ANIXTER INTERNATIONAL INC, 10-Q filed on 7/23/2013
Quarterly Report
Document and Entity Information
6 Months Ended
Jun. 28, 2013
Jul. 16, 2013
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Jun. 28, 2013 
 
Document Fiscal Year Focus
2013 
 
Document Fiscal Period Focus
Q2 
 
Trading Symbol
AXE 
 
Entity Registrant Name
ANIXTER INTERNATIONAL INC 
 
Entity Central Index Key
0000052795 
 
Current Fiscal Year End Date
--01-03 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
32,540,374 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Net sales
$ 1,579.5 
$ 1,577.0 
$ 3,070.4 
$ 3,099.7 
Cost of goods sold
1,223.4 
1,219.1 
2,376.1 
2,392.6 
Gross profit
356.1 
357.9 
694.3 
707.1 
Operating expenses
270.3 
268.0 
527.5 
530.5 
Operating income
85.8 
89.9 
166.8 
176.6 
Other expense:
 
 
 
 
Interest expense
(11.3)
(14.8)
(24.9)
(26.9)
Other, net
(4.0)
(5.5)
(5.9)
(8.6)
Income from continuing operations before income taxes
70.5 
69.6 
136.0 
141.1 
Income tax expense
24.6 
25.6 
47.5 
41.5 
Net income from continuing operations
45.9 
44.0 
88.5 
99.6 
Net income (loss) from discontinued operations
0.2 
(0.1)
0.1 
(0.4)
Net income
46.1 
43.9 
88.6 
99.2 
Basic:
 
 
 
 
Continuing operations (in dollars per share)
$ 1.40 
$ 1.32 
$ 2.70 
$ 2.98 
Discontinued operations (in dollars per share)
$ 0.01 
$ (0.01)
$ 0.01 
$ (0.01)
Net income (in dollars per share)
$ 1.41 
$ 1.31 
$ 2.71 
$ 2.97 
Diluted:
 
 
 
 
Continuing operations (in dollars per share)
$ 1.39 
$ 1.28 
$ 2.66 
$ 2.90 
Discontinued operations (in dollars per share)
$ 0.01 
   
$ 0.01 
$ (0.01)
Net income (in dollars per share)
$ 1.40 
$ 1.28 
$ 2.67 
$ 2.89 
Basic weighted-average common shares outstanding
32.8 
33.5 
32.7 
33.4 
Effect of dilutive securities:
 
 
 
 
Stock options and units
0.2 
0.2 
0.2 
0.3 
Convertible notes due 2013 (shares)
   
0.6 
0.3 
0.6 
Diluted weighted-average common shares outstanding
33.0 
34.3 
33.2 
34.3 
Comprehensive income
$ 33.9 
$ 24.2 
$ 68.2 
$ 99.0 
Dividend declared per common share
    
$ 4.50 
    
$ 4.50 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Jun. 28, 2013
Dec. 28, 2012
Current assets:
 
 
Cash and cash equivalents
$ 57.4 
$ 89.4 
Accounts receivable (Includes $523.4 and $527.2 at June 28, 2013 and December 28, 2012, respectively, associated with securitization facility)
1,237.4 
1,225.5 
Inventories
997.2 
1,060.9 
Deferred income taxes
32.6 
40.7 
Other current assets
31.3 
33.6 
Total current assets
2,355.9 
2,450.1 
Property and equipment, at cost
324.6 
314.4 
Accumulated depreciation
(222.6)
(218.5)
Net property and equipment
102.0 
95.9 
Goodwill
342.8 
342.0 
Other assets
167.9 
201.6 
Total assets
2,968.6 
3,089.6 1
Current liabilities:
 
 
Accounts payable
714.9 
716.9 
Accrued expenses
218.3 
249.5 
Short-term debt
7.0 
0.9 
Total current liabilities
940.2 
967.3 
Long-term debt (Includes $235.0 and $82.0 at June 28, 2013 and December 28, 2012, respectively, associated with securitization facility)
845.5 
982.2 
Other liabilities
145.8 
170.2 
Total liabilities
1,931.5 
2,119.7 
Stockholders’ equity:
 
 
Common stock - $1.00 par value, 100,000,000 shares authorized, 32,823,502 and 32,537,986 shares issued and outstanding at June 28, 2013 and December 28, 2012, respectively
32.8 
32.5 
Capital surplus
217.1 
218.6 
Retained earnings
859.4 
770.6 
Accumulated other comprehensive loss:
 
 
Foreign currency translation
(5.2)
15.4 
Unrecognized pension liability, net
(67.1)
(67.4)
Unrealized gain on derivatives, net
0.1 
0.2 
Total accumulated other comprehensive loss
(72.2)
(51.8)
Total stockholders’ equity
1,037.1 
969.9 
Total liabilities and stockholders’ equity
$ 2,968.6 
$ 3,089.6 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Jun. 28, 2013
Dec. 28, 2012
Accounts receivable
$ 523.4 
$ 527.2 
Long-term debt
845.5 
982.2 
Common stock, par value
$ 1.00 
$ 1.00 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
32,823,502 
32,537,986 
Common stock, shares outstanding
32,823,502 
32,537,986 
Accounts receivable securitization facility [Member]
 
 
Long-term debt
$ 235.0 
$ 82.0 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Operating activities:
 
 
Net income
$ 88.6 
$ 99.2 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
11.1 
11.1 
Deferred income taxes
10.0 
(6.8)
Stock-based compensation
6.8 
8.1 
Amortization of intangible assets
4.2 
5.3 
Accretion of debt discount
2.5 
8.9 
Amortization of deferred financing costs
1.4 
1.4 
Excess income tax benefit from employee stock plans
(1.2)
(3.1)
Changes in current assets and liabilities, net
(13.6)
(64.9)
Other, net
1.9 
   
Net cash provided by operating activities
111.7 
59.2 
Investing activities:
 
 
Capital expenditures, net
(17.9)
(18.6)
Acquisition of business, net of cash acquired
   
(56.2)
Net cash used in investing activities
(17.9)
(74.8)
Financing activities:
 
 
Proceeds from borrowings
399.9 
372.8 
Repayment of borrowings
(232.8)
(509.4)
Retirement of Notes due 2013
(300.0)
   
Proceeds from stock options exercised
7.4 
1.8 
Excess income tax benefit from employee stock plans
1.2 
3.1 
Proceeds from issuance of Notes due 2019
   
350.0 
Payment of special cash dividend
   
(150.6)
Deferred financing costs
   
(7.6)
Other
(1.5)
1.4 
Net cash (used in) provided by financing activities
(125.8)
61.5 
(Decrease) increase in cash and cash equivalents
(32.0)
45.9 
Cash and cash equivalents at beginning of period
89.4 
106.1 
Cash and cash equivalents at end of period
$ 57.4 
$ 152.0 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: Anixter International Inc. and its subsidiaries (collectively referred to as “Anixter” or the “Company”) are sometimes referred to in this Quarterly Report on Form 10-Q as “we”, “our”, “us”, or “ourselves.” The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation of the Condensed Consolidated Financial Statements for the periods shown. Certain prior period amounts have been reclassified to conform to the current year presentation. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

Recently issued and adopted accounting pronouncements: In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2013-2, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to require preparers to report, in one place, information about reclassifications out of accumulated other comprehensive income (loss) (“AOCI”). The ASU also requires companies to report changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the same reporting period, reporting about the effect of the reclassification is required on the respective line items in the statement where net income is presented. For items that are not reclassified to net income in their entirety in the same reporting period, a cross reference to other disclosures currently required under U.S. Generally Accepted Accounting Principles (“GAAP”) is required in the notes. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. Adoption of this guidance at the beginning of fiscal 2013 resulted in the additional disclosures below but did not have any other impact on our financial statement disclosures.
Our investments in several subsidiaries are recorded in currencies other than the U.S. dollar. As these foreign currency-denominated investments are translated at the end of each period during consolidation using period-end exchange rates, fluctuations of exchange rates between the foreign currency and the U.S. dollar increase or decrease the value of those investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the U.S. dollar, are translated into U.S. dollars using the average exchange rates during the periods reported, while the assets and liabilities are translated using period-end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate component of Stockholders’ Equity, “Foreign currency translation,” which is a component of AOCI.
We also accumulate items in AOCI for prior service costs and actuarial gains/losses related to our defined benefit obligations (see Note 4. Pension Plans) as well as an immaterial interest rate lock, which was designated as a cash flow hedge in connection with a debt offering completed in 2005. The amounts related to these items reclassified into net income were immaterial in all periods presented.
We do not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on our consolidated financial statements or disclosures.
Foreign currency translation: The increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in “Other, net” in the Condensed Consolidated Statements of Comprehensive Income.

