SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________
FORM 10-K
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (D)
--
OF THE SECURITES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 28, 2001 OR
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.)
4711 GOLF ROAD
SKOKIE, ILLINOIS 60076
(847) 677-2600
(Address and telephone number of principal executive offices in its charter)
SECURITIES REGISTERED PURSUANT TO SECTION 12 (B) OF THE ACT:
NAME OF EACH EXCHANGE
TITLE OF EACH CLASS ON WHICH REGISTERED
-------------------- --------------------
Common stock, $1 par value New York Stock Exchange
Convertible notes due 2020 New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12 (G) OF THE ACT: NONE.
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 _
Indicate by check mark if disclosure of delinquent filers pursuant to item
405 of Regulations S-K is not contained herein, and will not be contained, to
the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K.
Yes X No _
The aggregate market value of the shares of Registrant's Common Stock, $1
par value, held by nonaffiliates of Registrant was approximately $1,068,981,002
as of March 8, 2002.
At March 8, 2002, 36,988,962 shares of Registrant's Common Stock, $1 par
value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Certain portions of the Registrant's Proxy Statement for the 2002 Annual
Meeting of Stockholders of Anixter International Inc. are incorporated by
reference into Part III. This document consists of 45 pages. Exhibit List begins
on page 37.
TABLE OF CONTENTS
PART I
Item 1. Business of the Company..............................................1
Item 2. Properties...........................................................2
Item 3. Legal Proceedings....................................................3
Item 4. Submission of Matters to a Vote of Security Holders..................3
PART II
Item 5. Market for the Registrant's Common Equity and Related
Stockholder Matters................................................4
Item 6. Selected Financial Data..............................................4
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations..........................................5
Item 7A. Quantitative and Qualitative Disclosures about Market Risk..........13
Item 8. Consolidated Financial Statements and Supplementary Data............13
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...........................................34
PART III
Item 10. Directors and Executive Officers of the Registrant...................35
Item 11. Executive Compensation...............................................36
Item 12. Security Ownership of Certain Beneficial Owners and Management.......36
Item 13. Certain Relationships and Related Transactions.......................36
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K......36
PART I
ITEM 1. BUSINESS OF THE COMPANY.
(A) GENERAL DEVELOPMENT OF BUSINESS
Anixter International Inc. (the "Company"), formerly known as Itel
Corporation, which was incorporated in Delaware in 1967, is engaged in the
distribution of communications and specialty wire and cable products through
Anixter Inc. and its subsidiaries (collectively "Anixter").
In the fourth quarter of 1998, the Company decided to exit its
Integration segment and accordingly, the Integration segment is reflected as a
discontinued operation in these financial statements. The European Integration
business was sold in the fourth quarter of 1998. In 1999, the Company completed
the disposal of the Integration segment with North America Integration being
sold in the first quarter of 1999 followed by the sale of Asia Pacific
Integration in the fourth quarter of 1999.
As of January 2, 1998, the Company owned approximately 19% of ANTEC
Corporation and its subsidiaries (collectively "ANTEC"), a broadband
communications technology company, which was reduced from 31% in February 1997,
by the issuance of additional stock by ANTEC in connection with a merger. In
1998, the Company sold its remaining 19% interest in ANTEC.
In June 1998, the Company purchased 100% of the outstanding common stock
of Pacer Electronics, Inc., a distributor of wire and cable products, along with
value added services, to original equipment manufacturers in the electronics
industry.
In August 1997, the Company purchased approximately 93% of the
outstanding common stock of Accu-Tech Corporation ("Accu-Tech"), a networking
and wiring systems specialist distributing products for data, voice, video and
electrical applications. Accu-Tech became a wholly owned subsidiary during the
first quarter of 2002.
(B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS
The Company operates in one business segment which is engaged in the
distribution of communications and specialty wire and cable products. In 2001,
10.3% of total sales were to Lucent Technologies and its subsidiaries. No other
customer accounts for 10% or more of sales in 2001, 2000 or 1999.
For certain financial information concerning the Company's business
segment, see Note 13 "Business Segment" of the Notes to the Consolidated
Financial Statements of this report.
(C) NARRATIVE DESCRIPTION OF BUSINESS
In 1999, the Company completed the disposal of the Integration segment
and, accordingly, the Integration segment is reflected as a discontinued
operation in these financial statements. All narrative descriptions and year to
year comparisons have been restated to exclude Integration.
Anixter is a leading global distributor of data, voice and video network
communications products used by corporations to support their operations. In
addition, Anixter is a leading distributor of specialty wire and cable products
to original equipment manufacturers and to industrial companies for maintenance
and repair operations. Anixter also provides contractual supply chain management
of installation and repair-related materials for customers who install and/or
maintain communication equipment ("Integrated Supply"). Such contracts are
generally for time periods in excess of one year and include interfacing of
Anixter and customer information systems, the procurement, warehousing and
delivery of goods by Anixter, and in certain cases, the maintenance of dedicated
warehouse facilities. Anixter stocks and/or sells a full line of these products
from a network of 87 locations in the United States, 16 in Canada, 10 in the
United Kingdom, 24 in Continental Europe, 11 in Latin America, 4 in Australia
and 9 in Asia.
Anixter sells approximately 92,000 products to 85,000 active customers
and works with approximately 1,000 active suppliers. Its customers include
international, national, regional and local companies that are end users of
these products and engage in manufacturing, telecommunications, internet
service, finance, education, health care, transportation, utilities and
government. Also, Anixter sells products to resellers such as contractors,
installers, system integrators, value added resellers, architects, engineers and
wholesale distributors. The average order size is approximately $1,700. The
products distributed by Anixter include communications (voice, data and video)
products used to connect personal computers, peripheral equipment, mainframe
equipment and various networks to each other. The products include an assortment
of transmission media (copper and fiber optic cable) connectivity products and
support and supply products. In the enterprise network communications market,
Anixter sells products that are incorporated in local area networks ("LANs"),
the internetworking of LANs to form wide area networks and enterprise networks.
In the service provider market, Anixter provides the installation-related
materials that support central switching offices, web hosting sites and remote
transmission sites. Anixter's products also include electrical wiring system
products used for the transmission of electrical energy and control/monitoring
of industrial processes.
An important element of Anixter's overall business strategy is to develop
and maintain close relationships with its key suppliers, which include the
world's leading manufacturers of communications cabling, connectivity, support
and supply products and electrical wiring systems products. Such relationships
stress joint product planning, inventory management, technical support,
advertising and marketing. In support of this strategy, Anixter does not compete
with its suppliers in product design or manufacturing activities. Approximately
38% of Anixter's dollar volume purchases in 2001 were from its five largest
suppliers.
Anixter enhances its value proposition to both key suppliers and
customers through its industry leading specifications and testing lab in
suburban Chicago. In this Underwriter Laboratories-certified lab, Anixter works
with key suppliers to develop product specifications and to test compliance. The
Company uses the same lab to design and test various product configurations for
customers in order to optimize their network performance.
Anixter cost-effectively serves its customers' needs through its
proprietary computer system, which connects substantially all of its warehouses
and sales offices throughout the world. The system is designed for sales
support, order entry, inventory status, order tracking, credit review and
material management. Customers may also conduct business through Anixter's
e-commerce platform, one of the most comprehensive, user-friendly and secure Web
sites in the industry. Anixter operates a series of large modern hub warehouses
in key distribution centers in North America, Europe, Asia and Latin America
that provide for cost-effective and reliable storage and delivery of products to
its customers. The hub warehouses store the bulk of Anixter's inventory. Some
smaller warehouses are also maintained to maximize transportation efficiency and
to provide for the local pick-up needs of customers in certain cities.
Anixter has also developed close relationships with certain freight,
package delivery and courier services to minimize transit times between its
facilities and customer locations. The combination of its information systems,
distribution network and delivery partnerships allows Anixter to provide a high
level of customer service while maintaining a reasonable level of investment in
inventory and facilities.
The Company competes with distributors and manufacturers that sell
products directly or through existing distribution channels to end users or
other resellers. In addition, future performance could be subject to economic
downturns, possible rapid changes in applicable technologies or regulatory
changes, which may substantially change the cost and/or accessibility of public
network bandwidth. To guard against inventory obsolescence, the Company has
negotiated various return and price protection agreements with its key
suppliers. Although relationships with its suppliers are good, the loss of a
major supplier could have a temporary adverse effect on the Company's business,
but would not have a lasting impact since comparable products are available from
alternate sources.
MISCELLANEOUS
At December 28, 2001, the Company and its subsidiaries employed
approximately 4,900 people. Backlog orders are not material as a significant
amount of orders are shipped within 24 to 48 hours of receipt.
(D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES
For information concerning foreign and domestic operations and export
sales, see Note 10 "Income Taxes" and Note 13 "Business Segment" of this report.
ITEM 2. PROPERTIES.
Substantially all of the Company's facilities are leased.
ITEM 3. LEGAL PROCEEDINGS.
In the ordinary course of business, the Company and its subsidiaries
became involved as plaintiffs or defendants in various legal proceedings. The
claims and counterclaims in such litigation, including those for punitive
damages, individually in certain cases and in the aggregate, involve amounts
which may be material. However, it is the opinion of the Company's management,
based upon the advice of its counsel, that the ultimate disposition of pending
litigation will not be material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
During the fourth quarter of 2001, no matters were submitted to a vote of
the security holders.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS.
Anixter International Inc.'s Common Stock is traded on the New York Stock
Exchange under the symbol AXE. Stock price information is set forth in Note 14
("Selected Quarterly Financial Data (Unaudited)") of this report. As of March 8,
2002, the Registrant had 3,807 shareholders of record.
ITEM 6. SELECTED FINANCIAL DATA.
(In millions, except per share amounts)
FISCAL YEAR
Results of operations: 2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Net sales $3,144.2 $3,514.4 $2,712.0 $2,390.1 $2,126.4
Operating income (a) 102.0 189.8 112.8 87.0 91.1
Interest expense and other, net (b) (43.8) (55.2) (34.6) (34.8) (28.5)
Gain on ANTEC investment -- -- -- 24.3 2.2
Income from continuing operations (c) 33.6 78.7 69.7 44.7 37.4
Income from discontinued operations -- -- 54.5 20.9 7.9
Extraordinary loss on early extinguishment of debt (3.3) -- -- -- --
Net income 30.3 78.7 124.2 65.6 45.3
Basic income per share:
Continuing operations $ 0.92 $ 2.15 $ 1.86 $ 1.00 $ 0.79
Net income 0.83 2.15 3.31 1.46 0.95
Diluted income per share:
Continuing operations $ 0.89 $ 2.03 $ 1.83 $ 0.99 $ 0.78
Net income 0.80 2.03 3.26 1.45 0.95
Financial position at year-end:
Total assets $1,198.8 $1,686.0 $1,434.7 $1,335.1 $1,333.6
Total debt $ 241.1 $ 451.9 $ 468.0 $ 543.6 $ 468.8
Stockholders' equity (d) $ 563.1 $ 554.9 $ 456.4 $ 411.5 $ 477.0
Diluted book value per share $ 14.90 $ 13.57 $ 11.99 $ 9.09 $ 9.98
Diluted shares 37.8 40.9 38.1 45.3 47.8
Year end outstanding shares 36.9 37.7 35.9 41.9 47.3
Notes:
(a) In the third quarter of 2001, the Company incurred a one-time
restructuring charge of $31.7 million associated with reducing its
workforce, closing or consolidating certain facilities and exiting the
Korean market.
(b) In the fourth quarter of 2000, the Company incurred an $8.8 million
charge relating to the discount on the initial sale of accounts
receivable to an unconsolidated wholly owned special purpose corporation
in connection with an accounts receivable securitization program.
(c) In the third quarter of 1999, the Company recorded a $24.3 million tax
benefit in continuing operations for the reversal of previously
established tax reserves determined to be no longer necessary.
(d) Stockholders' equity reflects treasury stock purchases of $46.9 million,
$15.4 million, $91.9 million, $101.8 million and $14.2 million in 2001,
2000, 1999, 1998 and 1997, respectively. In addition, stockholders'
equity includes unrealized after-tax gains on marketable equity
securities available-for-sale of $19.8 million at January 2, 1998.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations may contain various "forward-looking statements"
within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
can be identified by the use of forward-looking terminology such as "believes",
"expects", "prospects", "estimated", "should", "may" or the negative thereof or
other variations thereon or comparable terminology indicating the Company's
expectations or beliefs concerning future events. The Company cautions that such
statements are qualified by important factors that could cause actual results to
differ materially from those in the forward-looking statements, a number of
which are identified in this report. Other factors also could cause actual
results to differ materially from expected results included in these statements.
These factors include general economic conditions, technology changes, changes
in supplier or customer relationships, exchange rate fluctuations and new or
changed competitors. The information contained in this financial review should
be read in conjunction with the consolidated financial statements, including the
notes thereto, on pages 14 to 33 of this Report.
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
ASSET SALES AND OTHER DISPOSITIONS
DISCONTINUED OPERATIONS AND ASSETS HELD FOR SALE: In 1999, the Company
completed the disposal of the Integration segment and, accordingly, the
Integration segment is reflected as a discontinued operation in these financial
statements. The North America Integration business was sold in the first quarter
of 1999 and the Asia Pacific Integration business was sold in the fourth quarter
of 1999. Total proceeds received from the sale of the Integration business were
$238.3 million, resulting in an after-tax gain of $50.6 million. Loss from
discontinued operations was $2.5 million in 1999. See Note 3 "Discontinued
Operations" in the Notes to the Consolidated Financial Statements for further
information.
The Company sold certain other assets for $25.1 million resulting in an
after-tax loss of $2.0 million in 1999.
FINANCINGS
On June 28, 2000, the Company issued $792.0 million 7% zero-coupon
convertible notes ("Convertible Notes") due 2020. The net proceeds from the
issue were $193.4 million and were initially used to repay working capital
borrowings under the floating rate bank line of credit. The Company expects to
reborrow these amounts under the line of credit from time to time for general
corporate purposes. The discount associated with the issuance is being amortized
through June 28, 2020, using the effective interest rate method. Holders of the
Convertible Notes may convert at any time on or before the maturity date, unless
the notes have previously been redeemed or purchased, into 7.4603 shares of the
Company's common stock for which the Company has reserved 5.9 million shares.
Additionally, holders may require the Company to purchase all or a portion of
their Convertible Notes on June 28, 2005, at a price of $356.28 per Convertible
Note, on June 28, 2010, at a price of $502.57 per Convertible Note and on June
28, 2015, at a price of $708.92 per Convertible Note. The Company may choose to
pay the purchase price in cash or common stock or a combination of both. The
Convertible Notes are structurally subordinated to the indebtedness of Anixter
Inc. ("Anixter").
On October 6, 2000, the Company entered into two financing arrangements
to support further business growth. The agreements consisted of a $500.0
million, senior unsecured, revolving credit agreement and a $275.0 million
accounts receivable securitization program. The new revolving credit line
included a $390.0 million, five-year agreement, plus a $110.0 million, 364-day
agreement. On April 24, 2001, Anixter Inc. cancelled the $110.0 million, 364-day
revolving credit line. Accordingly, the Company recorded an extraordinary loss
on the early extinquishment of debt in 2001 of $0.3 million ($0.2 million, net
of tax) to expense the financing fees associated with this portion of the
revolving credit agreement. On October 6, 2001, the Company reduced the
borrowing capacity on the accounts receivable securitization program from $275.0
million to $225.0 million.
