UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
þ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2018
For the quarterly period ended September 30, 2019
or
o☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
For the transition period from to

Commission File Number:001-14989
WESCO International, Inc.
(Exact name of registrant as specified in its charter)
Delaware
25-1723342
(State or other jurisdiction of
incorporation or organization)
 
25-1723342
(I.R.S. Employer
Identification No.)
   
225 West Station Square Drive

Suite 700
15219
Pittsburgh,Pennsylvania
(Zip Code)
(Address of principal executive offices) 
15219
(Zip Code)

(412) (412) 454-2200
(Registrant's telephone number, including area code)
Not applicable.
(Former name, former address and former fiscal year, if changed since last report)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
Title of ClassTrading Symbol(s)Name of Exchange on which registered
Common Stock, par value $.01 per shareWCCNew York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.              Yes þ☑ No o☐
Indicate by check mark 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 pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes þ☑ No o☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an 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.
Large accelerated filerþ
☑   
Accelerated filero
☐
     
Non-accelerated filer o☐
 
Smaller reporting companyo
☐
     
    
Emerging growth companyo☐
     
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 Exchange Act. o☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o☐ No þ☑
As of November 1, 2018, 46,691,008October 31, 2019, 41,796,445 shares of common stock, $0.01 par value, of the registrant were outstanding.




WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




QUARTERLY REPORT ON FORM 10-Q


Table of Contents
 Page
PART I—FINANCIAL INFORMATION 
  
Item 1. Financial Statements.
2
  
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
2224
  
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
2930
  
Item 4. Controls and Procedures.
2930
  
PART II—OTHER INFORMATION 
  
Item 1. Legal Proceedings.
30
Item 1A. Risk Factors.
30
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
30
Item 6. Exhibits.
31
  
SignaturesItem 1A. Risk Factors.
31
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
31
Item 6. Exhibits.
32
Signatures
33






WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
The interim financial information required by this item is set forth in the unaudited Condensed Consolidated Financial Statements and Notes thereto in this Quarterly Report on Form 10-Q, as follows:
 Page
  
Condensed Consolidated Balance Sheets (unaudited)
3
Condensed Consolidated Statements of Income and Comprehensive Income (unaudited)
4
Condensed Consolidated Statements of Cash Flows (unaudited)
5
Condensed Consolidated Statements of Stockholders' Equity (unaudited)
6
Notes to Condensed Consolidated Financial Statements (unaudited)
68



WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands of dollars, except share data)
(unaudited)
As of
September 30,
2018		 December 31,
2017		As of
Assets   September 30,
2019		 December 31,
2018
Current assets:      
Cash and cash equivalents$142,760
 $117,953
$138,160
 $96,343
Trade accounts receivable, net of allowance for doubtful accounts of $25,272 and $21,313 in 2018 and 2017, respectively1,265,880
 1,170,080
Trade accounts receivable, net of allowance for doubtful accounts of $27,122 and $24,468 in 2019 and 2018, respectively1,315,026
 1,166,607
Other accounts receivable80,676
 101,229
82,357
 96,984
Inventories926,768
 956,148
961,997
 948,726
Prepaid expenses and other current assets90,415
 63,439
80,940
 76,980
Total current assets2,506,499
 2,408,849
2,578,480
 2,385,640
Property, buildings and equipment, net of accumulated depreciation of $289,273 and $278,455 in 2018 and 2017, respectively157,129
 156,445
Intangible assets, net of accumulated amortization of $248,797 and $223,554 in 2018
and 2017, respectively
334,026
 367,104
Property, buildings and equipment, net of accumulated depreciation of $289,882 and $291,811 in 2019 and 2018, respectively174,459
 160,878
Operating lease assets (Notes 2 and 4)237,252
 —
Intangible assets, net of accumulated amortization of $278,856 and $249,539 in 2019
and 2018, respectively
293,493
 316,016
Goodwill1,755,292
 1,771,877
1,746,071
 1,722,603
Other assets25,845
 31,193
17,656
 19,899
Total assets$4,778,791
 $4,735,468
$5,047,411
 $4,605,036
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable$813,395
 $799,520
$849,584
 $794,348
Accrued payroll and benefit costs73,074
 72,686
50,205
 88,105
Short-term debt31,125
 34,075
25,561
 30,785
Current portion of long-term debt1,179
 1,224
Current portion of long-term debt, net of debt discount and debt issuance costs of $488 in 2018338
 25,429
Bank overdrafts30,266
 37,644
18,774
 17,818
Other current liabilities102,489
 95,820
Other current liabilities (Note 4)160,062
 105,461
Total current liabilities1,051,528
 1,040,969
1,104,524
 1,061,946
Long-term debt, net of debt discount and debt issuance costs of $10,596 and $14,224 in 2018 and 2017, respectively1,229,314
 1,313,261
Long-term debt, net of debt discount and debt issuance costs of $9,371 and $9,243 in 2019 and 2018, respectively1,346,333
 1,167,311
Operating lease liabilities (Notes 2 and 4)182,044
 —
Deferred income taxes147,048
 136,858
147,832
 143,967
Other noncurrent liabilities119,064
 128,237
79,968
 102,086
Total liabilities$2,546,954
 $2,619,325
$2,860,701
 $2,475,310
Commitments and contingencies (Note 10)


Commitments and contingencies (Note 12)



Stockholders’ equity:      
Preferred stock, $.01 par value; 20,000,000 shares authorized, no shares issued or outstanding—
 —
—
 —
Common stock, $.01 par value; 210,000,000 shares authorized, 59,152,810 and 59,045,762 shares issued and 46,753,475 and 47,009,540 shares outstanding in 2018 and 2017, respectively592
 591
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2018 and 2017, respectively43
 43
Common stock, $.01 par value; 210,000,000 shares authorized, 59,294,497 and 59,157,696 shares issued and 41,783,995 and 45,106,085 shares outstanding in 2019 and 2018, respectively593
 592
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2019 and 2018, respectively43
 43
Additional capital1,006,222
 999,156
1,034,888
 993,666
Retained earnings2,249,327
 2,079,697
2,477,259
 2,307,462
Treasury stock, at cost; 16,738,766 and 16,375,653 shares in 2018 and 2017, respectively(669,212) (647,158)
Treasury stock, at cost; 21,849,933 and 18,391,042 shares in 2019 and 2018, respectively(937,135) (758,018)
Accumulated other comprehensive loss(349,619) (312,590)(382,530) (408,435)
Total WESCO International, Inc. stockholders' equity2,237,353
 2,119,739
2,193,118
 2,135,310
Noncontrolling interests(5,516) (3,596)(6,408) (5,584)
Total stockholders’ equity2,231,837
 2,116,143
2,186,710
 2,129,726
Total liabilities and stockholders’ equity$4,778,791
 $4,735,468
$5,047,411
 $4,605,036
The accompanying notes are an integral part of the condensed consolidated financial statements.


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(In thousands of dollars, except per share data)
(unaudited)
Three Months Ended Nine Months EndedThree Months Ended Nine Months Ended
September 30 September 30September 30 September 30
2018 2017 2018 20172019 2018 2019 2018
Net sales (Note 3)$2,067,245
 $2,000,159
 $6,165,154
 $5,682,375
$2,148,110
 $2,067,245
 $6,259,465
 $6,165,154
Cost of goods sold (excluding depreciation and              
amortization)1,670,037
 1,614,814
 4,988,103
 4,580,896
1,747,913
 1,670,037
 5,067,799
 4,988,103
Selling, general and administrative expenses (Note 8)284,073
 280,497
 867,790
 815,653
Selling, general and administrative expenses290,852
 284,073
 883,222
 867,790
Depreciation and amortization15,618
 16,074
 47,321
 47,758
15,612
 15,618
 46,035
 47,321
Income from operations97,517
 88,774
 261,940
 238,068
93,733
 97,517
 262,409
 261,940
Net interest and other (Notes 8 and 9)17,050
 16,835
 54,574
 49,469
Net interest and other13,508
 17,050
 47,934
 54,574
Income before income taxes80,467
 71,939
 207,366
 188,599
80,225
 80,467
 214,475
 207,366
Provision for income taxes13,822
 18,363
 40,077
 47,684
15,886
 13,822
 44,970
 40,077
Net income66,645
 53,576
 167,289
 140,915
64,339
 66,645
 169,505
 167,289
Less: Net loss attributable to noncontrolling interests(204) (99) (1,921) (3)(156) (204) (824) (1,921)
Net income attributable to WESCO International, Inc.$66,849
 $53,675
 $169,210
 $140,918
$64,495
 $66,849
 $170,329
 $169,210
Other comprehensive income (loss):              
Foreign currency translation adjustments20,486
 51,148
 (37,029) 96,097
(16,856) 20,486
 25,905
 (37,029)
Post retirement benefit plan adjustments, net of tax—
 —
 —
 252
Comprehensive income attributable to WESCO International, Inc.$87,335
 $104,823
 $132,181
 $237,267
$47,639
 $87,335
 $196,234
 $132,181
              
Earnings per share attributable to WESCO International, Inc.              
Basic$1.42
 $1.13
 $3.60
 $2.93
$1.53
 $1.42
 $3.91
 $3.60
Diluted$1.41
 $1.12
 $3.56
 $2.90
$1.52
 $1.41
 $3.88
 $3.56


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




WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of dollars)
(unaudited)
Nine Months EndedNine Months Ended
September 30September 30
2018 20172019 2018
Operating activities:      
Net income$167,289
 $140,915
$169,505
 $167,289
Adjustments to reconcile net income to net cash provided by operating activities:      
Depreciation and amortization47,321
 47,758
46,035
 47,321
Deferred income taxes12,194
 8,433
4,621
 12,194
Other operating activities, net7,590
 12,617
10,876
 7,590
Changes in assets and liabilities:      
Trade accounts receivable, net(104,215) (174,667)(122,903) (104,215)
Other accounts receivable19,859
 4,421
15,450
 19,859
Inventories23,189
 (86,736)(1,500) 23,189
Prepaid expenses and other assets(22,088) (8,515)(20,720) (22,088)
Accounts payable18,235
 138,348
46,902
 18,235
Accrued payroll and benefit costs2,788
 2,383
(36,055) 2,788
Other current and noncurrent liabilities2,298
 (3,846)4,453
 2,298
Net cash provided by operating activities174,460
 81,111
116,664
 174,460
      
Investing activities:      
Capital expenditures(23,749) (15,970)(30,323) (23,749)
Acquisition payments(27,742) —
Other investing activities3,609
 3,490
4,575
 3,609
Net cash used in investing activities(20,140) (12,480)(53,490) (20,140)
      
Financing activities:      
Proceeds from issuance of short-term debt116,775
 130,890
Repayments of short-term debt(119,239) (114,972)
Repayments of short-term debt, net(29,600) (2,464)
Proceeds from issuance of long-term debt994,323
 1,079,718
1,105,397
 994,323
Repayments of long-term debt(1,081,323) (1,076,718)(927,410) (1,081,323)
Repurchases of common stock (Note 7)(27,055) (106,702)
Repurchases of common stock (Note 8)(152,735) (27,055)
Debt issuance costs(2,508) —
Repayment of deferred acquisition payable(11,401) —
Other financing activities, net(8,301) (4,380)175
 (8,301)
Net cash used in financing activities(124,820) (92,164)(18,082) (124,820)
      
Effect of exchange rate changes on cash and cash equivalents(4,693) 7,485
(3,275) (4,693)
      
Net change in cash and cash equivalents24,807
 (16,048)41,817
 24,807
Cash and cash equivalents at the beginning of period117,953
 110,131
96,343
 117,953
Cash and cash equivalents at the end of period$142,760
 $94,083
$138,160
 $142,760
Supplemental disclosures:      
Cash paid for interest$37,138
 $35,344
$38,347
 $37,138
Cash paid for income taxes48,744
 50,909
54,044
 48,744


The accompanying notes are an integral part of the condensed consolidated financial statements.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands of dollars)
(unaudited)
                    Accumulated Other
      Class B   Retained       Comprehensive
  Common Stock Common Stock Additional Earnings Treasury Stock Noncontrolling Income
  Amount Shares Amount Shares Capital (Deficit) Amount Shares Interests (Loss)
Balance, December 31, 2018 $592
 59,157,696
 $43
 4,339,431
 $993,666
 $2,307,462
 $(758,018) (18,391,042) $(5,584) $(408,435)
Exercise of stock-based awards 1
 156,760
     (90)   (54) (184)    
Stock-based compensation expense         4,665
          
Repurchases of common stock         19,144
   (19,144) (365,272)    
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 (42,564)     (1,822) (531)        
Noncontrolling interests                 (419)  
Net income attributable to WESCO           42,369
        
Translation adjustments                   22,517
Balance, March 31, 2019 $593
 59,271,892
 $43
 4,339,431
 $1,015,563
 $2,349,300
 $(777,216) (18,756,498) $(6,003) $(385,918)
Exercise of stock-based awards —
 20,831
     6
   (157) (3,029)    
Stock-based compensation expense         5,150
          
Repurchases of common stock         (22,500)   (127,500) (2,394,816)    
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 (19)     (1) 4
        
Noncontrolling interests                 (249)  
Net income attributable to WESCO           63,464
        
Translation adjustments                   20,244
Balance, June 30, 2019 $593
 59,292,704
 $43
 4,339,431
 $998,218
 $2,412,768
 $(904,873) (21,154,343) $(6,252) $(365,674)
Exercise of stock-based awards —
 1,983
     —
   (5) (94)    
Stock-based compensation expense         4,426
          
Repurchases of common stock         32,257
   (32,257) (695,496)    
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 (190)     (13) (4)        
Noncontrolling interests                 (156)  
Net income attributable to WESCO           64,495
        
