Exhibit 99
Investor Inquiries Media Inquiries
Cindy Klimstra Gary Ross
Director, Investor Relations Manager, Corporate PR
(847) 968-0268 (847) 371-5048
CDW Reports Third Quarter Results
Company Achieves Record Quarterly Net Income of $65.2 Million and Record EPS of
$0.76
o Record sales: $1.511 billion (24% increase year-over-year)
o Record average daily sales: $23.6 million (24% increase
year-over-year)
o Record net income: $65.2 million (46% increase year-over-year)
o Record earnings per share: $0.76 (46% increase year-over-year)
VERNON HILLS, Ill. - October 19, 2004, as corrected on October 26, 2004 -
CDW Corporation (NASDAQ: CDWC) achieved record quarterly results for sales,
average daily sales, net income and earnings per share in the third quarter of
2004.
Third quarter sales totaled $1.511 billion, an increase of 24 percent
versus the prior year quarter. Third quarter net income was $65.2 million, an
increase of 46 percent versus the third quarter of 2003. Diluted earnings per
share in the third quarter of 2004 were $0.76, an increase of 46 percent
compared to earnings per share of $0.52 in the third quarter of 2003, which
included $0.06 per share of transaction and integration expenses relating to the
purchase of selected U.S. assets and the Canadian operations of Micro Warehouse
in September 2003.
"We are pleased to deliver another quarter of record sales, net income and
earnings per share. Our profitability remained strong as we continued to gain
market share," said John A. Edwardson, chairman and chief executive officer.
"The third quarter is typically our strongest quarter, due to the impact of
fiscal year-end IT spending by federal government agencies. Within our public
sector segment, we focused on funded opportunities among our federal customers,
and experienced accelerated sales in this channel towards the end of the
quarter. In addition, overall demand from our small and medium-sized business
customers remained stable throughout the quarter."
Average daily sales for the third quarter of 2004 were $23.6 million
compared to $19.1 million in the third quarter of 2003, representing a 24
percent increase. Total sales in the third quarter of 2004 were $1.511 billion
compared to $1.223 billion in the prior period. The third quarter of 2004 and
the third quarter of 2003 both had 64 billing days. Included in the third
quarter of 2004 and for a portion of September 2003 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. CDW completed the purchase of
selected U.S. assets of Micro Warehouse on September 9, 2003, and completed the
purchase of Micro Warehouse Canada Ltd. operations on September 23, 2003.
o Third quarter 2004 average daily sales for the corporate sector were
$17.1 million, representing a 25 percent increase over last year.
Total corporate sector sales in the third quarter of 2004 were $1.096
billion compared to $878.4 million in the third quarter of 2003.
Page 1 of 8
o Third quarter 2004 average daily sales for the public sector were $6.5
million, representing a 20 percent increase over last year. Total
public sector sales in the third quarter of 2004 were $414.8 million
compared to $344.4 million in the third quarter of 2003.
o In the third quarter of 2004, double-digit unit volume growth was
achieved in most product categories on a year-over-year basis. The
unit volumes of desktop CPUs, server CPUs, software, data storage, and
multi-media increased more than 30 percent over the prior year
quarter. The unit volumes of notebook CPUs, notebook accessories,
printers, video, and input devices increased between 20 percent and 30
percent over the prior year quarter.
o Direct web sales were $406 million in the third quarter of 2004,
representing a 44 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 15.1 percent this quarter compared to 14.4 percent
in the same period of 2003, primarily due to an increase in vendor rebates and
an increase in net service contract revenue. An increase in cooperative
advertising funds included as a reduction of cost of sales was offset by freight
promotions and other changes in cost of sales.
Selling and administrative expenses as a percentage of sales were 6.5
percent this quarter compared to 6.9 percent in the third quarter of 2003.
Selling and administrative expenses in the third quarter of 2003 included $6.9
million of transaction and integration expenses related to the Micro Warehouse
transactions. Excluding this $6.9 million of expenses, and therefore on a
non-GAAP basis, selling and administrative expenses in the third quarter of 2003
were 6.4 percent of sales. The increase in selling and administrative expenses
in 2004 is primarily the result of continued investment in expanding CDW's sales
force and increases in certain administrative functions to support a larger
business. The non-GAAP selling and administrative expenses information is
included to provide meaningful comparisons to prior periods.
September 2004 average daily sales were $25.1 million, compared to $22.0
million in September 2003, representing a 14 percent increase. Total September
2004 sales were $527 million compared to $461 million in the prior period. Both
September 2004 and September 2003 had 21 billing days. The corporate and public
sector segments both generated double-digit growth in September 2004.