The accounts receivable securitization program is conducted through
Anixter Receivables Corporation ("ARC"), which is a wholly owned unconsolidated
subsidiary of the Company accounted for using the equity method. The program
allows the Company to sell, on an ongoing basis without recourse, a majority of
the accounts receivable originating in the United States to ARC and consists of
a series of 364-day facilities. ARC may in turn sell an interest in these
receivables to a financial institution and borrow up to $225.0 million. Prior to
October 6, 2001, ARC could borrow up to $275.0 million. The securitization
program began in October 2000, at which time $416.8 million of gross accounts
receivable were sold and removed from the balance sheet. At December 28, 2001
and December 29, 2000, the outstanding balance of accounts receivable sold to
ARC totaled $296.0 million and $388.3 million, respectively. In order to fund
the purchase of the accounts receivable from Anixter, ARC has incurred long-term
debt of $143.7 million and $236.3 million and has a subordinated note payable to
Anixter of $111.4 million and $126.1 million at December 28, 2001 and December
29, 2000, respectively. The effective interest rate paid by ARC in 2001 and 2000
on the long-term debt was 5.0% and 7.1%, respectively. ARC long-term debt has
not been guaranteed by Anixter or the Company and neither have an obligation,
contingent or otherwise, to the holders of ARC long-term debt. Under this
program ARC is required to maintain delinquency, loss-to-liquidation and
dilution ratios that are normal for this type of arrangement. As of December 28,
2001, ARC was within 13% of the maximum allowed under the delinquency ratio. The
Company does not believe it is necessary to amend the ratio at this time. A
charge of $8.8 million, primarily relating to the discount on the initial sale
of accounts receivable to ARC, was recorded at inception of the program in the
fourth quarter 2000. The Company expects to substantially recover the charge
during the course of the program. In other expenses, the Company recorded net
charges of $8.7 million and $3.8 million in 2001 and 2000, respectively,
primarily for the interest expense on the long-term debt incurred by ARC to fund
the purchases of the accounts receivable from Anixter.
In September 1996, Anixter filed a shelf registration statement with the
Securities and Exchange Commission to offer from time to time up to a $200.0
million aggregate principal amount of unsecured notes. On September 17, 1996,
Anixter issued $100.0 million of these notes due September 2003. The notes,
which bear interest at 8%, contain various restrictions with respect to secured
borrowings and are unconditionally guaranteed by the Company. During 2001,
Anixter repurchased $81.3 million of its 8% senior notes for $86.5 million.
Accordingly, the Company recorded an extraordinary loss on the early
extinquishment of debt of $5.2 million ($3.1 million, net of tax) in its
consolidated statement of operations for the year ended December 28, 2001. These
notes have a put provision that under certain circumstances is triggered by a
rating downgrade. At December 28, 2001, the outstanding balance of the 8% notes
was $18.6 million which was under the cross-default thresholds of Anixter and
the Company's other existing indebtedness. Therefore, Anixter and the Company
were not exposed to any potentially adverse effects from this provision.
At December 28, 2001, $408.2 million was available under the bank
revolving lines of credit at Anixter, of which $25.7 million was available to
pay the Company for intercompany liabilities. The primary liquidity source for
Anixter is the $390.0 million revolving credit agreement for which no borrowings
were outstanding at December 28, 2001. This revolving credit agreement requires
certain financial ratios to be maintained. The most restrictive financial ratios
are the fixed charge coverage ratio and the leverage ratio. As of December 28,
2001, Anixter's operating results exceeded the minimum required under the fixed
charge coverage ratio by 23%. If results for 2002 are significantly lower than
planned, the restricted financial ratio provisions would be in default and the
borrowings callable. In addition, due to cross-default provisions in all other
Anixter and Company debt agreements, all outstanding debt would then become due
and payable. While the Company does not expect to default under this agreement,
if that were to occur, the Company believes it would be able to obtain a waiver
or amendment from the lenders on reasonable terms. Due to the requirement of the
leverage ratio, borrowings of only $298.0 million of the $408.2 million
available under bank revolving lines of credit at Anixter would be permitted as
of December 28, 2001.
In 2002, the Company estimates that it will have positive cash flow from
operating activities and after capital expenditures. The Company will continue
to pursue opportunities to repurchase outstanding debt, with the volume and
timing to depend on market conditions. As of March 13, 2002, Anixter has
repurchased an additional $1.0 million of its 8% senior notes that mature in
September, 2003 for $1.1 million and 54,100 of its Convertible Notes that mature
in June 2020 for $15.5 million. The Company will reflect an extraordinary loss
on the early extinguishment of debt of approximately $0.6 million ($0.4 million,
net of tax) from these transactions in its consolidated statements of operations
for the 13 weeks ended March 29, 2002.
The Board of Directors of the Company had authorized the purchase of up
to 2.8 million common shares (2.0 million was authorized in 2001 and 0.8 million
carried over from prior year authorizations), with the volume and timing to
depend on market conditions. In 2001, the Company repurchased 2,079,000 shares
at an average cost of $22.57. Purchases were made on the open market and were
financed from cash generated by operations.
CASH FLOW
YEAR ENDED DECEMBER 28, 2001: Consolidated net cash provided by
continuing operating activities was $288.5 million in 2001 compared to $67.5
million in 2000. Cash provided by continuing operating activities increased
primarily due to a reduction in working capital required to support the
business. In 2001, accounts receivable decreased, providing cash of $128.5
million compared to $91.4 million in 2000. The outstanding balance of gross
receivables sold to ARC at December 28, 2001, was $92.3 million less than at
December 29, 2000. The cash generated by the decline was used by ARC to pay-down
$92.6 million of ARC long-term debt. Inventory declined $357.1 million as the
$120.0 million specifically identified at December 29, 2000 as inventory
returnable to vendors was returned and the remaining decline was due to reduced
purchases as lower levels of inventory were needed to support the reduced sales
levels. In 2000, inventory increased $329.7 million, $120.0 million of which
represented inventories returnable to vendors, to support the growth in the
service provider and integrated supply markets and a significant competitive
local exchange carrier contract. The increase in cash flow generated by the
reduction in inventory was partially offset by the related decrease of $294.5
million in accounts payable and accrued expenses. In 2000, accounts payable and
accrued expenses increased $181.8 million. In 2001, the Company incurred a $31.7
million restructuring charge, of which $6.6 million was non-cash. At December
28, 2001, $17.7 million remained to be paid. Consolidated net cash used in
investing activities was $20.5 million in 2001 versus $26.3 million in 2000.
Capital expenditures were $22.0 million in 2001 compared to $22.6 million in
2000. Capital expenditures in 2001 were primarily for the upgrades of warehouse
facilities and the purchase of software and computer equipment. Capital
expenditures are expected to be approximately $11.0 million in 2002. In the
first quarter of 2000, the Company purchased allNet Technologies Pty. Limited in
Australia for $6.7 million. In the third quarter of 2000, the Company sold the
net assets of a wholly owned U.S. subsidiary of its structured cabling business
for $3.0 million in cash and $1.6 million in notes receivable. Consolidated net
cash used by financing activities was $255.8 million in 2001 in comparison to
$24.4 million in 2000. In 2001, cash used in financing activities included a net
repayment of long-term borrowings of $142.4 million, extinquishment of senior
notes of $86.5 million and $46.9 million of treasury stock purchases, partially
offset by proceeds of $22.3 million received from the issuance of 1.3 million
shares of common stock for the exercise of stock options and the employee stock
purchase plan. In 2000, net repayment of long-term borrowings was $21.5 million,
while treasury stock purchases were $15.4 million. In addition, in 2000 the
Company received $34.9 million from the issuance of 2.2 million shares for the
exercise of stock options and the employee stock purchase plan. Cash used for
discontinued operations was $5.8 million in 2001 compared to $13.5 million in
2000.
YEAR ENDED DECEMBER 29, 2000: Consolidated net cash provided by
continuing operating activities was $67.5 million in 2000 compared to $6.9
million in 1999. Cash provided by continuing operating activities increased
primarily due to net proceeds of $236.3 million received in connection with the
receivable securitization program, partially offset by higher working capital
requirements. Consolidated net cash used by investing activities was $26.3
million in 2000 versus $15.9 million in 1999. In the first quarter of 2000, the
Company purchased allNet Technologies Pty. Limited in Australia for $6.7
million. In the third quarter of 2000, the Company sold the net assets of a
wholly owned U.S. subsidiary of its communications products distribution
business for $3.0 million in cash and $1.6 million in notes receivable. In the
fourth quarter of 1999, the Company acquired a small specialty wire and cable
company in Europe for $2.6 million. Capital expenditures were $22.6 million in
2000 compared to $13.8 million in 1999. The increase primarily relates to the
expansion of the Company's distribution centers. Consolidated net cash used by
financing activities was $24.4 million in 2000 in comparison to $163.4 million
in 1999. In 1999, the Company had treasury stock purchases of $91.9 million as
compared to $15.4 million in 2000. In addition, in 2000 the Company received
$34.9 million relating to the exercise of 2.2 million stock options compared to
$7.4 million received in 1999. Net repayment of long-term borrowings was $21.5
and $73.0 million in 2000 and 1999, respectively. In 1999, proceeds from the
sale of the Integration business was used to pay down long-term debt. Cash used
for discontinued operations was $13.5 million in 2000 compared to $169.4 million
provided in 1999. In 1999, proceeds of $238.3 million were received from the
sale of the Integration business.
INTEREST EXPENSE: Interest expense for continuing operations was $30.1
million, $43.3 million and $34.9 million for 2001, 2000 and 1999, respectively.
During the second quarter of 2001, the Company incurred $1.7 million in interest
expense related to the cancellation of certain interest rate hedge agreements
for which there were no longer outstanding borrowings. The decrease in the
interest expense in 2001 from 2000 was due to lower debt levels, a result of the
accounts receivable securitization program implemented in the fourth quarter of
2000, lower working capital levels and a reduction in interest rates. During
previous years, the Company had entered into interest rate agreements that
effectively fix or cap, for a period of time, the interest rate on a portion of
its floating-rate obligations. At December 28, 2001, the Company had only $0.5
million in variable borrowings outstanding under the bank revolving lines of
credit, for which no interest rate hedge agreements were in place. Total
outstanding debt at December 28, 2001, was $241.1 million for the Company and
$143.7 million for ARC. The interest rate on substantially all of the Company's
debt obligations (excluding ARC, which are variable rate obligations) at
December 28, 2001, was fixed. The impact of interest rate swaps and caps for
2001 and 1999 was an increase to interest expense of $0.3 million and $1.3
million, respectively, and a decrease to interest expense of $0.7 million in
2000.
INCOME TAXES
Various foreign subsidiaries of the Company had aggregate cumulative net
operating loss ("NOL") carryforwards for foreign income tax purposes of
approximately $167.6 million at December 28, 2001, which are subject to various
provisions of each respective country. Approximately $56.1 million of this
amount expires between 2002 and 2011 and $111.5 million of the amount has an
indefinite life. Of the $167.6 million NOL carryforwards of foreign
subsidiaries, $89.4 million related to losses that have already provided a tax
benefit in the U.S. due to rules permitting flow-through of such losses in
certain circumstances. Without such losses included, the cumulative NOL
carryforwards at December 28, 2001, were approximately $78.2 million, which are
subject to various provisions of each respective country. Approximately $48.6
million of this amount expires between 2002 and 2011 and $29.6 million of the
amount has an indefinite life. The deferred tax asset and valuation allowance
has been adjusted to reflect only the carryforwards for which the Company has
not taken a tax benefit in the U.S.
During the third quarter of 1998, the Internal Revenue Service completed
its examination for the years 1993 to 1995, which included an examination of net
operating losses and credit carryforwards dating back to 1979. As a result of
the lapsing, during the third quarter of 1999, of all relevant statutes of
limitations on assessment relating to that 17-year period of time, the Company
recorded a $24.3 million tax benefit in continuing operations in 1999 for the
reversal of previously established tax reserves determined to be no longer
necessary.
LIQUIDITY CONSIDERATIONS AND OTHER
Certain debt agreements entered into by the Company's operating
subsidiaries contain various restrictions, including restrictions on payments to
the Company. These restrictions have not had nor are expected to have an adverse
impact on the Company's ability to meet its cash obligations.
RESULTS OF OPERATIONS
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 ownership as well as other factors. In
addition, the Company's future performance could be affected by economic
downturns, possible rapid changes in applicable technologies or regulatory
changes that substantially change the cost and/or availability of public
networking bandwidth.
YEAR ENDED DECEMBER 28, 2001: Net income was $30.3 million in 2001
compared with $78.7 million in 2000. Due to a combination of increased economic
softness and continued deterioration of market conditions in the communications
products industry, the Company incurred a one-time charge of $31.7 million
($19.0 million, net of tax) in the third quarter of 2001 associated with
reducing its workforce, closing or consolidating certain facilities and exiting
the Korean market. The Company anticipates that the restructuring will result in
annualized expense reductions of approximately $48 million. In addition, the
Company recorded an after-tax extraordinary loss of $3.3 million for the early
extinguishment of $81.3 million of Anixter Inc.'s 8% senior notes and debt
issuance costs associated with the cancellation of a $110.0 million 364-day
revolving credit agreement due 2001. In 2000, the Company incurred an initial
after-tax charge of $5.3 million for the receivables securitization program,
which the Company expects to substantially recover during the course of the
program.
The Company's net sales for the year ended December 28, 2001, declined
10.5% to $3.1 billion from $3.5 billion in 2000. Net sales by major geographic
market are presented in the following table:
YEARS ENDED
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
North America $2,433.5 $2,739.3
Europe 502.1 587.1
Asia Pacific and Latin America 208.6 188.0
------------ ------------
$3,144.2 $3,514.4
============ ============
North America sales declined 11.2% to $2.4 billion from $2.7 billion in
2000. With the exception of integrated supply, all customer markets in North
America declined from 2000. Enterprise network communications product sales
declined 10.6%, due to a worldwide reduction in technology-related spending. The
electrical wire and cable market declined 4.3% resulting from the general
economic softness. Due to the significant fall in spending in the telecom
industry, sales in the service provider market were down 67.7%. The integrated
supply market improved significantly, as sales increased 65.1% on new contracts
added in late 2000. Europe sales decreased 14.5% when compared to 2000.
Increased sales in the integrated supply market partially offset declines across
all other customer markets as the general economic softness experienced in the
United States is also being felt by the international markets. Excluding the
effect in changes in exchange rates, Europe sales declined 10.9%. Asia Pacific
and Latin America net sales increased 11.0% from the same period in 2000,
reflecting strong growth in Latin America associated with expanded product
lines. Excluding the effect of changes in exchange rates, Asia Pacific and Latin
America net sales increased 13.8%.
In 2001, operating income decreased 46.2% to $102.0 million from $189.8
million in 2000. Operating margins declined to 3.2% in 2001 from 5.4% in 2000.
Excluding the one-time restructuring charge of $31.7 million previously
discussed, operating profit declined 29.5% to $133.7 million, representing a
4.3% operating margin compared to 5.4% in 2000. Gross margins were flat at
23.4%. Operating income (loss) by major market is presented in the following
table:
YEARS ENDED
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
North America * $ 89.7 $164.2
Europe * 21.2 24.6
Asia Pacific and Latin America * (8.9) 1.0
------------ ------------
$102.0 $189.8
============ ============
*THE YEAR ENDED DECEMBER 28, 2001, INCLUDES RESTRUCTURING COSTS FOR NORTH
AMERICA, EUROPE AND ASIA PACIFIC AND LATIN AMERICA OF $23.1 MILLION, $2.3
MILLION AND $6.3 MILLION, RESPECTIVELY.
