10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

__________________________________________

(Mark One)
☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 1, 2019
OR
☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from  to

Commission File No.: 1-14130

__________________________________________

MSC INDUSTRIAL DIRECT CO., INC.

(Exact name of registrant as specified in its charter)

__________________________________________

New York (State or Other Jurisdiction of Incorporation or Organization)	11-3289165 (I.R.S. Employer Identification No.)
75 Maxess Road, Melville, New York (Address of principal executive offices)	11747 (Zip Code)

(516) 812-2000

(Registrant’s telephone number, including area code)

__________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $.001	MSM	The New York Stock Exchange

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 ☒  No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒  No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a  smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☒	☐		☐	☐
Large accelerated filer ☒	Accelerated filer ☐	Non‑accelerated filer ☐	Smaller reporting company ☐	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes ☐  No ☒

As of June 19, 2019, 45,008,191 shares of Class A common stock and 10,193,348 shares of Class B common stock of the registrant were outstanding.

SAFE HARBOR STATEMENT

This Quarterly Report on Form 10-Q (the “Report”) contains forward‑looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Discussions containing such forward‑looking statements may be found in Items 2 and 3 of Part I and Item 1 of Part II of this Report, as well as within this Report generally. The words “believes,” “anticipates,” “thinks,” “expects,” “estimates,” “plans,” “intends,” and similar expressions are intended to identify forward‑looking statements. In addition, any statements which refer to expectations, projections or other characterizations of future events or circumstances are forward‑looking statements. We undertake no obligation to publicly disclose any revisions to these forward‑looking statements to reflect events or circumstances occurring subsequent to filing this Report with the Securities and Exchange Commission (the “SEC”). These forward‑looking statements are subject to risks and uncertainties, including, without limitation, those discussed in this section and Items 2 and 3 of Part I, as well as in Part II, Item 1A, “Risk Factors” of this Report, and in Part I, Item 1A, “Risk Factors” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended September 1, 2018. In addition, new risks emerge from time to time and it is not possible for management to predict all such risk factors or to assess the impact of such risk factors on our business. Accordingly, future results may differ materially from historical results or from those discussed or implied by these forward‑looking statements. Given these risks and uncertainties, the reader should not place undue reliance on these forward‑looking statements. These risks and uncertainties include, but are not limited to:

· general economic conditions in the markets in which the Company operates;

· changing customer and product mixes;

· competition, including the adoption by competitors of aggressive pricing strategies and sales methods;

· industry consolidation and other changes in the industrial distribution sector;

· volatility in commodity and energy prices;

· the outcome of government or regulatory proceedings or future litigation;

· credit risk of our customers;

· risk of customer cancellation or rescheduling of orders;

· work stoppages or other business interruptions (including those due to extreme weather conditions) at transportation centers, shipping ports, our headquarters or our customer fulfillment centers;

· dependence on our information systems and the risks of business disruptions arising from changes to our information systems and disruptions due to catastrophic events, power outages, natural disasters, computer system or network failures, computer viruses, physical or electronic break-ins and cyberattacks;  

· retention of key personnel;

· retention of qualified sales and customer service personnel and metalworking specialists;

· risk of loss of key suppliers, key brands or supply chain disruptions;

· changes to trade policies, including the impact from significant restrictions or tariffs;

· risks related to opening or expanding our customer fulfillment centers;

· litigation risk due to nature of our business;

· risks associated with the integration of acquired businesses or other strategic transactions;

· financial restrictions on outstanding borrowings;

· failure to comply with applicable environmental, health and safety laws and regulations;

· goodwill and intangible assets recorded resulting from our acquisitions could be impaired;

· our common stock price may be volatile; and

· our principal shareholders exercise significant control over us.

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MSC INDUSTRIAL DIRECT CO., INC.

INDEX

		Page
PART I.  FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)
	Condensed Consolidated Balance Sheets as of June 1, 2019 and September 1, 2018	4
	Condensed Consolidated Statements of Income for the Thirteen and Thirty-Nine Weeks Ended June 1, 2019 and June 2, 2018	5
	Condensed Consolidated Statements of Comprehensive Income for the Thirteen and Thirty-Nine Weeks Ended June 1, 2019 and June 2, 2018	6
	Condensed Consolidated Statements of Shareholders’ Equity for the Thirteen and Thirty-Nine Weeks Ended June 1, 2019 and June 2, 2018	7
	Condensed Consolidated Statements of Cash Flows for the Thirty-Nine Weeks Ended June 1, 2019 and June 2, 2018	8
	Notes to Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	26
PART II.  OTHER INFORMATION
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3.	Defaults Upon Senior Securities	27
Item 4.	Mine Safety Disclosures	27
Item 5.	Other Information	27
Item 6.	Exhibits	28
SIGNATURES		29

3

PART I. FINANCIAL INFORMATION

Item 1.  Condensed Consolidated Financial Statements

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Balance Sheets

(In thousands, except share data)

	June 1,		September 1,
	2019		2018
	(Unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	38,771	$	46,217
Accounts receivable, net of allowance for doubtful accounts of $17,945 and $12,992, respectively		546,486		523,892
Inventories		560,800		518,496
Prepaid expenses and other current assets		69,715		58,902
Total current assets		1,215,772		1,147,507
Property, plant and equipment, net		306,564		311,685
Goodwill		676,845		674,998
Identifiable intangibles, net		119,778		122,724
Other assets		5,389		31,813
Total assets	$	2,324,348	$	2,288,727
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Short-term debt	$	246,298	$	224,097
Accounts payable		146,815		145,133
Accrued liabilities		92,955		121,293
Total current liabilities		486,068		490,523
Long-term debt		284,691		311,236
Deferred income taxes and tax uncertainties		99,714		99,714
Total liabilities		870,473		901,473
Commitments and Contingencies
Shareholders’ Equity:
MSC Industrial Shareholders’ Equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized; none issued and outstanding		—		—
Class A common stock (one vote per share); $0.001 par value; 100,000,000 shares authorized; 54,484,700 and 54,649,158 shares issued, respectively		54		55
Class B common stock (ten votes per share); $0.001 par value; 50,000,000 shares authorized; 10,193,348 and 10,454,765 shares issued and outstanding, respectively		10		10
Additional paid-in capital		675,674		657,749
Retained earnings		1,394,551		1,325,822
Accumulated other comprehensive loss		(22,730)		(19,634)
Class A treasury stock, at cost, 9,476,509 and 9,207,635 shares, respectively		(599,116)		(576,748)
Total MSC Industrial shareholders’ equity		1,448,443		1,387,254
Noncontrolling interest		5,432		—
Total Equity		1,453,875		1,387,254
Total liabilities and shareholders’ equity	$	2,324,348	$	2,288,727
See accompanying notes to condensed consolidated financial statements.

4

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Income

(In thousands, except per share data)

(Unaudited)

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net sales	$	866,546	$	828,345	$	2,521,147	$	2,365,893
Cost of goods sold		497,891		467,344		1,442,693		1,332,600
Gross profit		368,655		361,001		1,078,454		1,033,293
Operating expenses		258,154		245,619		768,972		720,530
Income from operations		110,501		115,382		309,482		312,763
Other (expense) income:
Interest expense		(4,565)		(3,532)		(13,160)		(10,319)
Interest income		178		108		504		484
Other (expense) income, net		(95)		(141)		(330)		(472)
Total other expense		(4,482)		(3,565)		(12,986)		(10,307)
Income before provision for income taxes		106,019		111,817		296,496		302,456
Provision for income taxes		26,505		32,748		74,320		46,250
Net income		79,514		79,069		222,176		256,206
Less: Net income (loss) attributable to noncontrolling interest		(87)		—		(81)		—
Net income attributable to MSC Industrial	$	79,601	$	79,069	$	222,257	$	256,206
Per share data attributable to MSC Industrial:
Net income per common share:
Basic	$	1.44	$	1.40	$	4.02	$	4.54
Diluted	$	1.44	$	1.39	$	4.00	$	4.51
Weighted average shares used in computing net income per common share:
Basic		55,158		56,420		55,266		56,382
Diluted		55,387		56,804		55,556		56,733
See accompanying notes to condensed consolidated financial statements.

5

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Comprehensive Income

(In thousands)

(Unaudited)

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net income, as reported	$	79,514	$	79,069	$	222,176	$	256,206
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(2,576)		(889)		(3,242)		(1,705)
Comprehensive income		76,938		78,180		218,934		254,501
Comprehensive loss attributable to noncontrolling interest		170		—		227		—
Comprehensive income attributable to MSC Industrial (1)	$	77,108	$	78,180	$	219,161	$	254,501
(1) There were no material taxes associated with other comprehensive income during the thirteen and thirty-nine-week periods ending June 1, 2019 and June 2, 2018, respectively.
See accompanying notes to condensed consolidated financial statements.

6

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Shareholders’ Equity

(In thousands)

(Unaudited)

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Class A Common Stock
Beginning Balance	$	54	$	55	$	55	$	54
Repurchase and retirement of Class A common stock		—		—		(1)		—
Exchange of Class B common stock for Class A common stock		—		—		—		1
Ending Balance		54		55		54		55
Class B Common Stock
Beginning Balance		10		11		10		12
Exchange of Class B common stock for Class A common stock		—		(1)		—		(2)
Ending Balance		10		10		10		10
Additional Paid-in-Capital
Beginning Balance		670,047		652,440		657,749		626,995
Associate Incentive Plans		5,627		10,959		29,812		36,404
Repurchase and retirement of Class A common stock		—		—		(11,887)		—
Ending Balance		675,674		663,399		675,674		663,399
Retained Earnings
Beginning Balance		1,349,972		1,285,681		1,325,822		1,168,812
Net Income		79,601		79,069		222,257		256,206
Repurchase and retirement of Class A common stock		—		—		(48,439)		—
Cash dividends declared on Class A common stock		(28,335)		(26,598)		(85,042)		(74,285)
Cash dividends declared on Class B common stock		(6,422)		(6,162)		(19,266)		(18,348)
Dividend equivalents declared, net of cancellations		(265)		(202)		(781)		(597)
Ending Balance		1,394,551		1,331,788		1,394,551		1,331,788
Accumulated Other Comprehensive Loss
Beginning Balance		(20,237)		(18,079)		(19,634)		(17,263)
Foreign Currency Translation Adjustment		(2,493)		(889)		(3,096)		(1,705)
Ending Balance		(22,730)		(18,968)		(22,730)		(18,968)
Treasury Stock
Beginning Balance		(599,603)		(574,073)		(576,748)		(553,470)
Associate Incentive Plans		526		499		1,769		1,624
Repurchases of Class A common stock		(39)		(3,656)		(24,137)		(25,384)
Ending Balance		(599,116)		(577,230)		(599,116)		(577,230)
Total Shareholders’ Equity Attributable to MSC Industrial		1,448,443		1,399,054		1,448,443		1,399,054
Noncontrolling Interest
Beginning Balance		5,602		—		—		—
Issuance of Noncontrolling Interest in MSC Mexico		—		—		4,637		—
Capital Contributions		—		—		1,022		—
Foreign Currency Translation Adjustment		(83)		—		(146)		—
Net Income (loss)		(87)		—		(81)		—
Ending Balance		5,432		—		5,432		—
Total Shareholders’ Equity	$	1,453,875	$	1,399,054	$	1,453,875	$	1,399,054
Dividends declared per Class A Common share	$	0.63	$	0.58	$	1.89	$	1.64
Dividends declared per Class B Common share	$	0.63	$	0.58	$	1.89	$	1.64
See accompanying notes to condensed consolidated financial statements.

7

MSC INDUSTRIAL DIRECT CO., INC.

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

	Thirty-Nine Weeks Ended
	June 1,		June 2,
	2019		2018
Cash Flows from Operating Activities:
Net income	$	222,176	$	256,206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		48,539		47,133
Stock-based compensation		12,167		11,275
Loss on disposal of property, plant, and equipment		325		280
Provision for doubtful accounts		9,013		4,956
Deferred income taxes and tax uncertainties		—		(41,199)
Changes in operating assets and liabilities:
Accounts receivable		(30,180)		(34,434)
Inventories		(33,672)		(26,740)
Prepaid expenses and other current assets		(10,841)		1,005
Other assets		(609)		3,191
Accounts payable and accrued liabilities		(29,718)		8,564
Total adjustments		(34,976)		(25,969)
Net cash provided by operating activities		187,200		230,237
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment		(35,956)		(30,794)
Proceeds from sale of available for sale securities		27,025		—
Cash used in business acquisitions, net of cash received		(11,625)		(85,845)
Net cash used in investing activities		(20,556)		(116,639)
Cash Flows from Financing Activities:
Repurchases of common stock		(84,464)		(25,384)
Payments of cash dividends		(104,308)		(92,633)
Proceeds from sale of Class A common stock in connection with associate stock purchase plan		3,472		3,398
Proceeds from exercise of Class A common stock options		15,527		23,135
Borrowings under Shelf Facility Agreement		—		50,000
Borrowings under the revolving credit facilities		358,000		172,000
Payments under the revolving credit facilities		(336,000)		(220,000)
Contributions from noncontrolling interest		918		—
Payments on capital lease and financing obligations		(28,007)		(829)
Other, net		903		604
Net cash used in financing activities		(173,959)		(89,709)
Effect of foreign exchange rate changes on cash and cash equivalents		(131)		21
Net increase (decrease) in cash and cash equivalents		(7,446)		23,910
Cash and cash equivalents—beginning of period		46,217		16,083
Cash and cash equivalents—end of period	$	38,771	$	39,993
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	$	69,413	$	76,753
Cash paid for interest	$	10,791	$	8,231
See accompanying notes to condensed consolidated financial statements.

8

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the management of MSC Industrial Direct Co., Inc. (together with its wholly owned subsidiaries and entities in which it maintains a controlling financial interest, the “Company”) and in the opinion of management include all normal recurring material adjustments necessary to present fairly the Company’s financial position as of June 1, 2019 and June 2, 2018, the results of operations for the thirteen and thirty-nine weeks ended June 1, 2019 and June 2, 2018, and cash flows for the thirty-nine weeks ended June 1, 2019 and June 2, 2018. The September 1, 2018 financial information was derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 1, 2018.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934 for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 1, 2018.

The Company’s fiscal year ends on the Saturday closest to August 31 of each year. Unless the context requires otherwise, references to years contained herein pertain to the Company’s fiscal year. The Company’s 2019 fiscal year will be a 52-week accounting period that will end on August 31, 2019 and its 2018 fiscal year was a 52-week accounting period that ended on September 1, 2018.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of MSC Industrial Direct Co., Inc., its wholly owned subsidiaries and entities in which it maintains a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Recently Adopted Accounting Pronouncements

Effective September 2, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12, 2016-20 and 2017-05. These ASUs outline a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedeprior revenue recognition guidance, including industry-specific guidance. Revenue continues to be recognized when products are shipped to the customerand the customer obtains control of the products, and the adoption of these ASUs, using the modified retrospective approach, had no impact on the Company’s opening retained earnings. The Company reports its sales net of estimated sales returns and sales incentives. Sales tax collected from customers is excluded from net sales. Additional information and disclosures required by this new standard are contained in Note 2,  “Revenue”.

Effective September 2, 2018, the Company adoptedASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business to assist entities with evaluating when a set of transferred assets and activities is considered a business.

Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right-of-use asset and a lease liability in the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. During 2018, the FASB issued additional ASUs that address implementation issues and correct or improve certain aspects of the new accounting guidance for leases, including ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements. These ASUs do not change the core principles in the lease accounting standard outlined above. The amendments in ASU 2018-11 provide an optional transition method that allows entities to

9

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

initially apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods will continue to be in accordance with current lease accounting guidance. Management established a cross-functional team to evaluate and implement the new standard. The team selected a third-party software solution to facilitate the accounting and financial reporting requirements of the new lease accounting standard. Lease data elements have been gathered and are currently being migrated to the software solution. The new standard will be adopted in the first quarter of fiscal 2020 and the Company expects to use the optional transition method. While the Company has not yet completed its evaluation of the effects of adopting this ASU, right-of-use assets and lease liabilities will be recorded in the Consolidated Balance Sheets as of the effective date and thereafter.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for financial statement periods beginning after December 15, 2019. The new standard is effective for the Company for its fiscal year 2021.  The Company is currently evaluating the standard and does not expect a significant impact to its consolidated financial statements.

