MSC Industrial Direct Co., Inc. Reports Fiscal 2004 First Quarter Results.Business Editors MELVILLE, N.Y.--(BUSINESS WIRE)--Jan. 8, 2004 -- Revenue Increase of 5.7% Drives Net Income Increase of 32% -- Operating Margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: Reach 12% of Sales MSC INDUSTRIAL DIRECT CO., INC MSC Industrial Direct Co., Inc (MSC), through its subsidiaries, primarily, MSC Industrial Supply Co., is one of the largest industrial equipment distributors in the world. . (NYSE NYSE See: New York Stock Exchange : MSM MSM - Micronetics Standard MUMPS ), "MSC (1) (MSC.Software Corporation, Santa Ana, CA, www.mscsoftware.com) Founded in 1963 by Richard H. MacNeal and Robert G. Schwendler, MSC is the world's largest provider of mechanical computer aided engineering (MCAE) strategies, simulation software and services. ," one of the premier distributors of MRO MRO In currencies, this is the abbreviation for the Mauritanian Ouguiya. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. supplies to industrial customers throughout the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , today reported financial results for the first fiscal quarter ended November November: see month. 29, 2003. Net sales Net Sales The amount a seller receives from the buyer after costs associated with the sale are deducted. Notes: This amount is calculated by subtracting the following items from gross sales: merchandise returned for credit, allowances for damaged or missing goods, freight increased 5.7% to $222.8 million in the first quarter of fiscal 2004 from $210.7 million in the first quarter of fiscal 2003. Net income for the first quarter of fiscal 2004 rose to $16.5 million, or $0.24 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, an increase of 32.0% over net income of $12.5 million, or $0.19 per diluted share, in the year-ago period. In the first quarter of fiscal 2004, the Company continued to improve on its strong financial position. Free cash flow for the first quarter of fiscal 2004 was $11.7 million, ahead of internal expectations (See Note 1). As of November 30, 2003, the Company's cash and investments in marketable Marketable are securities that can be easily converted into cash. Such securities will generally have highly liquid markets allowing the security to be sold at a reasonable price very quickly. debt securities totaled $133.8 million, and its long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. was $1.1 million. "Fiscal 2004 began where fiscal 2003 left off, with strong operational and financial performance," stated Mitchell Mitchell, city (1990 pop. 13,798), seat of Davison co., SE S.Dak.; inc. 1881. Mitchell is a trade, distribution, and shipping center for a dairy and livestock area. Jacobson Jacobson is a surname with several variants. Some people with this name include:
The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , while operating margins increased to 12.1% of sales versus 9.7% a year ago. We are very pleased with these results, which point to the continued solid execution of our operating strategy." "Our business continues to fire on all cylinders," added David Sandler Sandler is the surname of:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . "During the quarter, we saw sales from our manufacturing customers increase for the first time since the second quarter of fiscal 2003. We are encouraged by this growth, and have also seen other signs that this market is beginning to firm. I'm I'm Contraction of I am. Our Living Language Speakers of some scattered varieties of American English sometimes use I'm instead of I've or I have in present perfect constructions, as in also pleased with the results of our diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. program, as we had continued strong sales growth from the non-manufacturing sector. " Mr. Jacobson concluded, "Over the past few years, MSC has invested to ensure that we have the systems and capabilities necessary to enhance our position in the marketplace. Now, with the initial signs of an improvement in the manufacturing sector and the ongoing success of our strategy and business model, we are well positioned to leverage these state-of-the art, scalable systems as we work to gain additional market share and drive revenue growth against an improving economic backdrop Backdrop may refer to:
