-----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, RogLhRl4h8f9Uv55zVrLbfFTyRdUoKUogWAn8eAbGJWh5I/2+UeJE+qfUos//ReO BY5ZGTkNYWAGEg2Ai9I8tA== 0000950144-98-010687.txt : 19980915 0000950144-98-010687.hdr.sgml : 19980915 ACCESSION NUMBER: 0000950144-98-010687 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19980701 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19980914 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: 8-K/A SEC ACT: SEC FILE NUMBER: 000-14625 FILM NUMBER: 98709004 BUSINESS ADDRESS: STREET 1: 5350 TECH DATA DR CITY: CLEARWATER STATE: FL ZIP: 34620 BUSINESS PHONE: 7275397429 MAIL ADDRESS: STREET 1: 5350 TECH DATA DRIVE CITY: CLEARWATER STATE: FL ZIP: 34620 8-K/A 1 TECH DATA CORPORATION FORM 8-K/A 1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K/A ----------------------------- CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED): JULY 1, 1998 TECH DATA CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) --------------------------------------------------------- FLORIDA 0-14625 59-1578329 (State or other (Commission File Number) (I.R.S. Employer jurisdiction of Identification No.). incorporation) 5350 TECH DATA DRIVE, CLEARWATER, FLORIDA 33760 (Address of principal executive offices) ------------------------- REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (727) 539-7429 NOT APPLICABLE (Former name or former address, if changed since last report.) ================================================================================ 2 Item 2. Acquisition or Disposition of Assets. The undersigned registrant, Tech Data Corporation ("Tech Data" or the "Company"), hereby amends the financial statements, exhibits and other portions of its Current Report on Form 8-K dated July 1, 1998 and filed with the Securities and Exchange Commission (the "Commission") on July 15, 1998, as set forth herein. This Current Report on Form 8-K was filed to report the acquisition of approximately 83% of the voting stock of Computer 2000 AG ("Computer 2000" or "Computer 2000 Group"), Europe's leading technology products distributor. The Company acquired approximately 80% of the outstanding voting stock of Computer 2000 on July 1, 1998 from its parent company, Klockner & Co. AG, based in Duisburg, Germany. Klockner & Co. AG is a subsidiary of Munich-based conglomerate VIAG AG. The initial acquisition was completed through an exchange of approximately 2.2 million shares of Tech Data Corporation common stock and $300 million of 5% convertible subordinated notes, due 2003. In a separate cash transaction on July 1, 1998, Tech Data also acquired an additional stake of approximately 3% of Computer 2000's shares from an institutional investor. The combined value of these transactions, including expenses, totaled approximately $403 million. Item 7 of the Company's Current Report on Form 8-K dated July 1, 1998, is hereby amended to include the financial statements and exhibits indicated in Item 7 below. Item 7. Financial Statements and Exhibits. (a) Financial statements of business acquired.
Page ---- Independent Auditors' Report......................................... F-1 Consolidated Balance Sheets of the Computer 2000 Group............... F-3 Consolidated Statements of Operations of the Computer 2000 Group..... F-4 Consolidated Statements of Cash Flows of the Computer 2000 Group..... F-5 Notes to Consolidated Financial Statements........................... F-6
The financial statements described above are attached hereto as Attachment 7(a) and are incorporated herein by this reference. 3 b) Pro forma financial information.
Page ---- Basis of Presentation..................................................... F-20 Unaudited Pro Forma Condensed Consolidated Balance Sheet as of April 30, 1998.......................................................... F-21 Unaudited Pro Forma Condensed Consolidated Statement of Income for the three months ended April 30, 1998....................................... F-22 Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended January 31, 1998............................................. F-23 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements.. F-24
The financial statements described above are attached hereto as Attachment 7(b) and are incorporated herein by this reference. (c) Exhibits 2-A(1) Share Purchase Agreement between Klockner & Co. AG and Tech Data Corporation dated April 14, 1998 and amended June 30, 1998. 2-B(2) Side Letter Agreement between Klockner & Co. AG and Tech Data Corporation dated April 14, 1998. 3-G(2) Amendments to By-Laws of Tech Data Corporation as adopted on June 23, 1998. 3-H(2) Articles of Amendment to Amended and Restated Articles of Incorporation of Tech Data Corporation as of June 24, 1998. 23-A(2) Consent of KPMG Hartkopf + Rentrop KG and AWT Allgemeine Wirtschaftstreuhand GmbH 23-B(2) Consent of Arthur Andersen LLP - ------------- (1) Incorporated by reference to Exhibit 2-A of the Company's Current Report on Form 8-K dated as of July 1, 1998 and filed with the Securities and Exchange Commission on July 15, 1998. (2) Filed herewith. 4 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 Dated: September 14, 1998 By: /s/ JEFFERY P. HOWELLS ----------------------------- Jeffery P. Howells Executive Vice President and Chief Financial Officer By: /s/ JOSEPH B. TREPANI ----------------------------- Joseph B. Trepani Senior Vice President and Corporate Controller 5 INDEX TO FINANCIAL STATEMENTS Attachment 7(a) - Financial Statements of Computer 2000 Group
Page ---- Independent Auditors' Report......................................... F-1 Consolidated Balance Sheets of the Computer 2000 Group............... F-3 Consolidated Statements of Operations of the Computer 2000 Group..... F-4 Consolidated Statements of Cash Flows of the Computer 2000 Group..... F-5 Notes to Consolidated Financial Statements........................... F-6
6 INDEPENDENT AUDITORS' REPORT To the Board of Directors of Computer 2000 Aktiengesellschaft We have audited the accompanying consolidated balance sheets of Computer 2000 Aktiengesellschaft and subsidiaries ("Computer 2000") as of September 30, 1997 and 1996 and the related consolidated statements of operations and cash flows for each of the years then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We did not audit the consolidated financial statements of AmeriQuest Technologies, Inc. as of and for the year ended September 30, 1996, which statements reflect total assets and revenues constituting 10 percent and 12 percent, respectively, of the related consolidated totals. Those financial statements were audited by other auditors whose report has been furnished to us, and in our opinion, insofar as it relates to the amounts, before adjustments necessary for conformity with German generally accepted accounting principles and before translation into Deutsche Mark, is based solely on the report of the other auditors. We conducted our audits in accordance with generally accepted auditing standards in Germany and the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the report of other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Computer 2000 as of September 30, 1997 and 1996 and the results of their operations and their cash flows for the years then ended in conformity with generally accepted accounting principles in Germany. Generally accepted accounting principles in Germany vary in certain significant respects from generally accepted accounting principles in the United States. The application of generally accepted accounting principles in the United States would have affected results of operations for the years ended September 30, 1997 and 1996 and stockholders' equity as of September 30, 1997 and 1996 to the extent summarized in Note 20 to the consolidated financial statements. /s/ KPMG Hartkopf + Rentrop KG /s/ AWT Allgemeine Wirtschaftstreuhand GmbH Cologne and Munich, December 12, 1997 F-1 7 REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS To AmeriQuest Technologies, Inc.: We have audited the consolidated balance sheet of AmeriQuest Technologies, Inc., (a Delaware Corporation) and subsidiaries (AmeriQuest) as of September 30, 1996 and the related consolidated statements of operations, stockholders' deficit and cash flows, not presented separately herein, for the fiscal year then ended. These financial statements are the responsibility of AmeriQuest's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AmeriQuest Technologies Inc. and subsidiaries as of September 30, 1996, and the results of their operations and cash flows for the year then ended in conformity with generally accepted accounting principles. /s/ Arthur Andersen LLP Los Angeles, California December 16, 1996 F-2 8 Consolidated Balance Sheets of the Computer 2000 Group (DM in thousands)
