<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 MARCH 29, 1996
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 April 30, 1996 there were 50,339,890 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>
MARCH 29, DECEMBER 31,
1996 1995
-------------- --------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents $ 15,600 $ 10,500
Accounts receivable (net of allowance for doubtful
accounts of $9,000 and $9,000, respectively) 401,700 400,000
Inventories, primarily finished goods 417,700 364,100
Income taxes receivable 4,000 8,300
Other assets 7,400 6,400
---------- ----------
Total current assets 846,400 789,300
Property, at cost 108,400 97,400
Accumulated depreciation (52,200) (48,200)
---------- ----------
Net property 56,200 49,200
Goodwill (net of accumulated amortization
of $53,000 and $47,000 respectively) 185,400 183,000
Assets held for sale, net 50,300 42,800
Investment in ANTEC 74,400 73,700
Other assets 23,900 55,000
---------- ----------
$1,236,600 $1,193,000
========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
2
<PAGE> 3
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 29, DECEMBER 31,
1996 1995
-------------- ----------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Accounts payable $ 221,600 $ 232,400
Accrued expenses 90,300 99,500
---------- ----------
Total current liabilities 311,900 331,900
Deferred taxes, net 37,500 37,400
Other liabilities 16,800 17,600
Long-term debt 421,800 333,700
---------- ----------
Total liabilities 788,000 720,600
Common stock repurchase commitment - 23,400
Stockholders' equity:
Common stock 50,800 52,500
Capital surplus 94,000 99,900
Retained earnings 318,700 308,400
Cumulative translation adjustments (14,900) (11,800)
---------- ----------
Total stockholders' equity 448,600 449,000
---------- ----------
$1,236,600 $1,193,000
========== ==========
</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
ENDED
---------------------------
MARCH 29, MARCH 31,
1996 1995
-------- --------
<S> <C> <C>
Revenues $567,400 $ 502,900
Cost of goods sold (421,600) (375,800)
-------- ---------
Gross profit 145,800 127,100
Operating expenses (120,900) (101,800)
Amortization of goodwill (1,500) (1,500)
-------- ---------
Operating income 23,400 23,800
Interest expense and other, net (5,500) (4,900)
Equity earnings in ANTEC 800 1,800
-------- ---------
Income before income taxes 18,700 20,700
Income tax expense (8,400) (9,600)
-------- ---------
Net income $ 10,300 $ 11,100
======== =========
Net income per common and common
equivalent share $ .20 $ .19
======== =========
Weighted average common and
common equivalent shares 52,223 57,824
======== =========
</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>
THREE-MONTH PERIODS
ENDED
------------------------------
MARCH 29, MARCH 31,
1996 1995
------ ------
<S> <C> <C>
Operating activities:
Net income $10,300 $11,100
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation 4,500 4,300
Amortization of goodwill 1,500 1,500
Deferred income tax expense 300 1,400
Equity earnings in ANTEC (800) (1,800)
Non-cash financing expense 500 200
Other, net 500 2,200
Changes in current assets and liabilities, net (79,700) (18,100)
-------- ---------
Net cash provided (used) by operating
activities (62,900) 800
Investing activities:
Purchases of property, net (11,700) (5,800)
Cash provided (used) by assets held for sale, net (2,000) 2,500
Other investments - (4,600)
-------- ---------
Net cash used by investing activities (13,700) (7,900)
-------- ---------
Net cash used before financing activities (76,600) (7,100)
Financing activities:
Borrowings 277,300 320,100
Reductions in borrowings (164,000) (267,900)
Proceeds from issuance of common stock 700 2,400
Purchases of treasury stock (30,800) (38,800)
Other, net (1,500) (600)
-------- ---------
Net cash provided by financing activities 81,700 15,200
-------- ---------
Cash provided 5,100 8,100
Cash and equivalents at beginning of period 10,500 14,200
-------- ---------
Cash and equivalents at end of period $15,600 $ 22,300
======== =========
Supplemental cash flow information:
Interest paid during the period $ 4,700 $ 5,800
======== =========
Income taxes paid during the period $ 4,000 $ 2,000
======== =========
</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: The accompanying consolidated financial statements
should be read in conjunction with the consolidated financial statements
included in Anixter International Inc.'s (Company) Annual Report on Form 10-K
for the year ended December 31, 1995. 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 a leading supplier of
wiring systems, networking and internetworking products for voice, data, and
video networks and electrical power applications.
