Table of Contents


        

                                                        
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 10-Q
 

(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended April 30, 2014

OR
 
¨
TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from             to             .

Commission File Number 0-14625
 

TECH DATA CORPORATION
(Exact name of Registrant as specified in its charter)
 
Florida
No. 59-1578329
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification Number)
5350 Tech Data Drive Clearwater, Florida
33760
(Address of principal executive offices)
(Zip Code)
(Registrant’s Telephone Number, including Area Code): (727) 539-7429

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  x     No    
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x     No   ¨  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “accelerated filer”, “large accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
 
Large accelerated filer
x
Accelerated Filer
¨
 
 
 
 
Non-accelerated Filer
¨
Smaller Reporting Company Filer
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ¨ No  x
Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date.
 
Class

Outstanding at May 23, 2014

Common stock, par value $.0015 per share
38,237,572

 


 

1
Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES
Form 10-Q for the Three Months Ended April 30, 2014
INDEX

 
 
PAGE
 
 
 
 
 
 
PART I.
 
ITEM 1.
 
 
 
 
 
ITEM 2.
ITEM 3.
ITEM 4.
PART II.
ITEM 1.
ITEM 1A.
ITEM 2
ITEM 3.
ITEM 4.
ITEM 5.
ITEM 6.
EXHIBITS
 
CERTIFICATIONS
 
 

2
Table of Contents


PART I. FINANCIAL INFORMATION

ITEM 1.
Financial Statements

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value and share amounts)
 
 
April 30,
 
January 31,  
 
2014
 
2014
 
(Unaudited)
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
675,632

 
$
570,101

Accounts receivable, less allowances of $59,701 and $58,754
3,061,180

 
3,215,729

Inventories
2,333,325

 
2,450,782

Prepaid expenses and other assets
242,764

 
232,423

Total current assets
6,312,901

 
6,469,035

Property and equipment, net
75,856

 
77,631

Other assets, net
626,246

 
623,000

Total assets
$
7,015,003

 
$
7,169,666

 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
3,762,087

 
$
3,959,410

Accrued expenses and other liabilities
594,832

 
614,697

Revolving credit loans and current maturities of long-term debt, net
49,856

 
43,481

Total current liabilities
4,406,775

 
4,617,588

Long-term debt, less current maturities
354,177

 
354,121

Other long-term liabilities
96,640

 
99,346

Total liabilities
4,857,592

 
5,071,055

Commitments and contingencies (Note 9)

 

Shareholders’ equity:
 
 
 
Common stock, par value $.0015; 200,000,000 shares authorized; 59,245,585 shares issued at April 30, 2014 and January 31, 2014
89

 
89

Additional paid-in capital
666,922

 
675,597

Treasury stock, at cost (21,008,013 and 21,177,130 shares at April 30, 2014 and January 31, 2014)
(887,789
)
 
(894,936
)
Retained earnings
2,006,757

 
1,993,290

Accumulated other comprehensive income
371,432

 
324,571

Total shareholders' equity
2,157,411

 
2,098,611

Total liabilities and shareholders' equity
$
7,015,003

 
$
7,169,666

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

3

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
 
 
Three months ended
 April 30,
 
2014
 
2013
Net sales
$
6,728,151

 
$
6,147,757

Cost of products sold
6,392,823

 
5,825,343

Gross profit
335,328

 
322,414

Operating expenses:
 
 
 
Selling, general and administrative expenses
291,596

 
283,360

Restatement-related expenses (Note 1)
12,236

 
3,023

 
303,832

 
286,383

Operating income
31,496

 
36,031

Interest expense
6,760

 
7,098

Other expense (income), net
451

 
(2,164
)
Income before income taxes
24,285

 
31,097

Provision for income taxes
10,818

 
13,337

Net income
$
13,467

 
$
17,760

Net income per share:
 
 
 
Basic
$
0.35

 
$
0.47

Diluted
$
0.35

 
$
0.47

Weighted average common shares outstanding:
 
 
 
Basic
38,137

 
37,907

Diluted
38,321

 
38,171


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

4

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
 
 
Three months ended
April 30,
 
2014
 
2013
Net income
$
13,467

 
$
17,760

Other comprehensive income (loss):
 
 
 
          Foreign currency translation adjustment
46,861

 
(47,609
)
Total comprehensive income (loss)
$
60,328

 
$
(29,849
)

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

5

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three months ended
April 30,   
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Cash received from customers
$
7,290,837

 
$
6,854,110

Cash paid to vendors and employees
(7,174,844
)
 
(6,695,526
)
Interest paid, net
(9,521
)
 
(9,538
)
Income taxes paid
(11,402
)
 
(14,825
)
Net cash provided by operating activities
95,070

 
134,221

Cash flows from investing activities:
 
 
 
Acquisition of businesses, net of cash acquired
0

 
8,044

Acquisition of trademark
0

 
(1,519
)
Expenditures for property and equipment
(2,426
)
 
(3,692
)
Software and software development costs
(1,801
)
 
(4,042
)
Net cash used in investing activities
(4,227
)
 
(1,209
)
Cash flows from financing activities:
 
 
 
Proceeds from the reissuance of treasury stock
553

 
1,139

Acquisition earn-out payment
(3,457
)
 
(6,183
)
Net borrowings (repayments) on revolving credit loans
5,884

 
(133,308
)
Principal payments on long-term debt
(143
)
 
(130
)
Excess tax benefit from stock-based compensation
546

 
684

Net cash provided by (used in) financing activities
3,383

 
(137,798
)
Effect of exchange rate changes on cash and cash equivalents
11,305

 
(9,251
)
Net increase (decrease) in cash and cash equivalents
105,531

 
(14,037
)
Cash and cash equivalents at beginning of year
570,101

 
340,564

Cash and cash equivalents at end of period
$
675,632

 
$
326,527

 
 
 
 
Reconciliation of net income to net cash provided by operating activities:
 
 
 
Net income
$
13,467

 
$
17,760

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
18,216

 
17,967

Provision for losses on accounts receivable
3,424

 
1,474

Stock-based compensation expense
1,973

 
3,091

Accretion of debt discount on Senior Notes
66

 
66

Excess tax benefits from stock-based compensation
(546
)
 
(684
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
211,064

 
400,527

Inventories
154,505

 
32,905

Prepaid expenses and other assets
(8,433
)
 
123,941

Accounts payable
(263,429
)
 
(399,971
)
Accrued expenses and other liabilities
(35,237
)
 
(62,855
)
Total adjustments
81,603

 
116,461

Net cash provided by operating activities
$
95,070

 
$
134,221


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

6


TECH DATA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 — BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of Business
Tech Data Corporation (“Tech Data” or the “Company”) is one of the world’s largest wholesale distributors of technology products. The Company serves as an indispensable link in the technology supply chain by bringing products from the world’s leading technology vendors to market, as well as providing customers with advanced logistics capabilities and value-added services. Tech Data’s customers include value-added resellers, direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. The Company is managed in two geographic segments: the Americas (including North America and South America) and Europe.
Principles of Consolidation
The consolidated financial statements include the accounts of Tech Data and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The Company operates on a fiscal year that ends on January 31.
Basis of Presentation
The consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). The Company prepares its financial statements in conformity with generally accepted accounting principles in the United States (“GAAP”). 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. In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly the consolidated financial position of the Company as of April 30, 2014 and its consolidated statements of income, comprehensive income and cash flows for the three months ended April 30, 2014 and 2013.
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 currency fluctuations and seasonal variations in the demand for the products and services offered. Narrow operating margins may magnify the impact of these factors on the Company's operating results. Recent historical seasonal variations have included an increase in European demand during the Company’s fiscal fourth quarter and decreased demand in other fiscal quarters, particularly quarters that include summer months. Given that the majority of the Company’s revenues are derived from Europe, the worldwide results closely follow the seasonality trends in Europe. The seasonal trend in Europe typically results in greater operating leverage, and therefore, lower selling, general and administrative expenses as a percentage of net sales in the region and on a consolidated basis during the second semester of the Company's fiscal year, particularly in the Company's fourth quarter. Additionally, the life cycles of major products, as well as the impact of future acquisitions and dispositions, may also materially impact the Company’s business, financial condition, or consolidated results of operations. Therefore, the results of operations for the three months ended April 30, 2014 and 2013 are not necessarily indicative of the results that can be expected for the entire fiscal year ended January 31, 2015.
Restatement-related expenses
Restatement-related expenses primarily include legal, accounting and third party consulting fees associated with (i) the restatement of certain of the Company's consolidated financial statements and other financial information from fiscal 2009 to fiscal 2013, (ii) the Audit Committee investigation to review the Company's accounting practices, (iii) incremental external audit and supplemental procedures by the Company in connection with the preparation of its financial statements, and (iv) other incremental legal and consulting fees incurred as a result of the Company's restatement-related investigation. During the three months ended April 30, 2014 and 2013, the Company incurred approximately $ 12.2 million and $ 3.0 million of restatement-related expenses, respectively, which are recorded in "restatement-related expenses" in the Consolidated Statement of Income.
Accounts Receivable Purchase Agreements
The Company has uncommitted accounts receivable purchase agreements under which certain accounts receivable may be sold, without recourse, to third-party financial institutions. Under these programs, the Company may sell certain accounts receivable in exchange for cash less a discount, as defined in the agreements. Available capacity under these programs, which the Company uses as a source of working capital funding, is dependent on the level of accounts receivable eligible to be sold into these programs and the financial institutions' willingness to purchase such receivables. In addition, certain of these agreements also require that the Company

7

continue to service, administer and collect the sold accounts receivable. At April 30, 2014 and January 31, 2014, the Company had a total of $227.2 million and $263.7 million , respectively, of accounts receivable sold to and held by financial institutions under these agreements. During the three months ended April 30, 2014 and 2013, discount fees recorded under these facilities were $1.3 million and $0.6 million , respectively, which are included as a component of "other expense (income), net" in the Company's Consolidated Statement of Income.
Recently Adopted Accounting Standards
In March 2013, the Financial Accounting Standards Board ("FASB") issued an accounting standard which clarifies the accounting for the derecognition of certain subsidiaries or groups of assets within a foreign entity or of an investment in a foreign entity. The guidance also requires the accounting for a business combination achieved in stages involving a foreign entity to be treated as a single event. The accounting standard was effective for the Company beginning with the quarter ending April 30, 2014 and is to be applied prospectively to derecognition events occurring after the effective date. The Company will apply the provisions of this accounting standard to all transactions described above prospectively from the date of adoption.
In March 2013, the FASB also issued an accounting standard which requires an entity to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of the guidance is fixed at the reporting date as the sum of: i) the amount the reporting entity agreed to pay on the basis of its arrangements among its co-obligors and ii) any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The accounting standard was effective for the Company beginning with the quarter ending April 30, 2014 and is to be applied retrospectively for all periods presented. The adoption of this guidance had no impact on the Company's consolidated financial position, income, comprehensive income or cash flows.
In July 2013, the FASB issued an accounting standard which requires presentation of certain unrecognized tax benefits as reductions to deferred tax assets rather than as liabilities when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The accounting standard was effective for the Company beginning with the quarter ending April 30, 2014 and is to be applied prospectively. The Company currently follows the guidance and this update had no impact on its financial statement disclosures.
Recently Issued Accounting Standards
In April 2014, the FASB issued an accounting standard which modifies the definition of discontinued operations by limiting discontinued operations reporting to disposals of components of an entity that represent strategic shifts that have (or will have) a major effect on an entity's operations and financial results. This update also requires additional financial statement disclosures about discontinued operations, as well as disposal of an individually significant component of an entity that does not qualify for discontinued operations presentation. The accounting standard is effective for the Company beginning with the quarter ending April 30, 2015 and is to be applied prospectively. The Company will apply the provisions of this accounting standard to all transactions described above prospectively from the date of adoption.
In May 2014, the FASB issued an accounting standard which will supersede all existing revenue recognition guidance under current GAAP. The new standard requires the recognition of revenue to depict the transfer of promised goods or services to customers while exercising extensive judgment and use of estimates. The accounting standard is effective for the Company beginning with the quarter ending April 30, 2017 and is to be applied retrospectively. The Company is currently in the process of assessing what impact this new standard may have on its consolidated financial position, results of operations or cash flows.



8


NOTE 2 — EARNINGS PER SHARE (“EPS”)
The Company reports a dual presentation of basic and diluted EPS. Basic EPS is computed by dividing net income by the weighted average number of shares outstanding during the reported period. Diluted EPS reflects the potential dilution related to equity-based incentives (further discussed in Note 5—Stock-Based Compensation) using the treasury stock method. The composition of basic and diluted EPS is as follows:
 
 
 
Three months ended April 30,
 
 
2014
 
2013
 
 
Net income   
 
Weighted  
average
shares  
 
Per
share
amount   
 
Net income   
 
Weighted  
average
shares  
 
Per
share
amount   
 
 
(In thousands, except per share data)
Net income per share - basic
 
$
13,467

 
38,137

 
$
0.35

 
$
17,760

 
37,907

 
$
0.47

Effect of dilutive securities:
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based awards
 
 
 
184

 
 
 
 
 
264

 
 
Net income per share - diluted
 
$
13,467

 
38,321

 
$
0.35

 
$
17,760

 
38,171

 
$
0.47

At April 30, 2014, no shares were excluded from the computation of diluted earnings per share as there were no equity-based awards outstanding where the exercise price was greater than the average market price, thereby resulting in an antidilutive effect. At April 30, 2013, there were 9,456 shares excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

NOTE 3 — DEBT

The carrying value of the Company's outstanding debt consists of the following:
 
April 30, 2014
 
January 31, 2014
 
(In thousands)
Senior Notes, interest at 3.75% payable semi-annually, due September 21, 2017
$
350,000

 
$
350,000

Less—unamortized debt discount
(908
)
 
(974
)
Senior Notes, net
349,092

 
349,026

Capital leases
5,671

 
5,662

Other committed and uncommitted revolving credit facilities, average interest rate of 5.33% and 6.15% at April 30, 2014 and January 31, 2014, respectively, expiring on various dates through fiscal 2017
49,270

 
42,914

 
404,033

 
397,602

Less—current maturities (included as “Revolving credit loans and current maturities of long-term debt, net”)
(49,856
)
 
(43,481
)
Total long-term debt, less current maturities
$
354,177

 
$
354,121

Senior Notes
In September 2012, the Company issued $350.0 million aggregate principal amount of 3.75% Senior Notes in a public offering (the "Senior Notes"), resulting in cash proceeds of approximately $345.8 million , net of debt discount and debt issuance costs of approximately $1.3 million and $2.9 million , respectively. The debt issuance costs incurred in connection with the public offering are amortized over the life of the Senior Notes as additional interest expense using the effective interest method. The Company pays interest on the Senior Notes semi-annually in arrears on March 21 and September 21 of each year, ending on the maturity date of September 21, 2017 . The Company, at its option, may redeem the Senior Notes at any time in whole or in part, at a redemption price equal to the greater of (i)  100% of the principal amount of the Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes being redeemed, discounted at a rate equal to the sum of the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest up to the date of redemption.

9

The Senior Notes are senior, unsecured obligations of the Company and rank equally in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness.
Other Credit Facilities
The Company has a $500.0 million revolving credit facility with a syndicate of banks (the “Credit Agreement”), which among other things, i) provides for a maturity date of September 27, 2016 , ii) provides for an interest rate on borrowings, facility fees and letter of credit fees based on the Company’s non-credit enhanced senior unsecured debt rating as determined by Standard & Poor’s Rating Service and Moody’s Investor Service, and iii) may be increased to a maximum of $750.0 million , subject to certain conditions. The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including a maximum debt to capitalization ratio and a minimum interest coverage ratio. The Company pays interest on advances under the Credit Agreement at the applicable LIBOR rate plus a predetermined margin that is based on the Company’s debt rating. There were no amounts outstanding under the Credit Agreement at April 30, 2014 and January 31, 2014.
The Company also has an agreement with a syndicate of banks (the “Receivables Securitization Program”) that allows the Company to transfer an undivided interest in a designated pool of U.S. accounts receivable, on an ongoing basis, to provide security or collateral for borrowings up to a maximum of $400.0 million . Under this program, the Company legally isolates certain U.S. trade receivables into a wholly-owned bankruptcy remote special purpose entity. Such receivables, which are recorded in the Consolidated Balance Sheet, totaled $682.8 million and $623.0 million at April 30, 2014 and January 31, 2014, respectively. As collections reduce accounts receivable balances included in the security or collateral pool, the Company may transfer interests in new receivables to bring the amount available to be borrowed up to the maximum. This program was renewed in October 2012 for a period of two years and interest is to be paid on advances under the Receivables Securitization Program at the applicable commercial paper or LIBOR rate plus an agreed-upon margin. There were no amounts outstanding under this program at April 30, 2014 and January 31, 2014.
In addition to the facilities described above, the Company has various other committed and uncommitted lines of credit and overdraft facilities totaling approximately $441.7 million at April 30, 2014 to support its operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal. There was $49.3 million outstanding on these facilities at April 30, 2014, at a weighted average interest rate of 5.33% , and $42.9 million outstanding at January 31, 2014, at a weighted average interest rate of 6.15% .
In consideration of the financial covenants discussed below, the Company’s maximum borrowing availability on its credit facilities is approximately $893.1 million , of which $49.3 million was outstanding at April 30, 2014. Certain of the Company’s credit facilities contain limitations on the amounts of annual dividends and repurchases of common stock and require compliance with other obligations, warranties and covenants. The financial ratio covenants contained within these credit facilities include a maximum debt to capitalization ratio and a minimum interest coverage ratio. At April 30, 2014, the Company was in compliance with all such financial covenants.
At April 30, 2014, the Company had also issued standby letters of credit of $85.5 million . These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions. The issuance of these letters of credit reduces the Company’s borrowing availability under certain of the above-mentioned credit facilities.  

