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UNITED STATES
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
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD
from ______ to ______
For the quarterly period ended MARCH 31, 2000
Commission file number 001-14989
WESCO INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 25-1723342
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
COMMERCE COURT
FOUR STATION SQUARE, SUITE 700
PITTSBURGH, PENNSYLVANIA 15219 (412) 454-2200
(Address of principal executive offices) (Registrant's telephone number,
including area code)
N/A
(Former name or former address, if changed since last report)
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 at least the past 90 days. Yes X No .
--- ---
As of April 30, 2000, WESCO International, Inc. had 40,812,939 shares and
4,653,131 shares of common stock and Class B common stock outstanding,
respectively.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
QUARTERLY REPORT ON FORM 10-Q
TABLE OF CONTENTS
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Page
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PART I - FINANCIAL INFORMATION
ITEM 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000 (unaudited) and
December 31, 1999.................................................................. 3
Condensed Consolidated Statements of Operations for the three
months ended March 31, 2000 and 1999 (unaudited) ........... 4
Condensed Consolidated Statements of Cash Flows for the three months ended
March 31, 2000 and 1999 (unaudited) ............................................... 5
Notes to Condensed Consolidated Financial Statements (unaudited) ..................... 6
ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of
Operations......................................................................... 9
ITEM 3 Quantitative and Qualitative Disclosures About Market Risk............................... 12
PART II - OTHER INFORMATION
ITEM 6 Exhibits and Reports on Form 8-K......................................................... 13
Signatures............................................................................... 14
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
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MARCH 31 DECEMBER 31
Dollars in thousands, except share data 2000 1999
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(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 38,635 $ 8,819
Trade accounts receivable, net of allowance for doubtful
accounts of $6,781 and $7,023 in 2000 and 1999, respectively 227,935 188,307
Other accounts receivable 29,163 31,829
Inventories 414,035 397,669
Income taxes receivable 6,413 10,667
Prepaid expenses and other current assets 3,478 4,930
Deferred income taxes 11,931 11,580
---------- ----------
Total current assets 731,590 653,801
Property, buildings and equipment, net 117,973 116,638
Goodwill and other intangibles, net of accumulated amortization of $21,307 and
$18,956 in 2000 and 1999, respectively 262,796 249,240
Other assets 8,853 9,114
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Total assets $1,121,212 $1,028,793
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 480,782 $ 406,963
Accrued payroll and benefit costs 13,425 18,171
Current portion of long-term debt 3,861 3,831
Other current liabilities 37,259 25,820
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Total current liabilities 535,327 454,785
Long-term debt 439,981 422,539
Other noncurrent liabilities 7,600 7,504
Deferred income taxes 26,982 26,660
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Total liabilities 1,009,890 911,488
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares
issued -- --
Common stock, $.01 par value; 210,000,000 shares authorized, 43,479,030 and
43,291,319 shares issued in 2000 and 1999, respectively 435 433
Class B nonvoting convertible common stock, $.01 par value; 20,000,000
shares authorized, 4,653,131 issued in 2000 and 1999 46 46
Additional capital 566,825 565,897
Retained earnings (deficit) (434,427) (443,582)
Treasury stock, at cost; 2,595,110 and 637,259 shares in 2000 and 1999,
respectively (20,838) (4,790)
Accumulated other comprehensive income (loss) (719) (699)
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Total stockholders' equity 111,322 117,305
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Total liabilities and stockholders' equity $1,121,212 $1,028,793
========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
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THREE MONTHS
ENDED MARCH 31
In thousands, except share data 2000 1999
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Net sales $923,360 $777,415
Cost of goods sold 760,004 638,622
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Gross profit 163,356 138,793
Selling, general and administrative expenses 126,457 110,380
Depreciation and amortization 5,525 4,499
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Income from operations 31,374 23,914
Interest expense, net 10,878 14,459
Other expense 5,263 4,614
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Income before income taxes 15,233 4,841
Provision for income taxes 6,078 1,924
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Net income $ 9,155 $ 2,917
======== ========
Earnings per share:
Basic $ 0.20 $ 0.08
======== ========
Diluted $ 0.19 $ 0.08
======== ========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
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THREE MONTHS ENDED
