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ý
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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¨
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
|
|
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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|
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75 Tri-State International
Lincolnshire, Illinois
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|
60069
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(Address of principal executive offices)
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(Zip Code)
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Page
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PART I
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FINANCIAL INFORMATION
|
|
Item 1.
|
|
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||
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||
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||
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||
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Item 2.
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||
Item 3.
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||
Item 4.
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PART II
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OTHER INFORMATION
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|
Item 1.
|
||
Item 1A.
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||
Item 2.
|
||
Item 3.
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||
Item 4.
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||
Item 5.
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||
Item 6.
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SIGNATURES
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in millions, except per share amounts)
|
|||||||
|
March 31, 2018
|
|
December 31, 2017
|
||||
Assets
|
(unaudited)
|
|
(as adjusted)
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
221.0
|
|
|
$
|
144.2
|
|
Accounts receivable, net of allowance for doubtful accounts of $6.2 for both periods
|
2,274.0
|
|
|
2,329.3
|
|
||
Merchandise inventory
|
485.8
|
|
|
411.5
|
|
||
Miscellaneous receivables
|
310.2
|
|
|
343.0
|
|
||
Prepaid expenses and other
|
188.9
|
|
|
168.3
|
|
||
Total current assets
|
3,479.9
|
|
|
3,396.3
|
|
||
Property and equipment, net
|
153.1
|
|
|
161.1
|
|
||
Goodwill
|
2,488.8
|
|
|
2,479.6
|
|
||
Other intangible assets, net
|
859.0
|
|
|
897.0
|
|
||
Other assets
|
47.1
|
|
|
32.7
|
|
||
Total Assets
|
$
|
7,027.9
|
|
|
$
|
6,966.7
|
|
Liabilities and Stockholders' Equity
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable-trade
|
$
|
1,288.5
|
|
|
$
|
1,317.7
|
|
Accounts payable-inventory financing
|
523.7
|
|
|
498.0
|
|
||
Current maturities of long-term debt
|
25.8
|
|
|
25.5
|
|
||
Contract liabilities
|
193.6
|
|
|
158.8
|
|
||
Accrued expenses and other current liabilities:
|
|
|
|
||||
Compensation
|
140.9
|
|
|
129.5
|
|
||
Interest
|
15.9
|
|
|
21.6
|
|
||
Sales taxes
|
42.0
|
|
|
43.8
|
|
||
Advertising
|
90.5
|
|
|
89.2
|
|
||
Income taxes
|
56.7
|
|
|
16.2
|
|
||
Other
|
204.9
|
|
|
221.8
|
|
||
Total current liabilities
|
2,582.5
|
|
|
2,522.1
|
|
||
Long-term liabilities:
|
|
|
|
||||
Debt
|
3,209.7
|
|
|
3,210.0
|
|
||
Deferred income taxes
|
188.9
|
|
|
196.3
|
|
||
Other liabilities
|
49.9
|
|
|
52.7
|
|
||
Total long-term liabilities
|
3,448.5
|
|
|
3,459.0
|
|
||
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; 151.9 and 153.1 shares issued, respectively
|
1.5
|
|
|
1.5
|
|
||
Less: treasury stock, $0.01 par value, 0.0 and 0.1 shares held, respectively
|
—
|
|
|
—
|
|
||
Outstanding common stock, $0.01 par value, 151.9 and 153.0 shares outstanding, respectively
|
1.5
|
|
|
1.5
|
|
||
Paid-in capital
|
2,928.5
|
|
|
2,911.6
|
|
||
Accumulated deficit
|
(1,854.6
|
)
|
|
(1,831.6
|
)
|
||
Accumulated other comprehensive loss
|
(78.5
|
)
|
|
(95.9
|
)
|
||
Total stockholders' equity
|
996.9
|
|
|
985.6
|
|
||
Total Liabilities and Stockholders' Equity
|
$
|
7,027.9
|
|
|
$
|
6,966.7
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(unaudited)
|
|
(as adjusted)
|
||||
Net sales
|
|
$
|
3,606.4
|
|
|
$
|
3,256.0
|
|
Cost of sales
|
|
3,002.5
|
|
|
2,702.5
|
|
||
Gross profit
|
|
603.9
|
|
|
553.5
|
|
||
Selling and administrative expenses
|
|
362.7
|
|
|
347.4
|
|
||
Advertising expense
|
|
37.1
|
|
|
35.4
|
|
||
Income from operations
|
|
204.1
|
|
|
170.7
|
|
||
Interest expense, net
|
|
(37.7
|
)
|
|
(39.7
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
(57.4
|
)
|
||
Other (expense) income
|
|
(0.7
|
)
|
|
0.9
|
|
||
Income before income taxes
|
|
165.7
|
|
|
74.5
|
|
||
Income tax expense
|
|
(38.7
|
)
|
|
(16.3
|
)
|
||
Net income
|
|
$
|
127.0
|
|
|
$
|
58.2
|
|
|
|
|
|
|
||||
Net income per common share:
|
|
|
|
|
||||
Basic
|
|
$
|
0.83
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
0.82
|
|
|
$
|
0.36
|
|
|
|
|
|
|
||||
Weighted-average common shares outstanding:
|
|
|
|
|
||||
Basic
|
|
152.2
|
|
|
159.4
|
|
||
Diluted
|
|
154.8
|
|
|
162.8
|
|
||
|
|
|
|
|
||||
Cash dividends declared per common share
|
|
$
|
0.2100
|
|
|
$
|
0.1600
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(in millions)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
|
|
(unaudited)
|
|
(as adjusted)
|
||||
Net income
|
|
$
|
127.0
|
|
|
$
|
58.2
|
|
Foreign currency translation, net
(1)
|
|
14.2
|
|
|
6.5
|
|
||
Unrealized gain (loss) from hedge accounting, net
(2)
|
|
3.2
|
|
|
(0.4
|
)
|
||
Other comprehensive income, net
|
|
17.4
|
|
|
6.1
|
|
||
Comprehensive income
|
|
$
|
144.4
|
|
|
$
|
64.3
|
|
(1)
|
Net of tax benefit of
$0.1 million
and
zero
for the three months ended
March 31, 2018 and 2017
, respectively.
|
(2)
|
Net of tax expense of
$1.1 million
and a tax benefit of
$0.3 million
for the three months ended
March 31, 2018 and 2017
, respectively.