NOTE SEPTEMBER 30, MARCH 31, ---- ------------------------ ---------- 1997 1996 1998 ---------- ---------- ---------- (UNAUDITED) ASSETS NON-CURRENT ASSETS Intangible assets (1) 3,768 4,845 4,101 Tangible assets (2) 44,892 44,180 43,712 Financial assets (3) 1,758 1,926 2,063 ---------- ---------- ---------- 50,418 50,951 49,876 ---------- ---------- ---------- CURRENT ASSETS Inventories (4) 659,965 537,308 907,543 Accounts receivable and other current assets (5) 913,047 789,000 1,226,181 Cash and cash equivalents 27,349 79,780 166,075 ---------- ---------- ---------- 1,600,361 1,406,088 2,299,799 PREPAID AND DEFERRED EXPENSES 15,341 17,846 20,890 ---------- ---------- ---------- TOTAL ASSETS 1,666,120 1,474,885 2,370,565 ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY SHAREHOLDERS' EQUITY Share capital (6) 47,706 47,706 67,020 Capital reserves (7) 9,815 41,668 110,772 Revenue reserves (8) 47,119 47,098 (23,079) Foreign currency translation differences 1,122 (8,083) 7,148 Unappropriated group income (loss) (70,198) 0 60,595 Minority interests 4,587 (8,435) 3,734 ---------- ---------- ---------- 40,151 119,954 226,190 ---------- ---------- ---------- PROVISIONS AND ACCRUALS (9) Provisions for pensions 1,985 1,146 2,332 Other accruals 211,710 114,480 226,399 ---------- ---------- ---------- 213,695 115,626 228,731 ---------- ---------- ---------- LIABILITIES Bank loans and overdrafts (10) 524,897 453,306 733,292 Trade accounts payable 609,202 589,007 858,539 Liabilities to related companies (11) 100,392 50,000 102,415 Other liabilities (12) 165,927 131,441 208,241 ---------- ---------- ---------- 1,400,418 1,223,754 1,902,487 ---------- ---------- ---------- DEFERRED INCOME 11,856 15,551 13,157 ---------- ---------- ---------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 1,666,120 1,474,885 2,370,565 ========== ========== ==========
F-3 9 Consolidated Statements of Operations of the Computer 2000 Group (DM in thousands)
YEAR ENDED SIX MONTHS ENDED SEPTEMBER 30, MARCH 31, ------------------------ ------------------------- NOTE 1997 1996 1998 1997 ---- ---------- ---------- ---------- ---------- (UNAUDITED) SALES (13) 8,229,729 6,640,373 5,219,476 4,450,280 Cost of sales 7,603,718 6,107,617 4,881,942 4,147,546 ---------- ---------- ---------- ---------- GROSS PROFIT 626,011 532,756 337,534 302,734 Selling expenses 250,421 228,636 136,076 133,538 General administrative expenses 261,859 241,527 103,113 113,756 Other operating income (14) 54,162 29,294 7,702 0 Other operating expenses (15) 57,840 33,155 999 68,433 ---------- ---------- ---------- ---------- INCOME (LOSS) FROM OPERATIONS 110,053 58,732 105,048 (12,993) Interest expense, net (16) 48,698 48,657 27,866 24,994 ---------- ---------- ---------- ---------- INCOME (LOSS) BEFORE EXTRAORDINARY EXPENSE AND TAXES 61,355 10,075 77,182 (37,987) Extraordinary expense (17) 103,999 0 0 0 Taxes on income (18) 19,448 20,064 16,762 11,636 Other taxes (19) 8,272 5,725 0 0 ---------- ---------- ---------- ---------- NET INCOME (LOSS) (70,364) (15,714) 60,420 (49,623) ========== ========== ========== ========== RECONCILIATION TO UNAPPROPRIATED GROUP LOSS Pre-acquisition income (loss) of newly-acquired subsidiaries (498) 152 358 847 Minorities' share of income (184) (3,393) (578) (533) Minorities' share of losses 848 15,215 395 412 ---------- ---------- ---------- ---------- GROUP INCOME (LOSS) (COMPUTER 2000 AG'S SHARE) (70,198) (3,740) 60,595 (48,897) Unappropriated group income brought forward 0 49,639 0 0 Increase of other revenue reserves (net) 0 (45,899) 0 0 ---------- ---------- ---------- ---------- UNAPPROPRIATED GROUP INCOME (LOSS) (70,198) 0 60,595 (48,897) ========== ========== ========== ==========
F-4 10 Consolidated Statements of Cash Flows of the Computer 2000 Group (DM in thousands)
YEAR ENDED SIX MONTHS ENDED SEPTEMBER 30, MARCH 31, -------------------- -------------------- 1997 1996 1998 1997 -------- -------- -------- -------- (UNAUDITED) Net income (loss) for the year (70,364) (15,714) 60,420 (49,623) Depreciation of non-current assets 23,929 22,759 11,313 11,269 Change in long-term provisions and accruals 839 (568) 347 412 Losses (profits) on disposals of non-current assets (1,005) 188 (742) 0 -------- -------- -------- -------- CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES BEFORE CHANGES IN WORKING CAPITAL (46,601) 6,665 71,338 (37,942) (Increase) in inventories (122,657) (1,802) (247,578) (208,163) Increase (decrease) in on-account payments received 5,507 604 (1,730) 1 Increase in receivables (121,542) (70,118) (318,684) (207,284) Increase in liabilities 138,325 97,421 311,436 135,463 -------- -------- -------- -------- CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES (146,968) 32,770 (185,218) (317,925) -------- -------- -------- -------- Goodwill (31,852) (5,554) (1,555) (8,303) Purchases of tangible and intangible non-current assets (30,660) (25,677) (9,723) (9,919) Purchases of financial assets (145) (2,052) (305) 0 Proceeds from disposals of non-current assets 8,414 3,713 0 0 -------- -------- -------- -------- CASH USED IN INVESTING ACTIVITIES (54,243) (29,570) (11,583) (18,222) -------- -------- -------- -------- Proceeds from capital increase 0 59,235 121,826 0 Repayment of loan from Klockner & Co AG (50,000) 0 0 0 Loan from VIAG AG 100,346 0 0 872 Increase (decrease) in other borrowings 76,021 (25,715) 208,351 291,631 Dividends paid relating to the previous year 0 (5,975) 0 0 Other financing transactions 22,413 1,093 5,350 (6,339) -------- -------- -------- -------- CASH PROVIDED BY FINANCING ACTIVITIES 148,780 28,638 335,527 286,164 -------- -------- -------- -------- CHANGE IN CASH AND CASH EQUIVALENTS (52,431) 31,838 138,726 (49,983) -------- -------- -------- -------- CASH AND CASH EQUIVALENTS AT THE END OF YEAR 27,349 79,780 166,075 29,797 ======== ======== ======== ========
