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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended January 31, 2002
OR
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from _______ to ______.
Commission File Number 0-14625
TECH DATA CORPORATION
(Exact name of Registrant as specified in its charter)
Florida 59-1578329
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
5350 Tech Data Drive 33760
Clearwater, Florida (Zip Code)
(Address of principal executive offices)
(Registrant's Telephone Number, including Area Code): (727) 539-7429
Securities registered pursuant to Section 12(b) of the Act:
Common stock, par value $.0015 per share
Securities registered pursuant to Section 12(g) of the Act:
5% Convertible subordinated debentures due 2003
2% Convertible subordinated debentures due 2021
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.[X]
Aggregate market value of the voting stock held by non-affiliates of the
registrant as of April 1, 2002: $2,521,000,000.
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at April 1, 2002
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Common stock, par value $.0015 per share 55,605,372
DOCUMENTS INCORPORATED BY REFERENCE
The registrant's Proxy Statement for use at the Annual Meeting of
Shareholders on June 4, 2002 is incorporated by reference in Part III of this
Form 10-K to the extent stated herein.
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PART I
ITEM 1. Business
Overview
Tech Data Corporation ("Tech Data" or the "Company") is a leading provider of
information technology ("IT") products, logistics management and other value-
added services, and based on sales, is the world's second largest distributor.
The Company distributes microcomputer hardware and software products to value-
added resellers, direct marketers, retailers, corporate resellers, and Internet
resellers. The Company and its subsidiaries distribute to more than 80 countries
and serve over 100,000 resellers in the United States, Canada, the Caribbean,
Latin America, Europe and the Middle East. The Company's broad assortment of
vendors and products meets the customers' need for a cost effective link to
those products through a single source.
The Company provides its customers with leading products in a variety of IT
segments, including peripherals, systems, networking and software, which
accounted for 46%, 24%, 15% and 15%, respectively, of sales in fiscal 2002. The
Company offers products from manufacturers and publishers such as Adobe, Apple,
Cisco, Compaq, Computer Associates, Creative Labs, Epson, Hewlett-Packard, IBM,
Intel, Iomega, Lexmark, Microsoft, Nortel Networks, NEC, Palm, Seagate, Sony,
Symantec, 3Com, Toshiba, Viewsonic, and Western Digital. The Company generally
ships products the same day the orders are received from regionally located
logistics centers. Customers are provided with a high level of service through
the Company's pre- and post-sale technical support, electronic commerce tools
(including on-line order entry, product integration services and electronic data
interchange ("EDI") services), customized shipping documents and flexible
financing programs.
Tech Data was incorporated in 1974 to market data processing supplies such as
tape, disk packs, and custom and stock tab forms for mini and mainframe
computers directly to end users. With the advent of microcomputer dealers, Tech
Data made the transition to a wholesale distributor in 1984 by broadening its
product line to include hardware products and withdrawing entirely from end-user
sales.
In May 1989, the Company entered the Canadian market through the acquisition of
a privately-held distributor subsequently named Tech Data Canada Inc. ("Tech
Data Canada"). Tech Data Canada serves customers in all Canadian provinces.
In March 1994, the Company entered the European market through the acquisition
of a privately-held distributor subsequently named Tech Data France, SA ("Tech
Data France").
To complement its Miami-based Latin American export business, the Company opened
a sales office and logistics center near Sao Paulo, Brazil in February 1997.
In July 1998, Tech Data completed the acquisition of 83% of the voting common
stock of Computer 2000 AG ("Computer 2000"), Europe's leading technology
products distributor (see Note 2 of Notes to Consolidated Financial Statements).
With a presence in significant geographic markets in Europe, the Middle East and
Latin America, the purchase of Computer 2000 expanded Tech Data's presence into
its current level of 29 countries worldwide. In April 1999, all of the shares of
Computer 2000 were integrated into Tech Data Germany AG ("Tech Data Germany").
The Company currently owns approximately 99.9% of the outstanding stock of Tech
Data Germany and 100% of Computer 2000's stock. The Company has changed the
names of most of Computer 2000's subsidiaries to match the Tech Data brand.
In May 1999, the Company acquired Globelle Corporation, a leading publicly-held
Canadian distributor, which nearly doubled the Company's Canadian business,
adding additional critical mass and a complementary product and geographic focus
(see Note 2 of Notes to Consolidated Financial Statements).
1
Industry
The wholesale distribution model, like that provided by the Company, has proven
to be well-suited for both manufacturers and publishers of IT products
("vendors") and resellers of those products. The large number and diversity of
resellers make it cost efficient for vendors to rely on wholesale distributors
to serve this customer base. Similarly, due to the large number of vendors and
products, resellers often cannot or choose not to establish direct purchasing
relationships with vendors. Instead, they rely on wholesale distributors, such
as Tech Data, which can leverage purchasing costs across multiple vendors to
satisfy a significant portion of their product procurement, delivery, financing,
marketing and technical support needs.
Through collaborative supply chain management initiatives, distributors, like
Tech Data, continue to advance the efficiency of this business model. By
leveraging Tech Data's infrastructure and logistics expertise, IT manufacturers
and publishers benefit by a cost-effective alternative to selling directly to
resellers or end users. The Company's ability to provide a "virtual warehouse"
of products for resellers means that they no longer need to hold inventory,
which reduces costs and risks associated with handling the product. In addition
to enabling fast reseller access to a comprehensive hardware and software
offering, the Company frequently ships products to end users on behalf of its
customers, thereby reducing the resellers' costs of storing, maintaining, and
shipping the products themselves. Tech Data facilitates this approach by
personalizing shipping labels and packing documents with its resellers' brand
identities (e.g. logos), marketing messages and other specialized content.
The increasing utilization of electronic ordering and information delivery
systems, including the ability to transact business over the Web, continues to
have a significant impact on the cost efficiency of the wholesale distribution
model. For example, distributors are now working to establish a more seamless
supply chain in which end-user orders flow immediately from reseller Web sites
direct to distributor logistics centers in closest proximity to the order
destination. Advances like these are possible due to the financial and
technical resources available to large-scale distributors such as Tech Data,
enabling a reduction in both their customers' and their own transaction costs
through more efficient purchasing and lower selling and delivery costs.
In summary, the IT logistics industry continues to address a broad spectrum of
reseller and vendor requirements. The economies of scale and global reach of
large industry leaders are expected to continue to be significant competitive
advantages in this marketplace.
Tech Data's fiscal 2002 results, like other companies in the technology
industry, were negatively affected by the U.S. economic downturn. This downturn
eventually spread to other regions throughout the world, albeit to a lesser
extent. While it appears there has been a "bottoming out" of the global
recession, there can be no assurance that further weakening will not occur. To
the extent that this continues, the IT industry, in general, and worldwide
demand for the products we sell, are likely to be negatively affected.
Vendor Relations
The Company's strong financial and industry positions have enabled it to obtain
contracts with most leading manufacturers and publishers. The Company purchases
products directly from manufacturers and publishers, generally on a non-
exclusive basis. The Company's vendor agreements are believed to be in the form
customarily used by each manufacturer and typically contain provisions which
allow termination by either party upon 30 days notice. Generally, the Company's
supplier agreements do not require it to sell a specified quantity of products
or restrict the Company from selling similar products manufactured by
competitors. Consequently, the Company has the flexibility to terminate or
curtail sales of one product line in favor of another product line as a result
of technological change, pricing considerations, product availability, customer
demand or vendor distribution policies.
Such agreements generally contain stock rotation and price protection provisions
which, along with the Company's inventory management policies and practices,
reduce the Company's risk of loss due to slow-moving inventory, vendor price
reductions, product updates or obsolescence. Under the terms of many
distribution agreements, suppliers, subject to certain limitations, will credit
the distributor for declines in inventory value resulting from the supplier's
price reductions. In addition, under many such agreements, the distributor has
the right, subject to certain limitations, to return for credit or exchange for
other products a portion of those inventory items purchased. A supplier who
elects to terminate a distribution agreement generally will repurchase from the
distributor the supplier's products carried in the distributor's inventory.
While the industry practices discussed above are sometimes not embodied in
agreements and do not protect the Company in all cases from declines in
inventory value, management believes that these practices provide a
2
significant level of protection from such declines. No assurance can be given,
however, that such practices will continue or that they will adequately protect
the Company against declines in inventory value. See Item 7 - Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Asset Management.
In addition to providing manufacturers and publishers with one of the largest
bases of resellers in the United States, Canada, the Caribbean, Latin America,
Europe and the Middle East, Tech Data also offers manufacturers and publishers
the opportunity to participate in a number of special promotions, training
programs and marketing services targeted to the needs of its resellers.
With the exception of Hewlett-Packard Company ("HP") and Compaq Computer
Corporation ("Compaq"), no single vendor accounted for more than 10% of Tech
Data's net sales during fiscal 2002, 2001, or 2000. Sales of HP products
accounted for 20%, 19%, and 19% of net sales in fiscal 2002, 2001, and 2000,
respectively, and sales of Compaq products accounted for 18%, 20%, and 16% of
net sales in fiscal 2002, 2001, and 2000, respectively.
On March 19 and 20, 2002, HP's and Compaq's shareholders, respectively, voted to
approve a merger of the two entities. A member of HP's board of directors is
contesting the vote. Based on the limited information currently available, the
impact of this merger, should it occur, cannot at this time be estimated by Tech
Data's management. Tech Data's business could be adversely impacted should the
merged company decide to bypass the distribution channel and increase the level
of business it transacts directly with end-users.
Customers, Products and Services
The Company sells more than 75,000 microcomputer products including peripherals,
systems, networking and software purchased directly from manufacturers and
publishers in large quantities for sale to an active reseller base of more than
100,000 value-added resellers (VARs), corporate resellers, direct marketers,
retailers and Internet resellers.
The market for VARs, which constituted approximately 58% of Tech Data's net
sales in fiscal 2002, is attractive because VARs generally rely on distributors
as their principal source of computer products and financing. This reliance is
due to VARs typically not having the resources to establish a large number of
direct purchasing relationships or stock significant product inventories.
Direct marketers, retailers and corporate resellers may establish direct
relationships with manufacturers and publishers for their more popular products,
but utilize distributors as the primary source for other product requirements
and the alternative source for products acquired directly. Tech Data also has
developed special programs to meet the unique needs of direct marketers,
retailers and Internet resellers, which constituted approximately 24% of the
Company's net sales in fiscal 2002. Corporate resellers constituted
approximately 18% of the Company's net sales in fiscal 2002. No single customer
accounted for more than 5% of the Company's net sales during fiscal 2002, 2001,
or 2000.
The Company pursues a strategy of continually strengthening its product line to
offer its customers a broad assortment of the latest technology products. From
time to time, the demand for certain products sold by the Company exceeds the
supply available from the manufacturer or publisher. In such cases, the Company
generally receives an allocation of the available products. Management believes
that the Company's ability to compete is not adversely affected by these
periodic shortages and the resulting allocations.
Tech Data provides resellers a high level of service through the Company's pre-
and post-sale technical support, suite of electronic commerce tools (including
web order entry and EDI services), customized shipping documents, product
configuration/integration services and flexible financing programs.
3
The Company delivers products throughout the United States, Canada, the
Caribbean, Latin America, Europe and the Middle East from its 33 regionally
located logistics centers. Locating logistics centers near its customers enables
the Company to deliver products on a timely basis, thereby reducing the
customers' need to invest in inventory. See Item 2 -- Properties for further
discussion of the Company's locations and logistics centers.
Sales and Electronic Commerce
Currently, the Company's sales force consists of approximately 2,000 field and
inside telemarketing sales representatives. Field sales representatives are
located in major metropolitan areas. Each field representative is supported by
inside telemarketing sales teams covering a designated territory. The Company's
team concept provides a strong personal relationship between representatives of
the customers and Tech Data. Territories with no field representation are
serviced exclusively by the inside telemarketing sales teams. Customers
typically call their inside sales teams on dedicated toll-free numbers or
contact the Company through various electronic methods to place orders. If the
product is in stock and the customer has available credit, customer orders are
generally shipped the same day from the logistics facility nearest the customer.
Increasingly, customers rely upon the Company's electronic ordering and
information systems, in addition to its product catalogs and frequent mailings,
as sources for product information, including availability and price. The
Company's on-line computer system allows the inside sales teams to check for
current stocking levels in each of the six United States logistics centers.
Likewise, inside sales teams in Canada, the Caribbean, Latin America, Europe and
the Middle East can check on stocking levels in their respective logistics
centers. Through the Company's website, most customers can gain remote access to
the Company's information systems to check product availability and pricing and
to place orders. Certain of the Company's larger customers have available EDI
services whereby orders, order acknowledgments, invoices, inventory status
reports, customized pricing information and other industry standard EDI
transactions are consummated on-line, which improves efficiency and timeliness
for both the Company and its customers. During fiscal 2002, approximately 29%
($5.0 billion) of the Company's worldwide sales dollar volume originated from
orders received electronically, up from approximately 24% in fiscal 2001.
The Company provides comprehensive training to its field and inside sales
representatives regarding technical characteristics of products and the
Company's policies and procedures. In addition, the Company's ongoing training
program is supplemented by product seminars offered by manufacturers and
publishers.
Competition
Tech Data operates in a market characterized by intense competition, based upon
such factors as product availability, credit availability, price, delivery and
various services and support provided by the distributor to the customer. The
Company believes that it is equipped to compete effectively with other
distributors in all of these areas.
Tech Data competes against several companies in the North American market,
including Ingram Micro and Synnex. In Latin America, Tech Data competes against
Ingram Micro and several regional and local distributors. Competition outside
of the Americas includes Ingram Micro, Actebis and a variety of smaller regional
and local distributors.
The Company also competes with manufacturers and publishers who sell directly to
resellers and end-users. The Company nevertheless believes that in the majority
of cases, manufacturers and publishers choose to sell products through
distributors rather than directly because of the relatively small volume and
high selling costs associated with numerous small orders. Management also
believes that the Company's prompt delivery of products and efficient handling
of returns provide an important competitive advantage over manufacturers' and
publishers' efforts to market their products directly.
4
Employees
On January 31, 2002, the Company had approximately 8,600 employees located as
follows: United States - 3,300, Europe - 4,500, and all other regions - 800.
Certain of the Company's employees in Canada are subject to collective
bargaining or similar arrangements, as well as employees in various countries
outside the United States that have laws providing representation rights to
employees on management boards. The Company considers its relations with its
employees to be good.
Foreign and Domestic Operations and Export Sales
Tech Data operates predominantly in a single industry segment as a wholesale
distributor of computer-based technology products and services. Therefore, the
principal markets, products and services and methods of distribution from which
each segment derives its revenues are essentially the same. The principal
geographical areas in which the Company operates are the United States, Europe
(including the Middle East) and other international areas which include in-
country operations in Canada, Brazil, Argentina, Chile, Peru, Uruguay and export
sales to Latin America and the Caribbean from the United States. In fiscal 2002,
2001, and 2000, 49%, 45% and 51%, respectively, of the Company's sales were
derived from sales outside of the United States.
Tech Data intends to either close or sell its operations in Norway and
potentially one other country during the first half of fiscal 2003. Charges and
operating losses from exiting these markets are estimated to range from $6 to $9
million.
See Note 11 of Notes to Consolidated Financial Statements, for further
information regarding the geographical distribution of the Company's net sales,
operating income and identifiable assets.
5
Executive Officers
The Company's executive officers as of April 17, 2002 are as follows:
Steven A. Raymund, Chairman of the Board of Directors and Chief Executive
Officer, age 46, has been employed by the Company since 1981, serving as Chief
Executive Officer since January 1986 and as Chairman of the Board of Directors
since April 1991. He has a Bachelor of Science Degree in Economics from the
University of Oregon and a Masters Degree from the Georgetown University School
of Foreign Service.
Nestor Cano, President of Worldwide Operations, age 38, joined the Company (via
C2000 AG) in July 1989 as a Software Product Manager and served in various
management positions with the Company's operations in Spain and Portugal between
1990 and 1995 where he was then promoted to Regional Managing Director. In March
1999, he was appointed Executive Vice President of U.S. Sales and Marketing, in
January 2000 he was promoted to President of the Americas, and in August 2000,
he was promoted to President of Worldwide Operations. Mr. Cano holds a Masters
Degree in Business Administration from IESE Business School in Barcelona and an
Engineering Degree from Barcelona University.
Jeffery P. Howells, Executive Vice President and Chief Financial Officer, age
45, joined the Company in October 1991 as Vice President of Finance and assumed
the responsibilities of Chief Financial Officer in March 1992. In March 1993,
he was promoted to Senior Vice President and Chief Financial Officer and was
promoted to Executive Vice President and Chief Financial Officer in March 1997.
In 1998, Mr. Howells was appointed to the Company's Board of Directors. From
1979 to 1991 he was employed by Price Waterhouse. Mr. Howells is a Certified
Public Accountant and holds a Bachelor of Business Administration Degree in
Accounting from Stetson University.
Perry M. Monych, President of U.S. Operations, age 47, joined the Company in
December 2000. Prior to joining the Company, he was President and Chief
Executive Officer of GE Access from November 1997 to November 2000. He was also
President and CEO of GE Capital IT Solutions - North America from July 1996 to
November 1997, and President and CEO of GE Capital IT Solutions - Canada from
December 1993 to July 1996. Mr. Monych holds a Masters Degree in Business
Administration from Harvard University and a Bachelor of Science Degree in
Forestry from the University of British Columbia.
Graeme A. Watt, President of Europe, age 41, joined the Company (via C2000 AG)
in January 1988 as Financial Controller for the United Kingdom and Ireland and
was promoted to Managing Director in 1995. He was promoted to Regional Managing
Director for Tech Data's Computer 2000 Group in January 2000, and in August 2000
he was promoted to President of Europe. Prior to joining the Company, he was
with Arthur Young for two years as a Chartered Accountant. Mr. Watt holds a
Bachelors Degree in Physiology from Edinburgh University.
