10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 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 quarterly period ended March 31, 2011

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 Number: 0-10653

UNITED STATIONERS INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	36-3141189
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

One Parkway North Boulevard

Suite 100

Deerfield, Illinois 60015-2559

(847) 627-7000

(Address, Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether 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 for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 and Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

On April 29, 2011, the registrant had outstanding 23,003,306 shares of common stock, par value $0.10 per share.

UNITED STATIONERS INC.

FORM 10-Q

For the Quarterly Period Ended March 31, 2011

TABLE OF CONTENTS

	Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of March 31, 2011 and December 31, 2010		3
Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2011 and 2010		4
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2011 and 2010		5
Notes to Condensed Consolidated Financial Statements		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		22
Item 3. Quantitative and Qualitative Disclosures About Market Risk		31
Item 4. Controls and Procedures		31
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		32
Item 1A. Risk Factors		32
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		32
Item 6. Exhibits		33
SIGNATURES		35

2

UNITED STATIONERS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

	(Unaudited)
	As of March  31, 2011			As of December  31, 2010
ASSETS
Current assets:
Cash and cash equivalents	$	39,521		$	21,301
Accounts receivable, less allowance for doubtful accounts of $28,045 in 2011 and $29,079 in 2010		648,099			628,119
Inventories		636,250			684,091
Other current assets		30,869			31,895
Total current assets		1,354,739			1,365,406
Property, plant and equipment, at cost		444,087			441,351
Less - accumulated depreciation and amortization		313,209			306,050
Net property, plant and equipment		130,878			135,301
Intangible assets, net		60,134			61,441
Goodwill		328,061			328,581
Other long-term assets		17,755			17,934
Total assets	$	1,891,567		$	1,908,663
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	422,449		$	421,566
Accrued liabilities		161,151			186,387
Short-term debt		6,800			6,800
Total current liabilities		590,400			614,753
Deferred income taxes		14,522			14,053
Long-term debt		435,000			435,000
Other long-term liabilities		81,901			85,259
Total liabilities		1,121,823			1,149,065
Stockholders’ equity:
Common stock, $0.10 par value; authorized - 100,000,000 shares, issued – 74,435,628 shares in 2011 and 2010		7,444			7,444
Additional paid-in capital		403,591			400,910
Treasury stock, at cost – 28,402,626 shares in 2011 and 28,247,906 shares in 2010		(782,621	)		(772,698	)
Retained earnings		1,181,523			1,167,109
Accumulated other comprehensive loss		(40,193	)		(43,167	)
Total stockholders’ equity		769,744			759,598
Total liabilities and stockholders’ equity	$	1,891,567		$	1,908,663

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)

	For the Three Months Ended March 31,
	2011		2010
Net sales	$	1,237,453	$	1,154,309
Cost of goods sold		1,055,081		987,443
Gross profit		182,372		166,866
Operating expenses:
Warehousing, marketing and administrative expenses		142,361		131,068
Operating income		40,011		35,798
Interest expense, net		6,521		6,229
Other expense, net		210		—
Income before income taxes		33,280		29,569
Income tax expense		12,833		11,344
Net income	$	20,447	$	18,225
Net income per share - basic:
Net income per share - basic	$	0.45	$	0.38
Average number of common shares outstanding - basic		45,478		47,346
Net income per share - diluted:
Net income per share - diluted	$	0.44	$	0.37
Average number of common shares outstanding - diluted		46,656		49,640
Dividends declared per share	$	0.13	$	—

See notes to condensed consolidated financial statements.

4

UNITED STATIONERS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(dollars in thousands)

(Unaudited)

	For the Three Months Ended March 31,
	2011			2010
Cash Flows From Operating Activities:
Net income	$	20,447		$	18,225
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		8,840			9,258
Amortization of capitalized financing costs		194			182
Share-based compensation		3,707			3,266
Excess tax benefits related to share-based compensation		(2,095	)		(3,419	)
Gain on the disposition of property, plant and equipment		—			(15	)
Impairment of equity investment		1,635			—
Deferred income taxes		(1,329	)		(1,586	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
(Increase) decrease in accounts receivable, net		(19,772	)		35,851
Decrease (increase) in inventory		48,178			(18,126	)
(Increase) decrease in other assets		(680	)		145
Increase in accounts payable		49,660			95,204
Decrease in checks in-transit		(48,672	)		(52,745	)
Decrease in accrued liabilities		(19,530	)		(3,630	)
Increase in other liabilities		458			337
Net cash provided by operating activities		41,041			82,947
Cash Flows From Investing Activities:
Capital expenditures		(9,819	)		(5,658	)
Acquisition, net of cash acquired		—			(10,527	)
Net cash used in investing activities		(9,819	)		(16,185	)
Cash Flows From Financing Activities:
Net proceeds from share-based compensation arrangements		9,615			15,079
Acquisition of treasury stock, at cost		(24,611	)		(11,720	)
Excess tax benefits related to share-based compensation		2,095			3,419
Payment of debt fees and other		(111	)		—
Net cash (used in) provided by financing activities		(13,012	)		6,778
Effect of exchange rate changes on cash and cash equivalents		10			22
Net change in cash and cash equivalents		18,220			73,562
Cash and cash equivalents, beginning of period		21,301			18,555
Cash and cash equivalents, end of period	$	39,521		$	92,117
Other Cash Flow Information:
Income tax payments, net	$	1,012		$	4,148
Interest paid		6,445			6,349

See notes to condensed consolidated financial statements.

5

UNITED STATIONERS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Basis of Presentation

The accompanying Condensed Consolidated Financial Statements represent United Stationers Inc. (“USI”) with its wholly owned subsidiary United Stationers Supply Co. (“USSC”), and USSC’s subsidiaries (collectively, “United” or the “Company”). The Company is a leading national wholesale distributor of business products, with net sales of approximately $4.8 billion for the year ended December 31, 2010. The Company stocks about 100,000 items from over 1,000 manufacturers. These items include a broad spectrum of technology products, traditional office products, office furniture, janitorial and breakroom supplies, and industrial supplies. In addition, the Company also offers private brand products. The Company primarily serves commercial and contract office products dealers, janitorial/breakroom product distributors, computer product resellers, furniture dealers, and industrial product distributors. The Company sells its products through a national distribution network of 64 distribution centers to its over 25,000 reseller customers, who in turn sell directly to end-consumers.

The accompanying Condensed Consolidated Financial Statements are unaudited, except for the Condensed Consolidated Balance Sheet as of December 31, 2010, which was derived from the December 31, 2010 audited financial statements. The Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted pursuant to such rules and regulations. Accordingly, the reader of this Quarterly Report on Form 10-Q should refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010 for further information.

In the opinion of the management of the Company, the Condensed Consolidated Financial Statements for the periods presented include all adjustments necessary to fairly present the Company’s results for such periods. Certain interim estimates of a normal, recurring nature are recognized throughout the year, relating to accounts receivable, supplier allowances, inventory, customer rebates, price changes and product mix. The Company evaluates these estimates periodically and makes adjustments where facts and circumstances dictate.

Acquisition and Investment

During the first quarter of 2010, the Company completed the acquisition of all of the capital stock of MBS Dev, Inc. (“MBS Dev”), a software solutions provider to business products resellers, which allows the Company to accelerate e-business development and enable customers and suppliers to utilize the internet. The purchase price included $12 million plus $3 million in deferred payments and an additional potential $3 million earn-out based upon the achievement of certain financial goals by December 31, 2014.

During the second quarter of 2010, the Company invested $5 million to acquire a minority interest in the capital stock of a managed print services and technology solution business. During the first quarter of 2011, a non-deductible asset impairment charge of $1.6 million was taken based on an independent third-party valuation analysis with respect to the fair value of this investment. This charge and the Company’s share of the earnings and losses of this investment are included in the Operating Expenses section of the Condensed Consolidated Statements of Income.

Stock and Cash Dividends

On March 1, 2011, the Company’s Board of Directors approved a two-for-one stock split of the Company’s issued common shares, which will be payable in the form of a 100% stock dividend. All stockholders will receive one additional share for each share owned at the close of business on the record date of May 16, 2011. The stock dividend will be payable on May 31, 2011 and the ex-dividend date will be June 1, 2011. This does not change the proportionate interest that a stockholder maintains in the Company. All shares and per share amounts have been adjusted for the two-for-one stock split throughout this report, unless otherwise noted.

On March 1, 2011, the Board of Directors approved initiation of a quarterly cash dividend of $0.26 per pre-split share. The first such cash dividend was paid on April 15, 2011 to stockholders of record as of the close of business on March 15, 2011.

6

2. Summary of Significant Accounting Policies

Principles of Consolidation

The Consolidated Financial Statements include the accounts of the Company. All significant intercompany accounts and transactions have been eliminated in consolidation. For all acquisitions, account balances and results of operations are included in the Consolidated Financial Statements as of the date acquired.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.

Various assumptions and other factors underlie the determination of significant accounting estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. The Company periodically reevaluates these significant factors and makes adjustments where facts and circumstances dictate.

Supplier Allowances

Supplier allowances (fixed or variable) are common practice in the business products industry and have a significant impact on the Company’s overall gross margin. Gross margin is determined by, among other items, file margin (determined by reference to invoiced price), as reduced by customer discounts and rebates as discussed below, and increased by supplier allowances and promotional incentives. Receivables related to supplier allowances totaled $63.1 million and $80.8 million as of March 31, 2011 and December 31, 2010, respectively. These receivables are included in “Accounts receivable” in the Consolidated Balance Sheets.

The majority of the Company’s annual supplier allowances and incentives are variable, based solely on the volume and mix of the Company’s product purchases from suppliers. These variable allowances are recorded based on the Company’s annual inventory purchase volumes and product mix and are included in the Company’s Consolidated Financial Statements as a reduction to cost of goods sold, thereby reflecting the net inventory purchase cost. The remaining portion of the Company’s annual supplier allowances and incentives are fixed and are earned based primarily on supplier participation in specific Company advertising and marketing publications. Fixed allowances and incentives are taken to income through lower cost of goods sold as inventory is sold.

Supplier allowances and incentives attributable to unsold inventory are carried as a component of net inventory cost. The potential amount of variable supplier allowances often differs based on purchase volumes by supplier and product category. As a result, changes in the Company’s sales volume (which can increase or reduce inventory purchase requirements) and changes in product sales mix (especially because higher-margin products often benefit from higher supplier allowance rates) can create fluctuations in variable supplier allowances.

Customer Rebates

Customer rebates and discounts are common practice in the business products industry and have a significant impact on the Company’s overall sales and gross margin. Such rebates are reported in the Consolidated Financial Statements as a reduction of sales. Customer rebates of $35.0 million and $56.1 million as of March 31, 2011 and December 31, 2010, respectively, are included as a component of “Accrued liabilities” in the Consolidated Balance Sheets.

Customer rebates include volume rebates, sales growth incentives, advertising allowances, participation in promotions and other miscellaneous discount programs. These rebates are paid to customers monthly, quarterly and/or annually. Estimates for volume rebates and growth incentives are based on estimated annual sales volume to the Company’s customers. The aggregate amount of customer rebates depends on product sales mix and customer mix changes. Reported results reflect management’s current estimate of such rebates. Changes in estimates of sales volumes, product mix, customer mix or sales patterns, or actual results that vary from such estimates may impact future results.

7

Revenue Recognition

Revenue is recognized when a service is rendered or when title to the product has transferred to the customer. Management records an estimate for future product returns related to revenue recognized in the current period. This estimate is based on historical product return trends and the gross margin associated with those returns. Management also records customer rebates that are based on annual sales volume to the Company’s customers. Annual rebates earned by customers include growth components, volume hurdle components, and advertising allowances.

Shipping and handling costs billed to customers are treated as revenues and recognized at the time title to the product has transferred to the customer. Freight costs are included in the Company’s Consolidated Financial Statements as a component of cost of goods sold and not netted against shipping and handling revenues. Net sales do not include sales tax charged to customers.

Additional revenue is generated from the sale of software licenses, delivery of subscription services (including the right to use software and software maintenance services), and professional services. Revenue is recognized when persuasive evidence of an arrangement exists, delivery has occurred, the fees are fixed and determinable, and collection is considered probable. If collection is not considered probable, the Company recognizes revenue when the fees are collected. If fees are not fixed and determinable, the Company recognizes revenues when the fees become due from the customer.

Accounts Receivable

In the normal course of business, the Company extends credit to customers that satisfy pre-defined credit criteria. Accounts receivable, as shown on the Consolidated Balance Sheets, include such trade accounts receivable and are net of allowances for doubtful accounts and anticipated discounts. The Company makes judgments as to the collectability of trade accounts receivable based on historical trends and future expectations. Management estimates an allowance for doubtful accounts, which addresses the collectability of trade accounts receivable. This allowance adjusts gross trade accounts receivable downward to its estimated collectible or net realizable value. To determine the allowance for doubtful accounts, management reviews specific customer risks and the Company’s trade accounts receivable aging. Uncollectible trade receivable balances are written off against the allowance for doubtful accounts when it is determined that the trade receivable balance is uncollectible.

Insured Loss Liability Estimates

The Company is primarily responsible for retained liabilities related to workers’ compensation, vehicle and certain employee health benefits. The Company records an expense for paid and open claims and an expense for claims incurred but not reported based on historical trends and on certain assumptions about future events. The Company has an annual per-person maximum cap, provided by a third-party insurance company, on certain employee medical benefits. In addition, the Company has both a per-occurrence maximum loss and an annual aggregate maximum cap on workers’ compensation and auto claims.

Leases

The Company leases real estate and personal property under operating leases. Certain operating leases include incentives from landlords including, landlord “build-out” allowances, rent escalation clauses and rent holidays or periods in which rent is not payable for a certain amount of time. The Company accounts for landlord “build-out” allowances as deferred rent at the time of possession and amortizes this deferred rent on a straight-line basis over the term of the lease.

The Company also recognizes leasehold improvements associated with the “build-out” allowances and amortizes these improvements over the shorter of (1) the term of the lease or (2) the expected life of the respective improvements. The Company accounts for rent escalation and rent holidays as deferred rent at the time of possession and amortizes this deferred rent on a straight-line basis over the term of the lease. As of March 31, 2011, the Company is not a party to any capital leases.

8

Inventories

Inventory constituting approximately 78% and 79% of total inventory as of March 31, 2011 and December 31, 2010, has been valued under the last-in, first-out (“LIFO”) accounting method. LIFO results in a better matching of costs and revenues. The remaining inventory is valued under the first-in, first-out (“FIFO”) accounting method. Inventory valued under the FIFO and LIFO accounting methods is recorded at the lower of cost or market. If the Company had valued its entire inventory under the lower of FIFO cost or market, inventory would have been $87.6 million and $84.7 million higher than reported as of March 31, 2011 and December 31, 2010, respectively. The change in the LIFO reserve since December 31, 2010, resulted in a $2.9 million increase in cost of goods sold.

