ANIXTER INTERNATIONAL INC, 10-Q filed on 10/27/2015
Quarterly Report
Document and Entity Information
9 Months Ended
Oct. 2, 2015
Oct. 20, 2015
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Oct. 02, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q3 
 
Trading Symbol
AXE 
 
Entity Registrant Name
ANIXTER INTERNATIONAL INC 
 
Entity Central Index Key
0000052795 
 
Current Fiscal Year End Date
--01-01 
 
Entity Filer Category
Large Accelerated Filer 
 
Entity Common Stock, Shares Outstanding
 
32,970,320 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 2, 2015
Oct. 3, 2014
Oct. 2, 2015
Oct. 3, 2014
Net sales
$ 1,489.2 
$ 1,438.0 
$ 4,354.7 
$ 4,055.2 
Cost of goods sold
1,158.3 
1,115.3 
3,385.6 
3,137.4 
Gross profit
330.9 
322.7 
969.1 
917.8 
Operating expenses
252.7 
240.2 
767.1 
688.1 
Operating income
78.2 
82.5 
202.0 
229.7 
Interest expense
(15.8)
(10.3)
(42.7)
(29.4)
Other, net
(5.5)
(2.0)
(13.0)
(13.6)
Income from continuing operations before income taxes
56.9 
70.2 
146.3 
186.7 
Income tax expense from continuing operations
21.5 
24.8 
54.9 
59.1 
Net income from continuing operations
35.4 
45.4 
91.4 
127.6 
(Loss) income from discontinued operations before income taxes (1)
(3.1)1
10.2 
54.6 1
37.6 
Income tax (benefit) expense from discontinued operations
(0.2)
3.1 
23.0 
11.5 
Net (loss) income from discontinued operations
(2.9)
7.1 
31.6 
26.1 
Net income
32.5 
52.5 
123.0 
153.7 
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax
2.6 
(39.7)
Basic:
 
 
 
 
Continuing operations
$ 1.06 
$ 1.37 
$ 2.75 
$ 3.87 
Discontinued operations
$ (0.09)
$ 0.22 
$ 0.95 
$ 0.79 
Net income
$ 0.97 
$ 1.59 
$ 3.70 
$ 4.66 
Diluted:
 
 
 
 
Continuing operations
$ 1.06 
$ 1.36 
$ 2.73 
$ 3.83 
Discontinued operations
$ (0.09)
$ 0.21 
$ 0.95 
$ 0.78 
Net income
$ 0.97 
$ 1.57 
$ 3.68 
$ 4.61 
Basic weighted-average common shares outstanding
33.3 
33.1 
33.2 
33.0 
Effect of dilutive securities:
 
 
 
 
Stock options and units
0.1 
0.3 
0.2 
0.3 
Diluted weighted-average common shares outstanding
33.4 
33.4 
33.4 
33.3 
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract]
 
 
 
 
Net income
32.5 
52.5 
123.0 
153.7 
Foreign currency translation
(35.2)
(35.2)
(73.8)
(26.6)
Changes in unrealized pension cost, net of tax
0.7 
5.8 
(0.3)
Changes in fair market value of derivatives
(0.1)
(0.1)
(0.2)
Other comprehensive loss
(34.5)
(35.3)
(68.1)
(27.1)
Comprehensive (loss) income
$ (2.0)
$ 17.2 
$ 54.9 
$ 126.6 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Oct. 2, 2015
Jan. 2, 2015
Current assets:
 
 
Cash and cash equivalents
$ 614.9 
$ 92.0 
Accounts receivable (Includes $475.8 and $548.5 at October 2, 2015 and January 2, 2015, respectively, associated with securitization facility)
1,188.1 
1,171.0 
Inventories
881.9 
859.0 
Deferred income taxes
30.7 
33.7 
Other current assets
52.8 
54.9 
Current assets of discontinued operations
41.6 
379.2 
Total current assets
2,810.0 
2,589.8 
Property and equipment, at cost
298.2 
305.3 
Accumulated depreciation
(191.2)
(201.1)
Net property and equipment
107.0 
104.2 
Goodwill
572.4 
582.3 
Other assets
257.7 
282.5 
Long-term assets of discontinued operations
0.6 
27.7 
Total assets
3,747.7 
3,586.5 
Current liabilities:
 
 
Accounts payable
852.5 
738.5 
Accrued expenses
194.3 
183.2 
Current liabilities of discontinued operations
26.2 
108.8 
Total current liabilities
1,073.0 
1,030.5 
Long-term debt (Includes $0.0 and $65.0 at October 2, 2015 and January 2, 2015, respectively, associated with securitization facility)
1,285.4 
1,207.7 
Other liabilities
188.8 
215.1 
Long-term liabilities of discontinued operations
4.5 
0.2 
Total liabilities
2,551.7 
2,453.5 
Stockholders’ equity:
 
 
Common stock - $1.00 par value, 100,000,000 shares authorized, 33,269,561 and 33,141,950 shares issued and outstanding at October 2, 2015 and January 2, 2015, respectively
33.3 
33.1 
Capital surplus
246.1 
238.2 
Retained earnings
1,122.7 
999.7 
Accumulated other comprehensive loss:
 
 
Foreign currency translation
(132.9)
(59.1)
Unrecognized pension liability, net
(73.2)
(79.0)
Unrealized gain on derivatives, net
0.1 
Total accumulated other comprehensive loss
(206.1)
(138.0)
Total stockholders’ equity
1,196.0 
1,133.0 
Total liabilities and stockholders’ equity
$ 3,747.7 
$ 3,586.5 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Oct. 2, 2015
Jan. 2, 2015
Accounts receivable
$ 475.8 
$ 548.5 
Common stock, par value
$ 1.00 
$ 1.00 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
33,269,561 
33,141,950 
Common stock, shares outstanding
33,269,561 
33,141,950 
Long-term debt
1,285.4 
1,207.7 
Accounts receivable securitization facility
 
 
Long-term debt
$ 0 
$ 65.0 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
9 Months Ended
Oct. 2, 2015
Oct. 3, 2014
Operating activities:
 
 
Net income
$ 123.0 
$ 153.7 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Gain on sale of business, net of tax of $9.8
(47.1)
Depreciation
17.1 
17.4 
Amortization of intangible assets
15.8 
6.3 
Stock-based compensation
10.8 
10.3 
Accretion of debt discount
1.2 
0.7 
Amortization of deferred financing costs
1.1 
1.1 
Deferred income taxes
4.3 
(2.8)
Excess income tax benefit from employee stock plans
(0.5)
(4.7)
Pension plan contributions
(23.3)
(14.6)
Pension plan expenses
8.6 
3.4 
Changes in current assets and liabilities, net
(20.5)
(98.7)
Other, net
3.2 
(3.5)
Net cash provided by operating activities
93.7 
68.6 
Investing activities:
 
 
Proceeds from sale of business
381.0 
Capital expenditures, net
(29.2)
(30.5)
Acquisition of business, net of cash acquired
2.2 
(418.4)
Net cash provided by (used in) investing activities
354.0 
(448.9)
Financing activities:
 
 
Proceeds from borrowings
643.6 
1,161.9 
Repayments of borrowings
(707.5)
(1,322.6)
Excess income tax benefit from employee stock plans
0.5 
4.7 
Proceeds from stock options exercised
5.9 
Deferred financing costs
(1.3)
Other
(1.0)
(1.7)
Net cash provided by financing activities
77.4 
408.6 
Increase in cash and cash equivalents
525.1 
28.3 
Effect of exchange rate on cash balances
(2.2)
2.5 
Cash and cash equivalents at beginning of period
92.0 
57.3 
Cash and cash equivalents at end of period
$ 614.9 
$ 88.1 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) (USD $)
In Millions, unless otherwise specified
9 Months Ended
Oct. 2, 2015
Statement of Cash Flows [Abstract]
 
Gain on sale of business, net of tax
$ 9.8 
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 April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-8 Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This update changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has a major effect on an entity's operations and financial results. The guidance is effective for entities with annual periods beginning on or after December 15, 2014. This accounting guidance applies prospectively to new disposals and new classifications of disposal groups held for sale. We adopted this guidance in the first quarter of fiscal year 2015. See Note 2. "Discontinued Operations" for applicable disclosures.