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(in millions)
(unaudited)
|
|||||||||||||||||||||||||||||||||||||
|
|
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, 2017 (as reported)
|
|
—
|
|
|
$
|
—
|
|
|
153.1
|
|
|
$
|
1.5
|
|
|
0.1
|
|
|
$
|
—
|
|
|
$
|
2,911.6
|
|
|
$
|
(1,834.3
|
)
|
|
$
|
(95.9
|
)
|
|
$
|
982.9
|
|
Cumulative adjustment
upon adoption of ASC 606
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.7
|
|
|
—
|
|
|
2.7
|
|
|||||||
Balance as of
December 31, 2017 (as adjusted)
|
|
—
|
|
|
—
|
|
|
153.1
|
|
|
1.5
|
|
|
0.1
|
|
|
—
|
|
|
2,911.6
|
|
|
(1,831.6
|
)
|
|
(95.9
|
)
|
|
985.6
|
|
|||||||
Net income
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
127.0
|
|
|
—
|
|
|
127.0
|
|
|||||||
Equity-based compensation expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
7.1
|
|
|||||||
Stock option exercises
|
|
—
|
|
|
—
|
|
|
0.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|||||||
Coworker Stock Purchase Plan
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|||||||
Repurchases of common stock
|
|
—
|
|
|
—
|
|
|
(1.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109.2
|
)
|
|
—
|
|
|
(109.2
|
)
|
|||||||
Dividends paid
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.1
|
|
|
(32.1
|
)
|
|
—
|
|
|
(32.0
|
)
|
|||||||
Incentive compensation plan shares withheld for taxes
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(8.7
|
)
|
|
—
|
|
|
(8.7
|
)
|
|||||||
Foreign currency translation
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14.2
|
|
|
14.2
|
|
|||||||
Unrealized gain from hedge accounting
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3.2
|
|
|
3.2
|
|
|||||||
Balance as of
March 31, 2018
|
|
—
|
|
|
$
|
—
|
|
|
151.9
|
|
|
$
|
1.5
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
2,928.5
|
|
|
$
|
(1,854.6
|
)
|
|
$
|
(78.5
|
)
|
|
$
|
996.9
|
|
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
|
||||||||
|
|
Three Months Ended March 31,
|
||||||
|
|
2018
|
|
2017
|
||||
Cash flows from operating activities:
|
|
(unaudited)
|
|
(as adjusted)
|
||||
Net income
|
|
$
|
127.0
|
|
|
$
|
58.2
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
||||
Depreciation and amortization
|
|
66.6
|
|
|
64.2
|
|
||
Equity-based compensation expense
|
|
8.1
|
|
|
12.1
|
|
||
Deferred income taxes
|
|
(13.4
|
)
|
|
(19.1
|
)
|
||
Amortization of deferred financing fees, debt premium and debt discount, net
|
|
1.2
|
|
|
3.2
|
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
57.4
|
|
||
Mark-to-market gain on interest rate cap agreements
|
|
—
|
|
|
(0.5
|
)
|
||
Other
|
|
(0.1
|
)
|
|
2.1
|
|
||
Changes in assets and liabilities:
|
|
|
|
|
||||
Accounts receivable
|
|
60.5
|
|
|
184.7
|
|
||
Merchandise inventory
|
|
(72.4
|
)
|
|
(36.0
|
)
|
||
Other assets
|
|
15.4
|
|
|
(20.0
|
)
|
||
Accounts payable-trade
|
|
(29.8
|
)
|
|
(10.4
|
)
|
||
Other current liabilities
|
|
59.5
|
|
|
78.7
|
|
||
Long-term liabilities
|
|
(0.4
|
)
|
|
(4.7
|
)
|
||
Net cash provided by operating activities
|
|
222.2
|
|
|
369.9
|
|
||
Cash flows used in investing activities:
|
|
|
|
|
||||
Capital expenditures
|
|
(15.9
|
)
|
|
(19.6
|
)
|
||
Net cash used in investing activities
|
|
(15.9
|
)
|
|
(19.6
|
)
|
||
Cash flows used in financing activities:
|
|
|
|
|
||||
Proceeds from borrowings under revolving credit facilities
|
|
170.0
|
|
|
44.1
|
|
||
Repayments of borrowings under revolving credit facilities
|
|
(170.0
|
)
|
|
(6.1
|
)
|
||
Repayments of long-term debt
|
|
(3.7
|
)
|
|
(3.7
|
)
|
||
Proceeds from issuance of long-term debt
|
|
—
|
|
|
2,083.0
|
|
||
Payments to extinguish long-term debt
|
|
—
|
|
|
(2,121.3
|
)
|
||
Payments of debt financing fees
|
|
—
|
|
|
(9.6
|
)
|
||
Net change in accounts payable-inventory financing
|
|
24.9
|
|
|
(135.7
|
)
|
||
Premium payments on interest rate cap agreements
|
|
(12.6
|
)
|
|
—
|
|
||
Proceeds from stock option exercises
|
|
7.3
|
|
|
4.4
|
|
||
Proceeds from Coworker Stock Purchase Plan
|
|
2.4
|
|
|
2.1
|
|
||
Repurchases of common stock
|
|
(109.2
|
)
|
|
(175.4
|
)
|
||
Payment of incentive compensation plan withholding taxes
|
|
(8.7
|
)
|
|
(18.3
|
)
|
||
Dividends
|
|
(32.0
|
)
|
|
(25.5
|
)
|
||
Other
|
|
0.4
|
|
|
(0.2
|
)
|
||
Net cash used in financing activities
|
|
(131.2
|
)
|
|
(362.2
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
|
1.7
|
|
|
(0.1
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
|
76.8
|
|
|
(12.0
|
)
|
||
Cash and cash equivalents—beginning of period
|
|
144.2
|
|
|
263.7
|
|
||
Cash and cash equivalents—end of period
|
|
$
|
221.0
|
|
|
$
|
251.7
|
|
Supplementary disclosure of cash flow information:
|
|
|
|
|
||||
Interest paid
|
|
$
|
(42.7
|
)
|
|
$
|
(48.4
|
)
|
Taxes paid, net
|
|
$
|
(10.6
|
)
|
|
$
|
(6.3
|
)
|
1.
|
Description of Business and Summary of Significant Accounting Policies
|
2.
|
Recent Accounting Pronouncements
|
|
|
March 31, 2017
|
||||||||||
(in millions)
(except per share amounts)
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
|
||||||
Net sales
|
|
$
|
3,324.7
|
|
|
$
|
(68.7
|
)
|
|
$
|
3,256.0
|
|
Gross profit
|
|
552.6
|
|
|
0.9
|
|
|
553.5
|
|
|||
Gross profit margin
|
|
16.6
|
%
|
|
40 bps
|
|
|
17.0
|
%
|
|||
|
|
|
|
|
|
|
||||||
Income from operations
|
|
169.8
|
|
|
0.9
|
|
|
170.7
|
|
|||
Income tax expense
|
|
(16.0
|
)
|
|
(0.3
|
)
|
|
(16.3
|
)
|
|||
Net income
|
|
$
|
57.6
|
|
|
$
|
0.6
|
|
|
$
|
58.2
|
|
|
|
|
|
|
|
|
||||||
Net income per common share
|
|
|
|
|
|
|
||||||
Basic
|
|
$
|
0.36
|
|
|
$
|
—
|
|
|
$
|
0.36
|
|
Diluted
|
|
$
|
0.35
|
|
|
$
|
0.01
|
|
|
$
|
0.36
|
|
|
|
December 31, 2017
|
||||||||||
(in millions)
|
|
As Reported
|
|
New Revenue Standard Adjustment
|
|
As Adjusted
(1)
|
||||||
Accounts receivable
|
|
$
|
2,320.5
|
|
|
$
|
8.8
|
|
|
$
|
2,329.3
|
|
Merchandise inventory
|
|
449.5
|
|
|
(38.0
|
)
|
|
411.5
|
|
|||
Miscellaneous receivables
|
|
336.5
|
|
|
6.5
|
|
|
343.0
|
|
|||
Prepaid expenses and other
|
|
127.4
|
|
|
40.9
|
|
|
168.3
|
|
|||
Total current assets
|
|
3,378.1
|
|
|
18.2
|
|
|
3,396.3
|
|
|||
|
|
|
|
|
|
|
||||||
Other assets
|
|
40.8
|
|
|
(8.1
|
)
|
|
32.7
|
|
|||
Total assets
|
|
6,956.6
|
|
|
10.1
|
|
|
6,966.7
|
|
|||
|
|
|
|
|
|
|
||||||
Contract liabilities
|
|
194.0
|
|
|
(35.2
|
)
|
|
158.8
|
|
|||
Income tax payable
|
|
15.1
|
|
|
1.1
|
|
|
16.2
|
|
|||
Other accrued expenses
|
|
180.2
|
|
|
41.6
|
|
|
221.8
|
|
|||
Total current liabilities
|
|
2,514.6
|
|
|
7.5
|
|
|
2,522.1
|
|
|||
|
|
|
|
|
|
|
||||||
Total liabilities
|
|
5,973.7
|
|
|
7.5
|
|
|
5,981.1
|
|
|||
Total stockholders’ equity
|
|
$
|
982.9
|
|
|
$
|
2.7
|
|
|
$
|
985.6
|
|
(1)
|
Amounts may not cross-foot due to rounding.
|
3.
|
Inventory Financing Agreements
|
(in millions)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Revolving Loan inventory financing agreement
(1)
|
|
$
|
481.6
|
|
|
$
|
480.9
|
|
Other inventory financing agreements
|
|
42.1
|
|
|
17.1
|
|
||
Accounts payable-inventory financing
|
|
$
|
523.7
|
|
|
$
|
498.0
|
|
(1)
|
The Senior Secured Asset-Based Revolving Credit Facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
|
4.
|
Contract Liabilities and Remaining Performance Obligations
|
(in millions)
|
|
Within 1 Year
|
|
Years 1-2
|
|
Years 2-3
|
|
Thereafter
|
||||||||
Remaining Performance Obligations
|
|
$
|
39.2
|
|
|
$
|
25.6
|
|
|
$
|
9.6
|
|
|
$
|
0.7
|
|
5.
|
Financial Instruments
|
|
|
|
|
|
|
March 31, 2018
|
|
December 31, 2017
|
||||||
Notional Value (in millions)
|
|
Effective Date
|
|
Maturity Date
|
|
Fair Value (in millions)
|
|
Fair Value (in millions)
|
||||||
$
|
1,400.0
|
|
|
January 17, 2017
|
|
December 31, 2018
|
|
$
|
8.8
|
|
|
$
|
5.4
|
|
1,400.0
|
|
|
December 31, 2018
|
|
December 31, 2020
|
|
12.7
|
|
|
—
|
|
|||
|
|
|
|
|
|
$
|
21.5
|
|
|
$
|
5.4
|
|
6.
