SECURITIES AND EXCHANGE COMMISSION ON AUGUST 1, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
Form S-3
Anixter International Inc. | Anixter Inc. |
| (Exact name of registrant as specified in its charter) | (Exact name of registrant as specified in its charter) | |
| Delaware (State or other jurisdiction of incorporation or organization) | Delaware (State or other jurisdiction of incorporation or organization) | |
| 94-1658138 (I.R.S. Employer Identification | 36-2361285 (I.R.S. Employer Identification No.) | |
2301 Patriot Boulevard
John A. Dul
Copies to:
STUART L. GOODMAN
DAVID MCCARTHY
SCHIFF HARDIN & WAITE
David McCarthy
Approximate date of commencement of proposed sale to the public: From time to time after the effective date of this Registration Statement.registration statement as determined by market and other conditions.
If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]o
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X]þ
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]o
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]o
If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
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CALCULATION OF REGISTRATION FEE
| Proposed Maximum | Proposed Maximum | Amount of | ||||||
| Title of Each Class of | Amount | Offering | Aggregate Offering | Registration | ||||
| Securities to be Registered | to be Registered | Price Per Unit | Price | Fee(1) | ||||
| Debt Securities of Anixter Inc. | $200,000,000 | 100% | $200,000,000 | $23,540 | ||||
| Guarantees of Anixter International Inc. with respect to Debt Securities(2) | — | — | — | (3) | ||||
| (1) | The registration fee has been calculated pursuant to Rule 457(a). |
| (2) | The obligations of Anixter Inc. under debt securities registered hereunder will be fully and unconditionally guaranteed by Anixter International Inc., as described more fully in the registration statement. |
| (3) | No separate registration fee is required under Rule 457(n). |
Pursuant to Rule 457(c)429 of the Securities Act, the prospectus included in this registration statement also relates to $100,000,000 aggregate principal amount of securities previously registered under the Securities Act basedof 1933 by registration statement No. 333-09185 and not yet issued.
The registrants hereby amend this registration statement on such date or dates as may be necessary to delay its effective date until the average bidregistrants shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until this registration statement shall become effective on such date as the Securities and asked
priceExchange Commission, acting pursuant to said Section 8(a), may determine.
| The information in this preliminary prospectus is not complete and may be changed. These securities may not be sold until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell nor does it seek an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
PROSPECTUS
$300,000,000
Anixter Inc.
Debt Securities
Anixter International Inc.
Guarantees of Debt Securities
Anixter Inc. may offer, from time to time, in amounts, at prices and on terms that it will determine at the time of offering one or more series of debt securities. Anixter International Inc. will fully and unconditionally guarantee the obligations of Anixter Inc. under any debt securities issued under this prospectus or any prospectus supplement.
We will provide specific terms of these securities, including their offering prices, in prospectus supplements to this prospectus. The prospectus supplements may also add, update or change information contained in this prospectus. You should read this prospectus and any prospectus supplement carefully before you invest.
We may offer these securities to or through underwriters, through dealers or agents, directly to you or through a combination of these methods. You can find additional information about our plan of distribution for the LYONs on July 31, 2000.
(2) Also being registered is such indeterminate number of shares of common
stock that may be issuable upon conversion of LYONs registered hereby,
which registration is not subject to an additional registration fee
pursuant to Rule 457(i)securities under the Securities Act.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION,
ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
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THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NO
SELLING SECURITYHOLDER MAY SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE.
THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT
SOLICITING ANY OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER
OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED AUGUST 1, 2000
PROSPECTUS
$792,000,000
ANIXTER INTERNATIONAL INC.
LIQUID YIELD OPTION(TM) NOTES DUE 2020
(ZERO COUPON -- SENIOR)
AND
COMMON STOCK ISSUABLE UPON
CONVERSION OF THE LYONSheading “Plan of Distribution” beginning on page of this prospectus. We issuedwill also describe the LYONsplan of distribution for any particular offering of these securities in a private placement in June 2000 at an issue price
of $252.57 per LYON.the applicable prospectus supplement. This prospectus willmay not be used to sell our securities unless it is accompanied by Selling Securityholders to
resell their LYONs and the common stock issuable upon conversion of their LYONs.
The LYONs are convertible at any time prior to maturity into common stock
at a conversion rate of 7.4603 shares of common stock per LYON, subject to
adjustment in certain events.
We will not pay interest on the LYONs prior to maturity, subject to our
right to do so in the event of certain changes with respect to United States
Federal income taxation. The issue price represents a yield to maturity of 7%
per year.
We may redeem all or a portion of the LYONs on or after June 28, 2005.
Holders may require us to repurchase their LYONs at a price of $356.28 per LYON
on June 28, 2005, $502.57 per LYON on June 28, 2010 and $708.92 per LYON on June
28, 2015. In addition, Holders may require us to repurchase the LYONs upon a
change in control on or before June 28, 2005.
The last reported sales price of our common stock on the New York Stock
Exchange on July 31, 2000 was 29 1/16 per share. Our common stock is traded on
the New York Stock Exchange under the symbol "AXE."
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INVESTING IN THE LYONS OR THE COMMON STOCK INVOLVES RISKS DESCRIBED IN THE
"RISK FACTORS" SECTION BEGINNING ON PAGE 9 OF THE PROSPECTUS.
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prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectusProspectus is truthful or complete. Any representation to the contrary is a criminal offense.
We will not receive any of the proceeds from the sale of the LYONs or the
common stock by the Selling Securityholders. The LYONs and the common stock may
be offered in negotiated transactions or otherwise, at market prices prevailing
at the time of sale or at negotiated prices. In addition, the common stock may
be offered from time to time through ordinary brokerage transactions on the New
York Stock Exchange. See "Plan of Distribution." The Selling Securityholders may
be deemed to be "Underwriters" as defined in the Securities Act. If any
broker-dealers are used by the Selling Securityholders, any commissions paid to
broker-dealers and, if broker-dealers purchase any LYONs or common stock as
principals, any profits received by such broker-dealers on the resale of the
LYONs or common stock, may be deemed to be underwriting discounts or commissions
under the Securities Act. In addition, any profits realized by the Selling
Securityholders may be deemed to be underwriting commissions.
(TM) TRADEMARK OF MERRILL LYNCH & CO.
The date of this prospectus is , 2000
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2005
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we have filed with the Securities and Exchange Commission, or SEC, utilizing a “shelf” registration or continuous offering process. Under this process, we may contain various "forward-looking statements" withinfrom time to time sell the meaningdebt securities described in this prospectus in one or more offerings up to a total dollar amount of Section 27A$300,000,000.
This prospectus provides you with a general description of the Securities Actdebt securities and guarantees of 1933,debt securities we may offer. Each time we offer securities, we will provide a prospectus supplement that will contain specific information about the terms of that offering. That prospectus supplement may include a description of any risk factors or other special considerations applicable to those securities. The prospectus supplement may also add, update or change information contained in this prospectus. If there is any inconsistency between the information in the prospectus and the prospectus supplement, you should rely on the information in the prospectus supplement. You should read both this prospectus and the applicable prospectus supplement together with the additional information described under the heading “Where You Can Find More Information.”
The registration statement containing this prospectus, including the exhibits to the registration statement, provides additional information about us and the securities offered under this prospectus. The registration statement, including the exhibits, can be read at the SEC website or at the SEC offices mentioned under the heading “Where You Can Find More Information.”
You should rely only on the information incorporated by reference or provided in this prospectus and the accompanying prospectus supplement. We have not authorized anyone to provide you with different information. We are not making an offer to sell or soliciting an offer to buy these securities in any jurisdiction in which the offer or solicitation is not authorized or in which the person making the offer or solicitation is not qualified to do so or to anyone to whom it is unlawful to make the offer or solicitation. You should not assume that the information in this prospectus or the accompanying prospectus supplement is accurate as amended,of any date other than the date on the front of the document.
References to “Anixter International” refer to Anixter International Inc. and Section
21Ereferences to “Anixter” refer to Anixter Inc. Unless the context requires otherwise, references to “we,” “us” or “our” refer collectively to Anixter International and its subsidiaries, including Anixter. References to “securities” refer collectively to the debt securities and guarantees of debt securities registered hereunder.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed and will file reports and other information with the SEC under the Securities Exchange Act of 1934, as amended which can be identified
by the use of forwarding-looking terminology such as "believes", "expects",
"prospects", "estimated", "should", "may" or the negative thereof or other
variations thereon or comparable terminology indicating our expectations or
beliefs concerning future events. We caution 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 the
prospectus. Other factors could also cause actual results to differ materially
from expected results included in these statements. See "Risk Factors".
We undertake no obligation to update these forward-looking statements as a
result of any events or circumstances after the date made or to reflect the
occurrence of unanticipated events.
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SUMMARY
Because this is a summary, it may not contain all the information that may
be important to you. You should read this entire prospectus before making an
investment decision. Except as otherwise stated, when used in this prospectus,
the terms "Anixter," "Anixter International," "we," "our" and "us" refer to
Anixter International Inc. and its subsidiaries.
ANIXTER INTERNATIONAL
We are a leading distributor of communications infrastructure equipment and
provider of logistics solutions for both enterprise networks and
telecommunications service provider networks. As the only global distributor of
communications infrastructure equipment, during 1999 we served approximately
85,000 customer accounts, with approximately 65,000 different products, from our
175 locations in 41 countries. Products we distribute include fiber optic and
copper data cable, connectivity products and peripheral products. We are a
significant distribution channel for major communications, cabling and
connectivity equipment manufacturers, including Alcatel, Belden, BICC General,
Corning/Siecor and Lucent. In addition, we are a leading distributor of
specialty wire and cable products to original equipment manufacturers and to
industrial companies for maintenance and repair operations. Logistics solutions
we provide include procurement, warehousing, inventory management, product
aggregation and just-in-time shipping. Our customers include Fortune 500
companies in a wide variety of industries, together with service providers,
communications equipment manufacturers and contractors, installers and
integrators. Dow Chemical, Global Crossing, MCI/WorldCom, Motorola, Nortel and
Wal-Mart are some of our leading customers. Over the five year period ended
December 31, 1999, we have grown sales at a compounded annual rate of 12.6% to a
total of $2.67 billion in 1999. In the same period, we grew operating earnings
at a compounded rate of 21.6% to a total of $112.8 million.
INDUSTRY DYNAMICS
According to Bernstein Research, the worldwide market for communications
equipment is $240 billion and is expected to grow in excess of 13% annually over
the next five years. We believe, based on our current product lines,
geographical presence and vendor sales policies, that we address approximately
8% to 10% of this market. We believe that the drivers for this growth include:
Growing Demand for Bandwidth. The importance of information is increasing
the need for faster, more reliable communications systems and greater bandwidth.
In turn, this is driving changes in the communications and technology
infrastructure of major corporations and telecommunications service providers,
including the creation of an emerging alternative telecommunications service
provider industry. This trend is driving unit growth of communications
infrastructure equipment as well as moving the market to higher quality
solutions in which we specialize.
Deregulation and Privatization. The global trend of deregulating
telecommunication services and privatizing former national telecommunication
service providers has resulted in a rapidly growing universe of emerging
alternative telecommunications service providers throughout the world. The rapid
pace at which this change has occurred has created significant time-to-market
issues for the new telecommunication service providers. These dynamics are
resulting in increased demand and growth opportunities for the communications
equipment and logistics services we offer.
Supply Chain Management. As telecommunications companies focus on their
core businesses and time-to-market challenges in their rapidly changing
marketplace, they are increasingly outsourcing procurement and logistics
services. We believe this trend towards outsourcing will continue and will
spread to global markets, presenting us with additional opportunities.
THE ANIXTER SOLUTION
We believe we are well positioned to take advantage of these industry
dynamics due to our global coverage, comprehensive product offerings, logistics
capabilities, technical knowledge, relationships with industry leading
manufacturers and scaleable infrastructure.
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Global Coverage. We believe our operations in 41 countries make us the
only global distributor of communications infrastructure equipment. This is
particularly attractive to multinational customers who are looking for
consistency in the products and services that support their global network
infrastructure. For the manufacturers whose products we sell, our ability to
promptly and consistently deliver their products throughout the world is an
attractive alternative to dealing with multiple distributors in numerous
countries.
Comprehensive Product Offering. We believe we carry the largest, single
source, communications infrastructure equipment inventory in the world. With
over 65,000 SKUs and an inventory valued at over $600 million at March 31, 2000,
customers find our ability to aggregate and deliver complete orders on a timely
basis to be of significant value.
Logistics Capabilities. The combination of our 18 regional distribution
centers and 57 strategically located service centers allows us to deliver
product to an estimated 90 percent of the metropolitan areas in the countries in
which we are located within 24 hours.
Technical Knowledge. Through the work done in collaboration with the
industry's leading cabling and connectivity product manufacturers at our lab in
Mt. Prospect, Illinois, our involvement with industry standard setting bodies on
a global basis, and our Levels (TM) specification program, we have been a leader
in defining quality products and standards for the industry. Our sales and
technical support staff of over 2,200 individuals are regularly trained in the
particulars of standards to enable them to assist customers in solving the
problems of constructing and maintaining a quality communications network.
Relationships with Industry Leading Manufacturers. Based on our assessment
of brand name recognition, quality and relative value based on price and quality
considerations, we believe the manufacturers whose products we sell represent
the leading manufacturers of cabling, connectivity and communications products.
Scaleable Infrastructure. We operate on a common information system
platform throughout the world and manage our business using common operating
practices and processes. We believe this platform allows us to easily and
economically initiate sales programs in new markets.
MARKETS
In order to capitalize on the industry dynamics described above and to
leverage our core competencies, we have defined and targeted the following key
customer markets:
- enterprise network,
- service provider,
- integrated supply, and
- original equipment manufacturer/maintenance and repair.
Enterprise Network Market. This market consists of companies,
organizations and institutions that are building data, voice and video networks
for use in their businesses. We provide communications equipment, including a
wide range of cabling and peripheral equipment utilized in the installation and
upgrade of local area networks and wide area networks. These products enable our
enterprise customers to build the quality high speed networks they need to
exploit current information technology in their businesses. A report by
Bernstein Research estimates the worldwide market for enterprise network
equipment is approximately $70 billion annually and is growing at a rate of
approximately 10% annually. We believe, based on our current product lines,
geographical presence and vendor sales policies, that we address approximately
8% to 10% of this market. We believe we are the largest supplier of cabling,
connectivity, infrastructure equipment and solutions to this market.
Demands on enterprise networks are expected to continue to grow
dramatically as enterprises increasingly rely on information as a way to
compete, and as the Internet and e-commerce become more
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prevalent in the way in which enterprises communicate and conduct business.
Reliability and speed will become increasingly critical as an enterprise's
customers and suppliers connect directly with its information systems. As a
result, enterprise networks are becoming more critical to an enterprise's
ultimate success.
We believe we are well positioned to take advantage of these positive
trends in the enterprise network market. Our technical knowledge and ability to
assemble a complete communications solution from multiple third party cable and
equipment manufacturers make us a supplier of choice to these customers. Our
enterprise network customers include Fortune 500 corporations, integrators and
installers. Examples of our significant end user customers and the various
industries we serve include Boeing (aerospace), First Union Bank and State Farm
(financial services), Texaco (oil and gas) and Wal-Mart (retail). In addition to
commercial end users, we sell products to many types of government agencies and
institutions as well as contractors, installers and integrators. We had 1999
sales of approximately $1.77 billion to the enterprise market.
Service Provider Market. This market consists of those companies that are
building bandwidth for resale of data, voice and video services to their
customers. We provide communications connectivity and infrastructure equipment
primarily to alternative telecommunications service providers and the
contractors that service them, in order to enable the service provider to
co-locate with traditional carriers or to connect directly to end customers. A
report by Bernstein Research estimates the worldwide service provider market is
approximately $170 billion a year and is growing at a rate in excess of 15%
annually. We believe, based on our current product lines, geographical presence
and vendor sales policies, that we address approximately 8% to 10% of this
market.
The service provider market is expected to experience significant growth as
deregulation of the telecommunications industry and recent privatizations
continue to encourage the creation of emerging service providers, including:
- competitive local exchange carriers,
- alternative service providers, and
- Internet service providers.
The service provider market has traditionally purchased directly from
manufacturers. However, the growth in the number of customers in this market has
placed significant pressure on manufacturers' logistics capabilities, thereby
creating an opportunity for distributors to play a significant role. Because
flexibility and time to market are critical to these customers, we believe our
product availability and reliable logistics services provide us with a
competitive advantage in this market.
We began a sales and marketing program in this market in late 1998. Since
then, we have been able to build a broad product and logistics service offering
to customers such as Covad Communications, KMC Telecom, MCI/WorldCom, NextLink
and Qwest Communications. We had 1999 sales of approximately $150 million to the
service provider market.
Integrated Supply Market. We supply logistics services and installation
related products for communications equipment. These services and equipment are
critical to communications companies' ability to assemble a complete solution
for their end customers. Logistics services include warehousing, automatic
inventory replenishment, asset serial number tracking, warranty management,
software/firmware upgrade management, product aggregation and just-in-time
shipping. Installation related products include cabling, connectivity and
peripheral products.
While there is no available market size data for integrated supply
services, we believe the opportunities are significant as communication product
manufacturers and service providers increasingly focus their human and financial
resources on core businesses and outsource peripheral functions. We believe our
expertise in inventory management, logistics and communications products
together with our key supplier relationships make us an attractive supplier for
procurement and delivery of third party installation materials. Our integrated
supply capabilities allow us to become part of the traditional supply
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chain and build a more integrated relationship with our customers. We had 1999
sales of approximately $210 million to integrated supply customers such as
Alcatel, AT&T, Global Crossing, Lucent and Nortel.
Original Equipment Manufacturer/Maintenance and Repair Market. We provide
electrical and electronic wire and cable that have been specially prepared for
use in original equipment manufacturing processes. We modify products to
customer specifications, manage inventory and supply products that are ready for
use in the customer's final assembly process. Anixter also supplies specialty
wire and cable products such as shipboard cable, process control wiring, high
temperature cables, elevator cables and mining cables for maintenance and repair
applications in industrial companies.
According to World Information Technologies Inc., the electrical wire and
cable market is a $12 billion market. We believe that approximately $3 billion
of this market is in products we sell and service. Original equipment
manufacturers and maintenance and repair customers demand product availability,
product knowledge, product modification (cutting, kitting, dyeing, striping and
twisting), timely delivery and project management.
We believe our strong relationships with leading suppliers of specialty
wire and cable and electrical/electronic products, large inventory, specialty
services, logistic capabilities and experienced sales force make us a supplier
of choice for customers in this market. Customers in this market include a wide
variety of industrial companies and contractors such as DaimlerChrysler, Dow
Chemical, Fluor Daniel, Motorola and Ontario Hydro. We had 1999 sales of
approximately $530 million to the original equipment manufacturer and
maintenance and repair markets.
From time to time Anixter has made, and in the future may make or consider
making, aquisitions of businesses for cash or stock that complement or extend
the Company's current business. There can be no assurance that any such
acquisitions will be made in the future or that any such acquisitions will in
fact be beneficial.
Our principal executive offices are located at 4711 Golf Road, Skokie,
Illinois 60076. Our telephone number at those offices is (847) 677-2600.
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THE OFFERING
LYONs............................... $792,000,000 aggregate principal amount
at maturity of LYONs due June 28, 2020.
Except as described under "Description
of LYONs -- Optional Conversion to
Semiannual Coupon Note Upon Tax Event,"
we will not pay interest on the LYONs
prior to maturity. Each LYON was issued
at a price of $252.57 per LYON and has
a principal amount at maturity of
$1,000.
Maturity............................ June 28, 2020.
Yield to Maturity of LYONs.......... 7% per year (computed on a semi-annual
bond equivalent basis) calculated from
June 28, 2000.
Conversion Rights................... Holders may convert the LYONs at any
time on or before the maturity date,
unless the LYONs have previously been
redeemed or purchased. For each LYON
converted, we will deliver 7.4603
shares of our common stock. The
conversion rate may be adjusted for
certain reasons, but will not be
adjusted for accrued original issue
discount. Upon conversion, you will not
receive any cash payment representing
accrued original issue discount.
