Exhibit 99
CDW Reports Second Quarter Results
Company Achieves Record Quarter
VERNON HILLS, Ill.--(BUSINESS WIRE)--July 24, 2007--CDW
Corporation (NASDAQ: CDWC):
-- Sales: $2.033 billion, up 24.4% year-over-year
-- Average daily sales: $31.763 million, up 24.4% year-over-year
-- Gross profit: $328.0 million, up 24.2 % year-over-year
-- Operating income: $123.7 million, up 14.7% year-over-year
(includes merger-related costs)
-- Net income: $80.1 million, up 9.5% year-over-year (includes
merger-related costs)
-- Diluted earnings per share: $0.99, up 8.8% year-over-year
(includes merger-related costs)
-- Non-GAAP diluted earnings per share: $1.05, up 15.4%
year-over-year (excludes merger-related costs)
CDW Corporation (NASDAQ: CDWC), a leading provider of technology
products and services to business, government and education, today
announced record quarterly sales, gross profit, operating income, net
income and diluted earnings per share in the second quarter of 2007.
The Company previously announced June 2007 and second quarter of 2007
sales results.
Total sales in the second quarter of 2007 were $2.033 billion
compared to $1.633 billion in the second quarter of 2006, an increase
of 24.4 percent. Average daily sales in the second quarter of 2007
were $31.763 million compared to $25.523 million in the second quarter
of 2006, representing a 24.4 percent increase. There were 64 billing
days in both the second quarter of 2007 and the second quarter of
2006.
CDW completed the acquisition of Berbee Information Networks on
October 11, 2006. Total sales for the second quarter of 2006 do not
include Berbee sales, while the second quarter of 2007 sales include
Berbee sales. Excluding Berbee sales in the second quarter of 2007,
and therefore on a non-GAAP basis, total sales were $1.880 billion, an
increase of 15.1 percent compared to total sales of $1.633 billion for
the second quarter of 2006 and average daily sales for the second
quarter of 2007 were $29.377 million, an increase of 15.1 percent
compared to average daily sales for the second quarter of 2006 of
$25.523 million.
Second Quarter of 2007 Highlights:
-- Total corporate sector segment sales in the second quarter of
2007 were $1.237 billion compared to $1.112 billion in the
second quarter of 2006, representing an increase of 11.2
percent. Second quarter of 2007 average daily sales for the
corporate sector segment were $19.321 million compared to
$17.373 million in the second quarter of 2006, representing an
increase of 11.2 percent.
-- Total public sector segment sales in the second quarter of
2007 were $643.6 million compared to $521.6 million in the
second quarter of 2006, representing an increase of 23.4
percent. Second quarter of 2007 average daily sales for the
public sector segment were $10.056 million compared to $8.150
million in the second quarter of 2006, representing an
increase of 23.4 percent.
-- While CDW did not own Berbee prior to October 11, 2006, the
Company is providing comparative information for Berbee. Total
Berbee sales in the second quarter of 2007 were $152.7 million
compared to $101.7 million in the second quarter of 2006,
representing an increase of 50.1 percent. Second quarter of
2007 average daily sales for Berbee were $2.386 million
compared to $1.590 million in the second quarter of 2006,
representing an increase of 50.1 percent. Compared to the
corporate sector and public sector segments, Berbee's business
model is more project oriented, which can result in a greater
degree of variability in sales on a quarterly basis.
-- Product categories that achieved the strongest year-over-year
unit volume growth for the second quarter of 2007 were
notebook computers, desktop computers, data storage, software
and video. Product categories exclude Berbee sales.
-- Direct web sales in the second quarter of 2007 were $588.9
million, representing a 19.3 percent increase compared to the
prior year, and comprised 31.3 percent of total sales
excluding Berbee. Berbee's sales are not made on the web due
to the higher services component of the sales.
Gross profit for the second quarter of 2007 was $328.0 million
compared to $264.0 million in the second quarter of 2006, representing
a 24.2 percent increase. Gross profit margin was 16.1 percent of sales
in the second quarter of 2007 compared to 16.2 percent of sales in the
second quarter of 2006.
In the second quarter of 2007, CDW recorded $8.0 million pre-tax
($4.9 million after-tax) of costs associated with the previously
announced merger agreement providing for the acquisition of CDW by VH
Holdings, Inc., which upon closing of the merger will be controlled by
investment funds affiliated with Madison Dearborn Partners, LLC and
Providence Equity Partners Inc. ("merger-related costs"). See
supplemental table at the end of the press release for a
reconciliation of GAAP to non-GAAP financial measures.
