ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 26-0273989 | |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
75 Tri-State International Lincolnshire, Illinois | 60069 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | x | Accelerated filer | ¨ | |||
Non-accelerated filer | ¨ (Do not check if a smaller reporting company) | Smaller reporting company | ¨ |
Page | ||
PART I | FINANCIAL INFORMATION | |
Item 1. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
PART II | OTHER INFORMATION | |
Item 1. | ||
Item 1A. | ||
Item 2. | ||
Item 3. | ||
Item 4. | ||
Item 5. | ||
Item 6. | ||
SIGNATURES | ||
Exhibit Index |
CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in millions, except per-share amounts) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
Assets | (unaudited) | ||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 248.2 | $ | 37.6 | |||
Accounts receivable, net of allowance for doubtful accounts of $5.9 and $6.0, respectively | 1,780.2 | 2,017.4 | |||||
Merchandise inventory | 460.4 | 393.1 | |||||
Miscellaneous receivables | 212.7 | 198.4 | |||||
Prepaid expenses and other | 114.8 | 144.3 | |||||
Total current assets | 2,816.3 | 2,790.8 | |||||
Property and equipment, net | 168.4 | 175.4 | |||||
Goodwill | 2,495.2 | 2,500.4 | |||||
Other intangible assets, net | 1,225.4 | 1,276.4 | |||||
Other assets | 12.6 | 12.3 | |||||
Total assets | $ | 6,717.9 | $ | 6,755.3 | |||
Liabilities and Stockholders’ Equity | |||||||
Current liabilities: | |||||||
Accounts payable-trade | $ | 958.6 | $ | 866.5 | |||
Accounts payable-inventory financing | 372.9 | 439.6 | |||||
Current maturities of long-term debt | 26.9 | 27.2 | |||||
Deferred revenue | 166.3 | 151.9 | |||||
Accrued expenses: | |||||||
Compensation | 126.7 | 120.4 | |||||
Interest | 17.5 | 25.1 | |||||
Sales taxes | 38.1 | 38.1 | |||||
Advertising | 50.8 | 52.3 | |||||
Income taxes | 51.6 | — | |||||
Other | 134.0 | 166.2 | |||||
Total current liabilities | 1,943.4 | 1,887.3 | |||||
Long-term liabilities: | |||||||
Debt | 3,225.0 | 3,232.5 | |||||
Deferred income taxes | 448.5 | 469.6 | |||||
Other liabilities | 61.1 | 70.0 | |||||
Total long-term liabilities | 3,734.6 | 3,772.1 | |||||
Commitments and contingencies (Note 7) | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.01 par value, 100.0 shares authorized, no shares issued or outstanding for both periods | — | — | |||||
Common stock, $0.01 par value, 1,000.0 shares authorized; 165.5 and 168.2 shares issued and outstanding, respectively | 1.7 | 1.7 | |||||
Paid-in capital | 2,817.1 | 2,806.9 | |||||
Accumulated deficit | (1,710.0 | ) | (1,651.6 | ) | |||
Accumulated other comprehensive loss | (68.9 | ) | (61.1 | ) | |||
Total stockholders’ equity | 1,039.9 | 1,095.9 | |||||
Total liabilities and stockholders’ equity | $ | 6,717.9 | $ | 6,755.3 |
CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except per-share amounts) (unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Net sales | $ | 3,116.7 | $ | 2,755.2 | ||||
Cost of sales | 2,592.2 | 2,298.7 | ||||||
Gross profit | 524.5 | 456.5 | ||||||
Selling and administrative expenses | 329.3 | 275.5 | ||||||
Advertising expense | 34.2 | 29.4 | ||||||
Income from operations | 161.0 | 151.6 | ||||||
Interest expense, net | (38.1 | ) | (44.8 | ) | ||||
Net loss on extinguishments of long-term debt | — | (24.3 | ) | |||||
Other income, net | 1.0 | 4.5 | ||||||