The Company also records adjustments to inventory for shrinkage. Inventory that is obsolete, damaged, defective or slow moving is recorded at the lower of cost or market. These adjustments are determined using historical trends and are adjusted, if necessary, as new information becomes available. The Company charges certain warehousing and administrative expenses to inventory each period with $30.6 million and $29.8 million remaining in inventory as of March 31, 2011 and December 31, 2010, respectively.

Cash Equivalents

An unfunded check balance (payments in-transit) exists for the Company’s primary disbursement accounts. Under the Company’s cash management system, the Company utilizes available borrowings, on an as-needed basis, to fund the clearing of checks as they are presented for payment. As of March 31, 2011 and December 31, 2010, outstanding checks totaling $34.6 million and $83.3 million, respectively, were included in “Accounts payable” in the Consolidated Balance Sheets.

All highly liquid debt instruments with an original maturity of three months or less are considered to be short-term investments. Short-term investments consist primarily of money market funds rated AAA and are stated at cost, which approximates fair value.

	As of March 31, 2011		As of December 31, 2010
Cash	$	21,121	$	14,301
Short-term investments		18,400		7,000
Total cash and short-term investments	$	39,521	$	21,301

Property, Plant and Equipment

Property, plant and equipment is recorded at cost. Depreciation and amortization are determined by using the straight-line method over the estimated useful lives of the assets. The estimated useful life assigned to fixtures and equipment is from two to ten years; the estimated useful life assigned to buildings does not exceed forty years; leasehold improvements are amortized over the lesser of their useful lives or the term of the applicable lease. Repair and maintenance costs are charged to expense as incurred.

Software Capitalization

The Company capitalizes internal use software development costs in accordance with accounting guidance on accounting for costs of computer software developed or obtained for internal use. Amortization is recorded on a straight-line basis over the estimated useful life of the software, generally not to exceed ten years. Capitalized software is included in “Property, plant and equipment, at cost” on the Consolidated Balance Sheet. The total costs are as follows (in thousands):

	As of March 31, 2011			As of December 31, 2010
Capitalized software development costs	$	67,825		$	66,108
Accumulated amortization		(49,096	)		(47,770	)
Net capitalized software development costs	$	18,729		$	18,338

9

Derivative Financial Instruments

The Company’s risk management policies allow for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate exposure. The policies do not allow such derivative financial instruments to be used for speculative purposes. At this time, the Company primarily uses interest rate swaps which are subject to the management, direction and control of our financial officers. Risk management practices, including the use of all derivative financial instruments, are presented to the Board of Directors for approval.

All derivatives are recognized on the balance sheet date at their fair value. All derivatives in a net receivable position are included in “Other long-term assets”, and those in a net liability position are included in “Other long-term liabilities”. The interest rate swaps that the Company has entered into are classified as cash flow hedges in accordance with accounting guidance on derivative instruments and hedging activities as they are hedging a forecasted transaction or the variability of cash flow to be paid by the Company. Changes in the fair value of a derivative that is qualified, designated and highly effective as a cash flow hedge are recorded in other comprehensive income, net of tax, until earnings are affected by the forecasted transaction or the variability of cash flow, and then are reported in current earnings.

The Company formally documents all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking all derivatives designated as cash flow hedges to specific forecasted transactions or variability of cash flow.

The Company formally assesses, at both the hedge’s inception and on an ongoing basis, whether the derivatives used in hedging transactions are highly effective in offsetting changes in cash flow of hedged items. When it is determined that a derivative is not highly effective as a hedge then hedge accounting is discontinued prospectively in accordance with accounting guidance on derivative instruments and hedging activities. At this time, this has not occurred as all cash flow hedges contain no ineffectiveness. See Note 12, “Derivative Financial Instruments”, for further detail.

Income Taxes

The Company accounts for income taxes using the liability method in accordance with the accounting guidance for income taxes. The Company estimates actual current tax expense and assesses temporary differences that exist due to differing treatments of items for tax and financial statement purposes. These temporary differences result in the recognition of deferred tax assets and liabilities. A provision has not been made for deferred U.S. income taxes on the undistributed earnings of the Company’s foreign subsidiaries as these earnings have historically been permanently invested. It is not practicable to determine the amount of unrecognized deferred tax liability for such unremitted foreign earnings. The Company accounts for interest and penalties related to uncertain tax positions as a component of income tax expense.

Foreign Currency Translation

The functional currency for the Company’s foreign operations is the local currency. Assets and liabilities of these operations are translated into U.S. currency at the rates of exchange at the balance sheet date. The resulting translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders’ equity. Income and expense items are translated at average monthly rates of exchange. Realized gains and losses from foreign currency transactions were not material.

10

New Accounting Pronouncements

In October 2009, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2009-13, “Multiple-Deliverable Revenue Arrangements”. ASU 2009-13 establishes the accounting and reporting guidance for arrangements that include multiple revenue-generating activities, and provides amendments to the criteria for separating deliverables, and measuring and allocating arrangement consideration to one or more units of accounting. The amendments in ASU 2009-13 also establish a hierarchy for determining the selling price of a deliverable. Enhanced disclosures are also required to provide information about a vendor’s multiple-deliverable revenue arrangements, including information about the nature and terms of the arrangement, significant deliverables, and the vendor’s performance within arrangements. The amendments also require providing information about the significant judgments made and changes to those judgments and about how the application of the relative selling-price method affects the timing or amount of revenue recognition. The amendments in ASU 2009-13 are effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. The adoption of ASU 2009-13 did not have a material impact on the Company’s financial position or results of operations.

In January 2010, the FASB issued Accounting Standards Codification (“ASC”) Topic 820 “Fair Value Measurements and Disclosures”, which updated and clarified previously issued guidance to improve disclosures about fair value measurements. These new disclosures include stating separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and the reasons for the transfers. In addition, it states that a reporting entity should present separately information about purchases, sales, issuances, and settlements in the reconciliation for fair value measurements using Level 3 inputs. The new disclosures and clarifications of existing disclosures are effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances, and settlements in the roll forward of activity in Level 3 fair value measurements. Those disclosures are effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. The adoption of ASC Topic 820 did not have an impact on the Company’s financial position and/or its results of operations. See Note 13, “Fair Value Measurements”, for information and related disclosures regarding the Company’s fair value measurements.

In December 2010, the FASB issued ASU 2010-29, “Business Combinations” (Topic 805). This ASU specifies that if a company presents comparative financial statements, the company should disclose revenue and earnings of the combined entity as though the business combination that occurred during the year had occurred as of the beginning of the comparable prior annual reporting period only. The ASU also expands the supplemental pro forma disclosures under Topic 805 to include a description of the nature and amount of material, nonrecurring pro forma adjustments directly attributable to the business combination included in the pro forma revenue and earnings. This ASU is effective prospectively for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2010. The adoption of ASU 2010-29 did not have a material impact on the Company’s financial position or results of operations.

3. Share-Based Compensation

Overview

As of March 31, 2011, the Company has two active equity compensation plans. A description of these plans is as follows:

Amended and Restated 2004 Long-Term Incentive Plan (“LTIP”)

In March 2004, the Company’s Board of Directors adopted the LTIP to, among other things, attract and retain managerial talent, further align the interests of key associates to those of the Company’s shareholders and provide competitive compensation to key associates. Award vehicles include stock options, stock appreciation rights, full value awards, cash incentive awards and performance-based awards. Key associates and non-employee directors of the Company are eligible to become participants in the LTIP, except that non-employee directors may not be granted incentive stock options.

Nonemployee Directors’ Deferred Stock Compensation Plan

Pursuant to the United Stationers Inc. Nonemployee Directors’ Deferred Stock Compensation Plan, non-employee directors may defer receipt of all or a portion of their retainer and meeting fees. Fees deferred are credited quarterly to each participating director in the form of stock units, based on the fair market value of the Company’s common stock on the quarterly deferral date. Each stock unit account generally is distributed and settled in whole shares of the Company’s common stock on a one-for-one basis, with a cash-out of any fractional stock unit interests, after the participant ceases to serve as a Company director.

11

Accounting For Share-Based Compensation

The following table summarizes the share-based compensation expense (in thousands):

	For the Three Months Ended March 31,
	2011			2010
Numerator:
Pre-tax expense	$	3,707		$	3,266
Tax effect		(1,401	)		(1,238	)
After tax expense		2,306			2,028
Denominator:
Denominator for basic shares - weighted average shares		45,478			47,346
Denominator for diluted shares - Adjusted weighted average shares and the effect of dilutive securities		46,656			49,640
Net expense per share:
Net expense per share - basic	$	0.05		$	0.04
Net expense per share - diluted	$	0.05		$	0.04

The following tables summarize the intrinsic value of options outstanding, exercisable, and exercised for the applicable periods listed below:

Intrinsic Value of Options

(in thousands of dollars)

	Outstanding		Exercisable
As of March 31, 2011	$	21,837	$	21,837
As of March 31, 2010		24,272		24,242

Intrinsic Value of Options Exercised

(in thousands of dollars)

March 31, 2011	$	5,972
March 31, 2010		9,069

The following tables summarize the intrinsic value of restricted shares outstanding and vested for the applicable periods listed below:

Intrinsic Value of Restricted Shares

(in thousands of dollars)

As of March 31, 2011	$	54,294
As of March 31, 2010		44,062

Intrinsic Value of Restricted Shares Vested

(in thousands of dollars)

March 31, 2011	$	6,916
March 31, 2010		3,439

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As of March 31, 2011, there was $24.9 million of total unrecognized compensation cost related to non-vested share-based compensation arrangements granted. This cost is expected to be recognized over a weighted-average period of 2.1 years.

Accounting guidance on share-based payments requires that cash flows resulting from the tax benefits from tax deductions in excess of the compensation cost recognized for those options (excess tax benefits) be classified as financing cash flows. For the three months ended March 31, 2011, the $2.1 million excess tax benefits classified as financing cash inflows on the Condensed Consolidated Statement of Cash Flows would have been classified as operating cash inflows if the Company had not adopted this guidance on share-based payments. For the three months ended March 31, 2010 this amount was $3.4 million.

Stock Options

The fair value of each option award is estimated on the date of grant using a Black-Scholes option valuation model that uses various assumptions including the expected stock price volatility, risk-free interest rate, and expected life of the option. Stock options generally vest in annual increments over three years and have a term of 10 years. Compensation costs for all stock options are recognized, net of estimated forfeitures, on a straight-line basis as a single award typically over the vesting period. The Company estimates expected volatility based on historical volatility of the price of its common stock. The Company estimates the expected term of share-based awards by using historical data relating to option exercises and employee terminations to estimate the period of time that options granted are expected to be outstanding. The interest rate for periods during the expected life of the option is based on the U.S. Treasury yield curve in effect at the time of the grant. As of March 31, 2011, there was no unrecognized compensation cost related to stock option awards granted. There were no stock options granted during the first three months of 2011 or 2010.

The following table summarizes the transactions, excluding restricted stock, under the Company’s equity compensation plans for the three months ended March 31, 2011:

Stock Options Only	Shares			Weighted Average Exercise Price		Weighted Average Exercise Contractual Life		Aggregate Intrinsic Value ($000)
Options outstanding - December 31, 2010		2,563,708		$	24.18
Granted		—			—
Exercised		(572,892	)		22.85
Canceled		—			—
Options outstanding – March 31, 2011		1,990,816		$	24.56		4.87		21,837
Number of options exercisable		1,990,816		$	24.56		4.87		21,837

Restricted Stock and Restricted Stock Units

The Company granted 4,000 shares of restricted stock and 201,614 restricted stock units (“RSUs”) during the first quarter of 2011. During the first quarter of 2010, the Company granted 22,576 shares of restricted stock and 207,248 RSUs. The restricted stock granted in each period vests in three equal annual installments on the anniversaries of the date of the grant. The RSUs granted in 2011 and 2010 vest in three annual installments based on the terms of the agreements, to the extent earned based on the Company’s cumulative economic profit performance against target economic profit goals. A summary of the status of the Company’s restricted stock and RSU grants and changes during the three months ended March 31, 2011, is as follows:

Restricted Stock and RSUs Only	Shares			Weighted Average Grant Date Fair Value		Weighted Average Contractual Life		Aggregate Intrinsic Value ($000)
Shares outstanding - December 31, 2010		1,562,626		$	20.13
Granted		205,614			33.10
Vested		(211,442	)		21.94
Canceled		(28,470	)		21.62
Outstanding – March 31, 2011		1,528,328		$	21.60		1.6	$	54,294

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4. Goodwill and Intangible Assets

Accounting guidance on goodwill and intangible assets requires that goodwill be tested for impairment at the reporting unit level on an annual basis and between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of the reporting unit below its carrying value. The Company performs an annual impairment test on goodwill and intangible assets with indefinite lives at December 31st of each year. Based on this latest test, the Company concluded that the fair value of each of the reporting units was in excess of the carrying value as of December 31, 2010. The Company did not consider there to be any triggering event during the three-month period ended March 31, 2011 that would require an interim impairment assessment. As a result, none of the goodwill or intangible assets with indefinite lives were tested for impairment during the three-month period ended March 31, 2011.

As of March 31, 2011 and December 31, 2010, the Company’s Condensed Consolidated Balance Sheets reflected $328.1 million and $328.6 million of goodwill, $60.1 million and $61.4 million in net intangible assets, respectively.

Net intangible assets consist primarily of customer lists, trademarks, and non-compete agreements purchased as part of past acquisitions. The Company has no intention to renew or extend the terms of acquired intangible assets and accordingly, did not incur any related costs during the first quarter of 2011. Amortization of intangible assets purchased as part of these acquisitions totaled $1.3 million, for each of the first quarters of 2011 and 2010. Accumulated amortization of intangible assets as of March 31, 2011 and December 31, 2010 totaled $22.8 million and $21.5 million, respectively.

5. Severance and Restructuring Charges

On December 31, 2010, the Company approved an early retirement program for eligible employees and a focused workforce realignment to support strategic initiatives. The Company recorded a pre-tax charge of $9.1 million in the fourth quarter of 2010 for estimated severance pay, benefits and outplacement costs related to these actions. This charge is included in Operating expenses on the Company’s Statements of Income. Cash outlays associated with this severance charge in the first quarter of 2011 were $0.5 million. As of March 31, 2011 and December 31, 2010, the Company had accrued liabilities for these actions of $8.6 million and $9.1 million, respectively.