|
Long-Term Debt
|
(dollars in millions)
|
|
Interest
Rate
|
|
Principal
|
|
Unamortized Discount and Deferred Financing Fees
|
|
Total
|
|||||||
Senior secured asset-based revolving credit facility
|
|
—
|
%
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
CDW UK revolving credit facility
|
|
—
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Senior secured term loan facility
(1)
|
|
4.3
|
%
|
|
1,464.3
|
|
|
(2.0
|
)
|
|
1,462.3
|
|
|||
CDW UK term loan
|
|
2.0
|
%
|
|
78.5
|
|
|
(1.3
|
)
|
|
77.2
|
|
|||
Senior notes due 2023
|
|
5.0
|
%
|
|
525.0
|
|
|
(4.2
|
)
|
|
520.8
|
|
|||
Senior notes due 2024
|
|
5.5
|
%
|
|
575.0
|
|
|
(5.0
|
)
|
|
570.0
|
|
|||
Senior notes due 2025
|
|
5.0
|
%
|
|
600.0
|
|
|
(7.0
|
)
|
|
593.0
|
|
|||
Other long-term obligations
|
|
|
|
12.2
|
|
|
—
|
|
|
12.2
|
|
||||
Total debt
|
|
|
|
3,255.0
|
|
|
(19.5
|
)
|
|
3,235.5
|
|
||||
Less current maturities
|
|
|
|
(25.8
|
)
|
|
—
|
|
|
(25.8
|
)
|
||||
Long-term debt, excluding current maturities
|
|
|
|
$
|
3,229.2
|
|
|
$
|
(19.5
|
)
|
|
$
|
3,209.7
|
|
(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 5
(Financial Instruments)
). The interest rate disclosed represents the variable interest rate in effect as of
March 31, 2018
.
|
(dollars in millions)
|
|
Interest
Rate |
|
Principal
|
|
Unamortized Discount and Deferred Financing Fees
|
|
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 5
(Financial Instruments)
). The interest rate disclosed represents the variable interest rate in effect as of
December 31, 2017
.
|
(in millions)
|
|
March 31, 2018
|
|
December 31, 2017
|
||||
Fair value
|
|
$
|
3,290.7
|
|
|
$
|
3,366.5
|
|
Carrying value
|
|
3,255.0
|
|
|
3,255.9
|
|
7.
|
Income Taxes
|
8.
|
Stockholders' Equity
|
9.
|
Earnings per Share
|
|
Three Months Ended March 31,
|
||||
(in millions)
|
2018
|
|
2017
|
||
Basic weighted-average shares outstanding
|
152.2
|
|
|
159.4
|
|
Effect of dilutive securities
(1)
|
2.6
|
|
|
3.4
|
|
Diluted weighted-average shares outstanding
(2)
|
154.8
|
|
|
162.8
|
|
(1)
|
The dilutive effect of outstanding stock options, restricted stock units, restricted stock, performance share units and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method.
|
(2)
|
There were less than
1 million
potential common shares excluded from diluted weighted-average shares outstanding for both the
three
months ended
March 31, 2018
and
2017
as their inclusion would have had an anti-dilutive effect.
|
11.
|
Segment Information
|
(in millions)
|
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Headquarters
|
|
Total
|
||||||||||||
Three Months Ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,565.8
|
|
|
$
|
327.6
|
|
|
$
|
1,230.0
|
|
|
$
|
483.0
|
|
|
$
|
—
|
|
|
$
|
3,606.4
|
|
Income (loss) from operations
|
|
124.8
|
|
|
22.3
|
|
|
71.7
|
|
|
19.8
|
|
|
(34.5
|
)
|
|
204.1
|
|
||||||
Depreciation and amortization expense
|
|
(21.1
|
)
|
|
(5.2
|
)
|
|
(11.2
|
)
|
|
(8.8
|
)
|
|
(20.3
|
)
|
|
(66.6
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three Months Ended March 31, 2017
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net sales
|
|
$
|
1,440.6
|
|
|
$
|
292.0
|
|
|
$
|
1,153.7
|
|
|
$
|
369.7
|
|
|
$
|
—
|
|
|
$
|
3,256.0
|
|
Income (loss) from operations
|
|
112.1
|
|
|
16.6
|
|
|
60.8
|
|
|
12.7
|
|
|
(31.5
|
)
|
|
170.7
|
|
||||||
Depreciation and amortization expense
|
|
(20.8
|
)
|
|
(5.1
|
)
|
|
(11.2
|
)
|
|
(7.2
|
)
|
|
(19.9
|
)
|
|
(64.2
|
)
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
|
Three Months Ended March 31, 2018
|
||||||||||||||||||
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Total
|
||||||||||
Geography
(1)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
1,564.4
|
|
|
$
|
327.6
|
|
|
$
|
1,230.0
|
|
|
$
|
9.2
|
|
|
$
|
3,131.2
|
|
Rest of World
|
1.4
|
|
|
—
|
|
|
—
|
|
|
473.8
|
|
|
475.2
|
|
|||||
Total Net sales
|
1,565.8
|
|
|
327.6
|
|
|
1,230.0
|
|
|
483.0
|
|
|
3,606.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Product and Services
|
|
|
|
|
|
|
|
|
|
||||||||||
Hardware
|
1,251.6
|
|
|
272.8
|
|
|
1,008.2
|
|
|
379.5
|
|
|
2,912.1
|
|
|||||
Software
|
219.6
|
|
|
43.1
|
|
|
183.1
|
|
|
59.3
|
|
|
505.1
|
|
|||||
Services
|
78.1
|
|
|
6.3
|
|
|
34.6
|
|
|
42.2
|
|
|
161.2
|
|
|||||
Other
(2)
|
16.5
|
|
|
5.4
|
|
|
4.1
|
|
|
2.0
|
|
|
28.0
|
|
|||||
Total Net sales
|
1,565.8
|
|
|
327.6
|
|
|
1,230.0
|
|
|
483.0
|
|
|
3,606.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales by Channel
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
1,565.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,565.8
|
|
|||||
Small Business
|
—
|
|
|
327.6
|
|
|
—
|
|
|
—
|
|
|
327.6
|
|
|||||
Government
|
—
|
|
|
—
|
|
|
418.5
|
|
|
—
|
|
|
418.5
|
|
|||||
Education
|
—
|
|
|
—
|
|
|
397.2
|
|
|
—
|
|
|
397.2
|
|
|||||
Healthcare
|
—
|
|
|
—
|
|
|
414.3
|
|
|
—
|
|
|
414.3
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
483.0
|
|
|
483.0
|
|
|||||
Total Net sales
|
1,565.8
|
|
|
327.6
|
|
|
1,230.0
|
|
|
483.0
|
|
|
3,606.4
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
|
|
||||||||||
Transferred at a point in time where CDW is principal
|
1,426.3
|
|
|
309.4
|
|
|
1,171.4
|
|
|
433.0
|
|
|
3,340.1
|
|
|||||
Transferred at a point in time where CDW is agent
|
92.7
|
|
|
16.5
|
|
|
41.1
|
|
|
15.1
|
|
|
165.4
|
|
|||||
Transferred over time where CDW is principal
|
46.8
|
|
|
1.7
|
|
|
17.5
|
|
|
34.9
|
|
|
100.9
|
|
|||||
Total Net sales
|
$
|
1,565.8
|
|
|
$
|
327.6
|
|
|
$
|
1,230.0
|
|
|
$
|
483.0
|
|
|
$
|
3,606.4
|
|
(1)
|
Net sales by Geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.
|
(2)
|
Includes items such as delivery charges to customers.
