Good day, everyone, and welcome to the Anixter International's Fourth Quarter 2012 Earnings Conference Call. Today's call is being recorded. And now, your host for today's call, Ms. Lisa Meers. Ms. Meers, please go ahead now.

Okay, thank you, Rufus. Good morning, everybody, and thank you for joining us for Anixter's fourth quarter 2012 earnings conference call. Today I'm joined by Bob Eck, President and CEO; and Ted Dosch, EVP and CFO, to discuss our fourth quarter financial results. After the remarks, we will open the line up to take your questions. Before we begin, I want to remind everyone that we will be making forward-looking statements in this presentation, which are subject to a number of factors that could cause Anixter's actual results to differ materially from what is indicated here. We do not undertake to update these statements and refer you to our SEC filings for more information. In conjunction with today's earnings announcement, please find the supplemental slide deck that can be accessed on the Investor Relations portion of our website at www.anixter.com/investor that will further detail the quarter. Today's earnings announcement includes both GAAP and non-GAAP financial results, the reconciliation of which is further detailed in both our earnings release and in the aforementioned slides posted on our website. Now I'll turn the call over to Bob.

Good morning, and thank you for joining us for a review of our fourth quarter 2012 operating and financial results. Today I will offer my perspective on our business and the current operating environment, update you on each of our reporting segments and discuss why we believe are well positioned to continue to grow and gain share in each of our end markets. Then I will turn the call to Ted to detail our financial performance and frame how we are looking at 2013, after which we will take your questions. As you all know, from a macro perspective, this was a difficult quarter to cap a difficult year. While we were not surprised by the ongoing weakness in Europe, we had expected more of a lift from the U.S. Latin America, which was strong for the first half of the year, slowed in Q4. Notwithstanding the broader challenges, our team executed well to once again deliver greater value to both our customers and our shareholders, and we'll continue to progress against our core strategies throughout the year. In addition to achieving record annual and fourth quarter sales, other highlights of the year included the midyear acquisition of Jorvex, the Peruvian wire & cable distributor, which is tracking well, and added $31 million in sales in the fourth quarter and $63 million for the year. Our venture in Saudi Arabia, which is tracking ahead of our expectations, importantly this project illustrates our global capabilities that differentiate us from our key competitors and highlights the success and importance of our targeted EMEA strategy. We continue to grow in supply chain solutions with expanded capabilities and penetration. We also rolled out our digital marketing initiative, which is still in its early stages but is already delivering results. We delivered solid financial results…

Thanks, Bob, and good morning, everyone. Before detailing our quarterly results, I want to first discuss the $47 million charges, or $1.16 per diluted share, of impairment, pension and restructuring charges that we recorded in the fourth quarter. As you will remember, we announced in December a change in our reportable segments. As a result of that change, we were required to reassign the carrying amount of goodwill to our new reporting units, which are the same as the realigned reportable segments of ECS, Wire & Cable and OEM Supply. An interim assessment of the recoverability of goodwill and an assessment of the recoverability of the company's long-lived assets assigned to those reporting units concluded that the estimated fair value of the OEM Supply business was lower than the carrying value of the net assets. Weak global economic conditions have disproportionately impacted this segment and resulted in a total impairment charge of $21.3 million. In the fourth quarter of 2012, the company offered a onetime, lump sum payment option to terminated vested participants, resulting in $34 million of additional contributions by the company to the plan in order to fund the lump sum payment. This action triggered a settlement charge of $15.3 million in the fourth quarter. The additional contributions were made to the plan using excess cash from operations so that the plan assets were not impacted, positively influencing the funded status of the plan. In addition, the company made changes to its U.S. defined benefit pension plan that will reduce future expenses and contributions. This change did not trigger any special charges. Finally, recognizing the ongoing weak global economic conditions, we took further aggressive actions to lean out our cost structure across all segments and geographies, resulting in a $10.1 million charge in the fourth quarter of 2012.…

[Operator Instructions] And for our first question, we go to David Manthey with Robert W. Baird. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: The first question is, on the Enterprise Cabling business, you've made a really nice shift over to Security. I'm wondering, in the pure kind of premise cabling business outside of Security and outside of the data center, do you think there's been a secular change in that industry overall, just in the enterprise-level desire to upgrade or change corporate networks?

