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WESCO International 10-K 2008
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0000950152-08-001676.txt : 20080305
0000950152-08-001676.hdr.sgml : 20080305
20080305130211
ACCESSION NUMBER: 0000950152-08-001676
CONFORMED SUBMISSION TYPE: 10-K/A
PUBLIC DOCUMENT COUNT: 6
CONFORMED PERIOD OF REPORT: 20071231
FILED AS OF DATE: 20080305
DATE AS OF CHANGE: 20080305

FILER:

COMPANY DATA:
COMPANY CONFORMED NAME: WESCO INTERNATIONAL INC
CENTRAL INDEX KEY: 0000929008
STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-ELECTRICAL APPARATUS & EQUIPMENT, WIRING SUPPLIES [5063]
IRS NUMBER: 251723345
STATE OF INCORPORATION: DE
FISCAL YEAR END: 1231

FILING VALUES:
FORM TYPE: 10-K/A
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-14989
FILM NUMBER: 08666958

BUSINESS ADDRESS:
STREET 1: COMMERCE COURT 4 STATION SQUARE
STREET 2: STE 700
CITY: PITTSBURGH
STATE: PA
ZIP: 15219
BUSINESS PHONE: 4124542200

MAIL ADDRESS:
STREET 1: COMMERCE COURT 4 STATION SQUARE
STREET 2: STE 700
CITY: PITTSBURGH
STATE: PA
ZIP: 15219

FORMER COMPANY:
FORMER CONFORMED NAME: CDW HOLDING CORP
DATE OF NAME CHANGE: 19971217


10-K/A
1
l30442ae10vkza.htm
WESCO INTERNATIONAL, INC. 10-K/A



WESCO International, Inc. 10-K/A



 





 

 







UNITED STATES SECURITIES AND EXCHANGE COMMISSION


WASHINGTON, D.C. 20549


FORM
10-K/A



(Amendment No. 1)



(Mark One)














     
þ   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934



For the fiscal year ended December 31, 2007



or














     
o   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

(State or other jurisdiction of

incorporation or organization)
  25-1723342

(I.R.S. Employer

Identification No.)
     
225 West Station Square Drive

Suite 700

Pittsburgh, Pennsylvania


(Address of principal executive offices)
  15219

(Zip Code)



(412) 454-2200

(Registrant’s telephone number, including area code)


SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
























     
Title of Class   Name of Exchange on which registered
Common Stock, par value $.01 per share
  New York Stock Exchange



SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: None



     Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule
405 of the Securities Act. Yes þ   No  o


     Indicate by check mark if the registrant is not required to file reports pursuant to Section
13 or 15(d) of the Act. Yes   o No þ


     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   þ 
No  o


     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in
definitive proxy or information statements incorporated by reference in Part III of this Form 10-K
or any amendment to this Form 10-K.  o


Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in
Rule 12b-2 of the Exchange Act. (Check one):






























             
Large accelerated filer þ
  Accelerated filer o
  Non-accelerated filer o
  Smaller reporting company o
 
  (Do not check if a smaller reporting company)



     Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of
the Act). Yes   o No  þ


     The registrant estimates that the aggregate market value of the voting shares held by
non-affiliates of the registrant was approximately $2,651.0 million as of June 30, 2007, the last
business day of the registrant’s most recently completed second fiscal quarter, based on the
closing price on the New York Stock Exchange for such stock.

As of
February 25, 2008, 42,832,207 shares of Common Stock, par value $.01 per share, of the
registrant were outstanding.



DOCUMENTS INCORPORATED BY REFERENCE:


Part III of this Form 10-K incorporates by reference portions of the registrant’s Proxy Statement
for its 2008 Annual Meeting of Stockholders.



 

 









 



EXPLANATORY
NOTE

     This
Amendment No. 1 to our Annual Report on Form 10-K amends Item 8, Financial Statements and Supplementary Data, of Part II and
Item 15, Exhibits and Financial Statement Schedules, of Part IV of
our Annual Report on Form 10-K for the year ended December 31, 2007
filed with the Securities and Exchange Commission on February 29,
2008. Due to a clerical error, the name of our independent registered
public accounting firm was inadvertently omitted from its report
appearing in such Item 8. Prior to our filing of our Annual Report on
Form 10-K, our independent registered public accounting firm provided
executed copies of both its report and its consent, which was filed
as Exhibit 23.1. There are no other changes to Item 8 of Part II
other than the inclusion of the name of our independent registered
public accounting firm in its report appearing in such Item 8.




 












WESCO INTERNATIONAL, INC.

Annual Report on Form 10-K for the Fiscal Year Ended

December 31, 2007

TABLE OF CONTENTS




















































































             
        Page  
           
  Financial Statements and Supplementary Data     4  
 
           
           
  Exhibits and Financial Statement Schedules     34  
 
  Signatures     39  
 





 








 








Item 8. Financial Statements and Supplementary Data.



     The information required by this item is set forth in our Consolidated Financial Statements
contained in this Annual Report on Form 10-K. Specific financial statements can be found at the
pages listed below:


WESCO International, Inc.




4






 








Report of Independent Registered Public Accounting Firm



To the Board of Directors and Shareholders of WESCO International, Inc.


In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of income, stockholders’ equity and cash flows present fairly, in all material respects,
the financial position of WESCO International, Inc. and its subsidiaries (the “Company”) at
December 31, 2007 and December 31, 2006, and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 2007 in conformity with accounting
principles generally accepted in the United States of America. In
addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 15(a)(2) presents fairly, in all
material respects, the information set forth therein when read in
conjunction with the related consolidated financial statements. Also in our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2007, based on criteria established in Internal Control — Integrated Framework issued
by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s
management is responsible for these financial statements, and financial statement schedule, for maintaining effective internal
control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in Management’s Report on Internal Control Over Financial
Reporting appearing under Item 9a. Our responsibility is to express opinions on these financial
statements, on the financial statement schedule, and on the Company’s internal control over financial reporting based on our integrated
audits. We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of material
misstatement and whether effective internal control over financial reporting was maintained in all
material respects. Our audits of the financial statements included examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a
material weakness exists, and testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a
reasonable basis for our opinions.


As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in
which it accounts for stock-based compensation as of January 1, 2006.


A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally accepted accounting principles. A
company’s internal control over financial reporting includes those policies and procedures that (i)
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company
are being made only in accordance with authorizations of management and directors of the company;
and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.


Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that
the degree of compliance with the policies or procedures may deteriorate.



/s/
PricewaterhouseCoopers LLP


Pittsburgh, Pennsylvania

February 29, 2008




5








 








WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS






































































































































































































































































































































































































































































































































































                 
    December 31
    2007   2006
     
    (Dollars in thousands,
    except share data)
Assets
               
Current Assets:
               
Cash and cash equivalents
  $ 72,297     $ 73,395  
Trade accounts receivable, net of allowance for
doubtful accounts of $17,418 and $12,641 in
2007 and 2006, respectively (Note 7)
    844,514       829,962  
Other accounts receivable
    44,783       43,011  
Inventories, net
    666,027       613,569  
Current deferred income taxes (Note 10)
    4,026       14,991  
Income taxes receivable
    38,793       34,016  
Prepaid expenses and other current assets
    10,059       9,068  
     
Total current assets
    1,680,499       1,618,012  
Property, buildings and equipment, net (Note 6)
    104,119       107,016  
Intangible assets, net (Note 3)
    133,791       147,550  
Goodwill (Note 3)
    924,358       931,229  
Other assets
    17,120       20,176  
     
Total assets
  $ 2,859,887     $ 2,823,983  
     
Liabilities and Stockholders’ Equity
               
Current Liabilities:
               
Accounts payable
  $ 626,293     $ 590,304  
Accrued payroll and benefit costs (Note 13)
    51,415       69,945  
Short-term debt (Note 7)
    502,300       390,500  
Current portion of long-term debt (Note 7)
    2,676       5,927  
Deferred acquisition payable (Note 4)
    1,285       3,453  
Bank overdrafts
    58,948       27,833  
Other current liabilities
    49,008       65,710  
     
Total current liabilities
    1,291,925       1,153,672  
Long-term debt (Note 7)
    811,311       743,887  
Deferred income taxes (Note 10)
    118,084       149,677  
Other noncurrent liabilities
    30,091       13,520  
     
Total liabilities
  $ 2,251,411     $ 2,060,756  
 
               
Commitments and contingencies (Note 15)
               
 
               
Stockholders’ Equity (Note 8 and 9):
               
Preferred stock, $.01 par value; 20,000,000
shares authorized, no shares issued or
outstanding
           
Common stock, $.01 par value; 210,000,000
shares authorized, 54,663,418 and 53,789,918
shares issued and 43,144,032 and 49,545,506
shares outstanding in 2007 and 2006,
respectively
    546       538  
Class B nonvoting convertible common stock,
$.01 par value; 20,000,000 shares authorized,
4,339,431 shares issued in 2007 and 2006; no
shares outstanding in 2007 and 2006
    43       43  
Additional capital
    808,739       769,948  
Retained earnings
    284,794       48,988  
Treasury stock, at cost; 15,858,817 and
8,583,843 shares in 2007 and 2006, respectively
    (511,478 )     (70,820 )
Accumulated other comprehensive income
    25,832       14,530  
     
Total stockholders’ equity
    608,476       763,227  
     
Total liabilities and stockholders’ equity
  $ 2,859,887     $ 2,823,983  
     




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




6






 











WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME






















































































































































































































































































































































































                         
    Year Ended December 31
    2007   2006   2005
    (In thousands, except share data)
Net sales
  $ 6,003,452     $ 5,320,603     $ 4,421,103  
 
                       
Cost of goods sold (excluding depreciation and amortization below)
    4,781,336       4,234,079       3,580,398  
Selling, general and administrative expenses
    791,133       692,881       612,780  
Depreciation and amortization
    36,759       28,660       18,639  
     
Income from operations
    394,224       364,983       209,286  
 
                       
Interest expense, net
    63,196       24,622       30,183  
Loss on debt extinguishment, net (Note 7)
                14,914  
Other expenses (Note 7)
          22,795       13,305  
     
Income before income taxes
    331,028       317,566       150,884  
 
                       
Provision for income taxes (Note 10)
    90,397       100,246       47,358  
     
 
                       
Net income
  $ 240,631     $ 217,320     $ 103,526  
     
 
                       
Earnings per share (Note 12)
                       
Basic
  $ 5.27     $ 4.46     $ 2.20  
     
 
                       
Diluted
  $ 4.99     $ 4.14     $ 2.10  
     




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



7






 











WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY














































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































































                                                                                 
                                                                            Accumulated  
                            Class B             Retained                     Other  
(Dollars in thousands, except   Comprehensive     Common Stock     Common Stock     Additional     Earnings     Treasury Stock     Comprehensive  
per share data)   Income     Amount     Shares     Amount     Shares     Capital     (Deficit)     Amount     Shares    Income (Loss)  
Balance, December 31, 2004
          $ 505       50,483,970     $ 43       4,339,431     $ 676,465     $ (271,858 )   $ (61,449 )     (8,407,790 )   $ 9,847  
             
Exercise of stock options,
including tax benefit of $13,815
            13       1,306,755                       22,347               (372 )     (10,817 )        
Stock-based compensation expense
                                            8,595                                  
Net income
  $ 103,526                                               103,526                          
Translation adjustment
    3,788                                                                       3,788  
 
                                                                             
Comprehensive income
  $ 107,314                                                                          
 
         
Balance, December 31, 2005
            518       51,790,725       43       4,339,431       707,407       (168,332 )     (61,821 )     (8,418,607 )     13,635  
             
Exercise of stock options,
including tax benefit of $34,966
            20       1,999,193                       50,807               (8,999 )     (165,236 )        
Stock-based compensation expense
                                            11,734                                  
Net income
  $ 217,320                                               217,320                          
Translation adjustment
    895                                                                       895  
 
                                                                             
Comprehensive income
  $ 318,215                                                                          
 
         
Balance, December 31, 2006
            538       53,789,918       43       4,339,431       769,948       48,988       (70,820 )     (8,583,843 )     14,530  
             
Exercise of stock options,
including tax benefit of $18,360
            8       873,500                       24,395               (10,077 )     (150,841 )        
Stock-based compensation expense
                                            14,403                                  
Issuance of treasury stock
                                            (7 )             187       22,656          
Adoption of FIN 48, net of tax
                                                    (4,825 )                        
Share repurchase program
                                                            (430,768 )     (7,146,789 )        
Net income
  $ 240,631                                               240,631                          
Translation adjustment
    11,302                                                                       11,302  
 
                                                                             
Comprehensive income
  $ 251,933                                                                          
 
         
Balance, December 31, 2007
          $ 546       54,663,418     $ 43       4,339,431     $ 808,739     $ 284,794     $ (511,478 )     (15,858,817 )   $ 25,832  
             




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



8






 











WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS



















































































































































































































































































































































































































































































































































































































































































































































































































































                         
    Year Ended December 31
    2007   2006   2005
    (In thousands)
Operating Activities:
                       
Net income
  $ 240,631     $ 217,320     $ 103,526  
Adjustments to reconcile net income to net cash provided by operating
activities:
                       
Loss on debt extinguishment, (net of premium in 2005 of $6,803)
                1,446  
Depreciation and amortization
    36,759       28,660       18,639  
Accretion and amortization of original issue discounts and
purchase discounts, respectively
                1,218  
Amortization of gain on interest rate swap
                (3,118 )
Stock option expense
    14,403       11,734       8,595  
Amortization of debt issuance costs
    4,192       2,520       1,263  
Gain on sale of property, buildings and equipment
    (371 )     (2,607 )     (36 )
Excess tax benefit from stock-based compensation
    (18,360 )     (34,966 )      
Interest related to uncertain tax positions
    1,097              
Deferred income taxes
    11,147       18,523       3,560  
Changes in assets and liabilities:
                       
Change in receivables facility
          (6,500 )     189,000  
Trade and other account receivables, net
    4,462       (11,832 )     (83,660 )
Inventories, net
    (33,632 )     (27,673 )     (60,220 )
Prepaid expenses and other current assets
    (2,618 )     30,030       12,386  
Accounts payable
    19,436       (27,873 )     95,657  
Accrued payroll and benefit costs
    (19,716 )     18,725       6,700  
Other current and noncurrent liabilities
    4,848       (8,978 )     141  
     
Net cash provided by operating activities
    262,278       207,083       295,097  
Investing Activities:
                       
Capital expenditures
    (16,118 )     (18,359 )     (14,154 )
Acquisition payments, net of cash acquired
    (32,398 )     (540,447 )     (278,829 )
Proceeds from sale of assets
    487       4,624        
Other investing activities
          (1,745 )     2,014  
     
Net cash used by investing activities
    (48,029 )     (555,927 )     (290,969 )
Financing Activities:
                       
Proceeds from issuance of long-term debt
    1,025,900       807,604       643,000  
Repayments of long-term debt
    (850,717 )     (462,918 )     (662,641 )
Debt issuance costs
    (754 )     (9,464 )     (9,043 )
Proceeds from exercise of options
    6,043       6,862       8,173  
Excess tax benefit from stock-based compensation
    18,360       34,966        
Repurchase of common stock
    (440,845 )            
Increase in bank overdrafts
    31,116       24,138       3,695  
Payments on capital lease obligations
    (1,709 )     (1,073 )     (215 )
     
Net cash (used) provided by financing activities
    (212,606 )     400,115       (17,031 )
     
Effect of exchange rate changes on cash and cash equivalents
    (2,741 )     (1 )     505  
Net change in cash and cash equivalents
    (1,098 )     51,270       (12,398 )
Cash and cash equivalents at the beginning of period
    73,395       22,125       34,523  
Cash and cash equivalents at the end of period
  $ 72,297     $ 73,395     $ 22,125  
     
Supplemental disclosures:
                       
Cash paid for interest
  $ 62,426     $ 44,952     $ 29,606  
Cash paid for taxes
    52,501       55,139       28,917  
Non-cash investing and financing activities:
                       
Property, plant and equipment acquired through capital leases
    2,599       2,144       2,000  
Deferred acquisition payable related to acquisitions
          1,107       5,000  
Note issued in connection with acquisition
                3,329  
Issuance of treasury stock
    187              




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



9






 











WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS




1. ORGANIZATION



     WESCO International, Inc. and its subsidiaries (collectively, “WESCO”), headquartered in
Pittsburgh, Pennsylvania, is a full-line distributor of electrical supplies and equipment and is a
provider of integrated supply procurement services with operations in the United States, Canada,
Mexico, the United Kingdom, Nigeria, United Arab Emirates and Singapore. WESCO currently operates
approximately 400 branch locations and seven distribution centers (five in the United States and
two in Canada).


