<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarter ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ___________ to _____________
Commission file numbers: United Stationers Inc.: 0-10653
United Stationers Supply Co.: 33-59811
UNITED STATIONERS INC.
UNITED STATIONERS SUPPLY CO.
----------------------------
(Exact name of registrant as specified in its charter)
United Stationers Inc.: Delaware United Stationers Inc.: 36-3141189
United Stationers Supply Co.: Illinois United Stationers Supply Co.: 36-2431718
- -------------------------------------- ----------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
2200 East Golf Road, Des Plaines, Illinois 60016-1267
- ------------------------------------------ ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (847) 699-5000
Indicate by check mark whether each registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
United Stationers Inc.: Yes ( X ) No ( )
United Stationers Supply Co.: Yes ( X ) No ( )
On April 30, 1998, United Stationers Inc. had outstanding 16,157,742 shares
of Common Stock, par value $0.10 per share On April 30, 1998, United
Stationers Supply Co. had 880,000 shares of Common Stock, $1.00 par value per
share, outstanding; United Stationers Inc. owns 100% of these shares.
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
Form 10-Q For the Quarter Ended March 31, 1998
----------------------------------------------
INDEX
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
IMPORTANT EXPLANATORY NOTE 1
Independent Accountant's Review Report 2
Condensed Consolidated Balance Sheets as of
March 31, 1998 and December 31, 1997. 3
Condensed Consolidated Statements of Income
for the Three Months ended March 31, 1998 and 1997. 4
Condensed Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1998
and 1997. 5
Notes to Condensed Consolidated Financial Statements. 6
Management's Discussion and Analysis of
Financial Condition and Results of Operations. 11
PART II - OTHER INFORMATION 18
- --------------------------
SIGNATURE 19
- ---------
INDEX TO EXHIBITS 20
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<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
ITEM 1. FINANCIAL STATEMENTS
IMPORTANT EXPLANATORY NOTE
--------------------------
THIS INTEGRATED FORM 10-Q IS FILED PURSUANT TO THE SECURITIES EXCHANGE ACT OF
1934, AS AMENDED, FOR EACH OF UNITED STATIONERS INC. ("UNITED"), A DELAWARE
CORPORATION, AND ITS WHOLLY OWNED SUBSIDIARY, UNITED STATIONERS SUPPLY CO.
("USSC"), AN ILLINOIS CORPORATION (COLLECTIVELY, THE "COMPANY"). UNITED
STATIONERS INC. IS A HOLDING COMPANY WITH NO OPERATIONS SEPARATE FROM ITS
OPERATING SUBSIDIARY, UNITED STATIONERS SUPPLY CO. AND ITS SUBSIDIARIES. NO
SEPARATE FINANCIAL INFORMATION FOR UNITED STATIONERS SUPPLY CO. AND ITS
SUBSIDIARIES HAS BEEN PROVIDED HEREIN BECAUSE MANAGEMENT FOR THE COMPANY
BELIEVES SUCH INFORMATION WOULD NOT BE MEANINGFUL BECAUSE (i) UNITED
STATIONERS SUPPLY CO. IS THE ONLY DIRECT SUBSIDIARY OF UNITED STATIONERS
INC., WHICH HAS NO OPERATIONS OTHER THAN THOSE OF UNITED STATIONERS SUPPLY
CO. AND (ii) ALL ASSETS AND LIABILITIES OF UNITED STATIONERS INC. ARE
RECORDED ON THE BOOKS OF UNITED STATIONERS SUPPLY CO. THERE IS NO MATERIAL
DIFFERENCE BETWEEN UNITED STATIONERS INC. AND UNITED STATIONERS SUPPLY CO.
FOR THE DISCLOSURE REQUIRED BY THE INSTRUCTIONS TO FORM 10-Q AND THEREFORE,
UNLESS OTHERWISE INDICATED, THE RESPONSES SET FORTH HEREIN APPLY TO EACH OF
UNITED STATIONERS INC. AND UNITED STATIONERS SUPPLY CO.
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INDEPENDENT ACCOUNTANT'S REVIEW REPORT
The Board of Directors
United Stationers Inc.
We have reviewed the accompanying condensed consolidated balance sheet of
United Stationers Inc. and Subsidiaries as of March 31, 1998, and the related
condensed consolidated statements of income and cash flows for the
three-month periods ended March 31, 1998 and 1997. These financial
statements are the responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data, and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, which
will be performed for the full year with the objective of expressing an
opinion regarding the financial statements taken as a whole. Accordingly, we
do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying condensed consolidated financial
statements referred to above for them to be in conformity with generally
accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of United Stationers Inc. as of
December 31, 1997, and the related consolidated statements of income, changes
in stockholders' equity, and cash flows for the year then ended (not
presented herein) and in our report dated January 27, 1998, we expressed an
unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying condensed consolidated
balance sheet as of December 31, 1997, is fairly stated, in all material
respects, in relation to the consolidated balance sheet from which it has
been derived.
