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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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26-0273989
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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75 Tri-State International
Lincolnshire, Illinois
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60069
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(Address of principal executive offices)
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(Zip Code)
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Page
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PART I
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FINANCIAL INFORMATION
|
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Item 1.
|
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||
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Item 2.
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Item 3.
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Item 4.
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PART II
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OTHER INFORMATION
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Item 1.
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||
Item 1A.
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||
Item 2.
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||
Item 3.
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Item 4.
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Item 5.
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Item 6.
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SIGNATURES
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Exhibit Index
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CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except per-share amounts)
|
|||||||
|
June 30, 2017
|
|
December 31, 2016
|
||||
Assets
|
(unaudited)
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
79.0
|
|
|
$
|
263.7
|
|
Accounts receivable, net of allowance for doubtful accounts of $6.2 and $5.9, respectively
|
2,335.3
|
|
|
2,168.6
|
|
||
Merchandise inventory
|
513.6
|
|
|
452.0
|
|
||
Miscellaneous receivables
|
337.8
|
|
|
234.9
|
|
||
Prepaid expenses and other
|
131.0
|
|
|
118.9
|
|
||
Total current assets
|
3,396.7
|
|
|
3,238.1
|
|
||
Property and equipment, net
|
160.7
|
|
|
163.7
|
|
||
Goodwill
|
2,469.3
|
|
|
2,455.0
|
|
||
Other intangible assets, net
|
976.6
|
|
|
1,055.6
|
|
||
Other assets
|
38.3
|
|
|
36.0
|
|
||
Total assets
|
$
|
7,041.6
|
|
|
$
|
6,948.4
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable-trade
|
$
|
1,391.6
|
|
|
$
|
1,072.9
|
|
Accounts payable-inventory financing
|
496.4
|
|
|
580.4
|
|
||
Current maturities of long-term debt
|
18.5
|
|
|
18.5
|
|
||
Deferred revenue
|
180.9
|
|
|
172.6
|
|
||
Accrued expenses:
|
|
|
|
||||
Compensation
|
150.7
|
|
|
167.6
|
|
||
Interest
|
21.6
|
|
|
25.1
|
|
||
Sales taxes
|
32.0
|
|
|
38.0
|
|
||
Advertising
|
89.3
|
|
|
55.8
|
|
||
Income taxes
|
12.4
|
|
|
—
|
|
||
Other
|
161.8
|
|
|
149.8
|
|
||
Total current liabilities
|
2,555.2
|
|
|
2,280.7
|
|
||
Long-term liabilities:
|
|
|
|
||||
Debt
|
3,277.8
|
|
|
3,215.9
|
|
||
Deferred income taxes
|
329.5
|
|
|
369.2
|
|
||
Other liabilities
|
30.0
|
|
|
37.1
|
|
||
Total long-term liabilities
|
3,637.3
|
|
|
3,622.2
|
|
||
Commitments and contingencies (Note 10)
|
|
|
|
|
|||
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, 155.6 and 160.3 shares issued and outstanding, respectively
|
1.5
|
|
|
1.6
|
|
||
Paid-in capital
|
2,890.5
|
|
|
2,857.3
|
|
||
Accumulated deficit
|
(1,927.1
|
)
|
|
(1,673.8
|
)
|
||
Accumulated other comprehensive loss
|
(115.8
|
)
|
|
(139.6
|
)
|
||
Total stockholders’ equity
|
849.1
|
|
|
1,045.5
|
|
||
Total liabilities and stockholders’ equity
|
$
|
7,041.6
|
|
|
$
|
6,948.4
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
(unaudited)
|
||||||||||||||||
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Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net sales
|
|
$
|
3,994.4
|
|
|
$
|
3,664.6
|
|
|
$
|
7,319.1
|
|
|
$
|
6,781.3
|
|
Cost of sales
|
|
3,353.3
|
|
|
3,054.1
|
|
|
6,125.5
|
|
|
5,646.3
|
|
||||
Gross profit
|
|
641.1
|
|
|
610.5
|
|
|
1,193.6
|
|
|
1,135.0
|
|
||||
Selling and administrative expenses
|
|
363.5
|
|
|
344.7
|
|
|
710.9
|
|
|
674.0
|
|
||||
Advertising expense
|
|
46.5
|
|
|
42.3
|
|
|
81.8
|
|
|
76.5
|
|
||||
Income from operations
|
|
231.1
|
|
|
223.5
|
|
|
400.9
|
|
|
384.5
|
|
||||
Interest expense, net
|
|
(35.9
|
)
|
|
(36.9
|
)
|
|
(75.6
|
)
|
|
(75.0
|
)
|
||||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
—
|
|
|
(57.4
|
)
|
|
—
|
|
||||
Other income
|
|
0.3
|
|
|
0.9
|
|
|
1.3
|
|
|
1.9
|
|
||||
Income before income taxes
|
|
195.5
|
|
|
187.5
|
|
|
269.2
|
|
|
311.4
|
|
||||
Income tax expense
|
|
(54.5
|
)
|
|
(70.0
|
)
|
|
(70.5
|
)
|
|
(116.1
|
)
|
||||
Net income
|
|
$
|
141.0
|
|
|
$
|
117.5
|
|
|
$
|
198.7
|
|
|
$
|
195.3
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per common share:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
$
|
0.90
|
|
|
$
|
0.71
|
|
|
$
|
1.26
|
|
|
$
|
1.18
|
|
Diluted
|
|
$
|
0.89
|
|
|
$
|
0.70
|
|
|
$
|
1.23
|
|
|
$
|
1.16
|
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
|
|
|
||||||||
Basic
|
|
156.0
|
|
|
164.9
|
|
|
157.7
|
|
|
166.1
|
|
||||
Diluted
|
|
159.0
|
|
|
166.7
|
|
|
160.9
|
|
|
167.8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
|
$
|
0.1600
|
|
|
$
|
0.1075
|
|
|
$
|
0.3200
|
|
|
$
|
0.2150
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
(unaudited)
|
|||||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
Net income
|
|
$
|
141.0
|
|
|
$
|
117.5
|
|
|
$
|
198.7
|
|
|
$
|
195.3
|
|
|
Foreign currency translation, net
(1)
|
|
18.9
|
|
|
(35.0
|
)
|
|
25.4
|
|
|
(42.9
|
)
|
|
||||
Unrealized loss from hedge accounting, net
(2)
|
|
(1.2
|
)
|
|
—
|
|
|
(1.6
|
)
|
|
—
|
|
|
||||
Other comprehensive income (loss), net
|
|
17.7
|
|
|
(35.0
|
)
|
|
23.8
|
|
|
(42.9
|
)
|
|
||||
Comprehensive income
|
|
$
|
158.7
|
|
|
$
|
82.5
|
|
|
$
|
222.5
|
|
|
$
|
152.4
|
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
|
||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
Common Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Loss
|
|
Total
Stockholders’ Equity |
||||||||||||||
Balance as of December 31, 2016
|
|
—
|
|
|
$
|
—
|
|
|
160.3
|
|
|
$
|
1.6
|
|
|
$
|
2,857.3
|
|
|
$
|
(1,673.8
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
1,045.5
|
|
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
198.7
|
|
|
—
|
|
|
198.7
|
|
||||||
