FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998
Commission file number 1-13059
JLK DIRECT DISTRIBUTION INC.
(Exact name of registrant as specified in its charter)
PENNSYLVANIA 23-2896928
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
1600 TECHNOLOGY WAY
P.O. BOX 231
LATROBE, PENNSYLVANIA 15650-0231
(Address of registrant's principal executive offices)
Registrant's telephone number, including area code:
(724) 539-5000
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 [ ]
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date:
TITLE OF EACH CLASS OUTSTANDING AT APRIL 30, 1998
------------------- -----------------------------
Class A Common Stock, par value $.01 4,917,000
Class B Common Stock, par value $.01 20,237,000
JLK DIRECT DISTRIBUTION INC.
FORM 10-Q
FOR QUARTER ENDED MARCH 31, 1998
TABLE OF CONTENTS
Item No.
- --------
PART I. FINANCIAL INFORMATION
1. Financial Statements:
Condensed Consolidated Balance Sheets (Unaudited)
March 31, 1998 and June 30, 1997
Condensed Consolidated Statements of Income (Unaudited)
Three and nine months ended March 31, 1998 and 1997
Condensed Consolidated Statements of Cash Flows (Unaudited)
Nine months ended March 31, 1998 and 1997
Notes to Condensed Consolidated Financial Statements
(Unaudited)
2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
PART II. OTHER INFORMATION
2. Changes in Securities and Use of Proceeds
5. Other Information
6. Exhibits and Reports on Form 8-K
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
- ---------------------------------------------------------------------
(in thousands) March 31, June 30,
1998 1997
--------- --------
ASSETS
Current Assets:
Cash and equivalents $ 8,991 $ 13,088
Notes receivable from Kennametal 17,601 -
Accounts receivable, less allowance for
doubtful accounts of $380 and $186 61,354 42,589
Inventories 84,405 70,332
Other assets 3,421 -
Deferred income taxes 3,314 3,260
-------- --------
Total current assets 179,086 129,269
-------- --------
Property, Plant and Equipment:
Land and buildings 3,065 1,761
Machinery and equipment 14,770 9,475
Less accumulated depreciation (5,531) (4,204)
-------- --------
Net property, plant and equipment 12,304 7,032
-------- --------
Other Assets:
Intangible assets, less accumulated
amortization of $6,915 and $4,948 60,400 27,927
Other 1,534 1,260
-------- --------
Total other assets 61,934 29,187
-------- --------
Total assets $253,324 $165,488
======== ========
LIABILITIES
Current Liabilities:
Notes payable to banks $ 1,208 $ 20,295
Notes payable to Kennametal - 15,805
Accounts payable 20,650 15,460
Due to Kennametal and affiliates 2,371 7,641
Accrued payroll and vacation pay 2,386 1,735
Income taxes payable 6,083 4,055
Other 9,178 2,806
-------- --------
Total current liabilities 41,876 67,797
-------- --------
Other Liabilities 7,199 4,960
-------- --------
Total liabilities 49,075 72,757
-------- --------
SHAREHOLDERS' EQUITY
Shareholders' Equity:
Investments by and advances from Kennametal - 92,643
Preferred stock, $.01 par value; 25,000
shares authorized; none issued - -
Class A Common Stock, $.01 par value;
75,000 shares authorized;
4,917 shares issued and outstanding 49 -
Class B Common Stock, $.01 par value;
50,000 shares authorized;
20,237 shares issued and outstanding 202 -
Additional paid-in capital 182,822 -
Retained earnings 21,084 -
Cumulative translation adjustments 92 88
-------- --------
Total shareholders' equity 204,249 92,731
-------- --------
Total liabilities and
shareholders' equity $253,324 $165,488
======== ========
See accompanying notes to condensed consolidated financial statements.
JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
- ----------------------------------------------------------------------
(in thousands, except per share data)
Three Months Ended Nine Months Ended
March 31, March 31,
--------------------- ---------------------
1998 1997 1998 1997
-------- -------- -------- --------
OPERATIONS:
Net sales $109,945 $ 84,433 $299,058 $225,195
Cost of goods sold 70,799 56,632 193,126 152,339
-------- -------- -------- --------
Gross profit 39,146 27,801 105,932 72,856
Operating expenses 27,608 18,406 73,918 50,425
-------- -------- -------- --------
Operating income 11,538 9,395 32,014 22,431
Interest income 700 - 2,870 -
-------- -------- -------- --------
Income before
income taxes 12,238 9,395 34,884 22,431
Provision for
income taxes 4,900 3,693 13,800 8,812
-------- -------- -------- --------
Net income $ 7,338 $ 5,702 $ 21,084 $ 13,619
======== ======== ======== ========
PER SHARE DATA:
Basic earnings
per share $ 0.29 - $ 0.84 -
======== ======== ======== ========
Diluted earnings
per share $ 0.29 - $ 0.83 -
======== ======== ======== ========
Weighted average
shares outstanding 25,154 - 25,154 -
======== ======== ======== ========
Diluted average
shares outstanding 25,312 - 25,301 -
======== ======== ======== ========
Pro forma net income
per share - $ 0.27 - $ 0.65
======== ======== ======== ========
Pro forma weighted
average shares
outstanding - 20,932 - 20,932
======== ======== ======== ========
See accompanying notes to condensed consolidated financial statements.
JLK DIRECT DISTRIBUTION INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
- ----------------------------------------------------------------------
(in thousands)
Nine Months Ended
March 31,
---------------------
1998 1997
-------- --------
OPERATING ACTIVITIES:
Net income $21,084 $13,619
Adjustments for noncash items:
Depreciation and amortization 3,315 1,118
Loss on sale of assets 66 -
Noncash transactions with Kennametal - 4,714
Changes in certain assets and liabilities, net
of effects of acquisitions:
Accounts receivable (9,590) (7,177)
Inventories (5,965) (2,357)
Accounts payable and accrued liabilities (3,438) 2,907
Other 1,250 (21)
-------- --------
Net cash flow from operating activities 6,722 12,803
-------- --------
INVESTING ACTIVITIES:
Purchases of property, plant and equipment (4,399) (2,028)
Notes receivable from Kennametal (17,601) -
Acquisitions, net of cash (43,974) -
Other 112 159
-------- --------
Net cash flow used for investing activities (65,862) (1,869)
-------- --------
FINANCING ACTIVITIES:
Net proceeds from initial public offering
of Class A Common Stock 90,430 -
Increase in short-term debt 1,102 -
Decrease in short-term debt (20,109) -
Decrease in term debt (579) -
Notes Payable to Kennametal (15,805) -
Net cash advances by (payments to) Kennametal - (5,127)
-------- -------
Net cash flow from (used for)
financing activities 55,039 (5,127)
-------- -------
Effect of exchange rate changes on cash 4 181
-------- -------
CASH AND EQUIVALENTS:
Net increase (decrease) in
cash and equivalents (4,097) 5,988
Cash and equivalents, beginning 13,088 690
-------- -------
Cash and equivalents, ending $ 8,991 $ 6,678
======== =======
See accompanying notes to condensed consolidated financial statements.
JLK DIRECT DISTRIBUTION INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- -------------------------------------------------------------------
1. The accompanying condensed consolidated financial statements of
JLK Direct Distribution Inc. (the "Company") include the
operations of J&L America, Inc. ("J&L"), a previously wholly-owned
subsidiary of Kennametal Inc. ("Kennametal"), and Full Service
Supply ("Full Service Supply"), which previously had been operated
as a program of Kennametal. Prior to April 1, 1997, the Company
had no separate legal status or existence. Kennametal
incorporated the Company as a Pennsylvania corporation under the
name "JLK Direct Distribution Inc." in April 1997. In
anticipation of the initial public offering ("IPO"), Kennametal
contributed to the Company the stock of J&L, including the J&L
United Kingdom operations, and the assets and liabilities of Full
Service Supply. Immediately prior to the effective date of the
IPO (see Note 2), Kennametal exchanged its currently outstanding
investment for 20,897,000 shares of Class B Common Stock.
