UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 1-14130
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A. FULL TITLE OF THE PLAN AND THE ADDRESS OF THE PLAN, IF DIFFERENT
FROM THAT OF THE ISSUER NAMED BELOW: SID TOOL SAVINGS PLAN
B. NAME OF ISSUER OF THE SECURITIES HELD PURSUANT TO THE PLAN AND THE
ADDRESS OF ITS PRINCIPAL EXECUTIVE OFFICE: MSC INDUSTRIAL DIRECT CO., INC., 75
MAXESS ROAD, MELVILLE, NEW YORK 11747
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2001 AND 2000 AND YEAR ENDED DECEMBER 31, 2001
WITH REPORT OF INDEPENDENT AUDITORS
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
INDEX TO FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULE
DECEMBER 31, 2001 AND 2000 AND YEAR ENDED DECEMBER 31, 2001
Page(s)
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Report of Independent Auditors 1
Report of Independent Public Accountants 2
Financial Statements
Statements of Net Assets Available for Benefits as of
December 31, 2001 and 2000 3
Statement of Changes in Net Assets Available for Benefits
for the Year Ended December 31, 2001 4
Notes to Financial Statements 5
Supplemental Schedule
Form 5500, Schedule H Line 4i- Schedule of Assets Held
At End of Year as of December 31, 2001 14
All other schedules are omitted as they are not applicable or are not required
based on the disclosure requirements of the Employee Retirement Income Security
Act of 1974, as amended, and applicable regulations issued by the Department of
Labor.
REPORT OF INDEPENDENT AUDITORS
To the Plan Administrator and Trustee of the
Sid Tool Savings Plan
We have audited the accompanying statement of net assets available for benefits
of the Sid Tool Savings Plan (the "Plan") as of December 31, 2001, and the
related statement of changes in net assets available for benefits for the year
ended December 31, 2001. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audit. The financial statements of the Sid
Tool Savings Plan as of December 31, 2000, were audited by other auditors whose
report dated May 29, 2001, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2001, and the changes in its net assets available for benefits for
the year then ended, in conformity with accounting principles generally accepted
in the United States.
Our audit was performed for the purpose of forming an opinion on the financial
statements taken as a whole. The supplemental schedule of assets held at end of
year as of December 31, 2001 is presented for purposes of additional analysis
and is not a required part of the financial statements but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. This supplemental schedule is the responsibility of the Plan's management.
This supplemental schedule has been subjected to the auditing procedures applied
in our audit of the financial statements and, in our opinion, is fairly stated
in all material respects in relation to the financial statements taken as a
whole.
/s/ Ernst & Young LLP
Melville, New York
June 18, 2002
1
The following report is a copy of the audit report previously issued by Arthur
Andersen in connection with the Plan's filing on Form 11-K for the year ended
December 31, 2000. This audit report has not been reissued by Arthur Andersen in
connection with this filing on Form 11-K. See exhibit 23.2 for further
discussion.
The Statement of Net Assets Available For Benefits of the Plan as of December
31, 1999 and the Statement of Changes in Net Assets Available For Benefits of
the Plan for the year ended December 31, 2000 are not included in the filing
herein.
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Plan Administrator and Trustee of the
Sid Tool Savings Plan:
We have audited the accompanying statements of net assets available for benefits
of the Sid Tool Savings Plan (the "Plan") as of December 31, 2000 and 1999, and
the related statement of changes in net assets available for benefits for the
year ended December 31, 2000. These financial statements are the responsibility
of the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Plan as of
December 31, 2000 and 1999, and the changes in its net assets available for
benefits for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of assets held
for investment purposes and loans in default are presented for the purposes of
additional analysis and are not a required part of the basic financial
statements but are supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974, as amended. These supplemental schedules
are the responsibility of the Plan's management. The supplemental schedules have
been subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
Arthur Andersen LLP
Melville, New York
May 29, 2001
2
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
December 31,
2001 2000
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ASSETS
Investments with custodian, at fair value $38,856,797 $34,618,397
Receivables:
Employer contribution, net of forfeitures 54,630 72,265
Participant contributions 198,800 340,870
Participant loans 1,961,287 1,826,405
Accrued income 14,253 12,283
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Total receivables 2,228,970 2,251,823
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Net assets available for benefits $41,085,767 $36,870,220
=========== ===========
See accompanying notes.
