Fourth Quarter 1997 Earnings Release January 22, 1998 CDW COMPUTER CENTERS, INC. REPORTS RECORD RESULTS Fourth Quarter Highlights: Eighteenth consecutive quarter of sequential sales growth as a public company 34% growth in net sales Operating income increases 30% Number of customers serviced advances 25% Financial & Operating Data (Reflects 3-for-2 stock split paid July 15, 1996) Three Months 12/31/97 12/31/96 % Change Twelve Months 12/31/97 12/31/96 % Change Net Sales (000's) $350,706 $262,173 34% $1,276,929 $927,895 38% Income from Operations (000's) $ 22,091 $ 16,967 30% $ 80,490 $ 53,603 50% Net Income (000's) $ 13,941 $ 10,693 30% $ 51,001 $ 34,400 48% Basic Earnings Per Share $ 0.65 $ 0.50 30% $ 2.37 $ 1.60 48% Diluted Earnings per Share $ 0.64 $ 0.49 31% $ 2.35 $ 1.58 49% Pro forma - Excluding Exit Charge Income from Operations (000's) $ 81,290 $ 56,803 43% Net Income (000's) $ 51,483 $ 36,352 42% Basic Earnings Per Share $2.39 $1.69 41% Diluted Earnings Per Share $2.37 $1.67 42% Operating Data Number of Orders Shipped 504,092 374,326 35% 1,814,388 1,318,316 38% Average Order Size $ 696 $ 700 (1)% $ 704 $ 704 0% Customers Serviced (000's) 218 174 25% 575 462 24% "Our record fourth quarter results provide a strong finish to a great year. Through the unrelenting efforts of our coworkers, CDW gained market share in 1997 while continuing our track record of profitable growth. As we begin 1998, we are focused on improving the execution of our operating model to attract new customers and enhance service to our existing customers." --- Michael P. Krasny, Chairman and Chief Executive Officer Vernon Hills, Illinois, January 22, 1998 --- CDW Computer Centers, Inc. (Nasdaq: CDWC) today announced record sales and earnings for the fourth quarter and year ended December 31, 1997. Net sales for the fourth quarter increased 34% to $350.7 million from $262.2 million in the same period of 1996. Net income for the quarter rose 30% to $13.9 million from $10.7 million in the fourth quarter of 1996. Diluted earnings per share for the quarter increased 31% to $0.64 in the fourth quarter of 1997 from $0.49 in the same period of 1996. Net sales for the year ended December 31, 1997 increased 38% to $1.277 billion from $927.9 million in the year ended 1996. Net income for the year ended December 31, 1997 rose 48% to $51.0 million from $34.4 million reported in 1996. Diluted earnings per share increased 49% to $2.35 from $1.58 in 1996. Net income in the year ended December 31, 1996 was reduced by a non-recurring charge to pre-tax earnings of $3.2 million. This included a $4.0 million charge for the estimated costs of exiting the Company’s now-vacant Buffalo Grove facility, offset by a related $800,000 reduction in the executive incentive bonus pool. Excluding the impact of the exit charge and its related impact on the executive incentive bonus pool in both years, pro forma net income and diluted earnings per share both increased 42% to $51.5 million and $2.37 per share, respectively, from $36.4 million and $1.67 per share in 1996. All diluted 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. "In the fourth quarter of 1997, our sales grew across all product categories as customers responded to our marketing initiatives and the efforts of our growing team of sales account managers," said Michael P. Krasny, chairman and chief executive officer. "The impact of increases in the number of customers serviced and number of orders shipped, combined with maintaining average order size compared to the prior year, all contributed to the growth in net sales," said Krasny. Printers, desktop computers, memory, video and data storage devices were the fastest growing product categories, based on the percentage increase in dollar sales over the fourth quarter of 1996. Notebook computers were the largest product category at 23% of net sales in the fourth quarter. Unit volumes of notebook and desktop computers were strong with growth rates of 45% and 48%, respectively, over the fourth quarter of 1996. "Our notebook and desktop computer sales are driven by products from top tier computer manufacturers such as Compaq, Hewlett-Packard, IBM and Toshiba. Declining price points and improved performance have increased the universe of customers upgrading their existing systems, while expanding their Internet and network systems capabilities," said Gregory C. Zeman, CDW’s president. Gross profit margin was 13.2% of net sales in the fourth quarter of both 1997 and 1996. The Company’s gross profit as a percentage of net sales may vary on a quarterly basis based upon vendor support programs, product mix, pricing strategies, market conditions and other factors. As a result, there is no certainty that the Company will be able to sustain the gross profit margin levels achieved in recent quarters. Selling and administrative expense as a percentage of net