WESCO International Inc. (WCC) 2018年年度報告「NYSE」.pdf

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1、WESCO INTERNATIONAL2018 ANNUAL REPORT18$26117$12814$23015$261$2821617$3.9314$5.1815$4.18$3.801618$4.8217$7,67914$7,89015$7,518$7,3361618$8,17717$31914$46515$373$3311618$353NET SALES(in millions)FREE CASH FLOW 2(in millions)DILUTED EPS 2(in millions)INCOME FROM OPERATIONS(EBIT)1(in millions)YEAR IN R

2、EVIEWCorporate Profile:WESCO International,Inc.(NYSE:WCC),a publicly traded Fortune 500 holding company headquartered in Pittsburgh,Pennsylvania,is a leading provider of electrical,industrial,and communications maintenance,repair and operating(MRO)and original equipment manufacturer(OEM)products,con

3、struction materials,and advanced supply chain management and logistic services.2018 annual sales were approximately$8.2 billion.The company employs approximately 9,100 people,maintains relationships with approximately 30,000 suppliers,and serves approximately 70,000 active customers worldwide.Custom

4、ers include commercial and industrial businesses,contractors,government agencies,institutions,telecommunications providers,and utilities.WESCO operates 10 fully automated distribution centers and approximately 500 branches in North America and international markets,providing a local presence for cus

5、tomers and a global network to serve multi-location businesses and multi-national corporations.Year Ended December 31,20142015201620172018Net sales$7,890$7,518$7,336$7,679$8,177 Income from operations(EBIT)1 465 373 331 319 353 Adjusted net income attributable to WESCO International,Inc.2 276 211 18

6、4 190 227 Adjusted diluted EPS 2 5.18 4.18 3.80 3.93 4.82 Diluted share count 53.3 50.4 48.3 48.4 47.2 Free cash flow 2 230261282128261Free cash flow as a%of net income 284%125%154%67%116%Total debt,including debt discount and debt issuance costs 1,586 1,665 1,403 1,363 1,233 Financial leverage rati

7、o 3 3.0 3.8 3.5 3.5 3.0 Adjusted stockholders equity 2 1,882 1,728 2,046 2,224 2,238 Return on Invested Capital(ROIC)10.0%7.8%7.5%6.8%7.9%FINANCIAL HIGHLIGHTS(Dollars in millions except for diluted EPS,financial leverage ratio,and percentages)1 Effective January 1,2018,WESCO adopted Accounting Stand

8、ards Update(ASU)2017-07,CompensationRetirement Benefits(Topic 715):Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.The adoption of this ASU resulted in the reclassification of$1.8 million,$1.5 million,$1.2 million and$0.9 million from selling,gene

9、ral and administrative expenses to net interest and other in the Consolidated Statements of Income and Comprehensive Income(Loss)for the years ended December 31,2017,2016,2015 and 2014,respectively.2 Non-GAAP financial measures are defined and reconciled on pages 90 and 91.3 Financial leverage ratio

10、 is calculated by dividing total debt,excluding debt discount and debt issuance costs,by earnings before interest,taxes,depreciation and amortization(EBITDA).8%40%16%14%11%11%PRODUCT CATEGORIESGeneral SuppliesCommunications and SecurityWire,Cable and ConduitElectrical Distribution and ControlsLighti

11、ng and SustainabilityAutomation,Controls and MotorsGEOGRAPHIESUnited StatesCanadaRest of World75%20%5%5%WESCO creates solutions for customers by utilizing a broad product and services portfolio,global reach,and technical expertise.These solutions reduce operational costs,increase energy efficiency,e

12、liminate waste,shorten construction time,and make it easier to do business.With a dedicated“extra effort”team of 9,100 associates,WESCO has cultivated long-term relationships with customers who regard WESCO as a critical supply chain partner and with suppliers who depend on WESCO as one of their lar

13、gest customers.The future is bright for WESCO,with extensive opportunities to grow,become more profitable,and create more value in the years ahead.2018 Annual Report 1OUR RESULTSBuilding on the positive momentum generated in our business in the second half of 2017,our top priorities for 2018 were to

14、 expand margins,deliver strong profitable growth,and increase cash generation.We delivered on these priorities last year,despite an economic backdrop that was more challenging than expected.We achieved record sales of$8.2 billion,with growth in all end markets and geographies.We expanded operating m

15、argin driven by strong pull-through,effective operating cost leverage,and sequentially improving gross margins in the second half of the year.Compared to 2017,we posted double-digit percentage increases in operating profit,net income,and earnings per share in 2018.In 2019,we expect our profitable gr

16、owth to continue as operating leverage increases in our business,a hallmark of WESCO in periods of growth.WESCO is recognized for our ability to generate strong free cash flow across all phases of the economic cycle.Last year,free cash flow generation exceeded our net income and increased over 100%v

17、ersus 2017.Over the last five years,we have generated approximately$1.2 billion in free cash flow,more than 105%of net income.In 2018,we used our free cash flow to continue to make organic investments in the business,return$125 million to shareholders via share repurchases,and repay$130 million of d

18、ebt.We ended the year with financial leverage within our target band and at its lowest point since early 2015.SUPPLY CHAIN SOLUTIONS COMPANYOver the past several years,we have described our continued focus on expanding from a pure-play electrical distributor to a service-focused,efficient,and capabl

19、e supply chain solutions company.We have leveraged our competitive differentiators,including our broad product and service offerings,geographic footprint,and technical expertise.These differentiators,combined with our commercial and operational excellence initiatives,allow us to continue to attract

20、and retain loyal customers and supplier partners,and they separate us from both traditional distributors and online competitors.During our 2019 Investor Day in June,we will share with you our strategic initiatives to further enhance our leading market position.We expect these initiatives to enable u

21、s to meet the current and future needs of our customers,take share in the market,and drive value for our shareholders.These initiatives include:Advanced Digital Capabilities Digitizing our business models and processes while expanding our e-commerce solutions.Commercial Excellence Leveraging data to

22、 improve execution in all phases of the customer experience.Operational Excellence Optimizing our operations and overall supply chain through our distribution center network and branch structure,enhanced pricing capabilities,and supplier rationalization efforts.Organization,Talent and Culture Invest

23、ing in our employees and communities through increased training and development,sustainability endeavors,and social initiatives.To Our Shareholders,Employees,and Business Partnersas a standalone company since spin out from Westinghouse25YEARSas a publicly-traded company20YEARSMILESTONESOUR BUSINESS

24、We are a leading supply chain solutions company in North America,distributing over one million electrical and industrial products to 70,000 customers,including a majority of Fortune 500 companies.Our focus is to build scale and profitability through organic growth,acquisitions,and the expansion of s

25、upply chain solutions and service offerings we deliver to our customers.We operate in highly fragmented markets,providing us with opportunities to increase share and consolidate the industry.Increased scale brings stronger customer and supplier relationships and enables greater profitability and the

26、 ability to invest for future growth.Across the value chain,our customers are seeking productivity,while suppliers are looking for more capable channel partners to generate demand for their products.This results in stronger,larger relationships on both ends of our value chain,and WESCO is well posit

27、ioned to benefit from these trends.OUR VALUES AND OUR CULTUREWESCOs 9,100 employees are the key to our results and our“extra-effort”culture.The team is the strongest it has been in my tenure.In 2018,we strengthened our talent base through internal moves,promotions and new additions,including a new C

28、hief Human Resources Officer and a Vice President and General Manager for our U.S.business.We continue to invest in developing our workforce through a mentorship program,military veteran recruiting,and WESCO University training.In 2018,we conducted our bi-annual Employee Engagement Survey,receiving

29、improved scores across nearly all dimensions studied.Based upon the surveys results,we are leveraging opportunities to make WESCO an even better place to work.Social and environmental responsibility is another WESCO focus.We emphasize safety in everything that we do.We established safety goals for o

30、ur operational leaders and increased comprehensive annual safety training requirements for all employees.In 2018,we launched a new Inclusion&Diversity campaign within the company that included focused training for our senior leaders.Later this year,we will publish an update to our WESCO Sustainabili

31、ty Report,detailing our initiatives to protect the environment,contribute to our communities,and ensure sound corporate governance practices.We also help our customers accelerate their sustainability efforts by providing products that improve energy efficiency,energy management,renewable energy,wate

32、r and waste mitigation,and green procurement.Consistent with our lean culture,we are measuring our progress,seeking improvement opportunities,and reporting on our performance.OUR PAST AND OUR FUTURE In February,we celebrated 25 years as a standalone company and in May we will mark 20 years as a publ

33、icly-traded company.Over the past decades,through organic growth and acquisitions,we have transformed WESCO from a break-even,captive distribution arm of Westinghouse to a profitable,industry-leading provider of supply chain solutions.We enter 2019 with positive momentum and expect continued end mar

34、ket growth.Skilled labor shortages,high capacity utilization in the U.S.and Canada,and customer productivity initiatives continue to drive demand for supply chain services that we are well positioned to provide.We also expect to benefit from positive market trends in renewable energy,LED lighting re

35、novation and retrofit,broadband communications build-out,energy grid modernization,and Internet of Things(IoT)applications.With roughly half of our business driven by capital projects,increased customer capital spending provides significant opportunities for future growth.EESCO A WESCO division100YE

36、ARSEECOL Electric Corp.A WESCO subsidiary100YEARSHazmasters,Inc.A WESCO subsidiary30YEARS2018 Annual Report 3WESCO provides an in-country and regional support structure that meets customers needs for rapid deployment,scalability,global sourcing,multi-currency transactions,and local inventory in the

37、Americas,EMEA,and Asia-Pacific.GLOBAL REACH WESCO PRESENCE SERVICE AREAWe remain focused on what we can control our strategy,our investments,our team,and our execution.Our competitive advantage is a broad portfolio of the industrys leading brands and an extensive array of service offerings to suppor

