ANIXTER INTERNATIONAL INC, 10-Q filed on 4/28/2015
Quarterly Report
Document and Entity Information
3 Months Ended
Apr. 3, 2015
Apr. 21, 2015
Entity Information [Line Items]
 
 
Document Type
10-Q 
 
Amendment Flag
false 
 
Document Period End Date
Apr. 03, 2015 
 
Document Fiscal Year Focus
2015 
 
Document Fiscal Period Focus
Q1 
 
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
 
32,954,880 
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Net sales
$ 1,385.1 
$ 1,274.3 
Cost of goods sold
1,075.8 
982.5 
Gross profit
309.3 
291.8 
Operating expenses
250.0 
221.8 
Operating income
59.3 
70.0 
Other expense:
 
 
Interest expense
(14.2)
(10.1)
Other, net
(4.0)
(9.7)
Income from continuing operations before income taxes
41.1 
50.2 
Income tax expense from continuing operations
14.6 
12.5 
Net income from continuing operations
26.5 
37.7 
Income from discontinued operations before income taxes
11.2 
14.0 
Income tax expense from discontinued operations
18.6 
4.3 
Net (loss) income from discontinued operations
(7.4)
9.7 
Net income
19.1 
47.4 
Basic:
 
 
Continuing operations
$ 0.80 
$ 1.15 
Discontinued operations
$ (0.22)
$ 0.29 
Net income
$ 0.58 
$ 1.44 
Diluted:
 
 
Continuing operations
$ 0.79 
$ 1.13 
Discontinued operations
$ (0.22)
$ 0.30 
Net income
$ 0.57 
$ 1.43 
Basic weighted-average common shares outstanding
33.2 
32.9 
Effect of dilutive securities:
 
 
Stock options and units
0.2 
0.4 
Diluted weighted-average common shares outstanding
33.4 
33.3 
Net income
19.1 
47.4 
Foreign currency translation
(41.0)
(6.4)
Changes in unrealized pension cost, net of tax
0.9 
(0.2)
Changes in fair market value of derivatives
(0.1)
Other comprehensive loss
(40.2)
(6.6)
Comprehensive (loss) income
$ (21.1)
$ 40.8 
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)
In Millions, unless otherwise specified
Apr. 3, 2015
Jan. 2, 2015
Current assets:
 
 
Cash and cash equivalents
$ 101.2 
$ 92.0 
Accounts receivable (Includes $480.7 and $548.5 at April 3, 2015 and January 2, 2015, respectively, associated with securitization facility)
1,109.4 
1,171.0 
Inventories
839.0 
859.0 
Deferred income taxes
33.4 
33.7 
Other current assets
51.5 
54.9 
Current assets held for sale
419.1 
379.2 
Total current assets
2,553.6 
2,589.8 
Property and equipment, at cost
308.3 
305.3 
Accumulated depreciation
(200.7)
(201.1)
Net property and equipment
107.6 
104.2 
Goodwill
577.1 
582.3 
Other assets
270.9 
282.5 
Long-term assets held for sale
27.7 
Total assets
3,509.2 
3,586.5 
Current liabilities:
 
 
Accounts payable
682.5 
738.5 
Accrued expenses
169.7 
183.2 
Current liabilities held for sale
131.8 
108.8 
Total current liabilities
984.0 
1,030.5 
Long-term debt (Includes $190.0 and $65.0 at April 3, 2015 and January 2, 2015, respectively, associated with securitization facility)
1,202.0 
1,207.7 
Other liabilities
208.7 
215.1 
Long-term liabilities held for sale
0.2 
Total liabilities
2,394.7 
2,453.5 
Stockholders’ equity:
 
 
Common stock - $1.00 par value, 100,000,000 shares authorized, 33,238,071 and 33,141,950 shares issued and outstanding at April 3, 2015 and January 2, 2015, respectively
33.2 
33.1 
Capital surplus
240.6 
238.2 
Retained earnings
1,018.9 
999.7 
Accumulated other comprehensive (loss) income:
 
 
Foreign currency translation
(100.1)
(59.1)
Unrecognized pension liability, net
(78.1)
(79.0)
Unrealized gain on derivatives, net
0.1 
Total accumulated other comprehensive loss
(178.2)
(138.0)
Total stockholders’ equity
1,114.5 
1,133.0 
Total liabilities and stockholders’ equity
$ 3,509.2 
$ 3,586.5 
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
In Millions, except Share data, unless otherwise specified
Apr. 3, 2015
Jan. 2, 2015
Accounts receivable
$ 480.7 
$ 548.5 
Common stock, par value
$ 1.00 
$ 1.00 
Common stock, shares authorized
100,000,000 
100,000,000 
Common stock, shares issued
33,238,071 
33,141,950 
Common stock, shares outstanding
33,238,071 
33,141,950 
Long-term debt
1,202.0 
1,207.7 
Accounts receivable securitization facility [Member]
 
