================================================================================

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,October 1, 2004

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 (I.R.S. Employer
of incorporation or organization) Identification No.)

2301 PATRIOT BLVD.
GLENVIEW, ILLINOIS 60026
(224) 521-8000
(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
--- ---

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2).

Yes X No
--- ---

At August 4,November 1, 2004, 37,013,11637,265,680 shares of the registrant's Common Stock,
$1.00 par value, were outstanding.

================================================================================

ANIXTER INTERNATIONAL INC.

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

PAGE
----

Item 1. Financial Statements........................................................................ 1

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....... 1214

Item 3. Quantitative and Qualitative Disclosures about Market Risk.................................. *

Item 4. Controls and Procedures..................................................................... 2225

PART II. OTHER INFORMATION

Item 1. Legal Proceedings .......................................................................... *

Item 2. Changes in Securities, Use of Proceeds and Issuer Purchases of Equity Securities............ *

Item 3. Defaults Upon Senior Securities............................................................. *

Item 4. Submission of Matters to a Vote of Security Holders......................................... 23*

Item 5. Other Information........................................................................... *

Item 6. Exhibits and Reports on Form 8-K............................................................ 2326

*No reportable information under this item.

This report may contain various "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""believe", "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.competitors and risks associated with integration of recently acquired
companies.

PART 1. FINANCIAL INFORMATION

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)

13 WEEKS ENDED 2639 WEEKS ENDED
---------------------- -------------------------------------------------- ----------------------------
(IN MILLIONS, EXCEPT SHARE AMOUNTS) JULY 2, JULY 4, JULY 2, JULY 4,OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003
--------- --------- --------- ------------------- ---------- ---------- ----------

NET SALES ....................................................................................... $ 813.1849.6 $ 644.8653.4 $ 1,577.32,426.9 $ 1,307.01,960.4
Cost of operations:
Cost of goods sold ............................... 621.6 486.8 1,203.1 988.2................................ 647.7 495.1 1,850.8 1,483.3
Operating expenses ............................... 157.1 136.4 310.2 274.2................................ 165.4 134.6 475.6 408.8
Impairment charge ................................. 1.8 -- 1.8 --
Amortization of intangibles ...................... 0.7 0.3 1.3 0.7....................... 0.8 0.4 2.1 1.1
--------- --------- --------- ---------
Total costs and expenses .................... 779.4 623.5 1,514.6 1,263.1..................... 815.7 630.1 2,330.3 1,893.2
--------- --------- --------- ---------
OPERATING INCOME .................................... 33.7 21.3 62.7 43.9..................................... 33.9 23.3 96.6 67.2
Other (expense) income:expense:
Interest expense ................................. (3.0).................................. (3.3) (6.0) (6.7)(3.2) (9.3) (9.9)
Extinguishment of debt ........................... (0.7) (5.8)............................ -- -- (0.7) (6.2)
Other, net ....................................... (2.4) 0.6 (5.5)........................................ (2.5) -- (8.0) (0.7)
--------- --------- --------- ---------
Income before income taxes and extraordinary gain ... 27.6 12.8 50.5 30.3.... 28.1 20.1 78.6 50.4
Income tax expense .................................. 10.8 5.5 19.7 12.8................................... 10.9 8.8 30.6 21.6
--------- --------- --------- ---------
Income before extraordinary gain .................... 16.8 7.3 30.8 17.5..................... 17.2 11.3 48.0 28.8
Extraordinary gain, net of tax of $0.6 ............................. -- -- 4.1 --
--------- --------- --------- ---------
NET INCOME ..................................................................................... $ 16.817.2 $ 7.311.3 $ 34.952.1 $ 17.528.8
========= ========= ========= =========
BASIC INCOME PER SHARE:
Income before extraordinary gain ................................... $ 0.46 $ 0.200.31 $ 0.841.30 $ 0.480.79
Extraordinary gain ............................................................... $ -- $ -- $ 0.11 $ --
Net income ............................................................................... $ 0.46 $ 0.200.31 $ 0.951.42 $ 0.480.79

DILUTED INCOME PER SHARE:
Income before extraordinary gain ................................... $ 0.440.41 $ 0.200.31 $ 0.821.23 $ 0.470.77
Extraordinary gain ............................................................... $ -- $ -- $ 0.110.10 $ --
Net income ............................................................................... $ 0.440.41 $ 0.200.31 $ 0.921.33 $ 0.470.77

DIVIDEND PER COMMON SHARE ....................................................... $ -- $ -- $ 1.50 $ --

See accompanying notes to the condensed consolidated financial statements.

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

JULY 2,OCTOBER 1, JANUARY 2,
2004 2004
----------- ----------
(IN MILLIONS, EXCEPT SHARE AMOUNTS) (UNAUDITED)

ASSETS
CURRENT ASSETS
Cash and cash equivalents ....................................................................................................... $ 36.536.9 $ 101.4
Accounts receivable (less allowances of $15.2$20.9 and $17.3
in 2004 and 2003, respectively) .......................................... 302.9........................................... 620.1 255.5
Note receivable-- unconsolidated subsidiary ................................. 68.4.................................. -- 56.5
Inventories ................................................................. 540.6.................................................................. 590.3 499.1
Deferred income taxes ............................................................................................................... 16.5 16.5
Other current assets ........................................................ 19.8......................................................... 20.7 18.9
-------- --------
Total current assets .............................................. 984.7............................................... 1,284.5 947.9
Property and equipment, at cost ............................................... 184.8................................................ 187.1 180.7
Accumulated depreciation ...................................................... (141.0)....................................................... (144.0) (137.6)
-------- --------
Net property and equipment ........................................ 43.8......................................... 43.1 43.1
Goodwill ...................................................................... 285.7....................................................................... 286.7 278.5
Other assets .................................................................. 110.5................................................................... 67.4 101.9
-------- --------
$1,424.7$1,681.7 $1,371.4
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable ......................................................................................................................... $ 335.0365.2 $ 304.4
Accrued expenses ............................................................ 94.4............................................................. 112.4 80.8
-------- --------
Total current liabilities ......................................... 429.4.......................................... 477.6 385.2
Long-term debt ................................................................ 258.8................................................................. 435.9 239.2
Other liabilities ............................................................. 55.8.............................................................. 57.0 56.2
-------- --------
Total liabilities ................................................. 744.0.................................................. 970.5 680.6

STOCKHOLDERS' EQUITY
Common stock -- $1.00 par value, 100,000,000 shares authorized,
36,987,67237,164,914 and 36,376,411 shares issued and outstanding in 2004
and 2003, respectively ................................................... 37.0.................................................... 37.2 36.4
Capital surplus ............................................................. 38.4.............................................................. 43.9 21.8
Retained earnings ........................................................... 617.3............................................................ 634.5 638.2
Accumulated other comprehensive loss:
Foreign currency translation ............................................. (11.4).............................................. (3.7) (4.8)
Minimum pension liability ................................................................................................. (0.5) (0.5)
Unrealized loss on foreign exchange contracts ............................ (0.1)derivatives ............................................ (0.2) (0.3)
-------- --------
Total accumulated other comprehensive loss ............................. (12.0).............................. (4.4) (5.6)
-------- --------
Total stockholders' equity ........................................ 680.7......................................... 711.2 690.8
-------- --------
$1,424.7$1,681.7 $1,371.4
======== ========

See accompanying notes to the condensed consolidated financial statements.

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

2639 WEEKS ENDED
--------------------------------------------
(IN MILLIONS) JULY 2, JULY 4,OCTOBER 1, OCTOBER 3,
2004 2003
------- ----------------- ----------

OPERATING ACTIVITIES

Net income ...................................................................................................................... $ 34.952.1 $ 17.528.8
Adjustments to reconcile net income to net cash provided by
continuing operating activities:
Extraordinary gain .............................................................................................. (4.1) --
Impairment of intangible asset .................................... 1.8 --
Loss on extinguishment of debt ...................................................................... 0.7 6.2
Loss on sale or disposal of fixed assets and securities ......... 0.1 0.2........... 0.4 0.3
Depreciation .................................................... 8.1 8.9...................................................... 12.2 13.5
Accretion of zero coupon convertible notes ........................ 6.9 6.6
Amortization of restricted stock ................................ 2.8 1.9.................................. 4.3 2.9
Amortization of intangible assets and deferred financing costs ...... 2.5 1.6 1.1
Accretion of zero coupon convertible notes ...................... 4.6 4.3
Income tax savings from employee stock plans .................... 2.0...................... 2.8 0.5
Deferred income taxes ........................................... 0.2............................................. 0.1 (0.3)
Changes in current assets and liabilities, net .................. (42.9) (15.5).................... (63.9) 23.2
Restructuring and other charges ................................. (1.1) (1.7)................................... (1.4) (2.3)
Other, net ...................................................... (2.5) 4.5
------- -------........................................................ (0.7) 2.4
------ ------
Net cash provided by continuing operating activities ...... 4.4 27.6........ 13.7 83.4

INVESTING ACTIVITIES

Capital expenditures ............................................. (6.3) (20.1)............................................... (11.6) (23.5)
Acquisition of business ...................................................................................... (33.3) --(42.0)
Proceeds from the sale of fixed assets ........................................................ -- 1.5
------- -------1.6
Proceeds from sale of investment ................................... -- 2.5
------ ------
Net cash used in continuing investing activities .......... (39.6) (18.6)............ (44.9) (61.4)

FINANCING ACTIVITIES

Proceeds from long-term borrowings ............................... 137.8 237.8................................. 301.5 285.9
Repayment of long-term borrowings ................................ (123.1) (218.9).................................. (294.2) (319.3)
Payment of cash dividend .................................................................................... (55.1) --
Proceeds from issuance of common stock ........................... 12.4 1.6............................. 16.3 4.8
Deferred financing costs ......................................... (1.1) (0.4)........................................... (1.2) (4.3)
Proceeds from issuance of notes payable ............................ -- 143.8
Purchases of common stock for treasury ........................................................ -- (18.4)(35.6)
Retirement of notes payable .............................................................................. -- (2.0)(75.9)
Other, net ....................................................... (0.1) (0.1)
------- -------......................................................... (0.2) (0.6)
------ ------
Net cash used in continuing financing activities .......... (29.2) (0.4)
------- -------............ (32.9) (1.2)
------ ------
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS FROM
CONTINUING OPERATIONS ............................................. (64.4) 8.6............................................... (64.1) 20.8
Cash used in discontinued operations ................................. (0.5)................................... (0.4) (1.0)
Cash and cash equivalents at beginning of period ............................................ 101.4 19.1
------- ------------- ------
Cash and cash equivalents at end of period ........................................................ $ 36.536.9 $ 27.3
======= =======38.9
====== ======

See accompanying notes to the condensed consolidated financial statements.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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 ("the Company") Annual
Report on Form 10-K for the year ended January 2, 2004. 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 2004 presentation.

RECEIVABLES AND ALLOWANCE FOR DOUBTFUL ACCOUNTS: The Company carries its
accounts receivable at their face amounts less an allowance for doubtful
accounts. On a regular basis, the Company evaluates its accounts receivable and
establishes the allowance for doubtful accounts based on a combination of
specific customer circumstances, as well as credit conditions and based on a
history of write-offs and collections. A receivable is considered past due if
payments have not been received within the agreed upon invoice terms. During the
13 and 39 weeks ended October 1, 2004, $3.7 million and $9.3 million was
recognized for the provision for doubtful accounts, respectively. During the 13
and 39 weeks ended October 3, 2003, $1.4 million and $4.7 million was recognized
for the provision for doubtful accounts, respectively.

ACCOUNTS RECEIVABLE PROGRAM: On October 6, 2000, the Company entered into an
accounts receivable securitization program. The underlying agreements for this
program were amended and restated on September 30, 2004 for an additional 364
days. The program is conducted through Anixter Receivables Corporation ("ARC"),
a wholly owned, bankruptcy remote, special purpose subsidiary. The 2004
amendment provides ARC with a call right with respect to receivables sold. As a
result of this call right, ARC no longer holds a passive interest in the
receivables and, thus, is no longer considered a qualified special purpose
entity. Accordingly, ARC, which was previously unconsolidated, is now
consolidated in the financial statements of the Company. Approximately $183.3
million of long-term funding and $298.8 million of accounts receivable sold to
ARC, are reflected in the Company's consolidated balance sheet at October 1,
2004. Additionally, Anixter's investment in ARC and the inter-company note
between Anixter and ARC is eliminated in consolidation. The receivables will
continue to be sold by Anixter to ARC. The assets of ARC are not available to
creditors of Anixter in the event of bankruptcy or insolvency proceedings.

STOCK BASED COMPENSATION: Beginning in 2003, the Company granted restricted
employee stock units in lieu of employee stock options. The fair value of the
restricted stock units is amortized over the four-year vesting period from the
date of grant. During the 13 weeks and 2639 weeks ended July 2,October 1, 2004, $1.1$1.2
million and $2.0$3.2 million was recognized as expense, respectively. During the 13
weeks and 2639 weeks ended July 4,October 3, 2003, $0.5 million and $0.7$1.2 million was
recognized as expense, respectively. Total expense for fiscal 2004 is expected
to be approximately $4.3 million as compared to $1.6 million in 2003.

