ANIXTER INTERNATIONAL INC, 10-Q filed on 4/26/2018
Quarterly Report
v3.8.0.1
Document and Entity Information - shares
3 Months Ended
Mar. 30, 2018
Apr. 18, 2018
Entity Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Mar. 30, 2018  
Document Fiscal Year Focus 2018  
Document Fiscal Period Focus Q1  
Trading Symbol AXE  
Entity Registrant Name ANIXTER INTERNATIONAL INC  
Entity Central Index Key 0000052795  
Current Fiscal Year End Date --12-28  
Entity Filer Category Large Accelerated Filer  
Entity Common Stock, Shares Outstanding   33,435,196
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($)
shares in Millions, $ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Net sales $ 1,964.2 $ 1,895.8
Cost of goods sold 1,579.4 1,516.1
Gross profit 384.8 379.7
Operating expenses 323.2 310.8
Operating income 61.6 68.9
Other expense:    
Interest expense (18.2) (18.9)
Other, net 2.3 (0.1)
Income before income taxes 45.7 49.9
Income tax expense 13.6 19.0
Net income $ 32.1 $ 30.9
Income per share:    
Basic $ 0.95 $ 0.92
Diluted $ 0.94 $ 0.91
Basic weighted-average common shares outstanding 33.7 33.5
Effect of dilutive securities:    
Stock options and units 0.4 0.4
Diluted weighted-average common shares outstanding 34.1 33.9
Net income $ 32.1 $ 30.9
Other comprehensive (loss) income:    
Foreign currency translation (3.5) 14.2
Changes in unrealized pension cost, net of tax 0.5 0.8
Other comprehensive (loss) income (3.0) 15.0
Comprehensive income $ 29.1 $ 45.9
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Millions
Mar. 30, 2018
Dec. 29, 2017
Current assets:    
Cash and cash equivalents $ 78.7 $ 116.0
Accounts receivable, net 1,476.3 1,434.2
Inventories 1,270.6 1,238.7
Other current assets 42.9 44.9
Total current assets 2,868.5 2,833.8
Property and equipment, at cost 385.5 376.9
Accumulated depreciation (228.3) (222.6)
Property and equipment, net 157.2 154.3
Goodwill 773.6 778.1
Intangible assets, net 367.8 378.8
Other assets 110.2 107.2
Total assets 4,277.3 4,252.2
Current liabilities:    
Accounts payable 1,044.0 1,081.6
Accrued expenses 254.9 269.2
Total current liabilities 1,298.9 1,350.8
Long-term debt 1,286.1 1,247.9
Other liabilities 200.4 194.5
Total liabilities 2,785.4 2,793.2
Stockholders’ equity:    
Common stock - $1.00 par value, 100,000,000 shares authorized, 33,803,463 and 33,657,466 shares issued and outstanding at March 30, 2018 and December 29, 2017, respectively 33.8 33.7
Capital surplus 282.4 278.7
Retained earnings 1,389.0 1,356.9
Accumulated other comprehensive loss:    
Foreign currency translation (126.7) (123.2)
Unrecognized pension liability, net (86.6) (87.1)
Total accumulated other comprehensive loss (213.3) (210.3)
Total stockholders’ equity 1,491.9 1,459.0
Total liabilities and stockholders’ equity $ 4,277.3 $ 4,252.2
v3.8.0.1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Mar. 30, 2018
Dec. 29, 2017
Common stock, par value $ 1.00 $ 1.00
Common stock, shares authorized 100,000,000.00 100,000,000.00
Common stock, shares issued 33,803,463 33,657,466
Common stock, shares outstanding 33,803,463 33,657,466
v3.8.0.1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Operating activities:    
Net income $ 32.1 $ 30.9
Adjustments to reconcile net income to net cash (used in) provided by operating activities:    
Depreciation 7.4 7.0
Amortization of intangible assets 9.3 9.0
Stock-based compensation 4.6 4.5
Deferred income taxes 0.4 0.4
Accretion of debt discount 0.6 0.5
Amortization of deferred financing costs 0.4 0.5
Pension plan contributions (2.3) (4.5)
Pension plan expenses 1.2 2.6
Changes in current assets and liabilities, net (124.9) 1.8
Other, net 0.0 1.2
Net cash (used in) provided by operating activities (71.2) 51.5
Investing activities:    
Capital expenditures, net (10.9) (8.6)
Other 4.1 0.0
Net cash used in investing activities (6.8) (8.6)
Financing activities:    
Proceeds from borrowings 531.3 435.0
Repayments of borrowings (493.0) (463.6)
Repayments of Canadian term loan 0.0 (15.0)
Proceeds from stock options exercised 0.8 1.8
Other, net 0.0 (0.2)
Net cash provided by (used in) financing activities 39.1 (42.0)
(Decrease) increase in cash and cash equivalents (38.9) 0.9
Effect of exchange rate changes on cash balances 1.6 2.2
Cash and cash equivalents at beginning of period 116.0 115.1
Cash and cash equivalents at end of period $ 78.7 $ 118.2
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
3 Months Ended
Mar. 30, 2018
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation: The unaudited interim Condensed Consolidated Financial Statements of Anixter International Inc. and its subsidiaries (collectively referred to as "Anixter" or the "Company"), sometimes referred to in this Quarterly Report on Form 10-Q as "we", "our", "us", or "ourselves" have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. Certain prior period amounts have been reclassified to conform to the current year presentation.
These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Anixter's Annual Report on Form 10-K for the year ended December 29, 2017 ("2017 Form 10-K"). 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.
The Company maintains its financial records on the basis of a fiscal year ending on the Friday nearest December 31, with the fiscal quarters spanning thirteen weeks, with the first quarter ending on the Friday of the first thirteen-week period. The first quarter of fiscal year 2018 ended on March 30, 2018, and the first quarter of fiscal year 2017 ended on March 31, 2017.
Recently issued and adopted accounting pronouncements: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively. The core principle of this new revenue recognition guidance is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance defines a five-step process to achieve this core principle. The new guidance 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 new guidance provides for two transition methods, a full retrospective approach and a modified retrospective approach. Anixter adopted the new revenue recognition guidance on December 30, 2017 utilizing the modified retrospective method of adoption for contracts not completed at the adoption date, and determined there were no changes required to its reported revenues as a result of the adoption. The Company has enhanced its disclosures of revenue to comply with the new guidance.
In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard as of the first quarter of fiscal year 2018 and will consider this guidance if a transaction should occur after this adoption date.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires entities to report the service cost component in the same line item as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Upon adoption, ASU 2017-07 required changes to the presentation of the income statement to be applied retrospectively. The Company adopted this standard effective the first quarter of fiscal year 2018. Service costs are recognized within "Operating expenses" in the Condensed Consolidated Statement of Comprehensive Income. All other components of net benefit costs are recorded in "Other, net" in the Company's Condensed Consolidated Statement of Comprehensive Income. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 was applied prospectively to awards modified on or after the adoption date. The standard was effective for Anixter’s financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2018. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.
Recently issued accounting pronouncements not yet adopted: In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company anticipates adopting the new lease guidance in the first quarter of its fiscal year 2019. The Company has established an implementation team, and is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of this ASU, but it is not expected to have a material effect on the Company's Condensed Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently assessing the impact the adoption of this ASU will have on its methodology for evaluating goodwill for impairment subsequent to adoption of this standard.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the "Act") that are stranded in accumulated other comprehensive income. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.
The Company does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its Condensed Consolidated Financial Statements or disclosures.
Revenue recognition: Anixter is a leading global distributor of network and security solutions, electrical and electronic solutions and utility power solutions. Through a global distribution network along with supply chain and technical expertise, Anixter helps customers reduce the risk, cost and complexity of their supply chains. Anixter is a leader in providing advanced inventory management services including procurement, just-in-time delivery, material management programs, turn-key yard layout and management, quality assurance testing, advisory engineering services, component kit production, storm/event kitting, small component assembly and e-commerce and electronic data interchange to a broad spectrum of customers with over 600,000 products. From enterprise networks to industrial MRO supply to video surveillance applications to electric power distribution, Anixter offers full-line solutions, and intelligence, that create reliable, resilient systems that sustain businesses and communities. Our revenue arrangements primarily consist of a single performance obligation to transfer promised goods or services. See Note 7. "Business Segments" for revenue disaggregated by geography.
Sales to customers and related cost of sales are primarily recognized at the point in time when transfer of control of goods transfers to the customer. For product sales, this generally occurs upon shipment of the products, however, this may occur at a later date depending on the agreed upon sales terms, such as delivery at the customer's designated location, or based on consignment terms. In instances where goods are not in stock and delivery times are critical, product is purchased from the manufacturer and drop-shipped to the customer. Anixter generally takes control of the goods when shipped by the manufacturer and then recognizes revenue when control of the product transfers to the customer. When providing services, sales are recognized over time as control transfers to the customer, which occurs as services are rendered.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company estimates different forms of variable consideration at the time of sale based on historical experience, current conditions and contractual obligations. Revenue is recorded net of customer discounts, rebates and similar charges. When Anixter offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue. The Company has elected to treat shipping and handling as a fulfillment activity. The practical expedient not to disclose information about remaining performance obligations has also been elected as these contacts have an original duration of one year or less or are contracts where the Company has applied the practical expedient to recognize service revenue in proportion to the amount Anixter has the right to invoice. The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation.
At December 29, 2017$9.5 million of deferred revenue related to outstanding contracts was reported in "Accrued expenses" in the Company's Consolidated Balance Sheet. This balance primarily represents prepayments from customers. During the three months ended March 30, 2018, $4.3 million of this deferred revenue was recognized. At March 30, 2018, deferred revenue was $11.6 million. The Company expects to recognize this balance as revenue within the next twelve months.
Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive Income:
 