2. ACCOUNTING POLICIES



     Basis of Consolidation



     The consolidated financial statements include the accounts of WESCO International, Inc.
(“WESCO International”) and all of its subsidiaries. All significant intercompany accounts and
transactions have been eliminated in consolidation.


     Use of Estimates



     The preparation of financial statements in conformity with generally accepted accounting
principles in the United States of America requires management to make estimates and assumptions
that affect the amounts reported in the consolidated financial statements and accompanying
disclosures. Although these estimates are based on management’s best knowledge of current events
and actions WESCO may undertake in the future, actual results may ultimately differ from the
estimates.


     Revenue Recognition



     Revenues are recognized for product sales when title, ownership and risk of loss pass to the
customer, or for services when the service is rendered. In the case of stock sales and special orders, a sale occurs at the time of shipment from
our distribution point, as the terms of WESCO’s sales are FOB shipping point. In cases where we
process customer orders but ship directly from our suppliers, revenue is recognized once product is
shipped and title has passed. For some of our customers, we provide services such as inventory
management or other specific support. Revenues are recognized upon evidence of fulfillment of the
agreed upon services. In all cases, revenue is recognized once the sales price to our customer is
fixed or is determinable and WESCO has reasonable assurance as to the collectibility in accordance
with Staff Accounting Bulletin No.104.


     Supplier Volume Rebates



     WESCO receives rebates from certain suppliers based on contractual arrangements with such
suppliers. An asset, included within other accounts receivable on the balance sheet, represents the
estimated amounts due to WESCO under the rebate provisions of such contracts. The corresponding
rebate income is recorded as a reduction of cost of goods sold. The appropriate level of such
income is derived from the level of actual purchases made by WESCO from suppliers, in accordance
with the provisions of Emerging Issues Task Force (“EITF”) Issue No. 02-16 , Accounting by a
Reseller for Cash Consideration Received from a Vendor
. Receivables under the supplier rebate
program were $40.0 million at December 31, 2007 and $35.9 million at December 31, 2006. The total
amount recorded as a reduction to cost of goods sold was $59.2 million, $54.1 million and $47.2
million for 2007, 2006 and 2005, respectively.


     Shipping and Handling Costs and Fees



     WESCO records the majority of costs and fees associated with transporting its products to
customers as a component of selling, general and administrative expenses. These costs totaled $62.0
million, $48.9 million and $44.5 million in 2007, 2006 and 2005, respectively.


     Cash Equivalents



     Cash equivalents are defined as highly liquid investments with original maturities of 90 days
or less when purchased.


     Asset Securitization



     WESCO accounts for its Receivables Facility in accordance with SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
(“SFAS No. 140”).
Prior to December 2006, WESCO accounted for transfers of receivables pursuant to the facility as a
“sale” and removed them from the consolidated balance sheet. Expenses associated with the facility
were reported as other expense in the statement of income. In December 2006, the Receivables
Facility was amended and restated such that WESCO effectively maintains control of receivables
transferred pursuant to the facility; therefore the transfers no longer qualify for “sale”
treatment under SFAS No. 140. As a result, the transferred receivables remain on the balance sheet,
and WESCO recognizes the related secured borrowing. Beginning in 2007, expenses associated with the
Receivables Facility were reported as interest expense in the statement of income.


10






 





     Allowance for Doubtful Accounts



     WESCO maintains allowances for doubtful accounts for estimated losses resulting from the
inability of its customers to make required payments. WESCO has a systematic procedure using
estimates based on historical data and reasonable assumptions of collectibility made at the local
branch level and on a consolidated corporate basis to calculate the allowance for doubtful
accounts. If the financial condition of WESCO’s customers were to deteriorate, resulting in an
impairment of their ability to make payments, additional allowances may be required. The allowance
for doubtful accounts was $17.4 million at December 31, 2007 and $12.6 million at December 31,
2006. The total amount recorded as selling, general and administrative expense related to bad debts
was $2.2 million, $3.8 million and $8.6 million for 2007, 2006 and 2005, respectively.


     Inventories



     Inventories primarily consist of merchandise purchased for resale and are stated at the lower
of cost or market. Cost is determined principally under the average cost method. WESCO makes
provisions for obsolete or slow-moving inventories as necessary to reflect reduction in inventory
value. Reserves for excess and obsolete inventories were $20.3 million and $23.0 million at
December 31, 2007 and 2006, respectively. The total expense related to excess and obsolete
inventories, included in cost of goods sold, was $8.0 million, $4.8 million and $4.1 million for
2007, 2006 and 2005, respectively. WESCO absorbs into the cost of inventory the general and
administrative expenses related to inventory such as purchasing, receiving and storage and at
December 31, 2007 and 2006 $42.8 million and $38.7 million, respectively, of these costs were
included in the ending inventory.


     Other Assets



     WESCO amortizes deferred financing fees over the term of the various debt instruments.
Deferred financing fees in the amount of $0.8 million related to amended financing was incurred
during the year ending December 31, 2007. As of December 31, 2007 and 2006, the amount of other
assets related to unamortized deferred financing fees was $16.3 million and $19.7 million,
respectively.


     Property, Buildings and Equipment



     Property, buildings and equipment are recorded at cost. Depreciation expense is determined
using the straight-line method over the estimated useful lives of the assets. Leasehold
improvements are amortized over either their respective lease terms or their estimated lives,
whichever is shorter. Estimated useful lives range from five to forty years for buildings and
leasehold improvements and three to ten years for furniture, fixtures and equipment.


     Computer software is accounted for in accordance with Statement of Position 98-1, Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use
. Capitalized computer
software costs are amortized using the straight-line method over the estimated useful life,
typically three to five years, and are reported at the lower of unamortized cost or net realizable
value.


     Expenditures for new facilities and improvements that extend the useful life of an asset are
capitalized. Ordinary repairs and maintenance are expensed as incurred. When property is retired or
otherwise disposed of, the cost and the related accumulated depreciation are removed from the
accounts and any related gains or losses are recorded and reported as selling, general and
administrative expenses.


     WESCO assesses its long-lived assets for impairment by periodically reviewing operating
performance by branch and respective utilization of real and tangible assets at such sites; and by
comparing fair values of real properties against market values of similar properties. Upon closure
of any branch, asset usefulness and remaining life are evaluated and any charges taken as
appropriate. Of its $104.1 million net book value of property, plant and equipment as of December
31, 2007, $63.4 million consists of land, buildings and leasehold improvements and are
geographically dispersed among WESCO’s 400 branches and seven distribution centers, mitigating the
risk of impairment. Approximately $16.5 million of assets consist of computer equipment and
capitalized software and are evaluated for use and serviceability relative to carrying value. The
remaining fixed assets, mainly of furniture and fixtures, warehousing equipment and transportation
equipment, are similarly evaluated for serviceability and use.


     Goodwill and Indefinite Life Intangible Assets



     In accordance with SFAS No. 142, Goodwill and Other Intangible Assets, goodwill and indefinite
life intangible assets are tested annually for impairment or more frequently if events or
circumstances occur indicating that their carrying value may not be recoverable. The evaluation of
impairment involves comparing the current fair value of goodwill to the recorded value. WESCO
estimates fair value using discounted cash flow analyses, which involves considerable management
judgment. Assumptions used for these estimated cash flows are based on a combination of historical
results and current internal forecasts. No impairment losses were identified in 2007 as a result
of this review. At December 31, 2007 and 2006 goodwill and indefinite life intangible assets
totaled $970.6 million and $977.4 million, respectively.


     Definite Lived Intangible Assets



     Intangible assets are amortized over 3 to 19 years. A portion of intangible assets related to
customer relationships are amortized using an accelerated method whereas all other intangible
assets subject to amortization use a straight-line method which reflects the pattern in which the
economic benefits of the respective assets are consumed or otherwise used. Intangible assets are
tested for
impairment if events or circumstances occur indicating that the respective asset might be impaired.


11






 





     Insurance Programs



     WESCO uses commercial insurance for auto, workers’ compensation, casualty and health claims as
a risk-reduction strategy to minimize catastrophic losses. Our strategy involves large deductibles
where WESCO must pay all costs up to the deductible amount. WESCO estimates our reserve based on
historical incident rates and costs. The assumptions included in developing this accrual include
the period of time from incurrence of a claim until the claim is paid by the insurance provider.
Presently, this period is estimated to be eight weeks. The total liability related to the insurance
programs was $10.0 million at December 31, 2007 and $9.5 million at December 31, 2006.


     Income Taxes



     Income taxes are accounted for under the liability method in accordance with SFAS No. 109,
Accounting for Income Taxes. Deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax basis of assets and liabilities and are
measured using the enacted tax rates and laws that will be in effect when the differences are
expected to reverse. Valuation allowances, if any, are provided when a portion or all of a deferred
tax asset may not be realized.


     During the first quarter of 2007, WESCO adopted FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109
(“FIN 48”), which
clarifies the accounting for uncertainty in income taxes. The adoption of FIN 48 resulted in an
increase of approximately $4.8 million in the liability for unrecognized tax benefits, which was
accounted for as a reduction to the January 1, 2007 balance of retained earnings. WESCO reviews
uncertain tax positions and assesses the need and amount of contingency reserves necessary to cover
any probable audit adjustments.


     Foreign Currency



     The local currency is the functional currency for all of WESCO’s operations outside the United
States. Assets and liabilities of these operations are translated to U.S. dollars at the exchange
rate in effect at the end of each period. Income statement accounts are translated at the average
exchange rate prevailing during the period. Translation adjustments arising from the use of
differing exchange rates from period to period are included as a component of other comprehensive
income within stockholders’ equity. Gains and losses from foreign currency transactions are
included in net income for the period.


      Stock-Based Compensation



     The Company’s stock-based employee compensation plans are comprised of fixed stock options and
stock-settled stock appreciation rights. Beginning January 1, 2006, WESCO adopted SFAS No. 123
(revised 2004) (“SFAS 123R”), Share-Based Payment, using the modified prospective method. Stock
options awarded prior to 2006 were accounted for using the measurement provisions of SFAS No. 123
(“SFAS 123”), Accounting for Stock-Based Compensation.


     Under SFAS 123R, compensation cost for all stock-based awards is measured at fair value on
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-based awards is determined using the
Black-Scholes valuation model, which is consistent with the valuation techniques previously
utilized for stock-based awards in footnote disclosures required under SFAS 123. Expected
volatilities are based on historical volatility of WESCO’s common stock. The expected life of the
option or stock settled appreciation right is estimated using historical data pertaining to option
exercises and employee terminations. The risk-free rate is based on the U.S. Treasury yields in
effect at the time of grant. The forfeiture assumption is based on WESCO’s historical employee
behavior that is reviewed on an annual basis. No dividends are assumed.


     WESCO granted the following stock-settled stock appreciation rights at the following weighted
average assumptions:






















































































                         
    2007   2006   2005
Stock-settled appreciation rights granted
    628,237       463,132       908,889  
Risk free interest rate
    4.9 %     4.9 %     3.0 %
Expected life
  4 years   4 years   4 years
Expected volatility
    40 %     50 %     59 %




     The weighted average fair value per equity award granted was $22.71, $30.72 and $15.23 for the
years ended December 31, 2007, 2006 and 2005, respectively. WESCO recognized $14.4 million, $11.7
and $8.6 million of non-cash stock-based compensation expense, which is included in selling,
general and administrative expenses, in 2007, 2006 and 2005, respectively.


12






 





     For the year ended December 31, 2005, WESCO’s pro forma net income and earnings per share
would have been adjusted to the amounts indicated below to reflect the additional fair value
compensation, net of tax, as if the fair-value based method of accounting for stock-based awards
had been applied to all outstanding awards:



















































































































         
    Year Ended  
    December 31,  
Dollars in thousands, except per share amounts   2005  
Net income reported
  $ 103,526  
Add: Stock-based compensation expense
included in reported net income, net of
related tax
    5,896  
Deduct: Stock-based employee compensation
expense determined under SFAS No. 123 for all
awards net of related tax
    (6,404 )
 
     
Pro forma net income
  $ 103,018  
 
     
 
       
Earnings per share:
       
Basic as reported
  $ 2.20  
Basic pro forma
  $ 2.19  
Diluted as reported
  $ 2.10  
Diluted pro forma
  $ 2.09  




     Treasury Stock



     Common stock purchased for treasury is recorded at cost. At the date of subsequent reissue,
the treasury stock account is reduced by the cost of such stock, with cost determined on a weighted
average basis.


