CDW 2002 Annual Report Download

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CDW Annual Report 2002

Table of contents

  • Page 1
    CDW Annual Report 2002

  • Page 2
    Cont ent s Chairman' s Letter ...2 Commitment to Cow orkers ...5 Commitment to Customers ...6 Commitment to Performance ...10 Financial Statements ...13 Report of Independent Accountants Board of Directors and Officers ...32 ...33 ...34 Corporate and Shareholder Information

  • Page 3
    ... • Nasdaq-100 Index • 100 Best Companies to Work for in America (FORTUNE magazine) ® Cash, cash equivalents & marketable securities Shareholders' equity $ $ 505 924 $ $ 394 779 28% 19% Active Commercial Customers (thousands) Net Sales ($ billions) Net Income ($ millions) Earnings per...

  • Page 4
    ... delivery costs drop as fast or faster than unit prices. But we must do this while maintaining the best service levels in the industry. Our coworkers continue to find wonderful ways to improve service while improving productivity, giving customers T he R ight Technology, R ight Aw ay. 2 CDW 2002

  • Page 5
    ... distribution center and the corporate sales force. Thank you for your continued confidence and support of CDW. John A. Edwardson Chairm an and Chief Ex ecutive O fficer CDW Executive Committee pictured below and on opposite page. Doug Eckrot e Art Friedson Chris Leahy Jon St evens CDW 2002 3

  • Page 6
    ... agents, managers, and executives at each of the corporate and public sector organizations that rely on CDW for their technology needs. From sales, training, marketing, and coworker services to purchasing, operations, information technology, and finance, each department touches the customer...

  • Page 7
    ...From All of O ur Customers." Another cornerstone of CDW's culture is a strict adherence to ethical business conduct. Our unyielding focus on using sound business practices, grounded in honesty and integrity, continues to support the values upon which the company was founded. Our code of conduct, The...

  • Page 8
    ...'s cust omers represent a diverse cross sect ion of American business, w e f ocus on smallt o mid-sized businesses, assist large businesses as a secondary or t ert iary supplier, and serve public sect or account s in t he f ederal, st at e and local government and educat ional market s. 6 CDW 2002

  • Page 9
    ...maximize their career development. CDW's sales structure has evolved through the addition of higher end product and service offerings. When a customer requires in-depth knowledge of complex technology solutions, a CDW product category specialist is available to support the account manager. More than...

  • Page 10
    ..., inside sales support, and contract management specialists to meet the needs of this growing customer segment. These sales teams are supported by specialized sales training programs as well as customized marketing initiatives. CDW • G's field sales team actively calls on public sector customers...

  • Page 11
    ...year, our Web sites a ver a ged m o r e t h a n 90,000 visitors per day. " I have a great w orking relationship w ith CDW • G. M y account manager gets me prompt quotes, timely delivery of my orders, and goes out of his w ay to address technical support issues. CDW • G customer service has made...

  • Page 12
    W i t h a d i ver se cu st o m er b ase, cl o se cu st o m er r el at i o n sh i p s, a broad product mix, skilled account managers, a f ocused market ing st rat egy, indust ry leading part ners, and an eff icient dist ribut ion cent er, CDW h as est ab l i sh ed t h e f o u n d at i o n f o r st r ...

  • Page 13
    ... the time needed for CDW to receive and stock product, update p r o d u ct sp ecifica t io n s, a n d p r o vid e vo lu m e p u r ch a se discounts to customers. To further enhance purchasing and marketing communications with partners, we developed PartnerNet. This program offers extranets for CDW...

  • Page 14
    ...R ight Technology, R ight Aw ay . Getting I.T. Right by preparing for the future. As a leading provider of technology, CDW will continue to evaluate and promote innovative products and services. During 2002, we expanded our product line with additional mobile wireless, security and high-end storage...

  • Page 15
    ... estimated costs associated w ith vacating the Company's leased facility. See Note 7 of Notes to Consolidated Financial Statements. Commercial customers is defined as public sector and corporate customers excluding consumers. Return on shareholders' equity is calculated as net income for the period...

  • Page 16
    ... direct marketer of multi-brand computers and related technology products and services in the United States. Our primary business is conducted from a combined corporate office and distribution center located in Vernon Hills, Illinois, sales offices in M ettaw a and Chicago, Illinois, and a sales...

  • Page 17
    ...our total sales for 2002. The grow th in our public sector segment is due in part to focused sales and marketing efforts in the federal, state and local government and educational institution markets. M ettaw a, IL Net advertising expense decreased to $4.0 million in 2002, compared to $5.5 million...

  • Page 18
    ..., state and local government and educational institution markets and the fact that these customers did not reduce I.T. budgets as severely as those in the corporate markets. The average selling price of desktop computers decreased 17.9% , servers decreased 24.2% and notebook computers decreased 18...

  • Page 19
    ... leasing company. Subsequent to December 31, 2002, FIRSTCORP w as acquired by IFC Credit Corporation. We use the equity method to account for our investment in CDW-L. Effective M ay 1, 2002, w e decided to stop originating new leases w ith this venture and began to refer customers to independent...

