CDW 2014 Annual Report Download - page 15

Table of Contents
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 data centers for our customers which host their technology
infrastructure and may store and transmit both business-critical data and confidential information. 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, as newer technologies evolve, we could be exposed to increased risk of breaches in security.
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 in our Public segment are derived from sales to governmental entities, 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, contracts
in the Public segment are generally terminable at any time for convenience of the contracting agency or group purchasing organization (“GPO”)
or upon default. Furthermore, our inability to enter into or retain contracts with GPOs may threaten our ability to sell to customers in those GPOs
and compete. 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. 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.
Moreover, as we expand our services and solutions business, we may be exposed to additional operational, regulatory and other risks. We also
could incur liability for failure to comply with the rules and regulations applicable to the new services and solutions we provide to our
customers. If any of the foregoing were to occur, our reputation with our customers, our brand and our business, results of operations or cash
flows could be adversely affected.
If we lose any of our key personnel, or are unable to attract and retain the talent required for our business, our business could be disrupted
and our financial performance could suffer.
Our success is heavily dependent upon our ability to attract, develop, engage and retain key personnel to manage and grow our
business, including our key executive, management, sales, services and technical coworkers.
Our future success will depend to a significant extent on the efforts of Thomas E. Richards, our Chairman and Chief Executive Officer,
as well as the continued service and support of our other executive officers. Our future success also will depend on our ability to retain our
customer-facing coworkers, who have been given critical CDW knowledge regarding, and the opportunity to develop strong relationships with,
many of our customers. In addition, as we seek to expand our offerings of value-added services and solutions, our success will even more
heavily depend on attracting and retaining highly skilled technology specialists and engineers, for whom the market is extremely competitive.
Our inability to attract, develop and retain key personnel could have an adverse effect on our relationships with our vendor partners and
customers and adversely affect our ability to expand our offerings of value-added services and solutions. Moreover, our inability to train our
sales, services and technical personnel effectively to meet the rapidly changing technology
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