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, 2000
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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
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(Exact name of registrant as specified in its charter)
FLORIDA NO. 59-1578329
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(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
5350 TECH DATA DRIVE, CLEARWATER, FLORIDA 33760
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(727) 539-7429
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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 JUNE 6, 2000
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Common stock, par value $.0015 per share 53,056,626
<PAGE>
TECH DATA CORPORATION AND SUBSIDIARIES
FORM 10-Q FOR THE QUARTER ENDED APRIL 30, 2000
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INDEX
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PART I. FINANCIAL INFORMATION PAGE
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Item 1. Financial Statements
Consolidated Balance Sheet as of
April 30, 2000 (unaudited) and
January 31, 2000 3
Consolidated Statement of Income
(unaudited) for the three months
ended April 30, 2000 and 1999 4
Consolidated Statement of Cash Flows
(unaudited) for the three months
ended April 30, 2000 and 1999 5
Notes to Consolidated Financial Statements
(unaudited) 6-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9-13
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 13
PART II. OTHER INFORMATION
Items 1-5 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, 2000.
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 14
2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
2000 2000
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ASSETS (Unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 45,458 $ 31,786
Accounts receivable, less allowance for
doubtful accounts of $63,428 and $61,617 2,013,753 1,906,315
Inventories 1,459,262 1,540,030
Prepaid and other assets 92,954 109,674
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Total current assets 3,611,427 3,587,805
Property and equipment, net 155,287 154,008
Excess of cost over acquired net assets, net 300,059 302,531
Other assets, net 88,434 79,474
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$ 4,155,207 $ 4,123,818
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans $ 1,053,169 $ 1,006,809
Accounts payable 1,446,470 1,524,330
Accrued expenses 302,804 261,077
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Total current liabilities 2,802,443 2,792,216
Long-term debt 320,949 316,840
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Total liabilities 3,123,392 3,109,056
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Minority interest 1,106 1,067
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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 $.0015; 200,000,000
shares authorized; 52,971,489 and
52,231,581 issued and outstanding 79 78
Additional paid-in capital 548,338 530,238
Retained earnings 593,467 556,248
Accumulated other comprehensive loss (111,180) (72,874)
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Total shareholders' equity 1,030,709 1,013,695
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$ 4,155,207 $ 4,123,818
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements
3
<PAGE>
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
-----------------------------
2000 1999
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<S> <C> <C>
Net sales $ 4,924,516 $ 3,877,158
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Cost and expenses:
Cost of products sold 4,666,657 3,651,916
Selling, general and administrative expenses 182,478 158,249
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4,849,135 3,810,165
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Operating income 75,381 66,993
Interest expense 18,751 16,914
Net foreign currency exchange (gain)/loss (795) 4,757
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Income before income taxes 57,425 45,322
Provision for income taxes 20,098 17,179
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Income before minority interest 37,327 28,143
Minority interest 108 119
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Net income $ 37,219 $ 28,024
=========== ===========
Net income per common share:
Basic $ .71 $ .55
=========== ===========
Diluted $ .68 $ .53
=========== ===========
Weighted average common shares outstanding:
Basic 52,322 51,133
=========== ===========
Diluted 58,470 57,421
=========== ===========
</TABLE>
The accompanying Notes to Consolidated Financial Statements
are an integral part of these financial statements
4
<PAGE>
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
(In thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
APRIL 30,
-----------------------------
2000 1999
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<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 4,742,913 $ 3,986,162
Cash paid to suppliers and employees (4,753,804) (3,887,109)
Interest paid (20,343) (23,478)
Income taxes paid (24,745) (25,664)
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Net cash (used in) provided by operating activities (55,979) 49,911
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Cash flows from investing activities:
Acquisition of business, net of cash acquired (17,040) (12,305)
Capital expenditures (10,724) (15,264)
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Net cash used in investing activities (27,764) (27,569)
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Cash flows from financing activities:
Proceeds from the issuance of common stock 18,101 2,206
Net borrowings (repayments) under revolving credit loan 83,024 (32,884)
Principal payments on long-term debt (134) (56)
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Net cash provided by (used in) financing activities 100,991 (30,734)
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Effect of exchange rate changes on cash (3,576) --
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Net increase (decrease) in cash and cash equivalents 13,672 (8,392)
Cash and cash equivalents at beginning of period 31,786 8,615
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Cash and cash equivalents at end of period $ 45,458 $ 223
=========== ===========
Reconciliation of net income to net cash (used in)
provided by operating activities:
Net income $ 37,219 $ 28,024
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Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Depreciation and amortization 15,707 13,840
Provision for losses on accounts receivable 11,047 10,136
Foreign currency transaction (gain) loss (795) 4,757
(Increase) decrease in assets:
Accounts receivable (181,606) 109,004
Inventories 43,067 84,761
Prepaid and other assets 5,868 6,650
Increase (decrease) in liabilities:
Accounts payable (41,398) (212,187)
Accrued expenses 54,912 4,926
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Total adjustments (93,198) 21,887
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Net cash (used in) provided by operating activities $ (55,979) $ 49,911
=========== ===========
</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
NOTE 1 - BASIS OF PRESENTATION:
The consolidated financial statements and related notes included herein
have been prepared by Tech Data Corporation ("the Company" or ("Tech Data"),
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 as of April 30, 2000 and the results
of their operations and cash flows for the three months ended April 30, 2000 and
1999. All significant intercompany accounts and transactions have been
eliminated in consolidation. The results of operations for the three months
ended April 30, 2000 are not necessarily indicative of the results that can be
expected for the entire fiscal year ending January 31, 2001.
NOTE 2 - ACQUISITION OF BUSINESS:
In July 1998, the Company acquired approximately 83% of the outstanding
voting common stock of Computer 2000 AG ("Computer 2000"), Europe's leading
technology products distributor. In connection with the acquisition (accounted
for under the purchase method), the Company was subject to additional contingent
purchase price payments. The Company negotiated the resolution of this
contingency during April 2000, which resulted in an increase to the purchase
price of Computer 2000 and the recognition of approximately $15.9 million in
additional goodwill recorded as of April 30, 2000. As a result of the initial
and subsequent purchase transactions, the Company currently owns approximately
99.8% of Computer 2000.
NOTE 3 - NET INCOME PER COMMON SHARE:
Basic Earnings Per Share ("Basic EPS") excludes from the calculation of
earnings per share the potential for dilution of earnings by certain common
stock equivalents and is computed by dividing net income by the weighted average
number of common shares outstanding during the reported period. Diluted Earnings
Per Share ("Diluted EPS") reflects the potential dilution that could occur
assuming the conversion of certain common stock equivalents, such as the
Company's convertible subordinated notes, as well as the exercise of stock
options, using the if-converted and treasury stock methods, respectively.
6
<PAGE>
The composition of basic and diluted net income per common share is as
follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30,
------------------------------------------------------------------------
2000 1999
--------------------------------- ---------------------------------
WEIGHTED PER WEIGHTED PER
NET AVERAGE SHARE NET AVERAGE SHARE
INCOME SHARES AMOUNT INCOME SHARES AMOUNT
------- ------ ------- ------- ------ -------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C> <C> <C>
Net income per common
share - basic $37,219 52,322 $ .71 $28,024 51,133 $ .55
======= =======
Effect of dilutive securities:
Stock options -- 815 -- 955
5% convertible subordinated notes 2,438 5,333 2,363 5,333
------- ------- ------- -------
Net income per common
share - diluted $39,657 58,470 $ .68 $30,387 57,421 $ .53
======= ======= ======= ======= ======= =======
</TABLE>
At April 30, 2000 and 1999, there were 2,439,000 and 2,808,000 shares,
respectively, excluded from the computation of diluted earnings per share
because their effect would have been anti-dulitve.
NOTE 4 - COMPREHENSIVE INCOME:
The Company has adopted Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in the Company's consolidated financial statements. 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 the foreign currency translation adjustment. The
Company's comprehensive loss for the three months ended April 30, 2000 and 1999
was $1.1 million and $25.6 million, respectively.
NOTE 5 - SEGMENT INFORMATION:
The Company has adopted the disclosure requirements of SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information" which
establishes standards for additional disclosure about operating segments for
interim and annual financial statements. This standard requires financial and
descriptive information be disclosed for segments whose operating results are
reviewed by the chief operating officer for decisions on resource allocation.
