-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BKcaouOjrGs+m/tIayBg3HPUDvyLRd45WY1t6ob1x5Rc8lfAYm14zvL+a0RmxXIL 88HxtTj+QsWSu5V6UxpBJQ== 0001047469-98-039102.txt : 19981105 0001047469-98-039102.hdr.sgml : 19981105 ACCESSION NUMBER: 0001047469-98-039102 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981104 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATIONERS INC CENTRAL INDEX KEY: 0000355999 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 363141189 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10653 FILM NUMBER: 98737332 BUSINESS ADDRESS: STREET 1: 2200 E GOLF RD CITY: DES PLAINES STATE: IL ZIP: 60016-1267 BUSINESS PHONE: 8476995000 MAIL ADDRESS: STREET 1: 2200 E GOLF ROAD STREET 2: 2200 E GOLF ROAD CITY: DES PLAINES STATE: IL ZIP: 600161267 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATIONERS SUPPLY CO CENTRAL INDEX KEY: 0000945633 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-PAPER AND PAPER PRODUCTS [5110] IRS NUMBER: 362431718 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 033-59811 FILM NUMBER: 98737333 BUSINESS ADDRESS: STREET 1: 2200 E GOLF RD CITY: DES PLAINES STATE: IL ZIP: 60016-1267 BUSINESS PHONE: 7086995000 MAIL ADDRESS: STREET 1: 2200 E GOLF ROAD STREET 2: 2200 E GOLF ROAD CITY: DES PLAINES STATE: IL ZIP: 600161267 10-Q 1 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-Q (Mark One) x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE --- SECURITIES EXCHANGE ACT OF 1934 For the quarter ended September 30, 1998 ------------------ OR --- TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ____________ to ____________ Commission file numbers: United Stationers Inc.: 0-10653 United Stationers Supply Co.: 33-59811 UNITED STATIONERS INC. UNITED STATIONERS SUPPLY CO. ---------------------------- (Exact name of registrant as specified in its charter) United Stationers Inc.: Delaware United Stationers Inc.: 36-3141189 United Stationers Supply Co.: Illinois United Stationers Supply Co.: 36-2431718 - -------------------------------------- ---------------------------------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 2200 East Golf Road, Des Plaines, Illinois 60016-1267 - ------------------------------------------ ---------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (847) 699-5000 Indicate by check mark whether each registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. United Stationers Inc.: Yes ( X ) No ( ) United Stationers Supply Co.: Yes ( X ) No ( ) On October 30, 1998, United Stationers Inc. had outstanding 36,891,105 shares of Common Stock, par value $0.10 per share. On October 30, 1998, United Stationers Supply Co. had 880,000 shares of Common Stock, $1.00 par value per share, outstanding; United Stationers Inc. owns 100% of these shares. UNITED STATIONERS INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1998 INDEX -----
PART I - FINANCIAL INFORMATION PAGE - ------------------------------ ---- IMPORTANT EXPLANATORY NOTE 1 Independent Accountants' Review Report 2 Condensed Consolidated Balance Sheets as of September 30, 1998 and December 31, 1997. 3 Condensed Consolidated Statements of Income for the Three Months and Nine Months ended September 30, 1998 and 1997. 4 Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1998 and 1997. 6 Notes to Condensed Consolidated Financial Statements. 7 Management's Discussion and Analysis of Financial Condition and Results of Operations. 13 PART II - OTHER INFORMATION 19 - --------------------------- SIGNATURE 20 - --------- INDEX TO EXHIBITS 21 - -----------------
UNITED STATIONERS INC. AND SUBSIDIARIES PART 1 - FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS IMPORTANT EXPLANATORY NOTE -------------------------- THIS INTEGRATED FORM 10-Q IS FILED PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, FOR EACH OF UNITED STATIONERS INC. ("UNITED"), A DELAWARE CORPORATION, AND ITS WHOLLY OWNED SUBSIDIARY, UNITED STATIONERS SUPPLY CO. ("USSC"), AN ILLINOIS CORPORATION (COLLECTIVELY, THE "COMPANY"). UNITED STATIONERS INC. IS A HOLDING COMPANY WITH NO OPERATIONS SEPARATE FROM ITS OPERATING SUBSIDIARY, UNITED STATIONERS SUPPLY CO. AND ITS SUBSIDIARIES. NO SEPARATE FINANCIAL INFORMATION FOR UNITED STATIONERS SUPPLY CO. AND ITS SUBSIDIARIES HAS BEEN PROVIDED HEREIN BECAUSE MANAGEMENT FOR THE COMPANY BELIEVES SUCH INFORMATION WOULD NOT BE MEANINGFUL BECAUSE (I) UNITED STATIONERS SUPPLY CO. IS THE ONLY DIRECT SUBSIDIARY OF UNITED STATIONERS INC., WHICH HAS NO OPERATIONS OTHER THAN THOSE OF UNITED STATIONERS SUPPLY CO. AND (II) ALL ASSETS AND LIABILITIES OF UNITED STATIONERS INC. ARE RECORDED ON THE BOOKS OF UNITED STATIONERS SUPPLY CO. THERE IS NO MATERIAL DIFFERENCE BETWEEN UNITED STATIONERS INC. AND UNITED STATIONERS SUPPLY CO. FOR THE DISCLOSURE REQUIRED BY THE INSTRUCTIONS TO FORM 10-Q AND THEREFORE, UNLESS OTHERWISE INDICATED, THE RESPONSES SET FORTH HEREIN APPLY TO EACH OF UNITED STATIONERS INC. AND UNITED STATIONERS SUPPLY CO. -1- INDEPENDENT ACCOUNTANTS' REVIEW REPORT The Board of Directors United Stationers Inc. We have reviewed the accompanying condensed consolidated balance sheet of United Stationers Inc. and Subsidiaries as of September 30, 1998, and the related condensed consolidated statements of income for the three month and nine month periods ended September 30, 1998 and 1997, and the condensed consolidated statements of cash flows for the nine month periods ended September 30, 1998 and 1997. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data, and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, which will be performed for the full year with the objective of expressing an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to the accompanying condensed consolidated financial statements referred to above for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of United Stationers Inc. as of December 31, 1997, and the related consolidated statements of income, changes in stockholders' equity, and cash flows for the year then ended (not presented herein) and in our report dated January 27, 1998, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 1997, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. /s/Ernst & Young LLP Chicago, Illinois October 22, 1998 -2- UNITED STATIONERS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data)
