-----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, URQgnIH/OzwWcA32iMN5iWO5u2IOTiVJooPBK3k4khV+g5itAw2dbbMeIfADjE8i zt6ddaerhbKevUa+f8UZWQ== 0000950137-98-002181.txt : 19980518 0000950137-98-002181.hdr.sgml : 19980518 ACCESSION NUMBER: 0000950137-98-002181 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980403 FILED AS OF DATE: 19980515 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: SEC FILE NUMBER: 001-10212 FILM NUMBER: 98624212 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 QUARTERLY REPORT DATED 3 APRIL, 98 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 APRIL 3, 1998 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.) 4711 Golf Road Skokie, Illinois 60076 ------------------------------- (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code:(847) 677-2600 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 May 12, 1998 there were 47,322,427 shares of Common Stock, $1.00 par value, of the registrant outstanding. 2 PART I. ITEM 1. FINANCIAL STATEMENTS ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATION (UNAUDITED)
(In millions, except per share amounts) 13 WEEKS ENDED ------------------ APRIL 3, APRIL 4, 1998 1997 -------- -------- Net sales $748.5 $658.7 Cost of goods sold 563.4 495.9 ------ ------ Gross profit 185.1 162.8 Operating expenses 155.7 136.1 Amortization of goodwill 1.6 1.6 ------ ------ Operating income 27.8 25.1 Interest expense and other, net (8.1) (7.4) Gain on ANTEC investment 8.4 2.2 ------ ------ Income before income taxes 28.1 19.9 Income tax expense 11.7 8.8 ------ ------ Income from continuing operations 16.4 11.1 Income from discontinued operations 11.1 - ------ ------ Net income $27.5 $11.1 ====== ====== Basic and diluted income per common share: Continuing operations $.35 $.23 Discontinued operations .23 - ------ ------ Net income $.58 $.23 ====== ======
See accompanying notes to the condensed consolidated financial statements. 2 3 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEET
(In millions) APRIL 3, JANUARY 2, 1998 1998 ------- --------- (UNAUDITED) Cash $12.5 $10.6 Accounts receivable (less allowances of $11.6 in 1998 and $11.3 in 1997) 559.2 551.1 Inventories 429.9 440.7 Other current assets 10.5 11.6 -------- -------- Total current assets 1,012.1 1,014.0 Property and equipment, at cost 162.4 152.1 Accumulated depreciation (94.6) (87.8) -------- -------- Net property and equipment 67.8 64.3 Goodwill (less accumulated amortization of $60.8 in 1998 and $59.2 in 1997) 203.1 203.1 Assets held for sale, net 8.1 20.6 Investment in ANTEC 76.8 112.0 Other assets 28.9 26.7 -------- -------- $1,396.8 $1,440.7 ======== ========
See accompanying notes to the condensed consolidated financial statements. 3 4 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEET
(In millions) APRIL 3, JANUARY 2, 1998 1998 ----------- ---------- (UNAUDITED) Current liabilities: Accounts payable $294.3 $324.3 Accrued expenses 92.3 110.3 Income taxes payable 18.4 13.5 -------- -------- Total current liabilities 405.0 448.1 Deferred taxes, net 31.3 33.4 Other liabilities 13.3 13.4 Long-term debt 446.5 468.8 -------- -------- Total liabilities 896.1 963.7 Stockholders' equity: Common stock 47.3 47.3 Capital surplus 47.3 47.1 Retained earnings 417.4 389.9 Accumulated other comprehensive income (11.3) (7.3) -------- -------- Total stockholders' equity 500.7 477.0 -------- -------- $1,396.8 $1,440.7 ======== ========
See accompanying notes to the condensed consolidated financial statements. 4 5 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
(In millions) 13 WEEKS ENDED -------------------------- APRIL 3, APRIL 4, 1998 1997 -------- -------- Operating activities: Net income $ 27.5 $ 11.1 Adjustments to reconcile net income to net cash provided (used) by operating activities from continuing operations: Income from discontinued operations (11.1) - Depreciation and amortization 7.8 7.8 Gain on ANTEC investment (8.4) (2.2) Deferred income taxes 1.7 (1.5) Changes in current assets and liabilities, net (28.4) .8 Other, net (4.7) (2.3) -------- -------- Net cash (used) provided by operating activities from continuing operations (15.6) 13.7 Investing activities: Capital expenditures, net (9.7) (6.4) Proceeds from sale of ANTEC 20.3 - -------- -------- Net cash provided (used) by investing activities 10.6 (6.4) -------- -------- Net cash (used) provided before financing activities (5.0) 7.3 Financing activities: Borrowings 490.8 272.0 Reduction in borrowings (512.4) (275.3) Proceeds from issuance of common stock .2 - Purchases of treasury stock - (9.6) Other, net (2.7) (1.7) -------- -------- Net cash used by financing activities (24.1) (14.6) Cash provided (used) by discontinued operations 31.0 (1.7) -------- -------- Cash provided (used) 1.9 (9.0) Cash at beginning of period 10.6 18.2 -------- -------- Cash at end of period $ 12.5 $ 9.2 ======== ========
