Second Quarter 1996 Earnings Release CDW COMPUTER CENTERS REPORTS RECORD SALES AND EARNINGS Second Quarter Highlights: 50% growth in net sales 97% growth in net income Twelfth consecutive quarter of sequential sales growth as a public company Operating margin increases to 6.0% of net sales Completed purchase of land for facility expansion 3-for-2 stock split effected as a stock dividend paid on July 15, 1996 Financial & Operating Data* Three Months 06/30/96 06/30/95 % Change Six Months 06/30/96 06/30/95 % Change Net Sales (000’s) $218,687 $146,160 50% $425,392 $287,516 48% Income from Operations (000’s) 13,061 6,833 91% 21,352 13,429 59% Net Income (000’s) 8,494 4,321 97% 14,028 8,505 65% Net Income Per Share 0.39 0.21 86% 0.65 0.41 59% O/S Shares 21,810 20,742 5% 21,729 20,726 5% Pro forma - Excluding Exit Charge Income from Operations (000’s) $24,552 $13,429 83% Net Income (000’s) 15,980 8,505 88% Net Income Per Share 0.74 0.41 80% Operating Data Number of Orders Shipped 301,813 225,163 34% 601,743 459,502 31% Average Order Size $725 $649 12% $707 $626 13% # account managers, end of period 256 162 58% 256 162 58% Catalogs Mailed (000’s) 12,904 8,459 53% 25,812 15,892 62% Catalogs Mailed (000's) 12,904 8,459 53% 25,812 15,892 62% PC 11,238 6,184 82% 22,473 12,116 85% MAC 1,666 2,275 -27% 3,339 3,776 -12% Customers Serviced 145,720 114,249 28% 254,189 203,695 25% Customers Serviced - TTM 418,665 418,665 Pages of National Advertising Placed 159 118 35% 309 236 31% *Reflects 3-for-2 stock split paid July 15,1996 "Our continuing strategy since our inception over ten years ago of providing superior customer service and competitive pricing with a cost efficient operating model has allowed our profits to grow at rates exceeding our sales growth rate. We continue to gain market share by focusing on internal growth." --- Michael P. Krasny, Chairman and Chief Executive Officer Buffalo Grove, Illinois, July 17, 1996 --- CDW Computer Centers, Inc. ("CDW") today announced record sales and accelerated earnings for the second quarter and six months ended June 30, 1996. Net sales for the second quarter increased 50% to $218,687,000 from $146,160,000 in the same period of 1995. Net income totaled $8,494,000, a 97% increase over $4,321,000 in the second quarter of 1995. Earnings per share of $0.39 for the second quarter of 1996 increased 86% from $0.21 in the same period of 1995. All earnings per share amounts reflect the 3-for-2 stock split effected in the form of a stock dividend, which was paid on July 15, 1996. Net sales for the six months ended June 30, 1996 increased 48% to $425,392,000 from $287,516,000 in the same period of 1995. Net income for the six months ended June 30, 1996 was $14.0 million, a 65% increase over $8.5 million reported in the first half of 1995. The 1996 net income was reduced by a pre-tax charge to earnings in the first quarter of $3,200,000, which includes a $4,000,000 non-recurring charge for the estimated costs of exiting the company’s current facility and a related $800,000 reduction in the executive incentive bonus pool. Earnings per share of $0.65 increased 59% from $0.41 in the first half of 1995. Pro forma net income and earnings per share for the six months ended June 30, 1996, excluding the impact of the exit charge, were $15,980,000 and $0.74, respectively, representing increases of 88% and 80%, respectively, over the first six months of 1995. "We continue to experience strong demand across our customer base, particularly from business users. Our marketing and sales efforts resulted in the number of customers serviced growing 6% to over 415,000 for the trailing twelve months ended June 30, 1996," said Michael P. Krasny, chairman and chief executive officer. "Our growth continues to be fueled by sales of high-end notebook/laptop computers, as well as multi-media products, input devices and data storage products. The advancements in technology provide more computing power for the dollar which has positively impacted customer demand, " said Gregory C. Zeman, CDW’s president. "While the growth rate of our Apple/MacIntosh business has slowed, it did not have a significant impact as Apple/MacIntosh-related products comprise less than 7% of our total sales. "The sales outlook for the third quarter is favorable as customer demand has remained strong through the first 15 days of July and we aggressively seek product specials from our vendors. For example, we just completed a special purchase for two models of a name brand desktop computer, including one model with a 133MHz Pentium processor priced to sell at $1,399.00," said Zeman. Second quarter gross profit margin grew to 13.5% of net sales versus 12.7% in the second quarter of 1995 and 12.9% in the first quarter of 1996. The increase in gross profit margin is primarily due to increased vendor rebates realized in the second quarter and the expansion of selling margin on certain product lines resulting from opportunistic purchases and pricing strategies. Given that the Company’s gross profit as a percentage of net sales may vary on a quarterly basis based upon product mix, market conditions, the value of the dollar and other factors, there is no certainty that