SECURITIES AND EXCHANGE COMMISSION



Delaware		94-1658138
(State or other jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

(Address and telephone number of principal executive offices in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or ~~15(d)~~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 o

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of ~~“large~~"large accelerated filer,~~” “accelerated~~" "accelerated filer,~~” “smaller~~" "smaller reporting ~~company”~~company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large ~~Accelerated Filer~~accelerated filer	x		Accelerated ~~Filer~~filer	o
~~Non-Accelerated Filer~~Non-accelerated filer	o	~~(Do not check if a smaller reporting company)~~	Smaller ~~Reporting Company~~reporting company	o
			Emerging ~~Growth Company~~growth company	o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section ~~13(a)~~13 (a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

At ~~October 17, 2018, 33,481,846~~April 15, 2019, 33,678,825 shares of registrant’s Common Stock, $1 par value, were outstanding.

This report may contain various “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements can be identified by the use of forward-looking terminology such as “believes”, “expects”, “intends”, “anticipates”, “contemplates”, “estimates”, “plans”, “projects”, “should”, “may”, “will” or the negative thereof or other variations thereon or comparable terminology indicating our expectations or beliefs concerning future events. We caution that such statements are qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements, a number of which are identified in this report. Other factors could also cause actual results to differ materially from expected results included in these statements. These factors include but are not limited to general economic conditions, the level of customer demand particularly for capital projects in the markets we serve, changes in supplier or customer relationships, risks associated with nonconforming products and services, political, economic or currency risks related to non-U.S. operations, new or changed competitors, risks associated with inventory and accounts receivable, copper and commodity price fluctuations, risks associated with substantial debt and restrictions contained in financial and operating covenants in our debt agreements, capital project volumes, risks associated with pension expense and funding, compliance with laws and regulations, the impact of ~~regulation and regulatory,~~ investigative and legal proceedings and legal compliance risks, information security risks, disruption or failure of information systems, disruptions to logistics capability or supply chain, the impact and the uncertainty concerning the timing and terms of the withdrawal by the United Kingdom from the European Union, unanticipated changes in our tax provision and tax liabilities related to the enactment of the Tax Cuts and Jobs Act, and risks associated with the integration of acquired companies including, but not limited to, the risk that the acquisitions may not provide us with the synergies or other benefits that were anticipated.

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL ~~STATEMENTS.~~

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

See accompanying notes to the Condensed Consolidated Financial Statements.

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	(Unaudited)						(Unaudited)
	September 28, 2018			December 29, 2017			March 29, 2019			December 28, 2018
(In millions, except share and per share amounts)
ASSETS
Current assets:
Cash and cash equivalents	$	69.9		$	116.0		$	77.0		$	81.0
Accounts receivable, net	1,637.5			1,434.2			1,593.7			1,600.0
Inventories	1,363.6			1,238.7			1,443.8			1,440.4
Other current assets	45.6			44.9			43.6			50.6
Total current assets	3,116.6			2,833.8			3,158.1			3,172.0
Property and equipment, at cost	404.2			376.9			404.2			398.4
Accumulated depreciation	(242.1		)	(222.6		)	(242.5		)	(235.1		)
Property and equipment, net	162.1			154.3			161.7			163.3
Operating leases							234.2			—
Goodwill	833.4			778.1			834.9			832.0
Intangible assets, net	405.0			378.8			385.3			392.9
Other assets	108.5			107.2			95.5			92.9
Total assets	$	4,625.6		$	4,252.2		$	4,869.7		$	4,653.1
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	1,298.7		$	1,081.6		$	1,164.0		$	1,320.0
Accrued expenses	303.6			269.2			278.9			309.0
Current portion of long-term debt	349.3			—
Current operating lease obligations							58.7			—
Total current liabilities	1,951.6			1,350.8			1,501.6			1,629.0
Long-term debt	914.4			1,247.9			1,368.3			1,252.7
Operating lease obligations							181.4			—
Other liabilities	195.5			194.5			197.7			201.0
Total liabilities	3,061.5			2,793.2			3,249.0			3,082.7
Stockholders’ equity:
Common stock - $1.00 par value, 100,000,000 shares authorized, 33,853,031 and 33,657,466 shares issued and outstanding at September 28, 2018 and December 29, 2017, respectively	33.9			33.7
Common stock - $1.00 par value, 100,000,000 shares authorized, 34,071,813 and 33,826,704 shares issued and outstanding at March 29, 2019 and December 28, 2018, respectively							34.1			33.9
Capital surplus	290.0			278.7			296.6			292.7
Retained earnings	1,471.4			1,356.9			1,560.0			1,513.2
Accumulated other comprehensive loss:
Foreign currency translation	(146.0		)	(123.2		)	(161.7		)	(168.6		)
Unrecognized pension liability, net	(85.2		)	(87.1		)	(108.3		)	(100.8		)
Total accumulated other comprehensive loss	(231.2		)	(210.3		)	(270.0		)	(269.4		)
Total stockholders’ equity	1,564.1			1,459.0			1,620.7			1,570.4
Total liabilities and stockholders’ equity	$	4,625.6		$	4,252.2		$	4,869.7		$	4,653.1

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine Months Ended						Three Months Ended
	September 28, 2018			September 29, 2017			March 29, 2019			March 30, 2018
(In millions)
Operating activities:
Net income	$	114.5		$	108.6		$	39.1		$	32.1
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation	23.3			21.5			9.3			7.4
Amortization of intangible assets	28.6			27.1			8.8			9.3
Stock-based compensation	15.0			13.3			4.1			4.6
Deferred income taxes	0.1			1.3			0.1			0.4
Accretion of debt discount	1.8			1.7
Amortization of deferred financing costs	1.2			1.6
Pension plan contributions	(5.8		)	(14.8		)	(2.1		)	(2.3		)
Pension plan expenses	3.2			7.9			1.4			1.2
Changes in current assets and liabilities, net	(74.8		)	(53.9		)	(175.8		)	(124.9		)
Other, net	(4.3		)	(4.2		)	0.9			1.0
Net cash provided by operating activities	102.8			110.1
Net cash used in operating activities							(114.2		)	(71.2		)
Investing activities:
Acquisitions of businesses, net of cash acquired	(149.9		)	—
Capital expenditures, net	(32.0		)	(30.9		)	(5.9		)	(10.9		)
Other	9.1			—			—			4.1
Net cash used in investing activities	(172.8		)	(30.9		)	(5.9		)	(6.8		)
Financing activities:
Proceeds from borrowings	2,036.8			1,324.2			1,241.5			531.3
Repayments of borrowings	(2,020.5		)	(1,370.9		)	(1,127.4		)	(493.0		)
Repayments of Canadian term loan	—			(70.9		)
Proceeds from stock options exercised	1.5			3.5			1.0			0.8
Other, net	—			(0.2		)	(0.2		)	—
Net cash provided by (used in) financing activities	17.8			(114.3		)
Net cash provided by financing activities							114.9			39.1
Decrease in cash and cash equivalents	(52.2		)	(35.1		)	(5.2		)	(38.9		)
Effect of exchange rate changes on cash balances	6.1			(3.1		)	1.2			1.6
Cash and cash equivalents at beginning of period	116.0			115.1			81.0			116.0
Cash and cash equivalents at end of period	$	69.9		$	76.9		$	77.0		$	78.7

ANIXTER INTERNATIONAL INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)



	Three Months Ended March 29, 2019
	Common Stock			Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss
	Shares	Amount		Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss			Total
(In millions)
Balance at December 28, 2018	33.9	$	33.9	$	292.7		$	1,513.2	$	(269.4	)	$	1,570.4
Net income	—	—		—			39.1		—			39.1
Other comprehensive income:
Foreign currency translation	—	—		—			—		6.9			6.9
Changes in unrealized pension cost, net of tax	—	—		—			—		0.2			0.2
Reclassification of tax effects ^(a)	—	—		—			7.7		(7.7		)	—
Stock-based compensation	—	—		4.1			—		—			4.1
Issuance of common stock and related taxes	0.2	0.2		(0.2		)	—		—			—
Balance at March 29, 2019	34.1	$	34.1	$	296.6		$	1,560.0	$	(270.0	)	$	1,620.7

(a)

The Company reclassified $7.7 million of tax benefits from "Accumulated other comprehensive loss" to "Retained earnings" for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act in accordance with the adoption of Accounting Standards Update 2018-02, "Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" in the first quarter of 2019.



	Three Months Ended March 30, 2018
	Common Stock			Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss
	Shares	Amount		Capital Surplus			Retained Earnings		Accumulated Other Comprehensive Loss			Total
(In millions)
Balance at December 29, 2017	33.7	$	33.7	$	278.7		$	1,356.9	$	(210.3	)	$	1,459.0
Net income	—	—		—			32.1		—			32.1
Other comprehensive (loss) income:
Foreign currency translation	—	—		—			—		(3.5		)	(3.5		)
Changes in unrealized pension cost, net of tax	—	—		—			—		0.5			0.5
Stock-based compensation	—	—		4.6			—		—			4.6
Issuance of common stock and related taxes	0.1	0.1		(0.9		)	—		—			(0.8		)
Balance at March 30, 2018	33.8	$	33.8	$	282.4		$	1,389.0	$	(213.3	)	$	1,491.9

See accompanying notes to the Condensed Consolidated Financial Statements.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation: The unaudited interim Condensed Consolidated Financial Statements of Anixter International Inc. and its subsidiaries (collectively referred to as "Anixter" or the "Company"), sometimes referred to in this Quarterly Report on Form 10-Q as "we", "our", "us", or "ourselves" have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. Certain prior period amounts have been reclassified to conform to the current year presentation.

These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Anixter's Annual Report on Form 10-K for the year ended December ~~29, 2017~~28, 2018 ("~~2017~~2018 Form 10-K"). The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation of the Condensed Consolidated Financial Statements for the periods shown.

The Company maintains its financial records on the basis of a fiscal year ending on the Friday nearest December 31, with the fiscal quarters spanning thirteen weeks, with the first quarter ending on the Friday of the first thirteen-week period. The ~~third~~first quarter of fiscal year 2019 ended on March 29, 2019, and the first quarter of fiscal year 2018 ended on ~~September 28, 2018, and the third quarter of fiscal year 2017 ended on September 29, 2017.~~March 30, 2018.

Recently issued and adopted accounting pronouncements: In ~~May 2014,~~February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2014-09,~~ ~~Revenue from Contracts with Customers~~, and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively. The core principle of this new revenue recognition guidance is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance defines a five-step process to achieve this core principle. The new guidance also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The new guidance provides for two transition methods, a full retrospective approach and a modified retrospective approach. Anixter adopted the new revenue recognition guidance on December 30, 2017 utilizing the modified retrospective method of adoption for contracts not completed at the adoption date, and determined there were no changes required to its reported revenues as a result of the adoption. The Company has enhanced its disclosures of revenue to comply with the new guidance.

~~In January 2017, the FASB issued ASU 2017-01,~~ ~~Business Combinations: Clarifying the Definition of a Business~~, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2018. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.

