Cdw Corp - Current report filing (8-K)
September 18 2007 - 9:13AM
Edgar (US Regulatory)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
September 17, 2007
(Exact Name of Registrant as Specified in Its Charter)
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Illinois
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0-21796
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36-3310735
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(State or Other Jurisdiction
of Incorporation)
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(Commission File Number)
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(IRS Employer
Identification No.)
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200 N. Milwaukee Ave.
Vernon Hills, Illinois
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60061
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrants telephone number, including area code:
(847) 465-6000
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
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Item 7.01 Regulation FD Disclosure.
CDW Corporation (CDW) hereby
furnishes certain information regarding its business which information was prepared in
connection with the financing activities related to the proposed acquisition of CDW by VH Holdings,
Inc. (the Merger) pursuant to a definitive Agreement and Plan of Merger, dated as
of May 29, 2007, among CDW, VH Holdings, Inc. and VH MergerSub, Inc. (the Merger Agreement).
Upon closing of the Merger, VH Holdings, Inc. will be controlled by investment funds affiliated with
Madison Dearborn Partners, LLC and Providence Equity Partners Inc.
Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
This current report on Form 8-K (this Current Report) contains forward-looking statements
within the meaning of the federal securities laws, which involve risks and uncertainties.
Forward-looking statements include all statements that do not relate solely to historical or
current facts, and you can identify forward-looking statements because they contain words such as
believes, expects, may, will, should, seeks, approximately, intends, plans,
estimates, projects or anticipates or similar expressions that concern our strategy, plans or
intentions. Any statements made relating to the Merger or to our estimated and projected earnings,
margins, cost savings, expenditures, cash flows, growth rates, strategies and financial results are
forward-looking statements. These forward-looking statements are subject to risks and uncertainties
that may change at any time, and, therefore, our actual results may differ materially from those
that we expected. We derive many of our forward-looking statements from our operating budgets and
forecasts, which are based upon many detailed assumptions. While we believe that our assumptions
are reasonable, we caution that it is very difficult to predict the impact of known factors, and,
of course, it is impossible for us to anticipate all factors that could affect our actual results.
Some of the important factors that could cause actual results to differ materially from our
expectations are more fully disclosed in our most recent Annual Report on Form 10-K, including,
without limitation, in conjunction with the forward-looking statements included in this Current
Report. All subsequent written and oral forward-looking statements attributable to us, or persons
acting on our behalf, are expressly qualified in their entirety by the cautionary statements. We
assume no obligation to publicly update or revise any forward-looking statement as a result of new
information or future events, except as otherwise required by law.
Factors that could cause actual results to differ materially from those expressed or implied in a
forward-looking statement may include the following (among others): failure to satisfy closing
conditions with respect to the proposed Merger; failure of VH Holdings, Inc. to obtain the necessary financing
arrangements to pay the aggregate merger consideration; the occurrence of any event, change or
other circumstance that could give rise to the termination of the Merger Agreement; the failure of
the proposed Merger to close for any other reason; the amount of the costs, fees, expenses and
charges relating to the Merger and the actual terms of financings that will need to be obtained for
the Merger; the impact of substantial indebtedness that will need to be incurred to finance the
consummation of the Merger; our ability to generate the significant amount of cash needed to
service our debt obligations; increases in interest rates; the risk that the benefits from the
Merger may not be fully realized or may take longer to realize than expected; changes in general
economic conditions in the United States; the costs and effects of legal or administrative
proceedings; risks inherent in acquisitions; and other factors described from time to time in
documents filed by CDW with the Securities and Exchange Commission.
As provided in General Instruction B.2 of Form 8-K, the information contained in this Item 7.01 of
this Current Report shall not be deemed to be filed for purposes of Section 18 of the Securities
Exchange
Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under
the Securities Act of 1933, as amended, except as shall be expressly set forth by specific
reference in such a filing. By furnishing this information, we make no admission as to the
materiality of any information in this Item 7.01 of this Current Report that is required to be
disclosed solely by reason of Regulation FD.
Non-GAAP Financial Measures
The information contained below includes presentations of EBITDA, Adjusted EBITDA, and Pro Forma
Adjusted EBITDA, which are supplemental measures of our performance that are not required by, or
presented in accordance with U.S. generally accepted accounting principles (GAAP). They are not
measurements of our financial performance under GAAP and should not be considered as alternatives
to net income or any other performance measures derived in accordance with GAAP or as alternatives
to net cash provided by operating activities as measures of our liquidity. EBITDA means net income
before provision for income taxes; interest income; and depreciation and amortization expense.
Adjusted EBITDA is calculated by excluding from EBITDA a litigation settlement associated with
the Micro Warehouse transaction, non-cash stock compensation expense, transaction fees, and other
adjustments. Pro Forma Adjusted EBITDA includes the EBITDA for Berbee Information Networks
Corporation (Berbee) prior to its acquisition on October 11, 2006 as if CDW owned Berbee.
We believe that EBITDA is frequently used by securities analysts, investors and other interested
parties in their supplemental evaluation of companies, many of which present an EBITDA measure when
reporting their results. We present Adjusted EBITDA as a supplemental measure to assess our
performance because it excludes a certain one-time charge and other items. We present Pro Forma
Adjusted EBITDA as a supplemental measure to assess our performance because it reflects the
estimated annualized impact of the acquisition of Berbee which was completed in the twelve months
ended June 30, 2007 (the LTM period).
EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA are not necessarily comparable to other
similarly titled financial measures of other companies due to the potential inconsistencies in the
method of calculation. EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA have limitations as
analytical tools, and should not be considered in isolation or as substitutes for analyzing our
results as reported under GAAP. Some of these limitations are:
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EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs;
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EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA do not reflect our tax expense or
the cash requirements to pay our taxes;
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EBITDA, Adjusted EBITDA and Pro Forma Adjusted EBITDA do not reflect historical cash
expenditures or future requirements for capital expenditures;
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although depreciation and amortization are non-cash charges, the assets being
depreciated and amortized will often have to be replaced in the future, and EBITDA,
Adjusted EBITDA, and Pro Forma Adjusted EBITDA do not reflect any cash requirements for
such replacements; and
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other companies in our industry may calculate EBITDA, Adjusted EBITDA and Pro Forma
Adjusted EBITDA differently, limiting their usefulness as comparative measures.
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The information contained below includes pro forma information for full year 2006 and the LTM
period as if CDW owned Berbee prior to its acquisition in October 2006. This information includes
sales, gross profit, operating income, Adjusted EBITDA, and information about capital expenditures.
This information is presented to provide additional comparative data for CDW including the impact
of this acquisition for these periods, and should not be considered to be an indication of future
performance.
($ in millions)
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For FY Ending December 31,
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PF LTM
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2005A
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2006PF
(1)
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6/30/2007
(1)
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Revenue
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Corporate Sector
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$
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4,411
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$
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4,514
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$
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4,708
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% Growth
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7.4
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%
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2.3
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%
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NA
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% Total
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70.1
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%
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63.4
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%
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62.0
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%
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Public Sector
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1,881
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2,162
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2,343
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% Growth
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15.2
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%
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15.0
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%
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NA
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% Total
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29.9
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%
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30.4
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%
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30.9
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%
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Berbee
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0
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442
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539
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% Growth
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NA
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NA
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NA
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% Total
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0.0
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%
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6.2
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%
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7.1
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%
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Total Revenue
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$
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6,292
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$
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7,118
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$
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7,590
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% Growth
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9.7
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%
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13.1
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%
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NA
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Gross Profit
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968
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1,141
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1,210
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% Margin
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15.4
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%
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16.0
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%
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15.9
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%
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Operating Income
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Corporate Sector
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$
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342
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$
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359
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$
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374
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% Margin
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7.8
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%
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8.0
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%
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7.9
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% Total (pre-Corporate)
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75.7
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%
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73.4
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%
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71.4
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%
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Public Sector
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110
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111
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128
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% Margin
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5.8
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%
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5.1
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%
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5.5
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%
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% Total (pre-Corporate)
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24.3
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%
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22.7
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%
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24.4
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%
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Berbee
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0
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19
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22
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% Margin
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NA
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4.3
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%
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4.1
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%
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% Total (pre-Corporate)
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0.0
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%
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3.9
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%
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4.2
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%
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Corporate HQ Expense
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(29
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(37
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(35
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Total Operating Income
(2)
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$
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423
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$
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452
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$
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489
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% Margin
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6.7
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%
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6.4
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%
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6.4
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%
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PF Adj. EBITDA
(3)
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439
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493
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527
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% Margin
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7.0
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%
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6.9
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%
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6.9
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%
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Normalized Capex
(4)
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23
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53
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49
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% Margin
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0.4
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%
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0.7
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%
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0.6
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%
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Total Capex
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49
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93
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81
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% Margin
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0.8
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%
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1.3
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%
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1.1
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%
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PF Adj. EBITDA Normalized Capex
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416
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440
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478
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% Margin
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6.6
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%
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6.2
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%
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6.3
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%
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% of EBITDA
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94.8
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%
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89.2
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%
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90.7
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%
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1.
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Berbee was acquired on 10/11/06. Pro forma to include the full period impact of the Berbee
acquisition for the year 2006 and last twelve months as of 6/30/07.
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2.
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Excludes stock compensation expense, Micro Warehouse settlement and transaction fees in the
applicable periods.
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3.
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See following table for reconciliation of 2005, PF 2006 and PF LTM 6/30/07 EBITDA.
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4.
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Normalized capex excludes capex from the Western distribution center in North Las Vegas in
2005, PF 2006 and PF LTM 6/30/07.
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($ in millions)
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PF LTM
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2005
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2006
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06/30/2007
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EBITDA
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$
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439.3
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$
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422.7
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$
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471.6
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Adjustments:
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Micro Warehouse settlement
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25.0
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25.0
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Non-cash stock compensation
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15.8
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12.5
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Transaction fees
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8.0
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Other adjustments
(1)
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(0.2
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7.9
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1.5
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Subtotal
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($0.2
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$
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48.7
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$
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47.0
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Adjusted EBITDA
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$
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439.1
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$
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471.4
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$
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518.6
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Berbee pre-acquisition EBITDA
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21.3
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8.7
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Pro forma adjusted EBITDA
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$
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492.7
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$
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527.3
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1.
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Includes accelerated vesting of options, equity compensation payroll taxes, capitalization
of cooperative advertising funds, non-recurring severance, incentive program accrual
adjustments, and a vendor incentive plan audit reserve reversal.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned hereunto duly authorized.
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CDW CORPORATION
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Date:
September 17, 2007
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By:
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/s/ Barbara A. Klein
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Barbara A. Klein
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Senior Vice President and
Chief Financial Officer
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