The following table summarizes the foreign exchange activity (in millions):

Three Months Ended
 
Six Months Ended

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Remeasurement of multicurrency balances
$
(6.0
)
 
$
(9.8
)
 
$
(11.4
)
 
$
(12.1
)
Venezuelan devaluation

 

 
(1.1
)
 

Revaluation of foreign currency forward contracts
3.6

 
6.0

 
8.9

 
6.9

Hedge costs
(0.5
)
 
(0.8
)
 
(1.1
)
 
(1.6
)
Total foreign exchange loss
$
(2.9
)
 
$
(4.6
)
 
$
(4.7
)
 
$
(6.8
)

In the first quarter of 2013, we had a $1.1 million foreign exchange loss due to the devaluation of the Venezuela bolivar from the rate of 4.30 bolivars to one U.S. dollar to 6.30 bolivars to one U.S. dollar. We believe that the new official rate of 6.30 bolivars to one U.S. dollar will be the rate that will be available in the event we repatriate cash from Venezuela.
We purchase foreign currency forward contracts to minimize the effect of fluctuating foreign currency-denominated accounts on our reported income. The foreign currency forward contracts are not designated as hedges for accounting purposes. Our strategy is to negotiate terms for our derivatives and other financial instruments to be highly effective, such that the change in the value of the derivative perfectly offsets the impact of the underlying hedged item (e.g., various foreign currency-denominated accounts). Our counterparties to foreign currency forward contracts have investment-grade credit ratings. We expect the creditworthiness of our counterparties to remain intact through the term of the transactions. We regularly monitor the creditworthiness of our counterparties to ensure no issues exist which could affect the value of the derivatives.
We do not hedge 100% of our foreign currency-denominated accounts. In addition, the results of hedging can vary significantly based on various factors, such as the timing of executing the foreign currency forward contracts versus the movement of the currencies as well as the fluctuations in the account balances throughout each reporting period. The fair value of the foreign currency forward contracts is based on the difference between the contract rate and the current exchange rate. The fair value of the foreign currency forward contracts is measured using observable market information. These inputs would be considered Level 2 in the fair value hierarchy. At June 28, 2013 and December 28, 2012, foreign currency forward contracts were revalued at then-current foreign exchange rates with the changes in valuation reflected directly in “Other, net” in the Condensed Consolidated Statements of Comprehensive Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At June 28, 2013 and December 28, 2012, the notional amount of the foreign currency forward contracts outstanding was approximately $197.5 million and $346.9 million, respectively. The fair value of our foreign currency forward contracts was not significant at June 28, 2013.
INCOME TAXES
INCOME TAXES
INCOME TAXES
The income tax provision on continuing operations for the second quarter of 2013 was $24.6 million compared to $25.6 million in the corresponding period of last year. Our effective tax rate for the second quarter of 2013 was 34.9% as compared to 36.7% in the prior year period. The change in the effective tax rate is due to the change in the country mix of income.
The income tax provision for the six months ended June 28, 2013 was $47.5 million compared to $41.5 million in the corresponding period of last year. Our effective tax rate for the six months ended June 28, 2013 was 34.9% as compared to 29.4% in the prior year period. In the first quarter of 2012, we recorded a tax benefit of $9.7 million primarily related to the reversal of deferred income tax valuation allowances in certain foreign jurisdictions. Excluding this benefit, as well as the impact of a charge for interest and penalties of $1.7 million for tax liabilities related to prior years which is included in "Other, net" ($1.1 million, net of tax) for the first quarter of 2012, the adjusted tax rate for the six months ended June 29, 2012 was 36.3%. When comparing the effective tax rate for the six months ended June 28, 2013 to the adjusted tax rate from the prior year, the change in the effective tax rate is due to the change in the country mix of income.
DEBT
DEBT
DEBT
Debt is summarized below:
 
June 28,
2013
 
December 28,
2012

(In millions)
Long-term debt:
 
Senior notes due 2019
$
350.0

 
$
350.0

Accounts receivable securitization facility
235.0

 
82.0

Senior notes due 2015
200.0

 
200.0

Senior notes due 2014
31.9

 
31.6

Revolving lines of credit and other
28.6

 
20.8

Convertible senior notes due 2013

 
297.8

Total long-term debt
845.5

 
982.2

Short-term debt
7.0

 
0.9

Total debt
$
852.5

 
$
983.1


At June 28, 2013, our total carrying value and estimated fair value of debt outstanding was $852.5 million and $878.9 million, respectively. This compares to a carrying value and estimated fair value at December 28, 2012 of $983.1 million and $1,065.0 million, respectively. The estimated fair value of our debt instruments is measured using observable market information which would be considered Level 2 inputs as described in the fair value accounting guidance on fair value measurements. Our weighted-average cost of borrowings was 4.9% and 6.2% for the three months ended June 28, 2013 and June 29, 2012, respectively, and 5.3% and 5.9% for the six months then ended, respectively. At December 28, 2012, our convertible senior notes due in February 2013 (“Convertible Notes”) were classified as long-term as we had the intent and ability to refinance such Convertible Notes under existing long-term financing agreements.
In the first quarter of 2013, our Convertible Notes matured and, pursuant to the terms of the indenture, we settled our conversion obligations up to the $300 million principal amount of the notes in cash. At the time of issuance of the Convertible Notes, we entered into a bond hedge that reimbursed us for any above par value amounts due to holders of the Convertible Notes at maturity. As we intended, we funded the retirement of the Convertible Notes with long term credit facilities available at the end of 2012.
At issuance of the Convertible Notes, we also sold to the counterparty a warrant to purchase shares of our common stock at a current exercise price of $72.81 which could not be exercised prior to the maturity of the notes. Although the bond hedge matured with the notes on February 15, 2013, the warrant "exercise period" began on May 16, 2013 and expired daily over 40 full trading days ending July 15, 2013. Any excess amount above the warrant exercise price of $72.81 could be settled in cash or stock at our option. Because our stock price exceeded the exercise price during the exercise period, 5.4 million warrants were exercised. At the end of the second quarter of 2013, we accrued $13.2 million for warrants exercised. On July 18, 2013, we paid $19.2 million in cash to settle all warrants exercised through July 15, 2013. The cash payment was recorded as a reduction to stockholders' equity.
Under our accounts receivable securitization program, we sell, on an ongoing basis without recourse, a portion of our accounts receivables originating in the United States to the Anixter Receivables Corporation (“ARC”), which is considered a wholly-owned, bankruptcy-remote variable interest entity (“VIE”). We have the authority to direct the activities of the VIE and, as a result, we have concluded that we maintain control of the VIE, are the primary beneficiary (as defined by accounting guidance) and, therefore, consolidate the account balances of ARC. As of June 28, 2013 and December 28, 2012, $523.4 million and $527.2 million of our receivables were sold to ARC, respectively. ARC in turn assigns a collateral interest in these receivables to a financial institution for proceeds up to $300 million. The assets of ARC are not available to us until all obligations of ARC are satisfied in the event of bankruptcy or insolvency proceedings.
PENSION PLANS
PENSION PLANS
PENSION PLANS
We have various defined benefit and defined contribution pension plans. Our defined benefit plans consist of the Anixter Inc. Pension Plan, Executive Benefit Plan and Supplemental Executive Retirement Plan (“SERP”) (together the “Domestic Plans”) and various pension plans covering employees of foreign subsidiaries (“Foreign Plans”). The majority of our 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 both the Domestic Plans and the Foreign Plans. Our policy is to fund all Domestic Plans as required by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Service (“IRS”) and all Foreign Plans as required by applicable foreign laws. The Executive Benefit Plan and SERP are the only two plans that are unfunded. Assets in the various plans consist primarily of equity securities and fixed income investments.
Non-union domestic employees hired on or after June 1, 2004 earn a benefit under a personal retirement account (hypothetical account balance). Each year, a participant’s account receives a credit equal to 2.0% of the participant’s salary (2.5% if the participant’s years of service at August 1 of the plan year are 5 years or more). Beginning January 1, 2011, active participants with 3 years of service became fully vested in their hypothetical personal retirement account (previously, participants vested after 5 years of service). Interest earned on the credited amount is not credited to the personal retirement account but is contributed to the participant’s account in the Anixter Inc. Employee Savings Plan. The interest contribution equals the interest earned on the personal retirement account in the Domestic Plan and is based on the ten years Treasury note rate as of the last business day of December. Effective as of December 31, 2013, benefits under the Anixter Inc. Pension Plan provided to employees hired before June 1, 2004 will be frozen and these employees will be covered under the personal retirement account pension formula described above for non-union domestic employees hired on or after June 1, 2004.
Components of net periodic pension cost are as follows (in millions):

