-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, EaSBWlOcOOSHUDDsECBbs63WguAbB/7tbR0F8wc6tWb48jvDnRfMFye2WGGp/GFc 0M3bGFk8aMCzskXyEJIdPQ== 0000790703-97-000014.txt : 19971216 0000790703-97-000014.hdr.sgml : 19971216 ACCESSION NUMBER: 0000790703-97-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971031 FILED AS OF DATE: 19971215 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: TECH DATA CORP CENTRAL INDEX KEY: 0000790703 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-COMPUTER & PERIPHERAL EQUIPMENT & SOFTWARE [5045] IRS NUMBER: 591578329 STATE OF INCORPORATION: FL FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-14625 FILM NUMBER: 97738586 BUSINESS ADDRESS: STREET 1: 5350 TECH DATA DR CITY: CLEARWATER STATE: FL ZIP: 34620 BUSINESS PHONE: 8135397429 MAIL ADDRESS: STREET 1: 5350 TECH DATA DRIVE CITY: CLEARWATER STATE: FL ZIP: 34620 10-Q 1 QUARTERLY REPORT FOR THE PERIOD ENDED 10/31/97 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, 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 33760 - ----------------------------------------- ---------------- (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 28, 1997 - ---------------------------------------- -------------------- Common stock, par value $.0015 per share 48,167,757 TECH DATA CORPORATION AND SUBSIDIARIES Form 10-Q For The Quarter Ended October 31, 1997 INDEX PART I. FINANCIAL INFORMATION PAGE Item 1. Financial Statements Consolidated Balance Sheet as of October 31, 1997 (unaudited) and January 31, 1997 3 Consolidated Statement of Income (unaudited) for the three and nine months ended October 31, 1997 and 1996 4 Consolidated Statement of Cash Flows (unaudited) for the nine months ended October 31, 1997 and 1996 5 Notes to Consolidated Financial Statements (unaudited) 6-7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 8-10 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, 1997. SIGNATURES 11 2
TECH DATA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands, except share amounts) October 31, January 31, 1997 1997 ---------- ---------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 1,893 $ 661 Accounts receivable, less allowance for doubtful accounts of $30,362 and $23,922 890,131 633,579 Inventories 1,014,684 759,974 Prepaid and other assets 68,118 55,796 ---------- ---------- Total current assets 1,974,826 1,450,010 Property and equipment, net 82,877 65,597 Excess of cost over acquired net assets, net 46,995 5,922 Other assets, net 23,774 23,765 ---------- ---------- $2,128,472 $1,545,294 ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Revolving credit loans $ 486,353 $ 396,391 Current portion of long-term debt 210 201 Accounts payable 1,006,808 658,732 Accrued expenses 89,048 42,693 ---------- ---------- Total current liabilities 1,582,419 1,098,017 Long-term debt 8,737 8,896 ---------- ---------- 1,591,156 1,106,913 ---------- ---------- Minority interest 10,576 - ---------- ---------- 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 and 100,000,000 shares authorized; 44,449,580 and 43,291,423 issued and outstanding 67 65 Additional paid-in capital 253,784 226,577 Retained earnings 273,642 210,283 Cumulative translation adjustment (758) 1,451 ---------- ---------- Total shareholders' equity 526,740 438,381 ---------- ---------- $2,128,472 $1,545,294 ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements 3
TECH DATA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (UNAUDITED) (In thousands, except per share amounts) Three months ended Nine months ended October 31, October 31, -------------------------- ------------------------------ 1997 1996 1997 1996 ---------- ---------- ---------- ---------- Net sales $2,021,479 $1,236,650 $4,943,445 $3,285,452 ---------- ---------- ---------- ---------- Cost and expenses: Cost of products sold 1,892,137 1,150,695 4,614,948 3,056,183 Selling, general and administrative expenses 83,294 54,023 205,938 149,632 ---------- ---------- ---------- ---------- 1,975,431 1,204,718 4,820,886 3,205,815 ---------- ---------- ---------- ---------- Operating profit 46,048 31,932 122,559 79,637 Interest expense 7,991 4,409 20,644 15,211 ---------- ---------- ---------- ---------- Income before income taxes 38,057 27,523 101,915 64,426 Provision for income taxes 14,384 10,775 38,556 25,234 ---------- ---------- ---------- ---------- Net income $ 23,673 $ 16,748 $ 63,359 $ 39,192 ========== ========== ========== ========== Net income per common share $ .51 $ .38 $ 1.39 $ .95 ========== ========== ========== ========== Weighted average common shares outstanding 46,483 44,641 45,579 41,046 ========== ========== ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements 4
TECH DATA CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) (In thousands) Nine months ended October 31, ----------------------------- 1997 1996 ---------- ---------- Cash flows from operating activities: Cash received from customers $4,782,338 $3,125,968 Cash paid to suppliers and employees (4,685,677) (3,215,839) Interest paid (20,895) (15,197) Income taxes paid (37,201) (29,521) ---------- ---------- Net cash provided by (used in) operating activities 38,565 (134,589) ---------- ---------- Cash flows from investing activities: Acquisition of business, net of cash acquired (53,668) - Capital expenditures (24,430) (13,547) ---------- ---------- Net cash used in investing activities (78,098) (13,547) ---------- ---------- Cash flows from financing activities: Proceeds from issuance of common stock 17,953 94,761 Net borrowings under revolving credit loan 22,962 56,485 Principal payments on long-term debt (150) (438) ---------- ---------- Net cash provided by financing activities 40,765 150,808 ---------- ---------- Net increase in cash and