UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 20, 2012
Tech Data Corporation
(Exact name of registrant as specified in its charter)
Florida |
0-14625 |
59-1578329 |
| (State or other jurisdiction of incorporation) |
(Commission File Number) | (IRS Employer 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
N/A
(Former name or former address, if changed since last report)
| Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |
||
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | |
Item 2.02. Results of Operations and Financial Condition.
On November 20, 2012, Tech Data Corporation issued a press release, furnished as Exhibit 99.1 and incorporated herein by reference, announcing its financial results for its third quarter ended October 31, 2012. The information in this Form 8-K, including the exhibit noted in Item 9.01, is furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section and shall not be deemed incorporated by reference into any registration statement or other document filed pursuant to the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
Exhibit 99.1
November 20, 2012 Press Release by Tech Data Corporation (The information provided in this Exhibit 99.1 is furnished and shall not be deemed "filed".)
SIGNATURE
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 hereunto duly authorized.
| Tech Data Corporation
(Registrant) |
||
| November 20, 2012
(Date) |
/s/ JEFFERY P. HOWELLS
Jeffery P. Howells Executive Vice President & Chief Financial Officer Tech Data Corporation |
EXHIBIT 99.1
CLEARWATER, Fla., Nov. 20, 2012 (GLOBE NEWSWIRE) -- Tech Data Corporation, a leading distributor of IT products, today announced results for the third quarter ended October 31, 2012.
| Results At A Glance | ||||
|
($ in millions, except per share amounts) |
Three months ended October 31, 2012 |
Three months ended October 31, 2011 |
Nine months ended October 31, 2012 |
Nine months ended October 31, 2011 |
| Net sales | $ 6,040.6 | $ 6,594.0 | $ 17,897.6 | $ 19,375.6 |
| Operating income | $ 69.5 | $ 89.6 | $ 209.7 | $ 244.0 |
| Operating margin | 1.15% | 1.36% | 1.16% | 1.26% |
| Net income attributable to shareholders of Tech Data Corporation | $ 45.9 | $ 53.5 | $ 132.0 | $ 152.3 |
| Net income per diluted share attributable to shareholders of Tech Data Corporation | $ 1.21 | $ 1.26 | $ 3.34 | $ 3.37 |
Net sales for the third quarter ended October 31, 2012 were $6.04 billion, a decrease of 8 percent from $6.59 billion in the prior-year third quarter. The weakening of certain foreign currencies against the U.S. dollar negatively impacted the year-over-year net sales comparison by approximately 5 percentage points. In the first quarter of fiscal 2013, the company prospectively revised its presentation of sales of vendor warranty services and certain fulfillment contracts such that they are now reflected on an agency basis as net fees as opposed to net sales and cost of products sold. These items would have contributed approximately $215 million of net sales in the third quarter, which negatively impacted the year-over-year net sales comparison by approximately 3 percentage points. This change had no impact on gross profit dollars, operating income dollars, net income dollars or earnings per share for any period reported, but positively impacted the gross margin and operating margin percentages in the third quarter of fiscal 2013 by approximately 17 and 4 basis points, respectively. Also included in prior year net sales is approximately $52 million related to the in-country operations of Brazil and Colombia, which the company exited at the end of fiscal 2012. Excluding the impact of the above factors, net sales increased approximately 1 percent.
Operating income for the third quarter was $69.5 million or 1.15 percent of net sales. This compared to operating income of $89.6 million or 1.36 percent of net sales in the prior-year third quarter. The year-over-year decline in operating income is attributable to the impact on gross profit of competitive pricing, product mix and certain vendor programs in both regions. Operating income in the Americas region was also impacted by a shortfall in sales and gross profit resulting from a loss of market share in the U.S. following the implementation of certain SAP modules during the second quarter.
Third-quarter net income attributable to shareholders of Tech Data Corporation was $45.9 million or $1.21 per diluted share compared to $53.5 million or $1.26 per diluted share in the prior-year period. The year-over-year decline is primarily attributable to the aforementioned items, partially offset by lower interest expense and lower non-controlling interest resulting from the acquisition of the company's European mobility joint venture partner's 50 percent interest in September. A lower average share count attributable to the company's share repurchases further lessened the impact of the reduced operating results on earnings per share.
