-----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, GQjX+smLVVxrmbMFMLx55OtX8XQQZF2ZyWXHPdm3dJia/cUMTDW6BVe6CtRXfS6s eUrpD2FO8lOBmEyEO/q9mQ== 0000950137-99-003016.txt : 19990816 0000950137-99-003016.hdr.sgml : 19990816 ACCESSION NUMBER: 0000950137-99-003016 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990702 FILED AS OF DATE: 19990813 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: 0101 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10212 FILM NUMBER: 99689444 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 2, 1999 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, August 6, 1999 there were 35,990,369 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 26 WEEKS ENDED JULY 2, JULY 3, JULY 2, JULY 3, 1999 1998 1999 1998 ------- ------- -------- -------- Net sales $ 658.5 $ 584.6 $1,253.6 $1,146.7 Cost of goods sold 502.6 440.8 948.4 861.8 ------- ------- -------- -------- Gross profit 155.9 143.8 305.2 284.9 Operating expenses 125.5 119.7 250.9 235.9 Amortization of goodwill 1.9 1.7 3.8 3.3 ------- ------- -------- -------- Operating income 28.5 22.4 50.5 45.7 Interest expense (7.5) (7.2) (16.1) (14.5) Gain on ANTEC investment - 15.9 - 24.3 Foreign exchange and other, net - (.6) (.1) (.3) ------- ------- -------- -------- Income before income taxes 21.0 30.5 34.3 55.2 Income tax expense 8.8 12.7 14.4 23.0 ------- ------- -------- -------- Income from continuing operations 12.2 17.8 19.9 32.2 Discontinued operations: Income from discontinued operations, net of tax 1.0 3.7 (.5) 4.9 Gain on disposal of discontinued operations, net of tax - - 45.9 11.1 ------- ------- -------- -------- Net income $ 13.2 $ 21.5 $ 65.3 $ 48.2 ======= ======= ======== ======== Basic income per common share: Continuing operations $ .33 $ .38 $ .51 $ .69 Discontinued operations .03 .08 1.17 .34 ------- ------- -------- -------- Net income $ .36 $ .46 $ 1.68 $ 1.03 ======= ======= ======== ======== Diluted income per common share: Continuing operations $ .33 $ .38 $ .51 $ .68 Discontinued operations .03 .08 1.15 .34 ------- ------- -------- -------- Net income $ .36 $ .46 $ 1.66 $ 1.02 ======= ======= ======== ======== See accompanying notes to the condensed consolidated financial statements. 2 3 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEET (In millions) JULY 2, JANUARY 1, 1999 1999 -------- -------- (UNAUDITED) Cash $ 14.3 $ 20.5 Accounts receivable (less allowances of $10.1 in 1999 and $11.0 in 1998) 517.0 455.9 Inventories 462.4 417.2 Income taxes receivable - 5.1 Other current assets 14.8 8.4 -------- -------- Total current assets 1,008.5 907.1 Property and equipment, at cost 148.2 144.1 Accumulated depreciation (92.2) (86.5) -------- -------- Net property and equipment 56.0 57.6 Goodwill (less accumulated amortization of $74.8 in 1999 and $71.0 in 1998) 232.1 233.8 Net assets of discontinued operations - 87.3 Other assets 39.5 36.0 -------- -------- $1,336.1 $1,321.8 ======== ======== See accompanying notes to the condensed consolidated financial statements. 3 4 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED BALANCE SHEET (In millions) JULY 2, JANUARY 1, 1999 1999 -------- -------- (UNAUDITED) Current liabilities: Accounts payable $ 288.6 $ 246.7 Accrued expenses 124.8 94.3 Income taxes payable 20.6 - -------- -------- Total current liabilities 434.0 341.0 Deferred taxes, net 14.4 15.0 Other liabilities 13.3 10.7 Long-term debt 476.1 543.6 -------- -------- Total liabilities 937.8 910.3 Stockholders' equity: Common stock 36.0 41.8 Accumulated other comprehensive income (36.8) (39.7) Retained earnings 399.1 409.4 -------- -------- Total stockholders' equity 398.3 411.5 -------- -------- $1,336.1 $1,321.8 ======== ======== See accompanying notes to the condensed consolidated financial statements. 4 5 ANIXTER INTERNATIONAL INC. CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In millions) 26 WEEKS ENDED JULY 2, JULY 3, 1999 1998 -------- -------- Operating activities: Net income $ 65.3 $ 48.2 Adjustments to reconcile net income to net cash provided by operating activities from continuing operations: Income from discontinued operations (45.4) (16.0) Depreciation and amortization 13.1 12.7 Gain on ANTEC investment - (24.3) Deferred income taxes (.6) 3.9 Changes in current assets and liabilities, net (14.6) (67.6) Other, net 3.8 (.1) -------- -------- Net cash provided by (used for) operating activities from continuing operations 21.6 (43.2) Investing activities: Capital expenditures (9.0) (14.3) Proceeds from sale of ANTEC - 104.3 Business acquisitions, net of cash acquired - (38.2) Other .7 - -------- -------- Net cash (used) provided by investing activities (8.3) 51.8 -------- -------- Net cash provided before financing activities 13.3 8.6 Financing activities: Borrowings 408.7 392.2 Reduction in borrowings (472.0) (373.0) Proceeds from issuance of common stock 4.0 3.0 Purchases of treasury stock (85.6) (50.6) Other, net (4.1) (2.4) -------- -------- Net cash used by financing activities (149.0) (30.8) Cash provided by discontinued operations 129.5 24.3 -------- -------- Cash (used) provided (6.2) 2.1 Cash at beginning of period 20.5 10.6 -------- -------- Cash at end of period $ 14.3 $ 12.7 ======== ======== 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 1, 1999. 