-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, DD2QVQl8YwtYwnuBaT32rwn1P0zyTgLXcV7OHVM7+HjpHvH7r/6a/Or4f6DhQwy8 TCjsUe5irDNtmA82XPh9Bw== 0000950137-97-002763.txt : 19970815 0000950137-97-002763.hdr.sgml : 19970815 ACCESSION NUMBER: 0000950137-97-002763 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970704 FILED AS OF DATE: 19970814 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANIXTER INTERNATIONAL INC CENTRAL INDEX KEY: 0000052795 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 941658138 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-10212 FILM NUMBER: 97660059 BUSINESS ADDRESS: STREET 1: 4711 GOLF ROAD CITY: SKOKIE STATE: IL ZIP: 60076 BUSINESS PHONE: 3129021515 MAIL ADDRESS: STREET 1: 4711 GOLF RD CITY: SKOKIE STATE: IL ZIP: 60076 FORMER COMPANY: FORMER CONFORMED NAME: ITEL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SSI COMPUTER DATE OF NAME CHANGE: 19710316 FORMER COMPANY: FORMER CONFORMED NAME: SSI COMPUTER CORP DATE OF NAME CHANGE: 19690727 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 4, 1997 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES - --- EXCHANGE ACT OF 1934 Commission file number 1-5989 ------ ANIXTER INTERNATIONAL INC. (Exact name of registrant as specified in its charter) Delaware 94-1658138 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 2 North Riverside Plaza Suite 1900 Chicago, Illinois 60606 ----------------------------------------------------- (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (312) 902-1515 -------------- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- At August 11, 1997 there were 47,530,094 shares of Common Stock, $1.00 par value, of the registrant outstanding. 2 PART I. FINANCIAL INFORMATION ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS) JULY 4, JAUARY 3, 1997 1997 ---------- ---------- (UNAUDITED)
Current assets: Cash and equivalents $21,600 $18,200 Accounts receivable (net of allowance for doubtful accounts of $9,000) 513,700 441,100 Inventories, primarily finished goods 387,800 397,300 Other assets 12,100 11,900 ---------- ---------- Total current assets 935,200 868,500 Property, at cost 140,500 128,400 Accumulated depreciation (78,300) (66,800) ---------- ---------- Net property 62,200 61,600 Goodwill (net of accumulated amortization of $60,700 and $57,600 respectively) 183,000 183,100 Assets held for sale, net 39,400 44,000 Investment in ANTEC 81,400 77,800 Other assets 27,100 26,000 ---------- ---------- $1,328,300 $1,261,000 ========== ==========
See accompanying notes to the condensed consolidated financial statements. 2 3 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)
JULY 4, JANUARY 3, 1997 1997 ----------- ---------- (UNAUDITED) Current liabilities: Accounts payable $ 265,700 $209,200 Accrued expenses 95,300 97,100 Income taxes payable 6,300 7,200 ---------- ---------- Total current liabilities 367,300 313,500 Deferred taxes, net 28,600 29,800 Other liabilities 14,000 13,800 Long-term debt 477,800 468,400 ---------- ---------- Total liabilities 887,700 825,500 Stockholders' equity: Common stock 47,300 48,000 Capital surplus 48,500 57,100 Retained earnings 366,100 344,500 Cumulative translation adjustments (22,100) (14,100) ---------- ---------- 439,800 435,500 Unrealized gain on investment in ANTEC (net of deferred income taxes) 800 - ---------- ---------- Total stockholders' equity 440,600 435,500 ---------- ---------- $1,328,300 $1,261,000 ========== ==========
See accompanying notes to the condensed consolidated financial statements. 3 4 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE-MONTH PERIODS SIX-MONTH PERIODS ENDED ENDED ---------------------- ----------------------- JULY 4, JUNE 28, JULY 4, JUNE 28, 1997 1996 1997 1996 ---------- ---------- ----------- ---------- Revenues $682,600 $611,800 $1,341,300 $1,179,200 Cost of goods sold (513,300) (460,200) (1,009,200) (881,800) ---------- ---------- ----------- ---------- Gross profit 169,300 151,600 332,100 297,400 Operating expenses (141,900) (129,700) (278,000) (250,600) Amortization of goodwill (1,500) (1,600) (3,100) (3,100) ---------- ---------- ----------- ---------- Operating income 25,900 20,300 51,000 43,700 Interest expense and other, net (7,200) (6,400) (14,600) (11,900) Equity in ANTEC earnings - 900 2,200 1,700 ---------- ---------- ----------- ---------- Income before income taxes 18,700 14,800 38,600 33,500 Income tax expense (8,300) (6,700) (17,100) (15,100) ---------- ---------- ----------- ---------- Net income $10,400 $8,100 $21,500 $18,400 ========== ========== =========== ========== Net income per common and common equivalent share: $.22 $.16 $.45 $.36 ========== ========== =========== ========== Weighted average common and common equivalent shares 47,300 50,300 47,600 51,200 ========== ========== =========== ==========