"During our third quarter we continued to face weak macro-economic environments and slowing demand, as well as challenges in our U.S. operations following the implementation of certain SAP modules in the second quarter. Our worldwide operating performance, which fell short of our plan and prior year, reflects the ongoing impact of these challenges," said Robert M. Dutkowsky, chief executive officer, Tech Data Corporation. "Despite a difficult economy, our European region, on a euro basis, delivered higher sales and improved operating income. And while Europe's positive results did not completely offset the Americas shortfall, recent investments and capital structure enhancements enabled us to minimize the impact to earnings per share. During the quarter, we completed the buyout of our European mobility joint venture, now branded Tech Data Mobile; and on November 1, we closed on the acquisition of several distribution companies belonging to Specialist Distribution Group (SDG), a leading distributor of enterprise and broadline IT products in the UK, France and the Netherlands. Both of these transactions support our diversification strategy and highlight our commitment to delivering improved earnings to our shareholders."
Third-Quarter Financial Highlights
Nine-Month Results
Net sales for the nine-month period ended October 31, 2012 were $17.9 billion, a decrease of 8 percent from $19.4 billion for the nine-month period ended October 31, 2011. The weakening of certain foreign currencies against the U.S. dollar negatively impacted the year-over-year nine-month period net sales comparison by approximately 6 percentage points. The change in presentation of vendor warranty services and certain fulfillment contracts reduced net sales for the nine-month period ended October 31, 2012 by approximately $606 million. This change had no impact on gross profit dollars, operating income dollars, net income dollars or earnings per share for any period reported, but positively impacted the gross margin and operating income margin percentages for the nine-month period by approximately 17 and 4 basis points, respectively. Also included in prior year net sales for the nine-month period is approximately $254 million related to the in-country operations of Brazil and Colombia, which the company exited at the end of fiscal 2012. Excluding the impact of the above factors, net sales increased approximately 2 percent.
On a regional basis, the Americas represented 40 percent of net sales, decreasing 11 percent to $7.22 billion from $8.09 billion for the prior-year period. The change in presentation of vendor warranty services and certain fulfillment contracts reduced the Americas' net sales for the nine-month period ended October 31, 2012 by approximately $298 million. Included in the Americas' prior year net sales for the nine-month period ended October 31, 2011 is approximately $254 million related to the in-country operations of Brazil and Colombia, which the company exited at the end of fiscal 2012. Excluding the impact of these factors, as well as the translation effect of certain foreign currencies, the Americas' net sales for the nine-month period ended October 31, 2012 decreased approximately 4 percent.
Europe represented 60 percent of net sales, decreasing 5 percent (increasing 4 percent on a euro basis) to $10.68 billion from $11.28 billion for the nine-month period ended October 31, 2011. The change in presentation of vendor warranty services and certain fulfillment contracts reduced Europe's net sales for the nine-month period ended October 31, 2012 by approximately $308 million (approximately 240 million euros). Excluding the impact of this change, Europe's net sales decreased approximately 3 percent (increased approximately 7 percent on a euro basis).
For the nine-month period ended October 31, 2012, the company recorded operating income of $209.7 million, or 1.16 percent of net sales, compared with operating income of $244.0 million, or 1.26 percent of net sales, in the prior-year period. The company recorded net income attributable to shareholders of Tech Data Corporation of $132.0 million, or $3.34 per diluted share, for the nine-month period ended October 31, 2012. This compared to net income attributable to shareholders of Tech Data Corporation of $152.3 million, or $3.37 per diluted share, in the prior-year period.
Business Outlook
For the fourth quarter of fiscal year 2013, on a reported basis, the company expects year-over-year, low single-digit sales growth and sequential improvement in gross and operating margins. In Europe, excluding the impact of SDG which was acquired November 1, 2012, the company expects year-over-year sales growth of low single digits, in euros. In the Americas, the company expects a year-over-year, low double-digit sales decline due to the continued impact of the implementation of certain SAP modules in the U.S. during the second quarter, and the exit of Brazil and Colombia at the end of fiscal 2012. All year-over-year comparisons are also impacted by the fiscal 2013 change in presentation of vendor warranty services and certain fulfillment contracts, as well as general market conditions. The company estimates the average U.S. dollar to euro currency exchange rate to be $1.28 to €1.00 for the fourth quarter of fiscal year 2013.
