Exhibit 99
CDW Achieves Record First Quarter Results
VERNON HILLS, Ill.--(BUSINESS WIRE)--April 25, 2006--CDW
Corporation (NASDAQ:CDWC):
-- Sales: $1.589 billion, up 7.7% year-over-year
-- Average daily sales: $24.822 million, up 7.7% year-over-year
-- Gross profit: $253.9 million, up 12.1% year-over-year
-- Net income: $61.7 million, up 0.5% year-over-year
-- Diluted earnings per share: $0.75, up 4.2% year-over-year
CDW Corporation (NASDAQ:CDWC) achieved record first quarter sales,
gross profit, net income and diluted earnings per share in the first
quarter of 2006.
Total sales in the first quarter of 2006 were $1.589 billion
compared to $1.475 billion in the first quarter of 2005, an increase
of 7.7 percent. Average daily sales in the first quarter of 2006 were
$24.822 million compared to $23.048 million in the first quarter of
2005, representing a 7.7 percent increase. The first quarter of 2006
and the first quarter of 2005 both had 64 billing days.
Gross profit for the first quarter of 2006 was $253.9 million
compared to $226.4 million the first quarter of 2005, an increase of
12.1 percent. Net income increased 0.5 percent for the first quarter
of 2006 to $61.7 million versus the prior year period, including the
impact of the required implementation of the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 123R
("SFAS 123R") relating to stock options as of January 1, 2006. Diluted
earnings per share were $0.75 in the first quarter of 2006, an
increase of 4.2 percent compared to diluted earnings per share of
$0.72 in the first quarter of 2005. The first quarter of 2006 included
stock-based compensation expense of $2.6 million after tax ($4.2
million pre-tax), or $0.03 per diluted share due to the implementation
of SFAS 123R.
"We delivered a solid first quarter performance as we continued to
take market share, deliver profitable growth, and maintain one of the
strongest balance sheets in our industry, while returning $128 million
to shareholders through share repurchases," said John A. Edwardson,
chairman and chief executive officer. "During the first quarter, we
took significant steps to better serve our customers and position
ourselves for future growth. We aligned our executive structure to
support our growth strategies, completed the first full quarter of
operations at our new Western distribution center in North Las Vegas,
Nevada, and launched the geographic realignment of our corporate sales
organization. Our expectation is to leverage these investments in the
business as we progress through 2006 and beyond."
First Quarter Highlights:
-- Total corporate sector sales in the first quarter of 2006 were
$1.150 billion compared to $1.088 billion in the first quarter
of 2005, representing a 5.7 percent increase. First quarter of
2006 average daily sales for the corporate sector were $17.972
million compared to $17.005 million in the first quarter of
2005.
-- Total public sector sales in the first quarter of 2006 were
$438.4 million compared to $386.8 million in the first quarter
of 2005, representing a 13.4 percent increase. First quarter
of 2006 average daily sales for the public sector were $6.851
million compared to $6.043 million in the first quarter of
2005.
-- Product categories that achieved the strongest year-over-year
unit volume growth for the quarter included notebook CPUs,
software, video, memory, and input devices.
-- Direct web sales in the first quarter of 2006 were a record
$501 million, representing a 14.8 percent increase compared to
the same period a year ago, and comprised 31.5 percent of
total sales.
-- Total March 2006 sales were $584.0 million compared to $541.8
million in March 2005, representing a 7.8 percent increase.
March 2006 average daily sales were $25.392 million compared
to $23.556 million in the prior period. March 2006 and March
2005 both had 23 billing days. The rate of growth for both the
corporate and public sector segments in March 2006 was similar
to each segment's respective rate of growth for the first
quarter of 2006.
Gross profit margin was 16.0 percent in the first quarter of 2006
compared to 15.4 percent in the same period of 2005. The increase was
primarily due to stronger product margins, increased net service
contract revenue and commission revenue, and a larger amount of
cooperative advertising funds classified 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
8.1 percent in the first quarter of 2006 compared to 6.9 percent in
the first quarter of 2005. The increase in selling and administrative
expenses in the first quarter of 2006 was primarily due to:
-- Costs of $5.0 million associated with the opening of the
company's new distribution center in North Las Vegas, Nevada,
and additional office space leased in Chicago and Vernon
Hills, Illinois. As previously announced, these infrastructure
investments are being made to position the company for future
growth.
