Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarterly Period Ended: May 31, 1994
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 (I.R.S. Employer
incorporation or organization) Identification No.)
2200 East Golf Road, Des Plaines, Illinois 60016-1267
(Address of principal executive offices) (Zip Code)
(708) 699-5000
(Registrant's telephone number including area code)
Indicate by check mark whether the 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 the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
(1) Yes X No
(2) Yes X No
As of June 30, 1994, United Stationers Inc. had 18,590,226 shares of
common stock, $.10 par value, outstanding.
INDEX
PAGE
NUMBER
PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of
May 31, 1994 and August 31, 1993. 3
Condensed Consolidated Statements of Income
for the Three Months Ended May 31, 1994
and May 31, 1993 and the Nine Months Ended
May 31, 1994 and May 31, 1993. 4
Condensed Consolidated Statements of Cash Flows
for the Nine Months Ended May 31, 1994 and
May 31, 1993. 6
Notes to Condensed Consolidated Financial Statements. 7
Management's Discussion and Analysis of
Financial Condition and Results of Operations. 8
PART II - OTHER INFORMATION 11
SIGNATURES 12
INDEX TO EXHIBITS 13
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
ASSETS
(Unaudited) (Audited)
May 31, August 31,
1994 1993
CURRENT ASSETS
Cash and cash equivalents $ 7,552 $ 7,889
Accounts receivable, net 140,493 162,844
Inventories 234,390 229,760
Prepaid expenses 16,542 16,426
Total Current Assets $398,977 $416,919
PROPERTY, PLANT AND EQUIPMENT, at cost $239,088 $234,818
Less-Accumulated depreciation and amortization (109,953) (97,182)
Net Property, Plant and Equipment $129,135 $137,636
GOODWILL, NET $ 42,648 $ 43,484
OTHER ASSETS, NET $ 10,899 $ 11,195
TOTAL ASSETS $581,659 $609,234
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Short-term debt and current maturities
of long-term obligations $ 3,702 $ 3,448
Accounts payable 86,745 150,374
Accrued liabilities 34,516 47,023
Total Current Liabilities $124,963 $200,845
DEFERRED INCOME TAXES $ 16,680 $ 14,484
LONG-TERM OBLIGATIONS $195,898 $156,208
STOCKHOLDERS' INVESTMENT $244,118 $237,697
TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $581,659 $609,234
The accompanying notes to condensed consolidated financial
statements are an integral part of these balance sheets.
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except share data)
(Unaudited)
FOR THE THREE MONTHS ENDED
May 31, May 31,
1994 1993
NET SALES $ 360,022 $ 365,791
COST OF SALES 282,481 279,735
Gross profit on sales $ 77,541 $ 86,056
WAREHOUSING, MARKETING AND
ADMINISTRATIVE EXPENSES $ 71,230 $ 75,324
Income from operations $ 6,311 $ 10,732
OTHER EXPENSE, net 2,663 2,502
Income before income taxes $ 3,648 $ 8,230
INCOME TAXES 1,413 3,404
NET INCOME $ 2,235 $ 4,826
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 18,588,828 18,567,498
NET INCOME PER COMMON SHARE $ .12 $ .26
CASH DIVIDENDS PAID PER COMMON SHARE $ .10 $ .10
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands of dollars, except share data)
(Unaudited)
FOR THE NINE MONTHS ENDED
May 31, May 31,
1994 1993
NET SALES $1,100,607 $1,109,930
COST OF SALES 855,732 855,241
Gross profit on sales $ 244,875 $ 254,689
WAREHOUSING, MARKETING AND
ADMINISTRATIVE EXPENSES $ 216,969 $ 221,365
Income from operations $ 27,906 $ 33,324
OTHER EXPENSE, net 7,561 6,518
Income before income taxes $ 20,345 $ 26,806
INCOME TAXES 8,342 11,296
NET INCOME $ 12,003 $ 15,510
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 18,586,289 18,553,948
NET INCOME PER COMMON SHARE $ .65 $ .84
CASH DIVIDENDS PAID PER COMMON SHARE $ .30 $ .30
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
FOR THE NINE MONTHS ENDED
May 31, May 31,
1994 1993
Cash Flows from Operating Activities
Net Income $ 12,003 $ 15,510
Adjustments to reconcile net income to
net cash used in operating activities:
Loss on sale of fixed assets 499 59
Depreciation and amortization 15,735 15,909
Increase in deferred income taxes 2,196 758
Decrease in accounts payable (63,629) (44,304)
Decrease in accrued liabilities (14,187) (4,289)
Decrease/(increase) in accounts receivable 22,351 (4,970)
Increase in inventories (4,630) (1,435)
Increase in prepaid expenses (116) (784)
Increase in other assets (1,348) (239)
Net Cash Used in Operating Activities $(31,126) $(23,785)
_______________________________________________________________________
Cash Flows from Investing Activities
Acquisition of property, plant and equipment $ (5,656) $(18,465)
Proceeds from disposition of property,
plant and equipment 220 30
Net Cash Used in Investing Activities $ (5,436) $(18,435)
_______________________________________________________________________
Cash Flows from Financing Activities
Increase/(decrease) in short-term debt $ 254 $ (1,710)
Payments on long-term obligations (1,377) (3,560)
Additions to long-term obligations 42,930 49,059
Issuance of common shares 41 476
Payment of dividends (5,739) (5,622)
Disposition of treasury stock 116 36
Net Cash Provided by Financing Activities $ 36,225 $ 38,679
_______________________________________________________________________
Net decrease in cash and
cash equivalents $ (337) $ (3,541)
Cash and cash equivalents at the beginning
