CDW 2006 Annual Report Download - page 18

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provided that the product is sold at a price which meets established management guidelines and
pursuant to various contracted prices, where applicable. Account managers have the opportunity to
achieve relatively high compensation levels and have historically shown increased productivity as
training and experience levels increase.
Stock Incentive Plans. In addition to regular cash compensation, we provide coworkers at the
manager level and above with additional long-term incentives designed to maximize performance and
productivity. To this end, we have adopted various stock-based compensation plans which enable
these coworkers to share in the Company’s success through appreciation in the value of the
Company’s stock.
Trademarks and Trade Names
We conduct business under a number of trademarks, trade names and service marks including
“CDW®,” “CDW. THE RIGHT TECHNOLOGY. RIGHT AWAY.®,” “CDW@WORK®,” “CDW-G®,”
“CDW-G@WORK®,” and “BERBEE®.” We have taken steps to protect these marks, some of which
are registered, and believe they have significant value and are important factors in our marketing
programs and business strategy.
Item 1A. Risk Factors
There are many factors that affect our business and the results of operations, some of which are
beyond our control. The following is a description of some important factors that may cause the
actual results of operations in future periods to differ materially from those currently expected or
desired.
Our sales and profitability may be affected by changes in the economic environment and other
factors. There are many factors which could affect our business, including:
• the capital and technology spending patterns of existing and prospective customers;
• general economic trends;
• the addition of new customers and further penetration of our existing customer base;
• the productivity and retention of our sales force;
• the optimization of our product mix and pricing strategies;
• the availability of products from our vendors;
• the successful development of new technology and products by equipment manufacturers
and software developers; and
• new competitors and new forms of competition.
Our business depends on our vendor relationships and the availability of products. We purchase
products for resale from manufacturers, distributors and other sources, all of whom we consider our
vendors. During 2006, we purchased approximately 51% of the products we sold directly from
manufacturers and the remaining amount from distributors and other sources. We are authorized by
manufacturers to sell all or some of their products via direct marketing activities. Our authorization
with each manufacturer is subject to specific terms and conditions regarding such things as product
return privileges, price protection policies, purchase discounts and vendor incentive programs,
including purchase rebates, sales volume rebates and cooperative advertising reimbursements.
From time to time, vendors may terminate our right to sell some or all of their products or change
these terms and conditions or reduce or discontinue the incentives that they offer us. Any such
termination or the implementation of such changes could have a negative impact on our operating
income. Additionally, some products are subject to manufacturer allocation, which limits the number
of units of those products that are available to resellers, including us.