UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)



þ☑						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the quarterly period ended March 31, 2019~~

orFor the quarterly period ended March 31, 2020



o☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
~~For the transition period from~~ to

For the transition period from to

Commission File Number: 001-14989

WESCO International, Inc.

(Exact name of registrant as specified in its charter)

Delaware

25-1723342

(State or other jurisdiction of

incorporation or organization)

~~25-1723342~~

(I.R.S. Employer

Identification No.)

225 West Station Square Drive

Suite 700

15219

Pittsburgh,

Pennsylvania

(Zip Code)

(Address of principal executive offices)

~~15219~~

~~(Zip Code)~~

(412) 454-2200

(Registrant's telephone number, including area code)

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

Title of Class

Trading Symbol(s)

Name of Exchange on which registered

Common Stock, par value $.01 per share

WCC

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days. Yes þ☑ No o☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☑ No o☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

~~Large accelerated filer~~ þ

Emerging growth company

~~Accelerated filer~~ o

☐

~~Non-accelerated filer~~ o

~~Smaller reporting company~~ o

~~Emerging growth company~~ o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☑

As of ~~May 1, 2019, 44,856,784~~April 30, 2020, 41,873,053 shares of common stock, $0.01 par value, of the registrant were outstanding.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

Table of Contents


		Page
PART I—FINANCIAL INFORMATION

		~~Page~~
~~PART I—FINANCIAL INFORMATION~~

Item 1. Financial Statements.	2

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.		2116

Item 3. Quantitative and Qualitative Disclosures About Market Risk.		2625

Item 4. Controls and Procedures.		2625

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.		2726

Item 1A. Risk Factors.		2726

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.~~		27

Item 6. Exhibits.	2826

Signatures		2928

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

The interim financial information required by this item is set forth in the unaudited Condensed Consolidated Financial Statements and Notes thereto in this Quarterly Report on Form 10-Q, as follows:


		Page

		~~Page~~

Condensed Consolidated Balance Sheets (unaudited)	3
Condensed Consolidated Statements of Income and Comprehensive Income (Loss) (unaudited)		4
Condensed Consolidated Statements of Cash Flows (unaudited)		5
Condensed Consolidated Statements of Stockholders' Equity (unaudited)		6
Notes to Condensed Consolidated Financial Statements (unaudited)		7

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands of dollars, except share data)

(unaudited)

As of
Assets March 31,
2019 December 31,
2018
Current assets:
Cash and cash equivalents $ 106,100
$ 96,343
Trade accounts receivable, net of allowance for doubtful accounts of $26,828 and $24,468 in 2019 and 2018, respectively 1,268,565
1,166,607
Other accounts receivable 75,326
96,984
Inventories 1,001,353
948,726
Prepaid expenses and other current assets 62,406
76,980
Total current assets 2,513,750
2,385,640
Property, buildings and equipment, net of accumulated depreciation of $290,883 and $291,811 in 2019 and 2018, respectively 166,688
160,878
Operating lease assets (Notes 2 and 4) 232,989
—
Intangible assets, net of accumulated amortization of $260,496 and $249,539 in 2019
and 2018, respectively
310,453
316,016
Goodwill 1,740,771
1,722,603
Other assets 19,987
19,899
    Total assets $ 4,984,638
$ 4,605,036
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable $ 870,242
$ 794,348
Accrued payroll and benefit costs 59,934
88,105
Short-term debt 27,313
30,785
Current portion of long-term debt, net of debt discount and debt issuance costs of $488 in 2018 1,159
25,429
Bank overdrafts 22,455
17,818
Other current liabilities (Note 4) 169,619
105,461
Total current liabilities 1,150,722
1,061,946
Long-term debt, net of debt discount and debt issuance costs of $8,508 and $9,243 in 2019 and 2018, respectively 1,214,276
1,167,311
Operating lease liabilities (Notes 2 and 4) 178,606
—
Deferred income taxes 145,501
143,967
Other noncurrent liabilities 99,171
102,086
    Total liabilities $ 2,788,276
$ 2,475,310
Commitments and contingencies (Note 11)

Stockholders’ equity:
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued or outstanding —
—
Common stock, $.01 par value; 210,000,000 shares authorized, 59,271,892 and 59,157,696 shares issued and 44,854,825 and 45,106,085 shares outstanding in 2019 and 2018, respectively 593
592
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2019 and 2018, respectively 43
43
Additional capital 1,015,563
993,666
Retained earnings 2,349,300
2,307,462
Treasury stock, at cost; 18,756,498 and 18,391,042 shares in 2019 and 2018, respectively (777,216 ) (758,018 )
Accumulated other comprehensive loss (385,918 ) (408,435 )
Total WESCO International, Inc. stockholders' equity 2,202,365
2,135,310
Noncontrolling interests (6,003 ) (5,584 )
    Total stockholders’ equity 2,196,362
2,129,726
    Total liabilities and stockholders’ equity $ 4,984,638
$ 4,605,036

~~The accompanying notes are an integral part of the condensed consolidated financial statements.~~

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME~~

~~(In thousands of dollars, except per share data)~~

~~(unaudited)~~

Three Months Ended
March 31
2019 2018
Net sales (Note 3) $ 1,961,267
$ 1,993,915
Cost of goods sold (excluding depreciation and
amortization) 1,578,771
1,613,966
Selling, general and administrative expenses 296,528
290,829
Depreciation and amortization 15,242
15,879
Income from operations 70,726
73,241
Net interest and other 17,120
19,783
Income before income taxes 53,606
53,458
Provision for income taxes 11,656
10,487
Net income 41,950
42,971
Less: Net loss attributable to noncontrolling interests (419 ) (1,450 )
Net income attributable to WESCO International, Inc. $ 42,369
$ 44,421
Other comprehensive income (loss):
Foreign currency translation adjustments 22,517
(28,800 )
Comprehensive income attributable to WESCO International, Inc. $ 64,886
$ 15,621

Earnings per share attributable to WESCO International, Inc.
Basic $ 0.94
$ 0.94
Diluted $ 0.93
$ 0.93


	As of
Assets	March 31, 2020		December 31, 2019
Current assets:
Cash and cash equivalents	$	342,560	$	150,902
Trade accounts receivable, net of allowance for doubtful accounts of $25,260 and $25,443 in 2020 and 2019, respectively	1,214,331		1,187,359
Other accounts receivable	77,691		98,029
Inventories	950,521		1,011,674
Prepaid expenses and other current assets (Note 4)	192,375		92,447
Total current assets	2,777,478		2,540,411
Property, buildings and equipment, net of accumulated depreciation of $269,582 and $268,415 in 2020 and 2019, respectively	183,997		181,448
Operating lease assets	271,602		235,834
Intangible assets, net of accumulated amortization of $278,711 and $280,442 in 2020 and 2019, respectively	267,628		287,275
Goodwill	1,717,963		1,759,040
Other assets	12,288		13,627
Total assets	$	5,230,956	$	5,017,635
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	804,330	$	830,478
Accrued payroll and benefit costs	28,940		49,508
Short-term debt	24,097		26,255
Current portion of long-term debt	379		430
Bank overdrafts	13,951		18,021
Other current liabilities	168,808		159,367
Total current liabilities	1,040,505		1,084,059
Long-term debt, net of debt issuance costs of $8,211 and $8,876 in 2020 and 2019, respectively	1,542,602		1,257,067
Operating lease liabilities	213,172		179,830
Deferred income taxes	146,977		146,617
Other noncurrent liabilities	85,574		91,391
Total liabilities	$	3,028,830	$	2,758,964
Commitments and contingencies (Note 10)
Stockholders’ equity:
Preferred stock, $.01 par value; 20,000,000 shares authorized, 0 shares issued or outstanding	—		—
Common stock, $.01 par value; 210,000,000 shares authorized, 59,381,958 and 59,308,018 shares issued and 41,873,053 and 41,797,093 shares outstanding in 2020 and 2019, respectively	594		593
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2020 and 2019, respectively	43		43
Additional capital	1,041,637		1,039,347
Retained earnings	2,565,597		2,530,429
Treasury stock, at cost; 21,848,336 and 21,850,356 shares in 2020 and 2019, respectively	(937,078)		(937,157)
Accumulated other comprehensive loss	(461,623)		(367,772)
Total WESCO International, Inc. stockholders' equity	2,209,170		2,265,483
Noncontrolling interests	(7,044)		(6,812)
Total stockholders’ equity	2,202,126		2,258,671
Total liabilities and stockholders’ equity	$	5,230,956	$	5,017,635

The accompanying notes are an integral part of the condensed consolidated financial statements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~INCOME AND COMPREHENSIVE INCOME (LOSS)

(In thousands of ~~dollars)~~dollars, except per share data)

(unaudited)

Three Months Ended
March 31
2019 2018
Operating activities:
Net income $ 41,950
$ 42,971
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 15,242
15,879
Deferred income taxes 893
2,736
Other operating activities, net 5,961
5,085
Changes in assets and liabilities:
Trade accounts receivable, net (76,696 ) (37,509 )
Other accounts receivable 22,425
29,986
Inventories (40,768 ) 2,992
Prepaid expenses and other assets 15,074
4,817
Accounts payable 68,085
8,077
Accrued payroll and benefit costs (27,851 ) (24,561 )
Other current and noncurrent liabilities 4,554
2,520
Net cash provided by operating activities 28,869
52,993

Investing activities:
Acquisition payments (27,742 ) —
Capital expenditures (10,828 ) (7,662 )
Other investing activities 53
(8,760 )
Net cash used in investing activities (38,517 ) (16,422 )

Financing activities:
Proceeds from issuance of short-term debt 23,569
57,919
Repayments of short-term debt (51,983 ) (52,220 )
Proceeds from issuance of long-term debt 423,666
493,000
Repayments of long-term debt (377,825 ) (515,000 )
Repurchases of common stock (2,572 ) (1,661 )
Increase (decrease) in bank overdrafts 4,639
(10,575 )
Other financing activities, net (248 ) (290 )
Net cash used in financing activities 19,246
(28,827 )

Effect of exchange rate changes on cash and cash equivalents 159
(1,800 )

Net change in cash and cash equivalents 9,757
5,944
Cash and cash equivalents at the beginning of period 96,343
117,953
Cash and cash equivalents at the end of period $ 106,100
$ 123,897
Supplemental disclosures:
Cash paid for interest $ 4,583
$ 4,607
Cash paid for income taxes 5,018
5,505


	Three Months Ended
	March 31
	2020		2019
Net sales (Note 3)	1,968,647		1,961,267
Cost of goods sold (excluding depreciation and amortization)	1,592,249		1,578,771
Selling, general and administrative expenses	299,392		296,528
Depreciation and amortization	16,093		15,242
Income from operations	60,913		70,726
Net interest and other	16,472		17,120
Income before income taxes	44,441		53,606
Provision for income taxes	10,266		11,656
Net income	34,175		41,950
Less: Net loss attributable to noncontrolling interests	(232)		(419)
Net income attributable to WESCO International, Inc.	$	34,407	$	42,369
Other comprehensive income (loss):
Foreign currency translation adjustments	(93,851)		22,517
Comprehensive (loss) income attributable to WESCO International, Inc.	$	(59,444)	$	64,886

Earnings per share attributable to WESCO International, Inc.
Basic	$	0.82	$	0.94
Diluted	$	0.82	$	0.93

The accompanying notes are an integral part of the condensed consolidated financial statements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’ EQUITY~~CASH FLOWS

(In thousands of dollars)

(unaudited)

Accumulated Other
Class B Retained Comprehensive
Common Stock Common Stock Additional Earnings Treasury Stock Noncontrolling Income
Amount Shares Amount Shares Capital (Deficit) Amount Shares Interests (Loss)
Balance, December 31, 2018 $ 592
59,157,696
$ 43
4,339,431
$ 993,666
$ 2,307,462
$ (758,018 ) (18,391,042 ) $ (5,584 ) $ (408,435 )
Exercise of stock-based awards 1
156,760
(90 ) (54 ) (184 )
Stock-based compensation expense 4,665

Repurchases of common stock 19,144
(19,144 ) (365,272 )
Tax withholding related to vesting of restricted stock units and retirement of common stock —
(42,564 ) (1,822 ) (531 )
Noncontrolling interests (419 )
Net income attributable to WESCO 42,369

Translation adjustments 22,517
Balance, March 31, 2019 $ 593
59,271,892
$ 43
4,339,431
$ 1,015,563
$ 2,349,300
$ (777,216 ) (18,756,498 ) $ (6,003 ) $ (385,918 )


	Three Months Ended
	March 31
	2020		2019
Operating activities:
Net income	$	34,175	$	41,950
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,093		15,242
Deferred income taxes	1,979		893
Other operating activities, net	1,760		5,961
Changes in assets and liabilities:
Trade accounts receivable, net	(53,944)		(76,696)
Other accounts receivable	19,236		22,425
Inventories	37,807		(40,768)
Prepaid expenses and other assets	(3,125)		15,074
Accounts payable	(10,858)		68,085
Accrued payroll and benefit costs	(18,973)		(27,851)
Other current and noncurrent liabilities	7,378		4,554
Net cash provided by operating activities	31,528		28,869

Investing activities:
Capital expenditures	(15,762)		(10,828)
Acquisition payments (Note 4)	(100,000)		(27,742)
Other investing activities	5,497		53
Net cash used in investing activities	(110,265)		(38,517)

Financing activities:
Repayments of short-term debt, net	(383)		(28,414)
Proceeds from issuance of long-term debt	585,511		423,666
Repayments of long-term debt	(300,511)		(377,825)
Repurchases of common stock (Note 7)	(1,566)		(2,572)
Other financing activities, net	(4,360)		4,391
Net cash provided by financing activities	278,691		19,246

