SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
-
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 29, 2001
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
COMMISSION FILE NUMBER: 1-5989
ANIXTER INTERNATIONAL INC.
(Exact name of registrant as specified in its charter)
DELAWARE 94-1658138
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4711 GOLF ROAD
SKOKIE, ILLINOIS 60076
(847) 677-2600
(Address and telephone number of principal executive offices)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes X No__
At August 6, 2001, 36,729,620 shares of the registrant's
Common Stock, $1.00 par value, were outstanding.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings *
Item 2. Changes in Securities *
Item 3. Defaults Upon Senior Securities *
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 5. Other Information *
Item 6. Exhibits and Reports on Form 8-K 13
* No reportable information under this item.
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, WHICH CAN BE IDENTIFIED BY THE USE
OF FORWARD-LOOKING TERMINOLOGY SUCH AS "BELIEVES", "EXPECTS", "PROSPECTS",
"ESTIMATED", "SHOULD", "MAY" OR THE NEGATIVE THEREOF OR OTHER VARIATIONS THEREON
OR COMPARABLE TERMINOLOGY INDICATING THE COMPANY'S EXPECTATIONS OR BELIEFS
CONCERNING FUTURE EVENTS. THE COMPANY CAUTIONS THAT SUCH STATEMENTS ARE
QUALIFIED BY IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER
MATERIALLY FROM THOSE IN THE FORWARD-LOOKING STATEMENTS, A NUMBER OF WHICH ARE
IDENTIFIED IN THIS REPORT. OTHER FACTORS COULD ALSO CAUSE ACTUAL RESULTS TO
DIFFER MATERIALLY FROM EXPECTED RESULTS INCLUDED IN THESE STATEMENTS. THESE
FACTORS INCLUDE GENERAL ECONOMIC CONDITIONS, TECHNOLOGY CHANGES, CHANGES IN
SUPPLIER OR CUSTOMER RELATIONSHIPS, EXCHANGE RATE FLUCTUATIONS AND NEW OR
CHANGED COMPETITORS.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the 13 Weeks Ended For the 26 Weeks Ended
---------------------- ----------------------
(In millions, except per share amounts) June 29, June 30, June 29, June 30,
2001 2000 2001 2000
---- ---- ---- ----
<c>
Net sales $ 839.8 $ 920.9 $1,720.1 $1,679.7
Cost of goods sold 639.3 712.2 1,307.6 1,284.0
-------- -------- -------- --------
Gross profit 200.5 208.7 412.5 395.7
Operating expenses 155.0 156.6 315.1 304.1
Amortization of goodwill 2.3 2.1 4.5 4.1
-------- -------- -------- --------
Operating income 43.2 50.0 92.9 87.5
Interest expense (8.9) (11.8) (18.2) (21.4)
Other, net (3.4) 1.0 (8.2) 0.8
-------- -------- -------- --------
Income before income taxes and extraordinary loss 30.9 39.2 66.5 66.9
Income tax expense 12.2 16.5 26.9 28.1
-------- -------- -------- --------
Income before extraordinary loss 18.7 22.7 39.6 38.8
Extraordinary loss on early extinguishment
of debt (net of income tax benefit of $.6) (0.8) - (0.8) -
-------- -------- -------- --------
Net income $ 17.9 $ 22.7 $ 38.8 $ 38.8
======== ======== ======== ========
Basic income per share:
Income before extraordinary loss $ 0.52 $ 0.62 $ 1.08 $ 1.08
Extraordinary loss (0.02) - (0.02) -
-------- -------- -------- --------
Net income $ 0.50 $ 0.62 $ 1.06 $ 1.08
======== ======== ======== ========
Diluted income per share:
Income before extraordinary loss $ 0.49 $ 0.60 $ 1.01 $ 1.04
Extraordinary loss (0.02) - (0.02) -
-------- -------- -------- --------
Net income $ 0.47 $ 0.60 $ 0.99 $ 1.04
======== ======== ======== ========
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In millions) June 29, December 29,
2001 2000
---------- ------------
ASSETS
(Unaudited)
Current assets
Cash $ 8.3 $ 20.8
Accounts receivable (less allowances of
$15.3 and $14.8 in 2001 and 2000, respectively) 249.7 293.3
Note receivable - unconsolidated subsidiary 132.5 126.1
Inventories 623.1 738.4
Inventories returnable to vendor, net - 120.0
Deferred income taxes 26.3 25.5
Other current assets 12.1 10.3
--------- ---------
Total current assets 1,052.0 1,334.4
Property and equipment, at cost 176.5 167.1
Accumulated depreciation (114.3) (110.6)
--------- ---------
Property and equipment, net 62.2 56.5
Goodwill (less accumulated amortization of