3
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 2001
Additions to net assets attributed to
Investment income (loss)
Net depreciation in fair value of investments $ (4,653,666)
Dividend and interest income 1,118,504
------------
(3,535,162)
Contributions
Participant 5,778,159
Employer, net of forfeitures 1,428,804
------------
7,206,963
------------
Total additions 3,671,801
Deductions from net assets attributed to
Benefits paid to participants 2,254,573
Withdrawals, administration fees and other 243,215
------------
Total deductions 2,497,788
Transfers
Transfer of plan assets (Note 1) 3,033,973
Participant rollovers 7,561
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Total transfers 3,041,534
------------
Net increase 4,215,547
Net assets available for benefits
Beginning of year 36,870,220
------------
End of year $ 41,085,767
============
See accompanying notes.
4
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2001
1. DESCRIPTION OF PLAN
The following description of the Sid Tool Savings Plan (the "Plan") provides
only general information. More complete information regarding the Plan's
provisions may be found in the plan agreement.
General
Effective January 1, 1989, Sid Tool Co., Inc., a wholly owned subsidiary of MSC
Industrial Direct Co. Inc., (the "Company") adopted the Sid Tool Co., Inc.
Employee 401(k) Savings Plan (the "401(k) Plan") for the benefit of its
employees ("associates"). Effective September 1993, the 401(k) Plan and the Sid
Tool Co., Inc. Profit Sharing Plan merged into the Plan. The Plan is a
continuation of the 401(k) Plan. Upon completion of the merger, all assets of
both plans were contributed to the Plan. The Plan is a defined contribution plan
covering all associates who meet certain age requirements. It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA").
On November 3, 2000, the Plan was amended to merge the Industrial Specialty Co.,
Inc. 401(k) Profit Sharing Plan of Industrial Specialty Co., Inc. ("Industrial
Specialty") and the Corbin Corporation Profit Sharing and Savings Plan of Corbin
Corporation ("Corbin"), with the Plan effective January 1, 2001. Industrial
Specialty and Corbin are subsidiaries of the Company. The net assets available
for benefits of the two benefit plans merged into the Plan as of January 1, 2001
were approximately $3,034,000.
Merrill Lynch Trust Company of New York and Merrill Lynch, Pierce, Fenner &
Smith Incorporated (collectively "Merrill Lynch" or "ML") are the investment
manager, trustee/custodian and recordkeeper of the Plan, respectively. Merrill
Lynch exercises responsibility over the administration, recordkeeping,
investment management and custody of Plan assets.
Eligibility
An associate is eligible for participation in the Plan on the first day of the
month after completing one full calendar month of service, and must be eighteen
years of age.
Contributions and Vesting
Participants may elect to contribute up to 15% of their pre-tax annual
compensation, as defined in the Plan. Participants may also contribute amounts
representing distributions from other qualifying plans. Participants are
immediately vested in their contributions plus actual earnings thereon. The
maximum annual contribution a participant could make into the Plan was $10,500
during 2001 and 2000, as established by the Internal Revenue Code (the "Code").
5
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF PLAN (CONTINUED)
CONTRIBUTIONS AND VESTING (CONTINUED)
The Company may make a discretionary matching contribution based on the
participant's contributions, limited to 4% of compensation. The Company may also
make a discretionary non-matching contribution to participants to be allocated
in the same ratio as each participant's compensation bears to the total of such
compensation of all eligible participants, at the option of the Company's Board
of Directors. Participants must have completed 1,000 hours of service and be
employed on the last day of the Plan year to be eligible to share in the
allocation of non-matching employer contributions. Participants vest in Company
contributions as follows:
Completed Years of Service Vested Percentage
-------------------------- -----------------
Less than 2 0%
2 but less than 3 20%
3 but less than 4 40%
4 but less than 5 60%
5 but less than 6 80%
6 or more 100%
In 2001, the Company's discretionary matching contributions were $1,457,754
including the application of forfeitures of approximately $28,950. There were
no discretionary non-matching contributions in 2001.
Participant Accounts
Individual accounts are maintained for each participant. Each participant's
account is credited with the participant's contributions and allocations of (a)
the Company's contributions and (b) plan earnings, and is charged with an
allocation of administrative expenses. Allocations are based on participant
earnings or account balances, as defined.
