<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark one)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarter ended October 31, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-14625
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TECH DATA CORPORATION
-------------------------------------------
(Exact name of registrant as specified in its charter)
Florida No. 59-1578329
--------------------------- ----------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5350 Tech Data Drive, Clearwater, Florida 34620
- ------------------------------------------ ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(813) 539-7429
--------------
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 such 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 the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Outstanding at
CLASS November 30, 1995
- -------------------------------- -----------------
Common stock, par value $.0015 per share 37,901,495
<PAGE> 2
TECH DATA CORPORATION AND SUBSIDIARIES
Form 10-Q For The Quarter Ended October 31, 1995
------------------------------------------------
INDEX
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PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet as of
October 31, 1995 (unaudited) and
January 31, 1995 3
Consolidated Statement of Income
(unaudited) for the three and nine
months ended October 31, 1995 and 1994 4
Consolidated Statement of Cash Flows
(unaudited) for the nine months
ended October 31, 1995 and 1994 5
Notes to Consolidated Financial Statements
(unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
PART II. OTHER INFORMATION
All items required in Part II have been previously
filed, have been included in Part I of this report
or are not applicable for the quarter ended
October 31, 1995.
SIGNATURES 10
<PAGE> 3
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
<TABLE>
<CAPTION>
October 31, January 31,
1995 1995
------------ ------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 874 $ 496
Accounts receivable, less allowance for
doubtful accounts of $23,201 and $16,580 416,382 309,846
Inventories 378,969 364,531
Prepaid and other assets 26,030 21,850
-------- --------
Total current assets 822,255 696,723
Property and equipment, net 63,143 51,042
Excess of cost over acquired net assets, net 9,549 10,061
Other assets, net 23,242 26,603
-------- --------
$918,189 $784,429
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans $267,371 $304,784
Current portion of long-term debt 549 542
Accounts payable 344,746 194,213
Accrued expenses 20,573 14,382
-------- --------
Total current liabilities 633,239 513,921
Long-term debt 9,211 9,682
-------- --------
642,450 523,603
-------- --------
Commitments and contingencies
Shareholders' equity:
Preferred stock, par value $.02; 226,500 shares
authorized and issued; liquidation
preference $.20 per share 5 5
Common stock, par value $.0015; 100,000,000
shares authorized; 37,866,489 and
37,807,794 issued and outstanding 57 57
Additional paid-in capital 129,251 127,947
Retained earnings 144,108 131,769
Cumulative translation adjustment 2,318 1,048
-------- --------
Total shareholders' equity 275,739 260,826
-------- --------
$918,189 $784,429
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
<PAGE> 4
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended Nine months ended
October 31, October 31,
------------------ ----------------------
1995 1994 1995 1994
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Net sales $843,286 $658,341 $2,185,582 $1,758,465
-------- -------- ---------- ----------
Cost and expenses:
Cost of products sold 784,601 604,526 2,030,568 1,611,715
Selling, general and
administrative expenses 42,179 33,068 119,697 89,764
-------- -------- ---------- ----------
826,780 637,594 2,150,265 1,701,479
-------- -------- ---------- ----------
Operating profit 16,506 20,747 35,317 56,986
Interest expense 4,825 3,600 14,829 8,799
-------- -------- ---------- ----------
Income before income taxes 11,681 17,147 20,488 48,187
Provision for income taxes 4,639 6,852 8,149 19,064
-------- -------- ---------- ----------
Net income $ 7,042 $ 10,295 $ 12,339 $ 29,123
======== ======== ========== ==========
Net income per common share $ .18 $ .27 $ .32 $ .76
======== ======== ========== ==========
Weighted average common
shares outstanding 38,171 38,300 38,068 38,273
======== ======== ========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
<PAGE> 5
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Nine months ended
October 31,
----------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $2,066,067 $1,675,280
Cash paid to suppliers and employees (1,989,032) (1,701,307)
Interest paid (14,957) (8,721)
Income taxes paid (4,080) (22,714)
---------- ----------
Net cash provided by (used in)
operating activities 57,998 (57,462)
---------- ----------
Cash flows from investing activities:
Capital expenditures (21,047) (29,975)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock 1,304 1,837
Net (repayments) borrowings under
revolving credit loan (37,413) 86,836
Principal payments on long-term debt (464) (982)
---------- ----------
Net cash (used in) provided by
financing activities (36,573) 87,691
---------- ----------
Net increase in cash and cash equivalents 378 254
Cash and cash equivalents at beginning of period 496 678
---------- ----------
Cash and cash equivalents at end of period $ 874 $ 932
========== ==========
