UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q


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

For the quarterly period ended ~~March 31,~~June 30, 2010


o		TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD from to

Commission file number 001-14989

WESCO International, Inc.

(Exact name of registrant as specified in its charter)


Delaware		~~25-1723342~~
(State or other jurisdiction of		~~(IRS Employer Identification No.)~~
incorporation or organization)		25-1723342 (IRS Employer Identification No.)

225 West Station Square Drive
Suite 700
Pittsburgh, Pennsylvania 15219		~~(412) 454-2200~~
(Address of principal executive offices)		(412) 454-2200 (Registrant’s telephone number, including area code)

N/A
(Former name, former address and former fiscal year, if changed since last report)

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. Yesþ Noo

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 such shorter period that the registrant was required to submit and post such files). Yesoþ Noo

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


Large accelerated filerþ	Accelerated filero	Non-accelerated filero	Smaller reporting companyo
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

As of ~~May 3,~~July 29, 2010, WESCO International, Inc. had ~~42,441,684~~42,453,342 shares of common stock outstanding.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited)


	March 31,			December 31,			June 30,			December 31,
Amounts in thousands, except share data	2010			2009			2010			2009

Assets
Current Assets:
Cash and cash equivalents	$	121,074		$	112,329		$	95,804		$	112,329
Trade accounts receivable, net of allowance for doubtful accounts of $21,530 and $20,060 in 2010 and 2009, respectively		689,119			635,754
Trade accounts receivable, net of allowance for doubtful accounts of $20,241 and $20,060 in 2010 and 2009, respectively								731,320			635,754
Other accounts receivable		37,940			31,808			16,348			31,808
Inventories, net		507,057			507,215			531,486			507,215
Current deferred income taxes		1,670			1,686			1,622			1,686
Income taxes receivable		21,645			29,135			22,174			29,135
Prepaid expenses and other current assets		12,977			13,077			16,998			13,077

Total current assets		1,391,482			1,331,004			1,415,752			1,331,004

Property, buildings and equipment, net		114,615			116,309			114,355			116,309
Intangible assets, net		79,467			81,308			77,625			81,308
Goodwill		866,002			863,410			876,873			863,410
Investment in subsidiary		40,046			43,957			—			43,957
Deferred income taxes		34,867			33,518			35,707			33,518
Other assets		12,674			24,687			12,292			24,687

Total assets	$	2,539,153		$	2,494,193		$	2,532,604		$	2,494,193


Liabilities and Stockholders’ Equity

Current Liabilities:
Accounts payable	$	534,515		$	453,154		$	540,706		$	453,154
Accrued payroll and benefit costs		26,579			30,949			38,444			30,949
Current portion of long-term debt		94,749			93,977			95,975			93,977
Bank overdrafts		26,796			32,191			22,530			32,191
Current deferred income taxes		7,512			7,301			7,715			7,301
Other current liabilities		59,697			63,262			72,943			63,262

Total current liabilities		749,848			680,834			778,313			680,834

Long-term debt, net of discount of $181,410 and $182,689 in 2010 and 2009, respectively		540,952			597,869
Long-term debt, net of discount of $180,131 and $182,689 in 2010 and 2009, respectively								483,812			597,869
Deferred income taxes		192,970			191,068			190,486			191,068
Other noncurrent liabilities		28,138			28,133			28,639			28,133

Total liabilities	$	1,511,908		$	1,497,904		$	1,481,250		$	1,497,904

Commitments and contingencies

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, 56,016,246 and 55,967,824 shares issued and 42,464,130 and 42,416,796 shares outstanding in 2010 and 2009, respectively		560			560
Common stock, $.01 par value; 210,000,000 shares authorized, 56,040,538 and 55,967,824 shares issued and 42,486,443 and 42,416,796 shares outstanding in 2010 and 2009, respectively								560			560
Class B nonvoting convertible common stock, $.01 par value; 20,000,000 shares authorized, 4,339,431 issued and no shares outstanding in 2010 and 2009, respectively		43			43			43			43
Additional capital		997,237			992,855			1,001,211			992,855
Retained earnings		601,399			582,199			629,193			582,199
Treasury stock, at cost; 17,891,547 and 17,890,459 shares in 2010 and 2009, respectively		(590,383	)		(590,353	)
Treasury stock, at cost; 17,893,526 and 17,890,459 shares in 2010 and 2009, respectively								(590,464	)		(590,353	)
Accumulated other comprehensive income		18,389			10,985			10,811			10,985

Total stockholders’ equity		1,027,245			996,289			1,051,354			996,289

Total liabilities and stockholders’ equity	$	2,539,153		$	2,494,193		$	2,532,604		$	2,494,193

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


	Three Months Ended						Three Months Ended						Six Months Ended
	March 31,						June 30,						June 30,
Amounts in thousands, except per share data	2010			2009			2010			2009			2010			2009

Net sales	$	1,148,599		$	1,179,590		$	1,259,121		$	1,159,218		$	2,407,720		$	2,338,807
Cost of goods sold (excluding depreciation and amortization below)		921,183			941,413			1,016,169			935,306			1,937,352			1,876,763
Selling, general and administrative expenses		183,039			187,489			185,977			169,914			369,016			357,347
Depreciation and amortization		6,101			7,157			5,620			6,360			11,721			13,516

Income from operations		38,276			43,531			51,355			47,638			89,631			91,181

Interest expense, net		13,530			12,518			14,400			13,821			27,930			26,350
Other income		(2,506	)		(1,626	)		(1,778	)		(1,101	)		(4,284	)		(2,727	)

Income before income taxes		27,252			32,639			38,733			34,918			65,985			67,558

Provision for income taxes		8,052			9,377			10,940			8,464			18,992			17,842

Net income	$	19,200		$	23,262		$	27,793		$	26,454		$	46,993		$	49,716


Earnings per share :
Basic	$	0.45		$	0.55		$	0.65		$	0.63		$	1.11		$	1.18


Diluted	$	0.44		$	0.55		$	0.60		$	0.62		$	1.04		$	1.17

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)


	Three Months Ended						Six Months Ended
	March 31,						June 30,
Amounts in thousands	2010			2009			2010			2009

Operating Activities:
Net income	$	19,200		$	23,262		$	46,993		$	49,716
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		6,101			7,157			11,721			13,516
Amortization of debt issuance costs		635			858			1,303			2,029
Amortization of debt discount		1,279			3,846			2,558			7,691
Deferred income taxes		292			2,537			(3,789	)		5,433
Stock-based compensation expense		3,517			3,161			7,117			6,319
Loss on sale of property, buildings and equipment		104			201
Loss (gain) on sale of property, buildings and equipment								62			(362	)
Asset impairment charge		3,400			—			3,793			—
Equity income, net of distributions in 2010 and 2009 of $86 and $2,237, respectively		(2,420	)		611
Equity income, net of distributions in 2010 and 2009 of $1,864 and $3,395, respectively								(2,421	)		668
Excess tax benefit from stock-based compensation		(408	)		(62	)		(629	)		(155	)
Interest related to uncertain tax positions		(37	)		222			(310	)		597
Changes in assets and liabilities
Trade and other receivables, net		(41,223	)		113,854			(80,204	)		132,937
Inventories, net		2,065			42,880			(21,844	)		92,011
Prepaid expenses and other current assets		6,951			(1,466	)		3,217			(5,580	)
Accounts payable		78,924			(45,395	)		85,756			(72,623	)
Accrued payroll and benefit costs		(4,451	)		(16,062	)		7,491			(23,831	)
Other current and noncurrent liabilities		(5,255	)		(1,010	)		7,942			(3,664	)

Net cash provided by operating activities		68,674			134,594			68,756			204,702

Investing Activities:
Capital expenditures		(2,246	)		(2,856	)		(6,022	)		(6,224	)
Acquisition payments		(48	)		(74	)		(14,296	)		(122	)
Proceeds from sale of subsidiary								40,000			—
Equity distribution		1,365			—			4,054			1,039
Collection of note receivable								15,000			—
Proceeds from sale of assets		15			82			178			98

Net cash used by investing activities		(914	)		(2,848	)
Net cash provided (used) by investing activities								38,914			(5,209	)

