Exhibit 99
CDW Reports Second Quarter Results;
Company Achieves Record Quarterly Earnings per Share
VERNON HILLS, Ill.--(BUSINESS WIRE)--July 19, 2006--CDW
Corporation (NASDAQ: CDWC):
-- Sales: $1.633 billion, up 6.1% year-over-year
-- Average daily sales: $25.523 million, up 6.1% year-over-year
-- Gross profit: $264.0 million, up 11.2% year-over-year
-- Net income: $73.1 million, up 9.0% year-over-year
-- Diluted earnings per share: $0.91, up 13.8% year-over-year
CDW Corporation (NASDAQ:CDWC) achieved record quarterly diluted
earnings per share in the second quarter of 2006.
Total sales in the second quarter of 2006 were $1.633 billion
compared to $1.540 billion in the second quarter of 2005, an increase
of 6.1 percent. Average daily sales in the second quarter of 2006 were
$25.523 million compared to $24.056 million in the second quarter of
2005, representing a 6.1 percent increase. The second quarter of 2006
and the second quarter of 2005 both had 64 billing days.
Gross profit for the second quarter of 2006 was $264.0 million
compared to $237.5 million in the second quarter of 2005, an increase
of 11.2 percent. Net income increased 9.0 percent for the second
quarter of 2006 to $73.1 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 $0.91 in the second
quarter of 2006, an increase of 13.8 percent compared to diluted
earnings per share of $0.80 in the second quarter of 2005. The second
quarter of 2006 included stock-based compensation expense of $2.4
million after tax ($3.7 million pre-tax), or $0.03 per diluted share
due to the implementation of SFAS 123R.
"Our commitment to serving our customers is the foundation of our
financial performance. In addition to our consistent emphasis on
customer service, our disciplined focus on profitable growth,
operational efficiency, and returning capital to shareholders through
share repurchases resulted in a strong quarter characterized by
improved operating income and record earnings per share," said John A.
Edwardson, chairman and chief executive officer. "This performance was
due to the efforts of all of our coworkers, who execute our growth
strategies every day and deliver the best customer service in the
industry."
"While we continued to profitably take market share, we remain
committed to growing revenue at a faster pace. To do that, we have
taken steps to create a more strategic platform for future growth.
Based on our successful customer segmentation strategy in the public
sector, we segmented the majority of our medium and large corporate
customers into geographic territories, and realigned our medium and
large corporate sector account managers accordingly. This has been a
significant undertaking over the past several months. Medium and large
corporate sector account managers involved with the change are in
process of building relationships with customers whose accounts have
been transferred. We believe the geographic realignment affected
corporate sector sales growth in the second quarter of 2006, but we
also know this is the right strategy for growth. We now have a
consistent framework for those sales teams that use geographic
segmentation, which is designed to enhance our ability to serve
customers, drive new business, increase sales teams' ownership and
accountability, and maximize account coverage," Edwardson said.
Second Quarter Highlights:
-- Total corporate sector segment sales in the second quarter of
2006 were $1.112 billion compared to $1.076 billion in the
second quarter of 2005, representing a 3.3 percent increase.
Second quarter of 2006 average daily sales for the corporate
sector segment were $17.373 million compared to $16.820
million in the second quarter of 2005.
-- Total public sector segment sales in the second quarter of
2006 were $521.6 million compared to $463.1 million in the
second quarter of 2005, representing a 12.6 percent increase.
Second quarter of 2006 average daily sales for the public
sector segment were $8.150 million compared to $7.236 million
in the second 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 second quarter of 2006 were $493.5
million, representing a 16.8 percent increase compared to the
same period a year ago, and comprised 30.2 percent of total
sales.
-- June 2006 sales were $600.4 million compared to $567.4 million
in June 2005, representing a 5.8 percent increase. June 2006
average daily sales were $27.293 million compared to $25.793
million in the prior period. June 2006 and June 2005 both had
22 billing days. In June 2006, corporate sector segment sales
increased 3.8 percent and public sector segment sales
increased 9.8 percent.
Gross profit margin was 16.2 percent in the second quarter of 2006
compared to 15.4 percent in the same period of 2005. The increase was
primarily due to increased net service contract and commission
revenue, a higher level of vendor incentives, and a favorable
comparison of delivery charges due to more limited delivery
promotions.
Selling and administrative expenses as a percentage of sales were
7.7 percent in the second quarter of 2006 compared to 6.8 percent in
the second quarter of 2005. The increase in selling and administrative
expenses in the second quarter of 2006 was primarily due to:
-- Costs of $6.3 million associated with the operations of the
company's new distribution center in North Las Vegas, Nevada,
and additional leased office space 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 $3.7 million due to the
required implementation of SFAS 123R on January 1, 2006, as
previously announced.
-- Increased payroll costs as a result of continued investment in
expanding CDW's sales force and additional 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 6.6 percent in the second quarter of 2006
compared to 6.7 percent in the second quarter of 2005.
Interest income was $5.5 million for the second quarter of 2006,
an increase of $1.5 million compared to the same period of 2005 due to
higher interest rates. The effective tax rate for the second quarter
of 2006 was 35.4 percent compared to 36.7 percent for the second
quarter of 2005.
Share Repurchase Activity
During the second quarter of 2006, CDW repurchased 1.5 million
shares of common stock at an average price of $54.51 per share for an
aggregate purchase price of $84 million. Under the current share
repurchase program approved in April 2006 for the repurchase of 5.0
million shares, 3.5 million shares remain available for purchase. In
addition, the Company paid an annual cash dividend of $0.52 per share
to common stock shareholders on June 30, 2006, for a total amount of
$41 million. Including share repurchases of $128 million in the first
quarter of 2006, total dollars returned to shareholders in the first
six months of 2006 were approximately $253 million.
