EXHIBIT 99.1
FOR FURTHER INFORMATION:
AT THE COMPANY: AT ASHTON PARTNERS:
DENNIS LETHAM CHRIS KETTMANN
CHIEF FINANCIAL OFFICER INVESTOR AND MEDIA INQUIRIES
(224) 521-8601 (312) 553-6716
ANIXTER INTERNATIONAL INC.
REPORTS RECORD FOURTH QUARTER OPERATING INCOME
ON SALES OF $1.03 BILLION
GLENVIEW, IL, JANUARY 31, 2006 - Anixter International Inc. (NYSE: AXE), the
world's leading distributor of communication products, electrical and electronic
wire & cable and a leading distributor of fasteners and other small parts ("C"
Class inventory components) to Original Equipment Manufacturers ("OEMs"), today
reported results for the quarter ended December 30, 2005.
FINANCIAL HIGHLIGHTS
(In millions, except per share amounts)
THREE MONTHS ENDED TWELVE MONTHS ENDED
----------------------------- -----------------------------
DEC. 30, DEC. 31, PERCENT DEC. 30, DEC. 31, PERCENT
2005 2004 CHANGE 2005 2004 CHANGE
-------- -------- ------- -------- -------- -------
Net Sales $1,025.6 $848.3 21% $3,847.4 $3,275.2 17%
Operating Income $ 54.7 $ 41.4 32% $ 189.4 $ 138.0 37%
Income Before
Extraordinary Gain $ 20.1 $ 25.6 -22% $ 90.0 $ 73.6 22%
Diluted Earnings Per Share
Before Extraordinary Gain $ 0.49 $ 0.64 -23% $ 2.22 $ 1.90 17%
Diluted Weighted Shares 41.4 39.9 4% 40.8 38.6 6%
Robert Grubbs, President and CEO, said, "Sales in the most recent quarter were
stronger than expected, as the anticipated slowdown surrounding the Thanksgiving
and Christmas holiday periods was less pronounced than historical patterns had
indicated. At the same time, all-time high copper prices had a positive effect
on our sales and earnings in the specialty wire & cable market. These two
factors, along with continued organic growth throughout many areas of the
business, drove record operating income results for the Company during the
quarter."
FOURTH QUARTER RESULTS
For the three-month period ended December 30, 2005, sales of $1.03 billion
produced an all-time high quarterly operating income of $54.7 million and net
income of $20.1 million, or 49 cents per diluted share. As previously reported,
an incremental income tax provision of $7.7 million or 19 cents per diluted
share was recorded related to the repatriation to the U.S. of accumulated
foreign earnings under the American Jobs Creation Act. The quarter also included
sales of $66.4 million from Infast, which was acquired on July 8, 2005.
In the prior year period, sales of $848.3 million generated operating income of
$41.4 million and net income of $25.6 million, or 64 cents per diluted share.
These prior year results benefited from a number of unusual items. Operating
income benefited from net favorable adjustments to cost of
sales of $10.2 million ($6.1 million after-tax, or 15 cents per diluted share)
due to a reduction in the risks associated with the value of certain
inventories. Operating results in the 2004 fourth quarter were also affected by
a number of unfavorable expense items, including moving costs related to the
relocation of the Company's largest distribution center and severance costs
associated with a reduction in staffing levels in Europe. These unfavorable
operating expense items combined to reduce fourth quarter operating earnings by
$4.4 million ($2.9 million after-tax, or 7 cents per diluted share). Lastly, due
to the consolidation of the accounts receivable securitization facility, the
prior year fourth quarter benefited from a gain of $6.4 million ($3.8 million
after-tax, or 9 cents per diluted share) arising from the recapture of the
remaining original discount expense that was recorded in 2000 when the accounts
receivable securitization facility was initiated.
Operating income in the most recent quarter of $54.7 million, a record for any
quarter in the Company's history, resulted in operating margins of 5.3 percent.
If the additional income tax provision of $7.7 million (or 19 cents per diluted
share) related to the repatriation of accumulated foreign earnings was excluded,
then net income would have been $27.8 million, or 67 cents per diluted share.