In connection with the IPO, Kennametal surrendered to the Company
640,000 shares of Class B Common Stock equal to the number of
additional shares of Class A Common Stock purchased by the
underwriters upon exercise of the underwriters over-allotment
option. In addition, Kennametal sold 20,000 shares of Class B
Common Stock at $20 per share to one of the members of its and the
Company's board of directors. The 20,000 shares of Class B Common
Stock were subsequently converted to Class A Common Stock.
Subsequent to the IPO, 4,917,000 shares of Class A Common Stock
were outstanding, and Kennametal held 20,237,000 shares of Class B
Common Stock.
2. On July 2, 1997, the Company consummated an IPO of approximately
4.9 million shares of Class A Common Stock at a price of $20 per
share. The net proceeds from the IPO were approximately $90
million and represented approximately 20% of the Company's
outstanding common stock. The net proceeds were used by the
Company to repay $20 million of short-term debt related to a
dividend paid to Kennametal and $20 million to repay Kennametal
for acquisitions in fiscal 1997 and income taxes paid for on
behalf of the Company.
Additional net proceeds of $44 million have been used to make
acquisitions in fiscal 1998 (see Note 5). The remaining net
proceeds are loaned to Kennametal under an intercompany
debt/investment and cash management agreement at a fluctuating
rate of interest equal to Kennametal's short-term borrowing costs.
Kennametal maintains unused lines of credit to enable it to repay
any portion of the borrowed funds as the amounts are due on demand
by the Company.
3. The condensed consolidated financial statements should be read in
conjunction with the Notes to Consolidated Financial Statements
included in the Company's 1997 Annual Report on Form 10-K. The
condensed consolidated balance sheet as of June 30, 1997 has been
derived from the audited balance sheet included in the Company's
1997 Annual Report on Form 10-K. These interim statements are
unaudited; however, management believes that all adjustments
necessary for a fair presentation have been made and all
adjustments are normal, recurring adjustments. The results for
the three and nine months ended March 31, 1998 are not necessarily
indicative of the results to be expected for the full fiscal year.
4. Basic earnings per share for fiscal 1998 was computed using the
weighted average number of shares outstanding during the period,
while diluted earnings per share was calculated to reflect the
potential dilution that occurs related to issuance of common stock
under stock option grants. The difference between basic and
diluted earnings per share relates solely to the effect of common
stock options. Pro forma earnings per share for fiscal 1997 was
computed using the weighted average number of shares outstanding
during the period. Pro Forma weighted average common shares
outstanding are presented on a basis that gives pro forma effect
to (i) the issuance of the Class B Common Stock and (ii) the
assumed issuance of 34,650 share of Class A Common Stock to fund
the excess of dividends over net income.
5. During the second quarter of fiscal 1998, JLK acquired Car-Max
Tool & Cutter Sales, Inc. and GRS Industrial Supply Company. Both
companies are engaged in the distribution of metalcutting tools
and industrial supplies. The two acquired companies had combined
annual sales of approximately $23.9 million.
During the quarter ended March 31, 1998, JLK acquired Production
Tools Sales, Inc., Dalworth Tool & Supply and ATS Industrial
Supply. The three companies had combined annual sales of
approximately $49 million. All three companies are engaged in the
distribution of metalcutting and industrial supplies.
Acquisitions have been recorded using the purchase method of
accounting, and accordingly, results of their operations have been
included in the Company's consolidated financial statements since
the effective dates of the respective acquisitions. Pro forma
results of operations have not been presented because the effects
of these acquisitions were not significant. In connection with
the above acquisitions, the net purchase price was allocated as
follows:
(in thousands)
Current assets, net of cash $17,338
Property, plant & equipment 2,400
Other assets 625
Goodwill 30,132
Liabilities (6,521)
-------
Purchase price, net of cash $43,974
Additionally, included in other current assets in the condensed
consolidated balance sheets is restricted cash related to the
above acquisitions. These amounts will be paid within one year.
