Table of Contents
Delaware | 5063 | 25-1723345 | ||
(state or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code) | (I.R.S. employer identification no.) |
Delaware | 5063 | 25-1723342 | ||
(state or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code) | (I.R.S. employer identification no.) |
Table of Contents
The information in this prospectus is not complete and may be changed. A registration statement relating to these securities has been filed with the Securities and Exchange Commission. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective. This prospectus is not an offer to sell these securities nor a solicitation of an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
• | You may withdraw tendered original notes at any time prior to the expiration of the exchange offer. | |
• | The exchange of original notes for exchange notes pursuant to the exchange offer should not be a taxable event for U.S. federal income tax purposes. | |
• | We will not receive any proceeds from the exchange offer. | |
• | There is no existing public market for the original notes. We expect that the exchange notes will be eligible for trading in The PORTALsm Market of the National Association of Securities Dealers, Inc., but we do not intend to list the exchange notes on any securities exchange or seek approval for quotation through any automated trading systems. |
Page | ||||||||
ii | ||||||||
iii | ||||||||
iii | ||||||||
1 | ||||||||
19 | ||||||||
25 | ||||||||
25 | ||||||||
26 | ||||||||
28 | ||||||||
39 | ||||||||
40 | ||||||||
51 | ||||||||
52 | ||||||||
53 | ||||||||
55 | ||||||||
60 | ||||||||
61 | ||||||||
71 | ||||||||
72 | ||||||||
107 | ||||||||
111 | ||||||||
114 | ||||||||
117 | ||||||||
118 | ||||||||
118 | ||||||||
F-1 | ||||||||
EX-12.1 | ||||||||
EX-23.1 | ||||||||
EX-23.2 |
i
Table of Contents
ii
Table of Contents
iii
Table of Contents
1
Table of Contents
• | industrial customers with large, complex plant maintenance operations, many of which require a national multi-site service solution for their electrical product needs; | |
• | large contractors for major industrial and commercial construction projects; | |
• | the electric utility industry; and | |
• | manufacturers of factory-built homes, recreational vehicles and other modular structures. |
• | expanding our product and service offerings to existing customers in industries we currently serve; | |
• | targeting new customers in industries we currently serve; and |
2
Table of Contents
• | targeting markets that provide significant growth opportunities, such as multi-site retail construction, education and healthcare facilities, original equipment manufacturers (“OEM”) and regional and national contractors. |
• | offering existing national account customers new products and services and serving additional customer locations; | |
• | extending certain established national account relationships to include our integrated supply services; and | |
• | expanding our customer base by leveraging our existing industry expertise in markets served to enter into new markets. |
• | active national marketing of our demonstrated project management capabilities; | |
• | further development of relationships with leading regional and national contractors and engineering firms; and | |
• | close coordination with multi-location contractor customers on their major project requirements. |
3
Table of Contents
4
Table of Contents
• | National Accounts — we coordinate product supply and materials management activities for MRO supplies, project needs and direct material for national and regional customers with multiple locations who seek purchasing leverage through a single electrical products provider. Regional and national contractors and top engineering and construction firms that specialize in major projects such as airport expansions, power plants and oil and gas facilities are also a focus group for our national accounts program; and | |
• | Integrated Supply — we design and implement programs that enable our customers to significantly reduce the number of MRO suppliers they use through services that include highly automated, proprietary electronic procurement and inventory replenishment systems andon-site materials management and logistics services. |
• | maintain local sourcing of customer service, technical support and sales coverage; | |
• | tailor branch products and services to local customer needs; | |
• | offer multi-site distribution capabilities to large customers and national accounts; and | |
• | provide same-day deliveries. |
5
Table of Contents
• | extensive use of automation and technology; | |
• | centralization of functions such as purchasing, accounting and information systems; | |
• | strategically located distribution centers; | |
• | purchasing economies of scale; and | |
• | incentive programs that increase productivity and encourage entrepreneurship. |
6
Table of Contents
Issuance of the Original Notes | We issued and sold the original notes on September 27, 2005 to Goldman, Sachs & Co., Lehman Brothers Inc., UBS Securities LLC, Banc of America Securities LLC and Credit Suisse First Boston LLC. In this prospectus, we collectively refer to those purchasers as the “initial purchasers.” The initial purchasers subsequently resold the outstanding notes to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, or tonon-U.S. persons outside the United States pursuant to Regulation S under the Securities Act. | |
Exchange and Registration Rights Agreement | Simultaneously with the sale of the original notes, we entered into an exchange and registration rights agreement with the initial purchasers. Under the exchange and registration rights agreement, we agreed to: | |
• file the registration statement of which this prospectus is a part within 210 days after the issue date of the original notes, which enables holders of the original notes to exchange such original notes for publicly registered exchange notes with substantially the same terms; | ||
• use our reasonable best efforts to cause the registration statement of which this prospectus is a part to become effective within 270 days after the issue date of the original notes; | ||
• use our reasonable best efforts to complete the exchange offer as promptly as practicable, but in any event prior to 300 days after the issue date of the original notes; and | ||
• file a shelf registration statement for the resale of the original notes if we cannot affect the exchange offer within the time periods listed above and in certain other circumstances. | ||
The exchange offer is intended to satisfy these exchange rights. After the exchange offer is complete, you will no longer be entitled to any exchange or registration rights with respect to your original notes. If we do not comply with our obligations under the exchange and registration rights agreement, we will be required to pay specified additional interest to the holders of original notes under certain circumstances. See “Exchange and Registration Rights Agreement.” | ||
The Exchange Offer | We are offering to exchange $1,000 principal amount of our 7.50% Senior Subordinated Notes due 2017, which have been registered under the Securities Act and which |
7
Table of Contents
we refer to in this prospectus as the exchange notes, for each $1,000 principal amount of our unregistered 7.50% Senior Subordinated Notes due 2017, which we refer to in this prospectus as the original notes. In order to be exchanged, an original note must be properly tendered and accepted for exchange. All original notes that are validly tendered and not validly withdrawn will be exchanged. As of the date of this prospectus, there are $150.0 million aggregate principal amount of original notes outstanding. We will issue the exchange notes promptly after the expiration of the exchange offer. | ||
The terms of the exchange notes are identical in all material respects (including principal amount, interest rate and maturity) to the terms of the original notes for which they may be exchanged pursuant to the exchange offer, except that the exchange notes are freely transferable by holders (other than as provided in this prospectus) and are not subject to any obligation regarding registration under the Securities Act as described in this prospectus. See “The Exchange Offer.” | ||
Resales of the Exchange Notes | We believe that the exchange notes to be issued in the exchange offer may be offered for resale, resold and otherwise transferred by you without compliance with the registration and prospectus delivery provisions of the Securities Act if you meet the following conditions: | |
• the exchange notes are acquired by you in the ordinary course of your business; | ||
• you are not engaging in and do not intend to engage in a distribution of the exchange notes; | ||
• you do not have an arrangement or understanding with any person to participate in the distribution of the exchange notes; and | ||
• you are not an affiliate of ours, as that term is defined in Rule 405 under the Securities Act. | ||
Our belief is based on interpretations by the staff of the Securities and Exchange Commission, as set forth in no-action letters issued to third parties unrelated to us. We have not applied to the Commission for no-action relief with respect to this exchange offer, and we cannot assure you that the staff would make a similar determination with respect to this exchange offer. | ||
If you do not meet the above conditions, you may incur liability under the Securities Act if you transfer any exchange note without delivering a prospectus meeting the requirements of the Securities Act. We do not assume or indemnify you against that liability. | ||
Each broker-dealer that is issued exchange notes in the exchange offer for its own account in exchange for original |
8
Table of Contents
notes which were acquired by that broker-dealer as a result of market-making activities or other trading activities must agree to deliver a prospectus meeting the requirements of the Securities Act in connection with any resales of the exchange notes. A broker-dealer may use this prospectus for an offer to resell or to otherwise transfer these exchange notes. See “Plan of Distribution.” | ||
No Minimum Condition | The exchange offer is not conditioned upon any minimum aggregate principal amount of original notes being tendered for exchange. See “The Exchange Offer — Conditions.” | |
Expiration Date | The exchange offer will expire at 5:00 p.m., New York City time, on , 2006, or such later date and time to which we extend it. The exchange offer will not remain in effect for more than 45 business days after the date on which notice of the exchange offer is mailed to you. We currently do not intend to extend the expiration date, although we reserve the right to do so. See “The Exchange Offer — Expiration Date; Amendments.” | |
Withdrawal of Tenders | You may withdraw the tender of your original notes at any time prior to 5:00 p.m., New York City time, on the expiration date. See “The Exchange Offer — Withdrawal Rights.” | |
Certain Conditions to the Exchange Offer | The exchange offer is subject to certain customary conditions, which we may waive. We currently expect that each of the conditions will be satisfied and that no waivers will be necessary. We reserve the right to terminate or amend the exchange offer at any time prior to the expiration date upon the occurrence of any such condition. Please read carefully the section of this prospectus entitled “The Exchange Offer — Conditions” for more information regarding the conditions to the exchange offer. | |
Procedures for Tendering Original Notes in the Form of Book-Entry Interests | The original notes were issued as global securities in fully registered form without coupons. Beneficial interests in the original notes which are held by direct or indirect participants in The Depository Trust Company (“DTC”) through certificateless depositary interests are shown on, and transfers of the original notes can be made only through, records maintained in book-entry form by DTC with respect to its participants. | |
If you are a holder of an original note held in the form of a book-entry interest and you wish to tender your original note for exchange pursuant to the exchange offer, you must transmit to J.P.Morgan Trust Company, National |
9
Table of Contents
Association, as exchange agent, on or prior to the expiration of the exchange offer either: | ||
• a written or facsimile copy of a properly completed and executed letter of transmittal and all other required documents to the address set forth on the cover page of the accompanying letter of transmittal; or | ||
• a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and forming a part of a confirmation of book-entry transfer in which you acknowledge and agree to be bound by the terms of the accompanying letter of transmittal. | ||
The exchange agent must also receive on or prior to the expiration of the exchange offer either: | ||
• a timely confirmation of book-entry transfer of your original notes into the exchange agent’s account at DTC, in accordance with the procedure for book-entry transfers described in this prospectus under the heading “The Exchange Offer — Procedures for Tendering;” or | ||
• the documents necessary for compliance with the guaranteed delivery procedures described below. | ||
A letter of transmittal accompanies this prospectus. By executing the letter of transmittal or delivering a computer-generated message through DTC’s Automated Tender Offer Program system, you will represent to us that, among other things: | ||
• the exchange notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business; | ||
• you are not engaging in and do not intend to engage in a distribution of the exchange notes; | ||
• you do not have an arrangement or understanding with any person to participate in the distribution of the exchange notes; and | ||
• you are not an affiliate of ours. | ||
Procedures for Tendering Certificated Original Notes | If you are a holder of book-entry interests in the original notes, you are entitled to receive, in limited circumstances, in exchange for your book-entry interests, certificated notes which are in equal principal amounts to your book-entry interests. See “Book-Entry; Delivery and Form — Certificated Notes.” No certificated original notes are issued and outstanding as of the date of this prospectus. If you acquire certificated original notes prior to the expiration of the exchange offer, you must tender your certificated original notes in accordance with the procedures described in this prospectus under the heading “The Exchange Offer — Procedures for Tendering.” |
10
Table of Contents
Special Procedures for Beneficial Owners | If you are a beneficial owner of original notes that are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, and you wish to tender the original notes in the exchange offer, you should contact that registered holder promptly and instruct that registered holder to tender on your behalf. If you wish to tender on your own behalf, you must, prior to completing and executing the accompanying letter of transmittal and delivering your original notes, either make appropriate arrangements to register ownership of the original notes in your name or obtain a properly completed bond power from the registered holder. The transfer of registered ownership may take considerable time and may not be able to be completed prior to the expiration date. See “The Exchange Offer — Procedures Applicable to All Holders.” | |
Guaranteed Delivery Procedures | If you wish to tender your original notes and your original notes are not immediately available or you cannot deliver your original notes, the accompanying letter of transmittal or any other documents required by the letter of transmittal, or cannot comply with the applicable procedures under DTC’s Automated Tender Offer Program prior to the expiration date, you must tender your original notes according to the guaranteed delivery procedures set forth in this prospectus under “The Exchange Offer — Guaranteed Delivery Procedures.” | |
Acceptance of Original Notes and Delivery of Exchange Notes | Except under the circumstances described above under “Certain Conditions to the Exchange Offer,” we will accept for exchange any and all original notes which are properly tendered in the exchange offer prior to 5:00 p.m., New York City time, on the expiration date. The exchange notes to be issued in the exchange offer will be delivered promptly following the expiration date. See “The Exchange Offer — Terms of the Exchange Offer.” | |
Consequences of Failure to Exchange | Holders of original notes who do not exchange their original notes for exchange notes pursuant to the exchange offer will continue to be subject to the restrictions on transfer of the original notes provided for in the original notes and in the governing indenture and as set forth in the legend on the original notes. In general, the original notes may not be offered or sold unless registered under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the Securities Act and applicable state securities law. We do not currently anticipate that we will register the original notes under the Securities Act. To the extent that original notes are tendered and accepted in the exchange offer, the trading market for untendered original notes could be adversely |
11
Table of Contents
affected. See “The Exchange Offer — Consequences of Failure to Exchange.” | ||
Exchange Agent | J.P.Morgan Trust Company, National Association is serving as exchange agent in connection with the exchange offer. See “The Exchange Offer — The Exchange Agent.” | |
Certain Material U.S. Federal Income and Estate Tax Considerations | The exchange of the original notes for the exchange notes should not be a taxable event for federal income tax purposes. See “Certain Material U.S. Federal and Estate Tax Considerations.” | |
Use of Proceeds | We will not receive any proceeds from the exchange of original notes for exchange notes pursuant to the exchange offer. |
12
Table of Contents
Issuer | WESCO Distribution, Inc. | |
Securities Offered | $150,000,000 aggregate principal amount of 7.50% Senior Subordinated Notes due 2017. | |
Maturity | October 15, 2017. | |
Interest | The exchange notes will accrue interest at the rate of 7.50% per annum and be payable in cash semi-annually in arrears on April 15 and October 15 of each year, beginning on April 15, 2006. The exchange notes will accrue interest from April 15, 2006. | |
Ranking | The exchange notes will be our unsecured senior subordinated obligations and will rank equally in right of payment with all of our existing and future senior subordinated indebtedness and senior to our future subordinated indebtedness. The exchange notes will be subordinated to our existing and future senior indebtedness and effectively subordinated to our existing and future secured indebtedness to the extent of the value of the related collateral. The exchange notes will be structurally subordinated to indebtedness and other liabilities of our subsidiaries. As of March 31, 2006: | |
• we had outstanding senior indebtedness of approximately $75 million, of which approximately $51 million was secured indebtedness (exclusive of the original notes and unused commitments under our revolving credit facility); | ||
• we had no outstanding senior subordinated indebtedness other than the original notes and our guarantee of the $150 million in aggregate principal amount of the 2.625% Convertible Senior Debentures due 2025 (the “Debentures”) of WESCO International and no outstanding indebtedness that would be subordinate or junior in right of repayment to the exchange notes; and | ||
• our subsidiaries had no indebtedness, excluding guarantees of approximately $48 million of borrowings under our mortgage financing facility (other than trade payables and other liabilities incurred in the ordinary course of business). | ||
See “Risk Factors” and “Description of the Notes — Ranking.” | ||
Optional Redemption | Except as described below, we will not have the option of redeeming the exchange notes prior to October 15, 2010. On or after October 15, 2010, we will have the option of redeeming the exchange notes, in whole or in part, at the |
13
Table of Contents
redemption prices described in this prospectus, together with accrued and unpaid interest and additional interest, if any, to the date of redemption. At any time before October 15, 2008, we may redeem up to 35% of the exchange notes issued in this exchange offer with the proceeds of certain equity offerings by us or WESCO International at the redemption price set forth under “Description of the Notes — Optional Redemption.” See “Description of the Notes — Optional Redemption.” | ||
Change of Control | Upon the occurrence of a change of control, each holder of exchange notes will have the right to require us to repurchase all or any part of such holder’s exchange notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of repurchase. See “Description of the Notes — Change of Control.” | |
Guarantee | The exchange notes will be unconditionally guaranteed by WESCO International on an unsecured senior basis. The guarantee will rank equally in right of payment with all existing and future senior unsecured indebtedness of WESCO International. The guarantee will be effectively subordinated to any secured indebtedness of WESCO International, including the guarantee of senior indebtedness under our revolving credit facility, to the extent of the value of the related collateral, and will be structurally subordinated to indebtedness and other liabilities of WESCO International’s subsidiaries, other than the senior subordinated indebtedness of WESCO Distribution, including the notes. | |
