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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
Commission file number 1-13059
JLK DIRECT DISTRIBUTION INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2896928
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1600 TECHNOLOGY WAY
P.O. BOX 231
LATROBE, PENNSYLVANIA 15650-0231
(Address of registrant's principal executive offices)
Registrant's telephone number, including area code: (724) 539-5000
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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Title Of Each Class Outstanding at October 30, 2000
------------------------------------ -------------------------------
Class A Common Stock, par value $.01 4,288,410
Class B Common Stock, par value $.01 20,237,000
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JLK DIRECT DISTRIBUTION INC.
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2000
TABLE OF CONTENTS
Item No. Page
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PART I. FINANCIAL INFORMATION
1. Financial Statements:
Condensed Consolidated Statements of Income (Unaudited)
Three months ended September 30, 2000 and 1999..................... 1
Condensed Consolidated Balance Sheets (Unaudited)
September 30, 2000 and June 30, 2000............................... 2
Condensed Consolidated Statements of Cash Flows (Unaudited)
Three months ended September 30, 2000 and 1999..................... 3
Notes to Condensed Consolidated Financial Statements (Unaudited)... 4
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.......................................... 7
PART II. OTHER INFORMATION
6. Exhibits and Reports on Form 8-K................................... 10
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
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JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
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(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------
2000 1999
---- ----
<S> <C> <C>
OPERATIONS
Net sales $ 120,451 $118,315
Cost of goods sold 83,656 79,737
--------- --------
Gross profit 36,795 38,578
Operating expense 34,656 31,599
Restructuring and asset impairment charge 1,587 --
--------- --------
Operating income 552 6,979
Other expense (income), net (11) 117
--------- --------
Income before provision for income taxes 563 6,862
Provision for income taxes 222 2,708
--------- --------
Net income $ 341 $ 4,154
========= ========
PER SHARE DATA
Basic earnings per share $ 0.01 $ 0.17
========= ========
Diluted earnings per share $ 0.01 $ 0.17
========= ========
Basic weighted average shares outstanding 24,525 24,510
========= ========
Diluted weighted average shares outstanding 24,525 24,510
========= ========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
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JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
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(in thousands)
<TABLE>
<CAPTION>
September 30, June 30,
2000 2000
---- ----
<S> <C> <C>
ASSETS
Current assets:
Cash and equivalents $ 4,404 $ 2,888
Notes receivable from Kennametal 16,937 11,159
Accounts receivable, less allowance for doubtful
accounts of $1,046 and $995 49,253 49,961
Inventories 111,404 123,436
Deferred income taxes 11,410 11,545
Other current assets 1,274 762
--------- ---------
Total current assets 194,682 199,751
--------- ---------
Property, plant and equipment:
Land and buildings 6,332 6,394
Machinery and equipment 34,987 34,206
Less accumulated depreciation (13,607) (12,464)
--------- ---------
Net property, plant and equipment 27,712 28,136
--------- ---------
Other assets:
Intangible assets, less accumulated
amortization of $19,256 and $18,177 58,010 59,088
Other 572 656
--------- ---------
Total other assets 58,582 59,744
--------- ---------
Total assets $ 280,976 $ 287,631
========= =========
LIABILITIES
Current liabilities:
Notes payable to banks $ -- $ 790
Accounts payable 20,519 30,389
Due to Kennametal and affiliates 7,068 7,020
Income taxes payable 2,920 2,923
Accrued payroll and vacation pay 3,007 2,938
Other 9,637 6,104
--------- ---------
Total current liabilities 43,151 50,164
--------- ---------
Deferred income taxes 389 466
Other liabilities 4,931 4,524
--------- ---------
Total liabilities 48,471 55,154
--------- ---------
SHAREOWNERS' EQUITY
Preferred stock, $.01 par value; 25,000 shares authorized; none issued -- --
Class A Common Stock, $.01 par value; 75,000 shares authorized;
4,917 shares issued, 4,288 shares outstanding 49 49
Class B Common Stock, $.01 par value; 50,000 shares authorized;
20,237 shares issued and outstanding 202 202
Additional paid-in capital 182,604 182,604
Retained earnings 65,117 64,779
Treasury stock, at cost; 629 shares of Class A Common stock held (14,204) (14,204)
Unearned compensation (46) (91)
Accumulated other comprehensive loss (1,217) (862)
--------- ---------
Total shareowners' equity 232,505 232,477
--------- ---------
Total liabilities and shareowners' equity $ 280,976 $ 287,631
========= =========
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
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JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
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(in thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------------
2000 1999
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<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 341 $ 4,154
