-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, G8H6HOH8ZSJy7SdQSx0huufPcgJjsMPpVoaAA97/uaGhqLG1B8UPFgLgOlGklO2W xyHGluQpLkIsDCcwpnD+Hw== 0000950137-00-000865.txt : 20000309 0000950137-00-000865.hdr.sgml : 20000309 ACCESSION NUMBER: 0000950137-00-000865 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000308 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ANIXTER INTERNATIONAL INC CENTRAL INDEX KEY: 0000052795 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063] IRS NUMBER: 941658138 STATE OF INCORPORATION: DE FISCAL YEAR END: 0101 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-10212 FILM NUMBER: 563654 BUSINESS ADDRESS: STREET 1: 4711 GOLF ROAD CITY: SKOKIE STATE: IL ZIP: 60076 BUSINESS PHONE: 3129021515 MAIL ADDRESS: STREET 1: 4711 GOLF RD CITY: SKOKIE STATE: IL ZIP: 60076 FORMER COMPANY: FORMER CONFORMED NAME: ITEL CORP DATE OF NAME CHANGE: 19920703 FORMER COMPANY: FORMER CONFORMED NAME: SSI COMPUTER DATE OF NAME CHANGE: 19710316 FORMER COMPANY: FORMER CONFORMED NAME: SSI COMPUTER CORP DATE OF NAME CHANGE: 19690727 10-K 1 FORM 10-K 1 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 COMMISSION FILE NUMBER 1-5989 ANIXTER INTERNATIONAL INC. (Exact name of Registrant as specified in its charter) DELAWARE 94-1658138 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.)
4711 GOLF ROAD SKOKIE, ILLINOIS 60076 (Address of principal executive offices and Zip Code) Registrant's telephone number, including area code: (847) 677-2600 SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NAME OF EACH EXCHANGE TITLE OF EACH CLASS ON WHICH REGISTERED ------------------- --------------------- Common Stock, $1 par value New York Stock Exchange
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE. Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Yes [ ] No [X] The aggregate market value of the shares of Registrant's Common Stock, $1 par value, held by nonaffiliates of Registrant was approximately $683,477,000 as of March 1, 2000. At March 1, 2000, 35,390,392 shares of Registrant's Common Stock, $1 par value, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE: Certain portions of the Registrant's Proxy Statement for the 1999 Annual Meeting of Stockholders of Anixter International Inc. are incorporated by reference into Part III. This document consists of 42 pages. Exhibit List begins on page 33. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 TABLE OF CONTENTS
PAGE ---- PART I Item 1. Business of the Company..................................... 3 Item 2 Properties.................................................. 5 Item 3. Legal Proceedings........................................... 5 Item 4. Submission of Matters to a Vote of Security Holders......... 5 Executive Officers of the Registrant........................ 6 PART II Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters......................................... 7 Item 6. Selected Financial Data..................................... 7 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations................................... 8 Item 7A. Quantitative and Qualitative Disclosures about Market Risk........................................................ 13 Item 8. Consolidated Financial Statements and Supplementary Data.... 13 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.................................... 13 PART III Item 10. Directors and Executive Officers of the Registrant.......... 33 Item 11. Executive Compensation...................................... 33 Item 12. Security Ownership of Certain Beneficial Owners and Management.................................................. 33 Item 13. Certain Relationships and Related Transactions.............. 33 PART IV Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.................................................... 33
2 3 PART I ITEM 1. BUSINESS OF THE COMPANY. (A) GENERAL DEVELOPMENT OF BUSINESS Anixter International Inc. (the "Company"), formerly known as Itel Corporation, which was incorporated in Delaware in 1967, is engaged in the distribution of communications and specialty wire and cable products through Anixter Inc. and its subsidiaries (collectively "Anixter"). In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. The European Integration business was sold in the fourth quarter of 1998. In 1999, the Company completed the disposal of the Integration segment with North America Integration being sold in the first quarter of 1999 followed by the sale of Asia Pacific Integration in the fourth quarter of 1999. In 1998, the Company sold its remaining 19% interest in ANTEC Corporation and its subsidiaries (collectively "ANTEC"), a broadband communications technology company. As of January 2, 1998, the Company owned approximately 19% of ANTEC, which was reduced from 31% in February 1997, by the issuance of additional stock by ANTEC in connection with a merger. In June 1998, the Company purchased 100% of the outstanding common stock of Pacer Electronics, Inc., a distributor of wire and cable products along with value added services to original equipment manufacturers in the electronic industry. In August 1997, the Company purchased approximately 93% of the outstanding common stock of Accu-Tech Corporation, a networking and wiring systems specialist distributing products for data, voice, video and electrical applications. In 1996, the Company changed its fiscal year end from a calendar year ending December 31 to the Friday nearest December 31 and included 52 weeks in 1999, 1998, 1997, and 53 weeks in 1996. This change did not have a significant effect on the results of operations for the year ended January 3, 1997. In 1995, the Company largely completed its strategy of selling its non-core businesses and investments including the sale of its 9% investment in the common stock of Santa Fe Energy Resources, Inc. ("Energy"). (B) FINANCIAL INFORMATION ABOUT INDUSTRY SEGMENTS For certain financial information concerning the Registrant's business segments, see Note 12 "Business Segments" of the Notes to the Consolidated Financial Statements of this report. (C) NARRATIVE DESCRIPTION OF BUSINESS In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. All narrative descriptions and year to year comparisons have been restated to exclude Integration. Anixter is a leading global distributor of communication products used in building enterprise and Service Provider (companies that offer telecommunications services, including internet service providers, cable companies and wireless communications providers), data, voice and video networks. In addition, Anixter is a leading distributor of specialty wire and cable products to original equipment manufacturers ("OEM") and to industrial companies for maintenance and repair operations ("MRO"). Anixter stocks and/or sells a full line of these products from a network of 86 locations in the United States, 19 in Canada, 10 in the United Kingdom, 27 in Continental Europe, 17 in Latin America, 4 in Australia, and 13 in Asia. Anixter sells approximately 65,000 products to 85,000 active customers and works with over 1,000 active suppliers. Its customers include international, national, regional and local companies that are end users of these products and engage in manufacturing, telecommunications, Internet service, finance, education, health care, transportation, utilities and government. Also, Anixter sells products to resellers such as contractors, installers, system 3 4 integrators, value added resellers, architects, engineers and wholesale distributors. The average order size is approximately $1,700. The products distributed by Anixter include communication (voice, data and video) products used to connect personal computers, peripheral equipment, mainframe equipment and various networks to each other. The products include an assortment of transmission media (copper and fiber optic cable) and components, as well as active data components for networking applications. In the Enterprise Network Communications market, Anixter sells products that are incorporated in local area networks ("LANs"), the internetworking of LANs to form wide area networks ("WANs") and enterprise networks. In the service provider market, Anixter provides the installation-related materials that support central switching offices, web hosting sites and remote transmission sites. Anixter's products also include electrical wiring system products used for the transmission of electrical energy and control/monitoring of industrial processes. Anixter also provides contractual supply chain management of installation and repair-related materials for customers who install and/or maintain communication equipment ("Integrated Supply"). Such contracts are generally for time periods in excess of one year and include interfacing of Anixter and customer information systems, the procurement, warehousing and delivery of goods by Anixter, and in certain cases, the maintenance of dedicated warehouse facilities. Prior to 1989, Anixter's operations were primarily limited to North America and the United Kingdom. In 1989, Anixter made a major commitment to expand its operations into the international voice, data and video communications markets. Since then, Anixter has opened businesses throughout Western and Central Europe and in significant markets in the Pacific Rim (other than Japan) and Latin America. An important element of Anixter's overall business strategy is to develop and maintain close relationships with its key suppliers, which include the world's leading manufacturers of networking, communications cabling and electrical wiring systems products. Such relationships stress joint product planning, inventory management, technical support, advertising and marketing. In support of this strategy, Anixter does not compete with its suppliers in product design or manufacturing activities. Approximately 47% of Anixter's dollar volume purchases in 1999 were from its five largest suppliers. Anixter cost-effectively serves its customers' needs through its proprietary computer system, which connects all of its warehouses and sales offices throughout the world. The system is designed for sales support, order entry, inventory status, order tracking, credit review and material management. In addition, Anixter operates a series of large modern hub warehouses in key distribution centers in North America, Europe, Asia and Latin America which provide for cost effective and reliable storage and delivery of products to its customers. The hub warehouses store the bulk of the Company's inventory and are to a certain degree specialized by broad product category. Some smaller warehouses are also maintained to provide for the local pick-up needs of customers in certain cities. Anixter has also developed close relationships with certain freight, package delivery and courier services to minimize transit times between its facilities and customer locations. The combination of its information systems, distribution network and delivery partnerships allows Anixter to provide a high level of customer service while maintaining a reasonable level of investment in inventory and facilities. The Company competes with distributors and manufacturers who sell products directly or through existing distribution channels to end users or other resellers. In addition, future performance could be subject to economic downturns, possible rapid changes in applicable technologies or regulatory changes, which substantially change the cost and/or accessibility of public network bandwidth. To guard against inventory obsolescence, the Company has negotiated various return and price protection agreements with its key suppliers. Although relationships with its suppliers are good, the loss of a major supplier could have a temporary adverse effect on the Company's business, but would not have a lasting impact since comparable products are available from alternate sources. 4 5 INVESTMENT IN ANTEC ANTEC is a communications technology company, specializing in the design and engineering of hybrid fiber/coax (HFC) broadband networks and the manufacturing, materials management and distribution of products for these networks. During the first half of 1998, the Company sold its remaining 7.1 million shares of ANTEC stock, resulting in net after tax proceeds of approximately $100 million. On February 6, 1997, a wholly owned subsidiary of ANTEC was merged into TSX Corporation. Under the terms of the transaction, TSX Corporation shareholders received one share of ANTEC Corporation stock for each share of TSX Corporation stock that they owned. The transaction was accounted for as a pooling of interests. Upon consummation of this transaction the Company's ownership interest in ANTEC was reduced to approximately 19% which resulted in the cessation of equity method accounting for this investment after February 6, 1997. MISCELLANEOUS At December 31, 1999, the Company and its subsidiaries employed approximately 5,200 people. Backlog orders are not material as a significant amount of orders are shipped within 24 to 48 hours of receipt. (D) FINANCIAL INFORMATION ABOUT FOREIGN AND DOMESTIC OPERATIONS AND EXPORT SALES For information concerning foreign and domestic operations and export sales, see Note 9 "Income Taxes" and Note 12 "Business Segments" of this report. ITEM 2. PROPERTIES. Substantially all of the Company's facilities are leased. ITEM 3. LEGAL PROCEEDINGS. In the ordinary course of business, the Company and its subsidiaries became involved as plaintiffs or defendants in various legal proceedings. The claims and counterclaims in such litigation, including those for punitive damages, individually in certain cases and in the aggregate, involve amounts which may be material. However, it is the opinion of the Company's management, based upon the advice of its counsel, that the ultimate disposition of pending litigation will not be material. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. During the fourth quarter of 1999, no matters were submitted to a vote of the security holders. 5 6 EXECUTIVE OFFICERS OF THE REGISTRANT The following table lists the name, age as of March 7, 2000, position, offices and certain other information with respect to the executive officers of the Company. The term of office of each executive officer will expire upon the appointment of his successor by the Board of Directors. Rod F. Dammeyer, 59............... Vice Chairman of the Company since February 1998; Chief Executive Officer and President of the Company from January 1993 to February 1998. John A. Dul, 39................... General Counsel of the Company since May 1998; Assistant Secretary of the Company since May 1995; General Counsel and Secretary of Anixter since January 1996; Associate General Counsel and Secretary from July 1994 to January 1996. Robert W. Grubbs Jr., 43.......... President and Chief Executive Officer of the Company since February 1998; President and Chief Executive Officer of Anixter since July 1994. Lisa Kearns Lanz, 47.............. Vice President--Controller of the Company since July 1999; Vice President--Treasurer of the Company from August 1997 to July 1999; Vice President--Treasurer of Premark International Inc. from May 1994 to June 1996. James E. Knox, 62................. Senior Vice President--Law and Secretary of the Company since 1986. Dennis J. Letham, 48.............. Chief Financial Officer, Senior Vice President--Finance of the Company since January 1995; Chief Financial Officer, Executive Vice President of Anixter since July 1993. Philip F. Meno, 41................ Vice President--Taxes of the Company since May 1993. Rod Shoemaker, 42................. Vice President--Treasurer of the Company and Anixter since July 1999; Assistant Treasurer of the Company and Anixter from October 1994 to July 1999. Samuel Zell, 58................... Chairman of the Board of Directors of the Company since January 1993.
6 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS. Anixter International Inc.'s Common Stock is traded on the New York Stock Exchange under the symbol AXE. Stock price information is set forth in Note 14 ("Quarterly Summary (unaudited)") of this report. As of March 1, 2000, the Registrant had 4,221 shareholders of record. ITEM 6. SELECTED FINANCIAL DATA.
