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FORM 10-K
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ý
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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CDW CORPORATION
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(Exact name of registrant as specified in its charter)
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Delaware
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26-0273989
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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75 Tri-State International
Lincolnshire, Illinois
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60069
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(Address of principal executive offices)
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(Zip Code)
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Title of each class:
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Name of each exchange on which registered
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Common stock, par value $0.01 per share
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Nasdaq Global Select Market
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Large accelerated filer
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ý
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Accelerated filer
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¨
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Non-accelerated filer
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¨
(Do not check if a smaller reporting company)
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Smaller reporting company
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¨
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Emerging growth company
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¨
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Item
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Page
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PART I
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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PART II
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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PART III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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PART IV
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Item 15.
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Item 16.
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SIGNATURES
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Our value proposition to our customers
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Our value proposition to our vendor partners
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●
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Broad selection of products and multi-branded IT solutions
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●
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Access to over 250,000 customers
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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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UK and Canada
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2017 Net Sales
(in billions)
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$6.3
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$1.2
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$2.2
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$2.2
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$1.7
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$1.6
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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 hyper-converged 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 end-to-end solutions, using hardware, software and services, that deliver access to applications that improve our customers’ productivity regardless of device or location. We connect our customers’ physical devices, including laptops, desktops, IP Phones, mobile devices and print systems, and utilize solutions to unite
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•
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Security
: We assess the security needs of our customers and provide them with risk mitigation tools and services across a multitude of categories such as: endpoint security, email security, web security, intrusion prevention, authentication, firewall, virtual private network services and network access control. Security consulting engagements include security assessment, policy and procedure gap analysis and development of security roadmaps.
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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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2017
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2016
(1)
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2015
(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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$
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3,490.9
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23.1
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%
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$
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2,921.6
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20.9
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%
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$
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2,537.3
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19.5
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%
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Netcomm Products
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2,042.9
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13.4
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1,958.2
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14.0
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1,915.0
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14.7
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Desktops
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1,159.4
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7.6
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1,050.0
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7.5
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965.6
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7.4
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Video
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1,076.9
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7.1
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962.1
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6.9
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853.8
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6.6
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Enterprise and Data Storage (Including Drives)
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1,071.5
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7.1
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1,053.1
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7.5
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1,067.2
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8.2
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Other Hardware
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3,100.3
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20.4
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3,042.6
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21.8
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2,950.5
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22.7
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Total Hardware
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11,941.9
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78.7
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10,987.6
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78.6
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10,289.4
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79.1
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|||
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|||||||||
Software
(2)
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2,540.1
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16.7
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2,389.3
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17.1
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2,152.3
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16.6
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Services
(2)
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611.3
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4.0
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575.1
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4.1
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467.7
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3.6
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Other
(3)
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98.2
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0.6
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29.9
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0.2
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79.3
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0.7
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Total Net sales
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$
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15,191.5
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100.0
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%
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$
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13,981.9
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100.0
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%
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$
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12,988.7
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100.0
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%
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(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, 2017.
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(2)
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Certain software and services revenue is recorded on a net basis for accounting purposes, so the category percentage of net revenues is not representative of the category percentage of gross profits.
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(3)
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Includes items such as delivery charges to customers and certain commission revenue.
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•
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resellers, such as Computacenter, Connection, Dimension Data, ePlus, Insight Enterprises, PCM, Presidio, SCC, Softchoice, World Wide Technology and many smaller resellers;
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•
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manufacturers who sell directly to customers, such as Adobe, Apple, Dell, HP Inc. and Hewlett Packard Enterprise;
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•
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large service providers and system integrators, such as Accenture, Dell, Hewlett Packard Enterprise and IBM;
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•
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communications service providers, such as AT&T, CenturyLink and Verizon;
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•
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cloud providers, such as Amazon Web Services, Box and Microsoft;
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•
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e-tailers, such as Amazon, Newegg and TigerDirect.com; and
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•
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retailers (including their e-commerce activities), such as Office Depot and Staples.
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•
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conduct business with our customers, including delivering services and solutions to them;
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•
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manage our inventory and accounts receivable and accounts payable;
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•
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purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely basis; and
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•
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maintain our cost-efficient operating model while scaling our business.
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•
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the imposition of additional trade law provisions or regulations;
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•
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the imposition of additional duties, tariffs and other charges on imports and exports;
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•
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foreign currency fluctuations;
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•
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natural disasters or other adverse occurrences at, or affecting, any of our suppliers’ facilities;
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•
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restrictions on the transfer of funds;
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•
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the financial instability or bankruptcy of manufacturers; and
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•
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significant labor disputes, such as strikes.
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•
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making it more difficult for us to satisfy our obligations with respect to our indebtedness;
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•
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requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries’ debt, which reduces the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;
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•
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requiring us to comply with restrictive covenants in our senior credit facilities and indentures, which limit the manner in which we conduct our business;
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•
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making it more difficult for us to obtain vendor financing from our vendor partners, including original equipment manufacturers and software publishers;
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•
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limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;
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•
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placing us at a competitive disadvantage compared to any of our less-leveraged competitors;
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•
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increasing our vulnerability to both general and industry-specific adverse economic conditions; and
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•
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limiting our ability to obtain additional debt or equity financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and increasing our cost of borrowing.
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•
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incur or guarantee additional debt;
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•
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pay dividends or make distributions to holders of our capital stock or to make certain other restricted payments or investments;
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•
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repurchase or redeem capital stock;
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•
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make loans, capital expenditures or investments or acquisitions;
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•
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receive dividends or other payments from our subsidiaries;
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•
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enter into transactions with affiliates;
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•
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create liens;
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•
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merge or consolidate with other companies or transfer all or substantially all of our assets;
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•
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transfer or sell assets, including capital stock of subsidiaries; and
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•
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prepay, repurchase or redeem debt.
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•
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will not be required to lend any additional amounts to us;
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•
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could elect to declare all borrowings outstanding thereunder, together with accrued and unpaid interest and fees, to be due and payable; or
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•
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could require us to apply all of our available cash to repay these borrowings.
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•
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our debt holders could declare all outstanding principal and interest to be due and payable;
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•
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the lenders under our senior credit facilities could foreclose against the assets securing the borrowings from them and the lenders under our Revolving Loan and CDW UK revolving credit facility could terminate their commitments to lend us money; and
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•
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we could be forced into bankruptcy or liquidation.
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•
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changes in financial estimates by any securities analysts who follow our common stock, our failure to meet these estimates or failure of securities analysts to maintain coverage of our common stock;
|
•
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downgrades by any securities analysts who follow our common stock;
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•
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future sales of our common stock by our officers, directors and significant stockholders;
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•
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market conditions or trends in our industry or the economy as a whole;
|
•
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investors’ perceptions of our prospects;
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•
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announcements by us or our competitors of significant contracts, acquisitions, joint ventures or capital commitments; and
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•
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changes in key personnel.
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•
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authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of common stock;
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•
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establish a classified Board of Directors so that not all members of our Board of Directors are elected at one time;
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•
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generally prohibit stockholder action by written consent, requiring all stockholder actions be taken at a meeting of our stockholders;
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•
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provide that special meetings of the stockholders can only be called by or at the direction of our Board of Directors pursuant to a written resolution adopted by the affirmative vote of the majority of the total number of directors that the Company would have if there were no vacancies;
|
•
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establish advance notice requirements for nominations for elections to our Board of Directors or for proposing matters that can be acted upon by stockholders at stockholder meetings; and
|
•
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provide that our Board of Directors is expressly authorized to make, alter or repeal our amended and restated bylaws.
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Name
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Age
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Position
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Thomas E. Richards
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63
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Chairman, President and Chief Executive Officer and Director
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Dennis G. Berger
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53
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Senior Vice President and Chief Coworker Services Officer
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Neal J. Campbell
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56
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Senior Vice President - Strategic Solutions and Services
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Mark C. Chong
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47
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Senior Vice President - Strategy and Marketing
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Christina M. Corley
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50
|
|
Senior Vice President - Commercial and International Markets
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Douglas E. Eckrote
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53
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Senior Vice President - Small Business Sales and eCommerce
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Collin B. Kebo
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51
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Senior Vice President and Chief Financial Officer
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Frederick J. Kulevich
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52
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Senior Vice President, General Counsel and Corporate Secretary
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Christine A. Leahy
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53
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Chief Revenue Officer
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Christina V. Rother
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54
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Senior Vice President - Public and Advanced Technology Sales
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Jonathan J. Stevens
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48
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Senior Vice President - Operations and Chief Information Officer
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Matthew A. Troka
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47
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Senior Vice President - Product and Partner Management
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Year Ended December 31,
|
||||||||||||||||||||||
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2017
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2016
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||||||||||||||||||||
|
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High
|
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Low
|
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Dividends Declared per Share
|
|
High
|
|
Low
|
|
Dividends Declared per Share
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||||||||||||
Fourth quarter
|
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$
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71.53
|
|
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$
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65.59
|
|
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$
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0.2100
|
|
|
$
|
55.47
|
|
|
$
|
43.64
|
|
|
$
|
0.1600
|
|
Third quarter
|
|
$
|
66.80
|
|
|
$
|
58.57
|
|
|
$
|
0.1600
|
|
|
$
|
47.50
|
|
|
$
|
39.17
|
|
|
$
|
0.1075
|
|
Second quarter
|
|
$
|
66.33
|
|
|
$
|
55.80
|
|
|
$
|
0.1600
|
|
|
$
|
43.11
|
|
|
$
|
37.80
|
|
|
$
|
0.1075
|
|
First quarter
|
|
$
|
61.00
|
|
|
$
|
50.49
|
|
|
$
|
0.1600
|
|
|
$
|
41.89
|
|
|
$
|
30.40
|
|
|
$
|
0.1075
|
|
|
|
June 27, 2013
|
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December 31, 2013
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December 31, 2014
|
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December 31, 2015
|
|
December 31, 2016
|
|
December 31, 2017
|
||||||||||||
CDW Corp
|
|
$
|
100
|
|
|
$
|
127
|
|
|
$
|
193
|
|
|
$
|
233
|
|
|
$
|
291
|
|
|
$
|
393
|
|
S&P MidCap 400 index
|
|
$
|
100
|
|
|
$
|
114
|
|
|
$
|
126
|
|
|
$
|
123
|
|
|
$
|
148
|
|
|
$
|
172
|
|
CDW Peers
|
|
$
|
100
|
|
|
$
|
110
|
|
|
$
|
122
|
|
|
$
|
126
|
|
|
$
|
144
|
|
|
$
|
167
|
|
|
|
|
||||||||||||||||||
|
|
Years Ended December 31,
|
||||||||||||||||||
(dollars and shares in millions, except per share amounts)
|
|
2017
|
|
2016
|
|
2015
(6)
|
|
2014
|
|
2013
|
||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net sales
|
|
$
|
15,191.5
|
|
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
|
$
|
12,074.5
|
|
|
$
|
10,768.6
|
|
Cost of sales
|
|
12,741.6
|
|
|
11,654.7
|
|
|
10,872.9
|
|
|
10,153.2
|
|
|
9,008.3
|
|
|||||
Gross profit
|
|
2,449.9
|
|
|
2,327.2
|
|
|
2,115.8
|
|
|
1,921.3
|
|
|
1,760.3
|
|
|||||
Selling and administrative expenses
|
|
1,410.1
|
|
|
1,345.1
|
|
|
1,226.0
|
|
|
1,110.3
|
|
|
1,120.9
|
|
|||||
Advertising expense
|
|
173.7
|
|
|
162.9
|
|
|
147.8
|
|
|
138.0
|
|
|
130.8
|
|
|||||
Income from operations
|
|
866.1
|
|
|
819.2
|
|
|
742.0
|
|
|
673.0
|
|
|
508.6
|
|
|||||
Interest expense, net
|
|
(150.5
|
)
|
|
(146.5
|
)
|
|
(159.5
|
)
|
|
(197.3
|
)
|
|
(250.1
|
)
|
|||||
Net loss on extinguishments of long-term debt
|
|
(57.4
|
)
|
|
(2.1
|
)
|
|
(24.3
|
)
|
|
(90.7
|
)
|
|
(64.0
|
)
|
|||||
Gain on remeasurement of equity investment
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|
—
|
|
|
—
|
|
|||||
Other income (expense), net
|
|
2.1
|
|
|
1.8
|
|
|
(9.3
|
)
|
|
2.7
|
|
|
1.0
|
|
|||||
Income before income taxes
|
|
660.3
|
|
|
672.4
|
|
|
647.0
|
|
|
387.7
|
|
|
195.5
|
|
|||||
Income tax expense
(1)
|
|
(137.3
|
)
|
|
(248.0
|
)
|
|
(243.9
|
)
|
|
(142.8
|
)
|
|
(62.7
|
)
|
|||||
Net income
|
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
Net income per common share:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Basic
|
|
$
|
3.37
|
|
|
$
|
2.59
|
|
|
$
|
2.37
|
|
|
$
|
1.44
|
|
|
$
|
0.85
|
|
Diluted
|
|
$
|
3.31
|
|
|
$
|
2.56
|
|
|
$
|
2.35
|
|
|
$
|
1.42
|
|
|
$
|
0.84
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash dividends declared per common share
|
|
$
|
0.6900
|
|
|
$
|
0.4825
|
|
|
$
|
0.3100
|
|
|
$
|
0.1950
|
|
|
$
|
0.0425
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
144.2
|
|
|
$
|
263.7
|
|
|
$
|
37.6
|
|
|
$
|
344.5
|
|
|
$
|
188.1
|
|
Working capital
|
|
863.5
|
|
|
957.4
|
|
|
903.5
|
|
|
985.4
|
|
|
810.9
|
|
|||||
Total assets
|
|
6,956.6
|
|
|
6,948.4
|
|
|
6,755.3
|
|
|
6,075.9
|
|
|
5,899.3
|
|
|||||
Total debt and capitalized lease obligations
(2)(3)
|
|
3,236.7
|
|
|
3,236.6
|
|
|
3,262.9
|
|
|
3,166.1
|
|
|
3,226.0
|
|
|||||
Total stockholders’ equity
|
|
982.9
|
|
|
1,045.5
|
|
|
1,095.9
|
|
|
936.5
|
|
|
711.7
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Capital expenditures
|
|
$
|
81.1
|
|
|
$
|
63.5
|
|
|
$
|
90.1
|
|
|
$
|
55.0
|
|
|
$
|
47.1
|
|
Gross profit as a percentage of Net sales
|
|
16.1
|
%
|
|
16.6
|
%
|
|
16.3
|
%
|
|
15.9
|
%
|
|
16.3
|
%
|
|||||
EBITDA
(4)
|
|
$
|
1,071.7
|
|
|
$
|
1,073.4
|
|
|
$
|
1,033.9
|
|
|
$
|
792.9
|
|
|
$
|
653.8
|
|
Adjusted EBITDA
(4)
|
|
1,185.6
|
|
|
1,117.3
|
|
|
1,018.5
|
|
|
907.0
|
|
|
808.5
|
|
|||||
Non-GAAP net income
(5)
|
|
605.8
|
|
|
569.0
|
|
|
503.5
|
|
|
409.9
|
|
|
314.3
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Statement of Cash Flows Data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Net cash provided by (used in):
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating activities
|
|
$
|
777.7
|
|
|
$
|
604.0
|
|
|
$
|
277.5
|
|
|
$
|
435.0
|
|
|
$
|
366.3
|
|
Investing activities
|
|
(81.1
|
)
|
|
(65.9
|
)
|
|
(354.4
|
)
|
|
(164.8
|
)
|
|
(47.1
|
)
|
|||||
Financing activities
|
|
(818.7
|
)
|
|
(304.6
|
)
|
|
(226.5
|
)
|
|
(112.0
|
)
|
|
(168.3
|
)
|
(1)
|
Includes the benefit of the Tax Cuts and Jobs Act enacted during 2017.