An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of between $0.24 and $0.26." The Company also announced that David Sandler, President and Chief Operating Officer, would be seeking medical advice to address diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. hearing in his left ear; the condition is caused by a benign benign /be·nign/ (be-nin´) not malignant; not recurrent; favorable for recovery. be·nign adj. Of no danger to health, especially relating to a tumorous growth; not malignant. growth, or acoustic neuroma Acoustic Neuroma Definition An acoustic neuroma is a benign tumor involving cells of the myelin sheath that surrounds the vestibulocochlear nerve (eighth cranial nerve). , pressing on the acoustic nerve acoustic nerve n. See vestibulocochlear nerve. , and is treatable with surgery or radiation therapy. If surgery is elected, the Company anticipates that Mr. Sandler would return to work full-time full-time adj. Employed for or involving a standard number of hours of working time: a full-time administrative assistant. full shortly following the procedure. Mr. Sandler stated "While I'm still seeking medical advice and considering my options to treat this condition, I'm confident that our strong and deep management team will be driving our established business goals and initiatives to take MSC to the next level, and any decision I make will be coordinated with the rest of our management team to ensure that my short absence is seamless See seamless integration. to the business." The management of MSC will host a conference call today at 11:00 a.m. Eastern Time to review the first quarter of fiscal 2004 results and to comment on current operations. The call may be accessed via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at: http://www.mscdirect.com Note 1 - Free cash flow is defined as net cash provided by operating activities less expenditures for property, plant and equipment. Net cash flow provided by operating activities was $13.9 million and expenditures for property, plant and equipment were $2.2 million. Management considers free cash flow to be an important indicator of the Company's financial strength and the ability to generate liquidity because it reflects cash generated from operations that can be used for strategic initiatives, dividends, and repurchases of the Company's stock. MSC Industrial Direct (NYSE: MSM) is one of the premier distributors of MRO supplies to industrial customers throughout the United States. MSC distributes more than 500,000 industrial products from more than 2,500 suppliers to more than 345,000 customers. In-stock availability exceeds 99% and standard ground delivery is next day to 80% of the industrial United States. MSC reaches its customers through a combination of more than 30 million direct-mail catalogs and CD-ROMs, 89 branch sales offices, more than 400 sales people, the Internet and associations with some of the world's most prominent B2B e-commerce (Business to Business Electronic-COMMERCE) Refers to one business selling to another business via the Web. See e-commerce. portals. CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and OF 1995. Statements in this Press Release may constitute "forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. " within the meaning of Section 27A of the Securities Act of 1933, as amended a·mend v. a·mend·ed, a·mend·ing, a·mends v.tr. 1. To change for the better; improve: amended the earlier proposal so as to make it more comprehensive. 2. , and section 21E of the Securities exchange Act of 1934, as amended. Any statements contained herein which are not statements of historical facts and that address activities, events or developments that the Company expects, believes or anticipates will or may occur in the future shall be deemed to be forward-looking statements. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated. Future events, actual results and performance, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements herein. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company undertakes no obligation to release publicly any revisions to these forward looking statements that may be made to reflect events or circumstances CIRCUMSTANCES, evidence. The particulars which accompany a fact. 2. The facts proved are either possible or impossible, ordinary and probable, or extraordinary and improbable, recent or ancient; they may have happened near us, or afar off; they are public or after the date hereof or to reflect the occurrence of unanticipated events. The inclusion of any statement in this release does not constitute an admission by MSC or any other person that the events or circumstances described in such statement are material. Factors that could cause actual results to differ materially from those in forward-looking statements include, without limitation, changing market conditions, competitive and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. matters, general economic conditions in the markets in which the Company operates, risk of cancellation cancellation (See: cancel) CANCELLATION. Its general acceptation, is the act of crossing a writing; it is used sometimes to signify the manual operation of tearing or destroying the instrument itself. Hyde v. Hyde, 1 Eq. Cas. Abr. 409; Rob. or rescheduling of orders, work stoppages at transportation centers or shipping ports, the risk of war, terrorism and similar hostilities hos·til·i·ty n. pl. hos·til·i·ties 1. The state of being hostile; antagonism or enmity. See Synonyms at enmity. 2. a. A hostile act. b. hostilities Acts of war; overt warfare. , availability of suitable acquisition opportunities, and various other risk factors listed from time to time in the Company's SEC reports.
MSC INDUSTRIAL DIRECT CO., INC.
