CDW 2004 Annual Report Download - page 32

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$168.1 million at December 31, 2004, compared to $149.1 million at December 31, 2003. The accounts
payable balance fluctuates due to our normal cycle of payments. The increase in accounts payable at December
31, 2004 was primarily due to this periodic fluctuation. The change in accounts payable reflected in cash
provided from operating activities also includes the impact of a $37.0 million decrease in book overdrafts
between December 31, 2003 and December 31, 2004.
Net cash used in investing activities for the year ended December 31, 2004 was $139.9 million. This
includes $115.5 million used to purchase marketable securities and $22.1 million used for capital expenditures.
Additionally, $2.3 million was used in the sale of our interest in CDW Leasing, LLC (“CDW-L”), as CDW-L’s
cash balance at the time of sale exceeded the proceeds received by us. Capital expenditures related primarily to
computer software and leasehold improvements.
Net cash used in financing activities for the year ended December 31, 2004 was $118.1 million. This
includes the payment of cash dividends totaling $30.0 million, the repurchase of 1,352,300 shares of our
common stock at a total cost of $86.0 million, and the impact of a $37.0 million decrease in book overdrafts
between December 31, 2003 and December 31, 2004. These items were partially offset by proceeds of $30.3
million from the exercise of stock options under our various stock option plans and $4.5 million from the
issuance of common stock in connection with the Employee Stock Purchase Plan.
In May 2003, Gregory C. Zeman, former director and vice chairman of the Company, and Daniel B. Kass,
former director and executive vice president of the Company, sold a total of 1,108,864 shares of common stock.
We did not receive any proceeds from the sale of shares and the number of outstanding common shares was not
impacted. The shares sold by Mr. Zeman and Mr. Kass were acquired from Michael P. Krasny, the chairman
emeritus, principal shareholder, and a director of the Company, through the exercise of options previously
granted to them pursuant to the MPK Stock Option Plan. The exercise of options by Mr. Zeman and Mr. Kass
resulted in the realization by the Company of an income tax benefit of approximately $17.7 million in 2003, of
which approximately $0.3 million had been previously recorded to deferred taxes. We recorded the
incremental tax benefit of $17.4 million as an increase to paid-in capital. In addition, we recorded incremental
payroll tax expense related to the option exercise of approximately $0.7 million, which reduced diluted earnings
per share in 2003 by less than $0.01 per share.
Aggregate Contractual Obligations
At December 31, 2004, we were obligated under various operating lease agreements, primarily for sales
office facilities, that expire at various dates through 2015. These lease agreements generally provide for
minimum rent payments and a proportionate share of operating expenses and property taxes and include certain
renewal and expansion options. For the years ended December 31, 2004, 2003 and 2002, rent expense was
$13.8 million, $11.3 million and $9.8 million, respectively. We expect to fulfill these commitments from our
working capital. The following table summarizes our contractual commitments under these operating lease
agreements as of December 31, 2004 (in thousands):
Total
Less than
1 year 1-3 years 3-5 years
Over 5
years
Operating leases $ 54,153 $ 7,268 $ 16,284 $ 17,184 $ 13,417
In February 2005, we signed a lease for a new distribution center to be constructed in North Las Vegas,
Nevada. See Note 19 to the Consolidated Financial Statements for more information on this subsequent event.