MARCH 31
In thousands 2000 1999
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OPERATING ACTIVITIES:
Net income $ 9,155 $ 2,917
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 5,525 4,499
Accretion of original issue and amortization of purchase discounts 280 2,408
Amortization of debt issuance costs and interest rate caps 155 460
Gain on sale of property, buildings and equipment -- (21)
Deferred income taxes (29) 1,761
Changes in assets and liabilities, excluding the effects of acquisitions:
Sale of trade accounts receivable 5,000 20,000
Trade and other receivables (34,303) (18,187)
Inventories (11,910) (2,045)
Prepaid expenses and other current assets 5,482 (2,156)
Other assets (63) (160)
Accounts payable 63,534 29,441
Accrued payroll and benefit costs (4,979) 221
Other current and noncurrent liabilities 10,808 9,661
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Net cash provided by operating activities 48,655 48,799
INVESTING ACTIVITIES:
Capital expenditures (3,272) (6,247)
Proceeds from the sale of property, buildings and equipment -- 21
Advances to affiliates -- (1,877)
Acquisitions (14,058) (3,932)
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Net cash used by investing activities (17,330) (12,035)
FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 237,870 125,294
Repayments of long-term debt (223,885) (142,232)
Repurchase of common stock (15,889) --
Proceeds from the exercise of stock options 395 32
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Net cash used by financing activities (1,509) (16,906)
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Net change in cash and cash equivalents 29,816 19,858
Cash and cash equivalents at the beginning of period 8,819 8,093
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Cash and cash equivalents at the end of period $ 38,635 $ 27,951
========= =========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. ORGANIZATION
WESCO International, Inc. and its subsidiaries (collectively, "WESCO"),
headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of
electrical supplies and equipment and is a provider of integrated supply
procurement services. WESCO is engaged principally in one line of business - the
sale of electrical products and maintenance, repair and operating supplies.
WESCO currently operates over 340 branch locations and five distribution centers
in the United States, Canada, Mexico, Puerto Rico, Guam, the United Kingdom, the
Balkans and Singapore.
2. ACCOUNTING POLICIES
Basis of Presentation
The unaudited condensed consolidated financial statements include the
accounts of WESCO and all of its subsidiaries and have been prepared in
accordance with Rule 10-01 of the Securities and Exchange Commission. The
unaudited condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes thereto
included in WESCO's 1999 Annual Report on Form 10-K filed with the Securities
and Exchange Commission.
The unaudited condensed consolidated balance sheet as of March 31, 2000,
and the unaudited condensed consolidated statements of operations and cash flows
for the three months ended March 31, 2000 and 1999, in the opinion of
management, have been prepared on the same basis as the audited consolidated
financial statements and include all adjustments necessary for the fair
presentation of the results of the interim periods. All adjustments reflected in
the condensed consolidated financial statements are of a normal recurring
nature. Results for the interim periods presented are not necessarily indicative
of the results to be expected for the full year.
Recent Accounting Pronouncement
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." This statement,
as amended, is required to be adopted by WESCO as of January 1, 2001, although
earlier adoption is permitted. This statement requires the recognition of the
fair value of any derivative financial instrument on the balance sheet. Changes
in fair value of the derivative and, in certain instances, changes in the fair
value of an underlying hedged asset or liability, are recognized through either
income or as a component of other comprehensive income. Management does not
expect this statement will have a material impact on the results of operation or
financial position of WESCO.
3. INITIAL PUBLIC OFFERING
On May 17, 1999, WESCO completed its initial public offering of 11,183,750
shares of common stock ("Offering") at $18.00 per share. In connection with the
Offering, certain employee rights to require WESCO to repurchase outstanding
redeemable common stock were terminated and approximately $31.5 million of
convertible notes were converted into 1,747,228 shares of common stock. Proceeds
from the Offering (after deducting Offering costs of $14.5 million) totaling
$186.8 million and borrowings of approximately $65 million were used to redeem
all of the 11 1/8% senior discount notes ($62.8 million) and to repay the
existing revolving credit and term loan facilities ($188.8 million).
In connection with the Offering, the Board of Directors approved a 57.8 to
one stock split effected in the form of a stock dividend of WESCO's common
stock. The Board of Directors also reclassified the Class A common stock into
common stock, increased the authorized common stock to 210,000,000 shares and
the authorized Class B common stock to 20,000,000 shares and authorized
20,000,000 shares of $.01 par value preferred stock, all effective May 11, 1999.
In this report, all share and per share data have been restated to reflect the
stock split.