|
(2)
|
Excludes borrowings of
$498 million
,
$580 million
,
$440 million
,
$332 million
and
$257 million
, as of December 31, 2017, 2016, 2015, 2014 and 2013, respectively, under our inventory financing agreements. We do not include these borrowings in total debt because we have not in the past incurred, and in the future do not expect to incur, any interest expense or late fees under these agreements.
|
(3)
|
Includes capitalized lease obligations of
$1 million
and
$2 million
as of
December 31, 2017 and 2016
, respectively, which are included in Other liabilities on the Consolidated Balance Sheet.
|
(4)
|
EBITDA is defined as consolidated net income before interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA, which is a measure defined in our credit agreements, means EBITDA adjusted for certain items which are described in the table below. We have included a reconciliation of EBITDA and Adjusted EBITDA in the table below. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
(g)
|
|
2014
|
|
2013
|
||||||||||
Net income
|
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
Depreciation and amortization
|
|
260.9
|
|
|
254.5
|
|
|
227.4
|
|
|
207.9
|
|
|
208.2
|
|
|||||
Income tax expense
|
|
137.3
|
|
|
248.0
|
|
|
243.9
|
|
|
142.8
|
|
|
62.7
|
|
|||||
Interest expense, net
|
|
150.5
|
|
|
146.5
|
|
|
159.5
|
|
|
197.3
|
|
|
250.1
|
|
|||||
EBITDA
|
|
1,071.7
|
|
|
1,073.4
|
|
|
1,033.9
|
|
|
792.9
|
|
|
653.8
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Non-cash equity-based compensation
|
|
43.7
|
|
|
39.2
|
|
|
31.2
|
|
|
16.4
|
|
|
8.6
|
|
|||||
Net loss on extinguishments of long-term debt
(a)
|
|
57.4
|
|
|
2.1
|
|
|
24.3
|
|
|
90.7
|
|
|
64.0
|
|
|||||
(Income) loss from equity investments
(b)
|
|
(0.7
|
)
|
|
(1.1
|
)
|
|
10.1
|
|
|
(2.2
|
)
|
|
(0.6
|
)
|
|||||
Acquisition and integration expenses
(c)
|
|
2.5
|
|
|
7.3
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|||||
Gain on remeasurement of equity investment
(d)
|
|
—
|
|
|
—
|
|
|
(98.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Reinstatement of prior year unclaimed property balances
(e)
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other adjustments
(f)
|
|
6.9
|
|
|
(3.6
|
)
|
|
6.9
|
|
|
9.2
|
|
|
82.7
|
|
|||||
Adjusted EBITDA
|
|
$
|
1,185.6
|
|
|
$
|
1,117.3
|
|
|
$
|
1,018.5
|
|
|
$
|
907.0
|
|
|
$
|
808.5
|
|
(a)
|
During the years ended December 31, 2017, 2016, 2015, 2014 and 2013, we recorded net losses on extinguishments of long-term debt. The losses represented the difference between the amount paid upon extinguishment, including call premiums and expenses paid to the debt holders and agents, and the net carrying amount of the extinguished debt, adjusted for a portion of the unamortized deferred financing costs.
|
(b)
|
Represents our share of (Income) loss from our equity investments. Our 35% share of CDW UK’s net loss includes our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the acquisition.
|
(c)
|
Comprised of expenses related to CDW UK.
|
(d)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(e)
|
Comprised of the reinstatement of prior year unclaimed property balances as a result of a retroactive Illinois state law change enacted during 2017.
|
(f)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during 2017. The year ended December 31, 2016 primarily includes our share of the settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter, partially offset by expenses related to the consolidation of office locations north of Chicago. During the year ended December 31, 2013, we recorded IPO and secondary offering- related expenses of $75 million.
|
(g)
|
Includes the impact of consolidating five months of CDW UK’s financial results for the year ended December 31, 2015.
|
(5)
|
Non-GAAP net income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, non-cash equity-based compensation, acquisition and integration expenses, and gains and losses from the extinguishments of long-term debt. Non-GAAP net income is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company’s performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that non-GAAP net income provides analysts, investors and management with helpful information regarding the underlying operating performance of our business, as this measure removes the impact of items that management believes are not reflective of underlying operating performance. Management uses this measure to evaluate period-over-period performance as management believes it provides a more comparable measure of the underlying business.
|
|
|
Years Ended December 31,
|
||||||||||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
(h)
|
|
2014
|
|
2013
|
||||||||||
Net income
|
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
$
|
244.9
|
|
|
$
|
132.8
|
|
Amortization of intangibles
(a)
|
|
185.1
|
|
|
187.2
|
|
|
173.9
|
|
|
161.2
|
|
|
161.2
|
|
|||||
Non-cash equity-based compensation
|
|
43.7
|
|
|
39.2
|
|
|
31.2
|
|
|
16.4
|
|
|
8.6
|
|
|||||
Non-cash equity-based compensation related to equity investment
(b)
|
|
—
|
|
|
—
|
|
|
20.0
|
|
|
—
|
|
|
—
|
|
|||||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
2.1
|
|
|
24.3
|
|
|
90.7
|
|
|
64.0
|
|
|||||
Acquisition and integration expenses
(c)
|
|
2.5
|
|
|
7.3
|
|
|
10.2
|
|
|
—
|
|
|
—
|
|
|||||
Gain on remeasurement of equity investment
(d)
|
|
—
|
|
|
—
|
|
|
(98.1
|
)
|
|
—
|
|
|
—
|
|
|||||
Reinstatement of prior year unclaimed property balances
(e)
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Other adjustments
(f)
|
|
4.9
|
|
|
(5.4
|
)
|
|
3.7
|
|
|
(0.3
|
)
|
|
61.2
|
|
|||||
Aggregate adjustment for income taxes
(g)
|
|
(214.9
|
)
|
|
(85.8
|
)
|
|
(64.8
|
)
|
|
(103.0
|
)
|
|
(113.5
|
)
|
|||||
Non-GAAP net income
|
|
$
|
605.8
|
|
|
$
|
569.0
|
|
|
$
|
503.5
|
|
|
$
|
409.9
|
|
|
$
|
314.3
|
|
(a)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(b)
|
Represents our 35% share of an expense related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to our acquisition of CDW UK.
|
(c)
|
Comprised of expenses related to CDW UK.
|
(d)
|
Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK.
|
(e)
|
Comprised of the reinstatement of prior year unclaimed property balances as a result of a retroactive Illinois law change enacted during 2017.
|
(f)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during 2017. The year ended December 31, 2016 primarily includes our share of the settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter, partially offset by
|
(g)
|
Aggregate adjustment for income taxes consists of the following:
|
|
Year Ended December 31,
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
||||||||||
Total Non-GAAP adjustments
|
$
|
297.7
|
|
|
$
|
230.4
|
|
|
$
|
165.2
|
|
|
$
|
268.0
|
|
|
$
|
295.0
|
|
Weighted-average statutory effective rate
|
36.0
|
%
|
|
36.0
|
%
|
|
38.0
|
%
|
|
39.0
|
%
|
|
39.0
|
%
|
|||||
Income tax
|
(107.2
|
)
|
|
(82.9
|
)
|
|
(62.8
|
)
|
|
(104.5
|
)
|
|
(115.1
|
)
|
|||||
Deferred tax adjustment due to law changes
|
1.3
|
|
|
(1.5
|
)
|
|
(4.0
|
)
|
|
—
|
|
|
—
|
|
|||||
Excess tax benefits from equity-based compensation
|
(36.2
|
)
|
|
(1.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Tax Cuts and Jobs Act
|
(75.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Withholding tax expense on the unremitted earnings of our Canadian subsidiary
|
—
|
|
|
—
|
|
|
3.3
|
|
|
—
|
|
|
—
|
|
|||||
Non-deductible adjustments and other
|
2.7
|
|
|
0.4
|
|
|
(1.3
|
)
|
|
1.5
|
|
|
1.6
|
|
|||||
Total aggregate adjustment for income taxes
|
$
|
(214.9
|
)
|
|
$
|
(85.8
|
)
|
|
$
|
(64.8
|
)
|
|
$
|
(103.0
|
)
|
|
$
|
(113.5
|
)
|
(h)
|
Includes the impact of consolidating five months for the year ended December 31, 2015 of CDW UK’s financial results.
|
(6)
|
Includes the impact of consolidating five months of CDW UK’s financial results for the year ended December 31, 2015.
|
•
|
General economic conditions are a key factor affecting our ability to generate sales and achieve our targeted operating results as they impact our customers’ willingness to spend on information technology. This is particularly the case for business customers, as their purchases tend to reflect confidence in their business prospects, which are driven by their perceptions of business conditions. Purchasing behavior may be different between our Corporate customers and Small Business customers due to their perception of business conditions.
|
•
|
Changes in spending policies, budget priorities and revenue levels are a key factor influencing government purchasing levels. Our Government results also reflect increased interest in meeting public safety needs through technology solutions by State and Local customers, as well as our ability to address strategic changes made by the Federal government toward a more programmatic technology strategy.
|
•
|
Customer focus on security has been, and we expect will continue to be, an ongoing trend. Customers are seeking solutions to protect their internal systems against threats and are implementing solutions that provide enterprise-wide visibility, detection expertise and investigation workflows. They are also implementing endpoint security, firewall segmentation and user authentication tools.
|
•
|
The Healthcare industry continues to experience uncertainty given recent proposed legislative action and concerns related to funding, which is impacting healthcare spending as customers seek more clarity.
|
•
|
Our Education sales channel performance continues to benefit from the creation of new learning environments for students. It has also been positively affected by the implementation of networking projects related to the US Federal Communications Commission E-Rate program. Within the higher education market, networking projects continue to be a key priority across campuses. While technology is an opportunity to create cost savings and improve productivity, funding is a key determinant of technology spending in education.
|
•
|
There continues to be substantial uncertainty regarding the impact of the Referendum on the United Kingdom’s (“UK”) Membership of the European Union (“EU”), advising for the exit of the UK from the EU (referred to as “Brexit”). Potential adverse consequences of Brexit such as global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between UK and EU countries and increased regulatory complexities could have a negative impact on our business, financial condition and results of operations. To date, CDW UK is not seeing significant changes in the buying behavior of its customers even with the uncertainty related to the timing and terms of Brexit.
|
•
|
Technology trends drive customer purchase behaviors and we are seeing continuing evolution in the market. Innovation influences customer purchases across all of our customer end-markets. Key trends in technology include increasing adoption of cloud-based solutions for certain key workloads, including backup and recovery, collaboration and security, as well as adoption of hyper-converged appliances to deliver greater flexibility and efficiency. In addition, hybrid IT solutions are being adopted, along with software being embedded into solutions.
|
|
Years Ended December 31,
|
||||||||||
(dollars in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
15,191.5
|
|
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
Gross profit
|
2,449.9
|
|
|
2,327.2
|
|
|
2,115.8
|
|
|||
Income from operations
|
866.1
|
|
|
819.2
|
|
|
742.0
|
|
|||
Net income
|
523.0
|
|
|
424.4
|
|
|
403.1
|
|
|||
Non-GAAP net income
|
605.8
|
|
|
569.0
|
|
|
503.5
|
|
|||
Adjusted EBITDA
|
1,185.6
|
|
|
1,117.3
|
|
|
1,018.5
|
|
|||
Average daily sales
|
59.8
|
|
|
55.0
|
|
|
51.1
|
|
|||
Net debt
(1)
|
3,091.3
|
|
|
2,970.7
|
|
|
3,222.1
|
|
|||
Cash conversion cycle (in days)
(2)
|
19
|
|
|
19
|
|
|
21
|
|
(1)
|
Defined as Total debt minus Cash and cash equivalents.
|
(2)
|
Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.
|
|
|
Years Ended December 31,
|
||||||||||||
|
|
2017
|
|
2016
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
||||||
Net sales
|
|
$
|
15,191.5
|
|
|
100.0
|
%
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
Cost of sales
|
|
12,741.6
|
|
|
83.9
|
|
|
11,654.7
|
|
|
83.4
|
|
||
Gross profit
|
|
2,449.9
|
|
|
16.1
|
|
|
2,327.2
|
|
|
16.6
|
|
||
Selling and administrative expenses
|
|
1,410.1
|
|
|
9.3
|
|
|
1,345.1
|
|
|
9.6
|
|
||
Advertising expense
|
|
173.7
|
|
|
1.1
|
|
|
162.9
|
|
|
1.2
|
|
||
Income from operations
|
|
866.1
|
|
|
5.7
|
|
|
819.2
|
|
|
5.9
|
|
||
Interest expense, net
|
|
(150.5
|
)
|
|
(1.0
|
)
|
|
(146.5
|
)
|
|
(1.0
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
(57.4
|
)
|
|
(0.4
|
)
|
|
(2.1
|
)
|
|
—
|
|
||
Other income, net
|
|
2.1
|
|
|
—
|
|
|
1.8
|
|
|
—
|
|
||
Income before income taxes
|
|
660.3
|
|
|
4.3
|
|
|
672.4
|
|
|
4.8
|
|
||
Income tax expense
|
|
(137.3
|
)
|
|
(0.9
|
)
|
|
(248.0
|
)
|
|
(1.8
|
)
|
||
Net income
|
|
$
|
523.0
|
|
|
3.4
|
%
|
|
$
|
424.4
|
|
|
3.0
|
%
|
(1)
|
Percentages may not total due to rounding.
