CDW 2003 Annual Report Download - page 48

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Cash and Cash Equivalents
Cash and cash equivalents include all deposits in banks and highly liquid temporary cash investments
purchased with original maturities of three months or less at the time of purchase.
Marketable Securities
We classify securities with a stated maturity, which we intend to hold to maturity, as “held-to-maturity,” and
record such securities at amortized cost. Securities which do not have stated maturities or which we do not
intend to hold to maturity are classified as “available-for-sale” and recorded at fair value, with unrealized
holding gains or losses recorded as a separate component of Shareholders' Equity. We do not invest in
trading securities. All securities are accounted for on a specific identification basis.
Our marketable securities are concentrated in securities of the U.S. Government, U.S. Government agencies
and municipal bonds. Such investments are supported by the financial stability and credit standing of the
U.S. Government or applicable U.S. Government agency.
Merchandise Inventory
Inventory is valued at the lower of cost or market. Cost is determined on the first-in, first-out method.
Property and Equipment
Property and equipment are stated at cost. We calculate depreciation using the straight-line method over
the useful lives of the assets. Expenditures for major renewals and improvements that extend the useful life
of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to
expense as incurred. The following table shows estimated useful lives of property and equipment:
Classification Estimated Useful Lives
Machinery and equipment 5 to 15 years
Building and leasehold improvements 2 to 25 years
Computer and data processing equipment 2 to 3 years
Computer software 3 to 5 years
Furniture and fixtures 5 years
Revenue Recognition
We record revenues from sales transactions when both risk of loss and title to products sold pass to the
customer. Our shipping terms dictate that the passage of title occurs upon receipt of products by the
customer. The majority of our revenues relate to physical products and are recognized on a gross basis with
the selling price to the customer recorded as net sales and the acquisition cost of the product recorded as
cost of sales. At the time of sale, we also record an estimate for sales returns based on historical experience.
Software maintenance products, third party services and extended warranties that we sell (for which we are
not the primary obligor) are recognized on a net basis in accordance with SEC Staff Accounting Bulletin
No. 101, “Revenue Recognition” and EITF 99-19, “Reporting Revenue Gross as a Principal versus Net as
an Agent.” Accordingly, such revenues are recognized in net sales either at the time of sale or over the
contract period, based on the nature of the contract, at the net amount retained by us, with no cost of goods
sold. In accordance with EITF 00-10, “Accounting for Shipping and Handling Fees and Costs,” we record
freight billed to our customers as net sales and the related freight costs as a cost of sales. Vendor rebates
and price protection are recorded when earned as a reduction to cost of sales or merchandise inventory, as
applicable.