Financing Activities:
Short-term borrowings, net		—			(50,000	)
Proceeds from issuance of long-term debt		205,500			71,000			310,452			248,200
Repayments of long-term debt		(262,401	)		(118,871	)		(424,404	)		(422,066	)
Debt issuance costs		(409	)		—			(596	)		(1,890	)
Proceeds from the exercise of stock options		427			112			613			312
Excess tax benefit from stock-based compensation		408			62			629			155
Repurchase of common stock		(30	)		—			(111	)		(18	)
Decrease in bank overdrafts		(5,395	)		(11,948	)		(9,660	)		(9,188	)
Payments on capital lease obligations		(538	)		(683	)		(830	)		(1,027	)

Net cash used by financing activities		(62,438	)		(110,328	)		(123,907	)		(185,522	)

Effect of exchange rate changes on cash and cash equivalents		3,423			(2,621	)		(288	)		2,981


Net change in cash and cash equivalents		8,745			18,797			(16,525	)		16,952
Cash and cash equivalents at the beginning of period		112,329			86,338			112,329			86,338

Cash and cash equivalents at the end of period	$	121,074		$	105,135		$	95,804		$	103,290

Supplemental disclosures:
Non-cash investing and financing activities:
Property, buildings and equipment acquired through capital leases		14			507			164			728

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1. ORGANIZATION

WESCO International, Inc. and its subsidiaries (collectively, “WESCO”), headquartered in Pittsburgh, Pennsylvania, is a full-line distributor of electrical supplies and equipment and is a provider of integrated supply procurement services with operations in the United States, Canada, Mexico, the United Kingdom, Singapore, China, Australia, Africa and the United Arab Emirates. WESCO currently operates approximately 380 branch locations and seven distribution centers (four in the United States and three in Canada).

2. ACCOUNTING POLICIES

Basis of Presentation

The 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 statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in WESCO’s 2009 Annual Report on Form 10-K filed with the SEC. The December 31, 2009 condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States.

The unaudited condensed consolidated balance sheet as of ~~March 31,~~June 30, 2010, the unaudited condensed consolidated statements of income for the three and six months ended ~~March 31,~~June 30, 2010 and 2009, respectively, and the unaudited condensed consolidated statements of cash flows for the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009, 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. All adjustments reflected in the unaudited condensed consolidated financial statements are of a normal recurring nature unless indicated. Results for the interim periods presented are not necessarily indicative of the results to be expected for the full year.

Recent Accounting Pronouncements

Pronouncements issued by the Financial Accounting Standards Board (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.

3. STOCK-BASED COMPENSATION

WESCO’s stock-based employee compensation plans are comprised of stock options, stock-settled stock appreciation rights and restricted stock units. 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 options and stock-settled appreciation rights is determined using the Black-Scholes valuation model. The fair value of restricted stock units 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.

~~There were no stock-settled stock appreciation rights granted during the three months ended March 31, 2009.~~ During the three ~~months~~and six month periods ended ~~March 31,~~June 30, 2010 and 2009, WESCO granted the following stock-settled stock appreciation rights at the following weighted average assumptions:


	~~Three Months Ended~~
	~~March 31,~~
	~~2010~~
~~Stock-settled appreciation rights granted~~		~~10,750~~
~~Risk free interest rate~~		~~2.2~~	%
~~Expected life~~	~~4.5 years~~
~~Expected volatility~~		50	%


	Three Months Ended June 30,						Six Months Ended June 30,
	2010			2009			2010			2009

Stock-settled appreciations rights granted		13,250			1,700			24,000			1,700
Risk free interest rate		2.2	%		2.0	%		2.2	%		2.0	%
Expected life		5.0 years			4.5 years			4.8 years			4.5 years
Expected volatility		49	%		50	%		49	%		50	%

For the three and six months ended ~~March 31,~~June 30, 2010, the weighted average fair value per stock-settled appreciation right granted was ~~$12.63.~~$17.07 and $15.08, respectively. For the three and six months ended June 30, 2009, the weighted average fair value per equity award granted was $10.86.

WESCO recognized ~~$3.5~~$3.6 million and $3.2 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the three months ended ~~March 31,~~June 30, 2010 and 2009, respectively. WESCO recognized $7.1 million and $6.3 million of non-cash stock-based compensation expense, which is included in selling, general and administrative expenses, for the six months ended June 30, 2010 and 2009, respectively. As of ~~March 31,~~June 30, 2010, there was ~~$16.6~~$13.3 million of total unrecognized compensation cost related to non-vested stock-based compensation arrangements for all awards previously made, of which approximately ~~$8.4~~$5.0 million is expected to be recognized over the remainder of 2010, ~~$6.3~~$6.4 million in 2011, ~~$1.8~~$1.9 million in 2012 and ~~approximately~~less than $0.1 million in 2013.

During the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009, the total intrinsic value of ~~stock options and stock-settled stock appreciation rights~~awards exercised was ~~$0.9~~$1.7 million and ~~$0.2~~$0.6 million, respectively, and the total amount of cash received from the exercise of options was ~~$0.4~~$0.6 million and ~~$0.1~~$0.3 million, respectively. The tax benefit associated with the exercise of ~~stock options and stock-settled stock appreciation rights~~awards for the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009 totaled ~~$0.4~~$0.6 million and ~~$0.1~~$0.2 million, respectively, and was recorded as a credit to additional capital.

The following table sets forth a summary of stock options and stock-settled stock appreciation rights and related information for the ~~three~~six months ended ~~March 31,~~June 30, 2010:


				Weighted		Weighted Average							Weighted		Weighted Average
				Average		Remaining		Aggregate Intrinsic					Average		Remaining		Aggregate Intrinsic
				Exercise		Contractual Term		Value					Exercise		Contractual Term		Value
	Awards			Price		(In Years)		(In Thousands)		Awards			Price		(In Years)		(In Thousands)
Outstanding at December 31, 2009		4,226,153		$	35.30						4,226,153		$	35.30
Granted		10,750			29.07						24,000			34.08
Exercised		(42,919	)		9.80						(77,524	)		13.47
Forfeited		(14,508	)		34.23						(66,030	)		34.42

Outstanding at March 31, 2010		4,179,476			35.55		6.7	$	27,800
Outstanding at June 30, 2010											4,106,599			35.72		6.4	$	24,578

Exercisable at March 31, 2010		2,612,743		$	36.04		5.5	$	20,286
Exercisable at June 30, 2010											2,583,555		$	36.23		5.3	$	18,161

For the three months ended ~~March 31,~~June 30, 2010 and 2009, the computation of diluted earnings per share excluded ~~approximately 3.2~~1.8 million and ~~3.1~~2.6 million, respectively, of stock-settled stock appreciation rights at weighted average exercise prices of ~~$42~~$52 per share and $47 per share, respectively. For the six months ended June 30, 2010 and 2009, the computation of diluted earnings per share excluded stock-settled stock appreciation rights of 1.8 million and 3.0 million, respectively, at weighted average exercise prices of $52 per share and $43 per share, respectively. These amounts were excluded because their effect would have been antidilutive.

Because of WESCO’s obligation to settle the par value of the 2.625% Convertible Senior Debentures due 2025 (the “2025 Debentures”), the 1.75% Convertible Senior Debentures due 2026 (the “2026 Debentures”) and the 6.0% Convertible Senior Debentures due 2029 (the “2029 Debentures” and together with the 2025 Debentures and 2026 Debentures, the “Debentures”) in cash, WESCO is not required to include any shares underlying the Debentures in its diluted weighted average shares outstanding until the average stock price per share for the period exceeds the conversion price of the respective Debentures. At such time, only the number of shares that would be issuable (under the treasury stock method of accounting for share dilution) would be included, which is based upon the amount by which the average stock price exceeds the conversion price. The conversion prices of the 2029 Debentures, 2026 Debentures and 2025 Debentures are $28.87, $88.15 and $41.86, respectively. Share dilution is limited to a maximum of 11,951,939 shares for the 2029 Debentures, ~~2,598~~2,507 shares for the 2026 Debentures and 2,205,434 shares for the 2025 Debentures. Since the average stock ~~price~~prices for the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2010 ~~was $30.63~~were $37.52 per share ~~687,990~~and $34.13 per share, respectively, 2,756,454 shares and 1,843,267 shares, respectively, underlying the 2029 Debentures were included in the diluted share count, and the effect on diluted earnings per share for both periods was a decrease of ~~less than $0.01.~~approximately $0.04. There was no impact of the Debentures on diluted earnings per share for the three and six month ~~period~~periods ended ~~March 31,~~June 30, 2009.

