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FORM 10-K
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ý
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ANNUAL 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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CDW CORPORATION
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(Exact name of registrant as specified in its charter)
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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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Title of each class:
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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NASDAQ Global Select Market
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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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Item
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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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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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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SIGNATURES
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Our value proposition to our customers
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Our value proposition to our vendor partners
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||
●
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Broad selection of products and multi-branded IT solutions
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●
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Access to over 250,000 customers throughout North America and the United Kingdom
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●
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Value-added services with integration capabilities
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●
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Large and established customer channels
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●
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Highly-skilled specialists and engineers
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●
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Strong distribution and implementation capabilities
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●
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Solutions across a very broad IT landscape
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●
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Value-added solutions and marketing programs that generate end-user demand
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•
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Data Center:
We assess our customers data center needs, design flexible, resilient and efficient solutions and manage the solution throughout its lifecycle. Our broad portfolio of hardware and software, for both on and off-premise solutions, enables us to provide a well-integrated solution, including converged and hyperconverged infrastructure, physical and virtualized servers, software defined data center, storage and energy-efficient power and cooling.
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•
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Digital Workspace:
We build solutions that deliver access to applications that improve our customers’ productivity regardless of time or location. We connect our customers’ physical devices, including laptops, desktops and mobile devices, and utilize collaboration solutions to unite communications and applications via the integration of products that facilitate the use of multiple enterprise communication methods including email, instant messaging, presence, social media, voice, video, hardware, software and services. We also host cloud-based collaboration solutions. Our solutions provide the tools that allow our customers’ employees to share knowledge, ideas and information among each other and with clients and partners effectively, securely and quickly.
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•
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Security
: We assess our customers’ security needs and provide them with threat prevention tools in order to protect their networks, servers and applications such as, anti-virus, anti-spam, content filtering, intrusion prevention, firewall and virtual private network services, and network access control. We also design and implement data loss prevention solutions, using data monitoring and encryption across a wide array of devices to ensure the security of customer information, personal employee information and research and development data.
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•
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Virtualization
: We design and implement server, storage and desktop virtualization solutions. Virtualization enables our customers to efficiently utilize hardware resources by running multiple, independent, virtual operating systems on a single computer and multiple virtual servers simultaneously on a single server. Virtualization also can separate a desktop environment and associated application software from the hardware device that is used to access it, and provides employees with remote desktop access. Our specialists assist customers with the steps of implementing virtualization solutions, including evaluating network environments, deploying shared storage options and licensing platform software.
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•
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Services
: We advise on, architect and manage integrated business technology for commercial and business organizations. Our solutions include integrated cloud, collaboration, data center, mobility and security business technology, from the physical to the application layer. We provide advisory, architectural and managed services across basic, discrete and integrated business technology solutions. We leverage best-in-class partner technology platforms to seamlessly architect and manage disparate IT platforms into integrated business technology solutions.
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Years Ended December 31,
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|||||||||||||||||||
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2016
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2015
(1)
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2014
(1)
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|||||||||||||||
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Dollars in
Millions |
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Percentage
of Total Net Sales |
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Dollars in
Millions
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Percentage
of Total Net Sales
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Dollars in
Millions
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Percentage
of Total Net Sales
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|||||||||
Notebooks/Mobile Devices
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2,934.3
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21.0
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%
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$
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2,538.5
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19.5
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%
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$
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2,352.9
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|
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19.5
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%
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Netcomm Products
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1,950.9
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14.0
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|
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1,912.3
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14.7
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1,613.9
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13.4
|
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|||
Desktops
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1,054.8
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7.5
|
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968.6
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7.5
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1,058.2
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8.8
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|||
Enterprise and Data Storage (Including Drives)
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1,057.6
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7.6
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1,065.5
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8.2
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1,023.9
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8.5
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|||
Other Hardware
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3,981.4
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28.5
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3,798.3
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29.2
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3,492.3
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|
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28.8
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|||
Software
(2)
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2,406.9
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17.2
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2,161.3
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16.6
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2,065.8
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17.1
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|||
Services
(2)
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579.0
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4.1
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472.8
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3.6
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371.1
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3.1
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Other
(3)
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17.0
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0.1
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71.4
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0.7
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96.4
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0.8
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Total Net sales
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$
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13,981.9
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100.0
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%
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$
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12,988.7
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100.0
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%
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$
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12,074.5
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|
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100.0
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%
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(1)
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Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the year ended December 31, 2016.
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(2)
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Certain software and services revenue is recorded on a net basis for accounting purposes, so the category percentage of net revenues is not representative of the category percentage of gross profits.
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(3)
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Includes items such as delivery charges to customers and certain commission revenue.
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•
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resellers, such as Computacenter, Connection, Dimension Data, ePlus, Insight Enterprises, PCM, Presidio, SCC, Softchoice, World Wide Technology and many smaller resellers;
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•
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manufacturers who sell directly to customers, such as Dell, HP Inc., Hewlett Packard Enterprise and Apple;
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•
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large service providers and system integrators, such as IBM, Accenture, Hewlett Packard Enterprise and Dell;
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•
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communications service providers, such as AT&T, CenturyLink and Verizon;
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•
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cloud providers, such as Amazon Web Services, Microsoft and Box;
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•
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e-tailers, such as Amazon, Newegg and TigerDirect.com; and
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•
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retailers (including their e-commerce activities), such as Staples and Office Depot.
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•
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conduct business with our customers, including delivering services and solutions to them;
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•
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manage our inventory and accounts receivable;
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•
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purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely basis; and
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•
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maintain our cost-efficient operating model while scaling our business.
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•
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the imposition of additional trade law provisions or regulations;
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•
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the imposition of additional duties, tariffs and other charges on imports and exports;
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•
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foreign currency fluctuations;
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•
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natural disasters or other adverse occurrences at, or affecting, any of our suppliers’ facilities;
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•
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restrictions on the transfer of funds;
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•
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the financial instability or bankruptcy of manufacturers; and
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•
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significant labor disputes, such as strikes.
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•
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making it more difficult for us to satisfy our obligations with respect to our indebtedness;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;
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•
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requiring us to comply with restrictive covenants in our senior credit facilities and indentures, which limit the manner in which we conduct our business;
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•
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making it more difficult for us to obtain vendor financing from our vendor partners, including original equipment manufacturers and software publishers;
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•
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limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;
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•
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placing us at a competitive disadvantage compared to any of our less-leveraged competitors;
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•
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increasing our vulnerability to both general and industry-specific adverse economic conditions; and
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•
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limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
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•
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incur or guarantee additional debt;
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•
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pay dividends or make distributions to holders of our capital stock or to make certain other restricted payments or investments;
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•
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repurchase or redeem capital stock;
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•
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make loans, capital expenditures or investments or acquisitions;
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•
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receive dividends or other payments from our subsidiaries;
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•
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enter into transactions with affiliates;
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•
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create liens;
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•
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merge or consolidate with other companies or transfer all or substantially all of our assets;
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•
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transfer or sell assets, including capital stock of subsidiaries; and
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•
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prepay, repurchase or redeem debt.
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•
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will not be required to lend any additional amounts to us;
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•
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could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable; or
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•
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could require us to apply all of our available cash to repay these borrowings.
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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•
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the lenders under our senior credit facilities could foreclose against the assets securing the borrowings from them and the lenders under our Revolving Loan and CDW UK Credit Facility could terminate their commitments to lend us money; and
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•
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we could be forced into bankruptcy or liquidation.
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•
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changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock;
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•
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downgrades by any securities analysts who follow our common stock;
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•
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future sales of our common stock by our officers, directors and significant stockholders;
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•
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market conditions or trends in our industry or the economy as a whole;
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•
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investors’ perceptions of our prospects;
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•
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announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and
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•
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changes in key personnel.
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•
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authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;
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•
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establish a classified Board of Directors so that not all members of our Board of Directors are elected at one time;
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•
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generally prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders;
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•
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provide that special meetings of the stockholders can only be called by or at the direction of our Board of Directors pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Company would have if there were no vacancies;
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•
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establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and
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•
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provide that our Board of Directors is expressly authorized to make, alter or repeal our amended and restated bylaws.
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Name
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Age
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Position
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Thomas E. Richards
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62
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Chairman, President and Chief Executive Officer, and Director
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Dennis G. Berger
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52
|
|
Senior Vice President and Chief Coworker Services Officer
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Neal J. Campbell
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55
|
|
Senior Vice President - Strategic Solutions and Services
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Mark C. Chong
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46
|
|
Senior Vice President - Strategy and Marketing
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Christina M. Corley
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49
|
|
Senior Vice President - Corporate Sales
|
Douglas E. Eckrote
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52
|
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Senior Vice President - Small Business Sales and eCommerce
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Christine A. Leahy
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52
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Senior Vice President - International, Chief Legal Officer and Corporate Secretary
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Christina V. Rother
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53
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Senior Vice President - Public and Advanced Technology Sales
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Jonathan J. Stevens
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47
|
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Senior Vice President - Operations and Chief Information Officer
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Matthew A. Troka
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46
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Senior Vice President - Product and Partner Management
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Ann E. Ziegler
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58
|
|
Senior Vice President and Chief Financial Officer
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|
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Year Ended December 31,
|
||||||||||||||||||||||
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|
2016
|
|
2015
|
||||||||||||||||||||
|
|
High
|
|
Low
|
|
Dividends Declared per Share
|
|
High
|
|
Low
|
|
Dividends Declared per Share
|
||||||||||||
Fourth quarter
|
|
$
|
55.47
|
|
|
$
|
43.64
|
|
|
$
|
0.1600
|
|
|
$
|
46.92
|
|
|
$
|
40.07
|
|
|
$
|
0.1075
|
|
Third quarter
|
|
$
|
47.50
|
|
|
$
|
39.17
|
|
|
$
|
0.1075
|
|
|
$
|
41.99
|
|
|
$
|
33.01
|
|
|
$
|
0.0675
|
|
Second quarter
|
|
$
|
43.11
|
|
|
$
|
37.80
|
|
|
$
|
0.1075
|
|
|
$
|
39.32
|
|
|
$
|
34.19
|
|
|
$
|
0.0675
|
|
First quarter
|
|
$
|
41.89
|
|
|
$
|
30.40
|
|
|
$
|
0.1075
|
|
|
$
|
38.44
|
|
|
$
|
33.21
|
|
|
$
|
0.0675
|
|
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
(in millions)
|
||||||
October 1 through October 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
654.3
|
|
November 1 through November 30, 2016
|
|
0.3
|
|
|
$
|
44.27
|
|
|
0.3
|
|
|
$
|
642.1
|
|
December 1 through December 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
642.1
|
|
Total
|
|
0.3
|
|
|
|
|
|
0.3
|
|
|
|
|
|
June 27, 2013
|
|
December 31, 2013
|
|
December 31, 2014
|
|
December 31, 2015
|
|
December 31, 2016
|
||||||||||
CDW Corp
|
|
$
|
100
|
|
|
$
|
138
|
|
|
$
|
209
|
|
|
$
|
251
|
|
|
$
|
315
|
|
S&P MidCap 400 index
|
|
$
|
100
|
|
|
$
|
118
|
|
|
$
|
130
|
|
|
$
|
127
|
|
|
$
|
153
|
|
CDW Peers
|
|
$
|
100
|
|
|
$
|
115
|
|
|
$
|
121
|
|
|
$
|
127
|
|
|
$
|
147
|
|
|
|
|
||||||||||||||||||
|
|
Years Ended December 31,
|
||||||||||||||||||
(dollars and shares in millions, except per share amounts)
|
|
2016
|
|
2015
(5)
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
|
$
|
12,074.5
|
|
|
$
|
10,768.6
|
|
|
$
|
10,128.2
|
|
Cost of sales
|
|
11,654.7
|
|
|
10,872.9
|
|
|
10,153.2
|
|
|
9,008.3
|
|
|
8,458.6
|
|
|||||
Gross profit
|
|
2,327.2
|
|
|
2,115.8
|
|
|
1,921.3
|
|
|
1,760.3
|
|
|
1,669.6
|
|
|||||
Selling and administrative expenses
|
|
1,345.1
|
|
|
1,226.0
|
|
|
1,110.3
|
|
|
1,120.9
|
|
|
1,029.5
|
|
|||||
Advertising expense
|
|
162.9
|
|
|
147.8
|
|
|
138.0
|
|
|
130.8
|
|
|
129.5
|
|
|||||
Income from operations
|
|
819.2
|
|
|
742.0
|
|
|
673.0
|
|
|
508.6
|
|
|
510.6
|
|
|||||
Interest expense, net
|
|
(146.5
|
)
|
|
(159.5
|
)
|
|
(197.3
|
)
|
|
(250.1
|
)
|
|
(307.4
|
)
|
|||||
Net loss on extinguishments of long-term debt
|
|
(2.1
|
)
|
|
(24.3
|
)
|
|
(90.7
|
)
|
|
(64.0
|
)
|
|
(17.2
|
)
|
|||||
Gain on remeasurement of equity investment
|
|
—
|
|
|
98.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense), net
|
|
1.8
|
|
|
(9.3
|
)
|
|
2.7
|
|
|
1.0
|
|
|
0.1
|
|
|||||
Income before income taxes
|
|
672.4
|
|
|
647.0
|
|
|
387.7
|
|
|
195.5
|
|
|
186.1
|
|
|||||
Income tax expense
|
|
(248.0
|
)
|
|
(243.9
|
)
|
|
(142.8
|
)
|
|
(62.7
|
)
|
|
(67.1
|
)
|
|||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
|
$
|
119.0
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
2.59
|
|
|
$
|
2.37
|
|
|
$
|
1.44
|
|
|
$
|
0.85
|
|
|
$
|
0.82
|
|
Diluted
|
|
$
|
2.56
|
|
|
$
|
2.35
|
|
|
$
|
1.42
|
|
|
$
|
0.84
|
|
|
$
|
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
0.4825
|
|
|
$
|
0.3100
|
|
|
$
|
0.1950
|
|
|
$
|
0.0425
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
263.7
|
|
|
$
|
37.6
|
|
|
$
|
344.5
|
|
|
$
|
188.1
|
|
|
$
|
37.9
|
|
Working capital
|
|
957.4
|
|
|
903.5
|
|
|
985.4
|
|
|
810.9
|
|
|
666.5
|
|
|||||
Total assets
|
|
6,948.4
|
|
|
6,755.3
|
|
|
6,075.9
|
|
|
5,899.3
|
|
|
5,673.5
|
|
|||||
Total debt and capitalized lease obligations
(1)(2)
|
|
3,236.6
|
|
|
3,262.9
|
|
|
3,166.1
|
|
|
3,226.0
|
|
|
3,724.5
|
|
|||||
Total stockholders’ equity
|
|
1,045.5
|
|
|
1,095.9
|
|
|
936.5
|
|
|
711.7
|
|
|
136.5
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
63.5
|
|
|
$
|
90.1
|
|
|
$
|
55.0
|
|
|
$
|
47.1
|
|
|
$
|
41.4
|
|
Gross profit as a percentage of Net sales
|
|
16.6
|
%
|
|
16.3
|
%
|
|
15.9
|
%
|
|
16.3
|
%
|
|
16.5
|
%
|
|||||
EBITDA
(3)
|
|
$
|
1,073.4
|
|
|
$
|
1,033.9
|
|
|
$
|
792.9
|
|
|
$
|
653.8
|
|
|
$
|
703.7
|
|
Adjusted EBITDA
(3)
|
|
1,117.3
|
|
|
1,018.5
|
|
|
907.0
|
|
|
808.5
|
|
|
766.6
|
|
|||||
Non-GAAP net income
(4)
|
|
569.0
|
|
|
503.5
|
|
|
409.9
|
|
|
314.3
|
|
|
247.1
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
|
$
|
604.0
|
|
|
$
|
277.5
|
|
|
$
|
435.0
|
|
|
$
|
366.3
|
|
|
$
|
317.4
|
|
Investing activities
|
|
(65.9
|
)
|
|
(354.4
|
)
|
|
(164.8
|
)
|
|
(47.1
|
)
|
|
(41.7
|
)
|
|||||
Financing activities
|
|
(304.6
|
)
|
|
(226.5
|
)
|
|
(112.0
|
)
|
|
(168.3
|
)
|
|
(338.0
|
)
|
(1)
|
Excludes borrowings of
$580 million
,
$440 million
,
$332 million
,
$257 million
and
$249 million
, as of December 31, 2016, 2015, 2014, 2013 and 2012, respectively, under our inventory financing agreements. We do not include these borrowings in total debt because we have not in the past incurred, and in the future do not expect to incur, any interest expense or late fees under these agreements.
|
(2)
|
Includes capitalized lease obligations of $2 million and $3 million as of December 31, 2016 and 2015, respectively, which are included in Other liabilities on the Consolidated Balance Sheet.
|
(3)
|
EBITDA is defined as consolidated net income before interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA, which is a measure defined in our credit agreements, means EBITDA adjusted for certain items which are described in the table below. We have included a reconciliation of EBITDA and Adjusted EBITDA in the table below. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(in millions)
|
|
2016
|
|
2015
(f)
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
|
$
|
119.0
|
|
Depreciation and amortization
|
|
254.5
|
|
|
227.4
|
|
|
207.9
|
|
|
208.2
|
|
|
210.2
|
|
|||||
Income tax expense
|
|
248.0
|
|
|
243.9
|
|
|
142.8
|
|
|
62.7
|
|
|
67.1
|
|
|||||
Interest expense, net
|
|
146.5
|
|
|
159.5
|
|
|
197.3
|
|
|
250.1
|
|
|
307.4
|
|
|||||
EBITDA
|
|
1,073.4
|
|
|
1,033.9
|
|
|
792.9
|
|
|
653.8
|
|
|
703.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-cash equity-based compensation
|
|
39.2
|
|
|
31.2
|
|
|
16.4
|
|
|
8.6
|
|
|
22.1
|
|
|||||
Net loss on extinguishments of long-term debt
(a)
|
|
2.1
|
|
|
24.3
|
|
|
90.7
|
|
|
64.0
|
|
|
17.2
|
|
|||||
(Income) loss from equity investments
(b)
|
|
(1.1
|
)
|
|
10.1
|
|
|
(2.2
|
)
|
|
(0.6
|
)
|
|
(0.3
|
)
|
|||||
Acquisition and integration expenses
(c)
|
|
7.3
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on remeasurement of equity investment
(d)
|
|
—
|
|
|
(98.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other adjustments
(e)
|
|
(3.6
|
)
|
|
6.9
|
|
|
9.2
|
|
|
82.7
|
|
|
23.9
|
|
|||||
Adjusted EBITDA
(f)
|
|
$
|
1,117.3
|
|
|
$
|
1,018.5
|
|
|
$
|
907.0
|
|
|
$
|
808.5
|
|
|
$
|
766.6
|
|
(a)
|
During the years ended December 31, 2016, 2015, 2014, 2013 and 2012, we recorded net losses on extinguishments of long-term debt. The losses represented the difference between the amount paid upon extinguishment, including call premiums and expenses paid to the debt holders and agents, and the net carrying amount of the extinguished debt, adjusted for a portion of the unamortized deferred financing costs.
|
(b)
|
Represents our share of net (income) loss from our equity investments. Our 35% share of CDW UK’s net loss includes our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition.
|
(c)
|
Comprised of expenses related to CDW UK.
|
(d)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(e)
|
Other adjustments primarily include our share of settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter in 2016, certain
|
(f)
|
Includes the impact of consolidating five months of CDW UK’s financial results for the year ended December 31, 2015.
|
(4)
|
Non-GAAP net income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, non-cash equity-based compensation, acquisition and integration expenses, and gains and losses from the extinguishments of long-term debt. Non-GAAP net income is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that non-GAAP net income provides analysts, investors and management with helpful information regarding the underlying operating performance of our business, as this measure removes the impact of items that management believes are not reflective of underlying operating performance. Management uses this measure to evaluate period-over-period performance as management believes it provides a more comparable measure of the underlying business.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(in millions)
|
|
2016
|
|
2015
(g)
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
|
$
|
119.0
|
|
Amortization of intangibles
(a)
|
|
187.2
|
|
|
173.9
|
|
|
161.2
|
|
|
161.2
|
|
|
163.7
|
|
|||||
Non-cash equity-based compensation
|
|
39.2
|
|
|
31.2
|
|
|
16.4
|
|
|
8.6
|
|
|
22.1
|
|
|||||
Non-cash equity-based compensation related to equity investment
(b)
|
|
—
|
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net loss on extinguishments of long-term debt
|
|
2.1
|
|
|
24.3
|
|
|
90.7
|
|
|
64.0
|
|
|
17.2
|
|
|||||
Acquisition and integration expenses
(c)
|
|
7.3
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Gain on remeasurement of equity investment
(d)
|
|
—
|
|
|
(98.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other adjustments
(e)
|
|
(5.4
|
)
|
|
3.7
|
|
|
(0.3
|
)
|
|
61.2
|
|
|
(3.3
|
)
|
|||||
Aggregate adjustment for income taxes
(f)
|
|
(85.8
|
)
|
|
(64.8
|
)
|
|
(103.0
|
)
|
|
(113.5
|
)
|
|
(71.6
|
)
|
|||||
Non-GAAP net income
(g)
|
|
$
|
569.0
|
|
|
$
|
503.5
|
|
|
$
|
409.9
|
|
|
$
|
314.3
|
|
|
$
|
247.1
|
|
(a)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(b)
|
Represents our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to our acquisition of CDW UK.
|
(c)
|
Comprised of expenses related to CDW UK.
|
(d)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(e)
|
Primarily includes our share of settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter during 2016, expenses related to the consolidation of office locations north of Chicago and secondary offering-related expenses. The amount in 2013 primarily relates to IPO and secondary offering-related expenses.
|
(f)
|
Aggregate adjustment for income taxes consists of the following:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
Total Non-GAAP adjustments
|
230.4
|
|
|
165.2
|
|
|
268.0
|
|
|
295.0
|
|
|
199.7
|
|
|||||
Weighted-average statutory effective rate
|
36.0
|
%
|
|
38.0
|
%
|
|
39.0
|
%
|
|
39.0
|
%
|
|
39.0
|
%
|
|||||
Income tax
|
(82.9
|
)
|
|
(62.8
|
)
|
|
(104.5
|
)
|
|
(115.1
|
)
|
|
(77.9
|
)
|
|||||
Deferred tax adjustment due to law changes
|
(1.5
|
)
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Stock compensation tax benefit related to the adoption of ASU 2016-09
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Withholding tax expense on the unremitted earnings of our Canadian subsidiary
|
—
|
|
|
3.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Non-deductible adjustments and other
|
0.4
|
|
|
(1.3
|
)
|
|
1.5
|
|
|
1.6
|
|
|
6.3
|
|
|||||
Total aggregate adjustment for income taxes
|
$
|
(85.8
|
)
|
|
$
|
(64.8
|
)
|
|
$
|
(103.0
|
)
|
|
$
|
(113.5
|
)
|
|
$
|
(71.6
|
)
|
(g)
|
Includes the impact of consolidating five months for the year ended December 31, 2015 of CDW UK’s financial results.
