CDW 2012 Annual Report Download - page 28

Table of Contents
The following table presents our net sales by customer channel for our Corporate and Public segments and the year-over-
year dollar and
percentage change in net sales for the years ended December 31, 2012 and 2011 :
Total net sales in 2012 increased $525.8 million , or 5.5% , to $10,128.2 million , compared to $9,602.4 million in 2011. There were
254 and 255 selling days in the years ended December 31, 2012 and 2011 , respectively. On an average daily basis, total net sales increased
5.9% . The increase in total net sales was the result of general volume growth, market share gains, a more tenured sales force, and a continued
focus on seller productivity across all areas of the organization. Our net sales growth for the year ended December 31, 2012 reflected growth in
notebooks/mobile devices, netcomm products, software products, desktop computers and enterprise storage.
Corporate segment net sales in 2012 increased $178.4 million , or 3.3% , compared to 2011. Within our Corporate segment, net sales to
medium/large customers increased 3.8% between years, and net sales to small business customers increased 1.6% between years. Customers
within the Corporate segment continued to take a more cautious approach to spending as increased macroeconomic uncertainty impacted
decision-making and led to some customers delaying purchases. The increases in Corporate segment net sales were primarily a result of
hardware growth, most notably in netcomm products, and unit volume growth in desktop computers. Software product growth, led by network
management and security software, also contributed to the increase in net sales. Partially offsetting the growth was a decline in net sales of
memory products due to several large orders in the second and third quarters of 2011 that did not recur.
Public segment net sales in 2012 increased $265.8 million , or 7.1% , between years, driven by continued strong performance in the
healthcare customer channel. Net sales to healthcare customers increased $220.6 million , or 18.1% , between years, led by hardware growth,
most notably in enterprise storage, and unit volume growth in netcomm products, desktop computers and point of care technology carts.
Software product growth also contributed to the increase in net sales in healthcare. The healthcare customer channel growth was primarily the
result of deeper relationships with several group purchasing organizations and increased healthcare industry demand for IT products, as the
healthcare industry continued its adoption of electronic medical records and point of care technologies. Net sales to government customers
increased $50.6 million , or 3.8% , in 2012 compared to 2011 led by unit volume increases in sales of notebooks/mobile devices, partially offset
by a decline in net sales of netcomm products. Net sales to education customers decreased $5.4 million , or 0.4% , between years, reflecting
budget constraints. A decline in sales to K-12 customers was partially offset by growth in sales to higher education customers that was led by
increased sales of netcomm products, as higher education customers refreshed and added additional enterprise technology.
Gross profit
Gross profit increased $86.1 million , or 5.4% , to $1,669.6 million in 2012, compared to $1,583.5 million in 2011. As a percentage of
total net sales, gross profit was 16.5% in both 2012 and 2011. Gross profit margin was positively impacted 10 basis points by a higher mix of
commission and net service contract revenue. Fully offsetting these increases in gross profit margin were declines in vendor funding primarily
due to program changes for certain vendors. Commission revenue, including agency fees earned on sales of software licenses and software
assurance under enterprise agreements, has a positive impact on our gross profit margin, as we record the fee or commission as a component of
net sales when earned and there is no corresponding cost of sales. Net service contract revenue, including items such as third-party services and
warranties, also has a positive impact on gross profit margin as our cost paid to the vendor or third-party service provider is recorded as a
reduction to net sales, resulting in net sales being equal to the gross profit on the transaction. Vendor funding includes purchase discounts,
volume rebates and cooperative advertising.
24
(in millions)
Years Ended December 31,
2012 2011 Dollar Change Percent Change
Corporate:
Medium / Large
$
4,448.5
$
4,287.1
$
161.4
3.8
%
Small Business
1,064.3
1,047.3
17.0
1.6
Total Corporate
$
5,512.8
$
5,334.4
$
178.4
3.3
%
Public:
Government
$
1,394.1
$
1,343.5
$
50.6
3.8
%
Education
1,192.3
1,197.7
(5.4
)
(0.4
)
Healthcare
1,436.6
1,216.0
220.6
18.1
Total Public
$
4,023.0
$
3,757.2
$
265.8
7.1
%