      Fair Value of Financial Instruments



     The Company’s financial instruments consist of cash and cash equivalents, accounts receivable,
accounts payable and other accrued liabilities, a revolving line of credit, a mortgage financing
facility, notes payable, debentures and other long-term debt. The estimated fair value of the
Company’s outstanding indebtedness described in Note 7 at December 31, 2007 and 2006 was $1,280.1
million and $1,214.0 million respectively. The fair values of the senior notes and debentures are
estimated based upon market price quotes. The carrying values of WESCO’s other long-term debt,
which include the mortgage facility and revolving credit facility are considered to approximate
fair value, based upon market price quotes and market comparisons available for instruments with
similar terms and maturities. For all remaining WESCO financial instruments, carrying values are
considered to approximate fair value due to their short maturities.


     Environmental Expenditures



     WESCO has facilities and operations that distribute certain products that must comply with
environmental regulations and laws. Expenditures for current operations are expensed or
capitalized, as appropriate. Expenditures relating to existing conditions caused by past
operations, and that do not contribute to future revenue, are expensed. Liabilities are recorded
when remedial efforts are probable and the costs can be reasonably estimated.


     Recent Accounting Pronouncements



     In September 2006, the Financial Accounting Standards Board (the “FASB”) issued SFAS No. 157,
Fair Value Measurements (“SFAS 157”) which defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands disclosures about
fair value measurements. On February 12, 2008, the FASB issued FASB Staff Position (“FSP”) SFAS
No. 157-2, Effective Date of SFAS No. 157. The FSP amends SFAS 157, to delay the effective date of
SFAS 157 for all nonfinancial assets and nonfinancial liabilities, except those that are recognized
or disclosed at fair value in the financial statements on a recurring basis (that is, at least
annually) to fiscal years beginning after November 15, 2008. WESCO is currently evaluating the
effect that the implementation of SFAS 157 will have on its financial position, results of
operations and cash flows.


     In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and
Liabilities
(“SFAS 159”) which provides companies with an option to report certain financial assets
and liabilities at fair value, with changes in value recognized in earnings each reporting period.
SFAS 159 establishes presentation and disclosure requirements designed to facilitate comparisons
between companies that choose different measurement attributes for similar types of assets and
liabilities. SFAS 159 is effective for fiscal years beginning after November 15, 2007. WESCO does
not anticipate that the adoption of SFAS 159 will have an impact on its financial position, results
of operations, or cash flows.


13






 






     In December 2007, the FASB issued SFAS No. 141 (revised 2007), Business Combinations (“SFAS
141R”) which establishes additional principles and requirements for how the acquirer in a business
combination recognizes and measures in its financial statements the identifiable assets acquired,
the liabilities assumed and any noncontrolling interest in the acquiree at the acquisition date
fair value. SFAS 141R is designed to improve the relevance, representational faithfulness, and
comparability of the financial information that a reporting entity provides in its financial
reports about a business combination and its effects. SFAS 141R applies prospectively to business
combinations for which the acquisition date is in or after the beginning of the first annual
reporting period beginning after December 15, 2008. WESCO is currently evaluating the effect that
the implementation of SFAS 141R will have on its financial position, results of operations and cash
flows.


     In December 2007, the FASB issued SFAS No. 160, Noncontrolling Interests in Consolidated
Financial Statements an Amendment of ARB No. 51
(“SFAS 160”). This statement amends Accounting
Research Bulletin No. 51, Consolidated Financial Statements (ARB 51”) to establish accounting and
reporting standards for a noncontrolling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest
in the consolidated entity that should be reported as equity in the consolidated financial
statements. SFAS 160 is effective for fiscal years beginning after December 15, 2008. WESCO is
currently evaluating the effect that the implementation of SFAS 160 will have on its financial
position, results of operations and cash flows.


3. GOODWILL AND INTANGIBLE ASSETS



     Goodwill



     The following table sets forth the changes in the carrying amount of goodwill:


















































































































































































                 
    Year Ended December 31
    2007   2006
    (In thousands)
Beginning balance January 1
  $ 931,229     $ 542,217  
Adjustments to goodwill for prior acquisitions: (1)
               
Communications Supply Holding, Inc.
    (26,454 )        
Fastec Industrial Corp.
          26  
Carlton-Bates Company.
          8,000  
Additions to goodwill for acquisitions:
               
Communications Supply Holding, Inc.
          380,977  
Cascade Controls Corporation
    1,418        
J-Mark Inc
    11,548        
Monti Electric Supply, Inc.
    6,269        
Foreign currency translation
    348       9  
     
Ending balance December 31
  $ 924,358     $ 931,229  
     





 
















(1)   Represents final purchase price adjustments.




Intangible Assets



     The components of intangible assets are as follows:



















































































































































































































































































































































                                                         
            December 31, 2007     December 31, 2006  
            Gross             Net     Gross             Net  
    Useful     Carrying     Accumulated     Carrying     Carrying     Accumulated     Carrying  
    Life     Amount     Amortization     Amount     Amount     Amortization     Amount  
            (In thousands)  
Intangible Assets:
                                                       
Trademarks
  Indefinite   $ 46,200             $ 46,200     $ 46,200             $ 46,200  
Non-compete agreements
    3-5       6,445     $ (5,173 )     1,272       6,445     $ (4,529 )     1,916  
Customer relationships
    4-19       76,000       (16,714 )     59,286       76,000       (7,306 )     68,694  
Distribution agreements
    5-19       33,500       (6,467 )     27,033       33,500       (2,760 )     30,740  
             
 
          $ 162,145     $ (28,354 )   $ 133,791     $ 162,145     $ (14,595 )   $ 147,550  
             




     Amortization expense related to intangible assets totaled $13.1 million, $9.2 million and $2.2
million for the years ended December 31, 2007, 2006 and 2005, respectively.



14








 




The following table sets forth the estimated amortization expense for intangibles for the next five
years (in thousands):









































































         
    Estimated
    Amortization
    Expense
For the year ended December 31,
       
2008
  $ 7,377  
2009
    7,380  
2010
    7,174  
2011
    5,755  
2012
    3,507  




4. ACQUISITIONS



     The following table sets forth the consideration paid for acquisitions:

































































































































































































































































                         
    Year Ended December 31
    2007   2006   2005
    (In thousands)
Details of acquisitions:
                       
Fair value of assets acquired
  $ 32,207     $ 684,005     $ 331,302  
Amounts earned under acquisition agreements
                5,560  
Fair value of liabilities assumed
    (5,146 )     (147,784 )     (48,673 )
Deferred acquisition payable
          (1,107 )     (5,000 )
Deferred acquisition payments and note conversion
    1,727       4,872       1,013  
Note issued to seller
                (3,329 )
Final purchase price adjustment
    3,610       5,500        
     
Cash paid for acquisitions
  $ 32,398     $ 545,486     $ 280,873  
     
Supplemental cash flow disclosure related to acquisitions:
                       
Cash paid for acquisitions
  $ 32,398     $ 545,486     $ 280,873  
Less: cash acquired
          (5,039 )     (2,044 )
     
Cash paid for acquisitions, net of cash acquired
  $ 32,398     $ 540,447     $ 278,829  
     



Acquisitions were accounted for under the purchase method of accounting in accordance with
SFAS No. 141, Business Combinations. Accordingly, the purchase price for each business acquired
has been allocated based on management’s estimate of the fair value of assets acquired and
liabilities assumed with the excess being recorded primarily as goodwill as of the effective date
of the acquisition.



     Acquisition of Communications Supply Holdings, Inc.



          On November 3, 2006, WESCO International completed its acquisition of Communications Supply
Holdings, Inc. (“Communications Supply”). On that day, a wholly-owned subsidiary of WESCO
Distribution, Inc. (“WESCO Distribution”) merged with and into Communications Supply, which became
a wholly-owned subsidiary of WESCO Distribution. WESCO paid at closing a cash merger price of
approximately $530.1 million, net of $5.0 million of cash acquired and $1.1 million of deferred
payments, of which $17.0 million was held in escrow to address post-closing adjustments relating to
working capital and potential indemnification claims. To fund the merger price paid at closing,
WESCO Distribution borrowed $105.0 million under its Receivables Facility and $102.0 million under
its revolving credit facility and used the borrowings, together with the $292.5 million of net
proceeds from the offering of the 2026 Debentures and approximately $30.6 million of other
available cash.



     During 2007, WESCO evaluated the calculation of the acquired working capital, along with the
calculation of various direct acquisition costs. These calculations resulted in an increase to the
purchase price in the amount of approximately $4.0 million. WESCO made payments totaling $4.0
million, which included purchase price adjustments totaling $3.6 million and a deferred payment of
$0.4 million to the previous owners of Communications Supply.


     In addition, during the three months ended September 30, 2007, WESCO finalized a plan for the
integration of Communications Supply into the WESCO operations. Pursuant to EITF Issue No. 95-3,
Recognition of Liabilities in Connection with a Purchase Business Combination, charges totaling approximately $0.7 million were recognized as a part of the
purchase price allocation. These charges relate to termination benefit costs and are expected to
be paid over the next 15 month period.


15






 





     The final allocation of assets acquired and liabilities assumed for the 2006 acquisition is
summarized below.





















































































































































































































































         
    Communications  
    Supply Holdings,  
    Inc.  
    (Final)  
    (In thousands)  
Assets Acquired
       
 
       
Cash and equivalents
  $ 5,039  
Trade accounts receivable
    102,582  
Inventories
    84,868  
Deferred income taxes short-term
    7,199  
Other accounts receivable
    8,286  
Prepaid expenses
    1,491  
Income taxes receivable
    15,925  
Property, buildings and equipment
    5,493  
Intangible assets
    71,295  
Goodwill
    354,522  
Other noncurrent assets
    849  
 
     
Total assets acquired
    657,549  
 
       
Liabilities Assumed
       
 
       
Accounts payable
    45,241  
Accrued and other current liabilities
    37,592  
Deferred acquisition payable
    1,107  
Restructure reserve
    687  
Deferred income taxes long-term
    32,140  
Other noncurrent liabilities
    554  
 
     
Total liabilities assumed
    117,321  
 
       
Fair value of net assets acquired, including intangible assets
  $ 540,228  
 
     



Communications Supply is a national distributor of wire, cable, network infrastructure, and
low voltage specialty system products for data, voice and security network communication
applications. Communications Supply sells it products through its 37 branches and sales offices
located throughout the United States. Communications Supply also adds new product categories, new
strategic supplier relationships and provides acquisition opportunities to penetrate further into
the low voltage specialty systems and industrial OEM and MRO markets.



     The final purchase price was allocated to the respective assets and liabilities based upon
their estimated fair values as of the acquisition date. The fair value of the intangible assets was
estimated by management and the allocation resulted in intangible assets of $71.3 million and
goodwill of $354.5 million, of which $11.7 million is deductible for tax purposes. The goodwill is
primarily being generated by the trained and assembled workforce and their ability to create and
develop a highly diversified customer base. The intangible assets include supplier relationships
of $21.4 million amortized over a range of 12 to 19 years, customer relationships of $21.4 million
amortized over a range of 4 to 7 years, non-compete agreements of $0.7 million amortized over 3
years, and trademarks of $27.8 million. Trademarks have an indefinite life and are not being
amortized. No residual value is estimated for the depreciable intangible assets.


     The operating results of Communications Supply have been included in WESCO’s consolidated
financial statements since November 3, 2006. Unaudited pro forma results of operations (in
thousands, except per share data) for the year ended December 31, 2006 are included below as if the
acquisition occurred on the first day of the respective period. This summary of the unaudited pro forma results of operations is not necessarily indicative of what WESCO’s results of
operations would have been had Communications Supply been acquired at the beginning of 2006, nor
does it purport to represent results of operations for any future periods. Seasonality of sales is
not a significant factor to these pro forma combined results of operations.


16






 










































































         
    Year Ended December 31
    2006
    (In thousands, except per share
    amounts)
Net sales
  $ 5,837,625  
Net income
  $ 228,192  
Earnings per common share:
       
Basic
  $ 4.72  
Diluted
  $ 4.38  




Acquisition of Carlton-Bates Company



     On September 29, 2005, WESCO acquired Carlton-Bates Company (“Carlton-Bates”), headquartered
in Little Rock, Arkansas. As part of the acquisition, WESCO developed a plan for the integration
of Carlton-Bates into the WESCO operations. This plan was finalized during the three-month period
ended September 30, 2006. Pursuant to EITF Issue No. 95-3, certain charges related to the
Carlton-Bates acquisition integration were recognized as a part of the purchase price allocation.
During the three-months ended September 30, 2007, WESCO determined that charges totaling
approximately $0.5 million were no longer required. As a result, these charges were removed from
the restructure reserve and recorded to other income. A summary of the charges for the year ended
December 31, 2007 is as follows:










































































































































































                                 
    Balance at                   Balance at
    December 31,                   December 31,
Amounts in thousands   2006   Cash Payments   Adjustments   2007
Termination Benefits
  $ 24     $ 23     $ 1     $  
Cost of closing redundant facilities
    1,392       123       493       776  
Other
    104       104              
 
               
Total
  $ 1,520     $ 250     $ 494     $ 776  
 
               




Acquisition of Fastec Industrial Corp.



     On July 29, 2005, WESCO acquired the assets and business of Fastec Industrial Corp. To
consummate this acquisition, WESCO issued a $3.3 million promissory note. The note was paid in
full in January 2007.


5. CONCENTRATIONS OF CREDIT RISK AND SIGNIFICANT SUPPLIERS



     WESCO distributes its products and services and extends credit to a large number of customers
in the industrial, construction, utility and manufactured structures markets. WESCO’s largest
supplier accounted for approximately 10%, 12% and 12% of WESCO’s purchases for each of the three
years, 2007, 2006 and 2005, respectively and therefore, WESCO could potentially incur risk due to
supplier concentration. Based upon WESCO’s broad customer base, the Company has concluded that it
has no credit risk due to customer concentration.


6. PROPERTY, BUILDINGS AND EQUIPMENT



     The following table sets forth the components of property, buildings and equipment:



























































































































































                 
    December 31,
    2007   2006
    (in thousands)
Buildings and leasehold improvements
  $ 76,684     $ 73,382  
Furniture, fixtures and equipment
    117,774       117,214  
Software costs
    49,187       44,566  
     
 
    243,645       235,162  
Accumulated depreciation and amortization
    (162,897 )     (149,327 )
     
 
    80,748       85,835  
Land
    20,115       19,053  
Construction in progress
    3,256       2,128  
     
 
  $ 104,119     $ 107,016  
     




17






 






     Depreciation expense was $19.0 million, $15.7 million and $14.5 million, and capitalized
software amortization was $4.7 million, $3.8 million and $4.1 million, in 2007, 2006 and 2005,
respectively. The unamortized software cost was $7.9 million as of December 31, 2007 and 2006.
Furniture, fixtures and equipment include capitalized leases of $6.0 million and $3.7 million and
related accumulated amortization of $1.2 million and $0.5 million as of December 31, 2007 and 2006,
respectively.


