<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 April 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-14625
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TECH DATA CORPORATION
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(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 May 31, 1995
- ---------------------------------------- ------------
Common stock, par value $.0015 per share 37,815,794
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TECH DATA CORPORATION
Form 10-Q For The Quarter Ended April 30, 1995
INDEX
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION PAGE
----
Item 1. Financial Statements
Consolidated Balance Sheet as of
April 30, 1995 (unaudited) and
January 31, 1995 3
Consolidated Statement of Income
(unaudited) for the three months ended
April 30, 1995 and 1994 4
Consolidated Statement of Cash Flows
(unaudited) for the three months
ended April 30, 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 7-8
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 April 30, 1995.
SIGNATURES 9
</TABLE>
2
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TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
<TABLE>
<CAPTION>
April 30, January 31,
1995 1995
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<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 562 $ 496
Accounts receivable, less allowance for
doubtful accounts of $19,018 and $16,580 323,924 309,846
Inventories 335,794 364,531
Prepaid and other assets 36,984 21,850
-------- --------
Total current assets 697,264 696,723
Property and equipment, net 53,034 51,042
Excess of cost over acquired net assets, net 9,891 10,061
Other assets 26,894 26,603
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$787,083 $784,429
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans $283,650 $304,784
Current portion of long-term debt 544 542
Accounts payable 211,908 194,213
Accrued expenses 16,452 14,382
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Total current liabilities 512,554 513,921
Long-term debt 9,504 9,682
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522,058 523,603
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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; 37,815,794 and 37,807,794
issued and outstanding 57 57
Additional paid-in capital 128,720 127,947
Retained earnings 133,618 131,769
Cumulative translation adjustment 2,625 1,048
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Total shareholders' equity 265,025 260,826
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$787,083 $784,429
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
3
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TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three months ended
April 30,
--------------------------
1995 1994
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<S> <C> <C>
Net sales $633,460 $530,469
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Cost and expenses:
Cost of products sold 587,244 485,312
Selling, general and
administrative expenses 38,061 27,452
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625,305 512,764
-------- --------
Operating profit 8,155 17,705
Interest expense 5,057 2,489
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Income before income taxes 3,098 15,216
Provision for income taxes 1,249 5,991
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Net income $ 1,849 $ 9,225
======== ========
Net income per common share $ 0.05 $ 0.24
======== ========
Weighted average common
shares outstanding 38,063 38,318
======== ========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
4
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TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
Three months ended
April 30,
---------
1995 1994
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<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $615,340 $ 518,338
Cash paid to suppliers and employees (585,490) (522,936)
Interest paid (5,112) (2,366)
Income tax refunds received (taxes paid) 591 (9,611)
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Net cash provided by (used in) operating activities 25,329 (16,575)
-------- ---------
Cash flows from investing activities:
Capital expenditures (4,726) (7,325)
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Cash flows from financing activities:
Proceeds from issuance of common stock 773 865
Net (repayments) borrowings under revolving credit loans (21,134) 23,507
Principal payments on long-term debt (176) (43)
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Net cash (used in) provided by financing activities (20,537) 24,329
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Net increase in cash and cash equivalents 66 429
Cash and cash equivalents at beginning of period 496 678
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Cash and cash equivalents at end of period $ 562 $ 1,107
======== =========
Reconciliation of net income to net cash provided by
(used in) operating activities:
Net income $ 1,849 $ 9,225
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Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 3,954 1,682
Provision for losses on accounts receivable 4,042 4,002
(Increase) decrease in assets:
Accounts receivable (18,120) (10,934)
Inventories 28,737 (17,565)
Prepaid and other assets (14,898) (9,447)
Increase (decrease) in liabilities:
Accounts payable 17,695 7,492
Accrued expenses 2,070 (1,030)
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Total adjustments 23,480 (25,800)
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Net cash provided by (used in) operating activities $ 25,329 $ (16,575)
======== =========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements.
5
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TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 April 30, 1995, and the results of their operations and
cash flows for the three months ended April 30, 1995 and 1994. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for the three months ended April 30, 1995 are not
necessarily indicative of the results that can be expected for the entire
fiscal year ending January 31, 1996.
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.
6
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TECH DATA CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Three Months Ended April 30, 1995 and 1994
Net sales increased 19.4% to $633.5 million in the first quarter of fiscal 1996
compared to $530.5 million in the first quarter last year. This 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 first quarter fiscal 1996 sales is lower than the rate of
growth in the prior year, which is attributable to business interruptions
caused by the conversion to a new computer system in December 1994. The
Company's international sales grew 36% in the first quarter of fiscal 1996
compared to the prior year first quarter and were approximately 15% of fiscal
1996 first quarter consolidated net sales.