7
<PAGE>
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 principal 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.
Financial information by geographic segment is as follows (in
thousands):
<TABLE>
<CAPTION>
OTHER
UNITED STATES EUROPE INTERNATIONAL TOTAL
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
APRIL 30, 2000
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Net sales to unaffiliated customers $2,635,705 $1,951,913 $ 336,898 $4,924,516
========== ========== ========== ==========
Operating income $ 49,691 $ 22,024 $ 3,666 $ 75,381
========== ========== ========== ==========
Identifiable assets $1,925,321 $1,927,594 $ 302,292 $4,155,207
========== ========== ========== ==========
APRIL 30,1999
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Net sales to unaffiliated customers $1,782,255 $1,910,181 $ 184,722 $3,877,158
========== ========== ========== ==========
Operating income $ 31,861 $ 33,224 $ 1,908 $ 66,993
========== ========== ========== ==========
Identifiable assets $1,514,101 $1,899,094 $ 163,631 $3,576,826
========== ========== ========== ==========
</TABLE>
NOTE 6 - REVOLVING CREDIT LOANS:
In May 2000, the Company entered into a new three-year $415 million
Revolving Credit Facility with a syndicate of banks, replacing its former $550
million Revolving Credit Facility. The Company pays interest under this
Revolving Credit Facility at the applicable eurocurrency rate plus a margin
based on the Company's credit rating. Additionally, in May 2000 the Company
entered into a new one-year $700 million Receivables Securitization Program with
a syndicate of banks, replacing its former $650 million Receivables
Securitization Program. 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 $500 million.
The aforementioned credit facilities include covenants which must be complied
with on a continuous basis, including the maintenance of certain financial
ratios and restrictions on payment of dividends. The Company is in compliance
with all such covenants.
NOTE 7: SUPPLEMENTAL CASH FLOW INFORMATION:
The Company entered into non-cash transactions representing capital
lease obligations of approximately $5.4 million during the first quarter of
fiscal 2001.
NOTE 8 - RECENT ACCOUNTING PRONOUNCEMENT:
In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities"
("SFAS 133"). This statement establishes requirements for accounting and
reporting of derivative instruments and hedging activities. SFAS 133 was updated
by the issuance of SFAS 137, "Accounting for Derivative Instruments and Hedging
Activities - Deferral of the Effective Date of FAS No. 133" and is effective for
fiscal years beginning after June 15, 2000. The future impact of this statement
on the Company's results of operations is not expected to be material.
8
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Certain statements within this Quarterly Report on Form 10-Q are
"forward-looking statements" as described in the "safe harbor" provisions 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 99A to the Company's Annual Report on Form 10-K for
the year ended January 31, 2000 for further information.
The following table sets forth the percentage of cost and expenses to
net sales derived from the Company's Consolidated Statement of Income for the
quarters ended April 30, 2000 and 1999 as follows:
PERCENTAGE OF
NET SALES
--------------------
QUARTER ENDED
APRIL 30,
--------------------
2000 1999
------ ------
Net sales 100.0% 100.0%
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Cost and expenses:
Cost of products sold 94.76 94.19
Selling, general and administrative expenses 3.71 4.08
------ ------
98.47 98.27
------ ------
Operating income 1.53 1.73
Interest expense .38 .44
Net foreign currency exchange (gain)/loss (.02) .12
------ ------
Income before income taxes 1.17 1.17
Provision for income taxes .41 .44
------ ------
Income before minority interest .76 .73
Minority interest -- --
------ ------
Net income .76% .73%
====== ======
RESULTS OF OPERATIONS
THREE MONTHS ENDED APRIL 30, 2000 AND 1999
Net sales increased 27.0% to $4.9 billion in the first quarter of
fiscal 2001 compared to $3.9 billion in the first quarter of last year. This
increase is primarily attributable to growth in the Company's U.S. business
through the addition of new customers and gains in market share, as well as the
addition of new product lines and the expansion of existing product lines in all
geographies. The Company's first quarter U.S., Europe and other international
sales grew 47.9%, 2.2% and 82.4%, respectively, compared to the first quarter of
last year. European sales grew 18.6% during the first quarter on a local
currency basis. Total international sales in the first quarter of fiscal 2001
represent approximately 46% of consolidated net sales compared with 54% in the
prior year.
