10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)
x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended November 28, 2009

OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For Transition Period from  to 

Commission File No.: 1-14130

 

MSC INDUSTRIAL DIRECT CO., INC.

(Exact Name of Registrant as Specified in Its Charter)

New York	11-3289165
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

75 Maxess Road, Melville, New York	11747
(Address of Principal Executive Offices)	(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 o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a “smaller reporting company.” See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large Accelerated Filer x	Accelerated Filer o	Non-Accelerated Filer o (Do not check if a smaller reporting company)	Smaller Reporting Company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of January 5, 2010, 44,821,256 shares of Class A common stock and 18,325,474 shares of Class B common stock of the registrant were outstanding.

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q (the “Report”) contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Discussions containing such forward-looking statements may be found in Items 2 and 3 of Part I of this Report, as well as within this Report generally. The words “believes,” “anticipates,” “thinks,” “expects,” “estimates,” “plans,” “intends,” and similar expressions are intended to identify forward-looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward-looking statements. We undertake no obligation to publicly disclose any revisions to these forward-looking statements to reflect events or circumstances occurring subsequent to filing this Report with the Securities and Exchange Commission (the “SEC”). These forward-looking statements are subject to risks and uncertainties, including, without limitation, those discussed in this section and Items 2 and 3 of Part I, as well as in Part II, Item 1A, “Risk Factors” of this Report, and in Part I, Item 1A, “Risk Factors” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended August 29, 2009. In addition, new risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, future results may differ materially from historical results or from those discussed or implied by these forward-looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward-looking statements. These risks and uncertainties include, but are not limited to:

• current economic, political, and social conditions;

• general economic conditions in the markets in which the Company operates;

• changing customer and product mixes;

• competition;

• industry consolidation;

• volatility in commodity and energy prices;

• the outcome of potential government or regulatory proceedings or future litigation;

• credit risk of our customers;

• risk of cancellation or rescheduling of orders;

• work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers or shipping ports;

• financial restrictions on outstanding borrowings;

• dependence on our information systems;

• retention of key personnel; and

• changing market conditions.

MSC INDUSTRIAL DIRECT CO., INC.

INDEX

	Page
PART I. FINANCIAL INFORMATION		1
Item 1. Condensed Consolidated Financial Statements (Unaudited)		1
Condensed Consolidated Balance Sheets as of November 28, 2009 and August 29, 2009		1
Condensed Consolidated Statements of Income for the Thirteen Weeks Ended November 28, 2009 and November 29, 2008		2
Condensed Consolidated Statement of Shareholders’ Equity for the Thirteen Weeks Ended November 28, 2009		3
Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended November 28, 2009 and November 29, 2008		4
Notes to Condensed Consolidated Financial Statements		5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12
Item 3. Quantitative and Qualitative Disclosures About Market Risk		18
Item 4. Controls and Procedures		18
PART II. OTHER INFORMATION		19
Item 1. Legal Proceedings		19
Item 1A. Risk Factors		19
Item 6. Exhibits		20
SIGNATURES		21

i

PART I. FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

MSC INDUSTRIAL DIRECT CO., INC.
  
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Thousands, Except per Share Data)

	November 28, 2009			August 29, 2009
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	250,620		$	225,572
Accounts receivable, net of allowance for doubtful accounts of $5,710 and $5,863, respectively		177,812			165,368
Inventories		243,283			246,649
Prepaid expenses and other current assets		14,700			17,169
Deferred income taxes		26,917			27,956
Total current assets		713,332			682,714
Property, plant and equipment, net		132,328			131,885
Goodwill		271,765			271,765
Identifiable intangibles, net		54,009			55,766
Other assets		12,638			15,417
Total assets	$	1,184,072		$	1,157,547
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Revolving credit notes	$	95,000		$	95,000
Current maturities of long-term notes payable		66,793			59,105
Accounts payable		58,432			55,345
Accrued liabilities		49,505			46,388
Total current liabilities		269,730			255,838
Long-term notes payable		18,822			39,365
Deferred income taxes and tax uncertainties		58,022			56,808
Total liabilities		346,574			352,011
Commitments and Contingencies
Shareholders’ Equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized; none issued and outstanding		—			—
Class A common stock (one vote per share); $0.001 par value; 100,000,000 shares authorized; 47,452,699 and 46,868,631 shares issued, and 44,824,912 and 44,247,972 shares outstanding, respectively		47			47
Class B common stock (ten votes per share); $0.001 par value; 50,000,000 shares authorized; 18,325,474 and 18,389,874 shares issued and outstanding, respectively		18			18
Additional paid-in capital		349,630			336,092
Retained earnings		596,146			577,321
Accumulated other comprehensive loss		(2,025	)		(2,068	)
Class A treasury stock, at cost, 2,627,787 and 2,620,659 shares, respectively		(106,318	)		(105,874	)
Total shareholders’ equity		837,498			805,536
Total liabilities and shareholders’ equity	$	1,184,072		$	1,157,547

 
 
See accompanying notes to condensed consolidated financial statements.

1

MSC INDUSTRIAL DIRECT CO., INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except per Share Data)
(Unaudited)

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008
Net sales	$	384,817		$	433,022
Cost of goods sold		209,118			228,948
Gross profit		175,699			204,074
Operating expenses		124,677			129,646
Income from operations		51,022			74,428
Other (Expense) Income:
Interest expense		(387	)		(1,894	)
Interest income		60			312
Other (expense) income, net		(17	)		5
Total other expense		(344	)		(1,577	)
Income before provision for income taxes		50,678			72,851
Provision for income taxes		19,258			27,756
Net income	$	31,420		$	45,095
Per Share Information:
Net income per common share:
Basic	$	0.50		$	0.73
Diluted	$	0.50		$	0.72
Weighted average shares used in computing net income per common share:
Basic		62,206			61,613
Diluted		62,727			62,298
Cash dividend declared per common share	$	0.20		$	0.20

 
 
See accompanying notes to condensed consolidated financial statements.

2

MSC INDUSTRIAL DIRECT CO., INC.
  
CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ EQUITY
Thirteen Weeks Ended November 28, 2009
(In Thousands)
(Unaudited)

	Class A Common Stock				Class B Common Stock					Additional Paid-In Capital		Retained Earnings			Accumulated Other Comprehensive Loss			Class A Treasury Stock						Total
	Shares		Amount		Shares			Amount										Shares			Amount at Cost
Balance at August 29, 2009		46,869	$	47		18,390		$	18	$	336,092	$	577,321		$	(2,068	)		2,621		$	(105,874	)	$	805,536
Exchange of Class B common stock for Class A common stock		65		—		(65	)		—		—		—			—			—			—			—
Exercise of common stock options, including income tax benefits of $2,937		349		—		—			—		10,428		—			—			—			—			10,428
Common stock issued under associate stock purchase plan		—		—		—			—		12		—			—			(16	)		620			632
Grant of restricted common stock, net of cancellations		170		—		—			—		—		—			—			—			—			—
Stock-based compensation		—		—		—			—		3,098		—			—			—			—			3,098
Purchase of treasury stock		—		—		—			—		—		—			—			23			(1,064	)		(1,064	)
Cash dividends paid on Class A common stock		—		—		—			—		—		(8,917	)		—			—			—			(8,917	)
Cash dividends paid on Class B common stock		—		—		—			—		—		(3,678	)		—			—			—			(3,678	)
Cumulative translation adjustment		—		—		—			—		—		—			43			—			—			43
Net income		—		—		—			—		—		31,420			—			—			—			31,420
Comprehensive income																									31,463
Balance at November 28, 2009		47,453	$	47		18,325		$	18	$	349,630	$	596,146		$	(2,025	)		2,628		$	(106,318	)	$	837,498

 
 
See accompanying notes to condensed consolidated financial statements.

3

MSC INDUSTRIAL DIRECT CO., INC.
  
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008
Cash Flows from Operating Activities:
Net income	$	31,420		$	45,095
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,577			6,691
Stock-based compensation		3,098			2,746
Provision for doubtful accounts		799			1,446
Deferred income taxes and tax uncertainties		2,253			1,034
Excess tax benefits from stock-based compensation		(1,749	)		(210	)
Changes in operating assets and liabilities:
Accounts receivable		(13,220	)		12,085
Inventories		3,393			(5,553	)
Prepaid expenses and other current assets		2,471			2,842
Other assets		2,656			2,634
Accounts payable and accrued liabilities		9,129			3,555
Total adjustments		15,407			27,270
Net cash provided by operating activities		46,827			72,365
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment		(5,135	)		(6,798	)
Proceeds from sale of property, plant and equipment		—			448
Net cash used in investing activities		(5,135	)		(6,350	)
Cash Flows from Financing Activities:
Purchases of treasury stock		(1,064	)		(80	)
Payment of cash dividends		(12,595	)		(12,448	)
Excess tax benefits from stock-based compensation		1,749			210
Proceeds from sale of Class A common stock in connection with associate stock purchase plan		632			628
Proceeds from exercise of Class A common stock options		7,491			573
Net borrowings under revolving loans from credit facility		—			4,000
Repayments of notes payable under the credit facility and other notes		(12,855	)		(10,292	)
Net cash used in financing activities		(16,642	)		(17,409	)
Effect of foreign exchange rate changes on cash and cash equivalents		(2	)		(190	)
Net increase in cash and cash equivalents		25,048			48,416
Cash and cash equivalents – beginning of period		225,572			42,843
Cash and cash equivalents – end of period	$	250,620		$	91,259
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	3,153		$	3,140
Cash paid for interest	$	344		$	1,870

 
 
See accompanying notes to condensed consolidated financial statements.

4

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 1. Basis of Presentation

The accompanying condensed consolidated financial statements include MSC Industrial Direct Co., Inc. (“MSC”) and all of its subsidiaries (hereinafter referred to collectively as the “Company”). All intercompany balances and transactions have been eliminated in consolidation.

The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation (consisting of normal recurring adjustments) have been included. Operating results for the first thirteen weeks of fiscal 2010 are not necessarily indicative of the results that may be expected for the fiscal year ending August 28, 2010. For further information, refer to the financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended August 29, 2009.