|
(5)
|
Includes the impact of consolidating five months of CDW UK’s financial results for the year ended December 31, 2015.
|
•
|
General economic conditions are a key factor affecting our ability to generate sales and achieve our targeted operating results as they impact our customers’ willingness to spend on information technology. This is particularly the case for corporate customers, as their purchases tend to reflect confidence in their business prospects, which are driven by their perceptions of business conditions. Purchasing behavior may be different between our Medium/Large customers and Small Business customers due to their perception of business conditions.
|
•
|
Changes in spending policies, budget priorities and revenue levels are a key factor influencing government purchasing levels. Our Government results also reflect increased interest in meeting public safety needs through technology solutions by state and local customers, as well as our ability to address strategic changes made by the Federal government toward a more programmatic technology strategy.
|
•
|
Customer focus on security has been, and we expect will continue to be, an ongoing trend. Customers are seeking solutions to protect their internal systems against threats and are implementing solutions that provide enterprise-wide visibility, detection expertise and investigation workflows. They are also implementing endpoint security, firewall segmentation and user authentication tools.
|
•
|
The Healthcare industry continues to experience consolidation, which has caused uneven technology growth as customers assess their post-acquisition state.
|
•
|
Our Education sales channel performance continues to be impacted by the implementation of networking projects related to the US Federal Communications Commission E-Rate program. We are also seeing positive impacts as schools develop digital testing and curriculum programs, and work to create new learning environments for students. Within the higher education market, networking projects continue to be a key priority across campuses. While technology is an opportunity to create cost savings and improve productivity, funding is a key determinant of technology spending in education.
|
•
|
There continues to be substantial uncertainty regarding the impact of Brexit. 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.
|
•
|
Technology trends drive customer purchase behaviors and we are seeing continuing evolution in the market. Innovation influences customer purchases across all of our customer end-markets. Key trends in technology include increasing adoption of cloud-based solutions for certain key workloads, including security, as well as adoption of hyper-converged appliances to deliver greater flexibility and efficiency. In addition, hybrid cloud solutions are being adopted, along with software being embedded into solutions.
|
|
Years Ended December 31,
|
||||||||||
(dollars in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
|
$
|
12,074.5
|
|
Gross profit
|
2,327.2
|
|
|
2,115.8
|
|
|
1,921.3
|
|
|||
Income from operations
|
819.2
|
|
|
742.0
|
|
|
673.0
|
|
|||
Net income
|
424.4
|
|
|
403.1
|
|
|
244.9
|
|
|||
Non-GAAP net income
|
569.0
|
|
|
503.5
|
|
|
409.9
|
|
|||
Adjusted EBITDA
|
1,117.3
|
|
|
1,018.5
|
|
|
907.0
|
|
|||
Average daily sales
|
55.0
|
|
|
51.1
|
|
|
47.5
|
|
|||
Net debt (defined as total debt minus cash and cash equivalents)
(1)
|
2,970.7
|
|
|
3,222.1
|
|
|
2,821.5
|
|
|||
Cash conversion cycle (in days)
(2)
|
19
|
|
|
21
|
|
|
21
|
|
(1)
|
As a result of the adoption of Accounting Standards Update (ASU) 2015-03 during the second quarter of 2015, historical periods have been revised to reflect the change in the presentation of deferred financing costs, which are now shown as a reduction of Long-term debt, instead of being presented as a separate asset on the Consolidated Balance Sheet. In the third quarter of 2015, we adopted ASU 2015-15 which allows entities to present deferred financing costs for line-of-credit arrangements as an asset. We retroactively adjusted the deferred financing costs and Long-term debt liability presented in historical periods 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.
|
|
|
Years Ended December 31,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
||||||
Net sales
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
Cost of sales
|
|
11,654.7
|
|
|
83.4
|
|
|
10,872.9
|
|
|
83.7
|
|
||
Gross profit
|
|
2,327.2
|
|
|
16.6
|
|
|
2,115.8
|
|
|
16.3
|
|
||
Selling and administrative expenses
|
|
1,345.1
|
|
|
9.6
|
|
|
1,226.0
|
|
|
9.4
|
|
||
Advertising expense
|
|
162.9
|
|
|
1.2
|
|
|
147.8
|
|
|
1.1
|
|
||
Income from operations
|
|
819.2
|
|
|
5.9
|
|
|
742.0
|
|
|
5.7
|
|
||
Interest expense, net
|
|
(146.5
|
)
|
|
(1.0
|
)
|
|
(159.5
|
)
|
|
(1.2
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
(2.1
|
)
|
|
—
|
|
|
(24.3
|
)
|
|
(0.2
|
)
|
||
Gain on remeasurement of equity investment
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|
0.8
|
|
||
Other income (expense), net
|
|
1.8
|
|
|
—
|
|
|
(9.3
|
)
|
|
(0.1
|
)
|
||
Income before income taxes
|
|
672.4
|
|
|
4.8
|
|
|
647.0
|
|
|
5.0
|
|
||
Income tax expense
|
|
(248.0
|
)
|
|
(1.8
|
)
|
|
(243.9
|
)
|
|
(1.9
|
)
|
||
Net income
|
|
$
|
424.4
|
|
|
3.0
|
%
|
|
$
|
403.1
|
|
|
3.1
|
%
|
(1)
|
Percentages may not total due to rounding.
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales |
|
Net Sales
|
|
Percentage
of Total Net Sales |
|
Dollar
Change |
|
Percent
Change (1) |
|||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Medium/Large
|
|
$
|
5,879.7
|
|
|
42.1
|
%
|
|
$
|
5,875.3
|
|
|
45.2
|
%
|
|
$
|
4.4
|
|
|
0.1
|
%
|
Small Business
|
|
1,150.2
|
|
|
8.2
|
|
|
1,093.0
|
|
|
8.4
|
|
|
57.2
|
|
|
5.2
|
|
|||
Total Corporate
|
|
7,029.9
|
|
|
50.3
|
|
|
6,968.3
|
|
|
53.6
|
|
|
61.6
|
|
|
0.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
1,863.7
|
|
|
13.3
|
|
|
1,700.9
|
|
|
13.1
|
|
|
162.7
|
|
|
9.6
|
|
|||
Education
|
|
2,018.3
|
|
|
14.4
|
|
|
1,818.8
|
|
|
14.0
|
|
|
199.5
|
|
|
11.0
|
|
|||
Healthcare
|
|
1,707.4
|
|
|
12.2
|
|
|
1,663.9
|
|
|
12.8
|
|
|
43.5
|
|
|
2.6
|
|
|||
Total Public
|
|
5,589.4
|
|
|
40.0
|
|
|
5,183.6
|
|
|
39.9
|
|
|
405.7
|
|
|
7.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
1,362.6
|
|
|
9.7
|
|
|
836.8
|
|
|
6.4
|
|
|
525.9
|
|
|
62.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Net sales
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
|
$
|
993.2
|
|
|
7.6
|
%
|
(1)
|
There were
254
selling days for the years ended
December 31, 2016 and 2015
.
|
|
|
Years Ended December 31,
|
|
|
|||||||||||||
|
|
2016
|
|
2015
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
(2)
|
|
$
|
522.5
|
|
|
7.4
|
%
|
|
$
|
500.8
|
|
|
7.2
|
%
|
|
4.3
|
%
|
Public
(2)
|
|
368.0
|
|
|
6.6
|
|
|
328.6
|
|
|
6.3
|
|
|
12.0
|
|
||
Other
(3)(4)
|
|
43.6
|
|
|
3.2
|
|
|
27.1
|
|
|
3.2
|
|
|
60.9
|
|
||
Headquarters
(5)
|
|
(114.9
|
)
|
|
nm*
|
|
|
(114.5
|
)
|
|
nm*
|
|
|
0.3
|
|
||
Total Income from operations
|
|
$
|
819.2
|
|
|
5.9
|
%
|
|
$
|
742.0
|
|
|
5.7
|
%
|
|
10.4
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income, allocations for certain 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 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.
|
(1)
|
We repaid all of the remaining aggregate principal amount outstanding. The loss recognized represents the difference between the aggregate principal amount and the net carrying amount of the purchased debt, adjusted for the remaining unamortized deferred financing costs and premium.
|
|
|
Years Ended December 31,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
Amortization of intangibles
(1)
|
|
187.2
|
|
|
173.9
|
|
||
Non-cash equity-based compensation
|
|
39.2
|
|
|
31.2
|
|
||
Non-cash equity-based compensation related to equity investment
(2)
|
|
—
|
|
|
20.0
|
|
||
Net loss on extinguishments of long-term debt
|
|
2.1
|
|
|
24.3
|
|
||
Acquisition and integration expenses
(3)
|
|
7.3
|
|
|
10.2
|
|
||
Gain on remeasurement of equity investment
(4)
|
|
—
|
|
|
(98.1
|
)
|
||
Other adjustments
(5)
|
|
(5.4
|
)
|
|
3.7
|
|
||
Aggregate adjustment for income taxes
(6)
|
|
(85.8
|
)
|
|
(64.8
|
)
|
||
Non-GAAP net income
(7)
|
|
$
|
569.0
|
|
|
$
|
503.5
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Represents our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to our acquisition of CDW UK.
|
(3)
|
Comprised of expenses related to CDW UK.
|
(4)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(5)
|
Primarily includes our share of settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter during the year ended December 31, 2016. Also includes expenses related to the consolidation of office locations north of Chicago during the years ended December 31, 2016 and 2015.
|
(6)
|
Aggregate adjustment for income taxes consists of the following:
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
||||
Total Non-GAAP adjustments
|
|
230.4
|
|
|
165.2
|
|
||
Weighted-average statutory effective rate
|
|
36.0
|
%
|
|
38.0
|
%
|
||
Income tax
|
|
(82.9
|
)
|
|
(62.8
|
)
|
||
Deferred tax adjustment due to law changes
|
|
(1.5
|
)
|
|
(4.0
|
)
|
||
Stock compensation tax benefit related to the adoption of ASU 2016-09
|
|
(1.8
|
)
|
|
—
|
|
||
Withholding tax expense on the unremitted earnings of our Canadian subsidiary
|
|
—
|
|
|
3.3
|
|
||
Non-deductible adjustments and other
|
|
0.4
|
|
|
(1.3
|
)
|
||
Total aggregate adjustment for income taxes
|
|
$
|
(85.8
|
)
|
|
$
|
(64.8
|
)
|
(7)
|
Includes the impact of consolidating five months of CDW UK's financial results for the year ended December 31, 2015.
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
Percentage of
Net Sales
|
|
2015
|
|
Percentage of
Net Sales
|
||||
Net income
|
|
$
|
424.4
|
|
|
|
|
$
|
403.1
|
|
|
|
Depreciation and amortization
|
|
254.5
|
|
|
|
|
227.4
|
|
|
|
||
Income tax expense
|
|
248.0
|
|
|
|
|
243.9
|
|
|
|
||
Interest expense, net
|
|
146.5
|
|
|
|
|
159.5
|
|
|
|
||
EBITDA
|
|
1,073.4
|
|
|
7.7%
|
|
1,033.9
|
|
|
8.0%
|
||
|
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
||||
Non-cash equity-based compensation
|
|
39.2
|
|
|
|
|
31.2
|
|
|
|
||
Net loss on extinguishments of long-term debt
|
|
2.1
|
|
|
|
|
24.3
|
|
|
|
||
(Income) loss from equity investments
(1)
|
|
(1.1
|
)
|
|
|
|
10.1
|
|
|
|
||
Acquisition and integration expenses
(2)
|
|
7.3
|
|
|
|
|
10.2
|
|
|
|
||
Gain on remeasurement of equity investment
(3)
|
|
—
|
|
|
|
|
(98.1
|
)
|
|
|
||
Other adjustments
(4)
|
|
(3.6
|
)
|
|
|
|
6.9
|
|
|
|
||
Total adjustments
|
|
43.9
|
|
|
|
|
(15.4)
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA
(5)
|
|
$
|
1,117.3
|
|
|
8.0%
|
|
$
|
1,018.5
|
|
|
7.8%
|
(1)
|
Represents our share of (income) loss from our equity investments. Our 35% share of CDW UK's net loss for the twelve months ended December 31, 2015 includes our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(4)
|
Primarily includes our share of settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter during the year ended December 31, 2016. Also includes expenses related to the consolidation of office locations north of Chicago during the years ended December 31, 2016 and 2015.
|
(5)
|
Includes the impact of consolidating five months of CDW UK's financial results for the year ended December 31, 2015.
|
|
|
Years Ended December 31,
|
|
|
|
||||||||
(in millions)
|
|
2016
|
|
2015
|
|
% Change
|
Average Daily % Change
(1)
|
||||||
Net sales, as reported
|
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
|
7.6
|
%
|
7.6
|
%
|
Foreign currency translation
(2)
|
|
—
|
|
|
(76.3
|
)
|
|
|
|
||||
Consolidated Net sales, on a constant currency basis
|
|
$
|
13,981.9
|
|
|
$
|
12,912.4
|
|
|
8.3
|
%
|
8.3
|
%
|
(1)
|
There were
254
selling days for the
twelve
months ended
December 31, 2016 and 2015
.
|
(2)
|
Represents the effect of translating the prior year results of CDW Canada and CDW UK at the average exchange rates applicable in the current year. Includes the impact of consolidating five months of CDW UK's financial results for the year ended December 31, 2015.
|
|
|
Year Ended December 31, 2015
|
|
Year Ended December 31, 2014
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
|
$
|
12,074.5
|
|
|
100.0
|
%
|
Cost of sales
|
|
10,872.9
|
|
|
83.7
|
|
|
10,153.2
|
|
|
84.1
|
|
||
Gross profit
|
|
2,115.8
|
|
|
16.3
|
|
|
1,921.3
|
|
|
15.9
|
|
||
Selling and administrative expenses
|
|
1,226.0
|
|
|
9.4
|
|
|
1,110.3
|
|
|
9.2
|
|
||
Advertising expense
|
|
147.8
|
|
|
1.1
|
|
|
138.0
|
|
|
1.1
|
|
||
Income from operations
|
|
742.0
|
|
|
5.7
|
|
|
673.0
|
|
|
5.6
|
|
||
Interest expense, net
|
|
(159.5
|
)
|
|
(1.2
|
)
|
|
(197.3
|
)
|
|
(1.6
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
(24.3
|
)
|
|
(0.2
|
)
|
|
(90.7
|
)
|
|
(0.8
|
)
|
||
Gain on remeasurement of equity investment
|
|
98.1
|
|
|
0.8
|
|
|
—
|
|
|
—
|
|
||
Other income, net
|
|
(9.3
|
)
|
|
(0.1
|
)
|
|
2.7
|
|
|
—
|
|
||
Income before income taxes
|
|
647.0
|
|
|
5.0
|
|
|
387.7
|
|
|
3.2
|
|
||
Income tax expense
|
|
(243.9
|
)
|
|
(1.9
|
)
|
|
(142.8
|
)
|
|
(1.2
|
)
|
||
Net income
|
|
$
|
403.1
|
|
|
3.1
|
%
|
|
$
|
244.9
|
|
|
2.0
|
%
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||
|
|
2015
|
|
2014
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net sales
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(1)
|
|||||||||
Corporate:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Medium/Large
|
|
$
|
5,875.3
|
|
|
45.2
|
%
|
|
$
|
5,578.3
|
|
|
46.2
|
%
|
|
$
|
297.0
|
|
|
5.3
|
%
|
Small Business
|
|
1,093.0
|
|
|
8.4
|
|
|
1,025.7
|
|
|
8.5
|
|
|
67.3
|
|
|
6.6
|
|
|||
Total Corporate
|
|
6,968.3
|
|
|
53.6
|
|
|
6,604.0
|
|
|
54.7
|
|
|
364.3
|
|
|
5.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
1,700.9
|
|
|
13.1
|
|
|
1,475.9
|
|
|
12.2
|
|
|
225.0
|
|
|
15.2
|
|
|||
Education
|
|
1,818.8
|
|
|
14.0
|
|
|
1,838.7
|
|
|
15.2
|
|
|
(19.9
|
)
|
|
(1.1
|
)
|
|||
Healthcare
|
|
1,663.9
|
|
|
12.8
|
|
|
1,623.7
|
|
|
13.4
|
|
|
40.2
|
|
|
2.5
|
|
|||
Total Public
|
|
5,183.6
|
|
|
39.9
|
|
|
4,938.3
|
|
|
40.9
|
|
|
245.3
|
|
|
5.0
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
836.8
|
|
|
6.4
|
|
|
532.2
|
|
|
4.4
|
|
|
304.6
|
|
|
57.2
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Net sales
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
|
$
|
12,074.5
|
|
|
100.0
|
%
|
|
$
|
914.2
|
|
|
7.6
|
%
|
(1)
|
There were 254 selling days for the years ended
December 31, 2015 and 2014
.
|
|
|
Years Ended December 31,
|
|
|
|||||||||||||
|
|
2015
|
|
2014
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
(2)
|
|
$
|
500.8
|
|
|
7.2
|
%
|
|
$
|
460.6
|
|
|
7.0
|
%
|
|
8.7
|
%
|
Public
(2)
|
|
328.6
|
|
|
6.3
|
|
|
303.9
|
|
|
6.2
|
|
|
8.1
|
|
||
Other
(3)(4)
|
|
27.1
|
|
|
3.2
|
|
|
21.4
|
|
|
4.0
|
|
|
26.7
|
|
||
Headquarters
(5)
|
|
(114.5
|
)
|
|
nm*
|
|
|
(112.9
|
)
|
|
nm*
|
|
|
1.5
|
|
||
Total Income from operations
|
|
$
|
742.0
|
|
|
5.7
|
%
|
|
$
|
673.0
|
|
|
5.6
|
%
|
|
10.3
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income, allocations for certain 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 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.
|
(1)
|
We redeemed or repurchased all or a portion of the 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 a portion of the unamortized deferred financing costs and/or unamortized premium.
|
(2)
|
We entered into a new $1,250 million five-year senior secured asset-based revolving credit facility (the “Revolving Loan”) on June 6, 2014. The Revolving Loan replaced our previous revolving loan credit facility that was to mature on June 24, 2016. The loss recognized represents the write-off of a portion of unamortized deferred financing costs.
|
|
|
Years Ended December 31,
|
||||||
(in millions)
|
|
2015
|
|
2014
|
||||
Net income
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
Amortization of intangibles
(1)
|
|
173.9
|
|
|
161.2
|
|
||
Non-cash equity-based compensation
|
|
31.2
|
|
|
16.4
|
|
||
Non-cash equity-based compensation related to equity investment
(2)
|
|
20.0
|
|
|
—
|
|
||
Net loss on extinguishments of long-term debt
|
|
24.3
|
|
|
90.7
|
|
||
Acquisition and integration expenses
(3)
|
|
10.2
|
|
|
—
|
|
||
Gain on remeasurement of equity investment
(4)
|
|
(98.1
|
)
|
|
—
|
|
||
Other adjustments
(5)
|
|
3.7
|
|
|
(0.3
|
)
|
||
Aggregate adjustment for income taxes
(6)
|
|
(64.8
|
)
|
|
(103.0
|
)
|
||
Non-GAAP net income
(7)
|
|
$
|
503.5
|
|
|
$
|
409.9
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Represents our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to our acquisition of CDW UK.
|
(3)
|
Comprised of expenses related to CDW UK.
|
(4)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(5)
|
Primarily includes expenses related to the consolidation of office locations north of Chicago and secondary offering-related expenses.
|
(6)
|
Aggregate adjustment for income taxes consists of the following:
|
|
|
Year Ended December 31,
|
||||||
|
|
2015
|
|
2014
|
||||
Total Non-GAAP adjustments
|
|
165.2
|
|
|
268.0
|
|
||
Weighted-average statutory effective rate
|
|
38.0
|
%
|
|
39.0
|
%
|
||
Income tax
|
|
(62.8
|
)
|
|
(104.5
|
)
|
||
Deferred tax adjustment due to law changes
|
|
(4.0
|
)
|
|
—
|
|
||
Withholding tax expense on the unremitted earnings of our Canadian subsidiary
|
|
3.3
|
|
|
—
|
|
||
Non-deductible adjustments and other
|
|
(1.3
|
)
|
|
1.5
|
|
||
Total aggregate adjustment for income taxes
|
|
$
|
(64.8
|
)
|
|
$
|
(103.0
|
)
|
(7)
|
Includes the impact of consolidating five months of CDW UK’s financial results for the year ended December 31, 2015.
|
|
Years Ended December 31,
|
|
|
||||||||
(in millions)
|
2015
|
|
Percentage of
Net Sales
|
|
2014
|
|
Percentage of
Net Sales |
||||
Net income
|
$
|
403.1
|
|
|
|
|
$
|
244.9
|
|
|
|
Depreciation and amortization
|
227.4
|
|
|
|
|
207.9
|
|
|
|
||
Income tax expense
|
243.9
|
|
|
|
|
142.8
|
|
|
|
||
Interest expense, net
|
159.5
|
|
|
|
|
197.3
|
|
|
|
||
EBITDA
|
1,033.9
|
|
|
8.0%
|
|
792.9
|
|
|
6.6%
|
||
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
||||
Non-cash equity-based compensation
|
31.2
|
|
|
|
|
16.4
|
|
|
|
||
Net loss on extinguishments of long-term debt
|
24.3
|
|
|
|
|
90.7
|
|
|
|
||
Loss (income) from equity investments
(1)
|
10.1
|
|
|
|
|
(2.2
|
)
|
|
|
||
Acquisition and integration expenses
(2)
|
10.2
|
|
|
|
|
—
|
|
|
|
||
Gain on remeasurement of equity investment
(3)
|
(98.1
|
)
|
|
|
|
—
|
|
|
|
||
Other adjustments
(4)
|
6.9
|
|
|
|
|
9.2
|
|
|
|
||
Total adjustments
|
(15.4
|
)
|
|
|
|
114.1
|
|
|
|
||
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA
(5)
|
$
|
1,018.5
|
|
|
7.8%
|
|
$
|
907.0
|
|
|
7.5%
|
(1)
|
Represents our share of net (income) loss from our equity investments. Our share of CDW UK's net loss includes our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(4)
|
Primarily includes certain historical retention costs, unusual, non-recurring litigation matters, secondary-offering-related expenses and expenses related to the consolidation of office locations north of Chicago.
