CDW 2012 Annual Report Download - page 23

Table of Contents
We have included a reconciliation of EBITDA and Adjusted EBITDA in the table below. Both EBITDA and Adjusted EBITDA 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 EBITDA and Adjusted EBITDA 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.
The following unaudited table sets forth reconciliations of net income (loss) to EBITDA and EBITDA to Adjusted EBITDA for the
periods presented:
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(2) For purposes of calculating the ratio of earnings to fixed charges, earnings consist of earnings before income taxes minus income from
equity investees plus fixed charges. Fixed charges consist of interest expensed and the portion of rental expense we believe is
representative of the interest component of rental expense.
(a) For the years ended December 31, 2008, 2009 and 2010, earnings available for fixed charges were inadequate to cover fixed
charges by $1,777.2 million, $461.2 million and $37.0 million, respectively.
(3) EBITDA is defined as consolidated net income (loss) before interest income (expense), income tax benefit (expense), depreciation, and
amortization. Adjusted EBITDA, which is a measure defined in our credit agreements, is calculated by adjusting EBITDA for certain
items of income and expense including (but not limited to) the following: (a) non-cash equity-based compensation; (b) goodwill
impairment charges; (c) sponsor fees; (d) certain consulting fees; (e) debt-related legal and accounting costs; (f) equity investment
income and losses; (g) certain severance and retention costs; (h) gains and losses from the early extinguishment of debt; (i) gains and
losses from asset dispositions outside the ordinary course of business; and (j) non-recurring, extraordinary or unusual gains or losses or
expenses.
Years Ended December 31,
(in millions)
2008 2009 2010 2011 2012
Net (loss) income
$
(1,765.1
)
$
(373.4
)
$
(29.2
)
$
17.1
$
119.0
Depreciation and amortization
218.4
218.2
209.4
204.9
210.2
Income tax (benefit) expense
(12.1
)
(87.8
)
(7.8
)
11.2
67.1
Interest expense, net
390.3
431.7
391.9
324.2
307.4
EBITDA
(1,168.5
)
188.7
564.3
557.4
703.7
Non-cash equity-based compensation
17.8
15.9
11.5
19.5
22.1
Sponsor fees
5.0
5.0
5.0
5.0
5.0
Consulting and debt-related
professional fees
4.3
14.1
15.1
5.1
0.6
Goodwill impairment
1,712.0
241.8
—
—
—
Net (gain) loss on extinguishments of
long-term debt
—
—
(
2.0
)
118.9
17.2
Other adjustments
(i)
—
(
0.1
)
7.9
11.4
18.0
Adjusted EBITDA
$
570.6
$
465.4
$
601.8
$
717.3
$
766.6
(i)
Includes certain retention costs and equity investment income, a litigation loss in the fourth quarter of 2012, certain severance costs
in 2009, and a gain related to the sale of the Informacast software and equipment in 2009.