SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission file number: 1-14130
November 27, 1999
MSC INDUSTRIAL DIRECT CO., INC.
(Exact name of registrant as specified in its charter)
New York 11-3289165
(State of incorporation) (IRS Employer
Identification No.)
75 Maxess Road
Melville, NY 11747
(Address of principal executive offices, including zip code)
(516) 812-2000
(Registrant's telephone number, including area code)
Indicate by check mark whether the 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 the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes |X| No |_|
As of January 7, 2000, 33,919,489 shares of Class A Common Stock and
34,138,778 shares of Class B Common Stock of the registrant were outstanding.
<PAGE>
MSC INDUSTRIAL DIRECT CO., INC.
INDEX
PART I. FINANCIAL INFORMATION Page
----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
November 27, 1999 and August 28, 1999 3
Consolidated Statements of Income -
Thirteen weeks ended November 27, 1999 and November 28, 1998 4
Consolidated Statement of Shareholders' Equity -
Thirteen weeks ended November 27, 1999 5
Consolidated Statements of Cash Flows -
Thirteen weeks ended November 27,1999 and November 28, 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures about Market Risk 14
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
Page 2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Balance Sheets
<TABLE>
<CAPTION>
(in thousands, except share data) November 27, August 28,
1999 1999
----------- ---------
(unaudited) (audited)
ASSETS
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 4,029 $ 2,725
Accounts receivable, net of allowance for doubtful
accounts of $5,705 and $5,799, respectively 98,171 90,007
Inventories 246,268 225,542
Due from officers, employees and affiliated companies 368 499
Prepaid expenses and other current assets 3,838 3,891
Current deferred income taxes 4,791 5,379
--------- ---------
Total current assets 357,465 328,043
--------- ---------
Property, Plant and Equipment, net 107,940 106,750
--------- ---------
Other Assets:
Goodwill 66,639 67,080
Other 10,502 12,511
--------- ---------
77,141 79,591
--------- ---------
$ 542,546 $ 514,384
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 19,305 $ 23,510
Accrued liabilities 60,595 56,979
Current portion of notes payable 7,314 306
--------- ---------
Total current liabilities 87,214 80,795
Long-term notes payable 79,940 69,468
Other 43 43
Deferred income tax liabilities 8,863 8,451
--------- ---------
Total liabilities 176,060 158,757
--------- ---------
Shareholders' Equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized; none outstanding -- --
Class A common stock; $0.001 par value; 100,000,000 shares authorized; 33,914,048
and 33,902,048 shares issued, 32,773,048 and 32,761,048 shares outstanding, 34 34
respectively
Class B common stock; $0.001 par value; 50,000,000 shares
authorized; 34,138,778 shares issued and outstanding 34 34
Additional paid-in capital 217,240 216,977
Retained earnings 172,178 161,687
Treasury stock, at cost; 1,141,000 shares of Class A (22,452) (22,452)
common stock held
Deferred stock compensation (548) (653)
--------- ---------
Total shareholders' equity 366,486 355,627
--------- ---------
$ 542,546 $ 514,384
========= =========
</TABLE>
The accompanying notes are an integral part
of these consolidated balance sheets.
