UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	~~QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2020~~2021


☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934	~~TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934~~

For the transition period from to

Commission File Number 001-35985

CDW ~~CORPORATION~~CORPORATION

(Exact name of registrant as specified in its charter)



Delaware			26-0273989
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)

75 Tri-State International
Lincolnshire,	,	Illinois		60069
(Address of principal executive offices)			(Zip Code)

(~~847~~) (847) 465-6000

(Registrant's telephone number, including area code)

None

(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 each class	Trading symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	CDW	Nasdaq Global Select Market

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 the past 90 days. ☒ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). ☒ Yes ☐ No

Table of Contents

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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:

~~Table of Contents~~

Large accelerated filer

☒

Accelerated filer

☐

~~Large accelerated filer~~

☒

~~Accelerated filer~~

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

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.

☐

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

As of July ~~31, 2020,~~30, 2021, there were ~~142,669,659~~137,495,464 shares of common stock, $0.01 par value, outstanding.

Table of Contents

CDW CORPORATION AND SUBSIDIARIES

FORM 10-Q

TABLE OF CONTENTS



		Page
PART I	FINANCIAL INFORMATION
Item 1.	Financial Statements:
	Consolidated Balance Sheets as of June ~~30, 2020~~ 3 0 , 2021 and December 31, ~~2019~~2020	3
	Consolidated Statements of Operations for the Three and Six Months Ended June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	4
	Consolidated Statements of Comprehensive Income for the Three and Six Months Ended June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	5
	Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	6
	Consolidated Statements of Cash Flows for the Six Months Ended June ~~30, 2020~~ 3 0 , 2021 and ~~2019~~2020	8
	Notes to Consolidated Financial Statements	9
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2122
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	3839
Item 4.	Controls and Procedures	39
PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4140
Item 3.	Defaults Upon Senior Securities	4140
Item 4.	Mine Safety Disclosures	4140
Item 5.	Other Information	4140
Item 6.	Exhibits	4241
SIGNATURES		4342

Table of Contents

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements


CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (dollars in millions, except per share amounts)
	June 30, 2021		December 31, 2020
Assets	(unaudited)
Current assets:
Cash and cash equivalents	$	501.2	$	1,410.2
Accounts receivable, net of allowance for credit losses of $21.2 and $29.6, respectively	3,370.5		3,212.6
Merchandise inventory	888.7		760.0
Miscellaneous receivables	430.9		379.5
Prepaid expenses and other	230.3		191.2
Total current assets	5,421.6		5,953.5
Operating lease right-of-use assets	124.7		130.8
Property and equipment, net	176.1		175.5
Goodwill	2,731.9		2,595.9
Other intangible assets, net	487.3		445.1
Other assets	49.3		43.9
Total Assets	$	8,990.9	$	9,344.7
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable-trade	$	2,207.4	$	2,088.4
Accounts payable-inventory financing	375.2		524.6
Current maturities of long-term debt	19.8		70.9
Contract liabilities	325.7		243.7
Accrued expenses and other current liabilities:
Compensation	255.1		288.3
Advertising	164.5		153.4
Sales and income taxes	80.4		104.2
Other	342.0		424.8
Total current liabilities	3,770.1		3,898.3
Long-term liabilities:
Debt	3,909.2		3,856.3
Deferred income taxes	33.1		55.3
Operating lease liabilities	161.5		169.0
Other liabilities	68.2		68.7
Total long-term liabilities	4,172.0		4,149.3
Stockholders' equity:
Preferred stock, $0.01 par value, 100.0 shares authorized; 0 shares issued or outstanding for both periods	0		0
Common stock, $0.01 par value, 1,000.0 shares authorized; 138.3 and 141.9 shares outstanding, respectively	1.4		1.4
Paid-in capital	3,294.1		3,204.9
Accumulated deficit	(2,163.5)		(1,813.4)
Accumulated other comprehensive loss	(83.2)		(95.8)
Total stockholders' equity	1,048.8		1,297.1
Total Liabilities and Stockholders' Equity	$	8,990.9	$	9,344.7

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share amounts)
June 30, 2020 December 31, 2019
Assets (unaudited)
Current assets:
Cash and cash equivalents $ 958.4
$ 154.0
Accounts receivable, net of allowance for credit losses of $30.7 and $7.9, respectively 3,029.0
3,002.2
Merchandise inventory 694.8
611.2
Miscellaneous receivables 353.9
395.1
Prepaid expenses and other 199.7
171.6
Total current assets 5,235.8
4,334.1
Operating lease right-of-use assets 137.3
131.8
Property and equipment, net 326.5
363.1
Goodwill 2,532.1
2,553.0
Other intangible assets, net 492.9
594.1
Other assets 24.9
23.3
Total Assets $ 8,749.5
$ 7,999.4
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable-trade $ 1,809.0
$ 1,835.0
Accounts payable-inventory financing 479.1
429.9
Current maturities of long-term debt 37.9
34.1
Contract liabilities 275.4
252.2
Accrued expenses and other current liabilities:
Compensation 163.2
212.3
Advertising 145.2
147.9
Sales and income taxes 145.4
88.6
Other 506.3
491.4
Total current liabilities 3,561.5
3,491.4
Long-term liabilities:
Debt 3,861.6
3,283.2
Deferred income taxes 67.6
62.4
Operating lease liabilities 138.0
131.1
Other liabilities 65.2
71.0
Total long-term liabilities 4,132.4
3,547.7
Stockholders' equity:
Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods —
—
Common stock, $0.01 par value, 1,000.0 shares authorized; 142.6 and 143.0 shares outstanding, respectively 1.4
1.4
Paid-in capital 3,138.3
3,095.3
Accumulated deficit (1,932.5 ) (2,018.6 )
Accumulated other comprehensive loss (151.6 ) (117.8 )
Total stockholders' equity 1,055.6
960.3
Total Liabilities and Stockholders' Equity $ 8,749.5
$ 7,999.4

The accompanying notes are an integral part of the Consolidated Financial Statements.

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per-share amounts)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net sales $ 4,365.7
$ 4,629.9
$ 8,754.9
$ 8,587.8
Cost of sales 3,618.5
3,856.1
7,251.2
7,141.9
Gross profit 747.2
773.8
1,503.7
1,445.9
Selling and administrative expenses 463.8
473.5
974.5
916.7
Operating income 283.4
300.3
529.2
529.2
Interest expense, net (39.7 ) (40.5 ) (77.6 ) (78.8 )
Other income, net 1.7
1.4
5.6
2.4
Income before income taxes 245.4
261.2
457.2
452.8
Income tax expense (56.3 ) (64.6 ) (100.2 ) (103.3 )
Net income $ 189.1
$ 196.6
$ 357.0
$ 349.5

Net income per common share:
Basic $ 1.32
$ 1.35
$ 2.50
$ 2.39
Diluted $ 1.31
$ 1.33
$ 2.47
$ 2.35

Weighted-average common shares outstanding:
Basic 142.4
145.7
142.5
146.3
Diluted 144.3
148.3
144.6
148.7

Table of Contents


CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (dollars in millions, except per-share amounts) (unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net sales	$	5,146.4	$	4,365.7	$	9,983.9	$	8,754.9
Cost of sales	4,263.6		3,618.5		8,305.9		7,251.2
Gross profit	882.8		747.2		1,678.0		1,503.7
Selling and administrative expenses	512.9		463.8		984.7		974.5
Operating income	369.9		283.4		693.3		529.2
Interest expense, net	(35.5)		(39.7)		(71.1)		(77.6)
Other income, net	36.8		1.7		37.9		5.6
Income before income taxes	371.2		245.4		660.1		457.2
Income tax expense	(97.1)		(56.3)		(153.4)		(100.2)
Net income	$	274.1	$	189.1	$	506.7	$	357.0

Net income per common share:
Basic	$	1.96	$	1.32	$	3.60	$	2.50
Diluted	$	1.93	$	1.31	$	3.56	$	2.47

Weighted-average common shares outstanding:
Basic	139.8		142.4		140.6		142.5
Diluted	141.7		144.3		142.4		144.6

The accompanying notes are an integral part of the Consolidated Financial Statements.

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
(unaudited)
Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Net income $ 189.1
$ 196.6
$ 357.0
$ 349.5
Other comprehensive income (loss):
Unrealized loss from hedge accounting, net of tax —
(4.1 ) (0.2 ) (12.4 )
Reclassification of hedge accounting loss to net income, net of tax 1.4
0.2
2.5
1.7
Foreign currency translation, net of tax 6.3
(8.0 ) (36.1 ) 1.9
Other comprehensive income (loss) 7.7
(11.9 ) (33.8 ) (8.8 )
Comprehensive income $ 196.8
$ 184.7
$ 323.2
$ 340.7

Table of Contents


CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (dollars in millions) (unaudited)
	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Net income	$	274.1	$	189.1	$	506.7	$	357.0
Other comprehensive income (loss):
Unrealized loss from hedge accounting, net of tax	0		0		0		(0.2)
Reclassification of hedge accounting loss to net income, net of tax	0.6		1.4		1.0		2.5
Foreign currency translation, net of tax	5.3		6.3		11.6		(36.1)
Other comprehensive income (loss)	5.9		7.7		12.6		(33.8)
Comprehensive income	$	280.0	$	196.8	$	519.3	$	323.2

The accompanying notes are an integral part of the Consolidated Financial Statements.

Table of Contents


CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (dollars in millions) (unaudited)
	Three Months Ended June 30, 2021
	Common Stock
	Shares	Amount		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance as of March 31, 2021	140.4	$	1.4	$	3,262.6	$	(2,004.6)	$	(89.1)	$	1,170.3
Net income	—	—		—		274.1		—		274.1
Equity-based compensation expense	—	—		20.6		—		—		20.6
Stock option exercises	—	—		4.1		—		—		4.1
Coworker Stock Purchase Plan	0.1	—		6.5		—		—		6.5
Repurchases of common stock	(2.2)	—		—		(376.9)		—		(376.9)
Dividends paid ($0.40 per share)	—	—		0.3		(56.1)		—		(55.8)


Reclassification of hedge accounting loss to net income	—	—		—		—		0.6		0.6
Foreign currency translation	—	—		—		—		5.3		5.3
Balance as of June 30, 2021	138.3	1.4		3,294.1		(2,163.5)		(83.2)		1,048.8


	Three Months Ended June 30, 2020
	Common Stock
	Shares	Amount		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance as of March 31, 2020	142.3	$	1.4	$	3,114.9	$	(2,067.3)	$	(159.3)	$	889.7
Net income	—	—		—		189.1		—		189.1
Equity-based compensation expense	—	—		5.6		—		—		5.6
Stock option exercises	0.3	—		12.7		—		—		12.7
Coworker Stock Purchase Plan	—	—		4.8		—		—		4.8

Dividends paid ($0.38 per share)	—	—		0.3		(54.3)		—		(54.0)


Reclassification of hedge accounting loss to net income	—	—		—		—		1.4		1.4
Foreign currency translation	—	—		—		—		6.3		6.3
Balance as of June 30, 2020	142.6	1.4		3,138.3		(1,932.5)		(151.6)		1,055.6

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
(unaudited)
Three Months Ended June 30, 2020
Common Stock
Shares Amount Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive Loss Total
Stockholders' Equity
Balance as of March 31, 2020 142.3
$ 1.4
$ 3,114.9
$ (2,067.3 ) $ (159.3 ) $ 889.7
Net income —
—
—
189.1
—
189.1
Equity-based compensation expense —
—
5.6
—
—
5.6
Stock option exercises 0.3
—
12.7
—
—
12.7
Coworker Stock Purchase Plan —
—
4.8
—
—
4.8
Dividends paid ($0.380 per share) —
—
0.3
(54.3 ) —
(54.0 )
Foreign currency translation —
—
—
—
6.3
6.3
Reclassification of hedge accounting loss to net income —
—
—
—
1.4
1.4
Balance as of June 30, 2020 142.6
$ 1.4
$ 3,138.3
$ (1,932.5 ) $ (151.6 ) $ 1,055.6

Table of Contents


CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (dollars in millions) (unaudited)																CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (dollars in millions) (unaudited)
																	Six Months Ended June 30, 2021
																	Common Stock
	Three Months Ended June 30, 2019																Shares	Amount		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
	Common Stock
	Shares		Amount		Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
Balance as of March 31, 2019	146.3		$	1.5	$	3,025.3	$	(1,972.0	)	$	(127.5	)	$	927.3
Balance as of December 31, 2020																Balance as of December 31, 2020	141.9	$	1.4	$	3,204.9	$	(1,813.4)	$	(95.8)	$	1,297.1
Net income	—		—		—		196.6			—			196.6			Net income	—	—		—		506.7		—		506.7
Equity-based compensation expense	—		—		11.8		—			—			11.8			Equity-based compensation expense	—	—		36.4		—		—		36.4
Stock option exercises	0.2		—		6.0		—			—			6.0			Stock option exercises	0.9	—		41.8		—		—		41.8
Coworker Stock Purchase Plan	—		—		4.3		—			—			4.3			Coworker Stock Purchase Plan	0.1	—		10.4		—		—		10.4
Repurchases of common stock	(1.5	)	—		—		(155.1		)	—			(155.1		)	Repurchases of common stock	(4.6)	—		—		(735.3)		—		(735.3)
Dividends paid ($0.295 per share)	—		—		0.2		(43.1		)	—			(42.9		)
Dividends paid ($0.80 per share)																Dividends paid ($0.80 per share)	—	—		0.6		(112.9)		—		(112.3)
Incentive compensation plan stock withheld for taxes																Incentive compensation plan stock withheld for taxes	—	—		—		(27.8)		—		(27.8)

Reclassification of hedge accounting loss to net income																Reclassification of hedge accounting loss to net income	—	—		—		—		1.0		1.0
Foreign currency translation	—		—		—		—			(8.0		)	(8.0		)	Foreign currency translation	—	—		—		—		11.6		11.6
Unrealized loss from hedge accounting	—		—		—		—			(4.1		)	(4.1		)
Reclassification of hedge accounting loss to net income	—		—		—		—			0.2			0.2
Balance as of June 30, 2019	145.0		$	1.5	$	3,047.6	$	(1,973.6	)	$	(139.4	)	$	936.1
Impact of adoption of Topic 740																Impact of adoption of Topic 740	—	—		—		19.2		—		19.2
Balance as of June 30, 2021																Balance as of June 30, 2021	138.3	$	1.4	$	3,294.1	$	(2,163.5)	$	(83.2)	$	1,048.8


	Six Months Ended June 30, 2020
	Common Stock
	Shares	Amount		Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Stockholders' Equity
Balance as of December 31, 2019	143.0	$	1.4	$	3,095.3	$	(2,018.6)	$	(117.8)	$	960.3
Net income	—	—		—		357.0		—		357.0
Equity-based compensation expense	—	—		14.4		—		—		14.4
Stock option exercises	0.7	—		19.8		—		—		19.8
Coworker Stock Purchase Plan	—	—		8.3		—		—		8.3
Repurchases of common stock	(1.1)	0		—		(140.8)		—		(140.8)
Dividends paid ($0.76 per share)	—	—		0.5		(108.7)		—		(108.2)
Incentive compensation plan stock withheld for taxes	—	—		—		(21.9)		—		(21.9)
Unrealized loss from hedge accounting	—	—		—		—		(0.2)		(0.2)
Reclassification of hedge accounting loss to net income	—	—		—		—		2.5		2.5
Foreign currency translation	—	—		—		—		(36.1)		(36.1)
Impact of adoption of Topic 326	—	—		—		0.5		—		0.5
Balance as of June 30, 2020	142.6	$	1.4	$	3,138.3	$	(1,932.5)	$	(151.6)	$	1,055.6

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
(unaudited)
Six Months Ended June 30, 2020
Common Stock
Shares Amount Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive Loss Total
Stockholders' Equity
Balance as of December 31, 2019 143.0
$ 1.4
$ 3,095.3
$ (2,018.6 ) $ (117.8 ) $ 960.3
Net income —
—
—
357.0
—
357.0
Equity-based compensation expense —
—
14.4
—
—
14.4
Stock option exercises 0.7
—
19.8
—
—
19.8
Coworker Stock Purchase Plan —
—
8.3
—
—
8.3
Repurchases of common stock (1.1 ) —
—
(140.8 ) —
(140.8 )
Dividends paid ($0.760 per share) —
—
0.5
(108.7 ) —
(108.2 )
Incentive compensation plan stock withheld for taxes —
—
—
(21.9 ) —
(21.9 )
Foreign currency translation —
—
—
—
(36.1 ) (36.1 )
Unrealized loss from hedge accounting —
—
—
—
(0.2 ) (0.2 )
Reclassification of hedge accounting loss to net income —
—
—
—
2.5
2.5
Impact of adoption of Topic 326 —
—
—
0.5
—
0.5
Balance as of June 30, 2020 142.6
$ 1.4
$ 3,138.3
$ (1,932.5 ) $ (151.6 ) $ 1,055.6

Six Months Ended June 30, 2019
Common Stock
Shares Amount Paid-in
Capital Accumulated
Deficit Accumulated
Other
Comprehensive Loss Total
Stockholders' Equity
Balance as of December 31, 2018 147.7
$ 1.5
$ 2,996.9
$ (1,892.6 ) $ (130.6 ) $ 975.2
Net income —
—
—
349.5
—
349.5
Equity-based compensation expense —
—
24.0
—
—
24.0
Stock option exercises 0.7
—
19.0
—
—
19.0
Coworker Stock Purchase Plan —
—
7.3
—
—
7.3
Repurchases of common stock (3.4 ) —
—
(332.2 ) —
(332.2 )
Dividends paid ($0.590 per share) —
—
0.4
(86.7 ) —
(86.3 )
Incentive compensation plan stock withheld for taxes —
—
—
(11.6 ) —
(11.6 )
Foreign currency translation —
—
—
—
1.9
1.9
Unrealized loss from hedge accounting —
—
—
—
(12.4 ) (12.4 )
Reclassification of hedge accounting loss to net income —
—
—
—
1.7
1.7
Balance as of June 30, 2019 145.0
$ 1.5
$ 3,047.6
$ (1,973.6 ) $ (139.4 ) $ 936.1

The accompanying notes are an integral part of the Consolidated Financial Statements.

