Tech Data Annual Report 2000

← All annual reports

FY2000 Annual Report · Tech Data

Loading PDF…

2000 SUMMARY
2000 SUMMARY
Annual Report
Annual Report

Year Ended January 31, 2000
Year Ended January 31, 2000

Technology Products and Logistics Services

Financial Highlights

TECH DATA CORPORATION AND SUBSIDIARIES

Net Sales

$ billions

$20

Net Income *

$ millions

$150

$ millions

$1,200

Shareholders’ Equity

Diluted Earnings Per Share *

$2.50

4,598
16,992
7,056
11,529

120

1,000

800

600

400

200

2.00

1.50

1.00

.50

'96

'97

'98

'99

'00

'96

'97

'98

'99

'00

'96

'97

'98

'99

'00

'96

'97

'98

'99

'00

For the year ended January 31:

1996

1997

1998

1999 *

2000

(In thousands,except per-share data)

4-Year
Compound
Growth
Rate

Net sales . . . . . . . . . . . . . . . . . . . . $ 3,086,620

$ 4,598,941

$ 7,056,619

$11,528,999

$16,991,750

53%

Operating income . . . . . . . . . . . . .

55,604

115,011

172,638

230,304

271,872

49%

Net income . . . . . . . . . . . . . . . . . .

21,541

56,973

89,485

119,375

127,501

56%

Net income per diluted share . . . . . .

.56

1.35

1.92

2.29

2.34

43%

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

At year end:

(In thousands)

1996

1997

1998

1999

2000

Working capital . . . . . . . . . . . . . . . $

201,704

351,993

537,381

725,057

795,589

Total assets . . . . . . . . . . . . . . . . . .

1,043,879

1,545,294

2,185,383

3,844,987

4,123,818

Total shareholders’ equity . . . . . . .

285,698

438,381

702,588

967,291

1,013,695

* Amounts exclude the $9.6 million after-tax gain on the sale of Macrotron AG in ﬁscal year 1999.Including the gain,ﬁscal 1999 net
income was $129.0 million,or $2.47 per diluted share.

This Summary Annual Report provides basic ﬁnancial information on Tech Data Corporation in a condensed format.
Comprehensive ﬁnancial reports are included in Tech Data Corporation’s Annual Report on Form 10-K. Please refer to this document
for a comprehensive discussion of the Company’s performance. (http://www.techdata.com/content/vistor/investrel/42989.pdf)

This Summary Annual Report contains forward-looking statements, which contain risks and uncertainties that could affect expected
results. Please refer to the Company’s Form 10-K for a list of such risks and uncertainties.

Summary Annual Report

ech Data Corporation’s

market position has never

been stronger. For the ﬁscal

volume doubled to an annualized

rate of $4 billion in the fourth

quarter. Such progress earned

Tech Data 10th place on the

Internet 500 published by

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

year ended January 31, 2000,

Interactive Week magazine in

we generated record sales

and unparalleled proﬁtability

within the industry. Net

sales for the year grew to

November 1999, ahead of many

popular dot-com destinations.

Inside the Internet

Tech Data’s Internet-centric business

model takes on many forms. Our

fast-growing sales over the Web are

$17 billion while net income

just part of the picture. We are helping

exceeded $127 million.

To our shareholders:

hundreds of traditional technology

resellers and retailers establish their

own business-to-business Internet-

selling models, including the

development of seamless links with

These solid results came at a

our systems to facilitate information

time of unprecedented price

sharing and order processing.

competition and fast-changing

Promising new e-tailers are also

market dynamics. Our ability to

relying on Tech Data for the physical

navigate through the challenges

infrastructure and services they need

and significantly grow market

to operate. All customer segments

share reaffirms Tech Data’s edge

are turning to us for access to the

in management, business strategy,

full line of products and custom

financial controls and overall

configuration services they need

execution. We performed

to build comprehensive Internet

exceptionally well in all areas

computing solutions.

Rising on the FORTUNE 500

' FY 2000 – 102nd

' FY 1999 – 145th

2000

Highest 10-year Return to Investors

of critical importance.

' FY 2000 – 26th

' FY 1999 –

47th

In addition to leveraging the Internet

Electronic commerce advances

in every way possible, we continue to

were among the most exciting

take other steps to increase efﬁciency

highlights last year as our EC

and further reduce selling, general

and administrative expenses. For the

most recent ﬁscal year, we drove SG&A

to a record low of 3.89% of sales while

constantly improving customer service.

The CompTIA industry organization

acknowledged our stellar performance

by presenting its 1999 Award of

Excellence to Tech Data for electronic

commerce innovation and superior

service delivery. In February 2000,

FORTUNE magazine declared

Tech Data as one of America’s Most

Admired Companies, ahead of all IT

industry competitors in the wholesalers

category. Many of our vendor partners

also formally recognized Tech Data with

awards of distinction, underscoring our

instrumental role in their success.

Our core competencies are taking on

even greater signiﬁcance today as

vendors streamline their supply chain

in favor of the largest and most

ﬁnancially sound logistics partners.

Although this trend is still in its early

stages, we are already reaping its

beneﬁts through stronger alliances

with 3Com, Adaptec, Apple, Cisco,

Compaq, Computer Associates,

Hewlett-Packard, IBM, Intel, Iomega,

NEC, Novell, Panasonic, Seagate and

many others. With most major vendors,

Tech Data continues to gain share

and drive incremental sales growth.

Letter to Shareholders

Summary Annual Report

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

‘Emerging power in the

direct shipping while giving end

outsourcing market’

users unsurpassed service and

Technology vendors and resellers

support through their preferred

both view Tech Data as an ideal

solution providers.

Tech Data continues

to expand its

international presence.

The 1999 acquisition

service provider to meet many

of Globelle Corporation

nearly doubled our

sales in Canada,

and we now have

operations in 30

countries worldwide.

types of outsourcing needs. Instead

Growing global success

of performing certain functions

Tech Data’s international business

in-house, they often ﬁnd that we

has grown from 14% of sales in

can do them better, faster and

ﬁscal 1996 to approximately 50%

more economically. In fact, our

today. Our U.S. business remained

expertise in product procurement,

strong throughout the past year,

conﬁguration and assembly,

growing by 32%, while we advanced

logistics management and other

to the No. 1 position in Europe with

services prompted VARBusiness

annual sales in excess of $7.5 billion.

magazine to conclude: “Forget what

Our Latin American operations faced

Our approach delivers the efﬁciency of direct shipping while giving end users
unsurpassed service and support through their preferred solution providers.

you know about Tech Data as a

difﬁcult market conditions earlier in

distributor; it is an emerging power

the year but ended ﬁscal 2000 with

in the outsourcing market.”

excellent sales and proﬁtability,

poised for future growth in this key

The outsourcing trend is pervasive

geographic region. Tech Data

among both small and large IT

Canada greatly strengthened its

resellers. Rather than touch product

market position through the May

prior to end-user delivery — adding

1999 acquisition and successful

costs and risks associated with

integration of Globelle Corporation,

handling — they frequently rely on

nearly doubling our sales in this part

our Private Label DeliverySM service

of the world while expanding our

so product can ship directly to their

Middle Eastern presence through

customers while they fully retain

Globelle’s subsidiary in Israel.

their own brand identity via custom

labels and packing documents. Our

Tech Data’s management team also

approach delivers the efﬁciency of

continued to live up to its reputation

Letter to Shareholders

as the best in the industry. In

people, so this competitive

commitment to ensure Tech Data’s

January 2000, Néstor Cano,

advantage becomes stronger

leadership in delivering the IT

Tech Data’s executive vice president

year after year.

products, logistics management

of U.S. sales and marketing, was

and other value-added services

promoted to president of the

A solid investment

that make today’s computing

Americas responsible for U.S.,

This past ﬁscal year marked our

solutions possible.

Canadian and Latin American

25th anniversary as one of the

operations. Before joining

most successful companies in the

We are excited about the future

Tech Data’s headquarters team in

technology business. We also

and the prospects for providing

March 1999, his diverse industry

considered the year a pivotal

even greater value to our

experience included 10 years with

turning point for the industry.

business partners and

the company’s Computer 2000

shareholders. Thank you for your

group in Europe. As managing

Weaker players found it virtually

ongoing support and conﬁdence

director overseeing operations in

impossible to survive amidst the

in Tech Data as a solid investment

Spain and Portugal, Néstor

heated price competition, tighter

in the e-commerce age. n

developed an extremely efﬁcient

vendor terms and conditions as

and highly proﬁtable organization

well as reduced rebate

that outpaced competitors in

opportunities. All of this was

these markets.

tough medicine for our

marketplace, and we are still in

In August, we appointed Karl Pohler

the early stages of a shakeout

Steven A. Raymund
Chairman of the Board of Directors
and Chief Executive Ofﬁcer

president of our European

that we expect to reshape the

May 5, 2000

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

operations. His outstanding

competitive landscape in our

career in the IT market began in

favor. From just about any

1980 with Digital Equipment

perspective, this ﬁscal year looks

Corporation’s German subsidiary

much brighter than the last.

and included executive

management positions with Sony

Throughout our history, we have

as well as Computer 2000.

successfully responded to the

changes and challenges of

Across all operations, Tech Data

doing business in one of the

has the right management depth

world’s most demanding and

and personnel to reach its

remarkably complex industries.

aggressive business goals. A

Our nearly 10,000 associates

variety of programs are regularly

worldwide give us the talent,

enhanced to train and reward our

experience and steadfast

Summary Annual Report

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

owadays anyone can publish

a Web site. Kids are doing

it all the time. Building Internet

solutions is a different story. It’s a

story we’re living and developing

every day at Tech Data.

Tech Data Web sites generate millions

of page hits daily throughout the world.

Hits that help IT resellers build

technological advantage for today’s

most successful businesses and those

trying to get ahead. If there’s a way to

The Realtime Connection
The Realtime Connection to a Virtual World

provide a service better, faster or more

cost-effectively online, we’re either

doing it or making sure we can in

the near future.

We’re delivering real value, real

results and real benefit online.

B2C and B2B resellers relied

increasingly on our infrastructure,

product offering and services to

conduct business last year,

generating more than $500 million

in revenue at Tech Data — double

the amount from the previous year.

Our e-channels growth

Transaction volume represents only

leaders and FedEx to form

expectations are even higher this

one important and recurring chapter

Viacore, an e-business hub

year as more and more Internet

in our e-volution. With just a few

that will enable fast, efﬁcient

resellers and our vendors realize

mouse clicks, for example,

deployment of RosettaNet

that their virtual-world models

customers can access Tech Data’s

standards to all trading partners.

require far more physical

comprehensive product catalog,

These and other initiatives,

bandwidth than they can

review detailed technical

including new Web storefront

economically build. For many,

speciﬁcations, check current

solutions we’re providing to

the decision is already clear;

pricing, conﬁgure systems, see

resellers, will make electronic

Tech Data’s vast network of

realtime product availability, create

commerce more pervasive and

fulﬁllment centers, just-in-time

formal quotes, submit purchase

as cost-effective as possible.

delivery capability and realtime

orders, track shipments and review

connections are what’s needed to

order history. And the story keeps

Within the business-to-business

fully prosper in the IT marketplace.

getting better.

e-commerce setting, Forrester

If there’s a way to provide a service better, faster or more cost-effectively online,
we’re either doing it or making sure we can in the near future.

One $5 million day at a time

Not only are we introducing greater

Research, Inc. estimates that

Tech Data’s own Web business

functionality and many additional

market sales will reach $2.7 trillion

is an equally — if not more —

features in response to customer

by 2004. Tech Data is already

compelling story compared to our

demand, we’re breaking new

a central force in this rapidly

success with e-tailers and other

ground by embracing and helping

unfolding epic adventure and is

types of Internet resellers. Last

to shape e-commerce standards

certain to be among the leading

year we crossed the $5 million

for the IT community. In addition to

authors of the digital economy’s

mark in daily Web sales to

participating in the industry’s

future. n

resellers, and annualized

RosettaNet consortium, formed for

electronic commerce revenue

this purpose, we recently joined

reached $4 billion at the end of

with several other IT logistics

last year, including electronic

data interchange (EDI) and other

EC capabilities.

1999 Awards and Honors

• 10th in the nation on Interactive Week

magazine’s Internet 500

• Dow Jones Business Directory Select Site
• 33rd in the nation, Business 2.0 magazine’s

“Hottest Companies on the Net”

Summary Annual Report

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

ech Data’s global breadth

allows tremendous economies

of scale. With a physical presence

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

in 30 countries worldwide, we’re

virtually everywhere our partners

need to be. Whether our resellers

need servers in São Paulo,

peripherals in Prague or chipsets

in Chattanooga, Tech Data and its

subsidiaries provide the product

assortment and infrastructure that

keep the world of technology

moving at the speed of light.

Across the
Across the Globe

In today’s economy, globalization

spells opportunity. Our vendor and

reseller partners want to do business

with international leaders, and large

integrators are increasingly seeking

global logistics support. Tech Data

beneﬁts from these trends as well as

the diversiﬁed business proﬁle we have

established. Our international sales

have soared from 14% of sales in ﬁscal

1996 to approximately 50% last year.

Fluent in all ‘languages’

In Europe alone, 225 languages are

spoken. Across the globe, more

than 125 computer programming

languages are employed. From

throughout the world. Tech Data is

Catalan to C++, German to

translating these initiatives and

JavaScript, Portuguese to

activities into a customer-centric

Tech Data’s International Sales Growth

PostScript, Tech Data is fluent.

corporate culture that unites our

International Sales 14%

U.S. Sales 86%

Our nearly 10,000 associates

more vital force in the expanding

people and operations as an even

worldwide do more than just

IT universe.

speak the language. By

successfully sharing best

Year after year, our growing

practices across our global

geographic presence and high-

enterprise, we leverage IT

caliber people combine to give

FY 1996 – $3.1 billion

International Sales 50%

U.S. Sales 50%

applications, merge global

Tech Data and its customers a

FY 2000 – $17.0 billion

experience and attract top

leading edge. Whether our trading

international talent. Ours is a

partners transact business using

Year after year, our growing geographic presence and high-caliber people
combine to give Tech Data and its customers a leading edge.

world-class organization

the euro, real, peso, dollar or other

comprised of the best people

currency, we consistently deliver

in the industry.

the best overall value. n

Global reach, local expertise

Through vast global reach as well

as local market expertise and

specialization, Tech Data provides

its business partners with

the best of all worlds. We

recognize that every market is

different, and by learning from

each other in all disciplines, we can

provide unparalleled services

tailored to meet regional as well as

in-country requirements

Tech Data placed 33rd on Business Week’s

Info Tech 100 ranking of the world’s best

technology companies.

Summary Annual Report

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

oday’s computing solutions

require a diverse mix of

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

hardware and software.

The resellers who put it all

together rely on Tech Data to

have what they need when

they need it.

As a leading provider of IT

solutions, we offer customers the

convenience of choosing from a

comprehensive selection of more

than 75,000 products. We also

The Source for Multivendor Solutions

deliver extensive assistance along

the way to help ensure they make

the best decisions. It’s one of the

key reasons resellers continually

view Tech Data as their preferred

product source and business

partner. Whether talking to one

of our highly trained sales or tech

support specialists or accessing

detailed product specifications

and other information via the Web,

resellers know they receive

unmatched decision support

from Tech Data.

Making a good thing better

marketplace requirements

How are we making this competitive

while giving Tech Data

advantage even stronger? By

unprecedented supply-chain

forming highly specialized

management capabilities.

dedicated business units focused

on today’s fastest-growing and

most lucrative technology

The answer to today’s

networking questions

segments. A number of these are

It’s imperative that resellers

already in place, producing solid

and vendors also do

results and even more promising

business with a supplier

futures. Examples include computer

that understands the intricacies

Tech Data’s Focused

Business Units

include dedicated

resources to address

today’s fastest-

growing – and most

lucrative –

technology market

opportunities.

telephony, storage area networks,

and compatibility issues

opportunities. Tech Data is that

thin-client/server computing,

associated with building complex

company and more. n

supplies and accessories, digital

networked solutions.

As a leading provider of IT solutions, we offer customers the convenience of
choosing from a comprehensive selection of more than 75,000 products.

imaging, CAD/graphics, Apple

This too is part of the Tech Data

technology and enterprise solutions.

heritage, and a legacy we will

leverage and strengthen

Comprised of cross-functional

throughout the new millennium.

teams from sales, product

marketing, education, marketing

Considering the speed of

services, credit, technical

technological change today, it

services and other departments,

takes a special company

these focused organizations

to keep pace. One

optimize business development

that understands

support for both customers and

shifting demand

vendors. The information systems

and emerging

enhancements we’re implementing

marketplace

this year will mean even greater

responsiveness to specialized

Summary Annual Report

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

uccess in business is often

deﬁned largely by your choice

of service providers. That simple

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

truth is particularly critical today.

We operate in a world where core

competencies are treasured, and

anything that may detract a company’s

focus or resources from them is a

prime candidate for outsourcing.

Companies are reevaluating virtually

everything they do to better assess

their real value-add and competitive

advantage.

Custom Services for an Outsourcing World
Custom Services

Can someone else do it better, faster,

cheaper? Is it possible to expand into

new service offerings without increasing

expenses? As IT resellers, manufacturers

and publishers worldwide ask

themselves these and other mission-

critical questions, they are increasingly

turning to Tech Data for answers.

Over the past 25 years we have been

developing a broad range of services

to address evolving marketplace

needs. For thousands of companies,

Tech Data’s infrastructure already

comprises much of their back ofﬁce.

This is just a glimpse

behind the scenes

at Tech Data — and at

the future of our growing

value-added services role

in the IT marketplace. n

Our business philosophy extends

beyond offering fast delivery of a

full line of competitively priced

products. Tech Data puts focus on

the entire procurement process:

product selection, order placement,

inventory management, logistics

assembly often takes

and ﬁnancial services. This customer-

place at one of our

centric approach ensures that IT

TDEnsembleSM locations housed

resellers receive close attention to

within our fulfillment centers.

their specialized needs. With the full

support of our vendor partners,

Tech Data credit and financing

Tech Data provides a total commitment

solutions typically make the sale

to reseller business needs.

possible. If a technical issue

For thousands of companies, Tech Data’s infrastructure already comprises much of
their back ofﬁce. Many more are seeking ways to further leverage our capabilities.

