The selected financial data set forth below are not necessarily indicative of the results of future operations and should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" and our Consolidated Financial Statements and the related notes.
We have derived the selected financial data presented below as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 from our Consolidated Financial Statements and related notes included elsewhere in this report. The selected financial data as of December 31, 2017, 2016 and 2015 and for the years ended December 31, 2016 and 2015 have been derived from our Consolidated Financial Statements as of and for those periods and are not included in this report.
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| | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | |
| (dollars in millions, except per share amounts) | | 2019 | | | | 2018 | | | | 2017 | | | | | 2016 | | | | | 2015(1) | | |
| Statement of Operations Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net sales | | $ | 18,032.4 | | | $ | 16,240.5 | | | $ | 14,832.9 | | | | $ | 13,672.7 | | | | $ | 12,988.7 | |
| Cost of sales | | 14,992.5 | | | | 13,533.6 | | | | 12,382.7 | | | | | 11,344.4 | | | | | 10,872.9 | | |
| Gross profit | | 3,039.9 | | | | 2,706.9 | | | | 2,450.2 | | | | | 2,328.3 | | | | | 2,115.8 | | |
| Selling and administrative expenses | | 1,713.1 | | | | 1,537.1 | | | | 1,410.0 | | | | | 1,345.4 | | | | | 1,226.0 | | |
| Advertising expense | | 193.2 | | | | 182.5 | | | | 173.7 | | | | | 162.9 | | | | | 147.8 | | |
| Operating income | | 1,133.6 | | | | 987.3 | | | | 866.5 | | | | | 820.0 | | | | | 742.0 | | |
| Interest expense, net | | (159.4 | | ) | | (148.6 | | ) | | (150.5 | | ) | | | (146.5 | | ) | | | (159.5 | | ) |
| Gain on remeasurement of equity investment | | — | | | | — | | | | — | | | | | — | | | | | 98.1 | | |
| Other (expense) income, net | | (24.5 | | ) | | 1.8 | | | | (55.3 | | ) | | | (0.3 | | ) | | | (33.6 | | ) |
| Income before income taxes | | 949.7 | | | | 840.5 | | | | 660.7 | | | | | 673.2 | | | | | 647.0 | | |
| Income tax expense | | (212.9 | | ) | | (197.5 | | ) | | (137.6 | | ) | | | (248.1 | | ) | | | (243.9 | | ) |
| Net income | | $ | 736.8 | | | $ | 643.0 | | | $ | 523.1 | | | | $ | 425.1 | | | | $ | 403.1 | |
| Net income per common share: | | | | | | | | | | | | | | | | | | | | | | |
| Basic | | $ | 5.08 | | | $ | 4.26 | | | $ | 3.37 | | | | $ | 2.60 | | | | $ | 2.37 | |
| Diluted | | $ | 4.99 | | | $ | 4.19 | | | $ | 3.31 | | | | $ | 2.56 | | | | $ | 2.35 | |
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| Cash dividends declared per common share | | $ | 1.2650 | | | $ | 0.9250 | | | $ | 0.6900 | | — | | $ | 0.4825 | | — | | $ | 0.3100 | |
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| Balance Sheet Data (at period end): | | | | | | | | | | | | | | | | | | | | | | |
| Cash and cash equivalents | | $ | 154.0 | | | $ | 205.8 | | | $ | 144.2 | | | | $ | 263.7 | | | | $ | 37.6 | |
| Working capital | | 842.7 | | | | 993.7 | | | | 874.2 | | | | | 959.9 | | | | | 903.5 | | |
| Total assets | | 7,999.4 | | | | 7,167.7 | | | | 6,966.7 | | | | | 6,958.4 | | | | | 6,755.3 | | |
| Total debt and capitalized lease obligations(2) | | 3,317.3 | | | | 3,209.1 | | | | 3,236.7 | | | | | 3,236.6 | | | | | 3,262.9 | | |
| Total stockholders' equity | | 960.3 | | | | 975.2 | | | | 985.6 | | | | | 1,047.9 | | | | | 1,095.9 | | |
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| Other Financial Data: | | | | | | | | | | | | | | | | | | | | | | |
| Capital expenditures | | $ | 236.3 | | | $ | 86.1 | | | $ | 81.1 | | | | $ | 63.5 | | | | $ | 90.1 | |
| Gross profit as a percentage of Net sales | | 16.9 | | % | | 16.7 | | % | | 16.5 | | % | | | 17.0 | | % | | | 16.3 | | % |
| Non-GAAP operating income(3) | | $ | 1,368.4 | | | $ | 1,216.6 | | | $ | 1,106.8 | | | | $ | 1,048.3 | | | | $ | 960.9 | |
| Non-GAAP net income(4) | | 902.1 | | | | 794.3 | | | | 605.9 | | | | | 569.7 | | | | | 503.5 | | |