Income before income taxes | 123.9 | 87.0 | ||||||
Income tax expense | (46.1 | ) | (32.3 | ) | ||||
Net income | $ | 77.8 | $ | 54.7 | ||||
Net income per common share: | ||||||||
Basic | $ | 0.47 | $ | 0.32 | ||||
Diluted | $ | 0.46 | $ | 0.32 | ||||
Weighted-average common shares outstanding: | ||||||||
Basic | 167.3 | 172.1 | ||||||
Diluted | 168.9 | 173.5 | ||||||
Cash dividends declared per common share | $ | 0.1075 | $ | 0.0675 |
CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (in millions) (unaudited) | |||||||||
Three Months Ended March 31, | |||||||||
2016 | 2015 | ||||||||
Net income | $ | 77.8 | $ | 54.7 | |||||
Foreign currency translation (net of tax benefit of $0.0 and $1.4 million, respectively) | (7.8 | ) | (11.0 | ) | |||||
Other comprehensive loss, net of tax | (7.8 | ) | (11.0 | ) | |||||
Comprehensive income | $ | 70.0 | $ | 43.7 |
CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (in millions) (unaudited) | ||||||||||||||||||||||||||||||
Preferred Stock | Common Stock | |||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss | Total Stockholders’ Equity | |||||||||||||||||||||||
Balance as of December 31, 2015 | — | $ | — | 168.2 | $ | 1.7 | $ | 2,806.9 | $ | (1,651.6 | ) | $ | (61.1 | ) | $ | 1,095.9 | ||||||||||||||
Net income | — | — | — | — | — | 77.8 | — | 77.8 | ||||||||||||||||||||||
Equity-based compensation expense | — | — | — | — | 6.7 | — | — | 6.7 | ||||||||||||||||||||||
Stock option exercises | — | — | — | — | 1.2 | — | — | 1.2 | ||||||||||||||||||||||
Excess tax benefits from equity-based compensation | — | — | — | — | 0.2 | — | — | 0.2 | ||||||||||||||||||||||
Coworker Stock Purchase Plan | — | — | — | — | 1.9 | — | — | 1.9 | ||||||||||||||||||||||
Common stock issued for equity-based compensation | — | — | 0.3 | — | — | — | — | — | ||||||||||||||||||||||
Repurchases of common stock | — | — | (3.0 | ) | — | — | (118.0 | ) | — | (118.0 | ) | |||||||||||||||||||
Dividends | — | — | — | — | 0.2 | (18.2 | ) | — | (18.0 | ) | ||||||||||||||||||||
Foreign currency translation | — | — | — | — | — | — | (7.8 | ) | (7.8 | ) | ||||||||||||||||||||
Balance as of March 31, 2016 | — | $ | — | 165.5 | $ | 1.7 | $ | 2,817.1 | $ | (1,710.0 | ) | $ | (68.9 | ) | $ | 1,039.9 |
CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in millions) (unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2016 | 2015 | |||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 77.8 | $ | 54.7 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 64.0 | 52.5 | ||||||
Equity-based compensation expense | 8.4 | 4.7 | ||||||
Deferred income taxes | (25.0 | ) | (22.6 | ) | ||||
Amortization of deferred financing costs, debt premium and debt discount, net | 1.6 | 1.5 | ||||||
Net loss on extinguishments of long-term debt | — | 24.3 | ||||||
Income from equity investment | — | (4.0 | ) | |||||
Other | — | 1.3 | ||||||
Changes in assets and liabilities: | ||||||||
Accounts receivable | 237.6 | 105.4 | ||||||
Merchandise inventory | (68.2 | ) | (19.7 | ) | ||||
Other assets | 9.4 | (23.1 | ) | |||||
Accounts payable-trade | 91.0 | (7.0 | ) | |||||
Other current liabilities | 38.0 | 8.7 | ||||||
Long-term liabilities | (7.0 | ) | 1.1 | |||||
Net cash provided by operating activities | 427.6 | 177.8 | ||||||
Cash flows from investing activities: | ||||||||
Capital expenditures | (11.0 | ) | (10.0 | ) | ||||
Premium payments on interest rate cap agreements | — | (0.5 | ) | |||||