6. Comprehensive Income

Comprehensive income is a component of stockholders’ equity and consists of the following components (in thousands):

	For the Three Months Ended March 31,
(dollars in thousands)	2011		2010
Net income	$	20,447	$	18,225
Unrealized foreign currency translation adjustment		738		893
Unrealized gain (loss) - interest rate swaps, net of tax		2,236		(1,312	)
Total comprehensive income	$	23,421	$	17,806

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7. Earnings Per Share

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities were exercised into common stock. Stock options, restricted stock and deferred stock units are considered dilutive securities. Stock options to purchase 0.1 million and 0.4 million shares of common stock were outstanding for each of the three-month periods ending March 31, 2011 and 2010, respectively, but were not included in the computation of diluted earnings per share because the options’ exercise prices were greater than the average market price of the common shares and, therefore, the effect would be antidilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	For the Three Months Ended March 31,
	2011		2010
Numerator:
Net income	$	20,447	$	18,225
Denominator:
Denominator for basic earnings per share - weighted average shares		45,478		47,346
Effect of dilutive securities:
Employee stock options and restricted units		1,178		2,294
Denominator for diluted earnings per share - Adjusted weighted average shares and the effect of dilutive securities		46,656		49,640
Net income per share:
Net income per share - basic	$	0.45	$	0.38
Net income per share - diluted	$	0.44	$	0.37

Common Stock Repurchases

As of March 31, 2011, the Company had Board authorization to repurchase $63.1 million of USI common stock. During the three-month periods ended March 31, 2011 and 2010, the Company repurchased 372,838 and 198,074 shares of USI’s common stock (on a pre-split basis) at an aggregate cost of $24.6 million and $11.7 million, respectively. Depending on market and business conditions and other factors, the Company may continue or suspend purchasing its common stock at any time without notice. Acquired shares are included in the issued shares of the Company and treasury stock, but are not included in average shares outstanding when calculating earnings per share data. During the first quarter of 2011 and 2010, the Company reissued 527,556 and 876,354 shares, respectively, of treasury stock to fulfill its obligations under its equity incentive plans.

8. Long-Term Debt

USI is a holding company and, as a result, its primary sources of funds are cash generated from operating activities of its direct operating subsidiary, USSC, and from borrowings by USSC. The 2007 Credit Agreement (as defined below), the 2007 Master Note Purchase Agreement (as defined below) and the Current Receivables Securitization Program (as defined below) contain restrictions on the ability of USSC to transfer cash to USI.

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Long-term debt consisted of the following amounts (in thousands):

	As of March 31, 2011		As of December 31, 2010
2007 Credit Agreement - Revolving Credit Facility	$	100,000	$	100,000
2007 Credit Agreement - Term Loan		200,000		200,000
2007 Master Note Purchase Agreement (Private Placement)		135,000		135,000
Total	$	435,000	$	435,000

In addition to long-term debt, as of March 31, 2011 and December 31, 2010 the Company had an industrial development bond outstanding with a balance of $6.8 million. This bond is scheduled to mature in 2011 and carries market-based interest rates.

As of March 31, 2011, 100% of the Company’s outstanding debt is priced at variable interest rates based primarily on the applicable bank prime rate, the London InterBank Offered Rate (“LIBOR”) or the applicable commercial paper rates related to the Current Receivables Securitization Program. While the Company had primarily all of its outstanding debt based on LIBOR at March 31, 2011, the Company had hedged $435 million of this debt with three separate interest rate swaps further discussed in Note 2, “Summary of Significant Accounting Policies”, and Note 12, “Derivative Financial Instruments”, to the Consolidated Financial Statements. As of March 31, 2011, the overall weighted average effective borrowing rate of the Company’s debt was 5%. At quarter-end funding levels based on $6.8 million, a 50 basis point movement in interest rates would not result in a material increase or decrease in annualized interest expense, on a pre-tax basis, nor upon cash flows from operations.

Receivables Securitization Program

On March 3, 2009, USI entered into an accounts receivables securitization program (as amended to date, the “Receivables Securitization Program” or the “Program”) that replaced the securitization program that USI terminated on March 2, 2009 (the “Prior Receivables Securitization Program” or the “Prior Program”). The parties to the Program are USI, USSC, United Stationers Financial Services (“USFS”), United Stationers Receivables, LLC (“USR”), and Bank of America, National Association (the “Investor”). The Current Program is governed by the following agreements:

• The Transfer and Administration Agreement among USSC, USFS, USR, and the Investors;

• The Receivables Sale Agreement between USSC and USFS;

• The Receivables Purchase Agreement between USFS and USR; and

• The Performance Guaranty executed by USI in favor of USR.

Pursuant to the Receivables Sale Agreement, USSC sells to USFS, on an on-going basis, all the customer accounts receivable and related rights originated by USSC. Pursuant to the Receivables Purchase Agreement, USFS sells to USR, on an on-going basis, all the accounts receivable and related rights purchased from USSC, as well as the accounts receivable and related rights USFS acquired from its then subsidiary, USSRC, upon the termination of the Prior Program. Pursuant to the Transfer and Administration Agreement, USR then sells the receivables and related rights to the Investor. The maximum investment to USR at any one time outstanding under the Current Program cannot exceed $100 million. USFS retains servicing responsibility over the receivables. USR is a wholly-owned, bankruptcy remote special purpose subsidiary of USFS. The assets of USR are not available to satisfy the creditors of any other person, including USFS, USSC or USI, until all amounts outstanding under the facility are repaid and the Program has been terminated. The maturity date of the Program is November 23, 2013, subject to the extension of the commitments of the Investors under the Current Program, which expire on January 20, 2012.

The receivables sold to the Investor will remain on USI’s Condensed Consolidated Balance Sheet, and amounts advanced to USR by the Investor or any successor Investor will be recorded as debt on USI’s Condensed Consolidated Balance Sheet. The cost of such debt will be recorded as interest expense on USI’s income statement. As of March 31, 2011 and December 31, 2010, $437.3 million and $405.5 million, respectively, of receivables had been sold to the agent. However, no amounts had been borrowed by USR as of those periods.

The Transfer and Administration Agreement prohibits the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and imposes other restrictions on the Company’s ability to incur additional debt. This agreement also contains additional covenants, requirements and events of default that are customary for this type of agreement, including the failure to make any required payments when due.

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Credit Agreement and Other Debt

On July 5, 2007, USI and USSC entered into a Second Amended and Restated Five-Year Revolving Credit Agreement with PNC Bank, National Association and U.S. Bank National Association, as Syndication Agents, KeyBank National Association and LaSalle Bank, National Association, as Documentation Agents, and JPMorgan Chase Bank, National Association, as Agent (as amended on December 21, 2007, the “2007 Credit Agreement”). The 2007 Credit Agreement provides a Revolving Credit Facility with a committed principal amount of $425 million and a Term Loan in the principal amount of $200 million. Interest on both the Revolving Credit Facility and the Term Loan is based on the three-month LIBOR plus an interest margin based upon the Company’s debt to EBITDA ratio (or “Leverage Ratio”, as defined in the 2007 Credit Agreement). The 2007 Credit Agreement prohibits the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and imposes other restrictions on the Company’s ability to incur additional debt. The Revolving Credit Facility expires on July 5, 2012, which is also the maturity date of the Term Loan.

On October 15, 2007, USI and USSC entered into a Master Note Purchase Agreement (the “2007 Note Purchase Agreement”) with several purchasers. The 2007 Note Purchase Agreement allows USSC to issue up to $1 billion of senior secured notes, subject to the debt restrictions contained in the 2007 Credit Agreement. Pursuant to the 2007 Note Purchase Agreement, USSC issued and sold $135 million of floating rate senior secured notes due October 15, 2014 at par in a private placement (the “Series 2007-A Notes”). Interest on the Series 2007-A Notes is payable quarterly in arrears at a rate per annum equal to three-month LIBOR plus 1.30%, beginning January 15, 2008. USSC may issue additional series of senior secured notes from time to time under the 2007 Note Purchase Agreement but has no specific plans to do so at this time. USSC used the proceeds from the sale of these notes to repay borrowings under the 2007 Credit Agreement.

USSC has entered into several interest rate swap transactions to mitigate its floating rate risk on a portion of its total long-term debt. See Note 12, “Derivative Financial Instruments”, for further details on these swap transactions and their accounting treatment.

The 2007 Credit Agreement also provides for the issuance of letters of credit in an aggregate amount of up to a sublimit of $90 million and provides a sublimit for swingline loans in an aggregate outstanding principal amount not to exceed $30 million at any one time. These amounts, as sublimits, do not increase the maximum aggregate principal amount, and any undrawn issued letters of credit and all outstanding swingline loans under the facility reduce the remaining availability under the 2007 Credit Agreement.

The Company had outstanding letters of credit under the 2007 Credit Agreement of $18.6 million as of March 31, 2011 and December 31, 2010, respectively. Approximately $7.0 million of these letters of credit were used to guarantee the industrial development bond.

Obligations of USSC under the 2007 Credit Agreement and the 2007 Note Purchase Agreement are guaranteed by USI and certain of USSC’s domestic subsidiaries. USSC’s obligations under these agreements and the guarantors’ obligations under the guaranties are secured by liens on substantially all Company assets, including accounts receivable, chattel paper, commercial tort claims, documents, equipment, fixtures, instruments, inventory, investment property, pledged deposits and all other tangible and intangible personal property (including proceeds) and certain real property, but excluding accounts receivable (and related credit support) subject to any accounts receivable securitization program permitted under the 2007 Credit Agreement. Also securing these obligations are first priority pledges of all of the capital stock of USSC and the domestic subsidiaries of USSC.

The 2007 Credit Agreement and 2007 Note Purchase Agreement prohibit the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and impose other restrictions on the Company’s ability to incur additional debt. Those agreements also contain additional covenants, requirements, and events of default that are customary for those types of agreements, including the failure to pay principal or interest when due. The 2007 Credit Agreement, 2007 Note Purchase Agreement, and the Transfer and Administration Agreement all contain cross-default provisions. As a result, if a termination event occurs under any of those agreements, the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party.

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9. Pension and Post-Retirement Health Care Benefit Plans

The Company maintains pension plans covering a majority of its employees. In addition, the Company had a post-retirement health care benefit plan (the “Retiree Medical Plan”) covering substantially all retired employees and their dependents, which terminated effective December 31, 2010. For more information on the Company’s retirement plans, see Notes 12 and 13 to the Company’s Consolidated Financial Statements for the year ended December 31, 2010. A summary of net periodic benefit cost related to the Company’s pension plans and Retiree Medical Plan for the three months ended March 31, 2011 and 2010 is as follows (dollars in thousands):

	Pension Benefits
	For the Three Months Ended March 31,
	2011			2010
Service cost - benefit earned during the period	$	192		$	217
Interest cost on projected benefit obligation		2,120			2,055
Expected return on plan assets		(2,522	)		(2,159	)
Amortization of prior service cost		34			34
Amortization of actuarial loss		485			476
Net periodic pension cost	$	309		$	623

The Company did not make any cash contributions to its pension plans during the three months ended March 31, 2011 and 2010, respectively. The May 15, 2011 contribution amount has not yet been determined.

	Retiree Medical Plan
	For the Three Months Ended March 31,
	2011		2010
Service cost - benefit earned during the period	$	—	$	58
Interest cost on projected benefit obligation		—		65
Amortization of actuarial gain		—		(85	)
Net periodic post-retirement healthcare benefit cost	$	—	$	38

On April 15, 2010, the Company notified the participants that it would terminate the Retiree Medical Plan effective December 31, 2010 and account for this as a negative plan amendment. The termination of the Retiree Medical Plan eliminated any future obligation of the Company to provide cost sharing benefits to current or future retirees. As such, there were no costs associated with the Retiree Medical Plan in the first quarter of 2011.

Defined Contribution Plan

The Company has defined contribution plans covering certain salaried associates and non-union hourly paid associates (the “Plan”). The Plan permits associates to defer a portion of their pre-tax and after-tax salary as contributions to the Plan. The Plan also provides for discretionary Company contributions and Company contributions matching associates’ salary deferral contributions, at the discretion of the Board of Directors. During the first quarter 2011, the Company recorded expense of $1.3 million for the Company match of associate contributions to the Plan. During the same period last year, the Company recorded expense of $0.8 million at a reduced matching percentage.

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10. Other Assets and Liabilities

Other assets and liabilities as of March 31, 2011 and December 31, 2010 were as follows (in thousands):

	As of March 31, 2011		As of December 31, 2010
Other Long-Term Assets:
Investment in deferred compensation	$	4,970	$	4,448
Long-Term notes receivable		8,192		6,950
Capitalized financing costs		1,349		1,432
Long-Term prepaid expenses		749		724
Other		2,495		4,380
Total other long-term assets	$	17,755	$	17,934
Other Long-Term Liabilities:
Accrued pension obligation	$	27,698	$	27,389
Deferred rent		19,013		18,535
Deferred directors compensation		4,996		4,455
Long-Term swap liability		21,620		25,215
Long-Term income tax liability		4,456		4,857
Other		4,118		4,808
Total other long-term liabilities	$	81,901	$	85,259

11. Accounting for Uncertainty in Income Taxes

For each of the periods ended March 31, 2011 and December 31, 2010, the Company had $4.1 million and $4.5 million, respectively, in gross unrecognized tax benefits. The entire amount of these gross unrecognized tax benefits would, if recognized, decrease the Company’s effective tax rate.

The Company recognizes net interest and penalties related to unrecognized tax benefits in income tax expense. The gross amount of interest and penalties reflected in the Condensed Consolidated Statement of Income for the quarter ended March 31, 2011, was not material. The Condensed Consolidated Balance Sheets for each of the periods ended March 31, 2011 and December 31, 2010, include $0.9 million and $1.0 million, respectively, accrued for the potential payment of interest and penalties.

As of March 31, 2011, the Company’s U.S. Federal income tax returns for 2007 and subsequent years remain subject to examination by tax authorities. In addition, the Company’s state income tax returns for the 2001 and subsequent tax years remain subject to examinations by state and local income tax authorities. Although the Company is not currently under examination by the IRS, a number of state and local examinations are currently ongoing. Due to the potential for resolution of ongoing examinations and the expiration of various statutes of limitation, it is reasonably possible that the Company’s gross unrecognized tax benefits balance may change within the next twelve months by a range of zero to $2.1 million. These unrecognized tax benefits are currently accrued for in the Condensed Consolidated Balance Sheets.

12. Derivative Financial Instruments

Interest rate movements create a degree of risk to the Company’s operations by affecting the amount of interest payments. Interest rate swap agreements are used to manage the Company’s exposure to interest rate changes. The Company designates its floating-to-fixed interest rate swaps as cash flow hedges of the variability of future cash flows at the inception of the swap contract to support hedge accounting.

USSC entered into three separate swap transactions to mitigate USSC’s floating rate risk on the noted aggregate notional amount of LIBOR based interest rate risk noted in the table below. These swap transactions occurred as follows:

• On November 6, 2007, USSC entered into an interest rate swap transaction (the “November 2007 Swap Transaction”) with U.S. Bank National Association as the counterparty.

• On December 20, 2007, USSC entered into another interest rate swap transaction (the “December 2007 Swap Transaction”) with Key Bank National Association as the counterparty.

• On March 13, 2008, USSC entered into an interest rate swap transaction (the “March 2008 Swap Transaction”) with U.S. Bank National Association as the counterparty.