Under the provisions of SFASStatement of Financial Accounting Standard ("SFAS")
No. 123, "Accounting for Stock-Based Compensation," and SFAS No. 148,
"Accounting for Stock-Based Compensation-Transition and Disclosure," an
amendment of SFAS No. 123, the Company has elected to continue to apply the
intrinsic value method of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and its related interpretations in
accounting for its stock-based compensation plans. In accordance with the APB
Opinion No. 25, compensation cost of stock options issued were measured as the
excess, if any, of the quoted market price of the company's stock at the date of
the grant over the option exercise price and is charged to operations over the
vesting period. The Company applied the disclosure-only provisions of SFAS No.
123. Accordingly, no compensation expense has been recognized in the condensed
consolidated statements of operations for the stock option plans.

The Black-Scholes option-pricing model was developed for estimating the fair
value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of the Company's stock options. Had compensation costs for the plans been
determined based on the fair value at the grant date using the Black-Scholes
option pricing model and amortized over the respective vesting period, the
Company's net income would have been reduced to the pro forma amounts indicated
below:

13 WEEKS ENDED 26 WEEKS ENDED
------------------- -------------------
JULY 2, JULY 4, JULY 2, JULY 4,
(IN MILLIONS, EXCEPT PER SHARE DATA) 2004 2003 2004 2003
------- ------- ------- -------

Net income as reported .............................. $ 16.8 $ 7.3 $ 34.9 $ 17.5
Add: APB No. 25 Stock-based employee compensation
included in net income, net ....................... 0.9 0.6 1.7 1.2
Deduct: SFAS No.123 Stock-employee compensation
expense, net ...................................... (2.2) (2.6) (4.5) (5.2)
------ ------ ------ ------
Pro forma net income ................................ $ 15.5 $ 5.3 $ 32.1 $ 13.5
====== ====== ====== ======

BASIC EARNINGS PER SHARE:
As reported ....................................... $ 0.46 $ 0.20 $ 0.95 $ 0.48
Pro forma ......................................... $ 0.42 $ 0.15 $ 0.88 $ 0.37

DILUTED EARNINGS PER SHARE:
As reported ....................................... $ 0.44 $ 0.20 $ 0.92 $ 0.47
Pro forma ......................................... $ 0.41 $ 0.15 $ 0.85 $ 0.37
4

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
13 WEEKS ENDED 39 WEEKS ENDED
------------------------ -------------------------
OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
(IN MILLIONS, EXCEPT PER SHARE DATA) 2004 2003 2004 2003
--------- ---------- ---------- ----------

BASIC EARNINGS PER SHARE

Net income as reported ............................................. $ 17.2 $ 11.3 $ 52.1 $ 28.8
Add: APB Opinion No. 25 Stock-based employee compensation
included in net income, net ...................................... 0.8 0.6 2.5 1.8
Deduct: SFAS No. 123 Stock-based employee compensation
expense, net ..................................................... (2.2) (2.4) (6.7) (7.6)
------ ------ ------ ------
Pro forma net income ............................................... $ 15.8 $ 9.5 $ 47.9 $ 23.0
====== ====== ====== ======

BASIC EARNINGS PER SHARE:
As reported ...................................................... $ 0.46 $ 0.31 $ 1.42 $ 0.79
Pro forma ........................................................ $ 0.43 $ 0.26 $ 1.30 $ 0.63

DILUTED EARNINGS PER SHARE

Net income as reported ............................................. $ 17.2 $ 11.3 $ 52.1 $ 28.8
Add: APB Opinion No. 25 Stock-based employee compensation
included in net income, net ...................................... 0.8 0.6 2.5 1.8
Add: Interest impact of assumed conversion of convertible notes .... 0.7 -- 0.7 --
Deduct: SFAS No. 123 Stock-based employee compensation
expense, net ..................................................... (2.2) (2.4) (6.7) (7.6)
------ ------ ------ ------
Pro forma net income ............................................... $ 16.5 $ 9.5 $ 48.6 $ 23.0
====== ====== ====== ======

DILUTED EARNINGS PER SHARE:
As reported ...................................................... $ 0.41 $ 0.31 $ 1.33 $ 0.77
Pro forma ........................................................ $ 0.38 $ 0.26 $ 1.23 $ 0.63

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In December 2003, the Financial
Accounting Standards Board ("FASB") revised Statement of Financial Accounting
Standards ("SFAS") No. 132, "Employers' Disclosures about Pensions and Other
Postretirement Benefits." This statement revises employers' disclosure about
pension plans and other postretirement benefit plans. It does not change the
measurement or recognition of those plans required by SFAS No. 87, "Employers'
Accounting for Pensions," SFAS No. 88, "Employers' Accounting for Settlements
and Curtailments of Defined Benefit Pension Plans and for Termination Benefits"
and SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions." It requires additional disclosures to those in the original SFAS No.
132. This statement is effective for financial statements with fiscal years
ending after December 15, 2003. The provisions of this statement have been
disclosed in Note 11, "Pension Plans, Post-Retirement Benefits and Other
Benefits."

In January 2003, the FASB issued Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities", an Interpretation of Accounting
Research Bulletin ("ARB") 51, which subsequently has been revised by FIN 46-R.
The primary objectives of FIN 46-R are to provide guidance on the identification
of entities for which control is achieved through means other than through
voting rights (variable interest entities or VIEs) and how to determine when and
which business enterprise should consolidate the VIE (the primary beneficiary).
This new model for consolidation applies to an entity in which either (1) the
equity investors (if any) do not have a controlling financial interest or (2)
the equity investment at risk is insufficient to finance that entity's
activities without receiving additional subordinated financial support from
other parties. In addition, FIN 46-R requires that both the primary beneficiary
and all other enterprises with a significant variable interest in a VIE make
additional disclosures. FIN 46-R is effective for VIEs created after January 31,
2003 and is effective for all VIEs created before February 1, 2003 that are
Special Purpose Entities ("SPEs") in the first reporting period ending after
December 15, 2003 and for all other VIEs created before February 1, 2003 in the
first reporting period ending after March 15, 2004. The adoption of FIN 46-R hasdid
not hadhave any effect on the Company's financial position, cash flows or results
of operations.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In March 2004, the Emerging Issues Task Force ("EITF") reached a final
consensus on EITF Issue No. 03-6, "Participating Securities and the Two-Class
Method under FASB Statement No. 128, Earnings Per Share," which provides
additional guidance to determine whether a security is a participating security
and therefore subject to the two-class method under SFAS No. 128. The guidance
in EITF 03-6 clarifies the notion of what constitutes a participating security,
and is effective for fiscal periods (interim or annual) beginning after March
31, 2004. The adoption of EITF 03-0603-6 did not impact the Company's condensed
consolidated financial statements.

At its September 29-30, 2004, meeting, the FASB reached a conclusion on EITF
Issue No. 04-8, "The Effect of Contingently Convertible Debt on Diluted Earnings
Per Share", that contingently convertible debt instruments will be subject to
the if-converted method under SFAS No. 128, "Earnings Per Share," regardless of
the contingent features included in the instrument. Under current practice,
issuers of contingently convertible debt instruments exclude potential common
shares underlying the debt instruments from the calculation of diluted earnings
per share until the market price or other contingency is met. The effective date
for Issue 04-8 is for reporting periods ending after December 15, 2004. The
Company will apply the EITF guidance by retroactively restating earnings per
share for all periods presented in its Form 10-K for the year ended December 31,
2004, which could result in a higher number of diluted shares and, in turn,
result in a lower diluted earnings per share calculation. The Company is
actively evaluating alternatives to modify or restructure its convertible debt
instruments, which would minimize the impact of adoption of this standard. The
adoption of EITF 04-8 will have a significant impact on diluted earnings per
share to the extent it cannot modify or restructure its convertible debt
instruments.

NOTE 2. COMPREHENSIVE INCOME

Comprehensive income, net of tax, consisted of the following:

13 WEEKS ENDED 2639 WEEKS ENDED
------------------ ------------------------------------------ -----------------------
(IN MILLIONS) JULY 2, JULY 4, JULY 2, JULY 4,OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003
------- ------- ------- ----------------- ---------- ---------- ----------

Net income ................................... $16.8 $ 7.3 $34.9 $17.5.......................................... $17.2 $11.3 $52.1 $28.8
Change in cumulative translation adjustment .. (5.6) 16.8 (6.6) 23.7......... 7.7 1.5 1.1 25.2
Change in fair market value of derivatives ............. (0.1) 0.3 (0.4) 0.2 (0.6)0.1 (0.3)
----- ----- ----- -----
Comprehensive income ......................... $11.5 $23.7 $28.5 $40.6................................ $24.8 $13.1 $53.3 $53.7
===== ===== ===== =====

NOTE 3. EXTRAORDINARY GAIN

In December 2003, the Company received $4.7 million from an escrow account
established in connection with the 1983 bankruptcy of Itel Corporation, the
predecessor of the Company. As of January 2, 2004, the Company was unable to
determine the appropriate beneficiary of this receipt and was in the process of
an investigation to determine its proper disposition. As of January 2, 2004, the
Company had not recorded income associated with this receipt because of the
uncertainty of the beneficiary. During the first quarter of 2004, the Company
completed the investigation and concluded that the funds are the property of the
Company. Accordingly, in the first quarter of 2004, the Company recorded a $4.1
million extraordinary after-tax gain as a result of the receipt.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 4. INCOME PER SHARETAXES

The following table sets forth the computation of basic and diluted income per
share:

13 WEEKS ENDED 26 WEEKS ENDED
------------------ ------------------
(IN MILLIONS, EXCEPT PER SHARE DATA) JULY 2, JULY 4, JULY 2, JULY 4,
2004 2003 2004 2003
------- ------- ------- -------

BASIC INCOME PER SHARE:
Income before extraordinary gain ............... $ 16.8 $ 7.3 $ 30.8 $ 17.5
Extraordinary gain, net ........................ -- -- 4.1 --
------ ------ ------ ------
Net income ..................................... $ 16.8 $ 7.3 $ 34.9 $ 17.5
====== ====== ====== ======

Weighted-average common shares outstanding ..... 36.7 36.4 36.6 36.7

Income per share before extraordinary gain ..... $ 0.46 $ 0.20 $ 0.84 $ 0.48
Extraordinary gain per share ................... $ -- $ -- $ 0.11 $ --
Net income per share ........................... $ 0.46 $ 0.20 $ 0.95 $ 0.48

DILUTED INCOME PER SHARE:
Income before extraordinary gain ............... $ 16.8 $ 7.3 $ 30.8 $ 17.5
Extraordinary gain, net ........................ -- -- 4.1 --
------ ------ ------ ------
Net income ..................................... $ 16.8 $ 7.3 $ 34.9 $ 17.5
====== ====== ====== ======

Weighted-average common shares outstanding ..... 36.7 36.4 36.6 36.7
Effect of dilutive securities:
Stock options and units ..................... 1.3 0.9 1.2 0.8
------ ------ ------ ------
Weighted-average common shares outstanding ..... 38.0 37.3 37.8 37.5
====== ====== ====== ======

Income per share before extraordinary gain ..... $ 0.44 $ 0.20 $ 0.82 $ 0.47
Extraordinary gain per share ................... $ -- $ -- $ 0.11 $ --
Net income per share ........................... $ 0.44 $ 0.20 $ 0.92 $ 0.47

In the 13 weeks ended July 2, 2004 and July 4, 2003, the Company excluded
6.6 million and 6.7 million, respectively, of common stock equivalents,
primarily relating to the 3.25% and 7% zero coupon convertible notes
("Convertible Notes"), from its calculation of diluted income per share. The
3.25% convertible notes were excluded as they are subject to various conditions,
which were not met at the end of the 13 weeks July 2, 2004 and July 4, 2003. The
7% convertible notes were excluded because the effect would have been
antidilutive. Because the Convertible Notes were not included in the diluted
shares outstanding, the related $1.4 million and $1.3 million for the 1339 weeks ended July 2, 2004 and July 4, 2003, respectively, of net interest expense was
not excluded from the determination of income in the calculation of diluted
income per share.

In the 26 weeks ended July 2, 2004 and July 4, 2003, the Company excluded
6.6 million and 6.7 million, respectively, of common stock equivalents,
primarily relating to the 3.25% and 7% zero coupon convertible notes
("Convertible Notes"), from its calculation of diluted income per share. The
3.25% convertible notes were excluded as they are subject to various conditions,
which were not met at the end of the 26 weeks ended July 2, 2004 and July 4,
2003. The 7% convertible notes were excluded because the effect would have been
antidilutive. Because the Convertible Notes were not included in the diluted
shares outstanding, the related $2.8 million and $2.6 million for the 26 weeks
ended July 2, 2004 and July 4, 2003, respectively, of net interest expense was
not excluded from the determination of income in the calculation of diluted
income per share.