Net cash used in investing activities | (11.0 | ) | (10.5 | ) | ||||
Cash flows from financing activities: | ||||||||
Proceeds from borrowings under revolving credit facility | 63.4 | — | ||||||
Repayments of borrowings under revolving credit facility | (63.4 | ) | — | |||||
Repayments of long-term debt | (6.7 | ) | (3.9 | ) | ||||
Proceeds from issuance of long-term debt | — | 525.0 | ||||||
Payments to extinguish long-term debt | — | (525.3 | ) | |||||
Payments of debt financing costs | — | (6.8 | ) | |||||
Net change in accounts payable-inventory financing | (66.5 | ) | (42.3 | ) | ||||
Proceeds from stock option exercises | 1.2 | 0.5 | ||||||
Excess tax benefits from equity-based compensation | 0.2 | 0.1 | ||||||
Proceeds from Coworker Stock Purchase Plan | 1.9 | 1.7 | ||||||
Repurchases of common stock | (118.0 | ) | — | |||||
Dividends | (18.0 | ) | (11.7 | ) | ||||
Other | (0.5 | ) | — | |||||
Net cash used in financing activities | (206.4 | ) | (62.7 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 0.4 | (1.7 | ) | |||||
Net increase in cash and cash equivalents | 210.6 | 102.9 | ||||||
Cash and cash equivalents—beginning of period | 37.6 | 344.5 | ||||||
Cash and cash equivalents—end of period | $ | 248.2 | $ | 447.4 | ||||
Supplementary disclosure of cash flow information: | ||||||||
Cash paid for Interest, net | $ | (44.1 | ) | $ | (53.1 | ) | ||
Cash paid for Income taxes, net | $ | (6.8 | ) | $ | (4.3 | ) |
1. | Description of Business and Summary of Significant Accounting Policies |
2. | Recent Accounting Pronouncements |
3. | Acquisition |
(in millions) | Acquisition-Date Fair Value | |||
Cash | $ | 291.6 | ||
Fair value of CDW common stock(1) | 33.2 | |||
Fair value of previously held equity investment on the date of acquisition(2) | 174.9 | |||
Total consideration | $ | 499.7 |
(1) | The Company issued 2 million shares of CDW common stock. The fair value of the common stock was based on the closing market price on July 31, 2015, adjusted for the lack of marketability as the shares of CDW common stock issued to the sellers are subject to a three-year lock up restriction from August 1, 2015. One of the sellers granted 1 million stock options to certain CDW UK coworkers over his shares of CDW common stock received in the transaction. The fair value of these stock options was $22 million, which has been accounted for as post-combination stock-based compensation and is being amortized over the weighted-average requisite service period of 3.2 years. Compensation expense for these options is included in Selling and administrative expenses in the Consolidated Statements of Operations. |
(2) | As a result of the Company obtaining control over CDW UK, the Company’s previously held 35% equity investment was remeasured to fair value, resulting in a gain of $98 million included in Gain on remeasurement of equity investment in the Consolidated Statements of Operations. The fair value of the previously held equity investment was determined by management with the assistance of a third party valuation firm, based on information available as of the acquisition date. |
(in millions) | Acquisition-Date Fair Value(1) | |||
Cash | $ | 27.8 | ||
Accounts receivable | 135.7 | |||
Merchandise inventory | 27.1 | |||
Property and equipment, net | 11.4 | |||
Identified intangible assets(2) | 289.8 | |||
Other assets | 53.6 | |||
