Distribution Solutions (DSGR) 8-K Entry into a Material Definitive Agreement

EXHIBIT 99.1

Lawson Products, Inc.
Pro Forma Condensed Consolidated Financial Information
(Unaudited)

On December 10, 2010, Lawson Products, Inc. (“the Company”) completed the sale of substantially all of the assets of Rutland Tool & Supply Company (“Rutland”), its wholly owned subsidiary, to Sid Tool Co. Inc., a wholly owned subsidiary of MSC Industrial Direct Co., Inc., (“MSC”) for approximately $11.0 million in cash plus the assumption of certain liabilities. The purchase price may be adjusted based on the final value of the net working capital of Rutland. The Company originally announced it had entered into the agreement to sell the assets of Rutland to MSC on November 9, 2010.

The unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2010, set forth below has been presented after giving effect to the sale of Rutland (the “Sale”) as if it had occurred on September 30, 2010. The unaudited Pro Forma Condensed Consolidated Statements of Operations for the nine month period ended September 30, 2010 and for the years ended December 31, 2009, 2008 and 2007 set forth below have been presented after giving effect to the Sale as if it had occurred on January 1, 2007, and does not assume any interest income on cash proceeds.

The unaudited Pro Forma Condensed Consolidated Statements of Operations for the years ended December 31, 2009, 2008 and 2007 have been prepared based on the Pro Forma Condensed Consolidated Financial Statements presented with the Form 8-K dated August 31, 2010 which were derived primarily from the audited Consolidated Financial Statements of the Company included in its fiscal 2009 Annual Report on Form 10-K. The unaudited Pro Forma Condensed Consolidated Statement of Operations for the nine months ended September 30, 2010 and the unaudited Pro Forma Condensed Consolidated Balance Sheet as of September 30, 2010, have been derived primarily from the unaudited Condensed Consolidated Financial Statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010. The unaudited pro forma financial statement information is based upon available information and assumptions that the Company believes are reasonable under the circumstance and were prepared to illustrate the estimated effects of the Sale.

The unaudited pro forma financial statement information has been provided for informational purposes and should not be considered indicative of the financial condition or results of operations that would have been achieved had the Sale occurred as of the periods presented. In addition, the unaudited pro forma financial statement information does not purport to indicate balance sheet data or results of operations as of any future date or for any future period. The unaudited pro forma financial statement information, including the notes thereto, should be read in conjunction with the historical financial statements of the Company included in its fiscal 2009 Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q for the quarters ended March 31, 2010, June 30, 2010 and September 30, 2010, that the Company filed with the Securities and Exchange Commission in 2010.

Lawson Products, Inc.
Pro Forma Condensed Consolidated Balance Sheet
(Dollars in thousands, except per share data)
(Unaudited)

	September 30, 2010
			Rutland
			Pro Forma
	As Reported (1)		Adjustments			Pro Forma
ASSETS
Current assets:
Cash and cash equivalents	$	23,170	$	11,015	(2)	$	34,185
Accounts receivable, less allowance for doubtful accounts		39,032		(3,244	)(3)		35,788
Inventories		55,802		(8,955	)(3)		46,847
Miscellaneous receivables and prepaid expenses		11,281		(168	)(3)		11,113
Deferred income taxes		4,711		—			4,711
Discontinued operations		1,106		—			1,106
Total current assets		135,102		(1,352	)		133,750
Property, plant and equipment, less accumulated depreciation and amortization		41,012		(46	)(3)		40,966
Cash value of life insurance		14,983		—			14,983
Deferred income taxes		11,795		—			11,795
Goodwill		28,099		—			28,099
Other assets		2,132		(63	)(3)		2,069
Total assets	$	233,123	$	(1,461	)	$	231,662
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	19,704	$	(1,824	)(4)	$	17,880
Accrued expenses and other liabilities		32,402		874	(5)		33,276
Discontinued operations		314		—			314
Total current liabilities		52,420		(950	)		51,470
Security bonus plan		25,365		—			25,365
Deferred compensation		10,249		—			10,249
Other		1,186		—			1,186
		36,800		—			36,800
Stockholders’ equity:
Preferred stock, $1 par value:
Authorized — 500,000 shares, Issued and outstanding — None		—		—			—
Common stock, $1 par value:
Authorized — 35,000,000 shares, Issued and outstanding — 8,522,001 shares		8,522		—			8,522
Capital in excess of par value		5,124		—			5,124
Retained earnings		127,632		(511	)(6)		127,121
Accumulated other comprehensive income		2,625		—			2,625
Stockholders’ equity		143,903		(511	)		143,392
Total liabilities and stockholders’ equity	$	233,123	$	(1,461	)	$	231,662

