Wayside Technology Group, Inc. Reports 2007 Third Quarter Results and Declares Quarterly Dividend

SHREWSBURY, N.J.--(BUSINESS WIRE)--

Wayside Technology Group, Inc. (NASDAQ: WSTG) today reported financial results for the third quarter ended September 30, 2007. The results will be discussed in a conference call to be held on Friday, October 26, 2007 at 10:00 AM Eastern time. The dial-in telephone number is (866) 814-8483 and the pass code is "WSTG".

This conference call will be available via live webcast -- in listen-mode only -- at www.earnings.com. A replay will be available on our website at www.waysidetechnology.com.

Net sales for the third quarter of 2007 decreased 14% or $6.9 million to $41.8 million compared to $48.7 million for the same period in 2006. Total sales for the third quarter of 2007 for our Lifeboat segment were $30.8 million compared to $31.5 million in the third quarter of 2006, representing a 2% decrease. Total sales for the third quarter of 2007 for our Programmer's Paradise segment were $11.0 million compared to $17.2 million in the third quarter of 2006, representing a 36% decrease. On a sequential basis, sales for our Programmer's Paradise segment increased 6% as compared to the second quarter of 2007. Gross profit margin, as a percentage of net sales, for the quarter ending September 30, 2007 was 9.9% compared to 9.0% in the third quarter of 2006.

"We continued to implement our plan to deemphasize the lowest margin segments of the VMware business while new VMware distributors adopted ultra low pricing strategies," said Simon F. Nynens, chairman and chief executive officer. "As a result our VMware labeled sales declined $9.5 million in the third quarter. Excluding VMware, sales of our higher margin lines increased by $2.5 million or 10%."

"VMware remains our single largest vendor and represents 30% of our third quarter revenue. We continue to be a strong partner for VMware and we continue to focus on virtualization. We expect VMware, as well as products complementary to VMware, to be a major driver of growth and profitability in the future," said Simon Nynens. "We recently received certification for our distribution business to act as a VMware Authorized Consulting Partner (VAC) and we launched a brand new incentive program, Lifeboat*Points, designed to leverage Lifeboat's technical consulting and other services, and to stimulate the growth of VMware ecosystem solutions. We also expect to grow our sales by adding new software lines and penetrating new accounts."

On October 24, 2007, the Board of Directors declared a quarterly dividend of $.15 per share of its common stock payable November 20, 2007 to shareholders of record on November 6, 2007.

In the Lifeboat Distribution segment, sales for the third quarter of 2007 decreased by 2%, compared to the year-earlier period, as we continued to deemphasize the lowest margin segments of the VMware business. Our remaining distribution lines showed strong growth. Excluding VMware, sales increased by $5.7 million or 41%.

In the Programmer's Paradise segment, sales for the third quarter of 2007 decreased by $6.2 million, compared with the year-earlier period, primarily due to declining VMware sales as well as increased competition in the "direct to end user" segment of our business. The decline in VMware sales is mainly due to a change in the government's GSA program by VMware. VMware has selected an exclusive reseller/distributor for GSA government sales. Programmer's Paradise now receives a referral fee for VMware GSA sales. This has a positive impact on gross margins; however, as a result, VMware's sales for our Programmer's Paradise segment decreased $3.1 million.

Gross profit for the quarter ended September 30, 2007 was $4.1 million compared to $4.4 million in the third quarter of 2006, a 6% decrease. Total gross profit for our Programmer's Paradise segment for the quarter ended September 30, 2007 was $1.4 million compared to $2.1 million in the third quarter of 2006, representing a 32% decrease. Total gross profit for our Lifeboat segment for the quarter ended September 30, 2007 was $2.7 million compared to $2.3 million in the third quarter of 2006, representing a 19% increase.

Total selling, general, and administrative ("SG&A") expenses for the third quarter of 2007 were $3.0 million compared to $3.1 million in the third quarter of 2006.

Net income for the third quarter of 2007 amounted to $822,000 or 2.0% of net sales as compared to $859,000 or 1.8% for the same period in 2006.

About Wayside Technology Group, Inc.

Wayside Technology Group, Inc. (NASDAQ: WSTG) was founded in 1982 and is a unified and integrated technology company providing products and solutions for corporate resellers, VARs, and developers, as well as business, government and educational entities. The company generated sales of $182 million in 2006, and was ranked No. 8 on BusinessWeek's list of hot growth companies in June 2006. The company offers technology products from software publishers and manufacturers such as Microsoft, CA, IBM, VMware, Borland, Quest Software, Compuware, Infragistics, ComponentOne, Macrovision, and Adobe.

