8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report: July 22, 2013

UNITED STATIONERS INC.

(Exact name of registrant as specified in its charter)

Delaware	0-10653	36-3141189
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

One Parkway North Blvd. Suite 100 Deerfield, Illinois	60015-2559
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code (847) 627-7000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

United Stationers Inc.

Item 2.02 Results of Operations and Financial Condition.

The following information, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” hereunder for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On July 22, 2013, United Stationers Inc. (the “Registrant”) issued a press release announcing its financial results for the three- and six-month periods ended June 30, 2013. A copy of the Registrant’s press release is attached as Exhibit 99.1 hereto and is incorporated herein by reference. In addition, a slide presentation summarizing earnings and financial results is attached as Exhibit 99.2 hereto and is incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.	Description
99.1*	Press Release, dated July 22, 2013, announcing financial results for the three- and six-month periods ended June 30, 2013.
99.2*	Earnings Presentation, a slide presentation summarizing earnings and financial results.

* — Included herewith.

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)
Dated: July 22, 2013	/s/ Fareed A. Khan
	Fareed A. Khan
	Senior Vice President and Chief Financial Officer

-2-

EXHIBIT INDEX

(d) Exhibits

Exhibit No.	Description
99.1*	Press Release, dated July 22, 2013, announcing financial results for the three- and six-month periods ended June 30, 2013.
99.2*	Earnings Presentation, a slide presentation summarizing earnings and financial results.

* — Included herewith.

-3-

EX-99.1

Exhibit 99.1

n e w s   r e l e a s e

Executive Offices	For Further Information Contact:
One Parkway North Blvd.
Suite 100	Cody Phipps
Deerfield, IL 60015-2559	President and Chief Executive Officer
	or
	Fareed Khan
	Senior Vice President and Chief Financial Officer
	United Stationers Inc.
	(847) 627-7000

UNITED STATIONERS REPORTS RECORD

SECOND QUARTER 2013 EARNINGS PER SHARE

DEERFIELD, Ill., July 22, 2013 – United Stationers Inc. (NASDAQ: USTR) reported strong second quarter 2013 earnings.

Second Quarter Financial Summary

• Diluted earnings per share grew by 30% to $0.86 versus $0.66 in the prior-year quarter.

• Net sales were $1.3 billion, flat with the prior year.

• Second quarter gross margin was $201.9 million or 15.8% of sales, compared with $188.3 million or 14.8% of sales in the prior-year quarter.

• Operating expenses were $143.0 million or 11.2% of sales, compared with $137.9 million or 10.8% of sales in the prior-year quarter.

• Operating income was up 17% to $58.9 million or 4.6% of sales, versus $50.3 million or 3.9% of sales in the prior-year quarter.

• Net income increased by 28% to $34.7 million compared with $27.0 million in the prior-year quarter.

• Net cash provided by operating activities for the three months ended June 30, 2013 totaled $58.7 million versus $20.4 million in the prior-year period. Share repurchases totaled $32.7 million for approximately 1.0 million shares during the three months ended June 30, 2013.

“We are pleased to report another quarter of strong results,” said Cody Phipps, president and chief executive officer. “Our strategic initiatives are working, we are in a strong financial position, and we continue to make excellent progress in developing talent and strengthening our purpose-driven culture. The OKI Supply acquisition, our recent restructuring actions, investments in growth businesses and ongoing cost actions were important factors in enabling us to deliver solid net income and EPS growth in a soft demand environment while we continued to focus on the fundamentals that ensure long-term success.”

Second Quarter Performance

Sales of $1.3 billion for the second quarter were flat to the prior year quarter. Strong growth was seen in the industrial supplies category with sales up 31.5%, which benefited from the acquisition of OKI Supply in the fourth quarter of 2012. Janitorial/breakroom sales for the second quarter grew 2.6%. Sales for office products, technology, and furniture categories were down 4.0%, 6.3% and 5.0%, respectively reflecting a soft demand environment.

(1) This is non-GAAP information. A reconciliation of these items to the most comparable GAAP measures is presented at the end of this news release. Except as noted, all references within this news release to financial results are presented in accordance with U.S. Generally Accepted Accounting Principles.