 
Three Months Ended
(In millions)
 
March 30,
2018
 
March 31,
2017
Other, net:
 
 
 
 
Foreign exchange
 
$
0.2

 
$
(0.7
)
Cash surrender value of life insurance policies
 
(0.6
)
 
0.6

Net periodic pension benefit
 
1.6

 
0.1

Other
 
1.1

 
(0.1
)
Total other, net
 
$
2.3

 
$
(0.1
)

Several of Anixter's 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 Income.
The Company purchases foreign currency forward contracts to minimize the effect of fluctuating foreign currency-denominated accounts on its reported income. The foreign currency forward contracts are not designated as hedges for accounting purposes. The Company's strategy is to negotiate terms for its 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). Its counterparties to foreign currency forward contracts have investment-grade credit ratings. Anixter expects the creditworthiness of its counterparties to remain intact through the term of the transactions. The Company regularly monitors the creditworthiness of its counterparties to ensure no issues exist which could affect the value of the derivatives.
The Company does not hedge 100% of its 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 March 30, 2018 and December 29, 2017, foreign currency forward contracts were revalued at then-current foreign exchange rates with the changes in valuation reflected directly in "Other, net" in the Condensed Consolidated Statements of Comprehensive Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At March 30, 2018 and December 29, 2017, the gross notional amount of the foreign currency forward contracts outstanding was approximately $215.7 million and $246.3 million, respectively. At March 30, 2018 and December 29, 2017, the net notional amount of the foreign currency forward contracts outstanding was approximately $116.3 million and $125.7 million, respectively. While all of the Company's foreign currency forward contracts are subject to master netting arrangements with its counterparties, assets and liabilities related to derivative instruments are presented on a gross basis within the Condensed Consolidated Balance Sheets. The gross fair value of derivative assets and liabilities are immaterial.
The combined effect of changes in both the equity and bond markets resulted in changes in the cash surrender value of the Company's company owned life insurance policies associated with the sponsored deferred compensation program.
Accumulated other comprehensive loss: Unrealized gains and losses are accumulated in "Accumulated other comprehensive loss" ("AOCI"). These changes are also reported in "Other comprehensive (loss) income" on the Condensed Consolidated Statements of Comprehensive Income. These include unrealized gains and losses related to the Company's defined benefit obligations and foreign currency translation. See Note 5. "Pension Plans" for pension related amounts reclassified into net income.
Investments in several subsidiaries are recorded in currencies other than the U.S. dollar ("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 Anixter's 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.
v3.8.0.1
DEBT
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
DEBT
DEBT
Debt is summarized below:
(In millions)
 