Yes, Dave, that's a good question. Actually, I think, kind of like I said last quarter, I think the bigger issue right now is a kind of stalled position of the non-res construction market and the, I think, stalled capital spending in IT, which is causing people to stay in the current space they're in, not upgrade if there's not a compelling reason to upgrade. And then the lack of new construction, which is holding back the horizontal land piece of that market, which I think is what you're really talking about. I think it's -- it used to be, when you go back into the '90s and the early part of the 2000s, we could expect an upgrade cycle that was delivered or was driven around network switch generation. So we went from 10-meg shared to switch to 100-meg shared to switch, to gigabit and so on. And that tended to drive fairly regular upgrades to the cable plan. For most of our big customers today, the cable plan is already in the horizontal in a fairly high level of performance. There's not been a lot of compelling application drivers to significantly upgrade the LAN switch speed. So we've had kind of a stall in that upgrade cycle thing we used to see in the '90s and 2000s. And that's why I think you see if non-res construction slowed down, there's not quite as much churn. And we aren't kind of seeing the reset in buildings we used to see. And that accounts, along with the slower IT capital spending, for the -- this kind of flat position we find ourselves in for the premises LAN. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Okay, that's very helpful. And I just -- I'd like to understand the number of days here. And most industrial distributors are talking about slowing near the end of the year, and I guess that probably was focused on your OEM and your Wire & Cable businesses. But could you just remind us the actual number of selling days in the fourth quarter? You had was what? It was 62, and you're saying you lost 1.5 because of the timing of the holidays, is that correct?

Yes, you're right, 62 kind of official billing days. But my comment about losing the equivalent of 1 day, which equates to about 1.5% of sales, really goes back to the timing of where Christmas fell. You remember, last year, Christmas and Christmas Eve were both on a weekend in 2011. And in 2012, with Christmas falling on a Tuesday, even though Christmas Eve, Monday, wasn't a holiday, it was pretty much a non-day from a sales and billing perspective. So official billing days were the same in Q4 '11 and '12 at 62. But we believe, effectively, it was 1 less day in 2012. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Right, right.

And I think, Dave, to just carry on a little further, we think that same trend or that same situation existed in January this year because, again, New Year's was a Sunday and, well, it's a Tuesday in '13. David J. Manthey - Robert W. Baird & Co. Incorporated, Research Division: Right, okay. And then just to recap the number of days in the first quarter, it was 64 this first quarter versus 64 a year ago, officially?

Correct. Yes, yes. And Dave, as Bob just said, official billing days would be the same Q1 ' 12 to Q1 '13. But effectively, we'll have about 1 less billing day in Q1 of this year because of the way the date fell.

And for our next question, we go to Shawn Harrison with Longbow Research.

I guess a 2-part question on gross margins. First, just if you could break out the $20 million of savings. How much of that is SG&A versus gross margin? And then longer term, I guess, as we see the mix shift in the business, I guess, probably continue within Security and maybe not rebound and others maybe so, where you think gross margin peaks out at again.

Okay, I don't know that I'm going to call out a projected gross margin peak, but let me first address the first part of your question, which was how much of the $20 million is in gross margin and how much is in operating expense. None of the $20 million is gross margin. It's all operating expense. So that's the first part. So the $20 million is going to make its way through to the bottom line regardless of what happens with margin. So in margins, the mix shift that we experienced in Wire & Cable was the more dominant mix shift or the more dominant effect on gross margin. And that mix shift, we expect to shift back towards OEM as the manufacturing environment accelerates, particularly in the U.S., which is where the dominant amount of our OEM presence is. In the Enterprise business, the mix between Security and sort of traditional data infrastructure business I think will shift in the second half of the year as we see some acceleration in data centers. And the reason we feel that, that's going to happen is that if I go back and look at the prior 2 recessions, I look at the kind of '08, '09 and we look back at '01, '02, we never went a period of more than 6 quarters of flat to down sales in our data infrastructure business. When we get to the end of June, if we have not seen an acceleration in the first 2 quarters of this year, we'll be 7 quarters in because if you recall, that business slowed first in the fourth quarter of '11. So we -- that's why we feel there's pent-up demand in the Enterprise business that we're going to see start to kick in, in the second half of 2013, and I think that moves the mix back to a more historical mix, which will benefit the gross margin in that business as well.

And that type of dynamic is included within that leverage you'd expect for the year. So the leverage may be more back-half weighted in terms of the operating profit?

That's correct, Shawn.

Okay. And then I guess a quick follow-up and one question pertaining to the earlier question just on the horizontal aspect of Enterprise. Are you seeing, I guess, with -- a disconnect now between the ABI index and potentially your Enterprise business just because of the slower upgrade cycles? And then the brief follow-up was just kind of expected tax rate for the year.

No, I think the ABI index and the upgrade cycles are 2 different things. The upgrade cycles are driven by a decision in an IT organization to enhance the performance of their networks. ABI is driven by people building new buildings and remodeling buildings.