Excluding the additional tax provision of $7.7 million identified above, the tax
rate for the recent quarter was 38.4 percent versus 38.9 percent in the prior
year fourth quarter.
(NOTE: A TABLE RECONCILING ALL OF THE ABOVE ITEMS FOLLOWS AT THE END OF THIS
RELEASE)
TWELVE MONTH RESULTS
For the twelve-month period ended December 30, 2005, sales of $3.85 billion
produced operating income of $189.4 million and net income of $90.0 million, or
$2.22 per diluted share. Sales for 2005 include $126.4 million from Infast,
which was acquired on July 8, 2005, and incremental revenues of $36.7 million
from the June 22, 2004 acquisition of the assets and operations of Distribution
Dynamics, Inc. Net income for the year includes the previously mentioned $7.7
million additional tax provision related to the repatriation of foreign
earnings, a charge of $1.2 million ($0.7 million after-tax, or 2 cents per
diluted share) related to the early retirement of debt and a tax credit of $1.4
million, or 3 cents per diluted share, related to a favorable income tax ruling
in Europe.
Sales of $3.28 billion in 2004 produced operating income of $138.0 million and
resulted in income before extraordinary gain of $73.6 million, or $1.90 per
diluted share. In addition to the previously mentioned $10.2 million net
favorable adjustments to cost of sales, the operating expense items of $4.4
million and the $6.4 million gain on the consolidation of the accounts
receivable facility, the prior year also includes a $2.6 million ($1.5 million
after-tax, or 4 cents per diluted share) charge for asset impairment and
acquisition-related charges, along with a charge of $0.7 million ($0.4 million
after-tax, or 1 cent per diluted share) for the early retirement of debt.
In 2004, the Company also reported an extraordinary after-tax gain of $4.1
million, or 11 cents per diluted share, associated with the receipt of $4.7
million of cash for a 1983 matter related to Itel Corporation, the predecessor
of the Company.
Operating income in 2005 of $189.4 million resulted in operating margins of 4.9
percent. If the $1.2 million charge for the early retirement of debt, the tax
credit in Europe and the incremental tax provision related to the repatriation
of accumulated foreign earnings were excluded from net income, then net income
in 2005 would have been $97.0 million, or $2.39 per diluted share. Excluding the
favorable income tax ruling in Europe and the additional tax provision of $7.7
million identified above, the tax rate for the year was 38.8 percent versus 39.0
percent in the prior year.
(NOTE: A TABLE RECONCILING ALL OF THE ABOVE ITEMS
FOLLOWS AT THE END OF THIS RELEASE)
FOURTH QUARTER SALES TRENDS
Commenting on fourth quarter sales trends, Grubbs said, "Sales in the fourth
quarter grew at a 14 percent organic rate year-over-year after adjusting for the
$66.4 million in sales related to the July 8, 2005 acquisition of Infast and
$5.4 million for the foreign currency effects of a stronger U.S. dollar. This
was the highest quarterly organic growth rate experienced in 2005."
Grubbs continued, "Fourth quarter organic growth in the specialty wire & cable
market benefited from record copper prices, continued strength in market demand
and new customer acquisition. During the quarter, market-based copper prices
averaged approximately $2.03 per pound, compared to the year ago fourth quarter
of $1.38 per pound, accounting for approximately $15 million of the year-on-year
increase in sales. The fourth quarter sales comparison also benefited from the
fact that the New Year's holiday fell within our fiscal 2006 calendar, while
last year it fell within the 2004 fiscal year."
"Similar to previous quarters, throughout the fourth quarter we saw strong
demand in virtually all of our end markets, both by geography and by product
set. Our efforts to expand our customer base and product set continued to
positively impact our results," said Grubbs.
"In North America, sales grew by 17 percent. In addition to the impact of high
copper prices, North American sales were up $3.6 million due to the stronger
Canadian dollar and $4.9 million due to the acquisition of Infast. These three
items represented 4 percent of the 17 percent sales growth. Outside of North
America, we saw sales climb by 37 percent in Europe as compared to the year ago
quarter," commented Grubbs.
