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 September 29, 2000March 30, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
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 Identification No.)
incorporation or organization)
4711 Golf Road
Skokie, Illinois 60076
(847) 677-2600
(Address and telephone number of principal executive offices)
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 November 2, 2000, 37,550,510May 4, 2001, 35,899,776 shares of the registrant's Common Stock, $1.00
par value, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders *
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 12 1210
* No reportable information under this item.
This report may contain various"forward-lookingvarious "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended, which
can be identified by the use of forward-looking terminology such as
"believes", "expects", "prospects", "estimated", "should", "may" or the
negative thereof or other variations thereon or comparable terminology
indicating the Company's expectations or beliefs concerning future
events. The Company cautions that such statements are qualified by
important factors that could cause actual results to differ materially
from those in the forward-looking statements, a number of which are
identified in this report. Other factors could also cause actual
results to differ materially from expected results included in these
statements. These factors include general economic conditions,
technology changes, changes in supplier or customer relationships,
exchange rate fluctuations and new or changed competitors.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions, except per share amounts)
13 Weeks Ended
--------------------------
March 30, March 31,
2001 2000
--------- ---------
Net sales .................................... $ 880.3 $ 758.8
Cost of goods sold ........................... 668.3 571.8
--------- ---------
Gross profit ................................. 212.0 187.0
Operating expenses ........................... 160.1 147.5
Amortization of goodwill ..................... 2.2 2.0
--------- ---------
Operating income ............................. 49.7 37.5
Interest expense ............................. (9.3) (9.6)
Other, net ................................... (4.8) (0.2)
--------- ---------
Income before income taxes ................... 35.6 27.7
Income tax expense ........................... 14.7 11.6
--------- ---------
Net income ................................... $ 20.9 $ 16.1
========= =========
Basic income per share ....................... $ 0.57 $ 0.45
Diluted income per share ..................... $ 0.53 $ 0.44
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(In millions) March 30, December 29,
ASSETS 2001 2000
--------- ------------
(Unaudited)
(In millions, except per share amounts)
For the 13 Weeks Ended For the 39 Weeks Ended
-------------------------------------- ---------------------------------------
September 29, October 1, September 29, October 1,
2000 1999 2000 1999
----------------- ---------------- ----------------- -----------------Current assets
Net salesCash ............................................... $ 955.92.1 $ 710.4 $ 2,606.5 $ 1,964.0
Cost20.8
Accounts receivable (less allowances of
goods sold 754.1 548.5 2,038.1 1,496.9
----------------- ---------------- ----------------- -----------------
Gross profit 201.8 161.9 568.4 467.1
Operating Expenses 145.8 126.9 420.8 377.8
Amortization of goodwill 2.1 1.8 6.2 5.6
----------------- ---------------- ----------------- -----------------
Operating income 53.9 33.2 141.4 83.7
Interest expense (12.5) (8.9) (33.9) (25.0)
Foreign exchange$15.8 and other,$14.8 in 2001 and 2000, respectively) .... 296.2 293.3
Note receivable - unconsolidated subsidiary ........ 111.9 126.1
Inventories ........................................ 727.3 738.4
Inventories returnable to vendor, net (0.5) (0.1) 0.3 (0.2)
----------------- ---------------- ----------------- -----------------
Income before.............. -- 120.0
Deferred income taxes 40.9 24.2 107.8 58.5.............................. 25.9 25.5
Other current assets ............................... 11.8 10.3
---------- ----------
Total current assets ........................... 1,175.2 1,334.4
Property and equipment, at cost ....................... 172.6 167.1
Accumulated depreciation .............................. (112.5) (110.6)
---------- ----------
Property and equipment, net .................... 60.1 56.5
Goodwill (less accumulated amortization of
$87.9 and $86.8 in 2001 and 2000, respectively) .... 235.8 239.3
Other assets .......................................... 68.4 55.8
---------- ----------
Total assets ................................... $ 1,539.5 $ 1,686.0
