<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1995
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
Commission file number 1-5989
ANIXTER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1658138
- -------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2 North Riverside Plaza
Suite 1900
Chicago, Illinois 60606
(Address of principal executive offices and Zip Code)
Registrant's telephone number, including area code: (312) 902-1515
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ---
At October 31, 1995 there were 53,567,238 shares of Common Stock, $1.00 par
value, of the registrant outstanding.
<PAGE> 2
PART I. FINANCIAL INFORMATION
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents $ 18,300 $ 14,200
Accounts receivable (net of allowances for doubtful
accounts of $7,500 and $6,000, respectively) 401,400 325,900
Inventories, primarily finished goods 325,200 275,800
Other assets 7,400 4,900
---------- ----------
Total current assets 752,300 620,800
Property, at cost 91,400 68,600
Accumulated depreciation (44,400) (35,200)
---------- ----------
Net property 47,000 33,400
Goodwill (net of accumulated amortization
of $55,500 and $46,000 respectively) 183,400 187,900
Discontinued and assets held for sale, net 52,300 105,400
Marketable equity securities - 64,500
Investment in ANTEC 67,900 69,500
Other assets 43,800 29,400
---------- ----------
$1,146,700 $1,110,900
========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
2
<PAGE> 3
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Accounts payable $ 214,200 $ 186,200
Accrued expenses 108,500 79,100
---------- ----------
Total current liabilities 322,700 265,300
Deferred taxes, net 3,800 1,800
Other liabilities 21,500 19,400
Long-term debt 316,900 280,500
---------- ----------
Total liabilities 664,900 567,000
Common stock repurchase commitment 23,400 -
Stockholders' equity:
Common stock
53,600 29,400
Capital surplus 117,500 262,500
Retained earnings 298,400 269,300
Cumulative translation adjustments (11,100) (10,100)
---------- ----------
458,400 551,100
Unrealized loss on marketable equity securities
(net of deferred income taxes) - (7,200)
---------- ----------
Total stockholders' equity 458,400 543,900
----------- ----------
$1,146,700 $1,110,900
========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
3
<PAGE> 4
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE-MONTH PERIODS NINE-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- ----------------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenues $ 571,100 $ 456,300 $ 1,616,000 $1,242,000
Cost of goods sold (429,200) (344,400) (1,210,900) (929,600)
--------- ---------- ----------- ----------
Gross profit 141,900 111,900 405,100 312,400
Operating expenses (114,100) (90,500) (324,800) (257,600)
Amortization of goodwill (1,500) (1,500) (4,500) (4,500)
--------- ---------- ----------- ----------
Operating income 26,300 19,900 75,800 50,300
Interest expense and other, net (6,000) (4,700) (16,300) (18,700)
Equity (loss) earnings in ANTEC (3,600) 1,800 (1,500) 7,200
Non-recurring item - ANTEC Offering - - - 48,200
Marketable equity securities losses - - (3,000) (39,600)
--------- --------- ----------- ----------
Income from continuing
operations before income taxes 16,700 17,000 55,000 47,400
Income tax expense (7,600) (6,300) (25,900) (17,200)
--------- --------- ----------- ----------
Income from continuing
operations 9,100 10,700 29,100 30,200
Income from discontinued
operations (net of related taxes) - 205,000 - 203,700
--------- --------- ----------- ----------
Net income $ 9,100 $ 215,700 $ 29,100 $ 233,900
========= ========= =========== ==========
Income per common and common
equivalent share:
Continuing operations $ .17 $ .17 $ .52 $ .47
Net income $ .17 $ 3.44 $ .52 $ 3.60
========= ========= =========== ==========
Weighted average common and
common equivalent shares 53,800 62,800 56,200 65,000
========= ========= =========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
4
<PAGE> 5
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE-MONTH PERIODS
ENDED SEPTEMBER 30,
----------------------------
1995 1994
------ ------
<S> <C> <C>
Operating activities:
Income from continuing operations $ 29,100 $ 30,200
Adjustments to reconcile income from continuing
operations to net cash provided (used) by continuing
operating activities:
Depreciation 11,000 7,000
Amortization of goodwill 4,500 4,500
Deferred income tax expense 2,000 16,400