Forfeitures
Forfeited balances of terminated participants' non-vested employer contributions
are used to reduce future employer discretionary matching contributions.
Forfeitures accumulated during 2001 were $114,483, with a forfeiture balance of
$288,198 as of December 31, 2001.
Participant Loans
The Plan has a loan provision which allows participants to borrow from the Plan.
The minimum loan is $1,000, and the maximum loan is 50% of a participants' total
vested account balance, not to exceed $50,000. The interest rate is established
by the prime rate plus one percent, as of the beginning of each month at which
the loan is made. Interest rates on outstanding loans as of December 31, 2001
ranged from 6.0% to 10.5%. Interest paid by a participant on an outstanding loan
is paid directly into the participant's account. Principal and interest is paid
ratably through payroll deductions. The repayment period cannot exceed five
years unless the loan is used to acquire a participant's principal residence. A
participant can only have two loans outstanding from the Plan at any given time.
6
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
1. DESCRIPTION OF PLAN (CONTINUED)
Payment of Benefits
On termination of service due to death, disability or retirement, a participant
may elect to receive either a lump-sum amount equal to the value of the
participant's vested interest in his or her account or annual installments over
a ten-year period. For termination of service for other reasons, a participant
will receive the value of the vested interest in his or her account as a
lump-sum distribution.
Plan Expenses
Expenses for recordkeeping, investment and other costs are paid by the Plan.
Accounting fees are paid by the Company.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The accounting records and financial statements of the Plan are prepared on the
accrual basis in accordance with accounting principles generally accepted in the
United States and are based upon data provided by Merrill Lynch, adjusted for
accruals for contributions receivable and excess contribution payments due to
participants based on the results of ERISA limit testing.
Investments
The Plan's investments are stated at fair value, which equals the quoted market
prices on the last business day of the Plan year. The shares of registered
investment companies are valued at quoted market prices, which represent the net
asset values of shares held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis. Interest
income is recorded on the accrual basis. Dividends are recorded on the
ex-dividend date.
Use of Estimates
The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
7
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS
The fair value of individual investments that represent 5% or more of the Plan's
net assets are as follows:
December 31,
---------------------------
2001 2000
---------- ----------
ML Equity Index Trust Class A $5,312,717 $5,375,204
ML Retirement Preservation Trust 6,625,904 5,174,874
ML Fundamental Growth Fund Class A 3,807,471 -
Federated Bond Fund Class A 3,273,726 2,405,771
Oppenheimer Global Fund 3,446,414 3,632,157
ML Growth Fund Class A - 4,627,576
MFS Mass. Investors Trust Class A 2,370,797 1,860,046
ML Balanced Capital Fund Class A 2,524,778 2,142,821
4. INVESTMENT OPTIONS
Participants may allocate their contributions into the Plan among the following
29 options in 2001 (including a number of "ML" options):
1) MSC Industrial Direct Inc. Class A Common Stock - The Plan Trustee will be
permitted to acquire, with amounts directed by participants to be invested
in the MSC Industrial Direct Co., Inc. Stock Fund, shares of Class A Common
Stock ("Common Stock") directly from the Company.
The Plan Trustee may acquire (sell) shares of Common Stock by purchasing
(selling) such shares on the principal national securities exchange on
which shares of Common Stock are traded on that date, and the cost of such
shares will be the weighted average purchase price (weighted average sale
price) paid by the Plan Trustee during a day. The price includes
commissions incurred in the purchase or sale. Alternatively, the Plan
Trustee may acquire shares of Common Stock directly from the Company. If
acquired directly from the Company, the cost of the shares of Common Stock
will be the average of the high and low of the Common Stock as traded on
the principal national securities exchange on which such shares are traded
on the date issued by the Company. The Plan Trustee may acquire shares of
Common Stock in a single purchase or over time, as they determine in their
sole discretion.
If circumstances so require, the Plan Trustee may suspend the purchase and
sale of shares of Common Stock. Such suspension will last until the Plan
Trustee determines that the circumstances causing the suspension have
ceased to exist. During the suspension period, the Plan Trustee will hold
all of the contributions directed to be invested in the fund in the ML
Retirement Preservation Trust.