Instead, accrued original issue
discount will be deemed paid by the
common stock you receive on conversion.
See "Description of LYONs -- Conversion
Rights."
Ranking............................. The LYONs are unsecured and
unsubordinated obligations and rank on
a parity in right of payment with all
existing and future unsecured and
unsubordinated indebtedness of Anixter
International Inc. The LYONs are
structurally subordinated to the
indebtedness and other liabilities of
our subsidiaries, including Anixter
Inc.
Original Issue Discount............. We offered each LYON with an original
issue discount for United States
federal income tax purposes equal to
the principal amount at maturity of
each LYON less the issue price to
investors. You should be aware that,
although we will not pay cash interest
on the LYONs, U.S. investors must
include accrued original issue discount
in their gross income for United States
federal income tax purposes prior to
the conversion, redemption, sale or
maturity of the LYONs (even if such
LYONs are ultimately not converted,
redeemed, sold or paid at maturity).
See "Federal Income Tax
Considerations -- Original Issue
Discount."
Sinking Fund........................ None.
Optional Redemption................. We may redeem all or a portion of the
LYONs for cash at any time on or after
June 28, 2005, at the redemption prices
set forth in this prospectus. See
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"Description of LYONs -- Redemption of
LYONs at the Option of Anixter."
Purchase of the LYONs at the Option
of the Holder....................... Holders may require us to purchase
their LYONs on June 28, 2005 at a price
of $356.28 per LYON, on June 28, 2010
at a price of $502.57 per LYON and on
June 28, 2015 at a price of $708.92 per
LYON. We may choose to pay the purchase
price in cash or common stock or a
combination of cash and common stock.
See "Description of LYONs -- Purchase
of LYONs at the Option of the Holder."
Change in Control................... Upon a Change in Control of Anixter
International occurring on or before
June 28, 2005, each holder may require
us to repurchase all or a portion of
such holder's LYONs at a price equal to
the issue price of such LYONs plus
accrued original issue discount to the
date of repurchase. The term "Change in
Control" is defined in "Description of
LYONs -- Change in Control Permits
Purchase of LYONs at the Option of the
Holder."
Optional Conversion to Semiannual
Coupon Note Upon Tax Event.......... From and after the occurrence of a Tax
Event, at our option, interest in lieu
of future original issue discount shall
accrue on each LYON from the option
exercise date at 7% per year on the
restated principal amount and shall be
payable semiannually on each interest
payment date to holders of record at
the close of business on each regular
record date immediately preceding such
interest payment date. Interest will be
computed on the basis of a 360-day year
comprised of twelve 30-day months and
will accrue from the most recent date
to which interest has been paid or, if
no interest has been paid, from the
option exercise date. In such event,
the redemption prices, purchase prices
and Change in Control purchase price
shall be adjusted as described herein.
However, there will be no changes in
the holder's conversion rights. See
"Description of LYONs -- Optional
Conversion to Semiannual Coupon Note
Upon Tax Event."
Use of Proceeds..................... Anixter International will not receive
any of the proceeds from the sale by
Selling Securityholders of the LYONs or
the common stock. See "Use of
Proceeds."
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RISK FACTORS
You should consider carefully the specific factors set forth below as well
as the other information contained in, or incorporated by reference into, this
prospectus before deciding whether to purchase any of the LYONs or common stock
offered hereby.
A REDUCTION IN CAPITAL SPENDING BY OUR CUSTOMERS COULD ADVERSELY AFFECT OUR
SALES OR EARNINGS
We supply products for use in network infrastructures, which are often a
part of our customers' capital budgets. A reduction in those budgets, which
could result from generally weaker economic conditions, tighter capital markets,
changes in applicable technologies, regulatory changes or alternative uses of
capital, could result in a slowing or reversal of our sales and/or earnings
growth.
In particular, ready access to capital by alternative telecommunications
service providers has been partially responsible for the rapid growth in our
sales to the service provider market. If capital were less available to these
customers, or if they decided to use their capital to acquire existing
communications infrastructures instead of building new ones, our sales and
earnings from the service provider market could be adversely affected.
A CHANGE IN SALES STRATEGY BY OUR VENDORS COULD ADVERSELY AFFECT OUR SALES OR
EARNINGS
Most of our agreements with vendors are terminable at will by either party
on short notice. Approximately 57% of our 1999 revenues were derived from the
resale of products purchased from ten vendors. If any of these vendors changed
its sales strategy to reduce its reliance on distribution channels, or decided
to terminate its business relationships with us, our sales and earnings could be
adversely affected until we were able to establish supply relationships with
vendors of comparable products. Although our relationships with our vendors are
good, they could change their sales strategies as a result of a change of
control, an expansion of their direct sales force or due to other factors beyond
our control.
OUR FOREIGN OPERATIONS ARE SUBJECT TO POLITICAL, ECONOMIC AND CURRENCY RISKS
We derive approximately one-third of our revenues from sales outside of the
United States. As our business activities and sales increase in these markets,
economic and political conditions may adversely affect our results of
operations, cash flows and financial condition in these markets. Our results of
operations and the value of our foreign assets are affected by fluctuations in
foreign currency exchange rates, and different legal, tax, accounting and
regulatory requirements.
WE HAVE A CONCENTRATION OF CREDIT RISK
Historically, our credit practices, diverse customer base and small average
order size have resulted in very low bad debt write-offs. While these conditions
continue to exist, our entrance into the telecommunications service provider
market has resulted in a higher concentration of credit risk. Customers in this
market may place orders in excess of $1 million, and accounts receivable from
any one of these customers may total several million dollars from time to time.
While we have taken appropriate actions to reduce the risk inherent in the large
accounts receivable resulting from these orders and believe that our allowance
for doubtful accounts remains adequate, from time to time it is possible that a
single customer default could have a material adverse impact on our earnings.
WE HAVE RISKS ASSOCIATED WITH INVENTORY
We must identify the right product mix and maintain sufficient inventory on
hand to meet customer orders. Failure to do so could adversely affect our sales
and earnings. To guard against inventory obsolescence, we have negotiated
various return rights and price protection agreements with key vendors. We also
maintain an inventory valuation reserve account against diminution in the value
or salability of our inventory. However, there is no guaranty that these
arrangements will be sufficient to avoid write-offs in excess of our reserves in
all circumstances.
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CHANGES IN TECHNOLOGY AND REGULATORY ENVIRONMENT COULD ADVERSELY AFFECT OUR
BUSINESS
The deregulation of the telecommunications industry and the improvements in
information transmission technology have created a greatly expanded
telecommunications service provider market and lessened the cost of transmitting
large quantities of information. As more bandwidth becomes available at
competitive prices, applications (such as e-commerce) are being developed to
take advantage of it. New applications, in turn, drive demand for more
bandwidth. The cycle of growth in bandwidth and applications has increased the
demand for our products and services.
Technological or regulatory changes, which could restrict the availability
of competitively priced bandwidth or limit the benefits of the applications
using such bandwidth, could adversely affect our business. For example, taxation
of the internet or security issues relating to e-commerce could slow demand for
our products and services.
A SUBSTANTIAL PORTION OF OUR COMMON STOCK IS HELD BY A SMALL NUMBER OF HOLDERS
Approximately 37% of our stock is currently held by three shareholders and
their affiliates. As a result, the three principal shareholders and their
affiliates can exercise significant influence over our affairs, including the
election of our directors, appointment of our management and approval of actions
requiring the approval of our stockholders, including the adoption of amendments
to our certificate of incorporation and approval of mergers or sales of
substantially all of our assets. The voting power of these shareholders under
certain circumstances could have the effect of delaying or preventing a change
in control of Anixter International. Also, the expectations of the investment
community about the extent to, and manner in, which these shareholders may
ultimately sell their shares, or the occurrence of such a sale, could have a
significant impact on our share price. In addition, approximately 6.1 million
additional shares, or 14.5% of outstanding shares on a fully diluted basis, are
subject to issuance under various employee and director stock plans.
OUR COMMON STOCK PRICE HISTORICALLY HAS BEEN VOLATILE
The price of our common stock has fluctuated, and may continue to
fluctuate, significantly in response to our operating performance and the
performance of other similar companies; news announcements relating to us, our
industry or our competitors, vendors or customers; changes in earnings estimates
or recommendations by research analysts; changes in general economic conditions;
and other developments affecting us or our industry, including our competitors,
vendors and customers. The concentration of ownership of our common stock
described above may result in additional volatility. As a result of such
concentration, from time to time, the volume of our stock traded in relation to
the number of outstanding shares has been low, which can magnify price changes.
OUR HOLDING COMPANY STRUCTURE RESULTS IN SUBSTANTIAL STRUCTURAL SUBORDINATION
AND MAY AFFECT OUR ABILITY TO MAKE PAYMENTS ON LYONS
The LYONs are obligations exclusively of Anixter International. We are a
holding company and, accordingly, substantially all of our operations are
conducted through our subsidiaries. As a result, our cash flow and our ability
to service our debt, including the LYONs, is dependent upon the earnings of our
subsidiaries. In addition, we are dependent on the distribution of earnings,
loans or other payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the LYONs or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, any payment of dividends, distributions, loans or
advances by our subsidiaries to us are subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
LYONs to participate in those assets, will be structurally subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we
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were a creditor of any of our subsidiaries, our rights as a creditor would be
subordinate to any security interest in the assets of our subsidiaries and any
indebtedness of our subsidiaries senior to that held by us.
As of March 31, 2000, our subsidiaries had outstanding approximately $576.8
million of indebtedness, in addition to other liabilities, including trade
payables, to which the LYONs would have been structurally subordinated as
described above.
OUR SUBSTANTIAL AMOUNT OF DEBT COULD LIMIT OUR GROWTH AND COULD IMPOSE
RESTRICTIONS ON OUR BUSINESS
Our subsidiaries have incurred substantial indebtedness, which totaled
$576.8 million as of March 31, 2000. This debt could adversely affect the
interests of our stockholders, for example, by limiting our ability to: (1) use
operating cash flow in other areas of our business since we must dedicate a
substantial portion of these funds to pay interest; (2) obtain additional
financing to fund our growth strategy, capital expenditures and other purposes;
and (3) react to changing market conditions and economic downturns. We may incur
additional indebtedness in the future to fund our growth strategy and for
general corporate purposes.
Our debt agreements contain numerous financial and operating covenants that
limit our discretion with respect to certain business matters. These covenants
restrict our ability to incur additional indebtedness, to pay dividends and
other distributions, and to merge or consolidate with other entities.
WE MAY NOT HAVE THE ABILITY TO RAISE THE FUNDS NECESSARY TO FINANCE THE CHANGE
IN CONTROL OFFER
Upon the occurrence of certain specific kinds of Change in Control events
occurring on or before June 28, 2005, we will be required to offer to repurchase
all outstanding LYONs. However, it is possible that we will not have sufficient
funds at such time to make the required repurchase of LYONs or that contractual
restrictions or the terms of other indebtedness will not allow such repurchases.
In addition, certain important corporate events, such as leveraged
recapitalizations that would increase the level of our indebtedness, would not
constitute a "Change in Control" under the indenture. See "Description of
LYONs -- Change in Control Permits Purchase of LYONs at the Option of the
Holder."
In addition, our principal operating subsidiary, Anixter Inc., is subject
to change of control provisions, with respect to both Anixter International and
Anixter Inc., in its bank credit agreement and in the indenture governing its 8%
Notes due 2003. Under that indenture, certain change of control events (which
may not constitute a "Change in Control" under the indenture governing the
LYONs), if occurring within a certain number of days of the downgrading of such
notes by national rating agencies, would result in the holders of such notes
having the right to require Anixter Inc. to repurchase such notes. Under the
bank credit agreement, if a change of control event occurs under the indenture
as described in the preceding sentence and the holders of such notes notify
Anixter Inc. of their election to require Anixter Inc. to repurchase more than
$2,500,000 aggregate principal of the 8% Notes due 2003 or if certain other
change of control events (which may not constitute a "Change in Control" under
the indenture governing the LYONs) occur, it would constitute an event of
default thereunder. It is possible that Anixter Inc. will not have sufficient
funds to repurchase the notes or repay bank indebtedness. It is also possible
that contractual restrictions or the terms of other indebtedness will not allow
such payments. In addition, if the LYONs are subject to repurchase, the LYONs
will be structurally subordinated to any required repurchase of the 8% Notes due
2003 or repayment under the bank credit agreement.
TRADING MARKET FOR LYONS
We can not assure you that an active trading market for the LYONs will
develop or as to the liquidity or sustainability of any such market, the ability
of the Holders to sell their LYONs or the price at which Holders of the LYONs
will be able to sell their LYONs. Future trading prices of the LYONs will depend
on many factors, including, among other things, prevailing interest rates, our
operating results, the price of our common stock and the market for similar
securities.
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USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the LYONs or
common stock by the selling securityholders. See "Selling Securityholders" for a
list of those entities receiving proceeds from sales of LYONs.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for each of the periods indicated is
as follows:
FISCAL YEAR ENDED THREE MONTHS ENDED
- ------------------------------------------------- -------------------
DEC. 29, JAN. 3, JAN. 2, JAN. 1, DEC. 31, JULY 2, JUNE 30,
1995 1997 1998 1999 1999 1999 2000
- -------- ------- ------- ------- -------- -------- --------
1.91x 2.03x 2.57x 2.83x 2.60x 2.46x 3.38x
These ratios include Anixter International and its consolidated
subsidiaries. For these ratios, "earnings" represent income before taxes plus
fixed charges (excluding capitalized interest) and amortization of previously
capitalized interest. Fixed charges consist of (1) interest on all indebtedness
and amortization of debt discount and expense, (2) capitalized interest and (3)
interest factor attributable to rentals.
PRICE RANGE OF COMMON STOCK
The common stock is traded on the NYSE under the symbol "AXE." The
following table sets forth for the fiscal quarters indicated the high and low
sales prices for the common stock as reported on the NYSE Composite Tape. The
last reported sale of common stock on July 31, 2000 was $29 1/16 per share.
HIGH LOW
---- ---
Year Ended January 1, 1999
First Quarter............................................. $20 1/2 $15 9/16
Second Quarter............................................ 22 3/4 16 13/16
Third Quarter............................................. 19 7/8 15 3/8
Fourth Quarter............................................ 20 5/16 11 7/8
Year Ended December 31, 1999
First Quarter............................................. $20 5/16 $10 5/8
Second Quarter............................................ 18 7/8 12 5/16
Third Quarter............................................. 23 3/4 18
Fourth Quarter............................................ 23 1/2 18 5/8
Year Ending December 29, 2000
First Quarter............................................. $31 1/8 $18 1/8
Second Quarter............................................ 35 3/16 26 1/8
Third Quarter (through July 31, 2000)..................... 31 11/16 26 13/16
As of July 27, 2000, there were approximately 37,150,115 shares of common
stock outstanding and approximately 4,448 holders of record.
DIVIDEND POLICY
We do not pay cash dividends on our common stock and do not anticipate
paying any cash dividends in the foreseeable future. Payment of dividends is at
the discretion of our board of directors. Our subsidiaries' debt agreements
contain financial covenants that restrict their ability to pay dividends and
other distributions to us, which in turn could limit our ability to pay
dividends to our shareholders.
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BUSINESS
OVERVIEW
We are a leading distributor of communications infrastructure equipment and
provider of logistics solutions for both enterprise networks and
telecommunications service provider networks. As the only global distributor of
communications infrastructure equipment, during 1999 we served approximately
85,000 customer accounts, with approximately 65,000 different products, from our
175 locations in 41 countries. Products we distribute include fiber optic and
copper data cable, connectivity products and peripheral products. We are a
significant distribution channel for major communications, cabling and
connectivity equipment manufacturers, including Alcatel, Belden, BICC General,
Corning/Siecor and Lucent. In addition, we are a leading distributor of
specialty wire and cable products to original equipment manufacturers and to
industrial companies for maintenance and repair operations. Logistics solutions
we provide include procurement, warehousing, inventory management, product
aggregation and just-in-time shipping. Our customers include Fortune 500
companies in a wide variety of industries, together with service providers,
communications equipment manufacturers and contractors, installers and
integrators. Dow Chemical, Global Crossing, MCI/WorldCom, Motorola, Nortel and
Wal-Mart are some of our leading customers. Over the five year period ended
December 31, 1999, we have grown sales at a compounded annual rate of 12.6% to a
total of $2.67 billion in 1999. In the same period, we grew operating earnings
at a compounded rate of 21.6% to a total of $112.8 million.
INDUSTRY DYNAMICS
According to Bernstein Research, the worldwide market for communications
equipment is $240 billion and is expected to grow in excess of 13% annually over
the next five years. We believe, based on our current product lines,
geographical presence and vendor sales policies, that we address approximately
8% to 10% of this market. We believe that the drivers for this growth include:
Growing Demand for Bandwidth. The importance of information is increasing
the need for faster, more reliable communications systems and greater bandwidth.
In turn, this is driving changes in the communications and technology
infrastructure of major corporations and telecommunications service providers,
including the creation of an emerging alternative telecommunications service
provider industry. This trend is driving unit growth of communications
infrastructure equipment as well as moving the market to higher quality
solutions in which we specialize.
Deregulation and Privatization. The global trend of deregulating
telecommunication services and privatizing former national telecommunication
service providers has resulted in a rapidly growing universe of emerging
alternative telecommunications service providers throughout the world. The rapid
pace at which this change has occurred has created significant time-to-market
issues for the new telecommunication service providers. These dynamics are
resulting in increased demand and growth opportunities for the communications
equipment and logistics services we offer.
Supply Chain Management. As telecommunications companies focus on their
core businesses and time-to-market challenges in their rapidly changing
marketplace, they are increasingly outsourcing procurement and logistics
services. We believe this trend towards outsourcing will continue and will
spread to global markets, presenting us with additional opportunities.
THE ANIXTER SOLUTION
We believe we are well positioned to take advantage of these industry
dynamics due to our global coverage, comprehensive product offerings, logistics
capabilities, technical knowledge, relationships with industry leading
manufacturers and scaleable infrastructure.
Global Coverage. We believe our operations in 41 countries make us the
only global distributor of communications infrastructure equipment. This is
particularly attractive to multinational customers who are looking for
consistency in the products and services that support their global network
infrastructure.
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For the manufacturers whose products we sell, our ability to promptly and
consistently deliver their products throughout the world is an attractive
alternative to dealing with multiple distributors in numerous countries.
Comprehensive Product Offering. We believe we carry the largest, single
source, communications infrastructure equipment inventory in the world. With
over 65,000 SKUs and an inventory valued at over $600 million at March 31, 2000,
customers find our ability to aggregate and deliver complete orders on a timely
basis to be of significant value.
Logistics Capabilities. The combination of our 18 regional distribution
centers and 57 strategically located service centers allows us to deliver
product to an estimated 90 percent of the metropolitan areas in the countries in
which we are located within 24 hours.
Technical Knowledge. Through the work done in collaboration with the
industry's leading cabling and connectivity product manufacturers at our lab in
Mt. Prospect, Illinois, our involvement with industry standard setting bodies on
a global basis, and our Levels (TM) specification program, we have been a leader
in defining quality products and standards for the industry. Our sales and
technical support staff of over 2,200 individuals are regularly trained in the
particulars of standards to enable them to assist customers in solving the
problems of constructing and maintaining a quality communications network.
Relationships with Industry Leading Manufacturers. Based on our assessment
of brand name recognition, quality and relative value based on price and quality
considerations, we believe the manufacturers whose products we sell represent
the leading manufacturers of cabling, connectivity and communication products.
Scaleable Infrastructure. We operate on a common information system
platform throughout the world and manage our business using common operating
practices and processes. We believe this platform allows us to easily and
economically initiate sales programs in new markets.
MARKETS
In order to capitalize on the industry dynamics described above and to
leverage our core competencies, we have defined and targeted the following key
customer markets:
- enterprise network,
- service provider,
- integrated supply, and
- original equipment manufacturer/maintenance and repair.
