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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934..............FOR THE FISCAL YEAR ENDED DECEMBER 31, 1995
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
(STATE OR OTHER JURISDICTION OF
INCORPORATION OR ORGANIZATION)
94-1658138
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
2 NORTH RIVERSIDE PLAZA
SUITE 1900
CHICAGO, ILLINOIS 60606
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (312) 902-1515
SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
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Common Stock, $1 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: NONE.
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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
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation 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. /X/
The aggregate market value of the shares of Registrant's Common Stock, $1 par
value, held by nonaffiliates of Registrant was approximately $705,000,000 as of
March 11, 1996.
At March 11, 1996, 52,175,000 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 1996 Annual Meeting
of Stockholders of Anixter International Inc. are incorporated by reference into
Part III. This document consists of 112 pages. Exhibit List begins on page 35.
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TABLE OF CONTENTS
PAGE
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PART I.
Item 1. Business of the Company............................................... 3
Item 2. Properties............................................................ 5
Item 3. Legal Proceedings..................................................... 5
Item 4. Submission of Matters to a Vote of Security Holders................... 5
Executive Officers of the Registrant.................................. 6
PART II.
Item 5. Market for the Registrant's Common Stock and Related Stockholder
Matters............................................................. 7
Item 6. Selected Financial Data............................................... 8
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................... 9
Item 8. Consolidated Financial Statements and Supplementary Data.............. 14
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure................................................ 14
PART III.
Item 10. Directors and Executive Officers of the Registrant.................... 34
Item 11. Executive Compensation................................................ 34
Item 12. Security Ownership of Certain Beneficial Owners and Management........ 34
Item 13. Certain Relationships and Related Transactions........................ 34
PART IV.
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K....... 34
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PART I
ITEM 1. BUSINESS OF THE COMPANY.
GENERAL
Anixter International Inc. (the "Company"), formerly known as Itel
Corporation, which was incorporated in Delaware in 1967, is engaged in providing
networking and cabling solutions for network infrastructure requirements through
Anixter Inc. and its subsidiaries (collectively "Anixter"). As of December 31,
1995 the Company also owned approximately 31% of ANTEC Corporation and its
subsidiaries (collectively "ANTEC"), a broadband communications technology
company.
In 1995 the Company largely completed its strategy of selling its non-core
businesses and investments including the sale of its 9% investment in the common
stock of Santa Fe Energy Resources, Inc. ("Energy").
In 1994, the Company sold its remaining interests in its rail car leasing
business conducted by Itel Rail Corporation ("Rail"). In 1994, 1993 and 1992,
the Company sold all of its other transportation services assets. In 1991, the
Company sold the distribution services business previously conducted by Itel
Distribution Systems, Inc. ("Itel Distribution") and all the stock of Great
Lakes International, Inc. which together with its subsidiaries (collectively
"Great Lakes") was engaged in heavy marine construction, primarily dredging. For
information about the 1994 and 1993 sales see Item 7--Financial Liquidity and
Capital Resources--Asset Sales and Other Dispositions and Note 3 of the Notes to
the Consolidated Financial Statements.
In 1994, the Company sold its 9% investment in the common stock of Catellus
Development Corporation ("Catellus"). In 1991, the Company sold its 15%
investment in the common stock of Santa Fe Pacific Corporation ("Santa Fe") and
its 21% investment in the common stock of American President Companies, Ltd.
("APC"). The financing operations of Signal Capital Corporation and its
subsidiaries (collectively "Signal Capital") are being held for sale. See Note 3
of the Notes to the Consolidated Financial Statements.
At December 31, 1995, the Company and its subsidiaries employed
approximately 5,100 persons. For information on segment and geographic data see
Note 15 of the Notes to the Consolidated Financial Statements.
OPERATIONS
Anixter is a leading supplier of wiring systems, networking and
internetworking products for voice, data and video networks and electrical power
applications in North America, Europe, Asia and Latin America. Anixter stocks
and/or sells a full line of these products from a network of 85 locations in the
United States, 19 in Canada, 17 in the United Kingdom, 28 in Continental Europe,
10 in Latin America, 6 in Australia, and 11 in Asia. Anixter sells approximately
80,000 products to over 60,000 active customers and works with over 2,000
suppliers. Its customers include international, national, regional and local
companies that are end users of these products and engage in manufacturing,
communications, 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 about $1,600.
The products sold by Anixter include communication (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) and components, as well as
active data components for networking applications. Anixter sells products that
are incorporated in local area networks ("LANs"), and the internetworking of
LANs to form wide area networks ("WANs"). Anixter's products also include
electrical wiring systems products used for the transmission of electrical
energy and control/monitoring of industrial processes.
Increasingly, the Company's end user customer base is seeking complete
solutions to their network infrastructure needs as opposed to just purchasing
networking products. Therefore, in some circumstances Anixter is providing
network design advice through its sales engineers prior to major sales
commitments as
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well as project management, staging and configuration during customer project
implementation, and customer training. On a post sale basis Anixter provides
network trouble shooting, maintenance and warranty services. Anixter service
offerings do not include cable system installation, application software
development or the provision of terminal devices. The Company has designed its
services to be compatible with and not competitive to the principal activities
of its reseller customer base.
Prior to 1989, Anixter's operations were primarily limited to North America
and the United Kingdom. In 1989, Anixter made a major commitment to expand its
operations into the international voice, data and video communications markets.
Since then, Anixter has opened businesses throughout Western Europe and in
significant markets in the Pacific Rim (other than Japan and Korea) and Latin
America. While most of the European businesses have achieved operating profits,
the Pacific Rim and Latin American expansion programs are considered to be in
the start-up mode.
An important element of Anixter's business strategy is to develop and
maintain close relationships with its key suppliers, which include the world's
leading manufacturers of networking 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 47% of the Company's purchases in 1995 were from its five largest
suppliers.
Anixter's ability to cost effectively serve its customers' needs is
possible through its proprietary computer system which connects 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. In addition, the Company operates a series of large modern
hub warehouses in key distribution centers in North America, Europe, Asia and
Latin America which provide for cost effective and reliable storage and delivery
of products to its customers. The hub warehouses store the bulk of the Company's
stock units and are to a certain degree specialized by broad product category.
Some smaller warehouses are also maintained 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
services while maintaining a reasonable level of investment in inventory and
facilities.
Anixter competes with distributors and manufacturers who sell products
directly or through existing distribution channels to end users or other
resellers. In addition, Anixter's future performance could be subject to
economic downturns and possibly rapid changes in applicable technologies. To
guard against inventory obsolescence, Anixter has negotiated various return and
price protection agreements with its key suppliers. Although Anixter's
relationships with its suppliers are good, the loss of a major supplier could
have a temporary adverse effect on Anixter's business but would not have a
lasting impact since comparable products are available from alternate sources.
INVESTMENT IN ANTEC
In 1993, the Company's interest in ANTEC was reduced from 100% to 53% in an
initial public offering of ANTEC common stock. In 1994, the Company's interest
was further reduced to 30% in a second public offering. In 1995, the Company
purchased .4 million shares of ANTEC common stock increasing its investment to
31%.
As of December 31, 1995 and 1994, the Company's interest in ANTEC was
approximately 31% and 30%, respectively. Effective January 1, 1994, the Company
reflects ANTEC as an equity investment in the consolidated financial statements.
As of December 31, 1995, the market value of the Company's 7,113,500 shares of
ANTEC was $128 million compared with a carrying value of $73.7 million. The
Company views ANTEC as a long-term investment, subject to change should future
circumstances warrant.
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ANTEC is a communications technology company, specializing in the design
and engineering of hybrid fiber/coax (HFC) broadband networks and the
manufacturing, materials management and distribution of products for these
networks.
Approximately 70% of ANTEC's consolidated sales for the year ended December
31, 1995 came from sales to the domestic cable industry. Demand for these
products depends primarily on capital spending for constructing, rebuilding,
maintaining or upgrading domestic cable television systems. Capital spending in
the cable industry has been cyclical. The amount of capital spending and,
therefore, ANTEC's sales and profits, are affected by a variety of factors,
including general economic conditions, availability and cost of capital, other
demands and opportunities for capital (such as acquisitions), regulation, demand
for cable services competition and technology, and real or perceived trends or
uncertainties in these factors. The impact of the new telecommunications
legislation, which among other things, will allow long-distance carriers, local
phone companies and cable companies to provide similar services across their
networks is not known. Technological developments are occurring rapidly in the
communications industry and, the effects of such developments are uncertain.
The domestic cable industry is highly concentrated with over 75% of U.S.
domestic subscribers being served by approximately twenty-five major
multi-system operators ("MSO's"). In 1995, over 50% of ANTEC's revenues were
obtained from sales to the twenty-five largest MSO's. A significant portion of
ANTEC's revenue is derived from sales to Tele-Communications, Inc. aggregating
$126.8 million, $151.6 million, and $146.1 million for the years ended December
31, 1995, 1994, and 1993, respectively.
All aspects of ANTEC's business are highly competitive. ANTEC competes with
national, regional and local manufacturers, distributors and wholesalers,
including companies larger than ANTEC, such as General Instrument Corporation
and Scientific-Atlanta, Inc. Various manufacturers who are suppliers to ANTEC
sell directly as well as through distributors into the cable marketplace. In
addition, because of the convergence of the cable, telecommunications and
computer industries and rapid technological development, new competitors are
entering the cable market. Many of ANTEC's competitors or potential competitors
are substantially larger and have greater resources than ANTEC. The principal
methods of competition are product differentiation, performance and quality;
price and terms; and service, technical and administrative support.
ASSETS HELD FOR SALE
The principal assets held for sale at December 31, 1995 are those of Signal
Capital. The finance business of Signal Capital has been classified as assets
held for sale in the Company's consolidated financial statements since its
acquisition in 1988. Subsequent to the purchase, the Company sold or liquidated
portions of the portfolio including $855 million in 1989, $78 million in 1990,
$157 million in 1991, $82 million in 1992, $82 million in 1993, $60 million in
1994 and $67 million in 1995. The $35 million net portfolio at December 31, 1995
represents approximately 2% of the original acquired Signal Capital portfolio.
The Company continues to liquidate the acquired Signal Capital portfolio in an
orderly manner that maximizes its value to shareholders and no material amounts
of new loans or investments are being made by Signal Capital.
ITEM 2. PROPERTIES.
Most 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 1995, no matters were submitted to a vote of
the security holders.
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EXECUTIVE OFFICERS OF THE REGISTRANT
The following table lists the name, age as of March 14, 1996, 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.
Kirk Brewer, 40............. Senior Vice President--Corporate & Investor Relations of the
Company since February 1992; Midwest Officer and Managing
Director of Georgeson & Co. from 1989 to February 1992.
Rod F. Dammeyer, 55......... Chief Executive Officer, President and Director of the Company
since January 1993; President and Director of the Company from
1985 to 1993.
John A. Dul, 35............. Assistant Secretary of the Company since May 1995; General
Counsel and Secretary of Anixter since January 1996; Associate
General Counsel and Secretary from July 1994 to January 1996;
Associate General Counsel and Assistant Secretary from May 1993
to July 1994; Associate General Counsel from January 1990 to
May 1993.
James M. Froisland, 45...... Vice President--Controller of the Company since February 1996;
Vice President--Corporate Controller of Budget Rent a Car
Corporation from March 1992 to February 1996; Vice President
Finance and Chief Financial Officer of Allsteel Inc., from
August 1990 to March 1992; Corporate Controller and Director of
Management Information Systems of the Haagen-Dazs Company, a
subsidiary of The Pillsbury Company from October 1988 to August
1990.
Robert W. Grubbs Jr., 39.... President and Chief Executive Officer of Anixter since July
1994; President Anixter U.S.A. from August 1993 to July 1994;
Executive Vice President, Sales and Marketing of Anixter from
August 1992 to August 1993; Senior Vice President Southeastern
Group of Anixter from May 1989 to August 1992.
James E. Knox, 58........... Senior Vice President, General Counsel and Secretary of the
Company since 1986.
Dennis J. Letham, 44........ Chief Financial Officer, Senior Vice President--Finance of the
Company since January 1995; Chief Financial Officer, Executive
Vice President of Anixter since July 1993; Chief Financial
Officer, Vice President of National Intergroup, Inc. from March
1991 to July 1993; Chief Financial Officer, Senior Vice
President of FoxMeyer, Inc from September 1990 to July 1993;
Vice President--Controller of National Intergroup, Inc. from
1989 to March 1991.