The value of the MSC Industrial Direct Co., Inc. Stock Fund is subject to
fluctuation in the market price of the shares of Common Stock. There is no
guarantee of investment performance. Likewise, there is no guarantee that
the Company will pay dividends in the future. The fair market value of the
shares of Common Stock will be equal to the closing price of the Common
Stock as reported on the principal national securities exchange on which
such shares are traded on the date of valuation.
8
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENT OPTIONS (CONTINUED)
2) ML Goal Manager Model Portfolios - Model Portfolios are composed of
investment options, with each model consisting of a different mix and,
therefore, a different risk and potential return profile. There are five
Goal Manager Model Portfolios available and these models utilize the funds
earmarked below in varying degrees.
3) ML Equity Index Trust Class A - Seeks to provide investment results that,
before expenses, replicate the total return of the Standard & Poor's 500
Composite Stock Price Index ("S&P 500"). In seeking to replicate the total
return of the S&P 500, management generally will allocate investments among
common stocks in approximately the same weighting as the index. Typically,
most of the assets will be comprised of all, or nearly all, 500 stocks in
the index in weightings closely aligned with those of the index. This fund
is also included in the Goal Manager Model Portfolios option.
4) ML Retirement Preservation Trust - Seeks to provide preservation of
capital, liquidity and current income at levels that are typically higher
than those provided by money market funds. The trust invests primarily in a
broadly diversified portfolio of Guaranteed Investment Contracts and in
obligations of U.S. government and government-agency securities. The trust
also invests in high-quality money market securities. Participants purchase
units that the trust seeks to maintain at $1.00 per unit, although this
cannot be assured. This fund is also included in the Goal Manager Model
Portfolios option.
5) MFS Emerging Growth Fund Class A - Seeks long-term growth of capital. The
fund invests primarily in small and medium-sized companies with growth
rates expected to be well above the growth rate of the overall economy and
the rate of inflation. Typically these companies are early in their life
cycles and have the potential to become major enterprises. The fund may
also invest in companies based on special factors such as new management,
new products or changes in consumer demand.
6) Davis Ser Inc. Real Estate Fund Class A - Seeks growth and income. The fund
normally invests at least 65% of its assets in securities of companies that
are principally engaged in the real-estate industry, that own significant
real-estate assets, that primarily invest in real-estate assets, or that
primarily invest the balance of assets in securities or other types of
companies. The fund may also invest in securities of foreign issuers.
7) ML Latin America Fund Class A - Seeks long-term capital appreciation
through investments in Latin American equity and debt securities. The
fund's objective reflects the belief that investment opportunities may
result in Latin America from an evolving longer-term international trend
encouraging greater market orientation and diminishing governmental
intervention in economic affairs. It is expected that, under normal
conditions, at least 65% of the fund's total assets will be invested in
Latin American securities. The fund may attempt to hedge against market and
currency risk through the use of options, futures, options on futures and
forward currency transactions.
8) ML Fundamental Growth Fund Class A - Seeks long-term growth of capital. The
fund normally invests at least 65% of assets in equities issued by medium
and large capitalization companies. These companies have above-average
growth in sales, profit margin improvement, niche products and services,
and are leading market shares. On December 17, 2001 this fund replaced the
ML Growth Fund Class A and all balances were transferred.
9
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENT OPTIONS (CONTINUED)
9) Federated Bond Fund Class A - Seeks income consistent with preservation of
capital. The fund normally invests at least 65% of its assets in
investment-grade corporate bonds, U.S. government securities, preferred
stock, convertibles and cash. It may invest up to 35% of assets in debt
rated as low as B; it may invest up to 25% in debt securities of foreign
governments. This fund is also included in the Goal Manager Model
Portfolios option.
10) ML S&P 500 Index Fund Class A - Seeks to match the performance of the
Standard & Poor's 500 Composite Stock Price Index (the "S&P 500") as
closely as possible before the deduction of fund expenses. The fund invests
in the common stocks represented in the S&P 500 in roughly the same
proportions as their weightings in the S&P 500. The fund may also invest in
derivative instruments linked to the S&P 500. At times the fund may not
invest in all of the common stocks in the S&P 500, nor, in the same
weightings as the S&P 500. At those times, the fund chooses instruments so
that the market capitalization, industry weighting and other fundamental
characteristics of the stocks and derivative instruments chosen are similar
to the S&P as a whole. The fund may also engage in securities lending.
