Exhibit 99
CDW Reports Second Quarter Results;
Company Achieves Record Quarterly Net Income of $58.3 Million
and EPS of $0.67
VERNON HILLS, Ill.--(BUSINESS WIRE)--July 20, 2004--CDW
Corporation (NASDAQ:CDWC):
-- Record sales: $1.383 billion (29% increase year-over-year)
-- Record average daily sales: $21.6 million (29% increase
year-over-year)
-- Record net income: $58.3 million (34% increase year-over-year)
-- Record earnings per share: $0.67 (31% increase year-over-year)
CDW Corporation (NASDAQ:CDWC) achieved record quarterly results
for sales, average daily sales, net income and earnings per share in
the second quarter of 2004.
Second quarter sales totaled $1.383 billion, an increase of 29
percent versus the prior year quarter. Second quarter net income was
$58.3 million, an increase of 34 percent versus the second quarter of
2003. Diluted earnings per share were $0.67, an increase of 31 percent
versus the second quarter of 2003.
"The ongoing strength of our superior business model has resulted
in record sales, net income and earnings per share this quarter," said
John A. Edwardson, chairman and chief executive officer. "Growth in
sales continued to outpace the market as we gained additional market
share. Along with this success, we are pleased with the strong
profitability we generated in the second quarter of 2004.
Year-over-year net income grew 500 basis points faster than sales due
to solid gross margin and operating margin performance. We attribute
this achievement to our ongoing focus of finding new and better ways
to provide outstanding service to our customers. These initiatives
include our marketing segmentation strategy, strong vendor
relationships, and ongoing training of our sales force."
"CDW coworkers are dedicated to responding to our customers with a
sense of urgency, and they have a passion for getting the job done
right in the most efficient way," said Edwardson. "This is ultimately
the reason for our success, and why we continue to believe that we
will grow at market rates plus ten points."
Average daily sales for second quarter 2004 were $21.6 million
compared to $16.8 million in the second quarter 2003, representing a
29 percent increase. Total sales in the second quarter 2004 were
$1,383 million compared to $1,075 million in the prior period. Second
quarter 2004 and second quarter 2003 both had 64 billing days.
Included in the second quarter of 2004 were sales made by former
members of the Micro Warehouse sales force who joined CDW in September
2003 in conjunction with the Micro Warehouse transactions.
-- Second quarter 2004 average daily sales for the corporate
sector were $16.7 million, representing a 31 percent increase
over last year. Total corporate sector sales in the second
quarter 2004 were $1,068 million compared to $818 million in
the second quarter 2003.
-- Second quarter 2004 average daily sales for the public sector
were $4.9 million, representing a 22 percent increase over
last year. Total public sector sales in the second quarter
2004 were $315 million compared to $258 million in the second
quarter 2003.
-- In the second quarter 2004, double-digit unit volume growth
was achieved in most product categories on a year-over-year
basis. The unit volumes of notebook CPUs, notebook
accessories, desktop CPUs, server CPUs, and data storage
increased more than 30 percent over the prior year quarter.
Software, printers, printer accessories, netcomm products, and
input devices increased between 20 percent and 30 percent over
the prior year quarter.
-- Direct web sales were $370 million in the second quarter of
2004, representing a 53 percent increase compared to the same
period a year ago, and comprised 27 percent of total sales.
Direct web sales improve productivity for CDW customers and
their account managers and allow CDW customers to shop
directly online.
Gross profit margin was 15.5 percent this quarter compared to 14.6
percent in the same period of 2003. The increase is primarily due to
improved product pricing, vendor rebates, and increased cooperative
advertising. In the second quarter of 2004, $25.7 million of vendor
consideration was reclassified to cost of sales compared to $17.3
million in the second quarter of 2003. This reclass is due to CDW's
adoption of Emerging Issues Task Force ("EITF") Issue No. 02-16,
"Accounting for Consideration Received from a Vendor by a Customer
(Including a Reseller of the Vendors' Products)", on January 1, 2003.
Selling and administrative expenses as a percentage of sales were
6.8 percent this quarter compared to 6.4 percent in the second quarter
of 2003. The increase is primarily due to the continued investment in
expanding CDW's sales force and increases in certain administrative
functions to support a larger business.
June 2004 average daily sales were $22.4 million, compared to
$17.8 million in June 2003, representing a 26 percent increase. Total
June 2004 sales were $493 million compared to $373 million in the
prior period. June 2004 had 22 billing days and June 2003 had 21
billing days. Corporate and public sector segments both generated
strong double-digit growth in June 2004.