~~In March 2017, the FASB issued ASU 2017-07,~~ ~~Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires entities to report the service cost component in the same line item as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Upon adoption, ASU 2017-07 required changes to the presentation of the income statement to be applied retrospectively. The Company adopted this standard effective the first quarter of fiscal year 2018. Service costs are recognized within "Operating expenses" in the Condensed Consolidated Statement of Comprehensive Income. All other components of net benefit costs are recorded in "Other, net" in the Company's Condensed Consolidated Statements of Comprehensive Income. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

~~In May 2017, the FASB issued ASU 2017-09,~~ ~~Compensation - Stock Compensation: Scope of Modification Accounting~~, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 was applied prospectively to awards modified on or after the adoption date. The standard was effective for Anixter’s financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2018. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.

~~Recently issued accounting pronouncements not yet adopted:~~ ~~In February 2016, the FASB issued ASU~~ 2016-02, Leases, which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. ~~The Company has established an implementation team and is implementing a new lease accounting information system.~~ In July 2018, the FASB issued additional authoritative guidance providing companies with an optional ~~prospective~~ transition method to ~~apply~~use the ~~provisions~~effective date of ~~this guidance.~~ASU 2016-02 as the date of initial application of transition and not restate comparative periods. The Company ~~will adopt~~adopted the standard in the first quarter of 2019 using this optional transition method. The Company elected the package of practical expedients, which allows it to carry forward historical lease classification, the practical expedient to not separate non-lease components from lease components, and ~~elect this transition method~~the short-term lease accounting policy election as defined in ASU 2016-02. The Company implemented internal controls and a lease accounting information system to ~~apply~~enable the preparation of financial information on adoption. The standard ~~prospectively. While the Company is currently evaluating the impact of adoption of this ASU, the adoption is expected to result in~~had a material ~~increase in~~impact on the ~~assets and liabilities recorded~~Company's Condensed Consolidated Balance Sheets, but did not have an impact on the Condensed Consolidated ~~Balance Sheets.~~Statements of Comprehensive Income. The most significant impact was the recognition of right-of-use assets of $244.1 million and lease liabilities of $249.6 million for operating leases, while accounting for finance leases remained substantially unchanged.

In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the "Act") that are stranded in accumulated other comprehensive income. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2019 and elected to reclassify $7.7 million of tax benefits from "Accumulated other comprehensive loss" to "Retained earnings" within its Condensed Consolidated Financial Statements.

In June 2018, the FASB issued ASU 2018-07, Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting, which will expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2019. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Recently issued accounting pronouncements not yet adopted: In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of this ASU, but it is not expected to have a material effect on the Company's Condensed Consolidated Financial Statements.

In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently assessing the impact the adoption of this ASU will have on its methodology for evaluating goodwill for impairment subsequent to adoption of this standard.

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement - Reporting Comprehensive Income: Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income,~~ which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the "Act") that are stranded in accumulated other comprehensive income. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.

~~In June 2018, the FASB issued ASU 2018-07,~~ ~~Compensation - Stock Compensation: Improvements to Nonemployee Share-Based Payment Accounting,~~ which will expand the scope of Topic 718 to include share-based payment transactions for acquiring goods and services from nonemployees. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Changes to the Disclosure Requirements for Fair Value Measurement, which changes the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its related disclosures.

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

In August 2018, the FASB issued ASU 2018-14, Compensation - Retirement Benefits - Defined Benefit Plans - General: Changes to the Disclosure Requirements for Defined Benefit Plans, which modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The standard is effective for Anixter's financial statements issued for fiscal years ending after December 15, 2020. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its related disclosures.

~~In August 2018, the FASB issued ASU 2018-15,~~ ~~Intangibles—Goodwill and Other—Internal-Use Software: Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement that is a Service Contract,~~ which will align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019. Early adoption is permitted and the Company intends to early adopt in the fourth quarter of 2018. The Company is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.

The Company does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its Condensed Consolidated Financial Statements or disclosures.

Revenue ~~recognition~~:recognition: Anixter is a leading global distributor of network and security solutions, electrical and electronic solutions and utility power solutions. Through a global distribution network along with supply chain and technical expertise, Anixter helps customers reduce the risk, cost and complexity of their supply chains. Anixter is a leader in providing advanced inventory management services including procurement, just-in-time delivery, material management programs, turn-key yard layout and management, quality assurance testing, component kit production, storm/event kitting, small component assembly and e-commerce and electronic data interchange to a broad spectrum of customers with ~~over~~nearly 600,000 products. Revenue arrangements primarily consist of a single performance obligation to transfer promised goods or services. See Note 8.9. "Business Segments" for revenue disaggregated by geography.

Sales to customers and related cost of sales are primarily recognized at the point in time when control of goods transfers to the customer. For product sales, this generally occurs upon shipment of the products, however, this may occur at a later date depending on the agreed upon sales terms, such as delivery at the customer's designated location, or based on consignment terms. In instances where goods are not stocked by Anixter and delivery times are critical, product is purchased from the manufacturer and drop-shipped to the customer. Anixter generally takes control of the goods when shipped by the manufacturer and then recognizes revenue when control of the product transfers to the customer. When providing services, sales are recognized over time as control transfers to the customer, which occurs as services are rendered.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company estimates different forms of variable consideration at the time of sale based on historical experience, current conditions and contractual obligations. Revenue is recorded net of customer discounts, rebates and similar charges. When Anixter offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue. The Company has elected to treat shipping and handling as a fulfillment activity. The practical expedient not to disclose information about remaining performance obligations has also been elected as these contacts have an original duration of one year or less or are contracts where the Company has applied the practical expedient to recognize service revenue in proportion to the amount Anixter has the right to invoice. The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation.

At December ~~29, 2017, $9.5~~28, 2018, $17.2 million of deferred revenue related to outstanding contracts was reported in "Accrued expenses" in the Company's Consolidated Balance Sheet. This balance primarily represents prepayments from customers. During the three ~~and nine~~ months ended ~~September 28, 2018, $1.6~~March 29, 2019, $6.9 million ~~and $7.0 million, respectively,~~ of this deferred revenue was recognized. At ~~September 28, 2018,~~March 29, 2019, deferred revenue was ~~$14.4~~$21.3 million. The Company expects to recognize this balance as revenue within the next twelve months.

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive Income:



	Three Months Ended
(In millions)	March 29, 2019			March 30, 2018
Other, net:
Foreign exchange (loss) gain	$	(0.5	)	$	0.2
Cash surrender value of life insurance policies	1.7			(0.6		)
Net periodic pension benefit	0.8			1.6
Other	(0.2		)	1.1
Total other, net	$	1.8		$	2.3

Three Months Ended Nine Months Ended
(In millions) September 28,
2018 September 29,
2017 September 28,
2018 September 29,
2017
Other, net:
Foreign exchange $ (2.5 ) $ (1.1 ) $ (6.2 ) $ (3.1 )
Cash surrender value of life insurance policies 0.3
0.9
0.1
2.0
Net periodic pension benefit 1.3
0.2
3.9
0.4
Other (0.7 ) 0.5
(0.4 ) 0.2
Total other, net $ (1.6 ) $ 0.5
$ (2.6 ) $ (0.5 )

Several of Anixter's subsidiaries conduct business in a currency other than the legal entity’s functional currency. Transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. The increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in "Other, net" in the Condensed Consolidated Statements of Comprehensive Income.

The Company purchases foreign currency forward contracts to minimize the effect of fluctuating foreign currency-denominated accounts on its reported income. The foreign currency forward contracts are not designated as hedges for accounting purposes. The Company's strategy is to negotiate terms for its derivatives and other financial instruments to be highly effective, such that the change in the value of the derivative perfectly offsets the impact of the underlying hedged item (e.g., various foreign currency-denominated accounts). Its counterparties to foreign currency forward contracts have investment-grade credit ratings. Anixter expects the creditworthiness of its counterparties to remain intact through the term of the transactions. The Company regularly monitors the creditworthiness of its counterparties to ensure no issues exist which could affect the value of the derivatives.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The Company does not hedge 100% of its foreign currency-denominated accounts. In addition, the results of hedging can vary significantly based on various factors, such as the timing of executing the foreign currency forward contracts versus the movement of the currencies as well as the fluctuations in the account balances throughout each reporting period. The fair value of the foreign currency forward contracts is based on the difference between the contract rate and the current exchange rate. The fair value of the foreign currency forward contracts is measured using observable market information. These inputs would be considered Level 2 in the fair value hierarchy. At ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ foreign currency forward contracts were revalued at then-current foreign exchange rates with the changes in valuation reflected directly in "Other, net" in the Condensed Consolidated Statements of Comprehensive Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ the gross notional amount of the foreign currency forward contracts outstanding was approximately ~~$116.9~~$101.7 million and ~~$246.3~~$96.3 million, respectively. At ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ the net notional amount of the foreign currency forward contracts outstanding was approximately ~~$78.1~~$100.9 million and ~~$125.7~~$75.7 million, respectively. While all of the Company's foreign currency forward contracts are subject to master netting arrangements with its counterparties, assets and liabilities related to derivative instruments are presented on a gross basis within the Condensed Consolidated Balance Sheets. The gross fair value of derivative assets and liabilities are immaterial.

The combined effect of changes in both the equity and bond markets resulted in changes in the cash surrender value of the Company's company owned life insurance policies associated with the sponsored deferred compensation program.

Leases: At contract inception, the Company determines if an arrangement is a lease. Operating leases are included in "Operating leases", "Current operating lease obligations" and "Operating lease obligations" on the Condensed Consolidated Balance Sheets. Finance leases are included in "Property and equipment, net", "Accrued expenses" and "Long-term debt" on the Condensed Consolidated Balance Sheets. The gross amount of the balances recorded related to finance leases was immaterial as of March 29, 2019, and December 28, 2018. Leases with an initial term of 12 months or less are not recorded on the Condensed Consolidated Balance Sheets. Operating lease expense is recognized on a straight-line basis over the lease term. The Company has lease agreements with lease and non-lease components and has elected to account for the lease and non-lease components as a single lease component.

Operating lease assets and liabilities are recognized at the commencement date, based on the present value of the future minimum lease payments over the lease term. A certain number of these leases contain rent escalation clauses either fixed or adjusted periodically for inflation or market rates that are factored into the Company's determination of lease payments. Anixter also has variable lease payments that do not depend on a rate or index, primarily for items such as common area maintenance and real estate taxes, which are recorded as variable cost when incurred. The operating lease asset includes advance payments and excludes incentives and initial direct costs incurred. As most of Anixter’s leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date to discount payments to the present value. Most operating leases contain renewal options, some of which also include options to early terminate the leases. The exercise of these options is at the Company's discretion. Lease terms include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option.

Accumulated other comprehensive loss: Unrealized gains and losses are accumulated in "Accumulated other comprehensive loss" ("AOCI"). These changes are also reported in "Other comprehensive income (loss)" on the Condensed Consolidated Statements of Comprehensive Income. These include unrealized gains and losses related to the Company's defined benefit obligations and foreign currency translation. See Note 6.7. "Pension Plans" for pension related amounts reclassified into net income.

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

Investments in several subsidiaries are recorded in currencies other than the U.S. dollar ("USD"). As these foreign currency denominated investments are translated at the end of each period during consolidation using period-end exchange rates, fluctuations of exchange rates between the foreign currency and the USD increase or decrease the value of those investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the USD, are translated into USD using the average exchange rates during the periods reported, while the assets and liabilities are translated using period-end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate component of AOCI, "Foreign currency translation." In addition, as Anixter's subsidiaries maintain investments denominated in currencies other than local currencies, exchange rate fluctuations will occur. Borrowings are raised in certain foreign currencies to minimize the exchange rate translation adjustment risk.