Yes, I'm sorry. I misstated the question. I guess to an extent, with the -- maybe it's a 2-part question, but the ABI Index coming back, is there any disconnect that you're seeing in terms of that recovery in the non-res side? And then just in terms of Enterprise upgrades, do you -- will you see people in terms of, I guess, as they add to the buildings, do they need to kind of go to the highest-level cabling given that we haven't seen a big jump in switch technology?

I think what happens when people building new buildings is they tend to go to higher-performing products because they expect the products to live in the walls for a long time. So they want to be, if you will, hedged against a future technology that would cause, if they bought the lowest-performing cable, to not support their applications. So I think if you look at the ABI Index improving, if that works its way through into non-res construction on a lag effect, eventually, that will play into more horizontal LAN infrastructure.

Okay, and [indiscernible].

[indiscernible]

I'm sorry. Ted?

I'm sorry. I was going to answer the other part of your question on tax rate. I think the best assumption to go forward would be assume a rate similar to our full year 2012. So somewhere in the 36.5% to 37% would be a good estimate.

Okay. And Bob, just it's typically a 6-month lag for you with the ABI before you may see some benefit to your business, is that correct?

I would say at least.

[Operator Instructions] And we go next to Tony Kure with KeyBanc.

Just wanted to -- with the new segments, I was hoping you can maybe help provide some color on the degrees of operating leverage. Obviously, you gave the full year expectation. And with the new reporting structure, could you maybe gauge for us and provide some color around the -- who would be at the high end and who would be at the low end of the range? You could probably figure it out, but I just want some color on that.

Tony, let me try to answer it this way and tie it into our comments on the $20 million of savings from the pension and restructuring actions because that, as you might imagine, will be the big driver, biggest driver, as we improve operating earnings across those segments. So just to give you a little bit of a sense, within that $20 million, we don't anticipate each quarter detailing out specific numbers by segment, et cetera, as these projects track going forward. But I can give you a sense that about 1/3 of the savings is really pension related, and that will hit all 3 of the businesses pretty much proportional to their size. The other 2/3 is restructuring, and as you might expect, about 60% of that savings will flow through to fasteners. For all the reasons we've talked about, both the fact that the current level of profitability in the OEM Supply business, combined with the fact that a large percentage of that business is in Europe, I think that's where you would expect us to be most intensely focused on improving our cost structure. So that 60% of the restructuring portion is attributable to fasteners. The other 40% is probably split pretty evenly between the 2 cabling businesses. Now that, in conjunction with the current level of performance of these businesses, if we have recovery in manufacturing overall to drive volume improvement in fasteners, they certainly -- that segment has the capability to drive the highest operating leverage. But that's more dependent upon the macro economics of overall manufacturing levels.

Okay, and that would leave the other 2 segments, Enterprise and Electrical Electronic being similar as far as operating leverage potential?

Yes, yes.

Okay. And then to sort of a same type question, again with the new segments, with the backdrop being your mid- to high single-digit organic growth, and you talked about the cadence, which was helpful, but where would you gauge as far as who would be at the high end or low end of that range on the organic growth side of the equation?

I think that's a little bit of a crapshoot, but my bet would be that the Electrical and Electronic Wire & Cable will be at the high end of that growth range, and Enterprise and OEM Supply will both be more at the lower end of that range.

And for our next question, we go to Brent Rakers with Wunderlich Securities.

Ted, I think you talked about -- when you were going over the 2013 outlook, you gave some organic targets for first and second half. And then I think I missed the comments you were making about incrementals. Could you maybe refresh on that and maybe talk about how that would look first half versus second half?

Yes, I believe what I said, looking at 2013, was that we would expect the first half of the year to improve low to mid-single-digit organic revenue growth with the -- improving to a mid-single-digit growth in the back half. And combined, that should drive mid- to high single-digit incremental operating profit leverage.

Ted, as clarification to that, does that include the $20 million savings target from the announcements in Q4 of this year?

No, that should be incremental to what we would consider normal operating profit leverage.

Great, okay. And then just to clarify as well regarding the SG&A rate in the reported fourth quarter here, was there any savings attached to this occurring -- or benefiting this Q4 operating cost number?

Very minimal. So when we say we should get -- begin to realize this $20 million savings immediately, we'll get a little bit less than a full quarter's worth in Q1. But by Q2, we should be ramping up pretty much to a full quarter of that annualized number.

Okay. And then just a last question. On the OEM Supply business, again kind of tying to the new segment disclosures as well, when you go back and kind of compute where the OEM Supply revenue stream was, even if you just focus on North America call it 3, 4 years ago at the peak of the last cycle, it was -- gosh, it was probably 40%, 50% higher. Could you maybe walk through some of the disconnects? I know the economy's weaker and I know the heavy truck. Can you speak if there -- have there been any contract losses or anything else to factor into that revenue decline?