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Approximately 98% ($435 million) of the Company’s debt had its interest payments designated as the hedged forecasted transactions to interest rate swap agreements at March 31, 2011. The interest rate swap agreements accounted for as cash flow hedges that were outstanding and recorded at fair value on the statement of financial position as of March 31, 2011 were as follows (in thousands):

As of March 31, 2011	Notional Amount		Receive		Pay			Effective Date		Termination (Maturity) Date		Fair Value Asset (Liability)(1)
November 2007 Swap Transaction	$	135,000		Floating 3-month LIBOR		4.674	%		January 15, 2008		January 15, 2013		(9,440	)
December 2007 Swap Transaction		200,000		Floating 3-month LIBOR		4.075	%		December 21, 2007		June 21, 2012		(8,798	)
March 2008 Swap Transaction		100,000		Floating 3-month LIBOR		3.212	%		March 31, 2008		June 29, 2012		(3,382	)

(1) These interest rate derivatives qualify for hedge accounting. Therefore, the fair value of each interest rate derivative is included in the Company’s Consolidated Balance Sheets as either a component of “Other long-term assets” or “Other long-term liabilities” with an offsetting component in “Stockholders’ Equity” as part of “Accumulated Other Comprehensive Loss”. Fair value adjustments of the interest rate swaps will be deferred and recognized as an adjustment to interest expense over the remaining term of the hedged instrument.

Under the terms of these swap transactions, USSC is required to make quarterly fixed rate payments to the counterparty calculated based on the notional amounts noted in the table above at a fixed rate also noted in the table above, while the counterparty is obligated to make quarterly floating rate payments to USSC based on the three-month LIBOR on the same referenced notional amount.

The hedged transactions described above qualify as cash flow hedges in accordance with accounting guidance on derivative instruments. This guidance requires companies to recognize all of their derivative instruments as either assets or liabilities in the statement of financial position at fair value. The Company does not offset fair value amounts recognized for interest rate swaps executed with the same counterparty.

For derivative instruments that are designated and qualify as a cash flow hedge (for example, hedging the exposure to variability in expected future cash flows that is attributable to a particular risk), the effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same line item associated with the forecasted transaction in the same period or periods during which the hedged transaction affects earnings (for example, in “interest expense” when the hedged transactions are interest cash flows associated with floating-rate debt).

The Company has entered into these interest rate swap agreements, described above, that effectively convert a portion of its floating-rate debt to a fixed-rate basis. This reduces the impact of interest rate changes on future interest expense. By using such derivative financial instruments, the Company exposes itself to credit risk and market risk. Credit risk is the risk that the counterparty to the interest rate swap agreements (as noted above) will fail to perform under the terms of the agreements. The Company attempts to minimize the credit risk in these agreements by only entering into transactions with credit worthy counterparties. The market risk is the adverse effect on the value of a derivative financial instrument that results from a change in interest rates.

The Company’s agreements with its derivative counterparties provide that if an event of default occurs on any Company debt of $25 million or more, the counterparties can terminate the swap agreements. If an event of default had occurred and the counterparties had exercised their early termination rights under the swap agreements as of March 31, 2011, the Company would have been required to pay the aggregate fair value net liability of $21.6 million plus accrued interest to the counterparties.

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These interest rate swap agreements contain no ineffectiveness; therefore, all gains or losses on these derivative instruments are reported as a component of other comprehensive income (“OCI”) and reclassified into earnings as “interest expense” in the same period or periods during which the hedged transaction affects earnings. The following table depicts the effect of these derivative instruments on the statement of income for the three-month period ended March 31, 2011.

	Amount of Loss Recognized in OCI on Derivative (Effective Portion)						Location of (Loss) Gain	Amount of (Loss) Gain Reclassified from Accumulated OCI into Income (Effective Portion)
	At December 31, 2010			At March 31, 2011			Reclassified from Accumulated OCI into Income (Effective Portion)	For the Three Months Ended March 31, 2011
November 2007 Swap Transaction	$	(6,681	)	$	(5,845	)	Interest expense, net; income tax expense	$	836
December 2007 Swap Transaction		(6,470	)		(5,446	)	Interest expense, net; income tax expense		1,024
March 2008 Swap Transaction		(2,470	)		(2,094	)	Interest expense, net; income tax expense		376

13. Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including interest rate swap liabilities related to interest rate swap derivatives based on the mark-to-market position of the Company’s interest rate swap positions and other observable interest rates (see Note 12, “Derivative Financial Instruments”, for more information on these interest rate swaps).

Accounting guidance on fair value establishes a hierarchy for those instruments measured at fair value which distinguishes between assumptions based on market data (observable inputs) and the Company’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

• Level 1—Quoted market prices in active markets for identical assets or liabilities;

• Level 2—Inputs other than Level 1 inputs that are either directly or indirectly observable; and

• Level 3—Unobservable inputs developed using estimates and assumptions developed by the Company which reflect those that a market participant would use.

Determining which category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each quarter. The following table summarizes the financial instruments measured at fair value in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2011 (in thousands):

	Fair Value Measurements as of March 31, 2011
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3
Liabilities
Interest rate swap liability	$	21,620	$	—	$	21,620	$	—

The carrying amount of accounts receivable at March 31, 2011, including $437.3 million of receivables sold under the Current Receivables Securitization Program, approximates fair value because of the short-term nature of this item.

Accounting guidance on fair value measurements requires separate disclosure of assets and liabilities measured at fair value on a recurring basis, as noted above, from those measured at fair value on a nonrecurring basis. As of March 31, 2011, no assets or liabilities are measured at fair value on a nonrecurring basis.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements often contain words such as “expects,” “anticipates,” “estimates,” “intends,” “plans,” “believes,” “seeks,” “will,” “is likely,” “scheduled,” “positioned to,” “continue,” “forecast,” “predicting,” “projection,” “potential” or similar expressions. Forward-looking statements include references to goals, plans, strategies, objectives, projected costs or savings, anticipated future performance, results or events and other statements that are not strictly historical in nature. These forward-looking statements are based on management’s current expectations, forecasts and assumptions. This means they involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied here. These risks and uncertainties include, without limitation, those set forth in “Item 1A. Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2010.

Readers should not place undue reliance on forward-looking statements contained in this Quarterly Report on Form 10-Q. The forward-looking information herein is given as of this date only, and the Company undertakes no obligation to revise or update it.

Overview and Recent Results

The Company is a leading wholesale distributor of business products, with 2010 net sales of approximately $4.8 billion. The Company sells its products through a national distribution network of 64 distribution centers to approximately 25,000 resellers, who in turn sell directly to end consumers.

As reported in the Company’s press release dated April 25, 2011, second quarter-to-date sales are trending up approximately 6%, boosted by successful execution of Company’s growth strategies and easier comparisons to April 2010 sales.

Key Company and Industry Trends

The following is a summary of selected trends, events or uncertainties that the Company believes may have a significant impact on its future performance.

• Earnings per share and share data for all periods presented have been adjusted to reflect the two-for-one stock split payable on May 31, 2011 in the form of a 100% stock dividend, which was declared by the Board of Directors on March 1, 2011. All stockholders will receive one additional share for each share owned at the close of business on the record date of May 16, 2011.

• The Board of Directors approved initiation of a quarterly cash dividend of $0.26 per pre-split share ($0.13 per post-split share). The first such cash dividend was paid on April 15, 2011 to stockholders of record as of the close of business on March 15, 2011.

• While there are signs of an overall improvement in the economy, the Company continues to develop growth strategies that do not rely exclusively on improvement in the general economy. To support these growth strategies, the Company is continuing to provide enhanced service offerings for customers and invest in important new initiatives, skill sets, and systems.

• Sales for the first quarter rose $83 million or 7.2% to $1.24 billion, representing a 5.5% increase over the prior-year quarter when adjusted for workdays. Strong growth was seen in the industrial supplies category, which grew 26.1% on a workday adjusted basis reflecting a positive economic environment, growth from strategic investments, and execution of sales initiatives fueled by the continued addition of sales resources. Janitorial/breakroom sales grew 7.5% reflecting market trends and execution of growth initiatives that helped offset the shift of some national account business that went direct to manufacturers in 2010. Technology and office products both achieved approximately 3.5% growth while the furniture category remained soft, down approximately 1.0% for the quarter.

• The gross margin for the quarter was $182.4 million, or 14.7% of sales, compared with $166.9 million, or 14.5% of sales in the prior-year quarter. Gross margin increased due to higher-product cost inflation and increased supplier allowances. This was partially offset by a lower-margin mix as well as continued competitive pricing pressures.

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• First quarter operating expenses were $142.4 million, or 11.5% of sales, compared with $131.1 million, or 11.4% of sales, in the first quarter of 2010. Excluding an asset impairment charge related to a minority interest in the capital stock of a managed print services and technology solution business, first quarter 2011 adjusted operating expenses were $140.8 million, or 11.4% of sales, even with the prior-year quarter. The current year quarter included a $1.6 million or 13 basis points charge related to a change in the Company’s vacation policy. For 2011, this change will cause timing differences between quarters; however, the expected impact to the full-year results will be immaterial. Operating expenses reflected continued investments in the Company’s strategic growth initiatives offset by savings from War on Waste initiatives.

• Operating income for the quarter ended March 31, 2011 was $40.0 million, or 3.2% of sales, versus $35.8 million, or 3.1% of sales, in the first quarter of 2010. Excluding the impairment charge noted above, adjusted operating margin was up 16% to $41.6 million or 3.4% of sales.

• Diluted earnings per share for the latest quarter were $0.44, compared with $0.37 in the prior-year period. Excluding the non-deductible $1.6 million asset impairment charge noted above, adjusted earnings per share were $0.47 or up 27%. Earnings per share in the 2011 quarter were unfavorably affected by slightly higher debt levels throughout the quarter, which increased interest expense.

• Net cash provided by operating activities for the first three months of 2011 was $41.0 million. The cash flow results were aided by increased earnings, but were lower than the prior-year quarter operating cash flows due to increased working capital needs and the timing of merchandise purchases in March of 2010. Cash flow used in investing activities totaled $9.8 million in the latest quarter, compared with $16.2 million in the same period last year. 2010 included a net cash outflow of $10.5 million related to the acquisition of MBS Dev, Inc. Capital spending for 2011 is expected to be approximately $35 million.

• The Company has approximately $850 million of total committed debt capacity with $441.8 million outstanding at March 31, 2011. Debt-to-total capitalization declined to 36.5% from 37.7% at March 31, 2010.

• On April 11, 2011, the Company entered into a letter agreement with Richard W. Gochnauer, its retiring chief executive officer, where the Company agreed to provide certain transition incentives to Mr. Gochnauer. The Company expects to record, in the second quarter of 2011, a one-time, pre-tax, non-cash expense of approximately $4.2 million related to this letter agreement.

For a further discussion of selected trends, events or uncertainties the Company believes may have a significant impact on its future performance, readers should refer to “Key Company and Industry Trends” under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the year-ended December 31, 2010.

Stock Repurchase Program

During the three-month period ended March 31, 2011 and 2010, the Company repurchased 372,838 and 198,074 shares of USI’s common stock (on a pre-split basis) at an aggregate cost of $24.6 million and $11.7 million, respectively. Through April 29, 2011, the Company repurchased an additional 95,931 shares (on a pre-split basis) for $6.9 million. As of that date, the Company had approximately $56 million remaining of existing share repurchase authorization from the Board of Directors.

Critical Accounting Policies, Judgments and Estimates

During the first quarter of 2011, there were no significant changes to the Company’s critical accounting policies, judgments or estimates from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

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Results of Operations

The following table presents operating income as a percentage of net sales:

	Three Months Ended March 31,
	2011			2010
Net sales		100.00	%		100.00	%
Cost of goods sold		85.26			85.54
Gross margin		14.74			14.46
Operating expenses
Warehousing, marketing and administrative expenses		11.50			11.35
Operating income		3.24			3.11

Adjusted Operating Income, Net Income and Earnings Per Share

The following table presents Adjusted Operating Expenses, Operating Income, Net Income and Earnings Per Share in the first quarter of 2011 excluding the effects of a non-deductible asset impairment charge of $1.6 million. Generally Accepted Accounting Principles require that the effects of this item be included in the Condensed Consolidated Statements of Income. Management believes that excluding this item is an appropriate comparison of its ongoing operating results to last year. It is helpful to provide readers of its financial statements with a reconciliation of these items to its Condensed Consolidated Statements of Income reported in accordance with Generally Accepted Accounting Principles, as well as disclosing adjusted results on a pre-split basis.

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	For the Three Months Ended March 31,
	2011						2010
	Amount			% to Net Sales			Amount		% to Net Sales
Net sales	$	1,237,453			100.00	%	$	1,154,309		100.00	%
Gross profit	$	182,372			14.74	%	$	166,866		14.46	%
Operating expenses	$	142,361			11.50	%	$	131,068		11.35	%
Asset impairment charge		(1,635	)		(0.13	)%		—		—
Adjusted operating expenses	$	140,726			11.37	%	$	131,068		11.35	%
Operating income	$	40,011			3.24	%	$	35,798		3.11	%
Operating expense item noted above		1,635			0.13	%		—		—
Adjusted operating income	$	41,646			3.37	%	$	35,798		3.11	%
Net income	$	20,447					$	18,225
Operating expense item noted above		1,635						—
Adjusted net income	$	22,082					$	18,225
Diluted earnings per share	$	0.44					$	0.37
Per share operating expense item noted above		0.03						—
Adjusted diluted earnings per share	$	0.47					$	0.37
Adjusted diluted earnings per share — growth rate over the prior year period		27	%
Weighted average number of common shares — diluted		46,656						49,640
Adjusted Diluted Earnings Per Share on a Pre-split Basis:
Adjusted diluted earnings per share (pre-split)	$	0.95					$	0.73
Pre-split weighted average number of common shares — diluted		23,328						24,820
Adjusted diluted earnings per share (pre-split) — growth rate over the prior year period		30	%

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Results of Operations—Three Months Ended March 31, 2011 Compared with the Three Months Ended March 31, 2010

Net Sales. Net sales for the first quarter of 2011 were $1.24 billion, up 7.2% compared with sales of $1.15 billion for the same three-month period of 2010. After adjusting for one additional workday in the first quarter of 2011, sales were up 5.5%. The following table summarizes net sales by product category for the three-month periods ended March 31, 2011 and 2010 (in millions):

	Three Months Ended March 31,
	2011		2010
Technology products	$	420.2	$	399.4
Traditional office products (including cut-sheet paper)		340.9		324.4
Janitorial and breakroom supplies		286.6		262.3
Office furniture		80.5		80.0
Industrial supplies		80.1		62.5
Freight revenue		21.5		21.1
Services, Advertising and Other		7.7		4.6
Total net sales	$	1,237.5	$	1,154.3

Sales in the technology products category increased in the first quarter of 2011 by approximately 3.6% versus the first quarter of 2010, after adjusting for one additional workday in the current year quarter. This category, which continues to represent the largest percentage of the Company’s consolidated net sales, accounted for approximately 34% of net sales for the first quarter of 2011. This growth was driven by increases in printer imaging supplies and hardware.