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|
20.7
|
|
||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
||||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
(359.3
|
)
|
|
—
|
|
|
(359.4
|
)
|
||||||
Dividends
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|
(50.7
|
)
|
|
—
|
|
|
(50.3
|
)
|
||||||
Incentive compensation plan shares withheld for taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(42.0
|
)
|
|
—
|
|
|
(42.0
|
)
|
||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
25.4
|
|
|
25.4
|
|
||||||
Unrealized loss from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1.6
|
)
|
|
(1.6
|
)
|
||||||
Balance as of June 30, 2017
|
|
—
|
|
|
$
|
—
|
|
|
155.6
|
|
|
$
|
1.5
|
|
|
$
|
2,890.5
|
|
|
$
|
(1,927.1
|
)
|
|
$
|
(115.8
|
)
|
|
$
|
849.1
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
|
||||||||
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
|
||||
Net income
|
|
$
|
198.7
|
|
|
$
|
195.3
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
129.5
|
|
|
127.7
|
|
||
Equity-based compensation expense
|
|
23.6
|
|
|
18.1
|
|
||
Deferred income taxes
|
|
(40.3
|
)
|
|
(49.9
|
)
|
||
Allowance for doubtful accounts
|
|
0.2
|
|
|
—
|
|
||
Amortization of deferred financing costs, debt premium and debt discount, net
|
|
3.7
|
|
|
3.3
|
|
||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
—
|
|
||
Gain on interest rate cap agreements
|
|
(0.5
|
)
|
|
—
|
|
||
Other
|
|
(0.2
|
)
|
|
—
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
(156.3
|
)
|
|
(74.9
|
)
|
||
Merchandise inventory
|
|
(57.8
|
)
|
|
(99.0
|
)
|
||
Other assets
|
|
(120.9
|
)
|
|
(44.4
|
)
|
||
Accounts payable-trade
|
|
311.8
|
|
|
219.3
|
|
||
Other current liabilities
|
|
34.4
|
|
|
23.5
|
|
||
Long-term liabilities
|
|
(7.1
|
)
|
|
(5.9
|
)
|
||
Net cash provided by operating activities
|
|
376.2
|
|
|
313.1
|
|
||
Cash flows from investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(36.8
|
)
|
|
(25.7
|
)
|
||
Net cash used in investing activities
|
|
(36.8
|
)
|
|
(25.7
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
||||
Proceeds from borrowings under revolving credit facilities
|
|
67.7
|
|
|
105.4
|
|
||
Repayments of borrowings under revolving credit facilities
|
|
(13.7
|
)
|
|
(105.4
|
)
|
||
Repayments of long-term debt
|
|
(7.5
|
)
|
|
(13.4
|
)
|
||
Proceeds from issuance of long-term debt
|
|
2,083.0
|
|
|
—
|
|
||
Payments to extinguish long-term debt
|
|
(2,121.3
|
)
|
|
—
|
|
||
Payments of debt financing costs
|
|
(9.6
|
)
|
|
—
|
|
||
Net change in accounts payable-inventory financing
|
|
(85.1
|
)
|
|
71.3
|
|
||
Proceeds from stock option exercises
|
|
7.4
|
|
|
3.8
|
|
||
Payment of incentive compensation plan withholding taxes
|
|
(42.0
|
)
|
|
0.7
|
|
||
Proceeds from Coworker Stock Purchase Plan
|
|
4.7
|
|
|
4.5
|
|
||
Repurchases of common stock
|
|
(359.4
|
)
|
|
(223.1
|
)
|
||
Dividends
|
|
(50.3
|
)
|
|
(35.7
|
)
|
||
Principal payments under capital lease obligations
|
|
(0.6
|
)
|
|
(0.8
|
)
|
||
Net cash used in financing activities
|
|
(526.7
|
)
|
|
(192.7
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
2.6
|
|
|
(2.9
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
|
(184.7
|
)
|
|
91.8
|
|
||
Cash and cash equivalents—beginning of period
|
|
263.7
|
|
|
37.6
|
|
||
Cash and cash equivalents—end of period
|
|
$
|
79.0
|
|
|
$
|
129.4
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
||||
Cash paid for Interest, net
|
|
$
|
(76.8
|
)
|
|
$
|
(73.0
|
)
|
Cash paid for Income taxes, net
|
|
$
|
(96.5
|
)
|
|
$
|
(132.7
|
)
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
3.
|
Goodwill
|
4.
|
Inventory Financing Agreements
|
(in millions)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Revolving Loan inventory financing agreement
(1)
|
|
$
|
474.7
|
|
|
$
|
558.3
|
|
Other inventory financing agreements
(2)
|
|
21.7
|
|
|
22.1
|
|
||
Accounts payable-inventory financing
|
|
$
|
496.4
|
|
|
$
|
580.4
|
|
(1)
|
The Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”) includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
|
(2)
|
As of
June 30, 2017
and
December 31, 2016
, amounts less than
$1 million
and
$3 million
, respectively, were collateralized by the inventory purchased under these financing agreements and a second lien on the related accounts receivable.
|
5.
|
Financial Instruments
|
6.
|
Long-Term Debt
|
(dollars in millions)
|
|
Interest
Rate
|
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
(1)
|
|
3.3
|
%
|
|
$
|
54.0
|
|
|
$
|
—
|
|
|
$
|
54.0
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.2
|
%
|
|
1,475.6
|
|
|
(2.3
|
)
|
|
1,473.3
|
|
|||
CDW UK term loan
|
|
1.7
|
%
|
|
72.9
|
|
|
(1.3
|
)
|
|
71.6
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(4.9
|
)
|
|
520.1
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(5.6
|
)
|
|
569.4
|
|
|||
Senior notes due 2025
|
|
5.0
|
%
|
|
600.0
|
|
|
(7.8
|
)
|
|
592.2
|
|
|||
Other long-term obligations
|
|
|
|
15.7
|
|
|
—
|
|
|
15.7
|
|
||||
Total debt
|
|
|
|
3,318.2
|
|
|
(21.9
|
)
|
|
3,296.3
|
|
||||
Less current maturities
|
|
|
|
(18.5
|
)
|
|
—
|
|
|
(18.5
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,299.7
|
|
|
$
|
(21.9
|
)
|
|
$
|
3,277.8
|
|
(dollars in millions)
|
|
Interest
Rate |
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
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 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(5.6
|
)
|
|
594.4
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(5.3
|
)
|
|
519.7
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(6.0
|
)
|
|
569.0
|
|
|||
Other long-term obligations
|
|
|
|
15.7
|
|
|
—
|
|
|
15.7
|
|
||||
Total debt
|
|
|
|
3,267.8
|
|
|
(33.4
|
)
|
|
3,234.4
|
|
||||
Less current maturities
|
|
|
|
(18.5
|
)
|
|
—
|
|
|
(18.5
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,249.3
|
|
|
$
|
(33.4
|
)
|
|
$
|
3,215.9
|
|
(in millions)
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Fair value
|
|
$
|
3,417.5
|
|
|
$
|
3,334.8
|
|
Carrying value
|
|
3,318.2
|
|
|
3,267.8
|
|
7.
|
Income Taxes
|
8.
|
Earnings per Share
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
(in millions)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||
Basic weighted-average shares outstanding
|
156.0
|
|
|
164.9
|
|
|
157.7
|
|
|
166.1
|
|
Effect of dilutive securities
(1)
|
3.0
|
|
|
1.8
|
|
|
3.2
|
|
|
1.7
|
|
Diluted weighted-average shares outstanding
(2)
|
159.0
|
|
|
166.7
|
|
|
160.9
|
|
|
167.8
|
|
(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 both the three and
six
months ended
June 30, 2017
and
2016
as their inclusion would have had an anti-dilutive effect.
|
9.