North America operating income decreased 45.4% in 2001 compared to 2000.
Excluding restructuring costs of $23.1 million and the non-recurring fulfillment
sales impact on operating profit of $6.9 million during 2000, operating profit
declined 28.3%. Operating margins decreased to 3.7% in 2001 from 6.0% in 2000.
Excluding restructuring costs, operating margins were 4.6%, a decline of 1.4
percentage points when compared to 2000. Operating results were negatively
affected, particularly in the second half of the year, as sales declined more
rapidly than the Company was able to reduce operating expenses. This more than
offset a slight improvement in gross margins from 23.7% in 2000 to 23.9% in
2001, resulting primarily from the change in sales mix caused by the decline in
sales to the lower margin service provider market. Europe operating income
decreased 13.6% when compared to 2000. Excluding restructuring costs of $2.3
million, operating profit decreased 4.2%, while operating margins improved by
0.5 percentage points to 4.7%. Excluding the effect of changes in exchange rates
and the restructuring charge, Europe operating profit remained flat. Operating
profit and margins benefited from a significant reduction in operating expenses,
reflecting organizational changes and refocused market efforts that offset the
14.5% decline in sales. In addition, Europe's gross margins improved to 22.3%
from 21.7% in 2000, reflecting reduced sales of lower margin networking
products. Asia Pacific and Latin America recorded an operating loss of $8.9
million in 2001 compared to income of $1.0 million for 2000. Excluding
restructuring costs of $6.3 million, the operating loss was $2.6 million and
operating margin was 1.8 percentage points below 2000. Operating loss was
negatively impacted by $6.3 million in inventory write-offs in Latin America
recorded in 2001. Changes in exchange rates had a minimal effect on operating
income.
Consolidated interest expense and other expenses decreased to $43.8
million in 2001 from $55.2 million in 2000. Interest expense decreased $13.2
million to $30.1 million due to lower debt levels, resulting from the accounts
receivable securitization program implemented in the fourth quarter of 2000,
lower working capital levels and a reduction in interest rates. Other expenses
of $13.7 million in 2001 primarily consisted of $8.7 million of costs associated
with the receivable securitization program and $5.3 million of foreign exchange
losses. The Company incurred a $2.3 million foreign exchange loss resulting from
the devaluation of the Argentine peso in December of 2001. In 2000, other
expenses of $11.9 million primarily represent costs associated with the
receivable securitization program, of which $8.8 million relates to the initial
discounting fee.
The consolidated tax provision on continuing operations decreased to
$24.6 million in 2001 from $55.9 million in 2000 due to lower pre-tax earnings,
partially offset by a small increase in the income tax rate. The 2001 effective
tax rate of 42.2% is based on pre-tax book income adjusted primarily for
amortization of nondeductible goodwill and losses of foreign operations that are
not currently deductible. The increase from 41.6% in 2000 is due to
nondeductible goodwill being a higher percentage of the total, offset by a lower
state tax rate.
YEAR ENDED DECEMBER 29, 2000: Income from continuing operations was $78.7
million in 2000 compared with $69.7 million in 1999. The comparative results
were favorably impacted by a 30% growth in sales and lower operating expenses as
a percentage of sales. 2000 includes an initial after-tax charge of $5.3 million
for the receivables securitization program, which the Company expects to
substantially recover during the course of the program. 1999 results were
favorably impacted by a $24.3 million one-time tax benefit.
The Company's net sales for the year ended December 29, 2000, grew by 30%
to $3.5 billion from $2.7 billion in 1999. Net sales by major geographic market
are presented in the following table:
YEARS ENDED
DECEMBER 29, DECEMBER 31,
(In millions) 2000 1999
------------ ------------
North America $2,739.3 $2,047.3
Europe 587.1 523.0
Asia Pacific and Latin America 188.0 141.7
------------ ------------
$3,514.4 $2,712.0
============ ============
North American sales from continuing operations in 2000 experienced 34%
growth to $2.7 billion from $2.0 billion in 1999. The improvement was the result
of growth in all customer markets. The service provider market continued its
rapid growth driven by the telecommunications industry. Enterprise network
communications benefitted from the increase in technology-related spending,
while the electrical wire and cable market grew along with the improving
economy. Sales to the integrated supply market increased 30% as the Company
entered into a couple of new significant contracts in 2000. In Europe, sales
increased 12%, reflecting strong growth in the Company's core enterprise network
communications products, combined with a growing amount of sales to the service
provider market. Excluding the effect of changes in exchange rates, sales
improved 22%. Asia Pacific and Latin America net sales were up 33% to $188.0
million in 2000 from $141.7 million in 1999. The increase is a result of
improved economic conditions along with a stronger market share position.
In 2000, operating income increased to $189.8 million from $112.8 million
in 1999. Operating margins improved to 5.4% in 2000 from 4.2% in 1999. The
improvement primarily relates to further leveraging of the expense structure,
associated with rapid sales growth, which more than offset a decline in gross
margins resulting from the mix in sales associated with the rapid growth of
sales to the service provider and integrated supply markets. Operating expenses
as a percent of sales decreased from 21% in 1999 to 18% in 2000. The lower gross
margins in the service provider and integrated supply markets correspond with
the higher operating productivity that is inherent in the nature of those
businesses, including the effects of some very large volume and low gross profit
fulfillment orders to service provider customers. 1999 expenses include $3.0
million for headcount reductions and the write-down of inventory to net
realizable value for the Latin American operations. Operating income (loss) by
major market is presented in the following table:
YEARS ENDED
DECEMBER 29, DECEMBER 31,
(In millions) 2000 1999
------------ ------------
North America $164.2 $106.2
Europe 24.6 20.6
Asia Pacific and Latin America 1.0 (14.0)
------------ ------------
$189.8 $112.8
============ ============
In North America, operating margins increased to 6.0% in 2000 from 5.2%
in 1999. The improvement primarily relates to a reduction, as a percentage of
sales, in retained overhead costs associated with the North American Integration
business, the absence of costs associated with the Year 2000 compliance efforts
incurred in 1999 and further leveraging of the expense structure resulting from
the significant increase in sales. Europe operating income increased 19%,
reflecting the increase in sales, as operating margins remained flat. Excluding
the effect of changes in exchange rates, Europe operating income increased 27%.
Asia Pacific and Latin America recorded income of $1.0 million compared to a
loss of $14.0 million in 1999. This resulted from the 33% improvement in sales
and a reduced cost structure following the expense reduction efforts made over
the last 2 years.
Consolidated interest expense and other expenses increased to $55.2
million in 2000 from $34.6 million in 1999. Interest expense increased $8.4
million to $43.3 million due to higher interest rates and higher levels of
working capital. Other expenses of $11.9 million in 2000 primarily represents
costs associated with the receivable securitization program, of which $8.8
million relates to the initial discounting fee.
The consolidated tax provision on continuing operations increased to
$55.9 million in 2000 from $8.5 million in 1999 due to higher pre-tax earnings.
1999 includes a $24.3 million one-time tax benefit recorded to reverse
previously established tax liabilities. The 2000 effective tax rate of 41.6% is
based on pre-tax book income adjusted primarily for amortization of
nondeductible goodwill and losses of foreign operations that are not currently
deductible.
IMPACT OF INFLATION: Inflation is currently not an important determinant
of Anixter's results of operations due to the low rate of inflation and, in
part, to rapid inventory turnover.
CRITICAL ACCOUNTING POLICIES
The Company believes that the following are critical areas which either
require judgement by management or may be affected by changes in general market
conditions outside the control of management. As a result, changes in estimates
and general market conditions could cause actual results to differ materially
from future expected results.
ALLOWANCE FOR DOUBTFUL ACCOUNTS : Each quarter the Company segregates the
doubtful receivable balances into the following major categories and determines
the bad debt reserve as stated below:
Customers that have refused to pay their balances are reserved based
on the historical write-off percentages.
Risk accounts are individually reviewed and the reserve is based on
the probability of potential default.
The outstanding balance for customers who have declared bankruptcy is
reserved at 100%.
If circumstances change (i.e., higher (lower) than expected defaults or
an unexpected material change in a major customer's ability to meet its
financial obligations to us), the Company's estimates of the recoverability of
amounts due to the Company could be reduced (increased) by a material amount.
INVENTORY OBSOLESCENCE: At December 28, 2001, the Company reported
inventory of $495.7 million. Each quarter the Company reviews the excess
inventory and makes an assessment of the realizable value. There are many
factors that management considers in determining whether or not a reserve should
be established. These factors include the following: a) return or rotation
privileges with vendors, b) price protection from vendors, c) expected usage
during the next twenty-four months, d) whether or not a customer is obligated by
contract to purchase the inventory, e) current market pricing, and f) risk of
obsolescence. If circumstances change (i.e., unexpected shift in market demand,
pricing or customer defaults) there could be a material impact on the net
realizable value of the inventory.
DEFERRED TAX ASSETS: The Company applies a three-year cumulative taxable
income test for foreign subsidiaries whose results are not included in the U.S.
tax return in determining whether to recognize an income tax benefit for their
respective foreign NOL carryforwards, with a resultant adjustment to the
valuation allowance. Qualitative factors surrounding a particular subsidiary are
also examined, and in certain circumstances (e.g., projections of further losses
for that subsidiary in the short term), an income tax benefit may not be
recorded (and therefore, the valuation allowance not adjusted) even when the
three-year cumulative taxable income is positive for a given subsidiary.
LIFE INSURANCE POLICIES: Anixter implemented a nonqualified deferred
compensation plan on January 1, 1995. The plan permits selected employees to
make pre-tax deferrals of salary and bonus. The plan provides for benefit
payments upon retirement, death, disability or termination. Concurrent with the
implementation of the deferred compensation plan, Anixter purchased variable,
separate account life insurance policies on the lives of the participants. To
fund additional liabilities, Anixter purchased fixed, general account
"increasing whole life" insurance policies on the lives of certain participants
in both the deferred compensation plan and the excess defined benefit plan. All
of the above policies are owned by Anixter and Anixter pays level annual
premiums on them. Policy proceeds are payable to Anixter upon the insured
participant's death. The cash surrender values on those policies are updated
quarterly.
At December 28, 2001 and December 29, 2000, the cash surrender value of
$19.1 million and $14.4 million, respectively, was recorded under this program
and reflected in "Other Assets" on the consolidated balance sheets. The value of
the investment was recorded at market value determined by the performance of the
underlying investments in the market. The Company's investment in the cash
surrender value program is liquid and redeemable in whole or part by
"surrendering" the underlying life insurance policies. As the life insurance
policies are recorded at market value, changes in the market value of the
underlying securities can have a significant impact on the Company's results of
operations.
FOREIGN DENOMINATED ASSETS AND LIABILITIES: At December 28, 2001, the
Company had a significant amount of assets and liabilities that are denominated
in currencies other than the functional currency of the reporting entity. Such
net assets at December 28, 2001, were approximately $20.0 million. The Company
has purchased approximately $10.0 million of short-term foreign currency forward
contracts to minimize the effect of fluctuating foreign currencies. If there was
a 10 percent adverse change in exchange rates, the Company would record a
foreign exchange loss of approximately $1.0 million.
PENSION EXPENSE: The Company accounts for its defined benefit pension
plans in accordance with SFAS No. 87, "Employers' Accounting for Pensions",
which requires that amounts recognized in financial statements be determined on
an actuarial basis. A substantial portion of the Company's pension benefit cost
relates to its defined benefit plan in the United States. The Company has not
made contributions to the U.S. pension plan since 1995. SFAS No. 87 and the
policies used by the Company generally reduce the volatility of the net benefit
cost from changes in pension liability discount rates and the performance of the
pension plan's assets, as significant actuarial gains/losses are amortized over
the service lives of the plan participants.
A significant element in determining the Company's net periodic benefit
cost in accordance with SFAS No. 87 is the expected return on plan assets. The
Company has assumed that the weighted-average expected long-term rate of return
on plan assets will be 8.53%. Over the long term, the company's pension plan
assets have earned in excess of 8.53%; therefore, the company believes that its
assumption of future returns of 8.53% is reasonable. This produces the expected
return on plan assets that is included in the net periodic benefit cost. The
difference between this expected return and the actual return on plan assets is
deferred. The plan assets have earned a rate of return substantially less than
8.53% in the last two years. Should this trend continue, future benefit costs
would likely increase.
At the end of each year, the Company determines the discount rate to be
used to discount the plan liabilities. The discount rate reflects the current
rate at which the pension liabilities could be effectively settled at the end of
the year. In estimating this rate, the Company looks to rates of return on high
quality, fixed-income investments that receive one of the two highest ratings
given by a recognized ratings agency. At December 28, 2001, the Company
determined this rate to be 6.81%. Changes in discount rates over the past three
years have not materially affected the net periodic benefit cost. The net effect
of changes in the discount rate, as well as the net effect of other changes in
actuarial assumptions and experience, have been deferred as allowed by SFAS No.
87.
At December 28, 2001, the Company's consolidated pension liability was
$21.5 million, up from $17.7 million at the end of 2000. For the year ended
December 28, 2001, the Company recognized consolidated pre-tax net periodic
benefit cost of $5.8 million, down from $7.0 million in 2000. In 2000, the
Company incurred a $3.2 million loss on settlement of a supplemental employee
retirement plan. As a result of the decline in the fair value of the pension
plan assets, along with a reduced discount rate, the Company estimates its 2002
net periodic benefit cost to increase by 25% to 50%.
TAX CONTINGENCIES: The Company believes it has a reasonable basis in the
tax law for all of the positions it takes on the various tax returns it files.
However, in recognition of the fact that various taxing authorities may take
opposing views on some issues, that the costs and hazards of litigation in
maintaining the positions that the Company has taken on various returns might be
significant and that the taxing authorities may prevail in their attempts to
overturn such positions, the Company maintains tax reserves. The amounts of such
reserves, the potential issues they are intended to cover and their adequacy to
do so, are topics of frequent review internally and with outside tax
professionals. Where necessary, adjustments are periodically made to such
reserves to reflect the lapsing of statutes of limitations, closings of ongoing
examinations or the commencement of new examinations.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company is exposed to the impact of interest rate changes and
fluctuations in foreign currencies, as well as changes in the market value of
its financial instruments. The Company periodically enters into derivatives in
order to minimize these risks, but not for trading purposes. The Company's
strategy is to negotiate terms for its derivatives and other financial
instruments to be perfectly effective, such that the change in the value of the
derivative perfectly offsets the impact of the underlying hedged item. Any
resulting gains or losses from hedge ineffectiveness are reflected directly in
income. See "Critical Accounting Policies" in Management's Discussion and
Analysis of Financial Condition and Results of Operations, Note 1 "Interest rate
agreements" and "Foreign currency forward contracts" and Note 8 "Debt" of the
consolidated financial statements for further detail on interest agreements and
debt obligations outstanding.
In the past, the Company has entered into interest rate agreements that
effectively fix or cap the LIBOR component of the interest rate on a portion of
its floating rate obligations. At December 28, 2001, the Company had minimal
variable debt outstanding and as a result, had no interest rate agreements
outstanding. Approximately 100% and 91% of debt obligations at December 28, 2001
and December 29, 2000, respectively, was fixed or capped.