$90.2 and $86.8 in 2001 and 2000, respectively) 234.1 239.3
Other assets 71.2 55.8
--------- ---------
$ 1,419.5 $ 1,686.0
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 346.9 $ 499.1
Accrued expenses 97.8 139.6
Income taxes payable 5.9 8.1
--------- ---------
Total current liabilities 450.6 646.8
Long-term debt 369.9 451.9
Other liabilities 38.7 32.4
--------- ---------
Total liabilities 859.2 1,131.1
Stockholders' equity
Common stock 36.5 37.7
Capital surplus 18.1 46.9
Accumulated other comprehensive income (56.0) (52.6)
Retained earnings 561.7 522.9
--------- ---------
Total stockholders' equity 560.3 554.9
--------- ---------
Total liabilities and stockholders' equity $ 1,419.5 $ 1,686.0
========= =========
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In millions) 26 Weeks Ended
-----------------------
June 29, June 30,
2001 2000
---- ----
Operating activities
Net income $ 38.8 $ 38.8
Adjustments to reconcile net income to net cash
provided by (used in) continuing operating activities:
Extraordinary loss 0.8 -
Depreciation and amortization 15.4 13.4
Accretion of zero-coupon convertible notes 7.2 -
Deferred income taxes (0.3) (1.1)
Changes in current assets and liabilities, net 63.6 (225.3)
Other, net 1.5 1.5
------ ------
Net cash provided by (used in) continuing operating activities 127.0 (172.7)
Investing activities
Capital expenditures (15.4) (6.2)
Acquisition of business - (6.7)
------ ------
Net cash used in continuing investing activities (15.4) (12.9)
Financing activities
Proceeds from long-term borrowings 578.8 844.4
Repayment of long-term borrowings (639.4) (649.2)
Repayment of notes payable (27.3) -
Proceeds from issuance of common stock 14.9 28.3
Purchases of common stock for treasury (46.9) (15.4)
Debt issuance costs (0.1) (6.0)
Other, net (0.1) (3.5)
------ ------
Net cash (used in) provided by continuing financing activities (120.1) 198.6
------ ------
(Decrease) increase in cash from continuing operations (8.5) 13.0
Cash used in discontinued operations (4.0) (9.7)
Cash at beginning of period 20.8 17.5
------ ------
Cash at end of period $ 8.3 $ 20.8
====== ======
See accompanying notes to the condensed consolidated financial statements.
ANIXTER INTERNATIONAL INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF CONSOLIDATION AND PRESENTATION
The accompanying condensed consolidated financial statements should be
read in conjunction with the consolidated financial statements included in
Anixter International Inc.'s ("the Company") Annual Report on Form 10-K for the
year ended December 29, 2000. 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 results of operations of any interim period are not necessarily
indicative of the results that may be expected for a full fiscal year. Certain
amounts for the prior year have been reclassified to conform to the 2001
presentation.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 2000, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an amendment of SFAS No.
133." These statements outline the accounting treatment for all derivative
activity. The Company adopted these standards in the first quarter of fiscal
2001. The impact of adoption on the consolidated results of operations or
financial position was not significant. The Company is exposed to the impact of
interest rate changes and fluctuations in foreign currencies, as well as changes
in the market value of its financial instruments. The Company periodically uses
derivatives, both fair value and cash flow hedges, in order to minimize these
risks, but not for trading purposes. The Company does not enter into derivative
transactions that are ineffective or expect to recognize significant gains and
losses associated with SFAS No. 133. During the second quarter of 2001, the
Company incurred $1.7 million in interest expense related to the cancellation of
certain of its interest rate hedge agreements for which there were no longer
outstanding borrowings. At June 29, 2001, the fair market value of the
derivatives were included in "Other assets" on the condensed consolidated
balance sheet.
