-----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, PjaeNcG9TWskVFzOqEdf1YGwMkSwp/YGJ0s/vAfpS4XHMcSY063j/2/Q+dYtM1LG HQ3ckZZTzMNlOeRIXoTdmQ== 0001021408-01-506331.txt : 20010906 0001021408-01-506331.hdr.sgml : 20010906 ACCESSION NUMBER: 0001021408-01-506331 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20010731 FILED AS OF DATE: 20010905 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: 1934 Act SEC FILE NUMBER: 000-14625 FILM NUMBER: 1731328 BUSINESS ADDRESS: STREET 1: 5350 TECH DATA DR CITY: CLEARWATER STATE: FL ZIP: 33760 BUSINESS PHONE: 7275397429 MAIL ADDRESS: STREET 1: 5350 TECH DATA DRIVE CITY: CLEARWATER STATE: FL ZIP: 33760 10-Q 1 d10q.txt FORM 10-Q FOR JULY 31, 2001 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 July 31, 2001 ------------- 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:(727) 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 August 27, 2001 - ------------------------------- --------------- Common stock, par value $.0015 per share 54,253,707 TECH DATA CORPORATION AND SUBSIDIARIES Form 10-Q for the Three and Six Months Ended July 31, 2001 ---------------------------------------------------------- INDEX -----
PART I. FINANCIAL INFORMATION PAGE ---- Item 1. Financial Statements Consolidated Balance Sheet as of July 31, 2001 (Unaudited) and January 31, 2001 3 Consolidated Statement of Income (Unaudited) for the three months and six months ended July 31, 2001 and 2000 4 Consolidated Statement of Cash Flows (Unaudited) for the six months ended July 31, 2001 and 2000 5 Notes to Consolidated Financial Statements (Unaudited) 6-10 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 11-17 Item 3. Quantitative and Qualitative Disclosures About Market Risk 18 PART II. OTHER INFORMATION Items 1-5 required in Part II have been previously filed, have been included in Part I of this report or are not applicable for the quarter ended July 31, 2001. Item 4. Submission of Matters to a Vote of Security Holders 19 Item 6. Exhibits and Reports on Form 8-K 19 SIGNATURES 20
2 PART I. FINANCIAL INFORMATION ITEM 1. Financial Statements TECH DATA CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET (In thousands, except share amounts)
July 31, January 31, 2001 2001 ---------------- --------------- ASSETS (Unaudited) Current assets: Cash and cash equivalents $ 221,725 $ 138,925 Accounts receivable, less allowance for doubtful accounts of $61,280 and $64,465 1,641,839 2,142,792 Inventories 1,106,477 1,669,574 Prepaid and other assets 133,457 114,977 ---------------- --------------- Total current assets 3,103,498 4,066,268 Property and equipment, net 137,101 153,196 Excess of cost over fair value of acquired net assets, net 277,713 299,692 Other assets, net 78,485 96,389 ---------------- --------------- $ 3,596,797 $ 4,615,545 ================ =============== LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Revolving credit loans $ 684,172 $ 1,249,576 Accounts payable 1,106,219 1,519,167 Accrued expenses 289,564 330,242 ---------------- --------------- Total current liabilities 2,079,955 3,098,985 Long-term debt 319,617 320,757 ---------------- --------------- Total liabilities 2,399,572 3,419,742 ---------------- --------------- Minority interest 459 489 ----------------- --------------- Shareholders' equity: Preferred stock, par value $.02; 226,500 shares authorized; none and 226,500 issued and outstanding; liquidation preference $.20 per share (see Note 6) - 5 Common stock, par value $.0015; 200,000,000 shares authorized; 54,236,140 and 53,796,432 issued and outstanding 81 81 Additional paid-in capital 581,535 575,223 Retained earnings 780,017 734,231 Accumulated other comprehensive loss (164,867) (114,226) ---------------- --------------- Total shareholders' equity 1,196,766 1,195,314 ---------------- --------------- $ 3,596,797 $ 4,615,545 ================ ===============
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 Six months ended July 31, July 31, -------------------------- -------------------------- 2001 2000 2001 2000 ------------ -------------- ------------ ------------- Net sales $ 4,136,584 $ 4,996,973 $ 8,816,576 $ $9,921,489 Cost of products sold 3,912,422 4,731,740 8,341,221 9,398,397 ------------ -------------- ------------ ------------- Gross profit 224,162 265,233 475,355 523,092 Selling, general and administrative expenses 166,779 180,788 346,641 363,266 Special charges (see Note 8) 20,000 - 20,000 - ------------ -------------- ------------ ------------- Operating income 37,383 84,445 108,714 159,826 Interest expense, net 15,932 21,768 38,711 40,519 Net foreign currency exchange loss (gain) 258 (243) 630 (1,038) ------------ -------------- ------------ ------------- Income before income taxes 21,193 62,920 69,373 120,345 Provision for income taxes 7,206 22,031 23,587 42,129 ------------ -------------- ------------ ------------- Income before minority interest 13,987 40,889 45,786 78,216 Minority interest - 107 - 215 ------------ -------------- ------------ ------------- Net income $ 13,987 $ 40,782 $ 45,786 $ 78,001 ============ ============== ============ ============= Net income per common share: Basic $ .26 $ .77 $ .85 $ 1.48 ============ ============== ============ ============= Diluted $ .25 $ .72 $ .83 $ 1.40 ============ ============== ============ ============= Weighted average common shares outstanding: Basic 54,146 53,162 53,990 52,747 ============ ============== ============ ============= Diluted 55,217 60,036 54,982 59,258 ============ ============== ============ =============
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)
Six months ended July 31, -------------------------------------- 2001 2000 --------------- ---------------- Cash flows from operating activities: Cash received from customers $ 9,227,780 $ 9,842,566 Cash paid to suppliers and employees (8,520,132) (9,810,691) Interest paid (39,076) (44,961) Income taxes paid (49,189) (39,943) --------------- ---------------- Net cash provided by (used in) operating activities 619,383 (53,029) --------------- ---------------- Cash flows from investing activities: Acquisition of business, net of cash acquired - (17,407) Capital expenditures (17,747) (24,882) --------------- ---------------- Net cash used in investing activities (17,747) (42,289) --------------- ---------------- Cash flows from financing activities: Proceeds from the issuance of common stock 6,307 39,028 Net (repayments) borrowings under revolving credit loans (518,047) 109,856 Principal payments on long-term debt (291) (84) --------------- ---------------- Net cash (used in) provided by financing activities (512,031) 148,800 --------------- ---------------- Effect of currency exchange rate changes on cash (6,805) (3,008) --------------- ---------------- Net increase in cash and cash equivalents 82,800 50,474 Cash and cash equivalents at beginning of period 138,925 31,786 --------------- ---------------- Cash and cash equivalents at end of period $ 221,725 $ 82,260 =============== ================ Reconciliation of net income to net cash provided by (used in) operating activities: Net income $ 45,786 $ 78,001 --------------- ---------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 31,623 31,123 Special charges (Note 8) 20,000 - Provision for losses on accounts receivable 21,941 21,884 Foreign currency transaction loss (gain) 630 (1,038) Decrease (increase) in assets: Accounts receivable 411,204 (78,927) Inventories 516,377 (46,461) Prepaid and other assets (30,043) (10,995) Increase (decrease) in liabilities: Accounts payable (371,899) (107,795) Accrued expenses (26,236) 61,179 --------------- ---------------- Total adjustments 573,597 (131,030) --------------- ---------------- Net cash provided by (used in) operating activities $ 619,383 $ (53,029) =============== ================