See accompanying notes to the condensed consolidated financial statements. 4 5 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (IN THOUSANDS)
SIX-MONTH PERIODS ENDED -------------------- JULY 4, JUNE 28, 1997 1996 --------- --------- Operating activities: Net income $21,500 $18,400 Adjustments to reconcile net income to net cash provided (used) by operating activities: Depreciation 12,700 9,600 Amortization of goodwill 3,100 3,100 Deferred income tax expense (2,800) 200 Other, net (1,500) 300 Changes in current assets and liabilities, net (21,800) (87,000) --------- --------- Net cash provided (used) by operating activities 11,200 (55,400) Investing activities: Purchases of property, net (14,400) (21,400) Cash provided (used) by assets held for sale, net 4,600 (1,600) Other investments (1,100) - --------- --------- Net cash used by investing activities (10,900) (23,000) --------- --------- Net cash provided (used) before financing activities 300 (78,400) Financing activities: Borrowings 671,600 402,300 Reduction in borrowings (655,400) (268,000) Proceeds from issuance of common stock 300 100 Purchases of treasury stock (9,600) (58,600) Other, net (3,800) 400 --------- --------- Net cash provided by financing activities 3,100 76,200 --------- --------- Cash provided (used) 3,400 (2,200) Cash and equivalents at beginning of period 18,200 10,500 --------- --------- Cash and equivalents at end of period $21,600 $8,300 ========= ========= Supplemental cash flow information: Interest paid during the period $15,700 $11,400 ========= ========= Income taxes paid during the period $19,300 $8,300 ========= =========
See accompanying notes to the condensed consolidated financial statements. 5 6 ANIXTER INTERNATIONAL INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation: The accompanying consolidated financial statements should be read in conjunction with the consolidated financial statements included in Anixter International Inc.'s ("Company") Annual Report on Form 10-K for the year ended January 3, 1997. The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary for a fair presentation of the condensed consolidated financial statements for the periods shown. All operating activities of the Company are carried out by its principal subsidiary, Anixter Inc. ("Anixter"), which is a leading supplier of wiring systems, networking and internetworking products for voice, data, and video networks and electrical power applications. Principles of consolidation: The condensed consolidated financial statements include the accounts of Anixter International Inc. and its subsidiaries after elimination of intercompany transactions. NOTE 2. SUMMARIZED FINANCIAL INFORMATION OF ANTEC The Company's ownership interest in ANTEC at July 4, 1997 and June 28, 1996 was approximately 19% and 31%, respectively. On February 6, 1997 a wholly-owned subsidiary of ANTEC was merged into TSX Corporation. Under the terms of the transaction, TSX Corporation shareholders received one share of ANTEC Corporation stock for each share of TSX Corporation stock that they owned. The transaction was accounted for as a pooling of interests. Upon consummation of this transaction the Company's ownership interest in ANTEC was reduced to approximately 19% which resulted in a cessation of equity method accounting for this investment after that date. As a result of this change, the Company recorded a $1.2 million after tax gain in the first quarter of 1997. NOTE 3. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. The Company has an approximately 99% ownership interest in Anixter Inc. at July 4, 1997 and January 3, 1997 which is included in the consolidated financial statements of the Company. The following summarizes the financial information for Anixter Inc. 6 7 ANIXTER INC. CONDENSED CONSOLIDATED BALANCE SHEETS JULY 4, 1997 (IN MILLIONS)