March 30,
2018
 
December 29,
2017
Long-term debt:
 
 
 
 
5.50% Senior notes due 2023
 
$
346.9

 
$
346.8

5.125% Senior notes due 2021
 
396.7

 
396.5

5.625% Senior notes due 2019
 
348.9

 
348.6

Revolving lines of credit
 
196.3

 
159.0

Other
 
1.6

 
1.7

Unamortized deferred financing costs
 
(4.3
)
 
(4.7
)
Total long-term debt
 
$
1,286.1

 
$
1,247.9


 
Fair Value of Debt
The fair value of Anixter's debt instruments is measured using observable market information which would be considered Level 2 in the fair value hierarchy described in accounting guidance on fair value measurements. The Company's fixed-rate debt consists of Senior notes due 2023, Senior notes due 2021 and Senior notes due 2019.
 
At March 30, 2018, the Company's total carrying value and estimated fair value of debt outstanding was $1,286.1 million and $1,328.3 million, respectively. This compares to a carrying value and estimated fair value of debt outstanding at December 29, 2017 of $1,247.9 million and $1,317.8 million, respectively. The increase in the carrying value and estimated fair value is primarily due to higher outstanding borrowings under Anixter's revolving lines of credit.
v3.8.0.1
LEGAL CONTINGENCIES
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
LEGAL CONTINGENCIES
LEGAL CONTINGENCIES
From time to time, Anixter is party to legal proceedings and matters that arise in the ordinary course of business. As of March 30, 2018, the Company does 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, the Company's 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.
v3.8.0.1
INCOME TAXES
3 Months Ended
Mar. 30, 2018
INCOME TAXES
 INCOME TAXES
The Company's effective tax rate for the first quarter of 2018 was 29.7% compared to 38.1% in the prior year period. The decrease was primarily due to a favorable tax impact from the December 22, 2017 Tax Cuts and Jobs Act (the "Act"). Under the Act, the statutory U.S. federal tax rate was reduced from 35% to 21% effective January 1, 2018. The benefit from this rate reduction was partially offset by other newly enacted tax provisions.
In the fourth quarter of 2017, the Company recorded a provisional $50.0 million one-time transition tax. At March 30, 2018, the Company has not completed its accounting for the tax effects of the Act and has not made adjustments to the provisional amount recorded.
The Act subjects U.S. shareholders to tax on Global Intangible Low-Taxed Income (“GILTI”) earned by certain foreign subsidiaries. The Company is electing to recognize the tax on GILTI as a period expense in the period the tax is incurred. Under this policy, the Company has not provided deferred taxes related to temporary differences that upon their reversal will affect the amount of income subject to GILTI in the period.
Anixter considers the undistributed earnings of its foreign subsidiaries to be indefinitely reinvested, and accordingly, no provision for any withholding taxes has been recorded. Upon distribution of those earnings in the form of dividends or otherwise, Anixter may be subject to withholding taxes payable to the various foreign countries.
v3.8.0.1
PENSION PLANS
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
PENSION PLANS
PENSION PLANS
The Company's defined benefit pension plans are the plans in the U.S., 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 these defined benefit pension plans are non-contributory and, with the exception of the U.S., 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. The Company's policy is to fund all Domestic Plans as required by the Employee Retirement Income Security Act of 1974 ("ERISA") and the 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 (benefit) cost are as follows:
 
 
Three Months Ended
 
 
Domestic Plans
 
Foreign Plans
 
Total
(In millions)
 
March 30, 2018
 
March 31, 2017
 
March 30, 2018
 
March 31, 2017
 
March 30, 2018
 
March 31, 2017
Recorded in operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
1.2

 
$
1.2

 
$
1.6

 
$
1.5

 
$
2.8

 
$
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded in other, net:
 
 
 
 
 
 
 
 
 
 
 
 
Interest cost
 
$
2.6

 
$
2.8

 
$
1.7

 
$
1.7

 
$
4.3

 
$
4.5

Expected return on plan assets
 
(4.3
)
 
(3.7
)
 
(2.5
)
 
(2.2
)
 
(6.8
)
 
(5.9
)
Net amortization (a)
 
0.1

 
0.5

 
0.8

 
0.8

 
0.9

 
1.3

Total recorded in other, net
 
$
(1.6
)
 
$
(0.4
)
 
$

 
$
0.3

 
$
(1.6
)
 
$
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net periodic pension (benefit) cost
 
$
(0.4
)
 
