<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 APRIL 4, 1997
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 May 8, 1997 there were 47,312,462 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>
APRIL 4, JANUARY 3,
1997 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and equivalents $ 9,200 $ 18,200
Accounts receivable (net of allowance for doubtful
accounts of $9,000 and $9,000, respectively) 480,400 441,100
Inventories, primarily finished goods 383,400 397,300
Other assets 11,800 11,900
---------- ----------
Total current assets 884,800 868,500
Property, at cost 133,100 128,400
Accumulated depreciation (72,200) (66,800)
---------- ----------
Net property 60,900 61,600
Goodwill (net of accumulated amortization
of $59,200 and $57,600 respectively) 183,600 183,100
Assets held for sale, net 45,700 44,000
Investment in ANTEC 59,600 77,800
Other assets 27,000 26,000
---------- ----------
$1,261,600 $1,261,000
========== ==========
</TABLE>
See accompanying notes to the condensed consolidated financial statements.
2
<PAGE> 3
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
<TABLE>
<CAPTION>
APRIL 4, JANUARY 3,
1997 1997
---------- ----------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Accounts payable $ 251,800 $209,200
Accrued expenses 81,200 97,100
Income taxes payable 4,600 7,200
---------- ----------
Total current liabilities 337,600 313,500
Deferred taxes, net 29,200 29,800
Other liabilities 13,100 13,800
Long-term debt 463,300 468,400
---------- ----------
Total liabilities 843,200 825,500
Stockholders' equity:
Common stock 47,300 48,000
Capital surplus 48,500 57,100
Retained earnings 355,600 344,500
Cumulative translation adjustments (19,700) (14,100)
---------- ----------
431,700 435,500
Unrealized losses on investment in ANTEC
(net of deferred income tax benefit) (13,300) -
---------- ----------
Total stockholders' equity 418,400 435,500
---------- ----------
$1,261,600 $1,261,000
========== ==========
</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
----------------------
APRIL 4, MARCH 29,
1997 1996
---------- ----------
<S> <C> <C>
Revenues $ 658,700 $ 567,400
Cost of goods sold (495,900) (421,600)
---------- ----------
Gross profit 162,800 145,800
Operating expenses (136,100) (120,900)
Amortization of goodwill (1,600) (1,500)
---------- ----------
Operating income 25,100 23,400
Interest expense and other, net (7,400) (5,500)
Equity in ANTEC earnings 2,200 800
---------- ----------
Income before income taxes 19,900 18,700
Income tax expense (8,800) (8,400)
---------- ----------
Net income $ 11,100 $ 10,300
========== ==========
Net income per common and common
equivalent share: $ .23 $ .20
========== ==========
Weighted average common and
common equivalent shares 47,800 52,200
========== ==========
</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
----------------------
APRIL 4, MARCH 29,
1997 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income $ 11,100 $ 10,300
Adjustments to reconcile net income
to net cash provided (used) by
operating activities:
Depreciation 6,200 4,500
Amortization of goodwill 1,600 1,500
Deferred income tax expense (1,500) 300
Loss on sale of marketable securities - (800)
Other, net (2,800) 1,000
Changes in current assets and liabilities, net (400) (79,700)
---------- ---------
Net cash provided (used) by operating
activities 14,200 (62,900)
Investing activities:
Purchases of property, net (6,400) (11,700)
Cash used by assets held for sale, net (1,700) (2,000)
---------- ---------
Net cash used by investing activities (8,100) (13,700)
---------- ---------
Net cash provided (used) before financing activities 6,100 (76,600)
Financing activities:
Borrowings 272,000 277,300
Reduction in borrowings (275,300) (164,000)
Proceeds from issuance of common stock - 700
Purchases of treasury stock (9,600) (30,800)
Other, net (2,200) (1,500)
---------- ---------
Net cash provided (used) by financing activities (15,100) 81,700
---------- ---------
Cash provided (used) (9,000) 5,100
Cash and equivalents at beginning of period 18,200 10,500
---------- ---------
Cash and equivalents at end of period $ 9,200 $ 15,600
========== =========
Supplemental cash flow information:
Interest paid during the period $ 9,500 $ 4,700
========== =========
Income taxes paid during the period $ 6,200 $ 4,000
========== =========
</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 January 3, 1997. 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.