James A. Loudon, 52......... Vice President--Treasurer of the Company and Anixter since
February 1996; Vice President--Controller of the Company from
March 1995 to February 1996; Vice President--Controller of
Anixter from January 1994 to February 1996; Vice
President--Treasurer of Anixter from February, 1988 to January,
1994.
Philip F. Meno, 37.......... Vice President--Taxes of the Company since May 1993; Director
of Taxes from January 1990 to May 1993; Tax Manager from 1986
to January 1990.
Samuel Zell, 54............. Chairman of the Board of Directors of the Company since January
1993; Chairman of the Board of Directors and Chief Executive
Officer of the Company from 1985 to 1993.
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PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
A. MARKET INFORMATION
Anixter International Inc.'s Common Stock is traded on the New York Stock
Exchange under the symbol AXE.
B. STOCK PRICES
The following table sets forth the high and low sales prices for the Common
Stock on the NYSE.
HIGH LOW
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1994
First Quarter.......................................... $15 $12 3/8
Second Quarter......................................... 15 3/4 11 1/2
Third Quarter.......................................... 17 11/16 15 5/8
Fourth Quarter......................................... 18 1/8 15 15/16
1995
First Quarter.......................................... $19 5/16 $16 3/4
Second Quarter......................................... 20 3/16 17 1/4
Third Quarter.......................................... 22 1/16 18 9/16
Fourth Quarter......................................... 20 7/8 16 3/4
1996
First Quarter (through March 11, 1996)................. $20 $16 7/8
C. DIVIDENDS ON COMMON STOCK
The Company has not paid cash dividends on its Common Stock since 1979. On
August 10, 1995, the Company's Board of Directors authorized a two-for-one stock
split in the form of a stock dividend paid October 25, 1995, to stockholders of
record September 22, 1995. This transaction increased the number of outstanding
shares from approximately 26.8 million to 53.6 million. All share and per share
data have been adjusted to reflect this split.
D. NUMBER OF HOLDERS OF COMMON STOCK
There were approximately 5,700 holders of record of the Common Stock as of
March 11, 1996.
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ITEM 6. SELECTED FINANCIAL DATA.
YEARS ENDED DECEMBER 31,
----------------------------------------------------
1995 1994 1993 1992 1991
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(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Results of operations(a):
Revenues --Anixter..................................... $2,194.8 $1,732.6 $1,328.6 $1,163.6 $1,025.8
--ANTEC...................................... -- -- 427.6 301.0 258.3
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Consolidated revenues.................................. $2,194.8 $1,732.6 $1,756.2 $1,464.6 $1,284.1
======== ======== ======== ======== ========
Operating income--Anixter and all other................ $ 99.6 $ 69.8 $ 45.8 $ 30.5 $ 25.7
--ANTEC................................ -- -- 22.4 12.1 7.3
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Consolidated operating income.......................... $ 99.6 $ 69.8 $ 68.2 $ 42.6 $ 33.0
======== ======== ======== ======== ========
Interest expense and other, net........................ $ (21.6) $ (27.1) $ (58.9) $ (77.9) $ (67.5)
Equity in income (loss) of ANTEC....................... (.6) 7.9 -- -- --
Non-recurring items, net(b)............................ -- 59.0 71.8 -- --
Marketable equity securities losses, principally
write-downs(c)....................................... (3.0) (39.6) (25.0) (25.0) (79.4)
Income (loss) from continuing operations............... 39.1 46.2 28.8 (45.8) (67.5)
Income (loss) from discontinued operations............. -- 200.7 (14.0) (38.1) 3.0
Extraordinary items, net(d)............................ -- -- (16.0) (20.4) 8.8
Net income (loss)...................................... $ 39.1 $ 246.9 $ (1.2) $ (104.3) $ (55.7)
Income (loss) per common and common equivalent
share(g):
Continuing operations.............................. $ .71 $ .72 $ .43 $ (.89) $ (1.07)
Before extraordinary items......................... .71 3.85 .20 (1.55) (1.03)
Net income (loss).................................. .71 3.85 (.07) (1.90) (.90)
Financial position at December 31(a):
Total assets........................................... $1,184.7 $1,110.9 $1,380.6 $1,436.2 $2,395.8
Total debt............................................. 333.7 280.5 494.8 725.6 1,426.9
Stockholders' equity(e)(f)............................. 449.0 543.9 405.3 367.3 563.6
Book value per common and common equivalent
share(f)(g).......................................... $ 8.77 $ 9.25 $ 6.14 $ 5.05 $ 7.48
Weighted average common and common equivalent
shares(g)............................................ 55.410 64.090 60.264 58.170 68.880
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Notes:
(a) Due to the 1994 sale of 4.0 million shares of ANTEC (see Note 1 of the Notes
to the Consolidated Financial Statements), all 1995 and 1994 financial
information reflects ANTEC as an equity investment. All prior financial
information reflects ANTEC as a consolidated subsidiary of the Company.
(b) The non-recurring items in 1994 include a $48.2 million pre-tax gain on the
May 1994 public offering of shares of common stock of ANTEC and a $10.8
million pre-tax gain relating to ANTEC's issuance of common stock in
connection with an acquisition in November 1994. Non-recurring items in 1993
principally include an $84.5 million pre-tax gain on the 1993 initial public
offering of shares of common stock of ANTEC and a $6.4 million pre-tax gain
on other investments offset by a pre-tax loss of approximately $19.1 million
relating to the liquidation of the Company's equity investment in Q-TEL (see
Note 4 of the Notes to the Consolidated Financial Statements).
(c) In 1994, 1993, 1992 and 1991, the Company wrote down the value of its
investments in marketable equity securities by $34.4 million, $25.0 million,
$25.0 million and $50.0 million, respectively. The remaining $5.2 million
pre-tax charge in 1994 relates to the loss on sale of the Company's
investment in Catellus. The remaining $29.4 million pre-tax charge in 1991
relates to the loss on sale of the Company's investment in Santa Fe. The
remaining marketable securities were sold in 1995 resulting in a pre-tax
loss of $3 million.
(d) Extraordinary items in 1993, 1992 and 1991 represent the gain/(loss), net of
related income taxes, on early extinguishment of senior and subordinated
debt at the Company and its subsidiaries.
(e) Stockholders' equity reflects treasury stock purchases of $129.2 million,
$138.9 million, $.3 million, $114.3 million and $147.4 million in 1995,
1994, 1993, 1992 and 1991, respectively. No dividends on common stock were
declared or paid during any of the periods shown.
(f) Stockholders' equity includes unrealized losses on marketable equity
securities available-for-sale, net of deferred income tax benefit of $3.9
million, $23.7 million, $49.1 million and $47.8 million at December 31,
1994, 1993, 1992 and 1991, respectively. Stockholders' equity at December
31, 1992 and 1991 included approximately $83 million of Series C convertible
preferred stock which was converted into 3.8 million shares of Common Stock
in 1993.
(g) All share and per share data has been adjusted to reflect the dividend paid
in the form of a two-for-one stock split on October 25, 1995.
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
Asset Sales and Other Dispositions
Recapitalization Program: In 1990, the Company began a program of modifying
its capital structure by reducing certain senior and subordinated debt and
purchasing Common Stock. Over the last several years, the Company also
implemented a program of selling or otherwise monetizing certain assets to fund
the recapitalization program. Since the program began, the Company has used
proceeds to eliminate all debt at the holding company, temporarily reduce
borrowings at the subsidiary level and to repurchase approximately $719 million
of outstanding Common Stock. The financial liquidity and capital resources in
1995 and 1994 reflect the impact of the Company's recapitalization program.
Sale of Rail Car Leasing Business: In 1994, the Company sold its remaining
interest in its rail cars for an aggregate purchase price of $205.5 million
which was used to: (1) repay $150 million of the Corporate senior bank term loan
("Term Loan"); (2) pay the related income tax liability of approximately $25
million caused by the sale which resulted after utilization of the Company's NOL
and ITC carryforwards; and (3) other general corporate purposes including the
purchase of the Company's Common Stock.
ANTEC Public Offerings: In May 1994, the Company completed a public
offering of shares of common stock of ANTEC for approximately $83 million. As a
result of the ANTEC Offering, the Company's ownership of ANTEC common stock was
reduced from 53% to 33%. In addition, in November 1994, ANTEC issued
approximately 2.0 million shares of ANTEC common stock in connection with an
acquisition which lowered the Company's ownership to approximately 30%. In the
fourth quarter of 1995 the Company purchased .4 million shares of ANTEC stock
increasing its ownership to 31%.
In September 1993, the Company and ANTEC completed an initial public
offering of shares of common stock of ANTEC (the "Initial Offering"). Net
proceeds to the Company of approximately $97 million were used to reduce
indebtedness. As a result of the Initial Offering, the Company's ownership of
ANTEC common stock was reduced to 53%.
Liquidation of Signal Capital: Signal Capital has been classified as assets
held for sale since its acquisition in 1988. Subsequent to the purchase, the
Company sold or liquidated portions of the portfolio including $855 million in
1989, $78 million in 1990, $157 million in 1991, $82 million in 1992, $82
million in 1993; $60 million in 1994 and $67 million in 1995. The $35 million
net portfolio at December 31, 1995 represents approximately 2% of the original
acquired Signal Capital portfolio. Proceeds were used to repay indebtedness. The
Company continues to liquidate the acquired Signal Capital portfolio in an
orderly manner that maximizes its value to the Company's shareholders and no
material amounts of new loans or investments are being made.
Other Dispositions: In 1995 the Company sold its investment in Energy for
approximately $72.6 million. In 1994, the Company sold its investment in the
marketable equity securities of Catellus for approximately $47.8 million. In
1994, 1993 and 1992, the Company sold all of its other transportation services
assets. Proceeds from these other dispositions were used to reduce debt or to
purchase the Company's Common Stock.
Cash Flow
Year ended December 31, 1995: Consolidated net cash used by continuing
operating activities was ($38.3) million for the year ended December 31, 1995
compared to ($35.4) million in 1994. Cash used by continuing operating
activities increased due primarily to increased working capital investment
resulting from a 27% increased sales volume and a decrease in net income from
continuing operations partially offset by non-recurring items and marketable
equity security losses in 1994. Consolidated net cash provided by investing
activities was $108.7 million in 1995 versus $381.8 million in 1994.
Consolidated investing activities in 1995
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include approximately $72.6 million of proceeds from the sale of the Company's
investment in Energy. Consolidated investing activities in 1994 include
approximately $82.8 million of proceeds from the Antec Offering and
approximately $60.3 million from the Company's sales of Catellus and Q-TEL. Cash
from discontinued operations, net was $71.2 million in 1995 versus $262.5
million in 1994. Consolidated cash used for net financing activities was ($74.1)
million for the year ended 1995 in comparison to ($363.2) million for the year
ended 1994. 1994 included the paydown of a substantial amount of subordinated
debt. The consolidated net financing activities in 1995 and 1994 also include
$129.2 million and $138.9 million, respectively of treasury stock purchases.
Discontinued operations in 1995 and 1994 include net proceeds from the reduction
of assets at Signal Capital of $67 million and $60 million, respectively and
include net proceeds of $17 million and $10 million, respectively from the sale
of the Company's other transportation assets. Discontinued operations in 1994
include net proceeds of $205.5 million from the sale of the Company's remaining
interest in its rail car leasing business.
Year ended December 31, 1994: Consolidated net cash used by continuing
operating activities was ($35.4) million for the year ended December 31, 1994
compared to ($42.4) million in 1993. Cash used by continuing operating
activities decreased due primarily to significantly improved earnings, after
elimination of non-recurring items and losses on marketable equity securities,
offset somewhat by a $64.5 million net working capital investment by Anixter
used to fund a $400 million increase in sales volume. Consolidated net cash
provided by net investing activities was $381.8 million in 1994 versus $285.7
million in 1993. Consolidated investing activities in 1994 include $262.5
million of cash from discontinued operations, net approximately $82.8 million of
proceeds from the ANTEC Offering, approximately $47.8 million from the sale of
the Company's investment in Catellus and approximately $12.5 million in net
receipts from the liquidation of the Company's equity investment in Q-TEL and
loans due from Q-TEL. Consolidated investing activities in 1993 reflect $156.6
million of proceeds from the ANTEC Initial Offering, $117.4 million from
discontinued operations, net, net receipts from the liquidation of the Company's
equity investment in Q-TEL of $23.7 million and proceeds from the sale of
miscellaneous marketable securities and other investments. Consolidated cash
used for net financing activities was ($363.2) million for the year ended 1994
in comparison to ($234.3) million for the year ended 1993. Both periods include
the paydown of a substantial amount of subordinated debt. The consolidated net
financing activities in 1994 also include $138.9 million of treasury stock
purchases. Cash from discontinued operations, net was $262.5 million in 1994
versus $117.4 million in 1993. Discontinued operations in 1994 include net
proceeds of $205.5 million from the sale of the Company's remaining interest in
its rail car leasing business. Discontinued operations in 1994 and 1993 include
net proceeds from the sale of the Company's other transportation services assets
of $10 million and $46 million, respectively, and cash received from the
reduction of assets at Signal Capital of $60 million and $82 million,
respectively.
