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," "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, 2008.

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.

Overview and Recent Results

The Company is North America's largest broad line wholesale distributor of business products, with 2008 net sales of approximately $5.0 billion. The Company sells its products through a national distribution network of 67 distribution centers to approximately 30,000 resellers, who in turn sell directly to end consumers.

As reported in the Company's press release dated April 30, 2009, month-to-date sales in April show a slight decline from the first quarter sales trends after adjusting for the negative impact of the Easter holiday which fell in April of this year as opposed to March of last year.

Key Company and Industry Trends

The following is a summary of selected trends, events or uncertainties that the Company believes may have a significant impact on its future performance.

† Continued challenging market conditions in the first quarter of 2009, driven by weakness in employment trends and manufacturing, had a negative effect on the Company's sales. Total Company sales for the first quarter of 2009 were $1.12 billion, a decline of 9% per selling day. Sales were down in all product categories, except for janitorial/breakroom which remained at prior year levels. The recession has had the harshest impact on furniture sales which showed the steepest decline at 31% per selling day and industrial sales which declined 19% per selling day.

†

† The Company has set an objective to reduce costs as quickly as possible to align them with lower sales. As a result of the workforce reduction announced January 27, 2009, the Company incurred a charge of $3.4 million in the first quarter. The Company has also taken other aggressive steps to manage costs. These include the actions taken that target labor cost, discretionary spending, variable costs, as well as productivity improvements.

† Gross margin as a percent of sales for the first quarter of 2009 was 14.7%, flat with the first quarter of 2008. Gross margin in the first quarter was negatively affected by the sales decline and reduced purchase volumes which led to lower supplier allowances, as well as the de-leveraging effect of lower sales on occupancy costs. These declines were offset by higher inflation (net of LIFO impact), lower fuel costs and the impact of War on Waste (WOW2) projects on gross margin.

† Total operating expenses as a percent of sales for the first quarter of 2009 were 12.1 % compared to 11.2% for the same quarter of the prior year. Excluding the $3.4 million severance charge noted above, operating expenses declined 5.6% to $132.0 million from $139.9 million. Operating expenses were down as a result of the cost reduction actions taken in the first quarter of 2009, partially offset by an increase in bad debt provisions. Operating expense as a percent of sales increased due to the deleveraging effect of lower sales and an increase in bad debts.

† Net cash provided by operating activities for the first quarter of 2009 was $115.8 million versus a use of $17.8 million at this time last year. Excluding the impact of accounts receivable sold, net cash provided by operating activities for the latest quarter was $138.8 million versus $45.2 million in the 2008 quarter. This increase in adjusted operating cash flows reflects a decrease in working capital as a result of management's emphasis on aligning working capital with sales.

† During the first quarter of 2009, the Company entered into a new $150 million accounts receivable securitization program that was structured to maintain the related accounts receivable and debt on its balance sheet. In contrast, the previous securitization facility was structured for off-balance sheet treatment.

† Outstanding debt totaled $552.5 million at March 31, 2009 versus adjusted outstanding debt, including accounts receivable sold, of $726.9 million at March 31, 2008. The $174.4 million reduction in adjusted debt was the result of the Company's strong operating cash flows and brought the Company's debt-to-total capitalization to 48.4% from 58.1%.

† No shares were repurchased in the first quarter of 2009. As of May 1, 2009, the Company has $100.9 million remaining of existing share repurchase authorization from the Board of Directors.

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 Company and Industry Trends" under Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K for the year-ended December 31, 2008.

Stock Repurchase Program

No shares were repurchased in the first quarter of 2009. During the first quarter of 2008, the Company repurchased 1.2 million shares at an aggregate cost of $67.5 million. At March 31, 2009, the Company had $100.9 million remaining of existing share repurchase authorization from the Board of Directors.

Critical Accounting Policies, Judgments and Estimates

During the first quarter of 2009, there were no significant changes to the Company's critical accounting policies, judgments or estimates from those disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

Results of Operations



The following table presents the Condensed Consolidated Statements of Income as
a percentage of net sales:



                                                       Three Months Ended
                                                           March 31,
                                                       2009         2008

Net sales                                                100.0 %      100.0 %
Cost of goods sold                                        85.3         85.3
Gross margin                                              14.7         14.7

Operating expenses:
Warehousing, marketing and administrative expenses        12.1         11.2

Operating income                                           2.6          3.5

Interest expense, net                                      0.7          0.5
Other expense, net                                         0.0          0.2
Income before income taxes                                 1.9          2.8
Income tax expense                                         0.7          1.1

Net income                                                 1.2 %        1.7 %

Adjusted Operating Income and Earnings Per Share

The following tables present Adjusted Operating Income and Earnings Per Share for the three-month periods ended March 31, 2009 and 2008 (in thousands, except per share data). The tables show Adjusted Operating Income and Earnings per Share excluding the effects of the first quarter 2009 severance charge. Generally Accepted Accounting Principles (GAAP) require that the effect of this item be included in the Condensed Consolidated Statements of Income. The Company believes that excluding this item is an appropriate comparison of its ongoing operating results to last year and that it is helpful to provide readers of its financial statements with a reconciliation of this item to its Condensed Consolidated Statements of Income reported in accordance with GAAP.