FISCAL YEAR ------------------------------------------------------- 1999 1998 1997 1996 1995 ---- ---- ---- ---- ---- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) Results of operations: Sales....................................... $2,670.0 $2,348.5 $2,090.9 $1,816.5 $1,659.1 Operating income............................ 112.8 87.0 91.1 62.2 51.6 Interest expense and other, net............. (34.6) (34.8) (28.5) (24.0) (19.2) Gain on ANTEC investment.................... -- 24.3 2.2 4.1 (0.6) Loss on sale of marketable equity securities............................... -- -- -- -- (3.0) Income from continuing operations (a)....... 69.7 44.7 37.4 22.6 11.7 Income from discontinued operations......... 54.5 20.9 7.9 13.5 27.4 Net income.................................. 124.2 65.6 45.3 36.1 39.1 Basic income per share (b): Continuing operations.................... $ 1.86 $ 1.00 $ 0.79 $ 0.46 $ 0.21 Net income per share..................... 3.31 1.46 0.95 0.73 0.71 Diluted income per share (b): Continuing operations.................... $ 1.83 $ 0.99 $ 0.78 $ 0.45 $ 0.21 Net income per share..................... 3.26 1.45 0.95 0.72 0.70 Financial position at year-end: Total assets................................ $1,434.7 $1,335.1 $1,333.6 $1,182.5 $1,131.4 Total debt.................................. $ 468.0 $ 543.6 $ 468.8 $ 468.4 $ 333.7 Stockholders' equity (c) (d)................ $ 456.4 $ 411.5 $ 477.0 $ 435.5 $ 449.0 Diluted book value per share (b)............ $ 11.99 $ 9.09 $ 9.98 $ 8.72 $ 8.05 Diluted shares (in thousands) (b)........... 38,078 45,263 47,775 49,949 55,784 Year end outstanding shares (in thousands)............................... 35,924 41,878 47,297 48,007 52,488
- --------------- Notes: (a) In the third quarter of 1999, the Company recorded a $24.3 million tax benefit in continuing operations for the reversal of previously established tax reserves determined to be no longer necessary. (b) All shares and per share data have been adjusted to reflect the dividend paid in the form of a two-for-one stock split on October 25, 1995. (c) Stockholders' equity reflects treasury stock purchases, including, in 1995, common stock repurchase commitments, of $91.9 million, $101.8 million, $14.2 million, $52.1 million and $152.6 million in 1999, 1998, 1997, 1996, and 1995, respectively. (d) Stockholders' equity includes unrealized after-tax gains on marketable equity securities available-for-sale of $19.8 million at January 2, 1998. 7 8 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. The following Management's Discussion and Analysis of Financial Condition and Results of Operations may contain various "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, 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 the discussion which follows. Other factors could also cause actual results to differ materially from expected results included in these statements. In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. The information contained in this financial review should be read in conjunction with the consolidated financial information on pages 16 to 32 of this Report. FINANCIAL LIQUIDITY AND CAPITAL RESOURCES Asset Sales and Other Dispositions ANTEC Investment: During the first half of 1998, the Company sold its remaining 7.1 million shares of ANTEC stock, resulting in net after tax proceeds of approximately $100 million. As of January 2, 1998, the Company's interest in ANTEC was approximately 19%. On February 6, 1997, a wholly owned subsidiary of ANTEC was merged into TSX Corporation. Under the terms of the transaction, TSX Corporation shareholders received one share of ANTEC Corporation stock for each share of TSX Corporation stock that they owned. The transaction was accounted for as a pooling of interests. Upon consummation of this transaction the Company's ownership interest in ANTEC was reduced to approximately 19% which resulted in the cessation of equity method accounting for this investment after February 6, 1997. Discontinued Operations and Assets held for Sale: In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. The European Integration business was sold in the fourth quarter of 1998. In 1999, the Company completed the disposal of the Integration segment. The North America Integration business was sold in the first quarter of 1999 and the Asia Pacific Integration business was sold in the fourth quarter of 1999. Total proceeds received from the sale of the Integration business were $238 million, resulting in an after-tax gain of $50.6 million. (Loss)/Income from discontinued operations was $(2.5) million, $7.7 million and $7.9 million in 1999, 1998 and 1997, respectively. See Note 3 "Discontinued Operations" in the Notes to the Consolidated Financial Statements for further information. The Company sold certain other assets for $25.1 million and $43.0 million, resulting in an after-tax loss/(gain) of $2.0 million and ($13.2) million in 1999 and 1998, respectively. Cash Flow Year ended December 31, 1999: Consolidated net cash provided by continuing operating activities was $3.8 million in 1999 compared to $44.0 million used in 1998. Cash provided by continuing operating activities increased primarily as a result of an increase in operating income and timing of inventory payments. Consolidated net cash used by investing activities was $15.9 million in 1999 versus $39.4 million provided in 1998. The decline in proceeds from investing activities resulted from the sale of the Company's remaining investment in ANTEC for $104.3 million in 1998. This was partially offset in 1998 by the acquisition of Pacer Electronics, Inc. for $38.1 million. In the fourth quarter of 1999, the Company acquired a small specialty wire and cable company in Europe for $2.6 million. Capital expenditures were $13.8 million and $26.4 million in 1999 and 1998, respectively. Capital expenditures are expected to be approximately $15-$18 million in 2000. Consolidated net cash used by financing activities was $160.3 million for 1999 in comparison to $30.0 million 8 9 in 1998. The change primarily resulted from a net paydown of long term debt of $73.0 million in 1999 versus net proceeds from the issuance of long-term debt of $73.3 million in 1998. Proceeds of $238 million received from the sale of the Integration business were used to paydown long term debt and purchase treasury stock. Year ended January 1, 1999: Consolidated net cash used by continuing operating activities was $44.0 million in 1998 compared to $48.1 million provided in 1997. Cash used by continuing operating activities increased primarily as the result of the timing of inventory payments and a decline in operating net income. Consolidated net cash provided by investing activities was $39.4 million in 1998 versus $51.1 million used in 1997. The increase in proceeds by investing activities resulted from the sale of the investment in ANTEC for $104.3 million. This was partially offset by the acquisition of Pacer Electronics, Inc. for $38.1 million. In 1997, the Company purchased Accu-Tech for $27.6 million in cash and assumed $15.2 million of additional debt. Capital expenditures were $26.4 million and $22.5 million in 1998 and 1997, respectively. Consolidated net cash used by financing activities was $30.0 million for 1998 in comparison to $22.3 million in 1997. The change resulted from $101.8 million being used to purchase treasury stock in 1998 compared to $14.2 million in 1997. Net proceeds from the issuance of long-term debt was $73.3 million in 1998 versus a net paydown of $10.1 million in 1997. Proceeds were used to fund higher working capital requirements. Interest Expense: Interest expense from continuing operations was $34.9 million, $31.7 million and $27.9 million for 1999, 1998 and 1997, respectively. The Company has entered into interest rate agreements which effectively fix or cap, for a period of time, the interest rate on a portion of its floating-rate obligations. As a result, the interest rate on approximately 65% of debt obligations at December 31, 1999, is fixed or capped. The impact of interest rate swaps and caps for 1999, 1998 and 1997, was to increase interest expense by $1.3 million, $.5 million and $.8 million, respectively. Financings In September 1996, the Company increased Anixter's secured domestic revolving line of credit to $550 million, obtained a release of collateral making the facility unsecured, lowered the interest rate spreads, and extended the expiration to 2001. Anixter filed a shelf registration statement with the Securities and Exchange Commission to offer from time to time up to $200 million aggregate principal amount of unsecured notes. On September 17, 1996, Anixter issued $100 million of these notes due September 2003. The notes, which bear interest at 8%, contain various restrictions with respect to secured borrowings and are unconditionally guaranteed by the Company. At December 31, 1999, $202 million was available under the bank revolving lines of credit at Anixter and Accu-Tech, of which $25.4 million was available to the Company for general corporate purposes. Income Taxes During the third quarter of 1998, the Internal Revenue Service completed its examination for the years 1993 to 1995, which included an examination of net operating losses and credit carryforwards dating back to 1979. As a result of the lapsing, during the third quarter of 1999, of all relevant statutes of limitations on assessment relating to that 17-year period of time, the Company recorded a $24.3 million tax benefit in continuing operations for the reversal of previously established tax reserves determined to be no longer necessary. Various foreign subsidiaries of the Company had aggregate cumulative NOL carryforwards for foreign income tax purposes of approximately $163.6 million at December 31, 1999, which are subject to various tax provisions of each respective country. Approximately $52.7 million of this amount expires between 2000 and 2009 and $110.9 million of the amount has an indefinite life. Of the $163.6 million NOL carryforwards of foreign subsidiaries, $84.9 million relates to losses that have already provided a tax benefit in the U.S. due to rules permitting flow-through of such losses in certain circumstances. Without such losses included, the cumulative NOL carryforwards at December 31, 1999 are approximately $78.7 million, which are subject to various provisions of each respective country. Approximately $39.5 million of this amount expires between 2000 and 2009 and $39.2 million of the amount has an indefinite life. The deferred tax asset, and valuation 9 10 allowance, relating to foreign NOL carryforwards have been adjusted to reflect only the carryforwards in which the Company has not taken a tax benefit in the U.S. Liquidity Considerations and Other Certain debt agreements entered into by the Company's operating subsidiaries contain various restrictions including restrictions on payments to the Company. Such restrictions have not had nor are expected to have an adverse impact on the Company's ability to meet its cash obligations. RESULTS OF OPERATIONS The Company has experienced increased sales due to the continued growth of the North American communications and electrical wire and cable businesses, along with its continuing worldwide expansion. 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 future performance could be affected by economic downturns, possible rapid changes in applicable technologies or regulatory changes that substantially change the cost and/or availability of public networking bandwidth. Year ended December 31, 1999: Income from continuing operations was $69.7 million in 1999 compared with $44.7 million in 1998. The comparative results were favorably impacted by a 14% growth in sales and lower operating expenses as a percentage of sales. 1998 results were favorably impacted by a $24.3 million gain realized on the sale of the Company's investment in ANTEC. In 1999, the Company repurchased 6.5 million of its outstanding shares for $91.9 million. Excluding the repurchases, diluted income per share from continuing operations would have been $1.63 as compared to $1.83 reported. Net sales grew by 14% to $2.7 billion. The North American sales from continuing operations experienced 19% growth to $2.0 billion from $1.7 billion in 1998. Improvement was a result of strong growth in the core Enterprise Network Communications and Electrical Wire and Cable product sets along with over $100 million of new volume from the Service Provider sector and a 72% increase in Integrated Supply. Improvement in Electrical Wire and Cable resulted from both volume increases and higher copper prices. In Europe, sales of $518.7 million were flat compared to last year. Excluding the effect of changes in exchange rates, sales improved 3%. Europe was negatively impacted by soft networking product sales and a stronger dollar. Asia Pacific and Latin America net sales were down 4% to $141.2 million in 1999 from $147.2 million in 1998. The decline is a result of soft economic conditions along with weaker local currencies for the first three quarters of 1999. Asia Pacific and Latin America ended the year with sales up 12% in the fourth quarter over 1998. Net sales by major market are presented in the following table:
YEARS ENDED ------------------------- DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) North America............................................ $2,010.1 $1,683.2 Europe................................................... 518.7 518.1 Asia and Latin America................................... 141.2 147.2 -------- -------- $2,670.0 $2,348.5 ======== ========
In 1999, operating income increased to $112.8 million from $87.0 million in 1998. Gross margin declined to 23.5% in 1999 from 24.5% in 1998. The very strong sales growth of the Service Provider and Logistic Service businesses, both of which have lower gross margins, have reduced the overall gross margin rate. Operating expenses as a percent of sales decreased from 20.5% in 1998 to 19.0% in 1999. The lower gross margins in the Service Provider and Logistic Service businesses corresponds with the higher operating productivity that is inherent in the nature of those businesses. 1999 expenses include $3.0 million for headcount reductions and the write-down of inventory to net realizable value for the Latin American operations. In 1998, the Company incurred $3.2 million of expenses for the consolidation and relocation of 10 11 certain distribution and office facilities in Europe, while Asia Pacific incurred $1.0 million in costs primarily relating to headcount reductions. In North America, operating margins declined to 5.3% in 1999 from 5.6% in 1998. The slight decline resulted primarily from higher spending on Year 2000 compliance efforts and retained overhead costs associated with the North American Integration business. Europe operating margins improved from 2.5% in 1998 to 4.0% in 1999. Excluding the $3.2 million consolidation and relocation costs noted above, 1998 operating margin was 3.1%. The improvement resulted from realizing the benefits of the 1998 restructuring and continued aggressive expense management in light of the weak sales growth. As noted above, excluding the 1999 $3.0 million of costs for Latin America and the 1998 $1.0 million of costs for Asia Pacific, the operating loss for Asia and Latin America was reduced by 44%. The improvement primarily resulted from Asia, where the Company realized the benefits from the 1998 restructuring and expense reduction efforts. Operating income (loss) by major market is presented in the following table:
YEARS ENDED ------------------------- DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) North America............................................ $106.2 $94.7 Europe................................................... 20.6 12.9 Asia and Latin America................................... (14.0) (20.6) ------ ----- $112.8 $87.0 ====== =====
Consolidated interest expense increased to $34.9 million in 1999 from $31.7 million in 1998. The increase resulted from higher working capital requirements. Foreign exchange and other expense declined from $3.1 million expense in 1998 to $.3 million income in 1999. The expense in 1998 primarily relates to the third quarter devaluation of the Mexican peso. Excluding the $24.3 million tax benefit previously discussed in "Financial Liquidity and Capital Resources", the 1999 effective income tax rate on continuing operations was 42.0% as compared with 41.6% in 1998. The effective tax rate exceeds the combined federal and state rate of approximately 40% primarily as a result of non-tax-deductible goodwill amortization and start-up losses in some foreign countries where there is no current year benefit. Year ended January 1, 1999: Income from continuing operations was $44.7 million in 1998 compared with $37.4 million in 1997. The 1998 results were favorably impacted by a 12% growth in sales and the $24.3 million gain on the sale of the Company's investment in ANTEC. Net sales grew by 12% to $2.3 billion. The North American continuing operations experienced a 16% growth to $1.7 billion from $1.5 billion in 1997. Improvement was a result of continued growth in demand for all major product sets. In addition, $93 million of the $227 million overall increase in 1998 sales is attributed to the inclusion of a full year for Accu-Tech, which was acquired in August 1997, and Pacer Electronics, Inc., which was purchased in June 1998. Lower copper prices resulted in lower sales prices, hindering the growth of the Wire and Cable business. In Europe, sales of $518.1 million represented growth of 6% as compared to 14% in 1997. The slowdown in sales growth is largely attributed to soft sales growth in the U.K. Asia Pacific and Latin America net sales were essentially flat to last year at $147.2 million. Excluding the effect of changes in exchange rates, net sales grew 10%. Significant volume growth in Latin America was offset by a decline in Asia Pacific, which was negatively impacted by poor economic conditions in Southeast Asia. 11 12 Net sales by major market are presented in the following table:
YEARS ENDED ----------------------- JANUARY 1, JANUARY 2, 1999 1998 ---------- ---------- (IN MILLIONS) North America.............................................. $1,683.2 $1,456.4 Europe..................................................... 518.1 487.0 Asia and Latin America..................................... 147.2 147.5 -------- -------- $2,348.5 $2,090.9 ======== ========
In 1998, operating income decreased to $87.0 million from $91.1 million in 1997. Gross margin declined to 24.5% in 1998 from 25.0% in 1997. The decline was primarily a result of unfavorable inventory costing adjustments in Latin America, poor economic conditions in Southeast Asia and planned price reductions in North American communications in pursuit of greater market share. Operating expenses as a percent of sales increased slightly from 20.3% in 1997 to 20.5% in 1998. In 1998, the Company incurred $3.2 million of expenses for the consolidation and relocation of certain distribution and office facilities in Europe to improve future productivity and lower costs. In addition, in 1997, $7.1 million of income was realized on the sale of an investment in a start-up telecommunications company and management fees relating to the collection of certain receivables. Excluding these unusual items, operating expenses as a percentage of sales continued to improve, declining from 20.7% in 1997 to 20.4% in 1998. Improvement primarily relates to headcount reductions in Asia Pacific and Europe, partially offset by increased operating expenses in North America. In North America, operating margins declined to 5.6% in 1998 from 6.8% in 1997. Excluding the $7.1 million increase noted in the paragraph above, 1997 operating margin was 6.3%. North American communications margins declined, resulting from the effects of lower copper prices on electrical wire and cable products, higher facility costs and increased headcount in pursuing greater market share. Europe operating margins improved from 2.2% in 1997 to 2.5% in 1998. Excluding the $3.2 million consolidation and relocation costs noted above, 1998 operating margin was 3.1%. The improvement resulted from reductions in headcount and improved gross margins due to lower costs and favorable inventory adjustments. Asia and Latin America continued to operate at a loss on flat sales due to the poor economy in Southeast Asia and unfavorable year end inventory adjustments in Latin America. Operating income (loss) by major market is presented in the following table:
YEARS ENDED ----------------------- JANUARY 1, JANUARY 2, 1999 1998 ---------- ---------- (IN MILLIONS) North America.............................................. $94.7 $99.0 Europe..................................................... 12.9 10.7 Asia and Latin America..................................... (20.6) (18.6) ----- ----- $87.0 $91.1 ===== =====