Page 3
<PAGE>
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Income
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------
(in thousands, except per share data) November 27, November 28,
1999 1998
----------- -----------
<S> <C> <C>
Net sales $ 182,761 $ 155,451
Cost of goods sold 111,541 91,690
--------- ---------
Gross profit 71,220 63,761
Operating expenses 52,781 43,920
--------- ---------
Income from operations 18,439 19,841
--------- ---------
Other Income (Expense):
Interest income 12 25
Interest expense (1,089) (89)
Other income, net 65 158
--------- ---------
(1,012) 94
--------- ---------
Income before provision for income taxes 17,427 19,935
Provision for income taxes 6,936 7,875
--------- ---------
Net income $ 10,491 $ 12,060
========= =========
Per Share Information (Note 2):
Net income per common share:
Basic $ 0.16 $ 0.18
========= =========
Diluted $ 0.16 $ 0.18
========= =========
Common shares used in computing per share amounts (Note 2):
Basic 67,086 67,112
========= =========
Diluted 67,303 68,531
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 4
<PAGE>
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statement of Shareholders' Equity
(unaudited)
<TABLE>
<CAPTION>
Class A Class B
(in thousands) Common Stock Common Stock Additional Treasury Stock
--------------- --------------- Paid-In Retained ----------------------
Shares Amount Shares Amount Capital Earnings Shares Amount at Cost
------ ------ ------ ------ ------- -------- ------ --------------
Thirteen weeks ended November 27, 1999:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, August 28, 1999 33,902 $34 34,139 $34 $216,977 $161,687 1,141 $(22,452)
Exercise of common stock options, including 12 -- -- -- 263 -- -- --
related tax benefits
Net income -- -- -- -- -- 10,491 -- --
Amortization of deferred stock compensation -- -- -- -- -- -- -- --
------ --- ------ --- -------- -------- ----- --------
Balance, November 27, 1999 33,914 $34 34,139 $34 $217,240 $172,178 1,141 $(22,452)
====== === ====== === ======== ======== ===== ========
(in thousands) Deferred
Stock
Compensation Total
------------ -----
Thirteen weeks ended November 27, 1999:
<S> <C> <C>
Balance, August 28, 1999 $(653) $355,627
Exercise of common stock options, including -- 263
related tax benefits
Net income -- 10,491
Amortization of deferred stock compensation 105 105
----- --------
Balance, November 27, 1999 $(548) $366,486
===== ========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 5
<PAGE>
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Cash Flows
(unaudited)
<TABLE>
<CAPTION>
Thirteen Weeks Ended
--------------------------
(in thousands, except per share data) November 27, November 28,
1999 1998
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 10,491 $ 12,060
--------- ---------
Adjustments to reconcile net income to net cash
(used in) provided by operating activities:
Depreciation and amortization 3,068 2,081
Amortization of deferred stock compensation 105 105
Provision for doubtful accounts 479 729
Deferred income taxes 1,000 (513)
Changes in operating assets and liabilities,
net of effect from acquisitions:
Accounts receivable (8,643) (9,361)
Inventories (20,726) (5,812)
Prepaid expenses and other current assets 53 283
Other assets 2,009 2,035
Accounts payable and accrued liabilities (589) 9,308
--------- ---------
(23,244) (1,145)
--------- ---------
Net cash (used in) provided by operating activities (12,753) 10,915
--------- ---------
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment (3,817) (13,324)
Cash paid for acquisitions, net of cash acquired -- (6,000)
--------- ---------
Net cash used in investing activities (3,817) (19,324)
--------- ---------
Cash Flows from Financing Activities:
Purchase of treasury stock -- (22,150)
Net proceeds from exercise of common stock options 263 368
Net proceeds from notes payable 17,480 24,853
Net advances to affiliates 131 34
--------- ---------
Net cash provided by financing activities 17,874 3,105
--------- ---------
Net increase (decrease) in cash and cash equivalents 1,304 (5,304)
Cash and cash equivalents - beginning of period 2,725 8,630
--------- ---------
Cash and cash equivalents - end of period $ 4,029 $ 3,326
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated statements.
Page 6
<PAGE>
Notes to Consolidated Financial Statements
(in thousands, except per share data)
(unaudited)
1. MSC Industrial Direct Co., Inc. ("MSC") was incorporated in the State of
New York on October 24, 1995. MSC and its subsidiaries, including its
principal operating subsidiary, Sid Tool Co., Inc., are hereinafter
referred to collectively as the "Company."
Reference is made to the Notes to Consolidated Financial Statements
contained within the Company's audited financial statements included in
MSC's annual report on Form 10-K for the year ended August 28, 1999. In
the opinion of management, the interim unaudited financial statements
included herein reflect all adjustments necessary, consisting of normal
recurring adjustments, for a fair presentation of such data in accordance
with generally accepted accounting principles. The results of operations
for interim periods are not necessarily indicative of the results to be
expected for a full year.
The Company's fiscal year ends on the Saturday nearest August 31 of each
year.