|
(5)
|
Includes the impact of consolidating five months for the year ended December 31, 2015 of CDW UK’s financial results.
|
|
|
Years Ended December 31,
|
|
|
|||||||
(in millions)
|
|
2015
|
|
2014
|
|
% Change
|
|||||
Net sales, as reported
|
|
$
|
12,988.7
|
|
|
$
|
12,074.5
|
|
|
7.6
|
%
|
Impact of acquisition
(1)
|
|
(350.7
|
)
|
|
—
|
|
|
|
|||
Organic Net sales
|
|
$
|
12,638.0
|
|
|
$
|
12,074.5
|
|
|
4.7
|
%
|
Foreign currency translation
(2)
|
|
—
|
|
|
(71.5
|
)
|
|
|
|||
Organic Net sales, on a constant currency basis
|
|
$
|
12,638.0
|
|
|
$
|
12,003.0
|
|
|
5.3
|
%
|
(1)
|
Represents five months for the year ended December 31, 2015 of CDW UK's financial results.
|
(2)
|
Represents the effect of translating the prior year results of our Canadian subsidiary 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
|
$0.1075
|
|
August 2, 2016
|
|
August 25, 2016
|
|
September 12, 2016
|
$0.1600
|
|
November 1, 2016
|
|
November 25, 2016
|
|
December 12, 2016
|
$0.4825
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
2014
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
604.0
|
|
|
$
|
277.5
|
|
|
$
|
435.0
|
|
Investing activities
|
(65.9
|
)
|
|
(354.4
|
)
|
|
(164.8
|
)
|
|||
|
|
|
|
|
|
||||||
Net change in accounts payable - inventory financing
|
143.6
|
|
|
95.9
|
|
|
75.5
|
|
|||
Other financing activities
|
(448.2
|
)
|
|
(322.4
|
)
|
|
(187.5
|
)
|
|||
Financing activities
|
(304.6
|
)
|
|
(226.5
|
)
|
|
(112.0
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
(7.4
|
)
|
|
(3.5
|
)
|
|
(1.8
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
226.1
|
|
|
$
|
(306.9
|
)
|
|
$
|
156.4
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
2016
|
|
2015
|
|
Dollar Change
|
||||||
Net income
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
21.3
|
|
Adjustments for the impact of non-cash items
(1)
|
202.9
|
|
|
150.3
|
|
|
52.6
|
|
|||
Net income adjusted for the impact of non-cash items
(2)
|
627.3
|
|
|
553.4
|
|
|
73.9
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
(3)
|
(179.9
|
)
|
|
(342.6
|
)
|
|
162.7
|
|
|||
Merchandise inventory
|
(68.5
|
)
|
|
(31.5
|
)
|
|
(37.0
|
)
|
|||
Accounts payable-trade
(4)
|
225.1
|
|
|
100.5
|
|
|
124.6
|
|
|||
Other
|
—
|
|
|
(2.3
|
)
|
|
2.3
|
|
|||
Net cash provided by operating activities
|
$
|
604.0
|
|
|
$
|
277.5
|
|
|
$
|
326.5
|
|
(1)
|
Includes items such as Deferred income taxes, Depreciation and amortization, Equity-based compensation expense, Gain on remeasurement of equity method investment, Loss from equity method investment and net loss on extinguishments of long-term debt.
|
(2)
|
The change in cash flows reflected stronger operating results driven by Net sales growth and the impact of consolidating a full year of CDW UK financial results in 2016, compared to five months in 2015.
|
(3)
|
The change in cash flows 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. In addition, the lower accounts receivable balances as of December 31, 2014, driven by early payments from certain customers, resulted in lower cash flows in the prior year period.
|
(4)
|
The increase in cash flows was primarily due to the timing of inventory purchases and longer payment terms with certain vendors.
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
2015
|
|
2014
|
|
Dollar Change
|
||||||
Net income
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
158.2
|
|
Adjustments for the impact of non-cash items
(1)
|
150.3
|
|
|
231.9
|
|
|
(81.6
|
)
|
|||
Net income adjusted for the impact of non-cash items
(2)
|
553.4
|
|
|
476.8
|
|
|
76.6
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
(3)
|
(342.6
|
)
|
|
(117.6
|
)
|
|
(225.0
|
)
|
|||
Merchandise inventory
(4)
|
(31.5
|
)
|
|
44.2
|
|
|
(75.7
|
)
|
|||
Accounts payable-trade
(5)
|
100.5
|
|
|
43.7
|
|
|
56.8
|
|
|||
Other
|
(2.3
|
)
|
|
(12.1
|
)
|
|
9.8
|
|
|||
Net cash provided by operating activities
|
$
|
277.5
|
|
|
$
|
435.0
|
|
|
$
|
(157.5
|
)
|
(1)
|
Includes items such as Deferred income taxes, Depreciation and amortization, Equity-based compensation expense, Gain on remeasurement of equity method investment, Loss (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 organic sales growth and the impact of consolidating five months of CDW UK financial results. A decrease in interest expense, partially offset by higher income tax expense, also contributed to the strong operating results.
|
(3)
|
The decrease in cash flows was driven by a higher accounts receivable balance at December 31, 2015 driven by higher sales in our Public segment where customers generally take longer to pay than customers in our Corporate segment, slower government payments in certain states due to budget issues and the lower accounts receivable balance at December 31, 2014 driven by early payments from certain customers.
|
(4)
|
The decrease in cash flows was primarily due to the lower inventory balance as of December 31, 2014 as a result of the timing of inventory receipts and earlier than expected inventory shipments at the end of 2014 due to accelerated customer roll-outs and an increase in inventory on-hand as of December 31, 2015 to support the growth in the business.
|
(5)
|
The increase in cash flows was primarily due to the timing of inventory purchases, longer payment terms with certain vendors and growth in the business.
|
(1)
|
Represents the rolling three-month average of the balance of trade 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 goods sold 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 goods sold for the same three-month period.
|
|
|
Payments Due by Period
|
||||||||||||||||||
(in millions)
|
|
Total
|
|
< 1 year
|
|
1-3 years
|
|
4-5 years
|
|
> 5 years
|
||||||||||
Term Loan
(1)
|
|
$
|
1,792.3
|
|
|
$
|
62.9
|
|
|
$
|
185.8
|
|
|
$
|
121.5
|
|
|
$
|
1,422.1
|
|
CDW UK Term Loan
(1)
|
|
74.0
|
|
|
1.2
|
|
|
21.7
|
|
|
51.1
|
|
|
—
|
|
|||||
Senior Notes due 2022
(2)
|
|
816.0
|
|
|
36.0
|
|
|
108.0
|
|
|
672.0
|
|
|
—
|
|
|||||
Senior Notes due 2023
(2)
|
|
708.8
|
|
|
26.3
|
|
|
78.8
|
|
|
52.5
|
|
|
551.2
|
|
|||||
Senior Notes due 2024
(2)
|
|
828.0
|
|
|
31.6
|
|
|
94.9
|
|
|
63.3
|
|
|
638.2
|
|
|||||
Operating leases
(3)
|
|
22.6
|
|
|
4.9
|
|
|
12.1
|
|
|
5.6
|
|
|
—
|
|
|||||
Asset retirement obligations
(4)
|
|
0.9
|
|
|
—
|
|
|
0.3
|
|
|
0.2
|
|
|
0.4
|
|
|||||
Total
|
|
$
|
4,242.6
|
|
|
$
|
162.9
|
|
|
$
|
501.6
|
|
|
$
|
966.2
|
|
|
$
|
2,611.9
|
|
(1)
|
Includes future principal and cash interest payments on long-term borrowings through scheduled maturity dates. Interest payments for variable rate debt were calculated using interest rates as of
December 31, 2016
. Excluded from these amounts are the amortization of debt issuance and other costs related to indebtedness.
|
(2)
|
Includes future principal and cash interest payments on long-term borrowings through scheduled maturity dates. Interest on the Senior Notes is calculated using the stated interest rates. Excluded from these amounts are the amortization of debt issuance and other costs related to indebtedness.
|
(3)
|
Includes the minimum lease payments for non-cancelable operating leases of properties and equipment used in our operations. Capital leases included in property and equipment are not material.
|
(4)
|
Represent commitments to return property subject to operating leases to original condition upon lease termination.
|
|
Page
|
/s/ Ernst & Young LLP
|
Chicago, Illinois
|
February 28, 2017
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except per-share amounts)
|
|||||||
|
December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
263.7
|
|
|
$
|
37.6
|
|
Accounts receivable, net of allowance for doubtful accounts of $5.9 and $6.0, respectively
|
2,168.6
|
|
|
2,017.4
|
|
||
Merchandise inventory
|
452.0
|
|
|
393.1
|
|
||
Miscellaneous receivables
|
234.9
|
|
|
198.4
|
|
||
Prepaid expenses and other
|
118.9
|
|
|
144.3
|
|
||
Total current assets
|
3,238.1
|
|
|
2,790.8
|
|
||
Property and equipment, net
|
163.7
|
|
|
175.4
|
|
||
Goodwill
|
2,455.0
|
|
|
2,500.4
|
|
||
Other intangible assets, net
|
1,055.6
|
|
|
1,276.4
|
|
||
Other assets
|
36.0
|
|
|
12.3
|
|
||
Total Assets
|
$
|
6,948.4
|
|
|
$
|
6,755.3
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable-trade
|
$
|
1,072.9
|
|
|
$
|
866.5
|
|
Accounts payable-inventory financing
|
580.4
|
|
|
439.6
|
|
||
Current maturities of long-term debt
|
18.5
|
|
|
27.2
|
|
||
Deferred revenue
|
172.6
|
|
|
151.9
|
|
||
Accrued expenses:
|
|
|
|
||||
Compensation
|
167.6
|
|
|
120.4
|
|
||
Interest
|
25.1
|
|
|
25.1
|
|
||
Sales taxes
|
38.0
|
|
|
38.1
|
|
||
Advertising
|
55.8
|
|
|
52.3
|
|
||
Other
|
149.8
|
|
|
166.2
|
|
||
Total current liabilities
|
2,280.7
|
|
|
1,887.3
|
|
||
Long-term liabilities:
|
|
|
|
||||
Debt
|
3,215.9
|
|
|
3,232.5
|
|
||
Deferred income taxes
|
369.2
|
|
|
469.6
|
|
||
Other liabilities
|
37.1
|
|
|
70.0
|
|
||
Total long-term liabilities
|
3,622.2
|
|
|
3,772.1
|
|
||
Commitments and contingencies (Note 14)
|
|
|
|
|
|||
Stockholders’ equity:
|
|
|
|
||||
Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods
|
—
|
|
|
—
|
|
||
Common stock, $0.01 par value, 1,000.0 shares authorized; 160.3 and 168.2 shares issued and outstanding, respectively
|
1.6
|
|
|
1.7
|
|
||
Paid-in capital
|
2,857.3
|
|
|
2,806.9
|
|
||
Accumulated deficit
|
(1,673.8
|
)
|
|
(1,651.6
|
)
|
||
Accumulated other comprehensive loss
|
(139.6
|
)
|
|
(61.1
|
)
|
||
Total stockholders’ equity
|
1,045.5
|
|
|
1,095.9
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
6,948.4
|
|
|
$
|
6,755.3
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Net sales
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
|
$
|
12,074.5
|
|
Cost of sales
|
11,654.7
|
|
|
10,872.9
|
|
|
10,153.2
|
|
|||
Gross profit
|
2,327.2
|
|
|
2,115.8
|
|
|
1,921.3
|
|
|||
Selling and administrative expenses
|
1,345.1
|
|
|
1,226.0
|
|
|
1,110.3
|
|
|||
Advertising expense
|
162.9
|
|
|
147.8
|
|
|
138.0
|
|
|||
Income from operations
|
819.2
|
|
|
742.0
|
|
|
673.0
|
|
|||
Interest expense, net
|
(146.5
|
)
|
|
(159.5
|
)
|
|
(197.3
|
)
|
|||
Net loss on extinguishments of long-term debt
|
(2.1
|
)
|
|
(24.3
|
)
|
|
(90.7
|
)
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
98.1
|
|
|
—
|
|
|||
Other income (expense), net
|
1.8
|
|
|
(9.3
|
)
|
|
2.7
|
|
|||
Income before income taxes
|
672.4
|
|
|
647.0
|
|
|
387.7
|
|
|||
Income tax expense
|
(248.0
|
)
|
|
(243.9
|
)
|
|
(142.8
|
)
|
|||
Net income
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
2.59
|
|
|
$
|
2.37
|
|
|
$
|
1.44
|
|
Diluted
|
$
|
2.56
|
|
|
$
|
2.35
|
|
|
$
|
1.42
|
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
163.6
|
|
|
170.3
|
|
|
170.6
|
|
|||
Diluted
|
166.0
|
|
|
171.8
|
|
|
172.8
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
$
|
0.4825
|
|
|
$
|
0.3100
|
|
|
$
|
0.1950
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
|
||||||||||||
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
Foreign currency translation (net of tax (expense) benefit of ($0.2) million, ($0.3) million and $0.5 million, respectively)
|
|
(78.5
|
)
|
|
(44.5
|
)
|
|
(10.3
|
)
|
|||
Other comprehensive loss, net of tax
|
|
(78.5
|
)
|
|
(44.5
|
)
|
|
(10.3
|
)
|
|||
Comprehensive income
|
|
$
|
345.9
|
|
|
$
|
358.6
|
|
|
$
|
234.6
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
|
||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive (Loss) Income
|
|
Total
Stockholders’ Equity |
||||||||||||||
Balance at December 31, 2013
|
|
—
|
|
|
$
|
—
|
|
|
172.0
|
|
|
$
|
1.7
|
|
|
$
|
2,688.1
|
|
|
$
|
(1,971.8
|
)
|
|
$
|
(6.3
|
)
|
|
$
|
711.7
|
|
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
|
—
|
|
|
—
|
|
|
16.4
|
|
||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
||||||
Excess tax benefits from equity-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||||
Coworker stock purchase plan
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.6
|
)
|
|
—
|
|
|
(33.6
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
244.9
|
|
|
—
|
|
|
244.9
|
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(10.3
|
)
|
|
(10.3
|
)
|
||||||
Balance at December 31, 2014
|
|
—
|
|
|
$
|
—
|
|
|
172.2
|
|
|
$
|
1.7
|
|
|
$
|
2,711.9
|
|
|
$
|
(1,760.5
|
)
|
|
$
|
(16.6
|
)
|
|
$
|
936.5
|
|
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
|
—
|
|
|
—
|
|
|
28.3
|
|
||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
||||||
Common stock issued for equity-based compensation
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Excess tax benefits from equity-based compensation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
||||||
Coworker stock purchase plan
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
8.7
|
|
|
—
|
|
|
—
|
|
|
8.7
|
|
||||||
Common stock issued for acquisition of business
|
|
—
|
|
|
—
|
|
|
1.6
|
|
|
—
|
|
|
55.0
|
|
|
—
|
|
|
—
|
|
|
55.0
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52.9
|
)
|
|
—
|
|
|
(52.9
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
403.1
|
|
|
—
|
|
|
403.1
|
|
||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|
(241.3
|
)
|
|
—
|
|
|
(241.3
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(44.5
|
)
|
|
(44.5
|
)
|
||||||
Balance at December 31, 2015
|
|
—
|
|
|
$
|
—
|
|
|
168.2
|
|
|
$
|
1.7
|
|
|
$
|
2,806.9
|
|
|
$
|
(1,651.6
|
)
|
|
$
|
(61.1
|
)
|
|
$
|
1,095.9
|
|
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33.2
|
|
|
—
|
|
|
—
|
|
|
33.2
|
|
||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
||||||
Common stock issued for equity-based compensation
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
9.3
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
(79.2
|
)
|
|
—
|
|
|
(78.7
|
)
|
||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
424.4
|
|
|
—
|
|
|
424.4
|
|
||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(8.7
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(367.4
|
)
|
|
—
|
|
|
(367.5
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78.5
|
)
|
|
(78.5
|
)
|
||||||
Balance as of December 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
160.3
|
|
|
$
|
1.6
|
|
|
$
|
2,857.3
|
|
|
$
|
(1,673.8
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
1,045.5
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
254.5
|
|
|
227.4
|
|
|
207.9
|
|
|||
Equity-based compensation expense
|
39.2
|
|
|
31.2
|
|
|
16.4
|
|
|||
Deferred income taxes
|
(97.2
|
)
|
|
(54.5
|
)
|
|
(89.1
|
)
|
|||
Amortization of deferred financing costs, debt premium and debt discount, net
|
6.5
|
|
|
6.4
|
|
|
6.4
|
|
|||
Net loss on extinguishments of long-term debt
|
2.1
|
|
|
24.3
|
|
|
90.7
|
|
|||
Loss (income) from equity investments
|
—
|
|
|
11.2
|
|
|
(1.2
|
)
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
(98.1
|
)
|
|
—
|
|
|||
Mark-to-market (gain) loss on interest rate cap agreements
|
(2.6
|
)
|
|
2.1
|
|
|
0.4
|
|
|||
Other
|
0.4
|
|
|
0.3
|
|
|
0.4
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(179.9
|
)
|
|
(342.6
|
)
|
|
(117.6
|
)
|
|||
Merchandise inventory
|
(68.5
|
)
|
|
(31.5
|
)
|
|
44.2
|
|
|||
Other assets
|
(50.1
|
)
|
|
(71.2
|
)
|
|
(18.7
|
)
|
|||
Accounts payable-trade
|
225.1
|
|
|
100.5
|
|
|
43.7
|
|
|||
Other current liabilities
|
80.2
|
|
|
47.5
|
|
|
1.7
|
|
|||
Long-term liabilities
|
(30.1
|
)
|
|
21.4
|
|
|
4.9
|
|
|||
Net cash provided by operating activities
|
604.0
|
|
|
277.5
|
|
|
435.0
|
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(63.5
|
)
|
|
(90.1
|
)
|
|
(55.0
|
)
|
|||
Payment for equity investment
|
—
|
|
|
—
|
|
|
(86.8
|
)
|
|||
Payment of accrued charitable contribution related to the MPK Coworker Incentive Plan II
|
—
|
|
|
—
|
|
|
(20.9
|
)
|
|||
Premium payments on interest rate cap agreements
|
(2.4
|
)
|
|
(0.5
|
)
|
|
(2.1
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
(263.8
|
)
|
|
—
|
|
|||
Net cash used in investing activities
|
(65.9
|
)
|
|
(354.4
|
)
|
|
(164.8
|
)
|
|||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings under revolving credit facility
|
338.8
|
|
|
314.5
|
|
|
—
|
|
|||
Repayments of borrowings under revolving credit facility
|
(338.8
|
)
|
|
(314.5
|
)
|
|
—
|
|
|||
Repayments of long-term debt
|
(20.6
|
)
|
|
(32.8
|
)
|
|
(15.4
|
)
|
|||
Proceeds from issuance of long-term debt
|
1,483.0
|
|
|
525.0
|
|
|
1,175.0
|
|
|||
Payments to extinguish long-term debt
|
(1,490.4
|
)
|
|
(525.3
|
)
|
|
(1,299.0
|
)
|
|||
Net change in other long-term obligation
|
15.7
|
|
|
—
|
|
|
—
|
|
|||
Payments of debt financing costs
|
(5.9
|
)
|
|
(6.8
|
)
|
|
(21.9
|
)
|
|||
Net change in accounts payable-inventory financing
|
143.6
|
|
|
95.9
|
|
|
75.5
|
|
|||
Proceeds from stock option exercises
|
7.4
|
|
|
2.4
|
|
|
1.3
|
|
|||
Proceeds from Coworker Stock Purchase Plan
|
9.3
|
|
|
8.7
|
|
|
5.8
|
|
|||
Repurchases of common stock
|
(367.4
|
)
|
|
(241.3
|
)
|
|
—
|
|
|||
Dividends paid
|
(78.7
|
)
|
|
(52.9
|
)
|
|
(33.6
|
)
|
|||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.6
|
|
|
0.3
|
|
|||
Principal payments under capital lease obligations
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash used in financing activities
|
(304.6
|
)
|
|
(226.5
|
)
|
|
(112.0
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
(7.4
|
)
|
|
(3.5
|
)
|
|
(1.8
|
)
|
|||
Net increase (decrease) in cash and cash equivalents
|
226.1
|
|
|
(306.9
|
)
|
|
156.4
|
|
|||
Cash and cash equivalents – beginning of period
|
37.6
|
|
|
344.5
|
|
|
188.1
|
|
|||
Cash and cash equivalents – end of period
|
$
|
263.7
|
|
|
$
|
37.6
|
|
|
$
|
344.5
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
(144.3
|
)
|
|
$
|
(154.6
|
)
|
|
$
|
(195.8
|
)
|
Taxes paid, net
|
$
|
(329.2
|
)
|
|
$
|
(300.2
|
)
|
|
$
|
(241.2
|
)
|
|
|
|
|
|
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
Classification
|
Estimated
Useful Lives |
Machinery and equipment
|
5 to 10 years
|
Building and leasehold improvements
|
4 to 25 years
|
Computer and data processing equipment
|
3 to 5 years
|
Computer software
|
3 to 5 years
|
Furniture and fixtures
|
4 to 10 years
|
Classification
|
Estimated
Useful Lives |
Customer relationships and contracts
|
3 to 14 years
|
Trade name
|
generally 20 years
|
Internally developed software
|
2 to 5 years
|
Other
|
1 to 10 years
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Foreign currency translation
|
|
$
|
(139.6
|
)
|
|
$
|
(61.1
|
)
|
|
$
|
(16.6
|
)
|
Accumulated other comprehensive loss
|
|
$
|
(139.6
|
)
|
|
$
|
(61.1
|
)
|
|
$
|
(16.6
|
)
|
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 certain 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 and recorded 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 at the acquisition date.
|
(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.
|
(2)
|
Details of the identified intangible assets acquired 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
|
|
|
|
(3)
|
Accounts payable includes both Accounts payable-trade and Accounts payable-inventory financing.
|
(1)
|
Excludes acquisition and integration expenses directly related to the transaction.
|
(2)
|
Includes additional amortization expense related to the fair value of acquired intangibles.
|
(3)
|
Excludes the gain of resulting from the remeasurement of the Company’s previously held
35%
equity investment to fair value upon the completion of the acquisition.
