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Exhibit 99.1
Kathleen S. Dvorak
Sr. Vice President and Chief Financial Officer
or
Randall W. Larrimore
President and Chief Executive Officer
United Stationers Inc.
(847) 699-5000
FOR IMMEDIATE RELEASE
UNITED STATIONERS REPORTS THIRD QUARTER RESULTS
DES PLAINES, IL, Oct. 29, 2001 -- United Stationers Inc. (NASDAQ: USTR)
today reported lower sales and earnings for the three and nine months ended
September 30, 2001. The company also provided details on its restructuring plan,
which is expected to improve its financial performance beginning in 2002.
LOWER SALES, RESTRUCTURING CHARGE AFFECT THIRD QUARTER RESULTS
Net sales for the third quarter were $951 million, down 6.4% compared
with $1.0 billion in the prior-year period. For the latest quarter, the company
recorded a net loss of $5.9 million, equal to $0.18 per share, compared with net
income of $26.4 million, or $0.76 per share, at this time last year. The net
loss includes a pre-tax restructuring charge of $47.6 million, or $0.86 per
share.
Several factors contributed to the sales decline. The weaker economy,
and the events of September 11th - which created additional uncertainty about
future economic growth - affected all business lines in all geographic regions.
In addition, the company sold Positive ID, its bar code scanning equipment
division, in July 2001.
The gross margin for the three months declined to 16.0%, compared with
16.2% in the prior-year period. This change is a direct result of incremental
costs reflected in gross margin that are associated with the company's
third-party fulfillment business, THE ORDER PEOPLE. Operating expenses totaled
$156.1 million, or 16.4% of sales, compared with $110.6 million, or 10.9% of
sales. The increase is due primarily to the restructuring charge, severance
costs not related to the restructuring plan, and incremental costs associated
with THE ORDER PEOPLE.
The $47.6 million pre-tax restructuring charge includes a pre-tax cash
charge of $31.7 million and a $15.9 million non-cash charge. Excluding the
charge, earnings per share were $0.67, compared with $0.76 in the third quarter
of 2000. The latest quarter included severance expense of approximately $3.1
million, or $0.05 per share, which was not directly related to the
restructuring, and a loss before interest and taxes related to THE ORDER PEOPLE
of $4.1 million, or $0.07 per share, compared with $5.6 million, or $0.10 per
share, in the second quarter of 2001. For the fourth quarter ending December
2001, the loss before interest and taxes related to THE ORDER PEOPLE is expected
to be approximately $3.0 million.
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United Stationers Reports Third Quarter Results
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SAME FACTORS AFFECT YEAR-TO-DATE RESULTS
Sales for the nine months were $3.0 billion, down slightly compared
with the same period in 2000. Including the restructuring charge, nine-month net
income was $37.5 million, compared with $66.6 million a year ago. Earnings per
share for the latest period were $1.11, versus $1.91 at this time last year. Net
income, excluding the restructuring charge, was $66.2 million, or $1.96 per
share, compared with $73.1 million, excluding the extraordinary charge, or $2.10
per share.
RESTRUCTURING PLAN BEGINS TO SHOW BENEFITS IN 2002
United Stationers' board of directors approved the restructuring plan
late in the third quarter. Since then, the company entered into an agreement to
sell certain assets previously included in the restructuring plan. Primarily
because of this agreement, the charge was reduced by $4.4 million to $47.6
million from the original $52 million charge announced in early October.
The restructuring plan includes lowering THE ORDER PEOPLE'S expense
base, as well as a workforce reduction, facility rationalization and systems
integration. Pre-tax cost savings in 2002 are expected to be approximately $25
million. In 2003, the plan is expected to produce ongoing pre-tax cost savings
of approximately $40 million, with additional benefits in future years, and a
300 basis point improvement in return on invested capital.
In addition to the third quarter charge, the cost of implementing the
restructuring plan (primarily expenses related to relocating inventory and
accelerated depreciation of certain capital assets) is estimated at
approximately $6.7 million, of which about $1.6 million will be recorded in the
fourth quarter. The remainder of these costs will be incurred as the
restructuring plan is implemented.