~~Goodwill:~~ The Company evaluates goodwill for impairment annually at the beginning of the third quarter and when events or changes in circumstances indicate the carrying value of reporting units might exceed their current fair values. The Company assesses goodwill for impairment by first performing a qualitative assessment, which considers specific factors, based on the weight of evidence, and the significance of all identified events and circumstances in the context of determining whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If it is determined that it is more likely than not that the fair value of a reporting unit is less than its carrying amount using the qualitative assessment, Anixter performs the two-step impairment test. From time to time, the Company may also bypass the qualitative assessment and proceed directly to the two-step impairment test. The first step of the impairment test is to identify a potential impairment by comparing the fair value of a reporting unit with its carrying amount. The estimates of fair value of a reporting unit are determined using the income approach and/or the market approach as described below. If step one of the test indicates a carrying value above the estimated fair value, the second step of the goodwill impairment test is performed by comparing the implied fair value of the reporting unit’s goodwill with the carrying amount of that goodwill. The implied residual value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

The income approach is a quantitative evaluation to determine the fair value of the reporting unit. Under the income approach fair value is determined based on estimated future cash flows discounted by an estimated weighted-average cost of capital plus a forecast risk, which reflects the overall level of inherent risk of the reporting unit and the rate of return a market participant would expect to earn. The inputs used for the income approach were significant unobservable inputs, or Level 3 inputs, as described in the accounting fair value hierarchy. Estimated future cash flows were based on internal projection models, industry projections and other assumptions deemed reasonable by management.

The market approach measures the fair value of a reporting unit through the analysis of recent sales, offerings, and financial multiples (sales or earnings before interest, tax, depreciation and amortization ("EBITDA")) of comparable businesses. Consideration is given to the financial conditions and operating performance of the reporting unit being valued relative to those publicly-traded companies operating in the same or similar lines of business.

In connection with the annual assessment of goodwill at the beginning of the third quarter of 2018, the Company bypassed the qualitative assessment and performed a quantitative test for all reporting units and utilized a combination of the income and market approaches. As a result of this assessment, the Company concluded that no impairment existed and the carrying amount of goodwill to be fully recoverable. All of the Company's reporting units had fair values that exceeded their respective carrying values by greater than 30%.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 2.RESTRUCTURING CHARGES

The Company considers restructuring activities to be programs whereby Anixter fundamentally changes its operations, such as closing and consolidating facilities, reducing headcount and realigning operations in response to changing market conditions. The following table summarizes activity related to liabilities associated with restructuring activities:

Restructuring Activity
Q2 2018
Plan
Q2 2016
Plan

Q4 2015
Plan
Total
Employee-Related Costs (a) Facility Exit and Other Costs (b) Employee-Related Costs (a) Facility Exit and Other Costs (b) Employee-Related Costs (a) Employee-Related Costs (a) Facility Exit and Other Costs (b)
Balance at December 29, 2017 $ —
$ —
$ 0.5
$ 0.5
$ 0.6
$ 1.1
$ 0.5
Charges 9.6
0.5
—
(0.4 ) (0.3 ) 9.3
0.1
Payments and other (1.0 ) (0.3 ) (0.5 ) (0.1 ) (0.1 ) (1.6 ) (0.4 )
Balance at September 28, 2018 $ 8.6
$ 0.2
$ —
$ —
$ 0.2
$ 8.8
$ 0.2



	Restructuring Activity
	Q2 2018 Plan
(In millions)	Employee-Related Costs (a)			Facility Exit and Other Costs (b)		Total
Balance at December 28, 2018	$	6.7		$	0.2	$	6.9
Payments and other	(1.1		)	—		(1.1		)
Balance at March 29, 2019	$	5.6		$	0.2	$	5.8


(a)	Employee-related costs primarily consist of severance benefits provided to employees who have been involuntarily terminated.


(b)	Facility exit and other costs primarily consist of lease termination costs.

Q2 2018 Restructuring Plan

In the second quarter of 2018, the Company recorded a pre-tax charge of $2.1 million, $1.3 million and ~~$1.1~~$1.1 million in its ~~NSS, EES~~Network & Security Solutions ("NSS"), Electrical & Electronic Solutions ("EES") and ~~UPS~~Utility Power Solutions ("UPS") segments, respectively, and an additional $5.4 million at its corporate headquarters, primarily for severance-related expenses associated with a reduction of approximately 260 positions. In the third quarter of 2018, the Company recorded an additional $0.2 million charge at its corporate headquarters. The $10.1 million charge related to the Q2second quarter 2018 plan primarily reflects actions related to facilities consolidation, systems integration and back office functions. This charge was included in "Operating expenses" in the Company's Condensed Consolidated Statements of Comprehensive Income for fiscal year 2018. The majority of the remaining charge included in accrued expenses of ~~$8.8~~$5.8 million as of ~~September 28, 2018~~March 29, 2019 is expected to be paid by the fourth quarter of 2019.

NOTE 3.~~DEBT~~ LEASES

~~Debt is summarized below:~~The Company adopted ASU 2016-02, Leases, as of December 29, 2018, using the modified retrospective approach. Prior year financial statements were not recast under the new standard and, therefore, those amounts are not presented below.

(In millions) September 28,
2018 December 29,
2017
Current portion of long-term debt:
5.625% Senior notes due 2019 $ 349.3
$ —

Long-term debt:
5.50% Senior notes due 2023 347.2
346.8
5.125% Senior notes due 2021 397.2
396.5
5.625% Senior notes due 2019 —
348.6
Revolving lines of credit 168.6
159.0
Other 4.9
1.7
Unamortized deferred financing costs (3.5 ) (4.7 )

Total debt $ 1,263.7
$ 1,247.9

Substantially all of Anixter's office and warehouse facilities are leased under operating leases. The ~~Senior notes due 2019 will mature on May 1, 2019,~~Company also leases certain equipment and ~~have been classified~~vehicles primarily as ~~current on~~operating leases. Lease costs are included within "Operating expenses" in the Company's Condensed Consolidated ~~Balance Sheet at September 28, 2018.~~Statements of Comprehensive Income. During the three months ended March 29, 2019, these costs were as follows:



	Three Months Ended
(In millions)	March 29, 2019
Lease cost
Operating lease cost	$	20.1
Variable lease cost	6.3
Short-term lease cost	0.3
Total lease cost	$	26.7

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The weighted-average remaining lease term and weighted-average discount rate under operating leases at March 29, 2019 were:



	March 29, 2019
Lease term and discount rate
Weighted-average remaining lease term	6.0 years
Weighted-average discount rate ^(a)	6.3	%


(a)	Upon adoption of ASU 2016-02, the discount rate used for existing leases was established as of December 29, 2018.

Maturities of operating lease liabilities at March 29, 2019 were as follows:



(In millions)
2019 (excluding the three months ended March 29, 2019)	$	54.1
2020	60.0
2021	43.9
2022	38.2
2023	26.7
2024 and thereafter	68.5
Total lease payments	$	291.4
Less imputed interest	51.3
Present value of lease liabilities	$	240.1

Operating lease payments include $18.0 million related to options to extend lease terms that are reasonably certain of being exercised. As of March 29, 2019, the Company has additional leases, primarily for facilities, that have not yet commenced of $25.7 million. These operating leases will commence in fiscal year 2019 with lease terms of seven to fifteen years. Anixter subleases certain real estate to third parties. During the three months ended March 29, 2019, the Company recognized income of $0.2 million which was included within "Operating expenses" in the Company's Condensed Consolidated Statements of Comprehensive Income. Aggregate future minimum rentals to be received under non-cancelable subleases at March 29, 2019 were $4.5 million.

During the three months ended March 29, 2019, leased assets obtained in exchange for operating lease obligations were $258.3 million. The operating cash outflow for amounts included in the measurement of operating lease obligations was $19.4 million.

NOTE 4.DEBT

Debt is summarized below:



(In millions)	March 29, 2019			December 28, 2018
Long-term debt:
6.00% Senior notes due 2025	$	247.0		$	246.9
5.50% Senior notes due 2023	347.5			347.4
5.125% Senior notes due 2021	397.6			397.4
Revolving lines of credit	368.2			260.0
Finance lease obligations	2.1			0.9
Other	11.5			6.1
Unamortized deferred financing costs	(5.6		)	(6.0		)
Total long-term debt	$	1,368.3		$	1,252.7

Fair Value of Debt

The fair value of Anixter's debt instruments is measured using observable market information which would be considered Level 2 in the fair value hierarchy described in accounting guidance on fair value measurements. The Company's fixed-rate debt consists of Senior notes due ~~2023,~~2025, Senior notes due ~~2021~~2023 and Senior notes due ~~2019.~~2021.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

At ~~September 28, 2018,~~March 29, 2019, the Company's total carrying value and estimated fair value of debt outstanding was ~~$1,263.7~~$1,368.3 million and ~~$1,299.9~~$1,416.4 million, respectively. This compares to a carrying value and estimated fair value of debt outstanding at December ~~29, 2017~~28, 2018 of ~~$1,247.9~~$1,252.7 million and ~~$1,317.8~~$1,261.7 million, respectively. The increase in the carrying value and estimated fair value is primarily due to higher outstanding borrowings under Anixter's revolving lines of credit.

NOTE 4.5. LEGAL CONTINGENCIES

From time to time, Anixter is party to legal proceedings and matters that arise in the ordinary course of business. As of ~~September 28, 2018,~~March 29, 2019, the Company does not believe there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company's financial condition and results of operations could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

NOTE 5.6. INCOME TAXES

The Company's effective tax rate for the ~~third~~first quarter of ~~2018~~2019 was ~~30.6%~~30.3% compared to ~~39.7%~~29.7% in the prior year period. The Company's effective tax rate for the nine months ended September 28, 2018 was 29.9% compared to 38.3% in the prior year period. Income tax expense for the nine months ended September 28, 2018 included a $1.8 million tax benefit related to the reversal of deferred income tax valuation allowances, partially offset by $0.5 million of tax expense related to domestic permanent tax differences. The decreaseincrease in the effective tax rate was due primarily ~~due~~ to ~~a favorable tax impact from~~ the change in the country mix of earnings.

The December 22, 2017 Tax Cuts and Jobs Act (the "Act"). Under the Act, the statutory U.S. federal tax rate was reduced from 35% to 21% effective January 1, 2018. The benefit from this rate reduction was partially offset by other newly enacted tax provisions.

In the fourth quarter of 2017, the Company recorded a provisional $50.0 million one-time transition tax. At September 28, 2018, the Company has not completed its accounting for the tax effects of the Act and has not made adjustments to the provisional amount recorded.

~~The~~ Act subjects U.S. shareholders to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries. The Company ~~is electing to recognize~~recognizes the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period.

Anixter considers the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested. Upon distribution of those earnings in the form of dividends or otherwise, Anixter may be subject to withholding taxes payable to the various foreign countries.