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable ................................... $ 447.6 $ 499.1
Accrued expenses ................................... 110.9 139.6
Income tax expense 16.9 (14.1) 45.0 0.3
----------------- ---------------- ----------------- -----------------
Income from continuing operations 24.0 38.3 62.8 58.2
Discontinued operations:
Income (loss) from discontinued
operations, net of tax - (0.6) - (1.1)
Gain on disposal of discontinued
operations, net of tax - 6.5 - 52.4
----------------- ---------------- ----------------- -----------------
Nettaxes payable ............................... 14.5 8.1
---------- ----------
Total current liabilities ...................... 573.0 646.8
Long-term debt ........................................ 401.1 451.9
Other liabilities ..................................... 35.0 32.4
---------- ----------
Total liabilities .............................. 1,009.1 1,131.1
Stockholders' equity
Common stock ....................................... 35.8 37.7
Capital surplus .................................... 6.1 46.9
Accumulated other comprehensive income ............. (55.4) (52.6)
Retained earnings .................................. 543.9 522.9
---------- ----------
Total stockholders' equity ..................... 530.4 554.9
---------- ----------
Total liabilities and stockholders' equity ..... $ 24.01,539.5 $ 44.2 $ 62.8 $ 109.5
================= ================ ================= =================
Basic income per share:
Continuing operations $ 0.65 $ 1.06 $ 1.73 $ 1.53
Discontinued operations - 0.17 - 1.35
----------------- ---------------- ----------------- -----------------
Net income $ 0.65 $ 1.23 $ 1.73 $ 2.88
================= ================ ================= =================
Diluted income per share:
Continuing operations $ 0.59 $ 1.04 $ 1.63 $ 1.52
Discontinued operations - 0.16 - 1.33
----------------- ---------------- ----------------- -----------------
Net income $ 0.59 $ 1.20 $ 1.63 $ 2.85
================= ================ ================= =================1,686.0
========== ==========
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions) September 29, December 31,
ASSETS 2000 1999
--------------- ---------------
(Unaudited)
Current assets:
Cash $ 18.4 $ 17.5
Accounts receivable (less allowances
of $17.0 and $10.3 in 2000 and 1999, respectively) 725.5 537.5
Inventories 860.6 536.4
Deferred income taxes 20.0 18.2
Other current assets 11.7 11.5
--------------- ---------------
Total current assets 1,636.2 1,121.1
Property and equipment, at cost 160.4 158.6
Accumulated depreciation (108.4) (105.5)
--------------- ---------------
Property and equipment, net 52.0 53.1
Goodwill (less accumulated amortization of
$84.6 and $78.4 in 2000 and 1999, respectively) 233.2 229.1
Other assets 41.3 31.4
--------------- ---------------
$ 1,962.7 $ 1,434.7
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 539.6 $ 340.4
Accrued expenses 135.3 131.2
Income taxes payable 15.4 6.0
--------------- ---------------
Total current liabilities 690.3 477.6
Other liabilities 35.7 32.7
Long-term debt 513.6 468.0
Zero-coupon convertible notes 203.6 -
--------------- ---------------
Total liabilities 1,443.2 978.3
Stockholders' equity:
Common stock 37.3 35.9
Accumulated other comprehensive income (54.6) (37.6)
Retained earnings 536.8 458.1
--------------- ---------------
519.5 456.4
--------------- ---------------
$ 1,962.7 $ 1,434.7
=============== ===============
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions) 3913 Weeks Ended
-----------------------------------------
September 29, October 1,-----------------------
March 30, March 31,
2001 2000
1999
----------------- -------------------------- ---------
Operating activities
Operating activities
Net income ................................................................. $ 62.820.9 $ 109.516.1
Adjustments to reconcile income from continuing operations
to net cash provided by (used in) continuing operating activities:
Income from discontinued operations - (51.3)
Depreciation and amortization 20.3 20.0......................................... 7.7 6.7
Accretion of zero-coupon convertible notes ............................ 3.6 --
Deferred income taxes (2.0) (28.3)................................................. (0.4) (0.8)
Changes in current assets and liabilities, net (307.8) (104.1)........................ 57.4 (112.5)
Other, net 0.6 0.8
----------------- -----------------............................................................ 0.1 0.9
-------- --------
Net cash used inprovided by (used in) continuing operating activities (226.1) (53.4).... 89.3 (89.6)
Investing activities
Capital expenditures (13.2) (12.8)
Acquisitions and divestitures (3.7) -....................................................... (8.6) (2.2)