In September 2015, the FASB issued ASU 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to retroactively account for measurement-period adjustments to provisional amounts recognized in a business combination. Under the new guidance, the measurement-period adjustments must be recognized in the period in which adjustments are determined, including the effect on earnings of any amounts that would have been recorded in previous periods. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. We adopted this guidance in the third quarter of fiscal year 2015.

Recently issued accounting pronouncements not yet adopted: In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The core principle of the guidance is that an entity should measure inventory at the "lower of cost and net realizable value" and options that currently exist for "market value" will be eliminated. The ASU defines net realizable value as the "estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation." The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-04, Compensation-Retirement Benefits (Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets), which permits a reporting entity with a fiscal year-end that does not coincide with a month-end to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The new guidance should be applied on a prospective basis. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The Securities and Exchange Commission ("SEC") staff noted that ASU 2015-03 does not address when a company has debt issuance costs related to lines-of-credit arrangements, which may not have an outstanding balance. As a result, in June 2015, the FASB issued ASU 2015-15, Interest Imputation of Interest, which states that the SEC staff will not object to an entity presenting debt issuance costs related to lines-of-credit arrangements as an asset. These new updates are effective for our financial statements in fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The new guidance will be applied on a retrospective basis. The adoption of these updates is not expected to have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The core principle of the guidance is that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events that will alleviate the substantial doubt are adequately disclosed in the footnotes to the financial statements. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The update’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. Examples of the use of judgments and estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The update also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The update provides for two transition methods to the new guidance: a retrospective approach and a modified retrospective approach. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e. the original adoption date per ASU 2014-09). We are currently in the process of evaluating the transition methods and the impact of adoption of this ASU on our consolidated financial statements.
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.
Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive (Loss) Income:
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
(In millions)
 
 
 
As Adjusted
(see Note 2)
 
 
 
As Adjusted
(see Note 2)
Other, net:
 
 
 
 
 
 
 
 
    Foreign exchange
 
$
(4.5
)
 
$
(2.3
)
 
$
(10.5
)
 
$
(4.7
)
    Foreign exchange devaluations
 

 

 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
(0.5
)
 
(0.3
)
 
(0.5
)
 
0.5

    Other
 
(0.5
)
 
0.6

 
(1.3
)
 
(1.4
)
Total other, net
 
$
(5.5
)
 
$
(2.0
)
 
$
(13.0
)
 
$
(13.6
)

In the first quarter of 2014, the Venezuelan government changed its policy regarding the bolivar, which required us to use the Complementary System for the Administration of Foreign Currency ("SICAD") rate of 49.0 bolivars to one U.S. Dollar ("USD") to repatriate cash from Venezuela. In the first quarter of 2014, the Argentine peso was also devalued from 6.5 pesos to one USD to approximately 8.0 pesos to one USD after the central bank scaled back its intervention in a bid to preserve USD cash reserves. As a result of these devaluations, we recorded foreign exchange losses in these two countries of $8.0 million in the first quarter of 2014.
In the first quarter of 2015, the Venezuelan government changed its policy regarding the bolivar, which we believe will now require us to use the Sistema Marginal de Divisas or Marginal Exchange System ("SIMADI") a "completely free floating" rate. As a result, we believe that the current rate of approximately 200.0 bolivars to one USD will be the rate available to us in the event we repatriate cash from Venezuela. As a result of the devaluation in the first quarter of 2015, we recorded a foreign exchange loss of $0.7 million in the first quarter of 2015.
Several of our subsidiaries conduct business in a currency other than the legal entity’s functional currency. Transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. The increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in "Other, net" in the Condensed Consolidated Statements of Comprehensive (Loss) Income.
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. While our derivatives are all subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the Condensed Consolidated Balance Sheets. The gross amount of our derivative assets and liabilities are immaterial.
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 October 2, 2015 and January 2, 2015, 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 (Loss) Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At October 2, 2015 and January 2, 2015, the gross notional amount of foreign currency forward contracts outstanding was approximately $237.1 million and $222.9 million, respectively. All of our foreign currency forward contracts are subject to master netting arrangements with our counterparties. As a result, at October 2, 2015 and January 2, 2015, the net notional amount of the foreign currency forward contracts outstanding was approximately $148.3 million and $121.9 million, respectively.
The combined effect of changes in both the equity and bond markets resulted in changes in the cash surrender value of our owned life insurance policies associated with our sponsored deferred compensation program.
Accumulated other comprehensive income (loss): We accumulated unrealized gains and losses in "Accumulated other comprehensive income (loss)" ("AOCI") which are also reported in "Other comprehensive loss" on the Condensed Consolidated Statements of Comprehensive (Loss) Income. These include unrealized gains and losses related to our defined benefit obligations, certain immaterial derivative transactions that have been designated as cash flow hedges and foreign currency translation. See Note 7. "Pension Plans" for pension related amounts reclassified into net income.

Our investments in several subsidiaries are recorded in currencies other than the USD. As these foreign currency denominated investments are translated at the end of each period during consolidation using period-end exchange rates, fluctuations of exchange rates between the foreign currency and the USD increase or decrease the value of those investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the USD, are translated into USD using the average exchange rates during the periods reported, while the assets and liabilities are translated using period-end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate component of AOCI, "Foreign currency translation." In addition, as our subsidiaries maintain investments denominated in currencies other than local currencies, exchange rate fluctuations will occur. Borrowings are raised in certain foreign currencies to minimize the exchange rate translation adjustment risk.
DISCONTINUED OPERATIONS
Disposal Groups, Including Discontinued Operations, Disclosure [Text Block]
DISCONTINUED OPERATIONS
    
On February 9, 2015, our Board of Directors approved the disposition of the OEM Supply - Fasteners ("Fasteners") business.  On February 11, 2015, through our wholly-owned subsidiary Anixter Inc., we entered into a definitive asset purchase agreement with American Industrial Partners ("AIP") to sell the Fasteners business for $380.0 million in cash, subject to certain post-closing adjustments. On June 1, 2015, we closed the sale of the Fasteners business to AIP, excluding certain foreign locations, resulting in initial cash proceeds of $358.0 million. In accordance with the asset purchase agreement, the sale of the Fastener businesses in several countries is anticipated to be completed by the end of the first quarter of 2016. Therefore, these assets and liabilities are classified as "Discontinued Operations." The components of the results from discontinued operations reflected in our Condensed Consolidated Statements of Cash Flows were immaterial. In the third quarter of 2015, in accordance with the terms of the agreement, AIP paid $10.0 million of the purchase price upon its acceptance of a stand-alone data center established by the parties. Also, in the third quarter of 2015, based on the preliminary calculation of the post-closing adjustment to the purchase price under the agreement, we reduced the receivable due from AIP by $1.0 million and recorded a reduction to the gain on the sale. We received a $13.0 million cash payment from AIP in prepayment of the post-closing adjustment during the third quarter of 2015, leaving a $0.9 million receivable due from AIP outstanding as of October 2, 2015. Including transaction related costs of $17.2 million, the sale resulted in a pre-tax gain of $39.7 million ($29.9 million, net of tax). This transaction gives us a sharper strategic focus on our core Enterprise Cabling and Security Solutions ("ECS") and Electrical and Electronic Wire and Cable ("W&C") segments and provides additional financial flexibility to build on these strong global platforms through organic investments or strategic acquisitions.

The assets and liabilities and operating results of the Fasteners business for the nine months ended October 2, 2015 are presented as "Discontinued Operations" in our Condensed Consolidated Financial Statements. Accordingly, all prior periods have been revised to reflect this classification.

We allocated interest costs to discontinued operations as a result of the sale of the Fasteners business. The allocated interest costs were $1.0 million in the third quarter of 2014, and $1.1 million and $3.1 million for the nine months ended October 2, 2015 and October 3, 2014, respectively. This represents the amount of interest costs not directly attributable to our other operations that would not have been incurred if we had the proceeds from the sale of the Fasteners business at the beginning of the respective periods.
In connection with the disposition of the Fasteners business, we recognized a pension curtailment gain of $5.1 million for the nine months ended October 2, 2015.