                                            For the three months ended March 31,
                                               2009                      2008
                                                      % to                      % to
                                       Amount       Net Sales     Amount      Net Sales

Sales                                $ 1,121,307       100.00 % $ 1,252,474      100.00 %

Gross profit                         $   164,336        14.66 % $   184,301       14.71 %

Operating expenses                   $   135,452        12.08 % $   139,895       11.17 %
Severance charge                          (3,354 )       0.30 %           -        0.00 %
Adjusted operating expenses          $   132,098        11.78 % $   139,895       11.17 %

Operating income                     $    28,884         2.58 % $    44,406        3.54 %
Operating expense item noted above         3,354         0.00 %           -        0.00 %
Adjusted operating income            $    32,238         2.88 % $    44,406        3.54 %

Net income per share - diluted       $      0.57                $      0.88
Per share operating expense item
noted above                                 0.09                          -
Adjusted net income per share -
diluted                              $      0.66                $      0.88

Weighted average number of common
shares - diluted                          23,810                     24,313

Results of Operations-Three Months Ended March 31, 2009 Compared with the Three Months Ended March 31, 2008

Net Sales. Net sales for the first quarter of 2009 were $1.12 billion, down 9.1% per selling day compared with sales of $1.25 billion for the same three-month period of 2008, with one less selling day in the current quarter. The following table summarizes net sales by product category for the three-month periods ended March 31, 2009 and 2008 (in millions):

                                                             Three Months Ended March 31,
                                                               2009              2008 (1)
Technology products                                       $           390     $           426
Traditional office products (including cut-sheet paper)               315                 348
Janitorial and breakroom supplies                                     249                 253
Office furniture                                                       88                 130
Industrial supplies                                                    58                  72
Freight revenue                                                        20                  22
Other                                                                   1                   1
Total net sales                                           $         1,121     $         1,252

Sales in the technology products category in the first quarter of 2009 declined by approximately 7% per selling day versus the first quarter of 2008. This category, which continues to represent the largest percentage of the Company's consolidated net sales, accounted for approximately 35% of net sales for the first quarter of 2009. The more discretionary products including printers, computer accessories and visual communication products saw significant declines while everyday consumables such as inkjet and laser printer cartridges continued to outperform the overall category.

Sales of traditional office supplies in the first quarter of 2009 declined by approximately 8% per selling day versus the first quarter of 2008. Traditional office supplies represented approximately 28% of the Company's consolidated net sales for the first quarter of 2009. The decline in this category reflected declines in durable products such as business machines, boards and desk accessories, while cut-sheet paper sales, which typically earn lower margins, grew modestly.

Sales in the janitorial and breakroom supplies product category remained relatively flat, rising 0.3% per selling day in the first quarter of 2009 compared to the first quarter of 2008. This category accounted for approximately 22% of the Company's first quarter of 2009 consolidated net sales. Growth in "OfficeJan" sales, and ongoing success in converting direct sales to wholesale, helped offset an overall soft market even for this highly consumable category.

Office furniture sales in the first quarter of 2009 decreased by approximately 31% per selling day compared to the same three-month period of 2008. Office furniture accounted for 8% of the Company's first quarter of 2009 consolidated net sales. Furniture continues to be hard-hit by the recession and sales declines were in line with the published results of the Company's major furniture suppliers in their transactional furniture segments. The Company's Alera private brand continued to outperform the balance of the Company's overall furniture category.

Industrial supplies sales in the first quarter of 2009 declined 19% per selling day compared to the same prior year period. Sales of industrial supplies accounted for 5% of the Company's net sales for the first quarter of 2009. This decline reflected the sudden and sharp drop in United States manufacturing, pipeline, and commercial construction activity, combined with de-stocking in the distributor channel.

The remaining 2% of the Company's first quarter 2009 net sales were composed of freight and other revenues.