7. DEBT



     The following table sets forth WESCO’s outstanding indebtedness:













































































































































































































                 
    December 31,
    2007   2006
    (In thousands)
Revolving credit facility
  $ 187,300     $ 97,000  
Mortgage financing facility
    43,638       44,925  
Acquisition related notes:
               
Fastec
          3,329  
Other
    552       666  
Capital leases
    4,797       3,894  
7.50% Senior Subordinated Notes due 2017
    150,000       150,000  
2.625% Convertible Senior Debentures due 2025
    150,000       150,000  
1.75% Convertible Senior Debentures due 2026
    300,000       300,000  
Accounts Receivable Securitization Facility
    480,000       390,500  
     
 
    1,316,287       1,140,314  
Less current portion
    (2,676 )     (5,927 )
Less short-term debt
    (502,300 )     (390,500 )
     
 
  $ 811,311     $ 743,887  
     




9.125% Senior Subordinated Notes due 2008



     In June 1998 and August 2001, WESCO Distribution, Inc. completed offerings of $300 million and
$100 million, respectively, in aggregate principal amount of 9.125% Senior Subordinated Notes due
2008 (the “2008 Notes”). The 2008 Notes were issued at an average issue price of 98% of par, and
net proceeds received from the sales of the 2008 Notes were approximately $376 million in the
aggregate. During 2003 and 2004, WESCO repurchased $21.1 million and $55.3 million, respectively,
in aggregate principal amount of 2008 Notes and recorded a net loss of $2.6 million in 2004 and a
net gain of $0.6 million in 2003. WESCO redeemed all of the remaining principal amount of the 2008
Notes during 2005, incurring a charge of $14.9 million. The charge included the payment of a
redemption price at 101.521% of par and the write-off of unamortized original issue discount and
debt issue costs.


Accounts Receivable Securitization Facility



     WESCO maintains an accounts receivable securitization program (the “Receivables Facility”)
under which it sells, on a continuous basis, an undivided interest in all domestic accounts
receivable to WESCO Receivables Corporation, a wholly owned special purpose entity (“SPE”). The
SPE sells, without recourse, a senior undivided interest in the receivables to third-party conduits
and financial institutions for cash while maintaining a subordinated undivided interest in a
portion of the receivables, in the form of overcollateralization. WESCO has agreed to continue
servicing the sold receivables for the third-party conduits and financial institutions at market
rates; accordingly, no servicing asset or liability has been recorded.


     On February 22, 2007, WESCO amended the Receivables Facility. The amendment increased the
purchase commitment under the Receivables Facility from $400 million to $500 million, included
Communications Supply Corporation and its subsidiaries as originators under the Receivables
Facility and extended the term of the Receivables Facility to May 9, 2010.


     Prior to December 2006, WESCO accounted for transfers of receivables pursuant to the
Receivables Facility as a “sale” and removed them from the consolidated balance sheet. In December
2006, the Receivables Facility was amended and restated such that WESCO effectively maintains
control of receivables transferred pursuant to the Receivables Facility; therefore the transfers no
longer qualify for “sale” treatment under SFAS No. 140. As a result, all transfers are accounted
for as secured borrowings and the receivables sold pursuant to the Receivables Facility are
included on the balance sheet as trade receivables, along with WESCO’s retained subordinated
undivided interest in those receivables.


     As of December 31, 2007 and 2006, accounts receivable eligible for securitization totaled
approximately $604.0 million and $531.3 million, respectively. The consolidated balance sheets as
of December 31, 2007 and 2006 reflect $480.0 million and $390.5 million, respectively, of account
receivable balances legally sold to third parties, as well as the related borrowings for equal
amounts.



18








 





     Effective with the amendment in December 2006, WESCO regained control of previously
transferred accounts receivable balances. EITF 02-09, Accounting for Changes that Result in a
Transferor Regaining Control of Financial Assets Sold,
requires that re-recognized assets be
recorded at fair value. Accordingly, WESCO reflected re-recognized trade receivables with an
estimated fair value of $390.5 million in the balance sheet at December 31, 2006, along with the
retained subordinated undivided interest of $137.9 million. As a result of this change in
accounting treatment, WESCO recognized a pre-tax gain of $2.4 million during the three months ended
March 31, 2007.


     Interest expense and other costs associated with the Receivables Facility totaled $28.3
million, $22.8 million and $13.3 million in 2007, 2006 and 2005, respectively. Prior to the
amendment and restatement, interest expense and other costs related to the Receivables Facility
were recorded as other expense in the consolidated statement of income. At December 31, 2007, the
interest rate on borrowings under this facility was approximately 5.7%.


Mortgage Financing Facility



     In February 2003, WESCO finalized a mortgage financing facility of $51 million, $43.6 million
of which was outstanding as of December 31, 2007. Total borrowings under the mortgage financing
facility are subject to a 22-year amortization schedule, with a balloon payment due at the end of
the 10-year term. The interest rate on borrowings under this facility is fixed at 6.5%.


Revolving Credit Facility



     At December 31, 2007, the aggregate borrowing capacity under the revolving credit facility was
$375 million. The revolving credit facility consists of two separate sub-facilities: (i) a U.S.
sub-facility and (ii) a Canadian sub-facility and is collateralized by the inventory of WESCO
Distribution and the inventory and accounts receivable of WESCO Distribution Canada, L.P. WESCO
Distribution’s obligations under the revolving credit facility have been guaranteed by WESCO
International and by certain of WESCO Distribution’s subsidiaries.


     On December 14, 2007, WESCO Distribution amended the facility. The amendment increased the
borrowing limit under the Canadian sub-facility from $65 million to $75 million, increased the
letter of credit sub-facility from $50 million to $55 million, allowed for the disposition of
WESCO’s LADD operations, a part of Carlton Bates Company, which was acquired in September 2005, and
extended the maturity date of the Revolving Credit Facility to November 1, 2013.


     Availability under the facility is limited to the amount of eligible inventory and eligible
accounts receivable and Canadian inventory and receivables applied against certain advance rates.
Depending upon the amount of excess availability under the facility, interest is calculated at
LIBOR plus a margin that ranges between 1.0% and 1.75% or at the Index Rate (prime rate published
by the Wall Street Journal) plus a margin that ranges between (0.25%) and 0.50%. As long as the
average daily excess availability for both the preceding and projected succeeding 90-day period is
greater than $50 million, WESCO would be permitted to make acquisitions and repurchase outstanding
public stock and bonds.


     The above permitted transactions would also be allowed if such excess availability is between
$25 million and $50 million and WESCO’s fixed charge coverage ratio, as defined by the revolving
credit agreement, is at least 1.25 to 1.0 after taking into consideration the permitted
transaction. Additionally, if excess availability under the revolving credit facility is less than
$60 million, then WESCO must maintain a fixed charge coverage ratio of 1.1 to 1.0. At December 31,
2007, the interest rate was 6.2%. WESCO was in compliance with all covenants as of December 31,
2007.


     During 2007, WESCO borrowed $891.4 million in the aggregate under the Revolving Credit
Facility and made repayments in the aggregate amount of $801.1 million. During 2006, aggregate
borrowings and repayments were $507.6 million and $439.6 million, respectively. At December 31,
2007, WESCO had an outstanding balance under the facility of $187.3 million. WESCO had
approximately $146.2 million available under the facility at December 31, 2007, after giving effect
to an outstanding letter of credit, as compared to approximately $326.9 million at December 31,
2006.


7.50% Senior Subordinated Notes due 2017



     At December 31, 2007, $150 million in aggregate principal amount of the 7.50% Senior
Subordinated Notes due 2017 (the “2017 Notes”) was outstanding. The 2017 Notes were issued by WESCO
Distribution in an indenture dated as of September 27, 2005 with The Bank of New York, as successor
to J.P. Morgan Trust Company, National Association, as trustee, and are unconditionally guaranteed
on an unsecured basis by WESCO International, Inc. The 2017 Notes accrue interest at the rate of
7.50% per annum and are payable in cash semi-annually in arrears on each April 15 and October 15.


     At any time on or after October 15, 2010, WESCO Distribution may redeem all or a part of the
2017 Notes. Between October 15, 2010 and October 14, 2011, WESCO Distribution may redeem all or a
part of the 2017 Notes at a redemption price equal to 103.750% of the principal amount. Between
October 15, 2011 and October 14, 2012, WESCO Distribution may redeem all or a part of the 2017
Notes at a redemption price equal to 102.500% of the principal amount. On and after October 15,
2013, WESCO Distribution may redeem all or a part of the 2017 Notes at a redemption price equal
to 100% of the principal amount.


19






 





     If WESCO Distribution undergoes a change of control prior to maturity, holders of 2017 Notes
will have the right, at their option, to require WESCO Distribution to repurchase for cash some or
all of their 2017 Notes at a repurchase price equal to 101% of the principal amount of the 2017
Notes being repurchased, plus accrued and unpaid interest to, but not including, the repurchase
date.


2.625% Convertible Senior Debentures due 2025



     At December 31, 2007, $150 million in aggregate principal amount of 2.625% Convertible Senior
Debentures due 2025 (the “2025 Debentures”) was outstanding. The 2025 Debentures were issued by
WESCO International under an indenture dated as of September 27, 2005 with The Bank of New York, as
successor to J.P. Morgan Trust Company, National Association, as Trustee, and are unconditionally
guaranteed on an unsecured senior subordinated basis by WESCO Distribution. The 2025 Debentures
accrue interest at the rate of 2.625% per annum and are payable in cash semi-annually in arrears on
each April 15 and October 15. Beginning with the six-month interest period commencing October 15,
2010, WESCO will also pay contingent interest in cash during any six-month interest period in which
the trading price of the 2025 Debentures for each of the five trading days ending on the second
trading day immediately preceding the first day of the applicable six-month interest period equals
or exceeds 120% of the principal amount of the 2025 Debentures. During any interest period when
contingent interest shall be payable, the contingent interest payable per $1,000 principal amount
of 2025 Debentures will equal 0.25% of the average trading price of $1,000 principal amount of the
2025 Debentures during the five trading days immediately preceding the first day of the applicable
six-month interest period. As defined in SFAS No. 133, Accounting for Derivative Instruments and
Hedge Activities,
the contingent interest feature of the 2025 Debentures is an embedded derivate
that is not considered clearly and closely related to the host contract. The contingent interest
component had no significant value at December 31, 2007 or 2006.


     The 2025 Debentures are convertible into cash and, in certain circumstances, shares of WESCO
International’s common stock, $0.1 par value, at any time on or after October 15, 2023, or prior to
October 15, 2023 in certain circumstances. The 2025 Debentures will be convertible based on an
initial conversion rate of 23.8872 shares of common stock per $1,000 principal amount of the 2025
Debentures (equivalent to an initial conversion price of approximately $41.86 per share). The
conversion rate and the conversion price may be adjusted under certain circumstances


     At any time on or after October 15, 2010, WESCO International may redeem all or a part of the
2025 Debentures at a redemption price equal to 100% of the principal amount of the 2025 Debentures
plus accrued and unpaid interest (including contingent interest and additional interest, if any)
to, but not including, the redemption date. Holders of 2025 Debentures may require WESCO to
repurchase all or a portion of their 2025 Debentures on October 15, 2010, October 15, 2015 and
October 15, 2020 at a cash repurchase price equal to 100% of the principal amount of the 2025
Debentures, plus accrued and unpaid interest (including contingent interest and additional
interest, if any) to, but not including, the repurchase date. If WESCO International undergoes
certain fundamental changes, as defined in the indenture governing the 2025 Debentures, prior to
maturity, holders of 2025 Debentures will have the right, at their option, to require WESCO
International to repurchase for cash some or all of their 2025 Debentures at a repurchase price
equal to 100% of the principal amount of the 2025 Debentures being repurchased, plus accrued and
unpaid interest (including contingent interest and additional interest, if any) to, but not
including, the repurchase date.


1.75% Convertible Senior Debentures due 2026



     On November 2, 2006, WESCO International issued $300 million in aggregate principal amount of
1.75% Convertible Senior Debentures due 2026 (the “2026 Debentures”). The 2026 Debentures were
issued by WESCO International under an indenture dated as of November 2, 2006 with The Bank of New
York, as Trustee, and are unconditionally guaranteed on an unsecured senior subordinated basis by
WESCO Distribution. The 2026 Debentures accrue interest at the rate of 1.75% per annum and are
payable in cash semi-annually in arrears on each May 15 and November 15, commencing May 15, 2007.
Beginning with the six-month interest period commencing November 15, 2011, WESCO will also pay
contingent interest in cash during any six-month interest period in which the trading price of the
2026 Debentures for each of the five trading days ending on the second trading day immediately
preceding the first day of the applicable six-month interest period equals or exceeds 120% of the
principal amount of the 2026 Debentures. During any interest period when contingent interest shall
be payable, the contingent interest payable per $1,000 principal amount of 2026 Debentures will
equal 0.25% of the average trading price of $1,000 principal amount of the 2026 Debentures during
the five trading days immediately preceding the first day of the applicable six-month interest
period. As defined in SFAS No. 133, Accounting for Derivative Instruments and Hedge Activities, the
contingent interest feature of the 2026 Debentures is an embedded derivate that is not considered
clearly and closely related to the host contract. The contingent interest component had no
significant value at December 31, 2007 or 2006.


     The 2026 Debentures are convertible into cash and, in certain circumstances, shares of WESCO
International’s common stock, $0.01 par value, at any time on or after November 15, 2024, or prior
to November 15, 2024 in certain circumstances. The 2026 Debentures will be convertible based on an
initial conversion rate of 11.3437 shares of common stock per $1,000 principal amount of the 2026
Debentures (equivalent to an initial conversion price of approximately $88.15 per share). The
conversion rate and the conversion price may be adjusted under certain circumstances.