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 and restated to conform to the 1999 presentation and to reflect the discontinuance of the Integration business. The impact on net income is not significant. NOTE 2. INCOME PER SHARE The following table sets forth the computation of basic and diluted income per common share from continuing operations: (In millions, except per share amounts) 13 WEEKS ENDED 26 WEEKS ENDED ------------------- --------------------- JULY 2, JULY 3, JULY 2, JULY 3, 1999 1998 1999 1998 ------- ------- -------- -------- Numerator: Income from continuing operations $ 12.2 $ 17.8 $ 19.9 $ 32.2 Denominator: Basic common shares outstanding 36.4 46.3 39.0 46.8 Effect of dilutive securities: Stock options and warrants .4 .4 .3 .4 ------- ------- -------- -------- Diluted common shares outstanding 36.8 46.7 39.3 47.2 ======= ======= ======== ======== Income per share from continuing operations: Basic $ .33 $ .38 $ .51 $ .69 Diluted $ .33 $ .38 $ .51 $ .68 6 7 ANIXTER INTERNATIONAL INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 3. COMPREHENSIVE INCOME For the 13 and 26 weeks ended July 2, 1999, total comprehensive income amounted to $18.6 million and $68.2 million respectively. For the 13 and 26 weeks ended July 3, 1998, total comprehensive income amounted to $1.7 million and $25.3 million, respectively. The difference between net income and comprehensive income is the change in cumulative translation adjustments and for 1998, unrealized gains on marketable equity securities. NOTE 4. DISCONTINUED OPERATIONS In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. Interest expense has been allocated to discontinued operations based on the percentage of total identifiable assets. The sale of the North American Integration business was completed on April 2, 1999, following the sale of the European Integration business in the fourth quarter of 1998. Total proceeds received were $215.8 million. This resulted in a one-time after-tax gain of $45.9 million, which is net of $11.0 million of costs associated primarily with the closing of selected Latin American and Asian Integration locations and severance costs associated with staff reductions necessitated by discontinuing the Integration segment. In the first quarter of 1998, the Company disposed of certain discontinued railcar assets which had been classified as assets held for sale. The disposition of these assets resulted in net proceeds of $29 million and an after-tax gain of $11.1 million. Net sales for discontinued operations are as follows: 13 WEEKS ENDED 26 WEEKS ENDED ------------------- --------------------- JULY 2, JULY 3, JULY 2, JULY 3, 1999 1998 1999 1998 Net sales $ 17.9 $ 198.8 $ 177.9 $ 385.2 7 8 ANIXTER INTERNATIONAL INC. NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) NOTE 5. INVESTMENT IN ANTEC During the first quarter of 1998, the Company sold 2.2 million shares of ANTEC Corporation 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. In the second quarter of 1998, the Company sold its remaining 4.9 million shares of ANTEC stock which resulted in net after-tax proceeds of approximately $68 million and an after-tax gain of $9.5 million. NOTE 6. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. The Company has an approximate 99% ownership interest in Anixter Inc. at July 2, 1999 and January 1, 1999 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 JULY 2, JANUARY 1, (In millions) 1999 1999 -------- -------- (UNAUDITED) Assets: Current assets $1,004.3 $ 863.0 Property, net 56.0 54.6 Goodwill 232.1 212.1 Net assets of discontinued operations - 98.3 Other assets 36.3 38.2 -------- -------- $1,328.7 $1,266.2 ======== ======== Liabilities and Stockholders' Equity: Current liabilities $ 422.0 $ 333.9 Other liabilities 9.3 8.6 Long-term debt 476.1 524.1 Subordinated notes payable to parent 5.8 7.0 Stockholders' equity 415.5 392.6 -------- -------- $1,328.7 $1,266.2 ======== ======== ANIXTER INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATION (UNAUDITED) 13 WEEKS ENDED 26 WEEKS ENDED ------------------- --------------------- JULY 2, JULY 3, JULY 2, JULY 3, 1999 1998 1999 1998 ------- ------- -------- -------- (In millions) Net sales $ 658.6 $ 559.7 $1,228.5 $1,101.9 Operating income $ 29.0 $ 22.0 $ 51.7 $ 45.1 Income before income tax expense $ 21.4 $ 13.2 $ 35.7 $ 27.5 Income from continuing operations $ 11.2 $ 4.5 $ 19.5 $ 9.3 Income (loss) from discontinued operations, net of tax $ 1.0 $ 4.4 $ (.5) $ 7.6 Gain on disposal of discontinued operations, net of tax $ - $ - $ 45.9 $ - Net income $ 12.2 $ 8.9 $ 64.9 $ 16.9 9 10 ITEM 2. 