Translation adjustments                   (16,856)
Balance, September 30, 2019 $593
 59,294,497
 $43
 4,339,431
 $1,034,888
 $2,477,259
 $(937,135) (21,849,933) $(6,408) $(382,530)
The accompanying notes are an integral part of the condensed consolidated financial statements.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands of dollars)
(unaudited)
                    Accumulated Other
      Class B   Retained       Comprehensive
  Common Stock Common Stock Additional Earnings Treasury Stock Noncontrolling Income
  Amount Shares Amount Shares Capital (Deficit) Amount Shares Interests (Loss)
Balance, December 31, 2017 $591
 59,045,762
 $43
 4,339,431
 $999,156
 $2,079,697
 $(647,158) (16,375,653) $(3,596) $(312,590)
Exercise of stock-based awards —
 88,554
     (67)   (455) (5,521)    
Stock-based compensation expense         3,858
          
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 (16,614)     (1,153) 417
        
Noncontrolling interests                 (1,450)  
Net income attributable to WESCO           44,421
        
Translation adjustments                   (28,800)
Balance, March 31, 2018 $591
 59,117,702
 $43
 4,339,431
 $1,001,794
 $2,124,535
 $(647,613) (16,381,174) $(5,046) $(341,390)
Exercise of stock-based awards —
 26,867
     (31)   (230) (3,795)    
Stock-based compensation expense         4,102
          
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 —
     32
 11
        
Noncontrolling interests                 (267)  
Net income attributable to WESCO           57,940
        
Translation adjustments                   (28,715)
Balance, June 30, 2018 $591
 59,144,569
 $43
 4,339,431
 $1,005,897
 $2,182,486
 $(647,843) (16,384,969) $(5,313) $(370,105)
Exercise of stock-based awards 1
 8,990
     14
   (119) (1,976)    
Stock-based compensation expense         4,118
          
Repurchases of common stock         (3,750)   (21,250) (351,821)    
Tax withholding related to vesting of restricted stock units and retirement of common stock —
 (749)     (57) (8)        
Noncontrolling interests                 (203)  
Net income attributable to WESCO           66,849
  ��     
Translation adjustments                   20,486
Balance, September 30, 2018 $592
 59,152,810
 $43
 4,339,431
 $1,006,222
 $2,249,327
 $(669,212) (16,738,766) $(5,516) $(349,619)
The accompanying notes are an integral part of the condensed consolidated financial statements.
   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)






1. ORGANIZATION
WESCO International, Inc. ("WESCO International") and its subsidiaries (collectively, “WESCO” or the "Company"), headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of electrical, industrial and communications maintenance, repair and operating ("MRO") and original equipment manufacturer ("OEM") products, construction materials, and advanced supply chain management and logistics services used primarily in the industrial, construction, utility and commercial, institutional and government markets. WESCO serves approximately 70,000 active customers globally through approximately 500 branches primarily located in North America, with operations in 15 additional countries and 1011 distribution centers located primarily in the United States and Canada, with operations in 16 additional countries.Canada.
2. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited Condensed Consolidated Financial Statements of WESCO have been prepared in accordance with Rule 10-01 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). The unaudited condensed consolidated financial information should be read in conjunction with the audited Consolidated Financial Statements and Notes thereto included in WESCO’s 20172018 Annual Report on Form 10-K as filed with the SEC on February 22, 2018.27, 2019. The Condensed Consolidated Balance Sheet at December 31, 20172018 was derived from the audited Consolidated Financial Statements as of that date, but does not include all of the disclosures required by accounting principles generally accepted in the United States of America.
The unaudited Condensed Consolidated Balance Sheet as of September 30, 2018,2019, the unaudited Condensed Consolidated Statements of Income and Comprehensive Income, and the unaudited Condensed Consolidated Statements of Stockholders' Equity for the three and nine months ended September 30, 20182019 and 2017, respectively,2018, and the unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 20182019 and 2017,2018, respectively, in the opinion of management, have been prepared on the same basis as the audited Consolidated Financial Statements and include all adjustments necessary for the fair statement of the results of the interim periods presented herein. All adjustments reflected in the unaudited condensed consolidated financial information are of a normal recurring nature unless indicated. The results for the interim periods presented herein are not necessarily indicative of the results to be expected for the full year.
Reclassifications
The Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2018 includes certain reclassifications to previously reported amounts to conform to the current period presentation.
Recently Adopted Accounting Pronouncements
Effective January 1, 2018,2019, WESCO adopted Accounting Standards Update (ASU) 2017-07, Compensation—Retirement Benefits (Topic 715): Improving2016-02, Leases, and all the Presentationrelated amendments (“Topic 842”), a comprehensive new standard that amended various aspects of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost.existing accounting guidance for leases. The adoption of this ASU, as described below and in Note 8,Topic 842 resulted in the reclassificationrecognition of amounts reportedright-of-use assets and lease liabilities for operating leases of approximately $240 million and $245 million, respectively, in the unaudited CondensedConsolidated Balance Sheet as of January 1, 2019, most of which relate to real estate. The adoption of Topic 842 did not have a material impact on the Consolidated Statements of Income and Comprehensive Income or Consolidated Statements of Cash Flows for the three and nine months ended September 30, 2017.2019, respectively.
Recently Adopted Accounting Pronouncements
Effective January 1, 2018, WESCO adopted ASU 2014-09, Revenue from Contracts with Customers,The Company used the optional effective date transition method and alltherefore did not adjust the related amendments (“Topic 606”) using the modified retrospective approach to all open contracts.prior comparative periods presented herein. There was no impactcumulative-effect adjustment to WESCO’s previously reported consolidated financial statements and WESCO does not expectbeginning retained earnings as a result of using this method. In addition, the Company elected the package of practical expedients that allowed the adoption of Topic 606842 without reassessing arrangements that commenced prior to have a material impact on its revenuethe effective date. Additional qualitative and results of operations on an ongoing basis.
WESCO’s significant accounting policies arequantitative information about the Company's leases is disclosed in Note 2 of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2017. Changes to the Company’s significant accounting policies as a result of adopting Topic 606 are described in Note 3 below.4.
Recently Issued Accounting Pronouncements
In AugustJune 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the Emerging Issues Task Force). This ASU provides guidance on eight specific cash flow issues where there is diversity in practice. The Company adopted this ASU in the first quarter of 2018. The adoption of this guidance did not have an impact on the unaudited condensed consolidated financial information presented herein.
In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost. This ASU requires that an employer disaggregate the service cost from the other components of net benefit cost. The Company adopted this guidance on a retrospective basis in the first quarter of 2018. See Note 8 for a description of the impact of this accounting standard on the unaudited Condensed Consolidated Statements of Income and Comprehensive Income presented herein. The adoption of this guidance did not have an impact on the Company's unaudited Condensed Consolidated Balance Sheets and the unaudited Condensed Consolidated Statements of Cash Flows presented herein.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting. This ASU clarifies when to account for a change to the terms or conditions of a share-based payment award as a modification. Under the new guidance, modification accounting is required only if the fair value, the vesting conditions, or the classification of the award (as equity or liability) changes as a result of the change in terms or conditions. The Company adopted this ASU in the first quarter of 2018. The adoption of this guidance did not have an impact on the unaudited condensed consolidated financial information presented herein.
Recently Issued Accounting Pronouncements
In February 2016, the FASB issued ASU 2016-02, Leases, a comprehensive new standard that amends various aspects of existing accounting guidance for leases, including the recognition of a right-of-use asset and a lease liability in the balance sheet and disclosing key information about leasing arrangements. This ASU is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. During 2018, the FASB issued additional ASUs that address implementation issues and correct or improve certain aspects of the new accounting guidance for leases, including ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842): Targeted Improvements. These ASUs do not change the core principles in the leasing standard outlined above. The amendments in ASU 2018-11 provide an optional transition method that allows entities to initially apply the new leases standard at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. Consequently, an entity’s reporting for the comparative periods will continue to be in accordance with current lease accounting guidance. Management established a cross-functional team to evaluate and implement the new standard. The team selected a third-party software solution to facilitate the accounting and financial reporting requirements of the new lease standard. Lease data elements have been gathered and are currently being migrated to the software solution. The new standard will be adopted in the first quarter of 2019 and the Company expects to use the optional transition method. While the Company has not yet completed its evaluation of the effects of adopting this ASU, right-of-use assets and lease liabilities will be recorded in the Consolidated Balance Sheets as of the effective date and thereafter.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which introduces new guidance for the accounting for credit losses on certain financial instruments. The amendments in this ASU are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. Management is currently evaluating the impact of adopting this ASU, but does not expect the adoption of this accounting standard tothat it will have a material impact on its consolidated financial statements and notes thereto.
In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment, which eliminates Step 2 of the goodwill impairment test. Under the amendments in this ASU, an entity should perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity should recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity should apply the amendments in this ASU on a prospective basis. This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Management expects to adopt this ASU in the fourth quarter of 2018 when the Company performs its annual impairment testing. The Company does not expect the adoption of this accounting standard to have a material impact on its consolidated financial statements and notes thereto.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement, which amends the disclosure requirements for recurring and nonrecurring fair value measurements by removing, modifying and adding certain disclosures. The amendments in this ASU are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. Management does not expect the adoption of this accounting standard to have a material impact on its consolidated financial statements and notes thereto.
In August 2018, the FASB issued ASU 2018-14, Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes to the Disclosure Requirements for Defined Benefit Plans, which amends the disclosure requirements for all employers that sponsor defined benefit pension and other post retirement plans by removing and adding certain disclosures. The amendments in this ASU are effective for fiscal years ending after December 15, 2020. Early adoption is permitted. Management does not expect the adoption of this accounting standard to have a material impact on its consolidated financial statements and notes thereto.
Other pronouncements issued by the FASB or other authoritative accounting standards groups with future effective dates are either not applicable or are not expected to be significant to WESCO’s financial position, results of operations or cash flows.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


3. REVENUE
WESCO’s 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 product has shipped from a WESCO facility or directly from a supplier. For products that ship directly from suppliers to customers, WESCO acts as the principal in the transaction and recognizes revenue on a gross basis. Revenue for integrated supply services is recognized over time based on hours incurred. This method reflects the transfer of control as the customer benefits from these services as they are being performed. WESCO generally satisfies its performance obligations within a year or less.
WESCO generally does not have significant financing terms associated with its contracts; payments are normally received within 60 days. There are no significant costs associated with obtaining customer contracts. WESCO generally passes through the warranties offered by the applicable manufacturer or supplier to its customers. Sales taxes (and value added taxes in foreign jurisdictions) collected from customers and remitted to governmental authorities are excluded from net sales.
The following tables disaggregate WESCO’s revenue by end market and geography:
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2018 2017 2018 2017
Industrial$723,869
 $722,227
 $2,243,590
 $2,111,813
Construction686,165
 674,996
 2,007,708
 1,870,406
Utility345,937
 312,501
 998,438
 861,162
Commercial, Institutional and Government ("CIG")311,274
 290,435
 915,418
 838,994
Total by end market$2,067,245
 $2,000,159
 $6,165,154
 $5,682,375
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2018 2017 2018 2017
United States$1,525,393
 $1,473,016
 $4,571,533
 $4,267,684
Other (1)
541,852
 527,143
 1,593,621
 1,414,691
Total by geography$2,067,245
 $2,000,159
 $6,165,154
 $5,682,375
(1)
Other primarily includes net sales originating in Canada.
WESCO distributes products and provides services to customers globally within the following end markets: (1) industrial, (2) construction, (3) utility, and (4) CIG.commercial, institutional and government. Revenue is measured as the amount of consideration WESCO expects to receive in exchange for transferring goods or providing services.
The following tables disaggregate WESCO’s revenue by end market and geography:
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2019 2018 2019 2018
Industrial$755,129
 $723,869
 $2,253,974
 $2,243,590
Construction714,589
 686,165
 2,052,061
 2,007,708
Utility357,527
 345,937
 1,012,726
 998,438
Commercial, Institutional and Government320,865
 311,274
 940,704
 915,418
Total by end market$2,148,110
 $2,067,245
 $6,259,465
 $6,165,154
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2019 2018 2019 2018
United States$1,601,962
 $1,525,393
 $4,679,251
 $4,571,533
Canada (1)
431,233
 429,830
 1,230,855
 1,234,600
Other International (1)
114,915
 112,022
 349,359
 359,021
Total by geography$2,148,110
 $2,067,245
 $6,259,465
 $6,165,154
(1)
The prior period has been reclassified to conform to the current period presentation.
In accordance with certain contractual arrangements, WESCO receives payment from its customers in advance and recognizes such payment as deferred revenue. Revenue for advance payment is recognized when the performance obligation has been satisfied and control has transferred to the customer, which is generally upon shipment. Deferred revenue is usually recognized within a year or less from the date of the customer’s advance payment. At September 30, 20182019 and December 31, 2017, $8.82018, $11.0 million and $15.5$11.8 million, respectively, of deferred revenue was recorded as a component of other current liabilities in the Condensed Consolidated Balance Sheets.
WESCO’s revenues are adjusted for variable consideration, which includes customer volume rebates, returns, and discounts. WESCO measures variable consideration by estimating expected outcomes using analysis and inputs based upon anticipated performance, historical data, as well as current and forecasted information. Measurement and recognition of variable consideration is reviewed by management on a monthly basis and revenue is adjusted accordingly. Variable consideration reduced revenue for
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


the three months ended September 30, 20182019 and 20172018 by approximately $25.1$26.3 million and $24.2$25.1 million, respectively, and by approximately $74.5$80.1 million and $66.5$74.5 million for the nine months ended September 30, 20182019 and 2017,2018, respectively.
Shipping and handling costs are recognized in net sales when they are billed to the customer. These costs are recognized as a component of selling, general and administrative expenses when WESCO does not bill the customer. WESCO has elected to recognize shipping and handling costs as a fulfillment cost. Shipping and handling costs recorded as a component of selling, general and administrative expenses totaled $17.6 million and $18.8 million for the three months ended September 30, 2019 and 2018, respectively, and $52.8 million and $55.6 million for the nine months ended September 30, 2019 and 2018, respectively.
4. LEASES
WESCO leases real estate, automobiles, trucks and other equipment. The determination of whether an arrangement is, or contains, a lease is performed at the inception of the arrangement. Classification and initial measurement of the right-of-use asset and lease liability are determined at the lease commencement date. The Company elected the short-term lease measurement and recognition exemption; therefore, leases with an initial term of 12 months or less are not recorded on the balance sheet.
The Company's arrangements include certain non-lease components such as common area and other maintenance for leased real estate, as well as mileage, fuel and maintenance costs related to leased automobiles and trucks. WESCO accounts for these nonlease components separately from the associated lease components. The Company does not guarantee any residual value in its lease agreements, and there are no material restrictions or covenants imposed by lease arrangements. Real estate leases typically include one or more options to extend the lease. The Company regularly evaluates the renewal options, and when they are reasonably certain of exercise, the Company includes the renewal period in its lease term. The Company uses the interest rate implicit in its leases to discount lease payments at the lease commencement date. When the implicit rate is not readily available, the Company uses its incremental borrowing rate.
The Company's finance leases, which are recorded in the Condensed Consolidated Balance Sheet as of September 30, 2019 as a component of property, buildings and equipment, current portion of long-term debt and long-term debt, are not material to the consolidated financial statements and notes thereto. Accordingly, finance leases have not been disclosed herein.
The following table sets forth supplemental balance sheet information related to operating leases for the period presented:
 As of
(In thousands)September 30, 2019
Operating lease assets$237,252
  