9
<PAGE>
The cost of products sold as a percentage of net sales increased from
94.2% in the first quarter of fiscal 2000 to 94.8% in the current period. The
increase is a result of competitive market conditions, the increase in the
Company's sales mix of lower margin computer systems as a percentage of total
sales and the Company's increased participation in customer outsourcing
activities, which, while maintaining reasonable pre-tax operating margins
through cost and working capital efficiencies, provide for lower gross profit
margins.
Selling, general and administrative expenses increased 15.3% from
$158.2 million in the first quarter of fiscal 2000 to $182.5 million in fiscal
2001, and as a percentage of net sales decreased to 3.7% from 4.1% in the
comparable prior year period. The decline in selling, general and administrative
expenses as a percentage of net sales is attributable to the realization of
greater economies of scale as well as improved operating efficiencies. The
dollar value increase in selling, general and administrative expenses is
attributable to increases in operating expenses needed to support the increased
volume of business.
As a result of the factors described above, operating profit in the
first quarter of fiscal 2001 increased 12.5% to $75.4 million, or 1.5% of net
sales, compared to $67.0 million, or 1.7% of net sales in the first quarter of
fiscal 2000. A factor contributing to the decrease in the operating profit
margin was the competitive market conditions experienced by the Company.
Interest expense increased from $16.9 million in the first quarter of
fiscal 2000 to $18.8 million in the current quarter due to an increase in the
Company's average outstanding indebtedness related to funding for continued
growth and capital expenditures combined with an increase in short-term interest
rates on the Company's floating rate indebtedness.
The Company reported a net foreign currency exchange gain of $.8
million in the first quarter of fiscal 2001, as compared to a net foreign
currency exchange loss of $4.8 million in the comparable quarter last year. The
fluctuation is primarily related to the devaluation of the Brazilian currency
and weakening of currencies in various European countries in the first quarter
of the prior year.
The provision for income taxes increased 17.0% to $20.1 million in the
first quarter of fiscal 2001 compared to $17.2 million last year. The increase
is attributable to an increase in the Company's income before income taxes. The
Company's estimated effective tax rate decreased from 37.9% in the first quarter
of 2000 to 35.0% in the current year due to fluctuations in the amount of
federal, state and foreign taxable income reported in each period. The Company's
effective tax rate for fiscal year 2000 was 36.3%.
As a result of the factors described above, net income increased 32.8%
to $37.2 million, or $.68 per diluted share, compared to $28.0 million, or $.53
per diluted share, in the prior year.
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
10
<PAGE>
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 business, financial condition, or results of
operations.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities of $56.0 million during the first
quarter of fiscal 2001 was primarily attributable to income from operations of
$37.2 million combined with an increase in accounts receivable and reduction in
accounts payable, offset by a decrease in inventory and an increase in accrued
expenses.
Net cash used in investing activities of $27.8 million during the first
three months of fiscal 2001 was attributable to the continuing investment of
$10.7 million related to the expansion of the Company's management information
systems, office facilities and equipment for its distribution centers combined
with the payment of $15.9 million related to the resolution of additional
contingent purchase price payments associated with the purchase of Computer 2000
and $1.2 million related to other miscellaneous acquisitions. The Company
expects to make capital expenditures of approximately $125 million during fiscal
2001 to further expand its management information systems, office facilities and
equipment for distribution centers.
Net cash provided by financing activities of $101.0 million during the
first three months of fiscal 2001 reflects the net borrowings on the Company's
revolving credit loans of $83.0 million and principal payments on long-term debt
of $.1 million, combined with the proceeds from stock option exercises
(including the related income tax benefit) of $18.1 million.
In May 2000, the Company entered into a new three-year $415
million Revolving Credit Facility with a syndicate of banks, replacing its
former $550 million Revolving Credit Facility. The Company pays interest under
this Revolving Credit Facility at the applicable eurocurrency rate plus a margin
based on the Company's credit rating. Additionally, in May 2000 the Company
entered into a new one-year $700 million Receivables Securitization Program with
a syndicate of banks, replacing its former $650 million Receivables
Securitization Program. 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 $500 million.