In January 2017, the FASB issued its final standard on simplifying the test for goodwill impairment, ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). This standard requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The new standard is effective for the Company for its fiscal year 2021. Upon adoption, the Company will apply this guidance prospectively to its annual and interim goodwill impairment tests and disclose the change in accounting principle.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the Company’s financial position, results of operations or cash flows.

Reclassification

Certain of the prior period line items contained in the Condensed Consolidated Statements of Shareholders’ Equity were condensed to conform to our current period presentation. The Company combined the “Exercise of common stock options”, the “Common stock issued under associate stock purchase plan”, the “Shares issued upon vesting of restricted stock units, including dividend equivalent units”, the “Stock-based compensation”, and the “Issuance of restricted common stock, net of cancellations” line items into a single line titled “Associate Incentive Plans”. These reclassifications did not affect the total amount of Shareholders’ Equity.

Note 2. Revenue

Revenue Recognition

Net sales include product revenue and shipping and handling charges, net of estimated sales returns and any related sales incentives. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. All revenue is recognized when the Company satisfies its performance obligations under the contract, and invoicing occurs at approximately the same point in time. The Company recognizes revenue once the customer obtains control of the products. The Company’s product sales have standard payment terms that do not exceed one year. The Company considers shipping and handling as activities to fulfill its performance obligation. The Company’s contracts have a single performance obligation, to deliver products, and are short-term in nature. The Company estimates product returns based on historical return rates. Total accrued sales returns were $4,897 and $4,832 as of June 1, 2019 and September 1, 2018, respectively, and are reported as Accrued liabilities in the Condensed Consolidated Balance Sheets. Sales taxes and value-added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.

10

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Consideration Payable to a Customer

The Company offers customers sales incentives, which primarily consist of volume rebates, and upfront sign-on payments. These volume rebates and payments are not in exchange for a distinct good or service and result in a reduction of net sales from the goods transferred to the customer at the later of when the related revenue is recognized or when the Company promises to pay the consideration. The Company estimates its volume rebate accruals and records its sign-on payments based on various factors, including contract terms, historical experience, and performance levels. Total accrued sales incentives, primarily related to volume rebates, were $13,840 and$14,000 as of June 1, 2019 and September 1, 2018, respectively, and are included in Accrued liabilities in the Condensed Consolidated Balance Sheets. Sign-on payments, not yet recognized as a reduction of revenue, are recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and were $2,698 and $2,457 as of June 1, 2019 and September 1, 2018, respectively.

Contract Assets and Liabilities

The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have material unsatisfied performance obligations, contract assets or liabilities as of June 1, 2019 and September 1, 2018.  

Disaggregation of Revenue

The Company operates in one operating and reportable segment as a distributor of metalworking and maintenance, repair, and operations (“MRO”) products and services. The Company serves a large number of customers in diverse industries, which are subject to different economic and industry factors. The Company's presentation of net sales by customer end-market most reasonably depicts how the nature, amount, timing, and uncertainty of Company revenue and cash flows are affected by economic and industry factors. The Company does not disclose net sales information by product category as it is impracticable to do so as a result of its numerous product offerings and the way its business is managed. The following table presents the Company's percentage of net sales by customer end-market for the thirteen and thirty-nine-week periods ended June 1, 2019:

	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	June 1, 2019		June 1, 2019
Manufacturing Heavy	47	%	48	%
Manufacturing Light	22	%	22	%
Government	7	%	8	%
Retail/Wholesale	6	%	6	%
Commercial Services	4	%	4	%
Other (1)	14	%	12	%
Total net sales	100	%	100	%

__________________________

(1) The other category primarily includes individual customer and small business net sales not assigned to a specific industry classification.

The Company’s net sales originating from the following geographic areas were as follows for the thirteen and thirty-nine-week periods ended June 1, 2019:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1, 2019				June 1, 2019
United States	$	831,533	96	%	$	2,434,603	97	%
UK		14,399	2	%		43,373	2	%
Canada		10,747	1	%		30,363	1	%
Mexico		9,867	1	%		12,808	< 1	%
Total net sales	$	866,546	100	%	$	2,521,147	100	%

11

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Note 3. Net Income per Share

The Company’s non-vested restricted share awards contain non-forfeitable rights to dividends and meet the criteria of a participating security as defined by Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share”. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common shares and participating securities based on their respective weighted average shares outstanding for the period. The following table sets forth the computation of basic and diluted net income per common share under the two-class methodfor the thirteen and thirty-nine weeks ended June 1, 2019 and June 2, 2018, respectively:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net income attributable to MSC Industrial as reported	$	79,601	$	79,069	$	222,257	$	256,206
Less: Distributed net income available to participating securities		(10)		(14)		(34)		(73)
Less: Undistributed net income available to participating securities		(19)		(56)		(66)		(248)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	78,999	$	222,157	$	255,885
Add: Undistributed net income allocated to participating securities		19		56		66		248
Less: Undistributed net income reallocated to participating securities		(19)		(55)		(66)		(247)
Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	79,000	$	222,157	$	255,886
Denominator:
Weighted average shares outstanding for basic net income per share		55,158		56,420		55,266		56,382
Effect of dilutive securities		229		384		290		351
Weighted average shares outstanding for diluted net income per share		55,387		56,804		55,556		56,733
Net income per share two-class method:
Basic	$	1.44	$	1.40	$	4.02	$	4.54
Diluted	$	1.44	$	1.39	$	4.00	$	4.51
Potentially dilutive securities		1,093		-		939		-

Potentially dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value are greater than the average market price of MSC common stock, and therefore their inclusion would be anti-dilutive.

Note 4. Stock-Based Compensation

The Company accounts for all share-based payments in accordance with ASC Topic 718, “Compensation—Stock Compensation”.Stock‑based compensation expense included in operating expenses for the thirteen and thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was as follows:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Stock options	$	1,215	$	1,132	$	3,541	$	3,455
Restricted share awards		346		658		1,216		2,230
Restricted stock units		2,452		1,827		7,181		5,401
Associate Stock Purchase Plan		76		68		229		189
Total		4,089		3,685		12,167		11,275
Deferred income tax benefit		(1,026)		(1,080)		(3,054)		(3,304)
Stock-based compensation expense, net	$	3,063	$	2,605	$	9,113	$	7,971

12

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Stock options

The fair value of each option grant is estimated on the date of grant using the Black‑Scholes option pricing model with the following assumptions:

	Thirty-Nine Weeks Ended
	June 1,		June 2,
	2019		2018
Expected life (in years)	4.0		4.0
Risk-free interest rate	2.98	%	1.87	%
Expected volatility	23.13	%	22.13	%
Expected dividend yield	2.70	%	2.30	%
Weighted-average grant-date fair value	$14.05		$12.25

A summary of the Company’s stock option activity for the thirty-nine-week period ended June 1, 2019 is as follows:

	Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding on September 1, 2018	1,760	$	72.96
Granted	398		83.21
Exercised	(207)		75.07
Canceled/Forfeited	(32)		77.66
Outstanding on June 1, 2019	1,919	$	74.78	4.4	$	4,510
Exercisable on June 1, 2019	892	$	72.64	3.3	$	3,086

The unrecognized share‑based compensation cost related to stock option expense at June 1, 2019was $9,190 and will be recognized over a weighted average period of 2.3 years. The total intrinsic value of options exercised, which represents the difference between the exercise price and market value of common stock measured at each individual exercise date, during the thirty-nine-week periods ended June 1, 2019 and June 2, 2018was $1,882 and$7,234, respectively.

Restricted share awards

A summary of the non‑vested restricted share award (“RSA”) activity under the Company’s 2005 Omnibus Incentive Plan and 2015 Omnibus Incentive Plan for the thirty-nine-week period ended June 1, 2019 is as follows:

	Shares	Weighted-AverageGrant-Date Fair Value
Non-vested restricted share awards at September 1, 2018	63	$	81.98
Granted	—		—
Vested	(39)		82.36
Canceled/Forfeited	(1)		82.55
Non-vested restricted share awards at June 1, 2019	23	$	81.30

The fair value of each RSA is the closing stock price on the NYSE of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSA award may be withheld to satisfy the statutory income tax withholding obligation. The remaining RSAs will be settled in shares of the Company’s Class A common stock when vested. The unrecognized share-based compensation cost related to RSAs at June 1, 2019was $620 and will be recognized over a weighted average period of 0.5 years.

13

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Restricted stock units

A summary of the Company’s non-vested Restricted Stock Unit (“RSU”) award activity for the thirty-nine-week period ended June 1, 2019 is as follows:

	Shares	Weighted-Average Grant-Date Fair Value
Non-vested restricted stock unit awards at September 1, 2018	377	$	73.18
Granted	173		82.99
Vested	(101)		72.69
Canceled/Forfeited	(21)		77.27
Non-vested restricted stock unit awards at June 1, 2019	428	$	77.06

The fair value of each RSU is the closing stock price on the NYSE of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSU award may be withheld to satisfy the statutory income tax withholding obligation. The remaining RSUs will be settled in shares of the Company’s Class A common stock when vested. These awards accrue dividend equivalents on outstanding units (in the form of additional stock units) based on dividends declared on the Company’s Class A common stock and these dividend equivalents convert to unrestricted common stock on the vesting dates of the underlying RSUs. The dividend equivalents are not included in the RSU table above. The unrecognized share-based compensation cost related to the RSUs at June 1, 2019was $26,641 and is expected to be recognized over a weighted average period of 3.2years.

Note 5. Fair Value

Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value into three levels, with Level 1 being of the highest priority. The three levels of inputs used to measure fair value are as follows:

Level 1—	Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active  markets.
Level 2—	Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—	Unobservable inputs which are supported by little or no market activity.

In connection with the construction of the Company’s customer fulfillment center (“CFC”) in Columbus, Ohio, the Company entered into an arrangement during fiscal 2013 with the Columbus-Franklin County Finance Authority (“Finance Authority”) which provides savings on state and local sales taxes imposed on construction materials purchased by entities that finance the transactions through them. Under this arrangement, the Finance Authority issued taxable bonds in the amount of $27,025 to finance the structure and site improvements of the Company’s CFC. The Company purchased these bonds at issuance. The bonds were redeemed on May 29, 2019 and all funds have been settled as of June 1, 2019. The bonds had an outstanding balance of $27,025 at September 1, 2018 and were classified as available for sale securities in accordance with ASC Topic 320. The fair values of these securities were based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy. The Company did not record any gains or losses on these securities during the thirty-nine-week period ended June 1, 2019.

The Company’s financial instruments, other than those presented in the disclosure above, include cash and cash equivalents, accounts receivable, accounts payable, and outstanding indebtedness. The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company's debt instruments are classified as Level 2 within the fair value hierarchy. The reported carrying amounts of the Company’s financial instruments approximated their fair values as of June 1, 2019 and September 1, 2018.

During the thirty-nine weeks ended June 1, 2019 and June 2, 2018, the Company had no remeasurements of non-financial assets or liabilities at fair value on a non-recurring basis subsequent to their initial recognition. 

14

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Note 6. Debt and Capital Lease Obligations

Debt at June 1, 2019 and September 1, 2018 consisted of the following:

	June 1,		September 1,
	2019		2018
	(Dollars in thousands)
Revolving Credit Facilities
Committed bank facility	$	-	$	224,000
Uncommitted bank facilities		246,000		-
Private Placement Debt:
Senior notes, series A		75,000		75,000
Senior notes, series B		100,000		100,000
Senior Notes		20,000		20,000
Shelf Facility Agreements:		90,000		90,000
Capital lease and financing obligations		1,264		27,926
Less: unamortized debt issuance costs		(1,275)		(1,593)
Total debt	$	530,989	$	535,333
Less: short-term debt(1)		(246,298)		(224,097)
Long-term debt	$	284,691	$	311,236

__________________________

(1) Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

Revolving Credit Facilities

In April 2017, the Company entered into a $600,000 committed credit facility (the “Committed Facility”). The Committed Facility, which matures on April 14, 2022, provides for a five-year unsecured revolving loan facility.

The Committed Facility permits up to $50,000 to be used to fund letters of credit. The Committed Facility also permits the Company to request one or more incremental term loan facilities and/or increase the revolving loan commitments in an aggregate amount not to exceed $300,000. Subject to certain limitations, each such incremental term loan facility or revolving commitment increase will be on terms as agreed to by the Company, the Administrative Agent and the lenders providing such financing.

The interest rate is based on either LIBOR or a base rate, plus in either case a spread based on the Company’s leverage ratio at the end of each fiscal reporting quarter. Based on the interest period the Company selects, interest may be payable every one, two, or three months. Interest is reset at the end of each interest period. The Company currently elects to have loans under the Committed Facility bear interest based on LIBOR with one-month interest periods.

During the first quarter of fiscal 2019, the Company entered intosix unsecured credit facilities that are uncommitted (the “Uncommitted Facilities”), totaling $440,000 of maximum uncommitted availability. Borrowings under the Uncommitted Facilities are generally due at the end of the applicable agreed interest period, but, in any event, no later than the one-year anniversary of the entrance into the applicable Uncommitted Facility. The Uncommitted Facilities contain limited covenants. An event of default under the Company’s Committed Facility is an event of default under the Uncommitted Facilities. The interest rate on the Uncommitted Facilities is based on LIBOR or the bank’s cost of funds or as otherwise agreed upon by the applicable bank and the Company. The $246,000 outstanding at the end of the fiscal third quarter of 2019 under the Uncommitted Facilities is classified as short-term in the Company’sCondensed Consolidated Balance Sheet.  

During the thirty-nine-week period ended June 1, 2019, the Company borrowed $358,000 and repaid $336,000 under its revolving credit facilities.  As of June 1, 2019 and September 1, 2018, the weighted average interest rates on borrowings under all its revolving credit facilities were3.26% and 3.20%, respectively.

15

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

Private Placement Debt

In July 2016, the Company completed the issuance and sale of $75,000 aggregate principal amount of 2.65% Senior Notes, Series A, due July 28, 2023 and $100,000 aggregate principal amount of 2.90% Senior Notes, Series B, due July 28, 2026; and in June 2018, the Company completed the issuance and sale of $20,000 aggregate principal amount of 3.79% Senior Notes, due June 11, 2025 (collectively “Private Placement Debt”). Interest is payable semiannually at the fixed stated interest rates.

Shelf Facility Agreements

In January 2018, the Company entered into Note Purchase and Private Shelf Agreements with Metropolitan Life Insurance Company (“Met Life Note Purchase Agreement”) and PGIM, Inc. (“Prudential Note Purchase Agreement” and together with the Met Life Note Purchase Agreement, the “Shelf Facility Agreements”).

The Met Life Note Purchase Agreement provides for an uncommitted facility for the issuance and sale of up to an aggregate total of $250,000 of senior notes, at either fixed or floating rates. In June 2018, the Company completed the issuance and sale of $20,000 aggregate principal amount of 3.22% Series 2018A Notes, due June 11, 2020 and $20,000 aggregate principal amount of 3.42% Series 2018B Notes, due June 11, 2021. Interest is payable semiannually at the fixed stated interest rates. As of June 1, 2019, the uncommitted availability under the Met Life Note Purchase Agreement is $210,000.

The Prudential Note Purchase Agreement provides for an uncommitted facility for the issuance and sale of up to an aggregate total of $250,000 of senior notes, at a fixed rate. In January 2018, the Company completed the issuance and sale of $50,000 aggregate principal amount of 3.04% Senior Notes due January 12, 2023. Interest is payable semiannually. As of June 1, 2019, the uncommitted availability under the Prudential Note Purchase Agreement is $200,000.

