CDW 2006 Annual Report Download - page 61

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Additional options to purchase common shares and Restricted Stock were outstanding during the
years ended December 31, 2004, 2005, and 2006, but were not included in the computation of
diluted earnings per share because they were antidilutive in that either: 1) the exercise price of the
options were greater than the average market price of common shares during the respective
periods or 2) the deemed per share proceeds under the treasury stock method (the sum of the
option exercise price, if applicable, any future compensation expense under SFAS 123R, and any
related ”windfall” tax benefits) for the options or Restricted Stock on a per share basis exceeded the
average market price of common shares during the respective periods.
Years Ended December 31,
2006 2005 2004
Weighted-average number of options (in 000’s) 2,370 1,226 1,091
Weighted-average exercise price $ 61.43 $ 67.64 $ 68.00
Weighted-average number of Restricted Stock (in 000’s) 86 - -
13. Profit Sharing and 401(k) Plan
We have a profit sharing plan that includes a salary reduction feature established under the Internal
Revenue Code Section 401(k) covering substantially all employees. Company contributions to the
profit sharing plan are made in cash and determined at the discretion of the Board of Directors. For
the years ended December 31, 2006, 2005 and 2004, amounts charged to expense for this plan
totaled $11.0 million, $10.9 million, and $5.5 million, respectively.
14. Leasing Joint Venture
CDW-L was a joint venture that was 50 percent owned by each of CDWCC, a wholly-owned
subsidiary of the Company, and First Portland Corporation ("FIRSTCORP"), an unrelated third
party leasing company. In a transaction that was effective August 1, 2004, CDWCC sold its 50
percent interest in CDW-L to FIRSTCORP for $2.7 million. The sale of $2.4 million of net assets,
including $5.0 million in cash, resulted in a gain of $0.3 million which is included in income from
operations.
In accordance with FASB Interpretation No. 46 (revised December 2003), “Consolidation of
Variable Interest Entities, an interpretation of ARB 51,” we consolidated CDW-L on December 31,
2003. CDW-L’s results of operations subsequent to December 31, 2003 and through the date of
sale are included in our statement of income with a minority interest for FIRSTCORP’s 50 percent
interest in this joint venture reflected in other expense, net. CDW-L had a $40 million financing
commitment from a financial institution, of which $1.5 million was outstanding at December 31,
2003. During the first quarter of 2004, the balance of $1.5 million was repaid and the financing
commitment was terminated.
15. Contingencies
On September 9, 2003, CDW completed the purchase of certain assets of Bridgeport Holdings,
Inc., Micro Warehouse, Inc., Micro Warehouse, Inc. of Ohio, and Micro Warehouse Gov/Ed, Inc.
(collectively, “Micro Warehouse”). On September 10, 2003, Micro Warehouse filed voluntary
petitions for relief under chapter 11 of title 11 of the United States Code in the United States
Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”). The Bankruptcy Court
confirmed a plan of distribution with respect to Micro Warehouse which became effective on
October 14, 2004. On March 3, 2005, the Bridgeport Holdings, Inc. Liquidating Trust (the
“Liquidating Trust”) filed a civil action in the Bankruptcy Court entitled Bridgeport Holdings
Liquidating Trust, Inc. vs. CDW Corporation and CDW SAC, Inc. alleging that CDW did not pay
reasonably equivalent value for the assets it acquired from Micro Warehouse and seeking to
have CDW’s “purchase of Micro Warehouse” set aside and an amount of damages, to be