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 ------------------------------------------ NOTE 1 - BASIS OF PRESENTATION: The consolidated financial statements and related notes included herein have been prepared by Tech Data Corporation (the "Company" or "Tech Data"), without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the financial position of Tech Data Corporation and subsidiaries as of July 31, 2001 and the results of their operations for the three and six months ended July 31, 2001 and 2000 and their cash flows for the six months ended July 31, 2001 and 2000. All significant intercompany accounts and transactions have been eliminated in consolidation. The results of operations for the six months ended July 31, 2001 are not necessarily indicative of the results that can be expected for the entire fiscal year ending January 31, 2002. NOTE 2 - NET INCOME PER COMMON SHARE: Basic Earnings Per Share ("Basic EPS") excludes from the calculation of earnings per share the potential for dilution of earnings by certain common stock equivalents and is computed by dividing net income by the weighted average number of common shares outstanding during the reported period. Diluted Earnings Per Share ("Diluted EPS") reflects the potential dilution that could occur assuming the conversion of certain common stock equivalents, such as the Company's convertible subordinated notes, as well as the exercise of stock options, using the if-converted and treasury stock methods, respectively. The composition of basic and diluted net income per common share is as follows:
Three months ended July 31, --------------------------------------------------------------------------------------- 2001 2000 ---------------------------------------- ----------------------------------------- Weighted Per Weighted Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount ----------- ---------- --------- ------------ ---------- --------- (In thousands, except per share amounts) Basic EPS $ 13,987 54,146 $ .26 $ 40,782 53,162 $ .77 ========= ========= Effect of dilutive securities: Stock options - 1,071 - 1,541 5% convertible subordinated notes - - 2,438 5,333 ----------- ---------- ------------ ---------- Diluted EPS $ 13,987 55,217 $ .25 $ 43,220 60,036 $ .72 =========== ========== ========= ============ ========== =========
6 NOTE 2 - NET INCOME PER COMMON SHARE (continued):
Six months ended July 31, --------------------------------------------------------------------------------------- 2001 2000 ---------------------------------------- ----------------------------------------- Weighted Per Weighted Per Net Average Share Net Average Share Income Shares Amount Income Shares Amount ----------- ---------- --------- ------------ ---------- --------- (In thousands, except per share amounts) Basic EPS $ 45,786 53,990 $ .85 $ 78,001 52,747 $ 1.48 ========= ========= Effect of dilutive securities: Stock options - 992 - 1,178 5% convertible subordinated notes - - 4,875 5,333 ----------- ---------- ------------ ---------- Diluted EPS $ 45,786 54,982 $ .83 $ 82,876 59,258 $ 1.40 =========== ========== ========= ============ ========== =========
The Company has excluded 1,459,090 shares from its calculation of diluted earnings per share for the three and six months ended July 31, 2001 and has excluded 175,300 shares from its calculation of diluted earnings per share for the three and six months ended July 31, 2000 because their effect would have been anti-dilutive. In addition, for purposes of calculating diluted earnings per share for the three and six months ended July 31, 2001, the effect of the convertible subordinated notes was excluded, as its inclusion would have been anti-dilutive. NOTE 3 - COMPREHENSIVE INCOME: Comprehensive income is defined as the change in equity (net assets) of a business enterprise during a period from transactions and other events and circumstances from non-owner sources. The Company's balance of other comprehensive income ("OCI") is comprised exclusively of changes in the Company's foreign currency translation adjustment ("CTA") account. Changes in foreign currency loan balances hedging net investments in foreign operations recorded in the CTA account for the three months ended July 31, 2001 and 2000 was a gain of $2.4 million and a loss of $2.4 million, respectively (net of related income taxes), and for the six months ended July 31, 2001 and 2000 was a gain of $11.0 million and $10.3 million, respectively (net of related income taxes). In total, the Company's comprehensive income for the three months ended July 31, 2001 and 2000 was $5.1 million and $42.7 million, respectively. The Company's comprehensive (loss) income was ($4.9) million and $41.7 million, for the six months ended July 31, 2001 and 2000, respectively. NOTE 4 - SEGMENT INFORMATION: The Company operates predominantly in a single industry segment as a wholesale distributor of computer-based technology products and related logistics and other value-added services. Based on geographic location, the Company has three segments. These geographical segments are 1) the United States, 2) Europe (including the Middle East) and 3) Other International areas (Canada, South America, and export sales to Latin America and the Caribbean from the U.S.). The measure of segment profit is operating income. 7 NOTE 4 - SEGMENT INFORMATION (continued): Financial information by geographic segment is as follows (in thousands):
Other United States Europe International Total ------------- ------------- ------------- ------------- Three months ended July 31, 2001 - -------------------------------- Net sales to unaffiliated customers $ 2,225,966 $ 1,614,011 $ 296,607 $ 4,136,584 ============= ============= ============= ============= Operating income {a}: before special charges $ 43,488 $ 9,258 $ 4,637 $ 57,383 ============= ============= ============= ============= after special charges $ 23,488 $ 9,258 $ 4,637 $ 37,383 ============= ============= ============= ============= Identifiable assets $ 1,409,163 $ 1,871,329 $ 316,305 $ 3,596,797 ============= ============= ============= ============= Three months ended July 31, 2000 - -------------------------------- Net sales to unaffiliated customers $ 2,917,715 $ 1,759,278 $ 319,980 $ 4,996,973 ============= ============= ============= ============= Operating income $ 62,996 $ 18,158 $ 3,291 $ 84,445 ============= ============= ============= ============= Identifiable assets $ 2,012,952 $ 1,888,896 $ 302,240 $ 4,204,088 ============= ============= ============= =============
Other United States Europe International Total ------------- ------ ------------- ------------- Six months ended July 31, 2001 - ------------------------------ Net sales to unaffiliated customers $ 4,664,842 $ 3,508,143 $ 643,591 $ 8,816,576 ============= ============= ============= ============= Operating income {a}: before special charges $ 86,888 $ 30,998 $ 10,828 $ 128,714 ============= ============= ============= ============= after special charges $ 66,888 $ 30,998 $ 10,828 $ 108,714 ============= ============= ============= ============= Identifiable assets $ 1,409,163 $ 1,871,329 $ 316,305 $ 3,596,797 ============= ============= ============= ============= Six months ended July 31, 2000 - ------------------------------------------------------ Net sales to unaffiliated customers $ 5,553,420 $ 3,711,191 $ 656,878 $ 9,921,489 ============= ============= ============= ============= Operating income $ 112,687 $ 40,182 $ 6,957 $ 159,826 ============= ============= ============= ============= Identifiable assets $ 2,012,952 $ 1,888,896 $ 302,240 $ 4,204,088 ============= ============= ============= =============