|
Equity-Based Compensation
|
11.
|
Segment Information
|
(in millions)
|
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
Three Months Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,630.7
|
|
|
$
|
321.5
|
|
|
$
|
1,674.1
|
|
|
$
|
368.1
|
|
|
$
|
—
|
|
|
$
|
3,994.4
|
|
Income (loss) from operations
|
|
127.1
|
|
|
19.3
|
|
|
104.5
|
|
|
12.6
|
|
|
(32.4
|
)
|
|
231.1
|
|
||||||
Depreciation and amortization expense
|
|
(20.8
|
)
|
|
(5.1
|
)
|
|
(11.2
|
)
|
|
(7.6
|
)
|
|
(20.7
|
)
|
|
(65.4
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,490.8
|
|
|
$
|
288.4
|
|
|
$
|
1,547.0
|
|
|
$
|
338.4
|
|
|
$
|
—
|
|
|
$
|
3,664.6
|
|
Income (loss) from operations
|
|
117.5
|
|
|
17.7
|
|
|
108.3
|
|
|
9.4
|
|
|
(29.4
|
)
|
|
223.5
|
|
||||||
Depreciation and amortization expense
|
|
(20.7
|
)
|
|
(5.2
|
)
|
|
(11.1
|
)
|
|
(8.3
|
)
|
|
(18.4
|
)
|
|
(63.7
|
)
|
(in millions)
|
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
Six Months Ended June 30, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
3,107.0
|
|
|
$
|
620.2
|
|
|
$
|
2,850.6
|
|
|
$
|
741.3
|
|
|
$
|
—
|
|
|
$
|
7,319.1
|
|
Income (loss) from operations
|
|
238.5
|
|
|
36.0
|
|
|
165.1
|
|
|
25.2
|
|
|
(63.9
|
)
|
|
$
|
400.9
|
|
|||||
Depreciation and amortization expense
|
|
(41.7
|
)
|
|
(10.3
|
)
|
|
(22.4
|
)
|
|
(14.6
|
)
|
|
(40.5
|
)
|
|
$
|
(129.5
|
)
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Six Months Ended June 30, 2016:
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
2,905.7
|
|
|
$
|
565.7
|
|
|
$
|
2,616.5
|
|
|
$
|
693.4
|
|
|
$
|
—
|
|
|
$
|
6,781.3
|
|
Income (loss) from operations
|
|
219.1
|
|
|
34.3
|
|
|
166.7
|
|
|
17.5
|
|
|
(53.1
|
)
|
|
$
|
384.5
|
|
|||||
Depreciation and amortization expense
|
|
(41.4
|
)
|
|
(10.3
|
)
|
|
(22.3
|
)
|
|
(16.9
|
)
|
|
(36.8
|
)
|
|
$
|
(127.7
|
)
|
12.
|
Supplemental Guarantor Information
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
June 30, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
67.0
|
|
|
$
|
—
|
|
|
$
|
38.5
|
|
|
$
|
—
|
|
|
$
|
(26.5
|
)
|
|
$
|
79.0
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
2,080.8
|
|
|
254.5
|
|
|
—
|
|
|
—
|
|
|
2,335.3
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
434.3
|
|
|
79.3
|
|
|
—
|
|
|
—
|
|
|
513.6
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
100.3
|
|
|
214.2
|
|
|
23.3
|
|
|
—
|
|
|
—
|
|
|
337.8
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
18.8
|
|
|
68.7
|
|
|
43.5
|
|
|
—
|
|
|
—
|
|
|
131.0
|
|
|||||||
Total current assets
|
—
|
|
|
186.1
|
|
|
2,798.0
|
|
|
439.1
|
|
|
—
|
|
|
(26.5
|
)
|
|
3,396.7
|
|
|||||||
Property and equipment, net
|
—
|
|
|
100.1
|
|
|
47.7
|
|
|
12.9
|
|
|
—
|
|
|
—
|
|
|
160.7
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
278.5
|
|
|
—
|
|
|
—
|
|
|
2,469.3
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
284.6
|
|
|
494.5
|
|
|
197.5
|
|
|
—
|
|
|
—
|
|
|
976.6
|
|
|||||||
Other assets
|
2.9
|
|
|
18.8
|
|
|
216.2
|
|
|
0.1
|
|
|
—
|
|
|
(199.7
|
)
|
|
38.3
|
|
|||||||
Investment in and advances to subsidiaries
|
872.5
|
|
|
3,022.8
|
|
|
(24.0
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
(3,869.3
|
)
|
|
—
|
|
|||||||
Total assets
|
$
|
875.4
|
|
|
$
|
4,364.2
|
|
|
$
|
4,971.4
|
|
|
$
|
926.1
|
|
|
$
|
—
|
|
|
$
|
(4,095.5
|
)
|
|
$
|
7,041.6
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable—trade
|
$
|
—
|
|
|
$
|
25.2
|
|
|
$
|
1,241.3
|
|
|
$
|
151.6
|
|
|
$
|
—
|
|
|
$
|
(26.5
|
)
|
|
$
|
1,391.6
|
|
Accounts payable—inventory financing
|
—
|
|
|
—
|
|
|
475.7
|
|
|
20.7
|
|
|
—
|
|
|
—
|
|
|
496.4
|
|
|||||||
Current maturities of
long-term debt
|
—
|
|
|
14.9
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.5
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
86.1
|
|
|
94.8
|
|
|
—
|
|
|
—
|
|
|
180.9
|
|
|||||||
Accrued expenses
|
—
|
|
|
201.0
|
|
|
210.5
|
|
|
56.6
|
|
|
—
|
|
|
(0.3
|
)
|
|
467.8
|
|
|||||||
Total current liabilities
|
—
|
|
|
241.1
|
|
|
2,017.2
|
|
|
323.7
|
|
|
—
|
|
|
(26.8
|
)
|
|
2,555.2
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,194.2
|
|
|
12.2
|
|
|
71.4
|
|
|
—
|
|
|
—
|
|
|
3,277.8
|
|
|||||||
Deferred income taxes
|
—
|
|
|
90.3
|
|
|
175.7
|
|
|
66.4
|
|
|
—
|
|
|
(2.9
|
)
|
|
329.5
|
|
|||||||
Other liabilities
|
—
|
|
|
24.0
|
|
|
6.1
|
|
|
212.3
|
|
|
—
|
|
|
(212.4
|
)
|
|
30.0
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,308.5
|
|
|
194.0
|
|
|
350.1
|
|
|
—
|
|
|
(215.3
|
)
|
|
3,637.3
|
|
|||||||
Total stockholders’ equity
|
875.4
|
|
|
814.6
|
|
|
2,760.2
|
|
|
252.3
|
|
|
—
|
|
|
(3,853.4
|
)
|
|
849.1
|
|
|||||||
Total liabilities and stockholders’ equity
|
$
|
875.4
|
|
|
$
|
4,364.2
|
|
|
$
|
4,971.4
|
|
|
$
|
926.1
|
|
|
$
|
—
|
|
|
$
|
(4,095.5
|
)
|
|
$
|
7,041.6
|
|
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
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,626.2
|
|
|
$
|
368.2
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,994.4
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
3,045.8
|
|
|
307.5
|
|
|
—
|
|
|
—
|
|
|
3,353.3
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
580.4
|
|
|
60.7
|
|
|
—
|
|
|
—
|
|
|
641.1
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
32.4
|
|
|
284.7
|
|
|
46.4
|
|
|
—
|
|
|
—
|
|
|
363.5
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
44.9
|
|
|
1.6
|
|
|
—
|
|
|
—
|
|
|
46.5
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(32.4
|
)
|
|
250.8
|
|
|
12.7
|
|
|
—
|
|
|
—
|
|
|
231.1
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(35.4
|
)
|
|
1.1
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(35.9
|
)
|
|||||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(67.8
|
)
|
|
251.9
|
|
|
11.4
|
|
|
—
|
|
|
—
|
|
|
195.5
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
29.3
|
|
|
(80.7
|
)
|
|
(3.1
|
)
|
|
—
|
|
|
—
|
|
|
(54.5
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(38.5
|
)
|
|
171.2
|
|
|
8.3
|
|
|
—
|
|
|
—
|
|
|
141.0
|
|
|||||||
Equity in earnings of subsidiaries
|
141.1
|
|
|
179.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(320.7
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
141.1
|
|
|
$
|
141.1
|
|
|
$
|
171.2
|
|
|
$
|
8.3
|
|
|
$
|
—
|
|
|
$
|
(320.7
|
)
|
|
$
|
141.0