The Company’s fiscal year ends on a Saturday close to August 31 of each year.

Note 2. Net Income per Share

In June 2008, the Financial Accounting Standards Board (“FASB”) issued amendments to Accounting Standards Codification^TM (“ASC”) Topic 260, “Earnings Per Share” (“ASC 260”), which require that non-vested share-based compensation awards that contain non-forfeitable rights to dividends or dividend equivalents (whether paid or unpaid) be considered participating securities and be included in the two-class method of computing earnings per share. Upon adoption, a company is required to retrospectively adjust its net income per share data presentation to conform with the provisions of the guidance. The authoritative guidance is effective for fiscal years beginning after December 15, 2008.

On August 30, 2009, the Company adopted the new authoritative guidance of ASC 260. The Company’s non-vested share-based compensation awards contain nonforfeitable rights to dividends and meet the criteria of a participating security as defined by ASC 260. Under the two-class method, net income per share is computed by dividing net income allocated to common stockholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common stock shares and participating securities based on their respective weighted average shares outstanding for the period. Prior period net income per share data presented has been adjusted retrospectively. The adoption of the new guidance did not have a material impact on the Company’s net income per share calculations.

5

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 2. Net Income per Share  – (continued)

The following table sets forth the computation of basic and diluted net income per common share under the two-class method (in thousands of dollars, except for per share amounts):

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008
Net income as reported	$	31,420		$	45,095
Less: Distributed net income available to participating securities		(98	)		(85	)
Less: Undistributed net income available to participating securities		(185	)		(271	)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	31,137		$	44,739
Add: Undistributed net income allocated to participating securities		185			271
Less: Undistributed net income reallocated to participating securities		(184	)		(268	)
Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	31,138		$	44,742
Denominator:
Weighted average shares outstanding for basic net income per share		62,206			61,613
Effect of dilutive securities		521			685
Weighted average shares outstanding for diluted net income per share		62,727			62,298
Net income per share Two-class method:
Basic	$	0.50		$	0.73
Diluted	$	0.50		$	0.72

Antidilutive stock options (452 and 895 shares at November 28, 2009 and November 29, 2008, respectively) were not included in the computation of diluted earnings per share.

6

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 3. Associate Benefit Plans

Stock-Based Compensation

The Company accounts for all share-based payments in accordance with ASC Topic 718, “Compensation — Stock Compensation” (“ASC 718”). The stock-based compensation expense related to the stock option plans and the Associate Stock Purchase Plan included in operating expenses was $1,489 and $1,558 for the thirteen week periods ended November 28, 2009 and November 29, 2008, respectively. Tax benefits related to these expenses for the thirteen week periods ended November 28, 2009 and November 29, 2008 were $545 and $530, respectively.

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following assumptions:

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008
Expected life (in years)		4.8			4.8
Risk-free interest rate		2.18	%		2.72	%
Expected volatility		35.2	%		30.3	%
Expected dividend yield		1.70	%		1.40	%

A summary of the activity of the Company’s stock option plans for the thirteen weeks ended November 28, 2009 is as follows:

	Options			Weighted- Average Exercise Price per Share		Weighted- Average Remaining Contractual Term (In Years)		Aggregate Intrinsic Value
Outstanding on August 29, 2009		2,759		$	33.65
Granted		515			44.17
Exercised		(350	)		21.43
Canceled		(1	)		14.71
Outstanding on November 28, 2009		2,923		$	36.97		4.46	$	27,907
Exercisable on November 28, 2009		1,691		$	32.66		3.39	$	23,369

The weighted-average grant-date fair values for the thirteen week periods ended November 28, 2009 and November 29, 2008 were $12.49 and $10.05, respectively. The total intrinsic value of options exercised during the thirteen week periods ended November 28, 2009 and November 29, 2008 were $8,643 and $665, respectively. The unrecognized share-based compensation cost related to stock option expense at November 28, 2009 was $13,271 and will be recognized over a weighted average period of 2.93 years.

7

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 3. Associate Benefit Plans  – (continued)

A summary of the activity of the non-vested share-based compensation awards granted under the Company’s 1995 Restricted Stock Plan and 2005 Omnibus Equity Plan (the “Plans”) for the thirteen weeks ended November 28, 2009 is as follows:

	Shares			Weighted Average Grant Date Fair Value
Non-vested at August 29, 2009		558		$	41.47
Granted		175			44.17
Vested		(64	)		42.57
Forfeited/Canceled		(5	)		42.11
Non-vested at November 28, 2009		664		$	42.07

Stock-based compensation expense recognized for the non-vested share-based compensation awards was $1,609 and $1,188 for the thirteen week periods ended November 28, 2009 and November 29, 2008, respectively. The unrecognized compensation cost related to these non-vested share-based compensation awards granted under the Plans at November 28, 2009 was $17,556 and will be recognized over a weighted-average period of 3.65 years.

Note 4. Comprehensive Income

The Company complies with the provisions of ASC Topic 220, “Comprehensive Income” (“ASC 220”) which establishes standards for the reporting of comprehensive income and its components. The components of comprehensive income, net of tax are as follows:

	Thirteen Weeks Ended
	November 28, 2009		November 29, 2008
Net income as reported	$	31,420	$	45,095
Cumulative foreign currency translation adjustment		43		(2,134	)
Comprehensive income	$	31,463	$	42,961

Note 5. Fair Value

Effective August 31, 2008, the Company adopted ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) as it relates to financial assets and liabilities and any other assets and liabilities that are recognized or disclosed at fair value on a recurring basis. On August 30, 2009, the Company adopted the remaining provisions of ASC 820 for all non-financial assets and liabilities measured on a non-recurring basis. ASC 820 establishes a common definition for fair value to be applied to U.S. Generally Accepted Accounting Principles (“GAAP”) guidance requiring the use of fair value, establishes a framework for measuring fair value, and expands the disclosure about such fair value measurements. ASC 820 establishes a three level fair value hierarchy that requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 — Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 — Include other inputs that are directly or indirectly observable in the marketplace.

Level 3 — Unobservable inputs which are supported by little or no market activity.

8

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 5. Fair Value  – (continued)

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

As of November 28, 2009, the Company measured cash equivalents consisting of money market funds at fair value on a recurring basis for which market prices are readily available (Level 1) and that invest primarily in United States government and government agency securities and municipal bond securities, which aggregated $231,747.

On August 30, 2009, the Company adopted the provisions of the fair value measurement accounting and disclosure guidance related to non-financial assets and liabilities recognized or disclosed at fair value on a nonrecurring basis. During the thirteen weeks ended November 28, 2009, the Company had no significant measurements of non-financial assets or liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Note 6. Notes Payable

The Company has an unsecured credit facility that consists of a revolving credit line commitment and term loan facility (the “Credit Facility”) which expires on June 8, 2011. The Company’s revolving credit line commitment is $150,000, of which $95,000 was outstanding at November 28, 2009 and August 29, 2009. The interest rate payable for borrowings under the revolving loans is currently 40 basis points over LIBOR rates. The weighted average borrowing rates in effect for the revolving loans at November 28, 2009 and August 29, 2009 were 0.68% and 0.69%, respectively. The Company is also charged a fee of 10 basis points on the borrowed and unborrowed balances of the revolving loans. The loans under the revolving credit line are due on June 8, 2011.

At November 28, 2009 and August 29, 2009, the Company had term loan borrowings outstanding under its term loan facility of $85,312 and $98,125, respectively. At November 28, 2009, principal payments consist of quarterly installments of approximately $12,813 in each of the following two quarters commencing in December 2009, $20,500 in each of the following two quarters commencing in June 2010, and a final payment of approximately $18,686 due in December 2010. Optional prepayments may be made at any time, or from time to time, in whole or part, without premium or penalty. The interest rate payable for borrowings under the term loan facility is currently 50 basis points over LIBOR rates. The borrowing rates in effect for the term loan borrowings at November 28, 2009 and August 29, 2009 were 0.74% and 0.79%, respectively.

Under the terms of the Credit Facility, the Company is subject to various operating and financial covenants, including a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. At November 28, 2009, the Company is in compliance with the operating and financial covenants of the Credit Facility.

The Company also has a long-term note payable in the amount of $303 to the Pennsylvania Industrial Development Authority, which is secured by the land on which the Harrisburg, Pennsylvania customer fulfillment center is located, which bears interest at 3% per annum and is payable in monthly installments of $15 (includes principal and interest) through September 2011.

Note 7. Dividend

The Company paid dividends of $12,595 for the thirteen weeks ended November 28, 2009. On December 22, 2009, the Board of Directors declared a dividend of $0.20 per share payable on February 2, 2010 to shareholders of record at the close of business on January 19, 2010. The dividend will result in a payout of approximately $12,629, based on the number of shares outstanding at January 5, 2010.

9

MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 8. Product Warranties

The Company generally offers a maximum one-year warranty, including parts and labor, for some of its machinery products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company may be able to recoup some of these costs through product warranties it holds with its original equipment manufacturers, which typically range from thirty to ninety days. In general, many of the Company’s general merchandise products are covered by third party original equipment manufacturers’ warranties. The Company’s warranty expense for the thirteen week periods ended November 28, 2009 and November 29, 2008 was minimal.

Note 9. Income Taxes

During the thirteen week period ended November 28, 2009, there were no material changes in unrecognized tax benefits.

With limited exceptions, the Company is no longer subject to Federal income tax examinations and State jurisdictions through fiscal 2005. Currently, the Company is under Federal examination for fiscal 2006.