38、t our customers.IN APPRECIATIONSandra Beach Lin will retire from the WESCO Board of Directors following our annual meeting in May.We thank Sandy for her 17 years of dedicated service to our Board of Directors,including her 10 years as Chair of the Nominating&Governance Committee.We appreciate her le

39、adership and commitment to excellence,and we are grateful for her many contributions to WESCOs success.OUR COMMITMENTSTo our employees,thank you for your dedication,engagement,and“extra effort”in providing outstanding service and value to our customers.To our customers,thank you for your business.We

40、 are committed to creating value in your operations to enable you to perform at the highest level.We will exceed your expectations in 2019.To our suppliers,thank you for your support and ongoing partnership.We look forward to excelling together in 2019.To our shareholders,thank you for your continue

41、d investment and confidence.We are committed to continually strengthening our business and increasing shareholder value.John J.Engel Chairman,President,and Chief Executive OfficerCanadaU.S.A.MexicoEcuadorPeruChileIrelandAngolaSpainEnglandScotlandPolandCzech RepublicUAENetherlandsChinaSingaporeThaila

42、nd4 WESCO International,Inc.UNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ended December 31,2018orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SEC

43、URITIES EXCHANGEACT OF 1934For the transition period from to Commission file number 001-14989WESCO International,Inc.(Exact name of registrant as specified in its charter)Delaware(State or other jurisdiction ofincorporation or organization)25-1723342(I.R.S.EmployerIdentification No.)225 West Station

44、 Square DriveSuite 700Pittsburgh,Pennsylvania(Address of principal executive offices)15219(Zip Code)(412)454-2200(Registrants telephone number,including area code)SECURITIES REGISTERED PURSUANT TO SECTION 12(b)OF THE ACT:Title of ClassName of Exchange on which registeredCommon Stock,par value$.01 pe

45、r shareNew York Stock ExchangeSECURITIES REGISTERED PURSUANT TO SECTION 12(g)OF THE ACT:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant t

46、o Section 13 or 15(d)of the Act.Yes No 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 repor

47、ts),and(2)has been subject to such filing requirements for at least the past 90 days.Yes No 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 registrants knowledge,in definitive proxy or i

48、nformation statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted purs

49、uant to Rule 405 of Regulation S-T during the preceding 12 months(or for such shorter period that the registrant was required to submit and post such file).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporti

50、ng company,or emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and emerging growth company in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Em

51、erging growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of the Ex-change Act.Indicate by check mark whethe

52、r the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The registrant estimates that the aggregate market value of the voting shares held by non-affiliates of the registrant was approximately$2.7 billion as of June 30,2018,the last business day of the registrants most recent

53、ly completed second fiscal quarter,based on the closing price on the New York Stock Exchange for such stock.As of February 26,2019,45,195,593 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

54、by reference portions of the registrants Proxy Statement for its 2019 Annual Meeting of Stockholders.TABLE OF CONTENTSPagePART I Item 1.Business1Item 1A.Risk Factors8Item 1B.Unresolved Staff Comments12Item 2.Properties12Item 3.Legal Proceedings12Item 4.Mine Safety Disclosures12PART II Item 5.Market

55、for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of EquitySecurities13Item 6.Selected Financial Data15Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations16Item 7A.Quantitative and Qualitative Disclosures About Market Risks30Item 8

56、.Financial Statements and Supplementary Data31Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure71Item 9A.Controls and Procedures71Item 9B.Other Information71PART III Item 10.Directors,Executive Officers and Corporate Governance72Item 11.Executive Compensatio

57、n72Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters72Item 13.Certain Relationships and Related Transactions,and Director Independence72Item 14.Principal Accountant Fees and Services72PART IV Item 15.Exhibits and Financial Statement Schedules73Ite

58、m 16.Form 10-K Summary78Signatures791PART IItem 1.Business.In this Annual Report on Form 10-K,“WESCO”refers to WESCO International,Inc.,and its subsidiaries and its predecessors unless the context otherwise requires.References to“we,”“us,”“our”and the“Company”refer to WESCO and its subsidiaries.The

59、CompanyWESCO International,Inc.(“WESCO International”),incorporated in 1993 and effectively formed in February 1994 upon acquiring a distribution business from Westinghouse Electric Corporation,is a leading North American-based distributor of products and provider of advanced supply chain management

60、 and logistics services used primarily in industrial,construction,utility,and commercial,institutional and government(“CIG”)markets.We are a leading provider of electrical,industrial,and communications maintenance,repair and operating(MRO)and original equipment manufacturer(OEM)products,construction

61、 materials,and advanced supply chain management and logistics services.Our primary product categories include general supplies,wire,cable and conduit,communications and security,electrical distribution and controls,lighting and sustainability,and automation,controls and motors.We serve approximately

62、 70,000 active customers globally through approximately 500 branches primarily located in North America,with operations in 15 additional countries and 10 distribution centers located in the United States and Canada.The Company employs approximately 9,100 employees worldwide.We distribute over 1,000,

63、000 products,grouped into six categories,from approximately 30,000 suppliers,utilizing a highly automated,proprietary electronic procurement and inventory replenishment system.In addition,we offer a comprehensive portfolio of value-added capabilities,which includes supply chain management,logistics

64、and transportation,procurement,warehousing and inventory management,as well as kitting,limited assembly of products and system installation.Our value-added capabilities,extensive geographic reach,experienced workforce and broad product and supply chain solutions have enabled us to grow our business

65、and establish a leading position in North America.Industry OverviewWe operate in highly fragmented markets that include thousands of small regional and locally based,privately owned competitors.The total potential in North America for purchases of MRO and OEM supplies and services across all industr

66、ial distribution market segments and channels is estimated to be approximately$880 billion per a combination of industry sources.According to one industry publication,the five largest full-line electrical distributors in North America,including WESCO,account for approximately one-third of an estimat

67、ed$100 billion-plus of electrical sales in North America.Our global account,integrated supply and OEM programs provide customers with regional,national,North American and global supply chain consolidation opportunities.The demand for these programs is driven primarily by the desire of companies to r

68、educe operating expenses by outsourcing operational and administrative functions associated with the procurement,management and utilization of MRO supplies and OEM components.We believe that opportunities exist for expansion of these programs.According to various industry sources,electrical distribu

69、tion industry sales have grown mid-single-digits on average over the past three years.Growth has been influenced by trends in the wider economy,including MRO and OEM purchasing,investments in infrastructure and construction activity.It is estimated that approximately 75%of electrical products sold i

70、n the United States are delivered to the end user through the distribution channel.2Markets and CustomersWe have a large base of approximately 70,000 active customers across a diverse set of end markets.Our top ten customers accounted for approximately 18%of our sales in 2018.No one customer account

71、ed for more than 4%of our sales in 2018.The following table outlines our sales breakdown by end market:Year Ended December 31,201820172016(percentages based on total sales)Industrial36%37%36%Construction33%33%34%Utility16%16%16%Commercial,Institutional and Government15%14%14%Industrial.Sales to indu

72、strial customers of MRO,OEM,and construction products and services accounted for approximately 36%of our sales in 2018,compared to 37%in 2017.Industrial sales product categories include a broad range of electrical equipment and supplies as well as lubricants,pipe,valves,fittings,fasteners,cutting to

73、ols,power transmission,and safety products.In addition,OEM customers require a reliable supply of assemblies and components to incorporate into their own products as well as value-added services such as supplier consolidation,design and technical support,just-in-time supply and electronic commerce,a

74、nd supply chain management.Construction.Sales of electrical and communications products to construction customers accounted for approximately 33%of our sales in 2018 and 2017.Customers include a wide array of contractors and engineering,procurement and construction firms for industrial,infrastructur

75、e,commercial and data and broadband communications projects.Specific applications include projects for refineries,railways,wastewater treatment facilities,data centers,security installations,offices,and modular and mobile homes.In addition to a wide array of electrical products,we offer contractors

76、communications products for projects related to IT/network modernization,physical security upgrades,broadband deployments,network security,and disaster recovery.Utility.Sales to utilities and utility contractors accounted for approximately 16%of our sales in 2018 and 2017.Customers include large inv

77、estor-owned utilities,rural electric cooperatives,municipal power authorities and contractors that serve these customers.We provide our utility customers with products and services to support the construction and maintenance of their generation,transmission and distribution systems along with an ext

78、ensive range of products that meet their power plant MRO and capital projects needs.Materials management and procurement outsourcing arrangements are also important in this market,as cost pressures and deregulation have caused utility customers to seek improvements in the efficiency and effectivenes

79、s of their supply chains.Commercial,Institutional and Government.Sales to CIG customers accounted for approximately 15%of our sales in 2018,compared to 14%in 2017.Customers include schools,hospitals,property management firms,retailers and federal,state and local government agencies of all types,incl

80、uding federal contractors.Business StrategyOur goal is to grow organically at a rate greater than that of our industry while making accretive acquisitions.Our organic growth strategy focuses on enhancing our sales,technical expertise and customer service capabilities to acquire new customers and inc

81、rease our sales to current customers,broaden our product and service offerings and expand our geographic footprint.We utilize LEAN continuous improvement initiatives on a company-wide basis to deliver operational excellence and improve productivity.We also extend our LEAN initiatives to customers to

82、 improve the efficiency and effectiveness of their operations and supply chains.In addition,we seek to develop a distinct competitive advantage through talent management and employee development processes and programs.We have identified certain growth engines that we believe provide substantial oppo

83、rtunities for above-market growth,and have developed strategies to address each of these areas of opportunity.These growth engines are a combination of business models,selected end markets and product categories,as discussed below.Grow Our Global Account Customer Relationships and Base.Our typical g

84、lobal account customer is a large,multi-location industrial or commercial company,a large utility,a major contractor,or a government or institutional customer.Our global account program is designed to provide customers with supply chain management services and cost reductions by coordinating and sta

85、ndardizing activity for MRO materials and OEM direct materials across their multiple locations,utilizing our broad geographic footprint and our largely integrated information technology platform.Comprehensive account plans are developed and managed at the local,national and international levels to p

