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

Indicate by check mark whether registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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

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

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. ☐

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

On ~~October 20, 2017,~~August 3, 2018, the registrant had outstanding ~~37,611,803~~37,709,883 shares of common stock, par value $0.10 per share.

	(Unaudited)			(Audited)			(Unaudited)			(Audited)
	As of September 30,			As of December 31,			As of June 30,			As of December 31,
	2017			2016			2018			2017
ASSETS
Current assets:
Cash and cash equivalents	$	29,085		$	21,329		$	31,751		$	28,802
Accounts receivable, less allowance for doubtful accounts of $17,167 in 2017 and $18,196 in 2016		689,169			678,184
Accounts receivable, less allowance for doubtful accounts of $16,677 in 2018 and $17,102 in 2017								640,134			619,200
Inventories		753,592			876,837			742,886			821,683
Other current assets		39,282			32,100			63,903			43,044
Total current assets		1,511,128			1,608,450			1,478,674			1,512,729
Property, plant and equipment, net		130,328			128,251			129,927			132,793
Intangible assets, net		75,938			83,690			68,547			73,441
Goodwill		13,164			297,906			13,065			13,153
Other long-term assets		46,930			45,209			73,061			42,134
Total assets	$	1,777,488		$	2,163,506		$	1,763,274		$	1,774,250
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	545,125		$	484,602		$	526,263		$	500,883
Accrued liabilities		189,532			197,804			195,342			189,916
Current maturities of long-term debt		6,084			28			6,072			6,079
Total current liabilities		740,741			682,434			727,677			696,878
Deferred income taxes		1,326			6,378			1,175			1,192
Long-term debt		453,173			608,941			518,660			492,044
Other long-term liabilities		72,370			84,647			76,525			89,222
Total liabilities		1,267,610			1,382,400			1,324,037			1,279,336
Stockholders’ equity:
Common stock, $0.10 par value; authorized - 100,000,000 shares, issued - 74,435,628 shares in 2017 and 2016		7,444			7,444
Common stock, $0.10 par value; authorized - 100,000,000 shares, issued - 74,435,628 shares in 2018 and 2017								7,444			7,444
Additional paid-in capital		411,996			409,805			415,449			412,987
Treasury stock, at cost – 36,819,759 shares in 2017 and 36,951,522 shares in 2016		(1,093,993	)		(1,096,744	)
Treasury stock, at cost – 36,725,594 shares in 2018 and 36,811,366 shares in 2017								(1,091,993	)		(1,093,813	)
Retained earnings		1,226,065			1,507,057			1,156,910			1,219,309
Accumulated other comprehensive loss		(41,634	)		(46,456	)		(48,573	)		(51,013	)
Total stockholders’ equity		509,878			781,106			439,237			494,914
Total liabilities and stockholders’ equity	$	1,777,488		$	2,163,506		$	1,763,274		$	1,774,250

	For the Three Months Ended					For the Nine Months Ended					For the Three Months Ended					For the Six Months Ended
	September 30,					September 30,					June 30,					June 30,
	2017			2016		2017			2016		2018			2017* Revised		2018			2017* Revised
Net sales	$	1,308,979		$	1,407,504	$	3,839,018		$	4,114,323	$	1,254,222		$	1,260,656	$	2,494,378		$	2,530,038
Cost of goods sold		1,137,025			1,208,650		3,303,832			3,519,564		1,081,016			1,083,092		2,199,996			2,166,807
Gross profit		171,954			198,854		535,186			594,759		173,206			177,564		294,382			363,231
Operating expenses:
Warehousing, marketing and administrative expenses		168,526			138,107		503,243			463,410		156,574			160,972		322,119			333,270
Restructuring charges												8,019			-		22,080			-
Impairment of goodwill		86,339			-		285,166			-		-			-		-			198,828
Defined benefit plan settlement loss		-			419		-			12,163
Operating (loss) income		(82,911	)		60,328		(253,223	)		119,186		8,613			16,592		(49,817	)		(168,867	)
Interest expense, net		6,116			6,484		19,154			18,058
Interest and other expense, net												8,850			7,022		17,072			14,485
(Loss) income before income taxes		(89,027	)		53,844		(272,377	)		101,128		(237	)		9,570		(66,889	)		(183,352	)
Income tax (benefit) expense		(7,089	)		17,102		(6,943	)		34,923		(140	)		4,474		(15,352	)		146
Net (loss) income	$	(81,938	)	$	36,742	$	(265,434	)	$	66,205	$	(97	)	$	5,096	$	(51,537	)	$	(183,498	)
Net (loss) income per share - basic:	$	(2.23	)	$	1.00	$	(7.23	)	$	1.81	$	(0.00	)	$	0.14	$	(1.40	)	$	(5.01	)
Average number of common shares outstanding - basic		36,750			36,578		36,692			36,560		36,925			36,673		36,895			36,659
Net (loss) income per share - diluted:	$	(2.23	)	$	0.99	$	(7.23	)	$	1.79	$	(0.00	)	$	0.14	$	(1.40	)	$	(5.01	)
Average number of common shares outstanding - diluted		36,750			36,938		36,692			36,896		36,925			36,873		36,895			36,659
Dividends declared per share	$	0.14		$	0.14	$	0.42		$	0.42	$	0.14		$	0.14	$	0.28		$	0.28

* Revised for the impact of the adoption of a new pension accounting pronouncement (see Note 9 – “Pension and Post-Retirement Benefit Plans”) for further detail.

	For the Three Months Ended						For the Nine Months Ended						For the Three Months Ended						For the Six Months Ended
	September 30,						September 30,						June 30,						June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Net (loss) income	$	(81,938	)	$	36,742		$	(265,434	)	$	66,205		$	(97	)	$	5,096		$	(51,537	)	$	(183,498	)
Other comprehensive (loss) income, net of tax
Translation adjustments		1,303			(692	)		2,780			2,441			(697	)		1,092			(1,625	)		1,477
Minimum pension liability adjustments		675			(2,298	)		2,083			6,035			1,045			704			2,089			1,408
Cash flow hedge adjustments		(73	)		288			(41	)		(139	)		485			(36	)		1,976			32
Total other comprehensive (loss) income, net of tax		1,905			(2,702	)		4,822			8,337
Comprehensive (loss) income	$	(80,033	)	$	34,040		$	(260,612	)	$	74,542
Total other comprehensive income, net of tax														833			1,760			2,440			2,917
Comprehensive income (loss)													$	736		$	6,856		$	(49,097	)	$	(180,581	)

	For the Nine Months Ended						For the Six Months Ended
	September 30,						June 30,
	2017			2016			2018			2017
Cash Flows From Operating Activities:
Net (loss) income	$	(265,434	)	$	66,205
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Net loss							$	(51,537	)	$	(183,498	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		32,567			34,199			21,389			21,534
Share-based compensation		6,115			6,903			4,441			4,038
Gain on the disposition of property, plant and equipment		(906	)		(21,027	)		(771	)		(656	)
Amortization of capitalized financing costs		1,065			502			713			804
Excess tax cost related to share-based compensation		-			960
Deferred income taxes		(15,887	)		(6,970	)		(9,352	)		(270	)
Change in contingent consideration								(700	)		-
Impairment of goodwill		285,166			-			-			198,828
Change in contingent consideration		(4,457	)		-
Pension settlement charge		-			12,163
Changes in operating assets and liabilities:
Increase in accounts receivable, net		(10,611	)		(35,457	)
(Increase) decrease in accounts receivable, net								(21,385	)		14,434
Decrease in inventory		123,870			73,735			78,385			76,757
Increase in other assets		(1,664	)		(35,221	)		(22,108	)		(1,178	)
Increase in accounts payable		60,706			8,902			25,189			24,133
Increase in accrued liabilities		2,349			13,659
Increase (decrease) in accrued liabilities								9,368			(19,603	)
Decrease in other liabilities		(7,886	)		(12,585	)		(9,955	)		(9,512	)
Net cash provided by operating activities		204,993			105,968			23,678			125,811
Cash Flows From Investing Activities:
Capital expenditures		(24,509	)		(28,167	)		(16,026	)		(13,677	)
Proceeds from the disposition of property, plant and equipment		46			33,890			296			-
Net cash (used in) provided by investing activities		(24,463	)		5,723
Investment in independent reseller channel								(19,000	)		-
Net cash used in investing activities								(34,730	)		(13,677	)
Cash Flows From Financing Activities:
Net repayments under revolving credit facility		(19,122	)		(96,640	)
Net borrowing under revolving credit facility								28,867			31,375
Borrowings under Term Loan		77,600			-			-			77,600
Repayments under Term Loan		(3,036	)		-			(3,036	)		(1,518	)
Contingent consideration								(967	)		-
Net repayments under Securitization Program		(200,000	)		-			-			(200,000	)
Net (disbursements) proceeds from share-based compensation arrangements		(1,273	)		621
Acquisition of treasury stock, at cost		-			(6,839	)
Net disbursements from share-based compensation arrangements								(238	)		(600	)
Payment of cash dividends		(15,518	)		(15,355	)		(10,425	)		(10,339	)
Excess tax cost related to share-based compensation		-			(960	)
Payment of debt issuance costs		(6,317	)		(86	)		-			(6,277	)
Contingent consideration		(5,543	)		-
Net cash used in financing activities		(173,209	)		(119,259	)
Net cash provided by (used in) financing activities								14,201			(109,759	)
Effect of exchange rate changes on cash and cash equivalents		435			232			(200	)		185
Net change in cash and cash equivalents		7,756			(7,336	)		2,949			2,560
Cash and cash equivalents, beginning of period		21,329			29,983			28,802			21,329
Cash and cash equivalents, end of period	$	29,085		$	22,647		$	31,751		$	23,889
Other Cash Flow Information:
Income tax payments, net	$	23,165		$	27,821		$	843		$	19,058
Interest paid		19,187			19,607			14,537			11,809

The accompanying Condensed Consolidated Financial Statements represent Essendant Inc. (“ESND”) with its wholly owned subsidiary Essendant Co. (“ECO”), and ECO’s subsidiaries (collectively, “Essendant” or the “Company”). The Condensed Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States and include the accounts of ESND and its subsidiaries. All intercompany transactions and balances have been eliminated. The Company operates in a single reportable segment as a leading national ~~wholesale~~ distributor of workplace items.

The accompanying Condensed Consolidated Financial Statements are unaudited. The Condensed Consolidated Balance Sheet as of December 31, ~~2016,~~2017, was derived from the December 31, ~~2016~~2017 audited financial statements. The Condensed Consolidated Financial Statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements, prepared in accordance with accounting principles generally accepted in the United States, have been condensed or omitted pursuant to such rules and regulations. Accordingly, the reader of this Quarterly Report on Form 10-Q should refer to the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017 (the ~~“2016~~“2017 Form 10-K”) for further information.

In the opinion of management, the accompanying unaudited Condensed Consolidated Financial Statements reflect all adjustments, consisting only of normal recurring adjustments, necessary to present fairly the financial position of Essendant at ~~September~~June 30, ~~2017~~2018 and the results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016,~~2017, and cash flows for the ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016.~~2017. The results of operations for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 should not necessarily be taken as indicative of the results of operations that may be expected for the entire year.

~~In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting~~. Under the new guidance, when awards vest or are settled, companies are required to record excess tax benefits and tax deficiencies as income tax expense or benefit in the income statement instead of in additional paid-in capital. Furthermore, excess tax benefits are presented as an operating activity on the statement of cash flows rather than as a financing activity. On January 1, 2017, the Company adopted the standard which resulted in $1.1 million and $1.9 million of incremental tax expense in the three and nine months ended September 30, 2017, respectively, due to excess tax deficiencies of vested or settled awards. Furthermore, the adoption of the standard by the Company resulted in changes in the calculation of the effect of dilutive securities for purposes of calculating diluted net income per share, which was immaterial in the period, and Condensed Consolidated Statement of Cash Flows presentation changes. The Company has elected to apply guidance concerning cash flow presentation on a prospective basis and to continue to estimate the number of awards expected to be forfeited.

~~In January 2017, the FASB issued ASU No. 2017-04,~~ ~~Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment,~~ which eliminates the second step of the two-step goodwill impairment test. Specifically, the standard requires an entity to perform its interim or annual goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair value; however, the loss recognized could not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform a qualitative assessment to determine if the quantitative impairment test is necessary. The Company early adopted the standard in the quarter ended March 31, 2017 when an interim impairment test was conducted as further discussed in Note 4 – “Goodwill and Intangible Assets”.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers,~~ that outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The ASU is based on the principle that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to fulfill a contract. In August 2015, the FASB issued ASU No. 2015-14, ~~Revenue from Contracts with Customers,~~ ~~which deferred the effective date of ASU No. 2014-09. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period.~~

Entities have the option of using either a full retrospective or a modified retrospective approach for the adoption of the new standard. The Company plans to adopt the standard using the modified retrospective approach, which will require the Company to recognize the cumulative effect of initial adoption of the standard for all contracts as of, and new contracts after, the date of initial application.

Based on the Company’s current assessment and detailed review of the revenue transactions of the organization with its customers, the impact of the application of the new standard is expected to be immaterial. The Company expects revenue recognition related to the processing, fulfillment and shipment of various warehoused goods to remain substantially unchanged. The Company also expects disclosure changes. The Company will continue to monitor for modifications to the standards throughout the year ended December 31, 2017.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), that requires lessees to recognize right-of-use assets and lease liabilities for all leases other than those that meet the definition of short-term leases. For short-term leases, lessees may elect an accounting policy by class of underlying asset under which these assets and liabilities are not recognized and lease payments are generally recognized over the lease term on a straight-line basis. This standard will be effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial ~~statements.~~statements and disclosures, but expects the impact to the Company’s consolidated balance sheet to be significant. The Company is in the process of analyzing existing leases and processes to support additional disclosures under the standard.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities. This update provides guidance concerning the financial reporting of hedging relationships to better portray the economic results of an entity’s risk management activities in its financial statements and expands the ability to apply hedge accounting to financial and nonfinancial risk components. Additionally, the standard eliminates the need to separately measure and report hedge ineffectiveness and generally requires the entire change in fair value of a hedging instrument to be presented in the same income statement line as the hedged item. The amendments in the standard are effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. The standard addresses the “stranded” tax effects resulting from the 2017 Tax Act in accumulated other comprehensive income. The effect of changes in tax laws or rates included in income from continuing operations are unaffected. The standard is effective for annual periods beginning after December 15, 2018, including interim periods within that reporting period with early adoption permitted. Disclosures are required in the period of adoption. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic 326) Measurement of Credit Losses on Financial ~~Instruments~~.Instruments. This standard replaces the incurred loss methodology previously employed to measure credit losses for most financial assets and requires the use of a forward-looking expected loss model. Current accounting delays the recognition of credit losses until it is probable a loss has been incurred, while the update will require financial assets to be measured at amortized costs less a reserve and equal to the net amount expected to be collected. This standard will be effective for annual periods beginning after December 15, 2019, including interim periods within that reporting period, and early application is permitted. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial ~~statements.~~statements

~~In August 2016, the FASB issued ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230), Classification of Certain Cash Receipts and Cash Payments~~. This standard amends and adjusts how cash receipts and cash payments are presented and classified in the statement of cash flows and is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years and will require adoption on a retrospective basis unless impracticable. If impracticable the Company would be required to apply the amendments prospectively as of the earliest date possible. The Company believes the impact of adoption of the new standard will be immaterial.

~~In March 2017, the FASB issued ASU No. 2017-07,~~ ~~Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~. The standard requires registrants that include a measure of operating income to include the service cost component in the same financial statement line item as other compensation costs and to report other pension-related costs, including amortization of prior service cost/credit, and settlement and curtailment effects, etc. separately, excluding them from operating expenses and income. The ASU also stipulates that only the service cost component of net benefit cost is eligible for capitalization. Application of the standard is required to be made on a retrospective basis for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement while the change in capitalized benefit cost is to be applied prospectively. This standard will be effective for annual periods beginning after December 15, 2017, including interim periods within that reporting period, and early application is permitted as of the beginning of an annual period. The Company is currently evaluating the new guidance to determine the impact it will have on the presentation of the Company’s consolidated financial statements, but does not expect an impact on net income.

Approximately ~~98.3%~~98.2% and 98.0% of total inventory as of ~~September~~June 30, ~~2017,~~2018 and December 31, ~~2016,~~2017, respectively, has been valued under the Last-In-First-Out (“LIFO”) method. An actual valuation of inventory under the LIFO method can be made only at the end of each fiscal year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs, and are subject to the final year-end LIFO inventory valuation. Inventory valued under the LIFO accounting method is recorded at the lower of cost or market. If the Company had valued its entire inventory under the lower of First-In-First-Out (“FIFO”) cost or market, inventory values would have been ~~$158.2~~$168.7 million and ~~$147.9~~$159.3 million higher than reported as of ~~September~~June 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, respectively.

For ~~the three months ended September 30, 2017, there was a $0.1 million reduction in LIFO liquidations compared to the $1.3 million reported in~~ the six months ended June 30, ~~2017. For the nine months ended September 30, 2017,~~2018, LIFO liquidations resulted in LIFO income of ~~$1.2~~$2.5 million, which was more than offset by LIFO ~~expense~~expenses in the three and six months ended June 30, 2018 of ~~$11.5~~$1.4 million and $11.9 million related to current inflation, for an overall net increase in cost of sales of ~~$10.3 million.~~$1.4 million and $9.4 million, respectively. LIFO liquidations occur when there are decrements of LIFO inventory quantities carried at lower costs in prior years as compared with the cost of current year purchases.