Note 10. Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

As a government contractor, from time to time the Company is subject to governmental or regulatory inquiries or audits. There is an audit currently pending by the General Services Administration (“GSA”) Office of Inspector General (“OIG”) relating to government sales under the Company’s Multiple Award Schedule Contract with the GSA and compliance with the Trade Agreements Act of 1979. By letters dated December 17, 2008 and April 22, 2009, the U.S. Department of Justice has advised the Company that GSA OIG’s audit identified non-compliant sales and a potential liability arising therefrom. The amount of potential liability, if any, is not estimable at this time. However, management does not expect the ultimate resolution of this matter to have any material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

On November 15, 2007, a purported shareholder derivative action captioned Plymouth County Retirement Association v. Schroeder et al. (the “Litigation”), was filed in the United States District Court for the Eastern District of New York (the “Court”), on the Company’s behalf, against the Company as nominal defendant, and certain of the Company’s current and former directors and officers. The plaintiff derivatively claimed violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as breach of fiduciary duties, waste of corporate assets and unjust enrichment in connection with certain stock options granted from 1997 to 2001. The plaintiff sought unspecified damages, disgorgement of stock options and any proceeds received from the exercise of misdated stock options, an accounting of stock option grants and costs, including attorneys’ fees and expenses. On February 1, 2008, the Company and the individually named defendants filed motions to dismiss the Litigation. By memorandum and order dated September 5, 2008, the Court granted in part and denied in part those motions. On December 22, 2008, the plaintiff filed an amended complaint, which allegations were substantially similar as to those contained in the initial complaint. On or about January 26, 2009, the Company and the individually named defendants filed an answer to the amended complaint. On July 7, 2009, the Company entered into a Stipulation of Settlement (the “Stipulation”) setting forth the terms and conditions of a proposed settlement between the parties in the Litigation (the “Settlement”). On November 2, 2009, the Court entered a final order approving the Settlement on the terms agreed to in the Stipulation, and dismissing the Litigation with prejudice against all Defendants. The Settlement provided for the payment of $800 to plaintiff’s counsel for their attorney’s fees and the reimbursement of their expenses, which amount was paid by the Company’s insurer.

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MSC INDUSTRIAL DIRECT CO., INC.
  
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Dollar Amounts and Shares in Thousands, Except per Share Data)
(Unaudited)

Note 11. New Accounting Pronouncements

In June 2009, the FASB issued ASC Topic 105, “Generally Accepted Accounting Principles” (“ASC 105”). Upon adoption, the FASB ASC becomes the source of authoritative generally accepted accounting principles in the United States, and supersedes all then-existing non-SEC accounting and reporting standards. All other non-grandfathered, non-SEC accounting literature not included in the ASC becomes non-authoritative. ASC 105 is effective for interim and annual financial periods ending after September 15, 2009. The adoption of ASC 105 eliminated all references to pre-Codification standards in our notes to the consolidated financial statements and did not have a material impact on our consolidated financial statements.

In November 2008, the SEC issued for comment a proposed roadmap outlining several milestones that, if achieved, could lead to mandatory adoption of International Financial Reporting Standards (“IFRS”), which is a comprehensive series of accounting standards published by the International Accounting Standards Board (the “IASB”), by U.S. issuers in 2014. The roadmap also contained proposed rule changes that would permit early adoption by a limited number of eligible U.S. issuers beginning with filings in 2010. According to the roadmap, the SEC would make a determination in 2011 regarding the mandatory adoption of IFRS. The Company is currently assessing the impact that this potential change would have on its consolidated financial statements, and the Company will continue to monitor the development of the potential implementation of IFRS as well as the ongoing convergence efforts of the FASB and the IASB.

Note 12. Subsequent Events

The Company has evaluated subsequent events and transactions for potential recognition and disclosure in the financial statements through January 7, 2010, the day the financial statements were issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is intended to update the information contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 29, 2009 and presumes that readers have access to, and will have read, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in such Annual Report on Form 10-K.

Overview

MSC Industrial Direct Co., Inc. (together with its subsidiaries, “MSC,” the “Company,” “we,” “our,” or “us”) is one of the largest direct marketers and distributors of a broad range of metalworking and maintenance, repair, and operations (“MRO”) products to customers throughout the United States.

We offer approximately 600,000 stock-keeping units (“SKUs”) through our master catalogs; weekly, monthly and quarterly specialty and promotional catalogs; newspapers; brochures; and the Internet, including our websites, MSCDirect.com, MSCMetalworking.com and Use-Enco.com (the “MSC Websites”). We service our customers from five customer fulfillment centers and 99 branch offices. Most of our products are carried in stock, and orders for these in-stock products are typically fulfilled the day on which the order is received. We also offer a nationwide cutoff time of 8:00 PM Eastern time on qualifying orders for customers in the contiguous United States, which will be delivered to the customer the next day at no additional cost.

Net sales decreased by 11.1% for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009, as our business was impacted by the global economic recession. Severe disruptions in the financial markets, together with continued tightening in the credit markets impacted, and are expected to continue to have an impact on our sales as this affects our customers’ profitability levels and ability to raise debt or equity capital. This reduces the amount of liquidity available to our customers which, in turn, limits their ability to make purchases. We expect this trend to continue, but to a lesser extent. This global economic recession has impacted both our core manufacturing customers and our national account and government program (the “Large Account Customer”). There is also uncertainty over the direction of the U.S. and global economies as a result of slower growth rates, higher unemployment and weak housing markets. We are continuing to monitor the economic conditions for their impact on our customers and markets and assessing both risks and opportunities that may affect our business. See the discussion below describing recent fluctuations in economic indicators and the possible impact on our future sales and margins.

Our gross profit margin was 45.7% for the thirteen week period ended November 28, 2009, as compared to 47.1% for the same period in fiscal 2009. The decrease in gross margin was primarily driven by the change in customer and product mix as our Large Account Customers, which typically generate lower margins and also purchase more of our lower margin products, constitute a larger portion of our total sales.

Operating expenses decreased for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009, as a result of decreased freight expenses, reduced workforce hours in the customer fulfillment centers, call-centers, and branches, and a decrease in sales associate commissions, all resulting from the aforementioned decrease in sales. As a result of the decrease in sales and gross margin, our operating margins decreased for the thirteen week period ended November 28, 2009 to 13.3%, as compared to 17.2% for the same period in fiscal 2009.

We continue to work proactively to manage and control discretionary spending as we closely monitor economic conditions. In an effort to reduce operating expenses, the Company has implemented several cost containment measures. In general, except for certain strategic hiring opportunities, the Company continues to place restrictions on all hiring. In addition, effective January 1, 2009, the Company implemented a temporary salary freeze for all associates, and effective in March 2009, the Company reduced its workforce hours in the customer fulfillment centers, call-centers, and branches, and temporarily suspended its matching contribution under its 401(k) savings plan for all associates. Effective January 1, 2010, the Company will partially reinstate merit increases to all eligible associates. We will also continue to opportunistically seek growth investments that will help position us for future expansion. We anticipate cash flows from operations, available cash and funds available under the revolving credit facility will be adequate to support our operations for the next twelve months.

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The Institute for Supply Management (“ISM”) index, which measures the economic activity of the U.S. manufacturing sector, is important to our planning because it historically has been an indicator of our manufacturing customers’ activity. A substantial portion of our revenues came from sales in the manufacturing sector during the thirteen week period ended November 28, 2009, including some national account customers. An ISM reading below 50.0% generally indicates that the manufacturing sector is contracting. Conversely, an ISM reading above 50.0% generally indicates that the manufacturing sector is expanding. The ISM was 55.9% for the month of December 2009. Although the index is above 50%, there still remains uncertainty relating to the current economic environment. We believe that the impact of volatile energy prices and raw material costs, the credit crisis, along with the general condition of the United States and global economy, will continue to have an adverse effect on our sales growth and margins. We are uncertain as to the long term impact of this economic cycle, but we will continue to look for opportunities to increase market share and deliver value added services to our customers. We believe that our strong balance sheet will enable us to extend credit to our credit worthy customers during this credit crisis, while many of our smaller competitors in our fragmented industry may struggle to meet their cash needs. We also believe that companies will be seeking cost reductions and shorter cycle times from their suppliers. Our business model focuses on providing overall procurement cost reduction and just-in-time delivery to meet our customers’ needs. We will seek to continue to drive cost reduction throughout our business through cost saving strategies and increased leverage from our existing infrastructure, and continue to provide additional procurement cost savings solutions to our customers through technology such as our Customer Managed Inventory and Vendor Managed Inventory programs.

Results of Operations

Net Sales

	Thirteen Weeks Ended
	November 28, 2009		November 29, 2008		Percentage Change
	(Dollars in Thousands)
Net Sales	$	384,817	$	433,022		(11.1%)

Net sales decreased 11.1%, or approximately $48 million, for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009. We estimate that this decrease is comprised of a core business decline of approximately $61 million, partially offset by an increase in our Large Account Customer programs of approximately $13 million. The effect of price increases was offset by increased discounting.

The global economic recession has negatively impacted our net sales, as mentioned above, and also has resulted in a decrease in average order size to approximately $315 for the first quarter of fiscal 2010 from $323 in the first quarter of fiscal 2009. We believe that our ability to transact with our customers through various portals and directly through the MSC Websites, gives us a competitive advantage over smaller suppliers. Sales through the MSC Websites were $114.8 million for the first quarter of fiscal 2010, representing 29.8% of consolidated net sales, compared to sales of $120.8 million for the first quarter of fiscal 2009, representing 27.9% of consolidated net sales. We grew our field sales associate headcount to 947 at November 28, 2009, an increase of approximately 3.8%, from field sales associates of 912 at November 29, 2008, in order to support our strategy to acquire new accounts and expand existing accounts across all customer types. We will continue to manage the timing of field sales associate increases and branch openings based on economic conditions.

In the fiscal 2010 MSC catalog, distributed in September 2009, we added approximately 21,000 new stock keeping units (“SKUs”) and removed approximately 22,000 SKUs. We believe that the new SKUs improve the overall quality of our offering.

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Gross Profit

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008			Percentage Change
	(Dollars in Thousands)
Gross Profit	$	175,699		$	204,074			(13.9%)
Gross Profit Margin		45.7	%		47.1	%

Gross profit margin for the thirteen week period ended November 28, 2009 declined from the comparable period in fiscal 2009. This is primarily a result of the change in customer and product mix as our Large Account Customers, which typically generate lower margins and also purchase more of our lower margin products, constitute a larger portion of our total sales. The effect of price increases on gross profit margin was offset by discounting.

