Tech Data Corporation Reports Second Quarter Fiscal Year 2018 Results

CLEARWATER, Fla., Aug. 31, 2017 /PRNewswire/ -- Tech Data (NASDAQ: TECD) (the "Company") today announced its financial results for the second quarter ended July 31, 2017.


                                                                                          Second quarter ended July 31,   Six months ended July 31,
                                                                                         -----------------------------   -------------------------

    ($ in millions,                                                                             2017           2016               Y/Y                    2017       2016        Y/Y
    except per share amounts)                                                                                                   Change                                     Change
    ------------------------                                                                                   ---                                                ---     ------

    Net Sales                                                                               $8,882.7       $6,353.7                          40%    $16,546.8  $12,317.1            34%


    Operating income (GAAP)                                                                   $103.5          $73.4                          41%       $178.6     $125.9            42%

    Operating margin (GAAP)                                                                    1.17%         1.15%             2 bps                  1.08%     1.02%      6 bps


    Operating income (Non-GAAP)                                                               $127.8          $78.1                          64%       $251.1     $135.7            85%

    Operating margin (Non-GAAP)                                                                1.44%         1.23%             21 bps                 1.52%     1.10%     42 bps


    Net income (GAAP)                                                                          $47.5          $46.4                           2%        $78.1      $79.8            -2%

    Net income (Non-GAAP)                                                                      $66.7          $50.3                          33%       $136.8      $87.3            57%


    EPS - diluted (GAAP)                                                                       $1.24          $1.31                          -5%        $2.06      $2.26            -9%

    EPS - diluted (Non-GAAP)                                                                   $1.74          $1.42                          23%        $3.61      $2.47            46%
    -----------------------                                                                    -----          -----                          ---         -----      -----            ---


    A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.
    This information is also available on the Investor Relations section of Tech Data's website at www.techdata.com/investor.

Financial Highlights for the Second Quarter Ended July 31, 2017:

    --  Net sales were $8.9 billion, an increase of 40 percent compared to the
        prior-year quarter. The increase in net sales is primarily due to the
        addition of the Technology Solutions business acquired from Avnet, Inc.
        on February 27, 2017 ("Technology Solutions"). On a constant currency
        basis, net sales increased 41 percent.
-- Americas: Net sales were $4.2 billion (47 percent of worldwide net sales), an increase of 57 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. -- Europe: Net sales were $4.4 billion (50 percent of worldwide net sales), an increase of 20 percent compared to the prior-year quarter. The increase in net sales is primarily attributed to the addition of Technology Solutions. On a constant currency basis, net sales increased 21 percent. -- Asia Pacific: Net sales were $0.3 billion (3 percent of worldwide net sales). Asia Pacific net sales are attributed to the addition of Technology Solutions.
    --  Gross profit was $515.6 million, an increase of $199.1 million, or 63
        percent compared to the prior-year quarter. As a percentage of net
        sales, gross profit was 5.80 percent compared to 4.98 percent in the
        prior-year quarter. The increase in gross profit and gross margin
        percentage is primarily attributable to the addition of Technology
        Solutions.
    --  Selling, general and administrative expenses ("SG&A") were $410.6
        million, or 4.62 percent of net sales, compared to $243.8 million, or
        3.84 percent of net sales in the prior-year quarter. Non-GAAP SG&A was
        $387.7 million, an increase of $149.4 million, or 63 percent, compared
        to the prior-year quarter. As a percentage of net sales, non-GAAP SG&A
        was 4.37 percent, compared to 3.75 percent in the prior-year quarter.
        The increase in both dollars and percentage of net sales, on a GAAP and
        non-GAAP basis, is primarily attributable to the addition of Technology
        Solutions.
    --  Worldwide operating income was $103.5 million, or 1.17 percent of net
        sales compared to $73.4 million or 1.15 percent of net sales in the
        prior-year quarter. Non-GAAP operating income was $127.8 million, an
        increase of $49.8 million, or 64 percent, compared to the prior-year
        quarter. As a percentage of net sales, non-GAAP operating income was
        1.44 percent, an improvement of 21 basis points over the prior-year
        quarter.
-- Americas: Operating income was $88.0 million, or 2.10 percent of net sales, compared to $41.2 million, or 1.54 percent of net sales in the prior-year quarter. Non-GAAP operating income was $84.7 million, an increase of $45.9 million, or 118 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 2.02 percent, an improvement of 57 basis points over the prior-year quarter. -- Europe: Operating income was $18.5 million, or 0.42 percent of net sales, compared to $35.9 million, or 0.98 percent of net sales in the prior-year quarter. Non-GAAP operating income was $43.4 million, an increase of $0.3 million, or 1 percent, compared to the prior-year quarter. As a percentage of net sales, non-GAAP operating income was 0.99 percent compared to 1.17 percent in the prior-year quarter. -- Asia Pacific: Operating income was $5.1 million, or 1.76 percent of net sales. Non-GAAP operating income was $6.7 million, or 2.32 percent of net sales. -- Stock-based compensation expense was $8.0 million, an increase of $4.2 million, compared to the prior-year quarter. This includes $1.0 million of acquisition and integration-related stock compensation expense. These expenses are excluded from the regional operating results and presented as a separate line item in the company's segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
    --  Net income was $47.5 million, compared to $46.4 million in the
        prior-year quarter. Non-GAAP net income was $66.7 million, an increase
        of $16.4 million, or 33 percent, compared to the prior-year quarter.
    --  Earnings per share on a diluted basis ("EPS") were $1.24, compared to
        $1.31 in the prior year quarter. Non-GAAP EPS was $1.74, an increase of
        $0.32, or 23 percent compared to the prior-year quarter.
    --  Net cash generated by operations during the quarter was $146 million.
    --  Return on invested capital for the trailing twelve months was 10
        percent, compared to 14 percent in the prior year period. The adjusted
        return on invested capital for the trailing twelve months was 12
        percent, compared to 14 percent in the prior year period.

