UNITED STATIONERS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1.    Basis of Presentation

        The accompanying Condensed Consolidated Financial Statements are unaudited, except for the Condensed Consolidated Balance Sheet as of December 31, 2001. These financial statements have been prepared in accordance with the rules and regulations of the United States Securities and Exchange Commission. 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, 2001 for further information.

        In the opinion of the Company's management, the Condensed Consolidated Financial Statements for the unaudited interim periods presented include all adjustments necessary to fairly present the results of such interim periods and the financial position as of the end of said periods. Certain interim estimates of a normal, recurring nature are recognized throughout the year, relating to accounts receivable, manufacturers' allowances, inventory, self-insurance, customer rebates, price changes and product mix. The Company periodically reevaluates these estimates and makes adjustments where facts and circumstances dictate. Certain amounts from prior periods have been reclassified to conform to the 2002 presentation.

        The Condensed Consolidated Financial Statements represent United Stationers Inc. ("United") with its wholly owned subsidiary, United Stationers Supply Co. ("USSC"), and its subsidiaries—collectively the "Company." The Company is the largest general line business products wholesaler in the United States and provider of marketing and logistics services to resellers, with trailing 12 months net sales of approximately $3.7 billion. The Company operates in a single reportable segment as a national wholesale distributor of business products. The Company offers approximately 40,000 items from more than 500 manufacturers. This includes a broad spectrum of office products, computer supplies, office furniture, business machines, presentation products and facilities management supplies. The Company primarily serves commercial and contract office products dealers. The Company sells its products through a national distribution network to more than 20,000 resellers, who in turn sell directly to end-users. These products are distributed through a computer-based network of 36 USSC regional distribution centers, 24 dedicated Lagasse, Inc. ("Lagasse") distribution centers that serve the janitorial and sanitation industry, two distribution centers in Mexico that serve computer supply resellers and two distribution centers that serve the Canadian marketplace. During the second quarter of 2002, the computer systems and product offerings of Azerty Incorporated ("Azerty"), a wholly owned subsidiary of USSC, were integrated into USSC. In connection with this integration, the Company closed the four separate U.S. Azerty distribution centers.

Acquisition of Peerless Paper Mills, Inc.

        On January 5, 2001, USSC's subsidiary, Lagasse, acquired all of the capital stock of Peerless Paper Mills, Inc. ("Peerless"). Subsequently, Peerless was merged into Lagasse. Peerless was a wholesale distributor of janitorial/sanitation, paper, and food service products. The purchase price of approximately $32.7 million was financed through the Company's Senior Credit Facility. The acquisition was accounted for using the purchase method of accounting and, accordingly, the purchase price was allocated to the assets purchased and the liabilities assumed, based upon the estimated fair values at the date of acquisition. The excess of cost over fair value of approximately $15.5 million was allocated to goodwill. The pro forma effects of the acquisition were not material.

Sale of CallCenter Services Business

        During 2000, the Company established The Order People ("TOP") to operate as its third-party fulfillment provider for product categories beyond office products. To become a full service provider, on July 1, 2000, the Company acquired all of the capital stock of CallCenter Services, Inc. CallCenter Services, Inc. was a customer relationship management outsourcing service company with inbound call centers in Wilkes-Barre, Pennsylvania, and Salisbury, Maryland. In November 2001, the Wilkes-Barre portion of the business acquired as part of CallCenter Services, Inc. was sold to Customer Satisfaction First for a nominal cash payment, the assumption of associated liabilities and the payment of expenses relating to that business during a post-closing transition period.

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Disputes relating to expense payments and certain liabilities associated with this sale have adversely contributed to the operating expenses attributable to TOP during 2002. In the second quarter of 2002, the Company sold the Salisbury portion of the business acquired as a part of CallCenter Services, Inc. to 1-800-BARNONE, a Financial Corporation, Inc. for $1.2 million in cash and the assumption of $1.7 million of debt. The sale of these assets did not have a material impact on the Company's Condensed Consolidated Financial Statements.