cash equivalents 1,232 2,672 Cash and cash equivalents at beginning of period 661 1,154 ---------- ---------- Cash and cash equivalents at end of period $ 1,893 $ 3,826 ========== ========== Reconciliation of net income to net cash provided by (used in) operating activities: Net income $ 63,359 $ 39,192 ---------- ---------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 18,749 14,451 Provision for losses on accounts receivable 19,555 14,534 (Increase) decrease in assets: Accounts receivable (161,107) (159,484) Inventories (167,710) (175,781) Prepaid and other assets (6,212) (18,750) Increase (decrease) in liabilities: Accounts payable 262,076 146,110 Accrued expenses 9,855 5,139 ---------- ---------- Total adjustments (24,794) (173,781) ---------- ---------- Net cash provided by (used in) operating activities $ 38,565 $ (134,589) ========== ==========
The accompanying Notes to Consolidated Financial Statements are an integral part of these financial statements. 5 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 October 31, 1997, and the results of their operations and cash flows for the three and nine months ended October 31, 1997 and 1996. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the nine months ended October 31, 1997 are not necessarily indicative of the results that can be expected for the entire fiscal year ending January 31, 1998. Acquisition - ----------- On July 1, 1997 the Company acquired approximately 77% of the voting common stock and 7% of the non-voting preferred stock of Macrotron AG ("Mactroton"), a leading publicly held distributor of personal computer products based in Munich, Germany. The initial acquisition was completed through an exchange of approximately $26 million in cash and 406,586 shares of the Company's common stock, for a combined total value of $35 million. On July 10, 1997, the Company commenced a tender offer for the remaining shares of Macrotron common and preferred stock at a price per share of DM730 and DM600, respectively. The tender offer period ended on September 5, 1997. As of October 31, 1997, the Company owned or had under option approximately 98% and 61% of Macrotron's common and preferred stock, respectively. The cash portion of the initial acquisition and the related tender offer were funded from the Company's revolving credit loan agreements. The acquisition of Macrotron will be accounted for under the purchase method. Consistent with the Company's accounting policy for foreign subsidiaries, Macrotron's operations will be consolidated into the Company's consolidated financial statements on a calendar year basis. Consequently, the Company's fiscal quarter ending October 31, 1997 includes Macrotron's operations for the three month period beginning July 1, 1997 and ending September 30, 1997. 6 The following pro forma unaudited results of operations reflects the effect on the Company's operations, as if the above described acquisition had occurred at the beginning of each of the periods presented below: Nine months ended October 31, -------------------------------- 1997 1996 ---------- ------------ Net sales $5,510,678 $3,937,587 Net income $ 64,432 $ 40,569 Net income per common share $ 1.41 $ .98 The unaudited pro forma information is presented for information purposes only and includes certain pro forma adjustments. Such pro forma information is not necessarily indicative of the operating results that would have occurred had the Mactrotron acquisition been consummated as of the beginning of the periods above, nor are they necessarily indicative of future operating results. 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. Subsequent event - ---------------- In November 1997, the Company completed a public offering of 3.7 million shares of its common stock resulting in net proceeds of approximately $149 million. 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, 1997 and 1996 - -------------------------------------------- Net sales increased 63.5% to $2.02 billion in the third quarter of fiscal 1998 compared to $1.24 billion in the third quarter last year. This increase is attributable to the acquisition of Macrotron AG, 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 domestic sales increased 40% while international sales advanced 271% in the third quarter of fiscal 1998 compared to the prior year third quarter. The significant growth in the Company's international sales is attributable to the acquisition of Macrotron AG, in which the Company acquired a controlling interest on July 1, 1997. International sales represented 23% of fiscal 1998 third quarter net sales compared to 10% for the third quarter of fiscal 1997. The cost of products sold as a percentage of net sales was 93.6% in the third quarter of fiscal 1998, compared to 93.0% in the prior year. This increase is the result of competitive market conditions 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 54.2% to $83.3 million in the third quarter of fiscal 1998 compared to $54.0 million last year and as a percentage of net sales declined to 4.12%, compared to 4.37% in the third quarter last year. The decline in selling, general and administrative expenses as a percentage of sales in the third quarter of fiscal 1998 is attributable to greater economies of scale realized by the Company in addition to improved operating efficiencies. The dollar value increase is attributable to the acquisition of Macrotron AG and the result of expanded employment and increases in other operating expenses needed to support the increased volume of business. As a result of the factors described above, operating profit increased 44.2% to $46.0 million, or 2.3% of net sales, in the third quarter of fiscal 1998, compared to $31.9 million, or 