The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statements of Comprehensive (Loss) Income:
 
 
Three Months Ended
 
Nine Months Ended
(In millions)
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Net sales
 
$
7.6

 
$
228.6

 
$
405.4

 
$
721.2

Operating (loss) income
 
$
(1.6
)
 
$
11.6

 
$
15.5

 
$
42.4

(Loss) income from discontinued operations before income taxes
 
$
(0.5
)
 
$
10.2

 
$
14.9

 
$
37.6

(Loss) gain on sale of discontinued operations
 
$
(2.6
)
 
$

 
$
39.7

 
$

Income tax (benefit) expense from discontinued operations
 
$
(0.2
)
 
$
3.1

 
$
23.0

 
$
11.5

Net (loss) income from discontinued operations
 
$
(2.9
)
 
$
7.1

 
$
31.6

 
$
26.1



As reflected on our Condensed Consolidated Balance Sheets as of October 2, 2015 and January 2, 2015, the components of assets and liabilities of the Fasteners businesses classified as "Discontinued Operations" are as follows:

(In millions)
October 2,
2015
 
January 2,
2015
Assets of discontinued operations:
 
 
 
Accounts receivable
$
34.5

 
$
158.2

Inventories
0.9

 
213.8

Net property and equipment

 
16.8

Other assets
6.8

 
18.1

Total assets of discontinued operations
$
42.2

 
$
406.9

 
 
 
 
Liabilities of discontinued operations:
 
 
 
Accounts payable
$
21.0

 
$
92.8

Accrued expenses
5.1

 
16.0

Other liabilities
4.6

 
0.2

Total liabilities of discontinued operations
$
30.7

 
$
109.0


BUSINESS COMBINATION
Business Combination Disclosure [Text Block]
BUSINESS COMBINATION
On September 17, 2014, we acquired 100% of the outstanding capital stock of Tri-Northern Acquisition Holdings, Inc. ("Tri-Ed"), a leading independent distributor of security and low-voltage technology products, from Tri-NVS Holdings, LLC for $418.5 million (net of cash acquired of $11.6 million and a favorable net working capital adjustment of $2.3 million). The acquisition was financed using borrowings under the 5-year senior unsecured revolving credit agreement, the accounts receivable securitization facility, available cash and the $200.0 million term loan. A portion of the proceeds from a subsequent issuance of $400.0 million principal amount of senior notes was used to repay certain incurred borrowings to finance the Tri-Ed acquisition.
The acquisition of Tri-Ed presents a strategic opportunity for us and our security business, consistent with our vision to create a leading global security platform and to accelerate profitable revenue growth. Through expanding our offering into highly complementary product lines, we believe our customers will benefit from a broader set of products and solutions in the areas of video, access control, fire/life safety, and intrusion detection. In addition, this transaction provides access to the residential construction end market at an attractive point in the recovery cycle as well as security integrators and dealers we do not currently service.
The following table sets forth the purchase price allocation, as of the acquisition date, for Tri-Ed. The purchase price allocation and valuation of the acquired intangible assets and related deferred tax liabilities was completed in the third quarter of 2015.
(In millions)
 
 
 
Cash
 
 
$
11.6

Current assets, net
 
 
203.9

Property and equipment
 
 
2.7

Goodwill
 
 
242.2

Intangible assets
 
 
166.8

Current liabilities
 
 
(143.3
)
Non-current liabilities
 
 
(56.1
)
Total purchase price
 
 
$
427.8


All Tri-Ed goodwill, other assets and liabilities were recorded in the ECS reportable segment. The goodwill resulting from the acquisition largely consists of our expected future product sales and synergies from combining Tri-Ed’s products with our existing product offerings. Other than $12.2 million, the remaining goodwill is not deductible for tax purposes. The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of the acquisition:
(In millions)
Average useful life (in years)
 
Fair value
Customer relationships
11-18
 
$
120.6

Exclusive supplier agreement
21
 
23.2

Trade names
Indefinite
 
10.6

Tri-Ed trade names
4
 
9.2

Non-compete agreements
4-5
 
3.2

Total intangible assets
 
 
$
166.8



The following unaudited pro forma information shows our results of operations as if the acquisition of Tri-Ed had been completed as of the beginning of fiscal 2014. Adjustments have been made for the pro forma effects of interest expense and deferred financing costs related to the financing of the business combination, depreciation and amortization of tangible and intangible assets recognized as part of the business combination, related income taxes and various other costs which would not have been incurred had we and Tri-Ed operated as a combined entity (i.e., management fees paid by Tri-Ed to its former owners).
 
 
Three Months Ended
 
Nine Months Ended
(In millions, except per share amounts)
 
October 3,
2014
 
October 3,
2014
Net sales
 
$
1,566.9

 
$
4,474.9

Net income from continuing operations
 
$
50.7

 
$
134.4

Income per share from continuing operations:
 
 
 
 
Basic
 
$
1.53

 
$
4.07

Diluted
 
$
1.52

 
$
4.03



Since the date of acquisition, the Tri-Ed results are reflected in our Condensed Consolidated Financial Statements. For the nine months ended October 2, 2015, Tri-Ed added approximately $462 million of revenue and $18 million in operating income, to our consolidated results.
RESTRUCTURING AND OTHER CHARGES
RESTRUCTURING AND OTHER CHARGES
RESTRUCTURING AND OTHER CHARGES
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. In the second quarter of 2015, we recorded a pre-tax charge of $3.1 million and $2.2 million in our ECS and W&C segments, respectively, for severance-related expenses associated with a reduction of approximately 100 positions. The $5.3 million charge reflects actions we are taking to improve efficiencies and eliminate the stranded costs in conjunction with the sale of the Fasteners business. This charge is included in "Operating expenses" in our Condensed Consolidated Statements of Comprehensive (Loss) Income for the nine months ended October 2, 2015. The majority of the remaining accrual related to this charge of $2.9 million as of October 2, 2015 is expected to be paid by the second quarter of 2016.
The second quarter of 2015 includes a write off of capitalized software of $3.1 million that has no ongoing economic benefit to continuing operations, $2.6 million of bad debt expense related to a customer in Venezuela, a $1.7 million dilapidation provision related to our leasehold properties, $1.0 million of acquisition and integration costs and $0.4 million related to pension divestiture costs.
Acquisition and integration costs were $8.1 million in the third quarter of 2015 and $9.1 million for the nine months ended October 2, 2015.
INCOME TAXES
INCOME TAXES
INCOME TAXES
Our effective tax rate from continuing operations for the third quarter of 2015 was 37.8% compared to 35.4% in the prior year period. The prior year period included a net tax benefit of $1.9 million primarily related to closing prior tax years, partially offset by a tax cost of $1.1 million related to certain acquisition transaction costs that are capitalized for tax purposes. Other differences in the comparable tax rate relate to our worldwide country mix of income.
Our effective tax rate from continuing operations for the nine months ended October 2, 2015 was 37.5% compared to 31.7% in the prior year period. The prior year period included a net tax benefit of $6.9 million primarily related to the reversal of deferred income tax valuation allowances in Europe and a net benefit of $1.9 million primarily related to closing prior tax years, partially offset by a tax cost of $1.1 million related to certain acquisition transaction costs that are capitalized for tax purposes. Other differences in the comparable tax rate relate to our worldwide country mix of income. Our nine months ended October 2, 2015 effective tax rate differs from the U.S. federal statutory rate primarily as a result of U.S. state taxes and our worldwide country mix of income.
As of January 2, 2015, we asserted permanent reinvestment of all non-U.S. earnings, including the non-U.S. earnings of the Fasteners business.  As a result of the disposition of the Fasteners business, we are no longer permanently reinvested with respect to the non-U.S. earnings of the Fasteners business, because we repatriated to the U.S. most of the net proceeds attributable to the sale of the non-U.S. Fasteners business via intercompany debt repayment, dividend or other means.  During the second quarter of 2015, we refined the anticipated repatriation amount and the estimated tax impact of the change in the reinvestment assertion, and we reduced the first quarter estimate by $4.9 million. Therefore, our nine months ended October 2, 2015 results include, as a component of discontinued operations, $10.3 million expense for U.S. federal and state, and foreign income taxes and withholding taxes related to this change in our reinvestment assertion.
DEBT
DEBT
DEBT
Debt is summarized below:
(In millions)
October 2,
2015
 
January 2,
2015
Long-term debt:
 
Senior notes due 2021
$
394.7

 
$
394.2

Senior notes due 2019
346.6

 
345.9

Senior notes due 2023
345.7

 

Term loan
195.0

 
198.8

Accounts receivable securitization facility

 
65.0

Revolving lines of credit

 