Common Stock Repurchase

        During the nine months ended September 30, 2002, the Company purchased 1.4 million shares at a cost of $38.3 million, compared with purchases of 0.2 million shares at a cost of $4.1 million during the same period last year. As of September 30, 2002, the Company has authorization to purchase an additional $27 million of its common stock. Purchases may be made from time to time in the open market or in privately negotiated transactions. Depending on market and business conditions and other factors, the Company may continue or suspend repurchasing its own 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. During the nine months ended September 30, 2002 and 2001, the Company reissued 209,090 shares and 573,776 shares, respectively, of treasury stock primarily to fulfill its obligations under its management equity plans.

2.    Summary of Significant Accounting Policies

Principles of Consolidation

        The Condensed Consolidated Financial Statements include the accounts of the Company. All intercompany accounts and transactions have been eliminated in consolidation. For all acquisitions, account balances and results of operations are included in the Condensed Consolidated Financial Statements as of the date acquired.

Revenue Recognition

        Revenue is recognized when a service is rendered or when a product is shipped and title has transferred to the customer. Management records an estimate for future product returns related to revenue recognized in the current period. This estimate is based on historical product return trends and the gross margin associated with those returns. Management also records an estimate for customer rebates which is based on estimated annual sales volume to the Company's customers. This estimate is used to determine the projected annual rebates earned by customers for growth components, volume hurdle components, and advertising allowances.

Cash Equivalents

        All highly liquid debt instruments with an original maturity of three months or less are considered cash equivalents. Cash equivalents are stated at cost, which approximates market value.

Accounts Receivable

        Accounts receivable are presented net of the allowance for doubtful accounts. To determine the allowance for doubtful accounts, management reviews specific customers and the Company's accounts receivable aging.

Inventory

        Inventory constituting approximately 88% and 77% of total inventory at September 30, 2002 and December 31, 2001, respectively, has been valued under the last-in, first-out ("LIFO") method. The increase in the percentage of inventory on LIFO is primarily the result of the integration of Azerty's product offering into USSC. Inventory valued under the first-in, first-out ("FIFO") and LIFO accounting methods is recorded at the lower of cost or market. If the lower of FIFO cost or market method of inventory accounting had been used by the Company, inventory would have been approximately $24.4 million and $26.2 million higher than reported at September 30, 2002 and December 31, 2001, respectively. Inventory reserves are recorded for shrinkage, obsolete,

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damaged, defective, and slow-moving inventory. These reserve estimates are determined using historical trends and are adjusted, if necessary, as new information becomes available.

Property, Plant and Equipment

        Property, plant and equipment are recorded at cost. Depreciation is determined by using the straight-line method over the estimated useful lives of the assets. The estimated useful life assigned to fixtures and equipment is from two to 10 years; the estimated useful life assigned to buildings does not exceed 40 years; leasehold improvements are amortized over the lesser of their useful lives or the term of the applicable lease.

Goodwill and Intangible Assets

        Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 142, " Goodwill and Other Intangible Assets ". SFAS No. 142 requires the Company to annually, or more frequently if impairment indicators arise, test goodwill and other indefinite-lived intangible assets for impairment rather than amortize them. The Company completed its impairment analysis for its goodwill in the second quarter of 2002. The Company's assessment resulted in no adjustment to the net carrying amount of goodwill. For the year ended December 31, 2001, the Company recorded after-tax goodwill amortization of $5.3 million, or $0.16 per share.

        The following table reflects the actual results for the three and nine months ended September 30, 2002, and the pro forma results for the same periods last year, assuming the discontinuation of goodwill amortization (in thousands, except per share data):

Software Capitalization

        The Company capitalizes internal-use software development costs in accordance with the American Institute of Certified Public Accountants' Statement of Position No. 98-1, "Accounting for Costs of Computer Software Developed or Obtained for Internal Use." Amortization is recorded on a straight-line basis over the estimated useful life of the software, generally not to exceed seven years.