On January 1, 2018, the Company adopted Topic 606 applying the modified retrospective transition method to all contracts that were not completed as of January 1, 2018. Results for reporting periods beginning after December 31, 2017 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported under the accounting standards in effect for the prior period. The Company recorded a net reduction to beginning retained earnings of $0.4 million as of January 1, 2018 due to the cumulative impact of adopting Topic 606. The impact to revenues for the three and six-month periods ended June 30, 2018 was immaterial as a result of adopting Topic 606.

The following is a description of principal activities from which the Company generates its revenue. Revenues are recognized when control of the promised goods are transferred to or services are performed for customers, in an amount that reflects the consideration that the Company expects to receive in exchange for those goods or services.

The Company principally generates revenue from selling workplace products to reseller customers under a contract or by purchase order. The Company’s product offerings may be divided into the following primary categories: (1) janitorial, foodservice and breakroom supplies, including janitorial and sanitation supplies, breakroom items, foodservice consumables, safety and security items and paper and packaging supplies; (2) technology products, including computer accessories and computer hardware items such as printers and other peripherals, imaging supplies and data storage; (3) traditional office products, including writing instruments, business machines, filing and record storage products, presentation products, shipping and mailing supplies, calendars and general office accessories; (4) industrial supplies, including various industrial MRO (maintenance, repair and operations) items, hand and power tools, safety and security supplies, janitorial equipment, oilfield and welding supplies; (5) cut sheet paper products, including copy paper with a wide assortment of styles and types; (6) automotive products, including a broad portfolio of automotive aftermarket tools and equipment; and (7) office furniture, including desks, filing and storage solutions, seating and systems furniture, along with a variety of specialized products for niche markets such as education, government, healthcare and professional services.

Control of goods usually transfers to the customer when those goods are shipped. For certain customers, control of goods transfers when those goods are delivered. Merchandise sales are billed daily or monthly. The amount of revenue recognized for merchandise sales is adjusted for expected returns, which are estimated based on historical product return trends and the gross margin associated with those returns; cash discounts, which are estimated based on customer purchases and discount terms and historical payments; and rebates, which are estimated based on sales volume to customers and customer rebate terms. The Company presents this revenue in net sales.

The remainder of the Company’s consolidated net sales were generated by advertising, fulfillment and other services. Advertising revenue is generated from the sale of catalogs and other advertising materials to customers over time. The Company also offers fulfillment services including fulfillment of product orders on behalf of the customer and call center support. The Company acts as an agent of the customer and therefore recognizes revenue on a net basis. The Company presents other revenues in net sales.

In accordance with authoritative Generally Accepted Accounting Principles (“GAAP”), the following table disaggregates revenue from contracts with customers into product categories. The Company has determined that disaggregating revenue into these categories provides appropriate disclosure and achieves associated objectives to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by economic factors. The Company generated 98% of net sales from its operations in the United States in the three and six months ended June 30, 2018 and 2017. As noted in the Company’s 2017 Form 10-K the Company has one reportable segment.

The disaggregated revenue for the three and six months ended June 30, 2018, and 2017 are as follows (in thousands):

	Three months ended June 30,				Six months ended June 30,
	2018		2017		2018		2017

Product categories:
Janitorial, foodservice and breakroom supplies (JanSan products)	$	346,305	$	349,700	$	674,809	$	695,127
Technology products		298,801		309,689		613,621		626,900
Traditional office products		176,617		186,708		355,568		384,740
Industrial supplies		163,031		146,104		318,241		293,303
Cut sheet paper products		116,020		109,631		235,587		215,795
Automotive products		85,389		82,143		166,381		160,949
Office furniture		62,997		69,939		121,798		142,027
Other revenues		5,062		6,742		8,373		11,198
Total revenue	$	1,254,222	$	1,260,656	$	2,494,378	$	2,530,038

Cost of sales for the three months ended June 30, 2018 and 2017 totaled $1.1 billion and $1.1 billion, while cost of sales for the six months ended June 30, 2018 and 2017, totaled $2.2 billion and $2.2 billion, respectively.

The Company enters into contracts to sell goods to resellers with credit terms that vary based on the risk of the customer, the volume of transactions and the nature of contractual terms. These credit terms may allow the customer to make payment in arrears, which are adjusted for significant financing components when recorded as an account receivable. The Company also provides certain contract rebates, upfront marketing arrangements, acquisition assistance and other rebates which are intended to incentivize customers to engage in long-term purchase arrangements with the Company. These are either prepaid at contract inception and amortized over the term of the contract or accrued over the contract term. Prepaid customer rebates are included as a component of either “Other current assets” or “Other assets” in the Condensed Consolidated Balance Sheets, while accrued customer rebates are included as a component of “Accrued liabilities” in the Condensed Consolidated Balance Sheets, refer to Note 11 – “Other Assets and Liabilities.”

Prepaid customer rebates at June 30, 2018 consisted of amounts to be amortized as a reduction of revenues in the future as follows:

As of ~~September~~June 30, ~~2017,~~2018, no revenue is expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period. This disclosure does not include revenue related to performance obligations that are part of a contract whose original expected duration is one year or less.

At the inception of each contract, the Company assesses the goods and services promised in its contracts and identifies each distinct performance obligations. To identify the performance obligations, the Company considers all goods or services promised regardless of whether they are explicitly stated or implied within the contract or by standard business practices. The Company determined that net merchandise sales to resellers and end-consumers represent performance obligations. This includes the packing and shipping of product through either delivery to the reseller or direct delivery to the end-consumer.

Shipping and handling activities performed before the customer obtains control of the goods are not considered promised services under customer contracts and therefore are not distinct performance obligations. The Company has chosen to make an accounting policy election to account for shipping and handling activities that occur after the customer obtains control of the goods as a fulfillment activity, and therefore accrues the expense of shipping and handling in cost of goods sold when merchandise is shipped. Shipping and handling costs billed to customers are part of the contract consideration and recognized at the time control of the promised goods has transferred to the customer. Control of goods generally transfers to the customer when those goods are shipped (FOB-shipping point).

For performance obligations related to sales, revenue is recognized when control is transferred. Determining when control transfers requires judgments that affect the timing of revenue recognized. Generally, revenue is recognized at a point in time when shipment occurs from the Company’s warehousing facilities. At this time, the customer is able to direct the use of the product and obtains substantially all of the benefits and risks from the product or service. The Company has a present right to payment at that time, the customer has legal title to the product, and the Company has ~~two active equity compensation plans. Under~~transferred physical possession.

Payment terms for net merchandise sales, fulfillment and other services are dependent on the 2015 Long-Term Incentive Plan (as amended and restated), award instruments include, but are not limited to, stock options, restricted stock awards, restricted stock units (“RSUs”), and performance-based awards. Associates and non-employee directorsagreed upon contractual repayment terms of the customer. Typically, these vary dependent on the size of the customer and its risk profile to the Company. Some customers receive discounts based on the contractual terms wherein early payment reduces the net payment amount. Conversely, for some customers the Company ~~are eligible~~provides enhanced payment terms which can extend up to ~~become participants~~and in excess of one year from invoicing. In some instances, these enhanced terms represent a significant financing component with an assumption of implicit interest. These amounts were immaterial in the ~~plan.~~period of adoption.

Given the Company’s reliance on customer rebates and discounts of the selling price of net sales, the Company notes that many of the contracts contain variable consideration payable to the customer that is recognized when the underlying revenue associated with the rebate and discount is recognized. Customer rebates and discounts include volume components, growth components, conversions, promotions, discount programs, and other programs. Estimates for customer rebates and discounts are based on both historical and estimated sales volume and other drivers as dictated by the contract. Changes in estimates of sales volume, product mix, customer mix or sales patterns, or actual results that vary from such estimates may impact future results.

In the normal course of business, the Company accepts product returns based on certain contractual terms, typically for product expiration dating or damage. The ~~Nonemployee Directors’ Deferred Stock Compensation Plan allows non-employee directors~~Company estimates reserves for returns and the related refunds to ~~elect~~customers based on historical experience of similar products and customers, as applicable. Reserves for returned merchandise are included as a component of “Other current assets” in the Condensed Consolidated Balance Sheets, while refund liabilities are included as a component of “Accrued liabilities.”

The Company has determined to ~~defer receipt~~utilize the modified retrospective approach which requires cumulative effect adjustment to the opening balance of retained earnings in the current year. This opening adjustment is determined based on the impact of the new revenue standard’s application on contracts that were not completed as of January 1, 2018, the date of initial application of the standard. This election had an immaterial impact on the Company’s financial statements.

The Company applies the practical expedient in Accounting Standard Codification (“ASC”) 606-10-65-1(f)(4) and does not retrospectively restate contracts for contract modifications that occurred before the beginning of the earliest reporting period presented. Instead, the Company has aggregated the effect of all modifications that occurred before the earliest reporting period presented. The effect of applying this practical expedient was immaterial.

For the Company’s contracts that have an original duration of one year or less, the Company uses the practical expedient in ASC 606-10-32-18 applicable to such contracts and does not consider the time value of money in relation to significant financing components. The effect of applying this practical expedient was immaterial.

Per ASC 606-10-25-18B, the Company has elected to account for shipping and handling activities that occur after the customer has obtained control as a ~~portion~~fulfillment activity instead of ~~their annual retainer~~a performance obligation. Furthermore, shipping and handling activities performed before transfer of control of the product also do not constitute a separate and distinct performance obligation.

The Company has elected to exclude from the transaction price those amounts which relate to sales and other taxes that are assessed by governmental authorities and that are imposed on and concurrent with a specific revenue-producing transaction and collected by the Company from a customer.

The Company applies the practical expedient in ~~deferred stock units.~~ASC 606-10-50-14 and is not required to determine the amount of the transaction price allocated to the remaining performance obligations that have original expected durations of one year or less. The effect of applying this practical expedient was immaterial as the Company has no remaining performance obligations associated with merchandise sales as of December 31, 2017.

Applying the practical expedient in ASC 340-40-25-4, the Company recognizes the incremental costs of obtaining contracts as an expense when incurred if the amortization period would have been one year or less. These costs are included in “Warehouse, marketing and administrative expenses.” The effect of applying this practical expedient was immaterial.

During the three months ended ~~September~~June 30, ~~2017,~~2018, the Company granted ~~276,671~~45,280 RSUs and no shares of restricted stock or performance-based units, compared to 68 RSUs and 15,577 shares of restricted stock in the same period of 2017. No performance-based units were granted in the three months ended June 30, 2018 or 2017.

During the six months ended June 30, 2018, the Company granted 107,296 shares of restricted stock, 45,280 RSUs and 634,778 performance-based units, compared to 58,962 shares of restricted stock and ~~50,080 RSUs, compared to 397,638 shares of restricted stock and 43,069~~221,365 RSUs in the same period of ~~2016. The Company~~2017. No performance units were granted ~~335,633 shares of restricted stock and 271,445 RSUs during~~in the ~~first nine~~six months ~~of 2017, compared to 526,697 shares of restricted stock and 290,725 RSUs during the first nine months of 2016.~~ended June 30, 2017.

~~Commencing in~~In 2015, the Company ~~began certain~~commenced two restructuring actions ~~which~~that included workforce reductions, facility closures and actions to reduce costs through management delayering in order to achieve broader functional alignment of the ~~organization.~~organization (“2015 restructuring action”). The charges associated with ~~these actions~~this action were included in ~~“warehousing,~~“Warehousing, marketing and administrative expenses.” ~~These actions were~~This action was substantially completed in 2016. ~~No expenses have been recorded~~

In the first quarter of 2018, the Company launched a restructuring program (“2018 restructuring action”) that will span to mid-2020. It includes facility consolidations totaling an anticipated $23 million to $28 million and workforce reductions totaling an anticipated $7 million to $12 million, or in aggregate an estimated cash cost of $30 million to $40 million over the restructuring period. These amounts are included in restructuring charges in the Condensed Consolidated Statement of Operations in the three ~~or nine~~and six months ended ~~September~~June 30, ~~2017.~~2018.

Product assortment refinement charges have also been incurred and are reflected as additional cost of goods sold in the three and six months ended June 30, 2018. The reduction in product assortment charges in the three months ended June 30, 2018 was due to better recovery rates than previously estimated.

The expenses, cash flows, and ~~accrued~~ liabilities associated with the 2015 and 2018 restructuring actions described above are noted in the following table (in thousands):

	(Benefit) Expense						Cash flow				Accrued Liabilities				Expense						Cash flow				Liabilities
	For the three months ended September 30,			For the nine months ended September 30,			For the nine months ended September 30,				As of September 30,		As of December 31,		For the three months ended June 30,			For the six months ended June 30,			For the six months ended June 30,		For the six months ended June 30,		As of June 30,		As of December 31,
	2016			2016			2017		2016		2017		2016		2018			2018			2018		2017		2018		2017
Fourth quarter 2015 Action
Workforce reduction	$	(700	)	$	(700	)	$	427	$	7,996	$	997	$	1,424
2018 Actions:
Product assortment refinement															$	(8,554	)	$	34,269			-		-		-		-

First quarter 2015 Actions
Workforce reduction	$	(510	)	$	(510	)	$	94	$	687	$	664	$	758		(152	)		11,436			2,592		-		8,844		-
Facility closure		-			254			-		501		-		-		8,171			11,183			7,235		-		3,770	$	-
Total	$	(510	)		(256	)	$	94	$	1,188	$	664	$	758	$	8,019		$	22,619		$	9,827	$	-	$	12,614	$	-

Fourth Quarter 2015 Actions:
Workforce reduction															$	(13	)	$	(553	)	$	103	$	316	$	261	$	917

First Quarter 2015 Actions:
Workforce reduction															$	-		$	-		$	-	$	94	$	664	$	664

Total															$	(548	)	$	56,335		$	9,930	$	410	$	13,539	$	1,581

Due to changes in management structure to allow for sales and operational efficiency, a new Canadian operating segment was created in the first quarter of 2018. This segment includes operations previously included in the Industrial and Automotive segments. The Canadian operating segment does not meet the materiality thresholds for reporting of individual segments and is combined with the other operating segments into one reportable segment. The Company tests goodwill for impairment annually as of October 1 and whenever triggering events or circumstances, such as macroeconomic conditions, market considerations, overall financial performance or a sustained decrease in share price, among others, indicates that an impairment may have occurred. When a triggering event is identified, an assessment of whether an impairment has ~~occurred is performed that requires a comparison of the carrying value of the net assets of the reporting unit to the fair value of the respective reporting unit.~~

~~In the quarter ended September 30, 2017, as a result of sales, earnings, and sustained market capitalization declines compared to book value during the quarter, the Company~~ determined that ~~a triggering event had occurred for all of its reporting units, requiring an interim impairment test of goodwill in~~ each of the Company’s goodwill reporting ~~units. As a result of these impairment tests, the Company determined that the carrying value of net assets for three~~units comprise an operating segment. At June 30, 2018, goodwill balances of the ~~four~~ reporting units ~~of the Company exceeded its fair value. In accordance with the provisions of ASU 2017-04 (refer to Note 1 – “Basis of Presentation”) the Company recognized a goodwill impairment charge of $86.3~~were $11.1 million ~~in aggregate based on the balances of goodwill in the impacted reporting units~~at Industrial and the difference between the carrying value of net assets and fair value, which was calculated based on the combination of market prices, merger and acquisitions (“M&A”) transactions of comparable businesses and forecasted future discounted cash flows.$2.0 million at Canada.

Previously, in the quarter ended March 31, 2017, a sustained decrease in the Company’s share price and related market capitalization was also considered a triggering event for all of its reporting units, requiring an interim impairment test of goodwill in each reporting unit. During this assessment, the Company determined that the carrying value of net assets for three of the four reporting units of the Company exceeded fair value and recognized a goodwill impairment charge of $198.8 million in aggregate.

~~The carrying amount of goodwill by reporting unit and impairment recognized is noted in the table below (in thousands):~~

Acquired intangible assets are initially recorded at their fair market values determined based on quoted market prices in active markets, if available, or recognized valuation models. The Company’s intangible assets have finite useful lives and are amortized on a straight-line basis over their useful lives. As a result of the indicators discussed above, during the quarter ended September 30, 2017, the Company identified a triggering event for certain long-lived asset groups within the reporting units noted above, requiring an assessment of whether the long-lived asset groups were impaired. The Company completed its test for recoverability of these asset groups utilizing certain cash-flow projections and determined that the undiscounted cash flows related to these asset groups over the estimated remaining useful lives exceeded their book value, and therefore, no additional assessment of the asset groups fair value compared to its carrying value was required.

