CDW Computer Centers, Inc. Reports 15 Percent Growth in Net Income And 14 Percent Growth in Sales for First Quarter

Apr 18, 2001, 01:00 ET from CDW Computer Centers, Inc.

    VERNON HILLS, Ill., April 18 /PRNewswire/ -- CDW Computer Centers, Inc.
 (Nasdaq:   CDWC) today announced first quarter 2001 net sales of $987 million,
 up 14 percent from first quarter 2000.  Earnings per share for the first
 quarter were $0.45, up 15 percent from 2000.
 
     First Quarter Highlights:
     -- Earnings per share increases 15 percent
     -- 14 percent growth in net sales
     -- Direct Web sales increase 108 percent to $151 million
     -- Sales account managers grow 43 percent to 1,170
     -- Active commercial customers increase 17 percent to 164,000
     -- Ranked No. 435 in the Fortune 500
 
     "We are pleased that we have been able to grow both sales and earnings in
 a declining market environment.  Fueling our growth is CDW's diverse product
 mix, with particular strength in the software and data storage categories.
 Our aggressive marketing and sales efforts are generating growth in the number
 of active commercial customers.  The strength of our commercial customer base
 should enable us to accelerate growth and continue to gain market share when
 economic conditions improve." John A. Edwardson, CDW's president and CEO.
     Net sales for the first quarter increased 14 percent to $987.2 million
 from $864.0 million in the same period of 2000.  Net income for the quarter
 rose 15 percent to $40.5 million from $35.3 million in the first quarter of
 2000.  Diluted earnings per share increased 15 percent to $0.45 in the first
 quarter of 2001 from $0.39 in the same period of 2000.  All earnings per share
 amounts reflect the 2-for-1 stock split effected in the form of a stock
 dividend, which was paid on June 21, 2000.
     "Our solid performance, despite the difficult environment for technology
 sales during the quarter, results from our core business-to-business
 strategy," said John A. Edwardson, CDW's president and chief executive
 officer.  "Key growth drivers include our diverse commercial customer base,
 which grew 17 percent over the prior year to more than 164,000, and our
 diverse product mix."
     Software, data storage devices, printers, input devices and video products
 were the fastest-growing product categories, all with sales growth rates
 exceeding 20 percent versus the first quarter of 2000.  Software was the
 Company's largest product category at 16 percent of net sales, a growth rate
 of more than 54%.  The desktop computer product line, which includes servers,
 increased 7 percent.  Notebook sales decreased 22 percent in net sales
 dollars.  "As overall demand for CPU product lines has lagged, we have
 experienced strength in the software, data storage and peripheral categories
 as customers seek to maximize productivity of their existing investment in IT
 infrastructure," said Gregory Zeman, CDW's vice chairman.
     Zeman added, "Our sales account manager base as of March 31, 2001 was
 1,170, a 43 percent increase from March 31, 2000.  Currently, we plan to
 increase the number of account managers to 1,350-1,400 by the end of 2001;
 however, we will adjust our hiring as business conditions dictate."
     "Our e-business strategy coupled with our relationship-based selling,
 enhances the transaction process with our customers and produces impressive
 results.  First quarter direct Web sales were $150.6 million, a 108 percent
 increase over the first quarter of 2000 and a 21 percent increase over the
 fourth quarter of 2000.  More importantly, approximately 65% of our sales were
 generated from the more than 91,000 active users of CDW@work(TM), our
 custom-tailored Web site program," said Zeman.
     Gross profit margin was 13.2 percent of net sales in the first quarter of
 2001, up 0.6 as a percent of net sales from the prior year quarter.  The
 Company's gross profit as a percentage of net sales may vary on a quarterly
 basis based upon vendor support programs, including inventory price protection
 policies, 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 the first quarter.
     Selling and administrative expenses, as a percentage of net sales,
 increased to 6.8 percent in the first quarter of 2001 from 6.1 percent in the
 same period of 2000.  The primary reasons for the change were increased
 payroll, occupancy and, to a lesser extent, bad debt expenses, partially
 offset by a decrease in net advertising expense, all as a percentage of net
 sales.  On a forward-looking basis, selling and administrative costs may
 increase as a percentage of net sales due to investments in new facilities,
 new sales account managers, marketing initiatives and potentially lower
 advertising expense reimbursements from vendors, coupled with a slower rate of
 sales growth.
     Working capital as of March 31, 2001 was $532.6 million, including
 approximately $214.1 million in cash, cash equivalents and marketable
 securities.  During the first quarter, the Company initiated its previously
 announced 5 million share buyback program and bought 1,895,000 shares of its
 common stock at an aggregate purchase price of $71.4 million.
     "On a forward looking basis, management believes that cautious assumptions
 as to the rate of sales and earnings growth are appropriate," said Edwardson.
 "Our business customers are impacted by the economic slowdown and accordingly
 have reduced IT spending levels.  Based upon our current level of sales per
 day, we project net sales for the second quarter 2001 in the range of
 $970 million to $1.009 billion, a growth rate between 3 percent and 7 percent
 compared to the second quarter 2000.  The ability to achieve the estimated
 sales growth rate is clouded by uncertainties related to economic conditions
 and IT spending levels.  Earnings per share for the second quarter 2001 are
 currently projected to be $0.40 to $0.42 per diluted share.  Actual earnings
 per share could differ significantly from this earnings guidance if we do not
 meet the sales estimate or if gross margins decrease as a percentage of sales
 from our historical experience.  Earnings are expected to grow at a slower
 rate than sales due to a higher expense base primarily related to occupancy
 and payroll costs.  Although customers are spending less, our growth in active
 commercial accounts demonstrates that we are continuing to gain market share
 in a very difficult business environment.  Management believes that our
 unwavering focus on customer service, our highly automated business processes,
 our strong financial position and our low-cost operating model will serve us
 well during these uncertain economic times."
 