JULY 4, JANUARY 3, 1997 1997 ----------- ---------- (UNAUDITED) Assets: Current assets $933.3 $857.7 Property, net 62.2 61.6 Goodwill 183.0 183.1 Other assets 35.5 34.1 ----------- ---------- $1,214.0 $1,136.5 =========== ========== Liabilities and Stockholders' Equity: Current liabilities $354.8 $304.0 Other liabilities 10.7 11.4 Long-term debt 477.8 468.4 Subordinated notes payable to parent 38.0 29.0 Shareholders' equity 332.7 323.7 ----------- ---------- $1,214.0 $1,136.5 =========== ==========
ANIXTER INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE-MONTHS ENDED SIX-MONTHS ENDED JULY 4, JUNE 28, JULY 4, JUNE 28, 1997 1996 1997 1996 --------- --------- -------- -------- (IN MILLIONS) Revenues $682.6 $611.8 $1,341.3 $1,179.2 ====== ====== ======== ======== Operating income $ 25.1 $ 20.7 $ 48.1 $ 42.9 ====== ====== ======== ======== Income before income tax expense $ 17.4 $ 13.3 $ 32.6 $ 29.4 ====== ====== ======== ======== Net income (loss) $ 8.7 $ 5.9 $ 16.4 $ 14.1 ====== ====== ======== ========
NOTE 4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS In February 1997, the FASB issued Statement No. 128, Earnings per Share, which is required to be adopted on December 31, 1997. At that time, the Company will be required to change the method currently used to compute earnings per share and to restate all prior periods. The impact of Statement 128 is not expected to be material. 7 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL LIQUIDITY AND CAPITAL RESOURCES CASH FLOW: Consolidated net cash provided by operating activities was $11.2 million for the first six months of 1997 compared to $55.4 million used for the same period in 1996. Cash provided by operating activities increased primarily due to lower working capital investments and higher net income. Consolidated cash used by investing activities was $10.9 million for the first six months of 1997 versus $23.0 million for the same period in 1996 as a result of a decrease in capital expenditures for 1997. Consolidated cash provided by net financing activities was $3.1 million for the first half of 1997 in comparison to $76.2 million in the first six months of 1996 due to the reduction in cash required for working capital investments in 1997 and lower capital expenditures. Cash provided by assets held for sale, net was $4.6 million in the first six months of 1997 versus $1.6 million used for the same period in 1996. Consolidated interest and other expense net was $14.6 million and $11.9 million for the six months ended July 4, 1997 and June 28, 1996, respectively. The increase is the result of higher costs associated with seven year 8% Senior Notes which were issued in September 1996 and higher working capital borrowings which occurred during the previous year. In addition to the fixed rate 8% Senior Notes the Company has entered into interest rate agreements which effectively fix or cap, for a period of time, the interest rate on a portion of its floating rate obligations. As a result, the interest rate on approximately 73% of all debt obligations at July 4, 1997 is fixed or capped. The impact of interest rate swaps and caps on interest expense, net for the six months ended July 4, 1997 and June 28, 1996 was to increase interest expense by approximately $.5 million in each period. FINANCINGS: At July 4, 1997, $211.9 million was available under the bank revolving lines of credit at Anixter, of which $37.0 million was available to pay the Company for intercompany liabilities. 8 9 OTHER LIQUIDITY CONSIDERATIONS: Certain debt agreements entered into by the Company's subsidiaries contain various restrictions including restrictions on payments to the Company. Such restrictions have not had nor are expected to have an adverse impact on the Company's ability to meet its cash obligations. The finance business of Signal Capital Corporation ("Signal Capital") has been included in assets held for sale since acquisition in 1988. Subsequent to the purchase, the Company sold or liquidated, through July 4, 1997, $1.4 billion of the portfolio. The $20.0 million net portfolio at July 4, 1997 represents approximately 1% of the original acquired Signal Capital portfolio. Proceeds have been used to repay indebtedness and repurchase shares of the Company's common stock. The Company continues to liquidate the acquired Signal Capital portfolio in an orderly manner that maximizes its value to shareholders and no material amounts of new loans or investments are being made by Signal Capital. CAPITAL EXPENDITURES AND ACQUISITIONS Consolidated capital expenditures were $14.4 million and $21.4 million for the first six months of 1997 and 1996, respectively. RESULTS OF OPERATIONS