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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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26-0273989
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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75 Tri-State International
Lincolnshire, Illinois
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60069
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(Address of principal executive offices)
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(Zip Code)
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Large accelerated filer
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x
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Page
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PART I
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FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II
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OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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SIGNATURES
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Exhibit Index
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CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except per-share amounts)
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|||||||
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June 30,
2016
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December 31, 2015
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||||
Assets
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(unaudited)
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||||
Current assets:
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||||
Cash and cash equivalents
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$
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129.4
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$
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37.6
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Accounts receivable, net of allowance for doubtful accounts of $5.9 and $6.0, respectively
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2,082.5
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2,017.4
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||
Merchandise inventory
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487.3
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393.1
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Miscellaneous receivables
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260.3
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198.4
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Prepaid expenses and other
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115.8
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144.3
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Total current assets
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3,075.3
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2,790.8
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Property and equipment, net
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163.8
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175.4
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Goodwill
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2,475.0
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2,500.4
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Other intangible assets, net
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1,162.0
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1,276.4
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Other assets
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11.8
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|
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12.3
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Total assets
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$
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6,887.9
|
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$
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6,755.3
|
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable-trade
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$
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1,078.1
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$
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866.5
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Accounts payable-inventory financing
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509.8
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439.6
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Current maturities of long-term debt
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26.1
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27.2
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Deferred revenue
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144.6
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151.9
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Accrued expenses:
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Compensation
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135.6
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120.4
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Interest
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25.1
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25.1
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Sales taxes
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26.9
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38.1
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Advertising
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59.1
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52.3
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Income taxes
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19.7
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—
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Other
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152.7
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166.2
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Total current liabilities
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2,177.7
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1,887.3
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Long-term liabilities:
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Debt
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3,214.4
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3,232.5
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Deferred income taxes
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420.8
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469.6
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Other liabilities
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61.6
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70.0
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Total long-term liabilities
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3,696.8
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3,772.1
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Commitments and contingencies (Note 7)
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Stockholders’ equity:
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Preferred stock, $0.01 par value, 100.0 shares authorized, no shares issued or outstanding for both periods
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—
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—
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Common stock, $0.01 par value, 1,000.0 shares authorized; 163.2 and 168.2 shares issued and outstanding, respectively
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1.6
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1.7
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Paid-in capital
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2,831.1
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2,806.9
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Accumulated deficit
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(1,715.3
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)
|
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(1,651.6
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)
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Accumulated other comprehensive loss
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(104.0
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)
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(61.1
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)
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||
Total stockholders’ equity
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1,013.4
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1,095.9
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Total liabilities and stockholders’ equity
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$
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6,887.9
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$
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6,755.3
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CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(unaudited)
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|||||||||||||||||
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2016
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2015
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2016
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2015
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||||||||
Net sales
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$
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3,664.6
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$
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3,314.0
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$
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6,781.3
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$
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6,069.2
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Cost of sales
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3,054.1
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2,779.5
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5,646.3
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5,078.2
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Gross profit
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610.5
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534.5
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1,135.0
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991.0
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Selling and administrative expenses
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344.7
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290.6
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674.0
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566.1
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Advertising expense
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42.3
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38.0
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76.5
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67.4
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Income from operations
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223.5
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205.9
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384.5
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357.5
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Interest expense, net
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(36.9
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)
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(37.8
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)
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(75.0
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)
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(82.6
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)
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Net loss on extinguishments of long-term debt
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—
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—
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—
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(24.3
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)
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Other income, net
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0.9
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4.0
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1.9
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8.5
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Income before income taxes
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187.5
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172.1
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311.4
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259.1
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Income tax expense
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(70.0
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)
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(63.9
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)
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(116.1
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)
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(96.2
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)
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Net income
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$
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117.5
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$
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108.2
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$
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195.3
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$
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162.9
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Net income per common share:
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Basic
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$
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0.71
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$
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0.63
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$
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1.18
|
|
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$
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0.95
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Diluted
|
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$
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0.70
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|
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$
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0.63
|
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$
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1.16
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$
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0.94
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||||||||
Weighted-average common shares outstanding:
|
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||||||||
Basic
|
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164.9
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171.0
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166.1
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171.6
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||||
Diluted
|
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166.7
|
|
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172.5
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167.8
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173.0
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||||
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||||||||
Cash dividends declared per common share
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$
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0.1075
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$
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0.0675
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$
|
0.2150
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$
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0.1350
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|
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CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
|
||||||||||||||||
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Three Months Ended June 30,
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Six Months Ended June 30,
|
||||||||||||
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2016
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2015
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2016
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2015
|
||||||||
Net income
|
|
$
|
117.5
|
|
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$
|
108.2
|
|
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$
|
195.3
|
|
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$
|
162.9
|
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Foreign currency translation (net of tax benefit of $0.3 and $1.7 million, and of $0.3 and $0.3 million, respectively)
|
|
(35.0
|
)
|
|
4.7
|
|
|
(42.9
|
)
|
|
(6.3
|
)
|
||||
Other comprehensive (loss) income, net of tax
|
|
(35.0
|
)
|
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4.7
|
|
|
(42.9
|
)
|
|
(6.3
|
)
|
||||
Comprehensive income
|
|
$
|
82.5
|
|
|
$
|
112.9
|
|
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$
|
152.4
|
|
|
$
|
156.6
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
|
||||||||||||||||||||||||||||||
|
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Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Loss
|
|
Total
Stockholders’ Equity |
||||||||||||||
Balance as of December 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
168.2
|
|
|
$
|
1.7
|
|
|
$
|
2,806.9
|
|
|
$
|
(1,651.6
|
)
|
|
$
|
(61.1
|
)
|
|
$
|
1,095.9
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
195.3
|
|
|
—
|
|
|
195.3
|
|
||||||
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.9
|
|
|
—
|
|
|
—
|
|
|
14.9
|
|
||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
||||||
Excess tax benefits from equity-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
||||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
||||||
Common stock issued for equity-based compensation
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(5.5
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(223.0
|
)
|
|
—
|
|
|
(223.1
|
)
|
||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
(36.0
|
)
|
|
—
|
|
|
(35.7
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42.9
|
)
|
|
(42.9
|
)
|
||||||
Balance as of June 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
163.2
|
|
|
$
|
1.6
|
|
|
$
|
2,831.1
|
|
|
$
|
(1,715.3
|
)
|
|
$
|
(104.0
|
)
|
|
$
|
1,013.4
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
||||||||
|
|
Six Months Ended June 30,
|
||||||
|
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
195.3
|
|
|
$
|
162.9
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
127.7
|
|
|
105.1
|
|
||
Equity-based compensation expense
|
|
18.1
|
|
|
12.2
|
|
||
Deferred income taxes
|
|
(49.9
|
)
|
|
(45.2
|
)
|
||
Amortization of deferred financing costs, debt premium and debt discount, net
|
|
3.3
|
|
|
3.1
|
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
24.3
|
|
||
Income from equity investment
|
|
—
|
|
|
(7.9
|
)
|
||
Other
|
|
—
|
|
|
2.4
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(74.9
|
)
|
|
(157.7
|
)
|
||
Merchandise inventory
|
|
(99.0
|
)
|
|
(98.9
|
)
|
||
Other assets
|
|
(44.4
|
)
|
|
(20.1
|
)
|
||
Accounts payable-trade
|
|
219.3
|
|
|
151.9
|
|
||
Other current liabilities
|
|
23.5
|
|
|
(34.7
|
)
|
||
Long-term liabilities
|
|
(5.9
|
)
|
|
1.7
|
|
||
Net cash provided by operating activities
|
|
313.1
|
|
|
99.1
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(25.7
|
)
|
|
(22.9
|
)
|
||
Premium payments on interest rate cap agreements
|
|
—
|
|
|
(0.5
|
)
|
||
Net cash used in investing activities
|
|
(25.7
|
)
|
|
(23.4
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from borrowings under revolving credit facility
|
|
105.4
|
|
|
—
|
|
||
Repayments of borrowings under revolving credit facility
|
|
(105.4
|
)
|
|
—
|
|
||
Repayments of long-term debt
|
|
(13.4
|
)
|
|
(7.7
|
)
|
||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
525.0
|
|
||
Payments to extinguish long-term debt
|
|
—
|
|
|
(525.3
|
)
|
||
Payments of debt financing costs
|
|
—
|
|
|
(6.8
|
)
|
||
Net change in accounts payable-inventory financing
|
|
71.3
|
|
|
41.2
|
|
||
Proceeds from stock option exercises
|
|
3.8
|
|
|
1.0
|
|
||
Excess tax benefits from equity-based compensation
|
|
0.7
|
|
|
0.2
|
|
||
Proceeds from Coworker Stock Purchase Plan
|
|
4.5
|
|
|
4.2
|
|
||
Repurchases of common stock
|
|
(223.1
|
)
|
|
(91.7
|
)
|
||
Dividends
|
|
(35.7
|
)
|
|
(23.2
|
)
|
||
Other
|
|
(0.8
|
)
|
|
—
|
|
||
Net cash used in financing activities
|
|
(192.7
|
)
|
|
(83.1
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
(2.9
|
)
|
|
(1.4
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
91.8
|
|
|
(8.8
|
)
|
||
Cash and cash equivalents—beginning of period
|
|
37.6
|
|
|
344.5
|
|
||
Cash and cash equivalents—end of period
|
|
$
|
129.4
|
|
|
$
|
335.7
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for Interest, net
|
|
$
|
(73.0
|
)
|
|
$
|
(81.3
|
)
|
Cash paid for Income taxes, net
|
|
$
|
(132.7
|
)
|
|
$
|
(123.4
|
)
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Acquisition
|
(in millions)
|
|
Acquisition-Date Fair Value
|
||
Cash
|
|
$
|
291.6
|
|
Fair value of CDW common stock
(1)
|
|
33.2
|
|
|
Fair value of previously held equity investment on the date of acquisition
(2)
|
|
174.9
|
|
|
Total consideration
|
|
$
|
499.7
|
|
(1)
|
The Company issued
2 million
shares of CDW common stock. The fair value of the common stock was based on the closing market price on
July 31, 2015
, adjusted for the lack of marketability as the shares of CDW common stock issued to the sellers are subject to a
three
-year lock up restriction from
August 1, 2015
. One of the sellers granted
1 million
stock options to certain CDW UK coworkers over his shares of CDW common stock received in the transaction. The fair value of these stock options was
$22 million
, which has been accounted for as post-combination stock-based compensation and is being amortized over the weighted-average requisite service period of
3.2
years. Compensation expense for these options is included in Selling and administrative expenses in the Consolidated Statements of Operations.