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,326.2
|
|
|
$
|
338.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,664.6
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
2,771.3
|
|
|
282.8
|
|
|
—
|
|
|
—
|
|
|
3,054.1
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
554.9
|
|
|
55.6
|
|
|
—
|
|
|
—
|
|
|
610.5
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
29.4
|
|
|
270.5
|
|
|
44.8
|
|
|
—
|
|
|
—
|
|
|
344.7
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
40.9
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
42.3
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(29.4
|
)
|
|
243.5
|
|
|
9.4
|
|
|
—
|
|
|
—
|
|
|
223.5
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(37.5
|
)
|
|
2.5
|
|
|
(1.9
|
)
|
|
—
|
|
|
—
|
|
|
(36.9
|
)
|
|||||||
Other income
|
—
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(66.9
|
)
|
|
246.0
|
|
|
8.4
|
|
|
—
|
|
|
—
|
|
|
187.5
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
25.2
|
|
|
(92.9
|
)
|
|
(2.3
|
)
|
|
—
|
|
|
—
|
|
|
(70.0
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(41.7
|
)
|
|
153.1
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
117.5
|
|
|||||||
Equity in earnings of subsidiaries
|
117.5
|
|
|
159.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(276.7
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
117.5
|
|
|
$
|
117.5
|
|
|
$
|
153.1
|
|
|
$
|
6.1
|
|
|
$
|
—
|
|
|
$
|
(276.7
|
)
|
|
$
|
117.5
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,577.8
|
|
|
$
|
741.3
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,319.1
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
5,505.0
|
|
|
620.5
|
|
|
—
|
|
|
—
|
|
|
6,125.5
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
1,072.8
|
|
|
120.8
|
|
|
—
|
|
|
—
|
|
|
1,193.6
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
63.9
|
|
|
554.4
|
|
|
92.6
|
|
|
—
|
|
|
—
|
|
|
710.9
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
78.8
|
|
|
3.0
|
|
|
—
|
|
|
—
|
|
|
81.8
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(63.9
|
)
|
|
439.6
|
|
|
25.2
|
|
|
—
|
|
|
—
|
|
|
400.9
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(74.5
|
)
|
|
2.1
|
|
|
(3.2
|
)
|
|
—
|
|
|
—
|
|
|
(75.6
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(57.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.4
|
)
|
|||||||
Other income
|
—
|
|
|
0.1
|
|
|
0.2
|
|
|
1.0
|
|
|
—
|
|
|
—
|
|
|
1.3
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(195.7
|
)
|
|
441.9
|
|
|
23.0
|
|
|
—
|
|
|
—
|
|
|
269.2
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
86.6
|
|
|
(151.0
|
)
|
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|
(70.5
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(109.1
|
)
|
|
290.9
|
|
|
16.9
|
|
|
—
|
|
|
—
|
|
|
198.7
|
|
|||||||
Equity in earnings of subsidiaries
|
198.8
|
|
|
307.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(506.6
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
198.8
|
|
|
$
|
198.7
|
|
|
$
|
290.9
|
|
|
$
|
16.9
|
|
|
$
|
—
|
|
|
$
|
(506.6
|
)
|
|
$
|
198.7
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,087.9
|
|
|
$
|
693.4
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,781.3
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
5,062.8
|
|
|
583.5
|
|
|
—
|
|
|
—
|
|
|
5,646.3
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
1,025.1
|
|
|
109.9
|
|
|
—
|
|
|
—
|
|
|
1,135.0
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
53.1
|
|
|
531.1
|
|
|
89.8
|
|
|
—
|
|
|
—
|
|
|
674.0
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
73.9
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
76.5
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(53.1
|
)
|
|
420.1
|
|
|
17.5
|
|
|
—
|
|
|
—
|
|
|
384.5
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(74.8
|
)
|
|
3.8
|
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|
(75.0
|
)
|
|||||||
Other income
|
—
|
|
|
—
|
|
|
0.7
|
|
|
1.2
|
|
|
—
|
|
|
—
|
|
|
1.9
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(127.9
|
)
|
|
424.6
|
|
|
14.7
|
|
|
—
|
|
|
—
|
|
|
311.4
|
|
|||||||
Income tax benefit (expense)
|
—
|
|
|
48.6
|
|
|
(160.5
|
)
|
|
(4.2
|
)
|
|
—
|
|
|
—
|
|
|
(116.1
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(79.3
|
)
|
|
264.1
|
|
|
10.5
|
|
|
—
|
|
|
—
|
|
|
195.3
|
|
|||||||
Equity in earnings of subsidiaries
|
195.3
|
|
|
274.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(469.9
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
195.3
|
|
|
$
|
195.3
|
|
|
$
|
264.1
|
|
|
$
|
10.5
|
|
|
$
|
—
|
|
|
$
|
(469.9
|
)
|
|
$
|
195.3
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
158.7
|
|
|
$
|
158.7
|
|
|
$
|
171.2
|
|
|
$
|
27.2
|
|
|
$
|
—
|
|
|
$
|
(357.1
|
)
|
|
$
|
158.7
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
82.5
|
|
|
$
|
82.5
|
|
|
$
|
153.1
|
|
|
$
|
(28.9
|
)
|
|
$
|
—
|
|
|
$
|
(206.7
|
)
|
|
$
|
82.5
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
222.5
|
|
|
$
|
222.5
|
|
|
$
|
290.9
|
|
|
$
|
42.3
|
|
|
$
|
—
|
|
|
$
|
(555.7
|
)
|
|
$
|
222.5
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
152.4
|
|
|
$
|
152.4
|
|
|
$
|
264.1
|
|
|
$
|
(32.4
|
)
|
|
$
|
—
|
|
|
$
|
(384.1
|
)
|
|
$
|
152.4
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2017
|
|||||||||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(22.1
|
)
|
|
$
|
391.5
|
|
|
$
|
40.7
|
|
|
$
|
—
|
|
|
$
|
(33.9
|
)
|
|
$
|
376.2
|
|
||||||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Capital expenditures
|
—
|
|
|
(26.6
|
)
|
|
(4.3
|
)
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
(36.8
|
)
|
|||||||||||||
Net cash used in investing activities
|
—
|
|
|
(26.6
|
)
|
|
(4.3
|
)
|
|
(5.9
|
)
|
|
—
|
|
|
—
|
|
|
(36.8
|
)
|
|||||||||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
54.0
|
|
|
—
|
|
|
13.7
|
|
|
—
|
|
|
—
|
|
|
67.7
|
|
|||||||||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.7
|
)
|
|||||||||||||
Repayments of long-term debt and revolving loan
|
—
|
|
|
(7.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7.5
|
)
|
|||||||||||||
Proceeds from the issuance of long-term debt
|
—
|
|
|
2,083.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,083.0
|
|
|||||||||||||
Payments to extinguish long-term debt
|
—
|
|
|
