Slide 1: New Revenue Accounting Standard (ASC 606)
NEW REVENUE ACCOUNTING STANDARD (ASC 606) February 7, 2018
Slide 2: Disclaimers
DISCLAIMERS Forward-Looking Statements Statements in this document that are not statements of historical fact are forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including without limitation statements regarding the
Slide 3: Contents
CONTENTS • Impacts to CDW • Prior Standard* vs. New Standard (ASC 606) * Defined throughout this presentation as the guidance of ASC 605, Revenue Recognition, and the industry-specific guidance of ASC 985, Software. 33
Slide 4: Q1 2018 Adoption of ASC 606
Q1 2018 ADOPTION OF ASC 606 Impacts to CDW Financial Statement Impacts to CDW • Lower revenue for certain security software licenses • Lower Net sales in 2017 and 2016 for certain (e.g. third-party support deemed to be critical or security software licenses being reported on a net essential to the c
Slide 5: Prior Standard vs. New Standard (ASC 606)
PRIOR STANDARD VS. NEW STANDARD (ASC 606)
Slide 6: Bill & Hold Change
BILL & HOLD CHANGE Configurations are completed, Customer Sales Hardware/ Sales goods are receives order is software is order is placed in goods & finalized picked shipped staging & services order is invoiced When we will When we recognize recognized revenue under revenue under the new the prior sta
Slide 7: 2017 Net Sales: Prior Standard to New Revenue Standard
2017 NET SALES: PRIOR STANDARD TO NEW REVENUE STANDARD *Comprised primarily of bill and hold transactions 77
Slide 8: 2016 Net Sales: Prior Standard to New Revenue Standard
2016 NET SALES: PRIOR STANDARD TO NEW REVENUE STANDARD *Comprised of bill and hold transactions 88
Slide 9: Restated Income Summary: 2017 and 2016
RESTATED INCOME SUMMARY: 2017 AND 2016 2017 2016 Growth rate New New New Prior Standard Prior Standard Prior Standard $ millions Standard (ASC 606) Change Standard (ASC 606) Change Standard (ASC 606) Net sales $15,191.5 $14,832.9 ($358.6) $13,981.9 $13,672.7 ($309.2) 8.7% 8.5% Gross profit 2,449.9 2
Slide 10: Restated Net Sales by Segment
RESTATED NET SALES BY SEGMENT Q1 2017 Q2 2017 Q3 2017 Q4 2017 Full Year 2017* New New New New Prior Standard Prior Standard Prior Standard Prior Standard Prior New Standard Standard (ASC 606) Standard (ASC 606) Standard (ASC 606) Standard (ASC 606) Standard (ASC 606) Corporate $ 1,476.3 $ 1,440.6 $
Slide 11: Non-GAAP Reconciliations
NON-GAAP RECONCILIATIONS #11))9 PEOPLE WHO GETIT
Slide 12: Adjusted EBITDA Reconciliation to Net Income
ADJUSTED EBITDA RECONCILIATION TO NET INCOME (Unaudited) ($ in millions) Prior Standard New standard (ASC 606) 2017 2016 2017 2016 Net income $ 523.0 $ 424.4 $ 523.1 $ 425.1 Depreciation and amortization 260.9 254.5 260.9 254.5 Income tax expense 137.3 248.0 137.6 248.0 Interest expense, net 150.5 1
Slide 13: Non-GAAP Net Income Reconciliation
NON-GAAP NET INCOME RECONCILIATION (Unaudited) ($ in millions) Prior Standard New standard (ASC 606) 2017 2016 2017 2016 Net income $ 523.0 $ 424.4 $ 523.1 $ 425.1 Non-GAAP Adjustments: Amortization of intangibles (i) 185.1 187.2 185.1 187.2 Equity-based compensation 43.7 39.2 43.7 39.2 Net loss on
Slide 14: Non-GAAP Net Income per Share
NON-GAAP NET INCOME PER SHARE (Unaudited) ($ and shares in millions, except per share amounts) Prior Standard New standard (ASC 606) 2017 2016 2017 2016 Net income $ 523.0 $ 424.4 $ 523.1 $ 425.1 Weighted-average common shares outstanding - Diluted 158.2 166.0 158.2 166.0 Net income per diluted shar