Effect of exchange rate changes on cash and cash equivalents	(8,296)		159

Net change in cash and cash equivalents	191,658		9,757
Cash and cash equivalents at the beginning of period	150,902		96,343
Cash and cash equivalents at the end of period	$	342,560	$	106,100
Supplemental disclosures:
Cash paid for interest	$	4,029	$	4,583
Cash paid for income taxes	$	6,245	$	5,018
Right-of-use assets obtained in exchange for new operating lease liabilities	$	57,185	$	8,092

Accumulated Other
Class B Retained Comprehensive
Common Stock Common Stock Additional Earnings Treasury Stock Noncontrolling Income
Amount Shares Amount Shares Capital (Deficit) Amount Shares Interests (Loss)
Balance, December 31, 2017 $ 591
59,045,762
$ 43
4,339,431
$ 999,156
$ 2,079,697
$ (647,158 ) (16,375,653 ) $ (3,596 ) $ (312,590 )
Exercise of stock-based awards —
88,554
(67 ) (455 ) (5,521 )
Stock-based compensation expense 3,858

Tax withholding related to vesting of restricted stock units and retirement of common stock —
(16,614 ) (1,153 ) 417

Noncontrolling interests (1,450 )
Net income attributable to WESCO 44,421

Translation adjustments (28,800 )
Balance, March 31, 2018 $ 591
59,117,702
$ 43
4,339,431
$ 1,001,794
$ 2,124,535
$ (647,613 ) (16,381,174 ) $ (5,046 ) $ (341,390 )

The accompanying notes are an integral part of the condensed consolidated financial statements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands of dollars)

(unaudited)


																Accumulated Other
				Class B							Retained							Comprehensive
	Common Stock					Common Stock					Additional		Earnings	Treasury Stock					Noncontrolling	Income
	Amount		Shares	Amount		Shares	Capital		(Deficit)		Amount		Shares	Interests		(Loss)
Balance, December 31, 2019	$	593	59,308,018	$	43	4,339,431	$	1,039,347	$	2,530,429	$	(937,157)	(21,850,356)	$	(6,812)	$	(367,772)
Exercise of stock-based awards	1		105,620				(39)				79		2,020
Stock-based compensation expense							4,626
Tax withholding related to vesting of restricted stock units and retirement of common stock	—		(31,680)				(2,297)		761
Noncontrolling interests														(232)
Net income attributable to WESCO									34,407
Translation adjustments																(93,851)
Balance, March 31, 2020	$	594	59,381,958	$	43	4,339,431	$	1,041,637	$	2,565,597	$	(937,078)	(21,848,336)	$	(7,044)	$	(461,623)


																Accumulated Other
				Class B							Retained							Comprehensive
	Common Stock					Common Stock					Additional		Earnings	Treasury Stock					Noncontrolling	Income
	Amount		Shares	Amount		Shares	Capital		(Deficit)		Amount		Shares	Interests		(Loss)
Balance, December 31, 2018	$	592	59,157,696	$	43	4,339,431	$	993,666	$	2,307,462	$	(758,018)	(18,391,042)	$	(5,584)	$	(408,435)
Exercise of stock-based awards	1		156,760				(90)				(54)		(184)
Stock-based compensation expense							4,665
Repurchases of common stock							19,144				(19,144)		(365,272)
Tax withholding related to vesting of restricted stock units and retirement of common stock	—		(42,564)				(1,822)		(531)
Noncontrolling interests														(419)
Net income attributable to WESCO									42,369
Translation adjustments																22,517
Balance, March 31, 2019	$	593	59,271,892	$	43	4,339,431	$	1,015,563	$	2,349,300	$	(777,216)	(18,756,498)	$	(6,003)	$	(385,918)

The accompanying notes are an integral part of the condensed consolidated financial statements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION

WESCO International, Inc. ("WESCO International") and its subsidiaries (collectively, “WESCO” or the "Company"), headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of electrical, industrial and communications maintenance, repair and operating ("MRO") and original equipment manufacturer ("OEM") products, construction materials, and advanced supply chain management and logistics services used primarily in the industrial, construction, utility and commercial, institutional and government markets. WESCO serves approximately 70,000 active customers globally through approximately 500 branches primarily located in North America, with operations in 1516 additional countries and 1011 distribution centers located in the United States and Canada.

2. ACCOUNTING POLICIES

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements of WESCO have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial information should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in WESCO’s ~~2018~~2019 Annual Report on Form 10-K as filed with the SEC on February ~~27, 2019.~~24, 2020. The Condensed Consolidated Balance Sheet at December 31, ~~2018~~2019 was derived from the audited Consolidated Financial Statements as of that date, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America.

The unaudited Condensed Consolidated Balance Sheet as of March 31, ~~2019,~~2020, the unaudited Condensed Consolidated Statements of Income and Comprehensive Income (Loss), the unaudited Condensed Consolidated Statements of Stockholders' Equity, and the unaudited Condensed Consolidated Statements of Cash Flows ~~and the unaudited Condensed Consolidated Statements of Stockholders' Equity~~ for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively, in the opinion of management, have been prepared on the same basis as the audited Consolidated Financial Statements and include all adjustments necessary for the fair statement of the results of the interim periods presented herein. All adjustments reflected in the unaudited condensed consolidated financial information are of a normal recurring nature unless indicated. The results for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.

~~Recently Adopted Accounting Pronouncements~~Reclassifications

~~Effective January 1, 2019, WESCO adopted Accounting Standards Update (ASU) 2016-02,~~ ~~Leases, and all the related amendments (“Topic 842”), a comprehensive new standard that amended various aspects of existing accounting guidance for leases.~~ The adoption of Topic 842 resulted in the recognition of right-of-use assets and lease liabilities for operating leases of approximately $240 million and $245 million, respectively, in the Consolidated Balance Sheet as of January 1, 2019, most of which relate to real estate. The adoption of Topic 842 did not have a material impact on the Consolidated Statement of Income and Comprehensive Income orCondensed Consolidated Statement of Cash ~~Flow~~Flows for the three months ended March 31, ~~2019.~~

~~The Company used the optional effective date transition method and therefore did not adjust the prior comparative periods presented herein. There was no cumulative-effect adjustment~~2019 includes certain reclassifications to beginning retained earnings as a result of using this method. In addition, the Company elected the package of practical expedients that allowed the adoption of Topic 842 without reassessing arrangements that commenced priorpreviously reported amounts to conform to the ~~effective date. Additional qualitative and quantitative information about the Company's leases is disclosed in Note 4.~~current period presentation.

Recently ~~Issued~~Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (FASB) issued ~~ASU~~Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which ~~introduces~~introduced new guidance for the accounting for credit losses on certain financial instruments. The ~~amendments in~~Company adopted this ASU ~~are~~ effective ~~for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early~~January 1, 2020. The adoption ~~is permitted. Management~~of this new credit loss guidance did not have a material impact on the unaudited condensed consolidated financial statements and notes thereto presented herein, and WESCO does not expect ~~the adoption of this accounting standard~~it to have a material impact on its ~~consolidated~~ financial ~~statements and notes thereto.~~position or results of operation on an ongoing basis.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The ~~amendments in~~Company adopted this ASU ~~are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management does not expect~~in the first quarter of 2020. The adoption of this ~~accounting standard to~~guidance did not have ~~a material~~an impact on ~~its~~the unaudited condensed consolidated financial statements and notes ~~thereto.~~thereto presented herein.

Recently Issued Accounting Pronouncements

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends the disclosure requirements for all employers that sponsor defined benefit pension and other post retirement plans by removing and adding certain disclosures. The amendments in this ASU are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management does not expect the adoption of this accounting standard to have a material impact on its condensed consolidated financial statements and notes thereto.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles of Accounting Standards Codification Topic 740, Income Taxes, and simplifies other aspects of accounting for income taxes. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. Management does not expect the adoption of this accounting standard to have a material impact on its condensed consolidated financial statements and notes thereto.

Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to WESCO’s financial position, results of operations or cash flows.

3. REVENUE

WESCO distributes products and provides services to customers globally within the following end markets: (1) industrial, (2) construction, (3) utility, and (4) commercial, institutional and government. Revenue is measured as the amount of consideration WESCO expects to receive in exchange for transferring goods or providing services.

The following tables disaggregate WESCO’s revenue by end market and geography:


	Three Months Ended
	March 31
(In thousands)	2020		2019
Industrial	$	702,214	$	736,906
Construction	636,503		633,288
Utility	340,945		308,269
Commercial, Institutional and Government	288,985		282,804
Total by end market	$	1,968,647	$	1,961,267

Three Months Ended
March 31
(In thousands) 2019 2018
Industrial $ 736,906
$ 758,976
Construction 633,288
637,800
Utility 308,269
315,546
Commercial, Institutional and Government 282,804
281,593
Total by end market $ 1,961,267
$ 1,993,915


	Three Months Ended
	March 31
(In thousands)	2020		2019
United States	$	1,478,491	$	1,460,991
Canada	377,419		384,596
Other International	112,737		115,680
Total by geography	$	1,968,647	$	1,961,267

Three Months Ended
March 31
(In thousands) 2019 2018
United States $ 1,460,991
$ 1,482,718
Canada ⁽¹⁾
384,596
398,738
Other International ⁽¹⁾
115,680
112,459
Total by geography $ 1,961,267
$ 1,993,915


⁽¹⁾	~~The prior period has been reclassified to conform to the current period presentation.~~

In accordance with certain contractual arrangements, WESCO receives payment from its customers in advance and recognizes such payment as deferred revenue. Revenue for advance payment is recognized when the performance obligation has been satisfied and control has transferred to the customer, which is generally upon shipment. Deferred revenue is usually recognized within a year or less from the date of the customer’s advance payment. At March 31, ~~2019~~2020 and December 31, ~~2018, $8.8~~2019, $9.9 million and ~~$11.8~~$12.3 million, respectively, of deferred revenue was recorded as a component of other current liabilities in the Condensed Consolidated Balance Sheets.

WESCO’s revenues are adjusted for variable consideration, which includes customer volume rebates, returns, and discounts. WESCO measures variable consideration by estimating expected outcomes using analysis and inputs based upon anticipated performance, historical data, as well as current and forecasted information. Measurement and recognition of variable consideration is reviewed by management on a monthly basis and revenue is adjusted accordingly. Variable consideration reduced revenue for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 by approximately $23.3 million and $25.5 million, ~~and $23.8 million,~~ respectively.

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Shipping and handling costs are recognized in net sales when they are billed to the customer. These costs are recognized as a component of selling, general and administrative expenses when WESCO does not bill the customer. WESCO has elected to recognize shipping and handling costs as a fulfillment cost. Shipping and handling costs recorded as a component of selling, ~~general and administrative expenses totaled $17.0 million and $18.2 million for the three months ended March 31, 2019 and 2018, respectively.~~

~~4. LEASES~~

WESCO leases real estate, automobiles, trucks and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Classification and initial measurement of the right-of-use asset and lease liability are determined at the lease commencement date. The Company has elected the short-term lease measurement and recognition exemption; therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet.

The Company's arrangements include certain non-lease components such as common area and other maintenance for leased real estate, as well as mileage, fuel and maintenance costs related to its leased automobiles and trucks. WESCO accounts for these nonlease components separately from the associated lease components. The Company does not guarantee any residual value in its lease agreements, and there are no material restrictions or covenants imposed by lease arrangements. Real estate leases typically include one or more options to extend the lease. The Company regularly evaluates the renewal options, and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term. The Company uses the interest rate implicit in its leases to discount lease payments at the lease commencement date. When the implicit rate is not readily available, the Company uses its incremental borrowing rate.

The Company's finance leases, which are recorded in the Condensed Consolidated Balance Sheet as of March 31, 2019 as a component of property, buildings and equipment, current portion of long-term debt and long-term debt, respectively, are not material to the consolidated financial statements and notes thereto. Accordingly, finance leases have not been disclosed herein.

~~The following table sets forth supplemental balance sheet information related to operating leases for the period presented:~~

As of
(In thousands) March 31, 2019
Operating lease assets $ 232,989

Current operating lease liabilities 59,236
Noncurrent operating lease liabilities 178,606
Total operating lease liabilities $ 237,842

~~The following table sets forth the Company's total lease cost, which is recorded as a component of selling, general and administrative expenses, for the period presented:~~

Three Months Ended
March 31
(In thousands) 2019
Operating lease cost $ 18,003
Short-term lease cost 11
Variable lease cost 5,321
Total lease cost $ 23,335

~~Variable lease cost consists of the non-lease components described above, as well as taxes and insurance for WESCO's leased real estate.~~

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

~~The following table sets forth supplemental cash flow information related to operating leases~~general and administrative expenses totaled $18.0 million and $17.0 million for ~~the period presented:~~

Three Months Ended
March 31
(In thousands) 2019
Operating cash flows from operating leases $ 18,012
Right-of-use assets obtained in exchange for new operating lease liabilities 8,092

~~For~~ the three months ended March 31, 2020 and 2019, ~~the weighted-average remaining lease term for operating leases was 5.5 years and the weighted-average discount rate used to measure operating lease assets and liabilities was 4.6%.~~respectively.