Adjustments for noncash items:
Depreciation 1,236 991
Amortization 1,079 1,309
Restructuring and asset impairment charge 235 --
Loss on sale of assets 351 282
Changes in certain assets and liabilities:
Accounts receivable 4,191 (3,586)
Proceeds from (reduction in) the sale of accounts receivable (4,028) 2,110
Inventories 11,548 (12,972)
Accounts payable and accrued liabilities (5,866) 15,423
Other (360) (581)
-------- --------
Net cash flow from operating activities 8,727 7,130
-------- --------
INVESTING ACTIVITIES
Purchases of property, plant and equipment (941) (1,563)
Notes receivable from Kennametal (5,486) (3,326)
Other 24 (41)
-------- --------
Net cash flow used for investing activities (6,403) (4,930)
-------- --------
FINANCING ACTIVITIES
Repayments of notes payable to banks (790) (933)
-------- --------
Effect of exchange rate changes on cash and equivalents (18) (196)
-------- --------
CASH AND EQUIVALENTS
Net increase in cash and equivalents 1,516 1,071
Cash and equivalents, beginning of year 2,888 2,807
-------- --------
Cash and equivalents, end of period $ 4,404 $ 3,878
======== ========
SUPPLEMENTAL DISCLOSURES
Interest paid $ 103 $ 236
Income taxes paid 455 181
</TABLE>
See accompanying notes to condensed consolidated financial statements.
3
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JLK DIRECT DISTRIBUTION INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
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1. The condensed consolidated financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements included in
JLK Direct Distribution Inc.'s (the company) June 30, 2000 Form 10-K. The
condensed consolidated balance sheet as of June 30, 2000 has been derived
from the audited balance sheet included in the company's June 30, 2000 Form
10-K. These interim statements are unaudited; however, management believes
that all adjustments necessary for a fair presentation have been made and
all adjustments are normal, recurring adjustments. The results for the
three months ended September 30, 2000 and 1999 are not necessarily
indicative of the results to be expected for the full fiscal year. Unless
otherwise specified, any references to a "year" is to a fiscal year ended
June 30. Certain amounts in the prior years' consolidated financial
statements have been reclassified to conform with the current year
presentation.
2. The accompanying condensed consolidated financial statements of the company
include the operations of J&L America, Inc. (J&L), a previously wholly
owned subsidiary of Kennametal Inc. (Kennametal), and Full Service Supply
(FSS), which previously had been operated as a program of Kennametal. Prior
to April 1, 1997, the company had no separate legal status or existence.
Kennametal incorporated the company as a Pennsylvania corporation under the
name "JLK Direct Distribution Inc." in April 1997. Kennametal currently
owns 83 percent of the outstanding stock of the company.
3. On July 20, 2000, Kennametal proposed to the company's Board of Directors
to acquire the outstanding shares of the company it does not already own.
On September 11, 2000, the company and Kennametal announced that they
entered into a definitive merger agreement for Kennametal to acquire these
minority shares. Pursuant to the agreement, the company agreed to commence
a cash tender offer for all of its shares of Class A Common Stock at a
price of $8.75 per share. The tender offer commenced on October 3, 2000 and
will expire on November 15, 2000. Following the company's purchase of
shares in the tender offer, Kennametal will acquire the remainder of the
minority shares at the same price in a merger. The aggregate value to
acquire the minority interest of approximately 4.3 million shares would be
approximately $37 million. The transaction has been unanimously approved by
the company's Board of Directors, including its special committee comprised
of independent directors of the Board. The transaction is not conditioned
on financing, but is subject to conditions set forth in the merger
agreement.
In July 2000, the company, its directors (including one former director)
and Kennametal were named as defendants in several putative class action
lawsuits. The lawsuits seek an injunction, rescission, damages, costs and
attorney fees in connection with Kennametal's proposal to acquire the
outstanding stock of the company not owned by Kennametal.
On November 3, 2000, the parties to the lawsuits entered into a Memorandum
of Understanding (MOU) with respect to a proposed settlement of the
lawsuits. The proposed settlement would provide for complete releases of
the defendants, as well as among other persons their affiliates and
representatives, and would extinguish and enjoin all claims that have been,
could have been or could be asserted by or on behalf of any member of the
class against the defendants which in any manner relate to the allegations,
facts, or other matters raised in the lawsuits or which otherwise relate in
any manner to the agreement, the offer and the merger. The MOU also
provides, among other matters, for the payment by the company of up to
approximately $0.3 million in attorneys' fees and expenses to plaintiffs'
counsel. No payment is to be made for liability or damages. The final
settlement of the lawsuits, including the amount of attorneys' fees and
expenses to be paid, is subject to the execution of a definitive
stipulation of settlement, to consummation of the merger, and to court
approval.