Senior notes due 2015

 
200.0

Other
3.4

 
3.8

Total long-term debt
$
1,285.4

 
$
1,207.7


At October 2, 2015, our total carrying value and estimated fair value of debt outstanding was $1,285.4 million and $1,311.6 million, respectively. This compares to a carrying value and estimated fair value at January 2, 2015 of $1,207.7 million and $1,243.8 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 5.3% and 4.7% for the three months ended October 2, 2015 and October 3, 2014, respectively, and 4.9% and 4.7% for the nine months ended October 2, 2015 and October 3, 2014, respectively.
Senior Notes Due 2023
On August 18, 2015, our primary operating subsidiary, Anixter Inc., completed the issuance of $350.0 million principal amount of Senior notes due 2023 ("Notes due 2023"). The Notes due 2023 were issued at a price that was 98.75% of par, which resulted in a discount related to underwriting fees of $4.4 million. The discount is reported on the Consolidated Balance Sheet as a reduction to the face amount of the Notes due 2023 and is being amortized to interest expense over the term of the related debt, using the effective interest method. In addition, $1.7 million of issuance costs were paid, which are being amortized through maturity using the straight-line method. The Notes due 2023 pay interest semi-annually at a rate of 5.50% per annum and will mature on March 1, 2023. In addition, Anixter Inc. may at any time redeem some or all of the Notes due 2023 at a price equal to 100% of the principal amount plus a "make whole" premium. If we experience certain kinds of changes of control, Anixter Inc. must offer to repurchase all of the Notes due 2023 outstanding at 101% of the aggregate principal amount repurchased, plus accrued and unpaid interest. The proceeds were used to partially finance the acquisition of the HD Supply Power Solutions Business from HD Supply, Inc. and certain subsidiaries of HD Supply, Inc., as described in Note 12. "Subsequent Events". We fully and unconditionally guarantee the Notes due 2023, which are unsecured obligations of Anixter Inc.
Retirement of Debt
In the first quarter of 2015, we retired our 5.95% Senior notes due 2015 upon maturity for $200.0 million. Available borrowings under existing long-term financing agreements were used to settle the maturity value.
In the first quarter of 2014, we retired our 10% Senior notes due 2014 upon maturity for $32.3 million. Available borrowings under existing long-term financing agreements were used to settle the maturity value.
Subsequent to October 2, 2015, we retired the $300.0 million accounts receivable securitization facility and $400.0 million (or the equivalent in Euro) 5-year senior unsecured revolving credit agreement and repaid the $200.0 million term loan. See Note 12. "Subsequent Events" for further information.
Accounts Receivable Securitization Program
Under our accounts receivable securitization program, we sold, on an ongoing basis without recourse, a portion of our accounts receivables originating in the United States to Anixter Receivables Corporation ("ARC"), which is considered a wholly-owned, bankruptcy-remote variable interest entity ("VIE"). We had the authority to direct the activities of the VIE and, as a result, we concluded that we maintained control of the VIE, were the primary beneficiary (as defined by accounting guidance) and, therefore, consolidated the account balances of ARC. As of October 2, 2015 and January 2, 2015, $475.8 million and $548.5 million of our receivables were sold to ARC, respectively. ARC in turn assigned a collateral interest in these receivables to a financial institution for proceeds up to $300 million. The assets of ARC were not available to us until all obligations of ARC were satisfied in the event of bankruptcy or insolvency proceedings. This facility was retired subsequent to October 2, 2015, as described in Note 12. "Subsequent Events".
PENSION PLANS
PENSION PLANS
PENSION PLANS
We have various defined benefit and defined contribution pension plans. Our defined benefit pension plans are the plans in the United States, which consist of the Anixter Inc. Pension Plan, the Executive Benefit Plan and the Supplemental Executive Retirement Plan ("SERP") (together the "Domestic Plans") and various defined benefit pension plans covering employees of foreign subsidiaries in Canada and Europe (together the "Foreign Plans"). The majority of our defined benefit 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.
In the third quarter of 2015, Anixter Inc. amended the Anixter Inc. Pension Plan in the United States whereby employees first hired or rehired on or after July 1, 2015 are no longer eligible to participate in the Anixter Inc. Pension Plan. Anixter Inc. will make an annual contribution to the Employee Savings Plan on behalf of each active participant who is first hired or rehired on or after July 1, 2015, or is not participating in the Anixter Inc. Pension Plan. The amount of the employer annual contribution to each active participant's account will be an amount determined by multiplying the participant's salary for the Plan year by either: (1) 2% if such participant's years of service as of August 1 of the Plan year is fewer than five, or (2) 2.5% if such participant's years of service as of August 1 of the Plan year is five or greater. This contribution is in lieu of being eligible for the Anixter Inc. Pension Plan.

Components of net periodic pension cost (benefit) are as follows:
 
Three Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Service cost
$
1.1

 
$
1.2

 
$
1.7

 
$
1.4

 
$
2.8

 
$
2.6

Interest cost
2.4

 
2.8

 
2.3

 
2.7

 
4.7

 
5.5

Expected return on plan assets
(3.1
)
 
(3.5
)
 
(2.6
)
 
(3.1
)
 
(5.7
)
 
(6.6
)
Net amortization (a)
0.2

 
(0.6
)
 
0.7

 
0.3

 
0.9

 
(0.3
)
Net periodic cost (benefit)
$
0.6

 
$
(0.1
)
 
$
2.1

 
$
1.3

 
$
2.7

 
$
1.2


 
Nine Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Service cost
$
4.1

 
$
3.6

 
$
5.0

 
$
4.4

 
$
9.1

 
$
8.0

Interest cost
9.1

 
8.1

 
6.9

 
8.1

 
16.0

 
16.2

Expected return on plan assets
(11.9
)
 
(10.4
)
 
(7.9
)
 
(9.5
)
 
(19.8
)
 
(19.9
)
Net amortization (a)
1.1

 
(1.7
)
 
2.2

 
0.9

 
3.3

 
(0.8
)
Net periodic cost (benefit)
$
2.4

 
$
(0.4
)
 
$
6.2

 
$
3.9

 
$
8.6

 
$
3.5


(a) 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 consolidated Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc.:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
October 2,
2015
 
January 2,
2015
(In millions)

 
As Adjusted
(see Note 2)
Assets:
 
 
 
Current assets
$
2,767.7

 
$
2,210.2

Current assets of discontinued operations
41.6

 
379.2

Property, equipment and capital leases, net
116.6

 
114.7

Goodwill
572.4

 
582.3

Other assets
257.7

 
282.5

Long-term assets of discontinued operations
0.6

 
27.7

 
$
3,756.6

 
$
3,596.6

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
1,047.2

 
$
921.3

Current liabilities of discontinued operations
26.2

 
108.8

Subordinated notes payable to parent

 
1.5

Long-term debt
1,298.5

 
1,221.8

Other liabilities
186.4

 
212.2

Long-term liabilities of discontinued operations
4.5

 
0.2

Stockholder’s equity
1,193.8

 
1,130.8

 
$
3,756.6

 
$
3,596.6


ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
  
 
Three Months Ended
 
Nine Months Ended
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
(In millions)
 
 
As Adjusted
(see Note 2)
 
 
 
As Adjusted
(see Note 2)
Net sales
$
1,489.2

 
$
1,438.0

 
$
4,354.7

 
$
4,055.2

Operating income
$
79.7

 
$
83.9

 
$
206.4

 
$
233.9

Income from continuing operations before income taxes
$
58.2

 
$
71.4

 
$
149.9

 
$
190.1

Net (loss) income from discontinued operations
$
(2.9
)
 
$
7.1

 
$
31.6

 
$
26.1

Net income
$
33.1

 
$
53.2

 
$
125.3

 
$
155.9

Comprehensive (loss) income
$
(1.4
)
 