Self-Insurance Liability Estimates

        The Company is primarily responsible for retained liabilities related to workers' compensation, auto and general liability and certain employee health benefits. The Company records an expense for claims incurred but not reported based on historical trends and certain assumptions about future events. The Company has an annual

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aggregate maximum cap on employee medical benefits. In addition, the Company has both an individual per claim maximum loss and an annual aggregate maximum cap on workers' compensation claims.

Income Taxes

        Income taxes are accounted for using the liability method, under which deferred income taxes are recognized for the estimated tax consequences for temporary differences between the financial statement carrying amounts and the tax basis of assets and liabilities. A provision has not been made for deferred U.S. income taxes on the undistributed earnings of the Company's foreign subsidiaries because these earnings are intended to be permanently invested.

Foreign Currency Translation

        The functional currency for the Company's foreign operations is the local currency. Assets and liabilities of these operations are translated at the rates of exchange at the balance sheet date. The resulting translation adjustments are included in accumulated other comprehensive loss, a separate component of stockholders' equity. Income and expense items are translated at average monthly rates of exchange. Realized gains and losses from foreign currency transactions were not material.

Use of Estimates

        The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported on the Condensed Consolidated Financial Statements and accompanying notes. Actual results could differ from these estimates.

        Various assumptions and other factors underlie the determination of significant accounting estimates. The process of determining significant estimates is fact specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial techniques. The Company periodically reevaluates these significant factors and makes adjustments where facts and circumstances dictate. Historically, actual results have not significantly deviated from those determined using the estimates described above.

Balance Sheet Presentation

        The Company receives promotional incentives from certain suppliers based on their participation in the Company's general line catalog and other annual and quarterly publications. These incentives are recorded as a reduction to cost of goods sold as they are earned over the life of the publications, and the unearned portion is disclosed on the Company's Condensed Consolidated Balance Sheets as "deferred credits". The uncollected incentives due from suppliers are included in accounts receivable. Prior to this quarter, the accounts receivable balance shown on the Company's Condensed Consolidated Balance Sheets included the deferred credits.

        For comparative purposes, the Company adjusted its Condensed Consolidated Balance Sheet for the period ended December 31, 2001 to the current year presentation. This resulted in an increase of $41.0 million to the previously reported current assets and current liabilities and had no effect on trade accounts receivable days outstanding, working capital, net income, earnings per share or equity. The following table sets forth the impact of

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the change in presentation on the previously reported accounts receivable balance and the amounts that would have been shown as deferred credits on the Company's Condensed Consolidated Balance Sheets (in thousands):

3.    Restructuring Charge

        The Company's board of directors approved a restructuring plan in the third quarter of 2001 that included:

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An organizational restructuring aimed at eliminating certain layers of management to achieve a lower cost structure and provide better service to customers;



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The consolidation of certain distribution facilities and call center operations;



•

An information technology platform consolidation;



•

Divestiture of The Order People's call center operations and certain other assets; and



•

A significant reduction to The Order People's cost structure.

        The restructuring plan called for a workforce reduction of 1,375. These positions primarily related to The Order People and call center operations. The associate groups affected by the restructuring plan included management personnel, inside and outside sales representatives, call center associates, distribution workers, and hourly administrative staff. The restructuring plan was designed to have all initiatives completed within approximately one year from the commitment date. As of September 30, 2002, the restructuring plan is substantially complete.

        During the third quarter of 2001, the Company recorded a pre-tax restructuring charge of $47.6 million, or $0.85 per share (on an after-tax basis). This charge included a pre-tax cash charge of $31.7 million and a $15.9 million non-cash charge. During the first quarter 2002, the Company reversed $0.7 million of the pre-tax cash charge and $1.7 million of the non-cash charge. The major components of the restructuring charge and the remaining accrual balance as of September 30, 2002 are as follows (in thousands):

        The non-cash asset write-downs of $15.9 million were primarily the result of facility closures and business divestitures, including $8.8 million related to property, plant and equipment and $7.1 million related to goodwill. Asset write-downs were based on management's estimate of net realizable value. Proceeds from the sale of certain

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assets exceeded the estimated net realizable value, resulting in the reversal of $1.7 million during the first quarter of 2002.