{a} The $20.0 million in pre-tax special charges referred to above relate to U.S. operations, and were taken during the second quarter of fiscal 2002, as further described in Note 8 to these consolidated financial statements. NOTE 5 - REVOLVING CREDIT LOANS: The Company has an agreement (the "Receivables Securitization Program") with six financial institutions that allows the Company to transfer an undivided interest in a designated pool of U.S. accounts receivable on an ongoing basis to provide borrowings up to a maximum of $700 million (as amended on May 17, 2001, which extended the maturity date to May 16, 2002). Under this program, the Company legally isolated certain U.S. trade receivables into a wholly-owned bankruptcy remote special purpose entity (balances included in accounts receivable were $723 million and $860 million as of July 31, 2001 and January 31, 2001 respectively). As collections reduce accounts receivable balances included in the pool, the Company may transfer interests in new receivables to bring the amount available to be borrowed up to the maximum. The Company pays interest on advances under the Receivables Securitization Program at a designated commercial paper rate plus an agreed-upon margin. Under the terms of the Company's Multi-currency Revolving Credit Facility with a syndicate of banks, the Company is able to borrow funds in major foreign currencies up to a maximum of $495 million on an unsecured basis. The Company pays interest on advances under this facility at the applicable eurocurrency rate plus a margin based on certain financial ratios. 8 NOTE 5 - REVOLVING CREDIT LOANS (continued): The Company can fix the interest rate for periods of 30 to 180 days under various interest rate options. In addition to the facilities described above, the Company has additional lines of credit and overdraft facilities totaling approximately $605 million at July 31, 2001, to support its worldwide operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal. The Company's credit agreements contain warranties and covenants that must be complied with on a continuing basis, including the maintenance of certain financial ratios and restrictions on payment of dividends. At July 31, 2001, the Company was in compliance with all such covenants. NOTE 6 - CAPITAL STOCK: During the six months ended July 31, 2001, the Company exchanged 192,525 shares of its common stock for all of the issued and outstanding shares of preferred stock. NOTE 7 - SUPPLEMENTAL CASH FLOW INFORMATION: The Company entered into capital leases for a distribution center in Germany, which totaled $5.4 million during the six months ending July 31, 2000. The Company recorded an income tax benefit of approximately $736,000 and $9,127,000 during the six months ended July 31, 2001 and 2000, respectively, related to the exercise of nonqualified employee stock options. NOTE 8 - SPECIAL CHARGES (ASSET & INVESTMENT IMPAIRMENT): During the quarter ended July 31, 2001, the Company recorded special charges of $20.0 million before taxes related to the disposal of certain long-lived assets ($15.2 million) and impairment of certain internet-related investments ($4.8 million). This total is presented separately as a component of income from operations in the Consolidated Statement of Income, and relates solely to the Company's U.S. operations. Of the special charges, $15.2 million is for the disposition of supply-chain software acquired for internal use by the Company. The Company made the decision to dispose of the supply-chain software since it achieved most of the anticipated benefits originally planned when it purchased the software through alternative systems and processes. The Company also recognized $4.8 million of special charges for the impairment of the Company's investments in the equity securities of certain privately-held, internet-related companies. Recognition of an impairment charge was the result of the investees experiencing a series of operating losses which appear to be other than temporary, and raised substantial doubts about the Company's ability to recoup its full investment. 9 NOTE 8 - SPECIAL CHARGES (ASSET & INVESTMENT IMPAIRMENT) (continued): The following unaudited proforma results of operations reflect the effect on the Company's operations if the special charges noted above had not occurred during the periods presented below (in thousands except per share amounts): Three months Six months ended ended July 31, 2001 July 31, 2001 ------------- ------------- Operating income before special charges (pre-tax) $ 57,383 $ 128,714 Net income $ 27,187 $ 58,986 Net income per common share: Diluted $ .49 $ 1.06 The unaudited proforma information is presented for informational purposes only. NOTE 9 - RECENT ACCOUNTING PRONOUNCEMENTS: In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 revises the standards of business combinations by eliminating the use of the pooling-of-interests ("pooling") method and requiring that all business combinations be accounted for using the purchase method of accounting. SFAS 141 also changes the criteria to recognize intangible assets apart from goodwill. The provisions of SFAS 141 are effective for all business combinations initiated after June 30, 2001. Impact of adoption of this statement on the Company's financial position and results of operations was not material. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 revises the standards of accounting for goodwill and indefinite lived intangible assets by replacing the regular amortization of these assets with the requirement that they are reviewed annually, or more frequently if impairment indicators arise, for impairment. Separable intangible assets that have finite lives will continue to be amortized over their useful lives. The accounting standards of SFAS 142 are effective for fiscal years beginning after December 15, 2001. Application of the non-amortization provisions of the statement is expected to result in an increase in net income after tax of approximately $8.3 million ($.14 per diluted share) per year. During the fiscal year ending January 31, 2003, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets under the new rules. Tech Data has not yet determined what the effect of these tests will be on the earnings and financial position of the Company. 10 ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Certain statements within this Quarterly Report on Form 10-Q are "forward- looking statements" as described in the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks and uncertainties and actual results could differ materially from those projected. Please refer to the cautionary statements and important factors discussed in Exhibit 99A to the Company's Annual Report on Form 10-K for the year ended January 31, 2001 for further information. The following table sets forth the percentage of cost and expenses to net sales derived from the Company's Consolidated Statement of Income for the three and six months ended July 31, 2001 and 2000 as follows:
