Anixter International Inc. Financial Statement Analysis
We may be adversely affected by the United Kingdom's withdrawal from the European Union (Brexit) and their future
relationship with other countries.
On January 31, 2020, the United Kingdom formally withdrew from the European Union (“Brexit”). This started a
transition period that will last until at least December 31, 2020 during which time the United Kingdom remains in the European
Economic Area, single market and customs union, and European Union laws continues to apply in the United Kingdom. The
United Kingdom and European Union have made a non-binding political declaration setting out a framework for the future
relationship between the United Kingdom and the European Union after the transition period. Negotiations on the future
relationship between the United Kingdom and the European Union have been and will likely continue to be complex and
protracted. The United Kingdom will also negotiate its future trading relationship with other countries.
We have significant operations in the United Kingdom and other member countries of the European Union. The
withdrawal by the United Kingdom and its future trading relationships could have an adverse effect on the tax, tax treaty,
currency, operational, legal and regulatory regimes to which our businesses in the region are subject. The end of the transition
period and the future trading relationship between the United Kingdom and European Union could also, among other potential
outcomes, disrupt the free movement of goods, services and people between the United Kingdom and the European Union and
significantly disrupt trade between the United Kingdom and the European Union and other parties. The uncertainty concerning
the timing could also have a negative impact on the business activity, political stability and economic conditions in the United
Kingdom, the European Union and the other economies in which we operate, which could result in customers reducing or
delaying spending decisions on our products. Our United Kingdom business has deferred tax assets totaling $6.8 million. A
downturn in our United Kingdom business caused by a material adverse effect could require us to record a valuation allowance
against those deferred tax assets. Any of these developments could have a material adverse effect on our business, financial
condition, operating results and cash flows.
We may
be adversely affected by unanticipated changes in our tax provisions.
We are a U.S.-owned multinational company subject to income and other taxes in the U.S. and jurisdictions abroad. Tax
laws are subject to change as new laws are passed and new interpretations of laws are issued or applied. Such changes in U.S.
or foreign tax laws, regulations, other administrative guidance and common law interpretation could affect our tax expense and
profitability as evidenced by the enactment of the Tax Cuts and Jobs Act on December 22, 2017. Further, the final
determination of tax audits or litigation could ultimately be materially different from our historical income tax provisions and
accruals. Changes in our tax provision and tax liabilities, whether due to changes in law, the interpretation, or a final
determination of audits or litigation, could have a material adverse impact on our financial condition, operating results and cash
flows.
ITEM 1B. UNRESOLVED STAFF COMMENTS.
None.
ITEM 2. PROPERTIES.
Our distribution network consists of 309 warehouses/branch locations in approximately 50 countries with approximately
9 million square feet of space. This includes 20 regional distribution centers (100,000 500,000 square feet), 44 local
distribution centers (35,000 - 100,000 square feet), 187 service centers and 58 branch locations. Additionally, we have 71
sales offices throughout the world. All but five of these facilities are leased. No one facility is material to our overall operations,
and we believe there is ample supply of alternative warehousing space available on similar terms and conditions in each of our
markets.
ITEM 3. LEGAL PROCEEDINGS.
Incorporated by reference to Note 6. "Commitments and Contingencies" in the notes to the Consolidated Financial
Statements of this Annual Report on Form 10-K.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
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