Operating Expenses

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008			Percentage Change
	(Dollars in Thousands)
Operating Expenses	$	124,677		$	129,646			(3.8%)
Percentage of Net Sales		32.4	%		29.9	%

The decrease in operating expenses in dollars for the thirteen week period ended November 28, 2009 as compared to the same period in fiscal 2009, was a result of decreased freight expenses, reduced workforce hours in the customer fulfillment centers, call-centers, and branches, and a decrease in sales associate commissions, all resulting from the aforementioned decrease in sales.

Payroll and payroll related costs continue to make up a significant portion of our operating expenses. These costs, excluding sales commissions, increased for the thirteen week period ended November 28, 2009, as compared to the same period in the prior fiscal year, primarily as a result of increased medical costs and an increase in staffing levels to support investment initiatives, partially offset by the reduction in associate hours in volume sensitive areas, such as fulfillment and call centers.

We have experienced an increase in medical costs of our self-insured group health plan for the thirteen weeks ended November 28, 2009, as compared to the same period in fiscal 2009. This is a result of an increase in both the number of medical claims filed by participants of our self-insured group health plan and the cost per claim. It is uncertain as to whether the medical costs will continue to increase through the remainder of fiscal 2010.

The increases in the operating expenses as a percentage of net sales for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009, was primarily due to various fixed costs distributed over a smaller revenue base.

Income from Operations

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008			Percentage Change
	(Dollars in Thousands)
Income from Operations	$	51,022		$	74,428			(31.4%)
Percentage of Net Sales		13.3	%		17.2	%

The decrease in income from operations for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009, was primarily attributable to the decrease in net sales, offset in part by the decrease in operating expenses as described above. As a percentage of net sales, the decrease is primarily the result of the distribution of expenses over a smaller revenue base.

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Interest Expense

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008			Percentage Change
	(Dollars in Thousands)
Interest Expense	$	(387	)	$	(1,894	)		(79.6%)

The decrease in interest expense for the thirteen week period ended November 28, 2009, as compared to the same period in fiscal 2009, was due to a combination of lower weighted average interest rates and lower average balances. Average loan balances outstanding for the term loan and revolving loans for the thirteen week period ended November 28, 2009 was approximately $184.7 million as compared to approximately $210.1 million for the same period in fiscal 2009. The decrease in the average loan balances for the thirteen week period is primarily a result of increased scheduled quarterly principal payments made on the Term Loan beginning in the fourth quarter of fiscal 2009.

Provision for Income Taxes

	Thirteen Weeks Ended
	November 28, 2009			November 29, 2008			Percentage Change
	(Dollars in Thousands)
Provision for Income Taxes	$	19,258		$	27,756			(30.6%)
Effective Tax Rate		38.0	%		38.1	%

The effective tax rate for the thirteen week period ended November 28, 2009 was 38.0%, compared to 38.1% for the comparable period in fiscal 2009.

Net Income

	Thirteen Weeks Ended
	November 28, 2009		November 29, 2008		Percentage Change
	(Dollars in Thousands)
Net Income	$	31,420	$	45,095		(30.3%)
Diluted Earnings Per Share	$	0.50	$	0.72		(30.6%)

The factors which affected net income for the week period ended November 28, 2009, as compared to the same period in fiscal 2009, have been discussed above.

Liquidity and Capital Resources

As of November 28, 2009, we held $250.6 million in cash and cash equivalent funds. As of November 28, 2009, cash equivalents consisted of money market funds that invest primarily in U.S. government and government agency securities and municipal bond securities and contain portfolios with average maturities of less than three months. We maintain a substantial portion of our cash and cash equivalents with well-known financial institutions. Historically, our primary capital needs have been to fund our working capital requirements necessitated by our sales growth, the cost of an acquisition, adding new products, and facilities expansions. Our primary sources of capital have been cash generated from operations. Borrowings under our credit facility, together with cash generated from operations, have been used to fund our working capital needs, repurchase shares of our Class A common stock, and pay dividends. At November 28, 2009, total borrowings outstanding were $180.6 million, as compared to $193.5 million at August 29, 2009.

We have an unsecured credit facility that consists of a revolving credit line commitment and term loan facility (the “Credit Facility”). We have a $150.0 million revolving credit line commitment, of which we had $95.0 million outstanding at November 28, 2009 and August 29, 2009. The interest rate payable for borrowings under the revolving credit line commitment is currently 40 basis points over LIBOR rates and the weighted average borrowing rates in effect at November 28, 2009 and August 29, 2009 were 0.68% and 0.69%, respectively. These interest rates will reset in thirty, sixty, ninety, or one hundred eighty day

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increments, at the Company’s discretion. As of November 28, 2009, the interest rates will reset in ninety day increments. We are also charged a fee of 10 basis points on the borrowed and unborrowed balances of the revolving loans. The loans under the revolving credit line commitment are due on June 8, 2011.

At November 28, 2009 and August 29, 2009, under our Credit Facility, we had term loan borrowings outstanding of $85.3 million and $98.1 million, respectively. Remaining payments as of November 28, 2009 consist of quarterly installments of approximately $12.8 million in each of the two quarters commencing in December 2009, $20.5 million in each of the following two quarters commencing in June 2010, and a final payment of approximately $18.7 million due in December 2010. Optional prepayments may be made at any time, or from time to time, in whole or part, without premium or penalty. The interest rate payable for borrowings under the term loan is currently 50 basis points over LIBOR rates. The borrowing rates in effect for the term loan borrowings at November 28, 2009 and August 29, 2009 were 0.74% and 0.79%, respectively. As of November 28, 2009, the current interest rate will reset in thirty day periods.

Under the terms of the Credit Facility, we are subject to various operating and financial covenants, including a maximum consolidated leverage ratio and a minimum consolidated interest coverage ratio. At November 28, 2009, we were in compliance with the operating and financial covenants of the Credit Facility.

Net cash provided by operating activities for the thirteen week periods ended November 28, 2009 and November 29, 2008 was $46.8 million and $72.4 million, respectively. The decrease of approximately $25.6 million in net cash provided from operations resulted primarily from an increase in accounts receivable and a decline in net income, offset by a decline in inventory and an increase in the growth of accounts payable and accrued liabilities.

Net cash used in investing activities for the thirteen week periods ended November 28, 2009 and November 29, 2008 was $5.1 million and $6.4 million, respectively. The decrease of approximately $1.3 million resulted primarily from the decrease in expenditures for property, plant and equipment.

Net cash used in financing activities for the thirteen week periods ended November 28, 2009 and November 29, 2008 was $16.6 million and $17.4 million, respectively. The decrease of approximately $0.8 million in net cash used in financing activities was primarily attributable to an increase in the proceeds from the exercise of Class A common stock options, offset by increased repayments of notes payable under the Credit Facility and other notes and by the decline in net borrowings under the revolving loans from the Credit Facility.

We paid a dividend of $12.6 million on November 13, 2009 to shareholders of record at the close of business on October 30, 2009. On December 22, 2009, the Board of Directors declared a dividend of $0.20 per share payable on February 2, 2010 to shareholders of record at the close of business on January 19, 2010. The dividend will result in a payout of approximately $12.6 million, based on the number of shares outstanding at January 5, 2010.

The continuing economic recessionary conditions could negatively impact our overall business, and as a result, could negatively impact our liquidity. In addition, the recent turmoil in the financial markets could limit our access to additional capital resources, if needed, and could increase associated costs. We believe based on our current business plan that our existing cash, cash equivalents, funds available under the revolving Credit Facility, and cash flow from operations will be sufficient to fund our planned capital expenditures and operating cash requirements for at least the next 12 months.

Related Party Transactions

We are affiliated with two real estate entities (together, the “Affiliates”), which lease property to us. The Affiliates are owned and controlled by our principal shareholders, Mitchell Jacobson, our Chairman, and his sister Marjorie Gershwind, and by their family related trusts. We paid rent under operating leases to the Affiliates for the first thirteen weeks of fiscal 2010 of approximately $0.6 million, in connection with our occupancy of our Atlanta Customer Fulfillment Center and one branch office. In the opinion of our management, based on its market research, the leases with Affiliates are on terms which approximate fair market value.

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Contractual Obligations

Certain of our operations are conducted on leased premises, two of which are leased from Affiliates, as noted above. The leases (most of which require us to provide for the payment of real estate taxes, insurance and other operating costs) are for varying periods, the longest extending to the year 2030, at November 28, 2009. In addition, we are obligated under certain equipment and automobile operating leases, which expire on varying dates through 2013.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.

Critical Accounting Estimates

We make estimates, judgments and assumptions in determining the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The estimates are used to form the basis for making judgments about the carrying values of assets and liabilities and the amount of revenues and expenses reported that are not readily apparent from other sources. Actual results may differ from these estimates. Our significant accounting policies are described in the notes to the consolidated financial statements. The accounting policies described below are impacted by our critical accounting estimates.

Allowance for Doubtful Accounts

We perform periodic credit evaluations of our customers’ financial condition and collateral is generally not required. We evaluate the collectibility of accounts receivable based on numerous factors, including past transaction history with customers and their credit-worthiness. We estimate an allowance for doubtful accounts as a percentage of net sales based on historical bad debt experience and adjust it for changes in the overall aging of accounts receivable, as well as specifically identified customers that are having difficulty meeting their financial obligations (e.g., bankruptcy, etc.). Historically, there has not been significant volatility in our bad debt expense due to strict adherence to our credit policy.

Inventory Valuation Reserve

Inventories consist of merchandise held for resale and are stated at the lower of weighted average cost or market. Management evaluates the need to record adjustments to reduce inventory to net realizable value on a quarterly basis. Each quarter, items to be liquidated are specifically identified and written-down, using historical data and reasonable assumptions, to their estimated market value, if less than their cost. Inherent in the estimates of market value are management’s estimates related to customer demand, technological and/or market obsolescence, possible alternative uses and ultimate realization of excess inventory.

Reserve for Self-Insured Group Health Plan

We have a self-insured group health plan. We are responsible for all covered claims up to a maximum liability of $300,000 per participant during a September 1 plan year. Benefits paid in excess of $300,000 are reimbursed to the plan under our stop loss policy. Due to the time lag between the time claims are incurred and the time claims are paid by us, a reserve for those claims incurred but not reported (“IBNR”) is established. The amount of this reserve is reviewed quarterly and is evaluated based on a historical analysis of claim trends, reporting and processing lag times and medical costs inflation.