The following table sets forth the maturities of the Company's operating lease liabilities and reconciles the respective undiscounted payments to the operating lease liabilities in the Condensed Consolidated Balance Sheet as of March 31, 2019:

(In thousands)
2019 $ 59,033
2020 61,233
2021 49,587
2022 36,767
2023 27,547
Thereafter 45,701
Total undiscounted operating lease payments 279,868
Less: interest (42,026 )
Total operating lease liabilities $ 237,842

~~The following table sets forth the future minimum rental payments for operating leases accounted for in accordance with Accounting Standards Codification Topic 840,~~ ~~Leases, as of December 31, 2018:~~

Years ending December 31 (In thousands)
2019 $ 71,640
2020 59,594
2021 47,264
2022 34,490
2023 24,493
Thereafter 40,302

5.4. ACQUISITIONS

The following table sets forth the consideration paid for acquisitions:


	Three Months Ended
	March 31
	2019
	(In thousands)
Fair value of assets acquired	$	34,812
Fair value of liabilities assumed	7,070
Cash paid for acquisitions	$	27,742

Three Months Ended
March 31
2019
(In thousands)
Fair value of assets acquired $ 34,812
Fair value of liabilities assumed 7,070
Cash paid for acquisitions $ 27,742

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Sylvania Lighting Services Corp.

On March 5, 2019, WESCO Distribution, Inc. ("WESCO Distribution"), through its WESCO Services, LLC subsidiary, acquired certain assets and assumed certain liabilities of Sylvania Lighting Services Corp. ("SLS"). Headquartered in Wilmington, Massachusetts, SLS offers a full spectrum of energy-efficient lighting upgrade, retrofit, and renovation solutions with annual sales of approximately $100 million and approximately 220 employees across the U.S. and Canada. WESCO Distribution funded the purchase price paid at closing with borrowings under its accounts receivable securitization facility. The purchase price was allocated to the respective assets and liabilities based upon their estimated fair values as of the acquisition date, resulting in goodwill of ~~$5.5~~$11.6 million, which is deductible for tax purposes.

Anixter International Inc.

6.On January 10, 2020, WESCO International entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Anixter International Inc. (“Anixter”) and Warrior Merger Sub, Inc., a wholly owned subsidiary of WESCO International (“Merger Sub”). The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Anixter (the “Merger”), with Anixter surviving the Merger and continuing as a wholly owned subsidiary of WESCO International.

At the effective time of the Merger, each outstanding share of Anixter common stock will be converted into the right to receive (i) $70.00 in cash, without interest, which amount may be increased by up to $2.82 per Anixter common share at closing, based on the volume-weighted average trading price of WESCO International common stock on the New York Stock Exchange during a specified period prior to closing, and subject to further adjustment as set forth in the Merger Agreement (the “cash consideration”), (ii) 0.2397 shares of WESCO International common stock, subject to adjustment as set forth in the Merger Agreement (the “common stock consideration”), and (iii) 0.6356 depositary shares, each share representing a 1/1,000th interest in a share of newly issued WESCO International Series A fixed-rate reset cumulative perpetual preferred stock, $25,000 stated amount per whole preferred share, subject to adjustment as set forth in the Merger Agreement (the “preferred stock consideration” and, together with the cash consideration and the common stock consideration, (the “Merger Consideration”), in each case less any applicable withholding taxes. Based on the closing price of WESCO International common stock and the liquidation preference of the WESCO International Series A preferred stock underlying the preferred stock consideration, and giving effect to the downside protection described above, the implied value of the per share Merger Consideration was:(i) $100.00, on January 10, 2020, the last full trading day before the public announcement of the merger and (ii) $94.91, on April 30, 2020, the most recent practicable date prior to the date of this filing.

Concurrently with the execution of the Merger Agreement, WESCO paid to entities affiliated with Clayton, Dubilier & Rice, LLC (“CD&R”), on behalf of Anixter, a termination fee of $100 million that was required to terminate Anixter’s then-existing merger agreement with CD&R. As of March 31, 2020, the termination fee is recorded on the balance sheet as a component of prepaid expenses and other current assets. Upon consummation of the Merger with Anixter, the $100 million termination fee will be accounted for as a portion of the Merger Consideration paid to the stockholders of Anixter.

The closing of the Merger is subject to the satisfaction or waiver of customary conditions to closing, including the approval or clearance, or the expiration, termination or waiver of the waiting periods under various antitrust laws. As of the date hereof, clearance under the antitrust laws of Canada remains outstanding. Notification of the Merger was filed in Canada on February 27, 2020 and, on April 14, 2020, the Canadian Commissioner of Competition issued a Supplementary Information Request seeking additional information with respect to the Merger and the businesses of Anixter and WESCO. Notification of the

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

Merger was filed in Mexico on February 10, 2020, and approval was received on April 30, 2020. Approval or clearance has previously been received under the antitrust laws of the United States, Russia and Turkey. WESCO, Anixter and Merger Sub have also filed notifications seeking approval under the antitrust laws of Chile (filed on February 20, 2020), but the receipt of approval in Chile is not a condition to the closing of the Merger. WESCO and Anixter expect to complete the Merger in the second or third calendar quarter of 2020.

5. GOODWILL

The following table sets forth the changes in the carrying value of goodwill:


	Three Months Ended
	March 31
(In thousands)	2020
Beginning balance January 1	$	1,759,040
Foreign currency exchange rate changes	(46,894)
Adjustments to goodwill for acquisitions⁽¹⁾	5,817
Ending balance March 31	$	1,717,963

⁽¹⁾Adjustments to goodwill resulted from the final allocation of the purchase price paid for SLS, as described in Note 4, to the respective assets acquired and liabilities assumed.

Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by a novel coronavirus disease (“COVID-19”) pandemic, as well as the decline in our share price and market capitalization, both of which could indicate that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, we performed an interim test for impairment. We tested for goodwill impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of our reporting units were determined using a combination of a discounted cash flow analysis and market multiples. We evaluated the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projected financial information. Goodwill and indefinite-lived trademarks totaled $1.8 billion and $1.9 billion as of March 31, 2020 and December 31, 2019, respectively.

There were no impairment losses identified as a result of our interim test. Two of our reporting units with goodwill of $261.3 million and $524.9 million, respectively, had estimated fair values that exceeded their respective carrying values by less than 5%. The determination of fair value of our reporting units involves significant management judgment, particularly as it relates to the underlying assumptions and factors around our expected operating margins and discount rate. In performing our quantitative assessments, we used expected operating margins supported by a combination of historical results, current forecasts, market data and recent economic events. We used a discount rate that reflects marketplace participants' cost of capital.

The determination of fair value involves significant management judgment and management applies its best judgment when assessing the reasonableness of financial projections. Fair values are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill and indefinite-lived intangible impairment tests will prove to be accurate predictions of future results.

Three Months Ended
March 31
(In thousands) 2019
Beginning balance January 1 $ 1,722,603
Foreign currency exchange rate changes 12,642
Additions to goodwill for acquisitions 5,526
Ending balance March 31 $ 1,740,771

7.6. STOCK-BASED COMPENSATION

WESCO’s stock-based employee compensation plans are comprised of stock-settled stock appreciation rights, restricted stock units and performance-based awards. Compensation cost for all stock-based awards is measured at fair value on the date of grant and compensation cost is recognized, net of estimated forfeitures, over the service period for awards expected to vest. The fair value of stock-settled stock appreciation rights ~~and performance-based awards with market conditions~~ is determined using the Black-Scholes ~~and Monte Carlo simulation models, respectively.~~model. The fair value of restricted stock units and performance-based awards with performance conditions is determined by the grant-date closing price of WESCO’s common stock. The forfeiture assumption is based on WESCO’s historical employee behavior that is reviewed on an annual basis. No dividends are assumed. For stock-settled stock appreciation rights that are exercised and for restricted stock units and performance-based ~~award~~awards that vest, shares are issued out of WESCO's outstanding common stock.

Stock-settled stock appreciation rights vest ratably over a three-year period and terminate on the tenth anniversary of the grant date unless terminated sooner under certain conditions. Vesting of restricted stock units is based on a minimum time period of three years. Vesting of performance-based awards is based on a three-year performance period, and the number of

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

shares earned, if any, depends on the attainment of certain performance levels. Outstanding awards would vest upon the consummation of a change in control transaction and performance-based awards would vest at the target level.

Performance-based awards granted in 2020 and 2019 were based on two equally-weighted performance ~~measures, which include~~measures: the three-year average growth rate of WESCO's net income and the three-year cumulative return on net assets. Performance-based awards granted in 2018 were based on two equally-weighted performance ~~measures, which include~~measures: the three-year average growth rate of the Company’s fully diluted earnings per share and the three-year cumulative return on net assets. From 2015 to 2017, the two equally-weighted performance-based award metrics were the three-year average growth rate of WESCO's net income and WESCO's total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period.

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

During the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, WESCO granted the following stock-settled stock appreciation rights, restricted stock units and performance-based awards at the following weighted-average fair values:


	Three Months Ended					Three Months Ended
	March 31, 2019		March 31, 2018			March 31, 2020		March 31, 2019
Stock-settled stock appreciation rights granted	213,618		491,229		Stock-settled stock appreciation rights granted	262,091		213,618
Weighted-average fair value	$	16.36	$	18.40	Weighted-average fair value	$	13.86	$	16.36

Restricted stock units granted	175,544		114,269		Restricted stock units granted	211,450		175,544
Weighted-average fair value	$	54.64	$	62.81	Weighted-average fair value	$	48.32	$	54.64

Performance-based awards granted	126,874		44,144		Performance-based awards granted	158,756		126,874
Weighted-average fair value	$	54.64	$	62.80	Weighted-average fair value	$	48.67	$	54.64

The fair value of stock-settled stock appreciation rights was estimated using the following weighted-average assumptions:


	Three Months Ended					Three Months Ended
	March 31, 2019		March 31, 2018			March 31, 2020		March 31, 2019
Risk free interest rate	2.5	%	2.5	%	Risk free interest rate	1.4	%	2.5	%
Expected life (in years)	5		5		Expected life (in years)	5		5
Expected volatility	29	%	28	%	Expected volatility	30	%	29	%

The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve as of the grant date. The expected life is based on historical exercise experience and the expected volatility is based on the volatility of the Company's daily stock prices over a five-year period preceding the grant date.

The following table sets forth a summary of stock-settled stock appreciation rights and related information for the three months ended March 31, ~~2019:~~2020:


	Awards	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (In years)	Aggregate Intrinsic Value (In thousands)
Outstanding at December 31, 2019	2,337,049	$	59.72
Granted	262,091	48.32
Exercised	(6,589)	42.12
Forfeited	(24,273)	65.33
Outstanding at March 31, 2020	2,568,278	58.54		5.7	$	—
Exercisable at March 31, 2020	2,027,915	$	59.84	4.9	$	—

Awards
Weighted-
Average
Exercise
Price

Weighted-
Average
Remaining
Contractual Term (In years)

Aggregate
Intrinsic
Value
(In thousands)
Outstanding at December 31, 2018 2,351,633
$ 59.26

     Granted 213,618
54.63

     Exercised (51,635 ) 35.11

     Forfeited (26,236 ) 70.00

Outstanding at March 31, 2019 2,487,380
59.25
6.3 $ 9,222
Exercisable at March 31, 2019 1,815,662
$ 58.38
5.3 $ 9,217

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

The following table sets forth a summary of time-based restricted stock units and related information for the three months ended March 31, ~~2019:~~2020:


	Awards	Weighted- Average Fair Value
Unvested at December 31, 2019	363,729	$	60.00
Granted	211,450	48.32
Vested	(78,007)	70.07
Forfeited	(6,755)	61.67
Unvested at March 31, 2020	490,417	$	53.38

Awards
Weighted-
Average
Fair
Value
Unvested at December 31, 2018 327,798
$ 57.87
     Granted 175,544
54.64
     Vested (112,500 ) 43.58
     Forfeited (1,565 ) 57.49
Unvested at March 31, 2019 389,277
$ 60.48

~~Performance shares are awards for which the vesting will occur based on market or performance conditions.~~ The following table sets forth a summary of performance-based awards for the three months ended March 31, ~~2019:~~2020:

Awards
Weighted-
Average
Fair
Value
Unvested at December 31, 2018 138,896
$ 59.33
     Granted 126,874
54.64
     Vested (25,696 ) 42.44
     Forfeited (35,486 ) 50.79
Unvested at March 31, 2019 204,588
$ 60.11

The unvested performance-based awards in the table above include 17,507 shares in which vesting of the ultimate number of shares is dependent upon WESCO's total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period. These awards are accounted for as awards with market conditions; compensation cost is recognized over the service period, regardless of whether the market conditions are achieved and the awards ultimately vest.


	Awards	Weighted- Average Fair Value
Unvested at December 31, 2019	195,305	$	60.24
Granted	158,756	48.67
Vested	(25,909)	78.04
Forfeited	(20,538)	71.47
Unvested at March 31, 2020	307,614	$	52.60

Vesting of the ~~remaining 187,081~~307,614 shares of performance-based awards in the table above is dependent upon the achievement of certain performance targets, including ~~80,944~~134,010 that are dependent upon the three-year average growth rate of WESCO's net income, ~~21,350~~19,797 that are dependent upon the three-year average growth rate of the Company's fully diluted earnings per share, and ~~84,787~~153,807 that are based upon the three-year cumulative return on net assets. These awards are accounted for as awards with performance conditions; compensation cost is recognized over the performance period based upon WESCO's determination of whether it is probable that the performance targets will be achieved.

WESCO recognized ~~$4.7~~$4.6 million and ~~$3.9~~$4.7 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, respectively. As of March 31, ~~2019,~~2020, there was ~~$36.6~~$35.9 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements for all awards previously made, of which approximately ~~$15.4~~$14.3 million is expected to be recognized over the remainder of ~~2019, $13.5 million in~~ 2020, ~~$7.0~~$13.4 million in 2021, ~~and $0.7~~$7.4 million in ~~2022.~~2022 and $0.8 million in 2023.