NOTE 5. INCOME TAXES

Consistent with the first quarter of 2004, the year-to-dateOctober 1, 2004 effective tax rate
(excluding extraordinary gain) iswas 39.0% compared to 43.0%43.8% and 42.4%43.0% during the
13 weeks and 2639 weeks ended July 4,October 3, 2003, respectively. The decrease in the
effective tax rate is primarily due to a change in the mix of foreign income and
losses by country as compared to country level net operating loss positions. The
change in tax rate increased net income by $1.1$1.4 million, or $0.03 per diluted
share, for the 13 weeks ended July 2,October 1, 2004 compared to the corresponding
period in 2003. The change in tax rate increased income before extraordinary
gain and net income by $1.7$3.1 million, or $0.05$0.08 per diluted share for the 2639 weeks
ended July 2,October 1, 2004 compared to the corresponding period in 2003.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 6.5. COMMON STOCK

In the first half of 2003, the Company repurchased 1,567,650 shares at an
average cost of $22.74. Purchases were made in the open market and were financed
from cash generated by operations and the net proceeds ($121.4 million) from the
issuance of 3.25% zero coupon convertible notes.notes ("Convertible Notes due 2033").
No shares were repurchased in 2004. The Company has the authorization to
purchase additional shares with the volume and timing to depend on market
conditions.

As a result of the exercise of stock options and the employee stock purchase
plan, 604,901781,466 shares were issued at an average exercise price of $20.46 in$20.27 for the
first half of39 weeks ended October 1, 2004. In the corresponding period in 2003, 101,500290,753
shares were issued at an average price of $15.74.$16.55.

NOTE 6. DEBT

On June 18, 2004, the Company announced that its primary operating
subsidiary, Anixter Inc., entered into a new five year, senior unsecured $275.0
million revolving credit agreement to support future growth of the business.
This new facility replaces a similar sized facility that was set to expire in
October of 2005. The borrowing rate under the new revolving credit agreement is
LIBOR plus 77.5 basis points. In addition, there are facility fees on the
revolving credit facility equal to 22.5 basis points. The new agreement, which
is guaranteed by Anixter International Inc., contains covenants that among other
things restricts the leverage ratio and sets a minimum fixed charge coverage
ratio. In connection with this refinancing, the company recorded a pre-tax loss
of $0.7 million in the second quarter ending July 2, 2004 for the write-off of
deferred financing costs remaining from the refinanced facility.

On October 6, 2000, the Company entered into an accounts receivable
securitization program. The underlying agreements for this program were amended
and restated on September 30, 2004 for an additional 364 days. The program is
conducted through Anixter Receivables Corporation ("ARC"), a wholly-owned,
bankruptcy-remote, special purpose subsidiary. Under the program, the Company
sells to ARC, at a discount of 2.12% on an ongoing basis without recourse, a
majority of the accounts receivable originating in the United States. ARC in
turn sells an interest in these receivables to financial institutions for
proceeds up to $225.0 million. Under this arrangement, Anixter continues to
service the sold receivables by performing the collection and cash application
functions in order to maintain relationships with its customers. These services
are billed by Anixter to ARC at cost.

The 2004 amendment provides ARC with a call right with respect to interests
in the receivables it has sold. As a result of this call right, ARC no longer
holds a passive interest the receivables and, thus, is no longer considered a
qualified special purpose entity. Accordingly, ARC, which was previously
unconsolidated, is now consolidated in the financial statements of the Company.
Approximately $183.3 million of long-term funding and $298.8 million of accounts
receivable sold to ARC, are reflected in the Company's consolidated balance
sheet at October 1, 2004. Additionally, Anixter's investment in ARC and the
inter-company note between Anixter and ARC is eliminated in consolidation. The
receivables will continue to be sold by Anixter to ARC. The assets of ARC are
not available to creditors of Anixter in the event of bankruptcy or insolvency
proceedings.

Beginning in the fourth quarter of 2004, costs associated with the program
(primarily funding costs), which were recorded in "other expense," will be
recorded as "interest expense." At the inception of this program, the Company
recorded a charge of $8.8 million for the initial discounting of receivables
sold to ARC. The Company expected to substantially recover this amount upon
termination of the program. In the intervening years, due to a decline in the
amount of accounts receivable in the program, $2.4 million of the initial
discount costs have been recouped. With the consolidation of ARC, the remaining
$6.4 million of discount costs are expected to be recovered during the fourth
quarter of 2004.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 7. INCOME PER SHARE

The following table sets forth the computation of basic and diluted income per
share:

13 WEEKS ENDED 39 WEEKS ENDED
------------------------ ------------------------
(IN MILLIONS, EXCEPT PER SHARE DATA) OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003
---------- ---------- ---------- ----------

BASIC INCOME PER SHARE:
Income before extraordinary gain ............... $ 17.2 $ 11.3 $ 48.0 $ 28.8
Extraordinary gain, net ........................ -- -- 4.1 --
------ ------ ------ ------
Net income ..................................... $ 17.2 $ 11.3 $ 52.1 $ 28.8
====== ====== ====== ======

Weighted-average common shares outstanding ..... 37.1 35.9 36.7 36.4

Income per share before extraordinary gain ..... $ 0.46 $ 0.31 $ 1.30 $ 0.79
Extraordinary gain per share ................... $ -- $ -- $ 0.11 $ --
Net income per share ........................... $ 0.46 $ 0.31 $ 1.42 $ 0.79

DILUTED INCOME PER SHARE:
Income before extraordinary gain ............... $ 17.2 $ 11.3 $ 48.0 $ 28.8
Extraordinary gain, net ........................ -- -- 4.1 --
Interest impact of assumed convertible notes ... 0.7 -- 0.7 --
------ ------ ------ ------
Net income ..................................... $ 17.9 $ 11.3 $ 52.8 $ 28.8
====== ====== ====== ======

Weighted-average common shares outstanding ..... 37.1 35.9 36.7 36.4
Effect of dilutive securities:
Stock options and units ..................... 1.4 0.8 1.3 0.9
Convertible notes ........................... 5.1 -- 1.7 --
------ ------ ------ ------
Weighted-average common shares outstanding ..... 43.6 36.7 39.7 37.3
====== ====== ====== ======

Income per share before extraordinary gain ..... $ 0.41 $ 0.31 $ 1.23 $ 0.77
Extraordinary gain per share ................... $ -- $ -- $ 0.10 $ --
Net income per share ........................... $ 0.41 $ 0.31 $ 1.33 $ 0.77

Holders of the Convertible Notes due 2033 may convert each of them into
13.5584 shares of the Company's common stock in any calendar quarter if:

- the sales price of our common stock reaches specified thresholds;
- during any period in which the credit rating assigned to the
Convertible Notes due 2033 is below a specified level;
- the Convertible Notes due 2033 are called for redemption; or
- specified corporate transactions have occurred.

The Convertible Notes due 2033 were convertible at October 1, 2004, as the
sales price of the Company's common stock exceeded the contingent conversion
trigger price for at least 20 of the preceding 30 days ended October 1, 2004. As
a result, the Company included 5.1 million and 1.7 million weighted average
shares in its calculation of diluted income per share for the 13 and 39 weeks
ended October 1, 2004, respectively. Because the Convertible Notes due 2033 were
included in the diluted shares outstanding, the related $0.7 million of net
interest expense was excluded from the determination of net income in the
calculation of diluted income per share for the 13 and 39 weeks ended October 1,
2004.

In the 13 and 39 weeks ended October 1, 2004, the Company excluded 1.5
million of common stock equivalents, relating to its 7% zero coupon convertible
notes due 2020 ("Convertible Notes due 2020"), from its calculation of diluted
income per share because the effect would have been antidilutive. Because the 7%
zero coupon convertible notes were not included in the diluted shares
outstanding, the related $0.7 million and $2.1 million of net interest expense
was not excluded from the determination of net income in the calculation of
diluted income per share for the 13 and 39 weeks ended October 1, 2004.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In the 13 and 39 weeks ended October 3, 2003, the Company excluded from its
calculation of diluted income per share 6.7 million of common stock equivalents
relating to the 3.25% and 7% zero coupon convertible notes. The 3.25%
Convertible Notes were excluded as they are subject to various conditions, which
were not met at the end of the 13 and 39 weeks ended October 3, 2003. The 7%
convertible notes were excluded because the effect would have been antidilutive.
Because the convertible notes were not included in the diluted shares
outstanding, the related $1.5 million and $4.1 million of net interest expense
was not excluded from the determination of income in the calculation of diluted
income per share for the 13 and 39 weeks ended October 3, 2003.

Holders of the Convertible Notes due 2033 and Convertible Notes due 2020 may
require us to purchase all or a portion of the respective notes at specified
future dates ("put option"). The Company may pay the purchase price in cash,
common stock or a combination thereof. The Company has the intent and ability to
pay the purchase price (equal to the initial accreted principal amount plus
accrued issue discount to the purchase date) in cash. As a result, the shares
related to the put option are not considered in our calculation of diluted
earnings per share.

NOTE 8. SPECIAL DIVIDEND

On February 11, 2004, the Company's Board of Directors declared a special
dividend of $1.50 per common share, or $55.8 million, as a return of excess
capital to shareholders. On March 31, 2004, the Company paid $55.1 million of
the dividend to shareholders of record as of March 16, 2004. In addition, as
required by the plan documents, the remaining dividend of $0.7 million was
accrued at July 2,October 1, 2004 for payments to be made on the vesting date to
holders of employee stock units and restricted stock.

In accordance with the provisions of the stock option plan, the exercise
price and number of options outstanding were adjusted to reflect the special
dividend. The average exercise price of outstanding options decreased from
$21.48 to $20.40 and the number of outstanding options increased from 4,331,975
to 4,561,424. These changes resulted in no additional compensation expense.

In accordance with the provisions of the enhanced incentive plan, stock
units granted in 2001 were adjusted to reflect the special dividend. The number
of outstanding stock units associated with the 2001 grant increased from 53,680
to 56,531. This change resulted in no additional compensation expense.

The conversion rate of the 3.25% zero coupon convertible notes due 2033
("Convertible Notes due 2033")2033 was adjusted in March
2004 to reflect the special dividend. Holders of the Convertible Notes due 2033
may convert each of themNote into 13.5584 shares of the Company's common stock, offor
which the Company has reserved 5.1 million shares based on the number of outstanding bonds, in any
calendar quarter if:

- - the sales price of our common stock reaches specified thresholds;

- - during any period in which the credit rating assigned to the Convertible
Notes is below a specified level;

- - the Convertible Notes due 2033 are called for redemption; or

- - specified corporate transactions have occurred.

Upon conversion, the Company has the right to deliver, in lieu of its common
stock, cash or a combination of cash and stock. The Convertible Notes due 2033
were not convertible at July 2, 2004, as none of the above conditions were met.

NOTE 8. DEBT

On June 18, 2004, the Company announced that its primary operating
subsidiary, Anixter Inc., entered into a new five year, senior unsecured $275.0
million revolving credit agreement to support future growth of the business.
This new facility replaces a similar sized facility that was set to expire in
October of 2005. The borrowing rate under the new revolving credit agreement is
LIBOR plus 77.5 basis points. In addition, there are facilities fees on the
unused portion of the facility equal to 22.5 basis points. The new agreement,
which is guaranteed by Anixter International Inc., contains covenants that among
other things restricts the leverage ratio and sets a minimum fixed charge
coverage ratio. In connection with this refinancing, the company recorded a
pre-tax loss of $0.7 million in the 13 weeks ended July 2, 2004, for the
write-off of deferred financing costs remaining from the refinanced facility.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUEDauthorized shares.

NOTE 9. ACQUISITIONS

On June 22, 2004, the Company purchased substantially all of the assets and
operations of Distribution Dynamics, Inc. ("DDI"), for $33.3 million, inclusive
of legal and advisory fees.. DDI was a privately held
value-added distributor of fasteners, hardware and related products specializing
in inventory logistics management programs directed at supporting the production
lines of original equipment manufacturers across a broad spectrum of industries.
Headquartered in Eden Prairie, Minnesota, DDI employs approximately 240250
associates located in sixteen locations in the United States. The Company
believes DDI's business model complements its strategy of building a global
original equipment manufacturer supply business. Assets, consisting of inventory, accounts
receivable, fixed assets and prepaid expenses, have been recordedIncluded in the Company's Condensed Consolidated Balance Sheet as of July 2, 2004 at estimated
fair value based on a preliminary allocationresults of the
purchase price.Company are $18.3 million of sales and $1.1 million of operating losses for the
13 weeks ended October 1, 2004. The purchase was funded with on-hand excess cash
balances and cash available under the Company's revolving credit facility. The
acquisitionCompany purchased DDI for $33.3 million inclusive of DDI'slegal and advisory fees,
acquiring tangible assets did notwith a fair value of $21.1 million. The tangible net
assets primarily consist of accounts receivable, inventory, fixed assets and
prepaid expenses. Based upon a third party valuation, assets and liabilities
have a material impact onbeen recorded in the Company's resultsCondensed Consolidated Balance Sheet as of
operations forOctober 1, 2004 at estimated fair value based on a preliminary allocation of the
13purchase price. Intangible assets have been recorded as follows:

- $4.4 million of intangible assets with a finite life of 8.5 years
(customer relationships); and
26
weeks ended July 2, 2004.- $7.8 million of goodwill.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

In the third quarter of 2003, the Company purchased 100% of the stock of
Walters Hexagon Group Limited ("Walters Hexagon"). Headquartered in Worcester,
England, Walters Hexagon is a leading distributor of fasteners and other small
parts to original equipment manufacturers and provides inventory management
services to a range of markets and industries. Walters Hexagon operates a
network of ten service centers in the United Kingdom and France and employs
approximately 300320 people. The Company believes Walters Hexagon's business model
and position as a value-added distributor complementedcomplements its existing U.S. original
equipment manufacturer supply business. The Company purchased Walters Hexagon
for $42.7 million, inclusive of legal and financial advisory fees, acquiring
tangible assets with a fair value of approximately $16.2 million. The tangible
net assets primarily consist of accounts receivable, inventory, office and
warehouse equipment and furnishings, accounts payable and select operating
liabilities. Based upon a third party valuation, assets and liabilities have
been recorded at estimated fair value based on a preliminaryan allocation of the purchase
price. Intangible assets are recorded at an estimated fair value as follows:

- $8.3 million of intangible assets with a finite life of 10 years
(customer relationships); and

-
- $18.2 million of goodwill.