Each of the credit facilities, Private Placement Debt, and Shelf Facility Agreements imposes several restrictive covenants including the requirement that the Company maintain a maximum consolidated leverage ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation, amortization and stock-based compensation) of no more than 3.00 to 1.00 (or, at the election of the Company after it consummates a material acquisition, a four-quarter temporary increase to 3.50 to 1.00), and a minimum consolidated interest coverage ratio of EBITDA to total interest expense of at least 3.00 to 1.00, during the terms of the credit facilities, Private Placement Debt, and Shelf Facility Agreements. At June 1, 2019, the Company was in compliance with the operating and financial covenants of the credit facilities, Private Placement Debt, and Shelf Facility Agreements.

Capital Lease and Financing Obligations

In connection with the construction of the Company’s CFC in Columbus, Ohio in fiscal 2013, the Finance Authority holds the title to the building and entered into a long-term lease with the Company. The lease was classified as a capital lease in accordance with ASC Topic 840 and was terminated and paid in full on May 29, 2019.

From time to time, the Company enters into capital leases and financing arrangements with vendors to purchase certain information technology equipment or software. The equipment or software acquired from these vendors is paid for over a specified period of time based on the terms agreed upon. During the thirty-nine-week period ended June 1, 2019, the Company entered into capital lease and financing obligations related to certain IT equipment and software totaling $1,345.  The gross amount of property and equipment acquired under the capital lease obligationand its accumulated amortization at June 1, 2019 was $442and $46, respectively.

Note 7. Shareholders’ Equity

Common Stock Repurchases and Treasury Stock

During the thirteen andthirty-nine-week periods ended June 1, 2019, the Company repurchased 0.5 and 1,054 shares of its Class A common stock for $39 and$84,464, respectively.From these totals, 0.5 and 316 shares have not been retired and the amounts of $39 and$24,137 are reflected at cost as treasury stock in the accompanying condensed consolidated financial statements for the thirteen and thirty-nine weeks ended June 1, 2019, respectively.

16

MSC INDUSTRIAL DIRECT CO., INC.

Notes to Condensed Consolidated Financial Statements

(Dollar amounts and shares in thousands, except per share data)

(Unaudited)

During the thirteen and thirty-nine-week periods ended June 2, 2018, the Company repurchased 42 and 291 shares of its Class A common stock for $3,656 and $25,384, respectively. These shares were not retired, and the values are reflected at cost as treasury stock in the accompanying condensed consolidated financial statements  for the thirteen and thirty-nine weeks ended June 2, 2018, respectively.  The total number of shares of Class A common stock authorized for future repurchase was 1,157 shares at June 1, 2019.

The Company reissued14and 47 shares of treasury stock during the thirteen andthirty-nine-week periods ended June 1, 2019 and reissued13 and 43 shares of treasury stock during the thirteen and thirty-nine-week periods ended June 2, 2018, respectively, to fund the Associate Stock Purchase Plan.

Dividends on Common Stock

On July 9, 2019, the Board of Directors declared a quarterly cash dividend of $0.75 per share payable on August 6, 2019 to shareholders of record at the close of business on July 23, 2019. The dividend will result in a payout of $41,401, based on the number of shares outstanding at June 19, 2019.

Note 8. Product Warranties

The Company generally offers a maximum one-year warranty, including parts and labor, for some of its machinery products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company may be able to recoup some of these costs through product warranties it holds with its original equipment manufacturers, which typically range from thirty to ninety days. In general, many of the Company’s general merchandise products are covered by third-party original equipment manufacturers’ warranties. The Company’s warranty expense for the thirteen and thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was minimal.

Note 9. Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted. The TCJA made significant changes to U.S. federal income tax laws including permanently lowering the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. As the Company has a fiscal August year-end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory rate of 25.6% for the fiscal year ending September 1, 2018. The Company’s statutory federal tax rate will be 21.0% for fiscal years 2019 and beyond. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118, which allows a company to report provisional numbers related to the TCJA and adjust those amounts during a measurement period not to extend beyond one year. The Company recorded a net tax benefit of $40,464 on a provisional basis in fiscal 2018from the revaluation of its net deferred tax liabilities primarily related to the lower federal corporate tax rate, partially offset by the lower federal benefit for state taxes and the change from a worldwide tax system to a territorial tax system.The measurement period ended during our fiscal quarter ended March 2, 2019, and no adjustments were recorded during this period. As a result, we consider our accounting for the tax effects of the TCJA to be complete based on our interpretation of the law and subsequently issued guidance. However, the U.S. Treasury may continue to issue regulations and other guidance on the application of certain provisions of the TCJA that may impact our interpretation of the rules and our calculation of the tax impact of the provisions of the TCJA.

During the thirty-nine-week period endedJune 1, 2019, there were no material changes in unrecognized tax benefits. 

Note 10. Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

17

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following is intended to update the information contained in the Company’s Annual Report on Form 10-K for the fiscal year ended September 1, 2018 and presumes that readers have access to, and will have read, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” contained in such Annual Report on Form 10-K.

Overview

MSC Industrial Direct Co., Inc. (together with its subsidiaries, “MSC,” the “Company,” “we,” “our,” or “us”) is a leading North American distributor of a broad range of MRO products and services. We help our customers drive greater productivity, profitability and growth with more than 1.7 million products, inventory management and other supply chain solutions, and deep expertise from more than 75 years of working with customers across industries. We continue to implement our strategies to gain market share, generate new customers, increase sales to existing customers, and diversify our customer base.

We offer approximately 1,712,000 active, saleable stock-keeping units through our catalogs; brochures; eCommerce channels, including our website, mscdirect.com (“MSC website”); our inventory management solutions; and call-centers and branches. We service our customers from 12 customer fulfillment centers (eight are located within the United States which includes five primary customer fulfillment centers, one is located in the United Kingdom, and three are in Canada) and 99 branch offices. Many of our products are carried in stock, and orders for these in-stock products are typically fulfilled the day on which the order is received.

Our business model focuses on providing overall procurement cost reduction and just-in-time delivery to meet our customers’ needs. We focus on offering inventory, process and procurement solutions that reduce MRO supply chain costs and improve plant floor productivity for our customers. We will seek to continue to achieve cost reduction throughout our business through cost-saving strategies and increased leverage from our existing infrastructure and continue to provide additional procurement cost-saving solutions to our customers through technology such as our Customer Managed Inventory, Vendor Managed Inventory (“VMI”), and vending programs.

Our field sales and service associate headcount was2,411 at June 1, 2019, compared to 2,348 at June 2, 2018.  Beginning in our fiscal fourth quarter of 2018, field sales and service personnel includes all customer-facing associates in an external sales or service role. Prior period headcount numbers have been adjusted to reflect this new definition. We have migrated our sales force from one designed to sell a spot buy value proposition to one prepared to deliver upon the new, more complex and high-touchrole that we play for our customers, to enable our customers to achieve higher levels of growth, profitability, and productivity.

Recent Developments and Highlights

Highlights during the three fiscal quarters ended June 1, 2019 include the following:

· We generated $187.2 million of cash from operations.

· We repurchased 1.1 million shares for $84.5 million.

· We paid out $104.3 million in cash dividends, compared to $92.6 million for the same periods in the prior fiscal year.

· On February 1, 2019, we completed the acquisition of certain assets of TAC Insumos Industriales, S. de R.L. de C.V. and certain of its affiliates (together, “TAC”) for aggregate consideration of $18.5 million (subject to finalizing the post-closing working capital adjustment), of which our 75% portion of the aggregate consideration was $13.9 million.

Our Strategy

Our objective is to continue to grow sales profitably while helping our customers become more productive and profitable by reducing their total cost for purchasing, using and maintaining MRO supplies. We continue to pursue strategic acquisitions that expand or complement our business in new and existing markets or further enhance the value and offerings we provide.

18

Business Environment

We utilize various indices when evaluating the level of our business activity. Approximately 69% of our revenues came from sales in the manufacturing sector during the third quarter of our fiscal year 2019. Through statistical analysis, we have found that trends in our customers’ activity have correlated to changes in the Metalworking Business Index (“MBI”). The MBI is a sentiment index developed from a monthly survey of the U.S. metalworking industry, focusing on durable goods manufacturing. For the MBI, a value below 50.0 generally indicates contraction and a value above 50.0 generally indicates expansion. The MBI index over the last three months and for the past 12-month period ending May 2019  were as follows:

Period	MBI
March	53.6
April	53.6
May	51.6
Fiscal 2019 Q3 average	52.9
12-month average	55.1

The May 2019 MBI reading of 51.6 continued its trend of expansion in the manufacturing industry, but at its slowest level of expansion since 2017.  Details released with the May MBI indicate continued expansion in supplier deliveries, new orders, production, and employment while backlogs and exports lowered the index. The most recent June MBI reading of 51.8 is indicative of continued expansion, albeit at a rate consistent with May. We will continue to monitor economic conditions for their impact on our customers and markets and continue to assess business risks and opportunities.

Thirteen-Week Period Ended June 1, 2019 Compared to the Thirteen-Week Period Ended June 2, 2018

The table below summarizes the Company’s results of operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:

	Thirteen Weeks Ended
	June 1, 2019			June 2, 2018			Change
		$	%		$	%		$	%
Net sales	$	866,546	100.0%	$	828,345	100.0%	$	38,201	4.6%
Cost of goods sold		497,891	57.5%		467,344	56.4%		30,547	6.5%
Gross profit		368,655	42.5%		361,001	43.6%		7,654	2.1%
Operating expenses		258,154	29.8%		245,619	29.7%		12,535	5.1%
Income from operations		110,501	12.8%		115,382	13.9%		(4,881)	(4.2)%
Total other expense		(4,482)	(0.5)%		(3,565)	(0.4)%		(917)	25.7%
Income before provision for income taxes		106,019	12.2%		111,817	13.5%		(5,798)	(5.2)%
Provision for income taxes		26,505	3.1%		32,748	(4.0)%		(6,243)	(19.1)%
Net income		79,514	9.2%		79,069	9.5%		445	0.6%
Less: Net income (loss) attributable to noncontrolling interest		(87)	0.0%		-	0.0%		(87)	0.0%
Net income attributable to MSC Industrial	$	79,601	9.2%	$	79,069	9.5%	$	532	0.7%

Net Sales

Net sales increased 4.6% or $38.2 million for the thirteen-week period ended June 1, 2019, as compared to the thirteen-week period ended June 2, 2018. We estimate that this $38.2 million increase in net sales is comprised of (i) $13.3 million of higher sales volume, excluding our All Integrated Solutions (“AIS”) subsidiary and MSC Mexico operations; (ii) $11.6 million from AIS, which we acquired in April 2018; (iii) $9.9 million from MSC Mexico, which commenced operations in February 2019; and (iv) $4.9 million from improved pricing, inclusive of changes in customer and product mix, discounting and other items; partially offset by (v) $1.5 million from foreign exchange impact. Of the above $38.2 million increase in net sales, sales to our government and national account programs (“Large Account Customers”) increased by $3.2 million and sales other than to our Large Account Customers increased by $35.0 million, which includes $11.6 million and $9.9 million of net sales from AIS and MSC Mexico, respectively.

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The table below shows the change in our average daily sales by total company and by customer type for the thirteen- week period ended June 1, 2019 compared to the same period in the prior fiscal year:

Average Daily Sales Percentage Change
(unaudited)
2019 vs. 2018 Fiscal Period	Thirteen Week Period Ended Fiscal Q3		% of Total Business
Total Company	4.6	%
Manufacturing Customers	5.1	%	69	%
Non-Manufacturing Customers	3.4	%	31	%

We believe that our ability to transact business with our customers through various electronic portals and directly through the MSC website gives us a competitive advantage over smaller suppliers. Sales made through our eCommerce platforms, including sales made through Electronic Data Interchange (“EDI”) systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 60.1% of consolidated net sales for the thirteen-week period ended June 1, 2019, compared to60.6% of consolidated net sales for the same period in the prior fiscal year. These percentages of consolidated net sales do not include eCommerce sales from the recent acquisitions of DECO Tool Supply Company and AIS, and from MSC Mexico operations.

Gross Profit

Gross profitmargin was 42.5% for the thirteen-week period ended June 1, 2019as compared to 43.6% for the same period in the prior fiscal year.  The decline was primarily the result of increased product costs and changes in our customer and product mix. In addition, 30 basis points of the decline resulted from MSC Mexico operations which commenced in the fiscal second quarter of 2019 and another 10 basis points of the decline came from the AIS business we acquired in the fiscal third quarter of 2018.

Operating Expenses

Operating expenses increased5.1% to $258.2 million for the thirteen-week period ended June 1, 2019, as compared to $245.6 million for the same period in the prior fiscal year.Operating expenses were29.8%of net sales for the thirteen-week period ended June 1, 2019, as compared to 29.7% for the thirteen-week period ended June 2, 2018. The increase in operating expenses was primarily attributable to an increase in payroll and payroll-related costs and freight costs, associated with higher sales volumes. Operating expenses also increased due to the acquisition of AIS in our third quarter of fiscal 2018 and from the operations of MSC Mexico which commenced in our second quarter of fiscal 2019. AIS and MSC Mexico operating expenses, including non-recurring acquisition and integration costs, accounted for $5.1 million and $1.9 million, respectively, of total operating expenses for the thirteen-week period ended June 1, 2019 and AIS accounted for $2.4 million of total operating expenses for the thirteen-week period ended June 2, 2018.

Payroll and payroll-related costs were56.3% of total operating expenses for the thirteen-week period ended June 1, 2019, as compared to 56.6% for thethirteen-week period ended June 2, 2018.  Included in payroll and payroll-related costs are salary, incentive compensation, sales commission, and fringe benefit costs. All of these costs, with the exception of incentive compensation, increased for the thirteen-week period ended June 1, 2019, as compared to the same period in the prior fiscal year, with much of the increase attributable to anincrease in salary expenses, primarily related to annual merit increases and an increase in our field sales and service associate headcount. Also contributing to the increase in payroll and payroll-related costs were increased sales commissions due to higher sales volume and increasedfringe costs associated with higher medical costs.  The incentive compensation accrual decreased as the fiscal 2019 bonus payout is currently expected to be made at lower levels than fiscal 2018.

Freight expense was $35.1 million for the thirteen-week period ended June 1, 2019, as compared to $33.4 million for the same period in the prior fiscal year. The primary driver of this increase was increased sales.

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Income from Operations

Income from operations decreased 4.2% to $110.5 million for the thirteen-week period ended June 1, 2019, as compared to $115.4 million for the same period in the prior fiscal year. This was primarily attributable to the increase in operating expenses as described above, partially offset by the increase in net sales and gross profit. Income from operations as a percentage of net sales decreased to 12.8% for the thirteen-week period ended June 1, 2019,  from13.9%for the same period in the prior fiscal year, primarily as the result of the decrease in the gross profit margin mentioned above.

Provisionfor Income Taxes

The effective tax rate for the thirteen-week period ended June 1, 2019 was 25.0% as compared to 29.3% for the same period in the prior fiscal year. The decrease in the effective tax rate was primarily due tothe reduction in the corporate tax rate to 21% resulting from the TCJA.  During fiscal 2018, the reduction in the corporate tax rate was pro-rated due to the effective date of the change.See Note 9 “Income Taxes” in the Notes to the unaudited Condensed Consolidated Financial Statements for further discussion.

Net Income

The factors which affected net income for the thirteen-week period endedJune 1, 2019, as compared to the same period in the previous fiscal year, have been discussed above.