8.7. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average number of common shares outstanding during the periods. Diluted earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average common shares and common share equivalents outstanding during the periods. The dilutive effect of common share equivalents is considered in the diluted earnings per share computation using the treasury stock method, which includes consideration of equity awards.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

The following table sets forth the details of basic and diluted earnings per share:


	Three Months Ended					Three Months Ended
	March 31					March 31
(In thousands, except per share data)	2019		2018		(In thousands, except per share data)	2020		2019
Net income attributable to WESCO International	$	42,369	$	44,421	Net income attributable to WESCO International	$	34,407	$	42,369
Weighted-average common shares outstanding used in computing basic earnings per share	45,076		47,038		Weighted-average common shares outstanding used in computing basic earnings per share	41,837		45,076
Common shares issuable upon exercise of dilutive equity awards	415		570		Common shares issuable upon exercise of dilutive equity awards	238		415
Weighted-average common shares outstanding and common share equivalents used in computing diluted earnings per share	45,491		47,608		Weighted-average common shares outstanding and common share equivalents used in computing diluted earnings per share	42,075		45,491
Earnings per share attributable to WESCO International					Earnings per share attributable to WESCO International
Basic	$	0.94	$	0.94	Basic	$	0.82	$	0.94
Diluted	$	0.93	$	0.93	Diluted	$	0.82	$	0.93

For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, the computation of diluted earnings per share attributable to WESCO International excluded ~~stock-based awards of~~ approximately 2.3 million and 1.8 million ~~and 1.5 million,~~of stock-based awards, respectively. These amounts were excluded because their effect would have been antidilutive.

In December 2017, the Company's Board of Directors authorized the repurchase of up to $300 million of the Company's common stock through December 31, 2020. In October 2018, the Board approved an increase to this repurchase authorization from $300 million to $400 million.

On November 6, 2018, the Company entered into an accelerated stock repurchase agreement ~~(the "ASR Transaction")~~ with a financial institution to repurchase ~~additional~~ shares of its common stock. In exchange for an up-front cash payment of $100.0 million, the Company received a total of 1,953,167 shares, 365,272 of which were received during the three months ended March 31, 2019. WESCO funded the repurchase with borrowings under its accounts receivable securitization and revolving credit facilities.

The total number of shares ultimately delivered under ~~the ASR Transaction was~~an accelerated stock repurchase transaction is determined by the average of the ~~volume-weighted average~~volume-weighted-average price of the Company's common stock for each exchange business day during the respective settlement valuation ~~period.~~periods. For purposes of computing earnings per share for the three months ended March 31, 2019, ~~shares received under the ASR Transaction were~~share repurchases have been reflected as a reduction to common shares outstanding on the respective delivery dates.

9.8. EMPLOYEE BENEFIT PLANS

A majority of WESCO’s employees are covered by defined contribution retirement savings plans for their services rendered subsequent to WESCO’s formation. WESCO also offers a deferred compensation plan for select individuals. For U.S. participants, WESCO matches contributions made by employees at an amount equal to 50% of participants' total monthly contributions up to a maximum of 6% of eligible compensation. For Canadian participants, WESCO makes contributions in amounts ranging from 3% to 5% of participants' eligible compensation based on years of continuous service. WESCO may also make, subject to the Board of Directors' approval, a discretionary contribution to the defined contribution retirement savings plan covering U.S. participants if certain predetermined profit levels are attained. For the three months ended March 31, ~~2019~~2020 and ~~2018,~~2019, WESCO incurred charges of ~~$12.6~~$2.8 million and ~~$10.7~~$12.6 million, respectively, for all such plans. Contributions are made in cash to employee retirement savings plan accounts. The deferred compensation plan is an unfunded plan. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the Company's obligation under the deferred compensation plan was ~~$23.1~~$21.9 million and ~~$21.9~~$25.2 million, respectively. Employees have the option to transfer balances allocated to their accounts in the defined contribution retirement savings plan and the deferred compensation plan into any of the available investment options.

The Company sponsors a contributory defined benefit plan covering substantially all Canadian employees of EECOL and a Supplemental Executive Retirement Plan ~~(the "SERP")~~ for certain executives of EECOL. During the three months ended March 31, ~~2019,~~2020, the Company ~~contributed $0.1~~made aggregate cash contributions of $1.0 million to ~~the SERP.~~its defined benefit plans.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

The following table sets forth the components of net periodic benefit costs for the defined benefit plans:


	Three Months Ended							Three Months Ended
	March 31							March 31
(In thousands)	2019			2018			(In thousands)	2020		2019
Service cost	$	1,149		$	1,347		Service cost	$	1,309	$	1,149
Interest cost	1,089			1,066			Interest cost	1,037		1,089
Expected return on plan assets	(1,422		)	(1,540		)	Expected return on plan assets	(1,614)		(1,422)
Recognized actuarial gain	(16		)	(12		)	Recognized actuarial gain	27		(16)
Net periodic benefit cost	$	800		$	861		Net periodic benefit cost	$	759	$	800

The service cost of ~~$1.1~~$1.3 million and ~~$1.3~~$1.1 million for the three months ended March 31, 2020 and 2019, ~~and 2018~~respectively, was reported as a component of selling, general and administrative expenses. The other components of net periodic benefit cost totaling a net benefit of ~~$0.3~~$0.6 million and ~~$0.5~~$0.3 million for the three months ended March 31, 2020 and 2019, ~~and 2018~~respectively, were presented as a component of net interest and other.

~~10.~~9. FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, bank overdrafts, and outstanding indebtedness. The Company's outstanding indebtedness includes $500 million in aggregate principal amount of 5.375% Senior Notes due 2021 and $350 million in aggregate principal amount of 5.375% Senior Notes due 2024. With the exception of these debt instruments, the carrying values of the Company's financial instruments approximate fair value.

The following table sets forth WESCO's debt instruments that were not carried at fair value as of March 31, 2020 and December 31, 2019:


	As of
	March 31, 2020						December 31, 2019
(In thousands)	Fair Value		Carrying Amount		Fair Value		Carrying Amount
5.375% Senior Notes due 2021	$	458,170	$	500,000	$	502,895	$	500,000
5.375% Senior Notes due 2024	295,358		350,000		363,269		350,000

The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company's debt instruments are classified as Level 2 within the fair value hierarchy. ~~The reported carrying amounts~~Changes in the fair value of ~~WESCO's~~the Company's debt instruments was effected by the current economic and financial ~~instruments approximated their fair values as of March 31, 2019 and December 31, 2018.~~market environment.

~~11.~~10. COMMITMENTS AND CONTINGENCIES

From time to time, a number of lawsuits and claims have been or may be asserted against the Company relating to the conduct of its business, including litigation relating to commercial, product and employment matters. The outcome of any litigation cannot be predicted with certainty, and some lawsuits may be determined adversely to WESCO. However, management does not believe that the ultimate outcome of any such pending matters is likely to have a material adverse effect on WESCO's financial condition or liquidity, although the resolution in any fiscal period of one or more of these matters may have a material adverse effect on WESCO's results of operations for that period.

In an effort to expand the Company's footprint in the Middle East, WESCO has been doing business since 2009 with WESTEC Supplies General Trading (“WESTEC”), an industrial equipment supplier headquartered in the United Arab Emirates. WESTEC has debt facilities comprised of a $5.8 million term loan and a $1.0 million line of credit ~~with a maximum borrowing capacity of approximately $6.8 million~~ to support its working capital requirements and joint sales efforts with WESCO. Due to the nature of WESCO’s arrangement with WESTEC, WESCO has provided a standby letter of credit under its revolving credit facility of up to $7.3 million as security for WESTEC’s ~~line of credit.~~debt facilities. As of March 31, ~~2019,~~2020, WESTEC had an outstanding ~~loan balance of $6.5~~indebtedness totaling $6.0 million. Management

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)

(unaudited)

currently believes the estimated fair value of the noncontingent guarantee on the ~~line of credit~~outstanding indebtedness is nominal and therefore a liability has not been recorded as of March 31, ~~2019.~~2020.

~~12.~~11. INCOME TAXES

The effective tax rate for the three months ended March 31, 2020 and 2019 was 23.1% and ~~2018 was~~ 21.7% ~~and 19.6%~~, respectively. WESCO’s effective tax rate is typically impacted by the tax effect of intercompany financing, foreign tax rate differences, nondeductible expenses and state income taxes. The ~~higher~~ effective tax rate for the three months ended March 31, ~~2019 was~~2020 is higher than the prior period primarily due to ~~the full application of the international provisions of U.S.~~discrete income tax ~~reform.~~expense related to stock-based awards. There have been no material adjustments to liabilities for uncertain tax positions since the last annual disclosure for the year ended December 31, ~~2018.~~2019.

12. SUBSEQUENT EVENTS

On April 30, 2020, in connection with WESCO’s previously announced Merger with Anixter, WESCO announced that its wholly owned subsidiary, WESCO Distribution, has commenced (a) offers to purchase for cash any and all of Anixter Inc.’s, (a wholly owned subsidiary of Anixter), outstanding (i) 5.50% Senior Notes due 2023, $350,000,000 aggregate principal amount, and (ii) 6.00% Senior Notes due 2025, $250,000,000 aggregate principal amount (collectively, the “Anixter Notes,” and such offers, the “Offers”) and (b) solicitations of consents from the holders of each series of these existing Anixter Notes to amend the relevant indentures to eliminate certain of the covenants, restrictive provisions, events of default and related provisions therein and exclude the Merger from the change in control provision. Among other conditions, the Offers are conditioned upon the substantially concurrent or prior closing of the Merger.

Concurrent with WESCO’s Offers, Anixter announced that Anixter Inc. has commenced solicitations of consents from the holders of each series of the Anixter Notes to amend the relevant indentures to, among other things, exclude the Merger from the change in control provision (the “Anixter Consent Solicitations”) in return for the payment of a consent fee (the “Consent Fee”). Holder of Anixter Notes have the option to participate in either the Offers or the Anixter Consent Solicitations, but not both. In certain circumstances, consents delivered in connection with the Offers may be aggregated with those delivered in connection with the Anixter Consent Solicitations.

Subject to the terms and conditions of the Offer to Purchase and Consent Solicitation Statement, dated April 30, 2020 (the “Offer to Purchase”), payment of the Offer consideration or the Consent Fee, as applicable, is expected to occur at or immediately following the closing of the Merger. Additional information with respect to the Offers and the Anixter Consent Solicitations is included in WESCO’s Current Report on Form 8-K, filed with the SEC on April 30, 2020. Holders of Anixter Notes should also read the Offer to Purchase (and the documents incorporated by reference therein) carefully and in their entirety before making any decision with respect to a tender of Anixter Notes pursuant to the Offers or the Anixter Consent Solicitations, because they contain important information.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

~~13. CONDENSED CONSOLIDATING FINANCIAL INFORMATION~~

WESCO Distribution has outstanding $500 million in aggregate principal amount of 5.375% Senior Notes due 2021 (the "2021 Notes") and $350 million in aggregate principal amount of 5.375% Senior Notes due 2024 (the "2024 Notes"). The 2021 Notes and 2024 Notes are unsecured senior obligations of WESCO Distribution and are fully and unconditionally guaranteed on a senior unsecured basis by WESCO International.

~~Condensed consolidating financial information for WESCO International, WESCO Distribution and the non-guarantor subsidiaries is presented in the following tables.~~

Condensed Consolidating Balance Sheet
March 31, 2019

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and
Eliminating
Entries
Consolidated
Cash and cash equivalents $ —
$ 38,774
$ 67,326
$ —
$ 106,100
Trade accounts receivable, net —
—
1,268,565
—
1,268,565
Inventories —
453,738
547,615
—
1,001,353
Prepaid expenses and other current assets 1,127
22,341
118,406
(4,142 ) 137,732
Total current assets 1,127
514,853
2,001,912
(4,142 ) 2,513,750
Intercompany receivables, net —
—
2,400,124
(2,400,124 ) —
Property, buildings and equipment, net —
68,829
97,859
—
166,688
Operating lease assets —
139,397
93,592
—
232,989
Intangible assets, net —
1,974
308,479
—
310,453
Goodwill —
257,623
1,483,148
—
1,740,771
Investments in affiliates 3,252,590
5,202,712
—
(8,455,302 ) —
Other assets —
2,717
17,270
—
19,987
Total assets $ 3,253,717
$ 6,188,105
$ 6,402,384
$ (10,859,568 ) $ 4,984,638

Accounts payable $ —
$ 426,015
$ 444,227
$ —
$ 870,242
Short-term debt —
—
27,313
—
27,313
Other current liabilities —
82,527
174,782
(4,142 ) 253,167
Total current liabilities —
508,542
646,322
(4,142 ) 1,150,722
Intercompany payables, net 1,051,352
1,348,772
—
(2,400,124 ) —
Long-term debt, net —
841,554
372,722
—
1,214,276
Operating lease liabilities —
110,998
67,608
—
178,606
Other noncurrent liabilities —
125,649
119,023
—
244,672
Total WESCO International stockholders' equity 2,202,365
3,252,590
5,202,712
(8,455,302 ) 2,202,365
Noncontrolling interests —
—
(6,003 ) —
(6,003 )
Total liabilities and stockholders’ equity $ 3,253,717
$ 6,188,105
$ 6,402,384
$ (10,859,568 ) $ 4,984,638

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Condensed Consolidating Balance Sheet
December 31, 2018

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and
Eliminating
Entries
Consolidated
Cash and cash equivalents $ —
$ 35,931
$ 60,412
$ —
$ 96,343
Trade accounts receivable, net —
—
1,166,607
—
1,166,607
Inventories —
440,422
508,304
—
948,726
Prepaid expenses and other current assets 1,123
57,586
124,523
(9,268 ) 173,964
Total current assets 1,123
533,939
1,859,846
(9,268 ) 2,385,640
Intercompany receivables, net —
—
2,403,704
(2,403,704 ) —
Property, buildings and equipment, net —
63,506
97,372
—
160,878
Intangible assets, net —
2,131
313,885
—
316,016
Goodwill —
257,623
1,464,980
—
1,722,603
Investments in affiliates 3,182,469
5,137,783
—
(8,320,252 ) —
Other assets —
2,905
16,994
—
19,899
Total assets $ 3,183,592
$ 5,997,887
$ 6,156,781
$ (10,733,224 ) $ 4,605,036