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| Statement of Cash Flows Data: | | | | | | | | | | | | | | | | | | | | | | |
| Net cash provided by (used in): | | | | | | | | | | | | | | | | | | | | | | |
| Operating activities | | $ | 1,027.2 | | | $ | 905.9 | | | $ | 777.7 | | | | $ | 604.0 | | | | $ | 277.5 | |
| Investing activities | | (331.4 | | ) | | (86.1 | | ) | | (81.1 | | ) | | | (65.9 | | ) | | | (354.4 | | ) |
| Financing activities | | (749.8 | | ) | | (754.8 | | ) | | (818.7 | | ) | | | (304.6 | | ) | | | (226.5 | | ) |
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| (1) | Includes the impact of consolidating five months of CDW UK's financial results. |
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| (2) | Excludes borrowings of $430 million, $429 million, $498 million, $580 million and $440 million as of December 31, 2019, 2018, 2017, 2016 and 2015, respectively, under our inventory financing agreements. We do not include these borrowings in total debt because we have not in the past incurred, and in the future do not expect to incur, any interest expense or late fees under these agreements. |
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| (3) | Non-GAAP operating income excludes, among other things, charges related to the amortization of acquisition-related intangible assets, equity-based compensation and the associated payroll taxes, and acquisition and integration expenses. |
Non-GAAP operating income is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe Non-GAAP operating income provide analysts, investors and management with helpful information regarding the underlying operating performance of our business, as this measure removes the impact of items that management believes are not reflective of underlying operating performance. Management uses this measure to evaluate period-over-period performance as management believes it provides a more comparable measure of the underlying business.
The following unaudited table sets forth a reconciliation of Operating income to Non-GAAP operating income for the periods presented:
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| | Year Ended December 31, | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015(1) | | |
| Operating income | | $ | 1,133.6 | | | $ | 987.3 | | | $ | 866.5 | | | $ | 820.0 | | | $ | 742.0 | |
| Amortization of intangibles | | 178.5 | | | | 182.7 | | | | 185.1 | | | | 187.2 | | | | 173.9 | | |
| Equity-based compensation | | 48.5 | | | | 40.7 | | | | 43.7 | | | | 39.2 | | | | 31.2 | | |
| Other adjustments(2) | | 7.8 | | | | 5.9 | | | | 11.5 | | | | 1.9 | | | | 13.8 | | |
| Non-GAAP operating income | | $ | 1,368.4 | | | $ | 1,216.6 | | | $ | 1,106.8 | | | $ | 1,048.3 | | | $ | 960.9 | |
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| (1) | Includes the impact of consolidating five months of CDW UK's financial results. |
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| (2) | Primarily includes payroll taxes on equity-based compensation, consolidation of office space, settlement of litigation matters, and acquisition and integration expenses. |
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| (4) | Non-GAAP net income excludes, among other things, charges related to acquisition-related intangible asset amortization, equity-based compensation, net loss on extinguishment of long-term debt, acquisition and integration expenses, and the associated tax effects of each. Non-GAAP net income is considered a non-GAAP financial measure. Generally, a non-GAAP financial measure is a numerical measure of a company's performance or financial position that either excludes or includes amounts that are not normally included or excluded in the most directly comparable measure calculated and presented in accordance with GAAP. Non-GAAP measures used by management may differ from similar measures used by other companies, even when similar terms are used to identify such measures. We believe that Non-GAAP net income provides analysts, investors and management with helpful information regarding the underlying operating performance of our business, as this measure removes the impact of items that management believes are not reflective of underlying operating performance. Management uses this measure to evaluate period-over-period performance as management believes it provides a more comparable measure of the underlying business. |
