CDW 2012 Annual Report Download - page 15

Table of Contents
of the information generated by our information technology systems, and our success in implementing new systems and upgrades, affects,
among other things, our ability to:
The integrity of our information technology systems is vulnerable to disruption due to forces beyond our control. While we have taken
steps to protect our information technology systems from a variety of threats, including computer viruses and malicious hackers, there can be no
guarantee that those steps will be effective. Furthermore, although we have redundant systems at a separate location to back up our primary
systems, there can be no assurance that these redundant systems will operate properly if and when required. Any disruption to or infiltration of
our information technology systems could significantly harm our business and results of operations.
Breaches of data security could impact our business.
Our business involves the storage and transmission of proprietary information and sensitive or confidential data, including personal
information of coworkers, customers and others. In addition, we operate three customer data centers which may store and transmit both business-
critical data and confidential information of our customers. In connection with our services business, our coworkers also have access to our
customers' confidential data and other information. We have privacy and data security policies in place that are designed to prevent security
breaches; however, breaches in security could expose us, our customers or other individuals to a risk of public disclosure, loss or misuse of this
information, resulting in legal claims or proceedings, liability or regulatory penalties under laws protecting the privacy of personal information,
as well as the loss of existing or potential customers and damage to our brand and reputation. In addition, the cost and operational consequences
of implementing further data protection measures could be significant. Such breaches, costs and consequences could adversely affect our
business, results of operations or cash flows.
The failure to comply with our Public segment contracts or applicable laws and regulations could result in, among other things, termination,
fines or other liabilities, and changes in procurement regulations could adversely impact our business, results of operations or cash flows.
Revenues from our Public segment customers are derived from sales to governmental departments and agencies, educational institutions
and healthcare customers, through various contracts and open market sales of products and services. Sales to Public segment customers are
highly regulated. Noncompliance with contract provisions, government procurement regulations or other applicable laws or regulations
(including but not limited to the False Claims Act and the Medicare and Medicaid Anti-Kickback Statute) could result in civil, criminal and
administrative liability, including substantial monetary fines or damages, termination of government contracts or other Public segment customer
contracts, and suspension, debarment or ineligibility from doing business with the government and other customers in the Public segment. In
addition, generally contracts in the Public segment are terminable at any time for convenience of the contracting agency or group purchasing
organization or upon default. The effect of any of these possible actions could adversely affect our business, results of operations or cash flows.
In addition, the adoption of new or modified procurement regulations and other requirements may increase our compliance costs and reduce our
gross margins, which could have a negative effect on our business, results of operations or cash flows.
If we fail to provide high
-quality services to our customers, or if our third-party service providers fail to provide high-quality services to our
customers, our reputation, business, results of operations or cash flows could be adversely affected.
Our service offerings include field services, managed services, warranties, configuration services, partner services and telecom services.
Additionally, we deliver and manage mission critical software, systems and network solutions for our customers. Finally, we also offer certain
services, such as implementation and installation services and repair services, to our customers through various third-party service providers
engaged to perform these services on our behalf. If we or our third-party service providers fail to provide high quality services to our customers
or such services result in a disruption of our customers' businesses, this could, among other things, result in legal claims and proceedings and
liability, and our reputation with our customers, our brand and our business, results of operations or cash flows could be adversely affected.
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conduct business with our customers;
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manage our inventory and accounts receivable;
• purchase, sell, ship and invoice our hardware and software products and provide and invoice our services efficiently and on a timely
basis; and
• maintain our cost-
efficient operating model.