Accounts payable $ —
$ 404,373
$ 389,975
$ —
$ 794,348
Short-term debt —
—
30,785
—
30,785
Other current liabilities —
86,600
159,481
(9,268 ) 236,813
Total current liabilities —
490,973
580,241
(9,268 ) 1,061,946
Intercompany payables, net 1,048,282
1,355,422
—
(2,403,704 ) —
Long-term debt, net —
842,093
325,218
—
1,167,311
Other noncurrent liabilities —
126,930
119,123
—
246,053
Total WESCO International stockholders' equity 2,135,310
3,182,469
5,137,783
(8,320,252 ) 2,135,310
Noncontrolling interests —
—
(5,584 ) —
(5,584 )
Total liabilities and stockholders’ equity $ 3,183,592
$ 5,997,887
$ 6,156,781
$ (10,733,224 ) $ 4,605,036

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Condensed Consolidating Statement of Income and Comprehensive Income
Three Months Ended
March 31, 2019

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and
Eliminating
Entries
Consolidated
Net sales $ —
$ 857,982
$ 1,142,394
$ (39,109 ) $ 1,961,267
Cost of goods sold (excluding depreciation and
amortization) —
689,556
928,324
(39,109 ) 1,578,771
Selling, general and administrative expenses —
152,429
144,099
—
296,528
Depreciation and amortization —
4,555
10,687
—
15,242
Results of affiliates’ operations 41,950
42,413
—
(84,363 ) —
Net interest and other —
12,034
5,086
—
17,120
Income tax expense —
(129 ) 11,785
—
11,656
Net income 41,950
41,950
42,413
(84,363 ) 41,950
Net loss attributable to noncontrolling interests —
—
(419 ) —
(419 )
Net income attributable to WESCO International $ 41,950
$ 41,950
$ 42,832
$ (84,363 ) $ 42,369
Other comprehensive loss:

Foreign currency translation adjustments 22,517
22,517
22,517
(45,034 ) 22,517
Comprehensive income attributable to WESCO International $ 64,467
$ 64,467
$ 65,349
$ (129,397 ) $ 64,886

Condensed Consolidating Statement of Income and Comprehensive Income
Three Months Ended
March 31, 2018

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and
Eliminating
Entries
Consolidated
Net sales $ —
$ 882,399
$ 1,150,110
$ (38,594 ) $ 1,993,915
Cost of goods sold (excluding depreciation and
amortization) —
716,258
936,302
(38,594 ) 1,613,966
Selling, general and administrative expenses —
150,482
140,347
—
290,829
Depreciation and amortization —
4,616
11,263
—
15,879
Results of affiliates’ operations 42,971
45,200
—
(88,171 ) —
Net interest and other —
13,816
5,967
—
19,783
Income tax (benefit) expense —
(544 ) 11,031
—
10,487
Net income 42,971
42,971
45,200
(88,171 ) 42,971
Net loss attributable to noncontrolling interests —
—
(1,450 ) —
(1,450 )
Net income attributable to WESCO International $ 42,971
$ 42,971
$ 46,650
$ (88,171 ) $ 44,421
Other comprehensive loss:

Foreign currency translation adjustments (28,800 ) (28,800 ) (28,800 ) 57,600
(28,800 )
Comprehensive income attributable to WESCO International $ 14,171
$ 14,171
$ 17,850
$ (30,571 ) $ 15,621

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Condensed Consolidating Statement of Cash Flows
Three Months Ended
March 31, 2019

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and Eliminating
Entries
Consolidated
Net cash (used in) provided by operating activities $ 5,157
$ 27,122
$ (3,410 ) $ —
$ 28,869
Investing activities:

Acquisition payments —
(27,742 ) —
—
(27,742 )
Capital expenditures —
(2,513 ) (8,315 ) —
(10,828 )
Dividends received from subsidiaries —
22,095
—
(22,095 ) —
Other —
(19,510 ) 53
19,510
53
Net cash used in investing activities —
(27,670 ) (8,262 ) (2,585 ) (38,517 )
Financing activities:
Borrowings —
139,134
330,196
(22,095 ) 447,235
Repayments (2,585 ) (140,134 ) (289,674 ) 2,585
(429,808 )
Repurchases of common stock (2,572 ) —
—
—
(2,572 )
Dividends paid by subsidiaries —
—
(22,095 ) 22,095
—
Increase in bank overdrafts —
4,639
—
—
4,639
Other —
(248 ) —
—
(248 )
Net cash provided by (used in) financing activities (5,157 ) 3,391
18,427
2,585
19,246
Effect of exchange rate changes on cash and cash equivalents —
—
159
—
159
Net change in cash and cash equivalents —
2,843
6,914
—
9,757
Cash and cash equivalents at the beginning of period —
35,931
60,412
—
96,343
Cash and cash equivalents at the end of period $ —
$ 38,774
$ 67,326
$ —
$ 106,100

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)~~

~~(unaudited)~~

Condensed Consolidating Statement of Cash Flows
Three Months Ended
March 31, 2018

(In thousands)
WESCO
International,
Inc.

WESCO
Distribution,
Inc.

Non-Guarantor
Subsidiaries

Consolidating
and Eliminating
Entries
Consolidated
Net cash provided by (used in) operating activities $ 5,497
$ 57,694
$ (10,198 ) $ —
$ 52,993
Investing activities:
Capital expenditures —
(2,954 ) (4,708 ) —
(7,662 )
Dividends received from subsidiaries —
22,744
—
(22,744 ) —
Other —
(18,908 ) (8,760 ) 18,908
(8,760 )
Net cash provided by (used in) investing activities —
882
(13,468 ) (3,836 ) (16,422 )
Financing activities:
Borrowings —
58,000
515,663
(22,744 ) 550,919
Repayments (3,836 ) (90,000 ) (477,220 ) 3,836
(567,220 )
Repurchases of common stock (1,661 ) —
—
—
(1,661 )
Dividends paid by subsidiaries —
—
(22,744 ) 22,744
—
Decrease in bank overdrafts —
(10,575 ) —
—
(10,575 )
Other —
(290 ) —
—
(290 )
Net cash (used in) provided by financing activities (5,497 ) (42,865 ) 15,699
3,836
(28,827 )
Effect of exchange rate changes on cash and cash equivalents —
—
(1,800 ) —
(1,800 )
Net change in cash and cash equivalents —
15,711
(9,767 ) —
5,944
Cash and cash equivalents at the beginning of period —
50,602
67,351
—
117,953
Cash and cash equivalents at the end of period $ —
$ 66,313
$ 57,584
$ —
$ 123,897

~~14. SUBSEQUENT EVENTS~~

The Company evaluated subsequent events and concluded that no subsequent events have occurred that would require recognition in the unaudited Condensed Consolidated Financial Statements or disclosure in the Notes thereto.

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and WESCO International, Inc.’s audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its ~~2018~~2019 Annual Report on Form 10-K. The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in WESCO International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, as well as WESCO International, Inc.’s other reports filed with the Securities and Exchange Commission.

Company Overview

WESCO International, Inc. (“WESCO International”), incorporated in 1993 and effectively formed in February 1994 upon acquiring a distribution business from Westinghouse Electric Corporation, is a leading North American-based distributor of products and provider of advanced supply chain management and logistics services used primarily in industrial, construction, utility, and commercial, institutional and government (“CIG”) markets. We are a leading provider of electrical, industrial, and communications maintenance, repair and operating ("MRO") and original equipment manufacturer ("OEM") products, construction materials, and advanced supply chain management and logistics services. Our primary product categories include general supplies, wire, cable and conduit, communications and security, electrical distribution and controls, lighting and sustainability, and automation, controls and motors.

We serve approximately 70,000 active customers globally through approximately 500 branches primarily located in North America, with operations in 1516 additional countries and 1011 distribution centers located in the United States and Canada. We employ approximately ~~9,300~~9,500 employees worldwide. We distribute over 1,000,000 products, grouped into six categories, from approximately 30,000 suppliers, utilizing a highly automated, proprietary electronic procurement and inventory replenishment system.

In addition, we offer a comprehensive portfolio of value-added capabilities, which includes supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting, limited assembly of products and system installation. Our value-added capabilities, extensive geographic reach, experienced workforce and broad product and supply chain solutions have enabled us to grow our business and establish a leading position in North America.

Our financial results for the first three months of ~~2019~~2020 reflect ~~gross margin expansion,~~net sales growth through the first ten weeks of the quarter, offset by declines during the last two weeks of March, as well as the ~~impact of foreign exchange headwinds, adverse weather, and one less work day.~~uncertain operating environment caused by the COVID-19 virus. Net sales ~~decreased $32.6~~increased $7.4 million, or ~~1.6%~~0.4%, over the same period last year. Cost of goods sold as a percentage of net sales was ~~80.5%~~80.9% and ~~80.9%~~80.5% for the first three months of ~~2019~~2020 and ~~2018,~~2019, respectively. Selling, general and administrative ("SG&A") expenses as a percentage of net sales were ~~15.1%~~15.2% and ~~14.6%~~15.1% for the first three months of ~~2019~~2020 and ~~2018,~~2019, respectively. Operating profit was ~~$70.7~~$60.9 million for the current three month period, compared to ~~$73.2~~$70.7 million for the first three months of ~~2018. Operating~~2019. Adjusted for $4.6 million of transaction costs related to our merger with Anixter, operating profit ~~decreased primarily due to higher SG&A expenses.~~was $65.5 million for the first quarter of 2020. Net income attributable to WESCO International for the three months ended March 31, 2020 and 2019 was $34.4 million and ~~2018 was~~ $42.4 million, respectively. Earnings per diluted share for the first quarter of 2020 was $0.82, based on 42.1 million diluted shares, compared to $0.93 for the first quarter of 2019, based on 45.5 million diluted shares. Adjusted earnings per diluted share for the first quarter of 2020 was $0.91.

We have been and ~~$44.4~~will continue to take the appropriate actions in response to the COVID-19 virus. Our top priority is the health and safety of our employees. The products and services that we provide are integral to the daily operations of our essential business customers, and as such, we are performing essential activities necessary to manage basic operations in the midst of the pandemic. To date, our branch locations have remained operational consistent with existing governmental and public health authority directives. We have taken actions to reduce costs consistent with the expected decline in demand. We will work to prepare our business to respond to the needs of our customers as demand recovers, which we believe could occur in the second half of this year.

Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by the COVID-19 pandemic, as well as the decline in our share price and market capitalization, both of which could indicate that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, we performed an interim test for impairment. We tested for goodwill impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of our reporting units were determined using a combination of a discounted cash flow analysis and market multiples. We evaluated the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projected financial information. As of March 31, 2020 and December 31, 2019, goodwill and indefinite-lived trademarks totaled $1.8 billion and $1.9 billion, respectively.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

There were no impairment losses identified as a result of our interim test. Two of our reporting units with goodwill of $261.3 million ~~respectively.~~and $524.9 million, respectively, had estimated fair values that exceeded their respective carrying values by less than 5%. The determination of fair value of our reporting units involves significant management judgment, particularly as it relates to the underlying assumptions and factors around our expected operating margins and discount rate. In performing our quantitative assessments, we used expected operating margins supported by a combination of historical results, current forecasts, market data and recent economic events. We used a discount rate that reflects marketplace participants' cost of capital.

Although we applied our best judgment assessing the reasonableness of the financial projections used to estimate the fair value of our reporting units, there is significant uncertainty surrounding the current macroeconomic environment and conditions in the markets in which we operate. A sustained decline in our share price and market capitalization, or any further economic deterioration that could cause our financial performance to fall below our current expectations, could increase the likelihood that the fair values of our reporting units are less than their carrying values, resulting in an impairment of goodwill and indefinite-lived intangible assets in a future period. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of future results.

Cash Flow

We generated ~~$28.9~~$31.5 million of operating cash flow for the first three months of ~~2019.~~2020. Investing activities included ~~payments~~the $100.0 million termination fee associated with the acquisition of ~~$27.7 million~~Anixter, as described in Note 5 of our Notes to ~~acquire Sylvania Lighting Solutions ("SLS")~~the unaudited Condensed Consolidated Financial Statements, and ~~$10.8~~$15.8 million of capital expenditures. Financing activities were comprised of borrowings and repayments of ~~$253.7~~$360.5 million and ~~$272.8~~$260.5 million, respectively, related to our revolving credit facility (the "Revolving Credit Facility"), as well as borrowings and repayments of ~~$170.0~~$225.0 million and ~~$105.0~~$40.0 million, respectively, related to our accounts receivable securitization facility (the “Receivables Facility”) ~~and repayments of $24.8 million to pay off our term loan facility (the "Term Loan Facility")~~. Financing activities for the first three months of ~~2019~~2020 also included ~~borrowings and~~net repayments onrelated to our various international lines of credit of approximately ~~$23.6 million and $27.2 million, respectively. Free cash flow for the first three months of 2019 and 2018 was $18.1 million and $45.3 million, respectively.~~

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

~~The following table sets forth the components of free cash flow for the periods presented:~~

Three Months Ended
(In millions) March 31,
2019 March 31,
2018
Cash flow provided by operations $ 28.9
$ 53.0
Less: Capital expenditures (10.8 ) (7.7 )
Free cash flow $ 18.1
$ 45.3

Note: Free cash flow is a non-GAAP financial measure of liquidity. Capital expenditures are deducted from operating cash flow to determine free cash flow. Free cash flow is available to fund investing and financing activities.$0.4 million.