2. The Company follows the provisions of the Financial Accounting Standards
Board Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share". SFAS No. 128 requires the Company to present basic
and diluted earnings per share ("EPS") on the face of the income
statement. Basic earnings per common share were computed based on the
weighted average number of common shares issued and outstanding during the
relevant periods. Diluted earnings per common share were computed based on
the weighted average number of common shares issued and outstanding plus
additional shares assumed to be outstanding to reflect the diluted effect
of common stock equivalents using the treasury stock method.
A reconciliation between the numerator and denominator of the basic and
diluted EPS calculation is as follows:
Page 7
<PAGE>
Thirteen Weeks Ended
-------------------------
November 27, November 28,
1999 1998
-------------------------
Net income for EPS
Computation $10,491 $12,060
======= =======
Basic EPS:
Weighted average
Common shares 67,086 67,112
======= =======
Basic EPS $ 0.16 $ 0.18
======= =======
Diluted EPS:
Weighted average
Common shares 67,086 67,112
Shares issuable from
Assumed conversion of
Common stock equivalents 217 1,419
------- -------
Weighted average common
Shares and common stock
equivalents 67,303 68,531
======= =======
Diluted EPS $ 0.16 $ 0.18
======= =======
3. In fiscal 1999, the Company adopted SFAS No. 130 "Reporting Comprehensive
Income," which establishes new rules for the reporting of comprehensive
income and its components. The adoption of this statement had no impact on
the Company's net income or shareholders' equity. For the first quarter of
fiscal 1999 and fiscal 2000, the Company's operations did not give rise to
items includable in comprehensive income which were not already included
in net income. Therefore, the Company's comprehensive income is the same
as its net income for all periods presented.
4. In fiscal 1999, the Company adopted SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." Pursuant to this
pronouncement, the reportable operating segments are determined based on
the Company's management approach. The management approach, as defined by
SFAS No. 131, is based on the way that the chief
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<PAGE>
operating decision maker organizes the segments within an enterprise for
making operating decisions and assessing performance. The Company's
results of operations are reviewed by the chief operating decision maker
on a consolidated basis and the Company operates in only one segment.
5. In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, "Accounting for Derivative Instruments and Hedging Activities". This
statement establishes accounting and reporting standards for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities. SFAS No. 133, as amended by SFAS
No. 137, is effective for all fiscal years beginning after June 15, 2000
and will not require retroactive restatement of prior period financial
statements. This statement requires the recognition of all derivative
instruments as either assets or liabilities in the balance sheet measured
at fair value. Derivative instruments will be recognized as gains or
losses in the period of change. If certain conditions are met where the
derivative instrument has been designated as a fair value hedge, the hedge
items may also be marked to market through earnings, thus creating an
offset. If the derivative is designed and qualifies as a cash flow hedge,
the changes in fair value of the derivative instrument may be recorded in
comprehensive income. The Company does not presently make use of
derivative instruments.
Page 9
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This Quarterly Report on Form 10-Q contains or incorporates certain
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934, and the
Company intends that such forward-looking statements be subject to the safe
harbors created thereby. Such forward-looking statements involve known and
unknown risks and uncertainties and include, but are not limited to, statements
regarding future events and our plans, goals and objectives. Such statements are
generally accompanied by words such as "believe," "anticipate," "think,"
"intend," "estimate," "expect," or similar terms. Our actual results may differ
materially from such statements. Factors that could cause or contribute to such
differences include, without limitation, changing market conditions, competitive
and regulatory matters, general economic conditions in the markets in which the
Company operates and availability of acquisition opportunities. Although the
Company believes that the assumptions underlying its forward-looking statements
are reasonable, any of the assumptions could prove inaccurate and, therefore,
the Company cannot make any assurances that the results contemplated in such
forward-looking statements will be realized. The inclusion of such
forward-looking information should not be regarded as a representation by the
Company or any other person that the future events, plans or expectations
contemplated by the Company will be achieved. Furthermore, past performance is
not necessarily an indicator of future performance.
Overview
MSC Industrial Direct Co., Inc. ("MSC") was formed in October 1995 as a holding
company to hold all of the outstanding capital stock of Sid Tool Co., Inc. (the
"Operating Subsidiary") which has conducted business since 1941. MSC and its
subsidiaries, including the Operating Subsidiary, are hereinafter referred to
collectively as the "Company."