As of March 31, 2006, WESCO International had approximately $300 million of senior indebtedness outstanding (excluding its guarantee of a mortgage financing facility under which approximately $48 million was outstanding), of which none was secured indebtedness. | ||
The exchange notes will not be guaranteed by any entity other than WESCO International. As of March 31, 2006, the exchange notes would have been structurally junior to approximately $213 million of indebtedness and other liabilities (including trade payables) of these non-guarantor subsidiaries. The non-guarantor subsidiaries generated approximately $284 million of our net sales for the three months ended March 31, 2006 and held approximately $1.3 billion of our consolidated assets at March 31, 2006. See “Risk Factors — Risks Relating to the Offering.” | ||
Certain Covenants | The indenture governing the exchange notes contains covenants that, subject to certain exceptions, limit the ability of us and our subsidiaries to: | |
• incur additional indebtedness and issue disqualified stock and preferred stock; |
14
Table of Contents
• pay dividends or make certain other restricted payments or investments; | ||
• create restrictions on dividends or other payments by our subsidiaries; | ||
• merge, consolidate, or sell all or substantially all of our assets; | ||
• create liens on assets; | ||
• enter into certain transactions with affiliates; and | ||
• incur indebtedness senior to the notes but junior to senior indebtedness. | ||
These covenants are subject to a number of important exceptions and qualifications. See “Description of the Notes — Certain Covenants.” | ||
Exchange Offer; Registration Rights; Additional Interest | Under the exchange and registration rights agreement executed as part of the offering of the original notes, we agreed to: | |
• file the registration statement of which this prospectus is a part within 210 days after the issue date of the original notes, which enables holders of the original notes to exchange their original notes for publicly registered exchange notes with substantially the same terms; | ||
• use our reasonable best efforts to cause the registration statement of which this prospectus is a part to become effective within 270 days after the issue date of the original notes; | ||
• use our reasonable best efforts to complete the exchange offer as promptly as practicable but in any event prior to 300 days after the issue date of the original notes; and | ||
• file a shelf registration statement for the resale of the original notes if we cannot affect the exchange offer within the time periods listed above and in certain other circumstances. | ||
If we do not comply with our obligations under the exchange and registration rights agreement, we will be required to pay specified additional interest to the holders of original notes under certain circumstances. See “Exchange and Registration Rights Agreement.” | ||
Use of Proceeds | We will not receive any proceeds from the exchange of the original notes for exchange notes pursuant to the exchange offer. See “Use of Proceeds.” | |
Absence of a Public Market for the Exchange Notes | The exchange notes will be a new issue of securities. We cannot assure you that any active or liquid market will develop for the exchange notes. |
15
Table of Contents
16
Table of Contents
Three Months Ended | |||||||||||||||||||||
Year Ended December 31, | March 31, | ||||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||||
(In millions, except share and per share data and ratios) | |||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||
Net sales(1) | $ | 3,286.8 | $ | 3,741.3 | $ | 4,421.1 | $ | 990.9 | $ | 1,265.5 | |||||||||||
Gross profit(2) | 610.1 | 712.1 | 840.7 | 185.2 | 253.1 | ||||||||||||||||
Selling, general and administrative expenses | 501.5 | 544.5 | 612.8 | 142.7 | 169.9 | ||||||||||||||||
Depreciation and amortization | 22.5 | 18.1 | 18.6 | 3.9 | 6.3 | ||||||||||||||||
Income from operations | 86.1 | 149.5 | 209.3 | 38.6 | 76.9 | ||||||||||||||||
Interest expense, net | 42.3 | 40.8 | 30.2 | 9.1 | 6.4 | ||||||||||||||||
Loss on debt extinguishment(3) | 0.2 | 2.6 | 14.9 | 10.1 | — | ||||||||||||||||
Other expenses(4) | 4.5 | 6.6 | 13.3 | 2.0 | 5.0 | ||||||||||||||||
Income before income taxes | 39.1 | 99.5 | 150.9 | 17.4 | 65.5 | ||||||||||||||||
Provision for income taxes(5) | 9.1 | 34.6 | 47.4 | 6.1 | 21.0 | ||||||||||||||||
Net income | $ | 30.0 | $ | 64.9 | $ | 103.5 | $ | 11.3 | $ | 44.5 | |||||||||||
Earnings per common share | |||||||||||||||||||||
Basic | $ | 0.67 | $ | 1.55 | $ | 2.20 | $ | 0.24 | $ | 0.93 | |||||||||||
Diluted | 0.65 | 1.47 | 2.10 | 0.23 | 0.86 | ||||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||
Basic | 44,631,459 | 41,838,034 | 47,085,524 | 46,694,626 | 48,031,287 | ||||||||||||||||
Diluted | 46,349,082 | 44,109,153 | 49,238,436 | 49,226,141 | 51,493,217 | ||||||||||||||||
Other Financial Data: | |||||||||||||||||||||
Capital expenditures | $ | 8.4 | $ | 12.1 | $ | 14.2 | $ | 2.7 | $ | 4.2 | |||||||||||
Net cash provided by operating activities(6) | 35.8 | 21.9 | 295.1 | 102.6 | 32.5 | ||||||||||||||||
Net cash used by investing activities | (9.2 | ) | (46.3 | ) | (291.0 | ) | (3.7 | ) | (5.2 | ) | |||||||||||
Net cash provided (used) by financing activities(6) | (22.3 | ) | 30.7 | (17.0 | ) | (114.4 | ) | (19.1 | ) | ||||||||||||
Ratio of earnings to fixed charges(7) | 1.7 | x | 2.9 | x | 4.7 | x | 2.5 | x | 7.9 | x |
17
Table of Contents
Three Months Ended | ||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||
2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||
(In millions, except share and per share data and ratios) | ||||||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 1,161.2 | $ | 1,356.9 | $ | 1,651.2 | $ | 1,279.5 | $ | 1,684.7 | ||||||||||
Total long-term debt (including current portion) | 422.2 | 417.6 | 403.6 | 299.5 | 374.7 | |||||||||||||||
Long-term obligations(8) | 53.0 | 2.0 | 4.3 | 1.0 | 3.3 | |||||||||||||||
Stockholders’ equity | 167.7 | 353.6 | 491.5 | 375.0 | 547.7 |
(1) | The operating results of the business of Fastec Industrial Corp., acquired on July 29, 2005, and Carlton-Bates Company, acquired on September 29, 2005, have been included in the consolidated financial data and represented, in the aggregate, sales of $104.5 million for the year ended December 31, 2005 and $106.6 million for the three months ended March 31, 2006. |
(2) | Excludes depreciation and amortization. |
(3) | Represents charges relating to the write-off of unamortized debt issuance and other costs associated with the early extinguishment of debt. |
(4) | Represents costs relating to the sale of accounts receivable pursuant to our accounts receivable securitization facility (the “Receivables Facility”). See Note 4 to WESCO International’s audited consolidated financial statements included elsewhere in this prospectus. |
(5) | Benefits of $2.6 million in 2003 from the resolution of prior year tax contingencies resulted in an unusually low provision for income taxes. |
(6) | In the first quarter of 2006, the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standard 123 (revised 2004),Share-Based Payment and SEC staff Accounting Bulletin No. 107,Share-Based Payment, requiring the measurement and recognition of all stock-based compensation under the fair value method were adopted. |
(7) | For purposes of calculating the ratio of earnings to fixed charges, “earnings” represents income before income taxes plus fixed charges. “Fixed charges” consist of interest expense, including amortization of debt issuance costs, and the portion of rental expense that management believes is representative of the interest component of rental expense. |
(8) | Includes amounts due under earnout agreements for past acquisitions. |
18
Table of Contents
• | incur additional debt or issue guarantees; | |
• | create liens; | |
• | make certain investments; | |
• | enter into transactions with our affiliates; | |
• | sell certain assets; | |
• | redeem capital stock or make other restricted payments; | |
• | declare or pay dividends or make other distributions to stockholders; and | |
• | merge or consolidate with any person. |
19
Table of Contents
• | uncertainties in assessing the value, strengths, weaknesses, contingent and other liabilities and potential profitability of acquisition candidates; | |
• | the potential loss of key employees of an acquired business; | |
• | problems that could arise from the integration of the acquired business; and | |
• | unanticipated changes in business, industry or general economic conditions that affect the assumptions underlying the acquisition or other transaction rationale. |
20
Table of Contents
• | making it more difficult for us to meet our payment and other obligations under the notes and our other outstanding debt; | |
• | resulting in an event of default if we fail to comply with the financial and other restrictive covenants contained in our debt agreements, which event of default could result in all of our debt becoming immediately due and payable; | |
• | reducing the availability of our cash flow to fund working capital, capital expenditures, acquisitions and other general corporate purposes, and limiting our ability to obtain additional financing for these purposes; |
21
Table of Contents
• | subjecting us to the risk of increased sensitivity to interest rate increases on our indebtedness with variable interest rates, including borrowings under our credit facilities; | |
• | limiting our flexibility in planning for, or reacting to, and increasing our vulnerability to, changes in our business, the industry in which we operate and the general economy; and | |
• | placing us at a competitive disadvantage compared to our competitors that have less debt or are less leveraged. |
22
Table of Contents
• | insolvent or rendered insolvent because of the guarantee; | |
• | engaged in a business or transaction for which its remaining assets constituted unreasonably small capital; or | |
• | intended to incur, or believed that it would incur, debts beyond its ability to pay at maturity. |
23
Table of Contents
24
Table of Contents
As of | |||||||
March 31, 2006 | |||||||
(In millions) | |||||||
Cash and cash equivalents | $ | 30.4 | |||||
Total debt (including current portion): | |||||||
Revolving credit facility | $ | — | |||||
Mortgage financing facility | 47.9 | ||||||
7.50 Senior Subordinated Notes due 2017 | 150.0 | ||||||
2.625% Convertible Senior Debentures due 2025 | 150.0 | ||||||
Other debt | 26.8 | ||||||
Total debt | 374.7 | ||||||
Total stockholders’ equity: | |||||||
Preferred stock, $.01 par value; 20,000,000 shares authorized; no shares issued or outstanding | $ | — | |||||
Common stock, $.01 par value; 210,000,000 shares authorized; 52,391,041 shares issued | 0.5 | ||||||
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized; 4,339,431 shares issued | — | ||||||
Additional capital | 723.6 | ||||||
Retained deficit | (123.9 | ) | |||||
Treasury stock, at cost; 8,516,795 shares | (66.3 | ) | |||||
Accumulated other comprehensive income | 13.8 | ||||||
Total stockholders’ equity | 547.7 | ||||||
Total capitalization | $ | 921.9 | |||||
25
Table of Contents
Three Months Ended | |||||||||||||||||||||||||||||
Year Ended December 31, | March 31, | ||||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2005 | 2006 | |||||||||||||||||||||||
(In millions, except share and per share data and ratios) | |||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||
Net sales(1) | $ | 3,658.0 | $ | 3,325.8 | $ | 3,286.8 | $ | 3,741.3 | $ | 4,421.1 | $ | 990.9 | $ | 1,265.5 | |||||||||||||||
Gross profit(2) | 643.3 | 590.8 | 610.1 | 712.1 | 840.7 | 185.2 | 253.1 | ||||||||||||||||||||||
Selling, general and administrative expenses | 517.2 | 494.4 | 501.5 | 544.5 | 612.8 | 142.7 | 169.9 | ||||||||||||||||||||||
Depreciation and amortization(3) | 31.0 | 19.8 | 22.5 | 18.1 | 18.6 | 3.9 | 6.3 | ||||||||||||||||||||||
Income from operations | 95.3 | 76.6 | 86.1 | 149.5 | 209.3 | 38.6 | 76.9 | ||||||||||||||||||||||
Interest expense, net | 45.1 | 43.0 | 42.3 | 40.8 | 30.2 | 9.1 | 6.4 | ||||||||||||||||||||||
Loss on debt extinguishment(4) | — | 1.1 | 0.2 | 2.6 | 14.9 | 10.1 | — | ||||||||||||||||||||||
Other expenses(5) | 16.9 | 6.6 | 4.5 | 6.6 | 13.3 | 2.0 | 5.0 | ||||||||||||||||||||||
Income before income taxes | 33.3 | 25.9 | 39.1 | 99.5 | 150.9 | 17.4 | 65.5 | ||||||||||||||||||||||
Provision for income taxes(6) | 13.1 | 2.8 | 9.1 | 34.6 | 47.4 | 6.1 | 21.0 | ||||||||||||||||||||||
Net income | $ | 20.2 | $ | 23.1 | $ | 30.0 | $ | 64.9 | $ | 103.5 | $ | 11.3 | $ | 44.5 | |||||||||||||||
Earnings per common share | |||||||||||||||||||||||||||||
Basic | $ | 0.45 | $ | 0.51 | $ | 0.67 | $ | 1.55 | $ | 2.20 | $ | 0.24 | $ | 0.93 | |||||||||||||||
Diluted | $ | 0.43 | $ | 0.49 | $ | 0.65 | $ | 1.47 | $ | 2.10 | $ | 0.23 | $ | 0.86 | |||||||||||||||
Weighted average common shares outstanding | |||||||||||||||||||||||||||||
Basic | 44,862,087 | 45,033,964 | 44,631,459 | 41,838,034 | 47,085,524 | 46,694,626 | 48,031,287 | ||||||||||||||||||||||
Diluted | 46,901,673 | 46,820,093 | 46,349,082 | 44,109,153 | 49,238,436 | 49,226,141 | 51,493,217 |
26
Table of Contents
Three Months Ended | ||||||||||||||||||||||||||||
Year Ended December 31, | March 31, | |||||||||||||||||||||||||||
2001 | 2002 | 2003 | 2004 | 2005 | 2005 | 2006 | ||||||||||||||||||||||
(In millions, except share and per share data and ratios) | ||||||||||||||||||||||||||||
Other Financial Data and Ratios: | ||||||||||||||||||||||||||||
Capital expenditures | $ | 13.8 | $ | 9.3 | $ | 8.4 | $ | 12.1 | $ | 14.2 | $ | 2.7 | $ | 4.2 | ||||||||||||||
Net cash provided by operating activities(7) | 161.3 | 20.3 | 35.8 | 21.9 | 295.1 | 102.6 | 32.5 | |||||||||||||||||||||
Net cash used by investing activities | (69.2 | ) | (23.1 | ) | (9.2 | ) | (46.3 | ) | (291.0 | ) | (3.7 | ) | (5.2 | ) | ||||||||||||||
Net cash provided (used) by financing activities(7) | (38.0 | ) | (49.9 | ) | (22.3 | ) | 30.7 | (17.0 | ) | (114.4 | ) | (19.1 | ) | |||||||||||||||
Ratio of earnings to fixed charges(8) | 1.6 | x | 1.5 | x | 1.7 | x | 2.9 | x | 4.7 | x | 2.5 | x | 7.9 | x | ||||||||||||||
Balance Sheet Data (as of the end of the period): | ||||||||||||||||||||||||||||
Total assets | $ | 1,170.8 | $ | 1,019.5 | $ | 1,161.2 | $ | 1,356.9 | $ | 1,651.2 | $ | 1,279.5 | $ | 1,684.7 | ||||||||||||||
Total long-term debt (including current portion) | 452.0 | 418.0 | 422.2 | 417.6 | 403.6 | 299.5 | 374.7 | |||||||||||||||||||||
Long term obligations(9) | — | — | 53.0 | 2.0 | 4.3 | 1.0 | 3.3 | |||||||||||||||||||||
Total stockholders’ equity | 144.7 | 169.3 | 167.7 | 353.6 | 491.5 | 375.0 | 547.7 |
(1) | The operating results of the business of Fastec Industrial Corp., acquired on July 29, 2005, and Carlton-Bates Company, acquired on September 29, 2005, have been included in the consolidated financial data and represented, in the aggregate, sales of $104.5 million for the year ended December 31, 2005 and $106.6 million for the three months ended March 31, 2006. |
(2) | Excludes depreciation and amortization. |
(3) | Effective for 2002, WESCO International adopted Statement of Financial Accounting Standards (“SFAS”) No. 142,Goodwill and Other Intangible Assets,as described in Note 2 to WESCO International’s audited consolidated financial statements included elsewhere in this prospectus. |
(4) | Represents charges relating to the write-off of unamortized debt issuance and other costs associated with the early extinguishment of debt. |
(5) | Represents costs relating to the sale of accounts receivable pursuant to our Receivables Facility. See Note 4 to WESCO International’s audited consolidated financial statements included elsewhere in this prospectus. |
(6) | Benefits of $2.6 million and $5.3 million in 2003 and 2002, respectively, from the resolution of prior year tax contingencies resulted in an unusually low provision for income taxes. |
(7) | In the first quarter of 2006, the provisions of Financial Accounting Standards Board Statement of Financial Accounting Standard 123 (revised 2004),Share-Based Payment and SEC staff Accounting Bulletin No. 107,Share-Based Payment, requiring the measurement and recognition of all stock-based compensation under the fair value method were adopted. |
(8) | For purposes of calculating the ratio of earnings to fixed charges, “earnings” represents income before income taxes plus fixed charges. “Fixed charges” consist of interest expense, amortization of deferred financing costs and the component of rental expense that management believes is representative of the interest component of rental expense. |
(9) | Includes amounts due under earnout agreements for past acquisitions. |
27
Table of Contents
28
Table of Contents
29
Table of Contents
30
Table of Contents
Three Months | |||||||||||||||||||||
Year Ended | Ended | ||||||||||||||||||||
December 31, | March 31, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2006 | 2005 | |||||||||||||||||
Net sales | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||
Gross profit | 19.0 | 19.0 | 18.6 | 20.0 | 18.7 | ||||||||||||||||
Selling, general and administrative expenses | 13.9 | 14.6 | 15.3 | 13.4 | 14.4 | ||||||||||||||||
Depreciation and amortization | 0.4 | 0.5 | 0.7 | 0.5 | 0.4 | ||||||||||||||||
Income from operations | 4.7 | 3.9 | 2.6 | 6.1 | 3.9 | ||||||||||||||||
Interest expense | 0.7 | 1.1 | 1.3 | 0.5 | 0.9 | ||||||||||||||||
Loss on debt extinguishment | 0.3 | — | — | — | 1.0 | ||||||||||||||||
Other expenses | 0.3 | 0.2 | 0.1 | 0.4 | 0.3 | ||||||||||||||||
Income before income taxes | 3.4 | 2.6 | 1.2 | 5.2 | 1.7 | ||||||||||||||||
Provision for income taxes | 1.1 | 0.9 | 0.3 | 1.7 | 0.6 | ||||||||||||||||
Net income | 2.3 | % | 1.7 | % | 0.9 | % | 3.5 | % | 1.1 | % | |||||||||||
First Quarter of 2006 versus First Quarter of 2005 |
31
Table of Contents
32
Table of Contents
33
Table of Contents
34
Table of Contents
35
Table of Contents
36
Table of Contents
37
Table of Contents
2007 to | 2009 to | 2010 - | ||||||||||||||||||
2006 | 2008 | 2010 | After | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Contractual cash obligations (including interest) | ||||||||||||||||||||
Revolving credit facility | $ | 29.0 | $ | — | $ | — | $ | — | $ | 29.0 | ||||||||||
Mortgage financing facility | 4.3 | 8.6 | 8.6 | 46.8 | 68.3 | |||||||||||||||
Non-cancelable operating and capital leases | 28.9 | 41.9 | 20.4 | 11.7 | 102.9 | |||||||||||||||
Bruckner note | 21.6 | — | — | — | 21.6 | |||||||||||||||
Fastec note | — | 3.6 | — | — | 3.6 | |||||||||||||||
Acquisition agreements | 2.7 | 4.4 | 0.1 | 0.1 | 7.3 | |||||||||||||||
7.50% Senior Subordinated Notes due 2017 | 11.3 | 22.5 | 22.5 | 228.7 | 285.0 | |||||||||||||||
2.625% Convertible Senior Debentures due 2025 | 3.9 | 7.9 | 7.9 | 209.1 | 228.8 | |||||||||||||||
Total contractual cash obligations | $ | 101.7 | $ | 88.9 | $ | 59.5 | $ | 496.4 | $ | 746.5 |
38
Table of Contents
39
Table of Contents
40
Table of Contents
• | industrial customers with large, complex plant maintenance operations, many of which require a national multi-site service solution for their electrical product needs; | |
• | large contractors for major industrial and commercial construction projects; | |
• | the electric utility industry; and | |
• | manufacturers of factory-built homes, recreational vehicles and other modular structures. |
• | expanding our product and service offerings to existing customers in industries we currently serve; | |
• | targeting new customers in industries we currently serve; and | |
• | targeting markets that provide significant growth opportunities, such as multi-site retail construction, education and healthcare facilities, OEM and regional and national contractors. |
• | offering existing national account customers new products and services and serving additional customer locations; | |
• | extending certain established national account relationships to include our integrated supply services; and | |
• | expanding our customer base by leveraging our existing industry expertise in markets served to enter into new markets. |
41
Table of Contents
• | active national marketing of our demonstrated project management capabilities; | |
• | further development of relationships with leading regional and national contractors and engineering firms; and | |
• | close coordination with multi-location contractor customers on their major project requirements. |
42
Table of Contents
43
Table of Contents
• | National Accounts — we coordinate product supply and materials management activities for MRO supplies, project needs and direct material for national and regional customers with multiple locations who seek purchasing leverage through a single electrical products provider. Regional and national contractors and top engineering and construction firms that specialize in major projects such as airport expansions, power plants and oil and gas facilities are also a focus group for our national accounts program; and | |
• | Integrated Supply — we design and implement programs that enable our customers to significantly reduce the number of MRO suppliers they use through services that include highly automated, proprietary electronic procurement and inventory replenishment systems andon-site materials management and logistics services. |
• | maintain local sourcing of customer service, technical support and sales coverage; | |
• | tailor branch products and services to local customer needs; | |
