8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported)   October 28, 2004

MSC Industrial Direct Co., Inc.

(Exact name of registrant as specified in its charter)

New York	1-14130	11-3289165
(State or other jurisdiction of incorporation)	(Commission File Number)	(I.R.S. Employer Identification No.)

75 Maxess Road, Melville, New York	11747
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code    (516) 812-2000

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13a-4(c))

ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

On October 28, 2004, the Registrant issued a press release announcing results of operations for its fourth fiscal quarter ended August 28, 2004 and its fiscal year ended August 28, 2004.  The entire text of the press release is attached as Exhibit 99.1

ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.

Exhibits:

99.1         MSC Industrial Direct Co., Inc. Press Release, dated October 28, 2004.

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Signature

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 hereunto duly authorized.

	MSC Industrial Direct Co., Inc.
Date: October 28, 2004	By:	/s/ Shelley Boxer
		Name: Shelley Boxer
		Title: Vice President, Finance

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EX-99.1

Exhibit 99.1

Contact:

Shelley Boxer, V.P. Finance

MSC Industrial Direct Co., Inc.

(516) 812-1216

Investor Relations: Eric Boyriven/Jim Olecki

Press: Scot Hoffman

Financial Dynamics

(212) 850-5600

FOR IMMEDIATE RELEASE

MSC INDUSTRIAL DIRECT CO., INC. REPORTS

FISCAL 2004 FOURTH QUARTER RESULTS

- - Average daily sales increase 20% year-over-year - -

- - Operating income and net income increase 66% and 63%, respectively - -

Melville, NY, October 28, 2004 - MSC INDUSTRIAL DIRECT CO., INC. (NYSE: MSM), “MSC,” one of the premier distributors of MRO supplies to industrial customers throughout the United States, today reported financial results for its fourth fiscal quarter ended August 28, 2004.

For the fourth quarter of fiscal 2004, net sales were $246.7 million, an increase of 18.2% over net sales of $208.8 million in the fourth quarter of fiscal 2003.  Net income increased 62.6% to $22.3 million in the fourth quarter of fiscal 2004, compared to net income of $13.7 million in the year-ago period.  Earnings per diluted share for the fiscal 2004 fourth quarter were $0.32, compared to $0.20 in the fourth quarter of fiscal 2003, an increase of 60.0%.  There was one less day in this year’s fourth quarter than in the fourth quarter of last year.

For the fiscal 2004 full-year period, the Company reported net sales of $955.3 million, an increase of 13.1% over revenues of $844.7 million for the fiscal 2003 full-year period.  Net income for fiscal 2004 rose 55.8% to $81.2 million, from net income of $52.1 million in the same period a year ago.  For fiscal 2004, the Company reported earnings per diluted share of $1.17, an increase of 51.9% over earnings per diluted share of $0.77 last year.

 “Our execution has resulted in outstanding financial performance,” stated Chuck Boehlke, Executive Vice President & Chief Financial Officer.  “Normalized for the number of days in the quarter versus a year ago, net sales in the fiscal 2004 fourth quarter increased 20%, while our operating leverage and focus on cost controls resulted in the conversion of 37.8% of incremental sales into operating income.  As a result, our operating margins rose significantly from year-ago levels to 14.6%, and net income increased 63%.  Free cash flow (See Note 1) reached $19.7 million for the quarter and $58.3 million for fiscal 2004, contributing to total invested cash at year-end of $183 million.  We posted excellent results for fiscal 2004, and are positioned well going into fiscal 2005.”

- MORE -

MSC INDUSTRIAL DIRECT CO., INC. REPORTS FISCAL 2004 FOURTH QUARTER RESULTS

Mitchell Jacobson, Chairman & Chief Executive Officer, concluded, “Throughout the year, MSC Industrial Direct has leveraged excellent operational execution and the overall economic recovery to generate exceptional results.  We’ve exceeded our expectations on many levels and have continued to gain market share by providing our customers with what they want: high quality products and services that lower their operating costs and increase their competitiveness.  We’ve seen strong performance across all operating regions, and solid growth of our business within both the manufacturing and non-manufacturing sectors.  In short, we have delivered on our promises.  However, while we are proud of these results, we also recognize that our customers continue to face challenges, including rising raw material and energy costs and interest rates, which may affect their businesses in the future.  These are not new issues, however, and we have managed our business appropriately to address them to date.  Against this backdrop, we intend to enhance our position as the premier supplier of MRO products, and keep delivering on our promises by consistently outperforming the sector into fiscal 2005 and beyond.”

The Company noted that, based upon current market conditions, it expects revenues for the first quarter of fiscal 2005 to be between $260 million to $265 million, with diluted earnings per share of between $0.35 and $0.37.

The management of MSC will host a conference call today at 11:00 a.m. Eastern Time to review the fourth quarter of fiscal 2004 results and to comment on current operations.  The call may be accessed via the Internet 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 in the fourth fiscal quarter and the fiscal year were  $21.6 million and $66.9 million respectively.  Expenditures for property, plant and equipment were $1.9 million and $8.6 million respectively, for the fourth fiscal quarter and for the fiscal year.  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 approximately 345,000 customers.  In-stock availability is approximately 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, approximately 90 branch sales offices, more than 450 sales people, the Internet and associations with some of the world’s most prominent B2B e-commerce portals.  For more information, visit the Company’s Web site at http://www.mscdirect.com.