In June 2001, the Financial Accounting Standards Board issued SFAS No.
141 "Business Combinations", and No. 142, "Goodwill and Other Intangible
Assets", effective for fiscal years beginning after December 15, 2001. Under the
new rules, goodwill will no longer be amortized but will be subject to annual
impairment tests in accordance with the Statements. Other intangible assets will
continue to be amortized over their useful lives.
The Company will apply the new rules on accounting for goodwill and
other intangible assets beginning in the first quarter of 2002. During 2002, the
Company will perform the first of the required impairment tests of goodwill as
of January 1, 2002, and does not anticipate that the effect of these tests will
be significant on the earnings and financial position of the Company.
NOTE 2. ACQUISITION OF BUSINESS
In the first quarter of 2000, the Company acquired 100% of the stock of
allNET Technologies Pty. Limited ("allNET") for $6.7 million. allNET is a
structured cabling distributor located in Australia. The effect of this
acquisition on the operating results of the Company was not significant.
NOTE 3. INCOME PER SHARE
The following table sets forth the computation of basic and diluted
income per common share:
13 WEEKS ENDED 26 WEEKS ENDED
----------------------- -----------------------
JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2001 2000 2001 2000
---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
BASIC INCOME PER SHARE
Income before extraordinary loss $ 18,742 $ 22,717 $ 39,620 $ 38,792
Extraordinary loss (850) - (850) -
---------- ---------- ---------- ----------
Net income (numerator) $ 17,892 $ 22,717 $ 38,770 $ 38,792
========== ========== ========== ==========
Weighted- average common shares
outstanding (denominator) 35,829 36,444 36,567 35,985
Income before extraordinary loss $ 0.52 $ 0.62 $ 1.08 $ 1.08
Extraordinary loss (0.02) - (0.02) -
Net income $ 0.50 $ 0.62 $ 1.06 $ 1.08
DILUTED INCOME PER SHARE
Income before extraordinary loss $ 18,742 $ 22,717 $ 39,620 $ 38,792
Interest impact of assumed
conversion of convertible notes 2,222 45 4,445 45
---------- ---------- ---------- ----------
Adjusted income before extraordinary
loss (numerator) 20,964 22,762 44,065 38,837
Extraordinary loss (850) - (850) -
---------- ---------- ---------- ----------
Net income $ 20,114 $ 22,762 $ 43,215 $ 38,837
========== ========== ========== ==========
Weighted-average common shares
outstanding 35,829 36,444 36,567 35,985
Effect of dilutive securities:
Stock options, warrants and
convertible notes 7,301 1,446 7,147 1,367
---------- ---------- ---------- ----------
Weighted-average common shares
outstanding (denominator) 43,130 37,890 43,714 37,352
========== ========== ========== ==========
Income before extraordinary loss $ 0.49 $ 0.60 $ 1.01 $ 1.04
Extraordinary loss (0.02) - (0.02) -
Net income $ 0.47 $ 0.60 $ 0.99 $ 1.04
NOTE 4. COMPREHENSIVE INCOME
Comprehensive income, net of tax, consisted of the following:
13 WEEKS ENDED 26 WEEKS ENDED
------------------- -------------------
(IN MILLIONS) JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2001 2000 2001 2000
-------- -------- -------- --------
Net income $ 17.9 $ 22.7 $ 38.8 $ 38.8
Cumulative effect of adoption of
SFAS No. 133 - - 2.7 -
Change in cumulative translation adjustment 1.1 (5.8) (7.2) (10.4)
Change in fair market value of derivatives (1.7) - 1.1 -
-------- -------- --------- --------
Comprehensive income $ 17.3 $ 16.9 $ 35.4 $ 28.4
======== ======== ========= ========
NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
The Company had an ownership interest of 99.7% in Anixter Inc. at June
29, 2001, which is included in the consolidated financial statements of the
Company. The following summarizes the financial information for Anixter Inc.:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN MILLIONS) JUNE 29, DECEMBER 29,