|
|
Three Months Ended March 31, 2017
(1)
|
||||||||||||||||||
|
Corporate
|
|
Small Business
|
|
Public
|
|
Other
|
|
Total
|
||||||||||
Geography
(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
United States
|
$
|
1,439.5
|
|
|
$
|
292.0
|
|
|
$
|
1,153.7
|
|
|
$
|
6.1
|
|
|
$
|
2,891.3
|
|
Rest of World
|
1.1
|
|
|
—
|
|
|
—
|
|
|
363.6
|
|
|
364.7
|
|
|||||
Total Net sales
|
1,440.6
|
|
|
292.0
|
|
|
1,153.7
|
|
|
369.7
|
|
|
3,256.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Major Product and Services
|
|
|
|
|
|
|
|
|
|
||||||||||
Hardware
|
1,146.5
|
|
|
240.8
|
|
|
958.6
|
|
|
293.5
|
|
|
2,639.4
|
|
|||||
Software
|
202.0
|
|
|
39.9
|
|
|
162.8
|
|
|
43.2
|
|
|
447.9
|
|
|||||
Services
|
75.8
|
|
|
6.2
|
|
|
28.0
|
|
|
31.3
|
|
|
141.3
|
|
|||||
Other
(3)
|
16.3
|
|
|
5.1
|
|
|
4.3
|
|
|
1.7
|
|
|
27.4
|
|
|||||
Total Net sales
|
1,440.6
|
|
|
292.0
|
|
|
1,153.7
|
|
|
369.7
|
|
|
3,256.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Sales by Channel
|
|
|
|
|
|
|
|
|
|
||||||||||
Corporate
|
1,440.6
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,440.6
|
|
|||||
Small Business
|
—
|
|
|
292.0
|
|
|
—
|
|
|
—
|
|
|
292.0
|
|
|||||
Government
|
—
|
|
|
—
|
|
|
374.6
|
|
|
—
|
|
|
374.6
|
|
|||||
Education
|
—
|
|
|
—
|
|
|
393.2
|
|
|
—
|
|
|
393.2
|
|
|||||
Healthcare
|
—
|
|
|
—
|
|
|
385.9
|
|
|
—
|
|
|
385.9
|
|
|||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
369.7
|
|
|
369.7
|
|
|||||
Total Net sales
|
1,440.6
|
|
|
292.0
|
|
|
1,153.7
|
|
|
369.7
|
|
|
3,256.0
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Timing of Revenue Recognition
|
|
|
|
|
|
|
|
|
|
||||||||||
Transferred at a point in time where CDW is principal
|
1,314.2
|
|
|
275.7
|
|
|
1,105.8
|
|
|
331.5
|
|
|
3,027.2
|
|
|||||
Transferred at a point in time where CDW is agent
|
81.3
|
|
|
14.0
|
|
|
37.5
|
|
|
8.2
|
|
|
141.0
|
|
|||||
Transferred over time where CDW is principal
|
45.1
|
|
|
2.3
|
|
|
10.4
|
|
|
30.0
|
|
|
87.8
|
|
|||||
Total Net sales
|
$
|
1,440.6
|
|
|
$
|
292.0
|
|
|
$
|
1,153.7
|
|
|
$
|
369.7
|
|
|
$
|
3,256.0
|
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Net sales by Geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.
|
(3)
|
Includes items such as delivery charges to customers.
|
|
Three Months Ended March 31,
|
||||||||||||
|
2018
|
|
2017
(1)
|
||||||||||
|
Dollars in
Millions |
|
Percentage
of Total Net Sales |
|
Dollars in
Millions |
|
Percentage
of Total Net Sales |
||||||
Notebooks/Mobile Devices
|
$
|
858.7
|
|
|
23.8
|
%
|
|
$
|
735.5
|
|
|
22.6
|
%
|
Netcomm Products
|
482.9
|
|
|
13.4
|
|
|
458.6
|
|
|
14.1
|
|
||
Desktops
|
303.5
|
|
|
8.4
|
|
|
263.2
|
|
|
8.1
|
|
||
Video
|
259.2
|
|
|
7.2
|
|
|
235.7
|
|
|
7.2
|
|
||
Enterprise and Data Storage (Including Drives)
|
256.0
|
|
|
7.1
|
|
|
234.8
|
|
|
7.2
|
|
||
Other Hardware
|
751.8
|
|
|
20.8
|
|
|
711.6
|
|
|
21.9
|
|
||
Total Hardware
|
2,912.1
|
|
|
80.7
|
|
|
2,639.4
|
|
|
81.1
|
|
||
|
|
|
|
|
|
|
|
||||||
Software
(2)
|
505.1
|
|
|
14.0
|
|
|
447.9
|
|
|
13.8
|
|
||
Services
(2)
|
161.2
|
|
|
4.5
|
|
|
141.3
|
|
|
4.3
|
|
||
Other
(3)
|
28.0
|
|
|
0.8
|
|
|
27.4
|
|
|
0.8
|
|
||
Total Net sales
|
$
|
3,606.4
|
|
|
100.0
|
%
|
|
$
|
3,256.0
|
|
|
100.0
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Certain software and services revenues are recorded on a net basis for accounting purposes. As a result, 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.
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
March 31, 2018
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
173.3
|
|
|
$
|
—
|
|
|
$
|
65.9
|
|
|
$
|
—
|
|
|
$
|
(18.2
|
)
|
|
$
|
221.0
|
|
Accounts receivable, net
|
—
|
|
|
—
|
|
|
1,898.8
|
|
|
375.2
|
|
|
—
|
|
|
—
|
|
|
2,274.0
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
401.0
|
|
|
84.8
|
|
|
—
|
|
|
—
|
|
|
485.8
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
105.2
|
|
|
182.7
|
|
|
22.3
|
|
|
—
|
|
|
—
|
|
|
310.2
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
21.5
|
|
|
119.9
|
|
|
47.5
|
|
|
—
|
|
|
—
|
|
|
188.9
|
|
|||||||
Total current assets
|
—
|
|
|
300.0
|
|
|
2,602.4
|
|
|
595.7
|
|
|
—
|
|
|
(18.2
|
)
|
|
3,479.9
|
|
|||||||
Property and equipment, net
|
—
|
|
|
87.7
|
|
|
42.1
|
|
|
23.3
|
|
|
—
|
|
|
—
|
|
|
153.1
|
|
|||||||
Goodwill
|
—
|
|
|
751.8
|
|
|
1,439.0
|
|
|
298.0
|
|
|
—
|
|
|
—
|
|
|
2,488.8
|
|
|||||||
Other intangible assets, net
|
—
|
|
|
277.4
|
|
|
388.6
|
|
|
193.0
|
|
|
—
|
|
|
—
|
|
|
859.0
|
|
|||||||
Other assets
|
1.6
|
|
|
52.1
|
|
|
207.5
|
|
|
2.8
|
|
|
—
|
|
|
(216.9
|
)
|
|
47.1
|
|
|||||||
Investment in and advances to subsidiaries
|
995.3
|
|
|
3,016.8
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,012.1
|
)
|
|
—
|
|
|||||||
Total Assets
|
$
|
996.9
|
|
|
$
|
4,485.8
|
|
|
$
|
4,679.6
|
|
|
$
|
1,112.8
|
|
|
$
|
—
|
|
|
$
|
(4,247.2
|
)
|
|
$
|
7,027.9
|
|
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Current liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Accounts payable-trade
|
$
|
—
|
|
|
$
|
24.6
|
|
|
$
|
1,063.6
|
|
|
$
|
218.5
|
|
|
$
|
—
|
|
|
$
|
(18.2
|
)
|
|
$
|
1,288.5
|
|
Accounts payable-inventory financing
|
—
|
|
|
—
|
|
|
481.8
|
|
|
41.9
|
|
|
—
|
|
|
—
|
|
|
523.7
|
|
|||||||
Current maturities of
long-term debt
|
—
|
|
|
14.9
|
|
|
3.8
|
|
|
7.1
|
|
|
—
|
|
|
—
|
|
|
25.8
|
|
|||||||
Contract liabilities
|
—
|
|
|
—
|
|
|
100.4
|
|
|
93.2
|
|
|
—
|
|
|
—
|
|
|
193.6
|
|
|||||||
Accrued expenses and other current liabilities
|
—
|
|
|
210.6
|
|
|
263.4
|
|
|
76.9
|
|
|
—
|
|
|
—
|
|
|
550.9
|
|
|||||||
Total current liabilities
|
—
|
|
|
250.1
|
|
|
1,913.0
|
|
|
437.6
|
|
|
—
|
|
|
(18.2
|
)
|
|
2,582.5
|
|
|||||||
Long-term liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Debt
|
—
|
|
|
3,131.2
|
|
|
8.3
|
|
|
70.2
|
|
|
—
|
|
|
—
|
|
|
3,209.7
|
|
|||||||
Deferred income taxes
|
—
|
|
|
69.0
|
|
|
89.3
|
|
|
32.2
|
|
|
—
|
|
|
(1.6
|
)
|
|
188.9
|
|
|||||||
Other liabilities
|
—
|
|
|
40.2
|
|
|
4.9
|
|
|
220.1
|
|
|
—
|
|
|
(215.3
|
)
|
|
49.9
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,240.4
|
|
|
102.5
|
|
|
322.5
|
|
|
—
|
|
|
(216.9
|
)
|
|
3,448.5
|
|
|||||||
Total stockholders' equity
|
996.9
|
|
|
995.3
|
|
|
2,664.1
|
|
|
352.7
|
|
|
—
|
|
|
(4,012.1
|
)
|
|
996.9
|
|
|||||||
Total Liabilities and Stockholders' Equity
|
$
|
996.9
|
|
|
$
|
4,485.8
|
|
|
$
|
4,679.6
|
|
|
$
|
1,112.8
|
|
|
$
|
—
|
|
|
$
|
(4,247.2
|
)