$
0.8

 
$
1.6

 
$
1.8

 
$
1.2

 
$
2.6


(a) Reclassified from AOCI.
v3.8.0.1
STOCKHOLDERS' EQUITY
3 Months Ended
Mar. 30, 2018
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY
At the end of the first quarter of 2018, there were 1.7 million shares reserved for issuance under the 2017 Stock Incentive Plan. Under such plan, the Company pays 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 units is amortized over the respective vesting period representing the requisite service period, generally three, four or six years. Director stock units are expensed in the period in which they are granted, as these vest immediately. The employee performance-based restricted stock units ("performance units") are issued on the third anniversary of the grant date based on the Company's total shareholder return ("TSR") relative to the TSR of the S&P Mid Cap 400 index. The fair value of each performance unit tranche is estimated using the Monte Carlo Simulation pricing model at the date of grant.
During the three months ended March 30, 2018, the Company granted 182,738 stock units to employees, with a weighted-average grant-date fair value of $13.7 million. During the three months ended March 30, 2018, the Company granted 35,868 performance units to employees, with a weighted-average grant-date fair value of $3.0 million. During the three months ended March 30, 2018, the Company granted directors 8,106 stock units, with a weighted-average grant-date fair value of $0.6 million. Antidilutive stock options and units are excluded from the calculation of weighted-average shares for diluted earnings per share. For the first quarter of 2018 and 2017, the antidilutive stock options and units were immaterial.
v3.8.0.1
BUSINESS SEGMENTS
3 Months Ended
Mar. 30, 2018
BUSINESS SEGMENTS
BUSINESS SEGMENTS
Anixter is a leading distributor of enterprise cabling and security solutions, electrical and electronic wire and cable solutions and utility power solutions. The Company has identified Network & Security Solutions ("NSS"), Electrical & Electronic Solutions ("EES") and Utility Power Solutions ("UPS") as reportable segments.
Corporate expenses are incurred to obtain and coordinate financing, tax, information technology, legal and other related services, certain of which were rebilled to subsidiaries. The Company also has various corporate assets which are reported in corporate. Segment assets may not include jointly used 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.
The categorization of net sales by end market is determined using a variety of data points including the technical characteristic of the product, the "sold to" customer information, the "ship to" customer information and the end customer product or application into which product will be incorporated. Anixter also has largely specialized its sales organization by segment. As data systems for capturing and tracking this data evolve and improve, the categorization of products by end market can vary over time. When this occurs, the Company reclassifies net sales by end market for prior periods. Such reclassifications typically do not materially change the sizing of, or the underlying trends of results within, each end market.
Segment Financial Information
Segment information for the three months ended March 30, 2018 and March 31, 2017 are as follows:
(in millions)
 
 
 
 
 
 
 
 
 
 
First Quarter of 2018
 
NSS
 
EES
 
UPS
 
Corporate
 
Total
Net Sales
 
$
994.8

 
$
568.4

 
$
401.0

 
$

 
$
1,964.2

Operating income
 
53.5

 
31.4

 
16.4

 
(39.7
)
 
61.6

First Quarter of 2017
 
NSS
 
EES
 
UPS
 
Corporate
 
Total
Net Sales
 
$
984.9

 
$
527.4

 
$
383.5

 
$

 
$
1,895.8

Operating income
 
61.8

 
27.9

 
16.2

 
(37.0
)
 
68.9


 
Geographic Information

The following table summarizes net sales by geographic areas for the three months ended March 30, 2018 and March 31, 2017:
 
 
Three Months Ended
(In millions)
 
March 30, 2018
 
March 31, 2017
Net sales
 
 
 
 
North America
 
$
1,612.4

 
$
1,567.7

EMEA
 
168.6

 
155.4

Emerging Markets
 
183.2

 
172.7

Total net sales
 
$
1,964.2

 
$
1,895.8



Goodwill Assigned to Segments
The following table presents the changes in goodwill allocated to the Company's reporting units during the three months ended March 30, 2018:
(In millions)
 
NSS
 
EES
 
UPS
 
Total
Balance as of December 29, 2017
 
$
408.8

 
$
181.7

 
$
187.6

 
$
778.1

Foreign currency translation
 
(1.3
)
 
(0.3
)
 
(2.9
)
 
(4.5
)
Balance as of March 30, 2018
 
$
407.5

 
$
181.4

 
$
184.7

 
$
773.6

v3.8.0.1
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC.
Anixter International Inc. guarantees, fully and unconditionally, substantially all of the debt of its subsidiaries, which include Anixter Inc., its 100% owned primary operating subsidiary. Anixter International Inc. has no independent assets or operations and all subsidiaries other than Anixter Inc. are minor. The following summarizes the financial information for Anixter Inc.:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)
 
March 30,
2018
 
December 29,
2017
Assets:
 
 
 
 
Current assets
 
$
2,866.9

 
$
2,833.5

Property, equipment and capital leases, net
 
163.9

 
161.3

Goodwill
 
773.6

 
778.1

Intangible assets, net
 
367.8

 
378.8

Other assets
 
110.2

 
107.2

 
 
$
4,282.4

 
$
4,258.9

Liabilities and Stockholders' Equity:
 
 
 
 
Current liabilities
 
$
1,300.1

 
$
1,351.9

Long-term debt
 
1,295.4

 
1,257.7

Other liabilities
 
201.4

 
192.9

Stockholder’s equity
 
1,485.5

 
1,456.4

 
 
$
4,282.4

 
$
4,258.9


ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
 
 
Three Months Ended
 (In millions)
 