(Unaudited) (Audited) September 30, December 31, 1998 1997 ------------- ------------ ASSETS Current assets: Cash and cash equivalents $ 24,938 $ 12,367 Accounts receivable, net 223,491 311,920 Inventories 510,252 511,555 Other current assets 18,228 14,845 ---------- ---------- Total current assets 776,909 850,687 Property, plant and equipment, net 164,984 164,543 Goodwill, net 182,211 111,852 Other 17,799 20,939 ---------- ---------- Total assets $1,141,903 $1,148,021 ---------- ---------- ---------- ---------- LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 331,618 $ 236,475 Accrued liabilities 121,729 118,496 Current maturities of long-term debt 7,365 44,267 ---------- ---------- Total current liabilities 460,712 399,238 Deferred income taxes 27,003 19,383 Long-term obligations 305,785 506,092 ---------- ---------- Total liabilities 793,500 924,713 Stockholders' equity: Common stock, $0.10 par value; 40,000,000 authorized; 36,864,150 and 31,810,546, respectively, issued and outstanding 3,686 3,181 Additional paid-in capital 301,589 213,042 Retained earnings 43,128 7,085 ---------- ---------- Total stockholders' equity 348,403 223,308 ---------- ---------- Total liabilities and stockholders' equity $1,141,903 $1,148,021 ---------- ---------- ---------- ----------
See notes to condensed consolidated financial statements. -3- UNITED STATIONERS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited)
Three Months Ended September 30, -------------------------- 1998 1997 -------- -------- Net sales $795,407 $650,912 Cost of goods sold 659,132 536,470 -------- -------- Gross profit 136,275 114,442 -------- -------- Operating expenses: Warehousing, marketing and administrative expenses 91,594 80,836 -------- -------- Income from operations 44,681 33,606 Interest expense 7,348 12,998 Other expense 2,820 - - -------- -------- Income before income taxes 34,513 20,608 Income taxes 14,634 8,741 -------- -------- Net income 19,879 11,867 Preferred stock dividends issued and accrued - - 611 -------- -------- Net income attributable to common stockholders $ 19,879 $ 11,256 -------- -------- -------- -------- Net income per common share $ 0.54 $ 0.46 -------- -------- -------- -------- Average number of common shares outstanding 36,749 24,684 Net income per common share - assuming dilution $ 0.52 $ 0.37 -------- -------- -------- -------- Average number of common shares outstanding - assuming dilution 37,909 30,267
See notes to condensed consolidated financial statements. -4- UNITED STATIONERS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (Unaudited)
Nine Months Ended September 30, --------------------------------- 1998 1997 ----------- ----------- Net sales $ 2,259,890 $ 1,895,974 Cost of goods sold 1,874,663 1,568,056 ----------- ----------- Gross profit 385,227 327,918 ----------- ----------- Operating expenses: Warehousing, marketing and administrative expenses 264,210 231,270 Non-recurring charge 13,852 - - ----------- ----------- Total operating expenses 278,062 231,270 ----------- ----------- Income from operations 107,165 96,648 Interest expense 28,690 41,526 Other expense 5,206 - - ----------- ----------- Income before income taxes 73,269 55,122 Income taxes 31,070 23,376 ----------- ----------- Income before extraordinary item 42,199 31,746 Extraordinary item, loss on early retirement of debt, net of tax benefit of $3,971 (5,907) - - ----------- ----------- Net income 36,292 31,746 Preferred stock dividends issued and accrued - - 1,528 ----------- ----------- Net income attributable to common stockholders $ 36,292 $ 30,218 ----------- ----------- ----------- ----------- Net income per common share: Income before extraordinary item $ 1.24 $ 1.23 Extraordinary item (0.17) - - ----------- ----------- Net income per share $ 1.07 $ 1.23 ----------- ----------- ----------- ----------- Average number of common shares outstanding 33,930 24,528 Net income per common share - assuming dilution: Income before extraordinary item $ 1.19 $ 1.02 Extraordinary item (0.17) - - ----------- ----------- Net income per share $ 1.02 $ 1.02 ----------- ----------- ----------- ----------- Average number of common shares outstanding - assuming dilution 35,586 29,731
See notes to condensed consolidated financial statements. -5- UNITED STATIONERS INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (Unaudited)
Nine Months Ended September 30, ----------------------------- 1998 1997 --------- --------- Cash Flows From Operating Activities: Net income $ 36,292 $ 31,746 Depreciation and amortization 20,554 20,006 Amortization of capitalized financing costs 1,730 3,350 Extraordinary item - early retirement of debt 9,877 - - Changes in operating assets and liabilities 242,683 72,413 --------- --------- Net cash provided by operating activities 311,136 127,515 Cash Flows From Investing Activities: Capital expenditures (14,873) (8,141) Proceeds from disposition of property, plant and equipment 36 44 Acquisition of Azerty, Inc., net of cash acquired of $0 (115,740) - - --------- --------- Net cash used in investing activities (130,577) (8,097) Cash Flows From Financing Activities: Retirement and principal payments on debt (548,603) (40,085) Borrowings under financing agreements 350,000 - - Net repayments under revolver (46,000) (52,000) Issuance of common shares 99,001 18 Payment of employee withholding tax related to stock option exercises (16,525) - - Redemption of preferred stock - - (21,172) Preferred stock dividends - - (141) Financing costs (4,526) - - Other (1,335) 41 --------- --------- Net cash used in financing activities (167,988) (113,339) --------- --------- Net change in cash and cash equivalents 12,571 6,079 Cash and cash equivalents, beginning of period 12,367 10,619 --------- --------- Cash and cash equivalents, end of period $ 24,938 $ 16,698 --------- --------- --------- --------- Other Cash Flow Information: Income taxes paid $ 20,302 $ 13,381 Interest paid 23,104 33,605
See notes to condensed consolidated financial statements. -6- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. BASIS OF PRESENTATION The accompanying condensed consolidated financial statements are unaudited, except for the Consolidated Balance Sheet as of December 31, 1997. These financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. Accordingly, the reader of this Form 10-Q should refer to the Company's Form 10-K for the year ended December 31, 1997 for further information. In the opinion of the Company's management, the condensed consolidated financial statements for the unaudited interim periods presented include all adjustments necessary to fairly present the results of such interim periods and the financial position as of the end of said periods. Certain interim expense and inventory estimates are recognized throughout the year relating to marginal income tax rates, shrinkage, price changes and product mix. Any refinements to these estimates based on actual experience are recorded when known. All common and common equivalent shares have been adjusted to reflect the 100% stock dividend, effective September 28, 1998. 