/s/Ernst & Young LLP
Chicago, Illinois
April 24, 1998
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<PAGE>
UNITED STATIONERS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1998 1997
----------- ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 11,504 $ 12,367
Accounts receivable, net 282,237 311,920
Inventories 484,911 511,555
Other current assets 15,754 14,845
------------ ------------
Total current assets 794,406 850,687
Property, plant and equipment, net 161,894 164,543
Goodwill, net 111,110 111,852
Other 20,282 20,939
------------ ------------
Total assets $ 1,087,692 $ 1,148,021
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 235,915 $ 236,475
Accrued liabilities 107,616 118,496
Current maturities of long-term debt 19,551 44,267
------------ ------------
Total current liabilities 363,082 399,238
Deferred income taxes 19,208 19,383
Long-term obligations 468,773 506,092
------------ ------------
Total liabilities 851,063 924,713
Stockholders' equity:
Common stock (voting), $0.10 par value;
40,000,000 authorized; 16,024,019 and
15,905,273, respectively, issued and
outstanding 1,602 1,591
Additional paid-in capital 211,261 213,042
Retained earnings 23,766 8,675
------------ ------------
Total stockholders' equity 236,629 223,308
------------ ------------
Total liabilities and
stockholders' equity $ 1,087,692 $ 1,148,021
------------ ------------
------------ ------------
</TABLE>
See notes to condensed consolidated financial statements.
-3-
<PAGE>
UNITED STATIONERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------------------
1998 1997
------------ -------------
<S> <C> <C>
Net sales $ 712,517 $ 635,021
Cost of goods sold 589,455 526,279
------------ -------------
Gross profit 123,062 108,742
Operating expenses
Warehousing, marketing and
administrative expenses 85,037 76,704
------------ -------------
Income from operations 38,025 32,038
Interest expense 11,826 14,661
------------ -------------
Income before income taxes 26,199 17,377
Income taxes 11,108 7,368
------------ -------------
Net income 15,091 10,009
Preferred stock dividends issued and accrued - - 455
------------ -------------
Net income attributable to common
stockholders $ 15,091 $ 9,554
------------ -------------
------------ -------------
Net income per common share $ 0.94 $ 0.78
------------ -------------
------------ -------------
Average number of common shares
outstanding 15,995 12,205
------------ -------------
------------ -------------
Net income per common share -
assuming dilution $ 0.88 $ 0.65
------------ -------------
------------ -------------
Average number of common shares
outstanding - assuming dilution 17,098 14,608
------------ -------------
------------ -------------
</TABLE>
See notes to condensed consolidated financial statements.
-4-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
---------------------------
1998 1997
--------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 15,091 $ 10,009
Depreciation and amortization 7,433 6,534
Transaction costs and other amortization 930 1,179
Changes in operating assets and liabilities 44,046 31,206
--------- -----------
Net cash provided by operating activities 67,500 48,928
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (3,984) (1,642)
Proceeds from disposition of property, plant
and equipment 9 30
--------- -----------
Net cash used in investing activities (3,975) (1,612)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal payments of debt (29,934) (29,417)
Net repayments under revolver (32,000) (11,000)
Payment of employee withholding tax related to
stock option exercises (2,571) - -
Issuance of common shares 243 - -
Other (126) 66
--------- -----------
Net cash used in financing activities (64,388) (40,351)
--------- -----------
Net change in cash and cash equivalents (863) 6,965
Cash and cash equivalents, beginning of period 12,367 10,619
--------- -----------
Cash and cash equivalents, end of period $ 11,504 $ 17,584
--------- -----------
--------- -----------
Other Cash Flow Information:
Cash payments during the three-month
period for:
Income taxes paid $ 742 $ 349
Interest paid 10,424 8,340
</TABLE>
See notes to condensed consolidated financial statements.
-5-
<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 Consolidated Balance Sheet as of December 31, 1997. These
financial statements have been prepared in accordance with the rules and
regulations of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles have been
condensed or omitted pursuant to such rules and regulations. 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. These adjustments were of a normal
recurring nature and did not have a material impact on the financial
statements presented. Certain interim expense and inventory estimates are
recognized throughout the year relating to marginal income tax rates,
shrinkage, price changes and product mix. Any refinements to these estimates
based on actual experience are recorded when known.
2. OPERATIONS
The Company is a national wholesale distributor of business products. The
Company offers approximately 35,000 items from more than 550 manufacturers.
This includes a broad spectrum of office products, computer supplies, office
furniture and facilities management supplies. The Company primarily serves
commercial and contract office products dealers. Its customers include more
than 20,000 resellers -- such as computer products resellers, office
furniture dealers, mass merchandisers, sanitary supply distributors,
warehouse clubs, mail order houses and office products superstores. The
Company has a distribution network of 64 Regional Distribution Centers.
Through its integrated computer systems, the Company provides a high level of
customer service and overnight delivery.
3. COMPREHENSIVE INCOME
As of January 1, 1998, the Company adopted Financial Accounting Standards
Board Statement 130, "Reporting Comprehensive Income." Statement 130
establishes new rules for the reporting and display of comprehensive income
and its components; however, the adoption of this Statement had no impact on
the Company's net income or stockholders' equity. Statement 130 requires
foreign currency translation adjustments, which prior to adoption were
included in stockholders' equity, to be included in other comprehensive
income.
During the first quarter of 1998 and 1997, total comprehensive income
amounted to $14,968,000 and $9,982,000, respectively.
-6-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
4. NET INCOME PER COMMON AND COMMON EQUIVALENT SHARE
Net income per common share is based on net income after preferred stock
dividend requirements. Basic earnings per share is calculated on the
weighted average number of common shares outstanding. Diluted earnings per
share is calculated on the weighted average number of common and common
equivalent shares outstanding during the period. Stock options and warrants
are considered to be common equivalent shares.