On May 1, 1998, JLK acquired Strong Tool Co. (Strong), distributor
of metalcutting tools, industrial supplies, and maintenance and
repair operating supplies headquartered in Cleveland, Ohio. Strong
reported sales of $64 million for the year ended December 31,
1997, and has a major presence in the Midwest, primarily in Ohio
and Indiana. A significant portion of the company's business is
in the distribution of metalcutting supplies, including
distribution through a number of integrated supply contracts.
6. Information related to the Company's shareholders' equity during
the nine months ended March 31, 1998 is as follows:
(in thousands) Additional Investments by
Class A Common Stock Class B Common Stock Paid-In Retained Translation and Advances
Shares Amount Shares Amount Capital Earnings Adjustments from Kennametal Total
------ ------ ------ ------ ------- -------- ----------- --------------- -----
Balance, June 30, 1997 - $ - - $ - $ - $ - $88 $92,643 $ 92,731
Exchange of investment by
and advances from
Kennametal for 20,897
shares of Class B Common
Stock - - 20,897 209 92,434 - - (92,643) -
Initial public offering
of Class A Common Stock
including surrender of
640 shares of Class B
Common Stock 4,897 48 (640) (6) 90,388 - - - 90,430
Sale and exchange of
Class B Common Stock for
Class A Common Stock by
Kennametal 20 1 (20) (1) - - - - -
Translation adjustments - - - - - - 4 - 4
Net Income - - - - - 21,084 - - 21,084
----- --- ------ ---- -------- ------- --- ------- --------
Balance, March 31, 1998 4,917 $49 20,237 $202 $182,822 $21,084 $92 $ - $204,249
===== === ====== ==== ======== ======= === ======= ========
In connection with the IPO, Kennametal surrendered to the Company
640,000 shares of Class B Common Stock equal to the number of
additional shares of Class A Common Stock purchased by the
underwriters upon exercise of the underwriters over-allotment
option. In addition, Kennametal sold 20,000 shares of Class B
Common Stock at $20 per share to one of the members of its and the
Company's board of directors. The 20,000 shares of Class B Common
Stock were subsequently converted to Class A Common Stock.
Subsequent to the IPO, 4,917,000 shares of Class A Common Stock
were outstanding, and Kennametal held 20,237,000 shares of Class B
Common Stock.
7. The Company engages in business transactions with Kennametal and
its subsidiaries. Products purchased for resale from Kennametal and
its subsidiaries and sales to these entities for the three and nine
months ended March 31, 1998 and 1997 were as follows:
Three months ended Nine months ended
March 31, March 31,
------------------ -----------------
1998 1997 1998 1997
------- -------- ------- -------
($ in thousands)
Purchases from Kennametal
and subsidiaries $10,263 $8,662 $29,362 $21,505
Sales to Kennametal
and subsidiaries $ 2,603 $4,028 $ 7,795 $11,157
The Company also receives from Kennametal certain warehouse,
management information systems, financial and administrative
services. All amounts incurred by Kennametal on behalf of the
Company are reflected in operating expenses in the accompanying
statements of income. Costs charged to the Company by Kennametal
totaled $2.5 million and $2.2 million, and $7.5 million and $6.0
million for the three and nine months ended March 31, 1998 and
1997, respectively.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
- ----------------------------------------------------------------------
RESULTS OF OPERATIONS
NET SALES
- ---------
Net sales for the March 1998 quarter were $109.9 million, an increase
of 30% from $84.4 million last year. Net sales primarily increased
because of acquisitions, an expanded product offering in the 1998
master catalog and from further penetration of existing customers.
These increases in sales were realized despite a $13 million reduction
in sales due to the General Electric Full Service Supply contract (GE
Contract) disengagement. Excluding the acquisitions, net sales
increased approximately 2%.
During the nine-month period ended March 31, 1998, consolidated sales
were $299.1 million, up 33% from $225.2 million last year and
benefited from the same factors mentioned above.
GROSS PROFIT
- ------------
Gross profit for the March 1998 quarter was $39.1 million, an increase
of 41% from $27.8 million in the prior year. Gross profit margin for
the March 1998 quarter was 35.6% compared to 32.9% in the prior year.
The gross profit margin improved due to a more favorable sales mix as
well as improved contract pricing on new Full Service Supply programs
and the positive impact of the GE Contract disengagement. These
benefits were partially offset by acquisition related effects.