Thirty-Nine-Week Period Ended June 1, 2019 Compared to the Thirty-Nine-Week Period Ended June 2, 2018

The table below summarizes the Company’s results of operations both in dollars (in thousands) and as a percentage of net sales for the periods indicated:

	Thirty-Nine Weeks Ended
	June 1, 2019			June 2, 2018			Change
		$	%		$	%		$	%
Net sales	$	2,521,147	100.0%	$	2,365,893	100.0%	$	155,254	6.6%
Cost of goods sold		1,442,693	57.2%		1,332,600	56.3%		110,093	8.3%
Gross profit		1,078,454	42.8%		1,033,293	43.7%		45,161	4.4%
Operating expenses		768,972	30.5%		720,530	30.5%		48,442	6.7%
Income from operations		309,482	12.3%		312,763	13.2%		(3,281)	(1.0)%
Total other expense		(12,986)	(0.5)%		(10,307)	(0.4)%		(2,679)	26.0%
Income before provision for income taxes		296,496	11.8%		302,456	12.8%		(5,960)	(2.0)%
Provision for income taxes		74,320	2.9%		46,250	2.0%		28,070	60.7%
Net income		222,176	8.8%		256,206	10.8%		(34,030)	(13.3)%
Less: Net income (loss) attributable to noncontrolling interest		(81)	0.0%		-	0.0%		(81)	0.0%
Net income attributable to MSC Industrial	$	222,257	8.8%	$	256,206	10.8%	$	(33,949)	(13.3)%

Net Sales

Net sales increased 6.6% or $155.3 million for the thirty-nine-week period ended June 1, 2019, as compared to the thirty-nine-week period ended June 2, 2018. We estimate that this $155.3 million increase in net sales is comprised of (i) $83.1 million of higher sales volume, excluding AIS and MSC Mexico operations; (ii) $46.3 million from AIS, which we acquired in April 2018; (iii) $12.8 million from MSC Mexico, which commenced operations in February 2019; and (iv) $16.7 million from improved pricing, inclusive of changes in customer and product mix, discounting and other items; partially offset by (v) $3.6 million from foreign exchange impact. Of the above $155.3 million increase in net sales, sales to our Large Account Customers increased by $37.0 million and sales other than to our Large Account Customers increased by $118.3 million, which includes $46.3 million and $12.8 million of net sales from AIS and MSC Mexico, respectively.

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The table below shows the change in our average daily sales by total company and by customer type for the thirty-nine-week period ended June 1, 2019 compared to the same period in the prior fiscal year:

Average Daily Sales Percentage Change
(unaudited)
2019 vs. 2018 Fiscal Period	Thirty-Nine-Week Period Ended Fiscal Q3		% of Total Business
Total Company	7.1	%
Manufacturing Customers	7.4	%	70	%
Non-Manufacturing Customers	6.3	%	30	%

We believe that our ability to transact business with our customers through various electronic portals and directly through the MSC website gives us a competitive advantage over smaller suppliers. Sales made through our eCommerce platforms, including sales made through EDI systems, VMI systems, Extensible Markup Language ordering-based systems, vending, hosted systems and other electronic portals, represented 60.1% of consolidated net sales for the thirty-nine-week period ended June 1, 2019, compared to 60.2% of consolidated net sales for the same period in the prior fiscal year. These percentages of consolidated net sales do not include eCommerce sales from the recent acquisitions of DECO and AIS and from MSC Mexico operations.

Gross Profit

Gross profitmargin was 42.8% for the thirty-nine-week period ended June 1, 2019as compared to 43.7% for the same period in the prior fiscal year. The decline was primarily the result of increased product costs and changes in our customer and product mix. In addition, 10 basis points of the decline resulted from MSC Mexico operations which commenced in the fiscal second quarter of 2019 and another 20 basis points of the decline came from the AIS business we acquired in the fiscal third quarter of 2018.

Operating Expenses

Operating expenses increased6.7% to $769.0 million for the thirty-nine-week period ended June 1, 2019, as compared to $720.5 million for the same period in the prior fiscal year.Operating expenses were30.5% of net sales for both the thirty-nine-week periods ended June 1, 2019 and June 2, 2018. The increase in operating expenses was primarily attributable to an increase in payroll and payroll-related costs and freight costs, associated with higher sales volumes. Operating expenses also increased due to the acquisition of AIS in our third quarter of the prior fiscal year and from the operations of MSC Mexico which commenced in the second quarter of fiscal 2019. AIS and MSC Mexico operating expenses, including non-recurring acquisition and integration costs, accounted for $14.8 million and $2.7 million, respectively, of total operating expenses for the thirty-nine-week period ended June 1, 2019 and AIS accounted for $2.4 million of total operating expenses for the thirty-nine-week period ended June 2, 2018.

Payroll and payroll-related costs were56.2% of total operating expenses for the thirty-nine-week period ended June 1, 2019, as compared to 56.9% for the thirty-nine-week period ended June 2, 2018.  Included in payroll and payroll-related costs are salary, incentive compensation, sales commission, and fringe benefit costs. All of these costs, with the exception of incentive compensation, increased for the thirty-nine-week period ended June 1, 2019, as compared to the same period in the prior fiscal year, with much of the increase attributable to anincrease in salary expenses, primarily related to annual merit increases and an increase in our field sales and service associate headcount. Also contributing to the increase in payroll and payroll-related costs wereincreased sales commissions due to higher sales volume andincreased fringe costs associated with higher medical costs.  The incentive compensation accrual decreased as the fiscal 2019 bonus payout is currently expected to be made at lower levels than fiscal 2018.

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Freight expense was $103.5 million for the thirty-nine-week period ended June 1, 2019, as compared to $96.7 million for the same period in the prior fiscal year. The primary driver of this increase was increased sales.

Income from Operations

Income from operations decreased 1.0% to $309.5 million for the thirty-nine-week period ended June 1, 2019, as compared to $312.8 million for the same period in the prior fiscal year. This was primarily attributable to the increase in operating expenses as described above. Income from operations as a percentage of net sales decreased to 12.3% for the thirty-nine-week period ended June 1, 2019,  from13.2%for the same period in the prior fiscal year, primarily as the result of the decrease in the gross profit margin mentioned above.

Provision for Income Taxes

The effective tax rate for the thirty-nine-week period ended June 1, 2019 was 25.1% as compared to 15.3% for the same period in the prior fiscal year. The increase in the effective tax rate was primarily due to the prior year period adjustment resulting from the revaluation of net deferred tax liabilities as of the enactment date of the TCJA.See Note 9 “Income Taxes” in the Notes to the unaudited Condensed Consolidated Financial Statements for further discussion.

Net Income

The factors which affected net income for the thirty-nine-week period endedJune 1, 2019, as compared to the same period in the previous fiscal year, have been discussed above.

Liquidity and Capital Resources

	June 1,		September 1,
	2019		2018		$ Change
	(Dollars in thousands)
Total debt	$	530,989	$	535,333	$	(4,344)
Less: Cash and cash equivalents		(38,771)		(46,217)		7,446
Net debt	$	492,218	$	489,116	$	3,102
Equity	$	1,453,875	$	1,387,254	$	66,621

As of June 1, 2019, we held $38.8 million in cash and cash equivalents, substantially all with well-known financial institutions. Historically, our primary financing needs have been to fund our working capital requirements necessitated by our sales growth and the costs of acquisitions, new products, new facilities, facility expansions, investments in vending solutions, technology investments, and productivity investments. Cash generated from operations, together with borrowings under our credit facilities, Private Placement Debt, and Shelf Facility Agreements, have been used to fund these needs, to repurchase shares of our Class A common stock, and to pay dividends. As of June 1, 2019, total borrowings outstanding, representing amounts due under our credit facilities, Private Placement Debt, and Shelf Facility Agreements, as well as all capital leases and financing arrangements, were $531.0 million, net of unamortized debt issuance costs of $1.3 million. As ofSeptember 1, 2018, total borrowings outstanding, representing amounts due under our credit facilities, Private Placement Debt, and Shelf Facility Agreements, as well as all capital leases and financing arrangements, were $535.3 million, net of unamortized debt issuance costs of $1.6 million. We believe, based on our current business plan, that our existing cash, funds available under our credit facilities, and cash flow from operations will be sufficient to fund our planned capital expenditures and operating cash requirements for at least the next 12 months.

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The table below summarizes information regarding the Company’s liquidity and capital resources:

	Thirty-Nine Weeks Ended
	June 1,		June 2,
	2019		2018
	(Dollars in thousands)
Net cash provided by operating activities	$	187,200	$	230,237
Net cash used in investing activities		(20,556)		(116,639)
Net cash used in financing activities		(173,959)		(89,709)
Effect of foreign exchange rate changes on cash and cash equivalents		(131)		21
Net increase (decrease) in cash and cash equivalents	$	(7,446)	$	23,910

Operating Activities

Net cash provided by operating activities for the thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was $187.2 million and $230.2 million, respectively. There are various increases and decreases contributing to this change. A decrease in the change in accounts payable and accrued liabilities relating to a greater decrease in the change in the payroll accrual based on the payroll periods, an increase in the change in prepaid expenses and other assets primarily relating to a greater increase in the change in vendor rebate receivables, and a greater increase in the change in inventories, partially offset by the increase in net income, after offsetting the income tax benefit recognized from the revaluation of the net deferred tax liabilities as of the enactment date of the TCJA, contributed to most of the decrease in net cash provided by operating activities.

	June 1,		September 1,		June 2,
	2019		2018		2018
	(Dollars in thousands)
Working Capital	$	729,704	$	656,984	$	587,692
Current Ratio		2.5		2.3		2.1
Days Sales Outstanding		59.2		55.6		56.2
Inventory Turnover		3.5		3.7		3.6

The increases in working capitaland the current ratio as of June 1, 2019 compared to June 2, 2018 is primarily due to an increase in inventories and accounts receivable resulting from an increase in sales, as well as a reduction in our current debt outstanding.

The increase in dayssales outstanding is primarily due to a receivables portfolio consisting of a greater percentage of our national account program sales, which are typically at longer terms. Inventory turns, calculated using a thirteen-point average inventory balance, remained relatively consistent with the prior year periods displayed.

Investing Activities

Net cash used in investing activities for the thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was $20.6 million and $116.6 million, respectively. The use of cash for the thirty-nine-week period ended June 1, 2019 consisted of expenditures for property, plant, and equipment and the acquisition of certain assets of TAC. This was offset by the cash received from the sale of the Finance Authority bonds that were redeemed on May 29, 2019.  The use of cash for the thirty-nine-week period ended June 2, 2018 was primarily related to the AIS acquisition with the remainder consisting of expenditures for property, plant, and equipment.

Financing Activities

Net cash used in financing activities for the thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was $174.0 million and $89.7 million, respectively. The major components contributing to the use of cash for the thirty-nine-week period ended June 1, 2019 were the repurchase of our common stock of $84.5 million, dividends paid of $104.3 million, and payments on capital lease and financing obligations of $28.0 million primarily related to the lease with the Finance Authority upon the settlement of the bonds. This was partially offset by net borrowings on all the credit facilities of $22.0 million and proceeds from the exercise of common stock options of $15.5 million. The major components contributing to the use of cash for the thirty-nine-week period ended June 2, 2018 were dividends paid of $92.6 million, and the

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repurchase of our common stock of $25.4 million. This was partially offset by proceeds from the exercise of common stock options of $23.1 million.

Contractual Obligations

Information regarding our long-term debt payments, operating lease payments, capital lease payments and other commitments is provided in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on our Form 10-K for the fiscal year ended September 1, 2018. As of June 1, 2019, there have been no material changes in our contractual obligations and commitments since September 1, 2018, with the exception of the $27.0 million payment on the capital lease obligation to the Finance Authority.

Long-term Debt

Credit Facilities

In April 2017, the Company entered into a $600 millionCommitted Facility. The Company also has six Uncommitted Facilities, totaling $440 million of maximum uncommitted availability.  See Note 6 “Debt and Capital LeaseObligations”in the Notes to the unaudited Condensed Consolidated Financial Statements for more information aboutthe credit facilities. As of June 1, 2019, we were in compliance with the operating and financial covenants of the credit facilities. The current unused balance of $597 million from the Committed  Facility, which is reduced by outstanding letters of credit, is available for working capital purposes if necessary.

Private Placement Debt and Shelf Facility Agreements

In July 2016, we completed the issuance and sale of unsecured senior notes. In January 2018, we entered into two Note Purchase and Private Shelf Agreements.In June 2018, we entered into an additional note purchase agreement. See Note 6 “Debt and Capital Lease Obligations” in the Notes to the unaudited Condensed Consolidated Financial Statements for more information about these transactions.

Capital Lease and Financing Arrangements

From time to time, we enter into capital leases and financing arrangements. See Note 6 “Debt and Capital Lease Obligations” in the Notes to the unaudited Condensed Consolidated Financial Statements for more information about our capital lease and financing arrangements.

Operating Leases

As of June 1, 2019, certain of our operations are conducted on leased premises. These leases are for varying periods, the longest extending to fiscal 2028. In addition, we are obligated under certain equipment and automobile operating leases, which expire on varying dates through fiscal 2023.

Off-Balance Sheet Arrangements

We have not entered into any off-balance sheet arrangements.

Critical Accounting Estimates

On an ongoing basis, we evaluate our critical accounting policies and estimates, including those related to revenue recognition, inventory valuation, allowance for doubtful accounts, warranty reserves, contingencies and litigation, income taxes, accounting for goodwill and long-lived assets, stock-based compensation, and business combinations. We make estimates, judgments and assumptions in determining the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. The estimates are used to form the basis for making judgments about the carrying values of assets and liabilities and the amount of revenues and expenses reported that are not readily apparent from other sources. Actual results may differ from these estimates.

There have been no material changes in the Company’s Critical Accounting Policies, as disclosed in its Annual Report on Form 10-K for the fiscal year ended September 1, 2018.

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Recently Issued Accounting Standards

See Note 1“Basis of Presentation” in the Notes to the unaudited Condensed Consolidated Financial Statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

For information regarding our exposure to certain market risks, see “Interest Rate Risks” in the Management’s Discussion and Analysis of Financial Condition and Results of Operations under Item 7A, “Quantitative and Qualitative Disclosures About Market Risk”, in our Annual Report on Form 10-K for the fiscal year ended September 1, 2018. Except as described in Management’s Discussion and Analysis of Financial Condition and Results of Operations above, there have been no significant changes in our financial instrument portfolio or interest rate risk since our September 1, 2018 fiscal year-end.

Item 4.  Controls and Procedures

Our senior management is responsible for establishing and maintaining a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Exchange Act) designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

In accordance with Exchange Act Rules 13a-15 and 15d-15, we carried out an evaluation, with the participation of the Chief Executive Officer and Chief Financial Officer, as well as other key members of our management, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective, as of the end of the period covered by this report, to ensure that information required to be disclosed in our reports filed or submitted under the Exchange Act is (i) accumulated and communicated to management as appropriate to allow timely decisions regarding required disclosure and (ii) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

No changes occurred in our internal controls over financial reporting (as defined in Rule 13a-15(f) and Rule 15d-15(f) promulgated under the Exchange Act) during the fiscal quarter ended June 1, 2019 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations or liquidity.

Item 1A.  Risk Factors

In addition to the other information set forth in this Report, consider the factors discussed in Part I, Item 1A,“Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended September 1, 2018, which could materially affect our business, financial condition or future results. The risks described in the aforementioned report are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be not material also may materially adversely affect our business, financial condition and/or operating results.

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Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth repurchases by the Company of its outstanding shares of Class A common stock during the thirteen-week period ended June 1, 2019:

Period	Total Number of Shares Purchased(1)	Average Price Paid Per Share(2)		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(3)	Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs
3/3/19-4/2/19	371	$	83.32	—	1,157,038
4/3/19-5/2/19	51		82.69	—	1,157,038
5/3/19-6/1/19	49		75.83	—	1,157,038
Total	471	$	82.60	—

__________________________

(1) During the thirteen weeks ended June 1, 2019, 471 shares of our common stock were withheld by the Company as payment to satisfy our associates’ tax withholding liability associated with our share-based compensation program and are included in the total number of shares purchased.

(2) Activity is reported on a trade date basis.