|
|
$
|
7,027.9
|
|
Condensed Consolidating Balance Sheet
|
|||||||||||||||||||||||||||
December 31, 2017
|
|||||||||||||||||||||||||||
(as adjusted)
|
|||||||||||||||||||||||||||
(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
|
—
|
|
|
—
|
|
|
2,015.7
|
|
|
313.6
|
|
|
—
|
|
|
—
|
|
|
2,329.3
|
|
|||||||
Merchandise inventory
|
—
|
|
|
—
|
|
|
354.6
|
|
|
56.9
|
|
|
—
|
|
|
—
|
|
|
411.5
|
|
|||||||
Miscellaneous receivables
|
—
|
|
|
103.9
|
|
|
211.1
|
|
|
28.0
|
|
|
—
|
|
|
—
|
|
|
343.0
|
|
|||||||
Prepaid expenses and other
|
—
|
|
|
18.0
|
|
|
100.4
|
|
|
49.9
|
|
|
—
|
|
|
—
|
|
|
168.3
|
|
|||||||
Total current assets
|
—
|
|
|
235.6
|
|
|
2,681.8
|
|
|
480.8
|
|
|
—
|
|
|
(1.9
|
)
|
|
3,396.3
|
|
|||||||
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
|
|
|
209.3
|
|
|
2.6
|
|
|
—
|
|
|
(211.6
|
)
|
|
32.7
|
|
|||||||
Investment in and advances to subsidiaries
|
983.9
|
|
|
3,066.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,050.0
|
)
|
|
—
|
|
|||||||
Total Assets
|
$
|
985.6
|
|
|
$
|
4,459.3
|
|
|
$
|
4,798.1
|
|
|
$
|
987.2
|
|
|
$
|
—
|
|
|
$
|
(4,263.5
|
)
|
|
$
|
6,966.7
|
|
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
|
|
|||||||
Contract liabilities
|
—
|
|
|
—
|
|
|
87.5
|
|
|
71.3
|
|
|
—
|
|
|
—
|
|
|
158.8
|
|
|||||||
Accrued expenses and other current liabilities
|
—
|
|
|
173.3
|
|
|
262.0
|
|
|
86.8
|
|
|
—
|
|
|
—
|
|
|
522.1
|
|
|||||||
Total current liabilities
|
—
|
|
|
231.7
|
|
|
1,946.3
|
|
|
346.0
|
|
|
—
|
|
|
(1.9
|
)
|
|
2,522.1
|
|
|||||||
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
|
—
|
|
|
43.0
|
|
|
4.7
|
|
|
214.9
|
|
|
—
|
|
|
(209.9
|
)
|
|
52.7
|
|
|||||||
Total long-term liabilities
|
—
|
|
|
3,243.7
|
|
|
113.1
|
|
|
313.8
|
|
|
—
|
|
|
(211.6
|
)
|
|
3,459.0
|
|
|||||||
Total stockholders' equity
|
985.6
|
|
|
983.9
|
|
|
2,738.7
|
|
|
327.4
|
|
|
—
|
|
|
(4,050.0
|
)
|
|
985.6
|
|
|||||||
Total Liabilities and Stockholders' Equity
|
$
|
985.6
|
|
|
$
|
4,459.3
|
|
|
$
|
4,798.1
|
|
|
$
|
987.2
|
|
|
$
|
—
|
|
|
$
|
(4,263.5
|
)
|
|
$
|
6,966.7
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,123.4
|
|
|
$
|
483.0
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,606.4
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
2,597.0
|
|
|
405.5
|
|
|
—
|
|
|
—
|
|
|
3,002.5
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
526.4
|
|
|
77.5
|
|
|
—
|
|
|
—
|
|
|
603.9
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
34.5
|
|
|
272.4
|
|
|
55.8
|
|
|
—
|
|
|
—
|
|
|
362.7
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
35.2
|
|
|
1.9
|
|
|
—
|
|
|
—
|
|
|
37.1
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(34.5
|
)
|
|
218.8
|
|
|
19.8
|
|
|
—
|
|
|
—
|
|
|
204.1
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(37.1
|
)
|
|
1.0
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(37.7
|
)
|
|||||||
Other (expense) income
|
—
|
|
|
—
|
|
|
0.4
|
|
|
(1.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.7
|
)
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(71.6
|
)
|
|
220.2
|
|
|
17.1
|
|
|
—
|
|
|
—
|
|
|
165.7
|
|
|||||||
Income tax (expense) benefit
|
(0.1
|
)
|
|
20.8
|
|
|
(55.3
|
)
|
|
(4.1
|
)
|
|
—
|
|
|
—
|
|
|
(38.7
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
(0.1
|
)
|
|
(50.8
|
)
|
|
164.9
|
|
|
13.0
|
|
|
—
|
|
|
—
|
|
|
127.0
|
|
|||||||
Equity in earnings of subsidiaries
|
127.1
|
|
|
177.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(305.0
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
127.0
|
|
|
$
|
127.1
|
|
|
$
|
164.9
|
|
|
$
|
13.0
|
|
|
$
|
—
|
|
|
$
|
(305.0
|
)
|
|
$
|
127.0
|
|
Consolidating Statement of Operations
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2017
|
|||||||||||||||||||||||||||
(as adjusted)
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net sales
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,886.3
|
|
|
$
|
369.7
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,256.0
|
|
Cost of sales
|
—
|
|
|
—
|
|
|
2,393.0
|
|
|
309.5
|
|
|
—
|
|
|
—
|
|
|
2,702.5
|
|
|||||||
Gross profit
|
—
|
|
|
—
|
|
|
493.3
|
|
|
60.2
|
|
|
—
|
|
|
—
|
|
|
553.5
|
|
|||||||
Selling and administrative expenses
|
—
|
|
|
31.5
|
|
|
269.8
|
|
|
46.1
|
|
|
—
|
|
|
—
|
|
|
347.4
|
|
|||||||
Advertising expense
|
—
|
|
|
—
|
|
|
34.0
|
|
|
1.4
|
|
|
—
|
|
|
—
|
|
|
35.4
|
|
|||||||
Income (loss) from operations
|
—
|
|
|
(31.5
|
)
|
|
189.5
|
|
|
12.7
|
|
|
—
|
|
|
—
|
|
|
170.7
|
|
|||||||
Interest (expense) income, net
|
—
|
|
|
(39.1
|
)
|
|
1.0
|
|
|
(1.6
|
)
|
|
—
|
|
|
—
|
|
|
(39.7
|
)
|
|||||||
Net loss on extinguishments of long-term debt
|
—
|
|
|
(57.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(57.4
|
)
|
|||||||
Other income
|
—
|
|
|
—
|
|
|
0.2
|
|
|
0.7
|
|
|
—
|
|
|
—
|
|
|
0.9
|
|
|||||||
Income (loss) before income taxes
|
—
|
|
|
(128.0
|
)
|
|
190.7
|
|
|
11.8
|
|
|
—
|
|
|
—
|
|
|
74.5
|
|
|||||||
Income tax (expense) benefit
|
—
|
|
|
57.3
|
|
|
(70.6
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
—
|
|
|
(16.3
|
)
|
|||||||
Income (loss) before equity in earnings of subsidiaries
|
—
|
|
|
(70.7
|
)
|
|
120.1
|
|
|
8.8
|
|
|
—
|
|
|
—
|
|
|
58.2
|
|
|||||||
Equity in earnings of subsidiaries
|
58.2
|
|
|
128.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(187.1
|
)
|
|
—
|
|
|||||||
Net income
|
$
|
58.2
|
|
|
$
|
58.2
|
|
|
$
|
120.1
|
|
|
$
|
8.8
|
|
|
$
|
—
|
|
|
$
|
(187.1
|
)
|
|
$
|
58.2
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
144.4
|
|
|
$
|
144.5
|
|
|
$
|
164.9
|
|
|
$
|
27.2
|
|
|
$
|
—
|
|
|
$
|
(336.6
|
)
|
|
$
|
144.4
|
|
Condensed Consolidating Statement of Comprehensive Income
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2017
|
|||||||||||||||||||||||||||
(as adjusted)
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Comprehensive income
|
$
|
64.3
|
|
|
$
|
64.3
|
|
|
$
|
120.1
|
|
|
$
|
15.3
|
|
|
$
|
—
|
|
|
$
|
(199.7
|
)
|
|
$
|
64.3
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2018
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(13.8
|
)
|
|
$
|
239.6
|
|
|
$
|
10.8
|
|
|
$
|
—
|
|
|
$
|
(14.4
|
)
|
|
$
|
222.2
|
|
Cash flows used in investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(11.1
|
)
|
|
(1.2
|
)
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|
(15.9
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(11.1
|
)
|
|
(1.2
|
)
|
|
(3.6
|
)
|
|
—
|
|
|
—
|
|
|
(15.9
|
)
|
|||||||