The stock purchase agreement provides for additional consideration of up to
a maximum of $5.8 million based on the future operating performance of Walters
Hexagon. The purchase was funded with on-hand excess cash balances along with
the assumption of $0.7 million of Walters Hexagon's debt. Included in the
results of the Company for the 13 and 2639 weeks ended July 2,October 1, 2004 are $26.2$28.5
million and $49.9$78.4 million of sales, respectively, and $1.2$1.3 million and $1.7$3.0
million of operating income, respectively, related to Walters Hexagon.

These acquisitions were accounted for as purchases and the results of
operations of the acquired businesses are included in the condensed consolidated
financial statements from the date of acquisition. Had these acquisitions
occurred at the beginning of the year of acquisition, the impact on the
Company's operating results would not have been significant.

8NOTE 10. IMPAIRMENT CHARGE

Following the September 2002 acquisition of the assets and operations of
Pentacon, Anixter has acquired Walters Hexagon as well as the assets and
operations of DDI. All three of these businesses are engaged in the supply of
"C" class inventory components to Original Equipment Manufacturers throughout
the United States and the United Kingdom along with a location in each of France
and Italy. As a part of bringing these businesses together to form an industry
leading supply chain solution that combines the individual strengths and
expertise of the acquired companies with the financial strength and global
capabilities of Anixter, a new brand name, Anixter Fasteners (SM) was introduced
in the 13 weeks ended October 1, 2004 to reflect the combined capabilities. As a
result of this new brand name introduction, the Company recorded an asset
impairment charge of $1.8 million in the 13 weeks ended October 1, 2004 to
write-down to fair value the value assigned to the Pentacon name when that
business was acquired by Anixter as the Pentacon brand name will no longer be
used in the industrial operations.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 10.11. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.

The Company guarantees, fully and unconditionally, substantially all of the
debt of its subsidiaries, which include Anixter Inc. Certain debt agreements
entered into by Anixter Inc. contain various restrictions including restrictions
on payments to the Company. Such restrictions have not had nor are expected to
have an adverse impact on the Company's ability to meet its cash obligations.
The following summarizes the financial information for Anixter Inc.:

ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

JULY 2, JANUARY 2,
(IN MILLIONS) 2004 2004
----------- ----------
(UNAUDITED)

ASSETS:
Current assets ......................... $ 972.0 $ 875.4
Property, net .......................... 43.3 43.1
Goodwill and other intangibles ......... 307.1 301.1
Other assets ........................... 119.3 109.6
-------- --------
$1,441.7 $1,329.2
======== ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities .................... $ 432.7 $ 384.9
Subordinated notes payable to parent ... 171.9 147.8
Long-term debt ......................... 45.0 30.0
Other liabilities ...................... 77.9 79.1
Stockholders' equity ................... 714.2 687.4
-------- --------
$1,441.7 $1,329.2
======== ========
OCTOBER 1, JANUARY 2,
(IN MILLIONS) 2004 2004
----------- -----------
(UNAUDITED)

ASSETS:
Current assets...................................................... $ 1,280.0 $ 875.4
Property, net....................................................... 42.7 43.1
Goodwill and other intangibles...................................... 310.0 301.1
Other assets........................................................ 74.3 109.6
----------- -----------
$ 1,707.0 $ 1,329.2
=========== ===========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities................................................. $ 476.2 $ 384.9
Subordinated notes payable to parent................................ 188.9 147.8
Long-term debt...................................................... 219.8 30.0
Other liabilities................................................... 78.9 79.1
Stockholders' equity................................................ 743.2 687.4
----------- -----------
$ 1,707.0 $ 1,329.2
=========== ===========

ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

13 WEEKS ENDED 26 WEEKS ENDED
------------------- ---------------------
JULY 2, JULY 4, JULY 2, JULY 4,
(IN MILLIONS) 2004 2003 2004 2003
-------- -------- -------- --------

Net sales ................... $ 813.1 $ 644.8 $1,577.3 $1,307.0
Operating income ............ $ 34.8 $ 22.3 $ 64.9 $ 45.0
Income before income taxes .. $ 28.1 $ 18.4 $ 51.4 $ 36.0
Net income .................. $ 16.9 $ 10.6 $ 31.4 $ 20.8

9
13 WEEKS ENDED 39 WEEKS ENDED
-------------------------- --------------------------
OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
(IN MILLIONS) 2004 2003 2004 2003
---------- ---------- ---------- ----------

Net sales .......................... $ 849.6 $ 653.4 $2,426.9 $1,960.4
Operating income ................... $ 35.0 $ 23.7 $ 99.9 $ 68.7
Income before income taxes ......... $ 28.5 $ 20.3 $ 79.9 $ 56.3
Net income ......................... $ 17.3 $ 11.4 $ 48.7 $ 32.2

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 11.12. PENSION PLANS, POST-RETIREMENT BENEFITS AND OTHER BENEFITS

The Company has various defined benefit and defined contributory pension
plans. The plans of the Company are the Anixter Inc. Pension Plan, and Anixter Inc.
Excess Benefit Plan and Anixter Inc. Supplemental Executive Retirement Plan
("Domestic Plans") and various pension plans covering employees of foreign
subsidiaries ("Foreign Plans"). The majority of the Company's pension plans are
non-contributory and cover substantially all full-time domestic employees and
certain employees in other countries. Retirement benefits are provided based on
compensation as defined in both the Domestic and Foreign Plans. The Company's
policy is to fund all plans as required by the Employee Retirement Income
Security Act of 1974 ("ERISA"), the Internal Revenue Service and applicable
foreign laws. Anixter Inc. Pension Plan assets consisted primarily of equity
securities and fixed income fund investments.

The expected long-term rate of return on our Anixter Inc. Pension Plan
assets reflects the average rate of earnings expected on the invested assets and
future assets to be invested to provide for the projected benefit obligation. We
have historically used a 9.0% rate of return since the average 10 year
historical return on our plan assets is approximately 10.4%. We reduced the
expected rate of return for 2004 to 8.5% due to the significant decline in the
equity market in 2001 and 2002. Components of net periodic pension cost is as
follows:

13 WEEKS ENDED
-----------------------------------------------------------------------------------------------------------------------------------------
DOMESTIC FOREIGN TOTAL
------------------ ------------------ ------------------
JULY 2, JULY 4, JULY 2, JULY 4, JULY 2, JULY 4,----------------------- ----------------------- -----------------------
OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003 2004 2003
------- ------- ------- ------- ------- ----------------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS)

Service cost ...................... $ 1.5 $ 1.2 $ 1.1 $ 0.7 $ 2.6 $ 1.9........................... $1.6 $1.4 $1.0 $0.8 $2.6 $2.2
Interest cost ............................................... 1.9 1.8 1.5 1.11.0 0.5 2.9 2.02.3
Expected return on plan assets .... (1.6) (1.2) (1.1) (0.4) (2.7) (1.6)......... (1.7) (1.4) (0.8) (0.5) (2.5) (1.9)
Net amortization ......................................... 0.1 -- 0.1 0.1 0.2 0.1
-- 0.2 0.2
----- ----- ----- ----- ----- --------- ---- ---- ---- ---- ----
Net periodic cost ................. $ 1.8 $ 1.7 $ 1.2 $ 0.8 $ 3.0 $ 2.5
===== ===== ===== ===== ===== =====...................... $1.9 $1.8 $1.3 $0.9 $3.2 $2.7
==== ==== ==== ==== ==== ====

2639 WEEKS ENDED
-----------------------------------------------------------------------------------------------------------------------------------------
DOMESTIC FOREIGN TOTAL
------------------ ------------------ ------------------
JULY 2, JULY 4, JULY 2, JULY 4, JULY 2, JULY 4,----------------------- ----------------------- -----------------------
OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003 2004 2003
------- ------- ------- ------- ------- ----------------- ---------- ---------- ---------- ---------- ----------
(IN MILLIONS)

Service cost ...................... $ 3.0 $ 2.6 $ 2.2 $ 1.7 $ 5.2 $ 4.3........................... $4.6 $4.0 $3.2 $2.5 $7.8 $6.5
Interest cost ..................... 3.6 3.3 1.9 1.2.......................... 5.5 4.55.1 2.9 1.7 8.4 6.8
Expected return on plan assets .... (3.2) (2.7) (1.8) (1.1) (5.0) (3.8)......... (4.9) (4.1) (2.6) (1.6) (7.5) (5.7)
Net amortization ......................................... 0.4 0.4 0.3 0.4 0.2 0.1 0.5 0.5
----- ----- ----- ----- ----- -----0.7 0.6
---- ---- ---- ---- ---- ----
Net periodic cost ................. $ 3.7 $ 3.6 $ 2.5 $ 1.9 $ 6.2 $ 5.5
===== ===== ===== ===== ===== =====...................... $5.6 $5.4 $3.8 $2.8 $9.4 $8.2
==== ==== ==== ==== ==== ====

The Company estimates that it will make contributions of $6.0 million in
2004 of
approximately $6.0 million to the Anixter Inc. Pension Plan and approximately $4.5 million to its
Foreign Plans.

1012

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED

NOTE 12.13. BUSINESS SEGMENTS

The Company is engaged in the distribution of communications and specialty
wire and cable products and "C" class inventory components from top suppliers to
contractors and installers, and also to end users including manufacturers,
natural resources companies, utilities and original equipment manufacturers. The
Company is organized by geographic regions, and accordingly, has identified
North America (United States and Canada), Europe and Emerging Markets (Asia
Pacific and Latin America) as reportable segments. The Company obtains and
coordinates financing, tax, information technology, legal and other related
services, certain of which are rebilled to subsidiaries. Interest expense and
other non-operating items are not allocated to the segments or reviewed on a
segment basis. The acquisition of DDI resulted in an increase in goodwill and
intangible assets of $7.8 million and $4.4 million, respectively, in the United
States during the 39 weeks ended October 1, 2004.

Segment information for the 13 and 2639 weeks ended July 2,October 1, 2004 and
July 4,October 3, 2003 was as follows:

(IN MILLIONS) 13 WEEKS ENDED 39 WEEKS ENDED
----------------------- -----------------------
OCTOBER 1, OCTOBER 3, OCTOBER 1, OCTOBER 3,
2004 2003 2004 2003
---------- ---------- ---------- ----------

NET SALES:
United States........................................... $ 571.5 $ 453.6 $ 1,617.8 $ 1,361.1
Canada.................................................. 84.7 64.8 238.0 187.2
---------- ---------- ---------- ----------
North America..................................... 656.2 518.4 1,855.8 1,548.3
Europe.................................................. 136.2 88.2 408.9 276.0
Emerging Markets........................................ 57.2 46.8 162.2 136.1
---------- ---------- ---------- ----------
$ 849.6 $ 653.4 $ 2,426.9 $ 1,960.4
========== ========== ========== ==========
OPERATING INCOME:
United States........................................... $ 24.7 $ 16.4 $ 66.9 $ 47.8
Canada.................................................. 4.9 3.8 13.7 9.7
---------- ---------- ---------- ----------
North America..................................... 29.6 20.2 80.6 57.5
Europe.................................................. 2.6 2.6 11.3 8.5
Emerging Markets........................................ 1.7 0.5 4.7 1.2
---------- ---------- ---------- ----------
$ 33.9 $ 23.3 $ 96.6 $ 67.2
========== ========== ========== ==========

OCTOBER 1, JANUARY 3,
TOTAL ASSETS: 2004 2004
---------- ----------

United States........................................... $ 1,174.9 $ 906.1
Canada.................................................. 139.0 120.2
---------- ----------
North America..................................... 1,313.9 1,026.3
Europe.................................................. 245.7 228.0
Emerging Markets........................................ 122.1 117.1
---------- ----------
$ 1,681.7 $ 1,371.4
========== ==========

13 WEEKS ENDED 26 WEEKS ENDED
--------------------- ---------------------
JULY 2, JULY 4, JULY 2, JULY 4,
2004 2003 2004 2003
-------- -------- -------- --------
NET SALES:
United States ............ $ 551.2 $ 450.3 $1,046.3 $ 907.5
Canada ................... 77.3 61.5 153.3 122.4
-------- -------- -------- --------
North America ...... 628.5 511.8 1,199.6 1,029.9
Europe ................... 132.5 89.9 272.7 187.8
Emerging Markets ......... 52.1 43.1 105.0 89.3
-------- -------- -------- --------
$ 813.1 $ 644.8 $1,577.3 $1,307.0
======== ======== ======== ========
OPERATING INCOME:
United States ............ $ 23.1 $ 15.0 $ 42.2 $ 31.4
Canada ................... 4.9 3.2 8.8 5.9
-------- -------- -------- --------
North America ...... 28.0 18.2 51.0 37.3
Europe ................... 4.2 2.9 8.7 5.9
Emerging Markets ......... 1.5 0.2 3.0 0.7
-------- -------- -------- --------
$ 33.7 $ 21.3 $ 62.7 $ 43.9
======== ======== ======== ========

JULY 2, JANUARY 2,
2004 2004
-------- ----------
TOTAL ASSETS:
United States ............ $ 936.8 $ 906.1
Canada ................... 126.7 120.2
-------- --------
North America ...... 1,063.5 1,026.3
Europe ................... 247.7 228.0
Emerging Markets ......... 113.5 117.1
-------- --------
$1,424.7 $1,371.4
======== ========

ANIXTER INTERNATIONAL INC.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

The following is a discussion 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 condensed 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 January 2, 2004.