Yes, I think what -- just to clarify one thing, Brent, on the front end, our -- what you might be remembering when you say 30% or 40% higher was when we used to include the Aerospace business in that OEM Supply. Yes, so if you take out that $0.25 billion sales, our peak revenue in this segment -- and I'm going from memory here -- is somewhere between $1 billion and $1.1 billion. So we're not that far, anywhere near the 30% or 40% below that peak revenue number. I mean, we can -- we have those restated numbers out on our website, which show that back historically, excluding Aerospace. So the second part there, though, is yes, we do have a higher mix in North America of the heavy truck customer vertical than we do in Europe. So across North America, our performance -- our revenue decline year-over-year has been almost entirely due to the performance of heavy truck and the rest of the businesses that we serve being pretty flat to slightly up. In Europe, we do have some heavy truck but not nearly as high of a content there. But the decline there has been spread pretty much across all industries just based on the more -- the macro performance of the European economy.

Yes. Brent, to your question about whether we've lost any big contracts, the answer is no. I think I said in my comments that we feel like we've held our own in this market in spite of the decline in sales. And that is the case, that the decline in sales is just production rates at existing customers. We haven't lost any major accounts. We haven't lost any major contracts. We actually had some wins in the fourth quarter that we'll implement over the course of '13. So I'm not concerned that sort of the underlying base of that business has gotten weaker.

Can you give us a sense? I mean, we've talked about heavy truck now for a couple quarters. Can you give us a sense for, at least within the North American business, what part of your revenue stream in OEM Supply that niche represents?

Roughly 40-ish percent is heavy truck related, and that's between heavy truck manufacturers and people who supply components into heavy trucks.

We go next to Ted Wheeler with Buckingham Research.

A couple just sort of follow-ups on comments you've already made. At one point, Ted, I think you said the restructuring might account for the bulk of operating improvement, and yet we're -- maybe I've misheard that because if we're looking at mid- to -- low to mid-single-digit revenue growth and some incrementals, fewer shares, I guess I get a pretty good improvement before you incorporate the restructuring. I hope I'm clear on my question. I -- and maybe...

Yes, Ted, let's -- let me clarify if I wasn't clear the first time. The numbers that I was speaking to, as far as 2013 outlook, with kind of mid-single-digit revenue growth and mid- to high single-digit operating leverage, that's based on ongoing operational improvement. And on top of that, we would deliver these -- this approximately $20 million of savings associated with restructuring and pension.

And just lastly for me on the revenue. As you go into the new year, is January the month in line with sort of what you were talking about here, perhaps the low to mid-single-digit organic, and then we have to adjust for the 1 day?

Hey, Ted, I don't think we're going to call out the month of January. We don't typically call out sales within months. But I can tell you that we were comfortable with the trend in the 3 weeks of the month. The first week of the month was slow, which is what we expected, because of the holiday timing.

And for our next question, we go to Steven Fox with Cross Research.

First question, just looking at some of the comments you already made about Enterprise in terms of potential improvements in technology needs, et cetera, I was wondering maybe if you could round that discussion out and talk about the impact of wireless in the building both from a positive standpoint for your business and maybe potentially also a negative drag relative to the horizontal Enterprise demand. And then secondly, just looking at all the mix issues you just talked about, I mean, I understand some of these are going to hopefully straighten out as the year goes on. Your margins, gross margins, have held pretty steady over the 3 last years in the 22%, 23% range and I'm just curious, if you looked out over the next couple years, do you see, with all the mix you're talking about, including Security, that, that range is still reasonable? Or could some of these product mixes actually drive your margins a little bit lower longer term?