 
Long-term debt
$ 190.0 
$ 65.0 
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Operating activities:
 
 
Net income
$ 19.1 
$ 47.4 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation
6.1 
5.6 
Amortization of intangible assets
5.4 
2.0 
Stock-based compensation
3.6 
3.3 
Accretion of debt discount
0.4 
0.3 
Amortization of deferred financing costs
0.4 
0.4 
Deferred income taxes
(3.8)
Excess income tax benefit from employee stock plans
(0.4)
(2.7)
Pension plan contributions
(4.8)
(4.7)
Pension plan expenses
2.9 
1.0 
Changes in current assets and liabilities, net
(15.5)
(41.1)
Other, net
0.8 
0.3 
Net cash provided by operating activities
18.0 
8.0 
Investing activities:
 
 
Capital expenditures, net
(10.9)
(9.0)
Other
2.3 
Net cash used in investing activities
(8.6)
(9.0)
Financing activities:
 
 
Proceeds from borrowings
346.8 
330.4 
Repayments of borrowings
(151.5)
(263.6)
Excess income tax benefit from employee stock plans
0.4 
2.7 
Proceeds from stock options exercised
0.5 
Other
(1.0)
(1.7)
Net cash (used in) provided by financing activities
(6.6)
36.0 
Increase in cash and cash equivalents
2.8 
35.0 
Effect of exchange rate on cash balances
6.4 
(2.5)
Cash and cash equivalents at beginning of period
92.0 
57.3 
Cash and cash equivalents at end of period
101.2 
89.8 
Senior Notes Due 2015 [Member]
 
 
Financing activities:
 
 
Retirement of Debt
(200.0)
Long-term Debt [Member]
 
 
Financing activities:
 
 
Retirement of Debt
(1.3)
Senior Notes Due Twenty Fourteen [Member]
 
 
Financing activities:
 
 
Retirement of Debt
$ 0 
$ (32.3)
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.

Recently issued accounting pronouncements not yet adopted: On April 15, 2015, the FASB issued ASU 2015-04, 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 financial statements.

On April 7, 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 standard is effective for our financial statements issued for 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 this standard is not expected to have a material impact on our 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. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. We are currently in the process of evaluating the transition methods and the impact of adoption of this ASU on our 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
(In millions)
 
April 3,
2015
 
April 4,
2014
Other, net:
 
 
 
 
    Foreign exchange
 
$
(3.6
)
 
$
(1.4
)
    Foreign exchange devaluations
 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
0.6

 
0.3

    Other
 
(0.3
)
 
(0.6
)
Total other, net
 
$
(4.0
)
 
$
(9.7
)

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 190.0 bolivars to one USD will be the rate available to us in the event we repatriate cash from Venezuela. As a result of this devaluation, 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 April 3, 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 April 3, 2015 and January 2, 2015, the gross notional amount of foreign currency forward contracts outstanding was approximately $213.4 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 April 3, 2015 and January 2, 2015, the net notional amount of the foreign currency forward contracts outstanding was approximately $98.6 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 (loss) income: We accumulated unrealized gains and losses in “Accumulated other comprehensive (loss) income ” (“AOCI”) which are also reported in "Other comprehensive loss" on the Condensed Consolidated Statement 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 6. "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. The transaction is expected to close during the second quarter of 2015, subject to customary closing conditions and regulatory approval. Following the transaction, we intend to have a sharper strategic focus on our core Enterprise Cabling and Security Solutions (“ECS”) and Electrical and Electronic Wire and Cable (“W&C”) segments and believe this transaction will provide additional financial flexibility to build on these strong global platforms through organic investments or strategic acquisitions.

Beginning in the first quarter of 2015, the assets and liabilities of the Fasteners business are classified as “Assets Held for Sale” and the operating results of the Fasteners business are presented as “Discontinued Operations” in our Condensed Consolidated Financial Statements. Accordingly, all prior periods have been revised to reflect this classification. Upon closing of the transaction, we expect to record a gain on the sale, net of taxes.

We allocated interest costs to discontinued operations as a result of the anticipated sale of the Fasteners business. The allocated interest costs were $0.5 million and $1.1 million in the first quarter of 2015 and 2014, respectively, and 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. The methodology is consistent with the interest costs we expect to incur after the sale of the Fasteners business.