2001 2000
--------- ---------
(UNAUDITED)
Assets:
Current assets $ 1,047.1 $ 1,331.0
Property, net 62.2 56.5
Goodwill, net 234.1 239.3
Other assets 67.5 53.8
--------- ---------
$ 1,410.9 $ 1,680.6
========= =========
Liabilities and Stockholders' Equity:
Current liabilities $ 443.4 $ 645.1
Other liabilities 31.5 28.6
Long-term debt 155.6 244.9
Subordinated notes payable to parent 234.3 250.5
Stockholders' equity 546.1 511.5
--------- ---------
$ 1,410.9 $ 1,680.6
========= =========
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
13 WEEKS ENDED 26 WEEKS ENDED
--------------------- ---------------------
(IN MILLIONS) JUNE 29, JUNE 30, JUNE 29, JUNE 30,
2001 2000 2001 2000
--------- --------- --------- ---------
Net sales $ 839.8 $ 920.9 $ 1,720.1 $ 1,679.7
Operating income $ 43.5 $ 50.4 $ 93.5 $ 89.1
Income before income taxes
and extraordinary loss $ 30.9 $ 39.1 $ 66.3 $ 68.5
Net income $ 17.6 $ 22.0 $ 37.9 $ 38.6
NOTE 6. EXTINGUISHMENT OF DEBT
During the second quarter of 2001, the Company repurchased $26.2
million of its 8% senior notes that mature in September, 2003 for $27.3 million.
Additionally, the Company expensed $.3 million of debt issuance costs associated
with the cancellation of a $110.0 million revolving credit agreement, due 2001.
Accordingly, the Company recorded an extraordinary loss on the early
extinguishment of debt of $1.4 million ($850,000 net of tax) in its condensed
consolidated statements of operations for the 13 and 26 weeks ended June 29,
2001.
NOTE 7. SUBSEQUENT EVENT
On July 20, 2001, the Company repurchased an additional $3.0 million
of its 8% senior notes that mature in September, 2003 for $3.1 million. The
Company will reflect an extraordinary loss of $.1 million on the early
extinguishment of debt from this transaction in its condensed consolidated
statements of operations for the 13 and 39 weeks ended September 28, 2001.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following is a discussion of the historical results of operations and
financial condition of Anixter International Inc. (the "Company") and factors
affecting the Company's financial resources. This discussion should be read in
conjunction with the consolidated financial statements, including the notes
thereto, set forth herein under "Financial Statements" and the Company's Annual
Report on Form 10-K for the year ended December 29, 2000. This discussion
contains forward-looking statements, which are qualified by reference to, and
should be read in conjunction with, the Company's discussion regarding
forward-looking statements as set forth in this report.
FINANCIAL LIQUIDITY AND CAPITAL RESOURCES
CASH FLOW
Consolidated net cash provided by continuing operating activities was $127.0
million for the 26 weeks ended June 29, 2001 compared, to $172.7 million used
for the same period in 2000. Cash provided by operating activities increased
primarily due to a reduction in working capital required to support the
business. In 2000, inventory increased $241.1 million to support the growth of
the business and a significant CLEC contract. Consolidated net cash used in
investing activities was $15.4 million for the 26 weeks ended June 29, 2001,
versus $12.9 million for the same period in 2000. For the 26 weeks ended June
29, 2001, the Company incurred $15.4 million of capital expenditures, primarily
for the expansion of warehouse facilities and purchase of software and computer
equipment. In the first quarter of 2000, the Company purchased allNet
Technologies Pty. Limited in Australia for $6.7 million. Capital expenditures
are expected to be approximately $22.0 million in 2001. Consolidated net cash
used in financing activities was $120.1 million for the 26 weeks ended June 29,
2001, in comparison to $198.6 million provided in the corresponding 2000 period.