        Employment termination and severance costs are related to voluntary and involuntary terminations and reflect cash termination payments to be paid to associates affected by the restructuring plan. Severance-related costs (health care benefits and career transition services) are included in termination and severance costs. The restructuring plan allows associates to continue their participation in the Company's health care plans during the term of their severance. During the first quarter of 2002, the Company reversed $0.5 million of severance-related costs due to such costs being lower than originally estimated.

        Accrued exit costs are primarily contractual lease obligations that existed prior to September 30, 2001 for buildings that the Company has closed or will be closing in the near future. During the first quarter of 2002, the Company reversed $0.2 million of accrued exit costs as a result of such costs being lower than originally estimated.

        Implementation costs are recognized as incurred and consist of costs directly related to the realization of the restructuring plan. These costs include training, stay bonuses, consulting fees, costs to relocate inventory, and accelerated depreciation. Implementation costs incurred during third quarter of 2002 and the nine months ended September 30, 2002 totaled $0.8 million and $5.1 million, respectively. Accumulated implementation costs incurred for the period September 30, 2001 through September 30, 2002 were $7.3 million. The Company estimates that the remaining implementation costs, which will be expensed as incurred during the fourth quarter of 2002, should total approximately $0.5 million.

        As of September 30, 2002, the Company had completed the closure of 10 distribution centers and three USSC call centers, eliminated one administrative office, divested the call center operations dedicated to serving The Order People's clients and implemented its organizational restructuring and workforce reduction. As a result, the Company reduced its workforce by approximately 1,271 associates through its voluntary and involuntary termination programs. The remaining workforce reductions will be associated with the corporate call center operations and will be completed during the fourth quarter of 2002. The Company believes it is on target to save $25 million during 2002 as a result of the restructuring initiative. These savings will be split between gross margin and operating expenses.

4.    Comprehensive Income (Loss)

        The following table sets forth the computation of comprehensive income (loss):

5.    Earnings Per Share

        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. Diluted EPS for the three months ended September 30, 2001, excludes 483,478 common stock equivalents because they were anti-dilutive. Stock options are considered dilutive securities.

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        The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share data):

6.    Long-Term Debt

        United is a holding company and, as a result, its primary sources of funds are cash generated from operating activities of its operating subsidiary, USSC, and from borrowings by USSC. The Credit Agreement (as defined below) and the indentures governing the Company's 8.375% Notes (as defined below) contain restrictions on the ability of USSC to transfer cash to United.

        Long-term debt consisted of the following amounts (in thousands):

        The prevailing prime interest rate at both September 30, 2002 and December 31, 2001 was 4.75%.

        In order to restate and further amend the Second Amended and Restated Credit Agreement, dated April 3, 1998 (the "Prior Credit Agreement"), USSC, as borrower, and United, as guarantor, entered into the Third Amended and Restated Revolving Credit Agreement, dated as of June 29, 2000, and Amendment No. 1 to the Third Amended and Restated Revolving Credit Agreement dated as of May 7, 2002, (as amended, the "Credit Agreement"), with various lenders and the administrative agent named therein. The Credit Agreement, among other things, provides a facility ("Tranche A Term Loan Facility") for the continuation of the term loans

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outstanding as of its effective date under the Prior Credit Agreement; an additional $150.0 million aggregate principal amount, five-year term loan facility (the "Tranche A-1 Term Loan Facility" and, together with the Tranche A Term Loan Facility, the "Term Loan Facilities"); and a revolving credit facility of up to $250.0 million aggregate principal amount (the "Revolving Credit Facility").

