MDM News Briefs

Cedric D. Beckett, a former executive with Bowman Distribution, Cleveland, OH, has acquired Strong Tool Company, Cleveland, OH, from Kennametal Inc., Latrobe, PA, and its J&L Industrial Supply metalworking tool distribution subsidiary. The transaction includes all seven of Strong Tool's warehouse/office locations in Ohio, Indiana and Erie, PA.

Parts of Integra Integrated Procurement Solutions, Northbrook, IL, which had revenues of $217 million in 2001, continue to be sold through Chapter 11 bankruptcy proceedings, as previously reported in the past two issues of MDM (please go to www.mdm.com for these archived stories and more). Asset sales through the bankruptcy court have totaled more than $13 million, subject to adjustments in each deal, with about a third of Integra's assets remaining to be sold, probably in smaller liquidation sales, according to the bankruptcy attorney.

GE Supply, the electrical, voice and data products distribution business of the General Electric Company, won the bankruptcy auction to acquire the assets of Questron Technology, Inc., Boca Raton, FL, with an $89.2-million bid. That topped an offer made previously by Sun Capital Partners for $81.5 million following Questron's filing for Chapter 11 protection in February. 2001 sales were approximately $130 million. Questron employs 400 and has 36 sales/service centers throughout the U.S. and Mexico. Once the transaction is closed, the company will operate as a separate business of GE Supply.

Wolseley plc, the world's largest specialist trade distributor of heating and plumbing products and the London-based parent of Ferguson Enterprises, has acquired, for cash, all of the stock of Clayton Acquisition Company, Tampa, FL, for $110 million. Clayton is the fourth largest wholesale distributor of waterworks, wastewater and storm drainage material in the U.S. Sales for the year ended Aug. 31, 2001 were $226 million. The company operates 31 branches in six states (Florida, Louisiana, Texas, Arkansas, Georgia and Mississippi) and one each in Barbados and Trinidad. Florida accounted for approximately 70% of total revenues in 2001.

The acquisition gives Wolseley a major increase in market share in Florida, the fourth largest waterworks market in the U.S. It will also give the group a presence in new markets in the fast growing Southeast. 'Clayton's product offering in the waterworks sector complements our own strengths in serving the utilities industry through Ferguson, part of Wolseley's North American Plumbing and Heating division,' said Charles Banks, group chief executive of Wolseley. 'This acquisition is in line with our strategy to expand the business through a combination of organic growth and bolt on acquisitions, which we can use as a platform for further growth.'

Rockwell Automation, Milwaukee, WI, said that its Rockwell Automation Korea unit has agreed to acquire the controller division of Samsung Electronics Company Limited's Mechatronics business located near Seoul, Korea. The new business, using the name Rockwell Samsung Automation, will develop automation products including PLCs, motion, drives, distributed I/O and software product lines. As part of the transaction, Samsung Electronics will provide Rockwell Samsung Automation with a license to brand and market products with the Samsung name in the Korean market. Samsung Electronics has also agreed to purchase control and other automation products from Rockwell, including those produced by the new company, as preferred products throughout all Samsung Electronics manufacturing operations.

W.W. Grainger, Chicago, IL, reported sales in the 2002 first quarter were $1.1 billion, down 8%, versus $1.2 billion in the prior year's first quarter. Sales in the branch-based distribution businesses segment declined by 8% to $999.0 million in

the 2002 first quarter, a result of the economy, weak natural resource end markets in Canada, and one less selling day. While most customer segments were down, the company reported an 11% increase in sales to government customers in the U.S. Also in the quarter, the company processed $95 million in sales through its primary website, grainger.com, an increase of 26% versus the 2001 first quarter. See www.mdm.com for complete Grainger financials.

Lawson Products, Inc., Des Plaines, IL, reported first quarter 2002 net sales of $95.7 million, up 14.5% from $83.7 million recorded in the first quarter of 2001. The increase in net sales is principally attributable to approximately 400 sales representatives who came to Lawson as part of the Premier Industrial acquisition completed as of Mar. 30, 2001. Also contributing to the increase was improved sales activity in the OEM marketplace. Net income for the first quarter of 2002 grew 18.3% to $3.8 million compared to $3.2 million reported for the same quarter last year.

Noland Company, Newport News, VA, reported first-quarter net income of $516,000, compared to the year-earlier period's $1.2 million. The wholesale distribution firm blamed the earnings decline on lower plumbing and electrical/industrial sales and thinner profit margins. First- quarter sales totaled $109.7 million, 4.6% less than the first-quarter 2001's $114.9 million.

Plumbing sales declined 4.7% while electrical/industrial sales were 15.1% less. Contributing to the steep decline in electrical/industrial sales was a softening in the company's integrated supply business. The company's newer air conditioning operations in Florida ' which rely heavily on the equipment replacement market ' grew 4.6% in the first quarter. Gross margins declined from 20.0% a year ago to 19.5%, reflecting increasingly competitive pricing conditions, leading to a 6.9% decline in gross profit.

Applied Industrial Technologies, Cleveland, OH, reported net sales for the quarter ended Mar. 31 declined 11.6% to $361.5 million from $408.8 million for the comparable period a year ago. Net income decreased 62.9% to $2.7 million from $7.0 million for last year's third quarter. For the first nine months of fiscal 2002, Applied recorded a net loss of $(1.6) million on sales of $1.08 billion. This net loss includes the effect of the previously reported first quarter non-cash charge of $12.1 million, for impaired goodwill (SFAS 142) associated with its fluid power business. For the first nine months of fiscal 2001, net income was $21.5 million on sales of $1.24 billion.

Motion Industries, Birmingham, AL, reported net sales for the quarter were $551.2 million, down 5.7% from $583.9 million in the same quarter in 2001. Operating profits for the first quarter were $42.6 million, down 5.8% from $45.2 million in the same quarter in 2001. The numbers were a slight improvement over their results for the past two quarters. The company said industrial production is starting to show small gains and will have a positive impact for Motion ahead.

Kaman Industrial Technologies, Bloomfield, CT, reported net sales were $117.4 million for the first quarter, down 4.6% from $123.1 million a year ago. The results for the 2002 first quarter include A-C Supply of Milwaukee, WI, which the company acquired in September 2001. Operating profit was $2.6 million in the first quarter, down 49% from $5.1 million in the 2001 quarter. In addition to the A-C Supply acquisition, the company announced in March that it had acquired a 60 percent majority ownership interest in Delamac de Mexico S.A. de C.V., a Mexican distributor of industrial products headquartered in Mexico City. Delamac, which supplies power transmission, bearings and fluid power products, generated sales of approximately $7.0 million in 2001.

First quarter sales of Eaton Corporation's largest business segment, Fluid Power, were $597 million, 11% below one year earlier. This compares to a decline of about 11% in Fluid Power's markets, with North American fluid power industry shipments off about 9%, and aerospace markets off about 17%. Segment profits before restructuring costs were $60 million, down 13% from a year ago. In the Industrial & Commercial Controls segment, first quarter sales were $486 million, down 13% from last year, compared to an estimated 24% decline in the North American markets for this business. Segment profits were $31 million before restructuring charges, down 37% from one year ago.