New Accounting Pronouncements

See Note 11 to the accompanying financial statements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes to our exposures to market risks since August 29, 2009. Please refer to the 2009 Annual Report on Form 10-K for the fiscal year ended August 29, 2009 for a complete discussion of our exposures to market risks.

Item 4. Controls and Procedures

Our senior management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, as well as other key members of our management, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer as appropriate to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

No change occurred in our internal controls over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act) during the fiscal quarter ended November 28, 2009 that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

As a government contractor, from time to time the Company is subject to governmental or regulatory inquiries or audits. There is an audit currently pending by the General Services Administration (“GSA”) Office of Inspector General (“OIG”) relating to government sales under the Company’s Multiple Award Schedule Contract with the GSA and compliance with the Trade Agreements Act of 1979. By letters dated December 17, 2008 and April 22, 2009, the U.S. Department of Justice has advised the Company that GSA OIG’s audit identified non-compliant sales and a potential liability arising therefrom. The amount of potential liability, if any, is not estimable at this time. However, management does not expect the ultimate resolution of this matter to have any material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

On November 15, 2007, a purported shareholder derivative action captioned Plymouth County Retirement Association v. Schroeder et al. (the “Litigation”), was filed in the United States District Court for the Eastern District of New York (the “Court”), on the Company’s behalf, against the Company as nominal defendant, and certain of the Company’s current and former directors and officers. The plaintiff derivatively claimed violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, as well as breach of fiduciary duties, waste of corporate assets and unjust enrichment in connection with certain stock options granted from 1997 to 2001. The plaintiff sought unspecified damages, disgorgement of stock options and any proceeds received from the exercise of misdated stock options, an accounting of stock option grants and costs, including attorneys’ fees and expenses. On February 1, 2008, the Company and the individually named defendants filed motions to dismiss the Litigation. By memorandum and order dated September 5, 2008, the Court granted in part and denied in part those motions. On December 22, 2008, the plaintiff filed an amended complaint, which allegations were substantially similar as to those contained in the initial complaint. On or about January 26, 2009, the Company and the individually named defendants filed an answer to the amended complaint. On July 7, 2009, the Company entered into a Stipulation of Settlement (the “Stipulation”) setting forth the terms and conditions of a proposed settlement between the parties in the Litigation (the “Settlement”). On November 2, 2009, the Court entered a final order approving the Settlement on the terms agreed to in the Stipulation, and dismissing the Litigation with prejudice against all Defendants. The Settlement provided for the payment of $0.8 million to plaintiff’s counsel for their attorney’s fees and the reimbursement of their expenses, which amount was paid by the Company’s insurer.

Item 1A. Risk Factors

In addition to the other information set forth in this Report, consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended August 29, 2009, which could materially affect our business, financial condition or future results. The risks described in the aforementioned report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially adversely affect our business, financial condition and/or operating results.

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Item 6. Exhibits

Exhibits:

10.1	Summary of Outside Directors’ Compensation*
10.2	Description of Annual Incentive Bonus Plan for fiscal year 2010*
10.3	Executive Incentive Compensation Recoupment Policy*
10.4	Form of Non-Qualified Stock Option Agreement under the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan*
10.5	Form of Restricted Stock Award under the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan*
31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

* Filed herewith.

† Furnished herewith.

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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 7, 2010	By: /s/ David Sandler President and Chief Executive Officer (Principal Executive Officer)
Dated: January 7, 2010	By: /s/ Charles Boehlke Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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EXHIBIT INDEX

Exhibit No.	Exhibit
10.1	Summary of Outside Directors’ Compensation*
10.2	Description of Annual Incentive Bonus Plan for fiscal year 2010*
10.3	Executive Incentive Compensation Recoupment Policy*
10.4	Form of Non-Qualified Stock Option Agreement under the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan*
10.5	Form of Restricted Stock Award under the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan*
31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.†

* Filed herewith.

† Furnished herewith.

EX-10.1

EXHIBIT 10.1

Summary of Outside Directors’ Compensation

Our non-employee directors are entitled to receive the following compensation:

· an annual retainer of $42,000 per director for service on our Board;

· a fee for attendance at Board meetings of $2,000 per meeting;

· a fee for attendance at Board Committee meetings of $1,700 per meeting;

· an annual retainer of $10,000 for the Chairman of the Audit Committee and an annual retainer of $5,000 for the Chairman of each of the Compensation Committee and the  Nominating and Corporate Governance Committee; and

· upon each director's election or re-election to our Board at the annual shareholders meeting, a restricted stock award per director consisting of such number of shares having an aggregate fair market value of $80,000 on the date of grant; 50% of these shares vest on the first anniversary of the date of grant and 50% vest on the second anniversary of the date of grant.

Directors’ cash compensation is paid quarterly in arrears.  The cash compensation of directors who serve less than a full quarter is pro-rated for the number of days actually served.  Directors who are appointed between annual shareholders meetings receive a pro-rated equity award upon appointment to our Board.  In addition, we reimburse our non-employee directors for reasonable out-of-pocket expenses incurred in connection with attending in-person board or committee meetings and for fees incurred in attending continuing education courses for directors that are approved in advance by the company.

The standing committees of the Board of Directors currently are the Audit, Compensation, and Nominating and Corporate Governance Committees.

EX-10.2

EXHIBIT 10.2

Description of Annual Incentive Bonus Plan for Fiscal Year 2010

On December 22, 2009, the Compensation Committee approved the Company's annual incentive bonus plan for fiscal year 2010.  The plan provides executive officers with the opportunity to earn annual cash bonuses with an allocation of 25% of target awards to the Compensation Committee's qualitative evaluation of individual performance and management achievement of strategic business initiatives (the "Discretionary Component"), and 75% of target awards and award levels above target based on achievement of adjusted diluted earnings per share for fiscal 2010 (the "Performance Component").

Under the annual incentive bonus plan, target bonus awards are set at various levels determined by the Compensation Committee for each executive, which will be: $665,000 for Mr. David Sandler, the Company's President and Chief Executive Officer; $230,000 for Mr. Charles Boehlke, the Company's Chief Financial Officer; and $155,000 for each of Mr. Thomas Cox and Mr. Douglas Jones, who are named executive officers.  Actual payout amounts will be based on achievement of the Discretionary Component and the Performance Component, with a maximum payout of 150% of target.  Under the plan, the Compensation Committee exercises discretion to adjust GAAP earnings per share to account for non-recurring and other similar items.  In addition, under the plan, the Compensation Committee retains discretion to adjust bonus payouts below the payout levels correlating to performance where it determines that circumstances exist that had a negative effect on the Company but were not reflected in earnings per share performance.

EX-10.3

EXHIBIT 10.3

MSC INDUSTRIAL DIRECT CO., INC.

EXECUTIVE INCENTIVE COMPENSATION RECOUPMENT POLICY

(Adopted October 13, 2009)

I.   INTRODUCTION

The Board of Directors of MSC Industrial Direct Co., Inc. (the “Company”) has determined that it is in the best interests of the Company to adopt a policy (the “Policy”) providing for the Company’s recoupment of certain incentive compensation paid to senior executives under certain circumstances.  In cases of a significant financial statement restatement, the Board may determine to recoup incentive compensation which was paid or vested based upon the achievement of certain financial results to the extent that the amount of such compensation would have been lower if the financial results had been properly reported.  In cases of a significant financial restatement where a senior executive’s misconduct has caused or partially caused the restatement, the Board may determine to recoup all such incentive compensation and the benefits and proceeds of all equity-based compensation from such senior executive.  The Board also has determined that it is in the best interests of the Company to provide for the cancellation and/or recoupment of equity awards and/or gains realized from the exercise of stock options where a senior executive violates certain restrictive covenants following the termination of the senior executive's employment.

II.   EFFECTIVE DATE

This Policy shall apply to all Incentive Compensation paid or awarded on or after the adoption of this Policy.

III.   DEFINITIONS

For purposes of this Policy, the following terms shall have the meanings set forth below:

“Senior Executives” shall mean executive officers designated by the Board as officers for purposes of Section 16 (“Section 16 Officers”) of the Securities Exchange Act of 1934, as amended, as well as the Company’s corporate controller.

“Incentive Compensation” shall mean bonuses or awards under the Company’s Annual Incentive Compensation Plan for Executives or grants and awards under the Company’s 2005 Omnibus Equity Plan, as well as under any successor plans.

“Misconduct” shall mean a knowing violation of SEC rules and regulations or Company policy.  Determinations of Misconduct for purposes of this Policy shall be made by the Board in its sole and absolute discretion (or, if the Board has delegated such authority to the Compensation Committee, by the Compensation Committee in its sole and absolute discretion) independently of, and the Board (or the Compensation Committee) shall not be bound by determinations by management that a Senior Executive has or has not met any particular standard of conduct under law or Company policy.

IV.   RECOUPMENT OF INCENTIVE COMPENSATION

In the event of a significant restatement of financial results, other than as a result of a change in accounting principles (a “Restatement”), the Board will review all Incentive Compensation paid (or, in the case of equity-based compensation, which vested) to Senior Executives on the basis of having met or exceeded specific performance targets for performance periods during the Restatement period.  To the extent permitted by applicable law, the Board will seek to recoup Incentive Compensation, in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may prejudice the interests of the Company in any related proceeding or investigation), paid (or in the case of equity-based compensation, which vested) to any Senior Executive on or after theEffective Date of this Policy, if and to the extent that (i) the amount (or vesting) of Incentive Compensation was calculated based upon the achievement of certain financial results that were subsequently reduced due to a Restatement, and (ii) the amount (or vesting) of Incentive Compensation that would have been paid (or, in the case of equity-based compensation, vested) to the Senior Executive had the financial results been properly reported would have been lower than the amount actually paid (or, in the case of equity-based compensation, vested).