The Company prepared sensitivity analyses of its derivatives and other
financial instruments assuming a one percentage point adverse change in interest
rates and a 10 percent adverse change in the foreign currency contracts
outstanding, and holding all other variables constant, the hypothetical adverse
changes would have increased interest expense by $0.8 million and $3.4 million
and decreased the value of foreign currency forward contracts by $3.2 million
and $3.1 million in 2001 and 2000, respectively. In 2001 and 2000, the fair
market value of the outstanding fixed rate debt was $245.2 million and $280.6
million, respectively. If interest rates were to increase or decrease by 1%, the
fair market value of the fixed rate debt would decrease or increase by 3.2% and
3.5% for 2001 and 2000, respectively. Changes in the market value of the
Company's debt does not affect the reported results of operations unless the
Company is retiring such obligations prior to their maturity. These analyses did
not consider the effects of a changed level of economic activity that could
exist in such an environment and certain other factors. Further, in the event of
a change of this magnitude, management would likely take actions to further
mitigate its exposure to possible changes. However, due to the uncertainty of
the specific actions that would be taken and their possible effects, the
sensitivity analyses assume no changes in the Company's financial structure.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PAGE
Report of Independent Auditors 14
Consolidated Statements of Operations 15
Consolidated Balance Sheets 16
Consolidated Statements of Cash Flows 17
Consolidated Statements of Stockholders' Equity 18
Notes to the Consolidated Financial Statements 19
Selected Quarterly Financial Data (Unaudited) 33
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Stockholders
Anixter International Inc.
We have audited the accompanying consolidated balance sheets of Anixter
International Inc. as of December 28, 2001, and December 29, 2000, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the three years in the period ended December 28, 2001. Our
audits also included the financial statement schedules listed in the Index at
Item 14(a). These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedules based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Anixter
International Inc. at December 28, 2001 and December 29, 2000, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 28, 2001, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the
related financial statement schedules, when considered in relation to the basic
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
ERNST & YOUNG LLP
Chicago, Illinois
January 28, 2002
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions, except per share amounts)
YEARS ENDED
----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
NET SALES $ 3,144.2 $ 3,514.4 $ 2,712.0
Cost of operations:
Cost of goods sold 2,407.3 2,692.5 2,042.7
Operating expenses 594.2 623.7 549.1
Amortization of goodwill 9.0 8.4 7.4
Restructuring costs 31.7 - -
------------ ------------ ------------
Total costs and expenses 3,042.2 3,324.6 2,599.2
------------ ------------ ------------
OPERATING INCOME 102.0 189.8 112.8
Other (expenses) income:
Interest expense (30.1) (43.3) (34.9)
Other, net (13.7) (11.9) 0.3
------------ ------------ ------------
Income from continuing operations before
income taxes and extraordinary loss 58.2 134.6 78.2
Income tax expense 24.6 55.9 8.5
------------ ------------ ------------
Income from continuing operations
before extraordinary loss 33.6 78.7 69.7
Discontinued operations:
Loss from discontinued operations, net of tax - - (2.5)
Gain on disposal of discontinued, net of tax - - 57.0
------------ ------------ ------------
Income before extraordinary loss 33.6 78.7 124.2
Extraordinary loss on early extinguishment
of debt, net of tax (3.3) - -
------------ ------------ ------------
NET INCOME $ 30.3 $ 78.7 $ 124.2
============ ============ ============
BASIC INCOME (LOSS) PER SHARE:
Continuing operations $ 0.92 $ 2.15 $ 1.86
Discontinued operations - - 1.45
Extraordinary loss (0.09) - -
------------ ------------ ------------
Net income $ 0.83 $ 2.15 $ 3.31
============ ============ ============
DILUTED INCOME (LOSS) PER SHARE:
Continuing operations $ 0.89 $ 2.03 $ 1.83
Discontinued operations - - 1.43
Extraordinary loss (0.09) - -
------------ ------------ ------------
Net income $ 0.80 $ 2.03 $ 3.26
============ ============ ============
See accompanying notes to the consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(In millions, except share amounts)
DECEMBER 28, DECEMBER 29,
ASSETS 2001 2000
------------ ------------
CURRENT ASSETS
Cash $ 27.2 $ 20.8
Accounts receivable (less allowances
of $20.9 and $14.8 in 2001 and 2000, respectively) 154.1 293.3
Note receivable - unconsolidated subsidiary 111.4 126.1
Inventories 495.7 738.4
Inventories returnable to vendor, net - 120.0
Deferred income taxes 32.0 25.5
Other current assets 8.6 10.3
------------ ------------
Total current assets 829.0 1,334.4
Property and equipment, at cost 167.4 167.1
Accumulated depreciation (112.4) (110.6)
------------ ------------
Net property and equipment 55.0 56.5
Goodwill (less accumulated amortization of
$95.4 and $86.8 in 2001 and 2000, respectively) 231.6 239.3
Other assets 83.2 55.8
------------ ------------
$1,198.8 $1,686.0
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 251.0 $ 499.1
Accrued expenses 86.2 139.6
Accrued restructuring 11.1 -
Income taxes payable 4.4 8.1
------------ ------------
Total current liabilities 352.7 646.8
Long-term debt 241.1 451.9
Other liabilities 41.9 32.4
------------ ------------
Total liabilities 635.7 1,131.1
STOCKHOLDERS' EQUITY
Common stock - - $1.00 par value, 100,000,000 shares
authorized, 36,917,313 and 37,654,885 shares issued
and outstanding in 2001 and 2000, respectively 36.9 37.7
Capital surplus 32.5 46.9
Accumulated other comprehensive income (59.5) (52.6)
Retained earnings 553.2 522.9
------------ ------------
Total stockholders' equity 563.1 554.9
------------ ------------
$1,198.8 $1,686.0
============ ============
See accompanying notes to the consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
YEARS ENDED
----------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
Operating activities
Net income $ 30.3 $ 78.7 $ 124.2
Adjustments to reconcile net income to net cash
provided by continuing operating activities:
Income from discontinued operations - - (54.5)
Extraordinary loss 3.3 - -
Depreciation and amortization 32.4 29.6 26.5
Accretion of zero-coupon convertible notes 14.7 7.0 -
Non-cash restructuring costs 6.6 - -
Income tax savings from employee stock plans 5.3 11.2 2.6
Deferred income taxes (12.5) (3.2) (28.6)
Changes in assets and liabilities:
Accounts receivable 128.5 91.4 (70.3)
Inventory 357.1 (329.7) (115.4)
Accounts payable and accruals (294.5) 181.8 127.9
Restructuring costs 17.7 - -
Other, net (0.4) 0.7 (5.5)
------------ ----------- ------------
Net cash provided by continuing operating activities 288.5 67.5 6.9
INVESTING ACTIVITIES
Capital expenditures (22.0) (22.6) (13.8)
Acquisitions and divestiture - (3.7) (2.6)
Proceeds from sale of fixed assets 1.5 - -
Other, net - - 0.5
------------ ----------- ------------
Net cash used in continuing investing activities (20.5) (26.3) (15.9)
FINANCING ACTIVITIES
Proceeds from long-term borrowings 795.2 1,557.0 897.2
Repayment of long-term borrowings (937.6) (1,578.5) (970.2)
Repayment of notes payable (86.5) - -
Proceeds from issuance of common stock 22.3 34.9 7.4
Purchases of common stock for treasury (46.9) (15.4) (91.9)
Debt issuance costs - (8.3) -
Other, net (2.3) (14.1) (5.9)
------------ ----------- ------------
Net cash used in continuing financing activities (255.8) (24.4) (163.4)
------------ ----------- ------------
INCREASE (DECREASE) IN CASH FROM CONTINUING OPERATIONS 12.2 16.8 (172.4)
Cash (used in) provided by discontinued operations (5.8) (13.5) 169.4
Cash at beginning of year 20.8 17.5 20.5
------------ ----------- ------------
Cash at end of year $ 27.2 $ 20.8 $ 17.5
============ =========== ============
See accompanying notes to the consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions)
ACCUMULATED OTHER
COMPREHENSIVE INCOME
--------------------------
UNREALIZED
GAIN ON
CUMULATIVE FOREIGN
COMMON CAPITAL RETAINED TRANSLATION EXCHANGE COMPREHENSIVE
STOCK SURPLUS EARNINGS ADJUSTMENTS CONTRACTS INCOME
---------- ---------- ---------- ------------- ----------- -------------
Balance at January 1, 1999 $ 41.8 $ - $ 409.4 $ (39.7) $ -
Net income - - 124.2 - - $124.2
Other comprehensive income:
Foreign currency translation adjustments - - - 2.1 - 2.1
-------------
Comprehensive income $126.3
Issuance of common stock and =============
related tax benefits 0.6 9.9 - - -
Purchase and retirement of
treasury stock (6.5) (9.9) (75.5) - -
---------- ---------- ---------- ------------- -----------
Balance at December 31, 1999 35.9 - 458.1 (37.6) -
Net income - - 78.7 - - $ 78.7
Other comprehensive income:
Foreign currency translation adjustments - - - (15.0) - (15.0)
-------------
Comprehensive income $ 63.7
Issuance of common stock and =============
related tax benefits 2.5 47.7 - - -
Purchase and retirement of
treasury stock (0.7) (0.8) (13.9) - -
---------- ---------- ---------- ------------- -----------
Balance at December 29, 2000 37.7 46.9 522.9 (52.6) -
Net income - - 30.3 - - $ 30.3
Other comprehensive income:
Foreign currency translation adjustments - - - (12.0) - (12.0)
Cumulative effect of change in accounting
principle, net of tax of $1.8 - - - - 2.7 2.7
Change in fair market value of foreign exchange
contracts, net of tax of $1.6 - - - - 2.4 2.4
-------------
Comprehensive income $ 23.4
Issuance of common stock and =============
related tax benefits 1.3 30.4 - - -
Purchase and retirement of
treasury stock (2.1) (44.8) - - -
---------- ---------- ---------- ------------- -----------
Balance at December 28, 2001 $ 36.9 $ 32.5 $ 553.2 $ (64.6) $ 5.1
========== ========== ========== ============= ===========
See accompanying notes to the consolidated financial statements.
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION: Anixter International Inc., formerly known as Itel
Corporation, which was incorporated in Delaware in 1967, is engaged in the
distribution of communications and specialty wire and cable products through
Anixter Inc. and its subsidiaries (collectively "Anixter").
BASIS OF PRESENTATION: The consolidated financial statements include the
accounts of Anixter International Inc. and its majority-owned subsidiaries,
excluding Anixter Receivables Corporation (collectively "the Company"), after
elimination of intercompany transactions. The Company's fiscal year ends on the
Friday nearest December 31 and included 52 weeks in 2001, 2000 and 1999.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
Certain amounts for prior years have been reclassified to conform to the
current year presentation.
FOREIGN CURRENCY TRANSLATION: The results of operations for foreign
subsidiaries where the functional currency is not the U.S. dollar are translated
into U.S. dollars using the average exchange rates during the year, while the
assets and liabilities are translated using period-end exchange rates. The
related translation adjustments are recorded in a separate component of
Stockholders' equity, "Accumulated other comprehensive income." Gains and losses
from foreign currency transactions are included in income. The Company
recognized $5.3 million, $0.9 million and $2.8 million in net foreign exchange
losses in 2001, 2000 and 1999, respectively.
ACCOUNTS RECEIVABLE PROGRAM: On October 6, 2000, the Company entered into
an accounts receivable securitization program. The program is conducted through
Anixter Receivables Corporation ("ARC"), which is a wholly owned unconsolidated
subsidiary of the Company, on terms equivalent to those in an arms-length
transaction. The investment is accounted for using the equity method. At
December 28, 2001 and December 29, 2000, Anixter's investment in ARC was $34.2
million and $17.1 million, respectively. The program allows the Company to sell,
on an ongoing basis without recourse, a majority of the accounts receivable
originating in the United States to ARC and consists of a series of 364-day
facilities. ARC may in turn sell an interest in these receivables to a financial
institution and borrow up to $225.0 million. Prior to October 6, 2001, ARC could
borrow up to $275.0 million. The Company agreed to continue servicing the sold
receivables for the financial institution at market rates that approximate cost;
accordingly, no servicing asset or liability has been recorded. At December 28,
2001 and December 29, 2000, the outstanding balance of accounts receivable sold
to ARC totaled $296.0 million and $388.3 million, respectively. Accordingly,
these accounts receivable were removed from the balance sheet. In order to fund
the purchases of the accounts receivable from Anixter, ARC has incurred
long-term debt of $143.7 million and $236.3 million and has a subordinated note
payable to Anixter of $111.4 million and $126.1 million at December 28, 2001 and
December 29, 2000, respectively. Net charges associated with the accounts
receivable securitization program of $8.7 million and $3.8 million were recorded
as other expenses in the 2001 and 2000 consolidated statements of operations,
respectively. These costs primarily relate to the interest expense on the
long-term debt incurred by ARC. Additionally, charges of $8.8 million relating
to the discount on the initial sale of accounts receivable to ARC were recorded
as other expenses in the 2000 consolidated statement of operations. The Company
expects to substantially recover the charges on the initial sale during the
course of the program.
NOTE RECEIVABLE: At December 28, 2001 and December 29, 2000, the
Company's note receivable of $111.4 million and $126.1 million, respectively,
represents the amount due to Anixter from ARC primarily for the sale of accounts
receivable and is subordinated to ARC's repayment of ARC long-term debt.
INVENTORIES: Inventories, consisting primarily of finished goods, are
stated at the lower of cost or market. Cost is determined using the average-cost
method. In fiscal year 2000, inventories returnable to vendor represent those
inventories that have been paid for by the Company. The inventory was returned
for cash in the first quarter of 2001.
PROPERTY AND EQUIPMENT: Capital expenditures are primarily for equipment,
leasehold improvements and computer software. Equipment and computer software
are recorded at cost and depreciated by applying the straight-line method over
their estimated useful lives, and range from 3 to 10 years. Leasehold
improvements are depreciated over the term of the related lease. Upon sale or
retirement, the cost and related depreciation are removed from the respective
accounts, and any gain or loss is included in income. Maintenance and repair
costs are expensed as incurred. Depreciation expense charged to operations was
$18.7 million, $17.1 million and $18.5 million in 2001, 2000 and 1999,
respectively.
GOODWILL: Goodwill primarily relates to the excess of cost over the fair
value of the net tangible assets of businesses acquired. The ongoing value and
remaining useful life of unamortized goodwill are subject to periodic evaluation
and the Company currently expects the carrying amount to be fully recoverable.
Should events and circumstances indicate that goodwill might be impaired, an
undiscounted cash flow methodology would be used to determine whether an
impairment loss would be recognized. Goodwill is amortized on a straight-line
basis over periods ranging from 20 to 40 years.