of the period 7,889 11,942
_______________________________________________________________________
Cash and Cash Equivalents at the End
of the Period $ 7,552 $ 8,401
_______________________________________________________________________
Income taxes paid $ 6,187 $ 12,946
Interest paid $ 7,447 $ 6,617
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(1) Basis of Presentation
The accompanying condensed consolidated financial statements are
unaudited, except for the Balance Sheet as of August 31, 1993, which is
condensed from the audited Balance Sheet at that date. These statements
have been prepared in accordance with the rules and regulations of the
Securities and Exchange Commission. These statements should be read in
conjunction with the Company's audited consolidated financial statements
for the year ended August 31, 1993, and the notes therein included in its
report on Form 10-K for the same period. Certain information and
footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. Certain
prior year amounts have been reclassified to conform with current year
presentations. In the opinion of the Company's management, the condensed
consolidated financial statements for the unaudited interim periods
presented include all adjustments necessary to fairly present the results
of such interim periods and the financial position as of the end of said
periods.
(2) Review
Arthur Andersen & Co., independent public accountants, have performed a
review of the condensed consolidated financial statements referred to
above. Since they did not perform an audit, they express no opinion on
these statements. Refer to the Report of Independent Public Accountants
included in this filing.
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UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
FISCAL 1994 COMPARED TO FISCAL 1993
Nine Month Results
Net sales were $1.1 billion for the first nine months of Fiscal 1994,
down .8% from the comparable period a year ago.
Gross profit as a percent of net sales decreased to 22.2% in the first
nine months of Fiscal 1994 from 22.9% in the first nine months of Fiscal
1993. The decrease reflects higher levels of rebates and allowances
earned by the Company's customers as a result of greater dealer
participation in buying groups and an acceleration in the rate of dealer
consolidations. In addition, margin was affected by increased
promotional sales as well as a shift in product mix.
Operating expenses as a percent of net sales decreased to 19.7% in the
first nine months of Fiscal 1994 from 19.9% in the first nine months of
Fiscal 1993. The decrease reflects the impact of actions taken by the
Company to streamline its work processes.
Income from operations as a percent of net sales decreased to 2.5% in the
first nine months of Fiscal 1994 from 3.0% in the first nine months of
Fiscal 1993.
Income before income taxes as a percent of net sales decreased to 1.8%
for the nine month period ending May 31, 1994 from 2.4% for the period
ending May 31, 1993. Net income was $12.0 million in the first nine
months of Fiscal 1994, down 22.6% from the $15.5 million in the
comparable year-ago period. Net income per share was $.65 in the first
nine months of Fiscal 1994, compared to $.84 in Fiscal 1993.
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UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS (CONTINUED)
Third Quarter Results
Net sales were $360.0 million for the third quarter of Fiscal 1994, a
1.6% decrease from net sales of $365.8 million in the comparable quarter
a year ago.
Gross profit as a percent of net sales decreased to 21.5% in the third
quarter of Fiscal 1994 from 23.5% in the third quarter of Fiscal 1993.
This decrease primarily reflects a higher level of rebates and allowances
earned by the Company's customers as a result of greater dealer
participation in buying groups and an acceleration in the rate of dealer
consolidations. In addition, margin was affected by increased
promotional sales as well as a shift in product mix.
Operating expenses as a percent of net sales decreased to 19.8% in the
third quarter of Fiscal 1994 from 20.6% in the comparable year-ago
quarter. The decrease is primarily the result of actions taken by the
Company to reduce freight and payroll expense as well as to streamline
work processes.
Income from operations as a percent of net sales decreased to 1.7% in the
third quarter of Fiscal 1994 from 2.9% in the third quarter of Fiscal
1993.
Income before income taxes as a percent to net sales was 1.0% in the
third quarter of Fiscal 1994 compared with the prior year's quarter of
2.2%. Net income was $2.2 million in the third quarter of Fiscal 1994,
down 53.7% from the $4.8 million in Fiscal 1993. Net income per share
was $.12 in the third quarter of Fiscal 1994, compared with $.26 in the
third quarter of Fiscal 1993.
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UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
Liquidity and Capital Resources
During the first nine months of Fiscal 1994, funds to support the
Company's working capital and capital expenditure requirements were
generated from borrowings under the Company's Reducing Revolving Credit
and Term Loan Agreement (the "Agreement") and operating activities.
