<PAGE>
Securities and Exchange Commission
Washington, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For The Quarterly Period Ended: NOVEMBER 30, 1993
Commission File Number: 0-10653
UNITED STATIONERS INC.
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(Exact name of Registrant as specified in its charter)
DELAWARE 36-3141189
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2200 East Golf Road, Des Plaines, Illinois 60016-1267
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(Address of principal executive offices) (Zip Code)
(708) 699-5000
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(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 December 31, 1993, United Stationers Inc. had 18,588,006 shares of
common stock, $.10 par value, outstanding.
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INDEX
PAGE
NUMBER
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PART I - FINANCIAL INFORMATION
Condensed Consolidated Balance Sheets as of
November 30, 1993 and August 31, 1993. 3
Condensed Consolidated Statements of Income
for the Three Months Ended November 30, 1993
and November 30, 1992. 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended November 30, 1993 and
November 30, 1992. 5
Notes to Condensed Consolidated Financial Statements. 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations. 7
PART II - OTHER INFORMATION 9
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<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars)
ASSETS
<TABLE>
<CAPTION>
(Unaudited) (Audited)
Nov. 30, August 31,
1993 1993
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<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 9,703 $ 7,889
Accounts receivable, net 161,576 162,844
Inventories 267,474 229,760
Prepaid expenses 17,030 16,426
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Total Current Assets $455,783 $416,919
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PROPERTY, PLANT AND EQUIPMENT, at cost $237,256 $234,818
Less-Accumulated depreciation and amortization (101,660) (97,182)
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Net Property, Plant and Equipment $135,596 $137,636
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GOODWILL, NET $ 43,205 $ 43,484
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OTHER ASSETS $ 11,437 $ 11,195
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TOTAL ASSETS $646,021 $609,234
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LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES
Short-term debt and current maturities
of long-term obligations $ 3,461 $ 3,448
Accounts payable 125,396 150,374
Accrued liabilities 41,915 47,023
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Total Current Liabilities $170,772 $200,845
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DEFERRED INCOME TAXES $ 15,134 $ 14,484
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LONG-TERM OBLIGATIONS $218,258 $156,208
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STOCKHOLDERS' INVESTMENT $241,857 $237,697
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TOTAL LIABILITIES AND STOCKHOLDERS' INVESTMENT $646,021 $609,234
-------- --------
-------- --------
</TABLE>
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)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
Nov. 30, Nov. 30,
1993 1992
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<S> <C> <C>
NET SALES $370,597 $365,321
COST OF SALES 285,823 283,497
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Gross profit on sales $ 84,774 $ 81,824
WAREHOUSING, MARKETING AND
ADMINISTRATIVE EXPENSES 72,401 71,241
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Income from operations $ 12,373 $ 10,583
OTHER EXPENSE, net 2,160 1,673
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Income before income taxes $ 10,213 $ 8,910
INCOME TAXES 4,289 3,799
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NET INCOME $ 5,924 $ 5,111
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WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 18,582,939 18,539,129
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NET INCOME PER COMMON SHARE $ .32 $ .28
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CASH DIVIDENDS PAID PER COMMON SHARE $ .10 $ .10
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</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
Nov 30, Nov. 30,
1993 1992
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 5,924 $ 5,111
Adjustments to reconcile net income to
net cash used in operating activities:
Depreciation and amortization 5,195 5,012
Increase in deferred taxes 650 4
Decrease in accounts payable (24,978) (18,211)
(Decrease) Increase in accrued liabilities (5,108) 3,378
Decrease (Increase) in accounts receivable 1,268 (12,435)
(Increase) Decrease in inventories (37,714) 1,661
(Increase) Decrease in prepaid expenses (604) 549
Increase in other assets (712) (833)
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NET CASH USED IN OPERATING ACTIVITIES $(56,079) $(15,764)
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CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of property, plant and equipment $ (2,439) $ (2,599)
Disposition of property, plant and equipment 33 49
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NET CASH USED IN INVESTING ACTIVITIES $ (2,406) $ (2,550)
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CASH FLOWS FROM FINANCING ACTIVITIES
Decrease in short-term debt $ 0 $ (323)
Payments on long-term obligations (205) (221)
Additions to long-term obligations 62,268 22,000
Issuance of common shares 26 19
Payment of dividends (1,905) (1,912)
Disposition of treasury stock 115 31
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NET CASH PROVIDED BY FINANCING ACTIVITIES $ 60,299 $ 19,594
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Net increase in cash and cash
equivalents $ 1,814 $ 1,280
Cash and cash equivalents at the beginning
of the period 7,889 11,942
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CASH AND CASH EQUIVALENTS AT THE END
OF THE PERIOD $ 9,703 $ 13,222
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-------- --------
Income taxes paid $ 446 $ 1,524
Interest paid $ 1,962 $ 1,492
</TABLE>
The accompanying notes to condensed consolidated financial
statements are an integral part of these statements.