INTEREST RATE AGREEMENTS: The Company utilized interest rate agreements
that effectively fix or cap, for a period of time, the London Interbank Offered
Rate ("LIBOR") component of an interest rate on a portion of its floating rate
obligations. There were no interest rate agreements outstanding at December 28,
2001 because the Company had minimal floating rate obligations outstanding. At
December 29, 2000, as a result of these interest rate agreements, the interest
rate on approximately 91% of debt obligations was fixed or capped. In June 2001,
the Company cancelled two hedge agreements and one interest rate collar
agreement for which there were no longer outstanding borrowings and incurred
$1.7 million in interest expense related to the cancellation. At December 29,
2000, the Company had two interest rate swap agreements outstanding with a
notional amount of $25.0 million each. These swap agreements obligated the
Company to pay a fixed rate of approximately 6.1% through January 2003 and July
2002. At December 29, 2000, the Company also had one interest rate collar
agreement with a notional amount of $50.0 million which entitled the Company to
receive from the bank the amount by which the LIBOR component of the floating
rate interest payments exceed 6.5%. In addition, the Company was required to pay
the bank the difference between 6.3% and the floating rate when it was below
5.3%. This interest rate collar was cancelled in June 2001. The fair value,
which is the estimated amount at the current interest rate that the Company
would receive or pay to enter into similar interest rate agreements at December
29, 2000, would have been to pay $0.5 million. The impact of these interest rate
agreements was to increase interest expense by $0.3 million in 2001, decrease
interest expense by $0.7 million in 2000 and increase interest expense by $1.3
million in 1999. The Company does not enter into interest rate transactions for
speculative purposes.
FOREIGN CURRENCY FORWARD CONTRACTS: The Company also purchased foreign
currency forward contracts, accounted for as cash flow hedges, to minimize the
effect of fluctuating foreign currencies on its reported income. The impact of
these foreign currency forward contracts on the income statement was
insignificant in 2001, 2000 and 1999. The forward contracts were revalued at
current foreign exchange rates, with the changes in valuation reflected directly
in income. At December 28, 2001 and December 29, 2000, the face amount of
foreign currency forward contracts outstanding was approximately $74.0 million
and $73.9 million, respectively. At December 28, 2001, the amount by which the
fair value exceeded the face amount of foreign exchange contracts was $8.5
million and was included in other assets on the consolidated balance sheet.
REVENUE RECOGNITION: Sales and related cost of sales are recognized upon
transfer of title which occurs upon shipment of products.
ADVERTISING AND SALES PROMOTION: Advertising and sales promotion costs
are expensed as incurred. Advertising and promotion costs were $10.9 million,
$11.3 million and $11.1 million in 2001, 2000 and 1999, respectively.
SHIPPING AND HANDLING FEES AND COSTS: The Company incurred shipping and
handling fees and costs totaling $76.5 million, $90.6 million and $70.1 million
for the years ended 2001, 2000 and 1999, respectively. These costs are included
in operating expenses in the consolidated statements of operations.
STOCK BASED COMPENSATION: In accordance with the Accounting Principles
Board Opinion 25, "Accounting for Stock Issued to Employees", compensation cost
of stock options is measured as the excess, if any, of the quoted market price
of the Company's stock at the date of the grant over the option exercise price
and is charged to operations over the vesting period. Income tax benefits
totaling $5.3 million, $11.2 million and $2.6 million in 2001, 2000 and 1999,
respectively, attributable to stock options exercised were credited to capital
surplus.
INCOME TAXES: Using the liability method, provisions for income taxes
include deferred taxes resulting from temporary differences in determining
income for financial and tax purposes. Such temporary differences result
primarily from differences in the carrying value of assets and liabilities.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS: In July 2001, the Financial
Accounting Standards Board ("FASB") issued Statement of Financial Accounting
Standards ("SFAS") No. 141 "Business Combinations". SFAS No. 141 supercedes
prior guidance and requires that all business combinations initiated after June
30, 2001 be accounted for using the purchase method, thereby eliminating the use
of the pooling of interest method. The Company adopted this statement as
required on July 1, 2001 and will account for all future business combinations
under the provisions of this statement.
In July 2001, the FASB issued SFAS No. 142 "Goodwill and Other Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill will no longer be amortized, but will be subject to annual
impairment tests in accordance with the statements. Amortization of goodwill was
$9.0 million, $8.4 million and $7.4 million in 2001, 2000 and 1999,
respectively. Other intangible assets will continue to be amortized over their
useful lives. The Company will apply the new rules on accounting for goodwill
and other intangible assets beginning in the first quarter of 2002. During 2002,
the Company will perform the first of the required impairment tests of goodwill
as of December 29, 2001 and does not anticipate that the effect of these tests
will have a material impact on the Company's results of operations or financial
position.
In August 2001, the FASB issued SFAS No. 144 "Accounting for the
Impairment or Disposal of Long Lived Assets". Consistent with prior guidance,
SFAS No. 144 continues to require a three-step approach for recognizing and
measuring the impairment of assets to be held and used. Assets to be sold must
be stated at the lower of the asset's carrying amount or fair value and
depreciation is no longer recognized. SFAS No. 144 is effective for fiscal years
beginning after December 15, 2001. The adoption of SFAS No. 144 is not expected
to have a material effect on the Company's results of operations or financial
position.
NOTE 2. INCOME (LOSS) PER SHARE
The following table sets forth the computation of basic and diluted
income (loss) per share:
(In millions, except per share data) YEARS ENDED
----------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
BASIC INCOME (LOSS) PER SHARE:
Income before extraordinary loss $ 33.6 $ 78.7 $ 69.7
Extraordinary loss (3.3) - -
------------ ------------ ------------
Net income (numerator) $ 30.3 $ 78.7 $ 69.7
============ ============ ============
Weighted-average common shares
outstanding (denominator) 36.5 36.6 37.5
Income per share before
extraordinary loss $ 0.92 $ 2.15 $ 1.86
Extraordinary loss per share (0.09) - -
Net income per share $ 0.83 $ 2.15 $ 1.86
DILUTED INCOME (LOSS) PER SHARE:
Income before extraordinary loss $ 33.6 $ 78.7 $ 69.7
Interest impact of assumed
conversion of convertible notes - 4.3 -
------------ ------------ ------------
Adjusted income before
extraordinary loss (numerator) 33.6 83.0 69.7
Extraordinary loss (3.3) - -
------------ ------------ ------------
Net income $ 30.3 $ 83.0 $ 69.7
============ ============ ============
Weighted-average common shares
outstanding 36.5 36.6 37.5
Effect of dilutive securities:
Stock options, warrants and
convertible notes 1.3 4.3 0.6
------------ ------------ ------------
Weighted-average common shares
outstanding (denominator) 37.8 40.9 38.1
============ ============ ============
Income per share before
extraordinary loss $ 0.89 $ 2.03 $ 1.83
Extraordinary loss per share (0.09) - -
Net income per share $ 0.80 $ 2.03 $ 1.83
In 2001, the Company excluded 5.9 million of common stock equivalents,
primarily relating to the Convertible Notes from its calculation of diluted
income (loss) per share because the effect would have been antidilutive. Because
the Convertible Notes were antidilutive, the related $9.0 million of net
interest expense was not excluded from the determination of income in the
calculation of diluted income (loss) per share. Potentially dilutive securities
that were excluded from the calculation of diluted income per share were
insignificant in 2000 and1999.
NOTE 3. DISCONTINUED OPERATIONS
In 1999, the Company completed the disposal of the Integration segment
and, accordingly, the Integration segment is reflected as a discontinued
operation in these financial statements. The North America Integration business
was sold in the first quarter of 1999 and the Asia Pacific Integration business
was sold in the fourth quarter of 1999. Interest expense has been allocated to
discontinued operations based on the percentage of total identifiable assets.
The Company recorded an after-tax gain from the sale of discontinued
assets of $57.0 million in 1999. The $57.0 million gain included a tax benefit
of $8.4 million resulting from the reversal of certain tax reserves associated
with prior years' reported sales of discontinued assets. Total proceeds received
from the sale of the Integration business were $238.3 million. There was no
significant activity in 2001 or 2000.
Net sales and income from discontinued operations for the year ended
December 31, 1999, were as follows:
(In millions)
Net sales $196.3
Costs and expenses (199.5)
-------
Operating loss (3.2)
Gain on sale of assets 81.1
Net interest expense and other (1.0)
Income tax expense (22.4)
-------
Income from discontinued operations $ 54.5
=======
NOTE 4. ACQUISITION AND DIVESTITURE OF BUSINESSES
In January 2000, the Company acquired 100% of the stock of allNET
Technologies Pty. Limited ("allNET") for $6.7 million. allNET is a
communications products distributor located in Australia. This acquisition was
accounted for using the purchase method of accounting. In September 2000, the
Company sold the net assets of a wholly owned subsidiary of Accu-Tech
Corporation for $3.0 million in cash and $1.6 million in notes receivable. The
effect of these transactions on the operating results of the Company was not
significant.
NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
At December 28, 2001 and December 29, 2000, the Company had an ownership
interest of 99.9% and 99.7%, respectively, in Anixter Inc., which is included in
the consolidated financial statements of the Company. The following summarizes
the financial information of Anixter Inc. and reflects the Integration segment
of the Company as a discontinued operation:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
Assets:
Current assets $ 827.1 $ 1,331.0
Property, net 55.0 56.5
Goodwill 231.6 239.3
Other assets 83.1 53.8
------------ ------------
$ 1,196.8 $ 1,680.6
============ ============
Liabilities and Stockholders' Equity:
Current liabilities $ 352.9 $ 645.1
Other liabilities 41.5 28.6
Long-term debt 19.3 244.9
Subordinated notes payable to parent 244.8 250.5
Stockholders' equity 538.3 511.5
------------ ------------
$ 1,196.8 $ 1,680.6
============ ============
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED
--------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
(In millions) 2001 2000 1999
------------ ------------ ------------
Net sales $3,144.2 $3,514.4 $2,686.9
Operating income $ 103.5 $ 191.6 $ 114.6
Income from continuing operations before
income taxes and extraordinary loss $ 58.7 $ 135.1 $ 79.9
Income from continuing operations before
extraordinary loss $ 34.2 $ 76.3 $ 43.6
Extraordinary loss $ 3.3 -
Net income $ 30.9 $ 75.7 $ 91.7
NOTE 6. RESTRUCTURING COSTS
Due to increased economic softness and deteriorating market conditions
in the communications products market, the Company announced a one-time
restructuring charge of $31.7 million during the third quarter of 2001. The
components of the charge are identified below.
STAFF REDUCTIONS - The Company planned to reduce approximately 700
employees across all business functions and geographic areas and communicated
these intentions to the employees in the third quarter of 2001. The reductions
started during that time and as of December 28, 2001, approximately 600
employees have been terminated. In 2001, the Company recorded a restructuring
charge of $9.8 million primarily relating to severance and fringe benefits of
the approximately 700 employees to be terminated.
FACILITY RESTRUCTURING - The Company recorded a restructuring charge of
$13.9 million to cover primarily the future lease payments on the excess
facilities located in North America. Included in this amount was management's
assumption that certain facilities could be sublet for a total of $7.2 million
and the write-off of related leasehold improvements and equipment of $2.0
million.
KOREA - The Company decided to leave the Korean market and, as a result,
recorded a restructuring charge of $6.2 million. The major components of this
charge included accounts receivable bad debts of $3.1 million and legal fees,
settlements and other shutdown costs totaling $3.1 million.
OTHER ITEMS - The Company expensed purchased software that it decided not
to implement and provided for legal fees associated with the restructuring. The
total charge for these items was $1.8 million.
The following table summarizes the restructuring costs:
TOTAL NON-CASH CASH ACCRUED
COSTS CHARGES PAYMENTS COSTS
----- -------- -------- -------
Staff Reductions $ 9.8 $ - $ 5.5 $ 4.3
Facility Restructuring 13.9 2.0 0.9 11.0
Korea 6.2 3.7 0.9 1.6
Other 1.8 0.9 0.1 0.8
----- -------- -------- ------
Total $31.7 $ 6.6 $ 7.4 $17.7
===== ======== ======== ======
Amounts related to the net lease expense due to the consolidation of
facilities will be paid over the respective lease terms through the year 2008.
The Company expects to complete a majority of the implementation of the
restructuring initiative by the second quarter of 2002.
NOTE 7. ACCRUED EXPENSES
Accrued expenses consisted of the following:
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
Salaries and fringe benefits $ 37.5 $ 60.0
Taxes 4.8 21.0
Discontinued operations 11.9 17.6
Freight 4.1 7.2
Other 27.9 33.8
------------ ------------
$ 86.2 $139.6
============ ============
NOTE 8. DEBT
Debt is summarized below:
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
7% Zero-coupon convertible notes $ 221.8 $ 207.0
8% Senior notes 18.6 100.0
Bank revolving lines of credit 0.5 142.2
Other 0.2 2.7
------------ ------------
Total debt $ 241.1 $ 451.9
============ ============
On June 28, 2000, the Company issued $792 million of 7% zero-coupon
convertible notes ("Convertible Notes") due 2020. The net proceeds from the
issue were $193.4 million and were initially used to repay working capital
borrowings under a floating rate bank line of credit. The Company expects to
reborrow such amounts under the line of credit from time to time for general
corporate purposes. The discount associated with the issuance is being amortized
through June 28, 2020 using the effective interest rate method. Issuance costs
were $6.5 million and are being amortized through June 28, 2020 using the
straight-line method.
Holders of the Convertible Notes may convert at any time on or before the
maturity date, unless the notes have previously been redeemed or purchased, into
7.4603 shares of the Company's common stock for which the Company has reserved
5.9 million shares. Additionally, holders may require the Company to purchase
all or a portion of their Convertible Notes on June 28, 2005, at a price of
$356.28 per Convertible Note, on June 28, 2010, at a price of $502.57 per
Convertible Note and on June 28, 2015, at a price of $708.92 per Convertible
Note. The Company may choose to pay the purchase price in cash or common stock
or a combination of both.
On October 6, 2000, Anixter entered into a new financing arrangement to
replace the existing $550.0 million revolving credit agreement set to mature in
2001. The new agreement consisted of a $500.0 million, senior unsecured,
revolving credit line which includes a $390.0 million agreement, due 2005, plus
a $110.0 million, 364-day agreement which was cancelled in the second quarter of
2001. Anixter has various other revolving bank lines of credit worldwide that
provide for up to $18.7 million of additional borrowings, none of which are
domestic. These international lines of credit reduce or mature at various dates
in 2002 through 2004. Floating and fixed interest rate options, based on the
prime or LIBOR rate, are available under these facilities.
At December 28, 2001, $0.5 million was borrowed and $408.2 million was
available under the bank revolving lines of credit at Anixter, of which $25.7
million was available to pay the Company for intercompany liabilities. The
weighted average interest rate on debt, excluding the fixed rate notes, at
December 28, 2001 and December 29, 2000, was 5.0% and 8.0%, respectively.
Facility fees of 0.25% payable on the 5 year agreement and 0.23% payable on the
364-day agreement totaled $1.1 million in 2001 and were included in interest
expense in the consolidated statement of operations. Facility fees for 2000 were
insignificant.
In September 1996, Anixter filed a shelf registration statement with the
Securities and Exchange Commission to offer from time to time up to $200.0
million aggregate principal amount of unsecured notes. On September 17, 1996,
Anixter issued $100.0 million of these notes due September 2003. The notes,
which bear interest at 8%, contain various restrictions with respect to secured
borrowings and are unconditionally guaranteed by the Company. The Company
repurchased $81.3 million of its 8% senior notes for $86.5 million during the
year ended December 28, 2001. Additionally, in 2001, the Company expensed $0.3
million of debt issuance costs associated with the cancellation of the $110.0
million revolving credit agreement. Accordingly, the Company recorded an
extraordinary loss on the early extinguishment of debt of $5.5 million ($3.3
million, net of tax), in its consolidated statements of operations for the year
ended December 28, 2001.
