Exhibit 99
CDW Outpaces Market Growth to Achieve Record Quarterly Sales, Net Income and
Earnings per Share
VERNON HILLS, Ill.--(BUSINESS WIRE)--Oct. 18, 2005--Third quarter
of 2005 highlights:
-- Average daily sales: $26.097 million, an increase of 10.5%
year-over-year
-- Sales: $1.670 billion, an increase of 10.5% year-over-year
-- Net income: $73.1 million, an increase of 12.2% year-over-year
-- Diluted earnings per share: $0.88, an increase of 15.8%
year-over-year
CDW Corporation (NASDAQ:CDWC) achieved record quarterly results
for sales, net income and earnings per share in the third quarter of
2005.
Third quarter sales totaled $1.670 billion, an increase of 10.5
percent compared to the third quarter of 2004. Third quarter net
income was $73.1 million, an increase of 12.2 percent versus the third
quarter of 2004. Diluted earnings per share were $0.88 in the third
quarter of 2005, an increase of 15.8 percent compared to earnings per
share of $0.76 in the third quarter of 2004.
"We are pleased to deliver another quarter of record results.
CDW's unique business model focuses on delivering a superior customer
experience, which has enabled us to outpace market growth and
profitably acquire share," said John A. Edwardson, chairman and chief
executive officer. "We achieved growth in every customer channel,
which demonstrates our ability to understand and respond quickly to
our customers' evolving IT demands. Our track record of strong
performance is based on our coworkers' ability to execute well in all
areas of the company on a consistent basis."
Average daily sales for the third quarter of 2005 were $26.097
million compared to $23.610 million in the third quarter of 2004,
representing a 10.5 percent increase. The third quarter of 2005 and
the third quarter of 2004 both had 64 billing days.
As previously announced, CDW has created a dedicated healthcare
team, which represents the company's next step in customer
segmentation based on an industry vertical. The healthcare team
addresses the unique IT solution requirements of a range of customers
within the growing healthcare field. Effective July 1, 2005,
approximately 10,000 active healthcare accounts representing
approximately $350 million in annualized revenue were consolidated
from both the corporate and public sectors into a new customer channel
within the public sector. Following this transfer of accounts, the
corporate sector remains primarily comprised of business customers,
and the public sector is comprised of federal and state and local
government entities, educational institutions, and healthcare
customers. Results of operations for 2004 and the first six months of
2005 have been restated for the corporate sector and public sector
solely to reflect this transfer of accounts from one sector of the
company's business to the other. The attached addendum to the
financial information provides these restatements. Consolidated
results are not affected by these restatements.
-- Third quarter of 2005 average daily sales for the corporate
sector were $17.448 million compared to $15.899 million,
representing a 9.7 percent increase over last year. Total
corporate sector sales in the third quarter of 2005 were
$1.117 billion compared to $1.018 billion in the third quarter
of 2004.
-- Third quarter of 2005 average daily sales for the public
sector were $8.649 million compared to $7.712 million,
representing a 12.2 percent increase over last year. Total
public sector sales in the third quarter of 2005 were $553.6
million compared to $493.5 million in the third quarter of
2004.
-- In the third quarter of 2005 double-digit unit volume growth
was achieved in notebook CPUs, desktop CPUs, software, data
storage, printers, video, and memory.
-- Direct Web sales were $455 million in the third quarter of
2005, representing a 12.3 percent increase compared to the
same period a year ago, and comprised 27.3 percent of total
sales.
-- September 2005 average daily sales were $28.228 million,
compared to $25.083 million in September 2004, representing a
12.5 percent increase. Total September 2005 sales were $592.8
million compared to $526.7 million in the prior period.
September 2005 and September 2004 both had 21 billing days.
Both the corporate and public sector segments generated growth
in September 2005.
Gross profit margin was 15.3 percent in the third quarter of 2005
compared to 15.1 percent in the same period of 2004. The increase was
primarily due to an increase in product margin. In addition, a larger
amount of cooperative advertising funds was classified as a reduction
of cost of sales, as an increase in these funds was received to
support an increase in marketing spending. The positive impact from
these items was partially offset by reduced customer charges for
delivery, insurance and handling as a result of modifications in these
charges made in the first quarter of 2005, and a lower level of vendor
incentives due to changes in vendor programs.
