Third Quarter 1995 Earnings Release CDW COMPUTER CENTERS ANNOUNCES RECORD SALES AND EARNINGS FOR FOURTH QUARTER OF 1995 "Our continued growth momentum represents significant achievement during a time of major industry developments. The introduction of Microsoft’s Windows 95 operating system affected both product flow and customer demand patterns. Since the August 24th launch of Windows 95, we have seen an increase in overall customer demand and product flow from our vendors. We are optimistic about the sales potential of new products and technologies in the fourth quarter and beyond." --- Michael P. Krasny, CDW’s Chairman and Chief Executive Officer BUFFALO GROVE, Illinois, October 18, 1995 --- CDW Computer Centers, Inc. ("CDW") today announced record sales and earnings for the third quarter and first nine months of 1995, reflecting strong performances by the Company’s MS-DOS/Windows ("PC") and Apple/Macintosh businesses and continued leverage of operating margin. Net sales for the quarter ended September 30, 1995 increased 43% to $161.1 million from $112.4 million in the same period of 1994. Net income totaled $5.3 million, a 53% increase over $3.5 million in the third quarter of 1994. Earnings per share of $0.37 for the third quarter of 1995 increased 48% from $0.25 in the same period of 1994. The weighted average number of shares outstanding increased approximately 3%, primarily as a result of the Company’s issuance of 550,000 shares of common stock in August 1995. Net sales for the nine months ended September 30, 1995 increased 54% to $448.6 million from $292.2 million in the same period of 1994. Net income was $13.8 million, a 72% increase over $8.0 million in the first nine months of 1994. Earnings per share of $0.99 for the first nine months of 1995 increased 62% from $0.61 in the same period of 1994. The weighted average number of shares outstanding increased approximately 6% as a result of the Company’s issuance of 1.1 million and 550,000 shares of common stock in June 1994 and August 1995, respectively. "We are pleased with the strength of our performance during the recent period of transition in the computer industry," said Michael P. Krasny, chairman and chief executive officer. "The introduction of Microsoft’s Windows 95 operating system in late August significantly impacted the third quarter in terms of product flow and patterns of demand. Many buyers delayed their computer and related product purchases until Windows 95 was available. In addition, certain products were not available as manufacturers transitioned to the Windows 95 operating system in their products. Overall, we experienced strong demand for Windows 95, with over 13,000 units sold." CDW processed 253,000 orders in the third quarter of 1995, a 37% increase over the same period in 1994. The average order size increased 5% to $636 from $606 in the comparable period of 1994. Notebooks and laptop computers were CDW’s largest product category by dollar volume in the third quarter of 1995 followed by printers and desktop computers. The gross profit margin of 12.7% was consistent with prior periods and within the Company’s range of expectations, Krasny said. Operating profit margin increased to 5.0 % from 4.8% in the year-ago quarter as continued improvements in employee productivity and the leveraging of the Company’s fixed costs over a higher sales volume more than offset an increase in net advertising expense. "The launch of Windows 95 has initially been strong in both the consumer and business segments of our customer base," said Gregory C. Zeman, president. "The introduction of Windows 95 and related products contributed to a 50 percent increase in software sales in the third quarter. Only two major manufacturers introduced software compatible with Windows 95 in the third quarter. Other software manufacturers are expected to release new software versions in the fourth quarter of 1995 and the first quarter of 1996. Pentium notebook and desktop sales were also strong during the quarter. There were heavy allocations of notebooks and desktops as some manufacturers delayed shipping products until they could include Windows 95. "We were particularly pleased with the growth of our Apple/Macintosh division. Sales grew 26% from the second quarter of 1995, and the division made a positive contribution to earnings in the quarter," Zeman said. "Our marketing strategy for Apple/Macintosh entered a new phase in the quarter. We were able to reduce prospecting catalog mailings and improve our sales due to the increased level of repeat business from existing customers and enhanced product availability." CDW continues to benefit from strong asset management. Annualized inventory turnover declined slightly to approximately 19 for the three months ended September 30, 1995 from 21 in the year-ago period. As of September 30, 1995, working capital was approximately $93 million with approximately $55 million in cash, cash equivalents and marketable securities. CDW had no long-term debt as of September 30, 1995. Looking forward, Krasny said CDW is optimistic about the remainder of 1995. "Focused on our fundamental strengths of customer service, efficient operations, effective asset management and aggressive marketing, we are poised for continued growth momentum in the remainder of 1995 and into 1996. We expect to continue to benefit from the growth of the computer industry and the continuous stream of product innovations." As previously announced, CDW completed a secondary offering of 550,000 newly issued shares of common stock in August. The offering generated approximately $26 million of net proceeds to the Company, which will be used for general corporate purposes, including facility requirements, working capital and possible acquisitions. 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 15,000 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 September 30, 1995 1994 Net sales $161,105 $112,397 Cost of sales 140,706 97,966 ---------- ---------- Gross profit 20,399 14,431 Selling and administrative expenses 12,358 9,002 ---------- ---------- Income from operations 8,041 5,429 Interest income (expense), net 595 177 Other income (expense) 26 57 ---------- ---------- Income before income taxes 8,662 5,663 Income tax provision 3,378 2,214 ---------- ---------- Net income $5,284 $3,449 ========== ========== Net income per share $0.37 $0.25 ========== ========== Weighted average number of common and common equivalent shares outstanding 14,179 13,800 Nine Months Ended September 30, 1995 1994 Net sales $448,621 $292,200 Cost of sales 391,393 254,389 ---------- ---------- Gross profit 57,228 37,811 Selling and administrative expenses 35,758 24,895 ---------- ---------- Income from operations 21,470 12,916 Interest income (expense), net 1,232 143 Other income (expense) 17 118 ---------- ---------- Income before income taxes 22,719 13,177 Income tax provision 8,930 5,151 ---------- ---------- Net income $13,789 $8,026 ========== ========== Net income per share $0.99 $0.61 ========== ========== Weighted average number of common and common equivalent shares outstanding 13,938 13,179 CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except share data) (unaudited) September 30, December 31, 1995 1994 ASSETS Current assets: Cash and cash equivalents $24,233 $2,969 Marketable Securities 30,595 19,595 Accounts receivable, net of alowance for doubtful accounts of $550 and $400, respectively 36,483 23,559 Miscellaneous receivables 2,705 1,300 Merchandise inventory 33,955 23,164 Prepaid and deferred taxes 3,997 641 Other assets 399 175 ---------- ---------- Total current assets 132,367 71,403 Property and equipment, net 3,099 2,904 Deferred taxes 3,285 3,625 Other assets 100 97 ---------- ---------- Total assets $138,851 $78,029 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $33,210 $16,237 Accrued expenses and other liabilities 6,236 5,949 ---------- ---------- Total current liabilities 39,446 22,186 Stockholders' equity 99,405 55,843 ---------- ---------- Total liabilities and stockholders' equity $138,851 $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