• | offer multi-site distribution capabilities to large customers and national accounts; and | |
• | provide same-day deliveries. |
• | extensive use of automation and technology; | |
• | centralization of functions such as purchasing, accounting and information systems; | |
• | strategically located distribution centers; | |
• | purchasing economies of scale; and | |
• | incentive programs that increase productivity and encourage entrepreneurship. |
44
Table of Contents
• | Electrical Supplies. Wiring devices, fuses, terminals, connectors, boxes, enclosures, fittings, lugs, terminations, tape, and splicing and marking equipment; | |
• | Industrial Supplies. Tools and testers, safety and security, fall protection, personal protection, consumables, janitorial and other MRO supplies; | |
• | Power Distribution. Circuit breakers, transformers, switchboards, panel boards, metering products and busway products; | |
• | Lighting. Lamps, fixtures, ballasts and lighting control products; | |
• | Wire and Conduit. Wire, cable, raceway, metallic and non-metallic conduit; | |
• | Control, Automation and Motors. Motor control devices, drives, surge and power protection, relays, timers, pushbuttons and operator interfaces; and | |
• | Data Communications. Cables, cable management and connecting hardware. |
• | outsourcing of the entire MRO purchasing process; | |
• | providing technical support for manufacturing process improvements usingstate-of-the-art automated solutions; | |
• | implementing inventory optimization programs; | |
• | participating in joint cost savings teams; | |
• | assigning our employees ason-site support personnel; |
45
Table of Contents
• | recommending energy-efficient product upgrades; and | |
• | offering safety and product training for customer employees. |
46
Table of Contents
47
Table of Contents
48
Table of Contents
Net Sales | Long-Lived Assets | |||||||||||||||||||||||
Year Ended December 31, | December 31, | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||
United States | $ | 3,829,755 | $ | 3,265,280 | $ | 2,872,239 | $ | 728,329 | $ | 488,787 | $ | 491,515 | ||||||||||||
Foreign Operations Canada | 499,817 | 394,375 | 335,695 | 12,375 | 11,958 | 11,926 | ||||||||||||||||||
Other foreign | 91,531 | 81,598 | 78,832 | 1,592 | 1,194 | 1,341 | ||||||||||||||||||
Subtotal Foreign Operations | 591,348 | 475,973 | 414,527 | 13,967 | 13,152 | 13,267 | ||||||||||||||||||
Total U.S. and Foreign | $ | 4,421,103 | $ | 3,741,253 | $ | 3,286,766 | $ | 742,296 | $ | 501,939 | $ | 504,782 | ||||||||||||
49
Table of Contents
50
Table of Contents
Location | Square Feet | Leased/Owned | ||||||
Warrandale, PA | 194,000 | Owned | ||||||
Sparks, NV | 131,000 | Leased | ||||||
Byhalia, MS | 148,000 | Owned | ||||||
Little Rock, AR | 100,000 | Leased | ||||||
Dorval, QE | 90,000 | Leased | ||||||
Columbia, SC | 70,000 | Leased | ||||||
Burnaby, BC | 65,000 | Owned | ||||||
Kettering, OH | 48,000 | Leased |
51
Table of Contents
52
Table of Contents
Name | Age | Position | ||||
Roy W. Haley | 59 | Chairman and Chief Executive Officer | ||||
Sandra Beach Lin | 48 | Director | ||||
George L. Miles, Jr. | 64 | Director | ||||
Steven A. Raymund | 50 | Director | ||||
James L. Singleton | 50 | Director | ||||
Robert J. Tarr, Jr. | 62 | Director | ||||
Lynn M. Utter | 43 | Director | ||||
William J. Vareschi | 63 | Director | ||||
Kenneth L. Way | 66 | Director | ||||
John J. Engel | 44 | Senior Vice President and Chief Operating Officer | ||||
Stephen A. Van Oss | 51 | Senior Vice President, Chief Financial and Administrative Officer | ||||
William M. Goodwin | 60 | Vice President, Operations | ||||
Robert B. Rosenbaum | 48 | Vice President, Operations | ||||
Donald H. Thimjon | 62 | Vice President, Operations | ||||
Ronald P. Van, Jr. | 45 | Vice President, Operations | ||||
Daniel A. Brailer | 49 | Treasurer and Director of Investor Relations | ||||
Marcy Smorey-Giger | 34 | Corporate Counsel and Secretary |
53
Table of Contents
54
Table of Contents
Long Term | |||||||||||||||||||||||||
Compensation | |||||||||||||||||||||||||
Securities | |||||||||||||||||||||||||
Annual Compensation | Underlying Equity | All Other | |||||||||||||||||||||||
Name and Principal | Fiscal | Awards | Compensation ($) | Total | |||||||||||||||||||||
Position(s) | Year | Salary ($) | Bonus ($)(1) | (#s)(2) | (3)(4)(5)(6)(7)(8) | Compensation | |||||||||||||||||||
Roy W. Haley | 2005 | 700,000 | 1,600,000 | 200,000 | 136,632 | 2,436,632 | |||||||||||||||||||
Chairman and Chief | 2004 | 685,833 | 1,470,000 | 200,000 | 70,678 | 2,226,511 | |||||||||||||||||||
Executive Officer | 2003 | 615,000 | 300,000 | 300,000 | 35,072 | 950,072 | |||||||||||||||||||
John J. Engel | 2005 | 450,000 | 530,000 | 75,000 | 102,778 | 1,082,778 | |||||||||||||||||||
Senior Vice President | 2004 | 209,711 | 200,000 | 200,000 | 215,560 | 625,271 | |||||||||||||||||||
and Chief Operating | 2003 | — | — | — | — | — | |||||||||||||||||||
Officer | |||||||||||||||||||||||||
Stephen A. Van Oss | 2005 | 408,333 | 430,000 | 75,000 | 65,156 | 903,489 | |||||||||||||||||||
Senior Vice President | 2004 | 325,000 | 387,000 | 70,000 | 38,051 | 750,051 | |||||||||||||||||||
and Chief Financial | 2003 | 300,000 | 130,000 | 70,000 | 25,710 | 455,710 | |||||||||||||||||||
and Administrative | |||||||||||||||||||||||||
Officer | |||||||||||||||||||||||||
William M. Goodwin | 2005 | 261,667 | 225,000 | 25,000 | 59,338 | 546,005 | |||||||||||||||||||
Vice President, | 2004 | 242,000 | 280,500 | 30,000 | 38,308 | 560,808 | |||||||||||||||||||
Operations | 2003 | 235,833 | 118,000 | 38,000 | 23,548 | 377,381 | |||||||||||||||||||
Donald H. Thimjon | 2005 | 245,333 | 225,000 | 25,000 | 54,071 | 524,404 | |||||||||||||||||||
Vice President, | 2003 | 242,000 | 280,500 | 35,000 | 35,852 | 558,352 | |||||||||||||||||||
Operations | 2002 | 235,833 | 76,200 | 38,000 | 23,874 | 335,907 |
(1) | Bonus amounts reflect compensation earned in the indicated fiscal year, but approved and paid in the following year. Bonus amounts reflect awards under documented performance objectives and plans, and are inclusive of a special one-year Value Acceleration Program payment approved by the Board for performance substantially above established goals. |
(2) | All equity awards granted to the Named Executive Officers in 2005, 2004 and 2003 were granted under WESCO International’s 1999 Long-Term Incentive Plan (“LTIP”), as amended and approved by the Board and stockholders. SARs granted in 2005 have an exercise price of $31.65 per share. SARs granted in 2004 have an exercise price of $24.02 per share. Mr. Engel, after joining WESCO International in 2004 was granted stock options at an exercise price of $16.82 per share. Stock options granted in 2003 have an exercise price of $5.90 per share. Awards granted under the LTIP are subject to certain time and performance based vesting requirements. |
(3) | Includes contributions under the WESCO Distribution, Inc. Retirement Savings Plan in the amounts of (a) $2,583, $4,200, $2,800, $5,250, and $6,150 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2005 |
55
Table of Contents
(b) $6,000, $3,938, $2,600, $4,925, and $6,000 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2004, (c) $6,000, $-0-, $2,400, $4,500, and $6,000 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2003. An award under WESCO International’s Retirement Savings Plan in the form of a discretionary contribution was made to all employees in 2005 for 2004 performance, specifically, in the amounts of $10,000, $5,729, $10,000, $14,000, and $14,000 for Messrs. Haley, Engel, Van Oss, Goodwin and Thimjon, respectively. | |
(4) | Includes contributions under the WESCO Distribution, Inc. Deferred Compensation Plan in the amounts of (a) $62,517 $15,300, $21,060, $11,015, and $8,775 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2005 (b) $22,700, $-0-, $10,613, $5,779, and $3,341 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2004, (c) $14,750, $-0-, $10,500, $5,036 and $2,666 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2003. An award under WESCO International’s Retirement Savings Plan in the form of a discretionary contribution was made in 2005 to the Deferred Compensation Plan in the amounts of $39,115, $-0-, $12,646, $11,183, and $8,257 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively. |
(5) | Includes an annual automobile allowance paid by WESCO International in the amount of $12,000 for each of Messrs. Haley, Van Oss, Goodwin, and Thimjon in each of 2005, 2004, and 2003. Includes automobile allowance in the amount of $12,000 in 2005 and $5,500 in 2004, the year Mr. Engel became employed with WESCO International. |
(6) | Includes the dollar value of insurance premiums paid by WESCO International for each executive officer’s term life insurance in the amounts of (a) $2,322, $540, $1,242, $3,713 and $3,366 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2005, (b) $2,419, $225, $1,294, $2,208, and $3,152 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2004, (c) $2,322, $-0-, $810, $2,012, and $3,208 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2003. |
(7) | Includes non-cash awards in the amounts of (a) $8,095, $-0-; $5,408, $2,177, and $1,523 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2005, (b) $7,809, $1,675, $5,094, $2,177 and $840 for Messrs. Haley, Engel, Van Oss, Goodwin, and Thimjon, respectively, in 2004. |
(8) | Includes relocation allowance paid by WESCO International for Mr. Engel in the amounts of $65,009 and $204,222 in 2005 and 2004 respectively. |
Potential | ||||||||||||||||||||||||
Realizable Value | ||||||||||||||||||||||||
at Assumed Rates | ||||||||||||||||||||||||
of Stock Price | ||||||||||||||||||||||||
Number of | % of Total | Appreciation | ||||||||||||||||||||||
Securities | SARs Granted to | Exercise | for SAR Term(1) | |||||||||||||||||||||
Underlying SARs | Employees in | Price | Expiration | |||||||||||||||||||||
Name | Granted | Fiscal Year | ($/Sh) | Date | 5% | 10% | ||||||||||||||||||
Roy W. Haley | 200,000 | 22.00 | % | 31.65 | 7/1/2015 | 3,980,000 | 10,088,000 | |||||||||||||||||
John J. Engel | 75,000 | 8.25 | % | 31.65 | 7/1/2015 | 1,492,500 | 3,783,000 | |||||||||||||||||
Stephen A. Van Oss | 75,000 | 8.25 | % | 31.65 | 7/1/2015 | 1,492,500 | 3,783,000 | |||||||||||||||||
William M. Goodwin | 25,000 | 2.75 | % | 31.65 | 7/1/2015 | 497,500 | 1,261,000 | |||||||||||||||||
Donald H. Thimjon | 25,000 | 2.75 | % | 31.65 | 7/1/2015 | 497,500 | 1,261,000 |
(1) | Amounts represent hypothetical gains that could be achieved for the respective SARs if exercised at the end of the SARs term. These gains are based on assumed rates of stock price appreciation of 5% and 10% compounded annually from the date the respective SARs were granted to their expiration date. These assumptions are not intended to forecast future appreciation of our stock price. The potential realizable value computation does not take into account federal or state income tax consequences of SARs exercises or sales of appreciated stock. |
56
Table of Contents
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised | |||||||||||||||||||||||
Option/SARs Awards at | In-the-Money Option/SARs | |||||||||||||||||||||||
FY-End | Awards at FY-End ($)(1) | |||||||||||||||||||||||
Shares Acquired | Value | Exercisable | Unexercisable | Exercisable | Unexercisable | |||||||||||||||||||
Name | on Exercise (#) | Realized (#) | (#) | (#) | ($) | 10% | ||||||||||||||||||
Roy W. Haley | N/A | N/A | 808,542 | 958,458 | 29,942,502 | 25,899,658 | ||||||||||||||||||
John J. Engel | N/A | N/A | 33,334 | 241,666 | 863,684 | 5,149,316 | ||||||||||||||||||
Stephen A. Van Oss | 25,000 | 668,250 | 130,963 | 271,009 | 4,217,782 | 6,962,181 | ||||||||||||||||||
William M. Goodwin | 10,525 | 261,651 | 84,283 | 175,352 | 2,634,489 | 4,853,667 | ||||||||||||||||||
Donald H. Thimjon | 54,808 | 1,494,674 | 11,667 | 178,685 | 218,290 | 5,193,027 |
(1) | Based on the closing market price per share of $42.73 as reported on the NYSE on December 31, 2005. |
57
Table of Contents
58
Table of Contents
59
Table of Contents
Shares Beneficially | Percent Owned | ||||||||
Name | Owned(1) | Beneficially | |||||||
FMR Corporation | 7,106,159 | (2) | 14.7 | % | |||||
82 Devonshire Street | |||||||||
Boston, Massachusetts 02109 | |||||||||
Putnam, LLC d/b/a Putnam Investments | 2,631,966 | (3) | 5.4 | % | |||||
One Post Office Square | |||||||||
Boston, Massachusetts 02109 | |||||||||
Roy W. Haley | 1,569,387 | 3.2 | % | ||||||
Stephen A. Van Oss | 211,234 | * | |||||||
William M. Goodwin | 84,252 | * | |||||||
John J. Engel | 83,334 | * | |||||||
Donald H. Thimjon | 69,359 | * | |||||||
Robert J. Tarr, Jr. | 15,000 | * | |||||||
James L. Singleton | 10,000 | * | |||||||
Kenneth L. Way | 5,453 | * | |||||||
Sandra Beach Lin | 350 | * | |||||||
George L. Miles, Jr. | — | * | |||||||
William J. Vareschi | — | — | |||||||
Lynn M. Utter | — | — | |||||||
Steven A. Raymund | — | — | |||||||
All 17 executive officers and Directors as a group | 2,114,967 | 4.2 | % |
* | Indicates ownership of less than 1% of the Common Stock. |
(1) | The beneficial ownership of Directors set forth in the following table does not reflect shares of common stock payable to any such Director following the Director’s termination of Board service with respect to portions of annual fees deferred under WESCO International’s Deferred Compensation Plan for Non-Employee Directors or in settlement of any options or SARs granted to any such Director under that plan to the extent that those options or SARs may not be exercised or settled within 60 days of April 28, 2006. |
(2) | Based on a Schedule 13G/A filed under the Securities Exchange Act of 1934 by FMR Corporation and its affiliates on February 14, 2006. |
(3) | Based on a schedule 13G/A filed under the Securities Exchange Act of 1934 by Putnam, LLC d/b/a Putnam Investments and its affiliates on February 10, 2006. |
60
Table of Contents
• | the exchange notes to be issued to you in the exchange offer are acquired in the ordinary course of your business; | |
• | you are not engaging in and do not intend to engage in a distribution of the exchange notes to be issued to you in the exchange offer; | |
• | you have no arrangement or understanding with any person to participate in the distribution of the exchange notes to be issued to you in the exchange offer; and | |
• | you are not an “affiliate” of ours, as defined under Rule 405 of the Securities Act. |
61
Table of Contents
• | the exchange offer is not consummated on or prior to 300 days after the date of the issuance of the original notes (other than in the event we file a shelf registration statement with respect to the original notes); or | |
• | we file a shelf registration statement with respect to the original notes, and such shelf registration statement is declared effective within 270 days after the date of the issuance of the original notes (or in the case of a shelf registration statement required to be filed in response to a change in law or the applicable interpretations of the SEC’s staff, if later, within 90 days after publication of the change in law or interpretation, but in no event before 270 days after the date of the issuance of the original notes) but shall thereafter cease to be effective (at any time that we are obligated to maintain the effectiveness of that shelf registration statement) without being succeeded within 90 days by an additional registration statement filed and declared effective |
62
Table of Contents
63
Table of Contents
• | to delay accepting any original notes or, if any of the conditions, other than those relating to necessary governmental approvals, set forth below under “— Conditions” have not been satisfied or waived prior to the expiration date, to terminate the exchange offer by giving oral or written notice of such delay or termination to the exchange agent; provided, however, we will not delay payment subsequent to the expiration date other than in anticipation of receiving necessary governmental approvals; or | |
• | to amend the terms of the exchange offer in any manner by complying with Rule 14e-l(d) under the Exchange Act to the extent that rule applies. |
64
Table of Contents
• | a written or facsimile copy of a properly completed and duly executed letter of transmittal, including all other documents required by such letter of transmittal, to the exchange agent at the address set forth on the cover page of the letter of transmittal; or | |
• | a computer-generated message transmitted by means of DTC’s Automated Tender Offer Program system and received by the exchange agent and forming a part of a confirmation of book-entry transfer, in which you acknowledge and agree to be bound by the terms of the letter of transmittal. |
• | a timely confirmation of book-entry transfer of such original notes into the exchange agent’s account at DTC pursuant to the procedure for book-entry transfers described below under “— Book-Entry Transfer” must be received by the exchange agent prior to the expiration date; or | |
• | you must comply with the guaranteed delivery procedures described below. |
65
Table of Contents
• | the certificates representing your original notes must be received by the exchange agent prior to the expiration date; or | |
• | you must comply with the guaranteed delivery procedures described below. |
• | original notes tendered in the exchange offer are tendered either: |
• | by a registered holder who has not completed the box entitled “Special Registration Instructions” or “Special Delivery Instructions” on the letter of transmittal or | |
• | for the account of an eligible institution; and |
• | the box entitled “Special Registration Instructions” on the letter of transmittal has not been completed. |
66
Table of Contents
• | you improperly tender your original notes; | |
• | you have not cured any defects or irregularities in your tender; and | |
• | we have not waived those defects, irregularities or improper tender. |
• | purchase or make offers for, or offer exchange notes for, any original notes that remain outstanding subsequent to the expiration of the exchange offer; | |
• | terminate the exchange offer if a condition to the exchange offer is not satisfied; or | |
• | to the extent permitted by applicable law, purchase original notes in the open market, in privately negotiated transactions or otherwise. |
• | the exchange notes to be acquired by you in the exchange offer are being acquired in the ordinary course of your business; | |
• | you are not engaging in and do not intend to engage in a distribution of the exchange notes to be acquired by you in the exchange offer; | |
• | you do not have an arrangement or understanding with any person to participate in the distribution of the exchange notes to be acquired by you in the exchange offer; and | |
• | you are not our “affiliate,” as defined under Rule 405 of the Securities Act. |
67
Table of Contents
• | you tender your original notes through an eligible financial institution; | |
• | on or prior to 5:00 p.m., New York City time, on the expiration date, the exchange agent receives from an eligible institution, a written or facsimile copy of a properly completed and duly executed letter of transmittal and notice of guaranteed delivery, substantially in the form provided by us; and | |
• | the certificates for all certificated original notes, in proper form for transfer, or a book-entry confirmation, and all other documents required by the letter of transmittal, are received by the exchange agent within three New York Stock Exchange trading days after the date of execution of the notice of guaranteed delivery. |
• | your name and address; | |
• | the amount of original notes you are tendering; and | |
• | a statement that your tender is being made by the notice of guaranteed delivery and that you guarantee that within three New York Stock Exchange trading days after the execution of the notice of guaranteed delivery, the eligible institution will deliver the following documents to the exchange agent: | |
• | the certificates for all certificated original notes being tendered, in proper form for transfer or a book-entry confirmation of tender; | |
• | a written or facsimile copy of the letter of transmittal, or a book-entry confirmation instead of the letter of transmittal; and | |
• | any other documents required by the letter of transmittal. |
• | you cannot deliver a book-entry confirmation of book-entry delivery of your book-entry interests into the exchange agent’s account at DTC; or | |
• | you cannot deliver all other documents required by the letter of transmittal to the exchange agent prior to the expiration date, |
68
Table of Contents
• | state your name; | |
• | identify the specific original notes to be withdrawn, including the certificate number or numbers and the principal amount of withdrawn notes; | |
• | be signed by you in the same manner as you signed the letter of transmittal when you tendered your original notes, including any required signature guarantees or be accompanied by documents of transfer sufficient for the exchange agent to register the transfer of the original notes into your name; and | |
• | specify the name in which the original notes are to be registered, if different from yours. |
• | any injunction, order or decree has been issued by any court or any governmental agency that would prohibit, prevent or otherwise materially impair our ability to proceed with the exchange offer; or | |
• | the exchange offer violates any applicable law or any applicable interpretation of the staff of the SEC. |