The following table summarizes the intangible assets of the Company by major class of intangible asset and the cost, accumulated amortization, net carrying amount, and weighted average life, if applicable (in thousands):

	September 30, 2017								December 31, 2016								June 30, 2018								December 31, 2017
								Weighted								Weighted								Weighted								Weighted
								Average								Average								Average								Average
	Gross					Net		Useful	Gross					Net		Useful	Gross					Net		Useful	Gross					Net		Useful
	Carrying		Accumulated			Carrying		Life	Carrying		Accumulated			Carrying		Life	Carrying		Accumulated			Carrying		Life	Carrying		Accumulated			Carrying		Life
	Amount		Amortization			Amount		(years)	Amount		Amortization			Amount		(years)	Amount		Amortization			Amount		(years)	Amount		Amortization			Amount		(years)
Intangible assets subject to amortization
Customer relationships and other intangibles	$	138,194	$	(69,964	)	$	68,230	16	$	137,452	$	(62,235	)	$	75,217	16	$	137,672	$	(76,333	)	$	61,339	16	$	138,110	$	(72,192	)	$	65,918	16
Non-compete agreements		4,660		(4,260	)		400	4		4,649		(4,260	)		389	4		4,652		(4,260	)		392	4		4,659		(4,260	)		399	4
Trademarks		13,773		(6,465	)		7,308	14		13,704		(5,620	)		8,084	14		13,725		(6,909	)		6,816	14		13,766		(6,642	)		7,124	14
Total	$	156,627	$	(80,689	)	$	75,938		$	155,805	$	(72,115	)	$	83,690		$	156,049	$	(87,502	)	$	68,547		$	156,535	$	(83,094	)	$	73,441

The following table summarizes the amortization expense to be incurred in ~~2017~~2018 through ~~2021~~2022 on intangible assets (in thousands):

The change in Accumulated Other Comprehensive ~~Income (Loss)~~Loss (“AOCI”) by component, net of tax, for the six-month period ended ~~September~~June 30, ~~2017~~2018 was as follows ~~(amounts in~~(in thousands):

The following table details the amounts reclassified out of AOCI into the income statement during the three and ~~nine~~six months ended ~~September~~June 30, ~~2017(in~~2018 (in thousands):

	Amount Reclassified From AOCI							Amount Reclassified From AOCI
	For the Three			For the Nine				For the Three			For the Six
	Months Ended			Months Ended				Months Ended			Months Ended
	September 30,			September 30,			Affected Line Item In The Statement	June 30,			June 30,
Details About AOCI Components	2017			2017			Where Net Income is Presented	2018			2018
Realized and unrealized gains (losses) on cash flow hedges
Gain on interest rate swap, before tax	$	22		$	197		Interest expense, net	$	115		$	309		Interest and other expense, net
Gain on foreign exchange hedges, before tax		86			62		Cost of goods sold
		(42	)		(100	)	Tax provision		(30	)		(79	)	Tax provision
	$	66		$	159		Net of tax	$	85		$	230		Net of tax

Defined benefit pension plan items
Amortization of prior service cost and unrecognized loss	$	1,134		$	3,402		Warehousing, marketing and administrative expenses	$	1,405		$	2,810		Interest and other expense, net
		(440	)		(1,319	)	Tax provision		(361	)		(721	)	Tax provision
		694			2,083		Net of tax		1,044			2,089		Net of tax
Total reclassifications for the period, net of tax	$	760		$	2,242			$	1,129		$	2,319

Basic earnings per share (“EPS”) is computed by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted EPS reflects the potential dilution that could occur if dilutive securities were exercised into common stock. Stock options, restricted stock, performance unit awards, restricted stock units and deferred stock units are considered dilutive securities. For the ~~three-month periods~~three and six months ended ~~September~~June 30, 2018, 0.1 million shares and in the three and six months ended June 30, 2017, ~~and 2016,~~ 0.2 ~~and 0.3~~ million shares of such securities, respectively, were outstanding but were not included in the computation of diluted earnings per share because the effect would be antidilutive. For the nine-month periods ended September 30, 2017 and 2016, 0.2 and 0.3 million shares of such securities, respectively, were excluded from the computation. An additional 0.1 million and 0.2 million shares of common stock outstanding for the three and nine months ended September 30, 2017, respectively, were excluded from the computation because the net loss would have caused the calculation to be anti-dilutive. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

	For the Three Months Ended					For the Nine Months Ended					For the Three Months Ended					For the Six Months Ended
	September 30,					September 30,					June 30,					June 30,
	2017			2016		2017			2016		2018			2017		2018			2017
Numerator:
Net (loss) income	$	(81,938	)	$	36,742	$	(265,434	)	$	66,205
Net (loss) Income											$	(97	)	$	5,096	$	(51,537	)	$	(183,498	)
Denominator:
Denominator for basic earnings per share -
weighted average shares		36,750			36,578		36,692			36,560		36,925			36,673		36,895			36,659
Effect of dilutive securities:
Employee stock options and restricted stock ⁽¹⁾		-			360		-			336		-			200		-			-
Denominator for diluted earnings per share -
Adjusted weighted average shares and the effect of dilutive securities		36,750			36,938		36,692			36,896		36,925			36,873		36,895			36,659
Net (loss) income per share:
Net (loss) income per share - basic	$	(2.23	)	$	1.00	$	(7.23	)	$	1.81
Net (loss) income per share - diluted ⁽²⁾	$	(2.23	)	$	0.99	$	(7.23	)	$	1.79
Net loss per share:
Net loss per share - basic											$	(0.00	)	$	0.14	$	(1.40	)	$	(5.01	)
Net loss per share - diluted ⁽¹⁾											$	(0.00	)	$	0.14	$	(1.40	)	$	(5.01	)

As of September 30, 2017 , the Company had Board authorization to repurchase $68.2 million of common stock. During the three and nine months ended September 30, 2017, the Company did not repurchase any shares of its common stock. During the three months ended September 30, 2016, the Company did not repurchase any shares of its common stock. For the nine months ended September 30, 2016, the Company repurchased 241,270 shares at an aggregate cost of $6.8 million. Depending on the market, business conditions and other factors, the Company may continue or suspend purchasing its common stock at any time without notice. Acquired shares are included in the issued shares of the Company and treasury stock, but are not included in average shares outstanding when calculating earnings per share data.

As ESND is a holding company, its primary sources of funds are cash generated from operating activities of its direct operating subsidiary, ECO, and from borrowings by ECO. The 2017 Credit Agreement and the Note Purchase Agreement (each as defined below and each a “Lending Agreement”) contain restrictions on the use of cash transferred from ECO to ESND.

On February 22, 2017, ESND, ECO, ECO’s United States subsidiaries (ESND, ECO and the subsidiaries collectively referred to as the “Loan Parties”), JPMorgan Chase Bank, National Association, as Administrative Agent, and certain lenders entered into a Fifth Amended and Restated Revolving Credit Agreement (the “2017 Credit Agreement”). The 2017 Credit Agreement amended and restated the Fourth Amended and Restated Five-Year Revolving Credit Agreement dated as of July 9, 2013 (as amended prior to February 22, 2017, the “2013 Credit Agreement”). Also on February 22, 2017, ESND, ECO and the holders of ECO’s 3.75% senior secured notes due January 15, 2021, (the “Notes”) entered into Amendment No. 4 (“Amendment No. 4”) to the Note Purchase Agreement dated as of November 25, 2013, (as amended prior to February 22, 2017, the “Note Purchase Agreement”).

The 2017 Credit Agreement and Amendment No. 4 eliminated certain covenants in the 2013 Credit Agreement and the Note Purchase Agreement that prohibited the Company from exceeding a debt-to-EBITDA ratio of 3.5 to 1.0 (or 4.0 to 1.0 following certain permitted acquisitions) and restricted the Company’s ability to pay dividends and repurchase stock when the ratio was 3.0 to 1.0 or more. As a result, the Company is no longer subject to a debt-to-EBITDA ratio covenant.

~~Proceeds from the 2017 Credit Facility were used to repay the balances of the 2013 Credit Agreement and the Receivables Securitization Program (as defined below).~~

The 2017 Credit Agreement provides for a revolving credit facility (with an aggregated committed principal amount of $1.0 billion), a first-in-last-out (“FILO”) revolving credit facility (with an aggregated committed principal amount of $100 million) and a term loan (with an initial aggregated committed principal amount of $77.6 million). The term loan was funded in a single funding on March 24, 2017. Loans under the 2017 Credit Agreement must be extended to the Company first through the FILO facility.

Borrowings under the 2017 Credit Agreement bear interest at LIBOR for specified interest periods, at the REVLIBOR30 Rate (as defined in the 2017 Credit Agreement) or at the Alternate Base Rate (as defined in the 2017 Credit Agreement), plus, in each case, a margin determined based on the Company’s average quarterly revolving availability. The margin on LIBOR-based loans and REVLIBOR30 Rate-based loans ranges from 1.25% to 1.75% for revolving and term loans and 2.00% to 2.50% for FILO loans, and on Alternate Base Rate loans ranges from 0.25% to 0.75% for revolving and term loans and 1.00% to 1.50% for FILO loans. From February 22, 2017 (the date of the 2017 Credit Agreement) to September 30, 2017, the applicable margin for LIBOR-based loans and REVLIBOR30 Rate-based loans is 1.50% for revolving and term loans and 2.25% for FILO loans, and for Alternate Base Rate loans is 0.50% for revolving and term loans and 1.25% for FILO loans. In addition, ECO is required to pay the lenders a commitment fee on the unutilized portion of the revolving and FILO commitments under the 2017 Credit Agreement at a rate per annum equal to 0.25%. Letters of credit issued pursuant to the 2017 Credit Agreement incur interest based on the applicable margin rate for LIBOR-based Loans, plus 0.125%. Unamortized deferred financing fees of $6.6 million are included within “Current maturities of long-term debt” and “Long-term debt” on the Condensed Consolidated Balance Sheets and are amortized over the life of the agreements.

Obligations of ECO under the 2017 Credit Agreement are guaranteed by ESND and ECO’s domestic subsidiaries. ECO’s obligations under these agreements and the guarantors’ obligations under the guaranty are secured by liens on substantially all Company assets. Availability of credit under the revolving facility is subject to a revolving borrowing base calculation comprised of a certain percentage of the eligible accounts receivable, plus a certain percentage of the inventory, less reserves. Similarly, availability under the FILO revolving credit facility is subject to a FILO borrowing base comprised primarily of 10% of the eligible accounts receivable, plus 10% multiplied by the net orderly liquidation value percentages of the eligible inventory, less reserves. Beginning in April 2017, the Company began repayment of nominal principal amounts pursuant to the terms and conditions of the term loan, and these payments may be subject to acceleration under certain dispositions of the underlying collateral.

The 2017 Credit Agreement contains representations and warranties, covenants and events of default that are customary for facilities of this type, including covenants to deliver periodic certifications setting forth the revolving borrowing base and FILO borrowing base. As long as the Payment Conditions (as defined in the 2017 Credit Agreement) are satisfied, the Loan Parties may pay dividends, repurchase stock and engage in certain permitted acquisitions, investments and dispositions, in each case subject to the other terms and conditions of the Credit Agreement and the other loan documents.

If ECO elects to prepay some or all of the Notes prior to January 15, 2021, and in certain circumstances if ECO is required to prepay the Notes, ECO will be obligated to pay a make-whole amount as set forth in the Note Purchase Agreement and Amendment No. 4. The Company’s obligations under the Note Purchase Agreement and Amendment No. 4 are secured by a $165.0 million letter of credit issued under the 2017 Credit Agreement.

The Company’s accounts receivable securitization program (“Receivables Securitization Program” or the “Program”) was terminated when the Company entered into the 2017 Credit Agreement. The Program provided maximum financing of up to $200 million secured by all the customer accounts receivable and related rights originated by ECO.

The 2017 Credit Agreement provides for the issuance of letters of credit up to $25.0 million, plus up to $165.0 million to be used as collateral for obligations under the Note Purchase Agreement. Letters of credit totaling approximately $177.5 million were utilized as of September 30, 2017.

~~Interest under the Note Purchase Agreement is payable semi-annually at a rate per annum equal to 3.75% (3.66% after the effect of terminating an interest rate swap).~~

~~For additional information about the 2017 Credit Agreement and the Note Purchase Agreement, see Note 11 – “Debt” to the Company’s Consolidated Financial Statements in the 2016 Form 10-K.~~

The Company maintains pension plans covering union and certain non-union employees. For more information on the Company’s retirement plans, see Note 13 – “Pension Plans and Defined Contribution Plan” to the Company’s Consolidated Financial Statements in the ~~2016~~2017 Form 10-K.

In accordance with the adoption of ASU 2017-07, the Company has retrospectively revised the presentation of the non-service components of periodic pension cost to “Interest and other expense, net” in the condensed consolidated statement of operations, while service cost remains in “Warehouse, marketing and administrative expense.” A summary of the effect for periods presented was as follows (in thousands):

A summary of net periodic pension cost related to the Company’s pension plans for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 was as follows ~~(dollars in~~(in thousands):

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,						For the Three Months Ended June 30,						For the Six Months Ended June 30,
	2017			2016			2017			2016			2018			2017			2018			2017
Service cost - benefit earned during the period	$	321		$	318		$	963		$	952		$	444		$	321		$	888		$	642

Interest cost on projected benefit obligation		1,862			1,806			5,586			6,322			1,769			1,862			3,538			3,724
Expected return on plan assets		(2,272	)		(2,219	)		(6,816	)		(7,484	)		(2,266	)		(2,272	)		(4,532	)		(4,544	)
Amortization of prior service cost		72			74			216			222			101			72			202			144
Amortization of actuarial loss		1,062			1,163			3,186			3,903			1,304			1,062			2,608			2,124
Settlement loss		-			419			-			12,163
Total non-service cost													$	908		$	723		$	1,816		$	1,447

Net periodic pension cost	$	1,045		$	1,561		$	3,135		$	16,078		$	1,352		$	1,045		$	2,704		$	2,090

The Company made cash contributions ~~to its pension plans~~ of $10.0 million in ~~the nine months ended September 30,~~January 2018 and April 2017, ~~and 2016, respectively.~~respectively, to its pension plans. Additional contributions, if any, for ~~2017~~the remainder of 2018 have not yet been determined. As of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, the Company had accrued ~~$29.9~~$33.2 million and ~~$40.2~~$43.3 million ~~respectively,~~ of pension liability within “Other long-term liabilities” on the Condensed Consolidated Balance Sheets.

The Company has a defined contribution ~~plan~~plans covering certain salaried associates, ~~and~~ non-union hourly paid associates and certain union associates (the ~~“Plan”~~“Plans”). The ~~Plan permits~~Plans permit associates to defer a portion of their pre-tax and after-tax salary as contributions to the ~~Plan.~~Plans. The ~~Plan~~Plans also ~~provides~~provide for Company-funded discretionary contributions as well as matching associates’ salary deferral contributions, at the discretion of the Board of Directors. The Company recorded expenses of $1.8 million, ~~and $5.6 million, respectively,~~ for the Company match of employee contributions to the ~~Plan~~Plans for the three ~~and nine~~ months ended ~~September~~June 30, ~~2017. During the same periods~~2018 compared to $1.9 million in the ~~prior year,~~corresponding period in 2017 and $3.7 million for the ~~Company recorded expense of $1.8 million~~six months ended June 30, 2018 and ~~$5.5 million, respectively, to match employee contributions.~~2017, respectively.

The Company measures certain financial assets and liabilities, including anforeign exchange hedges and interest rate ~~swap and foreign currency derivatives,~~swaps, at fair value on a recurring basis, based on ~~market rates of the Company’s positions and~~significant other observable ~~interest rates.~~inputs. The fair value of the foreign exchange hedges and the interest rate swaps is determined by using quoted market forward rates (level 2 inputs) and reflects the present value of the amount the Company would pay for contracts involving the same notional amount and maturity date. ~~The fair value of the foreign exchange hedge is determined by using quoted market spot rates (level 2 inputs).~~

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

Determining which ~~level to apply to~~category an asset or liability falls within the hierarchy requires significant judgment. The Company evaluates its hierarchy disclosures each ~~quarter.~~ reporting period.

The following table summarizes the financial instruments measured at fair value in the accompanying Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017 (in thousands):

	Fair Value Measurements								Fair Value Measurements
			Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs				Quoted Market Prices in Active Markets for Identical Assets or Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Interest rate swap & foreign exchange hedges:
Assets
- as of September 30, 2017	$	28	$	-	$	28	$	-
- as of June 30, 2018									$	2,089	$	-	$	2,089	$	-
- as of December 31, 2017									$	29	$	-	$	29	$	-

Liabilities
- as of September 30, 2017	$	43	$	-	$	43	$	-
- as of December 31, 2016	$	205	$	-	$	205	$	-
- as of December 31, 2017									$	638	$	-	$	638	$	-

The carrying amount of accounts receivable at ~~September~~June 30, ~~2017,~~2018, approximates fair value because of the short-term nature of this item. ~~Other than the measurement~~As of ~~goodwill at fair value as a result of the impairment as discussed in Note 4 – “Goodwill and Intangible Assets,” as of September~~June 30, ~~2017,~~2018, no assets or liabilities ~~were~~are measured at fair value on a nonrecurring basis.

Receivables related to supplier allowances totaling ~~$81.2~~$84.3 million and ~~$86.9~~$90.8 million were included in “Accounts receivable” in the Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively.

Current and non-current prepaid customer rebates, net of allowances, were ~~$46.4~~$53.8 million and ~~$47.9~~$40.7 million as of ~~September~~June 30, ~~2017,~~2018, and December 31, ~~2016,~~2017, respectively, and are included as a component of “Other current assets” and “Other long-term assets”.

