CDW 2014 Annual Report Download - page 51

Table of Contents
In February and March 2012, we purchased or redeemed the remaining $129.0 million of 11.0% Senior Exchange Notes due 2015 and
11.5%/12.25% Senior PIK Election Exchange Notes due 2015 (together, the "Senior Notes due 2015"), funded with the issuance of an additional
$130.0 million of Senior Notes due 2019. As a result, we recorded a loss on extinguishment of long-term debt of $9.4 million, representing the
difference between the purchase or redemption price of the Senior Notes due 2015 and the net carrying amount of the purchased debt, adjusted
for the remaining unamortized deferred financing costs.
Income tax expense
Income tax expense was $62.7 million in 2013 , compared to $67.1 million in 2012 . The effective income tax rate was 32.1% and
36.0% for 2013 and 2012 , respectively.
For 2013 , the effective tax rate differed from the U.S. federal statutory rate primarily due to state income taxes, including current year
state income tax credits and an adjustment to deferred state income taxes due to changes in apportionment factors. For 2012 , the effective tax
rate differed from the U.S. federal statutory rate primarily due to favorable adjustments to state tax credits which were partially offset by the
unfavorable impact of adjustments to deferred state income taxes due to changes in state tax laws and non-deductible expenses, primarily equity-
based compensation and meals and entertainment. The lower effective tax rate for 2013 as compared to 2012 was primarily driven by the
favorable impact of adjustments to deferred state income taxes due to changes in state tax apportionment factors and lower non-deductible
expenses.
Net income
Net income was $132.8 million in 2013, compared to $119.0 million in 2012. Significant factors and events causing the net changes
between the periods are discussed above.
Non
-GAAP net income
Non-GAAP net income was $314.3 million for the year ended December 31, 2013, an increase of $67.2 million , or 27.2% , compared
to $247.1 million for the year ended December 31, 2012.
We have included a reconciliation of Non-GAAP net income for the years ended December 31, 2013 and 2012 below. Non-GAAP net
income excludes, among other things, charges related to the amortization of acquisition-related intangibles, non-cash equity-
based compensation,
IPO- and secondary-offering related expenses and gains and losses from the early extinguishment of debt. Non-GAAP net income is considered
a non-GAAP financial measure. 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 Non-GAAP net income provides 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.
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