ACQUISITIONS OF DISTRIBUTION DYNAMICS AND WALTERS HEXAGON

- $4.4 million of intangible assets with a finite life of 8.5 years
(customer relationships); and
26
weeks ended July 2, 2004.- $7.8 million of goodwill.

- $8.3 million of intangible assets with a finite life of 10 years
(customer relationships); and

-
- $18.2 million of goodwill.

1214

ANIXTER INTERNATIONAL INC.

FINANCIAL LIQUIDITY AND CAPITAL RESOURCES

Overview

As a distributor, the Company's use of capital is largely for working
capital to support its revenue base. Capital commitments for property, plant and
equipment are limited to information technology assets, warehouse equipment and
office furniture and fixtures, since the Company operates from leased
facilities. Therefore, in any given reporting period, the amount of cash
consumed or generated by operations will primarily be a factor of the rate of
sales increase or decline, due to the corresponding change in working capital.

In periods when sales are increasing, the expanded working capital needs
will be funded first by cash from operations, secondly from additional
borrowings and lastly from additional equity offerings. Also, the Company will,
from time to time, issue or retire borrowings or equity in an effort to maintain
a cost-effective capital structure consistent with its anticipated capital
requirements.

Cash Flow

Consolidated net cash provided by operating activities was $4.4$13.7 million and
$27.6$83.4 million for the 2639 weeks ended July 2,October 1, 2004 and July 4,October 3, 2003,
respectively. The decrease in cash flow from operations in 2004 is primarily due
to an increase in working capital of $42.9$63.9 million to support the 19.7%23.8% growth
in sales from the last six months of 2003.sales. In 2003, working capital increased
$15.5decreased $23.2 million asdue to a much lower
sales increased only 1.5% from the last six months of 2002.growth rate.

Consolidated net cash used in investing activities was $39.6$44.9 million for the
2639 weeks ended July 2,October 1, 2004 as compared to $18.6$61.4 million for the same period
in 2003. During the 2639 weeks ended July 2,October 1, 2004, the Company spent $33.3
million to acquire DDI.DDI and $42.7 million in the corresponding period in 2003 to
purchase Walters Hexagon. Capital expenditures decreased $13.8$11.9 million during
the 2639 weeks ended July 2,October 1, 2004 as compared to the corresponding period in
2003. The decrease is primarily the result of the Company spending $17.3$18.4 million
in the first half
of39 weeks ended October 3, 2003 to complete the construction of a new
corporate headquarters facility. Capital expenditures are expected to be
approximately $12.0$16.3 million in 2004.

Consolidated net cash used in financing activities was $29.2$32.9 million for the
2639 weeks ended July 2,October 1, 2004 compared to $0.4$1.2 million in the first half of39 weeks ended
October 3, 2003. During the 2639 weeks ended July 2,October 1, 2004, the Company used
$55.1 million to fund the special dividend of $1.50 per common share that was
paid on March 31, 2004 to shareholders of record on March 16, 2004. In the 2639
weeks ended July 4,October 3, 2003, the Company paid $18.4$35.6 million for the purchase of
treasury stock and $2.0$75.9 million for the purchase of its 7% zero coupon
convertible notes and 8% senior notes. The Company did not purchase any treasury
stock, or debt prior to maturity, during the first half of39 weeks ended October 1, 2004.
However, the Company replaced its $275.0 million revolving credit facility with
a similar sized facility in the 2639 weeks ended July 2,October 1, 2004 which resulted in
additional deferred financing costs of $1.1$1.2 million as compared to $0.4$4.3 million
of deferred financing costs recorded in the corresponding period in 2003
primarily related to the issuance of the 3.25% convertible notesConvertible Notes due 2033. In the 39
weeks ended October 1, 2004, the Company had net proceeds from borrowings of
$14.7$7.3 million compared to $18.9a net payment on borrowings of $33.4 million in the
corresponding period in 2003. Proceeds from the issuance of common stock
relating to the exercise of stock options and the employee stock purchase plan
were $12.4$16.3 million for the 2639 weeks ended July 2,October 1, 2004 compared to $1.6$4.8
million in the first half of39 weeks ended October 3, 2003. In the first half39 weeks ended October 1,
2004, as a result of 2004, 604,901the exercise of stock options and employee stock purchase
plan, 781,466 shares were issued at an average price of $20.46.$20.27. In the
corresponding period in 2003, 101,500290,753 shares were issued at an average price of
$15.74.$16.55.

Financing

On June 18, 2004, the Company announced that its primary operating
subsidiary, Anixter Inc., entered into a new five year, senior unsecured $275.0
million revolving credit agreement to support future growth of the business.
This new facility replaces a similar sized facility that was set to expire in
October of 2005. The borrowing rate under the new revolving credit agreement is
LIBOR plus 77.5 basis points. In addition, there are facilitiesfacility fees on the
unused portion of therevolving credit facility equal to 22.5 basis points. The new agreement, which
is guaranteed by Anixter International Inc., contains covenants that among other
things restricts the leverage ratio and sets a minimum fixed charge coverage
ratio. In connection with this refinancing, the company recorded a pre-tax loss
of $0.7 million in the 13 weeks ended July 2,second quarter of 2004 for the write-off of deferred
financing costs remaining from the refinanced facility.

1315

ANIXTER INTERNATIONAL INC.

Certain debt agreements entered into by the Company's subsidiaries contain
various restrictions including restrictions on payments to the Company. Such
restrictions have not nor are expected to have an adverse impact on the
Company's ability to meet its cash obligations. At July 2,October 1, 2004, $234.5$239.0
million was available under the domestic bank revolving line of credit at
Anixter Inc., of which $35.3$42.3 million was available to pay the Company for
intercompany liabilities. Due to the leverage ratio restriction, borrowings of
only $193.1$196.0 million of the $234.5$239.0 million available would be permitted as of
July 2,October 1, 2004, ($170.0of which $178.7 million of the permitted borrowings maycould be used to pay dividends to the
Company).Company.

At July 2,October 1, 2004, the Company had approximately $41.7 million available
under the accounts receivable securitization facility while certain foreign
subsidiaries had approximately $15.7$20.8 million available under bank revolving
lines of credit and approximately $4.6$0.5 million outstanding.

In July of 2003, the Company issued $378.1 million of the Convertible Notes
due 2033. The conversion rate was adjusted in March 2004 to reflect the special
dividend. Holders of the Convertible Notes due 2033 may convert each of them
into 13.5584 shares of the Company's common stock, for which the Company has
reserved 5.1 million shares of its authorized shares.

During the 2639 weeks ended July 4,October 3, 2003, the Company recorded a pre-tax
loss of $6.2 million for the early extinguishment of $63.5 million of its 7%
zero coupon notes, $2.0 million of its 8% senior notes and debt issuance costs
associated with the cancellation of $115.0 million of its available revolving
credit facility. Although no debt was repurchased during the 2639 weeks ended
July
2,October 1, 2004, the Company may continue to pursue opportunities to repurchase
outstanding debt securities, with the volume and timing to depend on market
conditions.

Consolidated interest expense was $6.0$9.3 million and $6.7$9.9 million for the 2639
weeks ended July 2,October 1, 2004 and July 4,October 3, 2003, respectively. The decrease is
due to a lower average cost of borrowings. The average outstanding long-term
debt balance for the first half of39 weeks ended October 1, 2004 and October 3, 2003 was
$246.2$256.2 million and $215.4$226.1 million, respectively. The effective interest rate for
the first half of39 weeks ended October 1, 2004 and October 3, 2003 was 4.9% and 6.2%5.8%,
respectively.

Off Balance Sheet Financing

On October 6, 2000, the Company entered into an accountaccounts receivable
securitization program. The underlying agreements for this program were amended
and restated on September 30, 2004 for an additional 364 days. The program is
conducted through Anixter Receivables Corporation ("ARC"), which is a wholly-owned,
unconsolidated subsidiary ofbankruptcy-remote, special purpose subsidiary. Under the Company. The investment is accounted for using the equity method. The program,
allows the Company
sells to sell,ARC, at a discount of 2.12% on an ongoing basis without recourse, a
majority of the accounts receivable originating in the United StatesStates. ARC in
turn sells an interest in these receivables to financial institutions for
proceeds up to $225.0 million. Under this arrangement, Anixter continues to
service the sold receivables by performing the collection and cash application
functions in order to maintain relationships with its customers. These services
are billed by Anixter to ARC at cost.

The 2004 amendment provides ARC with a discountcall right with respect to interests
in the receivables it has sold. As a result of 2.12%this call right, ARC no longer
holds a passive interest the receivables and, consiststhus, is no longer considered a
qualified special purpose entity. Accordingly, ARC, which was previously
unconsolidated, is now consolidated in the financial statements of a seriesthe Company.
Approximately $183.3 million of 364-day facilities. At July 2, 2004long-term funding and January 2, 2004, the outstanding balance$298.8 million of accounts
receivable sold to ARC, totaled $276.7are reflected in the Company's consolidated balance
sheet at October 1, 2004. Additionally, Anixter's investment in ARC and the
inter-company note between Anixter and ARC is eliminated in consolidation. The
receivables will continue to be sold by Anixter to ARC. The assets of ARC are
not available to creditors of Anixter in the event of bankruptcy or insolvency
proceedings.

Beginning in the fourth quarter of 2004, costs associated with the program
(primarily funding costs), which were recorded in "other expense," will be
recorded as "interest expense." At the inception of this program, the Company
recorded a charge of $8.8 million and $245.7for the initial discounting of receivables
sold to ARC. The Company expected to substantially recover this amount upon
termination of the program. In the intervening years, due to a decline in
receivables, $2.4 million respectively. Accordingly, theseof the initial discount costs have been recouped. With
the consolidation of ARC, the remaining $6.4 million of discount costs are
expected to be recovered during the fourth quarter of 2004.

ANIXTER INTERNATIONAL INC.

Prior to the consolidation of the accounts receivable were removed fromsecuritization
facility at the end of the third quarter of 2004, ARC funding was not recorded
on the Company's balance sheet. Generally accepted accounting principles
required that the interest expense be classified as other expense as it was
recorded as part of the Company's investment adjustment related to its 100%
ownership of ARC. However, it was considered to be part of the Company's
financing strategy and therefore viewed as interest expense by the Company.
Included in the Condensed Consolidated Statements of Operations "Other, net"
classification, are net expenses incurred by ARC of $1.5$2.8 million and $1.1$1.7
million for the first half of39 weeks ended October 1, 2004 and 2003, respectively.October 3, 2003. Included in
the ARC net expense/income amount was interest expensefunding costs incurred by ARC of $1.2 million
and $1.4$2.1
million for the first half of39 weeks ended October 1, 2004 and 2003, respectively. Generally
accepted accounting principles require that the interest expense be classified
as other expense as it is recorded as part of the Company's investment
adjustment related to its 100% ownership of ARC. However, it is considered to be
part of the Company's financing strategy and therefore is viewed as interest
expense by the Company.October 3, 2003. The average
outstanding debt incurred byfunding extended to ARC for the first half of39 weeks ended October 1, 2004 and
October 3, 2003 was $141.1$151.8 million and $125.8$127.3 million, respectively. The
effective interestfunding rate on the ARC debt was 1.7%1.8% and 2.3%2.2% for the first half
of39 weeks ended
October 1, 2004 and October 3, 2003, respectively.