        As of September 30 2002, the aggregate principal amount of debt outstanding under the Term Loan Facilities included $107.8 million of term loan borrowings. This consisted of $21.9 million under the Tranche A Term Loan Facility and $85.9 million under the Tranche A-1 Term Loan Facility. Amounts outstanding under the Tranche A Term Loan Facility are to be repaid in six quarterly installments of $3.7 million. Amounts outstanding under the Tranche A-1 Term Loan Facility are to be repaid in 11 quarterly installments of $7.8 million.

        The Revolving Credit Facility is limited by its terms to $250.0 million in aggregate principal amount, less the aggregate amount of letter of credit liabilities under the facility. The Revolving Credit Facility matures on March 31, 2004. As of September 30, 2002, the Company had $205.8 million available under its Revolving Credit Facility after deducting $10.0 million of outstanding borrowing and certain outstanding letter-of-credit liabilities of $34.2 million. Availability may effectively be further reduced based on limitations imposed by financial covenants under the Credit Agreement. See "Liquidity and Capital Resources—General" on page 29 for further discussion of these restrictions.

        USSC's obligations under the Credit Agreement are guaranteed by United and secured by a first-priority pledge by United of USSC's stock. Additionally, USSC's obligations under the Credit Agreement are guaranteed by its direct and indirect subsidiaries (the "Affiliated Guarantors"), which exclude TOP, USS Receivables Company, Ltd. (the "Receivables Company") and other foreign subsidiaries.

        As collateral security for the obligations of USSC and the Affiliated Guarantors, security interests and liens have been placed upon accounts receivable and related instruments, inventory, equipment, contract rights, intellectual property and all other tangible and intangible personal property (including proceeds) and fixtures and certain real property of USSC and the Affiliated Guarantors, other than accounts receivable sold in connection with the Receivables Securitization Program (as defined). Also securing these obligations are first priority pledges of all of the outstanding stock of USSC and its domestic direct and indirect subsidiaries, including Lagasse and Azerty but excluding TOP, as well as certain of the stock of identified foreign direct and indirect subsidiaries of USSC excluding the Receivables Company. The loans outstanding under the Term Loan Facilities and the Revolving Credit Facility bear interest as determined within a pricing matrix. The interest rate is based on the ratio of total debt to earnings before interest, taxes, depreciation, and amortization ("EBITDA"). The Tranche A Term Loan Facility and Revolving Credit Facility bear interest at the prime rate plus 0.00% to 1.00% per annum, or, at the Company's option, the London Interbank Offered Rate ("LIBOR") plus 1.25% to 2.25% per annum. The Tranche A-1 Term Loan Facility bears interest at the prime rate plus 0.25% to 1.25% per annum or, at the Company's option, LIBOR plus 1.50% to 2.50% per annum.

        The Credit Agreement contains representations and warranties, affirmative and negative covenants, and events of default customary for financing of this type. The Company believes it was in compliance at September 30, 2002 with the covenants contained in the Credit Agreement.

        The right of United to participate in any distribution of earnings or assets of USSC is subject to the prior claims of the creditors of USSC. In addition, the Credit Agreement contains certain restrictive covenants, including covenants that restrict or prohibit USSC's ability to pay cash dividends and make other distributions to United.

8.375%Senior Subordinated Notes

        The 8.375% Senior Subordinated Notes ("8.375% Notes") were issued on April 15, 1998, under the 8.375% Notes Indenture. As of September 30, 2002, the aggregate outstanding principal amount of 8.375% Notes was $100.0 million. The 8.375% Notes are unsecured senior subordinated obligations of USSC, and payment of the 8.375% Notes is fully and unconditionally guaranteed by the Company and USSC's domestic "restricted" subsidiaries that incur indebtedness (as defined in the 8.375% Notes Indenture) on a senior subordinated basis. The 8.375% Notes mature on April 15, 2008, and bear interest at the rate of 8.375% per annum, payable

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semi-annually on April 15 and October 15 of each year. The 8.375% Notes are redeemable at the option of USSC at any time on or after April 15, 2003, in whole or in part, at the following redemption prices (expressed as percentages of principal amount):

        After 2005, the 8.375% Notes are payable at 100% of the principal amount, in each case together with accrued and unpaid interest, if any, to the redemption date.