Edwardson concluded, "Our outlook for the IT spending environment
continues to be optimistic. We believe that as a 'mutual fund of
technology companies,' we remain well positioned to outpace the market
and grow profitably by providing our customers with the best service
in the industry."
The company plans to release July sales on Thursday, August 12,
2004.
Forward Looking Statement
Any forward-looking statements contained in this release are based
on the Company's beliefs and expectations as of the date of this
release and are subject to certain risks and uncertainties which may
have a significant impact on the Company's business, operating results
or financial condition. Should any risk or uncertainty materialize, or
should underlying assumptions prove incorrect, actual results or
outcomes may vary materially from those described in forward-looking
statements. Factors affecting the Company's business and prospects are
discussed in the Company's filings with the Securities and Exchange
Commission.
About CDW
CDW(R) (NASDAQ:CDWC), ranked No. 376 on the FORTUNE 500, is a
leading provider of technology products and services for business,
government and education. CDW is a principal source of technology from
top name brands such as Adobe, APC, Apple, Cisco, HP, IBM, Microsoft,
Sony, Symantec, Toshiba and ViewSonic.
CDW was founded in 1984 and today employs approximately 3,700
coworkers. In 2003, the company generated net sales of approximately
$4.7 billion. CDW's direct model offers one-on-one relationships with
knowledgeable account managers; purchasing by telephone, fax, the
company's award-winning CDW.com Web site, customized CDW@work(TM)
extranets, CDWG.com Web site and macwarehouse.com Web site; custom
configured solutions and same day shipping; and pre- and post-sales
technical support, with more than 100 factory-trained and A+ certified
technicians on staff.
A live Web cast of CDW's management discussion of the second
quarter will be available at www.cdw.com/investor. The Web cast will
begin today, July 20, 2004, at 8:30 a.m. EDT / 7:30 a.m. CDT. An audio
replay of the call will also be available at www.cdw.com/investor
until July 30, 2004. Additional financial and operational data is
provided in a series of supplemental slides available at
www.cdw.com/investor.
For more information about CDW:
Visit CDW on the Internet at http://www.cdw.com. Contact CDW
Investor Relations via the Internet at investorrelations@cdw.com or by
telephone at 847-419-8234.
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended June 30, Six Months Ended June 30,
--------------------------- -------------------------
2004 2003 2004 2003
-------------- ------------ ------------- -----------
Net sales $ 1,382,904 $ 1,075,296 $ 2,719,593 $2,092,915
Cost of sales 1,168,374 918,838 2,300,600 1,789,069
-------------- ------------ ------------- -----------
Gross profit 214,530 156,458 418,993 303,846
Selling and
administrative
expenses 94,096 68,760 190,162 137,071
Net advertising
expense 25,287 17,213 43,504 27,838
-------------- ------------ ------------- -----------
Income from
operations 95,147 70,485 185,327 138,937
Interest income 2,076 2,053 3,913 4,098
Other expense,
net (626) (435) (1,037) (840)
-------------- ------------ ------------- -----------
Income before
income taxes 96,597 72,103 188,203 142,195
Income tax
provision 38,322 28,481 74,635 56,167
-------------- ------------ ------------- -----------
Net income $ 58,275 $ 43,622 $ 113,568 $ 86,028
============== ============ ============= ===========
Earnings per
share:
Basic $ 0.70 $ 0.52 $ 1.36 $ 1.03
============== ============ ============= ===========
Diluted $ 0.67 $ 0.51 $ 1.30 $ 1.00
============== ============ ============= ===========
Weighted-average
number of
common shares
outstanding:
Basic 83,537 83,354 83,678 83,659
============== ============ ============= ===========
Diluted 86,778 85,699 87,028 86,120
============== ============ ============= ===========
Dividends per
share $ 0.36 $ 0.00 $ 0.36 $ 0.00
============== ============ ============= ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31, June 30,
2004 2003 2003
----------- ------------ -----------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 605,276 $ 562,360 $ 553,148
Accounts receivable, net of
allowance for doubtful
accounts of $10,505,
$10,057 and $9,500
respectively 514,410 444,000 355,150
Merchandise inventory 188,912 183,890 147,511
Prepaid income taxes - - 1,996
Miscellaneous receivables 27,924 28,517 18,862
Deferred income taxes 12,147 12,147 11,757
Prepaid expenses 2,854 3,994 2,649
----------- ------------ -----------
Total current assets 1,351,523 1,234,908 1,091,073