(3) During fiscal year 1999, the Board of Directors established the MSC Stock Repurchase Plan, which we refer to as the “Repurchase Plan.” The total number of shares of our Class A common stock initially authorized for future repurchase was set at 5,000,000 shares. On January 8, 2008, and on October 21, 2011, the Board of Directors reaffirmed and replenished the Repurchase Plan. Most recently, on January 9, 2018, the Board of Directors authorized the repurchase of an additional 2,000,000 shares of Class A common stock under the Company’s ongoing Repurchase Plan. As of June 1, 2019, the maximum number of shares that may yet be repurchased under the Repurchase Plan was 1,157,038 shares.  There is no expiration date for this program.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information

None.

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Item 6.  Exhibits

EXHIBIT INDEX

Exhibit No.	Exhibit
31.1	Chief Executive Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Chief Financial Officer’s Certificate, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
32.2	Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**
101.INS	XBRL Instance Document.*
101.SCH	XBRL Taxonomy Extension Schema Document.*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.*
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.*
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.*

__________________________

*	Filedherewith.
**	Furnishedherewith.

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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.

	MSC Industrial  Direct Co., Inc. (Registrant)
Dated: July 10, 2019	By:	/s/ ERIK GERSHWIND President and Chief Executive Officer (Principal Executive Officer)
Dated: July 10, 2019	By:	/s/ RUSTOM JILLA Executive Vice President and Chief Financial Officer (Principal Financial Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Erik Gershwind, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 10, 2019

/s/ ERIK GERSHWIND

Erik Gershwind

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Rustom Jilla, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 10, 2019

/s/ RUSTOM JILLA

Rustom Jilla

Executive Vice President and Chief Financial Officer

(Principal Financial Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended June 1, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Erik Gershwind, Chief Executive Officer of the Company, certify, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 10, 2019

By:	/s/ ERIK GERSHWIND
Name:	Erik Gershwind President and Chief Executive Officer (Principal Executive Officer)

A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO SECTION 906

OF THE SARBANES‑OXLEY ACT OF 2002

In connection with the Quarterly Report on Form 10-Q of MSC Industrial Direct Co., Inc. (the “Company”) for the fiscal quarter ended June 1, 2019 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Rustom Jilla, Chief Financial Officer of the Company, certify, pursuant to Section 906 of the Sarbanes‑Oxley Act of 2002, that:

(1)the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: July 10, 2019

By:	/s/ RUSTOM JILLA
Name:	Rustom Jilla Executive Vice President and Chief Financial Officer (Principal Financial Officer)

A signed original of this written statement required by Section 906 has been provided to MSC Industrial Direct Co., Inc. and will be retained by it and furnished to the Securities and Exchange Commission or its staff upon request.

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Document And Entity Information - shares	9 Months Ended
	Jun. 01, 2019	Jun. 19, 2019
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 01, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Registrant Name	MSC INDUSTRIAL DIRECT CO INC
Entity Central Index Key	0001003078
Current Fiscal Year End Date	--08-31
Entity Filer Category	Large Accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	false
Entity Shell Company	false
Entity Current Reporting Status	Yes
Class A Common Stock [Member]
Entity Common Stock, Shares Outstanding		45,008,191
Class B Common Stock [Member]
Entity Common Stock, Shares Outstanding		10,193,348

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands		Jun. 01, 2019	Sep. 01, 2018
Current Assets:
Cash and cash equivalents		$ 38,771	$ 46,217
Accounts receivable, net of allowance for doubtful accounts of $17,945 and $12,992, respectively		546,486	523,892
Inventories		560,800	518,496
Prepaid expenses and other current assets		69,715	58,902
Total current assets		1,215,772	1,147,507
Property, plant and equipment, net		306,564	311,685
Goodwill		676,845	674,998
Identifiable intangibles, net		119,778	122,724
Other assets		5,389	31,813
Total assets		2,324,348	2,288,727
Current Liabilities:
Short-term debt	[1]	246,298	224,097
Accounts payable		146,815	145,133
Accrued liabilities		92,955	121,293
Total current liabilities		486,068	490,523
Long-term debt		284,691	311,236
Deferred income taxes and tax uncertainties		99,714	99,714
Total liabilities		870,473	901,473
Commitments and Contingencies
MSC Industrial Shareholders’ Equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized; none issued and outstanding
Additional paid-in capital		675,674	657,749
Retained earnings		1,394,551	1,325,822
Accumulated other comprehensive loss		(22,730)	(19,634)
Class A treasury stock, at cost, 9,476,509 and 9,207,635 shares, respectively		(599,116)	(576,748)
Total MSC Industrial shareholders’ equity		1,448,443	1,387,254
Noncontrolling interest		5,432
Total Equity		1,453,875	1,387,254
Total liabilities and shareholders' equity		2,324,348	2,288,727
Class A Common Stock [Member]
MSC Industrial Shareholders’ Equity:
Common stock		54	55
Class B Common Stock [Member]
MSC Industrial Shareholders’ Equity:
Common stock		$ 10	$ 10

[1] Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	9 Months Ended
	Jun. 01, 2019	Sep. 01, 2018
Accounts receivable, allowance for doubtful accounts	$ 17,945	$ 12,992
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A treasury stock, at cost, shares	9,476,509	9,207,635
Class A Common Stock [Member]
Common stock, votes per share	1
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, shares issued	54,484,700	54,649,158
Class B Common Stock [Member]
Common stock, votes per share	10
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	50,000,000	50,000,000
Common stock, shares issued	10,193,348	10,454,765
Common stock, shares outstanding	10,193,348	10,454,765

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Condensed Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Condensed Consolidated Statements Of Income [Abstract]
Net sales	$ 866,546	$ 828,345	$ 2,521,147	$ 2,365,893
Cost of goods sold	497,891	467,344	1,442,693	1,332,600
Gross profit	368,655	361,001	1,078,454	1,033,293
Operating expenses	258,154	245,619	768,972	720,530
Income from operations	110,501	115,382	309,482	312,763
Other (expense) income:
Interest expense	(4,565)	(3,532)	(13,160)	(10,319)
Interest income	178	108	504	484
Other (expense) income, net	(95)	(141)	(330)	(472)
Total other expense	(4,482)	(3,565)	(12,986)	(10,307)
Income before provision for income taxes	106,019	111,817	296,496	302,456
Provision for income taxes	26,505	32,748	74,320	46,250
Net income	79,514	79,069	222,176	256,206
Less: Net income (loss) attributable to noncontrolling interest	(87)		(81)
Net income attributable to MSC Industrial	$ 79,601	$ 79,069	$ 222,257	$ 256,206
Net income per common share:
Basic	$ 1.44	$ 1.40	$ 4.02	$ 4.54
Diluted	$ 1.44	$ 1.39	$ 4.00	$ 4.51
Weighted average shares used in computing net income per common share:
Basic	55,158	56,420	55,266	56,382
Diluted	55,387	56,804	55,556	56,733

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Condensed Consolidated Statements Of Comprehensive Income - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Condensed Consolidated Statements Of Comprehensive Income [Abstract]
Net income as reported		$ 79,514	$ 79,069	$ 222,176	$ 256,206
Other comprehensive income, net of tax:
Foreign currency translation adjustments		(2,576)	(889)	(3,242)	(1,705)
Comprehensive income		76,938	78,180	218,934	254,501
Comprehensive loss attributable to noncontrolling interest		170		227
Comprehensive income attributable to MSC Industrial	[1]	$ 77,108	$ 78,180	$ 219,161	$ 254,501

[1] There were no material taxes associated with other comprehensive income during the thirteen and thirty-nine-week periods ending June 1, 2019 and June 2, 2018, respectively.

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Condensed Consolidated Statements Of Comprehensive Income (Parenthetical) - USD ($)	3 Months Ended		9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Condensed Consolidated Statements Of Comprehensive Income [Abstract]
Other comprehensive income, taxes	$ 0	$ 0	$ 0	$ 0

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Condensed Consolidated Statements Of Shareholders' Equity - USD ($) $ in Thousands	Class A Common Stock [Member] Common Stock [Member]	Class A Common Stock [Member] Retained Earnings [Member]	Class A Common Stock [Member] Treasury Stock [Member]	Class A Common Stock [Member]	Class B Common Stock [Member] Common Stock [Member]	Class B Common Stock [Member] Retained Earnings [Member]	Class B Common Stock [Member]	Additional Paid-In Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Loss [Member]	Treasury Stock [Member]	Total Shareholders' Equity Attributable to MSC Industrial [Member]	Noncontrolling Interest [Member]	Total
Balance, Value at Sep. 02, 2017	$ 54				$ 12			$ 626,995	$ 1,168,812	$ (17,263)	$ (553,470)
Exchange of Class B common stock for Class A common stock, value	1				(2)
Associate Incentive Plans								36,404			1,624
Repurchases of common stock, Value			$ (25,384)
Cash dividends on common stock		$ (74,285)				$ (18,348)
Dividend equivalents declared, net of cancellations									(597)
Foreign Currency Translation Adjustment										(1,705)				$ (1,705)
Net income									256,206					256,206
Balance, Value at Jun. 02, 2018	55				10			663,399	1,331,788	(18,968)	(577,230)	$ 1,399,054		1,399,054
Dividends declared per common share				$ 1.64			$ 1.64
Balance, Value at Mar. 03, 2018	55				11			652,440	1,285,681	(18,079)	(574,073)
Exchange of Class B common stock for Class A common stock, value					(1)
Associate Incentive Plans								10,959			499
Repurchases of common stock, Value			$ (3,656)
Cash dividends on common stock		(26,598)				(6,162)
Dividend equivalents declared, net of cancellations									(202)
Foreign Currency Translation Adjustment										(889)				(889)
Net income									79,069					79,069
Balance, Value at Jun. 02, 2018	55				10			663,399	1,331,788	(18,968)	(577,230)	1,399,054		1,399,054
Dividends declared per common share				0.58			0.58
Balance, Value at Sep. 01, 2018	55				10			657,749	1,325,822	(19,634)	(576,748)			1,387,254
Associate Incentive Plans								29,812			1,769
Repurchases of common stock, Shares			316,000
Repurchases of common stock, Value			$ (24,137)
Repurchase and retirement of common stock, Value	(1)							(11,887)	(48,439)
Cash dividends on common stock		(85,042)				(19,266)
Dividend equivalents declared, net of cancellations									(781)
Issuance of Noncontrolling Interest in MSC Mexico													$ 4,637
Capital Contributions													1,022
Foreign Currency Translation Adjustment										(3,096)			(146)	(3,242)
Net income									222,257				(81)	222,176
Balance, Value at Jun. 01, 2019	54				10			675,674	1,394,551	(22,730)	(599,116)	1,448,443	5,432	1,453,875
Dividends declared per common share				1.89			1.89
Balance, Value at Mar. 02, 2019	54				10			670,047	1,349,972	(20,237)	(599,603)		5,602
Associate Incentive Plans								5,627			526
Repurchases of common stock, Shares			500
Repurchases of common stock, Value			$ (39)
Cash dividends on common stock		$ (28,335)				$ (6,422)
Dividend equivalents declared, net of cancellations									(265)
Foreign Currency Translation Adjustment										(2,493)			(83)	(2,576)
Net income									79,601				(87)	79,514
Balance, Value at Jun. 01, 2019	$ 54				$ 10			$ 675,674	$ 1,394,551	$ (22,730)	$ (599,116)	$ 1,448,443	$ 5,432	$ 1,453,875
Dividends declared per common share				$ 0.63			$ 0.63

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Condensed Consolidated Statements Of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018
Cash Flows from Operating Activities:
Net income	$ 222,176	$ 256,206
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	48,539	47,133
Stock-based compensation	12,167	11,275
Loss on disposal of property, plant, and equipment	325	280
Provision for doubtful accounts	9,013	4,956
Deferred income taxes and tax uncertainties		(41,199)
Changes in operating assets and liabilities:
Accounts receivable	(30,180)	(34,434)
Inventories	(33,672)	(26,740)
Prepaid expenses and other current assets	(10,841)	1,005
Other assets	(609)	3,191
Accounts payable and accrued liabilities	(29,718)	8,564
Total adjustments	(34,976)	(25,969)
Net cash provided by operating activities	187,200	230,237
Cash Flows from Investing Activities:
Expenditures for property, plant and equipment	(35,956)	(30,794)
Proceeds from sale of available for sale securities	27,025
Cash used in business acquisitions, net of cash received	(11,625)	(85,845)
Net cash used in investing activities	(20,556)	(116,639)
Cash Flows from Financing Activities:
Repurchases of common stock	(84,464)	(25,384)
Payments of cash dividends	(104,308)	(92,633)
Proceeds from sale of Class A common stock in connection with associate stock purchase plan	3,472	3,398
Proceeds from exercise of Class A common stock options	15,527	23,135
Borrowings under Shelf Facility Agreement		50,000
Borrowings under the revolving credit facilities	358,000	172,000
Payments under the revolving credit facilities	(336,000)	(220,000)
Contributions from noncontrolling interest	918
Payments on capital lease and financing obligations	(28,007)	(829)
Other, net	903	604
Net cash used in financing activities	(173,959)	(89,709)
Effect of foreign exchange rate changes on cash and cash equivalents	(131)	21
Net increase (decrease) in cash and cash equivalents	(7,446)	23,910
Cash and cash equivalents—beginning of period	46,217	16,083
Cash and cash equivalents—end of period	38,771	39,993
Supplemental Disclosure of Cash Flow Information:
Cash paid for income taxes	69,413	76,753
Cash paid for interest	$ 10,791	$ 8,231

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Basis Of Presentation

9 Months Ended

Jun. 01, 2019

Basis Of Presentation [Abstract]

Basis Of Presentation

Note 1. Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared by the management of MSC Industrial Direct Co., Inc. (together with its wholly owned subsidiaries and entities in which it maintains a controlling financial interest, the “Company”) and in the opinion of management include all normal recurring material adjustments necessary to present fairly the Company’s financial position as of June 1, 2019 and June 2, 2018, the results of operations for the thirteen and thirty-nine weeks ended June 1, 2019 and June 2, 2018, and cash flows for the thirty-nine weeks ended June 1, 2019 and June 2, 2018. The September 1, 2018 financial information was derived from the Company’s audited financial statements included in the Company’s Annual Report on Form 10-K for the year ended September 1, 2018.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to the rules and regulations of the SEC. The Company, however, believes that the disclosures contained in this report comply with the requirements of Section 13(a) of the Securities Exchange Act of 1934 for a Quarterly Report on Form 10-Q and are adequate to make the information presented not misleading. These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended September 1, 2018.

The Company’s fiscal year ends on the Saturday closest to August 31 of each year. Unless the context requires otherwise, references to years contained herein pertain to the Company’s fiscal year. The Company’s 2019 fiscal year will be a 52-week accounting period that will end on August 31, 2019 and its 2018 fiscal year was a 52-week accounting period that ended on September 1, 2018.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of MSC Industrial Direct Co., Inc., its wholly owned subsidiaries and entities in which it maintains a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Recently Adopted Accounting Pronouncements

Effective September 2, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12, 2016-20 and 2017-05. These ASUs outline a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedeprior revenue recognition guidance, including industry-specific guidance. Revenue continues to be recognized when products are shipped to the customerand the customer obtains control of the products, and the adoption of these ASUs, using the modified retrospective approach, had no impact on the Company’s opening retained earnings. The Company reports its sales net of estimated sales returns and sales incentives. Sales tax collected from customers is excluded from net sales. Additional information and disclosures required by this new standard are contained in Note 2,  “Revenue”.

Effective September 2, 2018, the Company adoptedASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business to assist entities with evaluating when a set of transferred assets and activities is considered a business.

Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right-of-use asset and a lease liability in the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. During 2018, the FASB issued additional ASUs that address implementation issues and correct or improve certain aspects of the new accounting guidance for leases, including ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements. These ASUs do not change the core principles in the lease accounting standard outlined above. The amendments in ASU 2018-11 provide an optional transition method that allows entities to initially apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods will continue to be in accordance with current lease accounting guidance. Management established a cross-functional team to evaluate and implement the new standard. The team selected a third-party software solution to facilitate the accounting and financial reporting requirements of the new lease accounting standard. Lease data elements have been gathered and are currently being migrated to the software solution. The new standard will be adopted in the first quarter of fiscal 2020 and the Company expects to use the optional transition method. While the Company has not yet completed its evaluation of the effects of adopting this ASU, right-of-use assets and lease liabilities will be recorded in the Consolidated Balance Sheets as of the effective date and thereafter.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for financial statement periods beginning after December 15, 2019. The new standard is effective for the Company for its fiscal year 2021.  The Company is currently evaluating the standard and does not expect a significant impact to its consolidated financial statements.

In January 2017, the FASB issued its final standard on simplifying the test for goodwill impairment, ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). This standard requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The new standard is effective for the Company for its fiscal year 2021. Upon adoption, the Company will apply this guidance prospectively to its annual and interim goodwill impairment tests and disclose the change in accounting principle.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the Company’s financial position, results of operations or cash flows.

Reclassification

Certain of the prior period line items contained in the Condensed Consolidated Statements of Shareholders’ Equity were condensed to conform to our current period presentation. The Company combined the “Exercise of common stock options”, the “Common stock issued under associate stock purchase plan”, the “Shares issued upon vesting of restricted stock units, including dividend equivalent units”, the “Stock-based compensation”, and the “Issuance of restricted common stock, net of cancellations” line items into a single line titled “Associate Incentive Plans”. These reclassifications did not affect the total amount of Shareholders’ Equity.

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Revenue

9 Months Ended

Jun. 01, 2019

Revenue [Abstract]

Revenue

Note 2. Revenue

Revenue Recognition

Net sales include product revenue and shipping and handling charges, net of estimated sales returns and any related sales incentives. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring products. All revenue is recognized when the Company satisfies its performance obligations under the contract, and invoicing occurs at approximately the same point in time. The Company recognizes revenue once the customer obtains control of the products. The Company’s product sales have standard payment terms that do not exceed one year. The Company considers shipping and handling as activities to fulfill its performance obligation. The Company’s contracts have a single performance obligation, to deliver products, and are short-term in nature. The Company estimates product returns based on historical return rates. Total accrued sales returns were $4,897 and $4,832 as of June 1, 2019 and September 1, 2018, respectively, and are reported as Accrued liabilities in the Condensed Consolidated Balance Sheets. Sales taxes and value-added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales.

Consideration Payable to a Customer

The Company offers customers sales incentives, which primarily consist of volume rebates, and upfront sign-on payments. These volume rebates and payments are not in exchange for a distinct good or service and result in a reduction of net sales from the goods transferred to the customer at the later of when the related revenue is recognized or when the Company promises to pay the consideration. The Company estimates its volume rebate accruals and records its sign-on payments based on various factors, including contract terms, historical experience, and performance levels. Total accrued sales incentives, primarily related to volume rebates, were $13,840 and$14,000 as of June 1, 2019 and September 1, 2018, respectively, and are included in Accrued liabilities in the Condensed Consolidated Balance Sheets. Sign-on payments, not yet recognized as a reduction of revenue, are recorded in Prepaid expenses and other current assets in the Condensed Consolidated Balance Sheets and were $2,698 and $2,457 as of June 1, 2019 and September 1, 2018, respectively.

Contract Assets and Liabilities

The Company records a contract asset when it has a right to payment from a customer that is conditioned on events other than the passage of time. The Company records a contract liability when customers prepay but the Company has not yet satisfied its performance obligation. The Company did not have material unsatisfied performance obligations, contract assets or liabilities as of June 1, 2019 and September 1, 2018.  

Disaggregation of Revenue

The Company operates in one operating and reportable segment as a distributor of metalworking and maintenance, repair, and operations (“MRO”) products and services. The Company serves a large number of customers in diverse industries, which are subject to different economic and industry factors. The Company's presentation of net sales by customer end-market most reasonably depicts how the nature, amount, timing, and uncertainty of Company revenue and cash flows are affected by economic and industry factors. The Company does not disclose net sales information by product category as it is impracticable to do so as a result of its numerous product offerings and the way its business is managed. The following table presents the Company's percentage of net sales by customer end-market for the thirteen and thirty-nine-week periods ended June 1, 2019:

	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	June 1, 2019		June 1, 2019
Manufacturing Heavy	47	%	48	%
Manufacturing Light	22	%	22	%
Government	7	%	8	%
Retail/Wholesale	6	%	6	%
Commercial Services	4	%	4	%
Other (1)	14	%	12	%
Total net sales	100	%	100	%

__________________________

(1) The other category primarily includes individual customer and small business net sales not assigned to a specific industry classification.

The Company’s net sales originating from the following geographic areas were as follows for the thirteen and thirty-nine-week periods ended June 1, 2019:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1, 2019				June 1, 2019
United States	$	831,533	96	%	$	2,434,603	97	%
UK		14,399	2	%		43,373	2	%
Canada		10,747	1	%		30,363	1	%
Mexico		9,867	1	%		12,808	< 1	%
Total net sales	$	866,546	100	%	$	2,521,147	100	%

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Net Income Per Share

9 Months Ended

Jun. 01, 2019

Net Income Per Share [Abstract]

Net Income Per Share

Note 3. Net Income per Share

The Company’s non-vested restricted share awards contain non-forfeitable rights to dividends and meet the criteria of a participating security as defined by Accounting Standards Codification (“ASC”) Topic 260, “Earnings Per Share”. Under the two-class method, net income per share is computed by dividing net income allocated to common shareholders by the weighted average number of common shares outstanding for the period. In applying the two-class method, net income is allocated to both common shares and participating securities based on their respective weighted average shares outstanding for the period. The following table sets forth the computation of basic and diluted net income per common share under the two-class methodfor the thirteen and thirty-nine weeks ended June 1, 2019 and June 2, 2018, respectively:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net income attributable to MSC Industrial as reported	$	79,601	$	79,069	$	222,257	$	256,206
Less: Distributed net income available to participating securities		(10)		(14)		(34)		(73)
Less: Undistributed net income available to participating securities		(19)		(56)		(66)		(248)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	78,999	$	222,157	$	255,885
Add: Undistributed net income allocated to participating securities		19		56		66		248
Less: Undistributed net income reallocated to participating securities		(19)		(55)		(66)		(247)
Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	79,000	$	222,157	$	255,886
Denominator:
Weighted average shares outstanding for basic net income per share		55,158		56,420		55,266		56,382
Effect of dilutive securities		229		384		290		351
Weighted average shares outstanding for diluted net income per share		55,387		56,804		55,556		56,733
Net income per share two-class method:
Basic	$	1.44	$	1.40	$	4.02	$	4.54
Diluted	$	1.44	$	1.39	$	4.00	$	4.51
Potentially dilutive securities		1,093		-		939		-

Potentially dilutive securities attributable to outstanding stock options and restricted stock units are excluded from the calculation of diluted earnings per share where the combined exercise price and average unamortized fair value are greater than the average market price of MSC common stock, and therefore their inclusion would be anti-dilutive.

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Stock-Based Compensation

9 Months Ended

Jun. 01, 2019

Stock-Based Compensation [Abstract]

Stock-Based Compensation

Note 4. Stock-Based Compensation

The Company accounts for all share-based payments in accordance with ASC Topic 718, “Compensation—Stock Compensation”.Stock‑based compensation expense included in operating expenses for the thirteen and thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was as follows:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Stock options	$	1,215	$	1,132	$	3,541	$	3,455
Restricted share awards		346		658		1,216		2,230
Restricted stock units		2,452		1,827		7,181		5,401
Associate Stock Purchase Plan		76		68		229		189
Total		4,089		3,685		12,167		11,275
Deferred income tax benefit		(1,026)		(1,080)		(3,054)		(3,304)
Stock-based compensation expense, net	$	3,063	$	2,605	$	9,113	$	7,971

Stock options

The fair value of each option grant is estimated on the date of grant using the Black‑Scholes option pricing model with the following assumptions:

	Thirty-Nine Weeks Ended
	June 1,		June 2,
	2019		2018
Expected life (in years)	4.0		4.0
Risk-free interest rate	2.98	%	1.87	%
Expected volatility	23.13	%	22.13	%
Expected dividend yield	2.70	%	2.30	%
Weighted-average grant-date fair value	$14.05		$12.25

A summary of the Company’s stock option activity for the thirty-nine-week period ended June 1, 2019 is as follows:

	Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding on September 1, 2018	1,760	$	72.96
Granted	398		83.21
Exercised	(207)		75.07
Canceled/Forfeited	(32)		77.66
Outstanding on June 1, 2019	1,919	$	74.78	4.4	$	4,510
Exercisable on June 1, 2019	892	$	72.64	3.3	$	3,086

The unrecognized share‑based compensation cost related to stock option expense at June 1, 2019was $9,190 and will be recognized over a weighted average period of 2.3 years. The total intrinsic value of options exercised, which represents the difference between the exercise price and market value of common stock measured at each individual exercise date, during the thirty-nine-week periods ended June 1, 2019 and June 2, 2018was $1,882 and$7,234, respectively.

Restricted share awards

A summary of the non‑vested restricted share award (“RSA”) activity under the Company’s 2005 Omnibus Incentive Plan and 2015 Omnibus Incentive Plan for the thirty-nine-week period ended June 1, 2019 is as follows:

	Shares	Weighted-AverageGrant-Date Fair Value
Non-vested restricted share awards at September 1, 2018	63	$	81.98
Granted	—		—
Vested	(39)		82.36
Canceled/Forfeited	(1)		82.55
Non-vested restricted share awards at June 1, 2019	23	$	81.30

The fair value of each RSA is the closing stock price on the NYSE of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSA award may be withheld to satisfy the statutory income tax withholding obligation. The remaining RSAs will be settled in shares of the Company’s Class A common stock when vested. The unrecognized share-based compensation cost related to RSAs at June 1, 2019was $620 and will be recognized over a weighted average period of 0.5 years.

Restricted stock units

A summary of the Company’s non-vested Restricted Stock Unit (“RSU”) award activity for the thirty-nine-week period ended June 1, 2019 is as follows:

	Shares	Weighted-Average Grant-Date Fair Value
Non-vested restricted stock unit awards at September 1, 2018	377	$	73.18
Granted	173		82.99
Vested	(101)		72.69
Canceled/Forfeited	(21)		77.27
Non-vested restricted stock unit awards at June 1, 2019	428	$	77.06

The fair value of each RSU is the closing stock price on the NYSE of the Company’s Class A common stock on the date of grant. Upon vesting, a portion of the RSU award may be withheld to satisfy the statutory income tax withholding obligation. The remaining RSUs will be settled in shares of the Company’s Class A common stock when vested. These awards accrue dividend equivalents on outstanding units (in the form of additional stock units) based on dividends declared on the Company’s Class A common stock and these dividend equivalents convert to unrestricted common stock on the vesting dates of the underlying RSUs. The dividend equivalents are not included in the RSU table above. The unrecognized share-based compensation cost related to the RSUs at June 1, 2019was $26,641 and is expected to be recognized over a weighted average period of 3.2years.

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Fair Value

9 Months Ended

Jun. 01, 2019

Fair Value [Abstract]

Fair Value

Note 5. Fair Value

Fair value accounting standards define fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The following fair value hierarchy prioritizes the inputs used to measure fair value into three levels, with Level 1 being of the highest priority. The three levels of inputs used to measure fair value are as follows:

Level 1—	Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active  markets.
Level 2—	Include other inputs that are directly or indirectly observable in the marketplace.
Level 3—	Unobservable inputs which are supported by little or no market activity.

In connection with the construction of the Company’s customer fulfillment center (“CFC”) in Columbus, Ohio, the Company entered into an arrangement during fiscal 2013 with the Columbus-Franklin County Finance Authority (“Finance Authority”) which provides savings on state and local sales taxes imposed on construction materials purchased by entities that finance the transactions through them. Under this arrangement, the Finance Authority issued taxable bonds in the amount of $27,025 to finance the structure and site improvements of the Company’s CFC. The Company purchased these bonds at issuance. The bonds were redeemed on May 29, 2019 and all funds have been settled as of June 1, 2019. The bonds had an outstanding balance of $27,025 at September 1, 2018 and were classified as available for sale securities in accordance with ASC Topic 320. The fair values of these securities were based on observable inputs in non-active markets, which are therefore classified as Level 2 in the hierarchy. The Company did not record any gains or losses on these securities during the thirty-nine-week period ended June 1, 2019.

The Company’s financial instruments, other than those presented in the disclosure above, include cash and cash equivalents, accounts receivable, accounts payable, and outstanding indebtedness. The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company's debt instruments are classified as Level 2 within the fair value hierarchy. The reported carrying amounts of the Company’s financial instruments approximated their fair values as of June 1, 2019 and September 1, 2018.

During the thirty-nine weeks ended June 1, 2019 and June 2, 2018, the Company had no remeasurements of non-financial assets or liabilities at fair value on a non-recurring basis subsequent to their initial recognition. 

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Debt And Capital Lease Obligations

9 Months Ended

Jun. 01, 2019

Debt And Capital Lease Obligations [Abstract]

Debt And Capital Lease Obligations

Note 6. Debt and Capital Lease Obligations

Debt at June 1, 2019 and September 1, 2018 consisted of the following:

	June 1,		September 1,
	2019		2018
	(Dollars in thousands)
Revolving Credit Facilities
Committed bank facility	$	-	$	224,000
Uncommitted bank facilities		246,000		-
Private Placement Debt:
Senior notes, series A		75,000		75,000
Senior notes, series B		100,000		100,000
Senior Notes		20,000		20,000
Shelf Facility Agreements:		90,000		90,000
Capital lease and financing obligations		1,264		27,926
Less: unamortized debt issuance costs		(1,275)		(1,593)
Total debt	$	530,989	$	535,333
Less: short-term debt(1)		(246,298)		(224,097)
Long-term debt	$	284,691	$	311,236

__________________________

(1) Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

Revolving Credit Facilities

In April 2017, the Company entered into a $600,000 committed credit facility (the “Committed Facility”). The Committed Facility, which matures on April 14, 2022, provides for a five-year unsecured revolving loan facility.

The Committed Facility permits up to $50,000 to be used to fund letters of credit. The Committed Facility also permits the Company to request one or more incremental term loan facilities and/or increase the revolving loan commitments in an aggregate amount not to exceed $300,000. Subject to certain limitations, each such incremental term loan facility or revolving commitment increase will be on terms as agreed to by the Company, the Administrative Agent and the lenders providing such financing.

The interest rate is based on either LIBOR or a base rate, plus in either case a spread based on the Company’s leverage ratio at the end of each fiscal reporting quarter. Based on the interest period the Company selects, interest may be payable every one, two, or three months. Interest is reset at the end of each interest period. The Company currently elects to have loans under the Committed Facility bear interest based on LIBOR with one-month interest periods.

During the first quarter of fiscal 2019, the Company entered intosix unsecured credit facilities that are uncommitted (the “Uncommitted Facilities”), totaling $440,000 of maximum uncommitted availability. Borrowings under the Uncommitted Facilities are generally due at the end of the applicable agreed interest period, but, in any event, no later than the one-year anniversary of the entrance into the applicable Uncommitted Facility. The Uncommitted Facilities contain limited covenants. An event of default under the Company’s Committed Facility is an event of default under the Uncommitted Facilities. The interest rate on the Uncommitted Facilities is based on LIBOR or the bank’s cost of funds or as otherwise agreed upon by the applicable bank and the Company. The $246,000 outstanding at the end of the fiscal third quarter of 2019 under the Uncommitted Facilities is classified as short-term in the Company’sCondensed Consolidated Balance Sheet.  

During the thirty-nine-week period ended June 1, 2019, the Company borrowed $358,000 and repaid $336,000 under its revolving credit facilities.  As of June 1, 2019 and September 1, 2018, the weighted average interest rates on borrowings under all its revolving credit facilities were3.26% and 3.20%, respectively.