The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statement of Comprehensive (Loss) Income:
 
 
 
(In millions)
 
April 3,
2015
 
April 4,
2014
Net sales
 
$
249.4

 
$
249.5

Operating income
 
$
11.9

 
$
15.7

Income from discontinued operations before income taxes
 
$
11.2

 
$
14.0

Income tax expense from discontinued operations
 
$
18.6

 
$
4.3

Net (loss) income from discontinued operations
 
$
(7.4
)
 
$
9.7



As reflected on our Condensed Consolidated Balance Sheets as of April 3, 2015 and January 2, 2015, the components of assets and liabilities of the Fasteners businesses classified as "Assets held for sale" and "Liabilities held for sale" are as follows:

(In millions)
 
April 3,
2015
 
January 2,
2015
Assets held for sale:
 
 
 
Accounts receivable
 
$
177.4

 
$
158.2

Inventories
 
208.5

 
213.8

Net property and equipment
 
16.8

 
16.8

Other assets
 
16.4

 
18.1

Total assets held for sale
 
$
419.1

 
$
406.9

 
 
 
 
 
Liabilities held for sale:
 
 
 
 
Accounts payable
 
$
114.0

 
$
92.8

Accrued expenses
 
17.6

 
16.0

Other liabilities
 
0.2

 
0.2

Total liabilities held for sale
 
$
131.8

 
$
109.0




The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statement of Cash Flows:
 
 
 
(In millions)
 
April 3,
2015
 
April 4,
2014
Depreciation
 
$
1.0

 
$
0.9

Amortization
 
$
0.3

 
$
0.3

Stock-based compensation
 
$
0.3

 
$
0.3

Capital expenditures
 
$
1.1

 
$
2.5

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 $418.4 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 preliminary purchase price allocation, as of the acquisition date, for Tri-Ed. The purchase price allocation is preliminary pending finalization of the valuation of the acquired intangible assets and related deferred tax liabilities, which is expected to be completed in 2015.
(In millions)
 
 
 
Cash
 
 
$
11.6

Current assets, net
 
 
203.9

Property and equipment
 
 
2.7

Goodwill
 
 
243.4

Intangible assets
 
 
166.8

Current liabilities
 
 
(144.6
)
Non-current liabilities
 
 
(56.1
)
Total purchase price
 
 
$
427.7


All Tri-Ed goodwill, other assets and liabilities were recorded in the Enterprise Cabling and Security Solutions (“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 preliminary 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
(In millions, except per share amounts)
April 4,
2014
Net sales
$
1,416.1

Net income from continuing operations
$
37.9

Income per share from continuing operations:
 
Basic
$
1.15

Diluted
$
1.14



Since the date of acquisition, the Tri-Ed results are reflected in our Condensed Consolidated Financial Statements. For 2015, Tri-Ed added approximately $150.9 million of revenue and $5.5 million in operating income, to our consolidated results.
INCOME TAXES
INCOME TAXES
INCOME TAXES
The income tax provision from continuing operations for the first quarter of 2015 was $14.6 million compared to $12.5 million in the corresponding period of last year. Our first quarter 2015 income tax provision differs from our first quarter 2014 income tax provision as a result of a net tax benefit of $4.9 million primarily related to the reversal of deferred income tax valuation allowances in Europe recorded in the first quarter 2014 and a change in our worldwide country mix of income. Our effective tax rate for the first quarter of 2015 was 35.6% compared to 24.9% in the prior year period. Our first quarter 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 our Board of Directors’ approval 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, following the disposition, we intend to repatriate 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.  Our first quarter 2015 results include, as a component of discontinued operations, $15.2 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)
April 3,
2015
 
January 2,
2015
Long-term debt:
 
Senior notes due 2021
$
394.4

 
$
394.2

Senior notes due 2019
346.1

 
345.9

Term loan
197.5

 
198.8

Accounts receivable securitization facility
190.0

 
65.0

Revolving lines of credit
70.0

 

Senior notes due 2015

 
200.0

Other
4.0

 
3.8

Total long-term debt
$
1,202.0

 
$
1,207.7


At April 3, 2015, our total carrying value and estimated fair value of debt outstanding was $1,202.0 million and $1,251.1 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 4.6% and 4.8% for the three months ended April 3, 2015 and April 4, 2014, respectively.

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.
Accounts Receivable Securitization Program
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 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 April 3, 2015 and January 2, 2015, $480.7 million and $548.5 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 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.
Components of net periodic pension cost are as follows:
 
 
Three Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
April 3,
2015
 
April 4,
2014
 
April 3,
2015
 
April 4,
2014
 
April 3,
2015
 
April 4,
2014
Service cost
$
1.3

 
$
1.2

 
$
1.7

 
$
1.5

 
$
3.0

 
$
2.7

Interest cost
2.6

 
2.6

 
2.3

 
2.7

 
4.9

 
5.3

Expected return on plan assets
(3.5
)
 
(3.5
)
 
(2.6
)
 
(3.2
)
 
(6.1
)
 
(6.7
)
Net amortization (a)
0.4

 
(0.6
)
 
0.7

 
0.3

 
1.1

 
(0.3
)
Net periodic cost (benefit)
$
0.8

 
$
(0.3
)
 