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 from continuing operations was $21.6 million for the 26 weeks ended July 2, 1999, compared to $43.2 million used for the same period in 1998. Cash provided by operating activities increased primarily due to the increase in accruals associated with the collection of receivables on behalf of North American Integration which was sold in the first quarter of 1999. Consolidated cash used by investing activities was $8.3 million for the 26 weeks ended July 2, 1999, versus $51.8 million provided for the same period in 1998 as a result of $104.3 million of proceeds received from the sale of ANTEC shares in 1998, partially offset by $38.2 million used for the acquisition of Pacer Electronics, Inc. in June of 1998. Consolidated cash used by net financing activities was $149.0 million for the 26 weeks ended July 2, 1999, in comparison to $30.8 million in 1998. The increase in cash used is primarily the result of the net paydown of the revolving line of credit of $63.3 million in 1999 versus net borrowings of $19.2 million in 1998. Treasury stock purchases in the 26 weeks ended July 2, 1999, were $85.6 million versus $50.6 million in 1998. Cash provided by discontinued operations was $129.5 million in 26 weeks ended July 2, 1999, compared to $24.3 million in 1998. The increase primarily relates to cash received from the sale of the North American Integration business. FINANCINGS: At July 2, 1999, $194.8 million was available under the bank revolving lines of credit at Anixter Inc., of which $20.0 million was available to pay the Company for intercompany liabilities. Consolidated interest expense was $7.5 million and $7.2 million for the second quarter 1999 and 1998, respectively, and was $16.1 million and $14.5 million for the first half of 1999 and 1998, respectively. The increase in interest expense is due to higher average debt levels resulting from funding higher working capital levels, partially offset by slightly lower interest rates. As of July 2, 1999, the Company has authorized the repurchase of up to 7 million shares in 1999, with the volume and timing to depend on market conditions. Purchases were made in the open market or through other transactions and were financed through available cash from the sale of the North American and European Integration businesses. The Company has repurchased 6,225,234 shares, as of July 2, 1999, at an average cost of $13.75. 10 11 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. CAPITAL EXPENDITURES AND ACQUISITIONS Consolidated net capital expenditures, were $9.0 million and $14.3 million for the 26 weeks ended July 2, 1999 and July 3, 1998, respectively. In June 1998, the Company purchased Pacer for $38.2 million, which resulted in the addition of approximately $30 million to goodwill. Operating results of Pacer in the first half of 1999 were not significant. 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 JULY 2, 1999: Income from continuing operations for the second quarter of 1999 was $12.2 million compared with $17.8 million for the second quarter of 1998. The Company's sales during the first quarter of 1999 increased 12.6% to $658.5 million from $584.6 million in 1998. Net sales by major geographic market are presented in the following table: (In millions) 13 WEEKS ENDED JULY 2, JULY 3, 1999 1998 -------- -------- North America $ 502.7 $ 422.6 Europe 122.2 123.3 Asia Pacific and Latin America 33.6 38.7 -------- -------- $ 658.5 $ 584.6 ======== ======== 11 12 North America sales grew 19.0%, resulting from a significant growth in both the core Structured Wiring and Electrical Wire and Cable product sets and the Integrated Supply business along with the inclusion of Pacer Electronics, which was acquired in June 1998. Europe sales declined .9% on a combination of lower network product sales and a stronger dollar. Excluding the effect from changes in exchange rates, Europe second quarter 1999 sales improved 2.4% over the corresponding 1998 period. Asia Pacific and Latin America declined 13.2%, a result of soft local economic conditions combined with weaker local currencies. Operating income for the second quarter of 1999 increased to $28.5 million from $22.4 million in 1998. Operating income by major geographic market is presented in the following table: (In millions) 13 WEEKS ENDED JULY 2, JULY 3, 1999 1998 -------- -------- North America $ 26.9 $ 23.2 Europe 4.7 3.4 Asia Pacific and Latin America (3.1) (4.2) -------- -------- $ 28.5 $ 22.4 ======== ======== North America operating income increased 16.0% in the quarter. The improvement primarily relates to higher sales volume and a reduction in operating expenses as a percent of sales reflecting staff reductions over the last few quarters. This improvement was partially offset by lower gross margin rates primarily a result of lower margin project business and significant increases in the lower gross margin public network and integrated supply business. Europe operating income increased 39.0% for the second quarter of 1999, due to a reduction in operating expenses associated with a 11.5% reduction in headcount. Asia Pacific and Latin America operating loss was reduced by 28.1%, reflecting the restructuring and expense reduction efforts of 1998. In the second quarter of 1998, the Company sold its remaining shareholdings in ANTEC Corporation resulting in an after-tax gain of $9.5 million. The consolidated tax provision on continuing operations in the second quarter decreased to $8.8 million in 1999 from $12.7 million in 1998 due to lower pre-tax earnings. The 1999 effective tax rate of 42% is based on pre-tax book income adjusted primarily for amortization of nondeductible goodwill and losses of foreign operations which are not currently deductible. 