Company Quick10K Filing
WESCO
Price46.83 EPS5
Shares44 P/E9
MCap2,056 P/FCF18
Net Debt1,209 EBIT327
TEV3,264 TEV/EBIT10
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-03-31 Filed 2020-05-01
10-K 2019-12-31 Filed 2020-02-24
10-Q 2019-09-30 Filed 2019-11-01
10-Q 2019-06-30 Filed 2019-08-02
10-Q 2019-03-31 Filed 2019-05-03
10-K 2018-12-31 Filed 2019-02-27
10-Q 2018-09-30 Filed 2018-11-02
10-Q 2018-06-30 Filed 2018-08-03
10-Q 2018-03-31 Filed 2018-05-04
10-K 2017-12-31 Filed 2018-02-22
10-Q 2017-09-30 Filed 2017-11-03
10-Q 2017-06-30 Filed 2017-08-04
10-Q 2017-03-31 Filed 2017-05-05
10-K 2016-12-31 Filed 2017-02-22
10-Q 2016-09-30 Filed 2016-11-04
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-06
10-K 2015-12-31 Filed 2016-02-22
10-Q 2015-09-30 Filed 2015-10-30
10-Q 2015-06-30 Filed 2015-07-31
10-Q 2015-03-31 Filed 2015-05-04
10-K 2014-12-31 Filed 2015-02-24
10-Q 2014-09-30 Filed 2014-11-03
10-Q 2014-06-30 Filed 2014-08-04
10-Q 2014-03-31 Filed 2014-05-06
10-K 2013-12-31 Filed 2014-02-21
10-Q 2013-09-30 Filed 2013-10-29
10-Q 2013-06-30 Filed 2013-08-07
10-Q 2013-03-31 Filed 2013-05-06
10-K 2012-12-31 Filed 2013-03-01
10-Q 2012-09-30 Filed 2012-11-01
10-Q 2012-06-30 Filed 2012-08-02
10-Q 2012-03-31 Filed 2012-05-03
10-K 2011-12-31 Filed 2012-02-22
10-Q 2011-09-30 Filed 2011-11-01
10-Q 2011-06-30 Filed 2011-08-03
10-Q 2011-03-31 Filed 2011-05-03
10-K 2010-12-31 Filed 2011-02-25
10-Q 2010-09-30 Filed 2010-11-02
10-Q 2010-06-30 Filed 2010-08-04
10-Q 2010-03-31 Filed 2010-05-06
10-K 2009-12-31 Filed 2010-02-26
8-K 2020-07-24 Other Events, Exhibits
8-K 2020-07-17 Enter Agreement, Shareholder Rights, Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K 2020-06-23
8-K 2020-06-22
8-K 2020-06-22
8-K 2020-06-22
8-K 2020-06-16
8-K 2020-06-12
8-K 2020-06-01
8-K 2020-05-29
8-K 2020-05-29
8-K 2020-05-28
8-K 2020-05-26
8-K 2020-05-14
8-K 2020-04-30
8-K 2020-04-30
8-K 2020-04-09
8-K 2020-03-18
8-K 2020-03-11
8-K 2020-03-09
8-K 2020-03-03
8-K 2020-02-28
8-K 2020-01-30
8-K 2020-01-10
8-K 2020-01-09
8-K 2020-01-03
8-K 2019-12-26
8-K 2019-12-26
8-K 2019-10-31
8-K 2019-10-01
8-K 2019-09-30
8-K 2019-09-30
8-K 2019-08-01
8-K 2019-06-13
8-K 2019-05-31
8-K 2019-05-02
8-K 2019-02-19
8-K 2019-01-31
8-K 2018-11-01
8-K 2018-08-02
8-K 2018-08-02
8-K 2018-06-11
8-K 2018-06-01
8-K 2018-05-23
8-K 2018-04-26
8-K 2018-03-07
8-K 2018-02-01

WCC 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risks.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 6. Exhibits.
EX-31.1 wcc-1q20ex311.htm
EX-31.2 wcc-1q20ex312.htm
EX-32.1 wcc-1q20ex321.htm
EX-32.2 wcc-1q20ex322.htm

WESCO Earnings 2020-03-31

Balance SheetIncome StatementCash Flow
10.08.06.04.02.00.02012201420172020
Assets, Equity
2.21.81.30.90.40.02012201420172020
Rev, G Profit, Net Income
1.00.60.2-0.3-0.7-1.12012201420172020
Ops, Inv, Fin

wcc-20200331
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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 March 31, 2020
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: 001-14989
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Delaware 25-1723342
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
225 West Station Square Drive
Suite 700
 15219
Pittsburgh,Pennsylvania(Zip Code)
(Address of principal executive offices)
(412) 454-2200
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year, if changed since last report)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of ClassTrading Symbol(s)Name of Exchange on which registered
Common Stock, par value $.01 per shareWCCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.     Yes No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller 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 April 30, 2020, 41,873,053 shares of common stock, $0.01 par value, of the registrant were outstanding.



WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

QUARTERLY REPORT ON FORM 10-Q

Table of Contents
 Page
PART I—FINANCIAL INFORMATION 
 
PART II—OTHER INFORMATION
 


1


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
The interim financial information required by this item is set forth in the unaudited Condensed Consolidated Financial Statements and Notes thereto in this Quarterly Report on Form 10-Q, as follows:
Page

2


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except share data)
(unaudited)
As of
AssetsMarch 31,
2020
December 31,
2019
Current assets:  
Cash and cash equivalents$342,560  $150,902  
Trade accounts receivable, net of allowance for doubtful accounts of $25,260 and $25,443 in 2020 and 2019, respectively
1,214,331  1,187,359  
Other accounts receivable77,691  98,029  
Inventories950,521  1,011,674  
Prepaid expenses and other current assets (Note 4)192,375  92,447  
Total current assets2,777,478  2,540,411  
Property, buildings and equipment, net of accumulated depreciation of $269,582 and $268,415 in 2020 and 2019, respectively
183,997  181,448  
Operating lease assets 271,602  235,834  
Intangible assets, net of accumulated amortization of $278,711 and $280,442 in 2020
and 2019, respectively
267,628  287,275  
Goodwill1,717,963  1,759,040  
Other assets12,288  13,627  
    Total assets$5,230,956  $5,017,635  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable$804,330  $830,478  
Accrued payroll and benefit costs28,940  49,508  
Short-term debt24,097  26,255  
Current portion of long-term debt
379  430  
Bank overdrafts13,951  18,021  
Other current liabilities 168,808  159,367  
Total current liabilities1,040,505  1,084,059  
Long-term debt, net of debt issuance costs of $8,211 and $8,876
 in 2020 and 2019, respectively
1,542,602  1,257,067  
Operating lease liabilities213,172  179,830  
Deferred income taxes146,977  146,617  
Other noncurrent liabilities85,574  91,391  
    Total liabilities$3,028,830  $2,758,964  
Commitments and contingencies (Note 10)
Stockholders’ equity:      
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued or outstanding
    
Common stock, $.01 par value; 210,000,000 shares authorized, 59,381,958 and 59,308,018 shares issued and 41,873,053 and 41,797,093 shares outstanding in 2020 and 2019, respectively
594  593  
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2020 and 2019, respectively
43  43  
Additional capital1,041,637  1,039,347  
Retained earnings2,565,597  2,530,429  
Treasury stock, at cost; 21,848,336 and 21,850,356 shares in 2020 and 2019, respectively
(937,078) (937,157) 
Accumulated other comprehensive loss(461,623) (367,772) 
Total WESCO International, Inc. stockholders' equity2,209,170  2,265,483  
Noncontrolling interests(7,044) (6,812) 
    Total stockholders’ equity2,202,126  2,258,671  
    Total liabilities and stockholders’ equity$5,230,956  $5,017,635  
The accompanying notes are an integral part of the condensed consolidated financial statements.
3


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (LOSS)
(In thousands of dollars, except per share data)
(unaudited)
 Three Months Ended
March 31
20202019
Net sales (Note 3)1,968,647  1,961,267  
Cost of goods sold (excluding depreciation and amortization)1,592,249  1,578,771  
Selling, general and administrative expenses299,392  296,528  
Depreciation and amortization  16,093  15,242  
Income from operations60,913  70,726  
Net interest and other16,472  17,120  
Income before income taxes44,441  53,606  
Provision for income taxes10,266  11,656  
Net income34,175  41,950  
Less: Net loss attributable to noncontrolling interests
(232) (419) 
Net income attributable to WESCO International, Inc.$34,407  $42,369  
Other comprehensive income (loss):
Foreign currency translation adjustments(93,851) 22,517  
Comprehensive (loss) income attributable to WESCO International, Inc.
$(59,444) $64,886  
Earnings per share attributable to WESCO International, Inc.
Basic$0.82  $0.94  
Diluted$0.82  $0.93  

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

4


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(unaudited)
 Three Months Ended
 March 31
20202019
Operating activities:  
Net income$34,175  $41,950  
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization16,093  15,242  
  Deferred income taxes1,979  893  
Other operating activities, net1,760  5,961  
Changes in assets and liabilities:
Trade accounts receivable, net(53,944) (76,696) 
Other accounts receivable19,236  22,425  
Inventories37,807  (40,768) 
Prepaid expenses and other assets(3,125) 15,074  
Accounts payable(10,858) 68,085  
Accrued payroll and benefit costs(18,973) (27,851) 
Other current and noncurrent liabilities7,378  4,554  
Net cash provided by operating activities31,528  28,869  
Investing activities:
Capital expenditures(15,762) (10,828) 
Acquisition payments (Note 4)(100,000) (27,742) 
Other investing activities5,497  53  
Net cash used in investing activities(110,265) (38,517) 
Financing activities:
Repayments of short-term debt, net(383) (28,414) 
Proceeds from issuance of long-term debt585,511  423,666  
Repayments of long-term debt(300,511) (377,825) 
Repurchases of common stock (Note 7)(1,566) (2,572) 
Other financing activities, net(4,360) 4,391  
Net cash provided by financing activities278,691  19,246  
Effect of exchange rate changes on cash and cash equivalents(8,296) 159  
Net change in cash and cash equivalents191,658  9,757  
Cash and cash equivalents at the beginning of period150,902  96,343  
Cash and cash equivalents at the end of period$342,560  $106,100  
Supplemental disclosures:
Cash paid for interest$4,029  $4,583  
Cash paid for income taxes$6,245  $5,018  
Right-of-use assets obtained in exchange for new operating lease liabilities$57,185  $8,092  

The accompanying notes are an integral part of the condensed consolidated financial statements.
5

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands of dollars)
(unaudited)
Accumulated Other
   Class B Retained  Comprehensive
 Common StockCommon StockAdditionalEarningsTreasury StockNoncontrollingIncome
AmountSharesAmountSharesCapital(Deficit)AmountSharesInterests(Loss)
Balance, December 31, 2019$593  59,308,018  $43  4,339,431  $1,039,347  $2,530,429  $(937,157) (21,850,356) $(6,812) $(367,772) 
Exercise of stock-based awards
1  105,620  (39) 79  2,020  
Stock-based compensation expense
4,626  
Tax withholding related to vesting of restricted stock units and retirement of common stock
  (31,680) (2,297) 761  
Noncontrolling interests(232) 
Net income attributable to WESCO34,407  
Translation adjustments(93,851) 
Balance, March 31, 2020$594  59,381,958  $43  4,339,431  $1,041,637  $2,565,597  $(937,078) (21,848,336) $(7,044) $(461,623) 

Accumulated Other
   Class B Retained  Comprehensive
 Common StockCommon StockAdditionalEarningsTreasury StockNoncontrollingIncome
AmountSharesAmountSharesCapital(Deficit)AmountSharesInterests(Loss)
Balance, December 31, 2018$592  59,157,696  $43  4,339,431  $993,666  $2,307,462  $(758,018) (18,391,042) $(5,584) $(408,435) 
Exercise of stock-based awards
1  156,760  (90) (54) (184) 
Stock-based compensation expense
4,665  
Repurchases of common stock
19,144  (19,144) (365,272) 
Tax withholding related to vesting of restricted stock units and retirement of common stock
  (42,564) (1,822) (531) 
Noncontrolling interests(419) 
Net income attributable to WESCO42,369  
Translation adjustments22,517  
Balance, March 31, 2019$593  59,271,892  $43  4,339,431  $1,015,563  $2,349,300  $(777,216) (18,756,498) $(6,003) $(385,918) 
The accompanying notes are an integral part of the condensed consolidated financial statements.
6

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)


1. ORGANIZATION
WESCO International, Inc. ("WESCO International") and its subsidiaries (collectively, “WESCO” or the "Company"), headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of electrical, industrial and communications maintenance, repair and operating ("MRO") and original equipment manufacturer ("OEM") products, construction materials, and advanced supply chain management and logistics services used primarily in the industrial, construction, utility and commercial, institutional and government markets. WESCO serves approximately 70,000 active customers globally through approximately 500 branches primarily located in North America, with operations in 16 additional countries and 11 distribution centers located in the United States and Canada.
2. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of WESCO have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial information should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in WESCO’s 2019 Annual Report on Form 10-K as filed with the SEC on February 24, 2020. The Condensed Consolidated Balance Sheet at December 31, 2019 was derived from the audited Consolidated Financial Statements as of that date, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America.
The unaudited Condensed Consolidated Balance Sheet as of March 31, 2020, the unaudited Condensed Consolidated Statements of Income and Comprehensive Income (Loss), the unaudited Condensed Consolidated Statements of Stockholders' Equity, and the unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019, respectively, in the opinion of management, have been prepared on the same basis as the audited Consolidated Financial Statements and include all adjustments necessary for the fair statement of the results of the interim periods presented herein. All adjustments reflected in the unaudited condensed consolidated financial information are of a normal recurring nature unless indicated. The results for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.
Reclassifications
The Condensed Consolidated Statement of Cash Flows for the three months ended March 31, 2019 includes certain reclassifications to previously reported amounts to conform to the current period presentation.
Recently Adopted Accounting Pronouncements
In June 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduced new guidance for the accounting for credit losses on certain financial instruments. The Company adopted this ASU effective January 1, 2020. The adoption of this new credit loss guidance did not have a material impact on the unaudited condensed consolidated financial statements and notes thereto presented herein, and WESCO does not expect it to have a material impact on its financial position or results of operation on an ongoing basis.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The Company adopted this ASU in the first quarter of 2020. The adoption of this guidance did not have an impact on the unaudited condensed consolidated financial statements and notes thereto presented herein.
Recently Issued Accounting Pronouncements
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends the disclosure requirements for all employers that sponsor defined benefit pension and other post retirement plans by removing and adding certain disclosures. The amendments in this ASU are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management does not expect the adoption of this accounting standard to have a material impact on its condensed consolidated financial statements and notes thereto.
7

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes certain exceptions to the general principles of Accounting Standards Codification Topic 740, Income Taxes, and simplifies other aspects of accounting for income taxes. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. Management does not expect the adoption of this accounting standard to have a material impact on its condensed consolidated financial statements and notes thereto.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to WESCO’s financial position, results of operations or cash flows.
3. REVENUE
WESCO distributes products and provides services to customers globally within the following end markets: (1) industrial, (2) construction, (3) utility, and (4) commercial, institutional and government. Revenue is measured as the amount of consideration WESCO expects to receive in exchange for transferring goods or providing services.
The following tables disaggregate WESCO’s revenue by end market and geography:
Three Months Ended
 March 31
(In thousands)20202019
Industrial$702,214  $736,906  
Construction636,503  633,288  
Utility340,945  308,269  
Commercial, Institutional and Government288,985  282,804  
Total by end market$1,968,647  $1,961,267  

Three Months Ended
 March 31
(In thousands)20202019
United States$1,478,491  $1,460,991  
Canada 377,419  384,596  
Other International112,737  115,680  
Total by geography$1,968,647  $1,961,267  

In accordance with certain contractual arrangements, WESCO receives payment from its customers in advance and recognizes such payment as deferred revenue. Revenue for advance payment is recognized when the performance obligation has been satisfied and control has transferred to the customer, which is generally upon shipment. Deferred revenue is usually recognized within a year or less from the date of the customer’s advance payment. At March 31, 2020 and December 31, 2019, $9.9 million and $12.3 million, respectively, of deferred revenue was recorded as a component of other current liabilities in the Condensed Consolidated Balance Sheets.
WESCO’s revenues are adjusted for variable consideration, which includes customer volume rebates, returns, and discounts. WESCO measures variable consideration by estimating expected outcomes using analysis and inputs based upon anticipated performance, historical data, as well as current and forecasted information. Measurement and recognition of variable consideration is reviewed by management on a monthly basis and revenue is adjusted accordingly. Variable consideration reduced revenue for the three months ended March 31, 2020 and 2019 by approximately $23.3 million and $25.5 million, respectively.
Shipping and handling costs are recognized in net sales when they are billed to the customer. These costs are recognized as a component of selling, general and administrative expenses when WESCO does not bill the customer. WESCO has elected to recognize shipping and handling costs as a fulfillment cost. Shipping and handling costs recorded as a component of selling,
8

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

general and administrative expenses totaled $18.0 million and $17.0 million for the three months ended March 31, 2020 and 2019, respectively.
4. ACQUISITIONS
The following table sets forth the consideration paid for acquisitions:
Three Months Ended
March 31
2019
(In thousands)
Fair value of assets acquired$34,812  
Fair value of liabilities assumed7,070  
Cash paid for acquisitions$27,742  

Sylvania Lighting Services Corp.
On March 5, 2019, WESCO Distribution, Inc. ("WESCO Distribution"), through its WESCO Services, LLC subsidiary, acquired certain assets and assumed certain liabilities of Sylvania Lighting Services Corp. ("SLS"). Headquartered in Wilmington, Massachusetts, SLS offers a full spectrum of energy-efficient lighting upgrade, retrofit, and renovation solutions with annual sales of approximately $100 million and approximately 220 employees across the U.S. and Canada. WESCO Distribution funded the purchase price paid at closing with borrowings under its accounts receivable securitization facility. The purchase price was allocated to the respective assets and liabilities based upon their estimated fair values as of the acquisition date, resulting in goodwill of $11.6 million, which is deductible for tax purposes.
Anixter International Inc.
On January 10, 2020, WESCO International entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Anixter International Inc. (“Anixter”) and Warrior Merger Sub, Inc., a wholly owned subsidiary of WESCO International (“Merger Sub”). The Merger Agreement provides that, among other things and subject to the terms and conditions of the Merger Agreement, Merger Sub will be merged with and into Anixter (the “Merger”), with Anixter surviving the Merger and continuing as a wholly owned subsidiary of WESCO International.
At the effective time of the Merger, each outstanding share of Anixter common stock will be converted into the right to receive (i) $70.00 in cash, without interest, which amount may be increased by up to $2.82 per Anixter common share at closing, based on the volume-weighted average trading price of WESCO International common stock on the New York Stock Exchange during a specified period prior to closing, and subject to further adjustment as set forth in the Merger Agreement (the “cash consideration”), (ii) 0.2397 shares of WESCO International common stock, subject to adjustment as set forth in the Merger Agreement (the “common stock consideration”), and (iii) 0.6356 depositary shares, each share representing a 1/1,000th interest in a share of newly issued WESCO International Series A fixed-rate reset cumulative perpetual preferred stock, $25,000 stated amount per whole preferred share, subject to adjustment as set forth in the Merger Agreement (the “preferred stock consideration” and, together with the cash consideration and the common stock consideration, (the “Merger Consideration”), in each case less any applicable withholding taxes. Based on the closing price of WESCO International common stock and the liquidation preference of the WESCO International Series A preferred stock underlying the preferred stock consideration, and giving effect to the downside protection described above, the implied value of the per share Merger Consideration was: (i) $100.00, on January 10, 2020, the last full trading day before the public announcement of the merger and (ii) $94.91, on April 30, 2020, the most recent practicable date prior to the date of this filing.
Concurrently with the execution of the Merger Agreement, WESCO paid to entities affiliated with Clayton, Dubilier & Rice, LLC (“CD&R”), on behalf of Anixter, a termination fee of $100 million that was required to terminate Anixter’s then-existing merger agreement with CD&R. As of March 31, 2020, the termination fee is recorded on the balance sheet as a component of prepaid expenses and other current assets. Upon consummation of the Merger with Anixter, the $100 million termination fee will be accounted for as a portion of the Merger Consideration paid to the stockholders of Anixter.
The closing of the Merger is subject to the satisfaction or waiver of customary conditions to closing, including the approval or clearance, or the expiration, termination or waiver of the waiting periods under various antitrust laws. As of the date hereof, clearance under the antitrust laws of Canada remains outstanding. Notification of the Merger was filed in Canada on February 27, 2020 and, on April 14, 2020, the Canadian Commissioner of Competition issued a Supplementary Information Request seeking additional information with respect to the Merger and the businesses of Anixter and WESCO. Notification of the
9

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

Merger was filed in Mexico on February 10, 2020, and approval was received on April 30, 2020. Approval or clearance has previously been received under the antitrust laws of the United States, Russia and Turkey. WESCO, Anixter and Merger Sub have also filed notifications seeking approval under the antitrust laws of Chile (filed on February 20, 2020), but the receipt of approval in Chile is not a condition to the closing of the Merger. WESCO and Anixter expect to complete the Merger in the second or third calendar quarter of 2020.
5. GOODWILL
The following table sets forth the changes in the carrying value of goodwill:
 Three Months Ended
March 31
(In thousands)2020
Beginning balance January 1$1,759,040  
Foreign currency exchange rate changes(46,894) 
Adjustments to goodwill for acquisitions(1)
5,817  
Ending balance March 31$1,717,963  
(1) Adjustments to goodwill resulted from the final allocation of the purchase price paid for SLS, as described in Note 4, to the respective assets acquired and liabilities assumed.
Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by a novel coronavirus disease (“COVID-19”) pandemic, as well as the decline in our share price and market capitalization, both of which could indicate that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, we performed an interim test for impairment. We tested for goodwill impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of our reporting units were determined using a combination of a discounted cash flow analysis and market multiples. We evaluated the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projected financial information. Goodwill and indefinite-lived trademarks totaled $1.8 billion and $1.9 billion as of March 31, 2020 and December 31, 2019, respectively.
There were no impairment losses identified as a result of our interim test. Two of our reporting units with goodwill of $261.3 million and $524.9 million, respectively, had estimated fair values that exceeded their respective carrying values by less than 5%. The determination of fair value of our reporting units involves significant management judgment, particularly as it relates to the underlying assumptions and factors around our expected operating margins and discount rate. In performing our quantitative assessments, we used expected operating margins supported by a combination of historical results, current forecasts, market data and recent economic events. We used a discount rate that reflects marketplace participants' cost of capital.
The determination of fair value involves significant management judgment and management applies its best judgment when assessing the reasonableness of financial projections. Fair values are sensitive to changes in underlying assumptions and factors. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill and indefinite-lived intangible impairment tests will prove to be accurate predictions of future results.
6. STOCK-BASED COMPENSATION
WESCO’s stock-based employee compensation plans are comprised of stock-settled stock appreciation rights, restricted stock units and performance-based awards. Compensation cost for all stock-based awards is measured at fair value on the date of grant and compensation cost is recognized, net of estimated forfeitures, over the service period for awards expected to vest. The fair value of stock-settled stock appreciation rights is determined using the Black-Scholes model. The fair value of restricted stock units and performance-based awards with performance conditions is determined by the grant-date closing price of WESCO’s common stock. The forfeiture assumption is based on WESCO’s historical employee behavior that is reviewed on an annual basis. No dividends are assumed. For stock-settled stock appreciation rights that are exercised and for restricted stock units and performance-based awards that vest, shares are issued out of WESCO's outstanding common stock.
Stock-settled stock appreciation rights vest ratably over a three-year period and terminate on the tenth anniversary of the grant date unless terminated sooner under certain conditions. Vesting of restricted stock units is based on a minimum time period of three years. Vesting of performance-based awards is based on a three-year performance period, and the number of
10

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

shares earned, if any, depends on the attainment of certain performance levels. Outstanding awards would vest upon the consummation of a change in control transaction and performance-based awards would vest at the target level.
Performance-based awards granted in 2020 and 2019 were based on two equally-weighted performance measures: the three-year average growth rate of WESCO's net income and the three-year cumulative return on net assets. Performance-based awards granted in 2018 were based on two equally-weighted performance measures: the three-year average growth rate of the Company’s fully diluted earnings per share and the three-year cumulative return on net assets.
During the three months ended March 31, 2020 and 2019, WESCO granted the following stock-settled stock appreciation rights, restricted stock units and performance-based awards at the following weighted-average fair values:
Three Months Ended
March 31,
2020
March 31,
2019
Stock-settled stock appreciation rights granted262,091  213,618  
Weighted-average fair value$13.86  $16.36  
Restricted stock units granted211,450  175,544  
Weighted-average fair value$48.32  $54.64  
Performance-based awards granted158,756  126,874  
Weighted-average fair value$48.67  $54.64  
The fair value of stock-settled stock appreciation rights was estimated using the following weighted-average assumptions:
Three Months Ended
March 31,
2020
March 31,
2019
Risk free interest rate1.4 %2.5 %
Expected life (in years)55
Expected volatility30 %29 %
The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve as of the grant date. The expected life is based on historical exercise experience and the expected volatility is based on the volatility of the Company's daily stock prices over a five-year period preceding the grant date.
The following table sets forth a summary of stock-settled stock appreciation rights and related information for the three months ended March 31, 2020:
AwardsWeighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual Term (In years)
Aggregate
Intrinsic
Value
(In thousands)
Outstanding at December 31, 20192,337,049  $59.72    
     Granted262,091  48.32    
     Exercised(6,589) 42.12    
     Forfeited(24,273) 65.33    
Outstanding at March 31, 20202,568,278  58.54  5.7$  
Exercisable at March 31, 20202,027,915  $59.84  4.9$  


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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

The following table sets forth a summary of time-based restricted stock units and related information for the three months ended March 31, 2020:
AwardsWeighted-
Average
Fair
Value
Unvested at December 31, 2019
363,729  $60.00  
     Granted211,450  48.32  
     Vested(78,007) 70.07  
     Forfeited(6,755) 61.67  
Unvested at March 31, 2020
490,417  $53.38  
The following table sets forth a summary of performance-based awards for the three months ended March 31, 2020:
AwardsWeighted-
Average
Fair
Value
Unvested at December 31, 2019
195,305  $60.24  
     Granted158,756  48.67  
     Vested(25,909) 78.04  
     Forfeited(20,538) 71.47  
Unvested at March 31, 2020
307,614  $52.60  
Vesting of the 307,614 shares of performance-based awards in the table above is dependent upon the achievement of certain performance targets, including 134,010 that are dependent upon the three-year average growth rate of WESCO's net income, 19,797 that are dependent upon the three-year average growth rate of the Company's fully diluted earnings per share, and 153,807 that are based upon the three-year cumulative return on net assets. These awards are accounted for as awards with performance conditions; compensation cost is recognized over the performance period based upon WESCO's determination of whether it is probable that the performance targets will be achieved.
WESCO recognized $4.6 million and $4.7 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, there was $35.9 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements for all awards previously made, of which approximately $14.3 million is expected to be recognized over the remainder of 2020, $13.4 million in 2021, $7.4 million in 2022 and $0.8 million in 2023.
7. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average number of common shares outstanding during the periods. Diluted earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average common shares and common share equivalents outstanding during the periods. The dilutive effect of common share equivalents is considered in the diluted earnings per share computation using the treasury stock method, which includes consideration of equity awards.

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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

The following table sets forth the details of basic and diluted earnings per share:
Three Months Ended
 March 31
(In thousands, except per share data)20202019
Net income attributable to WESCO International$34,407  $42,369  
Weighted-average common shares outstanding used in computing basic earnings per share
41,837  45,076  
Common shares issuable upon exercise of dilutive equity awards
238  415  
Weighted-average common shares outstanding and common share equivalents used in computing diluted earnings per share
42,075  45,491  
Earnings per share attributable to WESCO International
Basic$0.82  $0.94  
Diluted$0.82  $0.93  
For the three months ended March 31, 2020 and 2019, the computation of diluted earnings per share attributable to WESCO International excluded approximately 2.3 million and 1.8 million of stock-based awards, respectively. These amounts were excluded because their effect would have been antidilutive.
In December 2017, the Company's Board of Directors authorized the repurchase of up to $300 million of the Company's common stock through December 31, 2020. In October 2018, the Board approved an increase to this repurchase authorization from $300 million to $400 million.
On November 6, 2018, the Company entered into an accelerated stock repurchase agreement with a financial institution to repurchase shares of its common stock. In exchange for an up-front cash payment of $100.0 million, the Company received a total of 1,953,167 shares, 365,272 of which were received during the three months ended March 31, 2019. WESCO funded the repurchase with borrowings under its accounts receivable securitization and revolving credit facilities.
The total number of shares ultimately delivered under an accelerated stock repurchase transaction is determined by the average of the volume-weighted-average price of the Company's common stock for each exchange business day during the respective settlement valuation periods. For purposes of computing earnings per share for the three months ended March 31, 2019, share repurchases have been reflected as a reduction to common shares outstanding on the respective delivery dates.
8. EMPLOYEE BENEFIT PLANS
A majority of WESCO’s employees are covered by defined contribution retirement savings plans for their services rendered subsequent to WESCO’s formation. WESCO also offers a deferred compensation plan for select individuals. For U.S. participants, WESCO matches contributions made by employees at an amount equal to 50% of participants' total monthly contributions up to a maximum of 6% of eligible compensation. For Canadian participants, WESCO makes contributions in amounts ranging from 3% to 5% of participants' eligible compensation based on years of continuous service. WESCO may also make, subject to the Board of Directors' approval, a discretionary contribution to the defined contribution retirement savings plan covering U.S. participants if certain predetermined profit levels are attained. For the three months ended March 31, 2020 and 2019, WESCO incurred charges of $2.8 million and $12.6 million, respectively, for all such plans. Contributions are made in cash to employee retirement savings plan accounts. The deferred compensation plan is an unfunded plan. As of March 31, 2020 and December 31, 2019, the Company's obligation under the deferred compensation plan was $21.9 million and $25.2 million, respectively. Employees have the option to transfer balances allocated to their accounts in the defined contribution retirement savings plan and the deferred compensation plan into any of the available investment options.
The Company sponsors a contributory defined benefit plan covering substantially all Canadian employees of EECOL and a Supplemental Executive Retirement Plan for certain executives of EECOL. During the three months ended March 31, 2020, the Company made aggregate cash contributions of $1.0 million to its defined benefit plans.

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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

The following table sets forth the components of net periodic benefit costs for the defined benefit plans:
Three Months Ended
 March 31
(In thousands)20202019
Service cost$1,309  $1,149  
Interest cost1,037  1,089  
Expected return on plan assets(1,614) (1,422) 
Recognized actuarial gain27  (16) 
Net periodic benefit cost
$759  $800  
The service cost of $1.3 million and $1.1 million for the three months ended March 31, 2020 and 2019, respectively, was reported as a component of selling, general and administrative expenses. The other components of net periodic benefit cost totaling a net benefit of $0.6 million and $0.3 million for the three months ended March 31, 2020 and 2019, respectively, were presented as a component of net interest and other.
9. FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, bank overdrafts, and outstanding indebtedness. The Company's outstanding indebtedness includes $500 million in aggregate principal amount of 5.375% Senior Notes due 2021 and $350 million in aggregate principal amount of 5.375% Senior Notes due 2024. With the exception of these debt instruments, the carrying values of the Company's financial instruments approximate fair value.
The following table sets forth WESCO's debt instruments that were not carried at fair value as of March 31, 2020 and December 31, 2019:
As of
March 31, 2020December 31, 2019
(In thousands)Fair ValueCarrying AmountFair Value Carrying Amount
5.375% Senior Notes due 2021$458,170  $500,000  $502,895  $500,000  
5.375% Senior Notes due 2024295,358  350,000  363,269  350,000  

The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company's debt instruments are classified as Level 2 within the fair value hierarchy. Changes in the fair value of the Company's debt instruments was effected by the current economic and financial market environment.
10. COMMITMENTS AND CONTINGENCIES
From time to time, a number of lawsuits and claims have been or may be asserted against the Company relating to the conduct of its business, including litigation relating to commercial, product and employment matters. The outcome of any litigation cannot be predicted with certainty, and some lawsuits may be determined adversely to WESCO. However, management does not believe that the ultimate outcome of any such pending matters is likely to have a material adverse effect on WESCO's financial condition or liquidity, although the resolution in any fiscal period of one or more of these matters may have a material adverse effect on WESCO's results of operations for that period.
In an effort to expand the Company's footprint in the Middle East, WESCO has been doing business since 2009 with WESTEC Supplies General Trading (“WESTEC”), an industrial equipment supplier headquartered in the United Arab Emirates. WESTEC has debt facilities comprised of a $5.8 million term loan and a $1.0 million line of credit to support its working capital requirements and joint sales efforts with WESCO. Due to the nature of WESCO’s arrangement with WESTEC, WESCO has provided a standby letter of credit under its revolving credit facility of up to $7.3 million as security for WESTEC’s debt facilities. As of March 31, 2020, WESTEC had outstanding indebtedness totaling $6.0 million. Management
14

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

currently believes the estimated fair value of the noncontingent guarantee on the outstanding indebtedness is nominal and therefore a liability has not been recorded as of March 31, 2020.
11. INCOME TAXES
The effective tax rate for the three months ended March 31, 2020 and 2019 was 23.1% and 21.7%, respectively. WESCO’s effective tax rate is typically impacted by the tax effect of intercompany financing, foreign tax rate differences, nondeductible expenses and state income taxes. The effective tax rate for the three months ended March 31, 2020 is higher than the prior period primarily due to discrete income tax expense related to stock-based awards. There have been no material adjustments to liabilities for uncertain tax positions since the last annual disclosure for the year ended December 31, 2019.
12. SUBSEQUENT EVENTS
On April 30, 2020, in connection with WESCO’s previously announced Merger with Anixter, WESCO announced that its wholly owned subsidiary, WESCO Distribution, has commenced (a) offers to purchase for cash any and all of Anixter Inc.’s, (a wholly owned subsidiary of Anixter), outstanding (i) 5.50% Senior Notes due 2023, $350,000,000 aggregate principal amount, and (ii) 6.00% Senior Notes due 2025, $250,000,000 aggregate principal amount (collectively, the “Anixter Notes,” and such offers, the “Offers”) and (b) solicitations of consents from the holders of each series of these existing Anixter Notes to amend the relevant indentures to eliminate certain of the covenants, restrictive provisions, events of default and related provisions therein and exclude the Merger from the change in control provision. Among other conditions, the Offers are conditioned upon the substantially concurrent or prior closing of the Merger.
Concurrent with WESCO’s Offers, Anixter announced that Anixter Inc. has commenced solicitations of consents from the holders of each series of the Anixter Notes to amend the relevant indentures to, among other things, exclude the Merger from the change in control provision (the “Anixter Consent Solicitations”) in return for the payment of a consent fee (the “Consent Fee”). Holder of Anixter Notes have the option to participate in either the Offers or the Anixter Consent Solicitations, but not both. In certain circumstances, consents delivered in connection with the Offers may be aggregated with those delivered in connection with the Anixter Consent Solicitations.
Subject to the terms and conditions of the Offer to Purchase and Consent Solicitation Statement, dated April 30, 2020 (the “Offer to Purchase”), payment of the Offer consideration or the Consent Fee, as applicable, is expected to occur at or immediately following the closing of the Merger. Additional information with respect to the Offers and the Anixter Consent Solicitations is included in WESCO’s Current Report on Form 8-K, filed with the SEC on April 30, 2020. Holders of Anixter Notes should also read the Offer to Purchase (and the documents incorporated by reference therein) carefully and in their entirety before making any decision with respect to a tender of Anixter Notes pursuant to the Offers or the Anixter Consent Solicitations, because they contain important information.
15


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and WESCO International, Inc.’s audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its 2019 Annual Report on Form 10-K. The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in WESCO International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2019, as well as WESCO International, Inc.’s other reports filed with the Securities and Exchange Commission.
Company Overview
WESCO International, Inc. (“WESCO International”), incorporated in 1993 and effectively formed in February 1994 upon acquiring a distribution business from Westinghouse Electric Corporation, is a leading North American-based distributor of products and provider of advanced supply chain management and logistics services used primarily in industrial, construction, utility, and commercial, institutional and government (“CIG”) markets. We are a leading provider of electrical, industrial, and communications maintenance, repair and operating ("MRO") and original equipment manufacturer ("OEM") products, construction materials, and advanced supply chain management and logistics services. Our primary product categories include general supplies, wire, cable and conduit, communications and security, electrical distribution and controls, lighting and sustainability, and automation, controls and motors.
We serve approximately 70,000 active customers globally through approximately 500 branches primarily located in North America, with operations in 16 additional countries and 11 distribution centers located in the United States and Canada. We employ approximately 9,500 employees worldwide. We distribute over 1,000,000 products, grouped into six categories, from approximately 30,000 suppliers, utilizing a highly automated, proprietary electronic procurement and inventory replenishment system.
In addition, we offer a comprehensive portfolio of value-added capabilities, which includes supply chain management, logistics and transportation, procurement, warehousing and inventory management, as well as kitting, limited assembly of products and system installation. Our value-added capabilities, extensive geographic reach, experienced workforce and broad product and supply chain solutions have enabled us to grow our business and establish a leading position in North America.
Our financial results for the first three months of 2020 reflect net sales growth through the first ten weeks of the quarter, offset by declines during the last two weeks of March, as well as the uncertain operating environment caused by the COVID-19 virus. Net sales increased $7.4 million, or 0.4%, over the same period last year. Cost of goods sold as a percentage of net sales was 80.9% and 80.5% for the first three months of 2020 and 2019, respectively. Selling, general and administrative ("SG&A") expenses as a percentage of net sales were 15.2% and 15.1% for the first three months of 2020 and 2019, respectively. Operating profit was $60.9 million for the current three month period, compared to $70.7 million for the first three months of 2019. Adjusted for $4.6 million of transaction costs related to our merger with Anixter, operating profit was $65.5 million for the first quarter of 2020. Net income attributable to WESCO International for the three months ended March 31, 2020 and 2019 was $34.4 million and $42.4 million, respectively. Earnings per diluted share for the first quarter of 2020 was $0.82, based on 42.1 million diluted shares, compared to $0.93 for the first quarter of 2019, based on 45.5 million diluted shares. Adjusted earnings per diluted share for the first quarter of 2020 was $0.91.
We have been and will continue to take the appropriate actions in response to the COVID-19 virus. Our top priority is the health and safety of our employees. The products and services that we provide are integral to the daily operations of our essential business customers, and as such, we are performing essential activities necessary to manage basic operations in the midst of the pandemic. To date, our branch locations have remained operational consistent with existing governmental and public health authority directives. We have taken actions to reduce costs consistent with the expected decline in demand. We will work to prepare our business to respond to the needs of our customers as demand recovers, which we believe could occur in the second half of this year.
Certain triggering events occurred during the first quarter of 2020, including the effect of the ongoing macroeconomic disruption and uncertainty caused by the COVID-19 pandemic, as well as the decline in our share price and market capitalization, both of which could indicate that the carrying value of goodwill and indefinite-lived intangible assets may not be recoverable. Accordingly, we performed an interim test for impairment. We tested for goodwill impairment on a reporting unit level and the evaluation involved comparing the fair value of each reporting unit to its carrying value. The fair values of our reporting units were determined using a combination of a discounted cash flow analysis and market multiples. We evaluated the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projected financial information. As of March 31, 2020 and December 31, 2019, goodwill and indefinite-lived trademarks totaled $1.8 billion and $1.9 billion, respectively.
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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

There were no impairment losses identified as a result of our interim test. Two of our reporting units with goodwill of $261.3 million and $524.9 million, respectively, had estimated fair values that exceeded their respective carrying values by less than 5%. The determination of fair value of our reporting units involves significant management judgment, particularly as it relates to the underlying assumptions and factors around our expected operating margins and discount rate. In performing our quantitative assessments, we used expected operating margins supported by a combination of historical results, current forecasts, market data and recent economic events. We used a discount rate that reflects marketplace participants' cost of capital.
Although we applied our best judgment assessing the reasonableness of the financial projections used to estimate the fair value of our reporting units, there is significant uncertainty surrounding the current macroeconomic environment and conditions in the markets in which we operate. A sustained decline in our share price and market capitalization, or any further economic deterioration that could cause our financial performance to fall below our current expectations, could increase the likelihood that the fair values of our reporting units are less than their carrying values, resulting in an impairment of goodwill and indefinite-lived intangible assets in a future period. As a result, there can be no assurance that the estimates and assumptions made for purposes of the interim goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of future results.
Cash Flow
We generated $31.5 million of operating cash flow for the first three months of 2020. Investing activities included the $100.0 million termination fee associated with the acquisition of Anixter, as described in Note 5 of our Notes to the unaudited Condensed Consolidated Financial Statements, and $15.8 million of capital expenditures. Financing activities were comprised of borrowings and repayments of $360.5 million and $260.5 million, respectively, related to our revolving credit facility (the "Revolving Credit Facility"), as well as borrowings and repayments of $225.0 million and $40.0 million, respectively, related to our accounts receivable securitization facility (the “Receivables Facility”). Financing activities for the first three months of 2020 also included net repayments related to our various international lines of credit of approximately $0.4 million.
Financing Availability
As of March 31, 2020, we had $446.6 million in total available borrowing capacity under our Revolving Credit Facility, which was comprised of $231.3 million of availability under the U.S. sub-facility and $215.3 million of availability under the Canadian sub-facility. We had no borrowing capacity available under our Receivables Facility. The Revolving Credit Facility and the Receivables Facility mature in September 2024 and September 2022, respectively.
Critical Accounting Policies and Estimates
Effective January 1, 2020, we adopted Accounting Standards Update (ASU) 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. See Note 2 of our Notes to the unaudited Condensed Consolidated Financial Statements for information regarding our significant accounting policies.

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WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

Results of Operations
First Quarter of 2020 versus First Quarter of 2019
The following table sets forth the percentage relationship to net sales of certain items in our Condensed Consolidated Statements of Income and Comprehensive Income (Loss) for the periods presented:

Three Months Ended
March 31
20202019