"The major factor driving European sales growth was the July 8, 2005 acquisition
of Infast, which added $61.5 million to European sales in the quarter. Adjusting
for the stronger U.S. dollar impact of $10.3 million and for the Infast sales,
European sales grew organically by just two percent as compared to the year ago
quarter. The low organic growth rate reflects weak market conditions in much of
continental Europe. In the emerging markets of Latin America and Asia Pacific,
we saw a 21 percent increase in year-on-year sales, which included a $1.3
million favorable currency exchange rate effect. Specifically, Latin America
again reported very strong year-on-year sales gains of 24 percent. In Asia, we
saw sales increase by 12 percent versus the prior year's fourth quarter,"
continued Grubbs.
FOURTH QUARTER OPERATING RESULTS
"In the fourth quarter, operating margins were a solid 5.3 percent," said
Grubbs. "We approached the fourth quarter with a tight grip on operating
expenses in anticipation of a 'normal' seasonal slowdown. Because end
market-demand failed to show the expected seasonal turndown and copper prices
reached record levels, we were easily able to maintain our gross margin. This
situation, combined with the tightly controlled operating expenses, generated
record levels of quarterly operating profits."
Grubbs continued, saying, "In North America, where our specialty wire & cable
business is concentrated, operating margins in the most recent quarter were 6.5
percent. In Europe, operating margins in the fourth quarter of 2005 were 1.2
percent as compared to 0.3 percent in the year ago quarter, after adjusting for
severance costs in the fourth quarter of 2004. Our enterprise cabling and
security solutions business in Europe, as it has for the past few quarters,
continued to suffer from comparatively weak demand and very competitive pricing.
Also, as we expected, the recently acquired Infast operations contributed
positively to operating income. Emerging markets reported operating margins of
4.5 percent in the most recent quarter as compared to 5.0 percent in the year
ago quarter - when Asia Pacific reported an exceptionally strong quarter."
SPECIAL DIVIDEND, LEVERAGE AND CASH FLOW
"The major cash flow event of the fourth quarter was the payment of the special
$4.00 per share dividend, which resulted in a total cash outflow of $154
million," said Dennis Letham, Senior Vice President-Finance. "As a result of
this dividend payment, the company's debt-to-total capital ratio increased to
47.0 percent at the end of 2005 as compared to 35.1 percent at the end of 2004."
"Due to this distribution of capital, which management and the Board determined
to be in excess of the near-term needs of the Company, combined with the
improved operating performance, we have been able to substantially increase the
Company's return on equity," continued Letham.
"Cash flow from operations for the full-year of 2005 was slightly positive. As
we enter 2006, it is our expectation that our organic growth rates, which we
continue to believe will be between 8 to 12 percent for the year, will generate
positive cash flow from operations. The combination of this expected cash flow
with the $293 million in unused credit facilities gives the Company the
resources and flexibility necessary to fulfill its strategic growth needs in the
coming year," said Letham.
BUSINESS OUTLOOK
Concluding, Grubbs said, "We are pleased with the strong finish to fiscal 2005
and the results for the year overall. As we head into 2006, the overall economic
outlook appears to be reasonably stable. Good execution on our part in
continuing to develop our global security products business, the global
expansion of our specialty wire & cable business and the integration and
consolidation of recent acquisitions will be the important factors to our
success in 2006. While regional economic conditions and commodity price
fluctuations have the potential to negatively impact 2006, we believe our market
opportunities and focus will create the opportunity to have another solid year
of earnings growth in 2006."
FOURTH QUARTER EARNINGS REPORT
Anixter will report results for the 2005 fourth quarter on Tuesday, January 31,
2006, and broadcast a conference call discussing them at 9:30 am central time.