Enterprise Network Market. This market consists of companies,
organizations and institutions that are building data, voice and video networks
for use in their businesses. We provide communications equipment, including a
wide range of cabling and peripheral equipment utilized in the installation and
upgrade of local area networks and wide area networks. These products enable our
enterprise customers to build the quality high speed networks they need to
exploit current information technology in their businesses. A report by
Bernstein Research estimates the worldwide market for enterprise network
equipment is approximately $70 billion annually and is growing at a rate of
approximately 10% annually. We believe, based on our current product lines,
geographical presence and vendor sales policies, that we address approximately
8% to 10% of this market. We believe we are the largest supplier of cabling,
connectivity, infrastructure equipment and solutions to this market.
Demands on enterprise networks are expected to continue to grow
dramatically as enterprises increasingly rely on information as a way to
compete, and as the Internet and e-commerce become more prevalent in the way in
which enterprises communicate and conduct business. Reliability and speed will
become increasingly critical as an enterprise's customers and suppliers connect
directly with its information systems. As a result, enterprise networks are
becoming more critical to an enterprise's ultimate success.
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We believe we are well positioned to take advantage of these positive
trends in the enterprise network market. Our technical knowledge and ability to
assemble a complete communications solution from multiple third party cable and
equipment manufacturers make us a supplier of choice to these customers. Our
enterprise network customers include Fortune 500 corporations, integrators and
installers. Examples of our significant end user customers and the various
industries we serve include Boeing (aerospace), First Union Bank and State Farm
(financial services), Texaco (oil and gas) and Wal-Mart (retail). In addition to
commercial end users, we sell products to many types of government agencies and
institutions as well as contractors, installers and integrators. We had 1999
sales of approximately $1.77 billion to the enterprise market.
Service Provider Market. This market consists of those companies that are
building bandwidth for resale of data, voice and video services to their
customers. We provide communications connectivity and infrastructure equipment
primarily to alternative telecommunications service providers and the
contractors that service them, in order to enable the service provider to
co-locate with traditional carriers or to connect directly to end customers. A
report by Bernstein Research estimates the worldwide service provider market is
approximately $170 billion a year and is growing at a rate in excess of 15%
annually. We believe, based on our current product lines, geographical presence
and vendor sales policies, that we address approximately 8% to 10% of this
market.
The service provider market is expected to experience significant growth as
deregulation of the telecommunications industry and recent privatizations
continue to encourage the creation of emerging service providers, including:
- competitive local exchange carriers,
- alternative service providers, and
- Internet service providers.
The service provider market has traditionally purchased directly from
manufacturers. However, the growth in the number of customers in this market has
placed significant pressure on manufacturers' logistics capabilities, thereby
creating an opportunity for distributors to play a significant role. Because
flexibility and time to market are critical to these customers, we believe our
product availability and reliable logistics services provide us with a
competitive advantage in this market.
We began a sales and marketing program in this market in late 1998. Since
then, we have been able to build a broad product and logistics service offering
to customers such as Covad Communications, KMC Telecom, MCI/WorldCom, NextLink
and Qwest Communications. We had 1999 sales of approximately $150 million to the
service provider market.
Integrated Supply Market. We supply logistics services and installation
related products for communications equipment. These services and equipment are
critical to communications companies' ability to assemble a complete solution
for their end customers. Logistics services include warehousing, automatic
inventory replenishment, asset serial number tracking, warranty management,
software/firmware upgrade management, product aggregation and just-in-time
shipping. Installation related products include cabling, connectivity and
peripheral products.
While there is no available market size data for integrated supply
services, we believe the opportunities are significant as communication product
manufacturers and service providers increasingly focus their human and financial
resources on core businesses and outsource peripheral functions. We believe our
expertise in inventory management, logistics and communications products
together with our key supplier relationships make us an attractive supplier for
procurement and delivery of third party installation materials. Our integrated
supply capabilities allow us to become part of the traditional supply chain and
build a more integrated relationship with our customers. We had 1999 sales of
approximately $210 million to integrated supply customers such as Alcatel, AT&T,
Global Crossing, Lucent and Nortel.
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Original Equipment Manufacturer/Maintenance and Repair Market. We provide
electrical and electronic wire and cable that have been specially prepared for
use in original equipment manufacturing processes. We modify products to
customer specifications, manage inventory and supply products that are ready for
use in the customer's final assembly process. Anixter also supplies specialty
wire and cable products such as shipboard cable, process control wiring, high
temperature cables, elevator cables and mining cables for maintenance and repair
applications in industrial companies.
According to World Information Technologies Inc., the electrical wire and
cable market is a $12 billion market. We believe that approximately $3 billion
of this market is in products we sell and service. Original equipment
manufacturers and maintenance and repair customers demand product availability,
product knowledge, product modification (cutting, kitting, dyeing, striping and
twisting), timely delivery and project management.
We believe our strong relationships with leading suppliers of specialty
wire and cable and electrical/electronic products, large inventory, specialty
services, logistic capabilities and experienced sales force make us a supplier
of choice for customers in this market. Customers in this market include a wide
variety of industrial companies and contractors such as DaimlerChrysler, Dow
Chemical, Fluor Daniel, Motorola and Ontario Hydro. We had 1999 sales of
approximately $530 million to the original equipment manufacturer and
maintenance and repair markets.
SUPPLIERS
Anixter is a significant distribution channel for many of the
communications industry's leading manufacturers, including Alcatel, Belden, BICC
General, Cable Design Technologies, Cisco Systems, Corning/Siecor, Lucent,
Nortel, Panduit, and Superior Cable. As a result of these relationships, we
believe we have compiled the industry's most complete line of fiber optic
cabling, data cabling, connectivity and physical infrastructure products for all
of our markets. We are able to create comprehensive solutions for our customers
as a result of our product breadth.
We believe our Anixter solution delivers a competitive advantage to our
suppliers. We provide suppliers with access to a large technically trained sales
force, marketing expertise, product planning, inventory management and technical
support capabilities together with global distribution capabilities.
DISTRIBUTION AND SYSTEMS INFRASTRUCTURE
We operate offices in 175 cities and 41 countries throughout the world. We
operate 18 regional distribution centers (which contain over 80% of our
inventory) and 57 other strategically located distribution facilities totaling
over 3.5 million square feet of warehouse space, nearly all of which is leased,
to provide flexibility as we grow and pursue new markets. This system enables us
to provide next day delivery on 90% of our orders.
Additionally, our flexible management information systems enable us to
cost-effectively serve our customers' needs. We operate primarily in a mainframe
environment. The mainframe environment supports substantially all of our
operations on a 24-hour, 7-day-a-week basis from Chicago, Illinois. Because our
system is mainframe-based, we have been able to scale the system to support
growth in product lines, markets and locations, while preserving the global
scope of the system.
ACQUISITION OPPORTUNITIES
From time to time Anixter has made, and in the future may make or consider
making, acquisitions of businesses for cash or stock that complement or extend
the Company's current business. There can be no assurance that any such
acquisitions will be made in the future or that any such acquisitions will in
fact be beneficial.
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DESCRIPTION OF LYONS
The LYONs were issued under a senior indenture dated as of June 28, 2000.
The following summarizes some, but not all, of the material provisions of the
LYONs and the indenture. The following summary does not purport to be complete
and is subject to, and qualified by reference to, all of the provisions of the
indenture. As used in this description, the words "we," "us," "our," "Anixter"
or "Anixter International" do not include any current or future subsidiary of
Anixter International Inc.
GENERAL
On June 28, 2000, we issued $792,000,000 aggregate principal amount at
maturity of the LYONs in a private placement. The LYONs will mature on June 28,
2020. The principal amount at maturity of each LYON is $1,000. The LYONs will be
payable at the office of the paying agent, which initially will be an office or
agency of the trustee, or an office or agency maintained by us for such purpose,
in the Borough of Manhattan, The City of New York.
The LYONs were offered at a substantial discount from their principal
amount at maturity. See "Federal Income Tax Considerations -- Original Issue
Discount." We will not make periodic payments of interest on the LYONs. Each
LYON was issued at an issue price of $252.57 per LYON. However, the LYONs will
accrue original issue discount while they remain outstanding. Original issue
discount is the difference between the issue price and the principal amount at
maturity of a LYON. The calculation of the accrual of original issue discount
will be on a semi-annual bond equivalent basis using a 360-day year composed of
twelve 30-day months. Accrual of original issue discount commenced from the
issue date of the LYONs.
Maturity, conversion, purchase by us at the option of a holder or
redemption of a LYON will cause original issue discount and interest, if any, to
cease to accrue on such LYON under the indenture. We may not reissue a LYON that
has matured or been converted, purchased by us at the option of a holder,
redeemed or otherwise cancelled, except for registration of transfer, exchange
or replacement of such LYON.
LYONs may be presented for conversion at the office of the conversion
agent, and for exchange or registration of transfer at the office of the
registrar, each such agent initially being the trustee.
RANKING OF LYONS
The LYONs are unsecured and unsubordinated obligations. The LYONs rank on a
parity in right of payment with all of our existing and future unsecured and
unsubordinated indebtedness.
The LYONs are obligations exclusively of Anixter. We are a holding company
and, accordingly, substantially all of our operations are conducted through our
subsidiaries. As a result, our cash flow and our ability to service our debt,
including the LYONs, are dependent upon the earnings of our subsidiaries. In
addition, we are dependent on the distribution of earnings, loans or other
payments by our subsidiaries to us.
Our subsidiaries are separate and distinct legal entities. Our subsidiaries
have no obligation to pay any amounts due on the LYONs or to provide us with
funds for our payment obligations, whether by dividends, distributions, loans or
other payments. In addition, payments of dividends, distributions, loans or
advances by our subsidiaries to us are subject to statutory or contractual
restrictions. Payments to us by our subsidiaries will also be contingent upon
our subsidiaries' earnings and business considerations.
Our right to receive any assets of any of our subsidiaries upon their
liquidation or reorganization, and therefore the right of the holders of the
LYONs to participate in those assets, will be effectively subordinated to the
claims of that subsidiary's creditors, including trade creditors. In addition,
even if we were a creditor of any of our subsidiaries, our rights as a creditor
would be subordinate to any security interest in the assets of our subsidiaries
and any indebtedness of our subsidiaries senior to that held by us.
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As of March 31, 2000, our subsidiaries had outstanding approximately $576.8
million of indebtedness, in addition to other liabilities, including trade
payables, to which the LYONs would have been structurally subordinated as
described above. See "Capitalization."
CONVERSION RIGHTS
A holder may convert a LYON, in multiples of $1,000, into common stock at
any time before the close of business on June 28, 2020. However, a holder may
convert a LYON only until the close of business on the redemption date if we
call a LYON for redemption. A LYON for which a holder has delivered a purchase
notice or a Change in Control purchase notice requiring us to purchase the LYON
may be converted only if such notice is withdrawn in accordance with the
indenture.
The conversion rate is 7.4603 shares of common stock per LYON, subject to
adjustment upon the occurrence of certain events described below. We will pay
cash equal to the then current market value of a fractional share.
On conversion of a LYON, a holder will not receive any cash payment
representing accrued original issue discount. Our delivery to the holder of the
fixed number of shares of common stock into which the LYON is convertible,
together with any cash payment for fractional shares, will be deemed:
- to satisfy our obligation to pay the principal amount at maturity of the
LYON; and
- to satisfy our obligation to pay accrued original issue discount
attributable to the period from the issue date through the conversion
date.
As a result, accrued original issue discount is deemed to be paid in full rather
than cancelled, extinguished or forfeited.
The conversion rate will not be adjusted for such accrued original issue
discount. A certificate for the number of full shares of common stock into which
any LYON is converted, together with any cash payment for fractional shares,
will be delivered through the conversion agent as soon as practicable following
the conversion date. For a discussion of the tax treatment of a holder receiving
common stock upon conversion, see "Federal Income Tax
Considerations -- Disposition or Conversion."
The conversion rate will be adjusted for:
- dividends or distributions on common stock payable in common stock or
other capital stock;
- subdivisions, combinations or certain reclassifications of common stock;
- distributions to all holders of common stock of certain rights to
purchase common stock for a period expiring within 60 days at less than
the quoted price at the time; and
- distributions to such holders of our assets or debt securities or certain
rights to purchase our securities (excluding cash dividends or other cash
distributions from current or retained earnings other than any
Extraordinary Cash Dividend (as defined in the indenture)(the “Exchange Act”).
However, no adjustment need be made if holders may participate in the
transaction or in certain other cases. In cases where the fair market value of
assets, debt securities or certain rights, warrants or options to purchase our
securities distributed to shareholders:
- equals or exceeds the average quoted price of the common stock, or
- such average quoted price exceeds the fair market value of such assets,
debt securities or rights, warrants or options so distributed by less
than $1.00,
rather than being entitled to an adjustment in the conversion rate, the holder
of a LYON will be entitled to receive upon conversion, in addition to the shares
of common stock, the kind and amount of assets, debt securities or rights,
warrants or options comprising the distribution that such holder would have
received if
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such holder had converted such LYON immediately prior to the record date for
determining the shareholders entitled to receive the distribution.
The indenture permits us to increase the conversion rate from time to time.
If we are party to a consolidation, merger or binding share exchange or a
transfer of all or substantially all of our assets, the right to convert a LYON
into common stock may be changed into a right to convert it into the kind and
amount of securities, cash or other assets of Anixter or another person which
the holder would have received if the holder had converted the holder's LYONs
immediately prior to the transaction.
Holders of the LYONs may, in certain circumstances, be deemed to have
received a distribution subject to federal income tax as a dividend in the
amount of:
- a taxable distribution to holders of common stock which results in an
adjustment of the conversion rate; or
- an increase in conversion rate at our discretion.
See "Federal Income Tax Considerations -- Constructive Dividend."
If we exercise our option to have interest instead of original issue
discount accrue on a LYON following a Tax Event, the holder will be entitled on
conversion to receive the same number of shares of common stock the holder would
have received if we had not exercised such option.
If we exercise this option, LYONs surrendered for conversion by a holder
during the period from the close of business on any regular record date to the
opening of business of the next interest payment date, except for LYONs to be
redeemed on a date within this period, must be accompanied by payment of an
amount equal to the interest that the registered holder is to receive on the
LYON.
Except where LYONs surrendered for conversion must be accompanied by
payment as described above, we will not pay interest on converted LYONs on any
interest payment date after the date of conversion. See "-- Optional Conversion
to Semiannual Coupon Note Upon Tax Event."
REDEMPTION OF LYONS AT THE OPTION OF ANIXTER
No sinking fund is provided for the LYONs. Prior to June 28, 2005, the
LYONs will not be redeemable at our option. Beginning on June 28, 2005, we may
redeem the LYONs for cash as a whole at any time, or from time to time in part.
We will give not less than 15 days' nor more than 60 days' notice of redemption
by mail to holders of LYONs.
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The table below shows redemption prices of a LYON on June 28, 2005, at each
June 28 thereafter prior to maturity and at maturity on June 28, 2020. These
prices reflect the accrued original issue discount calculated to each such date.
The redemption price of a LYON redeemed between such dates would include an
additional amount reflecting the additional original issue discount accrued
since the next preceding date in the table.
(2) (3)
(1) ORIGINAL
LYON ISSUE REDEMPTION
ISSUE DISCOUNT PRICE
REDEMPTION DATE PRICE AT 7% (1)+(2)
- --------------- ------- -------- ----------
June 28, 2005............................................... $252.57 $103.71 $ 356.28
June 28, 2006............................................... 252.57 129.08 381.65
June 28, 2007............................................... 252.57 156.27 408.84
June 28, 2008............................................... 252.57 185.38 437.96
June 28, 2009............................................... 252.57 216.58 469.15
June 28, 2010............................................... 252.57 250.00 502.57
June 28, 2011............................................... 252.57 285.79 538.36
June 28, 2012............................................... 252.57 324.14 576.71
June 28, 2013............................................... 252.57 365.21 617.78
June 28, 2014............................................... 252.57 409.21 661.78
June 28, 2015............................................... 252.57 456.35 708.92
June 28, 2016............................................... 252.57 506.84 759.41
June 28, 2017............................................... 252.57 560.93 813.50
June 28, 2018............................................... 252.57 618.87 871.44
June 28, 2019............................................... 252.57 680.94 933.51
At stated maturity.......................................... 252.57 747.43 1,000.00
If converted to semiannual coupon LYONs following the occurrence of a Tax
Event, the LYONs will be redeemable at the restated principal amount plus
accrued and unpaid interest from the date of the conversion through the
redemption date. However, in no event may the LYONs be redeemed prior to June
28, 2005. See "-- Optional Conversion to Semiannual Coupon Note Upon Tax Event."
If less than all of the outstanding LYONs are to be redeemed, the trustee
shall select the LYONs to be redeemed in principal amounts at maturity of $1,000
or integral multiples of $1,000. In this case, the trustee may select the LYONs
by lot, pro rata or by any other method the trustee considers fair and
appropriate. If a portion of a holder's LYONs is selected for partial redemption
and the holder converts a portion of the LYONs, the converted portion shall be
deemed to be the portion selected for redemption.
PURCHASE OF LYONS AT THE OPTION OF THE HOLDER
On the purchase dates of June 28, 2005, June 28, 2010 and June 28, 2015, we
will, at the option of the holder, be required to purchase any outstanding LYON
for which a written purchase notice has been properly delivered by the holder
and not withdrawn, subject to certain additional conditions. Holders may submit
their LYONs for purchase to the paying agent at any time from the opening of
business on the date that is 20 business days prior to such purchase date until
the close of business on such purchase date.
The purchase price of a LYON will be:
- $356.28 per LYON on June 28, 2005;
- $502.57 per LYON on June 28, 2010; and
- $708.92 per LYON on June 28, 2015.
These purchase prices equal the issue price plus accrued original issue
discount to the purchase dates.
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We may, at our option, elect to pay the purchase price in cash or shares of
common stock, or any combination thereof. For a discussion of the tax treatment
of a holder receiving cash, common stock or any combination thereof, see
"Federal Income Tax Considerations -- Disposition or Conversion."
If prior to a purchase date the LYONs have been converted to semiannual
coupon LYONs following the occurrence of a Tax Event, the purchase price will be
equal to the restated principal amount plus accrued and unpaid interest from the
date of the conversion to the purchase date. See "-- Optional Conversion to
Semiannual Coupon Note Upon Tax Event."
We will be required to give notice on a date not less than 20 business days
prior to each purchase date to all holders at their addresses shown in the
register of the registrar, and to beneficial owners as required by applicable
law, stating among other things:
- whether we will pay the purchase price of LYONs in cash or common stock
or any combination thereof, specifying the percentages of each;
- if we elect to pay in common stock the method of calculating the market
price of the common stock; and
- the procedures that holders must follow to require us to purchase their
LYONs.
The purchase notice given by each holder electing to require us to purchase
LYONs shall state:
- the certificate numbers of the holder's LYONs to be delivered for
purchase;
- the portion of the principal amount at maturity of LYONs to be purchased,
which must be $1,000 or an integral multiple of $1,000;
- that the LYONs are to be purchased by us pursuant to the applicable
provisions of the LYONs; and
- in the event we elect, pursuant to the notice that we are required to
give, to pay the purchase price in common stock, in whole or in part, but
the purchase price is ultimately to be paid to the holder entirely in
cash because any of the conditions to payment of the purchase price or
portion of the purchase price in common stock is not satisfied prior to
the close of business on the purchase date, as described below, whether
the holder elects:
(1) to withdraw the purchase notice as to some or all of the LYONs to
which it relates, or
(2) to receive cash in respect of the entire purchase price for all LYONs
or portions of LYONs subject to such purchase notice.
If the holder fails to indicate the holder's choice with respect to the
election described in the final bullet point above, the holder shall be deemed
to have elected to receive cash in respect of the entire purchase price for all
LYONs subject to the purchase notice in these circumstances. For a discussion of
the tax treatment of a holder receiving cash instead of common stock, see
"Federal Income Tax Considerations -- Disposition or Conversion."