March 30,
2018
 
March 31,
2017
Net sales
 
$
1,964.2

 
$
1,895.8

Operating income
 
$
63.2

 
$
70.5

Income before income taxes
 
$
47.1

 
$
51.3

Net income
 
$
33.5

 
$
31.7

Comprehensive income
 
$
30.5

 
$
46.7

v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
3 Months Ended
Mar. 30, 2018
Basis of presentation
Basis of presentation: The unaudited interim Condensed Consolidated Financial Statements of Anixter International Inc. and its subsidiaries (collectively referred to as "Anixter" or the "Company"), sometimes referred to in this Quarterly Report on Form 10-Q as "we", "our", "us", or "ourselves" have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC"). Therefore, certain information and disclosures normally included in financial statements and related notes prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") have been condensed or omitted. Certain prior period amounts have been reclassified to conform to the current year presentation.
These financial statements should be read in conjunction with, and have been prepared in conformity with, the accounting principles reflected in the consolidated financial statements and related notes included in Anixter's Annual Report on Form 10-K for the year ended December 29, 2017 ("2017 Form 10-K"). 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.
The Company maintains its financial records on the basis of a fiscal year ending on the Friday nearest December 31, with the fiscal quarters spanning thirteen weeks, with the first quarter ending on the Friday of the first thirteen-week period. The first quarter of fiscal year 2018 ended on March 30, 2018, and the first quarter of fiscal year 2017 ended on March 31, 2017.
Recently issued and adopted accounting pronouncements
Recently issued and adopted accounting pronouncements: In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers, and issued subsequent amendments to the initial guidance in August 2015, March 2016, April 2016, May 2016 and December 2016 within ASU 2015-14, ASU 2016-08, ASU 2016-10, ASU 2016-12 and ASU 2016-20, respectively. The core principle of this new revenue recognition guidance is that a company will recognize revenue when promised goods or services are transferred to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The new guidance defines a five-step process to achieve this core principle. The new guidance 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 new guidance provides for two transition methods, a full retrospective approach and a modified retrospective approach. Anixter adopted the new revenue recognition guidance on December 30, 2017 utilizing the modified retrospective method of adoption for contracts not completed at the adoption date, and determined there were no changes required to its reported revenues as a result of the adoption. The Company has enhanced its disclosures of revenue to comply with the new guidance.
In January 2017, the FASB issued ASU 2017-01, Business Combinations: Clarifying the Definition of a Business, which adds guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions (or disposals) of assets or businesses. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard as of the first quarter of fiscal year 2018 and will consider this guidance if a transaction should occur after this adoption date.
In March 2017, the FASB issued ASU 2017-07, Compensation - Retirement Benefits: Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, which changes how employers that sponsor defined benefit pension or other postretirement benefit plans present the net periodic benefit cost in the income statement. The new guidance requires entities to report the service cost component in the same line item as other compensation costs. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component outside of income from operations. The standard was effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Upon adoption, ASU 2017-07 required changes to the presentation of the income statement to be applied retrospectively. The Company adopted this standard effective the first quarter of fiscal year 2018. Service costs are recognized within "Operating expenses" in the Condensed Consolidated Statement of Comprehensive Income. All other components of net benefit costs are recorded in "Other, net" in the Company's Condensed Consolidated Statement of Comprehensive Income. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.
In May 2017, the FASB issued ASU 2017-09, Compensation - Stock Compensation: Scope of Modification Accounting, which clarifies when changes to the terms or conditions of a share-based payment award must be accounted for as modifications. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award changes as a result of the change in terms or conditions. ASU 2017-09 was applied prospectively to awards modified on or after the adoption date. The standard was effective for Anixter’s financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company adopted this standard effective the first quarter of fiscal year 2018. The result of this adoption did not have a material impact on the Condensed Consolidated Financial Statements.
Recently issued accounting pronouncements not yet adopted
Recently issued accounting pronouncements not yet adopted: In February 2016, the FASB issued ASU 2016-02, Leases, which requires lessees to recognize assets and liabilities on the balance sheet for the rights and obligations created by all leases with terms of more than 12 months. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company anticipates adopting the new lease guidance in the first quarter of its fiscal year 2019. The Company has established an implementation team, and is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses, which requires the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable forecasts. The main objective of this ASU is to provide financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company is currently evaluating the impact of adoption of this ASU, but it is not expected to have a material effect on the Company's Condensed Consolidated Financial Statements.
In January 2017, the FASB issued ASU 2017-04, Intangibles - Goodwill and Other: Simplifying the Test for Goodwill Impairment, which removes step two from the goodwill impairment test. Step two measures a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. The new guidance requires an entity to perform its goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount, including goodwill. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently assessing the impact the adoption of this ASU will have on its methodology for evaluating goodwill for impairment subsequent to adoption of this standard.
In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which will allow a reclassification from accumulated other comprehensive income to retained earnings for the tax effects resulting from the December 22, 2017 enactment of the Tax Cuts and Jobs Act (the "Act") that are stranded in accumulated other comprehensive income. The standard is effective for Anixter's financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact of adoption of this ASU on its Condensed Consolidated Financial Statements.
The Company does not believe that any other recently issued, but not yet effective, accounting pronouncements, if adopted, would have a material impact on its Condensed Consolidated Financial Statements or disclosures.
Revenue recognition
Revenue recognition: Anixter is a leading global distributor of network and security solutions, electrical and electronic solutions and utility power solutions. Through a global distribution network along with supply chain and technical expertise, Anixter helps customers reduce the risk, cost and complexity of their supply chains. Anixter is a leader in providing advanced inventory management services including procurement, just-in-time delivery, material management programs, turn-key yard layout and management, quality assurance testing, advisory engineering services, component kit production, storm/event kitting, small component assembly and e-commerce and electronic data interchange to a broad spectrum of customers with over 600,000 products. From enterprise networks to industrial MRO supply to video surveillance applications to electric power distribution, Anixter offers full-line solutions, and intelligence, that create reliable, resilient systems that sustain businesses and communities. Our revenue arrangements primarily consist of a single performance obligation to transfer promised goods or services. See Note 7. "Business Segments" for revenue disaggregated by geography.
Sales to customers and related cost of sales are primarily recognized at the point in time when transfer of control of goods transfers to the customer. For product sales, this generally occurs upon shipment of the products, however, this may occur at a later date depending on the agreed upon sales terms, such as delivery at the customer's designated location, or based on consignment terms. In instances where goods are not in stock and delivery times are critical, product is purchased from the manufacturer and drop-shipped to the customer. Anixter generally takes control of the goods when shipped by the manufacturer and then recognizes revenue when control of the product transfers to the customer. When providing services, sales are recognized over time as control transfers to the customer, which occurs as services are rendered.
Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring goods or providing services. The Company estimates different forms of variable consideration at the time of sale based on historical experience, current conditions and contractual obligations. Revenue is recorded net of customer discounts, rebates and similar charges. When Anixter offers the right to return product, historical experience is utilized to establish a liability for the estimate of expected returns. Sales and other tax amounts collected from customers for remittance to governmental authorities are excluded from revenue. The Company has elected to treat shipping and handling as a fulfillment activity. The practical expedient not to disclose information about remaining performance obligations has also been elected as these contacts have an original duration of one year or less or are contracts where the Company has applied the practical expedient to recognize service revenue in proportion to the amount Anixter has the right to invoice. The Company typically receives payment 30 to 60 days from the point it has satisfied the related performance obligation.
At December 29, 2017$9.5 million of deferred revenue related to outstanding contracts was reported in "Accrued expenses" in the Company's Consolidated Balance Sheet. This balance primarily represents prepayments from customers. During the three months ended March 30, 2018, $4.3 million of this deferred revenue was recognized. At March 30, 2018, deferred revenue was $11.6 million. The Company expects to recognize this balance as revenue within the next twelve months.
Other, net
Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive Income:
 
 
Three Months Ended
(In millions)
 