"Our fiscal 2018 first-half results clearly show the enhanced earnings and cash-generating power of the new Tech Data. In Q2, worldwide sales exceeded plan and our teams maintained disciplined cost controls; however, we did not deliver the earnings we expected in the quarter," said Robert M. Dutkowsky, chairman and chief executive officer. "Tech Data is a stronger company today than it was a year ago. With the addition of Technology Solutions, we now have a richer portfolio of advanced technology vendors and customers, along with deeper skills to serve them. At the same time, we continue to accelerate the expansion of our capabilities in next-generation technologies. Our integration is progressing as planned and we are on track to deliver our synergy and debt reduction targets."

Business Outlook

    --  For the quarter ending October 31, 2017, the Company anticipates
        worldwide net sales to be in the range of $9.0 billion to $9.35 billion.
    --  For the quarter ending October 31, 2017, the Company anticipates EPS to
        be in the range of $0.80 to $1.00 and non-GAAP EPS to be in the range of
        $1.84 to $2.04.
    --  This guidance assumes weighted average diluted shares outstanding of
        38.5 million and an effective tax rate in the range of 30 percent to 32
        percent.
    --  This guidance also assumes an average U.S. dollar to euro exchange rate
        of $1.16 to EUR1.00.

Webcast Details

Tech Data will hold a conference call today at 5:00 p.m. (ET) to discuss its financial results for the second quarter ended July 31, 2017. A webcast of the call, including supplemental schedules, will be available to all interested parties and can be obtained at www.techdata.com/investor. The webcast will be available for replay for three months.

Investor Day Event

The Company also announced it will host an Investor Day in New York City beginning at 8:30 a.m. on Tuesday, October 10, 2017. Chairman and CEO Bob Dutkowsky, COO Rich Hume, and CFO Chuck Dannewitz, along with other members of the management team, will review the company's strategy, highlight its performance and outline the company's financial goals. A live webcast of the investor day event, including slides and supplemental schedules, will be available to all interested parties and can be obtained at www.techdata.com/investor. The webcast will be available for replay for three months.