|
(2)
|
As a result of the Company obtaining control over CDW UK, the Company’s previously held
35%
equity investment was remeasured to fair value, resulting in a gain of
$98 million
included in Gain on remeasurement of equity investment in the Consolidated Statements of Operations. The fair value of the previously held equity investment was determined by management with the assistance of a third party valuation firm, based on information available as of the acquisition date.
|
(in millions)
|
|
Acquisition-Date Fair Value
(1)
|
||
Cash
|
|
$
|
27.8
|
|
Accounts receivable
|
|
135.7
|
|
|
Merchandise inventory
|
|
27.1
|
|
|
Property and equipment, net
|
|
11.4
|
|
|
Identified intangible assets
(2)
|
|
289.8
|
|
|
Other assets
|
|
53.5
|
|
|
Total assets acquired
|
|
545.3
|
|
|
Accounts payable—trade
|
|
(86.1
|
)
|
|
Deferred revenue
|
|
(57.2
|
)
|
|
Other liabilities
|
|
(41.7
|
)
|
|
Deferred tax liabilities
|
|
(55.1
|
)
|
|
Debt
|
|
(111.5
|
)
|
|
Total liabilities assumed
|
|
(351.6
|
)
|
|
Total identifiable net assets
|
|
193.7
|
|
|
|
|
|
||
Goodwill
|
|
306.0
|
|
|
|
|
|
||
Total purchase price
|
|
$
|
499.7
|
|
(1)
|
The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. These fair values are subject to change within the measurement period.
|
(2)
|
Details of the identified intangible assets are as follows:
|
(in millions)
|
Acquisition-Date Fair Value
|
|
Weighted-Average Amortization Period (in years)
|
||
Customer relationships
|
$
|
260.8
|
|
|
13
|
Customer contracts
|
25.9
|
|
|
3
|
|
Developed technology
|
1.7
|
|
|
2
|
|
Trade name
|
1.4
|
|
|
1
|
|
Total identified intangible assets
|
$
|
289.8
|
|
|
|
(in millions)
|
|
Three months ended
|
|
Six months ended
|
||||
Net sales
|
|
$
|
3,541.0
|
|
|
$
|
6,513.6
|
|
Net income
|
|
115.7
|
|
|
171.7
|
|
(1)
|
Excludes acquisition and integration costs directly related to the transaction.
|
(2)
|
Includes additional amortization expense related to the fair value of acquired intangibles.
|
(3)
|
Excludes the Company's share of net income/loss from its previously held
35%
equity investment prior to the completion of the acquisition.
|
(4)
|
Includes additional non-cash equity-based compensation related to equity awards granted to CDW UK coworkers after the completion of the acquisition.
|
4.
|
Inventory Financing Agreements
|
(in millions)
|
|
June 30,
2016
|
|
December 31, 2015
|
||||
Revolving Loan inventory financing agreement
(1)
|
|
$
|
498.4
|
|
|
$
|
427.0
|
|
Other inventory financing agreements
(2)
|
|
11.4
|
|
|
12.6
|
|
||
Accounts payable-inventory financing
|
|
$
|
509.8
|
|
|
$
|
439.6
|
|
(1)
|
The Senior Secured Asset-Based Revolving Credit Facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
|
(2)
|
As of
June 30, 2016
and
December 31, 2015
, amounts owed under other inventory financing agreements of
$1 million
or less, for both periods, were collateralized by the inventory purchased under these financing agreements and a second lien on the related accounts receivable.
|
5.
|
Long-Term Debt
|
(dollars in millions)
|
|
Interest
Rate
|
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
(1)
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
(2)
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.25
|
%
|
|
1,490.4
|
|
|
(5.9
|
)
|
|
1,484.5
|
|
|||
CDW UK term loan
|
|
1.99
|
%
|
|
74.5
|
|
|
(0.4
|
)
|
|
74.1
|
|
|||
Senior notes due 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(6.1
|
)
|
|
593.9
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(5.7
|
)
|
|
519.3
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(6.3
|
)
|
|
568.7
|
|
|||
Total long-term debt
|
|
|
|
3,264.9
|
|
|
(24.4
|
)
|
|
3,240.5
|
|
||||
Less current maturities of long-term debt
|
|
|
|
(26.1
|
)
|
|
—
|
|
|
(26.1
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,238.8
|
|
|
$
|
(24.4
|
)
|
|
$
|
3,214.4
|
|
(dollars in millions)
|
|
Interest
Rate |
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
(1)
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
(2)
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.25
|
%
|
|
1,498.1
|
|
|
(6.7
|
)
|
|
1,491.4
|
|
|||
CDW UK Term Loan
|
|
1.98
|
%
|
|
88.4
|
|
|
(0.6
|
)
|
|
87.8
|
|
|||
Senior notes due 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(6.6
|
)
|
|
593.4
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(6.2
|
)
|
|
518.8
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(6.7
|
)
|
|
568.3
|
|
|||
Total long-term debt
|
|
|
|
3,286.5
|
|
|
(26.8
|
)
|
|
3,259.7
|
|
||||
Less current maturities of long-term debt
|
|
|
|
(27.2
|
)
|
|
—
|
|
|
(27.2
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,259.3
|
|
|
$
|
(26.8
|
)
|
|
$
|
3,232.5
|
|
(1)
|
The Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”) includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors. As of
June 30, 2016
, the Company had
no
outstanding borrowings under the Revolving Loan,
$2 million
of undrawn letters of credit and
$470 million
reserved related to the floorplan sub-facility. As of
June 30, 2016
, the borrowing base was
$1,448 million
based on the amount of eligible inventory and accounts receivable balances as of May 31, 2016. The Company could have borrowed up to an additional
$778 million
under the Revolving Loan as of
June 30, 2016
.
|
(2)
|
The CDW UK Credit Facility is a multi-currency revolving credit facility, expiring on July 17, 2017, under which CDW UK is permitted to borrow an aggregate amount of £
50.0 million
(
$67 million
as of
June 30, 2016
).
|
(in millions)
|
|
June 30, 2016
|
|
December 31,
2015 |
||||
Fair value
|
|
$
|
3,309.7
|
|
|
$
|
3,330.4
|
|
Carrying value
|
|
3,264.9
|
|
|
3,286.5
|
|
6.