the Company will be able to sustain the gross profit margin at the level achieved in the second quarter. Selling and administrative expense decreased to 7.6% of net sales in the second quarter versus 8.0% in the same quarter of 1995. The decrease relates primarily to a decrease in net advertising expense as a percentage of net sales as well as improved productivity. The decrease was partially offset by charges in the second quarter of 1996 of $315,000 for a co-worker incentive program based on attaining certain financial performance goals and $280,000 for a loss on the trade-in of certain internal computer equipment. Operating margin improved to 6.0% versus 4.7% in the year-ago quarter. "Total PC catalog circulation grew 82% to over 11 million catalogs and Mac catalog circulation decreased 27% to 1.6 million catalogs. We completed the quarter with 256 account managers on the telephones, a net increase of 39 from December 31, 1995," Zeman added. Annualized inventory turnover was approximately 23 times for the three and six months ended June 30, 1996 versus 21 times for the same periods a year ago. Working capital was approximately $108 million with approximately $55 million in cash, cash equivalents and marketable securities. Prepaid expenses and other current assets increased to approximately $1.0 million as of June 30, 1996 and are primarily comprised of paper purchased by the Company for future catalogs and a prepaid insurance premium. "We completed the purchase of the land for our new facility and are moving forward with construction. We plan to break ground for construction within the next 30-60 days and estimate occupancy in the middle of 1997," said Krasny. "We are optimistic that our new facility will provide the capacity to execute our cost-efficient operating model while continuing our growth." The statements in this release concerning the Company’s sales prospects are forward-looking statements that involve certain risks and uncertainties, including the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, in particular, notebook/laptop computers, and continuation of key vendor relationships. CDW Computer Centers, Inc. is a leading direct marketer of brand name microcomputer products. Inbound and outbound account managers are dedicated to providing superior customer service at the best price. 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 place orders and obtain product information by calling a CDW account manager at 1-800-884-4CDW, or by visiting CDW on the Internet at http://www.cdw.com. 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, 1996 1995 Net sales $218,687 $146,160 Cost of sales 189,071 127,645 ---------- ---------- Gross profit 29,616 18,515 Selling and administrative expenses 16,555 11,682 Exit Charge - - ---------- ---------- Income from operations 13,061 6,833 Interest income (expense), net 842 330 Other income (expense) (44) (21) ---------- ---------- Income before income taxes 13,859 7,142 Income tax provision 5,365 2,821 ---------- ---------- Net income $8,494 $4,321 ========== ========== Net income per share* $0.39 $0.21 ========== ========== Weighted average number of common and common equivalent shares outstanding* 21,810 20,742 *All amounts reflect a three-for-two stock split effected in the form of a stock dividend paid on July 15, 1996. Six Months Ended June 30, 1996 1995 Net sales $425,392 $287,516 Cost of sales 369,129 250,687 ---------- ---------- Gross profit 56,263 36,829 Selling and administrative expenses 30,911 23,400 Exit Charge 4,000 - ---------- ---------- Income from operations 21,352 13,429 Interest income (expense), net 1,677 638 Other income (expense) (98) (9) ---------- ---------- Income before income taxes 22,931 14,058 Income tax provision 8,903 5,553 ---------- ---------- Net income $14,028 $8,505 ========== ========== Net income per share* $0.65 $0.41 ========== ========== Weighted average number of common and common equivalent shares outstanding* 21,729 20,726 *All amounts reflect a three-for-two stock split effected in the form of a stock dividend paid on July 15, 1996. CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) June 30, December 31, 1996 1995 ASSETS Current assets: Cash, cash equivalents and Marketable Securities $55,162 $57,169 Accounts receivable, net of alowance for doubtful accounts of $800 and $625, respectively 50,523 38,527 Miscellaneous receivables 2,518 2,362 Merchandise inventory 37,915 27,422 Prepaid expenses and other current assets 984 206 Deferred income taxes 1,543 1,175 ---------- ---------- Total current assets 148,645 126,861 Property and equipment, net 2,862 3,474 Construction in Progress 6,199 - Deferred taxes 3,463 3,625 Deferred income taxes and other assets 3,569 3,560 ---------- ---------- Total assets $161,275 $133,895 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $25,936 $19,436 Accrued expenses and other liabilities 10,958 8,298 Accrued exit costs 4,000 - ---------- ---------- Total current liabilities 40,894 27,734 Stockholders' equity 120,381 106,161 ---------- ---------- Total liabilities and stockholders' equity $161,275 $133,895 ========== ========== 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