The call will be Webcast by CCBN and can be accessed at Anixter's Website at
www.anixter.com. The Webcast also will be available over CCBN's Investor
Distribution Network to both institutional and individual investors. Individual
investors can listen to the call through CCBN's individual investor center at
www.companyboardroom.com, or by visiting any of the investor sites in CCBN's
Individual Investor Network (such as America Online's Personal Finance Channel
and Fidelity.com). Institutional investors can access the call via CCBN's
password-protected event management site,
StreetEvents (www.streetevents.com). The Webcast will be archived on all of
these sites for 30 days.
ABOUT ANIXTER
Anixter International is the world's leading distributor of communication
products, electrical and electronic wire & cable and a leading distributor of
fasteners and other small parts ("C" Class inventory components) to Original
Equipment Manufacturers. The company adds value to the distribution process by
providing its customers access to 1) innovative inventory management programs,
2) more than 325,000 products and over $700 million in inventory, 3) 200
warehouses with more than 5 million square feet of space, and 4) locations in
220 cities in 45 countries. Founded in 1957 and headquartered near Chicago,
Anixter trades on The New York Stock Exchange under the symbol AXE.
Safe Harbor Statement
The statements in this news release that use such words as "believe," "expect,"
"intend," "anticipate," "contemplate," "estimate," "plan," "project," "should,"
"may," or similar expressions are forward-looking statements. They are subject
to a number of factors that could cause the company's actual results to differ
materially from what is indicated here. These factors include general economic
conditions, technology changes, changes in supplier or customer relationships,
commodity price fluctuations, exchange rate fluctuations, new or changed
competitors and risks associated with integration of recently acquired
companies. Please see the company's Securities and Exchange Commission filings
for more information.
ADDITIONAL INFORMATION ABOUT ANIXTER IS AVAILABLE ON THE INTERNET AT
www.anixter.com
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
13 WEEKS ENDED 52 WEEKS ENDED
--------------------------- ---------------------------
DECEMBER 30, DECEMBER 31, DECEMBER 30, DECEMBER 31,
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2005 2004 2005 2004
------------ ------------ ------------ ------------
Net sales $1,025.6 $848.3 $3,847.4 $3,275.2
Cost of goods sold 775.0 634.1 2,922.3 2,484.9
-------- ------ -------- --------
Gross profit 250.6 214.2 925.1 790.3
Operating expenses 195.0 172.2 732.5 647.8
Impairment charge -- -- -- 1.8
Amortization of intangibles 0.9 0.6 3.2 2.7
-------- ------ -------- --------
Operating income 54.7 41.4 189.4 138.0
Interest expense (8.3) (4.5) (27.2) (13.8)
Extinguishment of debt -- -- (1.2) (0.7)
Other, net (1.3) 5.1 (3.6) (2.9)
-------- ------ -------- --------
Income before income taxes and extraordinary gain 45.1 42.0 157.4 120.6
Income tax expense 25.0 16.4 67.4 47.0
-------- ------ -------- --------
Income before extraordinary gain 20.1 25.6 90.0 73.6
Extraordinary gain, net -- -- -- 4.1
-------- ------ -------- --------
Net income $ 20.1 $ 25.6 $ 90.0 $ 77.7
======== ====== ======== ========
Basic income per share:
Income before extraordinary gain $ 0.53 $ 0.69 $ 2.37 $ 2.00
Extraordinary gain -- -- -- 0.11
Net income $ 0.53 $ 0.69 $ 2.37 $ 2.11
Diluted income per share:
Income before extraordinary gain $ 0.49 $ 0.64 $ 2.22 $ 1.90
Extraordinary gain -- -- -- 0.11
Net income $ 0.49 $ 0.64 $ 2.22 $ 2.01
Average shares outstanding:
Basic 38.3 37.3 38.0 36.9
Diluted 41.4 39.9 40.8 38.6