5. REVOLVING CREDIT FACILTY

At ~~March 31,~~June 30, 2010, the aggregate borrowing capacity under the revolving credit facility was $375 million. The revolving credit facility consists of two separate sub-facilities: (i) a U.S. sub-facility and (ii) a Canadian sub-facility and includes a letter of credit sub-limit of up to $55 million. The facility matures on November 1, 2013 and is collateralized by the inventory of WESCO Distribution, Inc. (“WESCO Distribution”) and the inventory and accounts receivable of WESCO Distribution Canada, L.P. WESCO Distribution’s obligations under the revolving credit facility have been guaranteed by WESCO International, Inc. (“WESCO International”) and by certain of WESCO Distribution’s subsidiaries.

On February 19, 2010, WESCO Distribution, along with certain of its subsidiaries, entered into a Limited Consent and Amendment No. 4 (the “Amendment”) to its Third Amended and Restated Revolving Credit Agreement, dated November 1, 2006 (the “Agreement”). The Amendment permits WESCO to complete certain legal entity restructuring actions, issue additional surety bonds and invest additional resources in foreign subsidiaries. In addition, the amendment enhances WESCO’s hedging capacities.

Pursuant to the terms of the Amendment, WESCO agreed to modify the Applicable Margins (as defined in the Agreement) paid to the lenders on borrowings and letters of credit. Availability under the facility is limited to the amount of eligible U.S. and Canadian inventory and Canadian receivables applied against certain advance rates. Depending upon the amount of excess availability under the facility, interest will be calculated at LIBOR plus a margin that ranges between 2.25% and 2.875% or at the Index Rate (prime rate published by the Wall Street Journal) plus a margin that ranges between 1.00% and 1.625%. This change represented a 1.125% to 1.25% adjustment in borrowing margin over the previous rates. The fee for unused capacity associated with the facility was not changed and will range between 0.25% and 0.375%.

As long as the average daily excess availability for both the preceding and projected succeeding 90-day period is greater than $50 million, WESCO would be permitted to make acquisitions and repurchase outstanding public stock and bonds. The above permitted transactions would also be allowed if such excess availability is between $25 million and $50 million and WESCO’s fixed charge coverage ratio, as defined by Agreement, is at least 1.25 to 1.0 after taking into consideration the permitted transaction. Additionally, if excess availability under the revolving credit facility is less than $60 million, then WESCO must maintain a fixed charge coverage ratio of 1.1 to 1.0. At ~~March 31,~~June 30, 2010, ~~there was no balance~~WESCO had $28.0 million outstanding under the facility.

6. EQUITY INVESTMENT

During the first quarter of 2008, WESCO and Deutsch Engineered Connecting Devices, Inc. (“Deutsch”) completed a transaction with respect to WESCO’s LADD operations, which resulted in a joint venture in which Deutsch ~~owns~~owned a 60% interest and WESCO ~~owns~~owned a 40% interest. WESCO ~~accounts~~accounted for its investment in the joint venture using the equity method of accounting. Accordingly, earnings from the joint venture ~~are~~were recorded as other income in the consolidated statement of income. Deutsch iswas entitled, but not obliged, to acquire the remaining 40% after January 1, 2010. Deutsch paid to WESCO aggregate consideration of approximately ~~$75~~$75.0 million, consisting of ~~$60~~$60.0 million in cash plus a ~~$15~~$15.0 million promissory note for its 60% interest in the joint venture.

On January 15, 2010, WESCO received $1.8 million in accrued interest related to the promissory note for the period from January 2, 2008 to January 2, 2010. In addition, Deutsch and WESCO entered into an amended promissory note agreement. The amendment extended the maturity date for the payment of principal and interest to the earlier of (a) the closing date of Deutsch’s option to acquire the remaining 40% joint venture interest or (b) the maturity date of Deutsch’s credit facility or mezzanine financing facility. Interest ~~accrues~~accrued at a rate of 8.5% compounded annually. Management ~~believes~~believed this rate iswas commensurate with a market rate of interest; therefore, no reserve or allowance ~~has been~~was recorded against the promissory note.

On April 30, 2010, Deutsch notified WESCO ~~of its~~it would exercise of its option to purchase the remaining 40% of the LADD joint venture. The option price for Deutsch to acquire the remaining 40% of the joint venture iswas determined based upon a multiple of trailing earnings, with a minimum purchase price of $40.0 million and maximum purchase price of $50.0 million. The investment in the LADD joint venture at March 31, 2010 was $43.4 million, and the estimated option exercise price iswas $40.0 million. As a result, WESCO recorded a pre-tax impairment loss of $3.4 million to selling, general and administrative ~~expenses. WESCO is entitled to receive equity income and distributions through~~expenses during the ~~settlement date, which is expected to occur in the second~~first quarter of 2010. On June 7, 2010, WESCO ~~also expects~~completed the sale of its 40% interest in the LADD joint venture and recorded an additional impairment charge of $0.4 million to ~~receive~~selling, general and administrative expenses. WESCO received $40.0 million for its 40% interest plus $15.0 million ~~from Deutsch~~ for the outstanding promissory note ~~plus~~and $0.5 million for accrued ~~interest from January 3, 2010. Upon notification from Deutsch, the promissory note was reclassified in the balance sheet from other assets to other accounts receivable.~~interest.

7. 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 will make contributions in an amount equal to 50% of the participant’s total monthly contributions up to a maximum of 6% of eligible compensation. For Canadian participants, WESCO will make contributions in an amount ranging from 1% to 7% of the participant’s eligible compensation based on years of continuous service. In addition, employer contributions may be made at the discretion of the Board of Directors. For the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009, WESCO incurred charges of ~~$6.3~~$11.0 million and ~~$5.4~~$5.0 million, respectively, for all such plans. Effective January 1, 2010, WESCO reinstated all discretionary contributions that had been suspended since August 1, 2009 with the exception of a certain group of employees comprised of corporate officers and others. Reinstatement for these employees will be contingent upon WESCO reaching certain financial objectives. Contributions are made in cash to all employee retirement savings plan ~~accounts.~~accounts, except for the deferred compensation plan. Employees then have the option to transfer balances allocated to their accounts into any of the available investment options, including WESCO common stock.

8. COMMITMENTS AND CONTINGENCIES

WESCO is a co-defendant in a lawsuit filed in a state court in Indiana in which a customer alleges that WESCO sold defective products manufactured or remanufactured by others and is seeking monetary damages in the amount of $52 million. WESCO has denied any liability, believes that it has meritorious defenses and intends to vigorously defend itself against these allegations. Accordingly, no liability is recorded for this matter as of ~~March 31,~~June 30, 2010.

The effective ~~income~~ tax rate for the three months ended ~~March 31,~~June 30, 2010 and 2009 was ~~29.5%~~28.2% and ~~28.7%~~24.2%, respectively, and the effective tax rate for the six months ended June 30, 2010 and 2009 was 28.8% and 26.4%, respectively. WESCO’s three and six month effective tax ~~rate is~~rates are lower than the federal statutory rate of 35% primarily due to benefits resulting from the ~~2004~~ recapitalization of Canadian operations, which are partially offset by nondeductible expenses, state taxes and foreign rate differences. The effective tax rate for the ~~revaluation of deferred tax items. The~~six months ended June 30, 2010 ~~first quarter rate~~ reflects discrete adjustments oftotaling $1.2 million related to changes in uncertain tax positions and discrete adjustments totaling $0.5 million associated with prior years’ ~~foreign taxes partially offset by favorable~~taxes. The effective tax ~~positions. The~~rate for the six months ended June 30, 2009 ~~first quarter rate~~ included a discrete benefit of ~~$0.3~~$0.2 million related to prior years’ taxes.