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
Six Months Ended June 30,
2020 2019
Cash flows from operating activities:
Net income $ 357.0
$ 349.5
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 216.6
129.3
Equity-based compensation expense 14.4
24.9
Deferred income taxes 7.3
(22.5 )
Provision for credit losses 27.1
1.9
Other 6.8
4.5
Changes in assets and liabilities:
Accounts receivable (80.4 ) (230.1 )
Merchandise inventory (89.3 ) (197.3 )
Other assets 19.3
(109.6 )
Accounts payable-trade (2.1 ) 414.9
Other liabilities 39.1
49.0
Net cash provided by operating activities 515.8
414.5
Cash flows used in investing activities:
Capital expenditures (100.0 ) (43.9 )
Acquisition of business, net of cash acquired —
(75.0 )
Net cash used in investing activities (100.0 ) (118.9 )
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility 1,024.0
891.0
Repayments of borrowings under revolving credit facility (1,025.0 ) (815.0 )
Proceeds from issuance of long-term debt 600.0
—
Net change in accounts payable-inventory financing 52.3
36.3
Repurchases of common stock (140.8 ) (332.2 )
Payment of incentive compensation plan withholding taxes (21.9 ) (11.6 )
Dividend payments (108.3 ) (86.3 )
Other 14.0
12.6
Net cash provided by (used in) financing activities 394.3
(305.2 )
Effect of exchange rate changes on cash and cash equivalents (5.7 ) (1.7 )
Net increase (decrease) in cash and cash equivalents 804.4
(11.3 )
Cash and cash equivalents—beginning of period 154.0
205.8
Cash and cash equivalents—end of period $ 958.4
$ 194.5
Supplementary disclosure of cash flow information:
Interest paid $ (67.2 ) $ (76.0 )
Taxes paid, net $ (21.5 ) $ (115.2 )

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CDW CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (dollars in millions) (unaudited)
	Six Months Ended June 30,
	2021		2020
Cash flows from operating activities:
Net income	$	506.7	$	357.0
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	91.8		216.6
Equity-based compensation expense	36.4		14.4
Deferred income taxes	(3.1)		7.3
Provision for credit losses	(6.0)		27.1
Other	(31.0)		6.8
Changes in assets and liabilities:
Accounts receivable	(140.5)		(80.4)
Merchandise inventory	(127.9)		(89.3)
Other assets	(74.0)		19.3
Accounts payable-trade	107.5		(2.1)
Other liabilities	(15.0)		39.1
Net cash provided by operating activities	344.9		515.8
Cash flows from investing activities:
Capital expenditures	(38.5)		(100.0)
Acquisition of business, net of cash acquired	(211.6)		0
Proceeds from the sale of equity method investment	36.0		0
Net cash used in investing activities	(214.1)		(100.0)
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility	56.5		1,024.0
Repayments of borrowings under revolving credit facility	0		(1,025.0)
Proceeds from issuance of long-term debt	0		600.0
Payments to extinguish long-term debt	(56.5)		0

Net change in accounts payable-inventory financing	(150.1)		52.3
Financing payments for revenue generating assets	(46.1)		0
Repurchases of common stock	(735.3)		(140.8)
Proceeds from stock option exercises	41.8		0
Payment of incentive compensation plan withholding taxes	(27.8)		(21.9)
Dividend payments	(112.3)		(108.3)
Other	(12.7)		14.0
Net cash (used in) provided by financing activities	(1,042.5)		394.3
Effect of exchange rate changes on cash and cash equivalents	2.7		(5.7)
Net (decrease) increase in cash and cash equivalents	(909.0)		804.4
Cash and cash equivalents—beginning of period	1,410.2		154.0
Cash and cash equivalents—end of period	$	501.2	$	958.4
Supplementary disclosure of cash flow information:
Interest paid	$	(66.4)	$	(67.2)
Income taxes paid, net	$	(157.6)	$	(21.5)

The accompanying notes are an integral part of the Consolidated Financial Statements.

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CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

1. Description of Business and Summary of Significant Accounting Policies


1.	~~Description of Business and Summary of Significant Accounting Policies~~

Description of Business

CDW Corporation ("Parent"), a Fortune 500 company and member of the S&P 500 Index, is a ~~market-leading~~leading multi-brand provider of ~~integrated~~ information technology ("IT") solutions to small, medium and large business, government, education and healthcare customers in the United States ("US"), the United Kingdom ("UK") and Canada. The ~~Company's~~Company’s broad array of offerings ~~range~~ranges from discrete hardware and software products to integrated IT solutions ~~such as mobility, security,~~and services that include on-premise, hybrid and cloud capabilities across data center ~~optimization, cloud computing, virtualization~~ and ~~collaboration.~~networking, digital workspace, security and virtualization.

Throughout this report, the terms the "Company" and "CDW" refer to Parent and its 100% owned subsidiaries.

Parent has 2 100% owned subsidiaries, CDW LLC and CDW Finance Corporation. CDW LLC is an Illinois limited liability company that, together with its 100% owned subsidiaries, holds all material assets and conducts all business activities and operations of the Company. CDW Finance Corporation is a Delaware corporation formed for the sole purpose of acting as co-issuer of certain debt obligations and does not hold any material assets or engage in any business activities or operations.

Basis of Presentation

The accompanying unaudited interim Consolidated Financial Statements as of June 30, ~~2020~~2021 and for the three and six months ended June 30, ~~2020~~2021 and ~~2019~~2020 (the "Consolidated Financial Statements") have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and the rules and regulations of the US Securities and Exchange Commission (the "SEC") for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the "December 31, ~~2019~~2020 Consolidated Financial Statements"). The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, ~~2019~~2020 Consolidated Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for such interim periods reported are not necessarily indicative of results for the full year.

Reclassifications

Certain prior period amounts have been reclassified to conform with current period presentation.

Principles of Consolidation

The Consolidated Financial Statements include the accounts of Parent and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation.

Use of Estimates

The preparation of the Consolidated Financial Statements in accordance with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, ~~including management’s current assumptions with respect to implications of the COVID-19 pandemic,~~ the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and outcomes could differ from those estimates.

The notes to the Consolidated Financial Statements contained in the December 31, ~~2019~~2020 Consolidated Financial Statements include a discussion of the Company's significant accounting policies and estimates. Except as noted within Note 2 (Recent Accounting Pronouncements) for the adoption of Accounting Standards Update ("ASU") ~~2016-13, Financial Instruments~~2019-12,

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CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

~~- Credit Losses~~Income Taxes (Topic ~~326)~~740): ~~Measurement of Credit Losses on Financial Instruments ("Topic 326"),~~Simplifying the Accounting for Income Taxes, there have been no changes to the Company's significant accounting policies and estimates during the six months ended June 30, ~~2020.~~2021.

~~Accounts Receivable~~

~~The~~2. Recent Accounting Pronouncements

Accounting for Income Taxes

On January 1, 2021, the Company ~~estimates an allowance~~adopted and applied ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for ~~credit losses~~Income Taxes ("Topic 740") in accordance with the applicable transition methods. Among the various updates, the Company adopted the accounting for ownership changes when transitioning from the equity method to consolidation on a modified retrospective basis, which resulted in a $19 million adjustment to retained earnings as of January 1, 2021 for the cumulative effect of derecognizing the deferred tax liability related to ~~accounts receivable for future expected credit losses by using relevant information such as historical information, current conditions, and reasonable and supportable forecasts.~~the UK acquisition. The ~~allowance is measured on a pool basis when similar risk characteristics exist, and a loss-rate for each pool is determined using historical credit loss experience as~~adoption of the ~~basis for the estimation~~remaining components of expected credit losses. Adjustments to historical loss information are made for differences in current conditions as well as changes in forecasted macroeconomic conditions, such as changes in the unemployment rate or gross domestic product growth rate. The Company has typically experienced a higher loss experience with customers in pools associated within the Corporate, Small Business and Other segments, as comparedTopic 740 did not have an impact to the pools associated with the Public segment. During the six months ended June 30, 2020, the Company recognized an allowance of $27 million to reflect the forecasted credit deterioration due to the COVID-19 pandemic, which considered the customer makeup of the Company's pools, the impacts experienced to date and the impacts from the last significant economic downturn in 2008-2009. Due to the higher inherent risk in the pools associated with the Company's Corporate, Small Business, and Other segment, the majority of the additional allowance relates to these segments. As the overall impact and duration of COVID-19 remains uncertain, the Company's estimates and assumptions may evolve as conditions change.

~~Advertising~~

~~Advertising costs are generally charged to expense in the period incurred and recorded in Selling and administrative expenses in the~~Company’s Consolidated Statements of Operations. During the three months ended June 30, 2020 and 2019, the Company had advertising costs of $48 million and $53 million, respectively. During the six months ended June 30, 2020 and 2019, the Company had advertising costs of $93 million and $92 million, respectively.Financial Statements.


2.	~~Recent Accounting Pronouncements~~

Reference Rate Reform

In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial ~~Reporting.~~Reporting, followed by an amendment issued in January 2021. This ASU temporarily provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions that are expected to be affected by reference rate reform. This ASU, as amended, was effective upon ~~its~~ issuance and will remain in effect for all contract modifications and hedging relationships entered into through December 31, 2022. The adoption of this ASU along with the related expedients did not have an impact to the Company’s Consolidated Financial Statements.

~~Measurement of Credit Losses on Financial Instruments~~

3. Acquisition

On ~~January 1, 2020,~~March 15, 2021, the Company ~~adopted~~completed the acquisition of Amplified IT LLC ("Amplified IT") through a purchase of all issued and ~~applied Topic 326 using~~outstanding membership interests. Amplified IT is a Google Premium education partner and leading provider of Google Cloud services, solutions and software for education partners. This strategic acquisition expands the ~~modified retrospective approach. Topic 326 introduced a forward-looking approach based on expected losses~~Company's services and solutions capabilities to ~~estimate credit losses on certain types~~help schools leverage technology to achieve greater educational outcomes. The financial results of ~~financial instruments, including trade receivables, which is reflected~~Amplified IT have been included in ~~the Company’s policies. The adoption of Topic 326, as well as the adjustment to retained earnings for the cumulative effect, was not significant to~~ the Company's Consolidated Financial ~~Statements.~~Statements since the date of the acquisition. These amounts are presented within the Public reportable segment and are insignificant for the three and six months ended June 30, 2021. The purchase price allocation is preliminary and subject to customary closing adjustments and revision as additional information about fair value of assets and liabilities become available. Preliminarily, the Company recorded approximately $88 million of intangible assets, which primarily consisted of customer relationships.

4. Goodwill

The changes in goodwill by reportable segment are as follows:


	Corporate		Small Business		Public		Other(1)		Consolidated
Balances as of December 31, 2020(2)	$	1,123.6	$	185.9	$	929.6	$	356.8	$	2,595.9
Amplified IT acquisition(3)	0		0		130.3		0		130.3
Other acquisition adjustments	0.2		0		0		0		0.2
Foreign currency translation	0		0		0		5.5		5.5
Balances as of June 30, 2021(2)	$	1,123.8	$	185.9	$	1,059.9	$	362.3	$	2,731.9

(1)Other is comprised of CDW UK and CDW Canada operating segments.

(2)Goodwill is net of accumulated impairment losses of $1,571 million, $354 million and $28 million related to the Corporate, Public and Other segments, respectively, recorded in 2008 and 2009.

(3)For additional information regarding the Company's acquisition, see Note 3 (Acquisition).

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3. CDW CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (dollars in millions, except per share data, unless otherwise noted) 5. Inventory Financing Agreements	~~Inventory Financing Agreements~~

The Company has entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions, as described below. These amounts are classified separately as Accounts payable-inventory financing on the Consolidated Balance Sheets. The Company does not incur any interest expense associated with these agreements as balances are paid when they are due.

~~CDW CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars in millions, except per share data, unless otherwise noted)~~

Amounts included in Accounts payable-inventory financing are as follows:


	June 30, 2021		December 31, 2020
Revolving Loan inventory financing agreement(1)	$	327.7	$	470.1
Other inventory financing agreements	47.5		54.5
Accounts payable-inventory financing	$	375.2	$	524.6

June 30, 2020 December 31, 2019
Revolving Loan inventory financing agreement⁽¹⁾
$ 444.8
$ 379.1
Other inventory financing agreements 34.3
50.8
Accounts payable-inventory financing $ 479.1
$ 429.9

(1)The senior secured asset-based revolving credit facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.


~~(1)~~	The senior secured asset-based revolving credit facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.


4.	~~Contract Liabilities and Performance Obligations~~

6. Contract Liabilities and Performance Obligations

The Company's contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services. The Company's contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. As of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, the contract liability balance was ~~$275~~$326 million and ~~$252~~$244 million, respectively. During the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, the Company recognized revenue of ~~$210~~$147 million and ~~$113~~$210 million, respectively, related to its contract liabilities.

A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The following table represents the total transaction price for the remaining performance obligations as of June 30, ~~2020~~2021 related to noncancelable contracts longer than 12 months in duration that is expected to be recognized over future periods.

Within 1 Year Years 1-2 Years 2-3 Thereafter
Remaining performance obligations $ 37.2
$ 19.7
$ 7.3
$ 0.2


	Within 1 Year		Years 1-2		Years 2-3		Thereafter
Remaining performance obligations	$	36.8	$	22.0	$	7.7	$	1.3


5.	~~Financial Instruments~~

The Company's indebtedness creates interest rate risk on its variable-rate debt. The Company uses derivative financial instruments to manage its exposure to interest rate risk. The Company does not hold or issue derivative financial instruments for trading or speculative purposes.

~~The Company has interest rate cap agreements that entitle it to payments from the counterparty~~

Table of the amount, if any, by which three-month London Interbank Offered Rate ("LIBOR") exceeds the strike rates of the caps during the agreement period in exchange for an upfront premium. During 2020, the Company did not enter into interest rate cap agreements.

As of June 30, 2020 and December 31, 2019, the Company had interest rate cap agreements with a fair value of less than $1 million which were classified within Other assets on the Consolidated Balance Sheets. The total notional value of the interest rate cap agreements was $2.8 billion as of June 30, 2020 and December 31, 2019 of which $1.4 billion mature at December 31, 2020 and December 31, 2022, respectively.

The fair values of the Company's interest rate cap agreements are classified as Level 2 in the fair value hierarchy. The valuation of the interest rate cap agreements is derived by using a discounted cash flow analysis on the expected cash receipts that would occur if variable interest rates rise above the strike rates of the caps. This analysis reflects the contractual terms of the interest rate cap agreements, including the period to maturity, and uses observable market-based inputs, including LIBOR curves and implied volatilities. The Company also incorporates insignificant credit valuation adjustments to appropriately reflect the respective counterparty's nonperformance risk in the fair value measurements. The counterparty credit spreads are based on publicly available credit information obtained from a third-party credit data provider. For additional information, see Note 6 (Long-Term Debt).Contents

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

The interest rate cap agreements are designated as cash flow hedges. The changes in the fair value of derivatives that qualify as cash flow hedges are recorded in Accumulated other comprehensive loss ("AOCL") and are subsequently reclassified into Interest expense in the period when the hedged forecasted transaction affects earnings. The following tables provide the activity in AOCL, net of tax, for the three and six months ended June 30, 2020 and 2019.

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Change in fair value recorded to AOCL $ —
$ (4.1 ) $ (0.2 ) $ (12.4 )
Reclassification from AOCL to Interest expense, net $ 1.4
$ 0.2
$ 2.5
$ 1.7

7. Long-Term Debt

~~The Company expects to reclassify $6 million from AOCL to earnings within Interest expense, net during the next 12 months.~~


		As of June 30, 2021				As of December 31, 2020
	Maturity Date	Interest Rate		Amount		Interest Rate		Amount
Credit Facility

Senior secured asset-based revolving credit facility	March 2026	1.375	%	$	56.7	0	%	$	0


Term Loans
CDW UK term loan(1)	August 2021	0	%	0		1.445	%	56.0
Senior secured term loan facility	October 2026	1.860	%	1,415.9		1.900	%	1,423.4
Total term loans				1,415.9				1,479.4

Unsecured Senior Notes
Senior notes due 2024	December 2024	5.500	%	575.0		5.500	%	575.0
Senior notes due 2025	May 2025	4.125	%	600.0		4.125	%	600.0
Senior notes due 2028	April 2028	4.250	%	600.0		4.250	%	600.0
Senior notes due 2029	February 2029	3.250	%	700.0		3.250	%	700.0
Total unsecured senior notes				2,475.0				2,475.0

Other long-term obligations				6.3				0
Unamortized deferred financing fees				(24.9)				(27.2)
Current maturities of long-term debt				(19.8)				(70.9)
Total long-term debt				$	3,909.2			$	3,856.3

(1)Denominated in British pounds.


6.	~~Long-Term Debt~~

As of June 30, 2020 As of December 31, 2019
Maturity Date Interest Rate Amount Interest Rate Amount
Credit Facilities
CDW UK revolving credit facility⁽¹⁾
July 2021 — % $ —
— % $ —
Senior secured asset-based revolving credit facility March 2022 1.438 % 50.0
5.000 % 51.0
Total credit facilities 50.0
51.0

Term Loans
CDW UK term loan⁽¹⁾
August 2021 1.622 % 57.0
2.190 % 61.0
Senior secured term loan facility October 2026 1.930 % 1,430.8
3.550 % 1,438.3
Total term loans 1,487.8
1,499.3

Unsecured Senior Notes
Senior notes due 2024 December 2024 5.500 % 575.0
5.500 % 575.0
Senior notes due 2025 May 2025 4.125 % 600.0
— % —
Senior notes due 2025 September 2025 5.000 % 600.0
5.000 % 600.0
Senior notes due 2028 April 2028 4.250 % 600.0
4.250 % 600.0
Total unsecured senior notes 2,375.0
1,775.0

Other long-term obligations 12.7
12.6
Unamortized deferred financing fees (26.0 ) (20.6 )
Current maturities of long-term debt (37.9 ) (34.1 )
Total long-term debt $ 3,861.6
$ 3,283.2


~~(1)~~	~~British pound-denominated debt facilities.~~

As of June 30, ~~2020,~~2021, the Company is in compliance with the covenants under the various credit agreements and indentures.

Credit ~~Facilities~~Facility

The Company has a variable rate CDW UK revolving credit facility that is denominated in British pounds. As of June 30, 2020, the Company could have borrowed up to an additional £50 million ($62 million) under the CDW UK revolving credit facility.

~~The Company also~~ has a variable rate senior secured asset-based revolving credit facility (the "Revolving Loan") that is denominated in US dollars. The Revolving Loan is used by the Company for borrowings, issuances of letters of credit

~~CDW CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars in millions, except per share data, unless otherwise noted)~~

and floorplan financing. As of June 30, ~~2020,~~2021, the Revolving Loan had less than $1 million of undrawn letters of credit, ~~$432~~$315 million reserved for the floorplan sub-facility and a borrowing base of ~~$2.2~~$2.3 billion, which is based on the amount of eligible inventory and accounts receivable balances as of May 31, ~~2020.~~2021. As of June 30, ~~2020,~~2021, the Company could have borrowed up to an additional ~~$1.0~~$1.2 billion under the Revolving Loan.

The Revolving Loan is collateralized by a first priority interest in inventory (excluding inventory to the extent collateralized under the inventory financing arrangements as described in Note 35 (Inventory Financing Agreements)), deposits and accounts receivable, and by a second priority interest in substantially all other US assets.

Term ~~Loans~~

The CDW UK term loan has a variable interest rate. The Company is required to make annual principal installments of £5 million ($6 million), with the remaining principal amount due at the maturity date.

The CDW UK term loan agreement imposes restrictions on CDW UK's ability to transfer funds to the Company through the payment of dividends, repayment of intercompany loans, advances or subordinated debt that require, among other things, the maintenance of a minimum net leverage ratio. As of June 30, 2020, the amount of restricted payment capacity under the CDW UK term loan was £160 million ($198 million).Loan

The senior secured term loan facility (the "Term Loan") has a variable interest rate, which has effectively been capped through the use of interest rate ~~caps (see Note 5 (Financial Instruments)).~~caps. The interest ~~rate~~rates disclosed in the table above ~~represents~~represent the variable interest rates in effect ~~for~~on June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. The Company is required to pay quarterly principal installments of $4 million with the remaining principal amount due at the maturity date. As of June 30, ~~2020,~~2021, the amount of CDW's restricted payment capacity under the Term Loan was ~~$2.0~~$2.5 billion.

The Term Loan is collateralized by a second priority interest in substantially all inventory (excluding inventory to the extent collateralized under the inventory financing arrangements as described in Note 35 (Inventory Financing Agreements), deposits and accounts receivable, and by a first priority interest in substantially all other US assets.

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CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

Unsecured Senior Notes

The ~~senior notes~~Senior Notes have fixed interest rates, for which interest is paid semi-annually.

Issuances and Extinguishments

~~On April 21, 2020,~~During the first quarter of 2021, the Company amended, extended and increased the size of the Revolving Loan. The amended Revolving Loan (i) authorized CDW ~~completed~~UK to draw from the ~~issuance~~facility, (ii) increased the capacity from $1.45 billion to $1.60 billion, of ~~$600~~which $150 million ~~aggregate~~may be borrowed by CDW UK, and (iii) extended the maturity date from March 31, 2022 to March 26, 2026. Due to the addition of CDW UK as a borrower on the amended Revolving Loan, the variable rate CDW UK revolving credit facility was closed. The Company may borrow amounts denominated in US dollars, British pounds or Euros. Additionally, the Company paid off the remaining principal amount ~~of 4.125% Senior Notes due 2025 at par. The 2025 Senior Notes will mature~~ on ~~May 1, 2025 and bear interest of 4.125% per annum, payable semi-annually~~the variable rate CDW UK term loan by drawing on ~~May 1 and November 1 of each year, commencing November 1, 2020.~~the amended Revolving Loan.