F-5 11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS OF COMPUTER 2000 GROUP A. GENERAL INFORMATION ON THE CONSOLIDATED FINANCIAL STATEMENTS OF COMPUTER 2000 AKTIENGESELLSCHAFT ("COMPUTER 2000 GROUP") APPLICABLE REGULATIONS The consolidated financial statements of Computer 2000 Aktiengesellschaft ("Computer 2000") for the years ended September 30, 1997 and 1996 have been prepared in compliance with the regulations set out in the German Commercial Code (HGB) and the German Stock Corporation Law. The income statement has been prepared using the cost of sales classification method. In order to improve the clarity of their presentation, certain items have been summarized on the face of the balance sheet and income statement and are detailed separately in the notes. SIGNIFICANT ACCOUNTING POLICIES The following accounting policies have been applied consistently in the consolidated financial statements of Computer 2000 Group: INTANGIBLE NON-CURRENT ASSETS are stated at acquisition cost and are amortized straight-line over their estimated useful lives. TANGIBLE NON-CURRENT ASSETS are valued at acquisition or production cost, less accumulated depreciation from previous years together with depreciation charged in fiscal 1996/97. Depreciable, movable non-current assets with useful lives exceeding 3 years are depreciated using the declining-balance method and maximum rates permitted by the tax authorities. The method is changed to straight-line as soon as this results in a higher depreciation charge. Unscheduled depreciation is charged on assets whose net realizable values fall below their carrying values. A full year's depreciation is charged for additions to movable assets acquired in the first half of the fiscal year and a half-year's depreciation is charged on assets acquired in the second half of the year. Minor-value assets with a purchase cost of less than DM 800 are fully depreciated in the year of their acquisition. FINANCIAL ASSETS are valued at acquisition cost. Write-downs are made where it is believed there is a permanent diminution in value. In the consolidated financial statements inventories are stated at the lower of cost or net realizable value, whereby cost is calculated using moving average prices. Adjustments are made, where appropriate, to cover risks arising from slow-moving and obsolete inventories. TRADE ACCOUNTS RECEIVABLE, RECEIVABLES FROM RELATED COMPANIES AND OTHER CURRENT ASSETS are included at nominal value less provisions for estimated discounts. Specific allowances for bad debts have been set up to cover recognized credit risks from individual receivables and a general allowance for bad debts has been made for overall credit risk. PENSION PROVISIONS cover all pension commitments and are calculated actuarially, using a discount rate of 6% and applying the entry-age-normal method as permitted by the German tax authorities. Past service cost is recognized as permitted by ss. 6a (4) of the German Income Tax Law. Other accruals have been set up to cover all foreseeable risks and uncertain liabilities at the end of the year. F-6 12 Deferred taxes are calculated on temporary differences between commercial and taxable income, together with temporary differences arising from consolidation adjustments. Deferred taxes arising in the individual financial statements have been combined with those arising on consolidation. LIABILITIES are recorded at amounts payable. ACCOUNTS RECEIVABLE IN FOREIGN CURRENCY, to the extent they are not hedged, are translated into Deutsche Mark at transaction date rates or, if lower, at rates in effect on the balance sheet date. Foreign currency liabilities are translated at forward rates, provided they were hedged at the date the liabilities arose. Otherwise, they are translated at the higher of the transaction date rates or rates ruling at the end of the year. Insurance claims and marketing contributions are offset against the related expenses in the income statement. COMPANIES INCLUDED IN CONSOLIDATION All major domestic and foreign subsidiaries have been included in the consolidation financial statements of the Computer 2000 Group. The following companies have not been included in the consolidated financial statements, as their influence on the assets and liabilities, financial and earnings position of the Group is not considered material: Datech 2000 Ltd., Basingstoke, Great Britain; Computer 2000 S.L., Spain; AnyBus Technology Corporation, Hollywood, Florida, USA, AmeriQuest / 2000 Inc., Horsham, Pennsylvania, USA all of which are dormant companies, and Computer 2000, Vilnius, Lithuania, an operating company. Professional Systems AS, Oslo, Norway and Datec Norway AS, Oslo, Norway, both of which were dormant, were merged with Computer 2000 Norway AS, Oslo, Norway. The assets and liabilities of CMS Enhancements Inc., Florida, USA were sold as part of an asset deal. The company's name was then changed to AAG Inc. CMS Enhancement Systems Inc., Hollywood, Florida, USA was sold as part of the restructuring. AmeriQuest Technologies Ltd., (Australia) Pty. Ltd., Roseville, New South Wales, Australia was liquidated. Computer 2000 Italia S.r.L., Milan, Italy and Bits & Bytes S.r.L., Milan, Italy, both dormant companies, were liquidated in 1996/97. CONSOLIDATION METHODS The consolidation methods used have remained unchanged from the previous year. Audited interim financial statements were drawn up for subsidiaries with fiscal years ending on dates other than September 30. As in previous years, subsidiaries' equity is consolidated using the purchase method, whereby the investment in the subsidiary is offset against that part of equity attributable to the parent company. Any resulting difference is determined at the time of acquisition. Differences arising on initial consolidation are offset directly against reserves in the consolidated balance sheet, to the extent such differences represent goodwill as defined in ss. 309 of the German Commercial Code. Minority shareholders' interests in equity and income for the year are calculated based on their shareholding, voting rights or economic share and are shown separately as part of equity in the consolidated balance sheet. Unless they are of minor importance, intercompany profits arising from deliveries of goods and services within the Group are eliminated. F-7 13 Intercompany sales and other operating income are eliminated against corresponding expense items. Intercompany receivables and payables are eliminated. Any differences arising from this elimination process, compared with differences at the beginning of the year, are credited or charged to the income statement. Any contingent liabilities to consolidated companies are also eliminated. The tax effects of those consolidation adjustments affecting income are calculated and included with deferred tax balances arising in the individual financial statements of the companies included in consolidation. Uniform accounting and classification policies have been applied to the financial statements of all consolidated domestic and foreign subsidiaries. Appropriate adjustments have been made in the event of differences between local and German accounting policies. FOREIGN CURRENCY TRANSLATION In the consolidated financial statements, assets and liabilities of all foreign subsidiaries are translated into Deutsche Marks at closing exchange rates at the balance sheet date. Fair value adjustments to assets and liabilities made at the time of initial consolidation are translated using exchange rates in effect at that time. Differences arising from translating balance sheet items at varying exchange rates are charged or credited directly to a separate item of equity. Items making up the income statement are translated at average exchange rates for the year. The resulting exchange rate differences are recognized in the income statement. UNAUDITED INTERIM FINANCIAL DATA The interim financial data at March 31, 1998 and for the six months ended March 31, 1998 and 1997 are unaudited; however, in the opinion of management, such interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results of the interim periods. F-8 14 B. NOTES TO THE BALANCE SHEETS Statement of movements on non-current assets (DM in thousands)