Current operating lease liabilities61,114
Noncurrent operating lease liabilities182,044
Total operating lease liabilities$243,158
The following table sets forth the Company's total lease cost, which is recorded as a component of selling, general and administrative expenses, for the periods presented:
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2019 2019
Operating lease cost$18,605
 $54,879
Short-term lease cost23
 56
Variable lease cost5,335
 17,119
Total lease cost$23,963
 $72,054

Variable lease cost consists of the non-lease components described above, as well as taxes and insurance for WESCO's leased real estate.
   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




and administrative expenses totaled $18.8 million and $15.5 millionThe following table sets forth supplemental cash flow information related to operating leases for the three months endedperiod presented:
 Nine Months Ended
 September 30
(In thousands)2019
Operating cash flows from operating leases$48,484
Right-of-use assets obtained in exchange for new operating lease liabilities48,622
As of September 30, 20182019, the weighted-average remaining lease term for operating leases was 5.4 years and 2017, respectively,the weighted-average discount rate used to measure operating lease assets and $55.6 millionliabilities was 4.6%.
The following table sets forth the maturities of the Company's operating lease liabilities and $43.2 million forreconciles the nine months endedrespective undiscounted payments to the operating lease liabilities in the Condensed Consolidated Balance Sheet as of September 30, 2018 and 2017, respectively.2019:
 (In thousands)
2019$18,464
202068,791
202158,134
202244,780
202334,872
Thereafter51,749
Total undiscounted operating lease payments276,790
Less: interest(33,632)
Total operating lease liabilities$243,158

The following table sets forth the future minimum rental payments for operating leases accounted for in accordance with Accounting Standards Codification Topic 840, Leases, as of December 31, 2018:
Years ending December 31(In thousands)
2019$71,640
202059,594
202147,264
202234,490
202324,493
Thereafter40,302

4. FAIR VALUE OF FINANCIAL INSTRUMENTS5. ACQUISITIONS
The Company’s financial instruments consistfollowing table sets forth the consideration paid for acquisitions:
 Nine Months Ended
 September 30
 2019
 (In thousands)
Fair value of assets acquired$36,188
Fair value of liabilities assumed8,446
Cash paid for acquisitions$27,742

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


Sylvania Lighting Services Corp.
On March 5, 2019, WESCO Distribution, Inc. ("WESCO Distribution"), through its WESCO Services, LLC subsidiary, acquired certain assets and assumed certain liabilities of cashSylvania Lighting Services Corp. ("SLS"). Headquartered in Wilmington, Massachusetts, SLS offers a full spectrum of energy-efficient lighting upgrade, retrofit, and cash equivalents,renovation solutions with annual sales of approximately $100 million and approximately 220 employees across the U.S. and Canada. WESCO Distribution funded the purchase price paid at closing with borrowings under its accounts receivable accounts payable, bank overdrafts,securitization facility. The purchase price was allocated to the respective assets and outstanding indebtedness. The reported carrying amounts of WESCO's financial instruments approximatedliabilities based upon their estimated fair values as of September 30, 2018 and December 31, 2017.
The Company uses a market approach to determine the fair valueacquisition date, resulting in goodwill of its debt instruments, utilizing quoted prices in active markets, interest rates and other relevant information generated by market transactions involving similar instruments. Therefore, the Company's debt instruments are classified as Level 2 within the fair value hierarchy.$5.9 million, which is deductible for tax purposes.
5.6. GOODWILL
The following table sets forth the changes in the carrying value of goodwill:
 Nine Months Ended
 September 30
(In thousands)2019
Beginning balance January 1$1,722,603
Foreign currency exchange rate changes17,522
Additions to goodwill for acquisitions5,946
Ending balance September 30$1,746,071
 Nine Months Ended
 September 30
(In thousands)2018
Beginning balance January 1$1,771,877
Foreign currency exchange rate changes(16,585)
Ending balance September 30$1,755,292

6.7. STOCK-BASED COMPENSATION
WESCO’s stock-based employee compensation plans are comprised of stock-settled stock appreciation rights, restricted stock units and performance-based awards. Compensation cost for all stock-based awards is measured at fair value on the date of grant and compensation cost is recognized, net of estimated forfeitures, over the service period for awards expected to vest. The fair value of stock-settled stock appreciation rights and performance-based awards with market conditions is determined using the Black-Scholes and Monte Carlo simulation models, respectively. The fair value of restricted stock units and performance-based awards with performance conditions is determined by the grant-date closing price of WESCO’s common stock. The forfeiture assumption is based on WESCO’s historical employee behavior that is reviewed on an annual basis. No dividends are assumed.
Effective January 1, 2018, For stock-settled stock appreciation rights that are exercised and for restricted stock units and performance-based awards that vest, shares are issued out of WESCO's outstanding common stock.
Stock-settled stock appreciation rights vest ratably over a three-year period and terminate on the tenth anniversary of the grant date unless terminated sooner under certain conditions. Vesting of restricted stock units is based on a minimum time period of three years. Vesting of performance-based awards is based on a three-year performance period, and the number of shares earned, if any, depends on the attainment of certain performance levels. Outstanding awards would vest upon the consummation of a change in control transaction and performance-based awards would vest at the target level.
Performance-based awards granted in 2019 were based on two equally-weighted performance measures, which includemeasures: the three-year average growth rate of WESCO's net income and the three-year cumulative return on net assets. Performance-based awards granted in 2018 were based on two equally-weighted performance measures: the three-year average growth rate of the Company’s fully diluted earnings per share and the three-year cumulative return on net assets. From 2015 to 2017, the two equally-weighted performance-based award metrics were the three-year average growth rate of WESCO's net income and WESCO's total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


During the three and nine months ended September 30, 20182019 and 2017,2018, WESCO granted the following stock-settled stock appreciation rights, restricted stock units and performance-based awards at the following weighted-average fair values:
 Three Months Ended Nine Months Ended
 September 30,
2019		 September 30,
2018		 September 30,
2019		 September 30,
2018
Stock-settled stock appreciation rights granted—
 9,415
 213,618
 509,046
Weighted-average fair value$—
 $17.40
 $16.36
 $18.38
        
Restricted stock units granted6,256
 2,686
 181,800
 119,457
Weighted-average fair value$47.95
 $61.41
 $54.41
 $62.72
        
Performance-based awards granted—
 —
 126,874
 44,144
Weighted-average fair value$—
 $—
 $54.64
 $62.80
 Three Months Ended Nine Months Ended
 September 30,
2018		 September 30,
2017		 September 30,
2018		 September 30,
2017
Stock-settled stock appreciation rights granted9,415
 12,076
 509,046
 455,807
Weighted-average fair value$17.40
 $15.74
 $18.38
 $20.52
        
Restricted stock units granted2,686
 2,313
 119,457
 100,993
Weighted-average fair value$61.41
 $57.30
 $62.72
 $71.33
        
Performance-based awards granted—
 —
 44,144
 39,978
Weighted-average fair value$—
 $—
 $62.80
 $76.63
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)



The fair value of stock-settled stock appreciation rights was estimated using the following weighted-average assumptions:
 Three Months Ended Nine Months Ended
 September 30,
2019		 September 30,
2018		 September 30,
2019		 September 30,
2018
Risk free interest raten/a 2.8% 2.5% 2.5%
Expected life (in years)n/a 5
 5
 5
Expected volatilityn/a 28% 29% 28%
 Three Months Ended Nine Months Ended
 September 30,
2018		 September 30,
2017		 September 30,
2018		 September 30,
2017
Risk free interest rate2.8% 1.8% 2.5% 1.9%
Expected life (in years)5
 5
 5
 5
Expected volatility28% 28% 28% 29%

The risk-free interest rate is based on the U.S. Treasury Daily Yield Curve as of the grant date. The expected life is based on historical exercise experience and the expected volatility is based on the volatility of the Company's daily stock prices over a five-year period preceding the grant date.
The following table sets forth a summary of stock-settled stock appreciation rights and related information for the nine months ended September 30, 2018:2019:
 Awards 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual Term (In years)
 
Aggregate
Intrinsic
Value
(In thousands)
Outstanding at December 31, 20182,351,633
 $59.26
    
     Granted213,618
 54.63
    
     Exercised(108,022) 34.84
    
     Forfeited(87,351) 65.96
    
Outstanding at September 30, 20192,369,878
 59.71
 5.8 $4,948
Exercisable at September 30, 20191,749,201
 $59.00
 4.9 $4,948

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)

 Awards 
Weighted-
Average
Exercise
Price
 
Weighted-
Average
Remaining
Contractual Term (In years)
 
Aggregate
Intrinsic
Value
(In thousands)
Outstanding at December 31, 20172,238,607
 $57.75
    
     Granted509,046
 62.68
    
     Exercised(186,662) 40.73
    
     Forfeited(168,824) 69.12
    
Outstanding at September 30, 20182,392,167
 59.32
 6.3 $16,779
Exercisable at September 30, 20181,476,763
 $58.03
 4.9 $13,566

The following table sets forth a summary of time-based restricted stock units and related information for the nine months ended September 30, 2018:2019:
 Awards 
Weighted-
Average
Fair
Value
Unvested at December 31, 2018327,798
 $57.87
     Granted181,800
 54.41
     Vested(118,560) 44.58
     Forfeited(17,736) 59.57
Unvested at September 30, 2019373,302
 $60.25
 Awards 
Weighted-
Average
Fair
Value
Unvested at December 31, 2017290,054
 $58.11
     Granted119,457
 62.72
     Vested(59,905) 68.78
     Forfeited(14,539) 57.09
Unvested at September 30, 2018335,067
 $57.89
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)



Performance shares are awards for which the vesting will occur based on market or performance conditions. The following table sets forth a summary of performance-based awards for the nine months ended September 30, 2018:2019:
 Awards 
Weighted-
Average
Fair
Value
Unvested at December 31, 2018138,896
 $59.33
     Granted126,874
 54.64
     Vested(25,696) 42.44
     Forfeited(44,769) 52.15
Unvested at September 30, 2019195,305
 $60.24
 Awards 
Weighted-
Average
Fair
Value
Unvested at December 31, 2017148,508
 $60.23
     Granted44,144
 62.80
     Vested—
 —
     Forfeited(52,342) 65.15
Unvested at September 30, 2018140,310
 $59.20
The fair value of the performance shares granted during the nine months ended September 30, 2018 and 2017 was estimated using the following weighted-average assumptions:
 Nine Months Ended
 September 30,
2018		 September 30,
2017
Grant date share price$62.80
 $71.65
WESCO expected volatilityn/a
 29%
Peer group median volatilityn/a
 24%
Risk-free interest raten/a
 1.5%
Correlation of peer company returnsn/a
 114%

The unvested performance-based awards in the table above include 48,80517,507 shares in which vesting of the ultimate number of shares is dependent upon WESCO's total stockholder return in relation to the total stockholder return of a select group of peer companies over a three-year period. These awards are accounted for as awards with market conditions; compensation cost is recognized over the service period, regardless of whether the market conditions are achieved and the awards ultimately vest.
Vesting of the remaining 91,505177,798 shares of performance-based awards in the table above is dependent upon the achievement of certain performance targets, including 48,80577,856 that are dependent upon the three-year average growth rate of WESCO's net income, 21,35019,797 that are dependent upon the three-year average growth rate of the Company's fully diluted earnings per share, and 21,35080,145 that are based upon the three-year cumulative return on net assets. These awards are accounted for as awards with performance conditions; compensation cost is recognized over the performance period based upon WESCO's determination of whether it is probable that the performance targets will be achieved.
WESCO recognized $4.1$4.4 million and $3.5$4.1 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the three months ended September 30, 20182019 and 2017,2018, respectively. WESCO recognized $12.1$14.2 million and $11.3$12.1 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the nine months ended September 30, 20182019 and 2017,2018, respectively. As of September 30, 2018,2019, there was $22.9$24.9 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements for all awards previously made, of which approximately $4.1$4.8 million is expected to be recognized over the remainder of 2018, $11.82019, $12.7 million in 2019, $6.32020, $6.7 million in 20202021 and $0.7 million in 2021.2022.
7.8. EARNINGS PER SHARE
Basic earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average number of common shares outstanding during the periods. Diluted earnings per share is computed by dividing net income attributable to WESCO International by the weighted-average common shares and common share equivalents outstanding during the periods. The dilutive effect of common share equivalents is considered in the diluted earnings per share computation using the treasury stock method, which includes consideration of equity awards.
The following table sets forth the details of basic and diluted earnings per share:
   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




