SEGMENT AND RELATED DISCLOSURES

3 Months Ended

Mar. 31, 2017

Segment and Related Disclosures

Segment and Related Disclosures

Note 4–Segment and Related Disclosures

The internal reporting structure used by our chief operating decision maker (“CODM”) to assess performance and allocate resources determines the basis for our reportable operating segments.  Our CODM is our Chief Executive Officer, and he evaluates operations and allocates resources based on a measure of operating income.

Our operations are organized under three reportable segments—the SMB segment, which serves primarily small- and medium-sized businesses; the Large Account segment, which serves primarily medium-to-large corporations; and the Public Sector segment, which serves primarily federal, state, and local governmental and educational institutions.  The Headquarters/Other group provides services in areas such as finance, human resources, information technology, marketing, and product management.  Most of the operating costs associated with the Headquarters/Other group functions are charged to the operating segments based on their estimated usage of the underlying functions.  We report these charges to the operating segments as “Allocations.”  Certain headquarters costs relating to executive oversight and other fiduciary functions that are not allocated to the operating segments are included under the heading of Headquarters/Other in the tables below.

In May 2016, we acquired Softmart, a global supplier of information technology and software services solutions.  We have included the operating results of Softmart in our SMB and Large Account segments.   

In October 2016, we acquired GlobalServe, which has developed an industry-leading tool that simplifies customers’ global IT procurement.  We have included the operating results for GlobalServe in our Large Account segment.  The external sales and operating results of GlobalServe were immaterial to our consolidated results. 

Segment information applicable to our reportable operating segments for the three months ended March 31, 2017 and 2016 is shown below:

	Three Months Ended
	March 31,		March 31,
	2017		2016
Net sales:
SMB	$	273,633	$	261,246
Large Account		252,918		200,109
Public Sector		144,043		111,039
Total net sales	$	670,594	$	572,394
Operating income (loss):
SMB	$	8,607	$	11,321
Large Account		9,057		7,190
Public Sector		(2,613)		(150)
Headquarters/Other		(3,599)		(3,197)
Total operating income		11,452		15,164
Interest income (expense)		19		(14)
Income before taxes	$	11,471	$	15,150
Selected operating expense:
Depreciation and amortization:
SMB	$	154	$	9
Large Account		594		306
Public Sector		39		40
Headquarters/Other		2,068		2,061
Total depreciation and amortization	$	2,855	$	2,416
Total assets:
SMB	$	245,049
Large Account		376,478
Public Sector		69,504
Headquarters/Other		(14,539)
Total assets	$	676,492

The assets of our three operating segments presented above consist primarily of accounts receivable, intercompany receivable, goodwill, and other intangibles.  Assets reported under the Headquarters/Other group are managed by corporate headquarters, including cash, inventory, and property and equipment.  Total assets for the Headquarters/Other group are presented net of intercompany balance eliminations of $31,853 as of March 31, 2017.  Our capital expenditures consist largely of IT hardware and software purchased to maintain or upgrade our management information systems.  These information systems serve all of our segments, to varying degrees, and accordingly, our CODM does not evaluate capital expenditures on a segment basis.