Any purchase notice may be withdrawn by the holder by a written notice of
withdrawal delivered to the paying agent prior to the close of business on the
purchase date. The notice of withdrawal must state:
- the principal amount at maturity being withdrawn;
- the certificate numbers of the LYONs being withdrawn; and
- the principal amount at maturity, if any, of the LYONs that remain
subject to the purchase notice.
If we elect to pay the purchase price, in whole or in part, in shares of
common stock, the number of shares of common stock to be delivered by us shall
be equal to the portion of the purchase price to be paid in common stock divided
by the market price of a share of common stock.
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We will pay cash based on the market price for all fractional shares of
common stock in the event we elect to deliver common stock in payment, in whole
or in part, of the purchase price. See "Federal Income Tax
Considerations -- Disposition or Conversion."
The "market price" means the average of the sale prices of the common stock
for the five trading day period ending on (if the third business day prior to
the applicable purchase date is a trading day, or if not, then on the last
trading day prior to) the third business day prior to the applicable purchase
date, appropriately adjusted to take into account the occurrence, during the
period commencing on the first of such trading days during such five trading day
period and ending on such purchase date, of certain events that would result in
an adjustment of the conversion rate with respect to the common stock.
The "sale price" of the common stock on any date means the closing per
share sale price (or if no closing sale price is reported, the average of the
bid and ask prices or, if more than one in either case, the average of the
average bid and the average ask prices) on such date as reported in composite
transactions for the principal United States securities exchange on which the
common stock is traded or, if the common stock is not listed on a United States
national or regional securities exchange, as reported by the Nasdaq System.
Because the market price of the common stock is determined prior to the
applicable purchase date, holders of LYONs bear the market risk with respect to
the value of the common stock to be received from the date such market price is
determined to such purchase date. We may pay the purchase price or any portion
of the purchase price in common stock only if the information necessary to
calculate the market price is published in a daily newspaper of national
circulation.
Upon determination of the actual number of shares of common stock in
accordance with the foregoing provisions, we will publish such information on
our Web site on the World Wide Web.
Our right to purchase LYONs, in whole or in part, with common stock is
subject to our satisfying various conditions, including:
- the registration of the common stock under the Securities Act and the
Exchange Act, if required; and
- any necessary qualification or registration under applicable state
securities law or the availability of an exemption from such
qualification and registration.
If such conditions are not satisfied with respect to a holder prior to the
close of business on the purchase date, we will pay the purchase price of the
LYONs of the holder entirely in cash. See "Federal Income Tax
Considerations -- Disposition or Conversion." We may not change the form or
components or percentages of components of consideration to be paid for the
LYONs once we have given the notice that we are required to give to holders of
LYONs, except as described in the first sentence of this paragraph.
In connection with any purchase offer, we will:
- comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
- file Schedule TO or any other required schedule under the Exchange Act.
Payment of the purchase price for a LYON for which a purchase notice has
been delivered and not validly withdrawn is conditioned upon delivery of the
LYON, together with necessary endorsements, to the paying agent at any time
after delivery of the purchase notice. Payment of the purchase price for the
LYON will be made promptly following the later of the purchase date or the time
of delivery of the LYON.
If the paying agent holds money or securities sufficient to pay the
purchase price of the LYON on the business day following the purchase date in
accordance with the terms of the indenture, then, immediately after the purchase
date, the LYON will cease to be outstanding and original issue discount on such
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LYON will cease to accrue, whether or not the LYON is delivered to the paying
agent. Thereafter, all other rights of the holder shall terminate, other than
the right to receive the purchase price upon delivery of the LYON.
Our ability to purchase LYONs with cash may be limited by the terms of our
then existing borrowing agreements.
No LYONs may be purchased for cash at the option of holders if there has
occurred and is continuing an event of default with respect to the LYONs, other
than a default in the payment of the purchase price with respect to such LYONs.
CHANGE IN CONTROL PERMITS PURCHASE OF LYONS AT THE OPTION OF THE HOLDER
In the event of any Change in Control occurring on or prior to June 28,
2005, each holder will have the right, at the holder's option, subject to the
terms and conditions of the indenture, to require us to purchase all or any
portion of the holder's LYONs. However, the principal amount at maturity
submitted for purchase by a holder must be $1,000 or an integral multiple of
$1,000.
We will be required to purchase the LYONs as of the date that is 35
business days after the occurrence of such Change in Control (a "Change in
Control purchase date") at a cash price equal to the issue price plus accrued
original issue discount to the Change in Control purchase date.
If prior to a Change in Control purchase date the LYONs have been converted
to semiannual coupon LYONs following the occurrence of a Tax Event, we will be
required to purchase the LYONs at a cash price equal to the restated principal
amount plus accrued and unpaid interest from the date of the conversion to the
Change in Control purchase date.
Within 15 business days after the occurrence of a Change in Control, we are
obligated to mail to the trustee and to all holders of LYONs at their addresses
shown in the register of the registrar and to beneficial owners as required by
applicable law a notice regarding the Change in Control, which notice shall
state, among other things:
- the events causing a Change in Control;
- the date of such Change in Control;
- the last date on which the purchase right may be exercised;
- the Change in Control purchase price;
- the Change in Control purchase date;
- the name and address of the paying agent and the conversion agent;
- the conversion rate and any adjustments to the conversion rate;
- that LYONs with respect to which a Change in Control purchase notice is
given by the holder may be converted only if the change on control
purchase notice has been withdrawn in accordance with the terms of the
indenture; and
- the procedures that holders must follow to exercise these rights.
To exercise this right, the holder must delivery a written notice to the
paying agent prior to the close of business on the Change in Control purchase
date. The required purchase notice upon a Change in Control shall state:
- the certificate numbers of the LYONs to be delivered by the holder;
- the portion of the principal amount at maturity of LYONs to be purchased,
which portion must be $1,000 or an integral multiple of $1,000; and
- that we are to purchase such LYONs pursuant to the applicable provisions
of the LYONs.
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Any Change in Control purchase notice may be withdrawn by the holder by a
written notice of withdrawal delivered to the paying agent prior to the close of
business on the Change in Control purchase date.
The notice of withdrawal shall state:
- the principal amount at maturity being withdrawn;
- the certificate numbers of the LYONs being withdrawn; and
- the principal amount at maturity, if any, of the LYONs that remain
subject to a Change in Control purchase notice.
Payment of the Change in Control purchase price for a LYON for which a
Change in Control purchase notice has been delivered and not validly withdrawn
is conditioned upon delivery of the LYON, together with necessary endorsements,
to the paying agent at any time after the delivery of such Change in Control
purchase notice. Payment of the Change in Control purchase price for such LYON
will be made promptly following the later of the Change in Control purchase date
or the time of delivery of such LYON.
If the paying agent holds money sufficient to pay the Change in Control
purchase price of the LYON on the business day following the Change in Control
purchase date in accordance with the terms of the indenture, then, immediately
after the Change in Control purchase date, original issue discount on such LYON
will cease to accrue, whether or not the LYON is delivered to the paying agent.
Thereafter, all other rights of the holder shall terminate, other than the right
to receive the Change in Control purchase price upon delivery of the LYON.
Under the indenture, a "Change in Control" of Anixter is deemed to have
occurred at such time as:
- any person, including its affiliates and associates, other than Anixter,
its subsidiaries or their employee benefit plans, files a Schedule 13D or
14D-1 (or any successor schedule, form or report under the Exchange Act)
disclosing that such person has become the beneficial owner of 50% or
more of the voting power of our common stock or other capital stock into
which the common stock is reclassified or changed, with certain
exceptions; or
- there shall be consummated any consolidation or merger of Anixter
pursuant to which the common stock would be converted into cash,
securities or other property, in each case other than a consolidation or
merger of Anixter in which the holders of the common stock immediately
prior to the consolidation or merger have, directly or indirectly, at
least a majority of the total voting power in the aggregate of all
classes of capital stock of the continuing or surviving corporation
immediately after the consolidation or merger.
The indenture does not permit our board of directors to waive our
obligation to purchase LYONs at the option of holders in the event of a Change
in Control.
In connection with any purchase offer in the event of a Change in Control,
we will:
- comply with the provisions of Rule 13e-4, Rule 14e-1 and any other tender
offer rules under the Exchange Act which may then be applicable; and
- file Schedule TO or any other required schedule under the Exchange Act.
The Change in Control purchase feature of the LYONs may in certain
circumstances make more difficult or discourage a takeover of Anixter. The
Change in Control purchase feature, however, is not the result of our knowledge
of any specific effort:
- to accumulate shares of common stock;
- to obtain control of Anixter by means of a merger, tender offer,
solicitation or otherwise; or
- by management to adopt a series of anti-takeover provisions.
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Instead, the Change in Control purchase feature is a standard term
contained in other LYONs offerings that have been marketed by Merrill Lynch. The
terms of the Change in Control purchase feature resulted from negotiations
between Merrill Lynch and us.
We could, in the future, enter into certain transactions, including certain
recapitalizations, that would not constitute a Change in Control with respect to
the Change in Control purchase feature of the LYONs but that would increase the
amount of our (or our subsidiaries') outstanding indebtedness. See "-- Ranking
of LYONs".
No LYONs may be purchased at the option of holders upon a Change in Control
if there has occurred and is continuing an event of default with respect to the
LYONs, other than a default in the payment of the Change in Control purchase
price with respect to the LYONs.
EVENTS OF DEFAULT
The indenture defines an events of default as one or more of the following:
(1) default in payment of the principal amount at maturity (or if the
LYONs have been converted to semiannual coupon LYONs following a Tax Event,
the restated principal amount), issue price, accrued original issue
discount (or if the LYONs have been converted to semiannual coupon LYONs
following a Tax Event, accrued and unpaid interest and such default
continues for a period of 30 days), redemption price, purchase price or
Change in Control purchase price with respect to any LYON when such becomes
due and payable; and
(2) failure by Anixter to comply with any of its other agreements in
the LYONs or the indenture upon receipt by Anixter of notice of such
default by the Trustee or by holders of not less than 25% in aggregate
principal amount at maturity of the LYONs then outstanding and Anixter's
failure to cure (or obtain a waiver of) such default within 30 days after
receipt by Anixter of such notice; and
(3) the failure of Anixter or Anixter Inc. to make any payment by the
end of any applicable grace period after maturity of indebtedness, which
term as used in the indenture means obligations (other than nonrecourse
obligations) of Anixter or Anixter Inc. for borrowed money or evidenced by
bonds, debentures, notes or similar instruments ("Indebtedness") in an
amount (taken together with amounts under (4)) in excess of $25 million and
continuance of such failure; and
(4) the acceleration of Indebtedness of Anixter or Anixter Inc. in an
amount (taken together with amounts under (3)) in excess of $25 million
because of a default with respect to such Indebtedness, without, in the
case of (3) or (4), such Indebtedness having been discharged or such
acceleration having been cured, waived, rescinded or annulled, for a period
of 30 days after written notice to Anixter by the trustee or to Anixter and
the trustee by the holders of not less than 25% in aggregate principal
amount at maturity of the LYONs then outstanding. However, if any such
failure or acceleration referred to in (3) or (4) above shall cease or be
cured, waived, rescinded or annulled, then the event of default by reason
thereof shall be deemed not to have occurred; and
(5) final unsatisfied judgments not covered by insurance aggregating
in excess of $25 million rendered against Anixter or Anixter Inc. or any of
their subsidiaries and not stayed, bonded or discharged within 60 days; and
(6) the bankruptcy, insolvency or reorganization of Anixter or Anixter
Inc.
If an event of default, other than an event of default described in clause
(6) above, shall have happened and be continuing, either the trustee or the
holders of not less than 25% in aggregate principal amount at maturity of the
LYONs then outstanding may declare the issue price of the LYONs plus the
original issue discount on the LYONs accrued through the date of such
declaration to be immediately due and payable. If an event of default described
in clause (6) above shall occur, the issue price of the LYONs plus the original
issue discount accrued thereon through the occurrence of such event shall
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automatically become and be immediately due and payable. If the LYONs have been
converted to semiannual coupon LYONs following the occurrence of a Tax Event,
the amount due on an acceleration will be the restated principal amount plus
accrued and unpaid interest.
After acceleration the holders of a majority in aggregate principal amount
at maturity of the LYONs may, under certain circumstances, rescind and annul
such acceleration if all events of default, other than the non-payment of
accelerated principal or other specified amount, have been cured or waived.
Prior to the declaration of the acceleration of the LYONs, the holders of a
majority in aggregate principal amount at maturity of the LYONs may waive, on
behalf of all of the holders of the LYONs, any default and its consequences,
except an event of default described in paragraph (1) above, a default in
respect of a provision that cannot be amended without the consent of all of the
holders of the LYONs or a default that constitutes a failure to convert any LYON
into shares of common stock. Other than the duty to act with the required care
during an event of default, the trustee will not be obligated to exercise any of
its rights or powers at the request of the holders unless the holders shall have
offered to the trustee reasonable indemnity. Generally, the holders of a
majority in aggregate principal amount at maturity of the LYONs will have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the trustee or exercising any trust or power conferred on
the trustee.
A holder will not have any right to institute any proceeding under the
indenture, or for the appointment of a receiver or a trustee, or for any other
remedy under the indenture, unless:
(1) the holder has previously given to the trustee written notice of a
continuing event of default with respect to the LYONs;
(2) the holders of a least 25% in aggregate principal amount at
maturity of the LYONs have made a written request and have offered
reasonable indemnity to the trustee to institute the proceeding; and
(3) the trustee has failed to institute the proceeding and has not
received direction inconsistent with the original request from the holders
of a majority in aggregate principal amount at maturity of the LYONs within
60 days after the original request.
Holders may, however, sue to enforce the payment of the principal amount at
maturity (or if the LYONs have been converted to semiannual coupon notes
following a Tax Event, the restated principal amount), issue price, accrued
original issue discount (or if the LYONs have been converted to semiannual
coupon notes following a Tax Event, accrued and unpaid interest), redemption
price, purchase price or Change in Control purchase price with respect to any
LYON on or after the due date or to enforce the right, if any, to convert any
LYON without following the procedures listed in (1) through (3) above.
We will furnish the trustee an annual statement by our officers as to
whether or not we are in default in the performance of the indenture and, if so,
specifying all known defaults.
OPTIONAL CONVERSION TO SEMIANNUAL COUPON NOTE UPON TAX EVENT
From and after the date of the occurrence of a Tax Event, we shall have the
option to elect to have interest in lieu of future original issue discount
accrue at 7% per year on a principal amount per LYON (the "restated principal
amount") equal to the issue price plus original issue discount accrued to the
date of the Tax Event or the date on which we exercise the option described
herein, whichever is later (the "option exercise date").
Such interest shall accrue from the option exercise date and shall be
payable semiannually on the interest payment dates of June 28 and December 28 of
each year to holders of record at the close of business on June 13 or December
13 immediately preceding the interest payment date. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Interest will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from the option exercise date.
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A "Tax Event" means that Anixter shall have received an opinion from
independent tax counsel experienced in such matters to the effect that, on or
after the date of this offering memorandum, as a result of:
(1) any amendment to, or change (including any announced prospective
change) in, the laws (or any regulations thereunder) of the United States
or any political subdivision or taxing authority thereof or therein, or
(2) any amendment to, or change in, the interpretation or application
of such laws or regulations by any legislative body, court, governmental
agency or regulatory authority,
in each case which amendment or change is enacted, promulgated, issued or
announced or which interpretation is issued or announced or which action is
taken, on or after the date of this offering memorandum, there is more than an
insubstantial risk that interest (including original issue discount) payable on
the LYONs either:
- would not be deductible on a current accrual basis or
- would not be deductible under any other method, in either case in whole
or in part, by Anixter (by reason of deferral, disallowance, or
otherwise) for United States federal income tax purposes.
The Clinton Administration has previously proposed to change the tax law to
defer the deduction of original issue discount on convertible debt instruments
until the issuer pays the interest. Congress has not enacted these proposed
changes in the law.
If a similar proposal were ever enacted and made applicable to the LYONs in
a manner that would limit our ability to either
- deduct the interest, including original issue discount, payable on the
LYONs on a current accrual basis, or
- deduct the interest, including original issue discount, payable on the
LYONs under any other method for United States federal income tax
purposes,
such enactment would result in a Tax Event and the terms of the LYONs would be
subject to modification at our option as described above.
The modification of the terms of LYONs by us upon a Tax Event as described
above could possibly alter the timing of income recognition by holders of the
LYONs with respect to the semiannual payments of interest due on the LYONs after
the option exercise date. See "Federal Income Tax Considerations."
BOOK ENTRY SYSTEM; GLOBAL SECURITIES
The LYONs are represented by one or more global securities. Each global
security will:
- be registered in the name of The Depository Trust Company, also known as
DTC,
- be deposited with DTC or DTC's nominee or custodian and
- bear any required legends.
No global security may be exchanged in whole or in part for LYONs
registered in the name of any person other than DTC or any nominee unless:
- DTC has notified us that it is unwilling or unable to continue as
depositary or has ceased to be qualified to act as depositary, or
- an event of default is continuing.
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As long as DTC, or its nominee, is the registered owner of a global
security, DTC or its nominee will be considered the sole owner and holder of the
LYONs represented by the global security for all purposes under the indenture.
Except in the above limited circumstances, owners of beneficial interests in a
global security:
- will not be entitled to have LYONs registered in their names,
- will not be entitled to physical delivery of certified LYONs, and
- will not be considered to be holders of those LYONs under the indenture.
Payments on a global security will be made to DTC or its nominee as the
holder of the global security. Some jurisdictions have laws that require that
certain purchasers of securities take physical delivery of such securities in
definitive form. These laws may impair the ability to transfer beneficial
interests in a global security.
Institutions that have accounts with DTC or its nominee are referred to as
"participants." Ownership of beneficial interests in a global security will be
limited to participants and to persons that may hold beneficial interests
through participants. DTC will credit, on its book-entry registration and
transfer system, the respective principal amounts of LYONs represented by the
global security to the accounts of its participants.
Ownership of beneficial interests in a global security will be shown on and
effected through records maintained by DTC, with respect to participants'
interests, or any participant, with respect to interests of persons held by
participants on their behalf.
Payments, transfers and exchanges relating to beneficial interests in a
global security will be subject to policies and procedures of the depositary.
The depositary policies and procedures may change from time to time. Neither we
nor the trustee will have any responsibility or liability for DTC's or any
participant's records with respect to beneficial interests in a global security.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge into any other person, in a
transaction in which we are not the surviving corporation, or convey, transfer
or lease our properties and assets substantially as an entirety to, any person,
unless:
- the successor, if any, is a U.S. corporation, limited liability company,
partnership, trust or other entity,
- the successor assumes our obligations on the LYONs and under the
indenture,
- immediately after giving effect to the transaction, no default or event
of default shall have occurred and be continuing, and
- certain other conditions are met.
DISCHARGE OF THE INDENTURE
We may satisfy and discharge our obligations under the indenture by
delivering to the trustee for cancellation all outstanding LYONs or by
depositing with the trustee, the paying agent or the conversion agent, if
applicable after the LYONs have become due and payable, whether at stated
maturity, or any redemption date, or any purchase date, or a Change in Control
purchase date, or upon conversion or otherwise, cash or shares of common stock
(as applicable under the terms of the indenture) sufficient to pay all of the
outstanding LYONs and paying all other sums payable by us under the indenture.
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MODIFICATION
We and the trustee may make modifications and amendments to the indenture
without the consent of holders of LYONs for certain limited purposes. We and the
trustee may also make modifications and amendments to the indenture with the
consent of the holders of a majority in aggregate principal amount at maturity
of the LYONs. However, neither we nor the trustee may make any modification or
amendment without the consent of the holder of each LYON if such modification or
amendment would:
- change the stated maturity of any LYON;
- reduce the principal amount at maturity (or if the LYONs have been
converted to semiannual coupon notes following a Tax Event, the restated
principal amount), issue price, accrued original issue discount (or if
the LYONs have been converted to semiannual coupon notes following a Tax
Event, accrued and unpaid interest), redemption price, purchase price or
Change in Control purchase price with respect to any LYON;
- change the place of payment or the currency in which any LYON is payable,
- alter the manner or rate of accrual of original issue discount or
interest on any LYON or extend the time of payment;
- make any LYON payable in money or securities other than that stated in
the LYON;
- make any change that adversely affects the right to require us to
purchase a LYON;
- impair the right to institute suit for the enforcement of any payment
with respect to, or conversion of, any LYON; or
- change the provisions in the indenture that relate to modifying or
amending the indenture.