69
Table of Contents
By First Class/ Registered/Certified Mail: J.P.Morgan Trust Company, National Association | By Express Delivery Only: J.P.Morgan Trust Company, National Association | By Hand Only: J.P.Morgan Trust Company, National Association | ||
Worldwide Securities Services P.O. Box 2320 Dallas, Texas 75221-2320 | Worldwide Securities Services 2001 Bryan St., 9th Floor Dallas, Texas 75201 | Worldwide Securities Services Window 4 New York Plaza — 1st Floor New York, New York 10004 |
70
Table of Contents
71
Table of Contents
72
Table of Contents
Redemption | ||||
Year | Price | |||
2010 | 103.750 | % | ||
2011 | 102.500 | % | ||
2012 | 101.250 | % | ||
2013 and thereafter | 100.000 | % |
73
Table of Contents
• | the outstanding Senior Indebtedness of WESCO Distribution was approximately $75 million, of which approximately $51 million was Secured Indebtedness (exclusive of unused commitments under the revolving credit facility); and | |
• | WESCO Distribution had no outstanding Senior Subordinated Indebtedness other than the notes and its guarantee of the $150.0 million of the Debentures and no outstanding Indebtedness that is subordinate or junior in right of repayment to the notes. |
• | any obligation of WESCO Distribution to any Subsidiary; | |
• | any liability for federal, state, local or other taxes owed or owing by WESCO Distribution; | |
• | any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guarantees thereof or instruments evidencing such liabilities); | |
• | any Indebtedness or obligation of WESCO Distribution (and any accrued and unpaid interest in respect thereof) that by its terms is subordinate or junior in any respect to any other Indebtedness or obligation of WESCO Distribution, including any Senior Subordinated Indebtedness of WESCO Distribution and any Subordinated Obligations of WESCO Distribution; | |
• | any payment obligations with respect to any Capital Stock; or | |
• | any Indebtedness incurred in violation of the Indenture. |
74
Table of Contents
• | any Designated Senior Indebtedness is not paid in cash or cash equivalents when due; or | |
• | any other default on Designated Senior Indebtedness occurs and the maturity of such Designated Senior Indebtedness is accelerated in accordance with its terms unless, in either case the default has been cured or waived and any such acceleration has been rescinded or such Designated Senior Indebtedness has been paid in full in cash or cash equivalents. |
75
Table of Contents
76
Table of Contents
• | (A) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner,” as that term is defined in Rules 13d-3 and13d-5 of the Exchange Act (except that for purposes of this clause, such person shall be deemed to have “beneficial ownership” of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 50% of the total voting power of the Voting Stock of WESCO Distribution or WESCO International; | |
• | during any period of two consecutive years commencing on the Closing Date, individuals who at the beginning of such period constituted the board of directors of WESCO Distribution or WESCO International, as the case may be (together with any new directors whose election by such board of directors of WESCO Distribution or WESCO International, as the case may be, or whose nomination for election by the shareholders of WESCO Distribution or WESCO International, as the case may be, was approved by a vote of 662/3% of the directors of WESCO Distribution or WESCO International, as the case may be, then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the board of directors of WESCO Distribution or WESCO International, as the case may be, then in office; or | |
• | the merger or consolidation of WESCO Distribution or WESCO International with or into another Person or the merger of another Person with or into WESCO Distribution or WESCO International, or the sale of all or substantially all the assets of WESCO Distribution or WESCO International to another Person, and, in the case of any such merger or consolidation, the securities of WESCO Distribution or WESCO International that are outstanding immediately prior to such transaction and which represent 100% of the aggregate voting power of the Voting Stock of WESCO Distribution or WESCO International are changed into or exchanged for cash, securities or property, unless pursuant to such transaction such securities are changed into or exchanged for, in addition to any other consideration, securities of the surviving Person that represent immediately after such transaction, at least a majority of the aggregate voting power of the Voting Stock of the surviving Person; provided, however, that any sale of accounts receivable in connection with a Qualified Receivables Transaction will not constitute a Change of Control. |
• | that a Change of Control has occurred and that such Noteholder has the right to require WESCO Distribution to purchase such Noteholder’s notes at a purchase price in cash equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional interest, if any, to the date of repurchase (subject to the right of Noteholders of record on the relevant record date to receive interest on the relevant interest payment date); |
77
Table of Contents
• | the circumstances and relevant facts regarding such Change of Control; | |
• | the repurchase date (which can be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and | |
• | the instructions determined by WESCO Distribution, consistent with this covenant, that a Noteholder must follow in order to have its notes purchased. |
78
Table of Contents
Limitation on Indebtedness. |
(i) Indebtedness Incurred pursuant to the Credit Agreement or any other Credit Facility in an aggregate principal amount up to the greater of the Borrowing Base and $350.0 million; | |
(ii) Indebtedness of WESCO Distribution owed to and held by any Wholly Owned Subsidiary or Indebtedness of a Restricted Subsidiary owed to and held by WESCO Distribution or any Wholly Owned Subsidiary; provided, however, that (A) any subsequent issuance or transfer of any Capital Stock or any other event that results in any such Wholly Owned Subsidiary ceasing to be a Wholly Owned Subsidiary or any subsequent transfer of any such Indebtedness (except to WESCO Distribution or a Wholly Owned Subsidiary) will be deemed, in each case, to constitute the Incurrence of such Indebtedness by the issuer thereof and (B) if WESCO Distribution is the obligor on such Indebtedness, such Indebtedness is expressly subordinated to the prior payment in full in cash of all obligations with respect to the notes; | |
(iii) Indebtedness (A) represented by the notes (not including any Additional Notes), and the related exchange notes issued in a registered exchange offer pursuant to the Registration Rights Agreement, (B) outstanding on the Closing Date (including the Guarantee by WESCO Distribution of the Debentures) (other than the Indebtedness described in clauses (i) and (ii) above), (C) consisting of Refinancing Indebtedness Incurred in respect of any Indebtedness described in this clause (iii) (including Indebtedness that Refinances any Refinancing Indebtedness) or the foregoing paragraph (a), and (D) consisting of Guarantees of Indebtedness permitted under clauses (i) and (ii) of this paragraph (b); | |
(iv) (A) Indebtedness of a Restricted Subsidiary Incurred and outstanding on or prior to the date on which such Restricted Subsidiary was acquired by WESCO Distribution (other than Indebtedness Incurred as consideration in, or to provide all or any portion of the funds or credit support utilized to consummate, the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Subsidiary of or was otherwise acquired by WESCO Distribution); provided, however, if the aggregate amount of all such Indebtedness of all such Restricted Subsidiaries would exceed $50.0 million, that on the date that such Restricted Subsidiary is acquired by WESCO Distribution, it would have |
79
Table of Contents
been able to Incur $1.00 of additional Indebtedness pursuant to the foregoing paragraph (a) after giving effect to the Incurrence of such Indebtedness pursuant to this clause (iv) and (B) Refinancing Indebtedness Incurred by a Restricted Subsidiary in respect of Indebtedness Incurred by such Restricted Subsidiary pursuant to this clause (iv); | |
(v) Indebtedness (A) in respect of performance bonds, bankers’ acceptances, letters of credit and surety or appeal bonds provided by WESCO Distribution and the Restricted Subsidiaries in the ordinary course of their business, and (B) under Hedging Obligations consisting of Interest Rate Agreements directly related (as determined in good faith by WESCO Distribution) to Indebtedness permitted to be Incurred by WESCO Distribution and its Restricted Subsidiaries pursuant to the Indenture and Currency Agreements Incurred in the ordinary course of business; | |
(vi) Indebtedness Incurred by WESCO Distribution or any Restricted Subsidiary (including Capitalized Lease Obligations) financing the purchase, lease or improvement of property (real or personal) or equipment (whether through the direct purchase of assets or the Capital Stock of the Person owning such assets), in each case Incurred no more than 180 days after such purchase, lease or improvement of such property and any Refinancing Indebtedness in respect of such Indebtedness; provided, however, that at the time of the Incurrence of such Indebtedness and after giving effect thereto, the aggregate principal amount of all such Indebtedness Incurred pursuant to this clause (vi) (or, prior to the Closing Date, pursuant to the corresponding provision of the 1998 Notes Indenture) and then outstanding shall not exceed the greater of $50 million and 7% of Adjusted Consolidated Assets; | |
(vii) Indebtedness Incurred by WESCO Distribution in connection with the acquisition of a Related Business and any Refinancing Indebtedness in respect of such Indebtedness; provided, however, that the aggregate amount of all such Indebtedness Incurred and outstanding pursuant to this clause (vii) shall not exceed $75.0 million at any one time; | |
(viii) Attributable Debt Incurred by WESCO Distribution in respect of Sale/Leaseback Transactions; provided, however, that the aggregate amount of any such Attributable Debt Incurred and outstanding pursuant to this clause (viii) shall not exceed $75.0 million at any one time; | |
(ix) Indebtedness arising from agreements of WESCO Distribution or a Restricted Subsidiary providing for indemnification, purchase price adjustment or similar obligations, in each case, Incurred or assumed in connection with the disposition of any business, assets or a Subsidiary, other than Guarantees of Indebtedness Incurred by any Person acquiring all or any portion of such business, assets or a Subsidiary for the purpose of financing such acquisition; provided, however, that the maximum assumable liability in respect of all such Indebtedness shall at no time exceed the gross proceeds actually received by WESCO Distribution and its Restricted Subsidiaries in connection with such disposition; | |
(x) any Guarantee by WESCO Distribution of Indebtedness or other obligations of any of its Restricted Subsidiaries so long as the Incurrence of such Indebtedness Incurred by such Restricted Subsidiary is permitted under the terms of the Indenture; | |
(xi) Indebtedness arising from Guarantees to suppliers, lessors, licensees, contractors, franchisees or customers Incurred in the ordinary course of business; | |
(xii) Indebtedness Incurred by a Receivables Entity in a Qualified Receivables Transaction that is not recourse to WESCO Distribution or any other Restricted Subsidiary of WESCO Distribution (except for Standard Securitization Undertakings); and | |
(xiii) Indebtedness (other than Indebtedness permitted to be Incurred pursuant to the foregoing paragraph (a) or any other clause of this paragraph (b)) in an aggregate |
80
Table of Contents
principal amount on the date of Incurrence that, when added to all other such Indebtedness Incurred pursuant to this clause (xiii) and then outstanding, shall not exceed $75.0 million. |
Limitation on Restricted Payments |
81
Table of Contents
82
Table of Contents
Limitation on Restrictions on Distributions from Restricted Subsidiaries. |
83
Table of Contents
Limitation on Sales of Assets and Subsidiary Stock. |
84
Table of Contents
85
Table of Contents
Limitations on Transactions with Affiliates. |
Limitation on the Sale or Issuance of Capital Stock of Restricted Subsidiaries. |
86
Table of Contents
Limitation on Liens. |
SEC Reports. |
87
Table of Contents
88
Table of Contents
89
Table of Contents
90
Table of Contents
91
Table of Contents
92
Table of Contents
93
Table of Contents
94
Table of Contents
95
Table of Contents
96
Table of Contents
97
Table of Contents
98
Table of Contents
99
Table of Contents
100
Table of Contents
101
Table of Contents
102
Table of Contents
103
Table of Contents
104
Table of Contents
105
Table of Contents
106
Table of Contents
• | upon deposit of the Global Notes, DTC will credit the accounts of the Participants designated by the initial purchasers with portions of the principal amount of the Global Notes; and | |
• | ownership of these interests in the Global Notes will be shown on, and the transfer of ownership of these interests will be effected only through, records maintained by DTC (with respect to the Participants) or by the Participants and the Indirect Participants (with respect to other owners of beneficial interest in the Global Notes). |
107
Table of Contents
• | any aspect of DTC’s records or any Participants or Indirect Participant’s records relating to or payments made on account of beneficial ownership interest in the Global Notes or for maintaining, supervising or reviewing any of DTC’s records or any Participant’s or Indirect Participant’s records relating to the beneficial ownership interests in the Global Notes; or | |
• | any other matter relating to the actions and practices of DTC or any of its Participants or Indirect Participants. |
108
Table of Contents
• | DTC (a) notifies us that it is unwilling or unable to continue as depositary for the Global Notes or (b) has ceased to be a clearing agency registered under the Exchange Act and, in either case, we fail to appoint a successor depositary; | |
• | We, at our option, notifies the trustee in writing that it elects to cause the issuance of the Certificated Notes; or | |
• | there has occurred and is continuing a Default with respect to the notes. |
109
Table of Contents
110
Table of Contents
111
Table of Contents
112
Table of Contents
113
Table of Contents
• | an individual citizen or resident of the United States; | |
• | a corporation (or any other entity treated as a corporation for U.S. federal income tax purposes) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; | |
• | an estate the income of which is subject to U.S. federal income taxation regardless of its source; or | |
• | a trust if it (1) is subject to the primary supervision of a court within the United States and one or more U.S. persons have the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable U.S. Treasury regulations to be treated as a U.S. person. |
114
Table of Contents
Interest |
Sale, Exchange, Redemption or Repayment |
• | effectively connected with the conduct of a U.S. trade or business or | |
• | in the case of a treaty resident, attributable to a U.S. permanent establishment (or, in the case of an individual, a fixed base) in the United States. |
Interest |
• | does not actually or constructively own 10% or more of the total combined voting power of all classes of our stock; | |
• | is not a controlled foreign corporation with respect to which we are a “related person” within the meaning of the Code; | |
• | is not a bank receiving interest on the extension of the credit made pursuant to a loan agreement made in the ordinary course of its trade or business; and | |
• | certifies, under penalties of perjury, that such holder is not a U.S. person and provides such holder’s name and address. |
115
Table of Contents
Sale, Exchange, or Redemption |
• | theNon-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of that disposition, and certain other conditions are met; or | |
• | the gain is U.S. trade or business income. |
Federal Estate Tax |
116
Table of Contents
117
Table of Contents
118
Page | ||||
WESCO International, Inc. | ||||
F-2 | ||||
F-3 | ||||
F-5 | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9 | ||||
F-44 | ||||
F-45 | ||||
F-46 | ||||
F-47 | ||||
F-48 |
F-1
Table of Contents
F-2
Table of Contents
F-3
Table of Contents
F-4
Table of Contents
December 31, | ||||||||||
2005 | 2004 | |||||||||
(Dollars in thousands, | ||||||||||
except share data) | ||||||||||
Assets | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | 22,125 | $ | 34,523 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $12,609 and $12,481 in 2005 and 2004, respectively(Note 4) | 315,594 | 383,364 | ||||||||
Other accounts receivable | 36,235 | 30,237 | ||||||||
Inventories, net | 500,798 | 387,339 | ||||||||
Current deferred income taxes(Note 10) | 13,399 | 3,920 | ||||||||
Income taxes receivable | 12,814 | 6,082 | ||||||||
Prepaid expenses and other current assets | 7,898 | 9,451 | ||||||||
Total current assets | 908,863 | 854,916 | ||||||||
Property, buildings and equipment, net(Note 7) | 103,083 | 94,742 | ||||||||
Intangible assets, net(Note 3) | 83,892 | 537 | ||||||||
Goodwill(Note 3) | 542,217 | 401,610 | ||||||||
Other assets | 13,104 | 5,050 | ||||||||
Total assets | $ | 1,651,159 | $ | 1,356,855 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current Liabilities: | ||||||||||
Accounts payable | $ | 572,467 | $ | 455,821 | ||||||
Accrued payroll and benefit costs(Notes 12 and 13) | 51,220 | 43,350 | ||||||||
Short-term debt(Note 8) | 14,500 | — | ||||||||
Current portion of long-term debt(Note 8) | 36,825 | 31,413 | ||||||||
Deferred acquisition payable(Note 5) | 2,680 | 1,014 | ||||||||
Bank overdrafts | 3,695 | — | ||||||||
Other current liabilities | 38,499 | 32,647 | ||||||||
Total current liabilities | 719,886 | 564,245 | ||||||||
Long-term debt(Note 8) | 352,232 | 386,173 | ||||||||
Long-term deferred acquisition payable(Note 5) | 4,346 | 2,026 | ||||||||
Other noncurrent liabilities | 9,507 | 7,904 | ||||||||
Deferred income taxes(Note 10) | 73,738 | 42,954 | ||||||||
Total liabilities | $ | 1,159,709 | $ | 1,003,302 | ||||||
Commitments and contingencies(Note 14) | ||||||||||
Stockholders’ Equity (Note 9): | ||||||||||
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued or outstanding | — | — | ||||||||
Common stock, $.01 par value; 210,000,000 shares authorized, 51,790,725 and 50,483,970 shares issued in 2005 and 2004, respectively | 518 | 505 | ||||||||
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 shares issued in 2005 and 2004; no shares outstanding in 2005 and 2004 | 43 | 43 | ||||||||
Additional capital | 707,407 | 676,465 | ||||||||
Retained deficit | (168,332 | ) | (271,858 | ) | ||||||
Treasury stock, at cost; 8,418,607 and 8,407,790 shares in 2005 and 2004, respectively | (61,821 | ) | (61,449 | ) | ||||||
Accumulated other comprehensive income | 13,635 | 9,847 | ||||||||
Total stockholders’ equity | 491,450 | 353,553 | ||||||||
Total liabilities and stockholders’ equity | $ | 1,651,159 | $ | 1,356,855 | ||||||
F-5
Table of Contents
Year Ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(In thousands, except share data) | |||||||||||||
Net sales | $ | 4,421,103 | $ | 3,741,253 | $ | 3,286,766 | |||||||
Cost of goods sold (excluding depreciation and amortization below) | 3,580,398 | 3,029,132 | 2,676,701 | ||||||||||
Gross profit | 840,705 | 712,121 | 610,065 | ||||||||||
Selling, general and administrative expenses | 612,780 | 544,532 | 501,462 | ||||||||||
Depreciation and amortization | 18,639 | 18,143 | 22,558 | ||||||||||
Income from operations | 209,286 | 149,446 | 86,045 | ||||||||||
Interest expense, net | 30,183 | 40,791 | 42,317 | ||||||||||
Loss on debt extinguishment, net(Note 8) | 14,914 | 2,577 | 180 | ||||||||||
Other expenses(Note 4) | 13,305 | 6,580 | 4,457 | ||||||||||
Income before income taxes | 150,884 | 99,498 | 39,091 | ||||||||||
Provision for income taxes(Note 10) | 47,358 | 34,566 | 9,085 | ||||||||||
Net income | $ | 103,526 | $ | 64,932 | $ | 30,006 | |||||||
Earnings per share(Note 11) | |||||||||||||
Basic | $ | 2.20 | $ | 1.55 | $ | 0.67 | |||||||
Diluted | $ | 2.10 | $ | 1.47 | $ | 0.65 | |||||||
F-6
Table of Contents
Class B | |||||||||||||||||||||||||||||||||||||||||
Common Stock | Common Stock | Retained | Treasury Stock | Accumulated | |||||||||||||||||||||||||||||||||||||
Comprehensive | Additional | Earnings | Other Income | ||||||||||||||||||||||||||||||||||||||
Income | Amount | Shares | Amount | Shares | Capital | (Deficit) | Amount | Shares | (Loss) | ||||||||||||||||||||||||||||||||
Balance, December 31, 2002 | $ | 445 | 44,483,513 | $ | 46 | 4,653,131 | $ | 570,923 | $ | (366,796 | ) | $ | (33,841 | ) | (4,033,020 | ) | $ | (1,489 | ) | ||||||||||||||||||||||
Exercise of stock options, including tax benefit of $408 | 2 | 202,581 | 937 | (234 | ) | (28,048 | ) | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 605 | ||||||||||||||||||||||||||||||||||||||||
Redemption of stock options, including tax benefit | (12,814 | ) | |||||||||||||||||||||||||||||||||||||||
Repurchase of Class B common stock | (27,295 | ) | (4,339,431 | ) | |||||||||||||||||||||||||||||||||||||
Conversion of Class B common stock | 3 | 313,700 | (3 | ) | (313,700 | ) | |||||||||||||||||||||||||||||||||||
Net income | $ | 30,006 | 30,006 | ||||||||||||||||||||||||||||||||||||||
