CDW 2012 Annual Report Download - page 82

Table of Contents CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Method is highly sensitive to key assumptions, such as the volatility assumption. As such, the use of this method can be applied when
the range of possible future outcomes is difficult to predict.
The following table summarizes the assumptions and resulting fair value of the Class B Common Unit grants for the years ended
December 31, 2012, 2011 and 2010 :
The Company calculated the expected future volatility based upon an assessment of the two-year, five-year and implied volatility for
the Company’s selected peer group, adjusted for the Company’s leverage.
The risk-free interest rate of return used is based on a composite U.S. Treasury rate. The Company does not currently pay a dividend
nor anticipates paying a dividend in the future; therefore, the dividend yield is 0.00% .
Notional units granted under the MPK Plan were valued on the grant date at $1,000 per unit, the fair value equivalent of the Class A
Common Units at the time the awards were granted.
The following table sets forth the summary of equity plan activity for the year ended December 31, 2012 :
As of December 31, 2012 , the Company estimated there was $30.8 million of total unrecognized compensation cost related to
nonvested equity-
based compensation awards granted under the equity plans. That anticipated cost is expected to be recognized over the
weighted-average period of 4.5 years .
The Company’s net income (loss) included $22.1 million , $19.5 million and $11.5 million of compensation cost and $2.3 million ,
$1.9
million and $0.1 million of income tax benefits related to the Company’s equity-based
76
Years Ended December 31,
Assumptions 2012
2011 2010
Weighted-Average Grant Date Fair Value
$
125.65
$
148.89
$
130.45
Weighted-Average Volatility
65.26
%
82.87
%
97.86
%
Weighted-Average Risk-Free Rate
0.19
%
0.84
%
2.32
%
Dividend Yield
0.00
%
0.00
%
0.00
%
Equity Awards Class B
Common Units
(1)
MPK Plan
Units
(1) (2)
Outstanding at January 1, 2012
202,908
70,113
Granted
16,008
—
Forfeited
(1,615
)
(3,366
)
(3)
Repurchased/Settled
(818
)
(4)
(610
)
(4)
Outstanding at December 31, 2012
216,483
66,137
Vested at December 31, 2012
115,198
450
(5)
(1) The weighted-average grant date fair market value for Class B Common Units granted during the period ended December 31,
2012 is $125.65 . The weighted-average grant date fair market value for outstanding Class B Common Units inclusive of the
$60.00 per unit impact of the March 2010 modification and the impact of the June 2011 modification for Mr. Edwardson is
$260.26 . The weighted-average grant date fair market value for outstanding MPK Plan Units is $1,000 .
(2)
Represents units notionally credited to participants' accounts.
(3) The Company contributes the fair market value of awards forfeited under the plan to a charitable foundation. The contribution
is generally made in the quarter following that in which the units are forfeited. As of December 31, 2012 , the Company owed
a contribution for 777 units.
(4) Represents Class B Common Units that were repurchased by the Company from former participants and the settlement of
vested MPK Plan Units through the issuance of Class A Common Units in exchange for the vested MPK Plan Units.
(5)
Represents MPK Plan Units that have vested but not yet converted to Class A Common Units.