NOTE 4 — INCOME TAXES

The Company's effective tax rate was 44.5% in the first quarter of fiscal 2015 and 42.9% in the first quarter of fiscal 2014. The increase in the effective rate for the first quarter of fiscal 2015 compared to the same period of the prior year is primarily the result of the relative mix of earnings and losses within the tax jurisdictions in which the Company operates.
On an absolute dollar basis, the provision for income taxes decreased 18.9% to $10.8 million for the first quarter of fiscal 2015 compared to $13.3 million in the same period of fiscal 2014 primarily due to a decrease in taxable earnings in certain countries in which the Company operates.
The effective tax rate differed from the U.S. federal statutory rate of 35% during these periods primarily due to the relative mix of earnings or losses within the tax jurisdictions in which the Company operates such as: i) losses in tax jurisdictions where the Company is not able to record a tax benefit; ii) earnings in tax jurisdictions where the Company has previously recorded a valuation allowance on deferred tax assets; and iii) earnings in lower-tax jurisdictions for which no U.S. taxes have been provided because such earnings are planned to be reinvested indefinitely outside the United States.
The Company's future effective tax rates will continue to be affected by changes in the relative mix of taxable income and taxable loss jurisdictions, changes in the valuation of deferred tax assets or liabilities or changes in tax laws or interpretations thereof. The Company monitors the assumptions used in estimating the annual effective tax rate and makes adjustments, if required, throughout the

10

year. If actual results differ from the assumptions used in estimating the Company's annual effective income tax rates, future income tax expense could be materially affected.

In addition, the Company's income tax returns are subject to continuous examination by the Internal Revenue Service and other tax authorities. The Company regularly assesses the likelihood of adverse outcomes from these examinations to determine the adequacy of the Company's provision for income taxes. To the extent the Company prevails in matters for which accruals have been established or is required to pay amounts in excess of such accruals, the effective tax rate could be materially affected.

NOTE 5 — STOCK-BASED COMPENSATION
For the three months ended April 30, 2014 and 2013, the Company recorded $2.0 million and $3.1 million , respectively, of stock-based compensation expense, which is included in “selling, general and administrative expenses” in the Consolidated Statement of Income.
At April 30, 2014, the Company had awards outstanding from three equity-based compensation plans, only one of which is currently active. The active plan was approved by the Company’s shareholders in June 2009 and includes 4.0 million shares available for grant of which approximately 2.6 million shares remain available for future grant at April 30, 2014. Under the active plan, the Company is authorized to award officers, employees, and non-employee members of the Board of Directors restricted stock, options to purchase common stock, maximum value stock-settled stock appreciation rights (“MV Stock-settled SARs”), maximum value options (“MVOs”), and performance awards that are dependent upon achievement of specified performance goals. Equity-based compensation awards have a maximum term of 10 years, unless a shorter period is specified by the Compensation Committee of the Board of Directors ("Compensation Committee") or is required under local law. Awards under the plans are priced as determined by the Compensation Committee, and under the terms of the Company’s active equity-based compensation plan, are required to be priced at, or above, the fair market value of the Company’s common stock on the date of grant. Awards generally vest between one and four years from the date of grant.
A summary of the Company’s restricted stock activity for the three months ended April 30, 2014 is as follows:
 
 
 
 
Shares    
Outstanding at January 31, 2014
 
 
284,204

Granted
 
 
428,025

Vested
 
 
(148,522
)
Canceled
 
 
(5,579
)
Outstanding at April 30, 2014
 
 
558,128

A summary of the activity of the Company’s MV Stock-settled SARs, MVOs and stock options for the three months ended April 30, 2014 is as follows:
 
 
 
 
Shares    
Outstanding at January 31, 2014
 
 
329,788

Exercised
 
 
(241,844
)
Outstanding at April 30, 2014
 
 
87,944

The Company’s policy is to utilize shares of its treasury stock, to the extent available, to satisfy its obligation to issue shares upon the exercise of awards.



11

NOTE 6 — SHAREHOLDERS’ EQUITY
The Company’s common share issuance activity for the three months ended April 30, 2014 is summarized as follows:
 
 
Shares 
 
Weighted-
average
price per
share 
Treasury stock balance at January 31, 2014
21,177,130

 
$
42.26

Shares of treasury stock reissued
(169,117
)
 
 
Treasury stock balance at April 30, 2014
21,008,013

 
$
42.26


There were no common shares repurchased by the Company during the first quarter of fiscal 2015. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares.
NOTE 7 — FAIR VALUE MEASUREMENTS
The Company’s assets and liabilities carried or disclosed at fair value are classified in one of the following three categories: Level 1 – quoted market prices in active markets for identical assets and liabilities; Level 2 – inputs other than quoted market prices included in level 1 above that are observable for the asset or liability, either directly or indirectly; and Level 3 – unobservable inputs for the asset or liability. The classification of an asset or liability within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement.
The following table summarizes the valuation of the Company's assets and liabilities that are measured at fair value on a recurring basis:
 
April 30, 2014
 
January 31, 2014
 
Fair value measurement category
 
Fair value measurement category
 
Level 1
Level 2
Level 3
 
Level 1
Level 2
Level 3
 
(in thousands)
Assets
 
 
 
 
 
 
 
Foreign currency forward contracts
 
$
2,024

 
 
 
$
6,160

 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
Foreign currency forward contracts
 
$
2,408

 
 
 
$
2,423

 
Acquisition-related contingent consideration
 
 
$
6,790

 
 
 
$
10,571

The Company's foreign currency forward contracts are measured on a recurring basis based on foreign currency spot rates and forward rates quoted by banks or foreign currency dealers (Level 2 criteria) and are marked-to-market each period with gains and losses on these contracts recorded in the Company's Consolidated Statement of Income on a basis consistent with the classification of the change in the fair value of the underlying transactions giving rise to these foreign currency exchange gains and losses in the period in which their value changes, with the offsetting amount for unsettled positions being included in either other current assets or other current liabilities in the Consolidated Balance Sheet. See further discussion below in Note 8 – Derivative Instruments.
The acquisition-related contingent consideration represents the future earnout payments related to the Company's acquisitions. The Company estimates the fair value of this Level 3 contingent consideration liability at each reporting date using a discounted cash flow analysis, which requires the evaluation of significant unobservable inputs that include projected revenues, expenses and cash flows, and assumed discount rates. Approximately $4.2 million of the acquisition-related contingent consideration was paid during the first quarter of fiscal 2015.
The Company utilizes life insurance policies to fund the Company’s nonqualified deferred compensation plan. The life insurance asset recorded by the Company is the amount that would be realized upon the assumed surrender of the policy. This amount is based on the underlying fair value of the invested assets contained within the life insurance policies. The gains and losses are recorded in the Company’s Consolidated Statement of Income within "other expense (income), net". The related deferred compensation liability is also marked-to-market each period based upon the various investment return alternatives selected by the plan participants and the gains and losses are recorded in the Company’s Consolidated Statement of Income within "selling, general and administrative expenses". The net realizable value of the Company's life insurance investments and related deferred compensation liability at April 30, 2014 was $39.4 million and $34.9 million , respectively.

12

The $350 million of Senior Notes discussed in Note 3 - Debt, are carried at cost, less unamortized debt discount. The estimated fair value of the Senior Notes was approximately $368.0 million at April 30, 2014, based upon quoted market information (Level 1 criteria).
The carrying amounts of cash and cash equivalents, 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 revolving credit facilities and loans payable approximates fair value as the majority of these instruments have variable interest rates which approximate current market rates (Level 2 criteria).
NOTE 8 — DERIVATIVE INSTRUMENTS
In the ordinary course of business, the Company is exposed to movements in foreign currency exchange rates. The Company’s foreign currency risk management objective is to protect earnings and cash flows from the impact of exchange rate changes primarily through the use of foreign currency forward contracts to hedge both intercompany and third party loans, accounts receivable and accounts payable. These derivatives are not designated as hedging instruments.
The Company employs established policies and procedures to manage the exposure to fluctuations in the value of foreign currencies. It is the Company’s policy to utilize financial instruments to reduce risks where internal netting cannot be effectively employed. Additionally, the Company does not enter into derivative instruments for speculative or trading purposes.
The Company’s foreign currency exposure relates primarily to international transactions in Europe, Canada and Latin America, where the currency collected from customers can be different from the currency used to purchase the product. The Company’s transactions in its foreign operations are denominated primarily in the following currencies: U.S. dollar, British pound, Canadian dollar, Chilean peso, Czech koruna, Danish krone, euro, Mexican peso, Norwegian krone, Peruvian new sol, Polish zloty, Romanian leu, Swedish krona and Swiss franc.
The Company considers inventory as an economic hedge against foreign currency exposure in accounts payable in certain circumstances. This practice offsets such inventory against corresponding accounts payable denominated in currencies other than the functional currency of the subsidiary buying the inventory, when determining the net exposure to be hedged using traditional forward contracts. Under this strategy, the Company would expect to increase or decrease selling prices for products purchased in foreign currencies based on fluctuations in foreign currency exchange rates affecting the underlying accounts payable. To the extent the Company incurs a foreign currency exchange loss (gain) on the underlying accounts payable denominated in the foreign currency, a corresponding increase (decrease) in gross profit would be expected as the related inventory is sold. This strategy can result in a certain degree of quarterly earnings volatility as the underlying accounts payable is remeasured using the foreign currency exchange rate prevailing at the end of each period, or settlement date if earlier, whereas the corresponding increase (decrease) in gross profit is not realized until the related inventory is sold.
The Company classifies foreign currency exchange gains and losses on its derivative instruments used to manage its exposures to foreign currency denominated accounts receivable and accounts payable as a component of “cost of products sold” which is consistent with the classification of the change in fair value upon remeasurement of the underlying hedged accounts receivable or accounts payable. The Company classifies foreign currency exchange gains and losses on its derivative instruments used to manage its exposures to foreign currency denominated financing transactions as a component of “other expense (income), net” which is consistent with the classification of the change in fair value upon remeasurement of the underlying hedged loans. The total amount recognized in earnings on the Company's foreign currency forward contracts, which is included as a component of either “cost of products sold” or “other expense (income), net”, was a net foreign currency exchange loss of $8.8 million and a net foreign currency exchange gain of $16.9 million , respectively, for the three months ended April 30, 2014 and 2013. The gains and losses on the Company’s foreign currency forward contracts are largely offset by the change in the fair value of the underlying hedged assets or liabilities.
The notional amount of forward exchange contracts is the amount of foreign currency to be bought or sold at maturity. Notional amounts are indicative of the extent of the Company’s involvement in the various types and uses of derivative financial instruments and are not a measure of the Company’s exposure to credit or market risks 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 average notional amounts of derivative financial instruments outstanding during the three months ended April 30, 2014 and 2013 were $0.8 billion and $2.1 billion , respectively, with average maturities of 34 days and 28 days, respectively. As discussed above, under the Company's hedging policies, gains and losses on the derivative financial instruments would be expected to be largely offset by the gains and losses on the underlying assets or liabilities being hedged.
The Company’s foreign currency forward contracts are also discussed in Note 7 – Fair Value Measurements.

13

NOTE 9 — COMMITMENTS AND CONTINGENCIES
Synthetic Lease Facility
The Company has a synthetic lease facility with a group of financial institutions (the "Synthetic Lease") under which the Company leases certain logistics centers and office facilities from a third-party lessor. Properties leased under the Synthetic Lease are located in Clearwater and Miami, Florida; Fort Worth, Texas; Fontana, California; Suwanee, Georgia; Swedesboro, New Jersey; and South Bend, Indiana. The Synthetic Lease is accounted for as an operating lease and rental payments are calculated at the applicable LIBOR rate plus a margin based on the Company's credit ratings.
Upon not less than 30 days' notice, the Company, at its option, may purchase one or any combination of the properties, at an amount equal to each of the property's cost, as long as the lease balance does not decrease below a defined amount. Upon not less than 270 days, nor more than 360 days, prior to the lease expiration, the Company may, at its option, i) purchase a minimum of two of the properties, at an amount equal to each of the property's cost, ii) exercise the option to renew the lease for a minimum of two of the properties or iii) exercise the option to remarket a minimum of two of the properties and cause a sale of the properties. If the Company elects to remarket the properties, the Company has guaranteed the lessor a percentage of the cost of each property, in the aggregate amount of approximately $133.8 million . Future annual lease payments under the Synthetic Lease are approximately $2.6 million per year.
The Synthetic Lease contains covenants that must be complied with, similar to the covenants described in certain of the credit facilities discussed in Note 3 - Debt. As of April 30, 2014, the Company was in compliance with all such covenants.
Guarantees
As is customary in the technology industry, to encourage certain customers to purchase products from Tech Data, the Company has arrangements with certain finance companies that provide inventory financing facilities to the Company’s customers. In conjunction with certain of these arrangements, the Company would be required to purchase certain inventory in the event the inventory is repossessed from the customers by the finance companies. As the Company does not have access to information regarding the amount of inventory purchased from the Company still on hand with the customer at any point in time, the Company’s repurchase obligations relating to inventory cannot be reasonably estimated. Repurchases of inventory by the Company under these arrangements have been insignificant to date. The Company believes that, based on historical experience, the likelihood of a material loss pursuant to these inventory repurchase obligations is remote.
The Company provides additional financial guarantees to finance companies on behalf of certain customers. The majority of these guarantees are for an indefinite period of time, where the Company would be required to perform if the customer is in default with the finance company related to purchases made from the Company. The Company reviews the underlying credit for these guarantees on at least an annual basis. As of April 30, 2014 and January 31, 2014, the outstanding amount of guarantees under these arrangements totaled $11.7 million and $13.4 million , respectively. The Company believes that, based on historical experience, the likelihood of a material loss pursuant to the above guarantees is remote.
Contingencies
Prior to fiscal 2004, one of the Company’s subsidiaries, located in Spain, was audited in relation to various value added tax (“VAT”) matters. As a result of those audits, the Spanish subsidiary received notices of assessment from the Regional Inspection Unit of Spain’s taxing authority that allege the subsidiary did not properly collect and remit VAT. The Spanish subsidiary appealed these assessments to the Madrid Central Economic Administrative Courts beginning in March 2010. Following the administrative court proceedings the matter was appealed to the Spanish National Appellate Court. During the fourth quarter of fiscal year 2014, the Spanish National Appellate Court issued an opinion upholding the assessment for several of the assessed years. The Company believes that the Spanish subsidiary's defense to the assessments has solid legal grounds and is continuing to vigorously defend its position by appealing to the Spanish Supreme Court. The Company estimates the total exposure for these assessments (including previously recorded amounts), including various penalties and interest, was approximately $58.2 million and $56.4 million at April 30, 2014 and January 31, 2014, respectively, which was accrued as a result of the Spanish National Appellate Court’s ruling and is included in "accrued expenses and other liabilities" in the Consolidated Balance Sheet.
In December 2010, in a non-unanimous decision, a Brazilian appellate court overturned a 2003 trial court which had previously ruled in favor of the Company’s Brazilian subsidiary related to the imposition of certain taxes on payments abroad related to the licensing of commercial software products, commonly referred to as “CIDE tax.” The Company estimates the total exposure where the CIDE tax, including interest, may be considered due to be approximately $27.6 million and $25.3 million at April 30, 2014 and January 31, 2014, respectively. The Brazilian subsidiary has appealed the unfavorable ruling to the Supreme Court and Superior Court, Brazil's two highest appellate courts. Based on the legal opinion of outside counsel, the Company believes that the chances of

14

success on appeal of this matter are favorable and the Brazilian subsidiary intends to vigorously defend its position that the CIDE tax is not due. However, due to the lack of predictability of the Brazilian court system, the Company has concluded that it is reasonably possible that the Brazilian subsidiary may incur a loss up to the total exposure described above. The Company believes the resolution of this litigation will not be material to the Company’s consolidated net assets or liquidity; however, it could be material to the Company’s operating results for any particular period, depending upon the level of income for such period. In addition to the discussion regarding the CIDE tax above, the Company’s Brazilian subsidiary has been undergoing several examinations of non-income related taxes. Given the complexity and lack of predictability of the Brazilian tax system, the Company believes that it is reasonably possible that a loss may have been incurred. However, due to the early stages of the examination, the complex nature of the Brazilian tax system and the absence of communication from the local tax authorities regarding these examinations, the Company is currently unable to determine the likelihood of these examinations resulting in assessments nor estimate the amount of loss, if any, that may be reasonably possible if such assessment were to be made.
The Company is subject to various other legal proceedings and claims arising in the ordinary course of business. The Company’s management does not expect that the outcome in any of these other legal proceedings, individually or collectively, will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.
NOTE 10 — SEGMENT INFORMATION
Tech Data operates predominantly in a single industry segment as a distributor of technology products, logistics management, and other value-added services. While the Company operates primarily in one industry, it is managed based on geographic segments: the Americas (including North America and South America) and Europe. The Company assesses performance of and makes decisions on how to allocate resources to its operating segments based on multiple factors including current and projected operating income and market opportunities. The Company does not consider stock-based compensation expense in assessing the performance of its operating segments, and therefore the Company is reporting stock-based compensation expense as a separate amount. The accounting policies of the segments are the same as those described in Note 1—Business and Summary of Significant Accounting Policies.