20






 





     At any time on or after November 15, 2011, WESCO International may redeem all or a part of the
2026 Debentures at a redemption price equal to 100% of the principal amount of the 2026 Debentures
plus accrued and unpaid interest (including contingent interest and additional interest, if any)
to, but not including, the redemption date. Holders of 2026 Debentures may require WESCO to
repurchase all or a portion of their 2026 Debentures on November 15, 2011, November 15, 2016 and
November 15, 2021 at a cash repurchase price equal to 100% of the principal amount of the 2026
Debentures, plus accrued and unpaid interest (including contingent interest and additional
interest, if any) to, but not including, the repurchase date. If WESCO International undergoes
certain fundamental changes, as defined in the indenture governing the 2026 Debentures, prior to
maturity, holders of 2026 Debentures will have the right, at their option, to require WESCO
International to repurchase for cash some or all of their 2026 Debentures at a repurchase price
equal to 100% of the principal amount of the 2026 Debentures being repurchased, plus accrued and
unpaid interest (including contingent interest and additional interest, if any) to, but not
including, the repurchase date.


Covenant Compliance



     WESCO was in compliance with all relevant covenants contained in its debt agreements as of
December 31, 2007.


     The following table sets forth the aggregate principal repayment requirements for all
indebtedness for the next five years and thereafter (in thousands):











































































         
2008
  $ 504,976  
2009
    3,032  
2010
    2,793  
2011
    2,460  
2012
    2,120  
Thereafter
    800,906  
 
     
 
  $ 1,316,287  
 
     




     WESCO’s credit agreements contain various restrictive covenants that, among other things,
impose limitations on (i) dividend payments or certain other restricted payments or investments;
(ii) the incurrence of additional indebtedness and guarantees or issuance of additional stock;
(iii) creation of liens; (iv) mergers, consolidation or sales of substantially all of WESCO’s
assets; (v) certain transactions among affiliates; (vi) payments by certain subsidiaries to WESCO;
and (vii) capital expenditures. In addition, the revolving credit agreement requires WESCO to meet
certain fixed charge coverage tests depending on availability.


8. CAPITAL STOCK



Preferred Stock



     There are 20 million shares of preferred stock authorized at a par value of $.01 per share.
The Board of Directors has the authority, without further action by the stockholders, to issue all
authorized preferred shares in one or more series and to fix the number of shares, designations,
voting powers, preferences, optional and other special rights and the restrictions or
qualifications thereof. The rights, preferences, privileges and powers of each series of preferred
stock may differ with respect to dividend rates, liquidation values, voting rights, conversion
rights, redemption provisions and other matters.


Common Stock



     There are 210 million shares of common stock and 20 million shares of Class B common stock
authorized at a par value of $.01 per share. The Class B common stock is identical to the common
stock, except for voting and conversion rights. The holders of Class B common stock have no voting
rights. With certain exceptions, Class B common stock may be converted, at the option of the
holder, into the same number of shares of common stock.


     Under the terms of the Revolving Credit Facility, WESCO International is restricted from
declaring or paying dividends and as such, at December 31, 2007 and 2006, no dividends had been
declared, and therefore no retained earnings were reserved for dividend payments.


9. SHARE REPURCHASE PLANS



     On September 28, 2007, WESCO announced that the $400 million stock repurchase program,
reported on February 1, 2007, had been completed. WESCO also announced that its Board of Directors
authorized a new stock repurchase program in the amount of up to $400 million with an expiration
date of September 30, 2009. The shares may be repurchased from time to time in the open market or
through privately negotiated transactions. The stock repurchase program may be implemented or
discontinued at any time by WESCO. During the three and twelve month periods ended December 31,
2007, WESCO repurchased approximately 0.8 million shares for $30.6 million and approximately 7.1
million shares for $430.6 million, respectively.


     In addition, during 2007, WESCO purchased approximately 0.2 million shares from employees for
$10.1 million in connection with the settlement of tax withholding obligations arising from the
exercise of common stock units and stock-settled stock appreciation rights.


21






 





10. INCOME TAXES



     The following table sets forth the components of the provision for income taxes:











































































































































































































































                         
    Year Ended December 31
    2007   2006   2005
            (In thousands)        
Current taxes:
                       
Federal
  $ 66,986     $ 63,859     $ 18,141  
State
    25,438       11,581       1,699  
Foreign
    (13,174 )     6,552       6,212  
     
Total current.
    79,250       81,992       26,052  
Deferred taxes:
                       
Federal
    19,815       16,938       20,734  
State
    (9,859 )     2,101       2,567  
Foreign
    1,191       (785 )     (1,995 )
     
Total deferred
    11,147       18,254       21,306  
     
 
  $ 90,397     $ 100,246     $ 47,358  
     




     The following table sets forth the components of income before income taxes by jurisdiction:










































































































                         
    Year Ended December 31
    2007   2006   2005
            (In thousands)        
United States
  $ 357,426     $ 270,081     $ 126,098  
Foreign
    (26,398 )     47,485       24,786  
     
 
  $ 331,028     $ 317,566     $ 150,884  
     



22






 


\




     The following table sets forth the reconciliation between the federal statutory income tax
rate and the effective rate:























































































































































































































































                         
    Year Ended December 31
    2007   2006   2005
     
Federal statutory rate
    35.0 %     35.0 %     35.0 %
State taxes, net of federal tax benefit
    3.3       2.8       1.8  
Nondeductible expenses
    0.5       0.4       0.7  
Domestic tax benefit from foreign operations
    (2.0 )     (3.2 )     (3.1 )
Foreign tax rate differences(1)
    (7.0 )     (3.3 )     (3.3 )
Federal tax credits(2)
    (0.1 )           (0.8 )
Domestic production activity deduction
    (0.2 )     (0.1 )      
Section 965 dividend(3)
                0.7  
Adjustment related to uncertain tax positions
    0.6              
Adjustment related to foreign currency exchange gains(4)
    (0.6 )            
Change in valuation allowance(5)
    (2.6 )            
Other
    0.4             0.4  
     
 
    27.3 %     31.6 %     31.4 %
     





 
















































(1)   Includes tax benefit of $21.2 million, $10.0 million and $5.1 million in 2007, 2006 and 2005 respectively from
recapitalization of WESCO’s Canadian operations.
 
(2)   Represents a benefit of $0.6 million and $1.2 million in 2007 and 2005, respectively, from research and development credits.
 
(3)   The Amercian Jobs Creation Act (the “Jobs Act”) was established on October 22, 2004. One provision of the Jobs Act
effectively reduces the tax rate on qualifying repatriation of earnings held by foreign-based subsidiaries to approximately
5.25 percent. Normally, such repatriations would be taxed at a rate of 35 percent. In the fourth quarter of 2005, WESCO
elected to repatriate approximately $23.0 million under the Jobs Act. This repatriation of earnings triggered a U.S. federal
tax payment of approximately $1.0 million. This amount is reflected in the current income tax expense. Prior to the Jobs Act,
WESCO did not provide deferred taxes on undistributed earnings of foreign subsidiaries as WESCO intended to utilize these
earnings through expansion of its business operations outside the United States for an indefinite period of time.
 
(4)   Includes a benefit of $1.8 million in 2007 from foreign exchange gains related to the recapitalization of Canadian operations.
 
(5)   WESCO recorded an $8.5 million reversal of valuation allowances against deferred tax assets for net operating loss
carryforwards. The reversal was recorded as a discrete tax benefit in the third quarter of 2007.




     As of December 31, 2007 and 2006, WESCO had state tax benefits derived from net operating loss
carryforwards of approximately $9.3 million ($6.0 million, net of federal income tax) and $13.1
million ($8.5 million, net of federal income tax), respectively. The amounts will begin expiring in
2008. The net deferred tax asset of $13.1 million at December 31, 2006 was fully offset by a
valuation allowance. During 2007, WESCO recorded a reversal of this valuation allowance based on
achieving substantial profitability and a favorable assessment of expected future operating results
in jurisdictions in which WESCO’s net operating losses may be utilized in future periods.
Utilization of WESCO’s state net operating loss carryforwards is subject to annual limitations
imposed by state statute. Such annual limitations could result in the expiration of the net
operating loss and tax credit carryforwards before utilization.


     As of December 31, 2007, WESCO had approximately $33.8 million of undistributed earnings
related to its foreign subsidiaries. Management believes that these earnings will be indefinitely
reinvested in foreign jurisdiction; accordingly, WESCO has not provided for U.S. federal income
taxes related to these earnings.


23






 





     The following table sets forth deferred tax assets and liabilities:


































































































































































































































































































                                 
    December 31
    2007   2006
            (In thousands)    
    Assets   Liabilities   Assets   Liabilities
Accounts receivable
  $ 6,419     $     $ 8,962     $  
Inventory
          3,880             269  
Other
    21,159       19,671       13,603       7,305  
     
 
                               
Current deferred tax
    27,578       23,552       22,565       7,574  
     
 
                               
Intangibles
          120,105             141,168  
Property, buildings and equipment
          7,006             7,289  
Other
    13,366       4,339       340       1,560  
     
 
                               
Long-term deferred tax
  $ 13,366     $ 131,450     $ 340     $ 150,017  
     



11. ACCOUNTING FOR UNCERTAIN TAX POSITIONS



     On January 1, 2007, WESCO adopted FASB Interpretation No. 48, Accounting for Uncertainty in
Income Taxes — an interpretation of FASB Statement No. 109
(“FIN 48”). As a result of the
implementation of FIN 48, WESCO recognized an increase of $4.8 million in the liability for
unrecognized tax benefits, which was accounted for as a reduction to the January 1, 2007 balance of
retained earnings.


     The Company is currently under examination in several tax jurisdictions, both within the
United States and outside the United States, and remains subject to examination until the statute
of limitations expires for the respective tax jurisdictions. The following summary sets forth the
tax years that remain open in the company’s major tax jurisdictions:



























     
United States — Federal
  1999 and forward
United States — States
  2003 and forward
Canada
  1996 and forward




     The following table sets forth the reconciliation of gross unrecognized tax benefits:































































































         
    December 31,  
    2007  
(In thousands)
       
Beginning balance January 1
  $ 8,418  
Additions based on tax positions related to the current year
    1,941  
Additions for tax positions of prior years
    1,117  
Reductions for tax positions of prior years
    (226 )
Settlements
    (652 )
Lapse in statute of limitations
    (583 )
 
     
Ending balance December 31
  $ 10,015  
 
     




     The total amount of unrecognized tax benefits were $10.0 million and $8.4 million as of
December 31, 2007 and January 1, 2007, respectively. If these tax benefits were recognized in the
consolidated financial statements, the portion of these amounts that would reduce the Company’s
effective tax rate would be $8.1 million and $6.5 million, respectively. We do not anticipate any
material change in the total amount of unrecognized tax benefits to occur within the next twelve
months.


     WESCO records interest related to uncertain tax positions as a part of interest expense in the
consolidated statement of income. Any penalties are recognized as part of income tax expense. As
of December 31, 2007 and January 1, 2007, WESCO had an accrued liability of $4.4 million and $3.3
million, respectively, for interest related to uncertain tax positions. As of January 1, 2007,
WESCO recorded a liability for tax penalties of $0.5 million.


12. EARNINGS PER SHARE



     Basic earnings per share are computed by dividing net income by the weighted average common
shares outstanding during the periods. Diluted earnings per share are computed by dividing net
income 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 stock-based
compensation required by SFAS No. 123 (R) and SFAS No. 128, Earnings Per Share.


24






 





     The following table sets forth the details of basic and diluted earnings per share:


































































































































































































































































                                 
    Year Ended December 31        
    2007   2006   2005        
    (Dollars in thousands, except share data)        
Net income
  $ 240,631     $ 217,320     $ 103,526          
Weighted average
common shares
outstanding used in
computing basic
earnings per share
    45,699,537       48,724,343       47,085,524          
 
                               
Common shares
issuable upon
exercise of
dilutive stock
options
    1,691,102       2,569,798       2,152,912          
Common shares
issuable from
contingently
convertible
debentures (see
note below for
basis of
calculation)
    859,690       1,169,553                
     
 
                               
Weighted average
common shares
outstanding and
common share
equivalents used in
computing diluted
earnings per share
    48,250,329       52,463,694       49,238,436          
     
Earnings per share
                               
Basic
  $ 5.27     $ 4.46     $ 2.20          
Diluted
  $ 4.99     $ 4.14     $ 2.10          




     Stock-settled stock appreciation rights (“SARs”) of 0.3 million, 0.1 million and 1.7 million
at a weighted average exercise price of $65.90, $68.79 and $28.00 per share were outstanding as of
December 31, 2007, 2006 and 2005, respectively, were not included in the computation of diluted
earnings per share because to do so would have been antidilutive for the years ending December 31,
2007, 2006, and 2005.


     Under EITF Issue No. 04-8 The Effect of Contingently Convertible Instruments on Diluted
Earnings Per Share
, and EITF Issue No. 90-19 Convertible Bonds with Issuer Option to Settle for
Cash upon Conversion
, and because of WESCO’s obligation to settle the par value of the 2025
Debentures and 2026 Debentures (collectively, the “Debentures”) in cash, WESCO is not required to
include any shares underlying the Debentures in its diluted weighted average shares outstanding
until the average stock price per share for the period exceeds the conversion price of the
respective Debentures. At such time, only the number of shares that would be issuable (under the
“treasury” method of accounting for share dilution) will be included, which is based upon the
amount by which the average stock exceeds the conversion price. The conversion prices of the 2026
Debentures and 2025 Debentures are $88.15 and $41.86, respectively. Share dilution is limited to a
maximum of 3,403,110 shares for the 2026 Debentures and 3,583,080 shares for the 2025 Debentures.
Since the average stock price for twelve-month period ending December 31, 2007 was approximately
$55.0 per share, 859,690 shares underlying the 2025 Debentures were included in the diluted share
count. For the periods ended December 31, 2007 and 2006, the effect of the 2025 Debentures on
diluted earnings per share was a decrease of $0.09 and $0.10, respectively.


13. EMPLOYEE BENEFIT PLANS



     A majority of WESCO’s employees are covered by defined contribution retirement savings plans
for their service rendered subsequent to WESCO’s formation. WESCO also offers a deferred
compensation plan for select individuals. For U.S. participants, WESCO will make contributions in
an amount equal to 50% of the participant’s total monthly contributions up to a maximum of 6% of
eligible compensation. For Canadian participants, WESCO will make contributions in an amount
ranging from 1% to 7% of the participant’s eligible compensation based on years of continuous
service. In addition, employer contributions may be made at the discretion of the Board of
Directors and can be based on WESCO’s financial performance. Discretionary employer contributions
were made in the amount of $7.3 million, $12.8 million and $10.4 million in 2007, 2006 and 2005,
respectively. For the years ended December 31, 2007, 2006 and 2005, WESCO contributed to all such
plans $17.8 million, $21.5 million and $17.5 million, respectively, which was charged to expense.
Contributions are made in cash to employee retirement savings plan accounts. Employees then have
the option to transfer into any of their investment options, including WESCO stock.