In 1996 the Company changed its year end from a calendar year ending December
31 to the Friday nearest December 31. Fiscal year 1996 will end on January 3,
1997 while the first quarter ended on March 29, 1996. This change does not
have a significant effect on the results of operations for the quarter ended
March 29, 1996.
Principles of consolidation: The condensed consolidated financial statements
include the accounts of Anixter International Inc. and its subsidiaries after
elimination of intercompany transactions.
6
<PAGE> 7
NOTE 2. SUMMARIZED FINANCIAL INFORMATION OF ANTEC
The Company's ownership interest in ANTEC at March 29, 1996 and March 31, 1995
was 31% and 30% respectively. This investment is accounted for under the
equity method. The following summarizes the financial information for ANTEC:
ANTEC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1996 1995
-------- -------
(UNAUDITED)
<S> <C> <C>
Assets:
Current assets $ 228.0 $ 232.2
Property, net 25.7 25.9
Goodwill 170.6 171.8
Other assets 26.9 27.0
------- --------
$ 451.2 $ 456.9
======= ========
Liabilities and Shareholders' Equity:
Current liabilities $ 103.6 $ 101.8
Long-term debt 107.7 117.9
Shareholders' equity 239.9 237.2
------- --------
$ 451.2 $ 456.9
======= ========
</TABLE>
ANTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTH PERIODS
ENDED MARCH 31,
---------------------
1996 1995
------ ------
(IN MILLIONS)
<S> <C> <C>
Revenues $ 162.4 $ 158.8
======== =======
Operating income $ 8.2 $ 11.3
======== =======
Income before
income tax expense $ 5.5 $ 8.5
======== =======
Net income $ 2.6 $ 4.4
======== =======
</TABLE>
7
<PAGE> 8
NOTE 3. 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 were to be purchased at $18
per share plus an incremental increase of 6.5% per annum from the date of the
agreement. These shares were purchased in the first quarter of 1996 at $18.87
per share.
NOTE 4. 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. All share and per share data have
been adjusted to reflect this split.
8
<PAGE> 9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW: Consolidated net cash provided (used) by operating activities was
$(62.9) million for the first quarter of 1996 compared to $.8 million for the
same period in 1995. Cash used by operating activities increased due to higher
working capital investments. The increased working capital investment was
principally related to higher inventories which resulted from a combination of
lower than anticipated sales increases, and substantially shorter vendor lead
times. Consolidated cash used by investing activities was $13.7 million for
the first quarter of 1996 versus $7.9 million for the same period in 1995 due
to increased capital expenditures relating to expansion in emerging markets and
new service and logistic initiatives. Consolidated cash provided from net
financing activities was $81.7 million for the first quarter of 1996 in
comparison to $15.2 million for the first quarter of 1995. The consolidated
net financing activities in 1996 and 1995 include $30.8 million and $38.8
million of treasury stock purchases, respectively. Cash used for assets held
for sale, net was $2.0 million in the first quarter of 1996 versus net cash
provided of $2.5 million for the same period in 1995 and reflects the payment
of liabilities relating to those assets offset by modest proceeds from sales.
Consolidated interest and other expense net was $5.5 million and $4.9 million
for the quarters ended March 29, 1996 and March 31, 1995, 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 65% of debt
obligations at March 29, 1996 is fixed or capped. The impact of interest rate
swaps and caps on interest expense, net for the quarters ended March 29, 1996
and March 31, 1995 was to increase interest expense by approximately $.4
million and $.2 million respectively.