Accrued customer rebates of ~~$47.7~~$43.6 million and ~~$65.3~~$49.2 million as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016,~~2017, respectively, were included in “Accrued liabilities” in the Condensed Consolidated Balance Sheets.

The Company's tax provision for interim periods is determined using an estimate of its annual effective tax rate, adjusted for discrete items.

For the three and ~~nine~~six months ended ~~September~~June 30, 2018, the Company recorded an income tax benefit of $0.1 million on pre-tax loss of ($0.2) million for an effective tax rate of 59.2% and income tax benefit of $15.4 million on pre-tax loss of ($66.9) million for an effective tax rate of 23.0%, respectively. For the three and six months ended June 30, 2017, the Company recorded income tax benefit of $7.1 million and $6.9 million on pre-tax loss of $89.0 million and $272.4 million, respectively, for an effective tax rate of 8.0% and 2.5%, respectively. For the three and nine months ended September 30, 2016, the Company recorded income tax expense of ~~$17.1 million and $34.9~~$4.5 million on pre-tax income of ~~$53.8 million and $101.1~~$9.6 million, for an effective tax rate of ~~31.8%~~46.8% and 34.5%, respectively. In the nine months ended September 30, 2017, the Company adopted ASU 2016-09 which resulted in $1.1 million and $1.9 million in the three and nine months ended September 30, 2017, respectively, of incrementalincome tax expense ~~recognized due to excess~~of $0.1 million on pre-tax loss of $(183.4) million for an effective tax ~~deficiencies~~rate of ~~vested or settled awards in the period. The adoption of the standard was applied prospectively in accordance with guidance.~~(0.1)%, respectively.

The Company’s U.S. federal statutory rate is ~~35.0%~~21.0%. The most significant factors impacting the effective tax rates for the three and nine months ended September 30, 2017 were the permanent impact of the third quarter goodwill impairment charges and the discrete impact of the first quarter goodwill impairment charges, respectively. The most significant factor impacting the effective tax rate for the three and ~~nine~~six months ended ~~September~~June 30, ~~2016~~2018 and the three months ended June 30, 2017, was the discrete impact of equity compensation. The most significant factor impacting the effective tax rate for the six months ended June 30, 2017 was the discrete impact of the ~~payment~~goodwill impairment charges.

The effective tax rate for the three and six months ended June 30, 2018, also reflects the reduced federal corporate income tax rate as a result of ~~a dividend from a foreign subsidiary.~~the enactment of the Tax Cuts and Jobs Act (the “Tax Act”) in December 2017. The Company continues to analyze the aspects of the Tax Act which could potentially affect the provisional estimates that were recorded in the year ended December 31, 2017.

The Company has been named as a defendant in two lawsuits alleging that the Company sent unsolicited fax advertisements to the named plaintiffs, as well as other persons and entities, in violation of the Telephone Consumer Protection Act of 1991, as amended by the Junk Fax Prevention Act of 2005 ("TCPA"). One lawsuit was initially filed in the United States District Court for the Central District of California on May 1, 2015, and subsequently refiled in the United States District Court for the Northern District of ~~Illinois.~~Illinois (the “ND IL”). The other lawsuit was filed in the ~~United States District Court for the Northern District of Illinois~~ND IL on January 14, 2016. The two lawsuits were consolidated for discovery and pre-trial proceedings, and assigned to the same judge. Plaintiffs in both lawsuits seek certification of a class of plaintiffs comprised of persons and entities who allegedly received fax advertisements from the Company. Under the TCPA, recipients of unsolicited fax advertisements can seek damages of $500 per fax for inadvertent violations and up to $1,500 per fax for knowing and willful violations. Other reported TCPA lawsuits have resulted in a broad range of outcomes, with each case being dependent on its own unique set of facts and circumstances. In each lawsuit, the Company ishas vigorously ~~contesting~~contested class certification and ~~denies~~denied that any violations occurred. On November 3, 2017, the ND IL granted a motion by the Company to deny class certification. The effect of the ruling prevents the formation of a class and limits the two plaintiffs to their individual claims. On November 17, 2017, plaintiffs filed a Petition for Permission to Appeal under Rule 23(f) of the Federal Rules of Civil Procedure (the “Petition”) with the United States Court of Appeals for the 7^th Circuit (the “7^th Circuit”). The 7^th Circuit granted the Petition, and following briefing, the 7^th Circuit heard oral argument on the appeal on April 10, 2018. The lawsuits are stayed until the 7^th Circuit rules on the appeal.

Litigation of this kind is likely to lead to settlement negotiations, including negotiations prompted by pre-trial civil court procedures. Regardless of whether the lawsuits are resolved at trial or through settlement, the Company believes that a loss associated with resolution of the pending claims is probable. ~~As of the year ended December 31,~~In 2016, the Company recorded a $4.0 million, pre-tax reserve within ~~“warehousing,~~“Warehousing, marketing and administrative expenses” in the ~~consolidated statement~~Condensed Consolidated Statement of ~~operations.~~Operations. During the three months ended March 31, 2017, the Company recorded an additional $6.0 million, pre-tax reserve to reflect events concerning mediation activities and settlement negotiations between the Company and the ~~plaintiffs for a~~plaintiffs. At June 30, 2018, the total reserve ofremains $10.0 ~~million at September 30, 2017.~~million. The Company continues to evaluate its defenses based on its internal review and investigation of prior events, new information and future circumstances. Final disposition of the lawsuits, whether through settlement or through trial, may result in a loss materially in excess of the aggregate recorded amount. However, a range of reasonably possible excess losses is not estimable at this time.

~~As disclosed in the first quarter of~~In 2017, the Company was named in a class action lawsuit filed by a former employee in the Los Angeles Superior Court. During the second quarter of 2017, the Company reached an agreement on the general terms of a settlement to resolve this litigation. The parties ~~are in the process of finalizing~~have finalized a settlement agreement, which ~~will be~~is subject to court approval. On May 10, 2018, the court granted the parties’ Motion for Preliminary Approval of the settlement agreement. Notice to the class was issued on May 31, 2018. In consideration of the settlement, in the second quarter of 2017, the Company recorded a $3.0 million pre-tax reserve within ~~the warehousing,~~“Warehousing, marketing and administrative ~~expenses line item~~expenses” in the ~~consolidated statement~~Condensed Consolidated Statement of ~~operations~~Operations. A hearing on final approval of the settlement agreement is scheduled for ~~the nine months ended~~ September ~~30, 2017.~~ 28, 2018.

The Company is also involved in other legal proceedings arising in the ordinary course of, or incidental to its business. The Company has established reserves, which are not material, for potential losses that are probable and reasonably estimable that may result from those proceedings. In many cases, however, it is difficult to determine whether a loss is probable or even possible or to estimate the amount or range of potential loss, particularly where proceedings may be in relatively early stages or where plaintiffs are seeking substantial or indeterminate damages. Matters frequently need to be more developed before a loss or range of loss can reasonably be estimated. The Company believes that such ordinary course legal proceedings will be resolved with no material adverse effect upon its financial condition, results of operations or cash flows.

The Company invested $19 million during the second quarter in the independent reseller channel as part of it’s strategy to accelerate sales performance in key channels. The Company recognizes its share of the earnings and losses of its investees in “Interest and other expense, net” in the Condensed Consolidated Statement of Operations and includes the investments in “Other assets” in the Condensed Consolidated Balance Sheet. The carrying value of the investments will be subsequently adjusted to reflect the Company’s share of earnings and losses, other-than-temporary impairments and changes in capital of the investees.

On April 12, 2018, the Company announced it entered into a definitive agreement with Genuine Parts Company (“GPC”) pursuant to which the Company will combine with GPC’s S.P. Richards Company business (collectively, the “SPR Business”) in a business combination transaction, pursuant to the Agreement and Plan of Merger (as amended, the “Merger Agreement”) dated as of April 12, 2018, by and among GPC, Rhino SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of GPC (“SpinCo”), ESND and Elephant Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of ESND (“Merger Sub”). In connection with the Merger Agreement, GPC and SpinCo entered into a Separation Agreement dated as of April 12, 2018 (the “Separation Agreement”), pursuant to which the Business will be separated from GPC. Additionally, Essendant filed its proxy statement/prospectus-information statement on Form S-4 with the Securities and Exchange Commission (“SEC”) on June 8, 2018. The Company subsequently filed amended proxy statement/prospectus-information statements on Form S-4 with the SEC on July 20, 2018, August 1, 2018 and August 7, 2018. The SEC declared the Form S-4 effective on August 7, 2018.

In the transactions contemplated by the Merger Agreement and the Separation Agreement, (i) GPC will transfer certain of its wholly owned subsidiaries that are engaged in the Business to SpinCo, (ii) GPC will distribute SpinCo’s stock to GPC’s stockholders by way of a pro rata dividend (the “Distribution”), and (iii) Merger Sub will merge with and into SpinCo, with SpinCo as the surviving corporation (the “Merger”) and a wholly owned subsidiary of ESND. Upon consummation of the transactions contemplated by the Merger Agreement and the Separation Agreement, GPC shareholders will receive approximately 40.2 million shares of ESND common stock, which will represent approximately 51% of the outstanding shares of ESND common stock. ESND’s existing stockholders will continue to hold the remaining approximately 49% of the outstanding shares of ESND common stock.

Prior to the Distribution, SpinCo will enter into a credit facility for up to $400 million (the “SpinCo Credit Facility”). Immediately thereafter, GPC will transfer certain wholly owned subsidiaries to SpinCo and SpinCo will draw against the SpinCo Credit Facility in an amount sufficient to make payments in connection with an internal reorganization of the SPR Business, as described further in the Separation Agreement, of approximately $347 million, subject to adjustment based on SpinCo’s and ESND’s net debt and SpinCo’s net working capital at the time of the Distribution and certain other adjustments (the “Internal Reorganization Cash Payments”). SpinCo has entered into commitment letters with certain financial institutions to provide for the SpinCo Debt.

The transaction, which has been unanimously approved by the Boards of ESND and GPC, is expected to be tax free to the companies’ respective shareholders.

Under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and related HSR Act rules, the Merger may not be completed until the parties have filed notification and report forms with the U.S. Federal Trade Commission (“FTC”) and observed a specified statutory waiting period. The parties made their respective filings with the FTC under the HSR Act on May 2, 2018. On June 1, 2018, the FTC extended the waiting period by requesting additional information from the parties (a “Second Request”). The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 11:59 p.m. (Eastern Time in the U.S.) on the 30th day after certification of substantial compliance by the parties with such request unless that period is extended voluntarily by the parties or terminated sooner by the FTC.

The issuance of shares by ESND in connection with the transaction requires approval by ESND’s stockholders and is subject to customary closing conditions, including the HSR Act waiting period. The transaction is expected to close before the end of 2018. If the Merger Agreement is terminated under certain circumstances, ESND may be required to pay GPC a termination fee of $12 million or may under other circumstances be required to reimburse GPC up to $3 million for certain expenses in connection with the merger.

The Company expects to incur significant integration and transaction costs in connection with the transactions during the remainder of 2018.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Exchange Act. Forward-looking statements often contain words such as “expects,” “anticipates,” “estimates,” “intends,” “plans,” “believes,” “seeks,” “will,” “is likely to,” “scheduled,” “positioned to,” “continue,” “forecast,” “predicting,” “projection,” “potential” or similar expressions. Forward-looking statements include references to goals, plans, strategies, objectives, projected costs or savings, anticipated future performance, results or events and other statements that are not strictly historical in nature. These forward-looking statements are based on management’s current expectations, forecasts and assumptions. This means they involve a number of risks and uncertainties that could cause actual results to differ materially from those expressed or implied here. These risks and uncertainties include, without limitation, those set forth in Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year-ended December 31, ~~2016~~2017 (the ~~“2016~~“2017 Form 10-K”).

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

Essendant Inc. is a leading national ~~wholesale~~ distributor of workplace items, with ~~2016~~2017 net sales of ~~approximately $5.4~~$5.0 billion. ~~Essendant Inc. sells~~The Company provides access to a broad assortment of over ~~190,000~~170,000 items including janitorial, foodservice and breakroom supplies ~~(“JanSan”)~~(JanSan), technology products, traditional office products, industrial supplies, cut sheet paper products, automotive products and office furniture. ~~These items include~~Essendant serves a ~~broad spectrum~~diverse group of ~~brand-name and Essendant private label brand products. Essendant sells through a network of 70 distribution centers to~~ approximately 29,000 reseller customers. ~~Customers~~They include resellers in the independent reseller channel, including: office and workplace, ~~dealers;~~ facilities and maintenance, ~~distributors,~~ technology, military, automotive aftermarket, ~~customers,~~healthcare, other vertical suppliers and industrial resellers; the national ~~retailers~~reseller channel; and ~~healthcare and vertical suppliers; industrial distributors and internet retailers. The Company also operates CPO Commerce which sells tools, do-it-yourself equipment and other items online to~~ the ~~consumer market.~~e-commerce channel.

The Company has experienced significant sales declines this year, which were largely unanticipated and outpaced the Company’s ability to align its cost base. The performance improvement actions described in the Form 10-Q filed on July 26, 2017 have not been sufficient to offset the impacts of the sales declines. As a result, the Company needs to take additional actions to create value and has sharpened its focusis focused on three strategic ~~drivers to do so:~~drivers:

~~The Company is targeting annualized cost savings from these efforts in excess of $50 million by 2020 and will continue to refine and update this target as detailed plans are developed.~~

3) Advance supplier partnerships that leverage ~~the Company’s~~Essendant’s network and capabilities

Net sales ~~workday adjusted,~~declined by 0.5% in the ~~third~~second quarter of ~~2017 declined~~2018 and by ~~5.5%~~1.4% in the first six months of 2018 compared to the ~~third~~second quarter and year to date period of ~~2016. The decline was primarily~~2017, respectively, due to ~~lower sales to~~declines in the national ~~retail and independent distributor channels.~~reseller channel. Profitability in the quarter ~~was~~and year to date periods have been adversely impacted by higher freight costs, sales mix and lower supplier allowances and lower sales volume. We are implementing strategies to address these market trends, but we expect them to continue to impact our business. Full year 2017 net sales are expected to be down 6.0% to 7.5% from the prior year.allowances.

For a further discussion of selected trends, events or uncertainties the Company believes may have a significant impact on its future performance, readers should refer to “Key Trends and Recent Results” under Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the ~~2016~~2017 Form 10-K.

In the ~~third~~second quarter of ~~2017,~~2018, there were no significant changes to the Company’s critical accounting policies, judgments or estimates from those disclosed in the ~~2016~~2017 Form ~~10-K.~~10-K other than those noted below.

During the quarter ended March 31, 2018, the Company adopted the provisions of ASC 606. Refer to Note 2 – “Revenue Recognition” for a description of the immaterial impact of the adoption on the Company’s financial statements and accounting policies.

During the quarter ended March 31, 2018, the Company adopted the provisions of ASU 2017-07. Refer to Note 9 – “Pension and Post-Retirement Benefit Plans” for a description of the impact of adoption on the Company’s financial statements and accounting policies.

Results of Operations—Three Months Ended ~~September~~June 30, ~~2017~~2018 Compared with the Three Months Ended ~~September~~June 30, ~~2016~~2017

The following table presents the Condensed Consolidated Statements of ~~Income~~Operations results (in thousands):

	For the Three Months Ended September 30,											For the Three Months Ended June 30,
	2017						2016⁽¹⁾					2018						2017^{(1) (2)}
	Amount			% of Revenue			Amount		% of Revenue			Amount			% of Net sales			Amount		% of Net sales
Net sales:⁽¹⁾
Janitorial, foodservice and breakroom supplies (JanSan products)	$	342,885			26.2	%	$	378,424		26.9	%	$	346,305			27.6	%	$	349,700		27.7	%
Technology products		320,694			24.5	%		347,097		24.7	%		298,801			23.8	%		309,689		24.6	%
Traditional office products		202,664			15.5	%		229,317		16.3	%		176,617			14.1	%		186,708		14.8	%
Industrial products		143,370			11.0	%		140,312		10.0	%
Industrial supplies													163,031			13.0	%		146,104		11.6	%
Cut sheet paper products		110,325			8.4	%		109,698		7.8	%		116,020			9.3	%		109,631		8.7	%
Automotive products		75,724			5.8	%		78,618		5.6	%		85,389			6.8	%		82,143		6.5	%
Office furniture		72,130			5.5	%		82,272		5.8	%		62,997			5.0	%		69,939		5.5	%
Freight and other		41,187			3.1	%		41,766		2.9	%
Other revenues													5,062			0.4	%		6,742		0.6	%
Total net sales		1,308,979			100.0	%		1,407,504		100.0	%		1,254,222			100.0	%		1,260,656		100.0	%
Cost of goods sold		1,137,025			86.9	%		1,208,650		85.9	%		1,081,016			86.2	%		1,083,092		85.9	%
Total gross profit	$	171,954			13.1	%	$	198,854		14.1	%	$	173,206			13.8	%	$	177,564		14.1	%
Operating expenses:
Warehousing, marketing and administrative expenses		168,526			12.9	%		138,107		9.8	%		156,574			12.5	%		160,972		12.8	%
Impairment of goodwill		86,339			6.6	%		-		0.0	%
Defined benefit plan settlement loss		-			0.0	%		419		0.0	%
Restructuring charges													8,019			0.6	%		-		0.0	%
Total operating expenses	$	254,865			19.5	%	$	138,526		9.8	%	$	164,593			13.1	%	$	160,972		12.8	%
Total operating (loss) income		(82,911	)		(6.4	%)		60,328		4.3	%		8,613			0.7	%		16,592		1.3	%
Interest expense, net		6,116			0.4	%		6,484		0.5	%
(Loss) income before income taxes		(89,027	)		(6.8	%)		53,844		3.8	%
Interest and other expense, net													8,850			0.7	%		7,022		0.5	%
Loss (income) before income taxes													(237	)		(0.0	%)		9,570		0.8	%
Income tax (benefit) expense		(7,089	)		(0.5	%)		17,102		1.2	%		(140	)		(0.0	%)		4,474		0.4	%
Net (loss) income	$	(81,938	)		(6.3	%)	$	36,742		2.6	%	$	(97	)		(0.0	%)	$	5,096		0.4	%

Net Sales. Net sales for the quarter ended ~~September~~June 30, ~~2017~~2018 were $1.3 billion, a ~~5.5%~~0.5% decrease ~~workday adjusted, from $1.4 billion in sales during~~compared to the quarter ended ~~September~~June 30, ~~2016. Full year 2017 net sales are expected to be down 6.0% to 7.5% from the prior year.Net~~2017. Net sales by key product category for the quarters included the following:

JanSan product sales decreased ~~$35.5~~$(3.4) million or ~~8.0%~~1.0% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. Sales decreased due to declines in the national ~~retail~~reseller channel of ~~$33.9~~$12.0 million and ~~the independent distributor channel~~e-commerce declines of ~~$4.9~~$1.8 million, partially offset by ~~internet retailer growth.~~increased independent reseller channel sales of $10.4 million. As a percentage of total sales, JanSan represented ~~26.2%~~27.6% in the ~~third~~second quarter of ~~2017,~~2018, a decrease from the prior year quarter percentage of total sales of ~~26.9%~~27.7%.