|
Earnings per Share
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(in millions)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Basic weighted-average shares outstanding
|
164.9
|
|
|
171.0
|
|
|
166.1
|
|
|
171.6
|
|
Effect of dilutive securities
(1)
|
1.8
|
|
|
1.5
|
|
|
1.7
|
|
|
1.4
|
|
Diluted weighted-average shares outstanding
(2)
|
166.7
|
|
|
172.5
|
|
|
167.8
|
|
|
173.0
|
|
(1)
|
The dilutive effect of outstanding stock options, restricted stock units, restricted stock, performance share units and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method.
|
(2)
|
There were less than
1 million
potential common shares excluded from diluted weighted-average shares outstanding for the three and
six
months ended
June 30, 2016
and 2015, respectively, as their inclusion would have had an anti-dilutive effect.
|
7.
|
Commitments and Contingencies
|
8.
|
Segment Information
|
(in millions)
|
|
Corporate
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||
Three Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
1,779.2
|
|
|
$
|
1,547.0
|
|
|
$
|
338.4
|
|
|
$
|
—
|
|
|
$
|
3,664.6
|
|
Income (loss) from operations
(1)
|
|
135.2
|
|
|
108.3
|
|
|
9.4
|
|
|
(29.4
|
)
|
|
223.5
|
|
|||||
Depreciation and amortization expense
|
|
(25.9
|
)
|
|
(11.1
|
)
|
|
(8.3
|
)
|
|
(18.4
|
)
|
|
(63.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Three Months Ended June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
1,798.6
|
|
|
$
|
1,388.5
|
|
|
$
|
126.9
|
|
|
$
|
—
|
|
|
$
|
3,314.0
|
|
Income (loss) from operations
(1)
|
|
138.8
|
|
|
91.0
|
|
|
4.3
|
|
|
(28.2
|
)
|
|
205.9
|
|
|||||
Depreciation and amortization expense
|
|
(25.8
|
)
|
|
(11.2
|
)
|
|
(0.4
|
)
|
|
(15.2
|
)
|
|
(52.6
|
)
|
(in millions)
|
|
Corporate
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||
Six Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
3,471.4
|
|
|
$
|
2,616.5
|
|
|
$
|
693.4
|
|
|
$
|
—
|
|
|
$
|
6,781.3
|
|
Income (loss) from operations
(1)
|
|
253.4
|
|
|
166.7
|
|
|
17.5
|
|
|
(53.1
|
)
|
|
384.5
|
|
|||||
Depreciation and amortization expense
|
|
(51.7
|
)
|
|
(22.3
|
)
|
|
(16.9
|
)
|
|
(36.8
|
)
|
|
(127.7
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Six Months Ended June 30, 2015:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
3,409.0
|
|
|
$
|
2,405.7
|
|
|
$
|
254.5
|
|
|
$
|
—
|
|
|
$
|
6,069.2
|
|
Income (loss) from operations
(1)
|
|
257.4
|
|
|
146.4
|
|
|
9.2
|
|
|
(55.5
|
)
|
|
357.5
|
|
|||||
Depreciation and amortization expense
|
|
(51.5
|
)
|
|
(22.3
|
)
|
|
(0.7
|
)
|
|
(30.6
|
)
|
|
(105.1
|
)
|
(1)
|
Certain costs related to technology specialists have been reclassified between our Corporate and Public segments. Prior periods have been reclassified to conform to the current period presentation.
|
9.
|
Supplemental Guarantor Information
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
81.4
|
|
|
$
|
—
|
|
|
$
|
69.7
|
|
|
$
|
—
|
|
|
$
|
(21.7
|
)
|
|
$
|
129.4
|
|
Accounts receivable, net
|
—
|
|
|
0.2
|
|
|
1,883.8
|
|
|
198.5
|
|
|
—
|
|
|
—
|
|
|
2,082.5
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
433.7
|
|
|
53.6
|
|
|
—
|
|
|
—
|
|
|
487.3
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
87.4
|
|
|
151.0
|
|
|
21.9
|
|
|
—
|
|
|
—
|
|
|
260.3
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
17.0
|
|
|
61.9
|
|
|
36.9
|
|
|
—
|
|
|
—
|
|
|
115.8
|
|
|||||||
Total current assets
|
—
|
|
|
186.0
|
|
|
2,530.4
|
|
|
380.6
|
|
|
—
|
|
|
(21.7
|
)
|
|
3,075.3
|
|
|||||||
Property and equipment, net
|
—
|
|
|
103.8
|
|
|
50.0
|
|
|
10.0
|
|
|
—
|
|
|
—
|
|
|
163.8
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
284.2
|
|
|
—
|
|
|
—
|
|
|
2,475.0
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
300.1
|
|
|
635.0
|
|
|
226.9
|
|
|
—
|
|
|
—
|
|
|
1,162.0
|
|
|||||||
Other assets
|
3.5
|
|
|
20.1
|
|
|
262.4
|
|
|
4.1
|
|
|
—
|
|
|
(278.3
|
)
|
|
11.8
|
|
|||||||
Investment in and advances to subsidiaries
|
1,009.9
|
|
|
3,169.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,178.9
|
)
|
|
—
|
|
|||||||
Total assets
|
$
|
1,013.4
|
|
|
$
|
4,530.8
|
|
|
$
|
4,916.8
|
|
|
$
|
905.8
|
|
|
$
|
—
|
|
|
$
|
(4,478.9
|
)
|
|
$
|
6,887.9
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable—trade
|
$
|
—
|
|
|
$
|
19.7
|
|
|
$
|
959.1
|
|
|
$
|
121.0
|
|
|
$
|
—
|
|
|
$
|
(21.7
|
)
|
|
$
|
1,078.1
|
|
Accounts payable—inventory financing
|
—
|
|
|
—
|
|
|
499.2
|
|
|
10.6
|
|
|
—
|
|
|
—
|
|
|
509.8
|
|
|||||||
Current maturities of
long-term debt
|
—
|
|
|
15.5
|
|
|
—
|
|
|
10.6
|
|
|
—
|
|
|
—
|
|
|
26.1
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
77.0
|
|
|
67.6
|
|
|
—
|
|
|
—
|
|
|
144.6
|
|
|||||||
Accrued expenses
|
—
|
|
|
172.9
|
|
|
207.7
|
|
|
38.5
|
|
|
—
|
|
|
—
|
|
|
419.1
|
|
|||||||
Total current liabilities
|
—
|
|
|
208.1
|
|
|
1,743.0
|
|
|
248.3
|
|
|
—
|
|
|
(21.7
|
)
|
|
2,177.7
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,150.9
|
|
|
—
|
|
|
63.5
|
|
|
—
|
|
|
—
|
|
|
3,214.4
|
|
|||||||
Deferred income taxes
|
—
|
|
|
107.5
|
|
|
240.6
|
|
|
76.2
|
|
|
—
|
|
|
(3.5
|
)
|
|
420.8
|
|
|||||||
Other liabilities
|
—
|
|
|
54.4
|
|
|
3.4
|
|
|
278.6
|
|
|
—
|
|
|
(274.8
|
)
|
|
61.6
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,312.8
|
|
|
244.0
|
|
|
418.3
|
|
|
—
|
|
|
(278.3
|
)
|
|
3,696.8
|
|
|||||||
Total stockholders’ equity
|
1,013.4
|
|
|
1,009.9
|
|
|
2,929.8
|
|
|
239.2
|
|
|
—
|
|
|
(4,178.9
|
)
|
|
1,013.4
|
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
1,013.4
|
|
|
$
|
4,530.8
|
|
|
$
|
4,916.8
|
|
|
$
|
905.8
|
|
|
$
|
—
|
|
|
$
|
(4,478.9
|
)
|
|
$
|
6,887.9
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
December 31, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
45.1
|
|
|
$
|
—
|
|
|
$
|
31.9
|
|
|
$
|
—
|
|
|
$
|
(39.4
|
)
|
|
$
|
37.6
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,788.6
|
|
|
228.8
|
|
|
—
|
|
|
—
|
|
|
2,017.4
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
340.3
|
|
|
52.8
|
|
|
—
|
|
|
—
|
|
|
393.1
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
83.7
|
|
|
90.1
|
|
|
24.6
|
|
|
—
|
|
|
—
|
|
|
198.4
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
13.0
|
|
|
50.4
|
|
|
84.0
|
|
|
—
|
|
|
(3.1
|
)
|
|
144.3
|
|
|||||||
Total current assets
|
—
|
|
|
141.8
|
|
|
2,269.4
|
|
|
422.1
|
|
|
—
|
|
|
(42.5
|
)
|
|
2,790.8
|
|
|||||||
Property and equipment, net
|
—
|
|
|
110.0
|
|
|
54.1
|
|
|
11.3
|
|
|
—
|
|
|
—
|
|
|
175.4
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
309.6
|
|
|
—
|
|
|
—
|
|
|
2,500.4
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
306.0
|
|
|
704.9
|
|
|
265.5
|
|
|
—
|
|
|
—
|
|
|
1,276.4
|
|
|||||||
Other assets
|
3.8
|
|
|
17.3
|
|
|
263.0
|
|
|
3.0
|
|
|
—
|
|
|
(274.8
|
)
|
|
12.3
|
|
|||||||
Investment in and advances to subsidiaries
|
1,092.1
|
|
|
3,302.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,394.1
|
)
|
|
—
|
|
|||||||
Total assets
|
$
|
1,095.9
|
|
|
$
|
4,628.9
|
|
|
$
|
4,730.4
|
|
|
$
|
1,011.5
|
|
|
$
|
—
|
|
|
$
|
(4,711.4
|
)
|
|
$
|
6,755.3
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
31.0
|
|
|
$
|
727.4
|
|
|
$
|
147.5
|
|
|
$
|
—
|
|
|
$
|
(39.4
|
)
|
|
$
|
866.5
|
|
Accounts payable-inventory financing
|
—
|
|
|
—
|
|
|
428.4
|
|
|
11.4
|
|
|
—
|
|
|
(0.2
|
)
|
|
439.6
|
|
|||||||
Current maturities of long-term debt
|
—
|
|
|
15.4
|
|
|
—
|
|
|
11.8
|
|
|
—
|
|
|
—
|
|
|
27.2
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
77.4
|
|
|
74.5
|
|
|
—
|
|
|
—
|
|
|
151.9
|
|
|||||||
Accrued expenses
|
—
|
|
|
156.0
|
|
|
190.9
|
|
|
58.6
|
|
|
—
|
|
|
(3.4
|
)
|
|
402.1
|
|
|||||||
Total current liabilities
|
—
|
|
|
202.4
|
|
|
1,424.1
|
|
|
303.8