Translation adjustment | 7,193 | 7,193 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 37,199 | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2003 | 450 | 44,999,794 | 43 | 4,339,431 | 559,651 | (336,790 | ) | (61,370 | ) | (8,400,499 | ) | 5,704 | |||||||||||||||||||||||||||||
Exercise of stock options, including tax benefit of $5,386 | 15 | 1,484,176 | 13,999 | (79 | ) | (7,291 | ) | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 2,923 | ||||||||||||||||||||||||||||||||||||||||
Issuance of common stock, net of capitalized issuance costs | 40 | 4,000,000 | 99,892 | ||||||||||||||||||||||||||||||||||||||
Net income | $ | 64,932 | 64,932 | ||||||||||||||||||||||||||||||||||||||
Translation adjustment | 4,143 | 4,143 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 69,075 | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2004 | 505 | 50,483,970 | 43 | 4,339,431 | 676,465 | (271,858 | ) | (61,449 | ) | (8,407,790 | ) | 9,847 | |||||||||||||||||||||||||||||
Exercise of stock options, including tax benefit of $13,815 | 13 | 1,306,755 | 22,347 | (372 | ) | (10,817 | ) | ||||||||||||||||||||||||||||||||||
Stock-based compensation expense | 8,595 | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 103,526 | 103,526 | ||||||||||||||||||||||||||||||||||||||
Translation adjustment | 3,788 | 3,788 | |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 107,314 | |||||||||||||||||||||||||||||||||||||||
Balance, December 31, 2005 | $ | 518 | 51,790,725 | $ | 43 | 4,339,431 | $ | 707,407 | $ | (168,332 | ) | $ | (61,821 | ) | (8,418,607 | ) | $ | 13,635 | |||||||||||||||||||||||
F-7
Table of Contents
Year Ended December 31 | |||||||||||||||
2005 | 2004 | 2003 | |||||||||||||
(In thousands) | |||||||||||||||
Operating Activities: | |||||||||||||||
Net income | $ | 103,526 | $ | 64,932 | $ | 30,006 | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||||||
Loss on debt extinguishment, (net of premium in 2005 of $6,803) | 1,446 | 754 | 180 | ||||||||||||
Depreciation and amortization | 18,639 | 18,143 | 22,558 | ||||||||||||
Accretion and amortization of original issue discounts and purchase discounts, respectively | 1,218 | 2,714 | 2,898 | ||||||||||||
Amortization of gain on interest rate swap | (3,118 | ) | (912 | ) | (533 | ) | |||||||||
Stock option expense | 8,595 | 2,923 | 605 | ||||||||||||
Amortization of debt issuance costs | 1,263 | 1,426 | 1,248 | ||||||||||||
Loss (gain) on sale of property, buildings and equipment | (36 | ) | 86 | (513 | ) | ||||||||||
Deferred income taxes | 3,560 | 2,504 | 3,647 | ||||||||||||
Changes in assets and liabilities: | |||||||||||||||
Change in receivables facility | 189,000 | (17,000 | ) | (68,000 | ) | ||||||||||
Trade and other account receivables | (83,660 | ) | (107,786 | ) | (5,699 | ) | |||||||||
Inventories | (60,220 | ) | (63,767 | ) | 25,238 | ||||||||||
Prepaid expenses and other current assets | 12,386 | 12,703 | 1,347 | ||||||||||||
Accounts payable | 95,657 | 85,551 | 12,405 | ||||||||||||
Accrued payroll and benefit costs | 6,700 | 16,384 | 6,706 | ||||||||||||
Other current and noncurrent liabilities | 141 | 3,289 | 3,665 | ||||||||||||
Net cash provided by operating activities | 295,097 | 21,944 | 35,758 | ||||||||||||
Investing Activities: | |||||||||||||||
Capital expenditures | (14,154 | ) | (12,149 | ) | (8,379 | ) | |||||||||
Acquisition payments, net of cash acquired | (278,829 | ) | (34,114 | ) | (2,028 | ) | |||||||||
Other investing activities | 2,014 | — | 1,177 | ||||||||||||
Net cash used by investing activities | (290,969 | ) | (46,263 | ) | (9,230 | ) | |||||||||
Financing Activities: | |||||||||||||||
Proceeds from issuance of long-term debt | 643,000 | 357,600 | 169,180 | ||||||||||||
Repayments of long-term debt | (662,641 | ) | (415,005 | ) | (166,811 | ) | |||||||||
Proceeds from issuance of common stock | — | 105,000 | — | ||||||||||||
Equity issuance costs | — | (5,068 | ) | — | |||||||||||
Redemption of stock options | — | (20,144 | ) | — | |||||||||||
Proceeds from interest rate swap | — | — | 4,563 | ||||||||||||
Debt issuance costs | (9,043 | ) | (112 | ) | (2,389 | ) | |||||||||
Proceeds from exercise of options | 8,173 | 8,422 | 438 | ||||||||||||
Increase in bank overdrafts | 3,695 | — | — | ||||||||||||
Repurchase of Class B common stock | — | — | (27,295 | ) | |||||||||||
Payments on capital lease obligations | (215 | ) | — | — | |||||||||||
Net cash provided (used) by financing activities | (17,031 | ) | 30,693 | (22,314 | ) | ||||||||||
Effect of exchange rate changes on cash and cash equivalents | 505 | 654 | 711 | ||||||||||||
Net change in cash and cash equivalents | (12,398 | ) | 7,028 | 4,925 | |||||||||||
Cash and cash equivalents at the beginning of period | 34,523 | 27,495 | 22,570 | ||||||||||||
Cash and cash equivalents at the end of period | $ | 22,125 | $ | 34,523 | $ | 27,495 | |||||||||
Supplemental disclosures: | |||||||||||||||
Cash paid for interest | $ | 29,606 | $ | 36,539 | $ | 38,814 | |||||||||
Cash paid for taxes | 28,917 | 18,271 | 2,544 | ||||||||||||
Non-cash investing activities: | |||||||||||||||
Property, plant and equipment acquired through capital leases | 2,000 | 857 | — | ||||||||||||
Deferred acquisition payable related to prior acquisition | 5,000 | — | — | ||||||||||||
Note issued in connection with acquisition | 3,329 | — | — | ||||||||||||
Conversion of deferred acquisition payable to note | — | 50,000 | — | ||||||||||||
Non-cash financing activities: | |||||||||||||||
Decrease (increase) in fair value of outstanding interest rate swaps | — | 583 | (135 | ) | |||||||||||
Redemption of stock options | — | — | 20,144 |
F-8
Table of Contents
1. | Organization |
2. | Accounting Policies |
F-9
Table of Contents
F-10
Table of Contents
F-11
Table of Contents
F-12
Table of Contents
Year Ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in thousands, | |||||||||||||
except per share amounts) | |||||||||||||
Net income reported | $ | 103,526 | $ | 64,932 | $ | 30,006 | |||||||
Add: Stock-based compensation expense included in reported net income, net of related tax | 5,896 | 1,900 | 393 | ||||||||||
Deduct: Stock-based employee compensation expense determined under SFAS No. 123 for all awards net of related tax | (6,404 | ) | (2,672 | ) | (1,876 | ) | |||||||
Pro forma net income | $ | 103,018 | $ | 64,160 | $ | 28,523 | |||||||
Earnings per share: | |||||||||||||
Basic as reported | $ | 2.20 | $ | 1.55 | $ | 0.67 | |||||||
Basic pro forma | $ | 2.19 | $ | 1.53 | $ | 0.64 | |||||||
Diluted as reported | $ | 2.10 | $ | 1.47 | $ | 0.65 | |||||||
Diluted pro forma | $ | 2.09 | $ | 1.45 | $ | 0.62 |
F-13
Table of Contents
Year Ended | ||||||||||||
December 31 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Risk-free interest rate | 3.0 | % | 3.9 | % | 4.0 | % | ||||||
Expected life (years) | 4.0 | 6.0 | 7.0 | |||||||||
Stock price volatility | 59.0 | % | 64.0 | % | 67.0 | % |
F-14
Table of Contents
3. | Goodwill and Intangible Assets |
F-15
Table of Contents
Year Ended | ||||||||
December 31 | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Beginning balance January 1 | $ | 401,610 | $ | 398,673 | ||||
Additions to goodwill for prior acquisitions: | ||||||||
Herning Enterprise, Inc. | — | 422 | ||||||
Avon Electrical Supply, Inc.(1) | 5,560 | 2,989 | ||||||
WR Control Panel, Inc. | — | (600 | ) | |||||
Additional goodwill for acquisitions: | ||||||||
Fastec Industrial Corp. | 5,396 | — | ||||||
Carlton-Bates Company | 129,588 | — | ||||||
Foreign currency translation | 63 | 126 | ||||||
Ending balance December 31 | $ | 542,217 | $ | 401,610 | ||||
(1) | Represents $560 thousand paid for this acquisition and $5.0 million of contingent consideration for the final acquisition payment which management has estimated will be paid between 2006 and 2008 and is reported as deferred acquisition payable. |
Year Ended | ||||||||||||
December 31 | ||||||||||||
Useful Life | ||||||||||||
in Years | 2005 | 2004 | ||||||||||
(In thousands) | ||||||||||||
Trademarks | Indefinite | $ | 18,400 | $ | — | |||||||
Non-compete agreements | 5 | 4,787 | — | |||||||||
Customer relationships | 13-19 | 54,700 | 4,309 | |||||||||
Distribution agreements | 5 | 12,000 | — | |||||||||
89,887 | 4,309 | |||||||||||
Accumulated amortization | (5,995 | ) | (3,772 | ) | ||||||||
Ending balance December 31 | $ | 83,892 | $ | 537 | ||||||||
F-16
Table of Contents
Estimated | ||||
Amortization | ||||
For the year ended December 31, | Expenses | |||
2006 | $ | 7,626 | ||
2007 | 7,752 | |||
2008 | 7,127 | |||
2009 | 7,407 | |||
2010 | 7,449 |
4. | Accounts Receivable Securitization Facility |
F-17
Table of Contents
5. | Acquisitions |
Year Ended December 31 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(In thousands) | ||||||||||||
Details of acquisitions: | ||||||||||||
Fair value of assets acquired | $ | 331,302 | $ | — | $ | — | ||||||
Amounts earned under acquisition agreements | 5,560 | 2,811 | 84,343 | |||||||||
Fair value of liabilities assumed | (48,673 | ) | — | — | ||||||||
Deferred acquisition payable | (5,000 | ) | — | (84,343 | ) | |||||||
Deferred acquisition payment and note conversion | 1,013 | 81,303 | 2,028 | |||||||||
Note issued to seller | (3,329 | ) | (50,000 | ) | — | |||||||
Cash paid for acquisitions | $ | 280,873 | $ | 34,114 | $ | 2,028 | ||||||
Supplemental cash flow disclosure related to acquisitions: | ||||||||||||
Cash paid for acquisitions | $ | 280,873 | $ | 34,114 | $ | 2,028 | ||||||
Less: cash acquired | (2,044 | ) | — | — | ||||||||
Cash paid for acquisitions, net of cash acquired | $ | 278,829 | $ | 34,114 | $ | 2,028 | ||||||
F-18
Table of Contents
Fastec | ||||||||||||
Industrial | Carlton-Bates | |||||||||||
Corp. | Company | Total | ||||||||||
(In thousands) | ||||||||||||
Assets Acquired | ||||||||||||
Cash and equivalents | $ | 281 | $ | 1,763 | $ | 2,044 | ||||||
Trade accounts receivable | 4,675 | 37,628 | 42,303 | |||||||||
Inventories | 11,944 | 40,709 | 52,653 | |||||||||
Deferred income taxes short-term | — | 1,861 | 1,861 | |||||||||
Other accounts receivable | — | 840 | 840 | |||||||||
Prepaid expenses | 161 | 762 | 923 | |||||||||
Income taxes receivable | — | 2,789 | 2,789 | |||||||||
Property, buildings and equipment | 2,168 | 5,159 | 7,327 | |||||||||
Intangible assets | 11,134 | 74,444 | 85,578 | |||||||||
Goodwill | 5,396 | 129,588 | 134,984 | |||||||||
Total assets acquired | 35,759 | 295,543 | 331,302 | |||||||||
Liabilities Assumed | ||||||||||||
Accounts payable | 2,663 | 16,901 | 19,564 | |||||||||
Accrued and other current liabilities | 767 | 8,599 | 9,366 | |||||||||
Deferred income taxes long-term | — | 19,607 | 19,607 | |||||||||
Other noncurrent liabilities | — | 136 | 136 | |||||||||
Total liabilities assumed | 3,430 | 45,243 | 48,673 | |||||||||
Fair value of net assets acquired, including intangible assets | $ | 32,329 | $ | 250,300 | $ | 282,629 | ||||||
F-19
Table of Contents
Year Ended | ||||||||
December 31 | ||||||||
2005 | 2004 | |||||||
(In thousands, except | ||||||||
per share amounts) | ||||||||
Net sales | $ | 4,643,039 | $ | 4,017,696 | ||||
Net income | $ | 103,940 | $ | 59,290 | ||||
Earnings per common share: | ||||||||
Basic | $ | 2.21 | $ | 1.42 | ||||
Diluted | $ | 2.11 | $ | 1.34 |
F-20
Table of Contents
6. | Concentrations of Credit Risk and Significant Suppliers |
7. | Property, Buildings and Equipment |
December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Buildings and leasehold improvements | $ | 73,902 | $ | 72,778 | ||||
Furniture, fixtures and equipment | 119,623 | 94,377 | ||||||
Software costs | 38,656 | 38,317 | ||||||
232,181 | 205,472 | |||||||
Accumulated depreciation and amortization | (151,448 | ) | (134,678 | ) | ||||
80,733 | 70,794 | |||||||
Land | 19,822 | 19,222 | ||||||
Construction in progress | 2,528 | 4,726 | ||||||
$ | 103,083 | $ | 94,742 | |||||
F-21
Table of Contents
8. | Debt |
December 31, | ||||||||
2005 | 2004 | |||||||
(In thousands) | ||||||||
Revolving credit facility | $ | 29,000 | $ | — | ||||
Mortgage financing facility | 48,213 | 49,391 | ||||||
Acquisition related notes: | ||||||||
Bruckner | 20,000 | 50,000 | ||||||
Fastec | 3,329 | — | ||||||
Other | 176 | 36 | ||||||
Capital leases | 2,839 | 840 | ||||||
9.125% Senior Subordinated Notes due 2008(1) | — | 317,319 | ||||||
7.50% Senior Subordinated Notes due 2017 | 150,000 | — | ||||||
2.625% Convertible Senior Debentures due 2025 | 150,000 | — | ||||||
403,557 | 417,586 | |||||||
Less current portion | (36,825 | ) | (31,413 | ) | ||||
Less short-term debt | (14,500 | ) | — | |||||
$ | 352,232 | $ | 386,173 | |||||
(1) | Net of original issue discount of $4,934 and purchase discount of $3,914 in 2004, and interest rate swaps of $(2,669) in 2004. |
F-22
Table of Contents
F-23
Table of Contents
F-24
Table of Contents
2006 | $ | 51,325 | ||
2007 | 5,550 | |||
2008 | 2,004 | |||
2009 | 1,849 | |||
2010 | 1,690 | |||
Thereafter | 341,139 | |||
$ | 403,557 | |||
F-25
Table of Contents
9. | Capital Stock |
F-26
Table of Contents
10. | Income Taxes |
Year Ended December 31 | ||||||||||||||
2005 | 2004 | 2003 | ||||||||||||
(In thousands) | ||||||||||||||
Current taxes: | ||||||||||||||
Federal | $ | 18,141 | $ | 28,498 | $ | 1,466 | ||||||||
State | 1,699 | 1,635 | (875 | ) | ||||||||||
Foreign | 6,212 | 1,929 | 4,847 | |||||||||||
Total current | 26,052 | 32,062 | 5,438 | |||||||||||
Deferred taxes: | ||||||||||||||
Federal | 20,734 | 1,855 | 4,409 | |||||||||||
State | 2,567 | 200 | 1,091 | |||||||||||
Foreign | (1,995 | ) | 449 | (1,853 | ) | |||||||||
Total deferred | 21,306 | 2,504 | 3,647 | |||||||||||
$ | 47,358 | $ | 34,566 | $ | 9,085 | |||||||||
Year Ended December 31 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
(In thousands) | ||||||||||||
United States | $ | 126,037 | $ | 86,578 | $ | 29,925 | ||||||
Foreign | 24,786 | 12,920 | 9,166 | |||||||||
$ | 150,823 | $ | 99,498 | $ | 39,091 | |||||||
Year Ended | ||||||||||||
December 31 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Federal statutory rate | 35.0 | % | 35.0 | % | 35.0 | % | ||||||
State taxes, net of federal tax benefit | 1.8 | 1.2 | 0.4 | |||||||||
Nondeductible expenses | 0.7 | 1.0 | 2.3 | |||||||||
Domestic tax benefit from foreign operations | (3.1 | ) | (0.4 | ) | (3.9 | ) | ||||||
Foreign tax rate differences(1) | (3.3 | ) | (2.3 | ) | (1.5 | ) | ||||||
Favorable impact resulting from prior year tax contingencies(2) | — | — | (6.6 | ) | ||||||||
Section 965 dividend(3) | 0.7 | — | — | |||||||||
Net operating loss utilization(4) | — | — | (1.4 | ) | ||||||||
Federal tax credits(5) | (0.8 | ) | — | — | ||||||||
Other | 0.4 | 0.2 | (1.0 | ) | ||||||||
31.4 | % | 34.7 | % | 23.3 | % | |||||||
F-27
Table of Contents
(1) | Includes tax benefit of $5.1 and $1.3 million in 2005 and 2004 respectively from recapitalization of our Canadian operations. |
(2) | Represents a benefit of $2.6 million during 2003 from the resolution of prior year tax contingencies. |
(3) | The Jobs Act was established on October 22, 2004. One provision of the Jobs Act effectively reduces the tax rate on qualifying repatriation of earnings held by foreign-based subsidiaries to approximately 5.25 percent. Normally, such repatriations would be taxed at a rate of 35 percent. In the fourth quarter of 2005, WESCO elected to repatriate approximately $23.0 million under the Jobs Act. This repatriation of earnings triggered a U.S. federal tax payment of approximately $1.0 million. This amount is reflected in the current income tax expense. Prior to the Jobs Act, WESCO did not provide deferred taxes on undistributed earnings of foreign subsidiaries as WESCO intended to utilize these earnings through expansion of its business operations outside the United States for an indefinite period of time. |
(4) | Represents the recognition of a $0.6 million benefit associated with the utilization of a net operating loss. |
(5) | In 2005, represents a benefit of $1.2 million from Research and Development credits. |
F-28
Table of Contents
December 31 | |||||||||||||||||
2005 | 2004 | ||||||||||||||||
(In thousands) | |||||||||||||||||
Assets | Liabilities | Assets | Liabilities | ||||||||||||||
Accounts receivable | $ | 7,504 | $ | — | $ | 7,314 | $ | — | |||||||||
Inventory | — | 2,732 | — | 3,465 | |||||||||||||
Other | 12,481 | 3,854 | 4,791 | 4,720 | |||||||||||||
Current deferred tax | 19,985 | 6,586 | 12,105 | 8,185 | |||||||||||||
Intangibles | — | 70,189 | — | 38,917 | |||||||||||||
Property, buildings and equipment | — | 3,494 | — | 3,876 | |||||||||||||
Other | — | 55 | — | 161 | |||||||||||||
Long-term deferred tax | $ | — | $ | 73,738 | $ | — | $ | 42,954 | |||||||||
11. | Earnings Per Share |
Year Ended December 31 | |||||||||||||
2005 | 2004 | 2003 | |||||||||||
(Dollars in thousands, except share data) | |||||||||||||
Net income | $ | 103,526 | $ | 64,932 | $ | 30,006 | |||||||
Weighted average common shares outstanding used in computing basic earnings per share | 47,085,524 | 41,838,034 | 44,631,459 | ||||||||||
Common shares issuable upon exercise of dilutive stock options | 2,152,912 | 2,271,119 | 1,717,623 | ||||||||||
Weighted average common shares outstanding and common share equivalents used in computing diluted earnings per share | 49,238,436 | 44,109,153 | 46,349,082 | ||||||||||
Earnings per share | |||||||||||||
Basic | $ | 2.20 | $ | 1.55 | $ | 0.67 | |||||||
Diluted | $ | 2.10 | $ | 1.47 | $ | 0.65 |
F-29
Table of Contents
Conversion Price: | $ | 41.86 | ||
Number of Underlying Shares: | 0 to 3,583,080 | |||
Principal Amount | $ | 150,000,000 | ||
Formula: Number of extra dilutive shares created = ((Stock Price * Underlying Shares) — Principal)/ Stock Price | ||||
Condition: Only applies when share price exceeds $41.86 |
Include in | Share Dilution | |||||||||||||||
Conversion | Price | Share | Per $1.00 Share | |||||||||||||
Stock Price | Price | Difference | Count | Price Difference | ||||||||||||
$41.86 | $ | 41.86 | $ | 0 | 0 | 0 | ||||||||||
$42.86 | $ | 41.86 | $ | 1 | 83,313 | 83,313 | ||||||||||
$51.86 | $ | 41.86 | $ | 10 | 690,677 | 69,068 | ||||||||||
$61.86 | $ | 41.86 | $ | 20 | 1,158,249 | 57,912 | ||||||||||
$71.86 | $ | 41.86 | $ | 30 | 1,495,687 | 49,856 | ||||||||||
$81.86 | $ | 41.86 | $ | 40 | 1,750,683 | 43,767 |
F-30
Table of Contents
12. | Employee Benefit Plans |
13. | Stock Incentive Plans |
F-31
Table of Contents
2005 | 2004 | 2003 | ||||||||||||||||||||||
Weighted | Weighted | Weighted | ||||||||||||||||||||||
Average | Average | Average | ||||||||||||||||||||||
Exercise | Exercise | Exercise | ||||||||||||||||||||||
Awards | Price | Awards | Price | Awards | Price | |||||||||||||||||||
Beginning of year | 7,217,473 | $ | 10.26 | 7,654,822 | $ | 7.64 | 9,840,114 | $ | 5.99 | |||||||||||||||
Granted | 908,889 | 31.85 | 1,105,500 | 22.55 | 1,093,500 | 5.92 | ||||||||||||||||||
Exercised | (1,328,954 | ) | 7.08 | (1,484,176 | ) | 5.92 | (202,581 | ) | 2.63 | |||||||||||||||
Redeemed | — | — | — | — | (2,920,890 | ) | 1.75 | |||||||||||||||||
Cancelled | (493,472 | ) | 10.52 | (58,673 | ) | 8.05 | (155,321 | ) | 8.91 | |||||||||||||||
End of year | 6,303,936 | 14.02 | 7,217,473 | 10.26 | 7,654,822 | 7.64 | ||||||||||||||||||
Exercisable at end of year | 1,805,305 | $ | 10.83 | 2,514,232 | $ | 8.01 | 3,463,309 | $ | 7.38 |
Awards | Awards | Weighted Average | ||||||||||
Range of exercise prices | Outstanding | Exercisable | Remaining Contractual Life | |||||||||
$0.00 — $5.00 | 804,552 | 99,702 | 5.4 | |||||||||
$5.01 — $10.00 | 1,844,480 | 564,976 | 5.9 | |||||||||
$10.01 — $15.00 | 1,725,388 | 869,225 | 2.6 | |||||||||
$15.01 — $20.00 | 234,587 | 33,334 | 8.4 | |||||||||
$20.01 — $25.00 | 786,040 | 238,068 | 8.8 | |||||||||
$25.01 — $30.00 | 3,700 | 0 | 9.4 | |||||||||
$30.01 — $35.00 | 888,500 | 0 | 9.5 | |||||||||
$35.01 — $40.00 | 0 | 0 | — | |||||||||
$40.01 — $45.00 | 16,689 | 0 | 9.9 | |||||||||
6,303,936 | 1,805,305 | 5.9 | ||||||||||
F-32
Table of Contents
14. | Commitments and Contingencies |
(In thousands) | ||||
2006 | $ | 27,694 | ||
2007 | 23,062 | |||
2008 | 17,209 | |||
2009 | 12,297 | |||
2010 | 7,690 | |||
Thereafter | 11,658 |
15. | Segments and Related Information |
F-33
Table of Contents
Net Sales | Long-Lived Assets | ||||||||||||||||||||||||
Year Ended December 31, | December 31, | ||||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | ||||||||||||||||||||
(In thousands) | |||||||||||||||||||||||||
United States | $ | 3,829,755 | $ | 3,265,280 | $ | 2,872,239 | $ | 728,329 | $ | 488,787 | $ | 491,515 | |||||||||||||
Foreign operations Canada | 499,817 | 394,375 | 335,695 | 12,375 | 11,958 | 11,926 | |||||||||||||||||||
Other foreign | 91,531 | 81,598 | 78,832 | 1,592 | 1,194 | 1,341 | |||||||||||||||||||
Subtotal foreign operations | 591,348 | 475,973 | 414,527 | 13,967 | 13,152 | 13,267 | |||||||||||||||||||
Total U.S. and Foreign | $ | 4,421,103 | $ | 3,741,253 | $ | 3,286,766 | $ | 742,296 | $ | 501,939 | $ | 504,782 | |||||||||||||
16. | Other Financial Information |
F-34
Table of Contents
December 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | — | $ | 18,088 | $ | 4,037 | $ | — | $ | 22,125 | |||||||||||
Trade accounts receivable | — | — | 315,594 | — | 315,594 | ||||||||||||||||
Inventories | — | 380,227 | 120,571 | — | 500,798 | ||||||||||||||||
Other current assets | — | 40,049 | 50,971 | (20,674 | ) | 70,346 | |||||||||||||||
Total current assets | — | 438,364 | 491,173 | (20,674 | ) | 908,863 | |||||||||||||||
Intercompany receivables, net | — | (161,534 | ) | 206,253 | (44,719 | ) | — | ||||||||||||||
Property, buildings and equipment, net | — | 31,712 | 71,371 | — | 103,083 | ||||||||||||||||
