×

CDW Reports Second Quarter 2014 Results

CDW Corporation Logo

Achieves Record Net Sales, Adjusted EBITDA and Non-GAAP Net Income Per Share

(Dollars in millions, except per share amounts) Three months
ended
June 30,
2014
Three months
ended
June 30,
2013



% Chg.
Six months
ended
June 30,
2014
Six months
ended
June 30,
2013



% Chg.
Net Sales $ 3,106.0 $ 2,779.3 11.8 $ 5,758.3 $ 5,191.0 10.9
Gross Profit 496.9 451.6 10.0 922.1 853.6 8.0
Net Income 86.6 46.7 85.5 137.5 75.0 83.4
Net Income per Diluted Share $ 0.50 $ 0.32 57.6 $ 0.80 $ 0.51 55.8
Non-GAAP Net Income per Diluted Share1 $ 0.67 $ 0.46 45.6 $ 1.14 $ 0.79 44.8
Adjusted EBITDA1 $ 247.1 $ 212.6 16.3 $ 440.8 $ 391.2 12.7
1Measures used in this release that are not based on accounting principles generally accepted in the United States of America ("non-GAAP") are each defined and reconciled to the most directly comparable GAAP measure in the attached schedules.

VERNON HILLS, Ill., July 31, 2014 (GLOBE NEWSWIRE) -- CDW Corporation (Nasdaq:CDW), a leading multi-brand technology solutions provider to business, government, education and healthcare, today announced second quarter 2014 results. The company also announced that its Board of Directors has approved the payment of a quarterly cash dividend to shareholders of $0.0425 per share. This dividend will be paid on September 10, 2014 to all shareholders of record as of the close of business on August 25, 2014.

"We outperformed the US IT market once again in the second quarter, delivering excellent top-line and profit growth driven by the combined power of our diverse customer channels, our full suite of offerings that address customer priorities across the IT landscape, and our ongoing strategic progress," said Thomas E. Richards, chairman and chief executive officer of CDW.

"Sales growth of nearly 12 percent was powered by continued exceptional performance in K-12 education and excellent results in both Small Business and Healthcare. Sales to the Federal government returned to growth and both State & Local and Higher Education delivered strong results. Continued customer focus on refreshing client devices and the implementation of digital education testing drove significant increases in PC sales. Despite higher sales from these lower-margin products, we generated strong profitability, with Adjusted EBITDA up 16.3 percent and non-GAAP net income per share up 45.6 percent."

"Since our initial public offering last June we have paid down $647 million in net debt, lowering our annualized interest expense by nearly $90 million," said Ann E. Ziegler, CDW's chief financial officer. "We expect ongoing strong operating results coupled with the impact of lower interest expense from these actions as well as additional refinancing actions this year to continue to amplify net income growth and enable us to exceed our medium-term target of mid-teens annual earnings per share growth in 2014."

"Given our strong first half results and expectations for the balance of the year, we expect to exceed our medium-term target of outpacing US IT market growth by 200 to 300 basis points in 2014," continued Richards. "We will do that by remaining laser-focused on meeting the needs of our 250,000 customers in the US and Canada and remaining the partner of choice for more than 1,000 leading and emerging technology brands as the technology market continues to evolve."

Second Quarter of 2014 Highlights:

Total net sales in the second quarter of 2014 were $3.106 billion, compared to $2.779 billion in the second quarter of 2013, an increase of 11.8 percent. Average daily sales in the second quarter of 2014 were $48.5 million, compared to $43.4 million in the second quarter of 2013. There were 64 selling days in both the second quarters of 2014 and 2013.

  • Total Corporate segment net sales in the second quarter of 2014 were $1.656 billion, 7.7 percent higher than the second quarter of 2013. Corporate average daily sales in the second quarter of 2014 were $25.9 million, compared to $24.0 million in the second quarter of 2013. Corporate results reflected mid-teens sales increases to Small Business customers and mid-single digit increases to Medium and Large Business customers.
  • Total Public segment net sales in the second quarter of 2014 were $1.272 billion, 17.5 percent higher than the second quarter of 2013. Public average daily sales in the second quarter of 2014 were $19.9 million, compared to $16.9 million in the second quarter of 2013. Public results were led by sales increases of more than 25 percent to Education customers and high-teen growth in Healthcare. Sales to Government customers increased mid-single digits as sales to the Federal government returned to growth and State & Local government sales increased in the low double digits.
  • Net sales for CDW's Advanced Services business and Canadian operations, combined as "Other" for financial reporting purposes, rose 11.9 percent to $178.2 million in the second quarter of 2014, compared to $159.3 million in the second quarter of 2013. Average daily sales in the second quarter of 2014 were $2.8 million, compared to $2.5 million in the second quarter of 2013. CDW's Advanced Services business consists of customized engineering services delivered by CDW professional engineers and managed services, including hosting and data center services. Canadian sales were negatively affected by currency translation.