The following table sets forth
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands, except per share data)2019 2018 2019 2018
Net income attributable to WESCO International$64,495
 $66,849
 $170,329
 $169,210
Weighted-average common shares outstanding used in computing basic earnings per share42,100
 47,010
 43,545
 47,044
Common shares issuable upon exercise of dilutive equity awards278
 476
 355
 503
Weighted-average common shares outstanding and common share equivalents used in computing diluted earnings per share42,378
 47,486
 43,900
 47,547
Earnings per share attributable to WESCO International       
Basic$1.53
 $1.42
 $3.91
 $3.60
Diluted$1.52
 $1.41
 $3.88
 $3.56

For the detailsthree and nine months ended September 30, 2019, the computation of basic and diluted earnings per share:
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands, except per share data)2018 2017 2018 2017
Net income attributable to WESCO International$66,849
 $53,675
 $169,210
 $140,918
Weighted-average common shares outstanding used in computing basic earnings per share47,010
 47,415
 47,044
 48,134
Common shares issuable upon exercise of dilutive equity awards476
 389
 503
 508
Weighted-average common shares outstanding and common share equivalents used in computing diluted earnings per share

47,486
 47,804
 47,547
 48,642
Earnings per share attributable to WESCO International       
Basic$1.42
 $1.13
 $3.60
 $2.93
Diluted$1.41
 $1.12
 $3.56
 $2.90
share attributable to WESCO International excluded approximately 1.8 million of stock-based awards. For the three and nine months ended September 30, 2018, the computation of diluted earnings per share attributable to WESCO International excluded stock-based awards of approximately 1.7 million and 1.5 million, respectively. For the three and nine months ended September 30, 2017, the computation of diluted earnings per share attributable to WESCO International excluded stock-based awards of approximately 1.5 million and 1.3 million, respectively. These amounts were excluded because their effect would have been antidilutive.
In December 2014, the Company's Board of Directors authorized the repurchase of up to $300 million of the Company's common stock through December 31, 2017 (the "2014 Repurchase Authorization"). During the nine months ended September 30, 2017, the Company repurchased 1,778,537 shares under the 2014 Repurchase Authorization for $100.0 million.
In December 2017, the Company's Board of Directors authorized the repurchase of up to $300 million of the Company's common stock through December 31, 2020 (the "2017 Repurchase Authorization"). In October 2018, the Board approved an increase to this repurchase authorization from $300 million to $400 million.
On September 6, 2018,May 7, 2019, the Company entered into an accelerated stock repurchase agreement (the "ASR Transaction") with a financial institution to repurchase additional shares of its common stock pursuant to its 2017 Repurchase Authorization.stock. In exchange for an up-front cash payment of $25.0$150.0 million, the Company received an initial share deliverya total of 351,821 shares. As3,090,312 shares, of which 695,496 were received during the three months ended September 30, 2018,2019. WESCO funded the ASR Transaction had not yet settled betweenrepurchase primarily with borrowings under its accounts receivable securitization facility. For the counterparties. nine months ended September 30, 2019, the Company received a total of 3,455,584 shares, of which 365,272 were received upon the settlement of an accelerated stock repurchase agreement entered into on November 6, 2018.
The total number of shares ultimately delivered under the ASR Transaction will bean accelerated stock repurchase transaction is determined by the average of the volume-weighted average pricesvolume-weighted-average price of the Company's common stock for each exchange business day during the respective settlement valuation period.periods. For purposes of computing earnings per share for the three and nine months ended September 30, 2018 and 2017,2019, share repurchases werehave been reflected as a reduction to common shares outstanding on the respective delivery dates.
9. DEBT
Revolving Credit Facility
On September 26, 2019, WESCO fundedInternational, WESCO Distribution and certain other subsidiaries of the repurchase with available cashCompany entered into a $600 million revolving credit facility (the “Revolving Credit Facility”) as a replacement of its existing revolving credit facility entered into on September 24, 2015. The Revolving Credit Facility contains a letter of credit sub-facility of up to $125 million, pursuant to the terms and conditions of a Third Amended and Restated Credit Agreement, dated as of September 26, 2019 (the “Credit Agreement”). The Revolving Credit Facility contains an accordion feature allowing WESCO Distribution to request increases to the borrowing commitments under the Revolving Credit Facility of up to $200 million in the aggregate, subject to customary conditions.
The Revolving Credit Facility matures in September 2024 and is collateralized by (i) substantially all assets of WESCO Distribution and its subsidiaries which are party to the Credit Agreement, other than, among other things, real property and accounts receivable sold or intended to be sold pursuant to WESCO Distribution’s accounts receivable securitization facility, and (ii) substantially all assets of WESCO Canada and the other Canadian Borrowers, other than, among other things, real property, in each case, subject to customary exceptions and limitations. The obligations of WESCO Distribution and the other U.S. Borrowers under the Revolving Credit Facility have been guaranteed by the Company and certain of WESCO Distribution’s subsidiaries.
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


The obligations of WESCO Canada and the other Canadian Borrowers under the Revolving Credit Facility have been guaranteed by certain subsidiaries of WESCO Canada and the other Canadian Borrowers. The applicable interest rate for borrowings under the Company'sRevolving Credit Facility includes interest rate spreads based on available borrowing capacity that range between 1.25% and 1.50% for LIBOR-based borrowings and 0.25% and 0.50% for prime rate-based borrowings.
The Credit Agreement requires compliance with conditions precedent that must be satisfied prior to any borrowing as well as ongoing compliance with certain customary affirmative and negative covenants. The Credit Agreement contains customary events of default.
Accounts Receivable Securitization Facility
On September 26, 2019, WESCO Distribution amended its accounts receivable securitization facility.facility (the “Receivables Facility”) pursuant to the terms and conditions of a Ninth Amendment to the Fourth Amended and Restated Receivables Purchase Agreement, dated as of September 26, 2019 (the “Receivables Amendment”), by and among WESCO Receivables Corp. (“WESCO Receivables”), WESCO Distribution, the various purchaser groups from time to time party thereto and PNC Bank, National Association, as Administrator. The Receivables Amendment amends the amended and restated receivables purchase agreement entered into on September 24, 2015 (the “Existing Receivables Purchase Agreement” and as amended by the Receivables Amendment, the “Receivables Purchase Agreement”).
The Receivables Amendment increased the purchase limit under the Existing Receivables Purchase Agreement from $550 million to $600 million, with the opportunity to exercise an accordion feature which permits increases in the purchase limit of up to $200 million, extended the term of the Receivables Facility to September 26, 2022 and added and amended certain defined terms. The interest rate spread and commitment fee of the Receivables Facility remains 0.95% and 0.45%, respectively.
Under the Receivables Facility, WESCO sells, on a continuous basis, an undivided interest in all domestic accounts receivable to WESCO Receivables, a wholly owned special purpose entity (the “SPE”). The SPE sells, without recourse, a senior undivided interest in the receivables to financial institutions for cash while maintaining a subordinated undivided interest in the receivables, in the form of overcollateralization. Since WESCO maintains control of the transferred receivables, the transfers do not qualify for “sale” treatment. As a result, the transferred receivables remain on the balance sheet, and WESCO recognizes the related secured borrowing. WESCO has agreed to continue servicing the sold receivables for the third-party conduits and financial institutions at market rates; accordingly, no servicing asset or liability has been recorded.
8.10. EMPLOYEE BENEFIT PLANS
A majority of WESCO’s employees are covered by defined contribution retirement savings plans for their services rendered subsequent to WESCO’s formation. WESCO also offers a deferred compensation plan for select individuals. For U.S. participants, WESCO matches contributions made by employees at an amount equal to 50% of participants' total monthly contributions up to a maximum of 6% of eligible compensation. For Canadian participants, WESCO makes contributions in amounts ranging from 3% to 5% of participants' eligible compensation based on years of continuous service. WESCO may also make, subject to the Board of Directors' approval, a discretionary contribution to the defined contribution retirement savings plan covering U.S. participants if certain predetermined profit levels are attained. For the nine months ended September 30, 20182019 and 2017,2018, WESCO incurred charges of $33.5$24.7 million and $20.3$33.5 million, respectively, for all such plans. Contributions are made in cash to employee retirement savings plan accounts. The deferred compensation plan is an unfunded plan. As of September 30, 20182019 and December 31, 2017,2018, the Company's obligation under the deferred compensation plan was $23.8 million and $24.3$21.9 million, respectively. Employees have the option to transfer balances allocated to their accounts in the defined contribution retirement savings plan and the deferred compensation plan into any of the available investment options.
The Company sponsors a contributory defined benefit plan covering substantially all Canadian employees of EECOL and a Supplemental Executive Retirement Plan (the "SERP") for certain executives of EECOL. During the three and nine months ended September 30, 2018,2019, the Company contributed $0.1 million and $0.3 million, respectively, to the SERP.
   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




The following table sets forth the components of net periodic benefit costs for the defined benefit plans:
 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2019 2018 2019 2018
Service cost$1,158
 $1,296
 $3,446
 $3,955
Interest cost1,098
 1,026
 3,267
 3,131
Expected return on plan assets(1,433) (1,482) (4,265) (4,522)
Recognized actuarial gain(16) (11) (47) (35)
Net periodic benefit cost$807
 $829
 $2,401
 $2,529

 Three Months Ended Nine Months Ended
 September 30 September 30
(In thousands)2018 2017 2018 2017
Service cost$1,296
 $1,118
 $3,955
 $3,234
Interest cost1,026
 1,007
 3,131
 2,915
Expected return on plan assets(1,482) (1,432) (4,522) (4,144)
Recognized actuarial gain(11) (51) (35) (149)
Net periodic benefit cost$829
 $642
 $2,529
 $1,856
In accordance with ASU 2017-07, as described in Note 2, theThe service cost of $1.2 million and $1.3 million for the three months ended September 30, 2019 and 2018, respectively, and $3.4 million and $4.0 million for the three and nine months ended September 30, 2019 and 2018, respectively, was reported as a component of selling, general and administrative expenses. The other components of net periodic benefit cost totaling a net benefit of $0.4 million and $0.5 million for the three months ended September 30, 2019 and 2018, respectively, and $1.0 million and $1.4 million for the three and nine months ended September 30, 2019 and 2018, respectively, were presented as a component of net interest and other, as described in Note 9 below. For the three and nine months ended September 30, 2017, the Company reclassified a net benefit of $0.5 million and $1.4 million, respectively, from selling, general and administrative expenses to net interest and other. The Company used the amounts disclosed in Note 7 of the Notes to Condensed Consolidated Financial Statements in the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2017 as the estimation basis for applying the retrospective presentation requirements.
9. NET INTEREST AND OTHER11. FAIR VALUE OF FINANCIAL INSTRUMENTS
NetThe Company’s financial instruments consist of cash and cash equivalents, accounts receivable, accounts payable, bank overdrafts, and outstanding indebtedness. The Company uses a market approach to determine the fair value of its debt instruments, utilizing quoted prices in active markets, interest rates and other includes interest expense, interest income, amortizationrelevant information generated by market transactions involving similar instruments. Therefore, the inputs used to measure the fair value of the Company's debt discount and debt issuance costs,instruments are classified as Level 2 within the non-service cost componentsfair value hierarchy. The reported carrying amounts of net periodic benefit cost, and foreign exchange gains and losses from the remeasurementWESCO's financial instruments approximated their fair values as of certain financial instruments. For the three and nine months ended September 30, 2018, a foreign exchange gain of less than $0.1 million2019 and a foreign exchange loss of $2.6 million, respectively, from the remeasurement of financial instruments were reported as a component of net interest and other. Foreign exchange gains and losses were not material for the three and nine months ended September 30, 2017.December 31, 2018.
10.12. COMMITMENTS AND CONTINGENCIES
From time to time, a number of lawsuits and claims have been or may be asserted against usthe Company relating to the conduct of ourits business, including routine litigation relating to commercial, product and employment matters. The outcome of any litigation cannot be predicted with certainty, and some lawsuits may be determined adversely to us.WESCO. However, management does not believe that the ultimate outcome of any such pending matters is likely to have a material adverse effect on ourWESCO's financial condition or liquidity, although the resolution in any fiscal period of one or more of these matters may have a material adverse effect on ourWESCO's results of operations for that period.
In an effort to expand the Company's footprint in the Middle East, WESCO has been doing business since 2009 with WESTEC Supplies General Trading (“WESTEC”), an industrial equipment supplier headquartered in the United Arab Emirates. WESTEC has a line of credit with a maximum borrowing capacity of approximately $6.8 million to support its working capital requirements and joint sales efforts with WESCO. Due to the nature of WESCO’s arrangement with WESTEC, WESCO has provided a standby letter of credit under its revolving credit facility of up to $7.3 million as security for WESTEC’s line of credit. As of September 30, 2019, WESTEC had an outstanding loan balance of $6.4 million. Management currently believes the estimated fair value of the noncontingent guarantee on the line of credit is nominal and therefore a liability has not been recorded as of September 30, 2019.
11.13. INCOME TAXES
The effective tax rate for the three and nine months ended September 30, 2019 was 19.8% and 21.0%, respectively. The effective tax rate for the three and nine months ended September 30, 2018 was 17.2% and 19.3%, respectively. The effective tax rate for the three and nine months ended September 30, 2017 was 25.5% and 25.3%, respectively. WESCO’s effective tax rate is typically impacted by the tax effect of intercompany financing, foreign tax rate differences, other nondeductible expenses and state income taxes. The effective tax rates for the current year periods are lowerhigher than the prior year periods primarily due to the Tax Cuts and Jobs Actfull application of 2017 (the "TCJA"), which permanently reduced the international provisions of U.S. federal statutory income tax rate from 35% to 21%, effective January 1, 2018. Also,reform, as well as the discrete effect of accruing taxes attributable to the undistributed earnings of operations in China that are expected to be remitted in the future.
The total amount of unrecognized tax benefits resultingwas reduced from audit settlements favorably impacted$1.3 million to $0.1 million during the effective tax rate for the threenine months ended September 30, 2018.2019 due to the resolution of transfer pricing matters associated with the Canadian taxing authority.
The unaudited condensed consolidated financial information presented herein reflects provisional amounts for certain income tax effects of the TCJA for which the accounting is incomplete, but a reasonable estimate can be determined, based on enacted tax laws and rates as of September 30, 2018. Since the enactment of the TCJA on December 22, 2017, the Internal Revenue Service has issued proposed regulations and guidance regarding Section 965 of the Internal Revenue Code, as amended by the TCJA. We have reviewed the proposed regulations and guidance, and they do not materially impact the provisional amounts previously recorded for the one-time tax on the deemed repatriation of undistributed foreign earnings. Future adjustments (if any) resulting
   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