Invisible yet indispensable

arises, we do whatever it takes

Tech Data’s service offerings are

to arm our resellers with the

typically provided in a manner

answers. Our education services

transparent to end users. For

can be marketed directly by our

example, even product

customers, and we’ll teach the

containers can be “Private

classes on their

Labeled” with reseller logos and

behalf at our

shipped directly to end-user

own training

sites. Packing documents are

centers or

also customized based on

end-user sites.

reseller specifications. Our

Comprehensive business-

logistics services ensure the

building programs also help

right products make it to the right

vendors and a growing number

locations — on time, anywhere.

of resellers communicate their

Systems configuration and

messages to targeted markets.

Summary Annual Report

Tech Data Services

• Conﬁguration and Assembly

• Credit and Financial

• Custom Shipping

• E-business Solutions

• Enterprise Support

• Logistics Management

• Marketing Programs

• Technical Services

• Training and Education

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

ome traditions should never

change. Many get better

with time. Tech Data began

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

providing credit services to

its customers 25 years ago,

and the offering has evolved

into a distinct marketplace

advantage for the company.

The vast majority of customer

purchases are made possible

through net terms or via one

of our numerous alternative

ﬁnancing options.

The The Financial Edge

Working with global ﬁnancial

service providers, Tech Data has

developed some of the industry’s

most creative and cost-effective

credit solutions. New and expanded

offerings include OneLeaseSM, our

flexible end-user

leasing program,

a quick-credit

program, and a broad range of

Dun and Bradstreet reporting

services that help resellers grow their

businesses faster and more prudently

than ever before.

Tech Data’s credit and ﬁnancing

solutions also yield tremendous

beneﬁt for the company’s vendor

partners, who typically do not have

the desire or capability to address

Making it easier for resellers to buy from Tech Data:

• Inventory/Accounts Receivable Financing
• Electronic Funds Transfer (EFT)
• Cross-corporate Guarantees
• Assignment of Proceeds
• Joint Purchase Orders
• Sight Draft and Standby Letters of Credit
• OneLeaseSM

thousands of resellers’ ﬁnancial

business development seminars

are priced

requirements worldwide. We provided

have actually helped them turn

appropriately

more than $1.9 billion in credit to

around negative ﬁscal trends and

for each

customers at January 31, 2000,

strengthen ﬁnancial performance.

customer to mitigate risk, maximize

while reducing bad debt expense

to less than .25% of sales.

Walking the walk

sales and underscore the

importance of process efﬁciency.

The same business management

Besides providing the credit services

principles we cover in our seminars

Tech Data’s ﬁnancial management

resellers demand, Tech Data also

are employed internally at Tech Data.

practices build from the bottom line

Tech Data’s ﬁnancial management practices build from the bottom line up as we continually
invest in the company’s future to meet the expectations of all business partners.

offers targeted seminars and

Activity-based costing (ABC), for

up as we continually invest in the

programs to help them become

example, ensures that products

company’s future to meet the

better informed, optimize short-term

and services

expectations of all business partners.

T
e
c
h
D
a
t
a
C
o
r
p
o
r
a
t
i
o
n

w
w
w

.
t
e
c
h
d
a
t
a
.
c
o
m

It’s another tradition that enhances

our value to customers, vendors,

employees and shareholders. A

tradition that will always be a

Tech Data hallmark of excellence. n

cash ﬂow and improve overall

ﬁnancial management.

Upstart entrepreneurs with

exceptional technical

talents and ideas often

need assistance getting their

businesses started. By

helping them learn the

fundamentals, Tech Data

brings new depth and loyalty to

its reseller partnerships. Many

customers comment about how our

Summary Annual Report

n
o
i
t
a
r
o
p
r
o
C
a
t
a
D
h
c
e
T

m
o
c
.
a
t
a
d
h
c
e
t
.

w
w
w

Tech Data Corporation

BOARD OF DIRECTORS

Steven A. Raymund

Chairman of the Board of Directors and Chief Executive Ofﬁcer, Tech Data Corporation

Jeffery P. Howells

Executive Vice President and Chief Financial Ofﬁcer, Tech Data Corporation

Charles E. Adair

Partner, Cordova Ventures

Maximilian Ardelt

Member of the Board of Management, VIAG, AG

James M. Cracchiolo

President, American Express Travel Related Services International

Daniel M. Doyle

Chairman and Chief Executive Ofﬁcer, BrainBuzz.com, Inc.

Kathy Misunas

President and Chief Executive Ofﬁcer, brandwise, LLC

Edward C. Raymund

Chairman Emeritus

David M. Upton

Professor of Business Administration, Harvard Business School

John Y. Williams

Managing Director, Equity-South Advisors, LLC

OFFICERS

Steven A. Raymund

Chairman of the Board of Directors and Chief Executive Ofﬁcer

Néstor Cano

Karl Pohler

President of the Americas

President of Europe

Jeffery P. Howells

Executive Vice President and Chief Financial Ofﬁcer

H. John Lochow

Executive Vice President of Information Technology and Logistics and Chief Information Ofﬁcer

Timothy J. Curran

Senior Vice President of U.S. Sales

Charles V. Dannewitz

Senior Vice President of Taxes

Lawrence W. Hamilton

Senior Vice President of Human Resources

Elio Levy

Senior Vice President of U.S. Marketing

Yuda Saydun

Senior Vice President, President of Latin America

William R. Todd, Jr.

Senior Vice President of U.S. Distribution, Conﬁguration and Assembly Services

Joseph B. Trepani

Senior Vice President and Corporate Controller

Arthur W. Singleton

Corporate Vice President, Treasurer and Secretary

David R. Vetter

Corporate Vice President, General Counsel

Patrick O. Connelly

Vice President of Credit Services

HEADQUARTERS

Tech Data Corporation

5350 Tech Data Drive • Clearwater, FL 33760 • 727-539-7429

PRINCIPAL SUBSIDIARIES

Computer 2000 AG

Wolfratshauser, Strasse 84 • D-81379 Munich • Germany

Tech Data Canada, Inc.

6895 Columbus Road • Mississauga, Ontario L5T 2G9 • Canada

Tech Data Latin America, Inc. 8501 N.W. 17th Street • Suite 101 • Miami, FL 33126

Tech Data Education, Inc.

5350 Tech Data Drive • Clearwater, FL 33760

Tech Data Finance SPV, Inc. Suite 295 • 1655 North Main Street • Walnut Creek, CA 94596

Tech Data Product
Management, Inc.

5350 Tech Data Drive • Clearwater, FL 33760

Summary Annual Report

ANNUAL MEETING
The annual meeting of shareholders of the Company
will be held at 4:30 p.m. on Tuesday, June 20, 2000,
at Tech Data’s headquarters:
5350 Tech Data Drive; Clearwater, FL 33760;
727-539-7429.

INVESTOR RELATIONS
Tech Data Corporation welcomes inquiries from its
shareholders and other interested investors. For further
information on the activities of the Company, additional
copies of this report, or other ﬁnancial information,
please contact our Investor Relations department
at 800-237-8931, ext. 75855, or through e-mail at
ir@techdata.com. Additionally, information is available
through the Company’s World Wide Web site
at www.techdata.com. Quarterly earnings information
is available through the Company’s fax-on-demand
service by calling 800-758-5804, ext. 841125.

TRANSFER AGENT
Communications regarding lost stock certiﬁcates and
address changes should be directed to our transfer
agent, ChaseMellon Shareholder Services.

ChaseMellon Shareholder Services
85 Challenger Road, Overpeck Centre
Ridgeﬁeld Park, NJ 07660
800-756-3353

SECURITIES COUNSEL
Schiﬁno & Fleischer, P.A., Tampa, FL

INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, Tampa, FL

STOCK LISTING
The Company’s common stock is traded on The
Nasdaq Stock Market under the symbol TECD.

www.techdata.com

TECH DATA CORPORATION

5350 Tech Data Drive

Clearwater, Florida 33760

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

(Mark One)

FORM 10-K

H ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the ﬁscal year ended January 31, 2000

OR
h TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

For the transition period from

Commission File Number 0-14625
TECH DATA CORPORATION
(Exact name of Registrant as speciﬁed in its charter)

Florida
(State or other jurisdiction
of incorporation or organization)

5350 Tech Data Drive
Clearwater, Florida
(Address of principal executive ofﬁces)

59-1578329
(I.R.S. Employer
Identiﬁcation Number)

33760
(Zip Code)

(Registrant’s Telephone Number, including Area Code): (727) 539-7429

Securities registered pursuant to Section 12(g) of the Act:
Common stock, par value $.0015 per share

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 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 H No h

Indicate by check mark if disclosure of delinquent ﬁlers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained to the best of registrant’s knowledge, in deﬁnitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. H

Aggregate market value of the voting stock held by non-affiliates of the registrant as of April 28, 2000:

$2,063,000,000

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest

practicable date.

Common stock, par value $.0015 per share

52,945,898

Class

Outstanding at April 28, 2000

DOCUMENTS INCORPORATED BY REFERENCE

The registrant’s Proxy Statement for use at the Annual Meeting of Shareholders on June 20, 2000 is

incorporated by reference in Part III of this Form 10-K to the extent stated herein.

PART I

ITEM 1. Business

Overview

Tech Data Corporation (‘‘Tech Data’’ or the ‘‘Company’’) was incorporated in 1974 to market data
processing supplies such as tape, disk packs, and custom and stock tab forms for mini and mainframe
computers directly to end users. In 1984, the Company began marketing certain of its products to the
newly emerging market of microcomputer dealers, broadened its product line to include hardware
products, and withdrew entirely from end-user sales completing its transition to a wholesale distributor.
The Company has since continually expanded its product lines, customer base and geographical
presence.

On May 31, 1989,

through the acquisition of a
distributor subsequently named Tech Data Canada Inc. (‘‘Tech Data Canada’’). Tech Data Canada
serves customers in all Canadian provinces.

the Company entered the Canadian market

On March 24, 1994, the Company completed the non-cash exchange of 1,144,000 shares of its
common stock for all of the outstanding capital stock of Softmart International, S.A. (subsequently
named Tech Data France, SNC) (‘‘Tech Data France’’), a privately-held distributor of personal
computer products based in Paris, France.

To complement its Miami-based Latin American export business, the Company opened a 33,000

square-foot sales office and distribution center near Sa˜ o Paulo, Brazil in February 1997.

Tech Data expanded its European presence by acquiring a controlling interest in Macrotron AG
(‘‘Macrotron’’), a leading publicly-held distributor of personal computer products based in Munich,
Germany, on July 1, 1997. Macrotron’s product line included such leading vendors as 3Com, Canon,
Compaq, Corel, Epson, Hewlett-Packard, IBM, Intel, Microsoft, Sony and Toshiba. (See Note 2 of
Notes to Consolidated Financial Statements.)

Approximately one year later, in July 1998, Tech Data completed the acquisition of 83% of the
voting common stock of Computer 2000 AG (‘‘Computer 2000’’), Europe’s leading technology products
distributor (see Note 2 of Notes to Consolidated Financial Statements). With a presence in signiﬁcant
geographic markets in Europe, the Middle East and Latin America, the purchase of Computer 2000
expanded Tech Data’s presence into over 30 countries worldwide. As a result of this initial purchase,
subsequent tender offer, open market purchases and private purchase transactions, the Company, in
effect, currently owns approximately 99.8% of Computer 2000’s outstanding stock. Computer 2000’s
product line includes such leading vendors as Apple, Cisco, Compaq, Epson, Hewlett-Packard, IBM,
Intel, Microsoft, 3Com, and Toshiba.

With technology reseller customers in Germany, Switzerland and Austria, Computer 2000 had
signiﬁcant market overlap with Macrotron. As a result of this overlap, as well as the challenge of
integrating two large competitors in the Germanic market, Tech Data chose to sell
its controlling
interest in Macrotron effective on July 1, 1998. Tech Data owned 99% and 91% of Macrotron’s
outstanding common and preferred stock, respectively, at the time of the sale and recorded a $15.7
million pre-tax gain on the transaction (see Note 2 of Notes to Consolidated Financial Statements).

In May 1999, the Company acquired Globelle Corporation, a leading publicly-held Canadian
distributor, which nearly doubled the Company’s Canadian business, adding additional critical mass
and a complementary product and geographic focus (see Note 2 of Notes to Consolidated Financial
Statements).

Tech Data is a leading provider of IT products, logistics management and other value-added
services, and is the second largest based on worldwide sales. The Company distributes
microcomputer hardware and software products to value-added resellers, corporate resellers, retailers,
direct marketers and Internet resellers. The Company and its subsidiaries distribute to more than 70
countries and serve over 100,000 resellers in the United States, Canada,
the Caribbean, Latin
America, Europe and the Middle East. The Company’s broad assortment of vendors and products
meets the customers’ need for a cost effective link to those vendors’ products offered through a single
source.

The Company provides its customers with leading products including systems, peripherals,
networking and software, which accounted for 27%, 44%, 15% and 14%, respectively, of sales in ﬁscal
2000. The Company offers products from manufacturers and publishers such as Apple, Cisco,
Compaq, Computer Associates, Creative Labs, Epson, Hewlett-Packard, IBM, Intel, Iomega, Microsoft,
Northern Telecom, Novell, Okidata, Quantum, Seagate, Sony, Symantec, 3Com, Toshiba, Viewsonic,
and Western Digital. The Company generally ships products the same day the orders are received
from regionally located distribution centers. The customers are provided with a high-level of service
through the Company’s pre- and post-sale technical support, electronic commerce tools (including
on-line order entry, product conﬁguration services and electronic data interchange (‘‘EDI’’) services),
customized shipping documents and ﬂexible ﬁnancing programs.

Industry

The wholesale distribution model, like that provided by the Company, has proven to be well-suited
for both manufacturers and publishers of microcomputer products (‘‘vendors’’) and resellers of those
products. The large number and diversity of resellers makes it cost efficient for vendors to rely on
wholesale distributors which can leverage distribution costs across multiple vendors who outsource a
portion of their distribution, credit, marketing and support services. Similarly, due to the large number of
vendors and products, resellers often cannot or choose not to establish direct purchasing relationships.
Instead, they rely on wholesale distributors, such as Tech Data, which can leverage purchasing costs
across multiple vendors to satisfy a signiﬁcant portion of their product procurement, delivery, ﬁnancing,
marketing and technical support needs.

The Company believes that the rates of growth of the wholesale distribution segment of the
microcomputer industry and the Company continue to outpace that of the microcomputer industry as a
whole for the following reasons. First, as a result of
the use of open systems and off-the-shelf
components, hardware and software products are increasingly viewed as commodities. The resulting
price competition coupled with rising selling costs and shorter product life cycles make it difficult for
manufacturers and publishers to efficiently sell directly to resellers or end-users and has prompted
them to rely on more cost-efficient methods of distribution. Second, resellers are increasingly relying on
wholesale distributors such as Tech Data for product availability and ﬂexible ﬁnancing alternatives
rather than stocking large inventories themselves and maintaining credit lines to ﬁnance working
capital needs. In addition, consolidation in the wholesale distribution industry continues as economies
of scale and access to ﬁnancial resources become more critical. Larger distributors, like the Company,
that have been able to utilize economies of scale to lower costs and pass on the savings to its
customers in the form of reduced prices have continued to take market share.

A number of emerging industry trends are providing new opportunities and challenges for Tech
Data. The advent of the direct sales model for system products and other industry developments has
led many manufacturers and distributors to reevaluate their business models. Leading systems
manufacturers are introducing new policies, processes, terms and conditions as part of their overall
effort to reduce costs and improve efficiency. Some manufacturers are moving toward ‘‘build-to-order’’

business models instead of the traditional ‘‘build-to-forecast’’ approach that requires forecasting market
demand and manufacturing a broad range of systems based on these projections. The success of this
new model will be driven by the extent to which reseller and manufacturer partners embrace the model
and choose to make changes to their traditional ways of doing business.

As resellers continue to seek ways to reduce costs and improve efficiencies, distributors are
responding with a variety of new value-added services. Tech Data’s ability to provide a ‘‘virtual
warehouse’’ of products for resellers means that they no longer need to hold inventory. Conﬁguration
and assembly services can be employed to customize systems. By the fourth quarter of ﬁscal 2000,
approximately 58% of the Company’s U.S. sales orders were drop-shipped directly to an end-user on
behalf of a reseller. The majority of these orders were fulﬁlled using the Company’s Private Label
Delivery service which provides for customized packaging with reseller
logos and marketing
messages. The emergence of the Internet, and consequently Internet resellers, has created one of the
industry’s fastest-growing business segments. Through its comprehensive service offerings,
the
Company provides its reseller and vendor partners with a variety of outsourced distribution and
logistics services.

The increasing utilization of electronic ordering and information delivery systems, including the
ability to transact business over the World Wide Web, has had and is expected to continue to have a
signiﬁcant impact on the cost efficiency of the wholesale distribution industry. Distributors, such as
Tech Data, with the ﬁnancial and technical resources to develop, implement and operate state-of-the-
art management information systems have been able to reduce both their customers’ and their own
transaction costs through more efficient purchasing and lower selling and delivery costs.

In summary, microcomputer distribution is experiencing rapid growth and consolidation, creating

an environment in which market share gains and the resulting cost efficiencies are critical.

Business Strategy

Tech Data, as the world’s second largest distributor of microcomputer products, believes that its
infrastructure and the size of its operation position it to gain share in its current markets as well as
continue its expansion into new geographic markets. The Company’s size and performance have
allowed it to make signiﬁcant investments in personnel, management information systems, distribution
centers and other capital resources. The Company provides a broad array of products and services for
its resellers, which allows them to satisfy their needs from a single source. The Company’s competitive
advantage is the result of its low cost structure, investment in sophisticated management information
systems and its access to capital to ﬁnance growth.

To maintain and enhance its leadership position in wholesale distribution, the Company’s business

strategy includes the following main elements:

Maintain low cost and efficient operations.

The Company has pursued a strategy of
proﬁtable revenue growth by providing its customers with the beneﬁt of operating efficiencies
achieved through centralized management and control, stringent cost controls and automation.
The Company strictly controls selling, general and administrative expenses; utilizes its highly
automated order placement and processing systems to efficiently manage inventory and
shipments and to reduce transaction costs; and realizes economies of scale in product
purchasing, ﬁnancing and working capital management. The Company has been successful
in
reducing selling, general and administrative expenses as a percentage of net sales from 5.31% for
the ﬁscal year ended January 31, 1996 to 3.89% for the ﬁscal year ended January 31, 2000.

Leverage management information systems.