- -------------------------------------------------------------------------------------------------------------------- ACQUISITION AND PRODUCTION COST - -------------------------------------------------------------------------------------------------------------------- Balance at Exchange rate Reclassi- Balance at Oct. 1, 1996 adjustments Additions Disposal fications Sept. 30, 1997 ------------ ------------- --------- -------- --------- -------------- - -------------------------------------------------------------------------------------------------------------------- INTANGIBLE ASSETS Franchises, patents, trademarks and similar rights and assets, and licenses to such rights and assets 14,883 733 2,092 1,836 (11) 15,861 On-account payments 0 0 28 0 0 28 -------- -------- -------- -------- -------- -------- 14,883 733 2,120 1,836 (11) 15,889 -------- -------- -------- -------- -------- -------- TANGIBLE ASSETS Land and buildings 1,210 188 19 0 0 1,417 Machinery and equipment 117,597 8,994 22,540 20,302 1,644 130,473 On-account payments 1,241 37 3,028 0 (1,633) 2,673 -------- -------- -------- -------- -------- -------- 120,048 9,219 25,587 20,302 11 134,563 -------- -------- -------- -------- -------- -------- FINANCIAL ASSETS Shares in related companies 0 0 9 0 0 9 Investments 489 0 135 0 0 624 Securities included in non- current assets 1,437 1 0 313 0 1,125 -------- -------- -------- -------- -------- -------- 1,926 1 144 313 0 1,758 -------- -------- -------- -------- -------- -------- 136,857 9,953 27,851 22,451 0 152,210 ======== ======== ======== ======== ======== ======== - -------------------------------------------------------------------------------------------------------------------- - --------------------------------------------------------------------------------------- DEPRECIATION - --------------------------------------------------------------------------------------- Accumulated Book value Book value Depreciation depreciation Sept. 30, 1997 Sept. 30, 1996 for the year ------------ -------------- -------------- ------------ - --------------------------------------------------------------------------------------- INTANGIBLE ASSETS Franchises, patents, trademarks and similar rights and assets, and licenses to such rights and assets 12,121 3,740 4,845 3,106 On-account payments 0 28 0 0 -------- -------- -------- -------- 12,121 3,768 4,845 3,106 -------- -------- -------- -------- TANGIBLE ASSETS Land and buildings 136 1,281 1,143 55 Machinery and equipment 89,535 40,938 41,796 20,768 On-account payments 0 2,673 1,241 0 -------- -------- -------- -------- 89,671 44,892 44,180 20,823 -------- -------- -------- -------- FINANCIAL ASSETS Shares in related companies 0 9 0 0 Investments 0 624 489 0 Securities included in non- current assets 0 1,125 1,437 0 -------- -------- -------- -------- 0 1,758 1,926 0 -------- -------- -------- -------- 101,792 50,418 50,951 23,929 ======== ======== ======== ======== - ---------------------------------------------------------------------------------------
F-9 15 NON-CURRENT ASSETS The "exchange rate adjustments" column in the statement of movements on non-current assets for the Group represents differences between historical exchange rates used for acquisition and production costs brought forward and exchange rates in effect at the end of the year. (1) INTANGIBLE ASSETS These are primarily made up of rights to software programs. (2) TANGIBLE ASSETS A detailed statement of movements on the tangible non-current assets of Computer 2000 Group is set out on the preceding page. (3) FINANCIAL ASSETS A list of Computer 2000 AG's shareholdings as required by ss.285 no. 11 and ss.313 (2) of the German Commercial Code has been filed with the trade register at the Munich district court under number HR B 81532. (4) INVENTORIES
SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) 1. Work-in-progress, contracts-in-progress 441 2,028 2. Finished goods and merchandise 642,800 508,914 3. Advance payments 16,724 26,366 ------- ------- 659,965 537,308 ======= =======
(5) ACCOUNTS RECEIVABLE AND OTHER CURRENT ASSETS
SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) 1. Trade accounts receivable 777,680 681,923 2. Receivables from related companies 4,894 1,305 of which due after more than one year 0 0 3. Other assets 130,473 105,772 of which due after more than one year (5,502) (762) of which not yet legally receivable (10,453) (4,793) ------- ------- 913,047 789,000 ======= =======
Trade accounts receivable have been reduced by DM 194 million as a result of an asset-backed securitization program. At the same time, other assets include DM 23 million retentions which serve as security in connection with the program. F-10 16 SHAREHOLDERS' EQUITY (6) SHARE CAPITAL Share capital amounted to DM 47,706,000 at the end of the fiscal year, divided into 954,129 bearer shares with a nominal value of DM 50 each. Type I authorized capital totaled DM 164,000 at September 30, 1997, is solely available for the issue of employee shares and may not be issued in the form of a rights issue to shareholders. The creation of DM 17,900,000 type II authorized share capital was approved by the annual general meeting on April 30, 1997. The type III authorized capital totaled DM 5,734,000 at the end of the year and is approved for issue up to April 24, 2001. Full use was made of the type I authorized capital with an entry in the trade register on November 6, 1997 and, as a result, the share capital was increased for the issue of employee shares. Following an entry in the trade register on November 13, 1997 and a capital increase of DM 19,150,000 in December, 1997 the share capital of Computer 2000 AG totaled DM 67,020,000. Following the capital increase type II authorized capital amounts to DM 4,484,000 and full use was made of the type III authorized capital. The additional authorized capital approved by the shareholders for issue under certain conditions remained unchanged at DM 11,250,000 at the end of the year. In accordance with ss. 20 (4) of the German Stock Corporation Law, Klockner & Co AG, Duisburg announced that it has a direct majority shareholding in Computer 2000 AG. At the same time VIAG AG has also announced that it has an indirect majority holding in Computer 2000 AG. (7) CAPITAL RESERVES
SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) Balance at beginning of the year 41,668 0 + Additions arising from share premium 0 47,222 - - Goodwill on equity consolidation (31,853) (5,554) - - Transfer to offset loss for the year 0 0 ------- ------- 9,815 41,668 ======= =======
(8) REVENUE RESERVES
SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) Statutory reserve 218 218 Other revenue reserves at October 1 46,880 982 + Goodwill on equity consolidation 21 0 + Transfer from unappropriated income 0 49,638 - - Transfer to offset loss for the year 0 (3,740) ------- ------- 46,901 46,880 ------- ------- 47,119 47,098 ======= =======
F-11 17 OTHER INFORMATION CONCERNING SHAREHOLDERS' EQUITY Debit balances on minority interests of DM 261,000 have been offset against minority interest credit balances in the consolidated balance sheet. Profits of DM 498,000 were included in the group loss for the year on equity consolidation. (9) PROVISIONS AND ACCRUALS
SEPTEMBER 30, ---------------------------- 1997 1996 -------- -------- (DM IN THOUSANDS) Provisions for pensions and similar obligations 1,985 1,146 Tax accruals 14,676 14,552 Other provisions and accruals of which: 197,034 99,928 - - personnel-related accruals (36,498) (25,239) - - warranties (14,556) (7,228) - - outstanding credit notes (10,148) (9,299) - - outstanding invoices (18,639) (16,961) - - other (117,194) (41,201) -------- -------- 213,695 115,626 ======== ========