Gross profit for the second quarter of 2014 was $496.9 million, compared to $451.6 million in the second quarter of 2013, representing an increase of 10.0 percent. Gross profit margin was 16.0 percent in the second quarter of 2014, versus 16.2 percent for the same period of 2013, primarily reflecting the ongoing impact of both mix and pricing pressure from lower-margined, more transactional products.

Total selling and administrative expenses, including advertising expense, were $308.7 million in the second quarter of 2014, compared to $298.0 million in the second quarter of 2013. The increase primarily reflected higher coworker compensation related to increased coworker count and increased attainment-based compensation accruals consistent with year-to-date performance, as well as higher marketing and advertising spend. Coworker count was 7,151 as of June 30, 2014, compared to 6,810 as of June 30, 2013.

Excluding expenses related to non-cash equity and retention compensation expense and certain other items, Adjusted EBITDA was $247.1 million in the second quarter of 2014, compared to $212.6 million in the second quarter of 2013, representing an increase of 16.3 percent. Second quarter 2014 Adjusted EBITDA margin was 8.0 percent, approximately 40 basis points higher than the second quarter of 2013.

Interest expense decreased by $21.8 million to $48.5 million for the three months ended June 30, 2014 compared to $70.3 million for the comparable period in 2013, reflecting lower outstanding debt balances and a lower average interest rate. During the second quarter of 2014, the company recorded debt extinguishment charges of $2.6 million primarily due to its redemption of $42.5 million aggregate principal amount of 12.535% Senior Subordinated Exchange Notes due 2017. There were $10.3 million of debt extinguishment charges in the second quarter of 2013. Long-term debt, net of cash and including current maturities of long-term debt, was $2.90 billion as of June 30, 2014, $646.7 million lower than June 30, 2013.

The effective tax rate for the second quarter of 2014 was 36.9 percent versus 36.2 percent in the second quarter of 2013.

Net income was $86.6 million in the second quarter of 2014 versus net income of $46.7 million in the second quarter of 2013. Non-GAAP net income, which excludes intangible asset amortization expense related to the 2007 going-private transaction, certain debt refinancing expenses and certain other costs was $115.9 million in the second quarter of 2014, compared to $79.2 million in the second quarter of 2013, representing an increase of 46.3 percent driven by stronger operating results and lower interest expense.

Weighted average non-GAAP fully-diluted shares outstanding were 172.7 million for the quarter ended June 30, 2014 compared to 171.9 million for the quarter ended June 30, 2013. Non-GAAP net income per share for the quarter ended June 30, 2014 was $0.67.

First Six Months of 2014 Highlights:

Total net sales in the first six months of 2014 were $5.758 billion, compared to $5.191 billion in the first six months of 2013, an increase of 10.9 percent. Average daily sales for the first six months of 2014 were $45.3 million, compared to $40.9 million for the first six months of 2013, representing a 10.9 percent increase. There were 127 selling days in the first six months of both 2014 and 2013.

Gross profit for the first six months of 2014 was $922.1 million, compared to $853.6 million in the first six months of 2013, representing an increase of 8.0 percent.

Total selling and administrative expenses, including advertising expense, were $598.1 million in the first six months of 2014, compared to $579.9 million in the first six months of 2013, representing an increase of 3.1 percent. Excluding non-cash equity compensation and retention compensation expense, net litigation gains and certain other items, Adjusted EBITDA was $440.8 million in the first six months of 2014, compared to $391.2 million in the first six months of 2013, representing an increase of 12.7 percent. Adjusted EBITDA margin was 7.7 percent in the first six months of 2014 versus 7.5 percent in the first six months of 2013.

