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FORM 8-K
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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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001-35985
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26-0273989
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(State or other jurisdiction of
incorporation or organization)
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(Commission File Number)
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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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Emerging growth Company
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¨
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•
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Part I, Item 1. Business
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•
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Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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•
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Part II, Item 8. Financial Statements and Supplementary Data
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Exhibit No.
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Description
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23.1
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Consent of Ernst & Young LLP
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99.1
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Part I, Item 1. Business
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99.2
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Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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99.3
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Part II, Item 8. Financial Statements and Supplementary Data
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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CDW CORPORATION
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Date:
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August 25, 2017
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By:
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/s/ Ann E. Ziegler
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Ann E. Ziegler
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Senior Vice President and Chief Financial Officer
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Exhibit
Number
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Description
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23.1
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Consent of Ernst & Young LLP
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99.1
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Part I, Item 1. Business
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99.2
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Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
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99.3
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Part II, Item 8. Financial Statements and Supplementary Data
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101.INS
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XBRL Instance Document
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101.SCH
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XBRL Taxonomy Extension Schema Document
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101.CAL
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XBRL Taxonomy Extension Calculation Linkbase Document
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101.DEF
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XBRL Taxonomy Extension Definition Linkbase Document
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101.LAB
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XBRL Taxonomy Extension Label Linkbase Document
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101.PRE
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XBRL Taxonomy Extension Presentation Linkbase Document
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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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Public Segment
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Customer Channels
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Corporate Segment
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Small Business Segment
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Government
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Education
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Healthcare
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Other
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Target Customers
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>250 employees
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1 - 250 employees
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Various federal, state and local agencies
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Higher education and K-12
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Hospitals, ambulatory service providers and long-term care facilities
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Canada and United Kingdom
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2016 Net Sales
(in billions)
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$5.9
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$1.1
|
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$1.9
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$2.0
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$1.7
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$1.4
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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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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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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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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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|
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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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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
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•
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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.
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•
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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.
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•
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The Healthcare industry continues to experience consolidation, which has caused uneven technology growth as customers assess their post-acquisition state.
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•
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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.
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•
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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.
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•
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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.
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Years Ended December 31,
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||||||||||
(dollars in millions)
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2016
|
|
2015
|
|
2014
|
||||||
Net sales
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$
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13,981.9
|
|
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$
|
12,988.7
|
|
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$
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12,074.5
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Gross profit
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2,327.2
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|
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2,115.8
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1,921.3
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|||
Income from operations
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819.2
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|
|
742.0
|
|
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673.0
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|||
Net income
|
424.4
|
|
|
403.1
|
|
|
244.9
|
|
|||
Non-GAAP net income
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569.0
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503.5
|
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409.9
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|||
Adjusted EBITDA
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1,117.3
|
|
|
1,018.5
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|
|
907.0
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|||
Average daily sales
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55.0
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51.1
|
|
|
47.5
|
|
|||
Net debt (defined as total debt minus cash and cash equivalents)
(1)
|
2,970.7
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|
|
3,222.1
|
|
|
2,821.5
|
|
|||
Cash conversion cycle (in days)
(2)
|
19
|
|
|
21
|
|
|
21
|
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(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.
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(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,
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||||||||||||
|
|
2016
|
|
2015
|
||||||||||
|
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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
(2)
|
|
$
|
5,889.8
|
|
|
42.1
|
%
|
|
$
|
5,878.7
|
|
|
45.3
|
%
|
|
$
|
11.1
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
(2)
|
|
1,140.1
|
|
|
8.2
|
|
|
1,089.6
|
|
|
8.4
|
|
|
50.5
|
|
|
4.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
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
.
|
(2)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
|
|
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)(6)
|
|
$
|
453.6
|
|
|
7.7
|
%
|
|
$
|
432.5
|
|
|
7.4
|
%
|
|
4.9
|
%
|
Small Business
(2)(6)
|
|
68.9
|
|
|
6.0
|
|
|
68.3
|
|
|
6.3
|
|
|
0.9
|
|
||
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, Small Business 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, Small Business 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.
|
(6)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(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
(2)
|
|
$
|
5,878.7
|
|
|
45.3
|
%
|
|
$
|
5,541.8
|
|
|
45.9
|
%
|
|
$
|
336.9
|
|
|
6.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
(2)
|
|
1,089.6
|
|
|
8.4
|
|
|
1,062.2
|
|
|
8.8
|
|
|
27.4
|
|
|
2.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
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
.
|
(2)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
|
|
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) (6)
|
|
$
|
432.5
|
|
|
7.4
|
%
|
|
$
|
403.5
|
|
|
7.3
|
%
|
|
7.2
|
%
|
Small Business
(2) (6)
|
|
68.3
|
|
|
6.3
|
|
|
57.1
|
|
|
5.4
|
|
|
19.6
|
|
||
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, Small Business 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, Small Business 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.