Sales of traditional office supplies grew in the first quarter of 2011 by approximately 3.4% versus the first quarter of 2010. Traditional office supplies represented approximately 28% of the Company’s consolidated net sales for the first quarter of 2011. Within this category, cut-sheet paper sales drove growth along with gains from strategic growth initiatives and strong supplier and buying group alliances that have led to new business.

Sales in the janitorial and breakroom supplies product category increased 7.5% in the first quarter of 2011 compared to the first quarter of 2010. This category accounted for approximately 23% of the Company’s first quarter of 2011 consolidated net sales. Sales reflected market trends and execution of growth initiatives that helped offset the shift of some national account business that went direct to manufacturers in 2010.

Office furniture sales in the first quarter of 2011 were down nearly 1% compared to first quarter of 2010. Office furniture accounted for 7% of the Company’s first quarter of 2011 consolidated net sales. This quarterly decline represents continued sluggish market conditions in this category, partially offset by end-user demand for value products and growth with furniture-focused dealers.

Industrial sales in the first quarter of 2011 increased approximately 26% compared to the same prior-year period. Sales of industrial supplies accounted for 6% of the Company’s net sales for the first quarter of 2011. Industrial sales growth reflect a positive economic environment, growth from strategic investments, and execution of sales initiatives fueled by the continued addition of sales resources The remaining 2% of the Company’s first quarter 2011 net sales were composed of freight and other revenues.

Gross Profit and Gross Margin Rate. Gross profit (gross margin dollars) for the first quarter of 2011 was $182.4 million, compared to $166.9 million in the first quarter of 2010. The gross margin rate of 14.7% was 20 basis points higher than the prior-year quarter. Margins benefited from higher supplier allowances and purchase discounts which added about 20 basis points for the quarter. Margins also increased due to year-end investment buys and modest product cost inflation which together added about 50 basis points. These items were partially offset by an unfavorable margin mix and continued competitive pricing pressures that lowered margins by approximately 40 basis points. Rising fuel costs versus the prior-year quarter had a negative effect on gross margins but were offset by savings from War on Waste (“WOW”) initiatives.

Operating Expenses. Operating expenses for the first quarter of 2011 totaled $142.4 million, or 11.5% of net sales, compared with $131.1 million, or 11.4% of net sales in the first quarter of 2010. Excluding an asset impairment charge related to an equity investment, first quarter 2011 adjusted operating expenses were $140.8 million, or 11.4% of sales, even with the prior-year quarter. The current year quarter included a $1.6 million or 13 basis points charge related to a change in the Company’s vacation policy. For 2011, this change will cause timing differences between quarters; however, the expected impact to the full-year results will be immaterial. Lower bad debt and depreciation costs contributed approximately 10 and 5 basis points each to a lower operating expense ratio which was offset by the vacation policy change. Operating expenses also reflected continued investments in the Company’s strategic growth initiatives offset by savings from War on Waste initiatives.

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Interest Expense, net. Interest expense for the first quarter of 2011 was $6.5 million, up by $0.3 million for the same period in 2010, as a result of slightly higher debt levels throughout the quarter.

Other expense, net. Other expense included $0.2 million for an accounting charge to bring prior acquisition earn-out liabilities to fair value.

Income Taxes. Income tax expense was $12.8 million for the first quarter of 2011, compared with $11.3 million for the same period in 2010. The Company’s effective tax rate was 38.6% for the current-year quarter and 38.4% for the same period in 2010. The slightly higher rate in the first quarter of 2011 resulted from the non-deductible $1.6 million asset impairment charge, partially offset by other favorable discrete tax items.

Net Income. Net income for the first quarter of 2011 totaled $20.4 million, or $0.44 per diluted share, compared with net income of $18.2 million, or $0.37 per diluted share for the same three-month period in 2010. Adjusted for the impact of the $1.6 million non-deductible asset impairment charge in the first quarter of 2011, net income was $22.0 million and diluted earnings per share were $0.47.

Liquidity and Capital Resources

Debt

The Company’s outstanding debt consisted of the following amounts (in thousands):

	As of March 31, 2011			As of December 31, 2010
2007 Credit Agreement — Revolving Credit Facility	$	100,000		$	100,000
2007 Credit Agreement — Term Loan		200,000			200,000
2007 Master Note Purchase Agreement		135,000			135,000
Industrial development bond, at market-based interest rates, maturing in 2011		6,800			6,800
Debt under GAAP		441,800			441,800
Stockholders’ equity		769,744			759,598
Total capitalization	$	1,211,544		$	1,201,398
Adjusted debt-to-total capitalization ratio		36.5	%		36.8	%

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Operating cash requirements and capital expenditures are funded from operating cash flow and available financing. Financing available from debt and the sale of accounts receivable as of March 31, 2011, is summarized below (in millions):

Availability

Maximum financing available under:
2007 Credit Agreement — Revolving Credit Facility	$	425.0
2007 Credit Agreement — Term Loan		200.0
2007 Master Note Purchase Agreement		135.0
2009 Receivables Securitization Program(1)		100.0
Industrial Development Bond		6.8
Maximum financing available			$	866.8
Amounts utilized:
2007 Credit Agreement - Revolving Credit Facility		100.0
2007 Credit Agreement — Term Loan		200.0
2007 Master Note Purchase Agreement		135.0
2009 Receivables Securitization Program(1)		—
Outstanding letters of credit		18.6
Industrial Development Bond		6.8
Total financing utilized				460.4
Available financing, before restrictions				406.4
Restrictive covenant limitation				35.7
Available financing as of March 31, 2011			$	370.7

(1) The 2009 Receivables Securitization Program provides for maximum funding available of the lesser of $100 million or the total amount of eligible receivables less excess concentrations and applicable reserves.

The Credit Agreement, 2007 Note Purchase Agreement, and Transfer and Administration Agreement prohibit the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and impose other restrictions on the Company’s ability to incur additional debt. These agreements also contain additional covenants, requirements and events of default that are customary for these types of agreements, including the failure to make any required payments when due. The 2007 Credit Agreement, 2007 Note Purchase Agreement, and the Transfer and Administration Agreement all contain cross-default provisions. As a result, if an event of default occurs under any of those agreements, the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party.

The Company believes that its operating cash flow and financing capacity, as described, provide adequate liquidity for operating the business for the foreseeable future.

Contractual Obligations

During the three-month period ended March 31, 2011, there were no significant changes to the Company’s contractual obligations from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

Credit Agreement and Other Debt

On March 3, 2009, USI entered into an accounts receivables securitization program (as amended to date, the “2009 Receivables Securitization Program” or the “2009 Program”) that replaced the securitization program that USI terminated on March 2, 2009 (the “Prior Receivables Securitization Program” or the “Prior Program”). The parties to the 2009 Program are USI, USSC, United Stationers Financial Services (“USFS”), United Stationers Receivables, LLC (“USR”), and Bank of America, National Association (the “Investor”). The 2009 Program is governed by the following agreements:

• Transfer and Administration Agreement among USSC, USFS, USR and the Investors;

• Receivables Sale Agreement between USSC and USFS;

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• Receivables Purchase Agreement between USFS and USR; and

• Performance Guaranty executed by USI in favor of USR.

Pursuant to the Receivables Sale Agreement, USSC sells to USFS, on an on-going basis, all the customer accounts receivable and related rights originated by USSC. Pursuant to the Receivables Purchase Agreement, USFS sells to USR, on an on-going basis, all the accounts receivable and related rights purchased from USSC, as well as the accounts receivable and related rights USFS acquired from its then subsidiary USS Receivables Company, Ltd. (“USSRC”), upon the termination of the Prior Program. Pursuant to the Transfer and Administration Agreement, USR then sells the receivables and related rights to the Investor. The maximum investment to USR at any one time outstanding under the 2009 Program cannot exceed $100 million. USFS retains servicing responsibility over the receivables. USR is a wholly-owned, bankruptcy remote special purpose subsidiary of USFS. The assets of USR are not available to satisfy the creditors of any other person, including USFS, USSC or USI, until all amounts outstanding under the facility are repaid and the 2009 Program has been terminated. The maturity date of the 2009 Program is November 23, 2013, subject to the Investors’ renewing their commitments as liquidity providers supporting the 2009 Program, which expire on January 20, 2012.

The receivables sold to the Investor will remain on USI’s Condensed Consolidated Balance Sheet, and amounts advanced to USR by the Investor or any successor Investor will be recorded as debt on USI’s Condensed Consolidated Balance Sheet. The cost of such debt will be recorded as interest expense on USI’s income statement. As of March 31, 2011 and December 31, 2010, $437.3 million and $405.5 million, respectively, of receivables have been sold and no amounts have been advanced to USR.

On July 5, 2007, USI and USSC entered into a Second Amended and Restated Five-Year Revolving Credit Agreement with PNC Bank, National Association and U.S. Bank National Association, as Syndication Agents, KeyBank National Association and LaSalle Bank, National Association, as Documentation Agents, and JPMorgan Chase Bank, National Association, as Agent (as amended on December 21, 2007, the “2007 Credit Agreement”). The 2007 Credit Agreement provides a Revolving Credit Facility with a committed principal amount of $425 million and a Term Loan in the principal amount of $200 million. Interest on both the Revolving Credit Facility and the Term Loan is based on the three-month LIBOR plus an interest margin based upon the Company’s debt to EBITDA ratio (or “Leverage Ratio”, as defined in the 2007 Credit Agreement). The 2007 Credit Agreement prohibits the Company from exceeding a Leverage Ratio of 3.25 to 1.00 and imposes other restrictions on the Company’s ability to incur additional debt. The Revolving Credit Facility expires on July 5, 2012, which is also the maturity date of the Term Loan.

On October 15, 2007, USI and USSC entered into a Master Note Purchase Agreement (the “2007 Note Purchase Agreement”) with several purchasers. The 2007 Note Purchase Agreement allows USSC to issue up to $1 billion of senior secured notes, subject to the debt restrictions contained in the 2007 Credit Agreement. Pursuant to the 2007 Note Purchase Agreement, USSC issued and sold $135 million of floating rate senior secured notes due October 15, 2014 at par in a private placement (the “Series 2007-A Notes”). Interest on the Series 2007-A Notes is payable quarterly in arrears at a rate per annum equal to three-month LIBOR plus 1.30%, beginning January 15, 2008. USSC may issue additional series of senior secured notes from time to time under the 2007 Note Purchase Agreement but has no specific plans to do so at this time. USSC used the proceeds from the sale of these notes to repay borrowings under the 2007 Credit Agreement.

USSC entered into three separate swap transactions to mitigate USSC’s floating rate risk on the noted aggregate notional amount of LIBOR based interest rate risk noted in the table below. These swap transactions occurred as follows:

• On November 6, 2007, USSC entered into an interest rate swap transaction (the “November 2007 Swap Transaction”) with U.S. Bank National Association as the counterparty.

• On December 20, 2007, USSC entered into another interest rate swap transaction (the “December 2007 Swap Transaction”) with Key Bank National Association as the counterparty.

• On March 13, 2008, USSC entered into an interest rate swap transaction (the “March 2008 Swap Transaction”) with U.S. Bank National Association as the counterparty.

The interest rate swap agreements accounted for as cash flow hedges that were outstanding and recorded at fair value on the statement of financial position as of March 31, 2011 were as follows (in thousands):

As of March 31, 2011	Notional Amount		Receive		Pay			Effective Date		Termination (Maturity) Date
November 2007 Swap Transaction	$	135,000		Floating 3-month LIBOR		4.674	%		January 15, 2008		January 15, 2013
December 2007 Swap Transaction		200,000		Floating 3-month LIBOR		4.075	%		December 21, 2007		June 21, 2012
March 2008 Swap Transaction		100,000		Floating 3-month LIBOR		3.212	%		March 31, 2008		June 29, 2012

Under the terms of these swap transactions, USSC is required to make quarterly fixed rate payments to the counterparty calculated based on a notional amounts noted in the table above at a fixed rate also noted in the table above, while the counterparty is obligated to make quarterly floating rate payments to USSC based on the three-month LIBOR on the same referenced notional amount. Furthermore, each swap transaction has an effective date and termination date as noted in the table above. Notwithstanding the terms of the each swap transaction, USSC is ultimately obligated for all amounts due and payable under its credit agreements.

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The Company had outstanding letters of credit under the 2007 Credit Agreement of $18.6 million as of both March 31, 2011 and December 31, 2010.

At March 31, 2011, funding levels (including amounts sold under the 2009 Receivables Securitization Program), a 50 basis point movement in interest rates would not result in a material increase or decrease in annualized interest expense on a pre-tax basis, nor upon cash flows from operations.

As of March 31, 2011, the Company had an industrial development bond outstanding with a balance of $6.8 million. This bond is scheduled to mature in 2011 and carries market-based interest rates.

Refer to Note 8, “Long-Term Debt”, for further descriptions of the provisions of 2007 Credit Agreement and the 2007 Note Purchase Agreement.

Cash Flows

Cash flows for the Company for the three-month periods ended March 31, 2011 and 2010 are summarized below (in thousands):

	For the Three Months Ended March 31,
	2011			2010
Net cash provided by operating activities	$	41,041		$	82,947
Net cash used in investing activities		(9,819	)		(16,185	)
Net cash (used in) provided by financing activities		(13,012	)		6,778

Cash Flow From Operations

Net cash provided by operating activities for the three months ended March 31, 2011 totaled $41.0 million, compared with $82.9 million in the same three-month period of 2010.

Operating cash flows for the first three months of 2011 were lower than operating cash flows for the prior-year quarter. First quarter of 2011 operating cash flow results were aided by increased earnings, but were lower than the prior-year quarter operating cash flows due to increased working capital needs and the timing of merchandise purchases in March of 2010.

Cash Flow From Investing Activities

Net cash used in investing activities for the first three months of 2011 was $9.8 million, compared to net cash used in investing activities of $16.2 million for the three months ended March 31, 2010. The decrease primarily relates to the acquisition of MBS Dev for approximately $10.5 million, net of cash acquired in the first quarter 2010. Gross capital spending also increased in the first three months of 2011 to $9.8 million from $5.7 million in the same period in 2010. For the full year 2011, the Company expects gross capital expenditures to be approximately $35 million.

Cash Flow From Financing Activities

Net cash used in financing activities for the three months ended March 31, 2011 totaled $13.0 million, compared with cash inflow of $6.8 million in the prior-year period. Debt remained constant at $441.8 million from year end 2010 to March 31, 2011 while short-term investments included in cash and cash equivalents on the Condensed Consolidated Balance Sheets rose to $18.4 million, from $7.0 million at year-end 2010, as a result of strong operating cash flows and reduced working capital. First quarter 2011 cash used in financing activities was impacted by $24.6 million in share repurchases, partially offset by $9.6 million in net proceeds from share-based compensation arrangements, primarily stock option exercises.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is subject to market risk associated principally with changes in interest rates and foreign currency exchange rates. There were no material changes to the Company’s exposures to market risk during the first three months of 2011 from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

ITEM 4. CONTROLS AND PROCEDURES.

