CDW Corp Form 8-K Summary
Business Context and Reporting Period
This Current Report on Form 8-K was filed by CDW Corporation on July 2, 2013, covering events occurring on June 26, 2013, and July 2, 2013. The filing coincides with the company's Initial Public Offering (IPO) effective June 26, 2013, and announces a partial redemption of senior subordinated notes.
Key Financial Metrics and Debt Actions
The filing details a specific debt reduction event rather than providing comprehensive financial statements for a reporting period.
- Debt Redemption: CDW LLC and CDW Finance Corporation called for the redemption of $324.0 million aggregate principal amount of their 12.535% Senior Subordinated Exchange Notes due 2017.
- Outstanding Balance: The redemption reduces the currently outstanding $571.5 million aggregate principal amount of Notes.
- Redemption Price: The notes will be redeemed at 106.268% of the principal amount ($1,062.68 per $1,000 principal), plus accrued and unpaid interest.
- Redemption Date: August 1, 2013.
- Liquidity and Margins: The filing text does not provide clear values for revenue, profit, cash flow, or operating margins.
Material Changes and Corporate Governance
Significant changes to the Board of Directors and compensation structures were implemented in connection with the IPO:
- Board Appointments: Six new directors were appointed: Steven W. Alesio, Barry K. Allen, Benjamin D. Chereskin, Glenn M. Creamer, Robin P. Selati, and Donna F. Zarcone. The board now consists of nine directors.
- Director Compensation:
- Four independent directors (Alesio, Allen, Chereskin, Zarcone) are eligible for an annual cash retainer of $175,000 for 2013 service.
- Starting in 2014, these directors will receive a $75,000 annual cash retainer and an annual equity grant of restricted stock units valued at $125,000.
- Committee chairs receive supplemental retainers ($15,000 for Audit, $10,000 for Compensation, $10,000 for Nominating/Governance).
- Employee directors and sponsor-affiliated directors will not receive compensation for board service.
- Indemnification: The company entered into indemnification agreements with its directors on June 26, 2013, and expects to do so with executive officers by July 8, 2013.
Guidance, Outlook, and Risks
The filing does not contain forward-looking guidance, revenue outlook, or management commentary regarding future business performance. The primary risk disclosed relates to the financial obligation of the note redemption, which requires the company to pay approximately $344.3 million (principal plus premium) on August 1, 2013.
Key Facts for Investor Verification
- Verify the company's cash position and liquidity sources to ensure the ability to fund the $344.3 million note redemption on August 1, 2013.
- Confirm the impact of the $324.0 million debt reduction on the company's leverage ratios and interest expense going forward.
- Review the full S-1 Registration Statement (File No. 333-187472) for detailed biographies of the new directors and specific terms of the management services agreements.
- Monitor the execution of indemnification agreements with executive officers, expected by July 8, 2013.