V.   RECOUPMENT OF INCENTIVE COMPENSATION IN CASES OF MISCONDUCT

In addition to the recoupment provided under Section IV (but without duplication), in the event of a Restatement where a Senior Executive engaged in Misconduct that caused or partially caused the need for the Restatement, the Board will seek to require any or all of the following actions in all appropriate cases (taking into account all relevant factors, including whether the assertion of a recoupment claim may prejudice the interests of the Company in any related proceeding or investigation) to the extent the Board deems appropriate with respect to Incentive Compensation paid or awarded to such Senior Executive on or after the Effective Date: (i) repayment by the Senior Executive of all Incentive Compensation that was paid or vested based upon the achievement of financial results that were subsequently reduced due to a Restatement; (ii) cancellation of outstanding equity awards, including restricted share awards, restricted stock unit awards and stock options; (iii) payment by the Senior Executive of net proceeds resulting from the sale or other disposition of shares issued upon the exercise of stock options; (iv) payment by the Senior Executive of net proceeds resulting from the sale or other disposition of shares underlying any restricted share awards or restricted stock unit awards upon or following the vesting of such awards; (v) recoupment of any shares held by the Senior Executive issued upon or with respect to which the restrictions have lapsed upon the vesting of restricted share awards or restricted stock unit awards; and (vi) recoupment of any shares held by the Senior Executive issued upon the exercise of stock options.

VI.   ACKNOWLEDGEMENT BY SENIOR EXECUTIVES

Senior Executives shall acknowledge this Policy and agree to the terms and provisions of this Policy.

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VII.   BINDING EFFECT OF DETERMINATIONS BY BOARD; DELEGATION

The Board may delegate to the Compensation Committee all determinations to be made and actions to be taken by the Board under this Policy.  Any determination made by the Board or the Compensation Committee under this Policy shall be final, binding and conclusive on all parties.

VIII.   LIMITATION ON PERIOD FOR RECOUPMENT

The Board may only seek recoupment under Sections IV and V of this Policy if either (i) the Restatement shall have occurred within 36 months of the publication of the audited financial statements that have been restated, or (ii) the Audit Committee of the Board shall have taken steps to consider a Restatement prior to the end of 36 months after the publication of the audited financial statements that are the subject of the Restatement and the Restatement occurs within 48 months of the publication of the audited financial statements that have been restated.

IX.   SOURCES OF RECOUPMENT

The Board may seek recoupment from the Senior Executives from any of the following sources:  prior incentive compensation payments; future payments of incentive compensation; cancellation of outstanding equity awards; future equity awards; and direct repayment.

X.   SEVERABILITY

If any provision of this Policy or the application of any such provision to any Senior Executive shall be adjudicated to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Policy, and the invalid, illegal or unenforceable provisions shall be deemed amended to the minimum extent necessary to render any such provision or application enforceable.

XI.   NO IMPAIRMENT OF OTHER REMEDIES

This Policy does not preclude the Company from taking any other action to enforce a Senior Executive's obligations to the Company, including termination of employment or institution of civil or criminal proceedings.

This Policy is in addition to the requirements of Section 304 of the Sarbanes-Oxley Act of 2002 that are applicable to the Company's Chief Executive Officer and Chief Financial Officer.

XII.   RECOUPMENT FOLLOWING TERMINATION OF EMPLOYMENT

In the event that following a Senior Executive’s termination of employment with the Company (i) the Senior Executive discloses confidential information of the Company, (ii) within two (2) years of such termination, the Senior Executive directly or indirectly competes with the Company (including through employment by any company which the Company has identified as a competitive company), or (iii) within two (2) years of such termination, the Senior Executive solicits any of the Company's customers or employees, the Board may take any one or more of the following actions, to the extent permitted by applicable law:  (a) cancel any outstanding equity awards, including restricted share awards, restricted stock unit awards and stock options; (b) recover any net proceeds resulting from the sale or other disposition of shares issued upon the exercise of stock options; (c) recover any net proceeds resulting from the sale or other disposition of shares underlying any restricted share awards or restricted stock unit awards upon or following the vesting of such awards; (d) recoup any shares held by the Senior Executive issued upon or with respect to which the restrictions have lapsed upon the vesting of restricted share awards or restricted stock unit awards; and (e) recoup any shares held by the Senior Executive issued upon the exercise of stock options, in the cases of clauses (b) through (e) with respect to stock options that were exercised during the period beginning two years before and ending two years after the Senior Executive’s termination of employment and with respect to restricted share or restricted stock unit awards that vested during the period beginning two years before and ending two years after the Senior Executive’s termination of employment.

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XIII.   CHANGE IN CONTROL

In the event of a Change in Control, as defined in the Company's 2005 Omnibus Equity Plan (or any successor equity incentive plan), the Company's right to seek recoupment of Incentive Compensation or to take any of the other actions provided in Sections IV, V and XII of this Policy shall terminate, without prejudice to any rights that the Company otherwise may have under applicable law.

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EX-10.4

EXHIBIT 10.4

MSC INDUSTRIAL DIRECT CO., INC.

2005 OMNIBUS EQUITY PLAN

NON-QUALIFIED STOCK OPTION AGREEMENT

STOCK OPTION AGREEMENT (the "Agreement"), dated as of _____________ __, 200__, by and between MSC Industrial Direct Co., Inc. (the "Company"), having an address at 75 Maxess Road, Melville, New York 11747, and [INSERT ASSOCIATE NAME](the "Grantee"), having an address at _________________________________________________.

In accordance with Section 4 of the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan (the "Plan") and subject to the terms of the Plan and this Agreement, the Company hereby grants to the Grantee an option (the "Option") to purchase all or any part of an aggregate of [INSERT SHARES] shares (the “Shares”) of Class A common stock, $.001 par value per share, of the Company (the “Stock”).    Capitalized terms used but not defined herein shall have the meaning given to such terms in the Plan.

To evidence the Option and to set forth its terms, the Company and the Grantee agree as follows:

1.           Confirmation of Grant.  The Company hereby evidences the Option granted to the Grantee as of October ___, 2009, the date of the grant of the Option by the Company’s Compensation Committee of the Board of Directors (the “Committee”).  The Option granted hereby is a Non-Qualified Stock Option and is not intended to be an "incentive stock option" within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the "Code").

2.           Number of Shares.  This Option shall be for an aggregate of [# OF SHARES] Shares (subject to adjustment as provided in Section 3 of the Plan).

3.           Exercise Price.  The exercise price shall be $_____ per Share (the "Exercise Price") (subject to adjustment as provided in Section 3 of the Plan).  The Exercise Price reflects 100% of the Fair Market Value of one Share of Stock as calculated under the Plan.

4.           Term and Exercisability of the Option.  The Option shall expire on October 15, 2015, and, except as otherwise provided herein, may be exercised prior to its expiration at such times and for such number of whole Shares as follows:

(a)         On or after October ___, 2010, the Option is exercisable for up to 25% of the total number of Shares subject to this Option;

(b)         On or after October ___, 2011, the Option is exercisable for up to 50% of the total number of Shares subject to this Option;

(c)         On or after October ___, 2012, the Option is exercisable for up to 75% of the total number of Shares subject to this Option; and

(d)         On or after October ___, 2013, the Option is exercisable for up to 100% of the total number of Shares subject to this Option.

Notwithstanding the foregoing provisions of this Paragraph 4, and, except as otherwise provided herein, any portion of the Option which is not otherwise exercisable at the time of the Grantee's termination of employment (or provision of services, if applicable) with the Company and its Affiliates shall not become exercisable after such termination.

5.           Exercise of Option.  On or after the date any portion of the Option becomes exercisable, but prior to the expiration of the Option in accordance with Paragraph 4 above, the portion of the Option which has become exercisable may be exercised in whole or in part by the Grantee (or, pursuant to Paragraph 6 hereof, his or her permitted successor) upon delivery of the following to the Company:

(a)          a written notice of exercise which identifies this Agreement and states the number of whole Shares then being purchased; and

(b)         any combination of cash (or by certified or bank check), and/or (i) mature shares of unrestricted Stock as meet the requirements in the Plan then owned by the Grantee in an amount having a combined Fair Market Value on the exercise date equal to the aggregate Exercise Price of the Shares then being purchased using such unrestricted Stock, (ii) certification of ownership of shares of mature Stock owned by the Grantee to the satisfaction of the Administrator for later delivery to the Company as specified by the Company, or (iii) unless otherwise prohibited by law for either the Company or the Grantee, an irrevocable authorization of a third party to sell Shares of Stock acquired upon the exercise of the Option and remit to the Company a sufficient portion of the sale proceeds to pay the entire exercise price and any tax withholdings resulting from such exercise.

Notwithstanding the foregoing, (i) the Grantee (or any permitted successor) shall take whatever additional actions, including, without limitation, the furnishing of an opinion of counsel, and execute whatever additional documents the Company may, in its sole discretion, deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed by the Plan, this Agreement or applicable law, and (ii) the Company may restrict the Grantee’s ability to exercise the Option during any period when such exercise would constitute a violation of the Company’s insider trading policy or any applicable federal or state securities or other law or regulation.

No Shares shall be issued upon exercise of the Option until full payment has been made.  Upon satisfaction of the conditions and requirements of this Paragraph 5, the Company shall deliver to the Grantee (or his or her permitted successor) a certificate or certificates for the number of Shares in respect of which the Option shall have been exercised (less the number of Shares, if any, utilized in the payment of the Exercise Price in a cashless exercise as permitted under the Plan and the Agreement).  Upon exercise of the Option (or a portion thereof), the Company shall have a reasonable time to issue the Stock for which the Option has been exercised, and the Grantee shall not be treated as a stockholder for any purposes whatsoever prior to such issuance.  No adjustment shall be made for cash dividends or other rights for which the record date is prior to the date such Stock is recorded as issued and transferred in the Company’s official stockholder records, except as otherwise provided in the Plan or the Agreement.

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6.           Limitation Upon Transfer.  This Option and all rights granted hereunder shall not be transferred by the Grantee, other than to a Family Member (provided the transfer is a gift without consideration and there is no subsequent transfer other than by will or the laws of descent and distribution) or by will or by the laws of descent and distribution, shall not otherwise be assigned, pledged or hypothecated in any way, and shall not be subject to execution, attachment or similar process.  Any attempt to transfer this Option, other than as provided above, or to assign, pledge or hypothecate or otherwise dispose of this Option or of any rights granted hereunder contrary to the provisions hereof, or upon the levy of any attachment or similar process upon this Option or such rights, shall be  null and void.  The Option shall be exercised during the Grantee's lifetime only by the Grantee or by the Grantee's guardian or the Grantee’s legal representative.