The following table sets forth the computation of basic and diluted earnings
per share (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-------------------
1998 1997
-------- --------
<S> <C> <C>
Numerator:
Net income $ 15,091 $ 10,009
Preferred stock dividends - - 455
-------- --------
Numerator for basic and diluted earnings per share --
Net income attributable to common stockholders $ 15,091 $ 9,554
-------- --------
-------- --------
Denominator:
Denominator for basic earnings per share --
Weighted average shares 15,995 12,205
Effect of dilutive securities:
Employee stock options 1,103 1,001
Warrants - - 1,402
-------- --------
Dilutive potential common shares 1,103 2,403
-------- --------
Denominator for diluted earnings per share --
Adjusted weighted average shares
and assumed conversions 17,098 14,608
-------- --------
-------- --------
Basic earnings per share $ 0.94 $ 0.78
-------- --------
-------- --------
Diluted earnings per share $ 0.88 $ 0.65
-------- --------
-------- --------
</TABLE>
-7-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
5. SUBSEQUENT EVENTS
Azerty Acquisition
On April 3, 1998, the Company completed the acquisition of all of the capital
stock of Azerty Incorporated, Azerty de Mexico, S.A. de C.V., Positive ID
Wholesale Inc., and AP Support Services Incorporated (collectively, the
"Azerty Acquisition"), which together comprised substantially all of the
United States and Mexican operations of the Office Products Division of
Abitibi-Consolidated Inc. (collectively, the "Azerty Business"). The
aggregate purchase price paid by the Company for the Azerty Business was
approximately $115.1 million (including fees and expenses) following an
initial post-closing adjustment, and subject to final audit and review by the
Company. The Azerty Business is primarily a specialty wholesaler of computer
consumables, peripherals and accessories in the United States and Mexico. It
is currently anticipated that the Company's existing Micro United division
will be integrated into the Azerty Business.
The purchase price for the Azerty Business was funded from borrowings under
the Company's New Credit Facilities (as defined).
The New Credit Facilities
On April 3, 1998, in order to fund the purchase price of the Azerty Business,
refinance borrowings under the Company's then-existing senior secured credit
facilities, and pay related fees and expenses in connection therewith, the
Company amended and restated its existing credit agreement (as amended and
restated, the "New Credit Agreement") governing its senior secured credit
facilities (the "New Credit Facilities"). The New Credit Facilities
initially consisted of a $250.0 million six-year revolving credit facility
(the "Revolving Credit Facility"), a $150.0 million six-year tranche A term
loan facility (the "Tranche A Term Loan Facility"), and a $100.0 million six
and three-quarter year tranche B term loan facility (the "Tranche B Term Loan
Facility"). The net proceeds of the Notes Offering (as defined) were used to
permanently repay a substantial portion of indebtedness outstanding under the
Tranche B Term Loan Facility and the remainder of such facility was
permanently repaid with proceeds from the sale of certain receivables,
following which the Tranche B Term Loan Facility was terminated. As a result
of the early retirement of the Existing Credit Facilities, approximately $9.5
million ($5.7 million net of tax benefit of $3.8 million) of unamortized
financing fees will be expensed as a non-cash extraordinary charge during the
second quarter of 1998.
Receivables Securitization Program
On April 3, 1998, in connection with the refinancing of its Existing Credit
Facilities, the Company entered into a $163.0 million 364-day liquidity
facility (the "Receivables Securitization Program"), pursuant to which the
Company sells certain of its U.S. dollar trade receivables to a wholly-owned
offshore bankruptcy-remote subsidiary of the Company (the "Receivables
Company"). The Receivables Company then transfers the Eligible Receivables to
a third-party, multi-seller asset-backed commercial paper program existing
solely for the purpose of issuing commercial paper rated A-1/P-1 or higher.
The Company received approximately $160.0 million proceeds from the initial
sale of Eligible Receivables on April 3, 1998.
The proceeds to the Company from the Receivables Securitization Program were
used to reduce borrowings under the Revolving Credit Facility and a portion
of the Tranche B Term Loan Facility.
-8-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
The Notes Offering
On April 15, 1998, USSC consummated the sale of $100.0 million of its 8.375%
Senior Subordinated Notes due 2008 (the "8.375% Notes") in a transaction not
subject to the registration requirements of the Securities Act of 1933. The
8.375% Notes were immediately resold by the initial purchasers thereof in
reliance on Rule 144A under the Securities Act of 1933. The aggregate net
proceeds to the Company (aggregating approximately $97.0 million) from the
sale of the 8.375% Notes were used to repay a substantial portion of the
indebtedness outstanding under the Tranche B Term Loan Facility.
Computer Services Contract Write-Off
As a condition to the spinoff of ASI from the Wholesale Division of Boise
Cascade Office Products Corporation in January 1992, ASI entered into the
Computer Services Contract with a third party service provider to perform
certain computer services.
Upon completion of the systems integration between USSC and ASI, increasing
differences in the operating processes and technical environment between the
Company and the third-party service provider became evident. The Computer
Services Contract was modified to allow the Company, at its discretion, not
to perform any processing at the third-party service provider's facilities.
Accordingly, the related fees were reduced. Payments made to the third-party
service provider subsequent to this final renegotiation were effectively for
disaster recovery purposes only. The Company has recently consolidated its
disaster recovery services under an agreement with another third-party
service provider. In May 1998, the Company completed an assessment of the
future utility of the Computer Services Contract. Based upon such assessment,
the Company has determined that it is no longer feasible to use the prior
third-party service provider for disaster recovery purposes.
In May 1998, the Company will write off the remaining term of the Computer
Services Contract. As a result, the Company will record a non-recurring
charge of $13.9 million ($8.3 million net of tax benefit of $5.6 million),
which includes a $2.6 million prepaid expense and $11.3 million of future
payments.