$
17.9

 
$
57.2

 
$
128.8

STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
At the end of the third quarter of 2015, there were 1.7 million shares reserved for issuance under all incentive plans. Under the current stock incentive 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.
We did not grant any stock units to employees during the three months ended October 2, 2015. During the nine months ended October 2, 2015, we granted 181,665 stock units to employees, with a weighted-average grant-date fair value of $14.3 million. During the three and nine months ended October 2, 2015, we granted directors 9,585 and 23,642 stock units, respectively, with a weighted-average grant-date fair value of $0.5 million and $1.5 million, respectively. We exclude antidilutive stock options and units from the calculation of weighted-average shares for diluted earnings per share. For the third quarter of 2015 and 2014, the antidilutive stock options and units were immaterial.
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES
From time to time, we are party to legal proceedings and matters that arise in the ordinary course of business. As of October 2, 2015, 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 and electrical and electronic wire and cable products. We have identified Enterprise Cabling and Security Solutions ("ECS") and Electrical and Electronic Wire and Cable ("W&C") as reportable segments. As discussed in Note 2. "Discontinued Operations", beginning in the second quarter of 2015, the Fasteners segment has been classified as "Discontinued Operations" for all periods. We incur corporate expenses to obtain and coordinate financing, tax, information technology, legal and other related services, certain of which are billed to subsidiaries. These corporate expenses are allocated to the segments based primarily on projected sales and estimated use of time. A portion of these corporate expenses are reported in the corporate segment as they historically had been allocated to the Fasteners segment but are not considered directly related to the discontinued operations. For the three and nine months ended October 2, 2015, Corporate includes $9.1 million of acquisition and integration costs. 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 and nine months ended October 2, 2015 and October 3, 2014 are as follows:

(In millions)
 
Third Quarter of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
1,035.4

 
$
453.8

 
$

 
$
1,489.2

Operating income
$
61.8

 
$
28.6

 
$
(12.2
)
 
$
78.2

Third Quarter of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
903.9

 
$
534.1

 
$

 
$
1,438.0

Operating income
$
46.7

 
$
38.7

 
$
(2.9
)
 
$
82.5

Nine Months of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
2,952.8

 
$
1,401.9

 
$

 
$
4,354.7

Operating income
$
140.3

 
$
79.8

 
$
(18.1
)
 
$
202.0

Nine Months of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
2,514.7

 
$
1,540.5

 
$

 
$
4,055.2

Operating income
$
129.8

 
$
108.7

 
$
(8.8
)
 
$
229.7

Goodwill Assigned to Segments
The following table presents the changes in goodwill allocated to our reportable segments during the nine months ended October 2, 2015:
(In millions)
ECS
 
W&C
 
Total
Balance at January 2, 2015
$
403.4

 
$
178.9

 
$
582.3

Acquisition related (a)
(1.3
)
 

 
(1.3
)
Foreign currency translation
(7.2
)
 
(1.4
)
 
(8.6
)
Balance at October 2, 2015
$
394.9

 
$
177.5

 
$
572.4


(a) In the second and third quarters of 2015, we recorded immaterial increases in goodwill related to the purchase price allocation for the acquisition of Tri-Ed.

SUBSEQUENT EVENTS SUBSEQUENT EVENTS (Notes)
SUBSEQUENT EVENTS
NOTE 12. SUBSEQUENT EVENTS

Business Combination

On October 5, 2015, we, through our wholly-owned subsidiaries, Anixter Inc. and Anixter Canada Inc., completed the acquisition of the HD Supply Power Solutions Business from HD Supply, Inc. and certain subsidiaries of HD Supply, Inc. pursuant to the terms and conditions set forth in the Purchase Agreement dated July 15, 2015, in which we agreed to acquire the equity interest of certain subsidiaries of HD Supply, Inc. and certain assets that comprise the HD Supply Power Solutions Business ("Power Solutions") in exchange for $836.4 million (net of cash and outstanding checks of $12.8 million and a preliminary unfavorable net working capital adjustment of $24.2 million) (the "Acquisition"). The Acquisition was financed using borrowings under the Notes due 2023, the new financing arrangements described below and cash on hand.

New Financing

On October 5, 2015, we, through our wholly-owned subsidiaries, Anixter Inc., ARC and Anixter Canada Inc., entered into certain financing transactions in connection with the consummation of the Acquisition, including a U.S. accounts receivable asset based five-year revolving credit facility in an aggregate committed amount of $600.0 million ("New Receivables Facility"), a U.S. inventory asset based five-year revolving credit facility in an aggregate committed amount of $150.0 million ("Inventory Facility") for a U.S. combined commitment of $750.0 million ("Combined Commitment"). Additionally, we entered into a Canadian term loan facility in Canada in an aggregate principal amount of $300.0 million Canadian Dollars, the equivalent to approximately $225.0 million, with a five year maturity ("Canadian Term Loan"). In connection with these financing transactions, we expect to incur approximately $5.6 million in financing transaction costs, of which approximately $4.4 million is expected to be capitalized as debt issuance costs and amortized through maturity using the straight-line method, and approximately $1.2 million is expected to be expensed as incurred. These financing arrangements are described in greater detail below.

New Receivables Facility

On October 5, 2015, we, through our wholly-owned subsidiary, ARC, entered into a New Receivables Facility, which is a receivables based five-year revolving credit facility in an aggregate committed amount of $600.0 million. Borrowings under the New Receivables Facility are secured by a first lien on all assets of ARC and supported by an unsecured guarantee by the Company.

The New Receivables Facility has a borrowing base of 85% of eligible receivables, subject to certain reserves.

In connection with the entry into the New Receivables Facility, Anixter Inc. and ARC terminated its existing Second Amended and Restated Receivables Purchase Agreement (the "RPA").

In connection with the entry into the New Receivables Facility, on October 5, 2015, Anixter Inc. and ARC entered into a Third Amended and Restated Receivables Sale Agreement (the "Amended and Restated RSA"), which amended and restated the existing Second Amended and Restated Sales Agreement. The purpose of the Amended and Restated RSA is (i) to reflect the entry into the New Receivables Facility and the termination of the RPA, and (ii) to include in the receivables sold by Anixter Inc. to ARC receivables originated by Tri-Northern Holdings, Inc. and its subsidiaries (collectively, the "Tri-Ed Subsidiaries") and subsidiaries acquired in the Acquisition (the "Power Solutions Subsidiaries").

The foregoing descriptions of the New Receivables Facility and the Amended and Restated RSA do not purport to be complete and are qualified in their entirety by reference to the New Receivables Facility and the Amended and Restated RSA.

Inventory Facility

On October 5, 2015, we and certain of our wholly-owned subsidiaries, including the Tri-Ed Subsidiaries and Power Solutions Subsidiaries, entered into the Inventory Facility, an asset based lending five-year revolving credit facility, in an aggregate committed amount of $150.0 million. Borrowings under the Inventory Facility are secured by a first lien on Anixter Inc.'s and certain of its subsidiaries' personal property and supported by a guarantee by the Company.

The Inventory Facility has a borrowing base, (a) with respect to appraised eligible domestic inventory, of the lesser of (i) 85% of the net orderly liquidation value of such inventory and (ii) 75% of book value of such inventory, plus, (b) with respect to eligible domestic inventory not appraised, 40% of the net orderly liquidation value of such inventory, less (c) certain reserves.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the Inventory Facility.

The New Receivables Facility and the Inventory Facility (collectively, the "Combined Facilities")

The Combined Facilities drawn pricing will range from LIBOR plus 125 basis points when the combined unused availability (the "Combined Availability") under the Combined Facilities is greater than $500 million to LIBOR plus 175 basis points when Combined Availability is less than $250 million. Undrawn fees will be 25 basis points if greater than/equal to 50% of the Combined Commitment is drawn and 37.5 basis points if less than 50% of the Combined Commitment is drawn.

Acquisitions and restricted payments will be permitted, subject to, among other things, (i) Combined Availability of at least $150.0 million after giving pro forma effect to any acquisition or restricted payment or (ii) (a) Combined Availability of at least $112.5 million and (b) maintenance of a minimum fixed charge coverage ratio of at least 1.1x, after giving pro forma effect to the acquisition or restricted payment.

The Combined Facilities provides for customary representations and warranties and customary events of default, generally with corresponding grace periods, including, without limitation, payment defaults with respect to the facility, covenant defaults, cross-defaults to other agreements evidencing material indebtedness, certain judgments and events of bankruptcy.

The foregoing description does not purport to be complete and is qualified in its entirety by reference to the New Receivables Facility and Inventory Facility.