11) PIMCO Total Return Fund Class A - Seeks total return consistent with
preservation of capital. The fund invests at least 65% of assets in debt
securities, including U.S. government securities, corporate bonds, and
mortgage-related securities. It may invest up to 20% of assets in
securities denominated in foreign currencies. The portfolio duration
generally ranges from three to six years.
12) PIMCO Long Term U.S. Government - Seeks total return consistent with
preservation of capital and prudent investment management. This fund
invests primarily in U.S. government securities, maintaining a minimum
portfolio duration of eight years. It may also invest in corporate bonds,
mortgage and asset-backed securities, variable-rate securities, futures and
options contracts, and cash equivalents.
13) Lord Abbett Affiliated Fund - Seeks long-term growth of capital and income,
consistent with low volatility. The fund normally invests in equities of
large, seasoned companies. The advisor may sell stocks it believes to be
overpriced relative to risks assumed. The fund may write covered call
options with respect to more than 10% of its assets. It may also invest up
to 10% of its assets in foreign securities.
14) AIM International Equity Fund Class A - Seeks long-term growth of capital
by investing in a diversified portfolio of international equity securities.
The fund will invest at least 70% of its total assets in marketable equity
securities. It may also invest up to 20% of its total assets in securities
that are convertible into equity securities of foreign companies which are
listed on a recognized foreign securities exchange or traded on a foreign
over-the-counter market. The fund's assets will be invested in the
securities of foreign companies located in at least four countries outside
the United States. It will emphasize investment in foreign companies in the
developed countries of Western Europe and the Pacific Basin and may also
invest to a limited extent in the securities of companies located in
developing countries in various regions of the world. This fund is also
included in the Goal Manager Model Portfolios option.
15) Alliance Corporate Bond Fund Class A - Seeks income; capital appreciation
is secondary. The fund normally invests at least 65% of its assets in
investment-grade debt securities. It may hold corporate bonds,
convertibles, U.S. government obligations and dollar-denominated foreign
debt.
10
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENT OPTIONS (CONTINUED)
16) Van Kampen Emerging Growth Fund Class A - Seeks capital appreciation. This
fund normally invests at least 65% of its assets in common stocks of
emerging-growth companies, and may invest up to 20% of its total assets in
securities of foreign issuers. This Fund may also invest in certain
derivative instruments such as options, futures, and options on futures,
which may subject the fund to additional risks. This fund is also included
in the Goal Manager Model Portfolios option.
17) Seligman Communication and Information Fund Class A - Seeks capital
appreciation. The fund normally invests at least 80% of its assets in
common stocks issued by companies that operate in the communication,
information and related industries. It invests in large, established media
corporations, as well as in smaller companies with rapidly changing
technologies and expansion characteristics. The fund may invest up to 10%
of its assets in foreign securities; this restriction does not apply to
depository receipts.
18) Oppenheimer Global Fund - Seeks capital appreciation. The fund invests
primarily in common stocks and convertible securities issued by U.S. and
foreign companies. It ordinarily maintains investments in at least three
countries. The fund may invest in securities of companies in cyclical
industries and special situations.
19) Alliance Quasar Fund Class A - Seeks growth of capital. The fund follows
aggressive investment policies and invests primarily in equity securities.
It may invest in new or established, listed or unlisted, and foreign or
domestic securities. The fund may engage in short sales and other
derivatives transactions. This fund is also included in the Goal Manager
Model Portfolios option.
20) ML Eurofund Class A - Seeks capital appreciation through investment
primarily in equities of corporations domiciled in Europe. The fund expects
that, under normal market conditions, at least 80% of the fund's net assets
will be invested in European corporate securities, primarily in common
stocks, debt and preferred securities convertible into common stocks.
Investments in foreign securities involve special risks, including foreign
currency risk and the possibility of substantial volatility due to adverse
political, economic or other developments.
21) ML Global Allocation Fund Class A - Seeks high total investment return
consistent with prudent risk. The fund has a fully managed investment
policy utilizing U.S. and foreign equity, debt and money market securities,
the combination of which will be varied from time to time, both with
respect to types of securities and markets, in response to changing market
and economic trends. This investment approach provides the fund with the
opportunity to benefit from anticipated shifts in the relative performance
of different types of securities and different capital markets. The fund
may invest up to 35% of its total assets in non-investment-grade debt
securities (high-yield or "junk" bonds.)