March 30,
2018
 
March 31,
2017
Other, net:
 
 
 
 
Foreign exchange
 
$
0.2

 
$
(0.7
)
Cash surrender value of life insurance policies
 
(0.6
)
 
0.6

Net periodic pension benefit
 
1.6

 
0.1

Other
 
1.1

 
(0.1
)
Total other, net
 
$
2.3

 
$
(0.1
)

Several of Anixter's 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 Income.
The Company purchases foreign currency forward contracts to minimize the effect of fluctuating foreign currency-denominated accounts on its reported income. The foreign currency forward contracts are not designated as hedges for accounting purposes. The Company's strategy is to negotiate terms for its 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). Its counterparties to foreign currency forward contracts have investment-grade credit ratings. Anixter expects the creditworthiness of its counterparties to remain intact through the term of the transactions. The Company regularly monitors the creditworthiness of its counterparties to ensure no issues exist which could affect the value of the derivatives.
The Company does not hedge 100% of its 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 March 30, 2018 and December 29, 2017, foreign currency forward contracts were revalued at then-current foreign exchange rates with the changes in valuation reflected directly in "Other, net" in the Condensed Consolidated Statements of Comprehensive Income offsetting the transaction gain/loss recorded on the foreign currency-denominated accounts. At March 30, 2018 and December 29, 2017, the gross notional amount of the foreign currency forward contracts outstanding was approximately $215.7 million and $246.3 million, respectively. At March 30, 2018 and December 29, 2017, the net notional amount of the foreign currency forward contracts outstanding was approximately $116.3 million and $125.7 million, respectively. While all of the Company's foreign currency forward contracts are subject to master netting arrangements with its counterparties, assets and liabilities related to derivative instruments are presented on a gross basis within the Condensed Consolidated Balance Sheets. The gross fair value of derivative assets and liabilities are immaterial.
The combined effect of changes in both the equity and bond markets resulted in changes in the cash surrender value of the Company's company owned life insurance policies associated with the sponsored deferred compensation program.
Accumulated other comprehensive loss
Accumulated other comprehensive loss: Unrealized gains and losses are accumulated in "Accumulated other comprehensive loss" ("AOCI"). These changes are also reported in "Other comprehensive (loss) income" on the Condensed Consolidated Statements of Comprehensive Income. These include unrealized gains and losses related to the Company's defined benefit obligations and foreign currency translation. See Note 5. "Pension Plans" for pension related amounts reclassified into net income.
Investments in several subsidiaries are recorded in currencies other than the U.S. dollar ("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 Anixter's 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.
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
3 Months Ended
Mar. 30, 2018
Summary of Components of Other Net Reflected in Consolidated Statements of Operations
Other, net: The following represents the components of "Other, net" as reflected in the Condensed Consolidated Statements of Comprehensive Income:
 
 
Three Months Ended
(In millions)
 
March 30,
2018
 
March 31,
2017
Other, net:
 
 
 
 
Foreign exchange
 
$
0.2

 
$
(0.7
)
Cash surrender value of life insurance policies
 
(0.6
)
 
0.6

Net periodic pension benefit
 
1.6

 
0.1

Other
 
1.1

 
(0.1
)
Total other, net
 
$
2.3

 
$
(0.1
)
v3.8.0.1
DEBT (Tables)
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
Debt
Debt is summarized below:
(In millions)
 
March 30,
2018
 
December 29,
2017
Long-term debt:
 
 
 
 
5.50% Senior notes due 2023
 
$
346.9

 
$
346.8

5.125% Senior notes due 2021
 
396.7

 
396.5

5.625% Senior notes due 2019
 
348.9

 
348.6

Revolving lines of credit
 
196.3

 
159.0

Other
 
1.6

 
1.7

Unamortized deferred financing costs
 
(4.3
)
 
(4.7
)
Total long-term debt
 
$
1,286.1

 
$
1,247.9

v3.8.0.1
PENSION PLANS (Tables)
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
Components of Net Periodic Benefit Costs
:
 
 
Three Months Ended
 
 
Domestic Plans
 
Foreign Plans
 
Total
(In millions)
 
March 30, 2018
 
March 31, 2017
 
March 30, 2018
 
March 31, 2017
 
March 30, 2018
 
March 31, 2017
Recorded in operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
1.2

 
$
1.2

 
$
1.6

 
$
1.5

 
$
2.8

 
$
2.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Recorded in other, net:
 
 
 
 
 
 
 
 
 
 
 
 
Interest cost
 
$
2.6

 
$
2.8

 
$
1.7

 
$
1.7

 
$
4.3

 
$
4.5

Expected return on plan assets
 
(4.3
)
 
(3.7
)
 
(2.5
)
 
(2.2
)
 
(6.8
)
 
(5.9
)
Net amortization (a)
 
0.1

 
0.5

 
0.8

 
0.8

 
0.9

 
1.3

Total recorded in other, net
 
$
(1.6
)
 
$
(0.4
)
 
$

 
$
0.3

 
$
(1.6
)
 
$
(0.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net periodic pension (benefit) cost
 
$
(0.4
)
 
$
0.8

 
$
1.6

 
$
1.8

 
$
1.2

 
$
2.6


(a) Reclassified from AOCI.

v3.8.0.1
BUSINESS SEGMENTS (Tables)
3 Months Ended
Mar. 30, 2018
Segment Information
Segment information for the three months ended March 30, 2018 and March 31, 2017 are as follows:
(in millions)
 
 
 
 
 
 
 
 
 
 
First Quarter of 2018
 
NSS
 
EES
 
UPS
 
Corporate
 
Total
Net Sales
 
$
994.8

 
$
568.4

 
$
401.0

 
$

 
$
1,964.2

Operating income
 
53.5

 
31.4

 
16.4

 
(39.7
)
 
61.6

First Quarter of 2017
 
NSS
 
EES
 
UPS
 
Corporate
 
Total
Net Sales
 
$
984.9

 
$
527.4

 
$
383.5

 
$

 
$
1,895.8

Operating income
 
61.8

 
27.9

 
16.2

 
(37.0
)
 