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 condensed 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 2, 1998. 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. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a full fiscal year. Certain amounts for the prior year have been reclassified to conform to the 1998 presentation. COMPREHENSIVE INCOME: In the first quarter 1998, the Company adopted Statement of Financial Accounting Standards No. 130, "Reporting Comprehensive Income", (SFAS No. 130), which requires companies to report all changes in equity during a period, except those resulting from investment by owners, in a financial statement for the period in which they are recognized. The Company has chosen to disclose comprehensive income, which encompasses net income, foreign currency translation adjustments and unrealized gains and losses on marketable equity securities, in the year-end Consolidated Statement of Stockholders' Equity. The prior year has been restated to conform to the SFAS No. 130 requirements. 6 7 ANIXTER INTERNATIONAL INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 2. INCOME PER SHARE The following table sets forth the computation of basic and diluted income per common share from continuing operations:
13 WEEKS ENDED ------------------ (In millions, except per share amounts) APRIL 3, APRIL 4, 1998 1997 -------- -------- Numerator: Income from continuing operations $16.4 $11.1 Denominator: Basic common shares outstanding 47.3 47.8 Effect of dilutive securities: Stock options and warrants .3 .3 -------- -------- Diluted common shares outstanding 47.6 48.1 Basic and diluted income per share from continuing operations $.35 $.23
NOTE 3. COMPREHENSIVE INCOME SFAS No. 130 establishes new rules for the reporting and display of comprehensive income and its components; however, the adoption of this Statement had no impact on the Company's net income or shareholder's equity. SFAS No. 130 requires unrealized gains or losses on the Company's marketable equity securities and foreign currency translation adjustments, which prior to adoption were reported separately in shareholder's equity, to be included in other comprehensive income. Prior year financial statements have been reclassified to conform to the requirements of SFAS No. 130. During the first quarter of 1998 and 1997, total comprehensive income (loss) amounted to $23.6 million and $(7.9) million, respectively. 7 8 ANIXTER INTERNATIONAL INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 4. INVESTMENT IN ANTEC 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 the 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. During the first quarter 1998, the Company sold 2.2 million shares of ANTEC stock which resulted in net after tax proceeds of approximately $32 million and an after tax gain of $5.1 million. The sale reduced the Company's ownership interest to 12.4% at April 3, 1998. The Company has also reached an agreement with ANTEC, whereby ANTEC will have the right to acquire the remaining 4.9 million shares of ANTEC still owned by Anixter at a price of $14.50 per share. Completion of this transaction is subject to ANTEC's ability to secure financing for this transaction. When the sale of these remaining shares is completed it is anticipated that the Company will receive net proceeds of approximately $68 million and will report an anticipated after tax gain of $9.5 million or $.20 per diluted share. This gain will be reported in the period in which the anticipated sale closes. NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. The Company has an approximate 99% ownership interest in Anixter Inc. at April 3, 1998 and January 2, 1998 which is included in the consolidated financial statements of the Company. The following summarizes the financial information for Anixter Inc: 8 9 ANIXTER INC. CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 3, JANUARY 2, (In millions) 1998 1998 ----------- ---------- (UNAUDITED) Assets: Current assets $964.6 $980.4 Property, net 64.1 61.0 Goodwill 180.7 181.1 Other assets 39.0 36.6 ----------- ---------- $1,248.4 $1,259.1 =========== ========== Liabilities and Stockholders' Equity: Current liabilities $381.0 $423.7 Other liabilities 10.7 10.7 Long-term debt 426.8 450.4 Subordinated notes payable to parent 64.5 19.0 Stockholders' equity 365.4 355.3 ----------- ---------- $1,248.4 $1,259.1 =========== ==========
ANIXTER INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATION (UNAUDITED)
13 WEEKS ENDED ------------------ APRIL 3, APRIL 4, 1998 1997 -------- -------- (In millions) Net sales $728.6 $658.7 Operating income $ 27.6 $ 23.0 Income before income tax expense $ 17.6 $ 15.2 Net income (loss) $ 8.0 $ 7.7
9 10 NOTE 6. BUSINESS SEGMENTS The Company has recently been investing in the business of providing products and services for the design, development and support of network Infrastructures. In order to align its business segments with the strategic focus of the Company, operating results are now reported in two segments: Distribution and Intregration. The largest segment, Distribution, sells specialty wire and cable and structured wiring from top suppliers to contractors, installers, manufacturers, natural resources companies, utilities and original equipment manufacturers. The Integration segment sells products and services for the assessment, design, implementation and support of networking technologies. The Company obtains and coordinates financing, legal and other related services, certain of which are rebilled to subsidiaries. Corporate expenses are items not related to the operations of the segments. Corporate assets consists of goodwill, assets held for sale, investment in ANTEC and miscellaneous assets maintained for general corporate purposes.
