Acquisition, Integration and Restructuring Expenses (Notes)

9 Months Ended

Oct. 31, 2019

Acquisition, Integration and Restructuring Expenses [Abstract]

Business Acquisition, Integration, Restructuring and Other Related Costs [Text Block]

NOTE 3 — ACQUISITION, INTEGRATION AND RESTRUCTURING EXPENSES

Acquisition, integration and restructuring expenses are primarily comprised of costs related to the fiscal 2018 acquisition of Avnet, Inc.'s ("Avnet") Technology Solutions business ("TS") and restructuring costs related to the Global Business Optimization Program which was initiated in fiscal 2019.

Acquisitions

On February 27, 2017, Tech Data acquired all of the outstanding shares of TS for an aggregate purchase price of approximately $2.8 billion, comprised of approximately $2.5 billion in cash and 2,785,402 shares of the Company's common stock. Acquisition, integration and restructuring expenses related to the acquisition of TS are primarily comprised of restructuring costs, IT related costs, professional services, transaction related costs and other costs. Restructuring costs are comprised of severance and facility exit costs. IT related costs consist primarily of data center and non-ERP application migration and integration costs, as well as, IT related professional services. Professional services are primarily comprised of integration related activities, including professional fees for project management, accounting, tax and other consulting services. Transaction related costs primarily consist of investment banking fees, legal expenses and due diligence costs incurred in connection with the completion of the transaction. Other costs includes payroll related costs including retention, stock compensation, relocation and travel expenses, incurred as part of the integration of TS. For the nine months ended October 31, 2018, other costs are partially offset by a gain of $9.6 million related to the final working capital adjustment for the acquisition of TS as part of a settlement agreement with Avnet.

The Company incurred no acquisition, integration and restructuring expenses related to the acquisition of TS during the three and nine months ended October 31, 2019 and does not expect to incur any additional costs in future periods. Acquisition, integration and restructuring expenses for the three and nine months ended October 31, 2018 related to the acquisition of TS are comprised of the following:

	Three months ended October 31,		Nine months ended October 31,
	2018		2018
(in thousands)
Restructuring costs	$	1,618	$	16,267
IT related costs	2,120		10,606
Professional services	807		5,213
Transaction related costs	268		1,461
Other costs	2,340		1,785
Total	$	7,153	$	35,332

During the three months ended October 31, 2018, the Company recorded restructuring costs related to the acquisition of TS of $1.6 million in Europe. During the nine months ended October 31, 2018, the Company recorded restructuring costs related to the acquisition of TS of $3.6 million in the Americas and $12.7 million in Europe.

Additionally, the Company incurred $1.8 million of transaction related costs during the three and nine months ended October 31, 2019 related to the proposed Merger with the affiliates of Apollo Funds and the acquisition of DLT Solutions (see Note 14 - Subsequent Events for further discussion).

Global Business Optimization Program

In fiscal 2019, the Company's Board of Directors approved the Global Business Optimization Program (the "GBO Program") to increase investment in the Company’s strategic priorities and implement operational initiatives to drive productivity and enhance profitability. Under the GBO Program, the Company expects to incur cash charges of approximately $70 million to $80 million, primarily comprised of $40 million to $45 million of charges in Europe and $30 million to $35 million of charges in the Americas. The cash charges primarily consist of severance costs, and also include professional services and other costs.

Restructuring expenses related to the GBO Program are comprised of the following:

	Three months ended October 31,				Nine months ended October 31,				Cumulative Amounts Incurred to Date
	2019		2018		2019		2018
(in thousands)
Severance costs	$	1,851	$	8,741	$	9,185	$	17,615	$	35,612
Professional services and other costs	1,030		4,383		5,126		13,852		21,240
Total	$	2,881	$	13,124	$	14,311	$	31,467	$	56,852

Restructuring costs related to the GBO Program by segment are as follows:

	Three months ended October 31,				Nine months ended October 31,
	2019		2018		2019		2018
(in thousands)
Americas	$	1,902	$	2,502	$	6,154	$	9,838
Europe	975		10,099		7,228		20,981
Asia-Pacific	4		523		929		648
Total	$	2,881	$	13,124	$	14,311	$	31,467

Restructuring activity during the nine months ended October 31, 2019 related to the GBO Program is as follows:

	Nine months ended October 31, 2019
	Severance			Professional services and other costs			Total
(in thousands)
Balance at January 31, 2019	$	14,798		$	631		$	15,429
Fiscal 2020 restructuring expenses	9,185			5,126			14,311
Cash payments	(14,858		)	(5,721		)	(20,579		)
Foreign currency translation	(293		)	(23		)	(316		)
Balance at October 31, 2019	$	8,832		$	13		$	8,845