Financing Availability

As of March 31, ~~2019,~~2020, we had ~~$533.7~~$446.6 million in total available borrowing capacity under our Revolving Credit Facility, which was comprised of ~~$399.3~~$231.3 million of availability under the U.S. sub-facility and ~~$134.4~~$215.3 million of availability under the Canadian sub-facility. ~~Available~~We had no borrowing capacity available under our Receivables ~~Facility was $210.0 million.~~Facility. The Revolving Credit Facility and the Receivables Facility ~~both~~ mature in September ~~2020.~~2024 and September 2022, respectively.

Critical Accounting Policies and Estimates

Effective January 1, ~~2019,~~2020, we adopted Accounting Standards Update (ASU) ~~2016-02,~~ ~~Leases, and all the related amendments.~~2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. See Note 2 of our Notes to the unaudited Condensed Consolidated Financial Statements for information regarding our ~~critical~~significant accounting policies.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Results of Operations

First Quarter of ~~2019~~2020 versus First Quarter of ~~2018~~2019

The following table sets forth the percentage relationship to net sales of certain items in our Condensed Consolidated Statements of Income and Comprehensive Income (Loss) for the periods presented:


	Three Months Ended					Three Months Ended
	March 31					March 31
	2019		2018			2020		2019
Net sales	100.0	%	100.0	%	Net sales	100.0	%	100.0	%
Cost of goods sold (excluding depreciation and amortization)	80.5		80.9		Cost of goods sold (excluding depreciation and amortization)	80.9		80.5
Selling, general and administrative expenses	15.1		14.6		Selling, general and administrative expenses	15.2		15.1
Depreciation and amortization	0.8		0.8		Depreciation and amortization	0.8		0.8
Income from operations	3.6		3.7		Income from operations	3.1		3.6
Net interest and other	0.8		1.0		Net interest and other	0.8		0.8
Income before income taxes	2.8		2.7		Income before income taxes	2.3		2.8
Provision for income taxes	0.6		0.5		Provision for income taxes	0.5		0.6
Net income attributable to WESCO International	2.2	%	2.2	%	Net income attributable to WESCO International	1.8	%	2.2	%

Net sales were $2.0 billion for the first quarter of ~~2019~~2020 and ~~2018.~~2019. Organic sales for the first quarter of ~~2019 grew~~2020 declined by ~~1.0%~~1.7% as the number of workdays and ~~foreign exchange rates negatively~~acquisitions positively impacted net sales by 1.6% and ~~1.3%~~0.5%, ~~respectively, while acquisitions positively impacted net~~respectively. Net sales growth through the first ten weeks of the quarter were offset by ~~0.3%.~~

~~WESCO INTERNATIONAL, INC. AND SUBSIDIARIES~~

declines during the last two weeks of March.

The following table sets forth organic sales growth for the period presented:



	Three Months Ended
	March 31, ~~2019~~2020
Change in net sales	~~(1.6~~0.4	)%
Impact from acquisitions	~~0.3~~0.5	%
Impact from foreign exchange rates	~~(1.3~~—	)%
Impact from number of workdays	(1.6	)%
Organic sales growth	~~1.0~~(1.7)	%

Note: Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions in the first year of ownership, foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.

Cost of goods sold for the first quarter of ~~2019~~2020 and ~~2018~~2019 was $1.6 billion. As a percentage of net sales, cost of goods sold was ~~80.5%~~80.9% and ~~80.9%~~80.5%, respectively. ~~The decrease in cost of goods sold as a percentage of net sales was primarily due the execution of margin initiatives in all end markets and geographies.~~

SG&A expenses for the first quarter of ~~2019~~2020 totaled ~~$296.6~~$299.4 million versus ~~$290.8~~$296.6 million for the first quarter of ~~2018.~~2019. As a percentage of net sales, SG&A expenses were ~~15.1%~~15.2% and ~~14.6%~~15.1%, respectively. The increase in SG&A expenses ~~was primarily due~~reflects transaction costs related to ~~costs associated~~our merger with ~~the acquisition~~Anixter of ~~SLS, as well as higher~~$4.6 million, partially offset by lower payroll expenses. Adjusted for these costs, SG&A expenses were $294.8 million, or 15.0% of net sales, for the first quarter of 2020.

SG&A payroll expenses for the first quarter of ~~2019~~2020 of ~~$206.6~~$203.6 million ~~increased~~decreased by ~~$4.8~~$3.0 million compared to the same period in ~~2018~~2019 primarily due to ~~wage inflation~~lower variable compensation expense and ~~the impact of the SLS acquisition.~~benefit costs.

Depreciation and amortization for the first quarter of ~~2019~~2020 and ~~2018~~ was $16.1 million, compared to $15.2 million ~~and $15.9 million, respectively.~~for the first quarter of 2019.

Net interest and other totaled $16.5 million for the first quarter of 2020, compared to $17.1 million for the first quarter of ~~2019 compared~~2019. Net interest and other for the first quarter of 2020 includes approximately $0.5 million of interest on borrowings against our accounts receivable securitization facility to ~~$19.8~~fund the $100.0 million termination fee described above.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Income tax expense totaled $10.3 million for the first quarter of ~~2018.~~

~~Income tax expense totaled $11.7 million for the first quarter of 2019~~2020, compared to ~~$10.5~~$11.7 million in last year's comparable period, and the effective tax rate was ~~21.7%~~23.1% and ~~19.6%~~21.7%, respectively. The higher effective tax rate in the current quarter is primarily due to the ~~full application~~unfavorable effect of discrete income tax expense associated with stock-based awards. The effective tax rate for the ~~international provisions of U.S. tax reform.~~current period would have been 21.4% without this discrete impact.

Net income for the first quarter of ~~2019~~2020 was ~~$42.0~~$34.2 million, compared to net income of ~~$42.9~~$42.0 million for the first quarter of ~~2018.~~2019.

Net loss of ~~$0.4~~$0.2 million and ~~$1.5~~$0.4 million was attributable to noncontrolling interests for the first quarter of ~~2019~~2020 and ~~2018,~~2019, respectively.

Net income and ~~diluted~~ earnings per diluted share attributable to WESCO International were ~~$42.4~~$34.4 million and ~~$0.93~~$0.82 per diluted share, respectively, for the first quarter of ~~2019,~~2020, compared with net income and ~~diluted~~ earnings per diluted share of ~~$44.4~~$42.4 million and $0.93 per diluted share, respectively, for the first quarter of ~~2018.~~2019. Adjusted for the merger-related transaction costs discussed above, net income and earnings per diluted share attributable to WESCO International were $38.3 million and $0.91 per share, respectively, for the three months ended March 31, 2020.

The following tables set forth adjusted net income attributable to WESCO International and adjusted earnings per diluted share:


	Three Months Ended
Adjusted SG&A Expenses:	March 31, 2020		March 31, 2019

Selling, general and administrative expenses	$	299,392	$	296,528
Merger-related costs	(4,608)		—
Adjusted selling, general and administrative expenses	$	294,784	$	296,528


	Three Months Ended
Adjusted Income from Operations:	March 31, 2020		March 31, 2019

Income from operations	$	60,913	$	70,726
Merger-related costs	4,608		—
Adjusted income from operations	$	65,521	$	70,726


	Three Months Ended
Adjusted Net Interest and Other:	March 31, 2020		March 31, 2019

Net interest and other	$	16,472	$	17,120
Merger-related interest expense	(515)		—
Adjusted net interest and other	$	15,957	$	17,120

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


	Three Months Ended
Adjusted Provision for Income Taxes:	March 31, 2020		March 31, 2019

Provision for income taxes	$	10,266	$	11,656
Income tax effect of merger-related transaction costs	1,183		—
Adjusted provision for income taxes	$	11,449	$	11,656


	Three Months Ended
Adjusted Earnings Per Diluted Share:	March 31, 2020		March 31, 2019

Adjusted income from operations	$	65,521	$	70,726
Adjusted net interest and other	15,957		17,120
Adjusted income before income taxes	49,564		53,606
Adjusted provision for income taxes	11,449		11,656
Adjusted net income	38,115		41,950
Net loss attributable to noncontrolling interests	(232)		(419)
Adjusted net income attributable to WESCO International, Inc.	$	38,347	$	42,369

Diluted shares	42,075		45,491
Adjusted earnings per diluted share	$	0.91	$	0.93

Liquidity and Capital Resources

Total assets were ~~$5.0~~$5.2 billion and ~~$4.6~~$5.0 billion at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Total liabilities were ~~$2.8~~$3.0 billion and ~~$2.5~~$2.8 billion at March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively. Total stockholders' equity was $2.2 billion and $2.3 billion at March 31, ~~2019~~2020 and ~~$2.1 billion at~~ December 31, ~~2018.~~2019, respectively.

Our liquidity needs generally arise from fluctuations in our working capital requirements, capital expenditures, acquisitions and debt service obligations. As of March 31, ~~2019,~~2020, we had ~~$533.7~~$446.6 million in available borrowing capacity under our Revolving Credit Facility, ~~and $210.0 million in available borrowing capacity under our Receivables Facility,~~ which combined with available cash of ~~$37.2~~$285.2 million, provided liquidity of ~~$780.9~~$731.8 million. Our available cash includes $100 million that we borrowed under our Revolving Credit Facility in March as a precautionary measure to increase our cash position and preserve financial flexibility in light of the current uncertainty resulting from the COVID-19 pandemic. Cash included in our determination of liquidity represents cash in deposit and interest bearing investment accounts. We believe cash provided by operations and financing activities will be adequate to cover our ~~current~~ operational and business ~~needs.~~needs for at least the next twelve months. In addition, we regularly review our mix of fixed versus variable rate debt, and we may, from time to time, issue or retire borrowings and/or refinance existing debt in an effort to mitigate the impact of interest rate and foreign exchange rate fluctuations, and to maintain a cost-effective capital structure consistent with our anticipated capital requirements. At March 31, ~~2019,~~2020, approximately ~~68%~~54% of our debt portfolio was comprised of fixed rate debt.

Between now and closing of the Anixter acquisition, our capital allocation priorities include supporting our organic sales growth opportunities and repaying or holding cash available for debt repayment. Prior to signing the Merger Agreement with Anixter, we obtained debt financing commitments comprised of a senior secured asset-based revolving credit facility in aggregate principal amount of $1.2 billion and an unsecured bridge facility in aggregate principal amount of $3.2 billion. Prior to the completion of the merger, we intend to enter into permanent financing to replace the unsecured bridge facility, as well as a consent solicitation, tender offer or exchange offer with respect to Anixter's 5.50% Senior Notes due 2023 and 6.00% Senior Notes due 2025. We expect to use proceeds of the debt financing commitments, together with proceeds of any permanent financing replacing the debt financing commitments, amounts available under the senior secured asset-based revolving credit facility and existing cash on hand to consummate the merger. There can be no assurance that WESCO will finance the merger in this anticipated manner and the completion of the merger is not contingent upon the completion of any debt financing. After

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

closing, it is expected that excess liquidity will be directed primarily at debt reduction and costs related to the integration process, and we expect to maintain sufficient liquidity through our credit facilities and cash balances. We anticipate capital expenditures in 2020 to be sufficient to support our business initiatives.

We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions. We also communicate on a regular basis with our lenders regarding our financial and working capital performance, liquidity position and financial leverage. Our financial leverage ratio was ~~3.0~~3.1 as of March 31, ~~2019~~2020 and 2.8 as of December 31, ~~2018.~~2019. In addition, we are in compliance with all covenants and restrictions contained in our debt agreements as of March 31, ~~2019.~~2020, and we expect to maintain compliance with all such covenants and restrictions following our merger with Anixter.

The following table sets forth our financial leverage ratio as of March 31, ~~2019~~2020 and December 31, ~~2018:~~2019:


	Twelve Months Ended
(In millions of dollars, except ratio)	March 31, 2020		December 31, 2019
Income from operations	$	336.4	$	346.2
Depreciation and amortization	63.0		62.2
EBITDA	$	399.4	$	408.4

	As of
	March 31, 2020		December 31, 2019
Short-term borrowings and current debt	$	24.5	$	26.7
Long-term debt	1,542.6		1,257.1
Debt issuance costs ⁽¹⁾	8.2		8.8
Total debt	1,575.3		1,292.6
Less: cash and cash equivalents	342.6		150.9
Total debt, net of cash	$	1,232.7	$	1,141.7

Financial leverage ratio	3.1		2.8

Twelve months ended
(In millions of dollars, except ratio) March 31,
2019 December 31,
2018
Income from operations $ 349.9
$ 352.5
Depreciation and amortization 62.4
63.0
EBITDA $ 412.3
$ 415.5

March 31,
2019 December 31,
2018
Short-term borrowings and current debt $ 28.5
$ 56.2
Long-term debt 1,214.3
1,167.3
Debt discount and debt issuance costs ⁽¹⁾
8.5
9.6
Total debt 1,251.3
1,233.1
Less: cash and cash equivalents 106.1
96.3
Total debt, net of cash $ 1,145.2
$ 1,136.8

Financial leverage ratio 3.0
3.0
Financial leverage ratio, net of cash 2.8
2.7
⁽¹⁾Long-term debt is presented in the condensed consolidated balance sheets net of debt issuance costs.


⁽¹⁾	~~Long-term debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs.~~

Note: Financial leverage is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, including ~~debt discount and debt issuance costs, by EBITDA. Financial leverage ratio, net of cash is calculated by dividing total debt, including debt discount and~~ debt issuance costs, net of cash, by EBITDA. EBITDA, which is also a non-GAAP financial measure, is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.