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4. ACQUISITIONS
On February 29, 2000, WESCO acquired substantially all the assets and
assumed substantially all liabilities and obligations relating to the operations
of Control Corporation of America ("CCA"), a privately-owned company
headquartered in Richmond, Virginia. CCA, an electrical distributor specializing
in industrial automation solutions, had net sales of approximately $50 million
in 1999. The CCA acquisition is being accounted for under the purchase method of
accounting. Pro forma results of this acquisition, assuming it had occurred at
the beginning of the periods presented, would not be materially different from
the actual results reported.
5. EARNINGS PER SHARE
The following table sets forth the details of basic and diluted earnings per
share:
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THREE MONTHS ENDED
MARCH 31
Dollars in thousands, except share data 2000 1999
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Net income $ 9,155 $ 2,917
Interest on convertible debt -- 406
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Net income used in diluted earnings per share $ 9,155 $ 3,323
=========== ===========
Weighted average common shares outstanding used
in computing basic earnings per share 46,246,497 34,768,068
Common shares issuable upon exercise of
dilutive stock options 2,493,486 3,809,153
Assumed conversion of convertible debt -- 2,579,975
----------- -----------
Weighted average common shares outstanding and
common share equivalents used in computing
diluted earnings per share 48,739,983 41,157,196
=========== ===========
Earnings per share
Basic $ 0.20 $ 0.08
Diluted $ 0.19 $ 0.08
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</TABLE>
6. COMPREHENSIVE INCOME
The following table sets forth comprehensive income and its components:
THREE MONTHS ENDED
MARCH 31
In thousands 2000 1999
- ------------------------------------------------------------------
Net income $ 9,155 $ 2,917
Foreign currency translation adjustment (20) 259
------- -------
Comprehensive income $ 9,135 $ 3,176
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7. CASH FLOW STATEMENT
Supplemental cash flow information with respect to acquisitions was as
follows:
THREE MONTHS ENDED
MARCH 31
In thousands 2000 1999
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Details of acquisitions
Fair value of assets acquired $ 27,784 $ 6,994
Fair value of liabilities assumed (7,726) (3,062)
Deferred acquisition payable (6,000) --
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Cash paid for acquisitions $ 14,058 $ 3,932
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8. OTHER FINANCIAL INFORMATION
In June 1998, WESCO Distribution, Inc. issued $300 million of 9 1/8% senior
subordinated notes. The senior subordinated notes are fully and unconditionally
guaranteed by WESCO International, Inc. on a subordinated basis to all existing
and future senior indebtedness of WESCO International, Inc. Summarized financial
information for WESCO Distribution, Inc. is as follows:
BALANCE SHEET DATA
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<CAPTION>
MARCH 31 DECEMBER 31
In thousands 2000 1999
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Current assets $ 731,590 $ 653,801
Noncurrent assets 389,622 374,992
Current liabilities 535,327 454,785
Long-term debt 439,981 422,539
Other noncurrent liabilities 34,582 34,164
Total liabilities and stockholder's equity 1,121,212 1,028,793
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</TABLE>
STATEMENT OF OPERATIONS DATA
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
In thousands 2000 1999
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<S> <C> <C>
Net sales $923,360 $777,415
Gross profit 163,356 138,793
Income from operations 31,374 23,914
Net income 9,155 4,504
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</TABLE>
Prior to the June 1998 issuance of the senior discount notes, WESCO
Distribution, Inc. financial information was identical to that of WESCO
presented herein.
9. SUBSEQUENT EVENT
In May 2000, WESCO's board of directors authorized an additional $25 million
to be added to its existing $25 million share repurchase program which was
authorized in November 1999. As of May 8, 2000 WESCO has purchased $22.5 million
of common stock pursuant to this program.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the information
in the unaudited condensed consolidated financial statements and notes thereto
included herein and WESCO International Inc.'s Financial Statements and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included in its 1999 Annual Report on Form 10-K.
GENERAL
WESCO is a full-line distributor of electrical supplies and equipment and is
a provider of integrated supply procurement services. WESCO currently operates
more than 350 branch locations and five distribution centers in the United
States, Canada, Mexico, Puerto Rico, Guam, the United Kingdom, the Balkans and
Singapore. WESCO serves over 130,000 customers worldwide, offering over
1,000,000 products from over 23,000 suppliers. WESCO's diverse customer base
includes a wide variety of industrial companies; contractors for industrial,
commercial and residential projects; utility companies, and commercial,
institutional and governmental customers. Approximately 90% of WESCO's net sales
are generated from operations in the U.S., 9% from Canada and the remainder from
other countries.