Principles of consolidation: The condensed consolidated financial statements
include the accounts of Anixter International Inc. and its subsidiaries after
elimination of intercompany transactions.
NOTE 2. SUMMARIZED FINANCIAL INFORMATION OF ANTEC
The Company's ownership interest in ANTEC at April 4, 1997 and March 29, 1996
was 19% and 31%, respectively. On February 6, 1997 a wholly-owned subsidiary
of ANTEC was merged into TSX Corporation. Under the terms of the transaction,
TSX Corporation shareholders received one share of ANTEC Corporation stock for
each share of TSX Corporation stock that they owned. The transaction was
accounted for as a pooling of interests. Upon consummation of this transaction
the Company's ownership interest in ANTEC was reduced to approximately 19%
which resulted in a cessation of equity method accounting for this investment
after that date. As a result of this change, the Company recorded a $1.2
million after tax gain.
NOTE 3. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
The Company has an approximately 99% ownership interest in Anixter Inc. at
April 4, 1997 and January 3, 1997 which is included in the consolidated
financial statements of the Company. The following summarizes the financial
information for Anixter Inc.
6
<PAGE> 7
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
APRIL 4, 1997
(IN MILLIONS)
<TABLE>
<CAPTION>
APRIL 4, JANUARY 3,
1997 1997
----------- ----------
(UNAUDITED)
<S> <C> <C>
Assets:
Current assets $ 880.8 $ 857.7
Property, net 60.9 61.6
Goodwill 183.6 183.1
Other assets 34.9 34.1
-------- --------
$1,160.2 $1,136.5
======== ========
Liabilities and Stockholders' Equity:
Current liabilities $ 333.2 $ 304.0
Other liabilities 10.0 11.4
Long-term debt 463.3 468.4
Subordinated notes payable to parent 27.5 29.0
Shareholders' equity 326.2 323.7
-------- --------
$1,160.2 $1,136.5
======== ========
</TABLE>
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE-MONTHS ENDED
APRIL 4, MARCH 29,
1997 1996
-------- ---------
(IN MILLIONS)
<S> <C> <C>
Revenues $658.7 $567.4
====== =======
Operating income $ 23.0 $ 22.2
====== =======
Income before income tax expense $ 15.2 $ 16.1
====== =======
Net income (loss) $ 7.7 $ 8.2
====== =======
</TABLE>
NOTE 4. IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In February 1997, the FASB issued Statement No. 128, Earnings per Share, which
is required to be adopted on December 31, 1997. At that time, the Company will
be required to change the method currently used to compute earnings per share
and to restate all prior periods. The Impact of Statement 128 is not expected
to be material.
7
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW: Consolidated net cash provided by operating activities was $14.2
million for the first three months of 1997 compared to $62.9 million used for
the same period in 1996. Cash provided by operating activities increased
primarily due to a reduction in working capital investments and higher net
income. Consolidated cash used by investing activities was $8.1 million for the
first three months of 1997 versus $13.7 million for the same period in 1996 as
a result of a decrease in capital expenditures for 1997. Consolidated cash
used by net financing activities was $15.1 million for the first three months
of 1997 in comparison to $81.7 million provided in the first three months of
1996 due to the reduction in working capital investments in 1997 and a decrease
in purchases of treasury stock from $30.8 million in 1996 to $9.6 million in
1997. Cash used for assets held for sale, net was $1.7 million in the first
three months of 1997 versus $2.0 million for the same period in 1996.