  • Page 20
    ...shareholder and a Director of the Company; Gregory C. Zeman, a Director and then Vice Chairman of the Company; and Daniel B. Kass, then an Executive Vice President and a Director of the Company, sold 10,562,500 shares of common stock through a secondary public offering at a price of $40.00 per share...

  • Page 21
    ...thousands) December 31, 2002 2001 Assets Current assets: Cash and cash equivalents M arketable securities Accounts receivable, net of allow ance for doubtful accounts of $10,500 ...accompanying notes are an integral part of the consolidated financial statements. Financial Information CDW 2002 19

  • Page 22
    ...(in thousands, except per share data) Years Ended December 31, 2002 Net sales Cost of sales Gross profit $ 4,264,579 3,700,744 563,835 2001 $ 3,961,545 3,434,510 527,035 2000 $ 3,842,452 3,352,609 489,843 Selling and administrative expenses Net advertising expense Income from operations 261,611...

  • Page 23
    ... 31, 2001 M PK Restricted Stock Plan forfeitures Amortization of unearned compensation Exercise of stock options Tax benefit from stock option and restricted stock transactions Purchase of treasury shares Net income Net unrealized gains on marketable securities Comprehensive income 778,657 - 1,072...

  • Page 24
    ... activities: Net income Adjustments to reconcile net income to net cash provided by operating activities: Depreciation Accretion of marketable securities Stock-based compensation expense Allow ance for doubtful accounts Deferred income taxes Tax benefit from stock transactions Changes in assets and...

  • Page 25
    ... located in Vernon Hills, Illinois, sales offices in M ettaw a and Chicago, Illinois, and a sales office in Lan sd o w n e, Virg in ia. A d d it io n ally, w e m arket an d sell p ro d u ct s t h ro u g h CDW.com and CDWG.com , our Web sites. We extend credit to corporate and public sector customers...

  • Page 26
    ... for general corporate purposes, including issuances under various employee stock option plans. We account for the treasury shares using the cost method. Advertising Recently Issued Accounting Pronouncements Advertising costs are charged to expense in the period incurred. Cooperative reimbursements...

  • Page 27
    ...Holding Gains Losses Security Type December 31, 2002 Available-for-sale: M unicipal bonds Total available-for-sale Held-to-maturity: U.S. Government and Government agency securities Corporate fixed income securities Total held-to-maturity Total marketable securities Estimated Fair Value Amortized...

  • Page 28
    ...2000 6. Trade Financing Agreements We have entered into security agreements w ith certain financial institutions (" Flooring Companies" ) in order to facilitate the purchase of inventory from various suppliers under certain terms and conditions. The agreements allow for a maximum credit line of $84...

  • Page 29
    ... forfeited Balance at December 31, 2001 2002 Current: Accounts receivable Payroll and benefits M erchandise inventory Accrued expenses Subtotal current Non-current: Employee stock plans Exit charge Property and equipment Other Subtotal non-current Net deferred tax asset 5,014 489 174 825 6,502 $ 18...

  • Page 30
    ... per share amounts): 2002 Net income, as reported Add stock-based employee compensation expense included in reported net income, net of related tax effects Deduct total stock-based employee compensation expense determined under fair value based method for all aw ards, net of related tax effects...

  • Page 31
    ... The options w ere all outstanding at December 31, 2002 and 2001, respectively. Total 11. Profit Sharing and 401(k) Plan We have a profit sharing plan that includes a salary reduction feature established under the Internal Revenue Code Section 401(k) covering substantially all employees. Company...

  • Page 32
    ...brand computers and related technology products and services, primarily through direct marketing. We have tw o operating segments: corporate, which is primarily comprised of business customers, but also includes consumers, and public sector, w hich is comprised of federal, state and local government...

  • Page 33
    ... qualified account managers and any additional factors described from time to time in the Company's filings w ith the Securities and Exchange Commission. These among other factors are discussed in further detail in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2002...

  • Page 34
    ..., auditing, internal controls and financial reporting matters. John A. Edw ardson Chairman and Chief Executive Officer Barbara A. Klein Senior Vice President and Chief Financial Officer Report of Independent Accountants The Board of Directors CDW Computer Centers, Inc. Vernon Hills, Illinois In...

  • Page 35
    ...Executive Vice President - Sales James R. Shanks* Executive Vice President President, CDW Government, Inc. Douglas E. Eckrote* Senior Vice President - Purchasing and Operations Barbara A. Klein* Senior Vice President - Chief Financial Officer Kevin P . Adams Vice President - Program M anagement, CDW...

  • Page 36
    ... Reports Financial reports, including Form 10-K and annual reports can be accessed online at: CDW.com/investor. You may also obtain a copy upon w ritten request to: CDW Computer Centers, Inc. 200 North M ilw aukee Avenue Vernon Hills, Illinois 60061 Investor Inquiries Phone: (847) 419-8234 Fax...

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    CDW.com • 800.800.4239