Acquisition of business .................................................... -- (6.7)
Other - 0.9
----------------- -----------------...................................................................... -- 0.2
-------- --------
Net cash used in continuing investing activities (16.9) (11.9).................. (8.6) (8.7)
Financing activities
Proceeds from long-term borrowings 1,155.9 728.5......................................... 346.1 299.6
Repayment of long-term borrowings (903.0) (714.9).......................................... (398.8) (189.7)
Proceeds from issuance of common stock 30.8 7.0..................................... 3.2 11.7
Purchases of common stock for treasury ..................................... (46.9) (15.4) (85.6)
Debt issuance costs (6.4) -
Other, net (6.2) (5.5)
----------------- -----------------................................................................. (0.1) 0.3
-------- --------
Net cash provided by (used in) continuing financing activities 255.7 (70.5)
Cash (used in) provided by continuing financing activities .... (96.5) 106.5
-------- --------
(Decrease) increase in cash from continuing operations ........................ (15.8) 8.2
Cash used in discontinued operations (11.8) 131.0
----------------- -----------------
Increase (decrease) in cash 0.9 (4.8).......................................... (2.9) (4.9)
Cash at beginning of period ................................................... 20.8 17.5
20.5
----------------- ------------------------- --------
Cash at end of period ......................................................... $ 18.42.1 $ 15.7
================= =================20.8
======== ========
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Summary of Significant Accounting Policies
Basis of Consolidation and Presentation
The accompanying condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements included in
Anixter International Inc.'s ("the Company") Annual Report on Form 10-K for the
year ended December 31, 1999.29, 2000. 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 20002001
presentation.
Accounts Receivable Securitization Program
In the fourth quarter of 2000, the Company entered into a $275 million
accounts receivable securitization program. The program is conducted through a
special purpose corporation which is a wholly-owned unconsolidated subsidiary of
the Company. The program is secured by accounts receivable originating in the
United States and consists of a series of 364-day facilities. Initially, $257
million of the securitized accounts receivable will be removed from the balance
sheet. The proceeds were used to reduce outstanding debt. A non-operating charge
of approximately $9 million, primarily relating to the discount on the sale of
the accounts receivable to the wholly- owned special purpose corporation will be
recorded at inception of the program in the fourth quarter. The Company expects
to substantially recover the charge during the course of the program.
Recently Issued Accounting Pronouncements
In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an amendment of SFAS No.
133." These statements outline the accounting treatment for all derivative
activity. The Company is required to and will adoptadopted these standards in the first quarter of fiscal
2001, but does not expect adoption to have a significant
effect on its consolidated results of operations or financial position.
On December 3, 1999, the Securities and Exchange Commission staff issued
Staff Accounting Bulletin ("SAB") No. 101. SAB No. 101 reflects the basic
principles of revenue recognition.2001. The Company is requiredexposed to the impact of interest rate changes and
will adopt SAB
No. 101fluctuations in foreign currencies, as well as changes in the fourth quartermarket value of
fiscal 2000.its financial instruments. The adoption willCompany periodically uses derivatives, both fair
value and cash flow hedges, in order to minimize these risks, but not have afor
trading purposes. The Company does not enter into derivative transactions that
are ineffective or expect to recognize significant effectgains and losses associated
with SFAS No. 133. At March 30, 2001, the fair market value of the derivatives
were included in "Other assets" on the condensed consolidated balance sheet. The
impact on the consolidated results of operations or financial position.
ANIXTER INTERNATIONAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTSposition was not
significant.
Note 2. Acquisition of Business
In the first quarter of 2000, the Company acquired 100% of the stock of
allNET Technologies Pty. Limited ("allNET") for $6.7 million. allNET is a
structured cabling distributor located in Australia. The effect of this
acquisition on the operating results of the Company was not significant.