4
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JLK DIRECT DISTRIBUTION INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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4. Comprehensive income (loss) for the three months ended September 30, 2000
and 1999 is as follows (in thousands):
Three Months Ended
September 30,
---------------------
2000 1999
---- ----
Net income $ 341 $ 4,154
Foreign currency translation adjustments (355) (134)
------ -------
Comprehensive income (loss) $ (14) $ 4,020
====== =======
Accumulated other comprehensive loss consists solely of cumulative foreign
currency translation adjustments.
5. In connection with 1998 and 1997 acquisitions, the company entered into
employee retention and non-compete agreements. The remaining liability for
these agreements, and other similar agreements from previous acquisitions,
at September 30, 2000 and June 30, 2000 recorded in other current
liabilities was $1.5 million and $1.5 million, respectively, and in other
liabilities was $1.0 million and $1.1 million, respectively.
6. The company engages in business transactions with Kennametal and its
subsidiaries. Products purchased for resale from Kennametal and its
subsidiaries and sales to these entities were as follows (in thousands):
Three Months Ended
September 30,
------------------
2000 1999
---- ----
Purchases from Kennametal and subsidiaries $ 12,221 $ 27,658
Sales to Kennametal and subsidiaries 3,341 2,336
The company receives from Kennametal certain warehouse, management
information systems, financial and administrative services pursuant to
certain agreements between the company and Kennametal. Other agreements
between the company and Kennametal include a non-competition and corporate
opportunities allocation agreement, tax-sharing agreement, trademark
license agreement, product supply agreement and others, as more fully
described in the company's 2000 Form 10-K. All amounts incurred by
Kennametal on behalf of the company are reflected in operating expense in
the accompanying statements of income. Net costs charged to the company by
Kennametal under these agreements were as follows (in thousands):
Three Months Ended
September 30,
-------------------
2000 1999
---- ----
Administrative services agreement $ 962 $ 1,409
Warehousing agreement 93 120
Shared facilities agreement 47 (16)
Lease agreement 101 26
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Net costs charged by Kennametal $ 1,203 $ 1,539
======= =======
Under the Intercompany Debt/Investment and Cash Management Agreement with
Kennametal, the company earned interest income of $0.5 million and $0.3
million for the three months ended September 30, 2000 and 1999,
respectively.
7. In the September 2000 quarter, the company's management began to implement
a business improvement plan. As a result, the company recorded a
restructuring and asset impairment charge of $1.6 million associated with
the closure of five underperforming satellite locations and severance for
certain individuals. This includes a $0.2 million noncash writedown of the
book value of certain property, plant and equipment, net of salvage value,
that management determined would no longer be utilized in ongoing
operations. The costs accrued for these plans were based on management
estimates using the latest information available at
5
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JLK DIRECT DISTRIBUTION INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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the time that the accrual was established. The costs charged against the
accrual in the September 2000 quarter were not significant. The company
continues to review its business strategies and pursue other cost-reduction
activities, some of which could result in future charges.
8. The company reports two segments consisting of J&L and FSS. The company's
external sales, intersegment sales and operating income (loss) by segment
for the three months ended September 30, 2000 and 1999 are as follows (in
thousands):
Three Months Ended
September 30,
----------------------
2000 1999
---- ----
External sales:
J&L $ 84,834 $ 87,707
FSS 35,617 30,608
--------- --------
Total external sales $ 120,451 $118,315
========= ========
Intersegment sales:
J&L $ 906 $ 580
FSS -- --
--------- --------
Total intersegment sales $ 906 $ 580
========= ========
Total sales:
J&L $ 85,740 $ 88,287
FSS 35,617 30,608
--------- --------
Total sales $ 121,357 $118,895
========= ========
Operating income (loss):
J&L $ (986) $ 4,933
FSS 1,538 2,046
--------- --------
Total operating income $ 552 $ 6,979
========= ========
J&L operating income for the three months ended September 30, 2000 was
reduced by $1.4 million related to restructuring and asset impairment
charges and employee severance costs, and $1.7 million of costs primarily
related to the tender offer to acquire the outstanding shares of JLK.