Three Months Ended

Domestic (a)
 
Foreign
 
Total

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Service cost
$
2.0

 
$
2.8

 
$
1.7

 
$
1.4

 
$
3.7

 
$
4.2

Interest cost
2.4

 
3.2

 
2.4

 
2.4

 
4.8

 
5.6

Expected return on plan assets
(2.9
)
 
(2.4
)
 
(2.6
)
 
(2.4
)
 
(5.5
)
 
(4.8
)
Net amortization (b)
0.8

 
2.3

 
0.4

 
0.2

 
1.2

 
2.5

Net periodic cost
$
2.3

 
$
5.9

 
$
1.9

 
$
1.6

 
$
4.2

 
$
7.5



Six Months Ended

Domestic (a)
 
Foreign
 
Total

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Service cost
$
4.2

 
$
5.0

 
$
3.4

 
$
2.8

 
$
7.6

 
$
7.8

Interest cost
4.8

 
6.3

 
4.7

 
4.7

 
9.5

 
11.0

Expected return on plan assets
(5.9
)
 
(5.6
)
 
(5.2
)
 
(4.9
)
 
(11.1
)
 
(10.5
)
Net amortization (b)
1.6

 
4.3

 
0.8

 
0.5

 
2.4

 
4.8

Net periodic cost
$
4.7

 
$
10.0

 
$
3.7

 
$
3.1

 
$
8.4

 
$
13.1


(a)
Domestic pension costs are lower in the three and six months ended June 28, 2013 as compared to the corresponding periods in the prior year as a result of the plan amendment to our U.S. defined benefit plan which was completed in the fourth quarter of 2012.
(b)
Reclassified into operating expenses from AOCI.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
We guarantee, fully and unconditionally, substantially all of the debt of our subsidiaries, which include Anixter Inc., our primary operating subsidiary. We have no independent assets or operations and all subsidiaries other than Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc. (in millions):
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 28,
2013
 
December 28,
2012
 
(Unaudited)
 
 
Assets:
 
 
 
Current assets
$
2,355.2

 
$
2,449.3

Property, equipment and capital leases, net
114.3

 
108.7

Goodwill
342.8

 
342.0

Other assets
167.9

 
201.5

Subordinated notes receivable from parent

 
5.0

 
$
2,980.2

 
$
3,106.5

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
924.8

 
$
963.1

Subordinated notes payable to parent
7.5

 

Long-term debt
861.4

 
700.8

Other liabilities
145.2

 
168.6

Stockholder’s equity
1,041.3

 
1,274.0

 
$
2,980.2

 
$
3,106.5


ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended
 
Six Months Ended

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Net sales
$
1,579.5

 
$
1,577.0

 
$
3,070.4

 
$
3,099.7

Operating income
$
87.0

 
$
91.1

 
$
169.4

 
$
179.1

Income from continuing operations before income taxes
$
71.4

 
$
75.7

 
$
140.6

 
$
153.5

Net income (loss) from discontinued operations
$
0.2

 
$
(0.1
)
 
$
0.1

 
$
(0.4
)
Net income
$
45.3

 
$
47.7

 
$
90.2

 
$
106.9

Comprehensive income
$
33.1

 
$
28.0

 
$
69.8

 
$
106.7

RESTRUCTURING CHARGE
RESTRUCTURING CHARGE
RESTRUCTURING CHARGE
We consider restructuring activities to be programs whereby we fundamentally change our operations, such as closing and consolidating facilities, reducing headcount and realigning operations in response to changing market conditions. At June 28, 2013, the majority of the remaining unpaid restructuring charge of $5.3 million is expected to be paid by the end of fiscal 2013.
The following table summarizes activity related to liabilities associated with restructuring and employee severance (in millions):
 
Restructuring Charge
 
Employee-Related Costs (a)
 
Facility Exit and Other Costs (b)
 
Total
Balance at December 28, 2012
$
6.7

 
$
2.4

 
$
9.1

Payments and other
(3.0
)
 
(0.8
)
 
(3.8
)
Balance at June 28, 2013
$
3.7

 
$
1.6

 
$
5.3


(a)
Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated.
(b)
Facility exit and other costs primarily consist of lease termination costs.
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
STOCKHOLDERS’ EQUITY
At the end of the second quarter of 2013, there were approximately 2.0 million shares reserved for issuance under various incentive plans. Under these plans, we pay non-employee directors annual retainer fees and, at their election, meeting fees in the form of stock units. Employee and director stock units are included in common stock outstanding on the date of vesting, and stock options are included in common stock outstanding upon exercise by the participant. The fair value of employee stock options and units is amortized over the respective vesting period representing the requisite service period, generally three to four years for stock units and four years for stock options. Director stock units are expensed in the period in which they are granted, as these vest immediately.
During the first quarter of 2013, we granted 167,540 stock units to employees with a weighted-average grant-date fair value of $11.5 million. During the three and six months ended June 28, 2013, we granted directors 6,767 and 14,074 stock units, respectively, with a weighted-average grant-date fair value of $0.5 million and $1.0 million, respectively. We granted 56,003 stock options to employees during the first quarter of 2013 that had a grant-date fair value of $1.6 million. The fair value of the stock options granted during the six months ended June 28, 2013 was estimated using the Black-Scholes option pricing model with the following assumptions and resulting value:

Expected Stock Price Volatility
 
Risk-Free Interest Rate
 
Expected Dividend Yield
 
Average Expected Life
 
Exercise Price
 
Resulting Black-Scholes Value
42.0
%
 
1.1
%
 
%
 
6.12 years
 
$
68.64

 
$
28.57

LEGAL CONTINGENCIES
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES
In May 2009, Raytheon Co. filed for arbitration against one of our subsidiaries, Anixter Inc., alleging that it had supplied non-conforming parts to Raytheon. Raytheon sought damages of approximately $26 million. The arbitration hearing concluded in October 2010. In December 2010, the arbitration panel entered an “interim award” against us in the amount of $20.8 million. In April 2011, the arbitration panel entered a “final award” that reiterated the $20.8 million liability and added additional liability of $1.5 million in favor of Raytheon for certain amounts of its attorneys’ fees and costs in the arbitration proceeding. In the fourth quarter of 2010, we recorded a pre-tax charge of $20.0 million which approximated the expected cost of the award after consideration of insurance proceeds, fees, costs and interest on the award at 10% per annum until paid. As a result of our sale of our Aerospace business in the third quarter of 2011, the charge related to this matter was reclassified to discontinued operations in our Consolidated Statements of Comprehensive Income for the year ended December 31, 2010. Assets and liabilities related to the Raytheon matter were retained by us and were not reclassified to assets and liabilities of discontinued operations. In June 2011, we filed a motion to vacate the arbitration award in the Superior Court of Maricopa County, Arizona. In November 2011, the court denied our motion and confirmed the arbitration award in full. During the fourth quarter of 2011, we recorded an additional $2.5 million in discontinued operations to cover expected interest associated with further appeal proceedings. In February 2012, we appealed to the Arizona Court of Appeals the Maricopa County Superior Court judgment confirming the arbitration award. As part of the appellate process, in February 2012, we posted collateral for the judgment by tendering $10.0 million to Raytheon in cash and posted a bond in favor of Raytheon in the amount of $12.4 million. In September 2012, we tendered to Raytheon an additional $10.8 million in cash collateral pursuant to a stipulation that provides that Raytheon will cooperate in having the outstanding $12.4 million bond reduced by the same amount. As a result of this agreement, we reduced the accrued interest by $1.1 million in the third quarter of 2012 which was recorded within income (loss) from discontinued operations. In February 2013, the court approved a reduction in the amount of the bond to $1.5 million as stipulated by the parties. On April 18, 2013, the Arizona Court of Appeals upheld the Maricopa County Superior Court judgment confirming the arbitration award to Raytheon, but lowered the post-judgment interest on the award from 10% to 4.25% per annum to reflect the proper statutory rate in effect at the time of the trial court's judgment. The court further awarded Raytheon its attorneys' fees and expenses incurred in connection with the appeal. The final resolution of this matter did not have a material impact on our Condensed Consolidated Financial Statements in 2013 and all judgment amounts and related interest and expenses have been paid at the end of the second quarter of 2013.
In 2009, it came to our attention that certain employees in our U.S. Federal sales group engaged in entertainment of employees and contractors working on the procurement team for a government agency in excess of permissible limits set by applicable law and regulation. In October 2009, we voluntarily disclosed the matter to the government agency, and have fully cooperated with the government’s review of the matter over the last three years. In January 2012, we became aware of a qui tam lawsuit filed by a third-party “relator” against us in the U.S. District Court for the Eastern District of Virginia. The qui tam suit was filed by William Jones, as relator on behalf of the United States, against Anixter, American Systems Corporation (“ASC”), Corning Cabling Systems (“Corning”) and other defendants, and sought money damages, injunctive relief, civil penalties, attorneys’ fees and costs under the False Claims Act. In February 2013, Anixter, ASC and Corning reached a resolution in principle with the Department of Justice, Civil Division, to settle the qui tam complaint with no admission of liability. In March 2013, Anixter, ASC and Corning entered into a final settlement agreement, under which, collectively, the three companies are required to pay $3 million, plus interest at the annual rate of 2% from October 5, 2012, of which one-third, or $1.0 million, was paid by us. We were not suspended or debarred as a result of this investigation and continues to actively conduct business with the U.S. federal, state and local governments.
From time to time, in the ordinary course of business, we become involved as plaintiffs or defendants in various other legal proceedings not enumerated above. The claims and counterclaims in such other legal proceedings, including those for punitive damages, individually in certain cases and in the aggregate, involve amounts that may be material. However, it is our opinion, based on the advice of our counsel, that the ultimate disposition of those proceedings will not be material. As of June 28, 2013, we do not believe there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, our financial condition and results of operations could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.
BUSINESS SEGMENTS
BUSINESS SEGMENTS
BUSINESS SEGMENTS
We are a leading distributor of enterprise cabling and security solutions, electrical and electronic wire and cable products, OEM Supply fasteners and other small parts (“C” Class inventory components) from top suppliers to contractors and installers, and also to end-users including manufacturers, natural resources companies, utilities and original equipment manufacturers who use our products as a component in their end product. In the fourth quarter of 2012, we reorganized our reportable segments from geography to end market to reflect the new operating structure and management of these global businesses. Historical results reflecting the new business segments for previously reported periods are shown below.
We have identified Enterprise Cabling and Security Solutions (“ECS”), Electrical and Electronic Wire and Cable (“W&C”) and OEM Supply as reportable segments. We incur corporate expenses to obtain and coordinate financing, tax, information technology, legal and other related services, certain of which are rebilled to subsidiaries. These corporate expenses are allocated to the segments based primarily on projected sales and estimated use of time. Also, we have various corporate assets which are not allocated to the segments. Segment assets may not include jointly used assets or unallocated assets, but segment results include depreciation expense or other allocations related to those assets as such allocation is made for internal reporting. Interest expense and other non-operating items are not allocated to the segments or reviewed on a segment basis. Intercompany transactions are not significant.
Segment Financial Information
Segment information for the three months ended June 28, 2013 and June 29, 2012 are as follows (in millions):

Second Quarter of 2013
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
813.8

 
$
530.6

 
$
235.1

 
$

 
$
1,579.5

Operating income
42.0

 
38.1

 
5.7

 

 
85.8

Depreciation
2.9

 
1.7

 
0.9

 

 
5.5

Amortization of intangibles
0.2

 
1.7

 
0.4

 

 
2.3

Capital expenditures
0.6

 
0.2

 
0.6

 
7.4

 
8.8

Second Quarter of 2012
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
820.5

 
$
516.0

 
$
240.5

 
$

 
$
1,577.0

Operating income
39.6

 
43.4

 
6.9

 

 
89.9

Depreciation
2.7

 
1.5

 
1.4

 

 
5.6

Amortization of intangibles
0.2

 
0.6

 
1.8

 

 
2.6

Capital expenditures
1.0

 
0.2

 
0.9

 
6.5

 
8.6

Segment information for the six months ended June 28, 2013 and June 29, 2012 are as follows (in millions):
Six Months of 2013
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
1,558.9

 
$
1,048.4

 
$
463.1

 
$

 
$
3,070.4

Operating income
76.8

 
79.4

 
10.6

 

 
166.8

Depreciation
5.8

 
3.6

 
1.7

 

 
11.1

Amortization of intangibles
0.4

 
3.1

 
0.7

 

 
4.2

Total assets
1,239.8

 
969.6

 
452.4

 
306.8

 
2,968.6

Capital expenditures
1.4

 
0.4

 
1.9

 
14.2

 
17.9

Six Months of 2012
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
1,599.3

 
$
1,000.7

 
$
499.7

 
$

 
$
3,099.7

Operating income
77.8

 
83.2

 
15.6

 

 
176.6

Depreciation
5.3

 
3.0

 
2.8

 

 
11.1

Amortization of intangibles
0.4

 
1.2

 
3.7

 

 
5.3

Total assets (a)
1,272.4

 
997.9

 
461.6

 
357.7

 
3,089.6

Capital expenditures
2.8

 
0.6

 
2.8

 
12.4

 
18.6


(a)
Total assets for 2012 are as of December 28, 2012.