Gross Profit and Gross Margin Rate. Gross profit (gross margin dollars) for the first quarter of 2009 was $164.3 million, compared to $184.3 million in the first quarter of 2008. Despite the sales and margin dollars reductions, the Company's first quarter gross margin rate of 14.7% was flat to the prior year quarter. Margin benefited from higher inflation, net of LIFO expense, which added about 60 basis points (bps), and lower freight costs of 26 bps. This was offset by lower supplier allowances and purchase discounts of 60 bps driven by mix, volume, and management focus on reducing inventory levels. The de-leveraging impact of lower sales also negatively impacted the margin rate by 20 bps related to occupancy costs, which are primarily fixed.

Operating Expenses. Operating expenses for the first quarter of 2009 totaled $135.4 million, or 12.1% of net sales, compared with $139.9 million, or 11.2% of net sales in the first quarter of 2008. Included in the first quarter 2009 amount is $3.4 million or 0.3% of net sales for severance costs. Adjusting for this, operating expenses were down 5.6% to $132.0 million or 11.8% of sales in the first quarter 2009. The increase in operating expenses as a percentage of sales was due to higher bad debt provisions of 20 bps resulting from increased receivables aging and slower collections. The remainder of the operating expense ratio variance relates to the deleveraging of employee related costs of 45 bps. Such costs declined by $5.3 million in the quarter compared to the first quarter of 2008 due to various cost reduction actions and staff reductions that took place in the first quarter of 2009.

Interest Expense, net. Interest expense for the first quarter of 2009 was $7.2 million, compared with $7.3 million for the same period in 2008. Interest expense for the first quarter of 2009 remained relatively flat with the prior year as higher average borrowings during the quarter were offset by reduced interest rates. During the first quarter of 2009, the Company terminated its then existing Prior Receivables Securitization Program (the "Prior Program") which led to an increase in borrowings under the Company's revolving credit facility. This increase in debt as opposed to financing from receivables sold also contributed to the year-over-year increase in interest expense as the costs incurred under the Prior Program were recorded under "Other Expense, net".

Other Expense, net. Other expense for the first quarter of 2009 was $0.2 million, compared with $2.2 million in the first quarter of 2008. Other expense for both the first quarter of 2009 and 2008 primarily represents costs associated with the sale of certain trade accounts receivable through the Prior Program. During the first quarter of 2009, the Company entered into a new accounts receivable securitization program (the "2009 Receivables Securitization Program" or the "2009 Program") that was structured to maintain the related accounts receivable and debt on its balance sheet with costs of 2009 Program now included within "Interest Expense, net". In contrast, the previous securitization facility was structured for off-balance sheet treatment with costs included in "Other Expense, net".

Income Taxes. Income tax expense was $8.0 million for the first quarter of 2009, compared with $13.5 million for the same period in 2008. The Company's effective tax rate for the first quarter of 2009 and 2008 was 37.1% and 38.9%, respectively. The decline reflects a favorable mix of income between states and lower tax contingencies partially offset by unfavorable changes to tax law in certain states.

Net Income. Net income for the first quarter of 2009 totaled $13.5 million, or $0.57 per diluted share, compared with net income of $21.3 million, or $0.88 per diluted share for the same three-month period in 2008. Adjusted for the impact of the $3.4 million severance charge, first quarter 2009 diluted earnings per share were $0.66.

Liquidity and Capital Resources



Debt



The Company's outstanding debt under GAAP, together with funds generated from
the sale of receivables under the Company's off-balance sheet Receivables
Securitization Programs, consisted of the following amounts (in thousands):



                                                                 As of                 As of
                                                             March 31, 2009      December 31, 2008
2007 Credit Agreement - Revolving Credit Facility           $        210,700    $           321,300
2007 Credit Agreement - Term Loan                                    200,000                200,000
2007 Master Note Purchase Agreement                                  135,000                135,000
Industrial development bond, at market-based interest
rates, maturing in 2011                                                6,800                  6,800
Debt under GAAP                                                      552,500                663,100
Accounts receivable sold (1)                                               -                 23,000
Total outstanding debt under GAAP and accounts
receivable sold (adjusted debt)                                      552,500                686,100
Stockholders' equity                                                 589,473                565,638
Total capitalization                                        $      1,141,973    $         1,251,738

Adjusted debt-to-total capitalization ratio                             48.4 %                 54.8 %

The most directly comparable financial measure to adjusted debt that is calculated and presented in accordance with GAAP is total debt (as provided in the above table as "Debt under GAAP"). Under GAAP, accounts receivable sold under the Company's Prior Receivables Securitization Program are required to be reflected as a reduction in accounts receivable and not reported as debt. Internally, the Company considers accounts receivables sold to be a financing mechanism. The Company therefore believes it is helpful to provide readers of its financial statements with a measure ("adjusted debt") that adds accounts receivable sold to debt and calculates adjusted debt-to-total capitalization on the same basis as an additional liquidity measure. A reconciliation of these non-GAAP measures is provided in the table above. Adjusted debt and the adjusted debt-to-total-capitalization ratio are provided as additional liquidity measures.