$
2.1

 
$
1.3

 
$
2.9

 
$
1.0


(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
 
April 3,
2015
 
January 2,
2015
(In millions)

 
As Adjusted
(see Note 2)
Assets:
 
 
 
Current assets
$
2,133.4

 
$
2,210.2

Current assets held for sale
419.1

 
379.2

Property, equipment and capital leases, net
117.8

 
114.7

Goodwill
577.1

 
582.3

Other assets
270.9

 
282.5

Long-term assets held for sale

 
27.7

 
$
3,518.3

 
$
3,596.6

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
852.6

 
$
921.3

Current liabilities held for sale
131.8

 
108.8

Subordinated notes payable to parent

 
1.5

Long-term debt
1,215.7

 
1,221.8

Other liabilities
206.2

 
212.2

Long-term liabilities held for sale

 
0.2

Stockholder’s equity
1,112.0

 
1,130.8

 
$
3,518.3

 
$
3,596.6



ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
  
 
Three Months Ended
 
April 3,
2015
 
April 4,
2014
(In millions)
 
 
As Adjusted
(see Note 2)
Net sales
$
1,385.1

 
$
1,274.3

Operating income
$
60.8

 
$
71.3

Income from continuing operations before income taxes
$
42.4

 
$
51.3

Net (loss) income from discontinued operations
$
(7.4
)
 
$
9.7

Net income
$
20.0

 
$
48.2

Comprehensive (loss) income
$
(20.2
)
 
$
41.6

STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
At the end of the first 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.
During the three months ended April 3, 2015, we granted 178,576 stock units to employees, with a weighted-average grant-date fair value of $14.1 million. During the three months ended April 3, 2015, we granted directors 6,745 stock units, with a weighted-average grant-date fair value of $0.5 million, respectively. We exclude antidilutive stock options and units from the calculation of weighted-average shares for diluted earnings per share. For the first 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 April 3, 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 first 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 rebilled 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. 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 April 3, 2015 and April 4, 2014 are as follows:

(In millions)
 
First Quarter of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
915.8

 
$
469.3

 
$

 
$
1,385.1

Operating income
$
36.3

 
$
26.2

 
$
(3.2
)
 
$
59.3

First Quarter of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
776.8

 
$
497.5

 
$

 
$
1,274.3

Operating income
$
37.6

 
$
35.3

 
$
(2.9
)
 
$
70.0

 
 
Goodwill Assigned to Segments
The following table presents the changes in goodwill allocated to our reportable segments during the three months ended April 3, 2015:
(In millions)
ECS
 
W&C
 
Total
Balance at January 2, 2015
$
403.4

 
$
178.9

 
$
582.3

Foreign currency translation
(4.4
)
 
(0.8
)
 
(5.2
)
Balance at April 3, 2015
$
399.0

 
$
178.1

 
$
577.1



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.

Recently issued accounting pronouncements not yet adopted: On April 15, 2015, the FASB issued ASU 2015-04, 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 financial statements.

On April 7, 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 standard is effective for our financial statements issued for 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 this standard is not expected to have a material impact on our 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. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. Early adoption is not permitted. We are currently in the process of evaluating the transition methods and the impact of adoption of this ASU on our 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
(In millions)
 
April 3,
2015
 
April 4,
2014
Other, net:
 
 
 
 
    Foreign exchange
 
$
(3.6
)
 
$
(1.4
)
    Foreign exchange devaluations
 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
0.6

 
0.3

    Other
 
(0.3
)
 
(0.6
)
Total other, net
 
$
(4.0
)
 
$
(9.7
)

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 190.0 bolivars to one USD will be the rate available to us in the event we repatriate cash from Venezuela. As a result of this devaluation, 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 April 3, 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 April 3, 2015 and January 2, 2015, the gross notional amount of foreign currency forward contracts outstanding was approximately $213.4 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 April 3, 2015 and January 2, 2015, the net notional amount of the foreign currency forward contracts outstanding was approximately $98.6 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 (loss) income: We accumulated unrealized gains and losses in “Accumulated other comprehensive (loss) income ” (“AOCI”) which are also reported in "Other comprehensive loss" on the Condensed Consolidated Statement 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 6. "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 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
(In millions)
 
April 3,
2015
 
April 4,
2014
Other, net:
 
 
 
 
    Foreign exchange
 
$
(3.6
)
 
$
(1.4
)
    Foreign exchange devaluations
 
(0.7
)
 
(8.0
)
    Cash surrender value of life insurance policies
 
0.6

 
0.3

    Other
 
(0.3
)
 
(0.6
)
Total other, net
 
$
(4.0
)
 
$
(9.7
)
DISCONTINUED OPERATIONS (Tables)
The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statement of Comprehensive (Loss) Income:
 
 
 
(In millions)
 