Corporate level expenses are not allocated to the two segments and are
included entirely in the J&L segment. FSS operating income for the three
months ended September 30, 2000 was reduced by $0.2 million related to
employee severance costs.
9. In June 1998, Statement of Financial Accounting Standard (SFAS) No. 133,
"Accounting for Derivative Instruments and Hedging Activities" was issued.
SFAS No. 133 establishes accounting and reporting standards requiring all
derivative instruments (including certain derivative instruments imbedded
in other contracts) be recorded in the balance sheet as either an asset or
liability measured at their fair value. SFAS No. 133 requires that changes
in the derivative's fair value be recognized currently in earnings unless
specific hedge accounting criteria are met. Accounting for qualifying
hedges allows a derivative's gains and losses to offset related results on
the hedged item in the income statement, and requires that a company must
formally document, designate and assess the effectiveness of transactions
that receive hedge accounting. SFAS No. 133 was adopted on July 1, 2000 and
had no effect on the financial condition of the company.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
NET SALES
Net sales for the September 2000 quarter were $120.5 million, an increase of two
percent from $118.3 million last year as higher Full Service Supply (FSS) sales
were partially offset by lower sales levels at the acquired distributors.
J&L sales totaled $84.8 million for the September 2000 quarter, a decrease of
three percent from the prior year. Sales at the acquired distributors accounted
for the entire decline compared to the prior year as sales in the core J&L
catalog business were flat year-over-year. Sales declined in the acquired
distributors due to the reduced demand in the end markets served.
Sales for FSS of $35.6 million increased 16 percent in the September 2000
quarter compared to last year due to continued penetration in existing accounts.
The September 1999 quarter results were affected by the inability to ramp up new
programs due to start-up issues related to the implementation of the new
business system. The company provided FSS programs to 182 customers covering 260
different facilities at September 30, 2000, compared to 163 customers covering
262 different facilities at September 30, 1999.
GROSS PROFIT
Gross profit for the September 2000 quarter was $36.8 million, a decrease of
five percent from $38.6 million in the prior year while the gross profit margin
for the September 2000 quarter declined to 30.5 percent compared to 32.6 percent
in the prior year. These declines are due to lower margins in all businesses due
to a shift in the end markets served.
OPERATING EXPENSE
Operating expense for the September 2000 quarter was $34.7 million and included
$1.7 million of special charges primarily related to the tender offer to acquire
the company's outstanding shares. Excluding the special charges, operating
expense as a percentage of sales was 27.3 percent compared to 26.7 percent in
the prior year. Excluding the special charges, operating expense increased four
percent primarily due to higher shipping costs incurred to provide enhanced
customer service in both the J&L and FSS businesses.
Also included in operating expense were charges from Kennametal for warehousing,
administrative, financial and management information systems services provided
to the company. Charges from Kennametal were $1.2 million in the September 2000
quarter, a decrease of 22 percent from $1.5 million in the prior year. The
decline in total charges from Kennametal resulted from a reduction in
administrative charges due to the company assuming more of these types of costs
directly.
RESTRUCTURING AND ASSET IMPAIRMENT CHARGE
In the September 2000 quarter, the company's management began to implement a
business improvement plan. As a result, the company recorded a restructuring and
asset impairment charge of $1.6 million associated with the closure of five
underperforming satellite locations and severance for certain individuals. This
includes a $0.2 million non-cash writedown of the book value of certain
property, plant and equipment, net of salvage value, that management determined
would no longer be utilized in ongoing operations. The costs accrued for these
plans were based on management estimates using the latest information available
at the time that the accrual was established. The costs charged against the
accrual in the September 2000 quarter were not significant. Annualized benefits
of $0.9 million are expected to be realized beginning in the March 2001 quarter.
The company continues to review its business strategies and pursue other
cost-reduction activities, some of which could result in future charges.
7
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
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OTHER EXPENSE (INCOME), NET
The decline in other expense (income), net compared to the September 1999
quarter is due to higher levels of interest income from Kennametal, which
increased to $0.5 million from $0.3 million during the first quarter of 2000.
The increase in interest income is due to an increase in the note receivable
from Kennametal coupled with an increase in the interest rate charged to
Kennametal due to the higher interest rate environment in the September 2000
quarter.