Joseph A. Osbourn, Executive Vice President and Worldwide Chief Information
Officer, age 54, joined the Company in October 2000. Prior to joining the
Company, he was Senior Vice President and Chief Information Officer at Kmart
Corporation from September 1999 to September 2000, and was Vice President of
Information Services at Walt Disney World Company from September 1989 to
September 1999. Mr. Osbourn holds a Masters Degree in Business Administration
from Memphis State University and a Bachelors Degree in Physics from the
University of Louisville.
Patrick O. Connelly, Senior Vice President of Credit Services, the Americas, age
56, joined the Company in August 1994 as Vice President of Credit Services, and
in April 2001 he was promoted to Senior Vice President of Credit Services, the
Americas. Prior to joining the Company, he was employed by Unisys Corporation
for nine years as Worldwide Director of Credit. Mr. Connelly holds a Masters
Degree in Business Administration from the University of South Florida and
Bachelor of Arts Degrees in History and French from the University of Texas at
Austin.
6
Timothy J. Curran, Senior Vice President of U.S. Sales, age 50, joined the
Company in April 1997. Prior to joining the Company, he was employed by
Panasonic Communications and Systems Company (including various other Panasonic
affiliates) from 1983 to 1997 serving in a variety of senior management
positions. Mr. Curran holds a Bachelor of Arts Degree in History from the
University of Notre Dame and a Ph.D. in International Relations from Columbia
University.
Charles V. Dannewitz, Senior Vice President of Taxes, age 47, joined the Company
in February 1995 as Vice President of Taxes and was promoted to Senior Vice
President of Taxes in April 2000. Prior to joining the Company, he was employed
by Price Waterhouse for thirteen years, most recently as a Tax Partner. Mr.
Dannewitz is a Certified Public Accountant and holds a Bachelor of Science
Degree in Accounting from Illinois Wesleyan University.
Henrik Funch, Senior Vice President of Central Europe, age 45, joined the
Company in January 2001 as Senior Vice President of Northern Europe and then
soon took over as Senior Vice President of Central Europe. Prior to joining the
Company he was employed by GE Capital IT Solutions for five years, most recently
on its Executive Board for Europe. Mr. Funch has almost twenty years of
experience in the IT industry including nine years with IBM and four years with
Andersen Consulting. Mr. Funch holds both a Masters and a Bachelors Degree in
Economics from the Copenhagen School of Economics.
Andy Gass, Senior Vice President of Northern Europe, age 37, joined the Company
(via C2000 AG) in October 1995 as Finance and Operations Director of UK
operations and was promoted to Deputy Managing Director in October 1998. From
February 2000 to August 2001 Mr. Gass spent time as a Managing Director at Sage
Enterprise Solutions. He then returned to the Company as Senior Vice President
of Northern Europe in September 2001. Mr. Gass is a Chartered Accountant and
holds a Bachelors Degree in Commerce from Edinburgh University.
Lawrence W. Hamilton, Senior Vice President of Human Resources, age 44, joined
the Company in August 1993 as Vice President of Human Resources and was promoted
to Senior Vice President of Human Resources in March 1996. Prior to joining the
Company, he was employed by Bristol-Myers Squibb Company from 1985 to August
1993, most recently as Vice President - Human Resources and Administration of
Linvatec Corporation (a division of Bristol-Myers Squibb Company). Mr. Hamilton
holds a Bachelor of Arts Degree in Political Science from Fisk University and a
Masters of Public Administration, Labor Policy from the University of Alabama.
William J. Hunter, Senior Vice President and Chief Financial Officer of Europe,
age 42, joined the Company in April 1994 as Assistant Controller. In September
1996, he was promoted to Director of International Finance and in June 1997
became the Vice President and Controller for Europe. Effective June 1999, Mr.
Hunter was promoted to Senior Vice President and Chief Financial Officer for
Europe. From January 1989 to April 1994 he was employed by Price Waterhouse. Mr.
Hunter is a Certified Management Accountant and holds a Bachelor of Arts Degree
in Philosophy from Tulane University and a Bachelor of Science Degree in
Accounting from the University of South Florida.
Elio Levy, Senior Vice President of U.S. Marketing, age 54, joined the Company
in October 1991 as Director of Software and was promoted to Vice President of
Networking in January 1993. In January 1995, he was assigned as Vice President
of Marketing for Tech Data France and from January 1996 to June 1998 he served
as President of Tech Data Canada. In July 1998, he returned to the Company's
U.S. operations as Vice President and General Manager of International Marketing
and in November 1998 he assumed the role of Vice President and General Manager,
Peripherals. In April 2000 he was promoted to his current role of Senior Vice
President of Marketing. Mr. Levy holds a Bachelor of Science Degree in Business
from the College of Charleston.
7
Yuda Saydun, Senior Vice President and President of Latin America, age 49,
joined the Company in May 1993 as Vice President and General Manager - Latin
America. In March 1997 he was promoted to Senior Vice President and General
Manager - Latin America and in April 2000 was promoted to President of Latin
America. Prior to joining the Company, he was employed by American Express
Travel Related Services Company, Inc. from 1982 to May 1993, most recently as
Division Vice President, Cardmember Marketing. Mr. Saydun holds a Bachelor of
Science Degree in Political and Diplomatic Sciences from Universite Libre de
Bruxelles and a Masters of Business Administration Degree, Finance/Marketing
from the University of California, Los Angeles.
Lisa G. Thibodeau, Senior Vice President of U.S. Sales and Marketing Operations,
age 43, joined the Company in March 1995 as Assistant Controller. She was
promoted to the position of Vice President and U.S. Controller in September
1997. In May 2000, she was promoted to Senior Vice President of U.S. Sales and
Marketing Operations. Prior to joining the Company, Ms. Thibodeau was employed
from May 1989 to March 1995 at Walt Disney World, most recently as Finance
Manager. Ms. Thibodeau is a Certified Public Accountant and holds a Bachelors
Degree in Business Administration from the University of Massachusetts at
Amherst and a Masters Degree in Business Administration from Rollins College.
William K. Todd Jr., Senior Vice President of Logistics and Integration
Services, age 57, joined the Company in June 1999 as Vice President and General
Manager of Configuration and Assembly and was promoted to Senior Vice President
of Logistics and Integration Services in April 2000. Prior to joining the
Company, he was employed by Entex Information Services from September 1992 to
June 1999 as the Senior Vice President of Distribution and Manufacturing. Mr.
Todd holds a Bachelor of Science Degree in Business Management from New
Hampshire College.
Joseph B. Trepani, Senior Vice President and Corporate Controller, age 41,
joined the Company in March 1990 as Controller and held the position of Director
of Operations from October 1991 through January 1995. In February 1995, he was
promoted to Vice President and Worldwide Controller and to Senior Vice President
and Corporate Controller in March 1998. Prior to joining the Company, Mr.
Trepani was Vice President of Finance for Action Staffing, Inc. from July 1989
to February 1990. From 1982 to 1989, he was employed by Price Waterhouse. Mr.
Trepani is a Certified Public Accountant and holds a Bachelor of Science Degree
in Accounting from Florida State University.
Gerard F. Youna, Senior Vice President of Southern Europe, age 48, joined the
Company in 1989 as the Managing Director for Tech Data France. In 1999, he was
promoted to Regional Managing Director for France and Israel. In September
2000, he was promoted to Senior Vice President of Southern Europe. Mr. Youna
received a degree in IT Engineering from the Institut Informatique d'Entreprise
in Paris, France.
Arthur W. Singleton, Corporate Vice President, Treasurer and Secretary, age 41,
joined the Company in January 1990 as Director of Finance and was appointed
Treasurer and Secretary in April 1991. In February 1995, he was promoted to Vice
President, Treasurer and Secretary and was promoted to Corporate Vice President
in April 2000. Prior to joining the Company, Mr. Singleton was employed by Price
Waterhouse from 1982 to 1989. Mr. Singleton is a Certified Public Accountant and
holds a Bachelor of Science Degree in Accounting from Florida State University.
David R. Vetter, Corporate Vice President and General Counsel, age 43, joined
the Company in June 1993 as Vice President and General Counsel and was promoted
to Corporate Vice President and General Counsel in April 2000. Prior to joining
the Company, he was employed by the law firm of Robbins, Gaynor & Bronstein,
P.A. from 1984 to 1993, most recently as a partner. Mr. Vetter is a member of
the Florida Bar and holds Bachelor of Arts Degrees in English and Economics from
Bucknell University and a Juris Doctorate Degree from the University of Florida.
8
ITEM 2. Properties
Tech Data's worldwide executive offices are located in Clearwater, Florida. As
of January 31, 2002, the Company operated a total of 33 logistics centers to
provide its customers timely delivery of products. These logistics centers are
located in the following principal markets: U.S. - 6, Canada - 2, Latin America
- - 5, Europe - 18 and the Middle East - 2. The Company also operates training
centers in 10 cities in the United States.
The facilities of the Company are well maintained and are adequate to conduct
the Company's current business. The Company does have some excess capacity in
its physical infrastructure given the decline in sales volume over the past
year.
ITEM 3. Legal Proceedings
There are no material legal proceedings pending against the Company.
ITEM 4. Submission of Matters to a Vote of Security Holders
There have been no matters submitted to a vote of security holders during the
last quarter of the fiscal year ended January 31, 2002.
PART II
ITEM 5. Market for the Registrant's Common Stock and Related Shareholder Matters
The Company's common stock is traded on the Nasdaq Stock Market under the symbol
"TECD". The Company has not paid cash dividends since fiscal 1983 and the Board
of Directors does not intend to institute a cash dividend payment policy in the
foreseeable future. The table below presents the quarterly high and low sale
prices for the Company's common stock as reported by the Nasdaq Stock Market.
The approximate number of shareholders as of April 1, 2002 was 35,000.
Sales Price
-----------
Fiscal year 2002 High Low
- ---------------- ----------- ------------
Fourth quarter................................. $ 51.0500 $ 37.1700
Third quarter.................................. 45.9900 33.0900
Second quarter................................. 37.3700 27.8900
First quarter.................................. 38.4375 25.2500
Fiscal year 2001 High Low
- ---------------- ----------- -----------
Fourth quarter................................. $ 44.5625 $ 24.9375
Third quarter.................................. 55.8750 32.0000
Second quarter................................. 52.1250 35.3750
First quarter.................................. 43.7500 20.6250
9
ITEM 6. Selected Consolidated Financial Data
The following table sets forth certain selected consolidated financial data and
should be read in conjunction with "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the Company's consolidated
financial statements and notes thereto appearing elsewhere in this annual
report.
FIVE YEAR FINANCIAL SUMMARY
(In thousands, except per share data)
Year ended January 31,
---------------------------------------------------------------------------------
2002 2001 2000 1999/(1)/ 1998
----------- ----------- ----------- ----------- ----------
Income statement data:
Net sales.............................. $17,197,511 $20,427,679 $16,991,750 $11,528,999 $7,056,619
Cost of products sold.................. 16,269,481 19,331,616 16,058,086 10,806,153 6,590,873
----------- ----------- ----------- ----------- ----------
Gross profit........................... 928,030 1,096,063 933,664 722,846 465,746
Selling, general and
administrative expenses ............. 677,914 733,307 661,792 492,542 293,108
Special charges (Note 13).............. 27,000 -- -- -- --
----------- ----------- ----------- ----------- ----------
Operating income ...................... 223,116 362,756 271,872 230,304 172,638
Interest expense, net.................. 55,419 92,285 65,965 44,988 29,908
Net foreign currency exchange (gain)
loss.................................. (143) (3,884) 5,153 (5,027) --
Gain on the sale of Macrotron AG ...... -- -- -- (15,700) --
----------- ----------- ----------- ----------- ----------
Income before income taxes ............ 167,840 274,355 200,754 206,043 142,730
Provision for income taxes ............ 57,063 96,033 72,837 76,215 52,816
----------- ----------- ----------- ----------- ----------
Income before minority interest ....... 110,777 178,322 127,917 129,828 89,914
Minority interest...................... - 339 416 876 429
----------- ----------- ----------- ----------- ----------
Net income............................. $ 110,777 $ 177,983 $ 127,501 $ 128,952 $ 89,485
=========== =========== =========== =========== ==========
Net income per common share:
Basic................................ $ 2.04 $ 3.34 $ 2.47 $ 2.59 $ 2.00
=========== =========== =========== =========== ==========
Diluted.............................. $ 1.98 $ 3.14 $ 2.34 $ 2.47 $ 1.92
=========== =========== =========== =========== ==========
Weighted average common
shares outstanding:
Basic................................ 54,407 53,234 51,693 49,727 44,715
=========== =========== =========== =========== ==========
Diluted.............................. 60,963 59,772 58,508 54,161 46,610
=========== =========== =========== =========== ==========
Dividends per common share ............ -- -- -- -- --
=========== =========== =========== =========== ==========
Balance sheet data:
Working capital........................ $ 1,385,920 $ 967,283 $ 795,589 $ 725,057 $ 537,381
Total assets........................... 3,458,330 4,615,545 4,123,818 3,844,987 2,185,383
Revolving credit loans................. 86,046 1,249,576 1,006,809 817,870 540,177
Long-term debt......................... 612,335 320,757 316,840 308,521 8,683
Shareholders' equity .................. 1,259,933 1,195,314 1,013,695 967,291 702,588
_____________________
(1) Results for the fiscal year ended January 31, 1999 include six months of
results for Computer 2000 (acquired effective July 1, 1998) and six months
of results for Macrotron (sold effective July 1, 1998).
10
ITEM 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Foreword
Certain statements within this Item and throughout this Annual Report on Form
10-K and the documents incorporated herein are "forward-looking statements" as
described in the "safe harbor" provision of the Private Securities Litigation
Reform Act of 1995. These statements involve a number of risks and uncertainties
and actual results could differ materially from those projected. Please refer to
the cautionary statements and important factors discussed in Exhibit 99-A for
further information.
Results of Operations
The following table sets forth the percentage of cost and expenses to net sales
derived from the Company's Consolidated Statement of Income for each of the
three most recent fiscal years.
Percentage of Net Sales
----------------------------------------
Year ended January 31,
----------------------------------------
2002 2001 2000
------ ------ ------
United States........................................ 50.88% 55.11% 49.48%
Europe............................................... 42.06 38.25 44.31
Other international.................................. 7.06 6.64 6.21
--------- --------- ---------
Net sales............................................ 100.00 100.00 100.00
Cost of products sold................................ 94.60 94.63 94.51
--------- --------- ---------
Gross profit......................................... 5.40 5.37 5.49
Selling, general and administrative expenses ........ 3.94 3.59 3.89
Special charges (Note 13)............................ 0.16 0.00 0.00
--------- --------- ---------
Operating income..................................... 1.30 1.78 1.60
Interest expense, net................................ 0.32 0.45 0.39
Net foreign currency exchange (gain) loss............ 0.00 (0.01) 0.03
--------- --------- ---------
Income before income taxes .......................... 0.98 1.34 1.18
Provision for income taxes .......................... 0.34 0.47 0.43
--------- --------- ---------
Income before minority interest ..................... 0.64 0.87 0.75
Minority interest.................................... 0.00 0.00 0.00
--------- --------- ---------
Net income........................................... 0.64% 0.87% 0.75%
========= ========= =========
Fiscal Years Ended January 31, 2002 and 2001
Consolidated net sales decreased 15.8% to $17.2 billion in fiscal 2002 compared
to $20.4 billion in the prior year. This decrease was primarily due to lower
demand for technology-related products and services throughout the world and a
weakening of the euro. Net sales from U.S. operations fell 22.3% to $8.8 billion
due primarily to economic weakness in the region. On a local currency basis,
European net sales decreased 4.9% during the current year, and fell 7.4% in U.S.
dollar terms due to a weakening of several European currencies against the U.S.
dollar. Other international sales fell 10.5% in fiscal 2002 compared to the
prior year due mostly to lower demand and a weaker currency in Canada and Latin
America. Total international sales in fiscal 2002 represented approximately 49%
of consolidated net sales compared with 45% in the prior year.
Gross profit decreased $168.0 million from the prior year to $928.0 million in
fiscal 2002 compared to $1.1 billion in fiscal 2001. Gross margins increased 3
basis points to 5.40% in fiscal 2002 compared to 5.37% in fiscal 2001. This
increase is attributable to the positive effects of the Company's margin
improvement programs and the aforementioned increase in the mix of international
sales in fiscal 2002, on which the Company typically realizes higher gross
margins.
11
Selling, general and administrative expenses ("SG&A") decreased 7.6% or $55.4
million to $677.9 million in fiscal 2002 from $733.3 million in fiscal 2001.
This reduction in SG&A is attributable to the Company's highly variable cost
structure and aggressive cost cutting measures taken to counter the effects of
the economic downturn. The Company significantly reduced its payroll-related
costs as it managed its employee base down from approximately 10,500 employees
at the end of fiscal 2001 to approximately 8,600 at the end of fiscal 2002.
Likewise, the Company cut back dramatically on discretionary expenses such as
travel related costs, consulting and supplies. While these cost cutting measures
were significant, they could not entirely offset the effect of the year-over-
year sales decline and as a result SG&A, as a percentage of net sales, increased
35 basis points to 3.94% from 3.59% in the prior year. The greater mix of
international sales in fiscal 2002 also contributed to the higher SG&A as a
percentage of net sales, as the international model typically results in greater
costs along with a higher gross margin (as previously discussed above).
Special charges of $27.0 million were recognized in fiscal 2002. These special
charges related to the Company recording: a) the write-off of previously
capitalized software costs ($20.1 million); b) the impairment of certain
Internet-related investments ($5.4 million) and; c) the write-off of development
costs associated with a new German logistics center ($1.5 million), the
construction of which has been indefinitely deferred. The remaining Internet-
related investment has a carrying value of approximately $2.4 million at January
31, 2002. Investments in these types of technologies are inherently risky and
the Company could lose the remainder of its investment.