Non-recurring item - ANTEC Offering - (48,200)
Loss on sale of marketable equity securities 3,000 39,600
Equity loss (earnings) in ANTEC 1,500 (7,200)
Non-cash financing expense 600 3,000
Other, net 2,600 6,400
Changes in current assets and liabilities, net (82,600) (86,400)
--------- ---------
Net cash used by continuing operating
activities (28,300) (34,700)
Discontinued operations and assets held for sale, net 58,400 48,500
--------- ---------
Net cash provided by operating activities 30,100 13,800
Investing activities:
Sales of marketable equity securities 72,600 47,800
Purchases of property, net (24,200) (12,000)
Sale of ANTEC common stock - 82,800
Other, net (4,800) 12,500
--------- ---------
Net investing activities 43,600 131,100
--------- ---------
Net cash provided before financing activities 73,700 144,900
Financing activities:
Borrowings 597,800 787,800
Reductions in borrowings (564,600) (845,500)
Purchases of treasury stock (108,400) (77,600)
Proceeds from issuance of common stock 6,700 7,700
Other, net (1,100) (3,700)
--------- ---------
Net financing activities (69,600) (131,300)
--------- ---------
Cash provided 4,100 13,600
Cash and equivalents at beginning of period 14,200 31,000
--------- ---------
Cash and equivalents at end of period $ 18,300 $ 44,600
========= =========
Supplemental cash flow information:
Interest paid (including allocations to discontinued
operations in 1994) during the period $ 18,100 $ 41,700
========= =========
Income taxes paid during the period $ 15,600 $ 2,800
========= =========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
5
<PAGE> 6
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: On August 31, 1995 Itel Corporation amended its
certificate of incorporation to change its name to Anixter International Inc.
("Int'l."). The accompanying consolidated financial statements should be read
in conjunction with the consolidated financial statements included in Itel
Corporation's ("Itel") Annual Report on Form 10-K for the year ended December
31, 1994. The condensed consolidated financial information furnished herein
reflects all adjustments (consisting of normal recurring accruals) which are,
in the opinion of management, necessary for a fair presentation of the
condensed consolidated financial statements for the periods shown. All
operating activities of the Company are carried out by its principal
subsidiary, Anixter Inc. ("Anixter"), which is engaged in the sales of
networking products for voice, data, and video applications, and electrical
power wire and cable products.
Principles of consolidation: The condensed consolidated financial statements
include the accounts of Int'l. and its subsidiaries (collectively "the
Company") after elimination of intercompany transactions.
Income per share: All share and per share data have been adjusted to reflect
the two-for-one stock split paid October 25, 1995 to stockholders of record
September 22, 1995.
NOTE 2. DISCONTINUED AND ASSETS HELD FOR SALE
In July 1994, the Company sold 99.5% of its remaining interests in its railcars
for $35 million in cash and $169.5 million in notes receivable for an aggregate
purchase price of $204.5 million. The notes receivable were not due until the
end of 1998; however, the buyer prepaid all the notes and related interest in
October 1994. The Company's remaining interest in the railcars was sold in
October for cash of approximately $1 million. The net gain on the sale of the
Company's entire interest in railcars was
6
<PAGE> 7
approximately $205 million. The total cash proceeds of approximately $205
million were used to: (1) repay the $150 million Corporate senior bank term
loan ("Term Loan"); (2) pay the related income tax liability of approximately
$25 million caused by the sale which remained after utilization of the
Company's NOL and ITC carryforwards; and (3) other general corporate purposes
including the purchase of the Company's common stock.
NOTE 3. MARKETABLE EQUITY SECURITIES LOSSES
In the second quarter of 1995, the Company recorded a $1.8 million after-tax
loss on the sale of its investment in Santa Fe Energy Resources, Inc.
("Energy"). In the second quarter of 1994, the Company wrote down the value of
its investment in Energy equity securities by $21.0 million after-tax. Also,
in the first quarter of 1994, the Company recorded a $3.2 million after-tax
loss on the sale of its investment in Catellus Development Corporation
("Catellus").