Consolidated results in 1993 included ANTEC, while 1995 and 1994
consolidated results present ANTEC as an equity investment. The Company reduced
its interest in ANTEC to approximately 31% and 30% of ANTEC's outstanding shares
in 1995 and 1994, respectively, with a substantial impact on the comparability
of consolidated results. Operating income by the Company's major business
segments in 1995, 1994 and 1993 for Anixter is $99.6 million, $69.8 million and
$45.8 million and in 1993 for ANTEC $22.4 million.
Interest Expense: Consolidated net interest expense and other was $21.6
million, $27.1 million and $58.9 million for the years ended December 31, 1995,
1994 and 1993, respectively. The year ended December 31, 1993 includes $5.0
million of net interest expense and other relating to ANTEC. The Company has
entered into interest rate agreements which effectively fix or cap, for a period
of time, the interest rate on a portion of its floating rate obligations. As a
result, the interest rate on approximately 67% of debt obligations at December
31, 1995 is fixed or capped. The impact of interest rate swaps and caps on
interest expense, net for the years ended December 31, 1995, 1994 and 1993 was
to increase interest expense by approximately $.9 million, $6.0 million and
$10.8 million, respectively.
10
11
Financings
In November 1995, the Company terminated its $115 million senior bank term
loan facility ("Corporate Loan"). Effective with this termination, all existing
financing facilities are maintained by the operating subsidiaries of the
Company.
In March 1995, the Company increased Anixter's secured domestic revolving
line of credit to $425 million, lowered the interest rate spreads, and extended
the expiration to 2000.
At December 31, 1995, $193.6 million was available under the bank revolving
lines of credit at Anixter, of which $88 million was available to the Company
for general corporate purposes.
Debt Maturities and Repayments
In 1994, the Company repaid the entire $250 million Term Loan with proceeds
from the sale of the Company's rail car leasing business and the ANTEC Offering.
The Term Loan was originally obtained in December 1993 and was secured by the
Company's investments in the capital stock of Anixter, ANTEC and Signal Capital
and its investment in marketable securities.
In 1994 and 1993, respectively, the Company retired $221 million and $337
million of the face value of subordinated debt at the Company.
NOL Carryforwards
As of December 31, 1994, the Company had no NOL or ITC carryforwards for
Federal income tax purposes due to the sale in 1994 of the Company's rail car
leasing business which exhausted virtually all of the remaining carryforwards
existing at December 31, 1993. As of December 31, 1993, the Company had
cumulative NOL carryforwards of approximately $345 million that were set to
expire primarily in 1995 through 2007, and ITC carryforwards of approximately
$16 million that were set to expire between 1994 and 2001. Certain of these
carryforwards have not been examined by the IRS and, therefore, may still be
subject to adjustment.
As a result of the 1995 sale of the Energy shares the Company generated a
capital loss of approximately $80 million, most of which will be carried back
and offset against the 1994 gain on the Rail sale. It is anticipated this
carryback will generate cash refunds of $13.6 million in 1996 and will also
cause $9.0 million of the ITC's claimed in 1994 to be available for carryforward
to 1995. Approximately $3.6 million of the ITC's claimed in 1994 may now expire
as a result of the carryback of the Energy loss.
In addition, at December 31, 1995, various foreign subsidiaries of the
Company had aggregate cumulative NOL carryforwards for foreign income tax
purposes of approximately $41 million which are subject to various tax
provisions of each respective country. Approximately half of this amount expires
between 1996 and 2004 and half of which has an indefinite life.
The availability of tax benefits of NOL and ITC carryforwards to reduce the
Company's Federal income tax liability is subject to various limitations under
the Internal Revenue Code.
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. Such restrictions have not had nor are expected to have an adverse
impact on the Company's ability to meet its cash obligations.
CAPITAL EXPENDITURES
Consolidated capital expenditures were $31.3 million, $17.2 million and
$13.4 million for 1995, 1994 and 1993, respectively.
11
12
RESULTS OF OPERATIONS
The Company has experienced increased revenues due to the continued growth
of the market for products and services to support data, voice and video
networking technologies. While the Company continues to believe that its revenue
base will grow and its worldwide expansion will result in both increased
revenues and operating profits, there can be no assurance of future financial
performance. Anixter competes with distributors and manufacturers who sell
products directly or through existing distribution channels to end users or
other resellers. In addition, Anixter's future performance could be subject to
economic downturns and possibly rapid changes in applicable technologies.
In July 1994, the Company sold substantially all its remaining interest in
its fleet of rail cars. Results of operations reflect the rail car leasing
business as discontinued operations.
In May 1994, the Company sold in a public offering 4.0 million shares of
common stock of ANTEC. As a result of the ANTEC Offering, the Company's
ownership of ANTEC common stock was reduced from 53% to approximately 33%. In
addition, in November 1994, ANTEC issued approximately 2.0 million shares of
ANTEC common stock in connection with an acquisition which lowered the Company's
ownership to approximately 30%. In the fourth quarter of 1995 the Company
purchased .4 million shares of ANTEC stock increasing its ownership to 31%. The
Company views ANTEC as a long-term investment, subject to change should future
circumstances warrant. Due to the sale and issuance of ANTEC common stock, all
1995 and 1994 financial information reflects ANTEC as an equity investment. All
prior financial information reflects ANTEC as a consolidated subsidiary of the
Company.
Year ended December 31, 1995: Income from continuing operations was $39.1
million in 1995 compared with $46.2 million in 1994. Results in 1994 include a
$48.2 million pre-tax gain on the ANTEC Offering and a $10.8 million pre-tax
gain relating to ANTEC's issuance of common stock in connection with an
acquisition in November 1994. Results of continuing operations in 1994 include
pre-tax charges associated with the sale and write down of marketable equity
securities of $39.6 million. Net income was $39.1 million and $246.9 million for
the years ended December 31, 1995 and 1994, respectively. Net income from 1995
results includes a ($.3) million after tax loss on the Company's equity interest
in ANTEC, due to the one-time pre-tax reorganization charge of $21.7 million
recorded in the third quarter by ANTEC, versus $7.9 million of income in 1994.
In 1995, the Company also recorded a ($3.0) million loss associated with the
sale of its investment in marketable securities. Income from discontinued
operations in 1994 reflects a $202.0 million after-tax gain from the sale of the
Company's rail car leasing business.
Revenues in 1995 rose 27% to $2.2 billion resulting from the continued
growth of the North American business and the continuing penetration in Europe,
Asia, and Latin America. North America revenues in 1995 increased 23% to $1.7
billion due to strong demand for its communications products and focused
marketing efforts in its electrical wiring systems business. Europe revenues in
1995 increased to $429.1 million from $316.8 million due primarily to continued
expansion and increased market penetration, particularly in networking products,
across all geographic territories. Asia and Latin America revenues increased to
$96.4 million in 1995 due to increased market penetration, strong product demand
and expansion into new territories. Revenues by major markets are presented in
the following table.
YEARS ENDED DECEMBER 31,
-------------------------
1995 1994
-------- --------
(IN MILLIONS)
North America................................................. $1,669.3 $1,360.5
Europe........................................................ 429.1 316.8
Asia and Latin America........................................ 96.4 55.3
-------- --------
$2,194.8 $1,732.6
======== ========
Operating income for 1995 increased 43% to $99.6 million due primarily to
significantly improved volume and earnings in North America. North America
operating income increased 36% to $89.7 million in 1995 due to volume related
economies of scale offset by increased spending for new service and logistics
initiatives. Europe operating income in 1995 increased 167% to $17.6 million
from $6.6 million due primarily to
12
13
continued expansion and volume related economies of scale. Asia and Latin
America operating losses increased to ($7.7) million from ($2.6) million in 1994
due to geographic expansion, new offices and staff increases. Aggregate gross
start-up losses in expansion markets, which have yet to achieve profitable
operations were $12.6 million through 1995. Operating income (loss) by major
markets is presented in the following table.
YEARS ENDED
DECEMBER 31,
---------------
1995 1994
----- -----
(IN MILLIONS)
North America........................................................ $89.7 $65.8
Europe............................................................... 17.6 6.6
Asia and Latin America............................................... (7.7) (2.6)
----- -----
$99.6 $69.8
===== =====
Consolidated net interest expense and other for 1995 declined to $21.6
million from $27.1 million in 1994 due to the extinguishment of high-cost
corporate debt from the monetization of the Company's non-core assets in the
first half of 1994 partially offset by the cost of funding the stock purchase
program and increased working capital borrowings.
The consolidated tax provision for the year ended December 31, 1995
reflects an effective tax rate of 47.4% based on pre-tax book income adjusted
for goodwill amortization and start up losses in certain international
businesses which are not currently deductible and for which no anticipated
future tax benefit has been recorded. The increase in the effective tax rate
from the prior year period is due to the absence in 1995 of certain
non-recurring tax benefits associated with the secondary offering of ANTEC which
occurred in 1994.
Year ended December 31, 1994: Income from continuing operations was $46.2
million in 1994 compared with $28.8 million in 1993. Results in 1994 include a
$48.2 million pre-tax gain on the ANTEC Offering and a $10.8 million pre-tax
gain relating to ANTEC's issuance of common stock in connection with an
acquisition in November 1994. Results of continuing operations in 1993
principally include an $84.5 million pre-tax gain on the ANTEC Initial Offering
and a $6.4 million pre-tax gain on other investments offset by a pre-tax loss of
approximately $19.1 million relating to the liquidation of the Company's equity
investment in Q-TEL. Results of continuing operations in 1994 and 1993 include
pre-tax charges associated with the sale and write-down of marketable equity
securities of $39.6 million and $25.0 million, respectively. Net income (loss)
was $246.9 million and ($1.2) million for the years ended December 31, 1994 and
1993, respectively. Income from discontinued operations in 1994 reflects a
$202.0 million after-tax gain from the sale of the Company's rail car leasing
business. The Company retired or called for redemption a significant amount of
its subordinated and senior debt resulting in an extraordinary net loss of
($16.0) million in 1993.
Revenues in 1994 rose 30% to $1.7 billion resulting from the continued
growth of the North American business and the continuing penetration in Europe,
Asia, and Latin America. North America revenues in 1994 increased 28% to $1.4
billion due to strong demand for its communications business, focused marketing
efforts in its electrical wiring systems business. Europe revenues in 1994
increased to $316.8 million from $244.6 million due primarily to continued
expansion and increased market penetration, particularly in networking products,
across all geographic territories. Asia and Latin America revenues more than
doubled to $55.3 million in 1994 due to increased market penetration, strong
product demand and expansion into new territories. Revenues by major markets are
presented in the following table.
YEARS ENDED
DECEMBER 31,
---------------------
1994 1993
-------- --------
(IN MILLIONS)
North America................................................... $1,360.5 $1,059.6
Europe.......................................................... 316.8 244.6
Asia and Latin America.......................................... 55.3 24.4
-------- --------
$1,732.6 $1,328.6
======== ========
13
14
ANTEC revenues, which were reflected in the consolidated results in 1993,
but not in 1994, increased 29% to $553.5 million in 1994 from $427.6 million in
1993 due to 1994 acquisitions and international growth.
Operating income for 1994 increased 52% to $69.8 million due primarily to
significantly improved volume and earnings in North America. North America
operating income increased 41% to $65.8 million in 1994 due to volume related
economies of scale and termination of the equity participation plan and catalog
business in 1993 somewhat offset by increased spending for new service and
logistics initiatives. Europe operating income in 1994 doubled to $6.6 million
from $3.2 million due primarily to continued expansion and volume related
economies of scale and a positive earnings contribution from Continental Europe.
Asia and Latin America operating loss decreased to ($2.6) million from ($4.1)
million in 1993 due to reduced start-up losses in Asia and Latin America
reaching breakeven volume levels. Aggregate gross start-up losses in expansion
markets, which have yet to achieve profitable operations in their respective
years, were ($6.7) million in 1994 compared to ($8.6) million in 1993. Operating
income (loss) by major markets is presented in the following table.