The pension provision was set up solely to cover pension plans relating to members of the executive board. The addition to pension provisions with respect to past service cost was spread over three years in accordance with the option permitted in ss. 6a (4) of the German Income Tax Law. At the end of the year, unamortized past service cost amounted to DM 83,000. The calculation of the pension provision was made using a discount rate of 6% and mortality tables issued by Dr. Klaus Heubeck. Group tax accruals include deferred tax liabilities of DM 893,000. Other provisions and accruals consist mainly of costs, the reason for or amount of which has not yet been determined, and relate to the restructuring of AmeriQuest Technologies Inc., Horsham, Pennsylvania, USA, for consultancy, repairs and year-end closing costs, etc. (10) BANK LOANS AND OVERDRAFTS DM 11,711,000 of Group bank loans and overdrafts are secured locally (assignment of accounts receivable, chattel mortgages, etc.). DM 24,306,000 of Group bank loans and overdrafts have a remaining term of 1-5 years and DM 739,000 have a remaining term of more than 5 years. (11) LIABILITIES TO RELATED COMPANIES VIAG AG, the indirect majority shareholder, provided Computer 2000 AG with a DM 100 million loan. The loan and any accumulated interest are due for repayment within one year. There are also liabilities on current account of DM 57,424,000 with a remaining term of less than one year. F-12 18 (12) OTHER LIABILITIES
SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) 1. On-account payments received on orders 6,372 866 2. Bills of exchange payable 24,291 19,860 3. Other liabilities 135,264 110,715 of which for taxes (70,426) (52,034) of which for social security (3,383) (5,012) ------- ------- 165,927 131,441 ======= =======
DM 95,000 of other Group liabilities have a remaining term of 1-5 years. All other liabilities which have not been mentioned separately have a remaining term of less than 1 year. F-13 19 C. NOTES TO THE INCOME STATEMENT (13) SALES BY GEOGRAPHIC AREA
YEAR ENDED SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN MILLIONS) 1) Central Europe 2,674.9 2,123.7 2) Northern Europe 3,175.1 2,471.4 3) Southern and Eastern Europe 1,636.6 1,204.7 4) Non-European 743.1 840.6 ------- ------- 8,229.7 6,640.4 ======= =======
(14) OTHER OPERATING INCOME In the consolidated income statement this item mainly comprises foreign exchange gains and income not related to the period in the amount of DM 6.7 million from the release of provisions and accruals as well as from the sale of fixed assets. (15) OTHER OPERATING EXPENSES This item consists primarily of foreign exchange losses, translation losses arising on the consolidation of foreign subsidiaries' income statements and losses on disposals of non-current assets. (16) INTEREST EXPENSE, NET (INCLUDING LONG TERM LOANS)
YEAR ENDED SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) Other interest and similar income 4,319 3,489 - - of which from related companies (1) 0 Interest and similar expense 53,017 52,146 - - of which to related companies (1,941) (2,256) ------- ------- Interest expense, net (48,698) (48,657) ======= =======
(17) EXTRAORDINARY EXPENSE Extraordinary expense is made up primarily of costs for restructuring AmeriQuest Technologies Inc., Pennsylvania, USA and subsequent, related expenses. (18) TAXES ON INCOME Taxes on income include corporation tax for domestic companies and similar income-related taxes charged in other countries. These are calculated in accordance with local tax regulations for each company. The expense also includes deferred taxes on temporary differences between the commercial and tax balance sheet and on consolidation adjustments. (19) OTHER TAXES Other taxes include net worth tax, vehicle tax and consumption taxes. F-14 20 D. GERMAN GAAP TO US GAAP RECONCILIATION (20) SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN GERMAN GAAP AND U.S. GAAP The audited consolidated financial statements have been prepared and are presented in accordance with German generally accepted accounting principles which differ from U.S. GAAP. The following is a summary of those significant adjustments to consolidated net income and consolidated shareholders' equity for Computer 2000 Group and subsidiaries which would be required if U.S. GAAP were applied instead of German GAAP.
Year ended Six months ended September 30, March 31, ------------------ ------------------ 1997 1996 1998 1997 ------- ------- ------- ------- (DM in thousands) (DM in thousands) (Unaudited) Consolidated net income (loss) as reported in the consolidated income statements under German GAAP (70,364) (15,714) 60,420 (49,623) Pre-acquisition income (loss) of newly-acquired subsidiaries (498) 152 358 847 Plus loss applicable to minority shareholders 848 15,215 395 412 Less income (loss) applicable to minority shareholders (184) (3,393) (578) (533) ------- ------- ------- ------- Adjusted consolidated net income (loss) under German GAAP (70,198) (3,740) 60,595 (48,897) ------- ------- ------- ------- Adjustments to conform with U.S. GAAP Goodwill Amortization (A) (5,898) (9,713) (3,118) (2,805) Impairment (A) (9,928) (79,441) 0 (1,310) Other accruals (B) 53,000 0 0 53,000 Foreign currency translation (D) 4,294 1,593 (771) 3,878 Loss allocated to Computer 2000 Group (G) 0 (13,689) 0 0 Loss allocated to minority interests (C) 3,445 0 0 0 Other (E) 251 729 35 126 Deferred taxes (F) 47,920 65,372 (9,394) 16,507 Tax effect of U.S. GAAP adjustments (F) (154) (445) 2,546 (77) ------- ------- ------- ------- Consolidated net income (loss) in accordance with U.S. GAAP 22,732 (39,334) 49,893 20,422 ======= ======= ======= =======
Year ended Six months ended September 30, March 31, ------------------ ------------------ 1997 1996 1998 1997 ------- ------- ------- ------- (DM in thousands) (DM in thousands) (Unaudited) Consolidated shareholders' equity as reported in the consolidated balance sheets under German GAAP 40,151 119,954 226,190 58,205 Less minority interests (4,587) 8,435 (3,734) 14,148 ------- ------- ------- ------- Adjusted consolidated shareholders' equity under German GAAP 35,564 128,389 222,456 72,353 Adjustments to conform with U.S. GAAP Goodwill (A) 85,995 86,097 84,431 93,363 Other accruals (B) 53,000 0 53,000 53,000 Minority interests (C) 3,445 (16,128) 3,445 (17,438) Other (E) (609) (861) (574) (735) Deferred taxes (F) 130,527 82,607 123,700 95,981 Tax effect of U.S. GAAP adjustments (F) 371 525 350 3,581 ------- ------- ------- ------- Consolidated shareholders' equity in accordance with U.S. GAAP 308,293 280,629 486,808 300,105 ======= ======= ======= =======
F-15 21 NOTES TO GERMAN GAAP TO U.S. GAAP RECONCILIATIONS (A) GOODWILL In accordance with German GAAP, the difference between the purchase price and fair value of net assets acquired as part of a business combination (goodwill) may be charged directly to shareholders' equity. Under U.S. GAAP, goodwill must be capitalized and amortized through the income statement over its useful life not to exceed 40 years. Under U.S. GAAP management must assess the recoverability of long-lived assets, including goodwill, by determining whether the amortization of the balance over the remaining life can be recovered through the undiscounted future operating cash flows of the respective assets. As a result of an impairment, the Company wrote off its investment in AmeriQuest Technologies, Inc. during the year ended September 30, 1996. In addition, the goodwill arising from the purchase of DM 5.0 million was written off in fiscal 1997. (B) OTHER ACCRUALS Under German GAAP, accruals are determined by reasonable and prudent estimates reflecting the expected costs and expenses. Under U.S. GAAP, an estimated loss from a loss contingency shall be charged to income only if it is probable that an asset had been impaired or a liability had been incurred at the date of the financial statements and the amount of the loss can be reasonably estimated. If a loss is probable and the reasonable estimate of the loss is a range and no amount within the range appears to be a better estimate than any other amount, the minimum amount in the range shall be accrued. General or unspecified business risks do not meet the conditions for accrual and, therefore, no