The company plans to release July sales on Thursday, August 10,
2006. July 2005 had 20 billing days and July 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 Acer, Adobe, Apple, Cisco, HP, IBM, Lenovo,
Microsoft, Panasonic, Samsung, Sony, Symantec, Toshiba and ViewSonic.
CDW was founded in 1984 and employs approximately 4,450 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 second
quarter of 2006 results will be available at www.cdw.com/investor. The
web cast will begin today, July 19, 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 Six Months Ended
June 30, June 30,
----------------------- -----------------------
2006 2005 2006 2005
----------- ----------- ----------- -----------
Net sales $1,633,458 $1,539,595 $3,222,087 $3,014,677
Cost of sales 1,369,421 1,302,117 2,704,161 2,550,770
----------- ----------- ----------- -----------
Gross profit 264,037 237,478 517,926 463,907
Selling and
administrative
expenses 126,192 105,325 254,940 207,563
Advertising expense 30,007 29,665 60,902 56,126
----------- ----------- ----------- -----------
Income from operations 107,838 102,488 202,084 200,218
Interest income 5,492 3,989 10,699 7,168
Other expense, net (94) (479) (1,056) (849)
----------- ----------- ----------- -----------
Income before income
taxes 113,236 105,998 211,727 206,537
Income tax provision 40,125 38,937 76,938 78,079
----------- ----------- ----------- -----------
Net income $73,111 $67,061 $134,789 $128,458
=========== =========== =========== ===========
Earnings per share:
Basic $0.93 $0.82 $1.70 $1.57
=========== =========== =========== ===========
Diluted $0.91 $0.80 $1.66 $1.52
=========== =========== =========== ===========
Weighted-average
number of
common shares
outstanding:
Basic 78,994 81,337 79,488 81,975
=========== =========== =========== ===========
Diluted 80,564 83,737 81,268 84,521
=========== =========== =========== ===========
Dividends per share $0.52 $0.43 $0.52 $0.43
=========== =========== =========== ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31, June 30,
2006 2005 2005
----------- ------------ -----------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $444,925 $571,750 $510,006
Accounts receivable, net of
allowance for doubtful
accounts of $9,574, $9,564
and $9,879 respectively 689,824 637,245 628,906
Merchandise inventory 257,035 243,564 214,931
Miscellaneous receivables 50,953 27,848 28,829
Deferred income taxes 14,674 12,562 13,718
Prepaid expenses 12,072 8,274 4,632
----------- ------------ -----------
Total current assets 1,469,483 1,501,243 1,401,022
Marketable securities 59,261 39,176 70,364
Property and equipment, net 115,780 97,277 81,368
Other assets 11,187 11,360 10,626
----------- ------------ -----------
Total assets $1,655,711 $1,649,056 $1,563,380
=========== ============ ===========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $277,317 $245,201 $281,170
Accrued expenses and other
current liabilities 134,764 122,560 117,442
----------- ------------ -----------
Total current
liabilities 412,081 367,761 398,612
Long-term liabilities 22,138 16,730 15,597
Shareholders' equity:
Total shareholders'
equity 1,221,492 1,264,565 1,149,171
----------- ------------ -----------
Total liabilities
and shareholders'
equity $1,655,711 $1,649,056 $1,563,380
=========== ============ ===========
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Three Months Ended June 30, 2006
----------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------- ------------
Net sales $1,111,879 $521,579 $- $1,633,458
============ ============ ============= ============
Income (loss) from
operations $88,896 $28,950 $(10,008) $107,838
============ ============ =============
Net interest
income and other
expense 5,398
------------
Income before
income taxes $113,236
============
Total assets $596,065 $250,747 $808,899 $1,655,711
============ ============ ============= ============
Three Months Ended June 30, 2005
----------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------- ------------
Net sales $1,076,483 $463,112 $- $1,539,595
============ ============ ============= ============
Income (loss) 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
============ ============ ============= ============
Note: Segment information for the three months ended June 30, 2005 has
been restated to conform with the revised segment reporting structure.
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Six Months Ended June 30, 2006
----------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------- ------------
Net sales $2,262,063 $960,024 $- $3,222,087
============ ============ ============= ============
Income (loss) from
operations $178,194 $43,653 $(19,763) $202,084
============ ============ =============
Net interest
income and other
expense 9,643
------------
Income before
income taxes $211,727
============
Total assets $596,065 $250,747 $808,899 $1,655,711
============ ============ ============= ============
Six Months Ended June 30, 2005
----------------------------------------------------
Corporate Public Headquarters/
Sector Sector Other Consolidated
------------ ------------ ------------- ------------
Net sales $2,164,784 $849,893 $- $3,014,677
============ ============ ============= ============
Income (loss) from
operations $164,559 $51,707 $(16,048) $200,218
============ ============ =============
Net interest
income and other
expense 6,319
------------
Income before
income taxes $206,537
============
Total assets $434,453 $265,373 $863,554 $1,563,380
============ ============ ============= ============
Note: Segment information for the six months ended June 30, 2005 has
been restated to conform with the revised segment reporting structure.
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
- ----------------------------------------------------------------------
Three Months Ended Six Months Ended
June 30, June 30,
----------------------------------------
2006 2005 2006 2005
----------------------------------------
% of sales to commercial
customers (1) 99.1% 98.8% 99.0% 98.7%
Direct web sales (000's) $493,522 $422,614 $994,489 $859,091
Sales force, end of period 2,179 1,962 2,179 1,962
Annualized inventory turnover 23 25 23 24
Accounts receivable - days
sales outstanding 38 37 39 38
- ----------------------------------------------------------------------
(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