Canadian Term Loan

On October 5, 2015, we, through our wholly-owned subsidiaries, Anixter Canada Inc. and Tri-Ed ULC, entered into a $300.0 million Canadian Dollars (equivalent to approximately $225.0 million) Canadian Term Loan. The Canadian Term Loan is and will be guaranteed by all present and future material Canadian subsidiaries of Anixter Canada Inc. and Tri-Ed ULC as well as Anixter Mid Holdings BV. The Canadian Term Loan is secured by a first priority security interest in all of the assets of Anixter Canada Inc. and each of its Canadian subsidiaries (the "Borrowing Group").

The Canadian Term Loan will have a five year maturity. The drawn pricing will range from 0.375% to 1.250% over prime and 1.375% to 2.250% over the banker’s acceptance rate, depending on consolidated leverage ranging from less than or equal to 1.25x to equal to or greater than 3.00x. The Canadian Term Loan amortizes 5% in each of years 1 and 2, 10% in each of years 3 and 4 and 70% in year 5.

The Borrowing Group initially will be subject to a maximum leverage ratio of 4.25x and a minimum fixed charge coverage ratio of 3.0x.

The Canadian Term Loan provides for customary representations and warranties and customary events of default, generally with corresponding grace periods, including, without limitation, payment defaults with respect to the facility, covenant defaults, cross-defaults to other agreements evidencing material indebtedness, certain judgments and events of bankruptcy.

Retirement of Debt

In connection with the new financing arrangements described above, on October 5, 2015, we terminated our $300.0 million accounts receivable securitization facility and $400.0 million (or the equivalent in Euro) 5-year senior unsecured revolving credit agreement and repaid our borrowings under the $200.0 million term loan. In connection with the termination of these facilities and repayment of the $200.0 million term loan, we expect to incur a $0.9 million loss on the extinguishment of debt in the fourth quarter of 2015, representing a write-off of a portion of unamortized debt issuance costs. The remaining unamortized debt issuance costs will be amortized through maturity of the new financing arrangements using the straight-line method.
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 April 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-8 Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity. This update changes the criteria for determining which disposals can be presented as discontinued operations and modifies related disclosure requirements. Under the new guidance, a discontinued operation is defined as a disposal of a component or group of components that is disposed of or is classified as held for sale and represents a strategic shift that has a major effect on an entity's operations and financial results. The guidance is effective for entities with annual periods beginning on or after December 15, 2014. This accounting guidance applies prospectively to new disposals and new classifications of disposal groups held for sale. We adopted this guidance in the first quarter of fiscal year 2015. See Note 2. "Discontinued Operations" for applicable disclosures.

In September 2015, the FASB issued ASU 2015-16, Business Combinations: Simplifying the Accounting for Measurement-Period Adjustments, which eliminates the requirement to retroactively account for measurement-period adjustments to provisional amounts recognized in a business combination. Under the new guidance, the measurement-period adjustments must be recognized in the period in which adjustments are determined, including the effect on earnings of any amounts that would have been recorded in previous periods. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. We adopted this guidance in the third quarter of fiscal year 2015.

Recently issued accounting pronouncements not yet adopted: In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory. The core principle of the guidance is that an entity should measure inventory at the "lower of cost and net realizable value" and options that currently exist for "market value" will be eliminated. The ASU defines net realizable value as the "estimated selling prices in the ordinary course of business, less reasonably predictable cost of completion, disposal, and transportation." The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-04, Compensation-Retirement Benefits (Practical Expedient for the Measurement Date of an Employer's Defined Benefit Obligation and Plan Assets), which permits a reporting entity with a fiscal year-end that does not coincide with a month-end to measure defined benefit plan assets and obligations using the month-end that is closest to the entity's fiscal year-end and apply that practical expedient consistently from year to year. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The new guidance should be applied on a prospective basis. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability. The Securities and Exchange Commission ("SEC") staff noted that ASU 2015-03 does not address when a company has debt issuance costs related to lines-of-credit arrangements, which may not have an outstanding balance. As a result, in June 2015, the FASB issued ASU 2015-15, Interest Imputation of Interest, which states that the SEC staff will not object to an entity presenting debt issuance costs related to lines-of-credit arrangements as an asset. These new updates are effective for our financial statements in fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. The new guidance will be applied on a retrospective basis. The adoption of these updates is not expected to have a material impact on our consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. The core principle of the guidance is that an entity’s management should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are available to be issued. When management identifies conditions or events that raise substantial doubt about an entity’s ability to continue as a going concern, management should consider whether its plans that are intended to mitigate those relevant conditions or events that will alleviate the substantial doubt are adequately disclosed in the footnotes to the financial statements. The standard is effective for our financial statements issued for fiscal years beginning after December 15, 2016, and interim periods within those fiscal years. Early adoption is permitted. The adoption of this standard is not expected to have a material impact on our consolidated financial statements.

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, which provides guidance for revenue recognition. The update’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under current guidance. Examples of the use of judgments and estimates may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. The update also requires more detailed disclosures to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The update provides for two transition methods to the new guidance: a retrospective approach and a modified retrospective approach. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers: Deferral of the Effective Date, as a revision to ASU 2014-09, which revised the effective date to fiscal years, and interim periods within those years, beginning after December 15, 2017. Early adoption is permitted but not prior to periods beginning after December 15, 2016 (i.e. the original adoption date per ASU 2014-09). We are currently in the process of evaluating the transition methods and the impact of adoption of this ASU on our consolidated financial statements.
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.
Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive (Loss) Income:
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
(In millions)
 
 
 
As Adjusted
(see Note 2)
 
 
 
As Adjusted
(see Note 2)
Other, net:
 
 
 
 
 
 
 
 
    Foreign exchange
 
$
(4.5
)
 
$
(2.3
)
 
$
(10.5
)
 
$
(4.7
)
    Foreign exchange devaluations
 

 

 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
(0.5
)
 
(0.3
)
 
(0.5
)
 
0.5

    Other
 
(0.5
)
 
0.6

 
(1.3
)
 
(1.4
)
Total other, net
 
$
(5.5
)
 
$
(2.0
)
 
$
(13.0
)
 
$
(13.6
)

In the first quarter of 2014, the Venezuelan government changed its policy regarding the bolivar, which required us to use the Complementary System for the Administration of Foreign Currency ("SICAD") rate of 49.0 bolivars to one U.S. Dollar ("USD") to repatriate cash from Venezuela. In the first quarter of 2014, the Argentine peso was also devalued from 6.5 pesos to one USD to approximately 8.0 pesos to one USD after the central bank scaled back its intervention in a bid to preserve USD cash reserves. As a result of these devaluations, we recorded foreign exchange losses in these two countries of $8.0 million in the first quarter of 2014.
In the first quarter of 2015, the Venezuelan government changed its policy regarding the bolivar, which we believe will now require us to use the Sistema Marginal de Divisas or Marginal Exchange System ("SIMADI") a "completely free floating" rate. As a result, we believe that the current rate of approximately 200.0 bolivars to one USD will be the rate available to us in the event we repatriate cash from Venezuela. As a result of the devaluation in the first quarter of 2015, we recorded a foreign exchange loss of $0.7 million in the first quarter of 2015.
Several of our subsidiaries conduct business in a currency other than the legal entity’s functional currency. Transactions may produce receivables or payables that are fixed in terms of the amount of foreign currency that will be received or paid. A change in exchange rates between the functional currency and the currency in which a transaction is denominated increases or decreases the expected amount of functional currency cash flows upon settlement of the transaction. The increase or decrease in expected functional currency cash flows is a foreign currency transaction gain or loss that is included in "Other, net" in the Condensed Consolidated Statements of Comprehensive (Loss) Income.
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. While our derivatives are all subject to master netting arrangements, we present our assets and liabilities related to derivative instruments on a gross basis within the Condensed Consolidated Balance Sheets. The gross amount of our derivative assets and liabilities are immaterial.
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 October 2, 2015 and January 2, 2015, 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 (Loss) Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At October 2, 2015 and January 2, 2015, the gross notional amount of foreign currency forward contracts outstanding was approximately $237.1 million and $222.9 million, respectively. All of our foreign currency forward contracts are subject to master netting arrangements with our counterparties. As a result, at October 2, 2015 and January 2, 2015, the net notional amount of the foreign currency forward contracts outstanding was approximately $148.3 million and $121.9 million, respectively.
The combined effect of changes in both the equity and bond markets resulted in changes in the cash surrender value of our owned life insurance policies associated with our sponsored deferred compensation program.
Accumulated other comprehensive income (loss): We accumulated unrealized gains and losses in "Accumulated other comprehensive income (loss)" ("AOCI") which are also reported in "Other comprehensive loss" on the Condensed Consolidated Statements of Comprehensive (Loss) Income. These include unrealized gains and losses related to our defined benefit obligations, certain immaterial derivative transactions that have been designated as cash flow hedges and foreign currency translation. See Note 7. "Pension Plans" for pension related amounts reclassified into net income.