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||
|
|
2017
|
|
2016
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales |
|
Net Sales
|
|
Percentage
of Total Net Sales |
|
Dollar
Change |
|
Percent
Change (1) |
|||||||||
Corporate
(2)
|
|
$
|
6,347.0
|
|
|
41.8
|
%
|
|
$
|
5,889.8
|
|
|
42.1
|
%
|
|
$
|
457.2
|
|
|
7.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
(2)
|
|
1,246.5
|
|
|
8.2
|
|
|
1,140.1
|
|
|
8.2
|
|
|
106.4
|
|
|
9.3
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
2,167.5
|
|
|
14.3
|
|
|
1,863.7
|
|
|
13.3
|
|
|
303.8
|
|
|
16.3
|
|
|||
Education
|
|
2,211.4
|
|
|
14.6
|
|
|
2,018.3
|
|
|
14.4
|
|
|
193.1
|
|
|
9.6
|
|
|||
Healthcare
|
|
1,658.6
|
|
|
10.9
|
|
|
1,707.4
|
|
|
12.2
|
|
|
(48.8
|
)
|
|
(2.9
|
)
|
|||
Total Public
|
|
6,037.5
|
|
|
39.7
|
|
|
5,589.4
|
|
|
40.0
|
|
|
448.1
|
|
|
8.0
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
1,560.5
|
|
|
10.3
|
|
|
1,362.6
|
|
|
9.7
|
|
|
197.9
|
|
|
14.5
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total Net sales
|
|
$
|
15,191.5
|
|
|
100.0
|
%
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
1,209.6
|
|
|
8.7
|
%
|
(1)
|
There were 254 selling days for the years ended
December 31, 2017 and 2016
.
|
(2)
|
Amounts have been recast for 2016 to present Small Business as its own operating and reportable segment.
|
|
|
Years Ended December 31,
|
|
|
|||||||||||||
|
|
2017
|
|
2016
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Dollars in
Millions
|
|
Operating
Margin
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(1)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
(2)
|
|
$
|
487.0
|
|
|
7.7
|
%
|
|
$
|
453.6
|
|
|
7.7
|
%
|
|
7.4
|
%
|
Small Business
(2)
|
|
74.4
|
|
|
6.0
|
|
|
68.9
|
|
|
6.0
|
|
|
8.0
|
|
||
Public
|
|
374.0
|
|
|
6.2
|
|
|
368.0
|
|
|
6.6
|
|
|
1.6
|
|
||
Other
(3)
|
|
57.9
|
|
|
3.7
|
|
|
43.6
|
|
|
3.2
|
|
|
32.8
|
|
||
Headquarters
(4)
|
|
(127.2
|
)
|
|
nm*
|
|
|
(114.9
|
)
|
|
nm*
|
|
|
10.7
|
|
||
Total Income from operations
|
|
$
|
866.1
|
|
|
5.7
|
%
|
|
$
|
819.2
|
|
|
5.9
|
%
|
|
5.7
|
%
|
(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)
|
Amounts have been recast for 2016 to present Small Business as its own operating and reportable segment.
|
(3)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(4)
|
Includes Headquarters’ function costs that are not allocated to the segments.
|
(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.
|
|
|
Year Ended December 31, 2017
|
|
Year Ended December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
Income before income taxes
|
|
Income tax benefit (expense)
|
|
Net income
|
|
Income before income taxes
|
|
Income tax benefit (expense)
|
|
Net income
|
||||||||||||
GAAP (as reported)
|
|
$
|
660.3
|
|
|
$
|
(137.3
|
)
|
|
$
|
523.0
|
|
|
$
|
672.4
|
|
|
$
|
(248.0
|
)
|
|
$
|
424.4
|
|
Amortization of intangibles
(1)
|
|
185.1
|
|
|
(66.6
|
)
|
|
118.5
|
|
|
187.2
|
|
|
(67.4
|
)
|
|
119.8
|
|
||||||
Equity-based compensation
(2)
|
|
43.7
|
|
|
(51.9
|
)
|
|
(8.2
|
)
|
|
39.2
|
|
|
(15.9
|
)
|
|
23.3
|
|
||||||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
(20.7
|
)
|
|
36.7
|
|
|
2.1
|
|
|
(0.8
|
)
|
|
1.3
|
|
||||||
Integration expenses
(3)
|
|
2.5
|
|
|
(0.9
|
)
|
|
1.6
|
|
|
7.3
|
|
|
(2.6
|
)
|
|
4.7
|
|
||||||
Reinstatement of prior year unclaimed property balances
(4)
|
|
4.1
|
|
|
(1.5
|
)
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Deferred tax adjustment due to state law changes
|
|
—
|
|
|
1.3
|
|
|
1.3
|
|
|
—
|
|
|
(1.5
|
)
|
|
(1.5
|
)
|
||||||
Tax Cuts and Jobs Act
|
|
—
|
|
|
(75.5
|
)
|
|
(75.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other adjustments
(5)
|
|
4.9
|
|
|
0.9
|
|
|
5.8
|
|
|
(5.4
|
)
|
|
2.4
|
|
|
(3.0
|
)
|
||||||
Non-GAAP
|
|
$
|
958.0
|
|
|
$
|
(352.2
|
)
|
|
$
|
605.8
|
|
|
$
|
902.8
|
|
|
$
|
(333.8
|
)
|
|
$
|
569.0
|
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Includes excess tax benefits related to equity-based compensation.
|
(3)
|
Comprised of expenses related to CDW UK.
|
(4)
|
Comprised of the reinstatement of prior year unclaimed property balances as a result of a retroactive Illinois state law change enacted during 2017.
|
(5)
|
Primarily includes expenses related to payroll taxes on equity-based compensation during 2017. The year ended December 31, 2016 primarily includes our share of the settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter, partially offset by expenses related to the consolidation of office locations north of Chicago.
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2017
|
|
Percentage of
Net Sales
|
|
2016
|
|
Percentage of
Net Sales
|
||||
Net income
|
|
$
|
523.0
|
|
|
3.4%
|
|
$
|
424.4
|
|
|
3.0%
|
Depreciation and amortization
|
|
260.9
|
|
|
|
|
254.5
|
|
|
|
||
Income tax expense
|
|
137.3
|
|
|
|
|
248.0
|
|
|
|
||
Interest expense, net
|
|
150.5
|
|
|
|
|
146.5
|
|
|
|
||
EBITDA
|
|
1,071.7
|
|
|
7.1%
|
|
1,073.4
|
|
|
7.7%
|
||
|
|
|
|
|
|
|
|
|
||||
Adjustments:
|
|
|
|
|
|
|
|
|
||||
Equity-based compensation
|
|
43.7
|
|
|
|
|
39.2
|
|
|
|
||
Net loss on extinguishments of long-term debt
|
|
57.4
|
|
|
|
|
2.1
|
|
|
|
||
Income from equity investment
(1)
|
|
(0.7
|
)
|
|
|
|
(1.1
|
)
|
|
|
||
Integration expenses
(2)
|
|
2.5
|
|
|
|
|
7.3
|
|
|
|
||
Reinstatement of prior year unclaimed property balances
(3)
|
|
4.1
|
|
|
|
|
—
|
|
|
|
||
Other adjustments
(4)
|
|
6.9
|
|
|
|
|
(3.6
|
)
|
|
|
||
Total adjustments
|
|
113.9
|
|
|
|
|
43.9
|
|
|
|
||
|
|
|
|
|
|
|
|
|
||||
Adjusted EBITDA
|
|
$
|
1,185.6
|
|
|
7.8%
|
|
$
|
1,117.3
|
|
|
8.0%
|
(1)
|
Represents our share of net income from our equity investment.
|
(2)
|
Comprised of expenses related to CDW UK.
|
(3)
|
Comprised of the reinstatement of prior year unclaimed property balances as a result of a retroactive Illinois state law change enacted during 2017.
|
(4)
|
Primarily includes expenses related to payroll taxes on equity-based compensation and historical retention costs during 2017. The year ended December 31, 2016 primarily includes our share of the settlement payments received from the Dynamic Random Access Memory class action lawsuits and the favorable resolution of a local sales tax matter, partially offset by expenses related to the consolidation of office locations north of Chicago.
|
|
|
Years Ended December 31,
|
|
|
|
||||||||
(in millions)
|
|
2017
|
|
2016
|
|
% Change
|
Average Daily % Change
(1)
|
||||||
Net sales, as reported
|
|
$
|
15,191.5
|
|
|
$
|
13,981.9
|
|
|
8.7
|
%
|
8.7
|
%
|
Foreign currency translation
(2)
|
|
—
|
|
|
(28.3
|
)
|
|
|
|
||||
Consolidated Net sales, on a constant currency basis
|
|
$
|
15,191.5
|
|
|
$
|
13,953.6
|
|
|
8.9
|
%
|
8.9
|
%
|
(1)
|
There were
254
selling days for the years ended
December 31, 2017 and 2016
.
|
(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.
|
|
|
Years Ended December 31,
|
||||||||||||
|
|
2016
|
|
2015
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
(1)
|
||||||
Net sales
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
Cost of sales
|
|
11,654.7
|
|
|
83.4
|
|
|
10,872.9
|
|
|
83.7
|
|
||
Gross profit
|
|
2,327.2
|
|
|
16.6
|
|
|
2,115.8
|
|
|
16.3
|
|
||
Selling and administrative expenses
|
|
1,345.1
|
|
|
9.6
|
|
|
1,226.0
|
|
|
9.4
|
|
||
Advertising expense
|
|
162.9
|
|
|
1.2
|
|
|
147.8
|
|
|
1.1
|
|
||
Income from operations
|
|
819.2
|
|
|
5.9
|
|
|
742.0
|
|
|
5.7
|
|
||
Interest expense, net
|
|
(146.5
|
)
|
|
(1.0
|
)
|
|
(159.5
|
)
|
|
(1.2
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
(2.1
|
)
|
|
—
|
|
|
(24.3
|
)
|
|
(0.2
|
)
|
||
Gain on remeasurement of equity investment
|
|
—
|
|
|
—
|
|
|
98.1
|
|
|
0.8
|
|
||
Other income (expense), net
|
|
1.8
|
|
|
—
|
|
|
(9.3
|
)
|
|
(0.1
|
)
|
||
Income before income taxes
|
|
672.4
|
|
|
4.8
|
|
|
647.0
|
|
|
5.0
|
|
||
Income tax expense
|
|
(248.0
|
)
|
|
(1.8
|
)
|
|
(243.9
|
)
|
|
(1.9
|
)
|
||
Net income
|
|
$
|
424.4
|
|
|
3.0
|
%
|
|
$
|
403.1
|
|
|
3.1
|
%
|
(1)
|
Percentages may not total due to rounding.
|
|
|
Years Ended December 31,
|
|
|
|
|
|||||||||||||||
|
|
2016
|
|
2015
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net sales
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(1)
|
|||||||||
Corporate
(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)(3)(4)
|
|
$
|
453.6
|
|
|
7.7
|
%
|
|
$
|
432.5
|
|
|
7.4
|
%
|
|
4.9
|
%
|
Small Business
(2)(3)(4)
|
|
68.9
|
|
|
6.0
|
|
|
68.3
|
|
|
6.3
|
|
|
0.9
|
|
||
Public
(2)(4)
|
|
368.0
|
|
|
6.6
|
|
|
328.6
|
|
|
6.3
|
|
|
12.0
|
|
||
Other
(4)(5)
|
|
43.6
|
|
|
3.2
|
|
|
27.1
|
|
|
3.2
|
|
|
60.9
|
|
||
Headquarters
(6)
|
|
(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)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(4)
|
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.
|
(5)
|
Includes the financial results for our other operating segments, CDW Canada and CDW UK, which do not meet the reportable segment quantitative thresholds.
|
(6)
|
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.
|
Month of Extinguishment
|
Debt Instrument
|
|
(in millions)
|
|
||||||
|
Amount Extinguished
|
|
Loss Recognized
|
|
||||||
For the Year Ended December 31, 2016
|
|
|
|
|
|
|||||
August 2016
|
Senior Secured Term Loan Facility
|
|
$
|
1,490.4
|
|
|
$
|
(2.1
|
)
|
|
|
Total Loss Recognized
|
|
|
|
$
|
(2.1
|
)
|
|
||
|
|
|
|
|
|
|
||||
For the Year Ended December 31, 2015
|
|
|
|
|
|
|||||
March 2015
|
2019 Senior Notes
|
|
$
|
503.9
|
|
|
$
|
(24.3
|
)
|
(1)
|
|
Total Loss Recognized
|
|
|
|
$
|
(24.3
|
)
|
|
(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.
|
(1)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(2)
|
Includes excess tax benefits related to equity-based compensation.
|
(3)
|
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.
|
(4)
|
Comprised of expenses related to CDW UK.
|
(5)
|
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.
|
(6)
|
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.
|
(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
|
|
|
3.0%
|
|
$
|
403.1
|
|
|
3.1%
|
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 year 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 years 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.
|
Dividend Amount
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
$0.160
|
|
February 7, 2017
|
|
February 24, 2017
|
|
March 10, 2017
|
$0.160
|
|
May 3, 2017
|
|
May 25, 2017
|
|
June 12, 2017
|
$0.160
|
|
August 3, 2017
|
|
August 25, 2017
|
|
September 11, 2017
|
$0.210
|
|
November 1, 2017
|
|
November 24, 2017
|
|
December 11, 2017
|
$0.690
|
|
|
|
|
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
2015
|
||||||
Net cash provided by (used in):
|
|
|
|
|
|
||||||
Operating activities
|
$
|
777.7
|
|
|
$
|
604.0
|
|
|
$
|
277.5
|
|
Investing activities
|
(81.1
|
)
|
|
(65.9
|
)
|
|
(354.4
|
)
|
|||
|
|
|
|
|
|
||||||
Net change in accounts payable - inventory financing
|
(84.0
|
)
|
|
143.6
|
|
|
95.9
|
|
|||
Other financing activities
|
(734.7
|
)
|
|
(448.2
|
)
|
|
(322.4
|
)
|
|||
Financing activities
|
(818.7
|
)
|
|
(304.6
|
)
|
|
(226.5
|
)
|
|||
|
|
|
|
|
|
||||||
Effect of exchange rate changes on cash and cash equivalents
|
2.6
|
|
|
(7.4
|
)
|
|
(3.5
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
$
|
(119.5
|
)
|
|
$
|
226.1
|
|
|
$
|
(306.9
|
)
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
2017
|
|
2016
|
|
Dollar Change
|
||||||
Net income
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
98.6
|
|
Adjustments for the impact of non-cash items
(1)
|
194.4
|
|
|
202.9
|
|
|
(8.5
|
)
|
|||
Net income adjusted for the impact of non-cash items
(2)
|
717.4
|
|
|
627.3
|
|
|
90.1
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
(3)
|
(128.4
|
)
|
|
(179.9
|
)
|
|
51.5
|
|
|||
Merchandise inventory
(4)
|
8.5
|
|
|
(68.5
|
)
|
|
77.0
|
|
|||
Accounts payable-trade
|
231.5
|
|
|
225.1
|
|
|
6.4
|
|
|||
Other
(5)
|
(51.3
|
)
|
|
—
|
|
|
(51.3
|
)
|
|||
Net cash provided by operating activities
|
$
|
777.7
|
|
|
$
|
604.0
|
|
|
$
|
173.7
|
|
(1)
|
Includes items such as Deferred income taxes, Depreciation and amortization, Equity-based compensation expense and Net loss on extinguishments of long-term debt.
