Exhibit 99
CDW Achieves Record Fourth Quarter and Full Year Results
VERNON HILLS, Ill.--(BUSINESS WIRE)--Jan. 24, 2006--Fourth quarter
2005 highlights:
-- Average daily sales: $25.507 million, an increase of 8.3%
year-over-year
-- Sales: $1.607 billion, an increase of 6.6% year-over-year
-- Net income: $70.5 million, an increase of 12.5% year-over-year
-- Diluted earnings per share: $0.86, an increase of 17.8%
year-over-year
Full year 2005 highlights:
-- Average daily sales: $24.674 million, an increase of 10.1%
year-over-year
-- Sales: $6.3 billion, an increase of 9.7% year-over-year
-- Net income: $272 million, an increase of 12.7% year-over-year
-- Diluted earnings per share: $3.26, an increase of 16.8%
year-over year
CDW Corporation (NASDAQ:CDWC) achieved its highest fourth quarter
sales, net income and earnings per share and full year sales, net
income and earnings per share in the company's history in 2005.
Average daily sales in the fourth quarter of 2005 were $25.507
million compared to $23.549 million in the fourth quarter of 2004,
representing an 8.3 percent increase. Total sales in the fourth
quarter of 2005 sales were $1.607 billion, an increase of 6.6 percent
versus the prior year quarter. The fourth quarter of 2005 had 63
billing days and the fourth quarter of 2004 had 64 billing days.
Net income for the fourth quarter of 2005 was $70.5 million, an
increase of 12.5 percent versus the fourth quarter of 2004. Diluted
earnings per share were $0.86 in the fourth quarter of 2005, an
increase of 17.8 percent compared to earnings per share of $0.73 in
the fourth quarter of 2004.
CDW also achieved record sales, net income, and earnings per share
for full year 2005. Average daily sales for 2005 were $24.674 million
compared to $22.413 million for 2004, representing a 10.1 percent
increase. Total sales for 2005 were $6.3 billion, an increase of 9.7
percent versus the prior year. Full year 2005 had 255 billing days and
full year 2004 had 256 billing days.
Net income for 2005 was $272 million, an increase of 12.7 percent
versus 2004. Diluted earnings per share were $3.26 in 2005, an
increase of 16.8 percent compared to earnings per share of $2.79 in
2004.
"We achieved record fourth quarter results by continuing to take
market share, manage our business efficiently, and deliver profitable
growth. Thanks to the continued dedication of our coworkers, 2005 was
another year of record sales, net income, and earnings per share,"
said John A. Edwardson, chairman and chief executive officer. "In
2006, we expect to set new standards of service for our customers by
leveraging our investments in the business and continuing to innovate.
Our strategic objectives are solidly in place to build for the future,
outpace market growth, and continue our record of performance."
Fourth Quarter Highlights:
-- Corporate sector average daily sales for the fourth quarter of
2005 were $17.925 million compared to $16.759 million,
representing a 7.0 percent increase over last year. Total
corporate sector sales in the fourth quarter of 2005 were
$1.129 billion compared to $1.073 billion in the fourth
quarter of 2004.
-- Public sector average daily sales for the fourth quarter of
2005 were $7.583 million compared to $6.790 million,
representing an 11.7 percent increase over last year. Total
public sector sales in the fourth quarter of 2005 were $478
million compared to $435 million in the fourth quarter of
2004.
-- Product categories that achieved the strongest year-over-year
unit volume growth for the quarter on an average daily basis
included software, data storage, printers, video, memory, and
input devices.
-- Direct web sales were $455 million in the fourth quarter of
2005, representing a 16.9 percent increase compared to the
same period a year ago, and comprised 28.3 percent of total
sales.
-- December 2005 average daily sales were $26.703 million,
compared to $24.840 million in December 2004, representing a
7.5 percent increase. Total December 2005 sales were $561
million compared to $546 million in the prior period. December
2005 had 21 billing days and December 2004 had 22 billing
days. Average daily sales increased for both the corporate and
public sector segments in December 2005.
Gross profit margin was 15.5 percent this quarter compared to 14.8
percent in the same period of 2004. The increase was primarily due to
stronger product margins, increased net service contract revenue, and
a larger amount of cooperative advertising funds classified as a
reduction of cost of sales. Marketing activities and related
cooperative advertising increased in 2005 and virtually all
cooperative advertising funds were reclassified as a reduction of cost
of sales. The positive impact from these items was partially offset by
a lower level of vendor incentives due to changes by vendors in their
programs.
Selling and administrative expenses as a percentage of sales were
7.0 percent in the fourth quarter of 2005 compared to 6.5 percent in
the fourth quarter of 2004. The increase in selling and administrative
expenses in the fourth quarter of 2005 is primarily the result of
increased payroll costs as the result of continued investment in
expanding CDW's sales force and increased payroll costs for a larger
number of coworkers to support a larger and growing business. The
increase also included approximately $1.3 million of start-up costs
related to the opening of the company's new distribution center in
North Las Vegas, Nevada, in December 2005. In addition, items
associated with the previously announced modification to the company's
stock option program were reflected in selling and administrative
expenses, including $1.3 million of expense for an additional
profit-sharing contribution for 2005 to the 401(k) plan of $1,000 per
coworker and a $3.7 million charge in connection with the acceleration
of vesting of options for coworkers through the manager level on
December 31, 2005. The expense for these items was partially offset by
a reduction of $5.3 million for an accrual of a company-wide incentive
bonus program based on a partial achievement of specific financial
objectives for 2005. Operating margin was 6.7 percent in both the
fourth quarter of 2005 and 2004.