Consolidated interest and other expense net was $7.4 million and $5.5 million
for the three months ended April 4, 1997 and March 23, 1996, respectively. The
increase is the result of higher costs associated with seven year 8% Senior
Notes which were issued in September 1996 and higher working capital borrowings
in the previous year. In addition to the fixed rate 8% Senior Notes 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 76% of all debt
obligations at April 4, 1997 is fixed or capped. The impact of interest rate
swaps and caps on interest expense, net for the three months ended April 4,
1997 and March 29, 1996 was to increase interest expense by approximately $.3
million and $.4 million, respectively.
FINANCINGS:
At April 4, 1997, $217.3 million was available under the bank revolving lines
of credit at Anixter, of which $33.7 million was available to pay the Company
for intercompany liabilities.
8
<PAGE> 9
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 in assets held for sale since acquisition in 1988. Subsequent to the
purchase, the Company sold or liquidated, through April 4, 1997, $1.4 billion
of the portfolio. The $20.7 million net portfolio at April 4, 1997 represents
approximately 1% of the original acquired Signal Capital portfolio. Proceeds
have been 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 $6.4 million and $11.7 million for the
first three months of 1997 and 1996, respectively.
RESULTS OF OPERATIONS
The Company has experienced increased revenues due to growth in all major
product lines, with the exception of shared media hubs in North America, and
solid growth across all geographies. The Company competes with distributors
and manufacturers who sell products directly or through existing distribution
channels to end users or other resellers. The Company's relationship with the
manufacturers for which it distributes products could be affected by decisions
made by these manufacturers as the result of changes in management or
ownerships as well as other factors. In addition, the Company's future
performance could be affected by economic downturns and possible rapid changes
in applicable technologies.
EARNINGS PER SHARE: Weighted average common and common equivalent shares
outstanding decreased from March 29, 1996 to April 4, 1997 primarily as a
result of the Company's treasury stock purchases. An increase in borrowing
costs associated with stock purchases offset the decrease in shares resulting
in no significant effect on earnings per share.
9
<PAGE> 10
QUARTER ENDED APRIL 4, 1997: Net income for the first quarter of 1997 was
$11.1 million compared with $10.3 million for the first quarter of 1996.
The Company's revenues during the first quarter of 1997 increased 16% to $658.7
million from $567.4 million in 1996 due to the continued growth in demand for
all major products sets in North America, with the exception of shared media
hubs where industry wide growth has been flat to slightly down. In Europe,
Asia and Latin America sales grew across all major product sets with further
market penetration in Asia and Latin America where year over year sales grew by
54 percent in the March quarter. During the current period Europe's sales
growth was negatively impacted due to exchange rate fluctuations which resulted
in a 4% lower growth rate as compared to what it would have been had 1997
exchange rates remained constant with those in 1996. Revenues by major
geographic market are presented in the following table.
<TABLE>
<CAPTION>
QUARTERS ENDED
----------------------
APRIL 4, MARCH 29,
1997 1996
------- ------
(IN MILLIONS)
<S> <C> <C>
North America $483.4 $424.8
Europe 134.3 116.0
Asia and Latin America 41.0 26.6
------ ------
$658.7 $567.4
====== ======
</TABLE>
Gross margins increased at a lower rate than the 16% rate of growth in sales
principally due to softness in certain European countries due to the stronger
dollar and competitive pressures. As a result gross profit margins were 24.7%
versus 25.7% in 1996.
Operating expenses increased only 13% to $136.1 million, in support of a 16%
increase in revenues, as a result of headcount controls in 1997. The operating
expense ratio, before goodwill amortization, has decreased to 20.7% in the
first quarter of 1997 from 21.3% in the first quarter of 1996.
Operating income increased to $25.1 million in 1997 from $23.4 million in the
first quarter of 1996. Operating income by major geographic markets is
presented in the following table.