Total assets acquired | 545.4 | |||
Accounts payable—trade | (86.1 | ) | ||
Deferred revenue | (57.2 | ) | ||
Other liabilities | (41.5 | ) | ||
Deferred tax liabilities | (55.1 | ) | ||
Debt | (111.5 | ) | ||
Total liabilities assumed | (351.4 | ) | ||
Total identifiable net assets | 194.0 | |||
Goodwill | 305.7 | |||
Total purchase price | $ | 499.7 |
(1) | The fair values assigned to the tangible and intangible assets acquired and liabilities assumed were based on management’s estimates and assumptions, as well as other information compiled by management, including valuations that utilize customary valuation procedures and techniques. These fair values are subject to change within the measurement period. |
(2) | Details of the identified intangible assets are as follows: |
(in millions) | Acquisition-Date Fair Value | Weighted-Average Amortization Period (in years) | |||
Customer relationships | $ | 260.8 | 13 | ||
Customer contracts | 25.9 | 3 | |||
Developed technology | 1.7 | 2 | |||
Trade name | 1.4 | 1 | |||
Total identified intangible assets | $ | 289.8 |
Net sales | $ | 2,972.7 | ||
Net income | 56.1 |
(1) | Excludes acquisition and integration costs directly related to the transaction. |
(2) | Includes additional amortization expense related to the fair value of acquired intangibles. |
(3) | Excludes the Company's share of net income/loss from its previously held 35% equity investment prior to the completion of the acquisition. |
(4) | Excludes non-cash equity-based compensation related to certain equity awards granted by one of the sellers to CDW UK coworkers in July 2015 prior to the completion of the acquisition. |
(5) | Includes additional non-cash equity-based compensation related to equity awards granted to CDW UK coworkers after the completion of the acquisition. |
4. | Inventory Financing Agreements |
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Revolving Loan inventory financing agreement | $ | 354.9 | $ | 427.0 | ||||
Other inventory financing agreements(1) | 18.0 | 12.6 | ||||||
Accounts payable-inventory financing | $ | 372.9 | $ | 439.6 |
(1) | As of March 31, 2016 and December 31, 2015, amounts owed under other inventory financing agreements of $1 million or less for both periods, were collateralized by the inventory purchased under these financing agreements and a second lien on the related accounts receivable. |
5. | Long-Term Debt |
(dollars in millions) | Interest Rate | Principal | Unamortized Discount and Deferred Financing Costs(1) | Total | |||||||||||
Senior secured asset-based revolving credit facility (1) | — | % | $ | — | $ | — | $ | — | |||||||
CDW UK revolving credit facility(2) | — | % | — | — | — | ||||||||||
Senior secured term loan facility | 3.25 | % | 1,494.3 | (6.3 | ) | 1,488.0 | |||||||||
CDW UK term loan | 1.99 | % | 83.3 | (0.5 | ) | 82.8 | |||||||||
Senior notes due 2022 | 6.0 | % | 600.0 | (6.4 | ) | 593.6 | |||||||||
Senior notes due 2023 | 5.0 | % | 525.0 | (6.0 | ) | 519.0 | |||||||||
Senior notes due 2024 | 5.5 | % | 575.0 | (6.5 | ) | 568.5 | |||||||||
Total long-term debt | 3,277.6 | (25.7 | ) | 3,251.9 | |||||||||||
Less current maturities of long-term debt | (26.9 | ) | — | (26.9 | ) | ||||||||||
Long-term debt, excluding current maturities | $ | 3,250.7 | $ | (25.7 | ) | $ | 3,225.0 |
(dollars in millions) | Interest Rate | Principal | Unamortized Discount and Deferred Financing Costs(1) | Total | |||||||||||