The effective tax rate for the fourth quarter of 2005 was 36.3
percent compared to 39.5 percent for the fourth quarter of 2004. The
tax rate of 36.3 percent for the fourth quarter of 2005 reflects an
adjustment to the overall effective tax rate to arrive at a combined
rate of 37.2 percent 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 files state income tax returns in all
states. Due to differences in state income tax laws, including
differences in how income is apportioned among states, the
company's effective state income tax rate was lower in 2005
compared to 2004.
-- The overall effective tax rate was 37.2 percent in 2005
compared to 39.6 percent in 2004.
-- The company currently expects the combined tax rate for 2006
to be 37.5 percent. CDW is required to review its effective
tax rate estimate on a quarterly basis under accounting rules.
During the fourth quarter of 2005, CDW repurchased 704,000 shares
of common stock at an average price of $55.18 per share for an
aggregate purchase price of approximately $39 million. Under the
current share repurchase program approved in April 2005 for the
repurchase of 4.5 million shares, 2.2 million shares remain available
for purchase.
Full Year Highlights:
-- Full year 2005 average daily sales for the corporate sector
were $17.297 million compared to $16.036 million, representing
a 7.9 percent increase over last year. Total corporate sector
sales in 2005 were $4.411 billion compared to $4.105 billion
in 2004.
-- Full year 2005 average daily sales for the public sector were
$7.377 million compared to $6.378 million, representing a 15.7
percent increase over last year. Total public sector sales in
2005 were $1.881 billion compared to $1.633 billion in 2004.
-- Direct web sales were $1.769 billion in the full year 2005,
representing a 15.9 percent increase compared to the same
period a year ago, and comprised 28 percent of total sales.
Gross profit margin was 15.4 percent in 2005 compared to 15.2
percent in 2004, primarily due to a larger amount of cooperative
advertising funds classified as a reduction of cost of sales.
Selling and administrative expenses as a percentage of sales were
6.9 percent in 2005 compared to 6.7 percent in 2004. The increase in
selling and administrative expenses in 2005 is primarily the result of
continued investment in expanding CDW's sales force and increased
payroll costs for a larger number of coworkers to support a larger and
growing business. The increase also included approximately $2.7
million of start-up costs related to the opening of the company's new
distribution center in North Las Vegas, Nevada, in December 2005. In
addition, items associated with the previously announced modification
to the company's stock option program were also reflected in selling
and administrative expenses, including $4.0 million of expense for an
additional profit-sharing contribution for 2005 to the 401(k) plan of
$1,000 per coworker and a $3.7 million charge in connection with the
acceleration of vesting of options for coworkers through the manager
level on December 31, 2005. The expense for these items was partially
offset by a reduction of $5.3 million for an accrual of a company-wide
incentive bonus program based on a partial achievement of specific
financial objectives.
Total share repurchases for 2005 were approximately 4.6 million at
an average price of $56.52 per share for an aggregate purchase price
of approximately $258 million. Including an annual cash dividend of
approximately $35 million, total dollars returned to shareholders in
2005 were approximately $293 million.
The company plans to release January sales on Thursday, February
9, 2006. January 2005 had 21 billing days and January 2006 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), ranked No. 347 on the FORTUNE 500, is a leading provider
of technology solutions for business, government and education. CDW is
a principal source of technology products and services including top
name brands such as Adobe, APC, Apple, Cisco, HP, IBM, Lenovo,
Microsoft, Sony, Symantec, Toshiba and ViewSonic.
CDW was founded in 1984 and employs approximately 4,300 coworkers.