In addition to those items mentioned above, operating income was negatively
affected by operating losses in Latin America of approximately $7.4 million
during the fourth quarter; these operating losses were primarily related to
currency devaluation and asset realization issues in Argentina and Brazil.
As a result of the factors described above, operating income in fiscal 2002
decreased 38.5% to $223.1 million (1.30% of net sales) from $362.8 million
(1.78% of net sales) in fiscal 2001.
Interest expense decreased 39.9% to $55.4 million in fiscal 2002 from $92.3
million in fiscal 2001. This decrease is the result of a significant decrease in
the Company's average outstanding indebtedness and a decrease in rates. The
Company was able to reduce its outstanding debt net of cash by over $990.4
million during the past year due to dramatic improvements in its inventory
management and the cash generated from other operating activities.
The Company realized a net foreign currency exchange gain of $0.1 million in
fiscal 2002 compared to a gain of $3.9 million in fiscal 2001. It continues to
be the Company's goal to minimize foreign currency exchange gains and losses
through effective hedging techniques. The Company's foreign exchange policy
prohibits speculative hedges.
The provision for income taxes decreased 40.6% to $57.1 million in fiscal 2002
from $96.0 million in fiscal 2001. This decrease is attributable to the decrease
in taxable income during the year combined with a decrease in the Company's
effective tax rate to 34% in fiscal 2002 from 35% in fiscal 2001. The decrease
in the effective rate is primarily due to fluctuations and changes in the mix of
taxable income within the Company's various geographies and tax jurisdictions
reported in each period.
As a result of the factors described above, net income in fiscal 2002 decreased
37.8% to $110.8 million ($1.98 per diluted share) compared to $178.0 million
($3.14 per diluted share) in fiscal 2001. Excluding special charges, net income
decreased 27.8% to $128.6 million, or $2.27 per diluted share in fiscal 2002.
12
Fiscal Years Ended January 31, 2001 and 2000
Net sales increased 20.2% to $20.4 billion in fiscal 2001 compared to $17.0
billion in the prior year. This increase is attributable to market share gains
as well as the addition of new product lines and the expansion of existing
product lines in all geographies. U.S. operations were especially strong,
growing 34% over the prior year as customers shifted business to the Company due
to our high level of execution and extensive service offerings. Worldwide sales
growth would have been even greater in fiscal 2001 had the euro not devalued
against the dollar. On a local currency basis, Europe actually grew 20% (19% if
adjusted for the change in fiscal year - see Note 3 of Notes to Consolidated
Financial Statements), however, when translated into U.S. dollars, the region
had 4% growth. In addition to the U.S. and European growth, other international
sales grew approximately 28% over fiscal 2000. Total international sales in
fiscal 2001 represented approximately 45% of consolidated net sales compared
with 51% in the prior year.
Gross profit increased $162.4 million over the prior year to $1.1 billion in
fiscal 2001 compared to $933.7 million in fiscal 2000. Gross margins decreased
12 basis points to 5.37% in fiscal 2001 compared to 5.49% in fiscal 2000. This
decrease is attributable to the aforementioned decrease in the mix of higher
gross margin international sales relative to worldwide sales (in large part due
to the devaluation of the euro), competitive pressures, the Company's higher mix
of systems sales to total product sales and increased participation in customer
outsourcing activities. Both of these latter businesses typically involve lower
gross margins but provide acceptable operating and pre-tax margins, because of
cost and working capital efficiencies.
Selling, general and administrative expenses ("SG&A") increased 10.8% or $71.5
million to $733.3 million in fiscal 2001 from $661.8 million in fiscal 2000.
However, as a percentage of net sales, SG&A actually decreased 30 basis points
to 3.59% from 3.89% in the prior year. While the dollar value of SG&A increased
due to additional expenses required to support the increase in business, the
decrease in SG&A as a percentage of sales is attributable to the benefits
realized by the Company's ongoing focus on improving operating efficiencies as
well as the significant economies of scale achieved during the past year, as the
Company effectively leveraged its investment in infrastructure and resources.
As a result of the factors described above, operating income in fiscal 2001
increased 33.4% to $362.8 million (1.78% of net sales) from $271.9 million
(1.60% of net sales) in fiscal 2000.
Interest expense increased 39.9% to $92.3 million in fiscal 2001 from $66.0
million in fiscal 2000. This increase is the result of an increase in the
Company's average outstanding indebtedness related to funding for continued
growth and capital expenditures and an increase in average short-term interest
rates.
The Company realized a net foreign currency exchange gain of $3.9 million in
fiscal 2001 compared to a loss of $5.2 million in fiscal 2000. This gain is
largely due to the Company realizing benefits from the strengthening euro during
the fourth quarter of fiscal 2001.
The provision for income taxes increased 31.8% to $96.0 million in fiscal 2001
from $72.8 million in fiscal 2000. This increase is attributable to the increase
in taxable income during the year offset by a decrease in the Company's
effective tax rate to 35.0% in fiscal 2001 from 36.3% in fiscal 2000. The
decrease in the effective rate is primarily due to fluctuations and changes in
the mix of taxable income within the Company's various geographies and tax
jurisdictions reported in each period.
As a result of the factors described above, net income in fiscal 2001 increased
39.6% or $50.5 million to $178.0 million ($3.14 per diluted share) compared to
$127.5 million ($2.34 per diluted share) in fiscal 2000.
Critical Accounting Policies and Estimates
Management's discussion and analysis of its financial condition and results of
operations are based upon Tech Data's consolidated financial statements, which
have been prepared in accordance with accounting principles generally accepted
in the United States. The preparation of these financial statements requires
Tech Data to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues and expenses, and related disclosures. On an on-
going basis, Tech Data evaluates these estimates, including those related to bad
debts, inventories, vendor incentives, investments, fixed assets, intangible
assets, income taxes and contingencies. Our estimates and judgments are based on
currently available information, historical results and other assumptions we
believe are reasonable. Actual results could differ materially from these
estimates. Tech Data believes the following critical accounting policies affect
the more significant judgments and estimates used in the preparation of its
consolidated financial statements.
13
Accounts Receivable
Tech Data maintains allowances for doubtful accounts for estimated losses
resulting from the inability of its customers to make required payments. In
estimating the required allowance, Tech Data takes into consideration the
overall quality and aging of the receivable portfolio, the existence of credit
insurance and specifically-identified customer risks. If actual customer
performance were to deteriorate to an extent not expected by Tech Data,
additional allowances may be required which could have an adverse effect on the
Company's financial results.
Inventory
Tech Data values its inventory at the lower of its cost or market value. The
Company writes down its inventory for estimated obsolescence equal to the
difference between the cost of inventory and the estimated market value based
upon an aging analysis of the inventory on hand, specifically known inventory-
related risks, foreign currency fluctuations for foreign sourced product and
assumptions about future demand and market conditions. These write-downs are
reflected in the Company's cost of sales. If actual market conditions are less
favorable than those projected by management, additional inventory write-downs
may be required which could have an adverse effect on the Company's financial
results.
Vendor Incentives
The Company receives incentives from vendors related to cooperative advertising
allowances, volume rebates and other miscellaneous agreements. These incentives
are generally under quarterly, semi-annual or annual agreements with the
vendors, however, some of these incentives are negotiated on an ad hoc basis to
support specific programs mutually developed by the Company and the vendor.
Cooperative advertising allowances are generally required by the vendor to be
used by Tech Data exclusively for advertising or other marketing programs.
These restricted cooperative advertising allowances are recognized as a
reduction to selling, general and administrative expenses as the related
marketing expenses are incurred. The Company records unrestricted volume
rebates received as a reduction of inventory and recognizes the incentives as a
reduction to cost of sales when the related inventory is sold. Amounts received
or receivable from vendors that are not yet earned are deferred in the
consolidated balance sheet.
In addition, the Company receives early payment discounts from certain of its
vendors. The Company records early payment discounts received as a reduction of
inventory and recognizes the discount as a reduction to cost of sales when the
related inventory is sold.
Intangible Assets
The Company examines the carrying value of its excess of cost over fair value of
acquired net assets (goodwill) and other intangible assets as current events and
circumstances warrant to determine whether there are any impairment losses. If
indicators of impairment were present in intangible assets used in operations
and future cash flows were not expected to be sufficient to recover the assets'
carrying amount, an impairment loss would be charged to expense in the period
identified. No event has been identified that would indicate an impairment of
the value of goodwill recorded in the consolidated financial statements.
However, during fiscal 2002, the Company recorded a special charge of
approximately $20.1 million for certain of its software investments.
Income Taxes
Tech Data records valuation allowances to reduce its deferred tax assets to the
amount expected to be realized. In assessing the adequacy of recorded valuation
allowances, Tech Data considers future taxable income and ongoing prudent and
feasible tax planning strategies. In the event the Company determines it would
be able to use a deferred tax asset in the future in excess of its net carrying
value, an adjustment to the deferred tax asset would reduce income tax expense,
thereby increasing net income in the period such determination was made.
Likewise, should Tech Data determine that it is unable to use all or part of its
net deferred tax asset in the future, an adjustment to the deferred tax asset
would be charged to income tax expense, thereby reducing net income in the
period such determination was made.
14
Contingencies
The Company accrues for contingent obligations, including estimated legal costs,
when it is probable and the amount is reasonably estimable. As facts concerning
contingencies become known, we reassess our position and make appropriate
adjustments to the financial statements. Estimates that are particularly
sensitive to future changes include tax, legal and other regulatory matters such
as imports and exports which are subject to change as events evolve and as
additional information becomes available during the administrative and
litigation process.
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141").
SFAS 141 revises the standards of business combinations by eliminating the use
of the pooling-of-interests method and requiring that all business combinations
be accounted for using the purchase method of accounting. SFAS 141 also changes
the criteria to recognize intangible assets apart from goodwill. The provisions
of SFAS 141 are effective for all business combinations initiated after June 30,
2001. The impact of adoption of this statement on the Company's financial
position and results of operations was not material.
In June 2001, the FASB issued Statement of Financial Accounting Standards No.
142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 revises the
standards of accounting for goodwill and indefinite-lived intangible assets by
replacing the regular amortization of these assets with the requirement that
they are reviewed annually for possible impairment, or more frequently if
impairment indicators arise. Separable intangible assets that have finite lives
will continue to be amortized over their estimated useful lives. The accounting
standards of SFAS 142 are effective for fiscal years beginning after December
15, 2001. Application of the non-amortization provisions of the statement is
expected to result in an increase in net income of approximately $8.6 million
($.14 per diluted share) per year. During the first quarter for the fiscal year
ending January 31, 2003, the Company finalized the required transitional
impairment tests of goodwill and indefinite-lived intangible assets under the
requirements of SFAS 142. Based on the results of the transitional impairment
tests, Tech Data will not need to record any impairment for the adoption of this
statement.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"), which is effective for fiscal
periods beginning after December 15, 2001 and interim periods within those
fiscal years. This statement supersedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
and the accounting and reporting provisions of Accounting Principles Board
("APB") Opinion No. 30, "Reporting the Results of Operations--Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions", for the disposal of a segment
of a business. Under the provisions of APB 30, a segment of a business to be
disposed of was measured at the lower of its carrying amount or net realizable
value, adjusted for expected future operating losses, whereas SFAS 121 used fair
value less cost to sell and excludes future operating losses from the
measurement. SFAS 144 establishes a single accounting model, based on the
framework established in SFAS 121, for long-lived assets to be disposed of by
sale. The Company is currently evaluating the potential impact, if any, the
adoption of SFAS 144 will have on the Company's financial position and results
of operations.
Impact of Inflation
The Company has not been adversely affected by inflation as technological
advances and competition within the microcomputer industry has generally caused
prices of the products sold by the Company to decline. Management believes that
most price increases could be passed on to its customers, as prices charged by
the Company are not set by long-term contracts; however, as a result of
competitive pressure, there can be no assurance that the full effect of any such
price increases could be passed on to its customers.
Quarterly Data - Seasonality
The Company's quarterly operating results have fluctuated significantly in the
past and will likely continue to do so in the future as a result of seasonal
variations in the demand for the products and services offered by the Company.
The Company's narrow operating margins may magnify the impact of these factors
on the Company's operating results. Specific historical seasonal variations in
the Company's operating results have included a reduction of demand in Europe
during the summer months, increased Canadian government purchasing in the first
quarter, and worldwide pre-holiday stocking in the retail channel during the
September-to-November period. In addition, the product cycle of major products
may materially impact the Company's
15
business, financial condition, or results of operations. See Note 12 of Notes to
Consolidated Financial Statements for further information regarding the
Company's quarterly results.
Liquidity and Capital Resources
Net cash provided by operating activities of $976.6 million in fiscal 2002 was
primarily attributable to decreases in inventories and accounts receivable, in
addition to net income adjusted for non-cash items. The Company continues to
focus on improving asset turnover, as evidenced by its days of supply of
inventory which declined to 21.0 days at the end of fiscal 2002 from 30.2 days
at the end of fiscal 2001.
Net cash used in investing activities of $49.4 million during fiscal 2002 was
primarily attributable to the expansion or upgrade of the Company's management
information systems, office facilities and equipment for its logistics centers.
Depending upon economic conditions, the Company expects to make capital
expenditures of approximately $75 million during fiscal 2003 to further expand
or upgrade its IT systems, logistics centers and office facilities. Tech Data
continues to make significant investments to implement new IT systems and
upgrade its existing IT infrastructure in order to meet its changing business
requirements. These implementations and upgrades occur at various levels
throughout the Company and include, but are not limited to, new operating and
enterprise systems, financial systems, web technologies, customer relationship
management systems and telecommunications. While the Company believes it will
realize increased operating efficiencies as a result of these investments,
unforeseen circumstances or complexities could have an adverse impact on the
Company's business.
Net cash used in financing activities of $798.2 million during fiscal 2002
reflects the repayments of revolving credit loans, a portion of which was
refinanced through the issuance of $290.0 million of convertible subordinated
debentures ($284.2 million, net of expenses). In addition, the Company received
$36.4 million from stock option exercises (which does not include the related
income tax benefit of $7.0 million), benefit plans and purchases made through
the Company's Employee Stock Purchase Plan.
The Company currently maintains a $520.0 million revolving credit facility with
a syndicate of banks that expires in May 2003. The Company pays interest under
this revolving credit facility at the applicable eurocurrency rate plus a margin
based on the Company's credit ratings. Additionally, the Company currently
maintains a $700.0 million Receivables Securitization Program with a syndicate
of banks expiring in May 2002, which the Company intends to reduce to $500.0
million and renew for another year. The Company pays interest on the
Receivables Securitization Program at designated commercial paper rates plus an
agreed-upon margin. In addition to these credit facilities, the Company
maintains additional lines of credit and overdraft facilities totaling
approximately $620.0 million.
The aforementioned credit facilities total approximately $1.8 billion, of which
$86.0 million was outstanding at January 31, 2002. These credit facilities
contain covenants that must be complied with on a continuous basis, including
the maintenance of certain financial ratios, restrictions on payment of
dividends and restrictions on the amount of common stock that may be repurchased
annually. The Company was in compliance with all such covenants as of January
31, 2002. For a more detailed discussion of the Company's credit facilities,
see Note 5 of Notes to Consolidated Financial Statements.
In December 2001, the Company issued $290.0 million of convertible subordinated
debentures due 2021. The debentures bear interest at 2% per year and are
convertible into the Company's common stock at any time, if the market price of
the common stock exceeds a specified percentage, beginning at 120% and declining
1/2% each year until it reaches 110% at maturity, of the conversion price per
share of common stock, or in other specified instances. Holders may convert
debentures into 16.7997 shares per $1,000 principal amount of debentures,
equivalent to a conversion price of approximately $59.53 per share. The
debentures are convertible into 4,871,913 shares of the Company's common stock.
Holders have the option to require the Company to repurchase the debentures on
any of the fourth, eighth, twelfth or sixteenth anniversary dates from the issue
date at 100% of the principal amount plus accrued interest to the repurchase
date. The Company has the option to satisfy any debentures submitted for
repurchase in either cash and/or the Company's common stock, provided that
shares of common stock at the first purchase date will be valued at 95% of fair
market value (as defined in the indenture) and at 97.5% of fair market value for
all subsequent purchase dates. The debentures are redeemable in whole or in part
for cash, at the option of the Company at any time on or after December 20,
2005. The Company will pay contingent interest on the debentures during
specified six-month periods beginning on December 15, 2005, if the market price
of the debentures exceeds specified levels. In addition, the dilutive impact of
the $290.0 million of convertible subordinated debentures, due 2021, is
excluded from the diluted earnings per share calculations due to the contingent
conversion feature.
16
In August 2000, the Company filed a universal shelf registration statement with
the Securities and Exchange Commission for $500.0 million of debt and equity
securities. The net proceeds from any issuance are expected to be used for
general corporate purposes, including capital expenditures, the repayment or
refinancing of debt and to meet working capital needs. As of January 31, 2002,
the Company had not issued any debt or equity securities under this registration
statement, nor can any assurances be given that the Company will issue any debt
or equity securities under this registration statement in the future.
The Company believes that cash from operations, available and obtainable bank
credit lines, and trade credit from its vendors will be sufficient to satisfy
its working capital and capital expenditure requirements through fiscal 2003.