|
(4)
|
Excludes the Company’s share of net income/loss from its previously held
35%
equity investment prior to the completion of the acquisition.
|
(5)
|
Excludes non-cash equity-based compensation related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the completion of the acquisition.
|
(6)
|
Includes additional non-cash equity-based compensation related to equity awards granted to CDW UK coworkers after the completion of the acquisition.
|
(7)
|
Includes the elimination of inter-company sales transactions prior to the completion of the acquisition.
|
4.
|
Property and Equipment
|
|
|
December 31,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Land
|
|
$
|
27.7
|
|
|
$
|
27.7
|
|
Machinery and equipment
|
|
43.2
|
|
|
56.8
|
|
||
Building and leasehold improvements
|
|
120.4
|
|
|
126.7
|
|
||
Computer and data processing equipment
|
|
101.7
|
|
|
99.6
|
|
||
Computer software
|
|
10.8
|
|
|
10.3
|
|
||
Furniture and fixtures
|
|
23.8
|
|
|
29.4
|
|
||
Construction in progress
|
|
20.4
|
|
|
23.9
|
|
||
Property and equipment
|
|
348.0
|
|
|
374.4
|
|
||
Less: accumulated depreciation
|
|
(184.3
|
)
|
|
(199.0
|
)
|
||
Property and equipment, net
|
|
$
|
163.7
|
|
|
$
|
175.4
|
|
5.
|
Goodwill and Other Intangible Assets
|
(in millions)
|
|
Corporate
|
|
Public
|
|
Other
(1)
|
|
Consolidated
|
||||||||
Balances as of December 31, 2014:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
$
|
2,803.2
|
|
|
$
|
1,265.4
|
|
|
$
|
102.8
|
|
|
$
|
4,171.4
|
|
Accumulated impairment charges
|
|
(1,571.4
|
)
|
|
(354.1
|
)
|
|
(28.3
|
)
|
|
(1,953.8
|
)
|
||||
|
|
1,231.8
|
|
|
911.3
|
|
|
74.5
|
|
|
2,217.6
|
|
||||
2015 Activity:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
|
(22.4
|
)
|
||||
Acquisition
(2)
|
|
—
|
|
|
—
|
|
|
305.2
|
|
|
305.2
|
|
||||
|
|
—
|
|
|
—
|
|
|
282.8
|
|
|
282.8
|
|
||||
Balances as of December 31, 2015:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
2,803.2
|
|
|
1,265.4
|
|
|
385.6
|
|
|
4,454.2
|
|
||||
Accumulated impairment charges
|
|
(1,571.4
|
)
|
|
(354.1
|
)
|
|
(28.3
|
)
|
|
(1,953.8
|
)
|
||||
|
|
1,231.8
|
|
|
$
|
911.3
|
|
|
$
|
357.3
|
|
|
2,500.4
|
|
||
2016 Activity:
|
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(45.4
|
)
|
|
$
|
(45.4
|
)
|
CDW Advanced Services Allocation
(3)
|
|
28.2
|
|
|
18.3
|
|
|
(46.5
|
)
|
|
—
|
|
||||
|
|
28.2
|
|
|
18.3
|
|
|
(91.9
|
)
|
|
(45.4
|
)
|
||||
Balances as of December 31, 2016:
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
$
|
2,831.4
|
|
|
$
|
1,283.7
|
|
|
$
|
293.7
|
|
|
$
|
4,408.8
|
|
Accumulated impairment charges
|
|
$
|
(1,571.4
|
)
|
|
$
|
(354.1
|
)
|
|
$
|
(28.3
|
)
|
|
$
|
(1,953.8
|
)
|
|
|
$
|
1,260.0
|
|
|
$
|
929.6
|
|
|
$
|
265.4
|
|
|
$
|
2,455.0
|
|
(1)
|
Other is comprised of Canada and CDW UK reporting units.
|
(2)
|
For further information regarding the addition to goodwill resulting from the Company’s acquisition of CDW UK, see
Note 3
(Acquisition)
.
|
(3)
|
Effective January 1, 2016, the CDW Advanced Services business is included in the Company's Corporate and Public segments.
|
(in millions)
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships and contracts
|
|
$
|
2,084.6
|
|
|
$
|
(1,322.7
|
)
|
|
$
|
761.9
|
|
Trade name
|
|
422.1
|
|
|
(195.2
|
)
|
|
226.9
|
|
|||
Internally developed software
|
|
142.6
|
|
|
(77.7
|
)
|
|
64.9
|
|
|||
Other
|
|
6.0
|
|
|
(4.1
|
)
|
|
1.9
|
|
|||
Total
|
|
$
|
2,655.3
|
|
|
$
|
(1,599.7
|
)
|
|
$
|
1,055.6
|
|
|
|
|
|
|
|
|
||||||
December 31, 2015
|
|
|
|
|
|
|
||||||
Customer relationships
|
|
$
|
2,128.3
|
|
|
$
|
(1,162.0
|
)
|
|
$
|
966.3
|
|
Trade name
|
|
422.3
|
|
|
(173.9
|
)
|
|
248.4
|
|
|||
Internally developed software
|
|
136.5
|
|
|
(77.7
|
)
|
|
58.8
|
|
|||
Other
|
|
5.8
|
|
|
(2.9
|
)
|
|
2.9
|
|
|||
Total
|
|
$
|
2,692.9
|
|
|
$
|
(1,416.5
|
)
|
|
$
|
1,276.4
|
|
6.
|
Inventory Financing Agreements
|
|
|
December 31,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Revolving Loan inventory financing agreement
|
|
$
|
558.3
|
|
|
$
|
427.0
|
|
Other inventory financing agreements
|
|
22.1
|
|
|
12.6
|
|
||
Accounts payable-inventory financing
|
|
$
|
580.4
|
|
|
$
|
439.6
|
|
7.
|
Lease Commitments
|
8.
|
Long-Term Debt
|
(dollars in millions)
|
|
Interest Rate
|
|
Principal
|
|
Unamortized Discount, Premium, and Deferred Financing Costs
|
|
Total
|
|||||||
Year Ended December 31, 2016
|
|
|
|
|
|
|
|
|
|||||||
Senior secured asset-based revolving credit facility
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.3
|
%
|
|
1,483.0
|
|
|
(14.9
|
)
|
|
1,468.1
|
|
|||
CDW UK term loan
|
|
1.8
|
%
|
|
69.1
|
|
|
(1.6
|
)
|
|
67.5
|
|
|||
Senior notes due August 15, 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(5.6
|
)
|
|
594.4
|
|
|||
Senior notes due September 1, 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(5.3
|
)
|
|
519.7
|
|
|||
Senior notes due December 1, 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(6.0
|
)
|
|
569.0
|
|
|||
Other long-term obligations
|
|
|
|
15.7
|
|
|
—
|
|
|
15.7
|
|
||||
Total long-term debt
|
|
|
|
3,267.8
|
|
|
(33.4
|
)
|
|
3,234.4
|
|
||||
Less current maturities of long-term debt
|
|
|
|
(18.5
|
)
|
|
—
|
|
|
(18.5
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,249.3
|
|
|
$
|
(33.4
|
)
|
|
$
|
3,215.9
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Year Ended December 31, 2015
|
|
|
|
|
|
|
|
|
|||||||
Senior secured asset-based revolving credit facility
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.3
|
%
|
|
1,498.1
|
|
|
(6.7
|
)
|
|
1,491.4
|
|
|||
CDW UK term loan
|
|
2.0
|
%
|
|
88.4
|
|
|
(0.6
|
)
|
|
87.8
|
|
|||
Senior notes due August 15, 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(6.6
|
)
|
|
593.4
|
|
|||
Senior notes due September 1, 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(6.2
|
)
|
|
518.8
|
|
|||
Senior notes due December 1, 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
|
|
9.
|
Income Taxes
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
295.7
|
|
|
$
|
258.5
|
|
|
$
|
206.8
|
|
State
|
|
34.9
|
|
|
28.6
|
|
|
19.3
|
|
|||
Foreign
|
|
16.8
|
|
|
10.1
|
|
|
5.8
|
|
|||
Total current
|
|
347.4
|
|
|
297.2
|
|
|
231.9
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Domestic
|
|
(90.5
|
)
|
|
(48.5
|
)
|
|
(89.0
|
)
|
|||
Foreign
|
|
(8.9
|
)
|
|
(4.8
|
)
|
|
(0.1
|
)
|
|||
Total deferred
|
|
(99.4
|
)
|
|
(53.3
|
)
|
|
(89.1
|
)
|
|||
Income tax expense
|
|
$
|
248.0
|
|
|
$
|
243.9
|
|
|
$
|
142.8
|
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
(dollars in millions)
|
|
2016
|
|
2015
|
|
2014
|
|||||||||||||||
Statutory federal income tax rate
|
|
$
|
235.4
|
|
|
35.0
|
%
|
|
$
|
226.4
|
|
|
35.0
|
%
|
|
$
|
135.7
|
|
|
35.0
|
%
|
State taxes, net of federal effect
|
|
17.8
|
|
|
2.6
|
|
|
16.5
|
|
|
2.6
|
|
|
6.5
|
|
|
1.6
|
|
|||
Tax benefit of equity awards
|
|
(1.6
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Effect of rates different than statutory
|
|
(4.5
|
)
|
|
(0.7
|
)
|
|
(1.9
|
)
|
|
(0.3
|
)
|
|
(1.9
|
)
|
|
(0.5
|
)
|
|||
Foreign withholding tax
|
|
0.8
|
|
|
0.1
|
|
|
3.3
|
|
|
0.5
|
|
|
—
|
|
|
—
|
|
|||
Effect of UK tax rate change on deferred taxes
|
|
(1.5
|
)
|
|
(0.2
|
)
|
|
(4.0
|
)
|
|
(0.6
|
)
|
|
—
|
|
|
—
|
|
|||
Other
|
|
1.6
|
|
|
0.3
|
|
|
3.6
|
|
|
0.5
|
|
|
2.5
|
|
|
0.7
|
|
|||
Effective tax rate
|
|
$
|
248.0
|
|
|
36.9
|
%
|
|
$
|
243.9
|
|
|
37.7
|
%
|
|
$
|
142.8
|
|
|
36.8
|
%
|
|
|
December 31,
|
||||||
(in millions)
|
|
2016
|
|
2015
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Equity compensation plans
|
|
$
|
29.2
|
|
|
$
|
17.0
|
|
Payroll and benefits
|
|
22.7
|
|
|
21.2
|
|
||
Deferred interest
|
|
13.9
|
|
|
25.0
|
|
||
Net operating loss and credit carryforwards, net
|
|
12.7
|
|
|
14.1
|
|
||
Rent
|
|
11.0
|
|
|
10.8
|
|
||
Accounts receivable
|
|
8.3
|
|
|
6.4
|
|
||
Other
|
|
6.2
|
|
|
5.9
|
|
||
Trade credits
|
|
0.6
|
|
|
1.5
|
|
||
Total deferred tax assets
|
|
104.6
|
|
|
101.9
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Software and intangibles
|
|
337.4
|
|
|
411.0
|
|
||
Deferred income
|
|
58.3
|
|
|
87.3
|
|
||
International investments
|
|
31.3
|
|
|
30.4
|
|
||
Property and equipment
|
|
30.3
|
|
|
30.6
|
|
||
Other
|
|
15.3
|
|
|
17.3
|
|
||
Total deferred tax liabilities
|
|
472.6
|
|
|
576.6
|
|
||
Deferred tax asset valuation allowance
|
|
1.2
|
|
|
—
|
|
||
Net deferred tax liabilities
|
|
$
|
369.2
|
|
|
$
|
474.7
|
|
10.
|
Stockholders’ Equity
|
Secondary Offering Shares
|
|
Completion Date of Secondary Offering
|
|
Overallotment Shares
(1)
|
|
Completion Date of Overallotment Shares
|
||
10,000,000
|
|
|
3/12/2014
|
|
1,500,000
|
|
3/12/2014
|
|
15,000,000
|
|
|
5/28/2014
|
|
2,250,000
|
|
6/4/2014
|
|
15,000,000
|
|
|
9/8/2014
(2)
|
|
—
|
|
—
|
|
15,000,000
|
|
|
12/8/2014
|
|
2,250,000
|
|
12/8/2014
|
|
10,000,000
|
|
|
5/22/2015
|
|
1,500,000
|
|
5/22/2015
|
|
11,250,000
|
|
|
8/18/2015
|
|
1,687,500
|
|
8/18/2015
|
|
8,000,000
|
|
|
11/30/2015
|
|
1,200,000
|
|
12/9/2015
|
|
(1)
|
Under each underwriting agreement, the selling stockholders granted the underwriters an option, exercisable for
thirty
days, to purchase up to the additional amount of shares noted.
|
(2)
|
The option to purchase additional shares was not exercised in connection with the September 2014 secondary offering.
|
11.
|
Equity-Based Compensation
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
||||||
Equity-based compensation expense
|
|
$
|
39.2
|
|
|
$
|
31.2
|
|
|
$
|
16.4
|
|
Income tax benefit
|
|
(13.3
|
)
|
|
(10.9
|
)
|
|
(5.1
|
)
|
|||
Equity-based compensation expense (net of tax)
|
|
$
|
25.9
|
|
|
$
|
20.3
|
|
|
$
|
11.3
|
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Grant date fair value
|
|
$
|
8.55
|
|
|
$
|
11.13
|
|
|
$
|
7.23
|
|
Volatility
(1)
|
|
25.00
|
%
|
|
30.00
|
%
|
|
30.00
|
%
|
|||
Risk-free rate
(2)
|
|
1.47
|
%
|
|
1.75
|
%
|
|
1.77
|
%
|
|||
Expected dividend yield
|
|
1.08
|
%
|
|
0.72
|
%
|
|
0.70
|
%
|
|||
Expected term (in years)
(3)
|
|
6.0
|
|
|
6.0
|
|
|
6.0
|
|
(1)
|
Based upon an assessment of the two-year, five-year and implied volatility for the Company’s selected peer group, adjusted for the Company’s leverage.
|
(2)
|
Based on a composite US Treasury rate.
|
(3)
|
Calculated using the simplified method, which defines the expected term as the average of the option’s contractual term and the option’s weighted-average vesting period. The Company utilizes this method as it has limited historical stock option data that is sufficient to derive a reasonable estimate of the expected stock option term.
|
Options
|
|
Number of Options
|
|
Weighted-Average Exercise Price
|
|
Weighted-Average Remaining Contractual Term (years)
|
|
Aggregate Intrinsic Value (millions)
|
|||||
Outstanding at January 1, 2016
|
|
3,197,221
|
|
|
$
|
25.58
|
|
|
|
|
|
||
Granted
|
|
956,280
|
|
|
39.99
|
|
|
|
|
|
|||
Forfeited/Expired
|
|
(48,166
|
)
|
|
32.87
|
|
|
|
|
|
|||
Exercised
(1)
|
|
(324,284
|
)
|
|
22.90
|
|
|
|
|
|
|||
Outstanding at December 31, 2016
|
|
3,781,051
|
|
|
$
|
29.36
|
|
|
7.4
|
|
$
|
85.9
|
|
|
|
|
|
|
|
|
|
|
|||||
Exercisable at December 31, 2016
|
|
1,729,243
|
|
|
$
|
22.82
|
|
|
6.4
|
|
$
|
50.6
|
|
Vested and expected to vest at December 31, 2016
|
|
2,025,415
|
|
|
$
|
34.84
|
|
|
8.3
|
|
$
|
34.9
|
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Nonvested at January 1, 2016
|
|
1,257,399
|
|
|
$
|
19.19
|
|
Granted
(1)
|
|
35,392
|
|
|
39.82
|
|
|
Vested
(2)
|
|
(32,250
|
)
|
|
31.34
|
|
|
Forfeited
|
|
(81,053
|
)
|
|
17.05
|
|
|
Nonvested at December 31, 2016
|
|
1,179,488
|
|
|
$
|
19.52
|
|
(1)
|
The weighted-average grant date fair value of RSUs granted during the years ended
December 31, 2016, 2015 and 2014
was
$39.82
,
$36.24
and
$24.29
, respectively.
|
(2)
|
The aggregate fair value of RSUs that vested during the years ended
December 31, 2016, 2015 and 2014
was
$1 million
,
$1 million
and
less than $1 million
, respectively.
|
12.
|
Earnings Per Share
|
|
|
Years Ended December 31,
|
|||||||
(in millions)
|
|
2016
|
|
2015
|
|
2014
|
|||
Basic weighted-average shares outstanding
|
|
163.6
|
|
|
170.3
|
|
|
170.6
|
|
Effect of dilutive securities
(1)
|
|
2.4
|
|
|
1.5
|
|
|
2.2
|
|
Diluted weighted-average shares outstanding
(2)
|
|
166.0
|
|
|
171.8
|
|
|
172.8
|
|
(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 years ended
December 31, 2016, 2015 and 2014
, respectively, as their inclusion would have had an anti-dilutive effect.
|
13.
|
Coworker Retirement and Other Compensation Benefits
|
(in millions)
|
Corporate
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
7,029.9
|
|
|
$
|
5,589.4
|
|
|
$
|
1,362.6
|
|
|
$
|
—
|
|
|
$
|
13,981.9
|
|
Income (loss) from operations
|
522.5
|
|
|
368.0
|
|
|
43.6
|
|
|
(114.9
|
)
|
|
819.2
|
|
|||||
Depreciation and amortization expense
|
(103.5
|
)
|
|
(44.7
|
)
|
|
(32.1
|
)
|
|
(74.2
|
)
|
|
(254.5
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2015:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
6,968.3
|
|
|
$
|
5,183.6
|
|
|
$
|
836.8
|
|
|
$
|
—
|
|
|
$
|
12,988.7
|
|
Income (loss) from operations
|
500.8
|
|
|
328.6
|
|
|
27.1
|
|
|
(114.5
|
)
|
|
742.0
|
|
|||||
Depreciation and amortization expense
|
(103.2
|
)
|
|
(44.7
|
)
|
|
(16.2
|
)
|
|
(63.3
|
)
|
|
(227.4
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
2014:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
$
|
6,604.0
|
|
|
$
|
4,938.3
|
|
|
$
|
532.2
|
|
|
$
|
—
|
|
|
$
|
12,074.5
|
|
Income (loss) from operations
|
460.6
|
|
|
303.9
|
|
|
$
|
21.4
|
|
|
(112.9
|
)
|
|
673.0
|
|
||||
Depreciation and amortization expense
|
(102.5
|
)
|
|
(44.7
|
)
|
|
$
|
(1.7
|
)
|
|
(59.0
|
)
|
|
(207.9
|
)
|
|
Year Ended
December 31, 2016 |
|
Year Ended
December 31, 2015 (1) |
|
Year Ended
December 31, 2014 (1) |
|||||||||||||||
|
Dollars in
Millions
|
|
Percentage
of Total Net
Sales
|
|
Dollars in
Millions
|
|
Percentage
of Total Net
Sales
|
|
Dollars in
Millions
|
|
Percentage
of Total Net
Sales
|
|||||||||
Notebooks/Mobile Devices
|
$
|
2,934.3
|
|
|
21.0
|
%
|
|
$
|
2,538.5
|
|
|
19.5
|
%
|
|
$
|
2,352.9
|
|
|
19.5
|
%
|
Netcomm Products
|
1,950.9
|
|
|
14.0
|
|
|
1,912.3
|
|
|
14.7
|
|
|
1,613.9
|
|
|
13.4
|
|
|||
Desktops
|
1,054.8
|
|
|
7.5
|
|
|
968.6
|
|
|
7.5
|
|
|
1,058.2
|
|
|
8.8
|
|
|||
Enterprise and Data Storage (Including Drives)
|
1,057.6
|
|
|
7.6
|
|
|
1,065.5
|
|
|
8.2
|
|
|
1,023.9
|
|
|
8.5
|
|
|||
Other Hardware
|
3,981.4
|
|
|
28.5
|
|
|
3,798.3
|
|
|
29.2
|
|
|
3,492.3
|
|
|
28.8
|
|
|||
Software
(2)
|
2,406.9
|
|
|
17.2
|
|
|
2,161.3
|
|
|
16.6
|
|
|
2,065.8
|
|
|
17.1
|
|
|||
Services
(2)
|
579.0
|
|
|
4.1
|
|
|
472.8
|
|
|
3.6
|
|
|
371.1
|
|
|
3.1
|
|
|||
Other
(3)
|
17.0
|
|
|
0.1
|
|
|
71.4
|
|
|
0.7
|
|
|
96.4
|
|
|
0.8
|
|
|||
Total Net sales
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
|
$
|
12,074.5
|
|
|
100.0
|
%
|
(1)
|
Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the year ended December 31, 2016.
|
(2)
|
Certain software and services revenue is recorded on a net basis for accounting purposes, so the category percentage of net revenues is not representative of the category percentage of gross profits.
|
(3)
|
Includes items such as delivery charges to customers and certain commission revenue.