April 3,
2015
 
April 4,
2014
Net sales
 
$
249.4

 
$
249.5

Operating income
 
$
11.9

 
$
15.7

Income from discontinued operations before income taxes
 
$
11.2

 
$
14.0

Income tax expense from discontinued operations
 
$
18.6

 
$
4.3

Net (loss) income from discontinued operations
 
$
(7.4
)
 
$
9.7

As reflected on our Condensed Consolidated Balance Sheets as of April 3, 2015 and January 2, 2015, the components of assets and liabilities of the Fasteners businesses classified as "Assets held for sale" and "Liabilities held for sale" are as follows:

(In millions)
 
April 3,
2015
 
January 2,
2015
Assets held for sale:
 
 
 
Accounts receivable
 
$
177.4

 
$
158.2

Inventories
 
208.5

 
213.8

Net property and equipment
 
16.8

 
16.8

Other assets
 
16.4

 
18.1

Total assets held for sale
 
$
419.1

 
$
406.9

 
 
 
 
 
Liabilities held for sale:
 
 
 
 
Accounts payable
 
$
114.0

 
$
92.8

Accrued expenses
 
17.6

 
16.0

Other liabilities
 
0.2

 
0.2

Total liabilities held for sale
 
$
131.8

 
$
109.0

The following represents the components of the results from discontinued operations as reflected in our Condensed Consolidated Statement of Cash Flows:
 
 
 
(In millions)
 
April 3,
2015
 
April 4,
2014
Depreciation
 
$
1.0

 
$
0.9

Amortization
 
$
0.3

 
$
0.3

Stock-based compensation
 
$
0.3

 
$
0.3

Capital expenditures
 
$
1.1

 
$
2.5

BUSINESS COMBINATION (Tables)
The following table sets forth the preliminary purchase price allocation, as of the acquisition date, for Tri-Ed. The purchase price allocation is preliminary pending finalization of the valuation of the acquired intangible assets and related deferred tax liabilities, which is expected to be completed in 2015.
(In millions)
 
 
 
Cash
 
 
$
11.6

Current assets, net
 
 
203.9

Property and equipment
 
 
2.7

Goodwill
 
 
243.4

Intangible assets
 
 
166.8

Current liabilities
 
 
(144.6
)
Non-current liabilities
 
 
(56.1
)
Total purchase price
 
 
$
427.7

The following table sets forth the components of preliminary 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
(In millions, except per share amounts)
April 4,
2014
Net sales
$
1,416.1

Net income from continuing operations
$
37.9

Income per share from continuing operations:
 
Basic
$
1.15

Diluted
$
1.14

DEBT (Tables)
Debt
Debt is summarized below:
(In millions)
April 3,
2015
 
January 2,
2015
Long-term debt:
 
Senior notes due 2021
$
394.4

 
$
394.2

Senior notes due 2019
346.1

 
345.9

Term loan
197.5

 
198.8

Accounts receivable securitization facility
190.0

 
65.0

Revolving lines of credit
70.0

 

Senior notes due 2015

 
200.0

Other
4.0

 
3.8

Total long-term debt
$
1,202.0

 
$
1,207.7

PENSION PLANS (Tables)
Components of Net Periodic Cost
Components of net periodic pension cost are as follows:
 
 
Three Months Ended
 
Domestic
 
Foreign
 
Total
(In millions)
April 3,
2015
 
April 4,
2014
 
April 3,
2015
 
April 4,
2014
 
April 3,
2015
 
April 4,
2014
Service cost
$
1.3

 
$
1.2

 
$
1.7

 
$
1.5

 
$
3.0

 
$
2.7

Interest cost
2.6

 
2.6

 
2.3

 
2.7

 
4.9

 
5.3

Expected return on plan assets
(3.5
)
 
(3.5
)
 
(2.6
)
 
(3.2
)
 
(6.1
)
 
(6.7
)
Net amortization (a)
0.4

 
(0.6
)
 
0.7

 
0.3

 
1.1

 
(0.3
)
Net periodic cost (benefit)
$
0.8

 
$
(0.3
)
 
$
2.1

 
$
1.3

 
$
2.9

 
$
1.0


(a) Reclassified into operating expenses from AOCI.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. (Tables)
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
 
April 3,
2015
 
January 2,
2015
(In millions)

 
As Adjusted
(see Note 2)
Assets:
 
 
 
Current assets
$
2,133.4

 
$
2,210.2

Current assets held for sale
419.1

 
379.2

Property, equipment and capital leases, net
117.8

 
114.7

Goodwill
577.1

 
582.3

Other assets
270.9

 
282.5

Long-term assets held for sale

 
27.7

 
$
3,518.3

 
$
3,596.6

Liabilities and Stockholder’s Equity:
 
 
 