Percentage of net sales -------------------------------------------------------------- Three months Six months ended ended July 31, July 31, ---------------------------- ---------------------------- 2001 2000 2001 2000 ----------- ----------- ----------- ----------- Net sales United States 53.81% 58.39% 52.91% 55.97% Europe 39.02 35.21 39.79 37.41 Other international 7.17 6.40 7.30 6.62 ----------- ----------- ----------- ----------- Total net sales 100.00% 100.00% 100.00% 100.00% Cost of products sold 94.58 94.69 94.61 94.73 ----------- ----------- ----------- ----------- Gross profit 5.42 5.31 5.39 5.27 Selling, general and administrative expenses 4.03 3.62 3.93 3.66 Special charges .49 - .23 - ----------- ----------- ----------- ----------- Operating income .90 1.69 1.23 1.61 Interest expense, net .39 .44 .44 .41 Net foreign currency exchange loss (gain) - (.01) - (.01) ----------- ----------- ----------- ----------- Income before income taxes .51 1.26 .79 1.21 Provision for income taxes .17 .44 .27 .42 ----------- ----------- ----------- ----------- Income before minority interest .34 .82 .52 .79 Minority interest - - - - ----------- ----------- ----------- ----------- Net income .34% .82% .52% .79% =========== =========== =========== ===========
Results of Operations - --------------------- Three Months Ended July 31, 2001 and 2000 - ----------------------------------------- Overall net sales decreased 17.2% to $4.1 billion in the second quarter of fiscal 2002 compared to $5.0 billion in the second quarter of last year, primarily due to lower overall demand for products in the technology market and a weakening of the euro. Net sales from U.S. operations fell 23.7% to $2.2 billion due primarily to overall weakened economic conditions in the region. On a local currency basis, European net sales were almost flat from the prior year (down only 11 1.0%), but fell approximately 8.3% in U.S. dollar terms due to softening of several European currencies against the U.S. dollar. Other international sales fell 7.3% from the prior year due primarily to lower overall demand for products in Canada, offset by minor growth in Latin America. Due to the lower sales volume, gross profit decreased $41.1 million from $265.2 million in the second quarter of fiscal 2001 to $224.2 million in the second quarter of fiscal 2002. However, as a percent of sales, gross margin increased 11 basis points to 5.42% in the second quarter of fiscal 2002 compared to 5.31% in the second quarter of fiscal 2001. This increase in gross margin is attributable to the positive effects of the Company's internal focus on margin improvement programs, as well as an increase in the mix of higher gross margin international sales relative to worldwide sales. Selling, general and administrative expenses decreased 7.7% from $180.8 million in the second quarter of fiscal 2001 to $166.8 million in fiscal 2002, and as a percentage of net sales increased from 3.62% in the second quarter of fiscal 2001 to 4.03% in the second quarter of fiscal 2002. The dollar value decrease in selling, general and administrative expenses is attributable to cost reduction efforts initiated by the Company in light of the reduced sales volumes. The increase in selling, general and administrative expenses as a percentage of net sales is primarily attributable to the overall decrease in net sales from the prior year. Special pre-tax charges of $20.0 million (see Note 8) were recognized in the second quarter of fiscal 2002. These special charges relate to the Company recording expenses for the disposal of software products previously acquired for internal use ($15.2 million) and impairment of certain internet-related investments ($4.8 million). As a result of the factors described above, operating income in the second quarter of fiscal 2002 decreased 55.7% to $37.4 million, or .90% of net sales, compared to $84.4 million, or 1.69% of net sales in the second quarter of fiscal 2001. The main factors contributing to the decrease in the Company's operating income were the decrease in the Company's revenues due to the decline in overall demand for products in the technology market and the $20.0 million of special charges, offset in part, by the Company's ability to achieve higher gross margins on its sales. On a proforma basis without the special charges, the operating income of the Company decreased from the prior year by 32.0% to $57.4 million, or 1.39% of net sales. Interest expense decreased from $21.8 million in the second quarter of fiscal 2001 to $15.9 million in the current quarter due to a decrease in the Company's average outstanding indebtedness combined with lower short-term interest rates on the Company's floating rate indebtedness. The Company reported a net foreign currency exchange loss of $0.3 million in the second quarter of fiscal 2002, as compared to a net foreign currency exchange gain of $0.2 million in the comparable quarter last year. The fluctuation from the prior year was not significant for any of the Company's reportable segments. The provision for income taxes decreased 67.3% to $7.2 million in the second quarter of fiscal 2002 compared to $22.0 million last year. The decrease is attributable to a decrease in the Company's income before income taxes and a reduction in the Company's effective tax rate. The Company's estimated effective tax rate decreased from 35% in the second quarter of fiscal 2001 to 34% in the current fiscal quarter due to fluctuations in the amount of federal, state and foreign taxable income reported in each period. 12 As a result of the factors described above, net income decreased 65.7% to $14.0 million, or $.25 per diluted share, compared to $40.8 million or $.72 per diluted share, in the prior year. On a proforma basis without special charges, net income decreased 33.3% to $27.2 million, or $.49 per diluted share. Six Months Ended July 31, 2001 and 2000 - --------------------------------------- Net sales decreased 11.1% to $8.8 billion in the first six months of fiscal 2002 compared to $9.9 billion in the first six months of last year, primarily due to lower overall demand for products in the technology market and a weakening of the euro. Net sales from U.S. operations fell 16.0% to $4.7 billion due primarily to overall weakened economic conditions in the region. On a local currency basis, European net sales were 1.2% higher during the first six months of the current year, but fell 5.5% in U.S. dollar terms due to softening of several European currencies against the U.S. dollar. Other international sales fell 2.0% in the first half of fiscal 2002 compared to the first six months of last year due mostly to lower overall demand for products in Canada, offset by growth in Latin America. Due to the lower sales volume, gross profit decreased $47.7 million from $523.1 million in the first six months of fiscal 2001 to $475.4 million in the first six months of fiscal 2002. Gross margins, however, increased 12 basis points to 5.39% in the first half of fiscal 2002 compared to 5.27% in the first half of fiscal 2001. This increase in gross margin is attributable to the positive effects of the Company's internal focus on margin improvement programs, as well as an increase in the mix of higher gross margin international sales relative to worldwide sales. Selling, general and administrative expenses decreased 4.6% from $363.3 million in the first half of fiscal 2001 to $346.6 million in fiscal 2002, and as a percentage of net sales increased from 3.66% in the first half of fiscal 2001 to 3.93% in the first half of fiscal 2002. The dollar value decrease