-9-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
6. REVIEW
Ernst & Young LLP, independent public accountants, have reviewed the
condensed consolidated balance sheet of the Company as of March 31, 1998 and
the related condensed consolidated statements of income and cash flows for
the three-month periods ended March 31, 1998 and 1997. Since they did not
perform an audit, they express no opinion on these statements. They have
previously audited the consolidated balance sheet of the Company as of
December 31, 1997 from which the condensed consolidated balance sheet as of
that date has been derived. The Independent Accountant's Review Report has
been included in this filing.
-10-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Comments on Forward Looking Information
- ---------------------------------------
Certain information presented in this Form 10-Q includes forward-looking
statements regarding the Company's future results of operations. The Company
is confident that its expectations are based on reasonable assumptions given
its knowledge of its operations and business. However, there can be no
assurance that the Company's actual results will not differ materially from
its expectations. The matters referred to in forward-looking statements may
be affected by the risks and uncertainties involved in the Company's business
including, among others, competition with business products manufacturers and
other wholesalers, consolidation of the business products industry, the
ability to maintain gross profit margins, the ability to reduce operating
expenses as a percent of net sales, changing end-user demands, changes in
manufacturers' pricing, service interruptions and availability of liquidity
and capital resources.
First Quarter Ended March 31, 1998 compared with the
First Quarter Ended March 31, 1997
- ----------------------------------------------------
NET SALES. Net sales were $712.5 million in the first quarter of 1998, a
12.2% increase over net sales of $635.0 million in the first quarter of 1997.
However, the first quarter of 1998 benefited from the timing of the Easter
holiday that occurred in the first quarter of 1997. Excluding this effect,
sales would have increased approximately 11%. The Company experienced sales
strength in all geographic regions and across all product categories.
United Stationers' strategy is to create value in the supply chain for both
resellers and manufacturers. By reducing the overall cost of distribution,
the Company believes its role as a wholesaler will continue to expand and
that it can achieve above industry-average growth rates.
The Company believes that it has the opportunity to capture a portion of the
sales of business products currently sold directly by manufacturers to
resellers without wholesaler involvement. Currently, only approximately 20%
of manufacturers' shipments of business products move through wholesalers.
The Company believes that as resellers intensify their focus on asset
management, return on investment and inventory efficiency, they will continue
de-stocking and increasingly rely on United Stationers' products and services
to meet end-user requirements for a high order fill rate on a broad product
assortment available on an overnight basis.
The Company plans to continue to expand its customer base by: (i) maintaining
and building its business with commercial dealers and contract stationers;
(ii) developing additional programs for marketing and buying groups; (iii)
continuing to focus on complementary markets, including specialty dealers;
and (iv) expanding geographically, both within the United States and,
potentially, internationally.
The Company plans to expand its product line. These plans include developing
its newer product categories, such as office furniture, computer supplies and
peripherals, facilities management supplies and janitorial and sanitation
supplies as well as potentially offering new products or services. The
Company also plans to continue to expand its line of private brand products.
The Company believes that its various products and services are complementary
and that there are significant opportunities to cross-sell to existing
customers. By implementing this strategy, management believes the Company
can enhance sales as resellers purchase a broader selection of products
offered by the Company, thereby reducing end-user procurement costs and
enhancing reseller profitability.
-11-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
First Quarter Ended March 31, 1998 compared with the
First Quarter Ended March 31, 1997 (continued)
- ----------------------------------------------------
The Company intends to continue to invest in information systems enhancements
and customer interfaces that management believes will allow it to capture a
growing percentage of its customers' business. In addition, as the Internet
becomes increasingly important as a marketing channel, the Company is
positioned to participate in this trend with direct, on-line access by its
resellers to its 35,000 SKU general line catalog.
The Company believes it can enhance its growth by continuing to make
strategic acquisitions. For example, the acquisition of Lagasse Bros., Inc.
("Lagasse") in 1996 substantially increased the Company's position in the
janitorial and sanitation supplies product category. The Azerty Acquisition
also will expand its product offerings and will make the Company
one of the largest distributors of computer consumable supplies in the United
States. The Company intends to continue, from time to time, to pursue
acquisitions that expand its customer base, increase its geographic reach
and/or broaden its product offering.
GROSS PROFIT. Gross profit as a percent of net sales of 17.2% in the first
quarter of 1998 was up from 17.1% in the comparable period of 1997.
OPERATING EXPENSES. Operating expenses as a percent of net sales decreased
to 11.9% in the first quarter of 1998 from 12.1% in the first quarter of
1997. The reduction in operating expenses as a percent of net sales is
primarily due to the leveraging of fixed expenses on a higher sales base.
INCOME FROM OPERATIONS. Income from operations as a percent of net sales
increased to 5.3% in the first quarter of 1998 from 5.0% in the first quarter
of 1997.
INTEREST EXPENSE. Interest expense as a percent of net sales was 1.7% in the
first quarter of 1998, compared with 2.3% in the comparable period in 1997.
In addition to the impact of leveraging such expense against a higher sales
base, this reduction also reflects the prepayment of $50.0 million of 12.75%
senior subordinated notes and $15.5 million of term loans during the fourth
quarter of 1997 with a portion of the net proceeds from the October 1997
equity offering.
INCOME BEFORE INCOME TAXES AND EXTRAORDINARY ITEM. Income before income
taxes as a percent of net sales was 3.6% in the first quarter of 1998,
compared with 2.7% in the first quarter of 1997.
NET INCOME. Net income before preferred stock dividends was $15.1 million in
the first quarter of 1998, compared with $10.0 million in the first quarter
of 1997.
NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS. Net income attributable to
common stockholders was $15.1 million in the first quarter of 1998, compared
with $9.6 million in the first quarter of 1997.