Share Repurchases

In the 2639 weeks ended July 4,October 3, 2003, the Company repurchased 1,567,650
shares at an average cost of $22.74. Purchases were made in the open market and
were financed from cash generated by operations.operations and the issuance of Convertible
Notes due 2033. Although no shares were repurchased in the 2639 weeks ended
July 2,October 1, 2004, the Company has the authorization to purchase additional
shares, with the volume and timing to depend on market conditions.

ANIXTER INTERNATIONAL INC.

Liquidity Considerations and Other

In 2004, the Company estimates that it will have positive cash flow from
operating activities and after capital expenditures. The Company may continue to
pursue opportunities to acquire businesses and issue or retire borrowings or
equity in an effort to maintain a cost-effective capital structure consistent
with its anticipated capital requirements.

On February 11, 2004, the Company's Board of Directors declared a special
dividend of $1.50 per common share, or $55.8 million, as a return of excess
capital to shareholders. On March 31, 2004, the Company paid $55.1 million of
the dividend to shareholders of record as of March 16, 2004. In addition, as
required by the plan documents, the remaining dividend of $0.7 million was
accrued at July 2,October 1, 2004 for payments on the vesting date to holders of the
employee stock units and restricted stock.

SECONDTHIRD QUARTER 2004 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 ownership as well as other factors.
Although relationships with its suppliers are good, the loss of a major supplier
could have a temporary adverse effect on the Company's business, but would not
have a lasting impact since comparable products are available from alternate
sources. In addition to competitive factors, future performance could be subject
to economic downturns and possible rapid changes in applicable technologies.

OVERVIEW

In the secondthird quarter of 2004, the Company saw net income increase by $9.5$5.8
million, or 130.7%51.6%, on a 26.1%30.0% increase in sales from the secondthird quarter of the
prior year. Sales, gross profits, operating expenseexpenses and operating profits all
showed year-on-year increases from a combination of unit growth and commodity
driven price increases, the acquisition of Walters Hexagon in September of 2003
and DDI in June of 2004 and exchange rate changes related to the weaker US
dollar and combined unit growth and commodity driven price increases.U.S.
dollar. Gross margins declined 9040 basis points in the secondthird quarter of 2004 as
compared to the corresponding period in 2003, primarily due to an increase in
larger capital projects, excess industry capacity and an increasethe timing of passing
through commodity price increases to customers with long-term contracts. As a
result of the Company's new branding strategy of its recently acquired fastener
and small parts supply business, the Company recorded a pre-tax asset impairment
charge of $1.8 million in salesthe third quarter of 2004 to telecom-related original equipment
manufacturers ("OEMs"). Although gross margins decreased, operatingwrite-off the value
assigned to the Pentacon tradename when it was acquired in September 2002.
Operating expenses (including the $1.8 million impairment charge) as a percent
of sales declined 18080 basis points from the corresponding period in 2003 due to
the Company's continued tight expense controls.controls and the leveraging of existing
infrastructure. As a result, operating margins increased 9040 basis points in the
secondthird quarter of 2004 as compared to 2003.

ANIXTER INTERNATIONAL INC.

Beginning in the fourth quarter of 2004, costs associated with the accounts
receivable securitization program (funding costs), which were previously
recorded in "other income and expense," will be recorded as "interest expense."
The average interest rate related to funding under the securitization facility
was 2.0% for the third quarter of 2004 and 2003. Although interest expense will
increase in the fourth quarter of 2004 due to the consolidation of the accounts
receivable securitization facility, the Company's consolidated average interest
rate will decrease as compared to the corresponding period in 2003 due to the
lower average cost of funding associated with the securitization facility.

Other expenses increased $3.0$2.5 million in the current yearquarter primarily due
to an increase in foreign exchange losses and expenses of $1.7 million associated with the
Company's accounts receivable securitization program. Also contributing to the increase is a
reduction in the cash surrender value of life insurance policies of $0.1 million
in the second quarter of 2004 as compared to a gain of $1.4 million in the
corresponding period in 2003. Foreign exchange losses were $0.1 million in the
second quarter of this year as compared to $1.4 million in the corresponding
period in 2003. In the second quarter of 2004, the Company incurred a loss of
$0.7 million related to the write-off of deferred financing costs associated
with the early termination and replacement of the Company's $275.0 million
revolving credit facility. The Company refinanced this facility with a
five-year, similar sized facility to support future growth of the business. In
the prior year, the Company incurred a loss of $5.8 million related to the early
retirement of $63.5 million of its 7% zero coupon convertible notes. The Company's effective
tax rate droppeddeclined to 39.0% from 43.0%43.8% in the year ago quarter as a result of a
change in the mix of income and losses by country as compared to country-level
net operating loss positions.

ANIXTER INTERNATIONAL INC.

CONSOLIDATED RESULTS OF OPERATIONS

13 WEEKS ENDED
---------------------------------
JULY 2, JULY 4,--------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
-------- -------- ----------------- ---------- ---------
(IN MILLIONS)
Net sales ...............sales..................... $ 813.1849.6 $ 644.8 26.1%653.4 30.0%
Gross profit ............profit.................. $ 191.5201.9 $ 158.0 21.3%158.3 27.5%
Operating expenses ......expenses............ $ 157.8168.0 $ 136.7 15.5%135.0 24.4%
Operating income ..................... $ 33.733.9 $ 21.3 58.2%23.3 45.7%

Net Sales: The Company's net sales during the secondthird quarter of 2004
increased 26.1%30.0%, or $196.2 million, to $813.1$849.6 million from $644.8$653.4 million in the
same period in 2003. The acquisition of Walters Hexagon in September 2003 and
DDI in June of 2004, along with favorable effects from changes in exchange
rates, accounted for $26.2$46.8 million and $10.7$12.9 million of the increase,
respectively. Excluding the acquisition of Walters Hexagon and DDI and the
effects from changes in exchange rates, the Company's net sales increased 20.4%20.9%
during the 13 weeks ended July 2,October 1, 2004 from the same period in 2003. The
increase in net sales was due to improved economic conditions, commodity drivencommodity-driven
price increases, an increase in project business and an expanded product
offering.

Gross Margins: Gross margins decreased to 23.6%23.8% in the secondthird quarter of 2004
from 24.5%24.2% in the corresponding period in 2003. The decrease was primarily a
result of an increase in larger capital projects during the secondthird quarter of
2004, as compared to the secondthird quarter of 2003. Due to excess capacity in the
industry, pricing on these projects was extremely competitive, which reduced
gross margins. In addition, salesthe timing of passing through commodity price
increases to telecom-related OEMs, which have lowercustomers with long term contracts put pressure on gross margins, increased 43.6% in the second quarter.margins.

Operating Income: As a result of higher sales and the reduction in expenses
as a percentage of sales, operating margins were 4.2%4.0% for the secondthird quarter of
2004 as compared to 3.3%3.6% in the corresponding period in 2003. Operating expenses
increased $21.2$33.0 million in the secondthird quarter 2004 from the corresponding period
in 2003. The acquisitions of Walters Hexagon acquisitionand DDI increased operating
expenses by $6.2$12.8 million, while changes in exchange rates increased operating
expenses by $2.1$2.5 million. Excluding the acquisitions of Walters Hexagon and DDI
and the exchange rate impact, operating expenses increased $12.9$17.7 million, or
9.5%13.1%, primarily due to variable costs associated with higher sales volumes and
increases in healthcare costs, pension costs, and costs associated with additional
restricted stock grants.grants and an increase in employee incentives due to our
improved operating performance. Also, as a result of the Company's new branding
strategy of its recently acquired fastener and small parts supply business,
operating expenses increased due to the Company recording a pre-tax asset
impairment charge of $1.8 million in the third quarter of 2004 to write-off the
value assigned to the Pentacon tradename when it was acquired in September 2002.

Interest Expense: Consolidated interest expense decreasedincreased to $3.0$3.3 million in
the secondthird quarter of 2004 from $3.3$3.2 million in the corresponding period in 2003.
Interest expense decreasedincreased due to a reduction in the average cost of borrowings.higher debt levels. The average long-term debt
balance was $251.2$276.2 million and $217.9$247.4 million for the secondthird quarter of 2004 and
2003, respectively. The increase in interest expense due to the higher debt
level was partially offset by a lower average cost of borrowings. The average
interest rate for the secondthird quarter of 2004 and 2003, was 4.9%4.7% and 6.1%5.0%,
respectively.

ANIXTER INTERNATIONAL INC.

Other, net (expense) income:

13 WEEKS ENDED
--------------------
JULY 2, JULY 4,
2004 2003
------- -------
(IN MILLIONS)

Foreign exchange .................................. $ (0.1) $ (1.4)
(Loss) gain on the cash surrender value of
life insurance policies ......................... (0.1) 1.4
Accounts receivable securitization ................ (1.7) --
Other ............................................. (0.5) 0.6
------- -------
$ (2.4) $ 0.6
======= =======
13 WEEKS ENDED
------------------------
OCTOBER 1, OCTOBER 3,
2004 2003
---------- ----------
(IN MILLIONS)

Accounts receivable securitization .................. $ (1.4) $ (0.6)
Foreign exchange .................................... (0.7) 0.4
Sale of fixed assets................................. (0.1) (0.1)
Cash surrender value of life insurance policies...... 0.1 0.3
Other................................................ (0.4) --
---------- ----------
$ (2.5) $ --
========== ==========

The accounts receivable securitization program had net expenses of $1.7$1.4
million for the 13 weeks ended July 2, 2004. In the corresponding periodOctober 1, 2004, compared to $0.6 million of net
expenses in 2003, expenses related to the accounts receivable securitization program were
minimal.2003. The increase in net expenses was primarily a result of
increased sales of accounts receivable to ARC, which are sold at a 2.12%
discount. 16

ANIXTER INTERNATIONAL INC.Beginning in the fourth quarter of 2004, expenses (funding costs)
associated with the accounts receivable securitization program will be included
in interest expense as the funding under the securitization facility are now
consolidated in the Company's consolidated financial statements. Foreign
exchange losses increased $1.1 million in the 13 weeks ended October 1, 2004 as
compared to the corresponding period in 2003 primarily associated with the Latin
American operations.

Income Taxes: The consolidated tax provision increased to $10.8$10.9 million in
secondthird quarter of 2004 from $5.5$8.8 million in the secondthird quarter of 2003, primarily
due to an increase in income before taxes. The 2004 effective tax rate is 39.0%
compared to 43.0%43.8% in 2003. The decrease in the effective tax rate is primarily
due to a change in the mix of foreign income and losses by country as compared
to country-level net operating loss positions. The change in tax rate increased
net income by $1.1$1.4 million or $0.03 per diluted share.share in the third quarter of
2004 as compared to the same period in 2003.

NORTH AMERICA RESULTS OF OPERATIONS
13 WEEKS ENDED
-------------------------------
JULY 2, JULY 4,------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
------- ------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ...............sales............................. $ 628.5656.2 $ 511.8 22.8%518.4 26.6%
Gross profit ............profit.......................... $ 145.3156.7 $ 123.9 17.4%125.5 24.8%
Operating expenses ......expenses.................... $ 117.3127.1 $ 105.7 11.1%105.3 20.7%
Operating income ........income...................... $ 28.029.6 $ 18.2 54.1%20.2 46.5%

Net Sales: When compared to the corresponding period in 2003, North America
net sales for the 13 weeks ended July 2,October 1, 2004 increased 22.8%26.6% to $628.5$656.2
million. The combined Industrial Wireacquisition of DDI in June of 2004 accounted for $18.3 million of
the increase, while favorable changes in the Canadian exchange rate accounted
for $4.6 million of the increase. Excluding DDI and Cable andthe exchange rate impact,
North America Enterprise Cablingnet sales increased $84.2 million in22.1% during the secondthird quarter of 2004 as
compared to the secondcorresponding period in 2003. The combined industrial wire and
cable and enterprise cabling sales increased $110.7 million in the third quarter
of 2004 as compared to the third quarter of 2003, due to improved economic
conditions, price increases driven by higher copper and data cabling prices and
an expanded product offering. In the OEM supply market, the Pentacon operations
reported a 23.5%22.6% increase in sales on a combination of improved customer demand
and new contract additions.

Sales to North America telecom original equipment manufacturers
increased 43.6% in the second quarter of 2004 as compared to the corresponding
period in 2003.

Gross Margins: GrossNorth America's gross margins decreased to 23.1%23.9% in the secondthird
quarter of 2004 from 24.2% for the same period in 2003. The decrease is
primarily due to a higher percentage of capital projects, which had lower gross
margins due to excess capacity in the industry. In addition, gross margins
declined as a resultdue to the timing of the higher salespassing through commodity price increases to
telecom-related OEMs, which have lower gross margins.customers with long-term contracts.

ANIXTER INTERNATIONAL INC.