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Nine Months Ended September 30, 2010
				Rutland
				Pro Forma
	As Reported (7)			Adjustments			Pro Forma
Net sales	$	260,102		$	(23,334	)	$	236,768
Cost of goods sold		96,792			(13,348	)		83,444
Gross profit		163,310			(9,986	)		153,324
Operating expenses:
Selling, general and administrative expenses		150,195			(9,835	)		140,360
Severance and other expenses (benefits)		(875	)		(192	)		(1,067	)
Gain on disposal of property, plant and equipment		(1,701	)		—			(1,701	)
Operating income		15,691			41			15,732
Other income/expense, net		(354	)		(7	)		(361	)
Income from continuing operations before income taxes		15,337			34			15,371
Income taxes		5,880			13			5,893
Income from continuing operations	$	9,457		$	21		$	9,478
Basic and diluted income from continuing operations per share of common stock	$	1.11		$	—		$	1.11
Weighted average shares outstanding:
Basic		8,522			8,522			8,522
Diluted		8,528			8,528			8,528

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Year Ended December 31, 2009
				Rutland
	Pro Forma as			Pro Forma
	Reported (8)			Adjustments			Pro Forma
Net sales	$	332,454		$	(30,685	)	$	301,769
Cost of goods sold		124,118			(18,226	)		105,892
Gross profit		208,336			(12,459	)		195,877
Operating expenses:
Selling, general and administrative expenses		202,455			(14,844	)		187,611
Severance and other charges		6,536			(164	)		6,372
Settlement and related costs		154			—			154
Impairment of long-lived assets		1,043			(716	)		327
Operating loss		(1,852	)		3,265			1,413
Other income/expense, net		(8	)		—			(8	)
Loss from continuing operations before income taxes		(1,860	)		3,265			1,405
Income taxes		(1,675	)		1,168			(507	)
Loss from continuing operations	$	(185	)	$	2,097		$	1,912
Basic and diluted loss from continuing operations per share of common stock	$	(0.02	)	$	0.25		$	0.22
Basic and diluted weighted average shares outstanding		8,522			8,522			8,522

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Year Ended December 31, 2008
				Rutland
	Pro Forma as			Pro Forma
	Reported (8)			Adjustments			Pro Forma
Net sales	$	423,064		$	(46,492	)	$	376,572
Cost of goods sold		153,274			(26,753	)		126,521
Gross profit		269,790			(19,739	)		250,051
Operating expenses:
Selling, general and administrative expenses		242,574			(18,133	)		224,441
Severance and other charges		9,258			(103	)		9,155
Settlement and related costs		31,666			—			31,666
Operating loss		(13,708	)		(1,503	)		(15,211	)
Other income/expense, net		(162	)		(1	)		(163	)
Loss from continuing operations before income taxes		(13,870	)		(1,504	)		(15,374	)
Income taxes		8,813			(610	)		8,203
Loss from continuing operations	$	(22,683	)	$	(894	)	$	(23,577	)
Basic and diluted loss from continuing operations per share of common stock	$	(2.66	)	$	(0.10	)	$	(2.77	)
Basic and diluted weighted average shares outstanding		8,522			8,522			8,522

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

Lawson Products, Inc.
Pro Forma Condensed Consolidated Statement of Operations
(Amounts in thousands, except per share data)
(Unaudited)

	Year Ended December 31, 2007
				Rutland
	Pro Forma as			Pro Forma
	Reported (8)			Adjustments			Pro Forma
Net sales	$	445,106		$	(54,799	)	$	390,307
Cost of goods sold		157,687			(30,152	)		127,535
Gross profit		287,419			(24,647	)		262,772
Operating expenses:
Selling, general and administrative expenses		252,447			(22,072	)		230,375
Severance and other charges		11,819			(191	)		11,628
Settlement and related costs		5,793			—			5,793
Operating income		17,360			(2,384	)		14,976
Other income/expense, net		(371	)		93			(278	)
Income from continuing operations before income taxes		16,989			(2,291	)		14,698
Income taxes		7,361			(925	)		6,436
Income from continuing operations	$	9,628		$	(1,366	)	$	8,262
Basic and diluted income from continuing operations per share of common stock	$	1.13		$	(0.16	)	$	0.97
Weighted average shares outstanding:
Basic		8,522			8,522			8,522
Diluted		8,523			8,523			8,523

See accompanying Notes to the Unaudited Pro Forma Condensed Consolidated Financial Statements.

Lawson Products, Inc.
Notes to the Pro Forma Condensed Consolidated Financial Statements
(Unaudited)

(1)	Represents balances as reported on the unaudited Condensed Consolidated Balance Sheet included in the Company’s Form 10-Q for the quarter ended September 30, 2010.
(2)	Represents cash proceeds received from purchaser on December 10, 2010.
(3)	Represents asset balances that were acquired by purchaser.
(4)	Represents accounts payables that were assumed by purchaser.
(5)	Represents estimated transaction costs and working capital adjustments related to the Sale.
(6)	Represents the estimated pre-tax loss on the Sale.
(7)	Represents results of operations on the unaudited Condensed Consolidated Statements of Operations included in the Company’s Form 10-Q for the nine months ended September 30, 2010.
(8)	Represents results of operations on the unaudited Pro Forma Condensed Consolidated Statements of Operations included in the Company’s Form 8-K dated August 31, 2010 for the years ended December 31, 2009, 2008 and 2007.