86、rioritize activities,identify key performance measures,and track progress against 3objectives.We involve our preferred suppliers early in the implementation process to contribute expertise and product knowledge to accelerate program implementation and deliver cost savings and process improvements.Th

87、rough our growth initiatives,we plan to continue to expand the suite of products and services we offer to current customer sites,while increasing our reach to serve additional customer locations.We plan on expanding our customer base by capitalizing on our industry expertise and supply chain optimiz

88、ation capabilities.Extend Our Position in Integrated Supply Programs.Our integrated supply programs focus on optimizing the supply chain and replacing the traditional multi-vendor,resource-intensive procurement process with a single,outsourced,automated process.Each integrated supply program employs

89、 our product and distribution expertise to reduce the number of suppliers,total procurement costs,and administrative expenses,while meeting the customers service needs and improving their operating controls.We believe that large customers will seek to utilize such services to consolidate and simplif

90、y their MRO and OEM supply chains.We are expanding our position in North America as an integrated supply service provider by building upon established relationships within our large customer base and premier supplier network,and extending our services to additional customers and locations around the

91、 world.Our services are offered across all four of our end markets.Expand Our Relationships with Construction Contractors.We support new construction,renovation and retrofit projects across a wide variety of vertical markets,including manufacturing,healthcare,education,enterprise data communications

92、,telecommunications,energy and government infrastructure.We believe that significant cross selling opportunities exist for our electrical and communications products and expertise,and we are utilizing our global account and integrated supply programs,LEAN initiatives and project management expertise

93、 to capitalize on new non-residential construction opportunities.Expand Products and Services for Utilities.Our investor-owned,public power and utility contractor customers continue to focus on improving grid reliability and operating efficiency,while reducing costs.As a result,we anticipate opportu

94、nities from distribution grid improvement,storm hardening,renewable generation installation and transmission expansion projects as well as the continued adoption of integrated supply programs.Accordingly,we are focused on expanding our logistical and project services and supply chain management prog

95、rams to increase our scope of supply on the distribution grid,generation and other energy projects,including alternative energy projects.Grow Industrial MRO and Safety Sales.Our sales of industrial MRO materials include a broad range of electrical and non-electrical products used in the ongoing main

96、tenance and repair of equipment used in production processes.These products are also used for facility upkeep in manufacturing,commercial,institutional,and other operations.In addition,we have safety products,personal protection safety equipment,first aid supplies,and OSHA compliance categories to c

97、omplement the industrial MRO product lines.Expand International Operations.We seek to capitalize on existing and emerging international market opportunities through the expansion of our global product and service platforms.We follow large existing global customers into international markets,extendin

98、g our procurement outsourcing,integrated supply programs and supplier relationships.Once established,we also seek to develop new business opportunities in these markets.We believe this strategy of working with well-developed customer and supplier relationships significantly reduces risk and provides

99、 the opportunity to establish profitable business.Our priorities are focused on global vertical markets including energy,mining and metals,manufacturing,and infrastructure,as well as key product categories such as communications and security.Grow Our Communications Products Position.Over the last se

100、veral years,there has been a convergence of electrical and data communications contractors.Our ability to provide both electrical and communications products and services as well as automation,electromechanical,non-electrical MRO,physical security and utility products has presented cross selling opp

101、ortunities across WESCO.Communications products are in continual demand due to network upgrades,low voltage security investments,data center upgrades and increasing broadband and telecommunications usage.Grow Lighting System and Sustainability Sales.Lighting applications are undergoing significant i

102、nnovation,driven by energy efficiency and sustainability trends.We have expanded our sales team and marketing initiatives and increased our presence and customer base with recent acquisitions.We have also developed capabilities to provide complete turn-key solutions for the installation of LED equip

103、ment and controls.We expect to continue to add product and service offerings to provide lighting and energy-saving solutions.Pursue Strategic Acquisitions.Since 2010,we have made fourteen acquisitions that have helped us broaden and strengthen our product and services portfolio,increase our customer

104、 base,and provide an important source of talent.We believe that the highly fragmented nature of the electrical and industrial distribution industry will continue to provide acquisition opportunities.Drive Operational Excellence.LEAN continuous improvement is a set of company-wide strategic initiativ

105、es to increase efficiency and effectiveness across the entire business enterprise,including sales,operations and administrative processes.The basic principles behind LEAN are to systematically identify and implement improvements through simplification,elimination of 4waste and reduction in errors.We

106、 apply LEAN in our distribution environment,and develop and deploy numerous initiatives through the Kaizen approach targeting improvements in sales,margin,warehouse operations,transportation,purchasing,working capital management and administrative processes.Our objective is to continue to implement

107、LEAN initiatives across our business enterprise and to extend LEAN services to our customers and suppliers.Manage Our Talent.We seek to develop a distinct competitive advantage through talent management,and employee engagement and development.We believe our ability to attract,develop and retain dive

108、rse human capital is imperative to ongoing business success.We improve workforce capability through various programs and processes that identify,recruit,develop and promote our talent base.Significant enhancements in these programs have been made over the last several years,and we expect to continue

109、 to refine and enhance these programs in the future.Products and ServicesProductsOur network of branches and distribution centers stock approximately 220,000 unique product stock keeping units and we provide customers with access to more than 1,000,000 different products.Each branch tailors its inve

110、ntory to meet the needs of its local customers.Representative product categories and associated product lines that we offer include:General Supplies.Wiring devices,fuses,terminals,connectors,boxes,enclosures,fittings,lugs,terminations,wrap,splicing and marking equipment,tools and testers,safety,pers

111、onal protection,sealants,cutting tools,adhesives,consumables,fasteners,janitorial and other MRO supplies;Wire,Cable and Conduit.Wire,cable,raceway,metallic and non-metallic conduit;Communications and Security.Structured cabling systems,broadband products,low voltage specialty systems,specialty wire

112、and cable products,equipment racks and cabinets,access control,alarms,cameras,paging and voice solutions;Electrical Distribution and Controls.Circuit breakers,transformers,switchboards,panel boards,metering products and busway products;Lighting and Sustainability.Lamps,fixtures,ballasts and lighting

113、 control products,and Automation,Controls and Motors.Motor control devices,drives,surge and power protection,relays,timers,pushbuttons,operator interfaces,switches,sensors,and interconnects.The following table sets forth sales information by product category:Year Ended December 31,201820172016(perce

114、ntages based on total sales)General Supplies40%40%40%Wire,Cable and Conduit14%15%14%Communications and Security16%15%15%Electrical Distribution and Controls11%10%11%Lighting and Sustainability11%12%12%Automation,Controls and Motors8%8%8%We purchase products from a diverse group of approximately 30,0

115、00 suppliers.In 2018,our ten largest suppliers accounted for approximately 32%of our purchases.Our largest supplier in 2018 was Eaton Corporation,accounting for approximately 11%of our purchases.No other supplier accounted for more than 4%of our total purchases.Our supplier relationships are importa

116、nt to us,providing access to a wide range of products,services,technical training,and sales and marketing support.We have approximately 300 commercial agreements with more than 200 preferred suppliers and purchase nearly 60%of our products pursuant to these arrangements.Consistent with industry prac

117、tice,most of our agreements with suppliers,including both distribution agreements and commercial agreements,are terminable by either party on 60 days notice or less.5ServicesAs part of our overall offering,we provide customers a comprehensive portfolio of value-added solutions within a wide range of

118、 service categories including construction,e-commerce,energy and sustainability,engineering services,production support,safety and security,supply chain optimization,training,and working capital.These solutions are designed to address our customers business needs through:Technical advisory strategie

119、s,including product lifecycle management and migration planning;Supply chain and inventory optimization programs,including just-in-time delivery and vendor managed inventory;Consultation on production and operational efficiencies from cross-functional,cost saving teams;Transactional process improvem

120、ents utilizing a suite of e-commerce solutions;Energy-saving solutions,including lighting renovation and retrofit;Operational safety and product training for customers employees,and Dedicated on-site support personnel.Competitive StrengthsAs a leading electrical distributor in a highly fragmented No

121、rth American market,we compete directly with global,national,regional,and local distributors of electrical and other industrial supplies,along with buying groups formed by smaller distributors.Competition is generally based on product line breadth,product availability,service capabilities and price.

122、We believe that our market leadership,broad product offering,value-added services,technical expertise,extensive distribution network and low-cost operator status provide distinct competitive advantages.Market Leadership.Our ability to manage complex global supply chains,and multi-site facility maint

123、enance programs and construction projects,which require special sourcing,technical advice,logistical support and locally based service,has enabled us to establish a strong presence in the competitive and fragmented North American electrical distribution market.Broad Product Offering and Value-added

124、Services.We provide a wide range of products,services,and procurement solutions,which draw on our product knowledge,supply and logistics expertise,system capabilities and supplier relationships to enable our customers to maximize productivity,minimize waste,improve efficiencies,reduce costs and enha

125、nce safety.Our broad product offering and stable source of supply enables us to consistently meet customers wide-ranging capital project,MRO and OEM requirements.Extensive Distribution Network.We operate approximately 500 geographically dispersed branch locations and ten distribution centers(six in

126、the United States and four in Canada).Our distribution centers add value for our customers,suppliers,and branches through the combination of a broad and deep selection of inventory,online ordering and next-day shipment capabilities,and central order handling and fulfillment.Our distribution center n

127、etwork reduces the lead time and cost of supply chain activities through its automated replenishment and warehouse management system,and provides economies of scale in purchasing,inventory management,administration and transportation.This extensive network,which would be difficult and expensive to r

128、eplicate,allows us to:Enhance local customer service,technical support and sales coverage;Tailor individual branch products and services to local customer needs,and Offer multi-site distribution capabilities to large customers and global accounts.Low-Cost Operator.Our competitiveness has been enhanc

129、ed by our consistent favorable operating cost position,which is based on the use of LEAN,strategically-located distribution centers,and purchasing economies of scale.As a result of these and other factors,we believe our operating costs as a percentage of sales has historically been one of the lowest