The Company continues to experience increased revenue growth in all major product lines, with the exception of shared media hubs in North America, and solid growth across all geographies. The Company competes with distributors and manufacturers who sell products directly or through existing distribution channels to end users or other resellers. The Company's relationship with the manufacturers for which it distributes products could be affected by decisions made by these manufacturers as the result of changes in management or ownership as well as other factors. In addition, the Company's future performance could be affected by economic downturns and possible rapid changes in applicable technologies. EARNINGS PER SHARE: Weighted average common and common equivalent shares outstanding decreased from June 28, 1996 to July 4, 1997 as a result of the Company's treasury stock purchases. An increase in borrowing costs associated with stock purchases offset the decrease in shares resulting in no significant effect on earnings per share. 9 10 QUARTER ENDED JULY 4, 1997: Net income for the second quarter of 1997 was $10.4 million compared with $8.1 million for the second quarter of 1996. The Company's revenues during the second quarter of 1997 increased 12% to $682.6 million from $611.8 million in 1996 due to the continued growth in demand for all major products sets worldwide, with the exception of shared media hubs in North America where industry-wide growth has been flat to slightly down. Market penetration in Asia and Latin America grew by 55% in the quarter. While Europe sales grew by 25% in the current quarter they were at the same time negatively impacted due to exchange rate fluctuations which resulted in a five percentage point lower growth rate as compared to what it would have been had 1997 exchange rates remained constant with those in 1996. Revenues by major geographic market are presented in the following table:
QUARTERS ENDED ----------------- JULY 4, JUNE 28, 1997 1996 ------- -------- (IN MILLIONS) North America $497.5 $471.3 Europe 138.7 110.6 Asia and Latin America 46.4 29.9 ------ ------ $682.6 $611.8 ====== ======
Gross profits increased consistent with the 12% rate of growth in sales as gross profit margins were 24.8% for the second quarter of 1996 and 1997. Operating expenses increased only 9% to $141.9 million, in support of a 12% increase in revenues, as a result of headcount controls and reduced investments in 1997. The operating expense ratio, before goodwill amortization, has decreased to 20.8% in the second quarter of 1997 from 21.2% in the second quarter of 1996. Operating income increased to $25.9 million or 3.8% of sales in 1997 versus $20.3 million or 3.3% of sales in the same quarter of 1996. Operating income by major geographic markets is presented in the following table: 10 11
QUARTERS ENDED ------------------------- JULY 4, JUNE 28, 1997 1996 ------- -------- (IN MILLIONS) North America $30.1 $26.6 Europe 1.2 (.6) Asia and Latin America (5.4) (5.7) ----- ----- $25.9 $20.3 ===== =====
The increase in European profitability is due to 25% higher sales and resulting gross profits and the controlled increase in operating expenses partially offset by an increase in corporate allocations. The increase in corporate allocations from $1.9 million in the second quarter of 1996 to $3.6 million in the second quarter of 1997 is a result of the increased corporate expenses relating to systems and personnel required to support an increased number of transactions in 1997. Losses in emerging markets decreased slightly as a result of increased productivity at new locations added in the later part of 1996 partially offset by an increase in corporate expense allocations from $.8 million in the second quarter of 1996 to $1.8 million in the second quarter of 1997 resulting from increased transactions. Consolidated net interest expense for the second quarter of 1997 increased to $7.2 million from $6.4 million in 1996 due to the increase in debt resulting from working capital increases incurred in the previous year and the replacement of $100 million of short term borrowings with an average cost of 6.3% in 1996 with seven year term 8% Senior Notes. The consolidated tax provision increased to $8.3 million in 1997 from $6.7 million due to higher pre-tax earnings partially offset by a slight decrease in the effective tax rate from the second quarter of 1996 to 1997. The 1997 effective tax rate of 44%, which is based on pre-tax book income adjusted primarily for amortization of goodwill and losses of foreign operations which are not currently deductible, approximates the overall rate for 1996. 