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, 1997
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
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 May 31, 1997
- --------------------------------------- ------------------
Common stock, par value $.0015 per share 43,451,924
<PAGE>
TECH DATA CORPORATION AND SUBSIDIARIES
Form 10-Q For The Quarter Ended April 30, 1997
INDEX
PART I. FINANCIAL INFORMATION PAGE
Item 1. Financial Statements
Consolidated Balance Sheet as of
April 30, 1997 (unaudited) and
January 31, 1997 3
Consolidated Statement of Income
(unaudited) for the three months ended
April 30, 1997 and 1996 4
Consolidated Statement of Cash Flows
(unaudited) for the three months
ended April 30, 1997 and 1996 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, 1997.
SIGNATURES 9
2
<PAGE>
<TABLE>
<CAPTION>
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
April 30, January 31,
1997 1997
---------- -----------
<S> <C> <C>
ASSETS (Unaudited)
Current assets:
Cash and cash equivalents $ 1,381 $ 661
Accounts receivable, less allowance of $25,969
and $23,922 626,524 633,579
Inventories 671,083 759,974
Prepaid and other assets 44,982 55,796
---------- ----------
Total current assets 1,343,970 1,450,010
Property and equipment, net 66,327 65,597
Excess of cost over acquired net assets, net 5,808 5,922
Other assets, net 23,120 23,765
---------- ----------
$1,439,225 $1,545,294
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans $ 325,657 $ 396,391
Current portion of long-term debt 204 201
Accounts payable 595,243 658,732
Accrued expenses 51,512 42,693
---------- ----------
Total current liabilities 972,616 1,098,017
Long-term debt 8,844 8,896
---------- ----------
981,460 1,106,913
---------- ----------
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; 43,414,118 and 43,291,423
issued and outstanding 65 65
Additional paid-in capital 229,403 226,577
Retained earnings 228,505 210,283
Cumulative translation adjustment (213) 1,451
---------- ----------
Total shareholders' equity 457,765 438,381
---------- ----------
$1,439,225 $1,545,294
========== ==========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of these
financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
Three months ended
April 30,
-------------------------
1997 1996
---------- --------
<S> <C> <C>
Net sales $1,370,146 $985,574
---------- --------
Cost and expenses:
Cost of products sold 1,274,969 916,562
Selling, general and administrative expenses 59,484 46,285
---------- --------
1,334,453 962,847
---------- --------
Operating profit 35,693 22,727
Interest expense 6,526 5,523
---------- --------
Income before income taxes 29,167 17,204
Provision for income taxes 10,945 6,776
---------- --------
Net income $ 18,222 $ 10,428
========== ========
Net income per common share $ .41 $ .27
========== ========
Weighted average common shares outstanding 44,663 38,589
========== ========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of these
financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
Three months ended
April 30,
-------------------------
1997 1996
---------- --------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $1,372,286 $939,927
Cash paid to suppliers and employees (1,288,899) (947,485)
Interest paid (6,889) (5,358)
Income taxes paid (2,352) (6,550)
---------- --------
Net cash provided by (used in) operating activities 74,146 (19,466)
---------- --------
Cash flows from investing activities:
Capital expenditures (5,469) (2,213)
---------- --------
Cash flows from financing activities:
Proceeds from issuance of common stock 2,826 4,362
Net (repayments) borrowings under revolving credit loans (70,734) 17,227
Principal payments on long-term debt (49) (145)
---------- ---------
Net cash (used in) provided by financing activities (67,957) 21,444
---------- ---------
Net increase (decrease) in cash and cash equivalents 720 (235)
Cash and cash equivalents at beginning of period 661 1,154
---------- ---------
Cash and cash equivalents at end of period $ 1,381 $ 919
========== =========
Reconciliation of net income to net cash provided by
(used in) operating activities:
Net income $ 18,222 $ 10,428
---------- ---------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 5,607 4,696
Provision for losses on accounts receivable 4,915 4,552
(Increase) decrease in assets
Accounts receivable 2,140 (45,647)
Inventories 88,891 34,727
Prepaid and other assets 9,041 3,857
Increase (decrease) in liabilities:
Accounts payable (63,489) (33,147)
Accrued expenses 8,819 1,068
---------- ---------
Total adjustments 55,924 (29,894)
---------- ---------
Net cash provided by (used in) operating activities $ 74,146 $ (19,466)
========== =========
</TABLE>
The accompanying Notes to Consolidated Financial
Statements are an integral part of these
financial statements.
5
<PAGE>
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, 1997 and the results of their operations and
cash flows for the three months ended April 30, 1997 and 1996. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The results of operations for the three months ended April 30, 1997 are not
necessarily indicative of the results that can be expected for the entire fiscal
year ending January 31, 1998.
Proposed acquisition
- --------------------
In April 1997, the Company entered into an agreement to acquire 75% of the
outstanding voting common stock of Macrotron AG, a publicly-held German
distributor of personal computer products based in Munich, Germany. The closing
of the transaction is subject to completion of due diligence and is expected to
be completed by July 31, 1997. In Macrotron's most recent fiscal year ended
September 30, 1996, the company reported sales and net income of DM1.3 billion
($905 million) and DM7.8 million ($5.3 million), respectively.