In order to maintain and improve its
operating efficiencies and services to its resellers, the Company continues to make investments in

its state-of-the-art computer information systems. These systems provide the Company operating
efficiencies and allow the Company to offer additional services such as the expansion of its
electronic commerce capabilities, including electronic data interchange and order entry over the
Company’s World Wide Web site. Electronic commerce generates cost savings and operational
efficiencies for Tech Data and its customers. By the fourth quarter of ﬁscal 2000, approximately
34% of the Company’s U.S. sales dollar volume and approximately 60% of U.S. order lines were
generated electronically over the Company’s website and other links such as EDI. The Company
believes that growth in its electronic commerce capabilities will provide incremental economies of
scale and may further reduce transaction costs.

Offer a broad and balanced product mix.

The Company offers its resellers a broad
assortment of leading technology products. Currently, the Company offers more than 75,000
products from industry leading manufacturers and publishers. By offering a broad product
assortment,
from its resellers’ objective to procure product more
efficiently by reducing the number of their direct vendor relationships. The Company is continually
strengthening its product assortment to ensure it provides its customers with the latest technology
products. The Company maintains a balanced product line of systems, peripherals, networking
components and software to minimize the effects of ﬂuctuation in supply and demand.

the Company can beneﬁt

Foster customer loyalty through superior customer service.

Tech Data’s sales force
provides superior customer service through a dedicated team approach in order to differentiate
itself from its competitors and foster customer loyalty. The Company provides services such as
ﬂexible customer ﬁnancing and credit programs, a suite of electronic commerce tools (including
electronic order entry and access to product speciﬁcations), pre- and post-sale technical support,
product conﬁguration, customized shipping documents, ﬂexible product
return policies and
customer education programs.

Provide geographic coverage in selected international markets.

The Company has
utilized its strong ﬁnancial position, vendor relationships and distribution expertise to expand its
business in selected international markets. The Company’s future expansion strategy focuses on
identifying companies with signiﬁcant market positions and quality management teams in markets
it considers to be attractive. The Company expanded into Europe in 1994 with an acquisition in
France.
the Company continued its international expansion through the
development of an in-country subsidiary which stocks and distributes products in Brazil. The
Company’s purchase of Computer 2000 in July 1998 established the Company as the leading
European distributor, as well as strengthened its position in Latin America. In May 1999, the
purchase of Globelle Corporation allowed the Company to nearly double its presence in Canada.
The Company currently maintains operations in 30 countries and ships products to resellers in
more than 70 countries.

In February 1997,

Vendor Relations

The Company’s strong ﬁnancial and industry positions have enabled it to obtain contracts with
leading manufacturers and publishers. The Company purchases products directly from
most
manufacturers and publishers, generally on a nonexclusive basis. The Company’s vendor agreements
are believed to be in the form customarily used by each manufacturer and typically contain provisions
which allow termination by either party upon 30 days notice. Generally,
the Company’s supplier
agreements do not require it to sell a speciﬁed quantity of products or restrict the Company from selling
similar products manufactured by competitors. Consequently,
the Company has the ﬂexibility to
terminate or curtail sales of one product line in favor of another product line as a result of technological
change, pricing considerations, product availability, customer demand and vendor distribution policies.

Such agreements generally contain stock rotation and price protection provisions which, along with the
Company’s inventory management policies and practices, reduce the Company’s risk of loss due to
slow-moving inventory, vendor price reductions, product updates or obsolescence. Under the terms of
the distributor for declines in inventory value
many distribution agreements, suppliers will credit
resulting from the supplier’s price reductions, subject to certain limitations. In addition, under many
such agreements, the distributor has the right to return for credit or exchange for other products a
portion of those inventory items purchased, subject to certain limitations. A supplier who elects to
terminate a distribution agreement generally will repurchase from the distributor the supplier’s products
carried in the distributor’s inventory. While the industry practices discussed above are sometimes not
embodied in agreements and do not protect the Company in all cases from declines in inventory value,
management believes that these practices provide a signiﬁcant level of protection from such declines.
No assurance can be given, however, that such practices will continue or that they will adequately
protect the Company against declines in inventory value. See ‘‘Management’s Discussion and Analysis
of Financial Condition and Results of Operations — Asset Management.’’

Major computer systems manufacturers re-engineered their manufacturing processes whereby
ﬁnal assembly is being performed on a ‘‘build-to-order’’ methodology versus the alternative ‘‘build-to-
forecast’’ methodology employed by these manufacturers in the past. Tech Data has expanded its
two years to include ‘‘build-to-order’’ capabilities (‘‘channel
TDEnsemble services over the past
in addition to resellers, seeking custom
assembly’’) on behalf of
conﬁguration of branded and unbranded systems. Tech Data was selected by Compaq, Hewlett-
Packard and IBM to participate in their respective channel assembly initiatives. In addition to its own
ISO 9002-certiﬁed centers in Fontana, California, Frederick, Maryland, and Swedesboro, New Jersey,
Tech Data offers custom-conﬁguration at its FactoryDirect location which is located within IBM’s facility
in Research Triangle Park, North Carolina. During ﬁscal 2000 the Company expanded its FactoryDirect
program (‘‘co-location’’) to include Hewlett-Packard printer products at their Saudston, Virginia facility.

its manufacturing partners,

In addition to providing manufacturers and publishers with one of the largest bases of resellers in
the United States, Canada, the Caribbean, Latin America, Europe and the Middle East, the Company
also offers manufacturers and publishers the opportunity to participate in a number of special
promotions, training programs and marketing services targeted to the needs of its resellers.

With the exception of Hewlett-Packard and Compaq, no single vendor accounted for more than
10% of the Company’s net sales during ﬁscal 2000, 1999, or 1998. Sales of Hewlett-Packard products
accounted for 19%, 18%, and 13% of net sales in ﬁscal 2000, 1999 and 1998, respectively, and sales
of Compaq products accounted for 16%, 13% and 13% of net sales in ﬁscal 2000, 1999 and 1998,
respectively.

Customers, Products and Services

The Company sells more than 75,000 microcomputer products including systems, peripherals,
networking components and software purchased directly from manufacturers and publishers in large
quantities for sale to an active reseller base of more than 100,000 VARs, corporate resellers, direct
marketers, retailers and Internet resellers.

The Company’s VARs typically do not have the resources to establish a large number of direct
purchasing relationships or stock signiﬁcant product inventories. This market is attractive because
VARs, which constituted approximately 57% of Tech Data’s net sales in ﬁscal 2000, generally rely on
distributors as their principal source of computer products and ﬁnancing. Corporate resellers, retailers
and direct marketers may establish direct relationships with manufacturers and publishers for their
more popular products, but utilize distributors as the primary source for other product requirements and

the alternative source for products acquired direct. Corporate resellers constituted approximately 24%
of the Company’s net sales in ﬁscal 2000. Tech Data also has developed special programs to meet the
unique needs of retail, direct marketers and Internet resellers, who constituted approximately 19% of
the Company’s net sales in ﬁscal 2000. No single customer accounted for more than 5% of the
Company’s net sales during ﬁscal 2000, 1999, or 1998.

The Company pursues a strategy of continually strengthening its product line to offer its customers
a broad assortment of the latest technology products. From time to time, the demand for certain
products sold by the Company exceeds the supply available from the manufacturer or publisher. In
such case, the Company generally receives an allocation of the available products. Management
believes that the Company’s ability to compete is not adversely affected by these periodic shortages
and the resulting allocations.

Tech Data provides resellers a high-level of service through the Company’s pre- and post-sale
technical support, suite of electronic commerce tools (including on-line order entry and EDI services),
customized shipping documents, product conﬁguration services and ﬂexible ﬁnancing programs.

The Company delivers products throughout the United States, Canada, the Caribbean, Latin
America, Europe and the Middle East from its 37 regionally located distribution centers. Locating
distribution centers near its customers enables the Company to deliver products on a timely basis,
thereby reducing the customers’ need to invest in inventory. See Item 2 — Properties for further
discussion of the Company’s locations and distribution centers.

Sales and Electronic Commerce

Currently,

the Company’s sales force consists of approximately 2,000 ﬁeld and inside
telemarketing sales representatives. Field sales representatives are located in major metropolitan
areas. Each ﬁeld representative is supported by inside telemarketing sales teams covering a
designated territory. The Company’s team concept provides a strong personal relationship between
representatives of the customers and Tech Data. Territories with no ﬁeld representation are serviced
exclusively by the inside telemarketing sales teams. Customers typically call their inside sales teams
on dedicated toll-free numbers or contact the Company through various electronic methods to place
orders. If the product is in stock and the customer has available credit, customer orders are generally
shipped the same day from the distribution facility nearest the customer.

Increasingly, customers rely upon the Company’s electronic ordering and information systems, in
addition to its product catalogs and frequent mailings, as sources for product information, including
availability and price. The Company’s on-line computer system allows the inside sales teams to check
for current stocking levels in each of the seven United States distribution centers. Likewise, inside
sales teams in Canada, the Caribbean, Latin America, Europe and the Middle East can check on
stocking levels in their
respective distribution centers. Through the Company’s website, most
customers can gain remote access to the Company’s information systems to check product availability
and pricing and to place orders. Certain of the Company’s larger customers have available EDI
services whereby orders, order acknowledgments,
inventory status reports, customized
pricing information and other industry standard EDI transactions are consummated on-line which
improves efficiency and timeliness for both the Company and the customers. By the fourth quarter of
ﬁscal 2000 approximately 34% of the Company’s U.S. sales dollar volume originated from orders
received electronically and annualized worldwide electronic commerce sales volume was
approximately $4 billion.

invoices,

The Company provides comprehensive training to its ﬁeld and inside sales representatives
regarding technical characteristics of products and the Company’s policies and procedures. In addition,
the Company’s ongoing training program is supplemented by product seminars offered by
manufacturers and publishers.

Competition

The Company operates in a market characterized by intense competition. Competition within the
industry is based on product availability, credit availability, price, delivery and various services and
support provided by the distributor to the customer. The Company believes that it is equipped to
compete effectively with other distributors in these areas. Major competitors include Ingram Micro, Inc.,
CHS Electronics, Inc., Merisel, Inc., and Microage, Inc. as well as a variety of smaller local and
regional distributors. The only competitor larger than the Company is Ingram Micro, Inc.

The Company also competes with manufacturers and publishers who sell directly to resellers and
end-users. The Company nevertheless believes that in the majority of cases, manufacturers and
publishers choose to sell products through distributors rather than directly because of the relatively
small volume and high selling costs associated with numerous small orders. Management also
believes that the Company’s prompt delivery of products and efficient handling of returns provide an
important competitive advantage over manufacturers’ and publishers’ efforts to market their products
directly.

Employees

On January 31, 2000, the Company had approximately 9,575 employees located as follows:
United States 1 4,067, Europe 1 4,215, and all other regions 1 1,293. Certain of the Company’s
employees in Canada are subject
to collective bargaining or similar arrangements, as well as
employees in various countries outside the United States in which the Company operates that have
laws providing representation rights to employees on management boards. The Company considers its
relations with its employees to be good.

Foreign and Domestic Operations and Export Sales

The Company operates predominantly in a single industry segment as a wholesale distributor of
computer-based technology products and services. That
the principal markets, products and
services and methods of distribution from which each segment derives its revenues are essentially the
same. The principal geographical areas in which the Company operates are the United States, Europe
(including the Middle East) and Other International areas which include in-country operations in
Canada, Brazil, Argentina, Chile, Peru, Uruguay and export sales to Latin America and the Caribbean
from the United States. In ﬁscal 2000, 1999, and 1998, 50%, 45% and 23%, respectively, of the
Company’s sales were derived from sales outside of the United States.

is,

See Note 11 of Notes to Consolidated Financial Statements for further information regarding the

geographical distribution of the Company’s net sales, operating income and identiﬁable assets.

Executive Officers

The Company’s executive officers as of April 10, 2000 are as follows:

Steven A. Raymund, Chairman of the Board of Directors and Chief Executive Officer, age
44, has been employed by the Company since 1981, serving as Chief Executive Officer since January

1986 and as Chairman of the Board of Directors since April 1991. He has a B.S. Degree in Economics
from the University of Oregon and a Masters Degree from the Georgetown University School of
Foreign Service.

Ne´ stor Cano, President of the Americas, age 36, joined the Company in July 1998 as a result of
the Company’s acquisition of Computer 2000. In March 1999, he was appointed Executive Vice
President of U.S. Sales and Marketing and in January 2000 he was promoted to President of the
Americas. Prior to his appointment in the United States, Mr. Cano served in various management
positions with Computer 2000 from 1989 to 1998, most recently as Regional Managing Director of
Spain and Portugal. Mr. Cano holds an Engineering Degree from Barcelona University.

Karl Pohler, President of Europe, age 46, joined the Company in September 1999 and was
appointed Chairman of the Management Board of Computer 2000 AG, Tech Data’s Munich-based
subsidiary, and to a position on the Tech Data Germany AG Management Board. From August 1997 to
August 1999, he served as President of the Board of Management at Sony’s German subsidiary based
in Cologne. From July 1993 to July 1997, he served as Chairman of the Management Board of
Computer 2000 GmbH, Munich.

Jeffery P. Howells, Executive Vice President and Chief Financial Officer, age 43, joined the
Company in October 1991 as Vice President of Finance and assumed the responsibilities of Chief
Financial Officer in March 1992. In March 1993, he was promoted to Senior Vice President and Chief
Financial Officer and was promoted to Executive Vice President and Chief Financial Officer in March
1997. In 1998, Mr. Howells was appointed to the Company’s Board of Directors and to the Supervisory
Board of Computer 2000 AG. From 1979 to 1991 he was employed by Price Waterhouse. Mr. Howells
is a Certiﬁed Public Accountant and holds a B.B.A. Degree in Accounting from Stetson University.

H. John Lochow, Executive Vice President of Information Technology and Logistics, age 47,
joined the Company in February 1998 as Senior Vice President and Chief Information Officer and in
February 1999 was promoted to Executive Vice President of Information Technology and Logistics.
Prior to joining the Company, he served as Chief
Information Officer at Bell Canada and Chief
Executive of their international subsidiary Bell Sygma from 1996 to February 1998. From 1994 to 1996,
he was employed by AT&T Capital Corporation as Vice President of Systems and New Business
Development and from 1989 to 1994 he was employed by CNA Insurance Companies as Vice
President of Systems. Mr. Lochow holds a B.A. Degree in Mathematics from Thomas Edison
University.

Timothy J. Curran, Senior Vice President of U.S. Sales, age 48, joined the Company in April
1997. Prior to joining the Company, he was employed by Panasonic Communications and Systems
Company (including various other Panasonic affiliates) from 1983 to 1997 serving in a variety of senior
management positions. Mr. Curran holds a B.A. Degree in History from the University of Notre Dame
and a Ph.D. in International Relations from Columbia University.

Charles V. Dannewitz, Senior Vice President of Taxes, age 45, joined the Company in February
1995 as Vice President of Taxes and was promoted to Senior Vice President in April 2000. Prior to
joining the Company, he was employed by Price Waterhouse for 13 years, most recently as a Tax
Partner. Mr. Dannewitz is a Certiﬁed Public Accountant and holds a B.S. Degree in Accounting from
Illinois Wesleyan University.

Lawrence W. Hamilton, Senior Vice President of Human Resources, age 42,

joined the
Company in August 1993 as Vice President of Human Resources and was promoted to Senior Vice
President in March 1996. Prior to joining the Company, he was employed by Bristol-Myers Squibb

Company from 1985 to August 1993, most recently as Vice President - Human Resources and
Administration of Linvatec Corporation (a division of Bristol-Myers Squibb Company). Mr. Hamilton
holds a B.A. Degree in Political Science from Fisk University and a Masters of Public Administration,
Labor Policy from the University of Alabama.

Elio Levy, Senior Vice President of U.S. Marketing, age 52, joined the Company in October
1991 as Director of Software and was promoted to Vice President of Networking in January 1993. In
January 1995, he was assigned as Vice President of Marketing for Tech Data France and from
January 1996 to June 1998 he served as President of Tech Data Canada. In July 1998, he returned to
the Company’s U.S. operations as Vice President and General Manager of International Marketing and
in November 1998 he assumed the role of Vice President and General Manager, Peripherals. In April
2000 he was promoted to his current role of Senior Vice President of Marketing. Mr. Levy holds a B.S.
Degree in Business from the College of Charleston.

Yuda Saydun, Senior Vice President and President of Latin America, age 47, joined the
Company in May 1993 as Vice President and General Manager - Latin America. In March 1997 he was
promoted to Senior Vice President and General Manager 1 Latin America and in April 2000 was
promoted to President of Latin America. Prior to joining the Company, he was employed by American
Express Travel Related Services Company, Inc. from 1982 to May 1993, most recently as Division Vice
President, Cardmember Marketing. Mr. Saydun holds a B.S. Degree in Political and Diplomatic
Sciences from Universite´ Libre de Bruxelles and a Masters of Business Administration Degree,
Finance/Marketing from U.C.L.A.

William K. Todd Jr., Senior Vice President, U.S. Distribution, Conﬁguration and Assembly
Services, age 55, joined the Company in June 1999 as Vice President and General Manager of
Conﬁguration and Assembly and was promoted to Senior Vice President of Distribution in April 2000.
Prior to joining the Company, he was employed by Entex Information Services from September 1992 to
June 1999 as the Senior Vice President of Distribution and Manufacturing. Mr. Todd holds a B.S.
Degree in Business Management from New Hampshire College.

Joseph B. Trepani, Senior Vice President and Corporate Controller, age 39,

joined the
Company in March 1990 as Controller and held the position of Director of Operations from October
1991 through January 1995. In February 1995, he was promoted to Vice President and Worldwide
Controller and to Senior Vice President and Corporate Controller in March 1998. Prior to joining the
Company, Mr. Trepani was Vice President of Finance for Action Staffing, Inc. from July 1989 to
February 1990. From 1982 to 1989, he was employed by Price Waterhouse. Mr. Trepani is a Certiﬁed
Public Accountant and holds a B.S. Degree in Accounting from Florida State University.

Arthur W. Singleton, Corporate Vice President, Treasurer and Secretary, age 39, joined the
Company in January 1990 as Director of Finance and was appointed Treasurer and Secretary in April
1991. In February 1995, he was promoted to Vice President, Treasurer and Secretary and was
promoted to Corporate Vice President in April 2000. Prior to joining the Company, Mr. Singleton was
employed by Price Waterhouse from 1982 to 1989. Mr. Singleton is a Certiﬁed Public Accountant and
holds a B.S. Degree in Accounting from Florida State University.