NOTE 6.7. PENSION PLANS

The Company's defined benefit pension plans are the plans in the U.S., which consist of the Anixter Inc. Pension Plan, the Executive Benefit Plan and the Supplemental Executive Retirement Plan ("SERP") (together the "Domestic Plans") and various defined benefit pension plans covering employees of foreign subsidiaries in Canada and Europe (together the "Foreign Plans"). The majority of these defined benefit pension plans are non-contributory and, with the exception of the U.S., cover substantially all full-time domestic employees and certain employees in other countries. Retirement benefits are provided based on compensation as defined in both the Domestic Plans and the Foreign Plans. The Company's policy is to fund all Domestic Plans as required by the Employee Retirement Income Security Act of 1974 ("ERISA") and the IRS and all Foreign Plans as required by applicable foreign laws. The Executive Benefit Plan and SERP are the only two plans that are unfunded. Assets in the various plans consist primarily of equity securities and debt securities.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

Components of net periodic pension cost (benefit) ~~cost are~~were as follows:



	Three Months Ended
	Domestic Plans						Foreign Plans						Total
(In millions)	March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018			March 29, 2019			March 30, 2018
Recorded in operating expenses:
Service cost	$	0.8		$	1.2		$	1.4		$	1.6		$	2.2		$	2.8

Recorded in other, net:
Interest cost	2.8			2.6			1.7			1.7			4.5			4.3
Expected return on plan assets	(3.7		)	(4.3		)	(2.7		)	(2.5		)	(6.4		)	(6.8		)
Net amortization ^(a)	0.3			0.1			0.8			0.8			1.1			0.9
Total recorded in other, net	$	(0.6	)	(1.6		)	(0.2		)	—			(0.8		)	(1.6		)

Total net periodic pension cost (benefit)	$	0.2		$	(0.4	)	$	1.2		$	1.6		$	1.4		$	1.2


(a)	Reclassified from AOCI.

Three Months Ended
Domestic Plans Foreign Plans Total
(In millions) September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017
Recorded in operating expenses:
Service cost $ 0.8
$ 1.4
$ 1.5
$ 1.6
$ 2.3
$ 3.0

Recorded in other, net:
Interest cost $ 2.6
$ 3.2
$ 1.6
$ 1.7
$ 4.2
$ 4.9
Expected return on plan assets (4.0 ) (4.2 ) (2.4 ) (2.3 ) (6.4 ) (6.5 )
Net amortization ^(a)
0.2
0.5
0.7
0.9
0.9
1.4
Total recorded in other, net $ (1.2 ) $ (0.5 ) $ (0.1 ) $ 0.3
$ (1.3 ) $ (0.2 )

Total net periodic pension (benefit) cost $ (0.4 ) $ 0.9
$ 1.4
$ 1.9
$ 1.0
$ 2.8

~~(a) Reclassified from AOCI.~~

Nine Months Ended
Domestic Plans Foreign Plans Total
(In millions) September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017
Recorded in operating expenses:
Service cost $ 2.6
$ 3.8
$ 4.5
$ 4.5
$ 7.1
$ 8.3

Recorded in other, net:
Interest cost $ 7.7
$ 8.7
$ 5.1
$ 5.1
$ 12.8
$ 13.8
Expected return on plan assets (12.0 ) (11.7 ) (7.4 ) (6.6 ) (19.4 ) (18.3 )
Net amortization ^(a)
0.5
1.7
2.2
2.4
2.7
4.1
Total recorded in other, net $ (3.8 ) $ (1.3 ) $ (0.1 ) $ 0.9
$ (3.9 ) $ (0.4 )

Total net periodic pension (benefit) cost $ (1.2 ) $ 2.5
$ 4.4
$ 5.4
$ 3.2
$ 7.9

~~(a) Reclassified from AOCI.~~

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

NOTE 7.8. STOCKHOLDERS' EQUITY

At the end of the ~~third~~first quarter of ~~2018,~~2019, there were ~~1.7~~1.3 million shares reserved for issuance under the 2017 Stock Incentive Plan. Under such plan, the Company pays non-employee directors annual retainer fees and, at their election, meeting fees in the form of stock units. Employee and director stock units are included in common stock outstanding on the date of vesting, and stock options are included in common stock outstanding upon exercise by the participant. The fair value of employee stock units is amortized over the respective vesting period representing the requisite service period, generally three ~~four or~~to six years. Director stock units are expensed in the period in which they are granted, as these vest immediately. The 2019 employee performance-based restricted stock units ("performance units") are issued on the third anniversary of the grant date based on the Company's adjusted EBITDA margin for each of the performance periods with a total shareholder return ("TSR") modifier relative to the TSR of the ~~S&P Mid Cap 400 index.~~peer group companies determined by the Company's compensation committee. The fair value of each performance unit tranche is estimated using the Monte Carlo Simulation pricing model at the date of grant.

During the three ~~and nine~~ months ended ~~September 28, 2018,~~March 29, 2019, the Company granted ~~11,375 and 194,113~~228,137 stock units to employees, ~~respectively,~~with a weighted-average grant-date fair value of $13.5 million. During the three months ended March 29, 2019, the Company granted 58,139 performance units to employees, with a weighted-average grant-date fair value of $3.6 million. During the three months ended March 29, 2019, the Company granted directors 12,130 stock units, with a weighted-average grant-date fair value of $0.7 million and $14.4 million, respectively. During the three and nine months ended September 28, 2018, the Company granted 7,899 and 43,767 performance units to employees, respectively, with a weighted-average grant-date fair value of $0.4 million and $3.4 million, respectively. During the nine months ended September 28, 2018, the Company included additional stock compensation expense of $2.6 million related to a retirement agreement with the recently retired Chief Executive Officer ("CEO"), which extended the terms of his non-competition and non-solicitation restrictions in exchange for extended vesting and termination provisions of previously granted equity awards.million.

During the three and nine months ended September 28, 2018, the Company granted directors 9,733 and 25,771 stock units, respectively, with a weighted-average grant-date fair value of $0.6 million and $1.8 million, respectively.

Antidilutive stock options and units are excluded from the calculation of weighted-average shares for diluted earnings per share. For the ~~third~~first quarter of ~~2018~~2019 and ~~2017,~~2018, the antidilutive stock options and units were immaterial.

NOTE 8.9. BUSINESS SEGMENTS

Anixter is a leading distributor of enterprise cabling and security solutions, electrical and electronic wire and cable solutions and utility power solutions. The Company has identified ~~Network & Security Solutions ("NSS"), Electrical & Electronic Solutions ("EES")~~NSS, EES and ~~Utility Power Solutions ("UPS")~~UPS as reportable segments. Within its segments, the Company is also organized by geographies. Anixter's geographies consist of North America, which includes the U.S. and Canada, EMEA, which includes Europe, the Middle East and Africa, and Emerging Markets, which includes Asia Pacific and Central and Latin America.

Corporate expenses are incurred to obtain and coordinate financing, tax, information technology, legal and other related services, certain of which were rebilled to subsidiaries. The Company also has various corporate assets which are reported in corporate. Segment assets ~~may or~~ may not include jointly used assets, but segment results include depreciation expense or other allocations related to those assets as such allocation is made for internal reporting. Interest expense and other non-operating items are not allocated to the segments or reviewed on a segment basis.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

The categorization of net sales by end market is determined using a variety of data points including the technical characteristic of the product, the "sold to" customer information, the "ship to" customer information and the end customer product or application into which product will be incorporated. Anixter also has largely specialized its sales organization by segment. As data systems for capturing and tracking this data evolve and improve, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies net sales by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.

~~ANIXTER INTERNATIONAL INC.~~

~~NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)~~

Segment Financial Information

Segment information for the three ~~and nine~~ months ended ~~September 28,~~March 29, 2019 and March 30, 2018 ~~and September 29, 2017 are~~was as follows:

(In millions)
Third Quarter of 2018 NSS EES UPS Corporate Total
Net Sales $ 1,138.0
$ 597.4
$ 443.6
$ —
$ 2,179.0
Operating income 75.0
34.1
19.9
(39.5 ) 89.5



(In millions)
First Quarter of 2019	NSS		EES		UPS		Corporate			Total
Net sales	$	1,112.5	$	566.0	$	430.0	$	—		$	2,108.5
Operating income (losses)	70.9		29.1		18.5		(43.9		)	74.6



First Quarter of 2018	NSS		EES		UPS		Corporate			Total
Net sales	$	994.8	$	568.4	$	401.0	$	—		$	1,964.2
Operating income (losses)	53.5		31.4		16.4		(39.7		)	61.6

Third Quarter of 2017 NSS EES UPS Corporate Total
Net Sales $ 1,049.2
$ 555.0
$ 412.2
$ —
$ 2,016.4
Operating income 67.5
26.8
19.8
(33.3 ) 80.8

Nine Months of 2018 NSS EES UPS Corporate Total
Net Sales $ 3,229.1
$ 1,771.4
$ 1,280.6
$ —
$ 6,281.1
Operating income 194.6
101.1
54.2
(127.5 ) 222.4

Nine Months of 2017 NSS EES UPS Corporate Total
Net Sales $ 3,063.5
$ 1,643.9
$ 1,206.2
$ —
$ 5,913.6
Operating income 194.2
84.3
57.3
(103.5 ) 232.3

Geographic Information

The following ~~tables summarize~~table summarizes net sales by geographic areas for the three ~~and nine~~ months ended ~~September 28, 2018~~March 29, 2019 and ~~September 29, 2017:~~March 30, 2018:



	Three Months Ended
(In millions)	March 29, 2019		March 30, 2018
Net sales
North America	$	1,697.8	$	1,612.4
EMEA	152.5		168.6
Emerging Markets	258.2		183.2
Total net sales	$	2,108.5	$	1,964.2

Three Months Ended Nine Months Ended
(In millions) September 28, 2018 September 29, 2017 September 28, 2018 September 29, 2017
Net sales
North America $ 1,774.0
$ 1,664.5
$ 5,148.9
$ 4,901.4
EMEA 160.6
156.0
502.2
461.7
Emerging Markets 244.4
195.9
630.0
550.5
Total net sales $ 2,179.0
$ 2,016.4
$ 6,281.1
$ 5,913.6

Goodwill Assigned to Segments

The following table presents the changes in goodwill allocated to the Company's reporting units during the ~~nine~~three months ended ~~September 28, 2018:~~March 29, 2019:



(In millions)	NSS		EES		UPS		Total
Balance as of December 28, 2018	$	472.7	$	180.9	$	178.4	$	832.0
Acquisition related	0.2		—		—		0.2
Foreign currency translation	1.1		0.1		1.5		2.7
Balance as of March 29, 2019	$	474.0	$	181.0	$	179.9	$	834.9

(In millions) NSS EES UPS Total
Balance as of December 29, 2017 $ 408.8
$ 181.7
$ 187.6
$ 778.1
Acquisition related ^(a)
65.4
—
—
65.4
Foreign currency translation (5.4 ) (0.4 ) (4.3 ) (10.1 )
Balance as of September 28, 2018 $ 468.8
$ 181.3
$ 183.3
$ 833.4

(a) In the second quarter of 2018, the Company completed the acquisition of security businesses in Australia and New Zealand for $149.9 million, including a preliminary net working capital adjustment of $4.6 million. The transaction was financed primarily from borrowings under the revolving lines of credit. The purchase price was preliminarily allocated to $36.5 million of working capital and $60.4 million of intangible assets. Acquisition costs were $2.5 million. Third quarter year-to-date results include approximately $40.3 million of sales from the acquired entities. The purchase price allocation is pending finalization, and is expected to be completed in early 2019.

ANIXTER INTERNATIONAL INC.

NOTES TO THE UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

NOTE 9.10. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.