14. STOCK-BASED COMPENSATION



Stock Purchase Plans



     In connection with the 1998 recapitalization, WESCO established a stock purchase plan (“1998
Stock Purchase Plan”) under which certain employees may be granted an opportunity to purchase
WESCO’s common stock. The maximum number of shares available for purchase may not exceed 427,720.
There were no shares issued in 2007, 2006 or 2005.


25






 





Stock Option Plans



     WESCO has sponsored four stock option plans: the 1999 Long-Term Incentive Plan (“LTIP”), the
1998 Stock Option Plan, the
Stock Option Plan for Branch Employees and the 1994 Stock Option Plan. The LTIP was designed to be
the successor plan to all prior plans. Outstanding options under prior plans will continue to be
governed by their existing terms, which are substantially similar to the LTIP. Any remaining shares
reserved for future issuance under the prior plans are available for issuance under the LTIP. The
LTIP and predecessor plans are administered by the Compensation Committee of the Board of
Directors.



     An initial reserve of 6,936,000 shares of common stock has been authorized for issuance under
the LTIP. This reserve automatically increases by (i) the number of shares of common stock covered
by unexercised options granted under prior plans that are canceled or terminated after the
effective date of the LTIP, and (ii) the number of shares of common stock surrendered by employees
to pay the exercise price and/or minimum withholding taxes in connection with the exercise of stock
options granted under our prior plans. As of December 31, 2007, 3.9 million shares of common stock
were reserved under the LTIP for future equity award grants.


     Awards granted vest and become exercisable once criteria based on time or financial
performance are achieved. If the financial performance criteria are not met, all the awards will
vest after nine years and nine months. All awards vest immediately in the event of a change in
control. Each award terminates on the tenth anniversary of its grant date unless terminated sooner
under certain conditions.


     As of December 31, 2007, there was $19.6 million of total unrecognized compensation expense
related to non-vested stock-based compensation arrangements for all awards previously made of which
approximately $10.9 million is expected to be recognized in 2008, $6.5 million in 2009 and $2.2
million in 2010.


     The total intrinsic value of awards exercised during the years ended December 31, 2007 and
2006 was $50.8 million and $109.9 million, respectively. The total amount of cash received from the
exercise of options was $6.0 million and $15.9 million, respectively. The tax benefit associated
with the exercise of stock options and SARs was determined using the tax law ordering approach and
totaled $18.4 million and $35.0 million in 2007 and 2006, respectively. The tax benefit was
recorded as a credit to additional paid-in capital. In accordance with SFAS 123R, WESCO presents
all tax benefits resulting from the exercise of stock options and SARs as financing cash flows in
the Consolidated Statements of Cash Flows.


     The following table sets forth a summary of both stock options and stock appreciation rights
and related information for the years indicated:






























































































































































































































































































































































































































                                                         
    2007   2006   2005
            Weighted   Aggregate           Weighted           Weighted
            Average   Intrinsic           Average           Average
            Exercise   Value           Exercise           Exercise
    Awards   Price   (In Thousands)   Awards   Price   Awards   Price
Beginning of year
    4,578,822     $ 20.78               6,303,936     $ 14.02       7,217,473     $ 10.26  
Granted
    628,237       59.67               467,132       68.84       908,889       31.85  
Exercised
    (935,156 )     10.10               (2,125,913 )     11.25       (1,328,954 )     7.08  
Cancelled
    (58,040 )     27.38               (66,333 )             (493,472 )     10.52  
 
                                                     
End of year
    4,213,863       28.85     $ 71,139       4,578,822       20.78       6,303,936       14.02  
 
                                                       
 
                                                       
Exercisable at end
of year
    2,133,280       20.79     $ 44,412       2,332,360     $ 11.84       1,805,305     $ 10.83  



The following table sets forth exercise prices for equity awards outstanding as of December 31,
2007:







































































































































































































































                         
                    Weighted
                    Average
                    Remaining
    Awards   Awards   Contractual
Range of exercise price   Outstanding   Exercisable   Life
$0.00 - $10.00
    822,504       822,504       4.6  
$10.00 - $20.00
    1,092,660       249,250       1.8  
$20.00 - $30.00
    511,853       511,853       6.7  
$30.00 - $40.00
    699,824       398,328       7.5  
$40.00 - $50.00
    39,854       8,744       9.2  
$50.00 - $60.00
    2,650       884       8.2  
$60.00 - $70.00
    1,044,518     141,717       9.1  
 
                       
 
    4,213,863       2,133,280       5.8  
 
                       



26






 





15. COMMITMENTS AND CONTINGENCIES



     Future minimum rental payments required under operating leases, primarily for real property
that have noncancelable lease terms in excess of one year as of December 31, 2007, are as follows:







































































         
(In thousands)        
 
       
2008
  $ 36,569  
2009
    29,276  
2010
    22,895  
2011
    13,794  
2012
    10,520  
Thereafter
    11,356  




     Rental expense for the years ended December 31, 2007, 2006 and 2005 was $47.3 million, $38.7
million and $33.2 million, respectively.


     From time to time, a number of lawsuits and claims have been or may be asserted against WESCO
relating to the conduct of its business, including routine litigation relating to commercial and
employment matters. The outcomes of litigation cannot be predicted with certainty, and some
lawsuits may be determined adversely to WESCO. However, management does not believe that the
ultimate outcome is likely to have a material adverse effect on WESCO’s financial condition or
liquidity, although the resolution in any fiscal quarter of one or more of these matters may have a
material adverse effect on WESCO’s results of operations for that period.


     WESCO is a co-defendant in a lawsuit filed in a state court in Indiana in which a customer
alleges that WESCO sold defective products manufactured or remanufactured by others and is seeking
monetary damages in the amount of $52 million. WESCO has denied any liability, believes that it
has meritorious defenses and will vigorously defend itself against these allegations.


16. SEGMENTS AND RELATED INFORMATION



     WESCO provides distribution of product and services through its nine operating segments which
have been aggregated as one reportable segment. The sale of electrical products and maintenance
repair and operating supplies represents more than 90% of the consolidated net sales, income from
operations and assets for 2007, 2006 and 2005. WESCO has over 250,000 unique product stock keeping
units and markets more than 1,000,000 products for customers. It is impractical to disclose net
sales by product, major product group or service group. There were no material amounts of sales or
transfers among geographic areas and no material amounts of export sales.


     The following table sets forth information about WESCO by geographic area:


































































































































































































































































                                                 
    Net Sales   Long-Lived Assets
    Year Ended December 31,   December 31,
(In thousands)   2007   2006   2005   2007   2006   2005
United States
  $ 5,229,147     $ 4,606,783     $ 3,829,755     $ 107,711     $ 113,312     $ 102,266  
Foreign operations
                                               
Canada
    633,406       599,244       499,817       13,122       13,177       12,375  
Other foreign
    140,899       114,576       91,531       406       703       1,546  
           
Subtotal foreign
operations
    774,305       713,820       591,348       13,528       13,880       13,921  
           
Total U.S. and
Foreign
  $ 6,003,452     $ 5,320,603     $ 4,421,103     $ 121,239     $ 127,192     $ 116,187  
           




17. OTHER FINANCIAL INFORMATION



     WESCO Distribution issued $150 million in aggregate principal amount of 2017 Notes, and WESCO
International issued $150 million in aggregate principal amount of 2025 Debentures and $300 million
in aggregate principal amount of 2026 Debentures. The 2017 Notes are fully and unconditionally
guaranteed by WESCO International on a subordinated basis to all existing and future senior
indebtedness of WESCO International. The 2025 Debentures and 2026 Debentures are fully and
unconditionally guaranteed by WESCO Distribution on a senior subordinated basis to all existing and
future senior indebtedness of WESCO Distribution.


     Condensed consolidating financial information for WESCO International, WESCO Distribution,
Inc. and the non-guarantor subsidiaries is as follows:


27






 





     CONDENSED CONSOLIDATING BALANCE SHEETS














































































































































































































































































































































































































































































































































































































                                         
    December 31, 2007
            (In thousands)        
                            Consolidating    
    WESCO   WESCO   Non-Guarantor   and Eliminating    
    International, Inc   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Cash and cash equivalents
  $ (7 )   $ 32,140     $ 40,164     $     $ 72,297  
Trade accounts receivable
                844,514             844,514  
Inventories
          433,641       232,386             666,027  
Other current assets
    (16 )     35,956       61,721             97,661  
     
Total current assets
    (23 )     501,737       1,178,785             1,680,499  
Intercompany receivables, net
          (1,352,902 )     1,806,458       (453,556 )      
Property, buildings and equipment,
net
          33,642       70,477             104,119  
Intangible assets, net
          10,368       123,423             133,791  
Goodwill and other intangibles, net
          393,263       531,095             924,358  
Investments in affiliates and
other noncurrent assets
    1,512,055       2,912,423       2,822       (4,410,180 )     17,120  
     
Total assets
  $ 1,512,032     $ 2,498,531     $ 3,713,060     $ (4,863,736 )   $ 2,859,887  
     
Accounts payable
          467,859       158,434             626,293  
Short-term debt
          22,300       480,000             502,300  
Other current liabilities
          96,180       67,152             163,332  
     
Total current liabilities
          586,339       705,586             1,291,925  
Intercompany payables, net
    453,556                   (453,556 )      
Long-term debt
    450,000       318,608       42,703             811,311  
Other noncurrent liabilities
          90,468       57,707             148,175  
Stockholders’ equity
    608,476       1,503,116       2,907,064       (4,410,180 )     608,476  
     
Total liabilities and
stockholders’ equity
  $ 1,512,032     $ 2,498,531     $ 3,713,060     $ (4,863,736 )   $ 2,859,887  
     
















































































































































































































































































































































































































































































































































































































                                         
    December 31, 2006
            (In thousands)        
                            Consolidating    
    WESCO   WESCO   Non-Guarantor   and Eliminating    
    International, Inc   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Cash and cash equivalents
  $ (2 )   $ 27,622     $ 45,775     $     $ 73,395  
Trade accounts receivable
                829,962             829,962  
Inventories
          402,082       211,487             613,569  
Other current assets
          42,242       58,844             101,086  
     
Total current assets
    (2 )     471,946       1,146,068             1,618,012  
Intercompany receivables, net
          (1,487,030 )     1,559,778       (72,748 )      
Property, buildings and equipment,
net
          34,472       72,544             107,016  
Intangible assets, net
          11,314       136,236             147,550  
Goodwill and other intangibles, net
          374,026       557,203             931,229  
Investments in affiliates and
other noncurrent assets
    1,285,977       2,693,146       2,604       (3,961,551 )     20,176  
     
Total assets
  $ 1,511,254     $ 2,497,750     $ 3,684,345     $ (4,816,772 )   $ 2,876,577  
     
Accounts payable
          434,092       156,212             590,304  
Short-term debt
                390,500             390,500  
Other current liabilities
          64,631       108,237             172,868  
     
Total current liabilities
          498,723       654,949             1,153,672  
Intercompany payables, net
    72,748                   (72,748 )      
Long-term debt
    450,000       250,002       43,885             743,887  
Other noncurrent liabilities
          74,472       88,725             163,197  
Stockholders’ equity
    763,227       1,274,677       2,686,874       (3,961,551 )     763,227  
     
Total liabilities and
stockholders’ equity
  $ 1,285,975     $ 2,097,874     $ 3,474,433     $ (4,034,299 )   $ 2,823,983  
     





28








 






CONDENSED CONSOLIDATING STATEMENTS OF INCOME






















































































































































































































































































































































                                         
    Year Ended December 31, 2007
                    (In thousands)        
    WESCO                   Consolidating    
    International,   WESCO   Non-Guarantor   and Eliminating    
    Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net sales
  $     $ 4,161,129     $ 1,842,323     $     $ 6,003,452  
Cost of goods sold, excluding
depreciation and amortization
          3,371,101       1,410,235             4,781,336  
Selling, general and
administrative expenses
    11       646,309       144,813             791,133  
Depreciation and amortization
          17,223       19,536             36,759  
Results of affiliates’ operations
    221,160       211,698             (432,858 )      
Interest expense (income), net
    (36,311 )     44,384       55,123             63,196  
Other (income) expense
                             
Provision for income taxes
    16,829       72,650       918             90,397  
     
 
                                       
Net income (loss)
  $ 240,631     $ 221,160     $ 211,698     $ (432,858 )   $ 240,631  
     























































































































































































































































































































































                                         
    Year Ended December 31, 2006
                    (In thousands)        
    WESCO                   Consolidating    
    International,   WESCO   Non-Guarantor   and Eliminating    
    Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net sales
  $     $ 4,096,952     $ 1,223,651     $     $ 5,320,603  
Cost of goods sold, excluding
depreciation and amortization
          3,306,356       927,723             4,234,079  
Selling, general and
administrative expenses
    26       536,535       156,320             692,881  
Depreciation and amortization
          14,597       14,063             28,660  
Results of affiliates’ operations
    194,374       102,051             (296,425 )      
Interest expense (income), net
    (38,552 )     34,775       28,399             24,622  
Other (income) expense
          53,390       (30,595 )           22,795  
Provision for income taxes
    15,580       58,976       25,690             100,246  
     
 
                                       
Net income (loss)
  $ 217,320     $ 194,374     $ 102,051     $ (296,425 )   $ 217,320  
     














































































































































































































































































































































































                                         
    Year Ended December 31, 2005
                    (In thousands)        
    WESCO                   Consolidating    
    International,   WESCO   Non-Guarantor   and Eliminating    
    Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net sales
  $     $ 3,664,618     $ 756,485     $     $ 4,421,103  
Cost of goods sold, excluding
depreciation and amortization
          2,983,739       596,659             3,580,398  
Selling, general and
administrative expenses
    7       543,009       69,764             612,780  
Depreciation and amortization
          15,994       2,645             18,639  
Results of affiliates’ operations
    87,431       89,849             (177,280 )      
Interest expense (income), net
    (25,443 )     43,939       11,687             30,183  
Loss on debt extinguishment, net
          14,914                   14,914  
Other (income) expense
          41,528       (28,223 )           13,305  
Provision for income taxes
    9,341       23,913       14,104             47,358  
     
 
                                       
Net income (loss)
  $ 103,526     $ 87,431     $ 89,849     $ (177,280 )   $ 103,526  
     



29






 






CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS








































































































































































































































































































































































































































































































                                         
   Year Ended December 31, 2007
    (In thousands)
                            Consolidating    
                            and    
    WESCO   WESCO   Non-Guarantor   Eliminating    
    International, Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net cash provided (used) by operating
activities
  $ 36,094     $ 226,157     $ 27     $   —     $ 262,278  
Investing activities:
                                       
Capital expenditures
          (14,547 )     (1,571 )           (16,118 )
Acquisitions
          (32,398 )                 (32,398 )
Other
          487                   487  
     
Net cash used by investing activities
          (46,458 )     (1,571 )           (48,029 )
Financing activities:
                                       
Net borrowings (repayments)
    380,808       (204,337 )     (1,288 )           175,183  
Equity transactions
    (416,442 )                         (416,442 )
Other
    (465 )     29,156       (38 )           28,653  
     
Net cash provided (used) by
financing activities
    (36,099 )     (175,181 )     (1,326 )           (212,606 )
     
Effect of exchange rate changes on cash
and cash equivalents
                (2,741 )           (2,741 )
     
Net change in cash and cash equivalents
    (5 )     4,518       (5,611 )           (1,098 )
Cash and cash equivalents at beginning of
period
    (2 )     27,622       45,775             73,395  
     
Cash and cash equivalents at end of period
  $ (7 )   $ 32,140     $ 40,164     $     $ 72,297  
     











































































































































































































































































































































































































































































































                                         
   Year
Ended December 31, 2006
    (In thousands)
                            Consolidating    
                            and    
    WESCO   WESCO   Non-Guarantor   Eliminating    
    International, Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net cash provided (used) by operating
activities
  $ (61,824 )   $ 221,154     $ 47,753     $   —     $ 207,083  
Investing activities:
                                       
Capital expenditures
          (16,730 )     (1,629 )           (18,359 )
Acquisitions
          (540,447 )                 (540,447 )
Other
          (1,745 )     2,592             847  
     
Net cash used by investing activities
          (558,922 )     963             (557,959 )
Financing activities:
                                       
Net borrowings (repayments)
    328,209       48,551       (6,977 )           369,783  
Equity transactions
    (258,172 )     300,000                     41,828  
Other
    (8,215 )     (1,249 )                   (9,464 )
     
Net cash provided (used) by
financing activities
    61,822       347,302       (6,977 )           402,147  
     
Effect of exchange rate changes on cash
and cash equivalents
                (1 )           (1 )
     
Net change in cash and cash equivalents
    (2 )     9,534       41,738             51,270  
Cash and cash equivalents at beginning of
period
          18,088       4,037             22,125  
     
Cash and cash equivalents at end of period
  $ (2 )   $ 27,622     $ 45,775     $     $ 73,395  
     




30






 







CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS



















































































































































































































































































































































































































































































                                         
    Year Ended December 31, 2005
    (In thousands)
                            Consolidating    
    WESCO   WESCO   Non-Guarantor   and Eliminating    
    International, Inc.   Distribution, Inc.   Subsidiaries   Entries   Consolidated
     
Net cash provided (used) by operating
activities
  $ 38,901     $ 272,483     $ (16,287 )   $     $ 295,097  
Investing activities:
                                       
Capital expenditures
          (13,026 )     (1,128 )           (14,154 )
Acquisitions
          (278,829 )                 (278,829 )
Other
          2,014                   2,014  
     
Net cash used by investing activities
          (289,841 )     (1,128 )           (290,969 )
Financing activities:
                                       
Net borrowings (repayments)
    (42,975 )     24,299       (1,180 )           (19,856 )
Equity transactions
    8,173                         8,173  
Other
    (4,100 )     (4,827 )     3,579             (5,348 )
     
Net cash provided (used) by
financing activities
    (38,902 )     19,472       2,399             (17,031 )
     
Effect of exchange rate changes on cash
and cash equivalents
                505             505  
     
Net change in cash and cash equivalents
    (1 )     2,114       (14,511 )           (12,398 )
Cash and cash equivalents at beginning of
period
    1       15,974       18,548             34,523  
     
Cash and cash equivalents at end of period
  $     $ 18,088     $ 4,037     $     $ 22,125  
     




31






 






18. SELECTED QUARTERLY FINANCIAL DATA (unaudited)



     The following table sets forth selected quarterly financial data for the years ended December
31, 2007 and 2006:




























































































































































































































































































































































































                                 
    First   Second   Third   Fourth
    Quarter   Quarter   Quarter   Quarter
     
2007
                               
Net sales
  $ 1,450,556     $ 1,518,108     $ 1,545,607     $ 1,489,181  
Cost of goods sold
    1,151,533       1,210,022       1,232,520       1,187,261  
Income from
operations
    82,535       103,605       109,296       98,788  
Income before
income taxes
    70,315       86,820       91,727       82,166  
 
Net income
    48,158 (A),(D)     59,667 (A),(D)     71,774 (A),(B), (C),(D)     61,032 (A),(D)
Basic earnings per
share
(I)
    0.98       1.30       1.62       1.39  
Diluted earnings
per share
(J)
    0.93       1.22       1.54       1.34  
 
                               
2006
                               
Net sales
  $ 1,265,508     $ 1,335,976     $ 1,343,066     $ 1,376,053  
Cost of goods sold
    1,012,403       1,065,422       1,067,406       1,088,848  
Income from
operations
    76,925       94,728       100,177       93,153  
Income before
income taxes
    65,473       82,851       89,269       79,973  
Net income
    44,450 (E),(G)     55,178 (E),(G)     59,385 (E),(G)     58,307 (E),(F),(G)
Basic earnings per
share
(H)
    0.93       1.13       1.21       1.18  
Diluted earnings
per share
(I)
    0.86       1.05       1.13       1.10  






 
















































































(A)   Income tax benefits from the recapitalization of the
Canadian operations for the first, second, third and fourth
quarters of 2007 were $3.6 million, $5.3 million, $5.5
million and $6.8 million, respectively. The fourth quarter
reflects benefits realized as a result of a change in
estimate related to Canadian interest expense.
 
(B)   An income tax benefit of $1.8 million from a foreign
currency exchange gain related to the recapitalization of
Canadian operations was recorded in the third quarter of
2007.
 
(C)   Pursuant to SFAS 109, Accounting for Income Taxes, an $8.5
million valuation allowance reversal was recorded against
deferred tax assets for net operating loss carryforwards.
The reversal was recorded as a discrete tax benefit in the
third quarter of 2007.
 
(D)   Stock option expense for the first, second, third and
fourth quarters of 2007 was $3.3 million, $3.3 million,
$4.7 million and $3.2 million, respectively.
 
(E)   Income tax benefits from the recapitalization of the
Canadian operations for the first, second, third and fourth
quarters of 2006 were $2.1 million, $2.2 million, $2.1
million and $3.6 million, respectively. The fourth quarter
reflects increased utilization of foreign tax credits.
 
(F)   On November 3, 2006, Communications Supply Holdings, Inc.
was acquired and the sales resulting from this acquisition
for the fourth quarter of 2006 were $95.6 million.
 
(G)   Stock option expense for the first, second, third and
fourth quarters of 2006 was $2.6 million, $2.5 million,
$3.4 million and $3.2 million, respectively.
 
(H)   Earnings per share (EPS) in each quarter is computed using
the weighted average number of shares outstanding during
that quarter while EPS for the full year is computed by
taking the average of the weighted average number of shares
outstanding each quarter. Thus, the sum of the four
quarters’ EPS may not equal the full-year EPS.
 
(I)   Diluted earnings per share (DEPS) in each quarter is
computed using the weighted average number of shares
outstanding during that quarter while DEPS for the full
year is computed by taking the average of the weighted
average number of shares outstanding each quarter. Thus,
the sum of the four quarters’ DEPS may not equal the
full-year DEPS.





32








 





19. SUBSEQUENT EVENTS



          On December 14, 2007, WESCO announced that it had entered into a strategic arrangement with
Deutsch Engineered Connecting Devices, Inc. (“Deutsch”) with respect to its LADD operations. On
January 2, 2008, WESCO and Deutsch completed the transaction which resulted in a joint venture in
which Deutsch owns a 60% interest and WESCO owns a 40% interest. Deutsch paid to WESCO aggregate
consideration of approximately $75 million. Deutsch is entitled, but not obliged, to acquire the
remaining 40% after January 1, 2010. As a result of the transaction, WESCO recognized a pre-tax
gain of approximately $3.0 million.



          At the end of December, WESCO repurchased approximately 0.3 million shares under its
previously announced share repurchase program. WESCO settled the transaction in January for
approximately $13.3 million.



33






 








      PART IV






Item 15. Exhibits and Financial Statement Schedule.


The financial statements, financial statement schedule and exhibits listed below are filed as part
of this annual report:












































(a)   (1) Financial Statements
 
    The list of financial statements required by this item is set forth in
Item 8, “Financial Statements and Supplementary Data,” and is
incorporated herein by reference.
 
(2)   Financial Statement Schedule
 
    Schedule II — Valuation and Qualifying Accounts
 
(b)   Exhibits





















































































































































         
Exhibit No.   Description of Exhibit   Prior Filing or Sequential Page Number
2.1
  Recapitalization Agreement, dated as of
March 27, 1998, among Thor Acquisitions
L.L.C., WESCO International, Inc. (formerly
known as CDW Holding Corporation) and
certain security holders of WESCO
International, Inc.
  Incorporated by reference to Exhibit
2.1 to WESCO’s Registration Statement
on Form S-4 (No. 333-43225)
 
       
3.1
  Restated Certificate of Incorporation of
WESCO International, Inc.
  Incorporated by reference to Exhibit
3.1 to WESCO’s Registration Statement
on Form S-4 (No. 333-70404)
 
       
3.2
  By-laws of WESCO International, Inc.
  Incorporated by reference to Exhibit
3.2 to WESCO’s Registration Statement
on Form S-4 (No. 333-70404)
 
       
4.1
  Indenture, dated as of September 22, 2005,
by and among WESCO International, Inc.,
WESCO Distribution, Inc. and J.P. Morgan
Trust Company, National Association, as
Trustee.
  Incorporated by reference to Exhibit
4.1 to WESCO’s Current Report on Form
8-K, dated September 21, 2005
 
       
4.2
  Form of 2.625% Convertible Senior Debenture
due 2025 (included in Exhibit 4.1).
  Incorporated by reference to Exhibit
4.3 to WESCO’s Current Report on Form
8-K, dated September 21, 2005
 
       
4.3
  Indenture, dated as of September 22, 2005,
by and among WESCO International, Inc.,
WESCO Distribution, Inc. and J.P. Morgan
Trust Company, National Association, as
Trustee.
  Incorporated by reference to Exhibit
4.4 to WESCO’s Current Report on Form
8-K, dated September 21, 2005
 
       
4.4
  Form of 7.50% Senior Subordinated Note due
2017, (included in Exhibit 4.3).
  Incorporated by reference to Exhibit
4.6 to WESCO’s Current Report on Form
8-K, dated September 21, 2005
 
       
10.1
  CDW Holding Corporation Stock Purchase Plan.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.2
  Form of Stock Subscription Agreement.
  Incorporated by reference to Exhibit
10.2 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       



34






 






























































































































































































































         
Exhibit No.   Description of Exhibit   Prior Filing or Sequential Page Number
10.3
  CDW Holding Corporation Stock Option Plan.
  Incorporated by reference to Exhibit
10.3 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.4
  Amendment to CDW Holding Corporation Stock
Option Plan
  Incorporated by reference to Exhibit
10.1 to WESCO’s Current Report on
Form 8-K, dated March 2, 2006
 
       
10.5
  Form of Stock Option Agreement.
  Incorporated by reference to Exhibit
10.4 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.6
  Form of Amendment to Stock Option Agreement.
  Incorporated by reference to Exhibit
10.2 to WESCO’s Current Report on
Form 8-K, dated March 2, 2006
 
       
10.7
  CDW Holding Corporation Stock Option Plan
for Branch Employees.
  Incorporated by reference to Exhibit
10.5 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.8
  Amendment to CDW Holding Corporation Stock
Option Plan for Branch Employees.
  Incorporated by reference to Exhibit
10.3 to WESCO’s Current Report on
Form 8-K, dated March 2, 2006
 
       
10.9
  Form of Branch Stock Option Agreement.
  Incorporated by reference to Exhibit
10.6 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.10
  Form of Amendment to Branch Stock Option
Agreement.
  Incorporated by reference to Exhibit
10.4 to WESCO’s Current Report on
Form 8-K, dated March 2, 2006
 
       
10.11
  WESCO International, Inc. 1998 Stock Option
Plan.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 1998
 
       
10.12
  Amendment to WESCO International, Inc. 1998
Stock Option Plan.
  Incorporated by reference to Exhibit
10.5 to WESCO’s Current Report on
Form 8-K dated March 2, 2006
 
       
10.13
  Form of Management Stock Option Agreement.
  Incorporated by reference to Exhibit
10.2 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 1998
 
       
10.14
  Form of Amendment to Management Stock
Option Agreement.
  Incorporated by reference to Exhibit
10.6 to WESCO’s Current Report on
Form 8-K dated March 2, 2006
 
       
10.15
  1999 Deferred Compensation Plan for
Non-Employee Directors.
  Incorporated by reference to Exhibit
10.22 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 1998
 
       
10.16
  1999 Long-Term Incentive Plan.
  Incorporated by reference to Exhibit
10.22 to WESCO’s Registration
Statement on Form S-1 (No. 333-73299)
 
       



35






 































































































































































         
Exhibit No.   Description of Exhibit   Prior Filing or Sequential Page Number
10.17
  Office Lease
Agreement, dated as
of May 24, 1995, by
and between Commerce
Court Property
Holding Trust, as
Landlord, and WESCO
Distribution, Inc.,
as Tenant, as amended
by First Amendment to
Lease, dated as of
June 1995 and by
Second Amendment to
Lease, dated as of
December 29, 1995.
  Incorporated by reference to Exhibit
10.10 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.18
  Lease, dated as of
April 1, 1992, by and
between The E.T.
Hermann and Jane D.
Hermann 1978 Living
Trust and
Westinghouse Electric
Corporation, as
renewed by the
renewal letter, dated
as of December 13,
1996, from WESCO
Distribution, Inc.,
as successor in
interest to
Westinghouse Electric
Corporation, to Utah
State Retirement
Fund, as successor in
interest to The E.T.
Hermann and Jane D.
Hermann 1978 Living
Trust.
  Incorporated by reference to Exhibit
10.11 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.19
  Third Amendment to
Lease, dated as of
December 22, 2004, by
and between US
Institutional Real
Estate Equities,
L.P., as successor in
interest to Utah
State Retirement Fund
and The E.T. Hermann
and Jane D. Hermann
1978 Living Trust,
and WESCO
Distribution, Inc.,
as successor in
interest to
Westinghouse Electric
Corporation.
  Incorporated by reference to Exhibit
10.19 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2005
 