The Company is one of the largest direct marketers of a broad range of
industrial products to small and mid-sized industrial customers throughout the
United States. The Company distributes a full line of industrial products, such
as cutting tools, abrasives, measuring instruments, machine tool accessories,
safety equipment, fasteners, welding supplies and electrical supplies, intended
to satisfy its customers' maintenance, repair and operations ("MRO") supplies
requirements. The Company's 4,211 page master catalog offers over 400,000 stock
keeping units ("SKUs") and is supplemented by weekly, monthly and quarterly
specialty and promotional catalogs, newspapers and brochures. The products are
distributed through the Company's four distribution centers and approximately
100 customer service locations. Most of the products are carried in stock, and
orders for these products are typically fulfilled on the day the order is
received.
Results of Operations -
Thirteen weeks ended November 27, 1999 and November 28, 1998
Net sales increased by $27.3 million, or 17.6%, to $182.8 million in the first
quarter of fiscal 2000 from $155.5 million in the first quarter of fiscal 1999.
This increase was primarily attributable to an increase in sales to the
Company's existing customers, an increase in the number of active customers and
the effect of acquisitions made in fiscal 1999. The increase in sales to
existing customers was principally derived from an increase in the number of
SKUs offered, as well as from more focused marketing efforts.
Page 10
<PAGE>
Gross profit increased by $7.4 million, or 11.6%, to $71.2 million in the first
quarter of fiscal 2000 from $63.8 million in the first quarter of fiscal 1999.
The dollar increase in gross profit was primarily attributable to increased
sales. As a percentage of sales, gross profit decreased from 41.0% to 39.0%. The
percentage decrease resulted primarily from the mix of products being sold and
as a result of lower margins realized from customers and product lines added
through the Company's acquisitions.
Operating expenses increased by $8.9 million, or 20.3%, to $52.8 million in the
first quarter of fiscal 2000 from $43.9 million in the first quarter of fiscal
1999. As a percentage of sales, operating expenses increased from 28.3% to
28.9%. The increase was primarily attributable to increased sales volume which
required additional staffing and support, new distribution center opening costs,
and higher depreciation costs from expenditures for property, plant and
equipment.
Income from operations decreased by $1.4 million, or 7.1%, to $18.4 million in
the first quarter of fiscal 2000 from $19.8 million in the first quarter of
fiscal 1999. The decrease was primarily attributable to an increase in operating
expenses, offset by an increase in sales and gross profit.
Interest expense increased by $1.0 million to $1.1 million in the first quarter
of fiscal 2000 from $.1 million in the first quarter of fiscal 1999. The
increase was primarily attributable to higher long-term notes payable borrowings
under the Company's revolving credit agreement. The funds were used primarily
for inventory purchases for the Company's new distribution center.
Provision for income taxes and net income: The effective tax rate was 39.8
percent for the first quarter of fiscal 2000 as compared to 39.5 percent in the
prior year. Net income decreased by $1.6 million, or 13.2%, to $10.5 million in
the first quarter of fiscal 2000 from $12.1 million in the first quarter of
fiscal 1999. This decrease was primarily the result of previously mentioned
increases in operating expenses, interest expense and income taxes, offset by
increases in sales and gross profit.
Liquidity and Capital Resources
The Company's primary use of capital has been to fund the working capital
requirements necessitated by its sales growth, acquisitions and facilities
expansions. The Company's sources of financing have primarily been from
operations, supplemented by bank borrowings under its revolving credit facility,
and a portion of the proceeds from a fiscal 1997 public offering of Class A
common stock.
Under the terms of the credit facility, we have available unsecured borrowings
of up to $80.0 million. Interest on amounts borrowed may be paid at a rate per
annum equal to the bank's base rate (8.50% at November 27, 1999) or,
alternatively, at the bankers' acceptance rate or LIBOR rate plus margins, which
vary from 0.45% to 0.75% per annum. Our credit facility contains certain
covenants limiting mergers, use of proceeds, indebtedness, liens, investments,
sale of assets and acquisitions. Our credit facility also contains certain
financial covenants which require MSC to maintain a minimum net worth, ratio of
current assets to current liabilities, ratio of liabilities to effective net
worth, minimum interest coverage ratio and positive net income, to refrain from
capital expenditures in excess of certain amounts and to limit the issuance of
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dividends. As of November 27, 1999, the Company had approximately $78.0 million
in outstanding borrowings under the credit facility.
