Q2 1995 Earnings Release CDW COMPUTER CENTERS REPORTS RECORD SALES AND EARNINGS FOR SECOND QUARTER, FIRST HALF OF 1995 BUFFALO GROVE, Illinois, July 19, 1995-- CDW Computer Centers, Inc. ("CDW") today reported record sales and earnings for the three and six months ended June 30, 1995. Net sales for the second quarter ended June 30, 1995 increased 58.6% to $146.2 million from $92.2 million in the same period of 1994. Net income was $4.3 million, a 78.0% increase over $2.4 million in the second quarter of 1994. Earnings per share of $0.31 for the second quarter of 1995 increased 63.2% from $0.19 in the same period of 1994. Average order size increased to $649 as sales of notebook, laptop and desktop systems increased to 34% of total sales in the second quarter of 1995 versus 29% in the comparable prior year period. Net sales for the six months ended June 30, 1995 increased 59.9% to $287.5 million from $179.8 million in the same period of 1994. Net income was $8.5 million, an 85.8% increase over $4.6 million in the first half of 1994. Earnings per share of $0.61 for the first half of 1995 increased 69.4% from $0.36 in the same period of 1994. "Our growth continues to be fueled by sales increases in all product categories with desktop computers, add-on boards/memory products and software experiencing the highest growth percentages over the first six months of 1994," said Michael P. Krasny, chairman and chief executive officer. "The sales increase was positively impacted by growth in sales of IBM products and, to a lesser extent, Apple/Macintosh products. Notebook and laptop computers, printers, software and desktop computers were CDW’s largest product categories by dollar volume in the second quarter and first six months of 1995." The gross margin percentage was 12.7% and 12.8% for the three and six month periods ended June 30,1995, respectively, versus 13.2% and 13.0% for the three and six month periods ended June 30, 1994, respectively. "While we have experienced some pressure on our gross margin due, in part, to price increases from suppliers on certain product lines, our gross profit margin as a percentage of net sales is within the range of our historical experience," Krasny said. Annualized inventory turnover was approximately 21 for the three and six months ended June 30, 1995 versus 18 and 25 for the three and six month periods ended June 30, 1994, respectively. "We continued the expansion of our catalog mailings during the quarter in both our MS-DOS/Windows ("PC") business and our Apple/Macintosh business," said Gregory C. Zeman, CDW’s president. "For the first half of 1995, we distributed 12.1 million PC catalogs and 3.8 million Apple/Macintosh catalogs, and anticipate that for all of 1995, we will distribute 25-27 million PC catalogs and 5.5-6.5 million Apple/Macintosh catalogs. Additionally, in May 1995, we initiated an outbound calling program, which is targeted to inactive business customers within our existing database." "In conjunction with the release of Microsoft’s Windows 95 product, we plan to launch an aggressive advertising campaign in July 1995, including national magazine ads and a CDW Guide to Windows 95, which will appear as an insert in a national trade magazine and within our catalog," Zeman said. As of June 30, 1995, working capital was approximately $58.0 million with approximately $23.3 million in cash, cash equivalents and marketable securities. CDW has no long-term debt. Krasny said, "In order to sustain the long-term growth and profitability of our business, we are currently investigating several expansion alternatives including the potential acquisition of vacant land on which CDW would construct a combined office and warehouse facility or the lease of an additional building. If the Company chooses to develop a new facility and relocate, it would likely incur non-recurring exit costs, currently estimated to range between $3.0 million and $5.0 million on a pre-tax basis, relating to its current leased facility. Such costs would be charged to operating results in the quarter in which the Company commits to such course of action. If the Company chooses to lease an additional facility, it would not incur an exit charge. Additionally, the Company will incur moving and other costs relating to relocating all