(2,121.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,121.3
|
)
|
|||||||||||||
Payments of debt financing costs
|
—
|
|
|
(9.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.6
|
)
|
|||||||||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
(1.2
|
)
|
|
(83.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(85.1
|
)
|
|||||||||||||
Proceeds from stock option exercises
|
—
|
|
|
7.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.4
|
|
|||||||||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
4.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.7
|
|
|||||||||||||
Repurchases of common stock
|
(359.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(359.4
|
)
|
|||||||||||||
Payment of incentive compensation plan withholding taxes
|
—
|
|
|
(16.0
|
)
|
|
(24.0
|
)
|
|
(2.0
|
)
|
|
—
|
|
|
—
|
|
|
(42.0
|
)
|
|||||||||||||
Dividends
|
(50.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(50.3
|
)
|
|||||||||||||
Principal payments under capital lease obligations
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
(0.6
|
)
|
|||||||||||||
Repayment of intercompany loan
|
—
|
|
|
—
|
|
|
34.3
|
|
|
(34.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||||||||
Distributions and advances from (to) affiliates
|
409.7
|
|
|
(100.5
|
)
|
|
(316.6
|
)
|
|
—
|
|
|
—
|
|
|
7.4
|
|
|
—
|
|
|||||||||||||
Net cash (used in) provided by financing activities
|
—
|
|
—
|
|
(107.0
|
)
|
—
|
|
(390.3
|
)
|
—
|
|
(36.8
|
)
|
—
|
|
—
|
|
—
|
|
7.4
|
|
—
|
|
(526.7
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||||||||||
Net increase in cash and cash equivalents
|
—
|
|
|
(155.7
|
)
|
|
(3.1
|
)
|
|
0.6
|
|
|
—
|
|
|
(26.5
|
)
|
|
(184.7
|
)
|
|||||||||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
222.7
|
|
|
3.1
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
263.7
|
|
|||||||||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
67.0
|
|
|
$
|
—
|
|
|
$
|
38.5
|
|
|
$
|
—
|
|
|
$
|
(26.5
|
)
|
|
$
|
79.0
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Six Months Ended June 30, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(79.4
|
)
|
|
$
|
326.3
|
|
|
$
|
45.4
|
|
|
$
|
—
|
|
|
$
|
20.8
|
|
|
$
|
313.1
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(22.1
|
)
|
|
(1.9
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(25.7
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(22.1
|
)
|
|
(1.9
|
)
|
|
(1.7
|
)
|
|
—
|
|
|
—
|
|
|
(25.7
|
)
|
|||||||
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
105.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
105.4
|
|
|||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(105.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(105.4
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(7.7
|
)
|
|
—
|
|
|
(5.7
|
)
|
|
—
|
|
|
—
|
|
|
(13.4
|
)
|
|||||||
Net change in accounts payable - inventory financing
|
—
|
|
|
0.1
|
|
|
70.9
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
71.3
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
3.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.8
|
|
|||||||
Excess tax benefits from equity-based compensation
|
—
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
4.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.5
|
|
|||||||
Repurchases of common stock
|
(223.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(223.1
|
)
|
|||||||
Dividends
|
(35.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(35.7
|
)
|
|||||||
Principal payments under capital lease obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
|
(0.8
|
)
|
|||||||
Distributions and advances from (to) affiliates
|
258.8
|
|
|
136.4
|
|
|
(395.3
|
)
|
|
3.2
|
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
137.8
|
|
|
(324.4
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
(3.1
|
)
|
|
(192.7
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|
—
|
|
|
—
|
|
|
(2.9
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
|
|
36.3
|
|
|
—
|
|
|
37.8
|
|
|
—
|
|
|
17.7
|
|
|
91.8
|
|
|||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
45.1
|
|
|
—
|
|
|
31.9
|
|
|
—
|
|
|
(39.4
|
)
|
|
37.6
|
|
|||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
81.4
|
|
|
$
|
—
|
|
|
$
|
69.7
|
|
|
$
|
—
|
|
|
$
|
(21.7
|
)
|
|
$
|
129.4
|
|
13.
|
Subsequent Events
|
•
|
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 Corporate customers and Small Business customers due to their perceptions 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 uncertainty given recent legislative action and concerns related to funding and many customers put purchase decisions on hold pending more clarity.
|
•
|
Our Education sales channel performance continues to benefit from school adoption of digital testing and curriculum programs and creation of new learning environments for students. It has also been affected by the implementation of networking projects related to the US Federal Communications Commission E-Rate program. 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. To date, CDW UK is not seeing significant changes in the buying behavior of its customers even with the uncertainty related to timing and terms of Brexit.
|
•
|
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 backup and recovery, collaboration and security, as well as adoption of hyper-converged appliances to deliver greater flexibility and efficiency. In addition, hybrid IT solutions are being adopted, along with software being embedded into solutions.
|
|
Three Months Ended June 30,
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
||||
Net sales
|
$
|
3,994.4
|
|
|
$
|
3,664.6
|
|
Gross profit
|
641.1
|
|
|
610.5
|
|
||
Income from operations
|
231.1
|
|
|
223.5
|
|
||
Net income
|
141.0
|
|
|
117.5
|
|
||
Non-GAAP net income
|
163.2
|
|
|
155.6
|
|
||
Adjusted EBITDA
|
314.7
|
|
|
300.6
|
|
||
Average daily sales
|
62.4
|
|
|
57.3
|
|
||
Net debt
(1)
|
3,217.3
|
|
|
3,111.1
|
|
||
Cash conversion cycle (in days)
(2)
|
16
|
|
|
17
|
|
(1)
|
Defined as total debt minus cash and cash equivalents;
$3,296 million
minus
$79 million
for the three months ended June 30, 2017 and
$3,240 million
minus
$129 million
for the three months ended June 30, 2016.
|
(2)
|
Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.