Technology product (primarily ink and toner) sales decreased ~~$26.4~~$(10.9) million or ~~6.1%~~3.5% from the ~~third~~second quarter of ~~2016.~~2017. Sales in this category decreased primarily as a result of declines in the national retail channel of ~~$26.9~~$16.0 million and ~~the independent dealer~~e-commerce channel of ~~$2.6~~$0.6 million, partially offset by ~~internet retailer~~increased independent reseller channel sales ~~growth.~~of $5.7 million. As a percentage of total sales, technology products represented ~~24.5%~~23.8% in the ~~third~~second quarter of ~~2017,~~2018, a decrease from the prior year quarter percentage of total sales of ~~24.7%~~24.6%.

Traditional office product sales decreased ~~$26.7~~$(10.1) million or ~~10.2%~~5.4% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. Sales in this category decreased due to reductions in the national ~~retail~~reseller channel of ~~$14.4~~$8.0 million, ~~and the~~e-commerce declines of $2.7 million, partially offset by independent ~~dealers~~reseller channel increases of ~~$11.5~~$0.6 million. As a percentage of total sales, traditional office products represented ~~15.5%~~14.1% in the ~~third~~second quarter of ~~2017,~~2018, a decrease from the prior year quarter percentage of total sales of ~~16.3%~~14.8%.

Industrial ~~product~~supplies sales increased ~~$3.1~~$16.9 million or ~~3.8%~~11.6% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. This increase was driven by growth in the retail channel of $10.4 million, the general industrial channel of ~~$2.9~~$5.2 million and the international channel of ~~$1.8 million, the energy channel of~~ $1.3 ~~million and the welding channel of $1.1 million, partially offset by a decline in the retail channel of $3.5~~ million. As a percentage of total sales, industrial supplies represented ~~11.0%~~13.0% in the ~~third~~second quarter of ~~2017,~~2018, an increase from the prior year quarter percentage of total sales of ~~10.0%~~11.6%.

Cut sheet paper product sales increased ~~$0.6~~$6.5 million or ~~2.2%~~5.8% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. The increase in this category was primarily driven by increased independent reseller channel sales ~~to internet retailers~~ of ~~$1.2~~$5.0 million and e-commerce sales growth of $1.9 million, partially offset by national reseller channel sales declines ~~in the national retail channel.~~of $0.6 million. As a percentage of total sales, cut sheet paper represented ~~8.4%~~9.3% in the ~~third~~second quarter of 2017, which increased from the prior year quarter percentage of total sales of ~~7.8%~~8.7%.

Automotive product sales ~~decreased $2.9~~increased $3.2 million or ~~2.2%~~4.0% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. The ~~decrease~~increase in this category was primarily driven by strength in the ~~timing of promotional activities.~~auto parts channel. As a percentage of total sales, automotive products represented ~~5.8%~~6.8% in the ~~third~~second quarter of ~~2017,~~2018, which increased from the prior year quarter percentage of total sales of ~~5.6%~~6.5%.

Office furniture sales decreased ~~$10.1~~$(6.9) million or ~~10.9%~~9.9% in the ~~third~~second quarter of ~~2017~~2018 compared to the ~~third~~second quarter of ~~2016.~~2017. This decrease was primarily the result of declines in sales to ~~independent dealer channels~~the national reseller channel of ~~$6.3 million, national retailers of $2.4~~$7.9 million and ~~internet retailers.~~e-commerce declines of $0.3 million, partially offset by independent reseller channel sales increases of $1.2 million. As a percentage of total sales, office furniture represented ~~5.5%~~5.0% in the ~~third~~second quarter of ~~2017,~~2018, which decreased from the prior year quarter percentage of total sales of ~~5.8%~~5.5%.

~~The remainder of the Company’s third quarter 2017 net sales were composed of freight and other revenues.~~

Gross Profit and Gross Margin Rate. Gross profit for the ~~third~~second quarter of ~~2017~~2018 was ~~$172.0~~$173.2 million, compared to ~~$198.9~~$177.6 million in the ~~third~~second quarter of ~~2016.~~2017. Gross profit as a percentage of net sales (the gross margin rate) of ~~13.1%~~13.8% decreased 9928 basis points (bps) from the prior-year quarter gross margin rate of 14.1% primarily due to increased freight expenses (59 bps) and lower product margin (18 bps) resulting from lower supplier allowances ~~driven~~and sales mix, partially offset by ~~inventory purchase mix (62 bps) and deleveraging on distribution network and transportation costs (33 bps). Sales volume and supplier allowance declines more than offset~~a reduction in the ~~benefits~~reserve established in the first quarter of ~~merchandising and pricing actions~~2018 related to ~~our transformative initiatives. Our~~refining the Company’s product assortment (68 bps) due to better recovery rates than previously estimated. Adjusted gross profit was $164.7 million, or 13.1%, a decrease of ($12.9) million or (96 bps) from the prior year quarter principally due to increased freight expenses and lower product margin resulting from lower supplier allowances and sales to larger resellers are generally at lower margins than sales to our smaller resellers. Sales to new customers tend to be lower margin but improve over time. Lower margin category sales include cut-sheet paper products and technology products, while JanSan, traditional office products, furniture and industrial supplies are higher margin categories.mix.

Operating Expenses. Operating expenses for the ~~third~~second quarter of ~~2017~~2018 were ~~$254.9~~$164.6 million or ~~19.5%~~13.1% of net sales, compared to ~~$138.5~~$161.0 million or ~~9.8%~~12.8% of net sales in the prior year. The ~~$116.4~~$3.6 million increase was primarily driven by ~~goodwill impairment~~restructuring expenses of ~~$86.3~~$8.0 million and increased transformational ~~expenses~~costs of ~~$6.1~~$4.4 million compared to the prior quarter, partially offset by a $5.1 million reduction in a receivables reserve for one customer and a comparative decline of $3.0 million from 2017 litigation accruals as compared to the prior year ~~gains on the sale of the City of Industry, CA facility of $20.5 million, which created an unfavorable comparison.~~quarter. Adjusted operating expenses were ~~$162.6~~$146.7 million, ~~an increase~~a decrease of ~~$4.0~~$5.8 million from the prior year quarter ~~driven by higher variable incentive compensation of $7.0 million. The increase includes higher expense in~~due to the ~~third quarter of 2017, versus a reduction in the variable incentive compensation expense in the third quarter of 2016.~~receivables reserve reduction.

Interest and Other Expense, net. Interest and Other expense, net for the ~~third~~second quarter of ~~2017~~2018 was ~~$6.1~~$8.9 million compared to ~~$6.5~~$7.0 million in the ~~third~~second quarter of ~~2016.~~2017. This ~~decrease~~increase was primarily driven by ~~reduced outstanding debt~~higher interest rates as compared to the prior year quarter.

Income Taxes. Income tax benefit was ~~$7.1~~$0.1 million for the ~~third~~second quarter of ~~2017,~~2018, compared to ~~income tax~~ expense of ~~$17.1~~$4.5 million for the same period in ~~2016.~~2017. The Company’s effective tax rate was ~~8.0%~~59.2% for the current-year quarter compared to ~~31.8%~~46.8% for the same period in ~~2016.~~2017. The effective income tax rate in 2018 was most impacted by the pre-tax loss being offset by non-deductible or permanent items in the quarter while the most significant factor impacting the effective tax rate for the three months ended ~~September~~June 30, 2017 was the ~~permanent~~ impact of the ~~goodwill impairment charge recognized in~~adoption of new accounting guidance related to the ~~quarter.~~tax effects of share-based compensation.

Net ~~(Loss) Income.~~ Loss. Net loss for the ~~third~~second quarter of ~~2017~~2018 was ~~$(81.9)~~$(0.1) million or ~~$(2.23)~~$(0.00) per share, compared to net income of ~~$36.7~~$5.1 million or ~~$0.99~~$0.14 per ~~diluted~~ share in the prior year quarter. Adjusted net income was ~~$1.2~~$6.1 million, or ~~$0.03~~$0.16 per diluted share, compared with adjusted net income of ~~$20.9~~$10.3 million or ~~$0.57~~$0.28 per diluted share for the prior year quarter. Included within Adjusted operating expenses in the current quarter was the reversal of a $5.1 million, or $0.09 per share, reduction in a receivables reserve for one customer.

Results of Operations—~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 Compared with the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2016~~2017

The following table presents the Condensed Consolidated Statements of ~~Income~~Operations results (in thousands):

	For the Nine Months Ended September 30,											For the Six Months Ended June 30,
	2017						2016⁽¹⁾					2018						2017^{(1) (2)}
	Amount			% of Revenue			Amount		% of Revenue			Amount			% of Revenue			Amount			% of Revenue
Net sales:⁽¹⁾
Janitorial, foodservice and breakroom supplies (JanSan products)	$	1,017,152			26.5	%	$	1,115,364		27.1	%	$	674,809			27.1	%	$	695,127			27.5	%
Technology products		928,252			24.2	%		1,042,046		25.3	%		613,621			24.6	%		626,900			24.8	%
Traditional office products		575,617			15.0	%		643,724		15.6	%		355,568			14.3	%		384,740			15.2	%
Industrial products		436,161			11.4	%		423,523		10.3	%
Industrial supplies													318,241			12.8	%		293,303			11.6	%
Cut sheet paper products		319,375			8.3	%		302,568		7.4	%		235,587			9.4	%		215,795			8.5	%
Automotive products		236,673			6.2	%		238,576		5.8	%		166,381			6.7	%		160,949			6.4	%
Office furniture		209,781			5.5	%		231,484		5.6	%		121,798			4.9	%		142,027			5.6	%
Freight and other		116,007			2.9	%		117,038		2.9	%
Other revenues													8,373			0.2	%		11,198			0.4	%
Total net sales		3,839,018			100.0	%		4,114,323		100.0	%		2,494,378			100.0	%		2,530,038			100.0	%
Cost of goods sold		3,303,832			86.1	%		3,519,564		85.5	%		2,199,996			88.2	%		2,166,807			85.6	%
Total gross profit	$	535,186			13.9	%	$	594,759		14.5	%	$	294,382			11.8	%	$	363,231			14.4	%
Operating expenses:
Warehousing, marketing and administrative expenses		503,243			13.1	%		463,410		11.3	%		322,119			12.9	%		333,270			13.2	%
Restructuring charges													22,080			0.9	%		-			0.0	%
Impairment of goodwill		285,166			7.4	%		-		0.0	%		-			0.0	%		198,828			7.9	%
Defined benefit plan settlement loss		-			0.0	%		12,163		0.3	%
Total operating expenses	$	788,409			20.5	%	$	475,573		11.6	%	$	344,199			13.8	%	$	532,098			21.1	%
Total operating (loss) income		(253,223	)		(6.6	%)		119,186		2.9	%
Interest expense, net		19,154			0.5	%		18,058		0.5	%
(Loss) income before income taxes		(272,377	)		(7.1	%)		101,128		2.4	%
Total operating loss													(49,817	)		(2.0	%)		(168,867	)		-6.7	%
Interest and other expense, net													17,072			0.7	%		14,485			0.5	%
Loss before income taxes													(66,889	)		(2.7	%)		(183,352	)		-7.2	%
Income tax (benefit) expense		(6,943	)		(0.2	%)		34,923		0.8	%		(15,352	)		(0.6	%)		146			0.1	%
Net (loss) income	$	(265,434	)		(6.9	%)	$	66,205		1.6	%
Net loss												$	(51,537	)		(2.1	%)	$	(183,498	)		-7.3	%

Net Sales. Net sales for the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2017~~2018 were ~~$3.8~~$2.5 billion, a ~~6.2%~~1.4% decrease ~~workday adjusted,~~ from ~~$4.1~~$2.5 billion in sales during the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2016.~~2017. Net sales by key product category for the ~~periods~~period included the following:

JanSan product sales decreased ~~$98.2~~$20.3 million or ~~8.3%~~2.9% in the first ~~nine~~six months of ~~2017~~2018 compared to the first ~~nine~~six months of ~~2016.~~2018. Sales decreased due to declines in the national ~~retail~~reseller channel of ~~$81.4~~$33.9 million and ~~the~~e-commerce declines of $2.0 million, partially offset by increased independent ~~distributor~~reseller channel sales of ~~$18.3~~$15.4 million. As a percentage of total sales, JanSan represented ~~26.5%~~27.1% in the first ~~nine~~six months of ~~2017,~~2018, a decrease from the prior year ~~quarter~~ percentage of total sales of ~~27.1%~~27.5%.

Technology ~~products~~product (primarily ink and toner) sales decreased ~~$113.8~~$13.3 million or ~~10.5%~~2.1% from the first ~~nine~~six months of ~~2016.~~2017. Sales in this category decreased primarily as a result of ~~reduced supplier promotions and declines in the independent dealer channel of $77.4 million as well as~~ declines in the national retail channel of ~~$42.9~~$34.8 million and e-commerce channel of $0.7 million, partially offset by ~~internet retailers~~increased independent reseller channel sales ~~growth.~~of $22.2 million. As a percentage of total sales, technology products represented ~~24.2%~~24.6% in the first ~~nine~~six months of ~~2017, a decrease~~2018, an increase from the ~~same~~ prior year ~~period~~ percentage of total sales of ~~25.3%~~24.8%.

Traditional office product sales decreased ~~$68.1~~$29.2 million or ~~10.1%~~7.6% in the first ~~nine~~six months of ~~2017~~2018 compared to the ~~first nine months of 2016.~~same period in 2017. Sales in this category decreased due to reductions in the ~~independent dealers~~national reseller channel of ~~$37.5~~$19.2 million, e-commerce declines of $6.2 million and independent reseller channel declines ~~in sales to the national retail channel~~ of ~~$32.1 million, partially offset by internet retailers sales growth.~~$3.8 million. As a percentage of total sales, traditional office products represented ~~15.0%~~14.3% in the first ~~nine~~six months of ~~2017,~~2018, a decrease from the ~~same~~ prior year ~~period~~ percentage of total sales of ~~15.6%~~15.2%.

Industrial ~~product~~supplies sales increased ~~$12.6~~$24.9 million or ~~3.5%~~8.5% in the first ~~nine~~six months of ~~2017~~2018 compared to the first ~~nine~~six months of ~~2016.~~2017. This increase was driven by growth in the retail channel of $13.6 million, general industrial channel of ~~$8.9 million, the energy channel of $5.4~~$8.0 million and the international channel of ~~$4.4 million, partially offset by a decline in the retail channel of $6.3~~$3.4 million. As a percentage of total sales, industrial supplies represented ~~11.4%~~12.8% in the first ~~nine~~six months of ~~2017,~~2018, an increase from the ~~same~~ prior year ~~period~~ percentage of total sales of ~~10.3%~~11.6%.

Cut sheet paper product sales increased ~~$16.8~~$19.8 million or ~~6.1%~~9.2% in the first ~~nine~~six months of ~~2017~~2018 compared to the ~~first nine months of 2016.~~same period in 2017. The increase in this category was primarily driven by increased independent reseller channel sales ~~to independent dealers~~ of ~~$14.7~~$17.5 million and ~~internet retailers~~e-commerce sales growth of ~~$3.8~~$3.6 million, partially offset by national ~~retailers declines.~~reseller channel sales declines of $1.3 million. As a percentage of total sales, cut sheet paper represented ~~8.3%~~9.4% in the first ~~nine~~six months of 2017, which increased from the ~~same~~ prior year ~~period~~ percentage of total sales of ~~7.4% due to continued product category market-share growth.~~8.5%.