Non-GAAP Financial Information

The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Company's operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles ("GAAP"). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as "constant currency"), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring expenses, value-added tax assessments and acquisition-related financing expenses. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules. This information can also be obtained from the Company's Investor Relations website at www.techdata.com/investor.

Forward-Looking Statements

Certain statements in this communication may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, including statements regarding Tech Data's plans, objectives, expectations and intentions, which may relate to the Technology Solutions business, Tech Data's financial results and estimates and/or business prospects, involve a number of risks and uncertainties and actual results could differ materially from those projected. These forward looking statements are based on current expectations, estimates, forecasts, and projections about the operating environment, economies and markets in which Tech Data operates and the beliefs and assumptions of our management. Words such as "expects," "anticipates," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words, and similar expressions are intended to identify such forward looking statements. In addition, any statements that refer to projections of Tech Data's future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward looking statements. These forward looking statements are only predictions and are subject to risks, uncertainties, and assumptions. Therefore, actual results may differ materially and adversely from those expressed in any forward looking statements.

For additional information with respect to risks and other factors which could occur, see Tech Data's Annual Report on Form 10-K for the year ended January 31, 2017, including Part I, Item 1A, "Risk Factors" therein, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other securities filings with the Securities and Exchange Commission (the "SEC") that are available at the SEC's website at www.sec.gov and other securities regulators. Readers are cautioned not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Many of these factors are beyond Tech Data's control. Unless otherwise required by applicable securities laws, Tech Data disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Tech Data undertakes no duty to update any forward looking statements contained herein to reflect actual results or changes in Tech Data's expectations.

About Tech Data

Tech Data Corporation is one of the world's largest wholesale distributors of technology products, services and solutions. Its advanced logistics capabilities and value added services enable 115,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries. Tech Data generated $26.2 billion in net sales for the fiscal year ended January 31, 2017. It is ranked No. 107 on the Fortune 500(®) and one of Fortune's "World's Most Admired Companies." To learn more, visit www.techdata.com, or follow us on Facebook and Twitter.

Contacts:

Charles V. Dannewitz, Executive Vice President, Chief Financial Officer
727-532-8028 (chuck.dannewitz@techdata.com)

Arleen Quiñones, Corporate Vice President, Investor Relations and Corporate Communications
727-532-8866 (arleen.quinones@techdata.com)


    TECH DATA CORPORATION AND SUBSIDIARIES

    CONSOLIDATED STATEMENT OF OPERATIONS

    (In thousands, except per share amounts)

    (Unaudited)



                                                                 Three months ended            Six months ended

                                                        July 31,      July 31,
                                                        --------      --------

                                                                       2017               2016                       2017        2016


    Net sales                                                    $8,882,691         $6,353,739                $16,546,754 $12,317,101

    Cost of products sold                                         8,367,100          6,037,289                 15,574,075  11,702,040
                                                                  ---------          ---------                 ----------  ----------

    Gross profit                                                    515,591            316,450                    972,679     615,061

    Operating expenses:

    Selling, general and administrative expenses                    410,598            243,763                    763,230     490,259

    Acquisition, integration and restructuring expenses              30,117              1,982                     72,183       1,982

    LCD settlements and other, net                                 (28,655)           (3,699)                  (41,343)    (4,142)

    Value added tax assessments                                           -             1,049                          -      1,049
                                                                        ---             -----                        ---      -----

                                                                    412,060            243,095                    794,070     489,148
                                                                    -------            -------                    -------     -------

    Operating income                                                103,531             73,355                    178,609     125,913

    Interest expense                                                 28,272              6,288                     59,280      11,889

    Other expense (income), net                                         284            (1,230)                     (131)    (2,264)
                                                                        ---             ------                       ----      ------

    Income before income taxes                                       74,975             68,297                    119,460     116,288

    Provision for income taxes                                       27,516             21,903                     41,347      36,521
                                                                     ------             ------                     ------      ------

    Net income                                                      $47,459            $46,394                    $78,113     $79,767
                                                                    =======            =======                    =======     =======


    Earnings per share:

    Basic                                                             $1.24              $1.32                      $2.07       $2.27
                                                                      =====              =====                      =====       =====

    Diluted                                                           $1.24              $1.31                      $2.06       $2.26
                                                                      =====              =====                      =====       =====

    Weighted average common shares outstanding:

    Basic                                                            38,174             35,207                     37,720      35,167
                                                                     ======             ======                     ======      ======

    Diluted                                                          38,388             35,378                     37,935      35,373
                                                                     ======             ======                     ======      ======


    TECH DATA CORPORATION AND SUBSIDIARIES

    CONSOLIDATED BALANCE SHEET

    (In thousands, except par value and share amounts)



                                                                                      July 31,                      January 31,

                                                                                                                      2017              2017

                                                                                       ASSETS                (unaudited)
                                                                                                              ----------

    Current assets:

    Cash and cash equivalents                                                                                   $1,033,267        $2,125,591

    Accounts receivable, net                                                                                     4,981,866         3,047,927

    Inventories                                                                                                  2,703,763         2,118,902

    Prepaid expenses and other assets                                                                              247,504           119,906
                                                                                                                   -------           -------

    Total current assets                                                                                         8,966,400         7,412,326

    Property and equipment, net                                                                                    136,577            74,239

    Goodwill                                                                                                       853,767           199,021

    Intangible assets, net                                                                                       1,149,530           130,676

    Other assets, net                                                                                              267,651           115,604
                                                                                                                   -------           -------

    Total assets                                                                                               $11,373,925        $7,931,866
                                                                                                               ===========        ==========


                                                                        LIABILITIES AND SHAREHOLDERS' EQUITY

    Current liabilities:

    Accounts payable                                                                                            $5,465,428        $3,844,532

    Accrued expenses and other liabilities                                                                         742,815           493,199

    Revolving credit loans and current maturities of long-term debt, net                                           465,407           373,123
                                                                                                                   -------           -------

    Total current liabilities                                                                                    6,673,650         4,710,854

    Long-term debt, less current maturities                                                                      1,802,618           989,924

    Other long-term liabilities                                                                                    165,425            61,200
                                                                                                                   -------            ------

    Total liabilities                                                                                           $8,641,693        $5,761,978
                                                                                                                ----------        ----------

    Shareholders' equity:

    Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585                                         $89               $89
    shares issued at July 31, 2017 and January 31, 2017

    Additional paid-in capital                                                                                     811,046           686,042

    Treasury stock, at cost (21,100,662 and 24,018,983 shares at  July 31, 2017                                  (940,868)      (1,070,994)
    and January 31, 2017)

    Retained earnings                                                                                            2,707,406         2,629,293

    Accumulated other comprehensive income (loss)                                                                  154,559          (74,542)
                                                                                                                   -------           -------

    Total shareholders' equity                                                                                   2,732,232         2,169,888
                                                                                                                 ---------         ---------

    Total liabilities and shareholders' equity                                                                 $11,373,925        $7,931,866
                                                                                                               ===========        ==========


    TECH DATA CORPORATION AND SUBSIDIARIES

    GAAP TO NON-GAAP RECONCILIATION

     (In thousands)



                                                                                                                Three months ended July 31, 2017
                                                                                                                --------------------------------

                                                                                                Americas?(1)?                                    Europe?(1)?            APAC?(1)?           Stock Compensation Expense          Consolidated
                                                                                                -------------                                    -----------            ---------          --------------------------           ------------

    Net Sales                                                                                                 $4,192,475                                     $4,402,054           $288,162                                                   $8,882,691
                                                                                                              ==========                                     ==========           ========                                                   ==========

    GAAP operating income?(1)?                                                                                   $87,975                                        $18,464             $5,066                             $(7,974)                $103,531

    LCD settlements and other, net                                                                              (29,971)                                         1,316                  -                                                    (28,655)

    Acquisition, integration and                                                                                  14,242                                         14,685                145                                1,045                   30,117
    restructuring expenses

    Acquisition-related intangible                                                                                12,413                                          8,965              1,477                                                       22,855
    assets amortization expense