|
|
|
Three Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
3,994.4
|
|
|
100.0
|
%
|
|
$
|
3,664.6
|
|
|
100.0
|
%
|
Cost of sales
|
|
3,353.3
|
|
|
84.0
|
|
|
3,054.1
|
|
|
83.3
|
|
||
Gross profit
|
|
641.1
|
|
|
16.1
|
|
|
610.5
|
|
|
16.7
|
|
||
Selling and administrative expenses
|
|
363.5
|
|
|
9.1
|
|
|
344.7
|
|
|
9.4
|
|
||
Advertising expense
|
|
46.5
|
|
|
1.2
|
|
|
42.3
|
|
|
1.2
|
|
||
Income from operations
|
|
231.1
|
|
|
5.7
|
|
|
223.5
|
|
|
6.1
|
|
||
Interest expense, net
|
|
(35.9
|
)
|
|
(0.9
|
)
|
|
(36.9
|
)
|
|
(1.0
|
)
|
||
Other income
|
|
0.3
|
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||
Income before income taxes
|
|
195.5
|
|
|
4.8
|
|
|
187.5
|
|
|
5.1
|
|
||
Income tax expense
|
|
(54.5
|
)
|
|
(1.4
|
)
|
|
(70.0
|
)
|
|
(1.9
|
)
|
||
Net income
|
|
$
|
141.0
|
|
|
3.4
|
%
|
|
$
|
117.5
|
|
|
3.2
|
%
|
|
|
Three Months Ended June 30,
|
|
|
|
|
|||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
(1)
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(2)
|
|||||||||
Corporate
|
|
$
|
1,630.7
|
|
|
40.8
|
%
|
|
$
|
1,490.8
|
|
|
40.6
|
%
|
|
$
|
139.9
|
|
|
9.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
|
|
321.5
|
|
|
8.1
|
|
|
288.4
|
|
|
7.9
|
|
|
33.1
|
|
|
11.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
543.9
|
|
|
13.6
|
|
|
456.6
|
|
|
12.5
|
|
|
87.3
|
|
|
19.1
|
|
|||
Education
|
|
712.9
|
|
|
17.9
|
|
|
640.0
|
|
|
17.5
|
|
|
72.9
|
|
|
11.4
|
|
|||
Healthcare
|
|
417.3
|
|
|
10.4
|
|
|
450.4
|
|
|
12.3
|
|
|
(33.1
|
)
|
|
(7.3
|
)
|
|||
Total Public
|
|
1,674.1
|
|
|
41.9
|
|
|
1,547.0
|
|
|
42.2
|
|
|
127.1
|
|
|
8.2
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
368.1
|
|
|
9.2
|
|
|
338.4
|
|
|
9.2
|
|
|
29.7
|
|
|
8.8
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total net sales
|
|
$
|
3,994.4
|
|
|
100.0
|
%
|
|
$
|
3,664.6
|
|
|
100.0
|
%
|
|
$
|
329.8
|
|
|
9.0
|
%
|
(1)
|
Effective January 1, 2017, Small Business is now an operating and reportable segment. Its results were previously presented as a sales channel within the Corporate segment. Prior periods have been reclassified to conform to the current period presentation.
|
(2)
|
There were
64
selling days for both the three months ended
June 30, 2017 and 2016
.
|
|
|
Three Months Ended June 30,
|
|
|
|||||||||||||
|
|
2017
|
|
2016
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
|
|
$
|
127.1
|
|
|
7.8
|
%
|
|
$
|
117.5
|
|
|
7.9
|
%
|
|
8.1
|
%
|
Small Business
(2)
|
|
19.3
|
|
|
6.0
|
|
|
17.7
|
|
|
6.1
|
|
|
9.6
|
|
||
Public
|
|
104.5
|
|
|
6.2
|
|
|
108.3
|
|
|
7.0
|
|
|
(3.7
|
)
|
||
Other
(3)
|
|
12.6
|
|
|
3.4
|
|
|
9.4
|
|
|
2.8
|
|
|
33.8
|
|
||
Headquarters
(4)
|
|
(32.4
|
)
|
|
—
|
|
|
(29.4
|
)
|
|
—
|
|
|
10.6
|
|
||
Total income from operations
|
|
$
|
231.1
|
|
|
5.8
|
%
|
|
$
|
223.5
|
|
|
6.1
|
%
|
|
3.4
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income, allocations for Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(2)
|
Effective January 1, 2017, Small Business is its own operating and reportable segment. The prior period has been reclassified to conform to the current period presentation.
|
(3)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(4)
|
Includes certain Headquarters’ function costs that are not allocated to the segments.
|
|
|
Three Months Ended June 30,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Net income
|
|
$
|
141.0
|
|
|
$
|
117.5
|
|
Amortization of intangibles
(1)
|
|
46.3
|
|
|
47.1
|
|
||
Equity-based compensation
|
|
11.5
|
|
|
9.7
|
|
||
Integration expenses
(2)
|
|
2.0
|
|
|
2.2
|
|
||
Other adjustments
(3)
|
|
3.7
|
|
|
0.3
|
|
||
Aggregate adjustment for income taxes
(4)
|
|
(41.3
|
)
|
|
(21.2
|
)
|
||
Non-GAAP net income
|
|
$
|
163.2
|
|
|
$
|
155.6
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during the three months ended June 30, 2017 and 2016.
|
(4)
|
Aggregate adjustment for income taxes consists of the following:
|
|
|
Three Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Total Non-GAAP adjustments
|
|
$
|
63.4
|
|
|
$
|
59.3
|
|
Weighted-average statutory effective rate
|
|
36.0
|
%
|
|
36.0
|
%
|
||
Income tax
|
|
(22.8
|
)
|
|
(21.3
|
)
|
||
Excess tax benefits from equity-based compensation
|
|
(18.6
|
)
|
|
—
|
|
||
Non-deductible adjustments and other
|
|
0.1
|
|
|
0.1
|
|
||
Total aggregate adjustment for income taxes
|
|
$
|
(41.3
|
)
|
|
$
|
(21.2
|
)
|
|
|
Three Months Ended June 30,
|
|||||||||||
(in millions)
|
|
2017
|
|
Percentage of Net Sales
|
|
2016
|
|
Percentage of Net Sales
|
|||||
Net income
|
|
$
|
141.0
|
|
|
|
|
$
|
117.5
|
|
|
|
|
Depreciation and amortization
|
|
65.4
|
|
|
|
|
63.7
|
|
|
|
|||
Income tax expense
|
|
54.5
|
|
|
|
|
70.0
|
|
|
|
|||
Interest expense, net
|
|
35.9
|
|
|
|
|
36.9
|
|
|
|
|||
EBITDA
|
|
296.8
|
|
|
7.4
|
%
|
|
288.1
|
|
|
7.9%
|
||
|
|
|
|
|
|
|
|
|
|||||
Adjustments:
|
|
|
|
|
|
|
|
|
|||||
Equity-based compensation
|
|
11.5
|
|
|
|
|
9.7
|
|
|
|
|||
Income from equity investments
(1)
|
|
(0.1
|
)
|
|
|
|
(0.1
|
)
|
|
|
|||
Integration expenses
(2)
|
|
2.0
|
|
|
|
|
2.2
|
|
|
|
|||
Other adjustments
(3)
|
|
4.5
|
|
|
|
|
0.7
|
|
|
|
|||
Total adjustments
|
|
17.9
|
|
|
|
|
12.5
|
|
|
|
|||
Adjusted EBITDA
|
|
$
|
314.7
|
|
|
7.9
|
%
|
|
$
|
300.6
|
|
|
8.2%
|
(1)
|
Represents our share of net income/loss from our equity investments.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during the three months ended June 30, 2017 and 2016.
|
|
|
Three Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
% Change
|
|
Average Daily % Change
(1)
|
||||||
Consolidated Net sales, as reported
|
|
$
|
3,994.4
|
|
|
$
|
3,664.6
|
|
|
9.0
|
%
|
|
9.0
|
%
|
Foreign currency translation
(2)
|
|
—
|
|
|
(27.6
|
)
|
|
|
|
|
||||
Consolidated Net sales, on a constant currency basis
|
|
$
|
3,994.4
|
|
|
$
|
3,637.0
|
|
|
9.8
|
%
|
|
9.8
|
%
|
(1)
|
There were
64
selling days for both the three months ended
June 30, 2017 and 2016
.
|
(2)
|
Represents the effect of translating the prior year results of CDW Canada and CDW UK's results at the average exchange rates applicable in the current year.