9
<PAGE> 10
FINANCINGS:
At March 29, 1996, $77.7 million was available under the bank revolving lines
of credit at Anixter, of which $61.2 million was available to pay the Company
for intercompany liabilities.
OTHER LIQUIDITY CONSIDERATIONS: Certain debt agreements entered into by the
Company's subsidiaries contain various restrictions including restrictions on
payments to the Company. Such restrictions have not had nor are expected to
have an adverse impact on the Company's ability to meet its cash obligations.
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 through March 29, 1996 $1.4 billion of
the portfolio. The $34 million net portfolio at March 29, 1996 represents
approximately 2% of the original acquired Signal Capital portfolio. Proceeds
were used to repay indebtedness and repurchase shares of the Company's common
stock. The Company continues to liquidate the acquired Signal Capital
portfolio in an orderly manner that maximizes its value to shareholders and no
material amounts of new loans or investments are being made by Signal Capital.
CAPITAL EXPENDITURES AND ACQUISITIONS
Consolidated capital expenditures were $11.7 million and $5.8 million for the
first quarter of 1996 and 1995, respectively.
10
<PAGE> 11
RESULTS OF OPERATIONS
The Company has experienced increased revenues due to the continued growth of
the North American communications and electrical wire and cable businesses 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, this forward-looking statement is
subject to a number of uncertainties and actual results could differ
materially. The Company competes with distributors and manufacturers who sell
products directly or through existing distribution channels to end users or
other resellers. The Company's relationship with the manufacturers for which
it distributes products could be affected by decisions made by these
manufacturers as the result of changes in management or ownerships as well as
other factors. In addition, the Company's future performance could be affected
by economic downturns and possibly rapid changes in applicable technologies.
EARNINGS PER SHARE: Weighted average common and common equivalent shares
outstanding decreased from March 31, 1995 to March 29, 1996 primarily as a
result of the Company's treasury stock purchases in 1995 and 1996. An increase
in borrowing costs associated with stock purchases offset the decrease in
shares resulting in no significant effect on earnings per share.
QUARTER ENDED MARCH 29, 1996: Net income for the first quarter of 1996 was
$10.3 million compared with $11.1 million for the first quarter of 1995.
The Company's revenues during the first quarter of 1996 increased 13% to $567.4
million from $502.9 million in 1995 due to (1) the continued 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. The year over
year sales growth of 13% trailed the Company's five year compounded annual
growth rate of approximately 18%. The Company believes this lower than trend
growth rate is due to the disruptive effects of a sales force reorganization in
North America which was completed in the first quarter of 1996. The
reorganization, which divided the sales force into product specialties, is
intended to better focus the Company's sales efforts to support longer term
sales growth. Revenues by major geographic market are presented in the
following table.
11
<PAGE> 12
<TABLE>
<CAPTION>
QUARTERS ENDED
---------------
MARCH 29, MARCH 31,
1996 1995
---- ----
(IN MILLIONS)
<S> <C> <C>
North America $425.3 $386.2
Europe 116.0 100.1
Asia and Latin America 26.1 16.6
------ ------
$567.4 $502.9
====== ======
</TABLE>
The Company's gross margin increased 14.7% to $145.8 million in the first
quarter of 1996 from $127.1 million in the first quarter of 1995 due to the 13%
volume increase as well as a slight shift in sales mix to higher margin
products and faster growth rates in the higher gross margin foreign
geographies.
Operating expenses increased 19% to $120.9 million due to increased headcount
in most areas of the Company, including customer service based initiatives in
North America and Europe and geographic expansion in Asia and Latin America.
This increase in expenses was in line with 1996 business plan expectations;
however, because sales were less than anticipated the operating expense ratio,
before goodwill amortization, has risen to 21.3% in the first quarter of 1996
from 20.2% in the first quarter of 1995.