from additional regulatory guidance will be recognized as discrete income tax expense or benefit in the period the adjustments are determined.
The total amount of unrecognized tax benefits was reduced from $4.3 million to $1.6 million during the nine months ended September 30, 2018 due to audit settlements. The $1.6 million could affect the effective tax rate if recognized in the consolidated financial statements. It is reasonably possible that this amount will decrease by approximately $0.2 million within the next twelve months due to the expiration of statutes of limitation and the settlement of state audits.
12.14. CONDENSED CONSOLIDATING FINANCIAL INFORMATION
WESCO Distribution has outstanding $500 million in aggregate principal amount of 5.375% Senior Notes due 2021 (the "2021 Notes") and $350 million in aggregate principal amount of 5.375% Senior Notes due 2024 (the "2024 Notes"). The 2021 Notes and 2024 Notes are unsecured senior obligations of WESCO Distribution and are fully and unconditionally guaranteed on a senior unsecured basis by WESCO International.
Condensed consolidating financial information for WESCO International, WESCO Distribution and the non-guarantor subsidiaries is presented in the following tables.
 Condensed Consolidating Balance Sheet
 September 30, 2019
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Cash and cash equivalents$—
 $37,889
 $100,271
 $—
 $138,160
Trade accounts receivable, net—
 —
 1,315,026
 —
 1,315,026
Inventories—
 437,470
 524,527
 —
 961,997
Prepaid expenses and other current assets1,123
 27,376
 136,719
 (1,921) 163,297
Total current assets1,123
 502,735
 2,076,543
 (1,921) 2,578,480
Intercompany receivables, net—
 —
 2,543,978
 (2,543,978) —
Property, buildings and equipment, net—
 76,980
 97,479
 —
 174,459
Operating lease assets—
 146,247
 91,005
 —
 237,252
Intangible assets, net—
 1,658
 291,835
 —
 293,493
Goodwill—
 257,623
 1,488,448
 —
 1,746,071
Investments in affiliates3,383,537
 5,318,786
 —
 (8,702,323) —
Other assets—
 854
 16,802
 —
 17,656
Total assets$3,384,660
 $6,304,883
 $6,606,090
 $(11,248,222) $5,047,411
          
Accounts payable$—
 $418,502
 $431,082
 $—
 $849,584
Short-term debt—
 —
 25,561
 —
 25,561
Other current liabilities—
 69,505
 161,795
 (1,921) 229,379
Total current liabilities—
 488,007
 618,438
 (1,921) 1,104,524
Intercompany payables, net1,191,542
 1,352,436
 —
 (2,543,978) —
Long-term debt, net—
 856,992
 489,341
 —
 1,346,333
Operating lease liabilities—
 116,336
 65,708
 —
 182,044
Other noncurrent liabilities—
 107,575
 120,225
 —
 227,800
Total WESCO International stockholders' equity2,193,118
 3,383,537
 5,318,786
 (8,702,323) 2,193,118
Noncontrolling interests—
 —
 (6,408) —
 (6,408)
Total liabilities and stockholders’ equity$3,384,660
 $6,304,883
 $6,606,090
 $(11,248,222) $5,047,411
 Condensed Consolidating Balance Sheet
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Cash and cash equivalents$—
 $57,052
 $85,708
 $—
 $142,760
Trade accounts receivable, net—
 —
 1,265,880
 —
 1,265,880
Inventories—
 411,252
 515,516
 —
 926,768
Prepaid expenses and other current assets4,943
 42,568
 132,620
 (9,040) 171,091
Total current assets4,943
 510,872
 1,999,724
 (9,040) 2,506,499
Intercompany receivables, net—
 —
 2,270,584
 (2,270,584) —
Property, buildings and equipment, net—
 56,351
 100,778
 —
 157,129
Intangible assets, net—
 2,291
 331,735
 —
 334,026
Goodwill—
 257,623
 1,497,669
 —
 1,755,292
Investments in affiliates3,188,872
 5,144,891
 —
 (8,333,763) —
Other assets—
 2,780
 23,065
 —
 25,845
Total assets$3,193,815
 $5,974,808
 $6,223,555
 $(10,613,387) $4,778,791
          
Accounts payable$—
 $412,989
 $400,406
 $—
 $813,395
Short-term debt—
 —
 31,125
 —
 31,125
Other current liabilities—
 72,762
 143,286
 (9,040) 207,008
Total current liabilities—
 485,751
 574,817
 (9,040) 1,051,528
Intercompany payables, net952,642
 1,317,942
 —
 (2,270,584) —
Long-term debt, net—
 864,779
 364,535
 —
 1,229,314
Other noncurrent liabilities3,820
 117,464
 144,828
 —
 266,112
Total WESCO International stockholders' equity2,237,353
 3,188,872
 5,144,891
 (8,333,763) 2,237,353
Noncontrolling interests—
 —
 (5,516) —
 (5,516)
Total liabilities and stockholders’ equity$3,193,815
 $5,974,808
 $6,223,555
 $(10,613,387) $4,778,791

   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Balance Sheet
 December 31, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Cash and cash equivalents$—
 $35,931
 $60,412
 $—
 $96,343
Trade accounts receivable, net—
 —
 1,166,607
 —
 1,166,607
Inventories—
 440,422
 508,304
 —
 948,726
Prepaid expenses and other current assets1,123
 57,586
 124,523
 (9,268) 173,964
Total current assets1,123
 533,939
 1,859,846
 (9,268) 2,385,640
Intercompany receivables, net—
 —
 2,403,704
 (2,403,704) —
Property, buildings and equipment, net—
 63,506
 97,372
 —
 160,878
Intangible assets, net—
 2,131
 313,885
 —
 316,016
Goodwill—
 257,623
 1,464,980
 —
 1,722,603
Investments in affiliates3,182,469
 5,137,783
 —
 (8,320,252) —
Other assets—
 2,905
 16,994
 —
 19,899
Total assets$3,183,592
 $5,997,887
 $6,156,781
 $(10,733,224) $4,605,036
          
Accounts payable$—
 $404,373
 $389,975
 $—
 $794,348
Short-term debt—
 —
 30,785
 —
 30,785
Other current liabilities—
 86,600
 159,481
 (9,268) 236,813
Total current liabilities—
 490,973
 580,241
 (9,268) 1,061,946
Intercompany payables, net1,048,282
 1,355,422
 —
 (2,403,704) —
Long-term debt, net—
 842,093
 325,218
 —
 1,167,311
Other noncurrent liabilities—
 126,930
 119,123
 —
 246,053
Total WESCO International stockholders' equity2,135,310
 3,182,469
 5,137,783
 (8,320,252) 2,135,310
Noncontrolling interests—
 —
 (5,584) —
 (5,584)
Total liabilities and stockholders’ equity$3,183,592
 $5,997,887
 $6,156,781
 $(10,733,224) $4,605,036
 Condensed Consolidating Balance Sheet
 December 31, 2017
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Cash and cash equivalents$—
 $50,602
 $67,351
 $—
 $117,953
Trade accounts receivable, net—
 —
 1,170,080
 —
 1,170,080
Inventories—
 430,092
 526,056
 —
 956,148
Prepaid expenses and other current assets4,730
 42,547
 152,531
 (35,140) 164,668
Total current assets4,730
 523,241
 1,916,018
 (35,140) 2,408,849
Intercompany receivables, net—
 —
 2,189,136
 (2,189,136) —
Property, buildings and equipment, net—
 50,198
 106,247
 —
 156,445
Intangible assets, net—
 2,770
 364,334
 —
 367,104
Goodwill—
 257,623
 1,514,254
 —
 1,771,877
Investments in affiliates3,058,613
 5,023,826
 —
 (8,082,439) —
Other assets—
 2,778
 28,415
 —
 31,193
Total assets$3,063,343
 $5,860,436
 $6,118,404
 $(10,306,715) $4,735,468
          
Accounts payable$—
 $417,690
 $381,830
 $—
 $799,520
Short-term debt—
 —
 34,075
 —
 34,075
Other current liabilities—
 80,039
 162,475
 (35,140) 207,374
Total current liabilities—
 497,729
 578,380
 (35,140) 1,040,969
Intercompany payables, net939,784
 1,249,352
 —
 (2,189,136) —
Long-term debt, net—
 934,033
 379,228
 —
 1,313,261
Other noncurrent liabilities3,820
 120,709
 140,566
 —
 265,095
Total WESCO International stockholders' equity2,119,739
 3,058,613
 5,023,826
 (8,082,439) 2,119,739
Noncontrolling interests—
 —
 (3,596) —
 (3,596)
Total liabilities and stockholders’ equity$3,063,343
 $5,860,436
 $6,118,404
 $(10,306,715) $4,735,468

   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Statement of Income and Comprehensive Income
 Three Months Ended
 September 30, 2019
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $939,909
 $1,244,847
 $(36,646) $2,148,110
Cost of goods sold (excluding depreciation and         
amortization)—
 768,200
 1,016,359
 (36,646) 1,747,913
Selling, general and administrative expenses—
 146,925
 143,927
 —
 290,852
Depreciation and amortization—
 4,834
 10,778
 —
 15,612
Results of affiliates’ operations64,339
 58,725
 —
 (123,064) —
Net interest and other—
 12,944
 564
 —
 13,508
Income tax expense—
 1,392
 14,494
 —
 15,886
Net income64,339
 64,339
 58,725
 (123,064) 64,339
Net loss attributable to noncontrolling interests—
 —
 (156) —
 (156)
Net income attributable to WESCO International$64,339
 $64,339
 $58,881
 $(123,064) $64,495
Other comprehensive income:         
Foreign currency translation adjustments(16,856) (16,856) (16,856) 33,712
 (16,856)
Comprehensive income attributable to WESCO International$47,483
 $47,483
 $42,025
 $(89,352) $47,639

 Condensed Consolidating Statement of Income and Comprehensive Income
 Three Months Ended
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $899,994
 $1,206,174
 $(38,923) $2,067,245
Cost of goods sold (excluding depreciation and         
amortization)—
 727,052
 981,908
 (38,923) 1,670,037
Selling, general and administrative expenses—
 149,390
 134,683
 —
 284,073
Depreciation and amortization—
 4,475
 11,143
 —
 15,618
Results of affiliates’ operations66,645
 61,771
 —
 (128,416) —
Net interest and other—
 13,127
 3,923
 —
 17,050
Income tax expense—
 1,076
 12,746
 —
 13,822
Net income66,645
 66,645
 61,771
 (128,416) 66,645
Net loss attributable to noncontrolling interests—
 —
 (204) —
 (204)
Net income attributable to WESCO International$66,645
 $66,645
 $61,975
 $(128,416) $66,849
Other comprehensive income:
 

 

 

 

Foreign currency translation adjustments20,486
 20,486
 20,486
 (40,972) 20,486
Comprehensive income attributable to WESCO International$87,131
 $87,131
 $82,461
 $(169,388) $87,335

 Condensed Consolidating Statement of Income and Comprehensive Income
 Nine Months Ended
 September 30, 2019
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $2,736,224
 $3,643,193
 $(119,952) $6,259,465
Cost of goods sold (excluding depreciation and         
amortization)—
 2,220,792
 2,966,959
 (119,952) 5,067,799
Selling, general and administrative expenses—
 445,487
 437,735
 —
 883,222
Depreciation and amortization—
 13,861
 32,174
 —
 46,035
Results of affiliates’ operations169,505
 155,100
 —
 (324,605) —
Net interest and other—
 37,856
 10,078
 —
 47,934
Income tax expense—
 3,823
 41,147
 —
 44,970
Net income169,505
 169,505
 155,100
 (324,605) 169,505
Net loss attributable to noncontrolling interests—
 —
 (824) —
 (824)
Net income attributable to WESCO International$169,505
 $169,505
 $155,924
 $(324,605) $170,329
Other comprehensive income:
 

 

 

 

Foreign currency translation adjustments25,905
 25,905
 25,905
 (51,810) 25,905
Comprehensive income attributable to WESCO International$195,410
 $195,410
 $181,829
 $(376,415) $196,234

   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Statement of Income and Comprehensive Income
 Three Months Ended
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $899,994
 $1,206,174
 $(38,923) $2,067,245
Cost of goods sold (excluding depreciation and         
amortization)—
 727,052
 981,908
 (38,923) 1,670,037
Selling, general and administrative expenses—
 149,390
 134,683
 —
 284,073
Depreciation and amortization—
 4,475
 11,143
 —
 15,618
Results of affiliates’ operations66,645
 61,771
 —
 (128,416) —
Net interest and other—
 13,127
 3,923
 —
 17,050
Income tax expense—
 1,076
 12,746
 —
 13,822
Net income66,645
 66,645
 61,771
 (128,416) 66,645
Net loss attributable to noncontrolling interests—
 —
 (204) —
 (204)
Net income attributable to WESCO International$66,645
 $66,645
 $61,975
 $(128,416) $66,849
Other comprehensive income:
 