15

Financial information by geographic segment is as follows:
 
 
Three months ended April 30,
 
 
2014
 
2013
 
 
(In thousands)
Net sales to unaffiliated customers
 
 
 
 
Americas (1)
 
$
2,476,271

 
$
2,292,782

Europe
 
4,251,880

 
3,854,975

Total
 
$
6,728,151

 
$
6,147,757

 
 
 
 
 
Operating income
 
 
 
 
Americas (2)
 
$
26,283

 
$
27,231

Europe (3)
 
7,186

 
11,891

Stock-based compensation expense
 
(1,973
)
 
(3,091
)
Total
 
$
31,496

 
$
36,031

 
 
 
 
 
Depreciation and amortization
 
 
 
 
Americas
 
$
4,118

 
$
4,246

Europe
 
14,098

 
13,721

Total
 
$
18,216

 
$
17,967

 
 
 
 
 
Capital expenditures
 
 
 
 
Americas
 
$
1,482

 
$
1,697

Europe
 
2,745

 
6,037

Total
 
$
4,227

 
$
7,734

 
 
 
As of
 
 
April 30, 2014
 
January 31, 2014
 
 
(In thousands)
Identifiable assets
 
 
 
 
Americas
 
$
2,091,133

 
$
1,984,895

Europe
 
4,923,870

 
5,184,771

Total
 
$
7,015,003

 
$
7,169,666

 
 
 
 
 
Long-lived assets:
 
 
 
 
Americas (1)
 
$
26,587

 
$
28,091

Europe
 
49,269

 
49,540

Total
 
$
75,856

 
$
77,631

 
 
 
 
 
Goodwill & acquisition-related intangible assets, net:
 
 
 
 
Americas
 
$
9,320

 
$
8,936

Europe
 
389,471

 
386,919

Total
 
$
398,791

 
$
395,855

(1) Net sales to unaffiliated customers in the United States represented 83% of the total Americas' net sales to unaffiliated customers for each of the fiscal quarters ended April 30, 2014 and April 30, 2013. Total long-lived assets in the United States represented 90% of the Americas' total long-lived assets at both April 30, 2014 and January 31, 2014.
(2) Operating income in the Americas for the fiscal quarters ended April 30, 2014 and 2013 includes restatement-related expenses of $2.9 million and $1.8 million , respectively.
(3) Operating income in Europe for the fiscal quarters ended April 30, 2014 and 2013 includes restatement-related expenses of $9.4 million and $1.3 million , respectively.


16

ITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Forward-Looking Statements
This Quarterly Report on Form 10-Q, including this Management's Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”), contains 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. These forward-looking statements regarding future events and the future results of Tech Data Corporation (“Tech Data”, “we”, “our”, “us” or the “Company”) are based on current expectations, estimates, forecasts, and projections about the industries in which we operate 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 our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that 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. Readers are referred to the cautionary statements and important factors discussed in Part 1, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended January 31, 2014 for further information. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.
Overview
Tech Data is one of the world’s largest wholesale distributors of technology products. We serve as an indispensable link in the technology supply chain by bringing products from the world’s leading technology vendors to market, as well as providing our customers with advanced logistics capabilities and value-added services. Our customers include value-added resellers (“VARs”), direct marketers, retailers and corporate resellers who support the diverse technology needs of end users. We manage our business in two geographic segments: the Americas (including North America and South America) and Europe.
  Our financial objectives are to grow sales at or above the overall IT market growth rate by gaining share in select product areas, grow earnings in local currency, generate positive cash flow, and earn a return on invested capital above our weighted average cost of capital. To achieve this, we are focused on a strategy of execution, diversification and innovation that we believe differentiates our business in the marketplace.
The fundamental element of our strategy is execution. Our execution strategy is supported by our highly efficient infrastructure, combined with our multiple service offerings, to generate demand, develop markets and provide supply chain services for our vendors and customers. The technology distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition and declining average selling prices per unit, as well as changes in terms and conditions with our vendors, including those terms related to rebates, price protection, product returns and other incentives. We expect these conditions to continue in the foreseeable future and, therefore, we will continue to proactively evaluate our pricing policies and inventory management practices in response to potential changes in our vendor terms and conditions and the general market environment. More than 90% of the Company's net sales are on one common IT platform, which we believe will give Tech Data significant competitive advantages in providing greater supply chain opportunities by expanding our value-added services to our customers, on-boarding new vendors and products faster and improving our ability to rapidly respond to changes in the market.
In addition to execution, our strategy includes ongoing diversification and realignment of our customer and product portfolios to improve long-term profitability throughout our operations. Our broadline distribution business, characterized as high volume, more commoditized offerings, and comprised primarily of personal computer systems, peripherals, supplies and other similar products, remains a core part of our business and represents a significant percentage of our revenue. However, as technology advances, we have continued to evolve our business model, product mix, and value-added offerings in order to provide our vendors with the most efficient distribution channel for their products, and our customers with a broad array of innovative solutions to sell. We have responded to a changing IT landscape with investments in specialty areas, including the data center, software, mobility and consumer electronics, which collectively now comprise more than 50% of our consolidated net sales.

17

On November 1, 2012, we completed the acquisition of several distribution companies of Specialist Distribution Group (collectively "SDG"), the distribution arm of Specialist Computer Holdings PLC (“SCH”), a privately-held IT services company headquartered in the United Kingdom, for a final purchase price of approximately $358 million. SDG is a leading distributor of value and broadline IT products in the UK, France and the Netherlands. We believe the acquisition of SDG supports our diversification strategy by strengthening our European value and broadline offerings in key markets and expanding our vendor and customer portfolios, while leveraging our existing pan-European infrastructure.
Another strategic area of investment is our integrated supply chain services designed to provide innovative third party logistics and other offerings to our business partners. We have seen these offerings grow not only within our European mobility business but also within our consumer electronics and other businesses in both geographies. Our evolving mix of products, services, customers and geographies is important in achieving our strategic financial goals. As we execute our diversification strategy we continuously monitor the extension of credit and other terms and conditions offered to our customers to prudently balance risk, profitability and return on invested capital.
The final tenet of our strategy is innovation. Our IT systems and e-business tools and programs have provided our business with the flexibility to effectively navigate fluctuations in market conditions, structural changes in the technology industry, as well as changes created by the products we sell. An example of our investment in innovation and one that we believe is providing us with the flexibility to meet the demands of the ever-evolving technology market, is our continued deployment of internal IT systems across both our Americas and European regions, including the integration of SDG, which was completed in the first quarter of fiscal 2015. We believe our global IT systems provide us with a competitive advantage allowing us to drive efficiencies throughout our business while delivering innovative solutions for our business partners.
We believe our strategy of execution, diversification and innovation has differentiated us in the markets we serve and we believe we have opportunities for further gains in market share as our customer satisfaction ratings continue to improve. In addition, we have continued to gain traction on leveraging the SAP capabilities we have in the United States, as we have added new customers to our integrated supply chain services. These services have an extensive sales and implementation cycle and while their return on investment is not immediate, we remain optimistic about our ability to profitably grow this business.
We also continually evaluate the current and potential profitability and return on our investments in all geographies and consider changes in current and future investments based on risks, opportunities and current and anticipated market conditions. In connection with these evaluations, we may incur additional costs to the extent we decide to increase or decrease our investments in certain geographies. We will also continue to evaluate targeted strategic investments across our operations and new business opportunities and invest in those markets and product segments we believe provide us with the greatest opportunities for profitable growth. Finally, from a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. At April 30, 2014, we had a debt to total capital ratio (calculated as total debt divided by the aggregate of total debt and total equity) of 16%.
Recent Accounting Pronouncements and Legislation
See Note 1 of Notes to Consolidated Financial Statements for the discussion on recent accounting pronouncements.

18

Results of Operations
We do not consider stock-based compensation expense in assessing the performance of our operating segments, and therefore the Company reports stock-based compensation expense separately. The following table summarizes our net sales, change in net sales and operating income by geographic region for the three months ended April 30, 2014 and 2013:
 

 
Three months ended April 30, 2014
 
Three months ended April 30, 2013
 
$
 
% of net sales
 
$
 
% of net sales
 
 
 
 
 
 
 
 
 
 
Net sales by geographic region ($ in thousands):
 
 
 
 
 
 
 
 
 
Americas
$
2,476,271

 
36.8
%
 
$
2,292,782

 
37.3

%
Europe
4,251,880

 
63.2

 
3,854,975

 
62.7

 
Total
$
6,728,151

 
100.0
%
 
$
6,147,757

 
100.0

%
 
 
 
 
 
 
 
 
 
 
 
 
 
Three months ended April 30, 2014
 
 
 
Three months ended April 30, 2013
Year-over-year increase (decrease) in net sales (%):
 
 
 
 
 
 
 
 
 
Americas (US$)
 
 
8.0
%
 
 
 
(6.7
)
%
Europe (US$)
 
 
10.3
%
 
 
 
11.7

%
Europe (Euro)
 
 
4.9
%
 
 
 
12.6

%
Total (US$)
 
 
9.4
%
 
 
 
4.0

%

 
Three months ended April 30, 2014
 
Three months ended April 30, 2013
 
$
 
% of net sales 
 
$
 
% of net sales  
 
 
 
 
 
 
 
 
 
 
Operating income ($ in thousands):
 
 
 
 
 
 
 
 
 
Americas
$
26,283

 
1.06

%
 
$
27,231

 
1.19

%
Europe
7,186

 
0.17

%
 
11,891

 
0.31

%
Stock-based compensation expense
(1,973
)
 
(0.03
)
%
 
(3,091
)
 
(0.05
)
%
Total
$
31,496

 
0.47

%
 
$
36,031

 
0.59

%

 
Three months ended April 30, 2014
 
Three months ended April 30, 2013
 
$
 
% of net sales 
 
$
 
% of net sales  
 
 
 
 
 
 
 
 
 
 
Non-GAAP operating income ($ in thousands):
 
 
 
 
 
 
 
 
 
Americas
$
29,323

 
1.18

%
 
$
28,991

 
1.26

%
Europe
23,816

 
0.56

%
 
20,373

 
0.53

%
Stock-based compensation expense
(1,973
)
 
(0.03
)
%
 
(3,091
)
 
(0.05
)
%
Total
$
51,166

 
0.76

%
 
$
46,273

 
0.75

%


19

Non-GAAP financial data
Management believes that the presentation of non-GAAP operating income, non-GAAP net income and non-GAAP net income per diluted share is useful to investors because it provides a meaningful comparison of our performance between periods. The following tables provide a detailed reconciliation between results reported in accordance with generally accepted accounting principles in the United States ("GAAP") and non-GAAP financial measures.
 
 
Three months ended April 30,
 
 
2014
 
2013
 
 
(In thousands, except per share amounts)
GAAP to non-GAAP reconciliation of operating income - Americas:
 
 
 
 
Operating income - Americas
 
$
26,283

 
$
27,231

Restatement-related expenses (1)
 
2,870

 
1,760

Acquisition-related intangible assets amortization expense (2)
 
170

 
0

Non-GAAP operating income - Americas
 
$
29,323

 
$
28,991

 
 
 
 
 
GAAP to non-GAAP reconciliation of operating income - Europe:
 
 
 
 
Operating income - Europe
 
$
7,186

 
$
11,891

Restatement-related expenses (1)
 
9,366

 
1,263

Acquisition-related intangible assets amortization expense (2)
 
7,264

 
7,219

Non-GAAP operating income - Europe
 
$
23,816

 
$
20,373

 
 
 
 
 
Consolidated GAAP to non-GAAP reconciliation of operating income:
 
 
 
 
Operating income
 
$
31,496

 
$
36,031

Restatement-related expenses (1)
 
12,236

 
3,023

Acquisition-related intangible assets amortization expense (2)
 
7,434

 
7,219

Non-GAAP operating income
 
$
51,166

 
$
46,273

 
 
 
 
 
GAAP to non-GAAP reconciliation of net income:
 
 
 
 
Net income
 
$
13,467

 
$
17,760

Restatement-related expenses, net of tax (1)
 
8,759

 
2,061

Acquisition-related intangible assets amortization expense, net of tax (2)
 
5,427

 
5,280

Non-GAAP net income
 
$
27,653

 
$
25,101

 
 
 
 
 
GAAP to non-GAAP reconciliation of net income per share - diluted:
 
 
 
 
Net income per share - diluted
 
$
0.35

 
$
0.47

Restatement-related expenses, net of tax (1)
 
0.23

 
0.05

Acquisition-related intangible assets amortization expense, net of tax (2)
 
0.14

 
0.14

Non-GAAP net income per share - diluted
 
$
0.72

 
$
0.66

(1)
Fiscal 2015 and 2014 non-GAAP operating income excludes restatement-related expenses. Fiscal 2015 and 2014 non-GAAP net income excludes these expenses, net of the related tax effects.
(2)
Fiscal 2015 and 2014 non-GAAP operating income excludes acquisition-related intangible assets amortization expense. Fiscal 2015 and 2014 non-GAAP net income excludes this expense, net of the related tax effects.


20

The following table sets forth our Consolidated Statement of Income as a percentage of net sales for the three months ended April 30, 2014 and 2013, as follows:  
 
Three months ended April 30,
 
2014
 
2013 
Net sales
100.00

%
 
100.00

%
Cost of products sold
95.02

 
 
94.76

 
Gross profit
4.98

 
 
5.24

 
Operating expenses:
 
 
 
 
 
Selling, general and administrative expenses
4.33

 
 
4.60

 
Restatement-related expenses
0.18

 
 
0.05

 
 
4.51

 
 
4.65

 
Operating income
0.47

 
 
0.59

 
Interest expense
0.10

 
 
0.12

 
Other expense (income), net
0.01

 
 
(0.04
)
 
Income before income taxes
0.36

 
 
0.51

 
Provision for income taxes
0.16

 
 
0.22

 
Net income
0.20

%
 
0.29

%
Three months ended April 30, 2014 and 2013     
Net Sales
Our consolidated net sales were $6.7 billion in the first quarter of fiscal 2015, an increase of 9.4% when compared to the first quarter of fiscal 2014. The strengthening of certain foreign currencies against the U.S. dollar positively impacted our year-over-year net sales comparison by approximately three percentage points. Excluding the positive impact of the strengthening of certain foreign currencies against the U.S. dollar in fiscal 2015, consolidated net sales increased by approximately 6% in comparison with the same period of the prior fiscal year.
During the first quarter of fiscal 2015, net sales in the Americas were $2.5 billion, an increase of 8.0% when compared to the first quarter of the prior year. The increase in net sales in the Americas is primarily attributable to a stronger demand environment throughout the region. During the first quarter of fiscal 2015, net sales in Europe were $4.3 billion, an increase of 10.3% when compared to the first quarter of the prior year (an increase of 4.9% on a euro basis). The increase in our European net sales (in euros) during the first quarter of fiscal 2015 compared to the same period of the prior fiscal year is primarily due to a stronger demand environment. During the first quarter of fiscal 2015, we experienced strong sales performance in most European markets, especially Germany, Italy, Belgium, the Netherlands and Spain, partially offset by a decline in the UK.
We sell products purchased from the world’s leading peripheral, system, software and networking vendors. Products purchased from Hewlett-Packard Company generated 22% of our net sales for the first quarters of both fiscal 2015 and 2014. In addition, products purchased from Apple, Inc. generated 12% and 11%, respectively, of our net sales for the first quarters of fiscal 2015 and 2014. There were no other vendors or any customers that exceeded 10% of our consolidated net sales during the first quarters of fiscal 2015 and 2014.
Gross Profit
Gross profit as a percentage of net sales (“gross margin”) during the first quarter of fiscal 2015 was 4.98%, a decrease of 26 basis points compared to the 5.24% gross margin in the first quarter of fiscal 2014. The decrease in our year-over-year gross margin is primarily attributable to changes in product mix compared to the same period of the prior fiscal year as our sales in the first quarter of fiscal 2015 included higher sales from mobility and personal computer systems which typically have gross margins which are lower than our consolidated gross margin.
Selling, general and administrative expenses (“SG&A”)
SG&A as a percentage of net sales decreased to 4.33% in the first quarter of fiscal 2015, compared to 4.60% in the first quarter of fiscal 2014. The year-over-year change in percentage is primarily due to greater operating leverage as we generated solid sales growth in both Europe and the Americas, while keeping our costs relatively flat. In absolute dollars, SG&A increased $8.2 million in the first quarter of fiscal 2015 compared to the same period of the prior fiscal year. The increase in SG&A during the first quarter of fiscal 2015 is due to the impact of the strengthening of certain foreign currencies against the U.S. dollar.