NOTE 4. NON-RECURRING ITEMS
Non-recurring items in 1994 reflect a $29.4 million after-tax gain on the
public offering of shares of common stock of ANTEC Corporation ("ANTEC
Offering"). In the second quarter of 1994 the Company sold 4.0 million shares
of ANTEC common stock at $21.75 per share resulting in net proceeds of
approximately $83 million. The Company has provided income taxes relating to
the recognized pre-tax book gain.
NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANTEC
The Company's ownership interest in ANTEC at September 30, 1995 and 1994 was
30% and 33% respectively. This investment is accounted for under the equity
method. The following summarizes the financial information for ANTEC:
7
<PAGE> 8
ANTEC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1995 1994
-------- -------
(UNAUDITED)
(IN MILLIONS)
<S> <C> <C>
Assets:
Current assets $ 262.7 $ 234.2
Property, net 28.2 22.4
Goodwill 164.9 167.4
Other assets 21.9 14.0
------- -------
$ 477.7 $ 438.0
======= =======
Liabilities and Shareholders' Equity:
Current liabilities $ 106.6 $ 83.1
Long-term debt 145.9 125.2
Shareholders' equity 225.2 229.7
------- -------
$ 477.7 $ 438.0
======= =======
</TABLE>
ANTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIODS NINE-MONTH PERIODS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
---------------------------- -------------------------
1995 1994 1995 1994
------ -------- ------ ------
(IN MILLIONS)
<S> <C> <C> <C> <C>
Revenues $ 165.5 $ 138.1 $ 489.7 $ 418.9
======= ======= ======= =======
Operating income (loss) $ (15.9) $ 9.6 $ 1.2 $ 30.2
======= ======= ======= =======
Income (loss) before
income tax expense $ (18.6) $ 8.3 $ (7.1) $ 27.5
======= ======= ======= =======
Net income (loss) $ (11.9) $ 4.6 $ (6.5) $ 15.2
======= ======= ======= =======
</TABLE>
8
<PAGE> 9
During the third quarter of 1995, ANTEC recorded a pre-tax nonrecurring charge
of $21.7 million resulting in a third quarter and nine month year to date net
loss of $11.9 million and $6.5 million, respectively compared to income of $4.6
million and $15.2 million in the comparable 1994 periods. Using the equity
method of accounting for the Company's ownership in ANTEC the Company's
earnings per share were reduced by 4 cents and 2 cents per share in the third
quarter and year to date 1995 versus an increase in earnings per share of 1
cent and 7 cents, respectively in the prior year periods.
Subsequent to September 30, 1995, the Company purchased .4 million additional
shares of ANTEC stock increasing the investment from 30.3% to 31.9%.
NOTE 6. RELATED PARTY TRANSACTION
On June 27, 1995 the Company agreed to purchase up to 3.8 million shares of its
common stock from Sam Zell, the Company's Chairman, and other related
stockholders. The first 2.5 million shares were purchased on July 10, 1995 at
$18 per share. The remaining 1.3 million shares may be purchased no later than
December 31, 1996 at $18 per share plus an incremental increase of 6.5% per
annum from the date of the agreement. The purchase of the remaining shares has
been reflected as Common stock repurchase commitment in the consolidated
financial statements.
NOTE 7. STOCKHOLDER'S EQUITY
On August 31, 1995, the Company's Board of Directors authorized a two-for-one
stock split in the form of a stock dividend paid October 25, 1995, to
stockholders of record September 22, 1995. This transaction increased the
number of outstanding shares from approximately 26.8 million to 53.6 million.
All share and per share data have been adjusted to reflect this split.
9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
LIQUIDATION OF SIGNAL CAPITAL: The finance business of Signal Capital
Corporation ("Signal Capital") has been included as assets held for sale since
acquisition in 1988. Subsequent to the purchase, the Company sold or
liquidated portions of the portfolio including $855 million in 1989, $78
million in 1990, $157 million in 1991, $82 million in 1992, $82 million in
1993, $60 million in 1994 and $59 million through September 30, 1995. The
remaining portfolio of discontinued and assets held for sale at September 30,
1995 represents approximately 4.6% of the original acquired Signal Capital
portfolio. The acquired Signal Capital portfolio is being liquidated and no
material amounts of new loans or investments are being made by Signal Capital.
