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Anixter International's CEO Discusses Q3 2011 Results - Earnings Call Transcript

Before we begin, I want to remind everyone that statements on this conference call, including words such as believe, expect, intend, anticipate, contemplate, estimate, plan, project, should, may, will or similar expressions, are forward-looking statements. They are subject to a number of factors that could cause the company's actual results to differ materially from what is indicated here. These factors include general economic conditions, including the severity of current economic and financial market conditions; the level of customer demand, particularly for capital projects in the markets we serve; changes in supplier sales strategies or financial viability; political, economic or current currency customer viability; risks associated with accounts receivable; the impact of regulation and regulatory investigative and legal proceedings and legal compliance risks; potential impairment of goodwill; and risks associated with the integration of acquired companies. These uncertainties may cause our actual results to be materially different than those expressed in any forward-looking statements. We do not undertake to update any forward-looking statements. Please see the company's SEC filings for more information.

At this point, I'll turn the call over to Ted.

Theodore A. Dosch

Thank you, Chris. Good morning, and thank you, everyone, for joining us. Before we discuss the current period operating results in detail, I think it would be beneficial to remind everyone of both the rationale and the impact of our recent divestiture of the Aerospace Hardware division. As you are aware, on August 16, we announced that we have reached a definitive agreement to sell this business, and the transaction was closed on August 26. The final sales price of $155 million resulted in net proceeds of $137.6 million after adjusting for amounts placed in escrow, working capital adjustments and legal and advisory fees. Although our historical performance in Aerospace Hardware had been strong, customer and supplier consolidation had resulted in a business model distinctly different than our preferred model. Despite the fact that this business delivered operating margins well in excess of our corporate average, the high level of working capital that it required resulted in a return on capital that was lower than our desirable levels. The conclusion of our detailed analysis was that selling this business and redeploying the proceeds in our core business was our best long-term option.

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