Note 3. Income per Share
The following table sets forth the computation of basic and diluted
income per common share from continuing operations (In thousands, except per share
amounts):share:
13 weeks ended
39 weeks ended
September 29, October 1, September 29, October 1,------------------------
March 30, March 31,
2001 2000
1999 2000 1999--------- ---------
(In thousands, except per share amounts)
Basic Income Per Share:
Basic EPS:
Income from continuing operations $ 24,055 $ 38,273 $ 62,848 $ 58,197Net income (numerator) ........................................ $20,878 $16,075
Weighted-average common shares
Outstandingoutstanding (denominator) 36,975 36,026 36,321 37,978................................. 36,894 35,525
Basic EPSIncome Per Share ........................................ $ .650.57 $ 1.06 $ 1.73 $ 1.530.45
Diluted EPS:
Income from continuing operations $ 24,055 $ 38,273 $ 62,848 $ 58,197Per Share:
Net income .................................................... $20,878 $16,075
Interest impact of assumed
conversion of convertible notes 2,056........................... 2,223 --
2,101 --
Income from continuing operations------- -------
Net income plus assumed conversion (numerator) $ 26,111 $ 38,273 $ 64,949 $ 58,197............... $23,101 $16,075
======= =======
Weighted-average common shares
outstanding 36,975 36,026 36,321 $ 37,978............................................... 36,894 35,525
Effect of dilutive securities:
Stock options, warrants and convertible notes 7,519 887 3,450 425............. 6,994 1,023
------- -------
Weighted-average common shares outstanding (denominator) 44,494 36,913 39,771 38,403...... 43,888 36,548
======= =======
Diluted EPSIncome Per Share ...................................... $ .590.53 $ 1.04 $ 1.63 $ 1.520.44
Note 3.4. Comprehensive Income
ForComprehensive income, net of tax, consisted of the following:
13 and 39 weeks ended
September 29,----------------------
March 30, March 31,
2001 2000
total comprehensive--------- ---------
(In millions)
Net income amounted to $17.5 million and $45.8 million, respectively. For the 13 and 39
weeks ended October 1,1999, total comprehensive income was $44.8 million and
$113.0 million, respectively. The difference between net income and
comprehensive income is the change........................................... $ 20.9 $ 16.1
Cumulative effect of adoption of SFAS No. 133 ........ 2.7 --
Change in cumulative translation adjustments.adjustment .......... (8.3) (4.7)
Change in fair market value of derivatives ........... 2.8 --
------- -------
Comprehensive income ................................. $ 18.1 $ 11.4
======= =======
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. 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 third quarter of 1999, the Company recorded an
additional after-tax net curtailment gain of $2.5 million. The gain resulted
from the net decrease in the Company's pension benefit obligation for employees
affected by the sale of the North American Integration business. The Company
also recognized a tax benefit of $8.4 million resulting from the reversal of
certain tax liabilities associated with prior years' reported sales of
discontinued assets. In addition, a $4.4 million net loss was recorded for the
write-down of certain assets held for sale sold in the fourth quarter of 1999.
Integration net sales were $12.5 million and $190.4 million for the 13 and 39
weeks ended October 1,1999, respectively. Interest expense was allocated to
discontinued operations based on the percentage of total identifiable assets.
Note 5. Acquisition and Divestiture of Businesses
In the first quarter of 2000, the Company acquired 100% of the stock of allNET
Technologies Pty Limited ("allNET") for $6.7 million. allNET is a structured
cabling distributor located in Australia. In the third quarter of 2000, the
Company sold the net assets of a wholly-owned subsidiary of Accu-Tech
Corporation for $4.6 million. The effect of these transactions on the operating
results of the Company was not significant.
Note 6. Debt
On June 28, 2000, the Company issued $792 million 7% zero-coupon convertible
notes due 2020. The net proceeds from the issue were $193 million and was
initially used to repay working capital borrowings under a floating rate bank
line of credit which matures on September 6, 2001. The Company expects to
reborrow such amounts under the line of credit from time to time for general
corporate purposes. The discount associated with the issuance is being amortized
through June 28, 2020 using the effective interest rate method. Issuance costs
were $7 million and are being amortized through June 28, 2020 using the straight
line method.
On October 6, 2000, the Company entered into a new credit arrangement to replace
the existing $550 million revolving credit agreement set to mature in 2001. The
new agreement consists of a $500 million, senior unsecured, revolving credit
line which includes a $390 million, five year agreement, plus a $110 million,
364 day agreement.
Note 7. Summarized Financial Information of Anixter Inc.