Certain debt agreements entered into by the Company's subsidiaries
contain various restrictions including restrictions on payments to the Company.
The Company has guaranteed substantially all of the debt of its subsidiaries.
Restricted net assets of subsidiaries were approximately $410.1 million and
$404.5 million at December 28, 2001 and December 29, 2000, respectively.
Aggregate annual maturities of debt at December 28, 2001, were as
follows: 2002-$0.7 million; 2003-$18.6 million; 2004-none; 2005-none; 2006-none;
and $221.8 million thereafter. The amount due in 2002 was classified as
long-term due to the Company's ability and intent to refinance through its
long-term facilities.
Interest paid in 2001, 2000 and 1999, was $18.2 million, $39.1 million
and $34.5 million, respectively.
The estimated fair value of the Company's debt at December 28, 2001 and
December 29, 2000, was $245.9 million and $425.0 million respectively, based on
public quotations and current market rates.
NOTE 9. LEASE COMMITMENTS AND CONTINGENCIES
Substantially all of the Company's office and warehouse facilities and
equipment are leased under operating leases. A certain number of these leases
are long-term operating leases and expire at various dates through 2018. Minimum
lease commitments under operating leases at December 28, 2001 are as follows:
2002 - $46.0 million; 2003 - $35.0 million; 2004 - $26.7 million; 2005 - $17.7
million; 2006 - $12.1 million; beyond 2006 - $34.9 million. Total rental expense
was $57.8 million, $52.3 million and $58.3 million in 2001, 2000 and 1999,
respectively.
In the ordinary course of business, the Company and its subsidiaries
become involved as plaintiffs or defendants in various legal proceedings. The
claims and counterclaims in such litigation, including those for punitive
damages, individually in certain cases and in the aggregate, involve amounts
which may be material. However, it is the opinion of the Company's management,
based upon the advice of its counsel, that the ultimate disposition of pending
litigation will not be material.
NOTE 10. INCOME TAXES
The Company and its U.S. subsidiaries file their federal income tax
return on a consolidated basis. As of December 28, 2001, the Company had no net
operating loss ("NOL") or investment tax credit carryforwards for U.S. federal
income tax purposes. During the third quarter of 1998, the Internal Revenue
Service completed its examination for the years 1993 to 1995, which included an
examination of net operating losses and credit carryovers dating back to 1979.
As a result of the lapsing, during the third quarter of 1999, of all relevant
statutes of limitations on assessments relating to that 17-year period of time,
the Company recorded a $24.3 million tax benefit in continuing operations for
the reversal of previously established tax reserves which were determined to be
no longer necessary.
At December 28, 2001, various foreign subsidiaries of the Company had
aggregate cumulative NOL carryforwards for foreign income tax purposes of
approximately $167.6 million, which are subject to various provisions of each
respective country. Approximately $56.1 million of this amount expires between
2002 and 2011 and $111.5 million of the amount has an indefinite life.
Of the $167.6 million NOL carryforwards of foreign subsidiaries mentioned
above, $89.4 million relates to losses that have already provided a tax benefit
in the U.S. due to rules permitting flow-through of such losses in certain
circumstances. Without such losses included, the cumulative NOL carryforwards at
December 28, 2001, are approximately $78.2 million, which are subject to various
provisions of each respective country. Approximately $48.6 million of this
amount expires between 2002 and 2011 and $29.6 million of the amount has an
indefinite life. The deferred tax asset and valuation allowance, shown below
relating to foreign NOL carryforwards, have been adjusted to reflect only the
carryforwards for which the Company has not taken a tax benefit in the U.S.
Domestic income from continuing operations before income taxes was $55.5
million, $110.1 million and $76.0 million for 2001, 2000 and 1999, respectively.
Foreign income from continuing operations before income taxes was $2.7 million,
$24.5 million and $2.2 million for 2001, 2000 and 1999, respectively.
Undistributed earnings of the Company's foreign subsidiaries amounted to
approximately $83.7 million at December 28, 2001. Those earnings are considered
to be indefinitely reinvested and, accordingly, no provision for U.S. federal
and state income taxes has been provided. Upon distribution of those earnings in
the form of dividends or otherwise, the Company may be subject to both U.S.
income taxes (subject to adjustment for foreign tax credits) and withholding
taxes payable to the various foreign countries. According to the Company's
computations as of December 28, 2001, unrecognized foreign tax credit
carryforwards would be available to fully offset the U.S. regular corporate
income tax liability that would arise upon such a distribution. Additionally,
with respect to the countries that have undistributed earnings as of December
28, 2001, according to the foreign laws and treaties in place at that time,
withholding taxes of approximately $1.0 million would be payable upon the
remittance of all earnings at December 28, 2001.
The Company paid income taxes in 2001, 2000 and 1999 of $33.7 million,
$46.8 million and $64.9 million, respectively.
Significant components of the Company's deferred tax assets and
(liabilities) were as follows:
DECEMBER 28, DECEMBER 29,
(In millions) 2001 2000
------------ ------------
Gross deferred tax liabilities $ (17.4) $ (15.8)
Foreign NOL carryforwards 29.6 29.8
Deferred compensation 14.7 11.8
Inventory reserves 17.2 11.1
Allowance for doubtful accounts 3.0 5.8
Other 10.5 6.8
------------ ------------
Gross deferred tax assets 75.0 65.3
Valuation allowance (24.5) (25.5)
------------ ------------
Net deferred tax asset $ 33.1 $ 24.0
============ ============
Net current deferred tax assets $ 32.0 $ 25.5
Net non-current deferred tax assets (liabilities) 1.1 (1.5)
------------ ------------
$ 33.1 $ 24.0
============ ============
Income tax expense (benefit) was comprised of:
YEARS ENDED
---------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
(In millions) 2001 2000 1999
------------ ------------ ------------
Current--Foreign $ 10.1 $ 11.8 $ 7.6
State 3.3 8.1 4.5
Federal 25.1 36.7 25.0
------------ ------------ ------------
38.5 56.6 37.1
Deferred--Foreign (0.7) (0.7) (1.5)
State (2.3) (2.4) (1.1)
Federal (10.9) 2.4 (26.0)
------------ ------------ ------------
(13.9) (0.7) (28.6)
------------ ------------ ------------
$ 24.6 $ 55.9 $ 8.5
============ ============ ============
Reconciliations of income tax expense to the statutory corporate federal
tax rate of 35% were as follows:
YEARS ENDED
--------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
(In millions) 2001 2000 1999
------------ ------------ ------------
Statutory tax expense $ 20.4 $ 47.1 $ 27.4
Increase (reduction) in taxes resulting from:
Amortization of goodwill 2.6 2.5 2.2
Losses on foreign operations 0.9 2.3 2.5
State income taxes 0.5 3.7 2.3
Adjustment to prior year tax accounts - - (24.3)
Other, net 0.2 0.3 (1.6)
------------ ------------ ------------
$ 24.6 $ 55.9 $ 8.5
============ ============ ============
NOTE 11. PENSION PLANS, POST-RETIREMENT BENEFITS AND OTHER BENEFITS
The Company's various pension plans are non-contributory and cover
substantially all full-time domestic employees and certain employees in other
countries. Retirement benefits are provided based on compensation as defined in
the plans. The Company's policy is to fund these plans as required by Employee
Retirement Income Security Act and the Internal Revenue Service. Plan assets
consisted primarily of equity securities and mutual fund investments.
In 2000, the Company incurred a $3.2 million loss on settlement of a
supplemental employee retirement plan. In 1999, the Company completed the
disposal of the Integration segment that resulted in a curtailment gain of $4.4
million and, accordingly, was classified as a gain on disposal of discontinued
operations.
PENSION BENEFITS
-------------------------------
2001 2000
-------- --------
(IN MILLIONS)
CHANGE IN PROJECTED BENEFIT OBLIGATION:
Beginning balance $ 107.4 $ 104.2
Service cost 7.0 6.2
Interest cost 7.6 6.9
Amendments .7 -
Actuarial loss (gain) 3.2 (0.2)
Settlement/Curtailment loss - 3.4
Benefits paid (3.4) (11.0)
Foreign currency exchange rate changes (1.3) (2.1)
-------- --------
Ending balance $ 121.2 $ 107.4
======== ========
CHANGE IN PLAN ASSETS AT FAIR VALUE:
Beginning balance $ 99.8 $ 97.8
Actual return on plan assets (2.7) 4.8
Company contributions 2.7 2.7
Benefits paid (3.4) (3.8)
Foreign currency exchange rate changes (1.1) (1.7)
-------- --------
Ending balance $ 95.3 $ 99.8
======== ========
RECONCILIATION OF FUNDED STATUS:
Projected benefit obligation $(121.2) $(107.4)
Plan assets at fair value 95.3 99.8
-------- --------
Funded status (25.9) (7.6)
Unrecognized net actuarial loss (gain) 2.2 (11.7)
Unrecognized prior service cost 2.4 2.0
Unrecognized transition obligation (0.2) (0.4)
-------- --------
Accrued benefit cost $ (21.5) $ (17.7)
======== ========
WEIGHTED AVERAGE ASSUMPTIONS:
Discount rate 6.81% 7.25%
Expected return on plan assets 8.53% 8.63%
Salary growth rate 4.96% 5.42%
PENSION COSTS
----------------------------------
2001 2000 1999
------ ------ ------
(IN MILLIONS)
COMPONENTS OF NET PERIODIC COST:
Service cost $ 7.0 $ 6.2 $ 8.4
Interest cost 7.6 6.9 7.2
Expected return on plan assets (8.4) (8.4) ( 7.9)
Net amortization (0.4) (0.7) ( 0.2)
------ ------ ------
Periodic benefit cost prior to settlement/curtailment 5.8 4.0 7.5
Settlement/Curtailment loss (gain) - 3.0 (4.4)
------ ------ ------
Net periodic benefit cost $ 5.8 $ 7.0 $ 3.1
====== ====== ======
The Company has four plans in 2001 and three plans in 2000 where the
accumulated benefit obligation is in excess of the fair value of plan assets.
The accumulated benefit obligation was $4.2 million and $4.0 million and the
fair value of the plans' assets was $0.2 million and $0.1 million in 2001 and
2000, respectively.
The Company had two plans in 2000 where the fair value of assets were in
excess of the projected benefit obligation. The fair value of the plans' assets
was $8.6 million and had projected benefit obligations of $7.1 million.
The Company has several savings plans. The Company's contributions to
these plans are based upon various levels of employee participation. The total
cost of these plans was $1.6 million in 2001, $1.5 million in 2000 and $1.5
million in 1999. The Company's liability for post-retirement benefits other than
pensions is not material.
NOTE 12. PREFERRED STOCK AND COMMON STOCK
PREFERRED STOCK--
The Company has the authority to issue 15 million shares of preferred
stock, par value $1.00 per share, none of which was outstanding at the end of
2001 or 2000.
STOCK OPTIONS AND STOCK GRANTS--
At December 28, 2001, the Company had stock incentive plans that
authorize 2.6 million shares for additional stock option awards or stock grants.
Options granted under these plans have been granted with exercise prices at or
higher than the fair market value of the common stock on the date of grant.
One-fourth of the employee options granted become exercisable each year after
the year of grant. The director options fully vest in one year. All options
expire ten years after the date of grant.
Under its Enhanced Management Incentive Plan, in 2001 the Company issued
31,340 shares of restricted stock and granted 161,039 executive stock units.
During 2000, the first year restricted stock was granted, the Company issued
281,173 shares of restricted stock. Restricted stock and executive stock units
fully vest after four years from the date of grant. Compensation expense
associated with the restricted stock grants and executive stock units was $3.6
million and $1.7 million in 2001 and 2000, respectively.
The following table summarizes the 2001, 2000 and 1999 activity under the
employee and director option plans:
WEIGHTED WEIGHTED
AVERAGE AVERAGE
EMPLOYEE EXERCISE DIRECTOR EXERCISE
OPTIONS PRICE OPTIONS PRICE
--------- -------- -------- --------
(Options in thousands)
Balance at January 1, 1999 4,683.2 $16.48 390.0 $14.35
Granted 1,115.5 12.70 -- --
Exercised (452.0) 13.35 (30.0) 11.63
Canceled (163.1) 16.96 -- --
--------- -------- -------- --------
Balance at December 31, 1999 5,183.6 15.92 360.0 14.57
Granted 1,127.5 20.59 -- --
Exercised (2,003.0) 16.14 (100.0) 11.30
Canceled (147.1) 16.91 -- --
--------- -------- -------- --------
Balance at December 29, 2000 4,161.0 17.06 260.0 15.83
Granted 1,190.0 25.24 -- --
Exercised (1,128.1) 16.91 (40.0) 17.24
Canceled (138.3) 20.17 -- --
--------- -------- -------- --------
Balance at December 28, 2001 4,084.6 $19.37 220.0 $15.57
========= ======== ======== ========
Options Exercisable at year-end
1999 2,679.3 $16.49 360.0 $14.57
2000 2,031.3 $16.75 260.0 $15.83
2001 1,649.0 $16.72 220.0 $15.57
The following table summarizes information relating to options
outstanding and exercisable at December 28, 2001, using various ranges of
exercise prices:
EMPLOYEE OPTIONS
(options in thousands)
OPTIONS OUTSTANDING OPTIONS EXERCISABLE
----------------------------------------- -------------------------
WEIGHTED WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE REMAINING EXERCISE
PRICES OUTSTANDING PRICE YEARS EXERCISABLE PRICE
-------- ----------- -------- --------- ----------- ---------
$9.11 100.0 $ 9.11 1.0 100.0 $ 9.11
$12.69-$15.75 984.7 $13.65 7.1 576.9 $14.32
$17.44-$21.13 1,837.4 $19.26 7.4 967.5 $18.89
$25.20-$32.00 1,162.5 $25.28 10.0 4.6 $28.18
DIRECTOR OPTIONS
(options in thousands)
WEIGHTED WEIGHTED
RANGE OF AVERAGE AVERAGE
EXERCISE OUTSTANDING & EXERCISE REMAINING
PRICES EXERCISABLE PRICE YEARS
-------- ------------- -------- ---------
$8.38-$8.46 60.0 $ 8.42 1.0
$15.00-$20.69 160.0 $ 18.26 3.3
In addition, the Company has an Employee Stock Purchase Plan ("ESPP")
covering most employees. Participants can request that up to 10% of their base
compensation be applied toward the purchase of common stock under the Company's
ESPP. The purchase price is the lower of 85% of the fair market value of the
common stock at the beginning of the ESPP year, July 1, 2001, or at the end of
the ESPP year, June 30, 2002. Under the ESPP, the Company sold 110,128 shares,
114,100 shares and 123,700 shares to employees in 2001, 2000 and 1999,
respectively.
STOCK OPTION PLANS OF ANIXTER--
In 1995 and prior years, Anixter granted to key employees options to
purchase the common stock of Anixter. Substantially all options were granted
with exercise prices at the fair market value of the common stock on the date of
grant. These options vest over four years and terminate seven to ten years from
the date of grant. At December 28, 2001, the Company owned 99.97% of the
approximately 32.2 million shares of outstanding Anixter common stock.