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS


	March 31, 2010											June 30, 2010
	(In thousands)															(In thousands)
							Consolidating											Consolidating
	WESCO		WESCO		Non-Guarantor		and Eliminating					WESCO		WESCO		Non-Guarantor		and Eliminating
	International, Inc.		Distribution, Inc.		Subsidiaries		Entries			Consolidated		International, Inc.		Distribution, Inc.		Subsidiaries		Entries			Consolidated

Cash and cash equivalents	$	6	$	16,200	$	104,868	$	—		$	121,074	$	4	$	22,465	$	73,335	$	—		$	95,804
Trade accounts receivable, net		—		—		689,119		—			689,119		—		—		731,320		—			731,320
Inventories, net		—		301,212		205,845		—			507,057		—		318,339		213,147		—			531,486
Other current assets		268		20,322		53,642		—			74,232		32		4,532		52,578		—			57,142

Total current assets		274		337,734		1,053,474		—			1,391,482		36		345,336		1,070,380		—			1,415,752
Intercompany receivables, net		—		—		1,671,207		(1,671,207	)		—		—		—		1,730,325		(1,730,325	)		—
Property, buildings and equipment, net		—		37,996		76,619		—			114,615		—		38,749		75,606		—			114,355
Intangible assets, net		—		8,478		70,989		—			79,467		—		8,252		69,373		—			77,625
Goodwill and other intangibles, net		—		229,659		636,343		—			866,002		—		240,537		636,336		—			876,873
Investments in affiliates and other noncurrent assets		1,871,768		3,185,983		37,828		(5,007,992	)		87,587		1,899,211		3,180,831		38,375		(5,070,418	)		47,999

Total assets	$	1,872,042	$	3,799,850	$	3,546,460	$	(6,679,199	)	$	2,539,153	$	1,899,247	$	3,813,705	$	3,620,395	$	(6,800,743	)	$	2,532,604


Accounts payable	$	—	$	382,176	$	152,339	$	—		$	534,515	$	—	$	385,590	$	155,116	$	—		$	540,706
Other current liabilities		94,670		93,374		27,289		—			215,333		113,059		14,219		110,329		—			237,607

Total current liabilities		94,670		475,550		179,628		—			749,848		113,059		399,809		265,445		—			778,313
Intercompany payables, net		561,395		1,109,812		—		(1,671,207	)		—		545,863		1,184,462		—		(1,730,325	)		—
Long-term debt		165,206		151,924		223,822		—			540,952		165,730		179,677		138,405		—			483,812
Other noncurrent liabilities		23,526		196,185		1,397		—			221,108		23,241		155,866		40,018		—			219,125
Stockholders’ equity		1,027,245		1,866,379		3,141,613		(5,007,992	)		1,027,245		1,051,354		1,893,891		3,176,527		(5,070,418	)		1,051,354

Total liabilities and stockholders’ equity	$	1,872,042	$	3,799,850	$	3,546,460	$	(6,679,199	)	$	2,539,153	$	1,899,247	$	3,813,705	$	3,620,395	$	(6,800,743	)	$	2,532,604


	December 31, 2009
					(In thousands)
							Consolidating
	WESCO		WESCO		Non-Guarantor		and Eliminating
	International, Inc.		Distribution, Inc.		Subsidiaries		Entries			Consolidated

Cash and cash equivalents	$	3	$	16,924	$	95,402	$	—		$	112,329
Trade accounts receivable, net		—		—		635,754		—			635,754
Inventories, net		—		303,747		203,468		—			507,215
Other current assets		394		18,353		56,959		—			75,706

Total current assets		397		339,024		991,583		—			1,331,004
Intercompany receivables, net		—		—		1,560,850		(1,560,850	)		—
Property, buildings and equipment, net		—		38,819		77,490		—			116,309
Intangible assets, net		—		8,704		72,604		—			81,308
Goodwill and other intangibles, net		—		188,329		675,081		—			863,410
Investments in affiliates and other noncurrent assets		1,837,883		3,169,830		33,656		(4,939,207	)		102,162

Total assets	$	1,838,280	$	3,744,706	$	3,411,264	$	(6,500,057	)	$	2,494,193


Accounts payable	$	—	$	326,996	$	126,158	$	—		$	453,154
Short-term debt		—		—		—		—			—
Other current liabilities		99,528		37,080		91,072		—			227,680

Total current liabilities		99,528		364,076		217,230		—			680,834
Intercompany payables, net		554,257		1,006,593		—		(1,560,850	)		—
Long-term debt		164,679		348,952		84,238		—			597,869
Other noncurrent liabilities		23,527		192,661		3,013		—			219,201
Stockholders’ equity		996,289		1,832,424		3,106,783		(4,939,207	)		996,289

Total liabilities and stockholders’ equity	$	1,838,280	$	3,744,706	$	3,411,264	$	(6,500,057	)	$	2,494,193

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME


	Three Months Ended March 31, 2010
	(In thousands)													Three Months Ended June 30, 2010
								Consolidating											(In thousands)
	WESCO		WESCO			Non-Guarantor		and Eliminating						WESCO		WESCO Distribution,			Non-Guarantor		Consolidating and
	International, Inc.		Distribution, Inc.			Subsidiaries		Entries			Consolidated			International, Inc.		Inc.			Subsidiaries		Eliminating Entries			Consolidated

Net sales	$	—	$	658,946		$	503,370	$	(13,717	)	$	1,148,599		$	—	$	701,505		$	576,377	$	(18,761	)	$	1,259,121
Cost of goods sold		—		527,693			407,207		(13,717	)		921,183			—		565,868			469,062		(18,761	)		1,016,169
Selling, general and administrative expenses		88		129,258			53,693		—			183,039			34		124,718			61,225		—			185,977
Depreciation and amortization		—		3,496			2,605		—			6,101			—		2,614			3,006		—			5,620
Results of affiliates’ operations		26,556		34,828			—		(61,384	)		—			35,085		34,916			—		(70,001	)		—
Interest expense, net		7,268		3,745			2,517		—			13,530			7,258		3,261			3,881		—			14,400
Other income		—		(2,506	)		—		—			(2,506	)		—		(1,778	)		—		—			(1,778	)
Provision for income taxes		—		5,532			2,520		—			8,052			—		6,653			4,287		—			10,940


Net income	$	19,200	$	26,556		$	34,828	$	(61,384	)	$	19,200		$	27,793	$	35,085		$	34,916	$	(70,001	)	$	27,793

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF INCOME


	Six Months Ended June 30, 2010
						(In thousands)
	WESCO		WESCO Distribution,			Non-Guarantor		Consolidating and
	International, Inc.		Inc.			Subsidiaries		Eliminating Entries			Consolidated

Net sales	$	—	$	1,360,451		$	1,079,748	$	(32,479	)	$	2,407,720
Cost of goods sold		—		1,093,561			876,270		(32,479	)		1,937,352
Selling, general and administrative expenses		122		253,975			114,919		—			369,016
Depreciation and amortization		—		6,110			5,611		—			11,721
Results of affiliates’ operations		61,641		69,744			—		(131,385	)		—
Interest expense, net		14,526		7,006			6,398		—			27,930
Other income		—		(4,284	)		—		—			(4,284	)
Provision for income taxes		—		12,186			6,806		—			18,992


Net income	$	46,993	$	61,641		$	69,744	$	(131,385	)	$	46,993


	Six Months Ended June 30, 2009
						(In thousands)
	WESCO		WESCO Distribution,			Non-Guarantor			Consolidating and
	International, Inc.		Inc.			Subsidiaries			Eliminating Entries			Consolidated

Net sales	$	—	$	1,620,362		$	718,445		$	—		$	2,338,807
Cost of goods sold		—		1,311,366			565,397			—			1,876,763
Selling, general and administrative expenses		4		274,834			82,509			—			357,347
Depreciation and amortization		—		10,199			3,317			—			13,516
Results of affiliates’ operations		50,374		64,210			—			(114,584	)		—
Interest expense (income), net		654		31,556			(5,860	)		—			26,350
Other income		—		(2,727	)		—			—			(2,727	)
Provision for income taxes		—		8,970			8,872			—			17,842


Net income	$	49,716	$	50,374		$	64,210		$	(114,584	)	$	49,716

WESCO INTERNATIONAL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS


	Three Months Ended March 31, 2010														Six Months Ended June 30, 2010
	(In thousands)														(In thousands)
										Consolidating					WESCO			WESCO Distribution,			Non-Guarantor			Consolidating and
	WESCO			WESCO			Non-Guarantor			and Eliminating					International, Inc.			Inc.			Subsidiaries			Eliminating Entries		Consolidated
	International, Inc.			Distribution, Inc.			Subsidiaries			Entries		Consolidated

Net cash (used) provided by operating activities	$	(7,940	)	$	70,421		$	6,193		$	—	$	68,674
Net cash provided (used) by operating activities															$	7,263		$	83,034		$	(21,541	)	$	—	$	68,756
Investing activities:
Capital expenditures		—			(2,096	)		(150	)		—		(2,246	)		—			(5,784	)		(238	)		—		(6,022	)
Acquisition payments		—			(48	)		—			—		(48	)		—			(14,296	)		—			—		(14,296	)
Equity income, net of distributions		—			1,365			—			—		1,365
Proceeds from sale of subsidiary																—			40,000			—			—		40,000
Collection of note receivable																—			15,000			—			—		15,000
Other		—			15			—			—		15			—			4,232			—			—		4,232