in selling, general and administrative expenses is attributable to cost reduction efforts initiated by the Company in light of the reduced sales volumes. The increase in selling, general and administrative expenses as a percentage of net sales is primarily attributable to the overall decrease in net sales from the prior year. Special pre-tax charges of $20.0 million (see Note 8) were recognized in the first six months of fiscal 2002. These special charges relate to the Company recording pre-tax expenses for the disposal of certain software products previously acquired for internal use ($15.2 million) and impairment of certain internet-related investments ($4.8 million). As a result of the factors described above, operating income in the first half of fiscal 2002 decreased 32.0% to $108.7 million, or 1.23% of net sales, compared to $159.8 million, or 1.61% of net sales in the first half of fiscal 2001. The main factors contributing to the decrease in the Company's operating income were the decrease in the Company's revenues due to the decline in overall demand for products in the technology market and the $20.0 million of special charges, offset in part, by the Company's ability to achieve higher gross margins on its sales. On a proforma basis without the special charges, the operating income of the Company decreased from the prior year by 19.5% to $128.7 million, or 1.46% of net sales. Interest expense decreased from $40.5 million in the first six months of fiscal 2001 to $38.7 million in the first six months of 2002 due to a decrease in the Company's average outstanding indebtedness combined with lower short-term interest rates on the Company's floating rate indebtedness. 13 The Company reported a net foreign currency exchange loss of $0.6 million in the first six months of fiscal 2002, as compared to a net foreign currency exchange gain of $1.0 million in the first half of last year. The fluctuation from the prior year was not significant for any of the Company's reportable segments. The provision for income taxes decreased 44.0% to $23.6 million in the first six months of fiscal 2002 compared to $42.1 million for the first six months of 2001. The decrease is attributable to a decrease in the Company's income before income taxes and a reduction in the Company's effective tax rate. The Company's estimated effective tax rate decreased from 35% in the first half of 2001 to 34% in the first half of 2002 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 decreased 41.3% to $45.8 million, or $.83 per diluted share in the first six months of 2002, compared to $78.0 million, or $1.40 per diluted share in the first six months of 2001. On a proforma basis without special charges, net income decreased 24.4% to $59.0 million, or $1.06 per diluted share in the first six months of 2002. Quarterly Data - Seasonality - ---------------------------- The Company's quarterly operating results have fluctuated significantly in the past and will likely continue to do so in the future as a result of seasonal variations in the demand for the products and services offered by the Company. The Company's narrow operating margins may magnify the impact of these factors on the Company's operating results. Specific historical seasonal variations in the Company's operating results have included a reduction of demand in Europe during the summer months, but an increase in demand in Europe during the Company's fiscal fourth quarter, and increased Canadian government purchasing in the first quarter. In addition, the product cycle of major products may materially impact the Company's business, financial condition, or results of operations. Liquidity and Capital Resources - ------------------------------- Net cash provided by operating activities of $619.4 million during the first six months of fiscal 2002 was primarily attributable to income from operations of $45.8 million combined with a decrease in accounts receivable and inventories, offset by a reduction in accounts payable and accrued expenses. Net cash used in investing activities of $17.7 million during the first six months of fiscal 2002 was attributable to the continuing investment related to the expansion of the Company's management information systems, office facilities and equipment for its distribution centers. The Company expects to make capital expenditures of approximately $70 million during fiscal 2002 to further expand its management information systems, office facilities and equipment for distribution centers. Net cash used in financing activities of $512.0 million during the first six months of fiscal 2002 reflects the net repayments on the Company's revolving credit loans of $518.0 million and principal payments on long-term debt of $0.3 million, offset by the proceeds from stock option exercises (including the related income tax benefit) of $6.3 million. 14 The Company currently maintains a $495 million revolving credit facility with a syndicate of banks which expires in May 2003. The Company pays interest under this revolving credit facility at the applicable eurocurrency rate plus a margin based on the Company's credit rating. Additionally, the Company currently maintains a $700 million Receivables Securitization Program with a syndicate of banks expiring in May 2002. The Company pays interest on the Receivables Securitization Program at designated commercial paper rates plus an agreed-upon margin. In addition to these credit facilities, the Company maintains additional lines of credit and overdraft facilities totaling approximately $605 million. The aforementioned credit facilities total approximately $1.8 billion, of which $684 million was outstanding at July 31, 2001. These credit facilities contain covenants that must be complied with on a continuous basis, including the maintenance of certain financial ratios and restrictions on payment of dividends. The Company is in compliance with all such covenants. In August 2000, the Company filed a universal shelf registration statement with the Securities and Exchange Commission for $500 million of debt and equity securities. The net proceeds from any issuance are expected to be used for general corporate purposes, including capital expenditures, the repayment or refinancing of debt and to meet working capital needs. As of July 31, 2001, the Company had not issued any debt or equity securities, nor can any assurances be given that the Company will issue any debt or equity securities under this registration statement in the future. The Company believes that cash from operations, available and obtainable bank credit lines, and trade credit from its vendors will be sufficient to satisfy its working capital and capital expenditure requirements through fiscal 2002. 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 vendor price reductions and slow moving or obsolete inventory. In the event of a vendor price reduction, the Company generally receives a credit for the impact on products in inventory, subject to certain limitations. In addition, the Company has the right to rotate a certain percentage of purchases, subject to certain limitations. Historically, price protection and stock rotation privileges, as well as the Company's inventory management procedures have helped to reduce the risk of loss of carrying inventory. The Company attempts to control losses on credit sales by closely monitoring customers' creditworthiness through its information technology systems, which contain detailed information on each customer's payment history and other relevant information. The Company has obtained credit insurance that insures a percentage of the credit extended by the Company to certain of its larger domestic and international customers against possible loss. Customers who qualify for credit terms are typically granted net 30-day payment terms. The Company also sells products on a prepay, credit card, cash on delivery and floor plan basis. 