Principal maturities of long-term debt and amounts due under future minimum
lease payments are as follows:
Operating Capital Long-term
Fiscal year Leases Leases Debt Total
----------------------------------------------------------
(In thousands)
2003................................................ $ 37,730 $ 1,779 $ 191 $ 39,700
2004................................................ 30,333 1,779 300,210 332,322
2005................................................ 23,135 1,779 7,792 32,706
2006................................................ 18,006 1,779 - 19,785
2007................................................ 13,500 1,779 - 15,279
Thereafter.......................................... 133,413 12,166 290,000 435,579
---------- --------- ----------- ----------
Total payments...................................... 256,117 21,061 598,193 875,371
Less amounts representing interest ................. - (5,827) - (5,827)
---------- --------- ----------- ----------
Total principal payments ........................... $ 256,117 $ 15,234 $ 598,193 $ 869,544
========== ========= =========== ==========
The Company leases certain of its logistics centers and office facilities under
a five-year synthetic lease facility provided by a group of financial
institutions which expires in May 2005. The sum of future minimum lease payments
under this lease facility at January 31, 2002 was approximately $9.4 million,
which is included in the schedule above. In accordance with the terms of the
synthetic lease facility and the Internal Revenue Code, Tech Data claims tax
deductions for interest and depreciation on the leased assets. The maximum
funding of the Company's leasing activities available under the synthetic lease
facility is $135.0 million (of which the Company had utilized $115.0 million at
January 31, 2002). The synthetic lease facility has an initial term of five
years, with rent obligations commencing on the date construction of a discrete
project is complete. At any time during the term of the lease, the Company may,
at its option, purchase the property at approximately the amount expended by the
lessor to purchase the land and construct the building ("purchase value"). If
the Company elects not to purchase the property at the end of the lease, Tech
Data has guaranteed a percentage of the purchase value. This guaranty
approximated $100.1 million at January 31, 2002. See Note 10 of Notes to
Consolidated Financial Statements for additional disclosure.
The Company has also entered into other agreements to lease certain office
space, logistics centers and equipment for varying periods. Management expects
that in the normal course of business, these leases will be renewed or replaced
by other leases.
17
Asset Management
The Company manages its inventories by maintaining sufficient quantities to
achieve high order fill rates while attempting to stock only those products in
high demand with a rapid turnover rate. Inventory balances fluctuate as the
Company adds new product lines and when appropriate, makes large purchases,
including cash purchases from manufacturers and publishers when the terms of
such purchases are considered advantageous. The Company's contracts with most of
its vendors provide price protection and stock rotation privileges to reduce the
risk of loss due to manufacturer price reductions and slow moving or obsolete
inventory. In the event of a vendor price reduction, the Company generally
receives a credit for the impact on products in inventory, subject to certain
limitations. In addition, the Company has the right to rotate a certain
percentage of purchases, subject to certain limitations. Historically, price
protection and stock rotation privileges as well as the Company's inventory
management procedures have helped to reduce the risk of loss of inventory value.
The Company attempts to control losses on credit sales by closely monitoring
customers' creditworthiness through its information technology systems which
contain detailed information on each customer's payment history and other
relevant information. The Company has obtained credit insurance that insures a
percentage of the credit extended by the Company to certain of its larger
domestic and international customers against possible loss. Customers who
qualify for credit terms are typically granted net 30-day payment terms. The
Company also sells products on a prepay, credit card, cash on delivery and floor
plan basis.
Euro Conversion
The Company conducts business in multiple currencies, including the currencies
of various European countries in the European Union which began participating in
the single European currency by adopting the euro as their common currency as of
January 1, 1999. During the transition period that ended December 31, 2001, the
existing currencies of the member countries remained legal tender and customers
and vendors of the Company continued to use these currencies when conducting
business. Currency rates during this period, however, were not computed from
one legacy currency to another but instead were first converted into the euro.
On January 1, 2002, euro denominated bills and coins were issued and began
circulating. Most participating countries planned to withdraw legacy currencies
from circulation by February 28, 2002. No material costs were incurred nor were
there any material adverse effects on the Company's financial position or
results of operations as a result of the conversion to the euro.
Item 7a - Qualitative and Quantitative Disclosures About Market Risk
The Company, as a large international organization, faces exposure to adverse
movements in foreign currency exchange rates. These exposures may change over
time as business practices evolve and could have a material impact on the
Company's financial results in the future. In the normal course of business, the
Company employs established policies and procedures to manage its exposure to
fluctuations in the value of foreign currencies using a variety of financial
instruments. It is the Company's policy to utilize financial instruments to
reduce risks where internal netting cannot be effectively employed and to not
enter into foreign currency derivative instruments for speculative or trading
purposes. The Company's primary exposure relates to transactions in which the
currency collected from customers is different from the currency used to
purchase the product sold in Europe, Canada and Latin America. In addition, the
Company has foreign currency risk related to debt that is denominated in
currencies other than the U.S. dollar. The Company's foreign currency risk
management objective is to protect its earnings and cash flows from the adverse
impact of exchange rate movements. Foreign exchange risk is managed by using
forward, option and swap contracts to hedge intercompany loans, trade
receivables and payables. Hedged transactions are denominated primarily in the
following currencies: Canadian dollar, Danish krone, euros, Norwegian krone,
Swedish krona, Swiss franc, British pound and Chilean peso.
18
The following table provides information about the Company's foreign currency
derivative financial instruments outstanding as of January 31, 2002 and 2001.
The information is provided in United States dollar equivalents. For the foreign
currency contracts, the table presents the notional amount (at contractual
exchange rates) and the weighted-average contractual foreign currency exchange
rates. These contracts are generally for durations of 90 days or less.
Foreign Currency Contracts Notional Amounts by Expected Maturity
Average Forward Foreign Currency Exchange Rate
(Dollar amounts in millions, except weighted average contract rates)
Year Ended January 31, 2002 Year Ended January 31, 2001
-------------------------------------------------------------------------
Weighted Weighted
Notional Average Estimated Notional Average Estimated
Amount Contract Fair Value Amount Contract Fair Value
Rate Rate
-------------------------------------------------------------------------
United States Dollar Functional Currency
Forward Contracts - Purchase United States Dollar
Euro $ 4.45 0.890 $ 0.16 $ 70.50 0.886 $ (3.56)
Swiss Franc 27.12 1.659 0.91 27.41 1.751 (1.89)
Swedish Krona 9.53 10.494 0.16 5.29 9.438 0.04
Danish Krone 4.71 8.484 0.09 25.00 8.000 0.06
Norwegian Krone - - - 5.70 8.772 0.04
Forward Contracts - Sell United States Dollar
Canadian Dollar $ 36.86 1.587 $ (0.06) $ 4.95 1.515 $ 0.05
Euro 24.63 0.869 (0.24) 72.86 0.933 (0.20)
Danish Krone - - - 9.85 8.126 0.13
Miscellaneous other currencies 9.09 - (0.17) 2.25 - 0.02
Euro Functional Currency
Forward Contracts - Purchase United States Dollar
Euro $ 32.95 0.890 $ 1.19 $ 2.13 0.937 $ 0.01
German Mark - - - 26.12 2.211 (1.23)
Spanish Peseta - - - 3.06 182.243 (0.06)
Forward Contracts - Purchase Euro
Miscellaneous other currencies $ 0.97 - - $ 2.43 - $ 0.01
Purchased Call Options - Purchase United States
Dollar
German Mark $ - - - $ 10.00 2.055 $ 0.31
Miscellaneous other currencies - - - 5.00 - 0.08
Sold Put Options - Sell United States Dollar
German Mark $ - - - $ 10.00 1.970 $ (0.05)
Miscellaneous other currencies - - - 5.00 - (0.08)
19
Foreign Currency Contracts
Notional Amounts by Expected Maturity
Average Forward Foreign Currency Exchange Rate
(Dollar amounts in millions, except weighted average contract rates)
Year Ended January 31, 2002 Year Ended January 31, 2001
------------------------------------- ---------------------------------
Weighted Weighted
Notional Average Estimated Notional Average Estimated
Amount Contract Fair Value Amount Contract Fair Value
Rate Rate
------------------------------------- ---------------------------------
Other Miscellaneous Functional Currencies
Forward Contracts - Purchase United States Dollar
British Pound $24.04 1.428 $ 0.33 $ 57.29 1.456 $ (0.14)
Canadian Dollar 18.59 1.593 (0.04) 35.20 1.508 (0.20)
Chilean Peso 6.54 684.200 (0.20) 8.26 579.136 (0.06)
Miscellaneous other currencies 5.78 - (0.03) 3.92 - 0.06
Forward Contracts - Purchase Euro
British Pound $26.80 1.615 $ (0.44) $ 23.90 1.586 $ 0.26
Swiss Franc - - - 8.37 1.51 0.06
Miscellaneous other currencies 6.73 - (0.03) 4.91 - -
Purchased Call Options - Purchase United States
Dollar
Miscellaneous other currencies $ 3.00 - $ 0.04 $ 3.00 - $ 0.01
Sold Put Options - Sell United States Dollar
Miscellaneous other currencies $ 3.00 - - $ 3.00 - $ (0.20)
Purchased Call Options - Purchase Euro
Miscellaneous other currencies - - - $ 3.00 - $ 0.01
Sold Put Options - Sell Euro
Miscellaneous other currencies - - - $ 3.00 - $ (0.04)
The Company is exposed to changes in interest rates primarily as a result of its
short- and long-term debt used to maintain liquidity and to finance working
capital, capital expenditures and business expansion. Interest rate risk is also
present in the forward foreign currency contracts hedging intercompany and third
party loans. The Company's interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash flows and to lower
overall borrowing costs. To achieve its objective, the Company uses a
combination of fixed and variable rate debt. The nature and amount of the
Company's long-term and short-term debt can be expected to vary as a result of
future business requirements, market conditions and other factors. As of January
31, 2002 and January 31, 2001, approximately 88% and 19%, respectively, of the
outstanding debt had fixed interest rates (through the terms of such debt or
through interest rate swap agreements). The Company finances working capital
needs through bank loans, convertible subordinated debt and its accounts
receivable securitization program. Interest rate swaps are used to hedge the
interest rate risks of the underlying debt obligations.
20
The following table provides information about the Company's derivative
financial instruments and other financial instruments that are sensitive to
changes in interest rates. For debt obligations, the table presents principal
cash flows and related weighted-average interest rates by expected maturity
dates. Fair value for these instruments was determined based on third party
valuations. All amounts are stated in United States dollar equivalents.
Debt and Interest Rate Contracts as of January 31, 2002
Principal Notional Amount by Expected Maturity
(Dollar amounts in millions)
Year Ending January 31, Fair Value
2003 2004 2005 2006 Thereafter Total 1/31/2002
-----------------------------------------------------------------
United States Dollar Functional Currency
Liabilities
US dollar denominated long term debt (including current portion)
Fixed rate debt $ 0.19 $300.21 $7.79 - $290.00 $598.19 $ 615.30
Average interest rate 3.62% 3.62% 2.23% 2.00% 2.00%
Euro Functional Currency
Liabilities
Euro denominated debt - Revolving Credit
Variable rate debt $32.98 - - - - $ 32.98 $ 32.98
Average interest rate 4.13% - - - -
Euro denominated long term debt (including current portion)
Fixed rate debt $ 0.90 $ 0.90 $0.90 $0.90 $ 11.63 $ 15.23 $ 15.23
Average interest rate 5.92% 5.92% 5.92% 5.92% 5.92%
Purchased Interest Rate Caps
Euro
Notional Amount $ 8.59 $ 25.78 - - - $ 34.37 $ -
Average strike rate 5.50% 6.00% - - -
Forward rate 3.40% 3.40% - - -
Sold Interest Rate Floors
Euro
Notional Amount $ 8.59 $ 17.19 - - - $ 25.78 $ (0.09)
Average strike rate 4.00% 4.30% - - -
Forward rate 3.40% 3.40% - - -
Other Miscellaneous Functional Currencies
Liabilities
Other Miscellaneous Currencies denominated debt - Revolving Credit
Variable rate debt $53.07 - - - - $ 53.07 $ 53.07
Average interest rate 5.59% - - - -
21
Debt and Interest Rate Contracts as of January 31, 2002
Principal Notional Amount by Expected Maturity
(Dollar amounts in millions)
Year Ending January 31, Fair Value
2003 2004 2005 2006 Thereafter Total 1/31/2002
----------------------------------------------------------------
Purchased Interest Rate Caps
Swiss Franc
Notional Amount $ 11.65 $ 5.83 - - - $17.48 $ -
Average strike rate 4.50% 4.50% - - -
Forward rate 1.80% 3.00% - - -
Sold Interest Rate Floors
Swiss Franc
Notional Amount $ 11.65 $ 5.83 - - - $17.48 $ (0.20)
Average strike rate 3.30% 3.40% - - -
Forward rate 1.80% 3.00% - - -
22
Debt and Interest Rate Contracts as of January 31, 2001
Principal Notional Amount by Expected Maturity
(Dollar amounts in millions)
Year Ending January 31, Fair Value
2002 2003 2004 2005 Thereafter Total 1/31/2001
-------------------------------------------------------------------------
United States Dollar Functional Currency
Liabilities
US dollar denominated debt - Revolving Credit
Fixed rate debt $611.25 - - - - $611.25 $ 611.25
Average interest rate 7.40% - - - -
Euro denominated debt - Revolving Credit
Variable rate debt $292.10 - - - - $292.10 $ 292.10
Average interest rate 5.82% - - - -
US dollar denominated long term debt (including
current portion)
Fixed rate debt $ 0.17 $ 0.19 $300.21 $ 7.79 $ - $308.36 $ 278.36
Average interest rate 5.14% 5.14% 5.14% 10.25% -
Euro Functional Currency
Liabilities
Euro denominated debt - Revolving Credit
Variable rate debt $282.51 - - - - $282.51 $ 282.51
Average interest rate 5.71% - - - -
Euro denominated long term debt (including
current portion)
Fixed rate debt $ 0.37 $ 0.37 $ 0.37 $ 0.37 $11.46 $ 12.94 $ 12.94
Average interest rate 6.11% 6.11% 6.11% 6.11% 6.11%
Purchased Interest Rate Caps
Euro
Notional Amount $ 9.30 $18.60 $ 27.91 - - $ 55.81 $ 0.02
Average strike rate 4.50% 5.75% 6.00% - -
Forward rate 4.61% 4.61% 4.61% - -
Sold Interest Rate Floors
Euro
Notional Amount $ - $ 9.30 $ 27.91 - - $ 37.21 $ (0.09)
Average strike rate - 4.50% 4.17% - -
Forward rate - 4.61% 4.61% - -
23
Debt and Interest Rate Contracts as of January 31, 2001
Principal Notional Amount by Expected Maturity
(Dollar amounts in millions)
Year Ending January 31, Fair Value
2002 2003 2004 2005 Thereafter Total 1/31/2001
------------------------------------------------------------------------
Other Miscellaneous Functional Currencies
Liabilities
Other Miscellaneous Currencies denominated debt -
Revolving Credit
Variable rate debt $63.72 - - - - $ 63.72 $ 63.72
Average interest rate 8.70% - - - -
Purchased Interest Rate Caps
Swiss Franc
Notional Amount - $ 12.20 $ 6.09 - - $ 18.29 $ 0.01
Average strike rate - 4.50% 4.50% - -
Forward rate - 3.35% 3.35% - -
United States Dollar
Notional Amount - $ 10.00 - - - $ 10.00 $ -
Average strike rate - 7.25% - - -
Forward rate - 5.26% - - -
Sold Interest Rate Floors
Swiss Franc
Notional Amount - $ 12.20 $ 6.09 - - $ 18.29 $ (0.10)
Average strike rate - 3.30% 3.40% - -
Forward rate - 3.35% 3.35% - -
United States Dollar
Notional Amount - - $10.00 - - $ 10.00 $ (0.14)
Average strike rate - - 5.90% - -
Forward rate - - 5.26% - -
Prior to January 31, 2002 the Company presented market risk exposures using
value at risk (VaR). In an effort to provide more information regarding
derivative financial instruments and market risk, the Company has decided to
disclose this information in the tabular format.
Comments on Forward-Looking Information
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company has filed an Exhibit 99-A which
outlines cautionary statements and identifies important factors that could cause
the Company's actual results to differ materially from those projected in
forward-looking statements made by, or on behalf of, the Company. Such forward-
looking statements, as made within this Form 10-K, should be considered in
conjunction with Exhibit 99-A.
24
ITEM 8. Financial Statements and Supplementary Data
Index to Financial Statements
Page
----
Financial Statements
Reports of Independent Certified Public Accountants.................................. 26
Report of Management................................................................. 28
Consolidated Balance Sheet as of January 31, 2002 and 2001........................... 29
Consolidated Statement of Income for the three years ended January 31, 2002.......... 30
Consolidated Statement of Changes in Shareholders' Equity for the three years ended
January 31, 2002.................................................................... 31
Consolidated Statement of Cash Flows for the three years ended January 31, 2002...... 32
Notes to Consolidated Financial Statements........................................... 33
Financial Statement Schedule
Schedule II. -- Valuation and qualifying accounts.................................... 56
All schedules and exhibits not included are not applicable, not required or
would contain information which is shown in the financial statements or notes
thereto.
25
Report of Independent Certified Public Accountants
To the Board of Directors and Shareholders of Tech Data Corporation:
We have audited the accompanying consolidated balance sheets of Tech Data
Corporation and subsidiaries as of January 31, 2002 and 2001, and the related
consolidated statements of income, shareholders' equity, and cash flows for the
years then ended. Our audits also included the financial statement schedule
listed in the Index at Item 14a. These financial statements and schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. An
audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Tech Data
Corporation and subsidiaries at January 31, 2002 and 2001, and the consolidated
results of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States.
Also, in our opinion, the related financial statement schedule, when considered
in relation to the basic financial statements taken as a whole, presents fairly
in all material respects the information set forth therein.
/s/ ERNST & YOUNG LLP
Ernst & Young LLP
Tampa, Florida
March 13, 2002
26
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders of Tech Data Corporation
In our opinion, the consolidated financial statements listed in the
accompanying index present fairly, in all material respects, the results of
operations and cash flows for the year ended January 31, 2000, in conformity
with accounting principles generally accepted in the United States of America.