Consolidated interest expense increased to $31.7 million in 1998 from $27.9 million in 1997. The increase resulted from higher working capital requirements. Foreign exchange and other expense rose to $3.1 million in 1998 from $.6 million in 1997. The increase primarily relates to the third quarter devaluation of the Mexican peso. The 1998 effective income tax rate on continuing operations was 41.6% as compared with 42.3% in 1997. The effective tax rate exceeds the combined federal and state rate of approximately 40% primarily as a result of non-tax-deductible goodwill amortization and start-up losses in some foreign countries where there is no current year benefit. Impact of Year 2000: In 1999, the Company completed upgrading the mainframe operating system and modified software so that computer systems would function properly with respect to dates in the year 2000 and thereafter. The Company also completed the assessment of PC hardware and software systems and non- 12 13 information technology systems for Year 2000 compliance. Over the life of the project, the Company incurred and expensed approximately $4.5 million, primarily for assessment of the Year 2000 issue, mainframe operating system upgrades and code modifications. The time and expense of the project did not have a material impact on the Company's financial condition. As a result of these modifications, the Company did not incur any significant problems relating to Year 2000 issues. There was no interruption of business with key suppliers or downturn in economic activity caused by problems with Year 2000 issues. As of March 1, 2000, the Company has not been notified of any warranty issues relating to Year 2000 for the products it has sold and therefore, the Company believes it should have no material exposure to contingencies related to the Year 2000 issue for the products it has sold. The Company will continue to monitor its computer applications and those of its suppliers and vendors throughout the year 2000 to ensure that any latent Year 2000 matters that may arise are addressed promptly. Impact of Inflation: Inflation is currently not an important determinant of Anixter's results of operations due, in part, to rapid inventory turnover. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. The Company is exposed to the impact of interest rate changes and fluctuations in foreign currencies, as well as changes in the market value of its financial instruments. The Company periodically enters into derivatives in order to minimize these risks, but not for trading purposes. The Company has entered into interest rate agreements which effectively fix or cap the LIBOR component of the interest rate on a portion of its floating rate obligations. As a result, the interest rate on approximately 65% and 40% of debt obligations at December 31, 1999 and January 1, 1999, respectively, is fixed or capped. See Note 1, "Interest Rate Agreements," and Note 7, "Debt," of the consolidated financial statements for further detail on interest agreements and debt obligations outstanding. The Company prepared sensitivity analyses of its derivatives and other financial instruments assuming a 1 percentage point adverse change in interest rates and a 10 percent adverse change in the foreign currency contracts outstanding. Holding all other variables constant, the hypothetical adverse changes would increase interest expense by $2.8 million and foreign exchange losses by $2.5 million. The effect of the interest change on the fair market value of the outstanding debt is insignificant. These analyses did not consider the effects of the reduced level of economic activity that could exist in such an environment and certain other factors. Further, in the event of a change of such magnitude, management would likely take actions to further mitigate its exposure to possible changes. However, due to the uncertainty of the specific actions that would be taken and their possible effects, the sensitivity analyses assume no changes in the Company's financial structure. ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
PAGE ---- Report of Independent Auditors.............................. 14 Consolidated Statement of Operations........................ 15 Consolidated Balance Sheet.................................. 16 Consolidated Statement of Cash Flows........................ 17 Consolidated Statement of Stockholders' Equity.............. 18 Notes to the Consolidated Financial Statements.............. 19 Selected Quarterly Financial Data (Unaudited)............... 32
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. Not applicable. 13 14 REPORT OF INDEPENDENT AUDITORS The Board of Directors and Stockholders Anixter International Inc. We have audited the accompanying consolidated balance sheets of Anixter International Inc. as of December 31, 1999, and January 1, 1999, and the related consolidated statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1999. Our audits also included the financial statement schedules listed in the Index at Item 14(a). These financial statements and schedules are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements and schedules based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Anixter International Inc. at December 31, 1999, and January 1, 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 1999, in conformity with accounting principles generally accepted in the United States. Also, in our opinion, the related financial statement schedules, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein. ERNST & YOUNG LLP Chicago, Illinois February 7, 2000 14 15 ANIXTER INTERNATIONAL INC. CONSOLIDATED STATEMENT OF OPERATIONS (IN MILLIONS, EXCEPT PER SHARE AMOUNTS)
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- Net sales................................................. $2,670.0 $2,348.5 $2,090.9 Cost of operations: Cost of products sold.................................. 2,042.7 1,772.9 1,568.6 Operating expenses..................................... 507.1 481.5 424.9 Amortization of goodwill............................... 7.4 7.1 6.3 -------- -------- -------- Total costs and expenses.......................... 2,557.2 2,261.5 1,999.8 -------- -------- -------- Operating income.......................................... 112.8 87.0 91.1 Other (expenses) income: Interest expense....................................... (34.9) (31.7) (27.9) Gain on ANTEC investment............................... -- 24.3 2.2 Other.................................................. 0.3 (3.1) (0.6) -------- -------- -------- Income before income taxes................................ 78.2 76.5 64.8 Income tax expense........................................ 8.5 31.8 27.4 -------- -------- -------- Income from continuing operations......................... 69.7 44.7 37.4 Discontinued operations: (Loss) Income from discontinued operations, net of tax.................................................. (2.5) 7.7 7.9 Gain on disposal of discontinued operations, net of tax.................................................. 57.0 13.2 -- -------- -------- -------- Net income................................................ $ 124.2 $ 65.6 $ 45.3 ======== ======== ======== Basic income per share: Continuing operations..................................... $1.86 $1.00 $0.79 Discontinued operations................................... 1.45 0.46 0.16 -------- -------- -------- Net income................................................ $3.31 $1.46 $0.95 ======== ======== ======== Diluted income per share: Continuing operations..................................... $1.83 $0.99 $0.78 Discontinued operations................................... 1.43 0.46 0.17 -------- -------- -------- Net income................................................ $3.26 $1.45 $0.95 ======== ======== ========
See accompanying notes to the consolidated financial statements. 15 16 ANIXTER INTERNATIONAL INC. CONSOLIDATED BALANCE SHEET (IN MILLIONS, EXCEPT SHARE AMOUNTS)
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- ASSETS Current assets: Cash...................................................... $ 17.5 $ 20.5 Accounts receivable, (less allowances of $10.3 in 1999 and $11.0 in 1998)......................................... 537.5 455.9 Inventories............................................... 536.4 417.2 Deferred income taxes..................................... 18.2 13.3 Income taxes receivable................................... -- 5.1 Other assets.............................................. 11.5 8.4 -------- -------- Total current assets................................. 1,121.1 920.4 Property and equipment, at cost............................. 158.6 144.1 Accumulated depreciation.................................... (105.5) (86.5) -------- -------- Net property & equipment............................. 53.1 57.6 Goodwill (less accumulated amortization of $78.4 in 1999 and $71.0 in 1998)............................................ 229.1 233.8 Net assets of discontinued operations....................... -- 87.3 Other assets................................................ 31.4 36.0 -------- -------- $1,434.7 $1,335.1 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable.......................................... $ 340.4 $ 246.7 Accrued expenses.......................................... 149.1 94.3 Income taxes payable...................................... 6.0 -- -------- -------- Total current liabilities............................ 495.5 341.0 Deferred income taxes....................................... -- 28.3 Other liabilities........................................... 14.8 10.7 Long-term debt.............................................. 468.0 543.6 -------- -------- Total liabilities.................................... 978.3 923.6 Stockholders' equity: Common stock -- $1.00 par value, 100,000,000 shares authorized, 35,924,240 and 41,877,659 shares issued and outstanding in 1999 and 1998, respectively............. 35.9 41.8 Accumulated other comprehensive income.................... (37.6) (39.7) Retained earnings......................................... 458.1 409.4 -------- -------- Total stockholders' equity........................... 456.4 411.5 -------- -------- $1,434.7 $1,335.1 ======== ========
See accompanying notes to the consolidated financial statements. 16 17 ANIXTER INTERNATIONAL INC. CONSOLIDATED STATEMENT OF CASH FLOWS (IN MILLIONS)
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- Operating activities: Net Income................................................ $ 124.2 $ 65.6 $ 45.3 Adjustments to reconcile income from continuing operations to net cash provided by (used in) continuing operating activities: Income from discontinued operations.................... (54.5) (20.9) (7.9) Gain on ANTEC investment............................... -- (24.3) (2.2) Depreciation and amortization.......................... 26.0 26.8 26.1 Deferred income taxes.................................. (28.6) (7.4) (13.8) Changes in assets and liabilities: Accounts receivable.................................. (70.3) (41.7) (64.1) Inventory............................................ (115.4) (17.8) (46.3) Accounts payable and accruals........................ 124.9 (10.0) 110.9 Other, net........................................... (2.5) (14.3) 0.1 ------- ------- ------- Net cash provided by (used in) continuing operating activities............................ 3.8 (44.0) 48.1 ------- ------- ------- Investing activities: Capital expenditures...................................... (13.8) (26.4) (22.5) Acquisition of businesses................................. (2.6) (38.1) (28.6) Proceeds from sale of ANTEC............................... -- 104.3 -- Other, net................................................ 0.5 (0.4) -- ------- ------- ------- Net cash (used in) provided by continuing investing activities............................ (15.9) 39.4 (51.1) ------- ------- ------- Financing activities: Proceeds from long-term borrowings........................ 897.2 945.8 801.7 Repayment of long-term borrowings......................... (970.2) (872.5) (811.8) Proceeds from issuance of common stock.................... 10.5 3.1 3.5 Purchase of treasury stock................................ (91.9) (101.8) (14.2) Other, net................................................ (5.9) (4.6) (1.5) ------- ------- ------- Net cash used in continuing financing activities...................................... (160.3) (30.0) (22.3) ------- ------- ------- Cash provided by discontinued operations.................... 169.4 44.5 17.7 ------- ------- ------- Cash (used) provided........................................ (3.0) 9.9 (7.6) Cash at beginning of year................................... 20.5 10.6 18.2 ------- ------- ------- Cash at end of year......................................... $ 17.5 $ 20.5 $ 10.6 ======= ======= =======
See accompanying notes to the consolidated financial statements. 17 18 ANIXTER INTERNATIONAL INC. CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (IN MILLIONS)
ACCUMULATED OTHER COMPREHENSIVE INCOME ------------------------ UNREALIZED GAINS ON CUMULATIVE MARKETABLE COMMON CAPITAL RETAINED TRANSLATION EQUITY COMPREHENSIVE STOCK SURPLUS EARNINGS ADJUSTMENTS SECURITIES INCOME ------ ------- -------- ----------- ---------- ------------- Balance at January 3, 1997......... $48.0 $ 57.1 $344.6 $(14.1) $ -- Net income......................... -- -- 45.3 -- -- $ 45.3 Other comprehensive income: Foreign currency translation adjustments...................... -- -- -- (13.0) -- (13.0) Change in unrealized gain on marketable equity securities (net of tax of $12.2 million)......... -- -- -- -- 19.8 19.8 ------ Comprehensive income............... $ 52.1 ====== Issuance of common stock and related tax benefits............. 0.3 3.2 -- -- -- Purchase and retirement of treasury stock............................ (1.0) (13.2) -- -- -- ----- ------ ------ ------ ------ Balance at January 2, 1998......... 47.3 47.1 389.9 (27.1) 19.8 Net income......................... -- -- 65.6 -- -- $ 65.6 Other comprehensive income: Foreign currency translation adjustments...................... -- -- -- (12.6) -- (12.6) Change in unrealized gain on marketable equity securities (net of tax of $12.2 million)......... -- -- -- -- (19.8) (19.8) ------ Comprehensive income............... $ 33.2 ====== Issuance of common stock and related tax benefits............. 0.1 3.0 -- -- -- Purchase and retirement of treasury stock............................ (5.6) (50.1) (46.1) -- -- ----- ------ ------ ------ ------ Balance at January 1, 1999......... 41.8 -- 409.4 (39.7) -- Net income......................... -- -- 124.2 -- -- $124.2 Other comprehensive income: Foreign currency translation adjustments...................... -- -- -- 2.1 -- 2.1 ------ Comprehensive income............... $126.3 ====== Issuance of common stock and related tax benefits............. 0.6 9.9 -- -- -- Purchase and retirement of treasury stock............................ (6.5) (9.9) (75.5) -- -- ----- ------ ------ ------ ------ Balance at December 31, 1999....... $35.9 $ -- $458.1 $(37.6) $ -- ===== ====== ====== ====== ======
See accompanying notes to the consolidated financial statements. 18 19 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION: Anixter International Inc., formerly known as Itel Corporation, which was incorporated in Delaware in 1967, is engaged in providing networking and cabling solutions for private network infrastructure requirements through Anixter Inc. and its subsidiaries (collectively "Anixter"). BASIS OF PRESENTATION: The consolidated financial statements include the accounts of Anixter International Inc. and its majority-owned subsidiaries (collectively "the Company") after elimination of intercompany transactions. The Company's fiscal year ends on the Friday nearest December 31 and included 52 weeks in 1999, 1998 and 1997. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. Certain amounts for prior years have been reclassified to conform to the current year presentation. INVENTORIES: Inventories, consisting primarily of finished goods, are stated at the lower of cost or market. Cost is determined using the average-cost method. PROPERTY AND EQUIPMENT: Capital expenditures, primarily equipment, are recorded at cost and depreciated on the straight-line method over their estimated useful lives ranging from 3 to 10 years. Leasehold improvements are depreciated over the term of the related lease. Upon sale or retirement, the cost and related depreciation are removed from the respective accounts, and any gain or loss is included in income. Maintenance and repair costs are expensed as incurred. GOODWILL: Goodwill primarily relates to the excess of cost over the fair value of the net tangible assets of businesses acquired. The Company continually reviews goodwill to assess recoverability from estimated undiscounted future cash flows at the aggregate business unit level. Goodwill is amortized on a straight-line basis over periods ranging from 20 to 40 years. INVESTMENT IN ANTEC: In 1998, the Company sold its remaining 7.1 million shares of ANTEC stock which resulted in net after tax proceeds of approximately $100 million and an after-tax gain of $14.6 million. On February 6, 1997, a wholly-owned subsidiary of ANTEC was merged into TSX Corporation. Under the terms of the transaction, TSX Corporation shareholders received one share of ANTEC Corporation stock for each share of TSX Corporation stock that they owned. The transaction was accounted for as a pooling of interests. Upon consummation of this transaction, the Company's ownership interest in ANTEC was reduced to approximately 19%, which resulted in the cessation of equity method accounting for this investment after that date. As a result of this change, the Company recorded a $1.2 million after-tax gain. As of January 2, 1998, the market value of the Company's investment in ANTEC was $112.0 million. The Company reported its investment in ANTEC at fair value. All unrealized gains and losses, net of taxes, were recorded in stockholders' equity until realized. INTEREST RATE AGREEMENTS: In addition to the fixed rate 8.0% Senior Notes, the Company has entered into interest rate agreements which effectively fix or cap, for a period of time, the LIBOR component of an interest rate on a portion of its floating rate obligations. As a result, the interest rate on approximately 65% and 40%, of debt obligations at December 31, 1999 and January 1, 1999, respectively, is fixed or capped. At December 31, 1999 and January 1, 1999, the Company had an interest rate swap agreement outstanding with a notional amount of $25 million. This swap agreement obligated the Company to pay a fixed rate of approximately 6.1% through January 2003. At December 31, 1999 and January 1, 1999, the Company also had one interest rate collar agreement with a notional amount of $50 million which entitled the Company to receive from the bank the amount by which the LIBOR component of the floating rate interest payments exceed 6.5%. In addition, the Company is required to pay the bank the difference between 6.3% and the floating rate when it is below 5.3%. This interest rate collar matures in January 2002. At December 31, 1999 and January 1, 1999, the 19 20 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Company had three additional interest rate swap agreements outstanding with a notional amount aggregating $100 million that obligated the Company to pay a fixed rate of approximately 6.1% through July 2000. At December 31, 1999, the Company had an interest rate swap agreement outstanding with a notional amount of $25 million. This swap agreement obligated the Company to pay a fixed rate of 6.1% through July 2002. At December 31, 1999, the Company had a cancelable interest rate swap agreement outstanding with a notional amount of $50 million. This swap agreement obligated the Company to pay a fixed rate of 5.7% through August 2002. However, the counterparty exercised their right to cancel the swap in February 2000. The fair value, which is the estimated amount at the current interest rate that the Company would receive or pay to enter into similar interest rate agreements on the reporting date, of all of the Company's interest rate agreements at December 31, 1999, and January 1, 1999, would be to receive $1.4 million and pay $3.8 million, respectively. The impact of these interest rate agreements for fiscal years 1999, 1998 and 1997, was to increase interest expense by $1.3 million, $.5 million and $.8 million, respectively. The Company does not enter into interest rate transactions for speculative purposes. FOREIGN CURRENCY FORWARD CONTRACTS: The Company has purchased short-term foreign currency forward contracts to minimize the effect of fluctuating foreign currencies on its reported income. The impact of these foreign currency forward contracts on the income statement was insignificant in 1999, 1998 and 1997. The forward contracts are revalued at current foreign exchange rates, with the changes in valuation reflected directly in income. At December 31, 1999, and January 1, 1999, the Company had approximately $24.3 million and $32.7 million, respectively, in foreign currency forward contracts outstanding. REVENUE RECOGNITION: Sales and related cost of sales are recognized upon shipment of products. ADVERTISING AND SALES PROMOTION: Advertising and sales promotion costs are expensed as incurred. Advertising and promotion costs were $11.1 million, $13.3 million and $13.7 million in 1999, 1998 and 1997, respectively. STOCK BASED COMPENSATION: In accordance with the Accounting Principles Board Opinion 25, "Accounting for Stock Issued to Employees", compensation cost of stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the option exercise price and is charged to operations over the vesting period. Income tax benefits attributable to stock options exercised are credited to capital in excess of par. INCOME TAXES: Using the liability method, provisions for income taxes include deferred taxes resulting from temporary differences in determining income for financial and tax purposes. Such temporary differences result primarily from differences in the carrying value of assets and liabilities. NEW ACCOUNTING PRONOUNCEMENTS Accounting for Derivatives Instruments and Hedging Activities: In June 1998, the Financial Accounting Standards Board issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities," which is required to be adopted in the first quarter of fiscal year 2001. Because of the Company's minimal use of derivatives, management does not anticipate that the adoption of the new Statement will have a significant effect on earnings or the financial position of the Company. 20 21 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 2. INCOME PER SHARE The following table sets forth the computation of basic and diluted income per share from continuing operations:
1999 1998 1997 ---- ---- ---- Numerator (in millions): Income from continuing operations......................... $ 69.7 $ 44.7 $ 37.4 ====== ====== ====== Denominator (in thousands): Basic shares outstanding.................................. 37,507 44,877 47,533 Effect of dilutive securities: Stock options and warrants................................ 571 386 242 ------ ------ ------ Dilutive potential shares................................... 38,078 45,263 47,775 ====== ====== ====== Basic income per share from continuing operations........... $ 1.86 $ 1.00 $ 0.79 Diluted income per share from continuing operations......... $ 1.83 $ 0.99 $ 0.78
NOTE 3. DISCONTINUED OPERATIONS In the fourth quarter of 1998, the Company decided to exit its Integration segment and accordingly, the Integration segment is reflected as a discontinued operation in these financial statements. The European Integration business was sold in the fourth quarter of 1998. In 1999, the Company completed the disposal of the Integration segment with North America Integration being sold in the first quarter of 1999 followed by the sale of Asia Pacific Integration in the fourth quarter of 1999. Interest expense has been allocated to discontinued operations based on the percentage of total identifiable assets. The Company recorded an after-tax gain from the sale of discontinued assets of $57.0 million and $13.2 million in 1999 and 1998, respectively. Included in the fiscal year 1999 gain on sale of assets, is a tax benefit of $8.4 million resulting from the reversal of certain tax reserves associated with prior years' reported sales of discontinued assets. Total proceeds received from the sale of the Integration business was $238 million. Net sales and income from discontinued operations are as follows:
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- (IN MILLIONS) Net sales................................................... $196.3 $735.2 $714.3 Costs and expenses.......................................... (199.5) (710.0) (694.3) ------ ------ ------ Operating (loss) income..................................... (3.2) 25.2 20.0 Gain on sale of assets...................................... 81.1 22.0 -- Net interest expense and other.............................. (1.0) (4.8) (5.3) Income tax expense.......................................... (22.4) (21.5) (6.8) ------ ------ ------ Income from discontinued operations......................... $ 54.5 $ 20.9 $ 7.9 ====== ====== ======
NOTE 4. ACQUISITION OF PACER ELECTRONICS, INC. AND ACCU-TECH CORPORATION In June 1998, the Company purchased Pacer Electronics, Inc. ("Pacer") for approximately $38 million. Pacer is an electrical and data cabling distributor largely centered in the Northeast portion of the United States, with additional locations in North Carolina and Florida. The majority of Pacer's sales come from the 21 22 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) sale of wire, cable, connectors and related products and value added services to original equipment manufacturers in the electronics industry. In August 1997, the Company purchased approximately 93% of the outstanding common stock of Accu-Tech Corporation for $27.6 million in cash and assumed $15.2 million of debt. Accu-Tech Corporation is a networking and wiring specialist distributing products for data, voice, video and electrical applications. Both the Pacer acquisition and the Accu-Tech Corporation acquisition were accounted for using the purchase method of accounting. Had these acquisitions occurred at the beginning of their respective years of acquisition, the impact on the Company's operating results would not have been significant. NOTE 5. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. At December 31, 1999, and January 1, 1999, the Company had an ownership interest of approximately 99% in Anixter Inc., which is included in the consolidated financial statements of the Company. The following summarizes the financial information of Anixter Inc. and reflects the Integration segment of the Company as a discontinued operation: ANIXTER INC. CONDENSED CONSOLIDATED BALANCE SHEET
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) Assets: Current assets............................................ $1,117.9 $ 872.3 Property, net............................................. 53.1 54.6 Goodwill.................................................. 229.1 212.1 Net assets of discontinued operations..................... -- 98.3 Other assets.............................................. 31.2 28.9 -------- -------- $1,431.3 $1,266.2 ======== ======== Liabilities and Stockholders' Equity: Current liabilities....................................... $ 486.4 $ 333.8 Other liabilities......................................... 9.9 8.7 Long-term debt............................................ 468.0 524.1 Subordinated notes payable to parent...................... 19.1 7.0 Stockholders' equity...................................... 447.9 392.6 -------- -------- $1,431.3 $1,266.2 ======== ========
ANIXTER INC. CONDENSED CONSOLIDATED STATEMENT OF OPERATION
YEARS ENDED ------------------------- DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) Net sales................................................... $2,644.9 $2,240.2 Operating income............................................ $ 114.6 $ 84.3 Income before income tax expense............................ $ 79.9 $ 46.7 Income from continuing operations........................... $ 43.6 $ 15.7 Net income.................................................. $ 91.7 $ 25.0
22 23 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 6. ACCRUED EXPENSES Accrued expenses consists of the following:
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) Interest.................................................... $ 7.4 $ 5.9 Salaries and fringe benefits................................ 70.3 60.3 Other....................................................... 71.4 28.1 ------ ----- $149.1 $94.3 ====== =====
NOTE 7. DEBT Debt is summarized below:
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) Bank revolving lines of credit.............................. $362.8 $435.9 8% Senior notes............................................. 100.0 100.0 Other....................................................... 5.2 7.7 ------ ------ Total debt............................................. $468.0 $543.6 ====== ======
Anixter has various revolving bank lines of credit worldwide which provide for up to $565 million of borrowings of which $550 million is domestic. At December 31, 1999, approximately $363 million was borrowed and $202 million was available under the bank revolving lines of credit, of which $25.4 million was available for general corporate purposes. These lines of credit reduce or mature at various dates from 2001 through 2002. The $550 million domestic revolving line of credit matures in 2001. Floating and fixed interest rate options, based on the prime or LIBOR rate, are available under these facilities. The weighted average interest rate at December 31, 1999, and January 1, 1999, was 6.7% and 6.1%, respectively. Facility fees of .2% payable on the revolving lines of credit were insignificant. In September 1996, Anixter filed a shelf registration statement with the Securities and Exchange Commission to offer from time to time up to $200 million aggregate principal amount of unsecured notes. On September 17, 1996, Anixter issued $100 million of these notes due September 2003. The notes, which bear interest at 8%, contain various restrictions with respect to secured borrowings and are unconditionally guaranteed by the Company. Certain debt agreements entered into by the Company's subsidiaries contain various restrictions including restrictions on payments to the Company. The Company has guaranteed substantially all of the debt of its subsidiaries. Restricted net assets of subsidiaries were approximately $372.9 million and $362.5 million at December 31, 1999 and January 1, 1999, respectively. Aggregate annual maturities of debt are as follows: 2000 - none; 2001 - $362.8 million; 2002 - none; 2003 - $100.0 million; 2004 - none; and $5.2 million thereafter. Interest paid in 1999, 1998, and 1997 was $34.5 million, $36.6 million, and $31.0 million, respectively. The carrying amount of the Company's debt generally approximates fair value. 23 24 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 8. LEASE COMMITMENTS Substantially all of the Company's office and warehouse facilities and equipment are leased under operating leases. Certain of these leases are long-term operating leases and expire at various dates through 2013. Minimum lease commitments under operating leases at December 31, 1999 are as follows: 2000 -- $41.8 million; 2001 -- $32.1 million; 2002 -- $25.6 million; 2003 -- $16.4 million; 2004 -- $11.9 million; beyond 2004 -- $54.4 million. Total rental expense was $41.9 million, $39.6 million and $35.6 million in 1999, 1998 and 1997, respectively. NOTE 9. INCOME TAXES The Company and its U.S. subsidiaries file their federal income tax return on a consolidated basis. As of December 31, 1999, the Company had no NOL or ITC carryforwards for federal income tax purposes. During the third quarter of 1998, the Internal Revenue Service completed its examination for the years 1993 to 1995, which included an examination of net operating losses and credit carryovers dating back to 1979. As a result of the lapsing, during the third quarter of 1999, of all relevant statutes of limitations on assessment relating to that 17-year period of time, the Company recorded a $24.3 million tax benefit in continuing operations for the reversal of previously established tax reserves which were determined to be no longer necessary. At December 31, 1999, various foreign subsidiaries of the Company had aggregate cumulative NOL carryforwards for foreign income tax purposes of approximately $163.6 million, which are subject to various provisions of each respective country. Approximately $52.7 million of this amount expires between 2000 and 2009 and $110.9 million of the amount has an indefinite life. Of the $163.6 million NOL carryforwards of foreign subsidiaries mentioned above, $84.9 million relates to losses that have already provided a tax benefit in the U.S. due to rules permitting flow-through of such losses in certain circumstances. Without such losses included, the cumulative NOL carryforwards at December 31, 1999 are approximately $78.7 million, which are subject to various provisions of each respective country. Approximately $39.5 million of this amount expires between 2000 and 2009 and $39.2 million of the amount has an indefinite life. The deferred tax asset and valuation allowance, shown below relating to foreign NOL carryforwards, have been adjusted to reflect only the carryforwards for which the Company has not taken a tax benefit in the U.S. Domestic income from continuing operations before income taxes was $76.0 million, $84.0 million and $62.5 million for 1999, 1998 and 1997, respectively. Foreign income (loss) from continuing operations before income taxes was $2.2 million, $(7.5) million and $2.3 million for 1999, 1998 and 1997, respectively. The Company paid income taxes in 1999, 1998 and 1997 of $64.9 million, $63.8 million and $35.3 million, respectively. 24 25 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Significant components of the Company's deferred tax assets and (liabilities) were as follows:
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- (IN MILLIONS) Gross deferred tax liabilities.............................. $(17.8) $(51.4) Foreign NOL carryforwards................................... 29.9 26.1 Deferred compensation....................................... 9.4 9.3 Assets held for sale........................................ -- 6.4 Inventory reserves.......................................... 8.4 2.9 Investment reserves......................................... 4.5 5.3 Depreciation................................................ 5.1 2.5 Other....................................................... 6.6 7.9 ------ ------ Gross deferred tax assets................................... 63.9 60.4 Valuation allowance......................................... (26.3) (24.0) ------ ------ Net deferred tax asset (liability).......................... $ 19.8 $(15.0) ====== ======
Income tax expense (benefit) was comprised of:
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- (IN MILLIONS) Current -- Foreign.......................................... $ 7.6 $ 7.6 $10.1 State........................................... 4.5 1.9 3.4 Federal......................................... 25.0 22.4 22.9 ------ ----- ----- 37.1 31.9 36.4 Deferred -- Foreign......................................... (1.5) 4.5 (0.7) State.......................................... (1.1) 3.1 0.2 Federal........................................ (26.0) (7.7) (8.5) ------ ----- ----- (28.6) (.1) (9.0) ------ ----- ----- $ 8.5 $31.8 $27.4 ====== ===== =====
Reconciliation of income tax expense to the statutory corporate federal tax rate of 35% are as follows:
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- (IN MILLIONS) Statutory tax expense....................................... $27.4 $26.8 $22.7 Increase (reduction) in taxes resulting from: Amortization of goodwill.................................. 2.2 2.1 1.9 Losses on foreign operations.............................. 2.5 8.4 2.4 State income taxes........................................ 2.3 3.2 2.3 Adjustment to prior year tax accounts..................... (24.3) (9.4) (3.0) Other, net................................................ (1.6) 0.7 1.1 ----- ----- ----- $ 8.5 $31.8 $27.4 ===== ===== =====
25 26 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 10. PENSION PLANS, POST-RETIREMENT BENEFITS AND OTHER BENEFITS The Company's various pension plans are non-contributory and cover substantially all full-time domestic employees and certain employees in other countries. Retirement benefits are provided based on compensation as defined in the plans. The Company's policy is to fund these plans as required by ERISA and the Code. Plan assets consist primarily of equity securities and mutual fund investments. In 1999, the Company completed the disposal of the Integration segment which resulted in a curtailment gain of $4.4 million, and accordingly, is classified as a gain on disposal of discontinued operations.
PENSION BENEFITS --------------------- 1999 1998 ---- ---- (IN MILLIONS) Change in projected benefit obligation: Beginning balance......................................... $ 110.4 $ 92.6 Service cost.............................................. 8.4 8.0 Interest cost............................................. 7.2 6.7 Actuarial (gain)loss...................................... (13.0) 5.5 Curtailment gain.......................................... (4.8) -- Benefits paid............................................. (4.0) (2.4) ------- ------- Ending balance............................................ $ 104.2 $ 110.4 ======= ======= Change in plan assets at fair value: Beginning balance......................................... $ 92.4 $ 85.8 Actual return on plan assets.............................. 9.3 6.6 Company contributions..................................... 0.1 2.4 Benefits paid............................................. (4.0) (2.4) ------- ------- Ending balance............................................ $ 97.8 $ 92.4 ======= ======= Reconciliation of funded status: Projected benefit obligation.............................. $(104.2) $(110.4) Plan assets at fair value................................. 97.8 92.4 ------- ------- Funded status............................................. (6.4) (18.0) Unrecognized net actuarial gain........................... (15.8) (1.3) Unrecognized prior service cost........................... 2.1 2.3 Unrecognized transition obligation........................ (1.2) (1.5) ------- ------- Accrued benefit cost...................................... $ (21.3) $ (18.5) ======= ======= Weighted average assumptions: Discount rate............................................. 7.15% 7.17% Expected return on plan assets............................ 8.63% 8.72% Salary growth rate........................................ 5.26% 5.54%
PENSION COSTS ----------------------------- 1999 1998 1997 ---- ---- ---- (IN MILLIONS) Components of net periodic cost: Service cost...................................... $ 8.4 $ 8.0 $ 6.9 Interest cost..................................... 7.2 6.7 5.9 Expected return on plan assets.................... (7.9) (7.5) (6.1) Net amortization.................................. 0.2 (0.9) (0.5) ----- ----- ----- Periodic benefit cost prior to curtailment........ 7.5 6.3 6.2 Curtailment gain.................................. (4.4) -- -- ----- ----- ----- Net periodic benefit cost......................... $ 3.1 $ 6.3 $ 6.2 ===== ===== =====
26 27 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The Company has several plans where the fair value of assets are in excess of the projected benefit obligation. The fair value of the plans' assets were $8.7 million and $7.3 million, and had projected benefit obligations of $6.4 million and $5.7 million in 1999 and 1998, respectively. The Company has several savings plans. The Company's contributions to these plans are based upon various levels of employee participation. The total cost of these plans was $1.5 million in 1999, $1.9 million in 1998 and $1.7 million in 1997. The Company's liability for post-retirement benefits other than pensions is not material. NOTE 11. PREFERRED STOCK AND COMMON STOCK Preferred Stock-- The Company has the authority to issue 15 million shares of preferred stock, par value $1.00 per share, none of which was outstanding at the end of 1999 and 1998. Stock Options and Stock Grants-- At December 31, 1999, the Company has stock incentive plans which authorize 2.0 million shares for additional stock option awards or stock grants. Options granted under these plans have been granted with exercise prices at or higher than the fair market value of the common stock on the date of grant. One-fourth of the employee options granted become exercisable each year after the year of grant. Employee restricted stock vests over a four year period. 2000 will be the first year in which restricted stock will be issued. The director options fully vest in one year. All options expire ten years after the date of grant. The following table summarizes the 1999, 1998 and 1997 activity under the employee and director option plans.
WEIGHTED WEIGHTED AVERAGE AVERAGE EMPLOYEE EXERCISE DIRECTOR EXERCISE (OPTIONS IN THOUSANDS) OPTIONS PRICE OPTIONS PRICE ---------------------- -------- -------- -------- -------- Balance at January 3, 1997................................ 2,168.1 $16.28 490.0 $13.57 Granted................................................... 1,144.1 15.55 -- -- Exercised................................................. (7.0) 12.04 (60.0) 10.91 Canceled.................................................. (97.5) 17.13 -- -- ------- ------ ----- ------ Balance at January 2, 1998................................ 3,207.7 16.00 430.0 13.94 Granted................................................... 1,772.0 17.46 -- -- Exercised................................................. (34.1) 17.80 (40.0) 9.94 Canceled.................................................. (262.4) 17.09 -- -- ------- ------ ----- ------ Balance at January 1, 1999................................ 4,683.2 16.48 390.0 14.35 Granted................................................... 1,115.5 12.70 -- -- Exercised................................................. (452.0) 13.35 (30.0) 11.63 Canceled.................................................. (163.1) 16.96 -- -- ------- ------ ----- ------
Balance at December 31, 1999.............................. 5,183.6 $15.92 360.0 $14.57 ======= ====== ===== ====== Options Exercisable at year-end 1997.................................................... 1,160.2 $13.63 430.0 $13.94 1998.................................................... 1,660.9 $14.78 390.0 $14.35 1999.................................................... 2,679.3 $16.49 360.0 $14.57
27 28 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) The following table summarizes information relating to options outstanding and exercisable at December 31, 1999, using various ranges of exercise prices: EMPLOYEE OPTIONS
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ---------------------------------- ---------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE RANGE OF EXERCISE REMAINING EXERCISE EXERCISE PRICES OUTSTANDING PRICE YEARS EXERCISABLE PRICE --------------- ----------- -------- --------- ----------- -------- (OPTIONS IN THOUSANDS) $5.19-$9.11................. 271.3 $ 8.56 1.9 271.3 $ 8.56 $12.69-$15.75............... 2,266.0 $13.99 7.4 855.0 $15.08 $17.44-$21.13............... 2,646.3 $18.34 7.1 1,553.0 $18.66
DIRECTOR OPTIONS
WEIGHTED WEIGHTED AVERAGE AVERAGE RANGE OF OUTSTANDING & EXERCISE REMAINING EXERCISE PRICES EXERCISABLE PRICE YEARS --------------- ------------- -------- --------- (OPTIONS IN THOUSANDS) $8.38-$9.00.................................... 130.0 $ 8.56 1.2 $15.00-$20.69.................................. 230.0 $17.97 3.3
Additionally, the Company has an Employee Stock Purchase Plan ("ESPP") covering most employees. Participants can request that up to 10% of their base compensation be applied toward the purchase of common stock under the Company's ESPP. The purchase price is the lower of 85% of the fair market value of the common stock at the beginning of the ESPP year, July 1, 1999, or at the end of the ESPP year, June 30, 2000. Under the ESPP, the Company sold 123,700 shares, 175,900 shares, and 217,600 shares to employees in 1999, 1998 and 1997, respectively. STOCK OPTION PLANS OF ANIXTER-- In 1995 and prior, Anixter granted to key employees options to purchase the common stock of Anixter. Substantially all options have been granted with exercise prices at the fair market value of the common stock on the date of grant. These options vest over four years and terminate seven to ten years from the date of grant. 28 29 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) At December 31, 1999, the Company owned 99% of the approximately 32.6 million shares of outstanding Anixter common stock. The following table summarizes the 1999, 1998 and 1997 option activity:
WEIGHTED AVERAGE EXERCISE OPTIONS PRICE (OPTIONS IN THOUSANDS) ------- -------- Balance at January 3, 1997................................ 1,720.0 $10.99 Exercised................................................. (284.0) 9.48 Canceled.................................................. (107.6) 11.14 ------- Balance at January 2, 1998................................ 1,328.4 11.33 Exercised................................................. (253.8) 10.13 Canceled.................................................. (92.3) 11.77 ------- Balance at January 1, 1999................................ 982.3 11.57 Exercised................................................. (586.6) 11.21 Canceled.................................................. (26.2) 12.28 ------- Balance at December 31, 1999.............................. 369.5 $12.08 Options exercisable at year-end 1997................................................... 1,209.6 $10.99 1998................................................... 982.3 $11.57 1999................................................... 369.5 $12.08
Exercise prices for options outstanding as of December 31, 1999, range from $9.00 to $14.50 per share and have a weighted average remaining life of 2.0 years. Units-- The Company adopted a director stock unit plan ("DSUP") to pay its non-employee directors annual retainer fees in the form of stock units. These stock units convert to common stock of the Company at the pre-arranged time selected by each director. Stock units were granted to nine directors in 1999, having an aggregate value at grant date of $540 thousand. The following table summarizes the 1999, 1998, and 1997 activity under the DSUP.