    Total non-GAAP operating income                                                                             $(3,316)                                       $24,966             $1,622                               $1,045                  $24,317
    adjustments
                                                                                                                                                                                                                                                 ---

    Non-GAAP operating income                                                                                    $84,659                                        $43,430             $6,688                             $(6,929)                $127,848
                                                                                                                 =======                                        =======             ======                              =======                 ========

    GAAP operating margin                                                                                          2.10%                                         0.42%             1.76%                                                       1.17%

    Non-GAAP operating margin                                                                                      2.02%                                         0.99%             2.32%                                                       1.44%

    ?(1)?   GAAP operating income does not include stock compensation expense at the regional level.


                                                                                                     Three months ended July 31, 2016
                                                                                                     --------------------------------

                                                                                                       Americas?(1)?                  Europe?(1)?               Stock              Consolidated
                                                                                                                                                             Compensation
                                                                                                                                                                Expense
                                                                                                                                                                                                     ---

    Net Sales                                                                                                        $2,674,886                   $3,678,853                                    $6,353,739
                                                                                                                     ==========                   ==========                                    ==========

    GAAP operating income?(1)?                                                                                          $41,241                      $35,927              $(3,813)                 $73,355

    Value added tax assessments                                                                                           (407)                       1,456                                         1,049

    Acquisition, integration and restructuring expenses                                                                   1,046                          936                                         1,982

    Acquisition-related intangible assets amortization expense                                                              580                        4,828                                         5,408

    LCD settlements and other, net                                                                                      (3,699)                           -                                      (3,699)

    Total non-GAAP operating income adjustments                                                                        $(2,480)                      $7,220                                        $4,740
                                                                                                                        -------                       ------                                        ------

    Non-GAAP operating income                                                                                           $38,761                      $43,147              $(3,813)                 $78,095
                                                                                                                        =======                      =======               =======                  =======

    GAAP operating margin                                                                                                 1.54%                       0.98%                                        1.15%

    Non-GAAP operating margin                                                                                             1.45%                       1.17%                                        1.23%

    ?(1)?   GAAP operating income does not include stock compensation expense at the regional level.


    TECH DATA CORPORATION AND SUBSIDIARIES

    GAAP TO NON-GAAP RECONCILIATION

    (In thousands)



                                                                                                                 Six months ended July 31, 2017
                                                                                                                 ------------------------------

                                                                                                Americas?(1)?                                   Europe?(1)?            APAC?(1)?                Stock            Consolidated
                                                                                                                                                                                          Compensation
                                                                                                                                                                                             Expense
                                                                                                                                                                                                                                   ---

    Net Sales                                                                                                 $7,661,312                                    $8,408,974           $476,468                                     $16,546,754
                                                                                                              ==========                                    ==========           ========                                     ===========

    GAAP operating income?(1)?                                                                                  $138,875                                       $43,263             $9,363              $(12,892)                 $178,609

    LCD settlements and other, net                                                                              (42,659)                                        1,316                  -                                       (41,343)

    Acquisition, integration and                                                                                  44,424                                        26,257                145                  1,357                    72,183
    restructuring expenses

    Acquisition-related intangible                                                                                22,514                                        16,713              2,377                                          41,604
    assets amortization expense

    Total non-GAAP operating income                                                                              $24,279                                       $44,286             $2,522                 $1,357                   $72,444
    adjustments
                                                                                                                                                                                                                                   ---

    Non-GAAP operating income                                                                                   $163,154                                       $87,549            $11,885              $(11,535)                 $251,053
                                                                                                                ========                                       =======            =======               ========                  ========

    GAAP operating margin                                                                                          1.81%                                        0.51%             1.97%                                          1.08%

    Non-GAAP operating margin                                                                                      2.13%                                        1.04%             2.49%                                          1.52%

    ?(1)?   GAAP operating income does not include stock compensation expense at the regional level.