The Company hashad an approximate 99% ownership interest of 99.7% in Anixter Inc. at September 29, 2000,March
30, 2001, which is included in the consolidated financial statements of the
Company. The following summarizes the financial information for Anixter Inc:Inc.:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions) SeptemberMarch 30, December 29,
December 31,2001 2000
1999--------- ------------
Assets: (Unaudited)
Current assets ........................... $ 1,630.41,170.9 $ 1,117.91,331.0
Property, net 52.0 53.1............................ 60.1 56.5
Goodwill, net 233.3 229.1............................ 235.8 239.3
Other assets 39.0 31.2............................. 66.8 53.8
---------- ----------
$ 1,954.71,533.6 $ 1,431.31,680.6
========== ==========
Liabilities and Stockholders' Equity:
Current liabilities ...................... $ 677.6571.5 $ 468.5645.1
Other liabilities 30.9 27.8........................ 30.6 28.6
Long-term debt 513.6 468.0........................... 190.4 244.9
Subordinated notes payable to parent 240.1 19.1..... 211.7 250.5
Stockholders' equity 492.5 447.9..................... 529.4 511.5
---------- ----------
$ 1,954.71,533.6 $ 1,431.3
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(In millions) 13 weeks ended 39 weeks ended
September 29, October 1, September 29, October 1,
2000 1999 2000 1999
Net sales $ 955.9 $ 710.4 $ 2,606.5 $ 1,938.9
Operating income $ 54.4 $ 33.5 $ 143.5 $ 85.2
Income before income taxes $ 40.8 $ 24.3 $ 109.3 $ 60.0
Income from continuing operations $ 23.0 $ 13.3 $ 61.6 $ 32.8
Income loss from discontinued
operations, net of tax $ - $ (0.6) $ - $ (1.1)
Gain on disposal of discontinued
operations, net of tax $ - $ 2.6 $ - $ 48.5
Net income $ 23.0 $ 15.3 $ 61.6 $ 80.2
1,680.6
========== ==========
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
13 weeks ended
------------------------
(In millions) March 30, March 31,
2001 2000
--------- ---------
Net sales ....................... $ 880.3 $ 758.8
Operating income ................ $ 50.0 $ 38.7
Income before income taxes ...... $ 35.4 $ 29.4
Net income ...................... $ 20.3 $ 16.6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following is a discussion and analysis of the historical results of
operations and financial condition of Anixter International Inc. (the "Company")
and factors affecting the Company's financial resources. This discussion should
be read in conjunction with the consolidated financial statements, including the
notes thereto, set forth herein under "Financial Statements" and the Company's
Annual Report on Form 10-K for the year ended December 31, 1999.29, 2000. This discussion
contains forward-looking statements, which are qualified by reference to, and
should be read in conjunction with, the Company's discussion regarding
forward-looking statements as set forth in this report.
Financial Liquidity and Capital Resources
Cash Flow
Consolidated net cash used inprovided by continuing operating activities was $226.1$89.3
million for the 3913 weeks ended September 29, 2000March 30, 2001 compared to $53.4$89.6 million used for
the same period in 1999.2000. Cash used inprovided by operating activities increased
primarily due to the
increase in working capital requiredcash received for inventory that was returned to a vendor. In
2000, inventory increased $82.4 million to support the growth inof the business.
Specifically, inventory has increased $324.2 million from December 1999
primarily in order to support the rapid growth in the service providerbusiness
and integrated supply business.a significant CLEC contract. Consolidated net cash used in investing
activities was $16.9$8.6 million for the 3913 weeks ended September 29, 2000March 30, 2001 versus $11.9$8.7
million for the same period in 1999.2000. In the first quarter of 2001, the Company
incurred $8.6 million of capital expenditures, primarily for the expansion of
warehouse facilities and purchase of software and computer equipment. In the
first quarter of 2000, the Company purchased a small structured cabling company
in Australia for $6.7 million. In the third
quarter of 2000, the Company sold the net assets of a wholly-owned U.S.
subsidiary of its structured cabling business for $4.6Capital expenditures are expected to be
approximately $25.0 million in cash and notes
receivable.2001. Consolidated net cash provided byused in financing
activities was $255.7$96.5 million for the 3913 weeks ended September 29, 2000March 30, 2001 in comparison
to $70.5$106.5 million usedprovided in the corresponding 19992000 period. The change is
primarily the result of a net increasedecrease in long-term borrowings of $252.9$52.7 million
to fund the increase in
working capital.and $46.9 million of treasury stock purchases. In 1999,2000, long-term borrowings
increased by $13.6 million.