|
(2)
|
The change is primarily due to stronger operating results driven by Net sales and Gross profit growth and excess tax benefits recognized related to equity-based compensation.
|
(3)
|
The change in Accounts receivable was primarily due to the timing of sales compared to the same period in 2016.
|
(4)
|
The change in Merchandise inventory was primarily due to higher inventory levels in 2016 compared to 2015 as a result of the timing of inventory shipments to customers, increased returns and higher bill-and-hold orders.
|
(5)
|
The change in Other is driven by an increase in the receivables from vendors due to the growth in business and the settlement of our Restricted Debt Unit Plan liability, partially offset by an increase in accrued marketing expenses.
|
|
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.
|
(1)
|
Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.
|
(2)
|
Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily Cost of sales for the same three-month period.
|
(3)
|
Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.
|
|
Payments Due by Period
|
||||||||||||||||||
(in millions)
|
Total
|
|
2018
|
|
2019-2020
|
|
2021-2022
|
|
2023 & Thereafter
|
||||||||||
Term Loan
(1)
|
$
|
1,762.7
|
|
|
$
|
66.1
|
|
|
$
|
136.4
|
|
|
$
|
134.2
|
|
|
$
|
1,426.0
|
|
CDW UK Term Loan
(1)
|
80.3
|
|
|
8.2
|
|
|
16.0
|
|
|
56.1
|
|
|
—
|
|
|||||
Senior Notes due 2023
(2)
|
682.5
|
|
|
26.3
|
|
|
52.5
|
|
|
52.5
|
|
|
551.2
|
|
|||||
Senior Notes due 2024
(2)
|
796.4
|
|
|
31.6
|
|
|
63.3
|
|
|
63.3
|
|
|
638.2
|
|
|||||
Senior Notes due 2025
(2)
|
840.0
|
|
|
30.0
|
|
|
60.0
|
|
|
60.0
|
|
|
690.0
|
|
|||||
Operating leases
(3)
|
131.8
|
|
|
22.1
|
|
|
42.8
|
|
|
23.5
|
|
|
43.4
|
|
|||||
Mandatory repatriation tax
(4)
|
20.3
|
|
|
1.6
|
|
|
3.2
|
|
|
3.2
|
|
|
12.3
|
|
|||||
Total
|
$
|
4,314.0
|
|
|
$
|
185.9
|
|
|
$
|
374.2
|
|
|
$
|
392.8
|
|
|
$
|
3,361.1
|
|
(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, 2017
. 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)
|
Represents future cash tax payments for the deemed mandatory repatriation of our international operations unremitted earnings, as required by the Tax Cuts and Jobs Act.
|
|
Page
|
/s/ Ernst & Young LLP
|
We have served as the Company’s auditor since 2011.
|
Chicago, Illinois
|
February 28, 2018
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except per-share amounts)
|
|||||||
|
December 31,
|
||||||
|
2017
|
|
2016
|
||||
Assets
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
144.2
|
|
|
$
|
263.7
|
|
Accounts receivable, net of allowance for doubtful accounts of $6.2 and $5.9, respectively
|
2,320.5
|
|
|
2,168.6
|
|
||
Merchandise inventory
|
449.5
|
|
|
452.0
|
|
||
Miscellaneous receivables
|
336.5
|
|
|
234.9
|
|
||
Prepaid expenses and other
|
127.4
|
|
|
118.9
|
|
||
Total current assets
|
3,378.1
|
|
|
3,238.1
|
|
||
Property and equipment, net
|
161.1
|
|
|
163.7
|
|
||
Goodwill
|
2,479.6
|
|
|
2,455.0
|
|
||
Other intangible assets, net
|
897.0
|
|
|
1,055.6
|
|
||
Other assets
|
40.8
|
|
|
36.0
|
|
||
Total Assets
|
$
|
6,956.6
|
|
|
$
|
6,948.4
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable-trade
|
$
|
1,317.7
|
|
|
$
|
1,072.9
|
|
Accounts payable-inventory financing
|
498.0
|
|
|
580.4
|
|
||
Current maturities of long-term debt
|
25.5
|
|
|
18.5
|
|
||
Deferred revenue
|
194.0
|
|
|
172.6
|
|
||
Accrued expenses and other current liabilities:
|
|
|
|
||||
Compensation
|
129.5
|
|
|
167.6
|
|
||
Interest
|
21.6
|
|
|
25.1
|
|
||
Sales taxes
|
43.8
|
|
|
38.0
|
|
||
Advertising
|
89.2
|
|
|
55.8
|
|
||
Income taxes
|
15.1
|
|
|
2.6
|
|
||
Other
|
180.2
|
|
|
147.2
|
|
||
Total current liabilities
|
2,514.6
|
|
|
2,280.7
|
|
||
Long-term liabilities:
|
|
|
|
||||
Debt
|
3,210.0
|
|
|
3,215.9
|
|
||
Deferred income taxes
|
196.3
|
|
|
369.2
|
|
||
Other liabilities
|
52.8
|
|
|
37.1
|
|
||
Total long-term liabilities
|
3,459.1
|
|
|
3,622.2
|
|
||
|
|
|
|
||||
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; 153.1 and 160.3 shares issued, respectively
|
1.5
|
|
|
1.6
|
|
||
Less: treasury stock, $0.01 par value, 0.1 and 0 shares held, respectively
|
—
|
|
|
—
|
|
||
Outstanding common stock, $0.01 par value, 153.0 and 160.3 shares outstanding, respectively
|
1.5
|
|
|
1.6
|
|
||
Paid-in capital
|
2,911.6
|
|
|
2,857.3
|
|
||
Accumulated deficit
|
(1,834.3
|
)
|
|
(1,673.8
|
)
|
||
Accumulated other comprehensive loss
|
(95.9
|
)
|
|
(139.6
|
)
|
||
Total stockholders’ equity
|
982.9
|
|
|
1,045.5
|
|
||
Total Liabilities and Stockholders’ Equity
|
$
|
6,956.6
|
|
|
$
|
6,948.4
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per-share amounts)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Net sales
|
$
|
15,191.5
|
|
|
$
|
13,981.9
|
|
|
$
|
12,988.7
|
|
Cost of sales
|
12,741.6
|
|
|
11,654.7
|
|
|
10,872.9
|
|
|||
Gross profit
|
2,449.9
|
|
|
2,327.2
|
|
|
2,115.8
|
|
|||
Selling and administrative expenses
|
1,410.1
|
|
|
1,345.1
|
|
|
1,226.0
|
|
|||
Advertising expense
|
173.7
|
|
|
162.9
|
|
|
147.8
|
|
|||
Income from operations
|
866.1
|
|
|
819.2
|
|
|
742.0
|
|
|||
Interest expense, net
|
(150.5
|
)
|
|
(146.5
|
)
|
|
(159.5
|
)
|
|||
Net loss on extinguishments of long-term debt
|
(57.4
|
)
|
|
(2.1
|
)
|
|
(24.3
|
)
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
98.1
|
|
|||
Other income (expense), net
|
2.1
|
|
|
1.8
|
|
|
(9.3
|
)
|
|||
Income before income taxes
|
660.3
|
|
|
672.4
|
|
|
647.0
|
|
|||
Income tax expense
|
(137.3
|
)
|
|
(248.0
|
)
|
|
(243.9
|
)
|
|||
Net income
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
|
|
|
|
|
|
||||||
Net income per common share:
|
|
|
|
|
|
||||||
Basic
|
$
|
3.37
|
|
|
$
|
2.59
|
|
|
$
|
2.37
|
|
Diluted
|
$
|
3.31
|
|
|
$
|
2.56
|
|
|
$
|
2.35
|
|
|
|
|
|
|
|
||||||
Weighted-average common shares outstanding:
|
|
|
|
|
|
||||||
Basic
|
155.4
|
|
|
163.6
|
|
|
170.3
|
|
|||
Diluted
|
158.2
|
|
|
166.0
|
|
|
171.8
|
|
|||
|
|
|
|
|
|
||||||
Cash dividends declared per common share
|
$
|
0.6900
|
|
|
$
|
0.4825
|
|
|
$
|
0.3100
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
|
||||||||||||
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Net income
|
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
Foreign currency translation, net
(1)
|
|
43.5
|
|
|
(78.5
|
)
|
|
(44.5
|
)
|
|||
Unrealized gain from hedge accounting, net
(2)
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Other comprehensive income (loss), net of tax
|
|
43.7
|
|
|
(78.5
|
)
|
|
(44.5
|
)
|
|||
Comprehensive income
|
|
$
|
566.7
|
|
|
$
|
345.9
|
|
|
$
|
358.6
|
|
(1)
|
Net of tax expense of
$0.2 million
,
$0.2 million
and
$0.3 million
, respectively.
|
(2)
|
Net of tax expense of
$0.1 million
for 2017.
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(in millions)
|
|||||||||||||||||||||||||||||||||||||
|
|
Preferred Stock
|
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Shares
|
|
Amount
|
|
Paid-in
Capital
|
|
Accumulated
Deficit
|
|
Accumulated
Other
Comprehensive Loss
|
|
Total
Stockholders’ Equity |
|||||||||||||||||
Balance as of 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 as of
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
|
|
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
37.9
|
|
|||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|||||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
|||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.7
|
|
|
(107.6
|
)
|
|
—
|
|
|
(106.9
|
)
|
|||||||
Incentive compensation plan shares withheld for taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
—
|
|
|
(7.6
|
)
|
|
(42.0
|
)
|
|
—
|
|
|
(49.6
|
)
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
523.0
|
|
|
—
|
|
|
523.0
|
|
|||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(8.9
|
)
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(533.9
|
)
|
|
—
|
|
|
(534.0
|
)
|
|||||||
Unrealized gain from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.2
|
|
|||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
43.5
|
|
|
43.5
|
|
|||||||
Balance as of
December 31, 2017
|
|
—
|
|
|
$
|
—
|
|
|
153.1
|
|
|
$
|
1.5
|
|
|
0.1
|
|
|
$
|
—
|
|
|
$
|
2,911.6
|
|
|
$
|
(1,834.3
|
)
|
|
$
|
(95.9
|
)
|
|
$
|
982.9
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
|||||||||||
|
Years Ended December 31,
|
||||||||||
|
2017
|
|
2016
|
|
2015
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
523.0
|
|
|
$
|
424.4
|
|
|
$
|
403.1
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Depreciation and amortization
|
260.9
|
|
|
254.5
|
|
|
227.4
|
|
|||
Equity-based compensation expense
|
43.7
|
|
|
39.2
|
|
|
31.2
|
|
|||
Deferred income taxes
|
(172.7
|
)
|
|
(97.2
|
)
|
|
(54.5
|
)
|
|||
Amortization of deferred financing costs, debt premium and debt discount, net
|
5.2
|
|
|
6.5
|
|
|
6.4
|
|
|||
Net loss on extinguishments of long-term debt
|
57.4
|
|
|
2.1
|
|
|
24.3
|
|
|||
Loss from equity investments
|
—
|
|
|
—
|
|
|
11.2
|
|
|||
Gain on remeasurement of equity investment
|
—
|
|
|
—
|
|
|
(98.1
|
)
|
|||
Mark-to-market (gain) loss on interest rate cap agreements
|
(0.5
|
)
|
|
(2.6
|
)
|
|
2.1
|
|
|||
Other
|
0.4
|
|
|
0.4
|
|
|
0.3
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
|
(128.4
|
)
|
|
(179.9
|
)
|
|
(342.6
|
)
|
|||
Merchandise inventory
|
8.5
|
|
|
(68.5
|
)
|
|
(31.5
|
)
|
|||
Other assets
|
(116.4
|
)
|
|
(50.1
|
)
|
|
(71.2
|
)
|
|||
Accounts payable-trade
|
231.5
|
|
|
225.1
|
|
|
100.5
|
|
|||
Other current liabilities
|
51.4
|
|
|
80.2
|
|
|
47.5
|
|
|||
Long-term liabilities
|
13.7
|
|
|
(30.1
|
)
|
|
21.4
|
|
|||
Net cash provided by operating activities
|
777.7
|
|
|
604.0
|
|
|
277.5
|
|
|||
Cash flows used in investing activities:
|
|
|
|
|
|
||||||
Capital expenditures
|
(81.1
|
)
|
|
(63.5
|
)
|
|
(90.1
|
)
|
|||
Premium payments on interest rate cap agreements
|
—
|
|
|
(2.4
|
)
|
|
(0.5
|
)
|
|||
Acquisition of business, net of cash acquired
|
—
|
|
|
—
|
|
|
(263.8
|
)
|
|||
Net cash used in investing activities
|
(81.1
|
)
|
|
(65.9
|
)
|
|
(354.4
|
)
|
|||
Cash flows used in financing activities:
|
|
|
|
|
|
||||||
Proceeds from borrowings under revolving credit facility
|
1,560.7
|
|
|
338.8
|
|
|
314.5
|
|
|||
Repayments of borrowings under revolving credit facility
|
(1,560.7
|
)
|
|
(338.8
|
)
|
|
(314.5
|
)
|
|||
Repayments of long-term debt
|
(14.9
|
)
|
|
(20.6
|
)
|
|
(32.8
|
)
|
|||
Proceeds from issuance of long-term debt
|
2,083.0
|
|
|
1,483.0
|
|
|
525.0
|
|
|||
Payments to extinguish long-term debt
|
(2,121.3
|
)
|
|
(1,490.4
|
)
|
|
(525.3
|
)
|
|||
Net change in other long-term obligation
|
(3.8
|
)
|
|
15.7
|
|
|
—
|
|
|||
Payments of debt financing costs
|
(9.6
|
)
|
|
(5.9
|
)
|
|
(6.8
|
)
|
|||
Net change in accounts payable-inventory financing
|
(84.0
|
)
|
|
143.6
|
|
|
95.9
|
|
|||
Effective portion of interest rate cap agreements
|
0.4
|
|
|
—
|
|
|
—
|
|
|||
Proceeds from stock option exercises
|
13.0
|
|
|
7.4
|
|
|
2.4
|
|
|||
Proceeds from Coworker Stock Purchase Plan
|
10.3
|
|
|
9.3
|
|
|
8.7
|
|
|||
Repurchases of common stock
|
(534.0
|
)
|
|
(367.4
|
)
|
|
(241.3
|
)
|
|||
Payment of incentive compensation plan withholding taxes
|
(49.6
|
)
|
|
—
|
|
|
0.6
|
|
|||
Dividends
|
(106.9
|
)
|
|
(78.7
|
)
|
|
(52.9
|
)
|
|||
Principal payments under capital lease obligations
|
(1.3
|
)
|
|
(0.6
|
)
|
|
—
|
|
|||
Net cash used in financing activities
|
(818.7
|
)
|
|
(304.6
|
)
|
|
(226.5
|
)
|
|||
Effect of exchange rate changes on cash and cash equivalents
|
2.6
|
|
|
(7.4
|
)
|
|
(3.5
|
)
|
|||
Net (decrease) increase in cash and cash equivalents
|
(119.5
|
)
|
|
226.1
|
|
|
(306.9
|
)
|
|||
Cash and cash equivalents – beginning of period
|
263.7
|
|
|
37.6
|
|
|
344.5
|
|
|||
Cash and cash equivalents – end of period
|
$
|
144.2
|
|
|
$
|
263.7
|
|
|
$
|
37.6
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
|
||||||
Interest paid
|
$
|
(148.5
|
)
|
|
$
|
(144.3
|
)
|
|
$
|
(154.6
|
)
|
Taxes paid, net
|
$
|
(275.7
|
)
|
|
$
|
(329.2
|
)
|
|
$
|
(300.2
|
)
|
|
|
|
|
|
|
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
|
5 to 25 years
|
Computer and data processing equipment
|
3 to 5 years
|
Computer software
|
3 to 5 years
|
Furniture and fixtures
|
5 to 10 years
|
Classification
|
Estimated
Useful Lives |
Customer relationships and contracts
|
3 to 14 years
|
Trade name
|
generally 20 years
|
Internally developed software
|
3 to 5 years
|
Other
|
1 to 10 years
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Foreign currency translation
|
|
$
|
(96.1
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
(61.1
|
)
|
Unrealized gain from hedge accounting
|
|
0.2
|
|
|
—
|
|
|
—
|
|
|||
Accumulated other comprehensive loss
|
|
$
|
(95.9
|
)
|
|
$
|
(139.6
|
)
|
|
$
|
(61.1
|
)
|
2.