Net cash used in operating activities for the 13 week period ended November 27,
1999 was $12.8 million and the net cash provided by operating activities for the
13 week period ended November 28, 1998 was $10.9 million. The decrease in net
cash provided by operations resulted from increases in inventory commensurate
with the Company's sales growth, the introduction of new products and inventory
for the Company's new distribution center, and an increase in accounts payable.
Net cash used in investing activities for the 13 week periods ended November 27,
1999 and November 28, 1998 was $3.8 million and $19.3 million, respectively. The
net usage of cash in the first three months of fiscal 2000 was primarily
attributable to expenditures for property, plant and equipment. The net usage of
cash in the first three months of fiscal 1999 was primarily attributable to cash
paid for construction of the new Corporate headquarters, expenditures related to
the construction of a new distribution center and cash paid for an acquisition.
Net cash provided by financing activities was $17.9 million and $3.1 million for
the 13 week periods ended November 27, 1999 and November 28, 1998, respectively.
Net cash provided by financing activities for the first three months of fiscal
2000 reflected proceeds received from notes payable. Net cash provided by
financing activities for the first three months of fiscal 1999 was primarily
attributable to proceeds received from notes payable, offset by the purchase in
the open market of approximately 997,000 shares of Class A common stock, of
which approximately 31,000 shares were subsequently reissued under the 1998
Associate Stock Purchase Plan.
The Company believes that cash flow from operations will be sufficient to fund
future growth and meet planned capital expenditure needs in the near future. The
company is currently in the process of evaluating and expanding its loan
arrangements to provide additional sources of capital for future investment
spending.
Year 2000 Compliance Plan
Year 2000 Problem. The Year 2000 problem arises from the historic use of
only two digits (rather than four) for the designation of a year in date
information within computer programs. If not corrected, any of our equipment or
software programs that perform time sensitive calculations may incorrectly
identify the year `00' as 1900 instead of 2000, or not recognize it at all. This
could result in miscalculations or a major failure of certain systems. We may
also be vulnerable to the Year 2000 problems of our customers, suppliers and
service vendors and of other companies with which we conduct business (e.g.,
utility companies, shippers and telecommunications companies).
Year 2000 Compliance Plan. During calendar years 1997 and 1998, we
developed and began to implement a Year 2000 compliance plan using internal and
external resources in an effort to ensure that our business is not interrupted
by the Year 2000 problem. MSC's Year 2000 compliance plan is broken into four
components:
1. Renovating internal systems and applications. Our internal systems
and applications include Order Entry, Purchasing and Warehouse
Management. The applications used in the Order Entry system have
been re-written and were phased into MSC's call
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center and branch locations. This process was completed by May 1999.
The applications for the Purchasing and Warehouse Management systems
have been modified and our Year 2000 compliance work was completed
in August 1999. Many of our applications are already Year 2000
compliant as they were written using a compliant code generator.
2. Ensuring compliance of peripheral third party systems. We use a
number of third party package systems to supplement our internally
developed programs. Major systems in this area are our Financial and
Inventory Replenishment systems. Our Financial systems have been
replaced with a new package and are running on this software. The
Inventory Replenishment system has been tested as Year 2000
compliant. All of our material hardware, including our AS/400
computers, telephone systems, networks, PCs, security systems and
time clocks at all MSC locations have been tested as Year 2000
compliant.
3. Ensuring Year 2000 compliance by external companies that conduct
business with MSC. In 1999, we contacted all of our major customers,
suppliers and vendors to inquire about Year 2000 compliance. We did
not receive responses from all those contacted, but those who
responded did not indicate any problems. In addition, in 1999 we
conducted tests to determine whether those business partners with
which we currently conduct business electronically are year 2000
compliant. Our tests revealed no problems.
4. Implementing standards and conducting testing in an effort to ensure
that MSC's existing and future systems are Year 2000 compliant. All
new systems, whether hardware or software, are tested before
implementation in an effort to ensure Year 2000 compliance.