Reconciliation of net income to net cash
provided by (used in) operating activities:
Net income $ 12,339 $ 29,123
---------- ----------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 12,467 6,203
Provision for losses on accounts receivable 12,979 13,242
(Increase) decrease in assets:
Accounts receivable (119,515) (81,988)
Inventories (14,438) (82,102)
Prepaid and other assets (2,558) 583
Increase (decrease) in liabilities:
Accounts payable 150,533 59,445
Accrued expenses 6,191 (1,968)
---------- ----------
Total adjustments 45,659 (86,585)
---------- ----------
Net cash provided by (used in)
operating activities $ 57,998 $ (57,462)
========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
<PAGE> 6
TECH DATA CORPORATION AND SUBSIDIARIES
--------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(UNAUDITED)
-----------
Basis of presentation
- ---------------------
The consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission. In the opinion
of management, the accompanying unaudited consolidated financial
statements contain all adjustments, consisting of only normal recurring
adjustments, necessary to present fairly the financial position of Tech
Data Corporation and subsidiaries (the "Company") as of October 31,
1995, and the results of their operations and cash flows for the three
and nine months ended October 31, 1995 and 1994. All significant
intercompany accounts and transactions have been eliminated in
consolidation. The results of operations for the nine months ended
October 31, 1995 are not necessarily indicative of the results that can
be expected for the entire fiscal year ending January 31, 1996.
Revolving credit loans
- ----------------------
In October 1995, the Company renewed and extended its Receivables
Securitization Program to December 31, 1996, and increased the amount
that may be borrowed under this facility from $200 million to $250
million. With the increase in this facility, combined with the
Company's other revolving credit loans, the Company may borrow up to
$450 million, of which $267 million was outstanding at October 31, 1995.
Net income per common share
- ---------------------------
Net income per share of common stock is based on the weighted
average number of shares of common stock and common stock equivalents
outstanding during each period. Primary earnings and fully diluted earnings
per share are the same amounts for each of the periods presented.
<PAGE> 7
TECH DATA CORPORATION AND SUBSIDIARIES
--------------------------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS
--------------------------------------
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
------------------------------------------------
Results of Operations
- ---------------------
Three Months Ended October 31, 1995 and 1994
- --------------------------------------------
Net sales increased 28.1% to $843.3 million in the third quarter of
fiscal 1996 compared to $658.3 million in the third quarter a year ago.
Approximately $31 million of this increase is attributable to the sales of
Microsofts Windows 95 product which was launched in August. The launch of
Windows 95 is a one-time event and is not expected to reoccur in the fourth
quarter. The remainder of the increase is attributable to the addition of
new product lines and the expansion of existing product lines combined with
an increase in the Company's customer base. The rate of growth in third
quarter fiscal 1996 sales is lower than the rate of growth in the prior
year, although an improvement over first and second quarter fiscal 1996
sales growth of 19.4% and 24.4%, respectively, as the Company continues to
recover from the effects of the business interruptions caused by the
conversion to a new computer system in December 1994. The Company's
international sales grew 56% in the third quarter of fiscal 1996 compared to
the prior year third quarter and were approximately 12% of fiscal 1996 third
quarter consolidated net sales.
The cost of products sold as a percentage of net sales increased to
93.0% in the third quarter of fiscal 1996 from 91.8% in the prior year.
This increase is the result of competitive market conditions and to a lesser
extent the Company's strategy of lowering selling prices in order to gain
market share.
Selling, general and administrative expenses increased 27.6% to $42.2
million in the third quarter of fiscal 1996 compared to $33.1 million
last year and as a percentage of net sales were 5.0% in the third
quarter this year, compared to 5.0% in the third quarter last year. The
dollar value increase is primarily the result of expanded employment and
increases in other administrative expenses, including expenses associated
with the new computer system.
As a result of the factors described above, operating profit decreased
20.4% to $16.5 million, or 2.0% of net sales, in the third quarter of
fiscal 1996, compared to $20.7 million, or 3.2% of net sales for the
third quarter last year.
Interest expense increased in the third quarter of fiscal 1996 due to an
increase in the Company's average outstanding indebtedness over the
prior year comparable period and, to a lesser extent, a higher average
interest rate charged on such indebtedness.
As a result of the factors described above, net income decreased 31.6%
to $7.0 million, or $.18 per share, in the third quarter of fiscal 1996
compared to $10.3 million, or $.27 per share, in the prior year
comparable quarter.