21

Restatement-related expenses
Restatement-related expenses primarily include legal, accounting and third party consulting fees associated with (i) the restatement of certain of the Company's consolidated financial statements and other financial information from fiscal 2009 to fiscal 2013, (ii) the Audit Committee investigation to review the Company's accounting practices, (iii) incremental external audit and supplemental procedures by the Company in connection with the preparation of the Company's financial statements, and (iv) other incremental legal and consulting fees incurred as a result of the Company's restatement-related investigation. During the first quarters of fiscal 2015 and 2014, the Company incurred restatement-related expenses of approximately $12.2 million and $3.0 million, respectively. The Company expects to incur additional restatement-related expenses during fiscal 2015 for incremental audit and supplemental procedures in connection with the preparation of its financial statements and other incremental legal and consulting fees as a result of the Company's restatement-related investigation.
Other Expense (Income), Net
Other expense (income), net, consists primarily of gains and losses on investments in life insurance policies to fund the Company's nonqualified deferred compensation plan, interest income, discounts on the sale of accounts receivable and net foreign currency exchange gains and losses on certain financing transactions and the related derivative instruments used to hedge such financing transactions. Other expense (income), net, was approximately $0.5 million of expense in the first quarter of fiscal 2015 compared to $2.2 million of income in the first quarter of the prior fiscal year. The change in other expense (income), net, during the first quarter of fiscal 2015 is primarily attributable to a decrease in net foreign currency exchange gains on certain financing transactions, as compared to the same period of the prior fiscal year.
Provision for Income Taxes
Our effective tax rate was 44.5% in the first quarter of fiscal 2015 and 42.9% in the first quarter of fiscal 2014. The increase in the effective rate for the first quarter of fiscal 2015 compared to the same period of the prior year is primarily the result of the relative mix of earnings and losses within the tax jurisdictions in which we operate.
On an absolute dollar basis, the provision for income taxes decreased 18.9% to $10.8 million for the first quarter of fiscal 2015 compared to $13.3 million in the same period of fiscal 2014 primarily due to a decrease in taxable earnings in certain countries in which we operate.
The effective tax rate differed from the U.S. federal statutory rate of 35% during these periods primarily due to the relative mix of earnings or losses within the tax jurisdictions in which we operate such as: i) losses in tax jurisdictions where we are not able to record a tax benefit; ii) earnings in tax jurisdictions where we have previously recorded a valuation allowance on deferred tax assets; and iii) earnings in lower-tax jurisdictions for which no U.S. taxes have been provided because such earnings are planned to be reinvested indefinitely outside the United States.
Our future effective tax rates will continue to be affected by changes in the relative mix of taxable income and taxable loss jurisdictions, changes in the valuation of deferred tax assets or liabilities or changes in tax laws or interpretations thereof. We monitor the assumptions used in estimating the annual effective tax rate and make adjustments, if required, throughout the year. If actual results differ from the assumptions used in estimating our annual effective income tax rates, future income tax expense could be materially affected.
In addition, our income tax returns are subject to continuous examination by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of adverse outcomes from these examinations to determine the adequacy of our provision for income taxes. To the extent we prevail in matters for which accruals have been established or we are required to pay amounts in excess of such accruals, our effective tax rate could be materially affected.
 

22

Liquidity and Capital Resources
Our discussion of liquidity and capital resources includes an analysis of our cash flows and capital structure for all periods presented.
Cash Flows
The following table summarizes our Consolidated Statement of Cash Flows for the three months ended April 30, 2014 and 2013:
 
 
Three months ended April 30, 
 
 
2014
 
2013
 
 
(In thousands)
 
 
 
 
 
Net cash provided by (used in):
 
 
 
 
Operating activities
 
$
95,070

 
$
134,221

Investing activities
 
(4,227
)
 
(1,209
)
Financing activities
 
3,383

 
(137,798
)
Effect of exchange rate changes on cash and cash equivalents
 
11,305

 
(9,251
)
Net increase (decrease) in cash and cash equivalents
 
$
105,531

 
$
(14,037
)
As a distribution company, our business requires significant investment in working capital, particularly accounts receivable and inventory, partially financed through our accounts payable to vendors. An important driver of our operating cash flows is our cash conversion cycle (also referred to as “net cash days”). Our net cash days are defined as days of sales outstanding in accounts receivable (“DSO”) plus days of supply on hand in inventory (“DOS”), less days of purchases outstanding in accounts payable (“DPO”). We manage our cash conversion cycle on a daily basis throughout the year and our reported financial results reflect that cash conversion cycle at the balance sheet date. The following table presents the components of our cash conversion cycle, in days, as of April 30, 2014 and January 31, 2014:
 
 
 
As of April 30,
2014
 
As of January 31,
2014
Days of sales outstanding
 
41
 
37
Days of supply in inventory
 
33
 
29
Days of purchases outstanding
 
(53)
 
(47)
Cash conversion cycle (days)
 
21
 
19
Net cash provided by operating activities was $95.1 million in the first quarter of fiscal 2015 compared to $ 134.2 million of cash provided by operating activities for the same period of the prior year. The decrease in cash resulting from operating activities in the first quarter of fiscal 2015 compared to the same period of the prior year can be primarily attributed to the timing of both cash receipts from our customers and payments to our vendors.
Net cash used in investing activities of $ 4.2 million during the first quarter of fiscal 2015 is the result of the continuing expansion and upgrading of our IT systems, office facilities and equipment for our logistics centers in both the Americas and Europe. We expect to make total capital expenditures of approximately $40.0 million during fiscal 2015 for equipment and machinery in our logistics centers, office facilities and IT systems.
Net cash used in investing activities of $1.2 million during the first three months of fiscal 2014 is the result of $7.7 million of expenditures for the continuing expansion and upgrading of our IT systems, office facilities and equipment for our logistics centers in both the Americas and Europe and $1.5 million of expenditures for the acquisition of a trademark in Europe, partially offset by $8.0 million of cash received related to the final settlement of the SDG purchase price during the first quarter of fiscal 2014.
Net cash provided by financing activities of $3.4 million during the first quarter of fiscal 2015 is primarily the result of $5.9 million of net borrowings on our revolving credit lines, partially offset by $3.5 million payments related to acquisition earn-out payments. Net cash used in financing activities of $137.8 million during the first three months of fiscal 2014 is primarily the result of $133.3 million of net repayments on our revolving credit lines and $6.2 million related to acquisition earn-out payments, partially offset by $1.1 million of proceeds received from the reissuance of treasury stock related to the vesting and exercise of equity-based incentive awards and purchases made through our Employee Stock Purchase Plan.

23

Capital Resources and Debt Compliance
Our debt to total capital ratio was 16% at April 30, 2014. We believe a conservative approach to our capital structure will continue to support us in a global economic environment that remains uncertain. As part of our capital structure and to provide us with significant liquidity, we have a diverse range of financing facilities across our geographic regions with various financial institutions. Also providing us liquidity are our cash and cash equivalents balances across our regions, which are deposited and/or invested with various financial institutions. We are exposed to risk of loss on funds deposited with these financial institutions, however, we monitor our financing and depository financial institution partners regularly for credit quality. We believe that our existing sources of liquidity, including our financing facilities, cash resources and cash provided by operating activities are sufficient to meet our working capital needs and cash requirements for at least the next 12 months.
At April 30, 2014, we had approximately $ 675.6 million in cash and cash equivalents, of which $570.8 million was held in our foreign subsidiaries. As discussed above, the Company currently has sufficient resources, cash flows and liquidity within the United States to fund current and expected future working capital requirements. Historically, the Company has utilized and reinvested cash earned outside the United States to fund foreign operations and expansion, and plans to continue reinvesting such earnings and future earnings indefinitely outside of the United States. If the Company’s plans for the use of cash earned outside of the United States change in the future, cash and cash equivalents held by our foreign subsidiaries could not be repatriated to the United States without potential negative income tax consequences.
The following is a discussion of our various financing facilities:
Senior Notes
In September 2012, the Company issued $350.0 million aggregate principal amount of 3.75% Senior Notes in a public offering (the "Senior Notes"), resulting in cash proceeds of approximately $345.8 million, net of debt discount and debt issuance costs of approximately $1.3 million and $2.9 million, respectively. The debt issuance costs incurred in connection with the public offering are amortized over the life of the Senior Notes as additional interest expense using the effective interest method. We pay interest on the Senior Notes semi-annually in arrears on March 21 and September 21 of each year, ending on the maturity date of September 21, 2017. We may, at our option, redeem the Senior Notes at any time in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the Senior Notes being redeemed, discounted at a rate equal to the sum of the applicable Treasury Rate plus 50 basis points, plus accrued and unpaid interest up to the date of redemption. The Senior Notes are senior, unsecured obligations of the Company and rank equally in right of payment with all of our other unsecured and unsubordinated indebtedness.
Other Credit Facilities
We have a $500.0 million revolving credit facility with a syndicate of banks (the “Credit Agreement”), which, among other things, i) provides for a maturity date of September 27, 2016, ii) provides for an interest rate on borrowings, facility fees and letter of credit fees based on our non-credit enhanced senior unsecured debt rating as determined by Standard & Poor’s Rating Service and Moody’s Investor Service, and iii) may be increased to a maximum of $750.0 million, subject to certain conditions. The Credit Agreement includes various covenants, limitations and events of default customary for similar facilities for similarly rated borrowers, including a maximum debt to capitalization ratio and a minimum interest coverage ratio. We pay interest on advances under the Credit Agreement at the applicable LIBOR rate plus a predetermined margin that is based on our debt rating. There were no amounts outstanding under the Credit Agreement at April 30, 2014 and January 31, 2014.
We also have an agreement with a syndicate of banks (the “Receivables Securitization Program”) that allows us to transfer an undivided interest in a designated pool of U.S. accounts receivable, on an ongoing basis, to provide security or collateral for borrowings up to a maximum of $400.0 million. The Receivables Securitization Program was renewed in October 2012 for a period of two years and interest is to be paid on advances at the applicable commercial paper or LIBOR rate plus an agreed-upon margin. There were no amounts outstanding under this program at April 30, 2014 and January 31, 2014.
In addition to the facilities described above, we have various other committed and uncommitted lines of credit and overdraft facilities totaling approximately $441.7 million at April 30, 2014 to support our operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal. There was $49.3 million outstanding on these facilities at April 30, 2014, at a weighted average interest rate of 5.33%, and $42.9 million outstanding at January 31, 2014, at a weighted average interest rate of 6.15%.
In consideration of the financial covenants discussed below, our maximum borrowing availability on our credit facilities is approximately $892.9 million, of which $49.3 million was outstanding at April 30, 2014. Certain of our credit facilities contain limitations on the amounts of annual dividends and repurchases of common stock and require compliance with other obligations,

24

warranties and covenants. The financial ratio covenants contained within these credit facilities include a debt to capitalization ratio and a minimum interest coverage ratio. At April 30, 2014, we were in compliance with all such financial covenants.
At April 30, 2014, we had also issued standby letters of credit of $85.5 million. These letters of credit typically act as a guarantee of payment to certain third parties in accordance with specified terms and conditions. The issuance of these letters of credit reduces our borrowing availability under certain of the above-mentioned credit facilities.
Accounts Receivable Purchase Agreements
We have uncommitted accounts receivable purchase agreements under which certain accounts receivable may be sold, without recourse, to third-party financial institutions. Under these programs, we may sell certain accounts receivable in exchange for cash less a discount, as defined in the agreements. Available capacity under these programs, which we use as a source of working capital funding, is dependent on the level of accounts receivable eligible to be sold into these programs and the financial institutions' willingness to purchase such receivables. In addition, certain of these agreements also require that we continue to service, administer and collect on the sold accounts receivable. At April 30, 2014 and January 31, 2014, the Company had a total of $227.2 million and $263.7 million, respectively, of accounts receivable sold to and held by financial institutions under these agreements. During the three months ended April 30, 2014 and 2013, discount fees recorded under these facilities were $1.3 million and $0.6 million, respectively, which are included as a component of "other expense (income), net" in the Company's Consolidated Statement of Income.
Off-Balance Sheet Arrangements
Synthetic Lease Facility
We have a synthetic lease facility with a group of financial institutions (the "Synthetic Lease") under which we lease certain logistics centers and office facilities from a third-party lessor that expires in June 2018. Properties leased under the Synthetic Lease are located in Clearwater and Miami, Florida; Fort Worth, Texas; Fontana, California; Suwanee, Georgia; Swedesboro, New Jersey; and South Bend, Indiana. The Synthetic Lease is accounted for as an operating lease and rental payments are calculated at the applicable LIBOR rate plus a margin based on our credit ratings.
Upon not less than 30 days' notice, we may, at our option, purchase one or any combination of the properties, at an amount equal to each of the property's cost, as long as the lease balance does not decrease below a defined amount. Upon not less than 270 days, nor more than 360 days, prior to the lease expiration, we may, at our option, i) purchase a minimum of two of the properties, at an amount equal to each of the property's cost, ii) exercise the option to renew the lease for a minimum of two of the properties or iii) exercise the option to remarket a minimum of two of the properties and cause a sale of the properties. If we elect to remarket the properties, we have guaranteed the lessor a percentage of the cost of each property, in the aggregate amount of approximately $133.8 million . Future annual lease payments under the Synthetic Lease are approximately $2.6 million per year.
The Synthetic Lease contains covenants that must be complied with, similar to the covenants described in certain of the credit facilities discussed in Note 3 of Notes to Consolidated Financial Statements. As of April 30, 2014, the company was in compliance with all such covenants.
Guarantees
As is customary in the technology industry, to encourage certain customers to purchase products from us, we have arrangements with certain finance companies that provide inventory financing facilities for our customers. In conjunction with certain of these arrangements, we have agreements with the finance companies that would require us to repurchase certain inventory, which might be repossessed from the customers by the finance companies. Due to various reasons, including among other items, the lack of information regarding the amount of saleable inventory purchased from us still on hand with the customer at any point in time, our repurchase obligations relating to inventory cannot be reasonably estimated. Repurchases of inventory by us under these arrangements have been insignificant to date. We also provide additional financial guarantees to finance companies on behalf of certain customers. The majority of these guarantees are for an indefinite period of time, where we would be required to perform if the customer is in default with the finance company related to purchases made from us. We review the underlying credit for these guarantees on at least an annual basis. As of April 30, 2014 and January 31, 2014, the outstanding amount of guarantees under these arrangements totaled $11.7 million and $13.4 million, respectively. We believe that, based on historical experience, the likelihood of a material loss pursuant to the above inventory repurchase obligations and guarantees is remote.

25


ITEM 3.     Quantitative and Qualitative Disclosures About Market Risk.
For a description of the Company’s market risks, see “Part II, Item 7A. Qualitative and Quantitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January 31, 2014. No material changes have occurred in our market risks since January 31, 2014.

 

 
 

26


ITEM 4.
Controls and Procedures.

Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures designed to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the specified time period. Tech Data’s management, with the participation of the Company’s Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of April 30, 2014. Based on that evaluation and considering the material weaknesses in internal control over financial reporting reported in Part II, Item 9A of the Annual Report on Form 10-K for the fiscal year ended January 31, 2014, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective as of April 30, 2014.
The Company engaged significant internal and external resources to perform supplemental procedures to assist in reviewing its financial statements and accounting practices in light of the material weaknesses referred to above.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) identified in connection with management’s evaluation, except as discussed below, during our first quarter of fiscal 2015 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

Previously Identified Material Weaknesses
As reported in our Annual Report on Form 10-K for the fiscal year ended January 31, 2014, management identified the following material weaknesses in internal control over financial reporting: (i) inadequate control environment in a United Kingdom subsidiary and two other European subsidiaries; (ii) inadequate controls over manual journal entries in Europe and in two subsidiaries in Latin America; (iii) inadequate account reconciliation procedures in Europe over certain aspects of vendor accounting; and (iv) inadequate anti-fraud program controls and monitoring.
We are engaged in various stages of remedial action to address the material weaknesses described above. These actions include the following:
•
Certain personnel are no longer employed by the Company.
•
The Audit Committee, Board and executives have increased communication to all employees regarding the ethical values of the Company, requirement to comply with laws, the Code of Conduct and the Company's accounting policies.
•
The Company has engaged external experts to perform the internal audit function and to assist with the implementation of specific fraud detection procedures.
•
The accounting organization is adding resources to address standardization, training and competencies related to the use of accounting systems and to enhance all accounting personnel's understanding of accounting policy.
•
The Company has implemented changes to its compensation programs to better motivate accurate financial reporting and compliance.
•
The Company is implementing changes in various processes, including: tools to document, support and review manual journal entries; new financial statement review and audit programs; and centralization of various control and finance processes.
•
The Company is in the process of evaluating potential enhancements to the accounting and enterprise computer systems to improve systematic controls and account reconciliation processes.
•
The Company evaluated its organizational structure, and has changed roles and responsibilities to enhance controls and compliance.
•
The Company has appointed a Chief Ethics and Compliance Officer and is evaluating additional enhancements to its compliance structure and organization.