LIMITATIONS OF CLAIMS IN BANKRUPTCY
If a bankruptcy proceeding is commenced in respect of Anixter, the claim of
the holder of a LYON is, under Title 11 of the United States Code, limited to
the issue price of the LYON plus that portion of the original issue discount
that has accrued from the date of issue to the commencement of the proceeding.
In addition, the holders of the LYONs will be effectively subordinated to the
indebtedness and other obligations of our subsidiaries.
GOVERNING LAW
The indenture and the LYONs will be governed by, and construed in
accordance with, the law of the State of New York, without regard to conflicts
of laws principles.
REGARDING THE TRUSTEE
The trustee is also the trustee under the indenture governing the 8% Notes
due 2003 of Anixter Inc., a lender under the Anixter Inc. bank credit agreement,
a party from time to time with respect to our interest rate swap agreements, and
the custodian of certain of our pension assets.
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FEDERAL INCOME TAX CONSIDERATIONS
This is a summary of certain United States federal income tax
considerations relevant to holders of LYONs. This summary is based upon the
Internal Revenue Code of 1986, as amended (the "Code"), Treasury Regulations,
Internal Revenue Service rulings and judicial decisions now in effect, all of
which are subject to change (possibly with retroactive effect) or different
interpretations. There can be no assurance that the Internal Revenue Service
will not challenge one or more of the conclusions described herein, and we have
not obtained, nor do we intend to obtain, a ruling from the Internal Revenue
Service with respect to the United States federal income tax consequences of
acquiring or holding LYONs.
This summary does not purport to deal with all aspects of United States
federal income taxation that may be relevant to a holder (for example, persons
subject to the alternative minimum tax provisions of the Code). Also, it is not
intended to be wholly applicable to all categories of investors, such as foreign
corporations and individuals who are not citizens or residents of the United
States, some of which may be subject to special rules.
This summary also does not discuss the tax consequences arising under the
laws of any state, local or foreign jurisdiction. In addition, this summary is
limited to original purchasers of LYONs who acquire LYONs at their original
issue price within the meaning of Section 1273 of the Code and who will hold the
LYONs and common stock into which the LYONs may be converted as "capital assets"
within the meaning of Section 1221 of the Code.
PERSONS CONSIDERING THE PURCHASE, OWNERSHIP, CONVERSION OR OTHER
DISPOSITION OF LYONS SHOULD CONSULT THEIR OWN TAX ADVISORS REGARDING THE FEDERAL
INCOME TAX CONSEQUENCES AND THE CONSEQUENCES ARISING UNDER THE LAWS OF ANY
STATE, LOCAL OR FOREIGN TAXING JURISDICTION.
We have been advised by our counsel, Schiff Hardin & Waite, that in such
counsel's opinion the LYONs will be treated as indebtedness for United States
federal income tax purposes.
Counsel has further advised us that it is counsel's opinion that, while the
following does not purport to discuss all tax matters relating to the LYONs,
based upon the LYONs being treated as indebtedness, the following are the
material federal income tax consequences of the LYONs, subject to the
qualifications set forth above.
ORIGINAL ISSUE DISCOUNT
The LYONs were issued at a substantial discount from their principal amount
at maturity. For United States federal income tax purposes, the difference
between the issue price (the initial price at which a substantial number of the
LYONs are sold for money) and the stated principal amount at maturity of each
LYON constitutes original issue discount. Holders of the LYONs will be required
to include original issue discount in income periodically over the term of the
LYONs before receipt of cash or other payment attributable to such income.
A holder of a LYON must include in gross income for federal income tax
purposes, such holder's "accrued original issue discount," which is the sum of
the daily portions of original issue discount with respect to the LYON for each
day during the taxable year or portion of a taxable year on which such holder
holds the LYON. The daily portion is determined by allocating to each day of an
accrual period a pro rata portion of an amount equal to the adjusted issue price
of the LYON at the beginning of the accrual period multiplied by the yield to
maturity of the LYON. The accrual period of a LYON may be of any length and may
vary in length over the term of the LYON, provided that each accrual period is
no longer than one year and each scheduled payment of principal or interest
occurs at the end of an accrual period or on the first day of an accrual period.
The adjusted issue price of the LYON at the start of any accrual period is the
issue price of the LYON increased by the accrued original issue discount for
each prior accrual period. Under these rules, holders will have to include in
gross income increasingly greater amounts of original issue discount in each
successive accrual period. Any amount included in income as original issue
discount will increase a holder's tax basis in the LYON.
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We will be required to furnish annually to the Internal Revenue Service and
to certain noncorporate holders information regarding the amount of the original
issue discount attributable to that year. For this purpose, we will use a
six-month accrual period which ends on the day in each calendar year
corresponding to the maturity day of the LYON or the date six months before such
maturity date.
DISPOSITION OR CONVERSION
Except as described below, gain or loss upon a sale or other disposition of
a LYON or common stock received upon a conversion or a tender of a LYON will
generally be capital gain or loss (which will be long term if the LYON or common
stock is held for more than one year). Net capital gains of individuals are,
under certain circumstances, taxed at lower rates than items of ordinary income.
In the case of individuals, long-term capital gains with respect to property
held for more than one year are taxed at a maximum 20% federal tax rate. Net
capital gain of corporations is taxed the same as ordinary income, with a
maximum federal rate of 35%.
A holder's conversion of a LYON into common stock is generally not a
taxable event (except with respect to cash received in lieu of a fractional
share). The holder's obligation to include in gross income the daily portions of
original issue discount with respect to a LYON will terminate prospectively on
the date of conversion. The holder's basis in the common stock received on
conversion of a LYON will be the same as the holder's basis in the LYON at the
time of conversion (exclusive of any tax basis allocable to a fractional share).
The holding period for the common stock received on conversion will include the
holding period of the converted LYON (assuming each is held as a capital asset)
except that the holder's holding period for common stock attributable to accrued
original issue discount may commence on the day following the date of
conversion.
If a holder elects to exercise its option to tender a LYON to us on a
purchase date and we issue common stock in satisfaction of all or part of the
purchase price, assuming that the LYONs qualify as securities for federal income
tax purposes, the exchange of the LYON for common stock should qualify as a
reorganization or an otherwise nontaxable transaction for United States federal
income tax purposes. If the purchase price is paid solely in common stock,
neither gain nor loss would generally be recognized by the holder, except as
described below with respect to a fractional share. If the purchase price is
paid in a combination of shares of common stock and cash (other than cash
received in lieu of a fractional share), gain (but not loss) realized by the
holder would be recognized, but only to the extent such gain does not exceed
such cash. Such gain would generally be a capital gain (and would be a long-term
capital gain if the tendered LYON were held for more than one year).
A holder's tax basis in the common stock received in the exchange will be
the same as the holder's tax basis in the LYON tendered to us in exchange for
the LYON (exclusive of any tax basis allocable to a fractional share interest as
described below). However, this tax basis will be decreased by the amount of
cash (other than cash received in lieu of a fractional share), if any, received
in exchange and increased by the amount of any gain recognized by the holder on
the exchange (other than gain with respect to a fractional share). The holding
period for common stock received in the exchange will include the holding period
for the LYON tendered to us in exchange for the LYON (assuming each is held as a
capital asset). However, the holding period for common stock attributable to
accrued original issue discount may commence on the day following the purchase
date.
Cash received in lieu of a fractional share of common stock upon conversion
of a LYON or upon a tender of a LYON to us on a purchase date should be treated
as a payment in exchange for the fractional share. Accordingly, if the common
stock is a capital asset in the hands of the holder, the receipt of cash in lieu
of a fractional share of common stock should generally result in capital gain or
loss, if any, measured by the difference between the cash received for the
fractional share and the holder's basis in the fractional share.
If a holder elects to exercise its option to tender a LYON to us on a
purchase date or a Change in Control purchase date and we deliver cash in
satisfaction of the purchase price, the holder would recognize gain or loss,
measured by the difference between the amount of cash transferred by us to the
holder and
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the holder's basis in the tendered LYON. Gain or loss recognized by the holder
would generally be capital gain or loss (and would be long-term capital gain or
loss if the tendered LYON were held for more than one year).
CONSTRUCTIVE DIVIDEND
If at any time we make a distribution of property to our stockholders that
would be taxable to the stockholders as a dividend for United States federal
income tax purposes and, in accordance with the anti-dilution provisions of the
LYONs, the conversion rate of the LYONs is increased, such increase may be
deemed to be the payment of a taxable dividend to holders of the LYONs.
For example, an increase in the conversion rate in the event of
distributions of our evidences of indebtedness or our assets or an increase in
the event of an Extraordinary Cash Dividend will generally result in deemed
dividend treatment to holders of the LYONs, but generally an increase in the
event of stock dividends or the distribution of rights to subscribe for common
stock will not. See "Description of LYONS -- Conversion Rights."
BACKUP WITHHOLDING AND INFORMATION REPORTING
Information reporting will apply to payments of interest or dividends, if
any, made by us on, or the proceeds of the sale or other disposition of, the
LYONs or shares of common stock with respect to certain noncorporate holders,
and backup withholding at a rate of 31% may apply unless the recipient of such
payment supplies a taxpayer identification number, certified under penalties of
perjury, as well as certain other information or otherwise establishes an
exemption from backup withholding. Any amount withheld under the backup
withholding rules will be allowable as a credit against the holder's federal
income tax, provided that the required information is provided to the Internal
Revenue Service.
TAX EVENT
The modification of the terms of the LYONs by us upon a Tax Event as
described in "Description of LYONs -- Optional Conversion to Semiannual Coupon
Note Upon Tax Event," could possibly alter the timing of income recognition by
the holders with respect to the semiannual payments of interest due after the
option exercise date.
SELLING SECURITYHOLDERS
The LYONs were originally issued by us and sold by Merrill Lynch, Pierce,
Fenner & Smith Incorporated (the "Initial Purchaser") in a transaction exempt
from the registration requirements of the Securities Act to persons reasonably
believed by such Initial Purchaser to be "qualified institutional buyers" (as
defined by Rule 144A under the Securities Act). The Selling Securityholders
(which term includes their transferees, pledges, donees or successors) may from
time to time offer and sell pursuant to this prospectus any and all of the LYONs
and common stock.
Set forth below are the names of each Selling Securityholder, the principal
amount of LYONs that may be offered by such Selling Securityholder pursuant to
this prospectus and the number of shares of common stock into which such LYONs
are convertible. Unless set forth below, none of the Selling Securityholders has
had a material relationship with us or any of our predecessors or affiliates
within the past three years.
The following table sets forth certain information received by us on or
prior to July 31, 2000. However, any or all of the LYONs or common stock listed
below may be offered for sale pursuant to this prospectus by the Selling
Securityholders from time to time. Accordingly, no estimate can be given as to
the amounts of LYONs or common stock that will be held by the Selling
Securityholders upon consummation of any such sales. In addition, the Selling
Securityholders identified below may have sold, transferred, or otherwise
disposed of all or a portion of their LYONs since the date on which the
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information regarding their LYONs was provided, in transactions exempt from the
registration requirements of the Securities Act.
NUMBER OF
AGGREGATE PRINCIPAL SHARES OF
AMOUNT OF LYONS PERCENTAGE COMMON STOCK PERCENTAGE OF
AT MATURITY THAT OF LYONS THAT MAY BE COMMON STOCK
NAME MAY BE SOLD OUTSTANDING SOLD (1) OUTSTANDING (2)
- ---- ------------------- ----------- ------------ ---------------
Deutsche Bank Securities Inc.... $ 38,300,000 4.8% 285,729 *
Grace Brothers, Ltd............. 4,000,000 * 29,841 *
HBK Master Fund L.P............. 5,000,000 * 37,301 *
Libertyview Funds L.P........... 500,000 * 3,730 *
All other Holders of LYONs or
future transferees, pledgees,
donees or successors of any
such Holders(3)(4)............ 744,200,000 94.0 5,551,955 13.0%
------------ ----- ---------
Total................. 792,000,000 100.0 5,908,556
============ ===== =========
- ---------------
* Less than 1%.
(1) Assumes conversion of all of the Holder's LYONs at a conversion rate of
7.4603 shares of common stock per $1,000 principal amount at maturity of the
LYONs. However, this conversion rate will be subject to adjustment as
described under "Description of the LYONs -- Conversion Right." As a result,
the amount of common stock issuable upon conversion of the LYONs may
increase or decrease in the future.
(2) Calculated based on Rule 13d-3(d) (i) of the Exchange Act using 37,150,115
shares of common stock outstanding as of July 27, 2000. In calculating this
amount, we treated as outstanding the number of shares of common stock
issuable upon conversion of all of that particular Holder's LYONs. However,
we did not assume the conversion of any other Holder's LYONs.
(3) Information about other Selling Securityholders will be set forth in
prospectus supplements, if required.
(4) Assumes that any other Holders of LYONs, or any future transferees,
pledgees, donees or successors of or from any such other Holders of LYONs,
do not beneficially own any common stock other than the common stock
issuable upon conversion of the LYONs at the initial conversion rate.
The preceding table has been prepared based upon information furnished to
us by the Selling Securityholders in the table. From time to time, additional
information concerning ownership of the LYONs and common stock may rest with
certain Holders thereof not named in the preceding table, with whom we believe
we have no affiliation.
The Selling Securityholders listed in the above table may have sold or
transferred, in transactions exempt from the registration requirements of the
Securities Act, some or all of their LYONs since the date on which the
information is presented in the above table. Information about the Selling
Securityholders may change from over time. Any changed information will be set
forth in prospectus supplements.
Because the Selling Securityholders may offer all or some of their LYONs or
the underlying common stock from time to time, we can not estimate the amount of
the LYONs or the underlying common stock that will be held by the Selling
Securityholders upon the termination of any particular offering. See "Plan of
Distribution."
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PLAN OF DISTRIBUTION
The LYONs and the common stock are being registered to permit public
secondary trading of such securities by the holders thereof from time to time
after the date of this prospectus. We have agreed, among other things, to bear
all expenses (other than underwriting discounts and selling commissions) in
connection with the registration and sale of the LYONs and the common stock
covered by this prospectus.
We will not receive any of the proceeds from the offering of LYONs or the
common stock by the Selling Securityholders. We have been advised by the Selling
Securityholders that the Selling Securityholders may sell all or a portion of
the LYONs and common stock beneficially owned by them and offered hereby from
time to time on any exchange on which the securities are listed on terms to be
determined at the times of such sales. The Selling Securityholders may also make
private sales directly or through a broker or brokers. Alternatively, any of the
Selling Securityholders may from time to time offer the LYONs or the common
stock beneficially owned by them through underwriters, dealers or agents, who
may receive compensation in the form of underwriting discounts, commissions or
concessions from the Selling Securityholders and the purchasers of the LYONs and
the common stock for whom they may act as agent. The aggregate proceeds to the
Selling Securityholders from the sale of the LYONs or common stock offered by
them hereby will be the purchase price of such LYONs or common stock less
discounts and commissions, if any.
The LYONs and common stock may be sold from time to time in one or more
transactions at fixed offering prices, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the Holders of such securities or by agreement between such
Holders and underwriters or dealers who may receive fees or commissions in
connection therewith.
These transactions may include block transactions or crosses. Crosses are
transactions in which the same broker acts as an agent on both sides of the
trade.
In connection with sales of the LYONs and the underlying common stock or
otherwise, the Selling Securityholders may enter into hedging transactions with
broker-dealers. These broker-dealers may in turn engage in short sales of the
LYONs and the underlying common stock in the course of hedging their positions.
The Selling Securityholders may also sell the LYONs and underlying common stock
short and deliver LYONs and the underlying common stock to close out short
positions, or loan or pledge LYONs and the underlying common stock to
broker-dealers that in turn may sell the LYONs and the underlying common stock.
To our knowledge, there are currently no plans, arrangements or
understandings between any Selling Securityholders and any underwriter,
broker-dealer or agent regarding the sale of the LYONs and the underlying common
stock by the Selling Securityholders. Selling Securityholders may not sell any
or all of the LYONs and the underlying common stock offered by them pursuant to
this prospectus. In addition, we cannot assure you that any such Selling
Securityholder will not transfer, devise or gift the LYONs and the underlying
common stock by other means not described in this prospectus. In addition, any
securities covered by this prospectus which qualify for sale pursuant to Rule
144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A
rather than pursuant to this Prospectus.
The outstanding common stock is listed for trading on the New York Stock
Exchange.
The Selling Securityholders and any broker and any broker-dealers, agents
or underwriters that participate with the Selling Securityholders in the
distribution of the LYONs or the Common Stock may be deemed to be "underwriters"
within the meaning of the Securities Act, in which event any commissions
received by such broker-dealers, agents or underwriters and any profit on the
resale of the LYONs or the common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
The LYONs were issued and sold in June 2000 in transactions exempt from the
registration requirements of the Securities Act to persons reasonably believed
by the Initial Purchaser to be "qualified institutional buyers" (as defined in
Rule 144A under the Securities Act). We have agreed to indemnify
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the Initial Purchaser and each Selling Securityholder, and each Selling
Securityholder has agreed to indemnify us, the Initial Purchaser and each other
Selling Securityholder against certain liabilities arising under the Securities
Act.
The Selling Securityholders and any other person participating in such
distribution will be subject to the Exchange Act. The Exchange Act rules
include, without limitation, Regulation M, which may limit the timing of
purchases and sales of any of the LYONs and the underlying common stock by the
Selling Securityholders and any other such person. In addition, Regulation M of
the Exchange Act may restrict the ability of any person engaged in the
distribution of the LYONs and the underlying common stock to engage in
market-making activities with respect to the particular LYONs and the underlying
common stock being distributed for a period of up to five business days prior to
the commencement of such distribution. This may affect the marketability of the
LYONs and the underlying common stock and the ability of any person or entity to
engage in market-making activities with respect to the LYONs and the underlying
common stock.
We will use our best efforts to keep the registration statement of which
this prospectus is a part effective until the earlier of (i) the sale pursuant
to the registration statement of all the securities registered thereunder and
(ii) the expiration of the holding period applicable to such securities held by
persons that are not our affiliates under Rule 144(k) under the Securities Act
or any successor provision, subject to certain permitted exceptions in which
case we may prohibit offers and sales of LYONs and common stock pursuant to the
registration statement to which this prospectus relates.
LEGAL MATTERS
Certain legal matters relating to the validity of the LYONs and the common
shares to be issued upon conversion thereof were passed upon for us by Schiff
Hardin & Waite.
EXPERTS
The consolidated financial statements of Anixter International Inc.
appearing in Anixter International Inc.'s Annual Report (Form 10-K) for the year
ended December 31, 1999, have been audited by Ernst & Young LLP, independent
auditors, as set forth in their report thereon included therein and incorporated
herein by reference. Such consolidated financial statements are incorporated
herein by reference in reliance upon such report given on the authority of such
firm as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 under the Securities Act
with the SEC in connection with this offering. This prospectus is part of the
registration statement and does not contain all of the information contained in
the registration statement and all of the exhibits filed with the registration
statement. For further information about us, the LYONs and the common stock,
please see the registration statement and the exhibits filed with the
registration statement. Summaries in this prospectus of the contents of any
agreement or other document filed as an exhibit to this registration statement
are not necessarily complete. In each instance, please refer to the copy of the
agreement or other document filed as an exhibit to the registration statement.
We file reports, proxy statements and other information with the SEC, in
accordance with the Securities Exchange Act of 1934. You may read and copy our
reports, proxy statements and otherthis information filedat the following SEC public reference room:
| Public Reference Room | |
| 450 Fifth Street, N.W. | |
| Room 1024 | |
| Washington, D.C. 20549 |
You may also obtain copies of this information by us atmail from the public reference rooms ofroom at the SECabove address, at 450 Fifth Street, N.W., Washington, D.C. 20549,
Seven World Trade Center, Suite 1300, New York, New York, 10048 and Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661.prescribed rates. Please call the SEC at 1-800-SEC-0330 for furtheradditional information about the public reference rooms. Ourroom.