LIQUIDITY AND CAPITAL RESOURCES
The company's primary capital needs have been to fund working capital
requirements and the addition of new products and FSS programs. The company's
primary sources of financing have been cash from operations and the Intercompany
Debt/Investment and Cash Management Agreement with Kennametal. The company
anticipates that cash flows from operations and the Intercompany Debt/Investment
and Cash Management Agreement with Kennametal will be adequate to support its
operations for the foreseeable future.
Net cash from operations was $8.7 million in the September 2000 quarter, an
increase of $1.6 million compared to the prior year. The increase is due to
reduced working capital requirements of $5.1 million, partially offset by lower
net income of $3.8 million. Net cash from operations for the September 1999
quarter included a $12.7 million investment in inventory purchased from
Kennametal in order for JLK to have access to Kennametal's branded inventory for
sale to FSS customers subsequent to the implementation of the new business
system for FSS.
Net cash used for investing activities was $6.4 million for the three months
ended September 30, 2000, an increase of $1.5 million compared to the prior
year. The increase in net cash used for investing activities resulted from
higher amounts advanced under the note receivable from Kennametal of $2.2
million, partially offset by reduced capital expenditures of $0.6 million, as
higher capital requirements were necessary in the September 1999 quarter due to
the FSS system implementation.
Net cash flow used for financing activities was $0.8 million and $0.9 million
for the three months ended September 30, 2000 and 1999, respectively, and
reflected the repayment of amounts borrowed under notes payable to banks for
each period.
Pursuant to the definitive merger agreement between the company and Kennametal,
the company has agreed to commence a cash tender offer for all of its shares of
Class A Common Stock at a price of $8.75 per share. The aggregate value to
acquire the minority interest of approximately 4.3 million shares would be
approximately $37 million. The company will obtain the funds necessary for the
purchases from the Intercompany Debt/Investment and Cash Management Agreement
with Kennametal.
FINANCIAL CONDITION
The company's financial condition continues to remain strong. Total assets were
$281.0 million at September 30, 2000, down two percent from $287.6 million at
June 30, 2000 due primarily to a reduction in current assets from management's
focus to lower inventory levels. Net working capital increased to $151.5 million
at September 30, 2000, up one percent from $149.6 million at June 30, 2000 as
the reduction in current liabilities was greater than that of current assets due
to higher operating cash flows.
TENDER OFFER
On July 20, 2000, Kennametal proposed to the company's Board of Directors to
acquire the outstanding shares of the company it does not already own. On
September 11, 2000, the company and Kennametal announced that they entered into
a definitive merger agreement for Kennametal to acquire these minority shares.
Pursuant to the agreement, the company agreed to commence a cash tender offer
for all of its shares of Class A Common Stock at
8
<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
--------------------------------------------------------------------------------
a price of $8.75 per share. The tender offer commenced on October 3, 2000 and
will expire on November 15, 2000. Following the company's purchase of shares in
the tender offer, Kennametal will acquire the remainder of the minority shares
at the same price in a merger. The aggregate value to acquire the minority
interest of approximately 4.3 million shares would be approximately $37 million.
The transaction has been unanimously approved by the company's Board of
Directors, including its special committee comprised of independent directors of
the Board. The transaction is not conditioned on financing, but is subject to
conditions set forth in the merger agreement.
In July 2000, the company, its directors (including one former director) and
Kennametal were named as defendants in several putative class action lawsuits.
The lawsuits seek an injunction, rescission, damages, costs and attorney fees in
connection with Kennametal's proposal to acquire the outstanding stock of the
company not owned by Kennametal.
On November 3, 2000, the parties to the lawsuits entered into a Memorandum of
Understanding (MOU) with respect to a proposed settlement of the lawsuits. The
proposed settlement would provide for complete releases of the defendants, as
well as among other persons their affiliates and representatives, and would
extinguish and enjoin all claims that have been, could have been or could be
asserted by or on behalf of any member of the class against the defendants which
in any manner relate to the allegations, facts, or other matters raised in the
lawsuits or which otherwise relate in any manner to the agreement, the offer and
the merger. The MOU also provides, among other matters, for the payment by the
company of up to approximately $0.3 million in attorneys' fees and expenses to
plaintiffs' counsel. No payment is to be made for liability or damages. The
final settlement of the lawsuits, including the amount of attorneys' fees and
expenses to be paid, is subject to the execution of a definitive stipulation of
settlement, to consummation of the merger, and to court approval.
STRATEGIC ALTERNATIVES
The company is considering strategic alternatives for two subsidiaries, Strong
Tool Company and Abrasive & Tools Specialties Company, including the possible
divestiture of these businesses or a portion thereof. In 2000, these businesses
represented approximately $90 million in sales. The company is currently not a
party to any written or oral agreement regarding the divestiture of these
businesses.