WORKING CAPITAL LEVERAGE IMPROVES
Core elements of net working capital improved $56.1 million compared
with the prior year. Accounts receivable - before sales of receivables under the
company's securitization program - were $23.9 million lower, and inventory
dropped by $43.3 million, while accounts payable were down $11.1 million.
The balance sheet also reflected the decision to sell only $110 million
of receivables under the securitization, versus the maximum of $160 million sold
in the prior year. The company reduced sales under its securitization to avoid
accumulating excess cash balances. In addition, the balance sheet included
accrued liabilities of $23.5 million for restructuring costs.
"We are pleased to have improved our working capital leverage in the
current challenging environment," said Randall W. Larrimore, president and chief
executive officer. "Our initiatives are creating efficiencies and, by managing
our needs closely, we have generated significant cash from working capital."
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United Stationers Reports Third Quarter Results
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CAPITAL EXPENDITURES REMAIN LOW
Capital expenditures for 2001 are expected to be approximately $35
million versus $39 million last year. The company anticipates that its 2002
capital spending will be approximately $35-to-$40 million, which includes $17
million in restructuring-related capital expenditures.
STRONGER PERFORMANCE EXPECTED IN 2002
"Three critical factors focused our attention on our cost structure,"
Larrimore said. "First, we're faced with the reality that the economy may not
improve for some time. Second, we cannot afford to carry the infrastructure
associated with THE ORDER PEOPLE without the corresponding revenue. And finally,
we need to increase efficiencies to create a sustainable competitive advantage.
We developed a number of actions that are intended to revitalize the company and
provide the infrastructure to support continued profitable growth.
"We are working diligently to align our costs with current business
conditions. With the sales downturn resulting from the current macroeconomic
conditions, and uncertainty about when we will realize certain savings from the
restructuring plan, it is difficult for us to provide guidance on the fourth
quarter. Sales are down approximately 7% to date in October," he added.
"We're taking two approaches to strengthen our competitive position in
2002," said Larrimore. "First, we are streamlining our organizational structure,
which includes eliminating several layers and promoting best-practice sharing
throughout the company. We already are seeing results. More decisions now are
being made in the field and closer to our customers. We also have energized a
new set of managers who are determined to implement new ideas. Second, we are
taking significant steps to reduce costs, enhance productivity, and generate
higher returns on our invested capital. Our focus in the coming months will be
on successfully implementing our restructuring plan.
"Our aggressive restructuring efforts will position United Stationers
for solid earnings growth in 2002 and beyond. We are working to strengthen our
competitive position, increase efficiencies and improve return on invested
capital while remaining committed to maintaining the highest levels of customer
service in the industry," Larrimore concluded.
CONFERENCE CALL
United Stationers will host a conference call on Tuesday, October 30,
at 9:00 a.m. Central Time to discuss its third-quarter performance. To listen,
visit the investor relations section of the company's Website at
WWW.UNITEDSTATIONERS.COM at least 15 minutes before the call, and follow the
instructions provided to ensure that the necessary audio application is
downloaded and installed. Windows Media Player is required to listen to this
Webcast. This program is provided at no charge to the user. In addition,
interested parties can access an archived version of the call, also on the
investor relations section of the Website, about two hours after the call
concludes and for the following week.
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United Stationers Reports Third Quarter Results
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FORWARD-LOOKING STATEMENTS
With the exception of statements about historical matters, the
information presented in this news release contains forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, as
amended. These forward-looking statements are not guarantees of future
performance or events, and they involve a number of risks, uncertainties and
assumptions. These include, but are not limited to, uncertainties related to the
restructuring plan, the company's ability to realize the expected cost savings
and the timing of those savings related to facility closures and other
restructuring initiatives, the company's ability to streamline its organization
and operations, implement its cost-cutting initiatives, quickly reduce expenses
associated with THE ORDER PEOPLE, operate in a highly competitive environment,
rely on key management personnel, anticipate changes in end-users' traditional
demands for business products, rely on certain key suppliers and the
fluctuations in their pricing, and respond to economic conditions. A description
of these and other factors that could affect the company's business are included
in certain of United's filings with the Securities and Exchange Commission.