Cash flows (used in) provided by financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facilities
|
—
|
|
|
163.0
|
|
|
—
|
|
|
7.0
|
|
|
—
|
|
|
—
|
|
|
170.0
|
|
|||||||
Repayments of borrowings under revolving credit facilities
|
—
|
|
|
(163.0
|
)
|
|
—
|
|
|
(7.0
|
)
|
|
—
|
|
|
—
|
|
|
(170.0
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(3.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
(0.9
|
)
|
|
1.0
|
|
|
24.8
|
|
|
—
|
|
|
—
|
|
|
24.9
|
|
|||||||
Premium payments on interest rate cap agreements
|
—
|
|
|
(12.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12.6
|
)
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
7.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7.3
|
|
|||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
2.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|||||||
Repurchases of common stock
|
(109.2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(109.2
|
)
|
|||||||
Payment of incentive compensation plan withholding taxes
|
(8.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8.7
|
)
|
|||||||
Dividends
|
(32.0
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(32.0
|
)
|
|||||||
Other
|
—
|
|
|
0.7
|
|
|
(0.1
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
0.4
|
|
|||||||
Distributions and advances from (to) affiliates
|
149.9
|
|
|
91.3
|
|
|
(239.3
|
)
|
|
—
|
|
|
—
|
|
|
(1.9
|
)
|
|
—
|
|
|||||||
Net cash (used in) provided by financing activities
|
—
|
|
|
84.5
|
|
|
(238.4
|
)
|
|
24.6
|
|
|
—
|
|
|
(1.9
|
)
|
|
(131.2
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|
—
|
|
|
—
|
|
|
1.7
|
|
|||||||
Net increase in cash and cash equivalents
|
—
|
|
|
59.6
|
|
|
—
|
|
|
33.5
|
|
|
—
|
|
|
(16.3
|
)
|
|
76.8
|
|
|||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
113.7
|
|
|
—
|
|
|
32.4
|
|
|
—
|
|
|
(1.9
|
)
|
|
144.2
|
|
|||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
173.3
|
|
|
$
|
—
|
|
|
$
|
65.9
|
|
|
$
|
—
|
|
|
$
|
(18.2
|
)
|
|
$
|
221.0
|
|
Condensed Consolidating Statement of Cash Flows
|
|||||||||||||||||||||||||||
Three Months Ended March 31, 2017
|
|||||||||||||||||||||||||||
(as adjusted)
|
|||||||||||||||||||||||||||
(in millions)
|
Parent
Guarantor
|
|
Subsidiary
Issuer
|
|
Guarantor
Subsidiaries
|
|
Non-Guarantor
Subsidiaries
|
|
Co-Issuer
|
|
Consolidating
Adjustments
|
|
Consolidated
|
||||||||||||||
Net cash provided by operating activities
|
$
|
—
|
|
|
$
|
24.5
|
|
|
$
|
333.2
|
|
|
$
|
38.2
|
|
|
$
|
—
|
|
|
$
|
(26.0
|
)
|
|
$
|
369.9
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Capital expenditures
|
—
|
|
|
(14.6
|
)
|
|
(2.4
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
|
(19.6
|
)
|
|||||||
Net cash used in investing activities
|
—
|
|
|
(14.6
|
)
|
|
(2.4
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
|
(19.6
|
)
|
|||||||
Cash flows (used in) provided by financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Proceeds from borrowings under revolving credit facilities
|
—
|
|
|
38.0
|
|
|
—
|
|
|
6.1
|
|
|
—
|
|
|
—
|
|
|
44.1
|
|
|||||||
Repayments of borrowings under revolving credit facilities
|
—
|
|
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
|
—
|
|
|
—
|
|
|
(6.1
|
)
|
|||||||
Repayments of long-term debt
|
—
|
|
|
(3.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3.7
|
)
|
|||||||
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
|
)
|
|||||||
Payment of debt financing fees
|
—
|
|
|
(9.6
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(9.6
|
)
|
|||||||
Net change in accounts payable-inventory financing
|
—
|
|
|
(0.9
|
)
|
|
(132.2
|
)
|
|
(2.6
|
)
|
|
—
|
|
|
—
|
|
|
(135.7
|
)
|
|||||||
Proceeds from stock option exercises
|
—
|
|
|
4.4
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
|||||||
Proceeds from Coworker Stock Purchase Plan
|
—
|
|
|
2.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2.1
|
|
|||||||
Repurchases of common stock
|
(175.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(175.4
|
)
|
|||||||
Payment of incentive compensation plan withholding taxes
|
—
|
|
|
(10.4
|
)
|
|
(7.7
|
)
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(18.3
|
)
|
|||||||
Dividends
|
(25.5
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(25.5
|
)
|
|||||||
Other
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|
—
|
|
|
—
|
|
|
(0.2
|
)
|
|||||||
Distributions and advances from (to) affiliates
|
200.9
|
|
|
(9.3
|
)
|
|
(194.0
|
)
|
|
—
|
|
|
—
|
|
|
2.4
|
|
|
—
|
|
|||||||
Net cash used in financing activities
|
—
|
|
|
(27.7
|
)
|
|
(333.9
|
)
|
|
(3.0
|
)
|
|
—
|
|
|
2.4
|
|
|
(362.2
|
)
|
|||||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|
—
|
|
|
—
|
|
|
(0.1
|
)
|
|||||||
Net (decrease) increase in cash and cash equivalents
|
—
|
|
|
(17.8
|
)
|
|
(3.1
|
)
|
|
32.5
|
|
|
—
|
|
|
(23.6
|
)
|
|
(12.0
|
)
|
|||||||
Cash and cash equivalents—beginning of period
|
—
|
|
|
222.7
|
|
|
3.1
|
|
|
37.9
|
|
|
—
|
|
|
—
|
|
|
263.7
|
|
|||||||
Cash and cash equivalents—end of period
|
$
|
—
|
|
|
$
|
204.9
|
|
|
$
|
—
|
|
|
$
|
70.4
|
|
|
$
|
—
|
|
|
$
|
(23.6
|
)
|
|
$
|
251.7
|
|
13.
|
Subsequent Events
|
•
|
General economic conditions are a key factor affecting our ability to generate sales and achieve our targeted operating results as they impact our customers’ willingness to spend on information technology. This is particularly the case for 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. Additionally, changes in trade policy could have an adverse impact on our business.
|
•
|
Changes in spending policies, budget priorities and funding levels are a key factor influencing government, healthcare and education purchasing levels.
|
•
|
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.
|
•
|
There continues to be substantial uncertainty regarding the impact of the Referendum on the UK's 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.
|
|
Three Months Ended March 31,
|
||||||
(dollars in millions)
|
2018
|
|
2017
(1)
|
||||
Net sales
|
$
|
3,606.4
|
|
|
$
|
3,256.0
|
|
Gross profit
|
603.9
|
|
|
553.5
|
|
||
Income from operations
|
204.1
|
|
|
170.7
|
|
||
Net income
|
127.0
|
|
|
58.2
|
|
||
Non-GAAP net income
|
162.8
|
|
|
121.9
|
|
||
Adjusted EBITDA
|
279.8
|
|
|
250.1
|
|
||
Average daily sales
(2)
|
56.4
|
|
|
50.9
|
|
||
Net debt
(3)
|
3,014.5
|
|
|
3,028.8
|
|
||
Cash conversion cycle (in days)
(4)
|
17
|
|
|
19
|
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606).