So let me start with the wireless question. And Steve, I think it's -- I'll take it in 2 pieces. And the first piece, I'll take the -- typically the Ethernet LAN wireless chunk. Basically, people have talked for as long as I've been in this company, I think, that, that was going to replace wiring the horizontal. And what we've seen is that typically the wireless network's an overlay network, and we aren't seeing any change in that trend. And honestly, if you do a highly dense Ethernet wireless LAN in a building with lots of people in the building, because it's actually a shared network, you have to put in lots and lots of access points with PoE devices, which can come through the manufacturer's switch, but enclosures and housings and a lot of wire going to those and wire bringing the data backhaul. So we've never seen that impact our business one way or the other, which then shifts me to the other part of the wireless space, which is the in -- what we refer to as in-building wireless. Some people refer to it as DAS for distributing antenna system. And that's the cellular delivery inside the building, and that's a new market if you -- it's a new market for us. It's a new market in the enterprise space. If you think about the shift from 3G to 4G technology, what happens is that the radio spectrum is different, the signals have to pass through building materials as effectively as 3G signals did. That drives a challenge in delivering the high data speeds people expect with 4G. And that's driving a new application, which is an additional network in the building, not a replacement network. And that's an additional network that brings cellular -- basically a cellular microcell inside the building that then communicates with the macrocell outside the building. And when we talk about in-building wireless, that's the market we're talking about. It's a growth market for us. We launched the initiative in the beginning basically of 2012. And so far, we're pleased with it. We're growing from a very small base. It's a market that's in flux, but it's coming our way in the Enterprise space. So we feel good about that. It's an opportunity for us going forward. But taking the second part, to talk about gross margin and do we think our -- what we've seen in the past is -- will be consistent in the future or will there be some of these new products that degrade the margin. I think we would suggest that the margin experience we've had over the past couple years ought to be pretty consistent going forward. I think we're -- we have this mix shift with Security right now and ECS, which has a lot to do with less data investment as opposed to a dramatic shift, which is going to change the market profile or the margin profile of that business.

That's all very helpful. And just one very quick follow-up to all of that would be, relative to margins and mix, if in-building wireless did take off, how would that fit into the mix question?

It'll look very much like the data center or the traditional data infrastructure margin.

[Operator Instructions] For our next question, we go to Gary Farber with CL King. Gary Farber - CL King & Associates, Inc., Research Division: I just had a question on your Wire & Cable business. Can you speak to what the pricing environment is or what the competitive environment is currently? And has it changed much in the last 2 or 3 quarters?

So Gary, just to clarify, are you talking about our Electrical and Electronic Wire & Cable business? Gary Farber - CL King & Associates, Inc., Research Division: Right.

Okay. So the pricing environment actually had been pretty static for most of this year. As we got into the fourth quarter, we saw a little bit more price competition in some of the projects, and I think it's just the nature of -- in that market specifically, particularly in North America, an unconsolidated market with lots and lots of competitors, which when project availability gets a little bit tight, a lot of the competitors kind of revert to price-based competition. So we did see a little bit of pricing pressure in that market in the fourth quarter. Gary Farber - CL King & Associates, Inc., Research Division: And just one other question. On the data market, you talked about having -- you've gone through several quarters where you haven't -- have growth and you expect it to sort of reverse. Just from the outside, is there anything that you're sort of watching as far as data points or indicators to sort of verify that you're ultimately going to be on that path to recovery?

Gary, there's not a good outside indicator that you can look at to tie specifically to it. I think to me, the biggest indicator is the fact that we've gone so long with such a dead market. And in fact, that -- we believe the market declined in the high single to low double digits last year. We just don't see that trend exists for long periods of time. And I think we've had a lot of hesitation for corporations to spend capital dollars, and I think you saw it again in the December numbers. I think the December nondefense, non-aviation number released yesterday was 0.02 of a percent growth year-over-year, which to me is effectively 0. So in that environment, you just don't see much investment. You don't see that in IT drag on for long periods of time, and the reason is that there's more and more parts of a business that are digitized today than was true a decade ago. Mobile applications drive a lot of required new storage capacity as well as application servers. So you put all that stuff together and you basically say, if companies don't spend on IT for -- you get into 1.5 years-plus kind of a time period, at some point, they start straining against their infrastructure and they spend more. So that's how we're thinking about it. Gary Farber - CL King & Associates, Inc., Research Division: But would you say then that the durable goods report is a reasonable thing to follow then?

I think when capital spending comes back, IT will be one of the pieces that'll come back.

And with that, ladies and gentlemen, we have no further questions on our roster. Therefore, Mr. Eck, I will turn the conference back over to you for any closing remarks.

Thank you. Responding to the ongoing uncertainty in the macro environment, we're focused on identifying key growth opportunities and increasing margins while aggressively managing our cost structure. Our track record of delivering solid results is a testament to our ability to respond quickly to marketplace changes as well as the result of a lot of hard work from the entire team. We believe we have attractive growth opportunities that we can capitalize on through our current business model and existing strategies and initiatives. We operate in large, growing, global and fragmented end markets that set up well for our business model. We are constantly seeking growth for products and service expansion, share gains, geographic expansion, excellence in execution and M&A. As we have demonstrated in the past, we will constantly evaluate alternative uses of capital, and we'll return excess capital to shareholders when we think that is the right use of funds. Thank you.

And ladies and gentlemen, this will conclude today's conference. Thank you for your participation.