 

 

 

Foreign currency translation adjustments20,486
 20,486
 20,486
 (40,972) 20,486
Comprehensive income attributable to WESCO International$87,131
 $87,131
 $82,461
 $(169,388) $87,335


 Condensed Consolidating Statement of Income and Comprehensive Income
 Nine Months Ended
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $2,703,468
 $3,578,653
 $(116,967) $6,165,154
Cost of goods sold (excluding depreciation and         
amortization)—
 2,189,683
 2,915,387
 (116,967) 4,988,103
Selling, general and administrative expenses—
 447,437
 420,353
 —
 867,790
Depreciation and amortization—
 13,749
 33,572
 —
 47,321
Results of affiliates’ operations167,289
 158,093
 —
 (325,382) —
Net interest and other—
 41,202
 13,372
 —
 54,574
Income tax expense—
 2,201
 37,876
 —
 40,077
Net income167,289
 167,289
 158,093
 (325,382) 167,289
Net loss attributable to noncontrolling interests—
 —
 (1,921) —
 (1,921)
Net income attributable to WESCO International$167,289
 $167,289
 $160,014
 $(325,382) $169,210
Other comprehensive loss:
 

 

 

 

Foreign currency translation adjustments(37,029) (37,029) (37,029) 74,058
 (37,029)
Comprehensive income attributable to WESCO International$130,260
 $130,260
 $122,985
 $(251,324) $132,181

   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Statement of Cash Flows
 Nine Months Ended
 September 30, 2019
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and Eliminating
Entries
 Consolidated
Net cash provided by (used in) operating activities$9,480
 $210,707
 $(103,523) $—
 $116,664
Investing activities:
 
 
 
 
Capital expenditures—
 (13,269) (17,054) —
 (30,323)
Acquisition payments—
 (27,742) —
 —
 (27,742)
Dividends received from subsidiaries—
 67,065
 —
 (67,065) —
Other—
 (210,320) 4,575
 210,320
 4,575
Net cash used in investing activities—
 (184,266) (12,479) 143,255
 (53,490)
Financing activities:         
Borrowings143,255
 333,418
 856,464
 (210,320) 1,122,817
Repayments—
 (344,167) (630,263) —
 (974,430)
Repurchases of common stock(152,735) —
 —
 —
 (152,735)
Dividends paid by subsidiaries—
 —
 (67,065) 67,065
 —
Other—
 (13,734) —
 —
 (13,734)
Net cash (used in) provided by financing activities(9,480) (24,483) 159,136
 (143,255) (18,082)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (3,275) —
 (3,275)
Net change in cash and cash equivalents—
 1,958
 39,859
 —
 41,817
Cash and cash equivalents at the beginning of period—
 35,931
 60,412
 —
 96,343
Cash and cash equivalents at the end of period$—
 $37,889
 $100,271
 $—
 $138,160
 Condensed Consolidating Statement of Income and Comprehensive Income
 Three Months Ended
 September 30, 2017
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $867,973
 $1,169,377
 $(37,191) $2,000,159
Cost of goods sold (excluding depreciation and         
amortization)—
 697,896
 954,109
 (37,191) 1,614,814
Selling, general and administrative expenses—
 140,638
 139,859
 —
 280,497
Depreciation and amortization—
 4,475
 11,599
 —
 16,074
Results of affiliates’ operations53,576
 42,726
 —
 (96,302) —
Net interest and other—
 25,436
 (8,601) —
 16,835
Income tax (benefit) expense—
 (136) 18,499
 —
 18,363
Net income53,576
 42,390
 53,912
 (96,302) 53,576
Net loss attributable to noncontrolling interests—
 —
 (99) —
 (99)
Net income attributable to WESCO International$53,576
 $42,390
 $54,011
 $(96,302) $53,675
Other comprehensive income:         
Foreign currency translation adjustments51,148
 51,148
 51,148
 (102,296) 51,148
Comprehensive income attributable to WESCO International$104,724
 $93,538
 $105,159
 $(198,598) $104,823
Reclassification
As described in Note 8, the Company reclassified a net benefit of $0.5 million from selling, general and administrative expenses to net interest and other in the previously reported Condensed Consolidated Statement of Income and Comprehensive Income of the non-guarantor subsidiaries for the three months ended September 30, 2017.



   
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Statement of Cash Flows
 Nine Months Ended
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and Eliminating
Entries
 Consolidated
Net cash provided by operating activities$14,198
 $62,439
 $97,823
 $—
 $174,460
Investing activities:         
Capital expenditures—
 (12,831) (10,918) —
 (23,749)
Dividends received from subsidiaries—
 118,271
 —
 (118,271) —
Other—
 (81,128) 3,609
 81,128
 3,609
Net cash provided by (used in) investing activities—
 24,312
 (7,309) (37,143) (20,140)
Financing activities:         
Borrowings12,857
 246,323
 933,046
 (81,128) 1,111,098
Repayments—
 (318,323) (882,239) —
 (1,200,562)
Repurchases of common stock(27,055) —
 —
 —
 (27,055)
Dividends paid by subsidiaries—
 —
 (118,271) 118,271
 —
Other—
 (8,301) —
 —
 (8,301)
Net cash used in financing activities(14,198) (80,301) (67,464) 37,143
 (124,820)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (4,693) —
 (4,693)
Net change in cash and cash equivalents—
 6,450
 18,357
 —
 24,807
Cash and cash equivalents at the beginning of period—
 50,602
 67,351
 —
 117,953
Cash and cash equivalents at the end of period$—
 $57,052
 $85,708
 $—
 $142,760

 Condensed Consolidating Statement of Income and Comprehensive Income
 Nine Months Ended
 September 30, 2017
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and
Eliminating
Entries
 Consolidated
Net sales$—
 $2,490,102
 $3,289,693
 $(97,420) $5,682,375
Cost of goods sold (excluding depreciation and         
amortization)—
 2,002,708
 2,675,608
 (97,420) 4,580,896
Selling, general and administrative expenses—
 410,624
 405,029
 —
 815,653
Depreciation and amortization—
 13,811
 33,947
 —
 47,758
Results of affiliates’ operations140,915
 117,907
 —
 (258,822) —
Net interest and other—
 74,961
 (25,492) —
 49,469
Income tax (benefit) expense—
 (3,034) 50,718
 —
 47,684
Net income140,915
 108,939
 149,883
 (258,822) 140,915
Net loss attributable to noncontrolling interests—
 —
 (3) —
 (3)
Net income attributable to WESCO International$140,915
 $108,939
 $149,886
 $(258,822) $140,918
Other comprehensive income:
 

 

 

 

Foreign currency translation adjustments96,097
 96,097
 96,097
 (192,194) 96,097
Post retirement benefit plan adjustments, net of tax252
 252
 252
 (504) 252
Comprehensive income attributable to WESCO International$237,264
 $205,288
 $246,235
 $(451,520) $237,267
Reclassification15. SUBSEQUENT EVENTS
As described in Note 8, theThe Company reclassified a net benefit of $1.4 million from selling, generalevaluated subsequent events and administrative expenses to net interest and otherconcluded that no subsequent events have occurred that would require recognition in the previously reportedunaudited Condensed Consolidated Statement of Income and Comprehensive Income ofFinancial Statements or disclosure in the non-guarantor subsidiaries for the nine months ended September 30, 2017.Notes thereto.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)




 Condensed Consolidating Statement of Cash Flows
 Nine Months Ended
 September 30, 2018
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and Eliminating
Entries
 Consolidated
Net cash provided by operating activities$14,198
 $62,439
 $97,823
 $—
 $174,460
Investing activities:
 
 
 
 
Capital expenditures—
 (12,831) (10,918) —
 (23,749)
Dividends received from subsidiaries—
 118,271
 —
 (118,271) —
Other—
 (81,128) 3,609
 81,128
 3,609
Net cash provided by (used in) investing activities—
 24,312
 (7,309) (37,143) (20,140)
Financing activities:         
Borrowings12,857
 246,323
 933,046
 (81,128) 1,111,098
Repayments—
 (318,323) (882,239) —
 (1,200,562)
Repurchases of common stock(27,055) —
 —
 —
 (27,055)
Dividends paid by subsidiaries—
 —
 (118,271) 118,271
 —
Other—
 (8,301) —
 —
 (8,301)
Net cash used in financing activities(14,198) (80,301) (67,464) 37,143
 (124,820)
Effect of exchange rate changes on cash and cash equivalents—
 —
 (4,693) —
 (4,693)
Net change in cash and cash equivalents—
 6,450
 18,357
 —
 24,807
Cash and cash equivalents at the beginning of period—
 50,602
 67,351
 —
 117,953
Cash and cash equivalents at the end of period$—
 $57,052
 $85,708
 $—
 $142,760
WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(CONTINUED)
(unaudited)


 Condensed Consolidating Statement of Cash Flows
 Nine Months Ended
 September 30, 2017
          
(In thousands)
WESCO
International,
Inc.
 
WESCO
Distribution,
Inc.
 
Non-Guarantor
Subsidiaries
 
Consolidating
and Eliminating
Entries
 Consolidated
Net cash (used in) provided by operating activities$(28,740) $168,603
 $(58,752) $—
 $81,111
Investing activities:         
Capital expenditures—
 (7,435) (8,535) —
 (15,970)
Dividends received from subsidiaries—
 51,561
 —
 (51,561) —
Other—
 (174,032) 16,711
 160,811
 3,490
Net cash (used in) provided by investing activities—
 (129,906) 8,176
 109,250
 (12,480)
Financing activities:         
Borrowings135,442
 557,391
 691,682
 (173,907) 1,210,608
Repayments—
 (587,485) (617,301) 13,096
 (1,191,690)
Repurchases of common stock(106,702) —
 —
 —
 (106,702)
Dividends paid by subsidiaries—
 —
 (51,561) 51,561
 —
Other—
 (4,380) —
 —
 (4,380)
Net cash provided by (used in) financing activities28,740
 (34,474) 22,820
 (109,250) (92,164)
Effect of exchange rate changes on cash and cash equivalents—
 —
 7,485
 —
 7,485
Net change in cash and cash equivalents—
 4,223
 (20,271) —
 (16,048)
Cash and cash equivalents at the beginning of period—
 41,552
 68,579
 —
 110,131
Cash and cash equivalents at the end of period$—
 $45,775
 $48,308
 $—
 $94,083
13. SUBSEQUENT EVENTS
On October 31, 2018, the Company's Board of Directors approved an increase to the 2017 Repurchase Authorization from $300 million to $400 million, inclusive of the $25 million repurchase disclosed in Note 7 of these Notes to Condensed Consolidated Financial Statements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Item 2.    Management's Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the information in the unaudited condensed consolidated financial statements and notes thereto included herein and WESCO International, Inc.’s audited Consolidated Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its 20172018 Annual Report on Form 10-K. The matters discussed herein may contain forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from expectations. Certain of these risks are set forth in WESCO International, Inc.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2018, as well as WESCO International, Inc.’s other reports filed with the Securities and Exchange Commission.
Company Overview
WESCO 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 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 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 70,000 active customers globally through approximately 500 branches primarily located primarily in the United States and Canada,North America, with operations in 1615 additional countries and 1011 distribution centers located in the United States and Canada. We employ approximately 9,1009,300 employees worldwide. We distribute over 1,000,000 products, grouped into six categories, from more than 26,000approximately 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 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 and establish a leading position in North America.
Our financial results for the first nine months of 20182019 reflect sales growth improved profitability as a result of favorableand operating leverage, strong cash flow generation, as well as cost discipline and effective capital deployment.management. Net sales increased $482.8$94.3 million, or 8.5%1.5%, over the same period last year. Cost of goods sold as a percentage of net sales was 80.9%81.0% and 80.6%80.9% for the first nine months of 20182019 and 2017,2018, respectively. Selling, general and administrative ("SG&A") expenses as a percentage of net sales were 14.1% and 14.4% for the first nine months of 20182019 and 2017, respectively.2018. Operating profit was $261.9$262.4 million for the current nine month period, compared to $238.1$261.9 million for the first nine months of 2017. Operating profit increased primarily due to higher sales volume and cost control initiatives.2018. Net income attributable to WESCO International for the nine months ended September 30, 2019 and 2018 and 2017 was $169.2$170.3 million and $140.9$169.2 million, respectively.
Cash Flow
We generated $174.5$116.7 million of operating cash flow for the first nine months of 2018.2019. Investing activities mostly consistedincluded payments of $23.7$27.7 million to acquire Sylvania Lighting Solutions ("SLS") and $30.3 million of capital expenditures. Financing activities were comprised of borrowings and repayments of $504.3$625.4 million and $516.3$662.4 million, respectively, related to our revolving credit facility (the "Revolving Credit Facility"), borrowings and repayments of $490.0$480.0 million and $505.0$265.0 million, respectively, related to our accounts receivable securitization facility (the “Receivables Facility”) and repayments of $60.0$24.8 million applied to pay off our term loan facility (the "Term Loan Facility"). Financing activities for the first nine months of 20182019 also included borrowings andnet repayments onof our various international lines of credit of approximately $116.8 million and $119.2 million, respectively.$4.8 million. Additionally, financing activities for the first nine months of 20182019 included the repurchase of $25.0$150.0 million of the Company's common stock pursuant to the share repurchase plan announced on December 13, 2017. Free cash flow for the first nine months of 20182017 and 2017 was $150.8 million and $65.1 million, respectively.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