<PAGE> 8
Nine Months Ended October 31, 1995 and 1994
- --------------------------------------------
Net sales increased 24.3% to $2.19 billion in the first nine months of
fiscal 1996 compared to $1.76 billion in the same period last year. Net
income decreased 57.6% to $12.3 million, or $.32 per share, in the first
nine months of fiscal 1996 compared to $29.1 million, or $.76 per share,
in the comparable prior year period.
(The underlying reasons for the fluctuations in the results of
operations for the nine months ended October 31, 1995 are substantially
the same as in the comparative quarterly discussion above and,
therefore, will not be repeated here).
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities of $58.0 million during the
first nine months of fiscal 1996 was primarily attributable to the
Company's efforts to reduce inventory levels consistent with the lower
rate of sales growth.
Net cash used in investing activities of $21.0 million during the first
nine months of fiscal 1996 was a result of the Company making capital
expenditures for computer systems development, expansion of the
Company's headquarters facilities and the acquisition of equipment for
distribution centers. The Company expects to make capital expenditures
of approximately $25 million during fiscal 1996 for computer systems
development and to further expand its office facilities and distribution
centers.
Net cash used in financing activities of $36.6 million during the first
nine months of fiscal 1996 reflects the use of cash generated from
operating activities (net of capital expenditures) to reduce borrowings
under the Company's revolving credit loans.
In October 1995, the Company increased the amount that may be borrowed
under its Receivables Securitization Program from $200 million to $250
million and extended the maturity date to December 31, 1996. The
aforementioned loan modification increased the aggregate amount the
Company may borrow to $450 million, of which $267 million was
outstanding at October 31, 1995.
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 needs through
fiscal 1997.
Asset Management
- ----------------
The Company manages its inventories by maintaining sufficient quantities
to achieve high order fill rates while at the same time attempting to
stock only those products in high demand with a rapid turnover rate.
Inventory balances will fluctuate as the Company adds new product lines
and when appropriate, makes large purchases and cash purchases from
manufacturers when the terms of such purchases are considered
advantageous. The Company's contracts with most of its vendors provide
price protection and stock return privileges to reduce the risk of loss
to the Company due to manufacturer price reductions and slow moving or
obsolete inventory. In the event of a vendor price reduction, the Company
<PAGE> 9
generally receives a credit for products in inventory. In addition, the
Company has the right to return a certain percentage of purchases, subject
to certain limitations. Historically, price protection and stock return
privileges, as well as the Company's inventory management procedures, have
helped to reduce the risk of loss of carrying inventory.
The Company attempts to control losses on credit sales by closely
monitoring customers' creditworthiness through its on-line computer
system which contains detailed information on the customer's payment
history and other relevant information. In addition, the Company
participates in a national credit association which exchanges credit
rating information on mutual customers. Customers who qualify for
credit terms are typically granted net 30 day payment terms. The
Company also sells product on a prepay, credit card or cash on delivery
basis.
<PAGE> 10
SIGNATURES
----------
Pursuant to the requirements 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.
TECH DATA CORPORATION
---------------------
(Registrant)
Signature Title Date
- --------- ----- ----
/s/ Steven A. Raymund Chairman of the Board of December 12, 1995
- --------------------- Directors and Chief
Steven A. Raymund Executive Officer
/s/ Jeffery P. Howells Senior Vice President of December 12, 1995
- ---------------------- Finance and Chief Financial
Jeffery P. Howells Officer (principal financial
officer)
/s/ Joseph B. Trepani Vice President and Worldwide December 12, 1995
- --------------------- Controller (principal
Joseph B. Trepani accounting officer)
<PAGE> 11
INDEX TO EXHIBITS
-----------------
EXHIBIT
NO. DESCRIPTION
- ------- -----------
27 Financial Data Schedule
(for SEC use only)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements of Tech Data Corporation for the period ended
October 31, 1995 and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> OCT-31-1995
<CASH> 874
<SECURITIES> 0
<RECEIVABLES> 439,583
<ALLOWANCES> 23,201
<INVENTORY> 378,969
<CURRENT-ASSETS> 822,255
<PP&E> 63,143
<DEPRECIATION> 0
<TOTAL-ASSETS> 918,189
<CURRENT-LIABILITIES> 633,239
<BONDS> 0
<COMMON> 57
0
5
<OTHER-SE> 275,677
<TOTAL-LIABILITY-AND-EQUITY> 918,189
<SALES> 2,185,582
<TOTAL-REVENUES> 2,185,582
<CGS> 2,030,568
<TOTAL-COSTS> 2,150,265
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,829
<INCOME-PRETAX> 20,488
<INCOME-TAX> 8,149
<INCOME-CONTINUING> 12,339
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 12,339
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
</TABLE>