Operating Income: Operating expenses increased $11.6$21.8 million in the secondthird
quarter of 2004 from the corresponding period in 2003. The DDI acquisition
accounted for $6.3 million of the increase, iswhile changes in Canadian exchange
rates increased operating expenses by $0.7 million. Excluding the acquisition of
DDI and the exchange rate impact, North America operating expenses increased
14.0%, primarily due to variable costs associated with the increase in sales
volume, and higher pension and healthcare and costs, expenses related to additional
restricted stock grants.grants and an increase in employee incentives due to stronger
operating performance. As a result of the Company's new branding strategy of its
recently acquired fastener and small parts supply business, the Company recorded
a pre-tax asset impairment charge of $1.8 million in the third quarter of 2004
to write-off the value assigned to the Pentacon tradename when it was acquired
in September 2002. Primarily as a result of higher daily sales and continued
tight expense controls and the leveraging of the existing infrastructure. North
America operating margins increased to 4.4%4.5% in the secondthird quarter of 2004 from
3.5%3.9% in the same period in 2003. Exchange rate changes had a $0.3 million
favorable impact on operating income.

EUROPE RESULTS OF OPERATIONS

13 WEEKS ENDED
-------------------------------
JULY 2, JULY 4,---------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
------- ------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ...............sales......................... $ 132.5136.2 $ 89.9 47.4%88.2 54.6%
Gross profit ............profit...................... $ 34.933.9 $ 24.8 40.4%24.0 41.0%
Operating expenses ......expenses................ $ 30.731.3 $ 21.9 40.0%21.5 45.4%
Operating income ........income.................. $ 4.22.6 $ 2.9 43.6%2.6 3.2%

Net Sales: Europe net sales increased 47.4%54.6% in the secondthird quarter of 2004 to
$132.5$136.2 million from $89.9$88.2 million in the secondthird quarter of 2003, including a $7.9$8.6
million favorable effect from changes in exchange rates and an increase of $26.2$28.5
million as a result of the acquisition of Walters Hexagon. The increaseExcluding Walters
Hexagon and exchange rate impact, sales increased 12.5%. Overall demand remains
comparatively weaker than in local currency sales of 9.5% reflects the increaseU.S. and has resulted in economic activity in
Europe.significant margin
pressure.

Gross Margins: Europe'sEurope gross margins decreased to 26.4%24.8% in the secondthird quarter
of 2004 from 27.7%27.2% in the same period in 2003. The decrease is primarily due to
a large projectprojects at reduced margins.margins along with significant pricing pressure
resulting from excess capacity in the industry. Walters Hexagon added 5070 basis
points to Europe's gross margins in the secondthird quarter of 2004.

ANIXTER INTERNATIONAL INC.

Operating Income: Compared to the secondthird quarter of 2003, Europe operating
expenses increased 40.0%45.4%, or $8.8$9.9 million, to $30.7$31.3 million in the secondthird quarter
of 2004. Included in the increase are $6.2$6.5 million of expenses related to
Walters Hexagon and $1.6$1.7 million for changes in exchange rates. Excluding Waters
Hexagon and the exchange rate impact, operating expenses were $22.9$23.1 million, or
4.3%7.1% higher than 2003. Tight expense controls resulted in theEurope operating margins remaining flatdecreased to 1.9% from 2.8% in
2003 due to large projects at 3.3%.reduced margins and significant pricing pressures.
Exchange rate changes had a $0.4
million favorableminimal impact on operating income. Hexagon added 70
basis points to Europe operating margins in the third quarter of 2004.

EMERGING MARKETS RESULTS OF OPERATIONS

Net sales ...............sales......................... $ 52.157.2 $ 43.1 20.7%46.8 22.4%
Gross profit ............profit...................... $ 11.3 $ 9.3 22.1%8.8 28.9%
Operating expenses ......expenses................ $ 9.89.6 $ 9.1 8.3%8.3 16.8%
Operating income ........income.................. $ 1.51.7 $ 0.2 670.3%0.5 227.3%

Net Sales: Emerging Markets (Asia Pacific and Latin America) net sales were
up 20.7%22.4%, to $52.1$57.2 million in the secondthird quarter of 2004, from $43.1$46.8 million in
the secondthird quarter of 2003, including a $0.3$0.2 million unfavorable impact from
changes in exchange rates. The increase reflects an overall improvement in the
economic environmentlarger projects and strongerproduct and
market penetration.expansion.

ANIXTER INTERNATIONAL INC.

Gross Margins: During the secondthird quarter of 2004, Emerging Markets' gross
margins increased to 21.8%19.8% from 21.5%18.8% in the corresponding period in 2003. The
improvement is primarily due to price increases in Venezuela and higher margins
throughout Asia.

Operating Income: Emerging Markets operating income increased $1.3 million
from $0.2to $1.7
million in the secondthird quarter of 2003 to $1.52004 from $0.5 million in the secondthird quarter of
2004.2003. Operating expenses increased only 8.3%16.8% as compared to the corresponding period
in 2003. As a result of the higher sales levels, improved gross margins and
tight expense controls, operating margins increased to 2.9% in the secondthird quarter
of 2004 from 0.5%1.1% in 2003. Exchange rate changes had a minimal impact on
operating income.

YEAR-TO-DATE 2004 RESULTS OF OPERATIONS

OVERVIEW

In the 2639 weeks ended July 2,October 1, 2004, the Company saw net income, inclusive
of an extraordinary gain of $4.1 million, increasedincrease approximately 100%81.1% to $34.9$52.1
million on a 20.7%23.8% increase in sales from the corresponding period of the prior
year. Sales, gross profits, operating expenseexpenses and operating profits all showed
year-on-year increases from a combination of unit growth and commodity driven
price increases, the acquisitionacquisitions of Walters Hexagon in September of 2003 and
DDI in June of 2004 and exchange rate changes related to the weaker US dollar and
combined unit growth and commodity driven price increases.U.S. dollar.
Gross margins declined 7060 basis points in the first half of39 weeks ended October 1, 2004 as
compared to the corresponding period in 2003, primarily due to an increase in
larger capital projects, excess industry capacity and an increasethe timing of passing
through commodity price increases to customers with long-term contracts. As a
result of the Company's new branding strategy of its recently acquired fastener
and small parts supply business, the Company recorded a pre-tax asset impairment
charge of $1.8 million in salesthe third quarter of 2004 to telecom-related OEMs.write-off the value
assigned to the Pentacon tradename when it was acquired in September 2002.
Although gross margins decreased, operating expenses (including the $1.8 million
impairment charge) as a percent of sales declined 130120 basis points from the
corresponding period in 2003 due to the Company's continued tight expense
controls.controls and the leveraging of existing infrastructure. As a result, operating
margins increased 60 basis points in the first half of39 weeks ended October 1, 2004 as
compared to the corresponding period in 2003.

ANIXTER INTERNATIONAL INC.Beginning in the fourth quarter of 2004, costs associated with the accounts
receivable securitization program (funding costs), which were previously
recorded in "other income and expense," will be recorded as "interest expense."
The average interest rate related to funding under the securitization facility
was 1.8% for the 39 weeks ended October 1, 2004 and 2.2% for the corresponding
period in 2003. Although interest expense will increase in the fourth quarter of
2004, the Company's consolidated average interest rate will decrease as compared
to the corresponding period in 2003 due to the lower average cost of funding
associated with the securitization facility.

Other expenses increased in the current year due to larger foreign exchange
losses, which in large part were the result of the February 2004 devaluation of
the Venezuelan Bolivar. Expenses associated with the Company's accounts
receivable securitization program increased $1.1 million in the 39 weeks ended
October 1, 2004 as compared to the corresponding period in 2003, primarily a
result of increased sales of net accounts receivable to ARC, which are sold at a
2.12% discount. Foreign exchange losses totaled $3.2$4.0 million in the first
half of this year39 weeks
ended October 1, 2004 compared to $1.4$1.0 million of foreign exchange losses in the
corresponding period in 2003. In the first half of 2003,39 weeks ended October 1, 2004, a $1.3$0.1
million gain was recorded relating to the cash surrender value of life insurance
policies which
did not occurcompared to a gain of $1.6 million in 2004. The 26the 39 weeks ended July 2,October 3,
2003.

The 39 weeks ended October 1, 2004 includes a pre-tax loss of $0.7 million
related to the write-off of deferred financing costs associated with early
termination and replacement of the Company's $275.0 million revolving credit
facility. In the prior year, the Company incurred a pre-tax loss of $6.2 million
related to the early retirement of debt and the write-off of debt issuance costs
associated with the cancellation of $115.0 million of the available revolving
credit facility. The Company's effective tax rate (excluding extraordinary gain)
droppeddecreased to 39.0% in 2004 from 42.4%43.0% in 2003, as a result of a change in the
mix of income and losses by country as compared to country-level net operating
loss positions. The extraordinary gain in 2004 was the result of monies received
from an escrow account in connection with the 1983 bankruptcy of Itel
Corporation, the predecessor to the Company.

ANIXTER INTERNATIONAL INC.

CONSOLIDATED RESULTS OF OPERATIONS

2639 WEEKS ENDED
------------------------------------
JULY 2, JULY 4,----------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
-------- -------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ............... $1,577.3 $1,307.0sales........................ $ 2,426.9 $ 1,960.4 23.8%
Gross profit..................... $ 576.1 $ 477.1 20.7%
Gross profit ............Operating expenses............... $ 374.2479.5 $ 318.8 17.4%409.9 17.0%
Operating expenses ......income................. $ 311.596.6 $ 274.9 13.3%
Operating income ........ $ 62.7 $ 43.9 42.8%67.2 43.8%

Net Sales: The Company's net sales during the first half of39 weeks ended October 1, 2004
increased 20.7%23.8% to $1,577.3$2,426.9 million from $1,307.0$1,960.4 million in the same period in
2003. The acquisitionacquisitions of Walters Hexagon in September 2003, and DDI in June of
2004, along with favorable effects from changes in exchange rates, accounted for
$49.9$96.7 million and $36.2$49.2 million of the increase, respectively. Excluding the
acquisitionacquisitions of Walters Hexagon and DDI and the effects from changes in exchange
rates, the Company's net sales increased 14.1%16.4% during the 2639 weeks ended July 2,October
1, 2004 from the same period in 2003. The increase in net sales was due to
improved economic conditions, commodity drivencommodity-driven price increases, an increase in
larger capital projects and an expanded product offering.

Gross Margins: Gross margins decreased to 23.7% in the first half of39 weeks ended
October 1, 2004 from 24.4%24.3% in the corresponding period in 2003. The decreaseprimary
reason for the decline was a result of an increase in larger capital projects during the first half of39
weeks ended October 1, 2004 as compared to the first half of 2003. Due to excess capacity in the
industry, pricing on these projects was extremely competitive, which reduced
gross margins. In addition, sales to telecom-related OEMs, which have lower
gross margins, increased 27.5%15.0% in the first half of39 weeks ended October 1, 2004 as compared
to the corresponding period in 2003. Finally, the timing of passing through
commodity price increases to customers with long-term contracts put pressure on
gross margins.

Operating Income: As a result of higher sales, operating margins were 4.0%
for the first half of39 weeks ended October 1, 2004 as compared to 3.4% in the corresponding
period in 2003. Operating expenses increased $36.6$69.6 million in the first half of39 weeks ended
October 1, 2004 from the corresponding period in 2003. The Walters Hexagon acquisitionand
DDI acquisitions increased operating expenses by $12.3$25.1 million, while changes in
exchange rates increased operating expenses by $6.8$9.3 million. As a result of the
Company's new branding strategy of its recently acquired fastener and small
parts supply business, the Company recorded a pre-tax asset impairment charge of
$1.8 million in the third quarter of 2004 to write-off the value assigned to the
Pentacon tradename when it was acquired in September 2002. Excluding the above,
operating expenses increased $17.5$33.4 million, or 6.4%8.1%, primarily due to variable
costs associated with higher sales volumes, and increases in healthcare costs,and pension
costs, and
costsexpenses associated with additional restricted stock grants.grants and an
increase in employee incentives due to our improved operating performance.

ANIXTER INTERNATIONAL INC.

Interest Expense: Consolidated interest expense decreased to $6.0$9.3 million in
the 2639 weeks ended July 2,October 1, 2004 from $6.7$9.9 million in 2003. Interest expense
decreased due to a reduction in the average cost of borrowings. The average
long-term debt balance was $246.2$256.2 million and $215.4$226.1 million for the first half
of39 weeks
ended October 1, 2004 and October 3, 2003, respectively. The average interest
rate for the first half of
2004 and 2003 was 4.9% and 6.2%5.8%, respectively.

ANIXTER INTERNATIONAL INC.