David R. Vetter, Corporate Vice President and General Counsel, age 41, joined the Company
in April 2000. Prior to joining the
in June 1993 and was promoted to Corporate Vice President
Company, he was employed by the law ﬁrm of Robbins, Gaynor & Bronstein, P.A. from 1984 to 1993,
most recently as a partner. Mr. Vetter is a member of the Florida Bar and holds a B.A. Degree in
English and Economics from Bucknell University and a J.D. Degree from the University of Florida.

Patrick O. Connelly, Vice President of Credit Services, age 54, joined the Company in August
1994. Prior to joining the Company, he was employed by Unisys Corporation for nine years as
Worldwide Director of Credit. Mr. Connelly holds a B.A. Degree in History and French from the
University of Texas at Austin.

ITEM 2. Properties

Tech Data’s executive offices are located in Clearwater, Florida. The Company operates a total of
37 distribution centers to provide its customers timely delivery of products. These distribution centers
are located in the following principal markets: U.S. 1 7, Canada 1 3, Latin America 1 5, Europe 1
20 and the Middle East 1 2. In addition to the above distribution centers, the Company operates two
distribution facilities in the United States which are located within the manufacturing facilities of IBM
and Hewlett-Packard in connection with the Company’s FactoryDirect program (see Vendor Relations).
The Company also operates training centers in ten cities in the United States.

The facilities of the Company are substantially utilized, well maintained and are adequate to

conduct the Company’s current business.

ITEM 3. Legal Proceedings

There are no material legal proceedings pending against the Company.

ITEM 4. Submission of Matters to a Vote of Security Holders

There have been no matters submitted to a vote of security holders during the last quarter of the

ﬁscal year ended January 31, 2000.

PART II

ITEM 5. Market for the Registrant’s Common Stock and Related Shareholder Matters

The Company’s common stock is traded on the Nasdaq Stock Market under the symbol TECD.
The Company has not paid cash dividends since ﬁscal 1983. The Board of Directors does not intend to
institute a cash dividend payment policy in the foreseeable future. The table below presents the
quarterly high and low sales prices for the Company’s common stock as reported by The Nasdaq
Stock Market. The approximate number of shareholders as of January 31, 2000 was 31,000.

Sales Price

High

Low

Fiscal year 2000

Fourth quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third quarter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second quarter
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First quarter

$ 277⁄8
395⁄16
447⁄8
32

Fiscal year 1999

$ 441⁄2
531⁄8
497⁄8
505⁄8

$ 185⁄8
18
221⁄4
141⁄2

$ 265⁄8
363⁄4
333⁄4
361⁄8

ITEM 6. Selected Consolidated Financial Data

The following table sets forth certain selected consolidated ﬁnancial data and should be read in
conjunction with ‘‘Management’s Discussion and Analysis of Financial Condition and Results of
Operations’’ and the Company’s consolidated ﬁnancial statements and notes thereto appearing
elsewhere in this annual report.

FIVE YEAR FINANCIAL SUMMARY
(In thousands, except per share data)

Income statement data:
Net sales . . . . . . . . . . . . . . . . . . . . . . . .

Cost and expenses:

Cost of products sold . . . . . . . . . . . . .
Selling, general and administrative

expenses . . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . .
Net foreign currency exchange loss

(gain)

. . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) on the sale of Macrotron AG . . .

Income before income taxes . . . . . . . . .
Provision for income taxes . . . . . . . . . .

Income before minority interest . . . . . . .
Minority interest . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . .

Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . .

Weighted average common shares

outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . .

Dividends per common share . . . . . . . .

Balance sheet data:
Working capital
. . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . .
Revolving credit loans . . . . . . . . . . . . . .
Long-term debt
. . . . . . . . . . . . . . . . . . .
Shareholders’ equity . . . . . . . . . . . . . . .

Year Ended January 31,

2000

1999(1)

1998

1997

1996

$16,991,750

$11,528,999

$7,056,619

$4,598,941

$3,086,620

16,058,086

10,806,153

6,590,873

4,277,160

2,867,226

661,792

492,542

293,108

206,770

163,790

16,719,878

11,298,695

6,883,981

4,483,930

3,031,016

271,872
65,965

5,153
—

200,754
72,837

127,917
416

127,501

2.47

2.34

51,693

58,508

—

230,304
44,988

(5,027)
(15,700)

206,043
76,215

129,828
876

128,952

2.59

2.47

49,727

54,161

—

172,638
29,908

115,011
21,522

—
—

142,730
52,816

89,914
429

89,485

2.00

1.92

44,715

46,610

—

—
—

93,489
36,516

56,973
—

56,973

1.39

1.35

40,870

42,125

—

55,604
20,086

—
—

35,518
13,977

21,541
—

21,541

.57

.56

37,846

38,138

—

795,589
4,123,818
1,006,809
316,840
1,013,695

725,057
3,844,987
817,870
308,521
967,291

$ 537,381
2,185,383
540,177
8,683
702,588

$ 351,993
1,545,294
396,391
8,896
438,381

$ 201,704
1,043,879
283,100
9,097
285,698

(1) Results for the ﬁscal year ended January 31, 1999 include six months of results for Computer 2000 (acquired effective July
1, 1998) and six months of results for Macrotron (sold effective July 1, 1998). See Note 2 of Notes to Consolidated Financial
Statements.

ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Certain statements within this Item and throughout this Annual Report on Form 10-K and the
documents incorporated herein are ‘‘forward-looking statements’’ as described in the ‘‘safe harbor’’
provision 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 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 each of the three most recent ﬁscal years.

Percentage of Net Sales

Year ended January 31,

2000

1999

1998

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

100.0% 100.0% 100.0%

Cost and expenses:

Cost of products sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative expenses . . . . . . . . . . . . . . . . . . .

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net foreign currency exchange loss (gain) . . . . . . . . . . . . . . . . . . . . . . . .
(Gain) on the sale of Macrotron AG . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provision for income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income before minority interest
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Fiscal Years Ended January 31, 2000 and 1999

94.5
3.9

98.4

1.6
.4
—
—
1.2
.4

.8
—
.8%

93.7
4.3

98.0

2.0
.4
—
(.2)

1.8
.7

1.1
—
1.1%

93.4
4.2

97.6

2.4
.4
—
—
2.0
.7

1.3
—
1.3%

Net sales increased 47.4% to $17.0 billion in ﬁscal 2000 compared to $11.5 billion in the prior
year. This increase is attributable to the acquisition of Computer 2000 AG (‘‘Computer 2000’’), as well
as the addition of new customers, gains in market share, the addition of new product lines and the
expansion of existing product lines in all geographies. Sales in ﬁscal 2000 included 12 months of
operations of Computer 2000, which the Company acquired in July 1998, whereas ﬁscal 1999 sales
included six months of operations of Computer 2000 and six months of Macrotron AG, which was
acquired in July 1997 and sold in July 1998. The Company’s U.S., European and other international
sales grew 32%, 66% and 68%, respectively, in ﬁscal 2000 compared to the prior year. Excluding the
effect of acquisitions, sales growth rates in ﬁscal 2000 were approximately 32%, 14%, 12% and 22% in
the U.S., Europe, other international markets, and worldwide, respectively. Total international sales in
ﬁscal 2000 represented approximately 50% of consolidated net sales compared with 45% in the prior
year.

The cost of products sold as a percentage of net sales was 94.5% in ﬁscal 2000 compared to
93.7% in the prior year. This increase is a result of competitive market conditions and the Company’s
increased participation in customer outsourcing activities which provide lower gross proﬁt margins,
while, because of cost and working capital efficiencies in these activities, maintain reasonable pre-tax
margins.

Selling, general and administrative expenses increased 34.4% from $492.5 million in ﬁscal 1999 to
$661.8 million in ﬁscal 2000, and as a percentage of net sales decreased to 3.9% in ﬁscal 2000 from

4.3% in the prior year. This decline in selling, general and administrative expenses as a percentage of
net sales is attributable to greater economies of scale the Company realized during ﬁscal 2000 in
addition to improved operating efficiencies. The dollar value increase in selling, general and
administrative expenses is attributable to the acquisition of Computer 2000, increases in amortization
of intangibles and other operating expenses needed to support the increased volume of business.

As a result of the factors described above, operating income in ﬁscal 2000 increased 18.0% to
$271.9 million, or 1.6% of net sales, compared to $230.3 million, or 2.0% of net sales, in ﬁscal 1999. A
factor contributing to the decrease in the operating proﬁt margin from 2.0% in ﬁscal 1999 to 1.6% in
ﬁscal 2000 was the competitive market conditions experienced by the Company. Additionally, operating
margins in Europe are typically lower than the Company’s U.S. business as a result of the region’s
higher cost structure.

Interest expense increased 46.6% from $45.0 million in ﬁscal 1999 to $66.0 million in ﬁscal 2000.
This increase is the result of an increase in the Company’s average outstanding indebtedness related
to funding for continued growth and capital expenditures. The increase in interest expense was
partially offset in ﬁscal 2000 by decreases in average short-term interest rates on the Company’s
ﬂoating rate indebtedness.

The Company incurred a net foreign currency exchange loss of $5.2 million in ﬁscal 2000, as
compared to a net foreign currency exchange gain of $5.0 million in ﬁscal 1999, primarily related to
international economic conditions that led to weaker currencies principally in Latin America and Europe
as compared to the U.S. dollar.

The provision for income taxes decreased 4.4% to $72.8 million in ﬁscal 2000 from $76.2 million in
the prior year. This decrease is attributable to a decrease in the Company’s income before income
taxes. The Company’s average income tax rate declined to 36.3% in ﬁscal 2000 compared with 37.0%
in the prior year 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 in ﬁscal 2000 increased to $127.5 million,
or $2.34 per diluted share, compared to $119.4 million, or $2.29 per diluted share, in the prior year
(excluding the after-tax gain on the sale of Macrotron of $9.6 million, realized in ﬁscal 1999). Net
income for ﬁscal year 1999 totaled $129.0 million or $2.47 per diluted share including the gain on the
sale of Macrotron.

Fiscal Years Ended January 31, 1999 and 1998

Net sales increased 63.4% to $11.5 billion in ﬁscal 1999 compared to $7.1 billion in the prior year.
This increase is attributable to the acquisition of Computer 2000, as well as the addition of new product
lines and the expansion of existing product lines. Sales for the ﬁscal year ended January 31, 1999
include six months of results for Computer 2000, in which the Company acquired a controlling interest
in July 1998, and include six months of results for Macrotron AG, which was acquired in July 1997 and
sold in July 1998. The Company’s U.S., Europe and other international sales grew 17.0%, 295.5% and
32.9%, respectively, in ﬁscal 1999 compared to the prior year. The signiﬁcant growth in the Company’s
international sales is attributable to the acquisition of Computer 2000. Excluding the effect of
acquisitions and dispositions, sales growth rates in ﬁscal 1999 were approximately 17%, 27%, 15%
and 20% in the U.S., Europe, other international areas and worldwide, respectively. Total international
sales in ﬁscal 1999 represent approximately 45% of consolidated net sales compared with 23% in the
prior year.

The cost of products sold as a percentage of net sales increased from 93.4% in ﬁscal 1998 to
93.7% in ﬁscal 1999. This increase is a result of competitive market prices and the Company’s strategy
of lowering selling prices in order to gain market share and to pass on the beneﬁt of operating
efficiencies to its customers.

Selling, general and administrative expenses increased 68.0% from $293.1 million in ﬁscal 1998 to
$492.5 million in ﬁscal 1999, and as a percentage of net sales increased to 4.3% in ﬁscal 1999 from
4.2% in the prior year. The increase in selling, general and administrative expenses is attributable to
the acquisitions of Macrotron AG and Computer 2000, increases in amortization of intangibles as well
as other operating expenses needed to support the increased volume of business.

As a result of the factors described above, operating income in ﬁscal 1999 increased 33.4% to
$230.3 million, or 2.0% of net sales, compared to $172.6 million, or 2.4% of net sales, in ﬁscal 1998. A
factor contributing to the decrease in the operating proﬁt margin from 2.4% in ﬁscal 1998 to 2.0% in
ﬁscal 1999, was ongoing competitive pricing pressure experienced by the Company in its U.S.
business. Additionally contributing to this decrease was the Company’s more signiﬁcant presence in
Europe in ﬁscal 1999, principally as a result of the Computer 2000 acquisition. Operating margins in
Europe are typically lower than the Company’s U.S. business as a result of the region’s higher cost
structure.

Interest expense increased due to an increase in the Company’s average outstanding
indebtedness related to funding the acquisition of Computer 2000, funding for continued growth and
capital expenditures. The increase in interest expense was partially offset in ﬁscal 1999 by decreases
in average short-term interest rates on the Company’s ﬂoating rate indebtedness.

The Company’s results of operations in ﬁscal 1999 include a pre-tax gain of $15.7 million ($9.6

million net of income taxes) related to the July 1998 sale of Macrotron AG.

The Company’s average income tax rate was 37.0% for ﬁscal 1999 and ﬁscal 1998.

Net income in ﬁscal 1999 increased 44.1% to $129.0 million, or $2.47 per diluted share, compared
to $89.5 million, or $1.92 per diluted share, in the prior year. Excluding the gain on the sale of
Macrotron, net income increased 33.4% to $119.4 million, or $2.29 per diluted share.

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board (‘‘FASB’’) issued Statement of Financial
Accounting Standards (‘‘SFAS’’) No. 133,
‘‘Accounting for Derivative Instruments and Hedging
Activities’’ (‘‘SFAS 133’’). This statement establishes requirements for accounting and reporting of
derivative instruments and hedging activities. SFAS 133 was updated by the issuance of SFAS No.
137, ‘‘Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of
FAS No. 133’’ and is effective for ﬁscal years beginning after June 15, 2000. The future impact of this
statement on the Company’s results of operations is not expected to be material.

Impact of Inﬂation

The Company has not been adversely affected by inﬂation as technological advances and
competition within the microcomputer industry has generally caused prices of the products sold by the
Company to decline. Management believes that any price increases could be passed on to its
customers, as prices charged by the Company are not set by long-term contracts.

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, increased Canadian government purchasing in the ﬁrst quarter, and worldwide pre-holiday
stocking in the retail channel during the September-to-November period. In addition, the product cycle
of major products may materially impact the Company’s business, ﬁnancial condition, or results of
operations. See Note 12 of Notes to Consolidated Financial Statements for further information
regarding the Company’s quarterly results.

Liquidity and Capital Resources

Net cash used in operating activities of $4.3 million in ﬁscal 2000 was primarily attributable to
income from operations of $127.5 million combined with increases in accounts payable and accrued
expenses, offset by increases in accounts receivable, inventories and prepaid and other assets related
to the growth of the Company’s business. The Company continues to focus on improving asset
turnover, as evidenced by its days sales outstanding in accounts receivable, which declined to 36.3
days at the end of ﬁscal 2000 as compared to 42.4 days at the end of ﬁscal 1999. Similarly, days of
supply of inventory was reduced to 31.0 days at the end of ﬁscal 2000 from 34.4 days at the end of
ﬁscal 1999 while maintaining superior order ﬁll rates.

Net cash used in investing activities of $120.3 million during ﬁscal 2000 was attributable to the
Company’s investment of $77.4 million related to the expansion of
the Company’s management
information systems, office facilities and equipment for its distribution centers combined with the use of
$18.3 million related to the acquisition of additional shares of Computer 2000 and approximately $24.6
million related to the acquisition of Globelle (see Note 2 of Notes to Consolidated Financial
Statements). The Company expects to make capital expenditures of approximately $125 million during
ﬁscal 2001 to further expand its management information systems, office facilities and equipment for
distribution centers.

Net cash provided by ﬁnancing activities of $124.1 million during ﬁscal 2000 reﬂects the net
borrowings under the Company’s revolving credit loans of $99.4 million in addition to proceeds from
stock option exercises (including the related income tax beneﬁt) of $24.9 million.

As of January 31, 2000,

the Company maintained domestic and foreign revolving credit
agreements which provide maximum short-term borrowings of approximately $1.7 billion (including
local country credit lines), of which $1.0 billion was outstanding at that date. 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 needs through ﬁscal 2001.

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 manufacturer price

reductions and slow moving or obsolete inventory. In the event of a vendor price reduction, the
Company generally receives a credit
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.

for the impact on products in inventory, subject

The Company attempts to control

losses on credit sales by closely monitoring customers’
creditworthiness through its computer system which contains detailed information on each customer’s
payment history and other relevant information. The Company has obtained credit insurance which
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 ﬂoorplan basis.

Year 2000

The Company’s Year 2000 (‘‘Y2K’’) compliance project determined the readiness of
the
Company’s business for the Year 2000. The Company deﬁned Y2K ‘‘compliance’’ to mean that the
computer code will process all deﬁned future dates properly and give accurate results. The Company
has experienced no problems with its computer systems since the beginning of 2000 but will continue
to monitor the systems to assess whether any problems develop. In addition, the Company incurred
approximately $11.2 million in expenses related to assessing and remedying any Y2K problems and
upgrading computer systems, but does not expect to incur any additional material expenses related to
Y2K issues going forward.

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 and 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.

limited to;

The Company has implemented plans to address the issues raised by the euro conversion. These
issues include, but are not
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-demoninated transactions; and the need to analyze the legal and contractual
implications of
the required
the Company’s contracts. The Company currently anticipates that
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 Company has experienced
the euro on January 1, 1999,
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 currency.

Market Risk

The Company is exposed to the impact of foreign currency ﬂuctuation and interest rate changes
due to its international sales and global funding. In the normal course of business, the Company
employs established policies and procedures to manage its exposure to ﬂuctuations in the value of
foreign currencies and interest rates using a variety of ﬁnancial instruments. It is the Company’s policy
to utilize ﬁnancial instruments to reduce risks where internal netting cannot be effectively employed. It
is the Company’s policy not to enter into foreign currency or interest rate transactions for speculative or
trading purposes.

In addition to product sales and costs, the Company has foreign currency risk related to debt that
is denominated in currencies other than the U.S. dollar. The Company’s foreign currency risk
management objective is to protect its earnings and cash ﬂows from the adverse impact of exchange
rate movements. Foreign exchange risk is managed by using forward, option and swap contracts to
hedge intercompany loans, trade receivables and payables. Hedged transactions are denominated
primarily in the following currencies: Belgian Franc, Canadian Dollar, Danish Krone, European
Monetary Unit, French Franc, Spanish Peseta, Finnish Markka, Norwegian Krone, German Mark,
Swedish Krona, Swiss Franc and British Pound.