                                                                                                     Six months ended July 31, 2016
                                                                                                     ------------------------------

                                                                                                      Americas?(1)?                 Europe?(1)?               Stock              Consolidated
                                                                                                                                                           Compensation
                                                                                                                                                              Expense
                                                                                                                                                                                                    ---

    Net Sales                                                                                                       $5,062,890                  $7,254,211                                    $12,317,101
                                                                                                                    ==========                  ==========                                    ===========

    GAAP operating income?(1)?                                                                                         $72,516                     $60,867              $(7,470)                 $125,913

    Value added tax assessments                                                                                          (407)                      1,456                                          1,049

    Acquisition, integration and restructuring                                                                           1,046                         936                                          1,982
    expenses

    Acquisition-related intangible assets                                                                                1,160                       9,693                                         10,853
    amortization expense

    LCD settlements and other, net                                                                                     (4,142)                          -                                       (4,142)

    Total non-GAAP operating income adjustments                                                                       $(2,343)                    $12,085                                         $9,742
                                                                                                                       -------                     -------                                         ------

    Non-GAAP operating income                                                                                          $70,173                     $72,952              $(7,470)                 $135,655
                                                                                                                       =======                     =======               =======                  ========

    GAAP operating margin                                                                                                1.43%                      0.84%                                         1.02%

    Non-GAAP operating margin                                                                                            1.39%                      1.01%                                         1.10%

    ?(1)?   GAAP operating income does not include stock compensation expense at the regional level.


    Selling, general and
     administrative
     expenses ("SG&A")      Three months ended July 31,
                            ---------------------------

                     2017                                  2016
                     ----                                  ----

    Net Sales                                   $8,882,691       $6,353,739
                                                ==========       ==========

    GAAP SG&A                                      410,598          243,763

    Acquisition-related
     intangible assets
     amortization expense                         (22,855)         (5,408)

    Non-GAAP SG&A                                 $387,743         $238,355
                                                  ========         ========


    GAAP SG&A percentage of
     net sales                                       4.62%           3.84%

    Non- GAAP SG&A
     percentage of net
     sales                                           4.37%           3.75%



                             Six months ended July 31,
                             -------------------------

                                                      2017             2016
                                                      ----             ----

    Net Sales                                  $16,546,754      $12,317,101
                                               ===========      ===========

    GAAP SG&A                                      763,230          490,259

    Acquisition-related
     intangible assets
     amortization expense                         (41,604)        (10,853)

    Non-GAAP SG&A                                 $721,626         $479,406
                                                  ========         ========


    GAAP SG&A percentage of
     net sales                                       4.61%           3.98%

    Non- GAAP SG&A
     percentage of net
     sales                                           4.36%           3.89%


                                                               Three months ended July 31,
                                                               ---------------------------

                                                                                        2017                     2016
                                                                                        ----                     ----

                                                                        Net Income           Diluted EPS              Net Income           Diluted EPS

    GAAP Results                                                                     $47,459               $1.24                   $46,394                 $1.31

    LCD settlements and other, net                                                  (28,332)             (0.74)                  (3,699)               (0.10)

    Value added tax assessments                                                            -                  -                    1,386                  0.04

    Acquisition, integration and restructuring                                        30,117                0.78                     1,982                  0.05
    expenses

    Acquisition-related intangible assets                                             22,855                0.60                     5,408                  0.15
    amortization expense

    Income tax effect of the above adjustments                                       (5,367)             (0.14)                  (1,178)               (0.03)

    Non-GAAP results                                                                 $66,732               $1.74                   $50,293                 $1.42
                                                                                     =======               =====                   =======                 =====


                                                                Six months ended July 31,
                                                                -------------------------

                                                                                        2017                     2016
                                                                                        ----                     ----

                                                                        Net Income           Diluted EPS              Net Income           Diluted EPS

    GAAP Results                                                                     $78,113               $2.06                   $79,767                 $2.26

    LCD settlements and other, net                                                  (41,020)             (1.08)                  (4,142)               (0.12)

    Value added tax assessments                                                            -                  -                    1,386                  0.04

    Acquisition, integration and restructuring expenses                               72,183                1.90                     1,982                  0.05

    Acquisition-related intangible assets amortization expense                        41,604                1.10                    10,853                  0.31