|
|
Six Months Ended June 30,
|
||||||
(dollars in millions)
|
2017
|
|
2016
|
||||
Net sales
|
$
|
7,319.1
|
|
|
$
|
6,781.3
|
|
Gross profit
|
1,193.6
|
|
|
1,135.0
|
|
||
Income from operations
|
400.9
|
|
|
384.5
|
|
||
Net income
|
198.7
|
|
|
195.3
|
|
||
Non-GAAP net income
|
284.5
|
|
|
268.3
|
|
||
Adjusted EBITDA
|
563.9
|
|
|
533.3
|
|
||
Average daily sales
|
57.2
|
|
|
53.0
|
|
||
Net debt
(1)
|
3,217.3
|
|
|
3,111.1
|
|
||
Cash conversion cycle (in days)
(2)
|
16
|
|
|
17
|
|
(1)
|
Defined as total debt minus cash and cash equivalents;
$3,296 million
minus
$79 million
for the six months ended
June 30, 2017
and
$3,240 million
minus
$129 million
for the six months ended
June 30, 2016
.
|
(2)
|
Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.
|
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
7,319.1
|
|
|
100.0
|
%
|
|
$
|
6,781.3
|
|
|
100.0
|
%
|
Cost of sales
|
|
6,125.5
|
|
|
83.7
|
|
|
5,646.3
|
|
|
83.3
|
|
||
Gross profit
|
|
1,193.6
|
|
|
16.3
|
|
|
1,135.0
|
|
|
16.7
|
|
||
Selling and administrative expenses
|
|
710.9
|
|
|
9.7
|
|
|
674.0
|
|
|
9.9
|
|
||
Advertising expense
|
|
81.8
|
|
|
1.1
|
|
|
76.5
|
|
|
1.1
|
|
||
Income from operations
|
|
400.9
|
|
|
5.5
|
|
|
384.5
|
|
|
5.7
|
|
||
Interest expense, net
|
|
(75.6
|
)
|
|
(1.0
|
)
|
|
(75.0
|
)
|
|
(1.1
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
(57.4
|
)
|
|
(0.8
|
)
|
|
—
|
|
|
—
|
|
||
Other income
|
|
1.3
|
|
|
—
|
|
|
1.9
|
|
|
—
|
|
||
Income before income taxes
|
|
269.2
|
|
|
3.7
|
|
|
311.4
|
|
|
4.6
|
|
||
Income tax expense
|
|
(70.5
|
)
|
|
(1.0
|
)
|
|
(116.1
|
)
|
|
(1.7
|
)
|
||
Net income
|
|
$
|
198.7
|
|
|
2.7
|
%
|
|
$
|
195.3
|
|
|
2.9
|
%
|
|
|
Six Months Ended June 30,
|
|
|
|
|
|||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
(1)
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(2)
|
|||||||||
Corporate
|
|
$
|
3,107.0
|
|
|
42.5
|
%
|
|
$
|
2,905.7
|
|
|
42.8
|
%
|
|
$
|
201.3
|
|
|
6.9
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
|
|
620.2
|
|
|
8.5
|
|
|
565.7
|
|
|
8.3
|
|
|
54.5
|
|
|
9.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
930.8
|
|
|
12.7
|
|
|
796.5
|
|
|
11.7
|
|
|
134.3
|
|
|
16.9
|
|
|||
Education
|
|
1,110.0
|
|
|
15.2
|
|
|
981.0
|
|
|
14.5
|
|
|
129.0
|
|
|
13.1
|
|
|||
Healthcare
|
|
809.8
|
|
|
11.1
|
|
|
839.0
|
|
|
12.4
|
|
|
(29.2
|
)
|
|
(3.5
|
)
|
|||
Total Public
|
|
2,850.6
|
|
|
38.9
|
|
|
2,616.5
|
|
|
38.6
|
|
|
234.1
|
|
|
8.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
741.3
|
|
|
10.1
|
|
|
693.4
|
|
|
10.2
|
|
|
47.9
|
|
|
6.9
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total net sales
|
|
$
|
7,319.1
|
|
|
100.0
|
%
|
|
$
|
6,781.3
|
|
|
100.0
|
%
|
|
$
|
537.8
|
|
|
7.9
|
%
|
(1)
|
Effective January 1, 2017, Small Business is now an operating and reportable segment. Its results were previously presented as a sales channel within the Corporate segment. Prior periods have been reclassified to conform to the current period presentation.
|
(2)
|
There were
128
selling days for both the six months ended
June 30, 2017 and 2016
.
|
|
|
Six Months Ended June 30,
|
|
|
|||||||||||||
|
|
2017
|
|
2016
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
|
|
$
|
238.5
|
|
|
7.7
|
%
|
|
$
|
219.1
|
|
|
7.5
|
%
|
|
8.9
|
%
|
Small Business
(2)
|
|
36.0
|
|
|
5.8
|
|
|
34.3
|
|
|
6.1
|
|
|
4.9
|
|
||
Public
|
|
165.1
|
|
|
5.8
|
|
|
166.7
|
|
|
6.4
|
|
|
(1.0
|
)
|
||
Other
(3)
|
|
25.2
|
|
|
3.4
|
|
|
17.5
|
|
|
2.5
|
|
|
43.7
|
|
||
Headquarters
(4)
|
|
(63.9
|
)
|
|
—
|
|
|
(53.1
|
)
|
|
—
|
|
|
20.3
|
|
||
Total income from operations
|
|
$
|
400.9
|
|
|
5.5
|
%
|
|
$
|
384.5
|
|
|
5.7
|
%
|
|
4.3
|
%
|
(1)
|
Segment income from operations includes the segment’s direct operating income, allocations for Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(2)
|
Effective January 1, 2017, Small Business is its own operating and reportable segment. The prior period has been reclassified to conform to the current period presentation.
|
(3)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(4)
|
Includes certain Headquarters’ function costs that are not allocated to the segments.