The following table summarizes the 2001, 2000 and 1999 option activity:
WEIGHTED
AVERAGE
EXERCISE
OPTIONS PRICE
------- ---------
(Options in thousands)
Balance at January 1, 1999 982.3 $11.57
Exercised (586.6) 11.21
Canceled (26.2) 12.28
-------
Balance at December 31, 1999 369.5 12.08
Exercised (323.7) 11.92
Canceled (0.5) 14.50
-------
Balance at December 29, 2000 45.3 13.23
Exercised (27.3) 12.40
Canceled - -
-------
Balance at December 28, 2001 18.0 $14.50
=======
Options exercisable at year-end
1999 369.5 $12.08
2000 45.3 $13.23
2001 18.0 $14.50
The exercise price for options outstanding as of December 28, 2001, was
$14.50 per share and all options expired in January 2002.
UNITS--
The Company adopted a Director Stock Unit Plan ("DSUP") to pay its
non-employee directors annual retainer fees in the form of stock units. These
stock units convert to common stock of the Company at the pre-arranged time
selected by each director. Stock units were granted to eight directors in 2001
and nine directors in 2000, having an aggregate value at grant date of $480,000
and $540,000, respectively.
The following table summarizes the 2001, 2000 and 1999 activity under the
DSUP:
DSUP
STOCK UNITS
(In thousands) -----------
Balance at January 1, 1999 81.6
Granted 29.7
Converted (3.5)
-----------
Balance at December 31, 1999 107.8
Granted 20.4
Converted (31.2)
-----------
Balance at December 29, 2000 97.0
Granted 18.4
Converted (31.8)
Canceled (0.6)
-----------
Balance at December 28, 2001 83.0
===========
ACCOUNTING FOR STOCK BASED COMPENSATION--
The Company applied the disclosure-only provisions of SFAS No. 123
"Accounting for Stock Based Compensation". Accordingly, no compensation expense
has been recognized in the income statement for the stock option plans. Had
compensation costs for the plans been determined based on the fair value at the
grant date for awards beginning in 1995 and amortized over the respective
vesting period, the Company's income from continuing operations would have been
reduced to the pro forma amounts indicated below:
(In millions, except per share data)
2001 2000 1999
---- ---- ----
Basic income from continuing operations
--as reported $33.6 $78.7 $69.7
--pro forma $26.5 $72.7 $64.0
Diluted income from continuing operations
plus assumed conversion
--as reported $33.6 $83.0 $69.7
--pro forma $26.5 $77.0 $64.0
Basic income per share from
continuing operations
--as reported $0.92 $2.15 $1.86
--pro forma $0.72 $1.99 $1.71
Diluted income per share from
continuing operations
--as reported $0.89 $2.03 $1.83
--pro forma $0.71 $1.90 --
Pro forma diluted income per share has not been presented for 1999, as
the conversion of stock options and warrants would have had an anti-dilutive
effect.
The weighted average fair value for the Company's stock options (which
was $14.92 per share in 2001, $11.74 per share in 2000 and $5.50 per share in
1999) was estimated at the date of grant using the Black-Scholes option pricing
model with the following assumptions for 2001, 2000 and 1999, respectively:
expected stock price volatility of 52%, 45%, and 39%; expected dividend yield of
zero each year; risk-free interest rate of 5.2%, 6.5% and 5.6%; and, an expected
7 year life for 2001 and 2000 and a 5 year life for 1999.
The Black-Scholes option pricing model was developed for estimating the
fair value of traded options, which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's stock options have characteristics significantly different from
those of traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion, the
existing models do not necessarily provide a reliable single measure of the fair
value of the Company's stock options.
NOTE 13. BUSINESS SEGMENT
The Company operates in one business segment that is engaged in the
distribution of communications and specialty wire and cable products from top
suppliers to contractors and installers and to end users, including
manufacturers, natural resources companies, utilities and original equipment
manufacturers. The Company obtains and coordinates financing, legal and other
related services, certain of which are rebilled to subsidiaries.
The following table is a geographic breakdown of the Company's
operations. In 2001, the Company reported sales to a single customer that
represented 10.3% of total net sales. No other customer accounts for 10% or more
of sales in 2001, 2000 or 1999. Export sales were insignificant.
(In millions) WORLDWIDE OPERATIONS
---------------------------------------
2001 2000 1999
--------- --------- ---------
Net sales
United States $2,179.5 $2,453.9 $1,833.4
Europe 502.1 587.1 523.0
Canada 254.0 285.4 213.9
Asia Pacific and Latin America 208.6 188.0 141.7
--------- --------- ---------
$3,144.2 $3,514.4 $2,712.0
========= ========= =========
Operating income
United States $ 79.4 $ 144.6 $ 93.3
Europe 21.2 24.6 20.6
Canada 10.3 19.6 12.9
Asia Pacific and Latin America (8.9) 1.0 (14.0)
--------- --------- ---------
102.0 $ 189.8 $ 112.8
========= ========= =========
Tangible long-lived assets
United States $ 119.2 $ 89.8 $ 66.8
Europe 4.7 5.2 7.1
Canada 2.7 3.7 3.9
Asia Pacific and Latin America 3.3 4.2 5.0
--------- --------- ---------
$ 129.9 $ 102.9 $ 82.8
========= ========= =========
NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
The following is a summary of the unaudited interim results of operations
and the price range of the common stock composite for each quarter in the years
ended December 28, 2001 and December 29, 2000. The Company has never paid cash
dividends on its common stock.
FIRST SECOND THIRD FOURTH
(In millions, except per share amounts) QUARTER QUARTER QUARTER QUARTER
------- ------- ------- -------
YEAR ENDED DECEMBER 28, 2001
Net sales $880.3 $839.8 $761.5 $662.6
Cost of sales (668.3) (639.3) (590.8) (508.9)
Operating income (loss) 49.7 43.2 (10.0) 19.1
Income (loss) before income taxes and extraordinary loss 35.6 30.9 (19.7) 11.4
Income (loss) before extraordinary loss 20.9 18.7 (11.7) 5.7
Extraordinary loss on early extinguishment
of debt, net of tax - (0.8) (0.2) (2.3)
Net income (loss) 20.9 17.9 (11.9) 3.4
Basic income (loss) per share:
Income (loss) before extraordinary loss 0.57 0.52 (0.32) 0.16
Extraordinary loss - (0.02) (0.01) (0.06)
Net income (loss) 0.57 0.50 (0.33) 0.10
Diluted income (loss) per share:
Income (loss) before extraordinary loss 0.53 0.49 (0.32) 0.15
Extraordinary loss - (0.02) (0.01) (0.06)
Net income (loss) 0.53 0.47 (0.33) 0.09
Composite stock price range:
High 29.25 31.80 31.69 30.86
Low 18.81 23.30 23.15 23.85
Close 24.10 30.70 24.78 28.82
YEAR ENDED DECEMBER 29, 2000
Net sales $758.8 $920.9 $971.8 $862.9
Cost of sales (571.8) (712.2) (754.1) (654.4)
Operating income 37.5 50.0 53.9 48.4
Income before income taxes 27.7 39.2 40.9 26.8
Income from continuing operations 16.1 22.7 24.0 15.9
Net income 16.1 22.7 24.0 15.9
Basic income per share:
Continuing 0.45 0.62 0.65 0.42
Net income 0.45 0.62 0.65 0.42
Diluted income per share:
Continuing 0.44 0.60 0.59 0.41
Net income 0.44 0.60 0.59 0.41
Composite stock price range:
High 29.94 34.00 37.00 29.19
Low 18.69 26.50 27.06 17.75
Close 27.88 26.52 29.13 21.63
In the third quarter of 2001, the Company recorded a $31.7 million ($19.0
million after-tax) one-time restructuring charge for severance and costs
associated with closing and consolidating certain facilities. As a result, basic
and diluted income per share were reduced by $0.52 and $0.50, respectively.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
See Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders--"Election of Directors."
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the name, age as of March 8, 2002, position,
offices and certain other information with respect to the executive officers of
the Company. The term of office of each executive officer will expire upon the
appointment of his successor by the Board of Directors.
John A. Dul, 41 General Counsel of the Company since May 1998; Assistant Secretary of the Company
since May 1995; General Counsel and Secretary of Anixter since January 1996.
Terrance A. Faber, 50 Vice-President Controller of the Company since October 2000; Chief Financial Officer
of International Survey Research from January 2000 to October 2000; Corporate
Controller of BT Office Products International from August 1997 to January 2000;
Corporate Controller of The Bradford Exchange from October 1994 to August 1997.
Robert W. Grubbs Jr., 45 President and Chief Executive Officer of the Company since February 1998; President
and Chief Executive Officer of Anixter since July 1994.
James E. Knox, 64 Senior Vice-President--Law and Secretary of the Company since 1986.
Dennis J. Letham, 50 Chief Financial Officer, Senior Vice-President--Finance of the Company since January
1995; Chief Financial Officer, Executive Vice President of Anixter since July 1993.
Philip F. Meno, 43 Vice-President--Taxes of the Company since May 1993.
Rodney A. Shoemaker, 44 Vice-President--Treasurer of the Company and Anixter since July 1999; Assistant
Treasurer of the Company and Anixter from October 1994 to July 1999.
Samuel Zell, 60 Chairman of the Board of Directors of the Company since January 1985.
ITEM 11. EXECUTIVE COMPENSATION.
See Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders--"Executive Compensation," "Compensation of Directors," "Employment
Contracts and Termination of Employment and Changes in Control Arrangements,"
and "Compensation Committee Interlocks and Insider Participation."
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
See Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders--"Security Ownership of Management" and "Security Ownership of
Principal Stockholders."
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
See Registrant's Proxy Statement for the 2002 Annual Meeting of
Stockholders--"Certain Relationships and Related Transactions."
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) Exhibits.
The exhibits listed below in Items 14(a)1, 2 and 3 are filed
as part of this annual report. Each management contract or
compensatory plan required to be filed as an exhibit is
identified by an asterisk (*).
(b) Reports on Form 8-K.
None.
(A) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
(1) FINANCIAL STATEMENTS.
The following Consolidated Financial Statements of Anixter International
Inc. and Report of Independent Auditors are filed as part of this report.
PAGE
Report of Independent Auditors 14
Consolidated Statements of Operations for the years ended
December 28, 2001, December 29, 2000 and December 31, 1999 15
Consolidated Balance Sheets at December 28, 2001 and December 29, 2000 16
Consolidated Statements of Cash Flows for the years ended
December 28, 2001, December 29, 2000 and December 31, 1999 17
Consolidated Statements of Stockholders' Equity for the years
ended December 28, 2001, December 29, 2000 and December 31, 1999 18
Notes to the Consolidated Financial Statements 19
(2) FINANCIAL STATEMENT SCHEDULES.
The following financial statement schedules of Anixter International Inc.
are filed as part of this report and should be read in conjunction with the
Consolidated Financial Statements of Anixter International Inc.:
Page
I. Condensed financial information of Registrant 40
II. Valuation and qualifying accounts and reserves 44
All other schedules are omitted because they are not required or are not
applicable, or the required information is shown in the Consolidated Financial
Statements or notes thereto.
(3) EXHIBIT LIST.
Each management contract or compensation plan required to be filed as an
exhibit is identified by an asterisk (*).
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
(3) ARTICLES OF INCORPORATION AND BY-LAWS.
3.1 Restated Certificate of Incorporation of Anixter
International Inc., filed with Secretary of the State
of Delaware on September 29, 1987 and Certificate of
Amendment thereof, filed with the Secretary of
Delaware on August 31, 1995 (Incorporated by
reference from Anixter International Inc. Annual
Report on Form 10-K for the year ended December 31,
1995, Exhibit 3.1).
3.2 By-laws of Anixter International Inc. as amended
through November 9, 1995 (Incorporated by reference
from Anixter International Inc. Annual Report on Form
10-K for the year ended December 31, 1995, Exhibit
3.2).
(4) INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES.
4.1 Indenture dated September 17, 1996, between Anixter
Inc., Anixter International Inc. and the Bank of New
York, as Trustee, providing for 8% Senior Notes due
2003. (Incorporated by reference from Amendment No. 1
to Anixter Inc.'s Registration Statement on Form S-3,
Registration Number 333-09185, filed August 27, 1996,
Exhibit 4.1).
4.2 Indenture dated as of June 28, 2000, by and between
Anixter International Inc. and Bank of New York, as
Trustee offering 7% zero-coupon convertible notes due
2020. (Incorporated by reference from Anixter
International Inc.'s Registration Statement on Form
S-3, Registration Number 333-42788, filed August 1,
2000, Exhibit 4.1).
4.3 (a) Five-Year, $390 million, Revolving Credit
Agreement, dated October 6, 2000, among Anixter Inc.,
Bank of America, N.A., as Agent, and other banks
named therein. (Incorporated by reference from
Anixter International Inc. Annual Report on Form 10-K
for the year ended December 29, 2000, Exhibit 4.3).
(b)Amendment No. 1 to Anixter Five-Year, $390.0
million, Revolving Credit Agreement, dated October 6,
2000.
4.4 Receivables Sale Agreement, dated October 6, 2000,
between Anixter Inc. and Anixter Receivables
Corporation. (Incorporated by reference from Anixter
International Inc. Annual Report on Form 10-K for the
year ended December 29, 2000, Exhibit 4.5).
4.5 Receivables Purchase Agreement, dated October 6,
2000, among Anixter Receivables Corporation, as
Seller, Anixter Inc., as Servicer, Bank One, NA, as
Agent, and the other financial institutions named
therein. (Incorporated by reference from Anixter
International Inc. Annual Report on Form 10-K for the
year ended December 29, 2000, Exhibit 4.6).
(10) MATERIAL CONTRACTS.
10.1 (a) Asset Purchase Agreement, dated February 22, 1999
(Incorporated by reference from Anixter International
Inc. Current Report on Form 8-K dated April 2, 1999).
(b) First Amendment to Asset Purchase Agreement,
dated March 29, 1999 (Incorporated by reference from
Anixter International Inc. Current Report on Form 8-K
dated April 2, 1999).
10.2* Company's 1983 Stock Incentive Plan as amended and
restated July 16, 1992. (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, Exhibit
10.3).
10.3* Anixter International Inc. 1998 Stock Incentive Plan
(Incorporated by reference from Anixter International
Inc. Registration Statement on Form S-8, file number
333-56935. Exhibit 4a).
10.4* Company's Key Executive Equity Plan, as amended and
restated July 16, 1992. (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K
for the fiscal year ended December 31, 1992, Exhibit
10.8).
10.5* Company's Director Stock Option Plan. (Incorporated
by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31,
1991, Exhibit 10.24).
10.6* Form of Stock Option Agreement. (Incorporated by
reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31,
1992, Exhibit 10.24).
10.7* Form of Indemnity Agreement with all directors and
officers (Incorporated by reference from Anixter
International Inc. Annual Report on Form 10-K for the
year ended December 31, 1995, Exhibit 10.24).
10.8* Anixter International Inc. 1996 Stock Incentive Plan
(Incorporated by reference from Anixter International
Inc. Annual Report on Form 10-K for the year ended
December 31, 1995, Exhibit 10.26).
10.9* Form of Stock Option Grant (Incorporated by reference
from Anixter International Inc. Annual Report on Form
10-K for the year ended December 31, 1995, Exhibit
10.27).
10.10* Anixter Excess Benefit Plan (Incorporated by
reference from Anixter International Inc. Annual
Report on Form 10-K for the year ended December 31,
1995, Exhibit 10.28).