|
(2)
|
There were 64 selling days for both the three months ended March 31, 2018 and 2017.
|
(3)
|
Defined as Total debt minus Cash and cash equivalents.
|
(4)
|
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.
|
|
|
Three Months Ended March 31,
|
||||||||||||
|
|
2018
|
|
2017
(1)
|
||||||||||
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
|
Dollars in
Millions
|
|
Percentage of
Net Sales
|
||||||
Net sales
|
|
$
|
3,606.4
|
|
|
100.0
|
%
|
|
$
|
3,256.0
|
|
|
100.0
|
%
|
Cost of sales
|
|
3,002.5
|
|
|
83.3
|
|
|
2,702.5
|
|
|
83.0
|
|
||
Gross profit
|
|
603.9
|
|
|
16.7
|
|
|
553.5
|
|
|
17.0
|
|
||
Selling and administrative expenses
|
|
362.7
|
|
|
10.1
|
|
|
347.4
|
|
|
10.7
|
|
||
Advertising expense
|
|
37.1
|
|
|
1.0
|
|
|
35.4
|
|
|
1.1
|
|
||
Income from operations
|
|
204.1
|
|
|
5.7
|
|
|
170.7
|
|
|
5.2
|
|
||
Interest expense, net
|
|
(37.7
|
)
|
|
(1.0
|
)
|
|
(39.7
|
)
|
|
(1.2
|
)
|
||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
—
|
|
|
(57.4
|
)
|
|
(1.8
|
)
|
||
Other (expense) income, net
|
|
(0.7
|
)
|
|
—
|
|
|
0.9
|
|
|
—
|
|
||
Income before income taxes
|
|
165.7
|
|
|
4.6
|
|
|
74.5
|
|
|
2.3
|
|
||
Income tax expense
|
|
(38.7
|
)
|
|
(1.1
|
)
|
|
(16.3
|
)
|
|
(0.5
|
)
|
||
Net income
|
|
$
|
127.0
|
|
|
3.5
|
%
|
|
$
|
58.2
|
|
|
1.8
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
|
|
Three Months Ended March 31,
|
|
|
|
|
|||||||||||||||
|
|
2018
|
|
2017
(1)
|
|
|
|
|
|||||||||||||
(dollars in millions)
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Net Sales
|
|
Percentage
of Total Net Sales
|
|
Dollar
Change
|
|
Percent
Change
(2)
|
|||||||||
Corporate
|
|
$
|
1,565.8
|
|
|
43.4
|
%
|
|
$
|
1,440.6
|
|
|
44.2
|
%
|
|
$
|
125.2
|
|
|
8.7
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Small Business
|
|
327.6
|
|
|
9.1
|
|
|
292.0
|
|
|
9.0
|
|
|
35.6
|
|
|
12.2
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Public:
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Government
|
|
418.5
|
|
|
11.6
|
|
|
374.6
|
|
|
11.5
|
|
|
43.9
|
|
|
11.7
|
|
|||
Education
|
|
397.2
|
|
|
11.0
|
|
|
393.2
|
|
|
12.1
|
|
|
4.0
|
|
|
1.0
|
|
|||
Healthcare
|
|
414.3
|
|
|
11.5
|
|
|
385.9
|
|
|
11.8
|
|
|
28.4
|
|
|
7.3
|
|
|||
Total Public
|
|
1,230.0
|
|
|
34.1
|
|
|
1,153.7
|
|
|
35.4
|
|
|
76.3
|
|
|
6.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Other
|
|
483.0
|
|
|
13.4
|
|
|
369.7
|
|
|
11.4
|
|
|
113.3
|
|
|
30.6
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Total net sales
|
|
$
|
3,606.4
|
|
|
100.0
|
%
|
|
$
|
3,256.0
|
|
|
100.0
|
%
|
|
$
|
350.4
|
|
|
10.8
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
There were 64 selling days for both the three months ended March 31, 2018 and 2017.
|
|
|
Three Months Ended March 31,
|
|
|
|||||||||||||
|
|
2018
|
|
2017
(1)
|
|
|
|||||||||||
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Dollars in
Millions
|
|
Operating
Margin
Percentage
|
|
Percent Change
in Income
from Operations
|
|||||||
Segments:
(2)
|
|
|
|
|
|
|
|
|
|
|
|||||||
Corporate
|
|
$
|
124.8
|
|
|
8.0
|
%
|
|
$
|
112.1
|
|
|
7.8
|
%
|
|
11.3
|
%
|
Small Business
|
|
22.3
|
|
|
6.8
|
|
|
16.6
|
|
|
5.7
|
|
|
33.9
|
|
||
Public
|
|
71.7
|
|
|
5.8
|
|
|
60.8
|
|
|
5.3
|
|
|
18.1
|
|
||
Other
(3)
|
|
19.8
|
|
|
4.1
|
|
|
12.7
|
|
|
3.4
|
|
|
56.1
|
|
||
Headquarters
(4)
|
|
(34.5
|
)
|
|
nm*
|
|
|
(31.5
|
)
|
|
nm*
|
|
|
9.3
|
|
||
Total income from operations
|
|
$
|
204.1
|
|
|
5.7
|
%
|
|
$
|
170.7
|
|
|
5.2
|
%
|
|
19.6
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Segment income from operations includes the segment’s direct operating income, allocations for Headquarters’ costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.
|
(3)
|
Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.
|
(4)
|
Includes certain Headquarters' function costs that are not allocated to the segments.
|
Month of Extinguishment
|
Debt Instrument
|
|
(in millions)
|
|
||||||
|
Amount Extinguished
|
|
Loss Recognized
|
|
||||||
February 2017
|
Senior Secured Term Loan Facility
|
|
$
|
1,483.0
|
|
|
$
|
(13.7
|
)
|
|
March 2017
|
Senior Notes due 2022
|
|
600.0
|
|
|
(42.5
|
)
|
(1)
|
||
March 2017
|
Senior secured asset-based revolving credit facility
|
|
—
|
|
|
(1.2
|
)
|
|
||
|
Total Loss Recognized
|
|
|
|
$
|
(57.4
|
)
|
|
(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 fees and premium.
|
|
|
Three Months Ended March 31,
|
||||||||||||||||||||||
|
|
2018
|
|
2017
(1)
|
||||||||||||||||||||
(dollars in millions)
|
|
Income before income taxes
|
|
Income tax expense
(2)
|
|
Net income
|
|
Income before income taxes
|
|
Income tax expense
|
|
Net income
|
||||||||||||
GAAP (as reported)
|
|
$
|
165.7
|
|
|
$
|
(38.7
|
)
|
|
$
|
127.0
|
|
|
$
|
74.5
|
|
|
$
|
(16.3
|
)
|
|
$
|
58.2
|
|
Amortization of intangibles
(3)
|
|
46.7
|
|
|
(12.3
|
)
|
|
34.4
|
|
|
46.1
|
|
|
(16.6
|
)
|
|
29.5
|
|
||||||
Equity-based compensation
|
|
8.1
|
|
|
(7.0
|
)
|
|
1.1
|
|
|
12.1
|
|
|
(15.8
|
)
|
|
(3.7
|
)
|
||||||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
57.4
|
|
|
(20.7
|
)
|
|
36.7
|
|
||||||
Integration expenses
(4)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.5
|
|
|
(0.2
|
)
|
|
0.3
|
|
||||||
Other adjustments
(5)
|
|
0.5
|
|
|
(0.2
|
)
|
|
0.3
|
|
|
1.4
|
|
|
(0.5
|
)
|
|
0.9
|
|
||||||
Non-GAAP
|
|
$
|
221.0
|
|
|
$
|
(58.2
|
)
|
|
$
|
162.8
|
|
|
$
|
192.0
|
|
|
$
|
(70.1
|
)
|
|
$
|
121.9
|
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Income tax on non-GAAP adjustments includes excess tax benefits associated with equity compensation, and the impact
|
(3)
|
Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
|
(4)
|
Comprised of expenses related to CDW UK.
|
(5)
|
Includes other expenses such as payroll taxes on equity-based compensation during the three months ended
March 31, 2018 and 2017
.