Webcast Details
Tech Data will discuss its third-quarter results on a conference call today at 9:00 a.m. (ET). A webcast of the call, including supplemental schedules, will be available to all interested parties and can be accessed at www.techdata.com/investor. The webcast will be available for replay for three months.
Non-GAAP Financial Information
The non-GAAP data contained in this release is included with the intention of providing investors a more complete understanding of our operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles ("GAAP"). Non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the company, exclude restructuring charges, certain consulting costs, impairment charges, certain changes in valuation allowances for certain deferred tax assets, extraordinary gains or losses and other infrequent or unusual items. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial summary. This information is also available for review on the Investor Relations section of Tech Data's website at www.techdata.com/investor.
Cautionary Statement
Certain matters discussed in this news release are forward-looking statements, based on the company's current expectations that involve a number of risks and uncertainties. Factors that could cause actual results to differ materially include the following: global economic and political instability, competition, narrow margins, dependence on information systems, acquisitions and divestitures, exposure to natural disasters, war and terrorism, dependence on independent shipping companies, impact of policy changes, labor strikes, risk of declines in inventory value, product availability, vendor terms and conditions, loss of significant customers, customer credit exposure, need for liquidity and capital resources, fluctuations in interest rates, foreign currency exchange rates, exposure to foreign markets, international operations, changes in income tax and other regulatory legislation, potential adverse effects of litigation or regulatory enforcement action, changes in accounting rules, and the volatility of common stock price. Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission, copies of which can be obtained at the company's Investor Relations website at www.techdata.com. All information in this release is as of November 20, 2012. The company undertakes no duty to update any forward-looking statements herein to actual results or changes in the company's expectations.
About Tech Data
Tech Data Corporation (Nasdaq:TECD) is one of the world's largest wholesale distributors of technology products. Its advanced logistics capabilities and value added services enable 125,000 resellers in more than 100 countries to efficiently and cost effectively support the diverse technology needs of end users. Tech Data generated $26.5 billion in net sales for the fiscal year ended January 31, 2012 and is ranked 109th on the Fortune 500®. To learn more, visit www.techdata.com.
The Tech Data Corporation logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=10666
| TECH DATA CORPORATION AND SUBSIDIARIES | ||||
| CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED) | ||||
| (In thousands, except per share amounts) | ||||
| Three months ended | Nine months ended | |||
| October 31, | October 31, | |||
| 2012 | 2011 | 2012 | 2011 | |
| Net sales | $ 6,040,556 | $ 6,593,983 | $17,897,617 | $19,375,572 |
| Cost of products sold | 5,732,295 | 6,249,236 | 16,967,895 | 18,356,525 |
| Gross profit | 308,261 | 344,747 | 929,722 | 1,019,047 |
| Selling, general and administrative expenses | 238,715 | 255,178 | 720,027 | 775,020 |
| Operating income | 69,546 | 89,569 | 209,695 | 244,027 |
| Interest expense | 4,359 | 8,378 | 10,850 | 25,108 |
| Other expense, net | 2,044 | 428 | 4,566 | 882 |
| Income before income taxes | 63,143 | 80,763 | 194,279 | 218,037 |
| Provision for income taxes | 16,122 | 23,600 | 55,446 | 60,398 |
| Consolidated net income | 47,021 | 57,163 | 138,833 | 157,639 |