Selling and administrative expenses as a percentage of sales were
8.5 percent in the second quarter of 2007 compared to 7.7 percent in
the second quarter of 2006 and increased $45.9 million. The increase
in selling and administrative expenses in the second quarter of 2007
was primarily due to the inclusion of Berbee's operating expenses,
increased payroll costs as a result of continued investment in
expanding CDW's sales force, and merger-related costs of $8.0 million
pre-tax ($4.9 million after-tax). Non-GAAP selling and administrative
expenses as a percentage of sales, which exclude merger-related costs,
were 8.1 percent in the second quarter of 2007 compared to 7.7 percent
in the second quarter of 2006. The non-GAAP selling and administrative
expenses information is being presented to provide meaningful
comparisons to the prior year quarterly period.
Advertising expense was $32.2 million, representing 1.6 percent of
sales in the second quarter of 2007 compared to $30.0 million,
representing 1.8 percent of sales in the second quarter of 2006.
Operating margin was 6.1 percent in the second quarter of 2007
compared to 6.6 percent in the second quarter of 2006. Operating
income was $123.7 million in the second quarter of 2007 compared to
$107.8 million in the second quarter of 2006. Operating income for the
second quarter of 2007 included merger-related costs of $8.0 million
pre-tax ($4.9 million after-tax). Non-GAAP operating margin based on
non-GAAP operating income of $131.6 million, which excludes
merger-related costs, was 6.5 percent in the second quarter of 2007
compared to 6.6 percent in the second quarter of 2006. The non-GAAP
operating margin information is being presented to provide meaningful
comparisons to the prior year quarterly period.
Interest income was $5.3 million for the second quarter of 2007
compared to $5.5 million in the second quarter of 2006. The effective
tax rate for the second quarter of 2007 was 38.0 percent compared to
35.4 percent for the second quarter of 2006. The effective tax rate
for the second quarter of 2006 included a tax benefit of $2.3 million
relating to the resolution of an audit of the Company's 2003 federal
income tax return that did not repeat in the second quarter of 2007.
Net income was $80.1 million in the second quarter of 2007
compared to $73.1 million in the second quarter of 2006, an increase
of 9.5 percent. Net income in the second quarter of 2007 included
merger-related costs of $8.0 million pre-tax ($4.9 million after-tax).
Non-GAAP net income, which excludes merger-related costs, was $85.0
million in the second quarter of 2007 compared to $73.1 million in the
second quarter of 2006, an increase of 16.3 percent. The non-GAAP net
income information is being presented to provide meaningful
comparisons to the prior year quarterly period.
Diluted earnings per share were $0.99 in the second quarter of
2007 compared to diluted earnings per share of $0.91 in the second
quarter of 2006. Results for the second quarter of 2007 included
merger-related costs of $8.0 million pre-tax ($4.9 million after-tax)
or approximately $0.06 per diluted share. Non-GAAP diluted earnings
per share based on non-GAAP net income of $85.0 million, which exclude
merger-related costs, were $1.05 in the second quarter of 2007
compared to $0.91 in the second quarter of 2006. The non-GAAP diluted
earnings per share information is being presented to provide
meaningful comparisons to the prior year quarterly period.
The company plans to release July sales on Monday, August 13,
2007. July 2006 had 20 billing days and July 2007 will have 21 billing
days.
About CDW
CDW(R), ranked No. 342 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, APC, Apple, Cisco, EMC, Fujitsu, HP,
IBM, Lenovo, Microsoft, Panasonic, Quantum, Samsung, Sony, Symantec,
ViewSonic and Xerox. CDW's direct model offers customers one-on-one
relationships with knowledgeable account managers and access to
approximately 820 on-staff engineers and advanced technology
specialists who customize solutions for customers' complex technology
needs. CDW also provides same-day product shipping and post-sales
technical support.
CDW was founded in 1984 and as of June 30, 2007, employed
approximately 5,880 coworkers. In 2006, the company generated sales of
$6.8 billion. For more information, visit CDW.com.
Where You Can Find Additional Information
In connection with the proposed merger between CDW and a
subsidiary of VH Holdings, Inc., CDW filed with the SEC, and has
furnished to its shareholders, a definitive proxy statement soliciting
proxies for the meeting of its shareholders to be held with respect to
the Merger on August 9, 2007. CDW SHAREHOLDERS ARE ADVISED TO READ THE
PROXY STATEMENT CAREFULLY BECAUSE IT CONTAINS IMPORTANT INFORMATION.
CDW shareholders and other interested parties can obtain, without
charge, a copy of the proxy statement and other relevant documents
filed with the SEC from the SEC's website at http://www.sec.gov. CDW
shareholders and other interested parties can also obtain, without
charge, a copy of the proxy statement and other relevant documents by
directing a request by mail or telephone to CDW Corporation, 200 N.