-12-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
- -------------------------------
As of March 31, 1998, the credit facilities under the Amended and Restated
Credit Agreement (the "Credit Agreement") consisted of $119.0 million of term
loan borrowings (the "Term Loan Facilities"), and $224.0 million of
borrowings under a $325.0 million revolving credit facility (the "Revolving
Credit Facility"). In addition, the Company has $100.0 million of 12.75%
Senior Subordinated Notes due 2005, $29.8 million of industrial revenue bonds
and a $2.0 million mortgage.
The Term Loan Facilities consist of a $76.7 million tranche A term loan
facility (the "Tranche A Facility") and a $42.3 million tranche B term loan
facility (the "Tranche B Facility"). On March 31, 1998, principal payments of
$15.8 million and $8.7 million were paid from Excess Cash Flow (as defined in
the Credit Agreement) for the Tranche A and Tranche B Facilities,
respectively.
The Credit Agreement contains representations and warranties, affirmative and
negative covenants and events of default customary for financings of this
type. As of March 31, 1998, the Company was in compliance with all covenants
contained in the Credit Agreement.
Management believes that the Company's cash on hand, anticipated funds
generated from operations and available borrowings under the New Credit
Facilities (as defined), will be sufficient to meet the short-term (less than
twelve months) and long-term operating and capital needs of the Company as
well as to service its debt in accordance with its terms. There is, however,
no assurance that this will be accomplished.
United is a holding company and, as a result, its primary source of funds is
cash generated from operating activities of its operating subsidiary, USSC,
and bank borrowings by USSC. The New Credit Agreement (as defined), 8.375%
Notes Indenture (as defined) and the 12.75% Notes Indenture (as defined)
contain restrictions on the ability of USSC to transfer cash to United.
The statements of cash flows for the Company for the periods indicated are
summarized below:
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
---------------------
1998 1997
------- -------
(dollars in thousands)
<S> <C> <C>
Net cash provided by operating activities $67,500 $48,928
Net cash used in investing activities (3,975) (1,612)
Net cash used in financing activities (64,388) (40,351)
</TABLE>
Net cash provided by operating activities during the first three months of
1998 increased to $67.5 million from $48.9 million in the comparable
prior-year period. This increase was due to higher net income, a decrease in
accounts receivable and a decrease in inventory, only partially offset by a
decrease in accrued liabilities.
Net cash used in investing activities during the first three months of 1998
was $4.0 million compared with $1.6 million used in the first three months of
1997. The increase in cash used was due solely to an increase in capital
investments during 1998.
Net cash used in financing activities during the first three months of 1998
was $64.4 million compared with $40.4 million for the first three months of
1997. This increase was due primarily to the reduction of debt due to lower
working capital requirements.
New Credit Facilities
On April 3, 1998, USSC entered into the New Credit Agreement with United as
guarantor, The Chase Manhattan Bank, as agent, and a group of banks and
financial institutions (including Chase, the "Senior Lenders"). The
following is a summary of the principal terms of the New Credit Agreement
which summary does not purport to be complete and is subject, and is
qualified in its entirety by reference to all the provisions of the New
Credit Agreement, as it may be further amended from time to time, a copy of
which is available upon request to the Company.
The New Credit Agreement provides for the funding of the Azerty Acquisition,
the refinancing of certain existing indebtedness and for other general
corporate purposes of the Company and its subsidiaries. The New Credit
Facilities under the New Credit Agreement consist of $150.0 million of
borrowings pursuant to the Tranche A Term Loan Facility and commitments of up
to $250.0 million of revolving loan borrowings pursuant to the Revolving
Credit Facility (including a sublimit of $90.0 million under the Revolving
Credit Facility for letters of credit). A portion of the Revolving Credit
Facility is allocated for swingline loans. The New Credit Facilities also
included borrowings of $100.0 million under the Tranche B Term Loan Facility.
A substantial portion of the Tranche B Term Loan Facility was repaid with
the net proceeds from the Notes Offering. The remainder of the Tranche B
Term Loan Facility was permanently repaid with proceeds from the sale of
certain receivables under the Receivables Securitization Program.
The loans under the Tranche A Term Loan Facility and the Revolving Credit
Facility generally bear interest as determined within a set range with the
rate based on the ratio of total debt (which excludes the face amount of any
undrawn letters of credit) of United and its subsidiaries to EBITDA (as
defined in the New Credit Agreement). The Tranche A Term Loan Facility and
the Revolving Credit Facility bear interest, at the option of the Company and
based upon financial performance, at the base rate (i.e., the higher of the
prime rate or federal funds plus 0.50%) plus 0% to 0.75% or London Interbank
Offered Rate ("LIBOR") plus 1.00% to 2.00%.
-13-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
- -------------------------------------------
As of the date of this filing, the outstanding principal balance of the
Tranche A Term Loan Facility consists of $150.0 million and matures on or
about March 31, 2004, and no amount of the Tranche B Term Loan Facility
remained outstanding, which had been scheduled to mature on or about
December 31, 2004. The term loans under the Tranche A Term Loan Facility are
repayable in consecutive quarterly installments commencing on or about June
30, 1998, the first four of which are each in the amount of $2.5 million, the
next four of which are each in the amount of $3.75 million, the next four of
which are each in the amount of $6.25 million, the next four of which are
each in the amount of $7.5 million and the last eight of which are each in
the amount of $8.75 million.