The SEC also maintains a web site that contains reports, proxy statements and other information filedabout issuers, including Anixter, who file electronically with the SEC are available to the public over the Internet at the SEC's World Wide
WebSEC. The address of that site at http://iswww.sec.gov.
The Commission allows us to "incorporate“incorporate by reference"reference” the information we have filed with the SEC, which means that we can disclose important information by referring you to those documents. We consider the information incorporated by reference to be a part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings madebelow.
| • | Our annual report on Form 10-K for the fiscal year ended January 2, 2004. | |
| • | Our quarterly report on Form 10-Q for the fiscal quarter ended April 2, 2004. | |
| • | Our quarterly report on Form 10-Q for the fiscal quarter ended July 2, 2004. | |
| • | Our quarterly report on Form 10-Q for the fiscal quarter ended October 1, 2004. | |
| • | Our current report on Form 8-K filed on October 5, 2004. | |
| • | Our current report on Form 8-K filed on October 6, 2004. | |
| • | Our current report on Form 8-K filed on November 15, 2004. |
All documents filed by us with the SEC under Sections 13(a), 13(c), 14 orand 15(d) of the Exchange Act until ourfrom the date of this prospectus to the end of the offering is complete.
- Annual Report onof the securities under this document (other than current reports furnished, rather than filed, under Form 10-K8-K) shall also be deemed to be incorporated by reference and will automatically update information in this prospectus.
Any statements made in this prospectus or in a document incorporated or deemed to be incorporated by reference in this prospectus will be deemed to be modified or superseded for purposes of this prospectus to the fiscal year ended December 31, 1999.
- Quarterly Reports on Form 10-Q for the fiscal quarters ended March 31,
2000 and June 30, 2000.
- Current Reports on Form 8-K dated June 19, 2000 and June 28, 2000.
- The description of our common stockextent that a statement contained in our Registration
Statement on Form 8-Athis prospectus or in any other subsequently filed withdocument that is also incorporated or deemed to be incorporated by reference in this prospectus modifies or supersedes the SEC on April 29, 1969, and any
amendmentstatement. Any statement so modified or report filed for the purposesuperseded will not be deemed, except as so modified or superseded, to constitute a part of updating such description.this prospectus.
You may request a copy of these filings, at no cost, by writing or telephoningcalling us at the following address andor telephone number:
Vice President -- Treasurer
Anixter International Inc.
4711 Golf Road
Skokie, Illinois 60076
(847) 677-2600
| Anixter International Inc. | |
| 2301 Patriot Blvd. | |
| Glenview, Illinois 60026 | |
| Attention: Treasurer | |
| Telephone: 224-521-8000 |
2
You should rely only on the information incorporated by reference or provided in this prospectus. We have not authorized anyone else to provide you with different information. We are not making an offer of these securities in any state where the offer is not permitted. You should not assume the information in this prospectus or any supplement is accurate as of any date other than the date on the front of those documents.
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FORWARD-LOOKING STATEMENTS
This prospectus 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 Exchange Act, which can be identified by the use of forwarding-looking terminology such as “believes,” “expects,” “intends,” “anticipates,” “contemplates,” “estimates,” “plans,” “projects,” “should,” “may” or similar expressions, including the negative thereof, or other variations thereon or comparable terminology indicating our expectations or beliefs concerning future events. Such statements are subject to a number of factors that could cause our actual results to differ materially from what is indicated in this prospectus. These factors include general economic conditions, technology changes, changes in supplier or customer relationships, commodity price fluctuations, exchange rate fluctuations, new or changed competitors, risks associated with the integration of recently acquired companies, and other factors identified in our reports filed with the SEC under the Exchange Act.
We undertake no obligation to update these forward-looking statements as a result of any events or circumstances after the date made or to reflect the occurrence of unanticipated events.
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ANIXTER INTERNATIONAL INC.
$792,000,000
LIQUID YIELD OPTION(TM) NOTES DUE 2020
(ZERO COUPON -- SENIOR)
AND
5,908,558 SHARES
We are the leading global distributor of data, voice, video and security network communication products. In addition, we are the largest North American distributor of specialty wire and cable products. As the result of our purchases of the operations and assets of Distribution Dynamics, Inc. and Pentacon, Inc. and the purchase of 100% of the stock of Walters Hexagon Group Limited, we are also a leading distributor of “C” class inventory components, including screws, bolts, nuts, washers, pins, rings, fittings, springs, electrical connectors and similar small parts, many of which are specialized or highly engineered for particular applications.
We are an industry leader in the provision of advanced inventory management services, including procurement, just-in-time delivery, quality assurance testing, advisory engineering services, component kit production, small component assembly and e-commerce and electronic data interchange, to a broad spectrum of customers. Our comprehensive supply chain management solutions are designed to reduce customer procurement and management costs and enhance overall production efficiencies. Inventory management services are frequently provided under customer contracts for some period in excess of one year and include the interfacing of Anixter International and customer information systems and the maintenance of dedicated distribution facilities.
Our customers include international, national, regional, and local companies that include end users of our products, installers and resellers of our products and original equipment manufacturers who use our products as a component of their end product. Customers for our products cover all industry groups, including manufacturing, telecommunications, internet service, finance, education, health care, transportation, utilities and government as well as contractors, installers, system integrators, value added resellers, architects, engineers and wholesale distributors.
ANIXTER INC.
All of the operating activities of Anixter International are conducted through its wholly owned subsidiary Anixter Inc.
Our principal executive offices are located at 2301 Patriot Boulevard, Glenview, Illinois 60026. Our telephone number at those offices is (224) 521-8000.
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USE OF COMMON STOCK
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PROSPECTUS
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PROCEEDS
Unless otherwise described in the applicable prospectus supplement, we will use the net proceeds from the sale of securities offered by this prospectus and any applicable prospectus supplement for general corporate purposes, including additions to working capital, repayment of existing indebtedness and possible acquisitions.
RATIOS OF EARNINGS TO FIXED CHARGES
The following table sets forth our ratio of earnings to fixed charges for the periods indicated:
| Fiscal Year Ended | Nine Months Ended | |||||||||||||||||||||||||||
| December 31, | December 29, | December 28, | January 3, | January 2, | October 3, | October 1, | ||||||||||||||||||||||
| 1999 | 2000 | 2001 | 2003 | 2004 | 2003 | 2004 | ||||||||||||||||||||||
| Ratio of earnings to fixed charges(1) | 2.44 | 3.18 | 1.72 | 2.93 | 3.13 | 2.85 | 4.61 | |||||||||||||||||||||
| (1) | Earnings represent income before taxes, excluding equity investment income relating to Anixter Receivables Corporation, plus fixed charges. Fixed charges consist of (i) interest on all indebtedness and amortization of debt discount and deferred financing fees, (ii) capitalized interest and (iii) interest factor attributable to rentals. As a result of our adoption of Statement of Financial Accounting Standards No. 145 on January 4, 2003, any gain or loss from the extinguishment of debt is classified as income or loss from continuing operations rather than as an extraordinary item. As a result, the earnings in the above ratio for the fiscal year ended January 3, 2003 and prior periods have been revised to include any loss on extinguishment of debt. |
DESCRIPTION OF DEBT SECURITIES
Anixter may issue the debt securities, in one or more series, from time to time under an Indenture, dated as of September 6, 1996, as supplemented by the First Supplemental Indenture, among Anixter, Anixter International Inc., 2000
(TM)TRADEMARKas guarantor, and The Bank of New York, as Trustee. We refer to the Indenture, as so supplemented, as the Indenture in this description. The Bank of New York, as trustee under the Indenture, will act as indenture trustee for the purposes of the Trust Indenture Act. We have filed the Indenture as an exhibit to the registration statement of which this prospectus is a part.
This section briefly summarizes some of the terms of the debt securities and the Indenture. This section does not contain a complete description of the debt securities or the Indenture. The description of the debt securities is qualified in its entirety by the provisions of the Indenture. References to section numbers in this description of the debt securities, unless otherwise indicated, are references to section numbers of the Indenture.
General
The Indenture does not limit the amount of debt securities that may be issued. The Indenture provides for the issuance of debt securities from time to time in one or more series. The terms of each series of debt securities may be established in a supplemental indenture or officer’s certificates establishing such series.
The debt securities:
| • | are unsecured, unsubordinated obligations of Anixter; | |
| • | are equal in right of payment to any other unsecured, unsubordinated obligations of Anixter; and | |
| • | are guaranteed on a senior unsecured basis by Anixter International. |
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If Anixter uses this prospectus to offer debt securities, an accompanying prospectus supplement will describe the following terms of the debt securities being offered, to the extent applicable:
| • | the title; | |
| • | any limit on the aggregate principal amount; | |
| • | the identity of the registrar and paying agent for the debt securities; | |
| • | the date or dates, or the method by which such date or dates are determined or extended, on which Anixter will pay principal and premium, if any; | |
| • | the interest rate or rates (which may be fixed or variable) or the method of determining them, the date interest begins to accrue and the interest payment dates or the method of determining them; | |
| • | the regular record dates for any interest payment dates; | |
| • | the place or places where Anixter will pay principal and interest; | |
| • | the terms and conditions of any optional redemption, including the date after which, and the price or process at which, Anixter may redeem securities; | |
| • | the terms and conditions of any mandatory or optional redemption, repayment or purchase of the debt securities pursuant to a sinking fund or at the option of the holder of debt securities, including the date after which, and the price or prices at which, Anixter may redeem, repay or purchase the debt securities; | |
| • | the denomination in which Anixter will issue securities; | |
| • | the currency or currencies in which Anixter will pay principal and interest; | |
| • | any index or indices used to determine the amount of payments; | |
| • | the terms and conditions of any election by Anixter to pay, or by the holder of debt securities to receive, principal or interest on any debt security in currency or currencies other than those in which the debt securities are offered; | |
| • | the portion of principal payable on declaration of acceleration or maturity; | |
| • | if applicable, that the debt securities are defeasible pursuant to the provisions of the Indenture; | |
| • | any addition to or change in the events of default of Anixter or Anixter International applicable to the debt securities, and any change in the right of the indenture trustee or the holder of debt securities to declare the principal and interest due and payable; | |
| • | any addition or change to the covenants and definitions; | |
| • | whether registered or bearer securities will be issued, any restrictions on the offer, sale or delivery of bearer securities and the terms, if any, upon which bearer securities may be exchanged for registered securities and vice versa; | |
| • | whether Anixter will issue the debt securities in whole or in part in global form and, in such case, the depositary for such global securities and the circumstances under which beneficial owners of interests in the global security may exchange such interest for securities; and | |
| • | any other terms of the debt securities not inconsistent with the provisions of the Indenture. (See Section 301.) |
Guarantee of Anixter International
Anixter International will unconditionally guarantee to each holder of debt securities and to the indenture trustee the due and punctual payment of the principal of, and premium, if any, and interest on
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Anixter International is a holding company with no independent business operations or source of income of its own. It conducts substantially all of its operations through Anixter and, as a result, Anixter International depends on the earnings and cash flow of, and dividends or distributions from, Anixter to provide the funds necessary to meet its debt and contractual obligations. Anixter International’s holding company status also means that its right to participate in any distribution of the assets of any of its subsidiaries upon liquidation, reorganization or otherwise is subject to the prior claims of the creditors of each of the subsidiaries (except to the extent that the claims of Anixter International itself as a creditor of a subsidiary may be recognized).
Denomination, Registration and Transfer
Anixter may issue the debt securities as registered securities in certificated form or as global securities as described under the heading “Book-Entry Issuance.” Unless otherwise specified in the applicable prospectus supplement, Anixter will issue registered debt securities in denominations of $1,000 or integral multiples of $1,000. (See Section 302.)
If Anixter issues the debt securities as registered securities, Anixter will keep at one of its offices or agencies a register in which it will provide for the registration and transfer of the debt securities. Anixter will appoint that office or agency the security registrar for the purpose of registering and transferring the debt securities.
The holder of any registered debt security may exchange the debt security for registered debt securities of the same series having the same stated maturity date and original issue date, in any authorized denominations, in like tenor and in the same aggregate principal amount. The holder may exchange those debt securities by surrendering them in a place of payment maintained for this purpose at the office or agency Anixter has appointed securities registrar. Holders may present the debt securities for exchange or registration of transfer, duly endorsed or accompanied by a duly executed written instrument of transfer satisfactory to Anixter and the securities registrar. No service charge will apply to any exchange or registration of transfer, but Anixter or the indenture trustee may require payment of any taxes and other governmental charges as described in the Indenture. (See Section 305.)
Unless otherwise set forth in the applicable prospectus supplement, Anixter has appointed the indenture trustee as security registrar for each series of debt securities. (See Section 305.) Any other office or agency initially designated by Anixter for the registration and transfer of any debt securities will be named in the applicable prospectus supplement. Anixter may at any time designate additional offices and agencies for the registration and transfer or exchange of any debt securities or rescind such designations, except that Anixter will be required to maintain an office or agency in each place of payment for the debt securities of each series. (See Section 1002.)
If debt securities of any series are redeemed, Anixter will not be required to issue, register transfer of or exchange any debt securities of that series during a period beginning at opening of business 15 days before the selection of such debt securities and ending at the close of business on the day of a mailing of a notice of redemption. After notice is given, Anixter will not be required to issue, register the transfer of or exchange any debt securities that have been selected to be either partially or fully redeemed, except the unredeemed portion of any debt security being partially redeemed. (See Section 305.)
Payment and Paying Agents
Unless otherwise indicated in the applicable prospectus supplement, on each interest payment date, Anixter will pay interest on each debt security to the person in whose name that debt security is registered as of the close of business on the record date relating to that interest payment date. If Anixter defaults in
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| • | as of the close of business on a date that the indenture trustee selects, which may not be more than 15 days or less than 10 days before the date Anixter proposes to pay the defaulted interest, or | |
| • | in any other lawful manner that does not violate the requirements of any securities exchange on which that debt security is listed and that the indenture trustee believes is acceptable. (See Section 307.) |
Unless otherwise indicated in the applicable prospectus supplement, Anixter will pay the principal of and premium (if any) or interest on the debt securities when they are presented at the office of the indenture trustee, as paying agent. Anixter may at any time designate additional paying agents or one or more other offices or agencies where the debt securities may be presented or surrendered for payment or rescind such designations, except that Anixter will be required to maintain an office or agency in each place of payment for debt securities of a particular series.
Redemption
The applicable prospectus supplement will contain the specific terms on which Anixter may redeem a series of debt securities prior to its stated maturity. Anixter will send a notice of redemption to holders at least 30 days but not more than 60 days prior to the redemption date, unless a shorter period is specified in the debt securities to be redeemed. The notice will state:
| • | the redemption date; | |
| • | the redemption price; | |
| • | if less than all of the debt securities of the series are being redeemed, the particular debt securities to be redeemed (and the principal amounts, in the case of a partial redemption); | |
| • | that on the redemption date, the redemption price will become due and payable and any applicable interest will cease to accrue on and after that date; | |
| • | the place or places of payment; and | |
| • | whether the redemption is for a sinking fund. (See Section 1104.) |
On or before any redemption date, Anixter will deposit an amount of money with the indenture trustee or with a paying agent sufficient to pay the redemption price. (See Section 1105.)
If Anixter is redeeming less than all the debt securities, the indenture trustee will select the debt securities to be redeemed using a method it considers fair and appropriate. After the redemption date, holders of redeemed debt securities will have no rights with respect to the debt securities except the right to receive the redemption price and any unpaid interest to the redemption date. (See Section 1103.)
Consolidation, Merger, Conveyance, Transfer or Lease
Neither Anixter nor Anixter International shall consolidate with, or sell or convey all or substantially all of their respective assets to, or merge with or into any other person or entity unless:
| • | either Anixter or Anixter International, as applicable, is the continuing corporation, or the successor is a corporation organized and existing under the laws of the United States or a state thereof and the successor corporation expressly assumes by an indenture supplement Anixter International’s or Anixter’s obligations, as applicable, on the debt securities and under the Indenture; | |
| • | Anixter International or Anixter, as applicable, or the successor corporation, as the case may be, is not immediately after the merger or consolidation, or the sale, lease or conveyance, in default in the performance of any covenant or condition under the Indenture; and |
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| • | after giving effect to the transaction, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred or be continuing. (See Section 801.) |
Certain Covenants of Anixter and Anixter International
The Indenture contains certain covenants of Anixter, Anixter International and certain subsidiaries related to the incurrence of secured debt, sale and leaseback transactions and the transfer of principal facilities. The Indenture also contains certain covenants of Anixter and certain subsidiaries related to the incurrence of funded debt by certain subsidiaries of Anixter. These covenants do not, however, focus on the amount of debt incurred in any transaction and do not otherwise afford protection to holders of the debt securities in the event of a highly leveraged transaction that is not in violation of the covenants. Anixter and Anixter International do not currently intend to include any covenants or other provisions affording such protection in any series of debt securities. If in the future Anixter and Anixter International determine that it is desirable to include covenants or other provisions of this type in any series of debt securities, they will be described in the prospectus supplement for that series.
| Limitations on Secured Debt |
The Indenture provides that Anixter and Anixter International will not at any time create, incur, assume or guarantee, and will not cause or permit a Restricted Subsidiary to create, incur, assume or guarantee, any Secured Debt, and Anixter and Anixter International will not at any time create, and will not cause or permit a Restricted Subsidiary to create, any Security Interest securing any indebtedness existing on the date of the First Supplemental Indenture to the Indenture which would constitute Secured Debt if it were secured by a Security Interest, without making effective provisions whereby the debt securities then outstanding under the Indenture and any other indebtedness of or guaranteed by Anixter, Anixter International or such Restricted Subsidiary then entitled thereto, subject to applicable priorities of payment, shall be secured by the Security Interest securing such Secured Debt equally and ratably with any and all other obligations and indebtedness so secured, so long as such other obligations and indebtedness shall be so secured; provided, however, that the foregoing prohibition will not apply to:
| • | certain Security Interests to secure payment of the cost of acquisition, construction, development or improvement of property; | |
| • | Security Interests on property at the time of acquisition assumed by Anixter, Anixter International or a Restricted Subsidiary, or on the property or on the outstanding shares or indebtedness of a corporation or firm at the time it becomes a Restricted Subsidiary or is merged into or consolidated with Anixter, Anixter International or a Restricted Subsidiary, or on properties of a corporation or firm acquired by Anixter, Anixter International or a Restricted Subsidiary as an entirety or substantially as an entirety; | |
| • | Security Interests arising from conditional sales agreements or title retention agreements with respect to property acquired by Anixter, Anixter International or any Restricted Subsidiary; | |
| • | Security Interests securing indebtedness of a Restricted Subsidiary owing to Anixter, Anixter International or to another Restricted Subsidiary; | |
| • | Security Interests securing indebtedness of Anixter or a Restricted Subsidiary owing to an Unrestricted Subsidiary of the character described in clause (c) of the definition on Unrestricted Subsidiary; | |
| • | mechanics, and other statutory liens, arising in the ordinary course of business (including construction of facilities) in respect of obligations that are not due or that are being contested in good faith; | |
| • | liens for taxes, assessments or governmental charges not yet delinquent or for taxes, assessments or governmental charges that are being contested in good faith; |
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| • | Security Interests (including judgment liens) arising in connection with legal proceedings so long as such proceedings are being contested in good faith and, in case of judgment liens, execution thereon is stayed; | |
| • | certain landlords’ liens on fixtures; | |
| • | Security Interests to secure partial, progress, advance or other payments or indebtedness incurred for the purpose of financing construction on or improvement of property subject to such Security Interests; and | |
| • | certain Security Interests in favor, or made at the request, of governmental bodies. |
Additionally, such permitted Secured Debt includes (with certain limitations) any extension, renewal or refunding, in whole or in part, of any Secured Debt permitted at the time of the original incurrence thereof. In addition to the foregoing, Anixter, Anixter International and the Restricted Subsidiaries may incur Secured Debt, without equally and ratably securing the debt securities, if the sum of (a) the amount of Secured Debt entered into after the date of the Indenture and otherwise prohibited by the Indenture plus (b) the aggregate value of Sale and Leaseback Transactions entered into after the date of the Indenture, and otherwise prohibited by the Indenture, does not exceed ten percent of Consolidated Net Tangible Assets. (See Section 1005.)