Other, net (expense) income:

26 WEEKS ENDED
--------------------
JULY 2, JULY 4,
2004 2003
------- -------
(IN MILLIONS)

Foreign exchange .............................................. $ (3.2) $ (1.4)
Accounts receivable securitization ............................ (1.5) (1.1)
Gain on the cash surrender value of life insurance policies ... -- 1.3
Other ......................................................... (0.8) 0.5
------- -------
$ (5.5) $ (0.7)
======= =======
39 WEEKS ENDED
-----------------------
OCTOBER 1, OCTOBER 3,
2004 2003
---------- ----------
(IN MILLIONS)

Foreign exchange...................................... $ (4.0) $ (1.0)
Accounts receivable securitization ................... (2.8) (1.7)
Sale of fixed assets.................................. (0.1) (0.3)
Cash surrender value of life insurance policies....... 0.1 1.6
Other................................................. (1.2) 0.7
---------- ----------
$ (8.0) $ (0.7)
========== ==========

Foreign exchange hadproduced a net loss of $3.2$4.0 million in the 2639 weeks ended
July
2,October 1, 2004 as compared to foreign exchange losses of $1.4$1.0 million in the
corresponding period of 2003. A significant portion of the net loss in 2004
resulted from the February 2004 devaluation of the Venezuelan Bolivar. The
accounts receivable securitization program had expenses of $1.5$2.8 million for the
2639 weeks ended July 2,October 1, 2004, compared to $1.1$1.7 million of net expenses in
2003. The increase in net expenses was primarily a result of increased sales of
net accounts receivable to ARC, which are sold at a 2.12% discount. Beginning in
the fourth quarter of 2004, expenses associated with the accounts receivable
securitization program (funding costs) will be included in interest expense as
the funding under the securitization facility are now consolidated in the
Company's consolidated financial statements.

Income Taxes: The consolidated tax provision increased to $19.7$30.6 million in
the 2639 weeks ended July 2,October 1, 2004 from $12.8$21.6 million in the corresponding
period in 2003, due to an increase in income before taxes and extraordinary
gain. The 2004 effective tax rate (excluding extraordinary gain) is 39.0%
compared to 42.4%43.0% in 2003. The decrease in the effective tax rate is primarily
due to a change in the mix of foreign income and losses by country as compared
to country-level net operating loss positions. The change in tax rate increased
income before extraordinary gain and net income by $1.7$3.1 million or $0.05$0.08 per
diluted share in the first half of39 weeks ended October 1, 2004.

NORTH AMERICA RESULTS OF OPERATIONS

2639 WEEKS ENDED
------------------------------------
JULY 2, JULY 4,--------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
-------- -------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ............... $1,199.6 $1,029.9 16.5%sales............................ $ 1,855.8 $ 1,548.3 19.9%
Gross profit ............profit......................... $ 279.6436.3 $ 249.5 12.1%375.0 16.3%
Operating expenses ......expenses................... $ 228.6355.7 $ 212.2 7.7%317.5 12.0%
Operating income ........income..................... $ 51.080.6 $ 37.3 36.8%57.5 40.2%

Net Sales: When compared to the corresponding period in 2003, North America
net sales for the 2639 weeks ended July 2,October 1, 2004 increased 16.5%19.9% to $1,199.6$1,855.8
million. The combined Industrial Wireacquisition of DDI accounted for $18.3 million of the increase,
while favorable changes in the Canadian exchange rate accounted for $17.0
million of the increase. Excluding DDI and Cable andthe exchange rate impact, North
America Enterprise
Cablingnet sales increased $126.6 million in17.6% during the first half of39 weeks ended October 1, 2004 as
compared to the first half ofcorresponding period in 2003. The combined industrial wire and
cable and enterprise cabling sales increased $237.2 million in the 39 weeks
ended October 1, 2004 as compared to the corresponding period in 2003, due to
improved economic conditions, price increases driven by higher copper and data
cabling prices and an expanded product offering. In the OEM supply market, the
Pentacon operations reported a 15.8%18.0% increase in sales on a combination of
improved customer demand and new contract additions. Sales to telecom-related
OEMs increased 27.5%15.0% in the 2639 weeks ended July 2,October 1, 2004 as compared to the
corresponding period in 2003.

ANIXTER INTERNATIONAL INC.

Gross Margins: GrossNorth America's gross margins decreased to 23.3%23.5% in the first half of39
weeks ended October 1, 2004 from 24.2% for the same period in 2003. The decrease
is primarily due to a higher percentage of larger capital projects, which had
lower gross margins due to excess capacity in the industry. In addition, gross
margins declined as a result of the higher sales to telecom-related OEMs, which
have lower gross margins. Finally, the timing of passing through commodity price
increases to customers with long-term contracts put pressure on gross margins.
DDI added $5.1 million to gross profit during the 39 weeks ended October 1,
2004.

Operating Income: Operating expenses increased $16.4$38.2 million in the first
half of39 weeks
ended October 1, 2004 from the corresponding period in 2003. The DDI acquisition
accounted for $6.3 million of the increase, iswhile changes in exchange rates
increased operating expenses by $2.8 million. Excluding the acquisition of DDI
and the exchange rate impact, North America operating expenses increased 9.2%
primarily due to variable costs associated with the increase in sales volume,
and higher pension and healthcare and costs, expenses related to additional restricted
stock grants.grants and an increase in employee incentives due to our strong
year-to-date operating performance. As a result of the Company's new branding
strategy of its recently acquired fastener and small parts supply business, the
Company recorded a pre-tax asset impairment charge of $1.8 million in the third
quarter of 2004 to write-off the value assigned to the Pentacon tradename when
it was acquired in September 2002. Primarily as a result of higher daily sales
and continued tight expense controls and the leveraging of the existing
infrastructure. North America operating margins increased to 4.2%4.3% in the first half of39
weeks ended October 1, 2004 from 3.6%3.7% in the same period in 2003. 20

ANIXTER INTERNATIONAL INC.Exchange rate
changes had a $0.9 million favorable impact on operating income.

EUROPE RESULTS OF OPERATIONS

2639 WEEKS ENDED
---------------------------------
JULY 2, JULY 4,-----------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
------- ------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ...............sales...................... $ 272.7408.9 $ 187.8 45.2%276.0 48.2%
Gross profit ............profit................... $ 71.5105.4 $ 50.6 41.3%74.6 41.2%
Operating expenses ......expenses............. $ 62.894.1 $ 44.7 40.5%66.1 42.1%
Operating income ........income............... $ 8.711.3 $ 5.9 47.2%8.5 34.2%

Net Sales: Europe net sales increased 45.2%48.2% in the first half of39 weeks ended October 1,
2004 to $272.7$408.9 million from $187.8$276.0 million in the first half ofcorresponding period in 2003,
including a $22.5$31.1 million favorable effect from changes in exchange rates and an
increase of $49.9$78.4 million as a result of the acquisition of Walters Hexagon.
The increaseExcluding Walters Hexagon and exchange rate impact, sales increased 8.5%.
Overall, demand remains weak resulting in local
currency sales of 6.6% reflects an increase in economic activity in Europe.significant margin pressure.

Gross Margins: Europe's gross margins decreased to 26.2%25.8% in the first half
of39 weeks
ended October 1, 2004 from 27.0% in the same period in 2003. The decrease is
primarily due to a large projectprojects at reduced margins.margins along with significant
pricing pressures resulting from excess capacity in the industry. Walters
Hexagon added 4050 basis points to Europe's gross margins in the first half of39 weeks ended
October 1, 2004.

Operating Income: Compared to the first half of39 weeks ended October 3, 2003, Europe
operating expenses increased 40.5%42.1%, or $18.1$28.0 million, to $62.8$94.1 million in the first half
of39
weeks ended October 1, 2004. Included in the increase are $12.3$18.8 million of
expenses related to Walters Hexagon and $4.6$6.3 million for changes in exchange
rates. Excluding WatersWalters Hexagon and the exchange rate impact, operating
expenses were $45.9$69.0 million, or 2.7%4.1% higher than 2003. Tight expense controls resultedOperating margins
decreased to 2.8% from 3.1% in the operating margin
remaining flat at 3.2% in39 weeks ended October 1, 2004 as compared to
the corresponding period in 2003. ExchangeThe decrease is primarily due to a higher
percentage of projects at reduced margins and significant pricing pressures.
Walters Hexagon added 30 basis points to Europe's operating margins, while
exchange rate changes had a $1.0$1.2 million favorable impact on operating income.

ANIXTER INTERNATIONAL INC.

EMERGING MARKETS RESULTS OF OPERATIONS

2639 WEEKS ENDED
---------------------------------
JULY 2, JULY 4,----------------------------------------
OCTOBER 1, OCTOBER 3, PERCENT
2004 2003 CHANGE
------- ------- ----------------- ---------- ---------
(IN MILLIONS)

Net sales ...............sales....................... $ 105.0162.2 $ 89.3 17.6%136.1 19.2%
Gross profit ............profit.................... $ 23.134.4 $ 18.7 23.6%27.5 25.3%
Operating expenses ......expenses.............. $ 20.129.7 $ 18.0 11.8%26.3 13.4%
Operating income ........income................ $ 3.04.7 $ 0.7 312.3%1.2 277.5%

Net Sales: Emerging Markets (Asia Pacific and Latin America) net sales were
up 17.6%,19.2% to $105.0$162.2 million in the first half of39 weeks ended October 1, 2004, from $89.3$136.1
million in the first half ofcorresponding period in 2003, including a $1.3$1.1 million favorable
impact from changes in exchange rates. The increase reflects an overall improvement in the economic
environmentlarger projects and
strongerproduct and market penetration.expansion.

Gross Margins: During the first half of39 weeks ended October 1, 2004, Emerging Markets'
gross margins increased to 22.0%21.2% from 20.9%20.2% in the corresponding period in 2003.
The improvement is primarily due to price increases in Venezuela and higher
gross margins throughout Asia.

Operating Income: Emerging Markets operating income increased $2.3$3.5 million
from $0.7$1.2 million in the first half of 2003 to $3.0 million in the first half of
2004.39 weeks ended October 3, 2003. Operating expenses
increased only 11.8%13.4% as compared to the corresponding period in 2003. As a result of
the higher sales levels, improved gross margins and tight expense controls,
operating margins increased to 2.9% in the first
half of39 weeks ended October 1, 2004 from
0.8%0.9% in the corresponding period in 2003. Exchange rate changes had a minimal$0.3
million favorable impact on operating income.

ANIXTER INTERNATIONAL INC.

ITEM 4. CONTROLS AND PROCEDURES

The Company maintains a system of disclosure controls and procedures. The
Company's management, including the Chief Executive Officer and Chief Financial
Officer, evaluated the effectiveness of the design and operation of the
Company's disclosure controls and procedures as of July 2,October 1, 2004, pursuant to
Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934. Based on
that evaluation, the Chief Executive Officer and Chief Financial Officer
concluded that the Company's disclosure controls and procedures are effective in
ensuring that material information required to be filed in this quarterly report
has been made known to them in a timely fashion. There was no change in the
Company's internal control over financial reporting that occurred during the 2639
weeks ended July 2,October 1, 2004 that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.

2225

ANIXTER INTERNATIONAL INC.

PART II. OTHER INFORMATION

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

At the Annual Meeting of Stockholders held May 20, 2004, the Directors
of the Company were elected as follows:

VOTES
-------------------------
FOR WITHHELD
---------- ---------
Lord James Blyth 33,708,493 717,164
Robert L. Crandall 33,127,530 1,298,127
Robert W. Grubbs, Jr. 33,952,723 472,934
F. Philip Handy 33,976,755 448,902
Melvyn N. Klein 33,952,474 473,183
Stuart M. Sloan 33,690,747 734,910
Thomas C.Theobald 33,458,490 967,167
Mary A. Wilderotter 33,694,867 730,790
Matthew Zell 33,463,100 962,477
Samuel Zell 32,965,966 1,459,691

At this Annual Meeting, the Company's Management Incentive Plan was
approved by a vote of 32,642,287 shares "for" and 1,713,030 shares "against"
with 70,340 shares abstaining. The 2001 Stock Incentive Plan amendment was
approved by a vote of 28,471,010 shares "for" and 4,198,867 shares "against"
with 65,065 shares abstaining.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

(31) Instruments defining the rights of security holders, including
indentures.
4.1 Five year, $275.0 million, Revolving Credit
Agreement,(10) Material Contacts.
10.1 Anixter Inc. Supplemental Executive Retirement Plan
with Robert W. Grubbs and Dennis J. Letham, dated
June 18, 2004, among Anixter Inc.,
Bank of America, N.A., as Agent, and other banks
named therein.

(32)August 4, 2004.

(31) Rule 13a - 14(a) / 15d - 14(a) Certifications.
31.1 Robert W. Grubbs, President and Chief Executive
Officer, Certification Pursuant to Section 302, of
the Sarbanes-Oxley Act of 2002.
31.2 Dennis J. Letham, Senior Vice President-Finance and
Chief Financial Officer, Certification Pursuant to
Section 302, of the Sarbanes-Oxley Act of 2002.

(33)(32) Section 1350 Certifications.
32.1 Robert W. Grubbs, President and Chief Executive
Officer, Certification Pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
32.2 Dennis J. Letham, Senior Vice President-Finance and
Chief Financial Officer, Certification Pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.

b) Reports on Form 8-K

On April 28,July 27, 2004, the Company filed a Current Report on Form 8-K
under Item 7 "Financial Statements, Pro Forma Financial Information
and Exhibits" and Item 12 "Results of Operation and Financial
Condition" reporting its results for the fiscal quarter ended AprilJuly 2,
2004.

ANIXTER INTERNATIONAL INC.

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.
August 11,November 5, 2004
By: /s/ Robert W. Grubbs
-------------------------------------
Robert W. Grubbs
President and Chief Executive Officer

August 11,November 5, 2004
By: /s/ Dennis J. Letham
-------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer

2426