10
<PAGE> 11
<TABLE>
<CAPTION>
QUARTERS ENDED
--------------
APRIL 4, MARCH 29,
1997 1996
---- ----
(IN MILLIONS)
<S> <C> <C>
North America $31.8 $23.7
Europe (.9) 3.9
Asia and Latin America (5.8) (4.2)
----- -----
$25.1 $23.4
===== =====
</TABLE>
The decrease in European profitability is due to the separation of the
distribution business from the network integration business which occurred at
the end of the first quarter of 1996, gross margin pressures previously
discussed and an increase in corporate expense allocations for service provided
to foreign operations. The increase in corporate allocations from $2.6 million
in 1996 to $3.3 million in 1997 is a result of the increased corporate expenses
relating to systems and personnel required to support an increased number of
transactions in the first quarter of 1997.
Increased losses in emerging markets were due to increased staffing and new
locations added in the later part of 1996, planned increases in headcounts
required to penetrate the Asia/Pacific and Latin American markets and an
increase in corporate expense allocations from $1.0 million in 1996 to $1.8
million in 1997 resulting from increased transactions and higher corporate
allocable expenses.
Consolidated net interest expense for the first quarter of 1997 increased to
$7.4 million from $5.5 million in 1996 due to the increase in debt resulting
from working capital increases in the previous year and $100 million of short
term borrowings with an average cost of 6.3% in 1996 which was replaced with
the seven year term 8% Senior Notes.
The consolidated tax provision increased to $8.8 million in 1997 from $8.4
million due to higher pre-tax earnings partially offset by a decrease in the
effective tax rate from the first quarter of 1996 to 1997. The 1997 effective
tax rate of 44%, which is based on pre-tax book income adjusted primarily for
amortization of goodwill and losses of foreign operations which are not
currently deductible, approximates the overall rate for 1996.
11
<PAGE> 12
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held May 8, 1997 the Directors of the
Company were elected as follows:
<TABLE>
<CAPTION>
VOTES
--------------------
DIRECTORS FOR WITHHELD
- --------- ---------- --------
<S> <C> <C>
Lord James Blyth 40,871,283 54,716
Rod F. Dammeyer 40,862,908 63,091
Robert E. Fowler, Jr. 40,872,079 53,920
Robert W. Grubbs, Jr. 40,870,539 55,460
F. Philip Handy 40,871,955 54,044
Melvyn N. Klein 40,872,077 53,922
John R. Petty 40,870,739 55,260
Sheli Z. Rosenberg 40,872,921 53,078
Stuart M. Sloan 40,872,849 53,150
Thomas C. Theobald 40,873,125 52,874
Samuel Zell 40,869,552 56,447
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
12
<PAGE> 13
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 14, 1997 By:
-------------- -------------------------------------
Rod F. Dammeyer
President and Chief Executive Officer
Date: May 14, 1997 By:
------------ -------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer
13
<PAGE> 14
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 14, 1997 By: /s/ Rod F. Dammeyer
------------ -------------------------------------
Rod F. Dammeyer
President and Chief Executive Officer
Date: May 14, 1997 By: /s/ Dennis J. Letham
------------ -------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer
14
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contians summary financial information extracted from Itel's
Consolidated Financial statements and is qualified in its entirety by reference
to such finacial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-02-1998
<PERIOD-START> JAN-04-1997
<PERIOD-END> APR-04-1997
<CASH> 9,200
<SECURITIES> 0
<RECEIVABLES> 480,400
<ALLOWANCES> 9,000
<INVENTORY> 383,400
<CURRENT-ASSETS> 884,800
<PP&E> 133,100
<DEPRECIATION> 72,200
<TOTAL-ASSETS> 1,261,600
<CURRENT-LIABILITIES> 337,600
<BONDS> 0
0
0
<COMMON> 47,300
<OTHER-SE> 371,100
<TOTAL-LIABILITY-AND-EQUITY> 1,261,600
<SALES> 658,700
<TOTAL-REVENUES> 658,700
<CGS> 495,900
<TOTAL-COSTS> 633,600
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,400
<INCOME-PRETAX> 19,900
<INCOME-TAX> 8,800
<INCOME-CONTINUING> 11,100
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,100
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
</TABLE>