Geographic Segments
Net sales:
North America $ 748.6 $638.7 $2,850.8 $2,494.5
Europe 199.3 145.4 726.1 554.3
Asia Pacific and Latin America 77.7 64.2 270.5 226.4
-------- ------ -------- --------
$1,025.6 $848.3 $3,847.4 $3,275.2
======== ====== ======== ========
Operating income:
North America $ 48.8 $ 39.6 $ 161.3 $ 120.2
Europe 2.4 (1.4) 17.9 9.9
Asia Pacific and Latin America 3.5 3.2 10.2 7.9
-------- ------ -------- --------
$ 54.7 $ 41.4 $ 189.4 $ 138.0
======== ====== ======== ========
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 30, DECEMBER 31,
(IN MILLIONS) 2005 2004
------------ ------------
ASSETS
Cash $ 21.8 $ 53.4
Accounts receivable, net 772.3 620.4
Inventories 711.5 580.1
Deferred income taxes 16.5 16.3
Other current assets 14.6 11.7
-------- --------
Total current assets 1,536.7 1,281.9
Property and equipment, net 53.1 42.6
Goodwill 320.2 293.6
Other assets 102.1 88.5
-------- --------
$2,012.1 $1,706.6
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 436.0 $ 323.2
Accrued expenses 174.2 143.4
-------- --------
Total current liabilities 610.2 466.6
5.95% Senior notes 200.0 --
3.25% zero coupon convertible notes 155.8 150.9
Revolving lines of credit 139.3 32.1
Borrowings under securitization facility 130.0 161.8
7.0% zero coupon convertible notes -- 67.6
Other liabilities 70.4 64.6
-------- --------
Total liabilities 1,305.7 943.6
Stockholders' equity 706.4 763.0
-------- --------
$2,012.1 $1,706.6
======== ========
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - RECONCILIATION TABLE
13 WEEKS ENDED
-------------------------------------------------------------------------------------
DECEMBER 30, 2005 DECEMBER 31, 2004
----------------------------------------- -----------------------------------------
AS REPORTED AS REPORTED
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) UNDER GAAP UNUSUAL ITEMS AS ADJUSTED UNDER GAAP UNUSUAL ITEMS AS ADJUSTED
----------- ------------- ----------- ----------- ------------- -----------
Net sales $1,025.6 $ -- $1,025.6 $848.3 $ -- $848.3
Cost of goods sold 775.0 -- 775.0 634.1 10.2b 644.3
-------- ----- -------- ------ ------ ------
Gross profit 250.6 -- 250.6 214.2 (10.2) 204.0
Operating expenses 195.0 -- 195.0 172.2 (4.4)c 167.8
Amortization of intangibles 0.9 -- 0.9 0.6 -- 0.6
--------- ----- -------- ------ ------ ------
Operating income 54.7 -- 54.7 41.4 (5.8) 35.6
Operating margins 5.3% 5.3% 4.9% 4.2%
Interest expense (8.3) -- (8.3) (4.5) -- (4.5)
Other, net (1.3) -- (1.3) 5.1 (6.4)d (1.3)
-------- ----- -------- ------ ------ ------
Income before income taxes 45.1 45.1 42.0 (12.2) 29.8
Income tax expense 25.0 (7.7)a 17.3 16.4 (5.2)e 11.2
-------- ----- -------- ------ ------ ------
Net income $ 20.1 $ 7.7 $ 27.8 $ 25.6 $(7.0) $ 18.6
======== ===== ======== ====== ====== ======
BASIC INCOME PER SHARE $ 0.53 $0.20 $ 0.73 $ 0.69 $(0.19) $ 0.50
DILUTED INCOME PER SHARE $ 0.49 $0.19 $ 0.67 $ 0.64 $(0.17) $ 0.47
AVERAGE SHARES OUTSTANDING:
Basic 38.3 -- 38.3 37.3 -- 37.3
Diluted 41.4 -- 41.4 39.9 -- 39.9
a) Unfavorable tax adjustment of $7.7 million related to the repatriation of
accumulated foreign earnings.
b) Net favorable adjustments to cost of sales of $10.2 million arising
primarily from the reduction in risks associated with the value of certain
inventories.
c) Unfavorable expenses of $4.4 million related to the relocation of the
Company's largest distribution facility and severance costs associated with
a staffing reduction in Europe.
d) Gain of $6.4 million arising from the recapture of the remaining original
issue discount expense that was recorded in 2000 when the accounts
receivable securitization facility was initiated.
e) Net decrease in taxes of $5.2 million associated with the items noted in
b), c) and d) above.