|
Recent Accounting Pronouncements
|
•
|
The accounting for bill and hold transactions will result in revenue for certain of those arrangements being recognized earlier than under current GAAP. This change will not materially impact Net sales or Net income;
|
•
|
In certain security software transactions when accompanying third-party delivered software assurance is deemed to be critical or essential to the core functionality of the software license, the Company has determined that the software license and the accompanying third-party delivered software assurance are a single performance obligation. The value of the product is primarily the accompanying support delivered by a third-party and therefore the Company is acting as an agent in these transactions and will recognize them on a net basis. The Company currently recognizes revenue from the software license on a gross basis (i.e., acting as a principal) and accompanying third-party delivered software assurance on a net basis. This change will reduce both Net sales and Cost of sales with no impact on reported Gross profit.
|
•
|
The accounting for revenue related to hardware, software (excluding the above) and services will remain substantially unchanged.
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in millions)
(except per share amounts)
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
|
||||||||||||
Net sales
|
|
$
|
15,191.5
|
|
|
$
|
(358.6
|
)
|
|
$
|
14,832.9
|
|
|
$
|
13,981.9
|
|
|
$
|
(309.2
|
)
|
|
$
|
13,672.7
|
|
Gross profit
|
|
2,449.9
|
|
|
0.3
|
|
|
$
|
2,450.2
|
|
|
2,327.2
|
|
|
1.1
|
|
|
2,328.3
|
|
|||||
Gross profit margin
|
|
16.1
|
%
|
|
40 bps
|
|
|
16.5
|
%
|
|
16.6
|
%
|
|
40 bps
|
|
|
17.0
|
%
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income from operations
|
|
866.1
|
|
|
0.4
|
|
|
866.5
|
|
|
819.2
|
|
|
0.8
|
|
|
820.0
|
|
||||||
Income tax expense
|
|
(137.3
|
)
|
|
(0.3
|
)
|
|
(137.6
|
)
|
|
(248.0
|
)
|
|
(0.1
|
)
|
|
(248.1
|
)
|
||||||
Net income
|
|
$
|
523.0
|
|
|
$
|
0.1
|
|
|
$
|
523.1
|
|
|
$
|
424.4
|
|
|
$
|
0.7
|
|
|
$
|
425.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net income per common share
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic
|
|
$
|
3.37
|
|
|
$
|
—
|
|
|
$
|
3.37
|
|
|
$
|
2.59
|
|
|
$
|
0.01
|
|
|
$
|
2.60
|
|
Diluted
|
|
$
|
3.31
|
|
|
$
|
—
|
|
|
$
|
3.31
|
|
|
$
|
2.56
|
|
|
$
|
—
|
|
|
$
|
2.56
|
|
|
|
December 31, 2017
|
|
December 31, 2016
|
||||||||||||||||||||
(in millions)
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
(1)
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
|
||||||||||||
Accounts receivable
|
|
$
|
2,320.5
|
|
|
$
|
8.8
|
|
|
$
|
2,329.3
|
|
|
$
|
2,168.6
|
|
|
$
|
0.3
|
|
|
$
|
2,168.9
|
|
Merchandise inventory
|
|
449.5
|
|
|
(38.0
|
)
|
|
411.5
|
|
|
452.0
|
|
|
(28.1
|
)
|
|
423.9
|
|
||||||
Miscellaneous receivables
|
|
336.5
|
|
|
6.5
|
|
|
343.0
|
|
|
234.9
|
|
|
2.6
|
|
|
237.5
|
|
||||||
Prepaid expenses and other
|
|
127.4
|
|
|
40.9
|
|
|
168.3
|
|
|
118.9
|
|
|
35.3
|
|
|
154.2
|
|
||||||
Total current assets
|
|
3,378.1
|
|
|
18.2
|
|
|
3,396.3
|
|
|
3,238.1
|
|
|
10.1
|
|
|
3,248.2
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Other assets
|
|
40.8
|
|
|
(8.1
|
)
|
|
32.7
|
|
|
36.0
|
|
|
(0.1
|
)
|
|
35.9
|
|
||||||
Total assets
|
|
6,956.6
|
|
|
10.1
|
|
|
6,966.7
|
|
|
6,948.4
|
|
|
10.0
|
|
|
6,958.4
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deferred revenue
|
|
194.0
|
|
|
(35.2
|
)
|
|
158.8
|
|
|
172.6
|
|
|
(29.1
|
)
|
|
143.5
|
|
||||||
Income tax payable
|
|
15.1
|
|
|
1.1
|
|
|
16.2
|
|
|
2.6
|
|
|
0.7
|
|
|
3.3
|
|
||||||
Other accrued expenses
|
|
180.2
|
|
|
41.6
|
|
|
221.8
|
|
|
147.2
|
|
|
36.0
|
|
|
183.2
|
|
||||||
Total current liabilities
|
|
2,514.6
|
|
|
7.5
|
|
|
2,522.1
|
|
|
2,280.7
|
|
|
7.6
|
|
|
2,288.3
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Total liabilities
|
|
5,973.7
|
|
|
7.5
|
|
|
5,981.1
|
|
|
5,902.9
|
|
|
7.6
|
|
|
5,910.5
|
|
||||||
Total stockholders’ equity
|
|
$
|
982.9
|
|
|
$
|
2.7
|
|
|
$
|
985.6
|
|
|
$
|
1,045.5
|
|
|
$
|
2.4
|
|
|
$
|
1,047.9
|
|
(1)
|
Amounts may not cross-foot due to rounding.
|
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.
|
(in millions)
|
|
December 31, 2015
|
||
Net sales
|
|
$
|
13,507.6
|
|
Net income
|
|
$
|
363.7
|
|
(i)
|
Excludes acquisition and integration expenses directly related to the transaction.
|
(ii)
|
Includes additional amortization expense related to the fair value of acquired intangibles.
|
(iii)
|
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.
|
(iv)
|
Excludes the Company’s share of net income/loss from its previously held
35%
equity investment prior to the completion of the acquisition.
|
(v)
|
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.
|
(vi)
|
Includes additional non-cash equity-based compensation related to equity awards granted to CDW UK coworkers after the completion of the acquisition.
|
(vii)
|
Includes the elimination of inter-company sales transactions prior to the completion of the acquisition.
|
4.
|
Miscellaneous Receivables
|
|
|
December 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Vendor partner receivables
|
|
$
|
279.2
|
|
|
$
|
186.6
|
|
Other
|
|
57.3
|
|
|
48.3
|
|
||
Total
|
|
$
|
336.5
|
|
|
$
|
234.9
|
|
5.
|
Property and Equipment
|
|
|
December 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Building and leasehold improvements
|
|
$
|
123.0
|
|
|
$
|
120.4
|
|
Computer and data processing equipment
|
|
116.4
|
|
|
101.7
|
|
||
Machinery and equipment
|
|
45.6
|
|
|
43.2
|
|
||
Land
|
|
27.7
|
|
|
27.7
|
|
||
Furnitures and fixtures
|
|
22.7
|
|
|
23.8
|
|
||
Construction in progress
|
|
17.9
|
|
|
20.4
|
|
||
Computer software
|
|
9.6
|
|
|
10.8
|
|
||
Property and equipment, gross
|
|
362.9
|
|
|
348.0
|
|
||
Less: accumulated depreciation
|
|
(201.8
|
)
|
|
(184.3
|
)
|
||
Property and equipment, net
|
|
$
|
161.1
|
|
|
$
|
163.7
|
|
6.
|
Goodwill and Other Intangible Assets
|
(in millions)
|
|
Corporate
|
|
Small Business
(2)
|
|
Public
|
|
Other
(4)
|
|
Consolidated
|
||||||||||
Balance at December 31, 2014
(1)
|
|
$
|
1,045.9
|
|
|
$
|
185.9
|
|
|
$
|
911.3
|
|
|
$
|
74.5
|
|
|
$
|
2,217.6
|
|
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(22.4
|
)
|
|
(22.4
|
)
|
|||||
Acquisition
|
|
—
|
|
|
—
|
|
|
—
|
|
|
305.2
|
|
|
305.2
|
|
|||||
Balance at December 31, 2015
(1)
|
|
1,045.9
|
|
|
185.9
|
|
|
911.3
|
|
|
357.3
|
|
|
2,500.4
|
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45.4
|
)
|
|
(45.4
|
)
|
|||||
CDW Advanced Services Allocation
(3)
|
|
28.2
|
|
|
—
|
|
|
18.3
|
|
|
(46.5
|
)
|
|
—
|
|
|||||
Balance at December 31, 2016
(1)
|
|
1,074.1
|
|
|
185.9
|
|
|
929.6
|
|
|
265.4
|
|
|
2,455.0
|
|
|||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24.6
|
|
|
24.6
|
|
|||||
Balances as of December 31, 2017
(1)
|
|
$
|
1,074.1
|
|
|
$
|
185.9
|
|
|
$
|
929.6
|
|
|
$
|
290.0
|
|
|
$
|
2,479.6
|
|
(1)
|
Goodwill is net of accumulated impairment losses of
$1,571 million
,
$354 million
and
$28 million
related to the Corporate, Public and Other segments, respectively.
|
(2)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
(3)
|
Effective January 1, 2016, the CDW Advanced Services business is included in the Company's Corporate and Public segments.
|
(4)
|
Other is comprised of Canada and CDW UK operating segments.
|
(in millions)
|
|
|
|
|
|
|
||||||
December 31, 2017
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net Carrying Amount
|
||||||
Customer relationships and contracts
|
|
$
|
2,106.8
|
|
|
$
|
(1,490.8
|
)
|
|
$
|
616.0
|
|
Trade name
|
|
422.2
|
|
|
(216.3
|
)
|
|
205.9
|
|
|||
Internally developed software
|
|
162.6
|
|
|
(89.6
|
)
|
|
73.0
|
|
|||
Other
|
|
2.9
|
|
|
(0.8
|
)
|
|
2.1
|
|
|||
Total
|
|
$
|
2,694.5
|
|
|
$
|
(1,797.5
|
)
|
|
$
|
897.0
|
|
|
|
|
|
|
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
||||||
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
|
|
7.
|
Inventory Financing Agreements
|
|
|
December 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Revolving Loan inventory financing agreement
(1)
|
|
$
|
480.9
|
|
|
$
|
558.3
|
|
Other inventory financing agreements
(2)
|
|
17.1
|
|
|
22.1
|
|
||
Accounts payable-inventory financing
|
|
$
|
498.0
|
|
|
$
|
580.4
|
|
(1)
|
The Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”) includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
|
(2)
|
The Company also maintains other inventory financing agreements with financial intermediaries to facilitate the purchase of inventory from certain vendors. As of
December 31, 2017 and 2016
, amounts collateralized by the inventory purchased under these financing agreements and a second lien on the related accounts receivable were
$1 million
and
$3 million
, respectively.
|
8.
|
Lease Commitments
|
9.
|
Financial Instruments
|
(dollars in millions)
|
|
Interest Rate
|
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
(1)
|
|
3.7
|
%
|
|
1,468.0
|
|
|
(2.0
|
)
|
|
1,466.0
|
|
|||
CDW UK term loan
|
|
1.9
|
%
|
|
75.7
|
|
|
(1.4
|
)
|
|
74.3
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(4.5
|
)
|
|
520.5
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(5.2
|
)
|
|
569.8
|
|
|||
Senior notes due 2025
|
|
5.0
|
%
|
|
600.0
|
|
|
(7.3
|
)
|
|
592.7
|
|
|||
Other long-term obligations
|
|
|
|
12.2
|
|
|
—
|
|
|
12.2
|
|
||||
Total debt
|
|
|
|
3,255.9
|
|
|
(20.4
|
)
|
|
3,235.5
|
|
||||
Less current maturities
|
|
|
|
(25.5
|
)
|
|
—
|
|
|
(25.5
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,230.4
|
|
|
$
|
(20.4
|
)
|
|
$
|
3,210.0
|
|
(1)
|
The Senior secured term loan facility has a variable interest rate, which has effectively been capped through the use of an interest rate cap (see
Note 9
(Financial Instruments)
). The interest rate disclosed represents the variable interest rate in effect as of year ended
December 31, 2017
.