-- Stock-based compensation expense of $4.2 million due to the
implementation of SFAS 123R, as previously announced.
-- Incremental payroll taxes of $1.6 million on stock option
exercises by coworkers. Approximately $1.0 million of this
incremental expense was attributed to stock option exercises
on stock options for which vesting was accelerated as of
December 31, 2005, for coworkers through the manager level.
Approximately 1.4 million options were exercised in the first
quarter of 2006, including 800,000 options on which vesting
was accelerated as of December 31, 2005. Approximately 1.8
million options remain on which vesting was accelerated as of
December 31, 2005.
-- Incremental discretionary profit-sharing expense of $1.0
million to the 401(k) plan for 2006 in the amount of $1,000
per coworker, per the previously announced modification to the
company's stock option program.
-- A severance expense of $1.5 million in connection with
payments to several individuals who left the company in the
first quarter of 2006.
-- Increased payroll costs as a result of continued investment in
expanding CDW's sales force and more coworkers to support a
larger and growing business.
-- Increased sales commission expense due to the achievement of a
stronger gross profit margin compared to the prior year
period.
Operating margin was 5.9 percent in the first quarter of 2006
compared to 6.6 percent in the first quarter of 2005. The decline in
operating margin was primarily due to the implementation of SFAS 123R,
costs associated with the modification to the company's stock option
program, a severance expense, and investments for future growth,
including costs for infrastructure and additional sales and support
coworkers.
The effective tax rate for the first quarter of 2006 was 37.4
percent compared to 38.9 percent for the first quarter of 2005. As
previously announced, the company began collecting state sales taxes
from all taxable commercial customers effective April 1, 2005. As a
function of collecting state sales taxes, CDW also began paying income
taxes in these 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 the first
quarter of 2006 compared to the prior year period.
Share Repurchase Activity and Announcement of New Share Repurchase
Program
During the first quarter of 2006, CDW repurchased 2.2 million
shares of common stock at an average price of $57.68 per share for an
aggregate purchase price of $128 million. The share repurchase
activity in the first quarter of 2006 completed the share repurchase
program approved in April 2005 for the repurchase of approximately 4.5
million shares.
CDW's Board of Directors has authorized a new share repurchase
program of up to 5 million shares of Company stock, the fifth such
program in the Company's history. The authorization will enable the
Company to offset any potential dilutive effects from the exercise of
stock options and to opportunistically reduce the total number of
shares outstanding. The new repurchase program is expected to remain
effective through April 30, 2008, unless earlier terminated by the
Board or completed. The Company intends to hold the repurchased shares
in treasury for general corporate purposes, including issuances under
various employee stock option plans.
Since 2001, CDW has returned approximately $775 million to
shareholders through the repurchase of 15.5 million shares.
Recognition:
-- CDW was named No. 343 on FORTUNE Magazine's "FORTUNE 500"
list. In addition, the company scored within the top ten
percent of all FORTUNE 500 companies in several categories
measuring profitability and performance:
-- No. 29 in profit growth over the past ten years
-- No. 17 in revenue per dollar of assets
-- No. 32 in total return to shareholders for the past ten
years
-- CDW earned the top ranking in its industry in FORTUNE
magazine's "America's Most Admired Companies," as previously
announced. In the Wholesalers: Electronics and Office
Equipment industry, CDW ranked first in all eight attributes
measured, including innovation, employee talent, use of
corporate assets, social responsibility, quality of
management, financial soundness, long-term investment value,
and quality of products/services.
-- CDW was named by FORTUNE magazine to its annual "100 Best
Companies to Work For" list for the eighth straight year at
No. 34, as previously announced. This was the eighth
consecutive year CDW ranked in the top 40 on the list - a
record achieved by only four other organizations.