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<PAGE>
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. 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) ACCOUNTING CHANGES
During the quarter ended November 30, 1993, the Company adopted Financial
Accounting Standards Board Statement No. 106 (SFAS 106) "Employers' Accounting
For Postretirement Benefits Other Than Pensions" effective as of September 1,
1993. SFAS 106 requires companies to accrue the projected future costs of
postretirement health care and life insurance benefits throughout the employee's
active service period. The Company has applied the new rules using the
prospective method which did not have a material impact on the Company's
financial position and results of operations.
(3) 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
FIRST QUARTER RESULTS
Net sales were $371 million for the first quarter of Fiscal 1994, a 1.4%
increase over net sales of $365 million in the comparable period a year ago. The
increase reflects continued growth in most geographic areas.
Gross profit as a percent of net sales increased to 22.9% in the first quarter
of Fiscal 1994 from 22.4% in the first quarter of Fiscal 1993, reflecting a
favorable product mix.
Operating expenses as a percent of net sales were 19.5% in the first quarter of
Fiscal 1994 and the first quarter of Fiscal 1993. This expense level continues
to reflect the costs associated with the Company's free-freight marketing
program and the costs of managing 37,000 stockkeeping units. By the end of the
second quarter, the Company anticipates the number of stockkeeping units to be
reduced to a norm of 25,000 items.
Income from operations as a percent of net sales increased to 3.4% in the first
quarter of Fiscal 1994 from 2.9% in the first quarter of Fiscal 1993.
Income before income taxes as a percent of net sales was 2.8% in the first
quarter of Fiscal 1994 compared to the year-ago quarter of 2.4%. Net income was
$5.9 million in the first quarter of Fiscal 1994, up 15.9.% from the $5.1
million in the year-ago quarter. Net income per share was $.32 in the first
quarter of Fiscal 1994, compared to $.28 for the first 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 quarter 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.
In order to meet increased capital needs, the Company negotiated (under the
Agreement) a temporary increase in available credit of $20 million from December
1, 1993 until May 31, 1994. This additional availability is needed to support
increased inventory levels for the Company's peak selling season. The Company is
in the process of determining new inventory demand patterns for each of its
distribution centers. Each distribution center will carry an inventory of
products closely tailored to the needs of the local industries served by the
Company's customers. While new demand patterns are being developed, additional
inventory is being carried to ensure the Company's ability to fulfill its
customer's orders.
As of November 30, 1993, the Company had $146.0 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
in May 1994, by certain amounts as specified in the Agreement, to $83.6 million
as of May 31, 1997. 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). During the first quarter of Fiscal 1994, the
Company and the lenders executed the option to extend the maturity date from the
original date of September 30, 1994. 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 quarter of Fiscal 1994, capital expenditures totaled
approximately $2.4 million. The Company anticipates capital expenditure
requirements in the range of $15.0 million to $18.0 million for Fiscal 1994.
Capital expenditures will be financed from existing loan agreements and
operating activities.
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<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBIT
NUMBER
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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 & Counsel
27 Not applicable
99 Not applicable
(b) There were no reports on Form 8-K filed during the
quarter ended November 30, 1993.
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UNITED STATIONERS INC. AND SUBSIDIARIES
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.
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(Registrant)
Date: JANUARY 11, 1994 JOEL D. SPUNGIN
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Joel D. Spungin
Chairman of the Board and
Chief Executive Officer
JEFFREY K. HEWSON
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Jeffrey K. Hewson
President and Chief Operating Officer
ALLEN B. KRAVIS
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Allen B. Kravis
Senior Vice President and
Chief Financial Officer
TED S. RZESZUTO
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Ted S. Rzeszuto
Vice President and Controller
Report on Form 10-Q for the quarter ended November 30, 1993.
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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
18 Not applicable
19 Not applicable
22 Not applicable
23 Consent of Experts & Counsel
24 Not applicable
27 Not applicable
99 Not applicable
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<PAGE>
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
November 30, 1993, and the related condensed consolidated statements of income
and cash flows for the three-months ended November 30, 1993 and 1992. 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 those
consolidated financial statements. 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.
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Chicago, Illinois
January 5, 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
November 30, 1993, which includes our report dated January 5, 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.
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Chicago, Illinois,
January 11, 1994