or a portion of its operations under either alternative. Such relocation costs are not expected to exceed $1 million and will be charged to operating results in the period incurred. There are no formal or informal agreements in place with respect to the acquisition or leasing of any vacant property or existing facility." CDW will file a secondary registration statement and prospectus on Form S-3 with the Securities and Exchange Commission within the next several days. Pursuant to terms of the prospectus, the Company will offer for sale 500,000 newly issued shares of CDW’s common stock and certain selling shareholders will offer for sale 750,000 shares of CDW’s common stock. The net proceeds of the offering to the Company are expected to be used for general corporate purposes, including facility requirements, working capital and possible acquisitions. This offering will be made only by means of a prospectus in accordance with federal and state securities laws. CDW Computer Centers, Inc. is a direct marketer of brand name microcomputer products at discount prices. Through in-bound telemarketing account managers, CDW offers a broad range of over 20,000 MS-DOS/Microsoft Windows and Apple/Macintosh based microcomputer products, including hardware, peripherals, accessories, networking and software. Customers can call Computer Discount Warehouse at 1-800-884-4CDW to place orders and obtain product information from CDW's account managers. The Company's common stock is traded on the Nasdaq National Market under the symbol CDWC. For more information about CDW: Fax 1 800 PRO-INFO and enter the code -- CDW. Visit CDW on the Internet at http://www.cdw.com eMail CDW Investor Relations at shserv@admin.cdw.com. Telephone CDW Corporate Offices at 847 419-8234. CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three Months Ended June 30, 1995 1994 Net sales $146,160 $92,173 Cost of sales 127,645 79,965 ---------- ---------- Gross profit 18,515 12,208 Selling and administrative expenses 11,682 8,266 ---------- ---------- Income from operations 6,833 3,942 Interest income (expense), net 330 (4) Other income (expense) (21) 18 ---------- ---------- Income before income taxes 7,142 3,956 Income tax provision 2,821 1,528 ---------- ---------- Net income $4,321 $2,428 ========== ========== Net income per share $0.31 $0.19 ========== ========== Weighted average number of common and common equivalent shares outstanding 13,828 13,038 Six Months Ended June 30, 1995 1994 Net sales $287,516 $179,803 Cost of sales 250,687 156,423 ---------- ---------- Gross profit 36,829 23,380 Selling and administrative expenses 23,400 15,893 ---------- ---------- Income from operations 13,429 7,487 Interest income (expense), net 638 (33) Other income (expense) (9) 60 ---------- ---------- Income before income taxes 14,058 7,514 Income tax provision 5,553 2,937 ---------- ---------- Net income $8,505 $4,577 ========== ========== Net income per share $0.61 $0.36 ========== ========== Weighted average number of common and common equivalent shares outstanding 13,817 12,869 * All amounts reflect a two-for-one stock split effected in the form of a stock dividend paid on May 6, 1994. CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) June 30, December 31, 1995 1994 ASSETS Current assets: Cash, cash equivalents and marketable securities $23,296 $22,564 Accounts receivable, net 31,687 23,559 Miscellaneous receivables 1,798 1,300 Merchandise inventory 24,843 23,164 Prepaid expenses 194 175 Deferred taxes 622 641 ---------- ---------- Total current assets 82,440 71,403 Property and equipment, net 2,928 2,904 Deferred taxes 3,554 3,625 Other assets 92 97 ---------- ---------- Total assets $89,014 $78,029 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $19,503 $16,237 Accrued expenses and other liabilities 4,929 5,949 ---------- ---------- Total current liabilities 24,432 22,186 Stockholders' equity 64,582 55,843 ---------- ---------- Total liabilities and stockholders' equity $89,014 $78,029 ========== ========== At The Company FINANCIAL RELATIONS BOARD - CHICAGO Harry J. Harczak, Jr. Julie Creed Michael Rosenbaum Jeff Wilhoit Laura Kuhlmann-Doerer Chief Financial Officer Analyst Contact General Inquiries Media Inquiries (847) 419-6226 (312) 266-7800 (312) 266-7800 (312) 266-7800