Tech Data reports second-quarter results; net income grows 30 per cent year-over-year

Net income for the second-quarter increased 29.7% to $35.3 million, or $.60 per diluted share, compared with $27.2 million, or $.49 per diluted share, in the prior year, excluding the prior year's second-quarter pre-tax special charges of $20 million.

Second-quarter sales grew 9% in Europe and declined 11% and 16% in the U.S. and in rest-of-world, respectively, over the prior year. Reported European growth for Tech Data includes the Middle East region. "Our region hasn't suffered quite the same huge drops in volumes as other world markets. This is partly due to the strong regional growth in the Middle East market, which has been a buffer for the UAE market that trades a lot on its re-export sector. We have maintained a slow and steady growth in the face of a global market decline, and that is pleasing. We also managed to invest in our own expansion in different areas of our business. As for our parent company, Tech Data has managed to weather a very stormy and recessive period very well: huge effort has gone into building an ever-more efficient distribution and logistics business globally, and I think we have performed very strongly in the circumstances," says Steve Lockie, managing director for Tech Data FZ-LLC.

Net income for the six-months ended July 31, 2002 grew 19.4% to $70.4 million, or $1.20 per diluted share, compared with $59.0 million, or $1.06 per diluted share in the prior year, excluding the prior year's second- quarter special charges. Including these special charges, net income for the six-months ended July 31, 2002 grew 54% from $45.8 million, or $.83 per diluted share in the prior year six-month period. Sales for the six-months ended July 31, 2002 totaled $7.9 billion, a decline of 10.2%, compared with $8.8 billion in the six-month period last year.

Tech Data again ended the quarter with one of the strongest balance sheets in the industry. With continued strong cash flow generation through working capital management, the company has reduced its net indebtedness by $281 million during the second-quarter, and by $1.2 billion since January 31, 2001, resulting in a ratio of debt to total capital of 32% at July 31, 2002. Additionally, the company has reduced inventory levels to 22.5 days of supply at the end of the second-quarter, while continuing to maintain excellent customer service.

Sales of software and systems increased 10% and 2%, respectively, during the second- quarter while peripherals and networking declined by 9% and 10%, respectively. The peripherals business represented 43% of total second-quarter sales, systems 24%, software 18% and networking 15%. Electronic commerce sales grew to represent 36% of sales in the second-quarter this year, up from 29% last year.

"Tech Data continues to stand out as one of the best-performing companies in the IT industry," commented Steven A. Raymund, Tech Data's chairman and chief executive officer. "We're executing extremely well, adeptly managing our costs and making operational improvements that we expect to further strengthen our long-term leadership position. Our success in this challenging economic environment is clearly due to the hard work and dedication of Tech Data employees worldwide."