In addition, in our opinion, the financial statement schedule listed in the
accompanying index presents fairly, in all material respects, the information
set forth therein for the year ended January 31, 2000 when read in conjunction
with the related consolidated financial statements. These financial statements
and financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audit. We conducted our
audit of these statements in accordance with auditing standards generally
accepted in the United States of America, which require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for our opinion.
/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Tampa, Florida
March 28, 2000
27
REPORT OF MANAGEMENT
To Our Shareholders:
The management of Tech Data Corporation is responsible for the preparation,
integrity and objectivity of the consolidated financial statements and related
financial information contained in this Annual Report. The financial statements
have been prepared by the Company in accordance with accounting principles
generally accepted in the United States and, in the judgment of management,
present fairly and consistently the Company's financial position and results of
operations. The financial statements and other financial information in this
report include amounts that are based on management's best estimates and
judgments and give due consideration to materiality.
The Company maintains a system of internal accounting controls to provide
reasonable assurance that assets are safeguarded and that transactions are
executed in accordance with management's authorization and recorded properly to
permit the preparation of financial statements in accordance with generally
accepted accounting principles. The design, monitoring and revisions of the
system of internal accounting controls involves, among other things,
management's judgment with respect to the relative cost and expected benefits of
specific control measures.
The Audit Committee of the Board of Directors is responsible for recommending to
the Board the independent certified public accounting firm to be retained each
year. The Audit Committee meets periodically with the independent accountants
and management to review their performance and confirm that they are properly
discharging their responsibilities. The independent accountants have direct
access to the Audit Committee to discuss the scope and results of their work,
the adequacy of internal accounting controls and the quality of financial
reporting.
/s/ STEVEN A. RAYMUND /s/ JEFFERY P. HOWELLS
Steven A. Raymund Jeffery P. Howells
Chairman of the Board of Directors Executive Vice President
and Chief Executive Officer and Chief Financial Officer
March 13, 2002
28
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
January 31,
----------------------------------
2002 2001
---------- ----------
ASSETS
Current assets:
Cash and cash equivalents.......................................................... $ 257,927 $ 138,925
Accounts receivable, less allowance of $60,155 and $64,465......................... 1,702,957 2,142,792
Inventories........................................................................ 910,823 1,669,574
Prepaid and other assets........................................................... 99,823 114,977
---------- ----------
Total current assets.............................................................. 2,971,530 4,066,268
Property and equipment, net......................................................... 136,044 153,196
Excess of cost over fair value of acquired net assets, net.......................... 269,103 299,692
Other assets, net................................................................... 81,653 96,389
---------- ----------
$3,458,330 $4,615,545
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans............................................................. $ 86,046 $1,249,576
Accounts payable................................................................... 1,193,033 1,519,167
Accrued expenses................................................................... 306,531 330,242
---------- ----------
Total current liabilities......................................................... 1,585,610 3,098,985
Long-term debt...................................................................... 612,335 320,757
---------- ----------
Total liabilities................................................................. 2,197,945 3,419,742
---------- ----------
Minority interest................................................................... 452 489
---------- ----------
Commitments and contingencies (Note 10)
Shareholders' equity:
Preferred stock, par value $.02; 226,500 shares
authorized; none and 226,500 issued and outstanding; liquidation
preference $.20 per share (Note 9).............................................. - 5
Common stock, par value $.0015; 200,000,000 shares authorized;
55,454,433 and 53,796,432 issued and outstanding................................ 83 81
Additional paid-in capital........................................................ 618,680 575,223
Retained earnings................................................................. 845,008 734,231
Accumulated other comprehensive loss.............................................. (203,838) (114,226)
---------- ----------
Total shareholders' equity...................................................... 1,259,933 1,195,314
---------- ----------
$3,458,330 $4,615,545
========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
29
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
Year ended January 31,
-------------------------------------------
2002 2001 2000
----------- ----------- -----------
Net sales........................................................ $17,197,511 $20,427,679 $16,991,750
Cost of products sold............................................ 16,269,481 19,331,616 16,058,086
----------- ----------- -----------
Gross profit..................................................... 928,030 1,096,063 933,664
Selling, general and administrative expenses..................... 677,914 733,307 661,792
Special charges (Note 13)........................................ 27,000 - -
----------- ----------- -----------
Operating income................................................. 223,116 362,756 271,872
Interest expense, net............................................ 55,419 92,285 65,965
Net foreign currency exchange (gain) loss........................ (143) (3,884) 5,153
----------- ----------- -----------
Income before income taxes....................................... 167,840 274,355 200,754
Provision for income taxes....................................... 57,063 96,033 72,837
----------- ----------- -----------
Income before minority interest.................................. 110,777 178,322 127,917
Minority interest................................................ - 339 416
----------- ----------- -----------
Net income....................................................... $ 110,777 $ 177,983 $ 127,501
=========== =========== ===========
Net income per common share:
Basic.......................................................... $ 2.04 $ 3.34 $ 2.47
=========== =========== ===========
Diluted........................................................ $ 1.98 $ 3.14 $ 2.34
=========== =========== ===========
Weighted average common shares outstanding:
Basic.......................................................... 54,407 53,234 51,693
=========== =========== ===========
Diluted........................................................ 60,963 59,772 58,508
=========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
30
TECH DATA CORPORATION
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(In thousands)
Accumulated
Preferred Stock Common Stock Additional Other Total
--------------- ------------ Paid-In Retained Comprehensive Shareholders'
Shares Amount Shares Amount Capital Earnings Income (Loss) Equity
------ ------ ------ ------ ---------- ----------- ------------- -------------
Balance - January 31, 1999.......... 227 $ 5 51,098 $ 77 $ 505,385 $ 428,720 $ 33,104 $ 967,291
Issuance of common stock for
benefit plans and
stock options exercised
including related tax
benefit of $5,191................. 1,134 1 24,853 24,854
Effect of change in year end of
certain subsidiaries (Note 3)..... 27 (17,086) (17,059)
Comprehensive income (loss)......... 127,501 (88,892) 38,609
----- --- ------ ------ --------- ----------- ----------- -----------
Balance - January 31, 2000.......... 227 5 52,232 78 530,238 556,248 (72,874) 1,013,695
Issuance of common stock for
benefit plans and
stock options exercised
including related tax
benefit of $9,449................. 1,564 3 44,985 44,988
Comprehensive income (loss)......... 177,983 (41,352) 136,631
----- --- ------ ------ --------- ----------- ----------- -----------
Balance - January 31, 2001.......... 227 5 53,796 81 575,223 734,231 (114,226) 1,195,314
Issuance of common stock for
benefit plans and
stock options exercised
including related tax benefit
of $7,022......................... 1,465 2 43,452 43,454
Exchange of preferred to
common shares (Note 9)............ (227) (5) 193 5 -
Comprehensive income (loss)......... 110,777 (89,612) 21,165
----- --- ------ ------ --------- ----------- ----------- -----------
Balance - January 31, 2002.......... - $ - 55,454 $ 83 $ 618,680 $ 845,008 ($203,838) $ 1,259,933
===== === ====== ====== ========= =========== =========== ===========
The accompanying Notes to Consolidated Financial Statements are an integral part
of these financial statements.
31
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
Year ended January 31,
-----------------------------------------------------
2002 2001 2000
-------------- -------------- ---------------
Cash flows from operating activities:
Cash received from customers................................... $ 17,511,511 $ 20,114,486 $ 16,788,960
Cash paid to suppliers and employees........................... (16,406,265) (20,047,551) (16,684,316)
Interest paid.................................................. (55,871) (94,823) (69,554)
Income taxes paid.............................................. (72,745) (62,048) (34,176)
-------------- -------------- ---------------
Net cash provided by (used in) operating activities........... 976,630 (89,936) 914
-------------- -------------- ---------------
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired................ (183) (19,198) (42,898)
Expenditures for property and equipment........................ (28,466) (38,079) (59,038)
Software development costs..................................... (20,719) (22,705) (18,381)
-------------- -------------- ---------------
Net cash used in investing activities......................... (49,368) (79,982) (120,317)
-------------- -------------- ---------------
Cash flows from financing activities:
Proceeds from the issuance of common stock, net of related
tax benefit................................................... 36,432 35,539 19,663
Net (repayments) borrowings on revolving credit loans.......... (1,118,167) 248,712 99,447
Proceeds from issuance of long-term debt, net of expense....... 284,200 - -
Principal payments on long-term debt........................... (634) (557) (162)
-------------- -------------- ---------------
Net cash (used in) provided by financing activities........... (798,169) 283,694 118,948
-------------- -------------- ---------------
Effect of change in year end of certain subsidiaries (Note 3).... - - 23,626
-------------- -------------- ---------------
Effect of exchange rate changes on cash......................... (10,091) (6,637) -
-------------- -------------- ---------------
Net increase in cash and cash equivalents..................... 119,002 107,139 23,171
Cash and cash equivalents at beginning of year.................. 138,925 31,786 8,615
-------------- -------------- ---------------
Cash and cash equivalents at end of year........................ $ 257,927 $ 138,925 $ 31,786
============== ============== ===============
Reconciliation of net income to net cash provided by (used in)
operating activities:
Net income...................................................... $ 110,777 $ 177,983 $ 127,501
-------------- -------------- ---------------
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization.................................. 63,488 63,922 57,842
Provision for losses on accounts receivable.................... 40,764 41,447 40,877
Special charges (Note 13)...................................... 27,000 - -
Deferred income taxes.......................................... (11,848) (1,789) 1,306
Changes in assets and liabilities:
Decrease (increase) in accounts receivable.................... 314,000 (313,197) (202,790)
Decrease (increase) in inventories............................ 702,219 (146,093) (220,585)
(Increase) in prepaid and other assets........................ (6,248) (11,603) (25,430)
(Decrease) increase in accounts payable....................... (264,722) 11,863 136,748
Increase in accrued expenses.................................. 1,200 87,531 85,445
-------------- -------------- ---------------
Total adjustments........................................... 865,853 (267,919) (126,587)
-------------- -------------- ---------------
Net cash provided by (used in) operating activities............ $ 976,630 $ (89,936) $ 914
============== ============== ===============
The accompanying Notes to Consolidated Financial Statements are an integral part
of the these financial statements.
32
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Tech Data is a leading provider of IT products, logistics management and other
value-added services, and based on sales is the world's second largest
distributor. The Company distributes microcomputer hardware and software
products to value-added resellers, corporate resellers, retailers, direct
marketers and Internet resellers. The Company and its subsidiaries distribute to
more than 80 countries and serve over 100,000 resellers in the United States,
Canada, the Caribbean, Latin America, Europe and the Middle East.
Principles of Consolidation
The consolidated financial statements include the accounts of Tech Data
Corporation and its subsidiaries ("Tech Data" or the "Company"). All significant
intercompany accounts and transactions have been eliminated in consolidation.
For further discussion, see Note 3 - Change in Year End of Certain Subsidiaries.
Method of Accounting
The Company prepares its financial statements in conformity with generally
accepted accounting principles. These principles require management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Revenue Recognition
Sales are recorded upon shipment. The Company allows its customers to return
product for exchange or credit subject to certain limitations. Provision for
estimated losses on such returns are recorded at the time of sale. Funds
received from vendors for marketing programs and product rebates are accounted
for as a reduction of selling, general and administrative expenses or product
cost according to the nature of the program. Shipping costs are included in the
cost of products sold.
Inventories
Inventories are stated at the lower of cost or market, cost being determined on
the first-in, first-out (FIFO) method.
Property and Equipment
Property and equipment are stated at cost. Depreciation is computed over the
estimated economic lives (or lease period if shorter) using the following
methods:
Method Years
------ -----
Buildings and improvements................................................. Straight-line 3 - 39
Leasehold improvements..................................................... Straight-line 3 - 39
Furniture, fixtures and equipment.......................................... Accelerated 3 - 10
and straight-line
33
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
Expenditures for renewals and improvements that significantly add to productive
capacity or extend the useful life of an asset are capitalized. Expenditures for
maintenance and repairs are charged to operations when incurred. When assets are
sold or retired, the cost of the asset and the related accumulated depreciation
are eliminated from the accounts and any gain or loss is recognized at such
time.
Long-Lived Assets
Long-lived assets are reviewed for potential impairment at such time when events
or changes in circumstances indicate that recovery of the asset is unlikely. Any
impairment loss would be recognized when the sum of the expected, undiscounted
future net cash flows is less than the carrying amount of the asset.
Excess of Cost Over Fair Value of Acquired Net Assets
The excess of cost over fair value of acquired net assets ("goodwill") has been
amortized on a straight-line basis over 15 to 40 years. Amortization expense was
$8,640,000, $8,690,000, and $8,836,000 in 2002, 2001 and 2000, respectively. The
accumulated amortization of goodwill is $30,308,000 and $23,187,000 at January
31, 2002 and 2001, respectively. With the adoption of Statement of Financial
Accounting Standards No. 142, "Goodwill and Other Intangible Assets", effective
as of February 1, 2002, goodwill will no longer be amortized and will be
reviewed annually for possible impairment.
Intangibles
Included within other assets at January 31, 2002 are certain intangible assets
including capitalized software costs and the allocation of a portion of the
purchase price of Computer 2000 AG ("Computer 2000") to software used within the
Computer 2000 entities and the value of the customer base acquired (see Note 2 -
Acquisition and Disposition of Subsidiaries). Such capitalized costs are being
amortized over three to ten years resulting in amortization expense of
$11,605,000, $10,096,000, and $9,297,000 in 2002, 2001, and 2000, respectively.
The accumulated amortization of such costs was $57,750,000 and $48,442,000 at
January 31, 2002 and 2001, respectively. The remaining unamortized balance of
such costs was $39,781,000 and $57,019,000 at January 31, 2002 and 2001,
respectively.
Product Warranty
The Company's vendors generally warrant the products distributed by the Company
and allow the Company to return defective products, including those that have
been returned to the Company by its customers. The Company does not
independently warrant the products it distributes; however, the Company does
warrant services with regard to products integrated for its customers. A
provision for estimated warranty costs is recorded at the time of sale and
periodically adjusted to reflect actual experience. Warranty expense was not
material to the Company's Consolidated Statement of Income.
Income Taxes
Income taxes are accounted for under the liability method. Deferred taxes
reflect the tax consequences on future years of differences between the tax
bases of assets and liabilities and their financial reporting amounts. Deferred
taxes have not been provided on the cumulative undistributed earnings of foreign
subsidiaries or the cumulative translation adjustment related to those
investments since such amounts are expected to be reinvested indefinitely.
34
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
Concentration of Credit Risk
The Company sells its products to a large base of value-added resellers, direct
marketers, retailers, corporate resellers, and Internet resellers throughout the
United States, Canada, the Caribbean, Latin America, Europe, and the Middle
East. The Company performs ongoing credit evaluations of its customers and
generally does not require collateral. The Company has obtained credit insurance
which insures a percentage of credit extended by the Company to certain of its
larger domestic and international customers against possible loss. The Company
makes provisions for estimated credit losses at the time of sale.
No single customer accounted for more than 5% of the Company's net sales during
fiscal 2002, 2001, or 2000. Also, with the exception of HP and Compaq, no single
vendor accounted for more than 10% of Tech Data's net sales during fiscal 2002,
2001, or 2000. Sales of HP products accounted for 20%, 19%, and 19% of net sales
in fiscal 2002, 2001, and 2000, respectively, and sales of Compaq products
accounted for 18%, 20%, and 16% of net sales in fiscal 2002, 2001, and 2000,
respectively.
Foreign Currency Translation
Assets and liabilities of foreign operations that operate in a local currency
environment are translated to U.S. dollars at the exchange rates in effect at
the balance sheet date, with the related translation gains or losses reported as
a separate component of shareholders' equity (in the cumulative foreign currency
translation adjustment account or "CTA"). Income and expense accounts of foreign
operations are translated at the weighted average exchange rates during the
year.
Derivative Financial Instruments
The Company operates internationally with logistics facilities in various
locations around the world. The Company reduces its exposure to fluctuations in
interest rates and foreign exchange rates by creating offsetting positions
through the use of derivative financial instruments. The market risk related to
the foreign exchange agreements is offset by changes in the valuation of the
underlying items being hedged. The majority of the Company's derivative
financial instruments have terms of 90 days or less. The Company currently does
not use derivative financial instruments for trading or speculative purposes,
nor is the Company a party to leveraged derivatives.
Derivative financial instruments are accounted for on an accrual basis with
gains and losses on these contracts recorded in income in the period in which
their value changes. Gains and losses resulting from effective accounting hedges
of existing assets, liabilities or firm commitments are deferred and recognized
when the offsetting gains and losses are recognized on the related hedged items.
The notional amount of forward exchange contracts and options is the amount of
foreign currency to be bought or sold at maturity. The notional amount of
interest rate swaps is the underlying principal used in determining the interest
payments exchanged over the life of the swap. Notional amounts are indicative of
the extent of the Company's involvement in the various types and uses of
derivative financial instruments and are not a measure of the Company's exposure
to credit or market risks through its use of derivatives. The estimated fair
value of derivative financial instruments represents the amount required to
enter into similar offsetting contracts with similar remaining maturities based
on quoted market prices.
35
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
The Company's derivative financial instruments outstanding at January 31, 2002
and 2001 are as follows:
January 31, 2002 January 31, 2001
------------------------------- ---------------------------------
Notional Estimated Notional Estimated
Amounts Fair Value Amounts Fair Value
--------- ------------ --------- ------------
(In thousands) (In thousands)
Foreign exchange forward contracts........ $ 238,790 $ 1,630 $ 399,400 $ (6,600)
Purchased currency options................ 3,000 40 21,000 40
Interest rate swaps....................... 51,850 (290) 84,100 (300)
Fair Value of Financial Instruments
The carrying amounts of cash, accounts receivable, accounts payable and accrued
expenses approximate fair value because of the short maturity of these items.
