CDW 2015 Annual Report Download - page 91

Table of Contents
CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
On March 20, 2014, the Company repurchased and subsequently canceled $25.0 million aggregate principal amount of the 2019 Senior Notes from an affiliate of
Providence Equity. For additional information, see Note 8 (Long-Term Debt) .
On July 2, 2013, the Company completed an IPO of its common stock. Using a portion of the net proceeds from the IPO, the Company paid a $24.4 million
termination fee to affiliates of the Madison Dearborn and Providence Equity in connection with the termination of the management services agreement with such
entities that was effective upon completion of the IPO. The Company paid an annual management fee of $2.5 million in the year ended December 31, 2013. There
were no management fees paid for the years ended December 31, 2015 and 2014 .
Prior to the completion of the IPO, the Company had previously entered into a management services agreement with Madison Dearborn and Providence Equity
pursuant to which they had agreed to provide it with management and consulting services and financial and other advisory services. Pursuant to such agreement,
Madison Dearborn and Providence Equity received an annual management fee of $5.0 million and reimbursement of out-of-pocket expenses incurred in connection
with the provision of such services. Such amounts were classified as Selling and administrative expenses within the Consolidated Statements of Operations. The
management services agreement included customary indemnification and provisions in favor of Madison Dearborn and Providence Equity.
16. Segment Information
The Company’s segment information is presented in accordance with a “management approach,” which designates the internal reporting used by the chief operating
decision-maker for deciding how to allocate resources and for assessing performance.
The Company has two reportable segments: Corporate, which is comprised primarily of private sector business customers, and Public, which is comprised of
government agencies and education and healthcare institutions. The Company also has three other operating segments: CDW Advanced Services; Canada; and
Kelway, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category (“Other”). For additional
information relating to Kelway, see Note 3 (Acquisition).
The Company has centralized logistics and headquarters functions that provide services to the segments. The logistics function includes purchasing, distribution and
fulfillment services to support both the Corporate and Public segments. As a result, costs and intercompany charges associated with the logistics function are fully
allocated to both of these segments based on a percent of Net sales. The centralized headquarters function provides services in areas such as accounting, information
technology, marketing, legal and coworker services. Headquarters’ function costs that are not allocated to the segments are included under the heading of
“Headquarters” in the tables below.
The Company allocates resources to and evaluates performance of its segments based on Net sales, Income from operations and Adjusted EBITDA, a non-GAAP
measure as defined in the Company’s credit agreements. However, the Company has concluded that Income from operations is the more useful measure in terms of
discussion of operating results, as it is a GAAP measure.
Segment information for Total assets and capital expenditures is not presented, as such information is not used in measuring segment performance or allocating
resources between segments.
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