Senior secured asset-based revolving credit facility (1) | — | % | $ | — | $ | — | $ | — | |||||||
CDW UK revolving credit facility (2) | — | % | — | — | — | ||||||||||
Senior secured term loan facility | 3.25 | % | 1,498.1 | (6.7 | ) | 1,491.4 | |||||||||
CDW UK Term Loan | 1.98 | % | 88.4 | (0.6 | ) | 87.8 | |||||||||
Senior notes due 2022 | 6.0 | % | 600.0 | (6.6 | ) | 593.4 | |||||||||
Senior notes due 2023 | 5.0 | % | 525.0 | (6.2 | ) | 518.8 | |||||||||
Senior notes due 2024 | 5.5 | % | 575.0 | (6.7 | ) | 568.3 | |||||||||
Total long-term debt | 3,286.5 | (26.8 | ) | 3,259.7 | |||||||||||
Less current maturities of long-term debt | (27.2 | ) | — | (27.2 | ) | ||||||||||
Long-term debt, excluding current maturities | $ | 3,259.3 | $ | (26.8 | ) | $ | 3,232.5 |
(1) | The Senior Secured Asset-Based Revolving Credit Facility (“Revolving Loan”) includes an inventory floorplan sub-facility that is related to the Revolving Loan inventory financing agreement with a financial intermediary. As of March 31, 2016, the Company had no outstanding borrowings under the Revolving Loan, $2 million of undrawn letters of credit and $340 million reserved related to the floorplan sub-facility. As of March 31, 2016, the borrowing base was $1,334 million based on the amount of eligible inventory and accounts receivable balances as of February 29, 2016. The Company could have borrowed up to an additional $908 million under the Revolving Loan as of March 31, 2016. |
(2) | The CDW UK Credit Facility is a multi-currency revolving credit facility, expiring on July 17, 2017, under which CDW UK is permitted to borrow an aggregate amount of £50.0 million ($72 million). |
(in millions) | March 31, 2016 | December 31, 2015 | ||||||
Fair value | $ | 3,338.2 | $ | 3,330.4 | ||||
Carrying value | 3,277.6 | 3,286.5 |
6. | Earnings per Share |
Three Months Ended March 31, | |||||
(in millions) | 2016 | 2015 | |||
Basic weighted-average shares outstanding | 167.3 | 172.1 | |||
Effect of dilutive securities(1) | 1.6 | 1.4 | |||
Diluted weighted-average shares outstanding(2) | 168.9 | 173.5 |
(1) | The dilutive effect of outstanding stock options, restricted stock units, restricted stock and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method. |
(2) | There were less than 1 million potential common shares excluded from diluted weighted-average shares outstanding for the three months ended March 31, 2016 and 2015 as their inclusion would have had an anti-dilutive effect. |
7. | Commitments and Contingencies |
8. | Segment Information |
(in millions) | Corporate | Public | Other | Headquarters | Total | |||||||||||||||
Three Months Ended March 31, 2016: | ||||||||||||||||||||
Net sales | $ | 1,692.3 | $ | 1,069.4 | $ | 355.0 | $ | — | $ | 3,116.7 | ||||||||||
Income (loss) from operations(1) | 118.2 | 58.5 | 8.1 | (23.8 | ) | 161.0 | ||||||||||||||
Depreciation and amortization expense | (25.9 | ) | (11.2 | ) | (8.7 | ) | (18.2 | ) | (64.0 | ) | ||||||||||
Three Months Ended March 31, 2015: | ||||||||||||||||||||
Net sales | $ | 1,610.4 | $ | 1,017.2 | $ | 127.6 | $ | — | $ | 2,755.2 | ||||||||||
Income (loss) from operations(1) | 118.6 | 55.4 | 4.9 | (27.3 | ) | 151.6 | ||||||||||||||
Depreciation and amortization expense | (25.7 | ) | (11.1 | ) | (0.4 | ) | (15.3 | ) | (52.5 | ) |
(1) | Certain costs related to technology specialists have been reclassified between our Corporate and Public segments. Prior periods have been reclassified to conform to the current period presentation. |