Goodwill Assigned to Segments
The following table presents the changes in goodwill allocated to our reportable segments during the six months ended June 28, 2013 (in millions):

Reportable Segments

ECS
 
W&C
 
OEM Supply
 
Total
Balance as of December 28, 2012
$
164.1

 
$
177.9

 
$

 
$
342.0

Acquisition related (a)

 
2.6

 

 
2.6

Foreign currency translation
(1.2
)
 
(0.6
)
 

 
(1.8
)
Balance as of June 28, 2013
$
162.9

 
$
179.9

 
$

 
$
342.8


(a)
In the quarter ended June 28, 2013, we recorded an immaterial reclassification adjustment between intangible assets and goodwill related to the purchase price allocation related to the acquisition of Jorvex, S.A.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
Basis of presentation: Anixter International Inc. and its subsidiaries (collectively referred to as “Anixter” or the “Company”) are sometimes referred to in this Quarterly Report on Form 10-Q as “we”, “our”, “us”, or “ourselves.” The condensed consolidated financial information furnished herein reflects all adjustments (consisting of normal recurring accruals), which are, in the opinion of management, necessary for a fair presentation of the Condensed Consolidated Financial Statements for the periods shown. Certain prior period amounts have been reclassified to conform to the current year presentation. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.
Recently issued and adopted accounting pronouncements: In February 2013, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") 2013-2, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to require preparers to report, in one place, information about reclassifications out of accumulated other comprehensive income (loss) (“AOCI”). The ASU also requires companies to report changes in AOCI balances. For significant items reclassified out of AOCI to net income in their entirety in the same reporting period, reporting about the effect of the reclassification is required on the respective line items in the statement where net income is presented. For items that are not reclassified to net income in their entirety in the same reporting period, a cross reference to other disclosures currently required under U.S. Generally Accepted Accounting Principles (“GAAP”) is required in the notes. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2012. Adoption of this guidance at the beginning of fiscal 2013 resulted in the additional disclosures below but did not have any other impact on our financial statement disclosures.
Our investments in several subsidiaries are recorded in currencies other than the U.S. dollar. As these foreign currency-denominated investments are translated at the end of each period during consolidation using period-end exchange rates, fluctuations of exchange rates between the foreign currency and the U.S. dollar increase or decrease the value of those investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the U.S. dollar, are translated into U.S. dollars using the average exchange rates during the periods reported, while the assets and liabilities are translated using period-end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate component of Stockholders’ Equity, “Foreign currency translation,” which is a component of AOCI.
We also accumulate items in AOCI for prior service costs and actuarial gains/losses related to our defined benefit obligations (see Note 4. Pension Plans) as well as an immaterial interest rate lock, which was designated as a cash flow hedge in connection with a debt offering completed in 2005. The amounts related to these items reclassified into net income were immaterial in all periods presented.
We do not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on our consolidated financial statements or disclosures.
Foreign currency translation: The increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in “Other, net” in the Condensed Consolidated Statements of Comprehensive Income.

The following table summarizes the foreign exchange activity (in millions):

Three Months Ended
 
Six Months Ended

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Remeasurement of multicurrency balances
$
(6.0
)
 
$
(9.8
)
 
$
(11.4
)
 
$
(12.1
)
Venezuelan devaluation

 

 
(1.1
)
 

Revaluation of foreign currency forward contracts
3.6

 
6.0

 
8.9

 
6.9

Hedge costs
(0.5
)
 
(0.8
)
 
(1.1
)
 
(1.6
)
Total foreign exchange loss
$
(2.9
)
 
$
(4.6
)
 
$
(4.7
)
 
$
(6.8
)

In the first quarter of 2013, we had a $1.1 million foreign exchange loss due to the devaluation of the Venezuela bolivar from the rate of 4.30 bolivars to one U.S. dollar to 6.30 bolivars to one U.S. dollar. We believe that the new official rate of 6.30 bolivars to one U.S. dollar will be the rate that will be available in the event we repatriate cash from Venezuela.
We purchase foreign currency forward contracts to minimize the effect of fluctuating foreign currency-denominated accounts on our reported income. The foreign currency forward contracts are not designated as hedges for accounting purposes. Our strategy is to negotiate terms for our derivatives and other financial instruments to be highly effective, such that the change in the value of the derivative perfectly offsets the impact of the underlying hedged item (e.g., various foreign currency-denominated accounts). Our counterparties to foreign currency forward contracts have investment-grade credit ratings. We expect the creditworthiness of our counterparties to remain intact through the term of the transactions. We regularly monitor the creditworthiness of our counterparties to ensure no issues exist which could affect the value of the derivatives.
We do not hedge 100% of our foreign currency-denominated accounts. In addition, the results of hedging can vary significantly based on various factors, such as the timing of executing the foreign currency forward contracts versus the movement of the currencies as well as the fluctuations in the account balances throughout each reporting period. The fair value of the foreign currency forward contracts is based on the difference between the contract rate and the current exchange rate. The fair value of the foreign currency forward contracts is measured using observable market information. These inputs would be considered Level 2 in the fair value hierarchy. At June 28, 2013 and December 28, 2012, foreign currency forward contracts were revalued at then-current foreign exchange rates with the changes in valuation reflected directly in “Other, net” in the Condensed Consolidated Statements of Comprehensive Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At June 28, 2013 and December 28, 2012, the notional amount of the foreign currency forward contracts outstanding was approximately $197.5 million and $346.9 million, respectively. The fair value of our foreign currency forward contracts was not significant at June 28, 2013.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
Summary of Foreign Exchange Losses Reflected in Consolidated Statements of Comprehensive Income

The following table summarizes the foreign exchange activity (in millions):

Three Months Ended
 
Six Months Ended

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Remeasurement of multicurrency balances
$
(6.0
)
 
$
(9.8
)
 
$
(11.4
)
 
$
(12.1
)
Venezuelan devaluation

 

 
(1.1
)
 

Revaluation of foreign currency forward contracts
3.6

 
6.0

 
8.9

 
6.9

Hedge costs
(0.5
)
 
(0.8
)
 
(1.1
)
 
(1.6
)
Total foreign exchange loss
$
(2.9
)
 
$
(4.6
)
 
$
(4.7
)
 
$
(6.8
)
DEBT (Tables)
Debt
Debt is summarized below:
 
June 28,
2013
 
December 28,
2012

(In millions)
Long-term debt:
 
Senior notes due 2019
$
350.0

 
$
350.0

Accounts receivable securitization facility
235.0

 
82.0

Senior notes due 2015
200.0

 
200.0

Senior notes due 2014
31.9

 
31.6

Revolving lines of credit and other
28.6

 
20.8

Convertible senior notes due 2013

 
297.8

Total long-term debt
845.5

 
982.2

Short-term debt
7.0

 
0.9

Total debt
$
852.5

 
$
983.1

PENSION PLANS (Tables)
Components of Net Periodic Cost
Components of net periodic pension cost are as follows (in millions):

Three Months Ended

Domestic (a)
 
Foreign
 
Total

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Service cost
$
2.0

 
$
2.8

 
$
1.7

 
$
1.4

 
$
3.7

 
$
4.2

Interest cost
2.4

 
3.2

 
2.4

 
2.4

 
4.8

 
5.6

Expected return on plan assets
(2.9
)
 
(2.4
)
 
(2.6
)
 
(2.4
)
 
(5.5
)
 
(4.8
)
Net amortization (b)
0.8

 
2.3

 
0.4

 
0.2

 
1.2

 
2.5

Net periodic cost
$
2.3

 
$
5.9

 
$
1.9

 
$
1.6

 
$
4.2

 
$
7.5



Six Months Ended

Domestic (a)
 
Foreign
 
Total

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Service cost
$
4.2

 
$
5.0

 
$
3.4

 
$
2.8

 
$
7.6

 
$
7.8

Interest cost
4.8

 
6.3

 
4.7

 
4.7

 
9.5

 
11.0

Expected return on plan assets
(5.9
)
 
(5.6
)
 
(5.2
)
 
(4.9
)
 
(11.1
)
 
(10.5
)
Net amortization (b)
1.6

 
4.3

 
0.8

 
0.5

 
2.4

 
4.8

Net periodic cost
$
4.7

 
$
10.0

 
$
3.7

 
$
3.1

 
$
8.4

 
$
13.1


(a)
Domestic pension costs are lower in the three and six months ended June 28, 2013 as compared to the corresponding periods in the prior year as a result of the plan amendment to our U.S. defined benefit plan which was completed in the fourth quarter of 2012.
(b)
Reclassified into operating expenses from AOCI.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. (Tables)
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
June 28,
2013
 