     The statements in this release concerning the Company's sales growth,
 gross margin percentage and selling and administrative costs, projected
 earnings per share and other statements of a non-historical basis (including
 statements regarding implementing strategies for future growth, the ability of
 the Company to sustain its model of profitable growth and the expected
 benefits of the Company's e-Business strategy) 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,
 continuation of key vendor relationships and support programs, changes and
 uncertainties in economic conditions that could affect the rate of IT spending
 by our customers, changes in pricing by our vendors, and the ability of the
 Company to hire and retain qualified account managers.  Additional discussion
 regarding these and other factors affecting the Company's business and
 prospects is contained in the Company's periodic filings with the Securities
 and Exchange Commission.
 
     About CDW Computer Centers, Inc.
     CDW(R) (Nasdaq:   CDWC), ranked No. 435 on the FORTUNE 500, offers complete,
 customized technology solutions for businesses, government agencies and
 educational institutions nationwide.  CDW is a leading source of technology
 products and services from companies such as Cisco, Compaq, Hewlett-Packard,
 IBM, Microsoft, Sony, Toshiba and other top name brands.  CDW was founded in
 1984 as a home-based business and today employs more than 2,700 coworkers
 whose efforts generated net sales of $3.8 billion in 2000.  CDW's direct model
 offers one-on-one relationships with highly trained account managers;
 purchasing via telephone, the award-winning www.cdw.com Web site, and
 customized CDW@work extranets; custom configured solutions and same day
 shipping; flexible financing solutions; and, telephone and online technical
 support with its factory-trained and A+ certified technicians.  Additional
 information can be found by visiting www.cdw.com .
     A live Web cast of CDW's management discussion of the first quarter will
 be available on www.streetevents.com .  The Web cast will begin today, April
 18, 2001 at 5:00 pm EDT.  An audio replay of the call will be available on
 www.streetevents.com until April 26, 2001.
 
     For more information about CDW:
     Visit CDW on the Internet at http://www.cdw.com
     Contact CDW Investor Relations via the Internet at
      investorrelations@cdw.com
     Or by telephone at 847-419-8234.
 