accrual shall be made. Gain contingencies shall not be credited to income. (C) LOSSES ALLOCATED TO MINORITY INTERESTS Under German GAAP minority interests are classified as a separate component of equity and can be allocated unlimited losses generated by the respective investment. Under U.S. GAAP minority interests are not classified as equity and losses allocated to minority interests are limited to the extent of minority interests. (D) FOREIGN CURRENCY TRANSLATION Under German GAAP the Company translates assets and liabilities of foreign subsidiaries at spot rate at balance sheet date and income statement items at average rate. The consolidated net income (loss) for the year, however, is translated at spot rate and the resulting exchange rate difference is recognized in income. Under U.S. GAAP, generally all assets and liabilities of foreign subsidiaries are translated using the exchange rate at period end and income statement items are translated at average exchange rates prevailing during the period. Resulting translation adjustments are recorded as a separate component of equity. (E) OTHER Under German GAAP the Company provides for pension obligations using the entry age normal method as defined in the German tax code. U.S. GAAP require that the projected unit credit method be used and is more prescriptive as to the use of actuarial assumptions. F-16 22 (F) DEFERRED TAXES AND TAX EFFECT OF U.S. GAAP ADJUSTMENTS Under German GAAP, deferred tax assets and liabilities are not generally recognized for all temporary differences between the book carrying values and tax bases of the assets and liabilities. Under U.S. GAAP, with some exceptions, deferred tax assets and liabilities are recognized for all temporary differences between the book carrying values and tax bases of the assets and liabilities and the net operation loss carry forwards using future statutory tax rates. The measurement of deferred assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized. (G) LOSS ALLOCATED TO COMPUTER 2000 GROUP German GAAP allows the allocation of operating losses to minority interest even when the allocated losses will exceed the minority equity so that in total a negative minority equity will be stated. Differing from the above mentioned German GAAP method, U.S. GAAP only allows the allocating of operating losses to minority interest up to the amount of the stated minority equity. Therefore the actual loss 1996 of minority interest of the AmeriQuest Group was allocated to the Computer 2000 Group level. ACCOUNTS RECEIVABLE Under German GAAP trade receivables sold under an asset backed securitization program are removed from the balance sheet. Under U.S. GAAP unless specific requirements are met many such transactions are treated as a financing transaction and as such the trade receivables continue to be reflected on the balance sheet. As a result of such sales of receivables, assets and liabilities as of September 30, 1997 and 1996, respectively, would have been DEM 193.6 million and DEM 90.0 million higher than under German GAAP. EXTRAORDINARY ITEM Certain income and expense items, including losses in regard to AmeriQuest Technologies, Inc., can be classified as extraordinary income or expense for German GAAP purposes which can not be classified as extraordinary under U.S. GAAP. F-17 23 OTHER NOTES COST OF MATERIALS The cost of raw materials, consumables, supplies and purchased merchandise in the Group was DM 7,582 million. The cost of services amounted to DM 610,000. EMPLOYEES An average of 3,346 (previous year: 3,181) persons were employed during 1996/97. PERSONNEL COSTS
YEAR ENDED SEPTEMBER 30, ---------------------------- 1997 1996 ------- ------- (DM IN THOUSANDS) Wages and salaries 226,270 201,227 Social security, pension and welfare expense 43,745 37,769 of which for pensions (961) (1,486) ------- ------- 270,015 238,996 ======= =======
REMUNERATION OF MEMBERS OF THE SUPERVISORY BOARD AND THE EXECUTIVE BOARD The remuneration of members of the supervisory board during the year totaled DM 48,000 (1995/96: DM 48,000). The remuneration of members of the executive board for 1996/97 amounted to DM 3,035,000 (1995/96: DM 2,804,000). OTHER FINANCIAL COMMITMENTS At the end of the year there were forward foreign currency contracts totaling DM 106 million, made by the Group to hedge open US $ purchase commitments. Contingent liabilities arising from leasing agreements are of a volume which is normal for the business. F-18 24 Attachment 7(b) - Pro forma financial information. INDEX TO PRO FORMA FINANCIAL INFORMATION
Page ---- Basis of Presentation................................................. F-20 Unaudited Pro Forma Condensed Consolidated Balance Sheet as of April 30, 1998..................................................... F-21 Unaudited Pro Forma Condensed Consolidated Statement of Income for the three months ended April 30, 1998.............................. F-22 Unaudited Pro Forma Condensed Consolidated Statement of Income for the year ended January 31, 1998.................................... F-23 Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements......................................................... F-24
F-19 25 TECH DATA CORPORATION UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Basis of Presentation The following Unaudited Condensed Consolidated Financial Statements give effect to the acquisition by Tech Data Corporation ("Tech Data" or the "Company") of approximately 83% of the voting stock of Computer 2000 AG ("Computer 2000") on July 1, 1998. The Unaudited Pro Forma Condensed Consolidated Balance Sheet is based upon the individual consolidated balance sheets of the Company as of April 30, 1998 and of Computer 2000 as of March 31, 1998. The Unaudited Pro Forma Condensed Consolidated Statements of Income are based upon the individual consolidated statements of income of the Company for the three months ended April 30, 1998 and the year ended January 31, 1998 and of Computer 2000 for the three months ended March 31, 1998 and the year ended September 30, 1997. The results of operations of Tech Data and Computer 2000 have been combined to give effect to the acquisition as if it had occurred at the beginning of the periods presented. The unaudited pro forma consolidated financial information is based upon preliminary fair value allocations relative to the purchase of Computer 2000. The final allocation of the purchase price may vary as additional information is obtained, and accordingly, the ultimate allocations may differ from the allocations used in the unaudited pro forma consolidated financial statements. The following pro forma financial information has been prepared from and should be read in conjunction with the historical financial statements and related notes thereto of Computer 2000 appearing in the response to Item 7(a) of this Current Report on Form 8-K/A and the historical financial statements and related notes thereto of Tech Data Corporation for the year ended January 31, 1998 and the three months ended April 30, 1998, previously filed with the Securities and Exchange Commission. The unaudited pro forma consolidated financial information is not necessarily indicative of the financial position or operating results that would have occurred had the acquisition been consummated on the date or at the beginning of the periods for which the acquisition is being given effect nor is it necessarily indicative of future operating results or financial position. F-20 26 TECH DATA CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF APRIL 30, 1998 (U.S. dollars in thousands, except share amounts)