RECENT DEVELOPMENTS
Recent developments affecting the results of operations and financial
position of WESCO include the following:
Acquisition. During the first quarter, WESCO acquired substantially all the
assets and assumed substantially all liabilities and obligations relating to the
operations of Control Corporation of America ("CCA"), a privately-owned company
headquartered in Richmond, Virginia. CCA, an electrical distributor specializing
in industrial automation solutions, had net sales of approximately $50 million
in 1999. The CCA acquisition is being accounted for under the purchase method of
accounting.
RESULTS OF OPERATIONS
The following table sets forth the percentage relationship to net sales of
certain items in WESCO's condensed consolidated statements of operations for the
periods presented:
THREE MONTHS ENDED
MARCH 31
2000 1999
- ---------------------------------------------------------------------
Net sales 100.0% 100.0%
Gross profit 17.7 17.9
Selling, general and administrative expenses 13.7 14.2
Depreciation and amortization 0.6 0.6
----- -----
Income from operations 3.4 3.1
Interest expense 1.2 1.9
Other expense 0.5 0.6
----- -----
Income before income taxes 1.7 0.6
Income taxes 0.7 0.2
----- -----
Net income 1.0% 0.4%
===== =====
First Quarter 2000 versus First Quarter 1999
Net Sales. Net sales in the first quarter of 2000 increased $145.9 million,
or 18.8%, to $923.4 million compared with $777.4 million in the prior-year
quarter, primarily due to sales growth attributable to the Company's core
business and, to a lesser extent sales of acquired companies. The mix of direct
shipment sales remained at approximately 46%, with no change from the prior year
quarter. Core business sales increased approximately 16%. Robust sales growth
was evident across most product lines and integrated supply and construction
sales were especially strong.
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Gross Profit. Gross profit for the first quarter of 2000 increased $24.6
million to $163.4 million from $138.8 million for the first quarter of 1999.
Gross profit margin declined to 17.7% in the current-year quarter from 17.9% in
the first quarter of 1999, principally due to a slight decrease in direct
shipment billing margins and a small increase in transportation costs.
Selling, General and Administrative Expenses. Selling, general and
administrative ("SG&A") expenses increased $16.1 million, or 14.6%, to $126.5
million. Excluding SG&A expenses associated with companies acquired during 1999
and 2000, SG&A expenses increased 10.8%. The increase was principally due to
increased payroll related costs. The remainder of the increase was associated
with certain expenses that are variable in nature and increase when sales
increase. As a percent of sales, SG&A expenses declined to 13.7% compared with
14.2% in the year-earlier quarter reflecting enhanced operating leverage at this
higher relative sales level.
Depreciation and Amortization. Depreciation and amortization increased $1.0
million to $5.5 million reflecting higher amortization of goodwill from
acquisitions and higher depreciation from increases in property, buildings and
equipment over the prior year.
Income from Operations. Income from operations increased $7.5 million or 31%
over the prior year quarter due to higher gross profit, partially offset by
increased operating costs as described above.
Interest and Other Expense. Interest expense totaled $10.9 million for the
first quarter of 2000, a decrease of $3.6 million from the prior year quarter.
The decrease was primarily due to the higher levels of borrowings in 1999 before
WESCO completed its initial public offering in the second quarter. Other expense
totaled $5.3 million in the first quarter of 2000, a $0.6 million increase over
1999, reflecting costs associated with the accounts receivable securitization.
The increase in other expense was primarily due to the increased level of
securitized accounts receivable.
Income Taxes. The income tax provision increased to $6.1 million compared to
$1.9 million in the first quarter of 1999. The tax rate was 39.9% and 39.7% in
the first quarter of 2000 and 1999, respectively. The effective tax rates differ
from the federal statutory rate primarily due to state income taxes and
nondeductible expenses.
Net Income. Net income and diluted earnings per share were $9.2 million and
$0.19, respectively, for the first quarter of 2000, compared with $2.9 million
and $0.08, respectively, for the first quarter of 1999. The increases in net
income and earnings per share were primarily due to the $7.5 million increase in
operating income and the $3.6 million decrease in interest expense, partially
offset by a $0.6 million increase in other expense and a higher tax provision
associated with increased pre-tax income.