Anixter International Inc. guarantees, fully and unconditionally, substantially all of the debt of its subsidiaries, which include Anixter Inc., its 100% owned primary operating subsidiary. Anixter International Inc. has no independent assets or operations and all subsidiaries other than Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc.:

ANIXTER INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



(In millions)	March 29, 2019		December 28, 2018
Assets:
Current assets	$	3,156.4	$	3,171.6
Property and equipment, net	167.2		169.1
Operating leases	224.5		—
Goodwill	834.9		832.0
Intangible assets, net	385.3		392.9
Other assets	95.6		92.9
	$	4,863.9	$	4,658.5
Liabilities and Stockholder's Equity:
Current liabilities	$	1,500.7	$	1,630.3
Long-term debt	1,378.0		1,260.7
Operating lease obligations	171.6		—
Other liabilities	196.4		199.6
Stockholder’s equity	1,617.2		1,567.9
	$	4,863.9	$	4,658.5

(In millions) September 28,
2018 December 29,
2017
Assets:
Current assets $ 3,115.7
$ 2,833.5
Property, equipment and capital leases, net 168.2
161.3
Goodwill 833.4
778.1
Intangible assets, net 405.0
378.8
Other assets 108.5
107.2
$ 4,630.8
$ 4,258.9
Liabilities and Stockholders' Equity:
Current liabilities $ 1,952.9
$ 1,351.9
Long-term debt 923.4
1,257.7
Other liabilities 193.5
192.9
Stockholder’s equity 1,561.0
1,456.4
$ 4,630.8
$ 4,258.9

ANIXTER INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME



	Three Months Ended
(In millions)	March 29, 2019		March 30, 2018
Net sales	$	2,108.5	$	1,964.2
Operating income	$	76.1	$	63.2
Income before income taxes	$	57.4	$	47.1
Net income	$	40.4	$	33.5
Comprehensive income	$	39.8	$	30.5

Three Months Ended Nine Months Ended
(In millions)
September 28,
2018 September 29,
2017 September 28,
2018 September 29,
2017
Net sales $ 2,179.0
$ 2,016.4
$ 6,281.1
$ 5,913.6
Operating income $ 91.1
$ 82.4
$ 227.5
$ 237.4
Income before income taxes $ 70.1
$ 63.9
$ 167.8
$ 180.6
Net income $ 49.1
$ 38.5
$ 119.0
$ 111.4
Comprehensive income $ 56.3
$ 57.2
$ 98.1
$ 154.9

ANIXTER INTERNATIONAL INC.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following is a discussion of our financial condition and results of operations for the three ~~and nine~~ months ended ~~September 28, 2018~~March 29, 2019 as compared to the corresponding period in the prior year. This discussion should be read in conjunction with the Condensed Consolidated Financial Statements, including the related notes, set forth in this report under "Condensed Consolidated Financial Statements" and our Annual Report on Form 10-K for the year ended December ~~29, 2017.~~28, 2018.

~~Third~~First Quarter 2019 and ~~Year-to-Date~~ 2018 ~~and 2017~~ Consolidated Results of Operations

~~Third~~First Quarter Highlights

We delivered ~~third~~first quarter sales of ~~$2.2 billion,~~$2,108.5 million, up ~~8.1%~~7.3% compared to the prior year, ~~with~~driven by growth in ~~all segments and geographies.~~our Network and Security Solutions ("NSS")~~, Electrical and Electronic Solutions ("EES")~~ and Utility Power Solutions ("~~UPS") sales increased 8.5%, 7.6%,~~UPS) businesses. Excluding the impacts from acquisitions, foreign exchange and ~~7.6%, respectively. Reflecting broad strength across the business,~~copper, we delivered ~~overall~~ organic sales growth of ~~7.4%~~7.7%, ~~reflecting~~with organic growth in ~~our NSS, EES and UPS segments~~all segments. In addition to strong sales growth, we also delivered gross margin of ~~6.4%~~19.9%, ~~9.0% and 8.1%, respectively.~~up 30 basis points from the prior year.

Strategy Update and Business Outlook

~~As we look ahead to the fourth quarter, we~~We are optimistic that ~~solid~~favorable sales ~~growth~~trends that we realized in the first quarter of 2019 will continue, ~~reflecting momentum across the business~~based on our strong backlog and ~~a solid~~pipeline trends, and discussions with our customers and suppliers. We continue to see strong demand, ~~environment. Despite challenging~~tempered by macro economic ~~factors including tariffs, wage increases and broader inflationary pressures, our top priority remains improving profitability through~~uncertainty in certain markets. The improvement in gross margin ~~initiatives combined with~~will help fund our ~~focus on cost structure.~~investment in innovation and business transformation, as we continue to invest in customer-facing technologies that will enhance our digital capabilities and enterprise efficiencies and drive long-term EBITDA growth. As part of this multi-year initiative, we are also streamlining and standardizing our global business processes, as we migrate to a more efficient operating model. We expect our investment in innovation to deliver significant long-term benefits.

During the second quarter of 2018, we completed the acquisition of security businesses in Australia and New Zealand. We expect these acquisitions to be accretive to earnings in the first full year of operation, exclusive of transaction and integration costs.

ANIXTER INTERNATIONAL INC.

Items Impacting Comparability of Results

In addition to the results provided in accordance with U.S. Generally Accepted Accounting Principles ("U.S. GAAP") above, this report includes certain non-GAAP financial measures as defined by the Securities and Exchange Commission. Specifically, net sales comparisons to the prior corresponding period, both worldwide and in relevant segments, are discussed in this report both on a U.S. GAAP and non-GAAP basis. We believe that by providing non-GAAP organic growth, which adjusts for the impact of acquisitions (when applicable), foreign exchange fluctuations, copper prices and the number of billing days, both management and investors are provided with meaningful supplemental sales information to understand and analyze our underlying trends and other aspects of our financial performance. We calculate the year-over-year organic sales growth impact related to acquisitions by including their comparable period results prior to the acquisitions with our results, as we believe this represents the most accurate representation of organic growth, considering the nature of the companies we acquired and the synergistic revenues that have been or will be achieved. Historically, and from time to time, we may also exclude other items from reported financial results (e.g., impairment charges, inventory adjustments, restructuring charges, tax items, currency devaluations, pension settlements, etc.) in presenting adjusted operating expense, adjusted operating income, adjusted income taxes and adjusted net income so that both management and financial statement users can use these non-GAAP financial measures to better understand and evaluate our performance period over period and to analyze the underlying trends of our business. We have also excluded amortization of intangible assets associated with purchase accounting from acquisitions from the adjusted amounts for comparison of the non-GAAP financial measures period over period.

EBITDA is defined as net income from continuing operations before interest, income taxes, depreciation and amortization. Adjusted EBITDA is defined as EBITDA before foreign exchange and other non-operating expense and non-cash stock-based compensation, excluding the other items from reported financial results, as defined above. We believe that adjusted operating income, EBITDA and Adjusted EBITDA provide relevant and useful information, which is widely used by analysts, investors and competitors in our industry as well as by our management in assessing both consolidated and business segment performance. Adjusted operating income provides an understanding of the results from the primary operations of our business by excluding the effects of certain items that do not reflect the ordinary earnings of our operations. We use adjusted operating income to evaluate our period over period operating performance because we believe this provides a more comparable measure of our continuing business excluding certain items that are not reflective of expected ongoing operations. This measure may be useful to an investor in evaluating the underlying performance of our business. EBITDA provides us with an understanding of earnings before the impact of investing and financing charges and income taxes. Adjusted EBITDA further excludes the effects of foreign exchange and other non-cash stock-based compensation, and certain items that do not reflect the ordinary earnings of our operations and that are also excluded for purposes of calculating adjusted net income, adjusted earnings per share and adjusted operating income. EBITDA and Adjusted EBITDA are used by our management for various purposes including as measures of performance of our operating entities and as a basis for strategic planning and forecasting. Adjusted EBITDA may be useful to an investor because this measure is widely used to evaluate a company’s operating performance without regard to items excluded from the calculation of such measure, which can vary substantially from company to company depending on the accounting methods, book value of assets, capital structure and the method by which the assets were acquired, among other factors. They are not, however, intended as an alternative measure of operating results or cash flow from operations as determined in accordance with U.S. GAAP.

Non-GAAP financial measures provide insight into selected financial information and should be evaluated in the context in which they are presented. These non-GAAP financial measures have limitations as analytical tools, and should not be considered in isolation from, or as a substitute for, financial information presented in compliance with U.S. GAAP, and non-GAAP financial measures as reported by us may not be comparable to similarly titled amounts reported by other companies. The non-GAAP financial measures should be considered in conjunction with the Condensed Consolidated Financial Statements, including the related notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in this report. Management does not use these non-GAAP financial measures for any purpose other than the reasons stated above.

Our operating results can be affected by changes in prices of commodities, primarily copper, which are components in some of the electrical wire and cable products sold. Generally, as the costs of inventory purchases increase due to higher commodity prices, our mark-up percentage to customers remains relatively constant, resulting in higher sales revenue and gross profit. In addition, existing inventory purchased at previously lower prices and sold as prices increase may result in a higher gross profit margin. Conversely, a decrease in commodity prices in a short period of time would have the opposite effect, negatively affecting financial results. The degree to which spot market copper prices change affects product prices and the amount of gross profit earned will be affected by end market demand and overall economic conditions. Importantly, however, there is no exact measure of the impact of changes in copper prices, as there are thousands of transactions in any given year, each of which has various factors involved in the individual pricing decisions. Therefore, all references to the effect of copper prices are estimates.

ANIXTER INTERNATIONAL INC.

The following summarizes the various items that favorably/(unfavorably) impact the comparability of the results for the three ~~and nine~~ months ended ~~September 28, 2018~~March 29, 2019 and ~~September 29, 2017.~~March 30, 2018.

The items impacting operating expense and operating income by segment are reflected in the tables below.

ANIXTER INTERNATIONAL INC.

~~ANIXTER INTERNATIONAL INC.~~

NSS – Sales of ~~$1,138.0~~$1,112.5 million increased ~~8.5%~~11.8% from ~~$1,049.2~~$994.8 million in the prior year period. ~~Adjusting~~NSS organic sales increased 10.7%, adjusting for the unfavorable impact from foreign ~~exchange~~exchange and favorable impact from acquisitions, ~~NSS organic sales increased 6.4%,~~ reflecting growth in both the network infrastructure and security portions of the business and in all geographies. NSS security sales in the ~~third quarter~~three months ended March 29, 2019 of ~~2018 of $489.8~~$476.0 million, which represents ~~43.0%~~42.8% of total segment sales, increased ~~12.3%~~15.3% from the prior year period. Adjusted for the ~~$29.5~~$24.2 million favorable impact from acquisitions and ~~$6.4~~$10.2 million unfavorable currency impact, organic security sales growth was ~~6.6%~~11.3% compared to the ~~third quarter of 2017.~~three months ended March 30, 2018.

EES – Sales of ~~$597.4~~$566.0 million ~~increased 7.6%~~decreased 0.4% from ~~$555.0~~$568.4 million in the prior year, ~~period,~~ weakened by the unfavorable impacts from copper and foreign exchange. EES organic sales increased by 2.3%,with growth driven by ongoing strength in industrial ~~business and strong growth with OEM customers.~~ ~~Adjusting for the unfavorable impacts from foreign exchange and copper, EES organic sales increased by 9.0%~~.business.

UPS– Sales of ~~$443.6~~$430.0 million increased ~~7.6%~~7.2% from ~~$412.2~~$401.0 million in the prior year period, reflecting broad-based growth with both investor-owned utility and public power customers. UPS organic sales increased ~~8.1%~~7.9%, adjusting for the unfavorable impacts from foreign exchange and copper.