12 13 26 WEEKS ENDED JULY 2, 1999: Income from continuing operations for the first half of 1999 was $19.9 million as compared to $32.2 million for the first half of 1998. The Company's sales during the first half of 1999 increased 9.3% to $1,253.6 million from $1,146.7 million in 1998. Net sales by major geographic market are presented in the following table: (In millions) 26 WEEKS ENDED JULY 2, JULY 3, 1999 1998 -------- -------- North America $ 925.6 $ 815.7 Europe 261.7 256.6 Asia Pacific and Latin America 66.3 74.4 -------- -------- $1,253.6 $1,146.7 ======== ======== North America sales grew 13.5%, resulting from very strong second quarter growth in the core Structured Wiring and Electrical Wire and Cable product sets along with significant growth in the Integrated Supply business. 1999 results also include Pacer Electronics which was acquired in June 1998. Europe sales grew 2.0% on the strength of the first quarter as sales continue to be negatively impacted by soft networking product sales and a stronger dollar. Asia Pacific and Latin America sales declined 10.8% to $66.3 million due to soft economic conditions along with weaker local currencies. Operating income for the first half of 1999 increased $4.8 million from $45.7 million in 1998. Operating income by major geographic market are presented in the following table: (In millions) 26 WEEKS ENDED JULY 2, JULY 3, 1999 1998 -------- -------- North America $ 46.8 $ 47.2 Europe 10.2 8.4 Asia Pacific and Latin America (6.5) (9.9) -------- -------- $ 50.5 $ 45.7 ======== ======== 13 14 Operating income in North America declined slightly from 1998 as lower second quarter expenses associated with staff reductions was more than offset by higher spending on Year 2000 compliance efforts and retained costs associated with the sale of the North American Integration business. Europe's operating profit improved 21.2% from $8.4 million in 1998, reflecting savings generated from headcount reductions. Despite the 10.8% decline in sales, the combined Asia Pacific and Latin America operating loss was reduced by 33.9% reflecting the restructuring and expense reduction efforts of 1998. The first half of 1998 includes an after-tax gain of $14.6 million relating to the sale of the Company's shareholdings of ANTEC Corporation. The consolidated income tax provision on continuing operations for the first half of 1999 decreased to $14.4 million from $23.0 million in 1998. The decrease was due to lower pre-tax earnings. The 1999 effective tax rate of 42% is based on pre-tax book income adjusted primarily for amortization of nondeductible goodwill and losses of foreign operations which are not currently deductible. 14 15 IMPACT OF YEAR 2000 Some of the Company's older computer programs were written using two digits rather than four to define the applicable year. As a result, those computer programs have time-sensitive software that recognizes a date using "00" as the year 1900 rather than the year 2000. This could cause a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions, send invoices, or engage in similar normal business activities. The Company has completed an assessment, made upgrades to the mainframe operating system and modified its software so that its computer systems will function properly with respect to dates in the year 2000 and thereafter. Renovation of all critical business systems is now complete. The Company has also completed the assessment of PC hardware and software systems and non-information technology systems for Year 2000 compliance. The total Year 2000 project cost is estimated at approximately $4.5 million. To date, the Company has incurred and expensed approximately $3.8 million, primarily for assessment of the Year 2000 issue, mainframe operating system upgrades and code modifications. The project is funded through the Company's information technology budget, and represents less than six percent of that budget. The time and expense of the project has not had, and is not expected to have, a material impact on the Company's financial condition. The Company has initiated formal communications with all of its significant suppliers to confirm their Year 2000 compliance actions will be sufficient to avoid any substantial disruptions in the Company's operations. The Company has put a team together to continue to monitor this situation as the information evolves. The Company believes most of the responses have been designed to provide legal protection to the respondent as opposed to supplying direct and reliable information; as such the Company makes no claim as to the reliability of these responses. The Company is developing contingency plans to the extent believed to be appropriate. The Company's total Year 2000 project cost and estimates to complete that project assume no significant costs from the impact of third party Year 2000 issues based on presently available information. However, there can be no guarantee the other companies on which the Company relies will be Year 2000 compliant, and their failure to do so could adversely impact the Company as described below. 