The following table sets forth the components of free cash flow:
 Nine Months Ended
(In millions)September 30,
2018		 September 30,
2017
Cash flow provided by operations$174.5
 $81.1
Less: Capital expenditures(23.7) (16.0)
Free cash flow$150.8
 $65.1
Note: 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 investing and financing activities.amended on October 31, 2018.
Financing Availability
As of September 30, 2018,2019, we had $562.8$551.5 million in total available borrowing capacity under our Revolving Credit Facility, which was comprised of $380.3$381.4 million of availability under the U.S. sub-facility and $182.5$170.1 million of availability under the Canadian sub-facility. Available borrowing capacity under our Receivables Facility was $185.0$110.0 million. These debt facilities were amended and restated in September 2019. The Revolving Credit Facility and the Receivables Facility both mature in September 2020.2024 and September 2022, respectively. See Note 9 of our Notes to the unaudited Condensed Consolidated Financial Statements for further information regarding these facilities.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Critical Accounting Policies and Estimates
Effective January 1, 2018,2019, we adopted Accounting Standards Update (ASU) 2014-09, Revenue from Contracts with Customers2016-02, Leases, and all the related amendments, ASU 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,as well as certain other ASUs.amendments. See Note 2 of our Notes to the unaudited Condensed Consolidated Financial Statements for information regarding our criticalsignificant accounting policies.
Results of Operations
Third Quarter of 20182019 versus Third Quarter of 20172018
The following table sets forth the percentage relationship to net sales of certain items in our Condensed Consolidated Statements of Income and Comprehensive Income for the periods presented:
 Three Months Ended
 September 30
 2018 2017
Net sales100.0% 100.0%
Cost of goods sold (excluding depreciation and amortization)80.8
 80.7
Selling, general and administrative expenses (1)
13.7
 14.0
Depreciation and amortization0.8
 0.8
Income from operations4.7
 4.5
Net interest and other (1)
0.8
 0.9
Income before income taxes3.9
 3.6
Provision for income taxes0.7
 0.9
     Net income attributable to WESCO International3.2% 2.7%
(1)
As described in Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements, we adopted Accounting Standards Update (ASU) 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on a retrospective basis during the first quarter of 2018. This ASU requires the disaggregation of service cost from the other components of net periodic benefit cost. For the three months ended September 30, 2018 and 2017, the non-service cost components of net periodic benefit cost aggregated to a benefit of $0.5 million and are included in net interest and other.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


 Three Months Ended
 September 30
 2019 2018
Net sales100.0% 100.0%
Cost of goods sold (excluding depreciation and amortization)81.4
 80.8
Selling, general and administrative expenses13.5
 13.7
Depreciation and amortization0.7
 0.8
Income from operations4.4
 4.7
Net interest and other0.7
 0.8
Income before income taxes3.7
 3.9
Provision for income taxes0.7
 0.7
     Net income attributable to WESCO International3.0% 3.2%
Net sales were $2.1 billion for the third quarter of 2018,2019, up 3.9% compared to $2.0 billion for the third quarter of 2017, an increase of 3.4%.2018. Organic sales for the third quarter of 20182019 grew by 4.2%3.4% as foreign exchange rates negatively impacted net sales by 0.8%0.4%, and acquisitions positively impacted net sales by 0.9%.
The following table sets forth organic sales growth for the period presented:
 Three Months Ended
 September 30, 20182019
Change in net sales3.43.9 %
Impact from acquisitions—0.9 %
Impact from foreign exchange rates(0.80.4)%
Impact from number of workdays— %
Organic sales growth4.23.4 %
Note: Organic sales 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 goods sold for the third quarter of 2019 and 2018 was $1.7 billion, compared to $1.6 billion for the third quarter of 2017.billion. As a percentage of net sales, cost of goods sold was 80.8%81.4% and 80.7%80.8%, respectively. Cost of goods sold as a percentage of net sales for the third quarter of 20182019 primarily reflects margin improvement initiatives, which were more than offset by a reclassificationunfavorable business mix and the impact of certain labor costs from SG&A to cost of goods sold.supplier price increases.
SG&A expenses for the third quarter of 20182019 totaled $284.1$290.9 million versus $280.5$284.1 million for the third quarter of 2017.2018. As a percentage of net sales, SG&A expenses were 13.7%13.5% and 14.0%13.7%, respectively. The increase in SG&A expenses reflect higher payroll expensesreflects the impact of the SLS acquisition and increased costs driven by sales volume growth, partially offset by gains from the sale of certain long-lived assets.assets in the prior year, partially offset by lower payroll expenses.
SG&A payroll expenses for the third quarter of 20182019 of $204.8$202.7 million increaseddecreased by $6.9$2.1 million compared to the same period in 2017 primarily due to higher sales volume and variable compensation expense, partially offset by a reclassification of certain labor costs from SG&A to cost of goods sold.2018.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Depreciation and amortization for the third quarter of 20182019 and 20172018 was $15.6 million and $16.1 million, respectively.million.
Net interest and other totaled $13.5 million for the third quarter of 2019, compared to $17.1 million for the third quarter of 2018 compared to $16.82018. The resolution of transfer pricing matters associated with the Canadian taxing authority resulted in non-cash interest income of $3.7 million for the third quarter of 2017.2019.
Income tax expense totaled $13.8$15.9 million for the third quarter of 20182019, compared to $18.4$13.8 million in last year's comparable period, and the effective tax rate was 17.2%19.8% and 25.5%17.2%, respectively. The lowerhigher effective tax rate in the current quarter is primarily due to the Tax Cuts and Jobs Actfull application of 2017 (the "TCJA"), which permanently reduced the international provisions of U.S. federal statutorytax reform, as well as taxes attributable to the undistributed earnings of operations in China that are expected to be remitted in the future.
Net income tax rate from 35%for the third quarter of 2019 was $64.3 million, compared to 21%, effective January 1, 2018. Also, the discrete benefits resulting from audit settlements favorably impacted the effective tax ratenet income of $66.6 million for the third quarter of 2018.
Net income for the third quarter of 2018 was $66.6 million, compared to net income of $53.6 million for the third quarter of 2017.
Net loss of $0.2 million and $0.1 million was attributable to noncontrolling interests for the third quarter of 20182019 and 2017, respectively. The change in loss attributable to noncontrolling interests was primarily due to the effect of foreign currency.2018.
Net income and diluted earnings per share attributable to WESCO International were $66.8$64.5 million and $1.41$1.52 per diluted share, respectively, for the third quarter of 2018,2019, compared with net income and diluted earnings per share of $53.7$66.8 million and $1.12$1.41 per diluted share, respectively, for the third quarter of 2017.2018.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Nine Months Ended September 30, 20182019 versus Nine Months Ended September 30, 20172018
The following table sets forth the percentage relationship to net sales of certain items in our Condensed Consolidated Statements of Income and Comprehensive Income for the periods presented:
Nine Months EndedNine Months Ended
September 30September 30
2018 20172019 2018
Net sales100.0% 100.0%100.0% 100.0%
Cost of goods sold (excluding depreciation and amortization)80.9
 80.6
81.0
 80.9
Selling, general and administrative expenses (1)
14.1
 14.4
14.1
 14.1
Depreciation and amortization0.8
 0.8
0.7
 0.8
Income from operations4.2
 4.2
4.2
 4.2
Net interest and other (1)
0.8
 0.9
0.8
 0.8
Income before income taxes3.4
 3.3
3.4
 3.4
Provision for income taxes0.7
 0.8
0.7
 0.7
Net income attributable to WESCO International2.7% 2.5%2.7% 2.7%
(1)
As described in Note 8 of the Notes to the unaudited Condensed Consolidated Financial Statements, we adopted Accounting Standards Update (ASU) 2017-07, Compensation—Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, on a retrospective basis during the first quarter of 2018. This ASU requires the disaggregation of service cost from the other components of net periodic benefit cost. For the nine months ended September 30, 2018 and 2017, the non-service cost components of net periodic benefit cost aggregated to a benefit of $1.4 million and are included in net interest and other.
Net sales were $6.3 billion for the first nine months of 2019, compared to $6.2 billion for the first nine months of 2018, compared to $5.7 billion for the first nine months of 2017, an increase of 8.5%.2018. Organic sales for the first nine months of 20182019 grew by 7.9%2.1% as foreign exchange rates positivelyand the number of workdays negatively impacted net sales by 0.6%.0.9% and 0.5%, respectively, and were partially offset by the positive 0.8% impact from acquisitions.
The following table sets forth organic sales growth for the period presented:
 Nine Months Ended
 September 30, 20182019
Change in net sales8.51.5%
Impact from acquisitions—0.8%
Impact from foreign exchange rates0.6(0.9)%
Impact from number of workdays—(0.5)%
Organic sales growth7.92.1%
Note: Organic sales 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.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Cost of goods sold for the first nine months of 20182019 was $5.0$5.1 billion, compared to $4.6$5.0 billion for the first nine months of 2017.2018. As a percentage of net sales, cost of goods sold was 80.9%81.0% and 80.6%80.9%, respectively. The increase in cost of goods sold as a percentage of net sales was primarily due to geographic and end market business mix and a reclassification of certain labor costs from SG&A to cost of goods sold.
SG&A expenses for the first nine months of 20182019 totaled $867.8$883.2 million versus $815.7$867.8 million for the first nine months of 2017.2018. As a percentage of net sales, SG&A expenses were 14.1% and 14.4%, respectively.for both periods. The increase in SG&A expenses reflect higherreflects the impact of the SLS acquisition, partially offset by lower payroll expenses increased costs driven by sales volume growth,and the absence of a bad debt charge related to a Canadian customer that ceased operations, partially offset by gains fromwas recorded in the sale of certain long-lived assets.prior year.
SG&A payroll expenses for the first nine months of 20182019 of $608.7$613.0 million increased by $35.5$4.3 million compared to the same period in 20172018 primarily due to higher sales volumewage inflation and the impact of the SLS acquisition, partially offset by lower variable compensation expense which was partially offset by a reclassification of certain labor costs from SG&A to cost of goods sold.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


and benefit costs.
Depreciation and amortization for the first nine months of 2019 and 2018 and 2017 was $47.3$46.0 million and $47.8$47.3 million, respectively.
Net interest and other totaled $47.9 million for the first nine months of 2019, compared to $54.6 million for the first nine months of 2018 compared to $49.42018. The resolution of transfer pricing matters associated with the Canadian taxing authority resulted in non-cash interest income of $3.7 million for the first nine months of 2017. The increase was primarily due to2019. For the nine months ended September 30, 2018, net interest and other includes a foreign exchange loss of $2.6 million from the remeasurement of financial instruments, as well as accelerated amortization of debt discount and debt issuance costs relatedtotaling $0.8 million due to early repayments onof our then outstanding term loan facility.
Income tax expense totaled $40.1$45.0 million for the first nine months of 20182019, compared to $47.7$40.1 million in last year's comparable period, and the effective tax rate was 19.3%21.0% and 25.3%19.3%, respectively. The lowerhigher effective tax rate in the current year is primarily due to the TCJA, which permanently reducedfull application of the international provisions of U.S. federal statutory income tax rate from 35%reform, as well as taxes attributable to 21%, effective January 1, 2018.the undistributed earnings of operations in China that are expected to be remitted in the future.
Net income for the first nine months of 20182019 was $167.3$169.5 million, compared to net income of $140.9$167.3 million for the first nine months of 2017.2018.
Net loss of $1.9$0.8 million and less than $0.1$1.9 million was attributable to noncontrolling interests for the first nine months of 2019 and 2018, and 2017, respectively. The change in net loss attributable to noncontrolling interests was primarily due to the effect of foreign currency.
Net income and diluted earnings per share attributable to WESCO International were $169.2$170.3 million and $3.56$3.88 per diluted share, respectively, for the first nine months of 2018,2019, compared with net income and diluted earnings per share of $140.9$169.2 million and $2.90$3.56 per diluted share, respectively, for the first nine months of 2017.2018.
Liquidity and Capital Resources
Total assets were $4.8$5.0 billion and $4.7$4.6 billion at September 30, 20182019 and December 31, 2017,2018, respectively. Total liabilities were $2.6$2.9 billion and $2.5 billion at September 30, 20182019 and December 31, 2017.2018, respectively. Total stockholders' equity was $2.2 billion at September 30, 2018 and $2.1 billion at September 30, 2019 and December 31, 2017.2018, respectively.
Our liquidity needs generally arise from fluctuations in our working capital requirements, capital expenditures, acquisitions and debt service obligations. As of September 30, 2018,2019, we had $562.8$551.5 million in available borrowing capacity under our Revolving Credit Facility and $185.0$110.0 million in available borrowing capacity under our Receivables Facility, which combined with available cash of $79.8$61.5 million, provided liquidity of $827.6$723.0 million. Cash included in our determination of liquidity represents cash in deposit and interest bearing investment accounts. We believe cash provided by operations and financing activities will be adequate to cover our current operational and business needs. In addition, we regularly review our mix of fixed versus variable rate debt, and we may, from time to time, issue or retire borrowings and/or refinance existing debt in an effort to mitigate the impact of interest rate and foreign exchange rate fluctuations, and to maintain a cost-effective capital structure consistent with our anticipated capital requirements. At September 30, 2018,2019, approximately 67%62% of our debt portfolio was comprised of fixed rate debt.
We monitor the depository institutions that hold our cash and cash equivalents on a regular basis, and we believe that we have placed our deposits with creditworthy financial institutions. We also communicate on a regular basis with our lenders regarding our financial and working capital performance, liquidity position and financial leverage. Our financial leverage ratio was 3.1 and 3.63.0 as of September 30, 20182019 and 2.7 as of December 31, 2017, respectively.2018. In addition, we are in compliance with all covenants and restrictions contained in our debt agreements as of September 30, 2018.2019.