Net cash used by investing activities		—			(764	)		(150	)		—		(914	)
Net cash provided (used) by investing activities																—			39,152			(238	)		—		38,914
Financing activities:
Net borrowings (repayments)		7,138			(64,577	)		—			—		(57,439	)
Net repayments																(8,393	)		(106,389	)		—			—		(114,782	)
Equity transactions		805			—			—			—		805			1,131			—			—			—		1,131
Other		—			(5,804	)		—			—		(5,804	)		—			(10,256	)		—			—		(10,256	)

Net cash provided (used) by financing activities		7,943			(70,381	)		—			—		(62,438	)
Net cash used by financing activities																(7,262	)		(116,645	)		—			—		(123,907	)

Effect of exchange rate changes on cash and cash equivalents		—			—			3,423			—		3,423			—			—			(288	)		—		(288	)

Net change in cash and cash equivalents		3			(724	)		9,466			—		8,745			1			5,541			(22,067	)		—		(16,525	)
Cash and cash equivalents at the beginning of year		3			16,924			95,402			—		112,329			3			16,924			95,402			—		112,329

Cash and cash equivalents at the end of period	$	6		$	16,200		$	104,868		$	—	$	121,074		$	4		$	22,465		$	73,335		$	—	$	95,804

~~12. SUBSEQUENT EVENT~~

On April 30, 2010, Deutsch notified WESCO of its exercise of its option to purchase the remaining 40% of the LADD joint venture. As a result, WESCO recorded a pre-tax impairment loss of $3.4 million to selling, general and administrative expenses. WESCO expects to receive from Deutsch $40.0 million for its 40% investment in the joint venture and $15.0 million for the outstanding promissory note plus accrued interest. For further discussions refer to Note 6.


	Six Months Ended June 30, 2009
	(In thousands)
	WESCO			WESCO Distribution,			Non-Guarantor			Consolidating and
	International, Inc.			Inc.			Subsidiaries			Eliminating Entries		Consolidated
Net cash provided by operating activities	$	6,594		$	185,789		$	12,319		$	—	$	204,702
Investing activities:
Capital expenditures		—			(5,826	)		(398	)		—		(6,224	)
Acquisition payments		—			(122	)		—			—		(122	)
Equity income, net of distributions		—			1,039			—			—		1,039
Other		—			98			—			—		98

Net cash used by investing activities		—			(4,811	)		(398	)		—		(5,209	)
Financing activities:
Net repayments		(7,046	)		(166,062	)		(758	)		—		(173,866	)
Equity transactions		449			—			—			—		449
Other		—			(10,215	)		(1,890	)		—		(12,105	)

Net cash used by financing activities		(6,597	)		(176,277	)		(2,648	)		—		(185,522	)

Effect of exchange rate changes on cash and cash equivalents		—			—			2,981			—		2,981

Net change in cash and cash equivalents		(3	)		4,701			12,254			—		16,952
Cash and cash equivalents at the beginning of year		—			18,453			67,885			—		86,338

Cash and cash equivalents at the end of period	$	(3	)	$	23,154		$	80,139		$	—	$	103,290

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 Financial Statements and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in its 2009 Annual Report onForm 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 the Company’s Annual Report onForm 10-K for the fiscal year ended December 31, 2009, as well as the Company’s other reports filed with the Securities and Exchange Commission.

Company Overview

WESCO International, Inc., incorporated in 1993 and formed in February 1994 upon acquiring a distribution business from Westinghouse Electric Corporation, is a leading North American distributor of products and provider of supply chain services used primarily in the industrial, construction, utility and commercial, institutional and government markets. We serve over 100,000 customers globally, including a majority of the Fortune ~~1000,~~500, through approximately 380 full service branches and seven distribution centers located primarily in the United States, Canada and Mexico, with additional locations in the United Kingdom, Singapore, China, Australia, Africa and the United Arab Emirates. Approximately ~~84%~~83% of our net sales are generated from operations in the United States, 13% from Canada and the remainder from other countries.

We sell electrical and industrial maintenance, repair and operating supplies, commonly referred to as “MRO”, and electrical and non-electrical construction and original equipment manufacturer (“OEM”) products and services. Our primary product categories include general electrical and industrial supplies, wire, cable and conduit, data communications, power distribution equipment, lighting and lighting control systems, control and automation and motors. We distribute more than 1,000,000 products from ~~more than~~approximately 17,000 suppliers utilizing ~~a highly~~an automated, proprietary electronic procurement and inventory replenishment system. In addition, we offer a comprehensive portfolio of value-added services, which include supply chain management, logistics and transportation procurement, warehousing and inventory management as well as kitting and limited assembly of products. 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 ~~three~~six months of 2010 reflect ~~improved~~slowly improving conditions in our markets served, higher product prices and favorable foreign currency exchange rates. Sales ~~decreased $31.0~~increased $68.9 million, or ~~2.6%~~2.9%, over the same period last year. Cost of goods sold as a percentage of net sales was ~~80.2%~~80.5% and ~~79.8%~~80.2% for the first ~~three~~six months of 2010 and 2009, respectively. Operating income decreased by ~~$5.3~~$1.6 million, or ~~12.1%~~1.7%, primarily from the ~~decrease~~increase in ~~sales~~operating expenses and the impairment charge recorded in connection with our 40% investment in the LADD joint venture. Refer to Note 6 of our notes to the condensed consolidated financial statements for additional information regarding the LADD joint venture. Net income for the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009 was ~~$19.2~~$47.0 million and ~~$23.3~~$49.7 million, respectively.

Cash Flow

We generated ~~$68.7~~$68.8 million in operating cash flow for the first ~~three~~six months of 2010. Included in this amount was net income of ~~$19.2~~$47.0 million, an increase in accounts payable of ~~$78.9~~$85.8 million and an increase in trade and other receivables of ~~$41.2~~$80.2 million. Investing activities were primarily comprised of ~~capital expenditures, which totaled $2.2~~proceeds from the sale of our 40% interest in the LADD joint venture. Proceeds included $40.0 million for our 40% interest, plus $15.0 million for the collection of a promissory note. Investing activities for the first ~~three~~six months of ~~2010.~~2010 also included $14.3 million for acquisition payments and $6.0 million for capital expenditures. Financing activities consisted of borrowings and repayments of ~~$65.5~~$125.0 million and ~~$262.0~~$293.5 million, respectively, related to our revolving credit facility, and net borrowings of ~~$140.0~~$55.0 million related to our accounts receivable securitization facility (the “Receivables Facility”).

Financing Availability

As of ~~March 31,~~June 30, 2010, we had ~~$414.9~~$511.0 million in total available borrowing capacity. The available borrowing capacity under our revolving credit facility, which has a maturity date of November 1, 2013, was ~~$277.3~~$248.0 million, of which ~~$214.9~~$185.6 million is the U.S. sub-facility borrowing limit and $62.4 million is the Canadian sub-facility borrowing limit. The available borrowing capacity under the Receivables Facility, which was amended and restated in April 2009 to, among other things, extend the maturity date to April 13, 2012, was ~~$137.6~~$263.0 million at ~~March 31,~~June 30, 2010. In addition, in August 2009, we completed an exchange offer pursuant to which we issued $345.0 million aggregate principal amount of the 2029 Debentures in exchange for approximately $299.7 million and $57.7 million aggregate principal amounts of our outstanding 2026 Debentures and 2025 Debentures, respectively. Our 2025 Debentures and 2029 Debentures cannot be redeemed or repurchased until October 2010 and September 2016, respectively. In the event that our 2025 Debentures are redeemed or repurchased in October 2010, we believe that we will have ample financial capacity to handle such funding requirement. We ~~increased our cash by $8.7 million to $121.1 million at March 31, 2010, after taking into account $57.4 million of net debt repayments and $2.2 million of capital expenditures. 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. For further discussion refer to “Liquidity and Capital Resources.”