Treasury$109.9 million, while treasury stock purchases for the 39 weeks ended September 29, 2000 were $15.4 million compared to $85.6 millionmillion. In
addition, in 2000 the corresponding 1999 period. The Company received $30.8$11.7 million in 2000 from the exercise of
1,813,311678,000 stock options. Cash used for discontinued operations was $11.8$2.9 million in
the 3913 weeks ended September 29, 2000March 30, 2001 compared to $131.0$4.9 million providedused in the
corresponding 19992000 period.
The 39 weeks ended October 1,1999 includes the cash received from the
sale of the North American Integration business.
Financings
On June 28, 2000, the Company issued $792 million 7% zero-coupon
convertible notes due 2020. The net proceeds from the issue were $193 million
and was initially used to repay working capital borrowings under a floating rate
bank line of credit which matures on September 6, 2001. The Company expects to
reborrow such amounts under the line of credit from time to time for general
corporate purposes. The discount associated with the issuance is being amortized
through June 28, 2020 using the effective interest rate method. Issuance costs
were $7 million and are being amortized through June 28, 2020 using the straight
line method.On October 6, 2000, the Company entered into two new credit
arrangements to support further business growth. The new agreements consist of a
$500 million, senior unsecured, revolving credit agreement, and a $275 million
accounts receivable securitization program. The new revolving credit line
includes a $390 million, five-year agreement, plus a $110 million, 364-day
agreement. These facilities replaced the existing $550 million revolving credit
agreement set to mature in 2001.
The new accounts receivable securitization program is conducted through a
special purpose corporation that is wholly owned by the Company. The program
will be secured by accounts receivable originating in the United States and
consists of a series of 364-day facilities. Initially, $257 million of the
securitized accounts receivable were sold and removed from the balance sheet.
The proceeds were used to reduce outstanding debt. A non-operating charge of
approximately $9 million, primarily relating to the discount on the sale of the
accounts receivable to the wholly owned special purpose corporation, will be
recorded at inception of the program in the fourth quarter. The company expects
to substantially recover the charge during the course of the program.
At October 6, 2000, $407.3March 30, 2001, $441.1 million was available under the bank revolving lines
of credit at Anixter Inc., of which $35.7$11.7 million was available to pay the
Company for intercompany liabilities.general corporate purposes. Based upon the current forecast, the
Company is anticipating significant cash flow from operations. As a result, on
April 24, 2001, the Company cancelled the $110 million 364 day revolving credit
line.
Consolidated interest expense was $33.9$9.3 million and $25.0$9.6 million for the 3913 weeks
ended September 29,March 30, 2001 and March 31, 2000 and October 1,1999, respectively. The increasedecrease is due to
higherlower debt levels required to fund the increase in working capital along
with(partially offset by higher interest rates.
Therates), a result of the
impact of the accounts receivable securitization program implemented in the
third quarter of fiscal year 2000. In "Other expense", the Company hasrecorded
expense of $3.7 million relating to the interest expense incurred by Anixter
Receivables Corporation, a wholly owned unconsolidated subsidiary.
In 2001, the Company authorized the repurchasean increase of up to 1.5an additional 2 million shares in 2000,to
its existing share repurchase program, with the volume and timing to depend on
market conditions. AsDuring the first quarter of September 29,
2000,2001, the Company has repurchased
768,7762,079,000 shares at an average cost of $19.97.$22.57. Purchases were made in the open
market or through other transactions and were financed through availablefrom cash from the sale of the Integration businesses and
other non-core assets.
generated by operations.
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
Consolidated capital expenditures were $13.2 million and $12.8 million for the
39 weeks ended September 29, 2000 and October 1, 1999, respectively. The Company
expects to spend approximately $20 to $25 million in capital expenditures in
2000.
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.technologies or regulatory
changes that substantially change the cost and/or availability of public
networking bandwidth.
Quarter ended September 29, 2000: Income from continuing operationsMarch 30, 2001: Net income for the thirdfirst quarter of 20002001 was $24.0$20.9
million compared with $38.3$16.1 million for the thirdfirst quarter of 1999. Excluding a $24.3 million one-time tax benefit recorded
in the third quarter of 1999, income from continuing operations increased 72.0%.2000.