-more-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 2 of 8

Gross margin for the quarter was $201.9 million or 15.8% of sales, compared with $188.3 million or 14.8% of sales in the year-ago quarter. Gross margin improved due to a more favorable product mix, margin improvement initiatives, and higher purchase-related supplier allowances. War on Waste (WOW) cost savings also contributed to the improvement in gross margin.

Second quarter 2013 operating expenses were $143.0 million or 11.2% of sales compared with $137.9 million or 10.8% of sales, in the second quarter of 2012. These results reflected investments in growth businesses, the OKI acquisition, and variable management compensation partially offset by savings from our restructuring programs and ongoing cost savings initiatives.

Operating income for the quarter ended June 30, 2013 grew by 17% to $58.9 million or 4.6% of sales, versus $50.3 million or 3.9% of sales in the second quarter of 2012.

Diluted earnings per share for the latest quarter were up 30% to $0.86, compared with $0.66 in the prior-year period. Earnings per share in the 2013 quarter were favorably affected by increased operating income and lower interest expense.

Six-Month Performance

Sales in the first half of 2013 were $2.5 billion, flat compared with the prior-year period. This was led by a 33.5% increase in industrial supplies and a 2.8% increase in janitorial/breakroom after adjusting for workdays. Office products were down by 5.2%, furniture sales were down 4.1% and technology sales declined 6.1%.

Gross margin for the first half of 2013 was $390.5 million or 15.5% of sales, compared to $369.2 million or 14.5% of sales in the same prior-year period. The primary drivers of this increase were a shift to a higher margin mix, ongoing margin improvement initiatives, and higher purchase-related supplier allowances.

Operating expenses in 2013 were $306.3 million or 12.1% of sales, compared with $287.3 million or 11.3% of sales. Included in these results are a $14.4 million first quarter 2013 charge and a $6.2 million first quarter 2012 charge, both associated with workforce reduction and facility closure programs. Excluding these items, operating expenses in 2013 were $291.9⁽¹⁾ or 11.6%⁽¹⁾ of sales, compared with the prior year of $281.0 million⁽¹⁾ or 11.0%⁽¹⁾ of sales.

Operating income for the first half of 2013 was $84.2 million or 3.3% of sales, compared with $81.9 million or 3.2% of sales in the prior year period. Excluding the items mentioned above, operating income through the first six months of 2013 was $98.6⁽¹⁾ million or 3.9%⁽¹⁾ of sales, compared with $88.2 million⁽¹⁾ or 3.5%⁽¹⁾ of sales in the same period last year.

Diluted earnings per share for the first half of 2013 were $1.20 versus $1.01 in the first half of 2012. Excluding the items mentioned above, diluted earnings per share for the first half of 2013 were up 28% to $1.42⁽¹⁾, compared with $1.11⁽¹⁾ in the prior-year period.

Cash Flow, Debt Trends and Share Repurchases

Net cash provided by operating activities for the six months ended June 30, 2013 was $45.3 million, compared with $48.3 million in the same period last year. Cash flow used in investing activities totaled $13.5 million in 2013, compared with $10.2 million in the same period last year. Capital spending for 2013 is expected to be approximately $35 million.

The company currently has approximately $1.0 billion of total committed debt capacity and $518.5 million outstanding at June 30, 2013. Debt-to-total capitalization declined to 40.5% at June 30, 2013 from 43.3% at June 30, 2012. During the latest six months, the company paid $39.8 million to acquire approximately 1.2 million shares and paid cash dividends of $11.2 million to common shareholders.

-more-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 3 of 8

Outlook

“We continue to strengthen our core businesses while diversifying our portfolio into categories that are highly relevant to our customers while leveraging our capabilities and supply chain infrastructure,” stated Phipps. “A soft demand environment will necessitate a strong focus on the fundamentals and close management of our cost structure in the near term as we invest in the future. We expect the benefits from the OKI acquisition and our restructuring actions to continue into the second half of the year. We will keep our businesses healthy and profitable while we enhance shareholder value through earnings growth, accretive acquisitions, dividends and share repurchases.”