Fair Value

The fair values of the Senior Notes were estimated using quoted market prices for identical liabilities that are traded in over-the-counter secondary markets that are not considered active. The fair value of the Term Loan was estimated using dealer quotes for identical liabilities in markets that are not considered active. The Senior Notes and Term Loan ~~and CDW UK term loan are~~were classified as Level 2 within the fair value hierarchy. The carrying value of the Revolving Loan ~~and CDW UK revolving credit facility approximate~~approximates its fair value if there are outstanding borrowings.

The approximate fair values and related carrying values of the Company's long-term debt, including current maturities and excluding unamortized discount and unamortized deferred financing fees, ~~are~~were as follows:

June 30, 2020 December 31, 2019
Fair value $ 3,965.2
$ 3,447.5
Carrying value 3,925.5
3,337.9


	June 30, 2021		December 31, 2020
Fair value	$	4,056.3	$	4,077.9
Carrying value	3,953.9		3,954.4


7.	~~Income Taxes~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted into law. The primary impact to the Company’s financial statements as a result of the CARES Act was the deferral of US corporate income tax payments from the second quarter of 2020 to July 2020, as well as the deferral of employer related payroll tax payments from the second, third and fourth quarters of 2020 with 50% to be paid in the fourth quarter of 2021 and the remaining 50% to be paid in the fourth quarter of 2022.

~~CDW CORPORATION AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars in millions, except per share data, unless otherwise noted)~~

8. Income Taxes

Income tax expense was ~~$56~~$97 million and ~~$65~~$56 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The effective tax rate, expressed by calculating the income tax expense as a percentage of Income before income taxes, was ~~22.9%~~26.2% and ~~24.7%~~22.9% for the three months ended June 30, ~~2020~~2021 and 2019, respectively. The effective tax rates differed from the US statutory rate of 21.0% for both periods primarily due to state and local income taxes, partially offset by excess tax benefits on equity-based compensation.

~~Income tax expense was $100 million and $103 million for the six months ended June 30,~~ 2020, ~~and 2019,~~ respectively. The effective tax rate ~~expressed by calculating the income tax expense as a percentage of Income before income taxes, was 21.9%~~ for the ~~six~~three months ended June 30, ~~2020 and~~2021 differed from the US federal statutory rate of 21.0% ~~with~~primarily due to state and local income taxes ~~being largely~~and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess tax benefits on equity-based compensation. The effective tax rate for the ~~six~~three months ended June 30, ~~2019 was 22.8% and~~2020 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes, partially offset by excess tax benefits on equity-based ~~compensation~~compensation.

Income tax expense was $153 million and $100 million for the six months ended June 30, 2021 and 2020, respectively. The effective tax rate, expressed by calculating the income tax expense as a percentage of Income before income taxes, was 23.2% and 21.9% for the six months ended June 30, 2021 and 2020, respectively. The effective tax rate for the six months ended June 30, 2021 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and a discrete deferred tax ~~benefit related~~expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess tax benefits on equity-based compensation. The effective tax rate for the six months ended June 30, 2020 differed from the US federal statutory rate of 21.0% primarily due to ~~CDW Canada’s acquisition of Scalar Decisions Inc.~~state and local income taxes, partially offset by excess tax benefits on equity-based compensation.


8.	~~Earnings Per Share~~

9. Earnings Per Share

The numerator for both basic and diluted earnings per share is Net income. The denominator for basic earnings per share is the weighted-average shares outstanding during the period.

Table of Contents

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

A reconciliation of basic weighted-average shares outstanding to diluted weighted-average shares outstanding is as follows:


	Three Months Ended June 30,		Six Months Ended June 30,
	2021	2020	2021	2020
Basic weighted-average shares outstanding	139.8	142.4	140.6	142.5
Effect of dilutive securities(1)	1.9	1.9	1.8	2.1
Diluted weighted-average shares outstanding(2)	141.7	144.3	142.4	144.6

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Basic weighted-average shares outstanding 142.4
145.7
142.5
146.3
Effect of dilutive securities⁽¹⁾
1.9
2.6
2.1
2.4
Diluted weighted-average shares outstanding⁽²⁾
144.3
148.3
144.6
148.7

(1)The dilutive effect of outstanding stock options, restricted stock units, performance share units and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method.


~~(1)~~	The dilutive effect of outstanding stock options, restricted stock units, restricted stock, performance share units and Coworker Stock Purchase Plan units is reflected in the diluted weighted-average shares outstanding using the treasury stock method.

(2)There were fewer than 0.1 million potential common shares excluded from diluted weighted-average shares outstanding for both the three and six months ended June 30, 2021 and 2020 as their inclusion would have had an anti-dilutive effect.


~~(2)~~	There were fewer than 0.1 million potential common shares excluded from diluted weighted-average shares outstanding for both the three and six months ended June 30, 2020 and 2019 as their inclusion would have had an anti-dilutive effect.


9.	~~Commitments and Contingencies~~

10. Commitments and Contingencies

The Company is party to various legal proceedings that arise in the ordinary course of its business, which include commercial, intellectual property, employment, tort and other litigation matters. The Company is also subject to audit by federal, state, international, national, provincial and local authorities, and by various partners, group purchasing organizations and customers, including government agencies, relating to purchases and sales under various contracts. In addition, the Company is subject to indemnification claims under various contracts. From time to time, certain customers of the Company file voluntary petitions for reorganization or liquidation under the US bankruptcy laws or similar laws of the jurisdictions for the Company's business activities outside of the US. In such cases, certain pre-petition payments received by the Company could be considered preference items and subject to return to the bankruptcy administrator.

As of June 30, ~~2020,~~2021, the Company does not believe that there is a reasonable possibility that any material loss exceeding the amounts already recognized for these proceedings and matters, if any, has been incurred. However, the ultimate resolutions of these proceedings and matters are inherently unpredictable. As such, the Company's consolidated financial statements could be adversely affected in any particular period by the unfavorable resolution of one or more of these proceedings or matters.

Table of Contents

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)


~~10.~~	11. Segment Information

The Company has 3 reportable segments: Corporate, which is comprised primarily of US private sector business customers with more than 250 employees, Small Business, which primarily serves US private sector business customers with up to 250 employees, and Public, which is comprised of government agencies and education and healthcare institutions in the US. The Company has 2 other operating segments: CDW UK and CDW Canada, both of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category ("Other"). Headquarters function costs that are not allocated to the segments are included under the heading of "Headquarters" in the tables below.

Information about the Company's segments is as follows:


																				Corporate		Small Business		Public		Other		Headquarters		Total
Three Months Ended June 30, 2021																			Three Months Ended June 30, 2021
Net sales																			Net sales	$	1,983.3	$	482.9	$	2,080.7	$	599.5	$	0	$	5,146.4
Operating income (loss)																			Operating income (loss)	175.2		44.0		153.3		23.7		(26.3)		369.9
Depreciation and amortization expense																			Depreciation and amortization expense	(3.8)		(0.8)		(16.1)		(8.6)		(17.3)		(46.6)
	Corporate			Small Business			Public			Other			Headquarters			Total
Three Months Ended June 30, 2020																			Three Months Ended June 30, 2020
Net sales	$	1,557.5		$	302.1		$	2,022.1		$	484.0		$	—		$	4,365.7		Net sales	$	1,557.5	$	302.1	$	2,022.1	$	484.0	$	0	$	4,365.7
Operating income (loss)	123.0			21.0			159.9			16.5			(37.0		)	283.4			Operating income (loss)	123.0		21.0		159.9		16.5		(37.0)		283.4
Depreciation and amortization expense	(22.1		)	(5.6		)	(69.1		)	(7.9		)	(20.5		)	(125.2		)	Depreciation and amortization expense	(22.1)		(5.6)		(69.1)		(7.9)		(20.5)		(125.2)

Three Months Ended June 30, 2019
Six Months Ended June 30, 2021																			Six Months Ended June 30, 2021
Net sales	$	1,883.9		$	377.4		$	1,840.1		$	528.5		$	—		$	4,629.9		Net sales	$	3,788.9	$	915.6	$	4,002.4	$	1,277.0	$	0	$	9,983.9
Operating income (loss)	157.2			26.6			129.4			19.1			(32.0		)	300.3			Operating income (loss)	336.6		86.8		290.0		51.4		(71.5)		693.3
Depreciation and amortization expense	(21.6		)	(5.6		)	(13.7		)	(7.8		)	(16.3		)	(65.0		)	Depreciation and amortization expense	(7.8)		(1.6)		(29.5)		(17.2)		(35.7)		(91.8)

Six Months Ended June 30, 2020																			Six Months Ended June 30, 2020
Net sales																			Net sales	$	3,468.5	$	693.6	$	3,547.4	$	1,045.4	$	0	$	8,754.9
Operating income (loss)																			Operating income (loss)	250.4		48.3		272.3		31.2		(73.0)		529.2
Depreciation and amortization expense																			Depreciation and amortization expense	(44.4)		(11.4)		(106.8)		(15.9)		(38.1)		(216.6)

Corporate Small Business Public Other Headquarters Total
Six Months Ended June 30, 2020
Net sales $ 3,468.5
$ 693.6
$ 3,547.4
$ 1,045.4
$ —
$ 8,754.9
Operating income (loss) 250.4
48.3
272.3
31.2
(73.0 ) 529.2
Depreciation and amortization expense (44.4 ) (11.4 ) (106.8 ) (15.9 ) (38.1 ) (216.6 )

Six Months Ended June 30, 2019
Net sales $ 3,620.1
$ 733.0
$ 3,170.8
$ 1,063.9
$ —
$ 8,587.8
Operating income (loss) 291.9
51.0
205.5
44.7
(63.9 ) 529.2
Depreciation and amortization expense (43.1 ) (11.2 ) (26.4 ) (15.2 ) (33.4 ) (129.3 )

Table of Contents

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

Geographic Areas and Revenue Mix


	Three Months Ended June 30, 2021
	Corporate		Small Business		Public		Other		Total
Geography(1)
United States	$	1,976.2	$	482.9	$	2,080.7	$	4.7	$	4,544.5
Rest of World	7.1		0		0		594.8		601.9
Total Net sales	1,983.3		482.9		2,080.7		599.5		5,146.4

Major Product and Services
Hardware	1,586.5		416.4		1,763.9		458.8		4,225.6
Software	267.6		49.4		242.5		78.3		637.8
Services	110.9		11.3		70.1		59.4		251.7
Other(2)	18.3		5.8		4.2		3.0		31.3
Total Net sales	1,983.3		482.9		2,080.7		599.5		5,146.4

Sales by Channel
Corporate	1,983.3		0		0		0		1,983.3
Small Business	0		482.9		0		0		482.9
Government	0		0		513.4		0		513.4
Education	0		0		1,112.1		0		1,112.1
Healthcare	0		0		455.2		0		455.2
Other	0		0		0		599.5		599.5
Total Net sales	1,983.3		482.9		2,080.7		599.5		5,146.4

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal	1,789.2		451.6		1,953.5		527.2		4,721.5
Transferred at a point in time where CDW is agent	120.7		25.9		85.0		19.8		251.4
Transferred over time where CDW is principal	73.4		5.4		42.2		52.5		173.5
Total Net sales	$	1,983.3	$	482.9	$	2,080.7	$	599.5	$	5,146.4

(1)Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.

(2)Includes items such as delivery charges to customers.

Three Months Ended June 30, 2020
Corporate Small Business Public Other Total
Geography⁽¹⁾

United States $ 1,542.9
$ 302.1
$ 2,022.1
$ 3.8
$ 3,870.9
Rest of World 14.6
—
—
480.2
494.8
Total Net sales 1,557.5
302.1
2,022.1
484.0
4,365.7

Major Product and Services
Hardware 1,207.5
247.0
1,719.6
364.9
3,539.0
Software 243.2
43.2
227.4
68.6
582.4
Services 92.8
7.1
66.4
48.3
214.6
Other⁽²⁾
14.0
4.8
8.7
2.2
29.7
Total Net sales 1,557.5
302.1
2,022.1
484.0
4,365.7

Sales by Channel
Corporate 1,557.5
—
—
—
1,557.5
Small Business —
302.1
—
—
302.1
Government —
—
719.7
—
719.7
Education —
—
876.8
—
876.8
Healthcare —
—
425.6
—
425.6
Other —
—
—
484.0
484.0
Total Net sales 1,557.5
302.1
2,022.1
484.0
4,365.7

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal 1,387.2
280.7
1,854.2
426.2
3,948.3
Transferred at a point in time where CDW is agent 112.2
18.9
68.3
14.8
214.2
Transferred over time where CDW is principal 58.1
2.5
99.6
43.0
203.2
Total Net sales $ 1,557.5
$ 302.1
$ 2,022.1
$ 484.0
$ 4,365.7

Table of Contents


~~(1)~~	Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.


~~(2)~~	~~Includes items such as delivery charges to customers.~~

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)


	Three Months Ended June 30, 2020
	Corporate		Small Business		Public		Other		Total
Geography(1)
United States	$	1,542.9	$	302.1	$	2,022.1	$	3.8	$	3,870.9
Rest of World	14.6		0		0		480.2		494.8
Total Net sales	1,557.5		302.1		2,022.1		484.0		4,365.7

Major Product and Services(2)
Hardware	1,211.6		247.7		1,724.8		365.1		3,549.2
Software	238.9		42.6		222.5		68.3		572.3
Services	93.1		7.1		66.2		48.4		214.8
Other(3)	13.9		4.7		8.6		2.2		29.4
Total Net sales	1,557.5		302.1		2,022.1		484.0		4,365.7

Sales by Channel
Corporate	1,557.5		0		0		0		1,557.5
Small Business	0		302.1		0		0		302.1
Government	0		0		719.7		0		719.7
Education	0		0		876.8		0		876.8
Healthcare	0		0		425.6		0		425.6
Other	0		0		0		484.0		484.0
Total Net sales	1,557.5		302.1		2,022.1		484.0		4,365.7

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal	1,387.2		280.7		1,854.2		426.2		3,948.3
Transferred at a point in time where CDW is agent	112.2		18.9		68.3		14.8		214.2
Transferred over time where CDW is principal	58.1		2.5		99.6		43.0		203.2
Total Net sales	$	1,557.5	$	302.1	$	2,022.1	$	484.0	$	4,365.7

(2)Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the three months ended June 30, 2021.

(3)Includes items such as delivery charges to customers.

Three Months Ended June 30, 2019
Corporate Small Business Public Other Total
Geography⁽¹⁾

United States $ 1,881.7
$ 377.4
$ 1,840.1
$ 8.9
$ 4,108.1
Rest of World 2.2
—
—
519.6
521.8
Total Net sales 1,883.9
377.4
1,840.1
528.5
4,629.9

Major Product and Services
Hardware 1,497.2
316.0
1,523.5
400.7
3,737.4
Software 269.2
49.1
262.6
69.7
650.6
Services 99.8
7.0
49.2
55.3
211.3
Other⁽²⁾
17.7
5.3
4.8
2.8
30.6
Total Net sales 1,883.9
377.4
1,840.1
528.5
4,629.9

Sales by Channel
Corporate 1,883.9
—
—
—
1,883.9
Small Business —
377.4
—
—
377.4
Government —
—
578.4
—
578.4
Education —
—
773.6
—
773.6
Healthcare —
—
488.1
—
488.1
Other —
—
—
528.5
528.5
Total Net sales 1,883.9
377.4
1,840.1
528.5
4,629.9

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal 1,708.2
355.5
1,725.5
465.0
4,254.2
Transferred at a point in time where CDW is agent 118.7
20.0
65.0
13.5
217.2
Transferred over time where CDW is principal 57.0
1.9
49.6
50.0
158.5
Total Net sales $ 1,883.9
$ 377.4
$ 1,840.1
$ 528.5
$ 4,629.9

Table of Contents


~~(1)~~	Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.


~~(2)~~	~~Includes items such as delivery charges to customers.~~

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)


	Six Months Ended June 30, 2021
	Corporate		Small Business		Public		Other		Total
Geography(1)
United States	$	3,779.7	$	915.6	$	4,002.4	$	9.3	$	8,707.0
Rest of World	9.2		0		0		1,267.7		1,276.9
Total Net sales	3,788.9		915.6		4,002.4		1,277.0		9,983.9

Major Product and Services
Hardware	3,007.3		784.6		3,431.8		971.5		8,195.2
Software	534.6		98.5		433.9		176.3		1,243.3
Services	213.5		21.5		128.0		122.6		485.6
Other(2)	33.5		11.0		8.7		6.6		59.8
Total Net sales	3,788.9		915.6		4,002.4		1,277.0		9,983.9

Sales by Channel
Corporate	3,788.9		0		0		0		3,788.9
Small Business	0		915.6		0		0		915.6
Government	0		0		1,029.5		0		1,029.5
Education	0		0		2,055.4		0		2,055.4
Healthcare	0		0		917.5		0		917.5
Other	0		0		0		1,277.0		1,277.0
Total Net sales	3,788.9		915.6		4,002.4		1,277.0		9,983.9

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal	3,416.9		853.6		3,779.4		1,127.8		9,177.7
Transferred at a point in time where CDW is agent	233.0		52.8		143.1		43.2		472.1
Transferred over time where CDW is principal	139.0		9.2		79.9		106.0		334.1
Total Net sales	$	3,788.9	$	915.6	$	4,002.4	$	1,277.0	$	9,983.9

(2)Includes items such as delivery charges to customers.

Six Months Ended June 30, 2020
Corporate Small Business Public Other Total
Geography⁽¹⁾

United States $ 3,450.7
$ 693.6
$ 3,547.4
$ 10.0
$ 7,701.7
Rest of World 17.8
—
—
1,035.4
1,053.2
Total Net sales 3,468.5
693.6
3,547.4
1,045.4
8,754.9

Major Product and Services
Hardware 2,722.6
571.8
2,930.3
772.4
6,997.1
Software 518.0
96.5
467.1
165.6
1,247.2
Services 192.9
15.3
134.2
102.7
445.1
Other⁽²⁾
35.0
10.0
15.8
4.7
65.5
Total Net sales 3,468.5
693.6
3,547.4
1,045.4
8,754.9

Sales by Channel
Corporate 3,468.5
—
—
—
3,468.5
Small Business —
693.6
—
—
693.6
Government —
—
1,288.2
—
1,288.2
Education —
—
1,353.0
—
1,353.0
Healthcare —
—
906.2
—
906.2
Other —
—
—
1,045.4
1,045.4
Total Net sales 3,468.5
693.6
3,547.4
1,045.4
8,754.9

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal 3,128.2
647.4
3,258.8
925.2
7,959.6
Transferred at a point in time where CDW is agent 219.8
40.9
120.6
28.0
409.3
Transferred over time where CDW is principal 120.5
5.3
168.0
92.2
386.0
Total Net sales $ 3,468.5
$ 693.6
$ 3,547.4
$ 1,045.4
$ 8,754.9

Table of Contents


~~(1)~~	Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.


~~(2)~~	~~Includes items such as delivery charges to customers.~~

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)


	Six Months Ended June 30, 2020
	Corporate		Small Business		Public		Other		Total
Geography(1)
United States	$	3,450.7	$	693.6	$	3,547.4	$	10.0	$	7,701.7
Rest of World	17.8		0		0		1,035.4		1,053.2
Total Net sales	3,468.5		693.6		3,547.4		1,045.4		8,754.9

Major Product and Services(2)
Hardware	2,729.5		572.8		2,940.0		776.3		7,018.6
Software	511.1		95.4		457.6		161.6		1,225.7
Services	193.1		15.4		134.1		102.8		445.4
Other(3)	34.8		10.0		15.7		4.7		65.2
Total Net sales	3,468.5		693.6		3,547.4		1,045.4		8,754.9

Sales by Channel
Corporate	3,468.5		0		0		0		3,468.5
Small Business	0		693.6		0		0		693.6
Government	0		0		1,288.2		0		1,288.2
Education	0		0		1,353.0		0		1,353.0
Healthcare	0		0		906.2		0		906.2
Other	0		0		0		1,045.4		1,045.4
Total Net sales	3,468.5		693.6		3,547.4		1,045.4		8,754.9

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal	3,128.2		647.4		3,258.8		925.2		7,959.6
Transferred at a point in time where CDW is agent	219.8		40.9		120.6		28.0		409.3
Transferred over time where CDW is principal	120.5		5.3		168.0		92.2		386.0
Total Net sales	$	3,468.5	$	693.6	$	3,547.4	$	1,045.4	$	8,754.9

(2)Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the six months ended June 30, 2021.