Additional information can be found by visiting www.waysidetechnology.com.

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 contribution of key vendor relationships and support programs. The forward-looking statements contained herein are also subject generally to other risks and uncertainties that are described from time to time in our filings with the Securities and Exchange Commission.

           WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
                CONDENSED CONSOLIDATED BALANCE SHEETS
          (In thousands, except share and per share amounts)

                                            September 30, December 31,
                                                2007          2006
                                            ------------- ------------
                                             (Unaudited)

                                ASSETS

Current assets
 Cash and cash equivalents                  $      9,270  $    13,832
 Marketable securities                             9,421        7,032
 Accounts receivable, net                         20,150       28,045
 Inventory - finished goods                        1,249        1,265
 Prepaid expenses and other current assets           848          607
 Deferred income taxes                               926        1,632
                                            ------------- ------------
Total current assets                              41,864       52,413

Equipment and leasehold improvements, net            620          488
Other assets                                       2,096        2,927
Deferred income taxes                              1,127        1,453
                                            ------------- ------------

Total assets                                $     45,707  $    57,281
                                            ============= ============


                 LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
 Accounts payable and accrued expenses      $     21,691  $    35,304
 Dividend payable                                      -          638
                                            ------------- ------------
Total current liabilities                         21,691       35,942

Other liabilities                                     20           41
                                            ------------- ------------
Total liabilities                                 21,711       35,983

Commitments and contingencies

Stockholders' equity
 Common stock, $.01 par value; authorized,
 10,000,000 shares; issued 5,284,500 shares           53           53
 Additional paid-in capital                       29,406       29,252
 Treasury stock, at cost, 584,751 shares and
 687,879 shares, respectively                     (2,376)      (1,905)
 Accumulated deficit                              (3,530)      (6,302)
 Accumulated other comprehensive income              443          200
                                            ------------- ------------
Total stockholders' equity                        23,996       21,298
                                            ------------- ------------
Total liabilities and stockholders' equity  $     45,707  $    57,281
                                            ============= ============
           WAYSIDE TECHNOLOGY GROUP, INC. AND SUBSIDIARIES
    CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE
                                INCOME
                             (Unaudited)
                (In thousands, except per share data)

                                  Nine months ended Three months ended
                                    September 30,     September 30,
                                    2007     2006     2007      2006
                                  -------- -------- --------- --------
Net Sales                         $132,752 $125,479   $41,790  $48,679
Cost of sales                      119,834  113,196    37,664   44,299
                                  -------- -------- --------- --------
Gross profit                        12,918   12,283     4,126    4,380
Selling, general and
 administrative expenses             8,998    8,999     2,962    3,109
                                  -------- -------- --------- --------
Income from operations               3,920    3,284     1,164    1,271
Interest income, net                   749      501       257      222
Realized foreign exchange gain           1        2         1        1
                                  -------- -------- --------- --------
Income before income tax
 provision                           4,670    3,787     1,422    1,494
Provision for income taxes           1,898    1,556       600      635
                                  -------- -------- --------- --------
Net income                        $  2,772 $  2,231   $   822  $   859
                                  ======== ======== ========= ========
Net income per common share -
 Basic                            $   0.63 $   0.54   $  0.19  $  0.20
                                  ======== ======== ========= ========
Net income per common share -
 Diluted                          $   0.59 $   0.50   $  0.18  $  0.19
                                  ================= ==================

Weighted average common shares
 outstanding - Basic                 4,395    4,162     4,426    4,213
                                  ======== ======== ========= ========
Weighted average common shares
 outstanding - Diluted               4,682    4,495     4,674    4,548
                                  ======== ======== ========= ========

Reconciliation to comprehensive
 income:
---------------------------------

Net income                        $  2,772 $  2,231   $   822  $   859
  Other comprehensive income, net
   of tax:
   Unrealized gain on marketable
    securities                           4       21         4        6
   Foreign currency translation
    adjustments                        239       74        77       16
                                  -------- -------- --------- --------
Total comprehensive income        $  3,015 $  2,326   $   903  $   881
                                  ======== ======== ========= ========

Source: Wayside Technology Group, Inc.