DSUP STOCK UNITS ----------- Balance at January 3, 1997................................ 35.2 Granted................................................... 28.3 Exercised................................................. (1.0) Canceled.................................................. (2.9) ----- Balance at January 2, 1998................................ 59.6 Granted................................................... 25.9 Exercised................................................. (3.9) ----- Balance at January 1, 1999................................ 81.6 Granted................................................... 29.7 Exercised................................................. (3.5) ----- Balance at December 31, 1999.............................. 107.8 =====
29 30 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) Accounting for Stock Based Compensation-- The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation". Accordingly, no compensation expense has been recognized in the income statement for the stock option plans. Had compensation costs for the plans been determined based on the fair value at the grant date for awards beginning in 1995 and amortized over the respective vesting period, the Company's income from continuing operations would have been reduced to the pro forma amounts indicated below:
1999 1998 1997 ----- ----- ----- Income from continuing operations --as reported........................................ $69.7 $44.7 $37.4 --pro forma.......................................... $64.0 $40.1 $34.0 Basic income per share from continuing operations --as reported........................................ $1.86 $1.00 $0.79 --pro forma.......................................... $1.71 $0.89 $0.71 Diluted income per share from continuing operations --as reported........................................ $1.83 $0.99 $0.78 --pro forma.......................................... -- -- --
Pro forma diluted income per share has not been presented for 1999, 1998 and 1997 as the conversion of stock options and warrants would have had an anti-dilutive effect. The fair value for the Company's stock options (which was $5.50 per share in 1999, $7.63 per share in 1998 and $6.69 per share in 1997) was estimated at the date of grant using the Black-Scholes option pricing model with the following assumptions for 1999, 1998 and 1997, respectively: expected stock price volatility of 39%, 42% and 37%; expected dividend yield of zero; risk-free interest rate of 5.6%, 4.9% and 6.6% and an expected 5 year life. The pro forma effect on income from continuing operations for 1997 is not representative of the pro forma effect on earnings in future years because the pro forma calculation, as required by SFAS No. 123, does not take into consideration outstanding non-vested awards granted prior to 1995. The Black-Scholes option pricing model was used in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because the Company's stock options have characteristics significantly different from those of traded options, and because changes in the subjective input assumptions can materially affect the fair value estimate, in management's opinion, the existing models do not necessarily provide a reliable single measure of the fair value of the Company's stock options. 30 31 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 12. BUSINESS SEGMENTS The Company is engaged in the distribution of communications and specialty wire and cable products from top suppliers to contractors and installers and to end users, including manufacturers, natural resources companies, utilities and OEM's. The Company obtains and coordinates financing, legal and other related services, certain of which are rebilled to subsidiaries. The following table is a geographic breakdown of the Company's operations. Sales to a single customer did not exceed 10 percent of total sales. Export sales are insignificant.
WORLDWIDE OPERATIONS ------------------------------ 1999 1998 1997 -------- -------- -------- (IN MILLIONS) Net sales United States............................................. $1,806.8 $1,500.2 $1,263.2 Europe.................................................... 518.7 518.1 487.0 Canada, Asia Pacific and Latin America.................... 344.5 330.2 340.7 -------- -------- -------- $2,670.0 $2,348.5 $2,090.9 ======== ======== ======== Operating income United States............................................. $ 93.3 $ 85.3 $ 84.2 Europe.................................................... 20.6 12.9 10.7 Canada, Asia Pacific and Latin America.................... (1.1) (11.2) (3.8) -------- -------- -------- $ 112.8 $ 87.0 $ 91.1 ======== ======== ======== Tangible long-lived assets United States............................................. $ 65.3 $ 64.5 $ 51.9 Europe.................................................... 8.6 9.9 12.2 Canada, Asia Pacific and Latin America.................... 8.9 11.2 12.2 -------- -------- -------- $ 82.8 $ 85.6 $ 76.3 ======== ======== ========
NOTE 13. CONTINGENCIES AND LITIGATION In the ordinary course of business, the Company and its subsidiaries become involved as plaintiffs or defendants in various legal proceedings. The claims and counterclaims in such litigation, including those for punitive damages, individually in certain cases and in the aggregate, involve amounts which may be material. However, it is the opinion of the Company's management, based upon the advice of its counsel, that the ultimate disposition of pending litigation will not be material. 31 32 ANIXTER INTERNATIONAL INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) NOTE 14. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) The following is a summary of the unaudited interim results of operations and the price range of the common stock composite for each quarter in the years ended December 31, 1999, and January 1, 1999. The Company has not paid cash dividends on its common stock since 1979.
FIRST SECOND THIRD FOURTH QUARTER* QUARTER QUARTER* QUARTER -------- ------- -------- ------- (IN MILLIONS, EXCEPT PER SHARE AMOUNTS) YEAR ENDED DECEMBER 31, 1999 Net sales................................................... $595.1 $658.5 $710.4 $706.0 Cost of sales............................................... (445.8) (502.6) (548.5) (545.8) Operating income............................................ 22.0 28.5 33.2 29.1 Income before income taxes.................................. 13.3 21.0 24.2 19.7 Income from continuing operations........................... 7.7 12.2 38.3 11.5 Net income.................................................. 52.1 13.2 44.2 14.7 Basic income per share: Continuing................................................ 0.19 0.33 1.06 0.32 Net income................................................ 1.25 0.36 1.23 0.41 Diluted income per share: Continuing................................................ 0.19 0.33 1.04 0.31 Net income................................................ 1.25 0.36 1.20 0.40 Composite stock price range: High...................................................... 19.81 18.69 23.25 23.44 Low....................................................... 11.13 13.56 18.13 19.00 Close..................................................... 12.38 18.69 23.25 20.63 YEAR ENDED JANUARY 1, 1999 Net sales................................................... $562.1 $584.6 $617.3 $584.5 Cost of sales............................................... (421.0) (440.8) (465.4) (445.7) Operating income............................................ 23.3 22.4 28.9 12.4 Gain on ANTEC investment.................................... 8.4 15.9 -- -- Income before income taxes.................................. 24.7 30.5 15.9 5.4 Income from continuing operations........................... 14.4 17.8 9.3 3.2 Net income.................................................. 26.7 21.5 13.0 4.4 Basic income per share: Continuing................................................ 0.31 0.38 0.21 0.07 Net income................................................ 0.57 0.46 0.30 0.10 Diluted income per share: Continuing................................................ 0.30 0.38 0.21 0.07 Net income................................................ 0.56 0.46 0.29 0.10 Composite stock price range: High...................................................... 20.25 22.13 19.88 20.31 Low....................................................... 15.75 17.19 15.56 11.88 Close..................................................... 19.44 19.00 15.75 20.31
- --------------- * In the first quarter of 1999, the Company realized a $45.9 million net gain on the disposal of discontinued operations from the sale of its North American and European Integration business. In the third quarter of 1999, the Company recorded a $24.3 million tax benefit in continuing operations for the reversal of previously established tax reserves determined to be no longer necessary. 32 33 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT. See Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders -- "Election of Directors." ITEM 11. EXECUTIVE COMPENSATION. See Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders--"Executive Compensation," "Compensation of Directors," "Employment Contracts and Termination of Employment and Changes in Control Arrangements," and "Compensation Committee Interlocks and Insider Participation." ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT. See Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders -- "Security Ownership of Management" and "Security Ownership of Principal Stockholders." ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. See Registrant's Proxy Statement for the 2000 Annual Meeting of Stockholders -- "Certain Relationships and Related Transactions." PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K. (a) Exhibits. The exhibits listed below in Item 14(a)1, 2 and 3 are filed as part of this annual report. Each management contract or compensatory plan required to be filed as an exhibit is identified by an asterisk(*). (b) Reports on Form 8-K. None. (A) INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES. (1) Financial Statements. The following Consolidated Financial Statements of Anixter International Inc. and Report of Independent Auditors are filed as part of this report.
PAGE ---- Report of Independent Auditors.............................. 14 Consolidated Statement of Operations for the years ended December 31, 1999, January 1, 1999 and January 2, 1998.... 15 Consolidated Balance Sheet at December 31, 1999 and January 1, 1999................................................... 16 Consolidated Statement of Cash Flows for the years ended December 31, 1999, January 1, 1999 and January 2, 1998.... 17 Consolidated Statement of Stockholders' Equity for the years ended December 31, 1999, January 1, 1999 and January 2, 1998...................................................... 18 Notes to the Consolidated Financial Statements.............. 19
33 34 (2) Financial Statement Schedules. The following financial statement schedules of Anixter International Inc. are filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of Anixter International Inc.:
PAGE ---- I. Condensed financial information of Registrant............... 37 II. Valuation and qualifying accounts and reserves.............. 40
All other schedules are omitted because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto. (3) Exhibit List. Each management contract or compensation plan required to be filed as an exhibit is identified by an asterisk(*).
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- (3) Articles of Incorporation and by-laws. Restated Certificate of Incorporation of Anixter International Inc., filed with Secretary of State of Delaware on September 29, 1987 and Certificate of Amendment thereof, filed with Secretary of Delaware on August 31, 1995 (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 3.1) 3.1 By-laws of Anixter International Inc. as amended through November 9, 1995 (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 3.2) 3.2 (4) Instruments defining the rights of security holders, including indentures. (a) Amended and Restated Credit Agreement, dated March 11, 1994, among Anixter Inc., Chemical Bank, as Agent, and the other banks named therein. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1993, Exhibit 4.2.) 4.1 (b) Amendment, dated March 24, 1995, to Amended and Restated Credit Agreement, dated March 11, 1994, among Anixter Inc., Chemical Bank, as Agent, and the other banks named therein. (Incorporated by reference from Itel Corporation's Quarterly Report on Form 10-Q for the quarter ended March 31, 1995, Exhibit 4.1.) (c) Amendment dated September 6, 1996, to Amended and Restated Credit Agreement, dated March 11, 1994, among Anixter Inc., The Chase Manhattan Bank, as Agent, and the other banks named therein. (Incorporated by reference from Anixter International Inc. Quarterly Report on Form 10-Q for the quarter ended September 27, 1996, Exhibit 4.2) Indenture dated September 17, 1996, between Anixter Inc., Anixter International Inc. and the Bank of New York, as Trustee, providing for 8% Senior Notes due 2003. (Incorporated by reference from Amendment No. 1 to Anixter Inc.'s Registration Statement on Form S-3, Registration Number 333-09185, filed August 27, 1996, Exhibit 4.1) 4.2 (10) Material contracts. (a) Asset Purchase Agreement, dated February 22, 1999 (Incorporated by reference from Anixter International Inc. Current Report on Form 8-K dated April 2, 1999) 10.1 (b) First Amendment to Asset Purchase Agreement, dated March 29, 1999 (Incorporated by reference from Anixter International Inc. Current Report on Form 8-K dated April 2, 1999)
34 35
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- Company's Management Incentive Plan, dated February 9, 1995. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Exhibit 10.2.) 10.2 * Company's 1983 Stock Incentive Plan as amended and restated July 16, 1992. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Exhibit 10.3.) 10.3 * Anixter International Inc. 1998 Stock Incentive Plan (Incorporated by reference from Anixter International Inc. Registration Statement on Form S-8, file number 333-56935. Exhibit 4a.) 10.4 * Company's Key Executive Equity Plan, as amended and restated July 16, 1992. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Exhibit 10.8.) 10.5 * Company's Director Stock Option Plan. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Exhibit 10.24.) 10.6 * Warrant Agreement, dated August 22, 1990, between the Company and Bernard F. Brennan, William A. Buzick, Jr., F. Philip Handy, Harold Haynes, Jerome Jacobson, Melvyn Klein, John R. Petty and James D. Woods, individually. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1991, Exhibit 10.25.) 10.7 * (a) Agreement, dated February 9, 1995, with Rod F. Dammeyer (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1994, Exhibit 10.18(d).) 10.8 * (b) Amended and Restated Agreement dated February 9, 1995 with Rod F. Dammeyer (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.17 (b)) Form of Stock Option Agreement. (Incorporated by reference from Itel Corporation's Annual Report on Form 10-K for the fiscal year ended December 31, 1992, Exhibit 10.24.) 10.9 * Form of Indemnity Agreement with all directors and officers (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.24) 10.10* Anixter International Inc. 1996 Stock Incentive Plan (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.26) 10.11* Form of Stock Option Grant (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.27) 10.12* Anixter Excess Benefit Plan (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.28) 10.13* Forms of Anixter Stock Option, Stockholder Agreement and Stock Option Plan (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.29) 10.14* (a) Anixter Deferred Compensation Plan (Incorporated by reference from Anixter International Inc. Annual Report on Form 10-K for the year ended December 31, 1995, Exhibit 10.30) 10.15* (b) Anixter 1999 Restated Deferred Compensation Plan Anixter International Inc. Enhanced Management Incentive Plan for 1999-2000 (Incorporated by reference from Anixter International Inc. Quarterly Report on Form 10-Q for the quarterly period ended July 2, 1999, Exhibit 10.20) 10.16*
35 36
EXHIBIT NO. DESCRIPTION OF EXHIBIT ------- ---------------------- Financial Advisory Agreement, dated August 4, 1999 (Incorporated by reference from Anixter International Inc. Quarterly Report on Form 10-Q for the quarterly period ended October 1, 1999, Exhibit 10.21) 10.17* Employment Agreement with Robert W. Grubbs, dated July 22, 1999 (Incorporated by reference from Anixter International Inc. Quarterly Report on Form 10-Q for the quarterly period ended October 1, 1999, Exhibit 10.22) 10.18* Employment Agreement with Dennis J. Letham, dated July 22, 1999 (Incorporated by reference from Anixter International Inc. Quarterly Report on Form 10-Q for the quarterly period ended October 1, 1999, Exhibit 10.23) 10.19*
(21) Subsidiaries of the Registrant. 21.1 List of Subsidiaries of the Registrant. (23) Consents of experts and counsel. 23.1 Consent of Ernst & Young LLP (24) Power of attorney. 24.1 Power of Attorney executed by Lord James Blyth, Rod F. Dammeyer, Robert E. Fowler, Jr., Robert W. Grubbs, Melvyn N. Klein, John R. Petty, Sheli Rosenberg, Thomas C. Theobald, and Samuel Zell (27) Financial data schedule. 27.1 Financial data schedule
Copies of other instruments defining the rights of holders of long-term debt of the Company and its subsidiaries not filed pursuant to Item 601(b)(4)(iii) of Regulation S-K and omitted copies of attachments to plans and material contracts will be furnished to the Securities and Exchange Commission upon request. 36 37 ANIXTER INTERNATIONAL INC. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT ANIXTER INTERNATIONAL INC. (PARENT COMPANY) STATEMENT OF OPERATION (IN MILLIONS)
YEARS ENDED --------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- Operating (loss) income..................................... $ (2.5) $(1.5) $ 3.9 Other income: Gain on ANTEC investment............................... -- 24.3 2.2 Interest and investment income, including intercompany...... 3.1 7.2 6.0 ------ ----- ----- Income from operations before income taxes and equity in earnings of subsidiaries.................................. 0.6 30.0 12.1 Income tax benefit.......................................... 27.4 4.2 8.7 Equity in earnings of subsidiaries.......................... 96.2 31.4 24.5 ------ ----- ----- Net income.................................................. $124.2 $65.6 $45.3 ====== ===== =====
37 38 ANIXTER INTERNATIONAL INC. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT ANIXTER INTERNATIONAL INC. (PARENT COMPANY) BALANCE SHEET (IN MILLIONS)
DECEMBER 31, JANUARY 1, 1999 1999 ------------ ---------- Current assets: Cash...................................................... $ 0.4 $ 3.3 Accounts receivable....................................... -- 1.7 Amounts currently due from affiliates, net................ 6.3 4.5 Other assets.............................................. 0.1 0.4 ------ ------ Total current assets.............................. 6.8 9.9 Investment in and advances to subsidiaries.................. 449.9 430.4 Other assets................................................ 12.3 14.3 ------ ------ 469$.0.... $454.6 ====== ====== LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable and accrued expenses, due currently........ $ 9.7 $ 10.1 Income taxes, net, primarily deferred....................... 2.9 33.0 ------ ------ Total liabilities................................. 12.6 43.1 Stockholders' equity: Common stock.............................................. 35.9 41.8 Accumulated other comprehensive income.................... (37.6) (39.7) Retained earnings......................................... 458.1 409.4 ------ ------ Total stockholders' equity........................ 456.4 411.5 ------ ------ $469.0 $454.6 ====== ======
38 39 ANIXTER INTERNATIONAL INC. SCHEDULE I -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT ANIXTER INTERNATIONAL INC. (PARENT COMPANY) STATEMENT OF CASH FLOWS (IN MILLIONS)