Net income was $137.5 million for the first six months of 2014, up 83.4 percent compared to net income of $75.0 million in the first six months of 2013. Debt extinguishment charges were $8.0 million in the first six months of 2014, compared to $14.2 million for the same period in 2013. Interest expense was $98.6 million for the first six months of 2014, 30.8 percent below interest expense of $142.4 million for the same period in 2013. The effective tax rate for the first six months of 2014 was 36.9 percent versus 36.3 percent for the first six months of 2013.

Non-GAAP net income, which excludes amortization related to the 2007 going-private transaction and certain debt refinancing and other costs, was $197.0 million in the first half of 2014, compared to $135.5 million in the first half of 2013, representing an increase of 45.4 percent driven by stronger operating results and lower interest expense.

Weighted average non-GAAP fully-diluted shares outstanding were 172.5 million for the six months ended June 30, 2014 compared to 171.8 million for the six months ended June 30, 2013. Non-GAAP net income per share for the six months ended June 30, 2014 was $1.14.

Forward-Looking Statements

Statements in this release that are not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the future financial performance of CDW. These statements involve risks and uncertainties that could cause actual results to differ materially from those described in such statements. These risks and uncertainties include, among others, changes in economic conditions; decreases in spending on technology products by CDW's public segment customers; CDW's relationships with vendor partners and availability of their products; continued innovations in hardware, software and services offerings by CDW's vendor partners; substantial competition that could reduce CDW's market share; CDW's substantial indebtedness and ability to generate sufficient cash to service such indebtedness; restrictions imposed by CDW's indebtedness on its operations and liquidity; the continuing development, maintenance and operation of CDW's information technology systems; potential breaches of data security; potential failures to comply with Public segment contracts or applicable laws and regulations; potential failures to provide high-quality services to CDW's customers; potential losses of any key personnel; potential interruptions of the flow of products from suppliers; potential adverse occurrences at one of CDW's primary facilities or customer data centers; CDW's dependence on commercial delivery services; CDW's exposure to accounts receivable and inventory risks; future acquisitions or alliances; fluctuations in CDW's operating results; current and future legal proceedings and audits; potential acceleration of CDW's deferred cancellation of debt income; and other risk factors or uncertainties identified from time to time in CDW Corporation's filings with the SEC. Although CDW believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. Reference is made to a more complete discussion of forward-looking statements and applicable risks contained under the captions "Forward-Looking Statements" and "Risk Factors" in CDW Corporation's Annual Report on Form 10-K for the year ended December 31, 2013 filed with the SEC and subsequent filings with the SEC. CDW undertakes no obligation to update or revise any of its forward-looking statements, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Information

EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP net income, and Non-GAAP net income per diluted share are non-GAAP financial measures. We believe these measures provide helpful information with respect to the company's operating performance and cash flows including our ability to meet our future debt service, capital expenditures, working capital requirements and make dividend payments. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in the company's credit agreements.

The financial statement tables that accompany this press release include a reconciliation of non-GAAP financial measures to the applicable most comparable U.S. GAAP financial measures. Non-GAAP measures used by the company may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

About CDW

CDW is a leading multi-brand technology solutions provider to business, government, education and healthcare. A FORTUNE 500 company, CDW was founded in 1984 and employs more than 7,100 coworkers. For the trailing twelve months ended June 30, 2014, the company generated net sales of $11.3 billion. For more information about CDW please visit www.CDW.com.

Webcast

CDW will hold a conference call today, July 31 at 7:30 a.m. CT/8:30 a.m. ET to discuss its second quarter 2014 financial results. The conference call, which will be broadcast live via the Internet, and a copy of this press release along with supplemental slides used during the call, can be accessed on CDW's website at investor.cdw.com. For those unable to participate in the live call, a replay of the webcast will be available at investor.cdw.com approximately 90 minutes after the completion of the call and will be accessible on the site for approximately one year.