Interest rate risk is also present

The Company is exposed to changes in interest rates primarily as a result of its short and long-
term debt used to maintain liquidity and to ﬁnance working capital, capital expenditures and business
expansion.
in the forward foreign currency contracts hedging
intercompany and third party loans. The Company’s interest rate risk management objective is to limit
the impact of interest rate changes on earnings and cash ﬂows and to lower overall borrowing costs.
To achieve its objective, the Company uses a combination of ﬁxed and variable rate debt. The nature
and amount of the Company’s long-term and short-term debt can be expected to vary as a result of
future business requirements, market conditions and other factors. As of January 31, 2000 and
January 31, 1999, approximately 25% and 49%, respectively, of the outstanding debt had ﬁxed interest
rates (through the terms of such debt or through interest rate swap agreements). The Company
ﬁnances working capital needs through bank loans, convertible subordinated debt and its accounts
receivable securitization program. Interest rate swaps are used to hedge underlying debt obligations.

The Company uses a variety of techniques to assess the market risk of its derivative ﬁnancial
instruments. Techniques include a review of market value, sensitivity analysis and value at risk
(‘‘VaR’’). VaR represents the potential losses for an instrument or portfolio from adverse changes in
market factors for a speciﬁed time period and conﬁdence level. The Company employs a variance/
covariance approach, based on the interrelationship between currencies and interest rates, in its
calculation of VaR. The VaR model measures the potential losses in fair value or earnings that could
arise from changes in market conditions, using a 95 percent conﬁdence level and assuming a one-day
holding period.

VaR attributable to those interest rate sensitive exposures associated with the Company’s
exposure to interest rates was $5.0 million at January 31, 2000 and $4.0 million at January 31, 1999.
The increase in the estimated VaR was due to the increase in the notional value of the ﬁnancial
instruments.

The VaR attributable to those foreign currency exchange rate instruments associated with the
Company’s exposure to foreign exchange rates as a result of
its foreign currency denominated
intercompany loans and trade receivables and payables was $7.3 million at January 31, 2000 and
$14.9 million at January 31, 1999.

The Company’s calculated VaR exposures represent an estimate of potential losses that would be
recognized for an instrument or on its portfolio of derivative ﬁnancial
instruments assuming
hypothetical movements in future market rates and are not necessarily indicative of actual results that
may occur. It does not represent the maximum possible loss nor any expected loss that may occur,
because actual future gains and losses will differ from those estimated, based on actual ﬂuctuations in
market rates, operating exposures and the timing thereof, and changes in the Company’s portfolio of
derivative ﬁnancial instruments during the year.

The Company, however, believes that any loss incurred would be offset by the effects of currency
and interest rate movements on the respective underlying hedged transactions.
the
maximum exposure associated with the purchase of options is limited to the premiums paid, which is
recognized against income over the period being hedged.

In addition,

Comments on Forward-Looking Information

In connection with the ‘‘safe harbor’’ provisions of the Private Securities Litigation Reform Act of
1995, the Company has ﬁled an Exhibit 99A which outlines cautionary statements and identiﬁes
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-K, should be considered in conjunction with the
aforementioned Exhibit 99A.

ITEM 8. Financial Statements and Supplementary Data

Index to Financial Statements

Financial Statements

Report of Independent Certiﬁed Public Accountants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Independent Auditors’ Report. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Report of Management

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Balance Sheet at January 31, 2000 and 1999 . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Income for the three years ended January 31, 2000 . . . . . . . . .

Consolidated Statement of Changes in Shareholders’ Equity for the three years ended

January 31, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Consolidated Statement of Cash Flows for the three years ended January 31, 2000 . . . . .

Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Statement Schedule

Report of Independent Certiﬁed Public Accountants on Financial Statement Schedule . . . .

Schedule II. — Valuation and qualifying accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Page

All schedules and exhibits not

included are not applicable, not required or would contain

information which is shown in the ﬁnancial statements or notes thereto.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Board of Directors and Shareholders of Tech Data Corporation:

In our opinion, based on our audits and the report of other auditors,

the accompanying
consolidated balance sheet and the related consolidated statements of
income, of changes in
shareholders’ equity and of cash ﬂows present fairly, in all material respects, the ﬁnancial position of
Tech Data Corporation and its subsidiaries (‘‘the Company’’) at January 31, 2000 and 1999, and the
results of their operations and their cash ﬂows for each of the three years in the period ended January
31, 2000 in conformity with accounting principles generally accepted in the United States. These
ﬁnancial statements are the responsibility of the Company’s management; our responsibility is to
express an opinion on these ﬁnancial statements based on our audits. We did not audit the balance
sheet of Computer 2000 Aktiengesellschaft and subsidiaries, a majority-owned subsidiary of
the
Company, which statement reﬂects total assets of $1,542,000,000 as of January 31, 2000. The
statement was audited by other auditors whose report thereon has been furnished to us, and our
opinion expressed herein, insofar as it relates to the balance sheet amounts included for Computer
2000 Aktiengesellschaft and subsidiaries, is based solely on the report of the other auditors. We
conducted our audits of these statements in accordance with auditing standards generally accepted in
the United States, which require that we plan and perform the audit to obtain reasonable assurance
about whether the ﬁnancial statements are free of material misstatement. An audit includes examining,
on a test basis, evidence supporting the amounts and disclosures in the ﬁnancial statements,
assessing the accounting principles used and signiﬁcant estimates made by management, and
evaluating the overall ﬁnancial statement presentation. We believe that our audits and the report of
other auditors provide a reasonable basis for the opinion expressed above.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Tampa, Florida
March 28, 2000

INDEPENDENT AUDITORS’ REPORT

To the Executive Board of Computer 2000 Aktiengesellschaft, Munich:

We have audited the consolidated balance sheet of Computer 2000 Aktiengesellschaft and
subsidiaries as of January 31, 2000 not separately presented herein. This consolidated ﬁnancial
statement is the responsibility of the Company’s management. Our responsibility is to express an
opinion on this consolidated ﬁnancial statement based on our audit.

We conducted our audit in accordance with the generally accepted auditing standards in Germany
and United States. These standards require that we plan and perform the audit to obtain reasonable
assurance about whether the consolidated balance sheet is free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in that balance
sheet. An audit of a consolidated balance sheet also includes assessing the accounting principles used
and signiﬁcant estimates made by management, as well as evaluating the overall consolidated balance
sheet presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated balance sheet referred to above presents fairly, in all material
respects, the ﬁnancial position of Computer 2000 Aktiengesellschaft and subsidiaries as of January 31,
2000, in conformity with generally accepted accounting principles of the United States.

/s/ KPMG HARTKOPF + RENTROP TREUHAND KG
KPMG Hartkopf + Rentrop Treuhand KG
Wirtschaftspru¨ fungsgesellschaft
Cologne
March 28, 2000

REPORT OF MANAGEMENT

To Our Shareholders:

The management of Tech Data Corporation is responsible for the preparation,

integrity and
objectivity of the consolidated ﬁnancial statements and related ﬁnancial information contained in this
Annual Report. The ﬁnancial statements have been prepared by the Company in accordance with
accounting principles generally accepted in the United States and, in the judgment of management,
present fairly and consistently the Company’s ﬁnancial position and results of operations. The ﬁnancial
statements and other ﬁnancial
include amounts that are based on
management’s best estimates and judgments and give due consideration to materiality.

information in this report

The Company maintains a system of internal accounting controls to provide reasonable assurance
that assets are safeguarded and that transactions are executed in accordance with management’s
authorization and recorded properly to permit the preparation of ﬁnancial statements in accordance
with generally accepted accounting principles. The design, monitoring and revisions of the system of
internal accounting controls involves, among other things, management’s judgment with respect to the
relative cost and expected beneﬁts of speciﬁc control measures.

The Audit Committee of the Board of Directors is responsible for recommending to the Board the
independent certiﬁed public accounting ﬁrm to be retained each year. The Audit Committee meets
periodically with the independent accountants and management to review their performance and
conﬁrm that they are properly discharging their responsibilities. The independent accountants have
direct access to the Audit Committee to discuss the scope and results of their work, the adequacy of
internal accounting controls and the quality of ﬁnancial reporting.

/s/ STEVEN A. RAYMUND
Steven A. Raymund
Chairman of the Board of Directors
and Chief Executive Officer

/s/ JEFFERY P. HOWELLS
Jeffery P. Howells
Executive Vice President
and Chief Financial Officer

March 28, 2000

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except share amounts)

Current assets:

ASSETS

Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, less allowance of $61,617 and $60,521 . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid and other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Property and equipment, net
Excess of cost over acquired net assets, net
Other assets, net

January 31,

2000

1999

31,786
1,906,315
1,540,030
109,674

3,587,805
154,008
302,531
79,474

8,615
1,796,045
1,369,351
113,952

3,287,963
126,537
345,326
85,161

$4,123,818

$3,844,987

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Revolving credit loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Long-term debt

$1,006,809
1,524,330
261,077

2,792,216
316,840

$ 817,870
1,503,866
241,170

2,562,906
308,521

Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3,109,056

2,871,427

Minority interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,067

6,269

Commitments and contingencies (Notes 2 and 10) . . . . . . . . . . . . . . . .
Shareholders’ equity:

Preferred stock, par value $.02; 226,500 shares

authorized and issued; liquidation
preference $.20 per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Common stock, par value $.0015; 200,000,000 shares
authorized; 52,231,581 and 51,098,442 issued and
outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive (loss) income . . . . . . . . . . . . . . .

78
530,238
556,248
(72,874)

77
505,385
428,720
33,104

967,291

Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

1,013,695

$4,123,818

$3,844,987

The accompanying Notes to Consolidated Financial Statements are an integral part of these ﬁnancial statements.

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)

Year ended January 31,

2000

1999

1998

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$16,991,750

$11,528,999

$7,056,619

Cost and expenses:

Cost of products sold . . . . . . . . . . . . . . . . . . . . . . .

16,058,086

10,806,153

6,590,873

Selling, general and administrative expenses . .

661,792

492,542

293,108

16,719,878

11,298,695

6,883,981

Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . .

271,872

230,304

Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net foreign currency exchange loss (gain) . . . . . .

(Gain) on the sale of Macrotron AG . . . . . . . . . . . .

Income before income taxes . . . . . . . . . . . . . . . . . .

Provision for income taxes . . . . . . . . . . . . . . . . . . . .

Income before minority interest . . . . . . . . . . . . . . . .

Minority interest

. . . . . . . . . . . . . . . . . . . . . . . . . . . . .

65,965

5,153

—

200,754

72,837

127,917

416

44,988

(5,027)

(15,700)

206,043

76,215

129,828

876

172,638

29,908

—

142,730

52,816

89,914

429

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127,501

128,952

89,485

Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Weighted average common shares outstanding:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

2.47

2.34

2.59

2.47

2.00

1.92

51,693

58,508

49,727

54,161

44,715

46,610

The accompanying Notes to Consolidated Financial Statements are an integral part of these ﬁnancial statements.

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(In thousands)

Preferred Stock Common Stock Additional

Shares Amount Shares Amount

Accumulated
Other
Comprehensive
Income (loss)

Total
Shareholders’
Equity

Retained
Earnings

Paid-In
Capital

Balance 1 January 31, 1997 . .

227

43,291

$65

$226,577 $210,283

$ 1,451

$ 438,381

Issuance of common stock in

business purchase . . . . . . . .

Issuance of common stock for
stock options exercised and
related tax beneﬁt

. . . . . . . .

Issuance of common stock net

of offering costs . . . . . . . . . .

Comprehensive income . . . . . .

407

861

3,691

9,255

19,077

148,971

9,256

19,078

148,976

86,897

89,485

(2,588)

Balance 1 January 31, 1998 . .

227

48,250

403,880

299,768

(1,137)

702,588

Issuance of common stock in

business purchase . . . . . . . .

Issuance of common stock for
stock options exercised and
related tax beneﬁt

. . . . . . . .

Comprehensive income . . . . . .

2,196

652

84,964

16,541

84,967

16,543

163,193

128,952

34,241

Balance 1 January 31, 1999 . .

227

51,098

505,385

428,720

33,104

967,291

Issuance of common stock for
stock options exercised and
related tax beneﬁt

. . . . . . . .

Effect of change in year end of

certain subsidiaries
(see Note 3)

. . . . . . . . . . . .

Comprehensive income . . . . . .

1,134

24,853

24,854

(17,086)

127,501

(88,892)

(17,059)

38,609

Balance 1 January 31, 2000 . .

227

52,232

$78

$530,238 $556,248

$(72,874)

$1,013,695

The accompanying Notes to Consolidated Financial Statements are an integral part of these ﬁnancial statements.

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)

Year ended January 31,

2000

1999

1998

Cash ﬂows from operating activities:

Cash received from customers . . . . . . . . . . . . . . . . . . . . .
Cash paid to suppliers and employees . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 16,788,960
(16,684,316)
(69,554)
(39,367)

$ 11,094,731
(10,948,414)
(39,926)
(62,895)

$ 6,870,096
(6,914,537)
(29,909)
(51,949)

Net cash (used in) provided by operating activities . . . . .

(4,277)

43,496

(126,299)

Cash ﬂows from investing activities:

Acquisition of businesses, net of cash acquired . . . . . . . . .
Sale of Macrotron AG . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expenditures for property and equipment
. . . . . . . . . . . . .
Software development costs . . . . . . . . . . . . . . . . . . . . . . .

(42,898)
—
(59,038)
(18,381)

Net cash (used in) provided by investing activities . . . . .

(120,317)

Cash ﬂows from ﬁnancing activities:

Proceeds from issuance of common stock . . . . . . . . . . . . .
Net borrowings (repayments) from revolving credit loans . .
. . . . . . . . . . . . . . . .
Principal payments on long-term debt

Net cash provided by (used in) ﬁnancing activities . . . . . . .

Effect of change in year end of certain subsidiaries

(See Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Net increase in cash and cash equivalents . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . .

Cash and cash equivalents at end of year

. . . . . . . . . . . . . .

Reconciliation of net income to net cash (used in)

provided by operating activities:

24,854
99,447
(162)

124,139

23,626

23,171
8,615

31,786

(115,000)
227,843
(47,796)
(4,856)

60,191

16,543
(114,151)
(213)

(97,821)

(68,136)
—
(45,900)
(2,216)

(116,252)

168,054
76,786
(201)

244,639

—

5,866
2,749

8,615

—

2,088
661

2,749

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

127,501

128,952

89,485

Adjustments to reconcile net income to net cash (used in)

provided by operating activities:

Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . .
Provision for losses on accounts receivable . . . . . . . . . . .
Gain on sale of Macrotron AG . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in assets and liabilities:

(Increase) in accounts receivable . . . . . . . . . . . . . . . . . .
(Increase) in inventories . . . . . . . . . . . . . . . . . . . . . . . . .
(Increase) decrease in prepaid and other assets . . . . . .
Increase in accounts payable . . . . . . . . . . . . . . . . . . . . .
Increase (decrease) in accrued expenses . . . . . . . . . . .

Total adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

57,842
40,877
—
1,306

(202,790)
(220,585)
(25,430)
136,748
80,254

(131,778)

42,605
34,810
(15,700)
500

(434,268)
(49,830)
89,140
387,136
(139,849)

(85,456)

26,364
22,634
—
3,720

(183,481)
(181,393)
(8,317)
106,134
(1,445)

(215,784)

Net cash (used in) provided by operating activities . . . . .

(4,277)

43,496

$ (126,299)

The accompanying Notes to Consolidated Financial Statements are an integral part of these ﬁnancial statements.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated ﬁnancial statements include the accounts of Tech Data Corporation and its
subsidiaries (‘‘Tech Data’’ or the ‘‘Company’’). All signiﬁcant intercompany accounts and transactions
have been eliminated in consolidation. See Note 3 1Change in Year End of Certain Subsidiaries.

Method of Accounting

The Company prepares its ﬁnancial statements in conformity with generally accepted accounting
principles. These principles require management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the ﬁnancial statements and the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.

Revenue Recognition

Sales are recorded upon shipment. The Company allows its customers to return product for
exchange or credit subject to certain limitations. Provision for estimated losses on such returns are
recorded at the time of sale (see product warranty below). Funds received from vendors for marketing
programs and product rebates are accounted for as a reduction of selling, general and administrative
expenses or product cost according to the nature of the program.

Inventories

Inventories (consisting of computer related hardware and software products) are stated at the

lower of cost or market, cost being determined on the ﬁrst-in, ﬁrst-out (FIFO) method.

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed over the estimated economic

lives (or lease period if shorter) using the following methods:

Buildings and improvements
Leasehold improvements
Furniture, ﬁxtures and equipment

Method

Straight-line
Straight-line
Accelerated
and straight-line

Years

3 - 39
3 - 39
3 - 10

Expenditures for renewals and improvements that signiﬁcantly add to productive capacity or
extend the useful
life of an asset are capitalized. Expenditures for maintenance and repairs are
charged to operations when incurred. When assets are sold or retired, the cost of the asset and the
related accumulated depreciation are eliminated from the accounts and any gain or loss is recognized
at such time.

Long-Lived Assets

Long-lived assets are reviewed for potential impairment at such time when events or changes in
circumstances indicate that recovery of the asset is unlikely. Any impairment loss would be recognized
when the sum of the expected, undiscounted future net cash ﬂows is less than the carrying amount of
the asset.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Excess of Cost Over Acquired Net Assets

The excess of cost over acquired net assets (‘‘goodwill’’) is being amortized on a straight-line
basis over 15 to 40 years. Amortization expense was $8,836,000, $5,714,000 and $1,458,000 in 2000,
1999 and 1998, respectively. The accumulated amortization of goodwill is approximately $16,713,000
and $8,651,000 at January 31, 2000 and 1999, respectively.

Intangibles

Included within other assets at January 31, 2000 are certain intangible assets including capitalized
software costs and the allocation of a portion of the purchase price of Computer 2000 AG (‘‘Computer
2000’’) to software used within the Computer 2000 entities and the value of the customer base
acquired (see Note 2 1 Acquisition and Disposition of Subsidiaries). Such capitalized costs are being
amortized over
three to ten years with amortization expense of $9,297,000, $8,442,000 and
$4,967,000 in 2000, 1999, and 1998, respectively. The accumulated amortization of such costs was
$31,262,000 and $22,603,000 at January 31, 2000 and 1999, respectively. The remaining unamortized
balance of such costs was $45,202,000 and $39,876,000 at January 31, 2000 and 1999, respectively.