       
10.20
  Agreement of Lease,
dated as of September
3, 1998, by and
between Atlantic
Construction, Inc.,
as landlord, and
WESCO
Distribution-Canada,
Inc., as tenant, as
renewed by the
Renewal Agreement,
dated April 14, 2004,
by and between
Atlantic
Construction, Inc.,
as landlord, and
WESCO
Distribution-Canada,
Inc., as tenant.
  Incorporated by reference to Exhibit
10.20 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2005
 
       
10.21
  Lease dated December
13, 2002 between
WESCO Distribution,
Inc. and WESCO Real
Estate IV, LLC.
  Incorporated by reference to Exhibit
10.27 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002
 
       
10.22
  Lease Guaranty dated
December 13, 2002 by
WESCO International,
Inc. in favor of
WESCO Real Estate IV,
LLC.
  Incorporated by reference to Exhibit
10.28 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002
 
       
10.23
  Amended and Restated
Registration and
Participation
Agreement, dated as
of June 5, 1998,
among WESCO
International, Inc.
and certain security
holders of WESCO
International, Inc.
named therein.
  Incorporated by reference to Exhibit
10.19 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.24
  Employment Agreement,
dated as of June 5,
1998, between WESCO
Distribution, Inc.
and Roy W. Haley.
  Incorporated by reference to Exhibit
10.20 to WESCO’s Registration
Statement on Form S-4 (No. 333-43225)
 
       
10.25
  Employment Agreement,
dated as of July 29,
2004, between WESCO
International, Inc.
and John Engel.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2004
 
       
10.26
  Employment Agreement,
dated as of December
15, 2005, between
WESCO International,
Inc. and Stephen A.
Van Oss.
  Incorporated by reference to Exhibit
10.26 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2005




36






 













































































































































































         
Exhibit No.   Description of Exhibit   Prior Filing or Sequential Page Number
10.27
  Amended and Restated
Credit Agreement,
dated as of September
28, 2005, by and
among WESCO
Distribution, Inc.,
the other credit
parties signatory
thereto from time to
time, General
Electric Capital
Corporation, as Agent
and U.S. Lender, GECC
Capital Markets
Group, as Lead
Arranger, GE Canada
Finance Holding
Company, as Canadian
Agent and a Canadian
Lender, Bank of
America, N.A., as
Syndication Agent,
and The CIT
Group/Business
Credit, Inc. and
Citizens Bank of
Pennsylvania, as
Co-Documentation
Agents.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Current Report on
Form 8-K, September 28, 2005
 
       
10.28
  Intercreditor
Agreement, dated as
of March 19, 2002,
among PNC Bank,
National Association,
General Electric
Capital Corporation,
WESCO Receivables
Corp., WESCO
Distribution, Inc.,
Fifth Third Bank,
N.A., Mellon Bank,
N.A., The Bank of
Nova Scotia, Herning
Enterprises, Inc. and
WESCO Equity
Corporation.
  Incorporated by reference to Exhibit
10.21 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2001
 
       
10.29
  Second Amended and
Restated Receivables
Purchase Agreement
dated as of September
2, 2003 among WESCO
Receivables Corp.,
WESCO Distribution,
Inc., and the Lenders
identified therein.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2003
 
       
10.30
  Second Amendment to
Second Amended and
Restated Receivables
Purchase Agreement
and Waiver, dated
August 31, 2004.
  Incorporated by reference to Exhibit
10.4 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2004
 
       
10.31
  Third Amendment to
Second Amended and
Restated Receivables
Purchase Agreement,
dated September 23,
2004.
  Incorporated by reference to Exhibit
10.5 to WESCO’s Quarterly Report on
Form 10-Q for the quarter ended
September 30, 2004
 
       
10.32
  Sixth Amendment to
Second Amended and
Restated Receivables
Purchase Agreement,
dated October 4,
2005.
  Incorporated by reference to Exhibit
10.2 to WESCO’s Current Report on
Form 8-K, September 28, 2005
 
       
10.33
  Seventh Amendment to
Second Amended and
Restated Receivables
Purchase Agreement,
dated December 29,
2006.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Current Report on
Form 8-K, December 29, 2006
 
       
10.34
  Eighth Amendment to
Second Amended and
Restated Receivables
Purchase Agreement,
dated February 22,
2007.
  Incorporated by reference to Exhibit
10.1 to WESCO’s Current Report on
Form 8-K, February 22, 2007
 
       
10.35
  Loan Agreement
between Bear Stearns
Commercial Mortgage,
Inc. and WESCO Real
Estate IV, LLC, dated
December 13, 2002.
  Incorporated by reference to Exhibit
10.26 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002
 
       
10.36
  Guaranty of
Non-Recourse
Exceptions Agreement
dated December 13,
2002 by WESCO
International, Inc.
in favor of Bear
Stearns Commercial
Mortgage, Inc.
  Incorporated by reference to Exhibit
10.29 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002
 
       
10.37
  Environmental
Indemnity Agreement
dated December 13,
2002 made by WESCO
Real Estate IV, Inc.
and WESCO
International, Inc.
in favor of Bear
Stearns Commercial
Mortgage, Inc.
  Incorporated by reference to Exhibit
10.30 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002




37






 



























































































































































































         
Exhibit No.   Description of Exhibit   Prior Filing or Sequential Page Number
10.38
  Asset Purchase Agreement, dated as of
September 11, 1998, among Bruckner
Supply Company, Inc. and WESCO
Distribution, Inc.
  Incorporated by reference to Exhibit
2.01 to WESCO’s Current Report on
Form 8-K, dated September 11, 1998
 
       
10.39
  Amendment dated March 29, 2002 to
Asset Purchase Agreement, dated as of
September 11, 1998, among Bruckner
Supply Company, Inc. and WESCO
Distribution, Inc.
  Incorporated by reference to Exhibit
10.25 to WESCO’s Annual Report on
Form 10-K for the year ended December
31, 2002
 
       
10.40
  Agreement and Plan of Merger, dated
August 16, 2005, by and among
Carlton-Bates Company, the
shareholders of Carlton-Bates Company
signatory thereto, the Company
Representative (as defined therein),
WESCO Distribution, Inc. and C-B
WESCO, Inc.
  Incorporated by reference to Exhibit
10.3 to WESCO’s Current Report on
Form 8-K, dated September 28, 2005
 
       
10.41
  First Amendment to the Third Amended
and Restated Credit Agreement dated
November 15, 2007.
  Incorporated by reference to Exhibit
10.41 to WESCO’s Annual Report on
Form 10-K for the year ended December 31, 2007
 
       
10.42
  Second Amendment to the Third Amended
and Restated Credit Agreement dated
December 14, 2007.
  Incorporated by reference to Exhibit
10.42 to WESCO’s Annual Report on
Form 10-K for the year ended December 31, 2007
 
       
12.1
  Statement re computation of ratios.
  Incorporated by reference to Exhibit
12.1 to WESCO’s Annual Report on
Form 10-K for the year ended December 31, 2007
 
       
21.1
  Significant Subsidiaries of WESCO.
  Incorporated by reference to Exhibit
21.1 to WESCO’s Annual Report on
Form 10-K for the year ended December 31, 2007
 
       
23.1
  Consent of PricewaterhouseCoopers LLP.
  Filed herewith
 
       
31.1
  Certification of Chief Executive
Officer pursuant to Rule 13a-14(a)
promulgated under the Exchange Act.
  Filed herewith
 
       
31.2
  Certification of Chief Financial
Officer pursuant to Rule 13a-14(a)
promulgated under the Exchange Act.
  Filed herewith
 
       
32.1
  Certification of Chief Executive
Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
  Filed herewith
 
       
32.2
  Certification of Chief Financial
Officer pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
  Filed herewith



The registrant hereby agrees to furnish supplementally to the Commission, upon request, a copy of
any omitted schedule to any of the agreements contained herein.


Copies of exhibits may be retrieved electronically at the Securities and Exchange Commission’s home
page at www.sec.gov. Exhibits will also be furnished without charge by writing to Stephen A. Van
Oss, Senior Vice President and Chief Financial and Administrative Officer, 225 West Station Square
Drive, Suite 700, Pittsburgh, Pennsylvania 15219. Requests may also be directed to (412) 454-2200.




38






 











SIGNATURES



     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.












































         
  WESCO INTERNATIONAL, INC.

 
 
  By:  /s/
Roy W. Haley
 
 
    Name:   Roy W. Haley   
    Title:   Chairman of the Board and

Chief Executive Officer 
 
    Date:   March 5, 2008
 
 




39






 







Schedule II—Valuation and Qualifying Accounts













































































































































































































                                         
                    Col. C            
   Col.
A
          (In thousands)            
    Balance at  Col.
B
  Charged to          Col.
E
    Beginning   Charged to   Other  Col.
D
  Balance at
(in thousands)   of Period   Expense   Accounts(1)   Deductions(2)   End of Period
Allowance for doubtful accounts:
                                       
Year ended December 31, 2007
  $ 12,641     $ 2,182     $ 5,526     $ (2,931 )   $ 17,418  
Year ended December 31, 2006
    12,609       3,810       8,971       (12,749 )     12,641  
Year ended December 31, 2005
    12,481       8,601     $ 1,543       (10,016 )     12,609  






 
























(1)   Represents allowance for doubtful accounts in connection with certain acquisitions and the
on-balance sheet treatment of the AR Securitization Facility.
 
(2)   Includes a reduction in the allowance for doubtful accounts due to write-off of accounts receivable.
















































































































































































































                                         
                    Col. C            
   Col.
A
          (In thousands)            
    Balance at  Col.
B
  Charged to          Col.
E
    Beginning   Charged to   Other  Col.
D
  Balance at
(in thousands)   of Period   Expense   Accounts(1)   Deductions(2)   End of Period
Inventory reserve:
                                       
Year ended December 31, 2007
  $ 22,978     $ 8,023     $ 7     $ (10,729 )   $ 20,279  
Year ended December 31, 2006
    12,466       5,967       12,296       (7,751 )     22,978  
Year ended December 31, 2005
    10,070       4,081       1,840       (3,525 )     12,466  






 
























(1)   Represents inventory reserves in connection with certain acquisitions.
 
(2)   Includes a reduction in the inventory reserve due to disposal of inventory.

















































































































































































































                                         
                    Col. C            
   Col.
A
          (In thousands)            
    Balance at  Col.
B
  Charged to          Col.
E
    Beginning   Charged to   Other  Col.
D
  Balance at
(in thousands)   of Period   Expense   Accounts(1)   Deductions(2)   End of Period
Income tax valuation allowance:
                                       
Year ended December 31, 2007
  $ 13,055     $ (13,055 )   $       $       $  
Year ended December 31, 2006
    15,693       (2,638 )                 13,055  
Year ended December 31, 2005
    13,439       2,254            
      15,693  





40











EX-23.1
2
l30442aexv23w1.htm
EX-23.1



EX-23.1



 





Exhibit 23.1



CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


We hereby consent to the incorporation by reference in the Registration Statements on Form S-8
(No’s. 333-81857, 333-81847, 333-81845, 333-81841 and 333-91187) and Form S-3 (No’s. 333-119909,
333-123307 and 333-141697) of WESCO International, Inc. of our report dated February 29, 2008
relating to the financial statements, financial statement schedule and the effectiveness of
internal control over financial reporting, which appears in this Form
10-K/A.



/s/ PricewaterhouseCoopers LLP



Pittsburgh, Pennsylvania

February 29, 2008



 








EX-31.1
3
l30442aexv31w1.htm
EX-31.1



EX-31.1



 








Exhibit 31.1



CERTIFICATION



     I, Roy W. Haley, certify that:


     1. I have reviewed this annual report on Form 10-K of WESCO International, Inc.;


     2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;


     3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;


     4. The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:


     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;


     (b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;


     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and


     (d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and


     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):


     (a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and


     (b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.































         
     
Date: March 5, 2008  By:   /s/ Roy W. Haley
 
 
    Roy W. Haley   
    Chairman and Chief Executive Officer   


 








EX-31.2
4
l30442aexv31w2.htm
EX-31.2



EX-31.2



 















         


Exhibit 31.2



CERTIFICATION




     I, Stephen A. Van Oss, certify that:


     1. I have reviewed this annual report on Form 10-K of WESCO International, Inc.;


     2. Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;


     3. Based on my knowledge, the financial statements, and other financial information included
in this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this report;


     4. The registrant’s other certifying officer(s) and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules
13a-15(f) and 15d-15(f)) for the registrant and have:


     (a) Designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating to
the registrant, including its consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this report is being prepared;


     (b) Designed such internal control over financial reporting, or caused such internal control
over financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;


     (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and


     (d) Disclosed in this report any change in the registrant’s internal control over financial
reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth
fiscal quarter in the case of an annual report) that has materially affected, or is reasonably
likely to materially affect, the registrant’s internal control over financial reporting; and


     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit
committee of the registrant’s board of directors (or persons performing the equivalent functions):


     (a) All significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report financial information; and


     (b) Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.































         
     
Date: March 5, 2008  By:   /s/ Stephen A. Van Oss
 
 
    Stephen A. Van Oss   
    Senior Vice President and Chief Financial
and Administrative Officer 
 


 








EX-32.1
5
l30442aexv32w1.htm
EX-32.1



EX-32.1



 
















         


Exhibit 32.1



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of WESCO International, Inc. (the “Company”) on Form 10-K for
the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to his knowledge:





















1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.   The information contained in the Report fairly presents, in all
material respects, the financial condition and results of
operation of the Company.
































         
     
Date: March 5, 2008  By:   /s/ Roy W. Haley
 
 
    Roy W. Haley   
    Chairman and Chief Executive Officer   


 








EX-32.2
6
l30442aexv32w2.htm
EX-32.2



EX-32.2



 
















         


Exhibit 32.2



CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002



In connection with the Annual Report of WESCO International, Inc. (the “Company”) on Form 10-K for
the period ended December 31, 2007 as filed with the Securities and Exchange Commission on the date
hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby
certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002, that to his knowledge:





















1.   The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
 
2.   The information contained in the Report fairly presents, in
all material respects, the financial condition and results of
operation of the Company.


































         
     
Date: March 5, 2008  By:   /s/ Stephen A. Van Oss
 
 
    Stephen A. Van Oss   
    Senior Vice President and
Chief Financial and
Administrative Officer 
 
 



 








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