10.11* Forms of Anixter Stock Option, Stockholder Agreement
and Stock Option Plan (Incorporated by reference from
Anixter International Inc. Annual Report on Form 10-K
for the year ended December 31, 1995, Exhibit 10.29).
10.12* (a) Anixter Deferred Compensation Plan (Incorporated
by reference from Anixter International Inc. Annual
Report on Form 10-K for the year ended December 31,
1995, Exhibit 10.30).
(b) Anixter 1999 Restated Deferred Compensation Plan.
(c) Amendment No. 1 to Anixter 1999 Restated Deferred
Compensation Plan.
(d) Amendment No. 2 to Anixter 1999 Restated Deferred
Compensation Plan.
10.13* Financial Advisory Agreement, dated August 4, 1999
(Incorporated by reference from Anixter International
Inc. Quarterly Report on Form 10-Q for the quarterly
period ended October 1, 1999, Exhibit 10.21).
10.14* Employment Agreement with Robert W. Grubbs, dated
July 22, 1999 (Incorporated by reference from Anixter
International Inc. Quarterly Report on Form 10-Q for
the quarterly period ended October 1, 1999, Exhibit
10.22).
10.15* Employment Agreement with Dennis J. Letham, dated
July 22, 1999 (Incorporated by reference from Anixter
International Inc. Quarterly Report on Form 10-Q for
the quarterly period ended October 1, 1999, Exhibit
10.23).
10.16* Anixter International Inc. Management Incentive Plan
(Incorporated by reference from Anixter International
Inc. Quarterly Report on form 10Q for the quarterly
period ended June 30, 2000, Exhibit 10.20).
10.17* Amendment to Employee Agreements with Robert W.
Grubbs and Dennis J. Letham, dated February 14, 2001
(Incorporated by reference from Anixter International
Inc. Annual Report on Form 10-K for the year ended
December 29, 2000, Exhibit 10.23).
10.18* Anixter International Inc. 2001 Stock Incentive Plan.
(21) Subsidiaries OF THE REGISTRANT.
PAGE
21.1 List of Subsidiaries of the Registrant. 46
(23) Consents OF EXPERTS AND COUNSEL.
23.1 Consent of Ernst & Young LLP 48
(24) Power OF ATTORNEY.
24.1 Power of Attorney executed by Lord James Blyth,
Robert L. Crandall, Robert W. Grubbs, F. Philip
Handy, Melvyn N. Klein, John R. Petty, Stuart M.
Sloan, Thomas C. Theobald, Matthew Zell and Samuel
Zell 49
Copies of other instruments defining the rights of holders of long-term
debt of the Company and its subsidiaries not filed pursuant to Item
601(b)(4)(iii) of Regulation S-K and omitted copies of attachments to plans and
material contracts will be furnished to the Securities and Exchange Commission
upon request.
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(IN MILLIONS)
YEARS ENDED
--------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
Operating loss $(1.5) $(4.1) $ (2.5)
Other income (expenses):
Interest income, including intercompany 5.3 6.6 3.1
Other -- (0.6) --
------------ ------------ ------------
Income from operations before income taxes
and equity in earnings of subsidiaries 3.8 1.9 0.6
Income tax (expense) benefit (1.8) 1.9 27.4
Equity in earnings of subsidiaries 28.3 74.9 96.2
------------ ------------ ------------
Net income $30.3 $78.7 $124.2
============ ============ ============
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
BALANCE SHEETS
(IN MILLIONS)
ASSETS
DECEMBER 28, DECEMBER 29,
2001 2000
------------ -------------
Current assets:
Cash $ 0.8 $ 0.4
Accounts receivable 2.8 2.5
Amounts currently due from affiliates, net 2.7 3.4
Other assets 0.2 0.1
------------ -------------
Total current assets 6.5 6.4
Investment in and advances to subsidiaries 788.6 765.1
Other assets 6.8 7.0
------------ -------------
$ 801.9 $ 778.5
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses,
due currently $ 2.2 $ 2.8
Long-term debt 221.8 207.0
Income taxes, net, primarily deferred 14.8 13.8
------------ -------------
Total liabilities 238.8 223.6
Stockholders' equity:
Common stock 36.9 37.7
Capital surplus 32.5 46.9
Accumulated other comprehensive income (59.5) (52.6)
Retained earnings 553.2 522.9
------------ -------------
Total stockholders' equity 563.1 554.9
------------ -------------
$ 801.9 $ 778.5
============ =============
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(IN MILLIONS)
YEARS ENDED
------------------------------------------------
DECEMBER 28, DECEMBER 29, DECEMBER 31,
2001 2000 1999
------------ ------------ ------------
Operating activities:
Net income $ 30.3 $ 78.7 $ 124.2
Adjustments to reconcile net income to
net cash provided by operating activities:
Income tax expense (benefit) 1.8 (1.9) (27.4)
Equity in earnings of subsidiaries (28.3) (74.9) (96.2)
Accretion of zero-coupon convertible notes 14.7 7.0 --
Income tax savings from employee stock plans 5.3 11.2 2.6
Intercompany transactions 0.7 2.9 (1.7)
Change in other operating items 6.3 (4.7) 63.9
------------ ------------ ------------
Net cash provided by operating activities 30.8 18.3 65.4
Investing activities:
Proceeds from sale of businesses -- -- 28.3
------------ ------------ ------------
Net cash provided by investing activities -- -- 28.3
Financing activities:
Proceeds from long-term debt -- 200.0 --
Loans to subsidiaries, net (5.8) (231.4) (12.1)
Purchase of treasury stock (46.9) (15.4) (91.9)
Proceeds from issuance of common stock 22.3 34.9 7.4
Debt issuance costs -- (6.4) --
------------ ------------ ------------
Net cash used in financing activities (30.4) (18.3) (96.6)
------------ ------------ ------------
Cash provided (used) 0.4 -- (2.9)
Cash at beginning of year 0.4 0.4 3.3
------------ ------------ ------------
Cash at end of year $ 0.8 $ 0.4 $ 0.4
============ ============ ============
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
NOTE TO CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
In the parent company financial statements, the Company's investment in
subsidiaries is stated at cost plus equity in undistributed earnings of
subsidiaries since the date of acquisition. The Company's share of net income of
its unconsolidated subsidiaries is included in consolidated income using the
equity method. The parent company financial statements should be read in
conjunction with the Company's consolidated financial statements.
ANIXTER INTERNATIONAL INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 28, 2001, DECEMBER 29, 2000 AND DECEMBER 31, 1999
(IN MILLIONS)
ADDITIONS
---------
BALANCE AT CHARGED CHARGED BALANCE AT
BEGINNING OF TO TO OTHER END OF
DESCRIPTION THE PERIOD INCOME ACCOUNTS DEDUCTIONS THE PERIOD
----------- ---------- ------ -------- ---------- ----------
Year ended December 28, 2001:
Allowance for
doubtful accounts $14.8 $ 11.5 $ 0.1 $ (5.5) $20.9
Allowance for
deferred tax asset $25.5 $( 1.0) -- -- $24.5
Year ended December 29, 2000:
Allowance for
doubtful accounts $10.3 $ 8.1 $ (0.4) $ (3.2) $14.8
Allowance for
deferred tax asset $26.3 $(0.8) -- -- $25.5
Year ended December 31, 1999:
Allowance for
doubtful accounts $ 11.0 $ 5.7 $ (0.9) $(5.5) $10.3
Allowance for
deferred tax asset $ 24.0 $ 2.3 -- -- $26.3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) 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, IN THE CITY OF SKOKIE,
STATE OF ILLINOIS, ON THE 13TH DAY OF MARCH, 2002.
ANIXTER INTERNATIONAL INC.
DENNIS J. LETHAM
-------------------------------
Dennis J. Letham
SENIOR VICE PRESIDENT - FINANCE
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.
ROBERT W. GRUBBS Chief Executive Officer
- ---------------------- and President March 13, 2002
Robert W. Grubbs (Principal Executive Officer)
DENNIS J. LETHAM Senior Vice President--Finance March 13, 2002
- ---------------------- (Chief Financial Officer)
Dennis J. Letham
TERRANCE A. FABER Vice President--Controller March 13, 2002
- ---------------------- (Chief Accounting Officer)
Terrance A. Faber
LORD JAMES BLYTH* Director March 13, 2002
- ----------------------
Lord James Blyth
ROBERT L. CRANDELL* Director March 13, 2002
- ----------------------
Robert L. Crandall
ROBERT W. GRUBBS Director March 13, 2002
- ----------------------
Robert W. Grubbs
F. PHILIP HANDY* Director March 13, 2002
- ----------------------
F. Philip Handy
MELVYN N. KLEIN* Director March 13, 2002
- ----------------------
Melvyn N. Klein
JOHN R. PETTY* Director March 13, 2002
- ----------------------
John R. Petty
STUART M. SLOAN* Director March 13, 2002
- ----------------------
Stuart M. Sloan
THOMAS C. THEOBALD* Director March 13, 2002
- ----------------------
Thomas C. Theobald
Director March 13, 2002
- ----------------------
Mary Agnes Wilderotter
MATTHEW ZELL* Director March 13, 2002
- ----------------------
Matthew Zell
SAMUEL ZELL* Director March 13, 2002
- ----------------------
Samuel Zell
*By DENNIS J. LETHAM
----------------------------------------
Dennis J. Letham (ATTORNEY IN FACT)
Dennis J. Letham, as attorney in fact for each person indicated.
EXHIBIT 21.1
ANIXTER INTERNATIONAL SCHEDULE 21
LIST OF SUBSIDIARIES
JURISDICTION
COMPANY NAME OF INCORPORATION
Anixter Inc. Delaware
Accu-Tech Corporation Georgia
Wallace Electronics, Inc. Georgia
Anixter Australia Pty. Ltd. Australia
allNET Technologies Pty. Ltd. Australia
Anixter Cables y Manufacturas, S.A. de C.V. Mexico
Anixter Chile S.A. Chile
Anixter Colombia S.A. Colombia
Anixter Costa Rica S.A. Costa Rica
Anixter del Peru, S.A.C. Peru
Anixter de Mexico, S.A. de C.V. Mexico
Anixter do Brazil Ltda. Brazil
Anixter Financial Inc. Delaware
Anixter Communications (Malaysia) Sdn Bhd Malaysia
Anixter Singapore Pte Ltd. Singapore
Anixter Hong Kong Limited Hong Kong
Anixter Trading (Shanghai) Company Limited China
Anixter Thailand Inc. Delaware
Anixter Holdings, Inc. Delaware
Anixter Argentina S.A. Argentina
Anixter AEH Holdings Inc. Delaware
Anixter Europe Holdings B.V. Netherlands
Anixter Austria GmbH Austria
Anixter (CIS) L.L.C. (Russia) Russia
Anixter Danmark A/S Denmark
Anixter Deutschland GmbH Germany
Anixter Eurofin B.V. Netherlands
Anixter Canada Inc. Canada
WireXpress Ltd. Canada
Anixter Eurinvest B.V. Netherlands
Anixter Belgium B.V.B.A. Belgium
Anixter Espana S.L. Spain
Anixter France SARL France
Anixter International B.V.B.A. Belguim
Anixter Italia S.r.l. Italy
Anixter International Ltd. United Kingdom
Anixter Power & Construction Ltd. United Kingdom
Anixter U.K. Ltd. United Kingdom
Anixter Logistics, Europe B.V.B.A. Belgium
Anixter Nederland B.V. Netherlands
Anixter Switzerland Sarl Switzerland
Anixter Hungary Ltd. Hungary
Anixter Iletsim Sistemleri Pazarlama ve Ticaret A.S. Turkey
Anixter Network Systems Greece L.L.C. Greece
Anixter Norge A.N.S. Norway
Anixter Poland Sp.z.o.o. Poland
Anixter Portugal S.A. Portugal
Anixter Sverige AB Sweden
B.E.L. Corporation Delaware
Anixter Information Systems Corporation Illinois
Anixter (Barbados), Inc. Barbados
Anixter Korea Limited Korea
Anixter Philippines Inc. Delaware
Anixter Puerto Rico, Inc. Delaware
Anixter-Real Estate Inc. Illinois
Anixter Receivables Corporation Delaware
Anixter Venezuela Inc. Delaware
GL Holding of Delaware, Inc. Delaware
Itel Corporation California
Itel Container Ventures Inc. Delaware
ICV GP Inc. Delaware
ICV LP Inc. Delaware
Itel Rail Holdings Corporation Delaware
Fox River Valley Railroad Corporation Wisconsin
Green Bay & Western Railroad Company Wisconsin
Michigan & Western Railroad Company Michigan
Signal Capital Corporation Delaware
Richdale, Ltd. Delaware
Signal Capital Projects, Inc. Delaware
Signal Capital Norwalk Inc. Delaware
Railcar Services Corporation Delaware
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration
Statement (Form S-8 No. 2-93173) pertaining to the Anixter International Inc.
1983 Stock Incentive Plan, the Registration Statement (Form S-8 No. 33-13486)
pertaining to the Anixter International Inc. Key Executive Equity Plan, the
Registration Statement (Form S-8 No. 33-21656) pertaining to the Anixter
International Inc. 1988 Employee Stock Purchase Plan, the Registration Statement
(Form S-8 No. 33-38364) pertaining to the Anixter International Inc. 1989
Employee Stock Incentive Plan, the Registration Statement (Form S-8 No.
33-60676) pertaining to the Anixter International Inc. 1993 Director of Stock
Option Plan, the Registration Statement (Form S-8 No. 33-05907) pertaining to
the Anixter International Inc. 1996 Stock Incentive Plan, the Registration
Statement (Form S-8 No. 333-56815) pertaining to the Anixter International Inc.
1998 Mid-level Stock Option Plan, the Registration Statement (Form S-8 No.
333-56935) pertaining to the Anixter International Inc. 1998 Stock Incentive
Plan and the Registration Statement (Form S-3 No. 333-42788) pertaining to the
Anixter International Inc. zero-coupon convertible notes due 2020 of our report
dated January 28, 2002, with respect to the consolidated financial statements
and schedules of Anixter International Inc. included in this Annual Report (Form
10-K) for the year ended December 28, 2001.
ERNST & YOUNG LLP
Chicago, Illinois
March 13, 2002
EXHIBIT 24.1
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or
director of Anixter International Inc., a Delaware corporation (the
"Corporation"), which is about to file an annual report pursuant to Section 13
or 15(d) of the Securities Exchange Act of 1934, as amended, on Form 10-K hereby
constitutes and appoints Dennis J. Letham, John A. Dul and Terrance A. Faber,
and each of them, his or her true and lawful attorney-in-fact and agents, with
full power and all capacities, to sign the Corporation's Form 10-K and any or
all amendments thereto, and any other documents in connection therewith, to be
filed with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as she or he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or their substitute or substitutes, may lawfully do or cause to be done
by virtue hereof.
IN WITNESS WHEREOF, the undersigned and hereunto set her or his hand and
seal as of the 21st day of February 2002.
/s/ Lord James Blyth /s/ John R. Petty
/s/ Robert L. Crandall /s/ Stuart M. Sloan
/s/ Robert W. Grubbs /s/ Thomas C. Theobald
/s/ F. Philip Handy /s/ Matthew Zell
/s/ Melvyn N. Klein /s/ Samuel Zell