Conference Call

United Stationers will hold a conference call followed by a question and answer session on Tuesday, July 23, 2013, at 10:00 a.m. CDT, to discuss second quarter 2013 results. To participate, callers within the U.S. and Canada should dial (877) 317-6789, and international callers should dial (412) 317-6789 approximately 10 minutes before the presentation. The passcode is “10029341.” To listen to the webcast, participants should visit the Investors section of the company’s website (link: http://investors.unitedstationers.com), and click on the “Q2-13 Earnings Release” button on the right side of the page, several minutes before the event is broadcast. Interested parties can access an archived version of the call, this news release, a financial slide presentation and other information related to the call, also located on the Investors section of United Stationers’ website, about two hours after the call ends. You may also download the native iOS United Stationers iPhone app by visiting Apple’s App Store and searching for the United Stationers app, or you may view the app in your internet browser by clicking on this URL: http://investors.unitedstationers.com/m/. The browser app can be viewed on all supported smartphone devices including iPhone^®, Android^TM and BlackBerry^® devices.

Forward-Looking Statements

This news release contains forward-looking statements, including 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 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, but are not limited to the following: prevailing economic conditions and changes affecting the business products industry and the general economy; United’s ability to effectively manage its operations and to implement growth, cost-reduction and margin-enhancement initiatives; United’s reliance on key customers, and the risks inherent in continuing or increased customer concentration; United’s reliance on key suppliers and the supplier allowances and promotional incentives they offer; United’s reliance on independent resellers for a significant percentage of its net sales and, therefore, the importance of the continued independence, viability and success of these resellers; continuing or increasing competitive activity and pricing pressures within existing or expanded product categories, including competition from product manufacturers who sell directly to United’s customers; the impact of a loss of, or substantial decrease in, the availability of products or service from key vendors at competitive prices; United’s ability to maintain its existing information technology systems and the systems and eCommerce services that it provides to customers, and to successfully procure, develop and implement new systems and services without business disruption or other unanticipated difficulties or costs; the creditworthiness of United’s customers; United’s ability to manage inventory in order to maximize sales and supplier allowances while minimizing excess and obsolete inventory; United’s success in effectively identifying, consummating and integrating acquisitions; the risks and expense associated with United’s obligations to maintain the security of private information provided by United’s customers; the costs and risks related to compliance with laws, regulations and industry standards affecting United’s business; the availability of financing sources to meet United’s business needs; United’s reliance on key management personnel, both in day-to-day operations and in execution of new business initiatives; and the effects of hurricanes, acts of terrorism and other natural or man-made disruptions.

-more-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 4 of 8

Shareholders, potential investors and other readers are urged to consider these risks and uncertainties in evaluating forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. For additional information about risks and uncertainties that could materially affect United’s results, please see the company’s Securities and Exchange Commission filings. The forward-looking information in this news release is made as of this date only, and the company does not undertake to update any forward-looking statement. Investors are advised to consult any further disclosure by United regarding the matters discussed in this release in its filings with the Securities and Exchange Commission and in other written statements it makes from time to time. It is not possible to anticipate or foresee all risks and uncertainties, and investors should not consider any list of risks and uncertainties to be exhaustive or complete.

Company Overview

United Stationers Inc. is a leading wholesale distributor of business products, with 2012 net sales of $5.1 billion. The company stocks a broad and deep line of approximately 130,000 items on a national basis, including technology products, traditional office products, janitorial and breakroom supplies, office furniture, and industrial supplies. A network currently comprised of 64 distribution centers allows it to deliver these products to over 25,000 reseller customers. This network, combined with United’s depth and breadth of inventory, enables the company to ship most products overnight to more than 90% of the U.S. and offer next-day delivery to major cities in Mexico and Canada. For more information, visit unitedstationers.com.

United Stationers’ common stock trades on the NASDAQ Global Select Market under the symbol USTR.

