CDW 2014 Annual Report Download - page 16

Table of Contents
needs of our customers could cause a decrease in the overall quality and efficiency of such personnel. Such consequences could adversely affect
our business, results of operations or cash flows.
The interruption of the flow of products from suppliers could disrupt our supply chain.
A significant portion of the products we sell are manufactured or purchased by our vendor partners outside of the U.S., primarily in
Asia. Political, social or economic instability in Asia, or in other regions in which our vendor partners purchase or manufacture the products we
sell, could cause disruptions in trade, including exports to the U.S. Other events that could also cause disruptions to our supply chain include:
We cannot predict whether the countries in which the products we sell are purchased or manufactured, or may be purchased or
manufactured in the future, will be subject to new or additional trade restrictions or sanctions imposed by the U.S. or foreign governments,
including the likelihood, type or effect of any such restrictions. Trade restrictions, including new or increased tariffs or quotas, embargoes,
sanctions, safeguards and customs restrictions against the products we sell, as well as foreign labor strikes and work stoppages or boycotts, could
increase the cost or reduce the supply of product available to us and adversely affect our business, results of operations or cash flows. In
addition, our exports are subject to regulations and noncompliance with these requirements could have a negative effect on our business, results
of operations or cash flows.
A natural disaster or other adverse occurrence at one of our primary facilities or customer data centers could damage our business.
Substantially all of our corporate, warehouse and distribution functions are located at our Vernon Hills, Illinois facilities and our second
distribution center in North Las Vegas, Nevada. If the warehouse and distribution equipment at one of our distribution centers were to be
seriously damaged by a natural disaster or other adverse occurrence, we could utilize the other distribution center or third-party distributors to
ship products to our customers. However, this may not be sufficient to avoid interruptions in our service and may not enable us to meet all of the
needs of our customers and would cause us to incur incremental operating costs. In addition, we operate three customer data centers and
numerous sales offices which may contain both business-critical data and confidential information of our customers. A natural disaster or other
adverse occurrence at any of the customer data centers or at any of our major sales offices could negatively impact our business, results of
operations or cash flows.
We are heavily dependent on commercial delivery services.
We generally ship hardware products to our customers by FedEx, United Parcel Service and other commercial delivery services and
invoice customers for delivery charges. If we are unable to pass on to our customers future increases in the cost of commercial delivery services,
our profitability could be adversely affected. Additionally, strikes, inclement weather, natural disasters or other service interruptions by such
shippers could adversely affect our ability to deliver products on a timely basis.
We are exposed to accounts receivable and inventory risks.
We extend credit to our customers for a significant portion of our net sales, typically on 30-day payment terms. We are subject to the
risk that our customers may not pay for the products they have purchased, or may pay at a slower rate than we have historically experienced, the
risk of which is heightened during periods of economic downturn or uncertainty or, in the case of Public segment customers, during periods of
budget constraints.
We are also exposed to inventory risks as a result of the rapid technological changes that affect the market and pricing for the products
we sell. We seek to minimize our inventory exposure through a variety of inventory management procedures and policies, including our rapid-
turn inventory model, as well as vendor price protection and product return programs. However, if we were unable to maintain our rapid-turn
inventory model, if there were unforeseen product developments that
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the imposition of additional trade law provisions or regulations;
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the imposition of additional duties, tariffs and other charges on imports and exports;
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foreign currency fluctuations;
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natural disasters or other adverse occurrences at, or affecting, any of our suppliers' facilities;
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restrictions on the transfer of funds;
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the financial instability or bankruptcy of manufacturers; and
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significant labor disputes, such as strikes.