Attached as exhibits to this Quarterly Report are certifications of the Company’s Chief Executive Officer (“CEO”) and Senior Vice President and Chief Financial Officer (“CFO”), which are required in accordance with Rule 13a-14 under the Exchange Act. This “Controls and Procedures” section includes information concerning the controls and controls evaluation referred to in such certifications.

Inherent Limitations on Effectiveness of Controls

The Company’s management, including the CEO and CFO, does not expect that the Company’s Disclosure Controls or its internal control over financial reporting will prevent or detect all error or all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the existence of resource constraints. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the company have been detected. These inherent limitations include the fact that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by managerial override. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and no design is likely to succeed in achieving its stated goals under all potential future conditions. Projections of any evaluation of the effectiveness of controls to future periods are subject to risks, including that controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Disclosure Controls and Procedures

At the end of the period covered by this Quarterly Report the Company’s management performed an evaluation, under the supervision and with the participation of the Company’s CEO and CFO, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Such disclosure controls and procedures (“Disclosure Controls”) are controls and other procedures designed to provide reasonable assurance that information required to be disclosed in the Company’s reports filed under the Exchange Act, such as this Quarterly Report, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure Controls are also designed to reasonably assure that such information is accumulated and communicated to the Company’s management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Management’s quarterly evaluation of Disclosure Controls includes an evaluation of some components of the Company’s internal control over financial reporting, and internal control over financial reporting is also separately evaluated on an annual basis.

Based on this evaluation, the Company’s management (including its CEO and CFO) concluded that as of March 31, 2011, the Company’s Disclosure Controls were effective at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

The Company successfully implemented a new company-wide Human Resources Information System on January 3, 2011 and a new Tax Provision System on March 31, 2011. As a result, the Company’s internal control over financial reporting changed during the quarter ended March 31, 2011. Post-implementation monitoring has been ongoing and management believes internal controls are being maintained or enhanced by the systems. The implementations were undertaken to replace the Company’s legacy payroll, compensation and benefits system and tax provision process with more advanced technology. The new systems have undergone rigorous pre-implementation review and testing, and associates have been trained. As the systems are relatively new, management has not yet completed documenting and testing operating effectiveness of key controls. Management will complete its documentation and evaluation of the operating effectiveness of related key controls during subsequent periods. There were no other changes to the Company’s internal control over financial reporting during the quarter ended March 31, 2011, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

The Company is involved in legal proceedings arising in the ordinary course of or incidental to its business. The Company is not involved in any legal proceedings that it believes will result, individually or in the aggregate, in a material adverse effect upon its financial condition or results of operations.

ITEM 1A. RISK FACTORS.

For information regarding risk factors, see “Risk Factors” in Item 1A of Part I of the Company’s Form 10-K for the year ended December 31, 2010. There have been no material changes to the risk factors described in such Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Common Stock Purchase

As of March 31, 2011, the Company had $63.1 million remaining of Board authorizations to repurchase USI common stock. During the three-month period ended March 31, 2011 and 2010, the Company repurchased 372,838 and 198,074 shares of common stock (on a pre-split basis) at a cost of $24.6 and $11.7 million, respectively.

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ITEM 6. EXHIBITS

(a) Exhibits

This Quarterly Report on Form 10-Q includes as exhibits certain documents that the Company has previously filed with the SEC. Such previously filed documents are incorporated herein by reference from the respective filings indicated in parentheses at the end of the exhibit descriptions (all made under the Company’s file number of 0-10653). Each of the management contracts and compensatory plans or arrangements included below as an exhibit is identified as such by a double asterisk at the end of the related exhibit description.

Exhibit No.	Description
2.1	Agreement for Purchase and Sale of Stock of MBS Dev, Inc., dated as of February 26, 2010, among the Stockholders of MBS Dev, Inc. and United Stationers Supply Co. (“USSC”) (Exhibit 2.1 to the Company’s Form 10-Q for the quarter ended March 31, 2010, filed on May 6, 2010)
3.1	Second Restated Certificate of Incorporation of the Company, dated as of March 19, 2002 (Exhibit 3.1 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2001, filed on April 1, 2002)
3.2	Amended and Restated Bylaws of the Company, dated as of July 16, 2009 (Exhibit 3.1 to the Company’s Form 10-Q for the quarter ended September 30, 2009, filed on November 5, 2009)
4.1	Master Note Purchase Agreement, dated as of October 15, 2007, among United Stationers Inc. (“USI”), USSC, and the note Purchasers identified therein (Exhibit 4.1 to the Company’s Form 10-Q for the quarter ended June 30, 2010, filed on August 6, 2010)
4.2	Parent Guaranty, dated as of October 15, 2007, by USI in favor of holders of the promissory notes identified therein (Exhibit 4.4 to the Company’s Form 10-Q for the quarter ended September 30, 2007, filed on November 7, 2007)
4.3	Subsidiary Guaranty, dated as of October 15, 2007, by Lagasse, Inc., United Stationers Technology Services LLC (“USTS”) and United Stationers Financial Services LLC (“USFS”) in favor of the holders of the promissory notes identified therein (Exhibit 4.5 to the Company’s Form 10-Q for the quarter ended September 30, 2007, filed on November 7, 2007)
10.1*†	Performance Based Restricted Stock Unit Award Agreement between USI and Stephen Schultz, effective March 17, 2011**
10.2*†	Form of Performance Based Restricted Stock Unit Award Agreement under the 2004 Long Term Incentive Plan**
10.3	Form of Amended and Restated Executive Employment Agreement, effective as of December 31, 2010 (Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed March 21, 2011)**
10.4†	Sixth Amendment to the Transfer and Administration Agreement dated as of January 21, 2011, among USSC, USFS, United Stationers Receivables LLC, Enterprise Funding Company LLC and Bank of America, National Association (Exhibit 10.46 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010)
31.1*	Certification of Chief Executive Officer, dated as of May 3, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*	Certification of Chief Financial Officer, dated as of May 3, 2011, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*	Certification of Chief Executive Officer and Chief Financial Officer, dated as of May 3, 2011, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*	The following financial information from United Stationers Inc.’s Quarterly Report on Form 10-Q for the period ended March 31, 2011, filed with the SEC on May 3, 2011, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statement of Income for the three-month periods ended March 31, 2011 and 2010, (ii) the Consolidated Balance Sheet at March 31, 2011 and December 31, 2010, (iii) the Consolidated Statement of Cash Flows for the three-month periods ended March 31, 2011 and 2010, and (iv) Notes to Consolidated Financial Statements.

33

*    -	Filed herewith
**  -	Represents a management contract or compensatory plan or arrangement.
†    -	Confidential treatment has been requested for a portion of this document. Confidential portions have been omitted and filed separately with the Securities and Exchange Commission.

34

SIGNATURES

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.
	(Registrant)
Date: May 3, 2011	/s/ VICTORIA J. REICH
	Victoria J. Reich
	Senior Vice President and Chief Financial Officer (Duly authorized signatory and principal financial officer)

35

EX-10.1

Exhibit 10.1

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN

OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT FILED WITH THE COMMISSION.

THE OMITTED PORTIONS ARE INDICATED BY [**].

UNITED STATIONERS INC.

2004 LONG-TERM INCENTIVE PLAN

RESTRICTED STOCK UNIT AWARD AGREEMENT

This Restricted Stock Unit Award Agreement (this “Agreement”), dated as March 17, 2011, (the “Award Date”), is by and between Stephen Schultz (the “Participant”), and United Stationers Inc., a Delaware corporation (the “Company”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the Company’s 2004 Long-Term Incentive Plan (the “Plan”).

In the exercise of its discretion to grant awards under the Plan, the Committee has determined that the Participant should receive a restricted stock unit award, on the following terms and conditions:

Section 1. Grant. The Company hereby grants to the Participant a Restricted Stock Unit Award (the “Award”) of 2,000 restricted stock units (the “Units”), each Unit representing the right to receive up to two shares of the Company’s common stock as provided in Section 4 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement.

Section 2. No Rights as a Stockholder. The Units granted pursuant to this Award do not entitle the Participant to any rights of a stockholder of the Company’s Stock. The Participant’s rights with respect to the Units shall remain forfeitable at all times until satisfaction of the vesting conditions set forth in Section 3 of this Agreement.

Section 3. Vesting; Effect of Date of Termination. The Participant’s Units will vest on March 1, 2015 (the “Vesting Date”); provided that the Participant’s Date of Termination has not occurred before the Vesting Date. If the Participant’s Date of Termination occurs for any reason before the Vesting Date, the Participant’s Units will be forfeited on and after the Participant’s Date of Termination, subject to the following:

(a) If the Participant’s Date of Termination occurs before the Vesting Date by reason of the Participant’s death or Permanent and Total Disability (as defined below), a Pro Rata Portion of the Units will then become vested as of the Participant’s Date of Termination. As used herein, the “Pro Rata Portion” of the Units shall be determined by multiplying the total number of Units subject to this Agreement by a fraction, the numerator of which shall be the number of whole months elapsed from the Award Date to the Date of Termination, and the denominator of which shall be the number of whole months between the Award Date and the Vesting Date.

(b) If a Change of Control occurs after the Award Date and prior to both the Vesting Date and the Participant’s Date of Termination, then (i) 50% of the Units subject to this Agreement will then become fully vested as of the date of such event; and (ii) the portion of the Units that does not vest in accordance with the preceding clause (i) shall be subject to the vesting provisions of this Agreement without regard to the acceleration of vesting under clause (i).

(c) If a Change of Control occurs after the Award Date and prior to both the Vesting Date and the Participant’s Date of Termination and, during the two-year period following the date of such Change of Control, the Participant’s Date of Termination occurs by reason of involuntary termination of the Participant’s employment by the Company or its Subsidiaries without Cause or by the Participant for Good Reason (as defined below), the Units that have not otherwise vested under this Agreement will be fully vested as of the Participant’s Date of Termination.

(d) If the Participant’s Date of Termination occurs during an Anticipated Change of Control and before the Vesting Date by reason of the involuntary termination of the Participant’s employment by the Company or its Subsidiaries without Cause or by the Participant for Good Reason, and a Change of Control then occurs within two years following the Participant’s Date of Termination, the number of shares (subject to paragraph 5.2(f) of the Plan) that would have been issuable in settlement of the Units that were forfeited on the Date of Termination had those Units been vested on the Date of Termination (such number of shares determined in accordance with paragraph 4(c) below) shall be granted to the Participant on a fully vested basis as of the date of the Change of Control (but in no event later than March 15 of the year following the calendar year in which the Change of Control occurs).

(e) For purposes of this Agreement, the term “Permanent and Total Disability” means the Participant’s inability, due to illness, accident, injury, physical or mental incapacity or other disability, effectively to carry out his duties and obligations as an employee of the Company or its Subsidiaries or to participate effectively and actively as an employee of the Company or its Subsidiaries for 90 consecutive days or shorter periods aggregating at least 180 days (whether or not consecutive) during any twelve-month period.

(f) For purposes of this Agreement, “Good Reason” shall mean: (i) any material breach by the Company of this Agreement or of any employment agreement with the Participant without Participant’s written consent, (ii) any material reduction, without the Participant’s written consent, in the Participant’s duties, responsibilities or authority; provided, however, that for purposes of this clause (ii), neither (A) a change in the Participant’s supervisor or the number or identity of the Participant’s direct reports, nor (B) a change in the Participant’s title, duties, responsibilities or authority as a result of a realignment or restructuring of the Company’s executive organizational chart nor (C) a change in the Participant’s title, duties, responsibilities or authority as a result of a realignment or restructuring of the Company shall be deemed by itself to materially reduce Participant’s duties, responsibilities or authority, as long as, in the case of either (B) or (C), Participant continues to report to either the supervisor to whom he or she reported immediately prior to the Change of Control or a supervisor of equivalent responsibility and authority; or (iii) without Participant’s written consent: (A) a material reduction in the Participant’s base salary, (B) the relocation of the Participant’s principal place of employment more than fifty (50) miles from its location on the date of a Change in Control, or (C) the relocation of the Company’s corporate headquarters office outside of the metropolitan area in which it is located on the date of a Change in Control. For purposes of this Agreement, a Change of Control, alone, does not constitute Good Reason. Furthermore, notwithstanding the above, the occurrence of any of the events described above will not constitute Good Reason unless the Participant gives the Company written notice within thirty (30) days after the initial occurrence of any of such events that the Participant believes that such event constitutes Good Reason, and the Company thereafter fails to cure any such event within sixty (60) days after receipt of such notice.

Except as otherwise specifically provided, the Company will not have any further obligations to the Participant under this Agreement if the Participant’s Units are forfeited as provided herein.

Section 4. Number of Shares to be Received. The number of shares of Stock that the Participant will be entitled to receive in settlement of each Unit upon its vesting will be determined as follows:

(a) Each calendar year beginning with the year ending December 31, 2011 and ending with the year ending December 31, 2014 will be considered a performance period for purposes of this Award. As of the end of each performance period, the number of shares of Stock to be issued in settlement of 25% of the number of Units subject to this Agreement (the “Share Settlement Amount”) will be determined and fixed by multiplying 25% of the Units by the Share Adjustment Factor (defined below).

(b) The Share Adjustment Factor for any performance period is the sum of the EBIT Adjustment Factor and the Sales Adjustment Factor, each as defined in this paragraph. The EBIT Adjustment Factor for any performance period is the multiple (calculated to two decimal places) determined by comparing EBIT¹ for ORS Nasco Inc. for that performance period to the EBIT threshold, target and maximum amounts for that performance period as established by the Committee, as described in Appendix A to this Agreement. The Sales Adjustment Factor for any performance period is the

¹  For purposes of this Agreement, “EBIT” for any performance period means earnings before interest and taxes for ORS Nasco Inc. for that performance period, is calculated as total gross margin less total operating expenses, and will be derived from the diluted earnings per share as reported in the Company’s audited financial statements for the performance period and adjusted for the same items used in adjusting Net Income results for the United Stationers Management Incentive Plan purposes. The calculation of EBIT shall exclude the impacts of any intercompany sales and any acquisition accounting items, including amortization of intangible assets, depreciation expenses associated with any fixed asset step up to fair value and impact of any inventory step up to fair value.

multiple (calculated to two decimal places) determined by comparing Sales² for ORS Nasco Inc. for that performance period to the Sales threshold, target and maximum amounts for that performance period as established by the Committee, as described in Appendix A to this Agreement. The target EBIT and Sales amounts for ORS Nasco Inc. for each performance period are set forth in Appendix A.