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LIQUIDITY AND CAPITAL RESOURCES
Total assets were $1.1 billion and $1.0 billion at March 31, 2000 and
December 31, 1999, respectively. In addition, stockholders' equity was $111.3
million at March 31, 2000 compared to $117.3 million at December 31, 1999. The
decrease was primarily due to the Company's purchases of common stock during the
first quarter. Debt was $443.8 million at March 31, 2000 as compared to $426.4
million at December 31, 1999, an increase of $17.4 million.
On May 17, 1999, WESCO completed its initial public offering of 11,183,750
shares of common stock ("Offering") at $18.00 per share. In connection with the
Offering, certain employee rights to require WESCO to repurchase outstanding
redeemable common stock were terminated and approximately $31.5 million of
convertible notes were converted into 1,747,228 shares of common stock. Proceeds
from the Offering (after deducting Offering costs of $14.5 million) totaled
$186.8.
An analysis of cash flows for the first three months of 2000 and 1999
follows:
Operating Activities. Cash provided by operating activities totaled $48.7
million in the first three months of 2000, compared to $48.8 million a year ago.
In connection with WESCO's asset securitization program, cash provided by
operations in the first quarter of 2000 and 1999 included proceeds of $5.0
million and $20.0 million, respectively, from the sale of accounts receivable.
Excluding this transaction, cash from operating activities provided $43.7
million in 2000 compared to $28.8 million in 1999. On this basis, the $14.9
million quarter-to-quarter increase in operating cash flow was primarily due to
increased income adjusted for noncash charges and decreases in certain
components of working capital.
Investing Activities. Net cash used in investing activities was $17.3
million in the first three months of 2000, compared to $12.0 million in the
first quarter of 1999. Cash used for investing activities was higher in the
first quarter of 2000 primarily due to a $10.2 million increase in cash paid for
acquisitions, partially offset by higher spending in 1999 for capital
expenditures and affiliate advances of $3.0 million and $1.9 million,
respectively. WESCO's capital expenditures for the first quarter of 2000 were
for computer equipment and software and branch and distribution center facility
improvements. The decrease from the prior year was primarily due to 1999
replacements of computer hardware at the branch locations, software development
and a land purchase.
Financing Activities. Cash used by financing activities totaled $1.5 million
for the first quarter of 2000 primarily reflecting WESCO's ongoing common stock
purchase program offset by increased borrowings. In the first quarter of 1999,
cash used by financing activities totaled $16.9 million, principally related to
debt repayments.
WESCO's liquidity needs arise from seasonal working capital requirements,
capital expenditures, debt service obligations and acquisitions. In addition,
certain of the Company's acquisition agreements contain earn-out provisions
usually based on future earnings targets. The most significant of these
agreements relates to the Bruckner acquisition where there is an earn-out
potential of $100 million during the next four years.
In addition to cash generated from operations and amounts available under
the credit facilities, WESCO uses a receivables facility to provide liquidity
and may sell trade accounts receivables, on a revolving basis, up to $350
million.
In May 2000, WESCO's board of directors authorized an additional $25 million
to be added to its existing $25 million share repurchase program which was
authorized in November 1999. As of May 8, 2000, WESCO has purchased $22.5
million of common stock pursuant to this program, since its inception.
Management believes that cash generated from operations, together with
amounts available under the credit agreement and the receivables facility, will
be sufficient to meet WESCO's working capital, capital expenditures and other
cash requirements for the foreseeable future. There can be no assurance,
however, that this will be the case. Financing of acquisitions can be funded
under the existing credit agreement and may, depending on the number and size of
acquisitions, require the issuance of additional debt and equity securities.
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YEAR 2000 ISSUE
WESCO made substantial preparations for the Year 2000 issue, which concerns
the ability of computer programs and software applications to process
date-dependent calculations, processes and other information by properly
identifying the year. Based on information available to date, WESCO has not
experienced any significant events attributable to the Year 2000 issue. We will
continue to monitor operations and our customers and suppliers in order to
mitigate any negative impact should an issue arise. WESCO believes that if any
Year 2000 issue were to surface, there would not be a significant impact on its
operations. In 1999 and 1998, WESCO incurred costs of $3.3 million specifically
associated with modifying its systems for Year 2000 compliance. WESCO expects to
incur little or no costs in 2000 related to this issue.