| Net income attributable to noncontrolling interest | (1,123) | (3,644) | (6,785) | (5,312) |
| Net income attributable to shareholders of Tech Data Corporation | $ 45,898 | $ 53,519 | $ 132,048 | $ 152,327 |
| Net income per common share attributable to shareholders of Tech Data Corporation: | ||||
| Basic | $ 1.22 | $ 1.27 | $ 3.37 | $ 3.42 |
| Diluted | $ 1.21 | $ 1.26 | $ 3.34 | $ 3.37 |
| Weighted average common shares outstanding: | ||||
| Basic | 37,765 | 42,104 | 39,234 | 44,602 |
| Diluted | 38,025 | 42,554 | 39,546 | 45,157 |
| TECH DATA CORPORATION AND SUBSIDIARIES | ||
| CONSOLIDATED BALANCE SHEET | ||
| (In thousands) | ||
| October 31, | January 31, | |
| 2012 | 2012 | |
| ASSETS | (Unaudited) | |
| Current assets: | ||
| Cash and cash equivalents | $ 515,788 | $ 505,178 |
| Accounts receivable, net | 2,781,490 | 2,871,243 |
| Inventories | 2,025,424 | 1,802,976 |
| Prepaid expenses and other assets | 206,095 | 202,505 |
| Total current assets | 5,528,797 | 5,381,902 |
| Property and equipment, net | 83,049 | 88,595 |
| Other assets, net | 310,471 | 314,921 |
| Total assets | $5,922,317 | $5,785,418 |
| LIABILITIES AND EQUITY | ||
| Current liabilities: | ||
| Accounts payable | $3,111,391 | $3,042,809 |
| Accrued expenses and other liabilities | 469,171 | 551,280 |
| Revolving credit loans and current maturities of long-term debt | 65,848 | 48,490 |
| Total current liabilities | 3,646,410 | 3,642,579 |
| Long-term debt | 354,267 | 57,253 |
| Other long-term liabilities | 86,780 | 83,438 |
| Total liabilities | 4,087,457 | 3,783,270 |
| Equity attributable to shareholders of Tech Data Corporation | 1,834,860 | 1,973,823 |
| Noncontrolling interest | -- | 28,325 |
| Total equity | 1,834,860 | 2,002,148 |
| Total liabilities and equity | $5,922,317 | $5,785,418 |
| TECH DATA CORPORATION AND SUBSIDIARIES | ||||
| SUPPLEMENTARY INFORMATION (UNAUDITED) | ||||
| ($'s in thousands) | ||||
|
Three months ended October 31, 2012 |
Three months ended October 31, 2011 |
|||
| Operating Income by Segment |
Operating Income |
Operating Margin |
Operating Income |
Operating Margin |
| Americas | $ 33,747 | 1.43% | $ 52,638 | 1.89% |
| Europe | 39,445 | 1.07% | 39,718 | 1.04% |
| Stock-based compensation | (3,646) | (0.06)% | (2,787) | (0.04)% |
| Worldwide total | $ 69,546 | 1.15% | $ 89,569 | 1.36% |
|
Nine months ended October 31, 2012 |
Nine months ended October 31, 2011 |
|||
| Operating Income by Segment |
Operating Income |
Operating Margin |
Operating Income |
Operating Margin |
| Americas | $ 114,346 | 1.58% | $ 148,146 | 1.83% |
| Europe | 105,677 | 0.99% | 103,850 | 0.92% |
| Stock-based compensation | (10,328) | (0.06)% | (7,969) | (0.04)% |
| Worldwide total | $ 209,695 | 1.16% | $ 244,027 | 1.26% |
| Return on Invested Capital (ROIC) | ||
| ($'s in millions) | ||
| Twelve months ended | Twelve months ended | |
| October 31, 2012 | October 31, 2011 | |
| Net Operating Profit After Tax (NOPAT): | ||
| Operating Income(1) | $ 322 | $ 362 |
| Tax Provision | 88 | 97 |
| NOPAT(1) | $ 234 | $ 265 |
| Average Invested Capital: | ||
| Short-term debt (5-qtr average) | $ 119 | $ 364 |
| Long-term debt (5-qtr average) | 117 | 128 |
| Shareholders' Equity (5-qtr average) | 1,954 | 2,140 |
| Total average capital | 2,190 | 2,632 |
| Less: Cash (5-qtr average)(2) | (514) | (751) |
| Average invested capital less average cash | $ 1,676 | $ 1,881 |
| ROIC -- as reported | 14% | 14% |
| (1) Excludes a $28.3 million charge recorded in Q4 FY'12 for loss on disposal of subsidiaries related to the company's exit of its operations in Brazil and Colombia. | ||
| (2) As adjusted for the company's change in accounting for book overdrafts. | ||
CONTACT: Jeffery P. Howells, Executive Vice President
and Chief Financial Officer
727-538-7825 (jeff.howells@techdata.com)
or
Arleen Quinones, Director, Investor Relations
and Shareholder Services
727-532-8866 (arleen.quinones@techdata.com)