Our investments in several subsidiaries are recorded in currencies other than the USD. As these foreign currency denominated investments are translated at the end of each period during consolidation using period-end exchange rates, fluctuations of exchange rates between the foreign currency and the USD increase or decrease the value of those investments. These fluctuations and the results of operations for foreign subsidiaries, where the functional currency is not the USD, are translated into USD using the average exchange rates during the periods reported, while the assets and liabilities are translated using period-end exchange rates. The assets and liabilities-related translation adjustments are recorded as a separate component of AOCI, "Foreign currency translation." In addition, as our subsidiaries maintain investments denominated in currencies other than local currencies, exchange rate fluctuations will occur. Borrowings are raised in certain foreign currencies to minimize the exchange rate translation adjustment risk.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
Schedule of Other Nonoperating Income, by Component
The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive (Loss) Income:
 
 
Three Months Ended
 
Nine Months Ended
 
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
(In millions)
 
 
 
As Adjusted
(see Note 2)
 
 
 
As Adjusted
(see Note 2)
Other, net:
 
 
 
 
 
 
 
 
    Foreign exchange
 
$
(4.5
)
 
$
(2.3
)
 
$
(10.5
)
 
$
(4.7
)
    Foreign exchange devaluations
 

 

 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
(0.5
)
 
(0.3
)
 
(0.5
)
 
0.5

    Other
 
(0.5
)
 
0.6

 
(1.3
)
 
(1.4
)
Total other, net
 
$
(5.5
)
 
$
(2.0
)
 
$
(13.0
)
 
$
(13.6
)
DISCONTINUED OPERATIONS (Tables)
The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statements of Comprehensive (Loss) Income:
 
 
Three Months Ended
 
Nine Months Ended
(In millions)
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Net sales
 
$
7.6

 
$
228.6

 
$
405.4

 
$
721.2

Operating (loss) income
 
$
(1.6
)
 
$
11.6

 
$
15.5

 
$
42.4

(Loss) income from discontinued operations before income taxes
 
$
(0.5
)
 
$
10.2

 
$
14.9

 
$
37.6

(Loss) gain on sale of discontinued operations
 
$
(2.6
)
 
$

 
$
39.7

 
$

Income tax (benefit) expense from discontinued operations
 
$
(0.2
)
 
$
3.1

 
$
23.0

 
$
11.5

Net (loss) income from discontinued operations
 
$
(2.9
)
 
$
7.1

 
$
31.6

 
$
26.1

As reflected on our Condensed Consolidated Balance Sheets as of October 2, 2015 and January 2, 2015, the components of assets and liabilities of the Fasteners businesses classified as "Discontinued Operations" are as follows:

(In millions)
October 2,
2015
 
January 2,
2015
Assets of discontinued operations:
 
 
 
Accounts receivable
$
34.5

 
$
158.2

Inventories
0.9

 
213.8

Net property and equipment

 
16.8

Other assets
6.8

 
18.1

Total assets of discontinued operations
$
42.2

 
$
406.9

 
 
 
 
Liabilities of discontinued operations:
 
 
 
Accounts payable
$
21.0

 
$
92.8

Accrued expenses
5.1

 
16.0

Other liabilities
4.6

 
0.2

Total liabilities of discontinued operations
$
30.7

 
$
109.0

BUSINESS COMBINATION (Tables)
The following table sets forth the purchase price allocation, as of the acquisition date, for Tri-Ed. The purchase price allocation and valuation of the acquired intangible assets and related deferred tax liabilities was completed in the third quarter of 2015.
(In millions)
 
 
 
Cash
 
 
$
11.6

Current assets, net
 
 
203.9

Property and equipment
 
 
2.7

Goodwill
 
 
242.2

Intangible assets
 
 
166.8

Current liabilities
 
 
(143.3
)
Non-current liabilities
 
 
(56.1
)
Total purchase price
 
 
$
427.8

The following table sets forth the components of identifiable intangible assets acquired and their estimated useful lives as of the date of the acquisition:
(In millions)
Average useful life (in years)
 
Fair value
Customer relationships
11-18
 
$
120.6

Exclusive supplier agreement
21
 
23.2

Trade names
Indefinite
 
10.6

Tri-Ed trade names
4
 
9.2

Non-compete agreements
4-5
 
3.2

Total intangible assets
 
 
$
166.8

The following unaudited pro forma information shows our results of operations as if the acquisition of Tri-Ed had been completed as of the beginning of fiscal 2014. Adjustments have been made for the pro forma effects of interest expense and deferred financing costs related to the financing of the business combination, depreciation and amortization of tangible and intangible assets recognized as part of the business combination, related income taxes and various other costs which would not have been incurred had we and Tri-Ed operated as a combined entity (i.e., management fees paid by Tri-Ed to its former owners).
 
 
Three Months Ended
 
Nine Months Ended
(In millions, except per share amounts)
 
October 3,
2014
 
October 3,
2014
Net sales
 
$
1,566.9

 
$
4,474.9

Net income from continuing operations
 
$
50.7

 
$
134.4

Income per share from continuing operations:
 
 
 
 
Basic
 
$
1.53

 
$
4.07

Diluted
 
$
1.52

 
$
4.03

DEBT (Tables)
Debt
Debt is summarized below:
(In millions)
October 2,
2015
 
January 2,
2015
Long-term debt:
 
Senior notes due 2021
$
394.7

 
$
394.2

Senior notes due 2019
346.6

 
345.9

Senior notes due 2023
345.7

 

Term loan
195.0

 
198.8

Accounts receivable securitization facility

 
65.0

Revolving lines of credit

 

Senior notes due 2015

 
200.0

Other
3.4

 
3.8

Total long-term debt
$
1,285.4

 
$
1,207.7

PENSION PLANS (Tables)
Components of Net Periodic Cost
Components of net periodic pension cost (benefit) are as follows:
 
Three Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Service cost
$
1.1

 
$
1.2

 
$
1.7

 
$
1.4

 
$
2.8

 
$
2.6

Interest cost
2.4

 
2.8

 
2.3

 
2.7

 
4.7

 
5.5

Expected return on plan assets
(3.1
)
 
(3.5
)
 
(2.6
)
 
(3.1
)
 
(5.7
)
 
(6.6
)
Net amortization (a)
0.2

 
(0.6
)
 
0.7

 
0.3

 
0.9

 
(0.3
)
Net periodic cost (benefit)
$
0.6

 
$
(0.1
)
 
$
2.1

 
$
1.3

 
$
2.7

 
$
1.2


 
Nine Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
Service cost
$
4.1

 
$
3.6

 
$
5.0

 
$
4.4

 
$
9.1

 
$
8.0

Interest cost
9.1

 
8.1

 
6.9

 
8.1

 
16.0

 
16.2

Expected return on plan assets
(11.9
)
 
(10.4
)
 
(7.9
)
 
(9.5
)
 
(19.8
)
 
(19.9
)
Net amortization (a)
1.1

 
(1.7
)
 
2.2

 
0.9

 
3.3

 
(0.8
)
Net periodic cost (benefit)
$
2.4

 
$
(0.4
)
 
$
6.2

 
$
3.9

 
$
8.6

 
$
3.5


(a) Reclassified into operating expenses from AOCI.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. (Tables)
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
October 2,
2015
 
January 2,
2015
(In millions)

 
As Adjusted
(see Note 2)
Assets:
 
 
 
Current assets
$
2,767.7

 
$
2,210.2

Current assets of discontinued operations
41.6

 
379.2

Property, equipment and capital leases, net
116.6

 
114.7

Goodwill
572.4

 
582.3

Other assets
257.7

 
282.5

Long-term assets of discontinued operations
0.6

 
27.7

 
$
3,756.6

 
$
3,596.6

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
1,047.2

 
$
921.3

Current liabilities of discontinued operations
26.2

 
108.8

Subordinated notes payable to parent

 
1.5

Long-term debt
1,298.5

 
1,221.8

Other liabilities
186.4

 
212.2

Long-term liabilities of discontinued operations
4.5

 
0.2

Stockholder’s equity
1,193.8

 
1,130.8

 
$
3,756.6

 
$
3,596.6

ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
  
 
Three Months Ended
 
Nine Months Ended
 
October 2,
2015
 
October 3,
2014
 
October 2,
2015
 
October 3,
2014
(In millions)
 