During the nine-month period ended March 31, 1998, gross profit was
$105.9 million, up 45% from $72.9 million last year. Gross profit
margin for the nine-month period ended March 31, 1998 was 35.4%
compared to 32.4% in the prior year and benefited from the same
factors mentioned above.
OPERATING EXPENSES
- ------------------
Operating expenses for the March 1998 quarter were $27.6 million, an
increase of 50% from $18.4 million in the prior year. Operating
expenses as a percentage of net sales were 25.1% in the March 1998
quarter compared to 21.8% in the prior year. Operating expenses rose
primarily as a result of increased costs from acquisitions, including
higher amortization of intangibles, higher costs associated with the
addition of new showroom locations and increased direct mail costs.
Also included in operating expenses were charges from Kennametal Inc.
("Kennametal") for warehousing, administrative, financial and
management information systems services provided to the Company.
Charges from Kennametal were $2.5 million in the March 1998 quarter,
an increase of 10% from $2.2 million in the prior year. The increase
in total charges from Kennametal resulted partly from increased costs
to support higher sales volumes.
During the nine-month period ended March 31, 1998, operating expenses
were $73.9 million, up 47% from $50.4 million last year. Charges from
Kennametal were $7.5 million for the nine-month period ended March 31,
1998 compared to $6.0 million in the prior year. Operating expenses
for the nine-month period ended March 31, 1998, increased from the
same factors mentioned above.
INTEREST INCOME
- ---------------
The Company earned interest income of approximately $.7 million during
the March 1998 quarter. This was primarily from investments made from
excess cash and from the residual proceeds the Company received from
its initial public offering ("IPO").
During the nine-month period ended March 31, 1998, interest income was
approximately $2.9 million.
INCOME TAXES AND NET INCOME
- ---------------------------
The effective tax rate was 40% for the March 1998 quarter compared to
39.3% in the prior year. Net income increased 29% to $7.3 million for
the March 1998 quarter as a result of higher sales and an improved
gross margin, offset by higher operating expenses.
For the nine-month period ended March 31, 1998, the effective tax rate
was 39.6%,compared to 39.3% in the prior year. Net income increased
55% to $21.1 million from $13.6 million in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's primary capital needs have been to fund the working
capital requirements necessitated by its sales growth, its showroom
expansion program in the United States, its European expansion,
acquisitions, the addition of new products and Full Service Supply
Programs. The Company's primary sources of financing have been cash
from operations and the net proceeds from the IPO. The Company
anticipates that its cash flows from operations, its intercompany
debt/investment and cash management agreement with Kennametal and the
remaining net proceeds from the IPO will be adequate to support its
operations for the foreseeable future.
Net cash provided by operating activities was $6.7 million for the
nine months ended March 31, 1998. The decrease in net cash from
operations resulted from higher working capital requirements, offset
by higher net income and noncash items.
Net cash used in investing activities was $65.9 million for the nine
months ended March 31, 1998. The increase in net cash used in
investing activities resulted from recent acquisitions, from a portion
of the net proceeds from the IPO being loaned to Kennametal under an
intercompany debt/investment and cash management agreement, and from
investments related primarily to capital expenditures for improved
information systems and office and computer equipment to accommodate
new product offerings and showroom openings.
During the year, JLK acquired five companies that are engaged in the
distribution of metalcutting tools and industrial supplies.
Additionally, on May 1, 1998, JLK acquired Strong Tool Co. (Strong), a
distributor of metalcutting tools, industrial supplies, and
maintenance and repair operating supplies headquartered in Cleveland,
Ohio. The acquired companies have combined annual sales of
approximately $137 million. The acquisitions were accounted for using
the purchase method of accounting. The consolidated financial
statements include the operating results from the date of acquisition.
Net cash provided by financing activities was $55.0 million for the
nine months ended March 31, 1998. The increase in net cash provided
by financing activities was a result of proceeds received from the
issuance of common stock in connection with the Company's IPO. This
was partially offset by repayments to Kennametal for amounts
previously advanced to the Company for two acquisitions in the June
1997 quarter and by the repayment of short-term borrowings that were
made under the Company's line of credit primarily to fund the $20
million dividend paid to Kennametal.