sales increased to 6.9% of net sales in the fourth quarter of 1997 versus 6.7% in the same quarter of 1996, primarily due to an increase in net advertising expense as a percentage of net sales. Annualized inventory turnover was approximately 19 and 21 times, respectively, for the three and twelve months ended December 31, 1997. Working capital as of December 31, 1997 was $167.4 million, including approximately $79.4 million in cash, cash equivalents and marketable securities. The Company recently agreed to purchase approximately 18 acres of vacant land contiguous to its Vernon Hills facility for $4.3 million, subject to certain conditions of closing. "We will have approximately 45 total acres, of which approximately 32 are vacant and available for future expansion. The total expansion capacity provides the ability to operate from a single location, which has been a critical factor in our ability to become the lowest cost operator in the industry," said Krasny. The statements in this release concerning the Company’s future prospects are forward-looking statements that involve certain risks and uncertainties. Such risks and uncertainties include the continued acceptance of the Company’s distribution channel by vendors and customers, the timely availability and acceptance of new products, and continuation of key vendor relationships and support programs. CDW Computer Centers, Inc. (Nasdaq:CDWC) is a leading direct marketer of brand name microcomputer products, primarily to business, government, educational, institutional and home office users in the United States. CDW sells a broad range of brand name microcomputer products, including hardware and peripherals, software, networking products and accessories through knowledgeable telemarketing account managers. Sales of products that utilize, or are compatible with, the Microsoft Windows 95/Windows/Windows NT/MS-DOS operating platforms account for substantially all of the Company’s net sales. Customers can place orders and obtain product information by calling a CDW account manager at 1-800-800-4CDW, or by visiting CDW on the Internet at http://www.cdw.com. For more information about CDW: Visit CDW on the Internet at http://www.cdw.com Contact CDW Investor Relations via the Internet at shserv@admin.cdw.com Or by telephone at 847-419-8234. -TABLES FOLLOW- CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) (unaudited) December 31, 1997 December 31, 1996 ASSETS Cash, cash equivalents and marketable securities $79,425 $74,952 Accounts receivable, net of allowance for doubtful accounts of $1,950 and $1,100, respectively 87,524 57,396 Miscellaneous receivables 3,960 3,931 Merchandise inventory 61,941 41,462 Prepaid expenses and other current assets 759 823 Deferred income taxes 3,587 2,258 Total current assets 237,196 180,822 Property and equipment, net 26,253 3,636 Construction in progress 451 8,659 Deferred income taxes and other assets 5,741 5,713 Total assets $269,641 $198,830 LIABILITIES AND SHAREHOLDER'S EQUITY Current liabilities Accounts payable $44,451 36,642 Accrued expenses and other current liabilities 21,933 16,579 Accrued exit costs 3,391 3,987 Total current liabilities 69,775 57,208 Shareholder's equity 199,866 141,622 Total liabilities and shareholder's equity $269,641 $198,830 CDW COMPUTER CENTERS, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited) Three Months Ended December 31 1997 1996 Net Sales $350,706 $262,173 Cost of Sales 304,481 227,540 Gross profit 46,225 34,633 Selling and administrative expenses 24,134 17,666 Exit charge - - Income from operations 22,091 16,967 Interest income 1,076 896 Other expense (67) (42) Income before income taxes 23,100 17,821 Income tax provision 9,159 7,128 Net income $13,941 $10,693 Earnings per share*   Basic $0.65 $0.50   Diluted $0.64 $0.49 Weighted average number of common and common equivalent shares outstanding*   Basic 21,525 21,525   Diluted 21,701 21,850 *All amounts reflect a three-for-two stock split effected in the form of a stock dividend paid on July 15, 1996. Year Ended December 31 1997 1996 Net Sales $1,276,929 $927,895 Cost of Sales 1,106,124 805,413 Gross profit 170,805 122,482 Selling and administrative expenses 90,315 64,879 Exit charge - 4,000 Income from operations 80,490 53,603 Interest income 4,259 3,469 Other expense (241) (188) Income before income taxes 84,508 56,884 Income tax provision 33,507 22,484 Net income $51,001 $34,400 Earnings per share*   Basic $2.37 $1.60   Diluted $2.35 $1.58 Weighted average common shares outstanding*   Basic 21,525 21,525   Diluted 21,704 21,785 *All amounts reflect a three-for-two stock split effected in the form of a stock dividend paid on July 15, 1996. Traded: Nasdaq: CDWC CDW Computer Centers, Inc. Fleishman-Hillard (Chicago) Harry J. Harczak, Jr. Sharon J. Erikson Chief Financial Officer General Inquiries (847) 419-6226 (312) 751-8878