Selling and administrative expenses as a percentage of sales were
6.8 percent in the third quarter of 2005 compared to 6.5 percent in
the third quarter of 2004. The increase was primarily due to increased
expense for the additional profit-sharing contribution to the 401(k)
plan of $1,000 per coworker announced earlier this year in conjunction
with a modification to the company's stock option program; costs of
approximately $1 million related to the opening of the company's new
distribution center in North Las Vegas, Nevada; and increased payroll
costs for a larger number of coworkers to support a larger and growing
business.
The effective tax rate for the third quarter of 2005 was 36.9
percent, compared to 39.6 percent for the third quarter of 2004. The
tax rate of 36.9 percent for the third quarter of 2005 reflects an
adjustment to the overall effective tax rate to arrive at a combined
rate of 37.4 percent for the first nine months of 2005, which is the
rate the company currently expects for full-year 2005.
-- As previously announced, the company began collecting sales
taxes from all taxable commercial customers effective April 1,
2005. As a result, CDW has begun filing state income tax
returns in all states. Due to differences in state income tax
laws, including differences in how income is apportioned, the
company's overall effective state income tax rate will be
lower in 2005 compared to 2004.
-- The revised effective tax rate estimate for 2005 of 37.4
percent is down slightly from the previous estimate of 37.8
percent. The decrease is primarily attributable to an increase
in the estimate of tax-exempt interest income from state and
municipal securities that will be earned in 2005.
-- CDW is required to review its effective tax rate estimate on a
quarterly basis under accounting rules.
During the third quarter of 2005, CDW repurchased 124,000 shares
of common stock at an average price of $57.42 per share for an
aggregate purchase price of approximately $7 million. Under the
current share repurchase program approved in April 2005 for the
repurchase of 4.5 million shares, 2.9 million shares remain available
for purchase. Total share repurchases for the first nine months of
2005 were approximately 3.9 million at an average price of $56.76 per
share for an aggregate purchase price of approximately $219 million.
Including an annual cash dividend of approximately $35 million, total
dollars returned to shareholders in the first nine months of 2005 were
approximately $254 million.
The company plans to release October sales on Tuesday, November 8,
2005. October 2004 had 21 billing days and October 2005 will have 21
billing days.
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. 347 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 4,100
coworkers. In 2004, the company generated sales of $5.7 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 approximately 120 factory-trained and A+ certified
technicians on staff.
A live web cast of CDW's management discussion of the third
quarter of 2005 results will be available at www.cdw.com/investor. The
web cast will begin today, October 18, 2005, at 8:30 a.m. ET / 7:30
a.m. CT. An audio replay of the call will also be available at
www.cdw.com/investor for approximately two weeks.
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 847-419-6328.
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $1,670,204 $1,511,054 $4,684,881 $4,230,647
Cost of sales 1,415,261 1,283,098 3,966,031 3,583,698
----------- ----------- ----------- -----------
Gross profit 254,943 227,956 718,850 646,949
Selling and
administrative
expenses 112,670 97,887 320,233 288,049
Net advertising
expense 29,843 24,005 85,969 67,509
----------- ----------- ----------- -----------
Income from operations 112,430 106,064 312,648 291,391
Interest income 3,662 2,333 10,830 6,246
Other expense, net (284) (422) (1,133) (1,459)
----------- ----------- ----------- -----------
Income before income
taxes 115,808 107,975 322,345 296,178
Income tax provision 42,684 42,797 120,763 117,432
----------- ----------- ----------- -----------
Net income $ 73,124 $ 65,178 $ 201,582 $ 178,746
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.91 $ 0.78 $ 2.47 $ 2.14
=========== =========== =========== ===========
Diluted $ 0.88 $ 0.76 $ 2.40 $ 2.06
=========== =========== =========== ===========
Weighted-average
number of
common shares
outstanding:
Basic 80,526 83,047 81,487 83,466
=========== =========== =========== ===========
Diluted 82,957 85,957 83,993 86,675
=========== =========== =========== ===========
Dividends per share $ 0.00 $ 0.00 $ 0.43 $ 0.36
=========== =========== =========== ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
September December September
30, 31, 30,
2005 2004 2004
----------- ----------- -----------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 525,334 $ 478,197 $ 479,628
Accounts receivable, net of
allowance for doubtful accounts
of $9,910, $9,890 and $10,551
respectively 668,660 580,035 545,459
Merchandise inventory 258,720 213,222 214,451
Miscellaneous receivables 31,684 24,364 27,610
Deferred income taxes 13,718 13,718 12,147
Prepaid expenses 5,712 6,901 5,006
----------- ----------- -----------
Total current assets 1,503,828 1,316,437 1,284,301
Marketable securities 64,317 125,426 152,945
Property and equipment, net 92,690 68,595 67,343
Other assets 10,709 10,477 14,743
----------- ----------- -----------
Total assets $1,671,544 $1,520,935 $1,519,332
=========== =========== ===========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 299,866 $ 167,877 $ 231,253
Accrued expenses and other
current liabilities 128,595 102,987 113,424
----------- ----------- -----------
Total current liabilities 428,461 270,864 344,677
Long-term liabilities 16,464 8,654 8,083
Shareholders' equity:
Total shareholders' equity 1,226,619 1,241,417 1,166,572
----------- ----------- -----------
Total liabilities and
shareholders' equity $1,671,544 $1,520,935 $1,519,332
=========== =========== ===========
Note: Certain prior period amounts have been reclassified to conform
with the current period's presentation.