 
                    CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (in thousands, except per share data)
                                    (unaudited)
 
                                                           Three Months
                                                         Ended March 31,
                                                       2001          2000
 
     Net sales                                       $987,245       $863,988
 
     Cost of sales                                    857,126        754,775
 
     Gross profit                                     130,119        109,213
 
     Selling and administrative expenses               63,843         48,213
 
     Net advertising expenses                           2,813          4,152
 
     Income from operations                            63,463         56,848
 
     Interest income                                    3,824          1,755
 
     Other expense                                       (106)          (175)
 
     Income before income taxes                        67,181         58,428
 
     Income tax provision                              26,705         23,137
 
     Net income                                       $40,476        $35,291
 
     Earnings per share
       Basic                                            $0.47          $0.41
       Diluted                                          $0.45          $0.39
 
     Weighted average number of common shares
      outstanding
       Basic                                           86,194         86,574
       Diluted                                         89,089         89,452
 
 
 
                    CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (in thousands)
                                    (unaudited)
 
                                                    March 31,     December 31,
                                                      2001            2000
     ASSETS
 
     Current assets :
       Cash, cash equivalents and marketable
        securities                                   $214,109       $202,621
       Accounts receivable, net of allowance
        for doubtful accounts of $8,000 and
        $7,000, respectively                          328,276        337,424
       Merchandise inventory                          153,297        110,202
       Miscellaneous receivables                       11,371         13,442
       Deferred income taxes                            6,736          6,736
       Prepaid expenses and other assets                3,396          3,458
 
         Total current assets                         717,185        673,883
 
     Property and equipment, net                       65,030         61,966
     Investment in and advances to joint venture        6,743          5,804
     Deferred income taxes and other assets             6,438          6,784
 
         Total assets                                $795,396       $748,437
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities :
       Accounts payable                              $121,931        $56,081
       Accrued expenses and other current
        liabilities                                    60,884         54,243
       Accrued exit costs                               1,736          1,862
 
         Total current liabilities                    184,551        112,186
 
     Shareholders' equity                             610,845        636,251
 
         Total liabilities and shareholders'
          equity                                     $795,396       $748,437
 
 

SOURCE CDW Computer Centers, Inc.
    VERNON HILLS, Ill., April 18 /PRNewswire/ -- CDW Computer Centers, Inc.
 (Nasdaq:   CDWC) today announced first quarter 2001 net sales of $987 million,
 up 14 percent from first quarter 2000.  Earnings per share for the first
 quarter were $0.45, up 15 percent from 2000.
 
     First Quarter Highlights:
     -- Earnings per share increases 15 percent
     -- 14 percent growth in net sales
     -- Direct Web sales increase 108 percent to $151 million
     -- Sales account managers grow 43 percent to 1,170
     -- Active commercial customers increase 17 percent to 164,000
     -- Ranked No. 435 in the Fortune 500
 