~~ANIXTER INTERNATIONAL INC.~~

~~NSS –~~ Sales of $3,229.1 million increased 5.4% from $3,063.5 million in the prior year period. Adjusting for the favorable impact from acquisitions and foreign exchange, NSS organic sales increased 3.6%, reflecting growth in both the network infrastructure and security portions of the business and in all geographies~~. NSS sec~~urity sales in the nine months ended September 28, 2018 of $1,367.5 million, which represents 42.3% of total segment sales, increased 9.0% from the prior year period. Adjusted for the $41.0 million favorable impact from acquisitions and $0.4 million unfavorable currency impact, organic security sales growth was 5.6% compared to the nine months ended September 29, 2017.

~~EES –~~ ~~Sales of $1,771.4 million increased 7.8% from $1,643.9 million in the prior year period, strengthened by the favorable impacts from copper and foreign exchange. EES organic sales increased by 5.9%,~~ ~~with growth driven by ongoing strength in industrial business and strong growth with OEM customers.~~

~~UPS~~– Sales of $1,280.6 million increased 6.2% from $1,206.2 million in the prior year period, reflecting broad-based growth with both investor-owned utility and public power customers. UPS organic sales increased 6.0%, adjusting for the favorable impacts from foreign exchange and copper.

Gross margin of ~~19.5%~~19.9% in ~~the third~~first quarter of ~~2018~~2019 compares to ~~19.7% in the third quarter of 2017. Gross margin of~~ 19.6% in the ~~nine months ended September 28, 2018 compares to 19.8% in the nine months ended September 29, 2017.~~first quarter of 2018. The ~~lower~~higher gross margin was ~~caused~~driven by ~~competitive pressure, customer and product mix and cost inflation.~~margin initiatives implemented across the business.

ANIXTER INTERNATIONAL INC.

Operating expenses were ~~$334.6~~$344.3 million and ~~$316.4~~$323.2 million in the ~~third~~first quarter of ~~2018~~2019 and ~~2017,~~2018, respectively. The ~~third~~first quarter of ~~2018~~2019 includes ~~$9.6~~$8.8 million of intangible asset amortization and a ~~restructuring charge~~reversal of ~~$0.2~~acquisition and integration costs of $0.3 million. The first quarter of 2018 includes $9.3 million of intangible asset amortization, $0.3 million of acquisition and integration costs and $0.2 million of U.K. facility relocation costs. The U.K. facility relocation costs relate to expenses we incurred to move our largest warehouse in EMEA. We were forced to move this location due to a government-backed rail line that will run through our ~~existing~~legacy facility. ~~The third quarter of 2017 includes $9.1 million of intangible asset amortization and $0.8 million of acquisition and integration costs.~~ Excluding these items from their related periods, adjusted operating expenses in the ~~third~~first quarter of ~~2018~~2019 increased ~~5.8%~~7.1% to ~~$324.3~~$335.8 million, or ~~14.9%~~15.9% of sales, which compares to prior year adjusted operating ~~expenses~~expense of ~~$306.5~~$313.4 million, or ~~15.2%~~16.0% of sales. Further adjusting operating expenses for a favorable ~~$2.8~~$5.2 million impact of foreign currency in the ~~third~~first quarter of ~~2018,~~2019, adjusted operating expenses would have increased by ~~6.7%~~8.8%.

Operating expenses were $1,005.6 million and $940.3 million in the nine months ended September 28, 2018 and September 29, 2017, respectively. The nine months ended September 28, 2018 includes $28.6 million of intangible asset amortization, a restructuring charge of $9.4 million, $2.9 million of acquisition and integration costs, $2.6 million of CEO retirement agreement expense and $0.8 million of U.K. facility relocation costs. The CEO retirement agreement expense relates to additional stock compensation for a retirement agreement with the recently retired CEO, which extended the terms of his non-competition and non-solicitation restrictions in exchange for extended vesting and termination provisions of previously granted equity awards. The nine months ended September 29, 2017 includes $27.1 million of intangible asset amortization and $0.8 million of acquisition and integration costs. Excluding these items from their related periods, adjusted operating expenses in the nine months ended September 28, 2018 increased 5.3% to $961.3 million or 15.3% of sales, which compares to prior year adjusted operating expenses of $912.4 million or 15.4% of sales. Further adjusting operating expenses for an unfavorable $4.6 million impact of foreign currency in the nine months ended September 28, 2018, adjusted operating expenses would have increased by 4.8%.

~~ANIXTER INTERNATIONAL INC.~~

NSS – Operating income was ~~$75.0 million, or 6.6% of sales, in the third quarter of 2018, compared to $67.5~~$70.9 million, or 6.4% of sales, in the ~~third~~first quarter of ~~2017.~~2019, compared to $53.5 million, or 5.4% of sales, in the first quarter of 2018. The increase in operating income in 2019 was due to sales growth in both the network infrastructure and security portions of the ~~business.~~business and gross margin improvement. NSS delivered adjusted operating income of ~~$80.3~~$75.0 million in the ~~third~~first quarter of 2019 resulting in adjusted operating margin of 6.7%. NSS delivered adjusted operating income of $57.3 million in the first quarter of 2018 resulting in adjusted operating margin of ~~7.0%~~5.8%. ~~NSS~~

EES – Operating income was $29.1 million, or 5.1% of sales, in the first quarter of 2019, compared to $31.4 million, or 5.5% of sales, in the first quarter of 2018. The decrease in operating income in 2019 was driven by lower volumes and the unfavorable impacts of lower copper prices, partially offset by gross margin improvement. EES delivered adjusted operating income of ~~$71.1~~$30.5 million in the ~~third~~first quarter of ~~2017,~~2019 resulting in adjusted operating margin of ~~6.8%~~5.4%.

~~EES~~ – Operating income was $34.1 million, or 5.7% of sales, in the third quarter of 2018, compared to $26.8 million, or 4.8% of sales, in the third quarter of 2017. The increase in operating income was driven by strong operating expense leverage. EES delivered adjusted operating income of ~~$35.6~~$33.8 million in the ~~third~~first quarter of 2018 resulting in adjusted operating margin of ~~6.0%~~5.9%. ~~EES delivered adjusted operating income of $29.0 million in the third quarter of 2017, resulting in adjusted operating margin of 5.2%.~~

UPS– Operating income was ~~$19.9~~$18.5 million, or ~~4.5%~~4.3% of sales in the ~~third~~first quarter of ~~2018,~~2019, compared to ~~$19.8~~$16.4 million, or ~~4.8%,~~4.1% in the ~~third~~first quarter of ~~2017.~~2018. The increase in operating income in 2019 was driven by sales growth and expense discipline. UPS delivered adjusted operating income of ~~$23.1~~$21.7 million in the ~~third~~first quarter of ~~2018, resulting in adjusted operating margin of 5.2%. UPS delivered adjusted operating income of $23.1 million in the third quarter of 2017, resulting in adjusted operating margin of 5.6%.~~

~~ANIXTER INTERNATIONAL INC.~~

~~NSS~~ – Operating income was $194.6 million, or 6.0% of sales, in the nine months ended September 28, 2018, compared to $194.2 million, or 6.3% of sales, in the nine months ended September 29, 2017. The increase in operating income was due to sales growth in both the network infrastructure and security portions of the business. NSS delivered adjusted operating income of $212.4 million in the nine months ended September 28, 2018, resulting in adjusted operating margin of 6.6%. NSS delivered adjusted operating income of $205.0 million in the nine months ended September 29, 2017, resulting in adjusted operating margin of 6.7%.

~~EES~~ – Operating income was $101.1 million, or 5.7% of sales, in the nine months ended September 28, 2018, compared to $84.3 million, or 5.1% of sales, in the nine months ended September 29, 2017. The increase in operating income was driven by the favorable impacts of higher copper prices combined with sales growth and strong operating expense leverage. EES delivered adjusted operating income of $108.7 million in the nine months ended September 28, 2018, resulting in adjusted operating margin of 6.1%. EES delivered adjusted operating income of $90.2 million in the nine months ended September 29, 2017, resulting in adjusted operating margin of 5.5%

~~UPS~~– Operating income was $54.2 million, or 4.2% of sales, in the nine months ended September 28, 2018, compared to $57.3 million, or 4.7%, in the nine months ended September 29, 2017. The decrease in operating income was driven by lower gross margin. UPS delivered adjusted operating income of $64.8 million in the nine months ended September 28, 2018,2019 resulting in adjusted operating margin of 5.1%. UPS delivered adjusted operating income of ~~$67.3~~$19.7 million in the ~~nine months ended September 29, 2017,~~first quarter of 2018 resulting in adjusted operating margin of ~~5.6%~~4.9%.

ANIXTER INTERNATIONAL INC.

Interest Expense and Other

Interest expense was ~~$19.3~~$20.4 million and ~~$18.9~~$18.2 million in the ~~third~~first quarter of ~~2018~~2019 and ~~2017, respectively. Interest expense was $56.5 million and $55.7 million in the nine months ended September 28,~~ 2018, ~~and September 29, 2017,~~ respectively. The increase in interest expense ~~in 2018~~for the first quarter of 2019 was driven by higher borrowings under the revolving lines of credit due to ~~increased~~the acquisitions in the second quarter of 2018 and to support volume-driven higher working capital ~~investment to support the growth in the business.~~requirements.

~~Foreign exchange and other expense~~Other, net income of ~~$1.6~~$1.8 million in the ~~third~~first quarter of ~~2018~~2019 compares to ~~$0.5 million of income in the third quarter of 2017. Foreign exchange and other expense of $2.6~~$2.3 million in the ~~nine months ended September 28, 2018 compares to $0.5 million~~first quarter of expense in the nine months ended September 29, 2017. The increase in foreign exchange and other expense was driven by the strengthening of the U.S. dollar against certain foreign currencies, primarily in Europe, Canada and Latin America.2018.

Our effective tax rate for the ~~third~~first quarter of ~~2018~~2019 was ~~30.6%~~30.3% compared to ~~39.7% in the prior year period. Our effective tax rate for the nine months ended September 28, 2018 was 29.9% compared to 38.3%~~29.7% in the prior year period. The ~~nine months ended September 28, 2018 included a $1.8 million tax benefit related to~~increase in the ~~reversal of deferred income tax valuation allowances, partially offset by $0.5 million of tax expense related to domestic permanent tax differences. The decrease in our~~ effective tax rate was due primarily ~~due~~ to ~~a favorable tax impact from~~ the ~~December 22, 2017 Tax Cuts and Jobs Act (the "Act"). Under~~change in the ~~Act, the statutory U.S. federal tax rate was reduced from 35% to 21% effective January 1, 2018. The benefit from this rate reduction was partially offset by other newly enacted tax provisions.~~

~~ANIXTER INTERNATIONAL INC.~~

country mix of earnings.

EBITDA and Adjusted EBITDA

* Items impacting operating income excludes amortization of intangible assets in the calculation of adjusted EBITDA as amortization is already added back in the EBITDA calculation above.

* Items impacting operating income excludes amortization of intangible assets in the calculation of adjusted EBITDA as amortization is already added back in the EBITDA calculation above.ANIXTER INTERNATIONAL INC.