68.9


Revenue from External Customers by Geographic Areas
Geographic Information

The following table summarizes net sales by geographic areas for the three months ended March 30, 2018 and March 31, 2017:
 
 
Three Months Ended
(In millions)
 
March 30, 2018
 
March 31, 2017
Net sales
 
 
 
 
North America
 
$
1,612.4

 
$
1,567.7

EMEA
 
168.6

 
155.4

Emerging Markets
 
183.2

 
172.7

Total net sales
 
$
1,964.2

 
$
1,895.8

Changes in Goodwill
The following table presents the changes in goodwill allocated to the Company's reporting units during the three months ended March 30, 2018:
(In millions)
 
NSS
 
EES
 
UPS
 
Total
Balance as of December 29, 2017
 
$
408.8

 
$
181.7

 
$
187.6

 
$
778.1

Foreign currency translation
 
(1.3
)
 
(0.3
)
 
(2.9
)
 
(4.5
)
Balance as of March 30, 2018
 
$
407.5

 
$
181.4

 
$
184.7

 
$
773.6



v3.8.0.1
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC. (Tables)
3 Months Ended
Mar. 30, 2018
Text Block [Abstract]  
CONDENSED CONSOLIDATED BALANCE SHEETS
The following summarizes the financial information for Anixter Inc.:
ANIXTER INC.
CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions)
 
March 30,
2018
 
December 29,
2017
Assets:
 
 
 
 
Current assets
 
$
2,866.9

 
$
2,833.5

Property, equipment and capital leases, net
 
163.9

 
161.3

Goodwill
 
773.6

 
778.1

Intangible assets, net
 
367.8

 
378.8

Other assets
 
110.2

 
107.2

 
 
$
4,282.4

 
$
4,258.9

Liabilities and Stockholders' Equity:
 
 
 
 
Current liabilities
 
$
1,300.1

 
$
1,351.9

Long-term debt
 
1,295.4

 
1,257.7

Other liabilities
 
201.4

 
192.9

Stockholder’s equity
 
1,485.5

 
1,456.4

 
 
$
4,282.4

 
$
4,258.9

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
ANIXTER INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
 
 
 
Three Months Ended
 (In millions)
 