Operating income decreased modestly to $23.4 million in 1996 from $23.8 million
in the first quarter of 1995. Operating income by major geographic markets is
presented in the following table.
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------
MARCH 29, MARCH 31,
1996 1995
-------- --------
(IN MILLIONS)
<S> <C> <C>
North America $24.3 $20.1
Europe 3.4 5.2
Asia and Latin America (4.3) (1.5)
----- -----
$23.4 $23.8
===== =====
</TABLE>
12
<PAGE> 13
North American operating income includes the results of the North American
business unit as well as certain corporate expenses. In 1996 these corporate
related expenses were less than the prior year by approximately $1.5 million
which accounts for the better growth in operating profits than in sales.
The decrease in European profitability is due to volume related softness in
communications sales in certain countries, and increased spending for sales
force increases to support a move toward an end user customer focus. Changes
in currency exchange rates in the first quarter 1996 reduced operating income
by $.6 million as compared to what it would have been had 1996 exchange rates
remained constant with those in 1995.
Increased losses in emerging markets were due to new locations opened in the
later part of 1995 and planned increases in headcounts required to penetrate
the Asia/Pacific and Latin American markets.
Consolidated net interest expense for the first quarter of 1996 increased to
$5.5 million from $4.9 million in 1995 due to increased working capital
borrowings partially offset by lower all in interest rates.
The consolidated tax provision decreased by $1.2 million to $8.4 million due to
lower pre-tax earnings and a decrease in the effective tax rate. The 1996
effective tax rate of 45% is based on pre-tax book income adjusted for
amortization of goodwill and losses of foreign operations which are not
currently deductible.
13
<PAGE> 14
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held May 9, 1996:
The Directors of the Company were elected as follows:
<TABLE>
<CAPTION>
VOTES
------------------------------------------------------------------
DIRECTORS FOR WITHHELD
- --------- ----------- ----------
<S> <C> <C>
Lord James Blyth 45,710,247 115,599
Bernard F. Brennan 45,711,831 114,015
Rod F. Dammeyer 45,430,547 395,299
Robert E. Fowler, Jr. 45,709,863 115,983
Robert W. Grubbs Jr. 45,599,277 226,569
F. Philip Handy 45,710,995 114,851
Melvyn N. Klein 45,711,649 114,197
John R. Petty 45,709,883 115,963
Sheli Z. Rosenberg 45,437,097 388,749
Stuart M. Sloan 45,710,281 115,565
Thomas C. Theobald 45,712,145 113,701
Samuel Zell 45,437,143 388,703
</TABLE>
The Company's 1996 Stock Incentive Plan was approved by a vote of 34,549,557
shares "For", 11,040,821 shares "Against" and 98,968 shares "Abstain."
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
14
<PAGE> 15
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: May 10, 1996 By: /s/ Rod F. Dammeyer
------------ ---------------------------------------
Rod F. Dammeyer
President and Chief Executive Officer
Date: May 10, 1996 By: /s/ Dennis J. Letham
------------ ------------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This Schedule Conatins Summary Financial 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> 3-MOS
<FISCAL-YEAR-END> JAN-3-1997
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-29-1996
<CASH> 15,600
<SECURITIES> 0
<RECEIVABLES> 401,700
<ALLOWANCES> 9,000
<INVENTORY> 417,000
<CURRENT-ASSETS> 846,400
<PP&E> 108,400
<DEPRECIATION> 52,200
<TOTAL-ASSETS> 1,236,600
<CURRENT-LIABILITIES> 311,900
<BONDS> 0
0
0
<COMMON> 50,800
<OTHER-SE> 397,800
<TOTAL-LIABILITY-AND-EQUITY> 1,236,600
<SALES> 567,400
<TOTAL-REVENUES> 567,400
<CGS> 421,600
<TOTAL-COSTS> 544,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,500
<INCOME-PRETAX> 18,700
<INCOME-TAX> 8,400
<INCOME-CONTINUING> 10,300
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,300
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