7.           Termination of Employment or Provision of Services by Death, Disability.  If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates by death or Disability, the Option shall become exercisable in full for a period of one year from the date of such death or Disability or until the expiration of the stated term of such Option, whichever period is shorter.

8.           Termination of Employment or Provision of Services by Retirement.  If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates by reason of Grantee’s Retirement, the Option shall become exercisable in full for a period of one year from the date of such termination or until the expiration of the stated term of such Option, whichever period is shorter.

9.           Involuntary Termination of Employment or Provision of Services for Cause.  If the Grantee's employment with or provision of services for the Company and its Affiliates terminates for Cause, vesting of all outstanding Options held by the Grantee covered hereunder shall thereupon terminate and all Options held by the Grantee covered hereunder shall thereupon terminate.

10.          Involuntary Termination of Employment or Provision of Services Without Cause. If the Grantee’s employment with or provision of services for the Company and its Affiliates terminates involuntarily for any reason other than death, Disability, Retirement or Cause, the Option held by the Grantee covered hereunder may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of 30 days from the date of such termination of employment or provision of services or until the expiration of the stated term of such Option, whichever period is shorter.  Notwithstanding the foregoing, to the extent the Option is unvested or unexercisable at the date of termination, the Option shall thereupon terminate.

11.          Other Termination of Employment or Provision of Services.  If the Grantee’s employment with or provision of services for the Company and its Affiliates is terminated by the Grantee for any reason other than death, Disability or Retirement, the Option may thereafter be exercised, to the extent it was exercisable at the time of termination, for a period of 30 days from the date of such termination of employment or provision of services or until the expiration of the stated term of such Option, whichever period is shorter.  Notwithstanding the foregoing, to the extent the Option is unvested or unexercisable at the date of termination, the Option shall thereupon terminate.

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12.          Tolling.  Notwithstanding the foregoing, to the extent permitted under Section 409A of the Code, the exercise period following a termination described in Paragraphs (7), (8), (10) or (11) above shall be tolled for any applicable window/blackout period restrictions under the Company’s insider trading policy.

13.          Change in Control.   Upon a Change in Control, and subject to the terms of the Plan, the Options not then vested and exercisable shall become fully vested and exercisable and shall be otherwise subject to the Plan.

14.          Effect of Amendment of Plan.  No discontinuation, modification, or amendment of the Plan may, without the express written consent of the Grantee, adversely affect the rights of the Grantee under this Option, except as expressly provided under the Plan.

This Agreement may be amended as provided under the Plan, but except as provided thereunder shall not adversely affect Grantee’s rights hereunder without Grantee’s consent.

15.          No Limitation on Rights of the Company.  The grant of this Option shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of its business or assets.

16.          Rights as a Shareholder.  The Grantee shall have the rights of a shareholder with respect to the Shares covered by the Option only upon becoming the holder of record of those Shares.

17.           Compliance with Applicable Law.  Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates for Shares pursuant to the exercise of the Option, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded.  The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.  The Company may require, as a condition of the issuance and delivery of such certificates and in order to ensure compliance with such laws, regulations, and requirements, that the Grantee make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

18.          No Obligation to Exercise Option.  The granting of the Option shall impose no obligation upon the Grantee to exercise the Option.

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19.          Agreement Not a Contract of Employment or Other Relationship.  This Agreement is not a contract of employment, and the terms of employment of the Grantee or other relationship of the Grantee with the Company or any of its subsidiaries or affiliates shall not be affected in any way by this Agreement except as specifically provided herein.  The execution of this Agreement shall not be construed as conferring any legal rights upon the Grantee for a continuation of an employment or other relationship with the Company or any of its subsidiaries or affiliates, nor shall it interfere with the right of the Company or any of its subsidiaries or affiliates to discharge the Grantee and to treat him or her without regard to the effect which such treatment might have upon him or her as a Grantee.

20.          Tax Consequences.  The Company makes no representations or warranties with respect to the tax consequences of the grant or exercise of the Option and the disposition of the Shares obtained thereby.  A Grantee should consult his or her own tax advisor for information concerning the tax consequences of the grant and exercise of the Option.

21.          Withholding Taxes.  No later than the date as of which an amount first becomes includible in the gross income of the Grantee for Federal income tax purposes with respect to the exercise of the Option, the Grantee shall make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount, and by acceptance of this Award, Grantee has agreed to and hereby does, instruct the Company to satisfy his or her withholding obligations with Shares that would otherwise be delivered upon exercise of the Option.  The obligations of the Company under the Plan shall be conditional on such payment arrangements, and the Company, its Subsidiaries and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Grantee. The Administrator may establish such procedures as it deems appropriate for such settlement of withholding obligations with Grantee.

22.          Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service.  Any such notice shall be deemed given when received by the intended recipient.

23.          Governing Law.  Except to the extent preempted by Federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of New York without regard to the principles thereof relating to the conflicts of laws.

24.           Receipt of Plan.  The Grantee acknowledges receipt of a copy of the Plan, and represents that the Grantee is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all the terms and provisions of this Agreement and of the Plan.  The Grantee hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator with respect to any questions arising under this Agreement or the Plan.

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25.          Other Terms and Conditions.  The foregoing does not modify or amend any terms of the Plan.  To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.

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IN WITNESS WHEREOF, the Company and the Grantee have duly executed this Agreement as of the date first written above.

MSC INDUSTRIAL DIRECT CO., INC.              

I have read, understand and agree to abide by the terms of this Agreement, the Plan and the Associate confidentiality, Non-Solicitation and Non-Competition Agreement that I entered into with the company dated as of _______________________  _____, 200___ (the “Associate Agreement”).  I hereby acknowledge that the grant of Shares pursuant to this Agreement is consideration for my entering into and complying with the Associate Agreement.  I understand this Agreement, the Plan and the Associate Agreement in all respects the terms and conditions of the Option granted to me.

In addition, in accordance with the Company's Executive Incentive Compensation Recoupment Policy (the “Policy”), a copy of which I acknowledge having received and which I have reviewed and understand, I agree to the following:

(i)  I agree, upon demand by the Company, to forfeit, return or repay to the Company any or all of the “Option Benefits and Proceeds” if the Company determines that I engaged in Misconduct that caused or partially caused the need for a significant restatement of financial results, other than as a result of a change in accounting principles (a “Restatement”).  “Misconduct” shall mean a knowing violation of SEC rules and regulations or Company policy, as determined by the Board or the Compensation Committee of the Board in its sole and absolute discretion.

(ii)  I agree, upon demand by the Company, to forfeit, return or repay to the Company any or all of the "Option Benefits and Proceeds" if I breach or violate any of the terms of the Associate Agreement (which also shall mean any future Associate Agreement) following the termination of my employment with the Company.

“Option Benefits and Proceeds” shall mean (a) to the extent that the Option has not been fully exercised, all of my remaining rights under the Option, (b) to the extent that I have exercised all or any part of the Option and continue to hold shares acquired upon exercise of the Option, any such shares, and (c) to the extent that I have exercised all or any part of the Option and disposed of shares acquired upon exercise of the Option, any net proceeds realized from such disposition (or, in the case of a gift, the fair market value of the shares so gifted at the time of the gift); provided, that for purposes of clause (ii) above, clauses (b) and (c) of this definition of “Option Benefits and Proceeds” only shall apply with respect to an exercise of the Option during the period beginning two years before and ending two years after the termination of my employment.

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These provisions are subject to the limitations on the period for recoupment set forth in the Policy and shall terminate in the event of a Change in Control.

Date Associate Signature

FOR MSC INDUSTRIAL DIRECT CO., INC. USE ONLY

ACCEPTED BY MSC INDUSTRIAL DIRECT CO., INC.

By:
	Name: Danielle Fox
	Title: Sr. Compensation Analyst
Date:

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EX-10.5

EXHIBIT 10.5

MSC INDUSTRIAL DIRECT CO., INC.

2005 OMNIBUS EQUITY PLAN

RESTRICTED STOCK AWARD

MSC INDUSTRIAL DIRECT CO., INC. (the “Company”), hereby grants to [ASSOCIATE NAME] (the “Participant”) under the MSC Industrial Direct Co., Inc. 2005 Omnibus Equity Plan (the “Plan”) a Restricted Stock Award (the “Award”), pursuant to and evidencing the grant thereof by the Compensation Committee of the Board of Directors of the Company on October ___, 2009 (the “Award Date”) with respect to [# SHARES] shares of the Class A common stock, par value $.001 per share (the “Stock”), of the Company (the “Shares”), all in accordance with and subject to the following terms and conditions:

1.           Definitions.                                Capitalized terms used but not defined herein shall have the meaning given to such terms in the Plan.

2.           Restrictions.  Subject to Sections 5, 6 and 10 below, the restrictions on the applicable percentage of Shares shall lapse, and the applicable percentage of Shares shall vest, on each “Vesting Date” in accordance with the following schedule, provided that the Participant remains an associate of, or in the service of, the Company (or a subsidiary or affiliate) during the entire period (the “Restriction Period”) commencing on the Award Date and ending the applicable Vesting Date:

Vesting Date	Percentage of Shares Vested
October ___, 2012	50%
October ___, 2013	75%
October ___, 2014	100%

3.           Voting and Dividend Rights.  Upon the earlier of (i) issuance of the certificate or certificates for the Shares in the name of the Participant or (ii) book entry recordation of the grant by the Company’s transfer agent as provided in Section 11 hereof, the Participant shall thereupon be a shareholder with respect to all the Shares represented by such certificate or certificates and shall have the rights of a shareholder with respect to such Shares, including the right to vote such Shares and to receive all dividends and other distributions paid with respect to such Shares.  Dividends, if any, declared by the Company during a calendar year with respect to such Shares shall be paid to the Participant no later than the end of the calendar year in which the dividends are declared, or, if later, the fifteenth (15th) day of the third (3rd) month following the date such dividends are declared.