2. OPERATIONS The Company operates in a single segment as a national wholesale distributor of business products. The Company offers approximately 35,000 items from more than 550 manufacturers. This includes a broad spectrum of office products, computer supplies, office furniture and facilities management supplies. The Company primarily serves commercial and contract office products dealers. Its customers include more than 20,000 resellers -- such as computer products resellers, office furniture dealers, mass merchandisers, sanitary supply distributors, warehouse clubs, mail order houses and office products superstores. The Company has a distribution network of 40 business products distribution centers, 19 janitorial and sanitation distribution centers and 5 computer consumables, peripherals and accessories distribution centers. In addition to its broad product offering, the Company provides value-added marketing and logistics services to both manufacturers and resellers. 3. COMPREHENSIVE INCOME As of January 1, 1998, the Company adopted Financial Accounting Standards Statement 130, "Reporting Comprehensive Income." Statement 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or stockholders' equity. Statement 130 requires foreign currency translation adjustments, which prior to adoption were included in stockholders' equity, to be included in other comprehensive income. For the three-month and nine month periods ended September 30, 1998 and 1997, total comprehensive income amounted to $19,062,000, $11,248,000, $34,961,000, and $30,166,000, respectively. -7- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 4. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE Net income per common share is based on net income after preferred stock dividend requirements. Basic earnings per share is calculated on the weighted average number of common shares outstanding. Diluted earnings per share is calculated on the weighted average number of common and common equivalent shares outstanding during the period. Stock options and warrants are considered to be common equivalent shares. Weighted average shares and earnings per share have been restated to reflect the share conversion resulting from the 100% stock dividend, effective September 28, 1998. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):
Three Months Ended Nine Months Ended September 30, September 30, -------------------------- --------------------------- 1998 1997 1998 1997 -------- -------- -------- -------- NUMERATOR: Income before extraordinary item $ 19,879 $ 11,867 $ 42,199 $ 31,746 Extraordinary item - - - - (5,907) - - -------- -------- -------- -------- Net income 19,879 11,867 36,292 31,746 Preferred stock dividends issued and accrued - - 611 - - 1,528 -------- -------- -------- -------- Net income attributable to common stockholders $ 19,879 $ 11,256 $ 36,292 $ 30,218 -------- -------- -------- -------- -------- -------- -------- -------- DENOMINATOR: Denominator for basic earnings per share - Weighted average shares 36,749 24,684 33,930 24,528 Effect of dilutive securities: Employee stock options 1,160 3,110 1,656 2,732 Warrants - - 2,473 - - 2,471 -------- -------- -------- -------- Dilutive potential common shares 1,160 5,583 1,656 5,203 -------- -------- -------- -------- Denominator for diluted earnings per share - Adjusted weighted average shares and assumed conversions 37,909 30,267 35,586 29,731 -------- -------- -------- -------- -------- -------- -------- -------- Earnings per common share: Basic Income before extraordinary item $ 0.54 $ 0.46 $ 1.24 $ 1.23 Extraordinary item - - - - (0.17) - - -------- -------- -------- -------- Net income per share $ 0.54 $ 0.46 $ 1.07 $ 1.23 -------- -------- -------- -------- -------- -------- -------- -------- Diluted Income before extraordinary item $ 0.52 $ 0.37 $ 1.19 $ 1.02 Extraordinary item - - - - (0.17) - - -------- -------- -------- -------- Net income per share $ 0.52 $ 0.37 $ 1.02 $ 1.02 -------- -------- -------- -------- -------- -------- -------- --------
-8- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. AZERTY ACQUISITION On April 3, 1998, the Company completed the acquisition of all of the capital stock of Azerty Incorporated, Azerty de Mexico, S.A. de C.V., Positive ID Wholesale Inc., and AP Support Services Incorporated (collectively, the "Azerty Acquisition"), which together comprised substantially all of the United States and Mexican operations of the Office Products Division of Abitibi-Consolidated Inc. (collectively, the "Azerty Business"). The aggregate purchase price paid by the Company for the Azerty Business was approximately $115.7 million (including fees and expenses) following an initial post-closing adjustment, and subject to final audit and review by the Company. The Azerty Business is primarily a specialty wholesaler of computer consumables, peripherals and accessories in the United States and Mexico. It is currently anticipated that the Company's existing Micro United division will be integrated into the Azerty Business. The purchase price for the Azerty Business was funded from borrowings under the Company's New Credit Facilities (as defined). 6. THE NEW CREDIT FACILITIES On April 3, 1998, in order to fund the purchase price of the Azerty Business, refinance borrowings under the Company's then-existing senior secured credit facilities, and pay related fees and expenses in connection therewith, the Company amended and restated its then-existing credit agreement (as amended and restated, the "New Credit Agreement") governing its senior secured credit facilities (the "New Credit Facilities"). The New Credit Facilities consisted initially of a $250.0 million six year revolving credit facility (the "Revolving Credit Facility"), a $150 million six-year tranche A term loan facility (the "Tranche A Term Loan Facility"), and a $100.0 million six and three-quarter year tranche B term loan facility (the "Tranche B Term Loan Facility"). The net proceeds of the Notes Offering (as defined) were used to permanently repay a substantial portion of indebtedness outstanding under the Tranche B Term Loan Facility and the remainder of such facility was permanently repaid with proceeds from the sale of certain receivables, following which the Tranche B Term Loan Facility was terminated. As a result of the early retirement of the Existing Credit Facilities, approximately $9.5 million ($5.7 million net of tax benefit of $3.8 million) of unamortized financing fees were recorded as a non-cash extraordinary charge during the second quarter of 1998. 