CAUTIONARY STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.  Statements in this Press Release may constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, 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.  The Company undertakes no obligation to release publicly any revisions to these forward looking statements that may be made to reflect events or circumstances 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

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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 matters, general economic conditions in the markets in which the Company operates, risk of cancellation or rescheduling of orders, work stoppages at transportation centers or shipping ports, the risk of war, terrorism and similar hostilities, availability of suitable acquisition opportunities, and various other risk factors listed from time to time in the Company’s SEC reports.

(Tables Follow)

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MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Balance Sheets

(In thousands)

	August 28, 2004			August 30, 2003
ASSETS
Current Assets:
Cash and cash equivalents	$	39,517		$	114,294
Available-for-sale securities	6,000			—
Accounts receivable, net of allowance for doubtful accounts	114,077			93,598
Inventories	225,427			201,602
Prepaid expenses and other current assets	16,368			12,039
Deferred income taxes	10,000			11,051
Total current assets	411,389			432,584
Available-for-sale securities	137,797			—
Property, Plant and Equipment, net	103,284			106,935
Goodwill	63,202			63,202
Other assets	13,715			16,249
Total Assets	$	729,387		$	618,970
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	36,233		$	30,069
Accrued liabilities	48,638			48,406
Current portion of long-term notes payable	142			169
Total current liabilities	85,013			78,644
Long-term notes payable	997			1,132
Deferred income tax liability	25,171			28,839
Total liabilities	111,181			108,615
Shareholders’ Equity:
Preferred Stock	—			—
Class A common stock	52			39
Class B common stock	21			32
Additional paid-in capital	314,710			261,849
Retained earnings	393,341			331,568
Accumulated other comprehensive loss	(12		)	—
Class A treasury stock, at cost	(88,580		)	(83,133		)
Deferred stock compensation	(1,326		)	—
Total shareholders’ equity	618,206			510,355
Total Liabilities and Shareholders’ Equity	$	729,387		$	618,970

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MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Income

 (In thousands, except per share data)

	Thirteen Weeks Ended							Fiscal Year Ended
	August 28, 2004			August 30, 2003				August 28, 2004		August 30, 2003
Net sales	$	246,687		$	208,767			$	955,282	$		844,663
Cost of goods sold	135,737			115,410				524,913		464,965
Gross profit	110,950			93,357				430,369		379,698
Operating expenses	75,022			71,754				299,661		296,760
Income from operations	35,928			21,603				130,708		82,938
Other Income:
Interest income, net	535			614				1,979		1,387
Other income, net	35			(26			)	354		88
Total other income	570			588				2,333		1,475
Income before provision for income taxes	36,498			22,191				133,041		84,413
Provision for income taxes	14,234			8,500				51,886		32,321
Net income	$	22,264		$	13,691			$	81,155	$		52,092
Per Share Information:
Net income per common share:
Basic	$	.33		$	0.21			$	1.21	$	0.78
Diluted	$		.32	$		0.20		$	1.17	$	0.77
Weighted average shares used in computing net income per common share
Basic	67,816			66,451				67,056		66,537
Diluted	70,176			68,310				69,548		67,912

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MSC INDUSTRIAL DIRECT CO., INC.

Consolidated Statements of Cash Flows

 (In thousands)

	For The Fiscal Years Ended
	August 28, 2004				August 30, 2003
Cash Flows from Operating Activities:
Net income	$		81,155		$		52,092
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization expense	12,315				15,360
Loss on disposal of property, plant and equipment					49
Amortization of deferred stock compensation	151				—
Provision for doubtful accounts	1,761				1,579
Deferred income taxes	(2,617			)	6,798
Stock option income tax benefit	15,368				3,101
Amortization of bond premium	248				—
Changes in operating assets and liabilities:
Accounts receivable	(22,240			)	(855				)
Inventories	(23,825			)	3,961
Prepaid expenses and other current assets	(4,329			)	(5,349				)
Other assets	2,534				(116				)
Accounts payable and accrued liabilities	6,396				7,056
Total adjustments	(14,238			)	31,584
Net cash provided by operating activities	66,917				83,676
Cash Flows from Investing Activities:
Proceeds from sales of investments in available-for-sale securities	56,070				—
Purchases of investments in available-for-sale securities	(200,127			)	—
Purchases of property, plant and equipment	(8,664			)	(9,623				)
Net cash used in investing activities	(152,721			)	(9,623				)
Cash Flows from Financing Activities:
Purchases of treasury stock	(6,754			)	(22,598				)
Payment of cash dividend	(19,480			)	(3,315				)
Proceeds from sale of Class A common stock in connection with associate stock purchase plan	1,405				1,211
Proceeds from exercise of Class A common stock options	36,018				5,185
Repayments of notes payable	(162			)	(220				)
Net cash provided by (used in) financing activities	11,027				(19,737				)
Net (decrease) increase in cash and cash equivalents	(74,777			)	54,316
Cash and cash equivalents – beginning of period	114,294				59,978
Cash and cash equivalents – end of period	$	39,517			$			114,294
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	42,184			$	22,516

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