15 Euro Conversion - --------------- On January 1, 1999, eleven of the fifteen member countries of the European Union commenced a conversion from their existing sovereign currencies to a new, single currency called the euro. Fixed conversion rates between the existing currencies, the legacy currencies, and the euro were established and the euro became the common legal currency of the participating countries. The legacy currencies will remain legal tender as denominations of euro until January 1, 2002. At that time, countries will issue new euro-denominated bills for use in cash transactions. All legacy currency will be withdrawn prior to July 1, 2002 completing the euro conversion on this date. As of January 1, 1999, the participating countries no longer control their own monetary policies by directing independent interest rates for the legacy currencies, and instead, the authority to direct monetary policy, including money supply and official interest rates for the euro, is exercised by the new European Central Bank. The Company has implemented plans to address the issues raised by the euro conversion. These issues include, but are not limited to: the competitive impact created by cross-border price transparency; the need for the Company and its business partners to adapt IT and non-IT systems to accommodate euro-denominated transactions; and the need to analyze the legal and contractual implications of the Company's contracts. The Company currently anticipates that the required modifications to its systems, equipment and processes will be made on a timely basis and does not expect that the costs of such modifications will have a material effect on the Company's financial position or results of operations. Since the implementation of the euro on January 1, 1999, the Company has experienced improved efficiencies in its cash management program in Europe and has been able to reduce certain hedging activities as a direct result of the conversion. The Company has not experienced any material adverse effects on its financial position or results of operations in connection with the initial roll- out of the euro. Recent Accounting Pronouncements - -------------------------------- In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards No. 141, "Business Combinations" ("SFAS 141"). SFAS 141 revises the standards of business combinations by eliminating the use of the pooling-of-interests ("pooling") method and requiring that all business combinations be accounted for using the purchase method of accounting. SFAS 141 also changes the criteria to recognize intangible assets apart from goodwill. The provisions of SFAS 141 are effective for all business combinations initiated after June 30, 2001. Impact of adoption of this statement on the Company's financial position and results of operations was not material. In June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142"). SFAS 142 revises the standards of accounting for goodwill and indefinite lived intangible assets by replacing the regular amortization of these assets with the requirement that they are reviewed annually, or more frequently if impairment indicators arise, for impairment. Separable intangible assets that have finite lives will continue to be amortized over their useful lives. The accounting standards of SFAS 142 are effective for fiscal years beginning after December 15, 2001. Application of the non-amortization provisions of the statement is expected to result in an increase in net income after tax of approximately $8.3 million ($.14 per diluted share) per year. During the fiscal year ending January 31, 2003, the Company will perform the first of the required impairment tests of goodwill and indefinite lived intangible assets under the new rules. Tech Data has not yet determined what the effect of these tests will be on the earnings and financial position of the Company. 16 Comments on Forward-Looking Information - --------------------------------------- In connection with the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the Company, in Exhibit 99A to its Annual Report on Form 10-K for the year ended January 31, 2001, outlined cautionary statements and identified important factors that could cause the Company's actual results to differ materially from those projected in forward-looking statements made by, or on behalf of, the Company. Such forward-looking statements, as made within this Form 10-Q, should be considered in conjunction with the information included within the aforementioned Exhibit 99A. 17 ITEM 3. Quantitative and Qualitative Disclosures About Market Risk No material changes have occurred in the quantitative and qualitative market risk disclosure of the Company as presented in the Company's Annual Report on Form 10-K for the year ended January 31, 2001. 18 PART II - OTHER INFORMATION Item 4. Submission of Matters to a Vote of Security Holders At the 2001 Annual Meeting of Shareholders held June 19, 2001, the shareholders approved the election of two directors, Charles E. Adair and John Y. Williams, terms to expire in 2004. Directors Steven A. Raymund, Jeffery P. Howells, Maximilian Ardelt, James M. Cracchiolo, Daniel M. Doyle, Kathy Misunas, and David M. Upton will continue in office for their respective terms. The vote upon such proposal was 50,496,721 in favor, 90,497 against and as follows for each individual director: For Against Abstentions ------------------------------------ C. Adair 50,492,996 94,222 3,725 J. Williams 50,464,306 122,912 32,415 ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits 10-AAk - Amendment Number 2 to the Transfer and Administration Agreement dated May 17, 2001. (b) Reports on Form 8-K None 19 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 September 5, 2001 - --------------------- Directors; Chief Executive Officer Steven A. Raymund /s/ Jeffery P. Howells Executive Vice President and September 5, 2001 - ---------------------- Chief Financial Officer; Director Jeffery P. Howells (principal financial officer) /s/ Joseph B. Trepani Senior Vice President and September 5, 2001 - --------------------- Corporate Controller (principal Joseph B. Trepani accounting officer) /s/ Arthur W. Singleton Corporate Vice President, September 5, 2001 - ----------------------- Treasurer and Secretary Arthur W. Singleton 20 EX-10.1 3 dex101.txt AMENDMENT NO. 2 TO THE TRANSFER AND ADMINISTRATION AMENDMENT NUMBER 2 TO TRANSFER AND ADMINISTRATION AGREEMENT AMENDMENT NUMBER 2 TO TRANSFER AND ADMINISTRATION AGREEMENT (this "Amendment"), dated as of May 17, 2001 among TECH DATA CORPORATION ("Tech --------- ---- Data"), a Florida corporation ("Tech Data"), as collection agent (in such - ---- --------- capacity, the "Collection Agent"), TECH DATA FINANCE SPV, INC., a Delaware ---------------- corporation headquartered in California, as transferor (in such capacity, the "Transferor"), RECEIVABLES CAPITAL CORPORATION ("RCC"), a Delaware corporation , ---------- ---- ATLANTIC ASSET SECURITIZATION CORP., a Delaware corporation ("Atlantic"), -------- LIBERTY STREET FUNDING CORP., a Delaware corporation, ("Liberty"), AMSTERDAM ------- FUNDING