 
As Adjusted
(see Note 2)
 
 
 
As Adjusted
(see Note 2)
Net sales
$
1,489.2

 
$
1,438.0

 
$
4,354.7

 
$
4,055.2

Operating income
$
79.7

 
$
83.9

 
$
206.4

 
$
233.9

Income from continuing operations before income taxes
$
58.2

 
$
71.4

 
$
149.9

 
$
190.1

Net (loss) income from discontinued operations
$
(2.9
)
 
$
7.1

 
$
31.6

 
$
26.1

Net income
$
33.1

 
$
53.2

 
$
125.3

 
$
155.9

Comprehensive (loss) income
$
(1.4
)
 
$
17.9

 
$
57.2

 
$
128.8

BUSINESS SEGMENTS (Tables)
Segment information for the three and nine months ended October 2, 2015 and October 3, 2014 are as follows:

(In millions)
 
Third Quarter of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
1,035.4

 
$
453.8

 
$

 
$
1,489.2

Operating income
$
61.8

 
$
28.6

 
$
(12.2
)
 
$
78.2

Third Quarter of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
903.9

 
$
534.1

 
$

 
$
1,438.0

Operating income
$
46.7

 
$
38.7

 
$
(2.9
)
 
$
82.5

Nine Months of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
2,952.8

 
$
1,401.9

 
$

 
$
4,354.7

Operating income
$
140.3

 
$
79.8

 
$
(18.1
)
 
$
202.0

Nine Months of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
2,514.7

 
$
1,540.5

 
$

 
$
4,055.2

Operating income
$
129.8

 
$
108.7

 
$
(8.8
)
 
$
229.7

The following table presents the changes in goodwill allocated to our reportable segments during the nine months ended October 2, 2015:
(In millions)
ECS
 
W&C
 
Total
Balance at January 2, 2015
$
403.4

 
$
178.9

 
$
582.3

Acquisition related (a)
(1.3
)
 

 
(1.3
)
Foreign currency translation
(7.2
)
 
(1.4
)
 
(8.6
)
Balance at October 2, 2015
$
394.9

 
$
177.5

 
$
572.4


(a) In the second and third quarters of 2015, we recorded immaterial increases in goodwill related to the purchase price allocation for the acquisition of Tri-Ed.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Components of Other Net Reflected in Consolidated Statements of Comprehensive Income (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 2, 2015
Oct. 3, 2014
Oct. 2, 2015
Oct. 3, 2014
Summary of Components of Other Net Reflected in Consolidated Statements of Comprehensive Income [Abstract]
 
 
 
 
Foreign exchange
$ (4.5)
$ (2.3)
$ (10.5)
$ (4.7)
Foreign exchange devaluations
(0.7)
(8.0)
Cash surrender value of life insurance policies
(0.5)
(0.3)
(0.5)
0.5 
Other
(0.5)
0.6 
(1.3)
(1.4)
Total other, net
$ (5.5)
$ (2.0)
$ (13.0)
$ (13.6)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 2, 2015
Oct. 3, 2014
Oct. 2, 2015
Oct. 3, 2014
Oct. 2, 2015
Gross [Member]
Jan. 2, 2015
Gross [Member]
Oct. 2, 2015
Net [Member]
Jan. 2, 2015
Net [Member]
Oct. 2, 2015
Venezuelan bolívar fuerte
Apr. 4, 2014
Venezuelan bolívar fuerte
Apr. 4, 2014
Argentina, Pesos
Jan. 3, 2014
Argentina, Pesos
Derivative Instruments and Hedging Activities Disclosures [Line Items]
 
 
 
 
 
 
 
 
 
 
 
 
Foreign currency exchange rate
 
 
 
 
 
 
 
 
200 
49.0 
8.0 
6.5 
Foreign exchange losses due to devaluation
$ 0 
$ 0 
$ 0.7 
$ 8.0 
 
 
 
 
 
 
 
 
Rate of foreign currency denominated accounts not hedged
 
 
100.00% 
 
 
 
 
 
 
 
 
 
Derivative, Notional Amount
 
 
 
 
$ 237.1 
$ 222.9 
$ 148.3 
$ 121.9 
 
 
 
 
DISCONTINUED OPERATIONS (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended 9 Months Ended
Oct. 2, 2015
Jul. 3, 2015
Oct. 3, 2014
Jul. 3, 2015
Oct. 2, 2015
Oct. 3, 2014
Discontinued Operations Additional Detail [Line Items]
 
 
 
 
 
 
Consideration for Discontinued Operations
$ 380.0 
 
 
 
$ 380.0 
 
Proceeds from sale of business
 
 
 
358.0 
381.0 
Provision for doubtful accounts
 
2.6 
 
 
 
 
Transaction related costs
17.2 
 
 
 
17.2 
 
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax
(2.6)
 
 
39.7 
Discontinued Operation, Gain (Loss) on Disposal of Discontinued Operation, Net of Tax
 
 
 
29.9 
 
 
Interest Expense Allocated to Discontinued Operation
 
 
1.0 
 
1.1 
3.1 
Defined Benefit Plan, Curtailments
 
 
 
 
5.1 
 
Data Center Payment [Member]
 
 
 
 
 
 
Discontinued Operations Additional Detail [Line Items]
 
 
 
 
 
 
Proceeds from sale of business
10.0 
 
 
 
 
 
Net Working Capital Adjustment [Member]
 
 
 
 
 
 
Discontinued Operations Additional Detail [Line Items]
 
 
 
 
 
 
Proceeds from sale of business
13.0 
 
 
 
 
 
Provision for doubtful accounts
1.0 
 
 
 
 
 
Other Receivables
$ 0.9 
 
 
 
$ 0.9 
 
DISCONTINUED OPERATIONS - Statement of operating income (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 9 Months Ended
Oct. 2, 2015
Oct. 3, 2014
Oct. 2, 2015
Oct. 3, 2014
Discontinued Operations Income Statement [Line Items]
 
 
 
 
Net sales
$ 7.6 
$ 228.6 
$ 405.4 
$ 721.2 
Operating (loss) income
(1.6)
11.6 
15.5 
42.4 
Income from discontinued operations before income taxes (excluding gain)
(0.5)
10.2 
14.9 
37.6 
Discontinued Operation, Gain (Loss) from Disposal of Discontinued Operation, before Income Tax
(2.6)
39.7 
Income tax (benefit) expense from discontinued operations
(0.2)
3.1 
23.0 
11.5 
Net (loss) income from discontinued operations
$ (2.9)
$ 7.1 
$ 31.6 
$ 26.1 
DISCONTINUED OPERATIONS - Balance sheet (Details) (USD $)
In Millions, unless otherwise specified
Oct. 2, 2015
Jan. 2, 2015
Discontinued Operations Balance Sheet [Line Items]
 
 
Accounts receivable
$ 34.5 
$ 158.2 
Inventories
0.9 
213.8 
Net property and equipment
16.8 
Other assets
6.8 
18.1 
Total assets of discontinued operations
42.2 
406.9 
Accounts payable
21.0 
92.8 
Accrued expenses
5.1 
16.0 
Other liabilities
4.6 
0.2 
Total liabilities of discontinued operations
$ 30.7 
$ 109.0 
BUSINESS COMBINATION - Business Combination (Detail) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 2, 2015
Business Acquisition [Line Items]
 
Cash
$ 11.6 
Current assets, net
203.9 
Property and equipment
2.7 
Goodwill
242.2 
Intangible assets
166.8 
Current liabilities
(143.3)
Non-current liabilities
(56.1)
Total purchase price
$ 427.8 
BUSINESS COMBINATION, Intangible assets acquired (Details) (USD $)
In Millions, unless otherwise specified
12 Months Ended
Jan. 2, 2015
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Indefinite-lived Intangible Assets
$ 10.6 
Intangible assets
166.8 
Customer Relationships [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life