15 16 The planning, assessment, and execution of substantially all of the mainframe operating system upgrades and code modifications have been completed. A new general ledger system was implemented in April. The remainder of the project, including verification of its effectiveness, PC hardware and software upgrades, and the development of contingency plans, is estimated to be completed by October 1999, which is prior to any anticipated impact on the Company's operating systems. The Company believes that with modifications to existing software and upgrades to certain hardware the Year 2000 issue will not pose significant operational problems for its computer systems. However, if such modifications and upgrades are not made, or are not completed timely, the Year 2000 issue could have a material impact on the operations of the Company. The severity of a failure of the Company or key suppliers to be Year 2000 compliant would depend on the nature of the problem and how quickly it could be corrected or an alternative implemented, which is unknown at this time. In the extreme, such failures could bring the Company to a standstill. Some risks related to Year 2000 issues are beyond the control of the Company and its suppliers. For example, no preparations or contingency plan will protect the Company from a downturn in economic activity caused by the possible ripple effect throughout the entire economy that could be caused by problems with Year 2000 issues. The costs of the project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates, which were derived utilizing numerous assumptions of future events, including the continued availability of certain resources and other factors. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those anticipated. Specific factors that might cause such material differences include, but are not limited to, the availability and cost of personnel trained in this area, the ability to locate and correct all relevant computer codes, the success of third parties in modifying their own systems and similar uncertainties. The Company believes it should have no material exposure to contingencies related to the Year 2000 issue for the products it has sold. The Company's belief is based on the Company's practice of giving to its customers only those warranties that the Company receives from its suppliers. To the extent such warranties are breached, liability resulting therefrom will be the ultimate responsibility of the Company's suppliers. However, there can be no guarantee that such suppliers will be able to defend and indemnify the Company. Specific factors that might cause the Company to incur liability include, but are not limited to, insolvency of its suppliers, the existence of contractual limitations on the suppliers' liability, and uncertainties regarding judicial interpretation of the law regarding implied warranties. 16 17 PART II. OTHER INFORMATION ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS At the Annual Meeting of Stockholders held May 26, 1999 the Directors of the Company were elected as follows: VOTES --------------------------------- DIRECTORS FOR WITHHELD ---------- -------- Lord James Blyth 31,579,843 42,218 Robert L. Crandall 31,581,264 40,797 Rod F. Dammeyer 31,456,342 165,719 Robert E. Fowler, Jr. 31,453,943 168,118 Robert W. Grubbs, Jr. 31,453,044 169,017 F. Philip Handy 31,581,973 40,088 Melvyn N. Klein 31,583,373 38,688 John R. Petty 31,582,443 39,618 Sheli Z. Rosenberg 31,454,139 167,922 Stuart M. Sloan 31,454,795 167,266 Thomas C. Theobald 31,583,292 38,769 Samuel Zell 31,455,327 166,734 17 18 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Each management contract or compensation plan required to be filed as an exhibit is identified by an asterisk (*). (10) Material contracts 10.1 (A) Asset Purchase Agreement, dated February 22, 1999 (Incorporated by reference from Anixter International Inc. Current Report on Form 8-K dated April 2, 1999). (B) First Amendment to Asset Purchase Agreement, dated March 29, 1999 (Incorporated by reference from Anixter International Inc. Current Report on Form 8-K dated April 2, 1999). 10.20* Anixter International Inc. Enhanced Management Incentive Plan for 1999-2000. (27) Financial data schedule 27.1 Financial data schedule (b) Reports on Form 8-K On April 13, 1999, the Company filed a Current Report on Form 8-K dated April 2, 1999, relating to the sale of the North American Integration business to Ameritech Corporation. 18 19 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 13, 1999 By: /s/ Robert W. Grubbs --------------- --------------------------------- Robert W. Grubbs President and Chief Executive Officer Date: August 13, 1999 By: /s/ Dennis J. Letham --------------- --------------------------------- Dennis J. Letham Senior Vice President - Finance and Chief Financial Officer 19 EX-10.20 2 ENHANCED MANAGEMENT INCENTIVE PLAN FOR 1999-2000 1 EXHIBIT 10.20 THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993 ANIXTER INTERNATIONAL INC. ENHANCED MANAGEMENT INCENTIVE PLAN FOR 1999-2000 1. PURPOSE AND EFFECTIVE DATE. Anixter International Inc. and its subsidiary Anixter Inc. (together and individually, the "Company") have established a Management Incentive Plan pursuant to the approval of the Company's stockholders at their meeting on May 4, 1995. The annual incentive bonus opportunity currently being provided by the Management Incentive Plan (the "Regular Plan") is being enhanced for the 1999 and 2000 Bonus Years for certain key participants in the Management Incentive Plan as provided in this Enhanced Management Incentive Plan for 1999-2000 (the "Enhanced Plan"). To the extent that the value of any award under the Enhanced Plan exceeds the applicable limitations of the Management Incentive Plan that portion of the award shall be considered as having been granted outside the Management Incentive Plan. The effective date of the Enhanced Plan shall be January 1, 1999. 