Loans under the Tranche A Term Loan Facility and the Revolving Credit
Facility may be prepaid at any time, and are subject to certain mandatory
prepayments out of (i) net proceeds received from the issuance of equity
by United or any of its subsidiaries subject to certain exceptions provided
in the New Credit Agreement, (ii) net proceeds from certain asset sales
in excess of $15.0 million, (iii) 50% of the Company's Excess Cash Flow
(as defined in the New Credit Agreement) for any fiscal year (commencing with
the fiscal year ending December 31, 1998), but only if the Debt to Cash
Flow Ratio (as defined in the New Credit Agreement) as of the last day of the
fiscal year is greater than 3.75 to 1, (iv) net proceeds received from
casualty events subject to certain exceptions provided within the New Credit
Agreement and (v) net proceeds received from certain debt issuances.
Prepayments under the Tranche A Term Loan Facility will be applied pro
rata to the remaining installments due under the Tranche A Term Loan
Facility and, next, to the permanent reduction of commitments (and the
payment of loans outstanding) under the Revolving Credit Facility.
The Tranche A Term Loan Facility and the Revolving Credit Facility are
guaranteed, on a joint and several basis, by the Company and all of the
direct and indirect domestic subsidiaries of USSC.
The Tranche A Term Loan Facility and the Revolving Credit Facility are
secured by perfected first priority pledges of the stock of the Company, all
of the stock of the domestic direct and indirect subsidiaries of the Company
and certain of the stock of all of the foreign direct and indirect
subsidiaries (other than the Receivables Company) of the Company and security
interests in, and liens upon, certain accounts receivable, inventory,
contract rights and other personal and certain real property of the Company
and its domestic subsidiaries. The New Credit Agreement provides for the
complete release, upon request by the Company, of the liens upon achievement
of an investment grade rating from S&P or Moody's for the unsecured long-term
debt of United or the Company for any quarter, and a partial release in the
event the Leverage Ratio (as defined in the New Credit Agreement) is less
than or equal to 3 to 1. The Majority Lenders (as defined in the New Credit
Agreement) may request that the security interests be regranted if the
Leverage Ratio for any subsequent quarter exceeds 3 to 1. In addition, the
New Credit Agreement permits the release of the Senior Lenders' lien in
connection with the sale of specified receivables under the Receivables
Securitization Program.
-14-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
- -------------------------------------------
The New Credit Agreement contains certain restrictive covenants that, among
other things, limit the ability of the Company and its subsidiaries to
dispose of assets, incur indebtedness or liens, pay dividends or make other
payments in respect of capital stock or subordinated indebtedness, make
investments or other acquisitions, engage in mergers or consolidations,
engage in transactions with affiliates, and engage in any business other than
specified businesses. In addition, the New Credit Agreement requires the
Company to comply with certain financial ratios and tests, including ratios
of total debt to EBITDA, cash flow to fixed charges, and EBITDA to interest
expense, and a minimum net worth test.
12.75% Notes
The 12.75% Notes were originally issued on May 3, 1995 pursuant to the 12.75%
Notes Indenture. As of the date hereof, the aggregate outstanding principal
amount of the 12.75% Notes was $100.00 million. The 12.75% Notes are
unsecured senior subordinated obligations of USSC, and payment of the 12.75%
Notes is fully and unconditionally guaranteed by the Company and USSC's
domestic "restricted" subsidiaries on a senior subordinated basis. The
12.75% Notes mature on May 1, 2005, and bear interest at the rate of 12.75%
per annum, payable semi-annually on May 1 and November 1 of each year.
In addition, the 12.75% Notes are redeemable at the option of USSC at any
time on or after May 1, 2000, in whole or in part, at the following
redemption prices (expressed as percentages of principal amount):
<TABLE>
<CAPTION>
Redemption
Year Beginning May 1 Price
- -------------------- ----------
<S> <C>
2000 ...................................................... 106.375%
2001 ...................................................... 104.781%
2002 ...................................................... 103.188%
2003 ...................................................... 101.594%
</TABLE>
and thereafter at 100.0% of the principal amount, in each case together with
accrued and unpaid interest, if any, to the redemption date.
Upon the occurrence of a change of control (which term includes the
acquisition by any person or group of more than 50% of the voting power of
the outstanding common stock of either the Company or USSC or certain
significant changes in the composition of the Board of Directors of either
the Company or USSC), USSC shall be obligated to offer to redeem all or a
portion of each holder's 12.75% Notes at 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
such redemption. Such obligation, if it arose, could have a material adverse
effect on the Company.
The 12.75% Notes Indenture governing the 12.75% Notes contains certain
covenants, including limitations on the incurrence of indebtedness, the
making of restricted payments, transactions with affiliates, the existence of
liens, disposition of proceeds of asset sales, the making of guarantees by
restricted subsidiaries, transfer and issuances of stock of subsidiaries, the
imposition of certain payment restrictions on restricted subsidiaries and
certain mergers and sales of assets.
-15-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
- -------------------------------------------
8.375% Notes
The 8.375% Notes were issued on April 15, 1998 pursuant to the 8.375% Notes
Indenture. As of the date hereof, the aggregate outstanding principal amount
of 8.375% Notes was $100.0 million. The 8.375% Notes are unsecured senior
subordinated obligations of USSC, and payment of the 8.375% Notes is fully
and unconditionally guaranteed by the Company and USSC's domestic
subsidiaries that incur Indebtedness (as defined in the 8.375% Notes
Indenture) on a senior subordinated basis. The 8.375% Notes mature on April
15, 2008, and bear interest at the rate of 8.375% per annum, payable
semi-annually on April 15 and October 15 of each year.