YEARS ENDED
DECEMBER 31,
---------------
1994 1993
----- -----
(IN MILLIONS)
North America........................................................ $65.8 $46.7
Europe............................................................... 6.6 3.2
Asia and Latin America............................................... (2.6) (4.1)
----- -----
69.8 45.8
ANTEC................................................................ -- 22.4
----- -----
$69.8 $68.2
===== =====
ANTEC operating income which was reflected in the consolidated results in
1993 but not in 1994, increased 74% to $39.0 million from $22.4 million in 1993
due to increased volume.
Consolidated net interest expense and other for 1994 declined to $27.1
million from $58.9 million in 1993 due to the use of proceeds from the continued
monetization of the Company's non-core assets to significantly reduce high-cost
subordinated debt.
Impact of Inflation: Inflation has slowed in recent years and is currently
not an important determinant of Anixter's results of operations due, in part, to
rapid inventory turnover.
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PAGE
----
Report of Independent Auditors...................................... 15
Consolidated Balance Sheets......................................... 16
Consolidated Statements of Operations............................... 17
Consolidated Statements of Cash Flows............................... 18
Consolidated Statements of Stockholders' Equity..................... 19
Notes to the Consolidated Financial Statements...................... 20
Summary Quarterly Financial Information (Unaudited)................. 33
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
14
15
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 31, 1995 and 1994, and the related
consolidated statements of operations, stockholders' equity and cash flows for
each of the three years in the period ended December 31, 1995. 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 generally accepted auditing
standards. 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 31, 1995 and 1994, and the consolidated results
of its operations and its cash flows for each of the three years in the period
ended December 31, 1995, in conformity with generally accepted accounting
principles. 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
February 5, 1996
15
16
ANIXTER INTERNATIONAL INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
DECEMBER 31,
------------------------
1995 1994
---------- ----------
ASSETS
Current assets:
Cash and equivalents................................................ $ 10,500 $ 14,200
Accounts receivable (net of allowances for doubtful accounts of
$9,000 and $6,000, respectively)................................. 400,000 325,900
Inventories, primarily finished goods............................... 364,100 275,800
Other assets........................................................ 6,400 4,900
---------- ----------
Total current assets........................................ 781,000 620,800
Property, primarily equipment, at cost................................ 97,400 68,600
Accumulated depreciation.............................................. (48,200) (35,200)
---------- ----------
Net property................................................ 49,200 33,400
Goodwill (net of accumulated amortization of $51,500 and $45,500,
respectively)....................................................... 183,000 187,900
Assets held for sale, net............................................. 42,800 105,400
Marketable equity securities available-for-sale (cost of $75,600 in
1994)............................................................... -- 64,500
Investment in ANTEC................................................... 73,700 69,500
Other assets.......................................................... 55,000 29,400
---------- ----------
$1,184,700 $1,110,900
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................... $ 232,400 $ 186,200
Accrued expenses.................................................... 99,500 80,300
---------- ----------
Total current liabilities................................... 331,900 266,500
Income taxes, net, primarily deferred................................. 29,100 600
Other liabilities..................................................... 11,200 11,200
Long-term debt........................................................ 333,700 280,500
---------- ----------
Total liabilities........................................... 705,900 558,800
Minority interests.................................................... 6,400 8,200
Common stock repurchase commitment.................................... 23,400 --
Stockholders' equity:
Common stock--$1.00 par value, 100,000,000 shares authorized,
52,488,090 and 29,426,000 shares issued and outstanding,
respectively..................................................... 52,500 29,400
Capital surplus..................................................... 99,900 262,500
Retained earnings................................................... 308,400 269,300
Cumulative translation adjustments.................................. (11,800) (10,100)
---------- ----------
449,000 551,100
Unrealized losses on marketable equity securities available-for-sale
(net of deferred income tax benefit)............................. -- (7,200)
---------- ----------
Total stockholders' equity.................................. 449,000 543,900
---------- ----------
$1,184,700 $1,110,900
========== ==========
See accompanying notes to the consolidated financial statements.
16
17
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED DECEMBER 31,
-----------------------------------------
1995 1994 1993
----------- ----------- -----------
Revenues--Anixter..................................... $ 2,194,800 $ 1,732,600 $ 1,328,600
--ANTEC..................................... -- -- 427,600
----------- ----------- -----------
2,194,800 1,732,600 1,756,200
Cost of operations:
Cost of sales....................................... (1,641,100) (1,298,300) (1,324,500)
Operating expenses.................................. (448,100) (358,500) (354,700)
Amortization of goodwill............................ (6,000) (6,000) (8,800)
----------- ----------- -----------
(2,095,200) (1,662,800) (1,688,000)
----------- ----------- -----------
Operating income...................................... 99,600 69,800 68,200
Other (expenses) income:
Interest expense and other.......................... (24,800) (33,000) (72,200)
Interest income and other........................... 3,200 5,900 13,300
Equity in income (loss) of ANTEC.................... (600) 7,900 --
Non-recurring items, net............................ -- 59,000 71,800
Marketable equity securities losses, principally
write-downs...................................... (3,000) (39,600) (25,000)
----------- ----------- -----------
Income from continuing operations
before income taxes................................. 74,400 70,000 56,100
Income tax expense.................................... (35,300) (23,800) (27,300)
----------- ----------- -----------
Income from continuing operations..................... 39,100 46,200 28,800
Income (loss) from discontinued operations
(net of related taxes).............................. -- 200,700 (14,000)
----------- ----------- -----------
Income before extraordinary item...................... 39,100 246,900 14,800
Extraordinary item (net of related taxes)............. -- -- (16,000)
----------- ----------- -----------
Net income (loss)..................................... 39,100 246,900 (1,200)
Preferred stock dividends and amortization............ -- -- (3,100)
----------- ----------- -----------
Income (loss) applicable to common stock.............. $ 39,100 $ 246,900 $ (4,300)
=========== =========== ===========
Income (loss) per common and common equivalent share:
Continuing operations............................... $.71 $ .72 $ .43
Before extraordinary item........................... $.71 $3.85 $ .20
Net income (loss)................................... $.71 $3.85 $(.07)
See accompanying notes to the consolidated financial statements.
17
18
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-------------------------------------
1995 1994 1993
--------- --------- ---------
Operating activities:
Income from continuing operations..................... $ 39,100 $ 46,200 $ 28,800
Adjustments to reconcile income from continuing
operations to net cash used by continuing operating
activities:
Depreciation..................................... 15,700 10,000 10,800
Amortization of goodwill......................... 6,000 6,000 8,800
Deferred income tax expense...................... 17,000 20,400 20,500
Non-recurring items, net......................... -- (59,000) (71,800)
Marketable equity securities losses, principally
write-downs................................... 3,000 39,600 25,000
Non-cash financing expense....................... 800 3,900 8,100
Other, net....................................... 3,500 (800) 7,300
Changes in assets and liabilities:
Accounts receivable........................... (75,700) (99,100) (50,100)
Inventories................................... (88,300) (35,400) (55,700)
Accounts payable and accrued expenses......... 61,600 51,800 34,800
Other, net.................................... (21,000) (19,000) (8,900)
--------- --------- ---------
Net cash used by continuing operating
activities............................... (38,300) (35,400) (42,400)
--------- --------- ---------
Investing activities:
Sales of securities................................... 72,600 47,800 3,700
Purchases of property................................. (31,300) (17,200) (13,400)
Sale of and net receipts from ANTEC................... -- 82,800 156,600
Receipts from Q-TEL................................... -- 12,500 23,700
Proceeds from sales of discontinued operations, net... 71,200 262,500 117,400
Other, net............................................ (3,800) (6,600) (2,300)
--------- --------- ---------
Net cash provided by investing activities... 108,700 381,800 285,700
--------- --------- ---------
Net cash provided before financing activities........... 70,400 346,400 243,300
Financing activities:
Borrowings............................................ 836,400 858,600 915,500
Reductions in borrowings.............................. (786,300) (840,700) (817,400)
Reductions in subordinated indebtedness............... -- (246,600) (344,500)
Proceeds from issuance of common stock................ 8,300 8,600 21,100
Purchases of treasury stock........................... (129,200) (138,900) (300)
Other, net............................................ (3,300) (4,200) (8,700)
--------- --------- ---------
Net cash used in financing activities....... (74,100) (363,200) (234,300)
--------- --------- ---------
Cash provided (used).................................... (3,700) (16,800) 9,000
Cash and equivalents at beginning of year............... 14,200 31,000 22,000
--------- --------- ---------
Cash and equivalents at end of year..................... $ 10,500 $ 14,200 $ 31,000
========= ========= =========
See accompanying notes to the consolidated financial statements.
18
19
ANIXTER INTERNATIONAL INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
CUMULATIVE UNREALIZED LOSSES
PREFERRED COMMON CAPITAL RETAINED TRANSLATION ON MARKETABLE
STOCK STOCK SURPLUS EARNINGS ADJUSTMENTS EQUITY SECURITIES TOTAL
--------- ------- --------- -------- ----------- ----------------- ---------
Balance at December 31, 1992.... $ 83,600 $28,100 $ 281,200 $ 26,700 $ (3,200) $ (49,100) $ 367,300
Net loss........................ -- -- -- (1,200) -- -- (1,200)
Issuance of common stock and
other, net.................... -- 1,100 23,400 -- -- -- 24,500
Foreign currency translation
adjustments................... -- -- -- -- (6,700) -- (6,700)
Preferred stock dividends and
other......................... 200 -- -- (3,100) -- -- (2,900)
Conversion of preferred stock... (83,800) 3,800 78,900 -- -- -- (1,100)
Net change in unrealized losses
on marketable equity
securities
available-for-sale............ -- -- -- -- -- 25,400 25,400
-------- ------- --------- -------- -------- -------- ---------
Balance at December 31, 1993.... -- 33,000 383,500 22,400 (9,900) (23,700) 405,300
Net income...................... -- -- -- 246,900 -- -- 246,900
Issuance of common stock and
other, net.................... -- 500 13,800 -- -- -- 14,300
Foreign currency translation
adjustments................... -- -- -- -- (200) -- (200)
Purchases and retirement of
treasury stock................ -- (4,100) (134,800) -- -- -- (138,900)
Net change in unrealized losses
on marketable equity
securities
available-for-sale............ -- -- -- -- -- 16,500 16,500
-------- ------- --------- -------- -------- -------- ---------
Balance at December 31, 1994.... -- 29,400 262,500 269,300 (10,100) (7,200) 543,900
Net income...................... -- -- -- 39,100 -- -- 39,100
Issuance of common stock and
other, net.................... -- 500 12,600 -- -- -- 13,100
Foreign currency translation
adjustments................... -- -- -- -- (1,700) -- (1,700)
Purchases and retirement of
treasury stock................ -- (4,200) (125,000) -- -- -- (129,200)
Common stock repurchase
commitment.................... -- -- (23,400) -- -- -- (23,400)
Two-for-one stock split......... -- 26,800 (26,800) -- -- -- --
Net change in unrealized losses
on marketable equity
securities
available-for-sale............ -- -- -- -- -- 7,200 7,200
-------- ------- --------- -------- -------- -------- ---------
Balance at December 31, 1995.... $ -- $52,500 $ 99,900 $308,400 $ (11,800) $ -- $ 449,000
======== ======= ========= ======== ======== ======== =========
See accompanying notes to the consolidated financial statements.
19
20
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization: Anixter International Inc. (the "Company"), formerly known as
Itel Corporation, which was incorporated in Delaware in 1967, is engaged in
providing networking and cabling solutions for network infrastructure
requirements through Anixter Inc. and its subsidiaries (collectively "Anixter").
As of December 31, 1995 the Company also owned approximately 31% of ANTEC
Corporation and its subsidiaries (collectively "ANTEC"), a broadband
communications technology company.
Consolidation: The consolidated financial statements include the accounts
of Anixter International Inc. and its majority-owned subsidiaries (collectively
"the Company") after elimination of intercompany transactions. 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.
Reclassifications: Certain 1994 and prior information has been reclassified
to conform to the 1995 presentation.
Cash and equivalents: The Company considers all highly liquid investments
with a purchased maturity of three months or less to be cash equivalents. The
carrying amount of cash and equivalents approximates fair value because of the
short maturity of those instruments.
Inventories: Inventories are valued principally at the lower of average,
approximating first-in, first-out, cost or market.
Depreciation: The Company provides for depreciation of property principally
on the straight-line basis over various useful lives including 3 to 10 years for
equipment and the term of the lease for leasehold improvements.
Goodwill: Goodwill relates to the excess of cost over the fair value of the
net tangible assets of businesses acquired. The Company at each balance sheet
date evaluates, for recognition of potential impairment, its recorded goodwill
against the current and undiscounted expected future operating income before
goodwill amortization expense of the entities to which goodwill relates.