7. RECEIVABLES SECURITIZATION PROGRAM On April 3, 1998, in connection with the refinancing of its Existing Credit Facilities, the Company entered into a $163.0 million 364-day liquidity facility (the "Receivables Securitization Program"), pursuant to which the Company sells certain of its U.S. dollar trade receivables to a wholly-owned offshore bankruptcy-remote subsidiary of the Company (the "Receivables Company"). The Receivables Company then transfers the Eligible Receivables to a third-party, multi-seller asset-backed commercial paper program existing solely for the purpose of issuing commercial paper rated A-1/P-1 or higher. Costs related to this facility vary on a monthly basis and are generally related to certain interest rates. These costs are included in other expense. The condensed consolidated balance sheet at September 30, 1998 and the condensed consolidated statement of cash flows for the nine months ended September 30, 1998 reflect the sale of approximately $160.0 million in trade accounts receivable. The proceeds to the Company were used to reduce borrowings under the New Credit Facilities. -9- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 8. THE NOTES OFFERING On April 15, 1998, USSC consummated the sale of $100.0 million of its 8.375% Senior Subordinated Notes due 2008 (the "8.375% Notes") in a transaction not subject to the registration requirements of the Securities Act of 1933. The 8.375% Notes were immediately resold by the initial purchasers thereof in reliance on Rule 144A under the Securities Act of 1933. The aggregate net proceeds to the Company (aggregating approximately $97.0 million) from the sale of the 8.375% Notes were used to repay a substantial portion of indebtedness outstanding under the Tranche B Term Loan Facility. As a result the Company recorded an extraordinary charge of approximately $0.4 million ($0.2 million net of tax benefit of $0.2 million) related to unamortized financing fees. On August 5, 1998, the Company filed a prospectus and a letter of transmittal (which together constitute the "Exchange Offer") to exchange $1,000 principal amount of 8 3/8% Notes (the "New Notes") issued by the Company for each $1,000 principal of 8.375% Notes (the "Old Notes") originally issued by the Company on April 15, 1998, of which an aggregate principle amount of $100.0 million is outstanding. The form and terms of the New Notes are identical to the form and terms of the Old Notes except that the New Notes have been registered under the Securities Act of 1933, as amended, and will not bear any legends restricting their transfer. The Exchange Offer was made in order to satisfy certain contractual obligations of the Company. 9. JUNE EQUITY OFFERING (PRE-SPLIT) In June 1998, United completed an offering of 2,005,507 shares of Common Stock (the "June Equity Offering"), consisting of 1,500,000 primary shares sold by United, and 505,507 secondary shares sold by certain selling stockholders. The aggregate net proceeds to United of approximately $77.1 million were delivered to USSC and used to repay a portion of indebtedness under the Tranche A Term Loan Facility (as defined) which caused a permanent reduction of the amount borrowable thereunder. United did not receive any of the proceeds from the sale of the 505,507 shares of Common Stock offered by the selling stockholders, other than an aggregate of approximately $6.4 million paid by the selling stockholders upon exercise of employee stock options in connection with the June Equity Offering, which were delivered to USSC and applied to the repayment of indebtedness under the New Credit Facilities (as defined). Subsequent to the closing of the June Equity Offering, the underwriters for such offering exercised an overallotment option to purchase an additional 200,000 shares from United (the "Additional Shares"). The net proceeds to United of approximately $10.3 million from the sale of such Additional Shares were delivered to USSC and used to repay an additional portion of the indebtedness outstanding under the Tranche A Term Loan Facility. 10. COMPUTER SERVICES CONTRACT WRITE-OFF - NON RECURRING CHARGE As a condition to the spin-off of Associated Stationers Inc. ("ASI") from the Wholesale Division of Boise Cascade Office Products Corporation in January 1992, ASI entered into the Computer Services Contract with a third party service provider to perform certain computer services. Upon completion of the systems integration between USSC and ASI, increasing differences in the operating processes and technical environment between the Company and the third party service provider became evident. The Computer Services Contract was modified to allow the Company, at its discretion, not to perform any processing at the third-party service provider's facilities. Accordingly, the related fees were reduced. Payments made to the third-party service provider subsequent to this final renegotiations were effectively for disaster recover purposes only. The Company has recently consolidated its disaster recovery services under an agreement with another third-party service provider. In May 1998, the Company completed an assessment of the future utility of the Computer Services Contract. Based upon such assessment, the Company has determined that it is no longer feasible to use the prior third-party service provider for disaster recovery purposes. -10- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) During the second quarter, the Company wrote off the remaining term of the Computer Services Contract. As a result, the Company recorded a non-recurring charge of $13.9 million ($8.3 million net of tax benefit of $5.6 million), which includes a $2.5 million prepaid expense and $11.3 million of future payments. 11. SUMMARIZED FINANCIAL DATA FOR GUARANTOR SUBSIDIARIES Azerty Incorporated, Positive ID Wholesale Inc., and AP Support Services Incorporated (collectively, the "Azerty Guarantor Subsidiaries") and Lagasse Bros., Inc. ("Lagasse") guarantee the 8.375% Senior Subordinated Notes due 2008 (the "Notes") issued by United Stationers Supply Co. ("USSC"). The Azerty Guarantor Subsidiaries and Azerty de Mexico, S.A. de C.V. (collectively, the "Azerty Business") were acquired on April 3, 1998. Set forth below is summarized combined financial data for the Azerty Business (subsequent to its acquisition by USSC) and Lagasse. Summarized combined financial data as of September 30, 1998 and for the three months then ended reflects both Lagasse and the Azerty Business. The summarized combined income statement data for the nine months ended September 30, 1998 reflects the operations of Lagasse for the nine- month period and the Azerty Business for the six months ended September 30, 1998. Summarized financial data as of December 31, 1997 and for the three and nine-month periods ended September 30, 1997 reflect Lagasse only.
