CDW 2003 Annual Report Download - page 14

1
PART I
Item 1. Business.
General
CDW Corporation (collectively with its subsidiaries, “CDW” or the “Company”) is a leading direct
marketer of multi-brand computers and related technology products and services in the United States. The
Company was founded in 1984 and reincorporated in 1995 in Illinois. In May 2003, our shareholders approved
changing the name of the Company to CDW Corporation from CDW Computer Centers, Inc. The name change
became effective on June 18, 2003. Our extensive offering of products, including hardware and peripherals,
software, accessories and other products, combined with our service offerings, provide comprehensive solutions
for our customers’ technology needs. We offer customers a broad range of technology products from leading
vendors such as Apple, Cisco, Hewlett-Packard, IBM, Intel, Microsoft, Sony and Toshiba, among others. Our
high volume, cost-efficient operations, supported by our proprietary information technology systems, enable us
to offer these products at competitive prices combined with a high level of service. We provide a variety of
value-added services and web-based tools to our customers, including the ability to custom configure multi-
branded solutions, manage software licenses through our Software License Tracker tool and track tagged assets
through our IT Asset Management Tracking Database. We also offer technical support 24 hours a day, 7 days a
week to our customers.
During September 2003, we purchased selected U.S. assets and the Canadian operations of Micro
Warehouse, a reseller of computers, software and peripheral products. The U.S. transaction was completed on
September 9, 2003. The purchase price of the assets acquired in the U.S. transaction, including inventory, fixed
assets and customer lists, was $20.0 million. The purchase of the Canadian operations was completed on
September 23, 2003, for a purchase price of $2.7 million.
Building on the Micro Warehouse transactions, we expanded our customer base, increased our penetration
in the public sector and the eastern half of the U.S., and extended our growth platform into Canada.
For financial reporting purposes, we have two operating segments, corporate and public sector. Our
corporate customers are concentrated in the small to medium business (SMB) category, which is generally
comprised of businesses that have less than 1,000 employees at a single location. Our public sector customers
are comprised of federal, state and local government entities and educational institutions who are served by
CDW Government, Inc. (“CDW-G”), a wholly-owned subsidiary. (See Note 17 to the Consolidated Financial
Statements for certain financial information regarding our two operating segments.)
For the year ended December 31, 2003, we served approximately 416,000 commercial customers, defined
as public sector and corporate customers excluding consumers, which comprised 98% of our total net sales. We
focus on generating repeat sales from existing customers while also generating sales from new customers. We
create a high degree of customer loyalty through our relationship-focused account managers. These account
managers become knowledgeable about customer needs and assist customers by providing advice on the
selection and configuration of multi-branded technology solutions.
We market to current and prospective customers through our catalogs, other direct mail programs, product
advertisements in computer trade magazines and other publications, our Web sites and various Web advertising
vehicles. Additionally, we promote the CDW brand on a national basis through our branding campaign, which
includes television, print media and other activities. Our marketing efforts are integrated with a proactive
outbound calling program by our account managers. We also focus significant efforts on developing and
expanding our E-business initiatives. These initiatives include CDW.com, CDWG.com and macwarehouse.com
(our Web sites), and CDW@work and CDWG@work (our extranets), which are customized Web sites for our
commercial customers.