Private Placement Debt

In July 2016, the Company completed the issuance and sale of $75,000 aggregate principal amount of 2.65% Senior Notes, Series A, due July 28, 2023 and $100,000 aggregate principal amount of 2.90% Senior Notes, Series B, due July 28, 2026; and in June 2018, the Company completed the issuance and sale of $20,000 aggregate principal amount of 3.79% Senior Notes, due June 11, 2025 (collectively “Private Placement Debt”). Interest is payable semiannually at the fixed stated interest rates.

Shelf Facility Agreements

In January 2018, the Company entered into Note Purchase and Private Shelf Agreements with Metropolitan Life Insurance Company (“Met Life Note Purchase Agreement”) and PGIM, Inc. (“Prudential Note Purchase Agreement” and together with the Met Life Note Purchase Agreement, the “Shelf Facility Agreements”).

The Met Life Note Purchase Agreement provides for an uncommitted facility for the issuance and sale of up to an aggregate total of $250,000 of senior notes, at either fixed or floating rates. In June 2018, the Company completed the issuance and sale of $20,000 aggregate principal amount of 3.22% Series 2018A Notes, due June 11, 2020 and $20,000 aggregate principal amount of 3.42% Series 2018B Notes, due June 11, 2021. Interest is payable semiannually at the fixed stated interest rates. As of June 1, 2019, the uncommitted availability under the Met Life Note Purchase Agreement is $210,000.

The Prudential Note Purchase Agreement provides for an uncommitted facility for the issuance and sale of up to an aggregate total of $250,000 of senior notes, at a fixed rate. In January 2018, the Company completed the issuance and sale of $50,000 aggregate principal amount of 3.04% Senior Notes due January 12, 2023. Interest is payable semiannually. As of June 1, 2019, the uncommitted availability under the Prudential Note Purchase Agreement is $200,000.

Each of the credit facilities, Private Placement Debt, and Shelf Facility Agreements imposes several restrictive covenants including the requirement that the Company maintain a maximum consolidated leverage ratio of total indebtedness to EBITDA (earnings before interest expense, taxes, depreciation, amortization and stock-based compensation) of no more than 3.00 to 1.00 (or, at the election of the Company after it consummates a material acquisition, a four-quarter temporary increase to 3.50 to 1.00), and a minimum consolidated interest coverage ratio of EBITDA to total interest expense of at least 3.00 to 1.00, during the terms of the credit facilities, Private Placement Debt, and Shelf Facility Agreements. At June 1, 2019, the Company was in compliance with the operating and financial covenants of the credit facilities, Private Placement Debt, and Shelf Facility Agreements.

Capital Lease and Financing Obligations

In connection with the construction of the Company’s CFC in Columbus, Ohio in fiscal 2013, the Finance Authority holds the title to the building and entered into a long-term lease with the Company. The lease was classified as a capital lease in accordance with ASC Topic 840 and was terminated and paid in full on May 29, 2019.

From time to time, the Company enters into capital leases and financing arrangements with vendors to purchase certain information technology equipment or software. The equipment or software acquired from these vendors is paid for over a specified period of time based on the terms agreed upon. During the thirty-nine-week period ended June 1, 2019, the Company entered into capital lease and financing obligations related to certain IT equipment and software totaling $1,345.  The gross amount of property and equipment acquired under the capital lease obligationand its accumulated amortization at June 1, 2019 was $442and $46, respectively.

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Shareholders' Equity

9 Months Ended

Jun. 01, 2019

Shareholders' Equity [Abstract]

Shareholders' Equity

Note 7. Shareholders’ Equity

Common Stock Repurchases and Treasury Stock

During the thirteen andthirty-nine-week periods ended June 1, 2019, the Company repurchased 0.5 and 1,054 shares of its Class A common stock for $39 and$84,464, respectively.From these totals, 0.5 and 316 shares have not been retired and the amounts of $39 and$24,137 are reflected at cost as treasury stock in the accompanying condensed consolidated financial statements for the thirteen and thirty-nine weeks ended June 1, 2019, respectively.

During the thirteen and thirty-nine-week periods ended June 2, 2018, the Company repurchased 42 and 291 shares of its Class A common stock for $3,656 and $25,384, respectively. These shares were not retired, and the values are reflected at cost as treasury stock in the accompanying condensed consolidated financial statements for the thirteen and thirty-nine weeks ended June 2, 2018, respectively. The total number of shares of Class A common stock authorized for future repurchase was 1,157 shares at June 1, 2019.

The Company reissued14and 47 shares of treasury stock during the thirteen andthirty-nine-week periods ended June 1, 2019 and reissued13 and 43 shares of treasury stock during the thirteen and thirty-nine-week periods ended June 2, 2018, respectively, to fund the Associate Stock Purchase Plan.

Dividends on Common Stock

On July 9, 2019, the Board of Directors declared a quarterly cash dividend of $0.75 per share payable on August 6, 2019 to shareholders of record at the close of business on July 23, 2019. The dividend will result in a payout of $41,401, based on the number of shares outstanding at June 19, 2019.

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Product Warranties

9 Months Ended

Jun. 01, 2019

Product Warranties [Abstract]

Product Warranties

Note 8. Product Warranties

The Company generally offers a maximum one-year warranty, including parts and labor, for some of its machinery products. The specific terms and conditions of those warranties vary depending upon the product sold. The Company may be able to recoup some of these costs through product warranties it holds with its original equipment manufacturers, which typically range from thirty to ninety days. In general, many of the Company’s general merchandise products are covered by third-party original equipment manufacturers’ warranties. The Company’s warranty expense for the thirteen and thirty-nine-week periods ended June 1, 2019 and June 2, 2018 was minimal.

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Income Taxes

9 Months Ended

Jun. 01, 2019

Income Taxes [Abstract]

Income Taxes

Note 9. Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act (“TCJA”) was enacted. The TCJA made significant changes to U.S. federal income tax laws including permanently lowering the U.S. corporate income tax rate from 35% to 21% effective January 1, 2018. As the Company has a fiscal August year-end, the lower corporate income tax rate was phased in, resulting in a U.S. statutory rate of 25.6% for the fiscal year ending September 1, 2018. The Company’s statutory federal tax rate will be 21.0% for fiscal years 2019 and beyond. U.S. GAAP requires that the impact of tax legislation be recognized in the period in which the law was enacted.

In December 2017, the SEC issued Staff Accounting Bulletin No. 118, which allows a company to report provisional numbers related to the TCJA and adjust those amounts during a measurement period not to extend beyond one year. The Company recorded a net tax benefit of $40,464 on a provisional basis in fiscal 2018 from the revaluation of its net deferred tax liabilities primarily related to the lower federal corporate tax rate, partially offset by the lower federal benefit for state taxes and the change from a worldwide tax system to a territorial tax system. The measurement period ended during our fiscal quarter ended March 2, 2019, and no adjustments were recorded during this period. As a result, we consider our accounting for the tax effects of the TCJA to be complete based on our interpretation of the law and subsequently issued guidance. However, the U.S. Treasury may continue to issue regulations and other guidance on the application of certain provisions of the TCJA that may impact our interpretation of the rules and our calculation of the tax impact of the provisions of the TCJA.

During the thirty-nine-week period endedJune 1, 2019, there were no material changes in unrecognized tax benefits. 

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Legal Proceedings

9 Months Ended

Jun. 01, 2019

Legal Proceedings [Abstract]

Legal Proceedings

Note 10. Legal Proceedings

There are various claims, lawsuits, and pending actions against the Company incidental to the operation of its business. Although the outcome of these matters is currently not determinable, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s consolidated financial position, results of operations, or liquidity.

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Basis Of Presentation (Policy)

9 Months Ended

Jun. 01, 2019

Business And Summary Of Significant Accounting Policies [Abstract]

Principles Of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of MSC Industrial Direct Co., Inc., its wholly owned subsidiaries and entities in which it maintains a controlling financial interest. All significant intercompany balances and transactions have been eliminated in consolidation.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

Effective September 2, 2018, the Company adopted the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers (Topic 606) as modified by subsequently issued ASUs 2015-14, 2016-08, 2016-10, 2016-12, 2016-20 and 2017-05. These ASUs outline a single comprehensive model for entities to use in the accounting for revenue arising from contracts with customers and supersedeprior revenue recognition guidance, including industry-specific guidance. Revenue continues to be recognized when products are shipped to the customerand the customer obtains control of the products, and the adoption of these ASUs, using the modified retrospective approach, had no impact on the Company’s opening retained earnings. The Company reports its sales net of estimated sales returns and sales incentives. Sales tax collected from customers is excluded from net sales. Additional information and disclosures required by this new standard are contained in Note 2,  “Revenue”.

Effective September 2, 2018, the Company adoptedASU 2017-01, Business Combinations (Topic 805), which clarifies the definition of a business to assist entities with evaluating when a set of transferred assets and activities is considered a business.

Accounting Pronouncements Not Yet Adopted

Accounting Pronouncements Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842), a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right-of-use asset and a lease liability in the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. During 2018, the FASB issued additional ASUs that address implementation issues and correct or improve certain aspects of the new accounting guidance for leases, including ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements. These ASUs do not change the core principles in the lease accounting standard outlined above. The amendments in ASU 2018-11 provide an optional transition method that allows entities to initially apply the new lease accounting standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods will continue to be in accordance with current lease accounting guidance. Management established a cross-functional team to evaluate and implement the new standard. The team selected a third-party software solution to facilitate the accounting and financial reporting requirements of the new lease accounting standard. Lease data elements have been gathered and are currently being migrated to the software solution. The new standard will be adopted in the first quarter of fiscal 2020 and the Company expects to use the optional transition method. While the Company has not yet completed its evaluation of the effects of adopting this ASU, right-of-use assets and lease liabilities will be recorded in the Consolidated Balance Sheets as of the effective date and thereafter.

In June 2016, the FASB issued its final standard on measurement of credit losses on financial instruments. This standard, issued as ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), requires that an entity measure impairment of certain financial instruments, including trade receivables, based on expected losses rather than incurred losses. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years, with early adoption permitted for financial statement periods beginning after December 15, 2019. The new standard is effective for the Company for its fiscal year 2021.  The Company is currently evaluating the standard and does not expect a significant impact to its consolidated financial statements.

In January 2017, the FASB issued its final standard on simplifying the test for goodwill impairment, ASU 2017-04, Intangibles – Goodwill and Other (Topic 350). This standard requires an entity to perform its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge would be recognized for the amount by which the carrying amount exceeds the reporting unit's fair value, not to exceed the total amount of goodwill allocated to that reporting unit. This update is effective for annual and interim goodwill impairment tests in fiscal years beginning after December 15, 2019, with early adoption permitted. The new standard is effective for the Company for its fiscal year 2021. Upon adoption, the Company will apply this guidance prospectively to its annual and interim goodwill impairment tests and disclose the change in accounting principle.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to the Company’s financial position, results of operations or cash flows.

Reclassification

Reclassification

Certain of the prior period line items contained in the Condensed Consolidated Statements of Shareholders’ Equity were condensed to conform to our current period presentation. The Company combined the “Exercise of common stock options”, the “Common stock issued under associate stock purchase plan”, the “Shares issued upon vesting of restricted stock units, including dividend equivalent units”, the “Stock-based compensation”, and the “Issuance of restricted common stock, net of cancellations” line items into a single line titled “Associate Incentive Plans”. These reclassifications did not affect the total amount of Shareholders’ Equity.

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Revenue (Tables)

9 Months Ended

Jun. 01, 2019

Revenue [Abstract]

Schedule Of Disaggregation Of Revenue

	Thirteen Weeks Ended		Thirty-Nine Weeks Ended
	June 1, 2019		June 1, 2019
Manufacturing Heavy	47	%	48	%
Manufacturing Light	22	%	22	%
Government	7	%	8	%
Retail/Wholesale	6	%	6	%
Commercial Services	4	%	4	%
Other (1)	14	%	12	%
Total net sales	100	%	100	%

__________________________

(1) The other category primarily includes individual customer and small business net sales not assigned to a specific industry classification.

The Company’s net sales originating from the following geographic areas were as follows for the thirteen and thirty-nine-week periods ended June 1, 2019:

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1, 2019				June 1, 2019
United States	$	831,533	96	%	$	2,434,603	97	%
UK		14,399	2	%		43,373	2	%
Canada		10,747	1	%		30,363	1	%
Mexico		9,867	1	%		12,808	< 1	%
Total net sales	$	866,546	100	%	$	2,521,147	100	%

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Net Income Per Share (Tables)

9 Months Ended

Jun. 01, 2019

Net Income Per Share [Abstract]

Basic And Diluted Net Income Per Common Share Under The Two-Class Method

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Net income attributable to MSC Industrial as reported	$	79,601	$	79,069	$	222,257	$	256,206
Less: Distributed net income available to participating securities		(10)		(14)		(34)		(73)
Less: Undistributed net income available to participating securities		(19)		(56)		(66)		(248)
Numerator for basic net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	78,999	$	222,157	$	255,885
Add: Undistributed net income allocated to participating securities		19		56		66		248
Less: Undistributed net income reallocated to participating securities		(19)		(55)		(66)		(247)
Numerator for diluted net income per share:
Undistributed and distributed net income available to common shareholders	$	79,572	$	79,000	$	222,157	$	255,886
Denominator:
Weighted average shares outstanding for basic net income per share		55,158		56,420		55,266		56,382
Effect of dilutive securities		229		384		290		351
Weighted average shares outstanding for diluted net income per share		55,387		56,804		55,556		56,733
Net income per share two-class method:
Basic	$	1.44	$	1.40	$	4.02	$	4.54
Diluted	$	1.44	$	1.39	$	4.00	$	4.51
Potentially dilutive securities		1,093		-		939		-

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Stock-Based Compensation (Tables)

9 Months Ended

Jun. 01, 2019

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule Of Stock-Based Compensation Expense

	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	June 1,		June 2,		June 1,		June 2,
	2019		2018		2019		2018
Stock options	$	1,215	$	1,132	$	3,541	$	3,455
Restricted share awards		346		658		1,216		2,230
Restricted stock units		2,452		1,827		7,181		5,401
Associate Stock Purchase Plan		76		68		229		189
Total		4,089		3,685		12,167		11,275
Deferred income tax benefit		(1,026)		(1,080)		(3,054)		(3,304)
Stock-based compensation expense, net	$	3,063	$	2,605	$	9,113	$	7,971

Schedule Of Option Grant Fair Value Assumptions

	Thirty-Nine Weeks Ended
	June 1,		June 2,
	2019		2018
Expected life (in years)	4.0		4.0
Risk-free interest rate	2.98	%	1.87	%
Expected volatility	23.13	%	22.13	%
Expected dividend yield	2.70	%	2.30	%
Weighted-average grant-date fair value	$14.05		$12.25

Summary Of Stock Option Activity

	Options	Weighted-Average Exercise Price per Share		Weighted-Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Outstanding on September 1, 2018	1,760	$	72.96
Granted	398		83.21
Exercised	(207)		75.07
Canceled/Forfeited	(32)		77.66
Outstanding on June 1, 2019	1,919	$	74.78	4.4	$	4,510
Exercisable on June 1, 2019	892	$	72.64	3.3	$	3,086

Restricted Share Awards [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary Of Non-Vested Restricted Share Award Activity

	Shares	Weighted-AverageGrant-Date Fair Value
Non-vested restricted share awards at September 1, 2018	63	$	81.98
Granted	—		—
Vested	(39)		82.36
Canceled/Forfeited	(1)		82.55
Non-vested restricted share awards at June 1, 2019	23	$	81.30

Restricted Stock Units [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary Of Non-Vested Restricted Stock Unit Award Activity

	Shares	Weighted-Average Grant-Date Fair Value
Non-vested restricted stock unit awards at September 1, 2018	377	$	73.18
Granted	173		82.99
Vested	(101)		72.69
Canceled/Forfeited	(21)		77.27
Non-vested restricted stock unit awards at June 1, 2019	428	$	77.06

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Debt And Capital Lease Obligations (Tables)

