MDM News Digest

Precision Industries, Omaha, NE, has acquired Sisco Incorporated, Bentonville, AR. Sisco is a distributor for power transmission, bearings and hydraulics and works primarily with poultry-based industries, such as Tyson Foods. Other Sisco customers include Wal-Mart, Simmons Foods and Jet-Stream Plastics.

Airgas, Inc., Radnor, PA, has purchased seven retail operations based in Arizona from Air Liquide America Corporation. These operations have annual sales of nearly $10 million in welding hardgoods and packaged gases and include five locations in Arizona, one in New Mexico, and one in California. The two companies also have entered into an agreement for Air Liquide America to acquire two of Airgas' nitrous oxide production facilities and related business. The operations located in Donora, PA and Richmond, CA generate less than $10 million in annual sales. Airgas is selling the two facilities and related business to address certain regulatory concerns. Airgas will retain four nitrous oxide production facilities, which will meet its needs as a producer and distributor of nitrous oxide.

Danaher Corporation, Washington, DC said it signed a confidentiality agreement on Sept. 26 with Cooper Industries, Houston, TX, and expects to commence due diligence shortly. That announcement followed a heated public exchange after Danaher proposed a $6.5-billion merger to the slightly larger Cooper Industries in July. Cooper rejected that proposal, the second Danaher made to them in two years.

The Home Depot, Atlanta, GA, has entered into a definitive agreement to purchase Your 'other' Warehouse, Baton Rouge, LA, a plumbing distributor, with a focus on special order fulfillment. Full Story...


Sales and budgets on hold. Manufacturers of MRO products are reporting customer activity the past few weeks in the form of quotes and inquiries, as well as orders expedited to customers as distributors keep inventories low. But after Sept. 11 customers seem to be holding their breath to gain a better sense of where the economy's headed before committing to a budget or specific programs. The only optimism at the end of September seemed to be that once there is some signal of an upturn, the channel's current low inventories will translate into strong orders.

MRO Software, Inc., Bedford, MA, a provider of solutions for powering industrial collaboration, announced the availability of CollegoTM Catalog ManagerTM for industrial suppliers. The product is based on technology offered in MRO Software's existing supplier solutions, recently enhanced by the company's acquisition of Collego Corporation. Collego Catalog Manager helps aggregate data from multiple sources and formats it into one central repository, allowing easy customization, maintenance and publication of data through a browser-based, drag-and-drop interface that reduces dependency on IT resources. The product is targeted for industrial suppliers who need online catalogs to meet the requirements of multiple sales channels and customers, with catalog content that needs to be accurate, searchable, managed from a central repository and easily repurposed for a variety of destinations and applications.

The Fastenal Company, Winona, MN, reported net sales for the three-month period ended Sept. 30 totaled $207.1 million, an increase of 7.3% over the $192.9 million in the third quarter of 2000. Net earnings decreased from $20.8 million in the third quarter of 2000 to $17.0 million in the third quarter of 2001, a decrease of 18.3%. Net sales for the nine-month period ended Sept. 30 totaled $613.0 million, an increase of 9.9% over the $557.8 million in the same period of 2000. Net earnings decreased from $61.8 million in the first nine months of 2000 to $56.8 million in the same period of 2001, a decrease of 8.2%. Full Story...

August U.S. machine tool consumption totaled $207.37 million, according to AMTDA, the American Machine Tool Distributors' Association and AMT - The Association For Manufacturing Technology. This total, as reported by companies participating in the USMTC program, was up 21.1% from July but down 39.1% from the total of $340.33 million reported for August 2000. With a year-to-date total of $1,864.69 million, 2001 is down 31.1% compared to the same period in 2000. These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.

Economic activity in the manufacturing sector declined for the 14th consecutive month in September while the overall economy grew for the fourth consecutive month, say the nation's purchasing and supply executives in the latest Manufacturing NAPM Report On Businessﾮ. Full Story...