As of As of September 30, December 31, 1998 1997 ------------- ------------ Balance Sheet Data: Current assets $143,559 $ 29,731 Total assets 260,040 68,766 Current liabilities 72,236 13,564 Total liabilities 73,981 18,490
Three Months Ended Nine months Ended September 30, September 30, -------------------------------------- -------------------------------------- 1998 1997 1998 1997 ----------------- ----------------- ----------------- ---------------- Income Statement Data: Net sales $ 132,154 $ 26,056 $ 280,527 $ 71,545 Gross margin 14,626 5,089 32,631 13,259 Operating income 5,600 2,586 12,122 6,009 Net income 2,741 1,415 6,032 3,161
Set forth below is summarized combined financial data for the Azerty Business for periods prior to its acquisition by USSC.
As of December 31, 1997 ------------------ Balance Sheet Data: Current assets $83,986 Total assets 105,993 Current liabilities 51,678 Total liabilities 74,460
-11- UNITED STATIONERS INC. AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
Three Months Three Months Nine months Ended Ended Ended March 31, 1998 September 30, 1997 September 30, 1997 -------------- ------------------ ------------------ Income Statement Data: Net sales $99,723 $ 88,870 $ 177,237 Gross margin 8,673 7,561 15,538 Operating income 2,454 2,577 5,259 Net income 1,147 1,393 2,758
12. RECENT ACCOUNTING PRONOUNCEMENT During June 1998, the Financial Accounting Standards Board issued SFAS 133 "Accounting for Derivative Instruments and Hedging Activities," which will be effective for the Company's calendar year 2000. This statement establishes accounting and reporting standards requiring that every derivative instrument, including certain derivative instruments embedded in other contracts, be recorded on the balance sheet as either an asset or liability measured at its fair value. The statement also requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company is currently assessing the impact of this new statement on its consolidated financial position, liquidity, and results of operations. -12- UNITED STATIONERS INC. AND SUBSIDIARIES ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS COMMENTS ON FORWARD LOOKING INFORMATION - --------------------------------------- With the exception of statements with regard to historical matters, the matters discussed in this Form 10-Q contain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements involve risks and uncertainties which could cause actual results to differ materially from the forward-looking information. Such risks and uncertainties include, but are not limited to, the highly-competitive environment in which the Company operates, the integration of acquisitions, changes in end-users' traditional demands for business products, reliance by the Company on certain key suppliers, and the effects on the Company of fluctuations in manufacturers' pricing and general economic conditions. A description of these factors, as well as other factors which could affect the Company's business, is set forth in filings by the Company with the Securities and Exchange Commission, including the Company's Prospectus dated June 10, 1998. BUSINESS STRATEGY - ----------------- United Stationers' strategy is to create value in the supply chain for both resellers and manufacturers. By reducing the overall cost of distribution, the Company believes its role as a wholesaler will continue to expand and that it can achieve above industry-average growth rates. The Company believes that it has the opportunity to capture a portion of the sales of business products currently sold directly by manufacturers to resellers without wholesaler involvement. Currently, only approximately 20% of manufacturers' shipments of business products move through wholesalers. The Company believes that as resellers intensify their focus on asset management, return on investment and inventory efficiency, they will continue de-stocking and increasingly rely on United Stationers' products and services to meet end-user requirements for a high order fill rate on a broad product assortment available on an overnight basis. The Company plans to continue to expand its customer base by: (i) maintaining and building its business with commercial dealers and contract stationers; (ii) developing additional programs for marketing and buying groups; (iii) continuing to focus on complementary markets, including specialty dealers; and (iv) expanding geographically, both within the United States and, potentially, internationally. The Company plans to expand its product line. These plans include developing its newer product categories, such as office furniture, computer supplies and peripherals, facilities management supplies and janitorial and sanitation supplies, as well as potentially offering new products or services. The Company also plans to continue to expand its line of private brand products. The Company believes that its various products and services are complementary and that there are significant opportunities to cross-sell to existing customers. By implementing this strategy, management believes the Company can enhance sales as resellers purchase a broader selection of products offered by the Company, thereby reducing end-user procurement costs and enhancing reseller profitability. The Company intends to continue to invest in information systems enhancements and customer interfaces that management believes will allow it to capture a growing percentage of its customers' business. In addition, as the Internet becomes increasingly important as a marketing channel, the Company is positioned to participate in this trend with direct, on-line access by its resellers to its 35,000 SKU general line catalog. -13- UNITED STATIONERS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS BUSINESS STRATEGY (CONTINUED) - ---------------------------- The Company believes it can enhance its growth by continuing to make strategic acquisitions. For example, the acquisition of Lagasse Bros., Inc. ("Lagasse") in 1996 substantially increased the Company's position in the janitorial and sanitation supplies product category. The April 1998 Azerty Acquisition has also expanded the Company's product offerings and made it one of the largest distributors of computer consumable supplies in the United States. The Company intends to continue, from time to time, to pursue acquisitions that expand its customer base, increase its geographic reach and/or broaden its product offering. THIRD QUARTER ENDED SEPTEMBER 30, 1998 COMPARED WITH THE THIRD QUARTER ENDED SEPTEMBER 30, 1997 - -------------------------------------------------------- NET SALES. Net sales were $795.4 million in the third quarter of 1998, a 22.2% increase over net sales of $650.9 million in the third quarter of 1997. The Company experienced sales strength in all geographic regions and across all product categories. Organic sales in the third quarter of 1998 increased by 7.5%. During the third quarter of 1998, the Company experienced slowing sales growth reflecting weakness in the economy. Current trends indicate that the sales growth rate in the near-term will be at the low end of our stated goal of 6% to 9%. The Company has initiated several programs to stimulate additional revenue growth in 1999. GROSS MARGIN. Gross margin declined to 17.1% in the third quarter of 1998 compared with 17.6% in 1997. This decrease is primarily the result of the blending of the lower-margin computer consumables business (Azerty) into the Company's overall margin mix. Increases in vendor allowances partially offset the margin decline due to change in product mix discussed above. OPERATING EXPENSES. Operating expenses as a percent of net sales declined to 11.5% in 1998 compared with 12.4% in 1997. This reduction represents the impact of Azerty's lower operating expense ratio. INCOME FROM OPERATIONS. Income from operations as a