CORPORATION, a Delaware corporation ("AFC"), FALCON ASSET SECURITIZATION --- CORPORATION, a Delaware corporation, ("Falcon"), BLACK FOREST FUNDING ------ CORPORATION, a Delaware corporation, ("Black Forest"and collectively with RCC, ------------ Atlantic, Liberty, AFC and Falcon, the "Class Conduits"), CREDIT LYONNAIS NEW -------------- YORK BRANCH, a branch duly licensed under the laws of the State of New York of a banking corporation organized and existing under the laws of the Republic of France ("Credit Lyonnais"), as an Atlantic Bank Investor and as agent for --------------- Atlantic and the Atlantic Bank Investors (in such capacity, the "Atlantic -------- Agent"), BNP PARIBAS, a French banking corporation, acting through its Houston - ----- agency ("BNPP"), as an Atlantic Bank Investor, THE BANK OF NOVA SCOTIA, a ---- banking corporation organized and existing under the laws of Canada, acting through its New York Agency ("Scotia Bank"), as a Liberty Bank Investor and as ----------- agent for Liberty and the Liberty Bank Investors (in such capacity, the "Liberty ------- Agent"), ABN AMRO BANK N.V., a banking corporation organized and existing under - ----- the laws of the Netherlands and acting through its Chicago Branch ("ABN AMRO"), -------- as an AFC Bank Investor and as agent for AFC and the AFC Bank Investors (in such capacity, the "AFC Agent"), BANK ONE, NA (having its main office in Chicago, --------- Illinois), a national banking association ("Bank One"), as a Falcon Bank -------- Investor and as agent for Falcon and the Falcon Bank Investors (in such capacity, the "Falcon Agent"), BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK ------------ BRANCH, a branch duly licensed under the laws of New York of a banking corporation organized and existing under the laws of the Federal Republic of Germany ("HypoVereinsbank"), as a Black Forest Bank Investor and as agent for --------------- Black Forest and the Black Forest Bank Investors (in such capacity, the "Black ----- Forest Agent") and BANK OF AMERICA, NATIONAL ASSOCIATION, a national banking - ------------ association ("Bank of America"), as agent for RCC, Atlantic, Liberty, AFC, --------------- Falcon, Black Forest, the RCC Bank Investors, the Atlantic Bank Investors, the Black Forest Bank Investors, the Liberty Bank Investors, the AFC Bank Investors and the Falcon Bank Investors (in such capacity, the "Administrative Agent"), as an RCC Bank Investor, as agent for RCC and the RCC -------------------- Bank Investors (in such capacity, the "RCC Agent") and Lead Arranger, amending --------- that certain Transfer and Administration Agreement dated as of May 19, 2000, among the Transferor, the Collection Agent, the Class Conduits (as defined thereunder) and the Bank Investors (the "Original Agreement" and said agreement ------------------ as amended, the "Agreement"). ---------- WHEREAS, the parties hereto mutually desire to make certain amendments to the Agreement as hereinafter set forth; and WHEREAS, capitalized terms used herein shall have the meanings assigned to such terms in the Original Agreement; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: SECTION 1. Amendment to Definitions. ------------------------ (a) The definition of "Commitment Termination Date" is hereby deleted and replaced with the following (solely for convenience added language is italicized): ""Commitment Termination Date" means, with respect to each Class, May --------------------------- 16, 2002, or such later date to which such Commitment Termination Date may be extended by Transferor, the related Class Agent and the related Bank Investors not later than 60 days prior to the then current Commitment Termination Date for such Class." (b) The definition of "Dilution Reserve Ratio" is hereby deleted and replaced with the following (solely for convenience added language is italicized): ""Dilution Reserve Ratio" means, at any time, an amount equal to the ---------------------- product of (i) two (2) and (ii) the highest Dilution Ratio as of the last day of any of the preceding six (6) months." 2 (c) The definition of "Facility Limit" is hereby deleted and replaced with the following (solely for convenience added or changed language is italicized): ""Facility Limit" means (i) with respect to the Class of which -------------- Atlantic is a member, $111,562,500; provided that such amount may not at any time exceed the aggregate Commitments with respect to the Atlantic Bank Investors, (ii) with respect to the Class of which RCC is a member, $178,500,000; provided that such amount may not at any time exceed the aggregate Commitments with respect to the RCC Bank Investors, (iii) with respect to the Class of which Liberty is a member, $133,875,000; provided that such amount may not at any time exceed the aggregate Commitments with respect to the Liberty Bank Investors, in each case, at any time in effect, (iv) with respect to the Class of which AFC is a member, $111,562,500; provided that such amount may not at any time exceed the aggregate Commitments with respect to the AFC Bank Investors, in each case, at any time in effect, (v) with respect to the Class of which Falcon is a member, $111,562,500; provided that such amount may not at any time exceed the aggregate Commitments with respect to the Falcon Bank Investors, in each case, at any time in effect, (vi) with respect to the Class of which Black Forest is a member, $66,937,500; provided that such amount may not at any time exceed the aggregate Commitments with respect to the Black Forest Bank Investors, in each case, at any time in effect and (vii) with respect to any other Class, the amount specified as such in any supplement hereto for such Class; provided that, with respect to any other Class, the Facility Limit for such Class shall not at any time exceed the aggregate Commitments for the Bank Investors in such Class." (d) The definition of "Loss and Dilution Reserve" is hereby deleted and replaced with the following (solely for convenience added or changed language is italicized): ""Loss and Dilution Reserve" means, with respect to each Class, at any ------------------------- time, an amount equal to the product of (i) the Loss and Dilution Reserve Percentage and (ii) the Net Investment for such Class at such time. Notwithstanding the foregoing, (i) with respect to the Class of which RCC is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at all times be at least equal to $14,000,000, (ii) with respect to the Class of which Atlantic is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at all times be at least equal to $8,750,000, (iii) with respect to the Class of which Liberty is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at all times be at least equal to $10,500,000, (iv) with respect to the Class of which AFC is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at 3 all times be at least equal to $8,750,000, (v) with respect to the Class of which Falcon is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at all times be at least equal to $8,750,000, (vi) with respect to the Class of which Black Forest is a member, the portion of the Loss and Dilution Reserve attributable to losses shall at all times be at least equal to $5,250,000, and (vii) with respect to any other Class, the portion of the Loss and Dilution Reserve shall at all times be at least equal to an amount agreed upon by the Transferor, the Administrative Agent and the Class Agent for such additional class at the time it becomes a party hereto." (e) The