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




The following table sets forth our financial leverage ratio as of September 30, 20182019 and December 31, 2017:2018:
Twelve months endedTwelve months ended
(In millions of dollars, except ratio)September 30,
2018		 December 31,
2017		September 30,
2019		 December 31,
2018
Income from operations (1)
$342.9
 $319.2
$352.9
 $352.4
Depreciation and amortization63.6
 64.0
61.7
 63.0
EBITDA$406.5
 $383.2
$414.6
 $415.4
      
September 30,
2018		 December 31,
2017		September 30,
2019		 December 31,
2018
Short-term borrowings and current debt$32.3
 $35.3
$25.9
 $56.2
Long-term debt1,229.3
 1,313.3
1,346.3
 1,167.3
Debt discount and debt issuance costs (2)(1)
10.6
 14.2
9.4
 9.6
Total debt1,272.2
 1,362.8
1,381.6
 1,233.1
Less: cash and cash equivalents142.8
 118.0
138.2
 96.3
Total debt, net of cash$1,129.4
 $1,244.8
$1,243.4
 $1,136.8
      
Financial leverage ratio3.1
 3.6
3.0
 2.7
Financial leverage ratio, net of cash2.8
 3.2
(1) 
Due to the adoption of ASU 2017-07 on a retrospective basis in the first quarter of 2018, we classified the non-service cost components of net periodic benefit cost as part of net interest and other for the twelve months ended September 30, 2018 and December 31, 2017. These components aggregated to a benefit of $1.9 million and $1.8 million, respectively.
(2)
Long-term debt is presented in the condensed consolidated balance sheets net of debt discount and debt issuance costs.
Note: Financial leverage is a non-GAAP measure of the use of debt. Financial leverage ratio is calculated by dividing total debt, including debt discount and debt issuance costs, by EBITDA. Financial leverage ratio, net of cash is calculated by dividing total debt, including debt discount and debt issuance costs, net of cash, by EBITDA. EBITDA, which is also a non-GAAP financial measure, is defined as the trailing twelve months earnings before interest, taxes, depreciation and amortization.
At September 30, 2018,2019, we had cash and cash equivalents totaling $142.8$138.2 million, of which $94.5$106.1 million was held by foreign subsidiaries. TheAs a result of the Tax Cuts and Jobs Act of 2017 (the "TCJA"), we reevaluated our intent and ability to repatriate foreign earnings based upon the liquidity of our domestic operations and the cash held byflow needs of our foreign subsidiaries. Consequently, during the year ended December 31, 2018, we repatriated a portion of the previously taxed earnings attributable to our Canadian operations. In the current quarter, we determined that a portion of the undistributed earnings attributable to our Chinese operations are expected to be remitted in the future, and accordingly accrued taxes for such remittance. Except for this change, we continue to assert that the remaining undistributed earnings of our foreign subsidiaries, could bethe majority of which were subject to additional income taxes if repatriated.the one-time tax imposed by the TCJA, are indefinitely reinvested. We continue to believe that we are able to maintain a sufficient level of liquidity for our domestic operations and commitments without repatriation of therepatriating cash held by these foreign subsidiaries. However, as a result of the TCJA,Upon any future repatriation, additional tax expense or benefit may be incurred; however, we are reevaluating our intent and ability to repatriate foreign cash based upon the available liquidity and cash flow needs of our foreign subsidiaries anddo not believe it will disclose in future filings any change in our intention to repatriate undistributed foreign earnings and any resulting income tax impacts.be material.
We did not note any triggering events or substantive changes during the first nine months of 20182019 that would require an interim evaluation of impairment of goodwill or indefinite-lived intangible assets. We will perform our annual impairment testing of goodwill and indefinite-lived intangible assets during the fourth quarter.
Over the next several quarters, we plan to closely manage working capital, and it is expected that excess cash will be directed primarily at growth initiatives, acquisitions, debt reduction, and share repurchases. We remain focused on maintaining ample liquidity and credit availability. We anticipate increased capital expenditures in 20182019 to be higher than 2017 as we continue to invest in our business.support business initiatives. We believe our balance sheet and ability to generate ample cash flow provides us with a durable business model and should allow us to fund growth initiatives and expansion needs.
Cash Flow

Operating Activities. Net cash provided by operating activities for the first nine months of 2019 totaled $116.7 million, compared with $174.5 million of cash generated for the first nine months of 2018. Operating activities included net income of $169.5 million and adjustments to net income totaling $61.6 million. Other sources of cash in the first nine months of 2019 included an increase in accounts payable of $46.9 million, a decrease in other accounts receivable of $15.5 million, and an increase in other current and noncurrent liabilities of $4.4 million. Primary uses of cash in the first nine months of 2019 included: an increase in trade accounts receivable of $122.9 million; a decrease in accrued payroll and benefit costs of $36.1 million; an increase in prepaid expenses and other assets of $20.7 million; and, an increase in inventories of $1.5 million.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




Cash Flow
Operating Activities.Net cash provided by operating activities for the first nine months of 2018 totaled $174.5 million, compared with $81.1 million of cash generated for the first nine months of 2017. Net cash provided by operating activitieswhich included net income of $167.3 million and adjustments to net income totaling $67.1 million. Other sources of cash in the first nine months of 2018 included a decrease in inventories of $23.2 million, a decrease in other accounts receivable of $19.9 million, an increase in accounts payable of $18.2 million, an increase in accrued payroll and benefit costs of $2.8 million, and an increase in other current and noncurrent liabilities of $2.3 million. Primary uses of cash in the first nine months of 2018 included: an increase in trade accounts receivable of $104.2 million resulting from higher sales; and, an increase in prepaid expenses and other assets of $22.1 million.
Net cash provided by operating activities for the first nine months of 2017 totaled $81.1 million, which included net income of $140.9 million and adjustments to net income totaling $68.8 million. Other sources of cash in 2017 included an increase in accounts payable of $138.3 million, a decrease in other accounts receivable of $4.4 million, and an increase in accrued payroll and benefit costs of $2.4 million. Primary uses of cash in 2017 included: an increase in trade accounts receivable of $174.7 million resulting from higher sales in the latter part of the first nine months of 2017; an increase in inventories of $86.7 million; an increase in prepaid expenses and other assets of $8.5 million; and, a decrease in other current and noncurrent liabilities of $3.8 million.
Investing Activities. Net cash used in investing activities for the first nine months of 20182019 was $20.1$53.5 million, compared with $12.5$20.1 million used during the first nine months of 2017.2018. Included in the first nine months of 2019 were acquisition payments of $27.7 million. Capital expenditures were $30.3 million for the nine month period ended September 30, 2019, compared to $23.7 million for the nine month period ended September 30, 2018, compared to $16.0 million for the nine month period ended September 30, 2017.2018.
Financing Activities. Net cash used in financing activities for the first nine months of 20182019 was $124.9$18.1 million, compared to $92.2$124.8 million used in the first nine months of 2017. 2018. During the first nine months of 2019, financing activities consisted of borrowings and repayments of $625.4 million and $662.4 million, respectively, related to our Revolving Credit Facility, borrowings and repayments of $480.0 million and $265.0 million, respectively, related to our Receivables Facility and repayments of $24.8 million to pay off our Term Loan Facility. Financing activities for the first nine months of 2019 also included net repayments of our various international lines of credit of approximately $4.8 million. Additionally, financing activities for the first nine months of 2019 included the repurchase of $152.7 million of the Company's common stock, of which $150.0 million was pursuant to an accelerated stock repurchase transaction under the share repurchase plan announced on December 13, 2017 and amended on October 31, 2018.
During the first nine months of 2018, financing activities consisted of borrowings and repayments of $504.3 million and $516.3 million, respectively, related to our Revolving Credit Facility, borrowings and repayments of $490.0 million and $505.0 million, respectively, related to our Receivables Facility, and repayments of $60.0 million applied to our Term Loan Facility. Financing activities for the first nine months of 2018 also included borrowings andnet repayments onof our various international lines of credit of approximately $116.8 million and $119.2 million, respectively. Additionally, financing activities for the first nine months of 2018 included the repurchase of $25.0 million of the Company's common stock pursuant to the share repurchase plan announced on December 13, 2017.
During the first nine months of 2017, financing activities consisted of borrowings and repayments of $589.5 million and $561.5 million, respectively, related to our Revolving Credit Facility, borrowings and repayments of $490.2 million and $470.2 million, respectively, related to our Receivables Facility, and repayments of $45.0 million applied to our Term Loan Facility. Financing activities for the first nine months of 2017 also included borrowings and repayments on our various international lines of credit of approximately $130.9 million and $115.0 million, respectively. Additionally, financing activities for the nine months ended September 30, 2017 included the repurchase of $106.7 million of the Company's common stock, of which $100.0 million was pursuant to the share repurchase plan announced on December 17, 2014.$2.5 million.
Contractual Cash Obligations and Other Commercial Commitments
There were no material changes in our contractual obligations and other commercial commitments that would require an update to the disclosure provided in our 20172018 Annual Report on Form 10-K. Management believes that cash generated from operations, together with amounts available under our Revolving Credit Facility and the Receivables Facility, will be sufficient to meet our working capital, capital expenditures and other cash requirements for the foreseeable future. However, there can be no assurances that this will continue to be the case.
Inflation
The rate of inflation, as measured by changes in the producer price index, affects different commodities, the cost of products purchased and ultimately the pricing of our different products and product classes to our customers. For the nine months ended September 30, 2018,2019, pricing related to inflation impacted our sales by approximately1% to 2%.
Seasonality
Our operating results are not significantly affected by seasonal factors. Sales during the first quarter are usually affected by a reduced level of activity. Sales during the second, third and fourth quarters are generally 6 -6% to 8% higher than the first quarter. 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 pattern.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Impact of Recently Issued Accounting Standards
See Note 2 of our Notes to Condensed Consolidated Financial Statements for information regarding the effect of new accounting pronouncements.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES


Forward-Looking Statements
From time to time in this report and in other written reports and oral statements, references are made to expectations regarding our future performance. When used in this context, 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 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 management’s beliefs, as well as on assumptions made by and information currently 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 assurance that the forward-looking information will in fact prove to be accurate. Certain of these risks are set forth in the WESCO International’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2018, as well as WESCO International’s other reports filed with the Securities and Exchange Commission. 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.
Item 3.    Quantitative and Qualitative Disclosures about Market Risks.
There have not been any material changes to our exposures to market risk during the quarterly period ended September 30, 20182019 that would require an update to the relevant disclosures provided in our 20172018 Annual Report on Form 10-K.
Item 4.    Controls and Procedures.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)). Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures and internal control over financial reporting were effective as of the end of the period covered by this report.
Effective January 1, 2018,2019, we adopted ASU 2014-09, Revenue from Contracts with Customers2016-02, Leases, and all the related amendments. AlthoughIn connection with the adoption of this new revenuelease standard, had no impact on our results of operations, financial position or cash flows, we did expand ourmodified certain processes and implemented internal controls related to revenue recognition. However,leases. Except for the effect of adopting the new lease standard, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




PART II—OTHER INFORMATION
Item 1. Legal 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 routine litigation relating to commercial, product and employment matters. The outcome of any litigation cannot be predicted with certainty, and some lawsuits 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 material adverse effect on our results of operations for that period.
Item 1A. Risk Factors.
There have been no material changes to the risk factors previously disclosed in Item 1A. to Part 1 of WESCO’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table sets forth all issuer purchases of common stock during the three months ended September 30, 2018,2019, including those made pursuant to publicly announced plans or programs:
Period 
Total Number of Shares Purchased (2)
 Average Price Paid Per Share 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)
 
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1)
      (In Millions)
July 1 – July 31, 2018 60
 $58.25
 —
 $300.0
August 1 – August 31, 2018 1,701
 $60.13
 —
 $300.0
September 1 – September 30, 2018 352,785
 $60.40
 351,821
 $275.0
Total 354,546
 $60.40
 351,821
  
Period 
Total Number of Shares Purchased (1)
 Average Price Paid Per Share 
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (2)
 
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (2) (3)
      (In Millions)
July 1 – July 31, 2019 26
 $47.15
 —
 $125.0
August 1 – August 31, 2019 695,679
 $46.38
 695,496
 $125.0
September 1 – September 30, 2019 75
 $50.57
 —
 $125.0
Total 695,780
 $46.38
 695,496
  
(1) 
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 Company's common stock through December 31, 2020.
(2)
There were 2,725284 shares purchased induring the quarterly period ended September 30, 2019 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 restricted stock units.
(2)
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 Company's common stock through December 31, 2020. On October 31, 2018, the Company's Board of Directors approved an increase to the authorization from $300 million to $400 million.
(3)
This amount represents the remaining authorization under the Company's share repurchase program that is available to repurchase shares of the Company's common stock. Due to the nature of accelerated share repurchases, the Company receives a certain percentage of shares immediately 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 Company’s share repurchase program was reduced at the time of the up-front cash payment.


WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




Item 6.Exhibits.
(a)Exhibits
(10)    Material Contracts
(1) Seventh Amendment to Fourth Amended and Restated Receivables Purchase Agreement,Term Sheet, dated asSeptember 25, 2019, memorializing terms of April 23, 2018employment of Nelson Squires by WESCO International, Inc.
(31)    Rule 13a-14(a)/15d-14(a) Certifications
(1) Certification of Chief Executive Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.
(2) Certification of Chief Financial Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.
(32)    Section 1350 Certifications
(1) Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
(2) Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS    XBRL Instance Document.
101.SCH    XBRL Taxonomy Extension Schema Document.
101.CAL    XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF    XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB    XBRL Taxonomy Extension Label Linkbase Document.
101.PRE    XBRL Taxonomy Extension Presentation Linkbase Document.

104    Cover Page Interactive Data File (embedded within the Inline XBRL document)






WESCO INTERNATIONAL, INC. AND SUBSIDIARIES




SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.




  WESCO International, Inc.
  (Registrant)
November 2, 20181, 2019By:/s/ David S. Schulz
(Date) David S. Schulz
  Senior Vice President and Chief Financial Officer






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