YEARS ENDED -------------------------------------- DECEMBER 31, JANUARY 1, JANUARY 2, 1999 1999 1998 ------------ ---------- ---------- Operating activities: Net income................................................ $124.2 $ 65.6 $45.3 Adjustments to reconcile net income to net cash provided by operating activities: Gain on ANTEC investment............................. -- (24.3) (2.2) Income tax benefit................................... (27.4) (4.2) (8.7) Equity in earnings of subsidiaries................... (96.2) (31.4) (24.5) Change in other operating items...................... 51.3 16.9 23.1 ------ ------- ----- Net cash provided by operating activities......... 51.9 22.6 33.0 Investing activities: Proceeds from sale of businesses.......................... 28.3 14.2 -- Proceeds from sale of ANTEC............................... -- 104.3 -- Acquisition of businesses................................. -- (38.1) (27.6) Loans (to) from subsidiaries, net......................... (1.7) (1.0) 0.5 ------ ------- ----- Net cash provided by (used in) investing activities........................................ 26.6 79.4 (27.1) Financing activities: Purchase of treasury stock................................ (91.9) (101.8) (14.2) Proceeds from issuance of common stock.................... 10.5 3.1 3.5 ------ ------- ----- Net cash used in financing activities................ (81.4) (98.7) (10.7) ------ ------- ----- Cash (used) provided........................................ (2.9) 3.3 (4.8) Cash at beginning of year................................... 3.3 -- 4.8 ------ ------- ----- Cash at end of year......................................... $ 0.4 $ 3.3 $ -- ====== ======= =====
39 40 ANIXTER INTERNATIONAL INC. SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS AND RESERVES YEARS ENDED DECEMBER 31, 1999, JANUARY 1, 1999 AND JANUARY 2, 1998 (IN MILLIONS)
ADDITIONS ------------------- BALANCE AT CHARGED CHARGED BALANCE AT BEGINNING OF TO TO OTHER END OF DESCRIPTION THE PERIOD INCOME ACCOUNTS DEDUCTIONS THE PERIOD ----------- ------------ ------- -------- ---------- ---------- Year ended December 31, 1999: Allowance for doubtful accounts........... $11.0 $ 5.7 $(0.9) $(5.5) $10.3 Allowance for deferred tax asset.......... $24.0 $ 2.3 -- -- $26.3 Year ended January 1, 1999: Allowance for doubtful accounts........... $10.0 $ 4.2 $ 0.2 $(3.4) $11.0 Allowance for deferred tax asset.......... $16.7 $ 7.3 -- -- $24.0 Year ended January 2, 1998: Allowance for doubtful accounts........... $ 7.9 $ 7.1 $(0.6) $(4.4) $10.0 Allowance for deferred tax asset.......... $21.0 $(4.3) -- -- $16.7
40 41 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Skokie, State of Illinois, on the 7th day of March 7, 2000. ANIXTER INTERNATIONAL INC. By: /s/ DENNIS J. LETHAM ------------------------------------ Dennis J. Letham Senior Vice President -- Finance Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. /s/ ROBERT W. GRUBBS Chief Executive Officer and President March 7, 2000 - ------------------------------------ (Principal Executive Officer) Robert W. Grubbs /s/ DENNIS J. LETHAM Senior Vice President -- Finance March 7, 2000 - ------------------------------------ (Chief Financial Officer) Dennis J. Letham /s/ LISA KEARNS LANZ Vice President -- Controller March 7, 2000 - ------------------------------------ (Chief Accounting Officer) Lisa Kearns Lanz /s/ LORD JAMES BLYTH* Director March 7, 2000 - ------------------------------------ Lord James Blyth Director March 7, 2000 - ------------------------------------ Robert L. Crandall /s/ ROD F. DAMMEYER* Director March 7, 2000 - ------------------------------------ Rod F. Dammeyer /s/ ROBERT E. FOWLER, JR.* Director March 7, 2000 - ------------------------------------ Robert E. Fowler, Jr. /s/ ROBERT W. GRUBBS Director March 7, 2000 - ------------------------------------ Robert W. Grubbs Director March 7, 2000 - ------------------------------------ F. Philip Handy /s/ MELVYN N. KLEIN* Director March 7, 2000 - ------------------------------------ Melvyn N. Klein /s/ JOHN R. PETTY* Director March 7, 2000 - ------------------------------------ John R. Petty
41 42 /s/ SHELI Z. ROSENBERG* Director March 7, 2000 - ------------------------------------ Sheli Z. Rosenberg Director March 7, 2000 - ------------------------------------ Stuart M. Sloan /s/ THOMAS C. THEOBALD* Director March 7, 2000 - ------------------------------------ Thomas C. Theobald /s/ SAMUEL ZELL* Director March 7, 2000 - ------------------------------------ Samuel Zell *By /s/ DENNIS J. LETHAM ------------------------------- Dennis J. Letham (Attorney in fact)
Dennis J. Letham, as attorney in fact for each person indicated. 42 EX-10.15(B) 2 1999 RESTATED DEFERRED COMPENSATION PLAN 1 EXHIBIT 10.15b ANIXTER INC. DEFERRED COMPENSATION PLAN 1999 RESTATEMENT 2 TABLE OF CONTENTS PAGE --------- ARTICLE I--PURPOSE; effective date..........................................1 1.1 Purpose.............................................................1 1.2 Effective Date......................................................1 ARTICLE II--DEFINITIONS.....................................................1 2.1 Account.............................................................1 2.2 Affiliate...........................................................1 2.3 Beneficiary.........................................................1 2.4 Board...............................................................1 2.5 Bonus...............................................................2 2.6 Change in Control...................................................2 2.7 Code................................................................3 2.8 Committee...........................................................3 2.9 Company.............................................................3 2.10 Compensation........................................................3 2.11 Deferral Commitment.................................................3 2.12 Deferral Period.....................................................3 2.13 Determination Date..................................................3 2.14 Disability..........................................................3 2.15 Earnings............................................................3 2.16 Earnings Rate.......................................................4 2.17 Financial Hardship..................................................4 2.18 Parent Company......................................................4 2.19 Participant.........................................................4 2.20 Participating Employer..............................................4 2.21 Participation Agreement.............................................4 2.22 Plan................................................................4 2.23 Qualified 401(k) Plan...............................................4 2.24 Qualified Pension Plan..............................................5 2.25 Retirement..........................................................5 2.26 Salary..............................................................5 2.27 Valuation Date......................................................5 ARTICLE III--ELIGIBILITY AND DEFERRAL COMMITMENTS...........................5 3.1 Eligibility and Participation........................................5 3.2 Deferral Election....................................................5 3.3 Modification of Deferral Commitment..................................6 (i) 3 TABLE OF CONTENTS PAGE ---- ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS AND INTEREST....................6 4.1 Accounts............................................................6 4.2 Matching Contribution...............................................6 4.3 Pension Makeup......................................................6 4.4 Determination of Accounts...........................................6 4.5 Vesting of Accounts.................................................7 4.6 Tax Withholding.....................................................7 4.7 Statement of Account................................................7 ARTICLE V--PLAN BENEFITS...................................................7 5.1 Retirement Benefit..................................................7 5.2 Disability Benefit..................................................8 5.3 Change-in-Control Benefit...........................................8 5.4 Termination Benefit.................................................9 5.5 Death Benefit......................................................10 5.6 Withholding on Benefit Payments....................................11 5.7 Payment to Guardian................................................11 ARTICLE VI--OTHER DISTRIBUTIONS...........................................11 6.1 Early Withdrawals..................................................11 6.2 Financial Hardship Distributions...................................12 6.3 Accelerated Distribution...........................................12 ARTICLE VII--BENEFICIARY DESIGNATION......................................12 7.1 Beneficiary Designation............................................12 7.2 Changing Beneficiary...............................................13 7.3 No Beneficiary Designation.........................................13 7.4 Effect of Payment..................................................13 ARTICLE VIII--ADMINISTRATION..............................................14 8.1 Committee; Duties..................................................14 8.2 Agents.............................................................14 8.3 Binding Effect of Decisions........................................14 8.4 Indemnity of Committee.............................................14 ARTICLE IX--CLAIMS PROCEDURE..............................................14 9.1 Claim..............................................................14 9.2 Denial of Claim....................................................14 9.3 Review of Claim....................................................15 9.4 Final Decision.....................................................15 (ii) 4 TABLE OF CONTENTS PAGE ---- ARTICLE X--AMENDMENT AND TERMINATION OF THE PLAN..............................15 10.1 Amendment.............................................................15 10.2 Participating Employer's Right to Terminate...........................15 ARTICLE XI--MISCELLANEOUS.....................................................16 11.1 Unfunded Plan.........................................................16 11.2 Unsecured General Creditor............................................16 11.3 Trust Fund............................................................16 11.4 Nonassignability......................................................17 11.5 Not a Contract of Employment..........................................17 11.6 Protective Provisions.................................................17 11.7 Governing Law.........................................................17 11.8 Validity..............................................................17 11.9 Notice................................................................17 11.10 Successors............................................................18 APPENDIX A--CALCULATION OF EARNINGS USING AVERAGE DAILY BALANCE................1 (iii) 5 ANIXTER INC. DEFERRED COMPENSATION PLAN 1999 RESTATEMENT ARTICLE I--PURPOSE; EFFECTIVE DATE 1.1 Purpose Anixter Inc. (the "Company") adopts this Deferred Compensation Plan (the "Plan") to provide, in a tax-efficient manner, supplemental funds for retirement or death for certain employees of the Company and its Affiliates. It is intended that the Plan will aid in attracting and retaining employees of exceptional ability by providing them with this benefit. 1.2 Effective Date The Plan, effective as of January 1, 1995, is amended and restated effective January 1, 1999. ARTICLE II--DEFINITIONS Whenever used in this document, the following terms shall have the meanings indicated, unless a contrary or different meaning is expressly provided: 2.1 Account "Account" means the record or records maintained by a Participating Employer for each Participant in accordance with Article IV with respect to any deferral of Compensation pursuant to this Plan. 2.2 Affiliate "Affiliate" means the Parent Company or any other company designated as an Affiliate by the Board. 2.3 Beneficiary "Beneficiary" means the person, persons or entity entitled under Article VII to receive any Plan benefits payable after a Participant's death. 2.4 Board "Board" means the Board of Directors of the Company. PAGE 1 - DEFERRED COMPENSATION PLAN 6 2.5 Bonus "Bonus" means the remuneration earned in a Deferral Period, including amounts thereof deferred under an agreement entered into pursuant to either Code Section 125 or Code Section 401(k), regular or special performance bonus amounts and commissions, but excluding base and overtime pay, car allowances, cost of living allowances, other extraordinary payments and any amounts received under a stock option, phantom stock option or similar long-term incentive plan. 2.6 Change in Control "Change in Control" means: (a) With respect to the Parent Company, a change in control of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of 1934 (the "Act"), as amended or any successor thereto; provided that, without limitation, such a change in control shall be deemed to have occurred if (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) other than the Parent Company controls more than twenty-five percent (25%) of the Company's Voting Securities and the securities so controlled are greater in number than those controlled by the Parent Company; (ii) any "person" (as such term is used in Sections 13(d) and 14(d) of the Act) other than Samuel Zell, B. Ann Lurie and Sheli Rosenberg controls more than twenty-five percent (25%) of the Parent Company's Voting Securities and the securities so controlled are greater in number than those controlled by Mr. Zell and Mmes. Lurie and Rosenberg; (iii) during any period of two (2) consecutive years, individuals who at the beginning of such period constitute the Board of Directors of the Parent Company, together with any new directors whose election, or nomination for election by the shareholders, was approved by a vote of at least two-thirds (2/3) of the directors then still in office who were either directors at the beginning of the period or whose election or nomination for election was previously so approved, cease for any reason to constitute at least a majority of the Board of Directors of the Parent Company; or (iv) the stockholders of the Parent Company approve a merger or consolidation of the Parent Company with any other corporation, other than a merger or consolidation which would result in the Voting Securities of the Parent Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into Voting Securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the Voting Securities of the Parent Company or such surviving entity outstanding immediately after such merger or consolidation, or the stockholders of the Parent Company approve a plan of complete liquidation of the Parent Company or an agreement for the sale or disposition by the Parent Company (in one (1) transaction or a series of transactions) of all or substantially all of the Parent Company's assets to a person or entity which is not a subsidiary of the Parent Company; unless, with respect to clauses (i) and (ii) above, such person is a trustee or other fiduciary holding securities under an employee benefit plan of either the Company or the Parent Company. As used herein, "Voting Securities" shall mean any securities which vote generally in the election of directors. (b) With respect to the Company, a change in control shall mean any acquisition of more than fifty percent (50%) of the outstanding voting capital stock of the Company, but excludes (i) a "spin-off" distribution by the Parent Company to its stockholders, pro rata, of any or all of its shares of the capital stock of the Company prior to any such change in control; or (ii) a public stock offering of the Company's stock; or (iii) a sale of the Parent Company's eq- PAGE 2 - DEFERRED COMPENSATION PLAN 7 uity interest in the Company to a group of investors which includes members of management of the Company at the time of such purchase. 2.7 Code "Code" means the Internal Revenue Code, as amended from time to time. 2.8 Committee "Committee" means the Anixter Employee Benefits Administrative Committee which has been appointed by the Board to administer the Plan pursuant to Article VIII. 2.9 Company "Company" means Anixter Inc., a Delaware corporation, and its successors and assigns. 2.10 Compensation "Compensation" means the Salary and Bonuses payable by a Participating Employer to the Participant, determined before reduction for amounts deferred under this Plan. 2.11 Deferral Commitment "Deferral Commitment" means a commitment made by a Participant pursuant to Article III and for which a Participation Agreement has been submitted by the Participant to the Committee. 2.12 Deferral Period "Deferral Period" means the period during which a Participant has elected to defer a portion of the Participant's Compensation earned during such period. The Deferral Period shall be a calendar year. 2.13 Determination Date "Determination Date" means the last day of each calendar month. 2.14 Disability "Disability" means a physical or mental condition which, in the opinion of the Committee, prevents the Participant from satisfactorily performing the Participant's usual duties for a Participating Employer. The Committee shall determine the existence of the Disability and may rely on advice from a medical examiner, medical reports, and other evidence satisfactory to the Committee in making the determination. 2.15 Earnings "Earnings" means the amount of growth that is credited to an Account on each Determination Date in a calendar year based on the Earnings Rate. Earnings shall be calculated as set forth in Appendix A. PAGE 3 - DEFERRED COMPENSATION PLAN 8 2.16 Earnings Rate "Earnings Rate" means a rate equal to the nominal annual yield of the average of the ten (10) year Treasury note yield for United States Government securities for the three (3) months of the previous quarter, as published by the Federal Reserve Board (or any substantially similar index selected by the Board), times one hundred forty percent (140%). 2.17 Financial Hardship "Financial Hardship" means a severe financial hardship to the Participant resulting from a sudden and unexpected illness or accident of the Participant or of a dependent of the Participant, loss of the Participant's property due to casualty, or other extraordinary and unforeseeable circumstances whether similar or dissimilar to the foregoing. Financial Hardship shall be determined by the Committee on the basis of information supplied by the Participant in accordance with the standards set forth by the Committee. 2.18 Parent Company "Parent Company" means Anixter International Inc., a Delaware Corporation, and its successors and assigns. 2.19 Participant "Participant" means an eligible executive under Article III who has elected to defer Compensation during any Deferral Period under this Plan and who has not yet received full benefits hereunder. 2.20 Participating Employer "Participating Employer" means the Company and any subsidiary or affiliate of the Company designated by the Board as a Participating Employer under the Plan, as long as such designation has become effective and continues in effect. The designation as a Participating Employer shall become effective only upon the acceptance of such designation and the formal adoption of the Plan by a Participating Employer. A Participating Employer may revoke its acceptance of designation as a Participating Employer at any time, but until it makes such revocation, all of the provisions of this Plan and any amendments thereto shall apply to the Participants and Beneficiaries of the Participating Employer. 2.21 Participation Agreement "Participation Agreement" means the agreement submitted by a Participant to the Committee pursuant to Article III prior to the beginning of the Deferral Period, specifying a Deferral Commitment made for such Deferral Period. 2.22 Plan "Plan" means this Deferred Compensation Plan as amended from time to time. 2.23 Qualified 401(k) Plan "Qualified 401(k) Plan" means the Anixter Employee Savings Plan, or any successor defined contribution plan maintained by the Company that qualifies under Code Section 401(a). PAGE 4 - DEFERRED COMPENSATION PLAN 9 2.24 Qualified Pension Plan "Qualified Pension Plan" means the Anixter Inc. Pension Plan, or any successor defined benefit plan maintained by the Company that qualifies under Code Section 401(a). 2.25 Retirement "Retirement" means a Participant's voluntary termination of employment with a Participating Employer on or after the Participant's attainment of age fifty-five (55). 