Third Quarter 1996 Earnings Release OCTOBER 16, 1996 CDW COMPUTER CENTERS, INC. REPORTS RECORD SALES AND EARNINGS Third Quarter Highlights: 49% growth in net sales 83% growth in net income Thirteenth consecutive quarter of sequential sales growth as a public company Operating margin expands to 6.4% of net sales Construction of new facility begins $39,836 Financial & Operating Data* Three Months 09/30/96 09/30/95 % Change Nine Months 09/30/96 09/30/95 % Change Net Sales (000’s) $240,330 $161,105 49% $665,772 $448,621 48% Income from Operations (000’s) $15,284 $8,041 90% $36,636 $21,470 71% Net Income (000’s) $9,679 $5,284 83% $23,707 $13,789 72% Net Income Per Share 0.44 0.25 76% 1.09 0.66 65% O/S Shares 21,832 21,269 3% 21,763 20,907 4% Pro forma - Excluding Exit Charge Income from Operations (000’s) $21,470 86% Net Income (000’s) 25,659 13,789 86% Net Income Per Share 1.18 0.66 79% Operating Data Number of Orders Shipped (000's) 342 253 35% 944 713 32% Average Order Size $702 $636 10% $705 $630 12% Catalogs Mailed (000's) 12,695 7,640 66% 38,507 23,532 64% PC 10,962 6,248 75% 33,435 18,364 82% MAC 1,733 1,392 24% 5,072 5,168 (2)% Customers Serviced (000's) 161 123 31% 358 284 26% Customers Serviced - TTM (000's) 444 351 26% Pages of National Advertising Placed 173 161 7% 482 396 22% " Our continuing sequential sales and profit growth is a tribute to the tireless efforts of our co-workers who continue to find innovative methods of attracting, servicing and retaining our customers in a cost-effective manner. We will continue to pay attention to building a stronger model and not dwell on our success to date. " --- Michael P. Krasny, Chairman and Chief Executive Officer Buffalo Grove, Illinois, October 16, 1996 --- CDW Computer Centers, Inc. ("CDW") today announced record sales and accelerated earnings for the third quarter and nine months ended September 30, 1996. Net sales for the third quarter increased 49% to $240,330,000 from $161,105,000 in the same period of 1995. Net income totaled $9,679,000, an 83% increase over $5,284,000 in the third quarter of 1995. Earnings per share of $.44 for the third quarter of 1996 increased 76% from $.25 in the same period of 1995. Net sales for the nine months ended September 30, 1996 increased 48% to $665,722,000 from $448,621,000 in the same period of 1995. Net income for the nine months ended September 30, 1996 was $23.7 million, a 72% increase over $13.8 million reported in the first nine months of 1995. Net income in the 1996 period 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 $1.09 increased 65% from $.66 in the first nine months of 1995. Pro forma net income and earnings per share for the nine months ended September 30, 1996, excluding the impact of the exit charge, were $25.7 million and $1.18 per share, representing increases of 86% and 79%, respectively, over the first nine months 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. "We continue to experience strong demand as our customer base transitions to new technologies and faster processing speeds. Our marketing and sales efforts resulted in the number of customers serviced growing 27% to 444,000 for the trailing twelve months ended September 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. This demand is driven, in part, by customers adopting new 32 bit software architecture which requires faster processors, more memory and additional storage capacity, " said Gregory C. Zeman, CDW’s president. "The introduction of Windows 95 in the third quarter of 1995 did not have a significant impact on our third quarter comparisons." "The sales outlook for the fourth quarter is favorable as customer demand has remained strong through the first 15 days of October. We recently received authorization to direct market the Compaq Presario and Hewlett-Packard Vectra 500 lines, which should augment our desktop offerings as we move into the fourth quarter. Additionally, we continue to aggressively seek opportunistic buys from our vendors such as a 75 MHz desktop computer with a 630 MB hard drive currently offered for $649.00," said Zeman. Third quarter gross profit margin was 13.1% of net sales versus 12.7% in the third quarter of 1995 and 13.5% in the second quarter of 1996. The Company’s gross profit as a percentage of net sales may vary on a quarterly basis based upon product mix, market conditions, vendor support programs, the value of the dollar and other factors. As a result, there is no certainty that the Company will be able to sustain