The Company's net sales during the thirdfirst quarter of 20002001 increased 34.6%16.0% to
$955.9$880.3 million from $710.4$758.8 million in the same period in 1999.2000. Net sales by
major geographic market are presented in the following table:
13 weeks ended
September 29, October 1,---------------------
March 30, March 31,
(In millions) 2001 2000
1999
(in millions)--------- ---------
North America ........................... $ 746.2662.3 $ 547.4584.7
Europe 161.8 128.0.................................. 162.4 133.9
Asia Pacific and Latin America 47.9 35.0.......... 55.6 40.2
-------- --------
$ 955.9880.3 $ 710.4758.8
======== ========
When compared to the corresponding period in 1999,2000, North America sales for the
thirdfirst quarter of 20002001 grew 36.3%13.3% to $746.2$662.3 million. The improvement was a result
of continued rapid growth instrong sales increases to the Service Providerintegrated supply market and a 28.3%
increase in Integrated Supply sales, along with stronggood growth
in sales to the core Enterprise Network Communicationsenterprise network communications and Electrical Wireelectrical wire and
Cablecable market. Based on third quarter results,Due to difficult market conditions in the North America
telecommunications industry, service provider market sales to the Service Provider market are now at
an annualized $600 million run rate.declined 32.3%.
Europe sales increased 26.3%21.3% reflecting strong growth in our core structured cabling products,the service provider
market, along with a growing amount of sales to the Service Providerintegrated supply market.
Excluding the effect of changes in exchange rates, Europe sales improved 36.8%29.6%.
Asia Pacific and Latin American net sales were up 37.2%38.3% from the thirdfirst quarter
of 1999,2000, reflecting improvementvery strong sales in their respective economies.Latin America. Excluding the effect of
changes in exchange rates, Asia Pacific and Latin America sales increased 38.7%43.3%.
Operating income increased to $53.9$49.7 million in 20002001 from $33.2$37.5 million in the
thirdfirst quarter of 1999.2000. Operating income by major geographic market is presented
in the following table.table:
13 weeks ended
September 29, October 1,--------------------
March 30, March 31,
(In millions) 2001 2000
1999
(in millions)--------- ---------
North America ........................... $ 47.641.0 $ 31.132.7
Europe 5.7 4.6.................................. 7.7 5.2
Asia Pacific and Latin America 0.6 (2.5).......... 1.0 (0.4)
------- -------
$ 53.949.7 $ 33.237.5
======= =======
North America operating income for the thirdfirst quarter of 20002001 increased 53.1%,25.7%
from the corresponding period in 1999.2000. Operating margins improved to 6.4%6.2% in the
thirdfirst quarter of 2000,2001 from 5.7%5.6% in the same period in 1999.2000. The improvement
primarily relates to further leveraging of the expense structure which more than
offset a decline inthrough cost
controls, along with improved gross margins resulting from the mixchange in sales
associated
withmix caused by the rapid growth ofdecline in sales to the Service Provider and Integrated Supplylower margin service provider markets.
Europe operating income increased 22.9%,46.1% reflecting strong thirdfirst quarter sales.
Excluding the effect of changes in exchange rates, Europe operating profit
increased 33.4%53.5%. Asia Pacific and Latin America operating income increased 3.1$1.4
million, from a loss of $2.5$.4 million in the thirdfirst quarter of 1999.2000. This resulted
from the 37.2%38.3% improvement in sales and a reduced cost structure following the
changes made in staffing and operations over the last 2recent years. Changes in
exchange rates had a minimal effect on operating income.
Other expense totaled $4.8 million and $.2 million in the first quarter of 2001
and 2000, respectively. In 2001, the Company incurred $4.0 million in costs
associated with the accounts receivable securitization program and $.8 million
of foreign exchange losses.
The consolidated tax provision on continuing operations increased to $16.9$14.7
million in 20002001 from a $14.1$11.6 million tax benefit in the thirdfirst quarter of 1999.
As a result of the completion of the Internal Revenue Service review of previous
open tax years, a $24.3 million one-time tax benefit was recorded in the third
quarter of 1999 to reverse previously established tax liabilities.2000. The 20002001
effective tax rate of 41.3% is based on pre-tax book income adjusted primarily
for amortization of nondeductible goodwill and losses of foreign operations
which are not currently deductible.