The following unaudited table sets forth a reconciliation of Net income to Non-GAAP net income for the periods presented:
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| | Year Ended December 31, | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015(1) | | |
| Net income | | $ | 736.8 | | | $ | 643.0 | | | $ | 523.1 | | | $ | 425.1 | | | $ | 403.1 | |
| Amortization of intangibles(2) | | 178.5 | | | | 182.7 | | | | 185.1 | | | | 187.2 | | | | 173.9 | | |
| Equity-based compensation | | 48.5 | | | | 40.7 | | | | 43.7 | | | | 39.2 | | | | 31.2 | | |
| Net loss on extinguishments of long-term debt | | 22.1 | | | | — | | | | 57.4 | | | | 2.1 | | | | 24.3 | | |
| Gain on remeasurement of equity investment(3) | | — | | | | — | | | | — | | | | — | | | | (98.1 | | ) |
| Other adjustments(4) | | 7.8 | | | | 5.9 | | | | 11.5 | | | | 1.9 | | | | 33.9 | | |
| Aggregate adjustments for income taxes(5) | | (91.6 | | ) | | (78.0 | | ) | | (214.9 | | ) | | (85.8 | | ) | | (64.8 | | ) |
| Non-GAAP net income | | $ | 902.1 | | | $ | 794.3 | | | $ | 605.9 | | | $ | 569.7 | | | $ | 503.5 | |
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| (1) | Includes the impact of consolidating five months of CDW UK's financial results. |
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| (2) | Includes amortization expense for acquisition-related intangible assets, primarily customer relationships, customer contracts and trade names. |
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| (3) | Represents the gain resulting from the remeasurement of the Company's previously held 35% equity investment to fair value upon the completion of the acquisition of CDW UK. |
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| (4) | Primarily includes expenses related to the consolidation of office space, settlement of litigation matters, the favorable resolution of a local sales tax matter, acquisition and integration expenses and the Company's 35% share of expenses related to certain equity awards for the acquisition of CDW UK. |
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| (5) | Aggregate adjustments for income taxes consists of the following: |
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| Year Ended December 31, | | | | | | | | | | | | | | | | | | |
| (dollars in millions) | 2019 | | | | 2018 | | | | 2017 | | | | 2016 | | | | 2015 | | |
| Total Non-GAAP adjustments | $ | 256.9 | | | $ | 229.3 | | | $ | 297.7 | | | $ | 230.4 | | | $ | 165.2 | |
| Weighted-average statutory effective rate | 25.0 | | % | | 25.0 | | % | | 36.0 | | % | | 36.0 | | % | | 38.0 | | % |
| Income tax | (64.2 | | ) | | (57.3 | | ) | | (107.2 | | ) | | (82.9 | | ) | | (62.8 | | ) |
| Deferred tax adjustment due to law changes | 0.3 | | | | 0.5 | | | | 1.3 | | | | (1.5 | | ) | | (4.0 | | ) |
| Excess tax benefits from equity-based compensation | (24.5 | | ) | | (19.1 | | ) | | (36.2 | | ) | | (1.8 | | ) | | — | | |
| Discrete tax benefit related to CDW Canada's acquisition of Scalar | (3.0 | | ) | | — | | | | — | | | | — | | | | — | | |
| Tax Cuts and Jobs Act | — | | | | (1.9 | | ) | | (75.5 | | ) | | — | | | | — | | |
| Withholding tax expense on the unremitted earnings of our Canadian subsidiary | — | | | | — | | | | — | | | | — | | | | 3.3 | | |
| Non-deductible adjustments and other | (0.2 | | ) | | (0.2 | | ) | | 2.7 | | | | 0.4 | | | | (1.3 | | ) |
| Total aggregate adjustments for income taxes | $ | (91.6 | ) | | $ | (78.0 | ) | | $ | (214.9 | ) | | $ | (85.8 | ) | | $ | (64.8 | ) |
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