(3)Includes items such as delivery charges to customers.

Six Months Ended June 30, 2019
Corporate Small Business Public Other Total
Geography⁽¹⁾

United States $ 3,614.6
$ 733.0
$ 3,170.8
$ 17.2
$ 7,535.6
Rest of World 5.5
—
—
1,046.7
1,052.2
Total Net sales 3,620.1
733.0
3,170.8
1,063.9
8,587.8

Major Product and Services
Hardware 2,882.5
611.2
2,587.6
803.8
6,885.1
Software 515.2
97.2
482.8
146.9
1,242.1
Services 187.8
14.0
91.4
107.3
400.5
Other⁽²⁾
34.6
10.6
9.0
5.9
60.1
Total Net sales 3,620.1
733.0
3,170.8
1,063.9
8,587.8

Sales by Channel
Corporate 3,620.1
—
—
—
3,620.1
Small Business —
733.0
—
—
733.0
Government —
—
1,066.8
—
1,066.8
Education —
—
1,174.0
—
1,174.0
Healthcare —
—
930.0
—
930.0
Other —
—
—
1,063.9
1,063.9
Total Net sales 3,620.1
733.0
3,170.8
1,063.9
8,587.8

Timing of Revenue Recognition
Transferred at a point in time where CDW is principal 3,290.0
690.7
2,968.7
939.9
7,889.3
Transferred at a point in time where CDW is agent 222.7
39.8
111.3
26.5
400.3
Transferred over time where CDW is principal 107.4
2.5
90.8
97.5
298.2
Total Net sales $ 3,620.1
$ 733.0
$ 3,170.8
$ 1,063.9
$ 8,587.8

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~~(1)~~	Net sales by geography is generally based on the ship-to address with the exception of certain services that may be performed at, or on behalf of, multiple locations. Such service arrangements are categorized based on the bill-to address.


~~(2)~~	~~Includes items such as delivery charges to customers.~~

CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

The following table presents Net sales by major category for the three and six months ended June 30, ~~2020~~2021 and ~~2019.~~2020. Categories are based upon internal classifications.


	Three Months Ended June 30,
	2021				2020(1)
	Net Sales		Percentage of Total Net Sales		Net Sales		Percentage of Total Net Sales
Notebooks/Mobile Devices	$	1,710.1	33.2	%	$	1,427.7	32.7	%
Netcomm Products	483.8		9.4		471.2		10.8
Desktops	293.7		5.7		254.4		5.8
Video	410.5		8.0		246.8		5.7
Enterprise and Data Storage (Including Drives)	242.5		4.7		200.1		4.6
Other Hardware	1,085.0		21.1		949.0		21.7
Total Hardware	4,225.6		82.1		3,549.2		81.3

Software(2)	637.8		12.4		572.3		13.1
Services(2)	251.7		4.9		214.8		4.9
Other(3)	31.3		0.6		29.4		0.7
Total Net sales	$	5,146.4	100.0	%	$	4,365.7	100.0	%


	Six Months Ended June 30,
	2021				2020(1)
	Net Sales		Percentage of Total Net Sales		Net Sales		Percentage of Total Net Sales
Notebooks/Mobile Devices	$	3,302.8	33.1	%	$	2,538.2	29.0	%
Netcomm Products	938.4		9.4		926.0		10.6
Desktops	558.9		5.6		636.7		7.3
Video	736.5		7.4		560.3		6.4
Enterprise and Data Storage (Including Drives)	502.1		5.0		440.9		5.0
Other Hardware	2,156.5		21.6		1,916.5		21.9
Total Hardware	8,195.2		82.1		7,018.6		80.2

Software(2)	1,243.3		12.5		1,225.7		14.0
Services(2)	485.6		4.9		445.4		5.1
Other(3)	59.8		0.5		65.2		0.7
Total Net sales	$	9,983.9	100.0	%	$	8,754.9	100.0	%

(1)Amounts have been reclassified for changes in individual product classifications to conform to the presentation for the three and six months ended June 30, 2021.

(2)Certain software and services revenues are recorded on a net basis as the Company is acting as an agent in the transaction. As a result, the category percentage of net revenues is not representative of the category percentage of gross profits.

(3)Includes items such as delivery charges to customers.

Three Months Ended June 30,
2020 2019
Net Sales Percentage
of Total Net
Sales Net Sales Percentage
of Total Net
Sales
Notebooks/Mobile Devices $ 1,428.2
32.7 % $ 1,164.6
25.2 %
Netcomm Products 471.9
10.8
562.5
12.1
Desktops 253.6
5.8
418.3
9.0
Video 248.0
5.7
348.1
7.5
Enterprise and Data Storage (Including Drives) 199.9
4.6
273.1
5.9
Other Hardware 937.4
21.5
970.8
21.0
Total Hardware 3,539.0
81.1
3,737.4
80.7

Software⁽¹⁾
582.4
13.3
650.6
14.1
Services⁽¹⁾
214.6
4.9
211.3
4.6
Other⁽²⁾
29.7
0.7
30.6
0.6
Total Net sales $ 4,365.7
100.0 % $ 4,629.9
100.0 %

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CDW CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(dollars in millions, except per share data, unless otherwise noted)

12. Subsequent Event

On July 30, 2021, the Company completed the acquisition of Focal Point Data Risk LLC and certain affiliates ("Focal Point") through a purchase of all issued and outstanding equity interests. Focal Point is a leading US based cybersecurity services firm that brings an expert team with deep capabilities in identity and access management as well as the ability to serve customers across the full cybersecurity landscape. This strategic acquisition expands the Company’s services and capabilities to help customers address risks posed by malicious cyber threats and cyber workforce shortages, while helping customers navigate shifting data protection laws.

Six Months Ended June 30,
2020 2019
Net Sales Percentage
of Total Net
Sales Net Sales Percentage
of Total Net
Sales
Notebooks/Mobile Devices $ 2,539.3
29.0 % $ 2,080.6
24.2 %
Netcomm Products 928.1
10.6
1,073.7
12.5
Desktops 635.6
7.3
715.5
8.3
Video 561.8
6.4
619.2
7.2
Enterprise and Data Storage (Including Drives) 440.3
5.0
566.2
6.6
Other Hardware 1,892.0
21.6
1,829.9
21.3
Total Hardware 6,997.1
79.9
6,885.1
80.1

Software⁽¹⁾
1,247.2
14.2
1,242.1
14.5
Services⁽¹⁾
445.1
5.1
400.5
4.7
Other⁽²⁾
65.5
0.8
60.1
0.7
Total Net sales $ 8,754.9

100.0 %
$ 8,587.8

100.0 %

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~~(1)~~	Certain software and services revenues are recorded on a net basis for accounting purposes. As a result, the category percentage of net revenues is not representative of the category percentage of gross profits.


~~(2)~~	~~Includes items such as delivery charges to customers.~~

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

Unless otherwise indicated or the context otherwise requires, as used in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," the terms "we," "us," "the Company," "our," "CDW" and similar terms refer to CDW Corporation and its subsidiaries. "Management's Discussion and Analysis of Financial Condition and Results of Operations" should be read in conjunction with the unaudited interim Consolidated Financial Statements and the related notes included elsewhere in this report and with the audited Consolidated Financial Statements and the related notes included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. This discussion contains forward-looking statements that are subject to numerous risks and uncertainties. Actual results may differ materially from those contained in any forward-looking statements. See "Forward-Looking Statements" at the end of this discussion.

Overview

CDW Corporation, a Fortune 500 company and member of the S&P 500 Index, is a ~~market-leading~~leading multi-brand provider of ~~integrated~~ information technology ("IT") solutions to small, medium and large business, government, education and healthcare customers in the US, the UK and Canada. Our broad array of offerings ranges from discrete hardware and software products to integrated IT solutions ~~such as mobility, security,~~and services that include on-premise, hybrid and cloud capabilities across data center ~~optimization, cloud computing, virtualization~~ and ~~collaboration.~~networking, digital workspace, security and virtualization.

We are vendor, technology ~~"agnostic,"~~and consumption model "agnostic", with a solutions portfolio including more than 100,000 products and services from more than 1,000 leading and emerging brands. Our solutions are delivered in physical, virtual and cloud-based environments through approximately ~~6,800~~7,000 customer-facing coworkers, including sellers, highly-skilled technology specialists and advanced service delivery engineers. We are a leading sales channel partner for many original equipment manufacturers ("OEMs"), software publishers and cloud providers (collectively, our "vendor partners"), whose products we sell or include in the solutions we offer. We provide our vendor partners with a cost-effective way to reach customers and deliver a consistent brand experience through our established end-market coverage, technical expertise and extensive customer access.

We have three reportable segments, Corporate, Small Business and Public. Our Corporate segment primarily serves US private sector business customers with more than 250 employees. Our Small Business segment primarily serves US private sector business customers with up to 250 employees. Our Public segment is comprised of government agencies and education and healthcare institutions in the US. We also have two other operating segments: CDW UK and CDW Canada, each of which do not meet the reportable segment quantitative thresholds and, accordingly, are included in an all other category ("Other").

We may sell all or only select products that our vendor partners offer. Each vendor partner agreement provides for specific terms and conditions, which may include one or more of the following: product return privileges, price protection policies, purchase discounts and vendor incentive programs, such as purchase or sales rebates and cooperative advertising reimbursements. We also resell software for major software publishers. Our agreements with software publishers allow the end-user customer to acquire software or licensed products and services. In addition to helping our customers determine the best software solutions for their needs, we help them manage their software agreements, including warranties and renewals. A significant portion of our advertising and marketing expenses are reimbursed through cooperative advertising programs with our vendor partners. These programs are at the discretion of our vendor partners and are typically tied to sales or other commitments to be met by us within a specified period of time.

Trends and Key Factors Affecting our Financial Performance

We believe the following key factors may have a meaningful impact on our business performance, influencing our ability to generate sales and achieve our targeted financial and operating results:

•General economic conditions are a key factor affecting our results as they impact our customers' willingness to spend on information technology. This is particularly the case for our Corporate and Small Business customers, as their purchases tend to reflect confidence in their business prospects, which are driven by their discrete perceptions of business and general economic conditions. Additionally, changes in trade policy and product constraints from suppliers could have an adverse impact on our business.

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•The global spread of the novel coronavirus ~~(“COVID-19”~~("COVID-19") pandemic continues to create ~~significant~~ macroeconomic uncertainty, volatility and ~~disruption.~~disruption, including supply constraints. The ~~extent~~supply constraints are being caused primarily by component availability, resulting in extended lead times and unpredictability. In 2021, customer top priorities have been digital transformation, security, hybrid and cloud solutions, client devices, and preparing for workers to which the COVID-19 pandemic continues to impact our business, results of operations, cash flows, financial condition and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limitedreturn to the ~~duration, severity~~office and ~~further spread of~~enhancing remote enablement capabilities as hybrid environments become the ~~outbreak,~~ future ~~resurgences and reimplementation of closures, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.~~work model. We have ~~mobilized our resources to help ensure the well-being and safety of our coworkers, business continuity, a strong capital position and adequate liquidity. Our efforts have included:~~

We continue to be focused on the well-being and safety of our coworkers, leveraging standing crisis management protocols and following guidelines from public health authorities and state and local governments. During the first quarter of 2020, we implemented precautions to help keep our coworkers healthy and safe, including activating a cross-functional response team led by senior leadership, moving to remote work for our office coworkers, and implementing safety protocols at our distribution centers, including social distancing measures, segmented shifts, additional personal protective equipment, enhanced facility cleanings, and temperature screening for anyone entering the facilities. All distribution and configuration centers continue to be operational.

Remote enablement, operations continuity, and security are customer focus areas to manage remote environments at scale and to prepare to be remote longer. Customers also focused on initiatives to reduce costs, optimize resources, and leverage technology for better customer and employee experiences through digital transformation. We are orchestratingorchestrated solutions by leveraging client devices, accessories, collaboration tools, security, software and hybrid and cloud offerings to help customers build these capabilities and achieve their objectives.

~~We have adjusted our marketing and events from in-person to virtual to allow our customers to continue to interact and learn from our technical experts.~~

We increased our provision for credit losses during the six months ended June 30, 2020 as a result of the expected economic impact of COVID-19. We continue to monitor cash collections and credit limits of our customers to manage the risk of uncollectible receivables.

We continue to closely monitor our cost structure relative to the overall demand environment and have taken measures to enhance liquidity, including completing a $600 million debt issuance in April 2020, suspending share repurchases, and implementing cost savings initiatives.

•Changes in spending policies, budget priorities and funding levels, including current and future stimulus packages, are a key ~~factor~~factors influencing the purchasing levels of ~~government, healthcare~~Government, Healthcare and ~~education~~Education customers. ~~With~~As schools prepare for students to return this fall, Education customers have prioritized investments towards equity and access for all students and enhancing the ~~current~~in-classroom experience. In addition, Healthcare customers resumed projects that were paused during the pandemic as budget certainty improved as more patients returned to elective procedures. As the duration and ongoing economic impacts of the COVID-19 pandemic remain uncertain, current and future budget priorities and funding levels for ~~these~~Government, Healthcare and Education customers ~~have been and~~ may ~~continue to~~ be adversely affected.

•Technology trends drive customer purchasing behaviors in the market. Current technology trends are focused on delivering greater flexibility and efficiency, as well as designing IT securely. These trends are driving customer adoption of solutions such as those delivered via cloud, software defined architectures and hybrid on-premise and off-premise combinations, as well as the evolution of the IT consumption model to more "as a service" offerings, including Device as a Service and managed services. Technology trends could also change as customers consider the impact of the COVID-19 pandemic on their operations.

There continues to be substantial uncertainty regarding the impact of the UK's exit from the European Union ("EU") (referred to as "Brexit"), with the UK/EU future trade deal still being negotiated. Potential adverse consequences of Brexit such as global market uncertainty, volatility in currency exchange rates, greater restrictions on imports and exports between UK and EU countries and increased regulatory complexities could have a negative impact on our business, financial condition and results of operations. Prior to the impact of COVID-19, CDW UK had not experienced significant changes in the buying behavior of its customers. We have established a presence in the Netherlands to support CDW UK's broader growth opportunities in the EU and to help address future developments, as needed, for Brexit.

Key Business Metrics

We monitor a number of financial and non-financial measures and ratios on a regular basis in order to track the progress of our business and make adjustments as necessary. We believe that the most important of these measures and ratios include average daily sales, gross margin, operating margin, Net income, Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income, Net sales growth on a constant currency basis, Net income per diluted share, Non-GAAP net income per diluted share, free cash flow, return on working capital, Cash and cash equivalents, net working capital, cash conversion cycle, debt levels including available credit, sales per coworker and coworker turnover. These

measures and ratios are compared to standards or objectives set by management, so that actions can be taken, as necessary, in order to achieve the standards and objectives.

In this report, we discuss Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis, which are non-GAAP financial measures.

We believe these measures provide analysts, investors and management with helpful information regarding the underlying operating performance of our business, as they remove the impact of items that management believes are not reflective of underlying operating performance. Management uses these measures to evaluate period-over-period performance as management believes they provide a more comparable measure of the underlying business. For the definitions of Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis and reconciliations to the most directly comparable US GAAP measure, see "Results of Operations - Non-GAAP Financial Measure Reconciliations."

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Second Quarter Overview

The results of certain business metrics are as follows:

Three Months Ended June 30,
(dollars in millions) 2020 2019
Net sales $ 4,365.7
$ 4,629.9
Gross profit 747.2
773.8
Operating income 283.4
300.3
Net income 189.1
196.6
Non-GAAP operating income 338.2
358.4
Non-GAAP net income 225.3
237.7
Average daily sales⁽¹⁾
68.2
72.3
Net debt⁽²⁾
2,941.1
3,084.4
Cash conversion cycle (in days)⁽³⁾
25
16


~~(1)~~	~~There were 64 selling days for both the three months ended June 30, 2020 and 2019.~~


~~(2)~~	~~Defined as Total debt minus Cash and cash equivalents.~~


~~(3)~~	Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.


	Three Months Ended June 30,
(dollars in millions)	2021		2020
Net sales	$	5,146.4	$	4,365.7
Gross profit	882.8		747.2
Operating income	369.9		283.4
Net income	274.1		189.1
Non-GAAP operating income	418.1		338.2
Non-GAAP net income	286.1		225.3
Average daily sales(1)	80.4		68.2
Net debt(2)	3,427.8		2,941.1
Cash conversion cycle (in days)(3)	21		25

(1) There were 64 selling days for both the three months ended June 30, 2021 and 2020.

(2) Defined as Total debt minus Cash and cash equivalents.

(3) Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.

Results of Operations

Three Months Ended June 30, ~~2020~~2021 Compared to Three Months Ended June 30, ~~2019~~2020

Results of operations, in dollars and as a percentage of Net sales are as follows:


	Three Months Ended June 30,
	2021				2020
	Dollars in Millions		Percentage of Net Sales		Dollars in Millions		Percentage of Net Sales
Net sales	$	5,146.4	100.0	%	$	4,365.7	100.0	%
Cost of sales	4,263.6		82.8		3,618.5		82.9
Gross profit	882.8		17.2		747.2		17.1
Selling and administrative expenses	512.9		10.0		463.8		10.6
Operating income	369.9		7.2		283.4		6.5
Interest expense, net	(35.5)		(0.7)		(39.7)		(0.9)
Other income, net	36.8		0.7		1.7		—
Income before income taxes	371.2		7.2		245.4		5.6
Income tax expense	(97.1)		(1.9)		(56.3)		(1.3)
Net income	$	274.1	5.3	%	$	189.1	4.3	%

Three Months Ended June 30,
2020 2019

Dollars in
Millions

Percentage of
Net Sales

Dollars in
Millions

Percentage of
Net Sales
Net sales $ 4,365.7
100.0 % $ 4,629.9
100.0 %
Cost of sales 3,618.5
82.9
3,856.1
83.3
Gross profit 747.2
17.1
773.8
16.7
Selling and administrative expenses 463.8
10.6
473.5
10.2
Operating income 283.4
6.5
300.3
6.5
Interest expense, net (39.7 ) (0.9 ) (40.5 ) (0.9 )
Other income, net 1.7
—
1.4
—
Income before income taxes 245.4
5.6
261.2
5.6
Income tax expense (56.3 ) (1.3 ) (64.6 ) (1.4 )
Net income $ 189.1
4.3 % $ 196.6
4.2 %

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Net sales

Net sales by segment, in dollars and as a percentage of total Net sales, and the year-over-year dollar and percentage change in Net sales are as follows:


	Three Months Ended June 30,
	2021				2020
(dollars in millions)	Net Sales		Percentage of Total Net Sales		Net Sales		Percentage of Total Net Sales		Dollar Change		Percent Change(1)
Corporate	$	1,983.3	38.5	%	$	1,557.5	35.7	%	$	425.8	27.3	%

Small Business	482.9		9.4		302.1		6.9		180.8		59.8

Public:
Government	513.4		10.0		719.7		16.5		(206.3)		(28.7)
Education	1,112.1		21.6		876.8		20.1		235.3		26.8
Healthcare	455.2		8.8		425.6		9.7		29.6		7.0
Total Public	2,080.7		40.4		2,022.1		46.3		58.6		2.9

Other	599.5		11.7		484.0		11.1		115.5		23.8

Total Net sales	$	5,146.4	100.0	%	$	4,365.7	100.0	%	$	780.7	17.9	%

Three Months Ended June 30,
2020 2019
(dollars in millions) Net Sales
Percentage
of Total Net Sales
Net Sales
Percentage
of Total Net Sales

Dollar
Change

Percent
Change
Corporate $ 1,557.5
35.7 % $ 1,883.9
40.7 % $ (326.4 ) (17.3 )%

Small Business 302.1
6.9
377.4
8.2
(75.3 ) (19.9 )

Public:
Government 719.7
16.5
578.4
12.5
141.3
24.4
Education 876.8
20.1
773.6
16.7
103.2
13.3
Healthcare 425.6
9.7
488.1
10.5
(62.5 ) (12.8 )
Total Public 2,022.1
46.3
1,840.1
39.7
182.0
9.9

Other 484.0
11.1
528.5
11.4
(44.5 ) (8.4 )

Total Net sales $ 4,365.7
100.0 % $ 4,629.9
100.0 % $ (264.2 ) (5.7 )%
(1)There were 64 selling days for both the three months ended June 30, 2021 and 2020.