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Three Months Ended September 30, 2005
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,116,658 $553,546 $ - $1,670,204
=========== ========= ============== ============
Income (loss) from
operations $ 88,582 $ 32,414 $ (8,566) $ 112,430
=========== ========= ==============
Net interest income
and other expense 3,378
------------
Income before income
taxes $ 115,808
============
Total assets $ 447,826 $271,559 $ 952,159 $1,671,544
=========== ========= ============== ============
Three Months Ended September 30, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,017,505 $493,549 $ - $1,511,054
=========== ========= ============== ============
Income (loss) from
operations $ 81,342 $ 31,459 $ (6,737) $ 106,064
=========== ========= ==============
Net interest income
and other expense 1,911
------------
Income before income
taxes $ 107,975
============
Total assets $ 393,483 $233,549 $ 892,300 $1,519,332
=========== ========= ============== ============
Note: Segment information for the three months ended September 30,
2004 has been restated to conform with the revised segment reporting
structure.
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Nine Months Ended September 30, 2005
---------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- ----------- -------------- ------------
Net sales $3,281,442 $1,403,439 $ - $4,684,881
=========== =========== ============== ============
Income (loss) from
operations $ 253,141 $ 84,121 $ (24,614) $ 312,648
=========== =========== ==============
Net interest
income and other
expense 9,697
------------
Income before
income taxes $ 322,345
============
Total assets $ 447,826 $ 271,559 $ 952,159 $1,671,544
=========== =========== ============== ============
Nine Months Ended September 30, 2004
----------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
------------ ----------- -------------- ------------
Net sales $ 3,032,515 $1,198,132 $ - $4,230,647
============ =========== ============== ============
Income (loss)
from operations $ 243,083 $ 69,811 $ (21,503) $ 291,391
============ =========== ==============
Net interest
income and other
expense 4,787
------------
Income before
income taxes $ 296,178
============
Total assets $ 393,483 $ 233,549 $ 892,300 $1,519,332
============ =========== ============== ============
Note: Segment information for the nine months ended September 30, 2004
has been restated to conform with the revised segment reporting
structure.
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- -----------------------
2005 2004 2005 2004
---------- ---------- ----------- -----------
% of sales to commercial
customers (1) 99.1% 98.3% 98.8% 98.0%
Number of invoices
processed 1,678,857 1,566,776 4,955,039 4,773,076
Average invoice size $1,078 $1,040 $1,018 $961
Direct web sales (000's) $455,298 $405,596 $1,314,389 $1,136,959
Sales force, end of
period 2,061 1,880 2,061 1,880
Annualized inventory
turnover 25 24 24 24
Accounts receivable -
days sales outstanding 37 33 39 35
- ------------------------ ---------- ---------- ----------- -----------
(1) Commercial customers are defined as public sector and corporate
customers excluding consumers.