Edwardson said, "The foundation of our success is based on all of our
coworkers' dedication to customer service, operational excellence, and improving
productivity."
The company plans to release October sales on Tuesday, November 9, 2004,
and host and webcast its annual Analyst Day event on Wednesday, November 10,
2004, which will be held at its Mettawa, Illinois, sales office.
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.
Page 2 of 8
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 third quarter will be
available at www.cdw.com/investor. The Web cast will begin today, October 19,
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 October 29, 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 847-371-2262.
###
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CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended September 30,
--------------------------------------- --------------------------------------
2004 2003 2004 2003
------------------ ------------------ ----------------- -----------------
Net sales $ 1,511,054 $ 1,222,785 $ 4,230,647 $ 3,315,700
Cost of sales 1,283,098 1,046,561 3,583,698 2,835,630
------------------ ------------------ ----------------- -----------------
Gross profit 227,956 176,224 646,949 480,070
Selling and administrative
expenses 97,887 84,657 288,049 221,728
Net advertising expense 24,005 19,004 67,509 46,842
------------------ ------------------ ----------------- -----------------
Income from operations 106,064 72,563 291,391 211,500
Interest income 2,333 1,573 6,246 5,671
Other expense, net (422) (410) (1,459) (1,250)
------------------ ------------------ ----------------- -----------------
Income before income taxes 107,975 73,726 296,178 215,921
Income tax provision 42,797 29,122 117,432 85,289
------------------ ------------------ ----------------- -----------------
Net income $ 65,178 $ 44,604 $ 178,746 $ 130,632
================ ================ ================ ===============
Earnings per share:
Basic $ 0.78 $ 0.54 $ 2.14 $ 1.57
================ ================ ================ ===============
Diluted $ 0.76 $ 0.52 $ 2.06 $ 1.52
================ ================ ================ ===============
Weighted-average number of
common shares outstanding:
Basic 83,047 82,791 83,466 83,367
================ ================ ================ ===============
Diluted 85,957 85,786 86,675 86,024
================ ================ ================ ===============
Dividends per share $ 0.00 $ 0.30 $ 0.36 $ 0.30
================ ================ ================ ===============
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CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September 30, December 31, September 30,
2004 2003 2003
-------------- -------------- ---------------
Assets
Current assets:
Cash, cash equivalents and marketable securities $ 632,573 (1) $ 562,360 $ 528,965
Accounts receivable, net of allowance for doubtful
accounts of $10,551, $10,057 and $10,018 respectively 545,459 444,000 455,569
Merchandise inventory 214,451 183,890 189,950
Miscellaneous receivables 27,610 28,517 21,008
Deferred income taxes 12,147 12,147 11,757
Prepaid expenses 5,006 3,994 5,470
-------------- -------------- ---------------
Total current assets 1,437,246 (1) 1,234,908 1,212,719
Property and equipment, net 67,343 62,323 62,906
Other assets 14,743 14,401 17,321
-------------- -------------- ---------------
Total assets $ 1,519,332 (1) $ 1,311,632 $ 1,292,946
============== ============== ===============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 231,748 $ 149,074 $ 204,149
Accrued expenses and other current liabilities 121,012 (1) 99,389 87,395
-------------- -------------- ---------------
Total current liabilities 352,760 (1) 248,463 291,544
Minority interest - 1,985 -
Shareholders' equity:
Total shareholders' equity 1,166,572 1,061,184 1,001,402
-------------- -------------- ---------------
Total liabilities and shareholders' equity $ 1,519,332 (1) $ 1,311,632 $ 1,292,946
============== ============== ===============
Note: Certain prior period amounts have been reclassified to conform with the current period's presentation.
(1) These amounts have been revised from the amounts shown in the Press Release
originally issued on October 19, 2004. The revised amounts reflect the impact of
a balance sheet reclassification between "Cash, cash equivalents and marketable
securities" and "Accrued expenses and other current liabilities" in the amount
of $7,243,000 at September 30, 2004. The reclassification followed the discovery
of an inadvertent error in the accounting for certain income tax payments made
during the third quarter of 2004. As revised, the Press Release properly
reflects these payments.