December 28,
2012
 
(Unaudited)
 
 
Assets:
 
 
 
Current assets
$
2,355.2

 
$
2,449.3

Property, equipment and capital leases, net
114.3

 
108.7

Goodwill
342.8

 
342.0

Other assets
167.9

 
201.5

Subordinated notes receivable from parent

 
5.0

 
$
2,980.2

 
$
3,106.5

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
924.8

 
$
963.1

Subordinated notes payable to parent
7.5

 

Long-term debt
861.4

 
700.8

Other liabilities
145.2

 
168.6

Stockholder’s equity
1,041.3

 
1,274.0

 
$
2,980.2

 
$
3,106.5

ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)

Three Months Ended
 
Six Months Ended

June 28,
2013
 
June 29,
2012
 
June 28,
2013
 
June 29,
2012
Net sales
$
1,579.5

 
$
1,577.0

 
$
3,070.4

 
$
3,099.7

Operating income
$
87.0

 
$
91.1

 
$
169.4

 
$
179.1

Income from continuing operations before income taxes
$
71.4

 
$
75.7

 
$
140.6

 
$
153.5

Net income (loss) from discontinued operations
$
0.2

 
$
(0.1
)
 
$
0.1

 
$
(0.4
)
Net income
$
45.3

 
$
47.7

 
$
90.2

 
$
106.9

Comprehensive income
$
33.1

 
$
28.0

 
$
69.8

 
$
106.7

RESTRUCTURING CHARGE (Tables)
Summary of Liabilities Associated with Restructuring and Employee Severance
The following table summarizes activity related to liabilities associated with restructuring and employee severance (in millions):
 
Restructuring Charge
 
Employee-Related Costs (a)
 
Facility Exit and Other Costs (b)
 
Total
Balance at December 28, 2012
$
6.7

 
$
2.4

 
$
9.1

Payments and other
(3.0
)
 
(0.8
)
 
(3.8
)
Balance at June 28, 2013
$
3.7

 
$
1.6

 
$
5.3


(a)
Employee-related costs primarily consist of termination benefits provided to employees who have been involuntarily terminated.
(b)
Facility exit and other costs primarily consist of lease termination costs.
STOCKHOLDERS' EQUITY (Tables)
Fair Value of Stock Options Granted Valuation Assumption
The fair value of the stock options granted during the six months ended June 28, 2013 was estimated using the Black-Scholes option pricing model with the following assumptions and resulting value:

Expected Stock Price Volatility
 
Risk-Free Interest Rate
 
Expected Dividend Yield
 
Average Expected Life
 
Exercise Price
 
Resulting Black-Scholes Value
42.0
%
 
1.1
%
 
%
 
6.12 years
 
$
68.64

 
$
28.57

BUSINESS SEGMENTS (Tables)
Segment information for the three months ended June 28, 2013 and June 29, 2012 are as follows (in millions):

Second Quarter of 2013
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
813.8

 
$
530.6

 
$
235.1

 
$

 
$
1,579.5

Operating income
42.0

 
38.1

 
5.7

 

 
85.8

Depreciation
2.9

 
1.7

 
0.9

 

 
5.5

Amortization of intangibles
0.2

 
1.7

 
0.4

 

 
2.3

Capital expenditures
0.6

 
0.2

 
0.6

 
7.4

 
8.8

Second Quarter of 2012
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
820.5

 
$
516.0

 
$
240.5

 
$

 
$
1,577.0

Operating income
39.6

 
43.4

 
6.9

 

 
89.9

Depreciation
2.7

 
1.5

 
1.4

 

 
5.6

Amortization of intangibles
0.2

 
0.6

 
1.8

 

 
2.6

Capital expenditures
1.0

 
0.2

 
0.9

 
6.5

 
8.6

Segment information for the six months ended June 28, 2013 and June 29, 2012 are as follows (in millions):
Six Months of 2013
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
1,558.9

 
$
1,048.4

 
$
463.1

 
$

 
$
3,070.4

Operating income
76.8

 
79.4

 
10.6

 

 
166.8

Depreciation
5.8

 
3.6

 
1.7

 

 
11.1

Amortization of intangibles
0.4

 
3.1

 
0.7

 

 
4.2

Total assets
1,239.8

 
969.6

 
452.4

 
306.8

 
2,968.6

Capital expenditures
1.4

 
0.4

 
1.9

 
14.2

 
17.9

Six Months of 2012
ECS
 
W&C
 
OEM Supply
 
Corporate
 
Total
Net sales
$
1,599.3

 
$
1,000.7

 
$
499.7

 
$

 
$
3,099.7

Operating income
77.8

 
83.2

 
15.6

 

 
176.6

Depreciation
5.3

 
3.0

 
2.8

 

 
11.1

Amortization of intangibles
0.4

 
1.2

 
3.7

 

 
5.3

Total assets (a)
1,272.4

 
997.9

 
461.6

 
357.7

 
3,089.6

Capital expenditures
2.8

 
0.6

 
2.8

 
12.4

 
18.6


(a)
Total assets for 2012 are as of December 28, 2012.

The following table presents the changes in goodwill allocated to our reportable segments during the six months ended June 28, 2013 (in millions):

Reportable Segments

ECS
 
W&C
 
OEM Supply
 
Total
Balance as of December 28, 2012
$
164.1

 
$
177.9

 
$

 
$
342.0

Acquisition related (a)

 
2.6

 

 
2.6

Foreign currency translation
(1.2
)
 
(0.6
)
 

 
(1.8
)
Balance as of June 28, 2013
$
162.9

 
$
179.9

 
$

 
$
342.8


(a)
In the quarter ended June 28, 2013, we recorded an immaterial reclassification adjustment between intangible assets and goodwill related to the purchase price allocation related to the acquisition of Jorvex, S.A.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Mar. 29, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Dec. 28, 2012
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
Foreign exchange losses due to devaluation
    
$ (1.1)
    
$ (1.1)
    
 
Rate of foreign currency denominated accounts not hedged
 
 
 
100.00% 
 
 
Foreign currency forward contracts outstanding
$ 197.5 
 
 
$ 197.5 
 
$ 346.9 
Minimum [Member]
 
 
 
 
 
 
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
Foreign currency exchange rate
 
4.30 
 
 
 
 
Maximum [Member]
 
 
 
 
 
 
Summary Of Significant Accounting Policies [Line Items]
 
 
 
 
 
 
Foreign currency exchange rate
 
6.30 
 
 
 
 
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Foreign Exchange Losses Reflected in Consolidated Statements of Comprehensive Income (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Mar. 29, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Foreign Currency [Abstract]
 
 
 
 
 
Remeasurement of multicurrency balances
$ (6.0)
 
$ (9.8)
$ (11.4)
$ (12.1)
Venezuelan devaluation
   
(1.1)
   
(1.1)
   
Revaluation of foreign currency forward contracts
3.6 
 
6.0 
8.9 
6.9 
Hedge costs
(0.5)
 
(0.8)
(1.1)
(1.6)
Total foreign exchange loss
$ (2.9)
 
$ (4.6)
$ (4.7)
$ (6.8)
INCOME TAXES - Additional information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Mar. 30, 2012
Jun. 28, 2013
Jun. 29, 2012
Income Tax Disclosure [Abstract]
 
 
 
 
 
Income tax provision
$ 24.6 
$ 25.6 
 
$ 47.5 
$ 41.5 
Effective income tax rate
34.90% 
36.70% 
 
34.90% 
29.40% 
Tax benefit related to reversal of valuation allowances
 
 
9.7 
 
 
Interest and penalties related to taxes
 
 
1.7 
 
 
Interest and penalties related to taxes, net of tax
 
 
$ 1.1 
 
 
Adjusted effective Income Tax Rate
 
 
 