-tables follow-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 5 of 8

United Stationers Inc. and Subsidiaries

Condensed Consolidated Statements of Income

(unaudited)

(in thousands, except per share data)

	For the Three Months Ended				For the Six Months Ended
	June 30,				June 30,
	2013		2012		2013		2012
Net sales	$	1,274,494	$	1,275,710	$	2,524,979	$	2,547,357
Cost of goods sold		1,072,558		1,087,451		2,134,518		2,178,169
Gross profit		201,936		188,259		390,461		369,188
Operating expenses:
Warehousing, marketing and administrative expenses		143,009		137,935		306,293		287,272
Operating income		58,927		50,324		84,168		81,916
Interest expense, net		2,856		7,070		5,969		14,236
Income before income taxes		56,071		43,254		78,199		67,680
Income tax expense		21,401		16,225		29,655		25,539
Net income	$	34,670	$	27,029	$	48,544	$	42,141
Net income per common share – diluted	$	0.86	$	0.66	$	1.20	$	1.01
Weighted average number of common shares – diluted		40,328		40,887		40,475		41,626

-tables continue-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 6 of 8

United Stationers Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(dollars in thousands, except share data)

	(unaudited)						(audited)
	As of June 30,						As of
	2013			2012			Dec. 31, 2012
ASSETS
Current assets:
Cash and cash equivalents	$	21,117		$	14,559		$	30,919
Accounts receivable, net		662,195			655,018			658,760
Inventories		732,202			692,939			767,206
Other current assets		26,014			30,857			30,118
Total current assets		1,441,528			1,393,373			1,487,003
Property, plant and equipment, net		139,098			124,583			143,523
Goodwill		358,427			328,061			357,226
Intangible assets, net		64,713			53,756			67,192
Other long-term assets		26,598			21,958			20,260
Total assets	$	2,030,364		$	1,921,731		$	2,075,204
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	475,207		$	446,644		$	495,278
Accrued liabilities		176,394			171,920			205,228
Short-term debt		1,200			50,000			—
Total current liabilities		652,801			668,564			700,506
Deferred income taxes		16,693			14,203			18,054
Long-term debt		517,285			477,140			524,376
Other long-term liabilities		83,059			72,613			94,176
Total liabilities		1,269,838			1,232,520			1,337,112
Stockholders’ equity:
Common stock, $0.10 par value; authorized – 100,000,000 shares, issued – 74,435,628 shares in 2013 and 2012		7,444			7,444			7,444
Additional paid-in capital		408,419			405,461			404,196
Treasury stock, at cost – 34,605,362 and 33,890,478 shares at June 30, 2013 and 2012, respectively and 34,116,220 shares at December 31, 2012		(986,949	)		(957,029	)		(963,220	)
Retained earnings		1,380,727			1,284,538			1,343,437
Accumulated other comprehensive loss		(49,115	)		(51,203	)		(53,765	)
Total stockholders’ equity		760,526			689,211			738,092
Total liabilities and stockholders’ equity	$	2,030,364		$	1,921,731		$	2,075,204

-tables continue-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 7 of 8

United Stationers Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	For the Six Months Ended June 30,
	2013			2012
Cash Flows From Operating Activities:
Net income	$	48,544		$	42,141
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		19,381			17,338
Share-based compensation		5,538			3,165
(Gain) loss on the disposition of plant, property and equipment		(219	)		49
Amortization of capitalized financing costs		446			498
Excess tax benefits related to share-based compensation		(1,545	)		(159	)
Deferred income taxes		(7,195	)		(3,474	)
Changes in operating assets and liabilities, excluding the effects of acquisitions:
(Increase) decrease in accounts receivable, net		(4,036	)		4,425
Decrease in inventory		31,604			48,924
Decrease in other assets		997			15,455
Decrease in accounts payable		(36,236	)		(32,178	)
Increase (decrease) in checks in-transit		16,094			(20,324	)
Decrease in accrued liabilities		(20,757	)		(14,283	)
Decrease in other liabilities		(7,366	)		(13,244	)
Net cash provided by operating activities		45,250			48,333
Cash Flows From Investing Activities:
Capital expenditures		(17,044	)		(10,342	)
Proceeds from the disposition of property, plant and equipment		3,522			103
Net cash used in investing activities		(13,522	)		(10,239	)
Cash Flows From Financing Activities:
Net (repayments) borrowings under debt arrangements		(5,891	)		30,384
Net proceeds (disbursements) from share-based compensation arrangements		14,366			(583	)
Acquisition of treasury stock, at cost		(39,810	)		(54,311	)
Payment of cash dividends		(11,220	)		(10,848	)
Excess tax benefits related to share-based compensation		1,545			159
Payment of debt issuance costs		(410	)		(121	)
Net cash used in financing activities		(41,420	)		(35,320	)
Effect of exchange rate changes on cash and cash equivalents		(110	)		2
Net change in cash and cash equivalents		(9,802	)		2,776
Cash and cash equivalents, beginning of period		30,919			11,783
Cash and cash equivalents, end of period	$	21,117		$	14,559