Outlook

We believe that improvements made to our operations and capital structure and decisive actions taken over the past two years have positioned us to operate effectively as we continue to move ~~into~~through the recovery phase of this economic cycle. We expect ~~that~~ the economic recovery ~~will~~to be slow, and we believe that market trends ~~in 2010~~ point towards continued contraction in the non-residential construction and utility markets and gradual recovery in the industrial, international and government markets. ~~In total, we~~We anticipate ~~that second~~third quarter sales ~~will increase 2.0%~~ to ~~4.0% from first quarter levels,~~trend with historical seasonality, and ~~gross margin rates and SG&A expenses will be similar to that experienced in the first quarter. We expect that second quarter operating margins will be approximately 4.0%. For the full year 2010,~~therefore we ~~anticipate that demand in the end markets we serve~~believe sales will be flat to ~~down 2.0% compared~~slightly higher than in the second quarter. We expect gross margins to improve somewhat from second quarter levels and selling, general and administrative expenses to be stable. We expect third quarter operating margins to be somewhat higher than second quarter margins. Sales per workday in July 2010 was approximately 11.0% greater than sales per workday in July 2009, ~~demand levels.~~although there can be no assurance that sales will continue to increase over the prior year in August and September. We remain focused on actions to improve margins, provide superior customer service, maintain our cost leadership position, strengthen our team and produce improved shareholder returns.

Critical Accounting Policies and Estimates

During the ~~three~~six month period ended ~~March 31,~~June 30, 2010, there were no significant changes to our critical accounting policies and estimates referenced in the 2009 Annual Report on Form 10-K.

Results of Operations

~~First~~Second Quarter of 2010 versus ~~First~~Second Quarter of 2009

The following table sets forth the percentage relationship to net sales of certain items in our condensed consolidated statements of income for the periods presented:


	Three Months Ended						Three Months Ended
	March 31,						June 30,
	2010			2009			2010			2009
Net sales		100	%		100.0	%		100	%		100.0	%
Cost of goods sold		80.2			79.8			80.7			80.7
Selling, general and administrative expenses		15.9			15.9			14.8			14.7
Depreciation and amortization		0.5			0.6			0.4			0.5

Income from operations		3.4			3.7			4.1			4.1
Interest expense		1.2			1.0			1.1			1.2
Other income		(0.2	)		(0.1	)		(0.1	)		(0.1	)

Income before income taxes		2.4			2.8			3.1			3.0
Provision for income taxes		0.7			0.8			0.9			0.7

Net income		1.7	%		2.0	%		2.2	%		2.3	%

Cost of goods sold for the ~~first~~second quarter of 2010 was ~~$921.2~~$1,016.2 million versus ~~$941.4~~$935.3 million for the comparable period in 2009, and cost of goods sold as a percentage of net sales was ~~80.2%~~80.7% in 2010 ~~versus 79.8% in~~and 2009. The ~~increase in the~~ cost of goods sold percentage was ~~primarily~~unchanged as an improved sales mix was offset by an increase in inventory reserves due to higher ~~supplier volume rebates in the first quarter of 2009 compared to the first quarter of 2010.~~inventory levels.

Selling, general and administrative (“SG&A”) expenses in the ~~first~~second quarter of 2010 totaled ~~$183.0~~$186.0 million versus ~~$187.5~~$169.9 million in last year’s comparable quarter. The ~~decrease~~increase in SG&A expenses is primarily due to the ~~decrease in sales and aggressive~~restoration of temporary cost ~~reduction actions~~reductions taken in the prior year. As a percentage of net sales, SG&A expenses were ~~15.9%~~14.8% in the ~~first~~second quarter of 2010 and 14.7% in the ~~first~~second quarter of 2009, primarily reflecting the impact of the reinstatement of discretionary benefits, the absence of mandatory unpaid leave of absences in the current year, and an increase in operating expenses driven by the increase in sales, partially offset by the impact of headcount cost reduction actions taken in the prior ~~year offset by an impairment charge related to our 40% interest in the LADD joint venture.~~year.

SG&A payroll expenses for the ~~first~~second quarter of 2010 of ~~$124.8~~$125.7 million ~~decreased~~increased by ~~$6.8~~$11.2 million compared to the same quarter in 2009. The ~~decrease~~increase in payroll expenses was primarily due to ~~a decrease~~the reinstatement of 401K discretionary contributions and the absence of mandatory unpaid leave of absences in ~~salaries~~the current quarter, partially offset by severance costs recorded in the second quarter of 2009. The net impact of these temporary cost and ~~wages of $7.8 million related to the decrease in headcount.~~discretionary benefit changes increased payroll expense by $10.4 million. Other SG&A related payroll expenses increased ~~$1.0~~$0.8 million.

The remaining SG&A expenses for the ~~first~~second quarter of 2010 of ~~$58.2~~$60.3 million increased by ~~approximately $2.3~~$4.9 million compared to same quarter in 2009. Included in this period’s SG&A expenses was ~~a decrease~~an increase in ~~occupancy costs of $1.3 million and a decrease in other~~various operating expenses of ~~$1.3 million. These decreases were offset by a~~$4.5 million due to the increase in business activity levels and an additional charge of ~~$3.4~~$0.4 million related to the impairment of our 40% interest in the LADD joint ~~venture, an increase in professional and consulting fees of $1.9 million and an increase in property taxes of $1.3 million. Other SG&A expenses decreased $1.7 million.~~venture.

Depreciation and amortization for the ~~first~~second quarter of 2010 was ~~$6.1~~$5.6 million versus ~~$7.2~~$6.4 million in last year’s comparable quarter. The decrease is due to the reduction in capital expenditures in 2009.

Interest expense totaled ~~$13.5~~$14.4 million for the ~~first~~second quarter of 2010 versus ~~$12.5~~$13.8 million in last year’s comparable quarter, an increase of ~~8.1%~~4.2%. Interest expense for the ~~first~~second quarter of 2010 was impacted by the increase in interest rates, which was a result of amending both the Receivables Facility and revolving credit facility in April 2009 and February 2010, respectively. The application of the provisions of guidance concerning convertible debt instruments as of January 1, 2009 resulted in non-cash interest expense of $1.3 million in 2010 and $3.8 million in 2009.

Other income totaled ~~$2.5~~$1.8 million for the ~~first~~second quarter of 2010 versus ~~$1.6~~$1.1 million in the comparable period for 2009. ~~We account for our investment in the LADD joint venture on an equity basis, and earnings are reported as other income in the consolidated statement of income.~~ The increase in other income is due to the increase in the joint venture’s income. We accounted for our investment in the LADD joint venture on an equity basis, and earnings were reported as other income in the consolidated statement of income. On ~~April 30,~~June 7, 2010, we ~~were was notified by~~announced that we completed the sale of our 40% interest in the LADD joint venture to Deutsch, ~~Engineered Connecting Devices, Inc. (“Deutsch”),~~previously the 60% owner of the LADD joint ~~venture,~~venture. We received equity income through May 31, 2010 and distributions through April 30, 2010, the date Deutsch notified WESCO of its exercise of its option to purchase the remaining 40% of the LADD joint venture. ~~We are entitled to receive equity income and distributions through the settlement date, which is expected to occur~~As a result of this transaction, in the ~~second quarter of 2010.~~future there will be no other income reported for the LADD joint venture.

Income tax expense totaled ~~$8.1~~$10.9 million in the ~~first~~second quarter of 2010, and the effective tax rate was ~~29.5%~~28.2% compared to ~~28.7%~~24.2% in the same quarter in 2009. The increase in the effective tax rate is due to the ~~revaluation~~impact from foreign jurisdictions.

For the second quarter of ~~deferred~~2010, net income increased by $1.3 million to $27.8 million compared to $26.5 million in the second quarter of 2009. Diluted earnings per share was $0.60 for the second quarter of 2010 compared with $0.62 per diluted share for the second quarter of 2009. The increase in net income was primarily due to the increase in sales attributable to improved market conditions.

Six Months Ended June 30, 2010 versus Six Months Ended June 30, 2009

The following table sets forth the percentage relationship to net sales of certain items in our condensed consolidated statements of income for the periods presented:


	Six Months Ended
	June 30,
	2010			2009
Net sales		100	%		100.0	%
Cost of goods sold		80.5			80.2
Selling, general and administrative expenses		15.3			15.3
Depreciation and amortization		0.5			0.6

Income from operations		3.7			3.9
Interest expense		1.2			1.1
Other income		(0.2	)		(0.1	)

Income before income taxes		2.7			2.9
Provision for income taxes		0.8			0.8

Net income		1.9	%		2.1	%

Net sales in the first six months of 2010 totaled $2,407.7 million versus $2,338.8 million in the comparable period for 2009, an increase of $68.9 million, or 2.9%, over the same period last year. Sales were positively impacted by improved conditions in our markets served, higher product prices due primarily to rising commodity prices and favorable foreign currency exchange rates.