Goodwill is amortized on a straight-line basis over 40 years.
Marketable equity securities available-for-sale: Marketable equity
securities available-for-sale are reflected in the balance sheet at fair value
as of the balance sheet date. The difference between cost and market is
reflected in stockholders' equity net of deferred tax benefit. Realized gains
(losses) on dispositions of securities are determined using the average cost
method. Realized pre-tax gains (losses), before related interest carrying costs,
were ($3.0), ($5.2) million and $.3 million in 1995, 1994 and 1993,
respectively. Aggregate unrealized pre-tax losses on marketable equity
securities available-for-sale amounted to $11.1 million at December 31, 1994
(see Note 6).
Investment in ANTEC: Dilution of the Company's ownership position in ANTEC
which results from the issuance of shares of common stock by ANTEC is treated as
if an equivalent percentage of ownership had been disposed of by the Company. To
the extent ANTEC issues shares of common stock at amounts per share in excess of
or less than the Company's average per share carrying value, gains or losses
from such changes in ownership are recorded in income when such issuances occur.
In May 1994, the Company sold 4.0 million shares of ANTEC common stock in a
public offering (the "ANTEC Offering"). As a result of the ANTEC Offering, the
Company's ownership of ANTEC common stock was reduced from 53% to 33%. In
addition, in November 1994, ANTEC issued approximately 2.0 million shares of
ANTEC common stock in connection with an acquisition which lowered the Company's
ownership to approximately 30%. In the fourth quarter of 1995 the Company
purchased .4 million additional shares of ANTEC stock increasing the ownership
to 31%. The Company reflects ANTEC as an equity investment in the 1995 and 1994
consolidated financial statements. As of December 31, 1995, the market value of
the Company's investment in ANTEC was $128 million.
20
21
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Interest rate agreements: The Company has entered into interest rate
agreements which effectively fix or cap, for a period of time, the interest rate
on a portion of its floating rate obligations. As a result, the interest rate on
approximately 67% and 45%, of debt obligations at December 31, 1995 and 1994,
respectively, is fixed or capped. At December 31, 1995 and 1994, the Company had
interest rate cap agreements outstanding with notional amounts aggregating $175
million and $125 million, respectively. These interest rate cap agreements
effectively entitle the Company to receive from the banks the amount by which
the Corporation's interest payments on $125 million of its floating rate debt
exceed 6.0% and 6 3/4%, respectively at December 31, 1995 and 1994 and on $50
million exceeding 7.5% in 1995. The $2.3 million and $1.6 million of premiums
paid in 1995 and 1994, respectively, for these interest rate cap agreements are
included in other assets and are being amortized to interest expense over the
life of the respective interest rate cap agreements which expire in 1996 through
1998. Payments received as a result of the interest rate cap agreements are
recognized as a reduction of interest expense. The carrying value of these
interest rate cap agreements is $1.0 million and $1.1 million at December 31,
1995 and 1994, respectively. At December 31, 1995, the Company had an interest
rate swap agreement outstanding with a notional amount of $50 million. This swap
agreement obligates the Company to pay a fixed rate of 5.98% through June 1998.
In 1995 the Company entered into three forward rate agreements with a notional
amount aggregating $100 million. These forward rate agreements obligate the
Company to pay a fixed rate of approximately 6.11% for four years beginning in
July 1996. In 1995 the Company also entered into one forward rate interest
collar agreement with a notional amount of $50 million. This interest rate
agreement entitles the Company to receive from the bank the amount by which
floating rate interest payments exceed 6.50% and for the Company to pay the bank
the difference between 6.30% and the floating rate when interest rates fall
below 5.30%. This interest rate collar starts in January 1996 and matures in
January 2002. The fair value of all of the Company's interest rate agreements at
December 31, 1995 and 1994 is ($4.0) million and $3.6 million, respectively. The
fair value of interest rate agreements is the estimated amount that the Company
would pay to enter into the interest rate agreements at the reporting date,
taking into account current interest rates. The impact of interest rate
agreements on interest expense, net for the years ended December 31, 1995, 1994
and 1993 was to increase interest expense by approximately $.9 million, $6.0
million and $10.8 million, respectively. The Company does not enter into
interest rate transactions for speculative purposes.
Foreign currency forward contracts: The Company has purchased short-term
foreign currency forward contracts 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 1995, 1994 and 1993. The
forward contracts are revalued at current foreign exchange rates, with the
changes in valuation reflected directly in income. At December 31, 1995, the
Company had approximately $61.9 million in foreign currency forward contracts
outstanding.
Revenue recognition: Sales and related cost of sales are recognized
primarily upon shipment of products.
Advertising and sales promotion: Advertising and sales promotion costs are
expensed as incurred.
Income taxes: Provisions for income taxes include deferred taxes resulting
from temporary differences in determining income for financial and tax purposes
using the liability method. Such temporary differences result primarily from
differences in the carrying value of assets and liabilities.
Income (loss) per common share: Income (loss) per share amounts are based
upon net income, and in 1993, after deducting preferred dividends earned and the
amortization of preferred stock discounts. Weighted average common and common
equivalent shares were 55,410,000, 64,090,000 and 60,264,000 for 1995, 1994 and
1993, respectively. All share and per share data other than amounts displayed on
the balance sheets and consolidated statements of stockholders' equity have been
adjusted to reflect the two-for-one stock split in the form of a stock dividend,
paid October 25, 1995.
21
22
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 2. SUPPLEMENTAL CASH FLOW INFORMATION
Continuing operations of the Company paid interest, including that portion
allocated to discontinued operations, of approximately $24.0 million, $52.4
million and $96.7 million for the years ended December 31, 1995, 1994 and 1993,
respectively. Approximately $24.6 million, $27.8 million and $7.0 million was
paid for income taxes for the years ended December 31, 1995, 1994 and 1993,
respectively.
NOTE 3. DISCONTINUED AND ASSETS HELD FOR SALE
The finance business of Signal Capital Corporation ("Signal Capital") has
been included as assets held for sale since acquisition in 1988. Subsequent to
the purchase, the Company sold or liquidated portions of the portfolio including
$855 million in 1989, $78 million in 1990, $157 million in 1991, $82 million in
1992, $82 million in 1993, $60 million in 1994 and $67 million in 1995. The $35
million net portfolio at December 31, 1995 represents approximately 2% of the
original acquired Signal Capital portfolio. Proceeds were used to repay
indebtedness and repurchase shares of the Company's common stock. The Company
continues to liquidate the acquired Signal Capital portfolio in an orderly
manner that maximizes its value to shareholders and no material amounts of new
loans or investments are being made by Signal Capital.
On July 25, 1994, the Company sold 99.5% of its remaining interests in its
rail cars for $35.0 million in cash and $169.5 million in notes receivable for
an aggregate purchase price of $204.5 million. The buyer prepaid all the notes
and related interest in October 1994. The Company's remaining interest in the
rail cars was sold in October 1994 for cash of approximately $1.0 million. The
net gain on the sale of the Company's entire interest in rail cars was
approximately $202.0 million. The total cash proceeds of $205.5 million were
used to: (1) repay the $150 million Corporate senior bank term loan ("Term
Loan"); (2) pay the related income tax liability of approximately $25 million
caused by the sale which resulted after utilization of the Company's net
operating loss ("NOL") and investment tax credit ("ITC") carryforwards; and (3)
other general corporate purposes including the purchase of the Company's common
stock.
22
23
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The results of operations of the rail car leasing business, the other
transportation services segment, other previously sold businesses and the
results of the acquired Signal Capital portfolio have been included in
discontinued operations net of allocated corporate interest expense. Allocated
corporate interest expense amounted to $6.3 million and $19.0 million for the
years ended December 31, 1994 and 1993, respectively. No interest was allocated
in 1995. Summarized financial results of discontinued operations were as
follows:
YEARS ENDED DECEMBER 31,
---------------------------
1995 1994 1993
----- ------ ------
(IN MILLIONS)
Revenues:
Signal Capital............................................. $ 9.0 $ 2.0 $ 21.3
Rail car leasing........................................... -- 89.3 153.0
Other discontinued operations, principally transportation
services................................................ -- .6 49.4
------ ------ ------
$ 9.0 $ 91.9 $223.7
====== ====== ======
Operating income:
Signal Capital............................................. $ 3.0 $ 4.2 $ 8.0
Rail car leasing........................................... -- 52.3 89.7
Other discontinued operations, principally transportation
services................................................ (3.0) .5 4.9
------ ------ ------
$ -- $ 57.0 $102.6
====== ====== ======
Loss from discontinued operations before gain on sales (net
of related taxes).......................................... $ -- $ (1.3) $(14.0)
Gain on sales (net of related taxes)......................... -- 202.0 --
------ ------ ------
Income (loss) from discontinued operations (net of related
tax benefits of $101.1 million and $5.9 million in 1994 and
1993, respectively.)....................................... $ -- $200.7 $(14.0)
====== ====== ======
The composition of remaining assets held for sale at December 31, 1995 and
1994 consisted primarily of finance receivables.
NOTE 4. NON-RECURRING ITEMS
Non-recurring items in 1994 reflect a $48.2 million pre-tax gain on the
ANTEC Offering relating to the May 1994 public offering of shares of common
stock of ANTEC. The Company sold 4.0 million shares of ANTEC common stock at
$21.75 per share. Net proceeds from the ANTEC Offering were approximately $83
million. Non-recurring items in 1994 also reflect a $10.8 million pre-tax gain
relating to ANTEC's issuance of approximately 2.0 million shares of ANTEC common
stock in connection with an acquisition in November 1994. The Company provided
income taxes relating to the recognized pre-tax book gains.
Non-recurring items in 1993 reflect an $84.5 million pre-tax gain on the
1993 initial public offering of shares of common stock of ANTEC (the "Initial
Offering"). The Company provided income taxes relating to the recognized pre-tax
book gain. The Company and ANTEC sold approximately 4.0 million and 5.4 million
shares of ANTEC common stock, respectively, at $18 per share. Net proceeds from
the Initial Offering to the Company, after considering the redemption by ANTEC
of preferred shares owned by the Company, were approximately $97 million.
Non-recurring items in 1993 also reflect a $6.4 million pre-tax gain on other
investments.
The non-recurring pre-tax gains in 1993 were offset by a pre-tax loss of
approximately $19.1 million relating to the liquidation of the Company's equity
investment in Q-TEL. The remaining written-down equity investment and loans due
from Q-TEL were liquidated during the latter half of 1993 and early 1994.
23
24
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANTEC
The Company has an approximately 31% and 30% ownership interest in ANTEC at
December 31, 1995 and 1994, respectively and accounts for ANTEC under the equity
method. The following summarizes the financial information for ANTEC:
ANTEC CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31,
-----------------------------
1995 1994
----------- -----------
(IN MILLIONS)
Assets:
Current assets.......................................... $ 232.2 $ 234.2
Property, net........................................... 25.9 22.4
Goodwill................................................ 171.8 167.4
Other assets............................................ 27.0 14.0
------ ------
$ 456.9 $ 438.0
====== ======
Liabilities and Stockholders' Equity:
Current liabilities..................................... $ 101.8 $ 83.1
Long-term debt.......................................... 117.9 125.2
Stockholders' equity.................................... 237.2 229.7
------ ------
$ 456.9 $ 438.0
====== ======
ANTEC CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
-----------------------------
1995 1994
----------- -----------
(IN MILLIONS)
Revenues.................................................. $ 658.2 $ 553.5
====== ======
Operating income.......................................... $ 9.7 $ 39.0
====== ======
Income (loss) before income tax expense................... $ (1.3) $ 34.5
====== ======
Net income (loss)......................................... $ (3.6) $ 18.9
====== ======
Operating income in 1995 includes a $21.7 million one-time reorganization
charge recorded by ANTEC in the third quarter.
NOTE 6. MARKETABLE EQUITY SECURITIES AVAILABLE-FOR-SALE
In 1994 and 1993, the Company wrote down the value of its investments in
marketable equity securities, including Catellus which was sold in 1994, by
$34.4 million and $25.0 million, respectively. The Company has reduced the
pre-tax unrealized losses on marketable equity securities available-for-sale
included in stockholders' equity by $3.9 million at December 31, 1994 to reflect
a deferred tax benefit due to the Company's current ability to either (a)
carryback all December 31, 1994 unrealized capital losses to previously
generated
24
25
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
capital gains or (b) generate capital gains by the future sale of capital assets
to offset December 31, 1994 unrealized capital losses.