percent of net sales increased to 5.6% in 1998 compared with 5.2% in 1997. INTEREST EXPENSE. Interest expense as a percent of net sales was 0.9% compared with 2.0% in 1997. This reduction reflects the continued leveraging of fixed interest costs against higher sales and the repayment of indebtedness with the proceeds received from the June Equity Offering, the Receivables Securitization Program, and the October 1997 equity offering. These transactions were partially offset by the acquisition of Azerty, in April of 1998, for a purchase price of $115.7 million and the placement of $100.0 million of Senior Subordinated Notes at 8.375%, in April of 1998. OTHER EXPENSE. Other expense as a percent of net sales was 0.4% in 1998. This expense represents the costs associated with the sale of certain trade accounts receivable through an asset-backed securitization program. These costs vary on a monthly basis and are generally related to certain interest rates. INCOME BEFORE INCOME TAXES. Income before income taxes as a percent of net sales increased to 4.3% from 3.2% in 1997. NET INCOME. Net income as a percent of net sales increased to 2.5% compared with 1.8% in 1997. -14- UNITED STATIONERS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS NINE MONTHS ENDED SEPTEMBER 30, 1998 COMPARED WITH THE NINE MONTHS ENDED SEPTEMBER 30, 1997 - ------------------------------------------------------ NET SALES. Net sales for the nine months ended September 30, 1998 were $2.3 billion, up 19.2%, compared with $1.9 billion in 1997. The Company experienced sales strength in all geographic regions and across all product categories. During the third quarter of 1998, the Company experienced slowing sales growth reflecting weakness in the economy. Current trends indicate that the sales growth rate in the near-term will be at the low end of our stated goal of 6% to 9%. The Company has initiated several programs to stimulate additional revenue growth in 1999. GROSS MARGIN. Gross margin declined to 17.1% in the third quarter of 1998 compared with 17.3% in 1997. This decrease is primarily the result of the blending of the lower-margin computer consumables business (Azerty) into the Company's overall margin mix beginning in the second quarter of 1998. Increases in vendor allowances partially offset the margin decline due to change in product mix discussed above. OPERATING EXPENSES. Operating expenses as a percent of net sales, before a non-recurring charge, declined to 11.7% in 1998 compared with 12.2% in 1997. The non-recurring charge recorded in the second quarter of 1998 of $13.9 million ($8.3 million net of tax benefit of $5.6 million) related to the write-off of a contract for computer services from a vendor. This reduction represents the impact of Azerty's lower operating expense ratio. Operating expenses as a percent of net sales, including the aforementioned charges, was 12.3% in 1998. INCOME FROM OPERATIONS. Income from operations as a percent of net sales, before a non-recurring charge, increased to 5.4% in 1998 from 5.1% in 1997. Including the non-recurring charge, income from operations as a percent of net sales was 4.8%. INTEREST EXPENSE. Interest expense as a percent of net sales was 1.3% compared with 2.2% in 1997. This reduction reflects the continued leveraging of fixed interest costs against higher sales and the repayment of indebtedness with the proceeds received from the June Equity Offering, the Receivables Securitization Program, and the October 1997 equity offering. These transactions were partially offset by the acquisition of Azerty, in April of 1998, for a purchase price of $115.7 million and the placement of $100.0 million of Senior Subordinated Notes at 8.375%, in April of 1998. OTHER EXPENSE. Other expense as a percent of net sales was 0.2% in 1998. This expense represents the costs associated with the sale of certain trade accounts receivable through an asset-backed securitization program. These costs vary on a monthly basis and are generally related to certain interest rates. INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM. Income before income taxes and extraordinary item as a percent of net sales, excluding the impact of the non-recurring charge, increased to 3.9% from 2.9% in 1997. Including the non-recurring charge, income before income taxes and extraordinary item as a percent of net sales was 3.3%. NET INCOME. Net income in 1998 includes an extraordinary item, loss on the early retirement of debt of $9.9 million ($5.9 million net of tax benefit of $4.0 million). Net income as a percent of net sales, excluding the impact of the non-recurring charge and the extraordinary item, increased to 2.2% compared with 1.7% in 1997. Including the impact of the non-recurring charge and the extraordinary item, net income as a percent of net sales was 1.6% in 1998. -15- UNITED STATIONERS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- As of September 30, 1998, the credit facilities under the Amended and Restated Credit Agreement (the "New Credit Agreement") consisted of $60.5 million of term loan borrowings (the "Term Loan Facilities") and zero borrowings under a $250.0 million revolving loan facility (the "Revolving Credit Facility"). In addition, the Company has $100.0 million of 12.75% Senior Subordinated Notes due 2005, $100.0 million of 8.375% Senior Subordinated Notes due 2008, $29.8 million of industrial revenue bonds and a $1.9 million mortgage. The Term Loan Facilities consist of a $60.5 million tranche A term loan facility (the "Tranche A Term Loan Facility"), which is scheduled to mature on or about March 31, 2004. The term loans under the Tranche A Term Loan Facility are repayable in consecutive quarterly installments which began on June 30, 1998, the first four of which are each in the amount of $1.0 million, the next four of which are each in the amount of $1.5 million, the next four of which are each in the amount of $2.6 million, the next four of which are each in the amount of $3.1 million and the last eight of which are each in the amount of $3.7 million. The loans under the Tranche A Term Loan Facility and the Revolving Credit Facility generally bear interest as determined within a set range with the rate based on the ratio of total debt (which excludes the face amount of any undrawn letters of credit) of United and its subsidiaries to EBITDA (as defined in the New Credit Agreement). The Tranche A Term Loan Facility and the Revolving Credit Facility bear interest, at the option of the Company and based upon financial performance, at the base rate (i.e., the higher of the prime rate or federal funds plus 0.50%) plus 0% to 0.75% or LIBOR plus 1.00% to 2.00%. The Credit Agreement contains representations and warranties, affirmative and negative covenants and events of default customary for financing of this type. As of September 30, 1998, the Company was in compliance with all covenants contained in the Credit Agreement. Management believes that the Company's cash on hand, anticipated funds generated from operations and available borrowings under the Credit Agreement, will be sufficient to meet the short-term (less than twelve months) and long-term operating and capital needs of the Company, as well as to service its debt in accordance with its terms. There is, however, no assurance that this will be accomplished. United is a holding company and, as a result, its primary source of funds is cash generated from operating activities of its operating subsidiary, USSC, and bank borrowings by USSC. The New Credit Agreement, 8.375% Notes Indenture and the 12.75% Note Indenture contain restrictions on the ability of USSC to transfer cash to United. The statements of cash flows for the Company for the periods indicated are summarized below:
For the Nine Months Ended September 30, ----------------------------- 1998 1997 --------- --------- (dollars in thousands) Net cash provided by operating activities $ 311,136 $ 127,515 Net cash used in investing activities (130,577) (8,097) Net cash used in financing activities (167,988) (113,339)
Net cash provided by operating activities during the first nine months of 1998 increased to $311.1 million from $127.5 million in the comparable prior-year period. This increase was primarily the result of a decrease in accounts receivable resulting from the sale of certain trade accounts receivable through an asset-backed securitization program, a decrease in inventory and an increase in accounts payable. -16- UNITED STATIONERS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) - ------------------------------------------ Net cash used in investing activities during the first nine months of 1998 was $130.6 million compared with $8.1 million used in the first nine months of 1997. The increase in cash used was primarily due to the acquisition of Azerty Inc. and an increase in capital expenditures. Net cash used in financing activities during the first nine months of 1998 was $168.0 million compared with $113.3 million for the first nine months of 1997. This increase was due primarily to the reduction of debt due to the application of proceeds from the June Equity Offering and the sale of certain trade accounts receivable through an asset-backed securitization program. Receivables Securitization Program On April 3, 1998, in connection with the refinancing of its Existing Credit Facilities, the Company entered into the $163.0 million 364-day Receivables Securitization Program pursuant to which the Company sells its Eligible Receivables (except for certain excluded receivables, which initially includes all receivables from the Azerty Business and Lagasse) to the Receivables Company, a wholly-owned offshore, bankruptcy-remote special purpose limited liability company, which in turn ultimately transfers the Eligible Receivables to a third-party, multi-seller asset-backed commercial paper program existing solely for the purpose of issuing commercial paper rated A-1/P-1 or higher. The sale of trade receivables includes not only those Eligible Receivables that were existing on the closing date of the Receivables Securitization Program, but also Eligible Receivables created thereafter. The Chase Manhattan Bank acts as funding agent and, together with other commercial banks rated at least A-1/P-1, provides standby liquidity funding to support the purchase of the receivables by the Receivables Company. The proceeds from the Receivables Securitization Program were used to reduce borrowings under the Company's Revolving Credit Facility. The Receivables Company retains an interest in the Eligible Receivables transferred to the third party. The Receivables Securitization Program carries an effective interest rate of LIBOR plus 0.37%. As a result of the Receivables Securitization Program, actual balance sheet assets of the Company as of September 30, 1998 of approximately $160.0 million, consisting of accounts receivable, have been sold to the Receivables Company and do not secure the Company's obligations under the New Credit Facilities. Year 2000 The Company relies on both information technology ("IT") and non-IT computer systems in its operations. The mission-critical IT systems include the Company's operating and accounting systems, such as IT software applications that allow the Company to maintain inventory and customer information and to communicate with its suppliers and customers. The non-IT systems are primarily telecommunications systems and the embedded microprocessors that control warehouse and other building systems, such as inventory control devices, security systems, lighting, fire and safety systems, and heating, ventilating and air conditioning systems. In 1996, the Company began to address the year 2000 problem (that is, the fact that some systems may fail or produce inaccurate results using dates in or around the year 2000). The Company has formed a year 2000 task force under its Chief Information Officer to coordinate and implement measures designed to prevent disruption in its business operations related to the year 2000 problem. The Company is scheduled to complete the remediation of its mission-critical IT applications software in December 1998 and to complete an end-to-end test of its IT systems by July 1999. The Company is assessing the effect of the year 2000 problem on its non-IT systems and intends to replace non-IT systems as necessary to become year 2000 ready by December 1999. -17- UNITED STATIONERS INC. AND SUBSIDIARIES MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS LIQUIDITY AND CAPITAL RESOURCES (CONTINUED) - ------------------------------------------ The Company is also working with its customers and suppliers to determine whether the year 2000 problem will have an adverse effect on the Company's relationships with them. Beginning with the Company`s catalog for 1999, the Company's product suppliers have assured the Company that their products will be year 2000 ready. However, the Company does not control its suppliers and relies on a variety of utilities, telecommunications companies and other suppliers in order to continue its business. The Company is developing contingency plans to address the risks created by the year 2000 problem. These plans include procuring alternative suppliers, when available, when the Company is able to conclude that an existing supplier will not be year 2000 ready. The Company is scheduled to complete these contingency plans by July 1999. During 1997, the Company incurred approximately $1.4 million of expenses related to this issue and expects to incur an additional $1.2 million to $1.9 million of such expenses over the next year. For the nine months ended September 30, 1998, the Company incurred $1.2 million of such expenses. Funding for year 2000 expenses will be generated from on-going operations and available borrowings under the Credit Agreement. There can be no assurance that year 2000 remediation by the Company or third parties will be properly and timely completed and failure to do so could have a material adverse effect on the Company's financial condition. The Company cannot predict the actual effects to it of the year 2000 issue, which depends on numerous uncertainties such as: (1) whether major third parties address this issue properly and timely and (2) whether broad-based or systemic economic failures may occur. The Company is currently unaware of any events, trends, or condition regarding this issue that may have a material effect on the Company's results of operations, liquidity, and financial position. If the year 2000 issue is not resolved by January 1, 2000 the Company's results of operations or financial condition could be materially adversely affected. -18- UNITED STATIONERS INC. AND SUBSIDIARIES PART II - OTHER INFORMATION ITEM 1 LEGAL PROCEEDINGS Not applicable ITEM 2 CHANGES IN SECURITIES Not applicable ITEM 3 DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5 OTHER INFORMATION Not applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit Number ------- 2 Not applicable 11 Not applicable 15.1 Letter regarding unaudited interim financial information 18 Not applicable 19 Not applicable 22 Not applicable 23 Not applicable 24 Not applicable 27.1 Financial Data Schedule - United Stationers Inc.(1997) 27.2 Financial Data Schedule - United Stationers Inc.(1998) 27.3 Financial Data Schedule - United Stationers Supply Co. (1997) 27.4 Financial Data Schedule - United Stationers Supply Co. (1998) 99 Not applicable (b) The Company filed a report on Form 8-K on October 2, 1998 reporting under Item 5 the resignation of Gary G. Miller from the board of directors of the Company. The Company filed a report on Form 8-K on August 15, 1998 reporting under Item 5 the appointment of Max Hopper to its board of directors.