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. Fully diluted and primary earnings per share are the same amounts
for each of the periods presented.
6
<PAGE>
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, 1997 and 1996
- ------------------------------------------
Net sales increased 39.0% to $1.37 billion in the first quarter of fiscal
1998 compared to $986 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 market share. The
Company's U.S. and international sales grew 41% and 30%, respectively, in the
first quarter of fiscal 1998 compared to the prior year first quarter.
International sales were approximately 13% of fiscal 1998 first quarter net
sales compared to 14% for the first quarter last year.
The cost of products sold as a percentage of net sales increased to 93.1%
in the first quarter of fiscal 1998 from 93.0% in the prior year. This increase
is a result of competitive market prices and the Company's strategy of lowering
selling prices in order to gain market share and to pass on the benefit of
operating efficiencies to its customers.
Selling, general and administrative expenses increased by 28.5% to $59.5
million in the first quarter of fiscal 1998 compared to $46.3 million in the
prior year and decreased as a percentage of net sales to 4.34% in the first
quarter of fiscal 1998 compared to 4.70% in the first quarter last year. This
decline in selling, general and administrative expenses as a percentage of net
sales in the first quarter of fiscal 1998 is attributable to greater economies
of scale the Company realized in addition to improved operating efficiencies.
The dollar value increase in selling, general and administrative expenses is
primarily a result of expanded employment and increases in other administrative
expenses needed to support the increased volume of business.
As a result of the factors discussed above, operating profit increased
57.1% to $35.7 million, or 2.6% of net sales, in the first quarter of fiscal
1998 compared to $22.7 million, or 2.3% of net sales for the first quarter last
year.
Interest expense increased in the first quarter of fiscal 1998 due to an
increase in the Company's average outstanding indebtedness, partially offset by
decreases in short-term interest rates on the Company's floating rate
indebtedness.
As a result of the factors discussed above, net income increased 74.7% to
$18.2 million, or $.41 per share, in the first quarter of fiscal 1998 compared
to $10.4 million, or $.27 per share, in the prior year comparable quarter.
Liquidity and Capital Resources
- -------------------------------
Net cash provided by operating activities of $74.1 million during the first
quarter of fiscal 1998 was primarily attributable to reductions in accounts
receivable and inventories.
7
<PAGE>
Net cash used in investing activities of $5.5 million during the first
quarter of fiscal 1998 was a result of the Company making capital expenditures
to expand its management information system capability, office facilities and
distribution centers. The Company expects to make capital expenditures of
approximately $50 million during fiscal 1998 to further expand its management
information system capability, office facilities and distribution centers.
Net cash used in financing activities of $68.0 million during the first
quarter of fiscal 1998 was primarily used to reduce borrowings under the
Company's revolving credit loans.
As of April 30, 1997, the Company had total available credit loans of
approximately $625 million (including the $325 million Receivables
Securitization Program), of which approximately $325 million was outstanding.
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 1998.
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. 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 carrying inventory.
The Company attempts to control losses on credit sales by closely
monitoring customers' creditworthiness through its computer system which
contains detailed information on each customer's payment history and other
relevant information. In addition, the Company participates in a national credit
association which exchanges credit information on mutual customers. The Company
has recently obtained domestic credit insurance which insures a percentage of
the credit extended by the Company to certain of its larger 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 floorplan basis.
Comments on Forward-Looking Information
- ---------------------------------------
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995, the Company filed a Form 8-K with the Securities
Exchange Commission on March 26, 1996 outlining cautionary statements
identifying 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-Q, should be considered in conjunction with the information included
within the Form 8-K.
8
<PAGE>
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 June 10, 1997
- --------------------- Directors; Chief Executive Officer
Steven A. Raymund (principal executive officer)
/s/ Jeffery P. Howells Executive Vice President of Finance June 10, 1997
- ---------------------- and Chief Financial Officer;
Jeffery P. Howells (principal financial officer)
/s/ Joseph B. Trepani Vice President and Worldwide June 10, 1997
- --------------------- Controller; (principal accounting officer)
Joseph B. Trepani
9
<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, 1997 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-31-1998
<PERIOD-START> FEB-01-1997
<PERIOD-END> APR-30-1997
<CASH> 1,381
<SECURITIES> 0
<RECEIVABLES> 652,493
<ALLOWANCES> 25,969
<INVENTORY> 671,083
<CURRENT-ASSETS> 1,343,970
<PP&E> 66,327
<DEPRECIATION> 0
<TOTAL-ASSETS> 1,439,225
<CURRENT-LIABILITIES> 972,616
<BONDS> 8,844
0
5
<COMMON> 65
<OTHER-SE> 457,695
<TOTAL-LIABILITY-AND-EQUITY> 1,439,225
<SALES> 1,370,146
<TOTAL-REVENUES> 1,370,146
<CGS> 1,274,969
<TOTAL-COSTS> 1,334,453
<OTHER-EXPENSES> 59,484
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 6,526
<INCOME-PRETAX> 29,167
<INCOME-TAX> 10,945
<INCOME-CONTINUING> 18,222
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 18,222
<EPS-PRIMARY> .41
<EPS-DILUTED> .41
</TABLE>
