CDW 2015 Annual Report Download - page 30

Table of Contents
(e) Other adjustments primarily include certain historical retention costs, unusual, non-recurring litigation matters, secondary-offering-related expenses and
expenses related to the consolidation of office locations north of Chicago. During the year ended December 31, 2013, we recorded IPO- and secondary-
offering related expenses of $75.0 million. For additional information on the IPO- and secondary-offering related expenses, see Note 10 (Stockholder’s
Equity) to the accompanying Consolidated Financial Statements.
(f) Includes the impact of consolidating five months for the year ended December 31, 2015 of Kelway’s financial results.
(4) Non-GAAP net income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, non-cash equity-based
compensation, acquisition and integration expenses, and gains and losses from the extinguishment of long-term debt. Non-GAAP net income is considered a non-
GAAP financial measure. 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 non-GAAP net income provides meaningful information regarding our operating performance and cash flows including our ability to
meet our future debt service, capital expenditures and working capital requirements.
The following unaudited table sets forth a reconciliation of net income to non-GAAP net income 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
Amortization of intangibles (a)
173.9
161.2
161.2
163.7
165.7
Non-cash equity-based compensation
31.2
16.4
8.6
22.1
19.5
Non-cash equity-based compensation related to equity investment (b)
20.0
—
—
—
—
Net loss on extinguishments of long-term debt
24.3
90.7
64.0
17.2
118.9
Acquisition and integration expenses (c)
10.2
—
—
—
—
Gain on remeasurement of equity investment (d)
(98.1)
—
—
—
—
Other adjustments (e)
3.7
(0.3)
61.2
(3.3)
(15.6)
Aggregate adjustment for income taxes (f)
(64.8)
(103.0)
(113.5)
(71.6)
(106.8)
Non-GAAP net income (g)
$ 503.5
$ 409.9
$ 314.3
$ 247.1
$ 198.8
(a) Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.
(b) Represents 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 our
acquisition of Kelway.
(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.
(e) Primarily includes expenses related to the consolidation of office locations north of Chicago and secondary-offering-related expenses. Amount in 2013
primarily relates to IPO- and secondary-offering related expenses.
(f) Based on a normalized effective tax rate of 38.0% (39.0% prior to the Kelway acquisition), except for the non-cash equity-based compensation from our
equity investment and the gain resulting from the remeasurement of our previously held 35% equity investment to fair value upon the completion of the
acquisition of Kelway, which were tax effected at a rate of 35.4%. The aggregate adjustment for income taxes also includes a $4.0 million deferred tax
benefit recorded during the three months and year ended December 31, 2015 as a result of a tax rate reduction in the United Kingdom and additional tax
expense during the year ended December 31, 2015 of $3.3 million as a result of recording withholding tax on the unremitted earnings of our Canadian
subsidiary. Additionally, note that certain acquisition costs are non-deductible.
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