~~(1)~~	~~There were 64 selling days for both the three months ended June 30, 2020 and 2019.~~

Total Net sales for the three months ended June 30, ~~2020 decreased $264~~2021 increased $781 million, or ~~5.7%~~17.9%, to ~~$4,366~~$5,146 million, compared to the three months ended June 30, ~~2019.~~2020. Excluding the impact of foreign currency fluctuations, constant currency Net sales ~~decreased 5.3%~~growth was 16.3%. Net sales growth was primarily driven by Corporate, Education and Small Business customers. Our Corporate and Small Business customers prepared for returning to the office and optimizing hybrid work environment capabilities, while Education customers prioritized equity and access to learning and enhancing the in-classroom experience. For additional information, see Note 11 (Segment Information) to the accompanying Consolidated Financial Statements and "Non-GAAP Financial Measure Reconciliations" below regarding constant currency Net sales growth.

For the three months ended June 30, 2020, Net sales decreased across all major hardware categories, except for notebooks/mobile devices, compared to the three months ended June 30, 2019, due to the impact of the COVID-19 pandemic on customer demand. For additional information, see Note 10 (Segment Information) to the accompanying Consolidated Financial Statements.

Corporate segment Net sales for the three months ended June 30, ~~2020 decreased $326~~2021 increased $426 million, or ~~17.3%~~27.3%, compared to the three months ended June 30, ~~2019 driven by decreases across all major hardware categories~~2020. Expectations that a hybrid environment will become the future work model resulted in increased demand for notebooks/mobile devices, video and ~~software due to the impact of the COVID-19 pandemic on customer demand.~~accessories. Additionally, Corporate customers resumed infrastructure projects, driving growth in servers, enterprise storage and software.

Small Business segment Net sales for the three months ended June 30, ~~2020 decreased $75~~2021 increased $181 million, or ~~19.9%~~59.8%, compared to the three months ended June 30, ~~2019~~2020. Customers continued to focus on productivity and mobility as Net sales growth was driven by ~~decreases across all major hardware categories~~notebooks/mobile devices and ~~software due to the impact of the COVID-19 pandemic on customer demand.~~increased demand for video.

Public segment Net sales for the three months ended June 30, ~~2020~~2021 increased ~~$182~~$59 million, or ~~9.9%~~2.9%, compared to the three months ended June 30, ~~2019.~~2020. Net sales to Education customers increased 26.8% primarily driven by integrated solutions including notebooks/mobile devices, video, accessories and services. Schools have prioritized equity and access to learning and are investing in the interactive classroom experience to prepare for students returning to in-person learning in the fall. Net sales to Healthcare customers increased 7.0% primarily due to desktops and video. Healthcare customers saw patients returning for elective procedures which increased confidence in budgets, enabling delayed projects to restart. Net sales to Government customers ~~increased 24.4%~~decreased 28.7% primarily driven by notebooks/mobile ~~devices. Other~~devices and desktops, and the completion of the Census project, comprised of other hardware, including accessories and smartphones, and services also contributed to the increase as we continued to deliver on the Census project. Net sales to Education customers increased 13.3% primarily driven by notebooks/mobile devices, partially offset by video, as schools become more enabled for remote learning. Net sales to Healthcare customers decreased 12.8% primarily driven by desktops as hospitals delayed refresh projects.services.

Net sales in Other, which is comprised of results from our UK and Canadian operations, for the three months ended June 30, ~~2020 decreased $45~~2021 increased $116 million, or ~~8.4%~~23.8%, compared to the three months ended June 30, ~~2019.~~2020. In local currency, Canada Net sales ~~for Canadian operations decreased across most major hardware categories.~~increased as a result of increased customer confidence and higher vaccination rates while UK Net sales ~~for~~decreased due to a slower economic recovery. Customers in the UK ~~operations increased~~and Canada continued to focus on productivity, mobility and security as Net sales growth was driven primarily ~~driven~~ by notebooks/mobile ~~devices.~~devices, video and other hardware, including accessories. The impact of foreign currency exchange ~~further decreased~~increased Other Net sales by ~~approximately 320 basis points~~13.9%, primarily due to the ~~unfavorable impact resulting from~~favorable translation of the Canadian dollar and British pound ~~and Canadian dollar~~ to the US ~~dollar translations.~~dollar.

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Gross profit

Gross profit ~~decreased $27~~increased $136 million, or ~~3.4%~~18.2%, to $883 million for the three months ended June 30, 2021, compared to $747 million for the three months ended June 30, ~~2020, compared to $774 million for the three months ended June 30, 2019.~~2020. As a percentage of Net sales, Gross profit margin increased 4010 basis points to ~~17.1%~~17.2% for the three months ended June 30, ~~2020.~~2021. The increase in Gross profit margin was ~~positively impacted~~primarily driven by ~~product margin and by~~an increase in the mix of ~~netted down revenues that are booked~~ net ~~of cost of goods sold,~~service contract revenue, primarily ~~software~~Software as a ~~service.~~Service, and increased Net sales and margins on professional services, partially offset by overlapping higher margin configuration services in the prior year.

Selling and administrative expenses

Selling and administrative expenses ~~decreased $10~~increased $49 million, or ~~2.1%~~10.6%, to $513 million for the three months ended June 30, 2021, compared to $464 million for the three months ended June 30, ~~2020, compared to $474 million for the three months ended June 30, 2019.~~2020. The ~~decrease~~increase was primarily driven by ~~lower~~higher sales payroll expenses consistent with ~~lower~~higher Gross profit, ~~reduced~~higher coworker count and higher performance-based compensation ~~and cost saving measures, including decreased travel and entertainment, and ongoing productivity and efficiency efforts. These reductions were~~consistent with higher attainment against goals, partially offset by ~~COVID-19 related costs.~~lower intangible asset amortization. Total coworker count was ~~10,048,~~10,666, up ~~265~~618 from ~~9,783~~10,048 at June 30, ~~2019.~~2020 primarily due to an increase in new hires during 2021 and customer-facing coworkers as a result of our recent acquisitions.

As a percentage of total Net sales, Selling and administrative expenses ~~increased 40~~decreased 60 basis points to ~~10.6%~~10.0% during the three months ended June 30, ~~2020,~~2021, compared to ~~10.2%~~10.6% in the three months ended June 30, ~~2019~~2020 primarily due to ~~COVID-19 costs and higher payroll expense, primarily driven by higher coworker count,~~lower intangible asset amortization, partially offset by ~~lower performance-based compensation.~~higher payroll expenses.

Operating income

Operating income by segment, in dollars and as a percentage of Net sales, and the year-over-year percentage change are as follows:


	Three Months Ended June 30,													Three Months Ended June 30,
	2020					2019								2021				2020
	Dollars in Millions			Operating Margin		Dollars in Millions			Operating Margin		Percent Change in Operating Income			Dollars in Millions		Operating Margin		Dollars in Millions		Operating Margin		Percent Change in Operating Income
Segments:⁽¹⁾													Segments:(1)
Corporate	$	123.0		7.9	%	$	157.2		8.3	%	(21.8	)%	Corporate	$	175.2	8.8	%	$	123.0	7.9	%	42.3	%
Small Business	21.0			7.0		26.6			7.0		(21.1	)	Small Business	44.0		9.1		21.0		7.0		109.4
Public	159.9			7.9		129.4			7.0		23.6		Public	153.3		7.4		159.9		7.9		(4.1)
Other⁽²⁾	16.5			3.4		19.1			3.6		(13.6	)	Other(2)	23.7		4.0		16.5		3.4		42.8
Headquarters⁽³⁾	(37.0		)	nm*		(32.0		)	nm*		(15.6	)	Headquarters(3)	(26.3)		nm*		(37.0)		nm*		28.9
Total Operating income	$	283.4		6.5	%	$	300.3		6.5	%	(5.6	)%	Total Operating income	$	369.9	7.2	%	$	283.4	6.5	%	30.5	%

* Not meaningful


~~(1)~~	Segment operating income includes the segment's direct operating income, allocations for Headquarters' costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.


~~(2)~~	~~Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.~~


~~(3)~~	~~Includes certain Headquarters' function costs that are not allocated to the segments.~~

(1)Segment operating income includes the segment's direct operating income, allocations for certain Headquarters' costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.

(2)Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.

(3)Includes certain Headquarters' function costs that are not allocated to the segments.

Operating income was ~~$283~~was $370 million for the three months ended June 30, 2021, an increase of $87 million, or 30.5%, compared to $283 million for the three months ended June 30, 2020. Operating income increased primarily due to higher Gross profit dollars and lower intangible asset amortization, partially offset by higher sales payroll expenses consistent with higher Gross profit, higher coworker count and higher performance-based compensation consistent with higher attainment against goals. Total operating margin percentage increased 70 basis points to 7.2% for the three months ended June 30, 2021, compared to 6.5% for the three months ended June 30, 2020 primarily due to lower intangible asset amortization as a ~~decrease~~percentage of ~~$17 million, or~~ ~~5.6%, compared to $300~~Net sales, partially offset by higher payroll expenses.

Corporate segment Operating income was $175 million for the three months ended June 30, ~~2019.~~2021, an increase of $52 million, or 42.3%, compared to $123 million for the three months ended June 30, 2020. Corporate segment Operating income ~~decreased~~increased primarily due to higher Gross profit dollars and lower intangible asset amortization, partially offset by higher sales payroll and

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performance-based compensation expenses. Corporate segment operating margin percentage increased 90 basis points to 8.8% for the three months ended June 30, 2021, compared to 7.9% for the three months ended June 30, 2020 primarily due to lower ~~Gross profit dollars and COVID-19~~ ~~related costs, partially offset by lower performance-based compensation. Total operating margin percentage remained flat at~~ ~~6.5%~~ ~~for the three months endedJune 30, 2020 and 2019 primarily due to higher product margin and lower performance-based compensation~~intangible asset amortization as a percentage of Net sales, partially offset by higher payroll expenses.

Small Business segment Operating income was $44 million for the three months ended June 30, 2021, an increase of $23 million, or 109.4%, compared to $21 million for the three months ended June 30, 2020. Small Business segment Operating income increased primarily due to higher Gross profit dollars and lower intangible asset amortization, partially offset by higher sales payroll expenses. Small Business segment operating margin percentage increased 210 basis points to 9.1% for the three months ended June 30, 2021, compared to 7.0% for the three months ended June 30, 2020, primarily due to lower intangible asset amortization and lower payroll expenses as a percentage of Net sales, ~~and COVID-19 related costs.~~partially offset by lower product margin.

~~Corporate~~Public segment ~~Operatin~~gOperating income was ~~$123 million~~ ~~for the three months ended June 30, 2020,~~ ~~a decrease of $34 million, or 21.8%, compared to $157~~$153 million for the three months ended June 30, ~~2019. Corporate~~2021, a decrease of $7 million, or 4.1%, compared to $160 million for the three months ended June 30, 2020. Public segment ~~Operating~~Operating income decreased primarily due to ~~lower Gross profit dollars~~,higher sales payroll and performance-based compensation expenses, partially offset by ~~lower sales payroll expenses. Corporate~~higher Gross profit dollars. Public segment operating margin percentage decreased 4050 basis points to ~~7.9%~~ 7.4% for the t~~hree~~three months ended June 30, 2021, compared to 7.9% for the three months ended June 30, 2020, ~~compared to 8.3% for the three months ended~~ ~~June 30, 2019~~primarily due to higher payroll expenses as a percentage of Net sales, ~~and COVID-19 related costs,~~ partially offset by higher ~~product~~ margin ~~and lower provision for credit losses.~~from mixing into net service contract revenue.

~~Small Business segment~~Other Operating i~~ncome~~income was ~~$21~~ $24 million for the three months ended June 30, ~~2020, a decrease~~2021, an increase of $6$7 million, or ~~21.1%~~42.8%, compared to ~~$27~~$17 million for the three months ended June 30, ~~2019. Small Business segment Operating income decreased~~ ~~primarily~~ ~~due to lower Gross profit dollars, partially offset by lower sales payroll expenses. Small Business segment operating margin percentage remained flat at~~ ~~7.0%~~ ~~for the three months ended~~ ~~June 30, 2020~~ ~~and 2019 primarily due to higher product margin offset by higher payroll expenses as a percentage of Net sales and COVID-19 related costs.~~

~~Public segment Operating income was~~ ~~$160 million for the three months ended June 30, 2020, an increase of $31 million, or 23.6%, compared to $129 million for the three months ended June 30, 2019. Public segment~~2020. Other Operating income increased primarily due to higher Gross profit dollars, partially offset by higher ~~sales payroll. Public segment~~payroll expenses. Other operating margin ~~percentag~~epercentage increased 9060 basis points to ~~7.9%~~4.0% for the three months ended June 30, 2021, compared to 3.4% for the three months ended June 30, 2020 compared to 7.0% for the three months ended June 30, 2019 primarily due to a mix into more profitable product and service offerings and benefits from cost saving measures, such as decreased travel and entertainment, and ongoing productivity and efficiency efforts.

~~Other Operating income was~~ ~~$17 million for the three months ended June 30, 2020, a decrease of $2 million, or 13.6%,~~ ~~compared to~~ ~~$19 million~~ ~~for the three months ended June 30, 2019. Other Operating~~ ~~income decreased~~ primarily due to lower ~~Gross profit dollars. Other operating~~ ~~margin percentagedecreased 20 basis points to~~ ~~3.4%~~ ~~for the three months ended June 30, 2020, compared to 3.6% for the three months ended~~ ~~June 30, 2019~~ ~~primarily due to higher sales~~ payroll expenses, ~~as a percentage of Net sales due higher coworker count~~integration costs, intangible asset amortization, and ~~higher occupancy~~other selling and administrative expenses as a percentage of Net sales, partially offset by ~~higher~~lower product margin.

Interest expense, net

Interest expense, net for the three months ended June 30, 2021 was $36 million, a decrease of $4 million compared to $40 million for the three months ended June 30, 2020. This decrease was primarily driven by the benefits from the August 2020 senior notes refinancing, a lower effective interest rate on the Term Loan in 2021 compared to 2020 and lower borrowings under the revolving credit facility in 2021 compared to 2020.

Other income, net

During the three months ended June 30, 2021, we sold all ownership interests of an equity method investment and recognized a $36 million gain.

Income tax expense

Income tax expense was ~~$56~~$97 million and ~~$65~~$56 million for the three months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The effective ~~income~~ tax rate, expressed by calculating the income tax expense as a percentage of Income before income taxes, was 26.2% and 22.9% for the three months ended June 30, 2021 and ~~24.7%~~2020, respectively. The effective tax rate for the three months ended June 30, 2021 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess tax benefits on equity-based compensation. The effective tax rate for the three months ended June 30, 2020 ~~and 2019, respectively. The effective tax rates~~ differed from the US federal statutory rate of 21.0% ~~for both periods~~ primarily due to state and local income taxes, partially offset by excess tax benefits on equity-based compensation.

The ~~lower~~higher effective tax rate for the three months ended June 30, ~~2020,~~2021 as compared to the ~~three months ended June 30, 2019,~~same period in the prior year was primarily attributable to ~~higher~~lower excess tax benefits on equity-based compensation and a discrete deferred tax expense as a result of an increase in ~~2020.~~the UK corporate tax rate effective in 2023.

Non-GAAP Financial Measure Reconciliations

We have included reconciliations of Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis for the three months ended June 30, ~~2020~~2021 and ~~2019~~2020 below.

Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, and acquisition and integration expenses. Non-GAAP operating income margin is defined as Non-GAAP operating income as a percentage of Net sales. Non-GAAP income before income taxes and Non-GAAP net income exclude, among other things, charges related to acquisition-related intangible asset

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amortization, equity-based compensation, acquisition and integration expenses, and the associated tax effects of each. Net sales growth on a constant currency basis is defined as Net sales growth excluding the impact of foreign currency translation on Net sales compared to the prior period.

Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis are considered non-GAAP financial measures. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with US GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures.

Non-GAAP operating income

Non-GAAP operating income was $418 million for the three months ended June 30, 2021, an increase of $80 million, or 23.6%, compared to $338 million for the three months ended June 30, ~~2020, a decrease of $20 million, or 5.6%, compared to $358 million for the three months ended June 30, 2019.~~2020. As a percentage of Net sales, Non-GAAP operating income was 8.1% and 7.7% for ~~both~~ the three months ended June 30, 2021 and 2020, respectively.


	Three Months Ended June 30,
(dollars in millions)	2021			2020
Operating income, as reported	$	369.9		$	283.4
Amortization of intangibles(1)	24.4			44.4
Equity-based compensation	20.6			5.6
Other adjustments	3.2			4.8
Non-GAAP operating income	$	418.1		$	338.2
Non-GAAP operating income margin	8.1		%	7.7		%

(1)Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and ~~2019.~~trade names.

Three Months Ended June 30,
(dollars in millions) 2020 2019
Operating income $ 283.4
$ 300.3
Amortization of intangibles⁽¹⁾
44.4
44.7
Equity-based compensation 5.6
12.2
Other adjustments⁽²⁾
4.8
1.2
Non-GAAP operating income $ 338.2
$ 358.4
Non-GAAP operating income margin 7.7 % 7.7 %


~~(1)~~	~~Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.~~


~~(2)~~	~~Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.~~

Non-GAAP net income

Non-GAAP net income was $286 million for the three months ended June 30, 2021, an increase of $61 million, or 27.0%, compared to $225 million for the three months ended June 30, ~~2020, a decrease~~2020.


	Three Months Ended June 30,
	2021						2020
(dollars in millions)	Income before income taxes		Income tax expense(1)		Net income		Income before income taxes		Income tax expense(1)		Net income
US GAAP, as reported	$	371.2	$	(97.1)	$	274.1	$	245.4	$	(56.3)	$	189.1
Gain on sale of equity method investment	(36.0)		8.8		(27.2)		—		—		—
Amortization of intangibles(2)	24.4		(1.8)		22.6		44.4		(11.1)		33.3
Equity-based compensation	20.6		(6.2)		14.4		5.6		(6.3)		(0.7)
Other adjustments	3.2		(1.0)		2.2		4.8		(1.2)		3.6
Non-GAAP	$	383.4	$	(97.3)	$	286.1	$	300.2	$	(74.9)	$	225.3

(1)Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.