The change is primarily the result of a net decrease in long-term borrowings of
$60.6 million, extinguishment of senior notes of $27.3 million and $46.9 million
of treasury stock purchases, partially offset by proceeds of $14.9 million
received from the exercise of 896,637 stock options. In 2000, long-term
borrowings increased $195.2 million, while treasury stock purchases were $15.4
million. In addition, in 2000 the Company received $28.3 million from the
exercise of 1,673,000 stock options. Cash used for discontinued operations was
$4.0 million in the 26 weeks ended June 29, 2001, compared to $9.7 million used
in the corresponding 2000 period.
FINANCINGS
At June 29, 2001, $332.4 million was available under the bank revolving lines of
credit at Anixter Inc., of which $18.5 million was available to pay the Company
for general corporate purposes. On April 24, 2001, Anixter Inc. cancelled a $110
million 364 day revolving credit line.
During the second quarter of 2001, Anixter Inc. repurchased $26.2 million of its
8% senior notes that mature in September, 2003, for $27.3 million. In July 2001,
Anixter Inc. repurchased an additional $3.0 million of its 8% senior notes for
$3.1 million.
Consolidated interest expense was $18.2 million and $21.4 million for the 26
weeks ended June 29, 2001 and June 30, 2000, respectively. The decrease is due
to lower debt levels, a result of the impact of the accounts receivable
securitization program implemented in the third quarter of fiscal year 2000 and
lower working capital levels. During the second quarter of 2001, the Company
incurred $1.7 million in interest expense related to the cancellation of certain
of its interest rate hedge agreements for which there were no longer outstanding
borrowings. The Company recorded other expense of $6.6 million related to the
interest expense incurred by Anixter Receivables Corporation, a wholly owned
unconsolidated subsidiary.
The Company had authorized the purchase of up to 2.8 million shares of its
common stock, with the volume and timing to depend on market conditions. During
the first half of 2001, the Company repurchased 2,079,000 shares at an average
cost of $22.57. Purchases were made in the open market and were financed from
cash generated by operations.
OTHER LIQUIDITY CONSIDERATIONS
Certain debt agreements entered into by the Company's subsidiaries contain
various restrictions including restrictions on payments to the Company. Such
restrictions have not had nor are expected to have an adverse impact on the
Company's ability to meet its cash obligations.
RESULTS OF OPERATIONS
The Company competes with distributors and manufacturers who sell products
directly or through existing distribution channels to end users or other
resellers. The Company's relationship with the manufacturers for which it
distributes products could be affected by decisions made by these manufacturers
as the result of changes in management or ownerships as well as other factors.
In addition, the Company's future performance could be affected by economic
downturns, potentially rapid changes in applicable technologies or regulatory
changes that substantially change the cost and/or availability of public
networking bandwidth.
QUARTER ENDED JUNE 29, 2001: Net income for the second quarter of 2001 was $17.9
million compared with $22.7 million for the second quarter of 2000. In the
second quarter of 2001, the Company recorded an after-tax extraordinary loss of
$850,000 for the early extinguishment of $26.2 million of the 8% senior notes
and debt issuance costs associated with the cancellation of a $110.0 million
revolving credit agreement due 2001.
The Company's net sales during the second quarter of 2001 decreased 8.8% to
$839.8 million from $920.9 million in the same period in 2000. Net sales by
major geographic market are presented in the following table:
13 WEEKS ENDED
----------------------
(IN MILLIONS) JUNE 29, JUNE 30,
2001 2000
--------- ---------
North America $ 656.7 $ 734.3
Europe 130.6 142.6
Asia Pacific and Latin America 52.5 44.0
--------- ---------
$ 839.8 $ 920.9
========= =========
When compared to the corresponding period in 2000, North America sales for the
second quarter of 2001 decreased 10.6% to $656.7 million. In 2000, the Company's
sales included $63 million of non-recurring low gross margin fulfillment sales.