NOTE 7. EXTRAORDINARY ITEMS
In 1993, the Company retired or called for redemption of the senior and
subordinated debt resulting in pre-tax extraordinary losses of ($26.2) million.
NOTE 8. ACCRUED EXPENSES
Accrued expenses consists of the following:
DECEMBER 31,
----------------
1995 1994
----- -----
(IN MILLIONS)
Interest.......................................................... $ 5.6 $ .7
Wages, salaries and related....................................... 44.0 39.8
Taxes other than income........................................... 12.5 9.2
Other............................................................. 37.4 30.6
----- -----
$99.5 $80.3
===== =====
NOTE 9. DEBT
Debt is summarized below:
DECEMBER 31,
------------------
1995 1994
------ ------
(IN MILLIONS)
Bank revolving lines of credit.................................. $309.4 $260.5
Other........................................................... 24.3 20.0
------ ------
Total debt................................................. $333.7 $280.5
====== ======
Anixter has various secured revolving bank lines of credit worldwide which
provide for up to $503.0 million of borrowings secured by certain assets. At
December 31, 1995, $309.4 million was borrowed and $193.6 million was available
under the bank revolving lines of credit at Anixter, of which $88 million was
available for general corporate purposes. These lines of credit reduce or mature
at various dates from 1998 through 2000. The $425.0 million domestic revolving
line of credit matures in 2000. Floating and fixed interest rate options, based
on the prime or LIBOR rate, are available under these facilities and the average
interest rate at December 31, 1995 was 6.8%. Commitment fees of 1/8% to 1/2% are
payable on the unused portion of these revolving lines of credit. The commitment
fees paid were insignificant for all years.
Certain debt agreements entered into by the Company's subsidiaries contain
various restrictions including restrictions on payments to the Company. Amounts
available under these debt agreements are secured by certain assets of the
subsidiaries aggregating approximately $730.8 million at December 31, 1995. The
Company has guaranteed certain debt and other obligations of Anixter. Restricted
net assets of subsidiaries were approximately $312 million at December 31, 1995.
Aggregate annual maturities of debt are as follows: 1996--none; 1997--none;
1998--$53.8 million; 1999--none; 2000--$255.6; $24.3 million thereafter.
25
26
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The carrying amount of the Company's debt approximates fair value because
the underlying instruments are at variable rates which reprice frequently.
NOTE 10. INCOME TAXES
The Company and its U.S. subsidiaries file their Federal income tax return
on a consolidated basis. As of December 31, 1994, the Company had no NOL or ITC
carryforwards for Federal income tax purposes due to the sale of the Company's
rail car leasing business which exhausted virtually all carryforwards. These
carryforwards have not been examined by the Internal Revenue Service ("IRS")
and, therefore, may still be subject to adjustment. The availability of tax
benefits of NOL and ITC carryforwards to reduce the Company's Federal income tax
liability is subject to various limitations under the Internal Revenue Code of
1986, as amended (the "Code"). In addition, at December 31, 1995, various
foreign subsidiaries of the Company had aggregate cumulative NOL carryforwards
for foreign income tax purposes of approximately $41 million which are subject
to various provisions of each respective country. Approximately half of this
amount expires between 1996 and 2004 and half of which has an indefinite life.
As a result of the 1995 sale of the Santa Fe Energy Resources, Inc.
("Energy") shares the Company generated a capital loss of approximately $80
million, most of which will be carried back and offset against the 1994 gain on
the Rail sale. It is anticipated this carryback will generate cash refunds of
$13.6 million in 1996 and will also cause $9.0 million of the ITC's claimed in
1994 to be available for carryforward to 1995. Approximately $3.6 million of the
ITC's claimed in 1994 may now expire as a result of the carryback of the Energy
loss.
Domestic income from continuing operations before income taxes was $63.3
million, $70.6 million and $68.9 million for the years ended December 31, 1995,
1994 and 1993, respectively. Foreign income (loss) from continuing operations
before income taxes was $11.1 million, ($.6) million and ($12.8) million for the
years ended December 31, 1995, 1994 and 1993, respectively.
Deferred income taxes reflect the impact of temporary differences between
amounts of assets and liabilities for financial reporting purposes and such
amounts as measured by tax laws. Deferred income taxes also result from
differences between the fair value of assets acquired in business combinations
accounted for as purchases and their tax bases.
26
27
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Significant components of the Company's deferred tax liabilities and assets
were as follows:
DECEMBER 31,
----------------
1995 1994
------ ------
(IN MILLIONS)
Deferred tax liabilities:
Tax over book depreciation................................. $ 5.4 $ 9.4
Other deferred tax liabilities............................. 76.4 74.7
------ ------
Total deferred tax liabilities.......................... 81.8 84.1
Deferred tax assets:
Foreign NOL carryforwards.................................. 15.8 15.5
Unrealized losses on investments........................... -- 30.0
Other deferred tax assets.................................. 42.1 49.3
------ ------
Total deferred tax assets............................... 57.9 94.8
Valuation allowance on deferred tax assets................. (13.5) (12.5)
------ ------
Net deferred tax assets................................. 44.4 82.3
------ ------
Net deferred tax liability.............................. $ 37.4 $ 1.8
====== ======
At December 31, 1995, 1994 and 1993, consolidated valuation allowances for
deferred tax assets were $13.5 million, $12.5 million and $30.1 million,
respectively, including valuation allowances on foreign NOLs.
Income tax (expense) benefit relating to continuing operations was
comprised of:
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Current--Foreign................................. $ (8.5) $ (.1) $ .4
State................................... (2.2) (3.3) (4.1)
Federal................................. (7.6) -- (3.1)
------ ------ ------
(18.3) (3.4) (6.8)
Deferred--Foreign................................ (.7) -- --
State.................................. (3.1) (.9) .9
Federal................................ (13.2) (19.5) (21.4)
------ ------ ------
(17.0) (20.4) (20.5)
------ ------ ------
$(35.3) $(23.8) $(27.3)
====== ====== ======
27
28
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Reconciliations of income tax expense in continuing operations to the
statutory corporate Federal tax rate of 35% were as follows:
YEARS ENDED DECEMBER 31,
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Statutory tax expense.............................. $(26.0) $(24.5) $(19.6)
Effects of--
Amortization of goodwill......................... (1.8) (2.1) (3.1)
Losses on foreign operations..................... (4.0) 3.0 (3.6)
State income taxes, net of Federal benefit....... (3.5) (2.7) (2.1)
Impact of Revenue Reconciliation Act of 1993..... -- -- (2.7)
Adjustment to prior years tax accruals........... -- -- 2.4
Equity accounting, net........................... -- 4.5 --
Other, net....................................... -- (2.0) 1.4
------ ------ ------
$(35.3) $(23.8) $(27.3)
====== ====== ======
NOTE 11. CONTINGENCIES AND LITIGATION
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 12. LEASE COMMITMENTS
Substantially all of the Company's office and warehouse facilities and
equipment are leased under operating leases. Certain of these leases are
long-term operating leases and expire at various dates through 2007. Minimum
lease commitments under operating leases at December 31, 1995 are as follows:
1996 - $29.4 million; 1997 - $23.4 million; 1998 - $16.3 million; 1999 - $10.4
million; 2000 - $7.5 million; beyond 2000 - $25.6 million. Total rental expense
was $30.0 million, $23.3 million and $21.5 million in 1995, 1994 and 1993,
respectively.
NOTE 13. 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. Retirement benefits are provided
based on compensation as defined in the plans. The Company's policy is to fund
these plans as required by ERISA and the Code.
Assets of the Company's plans at fair value were $45.8 million and $36.7
million at December 31, 1995 and 1994, respectively. Projected benefit
obligations of the Company's plans were $58.3 million and $46.1 million at
December 31, 1995 and 1994, respectively. The accumulated benefit obligations of
the Company's plans were $45.1 million and $35.7 million at December 31, 1995
and 1994, respectively. The weighted-average assumed discount rate used to
measure the projected benefit obligation was 7.25% and 7.8% at December 31, 1995
and 1994, respectively. Pension expense, including the cost of 401(k) plans, for
1995, 1994 and 1993 was insignificant. The Company's liability for
post-retirement benefits other than pensions is insignificant.
28
29
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 14. PREFERRED STOCK AND COMMON STOCK
The Company has authority to issue 15 million shares of Preferred Stock,
par value $1.00 per share. In 1993, the outstanding Preferred Stock was
converted into approximately 3.8 million shares of Common Stock. On October 25,
1995 the Company paid a dividend in the form of a two-for-one stock split to
shareholders of record on September 22, 1995 which resulted in the issuance of
26,783,000 shares of stock. At December 31, 1995, 1994 and 1993, 52,490,000,
29,430,000 and 33,010,000 shares of Common Stock, respectively, were issued and
outstanding. In connection with the Company's employee stock plans described
below, 3,284,556 shares were reserved for issuance at December 31, 1995.
Stock options and stock grants--
The Company has Employee Stock Incentive Plans ("ESIP") which at their
inception authorized an aggregate of 11.4 million stock options or restricted
grants. In addition, the Company has a Director Stock Option Plan ("DSOP")
authorizing an aggregate of .4 million stock options. Substantially all options
and grants under these plans have been at fair market value or higher. One-third
of the options granted become exercisable each year after the year of grant
(except in the case of director options which vest fully in six months) and the
options expire ten years after the date of grant.
Additionally, 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 exercise price is the lower of 85% of the fair market value of the
Common Stock at the date of grant or at the later exercise date (currently one
year).
Under the ESIP, DSOP and ESPP, total options currently exercisable at
December 31, 1995 and 1994 were 1,025,732 and 829,254, respectively.
The following table summarizes the 1995 activity under the ESIP, DSOP and
ESPP.
ESIP DSOP ESPP EXERCISE
OPTIONS OPTIONS OPTIONS PRICE
--------- ------- -------- --------------
Balance at December 31, 1994.................... 1,252,922 500,000 151,244 $ 4.75-$16.65
Grants during 1995.............................. 3,000 100,000 180,544 $16.58-$20.69
Exercised....................................... (392,296) (90,000) (137,680) $4.75-$16.65
Expirations and terminations.................... -- -- (13,564) $13.34
--------- ------- ------ --------------
Balance at December 31, 1995.................... 863,626 510,000 180,544 $ 5.19-$20.69
========= ======= ====== ==============
Total stock options exercised for the years ended December 31, 1994 and
1993 were 1,899,834 and 2,268,156, respectively. The purchase price per share
for all stock options exercised ranged from $5.19 to $12.33 in 1994 and $5.19 to
$13.32 in 1993.
Stock option plans of Anixter--
In 1994 and 1995, Anixter granted to key employees of Anixter options to
purchase stock of Anixter. Substantially all options have been at fair market
value. These options vest immediately to four years and terminate one to ten
years from the date of grant. At December 31, 1995, 770,553 options were
exercisable. At
29
30
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
December 31, 1995, the Company owned 99% of the approximately 33.7 million
shares of outstanding Anixter common stock. The following table summarizes the
1995 activity:
ANIXTER EXERCISE
OPTIONS PRICE
--------- --------------
Balance at December 31, 1994..................................... 1,867,627 $ 9.00-$11.40
Grants during 1995............................................... 419,100 $14.50
Exercised........................................................ (118,076) $ 9.00-$11.40
Expirations and terminations..................................... (88,775) $ 9.00-$11.40
--------- -------------
Balance at December 31, 1995..................................... 2,079,876 $ 9.00-$14.50
========= =============
Warrants--
The Company has issued warrants to directors, which are currently
exercisable, to purchase 510,000 shares of Common Stock at prices ranging from
$5.07 to $20.69 per share expiring between 1996 and the year 2005.
Common Stock--
The Company purchased 7,275,000, 8,178,000 and 20,000 shares of Common
Stock in 1995, 1994 and 1993, respectively. All treasury stock was retired.
Common Stock Repurchase Commitment--
On June 27, 1995 the Company agreed to purchase up to 3.8 million shares of
its common stock from Sam Zell, the Company's Chairman, and other related
stockholders. The first 2.5 million shares were purchased on July 10, 1995 at
$18 per share. The remaining 1.3 million shares may be purchased no later than
December 31, 1996 for approximately $19 per share. The purchase of the remaining
shares has been reflected as Common Stock repurchase commitment in the
consolidated financial statements.
30
31
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
NOTE 15. BUSINESS SEGMENTS
The Company in 1995 and 1994 is engaged in one principal area of business:
providing networking and cabling solutions for business information and network
infrastructure requirements. Prior to the 1994 and 1993 ANTEC Offerings, the
Company was also engaged in the development and distribution of products used in
the cable television industry (ANTEC). The Company obtains and coordinates
financing, legal and other related services, certain of which are rebilled to
subsidiaries.