The aforementioned credit facilities include covenants which must be complied
with on a continuous basis, including the maintenance of certain financial
ratios and restrictions on payment of dividends. The Company is in compliance
with all such covenants. 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 2001.
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
11
<PAGE>
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 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 customers' payment history and other relevant
information. The Company has obtained credit insurance which 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 product on a prepay, credit card, cash on delivery and
floor-plan basis.
YEAR 2000
The Company's Year 2000 ("Y2K") compliance project determined the
readiness of the Company's business for the Year 2000. The Company defined Y2K
"compliance" to mean that the computer code will process all defined future
dates properly and give accurate results. The Company has experienced no
problems with its computer systems since the beginning of 2000 but will continue
to monitor the systems to assess whether any problems develop. In addition,
during fiscal 2000 the Company incurred approximately $11.2 million in expenses
related to assessing and remedying any Y2K problems and upgrading computer
systems, but does not expect to incur any additional material expenses related
to Y2K issues going forward.
EURO CONVERSION
On January 1, 1999, eleven of the fifteen member countries of the
European Union commenced a conversion from their existing sovereign currencies
to a new, single currency called the euro. Fixed conversion rates between the
existing currencies, the legacy currencies, and the euro were established and
the euro became the common legal currency of the participating countries and the
legacy currencies will remain legal tender as denominations of euro until
January 1, 2002. At that time, countries will issue new euro-denominated bills
for use in cash transactions. All legacy currency will be withdrawn prior to
July 1, 2002 completing the euro conversion on this date. As of January 1, 1999,
the participating countries no longer control their own monetary policies by
directing independent interest rates for the legacy currencies, and instead, the
authority to direct monetary policy, including money supply and official
interest rates for the euro, is exercised by the new European Central Bank.
The Company has implemented plans to address the issues raised by the
euro conversion. These issues include, but are not limited to: the competitive
impact created by cross-border price transparency; the need for the Company and
its business
12
<PAGE>
partners to adapt IT and non-IT systems to accommodate euro-demoninated
transactions; and the need to analyze the legal and contractual implications of
the Company's contracts. The Company currently anticipates that the required
modifications to its systems, equipment and processes will be made on a timely
basis and does not expect that the costs of such modifications will have a
material effect on the Company's financial position or results of operations.
Since the implementation of the euro on January 1, 1999, the Company
has experienced improved efficiencies in its cash management program in Europe
and has been able to reduce certain hedging activities as a direct result of the
conversion. The Company has not experienced any material adverse effects on its
financial position or results of operations in connection with the initial
roll-out of the euro.
RECENT ACCOUNTING PRONOUNCEMENT:
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"). This statement
establishes requirements for accounting and reporting of derivative instruments
and hedging activities. SFAS 133 was updated by the issuance of SFAS 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FAS No. 133" and is effective for fiscal years beginning after
June 15, 2000. The future impact of this statement on the Company's results of
operations is not expected to be material.
COMMENTS ON FORWARD-LOOKING INFORMATION
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the Company, in Exhibit 99A to its
Annual Report on Form 10-K for the year ended January 31, 2000, outlined
cautionary statements and identified 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 aforementioned Exhibit
99A.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
No material changes have occurred in the quantitative and qualitative
market risk disclosure of the Company as presented in the Company's Annual
Report on Form 10-K for the year ended January 31, 2000.
13
<PAGE>
PART III - OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
NO. DESCRIPTION
--- -----------
27 Financial Data Schedule
(b) Reports on Form 8-K
None.
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 14, 2000
--------------------- Directors and Chief
Steven A. Raymund Executive Officer
/s/ JEFFERY P. HOWELLS Executive Vice President June 14, 2000
---------------------- and Chief Financial Officer
Jeffery P. Howells (principal financial officer)
/s/ JOSEPH B. TREPANI Senior Vice President and June 14, 2000
--------------------- Corporate Controller (principal
Joseph B. Trepani accounting officer)
/s/ ARTHUR W. SINGLETON Corporate Vice President, June 14, 2000
----------------------- Treasurer and Secretary
Arthur W. Singleton
14
<PAGE>
EXHIBIT INDEX
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EXHIBIT NO. DESCRIPTION
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27 Financial Data Schedule