13 WEEKS ENDED ------------------------- (In millions) APRIL 3, APRIL 4, 1998 1997 -------- -------- BUSINESS SEGMENTS Net sales: Distribution $562.1 $492.6 Integration 186.4 166.1 -------- -------- $748.5 $658.7 ======== ======== Operating income: Distribution $29.5 $26.0 Integration (1.4) (2.9) Corporate (0.3) 2.0 -------- -------- $27.8 $25.1 ======== ======== Identifiable assets: Distribution $859.8 $730.6 Integration 205.6 211.7 Corporate 331.4 319.3 -------- -------- $1,396.8 $1,261.6 ======== ========
10 11 GEOGRAPHIC SEGMENTS
13 WEEKS ENDED ------------------------- APRIL 3, APRIL 4, 1998 1997 -------- -------- Net sales: North America $548.4 $483.4 Europe 152.5 134.3 Asia and Latin America 47.6 41.0 -------- -------- $748.5 $658.7 ======== ======== Operating Income: North America $31.1 $31.8 Europe 2.9 (0.9) Asia and Latin America (6.2) (5.8) -------- -------- $27.8 $25.1 ======== ========
11 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL LIQUIDITY AND CAPITAL RESOURCES CASH FLOW: Consolidated net cash used by operating activities from continuing operations was $15.6 million for the first quarter of 1998 compared to $13.7 million provided for the same period in 1997. Cash provided by operating activities decreased primarily due to the timing of inventory payments. Consolidated cash provided by investing activities was $10.6 million for the first quarter of 1998 versus $6.4 million used for the same period in 1997 as a result of proceeds received from the sale of ANTEC shares. Consolidated cash used by net financing activities was $24.1 million for the first quarter of 1998 in comparison to $14.6 million in 1997. The increase is primarily the result of the net paydown of the revolving line of credit of $21.6 million in 1998 versus $3.3 million in 1997. There were no treasury stock purchases in the first quarter 1998 as compared to $9.6 million in 1997. As a result of the sale of certain "assets held for sale", cash provided by discontinued operations was $31.0 million in the first quarter 1998 versus $1.7 million used for the same period in 1997. Consolidated net interest expense and other was $8.1 million and $7.4 million for the first quarter 1998 and 1997, respectively. The increase is the result of higher working capital borrowings in January and February 1998, along with $20 million of additional debt related to the Accu-Tech acquisition in September 1997. FINANCINGS: At April 3, 1998, $249.5 million was available under the bank revolving lines of credit at Anixter Inc., of which $73.3 million was available to pay the Company for intercompany liabilities. 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. 12 13 CAPITAL EXPENDITURES AND ACQUISITIONS Consolidated capital expenditures were $9.7 million and $6.4 million for the first quarter of 1998 and 1997, respectively. RESULTS OF OPERATIONS 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 ownerships 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. QUARTER ENDED APRIL 3, 1998: Income from continuing operations for the first quarter of 1998 was $16.4 million compared with $11.1 million for the first quarter of 1997. The Company's sales during the first quarter of 1998 increased 13.6% to $748.5 million from $658.7 million in 1997. Distribution sales were up 14.1% over last year reflecting sales growth in all sectors of the business. Integration sales increased 12.2% over last year with significant improvement in the service business, partially offset by declines in unit sales of shared media hubs and product price declines. Sales for North America, Europe and Emerging Markets (Latin America and Asia Pacific) increased 13.4%, 13.6% and 16.3%, respectively. Excluding the impact of foreign exchange, Europe and Emerging Markets would have been up 17.6% and 26.2%, respectively. Operating income increased to $27.8 million in 1998 from $25.1 million in the first quarter of 1997. Distribution operating income grew 13.6%, slightly lower than its sales growth, due to increased costs related to recently expanded distribution facilities in Dallas, Anaheim, Reno and Toronto along with head count additions in support of market share growth. Operating profit margins were 5.2% in 1998 versus 5.3% in 1997. Integration operating income improved 51% from a loss of $2.9 million in 1997 reflecting higher margin service revenues and improved utilization of staff and other resources in the foreign operations. 