|
|
|
Three Months Ended March 31,
|
||||||||||||
(in millions)
|
|
2018
|
|
Percentage of Net Sales
|
|
2017
(1)
|
|
Percentage of Net Sales
|
||||||
Net income
|
|
$
|
127.0
|
|
|
|
|
$
|
58.2
|
|
|
|
||
Depreciation and amortization
|
|
66.6
|
|
|
|
|
64.2
|
|
|
|
||||
Income tax expense
|
|
38.7
|
|
|
|
|
16.3
|
|
|
|
||||
Interest expense, net
|
|
37.7
|
|
|
|
|
39.7
|
|
|
|
||||
EBITDA
|
|
270.0
|
|
|
7.5
|
%
|
|
178.4
|
|
|
5.5
|
%
|
||
|
|
|
|
|
|
|
|
|
||||||
Adjustments:
|
|
|
|
|
|
|
|
|
||||||
Equity-based compensation
|
|
8.1
|
|
|
|
|
12.1
|
|
|
|
||||
Net loss on extinguishments of long-term debt
|
|
—
|
|
|
|
|
57.4
|
|
|
|
||||
Income from equity investment
(2)
|
|
(0.3
|
)
|
|
|
|
(0.2
|
)
|
|
|
||||
Integration expenses
(3)
|
|
—
|
|
|
|
|
0.5
|
|
|
|
||||
Other adjustments
(4)
|
|
2.0
|
|
|
|
|
1.9
|
|
|
|
||||
Total adjustments
|
|
9.8
|
|
|
|
|
71.7
|
|
|
|
||||
Adjusted EBITDA
|
|
$
|
279.8
|
|
|
7.8
|
%
|
|
$
|
250.1
|
|
|
7.7
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Represents our share of net income from our equity investment.
|
(3)
|
Comprised of expenses related to CDW UK.
|
(4)
|
Includes other expenses such as payroll taxes on equity-based compensation during the three months ended
March 31, 2018 and 2017
. Also includes historical retention costs during the three months ended
March 31, 2017
.
|
|
|
Three Months Ended March 31,
|
||||||||||||
(in millions)
|
|
2018
|
|
2017
(1)
|
|
% Change
|
|
Average Daily % Change
(2)
|
||||||
Consolidated Net sales, as reported
|
|
$
|
3,606.4
|
|
|
$
|
3,256.0
|
|
|
10.8
|
%
|
|
10.8
|
%
|
Foreign currency translation
(3)
|
|
—
|
|
|
34.9
|
|
|
|
|
|
||||
Consolidated Net sales, on a constant currency basis
|
|
$
|
3,606.4
|
|
|
$
|
3,290.9
|
|
|
9.6
|
%
|
|
9.6
|
%
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
There were 64 selling days for both the three months ended March 31, 2018 and 2017.
|
(3)
|
Represents the effect of translating the prior year results of CDW UK and CDW Canada's results at the average exchange rates applicable in the current year.
|
Dividend Amount
|
|
Declaration Date
|
|
Record Date
|
|
Payment Date
|
$0.21
|
|
February 7, 2018
|
|
February 26, 2018
|
|
March 12, 2018
|
|
Three Months Ended March 31,
|
||||||
(in millions)
|
2018
|
|
2017
|
||||
Net cash provided by (used in):
|
|
|
|
||||
Operating activities
|
$
|
222.2
|
|
|
$
|
369.9
|
|
Investing activities
|
(15.9
|
)
|
|
(19.6
|
)
|
||
Net change in accounts payable-inventory financing
|
24.9
|
|
|
(135.7
|
)
|
||
Other financing activities
|
(156.1
|
)
|
|
(226.5
|
)
|
||
Financing activities
|
(131.2
|
)
|
|
(362.2
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1.7
|
|
|
(0.1
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
$
|
76.8
|
|
|
$
|
(12.0
|
)
|
|
Three Months Ended March 31,
|
||||||||||
(in millions)
|
2018
|
|
2017
(1)
|
|
Dollar Change
|
||||||
Net income
|
$
|
127.0
|
|
|
$
|
58.2
|
|
|
$
|
68.8
|
|
Adjustments for the impact of non-cash items
(2)
|
62.4
|
|
|
119.4
|
|
|
(57.0
|
)
|
|||
Net income adjusted for the impact of non-cash items
(3)
|
189.4
|
|
|
177.6
|
|
|
11.8
|
|
|||
Changes in assets and liabilities:
|
|
|
|
|
|
||||||
Accounts receivable
(4)
|
60.5
|
|
|
184.7
|
|
|
(124.2
|
)
|
|||
Merchandise inventory
(5)
|
(72.4
|
)
|
|
(36.0
|
)
|
|
(36.4
|
)
|
|||
Accounts payable-trade
|
(29.8
|
)
|
|
(10.4
|
)
|
|
(19.4
|
)
|
|||
Other
|
74.5
|
|
|
54.0
|
|
|
20.5
|
|
|||
Net cash provided by operating activities
|
$
|
222.2
|
|
|
$
|
369.9
|
|
|
$
|
(147.7
|
)
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
Includes items such as deferred income taxes, depreciation and amortization, equity-based compensation expense and Net loss on extinguishments of long-term debt.
|
(3)
|
The change is primarily due to stronger operating results driven by Net sales and Gross profit growth, partially offset by higher sales payroll.
|
(4)
|
The change in Accounts receivable was primarily due to the increased sales volume during the first quarter of 2018 compared to 2017, coupled with higher cash collections during the first quarter of 2017.
|
(5)
|
The change in Merchandise inventory was primarily due to the timing of inventory shipments to customers during the first quarter of 2018 compared to the same period in the prior year, offset by lower on-hand inventory in the first quarter of 2018 as a result of higher strategic stocking positions in the first quarter of 2017.
|
|
March 31,
|
||||
(in days)
|
2018
|
|
2017
(1)
|
||
Days of sales outstanding (“DSO”)
(2)
|
54
|
|
|
51
|
|
Days of supply in inventory (“DIO”)
(3)
|
12
|
|
|
14
|
|
Days of purchases outstanding (“DPO”)
(4)
|
(49
|
)
|
|
(46
|
)
|
Cash conversion cycle
|
17
|
|
|
19
|
|
(1)
|
Amounts for 2017 have been adjusted to reflect the adoption of Topic 606.
|
(2)
|
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.
|
(3)
|
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.
|
(4)
|
Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.
|
Period
|
|
Total Number of Shares Purchased (in millions)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Program (in millions)
|
|
Maximum Dollar Value of Shares that May Yet be Purchased Under the Program
(1)
(in millions)
|
||||||
January 1 through January 31, 2018
|
|
0.4
|
|
|
$
|
73.20
|
|
|
0.4
|
|
|
$
|
829.6
|
|
February 1 through February 28, 2018
|
|
0.6
|
|
|
$
|
71.17
|
|
|
0.6
|
|
|
$
|
786.2
|
|
March 1 through March 31, 2018
|
|
0.5
|
|
|
$
|
73.96
|
|
|
0.5
|
|
|
$
|
748.9
|
|
Total
|
|
1.5
|
|
|
|
|
|
1.5
|
|
|
|
(1)
|
The amounts presented in this column are the remaining total authorized value to be spent after each month's repurchases. On August 3, 2017, the Company announced that its Board of Directors authorized a $750 million increase to the share repurchase program under which the Company may repurchase shares of its common stock in the open market through privately negotiated or other transactions, depending on share price, market conditions and other factors.
|
Exhibit
|
|
Description
|
|
|
|
10.1*
|
|
|
|
|
|
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.
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
*
|
Filed herewith
|
**
|
These items are furnished and not filed.
|
|
|
|
|
|
|
|
|
|
CDW CORPORATION
|
||
|
|
|
|
|
|
Date:
|
May 2, 2018
|
|
By:
|
|
/s/ Collin B. Kebo
|
|
|
|
|
|
Collin B. Kebo
|
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
|
(Duly authorized officer and principal financial officer)
|
1.
|
I have reviewed this quarterly report on Form 10-Q of the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Thomas E. Richards
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
CDW Corporation
|
May 2, 2018
|
1.
|
I have reviewed this quarterly report on Form 10-Q of the registrant;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
/s/ Collin B. Kebo
|
Collin B. Kebo
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
May 2, 2018
|
/s/ Thomas E. Richards
|
Thomas E. Richards
|
Chairman, President and Chief Executive Officer
|
CDW Corporation
|
May 2, 2018
|
/s/ Collin B. Kebo
|
Collin B. Kebo
|
Senior Vice President and Chief Financial Officer
|
CDW Corporation
|
May 2, 2018
|