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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 FORM 10-Q
(Mark One)
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
or
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                     to             

Commission File Number 001-35985
cdw-20210930_g1.gif
CDW CORPORATION
(Exact name of registrant as specified in its charter) 
Delaware26-0273989
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
75 Tri-State International
Lincolnshire, Illinois
60069
(Address of principal executive offices)(Zip Code)
(847) 465-6000
(Registrant's telephone number, including area code)
None
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading symbol(s)Name of each exchange on which registered
Common stock, par value $0.01 per shareCDWNasdaq Global Select Market

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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).      Yes      No


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act: 
Large accelerated filer  Accelerated filer
Non-accelerated filer☐   Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).       Yes      No
As of October 29, 2021, there were 135,723,028 shares of common stock, $0.01 par value, outstanding.


CDW CORPORATION AND SUBSIDIARIES
FORM 10-Q

TABLE OF CONTENTS

 Page
PART IFINANCIAL INFORMATION
Item 1.
Item 2.
Item 3.
Item 4.
PART IIOTHER INFORMATION
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
SIGNATURES


PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in millions, except per share amounts)
September 30, 2021December 31, 2020
Assets(unaudited)
Current assets:
Cash and cash equivalents$245.1 $1,410.2 
Accounts receivable, net of allowance for credit losses of $19.4 and $29.6, respectively
3,561.0 3,212.6 
Merchandise inventory844.4 760.0 
Miscellaneous receivables394.3 379.5 
Prepaid expenses and other247.4 191.2 
Total current assets
5,292.2 5,953.5 
Operating lease right-of-use assets122.2 130.8 
Property and equipment, net179.3 175.5 
Goodwill2,804.6 2,595.9 
Other intangible assets, net503.3 445.1 
Other assets110.0 43.9 
Total Assets
$9,011.6 $9,344.7 
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable-trade$2,280.7 $2,088.4 
Accounts payable-inventory financing340.0 524.6 
Current maturities of long-term debt28.5 70.9 
Contract liabilities304.0 243.7 
Accrued expenses and other current liabilities:
Compensation277.7 288.3 
Advertising149.8 153.4 
Sales and income taxes65.7 104.2 
Other386.8 424.8 
Total current liabilities3,833.2 3,898.3 
Long-term liabilities:
Debt4,037.7 3,856.3 
Deferred income taxes29.6 55.3 
Operating lease liabilities159.4 169.0 
Other liabilities114.7 68.7 
Total long-term liabilities
4,341.4 4,149.3 
Stockholders' equity:
Preferred stock, $0.01 par value, 100.0 shares authorized; no shares issued or outstanding for both periods
  
Common stock, $0.01 par value, 1,000.0 shares authorized; 136.2 and 141.9 shares outstanding, respectively
1.4 1.4 
Paid-in capital3,335.7 3,204.9 
Accumulated deficit(2,402.6)(1,813.4)
Accumulated other comprehensive loss(97.5)(95.8)
Total stockholders' equity
837.0 1,297.1 
Total Liabilities and Stockholders' Equity
$9,011.6 $9,344.7 

The accompanying notes are an integral part of the Consolidated Financial Statements.
3

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(dollars in millions, except per-share amounts)
(unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net sales$5,300.0 $4,756.4 $15,283.9 $13,511.3 
Cost of sales4,385.1 3,930.9 12,691.0 11,182.1 
Gross profit914.9 825.5 2,592.9 2,329.2 
Selling and administrative expenses528.5 507.7 1,513.2 1,482.2 
Operating income386.4 317.8 1,079.7 847.0 
Interest expense, net(36.4)(40.2)(107.5)(117.8)
Other income (expense), net0.4 (27.5)38.3 (21.9)
Income before income taxes350.4 250.1 1,010.5 707.3 
Income tax expense(83.8)(56.9)(237.2)(157.1)
Net income $266.6 $193.2 $773.3 $550.2 
Net income per common share:
Basic$1.94 $1.36 $5.54 $3.86 
Diluted$1.91 $1.33 $5.47 $3.80 
Weighted-average common shares outstanding:
Basic137.3 142.7 139.5 142.6 
Diluted139.4 144.8 141.4 144.7 

The accompanying notes are an integral part of the Consolidated Financial Statements.
4

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(dollars in millions)
(unaudited)
 Three Months Ended September 30,Nine Months Ended September 30,
2021202020212020
Net income $266.6 $193.2 $773.3 $550.2 
Other comprehensive income (loss):
Unrealized loss from hedge accounting, net of tax (0.4) (0.6)
Reclassification of hedge accounting loss to net income, net of tax0.7 1.6 1.7 4.1 
Foreign currency translation, net of tax(15.0)19.7 (3.4)(16.4)
Other comprehensive income (loss)(14.3)20.9 (1.7)(12.9)
Comprehensive income$252.3 $214.1 $771.6 $537.3 

The accompanying notes are an integral part of the Consolidated Financial Statements.
5

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
(unaudited)
Three Months Ended September 30, 2021
Common Stock
SharesAmountPaid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTotal
Stockholders' Equity
Balance as of June 30, 2021138.3 $1.4 $3,294.1 $(2,163.5)$(83.2)$1,048.8 
Net income— — — 266.6 — 266.6 
Equity-based compensation expense— — 16.9 — — 16.9 
Stock option exercises0.3 — 18.9 — — 18.9 
Coworker Stock Purchase Plan — — 5.5 — — 5.5 
Repurchases of common stock(2.4)— — (450.0)— (450.0)
Dividends paid ($0.40 per share)
— — 0.3 (55.1)— (54.8)
Incentive compensation plan stock withheld for taxes— — — (0.6)— (0.6)
Reclassification of hedge accounting loss to net income— — — — 0.7 0.7 
Foreign currency translation— — — — (15.0)(15.0)
Balance as of September 30, 2021136.2 1.4 3,335.7 (2,402.6)(97.5)837.0 

Three Months Ended September 30, 2020
Common Stock
SharesAmountPaid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTotal
Stockholders' Equity
Balance as of June 30, 2020142.6 $1.4 $3,138.3 $(1,932.5)$(151.6)$1,055.6 
Net income— — — 193.2 — 193.2 
Equity-based compensation expense— — 11.6 — — 11.6 
Stock option exercises0.2 — 7.1 — — 7.1 
Coworker Stock Purchase Plan — — 4.5 — — 4.5 
Dividends paid ($0.38 per share)
— — 0.3 (54.5)— (54.2)
Incentive compensation plan stock withheld for taxes— — — (0.2)— (0.2)
Unrealized loss from hedge accounting— — — — (0.4)(0.4)
Reclassification of hedge accounting loss to net income— — — — 1.6 1.6 
Foreign currency translation— — — — 19.7 19.7 
Balance as of September 30, 2020142.8 1.4 3,161.8 (1,794.0)(130.7)1,238.5 
6

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(dollars in millions)
(unaudited)
Nine Months Ended September 30, 2021
Common Stock
SharesAmountPaid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTotal
Stockholders' Equity
Balance as of December 31, 2020141.9 $1.4 $3,204.9 $(1,813.4)$(95.8)$1,297.1 
Net income— — — 773.3 — 773.3 
Equity-based compensation expense— — 53.3 — — 53.3 
Stock option exercises1.2 — 60.7 — — 60.7 
Coworker Stock Purchase Plan0.1 — 15.9 — — 15.9 
Repurchases of common stock(7.0)— — (1,185.3)— (1,185.3)
Dividends paid ($1.20 per share)
— — 0.9 (168.0)— (167.1)
Incentive compensation plan stock withheld for taxes— — — (28.4)— (28.4)
Reclassification of hedge accounting loss to net income— — — — 1.7 1.7 
Foreign currency translation— — — — (3.4)(3.4)
Impact of adoption of Topic 740— — — 19.2 — 19.2 
Balance as of September 30, 2021136.2 $1.4 $3,335.7 $(2,402.6)$(97.5)$837.0 

Nine Months Ended September 30, 2020
Common Stock
SharesAmountPaid-in
Capital
Accumulated
Deficit
Accumulated Other Comprehensive LossTotal
Stockholders' Equity
Balance as of December 31, 2019143.0 $1.4 $3,095.3 $(2,018.6)$(117.8)$960.3 
Net income— — — 550.2 — 550.2 
Equity-based compensation expense— — 26.0 — — 26.0 
Stock option exercises0.9 — 26.9 — — 26.9 
Coworker Stock Purchase Plan— — 12.8 — — 12.8 
Repurchases of common stock(1.1) — (140.8)— (140.8)
Dividends paid ($1.14 per share)
— — 0.8 (163.2)— (162.4)
Incentive compensation plan stock withheld for taxes— — — (22.1)— (22.1)
Unrealized loss from hedge accounting— — — — (0.6)(0.6)
Reclassification of hedge accounting loss to net income— — — — 4.1 4.1 
Foreign currency translation— — — — (16.4)(16.4)
Impact of adoption of Topic 326— — — 0.5 — 0.5 
Balance as of September 30, 2020142.8 $1.4 $3,161.8 $(1,794.0)$(130.7)$1,238.5 

The accompanying notes are an integral part of the Consolidated Financial Statements.
7

CDW CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in millions)
(unaudited)
 Nine Months Ended September 30,
 20212020
Cash flows from operating activities:
Net income$773.3 $550.2 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization140.0 349.0 
Equity-based compensation expense53.3 26.0 
Deferred income taxes(6.7)(2.5)
Provision for credit losses(7.3)30.4 
Other (33.4)38.4 
Changes in assets and liabilities:
Accounts receivable(323.5)(304.9)
Merchandise inventory(87.5)(34.2)
Other assets(92.6)(10.3)
Accounts payable-trade179.7 106.8 
Other liabilities41.4 (10.5)
Net cash provided by operating activities636.7 738.4 
Cash flows from investing activities:
Capital expenditures(66.2)(133.6)
Acquisitions of businesses, net of cash acquired(339.7)(38.5)
Proceeds from the sale of equity method investment36.0  
Net cash used in investing activities(369.9)(172.1)
Cash flows from financing activities:
Proceeds from borrowings under revolving credit facility548.3 1,024.0 
Repayments of borrowings under revolving credit facility(379.6)(1,075.0)
Proceeds from issuance of long-term debt 1,300.0 
Payments to extinguish long-term debt(56.5)(622.5)
Net change in accounts payable-inventory financing(183.7)232.5 
Financing payments for revenue generating assets(46.1) 
Repurchases of common stock(1,185.3)(140.8)
Proceeds from stock option exercises60.7 26.9 
Payment of incentive compensation plan withholding taxes(28.4)(22.1)
Dividend payments(167.1)(162.4)
Other5.9 (28.9)
Net cash (used in) provided by financing activities(1,431.8)531.7 
Effect of exchange rate changes on cash and cash equivalents(0.1)(2.5)
Net (decrease) increase in cash and cash equivalents(1,165.1)1,095.5 
Cash and cash equivalents—beginning of period1,410.2 154.0 
Cash and cash equivalents—end of period$245.1 $1,249.5 
Supplementary disclosure of cash flow information:
Interest paid$(85.1)$(90.5)
Income taxes paid, net$(264.4)$(196.4)

The accompanying notes are an integral part of the Consolidated Financial Statements.
8

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)

1.    Description of Business and Summary of Significant Accounting Policies
Description of Business
CDW Corporation ("Parent"), a Fortune 500 company and member of the S&P 500 Index, is a leading multi-brand provider of information technology ("IT") solutions to small, medium and large business, government, education and healthcare customers in the United States ("US"), the United Kingdom ("UK") and Canada. The Company’s broad array of offerings ranges from discrete hardware and software products to integrated IT solutions and services that include on-premise, hybrid and cloud capabilities across data center and networking, digital workspace, security and virtualization.
Throughout this report, the terms the "Company" and "CDW" refer to Parent and its 100% owned subsidiaries.
Parent has two 100% owned subsidiaries, CDW LLC and CDW Finance Corporation. CDW LLC is an Illinois limited liability company that, together with its 100% owned subsidiaries, holds all material assets and conducts all business activities and operations of the Company. CDW Finance Corporation is a Delaware corporation formed for the sole purpose of acting as co-issuer of certain debt obligations and does not hold any material assets or engage in any business activities or operations.
Basis of Presentation
The accompanying unaudited interim Consolidated Financial Statements as of September 30, 2021 and for the three and nine months ended September 30, 2021 and 2020 (the "Consolidated Financial Statements") have been prepared in conformity with accounting principles generally accepted in the United States of America ("US GAAP") and the rules and regulations of the US Securities and Exchange Commission (the "SEC") for interim financial statements. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to the rules and regulations of the SEC. These Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the "December 31, 2020 Consolidated Financial Statements"). The significant accounting policies used in preparing these Consolidated Financial Statements were applied on a basis consistent with those reflected in the December 31, 2020 Consolidated Financial Statements. In the opinion of management, the Consolidated Financial Statements contain all adjustments (consisting of a normal, recurring nature) necessary to present fairly the Company's financial position, results of operations, comprehensive income, cash flows and changes in stockholders' equity as of the dates and for the periods indicated. The unaudited results of operations for such interim periods reported are not necessarily indicative of results for the full year.
Reclassifications
Certain prior period amounts have been reclassified to conform with current period presentation.
Principles of Consolidation
The Consolidated Financial Statements include the accounts of Parent and its 100% owned subsidiaries. All intercompany transactions and accounts are eliminated in consolidation.
Use of Estimates
The preparation of the Consolidated Financial Statements in accordance with US GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reported periods. The Company bases its estimates on historical experience and on various other assumptions that management believes are reasonable under the circumstances, the results of which form the basis for making judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results and outcomes could differ from those estimates.
The notes to the Consolidated Financial Statements contained in the December 31, 2020 Consolidated Financial Statements include a discussion of the Company's significant accounting policies and estimates. Except as noted within Note 2 (Recent Accounting Pronouncements) for the adoption of Accounting Standards Update ("ASU") 2019-12,
9

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, there have been no changes to the Company's significant accounting policies and estimates during the nine months ended September 30, 2021.
2.    Recent Accounting Pronouncements
Accounting for Income Taxes
On January 1, 2021, the Company adopted and applied ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ("Topic 740") in accordance with the applicable transition methods. Among the various updates, the Company adopted the accounting for ownership changes when transitioning from the equity method to consolidation on a modified retrospective basis, which resulted in a $19 million adjustment to retained earnings as of January 1, 2021 for the cumulative effect of derecognizing the deferred tax liability related to the UK acquisition. The adoption of the remaining components of Topic 740 did not have an impact to the Company’s Consolidated Financial Statements.
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, followed by an amendment issued in January 2021. This ASU temporarily provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions that are expected to be affected by reference rate reform. This ASU, as amended, was effective upon issuance and will remain in effect for all contract modifications and hedging relationships entered into through December 31, 2022. The adoption of this ASU along with the related expedients did not have an impact to the Company’s Consolidated Financial Statements.
3.    Acquisitions
On March 15, 2021, the Company completed the acquisition of Amplified IT LLC ("Amplified IT") through a purchase of all issued and outstanding membership interests. Amplified IT is a Google Premium education partner and leading provider of Google Cloud services, solutions and software for education partners. This strategic acquisition expands the Company's services and solutions capabilities to help schools leverage technology to achieve greater educational outcomes. The financial results of Amplified IT have been included in the Company's Consolidated Financial Statements since the date of the acquisition. These amounts are presented within the Public reportable segment and are insignificant during the three and nine months ended September 30, 2021. The purchase price allocation is preliminary and subject to customary closing adjustments and revision as additional information about fair value of assets and liabilities become available. Preliminarily, the Company recorded approximately $88 million of intangible assets, which primarily consisted of customer relationships.
On July 30, 2021, the Company completed the acquisition of Focal Point Data Risk LLC and certain affiliates ("Focal Point") through a purchase of all issued and outstanding equity interests. Focal Point is a leading US-based cybersecurity services firm that brings a team skilled in identity and access management as well as the ability to serve customers across the full cybersecurity landscape. This strategic acquisition expands the Company’s services and capabilities to help customers address risks posed by malicious cyber threats and cyber workforce shortages, while helping customers navigate shifting data protection laws. The financial results of Focal Point have been included in the Company's Consolidated Financial Statements since the date of the acquisition. These amounts are presented within the Public reportable segment and are insignificant during the three and nine months ended September 30, 2021. The purchase price allocation is preliminary and subject to customary closing adjustments and revision as additional information about fair value of assets and liabilities become available. Preliminarily, the Company recorded approximately $37 million of intangible assets related to customer relationships.
10

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
4.    Goodwill
The changes in goodwill by reportable segment are as follows:
CorporateSmall BusinessPublic
Other(1)
Consolidated
Balances as of December 31, 2020(2)
$1,123.6 $185.9 $929.6 $356.8 $2,595.9 
Amplified IT acquisition(3)
  130.3  130.3 
Focal Point acquisition(3)
  81.8  81.8 
Other acquisition adjustments0.2    0.2 
Foreign currency translation   (3.6)(3.6)
Balances as of September 30, 2021(2)
$1,123.8 $185.9 $1,141.7 $353.2 $2,804.6 
(1)Other is comprised of CDW UK and CDW Canada operating segments.
(2)Goodwill is net of accumulated impairment losses of $1,571 million, $354 million and $28 million related to the Corporate, Public and Other segments, respectively, recorded in 2008 and 2009.
(3)For additional information regarding the Company's acquisitions, see Note 3 (Acquisitions).
5.    Inventory Financing Agreements
The Company has entered into agreements with certain financial intermediaries to facilitate the purchase of inventory from various suppliers under certain terms and conditions, as described below. These amounts are classified separately as Accounts payable-inventory financing on the Consolidated Balance Sheets. The Company does not incur any interest expense associated with these agreements as balances are paid when they are due.
Amounts included in Accounts payable-inventory financing are as follows:
September 30, 2021December 31, 2020
Revolving Loan inventory financing agreement(1)
$283.4 $470.1 
Other inventory financing agreements56.6 54.5 
Accounts payable-inventory financing$340.0 $524.6 
(1)The senior secured asset-based revolving credit facility includes an inventory floorplan sub-facility that enables the Company to maintain an inventory financing agreement with a financial intermediary to facilitate the purchase of inventory from certain vendors on more favorable terms than offered directly by the vendors.
6.    Contract Liabilities and Performance Obligations
The Company's contract liabilities consist of payments received from customers, or such consideration that is contractually due, in advance of providing the product or performing services. The Company's contract liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period. As of September 30, 2021 and December 31, 2020, the contract liability balance was $304 million and $244 million, respectively. During the nine months ended September 30, 2021 and 2020, the Company recognized revenue of $156 million and $157 million, respectively, related to its contract liabilities that were included in the beginning balance of the respective periods.
A contract's transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The following table represents the total transaction price for the remaining performance obligations as of September 30, 2021 related to noncancelable contracts longer than 12 months in duration that is expected to be recognized over future periods.
Within 1 YearYears 1-2Years 2-3Thereafter
Remaining performance obligations$36.9 $22.5 $7.4 $2.7 
11

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
7.    Debt
As of September 30, 2021As of December 31, 2020
Maturity DateInterest RateAmountInterest RateAmount
Credit Facility
Senior secured asset-based revolving credit facilityMarch 2026Variable$165.9 Variable$ 
Term Loans
CDW UK term loan(1)
August 2021 % 1.445 %56.0 
Senior secured term loan facilityOctober 2026Variable1,412.2 Variable1,423.4 
Total term loans
1,412.2 1,479.4 
Unsecured Senior Notes
Senior notes due 2024December 20245.500 %575.0 5.500 %575.0 
Senior notes due 2025May 20254.125 %600.0 4.125 %600.0 
Senior notes due 2028April 20284.250 %600.0 4.250 %600.0 
Senior notes due 2029February 20293.250 %700.0 3.250 %700.0 
Total unsecured senior notes
2,475.0 2,475.0 
Other debt obligations36.8  
Unamortized deferred financing fees(23.7)(27.2)
Current maturities of long-term debt(28.5)(70.9)
Total long-term debt$4,037.7 $3,856.3 
(1)Denominated in British pounds.
As of September 30, 2021, the Company is in compliance with the covenants under the various credit agreements and indentures.
Credit Facility
The Company has a variable rate senior secured asset-based revolving credit facility (the "Revolving Loan") that is denominated in US dollars, British pounds or Euros. The Revolving Loan is used by the Company for borrowings, issuances of letters of credit and floorplan financing. As of September 30, 2021, the Revolving Loan had less than $1 million of undrawn letters of credit, $280 million reserved for the floorplan sub-facility and a borrowing base of $2.7 billion, which is based on the amount of eligible inventory and accounts receivable balances as of August 31, 2021. As of September 30, 2021, the Company could have borrowed up to an additional $1.2 billion under the Revolving Loan.
The Revolving Loan is collateralized by a first priority interest in inventory (excluding inventory to the extent collateralized under the inventory financing arrangements as described in Note 5 (Inventory Financing Agreements)), deposits and accounts receivable, and by a second priority interest in substantially all other US assets.
Term Loan
The senior secured term loan facility (the "Term Loan") has a variable interest rate, which has effectively been capped through the use of interest rate caps. The Company is required to pay quarterly principal installments of $4 million with the remaining principal amount due at the maturity date. As of September 30, 2021, the amount of CDW's restricted payment capacity under the Term Loan was $2.6 billion.
The Term Loan is collateralized by a second priority interest in substantially all inventory (excluding inventory to the extent collateralized under the inventory financing arrangements as described in Note 5 (Inventory Financing Agreements)), deposits and accounts receivable, and by a first priority interest in substantially all other US assets.
12

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
Unsecured Senior Notes
The Senior Notes have fixed interest rates, for which interest is paid semi-annually.
Issuances and Extinguishments
During the first quarter of 2021, the Company amended, extended and increased the size of the Revolving Loan. The amended Revolving Loan (i) authorized CDW UK to draw from the facility, (ii) increased the capacity from $1.45 billion to $1.60 billion, of which $150 million may be borrowed by CDW UK, and (iii) extended the maturity date from March 31, 2022 to March 26, 2026. Due to the addition of CDW UK as a borrower on the amended Revolving Loan, the variable rate CDW UK revolving credit facility was closed. The Company may borrow amounts denominated in US dollars, British pounds or Euros. Additionally, the Company paid off the remaining principal amount on the variable rate CDW UK term loan by drawing on the amended Revolving Loan.
Fair Value
The fair values of the Senior Notes were estimated using quoted market prices for identical liabilities that are traded in over-the-counter secondary markets that are not considered active. The fair value of the Term Loan was estimated using dealer quotes for identical liabilities in markets that are not considered active. The Senior Notes and Term Loan were classified as Level 2 within the fair value hierarchy. The carrying value of the Revolving Loan approximates its fair value if there are outstanding borrowings.
The approximate fair values and related carrying values of the Company's long-term debt, including current maturities and excluding unamortized discount and unamortized deferred financing fees, were as follows:
September 30, 2021December 31, 2020
Fair value$4,202.4 $4,077.9 
Carrying value4,089.9 3,954.4 
8.    Income Taxes
Income tax expense was $84 million and $57 million for the three months ended September 30, 2021 and 2020, respectively. The effective tax rate was 23.9% and 22.7% for the three months ended September 30, 2021 and 2020, respectively. The effective tax rate for the three months ended September 30, 2021 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes, partially offset by excess tax benefits on equity-based compensation. The effective tax rate for the three months ended September 30, 2020 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate that was effective in the prior year, partially offset by excess tax benefits on equity-based compensation.
Income tax expense was $237 million and $157 million for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate was 23.5% and 22.2% for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate for the nine months ended September 30, 2021 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate effective in 2023, partially offset by excess tax benefits on equity-based compensation. The effective tax rate for the nine months ended September 30, 2020 differed from the US federal statutory rate of 21.0% primarily due to state and local income taxes and a discrete deferred tax expense as a result of an increase in the UK corporate tax rate that was effective in the prior year, largely offset by excess tax benefits on equity-based compensation.
13

CDW CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in millions, except per share data, unless otherwise noted)
9.    Earnings Per Share
The numerator for both basic and diluted earnings per share is Net income. The denominator for basic earnings per share is the weighted-average shares outstanding during the period.
A reconciliation of basic weighted-average shares outstanding to diluted weighted-average shares outstanding is as follows:
Three Months Ended September 30,Nine Months Ended September 30,