Tech Data Computer Pro Forma Combined Corporation 2000 Adjustments Pro Forma ----------- ---------- ----------- --------- ASSETS Current assets: Cash and cash equivalents $ 1,249 $ 89,843 $ -- $ 91,092 Accounts receivable, net 914,837 690,520 1,605,357 Inventories 969,570 490,962 1,460,532 Prepaid and other assets 57,399 45,120 102,519 ---------- ---------- ---------- ---------- Total current assets 1,943,055 1,316,445 -- 3,259,500 Property and equipment, net 110,792 23,647 134,439 Excess of cost over acquired net assets, net 57,088 45,675 198,562 (c)(e) 301,325 Other assets, net 22,994 70,571 (25,629)(e) 67,936 ---------- ---------- ---------- ---------- $2,133,929 $1,456,338 $ 172,933 $3,763,200 ========== ========== ========== ========== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Revolving credit loans $ 335,053 $ 567,738 $ 18,269 (d) $ 921,060 Accounts payable 949,580 409,943 1,359,523 Accrued expenses 101,877 215,149 317,026 ---------- ---------- ---------- ---------- Total current liabilities 1,386,510 1,192,830 18,269 2,597,609 Long-term debt 8,627 -- 8,627 Convertible subordinated notes -- 300,000 (a) 300,000 ---------- ---------- ---------- ---------- Total liabilities 1,395,137 1,192,830 318,269 2,906,236 ---------- ---------- ---------- ---------- Minority interest 3,431 156 32,648 (b) 36,235 ---------- ---------- ---------- ---------- Total shareholders' equity 735,361 263,352 (177,984)(a)(b)(e) 820,729 ---------- ---------- ---------- ---------- $2,133,929 $1,456,338 $ 172,933 $3,763,200 ========== ========== ========== ==========
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral part of these financial statements F-21 27 TECH DATA CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE THREE MONTHS ENDED APRIL 30, 1998 (U.S. dollars in thousands, except per share amounts)
Tech Data Computer Pro Forma Combined Corporation 2000 Adjustments Pro Forma ----------- ---------- ----------- --------- Net sales $ 2,184,366 $ 1,494,967 $ -- $ 3,679,333 ----------- ----------- ----------- ----------- Cost and expenses: Cost of products sold 2,044,599 1,397,745 -- 3,442,344 Selling, general and administrative expenses 94,801 67,634 626 (f)(g) 163,061 ----------- ----------- ----------- ----------- 2,139,400 1,465,379 626 3,605,405 ----------- ----------- ----------- ----------- Operating profit 44,966 29,588 (626) 73,928 Interest expense 7,954 7,977 3,903 (h) 19,834 ----------- ----------- ----------- ----------- Income before income taxes 37,012 21,611 (4,529) 54,094 Provision for income taxes 13,815 6,977 (1,444)(i) 19,348 ----------- ----------- ----------- ----------- Income before minority interest 23,197 14,634 (3,085) 34,746 Minority interest 92 (58) 2,643 (j) 2,677 ----------- ----------- ----------- ----------- Net income $ 23,105 $ 14,692 $ (5,728) $ 32,069 =========== =========== =========== =========== Net income per common share: Basic $ .48 -- -- $ .64 =========== =========== =========== =========== Diluted $ .46 -- -- $ .60 =========== =========== =========== =========== Weighted average common shares outstanding: Basic 48,285 -- 2,196 (1) 50,481 =========== =========== =========== =========== Diluted 50,323 -- 7,529 (l) 57,852 =========== =========== =========== ===========
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral part of these financial statements F-22 28 TECH DATA CORPORATION AND SUBSIDIARIES UNAUDITED PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME FOR THE YEAR ENDED JANUARY 31, 1998 (U.S. dollars in thousands, except per share amounts)
Tech Data Computer Pro Forma Combined Corporation 2000 Adjustments Pro Forma ----------- ---------- ----------- --------- Net sales $ 7,056,619 $ 4,746,095 $ -- $ 11,802,714 ------------ ------------ ------------ ------------ Cost and expenses: Cost of products sold 6,590,873 4,420,426 11,011,299 Selling, general and administrative expenses 293,108 273,832 (3,197)(f)(g) 563,743 ------------ ------------ ------------ ------------ 6,883,981 4,694,258 (3,197) 11,575,042 ------------ ------------ ------------ ------------ Operating profit 172,638 51,837 3,197 227,672 Interest expense 29,908 28,017 15,611 (h) 73,536 Impairment of Assets -- 29,411 (29,411)(k) -- ------------ ------------ ------------ ------------ Income (loss) before income taxes 142,730 (5,591) 16,997 154,136 Provision for income taxes 52,816 (16,331) 22,721 (i)(k) 59,206 ------------ ------------ ------------ ------------ Income (loss) before minority interest 89,914 10,740 (5,724) 94,930 Minority interest 429 (2,370) 3,935 (j) 1,994 ------------ ------------ ------------ ------------ Net income $ 89,485 $ 13,110 $ (9,659) $ 92,936 ============ ============ ============ ============ Net income per common share: Basic $ 2.00 -- -- $ 1.98 ============ ============ ============ ============ Diluted $ 1.92 -- -- $ 1.89 ============ ============ ============ ============ Weighted average common shares outstanding: Basic 44,715 -- 2,196 (1) 46,911 ============ ============ ============ ============ Diluted 46,610 -- 7,529 (1) 54,139 ============ ============ ============ ============
The accompanying Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements are an integral part of these financial statements F-23 29 TECH DATA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS Note (1) - Pro Forma Balance Sheet Adjustments On July 1, 1998 Tech Data Corporation ("Tech Data" or the "Company") acquired approximately 83% of the outstanding voting stock of Computer 2000 AG ("Computer 2000"). The Company acquired approximately 80% of the outstanding voting stock of Computer 2000 from its parent company, Klockner & Co. AG through an exchange of approximately 2.2 million shares of Tech Data Corporation common stock and $300 million of 5% convertible subordinated notes, due 2003. In a separate cash transaction on July 1, 1998, Tech Data also acquired an additional stake of approximately 3% of Computer 2000's shares from an institutional investor. The combined value of these transactions, including expenses, totaled approximately $403 million. The transactions have been accounted for under the purchase method of accounting. The following are the pro forma balance sheet adjustments to reflect the purchase: (a) Reflects the issuance of $300 million of 5% convertible subordinated notes and the issuance of 2.2 million shares of the Company's common stock paid as consideration in connection with the acquisition of Computer 2000. (b) Reflects the elimination of the common stock, additional paid in capital and retained earnings of Computer 2000 and the establishment of minority interest. (c) Reflects elimination of acquired goodwill of $46 million and the recognition of goodwill recorded on the acquisition. For purposes of the Unaudited Pro Forma Condensed Balance Sheet as of April 30, 1998, the goodwill was computed by subtracting from the estimated purchase price of $403 million the fair value of net assets acquired as of March 31, 1998 (net of minority interest). (d) Reflects the debt issued to finance estimated acquisition costs and additional purchases of the outstanding common stock of C2000 subsequent to the initial acquisition financed through advances on the Company's revolving credit loans. (e) Reflects the reduction of the acquired deferred tax asset to reflect the anticipated effective tax rate and related impact on the amount to be realized. F-24 30 TECH DATA CORPORATION AND SUBSIDIARIES NOTES TO UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS - CONTINUED Note (2) - Pro Forma Income Statement Adjustments (f) Reflects the elimination of amortization expense relating to acquired goodwill. (g) Reflects the amortization of goodwill resulting from the acquisition of Computer 2000 over a period of 40 years. Note that the goodwill of C2000 is computed herein based upon the difference between the purchase price and the preliminarily estimated fair value of net assets acquired as of the date of the closing of the transaction. (h) Reflects the recognition of interest expense resulting from the issuance of $300 million, 5% subordinated debentures and additional debt advanced on the Company's revolving credit loans used to fund the acquisition of Computer 2000 common stock. (i) Records the tax benefit related to the recognition of interest expense on indebtedness incurred in connection with the acquisition. (j) Recognizes the impact of the outstanding minority interest on Computer 2000's earnings after giving effect to pro forma adjustments and related tax effects. (k) Represents adjustment to eliminate non-recurring charges and related tax effects associated with AmeriQuest (a subsidiary of Computer 2000). (l) Reflects the adjustment to basic and diluted weighted average common shares outstanding related to the issuance of common stock and convertible subordinated debt to finance the acquisition. F-25 31 EXHIBIT INDEX