130、 in our industry.Our selling,general and administrative expenses as a percentage of revenues for 2018 were 14.1%.6GeographyOur network of branches and distribution centers are located primarily in North America.To serve our customers in the United States,we operate a network of approximately 340 bra

131、nches supported by six distribution centers located in Arkansas,Mississippi,Nevada,Pennsylvania,Texas and Wisconsin.To serve our Canadian customers,we operate a network of approximately 130branches in nine provinces.Branch operations are supported by four distribution centers located in Alberta,Brit

132、ish Columbia,Ontario and Quebec.We have seven branch locations in Mexico that provide various supply chain services to a broad range of end markets.We also sell to global customers through export sales offices located in Calgary,Houston,Miami,Montreal and Pittsburgh within North America and sales of

133、fices and branch operations in various international locations.Our branches in Aberdeen,Scotland;Dublin,Ireland;and,Manchester,England support sales efforts in Europe and the Middle East.We have branches in Singapore and Thailand to support our sales in Asia and a branch near Shanghai to serve custo

134、mers in China.Furthermore,we support sales in South America through our branches in Chile,Ecuador and Peru,and we have operations in six additional countries.Many of our international locations have been established to serve our growing list of customers with global operations.Intellectual PropertyW

135、e currently have trademarks,patents and service marks registered with the U.S.Patent and Trademark Office and Canadian Intellectual Property Office.The trademarks and service marks registered in the U.S.include:“WESCO”,our corporate logo and the running man logo.The Companys EECOL trademark is regis

136、tered in Canada.In addition,trademarks,patents,and service mark applications have been filed in various foreign jurisdictions,including Argentina,Australia,Brazil,Chile,Colombia,Costa Rica,Canada,Chile,China,the European Community,Egypt,Hong Kong,India,Indonesia,Japan,Korea,Malaysia,Mexico,New Zeala

137、nd,Norway,Panama,Peru,Philippines,Russia,Singapore,South Africa,Switzerland,Taiwan,Thailand,United Arab Emirates,United Kingdom,Venezuela,and Vietnam.Environmental MattersOur facilities and operations are subject to federal,state and local laws and regulations relating to environmental protection an

138、d human health and safety.Some of these laws and regulations may impose strict,joint and several liabilities on certain persons for the cost of investigation or remediation of contaminated properties.These persons may include former,current or future owners or operators of properties and persons who

139、 arranged for the disposal of hazardous substances.Our owned and leased real property may give rise to such investigation,remediation and monitoring liabilities under environmental laws.In addition,anyone disposing of certain products we distribute,such as ballasts,fluorescent lighting and batteries

140、,must comply with environmental laws that regulate certain materials in these products.We believe that we are in compliance,in all material respects,with applicable environmental laws.As a result,we do not anticipate making significant capital expenditures for environmental control matters either in

141、 the current year or in the near future.SeasonalityOur operating results are not significantly affected by seasonal factors.Sales during the first quarter are affected by a reduced level of activity.Sales during the second,third and fourth quarters are generally 6%to 8%higher than the first quarter.

142、Sales typically increase beginning in March,with slight fluctuations per month through October.During periods of economic expansion or contraction,our sales by quarter have varied significantly from this seasonal pattern.Website AccessOur Internet address is .Information contained on our website is

143、not part of,and should not be construed as being incorporated by reference into,this Annual Report on Form 10-K.We make available free of charge under the“Investors”heading on our website our annual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K and amendments to tho

144、se reports filed or furnished pursuant to Section 13(a)or 15(d)of the Securities Exchange Act of 1934,as amended(the“Exchange Act”),as well as our Proxy Statements,as soon as reasonably practicable after such documents are electronically filed or furnished,as applicable,with the Securities and Excha

145、nge Commission(the“SEC”).In addition,our charters for our Executive Committee,Nominating and Governance Committee,Audit Committee and Compensation Committee,as well as our Corporate Governance Guidelines,Code of Principles for Senior Executives,Independence Policy,Global Anti-Corruption Policy,and C

146、ode of Business Ethics and Conduct for our Directors,officers and employees,are all available on our website in the“Corporate Governance”link under the“Investors”heading.7Forward-Looking InformationThis Annual Report on Form 10-K contains various“forward-looking statements”within the meaning of the

147、Private Securities Litigation Reform Act of 1995.These statements involve certain unknown risks and uncertainties,including,among others,those contained in Item 1,“Business,”Item 1A,“Risk Factors,”and Item 7,“Managements Discussion and Analysis of Financial Condition and Results of Operations.”When

148、used in this Annual Report on Form 10-K,the words“anticipates,”“plans,”“believes,”“estimates,”“intends,”“expects,”“projects,”“will”and similar expressions may identify forward-looking statements,although not all forward-looking statements contain such words.Such statements,including,but not limited

149、to,our statements regarding business strategy,growth strategy,competitive strengths,productivity and profitability enhancement,competition,new product and service introductions and liquidity and capital resources,are based on managements beliefs,as well as on assumptions made by and information curr

150、ently available to management,and involve various risks and uncertainties,some of which are beyond our control.Our actual results could differ materially from those expressed in any forward-looking statement made by us or on our behalf.In light of these risks and uncertainties,there can be no assura

151、nce that the forward-looking information will in fact prove to be accurate.We have undertaken no obligation to publicly update or revise any forward-looking statements,whether as a result of new information,future events or otherwise.Executive OfficersOur executive officers and their respective ages

152、 and positions as of February 27,2019,are set forth below.NameAgePositionJohn J.Engel57Chairman,President and Chief Executive OfficerDiane E.Lazzaris52Senior Vice President and General CounselRobert Minicozzi57Vice President and Chief Information OfficerDavid S.Schulz53Senior Vice President and Chie

153、f Financial OfficerChristine A.Wolf58Senior Vice President and Chief Human Resources OfficerSet forth below is biographical information for our executive officers listed above.John J.Engel was elected as Chairman of the Board at the 2011 Annual Meeting and has served as President and Chief Executive

154、 Officer since 2009.Previously,Mr.Engel served as our Senior Vice President and Chief Operating Officer from 2004 to 2009.Before joining WESCO in 2004,Mr.Engel served as Senior Vice President and General Manager of Gateway,Inc.,Executive Vice President and Senior Vice President of Perkin Elmer,Inc.,

155、Vice President and General Manager of Allied Signal,Inc.,and also held various engineering,manufacturing and general management positions at General Electric Company.Diane E.Lazzaris has served as our Senior Vice President and General Counsel since January 2014,and from 2010 to December 2013 she ser

156、ved as our Vice President,Legal Affairs.From 2008 to 2010,Ms.Lazzaris served as Senior Vice President-Legal,General Counsel and Corporate Secretary of Dicks Sporting Goods,Inc.From 1994 to 2008,she held various corporate counsel positions at Alcoa Inc.,including Group Counsel to a group of global bu

157、sinesses.Robert Minicozzi has served as our Vice President and Chief Information Officer since January 2016.From 2012 to December 2015,Mr.Minicozzi served as Vice President and Global Divisional Chief Information Officer of Arrow Electronics,Inc.and previously held various information systems leader

158、ship positions with Arrow Electronics,Inc.David S.Schulz has served as our Senior Vice President and Chief Financial Officer since October 2016.From April 2016 to October 2016,he served as Senior Vice President and Chief Operating Officer of Armstrong Flooring,Inc.From 2013 to March 2016,he served a

159、s Senior Vice President and Chief Financial Officer of Armstrong World Industries,Inc.,and as Vice President,Finance of the Armstrong Building Products division from 2011 to 2013.Prior to joining Armstrong World Industries in 2011,he held various financial leadership roles with Procter&Gamble and Th

160、e J.M.Smucker Company.Mr.Schulz began his career as an officer in the United States Marine Corps.Christine A.Wolf has served as our Senior Vice President and Chief Human Resources Officer since June 2018.From 2011 to June 2018,Ms.Wolf served as the Chief Human Resources Officer of Orbital ATK,Inc.un

161、til its acquisition by Northrop Grumman.From 2008 to 2011,she served as the Chief Human Resources Officer of Fannie Mae and from 2004 to 2008 she served as Chief Human Resources Officer of E*Trade Financial Corporation.Prior to that,she held various positions in human resources with companies in a v

162、ariety of industries.8Item 1A.Risk Factors.The following factors,among others,could cause our actual results to differ materially from the forward-looking statements we make.All forward-looking statements attributable to us or persons working on our behalf are expressly qualified by the following fa

163、ctors.This information should be read in conjunction with Item 7,Managements Discussion and Analysis of Financial Condition and Results of Operations,Item 7A,Quantitative and Qualitative Disclosures about Market Risks and the consolidated financial statements and related notes included in this Form

164、10-K.Operational Risk FactorsAdverse conditions in the global economy and disruptions of financial markets could negatively impact our results of operations,cash flows or financial position.Our results of operations are affected by the level of business activity of our customers,which in turn is aff

165、ected by global economic conditions and market factors impacting the industries and markets that they serve.Certain global economies and markets continue to experience significant uncertainty and volatility,particularly commodity-driven end markets such as oil and gas and metals and mining.Adverse e

166、conomic conditions or lack of liquidity in these markets,particularly in North America,may adversely affect our revenues and operating results.Economic and financial market conditions may also affect the availability of financing for projects and for our customers capital or other expenditures,which

167、 can result in project delays or cancellations and thus affect demand for our products.There can be no assurance that any governmental responses to economic conditions or disruptions in the financial markets ultimately will stabilize the markets or increase our customers liquidity or the availabilit

168、y of credit to our customers.Should one or more of our larger customers declare bankruptcy,it could adversely affect the collectability of our accounts receivable,along with bad debt reserves and net income.In addition,our ability to access the capital markets may be restricted at a time when we wou