Intangible assets, net | — | 11,140 | 72,752 | — | 83,892 | ||||||||||||||||
Goodwill and other intangibles, net | — | 374,000 | 168,217 | — | 542,217 | ||||||||||||||||
Investments in affiliates and other noncurrent assets | 686,169 | 806,818 | 3,045 | (1,482,928 | ) | 13,104 | |||||||||||||||
Total assets | $ | 686,169 | $ | 1,500,500 | $ | 1,012,811 | $ | (1,548,321 | ) | $ | 1,651,159 | ||||||||||
Accounts payable | $ | — | $ | 453,101 | $ | 119,366 | $ | — | $ | 572,467 | |||||||||||
Short-term debt | — | 14,500 | — | — | 14,500 | ||||||||||||||||
Other current liabilities | — | 133,478 | 20,115 | (20,674 | ) | 132,919 | |||||||||||||||
Total current liabilities | — | 601,079 | $ | 139,481 | (20,674 | ) | $ | 719,886 | |||||||||||||
Intercompany payables, net | 44,719 | — | — | (44,719 | ) | — | |||||||||||||||
Long-term debt | 150,000 | 154,024 | 48,208 | — | 352,232 | ||||||||||||||||
Other noncurrent liabilities | — | 63,491 | 24,100 | — | 87,591 | ||||||||||||||||
Stockholders’ equity | 491,450 | 681,906 | 801,022 | (1,482,928 | ) | 491,450 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 686,169 | $ | 1,500,500 | $ | 1,012,811 | $ | (1,548,321 | ) | $ | 1,651,159 | ||||||||||
F-35
Table of Contents
December 31, 2004 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | 1 | $ | 15,974 | $ | 18,548 | $ | — | $ | 34,523 | |||||||||||
Trade accounts receivable | — | 18,077 | 365,287 | — | 383,364 | ||||||||||||||||
Inventories | — | 326,194 | 61,145 | — | 387,339 | ||||||||||||||||
Other current assets | — | 31,152 | 27,313 | (8,775 | ) | 49,690 | |||||||||||||||
Total current assets | 1 | 391,397 | 472,293 | (8,775 | ) | 854,916 | |||||||||||||||
Intercompany receivables, net | — | 210,406 | 26,729 | (237,135 | ) | — | |||||||||||||||
Property, buildings and equipment, net | — | 26,403 | 68,339 | — | 94,742 | ||||||||||||||||
Goodwill and other intangibles, net | — | 363,045 | 38,565 | — | 401,610 | ||||||||||||||||
Investments in affiliates and other noncurrent assets | 590,687 | 463,489 | 2,971 | (1,051,560 | ) | 5,587 | |||||||||||||||
Total assets | $ | 590,688 | $ | 1,454,740 | $ | 608,897 | $ | (1,297,470 | ) | $ | 1,356,855 | ||||||||||
Accounts payable | $ | — | $ | 376,932 | $ | 78,889 | $ | — | $ | 455,821 | |||||||||||
Other current liabilities | — | 101,989 | 15,210 | (8,775 | ) | 108,424 | |||||||||||||||
Total current liabilities | — | 478,921 | 94,099 | (8,775 | ) | 564,245 | |||||||||||||||
Intercompany payables, net | 237,135 | — | — | (237,135 | ) | — | |||||||||||||||
Long-term debt | — | 336,782 | 49,391 | — | 386,173 | ||||||||||||||||
Other noncurrent liabilities | — | 48,350 | 4,534 | — | 52,884 | ||||||||||||||||
Stockholders’ equity | 353,553 | 590,687 | 460,873 | (1,051,560 | ) | 353,553 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 590,688 | $ | 1,454,740 | $ | 608,897 | $ | (1,297,470 | ) | $ | 1,356,855 | ||||||||||
F-36
Table of Contents
Year Ended December 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net sales | $ | — | $ | 3,664,618 | $ | 756,485 | $ | — | $ | 4,421,103 | |||||||||||
Cost of goods sold, excluding depreciation and amortization | — | 2,983,739 | 596,659 | — | 3,580,398 | ||||||||||||||||
Selling, general and administrative expenses | 7 | 543,009 | 69,764 | — | 612,780 | ||||||||||||||||
Depreciation and amortization | — | 15,994 | 2,645 | — | 18,639 | ||||||||||||||||
Results of affiliates’ operations | 87,431 | 89,849 | — | (177,280 | ) | — | |||||||||||||||
Interest expense (income), net | (25,443 | ) | 43,939 | 11,687 | — | 30,183 | |||||||||||||||
Loss on debt extinguishment, net | — | 14,914 | — | — | 14,914 | ||||||||||||||||
Other (income) expense | — | 41,528 | (28,223 | ) | — | 13,305 | |||||||||||||||
Provision for income taxes | 9,341 | 23,913 | 14,104 | — | 47,358 | ||||||||||||||||
Net income (loss) | $ | 103,526 | $ | 87,431 | $ | 89,849 | $ | (177,280 | ) | $ | 103,526 | ||||||||||
Year Ended December 31, 2004 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net sales | $ | — | $ | 3,187,864 | $ | 553,389 | $ | — | $ | 3,741,253 | |||||||||||
Cost of goods sold, excluding depreciation and amortization | — | 2,588,682 | 440,450 | — | 3,029,132 | ||||||||||||||||
Selling, general and administrative expenses | 5 | 470,836 | 73,691 | — | 544,532 | ||||||||||||||||
Depreciation and amortization | — | 15,057 | 3,086 | — | 18,143 | ||||||||||||||||
Results of affiliates’ operations | 56,877 | 37,554 | — | (94,431 | ) | — | |||||||||||||||
Interest expense (income), net | (12,396 | ) | 52,397 | 790 | — | 40,791 | |||||||||||||||
Other (income) expense | — | 26,001 | (16,844 | ) | — | 9,157 | |||||||||||||||
Provision for income taxes | 4,336 | 15,568 | 14,662 | — | 34,566 | ||||||||||||||||
Net income (loss) | $ | 64,932 | $ | 56,877 | $ | 37,554 | $ | (94,431 | ) | $ | 64,932 | ||||||||||
F-37
Table of Contents
Year Ended December 31, 2003 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net sales | $ | — | $ | 2,806,044 | $ | 480,722 | $ | — | $ | 3,286,766 | |||||||||||
Cost of goods sold, excluding depreciation and amortization | — | 2,287,972 | 388,729 | — | 2,676,701 | ||||||||||||||||
Selling, general and administrative expenses | — | 429,567 | 71,895 | — | 501,462 | ||||||||||||||||
Depreciation and amortization | — | 19,391 | 3,167 | — | 22,558 | ||||||||||||||||
Results of affiliates’ operations | 22,495 | 26,889 | — | (49,384 | ) | — | |||||||||||||||
Interest expense (income), net | (11,559 | ) | 58,233 | (4,357 | ) | — | 42,317 | ||||||||||||||
Other (income) expense | — | 24,884 | (20,247 | ) | — | 4,637 | |||||||||||||||
Provision for income taxes | 4,048 | (9,609 | ) | 14,646 | — | 9,085 | |||||||||||||||
Net income (loss) | $ | 30,006 | $ | 22,495 | $ | 26,889 | $ | (49,384 | ) | $ | 30,006 | ||||||||||
F-38
Table of Contents
Year Ended December 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net cash provided (used) by operating activities | $ | 38,901 | $ | 272,483 | $ | (16,287 | ) | $ | — | $ | 295,097 | ||||||||||
Investing activities: | |||||||||||||||||||||
Capital expenditures | — | (13,026 | ) | (1,128 | ) | — | (14,154 | ) | |||||||||||||
Acquisitions | — | (278,829 | ) | — | — | (278,829 | ) | ||||||||||||||
Other | — | 2,014 | — | — | 2,014 | ||||||||||||||||
Net cash used by investing activities | — | (289,841 | ) | (1,128 | ) | — | (290,969 | ) | |||||||||||||
Financing activities: | |||||||||||||||||||||
Net borrowings (repayments) | (42,975 | ) | 24,299 | (1,180 | ) | — | (19,856 | ) | |||||||||||||
Equity transactions | 8,173 | — | — | — | 8,173 | ||||||||||||||||
Other | (4,100 | ) | (4,827 | ) | 3,579 | — | (5,348 | ) | |||||||||||||
Net cash provided (used) by financing activities | (38,902 | ) | 19,472 | 2,399 | — | (17,031 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 505 | — | 505 | ||||||||||||||||
Net change in cash and cash equivalents | (1 | ) | 2,114 | (14,511 | ) | — | (12,398 | ) | |||||||||||||
Cash and cash equivalents at beginning of period | 1 | 15,974 | 18,548 | — | 34,523 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | — | $ | 18,088 | $ | 4,037 | $ | — | $ | 22,125 | |||||||||||
F-39
Table of Contents
Year Ended December 31, 2004 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net cash (used) provided by operating activities | $ | 23,334 | $ | (10,748 | ) | $ | 9,358 | $ | — | $ | 21,944 | ||||||||||
Investing activities: | |||||||||||||||||||||
Capital expenditures | — | (11,708 | ) | (441 | ) | — | (12,149 | ) | |||||||||||||
Acquisitions | — | (34,114 | ) | — | — | (34,114 | ) | ||||||||||||||
Other | — | — | — | — | 0 | ||||||||||||||||
Net cash used by investing activities | — | (45,822 | ) | (441 | ) | — | (46,263 | ) | |||||||||||||
Financing activities: | |||||||||||||||||||||
Net borrowings (repayments) | (111,544 | ) | 56,235 | (2,096 | ) | — | (57,405 | ) | |||||||||||||
Equity transactions | 88,210 | — | — | — | 88,210 | ||||||||||||||||
Other | — | (112 | ) | — | — | (112 | ) | ||||||||||||||
Net cash provided (used) by financing activities | (23,334 | ) | 56,123 | (2,096 | ) | — | 30,693 | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 654 | — | 654 | ||||||||||||||||
Net change in cash and cash equivalents | — | (447 | ) | 7,475 | — | 7,028 | |||||||||||||||
Cash and cash equivalents at beginning of period | 1 | 16,421 | 11,073 | — | 27,495 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 1 | $ | 15,974 | $ | 18,548 | $ | — | $ | 34,523 | |||||||||||
F-40
Table of Contents
Year Ended December 31, 2003 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net cash provided (used) by operating activities | $ | (4,431 | ) | $ | 74,303 | $ | (34,114 | ) | $ | — | $ | 35,758 | |||||||||
Investing activities: | |||||||||||||||||||||
Capital expenditures | — | (7,978 | ) | (401 | ) | — | (8,379 | ) | |||||||||||||
Acquisitions | — | (2,028 | ) | — | — | (2,028 | ) | ||||||||||||||
Other | — | 1,177 | — | — | 1,177 | ||||||||||||||||
Net cash used by investing activities | — | (8,829 | ) | (401 | ) | — | (9,230 | ) | |||||||||||||
Financing activities: | |||||||||||||||||||||
Net (repayments) borrowings | 31,285 | (66,065 | ) | 37,149 | — | 2,369 | |||||||||||||||
Equity transactions | (26,857 | ) | — | — | — | (26,857 | ) | ||||||||||||||
Other | — | 4,563 | (2,389 | ) | — | 2,174 | |||||||||||||||
Net cash provided (used) by financing activities | 4,428 | (61,502 | ) | 34,760 | — | (22,314 | ) | ||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | 711 | — | 711 | ||||||||||||||||
Net change in cash and cash equivalents | (3 | ) | 3,972 | 956 | — | 4,925 | |||||||||||||||
Cash and cash equivalents at beginning of period | 4 | 12,449 | 10,117 | — | 22,570 | ||||||||||||||||
Cash and cash equivalents at end of period | $ | 1 | $ | 16,421 | $ | 11,073 | $ | — | $ | 27,495 | |||||||||||
F-41
Table of Contents
17. | Selected Quarterly Financial Data (unaudited) |
First | Second | Third | Fourth | |||||||||||||
Quarter | Quarter | Quarter | Quarter | |||||||||||||
(In thousands, except share data) | ||||||||||||||||
2005 | ||||||||||||||||
Net sales | $ | 990,871 | $ | 1,062,060 | $ | 1,131,449 | $ | 1,236,723 | ||||||||
Gross profit | 185,182 | 194,586 | 208,313 | 252,624 | ||||||||||||
Income from operations | 38,562 | 48,915 | 47,306 | 74,503 | ||||||||||||
Income before income taxes | 17,371 | 39,062 | 37,060 | 57,391 | ||||||||||||
Net income | 11,344 | (A),(B),(D) | 27,439 | (B),(C),(D) | 25,008 | (B),(D) | 39,735 | (A),(B),(C),(D) | ||||||||
Basic earnings per share(E) | 0.24 | 0.58 | 0.53 | 0.84 | ||||||||||||
Diluted earnings per share | 0.23 | 0.56 | 0.51 | 0.80 | ||||||||||||
2004 | ||||||||||||||||
Net sales | $ | 847,793 | $ | 931,020 | $ | 974,508 | $ | 987,932 | (G) | |||||||
Gross profit | 160,852 | 183,707 | 182,566 | 184,996 | (G) | |||||||||||
Income from operations | 26,259 | 42,871 | 40,888 | 39,428 | ||||||||||||
Income before income taxes | 15,204 | 29,806 | 28,203 | 26,285 | ||||||||||||
Net income | 9,721 | (K) | 19,086 | (F),(K) | 19,037 | (F),(H),(K) | 17,088 | (F),(H),(I),(J) | ||||||||
Basic earnings per share | 0.24 | 0.46 | 0.45 | 0.40 | ||||||||||||
Diluted earnings per share(K) | 0.23 | 0.44 | 0.43 | 0.38 |
(A) | During the first and fourth quarters of 2005 $123.8 million and $199.7 million, respectively in aggregate principal amount of the 2008 Notes were redeemed at a loss of $10.1 million and $4.8 million, respectively resulting from the payment of the call premium and the write-off of the unamortized original issue discount and debt issue costs. | |
(B) | Income tax benefits from the recapitalization of the Canadian operations for the first, second, third and fourth quarters of 2005 were $0.5 million, $1.1 million, $1.2 million and $2.3 million, respectively. | |
(C) | Income tax benefits from the utilization of research and development credits for the second and fourth quarters of 2005 were $1.0 million and $0.2 million, respectively. | |
(D) | Stock option expense for the first, second, third and fourth quarters of 2005 was $1.7 million, $1.5 million, $2.5 million and $3.0 million, respectively. | |
(E) | Earnings per share (EPS) in each quarter is computed using the weighted average number of shares outstanding during that quarter while EPS for the full year is computed by taking the average of the weighted average number of shares outstanding each quarter. Thus, the sum of the four quarters’ EPS may not equal the full-year EPS. | |
(F) | During the second, third and fourth quarters of 2004 $36.0 million, $9.3 million and $10.0 million, respectively in aggregate principal amount of the 2008 Notes were redeemed at a loss of $1.6 million, $0.5 million and $0.5 million, respectively, resulting from the payment of the call premium and the write-off of the unamortized original issue discount and debt issue costs. | |
(G) | On September 29, 2005, the common stock of Carlton-Bates Company was acquired and the sales and gross margin resulting from this acquisition for the fourth quarter of 2005 were $76.8 million and $21.3 million, respectively. | |
(H) | Income tax benefits from the recapitalization of the Canadian operations for the third and fourth quarters of 2004 were $0.7 million and $0.6 million, respectively. | |
(I) | During the fourth quarter of 2004 a public offering was completed offering 4.0 million shares of common stock resulting in equity issuance costs of $5.1 million. |
F-42
Table of Contents
(J) | Stock option expense for the first, second, third and fourth quarters of 2004 was $0.4 million, $0.4 million, $0.6 million and $1.6 million, respectively. | |
(K) | Diluted earnings per share (DEPS) in each quarter is computed using the weighted average number of shares outstanding during that quarter while DEPS for the full year is computed by taking the average of the weighted average number of shares outstanding each quarter. Thus, the sum of the four quarters’ DEPS may not equal the full-year DEPS. |
18. | Subsequent Event |
19. | Subsequent Event (Unaudited) |
F-43
Table of Contents
Col. A | Col. B | Col. C | Col. D | Col. E | ||||||||||||||||
Balance at | Charged | |||||||||||||||||||
Beginning | Charged | to Other | Balance at | |||||||||||||||||
of Period | to Expense | Accounts(1) | Deductions(2) | End of Period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Allowance for doubtful accounts: | ||||||||||||||||||||
Year ended December 31, 2005 | $ | 12,481 | $ | 8,601 | $ | 1,543 | $ | (10,016 | ) | $ | 12,609 | |||||||||
Year ended December 31, 2004 | 11,422 | 5,824 | (4,765 | ) | 12,481 | |||||||||||||||
Year ended December 31, 2003 | 10,261 | 10,229 | (9,068 | ) | 11,422 |
(2) | Includes a reduction in the allowance for doubtful accounts due to write-off of accounts receivable. |
Col. A | Col. B | Col. C | Col. D | Col. E | ||||||||||||||||
Balance at | Charged | |||||||||||||||||||
Beginning | Charged | to Other | Balance at | |||||||||||||||||
of Period | to Expense | Accounts(1) | Deductions(2) | End of Period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Inventory reserve: | ||||||||||||||||||||
Year ended December 31, 2005 | $ | 10,070 | $ | 4,081 | $ | 1,840 | $ | (3,525 | ) | $ | 12,466 | |||||||||
Year ended December 31, 2004 | 9,759 | 5,500 | (5,189 | ) | 10,070 | |||||||||||||||
Year ended December 31, 2003 | 11,873 | 5,005 | (7,119 | ) | 9,759 |
(2) | Includes a reduction in the inventory reserve due to disposal of inventory. |
Col. A | Col. B | Col. C | Col. D | Col. E | ||||||||||||||||
Balance at | Charged | Charged | ||||||||||||||||||
Beginning | (benefit) | to Other | Balance at | |||||||||||||||||
of Period | to Expense | Accounts | Deductions | End of Period | ||||||||||||||||
(In thousands) | ||||||||||||||||||||
Valuation Allowance | ||||||||||||||||||||
Year ended December 31, 2005 | $ | 13,439 | $ | 2,254 | 0 | 0 | $ | 15,693 | ||||||||||||
Year ended December 31, 2004 | 12,845 | 594 | 0 | 0 | 13,439 | |||||||||||||||
Year ended December 31, 2003 | 11,291 | 1,554 | 0 | 0 | 12,845 |
F-44
Table of Contents
March 31, | December 31, | |||||||||
2006 | 2005 | |||||||||
(Dollars in thousands, | ||||||||||
except share data) | ||||||||||
Assets | ||||||||||
Current Assets: | ||||||||||
Cash and cash equivalents | $ | 30,350 | $ | 22,125 | ||||||
Trade accounts receivable, net of allowance for doubtful accounts of $15,293 and $12,609 in 2006 and 2005, respectively(Note 5) | 348,611 | 315,594 | ||||||||
Other accounts receivable | 22,798 | 36,235 | ||||||||
Inventories, net | 507,930 | 500,798 | ||||||||
Current deferred income taxes | 13,712 | 13,399 | ||||||||
Income taxes receivable | 7,792 | 12,814 | ||||||||
Prepaid expenses and other current assets | 7,631 | 7,898 | ||||||||
Total current assets | 938,824 | 908,863 | ||||||||
Property, buildings and equipment, net | 103,569 | 103,083 | ||||||||
Intangible assets, net(Note 6) | 81,987 | 83,892 | ||||||||
Goodwill(Note 6) | 547,724 | 542,217 | ||||||||
Other assets | 12,629 | 13,104 | ||||||||
Total assets | $ | 1,684,733 | $ | 1,651,159 | ||||||
Liabilities and Stockholders’ Equity | ||||||||||
Current Liabilities: | ||||||||||
Accounts payable | $ | 575,661 | $ | 572,467 | ||||||
Accrued payroll and benefit costs | 34,818 | 51,220 | ||||||||
Short-term debt related to revolving credit facility | — | 14,500 | ||||||||
Current portion of long-term debt | 26,190 | 36,825 | ||||||||
Deferred acquisition payable | 8,180 | 2,680 | ||||||||
Bank overdrafts | 5,599 | 3,695 | ||||||||
Other current liabilities | 48,408 | 38,499 | ||||||||
Total current liabilities | 698,856 | 719,886 | ||||||||
Long-term debt | 348,477 | 352,232 | ||||||||
Long-term deferred acquisition payable | 3,333 | 4,346 | ||||||||
Other noncurrent liabilities | 10,561 | 9,507 | ||||||||
Deferred income taxes | 75,813 | 73,738 | ||||||||
Total liabilities | 1,137,040 | 1,159,709 | ||||||||
Commitments and contingencies(Note 8) | ||||||||||
Stockholders’ Equity: | ||||||||||
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued or outstanding | — | — | ||||||||
Common stock, $.01 par value; 210,000,000 shares authorized, 52,391,041 and 51,790,725 shares issued in 2006 and 2005, respectively | 524 | 518 | ||||||||
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued in 2006 and 2005; no shares outstanding | 43 | 43 | ||||||||
Additional capital | 723,557 | 707,407 | ||||||||
Retained earnings (deficit) | (123,882 | ) | (168,332 | ) | ||||||
Treasury stock, at cost; 8,516,795 and 8,418,607 shares in 2006 and 2005, respectively | (66,323 | ) | (61,821 | ) | ||||||
Accumulated other comprehensive income | 13,774 | 13,635 | ||||||||
Total stockholders’ equity | 547,693 | 491,450 | ||||||||
Total liabilities and stockholders’ equity | $ | 1,684,733 | $ | 1,651,159 | ||||||
F-45
Table of Contents
Three Months Ended | |||||||||
March 31, | |||||||||
2006 | 2005 | ||||||||
(Dollars in thousands, | |||||||||
except share data) | |||||||||
Net sales | $ | 1,265,508 | $ | 990,871 | |||||
Cost of goods sold (excluding depreciation and amortization below) | 1,012,403 | 805,689 | |||||||
Gross profit | 253,105 | 185,182 | |||||||
Selling, general and administrative expenses | 169,898 | 142,681 | |||||||
Depreciation and amortization | 6,282 | 3,939 | |||||||
Income from operations | 76,925 | 38,562 | |||||||
Interest expense, net | 6,393 | 9,125 | |||||||
Loss on debt extinguishment | — | 10,051 | |||||||
Other expenses(Note 5) | 5,059 | 2,015 | |||||||
Income before income taxes | 65,473 | 17,371 | |||||||
Provision for income taxes | 21,023 | 6,027 | |||||||
Net income | $ | 44,450 | $ | 11,344 | |||||
Earnings per share: | |||||||||
Basic: | $ | 0.93 | $ | 0.24 | |||||
Diluted: | $ | 0.86 | $ | 0.23 | |||||
F-46
Table of Contents
Three Months Ended | |||||||||||
March 31, | |||||||||||
2006 | 2005 | ||||||||||
(In thousands) | |||||||||||
Operating Activities: | |||||||||||
Net income | $ | 44,450 | $ | 11,344 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Loss on debt extinguishment (excluding premium of $8,168 in 2005) | — | 1,883 | |||||||||
Depreciation and amortization | 6,282 | 3,940 | |||||||||
Accretion of original issue and amortization of purchase discounts | — | 493 | |||||||||
Amortization of debt issuance costs | 552 | 286 | |||||||||
Deferred income taxes | 1,762 | (821 | ) | ||||||||
Amortization of gain on interest rate swap | — | (228 | ) | ||||||||
Stock-based compensation expense | 2,568 | 1,658 | |||||||||
Loss (gain) on the sale of property, buildings and equipment | 21 | (7 | ) | ||||||||
Excess tax benefit from stock-based compensation(Note 3) | (8,126 | ) | — | ||||||||
Changes in assets and liabilities | |||||||||||
Change in receivables facility | (2,000 | ) | 90,500 | ||||||||
Trade and other receivables | (17,319 | ) | (31,931 | ) | |||||||
Inventories | (6,943 | ) | 2,037 | ||||||||
Prepaid expenses and other current assets | 13,336 | 3,216 | |||||||||
Accounts payable | 3,482 | 33,496 | |||||||||
Accrued payroll and benefit costs | (16,402 | ) | (16,119 | ) | |||||||
Other current and noncurrent liabilities | 10,857 | 2,806 | |||||||||
Net cash provided by operating activities | 32,520 | 102,553 | |||||||||
Investing Activities: | |||||||||||
Capital expenditures | (4,206 | ) | (2,703 | ) | |||||||
Acquisition payments | (1,013 | ) | (1,014 | ) | |||||||
Net cash used by investing activities | (5,219 | ) | (3,717 | ) | |||||||
Financing Activities: | |||||||||||
Proceeds from issuance of long-term debt | 137,904 | 109,000 | |||||||||
Repayments of long-term debt | (167,228 | ) | (227,778 | ) | |||||||
Debt issuance costs | (532 | ) | |||||||||
Proceeds from the exercise of stock options | 960 | 4,337 | |||||||||
Excess tax benefit from stock-based compensation(Note 3) | 8,126 | — | |||||||||
Increase in bank overdrafts | 1,903 | — | |||||||||
Payments on capital lease obligations | (209 | ) | — | ||||||||
Net cash used by financing activities | (19,076 | ) | (114,441 | ) | |||||||
Effect of exchange rate changes on cash and cash equivalents | — | (153 | ) | ||||||||
Net change in cash and cash equivalents | 8,225 | (15,758 | ) | ||||||||
Cash and cash equivalents at the beginning of period | 22,125 | 34,523 | |||||||||
Cash and cash equivalents at the end of period | $ | 30,350 | $ | 18,765 | |||||||
Supplemental disclosures: | |||||||||||
Non-cash investing activities: | |||||||||||
Property, plant and equipment acquired through capital leases | 644 | — | |||||||||
Increase in deferred acquisition payable | 5,500 | — | |||||||||
Non-cash financing activities: | |||||||||||
Decrease in fair value of outstanding interest rate swaps | — | 1,107 |
F-47
Table of Contents
1. | Organization |
2. | Accounting Policies |
Basis of Presentation |
Recent Accounting Pronouncements |
F-48
Table of Contents
3. | Stock-Based Compensation |
F-49
Table of Contents
Three Months | ||||
Ended | ||||
March 31, | ||||
2006 | ||||
Risk free interest rate | 4.2% | |||
Expected life | 4 years | |||
Expected volatility | 57% |
Weighted | ||||||||||||
Average | Weighted Average | |||||||||||
Exercise | Remaining | |||||||||||
Awards | Price | Contractual Life | ||||||||||
Outstanding at December 31, 2005 | 6,303,936 | $ | 14.02 | 5.9 | ||||||||
Granted | 3,482 | 52.33 | ||||||||||
Exercised | 622,758 | 10.86 | ||||||||||
Cancelled | 40,634 | 13.86 | ||||||||||
Outstanding at March 31, 2006 | 5,644,026 | 14.40 | 5.9 | |||||||||
Exercisable at March 31, 2006 | 1,154,579 | 10.87 | 5.0 | |||||||||
Unvested at March 31, 2006 | 4,489,447 | 15.31 | 6.1 |
F-50
Table of Contents
Weighted Average | ||||||||||||
Awards | Awards | Remaining | ||||||||||
Range of exercise price | Outstanding | Exercisable | Contractual Life | |||||||||
$ 0.00 - $10.00 | 2,486,972 | 502,618 | 5.5 | |||||||||
$10.00 - $20.00 | 1,528,650 | 471,234 | 3.2 | |||||||||
$20.00 - $30.00 | 725,733 | 180,727 | 8.5 | |||||||||
$30.00 - $40.00 | 882,500 | 0 | — | |||||||||
$40.00 - $50.00 | 17,639 | 0 | — | |||||||||
$50.00 - $60.00 | 2,150 | 0 | — | |||||||||
$60.00 - $70.00 | 382 | 0 | — | |||||||||
5,644,026 | 1,154,579 | 5.9 | ||||||||||
Three Months Ended | |||||
March 31, 2005 | |||||
(Dollars in thousands, | |||||
except share amounts) | |||||
Net income reported | $ | 11,344 | |||
Add: Stock-based compensation expense included in reported net income, net of related tax | 1,043 | ||||
Deduct: Stock based employee compensation expense determined under fair value based methods for all awards, net of related tax | 1,236 | ||||
Pro forma net income | $ | 11,151 | |||
Earnings per share: | |||||
Basic as reported | $ | 0.24 | |||
Basic pro forma | $ | 0.24 | |||
Diluted as reported | $ | 0.23 | |||
Diluted pro forma | $ | 0.23 |
F-51
Table of Contents
4. | Earnings Per Share |
Three Months Ended | |||||||||
March 31, | |||||||||
2006 | 2005 | ||||||||
(Dollars in thousands, | |||||||||
except per share amounts) | |||||||||
Net income reported | $ | 44,450 | $ | 11,344 | |||||
Weighted average common shares outstanding used in computing basic earnings per share | 48,031,287 | 46,694,626 | |||||||
Common shares issuable upon exercise of dilutive stock options | 2,636,644 | 2,531,515 | |||||||
Common shares issuable from contingently convertible debentures (see note below for basis of calculation) | 825,286 | — | |||||||
Weighted average common shares outstanding and common share equivalents used in computing diluted earnings per share | 51,493,217 | 49,226,141 | |||||||
Earnings per share: | |||||||||
Basic | $ | 0.93 | $ | 0.24 | |||||
Diluted | $ | 0.86 | $ | 0.23 |
F-52
Table of Contents
Conversion Price: | $ | 41.86 | ||
Number of Underlying Shares: | 0 to 3,583,080 | |||
Principal Amount | $ | 150,000,000 | ||
Formula: Number of extra dilutive shares created = ((Stock Price * Underlying Shares) — Principal)/ Stock Price | ||||
Condition: Only applies when share price exceeds $41.86 |
Include in | Share Dilution | |||||||||||||||
Conversion | Price | Share | Per $1.00 Share | |||||||||||||
Stock Price | Price | Difference | Count | Price Difference | ||||||||||||
$41.86 | $ | 41.86 | $ | 0 | 0 | 0 | ||||||||||
$42.86 | $ | 41.86 | $ | 1 | 83,313 | 83,313 | ||||||||||
$51.86 | $ | 41.86 | $ | 10 | 690,677 | 69,068 | ||||||||||
$61.86 | $ | 41.86 | $ | 20 | 1,158,249 | 57,912 | ||||||||||
$71.86 | $ | 41.86 | $ | 30 | 1,495,687 | 49,856 | ||||||||||
$81.86 | $ | 41.86 | $ | 40 | 1,750,683 | 43,767 |
5. | Accounts Receivable Securitization |
F-53
Table of Contents
6. | Acquisitions |
F-54
Table of Contents
Fastec | Carlton- | |||||||
Industrial | Bates | |||||||
Corp. | Company | |||||||
(Dollars in thousands) | ||||||||
Assets Acquired | ||||||||
Cash and equivalents | $ | 281 | $ | 1,763 | ||||
Trade accounts receivable | 4,675 | 37,628 | ||||||
Inventories | 11,944 | 40,709 | ||||||
Deferred income taxes short-term | — | 1,861 | ||||||
Other accounts receivable | — | 840 | ||||||
Prepaid expenses | 161 | 762 | ||||||
Income taxes receivable | — | 2,789 | ||||||
Property, buildings and equipment | 2,168 | 5,159 | ||||||
Intangible assets | 11,134 | 74,444 | ||||||
Goodwill | 5,396 | 135,088 | ||||||
Total assets acquired | 35,759 | 301,043 | ||||||
Liabilities Assumed | ||||||||
Accounts payable | 2,663 | 16,901 | ||||||
Accrued and other current liabilities | 767 | 8,599 | ||||||
Deferred income taxes long-term | — | 19,607 | ||||||
Other noncurrent liabilities | — | 136 | ||||||
Total liabilities assumed | 3,430 | 45,243 | ||||||
Fair value of net assets acquired, including intangible assets | $ | 32,329 | $ | 255,800 | ||||
Acquisition of Carlton-Bates Company |
F-55
Table of Contents
Three Months Ended | ||||
March 31, 2005 | ||||
(Dollars in thousands, | ||||
except per share amounts) | ||||
Net Sales | $ | 1,066,025 | ||
Net Income | $ | 12,759 | ||
Earnings per common share: | ||||
Basis | $ | 0.27 | ||
Diluted | $ | 0.26 |
Acquisition of Fastec Industrial Corp. |
F-56
Table of Contents
Other Acquisition |
7. | Employee Benefit Plans |
8. | Commitments and Contingencies |
9. | Comprehensive Income |
Three Months | ||||||||
Ended | ||||||||
March 31, | ||||||||
2006 | 2005 | |||||||
(In thousands) | ||||||||
Net income | $ | 44,450 | $ | 11,344 | ||||
Foreign currency translation adjustment | (139 | ) | (556 | ) | ||||
Comprehensive income | $ | 44,311 | $ | 10,788 | ||||
F-57
Table of Contents
10. | Income Taxes |
Three Months | ||||||||
Ended | ||||||||
March 31, | ||||||||
2006 | 2005 | |||||||
Federal statutory rate | 35.0 | % | 35.0 | % | ||||
State taxes, net of federal tax benefit | 2.5 | 2.1 | ||||||
Nondeductible expenses | 0.4 | 0.8 | ||||||
Domestic tax benefit from foreign operations | (2.7 | ) | (0.3 | ) | ||||
Foreign tax rate differences(1) | (2.9 | ) | (2.9 | ) | ||||
Domestic production activity deduction | (0.2 | ) | — | |||||
32.1 | % | 34.7 | % | |||||
(1) | Includes a benefit of $2.1 and $0.5 million for the three months ended March 31, 2006 and 2005, respectively, from the recapitalization of our Canadian operations. |
11. | Other Financial Information (Unaudited) |
F-58
Table of Contents
F-59
Table of Contents
March 31, 2006 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | 3 | $ | 20,404 | $ | 9,943 | $ | — | $ | 30,350 | |||||||||||
Trade accounts receivable | — | — | 348,611 | — | 348,611 | ||||||||||||||||
Inventories | — | 386,255 | 121,675 | — | 507,930 | ||||||||||||||||
Other current assets | — | 20,688 | 39,038 | (7,793 | ) | 51,933 | |||||||||||||||
Total current assets | 3 | 427,347 | 519,267 | (7,793 | ) | 938,824 | |||||||||||||||
Intercompany receivables, net | — | (415,856 | ) | 441,034 | (25,178 | ) | — | ||||||||||||||
Property, buildings and equipment, net | — | 32,397 | 71,172 | — | 103,569 | ||||||||||||||||
Intangible assets, net | — | 10,953 | 71,034 | 81,987 | |||||||||||||||||
Goodwill and other intangibles, net | — | 374,000 | 173,724 | — | 547,724 | ||||||||||||||||
Investments in affiliates and other noncurrent assets | 723,852 | 1,071,412 | 2,926 | (1,785,561 | ) | 12,629 | |||||||||||||||
Total assets | $ | 723,855 | $ | 1,500,253 | $ | 1,279,157 | $ | (1,818,532 | ) | $ | 1,684,733 | ||||||||||
Accounts payable | $ | — | $ | 453,563 | $ | 122,098 | $ | — | $ | 575,661 | |||||||||||
Other current liabilities | 984 | 109,137 | 20,867 | (7,793 | ) | 123,195 | |||||||||||||||
Total current liabilities | 984 | 562,700 | 142,965 | (7,793 | ) | 698,856 | |||||||||||||||
Intercompany payables, net | 25,178 | — | — | (25,178 | ) | — | |||||||||||||||
Long-term debt | 150,000 | 151,759 | 46,718 | — | 348,477 | ||||||||||||||||
Other noncurrent liabilities | — | 65,981 | 23,726 | — | 89,707 | ||||||||||||||||
Stockholders’ equity | 547,693 | 719,813 | 1,065,748 | (1,785,561 | ) | 547,693 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 723,855 | $ | 1,500,253 | $ | 1,279,157 | $ | (1,818,532 | ) | $ | 1,684,733 | ||||||||||
F-60
Table of Contents
December 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Cash and cash equivalents | $ | $ | 18,088 | $ | 4,037 | $ | — | $ | 22,125 | ||||||||||||
Trade accounts receivable | — | — | 315,594 | — | 315,594 | ||||||||||||||||
Inventories | — | 380,227 | 120,571 | — | 500,798 | ||||||||||||||||
Other current assets | — | 40,049 | 50,971 | (20,674 | ) | 70,346 | |||||||||||||||
Total current assets | — | 438,364 | 491,173 | (20,674 | ) | 908,863 | |||||||||||||||
Intercompany receivables, net | — | (161,534 | ) | 206,253 | (44,719 | ) | — | ||||||||||||||
Property, buildings and equipment, net | — | 31,712 | 71,371 | — | 103,083 | ||||||||||||||||
Intangible assets, net | — | 11,140 | 72,752 | — | 83,892 | ||||||||||||||||
Goodwill and other intangibles, net | — | 374,000 | 168,217 | — | 542,217 | ||||||||||||||||
Investments in affiliates and other noncurrent assets | 686,169 | 806,818 | 3,045 | (1,482,928 | ) | 13,104 | |||||||||||||||
Total assets | $ | 686,169 | $ | 1,500,500 | $ | 1,012,811 | $ | (1,548,321 | ) | $ | 1,651,159 | ||||||||||
Accounts payable | $ | — | $ | 453,101 | $ | 119,366 | $ | — | $ | 572,467 | |||||||||||
Short-term debt | — | 14,500 | — | — | 14,500 | ||||||||||||||||
Other current liabilities | — | 133,478 | 20,115 | (20,674 | ) | 132,919 | |||||||||||||||
Total current liabilities | — | 601,079 | 139,481 | (20,674 | ) | 719,886 | |||||||||||||||
Intercompany payables, net | 44,719 | — | — | (44,719 | ) | — | |||||||||||||||
Long-term debt | 150,000 | 154,024 | 48,208 | — | 352,232 | ||||||||||||||||
Other noncurrent liabilities | — | 63,491 | 24,100 | — | 87,591 | ||||||||||||||||
Stockholders’ equity | 491,450 | 681,906 | 801,022 | (1,482,928 | ) | 491,450 | |||||||||||||||
Total liabilities and stockholders’ equity | $ | 686,169 | $ | 1,500,500 | $ | 1,012,811 | $ | (1,548,321 | ) | $ | 1,651,159 | ||||||||||
F-61
Table of Contents
Three Months Ended March 31, 2006 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net sales | $ | — | $ | 981,945 | $ | 283,563 | $ | — | $ | 1,265,508 | |||||||||||
Cost of goods sold | — | 793,215 | 219,188 | — | 1,012,403 | ||||||||||||||||
Selling, general and administrative expenses | 2 | 130,321 | 39,575 | — | 169,898 | ||||||||||||||||
Depreciation and amortization | — | 3,342 | 2,940 | — | 6,282 | ||||||||||||||||
Results of affiliates’ operations | 37,768 | 14,426 | — | (52,194 | ) | — | |||||||||||||||
Interest expense (income), net | (8,916 | ) | 9,961 | 5,348 | — | 6,393 | |||||||||||||||
Loss on debt extinguishment | — | — | — | — | — | ||||||||||||||||
Other (income) expense | — | 13,008 | (7,949 | ) | — | 5,059 | |||||||||||||||
Provision for income taxes | 2,232 | 8,756 | 10,035 | — | 21,023 | ||||||||||||||||
Net income | $ | 44,450 | $ | 37,768 | $ | 14,426 | $ | (52,194 | ) | $ | 44,450 | ||||||||||
Three Months Ended March 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net sales | $ | — | $ | 836,409 | $ | 154,462 | $ | — | $ | 990,871 | |||||||||||
Cost of goods sold | — | 681,937 | 123,752 | — | 805,689 | ||||||||||||||||
Selling, general and administrative expenses | 1 | 123,200 | 19,480 | — | 142,681 | ||||||||||||||||
Depreciation and amortization | — | 3,251 | 688 | — | 3,939 | ||||||||||||||||
Results of affiliates’ operations | 7,901 | 14,239 | — | (22,140 | ) | — | |||||||||||||||
Interest expense (income), net | (5,299 | ) | 12,200 | 2,224 | — | 9,125 | |||||||||||||||
Loss on debt extinguishment | — | 10,051 | — | 10,051 | |||||||||||||||||
Other (income) expense | — | 8,724 | (6,709 | ) | — | 2,015 | |||||||||||||||
Provision for income taxes | 1,855 | 3,384 | 788 | — | 6,027 | ||||||||||||||||
Net income | $ | 11,344 | $ | 7,901 | $ | 14,239 | $ | (22,140 | ) | $ | 11,344 | ||||||||||
F-62
Table of Contents
Three Months Ended March 31, 2006 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net cash (used) provided by operating activities | $ | 9,149 | $ | 12,641 | $ | 10,730 | $ | — | $ | 32,520 | |||||||||||
Investing activities: | |||||||||||||||||||||
Capital expenditures | — | (3,401 | ) | (805 | ) | (4,206 | ) | ||||||||||||||
Acquisition payments | — | (1,013 | ) | — | — | (1,013 | ) | ||||||||||||||
Net cash used by investing activities | — | (4,414 | ) | (805 | ) | — | (5,219 | ) | |||||||||||||
Financing activities: | |||||||||||||||||||||
Net repayments | (18,232 | ) | (10,768 | ) | (324 | ) | — | (29,324 | ) | ||||||||||||
Equity transactions | 9,086 | — | — | — | 9,086 | ||||||||||||||||
Other | — | 4,857 | (3,695 | ) | — | 1,162 | |||||||||||||||
Net cash used by financing activities | (9,146 | ) | (5,911 | ) | (4,019 | ) | — | (19,076 | ) | ||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | — | — | — | ||||||||||||||||
Net change in cash and cash equivalents | 3 | 2,316 | 5,906 | — | 8,225 | ||||||||||||||||
Cash and cash equivalents at the beginning of year | — | 18,088 | 4,037 | — | 22,125 | ||||||||||||||||
Cash and cash equivalents at the end of period | $ | 3 | $ | 20,404 | $ | 9,943 | $ | — | $ | 30,350 | |||||||||||
F-63
Table of Contents
Three Months Ended March 31, 2005 | |||||||||||||||||||||
Consolidating | |||||||||||||||||||||
WESCO | WESCO | and | |||||||||||||||||||
International, | Distribution, | Non-Guarantor | Eliminating | ||||||||||||||||||
Inc. | Inc. | Subsidiaries | Entries | Consolidated | |||||||||||||||||
(In thousands) | |||||||||||||||||||||
Net cash provided (used) by operating activities | $ | 9,798 | $ | 99,815 | $ | (7,060 | ) | $ | — | $ | 102,553 | ||||||||||
Investing activities: | |||||||||||||||||||||
Capital expenditures | — | (2,663 | ) | (40 | ) | — | (2,703 | ) | |||||||||||||
Acquisition payments | — | (1,014 | ) | — | — | (1,014 | ) | ||||||||||||||
Net cash used by investing activities | — | (3,677 | ) | (40 | ) | — | (3,717 | ) | |||||||||||||
Financing activities: | |||||||||||||||||||||
Net borrowings (repayments) | (14,135 | ) | (104,344 | ) | (299 | ) | — | (118,778 | ) | ||||||||||||
Equity transactions | 4,337 | — | — | — | 4,337 | ||||||||||||||||
Net cash (used) provided by financing activities | (9,798 | ) | (104,344 | ) | (299 | ) | — | (114,441 | ) | ||||||||||||
�� | |||||||||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | — | — | (153 | ) | — | (153 | ) | ||||||||||||||
Net change in cash and cash equivalents | — | (8,206 | ) | (7,552 | ) | — | (15,758 | ) | |||||||||||||
Cash and cash equivalents at the beginning of year | 1 | 15,974 | 18,548 | — | 34,523 | ||||||||||||||||
Cash and cash equivalents at the end of period | $ | 1 | $ | 7,768 | $ | 10,996 | $ | — | $ | 18,765 | |||||||||||
F-64
Table of Contents
By First Class/ Registered/ Certified Mail: J.P.Morgan Trust Company, National Association | By Express Delivery Only: J.P.Morgan Trust Company, National Association | By Hand Only: J.P.Morgan Trust Company, National Association | ||
Worldwide Securities Services P.O. Box 2320 Dallas, Texas 75221-2320 | Worldwide Securities Services 2001 Bryan St., 9th Floor Dallas, Texas 75201 | Worldwide Securities Services Window 4 New York Plaza — 1st Floor | ||
New York, New York 10004 |
Table of Contents
II-1
Table of Contents
Item 21. | Exhibits And Financial Statement Schedules |
Exhibit No. | Description of Exhibit | Prior Filing | ||||
2 | .1 | Recapitalization Agreement, dated as of March 27, 1998, among Thor Acquisitions L.L.C., WESCO International, Inc. (formerly known as CDW Holding Corporation) and certain security holders of WESCO International, Inc. | Incorporated by reference to Exhibit 2.1 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
3 | .1 | Restated Certificate of Incorporation of WESCO International, Inc. | Incorporated by reference to Exhibit 3.1 to WESCO’s Registration Statement on Form S-4 (No. 333-70404) | |||
3 | .2 | By-laws of WESCO International, Inc. | Incorporated by reference to Exhibit 3.2 to WESCO’s Registration Statement on Form S-4 (No. 333-70404) | |||
3 | .3 | Certificate of Incorporation of WESCO Distribution, Inc. | Incorporated by reference to Exhibit 3.3 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
3 | .4 | By-laws of WESCO Distribution, Inc. | Incorporated by reference to Exhibit 3.4 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
4 | .1 | Indenture, dated as of September 22, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and J.P. Morgan Trust Company, National Association, as Trustee. | Incorporated by reference to Exhibit 4.1 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .2 | Form of 2.625% Convertible Senior Debenture due 2025 (included in Exhibit 4.1). | Incorporated by reference to Exhibit 4.3 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .3 | Indenture, dated as of September 22, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and J.P. Morgan Trust Company, National Association, as Trustee. | Incorporated by reference to Exhibit 4.4 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .4 | Form of 7.50% Senior Subordinated Note due 2017, (included in Exhibit 4.3). | Incorporated by reference to Exhibit 4.6 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 |
II-2
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
5 | .1 | Opinion of Kirkpatrick & Lockhart Nicholson Graham LLP. | Previously filed | |||
10 | .1 | CDW Holding Corporation Stock Purchase Plan. | Incorporated by reference to Exhibit 10.1 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .2 | Form of Stock Subscription Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .3 | CDW Holding Corporation Stock Option Plan. | Incorporated by reference to Exhibit 10.3 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .4 | Amendment to CDW Holding Corporation Stock Option Plan | Incorporated by reference to Exhibit 10.1 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .5 | Form of Stock Option Agreement. | Incorporated by reference to Exhibit 10.4 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .6 | Form of Amendment to Stock Option Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .7 | CDW Holding Corporation Stock Option Plan for Branch Employees. | Incorporated by reference to Exhibit 10.5 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .8 | Amendment to CDW Holding Corporation Stock Option Plan for Branch Employees. | Incorporated by reference to Exhibit 10.3 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .9 | Form of Branch Stock Option Agreement. | Incorporated by reference to Exhibit 10.6 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .10 | Form of Amendment to Branch Stock Option Agreement. | Incorporated by reference to Exhibit 10.4 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .11 | WESCO International, Inc. 1998 Stock Option Plan. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 | |||
10 | .12 | Amendment to WESCO International, Inc. 1998 Stock Option Plan. | Incorporated by reference to Exhibit 10.5 to WESCO’s Current Report on Form 8-K dated March 2, 2006 | |||
10 | .13 | Form of Management Stock Option Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 | |||
10 | .14 | Form of Amendment to Management Stock Option Agreement. | Incorporated by reference to Exhibit 10.6 to WESCO’s Current Report on Form 8-K dated March 2, 2006 |
II-3
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .15 | 1999 Deferred Compensation Plan for Non- Employee Directors. | Incorporated by reference to Exhibit 10.22 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 1998 | |||
10 | .16 | 1999 Long-Term Incentive Plan. | Incorporated by reference to Exhibit 10.22 to WESCO’s Registration Statement on Form S-1 (No. 333-73299) | |||
10 | .17 | Office Lease Agreement, dated as of May 24, 1995, by and between Commerce Court Property Holding Trust, as Landlord, and WESCO Distribution, Inc., as Tenant, as amended by First Amendment to Lease, dated as of June 1995 and by Second Amendment to Lease, dated as of December 29, 1995. | Incorporated by reference to Exhibit 10.10 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .18 | Lease, dated as of April 1, 1992, by and between The E.T. Hermann and Jane D. Hermann 1978 Living Trust and Westinghouse Electric Corporation, as renewed by the renewal letter, dated as of December 13, 1996, from WESCO Distribution, Inc., as successor in interest to Westinghouse Electric Corporation, to Utah State Retirement Fund, as successor in interest to The E.T. Hermann and Jane D. Hermann 1978 Living Trust. | Incorporated by reference to Exhibit 10.11 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .19 | Third Amendment to Lease, dated as of December 22, 2004, by and between US Institutional Real Estate Equities, L.P., as successor in interest to Utah State Retirement Fund and The E.T. Hermann and Jane D. Hermann 1978 Living Trust, and WESCO Distribution, Inc., as successor in interest to Westinghouse Electric Corporation. | Incorporated by reference to Exhibit 10.19 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .20 | Agreement of Lease, dated as of September 3, 1998, by and between Atlantic Construction, Inc., as landlord, and WESCO Distribution-Canada, Inc., as tenant, as renewed by the Renewal Agreement, dated April 14, 2004, by and between Atlantic Construction, Inc., as landlord, and WESCO Distribution-Canada, Inc., as tenant. | Incorporated by reference to Exhibit 10.20 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .21 | Lease dated December 13, 2002 between WESCO Distribution, Inc. and WESCO Real Estate IV, LLC. | Incorporated by reference to Exhibit 10.27 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 |