2.26 Salary "Salary" means the base remuneration and overtime paid to a Participant by a Participating Employer during a Deferral Period, including amounts thereof deferred under an agreement entered into pursuant to either Code Section 125 or Code Section 401(k), but excluding regular or special performance bonus amounts, commissions, car allowances, cost of living allowances, other extraordinary payments and any amounts received under a stock option, phantom stock option or similar long-term incentive plan. 2.27 Valuation Date "Valuation Date" means the last day of the month in which Retirement, Disability, termination or death occurs or, in the case of Participants affected by Section 5.3(d), the last day of the month in which the Participant attains age fifty-five (55). ARTICLE III--ELIGIBILITY AND DEFERRAL COMMITMENTS 3.1 Eligibility and Participation (a) ELIGIBILITY. All executives designated by a Participating Employer and approved by the Board shall be entitled to participate. (b) PARTICIPATION. An eligible executive may elect to participate in the Plan with respect to any Deferral Period by submitting a Participation Agreement to the Committee by the last day of the month immediately preceding the beginning of the Deferral Period. (c) PART-YEAR PARTICIPATION. If an executive first becomes eligible to participate during a Deferral Period, a Participation Agreement may be submitted to the Committee within thirty (30) days following notification to the executive of eligibility to participate. The Participation Agreement shall be effective only with regard to Compensation earned following such submission. 3.2 Deferral Election (a) ELECTION BY PARTICIPANT. A Participant may elect to defer receipt of a certain percentage, not to exceed fifty percent (50%), of Salary payable to the Participant and/or a certain percentage, not to exceed one hundred percent (100%), of any Bonuses earned by the Participant during the Deferral Period but before the Participant's termination of employment for any PAGE 5 - DEFERRED COMPENSATION PLAN 10 reason. Notwithstanding any provision to the contrary contained in this Plan or in any Participation Agreement, no deferral shall operate to reduce any amount payable to the Company under any arrangement providing for or which would permit such amounts to be withheld from Salary or Bonuses otherwise due to a Participant (e.g., repayment of a loan at the rate of fifty percent (50%) of net annual Bonuses would result in the Company withholding fifty percent (50%) of such Bonus after tax but without regard to amounts deferred under this Plan or otherwise deferred or committed). (b) MINIMUM DEFERRAL. The minimum deferral amount shall be two thousand four hundred dollars ($2,400) per Deferral Period, which amount may consist of Salary, Bonus or any combination thereof. 3.3 Modification of Deferral Commitment Deferral Commitments shall be irrevocable except that the Committee may, in its sole discretion, reduce the amount to be deferred or waive the remainder of the Deferral Commitment upon a finding that the Participant has suffered a Financial Hardship. ARTICLE IV--DEFERRED COMPENSATION ACCOUNTS AND INTEREST 4.1 Accounts For record-keeping purposes only, the Participating Employer shall maintain an Account for each Participant who elects to have the receipt of Compensation deferred under this Plan. Deferrals made in each Deferral Period shall be maintained in separate accounts. The existence of these accounts shall not require any segregation of assets. The combined values of the separate accounts for each Participant shall constitute an Account. 4.2 Matching Contribution If a Participant defers the maximum elective percentage into the Qualified 401(k) Plan, the Participating Employer shall credit a matching contribution to the Participant's Account equal to any matching contribution which would have been credited to the Participant's Qualified 401(k) Plan but for the Participant's participation in this Plan. 4.3 Pension Makeup The Participating Employer shall restore an amount equal to any reduction in a Participant's Qualified Pension Plan benefits resulting from deferrals under this Plan to the extent that the Qualified Pension Plan benefits are not restored by any other plan or agreement provided by the Participating Employer. 4.4 Determination of Accounts Each Account shall be adjusted as of each Determination Date and shall consist of: (a) The balance of the Account as of the immediately preceding Determination Date; and PAGE 6 - DEFERRED COMPENSATION PLAN 11 (b) Any Compensation deferred and credited to the Account since the immediately preceding Determination Date; and (c) Earnings credited since the immediately preceding Determination Date. The total of (a), (b) and (c) shall be reduced by any distributions from the Account since the immediately preceding Determination Date. 4.5 Vesting of Accounts Each Participant shall be one hundred percent (100%) vested at all times in all amounts credited to the Participant's Account and all Earnings thereon. 4.6 Tax Withholding Any withholding of taxes or other amounts with respect to deferred Compensation that is required by state, federal, or local law shall be withheld from the Participant's corresponding nondeferred compensation to the maximum extent possible and any remaining amount required to be withheld shall reduce the amount credited to the Participant's Account. 4.7 Statement of Account A statement shall be issued on a quarterly basis by the Participating Employer to each Participant setting forth the Participant's Account balance under the Plan as of the immediately preceding Determination Date. ARTICLE V--PLAN BENEFITS 5.1 Retirement Benefit (a) BENEFIT AMOUNT. If a Participant terminates employment with all Participating Employers due to Retirement, the Participating Employer shall pay to the Participant a benefit equal to the balance in the Participant's Account. (b) FORM OF BENEFIT. The Retirement benefit attributable to the elective deferrals for any Deferral Period shall be paid in one (1) of the forms set out below, as elected by the Participant in the Participation Agreement for that year. Forms of payment are: (i) A lump-sum payment; (ii) Monthly installments, the number of such installments not to exceed one hundred twenty (120); or (iii) A combination of (i) and (ii) above. (c) COMMENCEMENT. The amount of the benefit shall be based on the value of the Participant's Account on the Valuation Date and shall be paid on the settlement date. The date on PAGE 7 - DEFERRED COMPENSATION PLAN 12 which lump-sum payments are made and on which installment payments commence shall be the settlement date. If a combination of lump sum and installments is elected, the lump sum and the first installment payment shall be paid on the settlement date. The settlement date shall be no more than sixty-five (65) days after the Valuation Date. Earnings shall continue to accrue on the Participant's Account to the settlement date, and Earnings on any remaining Account balance after the settlement date shall continue to accrue and be included in all payments made under this Section 5.1. All payments shall be made as of the first day of the month. (d) SMALL ACCOUNTS. On the Valuation Date, if the Participant's Account is less than the Participant's Salary rate in effect at the Participant's Retirement, the benefit may, at the Participating Employer's option, be paid in a lump sum. (e) INSTALLMENTS. If payment is by installments, the amount of the installments shall be redetermined each January 1 based upon the remaining Account balance, the remaining number of installments and an Earnings Rate equal to the rate in effect for the preceding quarter. (f) CHANGE IN FORM OF PAYMENT. Notwithstanding (b) above, a Participant may elect to file a change of payment designation which shall supersede the prior form of payment designation in the Participation Agreement for any one (1) or more Deferral Periods. If the Participant's most recent change of payment designation has not been filed two (2) calendar years prior to the year of Retirement, the prior election shall be used to determine the form of payment (e.g., if a Participant were to retire in 1998, the last day to file a change of payment designation would be December 31, 1996). 5.2 Disability Benefit (a) BENEFIT AMOUNT. If a Participant terminates employment with all Participating Employers due to Disability, the Participating Employer shall pay to the Participant a benefit equal to the balance in the Participant's Account. (b) FORM OF BENEFIT. The benefit payable under this Section 5.2 shall be paid in a lump sum. (c) COMMENCEMENT. The amount of the lump sum shall be based on the value of the Participant's Account on the Valuation Date. The date on which payment is made shall be the settlement date. Earnings shall continue to accrue on the Participant's Account to the settlement date. The settlement date shall be no more than sixty-five (65) days after the Valuation Date. All payments shall be made as of the first day of the month. 5.3 Change-in-Control Benefit (a) BENEFIT AMOUNT. If a Participant terminates employment with all Participating Employers within forty-eight (48) months following a Change in Control, the Participating Employer shall pay to the Participant a benefit equal to the balance in the Participant's Account. (b) FORM OF BENEFIT. Prior to the consummation of the Change in Control, each Participant shall elect in writing to receive payment in one (1) of the following forms: (i) A lump-sum payment; PAGE 8 - DEFERRED COMPENSATION PLAN 13 (ii) Monthly installments, the number of such installments not to exceed one hundred twenty (120); or (iii) A combination of (i) and (ii) above. (c) COMMENCEMENT. The amount of the benefit shall be based on the value of the Participant's Account on the Valuation Date and shall be paid on the settlement date. The date on which lump-sum payments are made and on which installment payments commence shall be the settlement date. If a combination of lump sum and installments is elected, the lump sum and the first installment payment shall be paid on the settlement date. The settlement date shall be no more than sixty-five (65) days after the Valuation Date. Earnings shall accrue from the Valuation Date to the settlement date at the Earnings Rate, substituting a multiplier of one hundred twenty percent (120%) for one hundred forty percent (140%). Earnings (calculated with the one hundred twenty percent (120%) multiplier) on any remaining Account balance after the settlement date shall continue to accrue and be included in all payments made under this subsection (c). All payments shall be made as of the first day of the month. (d) SMALL ACCOUNTS. On the Valuation Date, if the Participant's Account is less than the Participant's Salary rate in effect on the Participant's termination date, the benefit may, at the Participating Employer's option, be paid in a lump sum. (e) INSTALLMENTS. If payment is by installments, the amount of the installments shall be redetermined each January 1 based upon the remaining Account balance, the remaining number of installments and an Earnings Rate (calculated with the one hundred twenty percent (120%) multiplier) equal to the rate in effect for the preceding quarter. (f) CHANGE IN FORM OF PAYMENT. Notwithstanding (b) above, a Participant may elect to file a change of payment designation which shall supersede the prior form of payment designation. If the Participant's most recent change of payment designation has not been filed two (2) calendar years prior to the Participant's termination date, the prior election shall be used to determine the form of payment (e.g., if a Participant terminates in 2010, the last day to file a change of payment designation would be December 31, 2008). 5.4 Termination Benefit (a) BENEFIT AMOUNT. If a Participant terminates employment with all Participating Employers for any other reason, the Participating Employer shall pay to the Participant benefits equal to the balance in the Participant's Account. (b) FORM OF BENEFIT. The termination benefit payable under this Section 5.3 shall be paid in a lump sum. (c) COMMENCEMENT. The amount of the lump sum shall be based on the value of the Participant's Account on the Valuation Date. The date on which payment is made shall be the settlement date. Earnings shall accrue from the Valuation Date to the settlement date at the Earnings Rate without the one hundred forty percent (140%) multiplier. The settlement date shall be the PAGE 9 - DEFERRED COMPENSATION PLAN 14 first business day in January following the date the amounts deferred were held by the Participating Employer for five (5) years. (d) SALE OF DIVISION. (i) Notwithstanding the above, if the Company sells one (1) or more of its divisions to a buyer that does not elect to continue the Plan for that division's Participants, such Participants shall, prior to the date the sale closes, irrevocably elect in writing to commence payment in accordance with either subsection (c) above or this subsection (d). (ii) Participants electing to be paid under this subsection (d) shall further elect to receive their benefit payments upon their attainment of age fifty-five (55) in one (1) of the following forms: (A) A lump-sum payment; (B) Monthly installments, the number of such installments not to exceed one hundred twenty (120); or (C) A combination of (A) and (B) above. (iii) The first day of the month following the Participant's attainment of age fifty-five (55) shall be the settlement date. The amount of the benefit shall be based on the value of the Participant's Account on the Valuation Date. Any lump sum and first installment payment elected shall be paid on the settlement date. Earnings shall accrue from the Valuation Date to the settlement date at the Earnings Rate, substituting a multiplier of one hundred twenty percent (120%) for one hundred forty percent (140%). Earnings (calculated with the one hundred twenty percent (120%) multiplier) on any remaining Account balance after the settlement date shall continue to accrue and be included in all payments made under this subsection (d). All payments shall be made as of the first day of the month. (iv) If payment is by installments, the amount of the installments shall be redetermined each January 1 based upon the remaining Account balance, the remaining number of installments and an Earnings Rate (calculated with the one hundred twenty percent (120%) multiplier) equal to the rate in effect for the preceding quarter. (v) Notwithstanding (ii) above, a Participant may elect to file a change of payment designation which shall supersede the prior form of payment designation for any one (1) or more Deferral Periods. If the Participant's most recent change of payment designation has not been filed two (2) calendar years prior to the Participant's attainment of age fifty-five (55), the prior election shall be used to determine the form of payment (e.g., if a Participant attains age fifty-five (55) in 2010, the last day to file a change of payment designation would be December 31, 2008). 5.5 Death Benefit (a) PRERETIREMENT/POSTTERMINATION. PAGE 10 - DEFERRED COMPENSATION PLAN 15 (i) BENEFIT AMOUNT. If a Participant terminates employment with all Participating Employers due to death, or if a Participant dies following the Participant's termination of employment with all Participating Employers but prior to Retirement, the Participating Employer shall pay to the Participant's Beneficiary a benefit equal to the balance in the Participant's Account. (ii) FORM OF BENEFIT. The benefit payable under this subsection shall be paid in a lump sum. (iii) COMMENCEMENT. The amount of the lump sum shall be based on the value of the Participant's Account on the Valuation Date. The date on which payment is made shall be the settlement date. Earnings shall continue to accrue on the Participant's Account to the settlement date. The settlement date shall be no more than sixty-five (65) days after the Valuation Date. All payments shall be made as of the first day of the month. (b) POSTRETIREMENT. If a Participant dies following the Participant's Retirement from a Participating Employer, the Participating Employer shall continue to pay benefits to the Participant's Beneficiary in the form previously elected by the Participant for Retirement benefits. 5.6 Withholding on Benefit Payments The Participating Employer shall withhold from payments made hereunder any taxes required to be withheld from such payments under federal, state or local law. A Beneficiary, however, may elect not to have withholding of federal income tax pursuant to Section 3405(a)(2) of the Internal Revenue Code, or any successor provision thereto. 5.7 Payment to Guardian If a Plan benefit is payable to a minor or a person declared incompetent or to a person incapable of handling the disposition of property, the Committee may direct payment of such Plan benefit to the guardian, legal representative or person having the care and custody of such minor, incompetent or person. The Committee may require proof of incompetency, minority, incapacity or guardianship as it may deem appropriate prior to distribution of the Plan benefit. Such distribution shall completely discharge the Committee and the Participating Employer from all liability with respect to such benefit. ARTICLE VI--OTHER DISTRIBUTIONS 6.1 Early Withdrawals A Participant's Account may be distributed to the Participant before termination of employment as follows: (a) EARLY WITHDRAWALS. A Participant may elect in a Participation Agreement to withdraw all or any portion of the amount deferred by that Participation Agreement plus Earnings thereon as of a date specified in the election. Such date shall not be sooner than five (5) years after the date the Deferral Period commences. (b) FORM OF PAYMENT. Early withdrawals shall be paid in a lump sum and shall be charged to the Participant's Account as a distribution. PAGE 11 - DEFERRED COMPENSATION PLAN 16 If a Participant retires, dies or otherwise terminates employment with a Participating Employer for any reason prior to the designated early withdrawal date in the Participation Agreement, the Participating Employer shall disregard such early withdrawal date and pay the Participant or the Participant's Beneficiary the benefit due under Article V. 6.2 Financial Hardship Distributions Notwithstanding any other provision of the Plan, payment from the Participant's Account may be made to the Participant or the Participant's Beneficiary in the sole discretion of the Committee by reason of Financial Hardship. A payment based upon the Participant's, or the Participant's Beneficiary's, Financial Hardship may not exceed the amount required to meet the immediate financial need created by the hardship and not reasonably available from other sources of the Participant or the Participant's Beneficiary. If such a distribution is made, the Participant's deferrals into this Plan shall be suspended for twelve (12) calendar months following the distribution. Resumption of the Participant's deferrals into the Plan shall be made only at the election of the Participant in accordance with Article III herein. 6.3 Accelerated Distribution Notwithstanding any other provision of the plan, a Participant may request an accelerated distribution as follows: (a) A Participant, at any time, shall be entitled to receive, upon written request to the Committee, a lump-sum distribution equal to ninety percent (90%) of the Account balance as of the Determination Date immediately preceding the date on which the Committee receives notice pursuant to Section 11.9. The remaining balance of ten percent (10%) shall be forfeited by the Participant. A Participant who receives a distribution under this subsection shall be suspended from participation in the Plan for twelve (12) months. (b) If a Participant who is no longer employed by the Participating Employer is entitled to a benefit under Section 4.3 of this Plan, the Participant shall be entitled to receive, upon written request to the Committee, a lump-sum distribution equal to ninety percent (90%) of the actuarial equivalent vested accrued pension make-up benefit under Section 4.3 as of the Determination Date immediately preceding the date on which the Committee receives notice pursuant to Section 11.9. The remaining balance of ten percent (10%) shall be forfeited by the Participant. (c) The amount payable under this section shall be paid in a lump sum within forty-five (45) days following the Committee's receipt of notice by the Participant. Following the death of a Participant, the Participant's Beneficiary may, at any time, request an accelerated distribution under this section. ARTICLE VII--BENEFICIARY DESIGNATION 7.1 Beneficiary Designation Each Participant shall have the right, at any time, to designate a Beneficiary (both primary as well as contingent) to whom benefits under this Plan shall be paid in the event of a Participant's death PAGE 12 - DEFERRED COMPENSATION PLAN 17 prior to complete distribution to the Participant of the benefits due under the Plan. Each Beneficiary designation shall be in a written form prescribed by the Committee and will be effective only when filed with the Committee during the Participant's lifetime. 