2.6% of net sales for the third quarter last year. Interest expense increased in the third quarter of fiscal 1998 due to an increase in the average outstanding indebtedness related to funding continued growth and the acquisition of Macrotron AG. The provision for income taxes increased 33.5% to $14.4 million in the third quarter of fiscal 1998 compared to $10.8 million last year. This increase is attributable to an increase in the Company's income before income taxes. The Company's average income tax rate declined to 37.8% in the third quarter this year compared with 39.1% in the prior year due to fluctuations in the amount of federal, state and foreign taxable income reported in each period. As a result of the factors described above, net income increased 41.3% to $23.7 million, or $.51 per share, in the third quarter of fiscal 1998 compared to $16.7 million, or $.38 per share, in the prior year comparable quarter. 8 Nine Months Ended October 31, 1997 and 1996 - ------------------------------------------- Net sales increased 50.5% to $4.94 billion in the first nine months of fiscal 1998 compared to $3.29 billion in the same period last year. Net income for the nine month period this year was $63.4 million, or $1.39 per share, up 61.7% from the $39.2 million, or $.95 per share, in the same period last year. (The underlying reasons for the fluctuations in the results of operations for the nine months ended October 31, 1997 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 $38.6 million during the first nine months of fiscal 1998 was primarily attributable to income from operations $63.4 million combined with an increase in accounts payable, offset by increases in accounts receivable and inventories. Net cash used in investing activities of $78.1 million during the first nine months of fiscal 1998 was attributable to the payment of $53.7 million related to the acquisition of the common and preferred stock of Macrotron combined with the Company's continuing investment of $24.4 million in its management information systems, office facilities and its distribution center facilities. The Company expects to make capital expenditures of approximately $45 million during fiscal 1998 to further expand its management information systems capability, office facilities and distribution centers. Net cash provided by financing activities of $40.8 million during the first nine months of fiscal 1998 reflects the net borrowings under the Company's revolving credit loans of $23.0 million and proceeds from stock option exercises (including the related income tax benefit) of $18.0 million. The Company currently maintains domestic and foreign revolving credit agreements which provide maximum short-term borrowings of approximately $980 million (including local country credit lines), of which $486 million was outstanding at October 31, 1997. In November 1997, the Company completed a public offering of 3.7 million shares of its common stock resulting in net proceeds of approximately $149 million. The Company believes that proceeds from the common stock offering, along with 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 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. 9 The Company attempts to control losses on credit sales by closely monitoring customers' creditworthiness through evaluating detailed information on customer 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 credit insurance which insures a percentage of the credit extended by the Company to international and certain of its larger domestic 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 or credit card basis or through commercial finance companies. Recent Accounting Pronouncement - ------------------------------- In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 128, "Earnings per Share" ("SFAS 128") which is effective for financial statements issued for periods ending after December 15, 1997. SFAS 128 simplifies the previous standards for computing earnings per share and requires the disclosure of basic and diluted earnings per share. For the year ended January 31, 1997 and for the subsequent interim periods reported, the amount reported as net income per common share is not materially different than that which would have been reported for basic and diluted earnings per share in accordance with SFAS 128. 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 (the "Commission") on March 26, 1996 outlining cautionary statements and 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 aforementioned Form 8-K as well as the Risk Factors included in the Company's registration statement on Form S-3 filed with the Commission on October 2, 1997. 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 15, 1997 - --------------------- Directors and Chief Steven A. Raymund Executive Officer /s/ Jeffery P. Howells Executive Vice President December 15, 1997 - --------------------- of Finance and Chief Financial Jeffery P. Howells Financial Officer (principal financial officer) /s/ Joseph B. Trepani Vice President and Worldwide December 15, 1997 - --------------------- Controller (principal accounting Joseph B. Trepani officer) 11 EX-27 2 TECH DATA FDS FOR THE PERIOD ENDED 7/31/97
5 This schedule contains summary financial information extracted from the financial statements of Tech Data Corporation for the period ended October 31, 1997 and is qualified in its entirety by reference to such financial statements 1,000 9-mos JAN-31-1998 FEB-1-1997 OCT-31-1997 1,893 0 920,493 30,362 1,014,684 1,974,826 82,877 0 2,128,472 1,582,419 8,737 0 5 67 526,668 2,128,472 4,943,445 4,943,445 4,614,948 4,820,886 205,938 0 20,644 101,915 38,556 63,359 0 0 0 63,359 1.39 1.39
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