Product Warranty

The Company’s vendors generally warrant the products distributed by the Company and allow the
Company to return defective products, including those that have been returned to the Company by its
customers. The Company does not independently warrant the products it distributes; however, the
Company does warrant the following: (1) services with regard to products conﬁgured for its customers,
and (2) products it builds to order from components purchased from other sources. A provision for
estimated warranty costs is recorded at the time of sale and periodically adjusted to reﬂect actual
experience. Warranty expense was not material to the Company’s Consolidated Statement of Income.

Income Taxes

Income taxes are accounted for under the liability method. Deferred taxes reﬂect

the tax
consequences on future years of differences between the tax bases of assets and liabilities and their
ﬁnancial reporting amounts. Deferred taxes have not been provided on the cumulative undistributed
earnings of foreign subsidiaries or the cumulative translation adjustment related to those investments
since such amounts are expected to be reinvested indeﬁnitely.

Foreign Currency Activities

The assets and liabilities of foreign operations are translated at the exchange rates in effect at the
balance sheet date, with the related translation gains or losses reported as a separate component of
comprehensive income. The results of foreign operations are translated at the weighted average
exchange rates during the year. The Company recorded a net loss resulting from foreign currency
transactions (including gains or losses on forward contracts) of $5,153,000 for the year ended January
31, 2000 and a net gain of $5,027,000 for the year ended January 31, 1999. The foreign currency loss
for the ﬁscal year ended January 31, 1998 was immaterial.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Concentration of Credit Risk

The Company sells its products to a large base of value-added resellers (‘‘VARs’’), corporate
resellers, retailers, direct marketers and Internet resellers throughout the United States, Canada, the
Caribbean, Latin America, Europe, and the Middle East. The Company also performs ongoing credit
evaluations of its customers and generally does not require collateral. The Company has obtained
credit insurance which insures a percentage of credit extended by the Company to certain of its larger
domestic and international customers against possible loss. The Company makes provisions for
estimated credit losses at the time of sale.

Derivative Financial Instruments

The Company operates internationally with distribution facilities in various locations around the
world. The Company reduces its exposure to ﬂuctuations in interest rates and foreign exchange rates
instruments. The market risk
by creating offsetting positions through the use of derivative ﬁnancial
related to the foreign exchange agreements is offset by changes in the valuation of the underlying
items being hedged. The majority of the Company’s derivative ﬁnancial instruments have terms of 180
days or less. The Company currently does not use derivative ﬁnancial
instruments for trading or
speculative purposes, nor is the Company a party to leveraged derivatives.

Derivative ﬁnancial instruments are accounted for on an accrual basis. Income and expense are
recorded in the same category as that arising from the related asset or liability being hedged. Gains
liabilities or ﬁrm commitments are
and losses resulting from effective hedges of existing assets,
deferred and recognized when the offsetting gains and losses are recognized on the related hedged
items.

The notional amount of forward exchange contracts and options is the amount of foreign currency
to be bought or sold at maturity. The notional amount of interest rate swaps is the underlying principal
used in determining the interest payments exchanged over the life of the swap. Notional amounts are
indicative of the extent of the Company’s involvement in the various types and uses of derivative
instruments and are not a measure of the Company’s exposure to credit or market risks
ﬁnancial
through its use of derivatives. The estimated fair value of derivative ﬁnancial instruments represents
the amount required to enter into similar offsetting contracts with similar remaining maturities based on
quoted market prices.

The Company’s derivative ﬁnancial instruments outstanding at January 31, 2000 and 1999 are as

follows:

January 31, 2000

January 31, 1999

Notional
Amounts

Estimated
Fair Value

Notional
Amounts

Estimated
Fair Value

(In thousands)

Foreign exchange forward contracts . . .
Purchased currency options . . . . . . . . . .
Interest rate swaps . . . . . . . . . . . . . . . . . .

$455,100
52,200
9,700

$11,100
1,400
—

$438,000
60,000
329,000

130
90
(2,440)

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Fair Value of Financial Instruments

The carrying amounts of cash, accounts receivable, accounts payable and accrued expenses
approximate fair value because of the short maturity of these items. The carrying amount of debt
outstanding pursuant to bank credit agreements approximates fair value as interest rates on these
instruments approximate current market rates. The estimated fair value of the convertible subordinated
notes is approximately $260,000,000 at January 31, 2000 based upon available market information.
The carrying value of the convertible subordinated notes at January 31, 2000 was $300,000,000.

Comprehensive Income

The Company has adopted SFAS No. 130, ‘‘Reporting Comprehensive Income’’ (‘‘SFAS 130’’).
SFAS 130 establishes standards for
reporting and display of comprehensive income and its
components in the Company’s consolidated ﬁnancial statements. 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 is comprised exclusively of the cumulative foreign currency translation adjustment. For the
years ended January 31, 2000 and 1999, the Company recorded deferred income taxes related to the
change in the cumulative foreign currency translation adjustment of $12,942,000 and $4,376,000
respectively. The deferred income taxes related to the cumulative foreign currency translation
adjustment for the year ended January 31, 1998 was not signiﬁcant.

Stock-based Compensation

(‘‘SFAS 123’’). As permitted by this pronouncement,

The Company has adopted the disclosure requirements of SFAS No. 123, ‘‘Accounting for Stock
Based Compensation’’
the Company’s
measurement of compensation cost continues to be in accordance with the Accounting Principles
Board (‘‘APB’’) Opinion No. 25, ‘‘Accounting for Stock Issued to Employees.’’ In accordance with the
requirements of SFAS 123, the appropriate pro forma disclosures relating to net income and earnings
per share are provided. See Note 8 — Employee Beneﬁt Plans.

Net Income Per Common Share

Basic EPS is computed by dividing net income by the weighted average number of common
shares outstanding during the reported period. Diluted EPS reﬂects the potential dilution that could
occur assuming the conversion of the convertible subordinated notes and exercise of the 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:

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—(Continued)

Year ended
2000

Year ended
1999

Year ended
1998

Net
Income

Weighted
Average
Shares

Per
Share
Amount

Net
Income

Weighted
Average
Shares

Per
Share
Amount

Net
Income

Weighted
Average
Shares

Per
Share
Amount

(In thousands, except per share amounts)

Net income per common

Share 1 basic . . . . . . . . $127,501

51,693

$2.47

$128,952

49,727

$2.59

$89,485

44,715

$2.00

Effect of dilutive securities:

Stock options . . . . . . . . .
5% convertible
subordinated notes . . . . .

Net income per common

1,482

1,767

1,895

9,450

5,333

4,726

2,667

—

Share 1 diluted . . . . . . . $136,951

58,508

$2.34

$133,678

54,161

$2.47

$89,485

46,610

$1.92

At January 31, 2000, 1999 and 1998, there were 2,580,000, 1,571,000 and 98,000 shares,
respectively, excluded from the computation of diluted earnings per share because their effect would
have been antidilutive.

Cash management system

Under the Company’s cash management system, disbursements cleared by the bank are
reimbursed on a daily basis from the revolving credit loans. As a result, checks issued but not yet
presented to the bank are not considered reductions of cash or accounts payable. Included in accounts
payable are $87,051,000 and $95,185,000 at January 31, 2000 and 1999 respectively, for which
checks are outstanding.

Statement of cash ﬂows

Short-term investments which have an original maturity of ninety days or less are considered cash
equivalents in the statement of cash ﬂows. The effect of changes in foreign exchange rates on cash
balances is not material. See Note 2 1 Acquisition and Disposition of Subsidiaries regarding the
non-cash exchange of common stock and convertible notes in connection with business combinations.

Fiscal Year

The Company operates on a ﬁscal year that ends on January 31. For the period prior to ﬁscal
2000 the Company consolidated its European and Latin American subsidiaries on a ﬁscal year that
ended on December 31. Effective for the year ended January 31, 2000, the Company changed the
ﬁscal year end of the European subsidiaries from December 31 to January 31. See Note 3 - Change in
Year End of Certain Subsidiaries.

Recent Accounting Pronouncements

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—(Continued)

derivative instruments and hedging activities. SFAS 133 was updated by the issuance of SFAS 137,
‘‘Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of FAS
No. 133’’ and is effective for ﬁscal years beginning after June 15, 2000. The future impact of this
statement on the Company’s results of operations is not expected to be material.

Reclassiﬁcations

Certain prior year balances have been reclassiﬁed to conform with the current year presentation.

NOTE 2. ACQUISITION AND DISPOSITION OF SUBSIDIARIES

Acquisition and Disposition of Macrotron AG

On July 1, 1997, the Company acquired approximately 77% of the voting common stock and 7%
of the non-voting preferred stock of Macrotron AG (‘‘Macrotron’’), a distributor of personal computer
products based in Munich, Germany. The initial acquisition was completed through an exchange of
approximately $26,000,000 in cash and 406,586 shares of
for a
combined total value of approximately $35,000,000. The cash portion of the initial acquisition, the
related tender offer and subsequent purchase of Macrotron’s common and preferred stock were
funded from the Company’s revolving credit loan agreements. Prior to the disposition discussed below,
the Company owned approximately 99% and 91% of Macrotron’s common and preferred stock,
respectively for a total purchase price of approximately $80,000,000. The acquisition of Macrotron was
accounted for under the purchase method. The purchase price allocation resulted in approximately
$53,500,000 in excess cost over the net fair market value of tangible assets acquired as of January 31,
1998 and was being amortized over a period of 20 years.

the Company’s common stock,

Effective July 1, 1998, pursuant to a Share Purchase Agreement dated June 10, 1998, the
Company completed the sale of its majority interest in Macrotron to Ingram Micro, Inc. (‘‘Ingram’’). Tech
Data owned 99% and 91% of Macrotron’s outstanding common and preferred stock, respectively, at
the time of the sale. The sale of Macrotron was completed through the receipt of approximately
$228,000,000 from Ingram (approximately $100,000,000 for the Company’s shares of Macrotron and
the balance of $128,000,000 for the repayment of Macrotron’s intercompany indebtedness). The
Company recorded a $15,700,000 gain on the sale. Macrotron’s operations were consolidated into the
Company’s consolidated ﬁnancial statements on a calendar year basis. Consequently, the Company’s
ﬁscal year ended January 31, 1998 included Macrotron’s operations for the six month period beginning
July 1, 1997 and ending December 31, 1997. The Company’s ﬁscal year ended January 1999 included
the six month period beginning January 1, 1998 and ending June 30, 1998.

Acquisition of Computer 2000 AG

On July 1, 1998, Tech Data completed the acquisition of approximately 83% of the voting common
stock of Computer 2000 AG (‘‘Computer 2000’’), a European distributor of technology products. The
Company acquired 80% of the outstanding voting stock of Computer 2000 from its parent company,
Klockner & Co. AG., a subsidiary of Munich-based VIAG AG, and an additional stake of approximately
3% of Computer 2000’s shares from an institutional
investor. The initial acquisition was completed
through an exchange of approximately 2.2 million shares of Tech Data common stock and

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 2. ACQUISITION AND DISPOSITION OF SUBSIDIARIES—(Continued)

$300,000,000 of 5% convertible subordinated notes, due July 2003 (coupon rate of 5.0%, ﬁve year
term and convertible into shares of common stock at $56.25 per share). The Company commenced a
tender offer for the remaining Computer 2000 shares and, as a result of this tender offer, open market
purchases and private purchase transactions, the Company, in effect, currently owns approximately
99.8% of Computer 2000’s outstanding stock at January 31, 2000. The tender offer, open market
purchases and private purchase transactions were funded through the Company’s revolving credit loan
agreements.

The acquisition of Computer 2000 was accounted for under the purchase method. During the year
ended January 31, 2000, the Company acquired additional shares of Computer 2000 common stock,
which including other cash payments, has resulted in additional consideration of $18,300,000. The
aggregate purchase price of approximately $518,300,000 was allocated to the assets acquired and
liabilities assumed based upon their estimated fair values at the date of acquisition. The excess of the
purchase price over
the fair value of net assets acquired of approximately $329,000,000
($294,000,000 at the January 31, 2000 exchange rate) is being amortized on a straight-line basis over
40 years. In connection with the acquisition, the Company is subject to additional contingent purchase
price payments. The Company is presently negotiating the resolution of this contingency and believes
the ultimate settlement will not exceed $21,000,000. Any payments made related to this contingency
will increase the purchase price of Computer 2000 and result in the recognition of additional goodwill.

For periods prior to ﬁscal 2000,

the Company’s subsidiaries outside of North America were
included in its consolidated ﬁnancial statements on a calendar basis. As such, the year ended January
31, 2000, included a full year of results for Computer 2000 and the year ended January 31, 1999
included six months of results for Computer 2000 (which was acquired effective July 1, 1998) and
included six months of results for Macrotron (which was sold effective July 1, 1998). See Note 3 1
Change in Year End of Certain Subsidiaries.

Pro forma information

The following unaudited pro forma results of operations reﬂect the effect on the Company’s
operations as if the above described acquisition of Macrotron had occurred at the beginning of the
period presented below (in thousands, except per share amounts):

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended
January 31,

1998

$7,623,852
90,161

2.01
1.93

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 2. ACQUISITION AND DISPOSITION OF SUBSIDIARIES—(Continued)

The following unaudited pro forma results of operations reﬂect the effect on the Company’s
operations as if the above described acquisition of Computer 2000 and disposition of Macrotron had
occurred at the beginning of each of the periods presented below (in thousands, except per share
amounts):

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . .
Net income per common share:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended January 31,

1999

1998

$13,694,426
125,954

$11,350,432
95,669

2.48
2.34

2.04
1.94

The unaudited pro forma information is presented for informational purposes only and is not
necessarily indicative of the operating results that would have occurred had the acquisitions and
dispositions noted above been consummated as of the beginning of the respective periods, nor are
they necessarily indicative of future operating results.

Acquisition of Globelle Corporation

On May 21, 1999, the Company acquired majority control of Globelle Corporation (‘‘Globelle’’), a
mass storage and components distributor based in Canada. By October 8, 1999, the Company had
acquired 100% of the outstanding stock of Globelle for total cash consideration of approximately
$24,600,000. The acquisition of Globelle was accounted for under the purchase method. The
preliminary purchase price allocation has resulted in approximately $12,921,000 in excess purchase
price over the net fair market value of tangible assets acquired as of January 31, 2000, to be amortized
over a period of 20 years. Pro forma ﬁnancial information related to the Globelle acquisition has not
been presented since the acquisition was not material to the Company’s ﬁnancial position or results of
operations. The year ended January 31, 2000 includes seven months of results for Globelle.

Non-Cash Transactions

The Company issued $300,000,000 convertible subordinated notes and approximately 2,200,000
shares of common stock in conjunction with its acquisition of Computer 2000 in July 1998. In ﬁscal
2000, the Company entered into a capital
lease for a distribution center in Germany which totaled
$8,476,000 at January 31, 2000.

NOTE 3. CHANGE IN YEAR END OF CERTAIN SUBSIDIARIES

In ﬁscal 2000, the Company’s board of directors approved a change in the ﬁscal year end of its
European subsidiaries to January 31 to conform with the Company’s year end. The Tech Data
consolidated ﬁnancial statements for the year ended January 31, 2000 include the operating results of
these subsidiaries for the 12 months ended December 31, 1999 with the operating results for the
month of January 2000 reﬂected in retained earnings as a result of the change which does not have a
information
signiﬁcant effect on the accompanying ﬁnancial statements. Summarized ﬁnancial

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 3. CHANGE IN YEAR END OF CERTAIN SUBSIDIARIES—(Continued)

associated with the month of January 2000 for those foreign subsidiaries affected by this change is as
follows:

Net sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash provided by/(used in)

Operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

NOTE 4. PROPERTY AND EQUIPMENT

Month ended
January 31,

2000

(In thousands)
$617,284
27

(34,270)
(596)
58,492

Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buildings and improvements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture, ﬁxtures and equipment
. . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less-accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . .

NOTE 5. REVOLVING CREDIT LOANS

January 31,

2000

1999

(In thousands)

7,644
59,676
220,911
8,015

296,246
(142,238)

$ 4,897
36,995
156,414
4,299

202,605
(76,068)

$ 154,008

$126,537

January 31,

2000

1999

(In thousands)

Receivables Securitization Program, average interest rate of

6.54% at January 31, 2000, expiring May 9, 2000 . . . . . . . . . . . . . . . .

$ 460,000

$355,000

Multi-currency Revolving Credit Facility, average interest rate of

4.34% at January 31, 2000, expiring August 28, 2000 . . . . . . . . . . . . .

345,551

295,539

Other revolving credit facilities, average interest rate of

4.05%, expiring on various dates through 2000 . . . . . . . . . . . . . . . . . .

201,258

167,331

$1,006,809

$817,870

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 5. REVOLVING CREDIT LOANS—(Continued)

The Company has an agreement (the ‘‘Receivables Securitization Program’’) with three 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 $650,000,000. 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 sixteen major foreign currencies up to a maximum of
$550,000,000 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. 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 $500,000,000 at January 31, 2000 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 January 31, 2000, the Company was in compliance with all such covenants.

NOTE 6. LONG-TERM DEBT

Mortgage note payable, interest at 10.25%, principal and
interest of $85,130 payable monthly, balloon payment
due 2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Mortgage note payable funded through Industrial Revenue Bond,

interest at 6.90%, principal and interest payable quarterly,
through 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Convertible subordinated debentures, interest at 5.00% payable

semi-annually, due July 2003 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less - current maturities (included in accrued expenses) . . . . . . . . . . . . . .

January 31,

2000

1999

(In thousands)

$ 8,521

$ 8,661

—

300,000
8,476

316,997
(157)

300,000

—

308,683
(162)

$316,840

$308,521

Principal maturities of long-term debt (excluding capitalized lease obligations) at January 31, 2000
for the succeeding ﬁve ﬁscal years are as follows: 2001 - $157,000; 2002 - $172,000; 2003 - $191,000;
2004 - $300,211,000; 2005 - $234,000.

On July 1, 1998, the Company issued $300,000,000 convertible subordinated notes due July 1,
2003. The notes bear interest at 5% per year and are convertible any time prior to maturity, unless

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 6. LONG-TERM DEBT—(Continued)

previously redeemed or repurchased, into shares of common stock at a conversion rate of 17.777
shares per $1,000 principal amount of notes, equivalent to a conversion price of approximately $56.25
per share. The notes are convertible into approximately 5,333,000 shares of the Company’s common
stock. The notes are redeemable in whole or in part, at the option of the Company at any time on or
after July 1, 2001. These notes are subordinated in right of payment to all senior indebtedness of the
Company and will be effectively subordinated to all indebtedness and other liabilities of the Company’s
subsidiaries.