9. | Supplemental Guarantor Information |
Condensed Consolidating Balance Sheet | |||||||||||||||||||||||||||
March 31, 2016 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 185.4 | $ | — | $ | 82.6 | $ | — | $ | (19.8 | ) | $ | 248.2 | ||||||||||||
Accounts receivable, net | — | — | 1,529.0 | 251.2 | — | — | 1,780.2 | ||||||||||||||||||||
Merchandise inventory | — | — | 393.1 | 67.3 | — | — | 460.4 | ||||||||||||||||||||
Miscellaneous receivables | — | 77.7 | 111.9 | 23.1 | — | — | 212.7 | ||||||||||||||||||||
Prepaid expenses and other | — | 16.6 | 61.4 | 36.8 | — | — | 114.8 | ||||||||||||||||||||
Total current assets | — | 279.7 | 2,095.4 | 461.0 | — | (19.8 | ) | 2,816.3 | |||||||||||||||||||
Property and equipment, net | — | 106.1 | 51.5 | 10.8 | — | — | 168.4 | ||||||||||||||||||||
Goodwill | — | 751.8 | 1,439.0 | 304.4 | — | — | 2,495.2 | ||||||||||||||||||||
Other intangible assets, net | — | 303.7 | 670.2 | 251.5 | — | — | 1,225.4 | ||||||||||||||||||||
Other assets | 3.6 | 23.1 | 263.2 | 3.4 | — | (280.7 | ) | 12.6 | |||||||||||||||||||
Investment in and advances to subsidiaries | 1,036.3 | 3,120.4 | — | — | — | (4,156.7 | ) | — | |||||||||||||||||||
Total assets | $ | 1,039.9 | $ | 4,584.8 | $ | 4,519.3 | $ | 1,031.1 | $ | — | $ | (4,457.2 | ) | $ | 6,717.9 | ||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable—trade | $ | — | $ | 24.9 | $ | 774.6 | $ | 178.9 | $ | — | $ | (19.8 | ) | $ | 958.6 | ||||||||||||
Accounts payable—inventory financing | — | — | 355.6 | 17.5 | — | (0.2 | ) | 372.9 | |||||||||||||||||||
Current maturities of long-term debt | — | 15.4 | — | 11.5 | — | — | 26.9 | ||||||||||||||||||||
Deferred revenue | — | — | 90.9 | 75.4 | — | — | 166.3 | ||||||||||||||||||||
Accrued expenses | — | 184.8 | 187.5 | 47.0 | — | (0.6 | ) | 418.7 | |||||||||||||||||||
Total current liabilities | — | 225.1 | 1,408.6 | 330.3 | — | (20.6 | ) | 1,943.4 | |||||||||||||||||||
Long-term liabilities: | |||||||||||||||||||||||||||
Debt | — | 3,153.7 | — | 71.3 | — | — | 3,225.0 | ||||||||||||||||||||
Deferred income taxes | — | 116.5 | 255.3 | 80.3 | — | (3.6 | ) | 448.5 | |||||||||||||||||||
Other liabilities | — | 53.2 | 3.4 | 280.6 | — | (276.1 | ) | 61.1 | |||||||||||||||||||
Total long-term liabilities | — | 3,323.4 | 258.7 | 432.2 | — | (279.7 | ) | 3,734.6 | |||||||||||||||||||
Total stockholders’ equity | 1,039.9 | 1,036.3 | 2,852.0 | 268.6 | — | (4,156.9 | ) | 1,039.9 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,039.9 | $ | 4,584.8 | $ | 4,519.3 | $ | 1,031.1 | $ | — | $ | (4,457.2 | ) | $ | 6,717.9 |
Condensed Consolidating Balance Sheet | |||||||||||||||||||||||||||
December 31, 2015 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiary | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Assets | |||||||||||||||||||||||||||
Current assets: | |||||||||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 45.1 | $ | — | $ | 31.9 | $ | — | $ | (39.4 | ) | $ | 37.6 | ||||||||||||
Accounts receivable, net | — | — | 1,788.6 | 228.8 | — | — | 2,017.4 | ||||||||||||||||||||
Merchandise inventory | — | — | 340.3 | 52.8 | — | — | 393.1 | ||||||||||||||||||||
Miscellaneous receivables | — | 83.7 | 90.1 | 24.6 | — | — | 198.4 | ||||||||||||||||||||
Prepaid expenses and other | — | 13.0 | 50.4 | 84.0 | — | (3.1 | ) | 144.3 | |||||||||||||||||||