| Limitations on Sale and Leaseback Transactions |
The Indenture provides that Anixter and Anixter International may not, and may not permit any Restricted Subsidiary to, engage in any Sale and Leaseback Transaction unless:
| • | Anixter, Anixter International or such Restricted Subsidiary would be entitled to incur Secured Debt only by reason of the provision described in the last sentence of “Limitations on Secured Debt” equal in amount to the net proceeds of the property sold or transferred or to be sold or to be transferred pursuant to such Sale and Leaseback Transaction and secured by a Security Interest on the property to be leased without equally and ratably securing the debt securities outstanding under the Indenture as provided under said section; or | |
| • | Anixter, Anixter International or a Restricted Subsidiary shall apply, within 180 days after the effective date of such sale or transfer, an amount equal to such net proceeds to (i) to the acquisition, construction, development or improvement of properties, facilities or equipment which are, or upon such acquisition, construction, development or improvement will be, a Principal Facility or Facilities or a part thereof or (ii) to the redemption of debt securities or to the repayment of Senior Funded Debt of Anixter, Anixter International or of any Restricted Subsidiary (other than the Senior Funded Debt owed to any Restricted Subsidiary), or in part to such acquisition, construction, development or improvement and in part to such redemption and/or repayment. In lieu of applying an amount equal to such net proceeds to such redemption Anixter or Anixter International may, within 180 days after such sale or transfer, deliver to the indenture trustee debt securities (other than debt securities made the basis of a reduction in a mandatory sinking fund payment) for cancellation and thereby reduce the amount to be applied to the redemption of the debt securities by an amount equivalent to the aggregate principal amount of the debt securities so delivered. (See Section 1006.) |
| Limitations on Transfers of Principal Facilities |
The Indenture provides that so long as any debt securities are outstanding Anixter and Anixter International will not, and will not cause or permit any Restricted Subsidiary to, transfer any Principal Facility to any party other than Anixter, Anixter International or a Restricted Subsidiary unless within
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| • | to the acquisition, construction, development or improvement of properties, facilities or equipment which are, or upon such acquisition, construction, development or improvement will be, a Principal Facility or Facilities or a part thereof; or | |
| • | to the redemption of the debt securities or to the repayment of Senior Funded Debt of Anixter, Anixter International or any Restricted Subsidiary (other than Senior Funded Debt owed to any Restricted Subsidiary), or in part to such acquisition, construction, development or improvement and in part to such redemption and/or repayment. In lieu of applying all or any part of such amount to such redemption, Anixter International may, within 180 days after such transfer, deliver to the indenture trustee debt securities (other than debt securities made the basis of a reduction in a mandatory sinking fund payment) for cancellation and thereby reduce the amount to be applied to the redemption of the debt securities by an amount equivalent to the aggregate principal amount of the debt securities so delivered. (See Section 1007.) |
| Limitations on Senior Funded Debt by Restricted Subsidiaries of Anixter |
The Indenture provides that so long as the debt securities are outstanding Anixter will not permit any of its Restricted Subsidiaries to:
| • | create, assume or suffer to exist any Senior Funded Debt other than (i) Senior Funded Debt which is permitted to such Restricted Subsidiary as Secured Debt under the Indenture, (ii) Senior Funded Debt owed to Anixter, Anixter International or another Restricted Subsidiary, (iii) Senior Funded Debt of a corporation or other entity existing at the time it becomes a Restricted Subsidiary or is merged with or into a Restricted Subsidiary, (iv) Senior Funded Debt of a corporation or other entity assumed by a Restricted Subsidiary in the acquisition of all or a portion of the business of such corporation or other entity, and (v) Senior Funded Debt existing as of the date of the First Supplemental Indenture to the Indenture; or | |
| • | guarantee, directly or indirectly through any arrangement which is substantially the equivalent of a guarantee, any Senior Funded Debt of another Subsidiary except for (i) guarantees existing on the date of the First Supplemental Indenture to the Indenture, and (ii) guarantees of Senior Funded Debt permitted to a Restricted Subsidiary under the preceding bullet. (See Section 1008.) |
| Certain Definitions |
The following terms are defined substantially as follows in Section 101 of the Indenture and are used in this description as so defined:
| “Consolidated Net Tangible Assets”means, in each case, with respect to Anixter International (a) the total amount of assets (less applicable reserves and other properly deductible items) after deducting therefrom (i) all liabilities and liability items, except for indebtedness payable by its terms more than one year from the date of incurrence thereof (or renewable or extendable at the option of the obligor for a period ending more than one year after such date of incurrence), capitalized rent, capital stock (including redeemable preferred stock) and surplus, surplus reserves and deferred income taxes and credits and other non-current liabilities, and (ii) all goodwill, trade names, trademarks, patents, unamortized debt discount, unamortized expenses incurred in the issuance of debt, and other like intangibles which, in each case, under generally accepted accounting principles in effect on the date of the First Supplemental Indenture to the Indenture would be included on a consolidated balance sheet of Anixter International and its Restricted Subsidiaries, less (b) loans, advances, equity investments and guarantees (other than accounts receivable arising from the sale of merchandise in the ordinary course of business) at the time outstanding that were made or incurred by Anixter International and its Restricted Subsidiaries to, in or for Unrestricted Subsidiaries or to, in |
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| or for corporations while they were Restricted Subsidiaries and which at the time of computation are Unrestricted Subsidiaries. | |
| “Principal Facility”means any land, building, machinery or equipment, or leasehold interests and improvements in respect of the foregoing, owned, on the date of the First Supplemental Indenture to the Indenture or thereafter, by Anixter, Anixter International or a Restricted Subsidiary, which has a gross book value (without deduction for any depreciation reserves) at the date as of which the determination is being made of in excess of one percent of the Consolidated Net Tangible Assets, other than any such land, building, machinery or equipment, or leasehold interests and improvements in respect of the foregoing which, in the opinion of the Board of Directors of Anixter International (evidenced by a board resolution), is not of material importance to the business conducted by Anixter International and its Subsidiaries taken as a whole. | |
| “Restricted Subsidiary”means (a) any Subsidiary other than an Unrestricted Subsidiary and (b) any Subsidiary that was an Unrestricted Subsidiary but which, subsequent to the date of the First Supplemental Indenture to the Indenture, is designated by Anixter and Anixter International (evidenced by a resolution of their respective boards of directors) to be a Restricted Subsidiary; provided, however, that Anixter and Anixter International may not designate any such Subsidiary to be a Restricted Subsidiary if Anixter International or Anixter would thereby breach any covenant or agreement contained in the Indenture (on the assumption that any transaction to which such Subsidiary was a party at the time of such designation and which would have given rise to Secured Debt or Senior Funded Debt or constituted a Sale and Leaseback Transaction at the time it was entered into had such Subsidiary then been a Restricted Subsidiary was entered into at the time of such designation). | |
| “Sale and Leaseback Transaction”means any sale or transfer made by Anixter, Anixter International or one or more Restricted Subsidiaries (except a sale or transfer made to Anixter, Anixter International or one or more Restricted Subsidiaries) of any Principal Facility that (in the case of a Principal Facility which is a building or equipment) has been in operation, use or commercial production (exclusive of test and start-up periods) by Anixter, Anixter International or any Restricted Subsidiary for more than 180 days prior to such sale or transfer, or that (in the case of a Principal Facility that is a parcel of real property not containing a building) has been owned by Anixter, Anixter International or any Restricted Subsidiary for more than 180 days prior to such sale or transfer, if such sale or transfer is made with the intention of leasing, or as part of an arrangement involving the lease of such Principal Facility to Anixter, Anixter International or a Restricted Subsidiary (except a lease for a period not exceeding 36 months made with the intention that the use of the leased Principal Facility by Anixter, Anixter International or such Restricted Subsidiary will be discontinued on or before the expiration of such period). The creation of any Secured Debt permitted under the applicable section of the Indenture will not be deemed to create or be considered a Sale and Leaseback Transaction. | |
| “Secured Debt”means any indebtedness for money borrowed by, or evidenced by a note or other similar instrument of, Anixter, Anixter International or a Restricted Subsidiary, and any other indebtedness of Anixter, Anixter International or a Restricted Subsidiary on which, by the terms of such indebtedness, interest is paid or payable, including obligations evidenced or secured by leases, installment sales agreements or other instruments (other than indebtedness owed by a Restricted Subsidiary to Anixter or Anixter International, or by a Restricted Subsidiary to another Restricted Subsidiary, or by Anixter or Anixter International to a Restricted Subsidiary), which in any such case is secured by (a) a Security Interest in any property or assets of Anixter, Anixter International or any Restricted Subsidiary, or (b) a Security Interest in any shares of stock owned directly or indirectly by Anixter or Anixter International in a Restricted Subsidiary or in indebtedness for money borrowed by a Restricted Subsidiary from Anixter, Anixter International or another Restricted Subsidiary. The securing in the foregoing manner of any previously unsecured debt shall be deemed to be the creation of Secured Debt at the time such security is given. The amount of Secured Debt at |
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| any time outstanding shall be the aggregate amount then owing thereon by Anixter, Anixter International and the Restricted Subsidiaries. | |
| “Security Interest”means any mortgage, pledge, lien, encumbrance or other security interest which secures payment or performance of an obligation. | |
| “Senior Funded Debt”means any obligation of Anixter, Anixter International or any Restricted Subsidiary which constituted funded debt as of the date of its creation and that, in the case of such funded debt of Anixter and Anixter International is not subordinate and junior in right of payment to the prior payment of the debt securities. As used herein “funded debt” means all indebtedness for borrowed money having a maturity of more than 12 months from the date as of which the amount thereof is to be determined. | |
| “Subsidiary”means a corporation, association, partnership or other entity of which more than 50% of the outstanding voting stock is owned, directly or indirectly, by Anixter International, Anixter or by one or more other Subsidiaries, or by Anixter International, Anixter and one or more other Subsidiaries. | |
| “Unrestricted Subsidiary”means (a) any Subsidiary acquired or organized after the date of the First Supplemental Indenture to the Indenture,provided, however,that such Subsidiary is not a successor, directly or indirectly, to, and does not directly or indirectly own any equity interest in, any Restricted Subsidiary, (b) any Subsidiary the principal business and assets of which are located outside the United States of America (including its territories and possessions), (c) any Subsidiary the principal business of which consists of financing the acquisition or disposition of machinery, equipment, inventory, accounts receivable and other real, personal and intangible property by persons including Anixter, Anixter International or a Subsidiary, (d) any Subsidiary the principal business of which is owning, leasing, dealing in or developing real property for residential or office building purposes, and (e) any Subsidiary substantially all the assets of which consist of stock or other securities of an Unrestricted Subsidiary or Unrestricted Subsidiaries of the character described in clauses (a) through (d) of this paragraph, unless and until, in each of the cases specified in this paragraph, any such Subsidiary shall have been designated to be a Restricted Subsidiary pursuant to clause (b) of the definition of “Restricted Subsidiary.” |
Events of Default
The Indenture provides, with respect to any outstanding series of debt securities, that any of the following events constitutes an “Event of Default”:
| • | default in the payment of any interest upon any debt security of that series that becomes due and payable and the default continues for 30 days; | |
| • | default in the payment of principal of or any premium on any debt security of that series when due at its maturity; | |
| • | default in the deposit of any sinking fund payment when due; | |
| • | default in the performance, or breach, of any covenant or warranty of Anixter or Anixter International in the Indenture with respect to any debt securities of that series for 30 days after written notice to Anixter and Anixter International from the indenture trustee, or to Anixter, Anixter International and the indenture trustee from the holders of at least 25% of the outstanding debt securities of that series; | |
| • | default by Anixter or Anixter International under any mortgage, indenture, bonds, debentures, notes or instruments under which there may be issued, secured or evidenced indebtedness, constituting a failure to pay in excess of $25,000,000 in principal amount of such indebtedness to become due and payable prior to its stated maturity, and that acceleration shall not be rescinded or annulled, or such indebtedness shall not have been discharged, before written notice related thereto has been given by the indenture trustee or the holders of at least 25% of the outstanding debt securities of that series; |
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| • | certain events in bankruptcy, insolvency or reorganization with respect to Anixter and Anixter International; and | |
| • | any other default specified in the prospectus supplement relating to the debt securities or such series. (See Section 501.) |
If an Event of Default occurs as a result of either certain events in bankruptcy, insolvency or reorganization with respect to Anixter and Anixter International, then all unpaid principal of, premium (if any) and accrued interest on all debt securities at the time outstanding will become immediately due and payable without any declaration or other act on the part of the indenture trustee or any holder of debt securities. If an Event of Default occurs for any other reason with respect to debt securities of a particular series, the indenture trustee or the holders of 25% in principal amount of the outstanding debt securities of that series may declare the debt securities of that series due and payable immediately. (See Section 502.)
The holders of a majority of the aggregate principal amount of the outstanding debt securities of a particular series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the indenture trustee under the Indenture, or exercising any trust or power conferred on the indenture trustee with respect to the debt securities of that series. The indenture trustee may refuse to follow directions that are in conflict with law or the Indenture or that are unduly prejudicial to other holders. The indenture trustee may take any other action it deems proper that is not inconsistent with those directions. (See Section 512.)
The holders of a majority of the aggregate principal amount of the outstanding debt securities of any series may waive any past default under the Indenture and its consequences, except a default:
| • | in respect of a payment of principal of, or premium (if any), or interest on any debt security; or | |
| • | in respect of a covenant or provision that cannot be modified or amended without the consent of the holder of each affected debt security. (See Section 513.) |
At any time after the holders of the debt securities of a series declare that the debt securities of that series are due and immediately payable, a majority in principal amount of the outstanding holders of debt securities of that series may rescind and cancel the declaration and its consequences: (1) if all defaults (other than the non-payment of principal, premium, if any, or interest which has become due solely by the declaration) have been cured or waived, and (2) Anixter or Anixter International has paid or deposited with the indenture trustee an amount sufficient to pay:
| • | all overdue interest on the debt securities of that series; | |
| • | the principal of, and premium (if any), on any debt securities of that series which are due other than by the declaration; | |
| • | interest on overdue interest (if lawful); and | |
| • | sums paid or advanced by and amounts due to the indenture trustee under the Indenture. (See Section 502.) |
Modification of the Indenture
Anixter, Anixter International and the indenture trustee may modify or amend the Indenture, without the consent of the holders of any debt securities, for any of the following purposes:
| • | to evidence the succession of another person as obligor under the Indenture; | |
| • | to add to Anixter’s or Anixter International’s covenants or to surrender any right or power conferred on Anixter or Anixter International under the Indenture; | |
| • | to add or change any provisions of the Indenture to provide the issuance of bearer securities of any series, registrable or not registrable as to principal, and with or without interest coupons, or to permit or facilitate the issuance of securities of any series in uncertificated form; |
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| • | to add, change or eliminate any provisions of the Indenture related to one or more series of debt securities; provided that any such addition, change or elimination shall either (a) not adversely affect the rights of the holders of debt securities of any series in any material respect, or (b) not apply to any debt securities of any series created prior to the execution of such supplemental indenture where such addition, change or elimination has an adverse affect on the rights of the holders of such debt securities in any material respect; | |
| • | to secure the debt securities of any series; | |
| • | to establish the form or terms of debt securities of any series; | |
| • | to evidence or provide for the acceptance or appointment by a successor indenture trustee or facilitate the administration of the trusts under the Indenture by more than one indenture trustee; | |
| • | to cure any ambiguity or defect in and to correct or supplement any provision in the Indenture that may be inconsistent with any other provision of the Indenture, or to make any other provisions with respect to matters or questions arising under the Indenture; provided, however, that any such action shall not be inconsistent with the provisions of the Indenture and shall not adversely affect the rights of the holders of debt securities of any series in any material respect; | |
| • | to modify, eliminate or add to the provisions of the Indenture to such extent as shall be necessary to effect qualification of the Indenture under the Trust Indenture Act, or under any similar federal statute hereafter enacted, and to add to the Indenture such other provisions as may be expressly permitted by the Trust Indenture Act; | |
| • | to amend or supplement the restrictions on and procedures for transfers of debt securities to reflect any change in applicable law or regulation. (See Section 901.) |
The Indenture provides that we and the indenture trustee may amend the Indenture or the debt securities with the consent of the holders of a majority in principal amount of the then outstanding debt securities of each series affected by the amendment voting as one class. However, without the consent of each holder of any outstanding debt securities affected, an amendment or modification may not, among other things:
| • | change the stated maturity of the principal or interest on any debt security; | |
| • | reduce the principal amount of, rate of interest on, or premium (if any) payable upon the redemption of, any debt security; | |
| • | reduce the principal amount of a discount security that would be payable upon acceleration of its maturity | |
| • | change the place or currency of payment of principal of, or any premium (if any) or interest on, any debt security; | |
| • | impair a holder’s right to institute suit for the enforcement of any payment after the stated maturity or after any redemption date; | |
| • | modify or waive any provision relating to the guarantees; | |
| • | reduce the percentage of holders of debt securities necessary to modify or amend the Indenture or to consent to any waiver under the Indenture; and | |
| • | modify such provisions with respect to modification and waiver. (See Section 902.) |
Satisfaction and Discharge
Under the Indenture, Anixter can terminate its obligations with respect to debt securities of any series not previously delivered to the indenture trustee for cancellation when those debt securities:
| • | have become due and payable; |
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| • | will become due and payable at their stated maturity within one year; or | |
| • | are to be called for redemption within one year under arrangements satisfactory to the indenture trustee for giving notice of redemption. |
Anixter may terminate its obligations with respect to the debt securities of that series by depositing with the indenture trustee, as trust funds in trust for the purpose, an amount sufficient to pay and discharge the entire indebtedness on the debt securities of that series. In that case, the Indenture will cease to be of further effect and Anixter’s obligations will be satisfied and discharged with respect to that series (except as to Anixter’s obligations to pay all other amounts due under the Indenture and to provide certain officers’ certificates and opinions of counsel to the indenture trustee). At the expense of Anixter, the indenture trustee will execute proper instruments acknowledging the satisfaction and discharge. (See Section 401.)
Book-Entry Issuance
Unless otherwise specified in the applicable prospectus supplement, Anixter will issue any debt securities offered under this prospectus as “global securities.” We will describe the specific terms for issuing any debt security as a global security in the prospectus supplement relating to that debt security.
Unless otherwise specified in the applicable prospectus supplement, The Depository Trust Company, or DTC, will act as the depositary for any global securities. Anixter will issue global securities as fully registered securities registered in the name of DTC’s nominee, Cede & Co. Anixter will issue one or more fully registered global securities for each issue of debt securities, each in the aggregate principal or stated amount of such issue, and will deposit the global securities with DTC.
DTC is a limited-purpose trust company organized under the New York Banking Law, a “banking organization” within the meaning of the New York Banking Law, a member of the Federal Reserve System, a “clearing corporation” within the meaning of the New York Uniform Commercial Code, and a “clearing agency” registered under the provisions of Section 17A of the Securities Exchange Act. DTC holds securities that its participants deposit with DTC. DTC also facilitates the settlement among participants of securities transactions, such as transfers and pledges, in deposited securities through electronic computerized book-entry changes in participants’ accounts, thereby eliminating the need for physical movement of securities certificates. DTC’s direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations. DTC is owned by a number of its direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc. Access to DTC’s book-entry system is also available to others, such as securities brokers and dealers, banks and trust companies, that clear through or maintain a custodial relationship with a direct participant. The rules applicable to DTC and its participants are on file with the SEC.