2. ADMINISTRATION. The Enhanced Plan shall be administered by the Board of Directors, or the Compensation Committee of the Company's Board of Directors or such other Board committee as the Board may designate (the "Committee"). The Committee has the authority and responsibility for the interpretation, administration and application of the provisions of the Enhanced Plan, and the Committee's interpretations of the Enhanced Plan, and all actions taken by it and determinations made by it shall be binding on all persons. No Board or Committee member shall be liable for any determination, decision or action made in good faith with respect to the Enhanced Plan. 3. PARTICIPATION. The Participants of the Company listed on Exhibit B who are notified in writing of their participation in the Enhanced Plan and any additional Participants added to Exhibit B by the President and notified in writing of their participation in the Enhanced Plan are the "Participants" in the Enhanced Plan. The participation of the President and Senior Vice President--Finance in the Management Incentive Plan, including the Enhanced Plan, for the Bonus Year 2000 is conditioned upon approval of the stockholders of the Company at their annual meeting in 2000 of the Management Incentive Plan, including the Enhanced Plan, if the Company is subject to the limitations imposed by the Omnibus Budget Reconciliation Act of 1993 on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code. 4. ENHANCED INCENTIVE OPPORTUNITY. The annual incentive bonus opportunity of each Participant under the Regular Plan shall be divided into two equal portions. One portion shall continue to be governed by the provisions of the Regular Plan and the payout matrices established from time to time pursuant to that plan. This portion of the annual incentive bonus shall not be affected by the Enhanced Plan. The other portion shall be eliminated from the annual incentive 2 bonus provided by the Regular Plan. This eliminated portion of the regular annual incentive bonus, the "Fifty Percent of Regular Annual Bonus Opportunity," shall be governed solely by the Enhanced Plan. An additional annual incentive bonus opportunity as specified for each Participant in Exhibit B, the "Additional Bonus Opportunity," shall also be governed solely by the Enhanced Plan. Together the Fifty Percent of Regular Annual Bonus Opportunity and the Additional Bonus Opportunity shall be the Enhanced Incentive Opportunity and the product of the dollar amount equal to the Enhanced Incentive Opportunity times the percentage of this opportunity deemed earned by the Participant in accordance with paragraph 5. shall be the Earned Enhanced Incentive. 5. EARNED ENHANCED INCENTIVE. How much, if any, of the Enhanced Incentive Opportunity is earned is dependent on the Company's operating earnings before non-recurring items for each Bonus Year ("Earnings"). The determination of Earnings by the Committee shall be final and conclusive. In making this determination the Committee shall not be bound by technical accounting rules or how the Company chooses to report its Earnings. The payout grid for the Enhanced Incentive is as follows: EARNINGS FOR EARNINGS FOR BONUS YEAR 1999 BONUS YEAR 2000 --------------- --------------- (in millions) (in millions) Threshold--50% earned 92 122 Target--100% earned 102 136 Maximum--150% earned 112 150 None of the Enhanced Incentive Opportunity will be earned for Earnings below the Threshold. The percentage of the Enhanced Incentive Opportunity earned for Earnings between the Threshold and the Maximum shall be determined by interpolation. Earnings above the Maximum shall not affect the Enhanced Incentive Opportunity. 6. PAYMENT OF EARNED ENHANCED INCENTIVE. The Earned Enhanced Incentive shall be paid solely in Restricted Stock of the Company. The amount of Restricted Stock shall be determined as follows: First, a value for a share of Restricted Stock shall be determined by averaging the closing prices of the Company's Shares for each trading day during the Bonus Year ("Per Share Value"). The Committee will in its sole judgment adjust this calculation as the Committee determines to be appropriate for any increase or decrease in the number of issued Shares or any change in the value of the Shares resulting from a subdivision or consolidation of Shares, reorganization, recapitalization, spin-off, payment of stock dividends on the Shares, or any other increase or decrease in the number of issued Shares made without receipt of consideration by the Company, or the payment of an extraordinary cash dividend. Second, 110% of the Earned Enhanced Incentive that is attributable to Fifty Percent of Regular Bonus and 100% of the Earned Enhanced Incentive that is attributable to Additional Bonus Opportunity shall be added together to determine "Total Initial Value of Restricted Stock." Third, the Total Initial Value of Restricted Stock shall be divided by the Per Share Value to determine the number of Restricted Shares to be awarded to Participant for the Enhanced Incentive Opportunity for the Bonus Year. Fractional shares shall be rounded up or down to the nearest whole share. 