-tables continue-

United Stationers Reports Record Second Quarter 2013 Earnings Per Share

Page 8 of 8

United Stationers Inc. and Subsidiaries

Reconciliation of Non-GAAP Financial Measures

Adjusted Operating Income, Net Income, and Diluted Earnings Per Share

(unaudited)

(in thousands, except per share data)

	For the Six Months Ended June 30,
	2013						2012
	Amount			% to Net Sales			Amount			% to Net Sales
Net sales	$	2,524,979			100.00	%	$	2,547,357			100.00	%
Gross profit	$	390,461			15.46	%	$	369,188			14.49	%
Operating expenses	$	306,293			12.13	%	$	287,272			11.28	%
Worforce reduction and facility closure charge		(14,432	)		(0.57	)		(6,247	)		(0.25	)
Adjusted operating expenses	$	291,861			11.56	%	$	281,025			11.03	%
Operating income	$	84,168			3.33	%	$	81,916			3.21	%
Operating expense items noted above		14,432			0.57			6,247			0.25
Adjusted operating income	$	98,600			3.90	%	$	88,163			3.46	%
Net income	$	48,544					$	42,141
Operating expense items noted above, net of taxes		8,948						3,873
Adjusted net income	$	57,492					$	46,014
Diluted earnings per share	$	1.20					$	1.01
Per share operating expense items noted above		0.22						0.10
Adjusted diluted earnings per share	$	1.42					$	1.11
Adjusted diluted earnings per share — growth rate over the prior year period		28	%
Weighted average number of common shares — diluted		40,475						41,626

Note: Adjusted Operating Expenses, Operating Income, Net Income and Earnings Per Share for the six months ended June 30, 2013 and June 20, 2012, exclude the effects of a $14.4 million charge and $6.2 million charge, each related to workforce reductions and facility closures, respectively. Generally Accepted Accounting Principles require that the effects of these items be included in the Condensed Consolidated Statements of Income. Management believes that excluding these items 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.

-##-

EX-99.2

July 23, 2013

1

United Stationers Inc.

Earnings Presentation

Second Quarter 2013

TO BE FILED IN

CONJUNCTION WITH

PRESS RELEASE

Exhibit 99.2

July 23, 2013

2

Forward Looking Statements and

Non-GAAP Measures

This presentation contains forward-looking statements, including 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

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, but are not limited to the following:  prevailing economic conditions and changes affecting the business products industry and

the general economy; United’s ability to effectively manage its operations and to implement growth, cost-reduction and margin-

enhancement initiatives; United’s reliance on key customers, and the risks inherent in continuing or increased customer concentration;

United’s reliance on key suppliers and the supplier allowances and promotional incentives they offer; United’s reliance on independent

resellers for a significant percentage of its net sales and, therefore, the importance of the continued independence, viability and success

of these resellers; continuing or increasing competitive activity and pricing pressures within existing or expanded product categories,

including competition from product manufacturers who sell directly to United’s customers; the impact of a loss of, or substantial decrease

in, the availability of products or service from key vendors at competitive prices; United’s ability to maintain its existing information

technology systems and the systems and eCommerce services that it provides to customers, and to successfully procure, develop and

implement new systems and services without business disruption or other unanticipated difficulties or costs; the creditworthiness of

United’s customers; United’s ability to manage inventory in order to maximize sales and supplier allowances while minimizing excess

and obsolete inventory; United’s success in effectively identifying, consummating and integrating acquisitions; the risks and expense

associated with United’s obligations to maintain the security of private information provided by United’s customers; the costs and risks

related to compliance with laws, regulations and industry standards affecting United’s business; the availability of financing sources to

meet United’s business needs; United’s reliance on key management personnel, both in day-to-day operations and in execution of new

business initiatives; and the effects of hurricanes, acts of terrorism and other natural or man-made disruptions. 