(c) If any Units vest before the Vesting Date pursuant to paragraphs 3(a), (b) or (c), then for each performance period that has been completed prior to such vesting event, the applicable Settlement Share Amount determined for that performance period will be utilized. To the extent the number of Units that vest pursuant to Paragraphs 3(a), (b) or (c) exceeds the number of Units for which Settlement Share Amounts have been determined pursuant to Paragraphs 4(a) and (b), the number of shares of Stock to be issued in settlement of such additional Units will be determined by multiplying such number of additional Units by the Share Adjustment Factor for the last completed performance period (or by 1 if no performance period has been completed at that time).

Section 5. Settlement of Units. After any Units vest pursuant to Section 3, the Company will promptly, but in no event later than March 15 of the year following the calendar year in which such Units vest, cause to be issued to the Participant, or to the Participant’s beneficiary or legal representative in the event of Participant’s death, shares of Stock in payment and settlement of such vested Units in the amount determined in accordance with Section 4. Such issuance shall be evidenced by a stock certificate or appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, shall be subject to the tax withholding provisions of Section 6, and shall be in complete satisfaction of such vested Units. If the Units that vest include a fractional Unit, the Company will round the number of vested Units down to the nearest whole Unit prior to issuance of the shares as provided herein.

Section 6. Tax Matters.

(a) The Committee may require the Participant, or the alternate recipient identified in Section 5, to satisfy any potential federal, state, local or other tax withholding liability. Such liability must be satisfied at the time such Units vest and are settled in shares of Stock. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied: (A) through a cash payment by the Participant, (B) through the surrender of shares of Stock that the Participant already owns (provided, however, to the extent shares described in this clause (B) are used to satisfy more than the minimum statutory withholding obligation, as described below, then payments made with shares of Stock in accordance with this clause (B) shall be limited to shares held by the Participant for not less than six months prior to the payment date), (C) through the surrender of shares of Stock to which the Participant is otherwise entitled in respect of the Award under this Agreement; provided, however, that such shares under this clause (C) may be used to satisfy not more than the minimum statutory withholding obligation of the Company or applicable Subsidiary (based on minimum statutory withholding rates for federal, state and local tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), or (D) any combination of (A), (B) and (C); provided, however, that the Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (B)-(D) and that the Committee may require that the method of satisfying such an obligation be in compliance with Section 16 of the Exchange Act (if the Participant is subject thereto) and any other applicable laws and the respective rules and regulations thereunder. Any fraction of a share of Stock which would be required to satisfy such an obligation will be disregarded and the remaining amount due will be paid in cash by the Participant.

(b) The Award evidenced by this Agreement and the issuance of shares of Stock in settlement of vested Units is not intended to provide and does not provide for the deferral of compensation within the meaning of Section 409A of the Code. The Participant shall have no power to affect the timing of such settlement.

Section 7. Compliance with Laws. Despite the provisions of Section 5 hereof, the Company is not required to issue or deliver any certificates for shares of Stock if at any time the Company determines that the listing,

²  For purposes of this Agreement, “Sales” for any performance period means [net sales for ORS Nasco Inc. for that performance period. The calculation of Sales shall exclude the impacts of any intercompany sales].

registration or qualification of such shares upon any securities exchange or under any law, the consent or approval of any governmental body or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of the shares hereunder in compliance with all applicable laws and regulations, unless such listing, registration, qualification, consent, approval or other action has been effected or obtained, free of any conditions not acceptable to the Company.

Section 8. No Right to Employment. Nothing herein confers upon the Participant any right to continue in the employ of the Company or any Subsidiary.

Section 9. Nontransferability. Except as otherwise provided by the Committee or as provided in Section 5, and except with respect to shares of Stock issued in settlement of vested Units, the Participant's interests and rights in and under this Agreement may not be assigned, transferred, exchanged, pledged or otherwise encumbered other than as designated by the Participant by will or by the laws of descent and distribution. Issuance of shares of Stock in settlement of Units will be made only to the Participant; or, if the Committee has been provided with evidence acceptable to it that the Participant is legally incompetent, the Participant’s personal representative; or, if the Participant is deceased, to the designated beneficiary or other appropriate recipient in accordance with Section 5 hereof. The Committee may require personal receipts or endorsements of a Participant’s personal representative, designated beneficiary or alternate recipient provided for herein, and the Committee shall extend to those individuals the rights otherwise exercisable by the Participant with regard to any withholding tax election in accordance with Section 6 hereof. Any effort to otherwise assign or transfer any Units or any rights or interests therein or thereto under this Agreement will be wholly ineffective, and will be grounds for termination by the Committee of all rights and interests of the Participant and his or her beneficiary in and under this Agreement.

Section 10. Administration and Interpretation. The Committee has the authority to control and manage the operation and administration of the Plan. Any interpretations of the Plan by the Committee and any decisions made by it under the Plan are final and binding on the Participant and all other persons.

Section 11. Governing Law. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of law of Delaware or any other jurisdiction.

Section 12. Sole Agreement. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to all of the terms and conditions of the Plan (as the same may be amended in accordance with its terms), a copy of which may be obtained by the Participant from the office of the Secretary of the Company. In addition, this Agreement and the Participant’s rights hereunder shall be subject to all interpretations, determinations, guidelines, rules and regulations adopted or made by the Committee from time to time pursuant to the Plan. This Agreement is the entire agreement between the parties to it with respect to the subject matter hereof, and supersedes any and all prior oral and written discussions, commitments, undertakings, representations or agreements (including, without limitation, any terms of any employment offers, discussions or agreements between the parties).

Section 13. Binding Effect. This Agreement will be binding upon and will inure to the benefit of the Company and the Participant and, as and to the extent provided herein and under the Plan, their respective heirs, executors, administrators, legal representatives, successors and assigns.

Section 14. Amendment and Waiver. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement between the Company and the Participant without the consent of any other person. No course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity, binding effect or enforceability of this Agreement.

IN WITNESS WHEREOF, the Company has duly executed this Agreement as of the Award Date.

Very truly yours, UNITED STATIONERS INC.
By:	/s/ Frederick B. Hegi, Jr.
	Frederick B. Hegi, Jr. Chairman of the Board

Appendix A

Determination of Share Adjustment Factor

For any performance period, the Share Adjustment Factor shall be determined in accordance with Section 4(b) of the Restricted Stock Unit Award Agreement by adding the EBIT Adjustment Factor and the Sales Adjustment Factor derived from the following table:

ORS Nasco, Inc. EBIT for the Applicable Performance Period	EBIT Adjustment Factor (1)	ORS Nasco, Inc. Sales for the Applicable Performance Period	Sales Adjustment Factor (1)
Lower of 85% of Target EBIT or prior year’s actual EBIT (Threshold) (2)	0	Lower of 85% of Target Sales or prior year’s actual Sales (Threshold) (2)	0
Target EBIT	0.50	Target Sales	0.50
130% of Target EBIT (Maximum)	1.00	130% of Target Sales (Maximum)	1.00

(1) If ORS Nasco, Inc. EBIT or Sales for the applicable performance period is between Threshold and Target EBIT or Sales, or between Target and Maximum EBIT or Sales, the applicable EBIT Adjustment Factor and Sales Adjustment Factor will be determined by linear interpolation between the applicable EBIT Adjustment Factors and Sales Adjustment factors shown in the table.

(2) Threshold performance for purposes of the EBIT Adjustment Factor will be the lower of 85% of target EBIT or the prior year’s actual EBIT, and Threshold performance for purposes of the Sales Adjustment Factor will be will be the lower of 85% of target Sales or the prior year’s actual Sales.

Target ORS Nasco, Inc. EBIT and Sales for Each Performance Period

Year Ending	Target ORS Nasco, Inc. EBIT			Target ORS Nasco, Inc. Sales
December 31, 2011	$	[**	]	$	[**	]
December 31, 2012	$	[**	]	$	[**	]
December 31, 2013	$	[**	]	$	[**	]
December 31, 2014	$	[**	]	$	[**	]

EX-10.2

Exhibit 10.2

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN

OMITTED AND FILED SEPARATELY WITH THE

SECURITIES AND EXCHANGE COMMISSION

PURSUANT TO A REQUEST FOR CONFIDENTIAL

TREATMENT FILED WITH THE COMMISSION.

THE OMITTED PORTIONS ARE INDICATED BY [**].

UNITED STATIONERS INC.

2004 LONG-TERM INCENTIVE PLAN

Performance Based Restricted Stock Unit Award Agreement

This Restricted Stock Unit Award Agreement (this “Agreement”), dated March 1, 2011, (the “Award Date”), is by and between <First Name, Last Name> (the “Participant”), and United Stationers Inc., a Delaware corporation (the “Company”). Any term capitalized but not defined in this Agreement will have the meaning set forth in the Company’s 2004 Long-Term Incentive Plan (the “Plan”).

In the exercise of its discretion to grant awards under the Plan, the Committee has determined that the Participant should receive an award of restricted stock units (“Units”) under the Plan, on the following terms and conditions:

1. Grant. The Company hereby grants to the Participant a Restricted Stock Unit Award (the “Award”) consisting of *[target number] Units (the “Target Number of Units”), subject to possible increase to as many as *[number 50% greater than target number] Units (the “Maximum Number of Units”) depending on the degree to which the Company has satisfied the performance-based objectives specified in Appendix A to this Agreement. Each Unit that vests represents the right to receive one share of the Company’s common stock as provided in Section 5 of this Agreement. The Award will be subject to the terms and conditions of the Plan and this Agreement.

2. No Rights as a Stockholder. The Units granted pursuant to this Award do not entitle the Participant to any rights of a stockholder of the Company’s Stock. The Participant’s rights with respect to the Units shall remain forfeitable at all times until satisfaction of the vesting conditions set forth in Section 3 of this Agreement.

3. Vesting; Effect of Date of Termination. For purposes of this Agreement, “Vesting Date” means any date, including the Scheduled Vesting Dates (as defined below), on which Units subject to this Award vest as provided in this Section 3.

(a) Subject to paragraphs 3(b) through 3(f), a portion of the Participant’s Units will be eligible to vest on each of March 1, 2012, March 1, 2013 and March 1, 2014 (the “Scheduled Vesting Dates”). Units will vest on a Scheduled Vesting Date (i) if the Participant’s Date of Termination has not occurred before that Scheduled Vesting Date, and (ii) only to the extent the Units have been earned during the period from January 1, 2010 to that Scheduled Vesting Date as provided in Section 4. The period from January 1, 2010 through December 31, 2012 is referred to as the “Performance Period,” and the period from January 1, 2010 through an applicable Scheduled Vesting Date is referred to as a “Vesting Period.” If the Participant’s Date of Termination occurs for any reason during the Performance Period, the Participant’s Units that have not yet vested will be forfeited on and after the Participant’s Date of Termination, except as provided in paragraphs 3(b) through 3(f).

(b) If the Participant’s Date of Termination occurs during the Performance Period by reason of the Participant’s death or Permanent and Total Disability (as defined in paragraph 3(g)), a portion of the then unvested Units subject to this Award will become vested as of the Participant’s Date of Termination. That portion shall be equal to a number of Units determined by multiplying the lesser of (i) one-third of the Target Number of Units or (ii) the Target Number of Units not yet vested immediately prior to the Participant’s Date of Termination, by a fraction, the numerator of which shall be the number of whole months elapsed from the beginning of the calendar year in which the termination of employment occurred to the Date of Termination, and the denominator of which shall be twelve. Any remaining Units subject to this Award that do not vest as provided in this paragraph shall be forfeited.

(c) If the Participant’s Date of Termination occurs during the Performance Period by reason of the Participant’s Retirement (as defined in paragraph 3(j)), a portion of the then unvested Units will become vested as of the Scheduled Vesting Date at the end of the calendar year in which the Participant’s Date of Termination occurs. That portion shall be equal to the product of (i) the number of Units that otherwise would have vested on that Scheduled Vesting Date had the Participant’s employment not been terminated, and (ii) a fraction, the numerator of which shall be the number of whole months elapsed from the beginning of the calendar year in which the termination of employment occurred to the Date of Termination, and the denominator of which shall be twelve. Any remaining Units subject to this Award that do not vest as provided in this paragraph shall be forfeited.

(d) If a Change of Control occurs during the Performance Period and prior to the Participant’s Date of Termination, then a portion of the then unvested Units will become fully vested as of the date of such Change of Control. That portion shall be equal to the greater of (i) 50% of the Target Number of Units not yet vested immediately prior to the Change of Control, or (ii) an amount determined by multiplying 50% of the Target Number of Units not yet vested immediately prior to the Change of Control by the Performance Factor (determined as provided in Appendix A) for the longest completed Vesting Period (if any) prior to the date of the Change in Control. The remaining Units subject to this Award that do not vest in accordance with the previous sentence shall remain subject to the vesting provisions of this Agreement, with all Units that have vested as a result of the Change of Control deemed Earned Units for purposes of applying the formula specified in Appendix A.

Page 1 of 6 Pages

UNITED STATIONERS INC.

2004 LONG-TERM INCENTIVE PLAN

Performance Based Restricted Stock Unit Award Agreement

(e) If, during the Performance Period but within two years after a Change of Control described in paragraph 3(d), the Participant’s Date of Termination occurs by reason of the involuntary termination of the Participant’s employment by the Company or its Subsidiaries without Cause or by the Participant for Good Reason (as defined in paragraph 3(h)), all of the Target Number of Units that did not vest as a result of the Change of Control as provided in paragraph 3(d) will vest as of the Participant’s Date of Termination.

(f) If the Participant’s Date of Termination occurs during the Performance Period and during an Anticipated Change of Control by reason of the involuntary termination of the Participant’s employment by the Company or its Subsidiaries without Cause or by the Participant for Good Reason, and a Change of Control then occurs within two years following the Participant’s Date of Termination, a number of shares of Stock equal to the portion of the Target Number of Units forfeited on the Participant’s Date of Termination (subject to paragraph 5.2(f) of the Plan) shall be issued to the Participant on a fully vested basis promptly, but in no event later than two and one-half months after the end of the calendar year in which the Change of Control occurred.

(g) For purposes of this Agreement, the term “Permanent and Total Disability” means the Participant’s inability, due to illness, accident, injury, physical or mental incapacity or other disability, effectively to carry out his duties and obligations as an employee of the Company or its Subsidiaries or to participate effectively and actively as an employee of the Company or its Subsidiaries for 90 consecutive days or shorter periods aggregating at least 180 days (whether or not consecutive) during any twelve-month period.