169、ld like,or need,to do so.The economic,political and financial environment may also affect our business and financial condition in ways that we currently cannot predict,and there can be no assurance that economic and political instability,both domestically and internationally(for example,resulting fr

170、om changes to trade policies,tariffs or participation in trade agreements or economic and political unions)will not adversely affect our results of operations,cash flows or financial position in the future.An increase in competition could decrease sales,profit margins,and earnings.We operate in a hi

171、ghly competitive industry and compete directly with global,national,regional and local providers of like products and services.Some of our existing competitors have,and new market entrants may have,greater resources than us.Competition is generally based on product line breadth,product availability,

172、service capabilities and price.Other sources of competition are buying groups formed by smaller distributors to increase purchasing power and provide some cooperative marketing capability,as well as e-commerce companies.There may be new market entrants with non-traditional business and customer serv

173、ice models,resulting in increased competition and changing industry dynamics.Existing or future competitors may seek to gain or retain market share by reducing prices,and we may be required to lower our prices or may lose business,which could adversely affect our financial results.We may be subject

174、to supplier price increases while not being able to increase prices to customers.Also,to the extent that we do not meet changing customer preferences or demands,or to the extent that one or more of our competitors becomes more successful with private label products,on-line offerings or otherwise,our

175、 ability to attract and retain customers could be materially adversely affected.Existing or future competitors also may seek to compete with us for acquisitions,which could have the effect of increasing the price and reducing the number of suitable acquisitions.These factors,in addition to competiti

176、ve pressures resulting from the fragmented nature of our industry,could affect our sales,profit margins and earnings.Expansion into new business activities,industries,product lines or geographic areas could subject the company to increased costs and risks and may not achieve the intended results.We

177、have invested significantly in expanding our e-commerce capabilities and online customer experience.If our efforts to expand our capabilities in this area are not successful,we may not realize the return on our investments as anticipated,or our operating results could be adversely affected by slower

178、 than expected sales growth or additional costs.Furthermore,engaging in or significantly expanding business activities in product sourcing,sales and services could subject the company to unexpected costs and risks.Such activities could subject us to increased operating costs,product liability,regula

179、tory requirements and reputational risks.Our expansion into new and existing markets,including manufacturing related or regulated businesses,may present competitive distribution and regulatory challenges that differ from current ones.We may be less familiar with the target customers and may face dif

180、ferent or additional risks,as well as increased or unexpected costs,compared to existing operations.Growth into new markets may also bring us into direct competition with companies with whom we have little or no past experience as competitors.To the extent we are reliant upon expansion into new geog

181、raphic,industry and product markets for growth and do 9not meet the new challenges posed by such expansion,our future sales growth could be negatively impacted,our operating costs could increase,and our business operations and financial results could be negatively affected.Certain events or conditio

182、ns,including a failure or breach of our information security systems,could lead to interruptions in our operations,which may materially adversely affect our business operations,financial condition,and results of operations.We operate a number of facilities and we coordinate company activities,includ

183、ing information technology systems and administrative services and the like,through our headquarters operations.Our operations depend on our ability to maintain existing systems and implement new technology,which includes allocating sufficient resources to periodically upgrade our information techno

184、logy systems,and to protect our equipment and the information stored in our databases against both manmade and natural disasters,as well as power losses,computer and telecommunications failures,technological breakdowns,unauthorized intrusions,cyber-attacks,and other events.Conversions to new informa

185、tion technology systems may result in cost overruns,delays or business interruptions.If our information technology systems are disrupted,become obsolete or do not adequately support our strategic,operational or compliance needs,it could result in a competitive disadvantage or adversely affect our bu

186、siness operations and financial condition,including our ability to process orders,receive and ship products,maintain inventories,collect accounts receivable and pay expenses,therefore impacting our results of operations.Because we rely heavily on information technology both in serving our customers

187、and in our enterprise infrastructure in order to achieve our objectives,we may be vulnerable to damage or intrusion from a variety of cyber-attacks,including computer viruses,worms or other malicious software programs that access our systems.Despite the precautions we take to mitigate the risks of s

188、uch events,an attack on our enterprise information technology system could result in theft or disclosure of our proprietary or confidential information or a breach of confidential customer,supplier or employee information.Such events could have an adverse impact on revenue and harm our reputation.Ad

189、ditionally,such an event could cause us to incur legal liabilities and costs,which could be significant,in order to address and remediate the effects of an attack and related security concerns.We also depend on accessible office facilities,distribution centers and information technology data centers

190、 for our operations to function properly.An interruption of operations at any of our distribution centers or data centers could have a material adverse effect on the operations of branches served by the affected distribution or data center.Such disaster related risks and effects are not predictable

191、with certainty and,although they typically can be mitigated,they cannot be eliminated.We seek to mitigate our exposures to disaster events in a number of ways.For example,where feasible,we design the configuration of our facilities to reduce the consequences of disasters.We also maintain insurance f

192、or our facilities against casualties,and we evaluate our risks and develop contingency plans for dealing with them.Although we have reviewed and analyzed a broad range of risks applicable to our business,the ones that actually affect us may not be those that we have concluded are most likely to occu

193、r.Furthermore,although our reviews have led to more systematic contingency planning,our plans are in varying stages of development and execution,such that they may not be adequate at the time of occurrence for the magnitude of any particular disaster event that we may encounter.Loss of key suppliers

194、,product cost fluctuations,lack of product availability,or inefficient supply chain operations could decrease sales,profit margins,and earnings.Most of our agreements with suppliers are terminable by either party on 60 days notice or less.Our 10 largest suppliers in 2018 accounted for approximately

195、32%of our purchases for the period.Our largest supplier in 2018 was Eaton Corporation,accounting for approximately 11%of our purchases.The loss of,or a substantial decrease in the availability of,products from any of these suppliers,a suppliers change in sales strategy to rely less on distribution c

196、hannels,the loss of key preferred supplier agreements,or disruptions in a key suppliers operations could have a material adverse effect on our business.Supply interruptions could arise from shortages of raw materials,effects of economic,political or financial market conditions on a suppliers operati

197、ons,labor disputes or weather conditions affecting products or shipments,transportation disruptions,information system disruptions or other reasons beyond our control.In addition,certain of our products,such as wire and conduit,are commodity price based products and may be subject to significant pri

198、ce fluctuations which are beyond our control.While increases in the cost of energy or products could have adverse effects,decreases in those costs,particularly if severe,could also adversely impact us by creating deflation in selling prices,which could cause our gross profit margin to deteriorate.Fl

199、uctuations in energy or raw materials costs can also adversely affect our customers.Declines in oil and natural gas prices can negatively impact our customers operating in those industries and,consequently,our sales to those customers.Furthermore,we cannot be certain that particular products or prod

200、uct lines will be available to us,or available in quantities sufficient to meet customer demand.Such limited product access could cause us to be at a competitive disadvantage.The profitability of our business is also dependent upon the efficiency of our supply chain.An inefficient or ineffective sup

201、ply chain strategy or operations could increase operational costs,decrease sales,profit margins and earnings,which could adversely affect our business.10We must attract,retain and motivate key employees,and the failure to do so may adversely affect our business.Our success depends on hiring,retainin

202、g and motivating key employees,including executive,managerial,sales,technical,marketing and support personnel.We may have difficulty locating and hiring qualified personnel.In addition,we may have difficulty retaining such personnel once hired,and key people may leave and compete against us.The loss

203、 of key personnel or our failure to attract and retain other qualified and experienced personnel could disrupt or adversely affect our business,its sales and operating results.In addition,our operating results could be adversely affected by increased costs due to increased competition for employees,

204、higher employee turnover,which may also result in loss of significant customer business,or increased employee benefit costs.Acquisitions that we may undertake would involve a number of inherent risks,any of which could cause us not to realize the benefits anticipated to result.We have expanded our o

205、perations through organic growth and selected acquisitions of businesses and assets,and may seek to do so in the future.Acquisitions involve various inherent risks,including:problems that could arise from the integration of the acquired business;uncertainties in assessing the value,strengths,weaknes

206、ses,contingent and other liabilities and potential profitability of acquisition candidates;the potential loss of key employees of an acquired business;the ability to achieve identified operating and financial synergies anticipated to result from an acquisition or other transaction;unanticipated chan

207、ges in business,industry or general economic conditions that affect the assumptions underlying the acquisition or other transaction rationale;and expansion into new countries or geographic markets where we may be less familiar with operating requirements,target customers and regulatory compliance.An

208、y one or more of these factors could increase our costs or cause us not to realize the benefits anticipated to result from the acquisition of a business or assets.While there are risks associated with acquisitions generally,including integration risks,there are additional risks more specifically ass

209、ociated with owning and operating businesses internationally,including those arising from import and export controls,foreign currency exchange rate changes,developments in political,regulatory or economic conditions impacting those operations and various environmental and climatic conditions in part

210、icular areas of the world.Financial Risk FactorsChanges in tax laws or challenges to the Companys tax positions by taxing authorities could adversely impact the Companys results of operations and financial condition.We are subject to taxes in jurisdictions in which we do business,including but not l

211、imited to taxes imposed on our income,receipts,stockholders equity,property,sales,purchases and payroll.As a result,the tax expense we incur can be adversely affected by changes in tax law.We frequently cannot anticipate these changes in tax law,which can cause unexpected volatility in our results o

212、f operations.While not limited to the United States(U.S.)and Canada,changes in the tax law at the federal and state/provincial levels in the U.S.and Canada can have a material adverse effect on our results of operations.Additionally,the tax laws to which the Company is subject are inherently complex

213、 and ambiguous.Therefore,we must interpret the applicable laws and make subjective judgments about the expected outcome upon challenge by the applicable taxing authorities.As a result,the impact on our results from operations of the application of enacted tax laws to our facts and circumstances is f

214、requently uncertain.If a tax authority successfully challenges our interpretation and application of the tax law to our facts and circumstances,there can be no assurance that we can accurately predict the outcome and the taxes ultimately owed upon effective settlement,which may differ from the tax e

215、xpense recognized in our consolidated statements of income and comprehensive income(loss)and accrued in our consolidated balance sheets.Additionally,if we cannot meet liquidity requirements in the U.S.,we may have to repatriate funds from overseas,which would result in additional income taxes being

216、incurred on the amount repatriated.Uncertainties in the interpretation and application of the Tax Cuts and Jobs Act of 2017 could materially affect our tax obligations and effective tax rate.The Tax Cuts and Jobs Act of 2017(the TCJA)was enacted on December 22,2017,and it significantly affected U.S.