The Company has had discussions with third parties for the sale of substantial
portions of the acquired Signal Capital portfolio of loans and leases. Absent
such transactions, orderly liquidation of the remaining portfolio is expected
to continue over approximately the next two years. The Company continues to
reduce the acquired Signal Capital portfolio in an orderly manner that
maximizes its value to the Company's shareholders.
CASH FLOW: Consolidated net cash used by continuing operating activities was
$28.3 million for the first nine months of 1995 compared to $34.7 million for
the same period in 1994. Consolidated net cash used by continuing operating
activities in 1995 reflects an $82.6 million net working capital investment
used to fund a $374 million increase in revenues compared to a $86.4 million
working capital increase in 1994. Consolidated cash provided by net investing
activities was $43.6 million for the first nine months of 1995 versus $131.1
million for the same period in 1994. Consolidated investing activities in 1995
include proceeds of $72.6 million from the sale of the Company's investment in
Energy and in 1994 includes $82.8 million of proceeds from the ANTEC Offering
and $47.8 million from the sale of the Company's investment in Catellus.
10
<PAGE> 11
Consolidated cash used for net financing activities was $69.6 million for the
first nine months of 1995 in comparison to $131.3 million for the first nine
months of 1994. The consolidated net financing activities in 1994 include the
paydown of $221 million of subordinated debt. The consolidated net financing
activities in 1995 and 1994 include $108.4 million and $77.6 million of
treasury stock purchases, respectively. Net cash from discontinued operations
and assets held for sale, was $58.4 million for the first nine months of 1995
versus $48.5 million for the same period in 1994. Cash from discontinued
operations and assets held for sale, net in both periods reflects cash received
principally from the reduction of Signal Capital assets which are held for
sale, and in 1994, the receipt of $35 million on the sale of the Company's
remaining interest in its railcar leasing business.
FINANCINGS: On May 19, 1995, the Company converted its $115 million senior
bank term loan to a revolver ("Corporate Revolver"). The Corporate Revolver is
secured by the Company's investments in the capital stock of Anixter and ANTEC.
The Corporate Revolver had no outstanding borrowings at September 30, 1995.
On March 24, 1995, the Company increased Anixter's secured domestic revolving
line of credit to $425 million, lowered the interest rate spreads and extended
the maturity to 2000. The revolving line of credit is non-recourse to Int'l.
At September 30, 1995, in addition to the Corporate Revolver, $210 million was
available under the bank revolving lines of credit at Anixter, of which $90
million was available to pay Int'l. for intercompany liabilities.
INTEREST: Consolidated net interest expense was $16.3 million and $18.7
million for the nine months ended September 30, 1995 and 1994, respectively.
The Company has entered into interest rate agreements which effectively fix or
cap, for a period of time, the interest rate on a portion of its floating rate
obligations. As a result, the interest rate on approximately 70% of debt
obligations at September 30, 1995 is fixed or capped. The impact of interest
rate swaps and caps on interest expense, net for the nine months ended
September 30, 1995 and 1994 was to increase interest expense by approximately
$.7 million and $8.0 million, respectively.
11
<PAGE> 12
CAPITAL EXPENDITURES AND ACQUISITIONS
Consolidated capital expenditures were $24.2 million and $12.0 million for the
first nine months of 1995 and 1994, respectively. Increase in capital
expenditures is in support of international expansion, increase in service
offerings, enhanced logistical capabilities and infrastructure required by
general volume growth.
RESULTS OF OPERATIONS
The Company has experienced increased revenues due to the continued growth of
the North American communications and electrical wire and cable products and
its continuing worldwide expansion. While the Company continues to believe
that its revenue base will grow and its worldwide expansion will result in both
increased revenues and operating profits, there can be no assurance of future
financial performance. The Company competes with distributors and
manufacturers who sell products directly or through existing distribution
channels to end users or other resellers. In addition, the Company's future
performance could be subject to economic downturns and possibly rapid changes
in applicable technologies.