March 30,
2018
 
March 31,
2017
Net sales
 
$
1,964.2

 
$
1,895.8

Operating income
 
$
63.2

 
$
70.5

Income before income taxes
 
$
47.1

 
$
51.3

Net income
 
$
33.5

 
$
31.7

Comprehensive income
 
$
30.5

 
$
46.7

v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Summary of Components of Other Net Reflected in Consolidated Statements of Operations (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Other, net:    
Foreign exchange $ 0.2 $ (0.7)
Cash surrender value of life insurance policies (0.6) 0.6
Net periodic pension benefit 1.6 0.1
Other 1.1 (0.1)
Total other, net $ 2.3 $ (0.1)
v3.8.0.1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Additional Information (Detail)
$ in Millions
3 Months Ended
Mar. 30, 2018
USD ($)
Dec. 29, 2017
USD ($)
Summary Of Significant Accounting Policies [Line Items]    
Number of products 600,000  
Deferred Revenue, Current $ 11.6 $ 9.5
Recognition of Deferred Revenue $ 4.3  
Rate Of Foreign Currency Denominated Accounts Not Hedged 100.00%  
Gross [Member]    
Summary Of Significant Accounting Policies [Line Items]    
Notional amount of foreign currency forward contracts $ 215.7 246.3
Net [Member]    
Summary Of Significant Accounting Policies [Line Items]    
Notional amount of foreign currency forward contracts $ 116.3 $ 125.7
Minimum [Member]    
Summary Of Significant Accounting Policies [Line Items]    
Number of days between performance obligation satisfaction and payment 30 days  
Maximum [Member]    
Summary Of Significant Accounting Policies [Line Items]    
Number of days between performance obligation satisfaction and payment 60 days  
v3.8.0.1
DEBT (Detail) - USD ($)
$ in Millions
Mar. 30, 2018
Dec. 29, 2017
Debt Instrument [Line Items]    
Long-term debt $ 1,286.1 $ 1,247.9
Unamortized deferred financing costs (4.3) (4.7)
5.50% Senior notes due 2023 [Domain]    
Debt Instrument [Line Items]    
Long-term debt 346.9 346.8
5.125% Senior notes due 2021 [Member]    
Debt Instrument [Line Items]    
Long-term debt 396.7 396.5
5.625% Senior notes due 2019 [Member]    
Debt Instrument [Line Items]    
Long-term debt 348.9 348.6
Revolving lines of credit    
Debt Instrument [Line Items]    
Long-term debt 196.3 159.0
Other [Member]    
Debt Instrument [Line Items]    
Long-term debt $ 1.6 $ 1.7
v3.8.0.1
DEBT - Additional Information (Detail) - USD ($)
$ in Millions
Mar. 30, 2018
Dec. 29, 2017
Disclosure Debt Additional Information [Abstract]    
Long-term debt $ 1,286.1 $ 1,247.9
Long-term Debt Fair Value $ 1,328.3 $ 1,317.8
v3.8.0.1
INCOME TAXES - Additional Information (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Dec. 29, 2017
Mar. 31, 2017
Disclosure Income Taxes Additional Information [Abstract]      
Effective tax rate 29.70%   38.10%
Statutory corporate federal tax rate 21.00% 35.00%  
Provisional one-time transition tax   $ 50.0  
v3.8.0.1
PENSION PLANS - Components of Net Periodic Pension Cost (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Components of net periodic pension (benefit) cost:    
Service cost $ 2.8 $ 2.7
Interest cost 4.3 4.5
Expected return on plan assets (6.8) (5.9)
Net amortization [1] 0.9 1.3
Total recorded in other, net (1.6) (0.1)
Total net periodic pension (benefit) cost 1.2 2.6
Domestic Plan [Member]    
Components of net periodic pension (benefit) cost:    
Service cost 1.2 1.2
Interest cost 2.6 2.8
Expected return on plan assets (4.3) (3.7)
Net amortization [1] 0.1 0.5
Total recorded in other, net (1.6) (0.4)
Total net periodic pension (benefit) cost (0.4) 0.8
Foreign Plan [Member]    
Components of net periodic pension (benefit) cost:    
Service cost 1.6 1.5
Interest cost 1.7 1.7
Expected return on plan assets (2.5) (2.2)
Net amortization [1] 0.8 0.8
Total recorded in other, net 0.0 0.3
Total net periodic pension (benefit) cost $ 1.6 $ 1.8
[1] Reclassified from AOCI.
v3.8.0.1
STOCKHOLDERS' EQUITY - Additional Information (Detail)
$ in Millions
3 Months Ended
Mar. 30, 2018
USD ($)
shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Number of shares available for grant 1,700,000
Restricted Stock Units (RSUs) [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 4 years
Shares granted 182,738
Fair value of shares granted | $ $ 13.7
Restricted Stock Units (RSUs) [Member] | Maximum [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 6 years
Restricted Stock Units (RSUs) [Member] | Minimum [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Award vesting period 3 years
Performance Restricted Stock Units [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares granted 35,868
Fair value of shares granted | $ $ 3.0
Director stock units [Member]  
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Shares granted 8,106
Fair value of shares granted | $ $ 0.6
v3.8.0.1
BUSINESS SEGMENTS - Segment Information (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Segment Reporting Information [Line Items]    
Net sales $ 1,964.2 $ 1,895.8
Operating income 61.6 68.9
Network and Security Solutions [Member]    
Segment Reporting Information [Line Items]    
Net sales 994.8 984.9
Operating income 53.5 61.8
Electrical and Electronic Solutions [Member]    
Segment Reporting Information [Line Items]    
Net sales 568.4 527.4
Operating income 31.4 27.9
Utility Power Solutions [Member]    
Segment Reporting Information [Line Items]    
Net sales 401.0 383.5
Operating income 16.4 16.2
Corporate [Member]    
Segment Reporting Information [Line Items]    
Net sales 0.0 0.0
Operating income $ (39.7) $ (37.0)
v3.8.0.1
BUSINESS SEGMENTS - Revenues from External Customers by Geographic Areas (Details) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Disaggregation of Revenue [Line Items]    
Net sales $ 1,964.2 $ 1,895.8
North America [Member]    
Disaggregation of Revenue [Line Items]    
Net sales 1,612.4 1,567.7
EMEA [Member]    
Disaggregation of Revenue [Line Items]    
Net sales 168.6 155.4
Emerging Markets [Member]    
Disaggregation of Revenue [Line Items]    
Net sales $ 183.2 $ 172.7
v3.8.0.1
BUSINESS SEGMENTS - Changes in Goodwill (Detail)
$ in Millions
3 Months Ended
Mar. 30, 2018
USD ($)
Goodwill [Roll Forward]  
Goodwill, Beginning Balance $ 778.1
Foreign currency translation (4.5)
Goodwill, Ending Balance 773.6
Network and Security Solutions [Member]  
Goodwill [Roll Forward]  
Goodwill, Beginning Balance 408.8
Foreign currency translation (1.3)
Goodwill, Ending Balance 407.5
Electrical and Electronic Solutions [Member]  
Goodwill [Roll Forward]  
Goodwill, Beginning Balance 181.7
Foreign currency translation (0.3)
Goodwill, Ending Balance 181.4
Utility Power Solutions [Member]  
Goodwill [Roll Forward]  
Goodwill, Beginning Balance 187.6
Foreign currency translation (2.9)
Goodwill, Ending Balance $ 184.7
v3.8.0.1
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - Additional Information (Detail)
3 Months Ended
Mar. 30, 2018
Disclosure Summarized Financial Information Of Anixter Inc Additional Information [Abstract]  
Description of guarantees given by parent company
Anixter International Inc. guarantees, fully and unconditionally, substantially all of the debt of its subsidiaries, which include Anixter Inc., its 100% owned primary operating subsidiary. Anixter International Inc. has no independent assets or operations and all subsidiaries other than Anixter Inc. are minor.
v3.8.0.1
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED BALANCE SHEETS (Detail) - USD ($)
$ in Millions
Mar. 30, 2018
Dec. 29, 2017
Assets:    
Current assets $ 2,868.5 $ 2,833.8
Property, equipment and capital leases, net 157.2 154.3
Goodwill 773.6 778.1
Intangible assets, net 367.8 378.8
Other assets 110.2 107.2
Total assets 4,277.3 4,252.2
Liabilities and Stockholders' Equity:    
Current liabilities 1,298.9 1,350.8
Other liabilities 200.4 194.5
Stockholders' equity 1,491.9 1,459.0
Total liabilities and stockholders’ equity 4,277.3 4,252.2
Anixter Inc. [Member]    
Assets:    
Current assets 2,866.9 2,833.5
Property, equipment and capital leases, net 163.9 161.3
Goodwill 773.6 778.1
Intangible assets, net 367.8 378.8
Other assets 110.2 107.2
Total assets 4,282.4 4,258.9
Liabilities and Stockholders' Equity:    
Current liabilities 1,300.1 1,351.9
Long-term debt 1,295.4 1,257.7
Other liabilities 201.4 192.9
Stockholders' equity 1,485.5 1,456.4
Total liabilities and stockholders’ equity $ 4,282.4 $ 4,258.9
v3.8.0.1
SUMMARIZED FINANCIAL INFORMATION OF ANIXTER INC - CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Detail) - USD ($)
$ in Millions
3 Months Ended
Mar. 30, 2018
Mar. 31, 2017
Condensed Financial Statements, Captions [Line Items]    
Net sales $ 1,964.2 $ 1,895.8
Operating income 61.6 68.9
Income before income taxes 45.7 49.9
Net income 32.1 30.9
Comprehensive income 29.1 45.9
Anixter Inc. [Member]    
Condensed Financial Statements, Captions [Line Items]    
Net sales 1,964.2 1,895.8
Operating income 63.2 70.5
Income before income taxes 47.1 51.3
Net income 33.5 31.7
Comprehensive income $ 30.5 $ 46.7