Information for the years ended December 31, 1995, 1994 and 1993 regarding
the Company's major business segments is presented in the following table. ANTEC
is reflected as an equity investment in 1995 and 1994.
ANIXTER ANTEC OTHER(A) TOTAL
-------- ------ -------- --------
(IN MILLIONS)
Revenues:
1995................................................... $2,194.8 $ -- $ -- $2,194.8
1994................................................... 1,732.6 -- -- 1,732.6
1993................................................... 1,328.6 427.6 -- 1,756.2
Operating income:
1995................................................... 99.6 -- -- 99.6
1994................................................... 69.8 -- -- 69.8
1993................................................... 45.8 22.4 -- 68.2
Identifiable assets:
1995................................................... 1,015.9 -- 168.8 1,184.7
1994................................................... 839.6 -- 271.3 1,110.9
1993................................................... 718.3 239.0 423.3 1,380.6
Depreciation and amortization expense:
1995................................................... 21.7 -- -- 21.7
1994................................................... 16.0 -- -- 16.0
1993................................................... 14.8 4.8 -- 19.6
Capital expenditures:
1995................................................... 31.3 -- -- 31.3
1994................................................... 17.2 -- -- 17.2
1993................................................... 11.4 2.0 -- 13.4
- ---------------
(a) Identifiable assets are principally comprised of marketable equity
securities, discontinued rail car leasing assets, other discontinued and
assets held for sale, and in 1995 and 1994 the Company's investment in
ANTEC.
31
32
ANIXTER INTERNATIONAL INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The classification of the Company's 1995, 1994 and 1993 foreign operations
in the following table includes all revenues and related items of the Company's
non-U.S. operations. Export sales are insignificant.
WORLDWIDE (NON-U.S.)
OPERATIONS
----------------------------
1995 1994 1993
------ ------ ------
(IN MILLIONS)
Revenues:
Europe...................................... $429.1 $316.8 $244.6
Other....................................... 285.8 190.8 142.0
------ ------ ------
$714.9 $507.6 $386.6
====== ====== ======
Operating income (loss):
Europe...................................... $ 17.6 $ 6.6 $ 3.2
Other....................................... $ 4.5 3.6 (4.6)
------ ------ ------
$ 22.1 $ 10.2 $ (1.4)
====== ====== ======
Identifiable assets:
Europe...................................... $193.6 $147.2 $119.7
Other....................................... 136.3 101.2 90.0
------ ------ ------
$329.9 $248.4 $209.7
====== ====== ======
Foreign operations' revenues were 33%, 29% and 22% of consolidated revenues
in 1995, 1994 and 1993, respectively. Foreign operations' operating income
(loss) were negatively impacted for all years due to economies of scale and
start-up losses in expansion markets. Aggregate start-up losses in expansion
markets were ($9.1) million, ($6.7) million and ($8.6) million in 1995, 1994 and
1993, respectively, as Anixter continues to penetrate new markets in Europe,
Asia and Latin America.
32
33
SUMMARY QUARTERLY FINANCIAL INFORMATION (UNAUDITED)
The following tables summarize the Company's quarterly financial
information.
QUARTERS ENDED
----------------------------------------------------------------------------
MARCH 31, JUNE 30, SEPTEMBER 30, DECEMBER 31,
---------------- ---------------- ---------------- ----------------
1995 1994 1995 1994 1995 1994 1995 1994
------ ------ ------ ------ ------ ------ ------ ------
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
Revenues........................... $502.9 $362.8 $542.0 $422.9 $571.1 $456.3 $578.8 $490.6
Operating income................... $ 23.8 $ 13.7 $ 25.7 $ 16.7 $ 26.3 $ 19.9 $ 23.8 $ 19.5
Income from continuing operations
before income taxes(a)........... $ 20.7 $ 3.6 $ 17.6 $ 26.8 $ 16.7 $ 17.0 $ 19.4 $ 22.6
Income from continuing
operations....................... 11.1 2.7 8.9 16.8 9.1 10.7 10.0 16.0
Net income(b)...................... 11.1 $ 1.8 8.9 $ 16.4 9.1 $215.7 10.0 $ 13.0
====== ====== ====== ====== ====== ====== ====== ======
Income per common and common
equivalent share:
Continuing operations............ $ .19 $ .04 $ .16 $ .26 $ .17 $ .17 $ .19 $ .26
Net income....................... $ .19 $ .03 $ .16 $ .25 $ .17 $ 3.44 $ .19 $ .22
====== ====== ====== ====== ====== ====== ====== ======
Income per common and common
equivalent share--assuming full
dilution:
Continuing operations............ $ .19 $ .04 $ .16 $ .26 $ .17 $ .17 $ .19 $ .26
Net income....................... $ .19 $ .03 $ .16 $ .25 $ .17 $ 3.44 $ .19 $ .22
====== ====== ====== ====== ====== ====== ====== ======
- ---------------
(a) Continuing operations in the second quarter of 1995 include a $3.0 million
pre-tax loss associated with the sale of the Company's investment in Energy.
Continuing operations in the second quarter of 1994 include a $48.2 million
pre-tax gain on the ANTEC Offering. Continuing operations in the fourth
quarter of 1994 include a $10.8 million pre-tax gain relating to ANTEC's
issuance of common stock in connection with an acquisition in November 1994.
Continuing operations in the second quarter of 1994 includes pre-tax charges
of $34.4 million associated with the write-down of the Company's marketable
equity securities. Continuing operations in the first quarter of 1994
includes pre-tax charges of $5.2 million associated with the loss on sale of
the Company's investment in Catellus.
(b) Discontinued operations in the third quarter of 1994 include a $202.0
million pre-tax gain on the sale of the rail car leasing business (see Note
3 of the Notes to the Consolidated Financial Statements).
33
34
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT.
See Registrant's Proxy Statement for the 1996 Annual Meeting of
Stockholders--"Election of Directors."
ITEM 11. EXECUTIVE COMPENSATION.
See Registrant's Proxy Statement for the 1996 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 1996 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 1996 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 Item 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.
ITEM 14(A)1 AND 2. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES.
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.................................................. 15
Consolidated Balance Sheets at December 31, 1995 and 1994....................... 16
Consolidated Statements of Operations for the years ended December 31, 1995,
1994 and 1993................................................................. 17
Consolidated Statements of Cash Flows for the years ended December 31, 1995,
1994 and 1993................................................................. 18
Consolidated Statements of Stockholders' Equity for the years ended December 31,
1995, 1994 and 1993........................................................... 19
Notes to the Consolidated Financial Statements.................................. 20
34
35
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.
Consolidated Schedules for the years ended December 31, 1995, 1994 and
1993, except as noted:
PAGE
----
I. Condensed financial information of Registrant............................... 39
II. Valuation and qualifying accounts and reserves.............................. 42
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.
ITEM 14(A)3. EXHIBIT LIST. Each management contract or compensation plan
required to be filed as an exhibit is identified by an asterisk(*).
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NUMBER
--------- -------------------------------------------------------------------------
(3) Articles of Incorporation and by-laws.
3.1 Restated Certificate of Incorporation of Anixter International
Inc., filed with Secretary of State of Delaware on September 29,
1987 and Certificate of Amendment thereof, filed with Secretary of
Delaware on August 31, 1995........................................
3.2 By-laws of Anixter International Inc. as amended through November
9, 1995............................................................
(4) Instruments defining the rights of security holders, including indentures.+
4.1 (a) Amended and Restated Credit Agreement, dated March 11, 1994,
among Anixter Inc., Chemical Bank, as Agent, and the other banks
named therein. (Incorporated by reference from Itel Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1993, Exhibit 4.2.) ...............................................
(b) Amendment, dated March 24, 1995, to Amended and Restated Credit
Agreement, dated March 11, 1994, among Anixter Inc., Chemical Bank,
as Agent, and the other banks named therein. (Incorporated by
reference from Itel Corporation's Quarterly Report on Form 10-Q for
the quarter ended March 31, 1995, Exhibit 4.1.)....................
(10) Material contracts.+
10.1 Form of the Company's Tax Allocation Agreement, dated January 1,
1987. (Incorporated by reference from Itel Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987,
Exhibit 10.1.).....................................................
10.2* Company's Management Incentive Plan, dated February 9, 1995.
(Incorporated by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, Exhibit
10.2.).............................................................
10.3* 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.).....................................................
10.4* Warrant Agreement, dated December 5, 1985, between the Company and
Harold Haynes, Jerome Jacobson, Melvyn N. Klein and James D. Woods,
individually. (Incorporated by reference from Itel Corporation's
Annual Report on Form 10-K for the fiscal year ended December 31,
1985, Exhibit 10.14.)..............................................
35
36
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NUMBER
--------- -------------------------------------------------------------------------
10.5* Warrant Agreement, dated June 24, 1986, between the Company and
William A. Buzick, Jr., F. Philip Handy, Harold Haynes, Jerome
Jacobson, Melvyn N. Klein and James D. Woods, individually.
(Incorporated by reference from Itel Corporation's Registration
Statement on Form S-1, Registration Number 33-7000, filed July 3,
1986, Exhibit 10.17.)..............................................
10.6 * Supplemental Pension Agreement, dated November 17, 1986, between
the Company and Rod F. Dammeyer. (Incorporated by reference from
Itel Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1986, Exhibit 10.14.)...........................
10.7 * (a) Company's Supplemental Retirement Benefits Plan, dated January
1, 1987. (Incorporated by reference from Itel Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1987,
Exhibit 10.16.)....................................................
* (b) Amendment No. 1, dated May 17, 1989 and effective as of January
1, 1989, to the Company's Supplemental Retirement Benefits Plan.
(Incorporated by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1989, Exhibit
10.9(b).)..........................................................
* (c) Amendment No. 2, dated October 15, 1992, to the Company's
Supplemental Retirement Benefits Plan (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, Exhibit 10.7(c).)....................
* (d) Amendment No. 3, dated February 25, 1993, to the Company's
Supplemental Retirement Benefits Plan. (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, Exhibit 10.7(d).)....................
10.8 * 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.).....................................................
10.9 * Warrant Agreement, dated September 10, 1987, between the Company
and William A. Buzick, Jr., F. Philip Handy, Harold Haynes, Jerome
Jacobson, Melvyn N. Klein and James D. Woods, individually.
(Incorporated by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1988, Exhibit
10.15.)............................................................
10.10* Warrant Agreement, dated July 14, 1988, between the Company and
William A. Buzick, Jr., F. Philip Handy, Harold Haynes, Jerome
Jacobson, Melvyn N. Klein, Robert H. Lurie, John R. Petty and James
D. Woods, individually. (Incorporated by reference from Itel
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1989, Exhibit 10.19.).................................
10.11* Executive Supplemental Life Plan, dated June 15, 1989, for the
Company and participating subsidiaries. (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1989, Exhibit 10.20.)......................
10.12* (a) Company's Supplemental Executive Retirement Plan, dated January
18, 1990. (Incorporated by reference from Itel Corporation's Annual
Report on Form 10-K for the fiscal year ended December 31, 1989,
Exhibit 10.23.)....................................................
* (b) Amendment No. 1 dated February 25, 1993, to Company's
Supplemental Executive Retirement Plan. (Incorporated by reference
from Itel Corporation's Annual Report on Form 10-K for the fiscal
year ended December 31, 1992, Exhibit 10.13(b).)...................
36
37
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NUMBER
--------- -------------------------------------------------------------------------
10.13* Warrant Agreement, dated July 13, 1989, between Company and Bernard
F. Brennan, William A. Buzick, Jr., F. Philip Handy, Harold Haynes,
Jerome Jacobson, Melvyn N. Klein, Robert H. Lurie, John R. Petty
and James D. Woods, individually. (Incorporated by reference from
Itel Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1990, Exhibit 10.21.)...........................
10.14* 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.)......................
10.15* Warrant Agreement, dated August 22, 1990, between the Company and
Bernard F. Brennan, William A. Buzick, Jr., F. Philip Handy, Harold
Haynes, Jerome Jacobson, Melvyn Klein, John R. Petty and James D.
Woods, individually. (Incorporated by reference from Itel
Corporation's Annual Report on Form 10-K for the fiscal year ended
December 31, 1991, Exhibit 10.25.).................................
10.16* Letter Agreement, dated December 2, 1991, with John Pigott.
(Incorporated by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1991, Exhibit
10.26.)............................................................