EARNINGS PER SHARE: On August 31, 1995, the Company's Board of Directors
authorized a two-for-one stock split in the form of a stock dividend paid
October 25, 1995, to stockholders of record September 22, 1995. This
transaction increased the number of outstanding shares from approximately 26.8
million to 53.6 million. All share and per share data have been adjusted to
reflect this split.
Weighted average common and common equivalent shares outstanding decreased from
September 30, 1994 to September 30, 1995 primarily as a result of the Company's
treasury stock purchases in 1994 and 1995. An increase in borrowing costs
associated with stock purchases offset the decrease in shares resulting in no
significant effect on earnings per share.
12
<PAGE> 13
On June 27, 1995 the Company agreed to purchase up to 3.8 million shares of its
common stock from Sam Zell, the Company's Chairman, and other related
stockholders. The first 2.5 million shares were purchased on July 10, 1995 at
$18 per share. The remaining 1.3 million shares may be purchased no later than
December 31, 1996 at $18 per share plus an incremental increase of 6.5% per
annum from the date of the agreement. The purchase of the remaining shares has
been reflected as Common stock repurchase commitment in the consolidated
financial statements.
During the third quarter of 1995, ANTEC recorded a pre-tax nonrecurring charge
of $21.7 million resulting in a third quarter and nine month year to date net
loss of $11.9 million and $6.5 million, respectively compared to income of $4.6
million and $15.2 million in the similar 1994 periods. Using the equity method
of accounting for the Company's ownership in ANTEC this charge reduced the
Company's earnings per share by 4 cents and 2 cents per share in the third
quarter and year to date 1995 versus an increase in earnings per share of 1
cent and 7 cents, respectively in the prior year periods.
Subsequent to September 30, 1995, the Company purchased .4 million additional
shares of ANTEC stock increasing the investment from 30.3% to 31.9%.
QUARTER ENDED SEPTEMBER 30, 1995: Despite a 32% increase in operating income
to $26.3 million in the third quarter, income from continuing operations
dropped to $9.1 million from $10.7 million in 1994 primarily due to the
Company's equity in ANTEC earnings, which decreased significantly as a result
of the one-time reorganization charge recorded in the third quarter by ANTEC.
This charge had no effect on the cash flow of the Company and the current
market value of the Company's investment in ANTEC remains in excess of the
carrying value. Net income for the three months ended September 30, 1995 was
$9.1 million compared to $215.7 million in 1994 due primarily to the sale of
the Company's remaining interest in its railcars in July 1994 for $204.5
million after tax gain.
The Company's revenues during the third quarter of 1995 increased 25% to $571.1
million from $456.3 million in 1994 due to (1) the continued strong demand for
its
13
<PAGE> 14
communication products in North America and Europe, (2) focused marketing
efforts on its electrical wiring systems products and (3) further market
penetration in the Asian and Latin American expansion markets. Revenues by
major geographic market are presented in the following table.
<TABLE>
<CAPTION>
QUARTERS ENDED SEPTEMBER 30,
----------------------------
1995 1994
---- ----
(IN MILLIONS)
<S> <C> <C>
North America $439.9 $364.8
Europe 106.0 76.0
Asia and Latin America 25.2 15.5
------ ------
$571.1 $456.3
====== ======
</TABLE>
The Company's gross profit increased to $141.9 million in the third quarter of
1995 from $111.9 million in the third quarter of 1994 which is consistent with
the sales volume increase.
Operating expenses increased 26% to $114.1 million due to increased volume,
increased spending for new service and logistic initiatives, principally in
North America, and geographic expansion in Asia and Latin America. Spending on
new initiatives and international expansion is planned to increase in future
quarters.
Operating income increased 32% to $26.3 million in 1995 from $19.9 million in
the third quarter of 1994. Operating income by major geographic market is
presented in the following table.