217、tax law by,among other things,changing how the U.S.taxes the income of multinational corporations.The U.S.Department of Treasury(the Treasury Department)has broad authority to issue regulations and interpretative guidance that may significantly impact how the TCJA is applied.While the Treasury Depar

218、tment issued many proposed regulations and other guidance in 2018 to clarify certain aspects of the TCJA,these regulations and other guidance are subject to change when issued in their final form.Additionally,the Treasury Department is expected to issue more proposed regulations in 2019 to address o

219、ther aspects of the TCJA.Furthermore,guidance is expected to be forthcoming with respect to the treatment of the TCJA by the various states.We will continue to monitor the guidance issued by the Treasury Department and the various states and will record any material impact related to it in the perio

220、d of enactment.11Fluctuations in foreign currency have an effect on our results from operations.The results of our foreign operations are reported in the local currency and then translated into U.S.dollars at the applicable exchange rates for inclusion in our consolidated financial statements.The ex

221、change rates between some of these currencies and the U.S.dollar have fluctuated significantly in recent years,and may continue to do so in the future.We may incur losses related to foreign currency fluctuations,and foreign exchange controls may prevent us from repatriating cash in countries outside

222、 the U.S.In addition,because our financial statements are stated in U.S.dollars,such fluctuations may also affect the comparability of our results between financial periods.Our outstanding indebtedness requires debt service commitments that could adversely affect our ability to fulfill our obligatio

223、ns and could limit our growth and impose restrictions on our business.As of December 31,2018,excluding debt discount and debt issuance costs,we had$1.2 billion of consolidated indebtedness.We and our subsidiaries may undertake additional borrowings in the future,subject to certain limitations contai

224、ned in the debt instruments governing our indebtedness.Over the next three years,we will be required to repay or refinance approximately$883.3 million of our currently outstanding indebtedness.Our debt service obligations impact our ability to operate and grow our business.Our payments of principal

225、and interest on our indebtedness reduce the amount of funds available to us to invest in operations,future business opportunities,acquisitions,and other potentially beneficial activities.Our debt service obligations also increase our vulnerability to adverse economic,financial market and industry co

226、nditions.Our ability to service and refinance our indebtedness,make scheduled payments on our operating leases and fund capital expenditures,acquisitions or other business opportunities,will depend in large part on both our future performance and the availability of additional financing in the futur

227、e.There can be no assurance that our business will continue to generate sufficient cash flows from operations in the future to service our debt,make necessary capital expenditures,or meet other cash needs.If unable to do so,we may be required to refinance all or a portion of our existing debt,sell a

228、ssets,or obtain additional financing.Our debt agreements contain restrictions that may limit our ability to operate our business.Our credit facilities require us to maintain specific earnings to fixed expense ratios and to meet minimum net worth requirements in certain circumstances.In addition,our

229、credit facilities and our other debt agreements contain,and any of our future debt agreements may contain,additional covenant restrictions that limit our ability to operate our business,or are dependent upon our future financial performance.As a result of these covenants,our ability to respond to ch

230、anges in business and economic conditions and to obtain additional financing,if needed,may be significantly restricted,and we may be prevented from engaging in transactions that might otherwise be beneficial to us.See the liquidity section in Item 7.Managements Discussion and Analysis for further de

231、tails.There is a risk that the market value of our common stock may decline.Stock markets have experienced significant price and trading volume fluctuations,and the market prices of companies in our industry have been volatile.For some issuers,the markets have exerted downward pressure on stock pric

232、es and credit capacity.It is impossible to predict whether the price of our common stock will rise or fall.Trading prices of our common stock will be influenced by our operating results and prospects and by economic,political,financial,and other factors.Regulatory and Legal Risk FactorWe are subject

233、 to costs and risks associated with global laws and regulations affecting our business,as well as litigation for product liability or other matters affecting our business.The global legal and regulatory environment is complex and exposes us to compliance costs and risks,as well as litigation and oth

234、er legal proceedings,which could materially affect our operations and financial results.These laws and regulations may change,sometimes significantly,as a result of political or economic events,and some changes are anticipated to occur in the coming year.They include tax laws and regulations,import

235、and export laws and regulations,labor and employment laws and regulations,product safety,occupational safety and health laws and regulations,securities and exchange laws and regulations,data privacy laws and regulations(and other laws applicable to publicly-traded companies such as the Foreign Corru

236、pt Practices Act),and environmental laws and regulations.Furthermore,as a government contractor selling to federal,state and local government entities,we are also subject to a wide variety of additional laws and regulations.Proposed laws and regulations in these and other areas could affect the cost

237、 of our business operations.From time to time we are involved in legal proceedings,audits or investigations which may relate to,for example,product liability,labor and employment(including wage and hour),tax,escheat,import and export compliance,government contracts,worker health and safety,and gener

238、al commercial and securities matters.While we believe the outcome of any pending matter is 12unlikely to have a material adverse effect on our financial condition or liquidity,additional legal proceedings may arise in the future and the outcome of these as well as other contingencies could require u

239、s to take actions,which could adversely affect our operations or could require us to pay substantial amounts of money.Item 1B.Unresolved Staff Comments.None.Item 2.Properties.We have approximately 500 branches,of which approximately 340 are located in the United States,approximately 130 are located

240、in Canada,seven are located in Mexico and the remainder are in other countries located in Africa,Asia,Europe and South America.Approximately 14%of our branches are owned facilities,and the remainder are leased.The following table summarizes our distribution centers:Square FeetLeased/OwnedLocation Li

241、ttle Rock,AR100,000LeasedByhalia,MS(1)148,000OwnedSparks,NV199,000LeasedWarrendale,PA(1)194,000OwnedDallas,TX112,000LeasedMadison,WI136,000LeasedEdmonton,AB101,000LeasedBurnaby,BC65,000LeasedMississauga,ON246,000LeasedMontreal,QC126,000Leased(1)Property pledged as collateral under our Term Loan Faci

242、lity.We also lease our 109,000 square-foot headquarters in Pittsburgh,Pennsylvania.We do not regard the real property associated with any single branch location as material to our operations.We believe our facilities are in good operating condition and are adequate for their respective uses.Item 3.L

243、egal Proceedings.From time to time,a number of lawsuits and claims have been or may be asserted against us relating to the conduct of our business,including litigation relating to commercial,product and employment matters.The outcome of any litigation cannot be predicted with certainty,and some laws

244、uits may be determined adversely to us.However,management does not believe that the ultimate outcome of any such pending matters is likely to have a material adverse effect on our financial condition or liquidity,although the resolution in any fiscal period of one or more of these matters may have a

245、 material adverse effect on our results of operations for that period.Information relating to legal proceedings is disclosed in Note 16,Commitments and Contingencies,of the Notes to Consolidated Financial Statements and is incorporated herein by reference.Item 4.Mine Safety Disclosures.Not applicabl

246、e.13PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.Market,Stockholder and Dividend Information.Our common stock is listed on the New York Stock Exchange under the symbol“WCC.”As of February 26,2019,there were 45,195,593 shares

247、 of common stock outstanding held by approximately 19holders of record.We have not paid dividends on common stock and do not currently plan to pay dividends.We do,however,evaluate the possibility from time to time.It is currently expected that earnings will be reinvested to support growth initiative

248、s,acquisitions,debt reduction,and share repurchases.In addition,our Revolving Credit Facility,Term Loan Facility,2021 Notes and 2024 Notes limit our ability to pay dividends and repurchase our common stock.See Part II,Item 7,“Managements Discussion and Analysis of Financial Condition and Results of

249、Operations Liquidity and Capital Resources.”Issuer Purchases of Equity Securities.On December 13,2017,WESCO announced that its Board of Directors approved,on December 7,2017,the repurchase of up to$300 million of the Companys common stock through December 31,2020.On October 31,2018,the Companys Boar

250、d of Directors approved an increase to the authorization from$300 million to$400 million.As disclosed in Note 12 of the Notes to Consolidated Financial Statements,as of December 31,2018,2,003,446 shares had been repurchased for$125.0 million under this repurchase authorization.The following table se

251、ts forth all issuer purchases of common stock during the three months ended December 31,2018,including those made pursuant to publicly announced plans or programs:PeriodTotal Number of Shares Purchased(1)Average PricePaid Per ShareTotal Number ofShares Purchased asPart of PubliclyAnnounced Plans orP

252、rogramsApproximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(2)(In Millions)October 1 October 31,201864,148$59.1463,730$375.0November 1 November 30,20181,588,868$53.531,587,895$275.0December 1 December 31,2018$275.0Total1,653,016$53.751,651,625(1)There were 1,391 s

253、hares purchased in the period that were not part of the publicly announced share repurchase program.These shares were surrendered by stock-based compensation plan participants to satisfy tax withholding obligations arising from the exercise of stock-settled stock appreciation rights and vesting of r

254、estricted stock units.(2)This amount represents the remaining authorization under the Companys share repurchase program that is available to repurchase shares of the Companys common stock.Due to the nature of accelerated share repurchases,the Company receives a certain percentage of shares immediate

255、ly upon an up-front payment of cash.The remaining shares are delivered by the respective counterparty at the end of the valuation period.The amount authorized under the Companys share repurchase program was reduced at the time of the up-front cash payment.Company Performance.The following stock pric