(2)Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Table of ~~$13.0 million, or 5.2%, compared to $238 million for the three months ended June 30, 2019.~~Contents

Three Months Ended June 30,
2020 2019
(in millions) Income before income taxes
Income tax expense⁽¹⁾
Net income Income before income taxes
Income tax expense⁽¹⁾
Net income
GAAP (as reported) $ 245.4
$ (56.3 ) $ 189.1
$ 261.2
$ (64.6 ) $ 196.6
Amortization of intangibles⁽²⁾
44.4
(11.1 ) 33.3
44.7
(11.2 ) 33.5
Equity-based compensation 5.6
(6.3 ) (0.7 ) 12.2
(5.5 ) 6.7
Other adjustments⁽³⁾
4.8
(1.2 ) 3.6
1.2
(0.3 ) 0.9
Non-GAAP $ 300.2
$ (74.9 ) $ 225.3
$ 319.3
$ (81.6 ) $ 237.7


~~(1)~~	~~Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.~~


~~(2)~~	~~Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.~~


~~(3)~~	~~Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.~~

Net sales growth on a constant currency basis

Net sales ~~decreased $264~~increased $781 million, or ~~5.7%~~17.9%, to ~~$4,366~~$5,146 million for the three months ended June 30, ~~2020,~~2021, compared to ~~$4,630 million for~~ the three months ended June 30, ~~2019.~~2020. Net sales on a constant currency basis, which excludes the impact of foreign currency translation, ~~decreased $246~~increased $720 million, or ~~5.3%~~16.3%.


	Three Months Ended June 30,
(dollars in millions)	2021		2020		% Change(1)
Net sales, as reported	$	5,146.4	$	4,365.7	17.9	%
Foreign currency translation(2)	—		61.1
Net sales, on a constant currency basis	$	5,146.4	$	4,426.8	16.3	%

Three Months Ended June 30,
(dollars in millions) 2020 2019 % Change
Net sales, as reported $ 4,365.7
$ 4,629.9
(5.7 )%
Foreign currency translation⁽²⁾
—
(17.8 )
Net sales, on a constant currency basis $ 4,365.7
$ 4,612.1
(5.3 )%


~~(1)~~	~~There were 64 selling days for both the three months ended June 30, 2020 and 2019.~~(1)There were 64 selling days for both the three months ended June 30, 2021 and 2020.


~~(2)~~	~~Represents the effect of translating the prior year results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.~~

(2)Represents the effect of translating the prior year results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.

Six Months Overview

The results of certain business metrics are as follows:


	Six Months Ended June 30,
(dollars in millions)	2021		2020
Net sales	$	9,983.9	$	8,754.9
Gross profit	1,678.0		1,503.7
Operating income	693.3		529.2
Net income	506.7		357.0
Non-GAAP operating income	785.8		642.1
Non-GAAP net income	535.5		425.3
Average daily sales(1)	78.6		68.4
Net debt(2)	3,427.8		2,941.1
Cash conversion cycle (in days)(3)	21		25

Six Months Ended June 30,
(dollars in millions) 2020 2019
Net sales $ 8,754.9
$ 8,587.8
Gross profit 1,503.7
1,445.9
Operating income 529.2
529.2
Net income 357.0
349.5
Non-GAAP operating income 642.1
645.7
Non-GAAP net income 425.3
423.1
Average daily sales⁽¹⁾
68.4
67.6
Net debt⁽²⁾
2,941.1
3,084.4
Cash conversion cycle (in days)⁽³⁾
25
16
(1) There were 127 and 128 selling days for the six months ended June 30, 2021 and 2020, respectively.

(2) Defined as Total debt minus Cash and cash equivalents.

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~~(1)~~	~~There were 128 and 127 selling days for the six months ended June 30, 2020 and 2019, respectively.~~


~~(2)~~	~~Defined as Total debt minus Cash and cash equivalents.~~


~~(3)~~	Cash conversion cycle is defined as days of sales outstanding in Accounts receivable and certain receivables due from vendors plus days of supply in Merchandise inventory minus days of purchases outstanding in Accounts payable and Accounts payable-inventory financing, based on a rolling three-month average.

Results of Operations

Six Months Ended June 30, ~~2020~~2021 Compared to Six Months Ended June 30, ~~2019~~2020

Results of operations, in dollars and as a percentage of Net sales are as follows:


	Six Months Ended June 30,
	2021				2020
	Dollars in Millions		Percentage of Net Sales		Dollars in Millions		Percentage of Net Sales
Net sales	$	9,983.9	100.0	%	$	8,754.9	100.0	%
Cost of sales	8,305.9		83.2		7,251.2		82.8
Gross profit	1,678.0		16.8		1,503.7		17.2
Selling and administrative expenses	984.7		9.9		974.5		11.2
Operating income	693.3		6.9		529.2		6.0
Interest expense, net	(71.1)		(0.7)		(77.6)		(0.9)
Other income, net	37.9		0.4		5.6		0.1
Income before income taxes	660.1		6.6		457.2		5.2
Income tax expense	(153.4)		(1.5)		(100.2)		(1.1)
Net income	$	506.7	5.1	%	$	357.0	4.1	%

Six Months Ended June 30,
2020 2019

Dollars in
Millions

Percentage of
Net Sales

Dollars in
Millions

Percentage of
Net Sales
Net sales $ 8,754.9
100.0 % $ 8,587.8
100.0 %
Cost of sales 7,251.2
82.8
7,141.9
83.2
Gross profit 1,503.7
17.2
1,445.9
16.8
Selling and administrative expenses 974.5
11.2
916.7
10.6
Operating income 529.2
6.0
529.2
6.2
Interest expense, net (77.6 ) (0.9 ) (78.8 ) (0.9 )
Other income, net 5.6
0.1
2.4
—
Income before income taxes 457.2
5.2
452.8
5.3
Income tax expense (100.2 ) (1.1 ) (103.3 ) (1.2 )
Net income $ 357.0
4.1 % $ 349.5
4.1 %

Net sales

Net sales by segment, in dollars and as a percentage of total Net sales, and the year-over-year dollar and percentage change in Net sales are as follows:


	Six Months Ended June 30,
	2021				2020
(dollars in millions)	Net Sales		Percentage of Total Net Sales		Net Sales		Percentage of Total Net Sales		Dollar Change		Percent Change		Average Daily Sales Percent Change(1)
Corporate	$	3,788.9	37.9	%	$	3,468.5	39.6	%	$	320.4	9.2	%	10.1	%

Small Business	915.6		9.2		693.6		7.9		222.0		32.0		33.0

Public:
Government	1,029.5		10.3		1,288.2		14.7		(258.7)		(20.1)		(19.5)
Education	2,055.4		20.6		1,353.0		15.5		702.4		51.9		53.1
Healthcare	917.5		9.2		906.2		10.4		11.3		1.3		2.0
Total Public	4,002.4		40.1		3,547.4		40.6		455.0		12.8		13.7

Other	1,277.0		12.8		1,045.4		11.9		231.6		22.2		23.1

Total Net sales	$	9,983.9	100.0	%	$	8,754.9	100.0	%	$	1,229.0	14.0	%	14.9	%

Six Months Ended June 30,
2020 2019
(dollars in millions) Net Sales
Percentage
of Total Net Sales
Net Sales
Percentage
of Total Net Sales

Dollar
Change

Percent
Change

Average Daily Sales Percent Change⁽¹⁾
Corporate $ 3,468.5
39.6 % $ 3,620.1
42.2 % $ (151.6 ) (4.2 )% (4.9 )%

Small Business 693.6
7.9
733.0
8.5
(39.4 ) (5.4 ) (6.1 )

Public:
Government 1,288.2
14.7
1,066.8
12.4
221.4
20.8
19.8
Education 1,353.0
15.5
1,174.0
13.7
179.0
15.2
14.3
Healthcare 906.2
10.4
930.0
10.8
(23.8 ) (2.6 ) (3.3 )
Total Public 3,547.4
40.6
3,170.8
36.9
376.6
11.9
11.0

Other 1,045.4
11.9
1,063.9
12.4
(18.5 ) (1.7 ) (2.5 )

Total Net sales $ 8,754.9
100.0 % $ 8,587.8
100.0 % $ 167.1
1.9 % 1.1 %


~~(1)~~	(1)There were 127 and 128 ~~and 127~~ selling days for the six months ended June 30, 2021 and 2020, ~~and 2019,~~ respectively.

Total Net sales for the six months ended June 30, ~~2020~~2021 increased ~~$167~~$1,229 million ~~or 1.9%,~~ to ~~$8,755~~$9,984 million, compared to the six months ended June 30, ~~2019.~~2020. There was one ~~more~~less selling day in the six months ended June 30, ~~2020~~2021 compared to the same period of ~~2019,~~2020, and Net sales on an average daily sales basis increased ~~1.1%~~14.9%. Excluding the impact of foreign currency fluctuations, constant currency Net sales growth on an average daily sales basis was ~~1.5%~~13.6%. Net sales growth was primarily driven by Education, Corporate and Small Business customers. Our Education customers prioritized equity and access to learning and enhancing the in-classroom experience, while Corporate and Small Business customers prepared for returning to the office and optimizing hybrid work environment capabilities. For additional information, see Note 11 (Segment Information) to the accompanying Consolidated Financial Statements and "Non-GAAP Financial Measure Reconciliations" below regarding constant currency Net sales growth.

~~For the six months ended June~~

30 2020, Net sales growth was primarily due to notebooks/mobile devices from robust customer demand for remote enablement in response to the COVID-19 pandemic. The Census project further contributed to growth in other hardware, including accessories and smartphones, and services. These increases were partially offset by decreases in netcomm products, enterprise storage and desktops due to the impact

Table of ~~the COVID-19 pandemic on customer demand. For additional information, see Note 10 (Segment Information) to the accompanying Consolidated Financial Statements.~~Contents

Corporate segment Net sales for the six months ended June 30, ~~2020 decreased $152~~2021 increased $320 million, or ~~4.2%~~9.2%, compared to the six months ended June 30, ~~2019.~~2020. On an average daily sales basis, Corporate segment Net sales ~~decreased 4.9%~~increased 10.1%. ~~The decrease was primarily driven by netcomm products~~Expectations that a hybrid environment will become the future work model resulted in higher demand for notebooks/mobile devices, video and accessories. Additionally, Corporate customers resumed infrastructure projects, driving growth in servers, enterprise ~~storage.~~storage and software.

Small Business segment Net sales for the six months ended June 30, ~~2020 decreased $39~~2021 increased $222 million, or ~~5.4%~~32.0%, compared to the six months ended June 30, ~~2019.~~2020. On an average daily sales basis, Small Business segment Net sales ~~decreased 6.1%~~increased 33.0%. ~~The decrease~~Customers continued to focus on productivity and mobility as Net sales growth was driven by ~~declines across all major hardware categories.~~notebooks/mobile devices, video and accessories.

Public segment Net sales for the six months ended June 30, ~~2020~~2021 increased ~~$377~~$455 million, or ~~11.9%~~12.8%, compared to the six months ended June 30, ~~2019.~~2020. On an average daily sales basis, Public segment Net sales increased ~~11.0%~~13.7%. Net sales to Education customers increased 53.1% on an average daily sales basis primarily driven by integrated solutions including notebooks/mobile devices, video, accessories and services. Schools have prioritized equity and access to learning and investing in the interactive classroom experience to prepare for students returning to in-person learning in the fall. Net sales to Healthcare customers increased 2.0% on an average daily sales basis primarily due to services, servers and video, partially offset by notebooks/mobile devices. Healthcare customers saw patients returning for elective procedures which increased confidence in budgets, enabling delayed projects to restart. Net sales to Government customers ~~increased 19.8%~~decreased 19.5% on an average daily sales basis primarily driven by notebooks/mobile devices and desktops, software reflecting the continued ~~delivery on~~mix into Software as a Service, and the completion of the Census project, ~~within~~comprised of other hardware, including accessories and smartphones, and services. ~~Net sales to Education customers increased 14.3% on an average daily sales basis, primarily driven by notebooks/mobile devices,~~These decreases were partially offset by ~~video, as schools become more enabled for remote learning. Net sales to Healthcare customers decreased 3.3% on an average daily sales basis, primarily driven by desktops and~~increased infrastructure spending in enterprise ~~storage as hospitals delayed refresh projects, partially offset by notebooks/mobile devices.~~storage.

Net sales in Other, which is comprised of results from our UK and Canadian operations, for the six months ended June 30, ~~2020 decreased $19~~2021 increased $232 million, or ~~1.7%~~22.2%, compared to the six months ended June 30, ~~2019.~~2020. On an average daily sales basis, Other ~~decreased 2.5%~~increased 23.1%. ~~The UK operations grew in~~In local currency, ~~while the Canadian operations declined in local currency.~~Canada Net sales ~~for Canadian operations decreased across most major hardware categories.~~increased as a result of increased customer confidence and higher vaccination rates while UK Net sales ~~for~~increased at a lower rate due to a slower economic recovery. Customers in the UK ~~operations increased primarily~~and Canada continued to focus on productivity and mobility as Net sales growth was driven by notebooks/mobile devices, video and ~~software, partially offset by enterprise storage.~~other hardware, including accessories. The impact of foreign currency exchange further ~~decreased~~

increased Other Net sales by ~~approximately 250 basis points,~~11.0%, primarily due to the ~~unfavorable~~favorable translation of the Canadian dollar and British pound ~~and Canadian dollar~~ to the US dollar.

Gross profit

Gross profit increased ~~$58~~$174 million, or ~~4.0%~~11.6%, to $1,678 million for the six months ended June 30, 2021, compared to $1,504 million for the six months ended June 30, ~~2020, compared to $1,446 million for the six months ended June 30, 2019.~~2020. As a percentage of Net sales, Gross profit margin ~~increased~~decreased 40 basis points to ~~17.2%~~16.8% for the six months ended June 30, ~~2020.~~2021. The decrease in Gross profit margin was ~~positively impacted~~primarily driven by lower product ~~margin.~~margin, including notebook mix and rate, and overlapping higher margin configuration services in the prior year, partially offset by an increase in the mix of net service contract revenue, primarily Software as a Service, and increased Net sales and margins on professional services.

Selling and administrative expenses

Selling and administrative expenses increased ~~$58~~$10 million, or ~~6.3%~~1.1%, to $985 million for the six months ended June 30, 2021, compared to $975 million for the six months ended June 30, ~~2020, compared to $917 million for the six months ended June 30, 2019.~~2020. The increase was primarily due to ~~a higher provision for credit losses driven by a $27 million increase in reserves, which predominately reflects the expected economic impact of the COVID-19 pandemic,~~ higher payroll expenses consistent with higher Gross profit, higher coworker count and higher ~~Gross profit,~~performance-based compensation consistent with higher attainment against goals, partially offset by lower intangible asset amortization and ~~COVID-19 related costs.~~lower bad debt expense. Total coworker count was 10,666, up 618 from 10,048 at June 30, 2020 primarily due to an increase in new hires during 2021 and customer-facing coworkers as a result of our recent acquisitions.

As a percentage of Net sales, Selling and administrative expenses ~~increased 60~~decreased 120 basis points to ~~11.2%~~9.9% during the six months ended June 30, ~~2020,~~2021, compared to ~~10.6%~~11.1% for the six months ended June 30, ~~2019,~~2020, primarily due to ~~a higher provision for credit losses~~lower intangible asset amortization and ~~higher payroll expenses.~~lower bad debt expense.

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Operating income

Operating income by segment, in dollars and as a percentage of Net sales, and the year-over-year percentage change are as follows:


	Six Months Ended June 30,													Six Months Ended June 30,
	2020					2019								2021				2020
	Dollars in Millions			Operating Margin		Dollars in Millions			Operating Margin		Percent Change in Operating Income			Dollars in Millions		Operating Margin		Dollars in Millions		Operating Margin		Percent Change in Operating Income
Segments:⁽¹⁾													Segments:(1)
Corporate	$	250.4		7.2	%	$	291.9		8.1	%	(14.2	)%	Corporate	$	336.6	8.9	%	$	250.4	7.2	%	34.4	%
Small Business	48.3			7.0		51.0			7.0		(5.3	)	Small Business	86.8		9.5		48.3		7.0		79.6
Public	272.3			7.7		205.5			6.5		32.5		Public	290.0		7.2		272.3		7.7		6.5
Other⁽²⁾	31.2			3.0		44.7			4.2		(30.2	)	Other(2)	51.4		4.0		31.2		3.0		64.4
Headquarters⁽³⁾	(73.0		)	nm*		(63.9		)	nm*		(14.2	)	Headquarters(3)	(71.5)		nm*		(73.0)		nm*		2.1
Total Operating income	$	529.2		6.0	%	$	529.2		6.2	%	—	%	Total Operating income	$	693.3	6.9	%	$	529.2	6.0	%	31.0	%

* Not meaningful


~~(1)~~	Segment operating income includes the segment's direct operating income, allocations for certain Headquarters costs, allocations for income and expenses from logistics services, certain inventory adjustments and volume rebates and cooperative advertising from vendors.


~~(2)~~	~~Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.~~


~~(3)~~	~~Includes certain Headquarters' function costs that are not allocated to the segments.~~

(2)Includes the financial results for our other operating segments, CDW UK and CDW Canada, which do not meet the reportable segment quantitative thresholds.

(3)Includes certain Headquarters' function costs that are not allocated to the segments.

Operating income ~~remained flat at~~was $693 million for the six months ended June 30, 2021, an increase of $164 million, or 31.0%, compared to $529 million for the six months ended June 30, ~~2020 and 2019~~2020. Operating income increased primarily due to higher Gross profit dollars, lower intangible asset amortization and lower bad debt expense, partially offset by higher payroll expenses consistent with higher Gross profit, higher coworker count and a higher ~~provision for credit losses.~~attainment against goals. Total operating margin percentage ~~decreased 20~~increased 90 basis points to 6.9% for the six months ended June 30, 2021, from 6.0% for the six months ended June 30, 2020, ~~from 6.2%~~primarily due to lower intangible asset amortization and lower bad debt expense as a percentage of Net sales, partially offset by lower Gross profit margin.

Corporate segment Operating income was $337 million for the six months ended June 30, ~~2019 primarily due~~2021, an increase of $86 million, or 34.4%, compared to ~~a higher provision for credit losses, higher payroll expenses as percentage of Net sales and COVID-19 related costs, partially offset by higher product margin.~~

~~Corporate segment Operating income was~~ $250 million for the six months ended June 30, ~~2020, a decrease of $42 million, or 14.2%, compared~~2020. Corporate segment Operating income increased primarily due to ~~$292 million~~higher Gross profit dollars, lower intangible asset amortization and lower bad debt expense, partially offset by higher payroll expenses. Corporate segment operating margin percentage increased 170 basis points to 8.9% for the six months ended June 30, 2019. Corporate segment Operating income decreased primarily due to lower Gross profit dollars and a higher provision for credit losses. Corporate segment operating margin percentage decreased 90 basis points to2021, from 7.2% for the six months ended June 30, 2020, ~~from 8.1%~~primarily due to lower intangible asset amortization and lower bad debt expense as a percentage of Net sales, and an increase in the mix of net service contract revenues, primarily Software as a Service.

Small Business segment Operating income was $87 million for the six months ended June 30, ~~2019 primarily due~~2021, an increase of $39 million, or 79.6%, compared to ~~a higher provision for credit losses, higher payroll expenses as a percentage of Net sales and COVID-19 related costs.~~

~~Small Business segment Operating income was~~ $48 million for the six months ended June 30, 2020. Small Business segment Operating income increased primarily due to higher Gross profit dollars and lower intangible asset amortization, partially offset by higher payroll expenses. Small Business segment operating margin percentage increased 250 basis points to 9.5% for the six months ended June 30, 2021, from 7.0% for the three months ended June 30, 2020, primarily due to lower intangible asset amortization, lower payroll expenses and lower bad debt expense as a ~~decrease~~percentage of ~~$3 million, or 5.3%, compared to $51~~Net sales.

Public segment Operating income was $290 million for the six months ended June 30, ~~2019. Small Business segment Operating income decreased~~

~~primarily due~~2021, an increase of $18 million, or 6.5%, compared to a higher provision for credit losses. Small Business segment operating margin percentage remained flat at 7.0% for the six months ended June 30, 2020 and 2019 primarily due to higher product margin, offset by a higher provision for credit losses, higher payroll expenses as a percentage of Net sales and COVID-19 related costs.