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CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Three Months Ended September 30, 2004
-------------------------------------------------------------------------------
Corporate Public Sector Eliminations Consolidated
-------------------------------------------------------------------------------
External customer sales $ 1,096,222 $ 414,832 $ - $ 1,511,054
Transfers between segments 403,922 - (403,922) -
------------------ ------------------- ------------------- -------------------
Total net sales $ 1,500,144 $ 414,832 $ (403,922) $ 1,511,054
================== =================== =================== ===================
Income from operations $ 90,579 $ 15,485 $ - $ 106,064
================== =================== ===================
Net interest income and
other expense 1,911
-------------------
Income before income taxes $ 107,975
===================
Total assets $ 1,450,106 (1) $ 193,329 $ (124,103) $ 1,519,332 (1)
================== =================== =================== ===================
Three Months Ended September 30, 2003
-------------------------------------------------------------------------------
Corporate Public Sector Eliminations Consolidated
-------------------------------------------------------------------------------
External customer sales $ 878,393 $ 344,392 $ - $ 1,222,785
Transfers between segments 340,808 - (340,808) -
------------------ ------------------- ------------------- -------------------
Total net sales $ 1,219,201 $ 344,392 $ (340,808) $ 1,222,785
================== =================== =================== ===================
Income from operations $ 63,721 $ 8,842 $ - $ 72,563
================== =================== ===================
Net interest income and
other expense 1,163
-------------------
Income before income taxes $ 73,726
===================
Total assets $ 1,247,215 $ 166,646 $ (120,915) $ 1,292,946
================== =================== =================== ===================
(1) These amounts have been revised from the amounts shown in the Press Release
originally issued on October 19, 2004. The revised amounts reflect the impact of
a balance sheet reclassification between "Cash, cash equivalents and marketable
securities" and "Accrued expenses and other current liabilities" in the amount
of $7,243,000 at September 30, 2004. The reclassification followed the discovery
of an inadvertent error in the accounting for certain income tax payments made
during the third quarter of 2004. As revised, the Press Release properly
reflects these payments.
Page 6 of 8
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Nine Months Ended September 30, 2004
-------------------------------------------------------------------------------
Corporate Public Sector Eliminations Consolidated
-------------------------------------------------------------------------------
External customer sales $ 3,253,127 $ 977,520 $ - $ 4,230,647
Transfers between segments 936,008 - (936,008) -
------------------ ------------------- ------------------- -------------------
Total net sales $ 4,189,135 $ 977,520 $ (936,008) $ 4,230,647
================== =================== =================== ===================
Income from operations $ 262,048 $ 29,343 $ - $ 291,391
================== =================== ===================
Net interest income and
other expense 4,787
-------------------
Income before income taxes $ 296,178
===================
Total assets $ 1,450,106 (1) $ 193,329 $ (124,103) $ 1,519,332 (1)
================== =================== =================== ===================
Nine Months Ended September 30, 2003
-------------------------------------------------------------------------------
Corporate Public Sector Eliminations Consolidated
-------------------------------------------------------------------------------
External customer sales $ 2,530,166 $ 785,534 $ - $ 3,315,700
Transfers between segments 759,963 - (759,963) -
------------------ ------------------- ------------------- -------------------
Total net sales $ 3,290,129 $ 785,534 $ (759,963) $ 3,315,700
================== =================== =================== ===================
Income from operations $ 192,827 $ 18,673 $ - $ 211,500
================== =================== ===================
Net interest income and
other expense 4,421
-------------------
Income before income taxes $ 215,921
===================
Total assets $ 1,247,215 $ 166,646 $ (120,915) $ 1,292,946
================== =================== =================== ===================
(1) These amounts have been revised from the amounts shown in the Press Release
originally issued on October 19, 2004. The revised amounts reflect the impact of
a balance sheet reclassification between "Cash, cash equivalents and marketable
securities" and "Accrued expenses and other current liabilities" in the amount
of $7,243,000 at September 30, 2004. The reclassification followed the discovery
of an inadvertent error in the accounting for certain income tax payments made
during the third quarter of 2004. As revised, the Press Release properly
reflects these payments.
Page 7 of 8
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
- ----------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------------------------------------------------------
2004 2003 2004 2003
----------------------------------------------------------------------
% of sales to commercial customers 98.3% 98.2% 98.0% 98.0%
Number of invoices processed 1,566,776 1,287,675 4,773,076 3,834,742
Average invoice size $1,040 $989 $961 $917
Direct web sales (000's) $405,596 $281,446 $1,136,959 $755,779
Sales force, end of period 1,880 1,459 1,880 1,459
Annualized inventory turnover (1) 24 25 24 24
Accounts receivable - days sales outstanding 33 34 35 38
- ----------------------------------------------------------------------------------------------------------------------
(1) Starting in the third quarter of 2004, annualized inventory turnover
is computed on an average daily basis. Prior periods have been
restated using the new method.
Note: 2003 statistics exclude Micro Warehouse except for annualized
inventory turnover and accounts receivable - days sales outstanding.
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