Current liabilities
$
852.6

 
$
921.3

Current liabilities held for sale
131.8

 
108.8

Subordinated notes payable to parent

 
1.5

Long-term debt
1,215.7

 
1,221.8

Other liabilities
206.2

 
212.2

Long-term liabilities held for sale

 
0.2

Stockholder’s equity
1,112.0

 
1,130.8

 
$
3,518.3

 
$
3,596.6

ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
  
 
Three Months Ended
 
April 3,
2015
 
April 4,
2014
(In millions)
 
 
As Adjusted
(see Note 2)
Net sales
$
1,385.1

 
$
1,274.3

Operating income
$
60.8

 
$
71.3

Income from continuing operations before income taxes
$
42.4

 
$
51.3

Net (loss) income from discontinued operations
$
(7.4
)
 
$
9.7

Net income
$
20.0

 
$
48.2

Comprehensive (loss) income
$
(20.2
)
 
$
41.6

BUSINESS SEGMENTS (Tables)
Segment information for the three months ended April 3, 2015 and April 4, 2014 are as follows:

(In millions)
 
First Quarter of 2015
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
915.8

 
$
469.3

 
$

 
$
1,385.1

Operating income
$
36.3

 
$
26.2

 
$
(3.2
)
 
$
59.3

First Quarter of 2014 (As Adjusted, see Note 2)
ECS
 
W&C
 
Corporate
 
Total
Net sales
$
776.8

 
$
497.5

 
$

 
$
1,274.3

Operating income
$
37.6

 
$
35.3

 
$
(2.9
)
 
$
70.0

 
 
The following table presents the changes in goodwill allocated to our reportable segments during the three months ended April 3, 2015:
(In millions)
ECS
 
W&C
 
Total
Balance at January 2, 2015
$
403.4

 
$
178.9

 
$
582.3

Foreign currency translation
(4.4
)
 
(0.8
)
 
(5.2
)
Balance at April 3, 2015
$
399.0

 
$
178.1

 
$
577.1



SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 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
Apr. 3, 2015
Apr. 4, 2014
Summary of Components of Other Net Reflected in Consolidated Statements of Comprehensive Income [Abstract]
 
 
Foreign exchange
$ (3.6)
$ (1.4)
Foreign exchange devaluations
(0.7)
(8.0)
Cash surrender value of life insurance policies
0.6 
0.3 
Other
(0.3)
(0.6)
Total other, net
$ (4.0)
$ (9.7)
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Apr. 3, 2015
gross [Member]
Jan. 2, 2015
gross [Member]
Apr. 3, 2015
Net [Member]
Jan. 2, 2015
Net [Member]
Apr. 3, 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
 
 
 
 
 
 
190 
49.0 
8.0 
6.5 
Foreign exchange losses due to devaluation
$ 0.7 
$ 8.0 
 
 
 
 
 
 
 
 
Rate of foreign currency denominated accounts not hedged
100.00% 
 
 
 
 
 
 
 
 
 
Derivative, Notional Amount
 
 
$ 213.4 
$ 222.9 
$ 98.6 
$ 121.9 
 
 
 
 
DISCONTINUED OPERATIONS (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Discontinued Operations Additional Detail [Line Items]
 
 
Consideration for Discontinued Operations
$ 380.0 
 
Interest Expense Allocated to Discontinued Operation
$ 0.5 
$ 1.1 
DISCONTINUED OPERATIONS - Statement of operating income (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Discontinued Operations Income Statement [Line Items]
 
 
Net sales
$ 249.4 
$ 249.5 
Operating income
11.9 
15.7 
Income from discontinued operations before income taxes
11.2 
14.0 
Income tax expense from discontinued operations
18.6 
4.3 
Net (loss) income from discontinued operations
$ (7.4)
$ 9.7 
DISCONTINUED OPERATIONS - Balance sheet (Details) (USD $)
In Millions, unless otherwise specified
Apr. 3, 2015
Jan. 2, 2015
Discontinued Operations Balance Sheet [Line Items]
 
 
Accounts receivable
$ 177.4 
$ 158.2 
Inventories
208.5 
213.8 
Net property and equipment
16.8 
16.8 
Other assets
16.4 
18.1 
Total assets held for sale
419.1 
406.9 
Accounts payable
114.0 
92.8 
Accrued expenses
17.6 
16.0 
Other liabilities
0.2 
0.2 
Total liabilities held for sale
$ 131.8 
$ 109.0 
DISCONTINUED OPERATIONS - Cash flows (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Discontinued Operations Cash Flow [Line Items]
 