|
|
|
—
|
|
|
(43.0
|
)
|
|
1,887.3
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,156.5
|
|
|
—
|
|
|
76.0
|
|
|
—
|
|
|
—
|
|
|
3,232.5
|
|
|||||||
Deferred income taxes
|
—
|
|
|
117.3
|
|
|
272.8
|
|
|
83.4
|
|
|
—
|
|
|
(3.9
|
)
|
|
469.6
|
|
|||||||
Other liabilities
|
—
|
|
|
60.7
|
|
|
2.9
|
|
|
276.8
|
|
|
—
|
|
|
(270.4
|
)
|
|
70.0
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,334.5
|
|
|
275.7
|
|
|
436.2
|
|
|
—
|
|
|
(274.3
|
)
|
|
3,772.1
|
|
|||||||
Total stockholders’ equity
|
1,095.9
|
|
|
1,092.0
|
|
|
3,030.6
|
|
|
271.5
|
|
|
—
|
|
|
(4,394.1
|
)
|
|
1,095.9
|
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
1,095.9
|
|
|
$
|
4,628.9
|
|
|
$
|
4,730.4
|
|
|
$
|
1,011.5
|
|
|
$
|
—
|
|
|
$
|
(4,711.4
|
)
|
|
$
|
6,755.3
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,326.2
|
|
|
$
|
338.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,664.6
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
2,771.3
|
|
|
282.8
|
|
|
—
|
|
|
—
|
|
|
3,054.1
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
554.9
|
|
|
55.6
|
|
|
—
|
|
|
—
|
|
|
610.5
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
29.4
|
|
|
270.5
|
|
|
44.8
|
|
|
—
|
|
|
—
|
|
|
344.7
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
40.9
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
42.3
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(29.4
|
)
|
|
243.5
|
|
|
9.4
|
|
|
—
|
|
|
—
|
|
|
223.5
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(37.5
|
)
|
|
2.5
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(36.9
|
)
|
|||||||
Other income (expense), net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(66.9
|
)
|
|
246.0
|
|
|
8.4
|
|
|
—
|
|
|
—
|
|
|
187.5
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
25.2
|
|
|
(92.9
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
(70.0
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(41.7
|
)
|
|
153.1
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
117.5
|
|
|||||||
Equity in earnings of subsidiaries
|
117.5
|
|
|
159.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(276.7
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
117.5
|
|
|
$
|
117.5
|
|
|
$
|
153.1
|
|
|
$
|
6.1
|
|
|
$
|
—
|
|
|
$
|
(276.7
|
)
|
|
$
|
117.5
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2015
(1)
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,187.2
|
|
|
$
|
126.8
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,314.0
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
2,667.9
|
|
|
111.6
|
|
|
—
|
|
|
—
|
|
|
2,779.5
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
519.3
|
|
|
15.2
|
|
|
—
|
|
|
—
|
|
|
534.5
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
27.9
|
|
|
252.9
|
|
|
9.8
|
|
|
—
|
|
|
—
|
|
|
290.6
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
36.9
|
|
|
1.1
|
|
|
—
|
|
|
—
|
|
|
38.0
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(27.9
|
)
|
|
229.5
|
|
|
4.3
|
|
|
—
|
|
|
—
|
|
|
205.9
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(37.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(37.8
|
)
|
|||||||
Other income (expense), net
|
—
|
|
|
3.8
|
|
|
0.3
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
4.0
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(61.9
|
)
|
|
229.8
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
172.1
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
23.0
|
|
|
(85.7
|
)
|
|
(1.2
|
)
|
|
—
|
|
|
—
|
|
|
(63.9
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(38.9
|
)
|
|
144.1
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
108.2
|
|
|||||||
Equity in earnings of subsidiaries
|
108.2
|
|
|
147.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(255.3
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
108.2
|
|
|
$
|
108.2
|
|
|
$
|
144.1
|
|
|
$
|
3.0
|
|
|
$
|
—
|
|
|
$
|
(255.3
|
)
|
|
$
|
108.2
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,087.9
|
|
|
$
|
693.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,781.3
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
5,062.8
|
|
|
583.5
|
|
|
—
|
|
|
—
|
|
|
5,646.3
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
1,025.1
|
|
|
109.9
|
|
|
—
|
|
|
—
|
|
|
1,135.0
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
53.1
|
|
|
531.1
|
|
|
89.8
|
|
|
—
|
|
|
—
|
|
|
674.0
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
73.9
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
76.5
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(53.1
|
)
|
|
420.1
|
|
|
17.5
|
|
|
—
|
|
|
—
|
|
|
384.5
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(74.8
|
)
|
|
3.8
|
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
(75.0
|
)
|
|||||||
Other income, net
|
—
|
|
|
—
|
|
|
0.7
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(127.9
|
)
|
|
424.6
|
|
|
14.7
|
|
|
—
|
|
|
—
|
|
|
311.4
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
48.6
|
|
|
(160.5
|
)
|
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
(116.1
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(79.3
|
)
|
|
264.1
|
|
|
10.5
|
|
|
—
|
|
|
—
|
|
|
195.3
|
|
|||||||
Equity in earnings of subsidiaries
|
195.3
|
|
|
274.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(469.9
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
195.3
|
|
|
$
|
195.3
|
|
|
$
|
264.1
|
|
|
$
|
10.5
|
|
|
$
|
—
|
|
|
$
|
(469.9
|
)
|
|
$
|
195.3
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2015
(1)
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
5,814.7
|
|
|
$
|
254.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,069.2
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
4,854.2
|
|
|
224.0
|
|
|
—
|
|
|
—
|
|
|
5,078.2
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
960.5
|
|
|
30.5
|
|
|
—
|
|
|
—
|
|
|
991.0
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
55.2
|
|
|
491.4
|
|
|
19.5
|
|
|
—
|
|
|
—
|
|
|
566.1
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
65.6
|
|
|
1.8
|
|
|
—
|
|
|
—
|
|
|
67.4
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(55.2
|
)
|
|
403.5
|
|
|
9.2
|
|
|
—
|
|
|
—
|
|
|
357.5
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(82.8
|
)
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
(82.6
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(24.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.3
|
)
|
|||||||
Other income (expense), net
|
—
|
|
|
7.9
|
|
|
1.0
|
|
|
(0.4
|
)
|
|
—
|
|
|
—
|
|
|
8.5
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(154.4
|
)
|
|
404.5
|
|
|
9.0
|
|
|
—
|
|
|
—
|
|
|
259.1
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
57.8
|
|
|
(151.5
|
)
|
|
(2.5
|
)
|
|
—
|
|
|
—
|
|
|
(96.2
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(96.6
|
)
|
|
253.0
|
|
|
6.5
|
|
|
—
|
|
|
—
|
|
|
162.9
|
|
|||||||
Equity in earnings of subsidiaries
|
162.9
|
|
|
259.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(422.4
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
162.9
|
|
|
$
|
162.9
|
|
|
$
|
253.0
|
|
|
$
|
6.5
|
|
|
$
|
—
|
|
|
$
|
(422.4
|
)
|
|
$
|
162.9
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
82.5
|
|
|
$
|
82.5
|
|
|
$
|
153.1
|
|
|
$
|
(28.9
|
)
|
|
$
|
—
|
|
|
$
|
(206.7
|
)
|
|
$
|
82.5
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
112.9
|
|
|
$
|
112.9
|
|
|
$
|
144.1
|
|
|
$
|
7.8
|
|
|
$
|
—
|
|
|
$
|
(264.8
|
)
|
|
$
|
112.9
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
152.4
|
|
|
$
|
152.4
|
|
|
$
|
264.1
|
|
|
$
|
(32.4
|
)
|
|
$
|
—
|
|
|
$
|
(384.1
|
)
|
|
$
|
152.4
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
156.6
|
|
|
$
|
156.6
|
|
|
$
|
253.0
|
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