Cost of goods sold for the first six months of 2010 was $1,937.4 million versus $1,876.8 million for the comparable period in 2009, and cost of goods sold as a percentage of net sales was 80.5% in 2010 and 80.2% in 2009. The increase in the cost of goods sold percentage was primarily due to an increase in inventory reserves due to higher inventory levels partially offset by an improved sales mix.

SG&A expenses in the first six months of 2010 totaled $369.0 million versus $357.3 million in last year’s comparable period. The increase in SG&A expenses is primarily due to the restoration of temporary cost reductions taken in the prior year. As a percentage of net sales, SG&A expenses were 15.3% in the first six months of 2010 and 2009, primarily reflecting the impact of the reinstatement of discretionary benefits, the absence of mandatory unpaid leave of absences in the current year, an increase in operating expenses driven by the increase in sales and an impairment charge related to our 40% interest in the LADD joint venture, offset by the impact of headcount cost reduction actions taken in the prior year.

SG&A payroll expenses for the first six months of 2010 of $250.5 million increased by $4.4 million compared to the same period in 2009. The increase in payroll expenses was primarily due to the reinstatement of 401K discretionary contributions and the absence of mandatory unpaid leave of absences in the first six months of 2010, partially offset by severance costs recorded in the first six months of 2009. The net impact of these temporary cost and discretionary benefit changes increased payroll expense by $8.9 million. Other SG&A related payroll expenses decreased $4.5 million due to headcount cost reduction actions taken in the comparable prior year period.

The remaining SG&A expenses for the first six months of 2010 of $118.5 million increased by approximately $7.3 million compared to same period in 2009. Included in this period’s SG&A expenses was a charge of $3.8 million related to the impairment of our 40% interest in the LADD joint venture and an increase in various operating expenses of $3.5 million due to the increase in business activity levels.

Depreciation and amortization for the first six months of 2010 was $11.7 million versus $13.5 million in last year’s comparable period. The decrease is due to the reduction in capital expenditures in 2009.

Interest expense totaled $27.9 million for the first six months of 2010 versus $26.4 million in last year’s comparable period, an increase of 6.0%. Interest expense for the first six months of 2010 was impacted by the increase in interest rates, which was a result of amending both the Receivables Facility and revolving credit facility in April 2009 and February 2010, respectively. The application of the provisions of guidance concerning convertible debt instruments as of January 1, 2009 resulted in non-cash interest expense of $2.6 million in 2010 and $7.7 million in 2009.

Other income totaled $4.3 million for the first six months of 2010 versus $2.7 million in the comparable period for 2009. The increase in other income is due to the increase in the joint venture’s income. We accounted for our investment in the LADD joint venture on an equity basis, and earnings were reported as other income in the consolidated statement of income. On June 7, 2010, we announced that we completed the sale of our 40% interest in the LADD joint venture to Deutsch, previously the 60% owner of the LADD joint venture. We received equity income through May 31, 2010 and distributions through April 30, 2010, the date Deutsch notified WESCO of its exercise of its option to purchase the remaining 40% of the LADD joint venture. As a result of this transaction, in the future there will be no other income reported for the LADD joint venture.

Income tax ~~items~~expense totaled $19.0 million in the first six months of 2010, and the effective tax rate was 28.8% compared to 26.4% in the same period in 2009. The increase in the effective tax rate is due to the impact from foreign jurisdictions.

For the first ~~quarter~~six months of 2010, net income decreased by ~~$4.1~~$2.7 million to ~~$19.2~~$47.0 million compared to ~~$23.3~~$49.7 million in the first ~~quarter~~six months of 2009. Diluted earnings per share was ~~$0.44~~$1.04 for the first ~~quarter~~six months of 2010 compared with ~~$0.55~~$1.17 per diluted share for the first ~~quarter~~six months of 2009. The decrease in net income was primarily due to the ~~decline~~increase in operating costs partially offset by the increase in sales attributable to ~~the weak~~improved market conditions.

Liquidity and Capital Resources

Total assets at ~~March 31,~~June 30, 2010 and December 31, 2009 were $2.5 billion. Total assets remained unchanged primarily as a result of the increase in accounts receivable of $95.6 million and the increase in inventory of $24.3 million, which was mostly offset by the decrease in investment in subsidiary of $44.0 million related to the sale of our 40% interest in the LADD joint venture, the decrease in cash of $16.5 million, the decrease in other accounts receivable of $15.5 million and the decrease in other assets of $12.4 million related to the collection of the LADD joint venture promissory note. Total liabilities at ~~March 31,~~June 30, 2010 and December 31, 2009 were $1.5 billion. Total liabilities remained unchanged primarily as a result of the decrease in long-term debt of $112.1 million, which was partially offset by the increase in accounts payable of ~~$81.4 million, which was mostly offset by a decrease in long-term debt of $56.1~~$87.6 million. Stockholders’ equity increased ~~3.1%~~5.5% to ~~$1,027.2~~$1,051.4 million at ~~March 31,~~June 30, 2010, compared with $996.3 million at December 31, 2009, primarily as a result of net earnings of ~~$19.2 million, foreign currency translation adjustments of $7.4~~$47.0 million and stock-based compensation expense of ~~$3.5~~$7.1 million.

Our liquidity needs generally arise from working capital requirements, capital expenditures, acquisitions and debt service obligations. As of ~~March 31,~~June 30, 2010, we had ~~$277.3~~$248.0 million in available borrowing capacity under our revolving credit facility, which, combined with our ~~$137.6~~$263.0 million of available borrowing capacity under our Receivables Facility and our invested cash, provides us with liquidity of ~~$511.5~~$576.2 million. ~~As previously mentioned, Deutsch,~~During the ~~60% owner~~current quarter, we used the proceeds from the sale of ~~the LADD joint venture, has exercised its option to purchase~~ our 40% interest in the ~~second quarter~~LADD joint venture, net of ~~2010. We expect to receive from Deutsch $40.0 million~~payments for ~~our 40% interest and $15.0 million, plus accrued interest, for an outstanding promissory note. We intend to use this cash~~the acquisition of the business of Potelcom Supply, Inc., to pay down our variable rate debt. We believe cash provided by operations and financing activities will be adequate to cover our current operational and business needs.

We communicate on a regular basis with our lenders regarding our financial and working capital performance and liquidity position. We were in compliance with all covenants and restrictions as of ~~March 31,~~June 30, 2010. ~~In February 2010, Moody’s Investor Services affirmed our credit rating and stable outlook.~~

We did not note any conditions or events during the ~~first~~second quarter of 2010 requiring an interim evaluation of impairment of goodwill. We will perform our annual impairment testing of goodwill and indefinite-lived intangible assets during the fourth quarter of 2010.

Over the next several quarters, we expect to maintain working capital productivity, and it is expected that excess cash will be directed primarily at debt reduction. Our near term focus will be managing our cost structure as we resume sales growth and maintaining ample liquidity and credit availability. 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 expansion needs and growth initiatives in this time of economic recovery.

months of 2010 included: ~~$41.2~~$80.2 million for the increase in trade and other receivables, resulting from an increase in ~~sales in the month of March; $5.3~~sales; and $21.8 million for the ~~decrease~~increase in other current and noncurrent liabilities; and $4.5 million for the decrease in accrued payroll and benefit costs, resulting from the decrease in headcount and the payment of the 2009 management incentive compensation.inventory. During the first ~~three~~six months of 2009, primary sources of cash were net income of ~~$23.3~~$49.7 million and adjustments to net income totaling ~~$18.5~~$35.7 million; a decrease in trade and other receivables of ~~$113.9~~$132.9 million, resulting from the decrease in sales; and a decrease in inventory of ~~$42.9~~$92.0 million. Cash used by operating activities in the first ~~three~~six months of 2009 included: ~~$45.4~~$72.6 million for the decrease in accounts payable, resulting from the decrease in purchasing activity; ~~and $16.1~~$23.8 million for the decrease in accrued payroll and benefit costs, resulting from the payment of the 2008 management incentive ~~compensation.~~compensation; $5.6 million for the increase in prepaid expenses and other current assets and $3.6 million for the decrease in other current and noncurrent liabilities.