Total current assets | — | 141.8 | 2,269.4 | 422.1 | — | (42.5 | ) | 2,790.8 | |||||||||||||||||||
Property and equipment, net | — | 110.0 | 54.1 | 11.3 | — | — | 175.4 | ||||||||||||||||||||
Goodwill | — | 751.8 | 1,439.0 | 309.6 | — | — | 2,500.4 | ||||||||||||||||||||
Other intangible assets, net | — | 306.0 | 704.9 | 265.5 | — | — | 1,276.4 | ||||||||||||||||||||
Other assets | 3.8 | 17.3 | 263.0 | 3.0 | — | (274.8 | ) | 12.3 | |||||||||||||||||||
Investment in and advances to subsidiaries | 1,092.1 | 3,302.0 | — | — | — | (4,394.1 | ) | — | |||||||||||||||||||
Total assets | $ | 1,095.9 | $ | 4,628.9 | $ | 4,730.4 | $ | 1,011.5 | $ | — | $ | (4,711.4 | ) | $ | 6,755.3 | ||||||||||||
Liabilities and Stockholders’ Equity | |||||||||||||||||||||||||||
Current liabilities: | |||||||||||||||||||||||||||
Accounts payable-trade | $ | — | $ | 31.0 | $ | 727.4 | $ | 147.5 | $ | — | $ | (39.4 | ) | $ | 866.5 | ||||||||||||
Accounts payable-inventory financing | — | — | 428.4 | 11.4 | — | (0.2 | ) | 439.6 | |||||||||||||||||||
Current maturities of long-term debt | — | 15.4 | — | 11.8 | — | — | 27.2 | ||||||||||||||||||||
Deferred revenue | — | — | 77.4 | 74.5 | — | — | 151.9 | ||||||||||||||||||||
Accrued expenses | — | 156.0 | 190.9 | 58.6 | — | (3.4 | ) | 402.1 | |||||||||||||||||||
Total current liabilities | — | 202.4 | 1,424.1 | 303.8 | — | (43.0 | ) | 1,887.3 | |||||||||||||||||||
Long-term liabilities: | |||||||||||||||||||||||||||
Debt | — | 3,156.5 | — | 76.0 | — | — | 3,232.5 | ||||||||||||||||||||
Deferred income taxes | — | 117.3 | 272.8 | 83.4 | — | (3.9 | ) | 469.6 | |||||||||||||||||||
Other liabilities | — | 60.7 | 2.9 | 276.8 | — | (270.4 | ) | 70.0 | |||||||||||||||||||
Total long-term liabilities | — | 3,334.5 | 275.7 | 436.2 | — | (274.3 | ) | 3,772.1 | |||||||||||||||||||
Total stockholders’ equity | 1,095.9 | 1,092.0 | 3,030.6 | 271.5 | — | (4,394.1 | ) | 1,095.9 | |||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 1,095.9 | $ | 4,628.9 | $ | 4,730.4 | $ | 1,011.5 | $ | — | $ | (4,711.4 | ) | $ | 6,755.3 |
Consolidating Statement of Operations | |||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,761.7 | $ | 355.0 | $ | — | $ | — | $ | 3,116.7 | |||||||||||||
Cost of sales | — | — | 2,291.4 | 300.8 | — | — | 2,592.2 | ||||||||||||||||||||
Gross profit | — | — | 470.3 | 54.2 | — | — | 524.5 | ||||||||||||||||||||
Selling and administrative expenses | — | 23.6 | 260.7 | 45.0 | — | — | 329.3 | ||||||||||||||||||||
Advertising expense | — | — | 33.0 | 1.2 | — | — | 34.2 | ||||||||||||||||||||
Income (loss) from operations | — | (23.6 | ) | 176.6 | 8.0 | — | — | 161.0 | |||||||||||||||||||
Interest (expense) income, net | — | (37.5 | ) | 1.4 | (2.0 | ) | — | — | (38.1 | ) | |||||||||||||||||
Other income (expense), net | — | — | 0.6 | 0.4 | — | — | 1.0 | ||||||||||||||||||||
Income (loss) before income taxes | — | (61.1 | ) | 178.6 | 6.4 | — | — | 123.9 | |||||||||||||||||||
Income tax benefit (expense) | — | 23.4 | (67.6 | ) | (1.9 | ) | — | — | (46.1 | ) | |||||||||||||||||
Income (loss) before equity in earnings of subsidiaries | — | (37.7 | ) | 111.0 | 4.5 | — | — | 77.8 | |||||||||||||||||||
Equity in earnings of subsidiaries | 77.8 | 115.5 | — | — | — | (193.3 | ) | — | |||||||||||||||||||
Net income | $ | 77.8 | $ | 77.8 | $ | 111.0 | $ | 4.5 | $ | — | $ | (193.3 | ) | $ | 77.8 |
Consolidating Statement of Operations | |||||||||||||||||||||||||||