At March 31, ~~2019,~~2020, we had cash and cash equivalents totaling ~~$106.1~~$342.6 million, of which ~~$72.6~~$104.3 million was held by foreign subsidiaries. As a result of the Tax Cuts and Jobs Act of 2017 (the "TCJA"), we reevaluated our intent and ability to repatriate foreign earnings based upon the liquidity of our domestic operations and the cash flow needs of our foreign subsidiaries. Consequently, during the ~~year~~years ended December 31, 2019 and 2018, we repatriated a portion of the previously taxed earnings attributable to our ~~Canadian~~foreign operations. We continue to assert that the remaining undistributed earnings of our foreign subsidiaries, the majority of which were subject to the one-time tax imposed by the TCJA, are indefinitely reinvested. We believe that we are able to maintain a sufficient level of liquidity for our domestic operations and commitments without repatriating cash held by these foreign subsidiaries. Upon any future repatriation, additional ~~income taxes~~tax expense or benefit may be incurred; however, ~~it is~~we do not ~~practicable to determine the~~believe such amount ~~at this time.~~would be material.

~~We did not note any triggering events or substantive changes during~~Cash Flow

Operating Activities. Net cash provided by operating activities for the first three months of ~~2019 that would require an interim evaluation~~2020 totaled $31.5 million, compared with $28.9 million of ~~impairment~~cash generated for the first three months of ~~goodwill or indefinite-lived intangible assets. We will perform our annual impairment testing~~2019. Operating activities included net income of ~~goodwill~~$34.2 million and ~~indefinite-lived intangible assets during~~adjustments to net income totaling $19.8 million. Other sources of cash in the ~~fourth quarter.~~

~~Over~~first three months of 2020 included a decrease in inventories of $37.8 million, a decrease in other accounts receivable of $19.2 million due primarily to the next several quarters, we plan to closely manage working capital, and it is expected that excess cash will be directed primarily at growth initiatives, acquisitions, debt reduction, and share repurchases. We remain focused on maintaining ample liquidity and credit availability. We anticipate capital expenditurescollection of supplier volume rebates earned in 2019, ~~to be similar to 2018. We believe our balance sheet~~ and ~~ability to generate ample~~an increase in other current and noncurrent liabilities of $7.4 million. Primary uses of cash ~~flow provides us with~~in the first three months of 2020 included: an increase in trade accounts receivable of $53.9 million; a ~~durable business model~~decrease in accrued payroll and ~~should allow us to fund growth initiatives~~benefit costs of $19.0 million resulting from the payment of management incentive compensation earned in 2019; a decrease in accounts payable of $10.9 million; and, ~~expansion needs.~~an increase in prepaid expenses and other assets of $3.1 million.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

~~Cash Flow~~

~~Operating Activities.~~Net cash provided by operating activities for the first three months of 2019 totaled $28.9 million, ~~compared with $53.0 million of cash generated for the first three months of 2018. Net cash provided by operating activities~~which included net income of $42.0 million and adjustments to net income totaling $22.1 million. Other sources of cash in the first three months of 2019 included an increase in accounts payable of $68.1 million, a decrease in other accounts receivable of $22.4 million due primarily to the collection of supplier volume rebates earned in 2018, a decrease in prepaid expenses and other assets of $15.1 million, and an increase in other current and noncurrent liabilities of $4.6 million. Primary uses of cash in the first three months of 2019 included: an increase in trade accounts receivable of $76.7 million resulting from higher sales in the latter part of the quarter; an increase in inventories of $40.8 million primarily to support growth in our business; and, a decrease in accrued payroll and benefit costs of $27.9 million resulting from the payment of management incentive compensation earned in 2018.

Net cash provided by operating activities for the first three months of 2018 totaled $53.0 million, which included net income of $42.9 million and adjustments to net income totaling $23.7 million. Other sources of cash in 2018 included a decrease in other accounts receivable of $30.0 million due primarily to the collection of supplier volume rebates earned in 2017, an increase in accounts payable of $8.1 million, a decrease in prepaid expenses and other assets of $4.8 million, a decrease in inventories of $3.0 million, and an increase in other current and noncurrent liabilities of $2.6 million. Primary uses of cash in 2018 included: an increase in trade accounts receivable of $37.5 million resulting from higher sales in the latter part of the quarter; and, a decrease in accrued payroll and benefit costs of $24.6 million resulting from the payment of management incentive compensation earned in 2017.

Investing Activities. Net cash used in investing activities for the first three months of ~~2019~~2020 was ~~$38.5~~$110.3 million, compared with ~~$16.4~~$38.5 million used during the first three months of ~~2018.~~2019. Included in the first three months of 2020 was the $100.0 million termination fee associated with the acquisition of Anixter, as described in Note 4 of our Notes to the unaudited Condensed Consolidated Financial Statements. In the first quarter of 2019, ~~were acquisition~~we made payments of $27.7 ~~million.~~million to acquire Sylvania Lighting Solutions ("SLS"). Capital expenditures were $15.8 million for the three month period ended March 31, 2020, compared to $10.8 million for the three month period ended March 31, 2019, compared to $7.7 million for the three month period ended March 31, 2018. The first three months of 2018 also included other payments of $8.8 million for the purchase of a foreign financial instrument.2019.

Financing Activities. Net cash ~~used in~~provided by financing activities for the first three months of ~~2019~~2020 was ~~$19.2~~$278.7 million, compared to ~~$28.8~~$19.2 million ~~used in~~for the first three months of ~~2018.~~ 2019. During the first three months of 2020, financing activities consisted of borrowings and repayments of $360.5 million and $260.5 million, respectively, related to our Revolving Credit Facility, as well as borrowings and repayments of $225.0 million and $40.0 million, respectively, related to our Receivables Facility. Financing activities for the first three months of 2020 also included net repayments related to our various international lines of credit of approximately $0.4 million.

During the first three months of 2019, financing activities consisted of borrowings and repayments of $253.7 million and $272.8 million, respectively, related to our Revolving Credit Facility, borrowings and repayments of $170.0 million and $105.0 million, respectively, related to our Receivables Facility, and repayments of $24.8 million to pay off our Term Loan Facility. Financing activities for the first three months of 2019 also included ~~borrowings and~~net repayments onrelated to our various international lines of credit of approximately ~~$23.6 million and $27.2 million, respectively.~~

During the first three months of 2018, financing activities consisted of borrowings and repayments of $308.0 million and $320.0 million, respectively, related to our Revolving Credit Facility, borrowings and repayments of $185.0 million and $175.0 million, respectively, related to our Receivables Facility, and repayments of $20.0 million applied to our Term Loan Facility. Financing activities for the first three months of 2018 also included borrowings and repayments on our various international lines of credit of approximately $57.9 million and $52.2 million, respectively.$3.7 million.

Contractual Cash Obligations and Other Commercial Commitments

There were no material changes in our contractual obligations and other commercial commitments that would require an update to the disclosure provided in our ~~2018~~2019 Annual Report on Form 10-K. Management believes that cash generated from operations, together with amounts available under our Revolving Credit Facility and the Receivables Facility, will be sufficient to meet our working capital, capital expenditures and other cash requirements for the foreseeable future. However, there can be no assurances that this will continue to be the case.

Inflation

The rate of inflation, as measured by changes in the producer price index, affects different commodities, the cost of products purchased and ultimately the pricing of our different products and product classes to our customers. For the three months ended March 31, ~~2019,~~2020, pricing related to inflation impacted our sales by ~~approximately 2%~~less than 1%.

Seasonality

Our operating results are not significantly affected by seasonal factors. Sales during the first quarter are usually affected by a reduced level of activity. Sales during the second, third and fourth quarters are generally 65% to 8%7% higher than the first quarter. Sales typically increase beginning in March, with slight fluctuations per month through October. During periods of economic expansion or contraction, our sales by quarter have varied significantly from this pattern.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Guarantor Financial Statements

WESCO Distribution (the “Issuer”) has outstanding $500 million in aggregate principal amount of 5.375% Senior Notes due 2021 (the “2021 Notes”) and $350 million in aggregate principal amount of 5.375% Senior Notes due 2024 (the “2024 Notes” and, together with the 2021 Notes, the “Notes”).

The Notes are unsecured senior obligations of WESCO Distribution and are fully and unconditionally guaranteed on a senior unsecured basis by WESCO International (the “Parent Guarantor”), ranking pari passu in right of payment with all other existing and future senior obligations of the Issuer, including obligations under other unsubordinated indebtedness. The Notes are effectively subordinated to all existing and future obligations of the Issuer that are secured by liens on any property or assets of the Issuer, including the Issuer’s Revolving Credit Facility and the then outstanding term loan facility (the ��Senior Secured Credit Facilities”), to the extent of the value of the collateral securing such obligations, and are structurally subordinated to all liabilities (including trade payables) of any of the Parent Guarantor’s or the Issuer’s subsidiaries (the “non-Guarantor Subsidiaries”) and senior in right of payment to all existing and future obligations of the Issuer that are, by their terms, subordinated in right of payment to the Notes.

The Notes are guaranteed by the Parent Guarantor and not by the non-Guarantor Subsidiaries. In the event of a bankruptcy, liquidation or reorganization of any of the non-Guarantor Subsidiaries, such non-Guarantor Subsidiaries will pay the holders of their debt and their trade creditors before they will be able to distribute or contribute, as the case may be, any of their assets to the Issuer or the Parent Guarantor. Therefore, the Notes and the guarantee of the Parent Guarantor (the “Parent Guarantee”) are effectively subordinated to the liabilities of the non-Guarantor Subsidiaries.

The Parent Guarantee constitutes a senior obligation of the Parent Guarantor, ranking pari passu in right of payment with all other senior obligations of the Parent Guarantor, including obligations under other unsubordinated indebtedness. The Parent Guarantee is effectively subordinated to all existing and future obligations incurred by the Parent Guarantor that are secured by liens on any property or assets of the Parent Guarantor, including the Senior Secured Credit Facilities, to the extent of the value of the collateral securing such obligations, structurally subordinated to all liabilities (including trade payables) of the non-Guarantor Subsidiaries and senior in right of payment to all existing and future obligations of the Parent Guarantor that are, by their terms, subordinated in right of payment to the Parent Guarantee.

The Parent Guarantor guarantees to each holder of the Notes and to the respective trustees (i) the due and punctual payment of the principal of, premium, if any, and interest on each Note, when and as the same shall become due and payable, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal of and interest on the Notes, to the extent lawful, and the due and punctual payment of all other obligations and due and punctual performance of all obligations of the Issuer to the holders or the respective trustee all in accordance with the terms of the Notes and the indentures governing the Notes and (ii) in the case of any extension of time of payment or renewal of any Notes or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, at stated maturity, by acceleration or otherwise.

If the Issuer becomes a debtor in a case under the U.S. Bankruptcy Code or encounter other financial difficulty, under federal or state fraudulent transfer law, a court may void, subordinate or otherwise decline to enforce the Notes. A court might do so if it is found that when the Issuer issued the Notes, or in some states when payments became due under the Notes, the Issuer received less than reasonably equivalent value or fair consideration and either: (i) were insolvent or rendered insolvent by reason of such incurrence; (ii) were left with inadequate capital to conduct its business; or (iii) believed or reasonably should have believed that the Issuer would incur debts beyond its ability to pay.

The court might also void an issuance of the Notes without regard to the above factors, if the court found that the Issuer issued the Notes with actual intent to hinder, delay or defraud its creditors. A court would likely find that the Issuer did not receive reasonably equivalent value or fair consideration for the Notes, if the Issuer did not substantially benefit directly or indirectly from the issuance of the Notes. If a court were to void the issuance of the Notes, holders would no longer have any claim against the Issuer. Sufficient funds to repay the Notes may not be available from other sources. In addition, the court might direct holders to repay any amounts that they already received from the Issuer.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

The following tables present summarized financial information for WESCO International and WESCO Distribution on a combined basis after elimination of (i) intercompany transactions and balances among such entities and (ii) equity in earnings from and investments in any subsidiary that is a non-guarantor. The summarized financial information has been prepared in accordance with Rule 13-01 of Regulation S-X.


Summarized Balance Sheets
(In thousands of dollars)
(unaudited)
	As of
	March 31, 2020		December 31, 2019
Assets
Current assets	$	845,631	$	582,075
Due from non-guarantor subsidiaries	465,268		465,012
Total current assets	1,310,899		1,047,087
Noncurrent assets	515,326		484,552
Total assets	$	1,826,225	$	1,531,639
Liabilities
Current liabilities	$	441,402	$	445,075
Due to non-guarantor subsidiaries	3,296,996		3,133,326
Total current liabilities	3,738,398		3,578,401
Noncurrent liabilities	1,198,399		1,067,486
Total liabilities	$	4,936,797	$	4,645,887


Summarized Statement of Income
(In thousands of dollars)
(unaudited)
	Three Months Ended
	March 31, 2020
Net sales⁽¹⁾	$	873,594
Gross profit⁽¹⁾	168,571
Net income	$	285

⁽¹⁾ Includes $8.9 million of net sales and cost of goods sold to non-guarantor subsidiaries.

Impact of Recently Issued Accounting Standards

See Note 2 of our Notes to Condensed Consolidated Financial Statements for information regarding the effect of new accounting pronouncements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Forward-Looking Statements

From time to time in this report and in other written reports and oral statements, references are made to expectations regarding our future performance. When used in this context, the words “anticipates,” “plans,” “believes,” “estimates,” “intends,” “expects,” “projects,” “will” and similar expressions may identify forward-looking statements, although not all forward-looking statements contain such words. Such statements including, but not limited to, our statements regarding business strategy, growth strategy, competitive strengths, productivity and profitability enhancement, competition, new product and service introductions and liquidity and capital resources are based on management’s beliefs, as well as on assumptions made by and information currently available to management, and involve various risks and uncertainties, some of which are beyond our control. In addition, forward-looking statements in this document include information regarding our proposed acquisition of Anixter, the potential effects of the pending acquisition on our business and operations prior to the consummation thereof, the effects on WESCO if the acquisition is not consummated, information regarding the combined operations and business of WESCO and Anixter following the acquisition, if consummated, and statements regarding the impact of natural disasters, health epidemics and other outbreaks, especially the outbreak of COVID-19 since December 2019, which may have a material adverse effect on WESCO's business. Our actual results could differ materially from those expressed in any forward-looking statement made by us or on our behalf. In light of these risks and uncertainties, there can be no assurance that the forward-looking information will in fact prove to be accurate. Certain of these risks are set forth in the WESCO International’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018,~~2019, as well as WESCO International’s other reports filed with the ~~Securities and Exchange Commission.~~SEC. We have undertaken no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures about Market Risks.