|
(dollars in millions)
|
|
Interest Rate
|
|
Principal
|
|
Unamortized Discount and Deferred Financing Costs
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
|
|
3.3
|
%
|
|
1,483.0
|
|
|
(14.9
|
)
|
|
1,468.1
|
|
|||
CDW UK term loan
|
|
1.8
|
%
|
|
69.1
|
|
|
(1.6
|
)
|
|
67.5
|
|
|||
Senior notes due 2022
|
|
6.0
|
%
|
|
600.0
|
|
|
(5.6
|
)
|
|
594.4
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(5.3
|
)
|
|
519.7
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(6.0
|
)
|
|
569.0
|
|
|||
Other long-term obligations
|
|
|
|
15.7
|
|
|
—
|
|
|
15.7
|
|
||||
Total 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
|
|
|
|
December 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Fair value
|
|
$
|
3,366.5
|
|
|
$
|
3,334.8
|
|
Carrying value
|
|
3,255.9
|
|
|
3,267.8
|
|
11.
|
Income Taxes
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Current:
|
|
|
|
|
|
|
||||||
Federal
|
|
$
|
258.9
|
|
|
$
|
295.7
|
|
|
$
|
258.5
|
|
State
|
|
29.8
|
|
|
34.9
|
|
|
28.6
|
|
|||
Foreign
|
|
21.3
|
|
|
16.8
|
|
|
10.1
|
|
|||
Total current
|
|
310.0
|
|
|
347.4
|
|
|
297.2
|
|
|||
Deferred:
|
|
|
|
|
|
|
||||||
Domestic
|
|
(168.0
|
)
|
|
(90.5
|
)
|
|
(48.5
|
)
|
|||
Foreign
|
|
(4.7
|
)
|
|
(8.9
|
)
|
|
(4.8
|
)
|
|||
Total deferred
|
|
(172.7
|
)
|
|
(99.4
|
)
|
|
(53.3
|
)
|
|||
Income tax expense
|
|
$
|
137.3
|
|
|
$
|
248.0
|
|
|
$
|
243.9
|
|
|
|
Years Ended December 31,
|
|||||||||||||||||||
(dollars in millions)
|
|
2017
|
|
2016
|
|
2015
|
|||||||||||||||
Statutory federal income tax rate
|
|
$
|
231.1
|
|
|
35.0
|
%
|
|
$
|
235.4
|
|
|
35.0
|
%
|
|
$
|
226.4
|
|
|
35.0
|
%
|
State taxes, net of federal effect
(1)
|
|
18.3
|
|
|
2.8
|
|
|
17.8
|
|
|
2.6
|
|
|
16.5
|
|
|
2.6
|
|
|||
Excess tax benefit of equity awards
|
|
(36.2
|
)
|
|
(5.5
|
)
|
|
(1.6
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|||
Effect of rates different than statutory
|
|
(6.3
|
)
|
|
(1.0
|
)
|
|
(4.5
|
)
|
|
(0.7
|
)
|
|
(1.9
|
)
|
|
(0.3
|
)
|
|||
Foreign withholding tax
|
|
1.0
|
|
|
0.2
|
|
|
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
|
)
|
|||
Effect of US Tax Cuts and Jobs Act on Deferred Taxes and Mandatory Repatriation Tax
|
|
(75.5
|
)
|
|
(11.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Other
|
|
4.9
|
|
|
0.7
|
|
|
1.6
|
|
|
0.3
|
|
|
3.6
|
|
|
0.5
|
|
|||
Effective tax rate
|
|
$
|
137.3
|
|
|
20.8
|
%
|
|
$
|
248.0
|
|
|
36.9
|
%
|
|
$
|
243.9
|
|
|
37.7
|
%
|
(1)
|
The impact of state taxes on excess tax benefits of equity awards and the US Tax Cuts and Jobs Act are presented on the respective separate lines in the effective tax rate reconciliation.
|
|
|
December 31,
|
||||||
(in millions)
|
|
2017
|
|
2016
|
||||
Deferred tax assets:
|
|
|
|
|
||||
Equity compensation plans
|
|
$
|
18.7
|
|
|
$
|
29.2
|
|
Payroll and benefits
|
|
8.0
|
|
|
22.7
|
|
||
Deferred interest
|
|
6.8
|
|
|
13.9
|
|
||
Net operating loss and credit carryforwards, net
|
|
28.1
|
|
|
12.7
|
|
||
Rent
|
|
7.4
|
|
|
11.0
|
|
||
Accounts receivable
|
|
5.4
|
|
|
8.3
|
|
||
Other
|
|
8.0
|
|
|
6.2
|
|
||
Trade credits
|
|
1.5
|
|
|
0.6
|
|
||
Total deferred tax assets
|
|
83.9
|
|
|
104.6
|
|
||
|
|
|
|
|
||||
Deferred tax liabilities:
|
|
|
|
|
||||
Software and intangibles
|
|
194.5
|
|
|
337.4
|
|
||
Deferred income
|
|
18.6
|
|
|
58.3
|
|
||
International investments
|
|
19.2
|
|
|
31.3
|
|
||
Property and equipment
|
|
20.4
|
|
|
30.3
|
|
||
Other
|
|
12.0
|
|
|
15.3
|
|
||
Total deferred tax liabilities
|
|
264.7
|
|
|
472.6
|
|
||
Deferred tax asset valuation allowance
|
|
15.5
|
|
|
1.2
|
|
||
Net deferred tax liabilities
|
|
$
|
196.3
|
|
|
$
|
369.2
|
|
12.
|
Stockholders’ Equity
|
13.
|
Equity-Based Compensation
|
|
|
Years Ended December 31,
|
||||||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
|
||||||
Equity-based compensation expense
|
|
$
|
43.7
|
|
|
$
|
39.2
|
|
|
$
|
31.2
|
|
Income tax benefit
(1)
|
|
(15.3
|
)
|
|
(13.3
|
)
|
|
(10.9
|
)
|
|||
Equity-based compensation expense (net of tax)
|
|
$
|
28.4
|
|
|
$
|
25.9
|
|
|
$
|
20.3
|
|
(1)
|
Represents equity-based compensation tax expense at the statutory tax rates. This line does not include any excess tax benefits associated with equity awards separately disclosed in
Note 11
(Income Taxes)
.
|
|
|
Years Ended December 31,
|
||||||||||
|
|
2017
|
|
2016
|
|
2015
|
||||||
Grant date fair value
|
|
$
|
12.27
|
|
|
$
|
8.55
|
|
|
$
|
11.13
|
|
Volatility
(1)
|
|
22.00
|
%
|
|
25.00
|
%
|
|
30.00
|
%
|
|||
Risk-free rate
(2)
|
|
2.08
|
%
|
|
1.47
|
%
|
|
1.75
|
%
|
|||
Expected dividend yield
|
|
1.09
|
%
|
|
1.08
|
%
|
|
0.72
|
%
|
|||
Expected term (in years)
(3)
|
|
6.0
|
|
|
6.0
|
|
|
6.0
|
|
(1)
|
Based upon an assessment of the two-year and five-year historical volatility 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, 2017
|
|
3,781,051
|
|
|
$
|
29.36
|
|
|
|
|
|
||
Granted
|
|
1,213,299
|
|
|
58.97
|
|
|
|
|
|
|||
Forfeited/Expired
|
|
(59,834
|
)
|
|
45.76
|
|
|
|
|
|
|||
Exercised
(1)
|
|
(476,520
|
)
|
|
27.37
|
|
|
|
|
|
|||
Outstanding at December 31, 2017
|
|
4,457,996
|
|
|
$
|
37.41
|
|
|
7.21
|
|
$
|
143.0
|
|
|
|
|
|
|
|
|
|
|
|||||
Vested and exercisable at December 31, 2017
|
|
2,372,046
|
|
|
$
|
25.90
|
|
|
5.97
|
|
$
|
103.4
|
|
Expected to vest at December 31, 2017
|
|
2,056,814
|
|
|
$
|
50.44
|
|
|
8.61
|
|
$
|
39.2
|
|
(1)
|
The total intrinsic value of stock options exercised during the years ended
December 31, 2017, 2016 and 2015
was
$17 million
,
$7 million
and
$2 million
, respectively.
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Nonvested at January 1, 2017
|
|
1,179,488
|
|
|
$
|
19.52
|
|
Granted
(1)
|
|
25,493
|
|
|
58.90
|
|
|
Vested
(2)
|
|
(1,032,821
|
)
|
|
17.77
|
|
|
Forfeited
|
|
(41,091
|
)
|
|
23.00
|
|
|
Nonvested at December 31, 2017
|
|
131,069
|
|
|
$
|
40.11
|
|
(1)
|
The weighted-average grant date fair value of RSUs granted during the years ended
December 31, 2017, 2016 and 2015
was
$58.90
,
$39.82
and
$36.24
, respectively.
|
(2)
|
The aggregate fair value of RSUs that vested during the years ended
December 31, 2017, 2016 and 2015
was
$18 million
,
$1 million
and
$1 million
, respectively.
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Nonvested at January 1, 2017
|
|
363,947
|
|
|
$
|
38.92
|
|
Granted
(1)
|
|
254,451
|
|
|
59.00
|
|
|
Attainment Adjustment
(2)
|
|
361,880
|
|
|
24.40
|
|
|
Vested
(3)
|
|
(530,569
|
)
|
|
37.84
|
|
|
Forfeited
|
|
(30,736
|
)
|
|
47.28
|
|
|
Nonvested at December 31, 2017
|
|
418,973
|
|
|
$
|
50.75
|
|
(1)
|
The weighted-average grant date fair value of PSUs granted during the years ended
December 31, 2017, 2016 and 2015
was
$59.00
,
$39.91
and
$37.83
, respectively.
|
(2)
|
During the year ended December 31, 2017, the attainment on PSUs vested at December 31, 2016 was adjusted to reflect actual performance. The weighted-average grant date fair value of PSUs included in the attainment adjustment is
$24.40
.
|
(3)
|
The aggregate fair value of PSUs that vested during the years ended December 31, 2017 and 2016 was
$20 million
and
$9 million
, respectively.
No
PSUs vested during the year ended December 31, 2015.
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Nonvested at January 1, 2017
|
|
246,012
|
|
|
$
|
38.96
|
|
Granted
(1)
|
|
2,714
|
|
|
—
|
|
|
Vested
(2)
|
|
(121,266
|
)
|
|
37.79
|
|
|
Forfeited
|
|
(4,993
|
)
|
|
39.79
|
|
|
Nonvested at December 31, 2017
|
|
122,467
|
|
|
$
|
40.08
|
|
(1)
|
The weighted-average grant date fair value of PSAs granted during the year ended December 31, 2017 was
zero
as the units granted consisted of only dividends on previously granted units. The weighted-average grant date fair value of PSAs granted during the years ended December 31, 2016 and 2015 was
$40.06
and
$37.79
, respectively.
|
(2)
|
The aggregate fair value of PSAs that vested during the year ended
December 31, 2017
was
$5 million
.
No
PSAs vested during the years ended December 31, 2016 and 2015.
|
|
|
Number of Units
|
|
Weighted-Average Grant-Date Fair Value
|
|||
Nonvested at January 1, 2017
|
|
26,052
|
|
|
$
|
17.00
|
|
Granted
|
|
—
|
|
|
—
|
|
|
Vested
(1)
|
|
(25,398
|
)
|
|
17.00
|
|
|
Forfeited
|
|
(654
|
)
|
|
17.00
|
|
|
Nonvested at December 31, 2017
|
|
—
|
|
|
$
|
—
|
|
(1)
|
The aggregate fair value of restricted stock that vested during the years ended
December 31, 2017, 2016 and 2015
was less than
$1 million
,
$1 million
and
$3 million
, respectively.
|
14.
|
Earnings Per Share
|
|
|
Years Ended December 31,
|
|||||||
(in millions)
|
|
2017
|
|
2016
|
|
2015
|
|||
Basic weighted-average shares outstanding
|
|
155.4
|
|
|
163.6
|
|
|
170.3
|
|
Effect of dilutive securities
(1)
|
|
2.8
|
|
|
2.4
|
|
|
1.5
|
|
Diluted weighted-average shares outstanding
(2)
|
|
158.2
|
|
|
166.0
|
|
|
171.8
|
|
(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, 2017, 2016 and 2015
, respectively, as their inclusion would have had an anti-dilutive effect.
|
15.
|
Coworker Retirement and Other Compensation Benefits
|
(in millions)
|
Corporate
(1)
|
|
Small Business
(1)
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
2017:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
$
|
6,347.0
|
|
|
$
|
1,246.5
|
|
|
$
|
6,037.5
|
|
|
$
|
1,560.5
|
|
|
$
|
—
|
|
|
$
|
15,191.5
|
|
Income (loss) from operations
|
487.0
|
|
|
74.4
|
|
|
374.0
|
|
|
57.9
|
|
|
(127.2
|
)
|
|
866.1
|
|
||||||
Depreciation and amortization expense
|
(83.1
|
)
|
|
(20.7
|
)
|
|
(44.8
|
)
|
|
(30.9
|
)
|
|
(81.4
|
)
|
|
(260.9
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
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
|
)
|
|
Year Ended
December 31, 2017
|
|
Year Ended
December 31, 2016 (1) |
|
Year Ended
December 31, 2015 (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
|
$
|
3,490.9
|
|
|
23.1
|
%
|
|
$
|
2,921.6
|
|
|
20.9
|
%
|
|
$
|
2,537.3
|
|
|
19.5
|
%
|
Netcomm Products
|
2,042.9
|
|
|
13.4
|
|
|
1,958.2
|
|
|
14.0
|
|
|
1,915.0
|
|
|
14.7
|
|
|||
Desktops
|
1,159.4
|
|
|
7.6
|
|
|
1,050.0
|
|
|
7.5
|
|
|
965.6
|
|
|
7.4
|
|
|||
Video
|
1,076.9
|
|
|
7.1
|
|
|
962.1
|
|
|
6.9
|
|
|
853.8
|
|
|
6.6
|
|
|||
Enterprise and Data Storage (Including Drives)
|
1,071.5
|
|
|
7.1
|
|
|
1,053.1
|
|
|
7.5
|
|
|
1,067.2
|
|
|
8.2
|
|
|||
Other Hardware
|
3,100.3
|
|
|
20.4
|
|
|
3,042.6
|
|
|
21.8
|
|
|
2,950.5
|
|
|
22.7
|
|
|||
Total Hardware
|
11,941.9
|
|
|
78.7
|
|
|
10,987.6
|
|
|
78.6
|
|
|
10,289.4
|
|
|
79.1
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Software
|
2,540.1
|
|
|
16.7
|
|
|
2,389.3
|
|
|
17.1
|
|
|
2,152.3
|
|
|
16.6
|
|
|||
Services
(2)
|
611.3
|
|
|
4.0
|
|
|
575.1
|
|
|
4.1
|
|
|
467.7
|
|
|
3.6
|
|
|||
Other
(3)
|
98.2
|
|
|
0.6
|
|
|
29.9
|
|
|
0.2
|
|
|
79.3
|
|
|
0.7
|
|
|||
Total Net sales
|
$
|
15,191.5
|
|
|
100.0
|
%
|
|
$
|
13,981.9
|
|
|
100.0
|
%
|
|
$
|
12,988.7
|
|
|
100.0
|
%
|
(1)
|
Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the year ended
December 31, 2017
.