Capitalized lease obligations provide for aggregate payments, including interest, of approximately
$646,000 annually, payable through 2022. At January 31, 2000, future minimum lease payments for
the lease were $13,216,000 including $4,740,000 representing interest.

NOTE 7.

INCOME TAXES

Deferred income taxes reﬂect the net tax effects of temporary differences between the carrying
amounts of assets and liabilities for ﬁnancial reporting purposes and the amounts used for income tax
purposes. Signiﬁcant components of the Company’s deferred tax liabilities and assets are as follows:

January 31,

2000

1999

(In thousands)

Deferred tax liabilities:

Accelerated depreciation and amortization . . . . . . . . . . . . . . . . .
Capitalized advertising program costs . . . . . . . . . . . . . . . . . . . . .
Currency translation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other 1 net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 14,733
625
13,142
5,047

33,547

$ 19,821
2,174
1,996
4,246

28,237

Deferred tax assets:

Accruals not currently deductible . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves not currently deductible . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized inventory costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other 1 net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Less: valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9,515
21,067
367
60,506
3,730

95,185
(17,224)

77,961

7,880
22,777
2,046
59,996
8,934

101,633
(16,037)

85,596

Net deferred tax asset

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

$ 44,414

$ 57,359

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 7.

INCOME TAXES—(Continued)

Signiﬁcant components of the provision for income taxes are as follows:

Current: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total current

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Deferred:
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Federal
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Total deferred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended January 31,

2000

1999

1998

(In thousands)

$42,693
2,933
25,905

71,531

$50,153
6,816
18,746

75,715

$39,805
2,469
6,822

49,096

(805)
127
1,984

1,306

(3,093)
(424)
4,017

500

3,328
507
(115)

3,720

$72,837

$76,215

$52,816

The reconciliation of income tax attributable to continuing operations computed at the U.S. federal

statutory tax rates to income tax expense is as follows:

Year ended January 31,

2000

1999

1998

Tax at U.S. statutory rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State income taxes, net of federal tax beneﬁt . . . . . . . . . . . . . . . .
Other 1 net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The components of pre-tax earnings are as follows:

1.0
.3

35.0% 35.0% 35.0%
2.0
—
36.3% 37.0% 37.0%

1.4
.6

United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended January 31,

2000

1999

1998

$113,229
87,525

$200,754

(In thousands)
$140,850
65,193

$206,043

$126,757
15,973

$142,730

The Company’s foreign subsidiaries had deferred tax assets relating to net operating loss
carryforwards of $154,000,000. The majority of
the net operating losses have an indeﬁnite
carryforward period with the remaining portion expiring in years 2001 through 2009. A valuation
allowance of $17,000,000 has been recognized to offset the deferred tax assets relating to the net
operating loss carryforwards.

The cumulative amount of undistributed earnings of

international subsidiaries for which U.S.
income taxes have not been provided was approximately $147,000,000 at January 31, 2000. It is not
practical to estimate the amount of unrecognized deferred U.S. taxes on these undistributed earnings.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 8. EMPLOYEE BENEFIT PLANS

Stock Compensation Plans

At January 31, 2000, the Company had three stock-based compensation plans, as well as an
employee stock purchase plan, an employee stock ownership plan and a retirement savings plan,
which are described below. The Company applies APB Opinion 25 and related interpretations in
accounting for its plans. Accordingly, no compensation cost has been recognized for its ﬁxed stock
option plans and its stock purchase plan.

Fixed Stock Option Plans

In August 1985, the Board of Directors adopted the 1985 Incentive Stock Option Plan (the ‘‘1985
Plan’’), which covers an aggregate of 1,050,000 shares of common stock. The options were granted to
certain officers and key employees at or above fair market value; accordingly, no compensation
expense has been recorded with respect to these options. Options are exercisable beginning two
years from the date of grant only if the grantee is an employee of the Company at that time. No options
may be granted under the 1985 Plan after July 31, 1995.

In June 1990, the shareholders approved the 1990 Incentive and Non-Statutory Stock Option Plan
(the ‘‘1990 Plan’’) which covers an aggregate of 10,000,000 shares (as amended in June 1997) of
common stock. The 1990 Plan provides for the granting of incentive and non-statutory stock options,
stock appreciation rights (‘‘SARs’’) and limited stock appreciation rights (‘‘Limited SARs’’) at prices
determined by the stock option committee, except for incentive stock options which are granted at the
fair market value of the stock on the date of grant. Incentive options granted under the 1990 Plan
become exercisable over a ﬁve year period while the date of exercise of non-statutory options is
determined by the stock option committee. As of January 31, 2000, no SARs or Limited SARs had
been granted under the 1990 Plan. Options granted under the 1985 Plan and the 1990 Plan expire 10
years from the date of grant, unless a shorter period is speciﬁed by the stock option committee.

In June 1995, the shareholders approved the 1995 Non-Employee Director’s Non-Statutory Stock
Option Plan. Under this plan, the Company grants non-employee members of its Board of Directors
stock options upon their initial appointment to the board and then annually each year thereafter. Stock
options, granted at the fair market value of the stock on the date of grant, are awarded to members
upon their initial appointment and vest and become exercisable at a rate of 20% per year. Annual
awards vest and become exercisable one year from the date of grant. The number of shares subject to
options under this plan cannot exceed 100,000 and the options expire 10 years from the date of grant.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 8. EMPLOYEE BENEFIT PLANS—(Continued)

A summary of the status of the Company’s stock option plans is as follows:

January 31,
2000

January 31
1999

January 31,
1998

Weighted
Average
Exercise
Price

$26.88
17.87
16.21
26.69

4,364,075
3,050,700
(948,180)
(424,035)

Weighted
Average
Exercise
Price

$19.43
40.27
14.24
28.68

3,881,545
1,661,400
(609,620)
(569,250)

Weighted
Average
Exercise
Price

$14.31
26.65
13.23
17.57

3,285,818
1,643,400
(720,573)
(327,100)

. . . .
Outstanding at beginning of year
Granted . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . .
Canceled . . . . . . . . . . . . . . . . . . . . . . .

Outstanding at year end . . . . . . . . . . .

6,042,560

24.12

4,364,075

26.88

3,881,545

19.43

Options exercisable at year end . . . . .
Available for grant at year end . . . . . .

1,993,750
869,635

768,425
3,496,000

601,895
4,588,000

Options Outstanding

Options Exercisable

Weighted-
Average
Remaining
Contractual Life
(years)

5.21
8.99
6.98
8.01
8.01

Weighted-
Average
Exercise
Price

$12.52
16.41
22.30
38.36
44.89

Weighted-
Average
Exercise
Price

$11.99
16.29
22.41
34.71
44.56

Number
Exercisable
at 1/31/00

539,785
806,375
525,190
87,600
34,800

1,993,750

Range of
Exercise
Prices

Under $ 14.38
14.56 - 16.50
17.13 - 24.13
24.97 - 41.00
41.75 - 48.69

Number
Outstanding
at 1/31/00

846,185
1,989,665
1,416,360
1,579,850
210,500

6,042,560

Employee Stock Purchase Plan

Under the 1995 Employee Stock Purchase Plan approved in June 1995,

the Company is
authorized to issue up to 1,000,000 shares of common stock to eligible employees in the Company’s
U.S. and Canadian subsidiaries. Under the terms of the plan, employees can choose to have a ﬁxed
dollar amount or percentage deducted from their bi-weekly compensation to purchase the Company’s
common stock and/or elect to purchase shares once per calendar quarter. The purchase price of the
stock is 85% of the market value on the exercise date and employees are limited to a maximum
purchase of $25,000 in fair market value each calendar year. Since plan inception, the Company has
sold 251,795 shares as of January 31, 2000. All shares purchased under this plan must be retained for
a period of one year.

Pro Forma Effect of Stock Compensation Plans

Had the compensation cost for the Company’s stock option plans and employee stock purchase
plan been determined based on the fair value at the grant dates for awards under the plans consistent
with the method prescribed by Statement of Financial Accounting Standards No. 123, ‘‘Accounting for

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 8. EMPLOYEE BENEFIT PLANS—(Continued)

Stock-Based Compensation’’, the Company’s net income and net income per common share on a pro
forma basis would have been (in thousands, except per share data):

Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Year ended January 31,

2000

1999

1998

$113,603

$120,548

$85,344

2.20
1.95

2.42
2.32

1.91
1.83

The preceding pro forma results were calculated with the use of the Black-Scholes option-pricing
model. The weighted-average fair value of options granted during ﬁscal 2000, 1999 and 1998 was
$9.20, $24.04 and $14.80, respectively. The following assumptions were used for the years ended
January 31, 2000, 1999 and 1998, respectively:

Year Ended
January 31,

2000

1999
1998

Grant
Date

3/29/1999
10/28/1999
3/29/1998
3/29/1997

Expected
Option
Term

2-5
5
5
4.87

Expected
Volatility

65%
65%
65%
56%

Risk-Free
Interest Rate

5.00% - 5.23%
6.03%
5.68%
6.76%

Expected
Dividend
Yield

0%
0%
0%
0%

Results may vary depending on the assumptions applied within the model.

Stock Ownership and Retirement Savings Plans

In 1984 the Company established an employee stock ownership plan (the ‘‘ESOP’’) covering
substantially all U.S. employees. Contributions,
in the form of company stock, were made to
employees’ accounts on an annual basis upon approval by the Board of Directors. The ESOP provided
for distribution of vested percentages of the Company’s common stock to participants. Such beneﬁt
became fully vested after seven years of qualiﬁed service. The Company also offered its U.S.
employees a retirement savings plan pursuant to section 401(k) of the Internal Revenue Code (‘‘401(k)
Plan’’). The Company’s 401(k) Plan provided the ability for the Company to match deferrals in an
amount determined annually by the Company’s Board of Directors, most recently equal to 50% of the
ﬁrst 5% of each participant’s deferrals to a maximum contribution amount of $500.

Effective January 1, 2000, the Company merged the assets of the ESOP and 401(k) Plan to form
the Tech Data Corporation 401(k) Savings Plan (‘‘the 401(k) Savings Plan’’). Participant deferrals are
matched monthly, in the form of company stock, in an amount equal to 50% of the ﬁrst 6% of
participant deferrals, with no maximum, and participants are fully vested following four years of
qualiﬁed service.

At January 31, 2000, 825,000 shares of Tech Data stock were held by the Company’s 401(k)
Savings Plan and at January 31, 1999, 813,000 shares of Tech Data common stock were held by the
Company’s ESOP. Aggregate contributions made by the Company to these plans were $2,740,000,
$1,992,000 and $2,460,000 for 2000, 1999 and 1998, respectively.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 9. CAPITAL STOCK

Each outstanding share of preferred stock is entitled to one vote on all matters submitted to a vote
of shareholders, except for matters involving mergers, the sale of all Company assets, amendments to
the Company’s charter and exchanges of Company stock for stock of another company which require
approval by a majority of each class of capital stock. In such matters, the preferred and common
shareholders will each vote as a separate class.

NOTE 10. COMMITMENTS AND CONTINGENCIES

Operating Leases

The Company leases distribution facilities and certain equipment under noncancelable operating
leases which expire at various dates through 2015. Future minimum lease payments under all such
leases for the succeeding ﬁve ﬁscal years are as follows: 2001 1 $35,413,000; 2002 1 $26,262,000;
2003 1 $19,062,000; 2004 1 $10,054,000; 2005 1 $7,322,000 and $23,993,000 thereafter. Rental
expense for all operating leases amounted to $39,394,000, $27,015,000 and $15,704,000 in 2000,
1999 and 1998, respectively.

NOTE 11. SEGMENT INFORMATION

The Company has adopted the disclosure requirements of SFAS No. 131, ‘‘Disclosures about
Segments of an Enterprise and Related Information’’ which establishes standards for additional
disclosure about operating segments for interim and annual ﬁnancial statements. This standard
requires ﬁnancial and descriptive information be disclosed for segments whose operating results are
reviewed by the chief executive officer for decisions on resource allocation.

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 principal segments. These geographical segments are 1)
the United States, 2) Europe (including the Middle East) and 3) Other International areas (Canada,
Argentina, Brazil, Chile, Peru, Uruguay, and export sales to Latin America and the Caribbean from the
U.S.). The measure of segment proﬁt is income from operations. The accounting policies of the
segments are the same as those described in Note 1 — Summary of Signiﬁcant Accounting Policies.

TECH DATA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

NOTE 11. SEGMENT INFORMATION—(Continued)

Financial information by geographic segments is as follows (in thousands):

United States

Europe

Other
International

Total

Fiscal year 2000

Net sales to unaffiliated customers . . . . . . . .

$8,407,324

$7,528,978

$1,055,448

$16,991,750

Operating income . . . . . . . . . . . . . . . . . . . . . . .

$ 165,813

95,184

10,875

271,872

Identiﬁable assets . . . . . . . . . . . . . . . . . . . . . . .

$1,806,376

$1,999,116

$ 318,326

$ 4,123,818

Fiscal Year 1999

Net sales to unaffiliated customers . . . . . . . .

$6,359,124

$4,540,108

$ 629,767

$11,528,999

Operating income . . . . . . . . . . . . . . . . . . . . . . .

$ 156,142

73,585

577

230,304

Identiﬁable assets . . . . . . . . . . . . . . . . . . . . . . .

$1,555,325

$2,112,546

$ 177,116

$ 3,844,987

Fiscal Year 1998

Net sales to unaffiliated customers . . . . . . . .

$5,434,833

$1,148,036

$ 473,750

$ 7,056,619

Operating income . . . . . . . . . . . . . . . . . . . . . . .

$ 148,485

20,122

Identiﬁable assets . . . . . . . . . . . . . . . . . . . . . . .

$1,558,337

$ 534,192

4,031

172,638

92,854

$ 2,185,383

NOTE 12. UNAUDITED INTERIM FINANCIAL INFORMATION

Fiscal year 2000

Net sales . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt
. . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . .
Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . .

Fiscal year 1999

Net sales . . . . . . . . . . . . . . . . . . . . . .
Gross proﬁt(2)
. . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . .
Net income per common share:

Basic . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . .

Quarter ended

April 30

July 31

October 31

January 31

(In thousands, except per share amounts)

$3,877,158
225,242
28,024

$4,024,965
222,484
29,416

$4,310,072
231,353
33,004

$4,779,555
254,585
37,057

.55
.53

.57
.54

.63
.60

Quarter ended

.71
.67

April 30

July 31(1)

October 31

January 31(1)

(In thousands, except per share amounts)

$2,184,366
138,513
23,105

$2,213,261
143,371
35,279

$3,278,401
213,754
34,088

$3,852,971
227,208
36,480

.48
.46

.73
.70

.67
.63

.71
.67

(1) Net income for the Company’s quarters ended July 31, 1998 and January 31, 1999 include a pre-tax gain of $12,500,000
and $3,200,000, respectively, related to the sale of Macrotron. See further discussion in Note 2 — Acquisition and
Disposition of Subsidiaries.

(2) Certain prior year balances have been reclassiﬁed to conform with current year presentation.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial

PART III

Disclosure

None.

ITEMS 10, 11, 12 and 13.

The information required by Item 10 relating to executive officers of the registrant is included under
the caption ‘‘Executive Officers’’ of Item 1 of this Form 10-K. The information required by Item 10
the registrant and the information required by Items 11, 12 and 13 is
relating to Directors of
incorporated herein by reference to the registrant’s deﬁnitive proxy statement for the 2000 Annual
Meeting of Shareholders. However, the information included in such deﬁnitive proxy statement under
the subcaption entitled ‘‘Grant Date Present Value’’ in the table entitled ‘‘Option Grants in Last Fiscal
the information included under the caption entitled ‘‘Compensation Committee Report on
Year’’,
Executive Compensation’’, and the information included in the ‘‘Stock Price Performance Graph’’ shall
not be deemed incorporated by reference in this Form 10-K and shall not otherwise be deemed ﬁled
under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as
amended. The deﬁnitive proxy statement for the 2000 Annual Meeting of Shareholders will be ﬁled with
the Commission prior to May 31, 2000.

ITEM 14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K

(a) See index to ﬁnancial statements and schedules included in Item 8.

(b) The Company ﬁled the following reports on Form 8-K during the ﬁscal year ended January 31,

2000:

None

required pursuant to Item 601 of Regulation S-K.

Exhibit
Number

3-A(1)
3-B(2)

3-C(13)
3-F(9)

4-E(15)

Description

— Articles of Incorporation of the Company as amended to April 23, 1986.
— Articles of Amendment to Articles of Incorporation of the Company ﬁled on

August 27, 1987.

— By-Laws of the Company as amended to November 28, 1995.
— Articles of Amendment to Articles of Incorporation of the Company ﬁled on

July 15, 1993.

— Articles of Amendment to Articles of Incorporation of the Company ﬁled on

June 25, 1997.

— Incentive Stock Option Plan, as amended, and form of option agreement.

10-F(4)
10-G(10) — Employee Stock Ownership Plan as amended December 16, 1994.
10-V(5)

— Employment Agreement between the Company and Edward C. Raymund

dated as of January 31, 1991.

10-W(5)
10-X(6)

— Irrevocable Proxy and Escrow Agreement dated April 5, 1991.
— First Amendment to the Employment Agreement between the Company and

Edward C. Raymund dated November 13, 1992.

Exhibit
Number

10-Y(6)

— First Amendment in the nature of a Complete Substitution to the Irrevocable

Description

Proxy and Escrow Agreement dated November 13, 1992.
— 1990 Incentive and Non-Statutory Stock Option Plan as amended.

10-Z(7)
10-AA(7) — Non-Statutory Stock Option Grant Form.
10-BB(7) — Incentive Stock Option Grant Form.
10-CC(8) — Employment Agreement between the Company and Steven A. Raymund

dated February 1, 1992.

10-EE(10) — Retirement Savings Plan as amended January 26, 1994.
10-FF(9) — Revolving Credit and Reimbursement Agreement dated December 22, 1993.
10-GG(9) — Transfer and Administration Agreement dated December 22, 1993.
10-HH(10) — Amendments (Nos. 1-4) to the Transfer and Administration Agreement.
10-II(10)

— Amended and Restated Revolving Credit and Reimbursement Agreement

dated July 28, 1994, as amended.

10-JJ(10) — Revolving Foreign Currency Agreement dated August 4, 1994, as amended.
10-KK(13) — Amendments (Nos. 5,6) to the Transfer and Administration Agreement.
10-LL(13) — Amendments (Nos. 3-5) to the Amended and Restated Revolving Credit and

10-MM(13) — Amendments (Nos. 3-5) to the Revolving Foreign Currency Agreement dated

Reimbursement Agreement dated July 28, 1994, as amended.