 
36.30% 
DEBT- Debt (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 28, 2013
Dec. 28, 2012
Debt Instrument [Line Items]
 
 
Total long-term debt
$ 845.5 
$ 982.2 
Short-term debt
7.0 
0.9 
Total debt
852.5 
983.1 
Senior notes due 2019 [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
350.0 
350.0 
Accounts receivable securitization facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
235.0 
82.0 
Senior notes due 2015 [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
200.0 
200.0 
Senior notes due 2014 [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
31.9 
31.6 
Revolving lines of credit and other [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
28.6 
20.8 
Convertible senior notes due 2013 [Member]
 
 
Debt Instrument [Line Items]
 
 
Total long-term debt
$ 0 
$ 297.8 
DEBT - Additional Information (Detail) (USD $)
Share data in Millions, unless otherwise specified
2 Months Ended 3 Months Ended 6 Months Ended 0 Months Ended
Jul. 15, 2013
Jun. 28, 2013
Mar. 29, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Dec. 28, 2012
Jun. 28, 2013
Maximum [Member]
Jul. 18, 2013
Subsequent Event [Member]
Debt Instrument [Line Items]
 
 
 
 
 
 
 
 
 
Long-term debt, carrying value
 
$ 852,500,000 
 
 
$ 852,500,000 
 
$ 983,100,000 
 
 
Long-term debt, fair value
 
878,900,000 
 
 
878,900,000 
 
1,065,000,000 
 
 
Weighted average cost of borrowings
 
4.90% 
 
6.20% 
5.30% 
5.90% 
 
 
 
Settlement of convertible senior notes in cash
 
 
300,000,000 
 
300,000,000 
   
 
 
 
Warrant exercise price
 
72.81 
 
 
72.81 
 
 
 
 
Warrant exercisable period
40 days 
 
 
 
 
 
 
 
 
Warrant Ending Date
 
Jul. 15, 2013 
 
 
 
 
 
 
 
Class of Warrant or Right, Number of Securities Called by Warrants or Rights
 
5.4 
 
 
5.4 
 
 
 
 
Accrued exercised warrants
 
13,200,000 
 
 
 
 
 
 
 
Payments for Repurchase of Warrants
 
 
 
 
 
 
 
 
19,200,000 
Receivables Sold
 
523,400,000 
 
 
523,400,000 
 
527,200,000 
 
 
Line of credit facility maximum borrowing capacity
 
 
 
 
 
 
 
$ 300,000,000 
 
PENSION PLANS - Additional Information (Detail)
0 Months Ended 1 Months Ended 6 Months Ended 12 Months Ended
Dec. 31, 2010
Jan. 31, 2011
Jun. 28, 2013
Dec. 28, 2012
Compensation and Retirement Disclosure [Abstract]
 
 
 
 
General discussion of pension and other postretirement benefits
 
 
We have various defined benefit and defined contribution pension plans. Our defined benefit plans consist of the Anixter Inc. Pension Plan, Executive Benefit Plan and Supplemental Executive Retirement Plan (“SERP”) (together the “Domestic Plans”) and various pension plans covering employees of foreign subsidiaries (“Foreign Plans”). The majority of our 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 both the Domestic Plans and the Foreign Plans. Our policy is to fund all Domestic Plans as required by the Employee Retirement Income Security Act of 1974 (“ERISA”) and the Internal Revenue Service (“IRS”) and all Foreign Plans as required by applicable foreign laws. The Executive Benefit Plan and SERP are the only two plans that are unfunded. Assets in the various plans consist primarily of equity securities and fixed income investments. 
 
Percentage of participant's salary received as credit
 
 
 
2.00% 
Percentage of participant's salary received as credit for service period of five years or more
 
 
 
2.50% 
Participant's years of service required to receive a credit equal to 2.5%
 
 
 
5 years 
Vesting period
5 years 
3 years 
 
 
Treasury note rate, term
 
 
 
10 years 
PENSION PLANS - Components of Net Periodic Cost (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
$ 3.7 
$ 4.2 
$ 7.6 
$ 7.8 
Interest cost
4.8 
5.6 
9.5 
11.0 
Expected return on plan assets
(5.5)
(4.8)
(11.1)
(10.5)
Net amortization
1.2 1
2.5 1
2.4 1
4.8 1
Net periodic cost
4.2 
7.5 
8.4 
13.1 
Pension Plans, Domestic [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
2.0 2
2.8 2
4.2 2
5.0 2
Interest cost
2.4 2
3.2 2
4.8 2
6.3 2
Expected return on plan assets
(2.9)2
(2.4)2
(5.9)2
(5.6)2
Net amortization
0.8 1 2
2.3 1 2
1.6 1 2
4.3 1 2
Net periodic cost
2.3 2
5.9 2
4.7 2
10.0 2
Pension Plans, Foreign [Member]
 
 
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
 
 
Service cost
1.7 
1.4 
3.4 
2.8 
Interest cost
2.4 
2.4 
4.7 
4.7 
Expected return on plan assets
(2.6)
(2.4)
(5.2)
(4.9)
Net amortization
0.4 1
0.2 1
0.8 1
0.5 1
Net periodic cost
$ 1.9 
$ 1.6 
$ 3.7 
$ 3.1 
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. - Additional Information (Detail)
6 Months Ended
Jun. 28, 2013
Condensed Financial Information of Parent Company Only Disclosure [Abstract]
 
Description of guarantees given by parent company
We guarantee, fully and unconditionally, substantially all of the debt of our subsidiaries, which include Anixter Inc., our primary operating subsidiary. We have no independent assets or operations and all subsidiaries other than Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc. (in millions): 
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED BALANCE SHEETS (Details) (USD $)
In Millions, unless otherwise specified
Jun. 28, 2013
Dec. 28, 2012
Assets:
 
 
Current assets
$ 2,355.9 
$ 2,450.1 
Property, equipment and capital leases, net
102.0 
95.9 
Goodwill
342.8 
342.0 
Other assets
167.9 
201.6 
Total assets
2,968.6 
3,089.6 1
Liabilities and Equity:
 
 
Current liabilities
940.2 
967.3 
Long-term debt
845.5 
982.2 
Other liabilities
145.8 
170.2 
Stockholder's equity
1,037.1 
969.9 
Total liabilities and stockholders’ equity
2,968.6 
3,089.6 
Anixter Inc. [Member]
 
 
Assets:
 
 
Current assets
2,355.2 
2,449.3 
Property, equipment and capital leases, net
114.3 
108.7 
Goodwill
342.8 
342.0 
Other assets
167.9 
201.5 
Subordinated notes receivable from parent
   
5.0 
Total assets
2,980.2 
3,106.5 
Liabilities and Equity:
 
 
Current liabilities
924.8 
963.1 
Subordinated notes payable to parent
7.5 
   
Long-term debt
861.4 
700.8 
Other liabilities
145.2 
168.6 
Stockholder's equity
1,041.3 
1,274.0 
Total liabilities and stockholders’ equity
$ 2,980.2 
$ 3,106.5 
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Net sales
$ 1,579.5 
$ 1,577.0 
$ 3,070.4 
$ 3,099.7 
Operating income
85.8 
89.9 
166.8 
176.6 
Income from continuing operations before income taxes
70.5 
69.6 
136.0 
141.1 
Net income (loss) from discontinued operations
0.2 
(0.1)
0.1 
(0.4)
Net income
46.1 
43.9 
88.6 
99.2 
Comprehensive income
33.9 
24.2 
68.2 
99.0 
Anixter Inc. [Member]
 