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
December 31, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
222.7
|
|
|
$
|
3.1
|
|
|
$
|
37.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
263.7
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,904.9
|
|
|
263.7
|
|
|
—
|
|
|
—
|
|
|
2,168.6
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
390.6
|
|
|
61.4
|
|
|
—
|
|
|
—
|
|
|
452.0
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
92.6
|
|
|
130.1
|
|
|
12.2
|
|
|
—
|
|
|
—
|
|
|
234.9
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
14.3
|
|
|
69.0
|
|
|
35.6
|
|
|
—
|
|
|
—
|
|
|
118.9
|
|
|||||||
Total current assets
|
—
|
|
|
329.6
|
|
|
2,497.7
|
|
|
410.8
|
|
|
—
|
|
|
—
|
|
|
3,238.1
|
|
|||||||
Property and equipment, net
|
—
|
|
|
105.6
|
|
|
49.3
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
163.7
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
264.2
|
|
|
—
|
|
|
—
|
|
|
2,455.0
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
291.5
|
|
|
565.1
|
|
|
199.0
|
|
|
—
|
|
|
—
|
|
|
1,055.6
|
|
|||||||
Other assets
|
3.2
|
|
|
19.4
|
|
|
248.2
|
|
|
1.5
|
|
|
—
|
|
|
(236.3
|
)
|
|
36.0
|
|
|||||||
Investment in and advances to subsidiaries
|
1,042.3
|
|
|
3,026.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,068.8
|
)
|
|
—
|
|
|||||||
Total Assets
|
$
|
1,045.5
|
|
|
$
|
4,524.4
|
|
|
$
|
4,799.3
|
|
|
$
|
884.3
|
|
|
$
|
—
|
|
|
$
|
(4,305.1
|
)
|
|
$
|
6,948.4
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
25.9
|
|
|
$
|
895.3
|
|
|
$
|
151.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,072.9
|
|
Accounts payable-inventory financing
|
—
|
|
|
1.2
|
|
|
559.5
|
|
|
19.7
|
|
|
—
|
|
|
—
|
|
|
580.4
|
|
|||||||
Current maturities of long-term debt
|
—
|
|
|
14.9
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.5
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
100.8
|
|
|
71.8
|
|
|
—
|
|
|
—
|
|
|
172.6
|
|
|||||||
Accrued expenses
|
—
|
|
|
173.9
|
|
|
214.8
|
|
|
47.7
|
|
|
—
|
|
|
(0.1
|
)
|
|
436.3
|
|
|||||||
Total current liabilities
|
—
|
|
|
215.9
|
|
|
1,774.0
|
|
|
290.9
|
|
|
—
|
|
|
(0.1
|
)
|
|
2,280.7
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,136.3
|
|
|
12.1
|
|
|
67.5
|
|
|
—
|
|
|
—
|
|
|
3,215.9
|
|
|||||||
Deferred income taxes
|
—
|
|
|
99.1
|
|
|
205.4
|
|
|
67.9
|
|
|
—
|
|
|
(3.2
|
)
|
|
369.2
|
|
|||||||
Other liabilities
|
—
|
|
|
30.8
|
|
|
3.6
|
|
|
235.7
|
|
|
—
|
|
|
(233.0
|
)
|
|
37.1
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,266.2
|
|
|
221.1
|
|
|
371.1
|
|
|
—
|
|
|
(236.2
|
)
|
|
3,622.2
|
|
|||||||
Total stockholders’ equity
|
1,045.5
|
|
|
1,042.3
|
|
|
2,804.2
|
|
|
222.3
|
|
|
—
|
|
|
(4,068.8
|
)
|
|
1,045.5
|
|
|||||||
Total Liabilities and Stockholders’ Equity
|
$
|
1,045.5
|
|
|
$
|
4,524.4
|
|
|
$
|
4,799.3
|
|
|
$
|
884.3
|
|
|
$
|
—
|
|
|
$
|
(4,305.1
|
)
|
|
$
|
6,948.4
|
|
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
|
|||||||||||||||||||||||||||
Year Ended December 31, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,619.3
|
|
|
$
|
1,362.6
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,981.9
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
10,514.4
|
|
|
1,140.3
|
|
|
—
|
|
|
—
|
|
|
11,654.7
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
2,104.9
|
|
|
222.3
|
|
|
—
|
|
|
—
|
|
|
2,327.2
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
114.8
|
|
|
1,057.4
|
|
|
172.9
|
|
|
—
|
|
|
—
|
|
|
1,345.1
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
157.2
|
|
|
5.7
|
|
|
—
|
|
|
—
|
|
|
162.9
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(114.8
|
)
|
|
890.3
|
|
|
43.7
|
|
|
—
|
|
|
—
|
|
|
819.2
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(145.8
|
)
|
|
6.7
|
|
|
(7.4
|
)
|
|
—
|
|
|
—
|
|
|
(146.5
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|||||||
Other income (expense), net
|
—
|
|
|
0.2
|
|
|
1.0
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(262.5
|
)
|
|
898.0
|
|
|
36.9
|
|
|
—
|
|
|
—
|
|
|
672.4
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
79.9
|
|
|
(319.9
|
)
|
|
(8.0
|
)
|
|
—
|
|
|
—
|
|
|
(248.0
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(182.6
|
)
|
|
578.1
|
|
|
28.9
|
|
|
—
|
|
|
—
|
|
|
424.4
|
|
|||||||
Equity in earnings of subsidiaries
|
424.4
|
|
|
607.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,031.4
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
424.4
|
|
|
$
|
424.4
|
|
|
$
|
578.1
|
|
|
$
|
28.9
|
|
|
$
|
—
|
|
|
$
|
(1,031.4
|
)
|
|
$
|
424.4
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,151.2
|
|
|
$
|
837.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,988.7
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
10,158.6
|
|
|
714.3
|
|
|
—
|
|
|
—
|
|
|
10,872.9
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
1,992.6
|
|
|
123.2
|
|
|
—
|
|
|
—
|
|
|
2,115.8
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
114.5
|
|
|
1,020.9
|
|
|
90.6
|
|
|
—
|
|
|
—
|
|
|
1,226.0
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
143.2
|
|
|
4.6
|
|
|
—
|
|
|
—
|
|
|
147.8
|
|
|||||||
(Loss) income from operations
|
—
|
|
|
(114.5
|
)
|
|
828.5
|
|
|
28.0
|
|
|
—
|
|
|
—
|
|
|
742.0
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(158.3
|
)
|
|
2.3
|
|
|
(3.5
|
)
|
|
—
|
|
|
—
|
|
|
(159.5
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(24.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(24.3
|
)
|
|||||||
Management fee
|
—
|
|
|
4.2
|
|
|
—
|
|
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|||||||
Other (expense) income, net
|
—
|
|
|
(11.1
|
)
|
|
1.6
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|||||||
(Loss) income before income taxes
|
—
|
|
|
(304.0
|
)
|
|
832.4
|
|
|
118.6
|
|
|
—
|
|
|
—
|
|
|
647.0
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
103.3
|
|
|
(307.2
|
)
|
|
(40.0
|
)
|
|
—
|
|
|
—
|
|
|
(243.9
|
)
|
|||||||
(Loss) income before equity in earnings of subsidiaries
|
—
|
|
|
(200.7
|
)
|
|
525.2
|
|
|
78.6
|
|
|
—
|
|
|
—
|
|
|
403.1
|
|
|||||||
Equity in earnings of subsidiaries
|
403.1
|
|
|
603.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,006.9
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
403.1
|
|
|
$
|
403.1
|
|
|
$
|
525.2
|
|
|
$
|
78.6
|
|
|
$
|
—
|
|
|
$
|
(1,006.9
|
)
|
|
$
|
403.1
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Year Ended December 31, 2014
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
11,542.3
|
|
|
$
|
532.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,074.5
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
9,684.9
|
|
|
468.3
|
|
|
—
|
|
|
—
|
|
|
10,153.2
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
1,857.4
|
|
|
63.9
|
|
|
—
|
|
|
—
|
|
|
1,921.3
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
112.8
|
|
|
962.3
|
|
|
35.2
|
|
|
—
|
|
|
—
|
|
|
1,110.3
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
134.0
|
|
|
4.0
|
|
|
—
|
|
|
—
|
|
|
138.0
|
|
|||||||
(Loss) income from operations
|
—
|
|
|
(112.8
|
)
|
|
761.1
|
|
|
24.7
|
|
|
—
|
|
|
—
|
|
|
673.0
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(197.7
|
)
|
|
0.1
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
(197.3
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(90.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(90.7
|
)
|
|||||||
Management fee
|
—
|
|
|
3.9
|
|
|
—
|
|
|
(3.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Other income, net
|
—
|
|
|
1.2
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|||||||
(Loss) income before income taxes
|
—
|
|
|
(396.1
|
)
|
|
762.7
|
|
|
21.1
|
|
|
—
|
|
|
—
|
|
|
387.7
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
141.0
|
|
|
(278.1
|
)
|
|
(5.7
|
)
|
|
—
|
|
|
—
|
|
|
(142.8
|
)
|
|||||||
(Loss) income before equity in earnings of subsidiaries
|
—
|
|
|
(255.1
|
)
|
|
484.6
|
|
|
15.4
|
|
|
—
|
|
|
—
|
|
|
244.9
|
|
|||||||
Equity in earnings of subsidiaries
|
244.9
|
|
|
500.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(744.9
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
244.9
|
|
|
$
|
244.9
|
|
|
$
|
484.6
|
|
|
$
|
15.4
|
|
|
$
|
—
|
|
|
$
|
(744.9
|
)
|
|
$
|
244.9
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Year Ended December 31, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income (loss)
|
$
|
345.9
|
|
|
$
|
345.9
|
|
|
$
|
578.1
|
|
|
$
|
(49.6
|
)
|
|
$
|
—
|
|
|
$
|
(874.4
|
)
|
|
$
|
345.9
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
358.6
|
|
|
$
|
358.6
|
|
|
$
|
525.2
|
|
|
$
|
34.1
|
|
|
$
|
—
|
|
|
$
|
(917.9
|
)
|
|
$
|
358.6
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Year Ended December 31, 2014
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiary
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
234.6
|
|
|
$
|
234.6
|
|
|
$
|
484.6
|
|
|
$
|
5.1
|
|
|
$
|
—
|
|
|
$
|
(724.3
|
)
|
|
$
|
234.6
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Year Ended December 31, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(158.5
|
)
|
|
$
|
695.5
|
|
|
$
|
56.1
|
|
|
$
|
—
|
|
|
$
|
10.9
|
|
|
$
|
604.0
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(50.9
|
)
|
|
(7.6
|
)
|
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|
(63.5
|
)
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(2.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.4
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(53.3
|
)
|
|
(7.6
|
)
|
|
(5.0
|
)
|
|
—
|
|
|
—
|
|
|
(65.9
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
329.6
|
|
|
—
|
|
|
9.2
|
|
|
—
|
|
|
—
|
|
|
338.8
|
|
|||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(329.6
|
)
|
|
—
|
|
|
(9.2
|
)
|
|
—
|
|
|
—
|
|
|
(338.8
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(15.2
|
)
|
|
—
|
|
|
(5.4
|
)
|
|
—
|
|
|
—
|
|
|
(20.6
|
)
|
|||||||
Proceeds from the issuance of long-term debt
|
—
|
|
|
1,483.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,483.0
|
|
|||||||
Payments to extinguish long-term debt
|
—
|
|
|
(1,490.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,490.4
|
)
|
|||||||
Net change in other long-term obligation
|
—
|
|
|
—
|
|
|
15.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15.7
|
|
|||||||
Payment of debt financing costs
|
—
|
|
|
(4.5
|
)
|
|
—
|
|
|
(1.4
|
)
|
|
—
|
|
|
—
|
|
|
(5.9
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
1.5
|
|
|
131.0
|
|
|
11.1
|
|
|
—
|
|
|
—
|
|
|
143.6
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
|||||||
Proceeds from Coworker stock purchase plan
|
—
|
|
|
9.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
9.3
|
|
|||||||
Repurchases of common stock
|
(367.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(367.4
|
)
|
|||||||
Dividends
|
(78.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78.7
|
)
|
|||||||
Principal payments under capital lease obligations
|
—
|
|
|
—
|
|
|
1.0
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||||||
Repayment of intercompany loan
|
—
|
|
|
—
|
|
|
40.4
|
|
|
(40.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Distributions and advances from (to) affiliates
|
446.1
|
|
|
398.3
|
|
|
(872.9
|
)
|
|
—
|
|
|
—
|
|
|
28.5
|
|
|
—
|
|
|||||||
Net cash provided by (used in) financing activities
|
—
|
|
|
389.4
|
|
|
(684.8
|
)
|
|
(37.7
|
)
|
|
—
|
|
|
28.5
|
|
|
(304.6
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.4
|
)
|
|
—
|
|
|
—
|
|
|
(7.4
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
177.6
|
|
|
3.1
|
|
|
6.0
|
|
|
—
|
|
|
39.4
|
|
|
226.1
|
|
|||||||
Cash and cash equivalents – beginning of period
|
—
|
|
|
45.1
|
|
|
—
|
|
|
31.9
|
|
|
—
|
|
|
(39.4
|
)
|
|
37.6
|
|
|||||||
Cash and cash equivalents – end of period
|
$
|
—
|
|
|
$
|
222.7
|
|
|
$
|
3.1
|
|
|
$
|
37.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
263.7
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Year Ended December 31, 2015
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor |
|
Subsidiary
Issuer |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiary |
|
Co-Issuer
|
|
Consolidating
Adjustments |
|
Consolidated
|
||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
0.5
|
|
|
$
|
(18.1
|
)
|
|
$
|
350.0
|
|
|
$
|
27.9
|
|
|
$
|
—
|
|
|
$
|
(82.8
|
)
|
|
$
|
277.5
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(75.4
|
)
|
|
(11.6
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
(90.1
|
)
|
|||||||
Acquisition of business, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
(263.8
|
)
|
|
—
|
|
|
—
|
|
|
(263.8
|
)
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(75.9
|
)
|
|
(11.6
|
)
|
|
(266.9
|
)
|
|
—
|
|
|
—
|
|
|
(354.4
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
314.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
314.5
|
|
|||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(314.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(314.5
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(15.4
|
)
|
|
—
|
|
|
(17.4
|
)
|
|
—
|
|
|
—
|
|
|
(32.8
|
)
|
|||||||
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
|
—
|
|
|
—
|
|
|
96.1
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
95.9
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|||||||
Proceeds from Coworker stock purchase plan
|
—
|
|
|
8.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8.7
|
|
|||||||
Repurchases of common stock
|
(241.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(241.3
|
)
|
|||||||
Dividends paid
|
(52.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52.9
|
)
|
|||||||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||||||
Advances to/from affiliates
|
293.7
|
|
|
(196.5
|
)
|
|
(434.5
|
)
|
|
267.4
|
|
|
—
|
|
|
69.9
|
|
|
—
|
|
|||||||
Net cash provided by (used in) financing activities
|
(0.5
|
)
|
|
(207.3
|
)
|
|
(338.4
|
)
|
|
249.8
|
|
|
—
|
|
|
69.9
|
|
|
(226.5
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|
—
|
|
|
—
|
|
|
(3.5
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
(301.3
|
)
|
|
—
|
|
|
7.3
|
|
|
—
|
|
|
(12.9
|
)
|
|
(306.9
|
)
|
|||||||
Cash and cash equivalents – beginning of period
|
—
|
|
|
346.4
|
|
|
—
|
|
|
24.6
|
|
|
—
|
|
|
(26.5
|
)
|
|
344.5
|
|
|||||||
Cash and cash equivalents – end of period
|
$
|
—
|
|
|
$
|
45.1
|
|
|
$
|
—
|
|
|
$
|
31.9
|
|
|
$
|
—
|
|
|
$
|
(39.4
|
)
|
|
$
|
37.6
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Year Ended December 31, 2014
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor |
|
Subsidiary
Issuer |
|
Guarantor
Subsidiaries |
|
Non-Guarantor
Subsidiary |
|
Co-Issuer
|
|
Consolidating
Adjustments |
|
Consolidated
|
||||||||||||||
Net cash (used in) provided by operating activities
|
$
|
—
|
|
|
$
|
(120.4
|
)
|
|
$
|
547.7
|
|
|
$
|
11.8
|
|
|
$
|
—
|
|
|
$
|
(4.1
|
)
|
|
$
|
435.0
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(47.9
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(55.0
|
)
|
|||||||
Payment for equity investments
|
—
|
|
|
(86.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(86.8
|
)
|
|||||||
Payment of accrued charitable contribution related to the MPK Coworker Incentive Plan II
|
—
|
|
|
(20.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20.9
|
)
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(2.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.1
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(157.7
|
)
|
|
(7.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(164.8
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Repayments of long-term debt
|
—
|
|
|
(15.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15.4
|
)
|
|||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
1,175.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,175.0
|
|
|||||||
Payments to extinguish long-term debt
|
—
|
|
|
(1,299.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,299.0
|
)
|
|||||||
Payment of debt financing costs
|
—
|
|
|
(21.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21.9
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
—
|
|
|
75.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
75.5
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||||
Proceeds from Coworker stock purchase plan
|
—
|
|
|
5.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5.8
|
|
|||||||
Dividends paid
|
(33.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33.6
|
)
|
|||||||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||||
Advances to/from affiliates
|
33.6
|
|
|
581.9
|
|
|
(616.1
|
)
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Net cash provided by (used in) financing activities
|
—
|
|
|
428.0
|
|
|
(540.6
|
)
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
(112.0
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
(1.8
|
)
|
|||||||
Net increase (decrease) in cash and cash equivalents
|
—
|
|
|
149.9
|
|
|
—
|
|
|
10.6
|
|
|
—
|
|
|
(4.1
|
)
|
|
156.4
|
|
|||||||
Cash and cash equivalents – beginning of period
|
—
|
|
|
196.5
|
|
|
—
|
|
|
14.0
|
|
|
—
|
|
|
(22.4
|
)
|
|
188.1
|
|
|||||||
Cash and cash equivalents – end of period
|
$
|
—
|
|
|
$
|
346.4
|
|
|
$
|
—
|
|
|
$
|
24.6
|
|
|
$
|
—
|
|
|
$
|
(26.5
|
)
|
|
$
|
344.5
|
|
|
|
Year Ended December 31, 2016
|
||||||||||||||
(in millions, except per-share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
|
||||||||
Corporate:
|
|
|
|
|
|
|
|
|
||||||||
Medium/Large
|
|
$
|
1,410.7
|
|
|
$
|
1,489.0
|
|
|
$
|
1,463.5
|
|
|
$
|
1,516.6
|
|
Small Business
|
|
281.6
|
|
|
290.2
|
|
|
285.4
|
|
|
293.0
|
|
||||
Total Corporate
|
|
1,692.3
|
|
|
1,779.2
|
|
|
1,748.9
|
|
|
1,809.6
|
|
||||
Public:
|
|
|
|
|
|
|
|
|
||||||||
Government
|
|
339.9
|
|
|
456.6
|
|
|
537.5
|
|
|
529.6
|
|
||||
Education
|
|
341.0
|
|
|
640.0
|
|
|
671.4
|
|
|
365.9
|
|
||||
Healthcare
|
|
388.5
|
|
|
450.4
|
|
|
431.7
|
|
|
436.8
|
|
||||
Total Public
|
|
1,069.4
|
|
|
1,547.0
|
|
|
1,640.6
|
|
|
1,332.3
|
|
||||
Other
|
|
355.0
|
|
|
338.4
|
|
|
318.7
|
|
|
350.5
|
|
||||
Net sales
|
|
$
|
3,116.7
|
|
|
$
|
3,664.6
|
|
|
$
|
3,708.2
|
|
|
$
|
3,492.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
|
$
|
524.5
|
|
|
$
|
610.5
|
|
|
$
|
614.3
|
|
|
$
|
577.9
|
|
Income from operations
|
|
161.0
|
|
|
223.5
|
|
|
237.5
|
|
|
197.2
|
|
||||
Net income
|
|
77.8
|
|
|
117.5
|
|
|
125.9
|
|
|
103.2
|
|
||||
Basic
|
|
0.47
|
|
|
0.71
|
|
|
0.78
|
|
|
0.64
|
|
||||
Diluted
|
|
0.46
|
|
|
0.70
|
|
|
0.76
|
|
|
0.63
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
|
$
|
0.1075
|
|
|
$
|
0.1075
|
|
|
$
|
0.1075
|
|
|
$
|
0.1600
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Year Ended December 31, 2015
(2)
|
||||||||||||||
(in millions, except per-share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
|
||||||||
Corporate:
|
|
|
|
|
|
|
|
|
||||||||
Medium/Large
|
|
$
|
1,341.9
|
|
|
$
|
1,521.3
|
|
|
$
|
1,490.6
|
|
|
$
|
1,521.5
|
|
Small Business
|
|
268.5
|
|
|
277.3
|
|
|
274.1
|
|
|
273.1
|
|
||||
Total Corporate
|
|
1,610.4
|
|
|
1,798.6
|
|
|
1,764.7
|
|
|
1,794.6
|
|
||||
Public:
|
|
|
|
|
|
|
|
|
||||||||
Government
|
|
294.2
|
|
|
390.8
|
|
|
493.9
|
|
|
522.0
|
|
||||
Education
|
|
345.4
|
|
|
548.9
|
|
|
583.3
|
|
|
341.2
|
|
||||
Healthcare
|
|
377.6
|
|
|
448.8
|
|
|
406.7
|
|
|
430.8
|
|
||||
Total Public
|
|
1,017.2
|
|
|
1,388.5
|
|
|
1,483.9
|
|
|
1,294.0
|
|
||||
Other
|
|
127.6
|
|
|
126.9
|
|
|
252.5
|
|
|
329.8
|
|
||||
Net sales
|
|
$
|
2,755.2
|
|
|
$
|
3,314.0
|
|
|
$
|
3,501.1
|
|
|
$
|
3,418.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Gross profit
|
|
$
|
456.5
|
|
|
$
|
534.5
|
|
|
$
|
567.2
|
|
|
$
|
557.6
|
|
Income from operations
|
|
151.6
|
|
|
205.9
|
|
|
204.6
|
|
|
179.9
|
|
||||
Net income
|
|
54.7
|
|
|
108.2
|
|
|
150.9
|
|
|
89.3
|
|
||||
Net income per common share
(1)
:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
0.32
|
|
|
0.63
|
|
|
0.89
|
|
|
0.53
|
|
||||
Diluted
|
|
0.32
|
|
|
0.63
|
|
|
0.88
|
|
|
0.52
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
|
$
|
0.0675
|
|
|
$
|
0.0675
|
|
|
$
|
0.0675
|
|
|
$
|
0.1075
|
|
(1)
|
Basic and diluted net income per share are computed independently for each of the quarters presented. Therefore, the sum of quarterly basic and diluted per share information may not equal annual basic and diluted net income per share.
|
(2)
|
Effective January 1, 2016, CDW Advanced Services is no longer an operating segment and its results have been allocated to our Corporate and Public segments. The prior periods have been reclassified to conform to the current period presentation.
|
|
|
|
|
|
|
|
|
|
||||||||
(in millions)
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions
|
|
Balance at
End of
Period
|
||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
$
|
6.0
|
|
|
$
|
2.0
|
|
|
$
|
(2.1
|
)
|
|
$
|
5.9
|
|
Year Ended December 31, 2015
|
|
5.7
|
|
|
4.2
|
|
|
(3.9
|
)
|
|
6.0
|
|
||||
Year Ended December 31, 2014
|
|
5.4
|
|
|
5.4
|
|
|
(5.1
|
)
|
|
5.7
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Reserve for sales returns:
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2016
|
|
$
|
4.9
|
|
|
$
|
38.1
|
|
|
$
|
(36.2
|
)
|
|
$
|
6.8
|
|
Year Ended December 31, 2015
|
|
5.1
|
|
|
34.4
|
|
|
(34.6
|
)
|
|
4.9
|
|
||||
Year Ended December 31, 2014
|
|
5.1
|
|
|
36.2
|
|
|
(36.2
|
)
|
|
5.1
|
|
/s/ Ernst & Young LLP
|
Chicago, Illinois
|
February 28, 2017
|
Independent Board.