    Acquisition-related financing expenses                                             8,807                0.23                         -                    -

    Income tax effect of the above adjustments                                      (22,896)             (0.60)                  (2,511)               (0.07)

    Non-GAAP results                                                                $136,791               $3.61                   $87,335                 $2.47
                                                                                    ========               =====                   =======                 =====


    Return on Invested Capital (ROIC)



                                                       Twelve months ended July 31,

                                                               2017                          2016
                                                               ----                          ----

    TTM Net Operating Profit After Tax (NOPAT)*:

    Operating income                                       $344,598                      $339,168

    Income taxes on
     operating
     income?(1)?                                           (88,150)                    (103,254)

    NOPAT                                                  $256,448                      $235,914
                                                           ========                      ========


    Average Invested Capital:

    Short-term debt (5-
     qtr average)                                          $340,608                       $16,796

    Long-term debt (5-
     qtr average)                                           988,243                       349,316

    Shareholders' Equity
     (5-qtr average)                                      2,316,790                     2,036,086
                                                          ---------                     ---------

    Total average
     capital                                              3,645,641                     2,402,198

    Less: Cash (5-qtr
     average)                                           (1,081,802)                    (669,836)
                                                         ----------                      --------

    Average invested
     capital less
     average cash                                        $2,563,839                    $1,732,362
                                                         ==========                    ==========

    ROIC                                                        10%                          14%


    * Trailing Twelve Months is abbreviated as TTM.

    ?(1)? Income taxes on operating income was calculated using the trailing 12 months effective
     tax rate during the respective periods.


    Adjusted Return on Invested Capital (ROIC)



                                                                                                                                                  Twelve months ended July 31,

                                                                                                                                                              2017                                2016
                                                                                                                                                              ----                                ----

    TTM Net Operating Profit After Tax (NOPAT), as adjusted *:

    Non-GAAP operating income?(1)?                                                                                                                        $454,332                            $323,366

    Income taxes on non-GAAP operating income?(2)?                                                                                                       (134,878)                           (91,519)

    NOPAT, as adjusted                                                                                                                                    $319,454                            $231,847
                                                                                                                                                          ========                            ========


    Average Invested Capital, as adjusted:

    Short-term debt (5-qtr average)                                                                                                                       $340,608                             $16,796

    Long-term debt (5-qtr average)                                                                                                                         988,243                             349,316

    Shareholders' Equity (5-qtr average)                                                                                                                 2,316,790                           2,036,086

    Tax effected impact of non-GAAP adjustments?(3)?                                                                                                        31,842                            (27,154)
                                                                                                                                                            ------                             -------

    Total average capital, as adjusted                                                                                                                   3,677,483                           2,375,044

    Less: Cash (5-qtr average)                                                                                                                         (1,081,802)                          (669,836)
                                                                                                                                                        ----------                            --------

    Average invested capital less average cash                                                                                                          $2,595,681                          $1,705,208
                                                                                                                                                        ==========                          ==========

    Adjusted ROIC                                                                                                                                              12%                                14%


    * Trailing Twelve Months is abbreviated as TTM.


    ?(1)? Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, LCD settlements and other, net, value added tax assessments and acquisition-related intangible assets amortization
     expense.

    ?(2)? Income taxes on non-GAAP operating income was calculated using the trailing 12 months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods.

    ?(3)? Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments.


    Guidance Reconciliation



                             Three months ended October 31,
                                           2017
                            ------------------------------

                                       Low end of             High end of
                                     guidance range         guidance range
                                     --------------         --------------

    Earnings per
     share -diluted                                   $0.80                  $1.00

    Acquisition,
     integration and
     restructuring
     expenses                                          0.85                   0.85

    Acquisition-
     related
     intangible
     assets
     amortization
     expense                                           0.62                   0.62

    Income tax
     effect of the
     above
     adjustments                                     (0.43)                (0.43)

    Non-GAAP
     earnings per
     share -
     diluted                                          $1.84                  $2.04
                                                      =====                  =====

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SOURCE Tech Data Corporation