Investing Activities.Net cash ~~used~~provided by investing activities for the first ~~three~~six months of 2010 was ~~$0.9~~$38.9 million, compared with ~~$2.8~~$5.2 million of net cash used during the first ~~three~~six months of 2009. Included in 2010 were proceeds from the sale of our 40% interest in the LADD joint venture. Proceeds included $40.0 million for our 40% interest, plus $15.0 million for the collection of a promissory note. Investing activities for the first six months of 2010 also included payments of $14.3 million related to the acquisition of the business of Potelcom Supply, Inc. Capital expenditures were ~~$2.2~~$6.0 million and ~~$2.9~~$6.2 million in the first ~~three~~six months of 2010 and 2009, respectively.

Financing Activities.Net cash used by financing activities for the first ~~three~~six months of 2010 and 2009 was ~~$62.4~~$123.9 million and ~~$110.3~~$185.5 million, respectively. During the first ~~three~~six months of 2010, borrowings and repayments of long-term debt of ~~$65.5~~$125.0 million and ~~$262.0~~$293.5 million, respectively, were made to our revolving credit facility. Borrowings and repayments of ~~$140.0~~$185.0 million and $130.0 million, respectively, were applied to our Receivables Facility, and there were repayments of ~~$0.4~~$0.8 million to our mortgage financing facility. During the first ~~three~~six months of 2009, borrowings and repayments of long-term debt of ~~$71.0~~$193.2 million and ~~$118.5~~$196.2 million, respectively, were made to our revolving credit facility. Borrowings and repayments of $55.0 million and ~~$105.0~~$225.0 million, respectively, were applied to our Receivables Facility, and there were repayments of ~~$0.4~~$0.8 million to our mortgage financing facility.

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 2009 Annual Report on Form 10-K, other than the revolving credit facility disclosure in Note 5 to the condensed consolidated financial statements. 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 affects different commodities, the cost of products purchased and ultimately the pricing of our different products and product classes to our customers. On an overall basis, our pricing related to inflation comprised an estimated ~~$20.0~~$60.0 million of our sales revenue for the ~~three~~six months ended ~~March 31,~~June 30, 2010.

Seasonality

Our operating results are not significantly affected by certain seasonal factors. Sales during the first and fourth quarters are generally below the sales of the second and third quarters due to reduced level of activity during the winter months of December, January and February. Sales typically increase beginning in March with slight fluctuations per month through December.

Impact of Recently Issued Accounting Standards

See Note 2 of our notes to the condensed consolidated financial statements for information regarding the effect of new accounting pronouncements.

1820

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 Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009, as well as the Company’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.

1921

Item 3. Quantitative and Qualitative Disclosures about Market Risks

There have not been any material changes to our exposures to market risk during the quarter ended ~~March 31,~~June 30, 2010 that would require an update to the disclosures provided in our 2009 Annual Report on Form 10-K.

Item 4. Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure 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 such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Based on this evaluation, our principal executive officer and our principal financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control Over Financial Reporting

During the ~~first~~second quarter of 2010, there were no changes in our internal control over financial reporting identified in connection with management’s evaluation of the effectiveness of our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2022

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 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, based on information presently available, 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 quarter of one or more of these matters may have a material adverse effect on our results of operations for that period.

As initially reported in our 2008 Annual Report on Form 10-K, we are a co-defendant in a lawsuit filed in a state court in Indiana in which a customer alleges that we sold defective products manufactured or remanufactured by others and is seeking monetary damages in the amount of $52 million. We have denied any liability, continue to believe that we have meritorious defenses and intend to vigorously defend ourselves against these allegations. Accordingly, no liability is recorded for this matter as of ~~March 31,~~June 30, 2010.

Information relating to legal proceedings is included in Note 8, Commitments and Contingencies of the Notes to the Condensed Consolidated Financial Statements and is incorporated herein by reference.

Item 6. Exhibits

~~(a)~~

(a)

Exhibits


10.1		Form of Stock Appreciation Rights Agreement for Employees

10.2		Form of Restricted Stock Unit Agreement for Employees

10.3		Form of Stock Appreciation Rights Agreement for Non-Employee Directors

10.4		Form of Restricted Stock Unit Agreement for Non-Employee Directors

31.1		Certification of Chief Executive Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.


31.2		Certification of Chief Financial Officer pursuant to Rules 13a-14(a) promulgated under the Exchange Act.


32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.


32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		Interactive Data File*


*		In accordance with Rule 406T of Regulation S-T promulgated by the Securities and Exchange Commission, Exhibit 101 is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

2123


	Page
PART I — FINANCIAL INFORMATION

Item 1.Financial Statements
Condensed Consolidated Balance Sheets as of ~~March 31,~~June 30, 2010 and December 31, 2009 (unaudited)		2
Condensed Consolidated Statements of Income for the three months and six months ended ~~March 31,~~June 30, 2010 and 2009 (unaudited)		3
Condensed Consolidated Statements of Cash Flows for the ~~three~~six months ended ~~March 31,~~June 30, 2010 and 2009 (unaudited)		4
Notes to Condensed Consolidated Financial Statements (unaudited)		5

Item 2.Management’s Discussion and Analysis of Financial Condition and Results of Operations		15

Item 3.Quantitative and Qualitative Disclosures About Market Risk		2022

Item 4.Controls and Procedures		2022

PART II — OTHER INFORMATION

Item 1.Legal Proceedings		2123

Item 6.Exhibits		2123

~~Signatures~~Signature and Certifications		24
EX-10.1
EX-10.2
EX-10.3
EX-10.4
EX-31.1
EX-31.2
EX-32.1
EX-32.2
EX-101 INSTANCE DOCUMENT
EX-101 SCHEMA DOCUMENT
EX-101 CALCULATION LINKBASE DOCUMENT
EX-101 LABELS LINKBASE DOCUMENT
EX-101 PRESENTATION LINKBASE DOCUMENT
EX-101 DEFINITION LINKBASE DOCUMENT


				Weighted					Weighted
				Average					Average
				Fair					Fair
	Awards			Value		Awards			Value
Unvested at December 31, 2009		243,942		$	25.37		243,942		$	25.37
Granted		—			—		—			—
Vested		—			—		(675	)		25.37
Forfeited		(395	)		25.37		(3,085	)		25.37

Unvested at March 31, 2010		243,547		$	25.37
Unvested at June 30, 2010							240,182		$	25.37


	Three Months Ended					Three Months Ended
	March 31,					June 30,
Amounts in thousands	2010		2009			2010			2009

Net income	$	19,200	$	23,262		$	27,793		$	24,454
Foreign currency translation adjustment		7,404		(6,006	)		(7,578	)		16,011

Comprehensive income	$	26,604	$	17,256		$	20,215		$	40,465


	WESCO International, Inc.
Date: ~~May 6,~~August 4, 2010	/s/ Richard P. Heyse
	Richard P. Heyse
	Vice President and Chief Financial Officer


	Three Months Ended March 31, 2009
	(In thousands)													Three Months Ended June 30, 2009
								Consolidating											(In thousands)
	WESCO		WESCO			Non-Guarantor		and Eliminating						WESCO		WESCO Distribution,			Non-Guarantor			Consolidating and
	International, Inc.		Distribution, Inc.			Subsidiaries		Entries			Consolidated			International, Inc.		Inc.			Subsidiaries			Eliminating Entries			Consolidated

Net sales	$	—	$	834,870		$	344,720	$	—		$	1,179,590		$	—	$	785,493		$	373,725		$	—		$	1,159,218
Cost of goods sold		—		672,681			268,732		—			941,413			—		638,641			296,665			—			935,306
Selling, general and administrative expenses		2		145,689			41,798		—			187,489			2		129,201			40,711			—			169,914
Depreciation and amortization		—		3,595			3,562		—			7,157			—		6,605			(245	)		—			6,360
Results of affiliates’ operations		23,629		17,300			—		(40,929	)		—			26,745		46,910			—			(73,655	)		—
Interest expense, net		365		3,522			8,631		—			12,518			289		28,022			(14,490	)		—			13,821
Other income		—		(1,626	)		—		—			(1,626	)		—		(1,101	)		—			—			(1,101	)
Provision for income taxes		—		4,680			4,697		—			9,377			—		4,290			4,174			—			8,464


Net income	$	23,262	$	23,629		$	17,300	$	(40,929	)	$	23,262		$	26,454	$	26,745		$	46,910		$	(73,655	)	$	26,454