CDW 2015 Annual Report Download - page 29

Table of Contents
(2) Includes capitalized lease obligations of $3.2 million and $0.1 million as of December 31, 2015 and 2014, respectively, which are included in Other liabilities on the
Consolidated Balance Sheet.
(3) EBITDA is defined as consolidated net income before interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA, which is a measure
defined in our credit agreements, means EBITDA adjusted for certain items which are described in the table below. We have included a reconciliation of EBITDA
and Adjusted EBITDA in the table below. Both EBITDA and Adjusted EBITDA are considered non-GAAP financial measures. Generally, a non-GAAP financial
measure is a numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally
included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by us may differ
from similar measures used by other companies, even when similar terms are used to identify such measures.
We believe that EBITDA and Adjusted EBITDA provide helpful information with respect to our operating performance and cash flows including our ability to meet
our future debt service, capital expenditures and working capital requirements. Adjusted EBITDA is also the primary measure used in certain key covenants and
definitions contained in the credit agreement governing our Senior Secured Term Loan Facility (“Term Loan”), including the excess cash flow payment provision,
the restricted payment covenant and the net leverage ratio. These covenants and definitions are material components of the Term Loan as they are used in
determining the interest rate applicable to the Term Loan, our ability to make certain investments, incur additional debt, and make restricted payments, such as
dividends and share repurchases, as well as whether we are required to make additional principal prepayments on the Term Loan beyond the quarterly amortization
payments. For further details regarding the Term Loan, see Note 8 (Long-Term Debt) to the accompanying Consolidated Financial Statements.
The following unaudited table sets forth reconciliations of net income to EBITDA and EBITDA to Adjusted EBITDA for the periods presented:
Years Ended December 31,
(in millions)
2015
2014
2013
2012
2011
Net income
$ 403.1
$ 244.9
$ 132.8
$ 119.0
$ 17.1
Depreciation and amortization
227.4
207.9
208.2
210.2
204.9
Income tax expense
243.9
142.8
62.7
67.1
11.2
Interest expense, net
159.5
197.3
250.1
307.4
324.2
EBITDA
1,033.9
792.9
653.8
703.7
557.4
Non-cash equity-based compensation
31.2
16.4
8.6
22.1
19.5
Net loss on extinguishment of long-term debt (a)
24.3
90.7
64.0
17.2
118.9
Loss (income) from equity investments (b)
10.1
(2.2)
(0.6)
(0.3)
(0.1)
Acquisition and integration expenses (c)
10.2
—
—
—
—
Gain on remeasurement of equity investment (d)
(98.1)
—
—
—
—
Other adjustments (e)
6.9
9.2
82.7
23.9
21.6
Adjusted EBITDA (f)
$ 1,018.5
$ 907.0
$ 808.5
$ 766.6
$ 717.3
(a) During the years ended December 31, 2015, 2014, 2013, 2012, and 2011, we recorded net losses on extinguishments of long-term debt. The losses
represented the difference between the amount paid upon extinguishment, including call premiums and expenses paid to the debt holders and agents, and
the net carrying amount of the extinguished debt, adjusted for a portion of the unamortized deferred financing costs.
(b) Represents our share of net income/loss from our equity investments. Our 35% share of Kelway’s net loss includes our 35% share of an expense related to
certain equity awards granted by one of the sellers to Kelway coworkers in July 2015 prior to the acquisition.
(c) Primarily includes expenses related to the acquisition of Kelway.
(d) Represents the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the acquisition of
Kelway.
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