Investor Inquiries
Sari Macrie, CFA
Vice President, Investor Relations
(847) 968-0238
Media Inquiries
Mary Viola
Vice President, Corporate Communications
(847) 968-0743

CDWPR-FI

CDW CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(dollars and shares in millions, except per-share amounts)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2014

2013
%
Change(1)

2014

2013
%
Change(2)
Net sales $ 3,106.0 $ 2,779.3 11.8% $ 5,758.3 $ 5,191.0 10.9%
Cost of sales 2,609.1 2,327.7 12.1 4,836.2 4,337.4 11.5
Gross profit 496.9 451.6 10.0 922.1 853.6 8.0
Selling and administrative expenses 273.9 266.4 2.8 534.8 517.9 3.3
Advertising expense 34.8 31.6 9.8 63.3 62.0 2.1
Income from operations 188.2 153.6 22.5 324.0 273.7 18.4
Interest expense, net (48.5) (70.3) (31.1) (98.6) (142.4) (30.8)
Net loss on extinguishments of long-term debt (2.6) (10.3) (74.9) (8.0) (14.2) (43.6)
Other income, net 0.1 0.2 (68.6) 0.6 0.6 9.2
Income before income taxes 137.2 73.2 87.4 218.0 117.7 85.3
Income tax expense (50.6) (26.5) 90.8 (80.5) (42.7) 88.6
Net income $ 86.6 $ 46.7 85.5% $ 137.5 $ 75.0 83.4%
Net income per common share:
Basic $ 0.51 $ 0.32 58.3% $ 0.81 $ 0.52 56.8%
Diluted $ 0.50 $ 0.32 57.6% $ 0.80 $ 0.51 55.8%
Weighted-average number of common shares outstanding:
Basic 170.2 145.3 169.9 145.2
Diluted 172.7 146.7 172.5 146.5

(1) There were 64 selling days for both the three months ended June 30, 2014 and 2013.

(2) There were 127 selling days for both the six months ended June 30, 2014 and 2013.

CDW CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURE RECONCILIATIONS

We have included reconciliations of Non-GAAP net income, Non-GAAP net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin for the three and six months ended June 30, 2014 and 2013 below. Non-GAAP net income excludes, among other things, charges related to the amortization of acquisition-related intangibles, non-cash equity-based compensation and gains and losses from the early extinguishment of debt. The numerator of Non-GAAP net income per diluted share is Non-GAAP net income. Non-GAAP net income per diluted share increases the number of weighted average shares in the denominator as if the 2013 IPO and the exercise of the underwriters' overallotment option had occurred at the beginning of the periods reported. EBITDA is defined as consolidated net income (loss) before interest expense, income tax expense (benefit), 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. Adjusted EBITDA margin means Adjusted EBITDA as a percentage of our net sales. Non-GAAP net income, Non-GAAP net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance, financial position, or cash flows 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 the Company 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, Non-GAAP net income per diluted share, Adjusted EBITDA and Adjusted EBITDA margin provide helpful information with respect to our operating performance and cash flows including our ability to meet our future debt service, capital expenditures and working capital requirements. Adjusted EBITDA also provides helpful information as it is the primary measure used in certain financial covenants contained in our credit agreements.

NON-GAAP NET INCOME AND NON-GAAP NET INCOME PER DILUTED SHARE

(dollars and shares in millions, except per share amounts)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2014

2013
%
Change

2014

2013
%
Change
Net income $ 86.6 $ 46.7 $ 137.5 $ 75.0
Amortization of intangibles (i) 40.3 40.1 80.6 80.5
Non-cash equity-based compensation 4.3 2.1 7.6 4.0
Net loss on extinguishments of long-term debt 2.6 10.3 8.0 14.2
Interest expense adjustment related to extinguishments of long-term debt (ii) (0.5) (1.1) (0.8)
IPO- and secondary-offering-related expenses 0.5 0.2 0.9 0.2
Aggregate adjustment for income taxes (iii) (17.9) (20.2) (36.5) (37.6)
Non-GAAP net income $ 115.9 $ 79.2 46.3% $ 197.0 $ 135.5 45.4%
GAAP net income per diluted share $ 0.50 $ 0.32 57.6% $ 0.80 $ 0.51 55.8%
Non-GAAP net income per diluted share $ 0.67 $ 0.46 45.6% $ 1.14 $ 0.79 44.8%
Shares used in computing GAAP net income per diluted share 172.7 146.7 172.5 146.5
Shares used in computing Non-GAAP net income per diluted share (iv) 172.7 171.9 172.5 171.8

(i) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships and trade names.

(ii) Reflects adjustments to interest expense resulting from debt extinguishments. Represents the difference between interest expense previously recognized under the effective interest method and actual interest paid.

(iii) Based on a normalized effective tax rate of 39.0%.