Shareholders, potential investors and other readers are urged to consider these risks and uncertainties in evaluating forward-looking

statements and are cautioned not to place undue reliance on the forward-looking statements. For additional information about risks and

uncertainties that could materially affect United’s results, please see the company’s Securities and Exchange Commission filings.  The

forward-looking information in this news release is made as of this date only, and the company does not undertake to update any

forward-looking statement.  Investors are advised to consult any further disclosure by United regarding the matters discussed in this

release in its filings with the Securities and Exchange Commission and in other written statements it makes from time to time.  It is not

possible to anticipate or foresee all risks and uncertainties, and investors should not consider any list of risks and uncertainties to be

exhaustive or complete.

* This is non-GAAP information.  A reconciliation of these items to the most comparable GAAP measures is presented on the company’s

Website (www.unitedstationers.com) under the Investor Information section.  Except as noted, all references within this presentation 

to financial results are presented in accordance with U.S. Generally Accepted Accounting Principles.

Certain prior-period amounts have been reclassified to conform to the current presentation.

July 23, 2013

Headlines For the Three Months Ended June 30, 2013

Sales were $1.3 billion, flat compared with Q2 2012.

Earnings per diluted share were $0.86 up 30%, compared with Q2 2012

EPS of $0.66.

Gross margin of $201.9 million or 15.8% of sales, was up from $188.3

million or 14.8% of sales in the prior-year quarter.

Operating expenses in Q2 2013 were $143.0 million or 11.2% of sales,

compared with $137.9 million or 10.8% of sales in Q2 2012.

Operating income was $58.9 million or 4.6% as a percent of sales, and up

from $50.3 million or 3.9% of sales in the prior-year quarter.

Net income was $34.7 million, compared with $27.0 million in Q2 2012.

Net cash provided by operating activities was $58.7 million in Q2 2013

versus $20.4 million in Q2 2012.

During the quarter, the Company repurchased 1.0 million shares for $32.7

million and paid a cash dividend of $5.6 million to common shareholders.

3

July 23, 2013

4

Consolidated Statement of Income

For the Three Months Ended June 30, 2013 and 2012

% to sales change

$

% to Sales

$

% to Sales

$ change

% change

Fav (Unfav)

$ thousands (except EPS)

QTD Q2 2013

QTD Q2 2013

QTD Q2 2012

QTD Q2 2012

Fav (Unfav)

Fav (Unfav)

basis points

Net Sales

1,274,494

$  

1,275,710

$  

(1,216)

$    

(0.1%)

Gross Margin

201,936

15.84%

188,259

14.76%

13,677

7.3%

108

Operating Expense

143,009

11.22%

137,935

10.82%

(5,074)

(3.7%)

(40)

Operating Income

58,927

4.62%

50,324

3.94%

8,603

17.1%

68

Interest & Other

2,856

7,070

4,214

Taxes

21,401

16,225

(5,176)

Net Income

34,670

$       

27,029

$       

7,641

$     

Diluted Shares (000s)

40,328

40,887

(559)

(1.4%)

Diluted EPS

0.86

$          

0.66

$          

0.20

$       

30%

July 23, 2013

Headlines For the Six Months Ended June 30, 2013

Sales were $2.5 billion, flat to YTD June 2012.

Adjusted earnings per diluted share were $1.42*, compared with an

adjusted YTD June 2012 EPS of $1.11*. 

Gross margin rate of 15.5% was up from 14.5% last year.

Adjusted operating expenses YTD June 2013 were $291.9 million* or

11.6%* of sales, compared with an adjusted $281.0 million* or 11.0%* of

sales in the prior-year period.

Adjusted operating income was $98.6 million* or 3.9%* as a percent of

sales, up from an adjusted $88.2 million* or 3.5%* of sales in the prior-year

period.

Adjusted net income was $57.5 million*, compared with an adjusted $46.0

million* in the same period last year.

Net cash provided by operating activities was $45.3 million versus $48.3

million in the prior year period.