$
|
(409.8
|
)
|
|
$
|
156.6
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(79.4
|
)
|
|
$
|
326.3
|
|
|
$
|
45.4
|
|
|
$
|
—
|
|
|
$
|
20.8
|
|
|
$
|
313.1
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(22.1
|
)
|
|
(1.9
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(25.7
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(22.1
|
)
|
|
(1.9
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(25.7
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
105.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105.4
|
|
|||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(105.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105.4
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(5.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.4
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
0.1
|
|
|
70.9
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
71.3
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|||||||
Repurchases of common stock
|
(223.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(223.1
|
)
|
|||||||
Dividends
|
(35.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.7
|
)
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||||||
Distributions and advances from (to) affiliates
|
258.8
|
|
|
136.4
|
|
|
(395.3
|
)
|
|
3.2
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
137.8
|
|
|
(324.4
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
(3.1
|
)
|
|
(192.7
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
36.3
|
|
|
—
|
|
|
37.8
|
|
|
—
|
|
|
17.7
|
|
|
91.8
|
|
|||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
45.1
|
|
|
—
|
|
|
31.9
|
|
|
—
|
|
|
(39.4
|
)
|
|
37.6
|
|
|||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
81.4
|
|
|
$
|
—
|
|
|
$
|
69.7
|
|
|
$
|
—
|
|
|
$
|
(21.7
|
)
|
|
$
|
129.4
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(76.4
|
)
|
|
$
|
150.1
|
|
|
$
|
14.6
|
|
|
$
|
—
|
|
|
$
|
10.8
|
|
|
$
|
99.1
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(18.4
|
)
|
|
(4.2
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
(22.9
|
)
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(18.9
|
)
|
|
(4.2
|
)
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
|
(23.4
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Repayments of long-term debt
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.7
|
)
|
|||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
525.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
525.0
|
|
|||||||
Payments to extinguish long-term debt
|
—
|
|
|
(525.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(525.3
|
)
|
|||||||
Payment of debt financing costs
|
—
|
|
|
(6.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.8
|
)
|
|||||||
Net change in accounts payable - inventory financing
|
—
|
|
|
—
|
|
|
41.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
41.2
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.0
|
|
|||||||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|||||||
Repurchases of common stock
|
(91.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(91.7
|
)
|
|||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
4.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.2
|
|
|||||||
Dividends
|
(23.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(23.2
|
)
|
|||||||
Distributions and advances from (to) affiliates
|
114.9
|
|
|
72.2
|
|
|
(187.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
62.8
|
|
|
(145.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83.1
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(1.4
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
|
|
(32.5
|
)
|
|
—
|
|
|
12.9
|
|
|
—
|
|
|
10.8
|
|
|
(8.8
|
)
|
|||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
346.4
|
|
|
—
|
|
|
24.6
|
|
|
—
|
|
|
(26.5
|
)
|
|
344.5
|
|
|||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
313.9
|
|
|
$
|
—
|
|
|
$
|
37.5
|
|
|
$
|
—
|
|
|
$
|
(15.7
|
)
|
|
$
|
335.7
|
|
10.
|
Subsequent Events
|
•
|
Our Public segment sales are impacted by government spending policies, budget priorities and revenue levels. An adverse change in any of these factors could cause our Public segment customers to reduce their purchases or to terminate or not renew contracts with us, which could adversely affect our business, results of operations or cash flows. Meeting public safety needs continues to drive our sales growth from our state and local customers and we continue to benefit from the strategic changes made to better align with federal government purchasing programs for our federal customers. Sales growth in our education sales channel continues to benefit from the implementation of projects related to the U.S. Federal Communications Commission E-Rate program and schools developing digital testing and curriculum programs. The Healthcare industry continues to experience consolidation.
|
•
|
An important factor affecting our ability to generate sales and achieve our targeted operating results is the impact of general economic conditions on our customers’ willingness to spend on information technology. Global economic signals in 2016 continue to be mixed. For example, there is substantial uncertainty regarding the impact of the Referendum of the United Kingdom’s (“UK”) Membership of the European Union (“EU”) (referred to as “Brexit”), advising for the exit of the UK from the EU. Potential adverse consequences of Brexit such as global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between UK and EU countries and increased regulatory complexities could have a negative impact on our business, financial condition and results of operations. In addition, uncertainties related to potential changes in tax and regulatory policy, potential interest rate increases, weakening consumer and business confidence or increased unemployment could result in reduced or deferred spending on information technology products and services by our customers and result in increased competitive pricing pressures. We continue to closely monitor macroeconomic conditions and adjust our operational plans, including hiring plans, appropriately.
|
•
|
We believe that our customers’ transition to more complex technology solutions will continue to be an important growth area for us in the future. However, because the market for technology products and services is highly competitive, our success at capitalizing on this transition will be based on our ability to tailor specific solutions to customer needs, the quality and breadth of our product and service offerings, the knowledge and expertise of our sales force, price, product availability and speed of delivery.
|
|
Three Months Ended June 30,
|
||||||
(dollars in millions)
|
2016
|
|
2015
|
||||
Net sales
|
$
|
3,664.6
|
|
|
$
|
3,314.0
|
|
Gross profit
|
610.5
|
|
|
534.5
|
|
||
Income from operations
|
223.5
|
|
|
205.9
|
|
||
Net income
|
117.5
|
|
|
108.2
|
|
||
Non-GAAP net income
|
155.6
|
|
|
139.0
|
|
||
Adjusted EBITDA
|
300.6
|
|
|
268.0
|
|
||
Average daily sales
|
57.3
|
|
|
51.8
|
|
||
Net debt (defined as total debt minus cash and cash equivalents)
(1)
|
3,111.1
|
|
|
2,841.8
|
|
||
Cash conversion cycle (in days)
(2)
|
17
|
|
|
19
|
|
(1)
|
As a result of the adoption of Accounting Standards Update (ASU) 2015-15 which allows companies to present deferred financing costs for line-of-credit arrangements as an asset, we retrospectively adjusted the deferred financing costs and long-term debt liability presented in the June 30, 2015 Consolidated Balance Sheet to align it to the current period presentation.
|
(2)
|
Cash conversion cycle is defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average.