     "We are pleased that we have been able to grow both sales and earnings in
 a declining market environment.  Fueling our growth is CDW's diverse product
 mix, with particular strength in the software and data storage categories.
 Our aggressive marketing and sales efforts are generating growth in the number
 of active commercial customers.  The strength of our commercial customer base
 should enable us to accelerate growth and continue to gain market share when
 economic conditions improve." John A. Edwardson, CDW's president and CEO.
     Net sales for the first quarter increased 14 percent to $987.2 million
 from $864.0 million in the same period of 2000.  Net income for the quarter
 rose 15 percent to $40.5 million from $35.3 million in the first quarter of
 2000.  Diluted earnings per share increased 15 percent to $0.45 in the first
 quarter of 2001 from $0.39 in the same period of 2000.  All earnings per share
 amounts reflect the 2-for-1 stock split effected in the form of a stock
 dividend, which was paid on June 21, 2000.
     "Our solid performance, despite the difficult environment for technology
 sales during the quarter, results from our core business-to-business
 strategy," said John A. Edwardson, CDW's president and chief executive
 officer.  "Key growth drivers include our diverse commercial customer base,
 which grew 17 percent over the prior year to more than 164,000, and our
 diverse product mix."
     Software, data storage devices, printers, input devices and video products
 were the fastest-growing product categories, all with sales growth rates
 exceeding 20 percent versus the first quarter of 2000.  Software was the
 Company's largest product category at 16 percent of net sales, a growth rate
 of more than 54%.  The desktop computer product line, which includes servers,
 increased 7 percent.  Notebook sales decreased 22 percent in net sales
 dollars.  "As overall demand for CPU product lines has lagged, we have
 experienced strength in the software, data storage and peripheral categories
 as customers seek to maximize productivity of their existing investment in IT
 infrastructure," said Gregory Zeman, CDW's vice chairman.
     Zeman added, "Our sales account manager base as of March 31, 2001 was
 1,170, a 43 percent increase from March 31, 2000.  Currently, we plan to
 increase the number of account managers to 1,350-1,400 by the end of 2001;
 however, we will adjust our hiring as business conditions dictate."
     "Our e-business strategy coupled with our relationship-based selling,
 enhances the transaction process with our customers and produces impressive
 results.  First quarter direct Web sales were $150.6 million, a 108 percent
 increase over the first quarter of 2000 and a 21 percent increase over the
 fourth quarter of 2000.  More importantly, approximately 65% of our sales were
 generated from the more than 91,000 active users of CDW@work(TM), our
 custom-tailored Web site program," said Zeman.
     Gross profit margin was 13.2 percent of net sales in the first quarter of
 2001, up 0.6 as a percent of net sales from the prior year quarter.  The
 Company's gross profit as a percentage of net sales may vary on a quarterly
 basis based upon vendor support programs, including inventory price protection
 policies, 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 the first quarter.
     Selling and administrative expenses, as a percentage of net sales,
 increased to 6.8 percent in the first quarter of 2001 from 6.1 percent in the
 same period of 2000.  The primary reasons for the change were increased
 payroll, occupancy and, to a lesser extent, bad debt expenses, partially
 offset by a decrease in net advertising expense, all as a percentage of net
 sales.  On a forward-looking basis, selling and administrative costs may
 increase as a percentage of net sales due to investments in new facilities,
 new sales account managers, marketing initiatives and potentially lower
 advertising expense reimbursements from vendors, coupled with a slower rate of
 sales growth.
     Working capital as of March 31, 2001 was $532.6 million, including
 approximately $214.1 million in cash, cash equivalents and marketable
 securities.  During the first quarter, the Company initiated its previously
 announced 5 million share buyback program and bought 1,895,000 shares of its
 common stock at an aggregate purchase price of $71.4 million.
     "On a forward looking basis, management believes that cautious assumptions
 as to the rate of sales and earnings growth are appropriate," said Edwardson.
 "Our business customers are impacted by the economic slowdown and accordingly
 have reduced IT spending levels.  Based upon our current level of sales per
 day, we project net sales for the second quarter 2001 in the range of
 $970 million to $1.009 billion, a growth rate between 3 percent and 7 percent
 compared to the second quarter 2000.  The ability to achieve the estimated
 sales growth rate is clouded by uncertainties related to economic conditions
 and IT spending levels.  Earnings per share for the second quarter 2001 are
 currently projected to be $0.40 to $0.42 per diluted share.  Actual earnings
 per share could differ significantly from this earnings guidance if we do not
 meet the sales estimate or if gross margins decrease as a percentage of sales
 from our historical experience.  Earnings are expected to grow at a slower
 rate than sales due to a higher expense base primarily related to occupancy
 and payroll costs.  Although customers are spending less, our growth in active
 commercial accounts demonstrates that we are continuing to gain market share
 in a very difficult business environment.  Management believes that our
 unwavering focus on customer service, our highly automated business processes,
 our strong financial position and our low-cost operating model will serve us
 well during these uncertain economic times."
 
     The statements in this release concerning the Company's sales growth,
 gross margin percentage and selling and administrative costs, projected
 earnings per share and other statements of a non-historical basis (including
 statements regarding implementing strategies for future growth, the ability of
 the Company to sustain its model of profitable growth and the expected
 benefits of the Company's e-Business strategy) 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,
 continuation of key vendor relationships and support programs, changes and
 uncertainties in economic conditions that could affect the rate of IT spending
 by our customers, changes in pricing by our vendors, and the ability of the
 Company to hire and retain qualified account managers.  Additional discussion
 regarding these and other factors affecting the Company's business and
 prospects is contained in the Company's periodic filings with the Securities
 and Exchange Commission.
 