Our Board of Directors is comprised entirely of independent directors, other than our Chief Executive Officer.
Independent Lead Director.
Barry K. Allen serves as our independent lead director.
Independent Board Committees.
All members of our Audit, Compensation and Nominating and Corporate Governance Committees are independent directors.
|
Name
|
Age
|
Director Since
(1)
|
Primary Occupation
|
Independent
|
Board Committee Membership
As of December 31, 2016
(2)
|
||
Audit
|
Comp
|
Nom & Corp Gov
|
|||||
Thomas E. Richards (Chairman)
|
62
|
2011
|
Chairman & Chief Executive Officer, CDW Corporation
|
|
|
|
|
Virginia C. Addicott
|
53
|
2016
|
President & Chief Executive Officer, FedEx Custom Critical
|
ü
|
X
|
|
X
|
Steven W. Alesio
|
62
|
2009
|
Operating Partner, Providence Equity Partners L.L.C.; CEO, TwentyEighty, Inc.
|
ü
|
|
C
|
X
|
Barry K. Allen (Lead Director)
|
68
|
2009
|
Operating Partner, Providence Equity Partners L.L.C.; President, Allen Enterprises, LLC
|
ü
|
|
X
|
C
|
James A. Bell
|
68
|
2015
|
Retired Executive Vice President, The Boeing Company
|
ü
|
X
|
|
X
|
Benjamin D. Chereskin
|
58
|
2007
|
President, Profile Capital Management LLC
|
ü
|
X
|
|
X
|
Lynda M. Clarizio
|
56
|
2015
|
President, The Nielsen Company (US), LLC
|
ü
|
|
X
|
X
|
Paul J. Finnegan
|
63
|
2011
|
Co-Chief Executive Officer, Madison Dearborn Partners, LLC
|
ü
|
|
X
|
X
|
David W. Nelms
|
56
|
2014
|
Chairman & Chief Executive Officer, Discover Financial Services
|
ü
|
X
|
|
X
|
Joseph R. Swedish
|
65
|
2015
|
Chairman, President & Chief Executive Officer, Anthem, Inc.
|
ü
|
|
X
|
X
|
Donna F. Zarcone
|
59
|
2011
|
President and Chief Executive Officer, The Economic Club of Chicago
|
ü
|
C
|
|
X
|
(2)
|
Audit - Audit Committee; Comp - Compensation Committee; Nom & Corp Gov - Nominating and Corporate Governance Committee.
C
- Committee Chair.
|
•
|
Principal employment, occupation or association involving an active leadership role
|
•
|
Qualifications, attributes, skills and/or experience relevant to the Company’s business
|
•
|
Ability to bring diversity to the Board, including complementary skills and viewpoints
|
•
|
Other time commitments, including the number of other boards on which the potential candidate may serve
|
•
|
Independence and absence of conflicts of interest as determined by the Board’s standards and policies, the listing standards of NASDAQ and other applicable laws, regulations and rules
|
•
|
Financial literacy and expertise
|
•
|
Personal qualities, including strength of character, maturity of thought process and judgment, values and ability to work collegially
|
2016 Annual Compensation Elements
|
Amount
|
|
Board Retainer
|
$
|
87,500
|
Audit Committee Chair Retainer
|
$
|
20,000
|
Compensation Committee Chair Retainer
|
$
|
15,000
|
Nominating and Corporate Governance Committee Chair Retainer
|
$
|
10,000
|
Annual Restricted Stock Unit Grant Value
|
$
|
137,500
|
Name
|
Restricted Stock Units Outstanding
(#)
|
|
Virginia C. Addicott
|
3,493
|
|
Steven W. Alesio
|
12,137
|
|
Barry K. Allen
|
12,137
|
|
James A. Bell
|
6,610
|
|
Benjamin D. Chereskin
|
3,493
|
|
Lynda M. Clarizio
|
3,493
|
|
Paul J. Finnegan
|
2,287
|
|
David W. Nelms
|
12,137
|
|
Joseph R. Swedish
|
3,493
|
|
Donna F. Zarcone
|
12,137
|
|
Audit Committee
Chairperson:
Donna F. Zarcone
Other Members of the Committee:
Virginia C. Addicott, James A. Bell, Benjamin D. Chereskin, David W. Nelms
Meetings Held in 2016:
7
Primary Responsibilities:
Our Audit Committee is responsible for, among other things: (1) appointing, compensating, retaining, evaluating, terminating and overseeing our independent registered public accounting firm; (2) discussing with our independent registered public accounting firm its independence from management; (3) reviewing with our independent registered public accounting firm the scope and results of its audit; (4) approving all audit and permissible non-audit services to be performed by our independent registered public accounting firm; (5) overseeing the accounting and financial reporting process and discussing with management and our independent registered public accounting firm the interim and annual financial statements that we file with the U.S. Securities and Exchange Commission (“SEC”); (6) reviewing and monitoring our accounting principles, accounting policies and financial and accounting controls; (7) establishing procedures for the confidential and anonymous submission of concerns regarding questionable accounting, internal controls or auditing matters; (8) reviewing and approving or ratifying related person transactions; (9) overseeing our business process assurance function (internal audit); and (10) reviewing the Company’s compliance and ethics and risk management programs, including with respect to cybersecurity.
Independence:
Each member of the Audit Committee meets the audit committee independence requirements of NASDAQ and the rules under the Securities Exchange Act of 1934 (the “Exchange Act”).
The Board has designated each member of the Audit Committee as an “audit committee financial expert.” Each member of the Audit Committee is financially literate, knowledgeable and qualified to review financial statements.
|
Compensation Committee
Chairperson:
Steven W. Alesio
Other Members of the Committee:
Barry K. Allen, Lynda M. Clarizio, Paul J. Finnegan, Joseph R. Swedish
Meetings Held in 2016:
4
Primary Responsibilities:
Our Compensation Committee is responsible for, among other things: (1) reviewing and approving the compensation of our chief executive officer and other executive officers; (2) reviewing and approving employment agreements and other similar arrangements between CDW and our executive officers; (3) administering our stock plans and other incentive compensation plans; (4) periodically reviewing and recommending to the Board any changes to our incentive compensation and equity-based plans; and (5) reviewing trends in executive compensation.
Independence:
Each member of the Compensation Committee meets the compensation committee independence requirements of NASDAQ and the rules under the Exchange Act.
|
Nominating and Corporate Governance Committee
Chairperson:
Barry K. Allen
Other Members of the Committee:
Virginia C. Addicott, Steven W. Alesio, James A. Bell, Benjamin D. Chereskin, Lynda M. Clarizio, Paul J. Finnegan, David W. Nelms, Joseph R. Swedish, Donna F. Zarcone
Meetings Held in 2016:
4
Primary Responsibilities:
Our Nominating and Corporate Governance Committee is responsible for, among other things: (1) identifying individuals qualified to become members of our Board of Directors, consistent with criteria approved by our Board; (2) overseeing the organization of our Board to discharge the Board’s duties and responsibilities properly and efficiently; (3) identifying best practices and recommending corporate governance principles; (4) developing and recommending to our Board a set of corporate governance guidelines and principles applicable to us; (5) reviewing compliance with The CDW Way Code, our code of business conduct and ethics; (6) reviewing and approving the compensation of our directors; (7) setting performance goals for and reviewing the performance of our chief executive officer; and (8) executive succession planning.
Independence:
Each member of the Nominating and Corporate Governance Committee meets the nominating and corporate governance committee independence requirements of NASDAQ.
|
Name
|
Title
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
Ann E. Ziegler
|
Senior Vice President and Chief Financial Officer
|
Douglas E. Eckrote
|
Senior Vice President - Small Business Sales and eCommerce
|
Christine A. Leahy
|
Senior Vice President - International, Chief Legal Officer and Corporate Secretary
|
Jonathan J. Stevens
|
Senior Vice President, Operations and Chief Information Officer
|
Overview
|
2016 Business Highlights
Our Executive Compensation Program
Our Executive Compensation Practices
2016 Say-on-Pay Vote
|
What We Pay and Why
|
2016 Executive Compensation Decisions
Alignment of Executive Compensation Program with Operational Performance
Base Salary
Annual Cash Incentive Awards (Senior Management Incentive Plan)
Long-Term Incentive Program
Other Elements of Our 2016 Executive Compensation Program
|
How We Make Executive Compensation Decisions
|
Our Executive Compensation Philosophies and Objectives
Role of the Board, Compensation Committee and our Executive Officers
Guidance from Independent Compensation Consultant
Comparison to Relevant Peer Group
|
•
|
Net sales (which include results from our August 2015 acquisition of CDW UK, the UK-based integrated solutions provider previously known as Kelway) growth of 7.6%
|
•
|
Constant currency net sales growth of 8.3%
|
•
|
Adjusted EBITDA growth of 9.7%
|
•
|
Non-GAAP net income per diluted share growth of 16.9%, fueled by strong operating profits, incremental earnings from the inclusion of CDW UK and the repurchase of more than 8.7 million shares.
|
•
|
First, our nimble business model,
which enables us to quickly capitalize on market trends. In 2016, this helped us deliver a higher mix of “100% gross margin solutions and services,” contributing to our achievement of an adjusted EBITDA margin for the year above our mid-7% target range.
|
•
|
Second, the power of our balanced portfolio
of customer end-markets, with five US channels each with over $1 billion in annual Net sales and combined sales from Canadian and UK operations of more than $1.3 billion. In 2016, this diversity of end-markets enabled us to more than offset the impact of slow economic conditions on sales to US Medium and Large business customers, and deliver mid-single digit organic Net sales growth.
|
•
|
Third, our diverse product suite
of more than 100,000 products from over 1,000 leading and emerging brands. This breadth ensures we are well-positioned to meet our customer’s needs - whether transactional or highly complex. In 2016, US hardware sales increased 3%, software sales increased 8% and services increased 12%.
|
Named Executive Officer
|
|
2016 Base Salary
|
|
|
Thomas E. Richards
|
|
$
|
900,000
|
|
Ann E. Ziegler
|
|
$
|
551,562
|
|
Douglas E. Eckrote
|
|
$
|
401,250
|
|
Christine A. Leahy
|
|
$
|
453,201
|
|
Jonathan J. Stevens
|
|
$
|
321,750
|
|
•
|
Consistent with the 2015 SMIP design, the Compensation Committee chose Adjusted EBITDA and market share growth (based upon sales) as our SMIP performance goals. The Compensation Committee chose this combination of performance goals because together they take into account not only our absolute performance but also performance relative to the market.
|
•
|
Adjusted EBITDA performance goal was set at $1,102 million, which was based on a growth rate above US IT market growth rate expectations. When establishing the performance goals under SMIP, the Compensation Committee determined to exclude the items set forth in the Adjusted EBITDA reconciliation included in Appendix A to this Item 11. In addition, the Compensation
|
•
|
No payout unless 2016 Adjusted EBITDA at or above 2015 Adjusted EBITDA.
|
•
|
Payout range from 0% to 200% of target awards for performance against the Adjusted EBITDA performance goal.
|
•
|
Market share governor would reduce Adjusted EBITDA-based payouts at all performance levels unless we gained market share.
|
Named Executive Officer
|
|
SMIP Bonus Target
|
|
|
Calculated SMIP Payout
|
|
||
Thomas E. Richards
|
|
$
|
1,350,000
|
|
|
$
|
1,561,768
|
|
Ann E. Ziegler
|
|
$
|
680,670
|
|
|
$
|
787,443
|
|
Douglas E. Eckrote
|
|
$
|
573,750
|
|
|
$
|
663,751
|
|
Christine A. Leahy
|
|
$
|
434,377
|
|
|
$
|
502,516
|
|
Jonathan J. Stevens
|
|
$
|
483,250
|
|
|
$
|
559,055
|
|
•
|
Focus executives on key performance metrics aligned with long-term stockholder value creation and the Company’s long-term strategic plan and capital allocation plan.
|
•
|
Establish a direct link between compensation and the achievement of longer-term financial objectives.
|
•
|
Retain the services of executives through multi-year vesting provisions.
|
Executive
|
|
Amount
(1)
|
|
|
Thomas E. Richards
|
|
$
|
4,000,000
|
|
Ann E. Ziegler
|
|
$
|
1,400,000
|
|
Douglas E. Eckrote
|
|
$
|
450,000
|
|
Christine A. Leahy
|
|
$
|
900,000
|
|
Jonathan J. Stevens
|
|
$
|
400,000
|
|
Named Executive Officer
|
|
Target Shares Subject to 2014 PSU Award (#)
|
|
|
Shares Earned under 2014 PSU Award (#)
(1)
|
||
Thomas E. Richards
|
|
|
66,900
|
|
|
|
129,462
|
Ann E. Ziegler
|
|
|
14,409
|
|
|
|
27,884
|
Douglas E. Eckrote
|
|
|
9,263
|
|
|
|
17,925
|
Christine A. Leahy
|
|
|
13,380
|
|
|
|
25,892
|
Jonathan J. Stevens
|
|
|
8,234
|
|
|
|
15,934
|
Name and principal
position
|
Year
|
Salary
($)
(1)
|
Bonus
($)
(2)
|
|
Stock
Awards
($)
(3)
|
Option
Awards
($)
(4)
|
Non-equity
Incentive Plan
Compensation
($)
(5)
|
|
Non-qualified
Deferred
Compensation
Earnings
($)
|
|
All Other
Compensation
($)
(6)
|
Total
($)
|
|
Thomas E. Richards
Chairman, President and Chief Executive Officer
|
2016
|
888,461
|
—
|
|
2,000,005
|
1,289,272
|
1,561,768
|
|
—
|
|
11,992
|
5,751,498
|
|
2015
|
851,587
|
—
|
|
1,750,017
|
1,546,246
|
1,519,418
|
|
—
|
|
1,300,347
|
6,967,615
|
|
|
2014
|
798,250
|
—
|
|
1,625,001
|
1,445,040
|
1,836,609
|
|
12,878
|
|
278,019
|
5,995,797
|
|
|
Ann E. Ziegler
Senior Vice President and Chief Financial Officer
|
2016
|
544,516
|
—
|
|
699,986
|
451,243
|
787,443
|
|
—
|
|
11,555
|
2,494,743
|
|
2015
|
516,806
|
—
|
|
649,988
|
574,319
|
774,750
|
|
—
|
|
799,428
|
3,315,291
|
|
|
2014
|
453,955
|
—
|
|
349,995
|
311,242
|
967,868
|
|
7,870
|
|
173,998
|
2,264,928
|
|
|
Douglas E. Eckrote
Senior Vice President, Small Business Sales and eCommerce
|
2016
|
396,635
|
39,000
|
|
225,012
|
145,042
|
663,751
|
|
—
|
|
10,698
|
1,480,138
|
|
2015
|
379,760
|
29,250
|
|
225,002
|
198,804
|
741,292
|
|
—
|
|
680,663
|
2,254,771
|
|
|
2014
|
341,250
|
29,250
|
|
224,998
|
200,081
|
972,086
|
|
6,690
|
|
148,737
|
1,923,092
|
|
|
Christine A. Leahy
Senior Vice President -International, Chief Legal Officer and Corporate Secretary
|
2016
|
443,289
|
—
|
|
449,985
|
290,084
|
502,516
|
|
—
|
|
10,698
|
1,696,572
|
|
2015
|
396,032
|
—
|
|
400,007
|
353,422
|
513,689
|
|
—
|
|
655,576
|
2,318,726
|
|
|
2014
|
340,460
|
—
|
|
325,000
|
289,008
|
590,537
|
|
6,439
|
|
143,545
|
1,694,989
|
|
|
Jonathan J. Stevens
Senior Vice President, Operations and Chief Information Officer
|
2016
|
321,750
|
32,200
|
|
199,985
|
128,925
|
559,055
|
|
—
|
|
9,914
|
1,251,829
|
|
2015
|
330,279
|
24,150
|
|
199,985
|
176,711
|
593,340
|
|
—
|
|
584,235
|
1,908,700
|
|
|
2014
|
301,750
|
24,150
|
|
200,004
|
177,854
|
771,917
|
|
5,733
|
|
128,158
|
1,605,720
|
|
(1)
|
Salary.
2016 base salary adjustments were effective February 21, 2016. The 2016 increase in the base salary of Mr. Eckrote represents a shift in the mix of compensation from SMIP target opportunity to base salary.
|
(2)
|
Bonus.
The amounts reported represent lump sum merit awards granted to two of the Named Executive Officers in lieu of an increase in annual target compensation.
|
(3)
|
Stock awards.
The amounts reported in this column represent the grant date fair value of performance shares and performance share units granted in the applicable year, calculated in accordance with FASB ASC Topic 718. The amounts included in 2016 for the performance shares are calculated based on the closing stock price and the probable satisfaction of the performance conditions for such awards as of the date of grant. Assuming the highest level of performance is achieved for the 2016 performance shares, the maximum value of these awards at the grant date would be as follows: Mr. Richards-$4,000,010; Ms. Ziegler-$1,399,972; Mr. Eckrote-$450,024; Ms. Leahy-$899,970; and Mr. Stevens-$399,970. See Note 11 to the Audited Financial Statements included in this Form 10-K (the “Audited Financial Statements”) for a discussion of the relevant assumptions used in calculating these amounts.
|
(4)
|
Option awards.
The amounts reported in this column represent the grant date fair value of stock option awards granted in the applicable year, calculated in accordance with FASB ASC Topic 718. See Note 11 to the Audited Financial Statements for a discussion of the relevant assumptions used in calculating these amounts.
|
(5)
|
Non-equity incentive plan compensation.
The amounts reported represent cash awards to the Named Executive Officers under the SMIP. Please see the CD&A for further information regarding the 2016 SMIP.
|
|
|
Estimated Possible Payouts
Under Non-equity
Incentive Plan Awards
(1)
|
|
|
Estimated Possible Payouts
Under Equity Incentive Plan
Awards
(2)
|
|
|
|
Exercise
or Base
Price of
Option
Awards
($)
|
|
Grant
Date Fair
Value of
Stock
and
Option
Awards
($)
(4)
|
|
|||||||||||
Name
|
Grant
Date
|
|
Threshold
($)
|
|
Target
($)
|
|
Maximum
($)
|
|
|
Threshold
(#)
|
|
Target
(#)
|
|
Maximum
(#)
|
|
All
Other
Stock
Awards:
Number
of Units
(#)
|
|
All Other
Option
Awards:
Number of
Securities
Underlying
Options
(#)
(3)
|
|
||||
Thomas E. Richards
|
—
|
|
202,500
|
|
1,350,000
|
|
2,700,000
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
25,132
|
|
50,264
|
|
100,528
|
|
—
|
|
—
|
|
—
|
|
2,000,005
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
150,792
|
|
39.79
|
|
1,289,272
|
|
Ann E. Ziegler
|
—
|
|
102,101
|
|
680,670
|
|
1,361,340
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
8,796
|
|
17,592
|
|
35,184
|
|
—
|
|
—
|
|
—
|
|
699,986
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
52,777
|
|
39.79
|
|
451,243
|
|
Douglas E. Eckrote
|
—
|
|
86,063
|
|
573,750
|
|
1,147,500
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
2,828
|
|
5,655
|
|
11,310
|
|
—
|
|
—
|
|
—
|
|
225,012
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
16,964
|
|
39.79
|
|
145,042
|
|
Christine A. Leahy
|
—
|
|
65,157
|
|
434,377
|
|
868,754
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
5,655
|
|
11,309
|
|
22,618
|
|
—
|
|
—
|
|
—
|
|
449,985
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
33,928
|
|
39.79
|
|
290,084
|
|
Jonathan J.