27


PART II


ITEM 1.
Legal Proceedings.
Prior to fiscal 2004, one of the Company’s subsidiaries, located in Spain, was audited in relation to various value added tax (“VAT”) matters. As a result of those audits, the Spanish subsidiary received notices of assessment from the Regional Inspection Unit of Spain’s taxing authority that allege the subsidiary did not properly collect and remit VAT. The Spanish subsidiary appealed these assessments to the Madrid Central Economic Administrative Courts beginning in March 2010. Following the administrative court proceedings the matter was appealed to the Spanish National Appellate Court. During the fourth quarter of fiscal year 2014, the Spanish National Appellate Court issued an opinion upholding the assessment for several of the assessed years. The Company believes that the Spanish subsidiary's defense to the assessments has solid legal grounds and is continuing to vigorously defend its position by appealing to the Spanish Supreme Court. The Company estimates the total exposure for these assessments, including various penalties and interest, was approximately $58.2 million and $56.4 million at April 30, 2014 and January 31, 2014, respectively, which was accrued as a result of the Spanish National Appellate Court’s ruling and is included in "accrued expenses and other liabilities" in the Consolidated Balance Sheet.
In December 2010, in a non-unanimous decision, a Brazilian appellate court overturned a 2003 trial court which had previously ruled in favor of the Company’s Brazilian subsidiary related to the imposition of certain taxes on payments abroad related to the licensing of commercial software products, commonly referred to as “CIDE tax." The Company estimates the total exposure where the CIDE tax, including interest, may be considered due to be approximately $27.6 million and $25.3 million at April 30, 2014 and January 31, 2014, respectively. The Brazilian subsidiary has appealed the unfavorable ruling to the Supreme Court and Superior Court, Brazil's two highest appellate courts. Based on the legal opinion of outside counsel, the Company believes that the chances of success on appeal of this matter are favorable and the Brazilian subsidiary intends to vigorously defend its position that the CIDE tax is not due. However, due to the lack of predictability of the Brazilian court system, the Company has concluded that it is reasonably possible that the Brazilian subsidiary may incur a loss up to the total exposure described above. The Company believes the resolution of this litigation will not be material to the Company’s consolidated net assets or liquidity; however, it could be material to the Company’s operating results for any particular period, depending upon the level of income for such period. In addition to the discussion regarding the CIDE tax above, the Company’s Brazilian subsidiary has been undergoing several examinations of non-income related taxes. Given the complexity and lack of predictability of the Brazilian tax system, the Company believes that it is reasonably possible that a loss may have been incurred. However, due to the early stages of the examination, the complex nature of the Brazilian tax system and the absence of communication from the local tax authorities regarding these examinations, the Company is currently unable to determine the likelihood of these examinations resulting in assessments nor estimate the amount of loss, if any, that may be reasonably possible if such assessment were to be made.
The SEC has requested information from the Company with respect to the restatement of certain of our consolidated financial statements and other financial information from fiscal 2009 to 2013 and the Company has cooperated with the SEC’s request for information.
The Company is subject to various other legal proceedings and claims arising in the ordinary course of business. The Company’s management does not expect that the outcome in any of these other legal proceedings, individually or collectively, will have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

ITEM 1A.
Risk Factors.
In addition to other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2014, which could materially affect our business, financial position and results of operations. Risk factors which could cause actual results to differ materially from those suggested by forward-looking statements include but are not limited to those discussed or identified in this document, in our public filings with the SEC, and those incorporated by reference in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended January 31, 2014.
ITEM 2.
Unregistered Sales of Equity Securities and Use Of Proceeds.
Not applicable.


28

ITEM 3.     Defaults Upon Senior Securities.
Not applicable.

ITEM 4.     Mine Safety Disclosures.
Not applicable.  


29

ITEM 5.
Other Information.

On June 4, 2014, the Company’s shareholders approved an amendment to the Company’s Articles of Incorporation to declassify the Company’s Board of Directors and the Company filed articles of amendment with the Florida Department of State, Division of Corporations, to effectuate the declassification. On June 4, 2014, the Company’s Board of Directors also approved amendments to the Company’s By-Laws to make conforming changes for the declassification.
The Company held its Annual Meeting of Shareholders on June 4, 2014. The following matters set forth in our Proxy Statement dated April 24, 2014, which was filed with the Securities and Exchange Commission pursuant to Regulation 14A under the Securities Exchange Act of 1934, were voted upon with the results indicated below:

1.
The shareholders approved an amendment to the Company’s Articles of Incorporation to declassify its Board of Directors.
For
 
Against
 
Abstain
 
Broker non-votes
33,795,144
 
7,003
 
33,914
 
2,302,381

2.
The shareholders elected seven Class I and Class III directors to serve annual terms.
 
 
For
 
Against
 
Abstain
 
Broker non-votes
Class I:
 
 
 
 
 
 
Charles E. Adair
 
30,673,806

 
3,128,851

 
33,404

 
2,302,381

Harry J. Harczak, Jr.
 
31,050,438

 
2,746,887

 
38,736

 
2,302,381

Patrick G. Sayer
 
19,784,936

 
14,003,455

 
47,670

 
2,302,381

Class III:
 
 
 
 
 
 
Robert M. Dutkowsky
 
33,560,794

 
241,760

 
33,507

 
2,302,381

Jeffery P. Howells
 
31,284,332

 
2,518,325

 
33,404

 
2,302,381

Savio W. Tung
 
21,564,550

 
12,223,740

 
47,771

 
2,302,381

David M. Upton
 
33,233,153

 
563,880

 
39,028

 
2,302,381

Directors Kathleen Misunas, Thomas I. Morgan and Steven A. Raymund will continue in office for their respective terms.
3. The shareholders ratified the selection of Ernst & Young LLP as the Company’s independent registered certified public accounting firm for fiscal year 2015.
For
 
Against
 
Abstain
35,458,454
 
648,298
 
31,690

4. The voting results on an advisory vote to approve the compensation of the Company’s named executive officers as disclosed in the Company’s 2014 Proxy Statement are set forth below:
For
 
Against
 
Abstain
 
Broker non-votes
33,652,770
 
134,465
 
48,826
 
2,302,381
5. The voting results on the approval of the material terms of the performance measures applicable to performance-based awards under the 2009 Equity Incentive Plan of Tech Data Corporation are set forth below:
For
 
Against
 
Abstain
 
Broker non-votes
32,453,644
 
1,338,401
 
44,016
 
2,302,381

30

ITEM 6.
Exhibits.
(a)
Exhibits
 
3-A
Amended and Restated Articles of Incorporation of Tech Data Corporation filed on June 4, 2014 with the Secretary of the State of Florida
 
 
3-B
Bylaws of Tech Data Corporation as adopted by the Board of Directors and approved by the Shareholders on June 4, 2014

 
 
31-A
Certification of Chief Executive Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
31-B
Certification of Chief Financial Officer Pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 
 
32-A  
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
32-B  
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
 
 
101 (1)
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheet as of April 30, 2014 and January 31, 2014; (ii) Consolidated Statement of Income for the three months ended April 30, 2014 and 2013; (iii) Consolidated Statement of Comprehensive Income for the three months ended April 30, 2014 and 2013; (iv) Consolidated Statement of Cash Flows for the three months ended April 30, 2014 and 2013; and (v) Notes to Consolidated Financial Statements, detail tagged.

  __

(1)   XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 and 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.


31


SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
T ECH D ATA C ORPORATION
            (Registrant)
 
 
 
 
 
 
Signature
 
Title
 
Date
 
 
 
/s/    R OBERT  M. D UTKOWSKY        
  
Chief Executive Officer; Director
 
June 6, 2014
Robert M. Dutkowsky
  
 
 
 
 
 
 
/s/    J EFFERY  P. H OWELLS        
  
Executive Vice President and Chief Financial Officer; Director (principal financial officer)
 
June 6, 2014
Jeffery P. Howells
  
 
 
 
 
 
 
/s/    J OSEPH  B. T REPANI        
  
Senior Vice President and Corporate Controller (principal accounting officer)
 
June 6, 2014
Joseph B. Trepani
  
 
 
 
 


 




32


AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
TECH DATA CORPORATION
ARTICLE I
Name and Address
The name of the Corporation is: TECH DATA CORPORATION
The Corporation’s principal office address is: 5350 Tech Data Drive, Clearwater, Florida 33760
ARTICLE II
Nature of Business
The Corporation shall enjoy all rights, powers and privileges conferred upon the corporations by the constitution and laws of the State of Florida.
ARTICLE III
Authorized Capital Stock
The total number of shares of capital stock that the Corporation may issue is 200,000,000 shares of Common Stock having a par value of $.0015 per share.
ARTICLE IV
Common Stock
Each share of Common Stock shall be entitled to one vote on all matters submitted to a vote of the shareholders. Each share of Common Stock shall be entitled to share equally in dividends declared and paid by the Corporation from legally available funds. In the case of voluntary or involuntary liquidation, distribution or sale of assets, dissolution, or winding up of the Corporation, holders of the Common Stock are entitled to receive a pro rata share of the amount distributed.
ARTICLE V
Shareholder Votes on Certain Matters
(a) The affirmative vote of a majority of all the shares of Common Stock outstanding and entitled to vote shall be required to approve any of the following:
 
 
(i)
any merger or consolidation of the Corporation with or into any other corporation except in the case of a merger into the Corporation of a subsidiary of the Corporation 90% or more of which is owned by the Corporation and which does not require a vote of shareholders of either corporation pursuant to the laws of the State of Florida;
 
 
(ii)
any share exchange in which a corporation, person, or entity acquires the issued or outstanding shares of stock of this Corporation pursuant to a vote of shareholders of the Corporation;
 
 
(iii)
any sale, lease, exchange or other transfer of all, or substantially all, of the assets of this Corporation to any other corporation, person or entity; or
 
 
(iv)
any amendment to these Articles of Incorporation.
Such affirmative votes shall be in lieu of the vote of shareholders otherwise required by law.
(b) Nominees for director shall be elected to the Board of Directors if the number of votes cast “for” that nominee exceed the number of votes cast “against” that nominee (excluding abstentions) at any meeting for the election of directors at which a quorum is present;  provided  that, if the number of nominees for director exceeds the number of directors to be elected, directors shall be elected by a plurality of the votes cast at any meeting of shareholders for the election of directors at which a quorum is present, in each case subject to and in accordance with such other limitations and procedures as may be specified in the Bylaws.






(c) Shareholder approval shall be required for all matters requiring shareholder approval by any applicable listing requirements of the securities exchange or exchanges on which securities issued by the Corporation are listed.

ARTICLE VI
Term of Existence
The Corporation shall have perpetual existence unless sooner dissolved according to law.
ARTICLE VII
Board of Directors
The business and the affairs of the Corporation shall be managed by, or under the direction of, a Board of Directors comprised as follows:
 
 
(i)
The number of directors shall consist of not less than one nor more than thirteen members, the exact number of which shall be fixed from time to time in accordance with the Bylaws of the Corporation.
 
 
(ii)
Directors nominated for election at an annual meeting of shareholders shall be elected for a term expiring at the next annual meeting of shareholders. A director appointed to fill a vacancy of the Board of Directors shall hold office until the next annual meeting of shareholders.
 
 
(iii)
A director shall hold office until the date of the annual meeting of shareholders upon which his/her term expires and until his/her successor shall be elected and qualified, subject, however, to his/her prior death, resignation, retirement, disqualification or removal from office. A director may be removed from office only for cause and at a meeting of shareholders called expressly for that purpose by a vote of the holders of a majority of the shares cast that are entitled to vote at an election of directors.
 
ARTICLE VIII
No Pre-emptive Rights
The shareholders do not have pre-emptive rights to acquire authorized and unissued shares or treasury shares of the capital stock of the Corporation.
************
IN WITNESS WHEREOF, the undersigned have executed these Amended and Restated Articles of Incorporation this 4 th  day of June, 2014. These Amended and Restated Articles were adopted by the shareholders on the 4 th  day of June, 2014. The numbers of votes cast for the amendments by the shareholders were sufficient for approval.
 



 
 
/s/ DAVID R. VETTER
David R. Vetter
Secretary

 






BYLAWS

OF

TECH DATA CORPORATION


ARTICLE I.

Principal Office

The principal office of the Corporation shall be 5350 Tech Data Drive, Clearwater in the County of Pinellas, State of Florida.


ARTICLE II.

Shareholders

Section A.     ANNUAL MEETING . A meeting of the shareholders shall be held annually, within five (5) months of the end of each fiscal year of the Corporation, for the purpose of electing directors and for the transaction of such other proper business as may come before the meeting, the exact date to be established by the Board of Directors from time to time.

Section B.     SPECIAL MEETINGS . Special meetings of the shareholders may be called, for any purpose or purposes, by the Chief Executive Officer or the Board of Directors and shall be called by the Chief Executive Officer or the Secretary if the holders of not less than ten percent (10%) or more of all the votes entitled to be cast on any issue proposed to be considered at such special meeting sign, date and deliver to the corporation's Secretary one or more written demands for a special meeting, describing the purpose(s) for which it is to be held. Notice and call of any such special meeting shall state the purpose or purposes of the proposed meeting, and business transacted at any special meeting of the shareholders shall be limited to the purposes stated in the notice thereof.

Section C.     PLACE OF MEETING . The Board of Directors may designate any place, either within or without the State of Florida, as the place of meeting for any annual or special meeting of the shareholders. If no designation is made, the place of meeting shall be the principal office of the Corporation in the State of Florida.

Section D.     NOTICE OF MEETING . Written notice stating the place, day and hour of an annual or special meeting shall be delivered not less than ten (10) nor more than sixty (60) days before the date of the meeting to each shareholder entitled to vote at such meeting, except that no notice of a meeting need be given to any shareholders for which notice is not required to be given under applicable law. Notice shall be given as required or permitted under Florida Stat §607.0141. Notice of a special meeting shall include a description of the purpose or purposes for which the meeting is called. If the notice is mailed at least thirty (30) days before the date of the meeting, it may be done by a class of United States mail other than first class. If mailed such notice shall be deemed to be delivered when deposited in the United States mail, addressed to the shareholder at the shareholder's address as it appears on the stock transfer books of the corporation, with postage thereon prepaid.



Section E.     NOTICE OF ADJOURNED MEETING . If an annual or special shareholders' meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time or place if the new date, time or place is announced at the meeting before an adjournment is taken, and any business may be transacted at the adjourned meeting that might have been transacted on the original date of the meeting. If, however, a new record date for the adjourned meeting is or must be fixed under law, notice of the adjourned meeting must be given to persons who are shareholders as of the new record date and who are otherwise entitled to notice of such meeting.

Section F.     WAIVER OF CALL AND NOTICE OF MEETING . Call and notice of any shareholders' meeting may be waived by any shareholder before or after the date and time stated in the notice. Such waiver must be in writing signed by the shareholder and delivered to the corporation. Neither the business to be transacted at nor the purpose of any special or annual meeting need be specified in such waiver. A shareholder's attendance at a meeting (a) waives such shareholder's ability to object to lack of notice or defective notice of the meeting, unless the shareholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting; and (b) waives such shareholder's ability to object to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the shareholder objects to considering the matter when it is presented.

Section G.     QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS . Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of those shares exists with respect to that matter. Except as otherwise provided in the Articles of Incorporation or by law, a majority of the votes entitled to be cast on the matter by the voting group constitutes a quorum of that voting group for action on that matter. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting, unless a new record date is or must be set for an adjourned meeting. At any meeting at which a quorum is present, action on any matter (except for the election of directors which voting is governed by Article II, Section J) by a voting group shall be approved if the votes cast within the voting group favoring the action exceed the votes cast opposing the action, unless a greater number of affirmative votes is required by the Articles of Incorporation or bylaw.

Section H.     ADJOURNMENT; QUORUM FOR ADJOURNED MEETING . The holders of a majority of the shares represented, and who would be entitled to vote at a meeting if a quorum were present, where a quorum is not present, may adjourn such meeting from time to time. At such adjourned meeting at which a quorum shall be present or represented or deemed to be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed.

Section I.     ACTION BY SINGLE AND MULTIPLE VOTING GROUPS . If the Articles of Incorporation or law provides for voting by a single group on a matter, action on that matter is taken when voted upon by that voting group as provided in Section G above. If the Articles of Incorporation or law provides for voting by two or more voting groups on a matter, action on that matter is taken only when voted upon by each of those voting groups counted separately as provided in Section G above. Action may be taken by one voting group on a matter even though no action is taken by another group entitled to vote on the matter.

Section J.     VOTING FOR DIRECTORS . Unless otherwise provided in the Articles of Incorporation, a nominee for director shall be elected to the Board of Directors if the number of votes cast “for” such nominee exceed the votes cast “against” such nominee (excluding abstentions); provided, however, that directors shall be elected by a plurality of the votes cast at any meeting of shareholders for which (i) the Secretary of the Corporation receives a notice that a shareholder has nominated a person for election to the


Board of Directors in compliance with the advance notice requirements for shareholder nominees for director set forth in section O of Article II; and (ii) such nomination has not been withdrawn by such shareholder on or prior to the tenth (10th) day preceding the date the Corporation first mails its notice of meeting for such meeting to the shareholders. If directors are to be elected by a plurality of the votes cast, shareholders shall not be permitted to vote against a nominee. Each shareholder entitled to vote at an election of directors shall have the right to vote the number of shares owned by the shareholder for as many persons as there are directors to be elected and for whose election such shareholder has the right to vote.

Section K.     VOTING LISTS . At least ten (10) days prior to each meeting of shareholders, the officer or agent having charge of the stock transfer books for shares of the corporation shall make a complete list of the shareholders entitled to vote at such meeting, or any adjournment thereof, with the address and the number, class and series (if any) of shares held by each, which list shall be subject to inspection by any shareholder during normal business hours. This complete list will be available for at least ten (10) days prior to the meeting. The list also shall be available at the meeting and shall be subject to inspection by any shareholder at any time during the meeting or its adjournment. The shareholders list shall be prima facie evidence as to who are the shareholders entitled to examine such list or the transfer books or to vote at any meeting of the shareholders.

Section L.     VOTING OF SHARES . Each shareholder entitled to vote shall be entitled at every meeting of the shareholders to one vote in person or by proxy on each matter for each share of voting stock held by such shareholder. Such right to vote shall be subject to the right of the Board of Directors to close the transfer books or to fix a record date for voting shareholders as hereinafter provided.

Section M.     PROXIES . At all meetings of shareholders, a shareholder may vote by proxy, executed in writing and delivered to the corporation in the original or transmitted via telegram, electronic transmission, or as a photographic, photostatic or equivalent reproduction of a written proxy by the shareholder or by the shareholder's duly authorized attorney-in-fact; but, no proxy shall be valid after eleven (11) months from the date received, unless the proxy provides for a longer period. Each proxy shall be filed with the Secretary of the Corporation before or at the time of the meeting. In the event that a proxy shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one is present, that one, shall have all of the powers conferred by the proxy upon all the persons so designated, unless the instrument shall provide otherwise.