<TABLE>
<CAPTION>
QUARTERS ENDED SEPTEMBER 30,
----------------------------
1995 1994
------- --------
(IN MILLIONS)
<S> <C> <C>
North America $23.6 $18.4
Europe 4.5 1.6
Asia and Latin America (1.8) (.1)
----- -----
$26.3 $19.9
===== =====
</TABLE>
North America operating income increased due to volume related economies of
scale somewhat offset by increased spending for new service and logistic
initiatives. The significant increase in European profitability is due to
volume related economies of scale
14
<PAGE> 15
and positive operating earnings contributions in most countries in 1995.
Changes in currency exchange rates in the third quarter 1995 versus 1994
reduced operating results in Europe by about $.4 million. Increased losses in
Asia and Latin America are due to geographic expansion, opening of new offices
and staff increases.
Consolidated net interest expense for the third quarter of 1995 increased to
$6.0 million from $4.7 million in 1994 due to increased working capital
borrowings and costs of the stock purchase program partially offset by lower
all in interest rates.
The consolidated tax provision for the third quarter reflects an effective tax
rate of 45.5% based on pre-tax book income adjusted for goodwill amortization
and start up losses in certain international businesses which are not currently
deductible and for which no anticipated future tax benefit has been recorded.
The increase in the effective rate from 1994 is due to the absence in 1995 of
certain non-recurring tax benefits associated with the secondary offering of
ANTEC which occurred in 1994.
NINE MONTHS ENDED SEPTEMBER 30, 1995: Increased operating income of $75.8
million, up 50% from the same period in 1994, was somewhat offset by losses on
asset dispositions and the Company's equity interest in Antec losses which
resulted in income from continuing operations for the first nine months of 1995
of $29.1 million compared with $30.2 million for the first nine months of 1994.
Results in 1995 include a $1.8 million after-tax charge associated with the
sale of the Company's investment in Energy while results in 1994 include a $5.2
million gain consisting of $29.4 million after-tax gain on the ANTEC Offering
and a $24.2 million after-tax charge associated with the sale and write-down of
marketable equity securities. Net income was $29.1 million and $233.9 million
in the first nine months of 1995 and 1994, respectively due primarily to the
sale of the Company's remaining interest in its railcars in July 1994 for
$204.5 million after tax gain.
15
<PAGE> 16
The Company's revenues during the first nine months of 1995 increased 30% to
$1,616.0 million from $1,242.0 million in 1994 due to (1) the continued strong
demand for its communication products in North America and Europe, (2) focused
marketing efforts on its electrical wiring systems products and (3) further
market penetration in the Asian and Latin American expansion markets. Revenues
by major geographic market are presented in the following table.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1994
---- ----
(IN MILLIONS)
<S> <C> <C>
North America $1,240.1 $979.6
Europe 311.1 224.7
Asia and Latin America 64.8 37.7
-------- --------
$1,616.0 $1,242.0
======== ========
</TABLE>
The Company's gross profit increased to $405.1 million for the first nine
months of 1995 from $312.4 million for the same period of 1994 which is
consistent with the sales volume increase.
Operating expenses increased 26% to $324.8 million due to increased volume,
increased spending for new service and logistic initiatives, principally in
North America, and geographic expansion in Asia and Latin America. Spending on
new initiatives and international expansion is planned to increase in future
quarters.
Operating income increased 50% to $75.8 million in 1995 from $50.3 million in
the first nine months of 1994. Operating income by major geographic market is
presented in the following table.
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------
1995 1994
------ ------
(IN MILLIONS)
<S> <C> <C>
North America $66.0 $47.5
Europe 14.6 4.3
Asia and Latin America (4.8) (1.5)
----- -----
$75.8 $50.3
===== =====
</TABLE>
16
<PAGE> 17
North America operating income increased due to volume related economies of
scale somewhat offset by increased spending for new service and logistic
initiatives. The significant increase in European profitability is due to
volume related economies of scale and positive operating earnings contributions
in most countries in 1995. Changes in currency exchange rates in the first
nine months of 1995 versus 1994 contributed $.8 million to improved European
operating results.