10.17* (a) Agreement, dated February 9, 1995, with Rod F. Dammeyer
(Incorporated by reference from Itel Corporation's Annual Report on
Form 10-K for the fiscal year ended December 31, 1994, Exhibit
10.18(d).).........................................................
(b) Amended and Restated Agreement dated February 9, 1995 with Rod
F. Dammeyer........................................................
10.18* Agreement, dated November 1, 1992, with James E. Knox, as
amended............................................................
10.19* 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.)...........................
10.20 Tax Allocation Agreement with ANTEC Corporation. (Incorporated by
reference from Amendment No. 2 to ANTEC Corporation's Registration
Statement on Form S-1, Registration Number 33-65488, filed August
20, 1993, Exhibit 10.5.)...........................................
10.21 Registration Rights Agreement with ANTEC Corporation. (Incorporated
by reference from Amendment No. 3 to ANTEC Corporation's
Registration Statement on Form S-1, Registration Number 33-65488,
filed September 13, 1993, Exhibit 10.9.)...........................
10.22 Directors & Officers Insurance Agreement with ANTEC Corporation.
(Incorporated by reference to ANTEC Corporation's Registration
Statement on Form S-1, Registration Number 33-65488, filed July 2,
1993, Exhibit 10.8.)...............................................
10.23 Purchase Agreement dated as of June 23, 1994 among the Company,
Itel Rail Holdings Corporation and SCAP Associates, L.L.C.
(Incorporated by reference from Itel Corporation's Current Report
on Form 8-K, November 7, 1994, Exhibit 2.1)........................
10.24* Form of Indemnity Agreement with all directors and officers........
10.25 Agreement, dated June 27, 1995, among Riverside Partners, SZRL
Investments, Equity Holdings and Company. (Incorporated by
reference from Riverside Partners' Amendment No. 20 to its Schedule
13D, filed for an event on June 27, 1995, relating to the shares of
Itel Corporation, Exhibit 1.)......................................
10.26* Anixter International Inc. 1996 Stock Incentive Plan...............
10.27* Form of Stock Option Grant.........................................
10.28* Anixter Excess Benefit Plan........................................
37
38
EXHIBIT PAGE
NO. DESCRIPTION OF EXHIBIT NUMBER
--------- -------------------------------------------------------------------------
10.29* Forms of Anixter Stock Option, Stockholder Agreement and Stock
Option Plan........................................................
10.30* Anixter Deferred Compensation Plan.................................
(21) Subsidiaries of the Registrant.
21.1 List of Subsidiaries of the Registrant.............................
(23) Consents of experts and counsel.
23.1 Consent of Ernst & Young LLP.......................................
(24) Power of attorney.
24.1 Power of Attorney executed by Lord James Blyth, Bernard F. Brennan,
Rod F. Dammeyer, Robert E. Fowler, Jr., F. Philip Handy, Melvyn N.
Klein, John R. Petty, Sheli Rosenberg, Stuart M. Sloan, Thomas C.
Theobald and Samuel Zell...........................................
(27) Financial data schedule.
27.1 Financial data schedule............................................
(28) Additional exhibits.
This Annual Report on Form 10-K includes the following Financial Statement
Schedules:
ANIXTER INTERNATIONAL INC. AND SUBSIDIARIES--
FINANCIAL SCHEDULES
PAGE
Schedule I-- Condensed financial information of Registrant........................ 39
Schedule II-- Valuation and qualifying accounts and reserves....................... 42
All other schedules are omitted because they are not required or are not
applicable, or the required information is included in the consolidated
financial statements or notes thereto.
- ---------------
+ 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.
For the purposes of complying with the amendments to the rules governing
Form S-8 (effective July 13, 1990) under the Securities Act of 1933, as amended,
the Registrant hereby undertakes as follows, which undertaking shall be
incorporated by reference into the Registrant's Registration Statement on Form
S-8 Nos. 2-93173 (filed September 30, 1987), 33-13486 (filed April 15, 1987),
33-21656 (filed May 3, 1988) and 33-60676 (filed April 5, 1993):
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provision, or otherwise, the
Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933, and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
38
39
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
BALANCE SHEETS
(IN THOUSANDS)
DECEMBER 31,
---------------------
1995 1994
-------- --------
ASSETS
Current assets:
Cash and equivalents................................................ $ 1,000 $ 2,600
Accounts receivable................................................. 400 700
Amounts currently due from affiliates, net.......................... 61,200 98,500
Other assets........................................................ 500 200
-------- --------
Total current assets................................... 63,100 102,000
Investment in ANTEC................................................... 73,700 69,500
Investment in and advances to subsidiaries............................ 380,700 361,000
Marketable equity securities available-for-sale....................... -- 64,500
Other assets.......................................................... 18,000 1,700
-------- --------
$535,500 $598,700
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued expenses, due currently.................. $ 15,600 $ 41,900
Income taxes, net, primarily deferred................................. 46,100 11,700
Other liabilities..................................................... 1,400 1,200
-------- --------
Total liabilities...................................... 63,100 54,800
Common stock repurchase commitment.................................... 23,400 --
Stockholders' equity:
Common stock........................................................ 52,500 29,400
Capital surplus..................................................... 99,900 262,500
Retained earnings................................................... 308,400 269,300
Cumulative translation adjustments.................................. (11,800) (10,100)
-------- --------
449,000 551,100
Unrealized losses on marketable equity securities available for sale
(net of related deferred income tax benefit)..................... -- (7,200)
-------- --------
Total stockholders' equity............................. 449,000 543,900
-------- --------
$535,500 $598,700
======== ========
39
40
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
STATEMENTS OF OPERATIONS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-------------------------------
1995 1994 1993
------- -------- --------
Operating loss................................................. $(3,500) $ (4,700) $ (9,300)
Other (expenses) income:
Corporate interest expense................................... (1,300) (14,900) (65,200)
Interest and investment income, including intercompany....... 14,900 6,200 15,600
Gain on ANTEC Offerings...................................... -- 59,000 84,500
Marketable equity securities losses, principally
write-downs............................................... (3,000) (39,600) (25,000)
-------- -------- --------
10,600 10,700 9,900
-------- -------- --------
Income from operations before income taxes and equity in
earnings of subsidiaries..................................... 7,100 6,000 600
Income tax benefit............................................. 6,500 9,100 3,300
Equity in earnings of subsidiaries............................. 25,500 231,800 10,900
-------- -------- --------
Income before extraordinary items.............................. 39,100 246,900 14,800
Extraordinary items (net of related income taxes).............. -- -- (16,000)
-------- -------- --------
Net income (loss).............................................. $39,100 $246,900 $ (1,200)
======== ======== ========
40
41
ANIXTER INTERNATIONAL INC.
SCHEDULE I--CONDENSED FINANCIAL INFORMATION OF REGISTRANT
ANIXTER INTERNATIONAL INC. (PARENT COMPANY)
STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
YEARS ENDED DECEMBER 31,
-----------------------------------
1995 1994 1993
--------- --------- ---------
Operating activities:
Income before extraordinary items........................ $ 39,100 $ 246,900 $ 14,800
Adjustments to reconcile income before extraordinary
items to net cash used by operating activities:
Depreciation.......................................... -- -- 400
Income tax benefit.................................... (6,500) (9,100) (3,300)
Gain on ANTEC common stock issuances.................. -- (59,000) (84,500)
Marketable equity securities losses, principally
write-downs......................................... 3,000 39,600 25,000
Equity in earnings of subsidiaries.................... (25,500) (231,800) (10,900)
Non-cash financing expense............................ (100) 1,900 4,200
Change in other operating items....................... (6,600) (18,100) (27,000)
--------- --------- ---------
Net cash provided (used) by operating
activities..................................... 3,400 (29,600) (81,300)
Investing activities:
Sales of securities...................................... 72,600 47,800 3,700
Proceeds from ANTEC Offerings............................ -- 82,800 67,000
Redemption of ANTEC preferred stock...................... -- -- 30,000
Net dividends from subsidiaries.......................... 8,200 219,700 150,300
Loans from subsidiaries, net............................. 37,300 108,000 95,200
Other, net............................................... (4,000) -- 13,700
--------- --------- ---------
Net cash provided by investing activities........ 114,100 458,300 359,900
--------- --------- ---------
Net cash provided before financing activities.............. 117,500 428,700 278,600
Financing activities:
Borrowings............................................... 50,000 200,000 93,400
Reductions in borrowings................................. (50,000) (496,600) (391,300)
Purchases of treasury stock.............................. (129,200) (138,900) (300)
Preferred stock dividend payments........................ -- -- (2,900)
Proceeds from issuance of common stock................... 10,100 8,600 21,100
Other, net............................................... -- -- (1,400)
--------- --------- ---------
Net cash used in financing activities............ (119,100) (426,900) (281,400)
--------- --------- ---------
Cash provided (used)....................................... (1,600) 1,800 (2,800)
Cash and equivalents at beginning of year.................. 2,600 800 3,600
--------- --------- ---------
Cash and equivalents at end of year........................ $ 1,000 $ 2,600 $ 800
========= ========= =========
41
42
ANIXTER INTERNATIONAL INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
(IN THOUSANDS)
ADDITIONS
------------------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING OF CHARGED TO OTHER END OF
DESCRIPTION THE PERIOD INCOME ACCOUNTS DEDUCTIONS THE PERIOD
- ----------------------------------------- ------------ ---------- ---------- ---------- ----------
Year ended December 31, 1995:
Allowance for doubtful accounts........ $ 6,000 $ 5,800 $ 1,200 $ (4,000) $ 9,000
Unrealized losses on marketable equity
securities available-for-sale(b).... $ 11,100 -- -- (11,100) $ --
Allowance for deferred tax asset....... $ 12,500 1,000 -- -- $ 13,500
Year ended December 31, 1994:
Allowance for doubtful accounts(a)..... $ 6,200 5,100 600 (5,900) $ 6,000
Unrealized losses on marketable equity
securities available-for-sale(c).... $ 36,600 -- 8,900 (34,400) $ 11,100
Allowance for deferred tax asset....... $ 30,100 (17,600) -- -- $ 12,500
Year ended December 31, 1993:
Allowance for doubtful accounts........ $ 4,600 5,500 2,300 (6,200) $ 6,200
Unrealized losses on marketable equity
securities available-for-sale(c).... $ 74,400 -- (12,800) (25,000) $ 36,600
Allowance for deferred tax asset....... $ 33,100 -- -- (3,000) $ 30,100
- ---------------
(a) The deconsolidation of ANTEC resulted in a $1.4 million deduction in
allowance for doubtful accounts in 1994.
(b) In 1995 the Company sold its marketable equity securities resulting in a $3
million loss.
(c) In 1994 and 1993, the Company wrote down its investment in marketable equity
securities by $34.4 million and $25.0 million, respectively.
42
43
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
CHICAGO, STATE OF ILLINOIS, ON THE 14TH DAY OF MARCH, 1996.
ANIXTER INTERNATIONAL INC.
JAMES E. KNOX
----------------------------------------
James E. Knox
Senior Vice President, General Counsel
and Secretary
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.
Chief Executive Officer
and President
ROD F. DAMMEYER (Principal Executive Officer) March 14, 1996
- ---------------------------------------------
Rod F. Dammeyer
Senior Vice President--Finance
DENNIS J. LETHAM (Chief Financial Officer) March 14, 1996
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Dennis J. Letham
Vice President--Controller
JAMES M. FROISLAND (Chief Accounting Officer) March 14, 1996
- ---------------------------------------------
James M. Froisland
LORD JAMES BLYTH* Director March 14, 1996
- ---------------------------------------------
Lord James Blyth
BERNARD F. BRENNAN* Director March 14, 1996
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Bernard F. Brennan
ROD F. DAMMEYER Director March 14, 1996
- ---------------------------------------------
Rod F. Dammeyer
ROBERT E. FOWLER, JR.* Director March 14, 1996
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Robert E. Fowler, Jr.
F. PHILIP HANDY* Director March 14, 1996
- ---------------------------------------------
F. Philip Handy
MELVYN N. KLEIN* Director March 14, 1996
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Melvyn N. Klein
JOHN R. PETTY* Director March 14, 1996
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John R. Petty
SHELI Z. ROSENBERG* Director March 14, 1996
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Sheli Rosenberg
STUART M. SLOAN* Director March 14, 1996
- ---------------------------------------------
Stuart M. Sloan
THOMAS C. THEOBALD* Director March 14, 1996
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Thomas C. Theobald
SAMUEL ZELL* Director March 14, 1996
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Samuel Zell
*BY JAMES E. KNOX
------------------------------------------
James E. Knox (Attorney in fact)
James E. Knox, as attorney in fact for each person indicated.
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