7.2 Changing Beneficiary Any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new designation with the Committee. The filing of a new Beneficiary designation shall cancel all designations previously filed. 7.3 No Beneficiary Designation If any Participant fails to designate a Beneficiary in the manner provided above, if the designation is void, or if the Beneficiary designated by a deceased Participant dies before the Participant or before complete distribution of the Participant's benefits, the Participant's Beneficiary shall be the person in the first of the following classes in which there is a survivor: (a) The Participant's surviving spouse; (b) The Participant's children in equal shares, except that if any of the children predeceases the Participant but leave issue surviving, then such issue shall take by right of representation the share the parent would have taken if living; (c) The Participant's estate. 7.4 Effect of Payment Payment to the Beneficiary shall completely discharge the Participating Employer's obligations under this Plan. PAGE 13 - DEFERRED COMPENSATION PLAN 18 ARTICLE VIII--ADMINISTRATION 8.1 Committee; Duties This Plan shall be administered by the Committee. The Committee shall have such powers and duties as may be necessary to discharge its responsibilities. These powers shall include, but not be limited to, interpreting the Plan provisions; determining amounts due to any Participant, the rights of any Participant or Beneficiary under this Plan and the amounts credited to a Participant's Account and the Earnings thereon; enforcing the right to require any necessary information from any Participant; and any other activities deemed necessary or helpful. Members of the Committee may be Participants under the Plan. 8.2 Agents The Committee may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may from time to time consult with counsel who may be counsel to the Company. 8.3 Binding Effect of Decisions The decision or action of the Committee with respect to any question arising out of or in connection with the administration, interpretation and application of the Plan and the rules and regulations promulgated hereunder shall be final, conclusive and binding upon all persons having any interest in the Plan. 8.4 Indemnity of Committee To the extent permitted by applicable law, the Participating Employer shall indemnify, hold harmless and defend the members of the Committee against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to the Plan on account of such member's service on the Committee. ARTICLE IX--CLAIMS PROCEDURE 9.1 Claim Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee or its delegatee, which shall respond in writing as soon as practicable. 9.2 Denial of Claim If the claim or request is denied, the written notice of denial shall state: (a) The reasons for denial, with specific reference to the Plan provisions on which the denial is based, PAGE 14 - DEFERRED COMPENSATION PLAN 19 (b) A description of any additional material or information required and an explanation of why it is necessary, and (c) An explanation of the Plan's claims review procedure. 9.3 Review of Claim Any person whose claim or request is denied or who has not received a response within thirty (30) days may request review by notice given in writing to the Committee. The claim or request shall be reviewed by the Committee which may, but shall not be required to, grant the claimant a hearing. On review, the claimant may have representation, examine pertinent documents, and submit issues and comments in writing. 9.4 Final Decision The decision on review shall normally be made within sixty (60) days. If an extension of time is required for a hearing or other special circumstances, the claimant shall be notified and the time limit shall be one hundred twenty (120) days. The decision shall be in writing and shall state the reasons and the relevant Plan provisions. All decisions on review shall be final and bind all parties concerned. ARTICLE X--AMENDMENT AND TERMINATION OF THE PLAN 10.1 Amendment The Board may, at any time, amend the Plan in whole or in part provided, however, that no amendment shall be effective to decrease or restrict the amount credited to any Account maintained under the Plan as of the date of amendment, nor shall any amendment be effective to decrease the Earnings Rate at which amounts are credited to any Account balance existing as of the date of amendment. Changes in the definition of "Earnings Rate" shall not become effective before the first day of the Deferral Period which follows the adoption of the amendment and at least thirty (30) days written notice of the amendment has been given to each Participant. 10.2 Participating Employer's Right to Terminate The board of directors of each Participating Employer may at any time partially or completely terminate the Plan for that Participating Employer if, in its judgment, the tax, accounting, or other effects of the continuance of the Plan, or potential payments thereunder, would not be in the best interests of the Participating Employer. (a) PARTIAL TERMINATION. The board of directors of each Participating Employer may partially terminate the Plan by instructing the Committee not to accept any additional Deferral Commitments. If such a partial termination occurs, the Plan shall continue to operate and be effective with regard to Deferral Commitments entered into prior to the effective date of such partial termination. (b) COMPLETE TERMINATION. The board of directors of each Participating Employer may completely terminate the Plan by instructing the Committee not to accept any additional PAGE 15 - DEFERRED COMPENSATION PLAN 20 Deferral Commitments, and to terminate all ongoing Deferral Commitments. If such a complete termination occurs, the Committee shall pay out to each Participant the balance in the Participant's Account at such time and in such manner as the Committee, in its sole discretion, determines, except that the Participants' Accounts shall continue to accrue Earnings at the Earnings Rate and all payments made under this section shall include such Earnings. The Plan shall cease to operate when the Account balances have been fully paid. ARTICLE XI--MISCELLANEOUS 11.1 Unfunded Plan This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of "management or highly-compensated employees" within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and therefore to be exempt from the provisions of Parts 2, 3 and 4 of Title I of ERISA. Accordingly, the Board may terminate the Plan and no further benefits shall accrue hereunder, or the Board may remove certain employees as Participants, if it is determined by the United States Department of Labor, a court of competent jurisdiction or an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA (as currently in effect or hereafter amended) which is not so exempt. If the Plan is terminated under this Section 11.1, all ongoing Deferral Commitments shall terminate, no additional Deferral Commitments will be accepted by the Committee, and the amount of each Participant's Account balance shall be distributed to such Participant at such time and in such manner as the Committee, in its sole discretion, determines. 11.2 Unsecured General Creditor Participants and their Beneficiaries, heirs, successors and assigns shall have no secured legal or equitable rights, interest or claims in any property or assets of a Participating Employer, nor shall they be Beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts or the proceeds therefrom owned or which may be acquired by a Participating Employer. Except as may be provided in Section 11.3, such policies, annuity contracts or other assets of a Participating Employer shall not be held under any trust for the benefit of the Participants, their Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of a Participating Employer under this Plan. Any and all of a Participating Employer's assets and policies shall be and remain unrestricted by this Plan. A Participating Employer's obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future. 11.3 Trust Fund Each Participating Employer shall be responsible for the payment of all benefits provided under the Plan to Participants in its employ. At its discretion, the Participating Employer may establish one (1) or more trusts, with such trustees as the Participating Employer may approve, for the purpose of providing for the payment of such benefits. Although such trust or trusts may be irrevocable, the assets thereof shall be subject to the claims of all the Participating Employer's creditors in the event of insolvency. To the extent any benefits provided under the Plan are paid from any such trust, the Participating Employer shall have no further obligation to pay such benefits. If not paid from a trust, any benefits provided under the Plan shall remain the obligation of, and shall be paid by, the Participating Employer. PAGE 16 - DEFERRED COMPENSATION PLAN 21 11.4 Nonassignability Neither a Participant nor any other person shall have the right to commute, sell, assign, transfer, pledge, anticipate, mortgage or otherwise encumber, transfer, hypothecate or convey in advance of actual receipt the amounts, if any, payable hereunder, or any part thereof, which are, and all rights to which are, hereby expressly declared to be unassignable and nontransferable. No part of the amounts payable shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debts, judgments, alimony or separate maintenance owed by a Participant or any other person, nor be transferable by operation of law in the event of a Participant's or any other person's bankruptcy or insolvency. 11.5 Not a Contract of Employment The terms and conditions of this Plan shall not constitute a contract of employment between the Participating Employer and the Participant, and the Participant (or the Participant's Beneficiary) shall have no rights against the Participating Employer except as may otherwise be specifically provided herein. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of a Participating Employer or to interfere with the absolute and unrestricted right of a Participating Employer to discipline or discharge a Participant at any time. 11.6 Protective Provisions A Participant will cooperate with the Participating Employer by furnishing any and all information requested by the Participating Employer in order to facilitate the payment of benefits hereunder, by taking such physical examinations as the Participating Employer may deem necessary and by taking such other actions as may be requested by such Participating Employer. 11.7 Governing Law The provisions of this Plan shall be construed and interpreted according to the laws of the State of Illinois, without reference to its conflicts of laws provisions, except as preempted by federal law. 11.8 Validity If any provision of this Plan shall be held illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining parts hereof, but this Plan shall be construed and enforced as if such illegal and invalid provisions had never been inserted herein. 11.9 Notice Any notice or filing required or permitted under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to any member of the Committee. Such notice shall be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification. Mailed notice to the Committee shall be directed to the Company's corporate headquarters address. Mailed notice to a Participant or Beneficiary shall be directed to the individual's last known address in the Participating Employer's records. PAGE 17 - DEFERRED COMPENSATION PLAN 22 11.10 Successors The provisions of this Plan shall bind and inure to the benefit of each Participating Employer and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which shall, whether by merger, consolidation, purchase or otherwise acquire all or substantially all of the business and assets of a Participating Employer, and successors of any such corporation or other business entity. ANIXTER INC. By: ----------------------------------- Its Dated: ----------------------------------- PAGE 18 - DEFERRED COMPENSATION PLAN 23 APPENDIX A--CALCULATION OF EARNINGS USING AVERAGE DAILY BALANCE - -------------------------------------------------------------------------------- ADB FACTOR* = [Days in Month - Day of Month + 1] ---------------------------------- Days in Month (Round to 10 Decimal Places) - -------------------------------------------------------------------------------- EARNINGS FACTOR = [1 + Earnings Rate]1/12 - 1 (Round to 10 Decimal Places) - -------------------------------------------------------------------------------- EARNINGS = Earnings Factor x [Account Balance at Beginning of Month + Transaction 1 x ADB Factor 1 + Transaction 2 x ADB Factor 2 + Transaction 3 x ADB Factor 3] (Round to 2 Decimal Places) - -------------------------------------------------------------------------------- ACCOUNT BALANCE AT END OF = Account Balance at Beginning of Month + MONTH Deferrals During Month + Earnings - Distributions ================================================================================ NOTE - ---------------------------- *Separate ADB Factor for each transaction. The term "transaction" includes Participant and Employer deferrals, benefit payments, withdrawals, and any other type of distribution. 24 APPENDIX A--CALCULATION OF EARNINGS USING AVERAGE DAILY BALANCE EXAMPLE ASSUMPTIONS - ---------------------------------------------------------------------- MARCH 31 ACCOUNT BALANCE $10,000. - ---------------------------------------------------------------------- APRIL 14 DEFERRAL $1,000. - ---------------------------------------------------------------------- APRIL EARNINGS RATE 10.98%. ====================================================================== Step 1. Calculate Earnings for April on the most recent Account balance. A. Calculate the monthly Earnings factor (Earnings Rate/12) .1098/12 = .00915 B. Calculate the monthly Earnings (balance x factor) 10,000 x .00915 = 91.50 Step 2. Calculate Earnings during April on any deferrals. A. Calculate the average daily balance (ADB) for the deferral [deferral x (Days in the month - Deferral date + 1)] ------------------------------------- Days in the month 1,000 x (30 - 14 + 1) = 566.67 ----------- 30 B. Calculate the Earnings on the deferral (ADB x Earnings factor) 566.67 x .00915 = 5.19 Step 3. Calculate the Account balance as of April 30 (prior balance + deferrals + Earnings) 10,000 + 1,000 + 91.50 + 5.19 = 11,096.69 EX-21.1 3 SUBSIDIARIES OF THE REGISTRANT 1 EXHIBIT 21.1 ANIXTER INTERNATIONAL SCHEDULE 21 LIST OF SUBSIDIARIES
JURISDICTION COMPANY NAME OF INCORPORATION - ------------ ---------------- Anixter Inc. Delaware Anixter Cables y Manufacturas, S.A. de C.V. Mexico Anixter Canada Inc. Canada WireXpress Ltd. Canada Anixter Colombia S.A. Colombia Anixter Costa Rica S.A. Costa Rica Anixter del Peru, S.R.L. Peru Anixter de Mexico, S.A. de C.V. Mexico Anixter Holdings, Inc. Delaware Anixter Argentina S.A. Argentina Anixter Korea Limited Korea Anixter Venezuela Inc. Delaware Anixter Financial Inc. Delaware Anixter Chile S.A. Chile Anixter Communications (Malaysia) Sdn Bhd Malaysia Anixter Europe Holdings B.V. Netherlands Anixter Austria GmbH Austria Anixter Belgium N.V. Belgium Anixter (CIS) L.L.C. (Russia) Russia Anixter Danmark A/S Denmark Anixter Deutschland GmbH Germany Anixter Espana S.A. Spain Anixter France S.A. France Anixter Network Systems Greece, L.L.C. Greece Anixter Hungary Ltd. Hungary Anixter Iletsim Sistemleri Pazarlama ve Ticaret A.S. Turkey Anixter International N.V./S.A. Belgium Anixter Italia S.r.1. Italy Anixter International Ltd. United Kingdom Anixter U.K. Ltd. United Kingdom Anixter Logistics, Europe N.V. Belgium Anixter Nederland B.V. Netherlands Anixter Norge A.N.S. Norway Anixter Poland Sp.z.o.o. Poland Anixter Portugal S.A. Portugal Anixter Switzerland S.A./A.G. Switzerland Anixter Sverige AB Sweden Anixter Singapore Pte Ltd. Singapore Anixter Hong Kong Limited Hong Kong Anixter Thailand Inc. Delaware Anixter Philippines Inc. Delaware Anixter Australia Pty. Ltd. Australia Anixter Puerto Rico, Inc. Delaware Anixter do Brasil Ltda. Brazil Anixter-Real Estate Inc. Illinois Anixter Information Systems Corporation Illinois Anixter (Barbados), Inc. Barbados Accu-Tech Corporation Georgia Wallace Electronics, Inc. Georgia B.E.L. Corporation Delaware GL Holding of Delaware, Inc. Delaware Itel Corporation California Itel Container Corporation International California Itel Container Ventures Inc. Delaware Itel Rail Holdings Corporation Delaware Fox River Valley Railroad Corporation Wisconsin Green Bay and Western Railroad Company Wisconsin Michigan & Western Railroad Company Michigan
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McCloud River Railroad Company California Rex Railways, Inc. New Jersey Rex Leasing, Inc. New Jersey Signal Capital Corporation Delaware Richdale, Ltd. Delaware Signal Capital Projects, Inc. Delaware Signal Capital Norwalk, Inc. Delaware Railcar Services Corporation Delaware Seacoast Capital Corp. Delaware Seacoast Capital Corp. II Delaware
EX-23.1 4 CONSENT OF ERNST & YOUNG LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the incorporation by reference in the Registration Statement (Form S-8 No. 2-93173) pertaining to the Anixter International Inc. 1983 Stock Incentive Plan, the Registration Statement (Form S-8 No. 33-13486) pertaining to the Anixter International Inc. Key Executive Equity Plan, the Registration Statement (Form S-8 No. 33-21656) pertaining to the Anixter International Inc. 1988 Employee Stock Purchase Plan, the Registration Statement (Form S-8 No. 33-38364) pertaining to the Anixter International Inc. 1989 Employee Stock Incentive Plan, the Registration Statement (Form S-8 No. 33-60676) pertaining to the Anixter International Inc. 1993 Director of Stock Option Plan, the Registration Statement (Form S-8 No. 33-05907) pertaining to the Anixter International Inc. 1996 Stock Incentive Plan, the Registration Statement (Form S-8 No. 333-56815) pertaining to the Anixter International Inc. 1998 Mid-level Stock Option Plan and the Registration Statement (Form S-8 No. 333-56935) pertaining to the Anixter International Inc. 1998 Stock Incentive Plan of our report dated February 7, 2000, with respect to the consolidated financial statements and schedules of Anixter International Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 1999. ERNST & YOUNG LLP Chicago, Illinois March 6, 2000 EX-24.1 5 POWER OF ATTORNEY 1 EXHIBIT 24.1 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer and/or director of Anixter International Inc., a Delaware corporation (the "Corporation"), which is about to file an annual report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, on Form 10-K hereby constitutes and appoints Dennis J. Letham, James E. Knox, and Lisa Kearns Lanz, and each of them, his or her true and lawful attorney-in-fact and agents, with full power and all capacities, to sign the Corporation's Form 10-K and any or all amendments thereto, and any other documents in connection therewith, to be filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as she or he might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents, or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned and hereunto set her or his hand and seal as of the 18th day of February 2000. /s/ James Blyth /s/ John R. Petty /s/ Rod F. Dammeyer /s/ Sheli Z. Rosenberg /s/ Robert E. Fowler, Jr. /s/ Thomas C. Theobald /s/ Robert W. Grubbs /s/ Samuel Zell /s/ Melvyn N. Klein EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM ANIXTER INTERNATIONAL INC.'S CONSOLIDATED STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1 12-MOS DEC-31-1999 JAN-01-1999 DEC-31-1999 17,500,000 0 547,800,000 10,300,000 536,400,000 1,121,100,000 158,600,000 105,500,000 1,434,700,000 495,500,000 0 0 0 35,900,000 420,500,000 1,434,700,000 2,670,000,000 2,670,000,000 2,042,700,000 2,557,200,000 (300,000) 0 34,900,000 78,200,000 8,500,000 69,700,000 54,500,000 0 0 124,200,000 3.31 3.26
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