During the year, the Company repurchased 1.2 million shares for $39.8

million and paid cash dividends of $11.2 million to common shareholders.

5

July 23, 2013

Consolidated Statement of Income

For the Six Months Ended June 30, 2013 and 2012

6

% to sales change

$

% to Sales

$

% to Sales

$ change

% change

Fav (Unfav)

$ thousands (except EPS)

YTD Q2 2013

YTD Q2 2013

YTD Q2 2012

YTD Q2 2012

Fav (Unfav)

Fav (Unfav)

basis points

Net Sales

2,524,979

$ 

2,547,357

$ 

(22,378)

$    

(0.9%)

Workday Adjusted Sales Growth

(0.1%)

Gross Margin

390,461

15.46%

369,188

14.49%

21,273

5.8%

97

Operating Expense

306,293

12.13%

287,272

11.28%

(19,021)

(6.6%)

(85)

Operating Income

84,168

3.33%

81,916

3.21%

2,252

2.7%

12

Interest & Other

5,969

14,236

8,267

Taxes

29,655

25,539

(4,116)

Net Income

48,544

$      

42,141

$      

6,403

$       

Diluted Shares (000s)

40,475

41,626

(1,151)

(2.8%)

Diluted EPS

1.20

$         

1.01

$         

0.19

$        

18.8%

Adjusted to exclude non-operating items *

Adjusted Operating Expense

291,861

$    

11.56%

281,025

$    

11.03%

(10,836)

$    

(3.9%)

(53)

Adjusted Operating Income

98,600

3.90%

88,163

3.46%

10,437

11.8%

44

Adjusted Net Income

57,492

46,014

11,478

24.9%

Adjusted Diluted EPS

1.42

$         

1.11

$         

0.31

$        

28%

July 23, 2013

7

Sales

by Product Category –

Q2 2013

Sales

Sales

Sales

Sales

Sales

growth

(decline)

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Q2 2012

Category

vs Q2 2012

vs Q1 2012

vs Q4 2011

vs Q3 2011

vs Q2 2011

Technology

(6.3%)

(5.9%)

(0.1%)

(4.5%)

(2.8%)

Office Products

(4.0%)

(6.5%)

1.2%

1.2%

(0.8%)

Janitorial/

Breakroom

2.6%

3.0%

1.9%

2.3%

5.9%

Industrial

31.5%

35.7%

30.3%

7.0%

13.2%

Furniture

(5.0%)

(3.1%)

3.9%

(2.9%)

0.3%

growth

(decline)

growth

(decline)

growth

(decline)

growth

(decline)

July 23, 2013

Sales growth

Sales growth

Sales growth

Sales growth

Sales growth

(decline)

(decline)

(decline)

(decline)

(decline)

Q2 2013

Q1 2013

Q4 2012

Q3 2012

Q2 2012

Channel

vs Q2 2012

vs Q1 2012

vs Q4 2011

vs Q3 2011

vs Q2 2011

Independent

& Other

0.0%

0.1%

3.8%

1.0%

3.6%

Nationals

(0.9%)

(1.3%)

1.9%

(7.4%)

(12.2%)