256、e performance graph illustrates the cumulative total return on an investment in WESCO International,a 2018 Performance Peer Group,and the Russell 2000 Index.The graph covers the period from December 31,2013 to December 31,2018,and assumes that the value for each investment was$100 on December 31,201

257、8,and that all dividends were reinvested.142018 Performance Peer Group:Anixter International,Inc.Essendant,Inc.MSC Industrial Direct Co.,Inc.Applied Industrial Technologies,Inc.Fastenal CompanyRexel SAArrow Electronics,Inc.Genuine Parts CompanyRockwell Automation,Inc.Avnet,Inc.HD Supply Holdings,Inc

258、.Tech Data CorporationBarnes GroupHubbell,Inc.W.W.Grainger,Inc.Eaton Corporation PlcMRC Global,Inc.15Item 6.Selected Financial Data.The following selected financial data for the last five fiscal years has been derived from the Companys Consolidated Financial Statements for those years.As described b

259、elow,certain prior periods have been impacted by the retrospective application of an accounting standard.This financial data should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in Item 8,and with Managements Discussion and Analysis of Financial Conditi

260、on and Results of Operations,included in Item 7.Income Statement Data:Year Ended December 31,(In millions,except per share data)20182017201620152014Net sales$8,176.6$7,679.0$7,336.0$7,518.5$7,889.6Cost of goods sold(excluding depreciation and amortization)6,609.26,194.45,887.86,024.86,278.6Selling,g

261、eneral and administrative expenses(1)1,151.91,101.51,050.81,056.21,077.7Depreciation and amortization63.064.066.965.068.0Income from operations352.5319.1330.5372.5465.3Net interest and other(1)71.466.675.168.681.2Loss on debt extinguishment(2)123.9Income before income taxes281.1252.5131.5303.9384.1P

262、rovision for income taxes55.789.330.495.5108.7Net income225.4163.2101.1208.4275.4 Net loss attributable to noncontrolling interests2.00.30.52.30.5 Net income attributable to WESCO International$227.4$163.5$101.6$210.7$275.9Earnings per common share attributable to WESCOInternational Basic$4.87$3.42$

263、2.30$4.85$6.21Diluted$4.82$3.38$2.10$4.18$5.18Weighted-average common shares outstanding Basic46.747.844.143.444.4Diluted47.248.448.350.453.3Other Financial Data:Capital expenditures$36.2$21.5$18.0$21.7$20.5Net cash provided by operating activities296.7149.1300.2283.1251.2Net cash used in investing

264、activities(34.1)(5.3)(70.5)(170.2)(144.2)Net cash used in financing activities(275.1)(141.2)(276.3)(67.8)(95.5)Balance Sheet Data:Total assets$4,605.0$4,735.5$4,431.8$4,569.7$4,754.4Total debt(including current and short-term debt)(3)1,223.51,348.61,385.31,483.41,415.6Stockholders equity2,129.72,116

265、.11,963.61,727.51,881.8(1)Effective January 1,2018,WESCO adopted Accounting Standards Update(ASU)2017-07,CompensationRetirement Benefits(Topic 715):Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.The adoption of this ASU resulted in the reclassifi

266、cation of$1.8 million,$1.5 million,$1.2 million and$0.9 million from selling,general and administrative expenses to net interest and other in the Consolidated Statements of Income and Comprehensive Income(Loss)for the years ended December 31,2017,2016,2015 and 2014,respectively.(2)Represents the los

267、s recognized in 2016 related to the redemption of the then outstanding 6.0%Convertible Senior Debentures due 2029(the 2029 Debentures).(3)Includes the discount related to the 2029 Debentures and Term Loan Facility.For 2018,2017,2016 and 2015,also includes debt issuance costs.See Note 9 of the Notes

268、to Consolidated Financial Statements.16Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.The following discussion should be read in conjunction with the audited consolidated financial statements and notes thereto included in Item 8 of this Annual Report on F

269、orm 10-K.Company OverviewOur 2018 financial results reflect record sales with growth in all end markets and geographies,operating margin expansion,strong cash flow generation,and effective capital deployment.Sales increased$497.6 million,or 6.5%,over the prior year.Foreign exchange rates positively

270、impacted net sales by 0.3%,resulting in organic sales growth of 6.2%.Cost of goods sold as a percentage of net sales was 80.8%and 80.7%in 2018 and 2017,respectively.Operating income was$352.4 million for 2018,compared to$319.0 million for 2017.Operating income increased primarily due to higher sales

271、 volume and operating leverage.Net income attributable to WESCO International of$227.3 million increased by 39.1%compared to 2017 net income of$163.5 million,which included$26.4 million of discrete income tax expense resulting from the application of the TCJA.Earnings per diluted share attributable

272、to WESCO International was$4.82 in 2018,based on 47.2 million diluted shares,compared with earnings per diluted share of$3.38 in 2017,based on 48.4 million diluted shares.Excluding the impact of the TCJA of$0.55,adjusted earnings per diluted share for 2017 was$3.93.We provide a full-line of electric

273、al,industrial and communications MRO and OEM products,construction materials,and advanced supply chain management and logistics services to customers globally.Approximately 75%of our sales in 2018 were from customers in the United States and 25%were from international customers,primarily in Canada.O

274、ur end markets consist of industrial firms,electrical and data communications contractors,utilities,and commercial organizations,institutions and government entities.Our transaction types to these markets can be categorized as stock,direct ship and special order.Stock orders are filled directly from

275、 existing inventory and represent approximately 52%of total sales.Approximately 38%of our total sales are direct ship sales.Direct ship sales are typically custom-built products,large orders or products that are too bulky to easily handle and,as a result,are shipped directly to the customer from the

276、 supplier.Special orders are for products that are not ordinarily stocked in inventory and are ordered based on a customers specific request.Special orders represent the remaining 10%of total sales.We have historically financed our working capital requirements,capital expenditures,acquisitions,share

277、 repurchases and new branch openings through internally-generated cash flow,debt issuances,borrowings under our Revolving Credit Facility and funding through our Receivables Facility.Cash FlowWe generated$296.7 million in operating cash flow during 2018.Cash provided by operating activities included

278、 net income of$225.4 million,adjustments to net income totaling$84.9 million,which were offset by changes in assets and liabilities of$13.6 million.Investing activities primarily included capital expenditures of$36.2 million.Financing activities consisted of borrowings and repayments of$473.1 millio

279、n and$433.5 million,respectively,related to our Revolving Credit Facility,borrowings and repayments of$720.0 million and$825.0 million,respectively,related to our Receivables Facility,repayments of$60.0 million applied to our Term Loan Facility as well as borrowings and repayments on our various int

280、ernational lines of credit of$142.3 million and$143.7 million,respectively.Financing activities also included the repurchase of$127.2 million of the Companys common stock,of which$125.0 million was pursuant to the share repurchase plan announced on December 13,2017 and amended on October 31,2018.Fre

281、e cash flow for the years ended December 31,2018 and 2017 was$260.5 million and$127.6 million,respectively.17The following table sets forth the components of free cash flow:Twelve Months Ended December 31,20182017(In millions)Cash flow provided by operations$296.7$149.1Less:Capital expenditures(36.2

282、)(21.5)Free cash flow$260.5$127.6Note:The table above reconciles cash flow provided by operations to free cash flow.Free cash flow is a non-GAAP financial measure of liquidity.Capital expenditures are deducted from operating cash flow to determine free cash flow.Free cash flow is available to fund i

283、nvesting and financing activities.Financing AvailabilityAs of December 31,2018,we had$515.9 million in total available borrowing capacity under our Revolving Credit Facility,which was comprised of$398.1 million of availability under the U.S.sub-facility and$117.8 million of availability under the Ca

284、nadian sub-facility.Available borrowing capacity under our Receivables Facility was$275.0 million.The Receivables Facility and Revolving Credit Facility both mature in September 2020.Critical Accounting Policies and EstimatesOur discussion and analysis of our financial condition and results of opera

285、tions are based upon our consolidated financial statements,which have been prepared in accordance with accounting principles generally accepted in the United States of America(GAAP).The preparation of these financial statements requires us to make estimates and judgments that affect the reported amo

286、unts of assets,liabilities,revenues and expenses and related disclosure of contingent assets and liabilities.On an ongoing basis,we evaluate our estimates,including those related to supplier programs,bad debts,inventories,insurance costs,goodwill,income taxes,contingencies and litigation.We base our

287、 estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances,the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.Actual results

288、 may differ from these estimates.If actual market conditions are less favorable than those projected by management,additional adjustments to reserve items may be required.We believe the following critical accounting policies affect our judgments and estimates used in the preparation of our consolida

289、ted financial statements.Revenue RecognitionOur revenue arrangements generally consist of single performance obligations to transfer a promised good or service,or a combination of goods and services.Revenue is recognized when control has transferred to the customer,which is generally when the produc

290、t has shipped from one of our facilities or directly from a supplier.For products that ship directly from suppliers to customers,we act as the principal in the transaction and recognize revenue on a gross basis.Revenue for integrated supply services is recognized over time based on hours incurred as

291、 the transfer of control occurs as the services are being performed.We generally satisfy our performance obligations within a year or less.We generally do not have significant financing terms associated with our contracts;payments are normally received within 60 days.There are generally no significa

292、nt costs associated with obtaining customer contracts.We generally pass through warranties offered by manufacturers or suppliers to our customers.Sales taxes(and value added taxes in foreign jurisdictions)collected from customers and remitted to governmental authorities are excluded from net sales.S

293、upplier Volume RebatesWe receive rebates from certain suppliers based on contractual arrangements with such suppliers.Since there is a lag between actual purchases and the rebates received from suppliers,we estimate and accrue the approximate amount of rebates available at a specific date based on f

294、orecasted purchases and the rebate provisions of the various supplier contracts.We record the amounts as other accounts receivable in the Consolidated Balance Sheets and the corresponding rebate income is recorded as a reduction of cost of goods sold.Allowance for Doubtful AccountsWe maintain allowa