(iv) Non-GAAP net income per diluted share increases the number of weighted average shares in the denominator as if the 2013 IPO and the exercise of the underwriters' overallotment option had occurred at the beginning of the periods reported as follows:

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
Weighted-average number of common shares outstanding - Diluted 172.7 146.7 172.5 146.5
Effect of dilutive securities (2.5) (1.4) (2.6) (1.3)
Weighted-average number of common shares outstanding - Basic 170.2 145.3 169.9 145.2
Adjustment as if the IPO and exercise of the underwriters' overallotment option had occurred at the beginning of the period reported 26.6 26.6
Non-GAAP weighted-average number of common shares outstanding - Basic 170.2 171.9 169.9 171.8
Effect of dilutive shares 2.5 2.6
Non-GAAP weighted-average number of common shares outstanding - Diluted 172.7 171.9 172.5 171.8

CDW CORPORATION AND SUBSIDIARIES

ADJUSTED EBITDA

(dollars in millions)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2014

2013
%
Change

2014

2013
%
Change
Adjusted EBITDA $ 247.1 $ 212.6 16.3% $ 440.8 $ 391.2 12.7%
Adjustments to reconcile Adjusted EBITDA to income from operations (a):
Depreciation and amortization (b) (52.0) (52.3) (104.0) (104.3)
Non-cash equity-based compensation (4.3) (2.1) (7.6) (4.0)
IPO- and secondary-offering-related expenses (0.5) (0.2) (0.9) (0.2)
Sponsor fee (1.3) (2.5)
Litigation, net (c) 0.3
Other adjustments (d) (2.1) (3.1) (4.6) (6.5)
Total adjustments (58.9) (59.0) (116.8) (117.5)
Income from operations $ 188.2 $ 153.6 $ 324.0 $ 273.7

(a) Amounts historically reported within selling and administrative expense unless otherwise indicated.

(b) Includes depreciation expense of ($1.0) and ($0.8) for the three months ended June 30, 2014 and 2013, respectively, and ($1.8) for both the six months ended June 30, 2014 and 2013 historically reported within cost of sales.

(c) Relates to unusual, non-recurring litigation matters.

(d) Primarily includes certain historical retention costs reported within selling and administrative expense. Also includes an adjustment for other income/(expense) of $0.1 and ($0.1) for the three months ended June 30, 2014 and 2013, respectively, and ($0.2) and ($0.3) for the six months ended June 30, 2014 and 2013, respectively.

CDW CORPORATION AND SUBSIDIARIES

ADJUSTED EBITDA MARGIN

(dollars in millions)

(unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2014 2013 2014 2013
Net sales $ 3,106.0 $ 2,779.3 $ 5,758.3 $ 5,191.0
Adjusted EBITDA 247.1 212.6 440.8 391.2
Adjusted EBITDA margin 8.0% 7.6% 7.7% 7.5%

CDW CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

June 30,
2014
December 31,
2013
June 30,
2013
Assets
Current assets:
Cash and cash equivalents $ 227.6 $ 188.1 $ 179.3
Accounts receivable, net of allowance for doubtful accounts of $5.7, $5.4 and $5.4, respectively 1,526.1 1,451.0 1,390.5
Merchandise inventory 449.6 382.0 378.5
Miscellaneous receivables 159.6 146.3 165.1
Deferred income taxes 12.1
Prepaid expenses and other 52.4 46.1 108.2
Total current assets 2,415.3 2,213.5 2,233.7
Property and equipment, net 129.8 131.1 132.7
Goodwill 2,220.1 2,220.3 2,207.4
Other intangible assets, net 1,247.0 1,328.0 1,403.7
Deferred financing costs, net 31.5 30.1 41.4
Other assets 1.6 1.6 1.6
Total assets $ 6,045.3 $ 5,924.6 $ 6,020.5
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable - trade $ 809.9 $ 662.8 $ 771.0
Accounts payable - inventory financing 311.8 256.6 282.5
Current maturities of long-term debt 15.4 45.4 13.5
Accrued expenses and other liabilities 392.3 437.8 378.2
Total current liabilities 1,529.4 1,402.6 1,445.2
Long-term liabilities:
Debt 3,110.6 3,205.8 3,710.9
Deferred income taxes 517.9 563.5 598.3
Other liabilities 42.6 41.0 57.1
Total long-term liabilities 3,671.1 3,810.3 4,366.3
Total shareholders' equity 844.8 711.7 209.0
Total liabilities and shareholders' equity $ 6,045.3 $ 5,924.6 $ 6,020.5