Automotive product sales ~~decreased $1.9~~increased $5.4 million or ~~0.3%~~3.4% in the first ~~nine~~six months of ~~2017~~2018 compared to the first ~~nine~~six months of ~~2016.~~2017. The ~~decrease~~increase in this category was ~~primarily~~ driven by strength in the ~~timing of promotional activities.~~mobile dealer channel, auto parts channel and International channel. As a percentage of total sales, automotive products represented ~~6.2%~~6.7% in the first ~~nine~~six months of ~~2017,~~2018, which increased from the ~~same~~ prior year ~~period~~ percentage of total sales of ~~5.8%~~6.4%.

Office furniture sales decreased ~~$21.7~~$20.2 million or ~~8.9%~~14.2% in the first ~~nine~~six months of ~~2017~~2018 compared to the ~~first nine months of 2016.~~same period in 2017. This decrease was primarily the result of declines in sales to ~~independent dealer channels of $15.4 million,~~the national ~~retail~~reseller channel of ~~$3.8~~$16.3 million, the independent reseller channel of $2.1 million and ~~internet retailers.~~e-commerce declines of $1.8 million. As a percentage of total sales, office furniture represented ~~5.5%~~4.9% in the first ~~nine~~six months of ~~2017,~~2018, which decreased from the ~~same~~ prior year ~~period~~ percentage of total sales of 5.6%.

~~The remainder of the Company’s net sales for the nine months ended September 30, 2017 were composed of freight and other revenues.~~

Gross Profit and Gross Margin Rate. Gross profit for the first ~~nine~~six months of ~~2017~~2018 was ~~$535.2~~$294.4 million, compared to ~~$594.8~~$363.2 million in the ~~first nine months of 2016.~~same period in 2017. Gross profit as a percentage of net sales (the gross margin rate) of ~~13.9%~~11.8% decreased 52256 bps from the prior-year ~~nine month~~ period gross margin rate of ~~14.5%~~14.4% primarily due to ~~unfavorable inventory adjustments (42~~the reserve related to refining the Company’s product assortment (139 bps), ~~deleveraging on distribution network and transportation costs (42~~decline in product margin (67 bps) due to lower sales and lower supplier allowances ~~driven by~~resulting from inventory purchase mix ~~(13~~and timing, and increased freight costs (40 bps). Adjusted gross profit was $328.7 million, or 13.2%, a decrease of $34.6 million or 118 bps from the prior year period principally due to product margin due to lower sales and lower supplier allowances resulting from inventory purchase mix and timing and increased freight costs.

Operating Expenses. Operating expenses for the first ~~nine~~six months of ~~2017~~2018 were ~~$788.4~~$344.2 million or ~~20.5%~~13.8% of net sales, compared to ~~$475.6~~$532.1 million or ~~11.6%~~21.1% of net sales in the prior year. The ~~$312.8~~$187.9 million ~~increase~~decrease was primarily driven by prior year goodwill ~~impairments~~impairment of ~~$285.2~~$198.8 million, ~~transformational expenses of $14.5 million, a reset of variable compensation costs of $11.9 million, increased~~prior year litigation ~~expenses~~reserves of $9.0 million and ~~prior year gains on the sale~~a 2018 reduction of ~~the City of Industry, CA facility of $20.5~~$5.1 million ~~which created an unfavorable comparison,~~in a receivables reserve for one customer, partially offset by ~~reductions from the prior year pension settlement charge~~2018 restructuring expenses of ~~$12.2~~$22.6 million and increased transformational costs of $5.7 million. Adjusted operating expenses were ~~$479.9~~$308.1 million, ~~or 12.5%~~a decrease of ~~net sales compared with $483.7~~$7.7 million ~~or 11.8% of net sales in~~from the ~~same~~prior year period ~~last year, which was~~ primarily ~~driven by favorability of $4.1 million in inventory related expenses and $5.7 million in employee related expenses, partially offset by higher variable incentive compensation of $11.9 million.~~due to the receivables reserve reduction.

Interest and Other Expense, net. Interest and Other expense, net for the first ~~nine~~six months of ~~2017~~2018 was ~~$19.2~~$17.1 million compared to ~~$18.1~~$14.5 million in the ~~first nine months of 2016.~~same period in 2017. This increase was primarily driven by higher interest rates ~~partially offset by reductions in outstanding debt.~~as compared to the prior year.

Income Taxes. Income tax benefit was ~~$6.9~~$15.4 million for the first ~~nine~~six months of ~~2017,~~2018, compared to ~~income tax~~$0.1 million of expense ~~of $34.9 million~~ for the same period in ~~2016.~~2017. The Company’s effective tax rate was ~~2.5%~~23.0% for the ~~first nine months of 2017,~~current-year period compared to ~~34.5%~~(0.1)% for the same period in ~~2016.~~2017. The effective income tax rate in 2018 was most impacted by the pre-tax loss being offset by non-deductible or permanent items in the quarter while the most significant ~~factors~~factor impacting the effective tax rate for the ~~nine~~six months ended ~~September~~June 30, 2017 was ~~the permanent impact of the third quarter goodwill impairment charges and~~ the discrete impact of the ~~first quarter~~ goodwill impairment ~~charges.~~charge in the period.

Net ~~(Loss) Income.~~Loss. Net loss for the first ~~nine~~six months of ~~2017~~2018 was ~~$265.4~~($51.5) million or ~~$(7.23)~~$(1.40) per share, compared to net ~~income~~loss of ~~$66.2~~$(183.5) million or ~~$1.79~~$(5.01) per ~~diluted~~ share in the prior ~~year.~~year period. Adjusted net income was ~~$20.7~~$1.8 million, or ~~$0.56~~$0.05 per diluted share, compared with adjusted net income of ~~$57.9~~$19.5 million or ~~$1.57~~$0.53 per diluted share for the ~~same~~ prior year period. Included within Adjusted operating expenses in the current quarter was a $5.1 million, or $0.07, per share, reduction in a receivables reserve for one customer.

Cash flows for the Company for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 are summarized below (in thousands):

For the ~~nine-month~~six-month period ended ~~September~~June 30, ~~2017, the increase in~~2018, net cash ~~provided by~~from operating activities was principally the result of decreased ~~inventories and~~inventory, due to product assortment refinement charges, increased accounts payable and increased accrued liabilities, partially offset by ~~decreased~~the net loss, increased accounts ~~receivable.~~receivable and increases in other assets.

Investing cash outflows were primarily driven by investment of $19.0 million in the independent reseller channel in the six-month period ended June 30, 2018, refer to Note 14 – “Independent reseller channel investments.” Gross capital spending for the ~~nine-month~~six-month period ended ~~September~~June 30, 2018 and 2017 ~~and 2016~~ was ~~$24.5~~$16.0 million and ~~$28.2~~$13.7 million, respectively, which was used for various investments in fleet equipment, information technology systems, technology hardware, and distribution center equipment including facility projects.

The Company’s cash flow from financing activities is largely dependent on levels of borrowing under the Company’s credit agreement ~~the acquisition or issuance of treasury stock, contingent payments related to prior acquisitions~~ and quarterly dividend payments.

Cash outflows from financing activities in the nine-months ended September 30, 2017 included the repayment of the asset securitization program and payment of debt issuance costs incurred in connection with the 2017 Credit Agreement, partially offset by incremental borrowings under the 2017 Credit Agreement and term loan compared to net repayment and repurchases of shares in the nine-month period ended September 30, 2016.

In ~~July 2017,~~May 2018, the Board of Directors approved a dividend of $0.14 that was paid on ~~October~~July 13, ~~2017~~2018 to shareholders of record as of ~~September~~June 15, ~~2017.~~ 2018.

In ~~September 2017,~~July 2018, the Board of Directors approved a dividend of $0.14 ~~payable~~to be paid on ~~January 12,~~October 15, 2018 to shareholders of record as of ~~December 15, 2017.~~

Essendant’s growth has historically been funded by a combination of cash provided by operating activities and debt financing. The Company believes that its cash from operations and collections of receivables, coupled with its sources of borrowings and available cash on hand, are sufficient to fund its currently anticipated requirements. These requirements include payments of interest and dividends, scheduled debt repayments, capital expenditures, working capital needs, the funding of pension plans, and funding for additional share repurchases and acquisitions, if any. The Company believes that its sources of borrowings are sound and that the strength of its balance sheet affords the financial flexibility to respond to both internal growth opportunities and those available through acquisitions.

Availability of financing as of ~~September~~June 30, ~~2017,~~2018, is summarized below (in millions):

The Company’s total debt and debt-to-total capitalization ratio consisted of the following amounts (in millions):

Refer to Note ~~7 - “Debt”,~~11 – “Debt,” in the 2017 Form 10-K for further descriptions of the provisions of ~~our~~the Company’s financing ~~facilities as well as Note 11 - “Debt”, in our 2016 Form 10-K.~~facilities.

Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings Per Share, Adjusted EBITDA and Free Cash Flow (the “Non-GAAP table”)

The Non-GAAP table below presents Adjusted Gross Profit, Adjusted Operating Expenses, Adjusted Operating Income, Adjusted Net Income, Adjusted Diluted Earnings per Share, Adjusted EBITDA and Free Cash Flow for the three and ~~nine~~six months ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017 (in thousands, except per share data). These non-GAAP measures exclude certain non-recurring items and exclude other items that do not reflect the Company’s ongoing operations and are included to provide investors with useful information about the financial performance of our business. The presented non-GAAP financial measures should not be considered in isolation or as substitutes for the comparable GAAP financial measures. The non-GAAP financial measures do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP, and these non-GAAP financial measures should only be used to evaluate our results of operations in conjunction with the corresponding GAAP financial measures.

In order to calculate the non-GAAP measures, management excludes the following items to the extent they occur in the reporting period, to facilitate the comparison of current and prior year results and ongoing operations, as management believes these items do not reflect the underlying cost structure of our business. These items can vary significantly in amount and frequency.

Restructuring actions were taken in ~~2015 to improve our operational utilization, labor spend, inventory performance~~the three and ~~functional alignment of the organization. This~~six months ended June 30, 2018 and included product assortment refinements and workforce reductions and facility ~~consolidations with a beneficial impact of $1.2 million and $1.0 million in the three and nine months ended September 30, 2016, respectively~~consolidation (refer to Note 34 – “Severance &and Restructuring Charges”).

~~The Company recognized a $20.5 million gain on the sale of its City of Industry facility in the third quarter of 2016.~~

~~In the third quarter of 2016, the Company recorded a $1.2 million charge related to the severance of two operating leaders which were not part of a restructuring program.~~

In the ~~nine~~six months ended ~~September~~June 30, 2017, the Company recorded ~~two charges related to the~~goodwill impairment ~~of goodwill. In the third quarter, a $86.3 million impairment charge was the result of~~which resulted from declines in sales, ~~and~~ earnings ~~declines,~~ and ~~sustained~~ market capitalization ~~declines. In the nine months ended September 30, 2017, the Company recognized charges of $285.2 million, which include charges from the first and third quarters~~ (refer to Note 45 – “Goodwill and Intangible Assets”).

In the three and six months ended June 30, 2018, these were charges related to ~~litigation matters totaling $9.0 million for the nine months ended September 30, 2017 (refer to Note 12 – “Legal Matters”),~~ transformational expenses, ~~totaling $6.1 million~~including potential merger, acquisition and ~~$14.5 million, respectively, for the three and nine months ended September 30, 2017~~equity investment transactions, and a gain ~~of $0.2 million~~ reflecting receipt of payment on notes receivable reserved in ~~2015 in the three months ended September 30, 2017.~~2015. In the three and ~~nine~~six months ended ~~September~~June 30, ~~2016,~~2017, other actions included ~~settlement charges of $0.4 million~~litigation (refer to Note 13 – “Legal Matters”) and ~~$12.2 million, respectively, related to a defined benefit plan settlement, as well as the tax impact of dividends from a foreign subsidiary of $1.7 million.~~

Adjusted Gross Profit, adjusted operating expenses and adjusted operating income. Adjusted gross profit, adjusted operating expenses and adjusted operating income provide management and our investors with an understanding of the results from the primary operations of our business by excluding the effects of items described above that do not reflect the ordinary expenses and earnings of our operations. Adjusted gross profit, adjusted operating expenses and adjusted operating income are used to evaluate our period-over-period operating performance as they are more comparable measures of our continuing business. These measures may be useful to an investor in evaluating the underlying operating performance of our business.

Adjusted net income and adjusted diluted earnings per share. Adjusted net income and adjusted diluted earnings per share provide a more comparable view of our Company’s underlying performance and trends than the comparable GAAP measures. Net (loss) income and diluted (loss) earnings per share are adjusted for the effect of items described above that do not reflect the ordinary earnings of our operations.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA). Adjusted EBITDA is helpful in evaluating our operating performance and is used by management for various purposes, including as a measure of performance and as a basis for strategic planning and forecasting. Net (loss) income is adjusted for the effect of interest and other expenses, net, taxes, depreciation and amortization and stock-based compensation expense. Management believes that adjusted EBITDA is also commonly used by investors to evaluate operating performance between competitors because it helps reduce variability caused by differences in capital structures, income taxes, stock-based compensation accounting policies, and depreciation and amortization policies.

Free cash flow. Free cash flow is useful to management and our investors as it is a measure of the Company’s liquidity. It provides a more complete understanding of factors and trends affecting our cash flows than the comparable GAAP measure. Net cash provided by ~~(used in)~~ operating activities and net cash ~~provided by (used in)~~used in investing activities are aggregated and adjusted to exclude acquisitions and equity investments, net of cash acquired and divestitures.

For the Three Months Ended September 30,

2017

2016

Operating expenses
$
254,865

$
138,526

Impairment of goodwill (Note 4)

(86,339
)

-

Transformational expenses

(6,099
)

-

Payment on notes receivable

150

-

Defined benefit plan settlement charge

-

(419
)
Gain on sale of City of Industry facility

-

20,541

Severance costs for operating leadership

-

(1,245
)
Restructuring charges reversal

-

1,210

Adjusted operating expenses
$
162,577

$
158,613

Operating (loss) income
$
(82,911
)

$
60,328

Operating expense adjustments noted above

92,288

(20,087
)
Adjusted operating income
$
9,377

$
40,241

Net (loss) income
$
(81,938
)

$
36,742

Operating expense adjustments noted above

92,288

(20,087
)
Income tax (benefit) expense

(7,089
)

17,102

Non-GAAP tax provision on adjustments

Impairment of goodwill

(6,798
)

-

Transformational expenses

(2,409
)

-

Payment on notes receivable

59

-

Defined benefit plan settlement charge

-

(158
)
Gain on sale of City of Industry facility

-

2,789

Severance costs for operating leadership

-

(469
)
Restructuring charges reversal

-

456

Dividend from a foreign subsidiary

-

1,666

Income tax expense on adjusted net income

2,059

12,818

Adjusted net income
$
1,202

$
20,939

Diluted (loss) earnings per share ⁽¹⁾
$
(2.22
)

$
0.99

Operating expense adjustments noted above

2.51

(0.54
)
Non-GAAP tax provision on adjustments

(0.26
)

0.12

Adjusted diluted earnings per share
$
0.03

$
0.57

Net (loss) income
$
(81,938
)

$
36,742

(Benefit of) provision for income taxes

(7,089
)

17,102

Interest expense, net

6,116

6,484

Depreciation and amortization

11,033

11,263

Equity compensation expense

2,077

1,214

Operating expense adjustments noted above

92,288

(20,087
)
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
$
22,487

$
52,718

Net cash provided by operating activities
$
79,182

$
121,952

Net cash (used in) provided by investing activities

(10,786
)

22,280

Free cash flow
$
68,396

$
144,232

	For the Three Months Ended June 30,
	2018			2017 ⁽²⁾

Gross profit	$	173,206		$	177,564
Restructuring charges - product assortment refinements		(8,554	)		-
Adjusted gross profit	$	164,652		$	177,564

Operating expenses	$	164,593		$	160,972
Restructuring charges (Note 4)		(8,019	)		-
Transformational expenses		(9,854	)		(5,444	)
Litigation reserve (Note 13)		-			(3,000	)
Adjusted operating expenses	$	146,720		$	152,528

Operating income	$	8,613		$	16,592
Gross profit and operating expense adjustments noted above		9,319			8,444
Adjusted operating income	$	17,932		$	25,036

Net (loss) income	$	(97	)	$	5,096
Gross profit and operating expense adjustments noted above		9,319			8,444
Non-GAAP tax provision on adjustments
Product assortment refinements		2,870			-
Restructuring charges (Note 4)		(2,690	)		-
Transformational expenses		(3,306	)		(2,085	)
Litigation reserve (Note 13)		-			(1,164	)
Income tax provision on adjusted net loss		(3,126	)		(3,249	)
Adjusted net income	$	6,095		$	10,291

Diluted (loss) income per share ⁽¹⁾	$	-		$	0.14
Gross profit and operating expense adjustments noted above		0.25			0.23
Non-GAAP tax provision on adjustments		(0.09	)		(0.09	)
Adjusted diluted earnings per share	$	0.16		$	0.28