(h) For purposes of this Agreement, “Good Reason” shall mean: (i) any material breach by the Company of this Agreement or of any employment agreement with the Participant without Participant’s written consent, (ii) any material reduction, without the Participant’s written consent, in the Participant’s duties, responsibilities or authority; provided, however, that for purposes of this clause (ii), neither (A) a change in the Participant’s supervisor or the number or identity of the Participant’s direct reports, nor (B) a change in the Participant’s title, duties, responsibilities or authority as a result of a realignment or restructuring of the Company’s executive organizational chart nor (C) a change in the Participant’s title, duties, responsibilities or authority as a result of a realignment or restructuring of the Company shall be deemed by itself to materially reduce Participant’s duties, responsibilities or authority, as long as, in the case of either (B) or (C), Participant continues to report to either the supervisor to whom he or she reported immediately prior to the Change of Control or a supervisor of equivalent responsibility and authority; or (iii) without Participant’s written consent: (A) a material reduction in the Participant’s base salary, (B) the relocation of the Participant’s principal place of employment more than fifty (50) miles from its location on the date of a Change in Control, or (C) the relocation of the Company’s corporate headquarters office outside of the metropolitan area in which it is located on the date of a Change in Control. For purposes of this Agreement, a Change of Control, alone, does not constitute Good Reason. Furthermore, notwithstanding the above, the occurrence of any of the events described above will not constitute Good Reason unless the Participant gives the Company written notice within thirty (30) days after the initial occurrence of any of such events that the Participant believes that such event constitutes Good Reason, and the Company thereafter fails to cure any such event within sixty (60) days after receipt of such notice.

(i) For purposes of this Agreement, a Date of Termination shall be deemed to have occurred only if on such date the Participant has also experienced a “separation from service” as defined in the regulations promulgated under Code Section 409A.

(j) For purposes of this Agreement, “Retirement” means the Participant’s separation from service (as defined in the regulations promulgated under Code Section 409A) occurring after the earlier of (i) the Participant reaching age 65 or (ii) the Participant reaching age 55 and having completed at least 10 years of Service with the Company and its Subsidiaries.

(k) For purposes of this Agreement, a Change of Control shall be deemed to have occurred only if such event would also be deemed to constitute a change in ownership or effective control, or a change in the ownership of a substantial portion of the assets, of the Company under Code Section 409A.

Except as otherwise specifically provided, the Company will not have any further obligations to the Participant under this Agreement if the Participant’s Units are forfeited as provided herein.

4. Earned Units. The number of Units subject to this Award that the Participant will be deemed to have earned (“Earned Units”) and that are eligible for vesting as of each Scheduled Vesting Date during the Performance Period will be determined by the extent to which the Company has satisfied the performance-based objectives for the Vesting Period ending on the applicable Scheduled Vesting Date as set forth in Appendix A to this Agreement. The portion of the Units subject to this Award that will be deemed Earned Units as of each Scheduled Vesting Date during the Performance Period will be determined according to the formula specified in Appendix A, but in no event will the cumulative number of Units that are deemed Earned Units as of

Page 2 of 6 Pages

any Scheduled Vesting Date during the Performance Period exceed the Maximum Number of Units. Any Units that are not earned as of either of the first two Scheduled Vesting Dates during the Performance Period solely because of the failure to fully satisfy an applicable performance-based objective shall remain eligible to be earned as of a subsequent Scheduled Vesting Date during the Performance Period.

5. Settlement of Units. After any Units vest pursuant to Section 3, the Company will promptly, but in no event later than two and one-half months after the end of the calendar year in which the Vesting Date occurred, cause to be issued to the Participant, or to the Participant’s beneficiary or legal representative in the event of Participant’s death, one share of Stock in payment and settlement of each vested Unit. Such issuance shall be evidenced by a stock certificate or appropriate entry on the books of the Company or a duly authorized transfer agent of the Company, shall be subject to the tax withholding provisions of Section 6, and shall be in complete satisfaction of such vested Units. If the Units that vest include a fractional Unit, the Company will round the number of vested Units down to the nearest whole Unit prior to issuance of the shares as provided herein. Notwithstanding the foregoing, if any amount shall be payable with respect to this Award as a result of the Participant’s “separation from service” at such time as the Participant is a “specified employee” (as those terms are defined in regulations promulgated under Code Section 409A) and such amount is subject to the provisions of Code Section 409A, then no payment shall be made, except as permitted under Code Section 409A, prior to the first day of the seventh calendar month beginning after the Participant’s separation from service (or the date of Participant’s earlier death), or as soon as administratively practicable thereafter.

6. Tax Matters. The Committee may require the Participant, or the alternate recipient identified in Section 5, to satisfy any potential federal, state, local or other tax withholding liability. Such liability must be satisfied at the time such Units are settled in shares of Stock. At the election of the Participant, and subject to such rules and limitations as may be established by the Committee from time to time, such withholding obligations may be satisfied: (i) through a cash payment by the Participant, (ii) through the surrender of shares of Stock that the Participant already owns (provided, however, to the extent shares described in this clause (ii) are used to satisfy more than the minimum statutory withholding obligation, as described below, then payments made with shares of Stock in accordance with this clause (ii) shall be limited to shares held by the Participant for not less than six months prior to the payment date), (iii) through the surrender of shares of Stock to which the Participant is otherwise entitled in respect of the Award under this Agreement; provided, however, that such shares under this clause (iii) may be used to satisfy not more than the minimum statutory withholding obligation of the Company or applicable Subsidiary (based on minimum statutory withholding rates for federal, state and local tax purposes, including payroll taxes, that are applicable to such supplemental taxable income), or (iv) any combination of clauses (i), (ii) and (iii); provided, however, that the Committee shall have sole discretion to disapprove of an election pursuant to any of clauses (ii)-(iv) and that the Committee may require that the method of satisfying such an obligation be in compliance with Section 16 of the Exchange Act (if the Participant is subject thereto) and any other applicable laws and the respective rules and regulations thereunder. Any fraction of a share of Stock which would be required to satisfy such an obligation will be disregarded and the remaining amount due will be paid in cash by the Participant.

7. Compliance with Laws. Despite the provisions of Section 5 hereof, the Company is not required to issue or deliver any certificates for shares of Stock if at any time the Company determines that the listing, registration or qualification of such shares upon any securities exchange or under any law, the consent or approval of any governmental body or the taking of any other action is necessary or desirable as a condition of, or in connection with, the issuance or delivery of the shares hereunder in compliance with all applicable laws and regulations, unless such listing, registration, qualification, consent, approval or other action has been effected or obtained, free of any conditions not acceptable to the Company.

8. No Right to Employment. Nothing herein confers upon the Participant any right to continue in the employ of the Company or any Subsidiary.

9. Nontransferability. Except as otherwise provided by the Committee or as provided in Section 5, and except with respect to shares of Stock issued in settlement of vested Units, the Participant’s interests and rights in and under this Agreement may not be assigned, transferred, exchanged, pledged or otherwise encumbered other than as designated by the Participant by will or by the laws of descent and distribution. Issuance of shares of Stock in settlement of Units will be made only to the Participant; or, if the Committee has been provided with evidence acceptable to it that the Participant is legally incompetent, the Participant’s personal representative; or, if the Participant is deceased, to the designated beneficiary or other appropriate recipient in accordance with Section 5 hereof. The Committee may require personal receipts or endorsements of a Participant’s personal representative, designated beneficiary or alternate recipient provided for herein, and the Committee shall extend to those individuals the rights otherwise exercisable by the Participant with regard to any withholding tax election in accordance with Section 6 hereof. Any effort to otherwise assign or transfer any Units or any rights or interests therein or thereto under this Agreement will be wholly ineffective, and will be grounds for termination by the Committee of all rights and interests of the Participant and his or her beneficiary in and under this Agreement.

10. Administration and Interpretation. The Committee has the authority to control and manage the operation and administration of the Plan. Any interpretations of the Plan by the Committee and any decisions made by it under the Plan are final and binding on the Participant and all other persons.

11. Governing Law. This Agreement and the rights and obligations hereunder shall be governed by and construed in accordance with the laws of the state of Delaware, without regard to principles of conflicts of law of Delaware or any other jurisdiction.

12. Sole Agreement. Notwithstanding anything in this Agreement to the contrary, the terms of this Agreement shall be subject to all of the terms and conditions of the Plan (as the same may be amended in accordance with its terms), a copy of which may be obtained by the Participant from the office of the Secretary of the Company. In addition, this Agreement and the Participant’s rights hereunder shall be subject to all interpretations, determinations, guidelines, rules and regulations adopted or made by the Committee from time to time pursuant to the Plan. This Agreement is the entire agreement between the parties to it with respect to the subject matter hereof, and supersedes any and all prior oral and written discussions, commitments, undertakings, representations or agreements (including, without limitation, any terms of any employment offers, discussions or agreements between the parties).

13. Binding Effect. This Agreement will be binding upon and will inure to the benefit of the Company and the Participant and, as and to the extent provided herein and under the Plan, their respective heirs, executors, administrators, legal representatives, successors and assigns.

14. Amendment and Waiver. This Agreement may be amended in accordance with the provisions of the Plan, and may otherwise be amended by written agreement between the Company and the Participant without the consent of any other person. No course of conduct or failure or delay in enforcing the provisions of this Agreement will affect the validity, binding effect or enforceability of this Agreement.

IN WITNESS WHEREOF, the Company has duly executed this Agreement as of the Award Date.

Very truly yours,
UNITED STATIONERS INC.
By:	/s/ Frederick B. Hegi, Jr.
Frederick B. Hegi, Jr.
Chairman of the Board

Appendix A

Earned Units and Performance-Based Objectives

Performance Period: January 1, 2011 through December 31, 2013

The determination of the number of Units that will be earned as of each Scheduled Vesting Date during the Performance Period specified above as provided in Section 4 of the Agreement will be determined as follows:

1. The Company’s Economic Profit (as defined below) for the period beginning on the first day of the Performance Period and ending on the applicable Scheduled Vesting Date (the “Vesting Period”) will be calculated.

2. Based on that actual Economic Profit, the Performance Factor for the relevant Vesting Period will be determined from the following table by determining where the Company’s actual Economic Profit falls relative to the goals specified in the applicable column of the table below, and then selecting the corresponding Performance Factor. If the Company’s actual Economic Profit for any Vesting Period is between two amounts shown in the applicable column of the table, the corresponding Performance Factor will be determined by linear interpolation between the two relevant Performance Factors shown in the table. If actual Economic Profit for the Vesting Period is less than or equal to the Minimum amount specified, the Performance Factor is zero, and if it greater than the Maximum amount specified, the Performance Factor will be equal to the percentage specified for the Maximum amount.

	Company’s Cumulative Economic Profit Goals and Corresponding  Performance Factors During the Vesting Periods Ending on the Scheduled Vesting Dates Indicated
	December 31, 2011						December 31, 2012						December 31, 2013
	EP Goal			Perf. Factor			EP Goal			Perf. Factor			EP Goal			Perf. Factor
Minimum	$	[**	]		0	%	$	[**	]		0	%	$	[**	]		0	%
Target	$	[**	]		100	%	$	[**	]		100	%	$	[**	]		100	%
Maximum	$	[**	]		150	%	$	[**	]		150	%	$	[**	]		150	%

3. The number of Earned Units as of any Scheduled Vesting Date will be calculated using the following formula:

(Performance Factor x Cumulative Unit Percentage x Target Number of Units) — Number of Previously Earned Units

where:

• “Performance Factor” is the percentage determined as provided in item 2 above;

• “Cumulative Unit Percentage” is the percentage in the following table that corresponds to the Scheduled Vesting Date marking the end of the relevant Vesting Period:

Scheduled Vesting Dates	Cumulative Unit Percentage
December 31, 2010		33 1/3	%
December 31, 2011		66 2/3	%
December 31, 2012		100	%

• “Target Number of Units” is the number associated with that term in Section 1 of the Agreement; and

• “Number of Previously Earned Units” is the number of Units subject to the Award that had already been determined to be Earned Units during the Performance Period prior to the applicable Scheduled Vesting Date.

4. For purposes of this Appendix A, the Company’s “Economic Profit” for any Vesting Period shall mean profit after applying a capital charge based on the long-term weighted average cost of capital. Profit is defined as tax-effected earnings before interest and taxes as reported in the Company’s audited annual consolidated financial statements. Total capital used to calculate the capital charge includes all assets and liabilities except for cash or cash equivalents, debt (including Asset Backed Securitization) and stockholders’ equity. Profit and total capital will be calculated without regard to any change in accounting standards promulgated by the Financial Accounting Standards Board or similar accounting standards body that becomes effective after commencement of the Performance Period and is applicable to the Company, and will be adjusted to eliminate: (i) the carrying value and

amortization of intangible assets associated with any acquisition of all or substantially all of the stock or assets of a business consummated during the Performance Period, and (ii) the LIFO expense and LIFO reserve and (iii) the carrying value of the assets and liabilities associated with the Company’s pension benefits, post-retirement benefits and interest rate swap agreements to the extent reflected in Other Comprehensive Income as it appears on the Company’s financial statements and (iv) amortization of intangible assets associated with acquisitions completed after January 1, 2005 but before January 1, 2010 and to restate those intangibles back to their original value at the time of acquisition, provided that the adjustments set forth in the foregoing clauses (i) and (iii) shall be net of any tax effects.

5. As an example, to compute the number of Earned Units as of the first, second and third Scheduled Vesting Dates, assume the following facts: (i) the Target Number of Units was 15,000; (ii) the Company’s actual Economic Profit for the Vesting Period ending on the first Scheduled Vesting Date was half-way between the Minimum Amount and the Target Amount, resulting in a Performance Factor of 50%; (iii) the Company’s actual Economic Profit for the Vesting Period ending on the second Scheduled Vesting Date was half-way between the Target Amount and the Maximum Amount, resulting in a Performance Factor of 125%; and (iv) the Company’s actual Economic Profit for the Vesting Period ending on the third Scheduled Vesting Date was 60% of the way between the Target Amount and the Maximum Amount, resulting in a Performance Factor of 130%. Under these facts, the number of additional Earned Units that would vest as of each Scheduled Vesting Date would be:

First Determination Date:	(50% x 33 1/3% x 15,000) – 0 = 2,500 Units
Second Determination Date:	(125% x 66 2/3% x 15,000) – 2,500 = 10,000 Units
Third Determination Date:	(130% x 100% x 15,000) – 12,500 = 7,000 Units

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Richard W. Gochnauer, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Stationers Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2011	/s/ RICHARD W. GOCHNAUER
	Richard W. Gochnauer
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

AS ADOPTED PURSUANT TO

SECTION 302(a) OF THE SARBANES-OXLEY ACT OF 2002

I, Victoria J. Reich, certify that:

1. I have reviewed this quarterly report on Form 10-Q of United Stationers Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrants internal control over financial reporting; and

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 3, 2011	/s/ VICTORIA J. REICH
	Victoria J. Reich
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of United Stationers Inc. (the “Company”) on Form 10-Q for the quarterly period ended March 31, 2011, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Richard W. Gochnauer, Chief Executive Officer of the Company, and Victoria J. Reich, Senior Vice President and Chief Financial Officer of the Company, each hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

/s/ RICHARD W. GOCHNAUER

Richard W. Gochnauer

Chief Executive Officer

May 3, 2011

/s/ VICTORIA J. REICH

Victoria J. Reich

Senior Vice President and Chief Financial Officer

May 3, 2011