The carrying amount of debt outstanding pursuant to bank credit agreements
approximates fair value as interest rates on these instruments approximate
current market rates. The estimated fair value of the convertible subordinated
notes is approximately $607,108,000 and $270,000,000 at January 31, 2002 and
2001, respectively, based upon available market information.
Comprehensive Income
Comprehensive income is defined as the change in equity (net assets) of a
business enterprise during a period from transactions and other events and
circumstances from non-owner sources. The Company's balance of other
comprehensive income is comprised exclusively of changes in the Company's CTA
account. For the years ended January 31, 2002, 2001 and 2000, the Company
recorded deferred income taxes in the CTA account of $23,018,000, $20,101,000,
and $12,942,000, respectively.
Stock-Based Compensation
The Company measures compensation costs in accordance with the Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees." In
accordance with the requirements of the Financial Accounting Standards Board's
(FASB) Statement of Financial Accounting Standards No. 123 ("SFAS 123")
"Accounting for Stock-Based Compensation", the appropriate pro forma disclosures
relating to net income and earnings per share are provided. For further
discussion see Note 8 -- Employee Benefit Plans.
Net Income Per Common Share
Basic EPS is computed by dividing net income by the weighted average number of
common shares outstanding during the reported period. Diluted EPS reflects the
potential dilution that could occur assuming the conversion of the convertible
subordinated notes and exercise of the stock options using the if-converted and
treasury stock methods, respectively. The composition of basic and diluted net
income per common share is as follows:
36
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
Year ended January 31, Year ended January 31, Year ended January 31,
2002 2001 2000
------------------------------ -------------------------------- ---------------------------------
Weighted Per Weighted Per Weighted Per
Net Average Share Net Average Share Net Average Share
Income Shares Amount Income Shares Amount Income Shares Amount
--------- --------- ------- ---------- --------- ------- ---------- --------- --------
(In thousands, except per share amounts)
Net Income per common
share - Basic............. 110,777 54,407 $2.04 $177,983 53,234 $3.34 $127,501 51,693 $2.47
======= ======= ========
Effect of dilutive securities:
Stock options.............. 1,223 1,205 1,482
5% convertible
subordinated notes........ 9,900 5,333 9,750 5,333 9,450 5,333
--------- --------- ---------- --------- ---------- ---------
Net income per common
share - Diluted.......... 120,677 60,963 $1.98 $187,733 59,772 $3.14 $136,951 58,508 $2.34
========= ========= ======= ========== ========= ======= ========== ========= ========
At January 31, 2002, 2001 and 2000, there were 83,045, 1,502,990, and
2,580,000 shares, respectively, excluded from the computation of diluted
earnings per share because their effect would have been antidilutive.
In addition, the dilutive impact of the $290.0 million of convertible
subordinated debentures, due 2021, is excluded from the diluted earnings
per share calculations due to the contingent conversion feature which
requires the market price of the common stock to exceed a specified
percentage, beginning at 120% and declining 1/2% each year until it reaches
110% at maturity, of the conversion price per share of common stock.
Holders may convert debentures into 16.7997 shares per $1,000 principal
amount of debentures, equivalent to a conversion price of approximately
$59.53 per share.
Cash Management System
Under the Company's cash management system, disbursements cleared by the
bank are reimbursed on a daily basis from the revolving credit loans. As a
result, checks issued but not yet presented to the bank are not considered
reductions of cash or accounts payable. Included in accounts payable are
$95,300,000, and $101,400,000 at January 31, 2002 and 2001, respectively,
for which checks are outstanding.
Statement of Cash Flows
Short-term investments which have an original maturity of ninety days or
less are considered cash equivalents in the statement of cash flows. During
the year ended January 31, 2000, the effect of changes in foreign exchange
rates on cash balances was not material.
Non-Cash Transactions
The Company entered into capital leases for a logistics center in Germany
which totaled $3,848,000, $5,418,000 and $8,476,000 at January 31, 2002,
2001 and 2000, respectively.
Fiscal Year
The Company operates on a fiscal year that ends on January 31. For the
period prior to fiscal 2000, the Company consolidated its European and
Latin American subsidiaries on a fiscal year that ended on December 31.
Effective for the year ended January 31, 2000, the Company changed the
fiscal year end of the European subsidiaries from December 31 to
January 31. For further discussion, see Note 3 - Change in Year End of
Certain Subsidiaries.
37
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES--(Continued)
Recent Accounting Pronouncements
In June 2001, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141").
SFAS 141 revises the standards of accounting for business combinations by
eliminating the use of the pooling-of-interests method and requiring that all
business combinations be accounted for using the purchase method of accounting.
SFAS 141 also changes the criteria to recognize intangible assets apart from
goodwill. The provisions of SFAS 141 are effective for all business combinations
initiated after June 30, 2001. Impact of adoption of this statement on the
Company's financial position and results of operations was not material.
In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible
Assets" ("SFAS 142"). SFAS 142 revises the standards of accounting for goodwill
and indefinite-lived intangible assets by replacing the regular amortization of
these assets with the requirement that they are reviewed annually for possible
impairment, or more frequently if impairment indicators arise. Separable
intangible assets that have finite lives will continue to be amortized over
their estimated useful lives. The accounting standards of SFAS 142 are effective
for fiscal years beginning after December 15, 2001. Application of the non-
amortization provisions of the statement is expected to result in an increase in
net income after tax of approximately $8.6 million ($.14 per diluted share) per
year. During the first quarter for the fiscal year ending January 31, 2003, the
Company finalized the required transitional impairment tests of goodwill and
indefinite-lived intangible assets under the requirements of SFAS 142. Based on
the results of the transitional impairment tests, Tech Data will not need to
record any impairment for the adoption of this statement.
In August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" ("SFAS 144"), which is effective for fiscal
periods beginning after December 15, 2001 and interim periods within those
fiscal years. This statement supersedes SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of",
and the accounting and reporting provisions of Accounting Principles Board
("APB") Opinion No. 30, "Reporting the Results of Operations--Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and
Infrequently Occurring Events and Transactions", for the disposal of a segment
of a business. Under the provisions of APB 30, a segment of a business to be
disposed of was measured at the lower of its carrying amount or net realizable
value, adjusted for expected future operating losses, whereas SFAS 121 used fair
value less cost to sell and excluded future operating losses from the
measurement. SFAS 144 establishes a single accounting model, based on the
framework established in SFAS 121, for long-lived assets to be disposed of by
sale. The Company is currently evaluating the potential impact, if any, the
adoption of SFAS 144 will have on the Company's financial position and results
of operations.
Reclassifications
Certain prior year balances have been reclassified to conform with the current
year presentation.
38
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 2. ACQUISITION AND DISPOSITION OF SUBSIDIARIES
Acquisition of Computer 2000 AG
On July 1, 1998, Tech Data completed the acquisition of approximately 83% of the
voting common stock of Computer 2000 AG ("Computer 2000"), a European
distributor of technology products. The Company acquired 80% of the outstanding
voting stock of Computer 2000 from its parent company, Klockner & Co. AG., a
subsidiary of Munich-based VIAG AG, and an additional stake of approximately 3%
of Computer 2000's shares from an institutional investor. The initial
acquisition was completed through an exchange of approximately 2.2 million
shares of Tech Data common stock and $300,000,000 of 5% convertible subordinated
notes, due July 2003 (coupon rate of 5.0%, five year term and convertible into
shares of common stock at $56.25 per share). The Company commenced a tender
offer for the remaining Computer 2000 shares and on April 13, 1999 Computer 2000
adopted a resolution to integrate with Tech Data Germany AG ("Tech Data
Germany"). As a result of this integration, Tech Data Germany acquired 100% of
the shares of Computer 2000 in exchange for cash and a small amount of shares of
Tech Data Germany. Computer 2000 remains as a wholly-owned subsidiary of Tech
Data Germany. The tender offer, open market purchases and private purchase
transactions were funded through the Company's revolving credit loan agreements.
The acquisition of Computer 2000 was accounted for under the purchase method.
During the years ended January 31, 2001 and January 31, 2000, the Company
acquired additional shares of Computer 2000 common stock, which, including other
cash payments, has resulted in additional consideration of $18,200,000, and
$18,300,000 respectively. The aggregate purchase price of approximately
$536,500,000 was allocated to the assets acquired and liabilities assumed based
upon their estimated fair values at the date of acquisition.
The excess of the purchase price over the fair value of net assets acquired of
approximately $347,200,000 ($280,479,000 at the January 31, 2002 exchange rate)
will no longer be amortized effective February 1, 2002 with the adoption of SFAS
142.
Acquisition of Globelle Corporation
On May 21, 1999, the Company acquired majority control of Globelle Corporation
("Globelle"), a mass storage and components distributor based in Canada. By
October 8, 1999, the Company had acquired 100% of the outstanding stock of
Globelle for total cash consideration of approximately $24,600,000. The
acquisition of Globelle was accounted for under the purchase method. The
purchase price allocation resulted in approximately $12,921,000 ($11,773,000 at
the January 31, 2002 exchange rate) in excess purchase price over the net fair
market value of tangible assets acquired as of January 31, 2000, which will no
longer be amortized effective February 1, 2002 with the adoption of SFAS 142.
Pro forma financial information related to the Globelle acquisition has not been
presented since the acquisition was not material to the Company's financial
position or results of operations. The year ended January 31, 2001 includes
twelve months of results, while January 31, 2000 includes only seven months of
results for Globelle.
39
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 3. CHANGE IN YEAR END OF CERTAIN SUBSIDIARIES
In fiscal 2000, the Company's Board of Directors approved a change in the fiscal
year end of its European subsidiaries to January 31 to conform with the
Company's year end. Tech Data's consolidated financial statements for the year
ended January 31, 2000 include the operating results of these subsidiaries for
the twelve months ended December 31, 1999 with the operating results for the
month of January 2000 reflected in retained earnings as a result of the change.
This change did not have a significant effect on the accompanying financial
statements. Summarized financial information associated with the month of
January 2000 for those foreign subsidiaries affected by this change is as
follows:
Month ended
January 31, 2000
------------------
(In thousands)
Net sales.................................................. $617,284
Net income................................................. 27
Cash (used in)/provided by
Operating activities.................................... (34,270)
Investing activities.................................... (596)
Financing activities.................................... 58,492
NOTE 4. PROPERTY AND EQUIPMENT
January 31,
----------------------------------
2002 2001
--------- ---------
(In thousands)
Land......................................................................... $ 8,134 $ 7,771
Buildings and improvements................................................... 71,378 71,655
Furniture, fixtures and equipment............................................ 246,484 227,216
Construction in progress..................................................... 1,302 13,212
--------- ---------
327,298 319,854
Less accumulated depreciation ............................................... (191,254) (166,658)
--------- ---------
$ 136,044 $ 153,196
========= =========
Property and equipment includes approximately $14,800,000 and $13,000,000 of
assets under capital leases at January 31, 2002 and 2001, respectively. See
Note 6 - Long-Term Debt.
40
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 5. REVOLVING CREDIT LOANS
January 31,
-----------------------------------
2002 2001
------------ -----------
(In thousands)
Receivables Securitization Program, expiring May 16, 2002................. $ - $ 575,000
Multi-currency Revolving Credit Facility, expiring May 7, 2003 ........... - 328,351
Other revolving credit facilities, average interest rate of
4.96%, expiring on various dates throughout 2002....................... 86,046 346,225
------------ -----------
$ 86,046 $ 1,249,576
============ ===========
The Company has an agreement (the "Receivables Securitization Program") with six
financial institutions that allows the Company to transfer an undivided interest
in a designated pool of U.S. accounts receivable on an ongoing basis to provide
borrowings up to a maximum of $700,000,000. Under this program, the Company
legally isolated certain U.S. trade receivables into a wholly-owned bankruptcy
remote special purpose entity (balances included in accounts receivable were
$664,000,000 and $860,000,000 at January 31, 2002 and 2001, respectively). As
collections reduce accounts receivable balances included in the pool, the
Company may transfer interests in new receivables to bring the amount available
to be borrowed up to the maximum. The Company pays interest on advances under
the Receivables Securitization Program at designated commercial paper rates plus
an agreed-upon margin. The Company intends to reduce the Receivables
Securitization Program to $500,000,000 and renew it for another year prior to
its expiration in May 2002.
Under the terms of the Company's Multi-currency Revolving Credit Facility with a
syndicate of banks, the Company is able to borrow funds in major foreign
currencies up to a maximum of $520,000,000. Under this facility, the Company
has provided either a pledge of stock or a guarantee of certain of its
significant subsidiaries. The Company pays interest on advances under this
facility at the applicable eurocurrency rate plus a margin based on the
Company's credit ratings. The Company can fix the interest rate for periods of
30 to 180 days under various interest rate options.
In addition to the facilities described above, the Company has additional lines
of credit and overdraft facilities totaling approximately $620,000,000 at
January 31, 2002 to support its worldwide operations. Most of these facilities
are provided on an unsecured, short-term basis and are reviewed periodically for
renewal. The Company's credit agreements contain warranties and covenants that
must be complied with on a continuing basis, including the maintenance of
certain financial ratios, restrictions on payment of dividends and restrictions
on the amount of common stock that may be repurchased annually. At January 31,
2002, the Company was in compliance with all such covenants.
41
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 6. LONG-TERM DEBT
January 31,
---------------------------
2002 2001
------------- ---------
(In thousands)
Mortgage note payable, interest at 10.25%, principal and interest
of $85,130 payable monthly, balloon payment due 2005 ....................... $ 8,193 $ 8,365
Convertible subordinated debentures, interest at 5.00% payable
semi-annually, due July 2003 ............................................... 300,000 300,000
Convertible subordinated debentures, interest at 2.00% payable
semi-annually, due December 2021 ........................................... 290,000 -
Capital leases................................................................ 15,234 12,937
------------- -----------
613,427 321,302
Less - current maturities (included in accrued expenses) ..................... (1,092) (545)
------------- -----------
$612,335 $320,757
============= ===========
On July 1, 1998, the Company issued $300,000,000 of convertible subordinated
debentures due July 1, 2003. The debentures bear interest at 5% per year and are
convertible any time prior to maturity into shares of common stock at a
conversion rate of 17.777 shares per $1,000 principal amount of debentures,
equivalent to a conversion price of approximately $56.25 per share. The
debentures are convertible into 5,333,100 shares of the Company's common stock.
The debentures are redeemable in whole or in part for cash, in certain
circumstances, at the option of the Company at any time on or after July 1,
2001.
In December 2001, the Company issued $290.0 million of convertible subordinated
debentures due 2021. The debentures bear interest at 2% per year and are
convertible into the Company's common stock at any time, if the market price of
the common stock exceeds a specified percentage, beginning at 120% and declining
1/2% each year until it reaches 110% at maturity, of the conversion price per
share of common stock, or in other specified instances. Holders may convert
debentures into 16.7997 shares per $1,000 principal amount of debentures,
equivalent to a conversion price of approximately $59.53 per share. The
debentures are convertible into 4,871,913 shares of the Company's common stock.
Holders have the option to require the Company to repurchase the debentures on
any of the fourth, eighth, twelfth or sixteenth anniversary dates from the issue
date at 100% of the principal amount plus accrued interest to the repurchase
date. The Company has the option to satisfy any debentures submitted for
repurchase in either cash and/or the Company's common stock, provided that
shares of common stock at the first purchase date will be valued at 95% of fair
market value (as defined in the indenture) and at 97.5% of fair market value for
all subsequent purchase dates. The debentures are redeemable in whole or in part
for cash, at the option of the Company at any time on or after December 20,
2005. The Company will pay contingent interest on the debentures during
specified six-month periods beginning on December 15, 2005, if the market price
of the debentures exceeds specified levels. In addition, the dilutive impact of
the $290.0 million of convertible subordinated debentures, due 2021, is
excluded from the diluted earnings per share calculations due to the
contingent conversion feature.
The aforementioned debentures are subordinated in right of payment to all senior
indebtedness of the Company and are effectively subordinated to all indebtedness
and other liabilities of the Company's subsidiaries.
42
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 6. LONG-TERM DEBT--(Continued)
Principal maturities of long-term debt at January 31, 2002 for succeeding fiscal
years are as follows:
Capital
Lease Long-Term
Payments Debt Total
--------------------------------------
(In thousands)
Fiscal year:
2003 ..................................... $ 1,779 $ 191 $ 1,970
2004 ..................................... 1,779 300,210 301,989
2005 ..................................... 1,779 7,792 9,571
2006 ..................................... 1,779 - 1,779
2007 ..................................... 1,779 - 1,779
Thereafter ............................... 12,166 290,000 302,166
---------- ----------- -----------
Total payments ........................... 21,061 598,193 619,254
Less amounts representing interest ....... (5,827) - (5,827)
---------- ----------- -----------
Total principal payments ................. $ 15,234 $ 598,193 $ 613,427
========== =========== ===========
In August 2000, the Company filed a universal shelf registration statement with
the Securities and Exchange Commission for $500,000,000 of debt and equity
securities. The net proceeds from any issuance are expected to be used for
general corporate purposes, including capital expenditures, the repayment or
refinancing of debt and to meet working capital needs. As of January 31, 2002,
the Company had not issued any debt or equity securities under this registration
statement, nor can any assurances be given that the Company will issue any debt
or equity securities under this registration statement in the future.