        Upon the occurrence of a change of control (which includes the acquisition by any person or group of more than 50% of the voting power of the outstanding common stock of either United or USSC, or certain significant changes in the composition of the Board of Directors of either United or USSC), USSC would be obligated to offer to redeem all or a portion of each holder's 8.375% Notes at 101% of the principal amount, together with accrued and unpaid interest, if any, to the date of the redemption.

        The Indenture governing the 8.375% Notes contains certain affirmative and negative covenants applicable to USSC and its subsidiaries which are customary for financings of this type, including, among others, restrictions on the ability of USSC to make distributions to United (conditioned on the absence of a default, cumulative aggregate dollar limitations and the satisfaction of a debt incurrence test) and on the ability of USSC and its subsidiaries to enter into transactions with their affiliates (which, in addition to conditions similar to those described above with respect to the comparable covenant under the Credit Agreement, may require Board approval and a fairness opinion if above prescribed dollar values). The restrictions imposed are of the same nature as those under the Credit Agreement, but are generally less restrictive.

        In addition, the 8.375% Notes Indenture contains certain covenants, including limitations on the incurrence of indebtedness, the making of restricted payments, the existence of liens, disposition of proceeds of asset sales, the making of guarantees by restricted subsidiaries, transfer and issuances of stock of subsidiaries, the imposition of certain payment restrictions on restricted subsidiaries and certain mergers and sales of assets. The 8.375% Notes Indenture also permits the issuance of up to $100.0 million aggregate principal amount of additional 8.375% Notes having substantially identical terms and conditions to the 8.375% Notes, subject to compliance with the covenants contained in the 8.375% Notes Indenture, including compliance with the restrictions contained in the 8.375% Notes Indenture relating to incurrence of indebtedness.

7.    Trade Accounts Receivable

        As part of an overall financing strategy, the Company utilizes a standard third-party receivables securitization program (the "Receivables Securitization Program"), to provide low-cost funding. Under this $163.0 million program, the Company sells, on a revolving basis, its eligible trade accounts receivable (except for certain excluded accounts receivable, which initially includes all accounts receivable from Lagasse and foreign subsidiaries) to the Receivables Company, a wholly owned offshore, bankruptcy-remote special purpose limited liability company. This company in turn ultimately transfers the eligible trade accounts receivable to a trust, for which the trustee is JPMorgan Chase Bank. The trustee then sells investment certificates to third-party investors, which are backed by the accounts receivable owned by the trust. As a result of the short average collection cycle referred to below, proceeds from the collections under this revolving agreement were $2.2 billion for the nine months ended September 30, 2002 and 2001. Affiliates of PNC Bank and JPMorgan Chase act as funding agents. The funding agents, together with other commercial banks rated at least A-1/P-1, provide standby liquidity funding to support the sale of the accounts receivable by the Receivables Company under 364-day liquidity facilities.

        The Receivables Securitization Program is accounted for as a sale in accordance with the Financial Accounting Standards Board's ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities." Trade accounts

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receivable sold under these arrangements are excluded from accounts receivable in the Company's Condensed Consolidated Balance Sheets. The annual interest rate on the investment certificates issued under the Receivables Securitization Program during the three months ended September 30, 2002 was 1.9%, and ranged between 3.5% and 3.9% during the same period last year. For the nine months ended September 30, 2002 and 2001, the annual interest rate was 1.9% and ranged between 3.5% and 6.5%, respectively. The Company's retained interests on $323.6 million and $244.8 million of receivables in the master trust as of September 30, 2002 and December 31, 2001 were approximately $241.6 million and $119.8 million, respectively. Accordingly, as of September 30, 2002 and December 31, 2001, the Company had sold $82.0 million and $125.0 million, respectively, of trade accounts receivable through the Receivables Securitization Program. The retained interest, which is included in the accounts receivable balance reflected on the Condensed Consolidated Balance Sheets, is recorded at fair value. Due to a short average collection cycle for such trade accounts receivable of approximately 40 days and the Company's collection history, the fair value of the Company's retained interest approximates book value.