|
(6)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(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 and Small Business segments. 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 and Small Business segments, 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, except for Notes 5 and 16, as to which the date is August 25, 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(4)
|
|
Small Business(4)
|
|
Public
|
|
Other
(1)
|
|
Consolidated
|
||||||||||
Balances as of December 31, 2014:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Goodwill
|
|
$
|
2,617.3
|
|
|
$
|
185.9
|
|
|
$
|
1,265.4
|
|
|
$
|
102.8
|
|
|
$
|
4,171.4
|
|
Accumulated impairment charges
|
|
(1,571.4
|
)
|
|
—
|
|
|
(354.1
|
)
|
|
(28.3
|
)
|
|
(1,953.8
|
)
|
|||||
|
|
1,045.9
|
|
|
185.9
|
|
|
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
|
|
2,617.3
|
|
|
185.9
|
|
|
1,265.4
|
|
|
385.6
|
|
|
4,454.2
|
|
|||||
Accumulated impairment charges
|
|
(1,571.4
|
)
|
|
—
|
|
|
(354.1
|
)
|
|
(28.3
|
)
|
|
(1,953.8
|
)
|
|||||
|
|
1,045.9
|
|
|
185.9
|
|
|
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
|
|
2,645.5
|
|
|
185.9
|
|
|
1,283.7
|
|
|
293.7
|
|
|
4,408.8
|
|
|||||
Accumulated impairment charges
|
|
(1,571.4
|
)
|
|
—
|
|
|
(354.1
|
)
|
|
(28.3
|
)
|
|
(1,953.8
|
)
|
|||||
|
|
$
|
1,074.1
|
|
|
$
|
185.9
|
|
|
$
|
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, Small Business and Public segments.
|
(4)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(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(1)
|
|
Small Business(1)
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
2016:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
5,889.8
|
|
|
$
|
1,140.1
|
|
|
$
|
5,589.4
|
|
|
$
|
1,362.6
|
|
|
$
|
—
|
|
|
$
|
13,981.9
|
|
Income (loss) from operations
|
453.6
|
|
|
68.9
|
|
|
368.0
|
|
|
43.6
|
|
|
(114.9
|
)
|
|
819.2
|
|
||||||
Depreciation and amortization expense
|
(82.9
|
)
|
|
(20.6
|
)
|
|
(44.7
|
)
|
|
(32.1
|
)
|
|
(74.2
|
)
|
|
(254.5
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2015:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
5,878.7
|
|
|
$
|
1,089.6
|
|
|
$
|
5,183.6
|
|
|
$
|
836.8
|
|
|
$
|
—
|
|
|
$
|
12,988.7
|
|
Income (loss) from operations
|
432.5
|
|
|
68.3
|
|
|
328.6
|
|
|
27.1
|
|
|
(114.5
|
)
|
|
742.0
|
|
||||||
Depreciation and amortization expense
|
(82.6
|
)
|
|
(20.6
|
)
|
|
(44.7
|
)
|
|
(16.2
|
)
|
|
(63.3
|
)
|
|
(227.4
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2014:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
5,541.8
|
|
|
$
|
1,062.2
|
|
|
$
|
4,938.3
|
|
|
$
|
532.2
|
|
|
$
|
—
|
|
|
$
|
12,074.5
|
|
Income (loss) from operations
|
403.5
|
|
|
57.1
|
|
|
303.9
|
|
|
$
|
21.4
|
|
|
(112.9
|
)
|
|
673.0
|
|
|||||
Depreciation and amortization expense
|
(81.7
|
)
|
|
(20.8
|
)
|
|
(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
(1)
|
|
$
|
1,414.9
|
|
|
$
|
1,490.8
|
|
|
$
|
1,466.4
|
|
|
$
|
1,517.7
|
|
|
|
|
|
|
|
|
|
|
||||||||
Small Business
(1)
|
|
277.4
|
|
|
288.4
|
|
|
282.5
|
|
|
291.8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
(3)
|
||||||||||||||
(in millions, except per-share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
|
||||||||
Corporate
(1)
|
|
$
|
1,336.9
|
|
|
$
|
1,517.9
|
|
|
$
|
1,499.6
|
|
|
$
|
1,524.3
|
|
|
|
|
|
|
|
|
|
|
||||||||
Small Business
(1)
|
|
273.5
|
|
|
280.7
|
|
|
265.1
|
|
|
270.3
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
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
(2)
:
|
|
|
|
|
|
|
|
|
||||||||
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)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(2)
|
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.
|
(3)
|
Effective January 1, 2016, CDW Advanced Services is no longer an operating segment and its results have been allocated to our Corporate, Small Business and Public segments. The prior periods have been reclassified to conform to the current period presentation.
|