Purchases of securities under DTC’s system must be made by or through a direct participant, which will receive a credit for such securities on DTC’s records. The ownership interest of each actual purchaser of each security — the beneficial owner — is in turn recorded on the records of direct and indirect participants. Beneficial owners will not receive written confirmation from DTC of their purchases, but they should receive written confirmations providing details of the transactions, as well as periodic statements of their holdings, from the participants through which they entered into the transactions. Transfers of ownership interest in the securities are accomplished by entries made on the books of participants acting on behalf of beneficial owners. Beneficial owners will not receive certificates representing their securities, except in the event that use of the book-entry system for the securities is discontinued.
To facilitate subsequent transfers, all global securities that are deposited with, or on behalf of, DTC are registered in the name of DTC’s nominee, Cede & Co. The deposit of global securities with, or on behalf of, DTC and their registration in the name of Cede & Co. effect no change in beneficial ownership. DTC has no knowledge of the actual beneficial owners of the securities; DTC’s records reflect only the identity of the direct participants to whose accounts such securities are credited, which may or may not be
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Conveyance of notices and other communications by DTC to direct participants, by direct participants to indirect participants and by direct and indirect participants to beneficial owners will be governed by arrangements among them, subject to any statutory or regulatory requirements as may be in effect from time to time.
Neither DTC nor Cede & Co. will consent or vote with respect to the global securities. Under its usual procedures, DTC will mail an omnibus proxy to Anixter as soon as possible after the applicable record date. The omnibus proxy assigns Cede & Co.’s consenting or voting rights to those direct participants to whose accounts the securities are credited on the applicable record date (identified in a listing attached to the omnibus proxy).
Redemption proceeds, principal payments and any premium, interest or other payments on the global securities will be made to Cede & Co., as nominee of DTC. DTC’s practice is to credit direct participants’ accounts on the applicable payment date in accordance with their respective holdings shown on DTC’s records, unless DTC has reason to believe that it will not receive payment on that date. Payments by participants to beneficial owners will be governed by standing instructions and customary practices, as is the case with securities held for the accounts of customers in bearer form or registered in “street name,” and will be the responsibility of the participant and not of DTC, Anixter, Anixter International or the indenture trustee, subject to any statutory or regulatory requirements in effect at the time. Payment of redemption payments, principal and any premium, interest or other payments to DTC is the responsibility of Anixter and the applicable paying agent, disbursement of payments to direct participants will be the responsibility of DTC, and disbursement of payments to the beneficial owners will be the responsibility of direct and indirect participants.
If applicable, redemption notices will be sent to Cede & Co. If less than all of the debt securities of like tenor and terms are being redeemed, DTC’s practice is to determine by lot the amount of the interest of each direct participant in such issue to be redeemed.
A beneficial owner electing to have its interest in a global security repaid by Anixter will give any required notice through its participant and will effect delivery of its interest by causing the direct participant to transfer the participant’s interest in the global securities on DTC’s records to the appropriate party. The requirement for physical delivery in connection with a demand for repayment will be deemed satisfied when the ownership rights in the global securities are transferred on DTC’s records.
DTC may discontinue providing its services as securities depositary with respect to the global securities at any time by giving reasonable notice to Anixter or the indenture trustee. Under such circumstances, in the event that a successor securities depositary is not obtained, certificates for the securities are required to be printed and delivered.
Anixter may decide to discontinue use of the system of book-entry transfers through DTC (or a successor securities depositary). In that event, certificates for the securities will be printed and delivered.
We have provided the foregoing information with respect to DTC to the financial community for information purposes only. We do not intend the information to serve as a representation, warranty or contract modification of any kind. We have received the information in this section concerning DTC and DTC’s system from sources that we believe to be reliable, but we take no responsibility for the accuracy of this information.
Defeasance and Covenant Defeasance
If and to the extent indicated in the applicable prospectus supplement, Anixter may elect, at its option at any time, to have the following provisions of the Indenture related to defeasance and discharge of indebtedness or to defeasance of certain covenants applied to the debt securities of any series, or to any specified part of the series. (See Section 1301.)
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Defeasance and Discharge. The Indenture provides that Anixter may exercise the option for Anixter and Anixter International to be discharged from all their obligations with respect to debt securities (except for certain obligations to exchange or register the transfer of debt securities, to replace stolen, lost or mutilated debt securities, to maintain paying agencies and to hold moneys for payment in trust) upon the deposit in trust for the sole benefit of the holders of such debt securities of money or U.S. Government Obligations, or both, which, through the payment of principal and interest, if any, in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such debt securities on the respective stated maturities in accordance with the terms of the Indenture and such debt securities. Such defeasance or discharge may occur only if, among other things, Anixter has delivered to the indenture trustee an opinion of counsel to the effect that holders of such debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit, defeasance and discharge and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit, defeasance and discharge were not to occur. (See Sections 1302 and 1304.)
Defeasance of Certain Covenants. The Indenture provides that Anixter may exercise the option for Anixter and Anixter International to omit to comply with certain restrictive covenants, including those described under “Certain Covenants of Anixter and Anixter International” and in the fifth bullet point under “Events of Default” and any that may be described in the applicable prospectus supplement, and the occurrence of certain Events of Default, which are described in the fourth and fifth bullet points under “Events of Default” and any that may be described in the applicable prospectus supplement, will be deemed not to be or result in an Event of Default, in each case with respect to such debt securities. Anixter, in order to exercise such option, will be required to deposit, in trust for the sole benefit of the holders of such debt securities, money or U.S. Government Obligations, or both, which, through the payment of principal and interest, if any, in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such debt securities on the respective stated maturities relating thereto or on redemption in accordance with the terms of the Indenture and such debt securities. Anixter will also be required, among other things, to deliver to the indenture trustee an opinion of counsel to the effect that holders of such debt securities will not recognize income, gain or loss for federal income tax purposes as a result of such deposit and defeasance of certain obligations and will be subject to federal income tax on the same amount, in the same manner and at the same times as would have been the case if such deposit and defeasance were not to occur. (See Sections 1303 and 1304.)
Governing Law
The Indenture and the debt securities are governed by the internal laws of the State of New York.
Information Concerning the Indenture Trustee
No holder of a debt security of any series will have any right to institute any proceeding with respect to the Indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such holder has previously given to the indenture trustee written notice of a continuing Event of Default with respect to the debt securities of that series; (ii) the holders of a least 25% in aggregate principal amount of the debt securities of that series have made written request, and such holder or holders have offered reasonable indemnity, to the indenture trustee to institute such proceeding as indenture trustee; and (iii) the indenture trustee has failed to institute such proceeding, and has not received from the holders of a majority in aggregate principal amount of the debt securities of that series a direction inconsistent with such request, within 60 days after such notice, request and offer. (See Section 507.) However, such limitations do not apply to a suit instituted by a holder of a debt security for the enforcement of payment of the principal of, premium (if any) and interest on such security on or after the applicable due date specified in such debt security. (See Section 508.)
Anixter maintains a banking relationship with the Trustee in the ordinary course of its business, and the Trustee participates, along with several other banks, in the Anixter’s credit facility.
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PLAN OF MERRILL LYNCHDISTRIBUTION
We may sell the securities to or through underwriters, through dealers or agents, directly to you or through a combination of these methods. The prospectus supplement with respect to any offering of securities will describe the specific terms of the securities being offered, including:
| • | the name or names of any underwriters, dealers or agents; | |
| • | the purchase price of the securities and the proceeds to Anixter or Anixter International from the sale; | |
| • | any underwriting discounts and commissions or agency fees and other items constituting underwriters’ or agents’ compensation; | |
| • | any initial public offering price; | |
| • | any discounts or concessions allowed or reallowed or paid to dealers; and | |
| • | any securities exchange on which the offered securities may be listed. |
Through Underwriters. If we use underwriters in the sale of the securities, the underwriters will acquire the offered securities for their own account. We will execute an underwriting agreement with an underwriter or underwriters once an agreement for sale of the securities is reached. The underwriters may resell the offered securities in one or more transactions, including negotiated transactions, at a fixed public offering price or at varying prices determined at the time of sale. The underwriters may sell the offered securities directly or through underwriting syndicates represented by managing underwriters. Unless otherwise stated in the prospectus supplement relating to offered securities, the obligations of the underwriters to purchase those offered securities will be subject to certain conditions, and the underwriters will be obligated to purchase all of those offered securities if they purchase any of them.
Through Dealers. If we use a dealer to sell the securities, we will sell the offered securities to the dealer as principal. The dealer may then resell those offered securities at varying prices determined at the time of resale. Any initial public offering price and any discounts or concessions allowed or reallowed or paid to dealers may be changed from time to time.
Through Agents. If we use agents in the sale of securities, we may designate one or more agents to sell offered securities. Unless otherwise stated in a prospectus supplement, the agents will agree to use their best efforts to solicit purchases for the period of their appointment.
Directly to Purchasers. We may sell the offered securities directly to one or more purchasers. In this case, no underwriters, dealers or agents would be involved. We will describe the terms of our direct sales in our prospectus supplement.
General Information. A prospectus supplement will state the name of any underwriter, dealer or agent and the amount of any compensation, underwriting discounts or concessions paid, allowed or reallowed to them. A prospectus supplement will also state the proceeds to us from the sale of offered securities, any initial public offering price and other terms of the offering of those offered securities.
Our agents, underwriters and dealers, or their affiliates, may be customers of, engage in transactions with or perform services for us in the ordinary course of business.
We may authorize agents, underwriters or dealers to solicit offers by certain institutions to purchase offered securities from us at the public offering price and on terms described in the related prospectus supplement pursuant to delayed delivery contracts providing for payment and delivery on a specified date in the future. If we use delayed delivery contracts, we will disclose that we are using them in our prospectus supplement and will tell you when we will demand payment and delivery of the securities. The delayed delivery contracts will be subject only to the conditions we set forth in our prospectus supplement.
We may enter into agreements to indemnify agents, underwriters and dealers against certain civil liabilities, including liabilities under the Securities Act of 1933.
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LEGAL MATTERS
Certain legal matters relating to the validity of the securities offered by this prospectus were passed upon for us by John A. Dul, our Vice President — General Counsel. The opinions with respect to the securities may be subject to assumptions regarding future action to be taken by us and the indenture trustee, if applicable, in connection with the issuance and sale of the securities, the specific terms of the securities and other matters that may affect the validity of securities but that cannot be ascertained on the date of those opinions.
EXPERTS
The consolidated financial statements and schedules of Anixter International appearing in Anixter International’s Annual Report (Form 10-K) for the year ended January 2, 2004 have been audited by Ernst & CO., INC.
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39
Young LLP, independent registered public accounting firm, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements and schedules are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing.
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
| Item 14. | Other Expenses of Issuance and Distribution. |
The aggregate estimated (other than the registration fee) expenses to be
paid by the Registrant in connection with this offeringthe issuance and distribution of the securities covered hereby are as follows:
follows (all amounts other than the Securities and Exchange Commission filing fee are estimated):
| Securities and Exchange Commission filing fee | $ | 23,540 | |||
| Trustees’ fees | * | ||||
| Accounting fees and expenses | * | ||||
| Legal fees and expenses | * | ||||
| Transfer agent and registrar fees | * | ||||
| Printing and engraving expenses | * | ||||
| Miscellaneous expenses | * | ||||
| Total | $ | * | |||
| * | To be filed by amendment. |
| Item 15. | Indemnification of Directors and |
The certificate of our Restated Certificateincorporation of Incorporationeach of the registrants provides that no director shall be personally liable to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director. Notwithstanding the foregoing, a director shall be liable to the extent provided by applicable law:
-
| • | for any breach of the director’s duty of loyalty to the corporation or its stockholders, | |
| • | for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law, | |
| • | for unlawful payments of dividends or unlawful stock repurchases or redemptions as provided in Section 174 of the Delaware General Corporation Law, or | |
| • | for any transaction from which the director derived an improper personal benefit. |
The by-laws of each of the director's duty of loyalty to the corporation or
its stockholders,
- for acts or omissions not in good faith or that involve intentional
misconduct or a knowing violation of law,
- for unlawful payments of dividends or unlawful stock repurchases or
redemptions as provided in Section 174 of the Delaware General
Corporation Law, or
- for any transaction from which the director derived an improper personal
benefit.
Article IX of our By-lawsregistrants provides that weeach registrant will indemnify any person who was or is a party to any threatened, pending or completed action, suit or proceeding by reason of the fact that such person is or was a director or officer of the corporation, is or was serving at the request of the corporation as a director or officer of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorneys'attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any such action, suit or proceeding, if such person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, if he or she had no reason to believe his or her conduct was unlawful. In a derivative action (meaning one brought by or on behalf of the corporation), indemnification may be made only for expenses (including attorney'sattorney’s fees), actually and reasonably incurred by such person in connection with the defense or settlement of such an action or suit, if such person acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made if such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the Court of Chancery or the court in which the action or suit was brought shall determine, upon application, that such person is fairly and reasonably entitled to indemnity for such expenses, despite such adjudication of liability but in view of all the circumstances in the case.
Our By-laws
The by-laws of each of the registrants also permit useach registrant to purchase and maintain insurance on behalf of any person who is or was a director or officer of the corporation, or is or was serving at the
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We have entered into agreements to indemnify our directors and officers, in addition to the indemnification provided for in our Restated Certificate of Incorporation and Bylaws.
ITEM 16. EXHIBITS
The following exhibits
| Item 16. | Exhibits |
Reference is made to information in the Exhibit Index filed as part of this registration statement.
| Item 17. | Undertakings |
Each undersigned registrant hereby undertakes:
| (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
| (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; | |
| (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; | |
| (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; |
Provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are filed herewith or incorporated by reference herein:
in the registration statement.
| (2) That, for the purpose of | |
| (3) To remove from registration by |
Each undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the Company'sAnixter International Inc.’s annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in the registration statement shallwill be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shallwill be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrantregistrants pursuant to the foregoing provisions, described under Item 15 above, or otherwise, theeach registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the
such
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Each undersigned Registrantregistrant hereby undertakes:
(1) Toundertakes to file during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information in the
registration
II-2
41
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of the
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate, the changes in
the volume and price represent no more that a 20 percent change in the
maximum aggregate offering price set for the in the "Calculation of
Registration Fee" table in the effective registration statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information the registration statement.
(2) That,an application for the purpose of determining any liabilitythe eligibility of the indenture trustee to act under subsection (a) of Section 310 of the SecuritiesTrust Indenture Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to1939 in accordance with the securities offered
therein,rules and regulations prescribed by the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post effective amendment
anyCommission under Section 305(b)(2) of the securities being registered that remain unsold at the
terminationTrust Indenture Act of the offering.
1939.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing this Registration Statement on Form S-3 and has duly caused this Registration Statement on Form S-3registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Skokie,Glenview, State of Illinois, on July 31, 2000.
ANIXTER INTERNATIONAL INC.
By: /s/ ROBERT W. GRUBBS
----------------------------------
Robert W. Grubbs
Chief Executivethis 17th day of December, 2004.
| ANIXTER INTERNATIONAL INC. | |
| (Registrant) |
| By: | /s/ DENNIS J. LETHAM |
| Dennis J. Letham | |
| Senior Vice President — Finance | |
| and Chief Financial Officer |
Each person whose signature appears below appoints Dennis J. Letham, Terrance A. Faber, or John A. Dul or any one of them as such person’s true and President
lawful attorneys to execute in the name of each such person, and to file, any pre-effective or post-effective amendments to this registration statement that any of such attorneys shall deem necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission with respect thereto, in connection with this registration statement, which amendments may make such changes in such registration statement as any of the above-named attorneys deems appropriate, and to comply with the undertakings of the Registrant made in connection with this registration statement; and each of the undersigned hereby ratifies all that any of said attorneys shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this Registration
Statementregistration statement has been signed by the following persons in the capacities and on the dates indicated:
indicated.
| Signature | Title | Date | ||||
| /s/ ROBERT W. GRUBBS Robert W. Grubbs | Chief Executive Officer and (Principal Executive | December 17, 2004 | ||||
| /s/ DENNIS J. LETHAM Dennis J. Letham | Senior Vice President | December 17, 2004 | ||||
| /s/ TERRANCE A. FABER Terrance A. Faber | Vice President — Controller (Chief Accounting Officer) | December 17, 2004 | ||||
| /s/ LORD JAMES BLYTH Lord James Blyth | Director | December 17, 2004 | ||||
| /s/ ROBERT L. CRANDALL Robert L. Crandall | Director | December 17, 2004 | ||||
| /s/ ROBERT W. GRUBBS Robert W. Grubbs | Director | December 17, 2004 | ||||
II-4
| Signature | Title | Date | ||||
| /s/ F. PHILIP HANDY F. Philip Handy | Director | December 17, 2004 | ||||
| /s/ MELVYN N. KLEIN Melvyn N. Klein | Director | December 17, 2004 | ||||
| /s/ GEORGE MUÑOZ George Muñoz | Director | December 17, 2004 | ||||
| /s/ STUART M. SLOAN Stuart M. Sloan | Director | December 17, 2004 | ||||
| /s/ THOMAS C. THEOBALD Thomas C. Theobald | Director | December 17, 2004 | ||||
| /s/ MARY AGNES WILDEROTTER Mary Agnes Wilderotter | Director | December 17, 2004 | ||||
| /s/ MATTHEW ZELL Matthew Zell | Director | December 17, 2004 | ||||
| /s/ SAMUEL ZELL Samuel Zell | Director | December 17, 2004 | ||||
II-5
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the Village of Glenview, State of Illinois, on this 17th day of December, 2004.
| ANIXTER INC. | |
| (Registrant) |
| By: | /s/ DENNIS J. LETHAM |
| Dennis J. Letham | |
| Executive Vice | |
| Chief Financial Officer |
Each person whose signature appears below appoints Dennis J. Letham, Terrance A. Faber, or John A. Dul or any one of them as such person’s true and lawful attorneys to execute in the name of each such person, and to file, any pre-effective or post-effective amendments to this registration statement that any of such attorneys shall deem necessary or advisable to enable the Registrant to comply with the Securities Act of 1933, as amended, and any rules, regulations and requirements of the Securities and Exchange Commission with respect thereto, in connection with this registration statement, which amendments may make such changes in such registration statement as any of the above-named attorneys deems appropriate, and to comply with the undertakings of the Registrant made in connection with this registration statement; and each of the undersigned hereby ratifies all that any of said attorneys shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
| Signature | Title | Date | ||||
| /s/ ROBERT W. GRUBBS Robert W. Grubbs | Chief Executive Officer, President and Director | |||||
| December 17, 2004 | ||||||
| /s/ DENNIS J. LETHAM Dennis J. Letham | Executive Vice President and Director (Chief Financial Officer) | December 17, 2004 | ||||
| /s/ TERRANCE A. FABER Terrance A. Faber | Vice President — Controller (Chief Accounting Officer) | December 17, 2004 | ||||
| /s/ JOHN A. DUL John A. Dul | Director | December 17, 2004 | ||||
II-6
EXHIBIT INDEX
| Exhibit | ||||
| Number | Exhibit Title | |||
| 1 | .1 | Form of Underwriting Agreement* | ||
| 4 | .1 | Indenture by and among Anixter Inc., Anixter International Inc. and Bank of New York, as Trustee, with respect to Debt Securities and Guarantees dated September 6, 1996(Incorporated by reference from Anixter International Inc. Form S-3 filed with the SEC on July 30, 1996, Exhibit 4.1) | ||
| 4 | .2 | Form of First Supplemental Indenture by and among Anixter Inc., Anixter International Inc. and The Bank of New York, as Trustee, with respect to Debt Securities and Guarantees** | ||
| 4 | .3 | Form of Debt Security* | ||
| 5 | .1 | Opinion of John A. Dul** | ||
| 12 | .1 | Computation of Ratio of Earnings to Fixed Charges | ||
| 23 | .1 | Consent of Ernst & Young, LLP, independent auditors | ||
| 23 | .2 | Consent of John A. Dul (included in Exhibit 5.1) | ||
| 24 | .1 | Power of Attorney of certain directors and officers of Anixter International Inc. and Anixter Inc. (contained on signature pages) | ||
| 25 | .1 | Statement of Eligibility of Trustee on Form T-1 with respect to Debt Securities | ||
| * | To be filed by |
| ** | To be filed by amendment. |