|
|
|
Three Months Ended June 30,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
3,664.6
|
|
|
100.0
|
%
|
|
$
|
3,314.0
|
|
|
100.0
|
%
|
Cost of sales
|
|
3,054.1
|
|
|
83.3
|
|
|
2,779.5
|
|
|
83.9
|
|
||
Gross profit
|
|
610.5
|
|
|
16.7
|
|
|
534.5
|
|
|
16.1
|
|
||
Selling and administrative expenses
|
|
344.7
|
|
|
9.4
|
|
|
290.6
|
|
|
8.8
|
|
||
Advertising expense
|
|
42.3
|
|
|
1.2
|
|
|
38.0
|
|
|
1.1
|
|
||
Income from operations
|
|
223.5
|
|
|
6.1
|
|
|
205.9
|
|
|
6.2
|
|
||
Interest expense, net
|
|
(36.9
|
)
|
|
(1.0
|
)
|
|
(37.8
|
)
|
|
(1.1
|
)
|
||
Other income, net
|
|
0.9
|
|
|
—
|
|
|
4.0
|
|
|
0.1
|
|
||
Income before income taxes
|
|
187.5
|
|
|
5.1
|
|
|
172.1
|
|
|
5.2
|
|
||
Income tax expense
|
|
(70.0
|
)
|
|
(1.9
|
)
|
|
(63.9
|
)
|
|
(1.9
|
)
|
||
Net income
|
|
$
|
117.5
|
|
|
3.2
|
%
|
|
$
|
108.2
|
|
|
3.3
|
%
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
|
|
||||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
(1)
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(2)
|
|
Average Daily Sales Percent Change
(2)
|
||||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Medium / Large
|
|
$
|
1,489.0
|
|
|
40.6
|
%
|
|
$
|
1,521.3
|
|
|
45.9
|
%
|
|
$
|
(32.3
|
)
|
|
(2.1
|
)%
|
|
(2.1
|
)%
|
Small Business
|
|
290.2
|
|
|
7.9
|
|
|
277.3
|
|
|
8.4
|
|
|
12.9
|
|
|
4.7
|
|
|
4.7
|
|
|||
Total Corporate
|
|
1,779.2
|
|
|
48.6
|
|
|
1,798.6
|
|
|
54.3
|
|
|
(19.4
|
)
|
|
(1.1
|
)
|
|
(1.1
|
)
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Government
|
|
456.6
|
|
|
12.5
|
|
|
390.8
|
|
|
11.8
|
|
|
65.8
|
|
|
16.8
|
|
|
16.8
|
|
|||
Education
|
|
640.0
|
|
|
17.5
|
|
|
548.9
|
|
|
16.6
|
|
|
91.1
|
|
|
16.6
|
|
|
16.6
|
|
|||
Healthcare
|
|
450.4
|
|
|
12.3
|
|
|
448.8
|
|
|
13.5
|
|
|
1.6
|
|
|
0.3
|
|
|
0.3
|
|
|||
Total Public
|
|
1,547.0
|
|
|
42.2
|
|
|
1,388.5
|
|
|
41.9
|
|
|
158.5
|
|
|
11.4
|
|
|
11.4
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
|
338.4
|
|
|
9.2
|
|
|
126.9
|
|
|
3.8
|
|
|
211.5
|
|
|
166.8
|
|
|
166.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
|
$
|
3,664.6
|
|
|
100.0
|
%
|
|
$
|
3,314.0
|
|
|
100.0
|
%
|
|
$
|
350.6
|
|
|
10.6
|
%
|
|
10.6
|
%
|
(1)
|
Effective January 1, 2016, CDW Advanced Services is included in our Corporate and Public segments and Other is comprised of CDW Canada and CDW UK. Prior periods have been reclassified to conform to the current period presentation.
|
(2)
|
There were
64
selling days for both the three months ended
June 30, 2016 and 2015
.
|
|
|
Three Months Ended June 30,
|
|
|
|||||||||||||
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Percent Change
in Income (Loss)
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
(2)
|
|
$
|
135.2
|
|
|
7.6
|
%
|
|
138.8
|
|
|
7.7
|
%
|
|
(2.6
|
)%
|
|
Public
(2)
|
|
108.3
|
|
|
7.0
|
|
|
91.0
|
|
|
6.6
|
|
|
18.9
|
|
||
Other
(3)(4)
|
|
9.4
|
|
|
2.8
|
|
|
4.3
|
|
|
3.4
|
|
|
118.8
|
|
||
Headquarters
(5)
|
|
(29.4
|
)
|
|
nm*
|
|
|
(28.2
|
)
|
|
nm*
|
|
|
3.9
|
|
||
Total income from operations
|
|
$
|
223.5
|
|
|
6.1
|
%
|
|
$
|
205.9
|
|
|
6.2
|
%
|
|
8.6
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income, allocations for Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(2)
|
Certain costs related to technology specialists have been reclassified between our Corporate and Public segments. The prior period has been reclassified to conform to the current period presentation.
|
(3)
|
Effective January 1, 2016, CDW Advanced Services is included in our Corporate and Public segments and Other is comprised of CDW Canada and CDW UK. The prior period has been reclassified to conform to the current period presentation.
|
(4)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(5)
|
Includes certain Headquarters’ function costs that are not allocated to the segments. Certain Headquarters expenses have been allocated to CDW Canada in 2016. The prior period has been reclassified to conform to the current period presentation.
|
|
|
Three Months Ended June 30,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Net income
|
|
$
|
117.5
|
|
|
$
|
108.2
|
|
Amortization of intangibles
(1)
|
|
47.1
|
|
|
40.2
|
|
||
Non-cash equity-based compensation
|
|
9.7
|
|
|
7.5
|
|
||
Acquisition and integration expenses
(2)
|
|
2.2
|
|
|
1.4
|
|
||
Other adjustments
|
|
0.3
|
|
|
1.0
|
|
||
Aggregate adjustment for income taxes
(3)
|
|
(21.2
|
)
|
|
(19.3
|
)
|
||
Non-GAAP net income
(4)
|
|
$
|
155.6
|
|
|
$
|
139.0
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Comprises expenses related to CDW UK.
|
(3)
|
Based on a normalized effective tax rate of 36.0% and 39.0%, respectively. The decrease in the rate is primarily due to including the incremental impact of CDW UK and differing statutory tax rates in the US and the UK.
|
(4)
|
Includes the impact of consolidating CDW UK's financial results for the three months ended June 30, 2016.
|
|
|
Three Months Ended June 30,
|
|||||||||||
(in millions)
|
|
2016
|
|
Percentage of Net Sales
|
|
2015
|
|
Percentage of Net Sales
|
|||||
Net income
|
|
$
|
117.5
|
|
|
|
|
$
|
108.2
|
|
|
|
|
Depreciation and amortization
|
|
63.7
|
|
|
|
|
52.6
|
|
|
|
|||
Income tax expense
|
|
70.0
|
|
|
|
|
63.9
|
|
|
|
|||
Interest expense, net
|
|
36.9
|
|
|
|
|
37.8
|
|
|
|
|||
EBITDA
|
|
288.1
|
|
|
7.9
|
%
|
|
262.5
|
|
|
7.9%
|
||
|
|
|
|
|
|
|
|
|
|||||
Adjustments:
|
|
|
|
|
|
|
|
|
|||||
Non-cash equity-based compensation
|
|
9.7
|
|
|
|
|
7.5
|
|
|
|
|||
Income from equity investments
|
|
(0.1
|
)
|
|
|
|
(4.0
|
)
|
|
|
|||
Acquisition and integration expenses
(1)
|
|
2.2
|
|
|
|
|
1.4
|
|
|
|
|||
Other adjustments
(2)
|
|
0.7
|
|
|
|
|
0.6
|
|
|
|
|||
Total adjustments
|
|
12.5
|
|
|
|
|
5.5
|
|
|
|
|||
Adjusted EBITDA
(3)
|
|
$
|
300.6
|
|
|
8.2
|
%
|
|
$
|
268.0
|
|
|
8.1%
|
(1)
|
Comprises expenses related to CDW UK.
|
(2)
|
Primarily includes historical retention costs.
|
(3)
|
Includes the impact of consolidating CDW UK's financial results for the three months ended June 30, 2016.
|
|
|
Three Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
% Change
|
|
Average Daily % Change
(1)
|
||||||
Net sales, as reported
|
|
$
|
3,664.6
|
|
|
$
|
3,314.0
|
|
|
10.6
|
%
|
|
10.6
|
%
|
Impact of acquisition
(2)
|
|
(208.0
|
)
|
|
—
|
|
|
|
|
|
||||
Organic net sales
|
|
$
|
3,456.6
|
|
|
$
|
3,314.0
|
|
|
4.3
|
%
|
|
4.3
|
%
|
Foreign currency translation
(3)
|
|
—
|
|
|
(5.8
|
)
|
|
|
|
|
||||
Organic net sales, on a constant currency basis
|
|
$
|
3,456.6
|
|
|
$
|
3,308.2
|
|
|
4.5
|
%
|
|
4.5
|
%
|
(1)
|
There were
64
selling days for both the three months ended
June 30, 2016 and 2015
.
|
(2)
|
Represents CDW UK's financial results for the three months ended
June 30, 2016
.
|
(3)
|
Represents the effect of translating the prior year results of CDW Canada at the average exchange rates applicable in the current year.