ANIXTER INTERNATIONAL INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - RECONCILIATION TABLE
52 WEEKS ENDED
--------------------------------------------------------------------
DECEMBER 30, 2005 DECEMBER 31, 2004
-------------------------------- ---------------------------------
AS REPORTED UNUSUAL AS AS REPORTED UNUSUAL AS
(IN MILLIONS, EXCEPT PER SHARE AMOUNTS) UNDER GAAP ITEMS ADJUSTED UNDER GAAP ITEMS ADJUSTED
----------- ------- -------- ----------- ------- --------
Net sales $3,847.4 $ -- $3,847.4 $3,275.2 $ -- $3,275.2
Cost of goods sold 2,922.3 -- 2,922.3 2,484.9 10.2c 2,495.1
-------- ----- -------- -------- ------- --------
Gross profit 925.1 -- 925.1 790.3 (10.2) 780.1
Operating expenses 732.5 -- 732.5 647.8 (5.2)d 642.6
Impairment charge -- -- -- 1.8 (1.8)e --
Amortization of intangibles 3.2 -- 3.2 2.7 -- 2.7
-------- ----- -------- -------- ------- --------
Operating income 189.4 -- 189.4 138.0 (3.2) 134.8
Operating margins 4.9% 4.9% 4.2% 4.1%
Interest expense (27.2) -- (27.2) (13.8) -- (13.8)
Extinguishment of debt (1.2) 1.2a -- (0.7) 0.7a --
Other, net (3.6) -- (3.6) (2.9) (6.4)f (9.3)
-------- ----- -------- -------- ------- --------
Income before income taxes and extraordinary gain 157.4 1.2 158.6 120.6 (8.9) 111.7
Income tax expense 67.4 (5.8)b 61.6 47.0 (3.8)g 43.2
-------- ----- -------- -------- ------- --------
Income before extraordinary gain 90.0 7.0 97.0 73.6 (5.1) 68.5
Extraordinary gain, net -- -- -- 4.1 -- 4.1
-------- ----- -------- -------- ------- --------
Net income $ 90.0 $ 7.0 $ 97.0 $ 77.7 $ (5.1) $ 72.6
======== ===== ======== ======== ======= ========
BASIC INCOME PER SHARE:
Income before extraordinary gain $ 2.37 $0.19 $ 2.56 $ 2.00 $ (0.14) $ 1.86
Extraordinary gain -- -- -- 0.11 -- 0.11
Net income $ 2.37 $0.19 $ 2.56 $ 2.11 $ (0.14) $ 1.97
DILUTED INCOME PER SHARE:
Income before extraordinary gain $ 2.22 $0.17 $ 2.39 $ 1.90 $ (0.13) $ 1.77
Extraordinary gain -- -- -- 0.11 -- 0.11
Net income $ 2.22 $0.17 $ 2.39 $ 2.01 $ (0.13) $ 1.88
AVERAGE SHARES OUTSTANDING:
Basic 38.0 -- 38.0 36.9 -- 36.9
Diluted 40.8 -- 40.8 38.6 -- 38.6
a) Write-off of deferred financing costs associated with the early
extinguishment of debt.
b) Net unfavorable tax adjustments of $5.8 million related to the repatriation
of accumulated foreign earnings, the tax credit in Europe and the tax
effect associated with the item noted in a) above
c) Net favorable adjustments to cost of sales of $10.2 million arising
primarily from the reduction in risks associated with the value of certain
inventories.
d) Unfavorable expenses of $5.2 million related to the relocation of the
Company's largest distribution facility, severance costs associated with a
staffing reduction in Europe and acquisition-related charges.
e) Impairment charge of $1.8 million for the write-off of intangible assets
associated with the Pentacon tradename.
f) Gain of $6.4 million arising from the recapture of the remaining original
issue discount expense that was recorded in 2000 when the accounts
receivable securitization facility was initiated.
g) Net decrease in taxes of $3.8 million associated with the items noted in
a), c), d), e) and f) above.