CDW 2003 Annual Report Download - page 35

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December 31, 2003. From July 2002 through December 31, 2003, we purchased a total of 2,360,800 shares of
our common stock under this program at a total cost of $98.2 million (an average price of $41.59 per share).
In July 2003, our Board of Directors authorized a new share repurchase program of up to 2,500,000 shares
of our common stock. These purchases may be made from time to time in both open market and private
transactions, as conditions warrant. This new repurchase program is expected to remain in effect through July
2005, unless earlier terminated by the Board or completed. During the year ended December 31, 2003, no
purchases were made under this new program.
Repurchased shares are held in treasury pending use for general corporate purposes, including issuances
under various employee stock plans.
On July 23, 2003, our Board of Directors declared an annual cash dividend to shareholders. This dividend
of $0.30 per share, totaling $24.9 million, was paid on September 26, 2003, to shareholders of record on
September 12, 2003. In future years, we plan to announce any dividend following the annual shareholders
meeting, typically held in May.
We currently have one distribution center, located with our corporate headquarters, in Vernon Hills,
Illinois. The capacity of this distribution center should be sufficient to handle our expected growth in sales and
shipments at least through 2005, based on current projections. We will continue to make investments in this
distribution center to further automate the facility and increase its efficiency. We anticipate that a second
distribution center may be required in order to continue to support the company's growth beyond 2005, unless
the capacity of the existing distribution center can be expanded through automation, additional shifts for
receiving and shipping, or other actions. Accordingly, we have begun evaluating possible locations for a second
distribution center. We will consider in our evaluation factors such as concentration of customers, shipping
patterns for product received from our vendors as well as shipments to our customers and work force
availability. Because the evaluation is in process, we do not have an estimate of the cost for a second
distribution center, but we believe that our internally generated cash flow will be sufficient to cover the capital
expenditures for the distribution center.
Our current and anticipated uses of our cash, cash equivalents and marketable securities are to fund growth
in working capital and capital expenditures necessary to support future growth in sales, our stock buyback
program, potential dividends and possible expansion through acquisitions. We believe that the funds held in
cash, cash equivalents and marketable securities, and funds available under the credit facilities, will be sufficient
to fund our working capital and cash requirements for the foreseeable future.
Cash Flows
Net cash provided by operating activities in 2003 was $125.4 million compared to $231.4 million in 2002.
The primary factors that affected our cash flow from operations were net income, accounts receivable, and tax
benefits from stock options and restricted stock transactions. Accounts receivable increased from $333.1
million at December 31, 2002 to $444.0 million at December 31, 2003. The increase in accounts receivable was
due to higher sales in the fourth quarter of 2003 and sales added as a result of the Micro Warehouse
transactions. Cash provided by operating activities in 2003 was positively impacted by a $36.5 million tax
benefit recorded to paid-in capital, relating to the exercise of options pursuant to the MPK Stock Option Plan
and the CDW Incentive Stock Option Plan, and the vesting of shares related to the MPK Restricted Stock Plan.
Net cash used in investing activities for the year ended December 31, 2003 was $22.0 million. This
includes $22.7 million used to purchase selected U.S. assets and the Canadian operations of Micro Warehouse
and $11.4 million used for capital expenditures, partially offset by $6.5 million in proceeds from redemptions of
investments in marketable securities, and $5.6 million related to our investment in CDW Leasing, L.L.C.,
primarily repayments of advances and the consolidation of this joint venture into our balance sheet. Capital
expenditures related primarily to computer software and computer and data processing equipment.