INFLATION
The rate of inflation, as measured by changes in the consumer price index,
did not have a material effect on the sales or operating results of the Company
during the periods presented. However, inflation in the future could affect the
Company's operating costs. Price changes from suppliers have historically been
consistent with inflation and have not had a material impact on the Company's
results of operations.
SEASONALITY
WESCO's operating results are affected by certain seasonal factors. Sales
are typically at their lowest during the first quarter due to a reduced level of
activity during the winter months. Sales increase during the warmer months
beginning in March and continuing through November. Sales drop again slightly in
December as the weather cools and also as a result of reduced level of activity
during the holiday season. As a result, WESCO reports sales and earnings in the
first quarter that are generally lower than that of the remaining quarters.
FORWARD-LOOKING STATEMENTS
From time to time in this report and in other written reports and oral
statements, references are made to expectations regarding the future performance
of WESCO. When used in this context, the words "anticipates," "plans,"
"believes," "estimates," "intends," "expects," "projects" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain such words. Such statements including,
but not limited to, WESCO's statements regarding its business strategy, growth
strategy, productivity and profitability enhancement, new product and service
introductions and liquidity and capital resources are based on management's
beliefs, as well as on assumptions made by, and information currently available
to, management, and involve various risks and uncertainties, certain of which
are beyond WESCO's control. WESCO's actual results could differ materially from
those expressed in any forward-looking statement made by or on behalf of WESCO.
In light of these risks and uncertainties there can be no assurance that the
forward-looking information will in fact prove to be accurate. Factors that
might cause actual results to differ from such forward-looking statements
include, but are not limited to, an increase in competition, the amount of
outstanding indebtedness, the availability of appropriate acquisition
opportunities, availability of key products, functionality of information
systems, Year 2000 readiness, international operating environments and other
risks that are described in WESCO's Annual Report on Form 10-K for the year
ended December 31, 1999 which are incorporated by reference herein. WESCO has
undertaken no obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
The Company's revolving credit agreement borrowings bear rates of interest
that fluctuate with various indices, at WESCO's option, such as LIBOR, Prime
Rate or the Federal Funds Rate. Additionally other expense related to WESCO's
accounts receivable securitization can fluctuate as the costs are based on
commercial paper rates. While management does not consider this risk to be
material, increases in the aforementioned indices can negatively impact WESCO's
results.
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PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
The following exhibits are incorporated by reference or filed herewith.
27 Financial Data Schedule
A copy of this exhibit may be retrieved electronically at the Securities and
Exchange Commission's home page at www.sec.gov. Exhibits will also be
furnished without charge by writing to Steven A. Burleson, Vice President,
Chief Financial Officer, Commerce Court, Four Station Square, Suite 700,
Pittsburgh, Pennsylvania 15219. Requests may also be directed to (412)
454-2200.
(b) REPORTS ON FORM 8-K
None
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 May 15, 2000 on its
behalf by the undersigned thereunto duly authorized.
WESCO International, Inc. and Subsidiaries
By: /s/ Steven A. Burleson
--------------------------------------
Steven A. Burleson
Vice President, Chief Financial
Officer
14
<PAGE> 15
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
- --------------------------------------------------------------------------------
27 Financial Data Schedule, filed herewith
15
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM WESCO
INTERNATIONAL, INC. AND SUBSIDIARIES' UNAUDITED INTERIM CONDENSED 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> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 38,635
<SECURITIES> 0
<RECEIVABLES> 234,716
<ALLOWANCES> 6,781
<INVENTORY> 414,035
<CURRENT-ASSETS> 731,590
<PP&E> 117,973
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,121,212
<CURRENT-LIABILITIES> 535,327
<BONDS> 439,981
0
0
<COMMON> 481
<OTHER-SE> 110,841
<TOTAL-LIABILITY-AND-EQUITY> 1,121,212
<SALES> 923,360
<TOTAL-REVENUES> 923,360
<CGS> 760,004
<TOTAL-COSTS> 891,986
<OTHER-EXPENSES> 5,236
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,878
<INCOME-PRETAX> 15,233
<INCOME-TAX> 6,078
<INCOME-CONTINUING> 9,155
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,155
<EPS-BASIC> 0.20
<EPS-DILUTED> 0.19
</TABLE>