Consolidated net interest expense for the first nine months of 1995 declined to
$16.3 million from $18.7 million in 1994 due to the extinguishment of high-cost
corporate debt from the monetization of the Company's non-core assets in the
first half of 1994 partially offset by the cost of funding the stock purchase
program and increased working capital borrowings.
The consolidated tax provision for the nine months ended September 30, 1995
reflects an effective tax rate of 47.1% based on pre-tax book income adjusted
for goodwill amortization and start up losses in certain international
businesses which are not currently deductible and for which no anticipated
future tax benefit has been recorded. The increase in the effective tax rate
from the prior year period is due to the absence in 1995 of certain
non-recurring tax benefits associated with the secondary offering of ANTEC
which occurred in 1994.
17
<PAGE> 18
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
At a Special Meeting of Stockholders held August 31, 1995 authorization to
change the name of the Company to Anixter International Inc. was approved by a
vote of 21,188,546 shares "For", 94,982 shares "Against" and 21,179 shares
"Abstain."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Amendment to Certificate of incorporation of Anixter
International Inc. dated August 31, 1995.
27.1 Financial Data Schedule
(b) Reports on Form 8-K
On August 31, 1995 Itel filed a report on Form 8-K stating
that the certificate of incorporation had been amended to
change the name of the company to Anixter International Inc.
18
<PAGE> 19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANIXTER INTERNATIONAL INC.
Date: November 10, 1995 By:
----------------- -------------------------------------
Rod F. Dammeyer
President and Chief Executive Officer
Date: November 10, 1995 By:
----------------- -------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer
19
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ANIXTER INTERNATIONAL INC.
Date: November 10, 1995 By: /s/ Rod F. Dammeyer
----------------- -------------------------------------
Rod F. Dammeyer
President and Chief Executive Officer
Date: November 10, 1995 By: /s/ Dennis J. Letham
----------------- -------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer
<PAGE> 1
EXHIBIT 3.1
STATE OF DELAWARE
SECRETARY OF STATE
DIVISION OF CORPORATIONS
FILED 01:45 PM 08/31/1995
950198927 - 668010
CERTIFICATE OF AMENDMENT
TO THE
RESTATED CERTIFICATE OF INCORPORATION
OF
ITEL CORPORATION
____________________________________________________
Pursuant to Section 242 of the General
Corporation Law of the State of Delaware
___________________________________________________
ITEL Corporation, a Delaware corporation (hereinafter the
"Corporation"), does hereby certify as follows:
FIRST: The Corporation has capital stock.
SECOND: Article FIRST of the Corporation's Restated Certificate of
Incorporation is hereby amended to read in its
entirety as set forth below:
FIRST: The name of the Corporation shall be Anixter
International Inc.
THIRD: The foregoing amendment was duly adopted in accordance with
Section 242 of the General Corporation Law of the
State of Delaware.
IN WITNESS WHEREOF, ITEL Corporation has caused this Certificate to be
executed in its corporate name this 31st day of August, 1995.
ITEL CORPORATION
By: /s/ Rod Dammeyer
------------------------
Name: Rod Dammeyer
Title: President
ATTEST:
By: /s/ James E. Knox
-------------------------
Name: James E. Knox
Title: Secretary
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ITEL'S CONSOLIDATED
FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 18,300
<SECURITIES> 0
<RECEIVABLES> 401,400
<ALLOWANCES> 7,500
<INVENTORY> 325,200
<CURRENT-ASSETS> 752,300
<PP&E> 91,400
<DEPRECIATION> 44,400
<TOTAL-ASSETS> 1,146,700
<CURRENT-LIABILITIES> 322,700
<BONDS> 0
<COMMON> 53,600
0
0
<OTHER-SE> 404,800
<TOTAL-LIABILITY-AND-EQUITY> 1,146,700
<SALES> 1,616,000
<TOTAL-REVENUES> 1,616,000
<CGS> 1,210,900
<TOTAL-COSTS> 1,540,200
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 17,000
<INCOME-PRETAX> 55,000
<INCOME-TAX> 25,900
<INCOME-CONTINUING> 29,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,100
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
</TABLE>