~~Public segment Operating income was~~ $272 million for the six months ended June 30, ~~2020, an increase of $66 million, or 32.5%, compared to $206 million for the six months ended June 30, 2019.~~2020. Public segment Operating income increased primarily due to higher Gross profit dollars and lower bad debt expense, partially offset by higher ~~sales~~ payroll ~~expenses and a higher provision for credit losses.~~expenses. Public segment operating margin percentage ~~increased 120~~decreased 50 basis points to 7.2% for the six months ended June 30, 2021, from 7.7% for the six months ended June 30, 2020, ~~from 6.5%~~primarily due to overlapping higher margin configuration services in the prior year, partially offset by lower bad debt expense as a percentage of Net sales.

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Other Operating income was $51 million for the six months ended June 30, ~~2019 primarily due~~2021, an increase of $20 million, or 64.4%, compared to ~~a mix into more profitable product and service offerings, and lower payroll expenses as a percentage of Net sales.~~

~~Other Operating income was~~ $31 million for the six months ended June 30, ~~2020, a decrease of $14 million, or 30.2%, compared~~2020. Other Operating income increased primarily due to ~~$45 million~~higher Gross profit dollars and lower bad debt expense, partially offset by higher payroll expenses. Other operating margin percentage increased 100 basis points to 4.0% for the six months ended June 30, 2019. Other Operating income decreased primarily due to a mix out of more profitable service offerings, higher payroll expenses and a higher provision for credit losses. Other operating margin percentage decreased 120 basis points to2021, from 3.0% for the six months ended June 30, 2020, ~~from 4.2%~~primarily due to lower bad debt expense, payroll expenses, integration costs and other selling and administrative expenses as a percentage of Net sales, partially offset by lower product margin.

Interest expense, net

Interest expense, net, for the six months ended June 30, ~~2019~~2021 was $71 million, a decrease of $7 million compared to $78 million for the six months ended June 30, 2020. This decrease was primarily ~~due~~driven by a lower effective interest rate on the Term Loan in 2021 compared to ~~higher payroll expenses as~~2020, the benefits from the August 2020 senior notes refinancing, lower amortization on the interest rate cap premiums and lower borrowings under the revolving credit facility in 2021 compared to 2020, partially offset by additional interest expense on the April 2020 senior notes.

Other income, net

During the six months ended June 30, 2021, we sold all ownership interests of an equity method investment and recognized a ~~percentage of Net sales and a higher provision for credit losses.~~$36 million gain.

Income tax expense

Income tax expense was ~~$100~~$153 million and ~~$103~~$100 million for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively. The effective tax rate, expressed by calculating the income tax expense as a percentage of Income before income taxes, was 23.2% and 21.9% for the six months ended June 30, 2021 and 2020, ~~and~~respectively. The effective tax rate for the six months ended June 30, 2021 differed from the US federal statutory rate of 21.0% ~~with~~primarily due to state and local income taxes ~~being largely~~and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess tax benefits on equity-based compensation. The effective ~~income~~ tax rate for the six months ended June 30, ~~2019 was 22.8% and~~2020 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes, partially offset by excess tax benefits on equity-based ~~compensation and a discrete tax benefit related to CDW Canada’s acquisition of Scalar in 2019.~~

compensation.

The ~~decrease in the~~higher effective tax rate for the six months ended June 30, ~~2020~~2021 as compared to the same period ofin the prior year was primarily ~~driven by the~~attributable to a less favorable rate impact of ~~higher~~ excess tax benefits on equity-based compensation ~~in 2020, partially offset by~~and a discrete deferred tax ~~benefit related to CDW Canada's acquisition~~expense as a result of ~~Scalar~~an increase in ~~2019.~~the UK corporate tax rate effective in 2023.

Non-GAAP Financial Measure Reconciliations

We have included reconciliations of Non-GAAP operating income, Non-GAAP operating income margin, Non-GAAP income before income taxes, Non-GAAP net income and Net sales growth on a constant currency basis for the six months ended June 30, ~~2020~~2021 and ~~2019~~2020 below.

Non-GAAP operating income

Non-GAAP operating income was $786 million for the six months ended June 30, 2021, an increase of $144 million, or 22.4%, compared to $642 million for the six months ended June 30, ~~2020, a decrease of $4 million, or 0.5%, compared to $646 million for the six months ended June 30, 2019.~~2020. As a percentage of Net sales, Non-GAAP operating income was ~~7.3%~~7.9% and ~~7.5%~~7.3% for the six months ended June 30, ~~2020~~2021 and ~~2019,~~2020, respectively.


	Six Months Ended June 30,
(dollars in millions)	2021			2020
Operating income, as reported	$	693.3		$	529.2
Amortization of intangibles(1)	46.0			89.0
Equity-based compensation	36.4			14.4
Other adjustments	10.1			9.5
Non-GAAP operating income	$	785.8		$	642.1
Non-GAAP operating income margin	7.9		%	7.3		%

(1)Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Six Months Ended June 30,
(dollars in millions) 2020 2019
Operating income $ 529.2
$ 529.2
Amortization of intangibles⁽¹⁾
89.0
89.1
Equity-based compensation 14.4
24.9
Other adjustments⁽²⁾
9.5
2.5
Non-GAAP operating income $ 642.1
$ 645.7
Non-GAAP operating income margin 7.3 % 7.5 %


~~(1)~~	~~Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.~~


~~(2)~~	~~Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.~~

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Non-GAAP net income

Non-GAAP net income was $536 million for the six months ended June 30, 2021, an increase of $111 million, or 25.9%, compared to $425 million for the six months ended June 30, ~~2020, an increase of $2 million, or 0.5%, compared to $423 million~~2020.


	Six Months Ended June 30,
	2021						2020
(dollars in millions)	Income before income taxes		Income tax expense(1)		Net income		Income before income taxes		Income tax expense(1)		Net income
US GAAP, as reported	$	660.1	$	(153.4)	$	506.7	$	457.2	$	(100.2)	$	357.0
Gain on sale of equity method investment	(36.0)		8.8		(27.2)		—		—		—
Amortization of intangibles(2)	46.0		(7.2)		38.8		89.0		(22.2)		66.8
Equity-based compensation	36.4		(27.0)		9.4		14.4		(20.0)		(5.6)
Other adjustments	10.5		(2.7)		7.8		9.5		(2.4)		7.1
Non-GAAP	$	717.0	$	(181.5)	$	535.5	$	570.1	$	(144.8)	$	425.3

(1)Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.

(2)Includes amortization expense for ~~the six months ended June 30, 2019.~~acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.

Six Months Ended June 30,
2020 2019
(dollars in millions) Income before income taxes
Income tax expense⁽¹⁾
Net income Income before income taxes
Income tax expense⁽¹⁾
Net income
GAAP (as reported) $ 457.2
$ (100.2 ) $ 357.0
$ 452.8
$ (103.3 ) $ 349.5
Amortization of intangibles⁽²⁾
89.0
(22.2 ) 66.8
89.1
(22.5 ) 66.6
Equity-based compensation 14.4
(20.0 ) (5.6 ) 24.9
(16.8 ) 8.1
Other adjustments⁽³⁾
9.5
(2.4 ) 7.1
2.5
(3.6 ) (1.1 )
Non-GAAP $ 570.1
$ (144.8 ) $ 425.3
$ 569.3
$ (146.2 ) $ 423.1


~~(1)~~	~~Income tax on non-GAAP adjustments includes excess tax benefits associated with equity-based compensation.~~


~~(2)~~	~~Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names.~~


~~(3)~~	~~Includes other expenses such as payroll taxes on equity-based compensation, expenses related to the relocation of the downtown Chicago office, and acquisition and integration expenses.~~

Net sales growth on a constant currency basis

Net sales ~~increased $167 million, or 1.9%, to $8,755 million~~ for the six months ended June 30, ~~2020,~~2021 increased $1,229 million, or 14.0%, to $9,984 million, compared to ~~$8,588 million for~~ the six months ended June 30, ~~2019.~~2020. Net sales on a constant currency basis, which excludes the impact of foreign currency translation, increased ~~$194~~$1,125 million, or ~~2.3%~~12.7%.


	Six Months Ended June 30,
(dollars in millions)	2021		2020		% Change		Average Daily % Change(1)
Net sales, as reported	$	9,983.9	$	8,754.9	14.0	%	14.9	%
Foreign currency translation(2)	—		103.6
Net sales, on a constant currency basis	$	9,983.9	$	8,858.5	12.7	%	13.6	%

Six Months Ended June 30,
(dollars in millions) 2020 2019 % Change
Average Daily % Change⁽¹⁾
Net sales, as reported $ 8,754.9
$ 8,587.8
1.9 % 1.1 %
Foreign currency translation⁽²⁾
—
(26.8 )
Net sales, on a constant currency basis $ 8,754.9
$ 8,561.0
2.3 % 1.5 %
(1)There were 127 and 128 selling days for the six months ended June 30, 2021 and 2020, respectively.


~~(1)~~	~~There were 128 and 127 selling days for the six months ended June 30, 2020 and 2019, respectively.~~


~~(2)~~	~~Represents the effect of translating the prior year results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.~~

(2)Represents the effect of translating the prior year results of CDW UK and CDW Canada at the average exchange rates applicable in the current year.

Seasonality

While we have not historically experienced significant seasonality throughout the year, sales in our Corporate segment, which primarily serves US private sector business customers with more than 250 employees, are typically higher in the fourth quarter than in other quarters due to customers spending their remaining technology budget dollars at the end of the year. Additionally, sales in our Public segment have historically been higher in the third quarter than in other quarters primarily due to the buying patterns of the federal government and education customers. Since the onset of the pandemic, we have experienced variability compared to historic seasonality trends. As uncertainty due to the COVID-19 pandemic remains, seasonality by channel is expected to continue to be different than historical experience.

Liquidity and Capital Resources

Overview

We finance our operations and capital expenditures with internally generated cash from operations and borrowings under our revolving credit facility. As of June 30, ~~2020,~~2021, we had ~~$1.0~~$1.2 billion of availability for borrowings under our senior secured asset-based ~~revolving credit facility and an additional £50 million ($62 million) under the CDW UK~~ revolving credit facility. Our liquidity and borrowing plans are established to align with our financial and strategic planning processes and ensure we have the necessary funding to meet our operating commitments, which primarily include the purchase of inventory, payroll and general expenses. We also take into consideration our overall capital allocation strategy, which includes investment for future growth,

dividend payments, acquisitions and share repurchases. During 2020, we bolstered our liquidity position by completing a $600 million debt offering with the proceeds to be used for general corporate purposes. We also took additional measures to enhance our liquidity by suspending share repurchases and implementing various other cost savings initiatives. We believe we have

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adequate sources of liquidity and funding available for at least the next year; however, there are a number of factors that may negatively impact our available sources of funds. The amount of cash generated from operations will be dependent upon factors such as the successful execution of our business plan, general economic conditions and working capital management, including accounts receivable.

Long-Term Debt and Financing Arrangements

~~On April 21, 2020,~~During the first quarter of 2021, we ~~completed~~amended, extended and increased the ~~issuance~~size of ~~$600 million aggregate~~the Revolving Loan. As a result of the amended Revolving Loan, the variable rate CDW UK revolving credit facility was closed. Additionally, we paid off the remaining principal amount ~~of 4.125% Senior Notes due 2025 at par.~~on the variable rate CDW UK term loan by drawing on the amended Revolving Loan.

As of June 30, ~~2020,~~2021, we had total indebtedness of $3.9 billion, of which $1.5 billion was secured indebtedness. At June 30, ~~2020,~~2021, we were in compliance with the covenants under our various credit agreements and indentures.

For additional information regarding our debt and refinancing activities, see Note 67 (Long-Term Debt) to the accompanying Consolidated Financial Statements.

Inventory Financing Agreements

We have entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions. These amounts are classified separately as Accounts payable-inventory financing on the Consolidated Balance Sheets. We do not incur any interest expense associated with these agreements as balances are paid when they are due. For additional information, see Note 35 (Inventory Financing Agreements) to the accompanying Consolidated Financial Statements.

Share Repurchase Program

During ~~2020,~~the six months ended June 30, 2021, we repurchased ~~1.1~~4.6 million shares of our common stock for ~~$141~~$735 million under the previously announced share repurchase program. ~~In March 2020, we elected to suspend share repurchases as a precautionary measure in light of the COVID-19 pandemic. We have not made any further share repurchases since this announcement.~~ For additional information on our share repurchase program, see "Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds."

Dividends

A summary of ~~2020~~2021 dividend activity for our common stock is as follows:

Dividend Amount

Declaration Date

Record Date

Payment Date

$0.40

February 10, 2021

February 25, 2021

March 10, 2021

$0.40

May 5, 2021

May 25, 2021

June 10, 2021

~~Dividend Amount~~

~~Declaration Date~~

~~Record Date~~

~~Payment Date~~

~~$0.380~~

~~February 6, 2020~~

~~February 25, 2020~~

~~March 10, 2020~~

~~$0.380~~

~~May 6, 2020~~

~~May 25, 2020~~

~~June 10, 2020~~

On August ~~5, 2020,~~4, 2021, we announced that our Board of Directors declared a quarterly cash dividend of ~~$0.380~~$0.40 per common share. The dividend will be paid on September 10, ~~2020~~2021 to all stockholders of record as of the close of business on August 25, ~~2020.~~2021.

The payment of any future dividends will be at the discretion of our Board of Directors and will depend upon our results of operations, financial condition, business prospects, capital requirements, contractual restrictions, any potential indebtedness we may incur, restrictions imposed by applicable law, tax considerations and other factors that our Board of Directors deems relevant. In addition, our ability to pay dividends on our common stock will be limited by restrictions on our ability to pay dividends or make distributions to our stockholders and on the ability of our subsidiaries to pay dividends or make distributions to us, in each case, under the terms of our current and any future agreements governing our indebtedness.

~~Coronavirus Aid, Relief, and Economic Security Act~~

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted into law. The primary impact to our financial statements as a result of the CARES Act will be the deferral of US corporate income tax payments from the second quarter of 2020 to July 2020 as well as the deferral of employer related payroll tax payments from the second, third and fourth quarters of 2020 with 50% to be paid in the fourth quarter of 2021 and the remaining 50% to be paid in the fourth quarter of 2022.

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Cash Flows

Cash flows from operating, investing and financing activities are as follows:


	Six Months Ended June 30,
(dollars in millions)	2021		2020
Net cash provided by:
Operating activities	$	344.9	$	515.8

Investing Activities
Capital expenditures(1)	(38.5)		(100.0)
Acquisition of business, net of cash acquired	(211.6)		—
Proceeds from sale of equity method investment	36.0		—
Cash flows used in investing activities	(214.1)		(100.0)

Financing Activities
Net change in accounts payable - inventory financing	(150.1)		52.3
Financing payments for revenue generating assets	(46.1)		—
Other cash flows used in financing activities	(846.3)		342.0
Cash flows (used in) provided by financing activities	(1,042.5)		394.3

Effect of exchange rate changes on cash and cash equivalents	2.7		(5.7)
Net (decrease) increase in cash and cash equivalents	$	(909.0)	$	804.4

Six Months Ended June 30,
(dollars in millions) 2020 2019
Net cash provided by (used in):
Operating activities $ 515.8
$ 414.5
Investing activities (100.0 ) (118.9 )
Net change in accounts payable-inventory financing 52.3
36.3
Other financing activities 342.0
(341.5 )
Financing activities 394.3
(305.2 )
Effect of exchange rate changes on cash and cash equivalents (5.7 ) (1.7 )
Net increase (decrease) in cash and cash equivalents $ 804.4
$ (11.3 )
(1)Includes expenditures for revenue generating assets.

Operating Activities

Cash flows ~~from~~provided by operating activities are as follows:


	Six Months Ended June 30,
(dollars in millions)	2021		2020		Change
Net income	$	506.7	$	357.0	$	149.7
Adjustments for the impact of non-cash items(1)	88.1		272.2		(184.1)
Net income adjusted for the impact of non-cash items	594.8		629.2		(34.4)
Changes in assets and liabilities:
Accounts receivable(2)	(140.5)		(80.4)		(60.1)
Merchandise inventory(3)	(127.9)		(89.3)		(38.6)
Accounts payable-trade(4)	107.5		(2.1)		109.6
Other(5)	(89.0)		58.4		(147.4)
Cash flows provided by operating activities	$	344.9	$	515.8	$	(170.9)

(1)Includes items such as depreciation and amortization, deferred income taxes, provision for credit losses and equity-based compensation expense.

(2)The change is primarily due to increased sales volume in 2021, partially offset by improved collection performance.

(3)The change is primarily due to customer-driven stocking positions given continued supply constraints.

(4)The change is primarily due to mixing out of vendors with extended payment terms, partially offset by the increased sales and inventory volumes in 2021.

(5)The change is primarily due to growth in receivables from vendors in 2021 compared to a decline in the same period in 2020, as well as the timing of income tax payments.

Six Months Ended June 30,
(dollars in millions) 2020 2019 Change
Net income $ 357.0
$ 349.5
$ 7.5
Adjustments for the impact of non-cash items⁽¹⁾
272.2
138.1
134.1
Net income adjusted for the impact of non-cash items⁽²⁾
629.2
487.6
141.6
Changes in assets and liabilities:
    Accounts receivable⁽³⁾
(80.4 ) (230.1 ) 149.7
    Merchandise inventory⁽⁴⁾
(89.3 ) (197.3 ) 108.0
    Accounts payable-trade⁽⁵⁾
(2.1 ) 414.9
(417.0 )
    Other⁽⁶⁾
58.4
(60.6 ) 119.0
Net cash provided by operating activities $ 515.8
$ 414.5
$ 101.3

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~~(1)~~	~~Includes items such as depreciation and amortization, deferred income taxes, provision for credit losses and equity-based compensation expense.~~


~~(2)~~	~~The change is due to stronger operating results driven by Gross profit growth.~~


~~(3)~~	~~The change is primarily due to lower sales volume in the second quarter compared to 2019.~~


~~(4)~~	~~The change is primarily due to lower growth in inventory balances during the first half of 2020 compared to 2019.~~


~~(5)~~	~~The change is primarily due to lower sales volume in the second quarter compared to 2019.~~


~~(6)~~	~~The change is driven by improved collection performance and lower balance of our receivables from vendors.~~

In order to manage our working capital and operating cash needs, we monitor our cash conversion cycle, defined as days of sales outstanding in accounts receivable plus days of supply in inventory minus days of purchases outstanding in accounts payable, based on a rolling three-month average. Components of our cash conversion cycle are as follows:


	June 30,
(in days)	2021	2020
Days of sales outstanding (DSO)(1)	56	59
Days of supply in inventory (DIO)(2)	16	18
Days of purchases outstanding (DPO)(3)	(51)	(52)
Cash conversion cycle	21	25

June 30,
(in days) 2020 2019
Days of sales outstanding (DSO)⁽¹⁾
59
52
Days of supply in inventory (DIO)⁽²⁾
18
14
Days of purchases outstanding (DPO)⁽³⁾
(52 ) (50 )
Cash conversion cycle 25
16
(1)Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.


~~(1)~~	Represents the rolling three-month average of the balance of Accounts receivable, net at the end of the period, divided by average daily Net sales for the same three-month period. Also incorporates components of other miscellaneous receivables.


~~(2)~~	~~Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily Cost of sales for the same three-month period.~~


~~(3)~~	Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.

(2)Represents the rolling three-month average of the balance of Merchandise inventory at the end of the period divided by average daily Cost of sales for the same three-month period.

(3)Represents the rolling three-month average of the combined balance of Accounts payable-trade, excluding cash overdrafts, and Accounts payable-inventory financing at the end of the period divided by average daily Cost of sales for the same three-month period.

The cash conversion cycle ~~increased~~decreased to 21 days at June 30, 2021, compared to 25 days at June 30, ~~2020, compared to 16 days at June 30, 2019.~~2020. DSO, DIO and DPO ~~increased 7~~decreased 3 days, 42 days and ~~2 days,~~1 day, respectively, compared to June 30, ~~2019.~~2020. The ~~increase~~decrease in DSO was primarily ~~driven by higher receivable balances~~ due to ~~the current economic environment and greater impact~~improved collections in 2021. The decrease in DPO was primarily due to mixing out of ~~third-party services, such as software as a service and warranties. These third-party services also drove DPO higher.~~vendors with extended payment terms. The ~~increase~~change in DIO was ~~driven by~~primarily due to increased Net sales in 2021 and the impact of higher inventory levels ~~during the second quarter compared~~last year relative to ~~2019.~~sales due to COVID-19.