13 14 North America operating income declined 2.2% to $31.1 million in the first quarter 1998. The decline was the result of increased headcount in pursuing greater market share, additional warehouse facility costs and an unfavorable comparison of corporate expenses due to a one-time gain on sale of assets in 1997. Europe's operating income increased $3.8 million from a $.9 million loss in 1997. The improvement is the result of the strong sales growth, improved gross margins and lower operating expenses in both the Distribution and Integration segments. Emerging markets experienced a modest increase in operating losses from $5.8 million in 1997 to $6.2 million in 1998. Soft market conditions in Southeast Asia coupled with disappointing sales in Brazil and Mexico lead to the decline. The consolidated tax provision on continuing operations increased to $11.7 million in 1998 from $8.8 million in 1997 due to higher pre-tax earnings, partially offset by a decrease in the effective tax rate from the first quarter of 1997. The 1998 effective tax rate of 42%, which is based on pre-tax book income adjusted primarily for amortization of nondeductible goodwill and losses of foreign operations which are not currently deductible, approximates the overall expected rate for all of 1998. 14 15 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders held May 7, 1998 the Directors of the Company were elected as follows:
VOTES --------------------------- DIRECTORS FOR WITHHELD - --------- ---------- -------- Lord James Blyth 39,379,604 161,447 Rod F. Dammeyer 39,379,883 161,168 Robert E. Fowler, Jr. 39,379,586 161,465 Robert W. Grubbs, Jr. 39,372,701 168,350 F. Philip Handy 39,378,971 162,080 Melvyn N. Klein 39,380,571 160,480 John R. Petty 39,379,478 161,573 Sheli Z. Rosenberg 39,380,453 160,598 Stuart M. Sloan 39,379,907 161,144 Thomas C. Theobald 39,380,769 160,282 Samuel Zell 39,379,597 161,454
The Company's 1998 Stock Incentive Plan was approved by a vote of 30,329,342 shares "For", 5,873,079 shares "Against" and 109,527 shares "Abstain." ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 27.1 Financial Data Schedule (b) Reports on Form 8-K None 15 16 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: May 14, 1998 By: - ------------------- ------------------------------------- Robert W. Grubbs President and Chief Executive Officer Date: May 14, 1998 By: - ------------------- ------------------------------------- Dennis J. Letham Senior Vice President - Finance and Chief Financial Officer 16 17 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: May 14, 1998 By: /s/ Robert W. Grubbs ------------------ ------------------------------------ Robert W. Grubbs President and Chief Executive Officer Date: May 14, 1998 By: /s/ Dennis J. Letham ------------------ ------------------------------------ Dennis J. Letham Senior Vice President - Finance and Chief Financial Officer 17 EX-27 2 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE 13 WEEKS ENDED APRIL 3, 1998 AND APRIL 4, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDING IN SUCH REPORTS. 0000052795 ANIXTER INTERNATIONAL INC. 1,000 3-MOS 3-MOS JAN-01-1999 JAN-02-1998 JAN-03-1998 JAN-04-1997 APR-03-1998 APR-04-1997 12,500 9,200 0 0 559,200 480,400 11,600 9,000 429,900 383,400 1,012,100 884,800 162,400 133,100 94,600 72,200 1,396,800 1,261,600 405,000 337,600 0 0 0 0 0 0 47,300 47,300 453,400 371,100 1,396,800 1,261,600 748,500 658,700 748,500 658,700 563,400 495,900 720,700 633,600 0 0 0 0 8,100 7,400 28,100 19,900 11,700 8,800 16,400 11,100 11,100 0 0 0 0 0 27,500 11,100 .58 .23 .58 .23
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