Section N.     INFORMAL ACTION BY SHAREHOLDERS . Unless otherwise provided in the Articles of Incorporation, any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting, without prior notice and without a vote if the action is taken by the holders of outstanding stock of each voting group entitled to vote thereon having not less than the minimum number of votes with respect to each voting group that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted. In order to be effective the action must be evidenced by one or more written consents describing the action taken, dated and signed by approving shareholders having the requisite number of votes of each voting group entitled to vote thereon, and delivered to the Corporation by delivery to its principal office, principal place of business, the Secretary, or another officer or agent of the Corporation having custody of the book in which proceedings of meetings of shareholders are recorded. No written consent shall be effective to take the corporate action referred to therein unless, within sixty (60) days of the date of the earliest dated consent delivered to the Secretary, written consents signed by the number of shareholders required to take action is delivered to the Secretary. If authorization of an action is obtained by one or more written consent but less than all shareholders so consent, then within ten (10) days after obtaining the authorization of such action by written consents,


notice must be given to each shareholder who did not consent in writing and to each shareholder who is not entitled to vote on the action.

Section O.     ADVANCE NOTICE OF SHAREHOLDER PROPOSALS AND NOMINATIONS . Shareholders may nominate persons for election to the Board of Directors at the annual meeting of shareholders or propose business to be brought before the annual meeting of shareholders, or both, only if: (i) the shareholder has given timely notice in proper written form as provided for in this section; (ii) such business is a proper matter for shareholder action; and (iii) the shareholder is a shareholder of record at the time of giving the notice provided for in this section and at the time of the annual meeting, and is entitled to vote at the meeting.

To be timely, a shareholder notice shall be delivered to the Secretary at the principal executive offices of the Corporation no earlier than the close of business on the one hundredth and twentieth (120 th ) day prior to the anniversary of the preceding year’s annual meeting and no later than the ninetieth (90 th ) day prior to the anniversary of the preceding year’s annual meeting; provided, however, that in the event that the date of the annual meeting is more than 30 days before or more than 60 days after the anniversary date of the previous year’s annual meeting, notice by the shareholder must be received no later than the close of business on the later of the ninetieth (90 th ) day prior to the annual meeting and the tenth (10 th ) day following the day on which notice of the annual meeting was mailed or publicly announced by the Corporation.

To be in proper form, a shareholder notice to the Secretary shall be in writing and include the following information (the “Required Information”):
(i)
the name and address of the shareholder proposing such business and of the beneficial owner, if any, on whose behalf the proposal or nomination is made;
(ii)
a representation that the shareholder is entitled to vote at such meeting and a statement of the number of shares of the Corporation that are owned by the shareholder and beneficially owned as of the date of the notice and supplemented as of the record date;
(iii)
any material interest of such shareholder or beneficial owner in the nomination or proposal;
(iv)
a description of any agreement, arrangement or understanding between the shareholder, the beneficial owner and/or any nominee, or any of their affiliates or associates, and any other person (including the names of such person in connection with such nomination or proposal, including any swap or other derivative or short positions, profits interests, options, hedging transactions or borrowed or loaned shares, the effect of any of which is to mitigate loss to or manage risk of stock price changes (increases or decreases) for, or to increase or decrease the voting power of such shareholder, beneficial owner and/or nominee, or any of their respective affiliates or associates with respect to the shares of the Corporation;
(v)
any other information relating to such shareholder and beneficial owner that would be required to be disclosed in a proxy statement or other filing required to be made in connection with solicitations of proxies for the proposal and/or the election of directors in a contested election pursuant to Section 14 of the Securities Exchange Act of 1934 and the rules and regulations thereunder, whether or not any such nomination or proposal is made pursuant to Regulation 14A under the Securities Exchange Act of 1934;
(vi)
a representation that the shareholder intends to appear in person or by a representative at the meeting to nominate the person(s) or to propose the business specified in the notice;
(vii)
as to each person the shareholder proposes to nominate for election as a director:
a.
the name, address and date of birth of such person;
b.
written consent of each nominee to being named as a nominee and to serving as a director if elected;
c.
information regarding the nominee’s qualifications;


d.
information that is pertinent to qualities and characteristics for board members as may be specified from time to time in any policy of the Corporation;
e.
information that is required to be disclosed in solicitations of proxies for election of directors in an election contest; and
f.
such other information regarding such nominee that is reasonably requested by the Board of Directors.
(viii)
an undertaking by the shareholder to notify the Corporation in writing of any change in the foregoing information as of the record date for such annual meeting by notice received by the Secretary at the principal executive offices of the Corporation no later than the tenth (10 th ) day following such record date, and thereafter by notice received within two (2) business days of any change in such information and in any event, as of the close of business on the day preceding the meeting date; and
(ix)
as to each matter the shareholder proposes to bring before the meeting, other than nominations, set forth a brief description of such business, including the text of any proposal or resolutions to be proposed for consideration by shareholders and, if such business includes a proposal to amend these Bylaws, the text of the proposed amendment, the reasons for conducting such business at the meeting and any material interest of such shareholder or beneficial owner in such business.

If the shareholder or a qualified representative does not appear at the meeting to present an item of business, such proposed business shall not be transacted, notwithstanding that proxies in respect of such vote may have been received by the Corporation.

Except as otherwise provided by law, the Articles of Incorporation or these Bylaws, the chair of the meeting shall determine all matters relating to the conduct of the meeting, including but not limited to determining whether any item of business has been properly brought before the meeting in accordance with these Bylaws. If the chair should so determine and declare that any item of business has not been properly brought, then such business shall not be transacted at the meeting or shall be disregarded.

A shareholder who seeks to have any proposal included in the Corporation’s proxy materials must provide the notice required by and in accordance with the applicable requirements of the rules and regulations under the Securities Exchange Act of 1934.

In the event the Corporation calls a special meeting of the shareholders for purposes of electing one or more directors, a shareholder may nominate a person(s) for election to such position if the shareholder notice is delivered to the Secretary no later than the thirtieth (30 th ) day prior to such special meeting. Such notice shall comply with the requirements of proper form and include the Required Information set forth above.

Notwithstanding anything in this section to the contrary, in the event that the number of directors to be elected to the Board of Directors of the Corporation is increased and there is no public announcement by the Corporation naming all of the nominees for director or specifying the size of the increased Board of Directors at least 100 days prior to the anniversary of the preceding year’s annual meeting, a shareholder notice required by these Bylaws shall also be considered timely, but only with respect to nominees for any new positions created by such increase, if it shall be received by the Secretary of the Corporation at the principal executive offices not later than the close of business on the tenth (10 th ) day following the day on which such public announcement is first made by the Corporation.



In no event shall any notice or public announcement of an adjournment or postponement of an annual or special meeting commence a new time period (or extend any time period) for the giving of a shareholder notice as provided in this Bylaw .

Section P.     PRESIDING OFFICER AND SECRETARY . At every meeting of the shareholders, the Chairman of the Board, or in his absence the Chief Executive Officer, or, if neither be present, an individual appointed by the Board of Directors, shall act as the presiding officer of the meeting. The Secretary, or in his absence an Assistant Secretary, shall act as secretary for the meeting.

Section Q.     INSPECTORS . For each meeting of the shareholders, the Board of Directors or the Chief Executive Officer may appoint an inspector to supervise the voting; and, if the inspector is so appointed, all questions respecting the qualification of any vote, the validity of any proxy, and the acceptance or rejection of any vote shall be decided by such inspector. Before acting at any meeting, the inspector shall take an oath to execute his duties with strict impartiality and according to the best of his ability. If any inspector shall fail to be present or shall decline to act, the presiding officer shall appoint another inspector to act in his place.


ARTICLE III.

Board of Directors

Section A.     GENERAL POWERS . The business and affairs of the Corporation shall be managed by its Board of Directors, which may exercise all powers of the Corporation and do all lawful acts and things as are not bylaw, the Articles of Incorporation or these bylaws directed or required to be exercised or done only by the shareholders.

Section B.     NUMBER, TENURE AND QUALIFICATIONS . The number of directors of the Corporation shall be not less than one (1) nor more than thirteen (13) as such number shall be fixed from time to time by resolution of the Board of Directors. Each director shall hold office until such director's successor shall have been duly elected and shall have qualified, unless such director sooner dies, resigns or is removed by the shareholders at any annual or special meeting. It shall not be necessary for directors to be shareholders. All directors shall be natural persons who are 18 years of age or older.

Section C.     TERM OF OFFICE OF DIRECTORS . Directors shall be elected for terms expiring at the next annual meeting of shareholders. A director appointed to fill a vacancy of the Board of Directors shall hold office until the next annual meeting of shareholders.

Section D.     ANNUAL MEETING . After each annual meeting of shareholders, the Board of Directors shall hold its annual meeting at the same place as and, immediately, following such annual meeting of shareholders for the purpose of the election of officers and the transaction of such other business as may come before the meeting; and, if a majority of the directors are present at such place and time, no prior notice of such meeting shall be required to be given to the directors. The place and time of such meeting may be varied by written consent of all the directors.

Section E.     REGULAR MEETINGS . Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall be determined from time to time by the Board of Directors.



Section F.     SPECIAL MEETINGS . Special meetings of the Board of Directors may be called by the Chairman of the Board or the Chief Executive Officer. The person or persons authorized to call special meetings of the Board of Directors may fix the place for holding any special meetings of the Board of Directors called by him or them, as the case may be. If no such designation is made, the place of meeting shall be the principal office of the Corporation in the State of Florida.

Section G.     NOTICE . Whenever notice of a meeting is required, written notice stating the place, day and hour of the meeting shall be delivered at least two (2) days prior thereto to each director, either personally, or by first-class United States mail, telegraph, teletype, facsimile or other form of electronic communication, or by private mail carriers handling nationwide mail services, to the director's business address. If notice is given by first-class United States mail, such notice shall be deemed to be delivered five (5) days after deposited in the United States mail so addressed with postage thereon prepaid or when received, if such date is earlier. If notice is given by telegraph, teletype, facsimile transmission or other form of electronic communication or by private mail carriers handling nationwide mail services, such notice shall be deemed to be delivered when received by the director. Any director may waive notice of any meeting, either before, at, or after such meeting. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened and so states at the beginning of the meeting or promptly upon arrival at the meeting.

Section H.     QUORUM . A majority of the total number of directors as fixed from time to time shall constitute a quorum.

Section I.     ADJOURNMENT; QUORUM FOR ADJOURNED MEETING . If less than a majority of the total number of directors are present at a meeting, a majority of the directors so present may adjourn the meeting without further notice. At any adjourned meeting at which a quorum shall be present, any business may be transacted which might have been transacted at the meeting as originally noticed.

Section J.     MANNER OF ACTING . If a quorum is present when a vote is taken, the act of a majority of the directors present at the meeting shall be the act of the Board of Directors.

Section K.     RESIGNATION . Any director may resign at any time by giving written notice to the Board of Directors, Chairman of the Board or the Corporation. A director who resigns may postpone the effectiveness of his resignation to a future date or upon the occurrence of a future event specified in a written tender of resignation. If no time of effectiveness is specified therein, a resignation shall be effective upon tender. A vacancy shall be deemed to exist at the time a resignation is tendered, and the Board of Directors may elect to appoint a successor to take office when the resignation by its terms becomes effective.

Section L.     REMOVAL . Any director may be removed by the shareholders with cause at any meeting of the shareholders called expressly for that purpose, but such removal shall be without prejudice to the contract rights, if any, of the person removed. This by‑law shall not be subject to change by the Board of Directors.

Section M.     VACANCIES . Any vacancy occurring in the Board of Directors, including any vacancy created by reason of an increase in the number of directors or by reason of a director resignation as a result of not receiving an affirmative majority vote in an uncontested election, may be filled by the affirmative vote of a majority of the remaining directors, unless otherwise provided in the Articles of Incorporation. A director elected to fill a vacancy, shall hold office until the next shareholders' meeting at which directors are to be elected.



Section N.     COMPENSATION . By resolution of the Board of Directors, the directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors, and may be paid compensation for service on the Board, committees and for attendance at each meeting of the Board of Directors or assigned committees; or a stated compensation as directors. No payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. In addition, the directors may also receive options to purchase shares of stock of the Corporation under the Corporation's stock option plans.

Section O.     PRESUMPTION OF ASSENT . A director of the Corporation who is present at a meeting of the Board of Directors at which action on any corporate matter is taken shall be presumed to have assented to the action taken unless such director objects at the beginning of the meeting (or promptly upon his arrival) to the holding of the meeting or the transacting of specified business at the meeting or such director votes against such action or abstains from voting in respect of such matter.

Section P.     INFORMAL ACTION BY BOARD . Any action required or permitted to be taken by any provisions of law, the Articles of Incorporation or these bylaws at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if each and every member of the Board or of such committee, as the case may be, signs a written consent thereto and such written consent is filed in the minutes of the proceedings of the Board or such committee, as the case may be. Action taken under this section is effective when the last director signs the consent, unless the consent specifies a different effective date, in which case it is effective on the date so specified.

Section Q.     MEETING BY TELEPHONE, ETC. Directors or the members of any committee shall be deemed present at a meeting of the Board of Directors or of any such committee, as the case may be, if the meeting is conducted using a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time.


ARTICLE IV.

Officers

Section A.     NUMBER . The officers of the Corporation shall consist of a Chairman of the Board, Chief Executive Officer, regional Presidents, Chief Financial Officer, Secretary and Treasurer, and may include one or more Executive Vice Presidents, Senior Vice Presidents, Vice Presidents, Assistant Secretaries, and Assistant Treasurers, and such other officers as the Board of Directors may designate from time to time by resolution. The "Executive Officers" shall be designated from time to time by resolution.

Section B.     APPOINTMENT AND TERM OF OFFICE . The Chairman of the Board and the Executive Officers shall be appointed annually by the Board of Directors at its annual meeting, or as soon thereafter as is convenient. At all times, the Board of Directors shall have sole authority to appoint the Chairman of the Board, the Chief Executive Officer, the regional Presidents and the Chief Financial Officer. Interim appointments of all other Executive Officers shall be made by the Compensation Committee, which may delegate such interim appointments to the Chief Executive Officer under specific guidelines. The Chief Executive Officer or the regional Presidents shall appoint all non-Executive Officer positions. Any two or more offices may be held by the same person. Each officer shall hold office until such officer's successor shall have been duly appointed and qualified, unless such officer sooner dies, resigns or is removed by the


Board. The appointment of an officer does not itself create contract rights. The Board of Directors may require an officer to give security for the faithful performance of his or her duties.

Section C.     RESIGNATION . An officer may resign at any time by delivering notice to the Corporation. A resignation shall be effective when the notice is delivered unless the notice specifies a later effective date. An officer's resignation shall not affect the Corporation's contract rights, if any, with the officer.

Section D.     REMOVAL . The Board of Directors may remove any officer at any time whenever, in the judgment of the Board of Directors, the best interests of the Corporation will be served thereby. The Chief Executive Officer may remove any officer other than the Chairman of the Board, President of Worldwide Operations or Chief Financial Officer at any time with or without cause. An officer's removal shall not affect the officer's contract rights, if any, with the Corporation.

Section E.     VACANCIES . A vacancy in any office because of death, resignation, removal, disqualification or otherwise may be filled by the Board of Directors, Compensation Committee, or Chief Executive Officer as provided in Section B of this Article IV, for the unexpired portion of the term.

Section F.     DUTIES OF THE CHAIRMAN OF THE BOARD . The Chairman of the Board shall preside at all meetings of the Board of Directors and shall preside at all meetings of the shareholders. The Chairman may fill such other offices as the Board of Directors shall determine, and shall also exercise such further powers and perform such other duties as may from time to time be conferred or assigned by the Board of Directors.

Section G.     DUTIES OF THE CHIEF EXECUTIVE OFFICER . The Chief Executive Officer shall have general charge of the business and affairs of the Corporation and shall see that all the orders and resolutions of the Board of Directors are carried into effect. The Chief Executive Officer may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other agreements and obligations. The Chief Executive Officer shall have the power to appoint, employ and discharge officers as provided in this Article IV. In the absence or disability of Chairman of the Board, the Chief Executive Officer shall preside at all meetings of the shareholders and the Board of Directors. The Chief Executive Officer may fill such other offices as the Board of Directors shall determine, and shall also exercise such further powers and perform such other duties as may from time to time be conferred or assigned by the Board of Directors.

Section H.     DUTIES OF THE REGIONAL PRESIDENTS . The regional Presidents, unless otherwise designated by the Board of Directors, shall be the chief operating officer of the region of the Corporation to which they are assigned and shall have the responsibility for the general and active management of the business and affairs of the Corporation, subject to the directions of the Board of Directors and the Chief Executive Officer. The regional Presidents shall see that all the orders and resolutions of the Board of Directors are carried into effect. The regional Presidents may sign, execute and deliver in the name of the Corporation powers of attorney, contracts, bonds and other agreements and obligations. The regional Presidents shall appoint, employ and discharge officers as provided in this Article IV. In addition to the foregoing specific powers and duties, the regional Presidents shall exercise such further powers and perform such other duties as may from time to time be conferred or assigned by the Board of Directors.

Section I.     DUTIES OF THE CHIEF FINANCIAL OFFICER . The Chief Financial Officer unless otherwise designated by the Board of Directors, shall be the Executive Vice President of Finance of the Corporation. The Chief Financial Officer shall have the general custody of all the funds and securities


of the Corporation and shall be responsible for the general supervision of the collection and disbursement of funds of the Corporation. The Chief Financial Officer shall render to the Board of Directors and the Chief Executive Officer, whenever required, an account of all transactions and information pertaining to the financial condition of the Corporation. The Chief Financial Officer shall have such other powers and perform such other duties as are assigned by the Board of Directors or the Chief Executive Officer.