 
Depreciation
$ 1.0 
$ 0.9 
Amortization
0.3 
0.3 
Stock-based compensation
0.3 
0.3 
Capital expenditures
$ 1.1 
$ 2.5 
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
243.4 
Finite and indefinite lived intangible assets
166.8 
Current liabilities
(144.6)
Non-current liabilities
(56.1)
Total purchase price
$ 427.7 
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 
Finite and indefinite lived intangible assets
166.8 
Customer Relationships [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
18 years 
Contractual Rights [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
21 years 
Tri-Ed trade name [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
4 years 
Noncompete Agreements [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
5 years 
Customer Relationships [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
11 years 
Noncompete Agreements [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life
4 years 
Customer Relationships [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Finite-lived Intangible Assets
120.6 
Contractual Rights [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Finite-lived Intangible Assets
23.2 
Tri-Ed trade name [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Finite-lived Intangible Assets
9.2 
Noncompete Agreements [Member]
 
ScheduleOfAcquiredFiniteAndIndefiniteLivedIntangibleAssetsByMajorClass [Line Items]
 
Finite-lived Intangible Assets
$ 3.2 
BUSINESS AQUISITION, PRO FORMA (Details) (USD $)
In Millions, except Per Share data, unless otherwise specified
3 Months Ended
Apr. 4, 2014
Business Acquisition, Pro Forma Information, Nonrecurring Adjustment [Line Items]
 
Net sales
$ 1,416.1 
Net income from continuing operations
$ 37.9 
Basic net income per share
$ 1.15 
Diluted net income per share
$ 1.14 
Business Combination - Additional information (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 12 Months Ended
Apr. 3, 2015
Jan. 2, 2015
Business Acquisition [Line Items]
 
 
Business Acquisition, Percentage of Voting Interests Acquired
 
100.00% 
Payments to Acquire Businesses, Net of Cash Acquired
 
$ 418.4 
Cash
 
11.6 
Favorable net asset adjustment
 
2.3 
Business Acquisition, Goodwill, Expected Tax Deductible Amount
 
12.2 
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual
150.9 
 
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual
5.5 
 
Long-term Debt [Member]
 
 
Business Acquisition [Line Items]
 
 
Long-term Debt, Gross
 
200.0 
Senior notes due 2021 [Member]
 
 
Business Acquisition [Line Items]
 
 
Long-term Debt, Gross
 
$ 400.0 
INCOME TAXES - Additional information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Income Tax Disclosure [Abstract]
 
 
Income tax provision
$ 14.6 
$ 12.5 
Income Loss From Continuing Operations Tax Benefit Related To Reversal Of Valuation Allowance
4.9 
 
Effective income tax rate
35.60% 
24.90% 
Taxes Resulting From Repatriation of Foreign Earnings
$ 15.2 
 
DEBT- Debt (Detail) (USD $)
In Millions, unless otherwise specified
Apr. 3, 2015
Jan. 2, 2015
Debt Instrument [Line Items]
 
 
Long-term debt
$ 1,202.0 
$ 1,207.7 
Senior notes due 2021 [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
394.4 
394.2 
Senior notes due 2019 [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
346.1 
345.9 
Long-term Debt [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
197.5 
198.8 
Accounts receivable securitization facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
190.0 
65.0 
Revolving Credit Facility [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
70.0 
Senior Notes Due 2015 [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
200.0 
Other debt [Member]
 
 
Debt Instrument [Line Items]
 
 
Long-term debt
$ 4.0 
$ 3.8 
DEBT - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Jan. 2, 2015
Debt Instrument [Line Items]
 
 
 
Long-term debt
$ 1,202.0 
 
$ 1,207.7 
Long-term debt, fair value
1,251.1 
 
1,243.8 
Weighted average cost of borrowings
4.60% 
4.80% 
 
Receivables Sold
480.7 
 
548.5 
Line of credit facility maximum borrowing capacity
300 
 
 
Senior Notes Due 2015 [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Long-term debt
 
200.0 
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate
6.00% 
 
 
Retirement of Debt
200.0 
 
Senior Notes Due Twenty Fourteen [Member]
 
 
 
Debt Instrument [Line Items]
 
 
 
Long-term Debt, Percentage Bearing Fixed Interest, Percentage Rate
10.00% 
 
 
Retirement of Debt
$ 0 
$ 32.3 
 
PENSION PLANS - Additional Information (Detail)
General discussion of pension and other postretirement benefits
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.
PENSION PLANS - Components of Net Periodic Cost (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Defined Benefit Plan Disclosure [Line Items]
 
 
Service cost
$ 3.0 
$ 2.7 
Interest cost
4.9 
5.3 
Expected return on plan assets
(6.1)
(6.7)
Net amortization
1.1 1
(0.3)1
Net periodic cost
2.9 
1.0 
Pension Plans, Domestic [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Service cost
1.3 
1.2 
Interest cost
2.6 
2.6 
Expected return on plan assets
(3.5)
(3.5)
Net amortization
0.4 1
(0.6)1
Net periodic cost
0.8 
(0.3)
Pension Plans, Foreign [Member]
 