|
(2)
|
Certain software and services revenue are 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, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries |
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
113.7
|
|
|
$
|
—
|
|
|
$
|
32.4
|
|
|
$
|
—
|
|
|
$
|
(1.9
|
)
|
|
$
|
144.2
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
2,007.7
|
|
|
312.8
|
|
|
—
|
|
|
—
|
|
|
2,320.5
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
375.7
|
|
|
73.8
|
|
|
—
|
|
|
—
|
|
|
449.5
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
103.9
|
|
|
205.0
|
|
|
27.6
|
|
|
—
|
|
|
—
|
|
|
336.5
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
18.0
|
|
|
61.4
|
|
|
48.0
|
|
|
—
|
|
|
—
|
|
|
127.4
|
|
|||||||
Total current assets
|
—
|
|
|
235.6
|
|
|
2,649.8
|
|
|
494.6
|
|
|
—
|
|
|
(1.9
|
)
|
|
3,378.1
|
|
|||||||
Property and equipment, net
|
—
|
|
|
95.0
|
|
|
43.5
|
|
|
22.6
|
|
|
—
|
|
|
—
|
|
|
161.1
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
288.8
|
|
|
—
|
|
|
—
|
|
|
2,479.6
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
280.1
|
|
|
424.5
|
|
|
192.4
|
|
|
—
|
|
|
—
|
|
|
897.0
|
|
|||||||
Other assets
|
1.7
|
|
|
30.7
|
|
|
217.3
|
|
|
2.6
|
|
|
—
|
|
|
(211.5
|
)
|
|
40.8
|
|
|||||||
Investment in and advances to subsidiaries
|
981.2
|
|
|
3,063.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,044.7
|
)
|
|
—
|
|
|||||||
Total Assets
|
$
|
982.9
|
|
|
$
|
4,456.7
|
|
|
$
|
4,774.1
|
|
|
$
|
1,001.0
|
|
|
$
|
—
|
|
|
$
|
(4,258.1
|
)
|
|
$
|
6,956.6
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
42.5
|
|
|
$
|
1,112.1
|
|
|
$
|
165.0
|
|
|
$
|
—
|
|
|
$
|
(1.9
|
)
|
|
$
|
1,317.7
|
|
Accounts payable-inventory financing
|
—
|
|
|
1.0
|
|
|
480.9
|
|
|
16.1
|
|
|
—
|
|
|
—
|
|
|
498.0
|
|
|||||||
Current maturities of long-term debt
|
—
|
|
|
14.9
|
|
|
3.8
|
|
|
6.8
|
|
|
—
|
|
|
—
|
|
|
25.5
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
104.5
|
|
|
89.5
|
|
|
—
|
|
|
—
|
|
|
194.0
|
|
|||||||
Accrued expenses
|
—
|
|
|
173.3
|
|
|
222.3
|
|
|
83.8
|
|
|
—
|
|
|
—
|
|
|
479.4
|
|
|||||||
Total current liabilities
|
—
|
|
|
231.7
|
|
|
1,923.6
|
|
|
361.2
|
|
|
—
|
|
|
(1.9
|
)
|
|
2,514.6
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,134.2
|
|
|
8.3
|
|
|
67.5
|
|
|
—
|
|
|
—
|
|
|
3,210.0
|
|
|||||||
Deferred income taxes
|
—
|
|
|
66.5
|
|
|
100.1
|
|
|
31.4
|
|
|
—
|
|
|
(1.7
|
)
|
|
196.3
|
|
|||||||
Other liabilities
|
—
|
|
|
43.1
|
|
|
4.6
|
|
|
214.9
|
|
|
—
|
|
|
(209.8
|
)
|
|
52.8
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,243.8
|
|
|
113.0
|
|
|
313.8
|
|
|
—
|
|
|
(211.5
|
)
|
|
3,459.1
|
|
|||||||
Total stockholders’ equity
|
982.9
|
|
|
981.2
|
|
|
2,737.5
|
|
|
326.0
|
|
|
—
|
|
|
(4,044.7
|
)
|
|
982.9
|
|
|||||||
Total Liabilities and Stockholders’ Equity
|
$
|
982.9
|
|
|
$
|
4,456.7
|
|
|
$
|
4,774.1
|
|
|
$
|
1,001.0
|
|
|
$
|
—
|
|
|
$
|
(4,258.1
|
)
|
|
$
|
6,956.6
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
December 31, 2016
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries |
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
222.7
|
|
|
$
|
3.1
|
|
|
$
|
37.9
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
263.7
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,904.9
|
|
|
263.7
|
|
|
—
|
|
|
—
|
|
|
2,168.6
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
390.6
|
|
|
61.4
|
|
|
—
|
|
|
—
|
|
|
452.0
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
92.6
|
|
|
130.1
|
|
|
12.2
|
|
|
—
|
|
|
—
|
|
|
234.9
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
14.3
|
|
|
69.0
|
|
|
35.6
|
|
|
—
|
|
|
—
|
|
|
118.9
|
|
|||||||
Total current assets
|
—
|
|
|
329.6
|
|
|
2,497.7
|
|
|
410.8
|
|
|
—
|
|
|
—
|
|
|
3,238.1
|
|
|||||||
Property and equipment, net
|
—
|
|
|
105.6
|
|
|
49.3
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
163.7
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
264.2
|
|
|
—
|
|
|
—
|
|
|
2,455.0
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
291.5
|
|
|
565.1
|
|
|
199.0
|
|
|
—
|
|
|
—
|
|
|
1,055.6
|
|
|||||||
Other assets
|
3.2
|
|
|
19.4
|
|
|
248.2
|
|
|
1.5
|
|
|
—
|
|
|
(236.3
|
)
|
|
36.0
|
|
|||||||
Investment in and advances to subsidiaries
|
1,042.3
|
|
|
3,026.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,068.8
|
)
|
|
—
|
|
|||||||
Total Assets
|
$
|
1,045.5
|
|
|
$
|
4,524.4
|
|
|
$
|
4,799.3
|
|
|
$
|
884.3
|
|
|
$
|
—
|
|
|
$
|
(4,305.1
|
)
|
|
$
|
6,948.4
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
25.9
|
|
|
$
|
895.3
|
|
|
$
|
151.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,072.9
|
|
Accounts payable-inventory financing
|
—
|
|
|
1.2
|
|
|
559.5
|
|
|
19.7
|
|
|
—
|
|
|
—
|
|
|
580.4
|
|
|||||||
Current maturities of long-term debt
|
—
|
|
|
14.9
|
|
|
3.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18.5
|
|
|||||||
Deferred revenue
|
—
|
|
|
—
|
|
|
100.8
|
|
|
71.8
|
|
|
—
|
|
|
—
|
|
|
172.6
|
|
|||||||
Accrued expenses
|
—
|
|
|
173.9
|
|
|
214.8
|
|
|
47.7
|
|
|
—
|
|
|
(0.1
|
)
|
|
436.3
|
|
|||||||
Total current liabilities
|
—
|
|
|
215.9
|
|
|
1,774.0
|
|
|
290.9
|
|
|
—
|
|
|
(0.1
|
)
|
|
2,280.7
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,136.3
|
|
|
12.1
|
|
|
67.5
|
|
|
—
|
|
|
—
|
|
|
3,215.9
|
|
|||||||
Deferred income taxes
|
—
|
|
|
99.1
|
|
|
205.4
|
|
|
67.9
|
|
|
—
|
|
|
(3.2
|
)
|
|
369.2
|
|
|||||||
Other liabilities
|
—
|
|
|
30.8
|
|
|
3.6
|
|
|
235.7
|
|
|
—
|
|
|
(233.0
|
)
|
|
37.1
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,266.2
|
|
|
221.1
|
|
|
371.1
|
|
|
—
|
|
|
(236.2
|
)
|
|
3,622.2
|
|
|||||||
Total stockholders’ equity
|
1,045.5
|
|
|
1,042.3
|
|
|
2,804.2
|
|
|
222.3
|
|
|
—
|
|
|
(4,068.8
|
)
|
|
1,045.5
|
|
|||||||
Total Liabilities and Stockholders’ Equity
|
$
|
1,045.5
|
|
|
$
|
4,524.4
|
|
|
$
|
4,799.3
|
|
|
$
|
884.3
|
|
|
$
|
—
|
|
|
$
|
(4,305.1
|
)
|
|
$
|
6,948.4
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Year Ended December 31, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
13,631.0
|
|
|
$
|
1,560.5
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
15,191.5
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
11,436.1
|
|
|
1,305.5
|
|
|
—
|
|
|
—
|
|
|
12,741.6
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
2,194.9
|
|
|
255.0
|
|
|
—
|
|
|
—
|
|
|
2,449.9
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
127.2
|
|
|
1,093.1
|
|
|
189.8
|
|
|
—
|
|
|
—
|
|
|
1,410.1
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
166.4
|
|
|
7.3
|
|
|
—
|
|
|
—
|
|
|
173.7
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(127.2
|
)
|
|
935.4
|
|
|
57.9
|
|
|
—
|
|
|
—
|
|
|
866.1
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(148.3
|
)
|
|
4.1
|
|
|
(6.3
|
)
|
|
—
|
|
|
—
|
|
|
(150.5
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(57.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.4
|
)
|
|||||||
Other income (expense), net
|
—
|
|
|
(0.1
|
)
|
|
0.7
|
|
|
1.5
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(333.0
|
)
|
|
940.2
|
|
|
53.1
|
|
|
—
|
|
|
—
|
|
|
660.3
|
|
|||||||
Income tax (expense) benefit
|
(0.9
|
)
|
|
149.9
|
|
|
(269.7
|
)
|
|
(16.6
|
)
|
|
—
|
|
|
—
|
|
|
(137.3
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
(0.9
|
)
|
|
(183.1
|
)
|
|
670.5
|
|
|
36.5
|
|
|
—
|
|
|
—
|
|
|
523.0
|
|
|||||||
Equity in earnings of subsidiaries
|
523.9
|
|
|
707.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,230.9
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
523.0
|
|
|
$
|
523.9
|
|
|
$
|
670.5
|
|
|
$
|
36.5
|
|
|
$
|
—
|
|
|
$
|
(1,230.9
|
)
|
|
$
|
523.0
|
|
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, net
|
—
|
|
|
0.2
|
|
|
1.0
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
1.8
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(262.5
|
)
|
|
898.0
|
|
|
36.9
|
|
|
—
|
|
|
—
|
|
|
672.4
|
|
|||||||
Income tax (expense) benefit
|
—
|
|
|
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
Subsidiaries |
|
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
|
|
|||||||
Income (loss) 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
|
)
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(304.0
|
)
|
|
832.4
|
|
|
118.6
|
|
|
—
|
|
|
—
|
|
|
647.0
|
|
|||||||
Income tax (expense) benefit
|
—
|
|
|
103.3
|
|
|
(307.2
|
)
|
|
(40.0
|
)
|
|
—
|
|
|
—
|
|
|
(243.9
|
)
|
|||||||
Income (loss) 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
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Year Ended December 31, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
566.7
|
|
|
$
|
567.6
|
|
|
$
|
670.5
|
|
|
$
|
80.0
|
|
|
$
|
—
|
|
|
$
|
(1,318.1
|
)
|
|
$
|
566.7
|
|
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
Subsidiaries |
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
358.6
|
|
|
$
|
358.6
|
|
|
$
|
525.2
|
|
|
$
|
34.1
|
|
|
$
|
—
|
|
|
$
|
(917.9
|
)
|
|
$
|
358.6
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Year Ended December 31, 2017
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries |
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
0.6
|
|
|
$
|
(71.1
|
)
|
|
$
|
788.5
|
|
|
$
|
52.3
|
|
|
$
|
—
|
|
|
$
|
7.4
|
|
|
$
|
777.7
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(55.2
|
)
|
|
(6.3
|
)
|
|
(19.6
|
)
|
|
—
|
|
|
—
|
|
|
(81.1
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(55.2
|
)
|
|
(6.3
|
)
|
|
(19.6
|
)
|
|
—
|
|
|
—
|
|
|
(81.1
|
)
|
|||||||
Cash flows (used in) provided by: financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facility
|
—
|
|
|
1,501.5
|
|
|
—
|
|
|
59.2
|
|
|
—
|
|
|
—
|
|
|
1,560.7
|
|
|||||||
Repayments of borrowings under revolving credit facility
|
—
|
|
|
(1,501.5
|
)
|
|
—
|
|
|
(59.2
|
)
|
|
—
|
|
|
—
|
|
|
(1,560.7
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(14.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(14.9
|
)
|
|||||||
Proceeds from issuance of long-term debt
|
—
|
|
|
2,083.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,083.0
|
|
|||||||
Payments to extinguish long-term debt
|
—
|
|
|
(2,121.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,121.3
|
)
|
|||||||
Net change in other long-term obligation
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.8
|
)
|
|||||||
Payment of debt financing costs
|
—
|
|
|
(9.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.6
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
(0.2
|
)
|
|
(78.4
|
)
|
|
(5.4
|
)
|
|
—
|
|
|
—
|
|
|
(84.0
|
)
|
|||||||
Effective portion of interest rate cap agreements
|
—
|
|
|
0.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13.0
|
|
|||||||
Proceeds from Coworker stock purchase plan
|
—
|
|
|
10.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10.3
|
|
|||||||
Repurchases of common stock
|
(534.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(534.0
|
)
|
|||||||
Payment of incentive compensation plan withholding taxes
|
(49.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(49.6
|
)
|
|||||||
Dividends
|
(106.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(106.9
|
)
|
|||||||
Principal payments under capital lease obligations
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(1.3
|
)
|
|||||||
Repayment of intercompany loan
|
—
|
|
|
—
|
|
|
34.3
|
|
|
(34.3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||||
Distributions and advances from (to) affiliates
|
689.9
|
|
|
56.6
|
|
|
(737.2
|
)
|
|
—
|
|
|
—
|
|
|
(9.3
|
)
|
|
—
|
|
|||||||
Net cash (used in) provided by financing activities
|
(0.6
|
)
|
|
17.3
|
|
|
(785.3
|
)
|
|
(40.8
|
)
|
|
—
|
|
|
(9.3
|
)
|
|
(818.7
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|
—
|
|
|
—
|
|
|
2.6
|
|
|||||||
Net decrease in cash and cash equivalents
|
—
|
|
|
(109.0
|
)
|
|
(3.1
|
)
|
|
(5.5
|
)
|
|
—
|
|
|
(1.9
|
)
|
|
(119.5
|
)
|
|||||||
Cash and cash equivalents – beginning of period
|
—
|
|
|
222.7
|
|
|
3.1
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
263.7
|
|
|||||||
Cash and cash equivalents – end of period
|
$
|
—
|
|
|
$
|
113.7
|
|
|
$
|
—
|
|
|
$
|
32.4
|
|
|
$
|
—
|
|
|
$
|
(1.9
|
)
|
|
$
|
144.2
|
|
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 provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(158.5
|
)
|
|
$
|
695.5
|
|
|
$
|
56.1
|
|
|
$
|
—
|
|
|
$
|
10.9
|
|
|
$
|
604.0
|
|
Cash flows used in 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 (used in) provided by 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 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 (used in) provided by 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 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
Subsidiaries |
|
Co-Issuer
|
|
Consolidating
Adjustments |
|
Consolidated
|
||||||||||||||
Net cash provided (used in) 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
|
)
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(0.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.5
|
)
|
|||||||
Acquisition of business, net of cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
(263.8
|
)
|
|
—
|
|
|
—
|
|
|
(263.8
|
)
|
|||||||
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
|
)
|
|||||||
Payment of incentive compensation plan withholding taxes
|
—
|
|
|
0.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.6
|
|
|||||||
Dividends
|
(52.9
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(52.9
|
)
|
|||||||
Distributions and advances from (to) affiliates
|
293.7
|
|
|
(196.5
|
)
|
|
(434.5
|
)
|
|
267.4
|
|
|
—
|
|
|
69.9
|
|
|
—
|
|
|||||||
Net cash (used in) provided by 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 (decrease) increase 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
|
|
|
|
Year Ended December 31, 2017
(1)
|
||||||||||||||
(in millions, except per-share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
|
||||||||
Corporate
|
|
$
|
1,476.3
|
|
|
$
|
1,630.7
|
|
|
$
|
1,598.5
|
|
|
$
|
1,641.4
|
|
|
|
|
|
|
|
|
|
|
||||||||
Small Business
|
|
298.7
|
|
|
321.5
|
|
|
311.5
|
|
|
314.8
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Public:
|
|
|
|
|
|
|
|
|
||||||||
Government
|
|
386.9
|
|
|
543.9
|
|
|
606.7
|
|
|
630.0
|
|
||||
Education
|
|
397.1
|
|
|
712.9
|
|
|
700.7
|
|
|
400.8
|
|
||||
Healthcare
|
|
392.5
|
|
|
417.3
|
|
|
425.5
|
|
|
423.3
|
|
||||
Total Public
|
|
1,176.5
|
|
|
1,674.1
|
|
|
1,732.9
|
|
|
1,454.1
|
|
||||
Other
|
|
373.2
|
|
|
368.1
|
|
|
391.0
|
|
|
428.3
|
|
||||
Net sales
|
|
$
|
3,324.7
|
|
|
$
|
3,994.4
|
|
|
$
|
4,033.9
|
|
|
$
|
3,838.6
|
|
Gross profit
|
|
$
|
552.6
|
|
|
$
|
641.1
|
|
|
$
|
642.0
|
|
|
$
|
614.4
|
|
Income from operations
|
|
169.8
|
|
|
231.1
|
|
|
243.7
|
|
|
221.6
|
|
||||
Net income
(2)
|
|
57.6
|
|
|
141.0
|
|
|
129.2
|
|
|
195.2
|
|
||||
Basic
(3)
|
|
0.36
|
|
|
0.90
|
|
|
0.84
|
|
|
1.28
|
|
||||
Diluted
(3)
|
|
0.35
|
|
|
0.89
|
|
|
0.83
|
|
|
1.26
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
|
$
|
0.1600
|
|
|
$
|
0.1600
|
|
|
$
|
0.1600
|
|
|
$
|
0.2100
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
Year Ended December 31, 2016
(1)
|
||||||||||||||
(in millions, except per-share amounts)
|
|
First Quarter
|
|
Second Quarter
|
|
Third Quarter
|
|
Fourth Quarter
|
||||||||
Net Sales:
|
|
|
|
|
|
|
|
|
||||||||
Corporate
(4)
|
|
$
|
1,414.9
|
|
|
$
|
1,490.8
|
|
|
$
|
1,466.4
|
|
|
$
|
1,517.7
|
|
|
|
|
|
|
|
|
|
|
||||||||
Small Business
(4)
|
|
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
(3)
|
|
0.47
|
|
|
0.71
|
|
|
0.78
|
|
|
0.64
|
|
||||
Diluted
(3)
|
|
0.46
|
|
|
0.70
|
|
|
0.76
|
|
|
0.63
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends declared per common share
|
|
$
|
0.1075
|
|
|
$
|
0.1075
|
|
|
$
|
0.1075
|
|
|
$
|
0.1600
|
|
(1)
|
Sum of quarters may not agree to reported yearly totals due to rounding.
|
(2)
|
The fourth quarter of 2017 includes the benefit of the Tax Cuts and Jobs Act enacted during 2017. For information regarding the Tax Cuts and Jobs Act, see
Note 11
(Income Taxes)
.
|
(3)
|
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.
|
(4)
|
Amounts have been recast to present Small Business as its own operating and reportable segment.
|
|
|
|
|
|
|
|
|
|
||||||||
(in millions)
|
|
Balance at
Beginning
of Period
|
|
Charged to
Costs and
Expenses
|
|
Deductions
|
|
Balance at
End of
Period
|
||||||||
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
$
|
5.9
|
|
|
$
|
2.1
|
|
|
$
|
(1.8
|
)
|
|
$
|
6.2
|
|
Year Ended December 31, 2016
|
|
6.0
|
|
|
2.0
|
|
|
(2.1
|
)
|
|
5.9
|
|
||||
Year Ended December 31, 2015
|
|
5.7
|
|
|
4.2
|
|
|
(3.9
|
)
|
|
6.0
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
Reserve for sales returns:
|
|
|
|
|
|
|
|
|
||||||||
Year Ended December 31, 2017
|
|
$
|
6.8
|
|
|
$
|
40.6
|
|
|
$
|
(41.0
|
)
|
|
$
|
6.4
|
|
Year Ended December 31, 2016
|
|
4.9
|
|
|
38.1
|
|
|
(36.2
|
)
|
|
6.8
|
|
||||
Year Ended December 31, 2015
|
|
5.1
|
|
|
34.4
|
|
|
(34.6
|
)
|
|
4.9
|
|
/s/ Ernst & Young LLP
|
Chicago, Illinois
|
February 28, 2018
|
(a)
|
Financial Statements and Schedules
|
(1)
|
Consolidated Financial Statements:
|
|
Page
|
|
|
(2)
|
Financial Statement Schedules:
|
(b)
|
Exhibits
|
Exhibit
Number
|
|
Description
|
|
|
|
3.1
|
|
|
|
|
|
3.1.1
|
|