definition of "Maximum Net Investment" is hereby deleted and replaced with the following (solely for convenience added or changed language is italicized): ""Maximum Net Investment" means (i) with respect to the Class of which ---------------------- RCC is a member, $175,000,000, (ii) with respect to the Class of which Atlantic is a member, $109,375,000, (iii) with respect to the Class of which Liberty is a member, $131,250,000, (iv) with respect to the Class of which AFC is a member, $ 109,375,000, (v) with respect to the Class of which Falcon is a member, $109,375,000, (vi) with respect to the Class of which Black Forest is a member, $65,625,000 and (vii) with respect to any other Class, the amount set forth pursuant to Section 11.2(b)." SECTION 1. Affirmations. ------------ (a) The Transferor and Collection Agent have complied with Section 2.8 of the Agreement with respect to Lock-Box Accounts and solely for convenience attached hereto is the updated Exhibit C. (b) All parties hereto agree and acknowledge that with respect to each Bank Investor party hereto, each Bank Investor has a Commitment and such Commitment of such Bank Investor shall be the dollar amount set forth opposite such Bank Investor's signature on the signature page hereto, which may be different from the Original Agreement. SECTION 2. Conditions Precedent. This Amendment shall not become -------------------- effective until the Administrative Agent shall have received the following: (a) A copy of the Resolutions of the Board of Directors of the Transferor and Tech Data certified by its Secretary approving this Amendment 4 and the other documents to be delivered by the Transferor and Tech Data hereunder; and (b) A Certificate of the Secretary of the Transferor and Tech Data certifying (i) the names and signatures of the officers authorized on its behalf to execute this Amendment and any other documents to be delivered by it hereunder and (ii) the Resolutions referenced in Section 3(a) are still in full force and effect and that the Board has not taken any action to amend modify or repeal such Resolutions. SECTION 3. Representations and Warranties. The Transferor hereby ------------------------------ makes to the Company, on and as of the date hereof, all of the representations and warranties set forth in Section 3.1 of the Original Agreement. In addition, the Collection Agent and the Guarantor hereby make to the Company, on the date hereof, all the representations and warranties set forth in Section 3.3 of the Original Agreement. SECTION 4. Successors and Assigns. This Amendment shall bind, and ---------------------- the benefits hereof shall inure to the parties hereof and their respective successors and permitted assigns; SECTION 5. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND ------------- CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. THE TRANSFEROR HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN THE CITY OF NEW YORK FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. SECTION 6. Severability; Counterparts. This Amendment may be -------------------------- executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which when taken together shall constitute one and the same instrument. Any provisions of this Amendment which are prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction. 5 SECTION 7. Captions. The captions in this Amendment are for -------- convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 8. Ratification. Except as expressly affected by the ------------ provisions hereof, the Original Agreement as amended by this Amendment shall remain in full force and effect in accordance with its terms and ratified and confirmed by the parties hereto. On and after the date hereof, each reference in the Original Agreement to "this Agreement", "hereunder", "herein" or words of like import shall mean and be a reference to the Original Agreement as amended by this Amendment. 6 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Amendment as of the date first written above. TECH DATA FINANCE SPV, INC., as Transferor By: /s/ Arthur W. Singleton ------------------------ Name: Arthur W. Singleton Title: Vice President, Chief Financial Officer, Treasurer, and Secretary TECH DATA CORPORATION, as Collection Agent By: /s/ Arthur W. Singleton ----------------------- Name: Arthur W. Singleton Title: Vice President, Chief Financial Officer, Treasurer, and Secretary RECEIVABLES CAPITAL CORPORATION By: /s/ Evelyn Echevarria --------------------- Name: Evelyn Echevarria Title: Vice President ATLANTIC ASSET SECURITIZATION CORP. By: CREDIT LYONNAIS NEW YORK BRANCH, as attorney-in-fact By: /s/ Kostantina Kourmpetis ------------------------- Name: Kostantina Kourmpetis Title: Director LIBERTY STREET FUNDING CORP. By: /s/ Andrew L. Stidd -------------------- Name: Andrew L. Stidd Title: President AMSTERDAM FUNDING CORPORATION By: /s/ Andrew L. Stidd ------------------- Name: Andrew L. Stidd Title: President FALCON ASSET SECURITIZATION CORPORATION By: /s/ Julie C. Benda ------------------ Name: Julie C. Benda Title: Authorized Signatory BLACK FOREST FUNDING CORPORATION By: /s/ Lori Rezza -------------- Name: Lori Rezza Title: Vice President Commitment BANK OF AMERICA, NATIONAL - ---------- ASSOCIATION, as Administrative Agent, RCC $116,000,000 Agent and as an RCC Bank Investor By: /s/ Michelle M. Heath ---------------------- Name: Michelle M. Heath Title: Managing Director Commitment CREDIT LYONNAIS NEW YORK BRANCH, - ---------- $38,437,500 as Atlantic Agent and as an Atlantic Bank Investor By: /s/ Kostantina Kourmpetis ------------------------- Name: Kostantina Kourmpetis Title: Director Commitment BNP PARIBAS, - ---------- $13,125,000 as an Atlantic Bank Investor By: /s/ Angela Bentley ------------------ Name: Angela Bentley Title: Associate By: /s/ Aurora Abella ----------------- Name: Aurora Abella Title: Vice President Commitment THE BANK OF NOVA SCOTIA, as Liberty - ---------- $133,875,000 Agent and as a Liberty Bank Investor By: /s/ Alan Edwards ---------------- Name: Alan Edwards Title: Managing Director Commitment ABN AMRO BANK N.V., as AFC Agent - ---------- and as an AFC Bank Investor $111,562,500 By: /s/ Bernard Koh --------------- Name: Bernard Koh Title: Group Vice President By: /s/ Nancy Capecci ----------------- Name: Nancy Capecci Title: Group Vice President Commitment BANK ONE, NA (having its main office - ---------- in Chicago Illinois), as Falcon Agent $111,562,500 and as a Falcon Bank Investor By: /s/ Julie C. Benda ------------------ Name: Julie C. Benda Title: Director Commitment BAYERISCHE HYPO- UND VEREINSBANK AG, NEW YORK BRANCH, - ---------- as Black Forest Agent and Black Forest Bank Investor $66,937,500 By: /s/ Mark Hirshorn ----------------- Name: Mark Hirshorn Title: Managing Director By: /s/ Pamela J. Gillens --------------------- Name: Pamela J. Gillens Title: Associate Director Commitment LLOYDS TSB BANK PLC, - ---------- as an Atlantic Bank Investor $60,000,000 By: /s/ Gavin Rees -------------- Name: Gavin Rees Title: Assistant Director, Structured Finance By: /s/ Michelle White ------------------ Name: Michelle White Title: Assistant Vice President, Structured Finance Commitment LLOYDS TSB BANK PLC, - ---------- as an RCC Bank Investor $62,500,000 By: /s/ Gavin Rees -------------- Name: Gavin Rees Title: Assistant Director, Structured Finance By: /s/ Michelle White ------------------ Name: Michelle White Title: Assistant Vice President, Structured Finance -----END PRIVACY-ENHANCED MESSAGE-----