CDW CORPORATION AND SUBSIDIARIES

NET SALES DETAIL

(dollars in millions)

(unaudited)

Three Months Ended June 30,
2014 2013 % Change(1)
Corporate:
Medium / Large $ 1,395.4 $ 1,308.5 6.6%
Small Business 260.8 228.9 14.0
Total Corporate (2) $ 1,656.2 $ 1,537.4 7.7%
Public:
Government $ 313.1 $ 295.7 5.9%
Education 527.0 420.6 25.3
Healthcare 431.5 366.3 17.8
Total Public $ 1,271.6 $ 1,082.6 17.5%
Other $ 178.2 $ 159.3 11.9%
Total Net Sales $ 3,106.0 $ 2,779.3 11.8%

(1) There were 64 selling days for both the three months ended June 30, 2014 and 2013.

(2) Net sales of $37.1 for the three months ended June 30, 2013 have been reclassified from the Small Business customer channel to the Medium / Large customer channel to conform to the current period presentation.

Six Months Ended June 30,
2014 2013 % Change(1)
Corporate:
Medium / Large $ 2,670.2 ��$ 2,489.1 7.3%
Small Business 491.6 452.2 8.7
Total Corporate (2) 3,161.8 2,941.3 7.5%
Public:
Government $ 567.3 $ 548.0 3.5%
Education 848.6 652.9 30.0
Healthcare 825.6 728.5 13.3
Total Public $ 2,241.5 $ 1,929.4 16.2%
Other $ 355.0 $ 320.3 10.8%
Total Net Sales $ 5,758.3 $ 5,191.0 10.9%

(1) There were 127 selling days for both the six months ended June 30, 2014 and 2013.

(2) Net sales of $71.4 for the six months ended June 30, 2013 have been reclassified from the Small Business customer channel to the Medium / Large customer channel to conform to the current period presentation.

CDW CORPORATION AND SUBSIDIARIES

DEBT AND WORKING CAPITAL INFORMATION

(dollars in millions)

(unaudited)

June 30,
2014
December 31,
2013
June 30,
2013
Debt and ABL Revolver Availability
Cash and cash equivalents $ 227.6 $ 188.1 $ 179.3
Total debt 3,126.0 3,251.2 3,724.4
Senior secured debt 1,846.2 1,853.9 1,843.3
Outstanding borrowings under ABL Revolver
Borrowing base under ABL Revolver (1) 1,263.0 1,065.5 1,098.8
ABL Revolver availability 954.4 641.1 631.4
Cash plus ABL Revolver availability 1,182.0 829.2 810.7
Total net leverage ratio (2) 3.4 3.8 4.5
Working Capital
Days of sales outstanding (DSO) (3) 40 44 41
Days of supply in inventory (DIO) (3) 14 14 14
Days of purchases outstanding (DPO) (3) (35) (35) (35)
Cash conversion cycle (3) 19 23 20

(1) Amount in effect at quarter end.

(2) Defined as the ratio of total debt at period-end excluding any unamortized discount and/or premium, less cash and cash equivalents, to trailing twelve months Adjusted EBITDA. Prior periods have been revised to conform to the current definition.

(3) Based on a rolling three month average. Prior periods have been revised to conform to the current definition.

CDW CORPORATION AND SUBSIDIARIES

CASH FLOW INFORMATION

(in millions)

(unaudited)

Six Months Ended June 30,
2014 2013
Cash flows from operating activities $ 175.9 $ 207.1
Payment of accrued charitable contribution related to the MPK Coworker Incentive Plan II (20.9)
Capital expenditures and other cash flows from investing activities (21.0) (20.0)
Cash flows from investing activities (41.9) (20.0)
Net change in accounts payable - inventory financing 55.0 33.3
Other cash flows from financing activities (149.7) (77.6)
Cash flows from financing activities (94.7) (44.3)
Effect of exchange rate changes on cash and cash equivalents 0.2 (1.4)
Net increase in cash and cash equivalents 39.5 141.4
Cash and cash equivalents - beginning of period 188.1 37.9
Cash and cash equivalents - end of period $ 227.6 $ 179.3
Supplementary disclosure of cash flow information:
Interest paid $ (99.8) $ (142.7)
Taxes paid, net $ (111.9) $ (50.9)

Source:CDW Corporation