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Tech Data Corporation Reports Fiscal 2011 Third-Quarter Results

Sales, Net Income and Earnings Per Diluted Share Reach Record Third-Quarter Levels

CLEARWATER, Fla., Nov 22, 2010 (GlobeNewswire via COMTEX) -- Tech Data Corporation (Nasdaq:TECD), a leading distributor of IT products, today announced results for the third quarter ended October 31, 2010.

                                   Results At A Glance
  -------------------------------------------------------------------------------------
                                               Three      Three       Nine       Nine
                                               months    months     months     months
                                               ended      ended      ended      ended
                                               October   October    October    October
                                              31, 2010   31, 2009   31, 2010   31, 2009

                                                           (As                   (As
                                                        Adjusted)             Adjusted)
  ($ in millions, except per share amounts)                (1)                   (1)
  ------------------------------------------  --------  ---------  ---------  ---------

  Net sales                                   $6,163.8   $5,642.0  $17,258.8  $15,816.7

  Operating income                               $81.0      $65.1     $216.2     $166.8

  Operating income margin                        1.31%      1.15%      1.25%      1.05%

  Net income attributable to shareholders of

  Tech Data Corporation                          $50.5      $43.1     $136.9     $110.1


  Net income per diluted share attributable
   to
  shareholders of Tech Data Corporation          $1.07      $0.84      $2.76      $2.17
  ------------------------------------------  --------  ---------  ---------  ---------

  (1) Effective February 1, 2010, Tech Data Corporation reclassified certain foreign
   currency exchange gains or losses within the accompanying Consolidated Statement of
   Operations to "Cost of products sold."  Historically, these gains and losses were
   reported as a separate component of Other (income) expense titled "Net foreign
   currency exchange loss (gain)." Management believes this revised presentation is
   more consistent with how the company manages and reports the underlying transactions
   giving rise to these foreign currency exchange gains and losses.

Net sales for the third quarter ended October 31, 2010, were $6.16 billion, an increase of 9.2 percent from $5.64 billion in the prior-year third quarter. The weakening of certain foreign currencies against the U.S. dollar, compared to the same period of the prior year, negatively impacted the year-over-year net sales comparison by approximately 5 percentage points. Sequentially, net sales for the third quarter ended October 31, 2010, increased 12.6 percent over the second quarter. Stronger foreign currencies during the third quarter contributed approximately 4 percentage points to the sequential growth.

Operating income for the third quarter was $81.0 million, or 1.31 percent of net sales. This compared to operating income of $65.1 million, or 1.15 percent of net sales in the prior-year third quarter. Third-quarter net income attributable to shareholders of Tech Data Corporation increased 17.0 percent to $50.5 million, or $1.07 per diluted share compared to $43.1 million, or $0.84 per diluted share for the prior-year period.

On October 1, 2010, Tech Data completed the acquisition of Triade Holding B.V. ("Triade"), a portfolio of value-added distributors of consumer electronics and information technology products in Benelux, Denmark and Norway. Concurrently, Brightstar Europe, a joint venture between Tech Data and Brightstar Corporation, completed the acquisition of Triade's mobility subsidiaries, Mobile Communication Company B.V. and M.C.C. Belgium N.V. ("MCC"), in the Netherlands and Belgium, which specialize in the distribution of mobility products. At that time, Tech Data indicated MCC's results would not be consolidated in the company's financial statements. Based upon the final analysis of the acquisition structure, Tech Data has determined that it is appropriate to consolidate MCC; therefore, Triade and MCC have been included in the company's consolidated financial statements subsequent to the date of acquisition.

"Building on the momentum of the last several quarters, the Tech Data team once again performed exceptionally well, exceeding our plan and delivering record-setting results in the third quarter," said Robert M. Dutkowsky, chief executive officer, Tech Data Corporation. "While completing the acquisition of Triade as well as two other companies, we capitalized on solid demand for technology products in both the Americas and Europe, and successfully balanced selected market share gains with responsible growth. This, combined with solid expense management, provided strong operating leverage, resulting in the highest third quarter sales, earnings and earnings per diluted share in our company's history, as well as return on capital employed of 14%. Our year-to-date performance validates our strategy and is a testament to our team's relentless focus on profitable growth and excellent execution, which together with our strong balance sheet and effective working capital management efforts, currently put us on an accelerated track to achieve our three-year profitability and return on capital employed goals."