NSS – NSS adjusted EBITDA of ~~$81.6~~$78.0 million in the ~~third~~first quarter of ~~2018~~2019 compares to ~~$72.3~~$58.5 million in the ~~third~~first quarter of ~~2017.~~2018. The increase in adjusted EBITDA was driven by ~~operating expense leverage~~gross margin improvement and the favorable impact from acquisitions.

EES– EES adjusted EBITDA of ~~$36.5~~$32.6 million in the ~~third~~first quarter of ~~2018~~2019 compares to ~~$29.7~~$34.7 million in the ~~third~~first quarter of ~~2017.~~2018. The decrease in adjusted EBITDA was driven by lower volumes, partially offset by gross margin improvement.

UPS– UPS adjusted EBITDA of $22.7 million in the first quarter of 2019 compares to $20.9 million in the first quarter of 2018. The increase in adjusted EBITDA was driven by ~~strong~~sales growth and expense ~~leverage associated with the sales growth.~~discipline.

~~UPS~~– UPS adjusted EBITDA of $24.1 million in the third quarter of 2018 compares to $24.8 million in the third quarter of 2017. The decrease in adjusted EBITDA was caused primarily by customer mix combined with inflationary pressures on product costs and freight expense.

ANIXTER INTERNATIONAL INC.

Q3 YTD EBITDA and Adjusted EBITDA by Segment:
Nine Months Ended September 28, 2018
(In millions) NSS EES UPS Corporate Total
Net income $ 194.6
$ 101.1
$ 54.2
$ (235.4 ) $ 114.5
Interest expense —
—
—
56.5
56.5
Income taxes —
—
—
48.8
48.8
Depreciation 2.6
1.8
2.9
16.0
23.3
Amortization of intangible assets 13.0
5.7
9.9
—
28.6
EBITDA $ 210.2
$ 108.6
$ 67.0
$ (114.1 ) $ 271.7

Total of items impacting operating income* $ 4.8
$ 1.9
$ 0.7
$ 5.7
$ 13.1
Foreign exchange and other non-operating expense —
—
—
2.6
2.6
Stock-based compensation 1.2
1.1
0.4
12.3
15.0
Adjusted EBITDA $ 216.2
$ 111.6
$ 68.1
$ (93.5 ) $ 302.4

* Items impacting operating income excludes amortization of intangible assets and CEO retirement agreement expense in the calculation of adjusted EBITDA as amortization is already added back in the EBITDA calculation and CEO retirement agreement expense is added back as part of Stock-based compensation.

* Items impacting operating income excludes amortization of intangible assets in the calculation of adjusted EBITDA as amortization is already added back in the EBITDA calculation above.

~~NSS –~~ NSS adjusted EBITDA of $216.2 million in the nine months ended September 28, 2018 compares to $208.7 million in the nine months ended September 29, 2017. The increase in adjusted EBITDA was driven by operating expense leverage and the favorable impact from acquisitions.

~~EES~~– EES adjusted EBITDA of $111.6 million in the nine months ended September 28, 2018 compares to $92.9 million in the nine months ended September 29, 2017. The increase in adjusted EBITDA was driven by strong expense leverage associated with the sales growth combined with the benefit of higher copper prices.

~~UPS~~– UPS adjusted EBITDA of $68.1 million in the nine months ended September 28, 2018 compares to $71.6 million in the nine months ended September 29, 2017. The decrease in adjusted EBITDA was due primarily to lower gross margin.

~~ANIXTER INTERNATIONAL INC.~~

Financial Liquidity and Capital Resources

As a distributor, our use of capital is largely for working capital to support our revenue growth. Capital commitments for property and equipment are limited to information technology assets, warehouse equipment, office furniture and fixtures and leasehold improvements, because we operate almost entirely from leased facilities. Therefore, in any given reporting period, the amount of cash consumed or generated by operations other than from net earnings will primarily be due to changes in working capital as a result of the rate of increases or decreases in sales.

In periods when sales are increasing, the expanded working capital needs will be funded first by cash from operations, then from additional borrowings and lastly from additional equity offerings. In periods when sales are decreasing, we will have improved cash flows due to reduced working capital requirements. During such periods, we will use the expanded cash flow to reduce the amount of leverage in our capital structure until such time as economic conditions improve and growth resumes. Also, we will, from time to time, issue or retire borrowings or equity in an effort to maintain a cost-effective capital structure consistent with our anticipated capital requirements.

Net cash ~~provided by~~used in operations was ~~$102.8~~$114.2 million in the ~~nine~~three months ended ~~September 28, 2018~~March 29, 2019 compared to $71.2 million of net cash ~~provided by~~used in operations ~~of $110.1 million~~ in the prior year period. The ~~decrease~~increase is primarily due to higher investment in working capital to support growth in the business.

Net cash used in investing activities was ~~$172.8~~$5.9 million and $6.8 million in the ~~nine~~three months ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~which included $149.9 million for the acquisition of security businesses in Australia~~respectively, and ~~New Zealand and $32.0 million for capital expenditures. Net cash used in investing activities was $30.9 million in the nine months ended September 29, 2017 and~~primarily related to capital expenditures. Capital expenditures are expected to be approximately ~~$45~~$55 - ~~$50~~$60 million in ~~2018~~2019 as we continue to invest in warehouse equipment, information system upgrades, integration of acquired businesses and new software to support our infrastructure.

Net cash provided by financing activities was ~~$17.8~~$114.9 million in the ~~nine~~three months ended ~~September 28, 2018~~March 29, 2019 compared to net cash ~~used in~~provided by financing activities of ~~$114.3~~$39.1 million in the ~~nine~~three months ended ~~September 29, 2017.~~March 30, 2018. During the ~~nine~~three months ended ~~September 28,~~March 29, 2019 and March 30, 2018, we had net borrowings on our ~~revolving lines~~long-term debt of ~~credit of $16.3 million. During the nine months ended September 29, 2017, we had net repayments on our revolving lines of credit of $46.7~~$114.1 million and ~~a repayment of our Canadian term loan of $70.9 million.~~$38.3 million, respectively.

Liquidity and Capital Resources

At ~~September 28, 2018,~~March 29, 2019, our primary liquidity source was the ~~Receivables Facility~~U.S. accounts receivable asset based revolving credit facility in an aggregate committed amount of $600.0 million ("Receivables Facility") and the ~~Inventory Facility~~U.S. inventory asset based revolving credit facility in an aggregate committed amount of $150.0 ~~million.~~million ("Inventory Facility"). At ~~September 28, 2018,~~March 29, 2019, there was ~~$145.0~~$340.0 million of borrowings under the Receivables Facility, and there were no borrowings under the Inventory Facility.

Our debt-to-capital ratio ~~decreased~~increased from ~~46.1%~~44.4% at December ~~29, 2017 to 44.7% at September~~ 28, 2018 ~~below~~to 45.8% at March 29, 2019, within our targeted range of 45-50%.

We are in compliance with all of our covenants and believe that there is adequate margin between the covenant ratios and the actual ratios given the current trends of the business. ~~For further information, including information regarding our credit arrangements, see Note 3. "Debt" in the Notes to the Condensed Consolidated Financial Statements.~~

Critical Accounting Policies and Estimates

There were no material changes in our critical accounting policies since the filing of our ~~2017~~2018 Form 10-K. For further information about recently issued accounting pronouncements, see Note 1. "Summary of Significant Accounting Policies" in the Notes to the Condensed Consolidated Financial Statements. As discussed in the ~~2017~~2018 Form 10-K, the preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make certain estimates and assumptions that affect the amount of reported assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and revenues and expenses during the periods reported. Actual results may differ from those estimates.

ANIXTER INTERNATIONAL INC.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

There were no material changes to market risks and related disclosures in Item 7A. of Part II in the Company's Annual Report on Form 10-K for the year ended December ~~29, 2017,~~28, 2018, as filed with the Securities and Exchange Commission on February ~~22, 2018.~~21, 2019.

ITEM 4. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of Anixter's management, including its principal executive officer and principal financial officer, an evaluation was conducted as of ~~September 28, 2018~~March 29, 2019 of the effectiveness of the design and operation of disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended. Based on this evaluation, the Company's principal executive officer and principal financial officer concluded that disclosure controls and procedures were effective as of ~~September 28, 2018.~~March 29, 2019. There was no change in internal control over financial reporting that occurred during the three months ended ~~September 28, 2018~~March 29, 2019 that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Information regarding legal proceedings is contained in Note 4.5. "Legal Contingencies" in the ~~Notes~~notes to the Condensed Consolidated Financial Statements contained in this report and is incorporated herein by reference.

ITEM 1A. RISK FACTORS.

There were no material changes to the risk factors disclosed in Item 1A of Part 1 in the Company's Annual Report on Form 10-K for the year ended December ~~29, 2017,~~28, 2018, as filed with the Securities and Exchange Commission on February ~~22, 2018.~~21, 2019.

ITEM 6. EXHIBITS.



(10)		Material Contracts
10.1		Anixter International Inc. 2019 Performance Unit Grant Agreement
10.2		Anixter International Inc. 2019 Restricted Stock Unit Grant Agreement
(31)		Rule 13a — 14(a) /15d — 14(a) Certifications.
31.1		William A. Galvin, President and Chief Executive Officer, Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Theodore A. Dosch, Executive Vice President-Finance and Chief Financial Officer, Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
(32)		Section 1350 Certifications.
32.1		William A. Galvin, President and Chief Executive Officer, Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Theodore A. Dosch, Executive Vice President-Finance and Chief Financial Officer, Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS**		XBRL Instance Document - The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
101.SCH**		XBRL Taxonomy Extension Schema Document
101.CAL**		XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**		XBRL Taxonomy Extension Definition Linkbase
101.LAB**		XBRL Taxonomy Extension Label Linkbase Document
101.PRE**		XBRL Taxonomy Extension Presentation Linkbase Document

** Attached as Exhibit 101 to this report are the following documents formatted in XBRL (Extensible Business Reporting Language): (i) the Condensed Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~September 28,~~March 29, 2019 and March 30, 2018, ~~and September 29, 2017,~~ (ii) the Condensed Consolidated Balance Sheets at ~~September~~March 29, 2019 and December 28, 2018, ~~and December 29, 2017,~~ (iii) the Condensed Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September 28,~~March 29, 2019 and March 30, 2018, (iv) the Condensed Consolidated Statements of Stockholders’ Equity for the three months ended March 29, 2019 and March 30, 2018, and ~~September 29, 2017, and (iv)~~(v) Notes to the Condensed Consolidated Financial Statements for the three ~~and nine~~ months ended ~~September 28, 2018.~~March 29, 2019.

ANIXTER INTERNATIONAL INC.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.



	ANIXTER INTERNATIONAL INC.