Three Months Ended March 31, 2015 (1) | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiary | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Net sales | $ | — | $ | — | $ | 2,627.6 | $ | 127.6 | $ | — | $ | — | $ | 2,755.2 | |||||||||||||
Cost of sales | — | — | 2,186.4 | 112.3 | — | — | 2,298.7 | ||||||||||||||||||||
Gross profit | — | — | 441.2 | 15.3 | — | — | 456.5 | ||||||||||||||||||||
Selling and administrative expenses | — | 27.3 | 238.5 | 9.7 | — | — | 275.5 | ||||||||||||||||||||
Advertising expense | — | — | 28.7 | 0.7 | — | — | 29.4 | ||||||||||||||||||||
Income (loss) from operations | — | (27.3 | ) | 174.0 | 4.9 | — | — | 151.6 | |||||||||||||||||||
Interest (expense) income, net | — | (44.9 | ) | — | 0.1 | — | — | (44.8 | ) | ||||||||||||||||||
Net loss on extinguishments of long-term debt | — | (24.3 | ) | — | — | — | — | (24.3 | ) | ||||||||||||||||||
Other income (expense), net | — | 4.1 | 0.7 | (0.3 | ) | — | — | 4.5 | |||||||||||||||||||
Income (loss) before income taxes | — | (92.4 | ) | 174.7 | 4.7 | — | — | 87.0 | |||||||||||||||||||
Income tax benefit (expense) | — | 34.8 | (65.8 | ) | (1.3 | ) | — | — | (32.3 | ) | |||||||||||||||||
Income (loss) before equity in earnings of subsidiaries | — | (57.6 | ) | 108.9 | 3.4 | — | — | 54.7 | |||||||||||||||||||
Equity in earnings of subsidiaries | 54.7 | 112.3 | — | — | — | (167.0 | ) | — | |||||||||||||||||||
Net income | $ | 54.7 | $ | 54.7 | $ | 108.9 | $ | 3.4 | $ | — | $ | (167.0 | ) | $ | 54.7 |
Condensed Consolidating Statement of Comprehensive Income | |||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Comprehensive income | $ | 70.0 | $ | 70.0 | $ | 111.0 | $ | (3.3 | ) | $ | — | $ | (177.7 | ) | $ | 70.0 |
Condensed Consolidating Statement of Comprehensive Income | |||||||||||||||||||||||||||
Three Months Ended March 31, 2015 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiary | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Comprehensive income | $ | 43.7 | $ | 43.7 | $ | 108.9 | $ | (7.6 | ) | $ | — | $ | (145.0 | ) | $ | 43.7 |
Condensed Consolidating Statement of Cash Flows | |||||||||||||||||||||||||||
Three Months Ended March 31, 2016 | |||||||||||||||||||||||||||
(in millions) | Parent Guarantor | Subsidiary Issuer | Guarantor Subsidiaries | Non-Guarantor Subsidiaries | Co-Issuer | Consolidating Adjustments | Consolidated | ||||||||||||||||||||
Net cash (used in) provided by operating activities | $ | — | $ | (17.0 | ) | $ | 377.9 | $ | 42.1 | $ | — | $ | 24.6 | $ | 427.6 | ||||||||||||
Cash flows from investing activities: | |||||||||||||||||||||||||||
Capital expenditures | — | (9.9 | ) | (0.5 | ) | (0.6 | ) | — | — | (11.0 | ) | ||||||||||||||||
Net cash used in investing activities | — | (9.9 | ) | (0.5 | ) | (0.6 | ) | — | — | (11.0 | ) | ||||||||||||||||
Cash flows from financing activities: | |||||||||||||||||||||||||||
Proceeds from borrowings under revolving credit facility | — | 63.4 | — | — | — | — | 63.4 | ||||||||||||||||||||
Repayments of borrowings under revolving credit facility | — | (63.4 | ) | — | — | — | — | (63.4 | ) | ||||||||||||||||||
Repayments of long-term debt | — | (3.9 | ) | — | (2.8 | ) | — | — | (6.7 | ) | |||||||||||||||||
Net change in accounts payable-inventory financing | — | — | (72.9 | ) | 6.4 | — | — | (66.5 | ) | ||||||||||||||||||
Proceeds from stock option exercises | — | 1.2 | — | — |