|
|
|
|
3.2
|
|
|
|
|
|
3.3
|
|
|
|
|
|
3.4
|
|
|
|
|
|
3.5
|
|
|
|
|
|
3.6
|
|
|
|
|
|
3.7
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
3.8
|
|
|
|
|
|
3.9
|
|
|
|
|
|
3.10
|
|
|
|
|
|
3.11
|
|
|
|
|
|
3.12
|
|
|
|
|
|
3.13
|
|
|
|
|
|
3.14
|
|
|
|
|
|
4.1
|
|
|
|
|
|
4.2
|
|
|
|
|
|
4.3
|
|
|
|
|
|
4.4
|
|
|
|
|
|
4.5
|
|
|
|
|
|
4.6
|
|
|
|
|
|
4.7
|
|
|
|
|
|
4.8
|
|
|
|
|
|
10.1
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
10.2
|
|
|
|
|
|
10.3
|
|
|
|
|
|
10.4
|
|
|
|
|
|
10.5§
|
|
|
|
|
|
10.6§
|
|
|
|
|
|
10.7§
|
|
|
|
|
|
10.8§
|
|
|
|
|
|
10.9§
|
|
|
|
|
|
10.10§
|
|
|
|
|
|
10.11§
|
|
|
|
|
|
10.12§
|
|
|
|
|
|
10.13§
|
|
|
|
|
|
10.14§
|
|
|
|
|
|
10.15§
|
|
|
|
|
|
10.16§
|
|
|
|
|
|
10.17§
|
|
|
|
|
|
Exhibit
Number
|
|
Description
|
10.18§
|
|
|
|
|
|
10.19§
|
|
|
|
|
|
10.20§
|
|
|
|
|
|
10.21§
|
|
|
|
|
|
10.22§,*
|
|
|
|
|
|
10.23§
|
|
|
|
|
|
10.24§,*
|
|
|
|
|
|
10.25§
|
|
|
|
|
|
10.26§
|
|
|
|
|
|
10.27§
|
|
|
|
|
|
10.28§,*
|
|
|
|
|
|
12.1*
|
|
|
|
|
|
21.1*
|
|
|
|
|
|
23.1*
|
|
|
|
|
|
31.1*
|
|
|
|
|
|
31.2*
|
|
|
|
|
|
32.1**
|
|
|
|
|
|
32.2**
|
|
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
Exhibit
Number
|
|
Description
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
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*
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Filed herewith
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**
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These items are furnished and not filed.
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§
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A management contract or compensatory arrangement required to be filed as an exhibit pursuant to Item 601 of Regulation S-K.
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CDW CORPORATION
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Date:
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February 28, 2018
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By:
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/s/ Thomas E. Richards
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Thomas E. Richards
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Chairman, President and Chief Executive Officer
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Signature
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Title
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Date
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/s/ Thomas E. Richards
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Chairman, President and Chief Executive Officer
(principal executive officer) and Director
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February 28, 2018
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Thomas E. Richards
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/s/ Collin B. Kebo
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Senior Vice President and Chief Financial Officer
(principal financial officer)
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February 28, 2018
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Collin B. Kebo
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/s/ Neil B. Fairfield
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Vice President, Controller and Chief Accounting Officer
(principal accounting officer)
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February 28, 2018
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Neil B. Fairfield
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/s/ Virginia C. Addicott
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Director
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February 28, 2018
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Virginia C. Addicott
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/s/ Steven W. Alesio
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Director
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February 28, 2018
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Steven W. Alesio
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/s/ Barry K. Allen
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Director
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February 28, 2018
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Barry K. Allen
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/s/ James A. Bell
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Director
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February 28, 2018
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James A. Bell
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/s/ Benjamin D. Chereskin
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Director
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February 28, 2018
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Benjamin D. Chereskin
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/s/ Lynda M. Clarizio
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Director
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February 28, 2018
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Lynda M. Clarizio
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/s/ Paul J. Finnegan
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Director
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February 28, 2018
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Paul J. Finnegan
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/s/ David W. Nelms
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Director
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February 28, 2018
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David W. Nelms
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/s/ Joseph R. Swedish
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Director
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February 28, 2018
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Joseph R. Swedish
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/s/ Donna F. Zarcone
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Director
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February 28, 2018
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Donna F. Zarcone
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3.2.
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Termination of Employment
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3.3.
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Change in Control
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3.4.
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Definitions
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CDW Limited
10 Fleet Place
London, England EC4M 7RB
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CDW Limited
By:
/s/ Daniel A. Laws
Name: Daniel A. Laws
Title: Managing Director
Date: February 12, 2018
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Accepted and Agreed:
By:
/s/ Collin B. Kebo
Name: Collin B. Kebo
Title: Sr. Vice President & Chief Financial Officer, CDW Corporation
Date: February 12, 2018
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Years Ended December 31,
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(dollars in millions)
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2013
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2014 |
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2015
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2016
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2017
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Computation of earnings:
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Income before income taxes and adjustment for (income) loss from equity investees
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$
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194.9
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$
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385.5
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$
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657.2
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$
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671.2
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$
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659.4
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Distributed income from equity investees
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1.0
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1.1
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1.0
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1.1
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0.7
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Fixed charges
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254.3
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202.8
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164.5
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153.9
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155.1
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Total earnings
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$
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450.2
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$
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589.4
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$
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822.7
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$
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826.2
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$
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815.2
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Computation of fixed charges:
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Interest expense
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$
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241.8
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$
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191.3
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$
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153.5
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$
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141.8
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$
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145.7
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Amortization of deferred financing costs and debt premium
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8.8
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6.4
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6.4
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6.5
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5.2
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Portion of rent expense representative of interest
(1)
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3.7
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5.1
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4.6
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5.6
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4.2
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Total fixed charges
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$
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254.3
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$
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202.8
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$
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164.5
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$
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153.9
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$
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155.1
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Ratio of earnings to fixed charges
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1.8
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2.9
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5.0
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5.4
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5.3
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(1)
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Fixed charges include a reasonable estimation of the interest factor included in rental expense.
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Subsidiary
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Jurisdiction of Organization
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CDW LLC
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Illinois
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CDW Finance Corporation
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Delaware
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CDW Technologies LLC
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Wisconsin
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CDW Direct, LLC
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Illinois
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CDW Government LLC
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Illinois
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CDW Logistics, Inc.
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Illinois
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CDW Canada Corp.
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Novia Scotia
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CDW NA Limited
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United Kingdom
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CDW International Holdings Limited
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United Kingdom
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CDW Finance Bidco Limited
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United Kingdom
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CDW Finance Holdings Limited
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United Kingdom
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CDW Limited
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United Kingdom
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CDW Finance Topco Limited
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Jersey
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1.
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I have reviewed this annual report on Form 10-K of the registrant;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Thomas E. Richards
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Thomas E. Richards
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Chairman, President and Chief Executive Officer
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CDW Corporation
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February 28, 2018
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1.
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I have reviewed this annual report on Form 10-K of the registrant;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a.
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b.
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c.
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Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d.
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Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
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5.
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The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
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a.
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
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b.
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
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/s/ Collin B. Kebo
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Collin B. Kebo
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Senior Vice President and Chief Financial Officer
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CDW Corporation
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February 28, 2018
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/s/ Thomas E. Richards
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Thomas E. Richards
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Chairman, President and Chief Executive Officer
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CDW Corporation
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February 28, 2018
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/s/ Collin B. Kebo
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Collin B. Kebo
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Senior Vice President and Chief Financial Officer
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CDW Corporation
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February 28, 2018
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