Section J.     DUTIES OF THE SECRETARY . The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and of the Board of Directors, and all other notices required bylaw or by these bylaws. The Secretary shall keep a record of the minutes of the proceedings of meetings of shareholders and Board of Directors. The Secretary shall have custody of all books, records and papers of the Corporation, except such as shall be in the charge of the Chief Financial Officer, or of some other person authorized to have custody and possession of such by a resolution of the Board of Directors. The Secretary may sign or execute contracts with any Executive Officer thereunto authorized in the name of the Corporation and affix the seal of the Corporation thereto. The Secretary shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer.

Section K.     DUTIES OF TREASURER . The Treasurer shall endorse on behalf of the Corporation for collection checks, notes and other obligations, and shall deposit the same to the credit of the Corporation in banks or other depositories. The Treasurer shall enter or cause to be entered regularly in the banks of the Corporation full and accurate accounts of all monies received and paid on account of the Corporation. The Treasurer shall render to the Chief Financial Officer an account of all transactions and information pertaining to the financial condition of the Corporation and shall have such other powers and perform such other conditions as are assigned by the Board of Directors, Chief Executive Officer or Chief Financial Officer.

Section L.     DUTIES OF ASSISTANT SECRETARIES AND ASSISTANT TREASURERS . The Board of Directors or the Chief Executive Officer may appoint one or more assistant secretaries and assistant treasurers to perform such duties and to have such powers as shall be assigned to them by the Secretary or Treasurer, respectively, or by the Board of Directors or the Chief Executive Officer.

Section M.     DUTIES OF OTHER EXECUTIVE OFFICERS . Each Executive Officer, other than the Chief Executive Officer, the regional Presidents, the Chief Financial Officer, the Secretary and the Treasurer, shall have such powers and perform such duties as the Board of Directors may prescribe and shall perform such other duties as may be prescribed by these bylaws. Such Executive Officers may sign and execute contracts and other obligations pertaining to the regular course of his or her duties.

Section N.     COMPENSATION . The compensation of the Chief Executive Officer shall be set by the Board of Directors upon recommendations by the Compensation Committee. The compensation of the other Executive Officers shall be fixed by the Compensation Committee. No officer shall be prevented from receiving compensation by reason of the fact that the officer is also a director of the Corporation. The compensation of non-Executive Officers shall be set by the Chief Executive Officer, who may delegate this authority to the regional Presidents as to any officer, agent or employee under his or her direction and control.

Section O.     DELEGATION OF DUTIES . In the absence or disability of any officer of the Corporation, or for any other reason deemed sufficient by the Board of Directors, the Board may delegate the powers or duties of such officer to any other officer.

Section P.     DISASTER EMERGENCY POWERS OF ACTING OFFICERS . Unless otherwise expressly prescribed by action of the Board of Directors taken pursuant to Article XV of these bylaws, if,


as a result of some catastrophic event, a quorum of the Corporation's directors cannot readily be assembled and the Chief Executive Officer is unable to perform the duties of the office of Chief Executive Officer and/or other officers are unable to perform their duties, (a) the powers and duties of Chief Executive Officer shall be held and performed by that officer of the Corporation highest on the list of successors (adopted by the Board of Directors for such purpose) who shall be available and capable of holding and performing such powers and duties; and, absent any such prior designation, by the regional Presidents; (b) the officer so selected to hold and perform such powers and duties shall serve as Acting Chief Executive Officer until the Chief Executive Officer again becomes capable of holding and performing the powers and duties of Chief Executive Officer, or until the Board of Directors shall have elected a new Chief Executive Officer or designated another individual as Acting Chief Executive Officer; (c) such officer (or the Chief Executive Officer, if such person is still serving) shall have the power, in addition to all other powers granted to the Chief Executive Officer bylaw, the Articles of Incorporation, these bylaws and the Board of Directors, to appoint acting officers to fill vacancies that may have occurred, either permanently or temporarily, by reason of such disaster or emergency, each of such acting appointees to serve in such capacity until the officer for whom the acting appointee is acting is capable of performing the duties of such office, or until the Board of Directors shall have designated another individual to perform such duties or shall have elected or appointed another person to fill such office; (d) each acting officer so appointed shall be entitled to exercise all powers invested bylaw, the Articles of Incorporation, these bylaws and the Board of Directors in the office in which such person is serving; and (e) anyone transacting business with the Corporation may rely upon a certificate signed by any two officers of the Corporation that a specified individual has succeeded to the powers and duties of the Chief Executive Officer or such other specified office. Any person, firm, Corporation or other entity to which such certificate has been delivered by such officers may continue to rely upon it until notified of a change by means of a writing signed by two officers of this Corporation.

ARTICLE V.

Executive and Other Committees

Section A.     CREATION OF COMMITTEES . The Board of Directors may designate one or more committees, each to consist of two (2) or more of the directors of the Corporation.

Section B.     EXECUTIVE COMMITTEE . The Executive Committee, if there shall be one, shall consult with and advise the officers of the Corporation in the management of its business, and shall have, and may exercise, except to the extent otherwise provided by resolution of the Board of Directors creating such Executive Committee, such powers of the Board of Directors as can be lawfully delegated by the Board.

Section C.     COMPENSATION COMMITTEE . The Board of Directors shall appoint a Compensation Committee of three or more independent directors as defined in the committee’s charter and as independence is determined by the Board consistent with applicable rules and regulations. The Board of Directors shall designate one director as Chairman of the committee, and may designate one or more directors as alternate members of the committee, who may replace any absent or disqualified member at any meeting of the committee. The committee shall exercise such powers as may be specifically delegated to it by its charter or the Board of Directors and act upon such matters as may be referred to it from time to time for study and recommendation by the Board of Directors or the Chief Executive Officer. The charter shall meet the requirements of all applicable rules, regulations and listing requirements.

Section D.     AUDIT COMMITTEE . The Board of Directors shall appoint an Audit Committee of three or more independent directors, as defined in the committee’s charter and as independence is determined by the Board consistent with applicable rules and regulations. The Board of Directors shall


designate one director as Chairman of the committee, and may designate one or more directors as alternate members of the committee, who may replace any absent or disqualified member at any meeting of the committee. The committee shall exercise such powers as may be specifically delegated to it by its charter or the Board of Directors and act upon such matters as may be referred to it from time to time for study and recommendation by the Board of Directors or the Chief Executive Officer. The charter shall meet the requirements of all applicable rules, regulations and listing requirements.

Section E.     GOVERNANCE AND NOMINATING COMMITTEE . The Board of Directors shall appoint a Governance and Nominating Committee of three or more independent directors as defined in the committee’s charter and as independence is determined by the Board consistent with applicable rules and regulations. The Board of Directors shall designate one director as Chairman of the committee, and may designate one or more directors as alternate members of the committee, who may replace any absent or disqualified member at any meeting of the committee. The committee shall exercise such powers as may be specifically delegated to it by its charter or the Board of Directors and act upon such matters as may be referred to it from time to time for study and recommendation by the Board of Directors or the Chief Executive Officer. The charter shall meet the requirements of all applicable rules, regulations and listing requirements.

Section F.     OTHER COMMITTEES . The Board of Directors may appoint committees to administer the Corporation's various stock equity and other benefit plans or provide for the Compensation Committee to serve as the committee of the Board under any such plans. The specific terms of the benefit plans shall govern the appointment of committee members and the proceedings of each such committee. In addition, such other committees, to the extent provided in the resolution or resolutions creating them, shall have such functions and may exercise such powers of the Board of Directors as can be lawfully delegated.

Section G.     REMOVAL OR DISSOLUTION . Any Committee of the Board of Directors may be dissolved by the Board at any meeting; and any member of such committee may be removed by the Board of Directors with or without cause. Such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section H.     VACANCIES ON COMMITTEES . Vacancies on any committee of the Board of Directors shall be filled by the Board of Directors at any regular or special meeting.

Section I.     MEETINGS OF COMMITTEES . Regular meetings of any committee of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by such committee and special meetings of any such committee may be called by the Chairman or upon request of any two (2) members thereof upon two (2) days notice of the date, time and place of the meeting given to each of the other members of such committee, or on such shorter notice as may be agreed to in writing by each of the other members of such committee, given either personally or in the manner provided in Section G of Article III of these bylaws (pertaining to notice for directors' meetings).

Section J.     ABSENCE OF COMMITTEE MEMBERS . The Board of Directors may designate one or more directors as alternate members of any committee of the Board of Directors, who may replace at any meeting of such committee, any member not able to attend.

Section K.     QUORUM OF COMMITTEES . At all meetings of committees of the Board of Directors, a majority of the total number of members of the committee as determined from time to time shall constitute a quorum for the transaction of business.



Section L.     MANNER OF ACTING OF COMMITTEES . If a quorum is present when a vote is taken, the act of a majority of the members of any committee of the Board of Directors present at the meeting shall be the act of such committee.

Section M.     MINUTES OF COMMITTEES . Each committee of the Board of Directors shall keep regular minutes of its proceedings and report the same to the Board of Directors when required.

Section N.     COMPENSATION . Members of any committee of the Board of Directors may be paid compensation in accordance with the provisions of Section N of Article III of these bylaws (pertaining to compensation of directors).

Section O.     INFORMAL ACTION . Any committee of the Board of Directors may take such informal action and hold such informal meetings as allowed by the provisions of Sections P and Q of Article III of these bylaws.


ARTICLE VI.

Indemnification of Directors and Officers

Section A.     GENERAL . To the fullest extent permitted bylaw, the Corporation shall indemnify any person who is or was a party to any threatened, pending or completed action, suit or other type of proceeding (other than an action by or in the right of the Corporation), whether civil, criminal, administrative, investigative or otherwise, and whether formal or informal, by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against judgments, amounts paid in settlement, penalties, fines (including an excise tax assessed with respect to any employee benefit plan) and expenses (including counsel fees) actually and reasonably incurred in connection with any such action, suit or other proceeding, including any appeal thereof, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any such action, suit or other proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that such person did not act in good faith and in a manner that he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation or, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful.

Section B.     ACTIONS BY OR IN THE RIGHT OF THE CORPORATION . To the fullest extent permitted bylaw, the Corporation shall indemnify any person who is or was a party to any threatened, pending or completed action, suit or other type of proceeding (as further described in Section A of this Article VI) by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was a director, officer, employee or agent of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including counsel fees) and amounts paid in settlement not exceeding, in the judgment of the Board of Directors, the estimated expenses of litigating the action, suit or other proceeding to conclusion, actually and reasonably incurred in connection with the defense or settlement of such action, suit or other proceeding, including any appeal thereof, if such person acted in good faith and in a manner he or she reasonably believed to be in, or not opposed to, the best interests of the Corporation, except that no indemnification shall be made under this Section B in respect of any claim, issue or matter


as to which such person shall have been adjudged to be liable unless, and only to the extent that, the court in which such action, suit or other proceeding was brought, or any other court of competent jurisdiction, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses that such court shall deem proper.

Section C.     OBLIGATION TO INDEMNIFY . To the extent that a director, officer, employee or agent of the Corporation has been successful on the merits or otherwise in defense of any action, suit or other proceeding referred to in Section A or Section B of this Article VI, or in the defense of any claim, issue or matter therein, such person shall be indemnified against expenses (including counsel fees) actually and reasonably incurred by such person in connection therewith.

Section D.     DETERMINATION THAT INDEMNIFICATION IS PROPER . Indemnification pursuant to Section A or Section B of this Article VI, unless made pursuant to a determination by a court, shall be made by the Corporation only as authorized in the specific case upon a determination that the indemnification is proper in the circumstances because such person has met the applicable standard of conduct set forth in Section A or Section B of this Article VI. Such determination shall be made either (1) by the Board of Directors by a majority vote of a quorum consisting of directors who were not parties to the action, suit or other proceeding to which the indemnification relates; (2) if such a quorum is not obtainable or, even if obtainable, by majority vote of a committee duly designated by the Board of Directors (the designation being one in which directors who are parties may participate) consisting solely of two or more directors not at the time parties to such action, suit or other proceeding; (3) by independent legal counsel (i) selected by the Board of Directors in accordance with the requirements of subsection (1) or by a committee designated under subsection (2) or (ii) if a quorum of the directors cannot be obtained and a committee cannot be designated, selected by majority vote of the full Board of Directors (the vote being one in which directors who are parties may participate); or (4) by the shareholders by a majority vote of a quorum consisting of shareholders who were not parties to such action, suit or other proceeding or, if no such quorum is obtainable, by a majority vote of shareholders who were not parties to such action, suit or other proceeding.

Section E.     EVALUATION AND AUTHORIZATION . Evaluation of the reasonableness of expenses and authorization of indemnification shall be made in the same manner as is prescribed in Section D of this Article VI for the determination that indemnification is permissible; provided, however, that if the determination as to whether indemnification is permissible is made by independent legal counsel, the persons who selected such independent legal counsel shall be responsible for evaluating the reasonableness of expenses and may authorize indemnification.

Section F.     PREPAYMENT OF EXPENSES . Expenses (including counsel fees) incurred by a director or officer in defending a civil or criminal action, suit or other proceeding referred to in Section A or Section B of this Article VI shall be paid by the Corporation in advance of the final disposition thereof upon receipt of an undertaking by or on behalf of such director or officer to repay such amount if such person is ultimately found not to be entitled to indemnification by the Corporation pursuant to this Article VI. Expenses incurred by other employees and agents may be paid in advance upon such terms and conditions that the Board of Directors deems appropriate.

Section G.     NONEXCLUSIVITY AND LIMITATIONS . The indemnification and advancement of expenses provided pursuant to this Article VI shall not be deemed exclusive of any other rights to which a person may be entitled under any law, by-law, agreement, vote of shareholders or disinterested directors, or otherwise, both as to action in such person's official capacity and as to action in any other capacity while holding such office. In all cases not specifically provided for in this Article VI,


indemnification or advancement of expenses shall not be made to or on behalf of any director, officer, employee or agent if a judgment or other final adjudication establishes that such person's actions, or omissions to act, were material to the cause of action so adjudicated and constitute (1) a violation of the criminal law, unless the director, officer, employee or agent had reasonable cause to believe his or her conduct was lawful or had no reasonable cause to believe his or her conduct was unlawful; (2) a transaction from which the director, officer, employee or agent derived an improper personal benefit; (3) in the case of a director, a circumstance under which liability for unlawful distributions is applicable; (4) willful misconduct or a conscious disregard for the best interests of the Corporation in a proceeding by or in the right of a Corporation to procure a judgment in its favor or in a proceeding by or in the right of a shareholder; or (5) to the extent that such indemnification or advancement of expenses is expressly prohibited bylaw.

Section H.     CONTINUATION OF INDEMNIFICATION RIGHT . Unless expressly otherwise provided when authorized or ratified by this Corporation, indemnification and advancement of expenses as provided for in this Article VI shall continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors, and administrators of such person. For purposes of this Article VI, the term "corporation" includes, in addition to the resulting corporation, any constituent corporation (including any constituent of a constituent) absorbed in a consolidation or merger, so that any person who is or was a director, officer, employee or agent of a constituent corporation, or is or was serving at the request of a constituent corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, is in the same position under this Article VI with respect to the resulting or surviving corporation as such person would have been with respect to such constituent corporation if its separate existence had continued.

Section I.     INSURANCE . The Corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or who is or was serving at the request of the Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred by such person in any such capacity or arising out of such person's status as such, whether or not the Corporation would have the power to indemnify such person against the liability under Section A or Section B of this Article VI.


ARTICLE VII.

Interested Parties

Section A.     GENERAL . No contract or other transaction between the Corporation and any one or more of its directors or any other corporation, firm, association or entity in which one or more of its directors are directors or officers or are financially interested shall be either void or voidable because of such relationship or interest, because such director or directors were present at the meeting of the Board of Directors or of a committee thereof which authorizes, approves or ratifies such contract or transaction or because such director's or directors' votes are counted for such purpose if: (1) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested directors; (2) the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote on the matter, and they authorize, approve or ratify such contract or transaction by vote or written consent; or (3) the contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board of Directors, a committee thereof or the shareholders.



Section B.     APPROVAL BY BOARD OF DIRECTORS OR COMMITTEE . For purposes of Section A(1) of this Article VII, a conflict of interest transaction is authorized, approved or ratified if it receives the affirmative vote of a majority of the directors on the Board of Directors, or on the committee, who have no relationship or interest in the transaction, but a transaction may not be authorized, approved or ratified by a single director. If a majority of the directors who have no such relationship or interest in the transaction vote to authorize, approve or ratify the transaction, a quorum is present for the purpose of taking action under this Section B. The presence of or a vote cast by, a director with such relationship or interest in the transaction does not affect the validity of any action taken under Section A(1) of this Article VII if the transaction is otherwise authorized, approved or ratified as provided in Section A, but such presence or vote of those directors may be counted for purposes of determining whether the transaction is approved under other sections of the Corporation's bylaws and applicable law.

Section C.     APPROVAL BY SHAREHOLDERS . For purposes of Section A(2) of this Article VII, a conflict of interest transaction shall be authorized, approved or ratified if it receives the vote of a majority of the shares entitled to be counted under this Section C. Shares owned by or voted under the control of a director who has a relationship or interest in the transaction may not be counted in a vote of shareholders to determine whether to authorize, approve or ratify a conflict of interest transaction under Section A(2) of this Article VII. The vote of the shares owned by or voted under the control of a director who has a relationship or interest in the transaction shall be counted, however, in determining whether the transaction is approved under other sections of the Corporation's bylaws and applicable law. A majority of the shares, whether or not present, that would be entitled to be counted in a vote on the transaction under this Section C shall constitute a quorum for the purpose of taking action under this Section C.