 
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
 
 
Net sales
1,579.5 
1,577.0 
3,070.4 
3,099.7 
Operating income
87.0 
91.1 
169.4 
179.1 
Income from continuing operations before income taxes
71.4 
75.7 
140.6 
153.5 
Net income (loss) from discontinued operations
0.2 
(0.1)
0.1 
(0.4)
Net income
45.3 
47.7 
90.2 
106.9 
Comprehensive income
$ 33.1 
$ 28.0 
$ 69.8 
$ 106.7 
RESTRUCTURING CHARGE - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
Jun. 28, 2013
Dec. 28, 2012
Restructuring and Related Activities [Abstract]
 
 
Pre-tax restructuring charges
$ 5.3 
$ 9.1 
RESTRUCTURING CHARGES - Summary Of Liabilities Associated with Restructuring and Employee Severance (Detail) (USD $)
In Millions, unless otherwise specified
6 Months Ended
Jun. 28, 2013
Restructuring Reserve [Roll Forward]
 
Balance at December 28, 2012
$ 9.1 
Payments and other
(3.8)
Balance at June 28, 2013
5.3 
Employee - Related Costs [Member]
 
Restructuring Reserve [Roll Forward]
 
Balance at December 28, 2012
6.7 1
Payments and other
(3.0)1
Balance at June 28, 2013
3.7 1
Restructuring Charge Facility Exit And Other Costs [Member]
 
Restructuring Reserve [Roll Forward]
 
Balance at December 28, 2012
2.4 2
Payments and other
(0.8)2
Balance at June 28, 2013
$ 1.6 2
STOCKHOLDERS' EQUITY - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 28, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of shares reserved for issuance under various incentive plans
2,000,000 
2,000,000 
Stock Option [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period over which fair value is amortized
 
4 years 
Minimum [Member] |
Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period over which fair value is amortized
 
3 years 
Maximum [Member] |
Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Vesting period over which fair value is amortized
 
4 years 
Employee stock units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of stock units granted
 
167,540 
Weighted-average grant-date fair value
 
$ 11.5 
Director Stock Units [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of stock units granted
6,767 
14,074 
Weighted-average grant-date fair value
0.5 
1.0 
Employee stock option [Member]
 
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
 
Number of stock options granted
 
56,003 
Weighted-average grant-date fair value
 
$ 1.6 
STOCKHOLDERS' EQUITY - Fair Value of Stock Options Granted Valuation Assumption (Detail)
6 Months Ended
Jun. 28, 2013
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
 
Expected Stock Price Volatility
42.00% 
Risk-Free Interest Rate
1.10% 
Expected Dividend Yield
0.00% 
Average Expected Life
6 years 1 month 15 days 
Exercise Price
$ 68.64 
Resulting Black-Scholes Value
$ 28.57 
LEGAL CONTINGENCIES - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
1 Months Ended 3 Months Ended
Mar. 31, 2013
Feb. 28, 2013
Sep. 30, 2012
Feb. 29, 2012
Apr. 30, 2011
Dec. 31, 2010
May 31, 2009
Sep. 28, 2012
Dec. 30, 2011
Dec. 31, 2010
Apr. 18, 2013
Commitments and Contingencies Disclosure [Abstract]
 
 
 
 
 
 
 
 
 
 
 
Claim for damages made by Raytheon
 
 
 
 
 
 
$ 26 
 
 
 
 
Interim award against the company by the arbitration panel
 
 
 
 
20.8 
20.8 
 
 
 
 
 
Fees and arbitration proceeding costs
 
 
 
 
1.5 
 
 
 
 
 
 
Pre-tax charge
 
 
 
 
 
 
 
 
 
20.0 
 
Interest Cost associated with unfavorable arbitration ruling
 
 
 
 
 
 
 
 
 
10.00% 
 
Additional amount recorded in discontinued operations
 
 
 
 
 
 
 
(1.1)
2.5 
 
 
Companies tendered cash collaterals to Raytheon
 
 
 
10.0 
 
 
 
 
 
 
 
Companies tendered bond collaterals in favor of Raytheon
 
1.5 
12.4 
12.4 
 
 
 
 
 
 
 
Additional tendered cash collaterals to Raytheon
 
 
10.8 
 
 
 
 
 
 
 
 
Post-judgement interest rate on arbitration award
 
 
 
 
 
 
 
 
 
 
4.25% 
Amount to be paid with the other two parties in the settlement agreement
 
 
 
 
 
 
 
 
 
 
Accrued annual interest rate
2.00% 
 
 
 
 
 
 
 
 
 
 
Amount paid in settlement
$ 1.0 
 
 
 
 
 
 
 
 
 
 
BUSINESS SEGMENTS - Segment Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 29, 2012
Jun. 28, 2013
Jun. 29, 2012
Dec. 28, 2012
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
$ 1,579.5 
$ 1,577.0 
$ 3,070.4 
$ 3,099.7 
 
Operating income
85.8 
89.9 
166.8 
176.6 
 
Depreciation
5.5 
5.6 
11.1 
11.1 
 
Amortization of intangibles
2.3 
2.6 
4.2 
5.3 
 
Total assets
2,968.6 
 
2,968.6 
 
3,089.6 1
Capital expenditures
8.8 
8.6 
17.9 
18.6 
 
ECS [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
813.8 
820.5 
1,558.9 
1,599.3 
 
Operating income
42.0 
39.6 
76.8 
77.8 
 
Depreciation
2.9 
2.7 
5.8 
5.3 
 
Amortization of intangibles
0.2 
0.2 
0.4 
0.4 
 
Total assets
1,239.8 
 
1,239.8 
 
1,272.4 1
Capital expenditures
0.6 
1.0 
1.4 
2.8 
 
W & C [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
530.6 
516.0 
1,048.4 
1,000.7 
 
Operating income
38.1 
43.4 
79.4 
83.2 
 
Depreciation
1.7 
1.5 
3.6 
3.0 
 
Amortization of intangibles
1.7 
0.6 
3.1 
1.2 
 
Total assets
969.6 
 
969.6 
 
997.9 1
Capital expenditures
0.2 
0.2 
0.4 
0.6 
 
OEM Supply [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
235.1 
240.5 
463.1 
499.7 
 
Operating income
5.7 
6.9 
10.6 
15.6 
 
Depreciation
0.9 
1.4 
1.7 
2.8 
 
Amortization of intangibles
0.4 
1.8 
0.7 
3.7 
 
Total assets
452.4 
 
452.4 
 
461.6 1
Capital expenditures
0.6 
0.9 
1.9 
2.8 
 
Corporate [Member]
 
 
 
 
 
Segment Reporting Information [Line Items]
 
 
 
 
 
Net sales
   
   
 
Operating income
   
   
 
Depreciation
   
   
   
   
 
Amortization of intangibles
   
   
   
 
Total assets
306.8 
 
306.8 
 
357.7 1
Capital expenditures
$ 7.4 
$ 6.5 
$ 14.2 
$ 12.4 
 
BUSINESS SEGMENTS - Changes in Goodwill (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 28, 2013
Jun. 28, 2013
Goodwill [Roll Forward]
 
 
Balance as of December 28, 2012
 
$ 342.0 
Goodwill, Purchase Accounting Adjustments
2.6 1
 
Foreign currency translation
 
(1.8)
Balance as of June 28, 2013
342.8 
342.8 
ECS [Member]
 
 
Goodwill [Roll Forward]
 
 
Balance as of December 28, 2012
 
164.1 
Goodwill, Purchase Accounting Adjustments
   1
 
Foreign currency translation
 
(1.2)
Balance as of June 28, 2013
162.9 
162.9 
W & C [Member]
 
 
Goodwill [Roll Forward]
 
 
Balance as of December 28, 2012
 
177.9 
Goodwill, Purchase Accounting Adjustments
2.6 1
 
Foreign currency translation
 
(0.6)
Balance as of June 28, 2013
179.9 
179.9 
OEM Supply [Member]
 
 
Goodwill [Roll Forward]
 
 
Balance as of December 28, 2012
 
   
Goodwill, Purchase Accounting Adjustments
   1
 
Foreign currency translation
 
   
Balance as of June 28, 2013