Acquisitions

12 Months Ended

Dec. 31, 2021

PCM

On August 30, 2019, we completed our acquisition of PCM, acquiring 100 percent of the issued and outstanding shares of PCM for a cash purchase price of $745,562,000, which included cash and cash equivalents acquired of $84,637,000 and the payment of PCM’s outstanding debt. PCM was a provider of multi-vendor technology offerings, including hardware, software and services to small, mid-sized and corporate/enterprise commercial clients, state, local and federal governments and educational institutions across the United States, Canada and the United Kingdom. Based in El Segundo, California, PCM had 40 office locations in North America and the United Kingdom and more than 4,000 teammates. We believe that this acquisition allowed us to help PCM clients in positioning their businesses for future growth, transforming and securing their data platforms, creating modern and mobile experiences for their workforce and optimizing the procurement of technology. The addition of PCM complemented our supply chain expertise, adding scale and clients in the commercial space primarily in North America.

The following table summarizes the purchase price and the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition (in thousands):


Purchase price net of cash and cash equivalents acquired			$	660,925
Fair value of net assets acquired:
Current assets	$	531,941
Identifiable intangible assets - see description below	191,370
Property and equipment	91,213
Other assets	32,699
Current liabilities	(369,183)
Long-term liabilities, including deferred taxes	(71,009)
Total fair value of net assets acquired			407,031
Excess purchase price over fair value of net assets acquired ("goodwill")			$	253,894

Under the acquisition method of accounting, the total purchase price as shown in the table above was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values. The excess of the purchase price over fair value of net assets acquired was recorded as goodwill. In the fourth quarter of 2020, an adjustment of $56,700,000 was recorded to goodwill primarily due to a change in the customer relationships valuation based on updated information received for key inputs as well as an associated change in deferred taxes.

The estimated fair values of current assets and liabilities are based upon their historical costs on the date of acquisition due to their short-term nature. The estimated fair values of the majority of property and equipment excluding acquired real estate are also based upon historical costs as they approximate fair value. Certain long-term assets, including PCM’s IT systems, have been written down to the estimated fair value.

The estimated fair value of net assets acquired was approximately $407,031,000, including $191,370,000 of identifiable intangible assets, consisting primarily of customer relationships of $178,900,000. The fair value of the customer relationships were determined using the multiple-period excess earnings method.

The identifiable intangibles resulting from the acquisition are amortized using the straight-line method over the following estimated useful lives:


Intangible Assets			Estimated Economic Life
Customer relationships			10- 12 years
Trade name			1 Year
Non-compete agreements			2 - 3 Years

Goodwill of $253,894,000, which was recorded in our North America and EMEA operating segments, represents the excess of the purchase price over the estimated fair value assigned to tangible and identifiable intangible assets acquired and liabilities assumed from PCM. The goodwill is not amortized and will be tested for impairment annually in the fourth quarter of our fiscal year. The addition of the PCM technical employees to our team and the opportunity to grow our business are the primary factors making up the goodwill recognized as part of the transaction. None of the goodwill is tax deductible. The purchase price allocation was finalized during the third quarter of 2020.

We have consolidated the results of operations for PCM since its acquisition on August 30, 2019.

The following table reports pro forma information as if the acquisition of PCM had been completed at the beginning of the earliest period presented (in thousands, except per share amounts):


		Year Ended December 31,
		2019
Net sales	As reported	$	7,731,190
	Pro forma	$	9,207,512
Net earnings	As reported	$	159,407
	Pro forma	$	171,102
Diluted earnings per share	As reported	$	4.43
	Pro forma	$	4.76