|
|
|
Six Months Ended
June 30, 2016
|
|
Six Months Ended
June 30, 2015
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
6,781.3
|
|
|
100.0
|
%
|
|
$
|
6,069.2
|
|
|
100.0
|
%
|
Cost of sales
|
|
5,646.3
|
|
|
83.3
|
|
|
5,078.2
|
|
|
83.7
|
|
||
Gross profit
|
|
1,135.0
|
|
|
16.7
|
|
|
991.0
|
|
|
16.3
|
|
||
Selling and administrative expenses
|
|
674.0
|
|
|
9.9
|
|
|
566.1
|
|
|
9.3
|
|
||
Advertising expense
|
|
76.5
|
|
|
1.1
|
|
|
67.4
|
|
|
1.1
|
|
||
Income from operations
|
|
384.5
|
|
|
5.7
|
|
|
357.5
|
|
|
5.9
|
|
||
Interest expense, net
|
|
(75.0
|
)
|
|
(1.1
|
)
|
|
(82.6
|
)
|
|
(1.4
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
—
|
|
|
(24.3
|
)
|
|
(0.4
|
)
|
||
Other income, net
|
|
1.9
|
|
|
—
|
|
|
8.5
|
|
|
0.1
|
|
||
Income before income taxes
|
|
311.4
|
|
|
4.6
|
|
|
259.1
|
|
|
4.3
|
|
||
Income tax expense
|
|
(116.1
|
)
|
|
(1.7
|
)
|
|
(96.2
|
)
|
|
(1.6
|
)
|
||
Net income
|
|
$
|
195.3
|
|
|
2.9
|
%
|
|
$
|
162.9
|
|
|
2.7
|
%
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|
|
||||||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
|
|
||||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
(1)
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change (2) |
|
Average Daily Sales Percent Change
(2)
|
||||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Medium / Large
|
|
$
|
2,899.6
|
|
|
42.8
|
%
|
|
$
|
2,863.2
|
|
|
47.2
|
%
|
|
$
|
36.4
|
|
|
1.3
|
%
|
|
0.5
|
%
|
Small Business
|
|
571.8
|
|
|
8.4
|
|
|
545.8
|
|
|
9.0
|
|
|
26.0
|
|
|
4.8
|
|
|
3.9
|
|
|||
Total Corporate
|
|
3,471.4
|
|
|
51.2
|
|
|
3,409.0
|
|
|
56.2
|
|
|
62.4
|
|
|
1.8
|
|
|
1.0
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Government
|
|
796.5
|
|
|
11.7
|
|
|
685.0
|
|
|
11.3
|
|
|
111.5
|
|
|
16.3
|
|
|
15.4
|
|
|||
Education
|
|
981.0
|
|
|
14.5
|
|
|
894.3
|
|
|
14.7
|
|
|
86.7
|
|
|
9.7
|
|
|
8.8
|
|
|||
Healthcare
|
|
839.0
|
|
|
12.4
|
|
|
826.4
|
|
|
13.6
|
|
|
12.6
|
|
|
1.5
|
|
|
0.7
|
|
|||
Total Public
|
|
2,616.5
|
|
|
38.6
|
|
|
2,405.7
|
|
|
39.6
|
|
|
210.8
|
|
|
8.8
|
|
|
7.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other
|
|
693.4
|
|
|
10.2
|
|
|
254.5
|
|
|
4.2
|
|
|
438.9
|
|
|
172.5
|
|
|
170.3
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Total net sales
|
|
$
|
6,781.3
|
|
|
100.0
|
%
|
|
$
|
6,069.2
|
|
|
100.0
|
%
|
|
$
|
712.1
|
|
|
11.7
|
%
|
|
10.9
|
%
|
(1)
|
Effective January 1, 2016, CDW Advanced Services is included in our Corporate and Public segments and Other is comprised of CDW Canada and CDW UK. Prior periods have been reclassified to conform to the current period presentation.
|
(2)
|
There were
128
and
127
selling days for the six months ended
June 30, 2016 and 2015
, respectively.
|
|
|
Six Months Ended June 30,
|
|
|
||||||||||||
|
|
2016
|
|
2015
|
|
|
||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Percent Change
in Income (Loss)
from Operations
|
||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
||||||
Corporate
(2)
|
|
$
|
253.4
|
|
|
7.3
|
%
|
|
257.4
|
|
|
7.6
|
%
|
|
(1.6
|
)%
|
Public
(2)
|
|
166.7
|
|
|
6.4
|
|
|
146.4
|
|
|
6.1
|
|
|
13.9
|
|
|
Other
(3)(4)
|
|
17.5
|
|
|
2.5
|
|
|
9.2
|
|
|
3.6
|
|
|
89.6
|
|
|
Headquarters
(5)
|
|
(53.1
|
)
|
|
nm*
|
|
|
(55.5
|
)
|
|
nm*
|
|
|
(4.4
|
)
|
|
Total income from operations
|
|
$
|
384.5
|
|
|
5.7
|
%
|
|
357.5
|
|
|
5.9
|
%
|
|
7.6
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income and allocations for Headquarters’ costs, allocations for logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(2)
|
Certain costs related to technology specialists have been reclassified between our Corporate and Public segments. The prior period has been reclassified to conform to the current period presentation.
|
(3)
|
Effective January 1, 2016, CDW Advanced Services is included in our Corporate and Public segments and Other is comprised of CDW Canada and CDW UK. The prior period has been reclassified to conform to the current period presentation.
|
(4)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(5)
|
Includes certain Headquarters' function costs that are not allocated to the segments. Certain Headquarters expenses have been allocated to CDW Canada in 2016. The prior period has been reclassified to conform to the current period presentation.
|
Month of Extinguishment
|
Debt Instrument
|
|
(in millions)
|
|
||||||
|
Amount Extinguished
|
|
Loss Recognized
|
|
||||||
March 2015
|
2019 Senior Notes
|
|
$
|
503.9
|
|
|
$
|
(24.3
|
)
|
(1)
|
Total Loss Recognized
|
|
|
|
|
$
|
(24.3
|
)
|
|
(1)
|
We redeemed all of the remaining aggregate principal amount outstanding. The loss recognized represents the difference between the redemption price and the net carrying amount of the purchased debt, adjusted for the remaining unamortized deferred financing costs and premium.
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Net income
|
|
$
|
195.3
|
|
|
$
|
162.9
|
|
Amortization of intangibles
(1)
|
|
94.6
|
|
|
80.5
|
|
||
Non-cash equity-based compensation
|
|
18.1
|
|
|
12.2
|
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
24.3
|
|
||
Acquisition and integration expenses
(2)
|
|
3.8
|
|
|
1.7
|
|
||
Other adjustments
(3)
|
|
(2.8
|
)
|
|
1.6
|
|
||
Aggregate adjustment for income taxes
(4)
|
|
(40.7
|
)
|
|
(46.6
|
)
|
||
Non-GAAP net income
(5)
|
|
$
|
268.3
|
|
|
$
|
236.6
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Comprises expenses related to CDW UK.
|
(3)
|
Primarily includes the favorable resolution of a local sales tax matter in the six months ended June 30, 2016, partially offset by expenses related to the consolidation of office locations north of Chicago.
|
(4)
|
Based on a normalized effective tax rate of 36.0% and 39.0%, respectively. The decrease in the rate is primarily due to including the incremental impact of CDW UK and differing statutory tax rates in the US and the UK.
|
(5)
|
Includes the impact of consolidating CDW UK's financial results for the six months ended June 30, 2016.
|
|
|
Six Months Ended June 30,
|
||||||||||
(in millions)
|
|
2016
|
|
Percentage of Net Sales
|
|
2015
|
|
Percentage of Net Sales
|
||||
Net income
|
|
$
|
195.3
|
|
|
|
|
$
|
162.9
|
|
|
|
Depreciation and amortization
|
|
127.7
|
|
|
|
|
105.1
|
|
|
|
||
Income tax expense
|
|
116.1
|
|
|
|
|
96.2
|
|
|
|
||
Interest expense, net
|
|
75.0
|
|
|
|
|
82.6
|
|
|
|
||
EBITDA
|
|
514.1
|
|
|
7.6%
|
|
446.8
|
|
|
7.4%
|
||
|
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
||||
Non-cash equity-based compensation
|
|
18.1
|
|
|
|
|
12.2
|
|
|
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
|
|
24.3
|
|
|
|
||
Income from equity investments
|
|
(0.7
|
)
|
|
|
|
(8.5
|
)
|
|
|
||
Acquisition and integration expenses
(1)
|
|
3.8
|
|
|
|
|
1.7
|
|
|
|
||
Other adjustments
(2)
|
|
(2.0
|
)
|
|
|
|
2.3
|
|
|
|
||
Total adjustments
|
|
19.2
|
|
|
|
|
32.0
|
|
|
|
||
Adjusted EBITDA
(3)
|
|
$
|
533.3
|
|
|
7.9%
|
|
$
|
478.8
|
|
|
7.9%
|
(1)
|
Comprises expenses related to CDW UK.