Net (loss) income	$	(97	)	$	5,096
Income tax (benefit) expense		(140	)		4,474
Interest and other expense, net		8,850			7,022
Depreciation and amortization		10,591			10,569
Equity compensation expense		2,411			1,570
Gross profit and operating expense adjustments noted above		9,319			8,444
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)	$	30,934		$	37,174

Net cash provided by operating activities	$	45,103		$	72,786
Net cash used in investing activities	$	(26,938	)	$	(5,365	)
Add: Investment in independent reseller channel (Note 14) ⁽³⁾		19,000			-
Free cash flow	$	37,165		$	67,421

	For the Six Months Ended June 30,
	2018			2017 ⁽²⁾

Gross profit	$	294,382		$	363,231
Restructuring charges - product assortment refinements		34,269			-
Adjusted gross profit	$	328,651		$	363,231

Operating expenses	$	344,199		$	532,098
Restructuring charges (Note 4)		(22,080	)		-
Transformational expenses		(14,084	)		(8,395	)
Payment on notes receivable		110			-
Impairment of goodwill (Note 5)		-			(198,828	)
Litigation reserve (Note 12)		-			(9,000	)
Adjusted operating expenses	$	308,145		$	315,875

Operating loss	$	(49,817	)	$	(168,867	)
Gross profit and operating expense adjustments noted above		70,323			216,223
Adjusted operating income	$	20,506		$	47,356

Net loss	$	(51,537	)	$	(183,498	)
Gross profit and operating expense adjustments noted above		70,323			216,223
Non-GAAP tax provision on adjustments
Product assortment refinements		(6,864	)		-
Restructuring charges (Note 4)		(5,886	)		-
Transformational expenses		(4,267	)		(3,203	)
Payment on notes receivable		25			-
Impairment of goodwill (Note 5)		-			(6,559	)
Litigation reserve (Note 13)		-			(3,488	)
Income tax provision on adjusted net loss		(16,992	)		(13,250	)
Adjusted net income	$	1,794		$	19,475

Diluted loss per share ⁽¹⁾	$	(1.38	)	$	(4.97	)
Gross profit and operating expense adjustments noted above		1.88			5.86
Non-GAAP tax provision on adjustments		(0.45	)		(0.36	)
Adjusted diluted (loss) earnings per share	$	0.05		$	0.53

Net loss	$	(51,537	)	$	(183,498	)
Income tax (benefit) expense		(15,352	)		146
Interest and other expense, net		17,072			14,485
Depreciation and amortization		21,389			21,534
Equity compensation expense		4,441			4,038
Gross profit and operating expense adjustments noted above		70,323			216,223
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)	$	46,336		$	72,928

Net cash provided by operating activities	$	23,678		$	125,811
Net cash used in investing activities	$	(34,730	)	$	(13,677	)
Add: Investment in independent reseller channel (Note 14) ⁽³⁾		19,000			-
Free cash flow	$	7,948		$	112,134

For the Nine Months Ended September 30,

2017

2016

Operating expenses
$
788,409

$
475,573

Impairment of goodwill (Note 4)

(285,166
)

-

Litigation reserve (Note 12)

(9,000
)

-

Transformational expenses

(14,493
)

-

Payment on notes receivable

150

-

Defined benefit plan settlement charge

-

(12,163
)
Gain on sale of City of Industry facility

-

20,541

Severance costs for operating leadership

-

(1,245
)
Restructuring charges reversal

-

956

Adjusted operating expenses
$
479,900

$
483,662

Operating (loss) income
$
(253,223
)

$
119,186

Operating expense adjustments noted above

308,509

(8,089
)
Adjusted operating income
$
55,286

$
111,097

Net (loss) income
$
(265,434
)

$
66,205

Operating expense adjustments noted above

308,509

(8,089
)
Income tax (benefit) expense

(6,943
)

34,923

Non-GAAP tax provision on adjustments

Impairment of goodwill

(13,356
)

-

Litigation reserve

(3,488
)

-

Transformational expenses

(5,612
)

-

Payment on notes receivable

59

-

Defined benefit plan settlement charge

-

(4,574
)
Gain on sale of City of Industry facility

-

2,789

Severance costs for operating leadership

-

(469
)
Restructuring charges reversal

-

357

Dividend from a foreign subsidiary

-

1,666

Income tax expense on adjusted net income

15,454

35,154

Adjusted net income
$
20,678

$
57,885

Diluted (loss) earnings per share ⁽¹⁾
$
(7.20
)

$
1.79

Operating expense adjustments noted above

8.37

(0.22
)
Non-GAAP tax provision on adjustments

(0.61
)

-

Adjusted diluted earnings per share
$
0.56

$
1.57

Net (loss) income
$
(265,434
)

$
66,205

(Benefit of) provision for income taxes

(6,943
)

34,923

Interest expense, net

19,154

18,058

Depreciation and amortization

32,567

34,199

Equity compensation expense

6,115

6,903

Operating expense adjustments noted above

308,509

(8,089
)
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA)
$
93,968

$
152,199

Net cash provided by operating activities
$
204,993

$
105,968

Net cash (used in) provided by investing activities

(24,463
)

5,723

Free cash flow
$
180,530

$
111,691

The Company is subject to market risk associated principally with changes in interest rates and foreign currency exchange rates. There were no material changes to the Company’s exposures to market risk during the quarter ended ~~September~~June 30, ~~2017,~~2018, from those disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2017.

We maintain disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934. Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based upon this evaluation, the principal executive officer and the principal financial officer concluded that our disclosure controls and procedures are effective in providing reasonable assurance that material information required to be disclosed in our reports filed with or submitted to the Securities and Exchange Commission under the Securities Exchange Act is made known to management, including the principal executive officer and the principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

During the quarter ended ~~September~~June 30, ~~2017,~~2018, there have been no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For information regarding legal proceedings, see Note ~~12 -~~13 – “Legal Matters.”

For information regarding risk factors, see “Risk Factors” in Item 1A of Part I of the ~~2016~~2017 Form 10-K. There have been no material changes to the risk factors described in such Form 10-K, except for the ~~following three revised risk factors.~~following.

~~The loss~~RISKS RELATED TO ESSENDANT’S PLANNED MERGER WITH GPC’S SPR BUSINESS

On April 12, 2018, Essendant announced it entered into a definitive agreement with Genuine Parts Company (“GPC”) pursuant to which Essendant will combine with GPC’s Business Products Group (collectively, the “SPR Business”) in a business combination transaction, pursuant to the Agreement and Plan of ~~one or more significant customers could significantly reduce Essendant’s revenues~~Merger (as amended, the “Merger Agreement”) dated as of April 12, 2018, by and ~~profitability.~~

among GPC, Rhino SpinCo, Inc., a Delaware corporation and wholly owned subsidiary of GPC (“SpinCo”), ESND and Elephant Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of ESND (“Merger Sub”). In ~~2016, Essendant’s largest customer accounted for approximately 11%~~connection with the Merger Agreement, GPC and SpinCo entered into a Separation Agreement dated as of net sales and Essendant’s five largest customers accounted for approximately 25% of net sales. Several of Essendant’s current and potential customers were involved in business combinations in 2016 and 2015April 12, 2018 (the “Separation Agreement”), pursuant to which the SPR Business will be separated from GPC. In the transactions contemplated by the Merger Agreement and the ~~Company~~Separation Agreement, (i) GPC will transfer certain of its wholly owned subsidiaries that are engaged in the SPR Business to SpinCo, (ii) GPC will distribute SpinCo’s stock to GPC’s stockholders by way of a pro rata dividend (the “Distribution”), and (iii) Merger Sub will merge with and into SpinCo, with SpinCo as the surviving corporation (the “Merger” and, together with the Distribution, the “Transactions”) and a wholly owned subsidiary of ESND.

Essendant may not realize the anticipated cost synergies and growth opportunities from the Transactions.

Essendant expects ~~increased customer~~that it will realize cost synergies, growth opportunities and other financial and operating benefits as a result of the Transactions. Essendant’s success in realizing these benefits, and the timing of their realization, depends on the successful integration of the business operations of the SPR Business with Essendant. Even if Essendant is able to integrate the SPR Business successfully, Essendant cannot predict with certainty if or when these cost synergies, growth opportunities and benefits will occur, or the extent to which they will actually be achieved. For example, the benefits from the Transactions may be offset by costs incurred in integrating the companies. Realization of any benefits and synergies could be affected by the factors described in other risk factors and a number of factors beyond Essendant’s control, including, without limitation, general economic conditions, further consolidation in the ~~future. Following business combinations,~~industries in which Essendant operates, increased operating costs and regulatory developments.

The integration of the ~~surviving companies often review their supply chain and sourcing options, which can result~~SPR Business with Essendant following the Transactions may present significant challenges.

There is a significant degree of difficulty inherent in the ~~companies altering their sourcing relationships.~~ process of integrating the SPR Business with Essendant. These difficulties include:

The ~~Company generally does not have long-term contracts with its customers, which are typically free to reduce~~process of integrating operations could cause an interruption of, or ~~terminate their purchases from the Company on little or no notice. Increasing direct purchases by major customers from manufacturers, as well as the~~ loss of ~~one or more key customers, changes~~momentum in, the ~~sales mix~~activities of the SPR Business or ~~sales volume~~Essendant’s business. Members of Essendant’s or the SPR Business’ senior management may be required to ~~key customers,~~devote considerable amounts of time to this integration process, which will decrease the time they will have to manage Essendant or ~~a significant downturn in~~ the SPR Business, serve the existing Essendant business or ~~financial condition of any of them could significantly reduce Essendant’s sales and profitability.~~

~~For example, Essendant’s revenue and profitability declined as sales, including sales to several large customers and national account customers, declined in~~ the ~~nine months ended September 30, 2017.~~

~~Essendant relies on independent resellers for a significant percentage of its net sales.~~

Sales to independent resellers account for a significant portion of Essendant’s net sales. Independent resellers compete with national distributors and retailers that have substantially greater financial resources and technical and marketing capabilities. Financial, technical, and commercial constraints are challenging as business increasingly shifts online. Over the years, several of the Company’s independent reseller customers have been acquired by competitorsSPR Business, or ~~have ceased operation, and the Company expects independent reseller customers to continue to consolidate.~~develop new services or strategies. If Essendant’s ~~customer base of independent resellers declines and~~or the ~~Company~~SPR Business’ senior management is not able to ~~replace resulting sales declines,~~effectively manage the ~~Company’s~~integration process, or if any significant business ~~and~~activities are interrupted as a result of the integration process, the business of Essendant or the SPR Business could suffer.

Essendant’s successful or cost-effective integration of the SPR Business cannot be assured. The failure to do so could have a material adverse effect on Essendant’s business, financial condition or results of operations after the Transactions.

Essendant and GPC may fail to obtain the required regulatory approvals in connection with the Merger in a timely fashion, if at all, or regulators may impose burdensome conditions.

Essendant and GPC are subject to certain antitrust and competition laws, and the proposed Merger is subject to review and approval by regulators under those laws, including review and approval by the Federal Trade Commission (“FTC”). Although Essendant and GPC have agreed to use reasonable best efforts to obtain the requisite approvals, there can be no assurance that these regulatory approvals will be obtained. The parties made their respective filings with the FTC under the Hart-Scott-Rodino Antitrust Improvements Acts of 1976 (“HSR Act”) on May 2, 2018. On June 1, 2018, the FTC extended the waiting period by requesting additional information from the parties (a “Second Request”). The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 11:59 p.m. (Eastern Time in the U.S.) on the 30th day after certification of substantial compliance by the parties with such request unless that period is extended voluntarily by the parties or terminated sooner by the FTC.

The parties’ requirement to substantially comply with the Second Request or receive certain federal regulatory approvals before the consummation of the Transactions could delay the completion of the Transactions. An extended delay in the completion of the Transactions could diminish the anticipated benefits of the Transactions or result in additional transaction costs, loss of revenue or other effects associated with uncertainty about the Transactions. In addition, these governmental entities may attempt to condition their approval of the Transactions on the imposition of conditions, terms, obligations or restrictions that could have a material adverse effect on the Transactions themselves or Essendant’s businesses after the Transactions, including, but not limited to, Essendant’s operating results or the value of its common stock. If Essendant agrees to any material conditions, terms, obligations or restrictions in order to obtain any approvals required to complete the Transactions, the business, financial condition or results of operations of the combined company may be adversely affected.

Failure to complete the Transactions could adversely impact the market price of Essendant common stock as well as its business and operating results.

The consummation of the Transactions is subject to numerous conditions, including without limitation: (i) the separation of the SPR Business from the other businesses of GPC (the “Separation”) having taken place in accordance with the Separation Agreement; (ii) approval of the issuance of our common stock in connection with the Merger Agreement by the requisite vote of Essendant’s stockholders; and (iii) expiration of the applicable waiting period under the HSR Act. There is no assurance that these conditions will be met and that the Transactions will be consummated.

If the Transactions are not completed for any reason, the price of Essendant common stock may decline to the extent that the market price of Essendant common stock reflects positive market assumptions that the Transactions will be completed and the related benefits will be realized. In addition, Essendant and GPC have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory, printing and financial services fees related to the ~~nine months ended September 30, 2017, sales to independent dealers declined, which~~Transactions. A substantial portion of these expenses must be paid regardless of whether the ~~Company believes is due in part to independent dealers losing market share to larger competitors with greater resources. Sales~~Transactions are consummated. Even if the Transactions are completed, delay in the ~~nine months ended September 30, 2017 were also adversely affected by~~completion of the ~~previously disclosed acquisition~~Transactions could diminish the anticipated benefits of ~~a large regional independent dealer customer by Staples.~~

~~Essendant’s reliance on supplier allowances and promotional incentives could impact profitability.~~

~~Supplier allowances and promotional incentives that~~the Transactions or result in additional transaction expenses, loss of revenue or other effects associated with uncertainty about the Transactions. If the Transactions are ~~often based on~~not consummated because the volume of Company product purchases contribute significantly to Essendant’s profitability. If Essendant does not comply with suppliers’ terms and conditions, or does not make requisite purchases to achieve certain volume hurdles,Merger Agreement is terminated, Essendant may ~~not earn~~be required under certain ~~allowances~~circumstances to pay GPC a $12 million termination fee or may under other circumstances be required to reimburse GPC for up to $3 million for certain expenses in connection with the Transactions.

The announcement and ~~promotional incentives.~~pendency of the Merger could have an adverse effect on Essendant’s stock price or the business, financial condition, results of operations or business prospects of Essendant or the SPR Business.

The announcement and pendency of the Merger could disrupt Essendant’s businesses in negative ways. For example, ~~in 2016,~~customers and other third-party business partners of Essendant or the SPR Business may seek to terminate and/or renegotiate their relationships with Essendant or the SPR Business as ~~the Company executed its strategy to improve cash flow in part through lower inventory balances,~~ a reduction in purchases from suppliers resulted in lower supplier allowances and promotional incentives, which contributed to unfavorable gross margin changes. Additionally, suppliers may reduce the allowances they pay Essendant if they conclude the value Essendant creates does not justify the allowances. If Essendant’s suppliers reduce or otherwise alter their allowances or promotional incentives, Essendant’s profit margin for the saleresult of the ~~products it purchases~~Merger, whether pursuant to the terms of their existing agreements with Essendant and/or the SPR Business or otherwise. In addition, current and prospective employees of Essendant and the SPR Business may experience uncertainty regarding their future roles with the combined company, which might adversely affect Essendant’s ability to retain, recruit and motivate key personnel. Should they occur, any of these events could adversely affect the stock price of Essendant, or harm the financial condition, results of operations or business prospects of, Essendant or the SPR Business.

The previously announced unsolicited proposal from ~~those suppliers may decline. The loss or diminution of supplier allowances and promotional support~~Staples, Inc. to acquire Essendant could have an adverse effect on the ~~Company’s~~business, financial condition, results of ~~operations. As part~~operations or business prospects of Essendant.

The previously announced unsolicited proposal from Staples, Inc. to acquire Essendant could disrupt Essendant’s businesses in negative ways. For example, customers, suppliers and other partners of Essendant may seek to terminate or reduce their relationships with Essendant as a result of the ~~Company’s multi-year transformation program,~~proposal. In addition, current and prospective employees of Essendant may experience uncertainty

regarding their current or potential roles with Essendant, which might adversely affect Essendant’s ability to retain, recruit and motivate key personnel. Should they occur, any of these events could adversely affect the ~~Company has undertaken merchandising~~financial condition, results of operations or business prospects of Essendant.

Essendant expects to incur significant one-time costs in connection with the Transactions in 2018, including financing-related fees, legal, accounting and ~~sourcing initiatives~~other professional fees and transition and integration-related expenses. While Essendant expects to ~~more effectively leverage supply relationships~~be able to fund these one-time costs using cash from operations and ~~enhance profitability. Failure to complete the process, incomplete attainment or ineffective management of the initiatives could cause declines in profitability~~borrowings under existing and anticipated credit sources, these costs will negatively impact Essendant’s liquidity, cash flows and results of ~~operations.~~operations in the periods in which they are incurred.