Exhibit Number Description - -------------- ----------- 2-A(1) Share Purchase Agreement between Klockner & Co. AG and Tech Data Corporation dated April 14, 1998 and amended June 30, 1998. 2-B(2) Side Letter Agreement between Klockner & Co. AG and Tech Data Corporation dated April 14, 1998. 3-G(2) Amendments to By-Laws of Tech Data Corporation as adopted on June 23, 1998. 3-H(2) Articles of Amendment to Amended and Restated Articles of Incorporation of Tech Data Corporation as of June 24, 1998. 23-A(2) Consent of KPMG Hartkopf + Rentrop KG and AWT Allgemeine Wirtschaftstreuhand GmbH 23-B(2) Consent of Arthur Andersen LLP
- ------------- (1) Incorporated by reference to Exhibit 2-A of the Company's Current Report on Form 8-K dated as of July 1, 1998 and filed with the Securities and Exchange Commission on July 15, 1998. (2) Filed herewith. F-26 EX-2.B 2 SIDE LETTER AGREEMENT DATED APRIL 14, 1998 1 EXHIBIT 2-B SIDE LETTER AGREEMENT Tech Data Corporation ("TDC") hereby agrees with Klockner & Co. AG ("KLOCKNER") and VIAG AG ("VIAG") that so long as Klockner and/or VIAG, or any of their subsidiaries, own any or all of the 5% Convertible Subordinated Notes due [insert 60 months after date of closing], 2003 (the "NOTES") issued under the Trust Indenture dated as of [insert date of closing], 1998 (the "INDENTURE"), TDC will not redeem those Notes owned by Klockner or VIAG, or any of their subsidiaries, unless the closing price of the common stock of TDC into which the Notes may be converted is at least equal to 100% of the Conversion Price in effect for 15 Trading Days within a period of 30 Trading Days ending within 5 Trading Days prior to the notice of redemption. This limitation on the right of redemption does not apply to Notes owned by parties other than Klockner or VIAG. In the event that TDC issues or intends to issue securities of TDC convertible into or exchangeable for shares of common stock of TDC, equity interests in TDC or additional shares of common stock of TDC (other than shares of common stock of TDC under a qualified or non-qualified stock option plan of TDC or share issued in conjunction with an acquisition) (an "ISSUANCE") Klockner and VIAG, (or any subsidiary of VIAG designated for the purpose by Klockner) shall have the right of first refusal to purchase up to an amount of the issuance necessary to maintain Klockner and VIAG's then percentage ownership in the equity of TDC, including the total number of TDC shares issuable upon conversation. TDC shall notify Klockner and VIAG of TDC's intent to make an issuance in writing and to indicate the anticipated offering price for the issuance. Klockner and VIAG (or any subsidiary of VIAG designated for the purpose by Klockner) shall each have until the earlier of the date of issuance or 15 days following formal notice within which to ex- 2 -2- ercise the right of first refusal. In the event either Klockner or VIAG fail to notify TDC of its intention related to an issuance in the time specified above, the party that fails to provide such notice shall be deemed to have waived its right of first refusal as to that issuance only. Signed this fourteenth day of April, 1998. Tech Data Corporation By: /s/ ---------------------- As its: ---------------------- Chairman and Chief Executive Officer EX-3.G 3 BY-LAWS OF THE COMPANY AS AMENDED TO JUNE 24, 1998 1 EXHIBIT 3-G AMENDMENT TO BYLAWS OF TECH DATA CORPORATION The Bylaws of TECH DATA CORPORATION are amended pursuant to resolution of the Board of Directors adopted on June 23, 1998 as follows: 1. Section B of Article III - Board of Directors shall be and hereby is amended to read as follows: ARTICLE III. BOARD OF DIRECTORS Section B. NUMBER, TENURE AND QUALIFICATIONS. The number of directors of the corporation shall be not less than one (1) nor more than thirteen (13). Each director shall hold office until such director's successor shall have been duly elected and shall have qualified, unless such director sooner dies, resigns or is removed by the stockholders at any annual or special meeting. It shall not be necessary for directors to be stockholders. All directors shall be natural persons who are 18 years of age or older. EX-3.H 4 ARTICLES OF AMENDMENT FILED ON JUNE 24, 1998 1 EXHIBIT 3-H ARTICLES OF AMENDMENT TO AMENDED AND RESTATED ARTICLES OF INCORPORATION OF TECH DATA CORPORATION 1. The name of the corporation is Tech Data Corporation (the "Corporation"). 2. Article IX subparagraph (i) of the Articles of Incorporation of the Corporation is amended to read as follows: (i) The number of directors shall consist of not less than one nor more than thirteen members, the exact number of which shall be fixed from time to time in accordance with the Bylaws of the Corporation. 3. This Amendment was recommended by the board of directors to the Corporation's shareholders on March 27, 1998. 4. This Amendment was approved by the holders of more than a majority of the Corporation's common stock and the holders of all the shares of preferred stock, the only groups of the Corporation's shareholders entitled to vote on the Amendment, and the number of votes in favor of the Amendment was sufficient for approval. IN WITNESS WHEREOF, Tech Data Corporation has caused these Articles of Amendment to be executed on this 24th day of JUNE , 1998. ---- ------------ TECH DATA CORPORATION By: /s/ Arthur W. Singleton -------------------------------- Arthur W. Singleton, Secretary EX-23.A 5 CONSENT OF KPMG HARTKOPF ET AL 1 EXHIBIT 23-A Consent of Independent Accountants To the Board of Directors of Computer 2000 Aktiengesellschaft We consent to the incorporation by reference in the registration statements (Nos. 33-21879, 33-41074, 33-62181 and 33-60479) on Form S-8 of Tech Data Corporation of our report dated December 12, 1997, with respect to the consolidated balance sheets of Computer 2000 Aktiengesellschaft and subsidiaries as of September 30, 1997 and 1996, and the related consolidated statement of operations and cash flows for each of the years then ended, which report appears in the Form 8-K/A of Tech Data Corporation dated September 14, 1998. /s/ KPMG Hartkopf + Rentrop KG /s/ AWT Allgemeine Wirtschaftstreuhand GmbH Cologne and Munich September 10, 1998 EX-23.B 6 CONSENT OF ARTHUR ANDERSEN LLP 1 EXHIBIT 23-B CONSENT OF ARTHUR ANDERSEN LLP As independent certified public accountants, we hereby consent to the use of our report dated December 16, 1996, with respect to the September 30, 1996 consolidated financial statements of AmeriQuest Technologies, Inc., and to all references to our Firm, made a part of this Tech Data Corporation Form 8-K/A Report, into Tech Data Corporation's previously filed Registration Statements File Nos. 33-21879, 33-41074, 33-62181 and 33-60479. /s/ Arthur Andersen LLP Los Angeles, California September 10, 1998 -----END PRIVACY-ENHANCED MESSAGE-----