Investing Activities

Net cash used in investing activities ~~decreased $19~~increased $114 million infor the six months ended June 30, ~~2020~~2021 compared to June 30, ~~2019.~~2020. This ~~decrease~~increase was primarily due to the acquisition of ~~Scalar~~Amplified IT LLC in ~~2019,~~the first quarter of 2021, partially offset by ~~increased Capital expenditures~~proceeds from the sale of ~~$56 million primarily due~~an equity method investment. For additional information regarding the acquisition, see Note 3 (Acquisition) to ~~purchases of devices for~~ the ~~Census project.~~accompanying Consolidated Financial Statements.

Financing Activities

Net cash ~~provided by~~used in financing activities increased ~~$700~~$1,437 million infor the six months ended June 30, ~~2020~~2021 compared to June 30, ~~2019. The~~2020. This increase was primarily ~~driven by~~due to no new proceeds from the ~~$600 million~~issuance of long-term debt ~~offering completed in April and lower~~during 2021, higher share repurchases, ~~partially offset by~~ decreased borrowings under our revolving credit ~~facilities.~~facilities, the mixing out of vendors with extended payment terms under our inventory financing arrangements and increased financing payments for revenue generating assets. For additional information regarding the inventory financing agreements and debt activities, see Note 35 (Inventory Financing Agreements) and Note 67 (Long-Term Debt) to the accompanying Consolidated Financial Statements.

~~Contractual Obligations~~

Except as disclosed above under "Long-Term Debt and Financing Arrangements," there have been no material changes to our contractual obligations from those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

~~Off-Balance Sheet Arrangements~~

We have no off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Issuers and Guarantors of Debt Securities

On March 2, 2020, the SEC adopted final rules that amend the financial disclosure requirements for subsidiary issuers and guarantors of registered debt securities in Rule 3-10 of Regulation S-X. Although the disclosures required by the amendments do not become mandatory until January 4, 2021, voluntary early compliance is permitted. We have elected to voluntarily comply beginning with the quarterly period ended March 31, 2020.

Each series of our outstanding unsecured senior notes (the "Notes") are issued by CDW LLC and CDW Finance Corporation (the "Issuers") and are guaranteed by CDW Corporation ("Parent") and each of CDW LLC's direct and indirect, 100% owned, domestic

subsidiaries (the "Guarantor Subsidiaries" and, together with Parent, the "Guarantors"). All guarantees by Parent and the Guarantors are joint and several, and full and unconditional; provided that guarantees by the Guarantor Subsidiaries are subject to certain customary release provisions contained in the indentures governing the Notes.

The Notes and the related guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations and are:

•structurally subordinated to all existing and future indebtedness and other liabilities of our non-guarantor subsidiaries and;

•rank equal in right of payment with all of the Issuers' and the Guarantors’ existing and future unsecured senior debt.

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The following tables set forth Balance Sheet information as of June 30, ~~2020~~2021 and December 31, ~~2019,~~2020, and Statement of Operations information for the six months ended June 30, ~~2020~~2021 and for the year ended December 31, ~~2019.~~2020. The financial information includes the accounts of the Issuers and the accounts of the Guarantors (the "Obligor Group"). The financial information of the Obligor Group is presented on a combined basis and the intercompany balances and transactions between the Obligor Group have been eliminated.

Balance Sheet Information


(dollars in millions)	June 30, 2020		December 31, 2019		(dollars in millions)	June 30, 2021		December 31, 2020
Current assets	$	4,588.3	$	3,601.6	Current assets	$	4,623.9	$	5,161.3
Goodwill	2,205.6		2,206.1		Goodwill	2,369.7		2,239.1
Other assets	766.2		903.1		Other assets	620.3		572.1
Total Non-current assets	2,971.8		3,109.2		Total Non-current assets	2,990.0		2,811.2
Current liabilities	3,087.5		2,975.3		Current liabilities	3,149.4		3,265.0
Long-term debt	3,815.5		3,229.5		Long-term debt	3,851.1		3,856.5
Other liabilities	185.5		188.3		Other liabilities	174.2		209.8
Total Long-term liabilities	4,001.0		3,417.8		Total Long-term liabilities	4,025.3		4,066.3

Statement of Operations Information


(dollars in millions)	Six Months Ended June 30, 2021		Year Ended December 31, 2020
Net sales	$	8,706.9	$	16,380.8
Gross profit	1,475.7		2,851.8
Operating income	641.9		1,113.2
Net income	468.9		738.8

(dollars in millions) Six Months Ended June 30, 2020 Year Ended December 31, 2019
Net sales $ 7,709.5
$ 15,874.1
Gross profit 1,331.1
2,666.8
Operating income 497.9
1,032.1
Net income 329.2
656.7

Commitments and Contingencies

The information set forth in Note 910 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements is incorporated herein by reference.

Critical Accounting Policies and Estimates

We estimate an allowance for credit losses related to accounts receivable for future expected credit losses by using relevant information such as historical information, current conditions, and reasonable and supportable forecasts. The allowance is measured on a pool basis when similar risk characteristics exist, and a loss-rate for each pool is determined using historical credit loss experience as the basis for the estimation of expected credit losses. Adjustments to historical loss information are made for differences in current conditions, as well as changes in forecasted macroeconomic conditions, such as changes in unemployment rate or gross domestic product growth. We have typically experienced a higher loss experience with our customers in the pools associated with our Corporate, Small Business and Other segments, as compared to the pools associated with our Public segment. During the six months ended June 30, 2020, we recognized an allowance to reflect the forecasted credit deterioration due to the COVID-19 pandemic, which considered the customer makeup of our pools, the impacts experienced to date and the impacts from the last significant economic downturn in 2008-2009. Due to the higher inherent risk in the pools associated with our Corporate, Small Business and Other segments, the majority of the additional allowance relates to these segments. As the overall impact and duration of the COVID-19 pandemic remains uncertain, our estimates and assumptions may evolve as conditions change.

Our ~~other~~ critical accounting policies have not changed from those reported in "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

Recent Accounting Pronouncements

The information set forth in Note 2 (Recent Accounting Pronouncements) to the accompanying Consolidated Financial Statements is incorporated herein by reference.

Forward-Looking Statements

This report contains "forward-looking statements" within the meaning of the federal securities laws. All statements other than statements of historical fact are forward-looking statements. These statements relate to analyses and other information, which are based on forecasts of future results or events and estimates of amounts not yet determinable. These statements also relate to our future prospects, developments and business strategies. We claim the protection of The Private Securities Litigation Reform Act of 1995 for all forward-looking statements in this report.

These forward-looking statements are identified by the use of terms and phrases such as "anticipate," "assume," "believe," "estimate," "expect," "goal," "intend," "plan," "potential," "predict," "project," "target" and similar terms and phrases or future or conditional verbs such as "could," "may," "should," "will," and "would." However, these words are not the exclusive means of identifying such statements. Although we believe that our plans, intentions and other expectations reflected in or suggested by such forward-looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. All forward-looking statements are subject to risks and uncertainties that may cause actual results or events to differ materially from those that we expected.

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Important factors that could cause actual results or events to differ materially from our expectations, or cautionary statements, are disclosed under the section entitled "Risk Factors" included in our Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 and from time to time in our subsequent Quarterly Reports on Form 10-Q and our other US Securities and Exchange Commission ("SEC") filings. These factors include, among others, the COVID-19 pandemic and actions taken in response thereto and the associated impact on our business, results of operations, cash flows, financial condition and liquidity; global and regional economic and political conditions; decreases in spending on technology products and services; CDW's relationships with vendor partners and terms of their agreements; continued innovations in hardware, software and services offerings by CDW's vendor partners; substantial competition that could reduce CDW's market share; potential interruptions of the flow of products from suppliers; CDW's level of indebtedness and ability to generate sufficient cash to service such indebtedness; restrictions imposed by agreements relating to CDW's indebtedness on its operations and liquidity; changes in, or the discontinuation of, CDW's share repurchase program or dividend payments; the continuing development, maintenance and operation of CDW's information technology systems; potential breaches of data security and failure to protect our information technology systems from cybersecurity threats; ~~potential failures to comply with Public segment contracts or applicable laws and regulations;~~ potential failures to provide high-quality services to CDW's customers; potential losses of any key personnel; potential adverse occurrences at one of CDW's primary facilities or customer data centers; increases in the cost of commercial delivery services or disruptions of those services; CDW's exposure to accounts receivable and inventory risks; future acquisitions or alliances; fluctuations in CDW's operating results; fluctuations in foreign currency; global and regional economic and political conditions including uncertainties related to COVID-19; potential interruptions of the flow of products from suppliers; decreases in spending on technology products and services; potential failures to comply with Public segment contracts or applicable laws and regulations; current and future legal proceedings and audits; changes in laws, including regulations or interpretations thereof; CDW's level of indebtedness and ability to generate sufficient cash to service such indebtedness; restrictions imposed by agreements relating to CDW's indebtedness on its operations and liquidity; changes in, or the discontinuation of, CDW's share repurchase program or dividend payments; and other risk factors or uncertainties identified from time to time in CDW's filings with the SEC. All written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements contained in the section entitled "Risk Factors" ~~included~~and elsewhere in our Annual Report on Form 10-K for the year ended December 31, ~~2019 and elsewhere in this report~~2020 as well as other cautionary statements that are made from time to time in our other SEC filings and public communications. You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

We caution you that the important factors referenced above may not reflect all of the factors that could cause actual results or events to differ from our expectations. In addition, we cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. The forward-looking statements included in this report are made only as of the date ~~hereof or, with respect to any documents incorporated by reference, available at the time such document was prepared or filed with the SEC.~~hereof. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

See "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Quantitative and Qualitative Disclosures of Market Risks" in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020. As of June 30, ~~2020,~~2021, there have been no material changes in this information.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company's disclosure controls and procedures (as such term is defined in Rule 13a-15(e) or Rule 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report. Based on such evaluation, the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, has concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective in recording, processing, summarizing and reporting, on a timely basis, information required to be disclosed by the Company in the reports that it files or submits under the Exchange Act, and that information is accumulated and communicated to the Company's management, including the Company's Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely discussions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company's internal control over financial reporting during the three months ended June 30, ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, ~~the Company's~~our internal control over financial reporting. ~~We have not experienced any material impact to our internal controls over financial reporting despite the fact that most~~

Table of our coworkers are working remotely for their health and safety during the COVID-19 pandemic. We are continually monitoring and assessing the potential impact of COVID-19 on our internal controls to minimize the impact on their design and operating effectiveness.Contents

PART II—OTHER INFORMATION

Item 1. Legal Proceedings

The information set forth in Note 910 (Commitments and Contingencies) to the accompanying Consolidated Financial Statements included in "Part I, Item 1. Financial Statements" of this report is incorporated herein by reference.

Item 1A. Risk Factors

~~The disclosure below modifies~~See "Risk Factors" in the ~~risk factors previously disclosed in our~~Company's Annual Report on Form 10-K for the ~~fiscal~~ year ended December 31, 2019. These risks and uncertainties, along with those previously disclosed, may cause our business prospects, results of operations and cash flows in future periods to differ materially from those currently expected or desired. Factors not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business, results of operations and cash flows.2020.

~~Risks Related to Our Business~~

~~The outbreak of the novel coronavirus ("COVID-19") pandemic could adversely impact our business, results of operations, cash flows, financial condition and liquidity.~~

The global spread of COVID-19 continues to create significant macroeconomic uncertainty, volatility and disruption. Many governments and health authorities have implemented recommendations or mandates intended to stop or slow the further spread of the disease, such as shelter-in-place orders, resulting in the temporary closure of schools and non-essential businesses, or social distancing measures, resulting in modified operations of various businesses including ours, and these measures may remain in place for a significant period of time. While some of these restrictions have been lifted or eased in certain jurisdictions, the resurgence of COVID-19 in other jurisdictions has slowed, and in some cases reversed the reopening process. We could experience disruptions, including as a result of resurgences of COVID-19, that prevent us from meeting the demands of our customers, such as product constraints from our vendor partners and wholesale distributors and other disruptions to our supply chain, disruptions in or restrictions on the ability of our coworkers to work effectively, temporary closures of our distribution facilities and disruptions of commercial delivery services. The impact of COVID-19 and measures implemented to slow the spread have and could continue to cause delay in, or limit the ability of, our customers to make timely payments to us and could increase our costs. In addition, the pandemic has resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries, including the US, the UK and Canada. During the COVID-19 pandemic and even after it has subsided, we may experience adverse impacts to our business as a result of the pandemic’s global economic impact, including any recession, economic downturn or volatility, government spending cuts, tightening of credit markets or increased unemployment that has occurred or may occur in the future, which could cause our customers and potential customers to postpone or reduce spending on technology products or services or put downward pressure on prices.

Individually and collectively, the consequences of the COVID-19 pandemic could adversely impact our business, results of operations, cash flows, financial condition and liquidity. Net sales during the second quarter of 2020 decreased as compared to the second quarter of 2019 across all major hardware categories due to the impact of the COVID-19 pandemic on customer demand, in particular with respect to our Corporate and Small Business customers as their purchases tend to reflect confidence in their business prospects, which are driven by their discrete perceptions of business and economic conditions. The extent to which the COVID-19 pandemic continues to impact our business, results of operations, cash flows, financial condition and liquidity will depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration, the severity and further spread of the outbreak, future resurgences and reimplementation of closures, actions taken to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume. To the extent the COVID-19 pandemic adversely affects our business, results of operations, cash flows, financial condition and liquidity, it may also have the effect of heightening many of the other risks described in the "Risk Factors" section of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, such as those relating to spending on technology products and services by our public sector customers, our level of indebtedness, our need to generate sufficient cash to service our indebtedness, restrictive covenants contained in the agreements that govern our indebtedness limiting our ability to incur additional debt, pay dividends or repurchase capital stock, fluctuations in our operating results and volatility of our common stock price.

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

Unregistered Sales of Equity Securities

None.

Issuer Purchases of Equity Securities

On February ~~7, 2019,~~10, 2021, we announced that our Board of Directors authorized a $1$1.25 billion increase to our share repurchase program under which we may repurchase shares of our common stock in the open market through privately negotiated or other transactions, depending on share price, market conditions and other factors.

~~In March 2020,~~Information relating to the ~~Company elected to suspend share repurchases as a precautionary measure in light~~Company's purchases of ~~the COVID-19 pandemic. During~~its common stock during the three months ended June 30, ~~2020, there were no share~~2021 is as follows:


Period	Total Number of Shares Purchased (in millions)	Average Price Paid per Share		Total Number of Shares Purchased as Part of a Publicly Announced Program (in millions)	Maximum Dollar Value of Shares that May Yet be Purchased Under the Program(1) (in millions)
April 1 through April 30, 2021	0.2	$	171.96	0.2	$	1,193.2
May 1 through May 31, 2021	0.8	$	169.55	0.8	$	1,065.4
June 1 through June 30, 2021	1.2	$	169.11	1.2	$	852.6
Total	2.2			2.2

(1)The amounts presented in this column are the remaining total authorized value to be spent after each month's repurchases.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

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Item 6. Exhibits


Exhibit						Description

~~Exhibit~~3.1						~~Description~~ Sixth Restated Certificate of Incorporation of CDW Corporation, previously filed as Exhibit 3.2 with CDW Corporation’s Form 8-K filed on May 21, 2021 and incorporated herein by reference.

10.1**10.1						CDW Corporation ~~Senior Management~~2021 Long-Term Incentive Plan , previously filed as Exhibit 10.1 with CDW Corporation’s Form 8-K filed on May 21, 2021 and incorporated herein by reference.

10.2*						CDW Corporation Coworker Stock Purchase Plan (As Amended and Restated, ~~effective January 1, 2020.~~Effective May 20, 2021).

22.110.3						~~List of Issuer and Guarantor Subsidiaries.~~CDW LLC Nonqualified Deferred Compensation Plan.

31.1*						Certification of Chief Executive Officer Pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.

31.2*						Certification of Chief Financial Officer Pursuant to Rule 15d-14(a) under the Securities Exchange Act of 1934.

32.1**						Certification of Chief Executive Officer Pursuant to 18 U.S.C. 1350.

32.2**						Certification of Chief Financial Officer Pursuant to 18 U.S.C. 1350.

101.INS*						XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*						Inline XBRL Taxonomy Extension Schema Document.

101.CAL*						Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF*						Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB*						Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE*						Inline XBRL Taxonomy Extension Presentation Linkbase Document.

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

________________


*	* Filed herewith


**	~~These items are furnished and not filed.~~

** These items are furnished and not filed.

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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.

CDW CORPORATION

~~CDW CORPORATION~~

Date:

August 4, 2021

By:

~~Date:~~

~~August 5, 2020~~

~~By:~~

/s/ Collin B. Kebo

Collin B. Kebo

Senior Vice President and Chief Financial Officer

(Duly authorized officer and principal financial officer)

4342



	Six Months Ended June 30, 2019
	Common Stock
	Shares		Amount		Paid-in Capital		Accumulated Deficit			Accumulated Other Comprehensive Loss			Total Stockholders' Equity
Balance as of December 31, 2018	147.7		$	1.5	$	2,996.9	$	(1,892.6	)	$	(130.6	)	$	975.2
Net income	—		—		—		349.5			—			349.5
Equity-based compensation expense	—		—		24.0		—			—			24.0
Stock option exercises	0.7		—		19.0		—			—			19.0
Coworker Stock Purchase Plan	—		—		7.3		—			—			7.3
Repurchases of common stock	(3.4	)	—		—		(332.2		)	—			(332.2		)
Dividends paid ($0.590 per share)	—		—		0.4		(86.7		)	—			(86.3		)
Incentive compensation plan stock withheld for taxes	—		—		—		(11.6		)	—			(11.6		)
Foreign currency translation	—		—		—		—			1.9			1.9
Unrealized loss from hedge accounting	—		—		—		—			(12.4		)	(12.4		)
Reclassification of hedge accounting loss to net income	—		—		—		—			1.7			1.7
Balance as of June 30, 2019	145.0		$	1.5	$	3,047.6	$	(1,973.6	)	$	(139.4	)	$	936.1



		As of June 30, 2020					As of December 31, 2019
	Maturity Date	Interest Rate		Amount			Interest Rate		Amount
Credit Facilities
CDW UK revolving credit facility⁽¹⁾	July 2021	—	%	$	—		—	%	$	—
Senior secured asset-based revolving credit facility	March 2022	1.438	%	50.0			5.000	%	51.0
Total credit facilities				50.0					51.0

Term Loans
CDW UK term loan⁽¹⁾	August 2021	1.622	%	57.0			2.190	%	61.0
Senior secured term loan facility	October 2026	1.930	%	1,430.8			3.550	%	1,438.3
Total term loans				1,487.8					1,499.3

Unsecured Senior Notes
Senior notes due 2024	December 2024	5.500	%	575.0			5.500	%	575.0
Senior notes due 2025	May 2025	4.125	%	600.0			—	%	—
Senior notes due 2025	September 2025	5.000	%	600.0			5.000	%	600.0
Senior notes due 2028	April 2028	4.250	%	600.0			4.250	%	600.0
Total unsecured senior notes				2,375.0					1,775.0

Other long-term obligations				12.7					12.6
Unamortized deferred financing fees				(26.0		)			(20.6		)
Current maturities of long-term debt				(37.9		)			(34.1		)
Total long-term debt				$	3,861.6				$	3,283.2



(dollars in millions)	Six Months Ended June 30, 2020		Year Ended December 31, 2019
Net sales	$	7,709.5	$	15,874.1
Gross profit	1,331.1		2,666.8
Operating income	497.9		1,032.1
Net income	329.2		656.7