43
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 7. INCOME TAXES
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax liabilities and assets are as follows:
January 31,
-------------------------
2002 2001
---------- ---------
Deferred tax liabilities: (In thousands)
Accelerated depreciation and amortization ....... $ 11,154 $ 13,678
Capitalized advertising program costs ........... 618 462
Other, net ...................................... - 359
---------- ---------
Total deferred tax liabilities ................ 11,772 14,499
---------- ---------
Deferred tax assets:
Accruals not currently deductible ............... 12,643 8,042
Reserves not currently deductible ............... 26,705 21,877
Loss carryforwards ............................. 52,208 55,744
Currency translation ............................ - 3,664
Other, net ...................................... 87 -
---------- ---------
91,643 89,327
Less: valuation allowance ....................... (17,614) (18,243)
---------- ---------
Total deferred tax assets ....................... 74,029 71,084
---------- ---------
Net deferred tax asset .................... $ 62,257 $ 56,585
========== =========
The net change in the valuation allowance for deferred tax assets was a decrease
of $629,000 at January 31, 2002 and an increase of $1,019,000, and $1,187,000 at
January 31, 2001 and 2000, respectively.
44
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 7. INCOME TAXES--(Continued)
Significant components of the provision for income taxes are as follows:
Year ended January 31,
------------------------------
2002 2001 2000
------- --------- --------
Current: (In thousands)
Federal ................................... $ 45,734 $68,498 $42,693
State .................................... 3,710 3,348 2,933
Foreign .................................. 19,467 25,976 25,905
-------- -------- --------
Total current ........................... 68,911 97,822 71,531
-------- -------- --------
Deferred:
Federal .................................. (7,199) (5,825) (805)
State .................................... (941) (793) 127
Foreign .................................. (3,708) 4,829 1,984
-------- -------- --------
Total deferred .......................... (11,848) (1,789) 1,306
-------- -------- --------
$ 57,063 $96,033 $72,837
======== ======== ========
The reconciliation of income tax attributable to continuing operations computed
at the U.S. federal statutory tax rates to income tax expense is as follows:
Year ended January 31,
---------------------------------
2002 2001 2000
--------- ----------- ---------
Tax at U.S. statutory rates ............................... 35.0% 35.0% 35.0%
State income taxes, net of federal tax benefit ............ 1.1 .6 1.0
Taxes on foreign earnings over (under) U.S. tax rate ...... (2.6) (1.8) .3
Other - net ............................................... .5 1.2 -
--------- ------------ ---------
34.0% 35.0% 36.3%
========= =========== =========
The components of pretax earnings are as follows:
Year ended January 31,
----------------------------------------
2002 2001 2000
--------- ------------ ------------
(In thousands)
United States ...................... $ 99,210 $164,854 $113,229
Foreign ............................ 68,630 109,501 87,525
--------- ------------ ------------
$167,840 $274,355 $200,754
========= ============ ============
The Company's foreign subsidiaries had deferred tax assets relating to net
operating loss carryforwards of $149,000,000. The majority of the net operating
losses have an indefinite carryforward period with the remaining portion
expiring in years 2003 through 2012. A valuation allowance of $17,614,000 has
been recognized to offset the deferred tax assets relating to the net operating
loss carryforwards.
The cumulative amount of undistributed earnings of international subsidiaries
for which U.S. income taxes have not been provided was approximately
$288,000,000 at January 31, 2002. It is not practical to estimate the amount of
unrecognized deferred U.S. taxes on these undistributed earnings.
45
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 8. EMPLOYEE BENEFIT PLANS
Stock Compensation Plans
At January 31, 2002, the Company had four stock-based compensation plans. Under
the Company's various stock-based compensation plans, which cover 16,100,000
shares, the Company is authorized to award officers, employees, and non-employee
members of the Board of Directors grants of restricted stock, options to
purchase common stock, stock appreciation rights ("SARs"), limited stock
appreciation rights ("Limited SARs"), and performance awards that are dependent
upon achievement of specified performance goals. Stock options granted have a
maximum term of 10 years, unless a shorter period is specified by the stock
option committee of the Board of Directors. Awards under the plans are priced
as determined by the stock option committee with the exception of stock option
awards that are priced at the fair market value on the date of grant. Awards
generally vest between one and five years from the date of grant. The Company
applies APB Opinion 25 and related interpretations in accounting for its plans.
Accordingly, no compensation cost has been recognized for these plans.
A summary of the status of the Company's stock option plans is as follows:
January 31, 2002 January 31, 2001 January 31, 2000
------------------------ ---------------------- --------------------
Weighted- Weighted- Weighted-
Average Average Average
Exercise Exercise Exercise
Shares Price Shares Price Shares Price
------------------------ ---------------------- --------------------
Outstanding at beginning
of year ................... 6,303,752 $27.20 6,042,560 $24.12 4,364,075 $26.88
Granted ..................... 2,046,630 28.66 2,646,310 31.84 3,050,700 17.87
Exercised ................... (1,401,598) 24.36 (1,453,927) 21.55 (948,180) 16.21
Canceled .................... (429,088) 30.15 (931,191) 28.40 (424,035) 26.69
----------- ---------- ---------
Outstanding at year end...... 6,519,696 28.08 6,303,752 27.20 6,042,560 24.12
=========== ========== =========
Options exercisable at
year end .................. 1,845,192 1,487,113 1,993,750
Available for grant at
year end .................. 2,853,030 3,165,310 869,635
Options Outstanding Options Exercisable
------------------------------------------ -----------------------
Weighted-
Average Weighted- Weighted-
Number Remaining Average Number Average
Range of Outstanding Contractual Life Exercise Exercisable Exercise
Exercise Prices at 1/31/02 (years) Price at 1/31/02 Price
--------------- ------------ ---------------- ---------- ------------ ----------
$10.63 - $16.50 1,125,663 5.61 $14.88 631,995 $13.62
17.13 - 24.13 760,967 4.71 21.91 394,162 21.75
24.97 - 28.31 1,908,260 9.14 28.24 25,293 26.56
28.50 - 38.31 1,641,239 8.17 31.18 327,516 31.46
38.75 - 51.38 1,083,567 6.54 41.13 466,226 41.07
----------- ----------
6,519,696 7.34 28.08 1,845,192 25.64
=========== ==========
46
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 8. EMPLOYEE BENEFIT PLANS --(Continued)
Employee Stock Purchase Plan
Under the 1995 Employee Stock Purchase Plan approved in June 1995, the Company
is authorized to issue up to 1,000,000 shares of common stock to eligible
employees in the Company's U.S. and Canadian subsidiaries. Under the terms of
the plan, employees can choose to have a fixed dollar amount or percentage
deducted from their biweekly compensation to purchase the Company's common stock
and/or elect to purchase shares once per calendar quarter. The purchase price of
the stock is 85% of the market value on the exercise date and employees are
limited to a maximum purchase of $25,000 in fair market value each calendar
year. Since plan inception, the Company has sold 316,512 shares as of January
31, 2002. All shares purchased under this plan must be retained for a period of
one year.
Pro Forma Effect of Stock Compensation Plans
Had the compensation cost for the Company's stock option plans and employee
stock purchase plan been determined based on the fair value at the grant dates
for awards under the plans consistent with the method prescribed by SFAS 123,
"Accounting for Stock-Based Compensation", the Company's net income and net
income per common share on a pro forma basis would have been (in thousands,
except per share data):
Year ended January 31,
---------------------------------
2002 2001 2000
---------- --------- --------
Net income $89,979 $163,365 $113,603
Net income per common share:
Basic $ 1.65 $ 3.07 $ 2.20
Diluted $ 1.64 $ 2.90 $ 2.10
The preceding pro forma results were calculated with the use of the Black-
Scholes option-pricing model. The weighted-average fair value of options granted
during fiscal 2002, 2001 and 2000 was $16.63, $18.24, and $9.20, respectively.
The following assumptions were used for the years ended January 31, 2002, 2001
and 2000, respectively:
- -------------------------------------------------------------------------------------------
Expected Option
Year Ended Grant Term Expected Risk-Free Expected Dividend
January 31, Date (years) Volatility Interest Rate Yield
- -------------------------------------------------------------------------------------------
2002 4/2/2001 5 67% 4.37% 0%
2001 4/4/2000 4 67% 6.29% 0%
2000 3/29/1999 2-5 65% 5.00% - 5.23% 0%
10/28/1999 5 65% 6.03% 0%
Results may vary depending on the assumptions applied within the model.
47
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 8. EMPLOYEE BENEFIT PLANS--(Continued)
Stock Ownership and Retirement Savings Plans
In 1984, the Company established an employee stock ownership plan (the "ESOP")
covering substantially all U.S. employees. Contributions, in the form of company
stock, were made to employees' accounts on an annual basis upon approval by the
Board of Directors. The ESOP provided for distribution of vested percentages of
the Company's common stock to participants. Such benefit became fully vested
after seven years of qualified service. The Company also offered its U.S.
employees a retirement savings plan pursuant to section 401(k) of the Internal
Revenue Code ("401(k) Plan"). The Company's 401(k) Plan provided the ability for
the Company to match deferrals in an amount determined annually by the Company's
Board of Directors.
Effective January 1, 2000, the Company merged the assets of the ESOP and 401(k)
Plan to form the Tech Data Corporation 401(k) Savings Plan ("the 401(k) Savings
Plan"). At the Company's discretion, participant deferrals are matched monthly,
in the form of company stock, in an amount equal to 50% of the first 6% of
participant deferrals, with no maximum, and participants are fully vested
following four years of qualified service.
At January 31, 2002 and 2001, the number of shares of Tech Data common stock
held by the Company's 401(k) Savings Plan amounted to 652,000 shares and 796,000
shares, respectively. Aggregate contributions made by the Company to the 401(k)
Savings Plan and the ESOP were $2,140,000, $2,686,000, and $2,740,000 for 2002,
2001 and 2000, respectively.
NOTE 9. CAPITAL STOCK
Each outstanding share of preferred stock is entitled to one vote on all matters
submitted to a vote of shareholders, except for matters involving mergers, the
sale of all Company assets, amendments to the Company's charter and exchanges of
Company stock for stock of another company which require approval by a majority
of each class of capital stock. In such matters, the preferred and common
shareholders will each vote as a separate class.
During the fiscal year ended January 31, 2002, the Company completed a
transaction wherein it exchanged 192,525 shares of its common stock for all of
the issued and outstanding shares of preferred stock.
48
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 10. COMMITMENTS AND CONTINGENCIES
Operating Leases
The Company leases logistics centers, office facilities and certain equipment
under noncancelable operating leases that expire at various dates through 2015.
Rental expense for all operating leases amounted to $48,056,000, $46,786,000,
and $39,394,000 in 2002, 2001 and 2000, respectively. Future minimum lease
payments under all such leases for succeeding fiscal years are as follows (in
thousands):
Fiscal year:
2003.................................................. $ 37,730
2004.................................................. 30,333
2005.................................................. 23,135
2006.................................................. 18,006
2007.................................................. 13,500
Thereafter............................................ 133,413
--------------
Total payments........................................ $ 256,117
==============
The Company leases certain of its logistics centers and office facilities under
a five-year synthetic lease facility provided by a group of financial
institutions which expires in May 2005. The sum of future minimum lease payments
under this lease facility at January 31, 2002 was approximately $9.4 million,
which is included in the schedule above. In accordance with the terms of the
synthetic lease facility and the Internal Revenue Code, Tech Data claims tax
deductions for interest and depreciation on the leased assets. The maximum
funding of the Company's leasing activities available under the synthetic lease
facility is $135.0 million (of which the Company had utilized $115.0 million at
January 31, 2002). The synthetic lease facility has an initial term of five
years, with rent obligations commencing on the date construction of a discrete
project is complete. At any time during the term of the lease, the Company may,
at its option, purchase the property at approximately the amount expended by the
lessor to purchase the land and construct the building ("purchase value"). If
the Company elects not to purchase the property at the end of the lease, Tech
Data has guaranteed a percentage of the purchase value. This guaranty
approximated $100.1 million at January 31, 2002.
Properties leased under the synthetic lease facility, both completed and under
construction, total 2.1 million square feet of space, with land totaling 194
acres located in Clearwater and Miami, Florida; Fort Worth, Texas; Fontana,
California; Atlanta, Georgia and Swedesboro, New Jersey.
Contingencies
The Company has guaranteed the repayment of indebtedness of certain customers to
unrelated third parties. The total amount of indebtedness covered by these
guarantees was approximately $16,200,000 at January 31, 2002.
49
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 11. SEGMENT INFORMATION
The Company operates predominantly in a single industry segment as a wholesale
distributor of computer-based technology products and related logistics and
other value-added services. Based on geographic location, the Company has three
segments. These geographical segments are 1) the United States, 2) Europe
(including the Middle East) and 3) Other International areas (Canada, Argentina,
Brazil, Chile, Peru, Uruguay, and export sales to Latin America and the
Caribbean from the U.S.). The measure of segment profit is income from
operations. The accounting policies of the segments are the same as those
described in Note 1 -- Summary of Significant Accounting Policies.
Financial information by geographic segments is as follows (in thousands):
Other
United States Europe International Total
------------- ------ ------------- -----
Fiscal year 2002
- ----------------
Net sales to unaffiliated customers .............. $ 8,750,475 $7,233,251 $1,213,785 $17,197,511
=========== ========== ========== ===========
Operating income {a}: ............................ $ 142,100 $ 70,806 $ 10,210 $ 223,116
=========== ========== ========== ===========
Identifiable assets............................... $ 1,255,788 $1,951,767 $ 250,775 $ 3,458,330
=========== ========== ========== ===========
Fiscal year 2001
- ----------------
Net sales to unaffiliated customers .............. $11,258,506 $7,813,334 $1,355,839 $20,427,679
=========== ========== ========== ===========
Operating income ................................. $ 238,270 $ 100,458 $ 24,028 $ 362,756
=========== ========== ========== ===========
Identifiable assets............................... $ 1,835,019 $2,431,017 $ 349,509 $ 4,615,545
=========== ========== ========== ===========
Fiscal year 2000
- ----------------
Net sales to unaffiliated customers .............. $ 8,407,324 $7,528,978 $1,055,448 $16,991,750
=========== ========== ========== ===========
Operating income ................................. $ 165,813 $ 95,184 $ 10,875 $ 271,872
=========== ========== ========== ===========
Identifiable assets............................... $ 1,806,376 $1,999,116 $ 318,326 $ 4,123,818
=========== ========== ========== ===========
{a} The amounts shown above include special charges in the amount of $27.0
million recorded for the fiscal year ended January 31, 2002. Of this amount,
$25.5 million related to U.S. operations and $1.5 million related to European
operations. See Note 13 - Special Charges.
50
TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
NOTE 12. UNAUDITED INTERIM FINANCIAL INFORMATION
Quarter ended
----------------------------------------------------------------------------
April 30 July 31 October 31 January 31
---------- ---------- ---------- ----------
(In thousands, except per share amounts)
Fiscal year 2002
- ----------------
Net sales....................................... $4,679,992 $4,136,584 $4,215,951 $4,164,984
Gross profit.................................... 251,193 224,162 228,215 224,460
Net income...................................... 31,799 13,987 28,508 36,483
Net income per common share:
Basic......................................... $ 0.59 $ 0.26 $ 0.52 $ 0.66
Diluted....................................... $ 0.57 $ 0.25 $ 0.51 $ 0.63
Fiscal year 2001
- ----------------
Net sales....................................... $4,924,516 $4,996,973 $5,189,186 $5,317,004
Gross profit.................................... 257,859 265,233 280,677 292,294
Net income...................................... 37,219 40,782 47,246 52,736
Net income per common share:
Basic......................................... $ 0.71 $ 0.77 $ 0.88 $ 0.98
Diluted....................................... $ 0.68 $ 0.72 $ 0.82 $ 0.92
NOTE 13. SPECIAL CHARGES
In fiscal 2002, the Company recorded special charges totaling $27.0 million
before taxes. Of the $27.0 million in special charges, the Company recognized
$20.1 million for the write-off of previously capitalized software. The Company
made the decision to write off the software because the Company achieved most of
the anticipated benefits originally planned when it purchased or began
development of the software through alternative systems and processes. Thus, the
Company no longer saw the benefit of incurring significant additional
development costs necessary to implement the software.
The Company also recognized special charges of $5.4 million during the fiscal
year ended January 31, 2002 for the impairment of the Company's investments in
the equity securities of certain privately-held, Internet-related companies.
Recognition of an impairment charge was the result of the companies in which the
investments were held experiencing a series of operating losses which appear to
be other than temporary, and raised substantial doubts about Tech Data's
ability to recoup its full investment.
Finally, the Company wrote off $1.5 million of costs during the fiscal year
ended January 31, 2002 associated with the development of a new logistics center
in Germany. The construction of this facility has been indefinitely deferred as
a result of the economic downturn.
The total of these special charges are presented separately as a component of
income from operations in the Consolidated Statement of Income, and other than
the $1.5 million for the German logistics center, relates entirely to the
Company's U.S. operations.
ITEM 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
None.
51
TECH DATA CORPORATION AND SUBSIDIARIES
PART III
ITEMS 10, 11, 12 and 13.
The information required by Item 10 relating to executive officers of the
registrant is included under the caption "Executive Officers" of Item 1 of this
Form 10-K. The information required by Item 10 relating to Directors of the
registrant and the information required by Items 11, 12 and 13 is incorporated
herein by reference to the registrant's definitive proxy statement for the 2002
Annual Meeting of Shareholders. However, the information included in such
definitive proxy statement under the subcaption entitled "Grant Date Present
Value" in the table entitled "Option Grants in Last Fiscal Year", the
information included under the caption entitled "Compensation Committee Report
on Executive Compensation", and the information included in the "Stock Price
Performance Graph" shall not be deemed incorporated by reference in this Form
10-K and shall not otherwise be deemed filed under the Securities Act of 1933,
as amended, or under the Securities Exchange Act of 1934, as amended. The
definitive proxy statement for the 2002 Annual Meeting of Shareholders will be
filed with the Commission prior to May 31, 2002.