~~There have not been any material~~For a discussion of changes to ~~our exposures to~~the market ~~risk during the quarterly period ended March 31, 2019~~risks that ~~would require an update to the relevant disclosures provided~~were previously disclosed in our ~~2018~~2019 Annual Report on Form ~~10-K.~~10-K, refer to Part I, Item 2, "Management's Discussion and Analysis of Financial Condition and Results of Operations” and to Part II, Item 1A, "Risk Factors”.

Item 4. Controls and Procedures.

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures and internal control over financial reporting were effective as of the end of the period covered by this report.

~~Effective January 1, 2019, we adopted ASU 2016-02,~~ ~~Leases~~, and all the related amendments. In connection with the adoption of this new lease standard, we modified certain processes and implemented internal controls related to leases. Except for the effect of adopting the new lease standard, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

From time to time, a number of lawsuits and claims have been or may be asserted against us relating to the conduct of our business, including litigation relating to commercial, product and employment matters. The outcome of any litigation cannot be predicted with certainty, and some lawsuits may be determined adversely to us. However, management does not believe that the ultimate outcome of any such pending matters is likely to have a material adverse effect on our financial condition or liquidity, although the resolution in any fiscal period of one or more of these matters may have a material adverse effect on our results of operations for that period.

Item 1A. Risk Factors.

~~There have been no material changes~~The following is an additional risk factor to ~~the risk factors~~those previously disclosed in Item 1A. to Part 1 of WESCO’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2018.~~

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.~~2019.

The ~~following table sets forth all issuer purchases~~COVID-19 pandemic has adversely affected how we, our suppliers and our customers are operating our businesses, and the duration and extent to which it will affect our business, financial condition, results of ~~common~~operations, cash flows, liquidity, and stock ~~during~~price are uncertain.

In December 2019, a novel coronavirus disease (“COVID-19”) was reported in China, and on March 11, 2020, the ~~three months ended March 31, 2019,~~World Health Organization declared COVID-19 a global pandemic. Governmental authorities around the world have implemented measures to reduce the spread of COVID-19, and this widespread health crisis is adversely affecting the broader economies, financial markets, workforces, our suppliers and customers, and the business environment.

We cannot be certain about the impact that COVID-19 will have on our business and operations going forward. The duration and extent of the impact from the COVID-19 pandemic depends on future developments for which there is significant uncertainty at this time, such as the severity and transmission rate of the virus, governmental, business and individuals' actions taken in response, the extent and effectiveness of containment actions, restrictions or disruptions to transportation, including ~~those made pursuant~~reduced availability of ground or air transport, the impact of these and other factors on our employees, including disruptions to ~~publicly announced plans~~our operations resulting from the illness of any of our employees, the impact of these and other factors on our ability to sell and provide our products and services, including as a result of travel restrictions and people working from home, the effect on our suppliers and disruptions to the global supply chain, the effect on our customers and their demand for our products and services and ability to pay for them, and any closures of our and our suppliers’ and customers’ facilities. While we are supporting essential businesses and have not had to close our facilities for extended periods of time as of the date of this filing, there is significant uncertainty about what steps we may need to take in response to the pandemic in the future. We have taken actions to reduce costs and cash expenditures, including reductions in administrative expenses, payroll and benefits, capital expenditures, and other costs, and further steps may become necessary in the future. We have also drawn against our credit facilities as a precautionary measure to increase our cash position and preserve financial flexibility in light of the current uncertainty. Due to the uncertainty of COVID-19, we will continue to assess the situation, including the impact of governmental regulations that might be imposed in response to the pandemic. In addition, the impact of COVID-19 on macroeconomic conditions may impact the proper functioning of financial and capital markets, foreign currency exchange rates, commodity and energy prices, and interest rates. Even after the COVID-19 pandemic has subsided, we may continue to experience adverse impacts to our business as a result of any economic recession or ~~programs:~~depression that has occurred or may occur in the future.

Any of these events could materially adversely affect our business, financial condition, results of operations, cash flows, liquidity and stock price, and could also have the effect of heightening the other risks described in “Risk Factors” under Item 1A and “Management’s Discussion and Analysis of Financial Condition and Results of Operation” under Item 7 of our Annual Report on Form 10-K, filed with the SEC on February 24, 2020, including Operational Risks, Financial Risks, Regulatory and Legal Risks, and Risks Related to Our Pending Acquisition of Anixter, as well as in subsequent SEC filings.

Period
Total Number of Shares Purchased⁽²⁾
Average Price Paid Per Share
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾

Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs ^{(2) (3)}
(In Millions)
January 1 – January 31, 2019 2,821
$ 50.39
—
$ 275.0
February 1 – February 28, 2019 31,893
$ 55.67
—
$ 275.0
March 1 – March 31, 2019 377,304
$ 52.47
365,272
$ 275.0
Total 412,018
$ 52.71
365,272


⁽¹⁾	There were 46,746 shares purchased in the period that were not part of the publicly announced share repurchase program. These shares were surrendered by stock-based compensation plan participants to satisfy tax withholding obligations arising from the exercise of stock-settled stock appreciation rights and vesting of restricted stock units.


⁽²⁾	On December 13, 2017, WESCO announced that its Board of Directors approved, on December 7, 2017, the repurchase of up to $300 million of the Company's common stock through December 31, 2020. On October 31, 2018, the Company's Board of Directors approved an increase to the authorization from $300 million to $400 million.

⁽³⁾

This amount represents the remaining authorization under the Company's share repurchase program that is available to repurchase shares of the Company's common stock. Due to the nature of accelerated share repurchases, the Company receives a certain percentage of shares immediately upon an up-front payment of cash. The remaining shares are delivered by the respective counterparty at the end of the valuation period. The amount authorized under the Company’s share repurchase program was reduced at the time of the up-front cash payment.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Item 6.Exhibits.

(a)Exhibits

(31) Rule 13a-14(a)/15d-14(a) Certifications

(1) Certification of Chief Executive Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.

(2) Certification of Chief Financial Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.

(32) Section 1350 Certifications

(1) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

(2) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS XBRL Instance Document.

101.SCH XBRL Taxonomy Extension Schema Document.

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB XBRL Taxonomy Extension Label Linkbase Document.

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.

104 Cover Page Interactive Data File (embedded within the Inline XBRL document)

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



		WESCO International, Inc.
						(Registrant)



May ~~3, 2019~~1, 2020	By:	/s/ David S. Schulz
(Date)		David S. Schulz
		Senior Vice President and Chief Financial Officer



	(In thousands)
2019	$	59,033
2020	61,233
2021	49,587
2022	36,767
2023	27,547
Thereafter	45,701
Total undiscounted operating lease payments	279,868
Less: interest	(42,026		)
Total operating lease liabilities	$	237,842



Years ending December 31	(In thousands)
2019	$	71,640
2020	59,594
2021	47,264
2022	34,490
2023	24,493
Thereafter	40,302



	Awards		Weighted- Average Fair Value
Unvested at December 31, 2018	327,798		$	57.87
Granted	175,544		54.64
Vested	(112,500	)	43.58
Forfeited	(1,565	)	57.49
Unvested at March 31, 2019	389,277		$	60.48



	Condensed Consolidating Balance Sheet
	March 31, 2019

(In thousands)	WESCO International, Inc.		WESCO Distribution, Inc.		Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Consolidated
Cash and cash equivalents	$	—	$	38,774	$	67,326		$	—		$	106,100
Trade accounts receivable, net	—		—		1,268,565			—			1,268,565
Inventories	—		453,738		547,615			—			1,001,353
Prepaid expenses and other current assets	1,127		22,341		118,406			(4,142		)	137,732
Total current assets	1,127		514,853		2,001,912			(4,142		)	2,513,750
Intercompany receivables, net	—		—		2,400,124			(2,400,124		)	—
Property, buildings and equipment, net	—		68,829		97,859			—			166,688
Operating lease assets	—		139,397		93,592			—			232,989
Intangible assets, net	—		1,974		308,479			—			310,453
Goodwill	—		257,623		1,483,148			—			1,740,771
Investments in affiliates	3,252,590		5,202,712		—			(8,455,302		)	—
Other assets	—		2,717		17,270			—			19,987
Total assets	$	3,253,717	$	6,188,105	$	6,402,384		$	(10,859,568	)	$	4,984,638

Accounts payable	$	—	$	426,015	$	444,227		$	—		$	870,242
Short-term debt	—		—		27,313			—			27,313
Other current liabilities	—		82,527		174,782			(4,142		)	253,167
Total current liabilities	—		508,542		646,322			(4,142		)	1,150,722
Intercompany payables, net	1,051,352		1,348,772		—			(2,400,124		)	—
Long-term debt, net	—		841,554		372,722			—			1,214,276
Operating lease liabilities	—		110,998		67,608			—			178,606
Other noncurrent liabilities	—		125,649		119,023			—			244,672
Total WESCO International stockholders' equity	2,202,365		3,252,590		5,202,712			(8,455,302		)	2,202,365
Noncontrolling interests	—		—		(6,003		)	—			(6,003		)
Total liabilities and stockholders’ equity	$	3,253,717	$	6,188,105	$	6,402,384		$	(10,859,568	)	$	4,984,638



	Condensed Consolidating Balance Sheet
	December 31, 2018

(In thousands)	WESCO International, Inc.		WESCO Distribution, Inc.		Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Consolidated
Cash and cash equivalents	$	—	$	35,931	$	60,412		$	—		$	96,343
Trade accounts receivable, net	—		—		1,166,607			—			1,166,607
Inventories	—		440,422		508,304			—			948,726
Prepaid expenses and other current assets	1,123		57,586		124,523			(9,268		)	173,964
Total current assets	1,123		533,939		1,859,846			(9,268		)	2,385,640
Intercompany receivables, net	—		—		2,403,704			(2,403,704		)	—
Property, buildings and equipment, net	—		63,506		97,372			—			160,878
Intangible assets, net	—		2,131		313,885			—			316,016
Goodwill	—		257,623		1,464,980			—			1,722,603
Investments in affiliates	3,182,469		5,137,783		—			(8,320,252		)	—
Other assets	—		2,905		16,994			—			19,899
Total assets	$	3,183,592	$	5,997,887	$	6,156,781		$	(10,733,224	)	$	4,605,036

Accounts payable	$	—	$	404,373	$	389,975		$	—		$	794,348
Short-term debt	—		—		30,785			—			30,785
Other current liabilities	—		86,600		159,481			(9,268		)	236,813
Total current liabilities	—		490,973		580,241			(9,268		)	1,061,946
Intercompany payables, net	1,048,282		1,355,422		—			(2,403,704		)	—
Long-term debt, net	—		842,093		325,218			—			1,167,311
Other noncurrent liabilities	—		126,930		119,123			—			246,053
Total WESCO International stockholders' equity	2,135,310		3,182,469		5,137,783			(8,320,252		)	2,135,310
Noncontrolling interests	—		—		(5,584		)	—			(5,584		)
Total liabilities and stockholders’ equity	$	3,183,592	$	5,997,887	$	6,156,781		$	(10,733,224	)	$	4,605,036



	Condensed Consolidating Statement of Income and Comprehensive Income
	Three Months Ended
	March 31, 2018

(In thousands)	WESCO International, Inc.			WESCO Distribution, Inc.			Non-Guarantor Subsidiaries			Consolidating and Eliminating Entries			Consolidated
Net sales	$	—		$	882,399		$	1,150,110		$	(38,594	)	$	1,993,915
Cost of goods sold (excluding depreciation and
amortization)	—			716,258			936,302			(38,594		)	1,613,966
Selling, general and administrative expenses	—			150,482			140,347			—			290,829
Depreciation and amortization	—			4,616			11,263			—			15,879
Results of affiliates’ operations	42,971			45,200			—			(88,171		)	—
Net interest and other	—			13,816			5,967			—			19,783
Income tax (benefit) expense	—			(544		)	11,031			—			10,487
Net income	42,971			42,971			45,200			(88,171		)	42,971
Net loss attributable to noncontrolling interests	—			—			(1,450		)	—			(1,450		)
Net income attributable to WESCO International	$	42,971		$	42,971		$	46,650		$	(88,171	)	$	44,421
Other comprehensive loss:
Foreign currency translation adjustments	(28,800		)	(28,800		)	(28,800		)	57,600			(28,800		)
Comprehensive income attributable to WESCO International	$	14,171		$	14,171		$	17,850		$	(30,571	)	$	15,621



	Three Months Ended
(In millions)	March 31, 2019			March 31, 2018
Cash flow provided by operations	$	28.9		$	53.0
Less: Capital expenditures	(10.8		)	(7.7		)
Free cash flow	$	18.1		$	45.3



Period	Total Number of Shares Purchased⁽²⁾	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs ⁽²⁾	Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs ^{(2) (3)}
Period					(In Millions)
January 1 – January 31, 2019	2,821	$	50.39	—	$	275.0
February 1 – February 28, 2019	31,893	$	55.67	—	$	275.0
March 1 – March 31, 2019	377,304	$	52.47	365,272	$	275.0
Total	412,018	$	52.71	365,272