Property and equipment, net 63,950 62,323 62,193
Other assets 15,583 14,401 10,755
----------- ------------ -----------
Total assets $1,431,056 $1,311,632 $1,164,021
=========== ============ ===========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 215,855 $ 157,079 $ 141,478
Accrued expenses and other
current liabilities 100,181 91,384 50,605
----------- ------------ -----------
Total current
liabilities 316,036 248,463 192,083
Minority interest 2,374 1,985 -
Shareholders' equity:
Total shareholders'
equity 1,112,646 1,061,184 971,938
----------- ------------ -----------
Total liabilities
and shareholders'
equity $1,431,056 $1,311,632 $1,164,021
=========== ============ ===========
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Three Months Ended June 30, 2004
-----------------------------------------------
Corporate Public Eliminations Consolidated
Sector
-----------------------------------------------
External customer
sales $1,067,783 $315,121 $ - $1,382,904
Transfers between
segments 302,461 - (302,461) -
----------- --------- ------------ ------------
Total net sales $1,370,244 $315,121 $(302,461) $1,382,904
=========== ========= ============ ============
Income from operations $ 86,237 $ 8,910 $ - $ 95,147
=========== ========= ============
Net interest income
and other expense 1,450
------------
Income before income
taxes $ 96,597
============
Total assets $1,393,151 $185,750 $(147,845) $1,431,056
=========== ========= ============ ============
Three Months Ended June 30, 2003
-----------------------------------------------
Corporate Public Eliminations Consolidated
Sector
-----------------------------------------------
External customer
sales $ 817,607 $257,689 $ - $1,075,296
Transfers between
segments 244,222 - (244,222) -
----------- --------- ------------ ------------
Total net sales $1,061,829 $257,689 $(244,222) $1,075,296
=========== ========= ============ ============
Income from operations $ 63,735 $ 6,750 $ - $ 70,485
=========== ========= ============
Net interest income
and other expense 1,618
------------
Income before income
taxes $ 72,103
============
Total assets $1,097,599 $ 95,625 $ (29,203) $1,164,021
=========== ========= ============ ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Six Months Ended June 30, 2004
-----------------------------------------------
Corporate Public Eliminations Consolidated
Sector
-----------------------------------------------
External customer
sales $2,156,905 $562,688 $ - $2,719,593
Transfers between
segments 532,086 - (532,086) -
----------- --------- ------------ ------------
Total net sales $2,688,991 $562,688 $(532,086) $2,719,593
=========== ========= ============ ============
Income from operations $ 171,469 $ 13,858 $ - $ 185,327
=========== ========= ============
Net interest income
and other expense 2,876
------------
Income before income
taxes $ 188,203
============
Total assets $1,393,151 $185,750 $(147,845) $1,431,056
=========== ========= ============ ============
Six Months Ended June 30, 2003
-----------------------------------------------
Corporate Public Eliminations Consolidated
Sector
-----------------------------------------------
External customer
sales $1,651,773 $441,142 $ - $2,092,915
Transfers between
segments 419,155 - (419,155) -
----------- --------- ------------ ------------
Total net sales $2,070,928 $441,142 $(419,155) $2,092,915
=========== ========= ============ ============
Income from operations $ 129,106 $ 9,831 $ - $ 138,937
=========== ========= ============
Net interest income
and other expense 3,258
------------
Income before income
taxes $ 142,195
============
Total assets $1,097,599 $ 95,625 $ (29,203) $1,164,021
=========== ========= ============ ============
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------
2004 2003 2004 2003
----------------------------------------
Commercial customers served
(1):
Current period 209,291 176,393 307,898 251,254
Trailing 12 months 450,620 361,200 450,620 361,200
% of sales to commercial
customers 98.1% 98.1% 97.9% 97.9%
Number of invoices processed 1,556,292 1,262,218 3,206,300 2,547,067
Average invoice size $969 $911 $922 $880
Direct web sales (000's) $369,575 $242,193 $731,362 $474,333
Sales force, end of period 1,750 1,367 1,750 1,367
Annualized inventory turnover 26 26 25 24
Accounts receivable - days
sales outstanding 34 30 34 31
- ----------------------------------------------------------------------
(1) Commercial customers are defined as public sector and corporate
customers excluding consumers.
CONTACT: CDW Corporation
Investors:
Cindy Klimstra, 847-968-0268
or
Media:
Gary Ross, 847-371-5048