     About CDW Computer Centers, Inc.
     CDW(R) (Nasdaq:   CDWC), ranked No. 435 on the FORTUNE 500, offers complete,
 customized technology solutions for businesses, government agencies and
 educational institutions nationwide.  CDW is a leading source of technology
 products and services from companies such as Cisco, Compaq, Hewlett-Packard,
 IBM, Microsoft, Sony, Toshiba and other top name brands.  CDW was founded in
 1984 as a home-based business and today employs more than 2,700 coworkers
 whose efforts generated net sales of $3.8 billion in 2000.  CDW's direct model
 offers one-on-one relationships with highly trained account managers;
 purchasing via telephone, the award-winning www.cdw.com Web site, and
 customized CDW@work extranets; custom configured solutions and same day
 shipping; flexible financing solutions; and, telephone and online technical
 support with its factory-trained and A+ certified technicians.  Additional
 information can be found by visiting www.cdw.com .
     A live Web cast of CDW's management discussion of the first quarter will
 be available on www.streetevents.com .  The Web cast will begin today, April
 18, 2001 at 5:00 pm EDT.  An audio replay of the call will be available on
 www.streetevents.com until April 26, 2001.
 
     For more information about CDW:
     Visit CDW on the Internet at http://www.cdw.com
     Contact CDW Investor Relations via the Internet at
      investorrelations@cdw.com
     Or by telephone at 847-419-8234.
 
 
                    CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF INCOME
                       (in thousands, except per share data)
                                    (unaudited)
 
                                                           Three Months
                                                         Ended March 31,
                                                       2001          2000
 
     Net sales                                       $987,245       $863,988
 
     Cost of sales                                    857,126        754,775
 
     Gross profit                                     130,119        109,213
 
     Selling and administrative expenses               63,843         48,213
 
     Net advertising expenses                           2,813          4,152
 
     Income from operations                            63,463         56,848
 
     Interest income                                    3,824          1,755
 
     Other expense                                       (106)          (175)
 
     Income before income taxes                        67,181         58,428
 
     Income tax provision                              26,705         23,137
 
     Net income                                       $40,476        $35,291
 
     Earnings per share
       Basic                                            $0.47          $0.41
       Diluted                                          $0.45          $0.39
 
     Weighted average number of common shares
      outstanding
       Basic                                           86,194         86,574
       Diluted                                         89,089         89,452
 
 
 
                    CDW COMPUTER CENTERS, INC. AND SUBSIDIARIES
                       CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (in thousands)
                                    (unaudited)
 
                                                    March 31,     December 31,
                                                      2001            2000
     ASSETS
 
     Current assets :
       Cash, cash equivalents and marketable
        securities                                   $214,109       $202,621
       Accounts receivable, net of allowance
        for doubtful accounts of $8,000 and
        $7,000, respectively                          328,276        337,424
       Merchandise inventory                          153,297        110,202
       Miscellaneous receivables                       11,371         13,442
       Deferred income taxes                            6,736          6,736
       Prepaid expenses and other assets                3,396          3,458
 
         Total current assets                         717,185        673,883
 
     Property and equipment, net                       65,030         61,966
     Investment in and advances to joint venture        6,743          5,804
     Deferred income taxes and other assets             6,438          6,784
 
         Total assets                                $795,396       $748,437
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current liabilities :
       Accounts payable                              $121,931        $56,081
       Accrued expenses and other current
        liabilities                                    60,884         54,243
       Accrued exit costs                               1,736          1,862
 
         Total current liabilities                    184,551        112,186
 
     Shareholders' equity                             610,845        636,251
 
         Total liabilities and shareholders'
          equity                                     $795,396       $748,437
 
 SOURCE  CDW Computer Centers, Inc.