The company plans to release April sales on Tuesday, May 9, 2006.
April 2005 had 21 billing days and April 2006 will have 20 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. 343 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 4,350 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 first
quarter of 2006 results will be available at www.cdw.com/investor. The
web cast will begin today, April 25, 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 is a registered trademark and CDW@work is a trademark of CDW
Corporation. Other company and product names may be trademarks of
their respective owners.
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
Three Months Ended
March 31,
-----------------------
2006 2005
----------- -----------
Net sales $1,588,629 $1,475,082
Cost of sales 1,334,740 1,248,653
----------- -----------
Gross profit 253,889 226,429
Selling and administrative expenses 128,748 102,238
Net advertising expense 30,895 26,461
----------- -----------
Income from operations 94,246 97,730
Interest income 5,207 3,179
Other expense, net (962) (370)
----------- -----------
Income before income taxes 98,491 100,539
Income tax provision 36,813 39,142
----------- -----------
Net income $ 61,678 $ 61,397
=========== ===========
Earnings per share:
Basic $ 0.77 $ 0.74
=========== ===========
Diluted $ 0.75 $ 0.72
=========== ===========
Weighted-average number of
common shares outstanding:
Basic 80,004 82,621
=========== ===========
Diluted 81,973 85,309
=========== ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31, March 31,
2006 2005 2005
------------ ------------ ------------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 541,019 $ 571,750 $ 590,247
Accounts receivable, net
of allowance for doubtful
accounts of $9,564, $9,564
and $9,887 respectively 659,914 637,245 571,052
Merchandise inventory 257,554 243,564 205,413
Miscellaneous receivables 53,550 27,848 27,214
Deferred income taxes 11,766 12,562 13,718
Prepaid expenses 15,669 8,274 5,660
------------ ------------ ------------
Total current assets 1,539,472 1,501,243 1,413,304
Marketable securities 65,463 39,176 86,142
Property and equipment, net 112,329 97,277 77,818
Other assets 11,730 11,360 10,715
------------ ------------ ------------
Total assets $ 1,728,994 $ 1,649,056 $ 1,587,979
============ ============ ============
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 301,996 $ 245,201 $ 259,845
Accrued expenses and other
current liabilities 145,372 122,560 130,056
------------ ------------ ------------
Total current
liabilities 447,368 367,761 389,901
Long-term liabilities 24,999 16,730 11,779
Shareholders' equity:
Total shareholders'
equity 1,256,627 1,264,565 1,186,299
------------ ------------ ------------
Total
liabilities and
shareholders'
equity $ 1,728,994 $ 1,649,056 $ 1,587,979
============ ============ ============
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 March 31, 2006
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 1,150,184 $ 438,445 $ - $ 1,588,629
============ ============ ============ ============
Income (loss) from
operations $ 89,298 $ 14,703 $ (9,755) $ 94,246
============ ============ ============
Net interest
income and other
expense 4,245
------------
Income before
income taxes $ 98,491
============
Total assets $ 559,669 $ 242,193 $ 927,132 $ 1,728,994
============ ============ ============ ============
Three Months Ended March 31, 2005
---------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------ ------------
Net sales $ 1,088,301 $ 386,781 $ - $ 1,475,082
============ ============ ============ ============
Income (loss) 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
============ ============ ============ ============
Note: Segment information for the three months ended March 31, 2005
has been restated to conform with the revised segment reporting
structure.
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
- ----------------------------------------------------------------------
Three Months Ended March 31,
----------------------------
2006 2005
----------------------------
% of sales to commercial customers (1) 99.0% 98.5%
Direct web sales (000's) $500,967 $436,477
Sales force, end of period 2,128 1,985
Annualized inventory turnover 24 23
Accounts receivable - days sales
outstanding 37 35
- ----------------------------------------------------------------------
(1) Commercial customers are defined as public sector and corporate
customers excluding consumers.
CONTACT: CDW Corporation
Investor Inquiries
Cindy Klimstra (Investor Relations), 847-968-0268
or
Media Inquiries
Gary Ross (Corporate Communications), 847-371-5048