In accordance with GAAP, total debt outstanding at March 31, 2009 decreased by $110.6 million to $552.5 million from the balance at December 31, 2008. This resulted from a decrease in borrowings under the Revolving Credit Facility of the 2007 Credit Agreement. Adjusted debt as of March 31, 2009 decreased by $133.6 million from the balance at December 31, 2008 as a result of this decrease in borrowings under the Revolving Credit Facility and a $23 million decrease in the amount sold under the Company's Prior Receivables Securitization Program. These reductions were made possible by increased operating cash flows in the quarter.

At March 31, 2009, the Company's adjusted debt-to-total capitalization ratio was 48.4%, compared to 54.8% at December 31, 2008.

Operating cash requirements and capital expenditures are funded from operating cash flow and available financing. Financing available from debt and the sale of accounts receivable as of March 31, 2009, is summarized below (in millions):

                                  Availability



Maximum financing available under:
2007 Credit Agreement - Revolving Credit Facility   $ 425.0
2007 Credit Agreement - Term Loan                     200.0
2007 Master Note Purchase Agreement                   135.0
2009 Receivables Securitization Program (1)           150.0
Industrial Development Bond                             6.8
Maximum financing available                                   $ 916.8

Amounts utilized:
2007 Credit Agreement - Revolving Credit Facility     210.7
2007 Credit Agreement - Term Loan                     200.0
2007 Master Note Purchase Agreement                   135.0
2009 Receivables Securitization Program(1)                -
Outstanding letters of credit                          19.4
Industrial Development Bond                             6.8
Total financing utilized                                        571.9
Available financing, before restrictions                        344.9
Restrictive covenant limitation                                  45.7
Available financing as of March 31, 2009                      $ 299.2

The Credit Agreement, 2007 Note Purchase Agreement and Transfer and Administration Agreement prohibit the Company from exceeding a Leverage Ration of 3.25 to 1.00 and impose other restrictions on the Company's ability to incur additional debt. These agreements also contain additional covenants, requirements and events of default that are customary for these types of agreements, including the failure to make any required payments when due. The 2007 Credit Agreement 2007 Note Purchase Agreement and the Transfer and Administration Agreement all contain cross-default provisions. As a result if an event of default occurs under any of those agreements the lenders under all of the agreements may cease to make additional loans, accelerate any loans then outstanding and/or terminate the agreements to which they are party.

The Company believes that its operating cash flow and financing capacity, as described, provide adequate liquidity for operating the business for the foreseeable future.

Contractual Obligations

During the first quarter of 2009, there were no significant changes in contractual obligations from those disclosed in the Company's Form 10-K for the year ended December 31, 2008.

Credit Agreement and Other Debt

On March 3, 2009, USI entered into a $150 million accounts receivables securitization program (the "2009 Receivables Securitization Program" or the "2009 Program") that replaced the securitization program that USI terminated on March 2, 2009 (the "Prior Receivables Securitization Program" or the "Prior Program"). The parties to the 2009 Program are USI, USSC, USFS, and United Stationers Receivables, LLC ("USR"), and Bank of America, National Association ("Bank of America"), PNC Bank, National Association ("PNC"), Enterprise Funding Company LLC ("Enterprise"), and Market Street Funding LLC ("Market Street" and, together with Bank of America, PNC and Enterprise, the "Investors"). In connection with the 2009 Program, the parties entered into a number of agreements as of March 3, 2009, including:

† a Transfer and Administration Agreement among USSC, USFS, USR, Bank of America, PNC, Enterprise, and Market Street;

† a Receivables Sale Agreement between USSC and USFS;

† a Receivables Purchase Agreement between USFS and USR; and

† a Performance Guaranty executed by USI in favor of USR.

Pursuant to the Receivables Sale Agreement, USSC sells to USFS, on an on-going basis, all the customer accounts receivable and related rights originated by USSC. Pursuant to the Receivables Purchase Agreement, USFS sells to USR, on an on-going basis, all the accounts receivable and related rights purchased from USSC, as well as the accounts receivable and related rights USFS acquired from its subsidiary USSR upon the termination of the Prior Program. Pursuant to the Transfer and Administration Agreement, USR then sells the receivables and . . .