ARTICLE VIII.

Certificates of Stock

Section A.     CERTIFICATES FOR SHARES . Shares may, but need not, be represented by certificates. The rights and obligations of shareholders shall be identical whether or not their shares are represented by certificates. If shares are represented by certificates, each certificate shall be in such form as the Board of Directors may from time to time prescribe, signed (either manually or in facsimile) by the President, a Vice President, the Secretary, or the Treasurer and sealed with the seal of the Corporation or its facsimile), exhibiting the holder's name, certifying the number of shares owned and stating such other matters as may be required bylaw. The certificates shall be numbered and entered on the books of the Corporation as they are issued. If shares are not represented by certificates, then, within a reasonable time after issue or transfer of shares without certificates, the Corporation shall send the shareholder a written statement in such form as the Board of Directors may from time to time prescribe, certifying as to the number of shares owned by the shareholder and as to such other information as would have been required to be on certificates for such shares.

Section B.     SIGNATURES OF PAST OFFICERS . If the person who signed (either manually or in facsimile) a share certificate no longer holds office when the certificate is issued, the certificate shall nevertheless be valid.

Section C.     TRANSFER AGENTS AND REGISTRARS . The Board of Directors may, in its discretion, appoint responsible banks or trust companies in such city or cities as the Board may deem advisable from time to time to act as transfer agents and registrars of the stock of the Corporation; and, when such


appointments shall have been made, no stock certificate shall be valid until countersigned by one of such transfer agents and registered by one of such registrars.

Section D.     TRANSFER OF SHARES . Transfers of shares of the Corporation shall be made upon its books by the holder of the shares in person or by the holder's lawfully constituted representative, upon surrender of the certificate of stock for cancellation if such shares are represented by a certificate of stock or by delivery to the Corporation of such evidence of transfer as may be required by the Corporation if such shares are not represented by certificates. The person in whose name shares stand on the books of the Corporation shall be deemed by the Corporation to be the owner thereof for all purposes and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share on the part of any other person, whether or not it shall have express or other notice thereof, save as expressly provided by the laws of the State of Florida.

Section E.     LOST CERTIFICATES . The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation and alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or the owner's legal representative, to advertise the same in such manner as it shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.


ARTICLE IX.

Record Date

Section A.     RECORD DATE FOR SHAREHOLDER ACTIONS . The Board of Directors is authorized from time to time to fix in advance a date, not more than seventy (70) nor less than ten (10) days before the date of any meeting of the shareholders, a date in connection with the obtaining of the consent of shareholders for any purpose, or the date of any other action requiring a determination of the shareholders, as the record date for the determination of the shareholders entitled to notice of and to vote at any such meeting and any adjournment thereof (unless a new record date must be established bylaw for such adjourned meeting), or of the shareholders entitled to give such consent or take such action, as the case may be. In no event may a record date so fixed by the Board of Directors precede the date on which the resolution establishing such record date is adopted by the Board of Directors. Only those shareholders listed as shareholders of record as of the close of business on the date so fixed as the record date shall be entitled to notice of and to vote at such meeting and any adjournment thereof, or to exercise such rights or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. If the Board of Directors fails to establish a record date as provided herein, the record date shall be deemed to be the date ten (10) days prior to the date of the shareholders' meeting.

Section B.     RECORD DATE FOR DIVIDEND AND OTHER DISTRIBUTIONS . The Board of Directors is authorized from time to time to fix in advance a date, not more than seventy (70) nor less than ten (10) days before the date of any dividend or other distribution, as the record date for the determination of the shareholders entitled to receive such dividend or other distribution. In no event may a record date so fixed by the Board of Directors precede the date on which the resolution establishing such record date is adopted by the Board of Directors. Only those shareholders listed as shareholders of record as of the close


of business on the date so fixed as the record date shall be entitled to receive the dividend or other distribution, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid. If the Board of Directors fails to establish a record date as provided herein, the record date shall be deemed to be the date of distribution of the dividend or other distribution.


ARTICLE X.

Dividends

Subject to the provisions of the Articles of Incorporation and to law, the Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares of capital stock. Such dividends may be paid in cash or property, including shares of stock or other securities of the Corporation.


ARTICLE XI.

Fiscal Year

The fiscal year of the Corporation shall begin on February 1 and end on January 31 of each year, unless the Board of Directors specifically establishes a different fiscal year.


ARTICLE XII.

Seal

The corporate seal shall have the name of the Corporation, the word "SEAL" and the year of incorporation inscribed thereon, and may be a facsimile, engraved, printed or impression seal. An impression of said seal appears on the margin hereof.


ARTICLE XIII.

Stock in Other Corporations

Shares of stock in other corporations held by the Corporation shall be voted by such officer or officers or other agent of the Corporation as the Board of Directors shall from time to time designate for the purpose or by a proxy thereunto duly authorized by said Board.

ARTICLE XIV.

Amendments

These bylaws may be altered, amended or repealed and new bylaws may be adopted by the Board of Directors; provided that any by‑law or amendment thereto as adopted by the Board of Directors may be altered, amended or repealed by vote of the shareholders entitled to vote thereon, or a new bylaw in lieu thereof may be adopted by the shareholders, and the shareholders may prescribe in any bylaw made by them that such bylaw shall not be altered, amended or repealed by the Board of Directors.




ARTICLE XV.

Emergency Bylaws‑

Section A.     SCOPE OF EMERGENCY BYLAWS‑ . The emergency bylaws provided in this Article XV shall be operative during any emergency, notwithstanding any different provision set forth in the preceding articles hereof or the Articles of Incorporation. For purposes of the emergency by-law provisions of this Article XV, an emergency shall exist if a quorum of the Corporation's directors cannot readily be assembled because of some catastrophic event. To the extent not inconsistent with the provisions of this Article, the bylaws provided in the preceding Articles shall remain in effect during such emergency and upon termination of such emergency, these emergency bylaws shall cease to be operative.

Section B.     CALL AND NOTICE OF MEETING . During any emergency, a meeting of the Board of Directors may be called by any officer or director of the Corporation. Notice of the date, time and place of the meeting shall be given by the person calling the meeting to such of the directors as it may be feasible to reach by any available means of communication. Such notice shall be given at such time in advance of the meeting as circumstances permit in the judgment of the person calling the meeting.

Section C.     QUORUM AND VOTING . At any such meeting of the Board of Directors, a quorum shall consist of any one or more directors, and the act of the majority of the directors present at such meeting shall be the act of the Corporation.

Section D.     APPOINTMENT OF TEMPORARY DIRECTORS .

1. The director or directors who are able to be assembled at a meeting of directors during an emergency may assemble for the purpose of appointing, if such directors deem it necessary, one or more temporary directors (the "Temporary Directors") to serve as directors of the Corporation during the term of any emergency.

2. If no directors are able to attend a meeting of directors during an emergency, then such shareholders as may reasonably be assembled shall have the right, by majority vote of those assembled, to appoint Temporary Directors to serve on the Board of Directors until the termination of the emergency.

3. If no shareholders can reasonably be assembled in order to conduct a vote for Temporary Directors, then the Chief Executive Officer or his successor, as determined pursuant to Section R of Article IV herein shall be deemed a Temporary Director of the Corporation, and such Chief Executive Officer or his successor, as the case may be, shall have the right to appoint additional Temporary Directors to serve with him on the Board of Directors of the Corporation during the term of the emergency.

4. Temporary Directors shall have all of the rights, duties and obligations of directors appointed pursuant to Article III hereof, provided, however, that a Temporary Director may be removed from the Board of Directors at any time by the person or persons responsible for appointing such Temporary Director, or by vote of the majority of the shareholders present at any meeting of the shareholders during an emergency, and, in any event, the Temporary Director shall automatically be deemed to have resigned from the Board of Directors upon the termination of the emergency in connection with which the Temporary Director was appointed.



Section E.     MODIFICATION OF LINES OF SUCCESSION . During any emergency, the Board of Directors may provide, and from time to time modify, lines of succession different from that provided in Section R of Article IV in the event that during such an emergency any or all officers or agents of the Corporation shall for any reason be rendered incapable of discharging their duties.

Section F.     CHANGE OF PRINCIPAL OFFICE . The Board of Directors may, either before or during any such emergency, and effective during such emergency, change the principal office of the Corporation or designate several alternative head offices or regional offices, or authorize the officers of the Corporation to do so.

Section G.     LIMITATION OF LIABILITY . No officer, director or employee acting in accordance with these emergency bylaws during an emergency shall be liable except for willful misconduct.

Section H.     REPEAL AND CHANGE . These emergency bylaws shall be subject to repeal or change by further action of the Board of Directors or by action of the shareholders, but no such repeal or change shall modify the provisions of Section G above with regard to actions taken prior to the time of such repeal or change. Any amendment of these emergency bylaws may make any further or different provision that may be practical or necessary under the circumstances of the emergency.





















* * * * * * *
    

BYLAWS
    
OF
    
TECH DATA CORPORATION
    
* * * * * * *

BYLAWS

OF

TECH DATA CORPORATION


TABLE OF CONTENTS


Title    Page


ARTICLE I.
1
Principal Office     1

ARTICLE II.
1
Shareholders     1
Section A.
ANNUAL MEETING .    1
Section B.
SPECIAL MEETINGS .    1
Section C.
PLACE OF MEETING .    1
Section D.
NOTICE OF MEETING .    1
Section E.
NOTICE OF ADJOURNED MEETING .    2
Section F.
WAIVER OF CALL AND NOTICE OF MEETING .    2
Section G.
QUORUM AND VOTING REQUIREMENTS FOR VOTING GROUPS .    2
Section H.
ADJOURNMENT; QUORUM FOR ADJOURNED MEETING     2
Section I.
ACTION BY SINGLE AND MULTIPLE VOTING GROUPS     2
Section J.
VOTING FOR DIRECTORS .    2
Section K.
VOTING LISTS .    2
Section L.
VOTING OF SHARES .    3
Section M.
PROXIES .    3
Section N.
INFORMAL ACTION BY SHAREHOLDERS .    3
Section O.
ADVANCE NOTICE OF SHAREHOLDER PROPOSALS AND
NOMINATIONS .    4
Section P.
PRESIDING OFFICER AND SECRETARY .    6
Section Q.
INSPECTORS .    6

ARTICLE III.
6
Board of Directors     6
Section A.
GENERAL POWERS .    6
Section B.
NUMBER, TENURE AND QUALIFICATIONS .    6
Section C.
TERM OF OFFICE OF DIRECTORS     6
Section D.
ANNUAL MEETING .    7
Section E.
REGULAR MEETINGS .    7
Section F.
SPECIAL MEETINGS .    7
Section G.
NOTICE .    7
Section H.
QUORUM .    7
Section I.
ADJOURNMENT; QUORUM FOR ADJOURNED MEETING     7
Section J.
MANNER OF ACTING .    7
Section K.
RESIGNATION .    8
Section L.
REMOVAL .    8
Section M.
VACANCIES .    8
Section N.
COMPENSATION .    8
Section O.
PRESUMPTION OF ASSENT .    8
Section P.
INFORMAL ACTION BY BOARD .    8
Section Q.
MEETING BY TELEPHONE, ETC.     8

ARTICLE IV.
9
Officers     9
Section A.
NUMBER .    9
Section B.
APPOINTMENT AND TERM OF OFFICE .    9
Section C.
RESIGNATION     9
Section D.
REMOVAL .    9
Section E.
VACANCIES .    9
Section F.
DUTIES OF THE CHAIRMAN OF THE BOARD .    9
Section G.
DUTIES OF THE CHIEF EXECUTIVE OFFICER .    9
Section H.
DUTIES OF THE REGIONAL PRESIDENTS     10
Section I.
DUTIES OF CHIEF FINANCIAL OFFICER .    10
Section J.
DUTIES OF THE SECRETARY .    10
Section K.
DUTIES OF TREASURER .    11
Section L.
DUTIES OF ASSISTANT SECRETARIES AND ASSISTANT
TREASURERS .    11
Section M. DUTIES OF OTHER EXECUTIVE OFFICERS     11
Section N.
COMPENSATION     11
Section O.
DELEGATION OF DUTIES .    11
Section P.
DISASTER EMERGENCY POWERS OF ACTING OFFICERS .    11

ARTICLE V.
12
Executive and Other Committees     12
Section A.
CREATION OF COMMITTEES .    12
Section B.
EXECUTIVE COMMITTEE .    12
Section C.
COMPENSATION COMMITTEE .    12
Section D.
AUDIT COMMITTEE .    12
Section E.
GOVERNANCE AND NOMINATING COMMITTEE     13
Section F.
OTHER COMMITTEES .    13
Section G.
REMOVAL OR DISSOLUTION .    13
Section H.
VACANCIES ON COMMITTEES .    13
Section I.
MEETINGS OF COMMITTEES .    13
Section J.
ABSENCE OF COMMITTEE MEMBERS .    13
Section K.
QUORUM OF COMMITTEES .    13
Section L.
MANNER OF ACTING OF COMMITTEES .    13
Section M.
MINUTES OF COMMITTEES .    14
Section N.
COMPENSATION .    14
Section O.
INFORMAL ACTION     14

ARTICLE VI.
14
Indemnification of Directors and Officers     14
Section A.
GENERAL     14
Section B.
ACTIONS BY OR IN THE RIGHT OF THE CORPORATION     14
Section C.
OBLIGATION TO INDEMNIFY     15
Section D.
DETERMINATION THAT INDEMNIFICATION IS PROPER     15
Section E.
EVALUATION AND AUTHORIZATION     15
Section F.
PREPAYMENT OF EXPENSES     15
Section G.
NONEXCLUSIVITY AND LIMITATIONS     15
Section H.
CONTINUATION OF INDEMNIFICATION RIGHT     16
Section I.
INSURANCE     16

ARTICLE VII.
16
Interested Parties     16
Section A.
GENERAL .    16
Section B.
APPROVAL BY BOARD OF DIRECTORS OR COMMITTEE     17
Section C.
APPROVAL BY SHAREHOLDERS     17

ARTICLE VIII.
17
Certificates of Stock     17
Section A.
CERTIFICATES FOR SHARES     17
Section B.
SIGNATURES OF PAST OFFICERS .    17
Section C.
TRANSFER AGENTS AND REGISTRARS .    17
Section D.
TRANSFER OF SHARES .    18
Section E.
LOST CERTIFICATES .    18

ARTICLE IX.
18
Record Date     18
Section A.
RECORD DATE FOR SHAREHOLDER ACTIONS     18
Section B.
RECORD DATE FOR DIVIDEND AND OTHER DISTRIBUTIONS     18

ARTICLE X.
19
Dividends     19

ARTICLE XI.
19
Fiscal Year     19

ARTICLE XII.
19
Seal     19

ARTICLE XIII.
19
Stock in Other Corporations     19

ARTICLE XIV.
19
Amendments     19

ARTICLE XV.
20
Emergency Bylaws     20
Section A.
SCOPE OF EMERGENCY BYLAWS     20
Section B.
CALL AND NOTICE OF MEETING     20
Section C.
QUORUM AND VOTING     20
Section D.
APPOINTMENT OF TEMPORARY DIRECTORS     20
Section E.
MODIFICATION OF LINES OF SUCCESSION     21
Section F.
CHANGE OF PRINCIPAL OFFICE     21
Section G.
LIMITATION OF LIABILITY     21
Section H.
REPEAL AND CHANGE     21





Exhibit 31-A
Certification of Chief Executive Officer
Pursuant to
Exchange Act Rules 13a-14(a) and 15d-14(a)
As Adopted Pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002
I, Robert M. Dutkowsky, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Tech Data Corporation (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: June 6, 2014
 
 
 
/s/ R OBERT  M. D UTKOWSKY
Robert M. Dutkowsky
Chief Executive Officer






Exhibit 31-B
Certification of Chief Financial Officer
Pursuant to
Exchange Act Rules 13a-14(a) and 15d-14(a)
As Adopted Pursuant to
Section 302 of The Sarbanes-Oxley Act of 2002
I, Jeffery P. Howells, certify that:
1.
I have reviewed this quarterly report on Form 10-Q of Tech Data Corporation (the “registrant”);
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)), and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: June 6, 2014
 
 
 
/ S / J EFFERY  P. H OWELLS
Jeffery P. Howells
Executive Vice President and
Chief Financial Officer






Exhibit 32-A
Certification of Chief Executive Officer
Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
I, Robert M. Dutkowsky, Chief Executive Officer of Tech Data Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
(i)
The Quarterly Report on Form 10-Q of Tech Data Corporation for the quarter ended April 30, 2014 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, (15 U.S.C. 78m), and
(ii)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: June 6, 2014
 
/s/ R OBERT M. D UTKOWSKY
Robert M. Dutkowsky
Chief Executive Officer






Exhibit 32-B
Certification of Chief Financial Officer
Pursuant to
18 U.S.C. Section 1350,
As Adopted Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002
I, Jeffery P. Howells, Executive Vice President and Chief Financial Officer of Tech Data Corporation (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that, to my knowledge:
(i)
The Quarterly Report on Form 10-Q of Tech Data Corporation for the quarter ended April 30, 2014 (the “Report”) fully complies with the requirements of Section 13(a) of the Securities Exchange Act of 1934, (15 U.S.C. 78m), and
(ii)
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Dated: June 6, 2014
 
 
 
/s/ J EFFERY  P. H OWELLS
Jeffery P. Howells
Executive Vice President and
Chief Financial Officer