11 12 SIX-MONTHS ENDED JULY 4, 1997: Net income for the first half of 1997 was $21.5 million compared with $18.4 million for the first half of 1996. The Company's revenues during the first half of 1997 increased 14% to $1,341.3 million from $1,179.2 million in 1996 due to the continued growth in demand for all major products sets in all geographies, with the exception of the shared media hubs. Asia and Latin America sales grew by 55 percent year over year, the same as in the second quarter. During the current period Europe's sales growth was negatively impacted due to exchange rate fluctuations which resulted in a four percentage point lower growth rate as compared to what it would have been had 1997 exchange rates remained constant with those in 1996. Revenues by major geographic market are presented in the following table:
SIX-MONTHS ENDED ----------------------- JULY 4, JUNE 28, 1997 1996 -------- --------- (IN MILLIONS) North America $ 980.9 $ 896.1 Europe 273.0 226.6 Asia and Latin America 87.4 56.5 -------- -------- $1,341.3 $1,179.2 ======== ========
Gross profits for the first half of 1997 increased at a lower rate than the 14% rate of growth in sales principally due to first quarter softness in certain European and Asian countries resulting from the stronger dollar and competitive pressures. As a result gross profit margins were 24.8% versus 25.2% in 1996. Operating expenses increased only 11% to $278.0 million, in support of a 14% increase in revenues, as a result of headcount controls and reduced foreign investments in 1997. The operating expense ratio, before goodwill amortization, has decreased to 20.7% in the first half of 1997 from 21.3% in the first half of 1996. Operating income increased to $51.0 million in 1997 from $43.7 million in the first half of 1996. Operating income by major geographic markets is presented in the following table: 12 13
SIX-MONTHS ENDED ------------------------------ JULY 4, JUNE 28, 1997 1996 ------- --------- (IN MILLIONS) North America $ 61.9 $ 50.3 Europe .3 3.3 Asia and Latin America (11.2) (9.9) ------- ------ $ 51.0 $ 43.7 ======= ======
The decrease in European profitability is due to the separation of the distribution business from the network integration business which occurred at the end of the first quarter of 1996, gross margin pressures and a $2.8 million increase in corporate expense allocations for services provided to foreign operations. Increased losses in emerging markets primarily reflect the first quarter 1997 effect of increased staffing and new locations added in the later part of 1996, planned increases in headcounts in 1997 required to penetrate the Asia and Latin American markets and a $2.0 million increase in corporate expense allocations. Consolidated net interest expense for the first half of 1997 increased to $14.6 million from $11.9 million in 1996 due to the increase in debt resulting from working capital increases incurred in the previous year and the $100 million of 8% short term borrowings previously discussed. The consolidated tax provision increased to $17.1 million in 1997 from $15.1 million due to higher pre-tax earnings partially offset by a slight decrease in the effective tax rate from the first half of 1996 to 1997. 13 14 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K None 14 15 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. ANIXTER INTERNATIONAL INC. Date: August 14, 1997 By: /s/ Rod F. Dammeyer --------------- ----------------------- Rod F. Dammeyer President and Chief Executive Officer Date: August 14, 1997 By: /s/ Dennis J. Letham --------------- ------------------------ Dennis J. Letham Senior Vice President - Finance and Chief Financial Officer 15 EX-27.1 2 FINANCIAL DATA SCHEDULE
5 This schedule contians summary financial information extracted from Anixter International Inc.'s Consolidated Financial statements and is qualified in its entirety by reference to such finacial statements. 1,000 6-MOS JAN-02-1998 JAN-04-1997 JUL-04-1997 21,600 0 513,700 9,000 387,800 935,200 140,500 78,300 1,328,300 367,300 0 0 0 47,300 393,300 1,328,300 1,341,300 1,341,300 1,009,200 1,290,300 0 0 14,600 38,600 17,100 21,500 0 0 0 21,500 .45 .45
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