 
Defined Benefit Plan Disclosure [Line Items]
 
 
Service cost
1.7 
1.5 
Interest cost
2.3 
2.7 
Expected return on plan assets
(2.6)
(3.2)
Net amortization
0.7 1
0.3 1
Net periodic cost
$ 2.1 
$ 1.3 
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. - Additional Information (Detail)
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 consolidated Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc.:
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED BALANCE SHEETS (Details) (USD $)
In Millions, unless otherwise specified
Apr. 3, 2015
Jan. 2, 2015
Assets:
 
 
Current assets
$ 2,553.6 
$ 2,589.8 
Current assets held for sale
419.1 
379.2 
Property, equipment and capital leases, net
107.6 
104.2 
Goodwill
577.1 
582.3 
Other assets
270.9 
282.5 
Long-term assets held for sale
27.7 
Total assets
3,509.2 
3,586.5 
Liabilities and Equity:
 
 
Current liabilities
984.0 
1,030.5 
Current liabilities held for sale
131.8 
108.8 
Long-term debt
1,202.0 
1,207.7 
Other liabilities
208.7 
215.1 
Long-term liabilities held for sale
0.2 
Stockholder's equity
1,114.5 
1,133.0 
Total liabilities and stockholders’ equity
3,509.2 
3,586.5 
Anixter Inc. [Member]
 
 
Assets:
 
 
Current assets
2,133.4 
2,210.2 
Current assets held for sale
419.1 
379.2 
Property, equipment and capital leases, net
117.8 
114.7 
Goodwill
577.1 
582.3 
Other assets
270.9 
282.5 
Long-term assets held for sale
27.7 
Total assets
3,518.3 
3,596.6 
Liabilities and Equity:
 
 
Current liabilities
852.6 
921.3 
Current liabilities held for sale
131.8 
108.8 
Subordinated notes payable to parent
1.5 
Long-term debt
1,215.7 
1,221.8 
Other liabilities
206.2 
212.2 
Long-term liabilities held for sale
0.2 
Stockholder's equity
1,112.0 
1,130.8 
Total liabilities and stockholders’ equity
$ 3,518.3 
$ 3,596.6 
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Condensed Financial Statements, Captions [Line Items]
 
 
Net sales
$ 1,385.1 
$ 1,274.3 
Operating income
59.3 
70.0 
Income from continuing operations before income taxes
41.1 
50.2 
Net (loss) income from discontinued operations
(7.4)
9.7 
Net income
19.1 
47.4 
Comprehensive income
(21.1)
40.8 
Anixter Inc. [Member]
 
 
Condensed Financial Statements, Captions [Line Items]
 
 
Net sales
1,385.1 
1,274.3 
Operating income
60.8 
71.3 
Income from continuing operations before income taxes
42.4 
51.3 
Net (loss) income from discontinued operations
(7.4)
9.7 
Net income
20.0 
48.2 
Comprehensive income
$ (20.2)
$ 41.6 
STOCKHOLDERS' EQUITY - Additional Information (Detail) (USD $)
In Millions, except Share data, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of shares reserved for issuance under various incentive plans
1,700,000 
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] |
Restricted Stock Units (RSUs) [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Vesting period over which fair value is amortized
3 years 
Maximum [Member] |
Restricted Stock Units (RSUs) [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
178,576 
Weighted-average grant-date fair value
$ 14.1 
Director Stock Units [Member]
 
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
 
Number of stock units granted
6,745 
Weighted-average grant-date fair value
$ 0.5 
BUSINESS SEGMENTS - Segment Information (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Apr. 4, 2014
Segment Reporting Information [Line Items]
 
 
Net sales
$ 1,385.1 
$ 1,274.3 
Operating income
59.3 
70.0 
Enterprise Cabling And Security [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
915.8 
776.8 
Operating income
36.3 
37.6 
Wire And Cable [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
469.3 
497.5 
Operating income
26.2 
35.3 
Corporate Segment [Member]
 
 
Segment Reporting Information [Line Items]
 
 
Net sales
Operating income
$ (3.2)
$ (2.9)
BUSINESS SEGMENTS - Changes in Goodwill (Detail) (USD $)
In Millions, unless otherwise specified
3 Months Ended
Apr. 3, 2015
Goodwill [Roll Forward]
 
Balance at January 2, 2015
$ 582.3 
Foreign currency translation
(5.2)
Balance at April 3, 2015
577.1 
Enterprise Cabling And Security [Member]
 
Goodwill [Roll Forward]
 
Balance at January 2, 2015
403.4 
Foreign currency translation
(4.4)
Balance at April 3, 2015
399.0 
Wire And Cable [Member]
 
Goodwill [Roll Forward]
 
Balance at January 2, 2015
178.9 
Foreign currency translation
(0.8)
Balance at April 3, 2015
$ 178.1