On July 2, 1997, the Company consummated its IPO of approximately 4.9
million shares of common stock at a price of $20 per share. The net
proceeds from the IPO were approximately $90 million and represented
approximately 20% of the Company's outstanding common stock. The net
proceeds were used by the Company to repay $20 million of short-term
debt related to the dividend paid to Kennametal and to repay $20
million to Kennametal for the Company's fiscal 1997 acquisitions and
income taxes paid for on behalf of the Company.
Additional net proceeds of $44 million have been used to make fiscal
1998 acquisitions. The remaining net proceeds are loaned to
Kennametal under an intercompany debt/investment and cash management
agreement at a fluctuating rate of interest equal to Kennametal's
short-term borrowing costs. Kennametal maintains unused lines of
credit to enable it to repay any portion or all of such loans on
demand by the Company.
FINANCIAL CONDITION
- -------------------
The Company's financial condition remains strong. Total assets were
$253 million at March 31, 1998, up 53% from $165 million at June 30,
1997. Net working capital was $137 million, up from $61 million at
June 30, 1997. Additionally, the Company had no outstanding long-term
debt at March 31, 1998.
The most significant events that impacted the Company's financial
condition during the quarter were the acquisition of three industrial
supply companies and the remaining effects of the Company's IPO of
approximately 4.9 million shares of common stock at $20 per share.
YEAR 2000
- ---------
The Company has initiated a program to prepare its computer systems
and applications for the Year 2000. As part of this program, a review
has been performed of the key business, operational and financial
systems, and plans have been developed to implement the required
systems modifications and efforts are currently under way.
The Company expects to utilize both internal staff and outside
consultants to complete the necessary modifications and
anticipates that the associated costs, including computer and related
equipment, to address these issues will range between $5 and $10
million. Implementation is expected to be completed in calendar 1999.
There can be no assurance however, that there will not be a delay in,
or increased costs associated with the implementation of such changes.
OUTLOOK
- -------
In looking to the fourth quarter ending June 30, 1998, management
expects JLK's sales to continue to benefit from further expansion of
locations, increased mail order sales as a result of the expanded
product offering in the new master catalog and from acquisitions.
Sales should also benefit from the further development of
international business, offset in part by the loss of the General
Electric Full Service Supply Contract. In fiscal 1998, in conjunction
with the GE disengagement, the Company expects sales to General
Electric to amount to approximately 37% of the total amount received
by the Company in fiscal 1997 under the GE Contract which amounted to
$52 million.
This Form 10-Q contains forward-looking statements as defined in
Section 21E of the Securities Exchange Act of 1934. Actual results
can materially differ from those in the forward-looking statements to
the extent that the anticipated economic conditions in the United
States and Europe are not sustained. The Company undertakes no
obligation to publicly release any revisions to forward-looking
statements to reflect events or circumstances occurring after the date
hereof.
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- ----------------------------------------------------------------------
The information set forth in Note 2 to the condensed consolidated
financial statements, contained in Part I. of this Form 10-Q, and the
information set forth in Part I, Item 2 of this Form 10-Q, is
incorporated by reference herein and supplements the information
previously reported in Part II, Item 5 of the Company's Form 10-K for
the year ended June 30, 1997, which is also incorporated by reference
herein.
ITEM 5. OTHER INFORMATION
- ----------------------------------------------------------------------
On May 4, 1998, the Board of Directors elected H. Patrick Mahanes to
the Board. Mr. Mahanes is Vice President and Chief Operating Officer
of Kennametal Inc.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------------------------------------
(a) Exhibits
(27) Financial Data Schedule for nine months ended
March 31, 1998, submitted to the Securities and
Exchange Commission in electronic format. Filed herewith.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
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.
JLK DIRECT DISTRIBUTION INC.
Date: May 15, 1998 By: /s/ MICHAEL J. MUSSOG
---------------------
Michael J. Mussog
Vice President and
Chief Financial Officer