ADDENDUM
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended March 31, 2004
--------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
------------ --------- -------------- ------------
Net sales $ 1,018,027 $318,662 $ - $1,336,689
============ ========= ============== ============
Income from
operations $ 82,293 $ 16,702 $ (8,815) $ 90,180
============ ========= ==============
Net interest income
and other expense 1,426
------------
Income before
income taxes $ 91,606
============
Total assets $ 380,421 $215,981 $ 828,187 $1,424,589
============ ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended March 31, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,089,122 $247,567 $ - $1,336,689
=========== ========= ============== ============
Income from
operations $ 88,453 $ 10,542 $ (8,815) $ 90,180
=========== ========= ==============
Net interest income
and other expense 1,426
------------
Income before income
taxes $ 91,606
============
Total assets $ 415,858 $180,544 $ 828,187 $1,424,589
=========== ========= ============== ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended June 30, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $ 996,983 $385,921 $ - $1,382,904
=========== ========= ============== ============
Income from
operations $ 79,448 $ 21,650 $ (5,951) $ 95,147
=========== ========= ==============
Net interest income
and other expense 1,450
------------
Income before income
taxes $ 96,597
============
Total assets $ 388,124 $222,478 $ 820,454 $1,431,056
=========== ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended June 30, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,067,783 $315,121 $ - $1,382,904
=========== ========= ============== ============
Income from
operations $ 85,481 $ 15,617 $ (5,951) $ 95,147
=========== ========= ==============
Net interest income
and other expense 1,450
------------
Income before income
taxes $ 96,597
============
Total assets $ 424,852 $185,750 $ 820,454 $1,431,056
=========== ========= ============== ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended September 30, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,017,505 $493,549 $ - $1,511,054
=========== ========= ============== ============
Income from
operations $ 81,342 $ 31,459 $ (6,737) $ 106,064
=========== ========= ==============
Net interest income
and other expense 1,911
------------
Income before income
taxes $ 107,975
============
Total assets $ 393,483 $233,549 $ 892,300 $1,519,332
=========== ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended September 30, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,096,222 $414,832 $ - $1,511,054
=========== ========= ============== ============
Income from
operations $ 87,955 $ 24,846 $ (6,737) $ 106,064
=========== ========= ==============
Net interest income
and other expense 1,911
------------
Income before income
taxes $ 107,975
============
Total assets $ 433,703 $193,329 $ 892,300 $1,519,332
=========== ========= ============== ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended December 31, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,072,575 $434,552 $ - $1,507,127
=========== ========= ============== ============
Income from
operations $ 84,437 $ 23,600 $ (6,669) $ 101,368
=========== ========= ==============
Net interest income
and other expense 2,314
------------
Income before income
taxes $ 103,682
============
Total assets $ 411,381 $237,686 $ 871,868 $1,520,935
=========== ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended December 31, 2004
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,154,211 $352,916 $ - $1,507,127
=========== ========= ============== ============
Income from
operations $ 91,324 $ 16,713 $ (6,669) $ 101,368
=========== ========= ==============
Net interest income
and other expense 2,314
------------
Income before income
taxes $ 103,682
============
Total assets $ 454,367 $194,700 $ 871,868 $1,520,935
=========== ========= ============== ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended March 31, 2005
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,088,301 $386,781 $ - $1,475,082
=========== ========= ============== ============
Income from
operations $ 83,101 $ 22,610 $ (7,981) $ 97,730
=========== ========= ==============
Net interest income
and other expense 2,809
------------
Income before income
taxes $ 100,539
============
Total assets $ 427,758 $249,281 $ 910,940 $1,587,979
=========== ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended March 31, 2005
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,176,094 $298,988 $ - $1,475,082
=========== ========= ============== ============
Income from
operations $ 90,578 $ 15,133 $ (7,981) $ 97,730
=========== ========= ==============
Net interest income
and other expense 2,809
------------
Income before income
taxes $ 100,539
============
Total assets $ 474,398 $202,641 $ 910,940 $1,587,979
=========== ========= ============== ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
RESTATED:
Three Months Ended June 30, 2005
-------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- --------- -------------- ------------
Net sales $1,076,483 $463,112 $ - $1,539,595
=========== ========= ============== ============
Income from
operations $ 81,458 $ 29,097 $ (8,067) $ 102,488
=========== ========= ==============
Net interest income
and other expense 3,510
------------
Income before income
taxes $ 105,998
============
Total assets $ 434,453 $265,373 $ 863,554 $1,563,380
=========== ========= ============== ============
AS PREVIOUSLY REPORTED:
Three Months Ended June 30, 2005
--------------------------------------------------
Corporate Public Headquarters /
Sector Sector Other Consolidated
----------- ---------- -------------- ------------
Net sales $1,167,359 $ 372,236 $ - $1,539,595
=========== ========== ============== ============
Income from
operations $ 89,143 $ 21,412 $ (8,067) $ 102,488
=========== ========== ==============
Net interest income
and other expense 3,510
------------
Income before
income taxes $ 105,998
============
Total assets $ 486,139 $ 213,687 $ 863,554 $1,563,380
=========== ========== ============== ============
CONTACT: CDW Corporation
Investor Inquiries
Cindy Klimstra, 847-968-0268
or
Media Inquiries
Gary Ross, 847-371-5048