CDW 2014 Annual Report Download - page 34

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 investments plus distributed income from equity investments and fixed charges. Fixed charges consist of interest expense and the
portion of rental expense we believe is representative of the interest component of rental expense.
(a) For the year ended December 31, 2010, earnings available for fixed charges were inadequate to cover fixed charges by $37.0
million.
(3) EBITDA is defined as consolidated net income (loss) before interest expense, income tax expense (benefit), 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)
2014 2013 2012 2011 2010
Net income (loss)
$
244.9
$
132.8
$
119.0
$
17.1
$
(29.2
)
Depreciation and amortization
207.9
208.2
210.2
204.9
209.4
Income tax expense (benefit)
142.8
62.7
67.1
11.2
(7.8
)
Interest expense, net
197.3
250.1
307.4
324.2
391.9
EBITDA
792.9
653.8
703.7
557.4
564.3
Non-cash equity-based compensation
16.4
8.6
22.1
19.5
11.5
Sponsor fees —
2.5
5.0
5.0
5.0
Consulting and debt-related professional fees —
0.1
0.6
5.1
15.1
Net loss (gain) on extinguishments of long-term debt
90.7
64.0
17.2
118.9
(2.0
)
Litigation, net
(i)
(0.9
)
(4.1
)
4.3
—
—
IPO- and secondary-offering related expenses
1.4
75.0
—
—
—
Other adjustments
(ii)
6.5
8.6
13.7
11.4
7.9
Adjusted EBITDA
$
907.0
$
808.5
$
766.6
$
717.3
$
601.8
(i) Relates to unusual, non-
recurring litigation matters.
(ii)
Other adjustments primarily include certain retention costs and equity investment income.