22) ML Developing Capital Markets Fund Class A - Seeks long-term capital
appreciation by investing in securities, primarily equities, of issuers in
countries having smaller capital markets. It is currently expected that,
under normal conditions, at least 65% of the fund's net assets will be
invested in equity securities. The fund may employ a variety of investments
and techniques to hedge against market and currency risk, including
options, futures, options on futures and forward currency transactions.
23) AIM Equity Constellation Fund - Seeks capital appreciation. To work toward
this goal, the fund invests in small-to-medium-sized emerging growth
companies. Fund management will be particularly interested in companies
that are likely to benefit from new or innovative products, services or
processes that should enhance such companies' prospects for future growth
in earnings. The market prices of many of the securities purchased and held
by the fund may fluctuate widely.
11
PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
4. INVESTMENT OPTIONS (CONTINUED)
24) MFS Mass. Investors Trust Class A - Seeks current income and long-term
growth of capital and income. The fund invests primarily in common stocks
and convertibles. It may invest up to 35% of its assets in foreign
securities; this limit does not apply to American Depository Receipts. The
fund may invest a portion of the assets in debt securities and cash
equivalents. It may invest up to 15% of its assets in liquid securities.
This fund is also included in the Goal Manager Model Portfolios option.
25) MFS Research Fund - Seeks long-term growth of capital and future income.
The fund primarily invests in common stocks and convertible securities. It
may also invest in fixed-income securities; it may not invest more than 10%
of assets in securities rated below investment-grade. The fund may invest
up to 20% of its assets directly in foreign securities; it may also invest
in American Depository Receipts.
26) ML Balanced Capital Fund Class A - Seeks the highest total investment
return consistent with prudent risk primarily through a fully managed
investment policy that permits management of the fund to vary investment in
equity, debt and convertible securities based on its evaluation of changes
in economic and market trends. The fund invests in high-quality stocks,
corporate bonds and cash equivalents, and may invest up to 25% of its
assets in foreign securities.
27) ML Corporate Bond High Income Portfolio Fund Class A - Seeks a high level
of current income consistent with the investment policies of the portfolio
and with prudent investment management. As a secondary objective the fund
seeks capital appreciation, when consistent with its primary objective. The
fund invests substantially all of its assets in fixed-income securities
that are rated in the lower rating categories of the established rating
services or in unrated securities of comparable quality.
28) ML Pacific Fund Class A - The fund seeks long-term capital appreciation by
investing primarily in the equities of companies in the Far Eastern and
Western Pacific countries, including Japan, Australia, Hong Kong and
Singapore. The Pacific Basin is one of the most rapidly growing regions in
the world, and its stock markets have often reflected that growth. The fund
is designed for investors who want to achieve diversification by investing
in economies of Far Eastern and Western Pacific countries. To hedge the
fund's portfolio against market and currency risk, fund management may
employ strategies that include the use of currency options and futures,
options on such futures and forward foreign-currency transactions. Such
strategies involve special risks and there can be no assurance that they
will be successful.
29) Davis New York Venture Fund Class A - Seeks growth of capital. To work
toward this goal, the fund normally invests in common stocks and
convertible securities that management believes to have above-average
appreciation potential. The fund may also invest up to 10% of its assets in
securities of foreign issuers and up to 10% of its assets in restricted
securities.
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated January 11, 1995, stating that the Plan is qualified under Section 401(a)
of the Code and, therefore, the related trust is exempt from taxation.
Subsequent to issuance of this determination letter, the Plan was amended. Once
qualified, the Plan is required to
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PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
operate in conformity with the Code to maintain its qualification. The plan
administrator believes the Plan is being operated in compliance with the
applicable requirements of the Code and, therefore, believes that the Plan, as
amended, is qualified and the related trust is tax exempt.
6. RELATED PARTY TRANSACTIONS
Certain Plan investments are shares of mutual funds managed by ML. ML is the
trustee as defined by the Plan and, therefore, these transactions qualify as
party-in-interest transactions. Fees paid by the Plan for investment management
services amounted to $8,695 for the year ended December 31, 2001. In addition,
accounting fees, which are not material, are paid by the Company.