As of May 31, 1994, the Company had $124.0 million of borrowings
outstanding under the Agreement. The Agreement, as amended, consists of
a $150.0 million revolving credit facility ("Revolver") and a $30.0
million term loan ("Term Loan"). The Company believes current working
capital, cash flow from operations and available lines of credit will be
adequate to meet financing requirements in the foreseeable future.
The Revolver provides for revolving credit loans up to the amount of the
commitment until August 31, 1997. The commitment decreases quarterly
beginning May 31, 1994, by certain amounts as specified in the Agreement,
to $83.6 million as of May 31, 1997. As of May 31, 1994, $158.0 million
was available under the Agreement with the amount decreasing to $156.0
million as of August 31, 1994. Under the terms of the Agreement, the
Company is required to pay a facility fee of 3/16 of 1% of the total
available Revolver. The Term Loan matures on September 30, 1995 (or
earlier upon certain subsequent offerings by the Company of debt or
equity). Interest on both loans is payable at varying rates provided for
in the Agreement.
The Agreement contains certain financial covenants covering the Company
and its subsidiaries on a consolidated basis, including, without
limitation, covenants relating to the consolidated current ratio,
tangible net worth, capitalization, fixed charge coverage, capital
expenditures and payment of dividends by the Company.
During the first nine months of Fiscal 1994, capital expenditures totaled
approximately $5.7 million. The Company anticipates capital expenditure
requirements of approximately $12.0 million for Fiscal 1994. Capital
expenditures will be financed from existing loan agreements and operating
activities.
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UNITED STATIONERS INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
Number
2 Not applicable
4 Not applicable
10 Not applicable
11 Not applicable
15 Letter regarding unaudited interim
financial information
18 Not applicable
19 Not applicable
22 Not applicable
23 Consent of Experts and Counsel
24 Not applicable
27 Not applicable
99 Not applicable
(b) There were no reports on Form 8-K filed during the
quarter ended May 31, 1994.
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UNITED STATIONERS INC. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities and 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: July 8, 1994 Joel D. Spungin
Joel D. Spungin
Chairman of the Board and
Chief Executive Officer
Jeffrey K. Hewson
Jeffrey K. Hewson
President and Chief Operating Officer
Allen B. Kravis
Allen B. Kravis
Senior Vice President and
Chief Financial Officer
Ted S. Rzeszuto
Ted S. Rzeszuto
Vice President and Controller
Report on Form 10-Q for the quarter ended May 31, 1994.
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UNITED STATIONERS INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
Sequential
Exhibit Page
Number Number
2 Not applicable
4 Not applicable
10 Not applicable
11 Not applicable
15 Letter regarding unaudited interim
financial information 14
18 Not applicable
19 Not applicable
22 Not applicable
23 Consent of Experts and Counsel 15
24 Not applicable
27 Not applicable
99 Not applicable
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Exhibit 15
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Stockholders and
Board of Directors of
United Stationers Inc.:
We have reviewed the accompanying condensed consolidated balance sheet of
UNITED STATIONERS INC. (a Delaware Corporation) AND SUBSIDIARIES as of
May 31, 1994, and the related condensed consolidated statements of income
for the three- and nine-month periods ended May 31, 1994 and 1993, and
the condensed consolidated statements of cash flows for the nine-month
periods ended May 31, 1994 and 1993. These financial statements are the
responsibility of the Company's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical
procedures to financial data and making inquiries of persons responsible
for financial and accounting matters. It is substantially less in scope
than an audit conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole. Accordingly, we do
not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the condensed consolidated financial statements
referred to above for them to be in conformity with generally accepted
accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of United Stationers
Inc. and Subsidiaries as of August 31, 1993 (not presented herein), and,
in our report dated October 6, 1993, we expressed an unqualified opinion
on that statement. In our opinion, the information set forth in the
accompanying condensed consolidated balance sheet as of August 31, 1993,
is fairly stated, in all material respects, in relation to the
consolidated balance sheet from which it has been derived.
/s/ARTHUR ANDERSEN & CO.
Chicago, Illinois,
June 30, 1994
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Exhibit 23
To United Stationers Inc.:
We are aware that United Stationers Inc.'s Form 10-Q for the quarter
ended May 31, 1994, which includes our report dated June 30, 1994,
covering the unaudited interim financial information contained therein,
is incorporated by reference into its previously filed Registration
Statements on Form S-8 (File Nos. 2-77628, 33-4729 and 33-32453) and into
the previously filed Registration Statement on Form S-3 (File No. 33-
28251) of United Stationers Inc. Pursuant to Regulation C of the
Securities Act of 1933, that report is not considered a part of the
Registration Statements prepared or certified by our firm or a report
prepared or certified by our firm within the meaning of Sections 7 and 11
of the Act.
/s/ARTHUR ANDERSEN & CO.
Chicago, Illinois,
July 8, 1994
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