Excluding these sales, North America was down by 1.9%. This decrease reflects
the general economic softness in the United States, combined with significant
weakness in the Service Provider and technology related business sectors. Sales
declines in the Enterprise Network Communications and Electrical Wire and Cable
markets were partially offset by a significant increase in the Integrated Supply
market. Europe sales decreased 8.4% primarily due to the impact of foreign
exchange rates. Excluding the effect of changes in exchange rates, Europe sales
declined only 2.7%. This decline is primarily related to softness in the
Enterprise Network Communications market. Asia Pacific and Latin American net
sales were up 19.4% from the second quarter of 2000, reflecting very strong
sales in Latin America. Excluding the effect of changes in exchange rates, Asia
Pacific and Latin America sales increased 22.5%.
Operating income decreased to $43.2 million in 2001 from $50.0 million in the
second quarter of 2000. Operating income by major geographic market is presented
in the following table:
13 WEEKS ENDED
----------------------
(IN MILLIONS) JUNE 29, JUNE 30,
2001 2000
--------- ---------
North America $ 35.4 $ 43.9
Europe 6.9 6.2
Asia Pacific and Latin America 0.9 (0.1)
--------- ---------
$ 43.2 $ 50.0
========= =========
North America operating income for the second quarter of 2001 decreased 19.6%
from the corresponding period in 2000. Excluding the non-recurring fulfillment
sales noted previously, operating profit declined 13.1%. Operating margins
declined to 5.4% in the second quarter of 2001 from 6.0% in the same period in
2000. The decline in operating margin primarily relates to incremental costs
associated with facility expansions completed in late 2000. Europe operating
income increased 13.1% reflecting lower operating expenses and slightly higher
gross margins, primarily in the Specialty Wire and Cable market. Lower operating
expenses are a result of organizational changes and refocused marketing efforts
over the past two years. Excluding the effect of changes in exchange rates,
Europe operating profit increased 19.3%. Asia Pacific and Latin America
operating income increased $1.0 million, from a loss of $.1 million in the
second quarter of 2000. This resulted from the 19.4% improvement in sales and a
reduced cost structure following the changes made in staffing and operations in
recent years. Changes in exchange rates had a minimal effect on operating
income.
Other expense, net totaled $3.4 million in the second quarter of 2001 compared
to income of $1.0 million in the corresponding period in 2000. In the second
quarter of 2001, the Company incurred $3.4 million in costs associated with the
accounts receivable securitization program. In 2000, the Company recorded $1.1
million of interest income primarily related to an income tax refund. The
consolidated tax provision on continuing operations decreased to $12.2 million
in 2001 from $16.5 million in the second quarter of 2000. The second quarter
2001 effective tax rate of 39.5% is based on pre-tax book income adjusted
primarily for amortization of nondeductible goodwill and losses of foreign
operations for which no current benefit is available. The decline from the first
quarter 2001 rate of 41.3% is due to the anticipation of a higher percentage of
foreign earnings which are taxed at a lower rate due to the utilization of
operating loss carry-forwards. The full year anticipated effective tax rate is
40.5%.
26 WEEKS ENDED JUNE 29, 2001: Net income for the 26 weeks ended June 29, 2001
was $38.8 million equal to the corresponding period in 2000. In the second
quarter of 2001, the Company recorded an after-tax extraordinary loss of
$850,000 for the early extinguishment of $26.2 million of the 8% senior notes
and debt issuance costs associated with the cancellation of a $110.0 million
revolving credit agreement due 2001.
The Company's net sales during the 26 weeks ended June 29, 2001 increased 2.4%
to $1,720.1 million from $1,679.7 million in the same period in 2000.
Net sales by major geographic market are presented in the following table:
26 WEEKS ENDED
------------------------
(IN MILLIONS) JUNE 29, JUNE 30,
2001 2000
---------- ---------
North America $ 1,319.0 $ 1,319.0
Europe 293.0 276.5
Asia Pacific and Latin America 108.1 84.2
--------- ---------
$ 1,720.1 $ 1,679.7
========= =========
When compared to the corresponding period in 2000, North America sales for the
26 weeks ended June 29, 2001 remained flat at $1,319.0 million. 2001 sales were
flat in the core Enterprise Network Communications product set, while decreased
sales in the Service Provider sector were offset by increased sales in the
Integrated Supply and Electrical Wire and Cable markets. Europe sales increased
6.0% due to strong sales in the Service Provider and Integrated Supply markets.