Cost of Compliance. We believe that the total cost of our Year 2000
compliance plan will be $1.2 million not including the replacement of the
Financial system. These costs are expensed as incurred and, to date, we have
incurred approximately $1.0 million of such expenses. The Financial systems
replacement is a separate project which cost approximately $6.0 million and has
been capitalized.
Risks. As of the date of this report, we have not experienced any
difficulties associated with the Year 2000 problem that would have a material
adverse effect on our systems or operations. Although we believe our own systems
to be Year 2000 compliant, there can be no assurance that during the course of
the calendar year 2000, we will not experience a disruption that would have a
material adverse effect on our financial condition or results of operation or
that our system will work properly in conjunction with the systems of any
business partner. In addition, we continue to bear the risk of a material
adverse affect if any of our business partners has not appropriately addressed
its own Year 2000 compliance issues. Although we believe that our major
customers are Year 2000 compliant, there can be no assurance at this time that
such other companies have achieved Year 2000 compliance or that any conversions
by such companies to become Year 2000 compliant will be compatible with our
computer systems. The inability of our principal suppliers, service vendors or
customers to be Year 2000 compliant could have a material adverse effect on our
financial condition or results of operation.
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<PAGE>
Contingency Plans. We have arranged for alternative methods of placing
purchase orders and for the stockpiling of certain inventory items in the event
that our suppliers are not Year 2000 compliant. We do not have any other
contingency plans with respect to other problems that could arise in our
business as a result of the Year 2000 problem. Any of these could have a
material adverse effect on our financial condition or results of operation.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
The Company's principal financial instrument is long-term notes payable under an
unsecured revolving credit agreement. The Company is affected by market risk
exposure primarily through the effect of changes in interest rates on amounts
payable by the Company under this credit agreement. Changes in these factors
cause fluctuations in the Company's net income and cash flows. The Company has
an $80.0 million revolving credit line of which approximately $78.0 million was
outstanding at November 27, 1999. The agreement bears interest at the bank's
base rate (8.50% at November 27, 1999), or, alternatively, at the bankers
acceptance rate or LIBOR rate plus margins, which vary from 0.45% to 0.75% per
annum based on the ratio of total liabilities to effective net worth, or bid
note rate. If the principal amounts under the Company's credit agreement
remained at this year-end level for an entire year and the prime rate increased
or decreased, respectively, by 1%, then the Company would pay or save,
respectively, an additional $0.8 million in interest that year. The Company does
not utilize derivative financial instruments to hedge against changes in
interest rates or for any other purpose.
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<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
27 Financial data schedule for the quarter ended November 27, 1999.
Reports on Form 8-K:
No reports on Form 8-K have been filed during the quarter for which
this report is filed.
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<PAGE>
SIGNATURES
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.
MSC INDUSTRIAL DIRECT CO., INC.
(Registrant)
Dated: January 11, 2000 By: /s/ Mitchell Jacobson
----------------------- -----------------------------------------
President and Chief Executive Officer
Dated: January 11, 2000 By: /s/ Shelley M. Boxer
----------------------- -----------------------------------------
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
Page 16
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-26-2000
<PERIOD-START> AUG-29-1999
<PERIOD-END> NOV-27-1999
<CASH> 4,029
<SECURITIES> 0
<RECEIVABLES> 103,876
<ALLOWANCES> 5,705
<INVENTORY> 246,268
<CURRENT-ASSETS> 357,465
<PP&E> 140,627
<DEPRECIATION> 32,327
<TOTAL-ASSETS> 542,546
<CURRENT-LIABILITIES> 87,214
<BONDS> 0
0
0
<COMMON> 68
<OTHER-SE> 366,418
<TOTAL-LIABILITY-AND-EQUITY> 542,546
<SALES> 182,761
<TOTAL-REVENUES> 182,761
<CGS> 111,541
<TOTAL-COSTS> 52,781
<OTHER-EXPENSES> 77
<LOSS-PROVISION> 479
<INTEREST-EXPENSE> 1,089
<INCOME-PRETAX> 17,427
<INCOME-TAX> 6,936
<INCOME-CONTINUING> 10,491
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,491
<EPS-BASIC> 0.16
<EPS-DILUTED> 0.16
</TABLE>