Essendant expects to incur new indebtedness in connection with the Transactions, and the degree to which Essendant will be leveraged following completion of the Transactions may have a material adverse effect on Essendant’s businesses, financial condition or results of operations and cash flows. On April 12, 2018, Essendant entered into a commitment letter with JPMorgan Chase Bank, N.A. and Citibank, N.A. (collectively, together with all additional commitment parties added to the commitment letters from time to time, the “Commitment Parties”) (together with any amendments, supplements and joinders thereto, the “Essendant Commitment Letter”) pursuant to which the Commitment Parties have agreed to provide credit facilities to Essendant, the proceeds of which will be used for general corporate purposes, to make any true-up payments required to be made by SpinCo pursuant to the Separation Agreement, to pay certain other fees and expenses and to refinance certain existing indebtedness of Essendant. Also on April 12, 2018, SpinCo entered into a commitment letter with the Commitment Parties (together with any amendments, supplements and joinders thereto the “SpinCo Commitment Letter”; the SpinCo Commitment Letter and the Essendant Commitment Letter are referred to herein collectively as the “Commitment Letters”), pursuant to which the Commitment Parties have agreed to provide a term loan credit facility to SpinCo, the proceeds of which will finance the Internal Reorganization Cash Payments and certain fees and expenses related to the Transactions. Essendant’s ability to make payments on and to refinance its indebtedness, including the debt incurred pursuant to the Transactions, as well as any future debt that Essendant may incur, will depend on, among other things, Essendant’s ability to generate cash in the future from operations, financings or asset sales. Essendant’s ability to generate cash is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond Essendant’s control. If Essendant is not able to repay or refinance its debt as it becomes due, Essendant may be forced to sell assets or take other disadvantageous actions, including (i) reducing financing in the future for working capital, capital expenditures and general corporate purposes or (ii) dedicating an unsustainable level of Essendant’s cash flow from operations to the payment of principal and interest on Essendant’s indebtedness. In addition, Essendant’s ability to withstand competitive pressures and react to changes in Essendant’s industry could be impaired. The lenders who hold such debt also could accelerate amounts due in the event Essendant were to default, which could potentially trigger a default or acceleration of any of Essendant’s other debt. In addition, Essendant may increase its debt or raise additional capital following the Transactions, subject to restrictions in Essendant’s debt agreements and agreements entered into in connection with the Transactions. If Essendant’s cash flow from operations is less than it anticipates, or if Essendant’s cash requirements are more than it expects, Essendant may require more financing. However, debt or equity financing may not be available to Essendant on terms advantageous or acceptable to Essendant, if at all. If Essendant incurs additional debt or raises equity through the issuance of preferred stock, the terms of the debt or preferred stock issued may give the holders rights, preferences and privileges senior to those of holders of Essendant’s common stock, particularly in the event of liquidation. The terms of the debt or preferred stock also may impose additional and more stringent restrictions on Essendant’s operations than it currently has. If Essendant raises funds through the issuance of additional equity, Essendant stockholders’ percentage ownership in Essendant would be diluted. If Essendant is unable to raise additional capital when needed, it could affect Essendant’s financial condition.

Essendant’s rights plan and certain anti-takeover provisions contained in Essendant’s certificate of incorporation, Essendant’s bylaws and under Delaware law could hinder a takeover attempt.

On May 17, 2018, the Essendant Board of Directors adopted a stockholder rights plan, as subsequently amended on May 29, 2018, between Essendant and Equiniti Trust Company, as rights agent (the “Rights Plan”). Pursuant to the Rights Plan, one preferred stock purchase right (a “Right”) was distributed as a dividend on each share of Essendant common stock held of record as of the close of business on May 27, 2018. Each Right entitles Essendant stockholders to purchase a unit representing one one-thousandth of a share of Series A Junior Participating Preferred Stock for $33.00, subject to adjustment.

The Rights generally will be exercisable only if a person or group acquires beneficial ownership (including through derivatives) of 10% or more (or 15% or more for a person or group reporting beneficial ownership on Schedule 13G) of Essendant common stock or commences a tender or exchange offer upon consummation of which such person or group would beneficially own 10% or more of Essendant common stock. The Rights expire on May 17, 2019, unless earlier redeemed, exchanged or terminated.

Although the Essendant Board of Directors believes that, given current circumstances, it is in the best interests of stockholders that no one person or group acquire undue influence or control through purchases of Essendant stock, the Rights Plan could have the effect of delaying, deferring or preventing a change in control. For example, ~~we earned lower supplier allowances in the nine months ended September 30, 2017, which resulted primarily from lower sales and ongoing inventory rationalization efforts.~~such provisions may deter tender offers for shares of common

stock or exchangeable shares, which offers may be attractive to stockholders, or deter purchases of large blocks of common stock or exchangeable shares, thereby limiting the opportunity for stockholders to receive a premium for their shares of common stock or exchangeable shares over the then-prevailing market prices.

Essendant is subject to the provisions of Section 203 of the Delaware General Corporation Law prohibiting, under some circumstances, publicly-held Delaware corporations from engaging in business combinations with certain interested stockholders unless certain approvals are obtained. Such provisions could delay or impede the removal of incumbent directors and could make more difficult a merger, tender offer or proxy contest involving Essendant, even if such events could be beneficial, in the short-term, to the interests of the stockholders. In addition, such provisions could limit the price that some investors might be willing to pay in the future for shares of Essendant common stock. Additionally, Essendant’s certificate of incorporation and bylaws contain provisions relating to the limitations of liability and indemnification of Essendant’s directors and officers and dividing its board of directors into three classes of directors serving three-year terms. These provisions also may have the effect of deterring hostile takeovers or delaying changes in control or management of Essendant.

The Transactions may discourage other companies from trying to acquire Essendant before or for a period of time following completion of the Transactions.

Certain provisions in the Merger Agreement prohibit Essendant from soliciting any acquisition proposal during the pendency of the Merger. If the Merger Agreement is terminated under circumstances that obligate Essendant to pay GPC a termination fee, Essendant’s financial condition will be adversely affected as a result of the payment of the termination fee, which might deter third parties from proposing alternative acquisition proposals, including acquisition proposals that might result in greater value to Essendant stockholders than the Transactions. In addition, certain provisions of the tax matters agreement entered into between Essendant, SpinCo and GPC, which are intended to preserve the intended tax treatment of certain aspects of the Transactions for U.S. federal income tax purposes, may discourage acquisition proposals for a period of time following the Transactions. Essendant expects to issue approximately 40.2 million shares of its common stock in connection with the Merger. Consequently, Essendant will be a significantly larger company and have significantly more shares of common stock outstanding after the consummation of the Transactions, and an acquisition of Essendant may become more expensive. As a result, some companies that would otherwise consider acquiring Essendant may not seek to do so.

The Company did not repurchase any shares of common stock in the ~~nine~~three months ended ~~September~~June 30, ~~2017 while during the nine months ended September 30, 2016, the Company repurchased 241,270 of common stock at an aggregate cost of $6.8 million.~~2018 and 2017. The Company did not repurchase any additional shares through ~~October 23, 2017.~~July 26, 2018. As of that date, the Company had approximately $68.2 million remaining of existing share repurchase authorization from the Board of Directors.

2017 Fiscal Month

Total Number
of Shares
Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased as
Part of a Publicly
Announced Program

Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under
the Program

July 1, 2017 to July 31, 2017

-

-

-

68,160,702

August 1, 2017 to August 31, 2017

-

-

-

68,160,702

September 1, 2017 to September 30, 2017

-

-

-

68,160,702

Total Third Quarter

-

$
-

-

$
68,160,702

2018 Fiscal Month	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
April 1, 2018 to April 30, 2018		-		-		-		68,160,702
May 1, 2018 to May 31, 2018		-		-		-		68,160,702
June 1, 2018 to June 30, 2018		-		-		-		68,160,702
Total Second Quarter		-	$	-		-	$	68,160,702

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

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.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

		Page No.
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed Consolidated Balance Sheets as of ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016~~2017		3
Condensed Consolidated Statements of ~~(Loss) Income~~Operations for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017		4
Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the Three and ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017		5
Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~September~~June 30, ~~2017~~2018 and ~~2016~~2017		6
Notes to Condensed Consolidated Financial Statements		7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		1921
Item 3. Quantitative and Qualitative Disclosures About Market Risk		3133
Item 4. Controls and Procedures		3133
PART II — OTHER INFORMATION
Item 1. Legal Proceedings		3234
Item 1A. Risk Factors		3234
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		3338
Item 6. Exhibits		3439
SIGNATURES		3540

Year	Amount		Amount
2017	$	10,810
2018		8,088	$	8,063
2019		6,971		6,937
2020		6,968		6,934
2021		6,968		6,934
2022				6,880

	Foreign Currency Translation			Cash Flow Hedges			Defined Benefit Pension Plans			Total			Foreign Currency Translation			Cash Flow Hedges			Defined Benefit Pension Plans			Total
AOCI, balance as of December 31, 2016	$	(8,439	)	$	172		$	(38,189	)	$	(46,456	)
AOCI, balance as of December 31, 2017													$	(5,933	)	$	(206	)	$	(44,874	)	$	(51,013	)
Other comprehensive income (loss) before reclassifications		2,780			(200	)		-			2,580			(1,625	)		1,746			-			121
Amounts reclassified from AOCI		-			159			2,083			2,242			-			230			2,089			2,319
Net other comprehensive income		2,780			(41	)		2,083			4,822			(1,625	)		1,976			2,089			2,440
AOCI, balance as of September 30, 2017	$	(5,659	)	$	131		$	(36,106	)	$	(41,634	)
AOCI, balance as of June 30, 2018													$	(7,558	)	$	1,770		$	(42,785	)	$	(48,573	)

	As of			As of			As of			As of
	September 30, 2017			December 31, 2016			June 30, 2018			December 31, 2017

2017 Credit Agreement							$	6.1		$	6.1
Current maturities of long term debt							$	6.1		$	6.1

Term Loan	$	74.6		$	-		$	63.9		$	67.0
Revolving Credit Facility		141.3			-			211.6			181.3
FILO Facility		100.0			-			98.6			100.0
2013 Credit Agreement		-			260.4
2013 Note Purchase Agreement		150.0			150.0			150.0			150.0
Receivables Securitization Program		-			200.0
Mortgage & Capital Lease		-			0.1
Total long-term debt							$	524.1		$	498.3
Transaction Costs		(6.6	)		(1.5	)	$	(5.5	)	$	(6.3	)
Total	$	459.3		$	609.0

Total Debt							$	524.7		$	498.1

Year
2018	$	20,756
2019		11,628
2020		7,638
2021		5,286
2022		3,344
Thereafter		5,143
Total prepaid customer rebates	$	53,795

	December 31, 2016		For the three months ended March 30, 2017			For the three months ended September 30, 2017			For the nine months ended September 30, 2017		September 30, 2017
	Goodwill balance		Impairment			Impairment			Currency translation adjustments		Goodwill balance
Office & Facilities	$	224,683		(185,704	)	$	(38,979	)	$	-	$	-
Industrial		13,067		-			-		97			13,164
Automotive		45,234		(12,220	)		(33,342	)		328		-
CPO		14,922		(904	)		(14,018	)		-		-
	$	297,906	$	(198,828	)	$	(86,339	)	$	425	$	13,164

	Three months ended June 30, 2017							Six months ended June 30, 2017
Condensed consolidated statement of loss	As reported		As revised		Effect of change			As reported			As revised			Effect of change
Warehousing, marketing and administrative expenses	$	161,695	$	160,972	$	(723	)	$	334,717		$	333,270		$	(1,447	)
Operating income (loss)		15,869		16,592		723			(170,314	)		(168,867	)		1,447
Interest and other expense, net		6,299		7,022		723			13,038			14,485			1,447
Income (loss) before income taxes		9,570		9,570		-			(183,352	)		(183,352	)		-

	Nine months ended September 30,
	2017			2016
Net cash provided by operating activities	$	204,993		$	105,968
Net cash (used in) provided by investing activities		(24,463	)		5,723
Net cash used in financing activities		(173,209	)		(119,259	)

	Aggregated Committed Principal		Borrowing Base Limitation		Total Utilization		Net Availability		Aggregated Committed Principal		Borrowing Base Limitation		Total Utilization		Net Availability
2017 Credit Agreement
Term Loan ⁽¹⁾	$	74.6	$	74.6	$	74.6	$	-	$	70.0	$	70.0	$	70.0	$	-
Revolving Credit Facility ⁽²⁾⁽¹⁾		1,000.0		865.6	318.8			546.8		1,000.0		849.2	388.6			460.6
First-in-Last-Out ("FILO")		100.0		100.0		100.0		-		100.0		100.0		98.6		1.4
Total all Funding Sources	$	1,174.6	$	1,040.2	$	493.4	$	546.8	$	1,170.0	$	1,019.2	$	557.2	$	462.0

2017 Fiscal Month	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 1, 2017 to July 31, 2017		-		-		-		68,160,702
August 1, 2017 to August 31, 2017		-		-		-		68,160,702
September 1, 2017 to September 30, 2017		-		-		-		68,160,702
Total Third Quarter		-	$	-		-	$	68,160,702

Exhibit No.		Description
3.1		Third Restated Certificate of Incorporation of Essendant Inc. (“ESND” or the “Company”), dated as of June 1, 2015 (Exhibit 3.1 to the Form 10-Q, filed on July 23,2015)
3.2		Amended and Restated Bylaws of Essendant Inc., dated as of December 13, 2016 (Exhibit 3.1 to the Company’s Current Report on Form 8-K, filed on December 16, 2016)
3.3		Certificate of Elimination of Series A. Junior Preferred Stock of ESND (Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on May 17, 2018)
3.4		Certificate of Designation, preferences and Rights of Series A. Junior Participating Preferred Stock of ESND (Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 17, 2018)
4.1		Note Purchase Agreement, dated as of November 25, 2013, among ESND, Essendant Co. ~~(“ECO”)~~(ECO), and the note purchasers identified therein (the “2013 Note Purchase Agreement”) (Exhibit 4.4 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, filed on February 19, 2014 (the “2013 Form 10-K”))
4.2		Amendment No. 1 to Note Purchase Agreement, dated as of January 27, 2016, among ECO, ESND and the holders of Notes issued by the Company that are parties thereto (Exhibit 4.2 to the Form 10-Q, filed on April 20, ~~2016)~~2016)
4.3		Amendment No. 2 to Note Purchase Agreement, dated as of August 30, 2016, among ESND, ECO, and the note purchasers identified therein (Exhibit 10.7 to the Company’s Form 10-Q filed on October 26, 2016)
4.4		Amendment No 3 to Note Purchase Agreement, dated as of February 9, 2017, among ESND, ECO and the note purchasers identified therein (Exhibit 10.2 to the Form 10-Q filed on April 27, 2017)
4.5		Amendment No 4 to Note Purchase Agreement, dated as of February 22, 2017, among ESND, ECO and the note purchasers identified therein (Exhibit 10.3 to the Form 10-Q filed on April 27, 2017)
4.6		Parent Guaranty, dated as of November 25, 2013, by ESND in favor of the holders of the promissory notes identified therein (Exhibit 4.5 to the 2013 Form 10-K)
~~4.5~~4.7		Subsidiary Guaranty, dated as of November 25, 2013, by all of the domestic subsidiaries of ECO (Exhibit 4.6 to the 2013 Form 10-K)
4.8		Rights Agreement, dated as of May 17, 2018, between ESND and Equinity Trust Company, as rights agent (Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on May 17, 2018)
10.1*		Form of ~~Interim Chief Executive Officer Restricted Stock~~Cash Unit Award AgreementAgreement for Non-Employee Directors*
10.2*		Form of ~~Restricted Stock~~Cash Unit Award Agreement with EPS MinimumAgreement*
10.3*		Form of ~~Cash Retention~~Restricted Stock Unit Award Agreement**
10.4*		Form of ~~Cash Match~~Restricted Stock Unit Award AgreementAgreement for Non-Employee Directors*
10.5*		Form of Restricted Stock Award Agreement for Non-Employee Directors**
31.1*		Certification of Chief Executive Officer, dated as of ~~October 25, 2017,~~August 9, 2018, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2*		Certification of Chief Financial Officer, dated as of ~~October 25, 2017,~~August 9, 2018, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Chief Executive Officer and Chief Financial Officer, dated as of ~~October 25, 2017,~~August 9, 2018, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101*		The following financial information from Essendant Inc.’s Quarterly Report on Form 10-Q for the period ended ~~September~~June 30, ~~2017,~~2018, filed with the SEC on ~~October 25, 2017,~~August 9, 2018, formatted in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheet at ~~September~~June 30, ~~2017~~2018 and December 31, ~~2016;~~2017; (ii) the Condensed Consolidated Statement of ~~(Loss) Income~~Loss for the ~~three-month~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2018 and ~~2016;~~2017; (iii) the Condensed Consolidated Statements of Comprehensive ~~(Loss) Income~~Loss for the ~~three-month~~three- and ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2018 and ~~2016;~~2017; (iv) the Condensed Consolidated Statement of Cash Flows for the ~~nine-month~~six-month periods ended ~~September~~June 30, ~~2017~~2018 and ~~2016;~~2017; and (v) Notes to Condensed Consolidated Financial Statements.
*		- Filed herewith
**		- Represents a management contract or compensatory plan or arrangement

			ESSENDANT INC.
			(Registrant)

Date: ~~October 25, 2017~~August 9, 2018			/s/ Janet Zelenka
			Janet Zelenka
			Senior Vice President and Chief Financial Officer