The 8.375% Notes Indenture provides that, prior to April 15, 2001, USSC may
redeem, at its option, up to 35% of the aggregate principal amount of the
8.375% Notes within 180 days following one or more Public Equity Offerings
(as defined in the 8.375% Notes Indenture) with the net proceeds of such
offerings at a redemption price equal to 108.375% of the principal amount
thereof, together with accrued and unpaid interest and Additional Amounts (as
defined in the 8.375% Notes Indenture), if any, to the date of redemption;
provided that immediately after giving effect to each such redemption, at
least 65% of the aggregate principal amount of the 8.375% Notes remain
outstanding after giving effect to such redemption.
In addition, the 8.375% Notes are redeemable at the option of USSC at any
time on or after April 15, 2003, in whole or in part, at the following
redemption prices (expressed as percentages of principal amount):
<TABLE>
<CAPTION>
Redemption
Year Beginning May 1 Price
- -------------------- ----------
<S> <C>
2003 ....................................................... 104.188%
2004 ....................................................... 102.792%
2005 ....................................................... 101.396%
2006 ....................................................... 100.000%
</TABLE>
and thereafter at 100.000% of the principal amount, in each case together
with accrued and unpaid interest, if any, to the redemption date.
Upon the occurrence of a change of control (which term includes the
acquisition by any person or group of more than 50% of the voting power of
the outstanding common stock of either the Company or USSC or certain
significant changes in the composition of the Board of Directors of either
the Company or USSC), USSC shall be obligated to offer to redeem all or a
portion of each holder's 8.375% Notes at 101% of the principal amount
thereof, together with accrued and unpaid interest, if any, to the date of
such redemption. Such obligation, if it arose, could have a material adverse
effect on the Company.
The 8.375% Notes Indenture governing the 8.375% Notes contains certain
covenants, including limitations on the incurrence of indebtedness, the
making of restricted payments, transactions with affiliates, the existence of
liens, disposition of proceeds of asset sales, the making of guarantees by
restricted subsidiaries, transfer and issuances of stock of subsidiaries, the
imposition of certain payment restrictions on restricted subsidiaries and
certain mergers and sales of assets. In addition, the 8.375% Notes Indenture
provides for the issuance thereunder of up to $100.0 million aggregate
principal amount of additional 8.375% Notes having substantially identical
terms and conditions to the 8.375% Notes, subject to compliance with the
covenants contained in the 8.375% Notes Indenture, including compliance with
the restrictions contained in the 8.375% Notes Indenture relating to
incurrence of indebtedness.
-16-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources (Continued)
- ------------------------------------------
Receivables Securitization Program
On April 3, 1998, in connection with the refinancing of its Existing Credit
Facilities, the Company entered into the $163.0 million 364-day Receivables
Securitization Program pursuant to which the Company sells its Eligible
Receivables (except for certain excluded receivables, which initially
includes all receivables from the Azerty Business and Lagasse) to the
Receivables Company, a wholly-owned offshore, bankruptcy-remote special
purpose limited liability company, which in turn ultimately transfers the
Eligible Receivables to a third-party, multi-seller asset-backed commercial
paper program existing solely for the purpose of issuing commercial paper
rated A-1/P-1 or higher. The sale of trade receivables includes not only
those Eligible Receivables that were existing on the closing date of the
Receivables Securitization Program, but also Eligible Receivables created
thereafter. The Company received approximately $160.0 million in proceeds
from the initial sale of certain Eligible Receivables on April 3, 1998.
The Chase Manhattan Bank acts as funding agent and, together with other
commercial banks rated at least A-1/P-1, provides standby liquidity funding
to support the purchase of the receivables by the Receivables Company. The
proceeds from the Receivables Securitization Program were used to reduce
borrowings under the Company's Revolving Credit Facility. The Receivables
Company retains an interest in the Eligible Receivables transferred to the
third party. The Receivables Securitization Program carries an effective
interest rate of LIBOR plus 0.37%. As a result of the Receivables
Securitization Program, actual balance sheet assets of the Company as of
March 31, 1998 of approximately $160.0 million, consisting of accounts
receivable, have been sold to the Receivables Company and do not secure the
Company's obligations under the New Credit Facilities.
-17-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Not applicable
ITEM 2 CHANGES IN SECURITIES
Not applicable
ITEM 3 DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5 OTHER INFORMATION
Not applicable
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit
Number
-------
2 Not applicable
10.1 Certificate of Insurance covering directors' and
officers' liability insurance effective April 1, 1998
through April 1, 2000.
11 Not applicable
15.1 Letter regarding unaudited interim financial information
18 Not applicable
19 Not applicable
22 Not applicable
23 Not applicable
24 Not applicable
27.1 Financial Data Schedule--United Stationers Inc.
27.2 Financial Data Schedule--United Stationers Supply Co.
99 Not applicable
-18-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATIONERS INC.
UNITED STATIONERS SUPPLY CO.
--------------------------------
(Registrant)
Date: May 8, 1998 /s/ Daniel H. Bushell
----------------------------
Daniel H. Bushell
Executive Vice President and
Chief Financial Officer
-19-
<PAGE>
UNITED STATIONERS INC. AND SUBSIDIARIES
INDEX TO EXHIBITS
(a) Exhibit
Number
-------
2 Not applicable
10.1 Certificate of Insurance covering directors' and
officers' liability insurance effective April 1, 1998
through April 1, 2000.