Third-Quarter Financial Highlights

  • Net sales in the Americas (including North America and Latin America) were $2.70 billion, or 44 percent of worldwide net sales, representing an increase of 9.7 percent over the prior-year third quarter. Net sales in Europe totaled $3.46 billion, or 56 percent of worldwide net sales, representing an increase of 8.9 percent (18.9 percent increase on a euro basis) over the prior-year third quarter. The increase in sales is due to solid demand in both regions during the quarter, as well as the inclusion of sales of five European companies acquired in fiscal 2011.
  • Gross margin for the third quarter was 5.26 percent compared to 5.24 percent in the prior-year third quarter. The company's disciplined pricing, freight and inventory management practices contributed to the stable gross margin performance.
  • Selling, general and administrative expenses (SG&A) were $243.2 million, or 3.95 percent of net sales compared to $230.5 million, or 4.09 percent of net sales in the prior-year third quarter.The increase in SG&A expenses, on a dollar basis, was primarily attributable to the inclusion of operating expenses of five European companies acquired in fiscal 2011, and costs to support growth, partially offset by the impact of weaker foreign currencies. As a percentage of net sales, however, SG&A declined 14 basis points year-over-year due to leverage achieved on higher sales.
  • Operating income in the Americas for the third quarter was $46.1 million, or 1.71 percent of net sales compared to $39.4 million, or 1.60 percent of net sales in the prior-year third quarter. In Europe, the company generated operating income of $37.1 million, or 1.07 percent of net sales compared to operating income of $28.7 million, or .90 percent of net sales in the prior-year third quarter. Stock-based compensation expense is not included in the regional segment reporting results. This expense is presented as a separate line item in the company's segment reporting (see "Supplementary Information" table attached).
  • Cash used by operations totaled $105 million for the third quarter and $72 million for the nine months ended October 31, 2010.

Nine-months Results

Net sales for the nine-month period ended October 31, 2010, were $17.26 billion, an increase of 9.1 percent from $15.82 billion for the nine-month period ended October 31, 2009. 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 2 percentage points. On a regional basis, net sales in the Americas represented 45 percent of worldwide net sales and increased 9.8 percent to $7.76 billion from $7.07 billion for the prior-year period. Europe represented 55 percent of worldwide net sales and increased 8.6 percent (14.4 percent on a euro basis) to $9.50 billion from $8.75 billion for the nine-month period ended October 31, 2009.

For the nine-month period ended October 31, 2010, the company recorded operating income of $216.2 million, or 1.25 percent of net sales, compared with operating income of $166.8 million, or 1.05 percent of net sales, in the prior-year period. The company recorded net income attributable to shareholders of Tech Data Corporation of $136.9 million, or $2.76 per diluted share, for the nine-month period ended October 31, 2010. This compared to net income attributable to shareholders of Tech Data Corporation of $110.1 million, or $2.17 per diluted share, in the prior-year period.

Business Outlook

"Looking ahead to the fourth quarter, we expect solid demand trends to continue and sales could exceed historical seasonal patterns, primarily in the Americas, resulting in year-over-year, as well as sequential sales growth in both regions, on a local currency basis. We will maintain our focus on responsible growth, while closely managing costs and working capital, as we continue to make progress on achieving our long-term financial goals," said Dutkowsky.

Webcast Details

Tech Data will conduct a conference call today at 9 a.m. ET to discuss information included in this news release and related matters. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be accessed at www.techdata.com (Investor Relations section). The webcast will be available for replay until 5:00 p.m. ET on Monday, November 29, 2010.

Forward-Looking Statements

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: downturns in the global economy; intense competition both domestically and internationally; narrow profit margins; dependence on information systems; potential adverse effects of acquisitions; exposure to natural disasters, war and terrorism; dependence on independent shipping companies; the impact of increases in freight and handling fees charged to customers; potential impact of labor strikes; risk of declines in inventory value; product supply and availability; changes in vendor terms and conditions; loss of significant customers; credit exposure due to the deterioration in the financial condition of our customers; the inability to obtain required capital; fluctuations in interest rates; foreign currency exchange risks and exposure to foreign markets; the impact of changes in income tax and other regulatory legislation; changes in accounting rules; and the volatility of common stock. 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 22, 2010. 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 distributors of technology products from leading IT hardware and software producers. Tech Data serves more than 125,000 IT solution providers in over 100 countries. Every day, these value-added resellers depend on Tech Data to cost-effectively support the technology needs of end users, including small and medium businesses (SMB), large enterprises and government agencies. Ranked 109th on the FORTUNE 500(R), Tech Data generated $22.1 billion in net sales for its fiscal year ended January 31, 2010. To learn more, visit www.techdata.com.

  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,
                                    ----------------------  ------------------------
                                       2010      2009(1)       2010        2009(1)
                                                   (As                       (As
                                                 Adjusted)                Adjusted)
  Net sales                         $6,163,762  $5,642,046  $17,258,778  $15,816,736

  Cost of products sold              5,839,560   5,346,434   16,354,236   14,990,835
                                    ----------  ----------  -----------  -----------
  Gross profit                         324,202     295,612      904,542      825,901
  Selling, general and
   administrative expenses             243,230     230,542      688,326      659,147
                                    ----------  ----------  -----------  -----------
  Operating income                      80,972      65,070      216,216      166,754
  Interest expense                       7,739       6,673       21,656       21,698

  Other expense (income), net              122       (860)        (248)      (2,732)
                                    ----------  ----------  -----------  -----------
  Income before income taxes            73,111      59,257      194,808      147,788

  Provision for income taxes            21,948      16,148       57,169       38,076
                                    ----------  ----------  -----------  -----------
  Consolidated net income               51,163      43,109      137,639      109,712
  Net (income) loss attributable
   to noncontrolling interest            (705)          33        (693)          352
                                    ----------  ----------  -----------  -----------
  Net income attributable to
   shareholders of Tech Data
   Corporation                         $50,458     $43,142     $136,946     $110,064
                                    ==========  ==========  ===========  ===========