Independent

& Other

89%

Nationals

11%

Q2 2013

8

Sales by Channel –

Q2 2013

July 23, 2013

9

Gross Margin

dollars in millions

Q2 12

Q3 12

Q4 12

Q1 13

Q2 13

Dollars

$188.3

$203.8

$201.7

$188.5

$201.9

Rate

14.8%

15.8%

16.2%

15.1%

15.8%

10.0%

12.5%

15.0%

17.5%

20.0%

$100.0

$125.0

$150.0

$175.0

$200.0

July 23, 2013

10

Adjusted Operating Expense*

dollars in millions

Q2 12

Q3 12

Q4 12

Q1 13 *

Q2 13

Dollars

$137.9

$140.1

$146.3

$148.9

$143.0

Rate

10.8%

10.9%

11.8%

11.9%

11.2%

7.5%

10.0%

12.5%

15.0%

$100.0

$125.0

$150.0

July 23, 2013

11

Adjusted Operating Income*

dollars in millions

Q2 12

Q3 12

Q4 12

Q1 13 *

Q2 13

Dollars

$50.3

$63.6

$55.4

$39.7

$58.9

Rate

3.9%

4.9%

4.4%

3.2%

4.6%

2.0%

3.0%

4.0%

5.0%

6.0%

$-

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

July 23, 2013

12

Adjusted Earnings per Share*

shares in millions

Q2 12

Q3 12

Q4 12

Q1 13 *

Q2 13

EPS

$0.66

$0.91

$0.81

$0.56

$0.86

Diluted Shares

40.887

40.530

40.406

40.628

40.328

-

1.000

$-

$0.10

$0.20

$0.30

$0.40

$0.50

$0.60

$0.70

$0.80

$0.90

July 23, 2013

13

Working Capital Summary

$ Millions

3/31/2012

6/30/2012

9/30/2012

12/31/2012

3/31/2013

6/30/2013

Accounts Receivable

642.0

$        

655.0

$        

669.0

$        

658.8

$           

632.2

$           

662.2

$         

Inventories (LIFO)

672.3

692.9

643.6

767.2

726.2

732.2

Accounts Payable

433.7

446.6

443.0

495.3

431.9

475.2

Q1 12

Q2 12

Q3 12

Q4 12

Q1 13

Q2 2013

Net Trade A/R DSO

40

40

40

40

39

39

Inventory Turns

6.2

6.4

6.5

5.9

5.7

5.9

A/P as % Inventory (LIFO)

65%

64%

69%

65%

59%

65%

A/P as % Inventory (FIFO)

56%

56%

59%

57%

52%

56%

July 23, 2013

14

Cash Flows

QTD

QTD

QTD

QTD

2012

QTD

QTD

2013

$ Millions

Q1 12

Q2 12

Q3 12

Q4 12

YTD

Q1 13

Q2 13

YTD

Net Income

15.1

$          

27.0

$          

36.8

$          

32.9

$          

111.8

$        

13.8

$          

34.7

$          

48.5

$          

Depreciation & Amortization

8.8

9.0

9.2

10.1

37.1

9.7

10.1

19.8

Share-based compensation

1.9

1.3

2.0

3.5

8.7

2.4

3.1

5.5

Change in Accounts Receivable

17.6

(13.2)

(13.7)

31.1

21.8

26.3

(30.3)

(4.0)

Change in Inventory

70.0

(21.1)

49.7

(88.2)

10.4

40.8

(9.2)

31.6

Change in Accounts Payable

(65.3)

12.8

(3.5)

40.3

(15.7)

(63.2)

43.1

(20.1)

Change in Other Working Capital

(2.4)

5.4

19.4

(0.5)

21.9

(30.6)

11.8

(18.8)

Change in Working Capital

19.9

(16.1)

51.9

(17.3)

38.4

(26.7)

15.4

(11.3)

Other

(17.8)

(0.8)

7.5

4.9

(6.2)

(12.6)

(4.6)

(17.2)

Cash provided by operating activities

27.9

20.4

107.4

34.1

189.8

(13.4)

58.7

45.3

Capital Expenditures

(4.5)

(5.8)

(10.0)

(12.5)

(32.8)

(9.1)

(7.9)

(17.0)

Proceeds from disposition of fixed assets

0.1

0.0

0.1

0.6

0.8

0.1

3.4

3.5

Net cash used for capital expenditures *

(4.4)

(5.8)

(9.9)

(11.9)

(32.0)

(9.0)

(4.5)

(13.5)

Free Cash Flow *

23.5

$          

14.6

$          

97.5

$          

22.2

$          

157.8

$        

(22.4)

$         

54.2

$          

31.8

$          

July 23, 2013

15

Debt and Capitalization

$ Millions

3/31/2012

6/30/2012

9/30/2012

12/31/2012

3/31/2013

6/30/2013

Debt

512.2

$     

527.1

$     

455.0

$     

524.4

$     

537.0

$     

518.5

$         

Equity

682.6

689.2

710.8

738.1

755.1

760.5

Total capitalization

1,194.8

$   

1,216.3

$   

1,165.8

$   

1,262.5

$   

1,292.1

$   

1,279.0

$      

Debt-to-total capitalization

42.9%

43.3%

39.0%

41.5%

41.6%

40.5%