11 Not applicable
15.1 Letter regarding unaudited interim financial information
18 Not applicable
19 Not applicable
22 Not applicable
23 Not applicable
24 Not applicable
27.1 Financial Data Schedule--United Stationers Inc.
27.2 Financial Data Schedule--United Stationers Supply Co.
99 Not applicable
-20-
<PAGE>
Exhibit 10.1
ACORD Certificate of Insurance
Issue Date: April 20, 1998
Producer:
Malter Team
Mesirow Insurance Services
321 N. Clark Street, Suite 1200
Chicago, IL 60610
Insured:
United Stationers Inc. Et al
2200 East Golf Road
Des Plaines, IL 60016-1267
This certificate is issued as a matter of information only and confers no
rights upon the certificate holder. This certificate does not amend, extend
or alter the coverage afforded by the policies below.
Coverages:
This is to certify that the policies of insurance listed below have been
issued to the insured named above for the policy period indicated,
notwithstanding any requirement, term or condition of any contract or other
document with respect to which this certificate may be issued or may pertain,
the insurance afforded by the policies described herein is subject to all the
terms, exclusions and conditions of such policies. Limits shown may have
been reduced by paid claims.
Companies affording coverage:
A. FEDERAL INSURANCE COMPANY
Type of Insurance: Directors & Officers Liability
Policy Number: 8146-03-32
Policy Effective Date: 4/01/98
Policy Expiration Date: 4/01/00
Limits: $20,000,000
$250,000 Deductible
B. GREAT AMERICAN INSURANCE COMPANY
Type of Insurance: Excess Directors & Officers Liability
Policy Number: DFX0009370
Policy Effective Date: 4/01/98
Policy Expiration Date: 4/01/99
Limits: $15,000,000
Description of operations/locations/vehicles/special items:
None
<PAGE>
Certificate Holder:
United Stationers Inc.
2200 East Golf Road
Des Plaines, IL 60016
Cancellation:
Should any of the above described policies be canceled before the expiration
date thereof, the issuing company will endeavor to mail 30 days written
notice to the certificate holder named to the left, but failure to mail such
notice shall impose no obligation or liability of any kind upon the company,
its agents or representatives.
Authorized Representative:
James C. Styer
<PAGE>
EXHIBIT 15.1
May 8, 1998
The Board of Directors
United Stationers Inc.
We are aware of the incorporation by reference in the Registration Statement
(No. 333-02247) on Form S-3 of United Stationers Inc. for the registration of
a total of 2,035,243 shares of its common stock of our report dated
April 24, 1998 relating to the unaudited condensed consolidated interim
financial statements of United Stationers Inc. which are included in its
Form 10-Q for the period ended March 31, 1998.
Pursuant to Rule 436(c) of the Securities Act of 1933, our report is not a
part of the registration statement prepared or certified by accountants
within the meaning of Section 7 or 11 of the Securities Act of 1933.
/s/ Ernst & Young LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000355999
<NAME> UNITED STATIONERS, INC
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 11,504 12,367
<SECURITIES> 0 0
<RECEIVABLES> 289,532 304,547
<ALLOWANCES> 7,295 7,373
<INVENTORY> 484,911 511,555
<CURRENT-ASSETS> 794,406 850,687
<PP&E> 241,176 226,650
<DEPRECIATION> 79,282 56,864
<TOTAL-ASSETS> 1,087,692 1,148,021
<CURRENT-LIABILITIES> 363,082 399,238
<BONDS> 0 0
0 0
0 0
<COMMON> 1,602 1,591
<OTHER-SE> 235,164 221,717
<TOTAL-LIABILITY-AND-EQUITY> 1,087,692 1,148,021
<SALES> 712,517 635,021
<TOTAL-REVENUES> 712,517 635,021
<CGS> 589,455 526,279
<TOTAL-COSTS> 589,455 526,279
<OTHER-EXPENSES> 85,037 76,704
<LOSS-PROVISION> 583 1,586
<INTEREST-EXPENSE> 11,826 14,661
<INCOME-PRETAX> 26,199 17,377
<INCOME-TAX> 11,108 7,368
<INCOME-CONTINUING> 15,091 9,554
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 15,091 9,554
<EPS-PRIMARY> .94 0.78
<EPS-DILUTED> .88 0.65
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000945633
<NAME> UNITED STATIONERS SUPPLY CO.
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1997
<PERIOD-START> JAN-01-1998 JAN-01-1997
<PERIOD-END> MAR-31-1998 MAR-31-1997
<CASH> 11,504 12,367
<SECURITIES> 0 0
<RECEIVABLES> 289,532 304,547
<ALLOWANCES> 7,295 7,373
<INVENTORY> 484,911 511,555
<CURRENT-ASSETS> 794,406 850,687
<PP&E> 241,176 226,650
<DEPRECIATION> 79,282 56,864
<TOTAL-ASSETS> 1,087,692 1,148,021
<CURRENT-LIABILITIES> 363,082 399,238
<BONDS> 0 0
0 0
0 0
<COMMON> 1,602 1,591
<OTHER-SE> 235,164 221,717
<TOTAL-LIABILITY-AND-EQUITY> 1,087,692 1,148,021
<SALES> 712,517 635,021
<TOTAL-REVENUES> 712,517 635,021
<CGS> 589,455 526,279
<TOTAL-COSTS> 589,455 526,279
<OTHER-EXPENSES> 85,037 76,704
<LOSS-PROVISION> 583 1,586
<INTEREST-EXPENSE> 11,826 14,661
<INCOME-PRETAX> 26,199 17,377
<INCOME-TAX> 11,108 7,368
<INCOME-CONTINUING> 15,091 9,554
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 15,091 9,554
<EPS-PRIMARY> .94 0.78
<EPS-DILUTED> .88 0.65
</TABLE>