In 2005, the company generated sales of $6.3 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 fourth
quarter of 2005 results will be available at www.cdw.com/investor. The
web cast will begin today, January 24, 2006 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 Years Ended
December 31, December 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $1,606,964 $1,507,127 $6,291,845 $5,737,774
Cost of sales 1,358,184 1,283,952 5,324,215 4,867,650
----------- ----------- ----------- -----------
Gross profit 248,780 223,175 967,630 870,124
Selling and
administrative
expenses 113,249 98,514 433,482 386,563
Net advertising expense 28,545 23,293 114,514 90,802
----------- ----------- ----------- -----------
Income from operations 106,986 101,368 419,634 392,759
Interest income 4,325 2,722 15,155 8,968
Other expense, net (698) (408) (1,831) (1,867)
----------- ----------- ----------- -----------
Income before income
taxes 110,613 103,682 432,958 399,860
Income tax provision 40,103 40,983 160,866 158,415
----------- ----------- ----------- -----------
Net income $ 70,510 $ 62,699 $ 272,092 $ 241,445
=========== =========== =========== ===========
Earnings per share:
Basic $ 0.88 $ 0.75 $ 3.35 $ 2.90
=========== =========== =========== ===========
Diluted $ 0.86 $ 0.73 $ 3.26 $ 2.79
=========== =========== =========== ===========
Weighted-average number
of common shares
outstanding:
Basic 80,064 83,168 81,128 83,391
=========== =========== =========== ===========
Diluted 82,316 86,184 83,566 86,552
=========== =========== =========== ===========
Dividends per share $ 0.00 $ 0.00 $ 0.43 $ 0.36
=========== =========== =========== ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
December 31, December 31,
2005 2004
------------ ------------
Assets
Current assets:
Cash, cash equivalents and marketable
securities $ 571,750 $ 478,197
Accounts receivable, net of allowance
for doubtful accounts of $9,564 and
$9,890 respectively 637,245 580,035
Merchandise inventory 243,564 213,222
Miscellaneous receivables 27,848 24,364
Deferred income taxes 12,562 13,718
Prepaid expenses 8,274 6,901
------------ ------------
Total current assets 1,501,243 1,316,437
Marketable securities 39,176 125,426
Property and equipment, net 97,277 68,595
Other assets 11,360 10,477
------------ ------------
Total assets $ 1,649,056 $ 1,520,935
============ ============
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 245,201 $ 167,877
Accrued expenses and other current
liabilities 122,560 102,987
------------ ------------
Total current liabilities 367,761 270,864
Long-term liabilities 16,730 8,654
Shareholders' equity:
Total shareholders' equity 1,264,565 1,241,417
------------ ------------
Total liabilities and
shareholders' equity $ 1,649,056 $ 1,520,935
============ ============
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 December 31, 2005
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 1,129,266 $ 477,698 $ - $ 1,606,964
============ ============ ============ ============
Income (loss) from
operations $ 88,669 $ 26,304 $ (7,987) $ 106,986
============ ============ ============
Net interest income
and other expense 3,627
------------
Income before
income taxes $ 110,613
============
Total assets $ 442,691 $ 285,709 $ 920,656 $ 1,649,056
============ ============ ============ ============
Three Months Ended December 31, 2004
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 1,072,575 $ 434,552 $ - $ 1,507,127
============ ============ ============ ============
Income (loss) 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
============ ============ ============ ============
Note: Segment information for the three months ended December 31, 2004
has been restated to conform with the revised segment reporting
structure.
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Year Ended December 31, 2005
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 4,410,708 $ 1,881,137 $ - $ 6,291,845
============ ============ ============ ============
Income (loss) from
operations $ 341,810 $ 110,425 $ (32,601) $ 419,634
============ ============ ============
Net interest income
and other expense 13,324
------------
Income before
income taxes $ 432,958
============
Total assets $ 442,691 $ 285,709 $ 920,656 $ 1,649,056
============ ============ ============ ============
Year Ended December 31, 2004
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 4,105,090 $ 1,632,684 $ - $ 5,737,774
============ ============ ============ ============
Income (loss) from
operations $ 327,520 $ 93,411 $ (28,172) $ 392,759
============ ============ ============
Net interest income
and other expense 7,101
------------
Income before
income taxes $ 399,860
============
Total assets $ 411,381 $ 237,686 $ 871,868 $ 1,520,935
============ ============ ============ ============
Note: Segment information for the year ended December 31, 2004 has
been restated to conform with the revised segment reporting structure.
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
Three Months Ended Years Ended
December 31, December 31,
----------------------------------------------
2005 2004 2005 2004
----------------------------------------------
% of sales to commercial
customers (1) 99.0% 98.4% 98.9% 98.1%
Direct web sales (000's) $454,643 $388,753 $1,769,032 $1,525,712
Sales force, end of
period 2,153 2,012 2,153 2,012
Annualized inventory
turnover 25 24 24 24
Accounts receivable -
days sales outstanding 36 35 37 37
- ----------------------------------------------------------------------
(1) Commercial customers are defined as public sector and corporate
customers excluding consumers.
SELLING DAYS (1)
Month 2006 2005
------------------------------------------------------------
January 21 21
February 20 20
March 23 23
------------------------------------------------------------
Quarter 1 Total 64 64
------------------------------------------------------------
April 20 21
May 22 21
June 22 22
------------------------------------------------------------
Quarter 2 Total 64 64
------------------------------------------------------------
July 20 20
August 23 23
September 20 21
------------------------------------------------------------
Quarter 3 Total 63 64
------------------------------------------------------------
October 22 21
November 21 21
December 20 21
------------------------------------------------------------
Quarter 4 Total 63 63
------------------------------------------------------------
Fiscal Year 254 255
------------------------------------------------------------
(1) The number of selling days by month and quarter for both 2006 and
2005 are being provided for reference.
CONTACT: CDW Corporation
Investor Inquiries
Cindy Klimstra (Investor Relations), 847-968-0268
or
Media Inquiries
Gary Ross (Corporate Communications), 847-371-5048