CDW 2006 Annual Report Download - page 65

Download and view the complete annual report

Please find page 65 of the 2006 CDW annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 81

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81

55
assets and customer lists, based upon their fair values at the date of purchase. Subsequent to
the completion of the U.S. transaction, sales made by former members of the Micro Warehouse
U.S. sales force who joined CDW in conjunction with this transaction, along with the associated
costs, are included in the accompanying consolidated financial statements. The Canadian
transaction, completed on September 23, 2003, was accounted for as the purchase of a business
and, accordingly, the results of operations of the acquired business subsequent to the date of
purchase were included in our consolidated financial statements, and the assumed assets and
liabilities were recorded based upon their fair values at the date of purchase. The Canadian
operations were purchased for $2.7 million.
During the years ended December 31, 2003 and 2004, we recorded $22.3 million (pre-tax) and $3.9
million (pre-tax), respectively, of transaction and integration expenses associated with these
transactions. These expenses were primarily comprised of severance and outplacement costs,
payroll expenses for former Micro Warehouse employees performing transition services, customer
satisfaction expenses, customer communications and advertising expenses, legal and accounting
advisory fees and a reserve established for the equipment in a Wilmington, Ohio distribution center
leased by Micro Warehouse as discussed below.
In February 2004, we purchased the equipment in the Wilmington, Ohio distribution center leased
by Micro Warehouse and forfeited leasing the facility in exchange for $8.25 million. During 2003,
we recorded a $5.0 million reserve related to the purchased equipment in accordance with FASB
Interpretation No. 45, “Guarantor’s Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others.” At March 31, 2004, we increased this
reserve by $2.0 million due to a change in the scenarios used in estimating the Company’s
exposure. During the third quarter of 2004, substantially all of this equipment was liquidated at
values in line with our expectations.
19. Selected Quarterly Financial Data (Unaudited)
The following information is for the years ended December 31, 2006 and 2005 (in thousands,
except per share data):
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
December 31, 2006
Net sales $ 1,588,629 $ 1,633,458 $ 1,739,457 $ 1,823,929
Gross profit 253,889 264,037 267,871 284,046
Income before income taxes 98,491 113,236 116,297 86,327
Net income 61,678 73,111 77,734 53,557
Earnings per share:
Basic $ 0.77 $ 0.93 $ 1.00 $ 0.68
Diluted $ 0.75 $ 0.91 $ 0.98 $ 0.67
December 31, 2005
Net sales $ 1,475,082 $ 1,539,595 $ 1,670,204 $ 1,606,964
Gross profit 226,429 237,478 254,943 248,780
Income before income taxes 100,539 105,998 115,808 110,613
Net income 61,397 67,061 73,124 70,510
Earnings per share:
Basic $ 0.74 $ 0.82 $ 0.91 $ 0.88
Diluted $ 0.72 $ 0.80 $ 0.88 $ 0.86