COMPANY OVERVIEW
United Stationers Inc., with trailing 12 months' sales of approximately
$4.0 billion, is North America's largest distributor of business products and a
provider of marketing and logistics services to resellers. Its integrated
computer-based distribution system makes more than 40,000 items available to
20,000 resellers. United is able to ship products within 24 hours of order
placement because of its 38 United Stationers Supply Co. regional distribution
centers, 25 Lagasse distribution centers that serve the janitorial and
sanitation industry, six Azerty distribution centers that serve computer supply
resellers, two distribution centers that serve the Canadian marketplace and a
distribution center primarily serving clients of THE ORDER PEOPLE. Its focus on
fulfillment excellence has given the company a 98% order fill rate, a 99.5%
order accuracy rate, and a 99% on-time delivery rate. For more information,
visit WWW.UNITEDSTATIONERS.COM.
The company's common stock trades on the Nasdaq National Market System
under the symbol USTR and is included in the S&P SmallCap 600 Index.
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United Stationers Reports Third Quarter Results
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<Table>
<Caption>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
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2001 2000 2001 2000
----------- ----------- ----------- -----------
Net sales $ 950,910 $ 1,015,441 $ 2,989,638 $ 2,954,347
Cost of goods sold 798,507 850,925 2,516,109 2,482,906
----------- ----------- ----------- -----------
Gross profit 152,403 164,516 473,529 471,441
Operating expenses:
Warehousing, marketing and
administrative expenses 108,514 110,635 341,007 320,790
Restructuring charge 47,603 -- 47,603 --
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Total operating expenses 156,117 110,635 388,610 320,790
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(Loss) income from operations (3,714) 53,881 84,919 150,651
Interest expense, net 4,845 6,855 19,298 19,826
Other expense 1,215 2,834 3,333 8,215
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(Loss) income before income taxes
and extraordinary item (9,774) 44,192 62,288 122,610
Income tax (benefit) expense (3,831) 17,765 24,778 49,491
----------- ----------- ----------- -----------
(Loss) income before extraordinary item (5,943) 26,427 37,510 73,119
Extraordinary item -- loss on early
retirement of debt, net of tax
benefit of $4,248 -- -- -- 6,476
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Net (loss) income $ (5,943) $ 26,427 $ 37,510 $ 66,643
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Net (loss) income per common share --
assuming dilution:
(Loss) income before extraordinary item $ (0.18) $ 0.76 $ 1.11 $ 2.10
Extraordinary item -- -- -- (0.19)
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Net (loss) income per share $ (0.18) $ 0.76 $ 1.11 $ 1.91
=========== =========== =========== ===========
Average number of common shares
(in thousands) 33,668 34,926 33,810 34,890
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</Table>
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United Stationers Reports Third Quarter Results
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UNITED STATIONERS INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share data)
(unaudited)
<Table>
<Caption>
September 30,
------------------------
2001 2000
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ASSETS
Current assets:
Cash and cash equivalents $ 33,565 $ 22,525
Accounts receivable, net * 369,043 342,977
Inventories 554,195 597,484
Other current assets 38,754 24,348
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Total current assets 995,557 987,334
Property, plant and equipment, net 195,682 186,059
Goodwill, net 181,672 181,326
Other 19,816 18,650
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Total assets $ 1,392,727 $ 1,373,369
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 366,524 $ 377,577
Accrued liabilities 167,704 152,273
Current maturities of long-term debt 44,948 38,220
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Total current liabilities 579,176 568,070
Deferred income taxes 22,817 21,382
Long-term obligations 265,142 308,563
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Total liabilities 867,135 898,015
Stockholders' equity:
Common stock, $0.10 par value; authorized --
100,000,000 shares, issued -- 37,213,207 in
2001 and 2000 3,721 3,721
Additional paid-in capital 305,806 301,579
Treasury stock, at cost -- shares outstanding --
3,362,947 in 2001 and 2,940,330 in 2000 (61,912) (44,851)
Retained earnings 277,977 214,905
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Total stockholders' equity 525,592 475,354
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Total liabilities and stockholders' equity $ 1,392,727 $ 1,373,369
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</Table>
*Reflects the sale of $110.0 million in 2001 and $160.0 million in 2000
of certain trade accounts receivable through an asset-backed securitization
program.
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