Stevens
|
—
|
|
72,488
|
|
483,250
|
|
966,500
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
2,513
|
|
5,026
|
|
10,052
|
|
—
|
|
—
|
|
—
|
|
199,985
|
|
|
3/2/16
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
—
|
|
—
|
|
—
|
|
15,079
|
|
39.79
|
|
128,925
|
|
(1)
|
These amounts represent threshold, target and maximum cash award levels set in 2016 under the SMIP. The amount actually earned by each Named Executive Officer is reported as Non-Equity Incentive Plan Compensation in the 2016 Summary Compensation Table.
|
(2)
|
These amounts represent the threshold, target and maximum performance shares granted under the 2013 LTIP. For actively employed executives, these performance shares are scheduled to vest on December 31, 2018, subject to the achievement of the threshold performance goals relating to adjusted FCF and adjusted EPS over the 2016-2018 performance period. The number of shares subject to a performance share award increases as a result of the deemed reinvestment of dividend equivalents prior to settlement of the award and such additional shares are subject to the same vesting conditions as the underlying performance shares. Please see the CD&A for further information regarding this award.
|
(3)
|
These amounts represent stock options granted under the 2013 LTIP. For actively employed executives, these options vest in one-third increments on each of the first through third year anniversaries of the date of grant.
|
(4)
|
The amounts reported represent the grant date fair value associated with the grant of these performance shares and stock option awards, as computed in accordance with FASB ASC Topic 718. In the case of the performance shares, the grant date fair value is calculated based on the closing stock price on the date of grant and the probable satisfaction of the performance conditions for such awards as of the date of grant. See Note 11 to the Audited Financial Statements for a discussion of the relevant assumptions used in calculating these amounts.
|
|
Option Awards
|
|
Stock Awards
|
|||||||||||
Name
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable
(#)
|
|
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
|
Number
of Shares
or Units
of Stock
That
Have Not
Vested
(#)
|
|
Market
Value of
Shares
or Units
of Stock
That
Have Not
Vested
($)
(8)
|
|
Equity Incentive
Plan Awards:
Number of
Unearned
Shares, Units,
or Other Rights
that Have Not
Vested
(#)
|
|
Equity Incentive
Plan Awards:
Market or
Payout Value of
Unearned Shares,
Units or Other
Rights that Have
Not Vested
($)
(8)
|
|
Thomas E. Richards
|
409,824
(1)
|
|
95,470
(1)
|
17.00
|
12/12/2022
|
|
18,246
(5)
|
|
950,434
|
|
—
|
|
—
|
|
133,800
(2)
|
|
66,900
(2)
|
24.29
|
2/25/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|
46,308
(3)
|
|
92,618
(3)
|
37.79
|
2/19/2025
|
|
—
|
|
—
|
|
47,168
(6)
|
|
2,456,981
|
|
|
—
|
|
150,792
(4)
|
39.79
|
3/2/2026
|
|
—
|
|
—
|
|
50,800
(7)
|
|
2,646,172
|
|
|
Ann E. Ziegler
|
28,818
(2)
|
|
14,410
(2)
|
24.29
|
2/25/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
17,200
(3)
|
|
34,401
(3)
|
37.79
|
2/19/2025
|
|
—
|
|
—
|
|
17,519
(6)
|
|
912,565
|
|
|
—
|
|
52,777
(4)
|
39.79
|
3/2/2026
|
|
—
|
|
—
|
|
17,779
(7)
|
|
926,108
|
|
|
Douglas E. Eckrote
|
18,526
(2)
|
|
9,263
(2)
|
24.29
|
2/25/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5954
(3)
|
|
11,908
(3)
|
37.79
|
2/19/2025
|
|
—
|
|
—
|
|
6,064
(6)
|
|
315,874
|
|
|
—
|
|
16,964
(4)
|
39.79
|
3/2/2026
|
|
—
|
|
—
|
|
5,715
(7)
|
|
297,694
|
|
|
Christine A. Leahy
|
26,760
(2)
|
|
13,380
(2)
|
24.29
|
2/25/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
10,584
(3)
|
|
21,170
(3)
|
37.79
|
2/19/2025
|
|
—
|
|
—
|
|
10,781
(6)
|
|
561,582
|
|
|
—
|
|
33,928
(4)
|
39.79
|
3/2/2026
|
|
—
|
|
—
|
|
11,429
(7)
|
|
595,337
|
|
|
Jonathan J. Stevens
|
16,468
(2)
|
|
8,234
(2)
|
24.29
|
2/25/2024
|
|
—
|
|
—
|
|
—
|
|
—
|
|
5,292
(3)
|
|
10,585
(3)
|
37.79
|
2/19/2025
|
|
—
|
|
—
|
|
5,390
(6)
|
|
280,765
|
|
|
—
|
|
15,079
(4)
|
39.79
|
3/2/2026
|
|
—
|
|
—
|
|
5,079
(7)
|
|
264,565
|
|
(1)
|
Represents stock options granted to Mr. Richards in connection with the pre-initial public offering distribution of equity held by CDW Holdings LLC, our parent company prior to our initial public offering. These stock options were issued to B Unit holders (B Units represented equity interests in the company while it was privately held) to preserve their fully diluted equity ownership percentages, as required by the CDW Holdings LLC Unitholders Agreement. The vesting of the stock options is based upon the remainder of the 5 year daily vesting schedule applicable to the B Units with respect to which the stock options were granted. A portion of Mr. Richards’ stock option grant (54,514 shares) was vested as of June 26, 2013 (the date of our initial public offering), while the remaining portion of the stock option grant vests daily on a pro rata basis through December 11, 2017.
|
(2)
|
These stock options were awarded on February 25, 2014, and vest in one-third increments on each of the first through third year anniversaries of the date of grant.
|
(3)
|
These stock options were awarded on February 19, 2015, and vest in one-third increments on each of the first through third year anniversaries of the date of grant.
|
(4)
|
These stock options were awarded on March 2, 2016, and vest in one-third increments on each of the first through third year anniversaries of the date of grant.
|
(5)
|
Represents shares of restricted stock granted to B unit holders, including Mr. Richards, in connection with the pre-initial public offering distribution of equity held by CDW Holdings LLC, our parent company prior to our initial public offering. The vesting of the shares of restricted stock is based upon the remainder of the 5 year daily vesting schedule applicable to the B Units for which the restricted shares were received in exchange. For Mr. Richards, these shares vest daily on a pro rata basis through December 11, 2017.
|
(6)
|
These performance shares were awarded on February 19, 2015 and vest on December 31, 2017, subject to the achievement of the threshold performance goals relating to adjusted FCF and adjusted EPS over the 2015-2017 performance period. The amounts reported in this column are based on target achievement of the applicable performance goals and include performance shares acquired through the deemed reinvestment of dividend equivalents.
|
(7)
|
These performance shares were awarded on March 2, 2016 and vest on December 31, 2018, subject to the achievement of the threshold performance goals relating to adjusted FCF and adjusted EPS over the 2016-2018 performance period. The amounts reported in this column are based on target achievement of the applicable performance goals and include performance shares acquired through the deemed reinvestment of dividend equivalents.
|
(8)
|
The market value of shares of stock that have not vested reflects a stock price of $52.09, our closing stock price on December 30, 2016.
|
Name
|
Number of
Shares Acquired
on Vesting
(1)
(#)
|
|
|
Value Realized on Vesting
(2)
($)
|
|
|
Thomas E. Richards
|
152,064
|
|
|
7,749,939
|
|
|
Ann E. Ziegler
|
28,583
|
|
|
1,488,893
|
|
|
Douglas E. Eckrote
|
18,375
|
|
|
957,159
|
|
|
Christine A. Leahy
|
26,542
|
|
|
1,382,563
|
|
|
Jonathan A. Stevens
|
16,334
|
|
|
850,825
|
|
(1)
|
For Mr. Richards, includes 19,355 shares of restricted stock granted to B unit holders, including Mr. Richards, in connection with the pre-initial public offering distribution of equity held by CDW Holdings LLC, our parent company prior to our initial public offering. The vesting of the shares of restricted stock is based upon the remainder of the 5 year daily vesting schedule applicable to the B units for which the shares of restricted stock were received in exchange. The remaining shares reported in this column represent shares acquired upon the vesting of performance share units awarded on February 25, 2014 and which vested on December 31, 2016 based on the achievement of performance goals relating to adjusted FCF and adjusted EPS over the 2014-2016 performance period, including shares acquired through the deemed reinvestment of dividend equivalents through December 31, 2016. Performance share unit award recipients receive fractional shares upon settlement; however, for purposes of this table, share numbers have been rounded to the nearest whole share.
|
Name
|
|
Executive
Contributions
in Last Fiscal
Year
($)
|
|
|
Registrant
Company
Contributions
in Last Fiscal Year
($)
|
|
|
Aggregate
Earnings in
Last Fiscal Year
($)
|
|
|
Aggregate
Withdrawals/
Distributions
($)
|
|
|
Aggregate
Balance at
Last Fiscal
Year-End
($)
(1)
|
Thomas E. Richards
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,636,784
|
Ann E. Ziegler
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,444,703
|
Douglas E. Eckrote
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,928,270
|
Christine A. Leahy
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,818,393
|
Jonathan J. Stevens
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,509,358
|
(1)
|
A qualifying termination means termination of the Named Executive Officer’s employment (1) by the Company other than (A) for “cause,” (B) the Named Executive Officer’s death or (C) the Named Executive Officer’s disability, or (2) by the Named Executive Officer for “good reason.”
|
(2)
|
Amounts reported in this column represent two times the sum of (i) the Named Executive Officer’s base salary and (ii) the Named Executive Officer’s annual incentive bonus target for 2016 multiplied by the 2016 SMIP payout percentage of 115.7%. Under the Compensation Protection Agreements, the Named Executive Officers are also entitled to a pro rata bonus based on the Company’s actual performance for the year in which termination occurs. Because the SMIP bonus is considered earned as of December 31, 2016, amounts related to the pro rata bonus have been excluded from this table and are reported in the 2016 Summary Compensation Table as 2016 compensation.
|
(3)
|
Represents the estimated value of continued welfare benefits that all Named Executive Officers would be entitled to receive upon a qualifying termination of employment.
|
(4)
|
Represents the maximum value of outplacement services that all Named Executive Officers would be entitled to receive upon a qualifying termination of employment.
|
Name
|
Severance
Payment
($)
(2)
|
|
Value of
Accelerated
Equity Awards
($)
(3)
|
|
Aggregate
Payments
($)
|
|
Thomas E. Richards
|
—
|
|
11,859,520
|
|
11,859,520
|
|
Ann E. Ziegler
|
—
|
|
2,458,769
|
|
2,458,769
|
|
Douglas E. Eckrote
|
—
|
|
946,267
|
|
946,267
|
|
Christine A. Leahy
|
—
|
|
1,664,843
|
|
1,664,843
|
|
Jonathan J. Stevens
|
—
|
|
841,108
|
|
841,108
|
|
(1)
|
As noted above, the terms of our 2016, 2015 and 2014 equity awards include retirement vesting provisions and, as of December 31, 2016, Mr. Richards and Ms. Ziegler were our only Named Executive Officers eligible for retirement vesting under such equity awards. Please see footnote 3 for an estimate of the amounts that would be received by Mr. Richards and Ms. Ziegler under the terms of such equity awards upon a December 31, 2016 retirement.
|
(2)
|
The Named Executive Officers are entitled to a pro rata bonus based on target for the year in which termination occurs upon death or a termination due to disability and may receive, at the Compensation Committee’s discretion, a pro rata bonus for the year of retirement. Because the SMIP bonus is considered earned as of December 31, 2016, amounts related to the pro rata bonus have been excluded from this table and are reported in the 2016 Summary Compensation Table as 2016 compensation.
|
(3)
|
Represents the value of the accelerated vesting of the 2016, 2015 and 2014 stock option awards, pro rata vesting of the 2016 and 2015 performance shares, assuming target achievement of the applicable performance goals, and, for Mr. Richards, partial vesting of the Replacement Awards upon death or a termination due to disability. Under the terms of the 2016, 2015 and 2014 equity awards, Mr. Richards and Ms. Ziegler would continue to vest in their option grants and receive a prorated payout based on actual performance with respect to their performance shares upon retirement, provided that each continued to comply with non-competition, non-solicitation and confidentiality restrictive covenants during the vesting period. Assuming a retirement as of December 31, 2016, the value of the accelerated vesting associated with Mr. Richards’ and Ms. Ziegler’s outstanding equity awards is estimated to equal $7,559,044
and $2,458,769, respectively, assuming target achievement of the performance goals applicable to their performance awards. The value of the accelerated vesting of the equity awards reported in this table is based upon our closing stock price of $52.09 on December 30, 2016. Excluded from this column are the 2014 performance share units that vested based on Company performance and continued service of the Named Executive Officer through December 31, 2016 and which are reflected in the 2016 Stock Vested Table.
|
Name
|
Severance
Payment
(2)
($)
|
Value of
Accelerated
Equity
Awards
($)
(3)
|
|
Welfare
Benefits
($)
(4)
|
Outplacement
($)
(5)
|
Aggregate
Payments
($)
|
|
Thomas E. Richards
|
4,865,083
|
14,442,629
|
|
25,699
|
20,000
|
19,353,411
|
|
Ann E. Ziegler
|
2,701,072
|
3,380,362
|
|
23,334
|
20,000
|
6,124,768
|
|
Douglas E. Eckrote
|
2,382,856
|
1,250,021
|
|
29,117
|
20,000
|
3,681,994
|
|
Christine A. Leahy
|
1,919,068
|
2,248,928
|
|
32,031
|
20,000
|
4,220,027
|
|
Jonathan J. Stevens
|
1,915,388
|
1,111,073
|
|
27,646
|
20,000
|
3,074,107
|
|
(1)
|
A qualifying termination means termination of the Named Executive Officer’s employment following a change in control (1) by the Company other than (A) for “cause,” (B) the Named Executive Officer’s death or (C) the Named Executive Officer’s disability, or (2) by the Named Executive Officer for “good reason.” Under the terms of the Compensation Protection Agreements, if the payments and benefits to a Named Executive Officer under his or her respective Compensation Protection Agreement or another plan, arrangement or agreement would subject the Named Executive Officer to the excise tax imposed by Section 4999 of the Internal Revenue Code, then such payments will be reduced by the minimum amount necessary to avoid such excise tax, if such reduction would result in the Named Executive Officer receiving a higher net after-tax amount. The amounts reflected in this table do not reflect the application of any reduction in compensation or benefits pursuant to the terms of the Compensation Protection Agreements.
|
(2)
|
Amounts reported in this column represent two times the sum of (i) the Named Executive Officer’s base salary and (ii) the Named Executive Officer’s average SMIP bonus for each of the three fiscal years ending prior to the change in control. Under the Compensation Protection Agreements, the Named Executive Officers are also entitled to a pro rata bonus based on the Company’s actual performance for the year in which termination occurs. Because the SMIP bonus is considered earned as of December 31, 2016, amounts related to the pro rata bonus have been excluded from this table and are reported in the 2016 Summary Compensation Table as 2016 compensation.
|
(3)
|
Represents the value of equity awards that would become vested upon a qualifying termination of employment within two years following a change in control or upon a change in control in which the outstanding awards are not effectively assumed, assuming target achievement of the applicable performance goals. With respect to Mr. Richards, the vesting of his outstanding Replacement Awards would also accelerate upon a qualifying change in control, without a related termination of employment. Based on a December 31, 2016 closing price, the value of the accelerated vesting associated with Mr. Richards’ outstanding Replacement Awards is estimated to equal $4,300,476. The value of the accelerated vesting of the equity awards reported in this table is based upon our closing stock price of $52.09
on December 30, 2016. Excluded from this column are the 2014 performance share units that vested based on Company performance and continued service of the Named Executive Officer through December 31, 2016 and which are reflected in the 2016 Stock Vested Table.
|
(4)
|
Represents the estimated value of continued welfare benefits that all Named Executive Officers would be entitled to receive upon a qualifying termination of employment.
|
|
Year Ended December 31,
|
||||||||||||
|
2016
|
% of Net Sales
|
|
2015
|
% of Net Sales
|
|
% Change
|
||||||
Net income
|
$
|
424.4
|
|
|
|
$
|
403.1
|
|
|
|
|||
Depreciation and amortization
|
|
254.5
|
|
|
|
|
227.4
|
|
|
|
|||
Income tax expense
|
|
248.0
|
|
|
|
|
243.9
|
|
|
|
|||
Interest expense, net
|
|
146.5
|
|
|
|
|
159.5
|
|
|
|
|||
EBITDA
|
|
1,073.4
|
|
7.7
|
%
|
|
|
1,033.9
|
8.0
|
%
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
||||
Non-cash equity-based compensation
|
|
39.2
|
|
|
|
|
31.2
|
|
|
|
|||
Net loss on extinguishments of long-term debt
|
|
2.1
|
|
|
|
|
24.3
|
|
|
|
|||
(Income)/loss from equity investments
(a)
|
|
(1.1
|
)
|
|
|
|
10.1
|
|
|
|
|||
Acquisition and integration expenses
(b)
|
|
7.3
|
|
|
|
|
10.2
|
|
|
|
|||
Gain on remeasurement of equity investment
(c)
|
|
—
|
|
|
|
|
(98.1)
|
|
|
|
|||
Other adjustments
(d)
|
|
(3.6
|
)
|
|
|
|
6.9
|
|
|
|
|||
Total adjustments
|
|
43.9
|
|
|
|
|
(15.4)
|
|
|
|
|||
Adjusted EBITDA
(e)
|
$
|
1,117.3
|
|
8.0
|
%
|
|
$
|
1,018.5
|
7.8
|
%
|
|
9.7
|
%
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
% Change
|
||||
Net income
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
Amortization of intangibles
(a)
|
|
|
187.2
|
|
|
|
173.9
|
|
|
Non-cash equity-based compensation
|
|
|
39.2
|
|
|
|
31.2
|
|
|
Non-cash equity-based compensation related to equity investment
(b)
|
|
|
—
|
|
|
|
20.0
|
|
|
Net loss on extinguishments of long-term debt
|
|
|
2.1
|
|
|
|
24.3
|
|
|
Acquisition and integration expenses
(c)
|
|
|
7.3
|
|
|
|
10.2
|
|
|
Gain on remeasurement of equity investment
(d)
|
|
|
—
|
|
|
|
(98.1)
|
|
|
Other adjustments
(e)
|
|
|
(5.4)
|
|
|
|
3.7
|
|
|
Aggregate adjustment for income taxes
(f)
|
|
|
(85.8)
|
|
|
|
(64.8)
|
|
|
Non-GAAP net income
(g)
|
|
$
|
569.0
|
|
|
$
|
503.5
|
13.0%
|
|
GAAP net income per diluted share
|
|
$
|
2.56
|
|
|
$
|
2.35
|
9.0%
|
|
Non-GAAP net income per diluted share
|
|
$
|
3.43
|
|
|
$
|
2.93
|
16.9%
|
|
Shares used in computing GAAP and Non-GAAP net income per diluted share
|
|
|
166.0
|
|
|
|
171.8
|
|
|
|
Year Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
||||
Total Non-GAAP adjustments
|
|
$
|
230.4
|
|
|
$
|
165.2
|
|
|
Weighted-average statutory effective rate
|
|
|
36.0%
|
|
|
|
38.0%
|
|
|
Income tax
|
|
|
(82.9)
|
|
|
|
(62.8)
|
|
|
Deferred tax adjustment due to law changes
|
|
|
(1.5)
|
|
|
|
(4.0)
|
|
|
Stock compensation tax benefit related to the adoption of ASU 2016-09
|
|
|
(1.8)
|
|
|
|
—
|
|
|
Withholding tax expense on the unremitted earnings of our Canadian subsidiary
|
|
|
—
|
|
|
|
3.3
|
|
|
Non-deductible adjustments and other
|
|
|
0.4
|
|
|
|
(1.3)
|
|
|
Total aggregate adjustment for income taxes
|
|
|
(85.8)
|
|
|
|
(64.8)
|
|
|
|
Year Ended December 31,
|
||||||
|
|
2016
|
|
2015
|
% Change
|
||
Net sales, as reported
|
$
|
13,981.9
|
|
$
|
12,988.7
|
|
7.6%
|
Foreign currency translation
(a)
|
|
—
|
|
|
(76.3)
|
|
|
Consolidated net sales, on a constant currency basis
|
$
|
13,981.9
|
|
$
|
12,912.4
|
|
8.3%
|
|
|
Year Ended December 31,
|
|||||
|
|
2016
|
|
2015
|
|
||
Net cash provided by operating activities
|
|
$
|
604.0
|
|
$
|
277.5
|
|
Capital expenditures
|
|
|
(63.5)
|
|
|
(90.1)
|
|
Net change in accounts payable - inventory financing
|
|
|
143.6
|
|
|
95.9
|
|
Free cash flow
|
|
$
|
684.1
|
|
$
|
283.3
|
|
•
|
each member of our Board of Directors, each director nominee and each of our named executive officers;
|
•
|
all members of our Board and our executive officers as a group; and
|
•
|
each person or group who is known by us to own beneficially more than 5% of our common stock.
|
Name
|
Aggregate
Number of Shares
Beneficially Owned
|
|
Percent of
Outstanding Shares
|
Additional Information
|
Thomas E. Richards
|
1,836,006
|
|
1.1%
|
Includes beneficial ownership of 915,447 shares held by Mr. Richards that may be acquired within 60 days of February 15, 2017. Also includes 15,813 shares of unvested restricted stock and 195,940 unvested performance shares held by Mr. Richards.
|
Ann E. Ziegler
|
227,918
|
|
*
|
Includes beneficial ownership of 123,803 shares held by Ms. Ziegler that may be acquired within 60 days of February 15, 2017. Also includes 70,599 unvested performance shares held by Ms. Ziegler.
|
Douglas E. Eckrote
|
257,748
|
|
*
|
Includes beneficial ownership of 63,726 shares held by Mr. Eckrote that may be acquired within 60 days of February 15, 2017. Also includes 23,561 unvested performance shares held by Mr. Eckrote.
|
Christine A. Leahy
|
351,262
|
|
*
|
Includes beneficial ownership of 99,160 shares held by Ms. Leahy that may be acquired within 60 days of February 15, 2017. Also includes 44,423 unvested performance shares held by Ms. Leahy.
|
Jonathan J. Stevens
|
168,360
|
|
*
|
Includes beneficial ownership of 56,646 shares held by Mr. Stevens that may be acquired within 60 days of February 15, 2017. Also includes 20,941 unvested performance shares held by Mr. Stevens.
|
Virginia C. Addicott
|
3,493
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Ms. Addicott that may be acquired within 60 days of February 15, 2017.
|
Steven W. Alesio
|
33,650
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Alesio that may be acquired within 60 days of February 15, 2017. Also includes beneficial ownership of 8,645 vested restricted stock units on which settlement into shares of CDW Corporation common stock has been deferred until the sooner of separation of service on the Board of Directors or five years following vesting.
|
Barry K. Allen
|
35,011
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Allen that may be acquired within 60 days of February 15, 2017. Also includes beneficial ownership of 8,645 vested restricted stock units on which settlement into shares of CDW Corporation common stock has been deferred until the sooner of separation of service on the Board of Directors or five years following vesting. Also includes 1,854 shares held by Allen Enterprises LLC, a limited liability company of which Mr. Allen is the sole member.
|
James A. Bell
|
12,290
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Bell that may be acquired within 60 days of February 15, 2017. Also includes beneficial ownership of 3,117 vested restricted stock units on which settlement into shares of CDW Corporation common stock has been deferred until the sooner of separation of service on the Board of Directors or five years following vesting.
|
Benjamin D. Chereskin
|
201,874
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Chereskin that may be acquired within 60 days of February 15, 2017. Also includes 175,163 shares held by the Chereskin Family Dynasty Trust and 6,936 shares held by the Benjamin D Chereskin Dynasty Trust which are deemed to be beneficially owned by Mr. Chereskin.
|
Lynda M. Clarizio
|
3,976
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Ms. Clarizio that may be acquired within 60 days of February 15, 2017.
|
Paul J. Finnegan
|
18,569
|
|
*
|
Includes beneficial ownership of 2,287 shares held by Mr. Finnegan that may be acquired within 60 days of February 15, 2017. Also includes 8,141 shares indirectly owned by Glen Lake Partners L.P. Mr. Finnegan is the trustee of Glen Lake Partners Management Trust I, a general partner of Glen Lake Partners, L.P. Mr. Finnegan's wife, Mary M. Finnegan, is the trustee of Glen Lake Partners Management Trust II, the other general partner of Glen Lake Partners, L.P.
|
David W. Nelms
|
12,137
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Nelms that may be acquired within 60 days of February 15, 2017. Also includes beneficial ownership of 8,645 vested restricted stock units on which settlement into shares of CDW Corporation common stock has been deferred until the sooner of separation of service on the Board of Directors or five years following vesting.
|
Joseph R. Swedish
|
5,086
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Mr. Swedish that may be acquired within 60 days of February 15, 2017.
|
Donna F. Zarcone
|
19,143
|
|
*
|
Includes beneficial ownership of 3,493 shares held by Ms. Zarcone that may be acquired within 60 days of February 15, 2017. Also includes beneficial ownership of 8,645 vested restricted stock units on which settlement into shares of CDW Corporation common stock has been deferred until the sooner of separation of service on the Board of Directors or five years following vesting.
|
All directors and executive officers as a group (23 persons)
|
4,387,319
|
|
2.7%
|
|
Name
|
Aggregate Number of Shares Beneficially Owned
|
|
Percent of
Outstanding Shares
|
|
FMR LLC
(1)
245 Summer Street
Boston Massachusetts 02210
|
18,628,246
|
|
11.605
|
%
|
The Vanguard Group
(2)
100 Vanguard Boulevard
Malvern, Pennsylvania 19355
|
14,362,949
|
|
8.94
|
%
|
Blackrock, Inc.