Excluding the effect of changes in exchange rates, Europe sales improved 12.9%.
Asia Pacific and Latin American net sales were up 28.4% from the same period in
2000, reflecting improvement in their respective economies. Excluding the effect
of changes in exchange rates, Asia Pacific and Latin America net sales increased
32.4%.
Operating income for the first half of 2001 increased 6.2%, or $5.4 million,
from $87.5 million in the first half of 2000. Operating income by major
geographic market is presented in the following table:
26 WEEKS ENDED
------------------------
(IN MILLIONS) JUNE 29, JUNE 30,
2001 2000
--------- ---------
North America $ 76.4 $ 76.6
Europe 14.6 11.4
Asia Pacific and Latin America 1.9 (0.5)
--------- ---------
$ 92.9 $ 87.5
========= =========
North America operating income and related operating margins were basically flat
compared to last year for the first half of 2001. Europe operating income
increased 28.2%, due to the increase in sales and a significant reduction in
operating expenses, reflecting organizational changes and refocused marketing
efforts. Excluding the effect of changes in exchange rates, Europe operating
profit increased 35.0%. Asia Pacific and Latin America recorded operating profit
of $1.9 million in the first half of 2001 compared to a loss of $.5 million for
the same period in 2000. This resulted from the 28.4% improvement in sales and a
reduced cost structure following the corrections made over the last two years.
Changes in exchange rates had a minimal effect on operating income.
Other expense, net totaled $8.2 million for the 26 weeks ended June 29, 2001
compared to income of $.8 million for the same period in 2000. During the first
half of 2001, the Company incurred $7.4 million in costs associated with the
accounts receivable securitization program and $1.0 million in foreign exchange
losses offset by miscellaneous income of $.2 million. In 2000, the Company
recorded $1.1 million of interest income primarily related to an income tax
refund.
The consolidated tax provision on continuing operations decreased to $26.9
million in 2001 from $28.1 million in the first half of 2000 due to a reduction
in the income tax rate and slightly lower pre-tax earnings. The 2001 effective
tax rate of 40.5% is based on pre-tax book income adjusted primarily for
amortization of nondeductible goodwill and losses of foreign operations for
which no current benefit is available. The decline in the effective tax rate
from 42.0% in 2000, reflects the anticipation of a higher percentage of foreign
earnings which have a lower effective tax rate than domestic earnings due to the
utilization of operating loss carry-forwards.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS
At the Annual Meeting of Stockholders held May 24, 2001 the Directors of the
Company were elected as follows:
DIRECTORS VOTES
- --------- ----------------------------
FOR WITHHELD
---------- --------
Lord James Blythe 33,731,778 34,779
Robert L. Crandall 33,731,211 35,346
Robert W. Grubbs, Jr. 31,083,129 2,683,428
F. Phillip Handy 33,735,269 31,288
Melvyn N. Klein 33,732,434 34,123
John R. Petty 33,732,054 34,503
Stuart M. Sloan 33,735,526 31,031
Thomas C. Theobald 33,734,422 32,135
Matthew Zell 33,192,692 573,865
Samuel Zell 33,214,349 552,208
At this Annual Meeting, the 2001 Stock Incentive Plan was approved by a vote of
21,597,166 shares "for" and 10,002,713 shares "against" with 73,185 shares
abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
None.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED, THEREUNTO DULY AUTHORIZED.
ANIXTER INTERNATIONAL INC.
Date: August 9, 2001 By: /S/ ROBERT W. GRUBBS
-------------------------------------
Robert W. Grubbs
President and Chief Executive Officer
Date: August 9, 2001 By: /S/ DENNIS J. LETHAM
-------------------------------------
Dennis J. Letham
Senior Vice President - Finance
and Chief Financial Officer