FORWARD-LOOKING STATEMENTS
This Form 10-Q contains "forward-looking statements," as defined in Section 21E
of the Securities Exchange Act of 1934. Actual results may differ materially
from those expressed or implied in the forward-looking statements. Factors that
could cause actual results to differ materially include, but are not limited to,
the extent that the economic conditions in the United States and, to a lesser
extent, Europe, are not sustained, risks associated with integrating businesses,
demands on management resources, risks associated with international markets
such as currency exchange rates, competition and the risks associated with
implementation of restructuring actions. The company undertakes no obligation to
publicly release any revisions to forward-looking statements to reflect events
or circumstances occurring after the date hereof.
9
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibits
(27) Financial Data Schedule
27.1 For the three months ended September 30, 2000,
submitted to the Securities and Exchange commission
in electronic format. Filed herewith.
27.2 For the year ended June 30, 2000, as restated,
submitted to the Securities and Exchange Commission
in electronic format. Filed herewith.
27.3 For the nine months ended March 31, 2000, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.4 For the six months ended December 31, 1999, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.5 For the three months ended September 30, 1999, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.6 For the year ended June 30, 1999, as restated,
submitted to the Securities and Exchange Commission
in electronic format. Filed herewith.
27.7 For the nine months ended March 31, 1999, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.8 For the six months ended December 31, 1998, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.9 For the three months ended September 30, 1998, as
restated, submitted to the Securities and Exchange
Commission in electronic format. Filed herewith.
27.10 For the year ended June 30, 1998, as restated,
submitted to the Securities and Exchange Commission
in electronic format. Filed herewith.
(b) Reports on Form 8-K
A report on Form 8-K was filed on July 21, 2000 regarding the
announcement of a proposal by Kennametal Inc. to acquire the
outstanding shares of JLK Direct Distribution Inc., an 83
percent-owned subsidiary of Kennametal Inc., that it does not
already own for $6.70 per share in cash.
A report on Form 8-K was filed on July 25, 2000 regarding
Kennametal Inc. and all the directors of JLK Direct
Distribution Inc., an 83 percent-owned subsidiary of
Kennametal Inc., being named as defendants in civil action No.
GD00-12565, filed in the Court of Common Pleas in Allegheny
County, Pennsylvania.
A report on Form 8-K was filed on August 8, 2000 regarding JLK
Direct Distribution Inc., an 83 percent-owned subsidiary of
Kennametal Inc., Kennametal Inc. and all the directors of JLK
Direct Distribution Inc., being named in two additional class
action lawsuits filed in the Court of Common Pleas in
Allegheny County, Pennsylvania.
A report on Form 8-K was filed on September 11, 2000 regarding
the announcement that Kennametal Inc. and JLK Direct
Distribution Inc., an 83 percent-owned subsidiary of
Kennametal Inc., have entered into a definitive merger
agreement for Kennametal to acquire the outstanding shares of
JLK that Kennametal does not already own.
A report on Form 8-K was filed on September 12, 2000 regarding
the announcement that JLK Direct Distribution Inc., an 83
percent-owned subsidiary of Kennametal Inc., expects to
recognize special charges of $15 - $20 million associated with
its business improvement plan.
A report on Form 8-K was filed on October 3, 2000 regarding
the commencement by JLK Direct Distribution Inc. of a tender
offer to purchase all of the outstanding shares of the
company's Class A Common Stock for a purchase price of $8.75
per share in cash.
A report on Form 8-K was filed on November 1, 2000 by JLK
Direct Distribution Inc. announcing the extension, to November
15, 2000, of the expiration date of the company's pending
tender offer to purchase all of the outstanding shares of its
Class A Common Stock for $8.75 per share in cash.
A report on Form 8-K was filed on November 7, 2000 by JLK
Direct Distribution Inc. announcing the filing of amendment
No. 2 to Schedule T-O, including a supplement to the offer to
purchase, regarding a tender offer to purchase all of the
outstanding shares of the company's Class A Common Stock for a
purchase price of $8.75 per share in cash.
10
<PAGE> 13
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.
JLK DIRECT DISTRIBUTION INC.
Date: November 14, 2000 By: /s/ DIANA L. SCOTT
--------------------------
Diana L. Scott
Vice President,
Chief Financial Officer,
and Treasurer
11