II-4
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .22 | Lease Guaranty dated December 13, 2002 by WESCO International, Inc. in favor of WESCO Real Estate IV, LLC. | Incorporated by reference to Exhibit 10.28 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .23 | Amended and Restated Registration and Participation Agreement, dated as of June 5, 1998, among WESCO International, Inc. and certain security holders of WESCO International, Inc. named therein. | Incorporated by reference to Exhibit 10.19 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .24 | Employment Agreement, dated as of June 5, 1998, between WESCO Distribution, Inc. and Roy W. Haley. | Incorporated by reference to Exhibit 10.20 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .25 | Employment Agreement, dated as of July 29, 2004, between WESCO International, Inc. and John Engel. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 | |||
10 | .26 | Employment Agreement, dated as of December 15, 2005, between WESCO International, Inc. and Stephen A. Van Oss. | Incorporated by reference to Exhibit 10.26 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .27 | Amended and Restated Credit Agreement, dated as of September 28, 2005, by and among WESCO Distribution, Inc., the other credit parties signatory thereto from time to time, General Electric Capital Corporation, as Agent and U.S. Lender, GECC Capital Markets Group, as Lead Arranger, GE Canada Finance Holding Company, as Canadian Agent and a Canadian Lender, Bank of America, N.A., as Syndication Agent, and The CIT Group/Business Credit, Inc. and Citizens Bank of Pennsylvania, as Co-Documentation Agents. | Incorporated by reference to Exhibit 10.1 to WESCO’s Current Report on Form 8-K, September 28, 2005 | |||
10 | .28 | Intercreditor Agreement, dated as of March 19, 2002, among PNC Bank, National Association, General Electric Capital Corporation, WESCO Receivables Corp., WESCO Distribution, Inc., Fifth Third Bank, N.A., Mellon Bank, N.A., The Bank of Nova Scotia, Herning Enterprises, Inc. and WESCO Equity Corporation. | Incorporated by reference to Exhibit 10.21 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2001 |
II-5
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .29 | Second Amended and Restated Receivables Purchase Agreement dated as of September 2, 2003 among WESCO Receivables Corp., WESCO Distribution, Inc., and the Lenders identified therein. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 | |||
10 | .30 | Second Amendment to Second Amended and Restated Receivables Purchase Agreement and Waiver, dated August 31, 2004. | Incorporated by reference to Exhibit 10.4 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 | |||
10 | .31 | Third Amendment to Second Amended and Restated Receivables Purchase Agreement, dated September 23, 2004. | Incorporated by reference to Exhibit 10.5 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 | |||
10 | .32 | Sixth Amendment to Second Amended and Restated Receivables Purchase Agreement, dated October 4, 2005. | Incorporated by reference to Exhibit 10.2 to WESCO’s Current Report on Form 8-K, September 28, 2005 | |||
10 | .33 | Loan Agreement between Bear Stearns Commercial Mortgage, Inc. and WESCO Real Estate IV, LLC, dated December 13, 2002. | Incorporated by reference to Exhibit 10.26 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .34 | Guaranty of Non-Recourse Exceptions Agreement dated December 13, 2002 by WESCO International, Inc. in favor of Bear Stearns Commercial Mortgage, Inc. | Incorporated by reference to Exhibit 10.29 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .35 | Environmental Indemnity Agreement dated December 13, 2002 made by WESCO Real Estate IV, Inc. and WESCO International, Inc. in favor of Bear Stearns Commercial Mortgage, Inc. | Incorporated by reference to Exhibit 10.30 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .36 | Asset Purchase Agreement, dated as of September 11, 1998, among Bruckner Supply Company, Inc. and WESCO Distribution, Inc. | Incorporated by reference to Exhibit 2.01 to WESCO’s Current Report on Form 8-K, dated September 11, 1998 | |||
10 | .37 | Amendment dated March 29, 2002 to Asset Purchase Agreement, dated as of September 11, 1998, among Bruckner Supply Company, Inc. and WESCO Distribution, Inc. | Incorporated by reference to Exhibit 10.25 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .38 | Agreement and Plan of Merger, dated August 16, 2005, by and among Carlton- Bates Company, the shareholders of Carlton-Bates Company signatory thereto, the Company Representative (as defined therein), WESCO Distribution, Inc. and C-B WESCO, Inc. | Incorporated by reference to Exhibit 10.3 to WESCO’s Current Report on Form 8-K, dated September 28, 2005 |
II-6
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .39 | Registration Rights Agreement, dated September 27, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and Lehman Brothers Inc. and Goldman Sachs & Co., as representatives of the initial purchasers named therein. | Incorporated by reference to Exhibit 4.2 to WESCO’s Current Report on Form 8-K, September 21, 2005 | |||
10 | .40 | Exchange and Registration Rights Agreement, dated September 27, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and Goldman Sachs & Co. and Lehman Brothers Inc., as representatives of the initial purchasers named therein. | Incorporated by reference to Exhibit 4.5 to WESCO’s Current Report on Form 8-K, September 21, 2005 | |||
12 | .1 | Statement re computation of ratios. | Filed herewith | |||
21 | .1 | Subsidiaries of WESCO. | Incorporated by reference to Exhibit 21.1 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
23 | .1 | Consent of PricewaterhouseCoopers LLP. | Filed herewith | |||
23 | .2 | Consent of American Appraisal Associates, Inc. | Filed herewith | |||
23 | .3 | Consent of Kirkpatrick & Lockhart Nicholson Graham LLP | Included in Exhibit 5.1 | |||
24 | .1 | Powers of Attorney with respect to WESCO International, Inc. | Previously filed | |||
24 | .2 | Power of Attorney with respect to WESCO Distribution, Inc. | Previously filed | |||
25 | .1 | Form T-1 of J.P. Morgan Trust Company, National Association, under the Trust Indenture Act of 1939. | Previously filed | |||
99 | .1 | Form of Letter of Transmittal. | Previously filed | |||
99 | .2 | Form of Notice of Guaranteed Delivery | Previously filed | |||
99 | .3 | Form of Exchange Agent Agreement | Previously filed |
Item 22. | Undertakings |
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: |
(a) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933; |
II-7
Table of Contents
(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and | |
(c) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; and |
(2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. | |
(3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. |
II-8
Table of Contents
WESCO INTERNATIONAL, INC. By: /s/ Stephen A. Van Oss Title: Senior Vice President and Chief Financial and Administrative Officer | WESCO DISTRIBUTION, INC. By: /s/ Stephen A. Van Oss Title: Senior Vice President and Chief Financial and Administrative Officer |
Signature | Title | Date | ||||
* | Chairman and Chief Executive Officer (Principal Executive Officer) | |||||
/s/Stephen A. Van Oss | Senior Vice President and Chief Financial and Administrative Officer (Principal Financial and Accounting Officer) | May 24, 2006 | ||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director | |||||
* | Director |
II-9
Table of Contents
Signature | Title | Date | ||||
* | Director | |||||
*By: | /s/Stephen A. Van Oss | Attorney-in-Fact | May 24, 2006 |
II-10
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
2 | .1 | Recapitalization Agreement, dated as of March 27, 1998, among Thor Acquisitions L.L.C., WESCO International, Inc. (formerly known as CDW Holding Corporation) and certain security holders of WESCO International, Inc. | Incorporated by reference to Exhibit 2.1 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
3 | .1 | Restated Certificate of Incorporation of WESCO International, Inc. | Incorporated by reference to Exhibit 3.1 to WESCO’s Registration Statement on Form S-4 (No. 333-70404) | |||
3 | .2 | By-laws of WESCO International, Inc. | Incorporated by reference to Exhibit 3.2 to WESCO’s Registration Statement on Form S-4 (No. 333-70404) | |||
3 | .3 | Certificate of Incorporation of WESCO Distribution, Inc. | Incorporated by reference to Exhibit 3.3 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
3 | .4 | By-laws of WESCO Distribution, Inc. | Incorporated by reference to Exhibit 3.4 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
4 | .1 | Indenture, dated as of September 22, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and J.P. Morgan Trust Company, National Association, as Trustee. | Incorporated by reference to Exhibit 4.1 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .2 | Form of 2.625% Convertible Senior Debenture due 2025 (included in Exhibit 4.1). | Incorporated by reference to Exhibit 4.3 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .3 | Indenture, dated as of September 22, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and J.P. Morgan Trust Company, National Association, as Trustee. | Incorporated by reference to Exhibit 4.4 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
4 | .4 | Form of 7.50% Senior Subordinated Note due 2017, (included in Exhibit 4.3). | Incorporated by reference to Exhibit 4.6 to WESCO’s Current Report on Form 8-K, dated September 21, 2005 | |||
5 | .1 | Opinion of Kirkpatrick & Lockhart Nicholson Graham LLP. | Previously filed | |||
10 | .1 | CDW Holding Corporation Stock Purchase Plan. | Incorporated by reference to Exhibit 10.1 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .2 | Form of Stock Subscription Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .3 | CDW Holding Corporation Stock Option Plan. | Incorporated by reference to Exhibit 10.3 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .4 | Amendment to CDW Holding Corporation Stock Option Plan | Incorporated by reference to Exhibit 10.1 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 |
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .5 | Form of Stock Option Agreement. | Incorporated by reference to Exhibit 10.4 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .6 | Form of Amendment to Stock Option Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .7 | CDW Holding Corporation Stock Option Plan for Branch Employees. | Incorporated by reference to Exhibit 10.5 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .8 | Amendment to CDW Holding Corporation Stock Option Plan for Branch Employees. | Incorporated by reference to Exhibit 10.3 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .9 | Form of Branch Stock Option Agreement. | Incorporated by reference to Exhibit 10.6 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .10 | Form of Amendment to Branch Stock Option Agreement. | Incorporated by reference to Exhibit 10.4 to WESCO’s Current Report on Form 8-K, dated March 2, 2006 | |||
10 | .11 | WESCO International, Inc. 1998 Stock Option Plan. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 | |||
10 | .12 | Amendment to WESCO International, Inc. 1998 Stock Option Plan. | Incorporated by reference to Exhibit 10.5 to WESCO’s Current Report on Form 8-K dated March 2, 2006 | |||
10 | .13 | Form of Management Stock Option Agreement. | Incorporated by reference to Exhibit 10.2 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1998 | |||
10 | .14 | Form of Amendment to Management Stock Option Agreement. | Incorporated by reference to Exhibit 10.6 to WESCO’s Current Report on Form 8-K dated March 2, 2006 | |||
10 | .15 | 1999 Deferred Compensation Plan for Non- Employee Directors. | Incorporated by reference to Exhibit 10.22 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 1998 | |||
10 | .16 | 1999 Long-Term Incentive Plan. | Incorporated by reference to Exhibit 10.22 to WESCO’s Registration Statement on Form S-1 (No. 333-73299) | |||
10 | .17 | Office Lease Agreement, dated as of May 24, 1995, by and between Commerce Court Property Holding Trust, as Landlord, and WESCO Distribution, Inc., as Tenant, as amended by First Amendment to Lease, dated as of June 1995 and by Second Amendment to Lease, dated as of December 29, 1995. | Incorporated by reference to Exhibit 10.10 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) |
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .18 | Lease, dated as of April 1, 1992, by and between The E.T. Hermann and Jane D. Hermann 1978 Living Trust and Westinghouse Electric Corporation, as renewed by the renewal letter, dated as of December 13, 1996, from WESCO Distribution, Inc., as successor in interest to Westinghouse Electric Corporation, to Utah State Retirement Fund, as successor in interest to The E.T. Hermann and Jane D. Hermann 1978 Living Trust. | Incorporated by reference to Exhibit 10.11 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .19 | Third Amendment to Lease, dated as of December 22, 2004, by and between US Institutional Real Estate Equities, L.P., as successor in interest to Utah State Retirement Fund and The E.T. Hermann and Jane D. Hermann 1978 Living Trust, and WESCO Distribution, Inc., as successor in interest to Westinghouse Electric Corporation. | Incorporated by reference to Exhibit 10.19 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .20 | Agreement of Lease, dated as of September 3, 1998, by and between Atlantic Construction, Inc., as landlord, and WESCO Distribution-Canada, Inc., as tenant, as renewed by the Renewal Agreement, dated April 14, 2004, by and between Atlantic Construction, Inc., as landlord, and WESCO Distribution-Canada, Inc., as tenant. | Incorporated by reference to Exhibit 10.20 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .21 | Lease dated December 13, 2002 between WESCO Distribution, Inc. and WESCO Real Estate IV, LLC. | Incorporated by reference to Exhibit 10.27 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .22 | Lease Guaranty dated December 13, 2002 by WESCO International, Inc. in favor of WESCO Real Estate IV, LLC. | Incorporated by reference to Exhibit 10.28 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .23 | Amended and Restated Registration and Participation Agreement, dated as of June 5, 1998, among WESCO International, Inc. and certain security holders of WESCO International, Inc. named therein. | Incorporated by reference to Exhibit 10.19 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .24 | Employment Agreement, dated as of June 5, 1998, between WESCO Distribution, Inc. and Roy W. Haley. | Incorporated by reference to Exhibit 10.20 to WESCO’s Registration Statement on Form S-4 (No. 333-43225) | |||
10 | .25 | Employment Agreement, dated as of July 29, 2004, between WESCO International, Inc. and John Engel. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 |
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .26 | Employment Agreement, dated as of December 15, 2005, between WESCO International, Inc. and Stephen A. Van Oss. | Incorporated by reference to Exhibit 10.26 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
10 | .27 | Amended and Restated Credit Agreement, dated as of September 28, 2005, by and among WESCO Distribution, Inc., the other credit parties signatory thereto from time to time, General Electric Capital Corporation, as Agent and U.S. Lender, GECC Capital Markets Group, as Lead Arranger, GE Canada Finance Holding Company, as Canadian Agent and a Canadian Lender, Bank of America, N.A., as Syndication Agent, and The CIT Group/Business Credit, Inc. and Citizens Bank of Pennsylvania, as Co-Documentation Agents. | Incorporated by reference to Exhibit 10.1 to WESCO’s Current Report on Form 8-K, September 28, 2005 | |||
10 | .28 | Intercreditor Agreement, dated as of March 19, 2002, among PNC Bank, National Association, General Electric Capital Corporation, WESCO Receivables Corp., WESCO Distribution, Inc., Fifth Third Bank, N.A., Mellon Bank, N.A., The Bank of Nova Scotia, Herning Enterprises, Inc. and WESCO Equity Corporation. | Incorporated by reference to Exhibit 10.21 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2001 | |||
10 | .29 | Second Amended and Restated Receivables Purchase Agreement dated as of September 2, 2003 among WESCO Receivables Corp., WESCO Distribution, Inc., and the Lenders identified therein. | Incorporated by reference to Exhibit 10.1 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2003 | |||
10 | .30 | Second Amendment to Second Amended and Restated Receivables Purchase Agreement and Waiver, dated August 31, 2004. | Incorporated by reference to Exhibit 10.4 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 | |||
10 | .31 | Third Amendment to Second Amended and Restated Receivables Purchase Agreement, dated September 23, 2004. | Incorporated by reference to Exhibit 10.5 to WESCO’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2004 | |||
10 | .32 | Sixth Amendment to Second Amended and Restated Receivables Purchase Agreement, dated October 4, 2005. | Incorporated by reference to Exhibit 10.2 to WESCO’s Current Report on Form 8-K, September 28, 2005 | |||
10 | .33 | Loan Agreement between Bear Stearns Commercial Mortgage, Inc. and WESCO Real Estate IV, LLC, dated December 13, 2002. | Incorporated by reference to Exhibit 10.26 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .34 | Guaranty of Non-Recourse Exceptions Agreement dated December 13, 2002 by WESCO International, Inc. in favor of Bear Stearns Commercial Mortgage, Inc. | Incorporated by reference to Exhibit 10.29 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 |
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
10 | .35 | Environmental Indemnity Agreement dated December 13, 2002 made by WESCO Real Estate IV, Inc. and WESCO International, Inc. in favor of Bear Stearns Commercial Mortgage, Inc. | Incorporated by reference to Exhibit 10.30 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .36 | Asset Purchase Agreement, dated as of September 11, 1998, among Bruckner Supply Company, Inc. and WESCO Distribution, Inc. | Incorporated by reference to Exhibit 2.01 to WESCO’s Current Report on Form 8-K, dated September 11, 1998 | |||
10 | .37 | Amendment dated March 29, 2002 to Asset Purchase Agreement, dated as of September 11, 1998, among Bruckner Supply Company, Inc. and WESCO Distribution, Inc. | Incorporated by reference to Exhibit 10.25 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2002 | |||
10 | .38 | Agreement and Plan of Merger, dated August 16, 2005, by and among Carlton- Bates Company, the shareholders of Carlton-Bates Company signatory thereto, the Company Representative (as defined therein), WESCO Distribution, Inc. and C-B WESCO, Inc. | Incorporated by reference to Exhibit 10.3 to WESCO’s Current Report on Form 8-K, dated September 28, 2005 | |||
10 | .39 | Registration Rights Agreement, dated September 27, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and Lehman Brothers Inc. and Goldman Sachs & Co., as representatives of the initial purchasers named therein. | Incorporated by reference to Exhibit 4.2 to WESCO’s Current Report on Form 8-K, September 21, 2005 | |||
10 | .40 | Exchange and Registration Rights Agreement, dated September 27, 2005, by and among WESCO International, Inc., WESCO Distribution, Inc. and Goldman Sachs & Co. and Lehman Brothers Inc., as representatives of the initial purchasers named therein. | Incorporated by reference to Exhibit 4.5 to WESCO’s Current Report on Form 8-K, September 21, 2005 | |||
12 | .1 | Statement re computation of ratios. | Filed herewith | |||
21 | .1 | Subsidiaries of WESCO. | Incorporated by reference to Exhibit 21.1 to WESCO’s Annual Report on Form 10-K for the year ended December 31, 2005 | |||
23 | .1 | Consent of PricewaterhouseCoopers LLP. | Filed herewith | |||
23 | .2 | Consent of American Appraisal Associates, Inc. | Filed herewith | |||
23 | .3 | Consent of Kirkpatrick & Lockhart Nicholson Graham LLP | Included in Exhibit 5.1 | |||
24 | .1 | Powers of Attorney with respect to WESCO International, Inc. | Previously filed | |||
24 | .2 | Power of Attorney with respect to WESCO Distribution, Inc. | Previously filed |
Table of Contents
Exhibit No. | Description of Exhibit | Prior Filing | ||||
25 | .1 | Form T-1 of J.P. Morgan Trust Company, National Association, under the Trust Indenture Act of 1939. | Previously filed | |||
99 | .1 | Form of Letter of Transmittal. | Previously filed | |||
99 | .2 | Form of Notice of Guaranteed Delivery | Previously filed | |||
99 | .3 | Form of Exchange Agent Agreement | Previously filed |