        Losses recognized on the sale of trade accounts receivable totaled approximately $0.5 million and $1.3 million for the three and nine months ended September 30, 2002, respectively, and $1.5 million and $5.9 million for the three and nine months ended September 30, 2001, respectively. These costs vary on a monthly basis and generally are related to certain short-term interest rates. These costs are included in the Condensed Consolidated Statements of Operations under the caption "Other Expense, net."

        The Company has retained the responsibility for servicing accounts receivable transferred to the master trust. No servicing asset or liability has been recorded because the fees the Company receives for servicing the receivables approximate the related costs. No accounts receivable sold to the master trust were written off during the nine months ended September 30, 2002 or the 12 months ended December 31, 2001.

8.    Recent Accounting Pronouncements

        In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities, which is effective for disposal activities initiated after December 31, 2002. SFAS No. 146 nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred rather than recognized at the date of commitment to an exit plan as was dictated under EITF No. 94-3. The Company will adopt SFAS No. 146 on January 1, 2003, and based on current circumstances, does not believe that this adoption will have a material impact on its financial position or results of operations.

        In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No. 4, 44, Amendment of FASB Statement No. 13, and Technical Corrections, which is effective for fiscal years beginning after May 15, 2002. SFAS No. 145 requires most gains and losses from extinguishment of debt to be presented as a gain or loss from continuing operations rather than as an extraordinary item. Accounting Principles Board ("APB") Opinion No. 30, "Reporting the Results of Operations—Reporting Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" will now be used to classify those gains and losses. SFAS No. 145 also amends SFAS No. 13, which requires that certain capital lease modifications be treated as a sale-leaseback transaction. The Company will adopt SFAS No. 145 on January 1, 2003 and, based on current circumstances, does not believe that this adoption will have a material impact on its financial position or results of operations.

        In August 2001, the FASB issued SFAS No. 144, " Accounting for the Impairment or Disposal of Long-Lived Assets," which addresses financial accounting and reporting for the impairment or disposal of long-lived assets. SFAS No. 144 is effective for fiscal years beginning after December 15, 2001. The Company adopted SFAS No. 144 as of January 1, 2002 and the adoption did not have a material impact on the Company's financial position or results of operations.

        In June 2001, the FASB issued SFAS No. 143, " Accounting for Asset Retirement Obligations," which is effective for fiscal years beginning after June 15, 2002. SFAS No. 143 requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred.

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Upon initial recognition of a liability, that cost should be capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. The Company will adopt SFAS No. 143 on January 1, 2003 and, based on current circumstances, does not believe that the impact of adopting of SFAS No. 143 will have a material impact on its financial position or results of operations.

9.    Condensed Consolidating Financial Statements—Unaudited

        The following table presents condensed consolidating financial information, as required by the Company's 8.375% Notes, for United Stationers Inc., the parent holding company and guarantor; United Stationers Supply Co., the issuer; The Order People, Lagasse, United Stationers Financial Services LLC, and United Stationers Technology Services LLC, the subsidiary guarantors; United Worldwide Limited, United Stationers Hong Kong Limited and the Receivables Company, are non-guarantors; and elimination adjustments. Separate financial statements of the guarantors are not presented, as the Company believes the condensed consolidating financial information is more meaningful in understanding the statements of operations, balance sheets, and cash flows of the guarantor subsidiaries. Therefore, the following condensed consolidating financial information has been prepared using the equity method of accounting in accordance with the requirements for presentation of such information

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