~~October~~April 23, ~~2018~~2019	By:	/s/ William A. Galvin
		William A. Galvin
		President and Chief Executive Officer

~~October~~April 23, ~~2018~~2019	By:	/s/ Theodore A. Dosch
		Theodore A. Dosch
		Executive Vice President – Finance and Chief Financial Officer

2925



		Page
	PART I. FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2723
Item 4.	Controls and Procedures	2723
	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	2824
Item 1A.	Risk Factors	2824
Item 6.	Exhibits	2824



U.S. GAAP to Non-GAAP Net Income and EPS Reconciliation:
(In millions, except per share amounts)	Three Months Ended
	March 29, 2019		March 30, 2018
Reconciliation to most directly comparable U.S. GAAP financial measure:
Net income - U.S. GAAP	$	39.1	$	32.1
Items impacting net income	6.3		7.6
Net income - Non-GAAP	$	45.4	$	39.7

Diluted EPS – U.S. GAAP	$	1.14	$	0.94
Diluted EPS impact of these items	0.19		0.22
Diluted EPS – Non-GAAP	$	1.33	$	1.16



U.S. GAAP to Non-GAAP Net Income and EPS Reconciliation:
(In millions, except per share amounts)	Three Months Ended				Nine Months Ended
	September 28, 2018		September 29, 2017		September 28, 2018		September 29, 2017
Reconciliation to most directly comparable U.S. GAAP financial measure:
Net income - U.S. GAAP	$	47.6	$	37.6	$	114.5	$	108.6
Items impacting net income	7.2		6.6		31.9		18.8
Net income - Non-GAAP	$	54.8	$	44.2	$	146.4	$	127.4

Diluted EPS – U.S. GAAP	$	1.40	$	1.11	$	3.36	$	3.20
Diluted EPS impact of these items	0.21		0.19		0.94		0.55
Diluted EPS – Non-GAAP	$	1.61	$	1.30	$	4.30	$	3.75



Sales Growth Trends
	Nine Months Ended September 28, 2018										Nine Months Ended September 29, 2017
($ millions)	As Reported		Foreign Exchange Impact			Copper Impact			As Adjusted		As Reported		Acquisitions Impact		Adjusted for Acquisitions		Organic Growth / (Decline)


Network & Security Solutions (NSS)
North America	$	2,475.4	$	(3.1	)	$	—		$	2,472.3	$	2,403.6	$	—	$	2,403.6	2.9	%
EMEA	303.8		(11.5		)	—			292.3		268.3		1.2		269.5		8.5	%
Emerging Markets	449.9		4.1			—			454.0		391.6		41.2		432.8		4.9	%
NSS	$	3,229.1	$	(10.5	)	$	—		$	3,218.6	$	3,063.5	$	42.4	$	3,105.9	3.6	%

Electrical & Electronic Solutions (EES)
North America	$	1,392.9	$	(2.4	)	$	(15.4	)	$	1,375.1	$	1,291.6	$	—	$	1,291.6	6.5	%
EMEA	198.4		(10.2		)	(1.9		)	186.3		193.4		—		193.4		(3.7	)%
Emerging Markets	180.1		0.1			(1.4		)	178.8		158.9		—		158.9		12.5	%
EES	$	1,771.4	$	(12.5	)	$	(18.7	)	$	1,740.2	$	1,643.9	$	—	$	1,643.9	5.9	%

Utility Power Solutions (UPS)
North America	$	1,280.6	$	(1.5	)	$	(0.5	)	$	1,278.6	$	1,206.2	$	—	$	1,206.2	6.0	%
UPS	$	1,280.6	$	(1.5	)	$	(0.5	)	$	1,278.6	$	1,206.2	$	—	$	1,206.2	6.0	%

Total	$	6,281.1	$	(24.5	)	$	(19.2	)	$	6,237.4	$	5,913.6	$	42.4	$	5,956.0	4.7	%

Geographic Sales
North America	$	5,148.9	$	(7.0	)	$	(15.9	)	$	5,126.0	$	4,901.4	$	—	$	4,901.4	4.6	%
EMEA	502.2		(21.7		)	(1.9		)	478.6		461.7		1.2		462.9		3.4	%
Emerging Markets	630.0		4.2			(1.4		)	632.8		550.5		41.2		591.7		6.9	%
Total	$	6,281.1	$	(24.5	)	$	(19.2	)	$	6,237.4	$	5,913.6	$	42.4	$	5,956.0	4.7	%



x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934



	Restructuring Activity
	Q2 2018 Plan						Q2 2016 Plan						Q4 2015 Plan			Total
	Employee-Related Costs (a)			Facility Exit and Other Costs (b)			Employee-Related Costs (a)			Facility Exit and Other Costs (b)			Employee-Related Costs (a)			Employee-Related Costs (a)			Facility Exit and Other Costs (b)
Balance at December 29, 2017	$	—		$	—		$	0.5		$	0.5		$	0.6		$	1.1		$	0.5
Charges	9.6			0.5			—			(0.4		)	(0.3		)	9.3			0.1
Payments and other	(1.0		)	(0.3		)	(0.5		)	(0.1		)	(0.1		)	(1.6		)	(0.4		)
Balance at September 28, 2018	$	8.6		$	0.2		$	—		$	—		$	0.2		$	8.8		$	0.2



(In millions)
Third Quarter of 2018	NSS		EES		UPS		Corporate			Total
Net Sales	$	1,138.0	$	597.4	$	443.6	$	—		$	2,179.0
Operating income	75.0		34.1		19.9		(39.5		)	89.5



Third Quarter of 2017	NSS		EES		UPS		Corporate			Total
Net Sales	$	1,049.2	$	555.0	$	412.2	$	—		$	2,016.4
Operating income	67.5		26.8		19.8		(33.3		)	80.8



Nine Months of 2018	NSS		EES		UPS		Corporate			Total
Net Sales	$	3,229.1	$	1,771.4	$	1,280.6	$	—		$	6,281.1
Operating income	194.6		101.1		54.2		(127.5		)	222.4



Nine Months of 2017	NSS		EES		UPS		Corporate			Total
Net Sales	$	3,063.5	$	1,643.9	$	1,206.2	$	—		$	5,913.6
Operating income	194.2		84.3		57.3		(103.5		)	232.3



(In millions)	NSS			EES			UPS			Total
Balance as of December 29, 2017	$	408.8		$	181.7		$	187.6		$	778.1
Acquisition related ^(a)	65.4			—			—			65.4
Foreign currency translation	(5.4		)	(0.4		)	(4.3		)	(10.1		)
Balance as of September 28, 2018	$	468.8		$	181.3		$	183.3		$	833.4

																															Items Impacting Comparability of Operating Expense and Operating Income by Segment:

	Three Months Ended September 28, 2018															Three Months Ended March 29, 2019
(In millions)	NSS			EES			UPS			Corporate			Total			NSS			EES			UPS			Corporate			Total
Amortization of intangible assets	$	(5.0	)	$	(1.4	)	$	(3.2	)	$	—		$	(9.6	)	$	(4.1	)	$	(1.4	)	$	(3.3	)	$	—		$	(8.8	)
Restructuring charge	—			—			—			(0.2		)	(0.2		)	—			—			0.1			(0.1		)	—
Acquisition and integration costs	(0.2		)	—			—			(0.1		)	(0.3		)	—			—			—			0.3			0.3
U.K. facility relocation costs	(0.1		)	(0.1		)	—			—			(0.2		)
Total of items impacting operating expense and operating income	$	(5.3	)	$	(1.5	)	$	(3.2	)	$	(0.3	)	$	(10.3	)	$	(4.1	)	$	(1.4	)	$	(3.2	)	$	0.2		$	(8.5	)


	Three Months Ended September 29, 2017															Three Months Ended March 30, 2018
(In millions)	NSS			EES			UPS			Corporate			Total			NSS			EES			UPS			Corporate			Total
Amortization of intangible assets	$	(3.6	)	$	(2.2	)	$	(3.3	)	$	—		$	(9.1	)	$	(3.8	)	$	(2.2	)	$	(3.3	)	$	—		$	(9.3	)
Acquisition and integration costs	—			—			—			(0.8		)	(0.8		)	—			—			—			(0.3		)	(0.3		)
U.K. facility relocation costs																—			(0.2		)	—			—			(0.2		)
Total of items impacting operating expense and operating income	$	(3.6	)	$	(2.2	)	$	(3.3	)	$	(0.8	)	$	(9.9	)	$	(3.8	)	$	(2.4	)	$	(3.3	)	$	(0.3	)	$	(9.8	)


Q3 EBITDA and Adjusted EBITDA by Segment:
2019 EBITDA and Adjusted EBITDA by Segment:													2019 EBITDA and Adjusted EBITDA by Segment:
	Three Months Ended September 28, 2018													Three Months Ended March 29, 2019
(In millions)	NSS		EES		UPS			Corporate			Total			NSS		EES		UPS			Corporate			Total
Net income	$	75.0	$	34.1	$	19.9		$	(81.4	)	$	47.6
Net income (loss)														$	70.9	$	29.1	$	18.5		$	(79.4	)	$	39.1
Interest expense	—		—		—			19.3			19.3			—		—		—			20.4			20.4
Income taxes	—		—		—			21.0			21.0			—		—		—			16.9			16.9
Depreciation	0.9		0.6		1.1			5.6			8.2			2.4		1.8		0.9			4.2			9.3
Amortization of intangible assets	5.0		1.4		3.2			—			9.6			4.1		1.4		3.3			—			8.8
EBITDA	$	80.9	$	36.1	$	24.2		$	(35.5	)	$	105.7		$	77.4	$	32.3	$	22.7		$	(37.9	)	$	94.5

Total of items impacting operating income*	$	0.3	$	0.1	$	—		$	0.3		$	0.7
Foreign exchange and other non-operating expense	—		—		—			1.6			1.6
Total of items impacting operating income ^(a)														$	—	$	—	$	(0.1	)	$	(0.2	)	$	(0.3	)
Foreign exchange and other non-operating (income)														—		—		—			(1.8		)	(1.8		)
Stock-based compensation	0.4		0.3		(0.1		)	2.6			3.2			0.6		0.3		0.1			3.1			4.1
Adjusted EBITDA	$	81.6	$	36.5	$	24.1		$	(31.0	)	$	111.2		$	78.0	$	32.6	$	22.7		$	(36.8	)	$	96.5


(a)	Items impacting operating income excludes amortization of intangible assets in the calculation of adjusted EBITDA as amortization is already added back in the EBITDA calculation above.


2018 EBITDA and Adjusted EBITDA by Segment:													2018 EBITDA and Adjusted EBITDA by Segment:
	Three Months Ended September 29, 2017													Three Months Ended March 30, 2018
(In millions)	NSS		EES		UPS		Corporate			Total				NSS		EES		UPS		Corporate			Total
Net income	$	67.5	$	26.8	$	19.8	$	(76.5	)	$	37.6
Net income (loss)														$	53.5	$	31.4	$	16.4	$	(69.2	)	$	32.1
Interest expense	—		—		—		18.9			18.9				—		—		—		18.2			18.2
Income taxes	—		—		—		24.8			24.8				—		—		—		13.6			13.6
Depreciation	0.7		0.5		1.1		5.1			7.4				0.8		0.5		0.9		5.2			7.4
Amortization of intangible assets	3.6		2.2		3.3		—			9.1				3.8		2.2		3.3		—			9.3
EBITDA	$	71.8	$	29.5	$	24.2	$	(27.7	)	$	97.8			$	58.1	$	34.1	$	20.6	$	(32.2	)	$	80.6

Total of items impacting operating income*	$	—	$	—	$	—	$	0.8		$	0.8
Total of items impacting operating income ^(a)														$	—	$	0.2	$	—	$	0.3		$	0.5
Foreign exchange and other non-operating (income)	—		—		—		(0.5		)	(0.5		)		—		—		—		(2.3		)	(2.3		)
Stock-based compensation	0.5		0.2		0.6		3.1			4.4				0.4		0.4		0.3		3.5			4.6
Adjusted EBITDA	$	72.3	$	29.7	$	24.8	$	(24.3	)	$	102.5			$	58.5	$	34.7	$	20.9	$	(30.7	)	$	83.4