(3)
55 East 52
nd
Street
New York, New York 10055
|
11,073,689
|
|
6.9
|
%
|
(1) This information is based on a Schedule 13G/A filed by FMR LLC with the SEC on February 14, 2017 reporting beneficial ownership as of December 31, 2016. FMR LLC reported that it has sole voting power with respect to 3,491,034 shares of our common stock and sole dispositive power with respect to 18,628,246 shares of our common stock.
(2) This information is based on a Schedule 13G/A filed by The Vanguard Group with the SEC on February 10, 2017 reporting beneficial ownership as of December 31, 2016. The Vanguard Group reported that it has sole voting power with respect to 129,405 shares of our common stock, shared voting power with respect to 23,621 shares of our common stock, sole dispositive power with respect to 14,207,523 shares of our common stock and shared dispositive power with respect to 155,426 shares of our common stock.
(3) This information is based on a Schedule 13G/A filed by Blackrock, Inc. with the SEC on January 23, 2017 reporting beneficial ownership as of December 31, 2016. Blackrock, Inc. reported that it has sole voting power with respect to 9,402,850 shares of our common stock and sole dispositive power with respect to 11,073,689 shares of our common stock.
|
December 31, 2016
|
A
|
B
|
C
|
||||
Plan Category
|
Number of Securities
to be Issued
upon Exercise of
Outstanding Options, Warrants and Rights
|
|
Weighted Average
Exercise Price of
Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining
Available for Future Issuance Under
Equity Compensation Plans (Excluding
Securities Reflected in Column A)
|
|
|
Equity Compensation Plans
Approved by Stockholders
|
6,497,992
(1)
|
|
$
|
29.36
(2)
|
|
8,992,009
(3)
|
|
Equity Compensation Plans
Not Approved by Stockholders
|
—
|
|
|
—
|
|
—
|
|
Total
|
6,497,992
|
|
$
|
29.36
|
|
8,992,009
|
|
(2)
|
Excludes restricted stock units and performance share units that convert to shares of common stock from determination of Weighted Average Exercise Price.
|
(3)
|
Includes 1,014,786 shares available under our Coworker Stock Purchase Plan (“CSPP”). The CSPP provides the opportunity for eligible coworkers to acquire shares of our common stock at a 5% discount. There is no compensation expense associated with the CSPP.
|
•
|
the size of the transaction and the amount payable to or by the related person;
|
•
|
the nature of the interest of the related person in the transaction;
|
•
|
whether the transaction may involve a conflict of interest;
|
•
|
whether the transaction is at arm’s-length, in the ordinary course or on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances; and
|
•
|
the purpose of the transaction and any potential benefits to us.
|
|
|
|
|
Years Ended
|
||||||
|
|
|
|
December 31,
|
||||||
(in thousands)
|
|
|
|
2016
|
|
2015
|
||||
Audit fees
|
|
|
|
$
|
2,983.4
|
|
|
$
|
2,142.0
|
|
Audit-related fees
|
|
|
|
50.0
|
|
|
25.6
|
|
||
Tax fees
|
|
|
|
196.5
|
|
|
390.6
|
|
||
All other fees
|
|
|
|
2.8
|
|
|
2.8
|
|
||
Total fees
|
|
|
|
$
|
3,232.7
|
|
|
$
|
2,561.0
|
|
(a)
|
Financial Statements and Schedules
|
(1)
|
Consolidated Financial Statements:
|
|
Page
|
|
|
(2)
|
Financial Statement Schedules:
|
(b)
|
Exhibits
|
|
|
|
CDW CORPORATION
|
|
|
|
|
|
|
Date:
|
February 28, 2017
|
|
By:
|
/s/ Thomas E. Richards
|
|
|
|
|
Thomas E. Richards
|
|
|
|
|
Chairman, President and Chief Executive Officer
|
Signature
|
|
Title
|
|
Date
|
|
|
|
||
/s/ Thomas E. Richards
|
|
Chairman, President and Chief Executive Officer
(principal executive officer) and Director
|
|
February 28, 2017
|
Thomas E. Richards
|
|
|
|
|
|
|
|
||
/s/ Ann E. Ziegler
|
|
Senior Vice President and Chief Financial Officer
(principal financial officer)
|
|
February 28, 2017
|
Ann E. Ziegler
|
|
|
|
|
|
|
|
||
/s/ Neil B. Fairfield
|
|
Vice President and Controller
(principal accounting officer)
|
|
February 28, 2017
|
Neil B. Fairfield
|
|
|
|
|
|
|
|
|
|
/s/ Virginia C. Addicott
|
|
Director
|
|
February 28, 2017
|
Virginia C. Addicott
|
|
|
|
|
|
|
|
||
/s/ Steven W. Alesio
|
|
Director
|
|
February 28, 2017
|
Steven W. Alesio
|
|
|
|
|
|
|
|
||
/s/ Barry K. Allen
|
|
Director
|
|
February 28, 2017
|
Barry K. Allen
|
|
|
|
|
|
|
|
||
/s/ James A. Bell
|
|
Director
|
|
February 28, 2017
|
James A. Bell
|
|
|
|
|
|
|
|
|
|
/s/ Benjamin D. Chereskin
|
|
Director
|
|
February 28, 2017
|
Benjamin D. Chereskin
|
|
|
|
|
|
|
|
||
/s/ Lynda M. Clarizio
|
|
Director
|
|
February 28, 2017
|
Lynda M. Clarizio
|
|
|
|
|
|
|
|
||
/s/ Paul J. Finnegan
|
|
Director
|
|
February 28, 2017
|
Paul J. Finnegan
|
|
|
|
|
|
|
|
||
/s/ David W. Nelms
|
|
Director
|
|
February 28, 2017
|
David W. Nelms
|
|
|
|
|
|
|
|
||
/s/ Joseph R. Swedish
|
|
Director
|
|
February 28, 2017
|
Joseph R. Swedish
|
|
|
|
|
|
|
|
|
|
/s/ Donna F. Zarcone
|
|
Director
|
|
February 28, 2017
|
Donna F. Zarcone
|
|
|
|
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
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.
|
|
|
|
3.1.1
|
|
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.
|
|
|
|
3.2
|
|
Amended and Restated By-Laws of CDW Corporation, previously filed as Exhibit 3.2 with CDW Corporation’s Form 10-Q filed on August 4, 2016 and incorporated herein by reference.
|
|
|
|
3.3
|
|
Articles of Organization of CDW LLC, previously filed as Exhibit 3.3 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.4
|
|
Amended and Restated Limited Liability Company Agreement of CDW LLC, previously filed as Exhibit 3.4 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.5
|
|
Certificate of Incorporation of CDW Finance Corporation, previously filed as Exhibit 3.5 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.6
|
|
Amended and Restated By-Laws of CDW Finance Corporation, previously filed as Exhibit 3.1 with CDW Corporation's Form 10-Q filed on May 8, 2015 and incorporated herein by reference.
|
|
|
|
3.7
|
|
Articles of Organization of CDW Technologies LLC (formerly CDW Technologies, Inc.), previously filed as Exhibit 3.7 with CDW Corporation's Form 10-K filed on February 25, 2016 and incorporated herein by reference.
|
|
|
|
3.8
|
|
Operating Agreement of CDW Technologies LLC (formerly CDW Technologies, Inc.), previously filed as Exhibit 3.8 with CDW Corporation's Form 10-K filed on February 25, 2016 and incorporated herein by reference.
|
|
|
|
3.9
|
|
Articles of Organization of CDW Direct, LLC, previously filed as Exhibit 3.9 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.10
|
|
Amended and Restated Limited Liability Company Agreement of CDW Direct, LLC, previously filed as Exhibit 3.10 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.11
|
|
Articles of Organization of CDW Government LLC, previously filed as Exhibit 3.11 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.12
|
|
Amended and Restated Limited Liability Company Agreement of CDW Government LLC, previously filed as Exhibit 3.12 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.13
|
|
Articles of Incorporation of CDW Logistics, Inc., previously filed as Exhibit 3.13 with CDW Corporation’s Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
3.14
|
|
Amended and Restated By-Laws of CDW Logistics, Inc., previously filed as Exhibit 3.14 with CDW Corporation’s Form S-3 filed on July 31, 2014 (Reg. No. 333-197744) and incorporated herein by reference.
|
|
|
|
4.1
|
|
Specimen Common Stock Certificate, previously filed as Exhibit 4.1 with CDW Corporation’s Amendment No. 3 to Form S-1 filed on June 25, 2013 (Reg. No. 333-187472) and incorporated herein by reference.
|
|
|
|
4.2
|
|
Indenture, dated as of August 5, 2014, by and among CDW LLC, CDW Finance Corporation, the guarantors party thereto and U.S. Bank National Association, as trustee, previously filed as Exhibit 4.1 with CDW Corporation’s Form 8-K filed on August 6, 2014 and incorporated herein by reference.
|
|
|
|
Exhibit
Number
|
|
Description
|
4.3
|
|
Form of 6% Senior Note (included as Exhibit A to Exhibit 4.2), previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on August 6, 2014 and incorporated herein by reference.
|
|
|
|
4.4
|
|
Second Supplemental Indenture, dated as of March 3, 2015, by and among CDW LLC, CDW Finance Corporation, the guarantors party thereto and U.S. Bank National Association, as trustee, previously filed as Exhibit 4.2 with CDW Corporation’s Form 8-K filed on March 3, 2015 and incorporated herein by reference.
|
|
|
|
4.5
|
|
Form of 5% Note (included as Exhibit A to Exhibit 4.4), previously filed as Exhibit 4.2 with CDW Corporation's Form 8-K filed on March 3, 2015 and incorporated herein by reference.
|
|
|
|
4.6
|
|
Base Indenture, dated as of December 1, 2014, by and among CDW LLC, CDW Finance Corporation, CDW Corporation, the guarantors party thereto and U.S. Bank National Association as trustee, previously filed as Exhibit 4.1 with CDW Corporation's Form 8-K filed on December 1, 2014 and incorporated herein by reference.
|
|
|
|
4.7
|
|
First Supplemental Indenture, dated as of December 1, 2014, by and among CDW LLC, CDW Finance Corporation, CDW Corporation the guarantors party thereto and U.S. Bank National Association as trustee, previously filed as Exhibit 4.2 with CDW Corporation's Form 8-K filed on December 1, 2014 and incorporated herein by reference.
|
|
|
|
4.8
|
|
Form of 5.5% Senior Note (included as Exhibit B to Exhibit 4.7), previously filed as Exhibit 4.3 with CDW Corporation's Form 8-K filed on December 1, 2014 and incorporated herein by reference.
|
|
|
|
10.1
|
|
Amended and Restated Revolving Loan Credit Agreement, dated as of June 6, 2014, by and among CDW LLC, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, GE Commercial Distribution Finance Corporation, as floorplan funding agent, and the joint lead arrangers, joint bookrunners, co-collateral agents, co-syndication agents and co-documentation agents party thereto, previously filed as Exhibit 10.1 with CDW Corporation’s Form 8-K filed on June 9, 2014 and incorporated herein by reference.
|
|
|
|
10.2*
|
|
First Amendment to ABL Credit Agreement, dated as of November 16, 2016, CDW LLC, the lenders from time to time party thereto, JPMorgan Chase Bank, N.A., as administrative agent, Deutsche Bank AG New York Branch and Wells Fargo Bank, N.A. (as successor to GE Commercial Distribution Finance Corporation), as co-collateral agents, and Wells Fargo & Company (as successor to GE Commercial Distribution Finance Corporation), as floorplan funding agent.
|
|
|
|
10.3
|
|
Amended and Restated Term Loan Agreement, dated as of August 17, 2016, by and among CDW LLC, the lenders from time to time party thereto, Barclays Bank PLC, as administrative agent and collateral agent, and the joint lead arrangers, joint bookrunners, syndication agent and co-documentation agents party thereto, previously filed as Exhibit 10.1 with CDW Corporation's Form 8-K filed on August 18, 2016 and incorporated herein by reference.
|
|
|
|
10.4
|
|
Second Amended and Restated Guarantee and Collateral Agreement, dated April 29, 2013, by and among CDW LLC, the guarantors party thereto and Barclays Bank PLC, as collateral agent, previously filed as Exhibit 10.2 with CDW Corporation’s Form 8-K filed on May 1, 2013 and incorporated herein by reference.
|
|
|
|
10.5§
|
|
Amended and Restated Compensation Protection Agreement, dated as of March 10, 2016, by and among CDW Corporation, CDW LLC and Thomas E. Richards, previously filed as Exhibit 10.1 with CDW Corporation's Form 8-K filed on March 14, 2016 and incorporated herein by reference.
|
|
|
|
10.6§
|
|
Form of Compensation Protection Agreement (executive officers other than Thomas E. Richards), previously filed as Exhibit 10.2 with CDW Corporation’s Form 8-K filed on March 14, 2016 and incorporated herein by reference.
|
|
|
|
10.7§
|
|
Form of Noncompetition Agreement under the Compensation Protection Agreement, previously filed as Exhibit 10.3 with CDW Corporation’s Form 8-K filed on March 14, 2016 and incorporated herein by reference.
|
|
|
|
10.8§
|
|
Letter Agreement, dated as of September 13, 2011, by and between CDW Direct, LLC and Christina M. Corley, previously filed as Exhibit 10.31 with CDW Corporation’s Form 10-K filed on March 9, 2012 and incorporated herein by reference.
|
|
|
|
Exhibit
Number
|
|
Description
|
10.9§
|
|
Form of Indemnification Agreement by and between CDW Corporation and its directors and officers, previously filed as Exhibit 10.32 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.
|
|
|
|
10.10
|
|
Share Repurchase Agreement, dated as of May 17, 2015, by and among the Company, Madison Dearborn Partners, LLC Capital Partners V-A, L.P., Madison Dearborn Partners, LLC Capital Partners V-C, L.P., Madison Dearborn Partners, LLC Capital Partners V Executive-A, L.P., MDCP Co-Investors (CDW), L.P., Providence Equity Partners VI L.P., Providence Equity Partners VI-A L.P. and PEP Co-Investors (CWD) L.P., previously filed as Exhibit 10.1 with CDW Corporation's Form 8-K filed on May 21, 2015 and incorporated herein by reference.
|
|
|
|
10.11
|
|
Letter Agreement, dated as of May 18, 2015, by and among the Company, Madison Dearborn Partners, LLC Capital Partners V-A, L.P., Madison Dearborn Partners, LLC Capital Partners V-C, L.P., Madison Dearborn Partners, LLC Capital Partners V Executive-A, L.P., MDCP Co-Investors (CDW), L.P., Providence Equity Partners VI L.P., Providence Equity Partners VI-A L.P. and PEP Co-Investors (CWD) L.P., previously filed as Exhibit 10.2 with CDW Corporation's Form 8-K filed on May 21, 2015 and incorporated herein by reference.
|
|
|
|
10.12§
|
|
CDW Corporation Amended and Restated 2013 Senior Management Incentive Plan, previously filed as Exhibit 10.1 with CDW Corporation’s Form 10-Q filed on May 5, 2016 and incorporated herein by reference.
|
|
|
|
10.13§
|
|
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.
|
|
|
|
10.14§
|
|
Amended and Restated CDW Corporation Coworker Stock Purchase Plan, previously filed as Exhibit 10.1 with CDW Corporation’s Form 10-Q filed on November 3, 2016 and incorporated herein by reference.
|
|
|
|
10.15§
|
|
Form of CDW Corporation Option Award Notice and Stock Option Agreement (executed by Thomas E. Richards), previously filed as Exhibit 10.37 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.
|
|
|
|
10.16§
|
|
Form of CDW Corporation Option Award Notice and Stock Option Agreement (executed by Neal J. Campbell and Christina M. Corley), previously filed as Exhibit 10.38 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.
|
|
|
|
10.17§
|
|
Form of CDW Corporation Restricted Stock Award Notice and Restricted Stock Award Agreement (executed by Thomas E. Richards), previously filed as Exhibit 10.12 with CDW Corporation’s Form 10-Q filed on August 12, 2013 and incorporated herein by reference.
|
|
|
|
10.18§
|
|
Form of CDW Corporation Restricted Stock Award Notice and Restricted Stock Award Agreement (executed by Christina M. Corley), previously filed as Exhibit 10.13 with CDW Corporation’s Form 10-Q filed on August 12, 2013 and incorporated herein by reference.
|
|
|
|
10.19§
|
|
CDW Amended and Restated Restricted Debt Unit Plan, previously filed as Exhibit 10.3 with CDW Corporation’s Form 10-Q filed on November 7, 2013 and incorporated herein by reference.
|
|
|
|
10.20§
|
|
Form of CDW Restricted Debt Unit Grant Notice and Agreement (executed by Thomas E. Richards, Dennis G. Berger, Douglas E. Eckrote, Christine A. Leahy, Jonathan J. Stevens and Ann E. Ziegler), previously filed as Exhibit 10.23 with CDW Corporation's Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
10.21§
|
|
Form of CDW Restricted Debt Unit Grant Notice and Agreement (executed by Neal J. Campbell, Christina M. Corley, Christina V. Rother and Matthew A. Troka), previously filed as Exhibit 10.24 with CDW Corporation's Form S-4 filed on September 7, 2010 (Reg. No. 333-169258) and incorporated herein by reference.
|
|
|
|
10.22§,*
|
|
Form of Stock Option Agreement (executive officers) under the CDW Corporation Amended and Restated 2013 Long-Term Incentive Plan.
|
|
|
|
Exhibit
Number
|
|
Description
|
10.23§,*
|
|
Form of Performance Share Unit Award Agreement (executive officers) under the CDW Corporation Amended and Restated 2013 Long-Term Incentive Plan.
|
10.24§,*
|
|
Form of Performance Share Award Agreement (executive officers for 2015 and 2016 awards) under the CDW Corporation Amended and Restated 2013 Long-Term Incentive Plan.
|
|
|
|
10.25§
|
|
Form of Non-Employee Director Restricted Stock Unit Award Agreement under the CDW Corporation 2013 Long-Term Incentive Plan, previously filed as Exhibit 10.6 with CDW Corporation’s Form 10-Q filed on May 12, 2014 and incorporated herein by reference.
|
|
|
|
12.1*
|
|
Computation of ratio of earnings to fixed charges.
|
|
|
|
21.1*
|
|
List of subsidiaries.
|
|
|
|
23.1*
|
|
Consent of Ernst & Young LLP.
|
|
|
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) under the Securities Exchange Act of 1934.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350.
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350.
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
|
*
|
Filed herewith
|
**
|
These items are furnished and not filed.
|
§
|
A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K.
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Years ended December 31,
|
|||||||||||||||||||
(dollars in millions)
|
|
2012
|
|
2013
|
|
2014 |
|
2015
|
|
2016
|
||||||||||
Computation of earnings:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Income (loss) before income taxes and adjustment for (income) loss from equity investees
|
|
$
|
185.8
|
|
|
$
|
194.9
|
|
|
$
|
385.5
|
|
|
$
|
657.2
|
|
|
$
|
671.2
|
|
Distributed income from equity investees
|
|
1.2
|
|
|
1.0
|
|
|
1.1
|
|
|
1.0
|
|
|
1.1
|
|
|||||
Fixed charges
|
|
312.4
|
|
|
254.3
|
|
|
202.8
|
|
|
164.5
|
|
|
153.9
|
|
|||||
Total earnings
|
|
$
|
499.4
|
|
|
$
|
450.2
|
|
|
$
|
589.4
|
|
|
$
|
822.7
|
|
|
$
|
826.2
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Computation of fixed charges:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Interest expense
|
|
$
|
294.4
|
|
|
$
|
241.8
|
|
|
$
|
191.3
|
|
|
$
|
153.5
|
|
|
$
|
141.8
|
|
Amortization of deferred financing costs and debt premium
|
|
13.6
|
|
|
8.8
|
|
|
6.4
|
|
|
6.4
|
|
|
6.5
|
|
|||||
Portion of rent expense representative of interest
(1)
|
|
4.4
|
|
|
3.7
|
|
|
5.1
|
|
|
4.6
|
|
|
5.6
|
|
|||||
Total fixed charges
|
|
$
|
312.4
|
|
|
$
|
254.3
|
|
|
$
|
202.8
|
|
|
$
|
164.5
|
|
|
$
|
153.9
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ratio of earnings to fixed charges
|
|
1.6
|
|
|
1.8
|
|
|
2.9
|
|
|
5.0
|
|
|
5.4
|
|
(1)
|
Fixed charges include a reasonable estimation of the interest factor included in rental expense.
|
|
|
|
Subsidiary
|
|
Jurisdiction of Organization
|
CDW LLC
|
|
Illinois
|
CDW Finance Corporation
|
|
Delaware
|
CDW Technologies LLC
|
|
Wisconsin
|
CDW Direct, LLC
|
|
Illinois
|
CDW Government LLC
|
|
Illinois
|
CDW Logistics, Inc.
|
|
Illinois
|
CDW Canada Corp.
|
|
Novia Scotia
|
CDW NA Limited
|
|
United Kingdom
|
CDW International Holdings Limited
|
|
United Kingdom
|
CDW Finance Bidco Limited
|
|
United Kingdom
|
CDW Finance Holdings Limited
|
|
United Kingdom
|
CDW Limited
|
|
United Kingdom
|
CDW Finance Topco Limited
|
|
Jersey
|
1.
|
I have reviewed this annual report on Form 10-K of the registrant;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
/s/ Thomas E. Richards
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
CDW Corporation
|
February 28, 2017
|
1.
|
I have reviewed this annual report on Form 10-K of the registrant;
|
2.
|
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;
|
3.
|
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;
|
4.
|
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:
|
a.
|
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;
|
b.
|
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;
|
c.
|
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
|
d.
|
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
|
5.
|
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):
|
a.
|
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
|
b.
|
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.
|
/s/ Ann E. Ziegler
|
Ann E. Ziegler
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
February 28, 2017
|
/s/ Thomas E. Richards
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
CDW Corporation
|
February 28, 2017
|
/s/ Ann E. Ziegler
|
Ann E. Ziegler
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
February 28, 2017
|