  Net income per common share attributable to shareholders
   of Tech
  Data Corporation:
   Basic                                 $1.08        $.85        $2.78        $2.19
   Diluted                               $1.07        $.84        $2.76        $2.17
  Weighted average common shares
   outstanding:
   Basic                                46,672      50,556       49,234       50,322
   Diluted                              47,069      51,158       49,684       50,622

  (1) Effective February 1, 2010, Tech Data Corporation reclassified certain foreign
   currency exchange gains or losses within the accompanying Consolidated Statement
   of Operations to "Cost of products sold." Historically, these gains and losses
   were reported as a separate component of Other (income) expense titled "Net
   foreign currency exchange loss (gain)." Management believes this revised
   presentation is more consistent with how the company manages and reports the
   underlying transactions giving rise to these foreign currency exchange gains and
   losses.

  TECH DATA CORPORATION AND SUBSIDIARIES
  CONSOLIDATED BALANCE SHEET
  (In thousands)

                                               January
                                 October 31,     31,
                                    2010       2010(1)

  ASSETS                         (Unaudited)
                                 -----------  ----------
  Current assets:
   Cash and cash equivalents        $706,541  $1,116,579
   Accounts receivable, net        2,976,372   2,593,919
   Inventories                     2,165,473   1,704,658
   Prepaid expenses and other
    assets                           191,249     156,448
                                 -----------  ----------
    Total current assets           6,039,635   5,571,604
  Property and equipment, net         92,060      90,634

  Other assets, net                  282,317     167,881
                                 -----------  ----------

    Total assets                  $6,414,012  $5,830,119
                                 ===========  ==========

  LIABILITIES AND EQUITY
  Current liabilities:
   Revolving credit loans           $130,603     $65,384
   Accounts payable                3,202,836   2,799,949
   Accrued expenses and other
    liabilities                      528,564     455,841
                                 -----------  ----------
    Total current liabilities      3,862,003   3,321,174
  Long-term debt, net                392,357     338,157

  Other long-term liabilities         93,377      76,255
                                 -----------  ----------

    Total liabilities              4,347,737   3,735,586
                                 -----------  ----------
    Equity attributable to
     shareholders of Tech Data
     Corporation                   2,046,018   2,088,895

    Noncontrolling interest           20,257       5,638
                                 -----------  ----------

    Total equity                   2,066,275   2,094,533
                                 -----------  ----------
    Total liabilities and
     equity                       $6,414,012  $5,830,119
                                 ===========  ==========

  (1) Certain reclassifications have been made to the
   January 31, 2010 consolidated balance sheet to
   conform to the October 31, 2010, consolidated balance
   sheet presentation. Such reclassifications had no
   effect on previously reported equity.

  TECH DATA CORPORATION AND SUBSIDIARIES
  SUPPLEMENTARY INFORMATION (UNAUDITED)
  (In thousands)

                                   Three months ended    Three months ended

                                    October 31, 2010     October 31, 2009(1)
                                  --------------------  --------------------

                                  Operating  Operating  Operating  Operating
  Operating Income by Segment      Income     Margin     Income     Margin
                                  ---------  ---------  ---------  ---------
  Americas                          $46,148      1.71%    $39,414      1.60%
  Europe                             37,110      1.07%     28,671       .90%

  Stock-based compensation          (2,286)               (3,015)
                                  ---------     (.04)%  ---------     (.05)%

  Worldwide total                   $80,972               $65,070
                                  =========      1.31%  =========      1.15%

                                   Nine months ended     Nine months ended

                                    October 31, 2010     October 31, 2009(1)
                                  --------------------  --------------------

                                  Operating  Operating  Operating  Operating
  Operating Income by Segment      Income     Margin     Income     Margin
                                  ---------  ---------  ---------  ---------
  Americas                         $135,018      1.74%   $100,181      1.42%
  Europe                             88,593       .93%     75,219       .86%

  Stock-based compensation          (7,395)               (8,646)
                                  ---------     (.04)%  ---------     (.05)%

  Worldwide total                  $216,216              $166,754
                                  =========      1.25%  =========      1.05%

  (1) Effective February 1, 2010, Tech Data Corporation reclassified certain
   foreign currency exchange gains or losses within the accompanying
   Consolidated Statement of Operations to "Cost of products sold."
   Historically, these gains and losses were reported as a separate
   component of Other (income) expense titled "Net foreign currency exchange
   loss (gain)." Management believes this revised presentation is more
   consistent with how the company manages and reports the underlying
   transactions giving rise to these foreign currency exchange gains and
   losses.

This news release was distributed by GlobeNewswire, www.globenewswire.com

SOURCE: Tech Data Corporation

CONTACT: Tech Data Corporation
Jeffery P. Howells, Executive Vice President and Chief Financial Officer
727-538-7825
jeff.howells@techdata.com

Arleen Quinones, Director, Investor Relations and Shareholder Services
727-532-8866
arleen.quinones@techdata.com

"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding Tech Data Corporation's business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.