Condensed Consolidated Balance Sheets
(In thousands)
November August
29, 30,
2003 2003
--------- ---------
ASSETS
------
Current Assets:
Cash and cash equivalents $62,654 $114,294
Available-for-sale securities 2,961 --
Accounts receivable, net of allowance for
doubtful accounts 104,128 93,598
Inventories 201,438 201,602
Prepaid expenses and other current assets 11,741 12,039
Deferred income taxes 10,771 11,051
--------- ---------
Total current assets 393,693 432,584
--------- ---------
Available-for-sale securities 68,200 --
Property, Plant and Equipment, net 105,998 106,935
Goodwill 63,202 63,202
Other assets 13,215 16,249
--------- ---------
Total Assets $644,308 $618,970
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
Accounts payable $34,352 $30,069
Accrued liabilities 44,663 48,406
Current portion of long-term notes payable 149 169
--------- ---------
Total current liabilities 79,164 78,644
Long-term notes payable 1,097 1,132
Deferred income tax liabilities 28,864 28,839
--------- ---------
Total liabilities 109,125 108,615
--------- ---------
Shareholders' Equity:
Class A common stock 39 39
Class B common stock 32 32
Additional paid-in capital 273,271 261,849
Retained earnings 344,676 331,568
Treasury stock, at cost (82,835) (83,133)
--------- ---------
Total shareholders' equity 535,183 510,355
--------- ---------
Total Liabilities and Shareholders' Equity $644,308 $618,970
========= =========
MSC INDUSTRIAL DIRECT CO., INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
First Quarter Ended
--------------------------------
November 29, November 30,
2003 2002
-------------- -----------------
Net sales $222,761 $210,692
Cost of goods sold 122,501 116,175
-------------- -----------------
Gross profit 100,260 94,517
Operating expenses 73,369 74,147
-------------- -----------------
Income from operations 26,891 20,370
-------------- -----------------
Other Income/(Expense):
Interest income, net 292 249
Other (expense) income, net 50 10
-------------- -----------------
Total other income 342 259
-------------- -----------------
Income before provision
for income taxes 27,233 20,629
Provision for income taxes 10,757 8,148
-------------- -----------------
Net income $16,476 $12,481
============== =================
Per Share Information:
Net income per common share:
Basic $0.25 $0.19
============== =================
Diluted $0.24 $0.19
============== =================
Weighted average shares used in
computing net income per common
share
Basic 66,004 66,513
============== =================
Diluted 68,350 66,953
============== =================
MSC INDUSTRIAL DIRECT CO., INC.
Consolidated Statements of Cash Flows
(In thousands)
For The Fiscal
Quarters Ended
-----------------
November November
29, 30,
2003 2002
-------- --------
Cash Flows from Operating Activities:
Net income $16,476 $12,481
-------- --------
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization expense 3,157 3,833
Provision for doubtful accounts 549 542
Stock option income tax benefit 474 355
Deferred income taxes 305 1,203
Changes in operating assets and liabilities:
Accounts receivable (11,079) (5,202)
Inventories 164 (8,004)
Prepaid expenses and other current assets 298 (1,947)
Other assets 3,034 3,059
Accounts payable and accrued liabilities 540 3,739
-------- --------
Total adjustments (2,558) (2,422)
-------- --------
Net cash provided by operating activities 13,918 10,059
-------- --------
Cash Flows from Investing Activities:
Purchase of available-for-sale securities (71,161) --
Purchases of property, plant and equipment (2,220) (2,274)
-------- --------
Net cash used in investing activities (73,381) (2,274)
-------- --------
Cash Flows from Financing Activities:
Purchases of treasury stock -- (2,958)
Payment of cash dividend (3,325) --
Proceeds from associate stock purchase plan 255 268
Proceeds from exercise of common stock options 10,948 142
Repayments of notes payable (55) (48)
-------- --------
Net cash provided by (used) in financing
activities 7,823 (2,596)
-------- --------
Net (decrease) increase in cash and cash equivalents (51,640) 5,189
Cash and cash equivalents - beginning of period 114,294 59,978
-------- --------
Cash and cash equivalents - end of period $62,654 $65,167
======== ========
Supplemental Disclosure of Cash Flow Information:
Cash paid for interest $9 $11
======== ========
Cash paid for income taxes $2,408 $1,428
======== ========
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