|
(2)
|
Primarily includes the favorable resolution of a local sales tax matter, partially offset by expenses related to the consolidation of office locations north of Chicago and historical retention costs.
|
(3)
|
Includes the impact of consolidating CDW UK's financial results for the six months ended June 30, 2016.
|
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
% Change
|
|
Average Daily % Change
(1)
|
||||||
Net sales, as reported
|
|
$
|
6,781.3
|
|
|
$
|
6,069.2
|
|
|
11.7
|
%
|
|
10.9
|
%
|
Impact of acquisition
(2)
|
|
(440.1
|
)
|
|
—
|
|
|
|
|
|
||||
Organic net sales
|
|
$
|
6,341.2
|
|
|
$
|
6,069.2
|
|
|
4.5
|
%
|
|
3.7
|
%
|
Foreign currency translation
(3)
|
|
—
|
|
|
(17.5
|
)
|
|
|
|
|
||||
Organic net sales, on a constant currency basis
|
|
$
|
6,341.2
|
|
|
$
|
6,051.7
|
|
|
4.8
|
%
|
|
4.0
|
%
|
(1)
|
There were
128
and
127
selling days for the
six
months ended
June 30, 2016 and 2015
, respectively.
|
(2)
|
Represents CDW UK's financial results for the
six
months ended
June 30, 2016
.
|
(3)
|
Represents the effect of translating the prior year results of CDW Canada at the average exchange rates applicable in the current year.
|
Dividend Amount
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
$0.1075
|
|
February 9, 2016
|
|
February 25, 2016
|
|
March 10, 2016
|
$0.1075
|
|
May 4, 2016
|
|
May 25, 2016
|
|
June 10, 2016
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2016
|
|
2015
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
313.1
|
|
|
$
|
99.1
|
|
Investing activities
|
(25.7
|
)
|
|
(23.4
|
)
|
||
|
|
|
|
||||
Net change in accounts payable-inventory financing
|
71.3
|
|
|
41.2
|
|
||
Other financing activities
|
(264.0
|
)
|
|
(124.3
|
)
|
||
Financing activities
|
(192.7
|
)
|
|
(83.1
|
)
|
||
|
|
|
|
||||
Effect of exchange rate changes on cash and cash equivalents
|
(2.9
|
)
|
|
(1.4
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
91.8
|
|
|
$
|
(8.8
|
)
|
|
Six Months Ended June 30,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
Dollar Change
|
||||||
Net income
|
$
|
195.3
|
|
|
$
|
162.9
|
|
|
$
|
32.4
|
|
Adjustments for the impact of non-cash items
(1)
|
99.2
|
|
|
94.0
|
|
|
5.2
|
|
|||
Net income adjusted for the impact of non-cash items
(2)
|
294.5
|
|
|
256.9
|
|
|
37.6
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
—
|
|
|||||
Accounts receivable
(3)
|
(74.9
|
)
|
|
(157.7
|
)
|
|
82.8
|
|
|||
Merchandise inventory
|
(99.0
|
)
|
|
(98.9
|
)
|
|
(0.1
|
)
|
|||
Accounts payable-trade
(4)
|
219.3
|
|
|
151.9
|
|
|
67.4
|
|
|||
Other
|
(26.8
|
)
|
|
(53.1
|
)
|
|
26.3
|
|
|||
Net cash provided by operating activities
|
$
|
313.1
|
|
|
$
|
99.1
|
|
|
$
|
214.0
|
|
(1)
|
Includes items such as Deferred income taxes, Depreciation and amortization, Equity-based compensation expense, Income from equity method investment and Net loss on extinguishments of long-term debt.
|
(2)
|
The increase in cash flows reflected stronger operating results driven by the impact of consolidating six months of CDW UK's financial results, organic sales growth and lower interest expense, partially offset by higher income tax expense.
|
(3)
|
The increase in cash flow was primarily due to an increase in collections during 2016 due to the higher accounts receivable balance as of December 31, 2015 driven by higher sales in our Public segment where customers generally take longer to pay than customers in our Corporate segment.
|
(4)
|
The increase in cash flows was primarily due to the timing of payments to vendors during the current period and longer payment terms with certain vendors.
|
(1)
|
Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.
|
(2)
|
Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily cost of sales for the same three-month period.
|
(3)
|
Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily cost of sales for the same three-month period.
|
Period
|
|
Total Number of Shares Purchased (in millions)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program (in millions)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Program
(1)
(in millions)
|
||||||
April 1 through April 30, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
140.5
|
|
May 1 through May 31, 2016
|
|
0.4
|
|
|
$
|
41.95
|
|
|
0.4
|
|
|
$
|
872.2
|
|
June 1 through June 30, 2016
|
|
2.1
|
|
|
$
|
42.00
|
|
|
2.1
|
|
|
$
|
785.5
|
|
Total
|
|
2.5
|
|
|
|
|
|
2.5
|
|
|
|
(1)
|
On
November 6, 2014
, the Company announced that the Board of Directors approved a
$500 million
share repurchase program, which became effective immediately, under which the Company may repurchase shares of its common stock in the open market or through privately negotiated or other transactions, depending on share price, market conditions and other factors. The share repurchase program does not obligate the Company to repurchase any dollar amount or number of shares, and repurchases may be commenced or suspended from time to time without prior notice. On May 4, 2016, the Company announced that its Board of Directors authorized a $750 million increase to the Company's share repurchase program, which became effective immediately.
|
|
|
|
|
|
|
|
|
|
CDW CORPORATION
|
||
|
|
|
|
|
|
Date:
|
August 3, 2016
|
|
By:
|
|
/s/ Ann E. Ziegler
|
|
|
|
|
|
Ann E. Ziegler
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
(Duly authorized officer and principal financial officer)
|
Exhibit
|
|
Description
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3.1
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Fifth Amended and Restated Certificate of Incorporation of CDW Corporation, previously filed as Exhibit 3.1 with CDW Corporation’s Amendment No. 2 to Form S-1 filed on June 14, 2013 (Reg. No. 333-187472) and incorporated herein by reference.
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3.1.1
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Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of CDW Corporation, previously filed as Exhibit 3.1 with CDW Corporation's Form 8-K filed on May 19, 2016 and incorporated herein by reference.
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3.2*
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Amended and Restated By-Laws of CDW Corporation.
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10.1§
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Amended and Restated 2013 Long-Term Incentive Plan of CDW Corporation, previously filed as Exhibit 10.1 with CDW Corporation's Form 8-K filed on May 19, 2016 and incorporated herein by reference.
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31.1*
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Certification of Chief Executive Officer Pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.
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31.2*
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Certification of Chief Financial Officer Pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.
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32.1*, **
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Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350.
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32.2*, **
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Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350.
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101.INS*
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XBRL Instance Document.
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101.SCH*
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XBRL Taxonomy Extension Schema Document.
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101.CAL*
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XBRL Taxonomy Extension Calculation Linkbase Document.
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101.DEF*
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XBRL Taxonomy Extension Definition Linkbase Document.
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101.LAB*
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XBRL Taxonomy Extension Label Linkbase Document.
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101.PRE*
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XBRL Taxonomy Extension Presentation Linkbase Document.
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*
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Filed herewith
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§
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A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K.
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**
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These items are furnished and not filed.
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1.
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I have reviewed this quarterly report on Form 10-Q of the registrant;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Thomas E. Richards
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Thomas E. Richards
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Chairman, President and Chief Executive Officer
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CDW Corporation
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August 3, 2016
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1.
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I have reviewed this quarterly report on Form 10-Q of the registrant;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Ann E. Ziegler
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Ann E. Ziegler
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Senior Vice President and Chief Financial Officer
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CDW Corporation
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August 3, 2016
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/s/ Thomas E. Richards
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Thomas E. Richards
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Chairman, President and Chief Executive Officer
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CDW Corporation
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August 3, 2016
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/s/ Ann E. Ziegler
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Ann E. Ziegler
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Senior Vice President and Chief Financial Officer
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CDW Corporation
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August 3, 2016
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