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Company has the right
under the Plan to discontinue its contributions at any time and to terminate the
Plan, subject to the provisions of ERISA. In the event of the Plan termination,
participants will become 100% vested in their accounts.
8. SUBSEQUENT EVENTS
Effective April 1, 2002, the Company changed the Plan's trustee/custodian,
investment manager and recordkeeper to T.Rowe Price Trust Company, T.Rowe Price
Investment Services, Inc. and T.Rowe Price Retirement Plan Services, Inc.,
respectively (collectively "T.Rowe Price"). All of the Plan's investments held
by ML were transferred to T.Rowe Price.
In addition, effective April 1, 2002, upon approval of the board of directors of
the Company, the Plan's name was changed to MSC Industrial Direct 401(k) Plan.
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PLAN NUMBER: 003
PLAN EIN: 13-5526506
SID TOOL SAVINGS PLAN
FORM 5500 - SCHEDULE H LINE 4i - SCHEDULE OF ASSETS HELD AT END OF YEAR
AS OF DECEMBER 31, 2001
Identity of Issuer Description Cost Current Value
------------------ ---------------------------------------------------- ---------- -------------
Merrill Lynch * MSC Industrial Direct Inc. Class A Common Stock $1,232,648 $ 1,335,615
Merrill Lynch * ML Equity Index Trust Class A 5,232,395 5,312,717
Merrill Lynch * ML Retirement Preservation Trust 6,625,904 6,625,904
Merrill Lynch * MFS Emerging Growth Fund Class A 1,054,385 724,431
Merrill Lynch * Davis Ser. Inc Real Estate Fund A 465,949 474,089
Merrill Lynch * ML Fundamental Growth Fund Class A 5,886,894 3,807,471
Merrill Lynch * ML Latin America Fund Class A 13,168 12,228
Merrill Lynch * Federated Bond Fund Class A 3,499,724 3,273,726
Merrill Lynch * ML S&P 500 Index Fund Class A 552,696 476,771
Merrill Lynch * PIMCO Total Return Fund Class A 167,101 164,392
Merrill Lynch * PIMCO Long Term U.S. Government 457,989 445,775
Merrill Lynch * Lord Abbett Affiliated Fund 42,688 42,558
Merrill Lynch * AIM International Equity Fund Class A 1,040,568 794,778
Merrill Lynch * Alliance Corporate Bond Fund Class A 134,363 131,651
Merrill Lynch * Van Kampen Emerging Growth Fund Class A 2,267,461 1,389,640
Merrill Lynch * Seligman Communication and Information Fund Class A 2,258,873 1,645,848
Merrill Lynch * Oppenheimer Global Fund 3,625,415 3,446,414
Merrill Lynch * Alliance Quasar Fund Class A 1,061,624 942,918
Merrill Lynch * ML Eurofund Class A 225,082 196,879
Merrill Lynch * ML Global Allocation Fund Class A 408,848 389,744
Merrill Lynch * ML Developing Capital Markets Fund Class A 14,150 12,362
Merrill Lynch * AIM Equity Constellation Fund 811,237 577,848
Merrill Lynch * MFS Mass. Investors Trust Class A 2,765,640 2,370,797
Merrill Lynch * MFS Research Fund 353,678 277,585
Merrill Lynch * ML Balanced Capital Fund Class A 3,003,359 2,524,778
Merrill Lynch * ML Corporate Bond High Income Portfolio Fund Class A 169,575 127,931
Merrill Lynch * ML Pacific Fund Class A 120,819 87,025
Merrill Lynch * Davis New York Venture Fund Class A 1,297,569 1,204,248
Merrill Lynch * Cash Fund/CMA Money Fund 40,674 40,674
Participant Loans * A commercial bank's fixed rate mortgage
(6.0% - 10.5% for 2001) - 1,961,287
-----------
$40,818,084
===========
* Parties-in-interest
This schedule should be read in conjunction with the accompanying financial
statements and notes thereto.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator has duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
SID TOOL SAVINGS PLAN
Date: June 27, 2002
/s/ Barbara Schwartz
---------------------------
Barbara Schwartz
Plan Administrator
15