295、nces for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments.We have a systematic procedure using historical data and reasonable assumptions of collectability made at the local branch level and on a consolidated corporate basis to estimate a

296、llowances for doubtful accounts.18Excess and Obsolete Inventory We write down our inventories to the lower of cost and net realizable value based on internal factors derived from historical analysis of actual losses.We use past data to identify items in excess of 36 months supply relative to demand

297、or movement.We then analyze the ultimate disposition of identified excess inventories as they are sold,returned to supplier,or scrapped.This historical item-by-item analysis allows us to develop an estimate of the likelihood that an item identified as being in excess supply ultimately becomes obsole

298、te.We apply the estimate to inventories currently in excess of 36 months supply,and reduce the carrying value of inventories by the derived amount.We revisit and test our assumptions on a periodic basis.Historically,we have not had material changes to our assumptions,nor do we anticipate any materia

299、l changes in the future.Goodwill and Indefinite-Lived Intangible AssetsGoodwill and indefinite-lived intangible assets are tested for impairment annually during the fourth quarter using information available at the end of September,or more frequently if triggering events occur,indicating that their

300、carrying value may not be recoverable.We test for goodwill impairment on a reporting unit level and the evaluation involves comparing the fair value of each reporting unit to its carrying value.The fair values of the reporting units are determined using a combination of a discounted cash flow analys

301、is and market multiples.Assumptions used for these fair value techniques are based on a combination of historical results,current forecasts,market data and recent economic events.We evaluate the recoverability of indefinite-lived intangible assets using the relief-from-royalty method based on projec

302、ted financial information.The determination of fair value involves significant management judgment and we apply our best judgment when assessing the reasonableness of financial projections.Fair values are sensitive to changes in underlying assumptions and factors.As a result,there can be no assuranc

303、e that the estimates and assumptions made for purposes of the annual goodwill and indefinite-lived intangible impairment tests will prove to be an accurate prediction of future results.We performed our annual impairment tests of goodwill and indefinite-lived intangible assets during the fourth quart

304、er.A possible indicator of goodwill impairment is the relationship of a companys market capitalization to its book value.As of December 31,2018,our market capitalization exceeded our book value and the fair values of our reporting units exceeded their carrying values.Accordingly,there were no impair

305、ment losses identified as a result of our annual test.Intangible AssetsWe account for certain economic benefits purchased as a result of our acquisitions,including customer relations,distribution agreements,technology and trademarks,as intangible assets.Most trademarks have an indefinite life.We amo

306、rtize all other intangible assets over a useful life determined by the expected cash flows produced by such intangibles and their respective tax benefits.Useful lives vary between 2 and 20 years,depending on the specific intangible asset.Income TaxesWe account for income taxes under the asset and li

307、ability method,which requires the recognition of deferred income taxes for events that have future tax consequences.Under this method,deferred income taxes are recognized(using enacted tax laws and rates)based on the future income tax effects of differences in the carrying amounts of assets and liab

308、ilities for financial reporting and tax purposes.The effect of a tax rate change on deferred tax assets and liabilities is recognized in income in the period of change.We recognize deferred tax assets at amounts that are expected to be realized.To make such determination,management evaluates all pos

309、itive and negative evidence,including but not limited to,prior,current and future taxable income,tax planning strategies and future reversals of existing temporary differences.A valuation allowance is recognized if it is“more-likely-than-not”that some or all of a deferred tax asset will not be reali

310、zed.We regularly assess the realizability of deferred tax assets.We account for uncertainty in income taxes using a more-likely-than-not recognition threshold.Due to the subjectivity inherent in the evaluation of uncertain tax positions,the tax benefit ultimately recognized may materially differ fro

311、m the estimate.We recognize interest and penalties related to uncertain tax benefits as part of interest expense and income tax expense,respectively.The TCJA imposed a one-time tax on the deemed repatriation of undistributed foreign earnings(the transition tax).Except for a portion of the previously

312、 taxed foreign earnings that have been repatriated,we continue to assert that the remaining undistributed earnings of our foreign subsidiaries,the majority of which were subject to the transition tax,are indefinitely reinvested.We believe we are able to maintain a sufficient level of liquidity for o

313、ur domestic operations and commitments without repatriating cash held by these foreign subsidiaries.Upon any future repatriation,additional income taxes may be incurred;however,it is not practicable to determine the amount at this time.The provisions of the TCJA also introduced U.S.taxation on certa

314、in global intangible low-taxed income(GILTI).We have elected to account for GILTI tax as a component of income tax expense.19Future adjustments(if any)resulting from additional regulatory guidance regarding the accounting for the income tax effects of TCJA will be recognized as discrete income tax e

315、xpense or benefit in the period in which guidance is issued.Results of OperationsThe following table sets forth the percentage relationship to net sales of certain items in our Consolidated Statements of Income and Comprehensive Income for the periods presented:Year Ended December 31,201820172016Net

316、 sales100.0%100.0%100.0%Cost of goods sold(excluding depreciation and amortization)80.880.780.3Selling,general and administrative expenses14.114.314.3Depreciation and amortization0.80.80.9Income from operations4.34.24.5Net interest and other0.90.91.0Loss on debt redemption1.7Income before income tax

317、es3.43.31.8Provision for income taxes0.61.20.4Net income attributable to WESCO International2.8%2.1%1.4%2018 Compared to 2017Net Sales.Net sales in 2018 increased 6.5%to$8.2 billion,compared with$7.7 billion in 2017.Foreign exchange rates positively impacted net sales by 0.3%,resulting in organic sa

318、les growth of 6.2%.The following table sets forth organic sales growth:Twelve Months EndedDecember 31,Organic Sales Growth:2018 Change in net sales6.5%Less:Impact from acquisitions%Less:Impact from foreign exchange rates0.3%Less:Impact from number of workdays%Organic sales growth6.2%Note:Organic sal

319、es growth is a non-GAAP financial measure of sales performance.Organic sales growth is calculated by deducting the percentage impact from acquisitions in the first year of ownership,foreign exchange rates and number of workdays from the overall percentage change in consolidated net sales.Cost of Goo

320、ds Sold.Cost of goods sold increased 6.7%in 2018 to$6.6 billion,compared with$6.2 billion in 2017.Cost of goods sold as a percentage of net sales was 80.8%and 80.7%in 2018 and 2017,respectively.Cost of goods sold as a percentage of net sales was positively impacted by our ability to effectively pass

321、 through supplier price increases to customers and margin improvement initiatives.These benefits were offset by a reclassification of certain labor costs from selling,general and administrative expenses to cost of goods sold.Selling,General and Administrative(SG&A)Expenses.SG&A expenses include cost

322、s associated with personnel,shipping and handling,travel,advertising,facilities,utilities and bad debts.SG&A expenses increased by$50.3 million,or 4.6%,to$1.2 billion in 2018.SG&A expenses increased primarily as a result of higher payroll expenses and higher operating costs,which were required to su

323、pport sales volume growth.SG&A expenses as a percentage of net sales improved to 14.1%in 2018 from 14.3%in 2017.20SG&A payroll expenses for 2018 of$804.2 million increased by$27.9 million compared to 2017.The increase in SG&A payroll expenses was primarily due to increases in salaries,variable compe

324、nsation and healthcare benefits,which were partially offset by a reclassification of certain labor costs from selling,general and administrative expenses to cost of goods sold.The remaining SG&A expenses for 2018 of$347.8 million increased by$22.5 million compared to 2017.The increase in the remaini

325、ng SG&A expenses was primarily due to higher costs driven by sales volume growth and a bad debt charge related to a Canadian customer that ceased operations.These increases were partially offset by gains from the sale of certain long-lived assets.Depreciation and Amortization.Depreciation and amorti

326、zation decreased$1.0 million to$63.0 million in 2018,compared with$64.0 million in 2017.Income from Operations.Income from operations increased by$33.4 million to$352.4 million in 2018,compared to$319.0 million in 2017.Income from operations as a percentage of net sales was 4.3%and 4.2%in 2018 and 2

327、017,respectively.Income from operations as a percentage of net sales increased primarily as a result of higher sales volume,as well as operational efficiencies and cost discipline.Net Interest and Other.Net interest and other totaled$71.4 million in 2018,compared with$66.6 million in 2017,an increas

328、e of 7.2%.The increase was primarily due to a foreign exchange loss of approximately$3.0 million from the remeasurement of a financial instrument,as well as accelerated amortization of debt discount and debt issuance costs due to early repayments on our term loan facility.Income Taxes.Our effective

329、tax rate was 19.8%in 2018 compared to 35.4%in 2017.The lower effective tax rate for 2018 was primarily due to the permanent reduction of the U.S.federal statutory income tax rate from 35%to 21%,effective January 1,2018,as well as the completion of the accounting for the income tax effects of the TCJ

330、A.In 2017,the effective tax rate was negatively impacted by the discrete income tax expense of$26.4 million related to the application of the TCJA.Net Income.Net income increased by$62.2 million,or 38.1%,to$225.4 million in 2018,compared to$163.1 million in 2017.The increase in net income was primar

331、ily due higher sales volume and lower income taxes.Net Loss Attributable to Noncontrolling Interests.Net loss attributable to noncontrolling interests in 2018 and 2017 was$2.0 million and$0.3 million,respectively.The change in net loss attributable to noncontrolling interests was primarily due to th

332、e effect of foreign currency.Net Income Attributable to WESCO International.Net income and earnings per diluted share attributable to WESCO International were$227.3 million and$4.82 per share,respectively,in 2018,compared with$163.5 million and$3.38 per share,respectively,in 2017.2017 Compared to 20

333、16Net Sales.Net sales in 2017 increased 4.7%to$7.7 billion,compared with$7.3 billion in 2016.Foreign exchange rates and acquisitions positively impacted net sales by 0.4%and 0.2%,respectively,and were partially offset by a 0.4%impact from the number of workdays,resulting in organic sales growth of 4.5%.The following table sets forth organic sales growth:Twelve Months EndedDecember 31,Organic Sales