3 7. RESTRICTED STOCK. Restricted Stock shall only be issued upon the execution of a Restricted Stock Agreement in the form attached as Exhibit A. The Restricted Stock will vest as provided in the Restricted Stock Agreement. 8. EMPLOYMENT. The Enhanced Plan is not a contract of employment. If the employment of a Participant shall terminate for any reason during a Bonus Year, the Participant shall have no right to any Enhanced Incentive Opportunity for that or, if applicable, the subsequent Bonus Year. A Participant whose employment terminates during a Bonus Year shall be treated as if he was not a Participant in Enhanced Plan at any time during the Bonus Year and that Participant's entire annual incentive bonus opportunity, it any, for that Bonus Year will be governed by the Regular Plan. 9. IMPACT ON OTHER PLANS. The value of any portion of an Earned Enhanced Incentive shall not be considered in determining (a) a Participant's pension benefit under any of the Company's retirement plans or (b) the amount that a Participant can contribute to any savings plan maintained by the Company. However, if a Participant is participating in a defined benefit pension plan that provides for a pension that is affected by the amount of annual incentive bonus earned by the Participant under the Regular Plan, the amount of annual incentive bonus earned by that Participant under the Regular Plan for that Bonus Year will be treated, to the extent permitted by law, for purposes of that pension plan as if it were twice that amount. 10. AMENDMENT OF THE ENHANCED PLAN. The Board of Directors or the Committee may from time to time suspend, terminate, revise or amend the Enhanced Plan or the terms of any grant in any respect whatsoever. No such amendment shall affect rights in Restricted Stock earned prior to the amendment or shall reduce the total annual incentive bonus opportunity for that Bonus year below the opportunity the Participant would have had for that Bonus Year if he or she had not been Participant or, if a Change of Control as defined in Exhibit B has occurred, shall reduce any Participant's Enhanced Incentive Opportunity for the Bonus Year in which such amendment is made. Executed as of the Effective Date. Anixter International Inc. By ------------------------- Its President 4 EXHIBIT A TO ENHANCED INCENTIVE ENHANCED PLAN THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1993 RESTRICTED STOCK GRANT AGREEMENT This RESTRICTED STOCK GRANT AGREEMENT is entered into effective __________ ("Date of Grant") by and between ANIXTER INTERNATIONAL INC (together with its subsidiaries and individually, the "Company") and ______________ ("Participant"), for the purpose of subjecting ______ shares of the common stock of the Company and any distributions thereon (the "Stock") granted to Participant as a Restricted Stock Grant under Company's _____ Stock Incentive Plan to certain forfeiture provisions contained herein. W I T N E S S E T H: WHEREAS, Participant pursuant to Company's Enhanced Management Incentive Plan for 1999-2000 has been granted the Stock subject to the forfeiture provisions contained herein; and NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained, the parties hereto agree as follows: Section 1 Vesting and Forfeiture. One third of the Stock shall vest on each anniversary of the Date of Grant beginning with the second anniversary of the Date of Grant. In the case of the President or Senior Vice President--Finance, the number of shares of Stock vesting on each such anniversary will be reduced to the number of shares of Stock that can vest without the value thereof being subject to, or causing other compensation to be subject to, the limitations imposed by the Omnibus Budget Reconciliation Act of 1993 on the deductibility of executive compensation under Section 162(m) of the Internal Revenue Code, provided that any shares not vesting as scheduled will vest on the earliest date thereafter that they can vest without triggering such limitations and all of the Stock will vest no later than the fifth anniversary of the Date of Grant All of the Stock will vest upon the death or permanent total disability of Participant or upon any Change of Control of the Company. A "Change of Control of the Company" shall occur if (a) substantially all the assets of the Company are sold to a Third Party or a Third Party becomes the Beneficial Owner of the greater of (I) 25%, or (ii) the percentage owned by Sam Zell and his affiliates, of the Company's securities that vote for the election of directors or (b) a majority of the Board of Directors of the Company were not nominated for election by the Board of Directors. A "Third Party" is