Milwaukee Ave., Vernon Hills, Illinois 60061, Attention: Corporate
Secretary, telephone: (847) 465-6000, or from CDW's website,
http://www.cdw.com.
CDW and certain of its directors, executive officers and other
members of management and employees may, under SEC rules, be deemed to
be "participants" in the solicitation of proxies from shareholders of
CDW with respect to the proposed transaction. Information regarding
the persons who may be considered "participants" in the solicitation
of proxies is set forth in the definitive proxy statement described
above.
Statements about the expected timing, completion and effects of
the proposed merger between CDW and a subsidiary of VH Holdings, Inc.
and all other statements in this filing other than historical facts,
constitute forward-looking statements within the meaning of the safe
harbor provisions of the Private Securities Litigation Reform Act of
1995. Readers are cautioned not to place undue reliance on these
forward-looking statements, each of which is qualified in its entirety
by reference to the following cautionary statements. Forward-looking
statements speak only as of the date hereof and are based on current
expectations and involve a number of assumptions, risks and
uncertainties that could cause actual results to differ materially
from those projected in the forward-looking statements. CDW may not be
able to complete the proposed merger because of a number of factors,
including, among other things, the failure to obtain shareholder
approval, the failure of financing or the failure to satisfy other
closing conditions. Other risks and uncertainties that may affect
forward-looking statements are described in the reports filed by CDW
with the SEC under the Securities Exchange Act of 1934, as amended,
including without limitation CDW's Annual Report on Form 10-K for the
year ended December 31, 2006, and the definitive proxy statement dated
July 13, 2007, relating to the special meeting of shareholders to be
held to vote on the merger agreement.
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,
---------------------- -----------------------
2007 2006 2007 2006
---------- ----------- ----------- -----------
Net sales $2,032,838 $1,633,458 $3,891,956 $3,222,087
Cost of sales 1,704,851 1,369,421 3,262,650 2,704,161
---------- ----------- ----------- -----------
Gross profit 327,987 264,037 629,306 517,926
Selling and
administrative
expenses 172,117 126,192 326,302 254,940
Advertising expense 32,199 30,007 61,378 60,902
---------- ----------- ----------- -----------
Income from operations 123,671 107,838 241,626 202,084
Interest income 5,336 5,492 9,700 10,699
Other income/(expense),
net 234 (94) (171) (1,056)
---------- ----------- ----------- -----------
Income before income
taxes 129,241 113,236 251,155 211,727
Income tax provision 49,150 40,125 94,284 76,938
---------- ----------- ----------- -----------
Net income $ 80,091 $ 73,111 $ 156,871 $ 134,789
========== =========== =========== ===========
Earnings per share:
Basic $ 1.01 $ 0.93 $ 1.99 $ 1.70
========== =========== =========== ===========
Diluted $ 0.99 $ 0.91 $ 1.95 $ 1.66
========== =========== =========== ===========
Weighted-average number
of common shares
outstanding:
Basic 79,103 78,994 78,856 79,488
========== =========== =========== ===========
Diluted 80,995 80,564 80,621 81,268
========== =========== =========== ===========
Dividends per share $ - $ 0.52 $ - $ 0.52
========== =========== =========== ===========
CDW CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 30, December 31, June 30,
2007 2006 2006
------------ ------------ ------------
Assets
Current assets:
Cash, cash equivalents and
marketable securities $ 580,320 $ 351,596 $ 444,925
Accounts receivable, net of
allowance for doubtful
accounts of $10,089, $9,995,
and $9,574, respectively 909,162 850,002 689,824
Merchandise inventory 290,615 261,858 257,035
Miscellaneous receivables 46,837 55,881 50,953
Deferred income taxes 15,047 15,060 14,674
Prepaid expenses and other
current assets 18,146 15,139 12,072
------------ ------------ ------------
Total current assets 1,860,127 1,549,536 1,469,483
Marketable securities - 40,000 59,261
Property and equipment, net 180,110 171,448 115,780
Goodwill and other intangible
assets, net 179,180 183,094 4,277
Other assets 8,370 7,349 6,910
------------ ------------ ------------
Total assets $ 2,227,787 $ 1,951,427 $ 1,655,711
============ ============ ============
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $ 421,229 $ 354,307 $ 277,317
Accrued expenses and other
current liabilities 183,840 175,074 134,764
------------ ------------ ------------
Total current
liabilities 605,069 529,381 412,081
Long-term liabilities 35,451 34,881 22,138
Shareholders' equity:
Total shareholders'
equity 1,587,267 1,387,165 1,221,492
------------ ------------ ------------
Total liabilities
and shareholders'