the gross profit margin at the levels achieved in recent quarters. Selling and administrative expense decreased to 6.8% of net sales in the third quarter versus 7.7% in the same quarter of 1995. The decrease relates primarily to a decrease in net advertising expense as a percentage of net sales. The improvement in net advertising expense is due to the combined effect of improved productivity of our marketing efforts, thereby reducing gross advertising expense as a percentage of net sales, and increased cooperative advertising reimbursements from vendors. Operating margin improved to 6.4% versus 5.0% in the year-ago quarter. The Company plans to increase marketing efforts in future quarters which may result in an increase in net advertising expense as a percentage of net sales and lower operating margins than that achieved in the third quarter of 1996. "Total catalog circulation grew 66% to over 12 million catalogs for the three months ended September 30, 1996 versus the same period in the prior year, while declining slightly from the second quarter of 1996. We are pleased with the improved productivity of our marketing activities and plan to expand those activities to drive future growth," Zeman added. Annualized inventory turnover was approximately 20 and 21 times for the three and nine months ended September 30, 1996, respectively, versus 19 and 18 times for the same periods a year ago. Working capital as of September 30, 1996 was approximately $116 million with approximately $66 million in cash, cash equivalents and marketable securities. Prepaid expenses and other current assets of approximately $1.1 million as of September 30, 1996 are primarily comprised of paper purchased by the Company for future catalogs and prepaid insurance premiums. "We broke ground in early September on the construction of our new warehouse, distribution, telemarketing and corporate office facility which should be ready for occupancy in the third quarter of 1997," said Krasny. "Our new facility should provide the capacity necessary 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. The statement in this release concerning future advertising expense is a forward looking statement that involves certain uncertainties including the ability to identify cost-effective incremental advertising and marketing programs. 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 BALANCE SHEETS (in thousands) (unaudited) September 30, 1996 December 31, 1995 ASSETS Cash, cash equivalents and marketable securites $65,500 $57,169 Accounts receivable, net of allowance for doubtful accounts of $950 and $625, respectively 55,359 38,527 Miscellaneous receivables 2,575 2362 Merchandise inventory 46,000 27,422 Prepaid expenses and other current assets 1,146 206 Deferred income taxes 1,543 1,175 Total current assets 172,123 126,861 Property and equipment, net 3,385 3,474 Construction in progress 6,853 - Deferred income taxes and other assets 3,571 3,560 Total assets 185,932 133,895 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Accounts payable 7,932 19,436 Accrued expenses and other current liabilities 13,851 8,298 Accrued exit costs 3,987 - Total current liabilities 55,770 27,734 Shareholder's equity 130,162 106,161 Total liabilities and shareholder's equity 185,932 133,895 CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three Months Ended September 30 1996 1995 Net Sales $240,330 $161,105 Cost of Sales 208,744 140,706 Gross profit 31,586 20,399 Selling and administrative expenses 16,302 12,358 Exit charge - - Income from operations 15,284 8,041 Interest income, net 896 595 Other income (48) 26 Income before income taxes 16,132 8,662 Income tax provision 6,453 3,378 Net income 9,679 5,284 Net income per share* 0.44 0.25 Weighted average number of common and common equivalent shares outstanding* 21,832 21,269 Nine Months Ended Septemer 30 1996 1995 Net Sales $665,722 $448,621 Cost of Sales 577,873 391,393 Gross profit 87,849 57,228 Selling and administrative expenses 47,213 35,758 Exit charge 4,000 - Income from operations 36,636 21,470 Interest income, net 2,573 1,232 Other income (146) 17 Income before income taxes 39,063 22,719 Income tax provision 15,356 8,930 Net income 23,707 13,789 Net income per share* 1.09 0.66 Weighted average number of common and common equivalent shares outstanding* 21,763 20,907 * All amounts reflect a three-for-two stock split effected in the form of a stock dividend paid on July 15, 1996. 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