The cost of products sold as a percentage of net sales increased to 92.7% in the
first quarter of fiscal 1996 from 91.5% in the prior year. This increase is a
result of the Company's strategy of lowering selling prices in order to gain
market share. In addition, the increase is also attributable to certain freight
concessions made with customers during the first quarter of fiscal 1996 in order
to ensure timely delivery of product.
Selling, general and administrative expenses increased by 38.6% to
$38.1 million in the first quarter of fiscal 1996 compared to $27.5 million in
the prior year and increased as a percentage of net sales to 6.0% of net sales
in the first quarter of fiscal 1996 compared to 5.2% in the first quarter last
year. The increase is primarily the result of expanded employment and increases
in other administrative expenses, including expenses associated with the new
computer system. Additionally, the increase in selling, general and
administrative expenses as a percentage of sales in the first quarter of fiscal
1996 is attributable to the reduced rate of sales growth resulting from
business interruptions caused by the December 1994 computer system conversion.
As a result of the factors discussed above, operating profit decreased 53.9% to
$8.2 million, or 1.3% of net sales, in the first quarter of fiscal 1996,
compared to $17.7 million, or 3.3% of net sales for the first quarter last
year.
Interest expense increased in the first quarter of fiscal 1996 due to an
increase in the Company's average outstanding indebtedness, combined with
increases in short-term interest rates on the Company's floating rate
indebtedness.
As a result of the factors discussed above, net income decreased 80.0% to $1.8
million, or $.05 per share, in the first quarter of fiscal 1996 compared to $9.2
million, or $.24 per share, in the prior year comparable quarter.
7
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Liquidity and Capital Resources
Net cash provided by operating activities of $25.3 million during the first
quarter 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 $4.7 million during the first quarter
of fiscal 1996 was a result of the Company making capital expenditures to expand
the capacity of its systems, office and warehouse facilities. The Company
expects to make capital expenditures of approximately $25 million during
fiscal 1996 to further expand its office and warehouse facilities.
Net cash used in financing activities of $20.5 million during the first quarter
of fiscal 1996 was primarily used to reduce borrowings under the Company's
revolving credit loans.
The Company currently maintains domestic and foreign revolving credit agreements
which provide maximum short-term borrowings of approximately $400 million, of
which $284 million was outstanding at April 30, 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 during fiscal 1996.
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 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 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 20 or 30 day
payment terms. The Company also sells product on a prepay, credit card or cash
on delivery basis.
8
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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)
<TABLE>
<CAPTION>
Signature Title Date
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<S> <C> <C>
/s/ Steven A. Raymund Chairman of the Board of June 13, 1995
- --------------------- Directors and Chief
Steven A. Raymund Executive Officer
/s/ Jeffery P. Howells Senior Vice President of Finance June 13, 1995
- ---------------------- and Chief Financial Officer
Jeffery P. Howells (principal financial officer)
/s/ Joseph B. Trepani Vice President and Worldwide June 13, 1995
- --------------------- Controller (principal accounting officer)
Joseph B. Trepani
</TABLE>
9
<PAGE> 10
INDEX TO EXHIBITS
-----------------
EXHIBIT
NO. DESCRIPTION
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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 APRIL 30,
1995 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1996
<PERIOD-START> FEB-01-1995
<PERIOD-END> APR-30-1995
<CASH> 562
<SECURITIES> 0
<RECEIVABLES> 342,942
<ALLOWANCES> 19,018
<INVENTORY> 335,794
<CURRENT-ASSETS> 697,264
<PP&E> 53,034
<DEPRECIATION> 0
<TOTAL-ASSETS> 787,083
<CURRENT-LIABILITIES> 512,554
<BONDS> 0
<COMMON> 57
0
5
<OTHER-SE> 264,963
<TOTAL-LIABILITY-AND-EQUITY> 787,083
<SALES> 633,460
<TOTAL-REVENUES> 633,460
<CGS> 587,244
<TOTAL-COSTS> 587,244
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 5,057
<INCOME-PRETAX> 3,098
<INCOME-TAX> 1,249
<INCOME-CONTINUING> 1,849
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,849
<EPS-PRIMARY> .05
<EPS-DILUTED> .05
</TABLE>