9 Months Ended

Jun. 01, 2019

Debt And Capital Lease Obligations [Abstract]

Schedule Of Debt

	June 1,		September 1,
	2019		2018
	(Dollars in thousands)
Revolving Credit Facilities
Committed bank facility	$	-	$	224,000
Uncommitted bank facilities		246,000		-
Private Placement Debt:
Senior notes, series A		75,000		75,000
Senior notes, series B		100,000		100,000
Senior Notes		20,000		20,000
Shelf Facility Agreements:		90,000		90,000
Capital lease and financing obligations		1,264		27,926
Less: unamortized debt issuance costs		(1,275)		(1,593)
Total debt	$	530,989	$	535,333
Less: short-term debt(1)		(246,298)		(224,097)
Long-term debt	$	284,691	$	311,236

__________________________

(1) Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

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Revenue (Narrative) (Details)	9 Months Ended	12 Months Ended
	Jun. 01, 2019 USD ($) segment	Sep. 01, 2018 USD ($)
Accrued sales returns	$ 4,897,000	$ 4,832,000
Performance obligation	0	0
Accrued sales incentives	13,840,000	14,000,000
Prepaid sales incentives	2,698,000	2,457,000
Contract assets	0	0
Contract liabilities	$ 0	$ 0
Number of operating segments | segment	1
Number of reportable segments | segment	1
Maximum [Member]
Payment term	1 year

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Revenue (Schedule Of Disaggregation Of Revenue) (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
		Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Disaggregation of Revenue [Line Items]
Net sales		$ 866,546	$ 828,345	$ 2,521,147	$ 2,365,893
Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		100.00%		100.00%
Net Sales [Member] | Geographic Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		100.00%		100.00%
Manufacturing Heavy [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		47.00%		48.00%
Manufacturing Light [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		22.00%		22.00%
Government [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		7.00%		8.00%
Retail/Wholesale [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		6.00%		6.00%
Commercial Services [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage		4.00%		4.00%
Other Customers [Member] | Net Sales [Member] | Customer Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage	[1]	14.00%		12.00%
United States [Member] | Net Sales [Member] | Geographic Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales		$ 831,533		$ 2,434,603
Concentration risk, percentage		96.00%		97.00%
UK [Member] | Net Sales [Member] | Geographic Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales		$ 14,399		$ 43,373
Concentration risk, percentage		2.00%		2.00%
Canada [Member] | Net Sales [Member] | Geographic Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales		$ 10,747		$ 30,363
Concentration risk, percentage		1.00%		1.00%
Mexico [Member] | Net Sales [Member] | Geographic Concentration Risk [Member]
Disaggregation of Revenue [Line Items]
Net sales		$ 9,867		$ 12,808
Concentration risk, percentage		1.00%
Mexico [Member] | Net Sales [Member] | Geographic Concentration Risk [Member] | Maximum [Member]
Disaggregation of Revenue [Line Items]
Concentration risk, percentage				1.00%

[1] The other category primarily includes individual customer and small business net sales not assigned to a specific industry classification.

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Net Income Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Net Income Per Share [Abstract]
Net income attributable to MSC Industrial as reported	$ 79,601	$ 79,069	$ 222,257	$ 256,206
Less: Distributed net income available to participating securities	(10)	(14)	(34)	(73)
Less: Undistributed net income available to participating securities	(19)	(56)	(66)	(248)
Undistributed and distributed net income available to common shareholders	79,572	78,999	222,157	255,885
Add: Undistributed net income allocated to participating securities	19	56	66	248
Less: Undistributed net income reallocated to participating securities	(19)	(55)	(66)	(247)
Undistributed and distributed net income available to common shareholders	$ 79,572	$ 79,000	$ 222,157	$ 255,886
Weighted average shares outstanding for basic net income per share	55,158	56,420	55,266	56,382
Effect of dilutive securities	229	384	290	351
Weighted average shares outstanding for diluted net income per share	55,387	56,804	55,556	56,733
Basic	$ 1.44	$ 1.40	$ 4.02	$ 4.54
Diluted	$ 1.44	$ 1.39	$ 4.00	$ 4.51
Potentially dilutive securities	1,093		939

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Stock-Based Compensation (Narrative) (Details) - USD ($) $ in Thousands	9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation cost	$ 9,190
Unrecognized share-based compensation weighted average period	2 years 3 months 18 days
Total intrinsic value of options exercised	$ 1,882	$ 7,234
Restricted Share Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation cost	$ 620
Unrecognized share-based compensation weighted average period	6 months
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized share-based compensation cost	$ 26,641
Unrecognized share-based compensation weighted average period	3 years 2 months 12 days

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Stock-Based Compensation (Schedule Of Stock-Based Compensation Expense) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 4,089	$ 3,685	$ 12,167	$ 11,275
Deferred income tax benefit	(1,026)	(1,080)	(3,054)	(3,304)
Stock-based compensation expense, net	3,063	2,605	9,113	7,971
Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	1,215	1,132	3,541	3,455
Restricted Share Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	346	658	1,216	2,230
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	2,452	1,827	7,181	5,401
Associate Stock Purchase Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 76	$ 68	$ 229	$ 189

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Stock-Based Compensation (Schedule Of Option Grant Fair Value Assumptions) (Details) - $ / shares	9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018
Stock-Based Compensation [Abstract]
Expected life (in years)	4 years	4 years
Risk-free interest rate	2.98%	1.87%
Expected volatility	23.13%	22.13%
Expected dividend yield	2.70%	2.30%
Weighted-average grant-date fair value	$ 14.05	$ 12.25

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Stock-Based Compensation (Summary Of Stock Option Activity) (Details) - Stock Options [Member] $ / shares in Units, shares in Thousands, $ in Thousands	9 Months Ended
	Jun. 01, 2019 USD ($) $ / shares shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding, Beginning Balance, Options | shares	1,760
Granted, Options | shares	398
Exercised, Options | shares	(207)
Canceled/Forfeited, Options | shares	(32)
Outstanding, Ending Balance, Options | shares	1,919
Exercisable, Ending Balance, Options | shares	892
Outstanding, Beginning Balance, Weighted-Average Exercise Price per Share | $ / shares	$ 72.96
Granted, Weighted-Average Exercise Price per Share | $ / shares	83.21
Exercised, Weighted-Average Exercise Price per Share | $ / shares	75.07
Canceled/Forfeited, Weighted-Average Exercise Price per Share | $ / shares	77.66
Outstanding, Ending Balance, Weighted-Average Exercise Price per Share | $ / shares	74.78
Exercisable, Ending Balance, Weighted-Average Exercise Price per Share | $ / shares	$ 72.64
Outstanding, Ending Balance, Weighted-Average Remaining Contractual Term (in years)	4 years 4 months 24 days
Exercisable, Ending Balance, Weighted-Average Remaining Contractual Term (in years)	3 years 3 months 18 days
Outstanding, Ending Balance, Aggregate Intrinsic Value | $	$ 4,510
Exercisable, Ending Balance, Aggregate Intrinsic Value | $	$ 3,086

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Stock-Based Compensation (Summary Of Non-Vested Restricted Share Award Activity) (Details) shares in Thousands	9 Months Ended
	Jun. 01, 2019 $ / shares shares
Restricted Share Awards [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested restricted share awards, Beginning balance, Shares | shares	63
Vested, Shares | shares	(39)
Canceled/Forfeited, Shares | shares	(1)
Non-vested restricted share awards, Ending balance, Shares | shares	23
Non-vested restricted share awards, Beginning balance, Weighted-Average Grant-Date Fair Value | $ / shares	$ 81.98
Vested, Weighted-Average Grant-Date Fair Value | $ / shares	82.36
Canceled/Forfeited, Weighted-Average Grant-Date Fair Value | $ / shares	82.55
Non-vested restricted share awards, Ending balance, Weighted-Average Grant-Date Fair Value | $ / shares	$ 81.30
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested restricted share awards, Beginning balance, Shares | shares	377
Granted, Shares | shares	173
Vested, Shares | shares	(101)
Canceled/Forfeited, Shares | shares	(21)
Non-vested restricted share awards, Ending balance, Shares | shares	428
Non-vested restricted share awards, Beginning balance, Weighted-Average Grant-Date Fair Value | $ / shares	$ 73.18
Granted, Weighted-Average Grant-Date Fair Value | $ / shares	82.99
Vested, Weighted-Average Grant-Date Fair Value | $ / shares	72.69
Canceled/Forfeited, Weighted-Average Grant-Date Fair Value | $ / shares	77.27
Non-vested restricted share awards, Ending balance, Weighted-Average Grant-Date Fair Value | $ / shares	$ 77.06

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Fair Value (Details) - USD ($)	9 Months Ended
	Jun. 01, 2019	Jun. 02, 2018	Sep. 01, 2018	Aug. 31, 2013
Fair Value [Abstract]
Taxable bonds			$ 27,025,000	$ 27,025,000
Fair value remeasurement of non-financial liabilities on non-recurring basis	$ 0	$ 0

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Debt And Capital Lease Obligations (Revolving Credit Facilities) (Narrative) (Details)	9 Months Ended
	Jun. 01, 2019 USD ($) agreement	Jun. 02, 2018 USD ($)	Sep. 01, 2018 USD ($)
Debt Instrument [Line Items]
Borrowing rate under Credit Facility	3.26%		3.20%
Borrowings under the revolving credit facilities	$ 358,000,000	$ 172,000,000
Repayments of debt	336,000,000	$ 220,000,000
Committed Bank Facility [Member]
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 600,000,000
Maturity date	Apr. 14, 2022
Credit facility, expiration term	5 years
Available increase in amount borrowed	$ 300,000,000
Outstanding balance			$ 224,000,000
Uncommitted Bank Facilities [Member]
Debt Instrument [Line Items]
Number of credit facilities | agreement	6
Credit facility, maximum borrowing capacity	$ 440,000,000
Outstanding balance	246,000,000
Letter of Credit [Member]
Debt Instrument [Line Items]
Credit facility, maximum borrowing capacity	$ 50,000,000

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Debt And Capital Lease Obligations (Private Placement Debt) (Narrative) (Details) - Private Placement Debt [Member] - USD ($)	9 Months Ended
	Jun. 01, 2019	Sep. 01, 2018
Senior Notes Series A [Member]
Debt Instrument [Line Items]
Principal amount	$ 75,000,000	$ 75,000,000
Interest rate	2.65%	2.65%
Maturity date	Jul. 28, 2023
Senior Notes Series B [Member]
Debt Instrument [Line Items]
Principal amount	$ 100,000,000	$ 100,000,000
Interest rate	2.90%	2.90%
Maturity date	Jul. 28, 2026
Senior Notes Due June 11, 2025 [Member]
Debt Instrument [Line Items]
Principal amount	$ 20,000,000	$ 20,000,000
Interest rate	3.79%
Maturity date	Jun. 11, 2025

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Debt And Capital Lease Obligations (Shelf Facility Agreements) (Narrative) (Details)	9 Months Ended
	Jun. 01, 2019 USD ($)
Line of Credit Facility [Line Items]
Maximum consolidated leverage ratio of total indebtedness to EBITDA	3.00
Maximum consolidated leverage ratio of total indebtedness to EBITDA after material acquisition	3.50
Minimum consolidated interest coverage ratio of EBITDA to total interest expense	3.00
Met Life Note Purchase Agreement [Member]
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 250,000,000
Remaining borrowing capacity	210,000,000
Met Life Note Purchase Agreement [Member] | Series 2018A Notes [Member]
Line of Credit Facility [Line Items]
Principal amount	$ 20,000,000
Interest rate	3.22%
Met Life Note Purchase Agreement [Member] | Series 2018B Notes [Member]
Line of Credit Facility [Line Items]
Principal amount	$ 20,000,000
Interest rate	3.42%
Prudential Note Purchase Agreement [Member]
Line of Credit Facility [Line Items]
Credit facility, maximum borrowing capacity	$ 250,000,000
Remaining borrowing capacity	200,000,000
Senior Notes [Member] | Prudential Note Purchase Agreement [Member]
Line of Credit Facility [Line Items]
Principal amount	$ 50,000,000
Interest rate	3.04%

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Debt And Capital Lease Obligations (Capital Lease And Financing Obligations) (Narrative) (Details) $ in Thousands	9 Months Ended
	Jun. 01, 2019 USD ($)
Debt And Capital Lease Obligations [Abstract]
Property and equipment acquired under capital leases and financing agreements	$ 442
Property and equipment acquired under capital leases and financing agreements, accumulated amortization	46
Non-cash financing activity related to the capital lease	$ 1,345

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Debt And Capital Lease Obligations (Schedule Of Debt) (Details) - USD ($)		Jun. 01, 2019	Sep. 01, 2018
Debt Instrument [Line Items]
Capital lease and financing obligations		$ 1,264,000	$ 27,926,000
Less: unamortized debt issuance costs		(1,275,000)	(1,593,000)
Total debt		530,989,000	535,333,000
Less: short-term debt	[1]	(246,298,000)	(224,097,000)
Long-term debt		284,691,000	311,236,000
Committed Bank Facility [Member]
Debt Instrument [Line Items]
Revolving credit facility			224,000,000
Uncommitted Bank Facilities [Member]
Debt Instrument [Line Items]
Revolving credit facility		246,000,000
Shelf Facility Agreement [Member]
Debt Instrument [Line Items]
Shelf Facility		90,000,000	90,000,000
Senior Notes Series A [Member] | Private Placement Debt [Member]
Debt Instrument [Line Items]
Principal amount		75,000,000	75,000,000
Senior Notes Series B [Member] | Private Placement Debt [Member]
Debt Instrument [Line Items]
Principal amount		100,000,000	100,000,000
Senior Notes Due June 11, 2025 [Member] | Private Placement Debt [Member]
Debt Instrument [Line Items]
Principal amount		$ 20,000,000	$ 20,000,000

[1] Net of unamortized debt issuance costs expected to be amortized in the next twelve months.

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Shareholders' Equity (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended		9 Months Ended
	Jul. 09, 2019	Jun. 01, 2019	Jun. 02, 2018	Jun. 01, 2019	Jun. 02, 2018
Components Of Shareholders Equity [Line Items]
Maximum number of shares that can be repurchased		1,157,000		1,157,000
Treasury stock reissued to fund plan, shares		14,000	13,000	47,000	43,000
Subsequent Event [Member]
Components Of Shareholders Equity [Line Items]
Dividends declared date	Jul. 09, 2019
Dividends payable per share	$ 0.75
Dividend payable date	Aug. 06, 2019
Dividends record date	Jul. 23, 2019
Dividend payable amount	$ 41,401
Class A Common Stock [Member]
Components Of Shareholders Equity [Line Items]
Treasury stock repurchased, and treasury stock repurchased and retired, shares		500		1,054,000
Treasury stock repurchased, and treasury stock repurchased and retired, amount		$ 39
Treasury Stock [Member]
Components Of Shareholders Equity [Line Items]
Shares repurchased			42,000		291,000
Treasury Stock [Member] | Class A Common Stock [Member]
Components Of Shareholders Equity [Line Items]
Common stock shares repurchased		500		316,000
Purchase of treasury stock		$ 39	$ 3,656	$ 24,137	$ 25,384
Treasury stock repurchased, and treasury stock repurchased and retired, amount				$ 84,464

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Product Warranties (Details)	9 Months Ended
	Jun. 01, 2019
Minimum [Member]
Product warranties with original equipment manufacturers	30 days
Maximum [Member]
Warranty period	1 year
Product warranties with original equipment manufacturers	90 days

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Income Taxes (Details) - USD ($)	9 Months Ended	12 Months Ended
	Jun. 01, 2019	Dec. 31, 2018	Sep. 01, 2018	Dec. 31, 2017
Income Taxes [Abstract]
U.S. federal statutory rate		21.00%		35.00%
Effective tax rate			25.60%
Tax benefit from remeasurement of deferred tax items			$ 40,464,000
Changes in unrecognized tax benefits	$ 0