August 4, 1994, as amended.

10-NN(12) — Non-Employee Directors’ 1995 Non-Statutory Stock Option Plan.
10-OO(12) — 1995 Employee Stock Purchase Plan.
10-PP(12) — Employment Agreement between the Company and A. Timothy Godwin

10-QQ(14) — Amended and Restated Transfer and Administration Agreement dated

dated as of December 5, 1995.

January 21, 1997.

10-RR(14) — Amendment Number 1 to the Amended and Restated Transfer and

Administration Agreement dated January 21, 1997, as amended.

10-SS(14) — Revolving Credit and Reimbursement Agreement dated May 23, 1996.
10-TT(15) — Amendment Number 2 to the Amended and Restated Transfer and

Administration Agreement dated January 21, 1997, as amended.

10-UU(15) — Revolving Credit and Reimbursement Agreement dated August 28, 1997.
10-VV(16) — Amendment Number 3 to the Amended and Restated Transfer and

Administration Agreement dated January 21, 1997, as amended.

10-WW(17) — Amendments (Nos. 1-2) to the Revolving Credit and Reimbursement
Agreement dated August 28, 1997, as amended.
10-XX(17) — Amendments (Nos. 4-6) to the Amended and Restated Transfer and

10-YY(18) — Second Amended and Restated Transfer and Administration Agreement

Administration Agreement dated January 21, 1997, as amended.

dated February 10, 1999.

10-ZZ(19) — Amendments (Nos. 1,2) to Second Amended and Restated Transfer and

21(19)
27(3)
99-A(3)

Administration Agreement.
— Subsidiaries of Registrant.
— Financial Data Schedule (included in the electronic version only).
— Cautionary Statement For Purposes of the ‘‘Safe Harbor’’ Provisions of the

Private Securities Litigation Reform Act of 1995.

(1)

(2)

Incorporated by reference to the Exhibits included in the Company’s Registration Statement on Form S-1,
File No. 33-4135.
Incorporated by reference to the Exhibits included in the Company’s Registration Statement on Form S-1,
File No. 33-21997.

(3) Filed herewith.
(4)

Incorporated by reference to the Exhibits included in the Company’s Registration Statement on Form S-8,

(5)

(6)

(7)

(8)

(9)

File No. 33-21879.
Incorporated by reference to the Exhibits included in the Company’s Form 10-Q for the quarter ended
July 31, 1991, File No. 0-14625.
Incorporated by reference to the Exhibits included in the Company’s Form 10-Q for the quarter ended
October 31, 1992, File No. 0-14625.
Incorporated by reference to the Exhibits included in the Company’s Registration Statement on Form S-8,
File No. 33-41074.
Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended
January 31, 1993, File No. 0-14625.
Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended
January 31, 1994, File No. 0-14625.

(10) Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended

January 31, 1995, File No. 0-14625.

(11) Incorporated by reference to the Exhibits included in the Company’s Form 8-K ﬁled on March 26, 1996, File

No. 0-14625.

(12) Incorporated by reference to the Exhibits included in the Company’s Deﬁnitive Proxy Statement for the 1995

Annual Meeting of Shareholders, File No. 0-14625.

(13) Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended

January 31, 1996, File No. 0-14625.

(14) Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended

January 31, 1997, File No. 0-14625.

(15) Incorporated by reference to the Exhibits included in the Company’s Registration Statement on Form S-3,

File No. 333-36999.

(16) Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended

January 31, 1998, File No. 0-14625.

(17) Incorporated by reference to the Exhibits included in the Company’s Form 10-K for the year ended

January 31, 1999, File No. 0-14625.

(18) Incorporated by reference to the Exhibits included in the Company’s Form 10-Q for the quarter ended

July 31, 1999, File No. 0-14625.

(19) To be ﬁled by amendment.

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON
FINANCIAL STATEMENT SCHEDULE

To the Board of Directors and Shareholders of Tech Data Corporation:

Our audits of the consolidated ﬁnancial statements referred to in our report dated March 28, 2000
appearing on page 20 of this Form 10-K of Tech Data Corporation also included an audit of the
Financial Statement Schedule listed in Item 14 of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the information set forth therein when read
in conjunction with the related consolidated ﬁnancial statements.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Tampa, Florida
March 28, 2000

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We hereby consent to the incorporation by reference in the Registration Statements on Form S-8
(Nos. 33-21879, 33-41074, 33-62181, 33-60479, 333-93801 and 333-85509) of Tech Data Corporation
of our report dated March 28, 2000 appearing on page 20 of this Form 10-K. We also consent to the
incorporation by reference of our report on the Financial Statement Schedule appearing above.

/s/ PRICEWATERHOUSECOOPERS LLP
PricewaterhouseCoopers LLP
Tampa, Florida
April 26, 2000

CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

We consent to incorporation by reference in the registration statements on Form S-8 (No. 33-
21879, 33-41074, 33-62181, 33-60479, 333-93801 and 333-85509) of Tech Data Corporation of our
report dated March 28, 2000,
relating to the consolidated balance sheet of Computer 2000
Aktiengesellschaft and subsidiaries as of January 31, 2000, which report appears in the January 31,
2000 annual report on Form 10-K of Tech Data Corporation dated March 28, 2000.

KPMG Hartkopf + Rentrop Treuhand KG
Wirtschaftspru¨ fungsgesellschaft
Cologne
April 26, 2000

SCHEDULE II

TECH DATA CORPORATION AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(In thousands)

Description

Allowance for doubtful accounts
receivable and sales returns:

January 31,

2000
1999
1998

Additions

Balance at
Beginning
of Period

Charged to
Cost and
Expenses

Deductions

Other(1)

Balance
at End of
Period

$60,521
29,731
23,922

$40,877
34,810
22,634

$(44,932)
(31,707)
(26,153)

$ 5,151
27,687
9,328

$61,617
60,521
29,731

(1) Other includes recoveries, acquisitions, dispositions and the effect of ﬂuctuations in foreign currency and the
effect of the change in year end of certain subsidiaries (See Note 3 to Notes to Consolidated Financial
Statements).

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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 on May 1, 2000.

TECH DATA CORPORATION

/s/ STEVEN A. RAYMUND
Steven A. Raymund,
Chairman of the Board of Directors;
Chief Executive Officer

POWER OF ATTORNEY

Each person whose signature to this Annual Report on Form 10-K appears below hereby appoints
Jeffery P. Howells and Arthur W. Singleton, or either of them, as his attorney-in-fact to sign on his
behalf individually and in the capacity stated below and to ﬁle all amendments and post-effective
amendments to this Annual Report on Form 10-K, and any and all instruments or documents ﬁled as a
part of or in connection with this Annual Report on Form 10-K or the amendments thereto, and the
attorney-in-fact, or either of them, may make such changes and additions to this Annual Report on
Form 10-K as the attorney-in-fact, or either of them, may deem necessary or appropriate.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.

Signature

Title

Date

/s/ STEVEN A. RAYMUND

Chairman of the Board of Directors;

May 1, 2000

Steven A. Raymund

Chief Executive Officer

/s/ JEFFERY P. HOWELLS

Executive Vice President and

May 1, 2000

Jeffery P. Howells

Chief Financial Officer; Director
(principal ﬁnancial officer)

/s/ JOSEPH B. TREPANI

Senior Vice President and Corporate

May 1, 2000

Joseph B. Trepani

Controller (principal accounting officer)

/s/ ARTHUR W. SINGLETON

Corporate Vice President, Treasurer

May 1, 2000

Arthur W. Singleton

and Secretary

/s/ CHARLES E. ADAIR

Director

Charles E. Adair

/s/ MAXIMILIAN ARDELT

Director

Maximilian Ardelt

/s/ JAMES M. CRACCHIOLO

Director

James M. Cracchiolo

May 1, 2000

Signature

Title

Date

/s/ DANIEL M. DOYLE

Director

May 1, 2000

Daniel M. Doyle

/s/ EDWARD C. RAYMUND

Director; Chairman Emeritus

May 1, 2000

Edward C. Raymund

/s/ KATHY MISUNAS

Director

Kathy Misunas

/s/ DAVID M. UPTON

Director

David M. Upton

/s/ JOHN Y. WILLIAMS

Director

John Y. Williams

May 1, 2000

Exhibit 99-A

Cautionary Statements for Purposes of the ‘‘Safe Harbor’’
Provisions of the Private Securities Litigation Reform Act of 1995

The Private Securities Litigation Reform Act of 1995 (the ‘‘Act’’) provides a ‘‘safe harbor’’ for
‘‘forward-looking statements’’ to encourage companies to provide prospective information, so long as
such information is identiﬁed as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to differ materially from those
discussed in the forward-looking statement(s). Tech Data Corporation (the ‘‘Company’’ or ‘‘Tech Data’’)
desires to take advantage of the safe harbor provisions of the Act.

Except for historical information, the Company’s Annual Report on Form 10-K for the year ended
January 31, 2000 to which this exhibit is appended, the Company’s quarterly reports on Form 10-Q,
the Company’s current reports on Form 8-K, periodic press releases, as well as other public
documents and statements, may contain forward-looking statements within the meaning of the Act.

In addition, representatives of the Company, from time to time, participate in speeches and calls
with market analysts, conferences with investors and potential investors in the Company’s securities,
and other meetings and conferences. Some of the information presented in such speeches, calls,
meetings and conferences may be forward-looking within the meaning of the Act.

It is not reasonably possible to itemize all of the many factors and speciﬁc events that could affect
the Company and/or the microcomputer products distribution industry as a whole. In some cases,
information regarding certain important factors that could cause actual results to differ materially from
those projected,
forecasted, estimated, budgeted or otherwise expressed in forward-looking
statements made by or on behalf of the Company may appear or be otherwise conveyed together with
such statements. The following additional factors (in addition to other possible factors not listed) could
affect the Company’s actual results and cause such results to differ materially from those projected,
forecasted, estimated, budgeted or otherwise expressed in forward-looking statements made by or on
behalf of the Company:

Competition

The Company operates in a highly competitive environment, both in the United States and
internationally. The computer wholesale distribution industry is characterized by intense competition,
based primarily on product availability, credit availability, price, speed of delivery, ability to tailor speciﬁc
solutions to customer needs, quality and depth of product lines and pre-sale and post-sale training,
service and support. The Company competes with a variety of regional, national and international
wholesale distributors, some of which have greater ﬁnancial resources than the Company. In addition,
the Company faces competition from direct sales by vendors which may be able to offer resellers lower
prices than the Company.

Narrow Proﬁt Margins

As a result of intense price competition in the industry, the Company has narrow gross proﬁt and
operating proﬁt margins. These narrow margins magnify the impact on operating results of variations in
sales and operating costs. The Company has partially offset the effects of its low gross proﬁt margins
by increasing sales and reducing operating expenses as a percentage of sales; however, there can be
no assurance that the Company will maintain or increase sales or further reduce operating expenses
as a percentage of sales in the future. Future gross proﬁt margins may be adversely affected by
changes in product mix, vendor pricing actions and competitive and economic pressures.

Risk of Declines in Inventory Value

The Company is subject to the risk that the value of its inventory will decline as a result of price
reductions by vendors or technological obsolescence. It is the policy of most vendors of microcomputer
products to protect distributors, such as the Company, which purchase directly from such vendors,
from the loss in value of inventory due to technological change or the vendors’ price reductions. Some
vendors, however, may be unwilling or unable to pay the Company for products returned to them under
industry practices are sometimes not embodied in written
purchase agreements. Moreover,
agreements and do not protect
the Company in all cases from declines in inventory value. No
assurance can be given that such practices will continue, that unforeseen new product developments
will not adversely affect the Company, or that the Company will be able to successfully manage its
existing and future inventories.

Some major systems vendors are developing programs which will allow the Company to assemble
systems from components provided by the vendors. While the Company has developed the ability to
conﬁgure computer products, the process of assembling large volumes of systems from components
will require new business practices by the Company. It is also uncertain how the vendors will apply
policies related to price protection, stock rotation and other protections against the decline in inventory
value to components.

Dependence on Information Systems

The Company is highly dependent upon its internal computer and telecommunication systems to
operate its business. There can be no assurance that the Company’s information systems will not fail,
that the Company will be able to attract and retain qualiﬁed personnel necessary for the operation of
such systems, that the Company will be able to expand and improve its information systems, or that
the information systems of acquired companies will be sufficient to meet the Company’s standards or
can be successfully converted into an acceptable information system on a timely and cost-effective
basis. Any of such problems could have an adverse effect on the Company’s business.

The Company’s Year 2000 (‘‘Y2K’’) compliance project determined the readiness of
the
Company’s business for Year 2000. The Company has experienced no signiﬁcant problems with its
computer systems since the beginning of 2000 but will continue to monitor the systems to assess
whether any problems develop. While the Company has not experienced any signiﬁcant Y2K problems
to date, there can be no assurance that the Company will not experience material Y2K problems in the
future. In addition, the Company faces risks to the extent that suppliers of products, services and
business on a worldwide basis may experience post-Y2K issues.

Customer Credit Exposure

The Company sells its products to a large customer base of value-added resellers, corporate
resellers, retailers and direct marketers. A signiﬁcant portion of such sales is ﬁnanced by the Company.
As a result, the Company’s business could be adversely affected in the event of the deterioration of the
ﬁnancial condition of its customers, resulting in the customers’ inability to repay the Company. This risk
would be increased in the event of a general economic downturn affecting a large number of the
Company’s customers.

Management of Expansion

The rapid expansion of the Company’s business has required the Company to make signiﬁcant
recent additions in personnel and has signiﬁcantly increased the Company’s working capital

requirements. Although the Company has experienced rapid expansion in recent years, such
expansion should not be considered indicative of future expansion. Such expansion has resulted in
new and increased responsibilities for management personnel and has placed and continues to place
a strain upon the Company’s management, operating and ﬁnancial systems and other resources.
There can be no assurance that the strain placed upon the Company’s management, operating and
ﬁnancial systems and other resources will not have an adverse effect on the Company’s business, nor
can there be any assurance that the Company will be able to attract or retain sufficient personnel to
continue the expansion of its operations.

Liquidity and Capital Resources

The Company’s business requires substantial capital to ﬁnance accounts receivable and product
inventory that are not ﬁnanced by trade creditors. The Company has historically relied upon cash
generated from operations, bank credit lines, trade credit from its vendors and proceeds from public
offerings of its Common Stock to satisfy its capital needs and ﬁnance growth. In order to continue its
expansion, the Company will need additional ﬁnancing, including debt ﬁnancing. The inability to obtain
such sources of capital could have an adverse effect on the Company’s business.

Acquisitions

As part of its growth strategy, the Company pursues the acquisition of companies that either
complement or expand its existing business. As a result, the Company regularly evaluates potential
acquisition opportunities, which may be material in size and scope. Acquisitions involve a number of
risks and uncertainties, including expansion into new geographic markets and business areas, the
requirement to understand local business practices, the diversion of management’s attention to the
assimilation of the operations and personnel of the acquired companies, the possible requirement to
upgrade the acquired companies’ management information systems to the Company’s standards,
potential adverse short-term effects on the Company’s operating results and the amortization of any
acquired intangible assets.

Foreign Currency Exchange Risks; Exposure to Foreign Markets

The Company conducts business in countries outside of the United States which exposes the
Company to ﬂuctuations in foreign currency exchange rates. The Company may enter into short-term
forward exchange or option contracts to hedge this risk according to its outlook on future exchange
rates; nevertheless, ﬂuctuations in foreign currency exchange rates could have an adverse effect on
the Company’s business.

The Company’s international operations are subject to other risks such as the imposition of
governmental controls, currency devaluations, export license requirements, restrictions on the export
of certain technology, political
instability, trade restrictions, tariff changes, difficulties in staffing and
managing international operations, difficulties in collecting accounts receivable and longer collection
periods and the impact of local economic conditions and practices. As the Company continues to
expand its international business, its success will be dependent, in part, on its ability to anticipate and
effectively manage these and other risks. There can be no assurance that these and other factors will
not have an adverse effect on the Company’s business.

Product Supply Shortages

The Company is dependent upon the supply of products available from its vendors. The industry is
characterized by periods of severe product shortages due to vendors’ difficulty in projecting demand for

certain products distributed by the Company. When such product shortages occur, the Company
typically receives an allocation of product from the vendor. There can be no assurance that vendors
will be able to maintain an adequate supply of products to fulﬁll all of the Company’s customer orders
on a timely basis. Failure to obtain adequate product supplies, if available to competitors, could have
an adverse effect on the Company’s business.

Vendor Relations

The loss of certain key vendors could have an adverse effect on the Company’s business. In
addition, the Company relies on various rebate and cooperative marketing programs offered by its
vendors to defray expenses associated with distributing and marketing the vendors’ products.
Additionally, certain of the Company’s vendors subsidize ﬂoor plan ﬁnancing arrangements. A reduction
by the Company’s vendors in any of these programs could have an adverse effect on the Company’s
business.

General Economic Conditions

From time to time the markets in which the Company sells its products experience weak economic
conditions that may negatively affect the Company’s sales. Although the Company does not consider
its business to be highly seasonal, it has experienced seasonally higher sales and earnings in the third
and fourth quarters. To the extent that general economic conditions affect the demand for products sold
by the Company, such conditions could have an adverse effect on the Company’s business.

Exposure to Natural Disasters

The Company’s headquarters facilities, certain of its distribution centers as well as certain vendors
and customers are located in areas prone to natural disasters such as ﬂoods, hurricanes, tornadoes,
earthquakes and other adverse weather conditions. The Company’s business could be adversely
affected should its ability to distribute products be impacted by such an event.

Labor Strikes

The Company’s labor force is currently non-union with the exception of employees of certain
to collective bargaining or similar
Canadian and European subsidiaries which are subject
arrangements. Additionally,
the Company does business in certain foreign countries where labor
disruption is more common than is experienced in the United States. The majority of the freight carriers
used by the Company are unionized. A labor strike by a group of the Company’s employees, one of the
Company’s freight carriers, one of its vendors, a general strike by civil service employees, or a
governmental shutdown could have an adverse effect on the Company’s business.

Volatility of Common Stock

Because of the foregoing factors, as well as other variables affecting the Company’s operating
results, past ﬁnancial performance should not be considered a reliable indicator of future performance,
and investors should not use historical trends to anticipate results or trends in future periods. In
addition, the Company’s participation in a highly dynamic industry often results in signiﬁcant volatility of
the Common Stock price.