any Person, other than Samuel Zell or his Affiliates and other than Anixter International Inc. or its subsidiaries. "Person," "Affiliates," and "Beneficial Owner" shall be defined as those terms are defined pursuant to the Securities Exchange Act of 1934, as amended. If at a time the Stock is not vested (i) Participant's employment with Company is terminated by Company for good cause or by Participant voluntarily or (ii) any transfer of the Stock shall be made in 5 violation of this Agreement, the Stock and any distributions thereon may be reacquired by the Company, upon notice to Participant or any permitted transferee, at no cost to the Company. Such notice of forfeiture shall be given by the Company no later than 90 days after the date on which the Company receives actual notice of the occurrence of such event. Section 2 Prohibited Transfers. Any sale, hypothecation, encumbrance or other transfer other than transfer by death of any of the shares of Stock subject to forfeiture is prohibited unless the same shall have been consented to in advance in writing by the Company (which consent may be withheld in the sole discretion of the Company). Section 3 Legends. Each instrument representing the Stock shall be endorsed with the following legend and with any other legends required by law: THE SALE OR TRANSFER OF SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE, WHETHER VOLUNTARY, OR BY OPERATION OF LAW, IS SUBJECT TO THE RESTRICTIONS ON TRANSFER AND FORFEITURE CONDITIONS (WHICH INCLUDE THE SATISFACTION OF CERTAIN EMPLOYMENT SERVICE REQUIREMENTS) SET FORTH IN A RESTRICTED STOCK GRANT AGREEMENT. A COPY OF SUCH AGREEMENT MAY BE INSPECTED AT THE OFFICE OF THE SECRETARY OF THE CORPORATION. Section 4 Withholding Taxes. As a condition to the grant or the vesting of the Stock acquired hereunder, the Grantee shall make such arrangements as the Company may require for the satisfaction of any Federal, state or local withholding tax obligations that may arise in connection with such grant or vesting. Section 5. Retention of Certificate and Any Distributions. The Secretary or any Assistant Secretary shall retain on behalf of Participant, until the Stock is vested, all certificates and distributions pertaining to the Stock. Upon vesting, the certificates and all distributions (with interest on any cash distributions at 5%) shall be delivered to Participant. Section 6 Parties in Interest. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto, their respective heirs, executors, administrators, successors, assigns and personal representatives. Section 7 Specific Performance. In the event of a breach of this Agreement by any party hereto, any other party hereto shall be entitled to secure specific performance of this Agreement in any court of competent jurisdiction. Section 8 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument. Section 9 Notices, etc. All notices and other communications required or permitted hereunder will be in writing and will be mailed by first-class mail, postage prepaid, addressed (a) if to Company at 4711 Golf Road Skokie, Illinois 60076 Attn: General Counsel 6 or at such other address as Company will have furnished to Participant in writing, or (b) if to Participant at Then current address in the records of Company or at such other address as Participant will have furnished to Company in writing in accordance with this Section. All notices and other communications to be given hereunder shall be given in writing. Except as otherwise specifically provided herein, all notices and other communications hereunder shall be deemed to have been given if personally delivered to the party being served, or two business days after mailing thereof by registered mail, return receipt requested, postage prepaid, to the requisite address set forth above (until notice of change thereof is served in the manner provided in this Section). Section 10 No Right to Employment. Nothing in this Agreement or in the act of granting the Stock to Participant shall give Participant any rights to continue to be employed by Company. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. Company: ANIXTER INTERNATIONAL INC. a Delaware corporation By --------------------------------- Its --------------------------------- Participant: - --------------------------------- EX-27.1 3 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE REGISTRANT'S FORM 10-Q FOR THE 26 WEEKS ENDED JULY 2, 1999 AND JULY 3, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS INCLUDING IN SUCH REPORTS. THE 26 WEEKS ENDED JULY 3, 1998 HAS BEEN RESTATED TO REFLECT THE DISCONTINUANCE OF THE INTEGRATION SEGMENT. 0000052795 ANIXTER INTERNATIONAL INC. 1,000 6-MOS 6-MOS DEC-31-1999 JAN-01-1999 JAN-02-1999 JAN-03-1998 JUL-02-1999 JUL-03-1998 14,300 12,700 0 0 527,000 478,300 10,100 11,000 462,400 408,500 1,008,500 898,200 148,200 144,500 92,200 87,200 1,336,100 1,324,600 434,000 340,600 0 0 0 0 0 0 36,000 45,000 362,300 409,700 1,336,100 1,324,600 1,253,600 1,146,700 1,253,600 1,146,700 948,400 861,800 1,203,100 1,101,000 0 0 0 0 16,100 14,500 34,300 55,200 14,400 23,000 19,900 32,200 45,400 16,000 0 0 0 0 65,300 48,200 1.68 1.03 1.66 1.02
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