PART IV
ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K
(a) See index to financial statements and schedules included in Item 8.
(b) The Company filed a Current Report on Form 8-K on December 10, 2001
and on December 26, 2001 in connection with the issuance of its press
releases, for the announcement, offering and sale of the $290 million
2% convertible subordinated debentures.
(c) The exhibit numbers on the following list correspond to the numbers in
the exhibit table required pursuant to Item 601 of Regulation S-K.
Exhibit
Number Description
------- -----------
3-A/(1)/ - Articles of Incorporation of the Company as amended to April
23, 1986.
3-B/(2)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on August 27, 1987.
3-C/(13)/ - By-Laws of the Company as amended to November 28, 1995.
3-F/(9)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on July 15, 1993.
3-G/(15)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on June 25, 1997.
3-H/(20)/ - By-Laws of the Company as adopted on March 25, 1997.
3-I/(20)/ - Amendment to By-Laws of the Company as adopted on March 30,
1999.
3-J/(20)/ - Amendment to By-Laws of the Company as adopted on April 5,
2000.
3-K/(21)/ - Amendment to By-Laws of the Company as adopted on June 23,
1998.
3-L/(21)/ - Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company as of June 24, 1998.
4-A/(26)/ - Indenture between the Company and Bank One Trust Company,
N.A., dated as of December 10, 2001.
4-B/(26)/ - Registration Agreement dated as of December 10, 2001 between
the Company and Salomon Smith Barney Inc., as representative
of the initial purchasers.
10-F/(4)/ - Incentive Stock Option Plan, as amended, and form of option
agreement.
10-G/(10)/ - Employee Stock Ownership Plan as amended December 16, 1994.
52
Exhibit
Number Description
- ------- -----------
10-V/(5)/ - Employment Agreement between the Company and Edward C.
Raymund dated as of January 31, 1991.
10-W/(5)/ - Irrevocable Proxy and Escrow Agreement dated April 5, 1991.
10-X/(6)/ - First Amendment to the Employment Agreement between the
Company and Edward C. Raymund dated November 13, 1992.
10-Y/(6)/ - First Amendment in the nature of a Complete Substitution to
the Irrevocable Proxy and Escrow Agreement dated November
13, 1992.
10-Z/(6) / - 1990 Incentive and Non-Statutory Stock Option Plan as
amended.
10-AA/(7)/ - Non-Statutory Stock Option Grant Form.
10-BB/(7)/ - Incentive Stock Option Grant Form.
10-CC/(8)/ - Employment Agreement between the Company and Steven A.
Raymund dated February 1, 1992.
10-EE/(10)/ - Retirement Savings Plan as amended January 26, 1994.
10-FF/(9)/ - Revolving Credit and Reimbursement Agreement dated December
22, 1993.
10-GG/(9)/ - Transfer and Administration Agreement dated December 22,
1993.
10-HH/(10)/ - Amendments (Nos. 1-4) to the Transfer and Administration
Agreement.
10-II/(10)/ - Amended and Restated Revolving Credit and Reimbursement
Agreement dated July 28, 1994, as amended.
10-JJ/(10)/ - Revolving Foreign Currency Agreement dated August 4, 1994,
as amended.
10-KK/(13)/ - Amendments (Nos. 5,6) to the Transfer and Administration
Agreement.
10-LL/(13)/ - Amendments (Nos. 3-5) to the Amended and Restated Revolving
Credit and Reimbursement Agreement dated July 28, 1994, as
amended.
10-MM/(13)/ - Amendments (Nos. 3-5) to the Revolving Foreign Currency
Agreement dated August 4, 1994, as amended.
10-NN/(12)/ - Non-Employee Directors' 1995 Non-Statutory Stock Option
Plan.
10-OO/(12)/ - 1995 Employee Stock Purchase Plan.
10-PP/(12)/ - Employment Agreement between the Company and A. Timothy
Godwin dated as of December 5, 1995.
10-QQ/(14)/ - Amended and Restated Transfer and Administration Agreement
dated January 21, 1997.
10-RR/(14)/ - Amendment Number 1 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-SS/(14)/ - Revolving Credit and Reimbursement Agreement dated May 23,
1996.
10-TT/(15)/ - Amendment Number 2 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-UU/(15)/ - Revolving Credit and Reimbursement Agreement dated August
28, 1997.
10-VV/(16)/ - Amendment Number 3 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-WW/(17)/ - Amendments (Nos. 1-2) to the Revolving Credit and
Reimbursement Agreement dated August 28, 1997, as amended.
10-XX/(17)/ - Amendments (Nos. 4-6) to the Amended and Restated Transfer
and Administration Agreement dated January 21, 1997, as
amended.
10-YY/(18)/ - Second Amended and Restated Transfer and Administration
Agreement dated February 10, 1999.
10-ZZ/(19)/ - Amendments (Nos. 1,2) to Second Amended and Restated
Transfer and Administration Agreement.
10-AAa/(20)/ - Transfer and Administration Agreement dated May 19, 2000.
10-AAb/(20)/ - Credit Agreement dated as of May 8, 2000.
10-AAc/(20)/ - Amended and Restated Participation Agreement dated as of May
8, 2000.
10-AAd/(20)/ - Amended and Restated Lease Agreement dated as of May 8,
2000.
10-AAe/(20)/ - Amended and Restated Agency Agreement dated as of May 8,
2000.
10-AAf/(22)/ - Retirement Savings Plan as amended July 14, 1999.
10-AAg/(23)/ - Tech Data Corporation 401(K) Savings Plan dated January 1,
2000.
53
Exhibit
Number Description
- ------- -----------
10-AAh/(27)/ - Amendment Number 1 to the Transfer and Administration
Agreement dated November 2, 2000.
10-AAi/(24)/ - 2000 Non-Qualified Stock Option Plan of Tech Data
Corporation.
10-AAj/(24)/ - 2000 Equity Incentive Plan of Tech Data Corporation.
10-AAk/(25)/ - Amendment Number 2 to the Transfer and Administration
Agreement dated May 17, 2001.
21-A/(3)/ - Subsidiaries of Registrant.
23-A/(3)/ - Consent of Ernst & Young LLP.
23-B/(3)/ - Consent of PricewaterhouseCoopers LLP.
99-A/(3)/ - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995.
_____________
(1) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-1, File No. 33-4135.
(2) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-1, File No. 33-21997.
(3) Filed herewith.
(4) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 33-21879.
(5) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 1991, File No. 0-14625.
(6) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended October 31, 1992, File No. 0-14625.
(7) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 33-41074.
(8) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1993, File No. 0-14625.
(9) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1994, File No. 0-14625.
(10) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1995, File No. 0-14625.
(11) Incorporated by reference to the Exhibits included in the Company's Form
8-K filed on March 26, 1996, File No. 0-14625.
(12) Incorporated by reference to the Exhibits included in the Company's
Definitive Proxy Statement for the 1995 Annual Meeting of Shareholders,
File No. 0-14625.
(13) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1996, File No. 0-14625.
(14) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1997, File No. 0-14625.
(15) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-36999.
(16) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1998, File No. 0-14625.
(17) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1999, File No. 0-14625.
(18) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 1999, File No. 0-14625.
(19) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 2000, File No. 0-14625.
(20) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 2000, File No. 0-14625.
(21) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-44848.
(22) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-85509.
54
(23) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-93801.
(24) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-59198.
(25) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 2001, File No. 0-14625.
(26) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-76858.
(27) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 2001, File No. 0-14625.
55
SCHEDULE II
TECH DATA CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)
Activity
-----------------------------------
Allowance for doubtful Balance at Charged to Balance
accounts receivable and beginning cost and at end of
sales returns: of period expenses Deductions Other/(1)/ period
- -------------- --------- --------- ---------- ---------- ---------
January 31,
2002 64,465 40,764 (48,862) 3,788 60,155
2001 61,617 41,447 (42,467) 3,868 64,465
2000 60,521 40,877 (44,932) 5,151 61,617
_______________
/(1)/ "Other" includes recoveries, acquisitions, dispositions, the effect of
fluctuations in foreign currency and the effect of the change in year end
of certain subsidiaries (see Note 3 to Notes to Consolidated Financial
Statements).
56
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized on April 24, 2002.
TECH DATA CORPORATION
By /s/ STEVEN A. RAYMUND
----------------------
Steven A. Raymund,
Chairman of the Board of Directors;
Chief Executive Officer
POWER OF ATTORNEY
Each person whose signature to this Annual Report on Form 10-K appears below
hereby appoints Jeffery P. Howells and Arthur W. Singleton, or either of them,
as his attorney-in-fact to sign on his behalf individually and in the capacity
stated below and to file all amendments and post-effective amendments to this
Annual Report on Form 10-K, and any and all instruments or documents filed as a
part of or in connection with this Annual Report on Form 10-K or the amendments
thereto, and the attorney-in-fact, or either of them, may make such changes and
additions to this Annual Report on Form 10-K as the attorney-in-fact, or either
of them, may deem necessary or appropriate.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ STEVEN A. RAYMUND Chairman of the Board of Directors; April 24, 2002
- --------------------- Chief Executive Officer
Steven A. Raymund
/s/ JEFFERY P. HOWELLS Executive Vice President and April 24, 2002
- ---------------------- Chief Financial Officer; Director
Jeffery P. Howells (principal financial officer)
/s/ JOSEPH B. TREPANI Senior Vice President and Corporate April 24, 2002
- --------------------- Controller (principal accounting officer)
Joseph B. Trepani
/s/ ARTHUR W. SINGLETON Corporate Vice President, Treasurer April 24, 2002
- ----------------------- and Secretary
Arthur W. Singleton
/s/ CHARLES E. ADAIR Director April 24, 2002
- --------------------
Charles E. Adair
/s/ MAXIMILIAN ARDELT Director April 24, 2002
- ---------------------
Maximilian Ardelt
/s/ JAMES M. CRACCHIOLO Director April 24, 2002
- -----------------------
James M. Cracchiolo
/s/ DANIEL M. DOYLE Director April 24, 2002
- -------------------
Daniel M. Doyle
/s/ KATHY MISUNAS Director April 24, 2002
- -----------------
Kathy Misunas
/s/ DAVID M. UPTON Director April 24, 2002
- ------------------
David M. Upton
/s/ JOHN Y. WILLIAMS Director April 24, 2002
- --------------------
John Y. Williams
57
EXHIBIT INDEX
Exhibit
Number Description
------- -----------
3-A/(1)/ - Articles of Incorporation of the Company as amended to April
23, 1986.
3-B/(2)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on August 27, 1987.
3-C/(13)/ - By-Laws of the Company as amended to November 28, 1995.
3-F/(9)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on July 15, 1993.
3-G/(15)/ - Articles of Amendment to Articles of Incorporation of the
Company filed on June 25, 1997.
3-H/(20)/ - By-Laws of the Company as adopted on March 25, 1997.
3-I/(20)/ - Amendment to By-Laws of the Company as adopted on March 30,
1999.
3-J/(20)/ - Amendment to By-Laws of the Company as adopted on April 5,
2000.
3-K/(21)/ - Amendment to By-Laws of the Company as adopted on June 23,
1998.
3-L/(21)/ - Articles of Amendment to Amended and Restated Articles of
Incorporation of the Company as of June 24, 1998.
4-A/(26)/ - Indenture between the Company and Bank One Trust Company,
N.A., dated as of December 10, 2001.
4-B/(26)/ - Registration Agreement dated as of December 10, 2001 between
the Company and Salomon Smith Barney Inc., as representative
of the initial purchasers.
10-F/(4)/ - Incentive Stock Option Plan, as amended, and form of option
agreement.
10-G/(10)/ - Employee Stock Ownership Plan as amended December 16, 1994.
Exhibit
Number Description
- ------- -----------
10-V/(5)/ - Employment Agreement between the Company and Edward C.
Raymund dated as of January 31, 1991.
10-W/(5)/ - Irrevocable Proxy and Escrow Agreement dated April 5, 1991.
10-X/(6)/ - First Amendment to the Employment Agreement between the
Company and Edward C. Raymund dated November 13, 1992.
10-Y/(6)/ - First Amendment in the nature of a Complete Substitution to
the Irrevocable Proxy and Escrow Agreement dated November
13, 1992.
10-Z/(6) / - 1990 Incentive and Non-Statutory Stock Option Plan as
amended.
10-AA/(7)/ - Non-Statutory Stock Option Grant Form.
10-BB/(7)/ - Incentive Stock Option Grant Form.
10-CC/(8)/ - Employment Agreement between the Company and Steven A.
Raymund dated February 1, 1992.
10-EE/(10)/ - Retirement Savings Plan as amended January 26, 1994.
10-FF/(9)/ - Revolving Credit and Reimbursement Agreement dated December
22, 1993.
10-GG/(9)/ - Transfer and Administration Agreement dated December 22,
1993.
10-HH/(10)/ - Amendments (Nos. 1-4) to the Transfer and Administration
Agreement.
10-II/(10)/ - Amended and Restated Revolving Credit and Reimbursement
Agreement dated July 28, 1994, as amended.
10-JJ/(10)/ - Revolving Foreign Currency Agreement dated August 4, 1994,
as amended.
10-KK/(13)/ - Amendments (Nos. 5,6) to the Transfer and Administration
Agreement.
10-LL/(13)/ - Amendments (Nos. 3-5) to the Amended and Restated Revolving
Credit and Reimbursement Agreement dated July 28, 1994, as
amended.
10-MM/(13)/ - Amendments (Nos. 3-5) to the Revolving Foreign Currency
Agreement dated August 4, 1994, as amended.
10-NN/(12)/ - Non-Employee Directors' 1995 Non-Statutory Stock Option
Plan.
10-OO/(12)/ - 1995 Employee Stock Purchase Plan.
10-PP/(12)/ - Employment Agreement between the Company and A. Timothy
Godwin dated as of December 5, 1995.
10-QQ/(14)/ - Amended and Restated Transfer and Administration Agreement
dated January 21, 1997.
10-RR/(14)/ - Amendment Number 1 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-SS/(14)/ - Revolving Credit and Reimbursement Agreement dated May 23,
1996.
10-TT/(15)/ - Amendment Number 2 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-UU/(15)/ - Revolving Credit and Reimbursement Agreement dated August
28, 1997.
10-VV/(16)/ - Amendment Number 3 to the Amended and Restated Transfer and
Administration Agreement dated January 21, 1997, as amended.
10-WW/(17)/ - Amendments (Nos. 1-2) to the Revolving Credit and
Reimbursement Agreement dated August 28, 1997, as amended.
10-XX/(17)/ - Amendments (Nos. 4-6) to the Amended and Restated Transfer
and Administration Agreement dated January 21, 1997, as
amended.
10-YY/(18)/ - Second Amended and Restated Transfer and Administration
Agreement dated February 10, 1999.
10-ZZ/(19)/ - Amendments (Nos. 1,2) to Second Amended and Restated
Transfer and Administration Agreement.
10-AAa/(20)/ - Transfer and Administration Agreement dated May 19, 2000.
10-AAb/(20)/ - Credit Agreement dated as of May 8, 2000.
10-AAc/(20)/ - Amended and Restated Participation Agreement dated as of May
8, 2000.
10-AAd/(20)/ - Amended and Restated Lease Agreement dated as of May 8,
2000.
10-AAe/(20)/ - Amended and Restated Agency Agreement dated as of May 8,
2000.
10-AAf/(22)/ - Retirement Savings Plan as amended July 14, 1999.
10-AAg/(23)/ - Tech Data Corporation 401(K) Savings Plan dated January 1,
2000.
Exhibit
Number Description
- ------- -----------
10-AAh/(27)/ - Amendment Number 1 to the Transfer and Administration
Agreement dated November 2, 2000.
10-AAi/(24)/ - 2000 Non-Qualified Stock Option Plan of Tech Data
Corporation.
10-AAj/(24)/ - 2000 Equity Incentive Plan of Tech Data Corporation.
10-AAk/(25)/ - Amendment Number 2 to the Transfer and Administration
Agreement dated May 17, 2001.
21-A/(3)/ - Subsidiaries of Registrant.
23-A/(3)/ - Consent of Ernst & Young LLP.
23-B/(3)/ - Consent of PricewaterhouseCoopers LLP.
99-A/(3)/ - Cautionary Statement for Purposes of the "Safe Harbor"
Provisions of the Private Securities Litigation Reform Act
of 1995.
_____________
(1) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-1, File No. 33-4135.
(2) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-1, File No. 33-21997.
(3) Filed herewith.
(4) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 33-21879.
(5) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 1991, File No. 0-14625.
(6) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended October 31, 1992, File No. 0-14625.
(7) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 33-41074.
(8) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1993, File No. 0-14625.
(9) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1994, File No. 0-14625.
(10) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1995, File No. 0-14625.
(11) Incorporated by reference to the Exhibits included in the Company's Form
8-K filed on March 26, 1996, File No. 0-14625.
(12) Incorporated by reference to the Exhibits included in the Company's
Definitive Proxy Statement for the 1995 Annual Meeting of Shareholders,
File No. 0-14625.
(13) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1996, File No. 0-14625.
(14) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1997, File No. 0-14625.
(15) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-36999.
(16) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1998, File No. 0-14625.
(17) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 1999, File No. 0-14625.
(18) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 1999, File No. 0-14625.
(19) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 2000, File No. 0-14625.
(20) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 2000, File No. 0-14625.
(21) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-44848.
(22) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-85509.
(23) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-93801.
(24) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-8, File No. 333-59198.
(25) Incorporated by reference to the Exhibits included in the Company's Form
10-Q for the quarter ended July 31, 2001, File No. 0-14625.
(26) Incorporated by reference to the Exhibits included in the Company's
Registration Statement on Form S-3, File No. 333-76858.
(27) Incorporated by reference to the Exhibits included in the Company's Form
10-K for the year ended January 31, 2001, File No. 0-14625.