equity $ 2,227,787 $ 1,951,427 $ 1,655,711
============ ============ ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Three Months Ended June 30, 2007
---------------------------------------------------------
Corporate Public Headquarters
Sector Sector Berbee / Other Consolidated
----------- --------- --------- ------------ ------------
Net sales $ 1,236,516 $ 643,603 $ 152,719 $ - $ 2,032,838
=========== ========= ========= ============ ============
Income
(loss) from
operations $ 97,807 $ 36,185 $ 5,784 $ (16,105) $ 123,671
=========== ========= ========= ============
Net interest
income and
other
expense 5,570
------------
Income
before
income
taxes $ 129,241
============
Total assets $ 521,462 $ 323,215 $ 309,337 $ 1,073,773 $ 2,227,787
=========== ========= ========= ============ ============
Three Months Ended June 30, 2006
---------------------------------------------------------
Corporate Public Headquarters
Sector Sector Berbee / 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
=========== ========= ========= ============ ============
CDW CORPORATION AND SUBSIDIARIES
SEGMENT REPORTING INFORMATION
(in thousands)
Six Months Ended June 30, 2007
---------------------------------------------------------
Corporate Public Headquarters
Sector Sector Berbee / Other Consolidated
---------- ---------- --------- ------------ ------------
Net sales $2,455,557 $1,140,999 $ 295,400 $ - $ 3,891,956
========== ========== ========= ============ ============
Income
(loss) from
operations $ 195,043 $ 61,408 $ 10,988 $ (25,813) $ 241,626
========== ========== ========= ============
Net interest
income and
other
expense 9,529
------------
Income
before
income
taxes $ 251,155
============
Total assets $ 521,462 $ 323,215 $ 309,337 $ 1,073,773 $ 2,227,787
========== ========== ========= ============ ============
Six Months Ended June 30, 2006
---------------------------------------------------------
Corporate Public Headquarters
Sector Sector Berbee / 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
========== ========== ========= ============ ============
CDW CORPORATION AND SUBSIDIARIES
OPERATING DATA
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------------------
2007 2006 2007 2006
-------------------------------------------
Direct web sales (000's) $588,872 $493,522 $1,139,716 $994,489
Sales force, end of period
(1) 2,722 2,179 2,722 2,179
Annualized inventory
turnover 26 23 26 23
Accounts receivable - days
sales outstanding 41 38 42 39
- ----------------------------------------------------------------------
(1) Sales force at June 30, 2007 includes 187 Berbee sales force
coworkers.
CDW CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL MEASURES
(in thousands, except per share data)
Three Months Six Months
Ended Ended
June 30, 2007 June 30, 2007
------------- -------------
Selling and administrative expenses
- ------------------------------------------
GAAP selling and administrative expenses $ 172,117 $ 326,302
Adjusted for:
Merger acquisition costs (7,970) (7,970)
------------- -------------
Non-GAAP selling and administrative
expenses $ 164,147 $ 318,332
============= =============
Selling and administrative expenses as a
percentage of net sales
- ------------------------------------------
GAAP selling and administrative expenses
as a percentage of net sales 8.5% 8.4%
Adjusted for:
Merger acquisition costs (0.4)% (0.2)%
------------- ------------
Non-GAAP selling and administrative
expenses as a percentage of net sales 8.1% 8.2%
============= ============
Income from operations
- ------------------------------------------
GAAP income from operations $ 123,671 $ 241,626
Adjusted for:
Merger acquisition costs 7,970 7,970
------------- -------------
Non-GAAP income from operations $ 131,641 $ 249,596
============= =============
Income from operations as a percentage of
net sales
- ------------------------------------------
GAAP income from operations as a
percentage of net sales 6.1% 6.2%
Adjusted for:
Merger acquisition costs 0.4% 0.2%
------------- -------------
Non-GAAP income from operations as a
percentage of net sales 6.5% 6.4%
============= =============
Net income
- ------------------------------------------
GAAP net income $ 80,091 $ 156,871
Adjusted for:
Merger acquisition costs, net of income
tax 4,941 4,941
------------- -------------
Non-GAAP net income $ 85,032 $ 161,812
============= =============
Diluted earnings per share
- ------------------------------------------
GAAP diluted earnings per share $ 0.99 $ 1.95
Adjusted for:
Merger acquisition costs, net of income
tax 0.06 0.06
------------- -------------
Non-GAAP diluted earnings per share $ 1.05 $ 2.01
============= =============
CONTACT: CDW Corporation
Investor Inquiries
Cindy Klimstra
Vice President, Investor Relations
(847) 968-0268
or
Media Inquiries
Gary Ross
Sr. Manager, Corporate Communications
(847) 371-5048