NxTrend Technology, Inc, Colorado Springs, CO, a provider of technology solutions for distribution, announced the return of title on all NxTrend assets to its former owners. Since March of 2000, NxTrend had operated as a wholly owned subsidiary of BuildNet, a solutions provider for the U.S. construction industry that was rolling up a group of technology companies across the construction channel. Although the company has been operating independently of BuildNet since March of this year, the return of title formally separates NxTrend and BuildNet. BuildNet filed for Chapter 11 bancruptcy protection in August of this year. NxTrend was not included in that Chapter 11 filing. 'We anticipated the return of title and we're pleased to have this behind us,' said Michael J. Cornell, president and CEO of NxTrend. 'This is really the last piece of the puzzle to shedding all that baggage. We're thrilled about the future and happy our customers and prospects no longer have this to be concerned about.'

Industrial supply alliance IBC, Hartford, CT, has added its first Mexican location with the addition of Gorman Industrial Supply, El Paso, TX, to its group of industrial supply distributors located throughout the North America. Gorman Industrial has locations in Juarez, Mexico and San Diego, CA. From these locations they service West Texas, Southern New Mexico and Northern Mexico (from Juarez to Tijuana). Currently about 80% of their business is done in Mexico. IBC expects to use Gorman's experience as a platform for national account opportunities. Gorman focuses on cutting tools, hand and power tools, as well as abrasives and other general MRO-related items.

Master fasteners distributor EFC International (Engineered Fasteners), St. Louis, MO, has realigned its western U.S. sales territory by appointing Diamondback Fasteners, Scottsdale, AZ, as exclusive representative for that area. A member of the Southwest Fastener Alliance, Diamondback Fasteners will function as a multi-line fastener representative for 12 states.

GE Supply, Shelton, CT, the electrical, voice and data products distribution business of GE, has added Stanley Electrical Products to its 250,000 product offering at its 150 branch locations and Web site. Stanley recently entered electrical distribution with a full line of professional electrician tools including measuring, cutting, fastening, striking/struck, layout, insulated, electronic measuring and boring tools, and hand tools.

Graybar Electric opened its 12th distribution center in September in Springfield, MO. The 186,000-square-foot underground complex includes 15 truck docks and serves as a regional zone center for a seven-state area. Graybar has been building out a logistics network to support its 292 branches, with the goal of improving customer service on same-day items at the branches, and using its warehouses to

consolidate orders for next-day delivery and stock slow-moving and hard-to-find items.

New order index for Industrial Supply Manufacturers Association (ISMA), formerly the American Supply & Machinery Manufacturers Association (ASMMA), increase in July by 1.2 index points from the June level. Year-to-date new orders stand 7.9% lower than the levels reached during 2000. The ISMA new order index forecast for 2002 is at ﾖ4.4. The Federal Reserve Board's Durable Manufactures Index and the Conference Board's Index of Leading Indicators increased in July.

Pentacon, Inc., Chatsworth, CA, said it did not make the interest payment that was due Oct. 1 in respect of its 12ﾼ percent senior subordinated notes due Apr. 1, 2009. The company has a 30-day grace period to make the interest payment due on the notes before such nonpayment would become an event of default under the indenture relating to the notes and the company's bank credit facility. On Sept. 28, 2001, the company's lender under its bank credit facility exercised its right to establish a reserve in the amount of $4.9 million, effectively reducing the company's availability under that facility to meet its working capital, capital expenditure and debt servicing requirements. Although the company generated positive cash flow for the third quarter, because of the events of Sept. 11, 2001 and the company's business concentration in certain segments of the aerospace industry, the company is revising its business projections in the context of current economic conditions.
The company also is continuing to consider a variety of other potential transactions with a view toward strengthening its financial wherewithal. The company continues in discussions with its lenders under the bank credit facility, and shortly will be inviting a dialogue with the holders of its notes. The purpose of these discussions will be to explore scenarios for restructuring financially and recapitalizing the company. Headquartered in Houston, TX, Pentacon is a distributor of fasteners and other small parts and provider of related inventory management services. Pentacon presently has 35 distribution and sales facilities in the U.S., along with sales offices in Europe, Canada, Mexico and Australia.