|
Month of Extinguishment
|
|
Debt Instrument
|
|
(in millions)
|
||
|
Loss Recognized
|
|||||
February 2017
|
|
Senior Secured Term Loan Facility
|
|
$
|
(13.7
|
)
|
March 2017
|
|
Senior Notes due 2022
|
|
(42.5
|
)
|
|
March 2017
|
|
Senior secured asset-based revolving credit facility
|
|
(1.2
|
)
|
|
|
|
Total Loss Recognized
|
|
$
|
(57.4
|
)
|
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Net income
|
|
$
|
198.7
|
|
|
$
|
195.3
|
|
Amortization of intangibles
(1)
|
|
92.4
|
|
|
94.6
|
|
||
Equity-based compensation
|
|
23.6
|
|
|
18.1
|
|
||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
—
|
|
||
Integration expenses
(2)
|
|
2.5
|
|
|
3.8
|
|
||
Other adjustments
(3)
|
|
4.9
|
|
|
(2.8
|
)
|
||
Aggregate adjustment for income taxes
(4)
|
|
(95.0
|
)
|
|
(40.7
|
)
|
||
Non-GAAP net income
|
|
$
|
284.5
|
|
|
$
|
268.3
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during the six months ended June 30,
|
(4)
|
Aggregate adjustment for income taxes consists of the following:
|
|
|
Six Months Ended June 30,
|
||||||
|
|
2017
|
|
2016
|
||||
Total Non-GAAP adjustments
|
|
$
|
180.8
|
|
|
$
|
113.7
|
|
Weighted-average statutory effective rate
|
|
36.0
|
%
|
|
36.0
|
%
|
||
Income tax
|
|
(65.1
|
)
|
|
(40.9
|
)
|
||
Excess tax benefits from equity-based compensation
|
|
(30.1
|
)
|
|
—
|
|
||
Non-deductible adjustments and other
|
|
0.2
|
|
|
0.2
|
|
||
Total aggregate adjustment for income taxes
|
|
$
|
(95.0
|
)
|
|
$
|
(40.7
|
)
|
|
|
Six Months Ended June 30,
|
|||||||||||
(in millions)
|
|
2017
|
|
Percentage of Net Sales
|
|
2016
|
|
Percentage of Net Sales
|
|||||
Net income
|
|
$
|
198.7
|
|
|
|
|
$
|
195.3
|
|
|
|
|
Depreciation and amortization
|
|
129.5
|
|
|
|
|
127.7
|
|
|
|
|||
Income tax expense
|
|
70.5
|
|
|
|
|
116.1
|
|
|
|
|||
Interest expense, net
|
|
75.6
|
|
|
|
|
75.0
|
|
|
|
|||
EBITDA
|
|
474.3
|
|
|
6.5
|
%
|
|
514.1
|
|
|
7.6%
|
||
|
|
|
|
|
|
|
|
|
|||||
Adjustments:
|
|
|
|
|
|
|
|
|
|||||
Equity-based compensation
|
|
23.6
|
|
|
|
|
18.1
|
|
|
|
|||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
|
|
—
|
|
|
|
|||
Income from equity investments
(1)
|
|
(0.2
|
)
|
|
|
|
(0.7
|
)
|
|
|
|||
Integration expenses
(2)
|
|
2.5
|
|
|
|
|
3.8
|
|
|
|
|||
Other adjustments
(3)
|
|
6.3
|
|
|
|
|
(2.0
|
)
|
|
|
|||
Total adjustments
|
|
89.6
|
|
|
|
|
19.2
|
|
|
|
|||
Adjusted EBITDA
|
|
$
|
563.9
|
|
|
7.7
|
%
|
|
$
|
533.3
|
|
|
7.9%
|
(1)
|
Represents our share of net income/loss from our equity investments.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during the six months ended June 30, 2017 and 2016. 2016 also includes the favorable resolution of a local sales tax matter partially offset by expenses related to the consolidation of office locations north of Chicago.
|
|
|
Six Months Ended June 30,
|
||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
% Change
|
|
Average Daily % Change
(1)
|
||||||
Consolidated Net sales, as reported
|
|
$
|
7,319.1
|
|
|
$
|
6,781.3
|
|
|
7.9
|
%
|
|
7.9
|
%
|
Foreign currency translation
(2)
|
|
—
|
|
|
(54.4
|
)
|
|
|
|
|
||||
Consolidated Net sales, on a constant currency basis
|
|
$
|
7,319.1
|
|
|
$
|
6,726.9
|
|
|
8.8
|
%
|
|
8.8
|
%
|
(1)
|
There were
128
selling days for both the six months ended
June 30, 2017 and 2016
.
|
(2)
|
Represents the effect of translating the prior year results of CDW Canada and CDW UK's results at the average exchange rates applicable in the current year.
|
Dividend Amount
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
$0.1600
|
|
February 7, 2017
|
|
February 24, 2017
|
|
March 10, 2017
|
$0.1600
|
|
May 3, 2017
|
|
May 25, 2017
|
|
June 12, 2017
|
|
Six Months Ended June 30,
|
||||||
(in millions)
|
2017
|
|
2016
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
376.2
|
|
|
$
|
313.1
|
|
Investing activities
|
(36.8
|
)
|
|
(25.7
|
)
|
||
Net change in accounts payable-inventory financing
|
(85.1
|
)
|
|
71.3
|
|
||
Other financing activities
|
(441.6
|
)
|
|
(264.0
|
)
|
||
Financing activities
|
(526.7
|
)
|
|
(192.7
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
2.6
|
|
|
(2.9
|
)
|
||
Net (decrease) increase in cash and cash equivalents
|
$
|
(184.7
|
)
|
|
$
|
91.8
|
|
|
Six Months Ended June 30,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
Dollar Change
|
||||||
Net income
|
$
|
198.7
|
|
|
$
|
195.3
|
|
|
$
|
3.4
|
|
Adjustments for the impact of non-cash items
(1)
|
173.4
|
|
|
99.2
|
|
|
74.2
|
|
|||
Net income adjusted for the impact of non-cash items
(2)
|
372.1
|
|
|
294.5
|
|
|
77.6
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
(3)
|
(156.3
|
)
|
|
(74.9
|
)
|
|
(81.4
|
)
|
|||
Merchandise inventory
|
(57.8
|
)
|
|
(99.0
|
)
|
|
41.2
|
|
|||
Accounts payable-trade
(4)
|
311.8
|
|
|
219.3
|
|
|
92.5
|
|
|||
Other
(5)
|
(93.6
|
)
|
|
(26.8
|
)
|
|
(66.8
|
)
|
|||
Net cash provided by operating activities
|
$
|
376.2
|
|
|
$
|
313.1
|
|
|
$
|
63.1
|
|
(1)
|
Includes items such as Deferred income taxes, Depreciation and amortization, Equity-based compensation expense and Net loss on extinguishments of long-term debt.
|
(2)
|
The change is primarily due to stronger operating results driven by Net sales and Gross profit growth.
|
(3)
|
The change in cash flow primarily reflects the impact of increased Net sales volume compared to the same period in 2016.
|
(4)
|
The change in cash flow is driven by the mix of vendors and variances in timing of payments between the periods.
|
(5)
|
The change in Other is driven by timing differences in compensation payments between periods and an increase in the receivables from vendors due to the growth in business.
|
(1)
|
Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.
|
(2)
|
Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily cost of sales for the same three-month period.
|
(3)
|
Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily cost of sales for the same three-month period.
|
Period
|
|
Total Number of Shares Purchased (in millions)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program (in millions)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Program
(1)
(in millions)
|
||||||
April 1 through April 30, 2017
|
|
1.1
|
|
|
$
|
57.93
|
|
|
1.1
|
|
|
$
|
403.0
|
|
May 1 through May 31, 2017
|
|
1.4
|
|
|
$
|
58.50
|
|
|
1.4
|
|
|
$
|
318.5
|
|
June 1 through June 30, 2017
|
|
0.6
|
|
|
$
|
61.67
|
|
|
0.6
|
|
|
$
|
282.7
|
|
Total
|
|
3.1
|
|
|
|
|
|
3.1
|
|
|
|
(1)
|
The amounts presented in this column are the remaining total authorized value to be spent after each month's repurchases. On August 3, 2017, the Company announced that its Board of Directors authorized a $750 million increase to the share repurchase program under which the Company may repurchase shares of its common stock in the open market through privately negotiated or other transactions, depending on share price, market conditions and other factors.
|
|
|
|
|
|
|
|
|
|
CDW CORPORATION
|
||
|
|
|
|
|
|
Date:
|
August 3, 2017
|
|
By:
|
|
/s/ Ann E. Ziegler
|
|
|
|
|
|
Ann E. Ziegler
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
(Duly authorized officer and principal financial officer)
|
Exhibit
|
|
Description
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
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.
|
1.
|
I have reviewed this quarterly report on Form 10-Q 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
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Thomas E. Richards
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Thomas E. Richards
|
Chairman, President and Chief Executive Officer
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CDW Corporation
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August 3, 2017
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1.
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I have reviewed this quarterly report on Form 10-Q of the registrant;
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2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
|
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
|
August 3, 2017
|
/s/ Thomas E. Richards
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
CDW Corporation
|
August 3, 2017
|
/s/ Ann E. Ziegler
|
Ann E. Ziegler
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
August 3, 2017
|