39 weeks ended September 29, 2000: Income from continuing operations for the 39
weeks ended September 29, 2000 was $62.8 million compared to $58.2 million for
the 39 weeks ended October 1, 1999. Excluding a $24.3 million one-time tax
benefit recorded in the third quarter of 1999, income from continuing operations
increased 85.3%.
The Company's net sales during the 39 weeks ended September 29, 2000 increased
32.7% to $2,606.5 million from $1,964.0 million in the same period in 1999. Net
sales by major geographic market are presented in the following table:
39 weeks ended
September 29, October 1,
2000 1999
(in millions)
North America $ 2,038.9 $ 1,473.0
Europe 435.8 389.7
Asia Pacific and Latin America 131.8 101.3
$ 2,606.5 $ 1,964.0
When compared to the corresponding period in 1999, North America sales for
the 39 weeks ended September 29, 2000 grew 38.4% to $2,038.9 million. The
improvement was a result of rapid growth in sales to the Service Provider and
Integrated Supply markets, along with strong growth in sales to the core
Enterprise Network Communications and Electrical Wire and Cable market. Sales to
the Service Provider market continued their rapid growth and are now at an
annualized $600 million run rate. Improvement in sales to the Enterprise Network
Communications market reflects a rebound from the soft year-end 1999 sales
related to the Year 2000 compliance efforts, while improvement in sales to the
Electrical Wire and Cable market reflects higher copper prices and higher volume
associated with the sales to the public network market. Europe sales increased
11.8% due to strong second and third quarter sales in our core structured
cabling products along with an increasing amount of sales to the Service
Provider market. Excluding the effect of changes in exchange rates, Europe sales
improved 20.6%. Asia Pacific and Latin American net sales were up 30.2% from the
same period in 1999, reflecting improvement in their respective economies.
Operating income for the first three quarters of 2000 increased 68.9% or $57.7
million from $83.7 million in the first three quarters of 1999. Operating income
by major geographic market is presented in the following table:
39 weeks ended
September 29, October 1,
2000 1999
(in millions)
North America $ 124.2 $ 77.9
Europe 17.1 14.8
Asia Pacific and Latin America 0.1 (9.0)
$ 141.4 $ 83.7
North America operating income increased 59.4%. Operating margins improved to
6.1% in the first three quarters of 2000, from 5.3% in the same period in 1999.
The improvement primarily relates to a reduction, as a percentage of sales, in
retained overhead costs associated with the North American Integration business,
the absence of costs associated with the Year 2000 compliance efforts incurred
in 1999 and further leveraging of the expense structure resulting from the
significant increase in sales. Europe operating income increased 15.3%,
reflecting the increase in sales. Excluding the effect of changes in exchange
rates, Europe operating profit increased 19.9%. Asia Pacific and Latin America
operating income increased 101.4%, recording income of $.1 million in the first
three quarters of 2000 compared to a loss of $9.0 million for the same period in
1999. This resulted from the 30.2% improvement in sales and a reduced cost
structure following the corrections made over the last 2 years.
The consolidated tax provision on continuing operations increased to $45.0
million in 2000 from $.3 million in the first three quarters of 1999 due to
higher pre-tax earnings. The first three quarters of 1999 includes a $24.3
million one-time tax benefit recorded to reverse previously established tax
liabilities. The 2000 effective tax rate of 41.7% is based on pre-tax book income adjusted primarily
for amortization of nondeductible goodwill and losses of foreign operations
which are not currently deductible.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial data scheduleNone.
(b) Reports on Form 8-K
None.On February 23, 2001, the Company announced that its ongoing program to
repurchase its common stock has been increased to permit the purchase of an
additional 1 million shares.
On March 15, 2001, the Company announced that its ongoing program to
repurchase its common stock has been increased to permit the purchase of an
additional 1 million shares.
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: November 3, 2000May 11, 2001 By: /s/ Robert W. Grubbs
----------------------------
Robert W. Grubbs
President and Chief Executive Officer
Date: November 3, 2000May 11, 2001 By: /s/ Dennis J. Letham
----------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer