CDW 2012 Annual Report Download - page 33

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, 2011 and 2010:
Total net sales in 2011 increased $801.2 million, or 9.1%, to $9,602.4 million, compared to $8,801.2 million in 2010. There were 255
and 254 selling days in the years ended December 31, 2011 and 2010, respectively. On an average daily basis, total net sales increased 8.7%.
The increase in total net sales was the result of general volume growth and increased demand in the information technology industry overall, in
addition to our focus on growing market share. The most significant drivers of sales growth in 2011 were hardware unit volume growth in
notebook/mobile devices, desktop computers and netcomm products, along with growth in software products.
Corporate segment net sales in 2011 increased $500.8 million, or 10.4%, compared to 2010. Within our Corporate segment, net sales to
medium / large customers increased 10.9% between years, and net sales to small business customers increased 8.4% between years. These
increases were primarily a result of hardware unit volume growth, most notably in notebook/mobile devices and netcomm products, and growth
in software products as we continued to benefit from increased demand from our Corporate customers. Public segment net sales in 2011
increased $196.6 million, or 5.5%, between years as growth in the healthcare customer channel more than offset slight declines in the
government and education customer channels. Net sales to healthcare customers increased $224.6 million, or 22.7%, between years, primarily
driven by hardware unit volume increases in desktop computers, notebook/mobile devices and netcomm products, growth in software products
and additional sales from an expanded relationship with a group purchasing organization. Net sales to government customers decreased $25.1
million, or 1.8%, in 2011 compared to 2010 driven by a 10.2% decline between years for the first nine months of 2011, partially offset by net
sales growth of 22.8% between years for the fourth quarter of 2011. Although government spending was impacted negatively throughout 2011 as
a result of budget constraints and uncertainty, net sales to federal government customers drove the fourth quarter increase of 22.8% in the
government customer channel. The fourth quarter of 2011 benefited from increased orders placed late in the third quarter, the end of the federal
government's fiscal year, that shipped during the fourth quarter, compared to the same period of the prior year. Net sales to education customers
decreased $2.9 million, or 0.2%, between years, due to continuing budget pressures.
Gross profit
Gross profit increased $192.7 million, or 13.9%, to $1,583.5 million in 2011, compared to $1,390.8 million in 2010. As a percentage of
total net sales, gross profit was 16.5% in 2011, up from 15.8% in 2010. Gross profit margin increased 70 basis points between years, primarily
due to favorable price/mix changes within product margin across most product categories of 30 basis points, and a higher mix of commission
and net service contract revenue of 20 basis points. 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 amount. 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 sales, resulting in net sales being equal to the gross profit on the transaction.
The gross profit margin may fluctuate based on various factors, including vendor incentive and inventory price protection programs,
cooperative advertising funds classified as a reduction of cost of sales, product mix, net service contract revenue, commission revenue, pricing
strategies, market conditions, and other factors, any of which could result in changes in gross profit margins.
29
(in millions)
Years Ended December 31,
2011 2010 Dollar Change Percent Change
Corporate:
Medium / Large
$
4,287.1
$
3,867.3
$
419.8
10.9
%
Small Business
1,047.3
966.3
81.0
8.4
Total Corporate
$
5,334.4
$
4,833.6
$
500.8
10.4
%
Public:
Government
$
1,343.5
$
1,368.6
$
(25.1
)
(1.8
)%
Education
1,197.7
1,200.6
(2.9
)
(0.2
)
Healthcare
1,216.0
991.4
224.6
22.7
Total Public
$
3,757.2
$
3,560.6
$
196.6
5.5
%