-19- UNITED STATIONERS INC. AND SUBSIDIARIES SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED STATIONERS INC. UNITED STATIONERS SUPPLY CO. ----------------------------------- (Registrant) Date: October 30, 1998 /s/ Daniel H. Bushell ------------------- ----------------------------------- Daniel H. Bushell Executive Vice President and Chief Financial Officer -20- UNITED STATIONERS INC. AND SUBSIDIARIES INDEX TO EXHIBITS
(a) Exhibit Number ------- 2 Not applicable 11 Not applicable 15.1 Letter regarding unaudited interim financial information 18 Not applicable 19 Not applicable 22 Not applicable 23 Not applicable 24 Not applicable 27.1 Financial Data Schedule - United Stationers Inc. (1997) 27.2 Financial Data Schedule - United Stationers Inc. (1998) 27.3 Financial Data Schedule - United Stationers Supply Co. (1997) 27.4 Financial Data Schedule - United Stationers Supply Co. (1998) 99 Not applicable
-21- EX-15.1 2 EX-15.1 EXHIBIT 15.1 November 2, 1998 The Board of Directors United Stationers, Inc. We are aware of the incorporation by reference in the Registration Statement on Form S-8 of United Stationers Inc. for the registration of 4,100,000 shares of its common stock relating to the unaudited condensed consolidated interim financial statements of United Stationers Inc. which are included in its Form 10-Q for the quarter ended September 30, 1998. /s/ Ernst & Young LLP EX-27.1 3 EX-27.1
5 0000355999 UNITED STATIONERS INC. 1,000 3-MOS 9-MOS DEC-31-1997 DEC-31-1997 JUL-01-1997 JAN-01-1997 SEP-30-1997 SEP-30-1997 16,698 16,698 0 0 321,434 321,434 7,280 7,280 445,787 445,787 796,613 796,613 232,438 232,438 67,519 67,519 1,101,726 1,101,726 439,133 439,133 0 0 0 0 0 0 2,342 2,342 86,631 86,631 1,101,726 1,101,726 650,912 1,895,974 650,912 1,895,974 114,442 327,918 114,442 327,918 80,836 231,270 637 2,315 12,998 41,526 20,608 55,122 8,741 23,376 11,867 31,746 0 0 0 0 0 0 11,867 31,746 0.46 1.23 0.37 1.02
EX-27.2 4 EX-27.2
5 0000355999 UNITED STATIONERS INC. 1,000 3-MOS 9-MOS DEC-31-1998 DEC-31-1998 JUL-01-1998 JAN-01-1998 SEP-30-1998 SEP-30-1998 24,938 24,938 0 0 233,335 233,335 9,844 9,844 510,252 510,252 776,909 776,909 259,064 259,064 94,080 94,080 1,141,903 1,141,903 460,712 460,712 0 0 0 0 0 0 3,686 3,686 344,717 344,717 1,141,903 1,141,903 795,407 2,259,890 795,407 2,259,890 136,275 385,227 136,275 385,227 91,594 283,268 779 3,571 10,169 33,896 34,513 73,269 14,634 31,070 19,879 42,199 0 0 0 (5,907) 0 0 19,879 36,292 .54 1.07 .52 1.02
EX-27.3 5 EX-27.3
5 0000945633 UNITED STATIONERS SUPPLY COMPANY 1,000 3-MOS 9-MOS DEC-31-1997 DEC-31-1997 JUL-01-1997 JAN-01-1997 SEP-30-1997 SEP-30-1997 16,698 0 0 0 321,434 321,434 7,280 7,280 445,787 445,787 796,613 796,613 232,438 232,438 67,519 67,519 1,101,726 1,101,726 439,133 439,133 0 0 0 0 0 0 2,342 2,342 86,631 86,631 1,101,726 1,101,726 650,912 1,895,974 650,912 1,895,974 114,442 327,918 114,442 327,918 80,836 231,270 637 2,315 12,998 41,526 20,608 55,122 8,741 23,376 11,867 31,746 0 0 0 0 0 0 11,867 31,746 .46 1.23 .37 1.02
EX-27.4 6 EX-27.4
5 0000945633 UNITED STATIONERS SUPPLY COMPANY 1,000 3-MOS 9-MOS DEC-31-1998 DEC-31-1998 JUL-01-1998 JAN-01-1998 SEP-30-1998 SEP-30-1998 24,938 24,938 0 0 233,335 233,335 9,844 9,844 510,252 510,252 776,909 776,909 259,064 259,064 94,080 94,080 1,141,903 1,141,903 460,712 460,712 0 0 0 0 0 0 3,686 3,686 344,717 344,717 1,141,903 1,141,903 795,407 2,259,890 795,407 2,259,890 136,275 385,227 136,275 385,227 91,594 283,268 779 3,571 10,160 33,896 34,513 73,269 14,634 31,070 19,879 42,199 0 0 0 (5,907) 0 0 19,879 36,292 0.54 1.07 0.52 1.02
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