4.           Transfer Restrictions; Forfeitures.  This Award and the Shares (until they become unrestricted pursuant to the terms hereof) are non-transferable and may not be assigned, pledged or hypothecated and shall not be subject to execution, attachment or similar process.  Upon any attempt to effect any such disposition, or upon the levy of any such process, the Award shall immediately become null and void and the Shares shall be forfeited.

5.           Termination of Employment or Provision of Services by Reason of Death, Disability or Retirement.  If the Participant’s employment with or provision of services for the Company and its Affiliates terminates by reason of death, Disability or Retirement, the restrictions to the Shares shall forthwith terminate.

6.           Other Termination of Employment or Provision of Services.  If the Participant’s employment or provision of services is terminated for any reason other than death, Disability or Retirement, the Participant shall be obligated to redeliver such Shares that are still restricted prior to termination to the Company immediately and the Company shall pay to the Participant, in redemption of such restricted Shares, the amount equal to the price paid (if any) by the Participant for such Shares.

7.           Election Under Section 83(b). No later than 30 days after the date of grant of the Shares hereunder, Participant may make an election to be taxed upon such award under  Section 83(b) of the Internal Revenue Code of 1986, as amended  (the “Code”).  If the Participant makes a Section 83(b) election  with respect to the Shares granted hereunder, he or she shall provide a copy thereof to the Company within ten days of the filing of such election with the Internal Revenue Service and shall satisfy all then applicable Federal, state or local withholding tax obligations arising from that election in accordance with Section 8 below.  The Participant should consult his or her own tax advisor for information concerning the tax consequences of the grant of an Award, the filing of a Section 83(b) election and the lapse of restrictions with respect to the Shares.

8.           Withholding Taxes.  No later than the date as of which an amount first becomes includible in the gross income of the Participant for Federal income tax purposes with respect to any Award under the Plan, the Participant shall make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless the Participant elects, with respect to each particular vesting event, to satisfy his or her withholding obligation with a cash payment in accordance with rules established by the Administrator, the Participant shall be deemed to have, and by his or her signature hereto hereby does, instruct the Company to satisfy his or her withholding obligations with Stock that is part of the Award that gives rise to the withholding requirement.  Changes to this instruction to pay withholding obligations in Stock (i.e., to make arrangements to pay withholding obligations in cash) can only be made during the “trading window” prior to the vesting event under the Company’s Insider Trading Policy.  The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company, its Subsidiaries and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant. The Administrator may establish such procedures as it deems appropriate for the settlement of withholding obligations with Stock or cash.  A Participant should consult his or her own tax advisor for more information concerning the tax consequences of the grant of an Award.

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9.           Death of Participant.  If any of the Shares shall vest upon the death of the Participant, they shall be registered in the name of the estate of the Participant unless the Company shall have theretofore received in writing a beneficiary designation, in which event they shall be registered in the name of the designated beneficiary.

10.         Change in Control. Upon any Change in Control as provided under the Plan, and otherwise subject to the Plan, any restrictions applicable to Shares covered hereunder shall lapse and such Shares shall become free of restrictions and fully vested and transferable and shall be otherwise subject to the Plan.

11.         Issuance of Shares.  The Shares will be initially evidenced by a book entry record maintained by the Company’s transfer agent.  Once the Shares have vested, physical share certificates (less those needed for withholding taxes) may be issued upon the Participant’s written request to the transfer agent or Plan Administrator.  The Company may place on the certificates representing the Shares such legend or legends as the Company may deem appropriate and the Company may place a stop transfer order with respect to such Shares with the transfer agent(s) for the Shares.

12.         Effect of Amendment of Plan.  No discontinuation, modification, or amendment of the Plan may, without the express written consent of the Participant, adversely affect the rights of the Participant under this Award, except as expressly provided under the Plan.

This Restricted Stock Award Agreement (the “Agreement”) may be amended as provided under the Plan, but except as provided thereunder any such amendment shall not adversely affect Participant’s rights hereunder without Participant’s consent.

13.         No Limitation on Rights of the Company.  The grant of this Award shall not in any way affect the right or power of the Company to make adjustments, reclassifications, or changes in its capital or business structure or to merge, consolidate, dissolve, liquidate, sell, or transfer all or any part of its business or assets.

14.         Compliance with Applicable Law.  Notwithstanding anything herein to the contrary, the Company shall not be obligated to cause to be issued or delivered any certificates for Shares, unless and until the Company is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority, and the requirements of any exchange upon which Shares are traded.  The Company shall in no event be obligated to register any securities pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) or to take any other action in order to cause the issuance and delivery of such certificates to comply with any such law, regulation or requirement.  The Company may require, as a condition of the issuance and delivery of such certificates and in order to ensure compliance with such laws, regulations, and requirements, that the Participants make such covenants, agreements, and representations as the Company, in its sole discretion, considers necessary or desirable.

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15.         Agreement Not a Contract of Employment or Other Relationship.  This Agreement is not a contract of employment, and the terms of employment of the Participant or other relationship of the Participant with the Company or any of its subsidiaries or affiliates shall not be affected in any way by this Agreement except as specifically provided herein.  The execution of this Agreement shall not be construed as conferring any legal rights upon the Participant for a continuation of an employment or other relationship with the Company or any of its subsidiaries or affiliates, nor shall it interfere with the right of the Company or any of its subsidiaries or affiliates to discharge the Participant and to treat him or her without regard to the effect which such treatment might have upon him or her as a Participant.

16.         Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered, or express mail, postage prepaid, return receipt requested, or by a reputable overnight delivery service.  Any such notice shall be deemed given when received by the intended recipient.

17.         Governing Law.  Except to the extent preempted by Federal law, this Agreement shall be construed and enforced in accordance with, and governed by, the laws of the State of New York without regard to the principles thereof relating to the conflicts of laws.

18.         No Rights to Continued Employment.  Nothing contained in the Plan shall give any associate the right to be retained in the employment or service of the Company or any of its subsidiaries or affiliates or affect the right of any such employer to terminate the Participant.  The adoption and maintenance of the Plan shall not constitute an inducement to, or condition of, the employment or service of the Participant.  The Plan is a discretionary plan, and participation by the Participant is purely voluntary.  Participation in the Plan with respect to this Award shall not entitle the Participant to participate with respect to any other award.  Any payment or benefit paid to the Participant with respect to this Award shall not be considered to be part of the Participant’s “salary,” and thus, shall not be taken into account for purposes of determining the Participant’s termination indemnity, severance pay, retirement or pension payment, or any other employee benefits, except to the extent required under applicable law.

19.         Receipt of Plan.  The Participant acknowledges receipt of a copy of the Plan, and represents that the Participant is familiar with the terms and provisions thereof, and hereby accepts this Award subject to all the terms and provisions of this Agreement and of the Plan.  The Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator with respect to any questions arising under this Agreement or the Plan.

20.         Other Terms and Conditions.  The foregoing does not modify or amend any terms of the Plan.  To the extent any provisions of the Agreement are inconsistent or in conflict with any terms or provisions of the Plan, the Plan shall govern.

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IN WITNESS WHEREOF, this Agreement has been duly executed as of ___________________.

MSC Industrial Direct Co., Inc.                   

I have read, understand and agree to abide by the terms of this Agreement, the Plan and the Associate Confidentiality, Non-Solicitation and Non-Competition Agreement that I entered into with the Company dated as of , 200 (the “Associate Agreement”).  I hereby acknowledge that the grant of Shares pursuant to this Agreement is consideration for my entering into and complying with the Associate Agreement.  I understand this Agreement, the Plan and the Associate Agreement control in all respects the terms and conditions of the Award granted to me.

In addition, in accordance with the Company’s Executive Incentive Compensation Recoupment Policy (the “Policy”), a copy of which I acknowledge having received and which I have reviewed and understand, I agree to the following:

(i)          I agree, upon demand by the Company, to forfeit, return or repay to the Company any or all of the “Award Benefits and Proceeds” if the Company determines that I engaged in Misconduct that caused or partially caused the need for a significant restatement of financial results, other than as a result of a change in accounting principles (a “Restatement”).  “Misconduct” shall mean a knowing violation of SEC rules and regulations or Company policy, as determined by the Board or the Compensation Committee of the Board in its sole and absolute discretion.

(ii)         I agree, upon demand by the Company, to forfeit, return or repay to the Company any or all of the “Award Benefits and Proceeds” if I breach or violate any of the terms of the Associate Agreement (which also shall mean any future Associate Agreement) following the termination of my employment with the Company.

“Award Benefits and Proceeds” shall mean (a) to the extent that the Award has not fully vested, all of my remaining rights under the Award, (b) to the extent that all or any part of the Award has vested and I continue to hold shares that vested, any such shares, and (c) to the extent that all or any part of the Award has vested and I have disposed of shares that vested under the Award, any net proceeds realized from such disposition (or, in the case of a gift, the fair market value of the shares so gifted at the time of the gift); provided, that for purposes of clause (ii) above, clauses (b) and (c) of this definition of “Award Benefits and Proceeds” only shall apply with respect to shares that vested during the period beginning two years before and ending two years after the termination of my employment.

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These provisions are subject to the limitations on the period for recoupment set forth in the Policy and shall terminate in the event of a Change in Control.

Date Associate Signature

FOR MSC INDUSTRIAL DIRECT CO., INC. USE ONLY

ACCEPTED BY MSC INDUSTRIAL DIRECT CO., INC.

By:
	Name: Danielle Fox
	Title: Sr. Compensation Analyst
Date:

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, David Sandler, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 7, 2010

/s/ David Sandler

David Sandler

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Charles Boehlke, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: January 7, 2010

/s/ Charles Boehlke

Charles Boehlke

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended November 28, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, David Sandler, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 7, 2010

By:	/s/ David Sandler
Name:	David Sandler President and Chief Executive Officer (Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended November 28, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Charles Boehlke, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: January 7, 2010

By:	/s/ Charles Boehlke
Name:	Charles Boehlke Chief Financial Officer (Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.