IN OUR BUSINESS

Tech Data Corporation is one of the world's largest wholesale distributors of technology products. Its advanced logistics capabilities and value-added services enable over 125,000 resellers in more than 100 countries to efficiently and cost effectively support the diverse technology needs of end users, including small and medium businesses (SMB), large enterprises, consumers and government agencies.

ON THE BALANCE SHEET

THROUGHOUT THE PORTFOLIO

Dollars shown represent approximate fiscal year 2012 sales. Our reporting methodology results in some overlap between certain categories.

IN THE RESULTS

For the fiscal years ended January 31,

$ in millions, except per share data

2012 2011 2010
Sales $ 26,488 $ 24,376 $ 22,100
Gross margin         5.26 %         5.26 %         5.21 %
GAAP operating income $       328 $       334 $       259
Non-GAAP operating income (1) $       356 $       334 $       259
GAAP operating margin         1.24 %         1.37 %         1.17 %
Non-GAAP operating margin (1)         1.34 %         1.37 %         1.17 %
GAAP net income $       206 $       214 $       180
Non-GAAP net income (1) $       226 $       214 $       180
GAAP net income per diluted share $       4.66 $       4.36 $       3.54
Non-GAAP net income per diluted share (1) $       5.09 $       4.36 $       3.54
Return on invested capital (1)             14 %             14 %             13 %
Cash conversion cycle (days)             20             24             23
Cash and cash equivalents $       505 $       764 $       983
Total debt $       105 $       494 $       404

(1) Please refer to Appendix A for the GAAP to non-GAAP reconciliation

Global Executive Committee (Pictured from left:)

Murray Wright, President, the Americas – Néstor Cano, President, Europe – Bob Dutkowsky, Chief Executive Officer – Jeff Howells, Executive Vice President and Chief Financial Officer – Caryl Lucarelli, Vice President, Human Resources – John Tonnison, Executive Vice President and Chief Information Officer

My Fellow Shareholders,

I am pleased to report that Tech Data produced another strong year, reaching new heights in sales and earnings per share in fiscal 2012. Much like the image of competitive rowers on the cover of this year's annual report, through a tremendous amount of teamwork and discipline, and drawing upon our company's strengths, we once again delivered value to our customers, vendor partners and our shareholders.

We began fiscal 2012 on a strong note with positive momentum from a recovering IT market. As the year progressed, we faced a number of challenges brought on by weakness in certain European markets, general macro-economic uncertainty in others, and a slowing IT market. Despite these headwinds, the Tech Data team demonstrated the strength, balance and endurance of its operations by delivering another solid financial performance for the year.

Fiscal 2012 Highlights:

  • Grew sales by 9 percent, or 6 percent in constant currency, to a record $26.5 billion
  • Improved non-GAAP operating income to $356.2 million, and non-GAAP net income to $225.6 million (excludes charges related to the exit of Brazil and Colombia)
  • Achieved non-GAAP earnings per diluted share of $5.09 — our fifth consecutive year of double-digit earnings per share growth
  • Generated $503 million of cash from operations
  • Earned a return on invested capital of 14 percent
  • Completed the acquisition of two specialty software distributors in Europe
  • Returned value to our shareholders through the repurchase of $315 million of our stock — the highest level of stock repurchases in any one year in our history

Strength In Execution: The Engine Room

In competitive rowing, the engine room is comprised of the team's strongest athletes. At Tech Data, execution is our engine room and the linchpin of our strategy — providing momentum and propelling us forward.

Strong execution was evident in both regions' fiscal 2012 performance. In Europe, throughout the year we experienced pockets of strength and weakness in the economic environment, with robust growth in markets such as the U.K. and Germany, helping to offset softness in the southern region and in consumer markets. This, together with the acquisitions we completed in fiscal 2011, resulted in 8 percent sales growth, in euros, and the highest level of European sales in our company's history. To further position the company for the future, during the fiscal year we acquired two European specialty software distributors and realigned our European resources to match our cost structure with market conditions. Our European organization's solid performance in fiscal 2012 reflects how the region's broad geographic footprint, together with its diverse array of product and customer sets, help mitigate our overall exposure and it reaffirms our position as Europe's leading distributor of IT products.

Strength in execution was also evident in the Americas region, which continued its solid track record of responsible growth and excellent cost management. At year end, we ceased operations in Brazil and Colombia – markets that were generating insufficient levels of profitability and return on invested capital. Excluding charges related to exiting these markets, the Americas region grew non-GAAP operating income more than three times the rate of sales growth and to its highest level in 11 years. Our Americas team's execution excellence, new market initiatives and innovative offerings continue to drive exceptional results and differentiate Tech Data throughout the region.

In fiscal 2012, our execution engine extended beyond our regional operations as we took a number of steps to further strengthen our capital structure. During the year, we retired $350 million of our convertible debt and replaced it with flexible and cost-effective credit facilities. We also repurchased $315 million of our stock in the fiscal year, bringing the total amount of stock repurchased since fiscal 2006 to $915 million – representing more than a third of our outstanding shares. Solid earnings and superb asset management resulted in excellent operating cash flow, and, together with the new capital structure, we ended the year with the strongest balance sheet in our company's history, providing us with the flexibility to drive a number of value-creating initiatives in the future.

Balance Through Diversification

Over the last five years, the key driver to our steady progression of improved earnings and return on invested capital, as well as more balanced results, has been our diversification to higher-growth specialty businesses, namely the data center, software, mobility and consumer electronics. With the shifting of the IT market landscape to cloud-based, mobile and converged offerings, we have unleashed the strength of our broadline engine and built significant practices in these specialty areas. Fueled by demand for these products, as well as our focus and investments, these specialty business areas represented well over half of Tech Data sales in fiscal 2012. From industry-standard servers and software-running data centers to "always on, always connected" smartphones and network-attached devices such as tablets, we believe Tech Data is the only IT distributor in the market today able to provide our reseller customers with a robust end-to-end continuum of offerings.

Endurance Through Innovation

For Tech Data, innovation means using our IT systems to better serve the channel and improve our productivity. Our innovative platforms and tools give Tech Data staying power with our vendor partners and customers by making us more responsive to their needs and easier for them to do business with us. Fiscal 2012 saw the launch of several major game-changing initiatives that are unmatched in the IT distribution marketplace. In both Europe and the Americas, we introduced TDCloudTM, a comprehensive channel program that provides resellers with access to a broad range of cloud-enabling solutions and services from leading vendors to help our customers and Tech Data capitalize on this high growth environment. Our StreamOneTM Solutions Store in the U.S. is the channel's first application storefront that gives independent software vendors a platform to reach more customers, and enables resellers to offer a wide array of software solutions and cloud services in a simple, automated fashion. And expanding on our highly successful Brightstar Europe joint venture, this past fiscal year we introduced the groundbreaking TDMobilityTM offering, a U.S. joint venture with Brightstar Corp. that simplifies the selling, delivery and support of mobile services for resellers serving small and medium businesses and brings to market the industry's first end-to-end platform across multiple wireless carriers. Our ability to extend our vendors' reach into the attractive SMB space, while empowering our reseller customers and simplifying their routes to market through these offerings, illustrates how Tech Data is using innovation as a differentiator and delivering value-added services to the channel.

Looking Ahead

As we begin the third year of our three-year financial outlook cycle, and prepare for our next long-term cycle, we are excited and energized by the game-changing technologies our vendor partners continue to develop, and by our role in bringing these products to market as efficiently as possible. Our performance over the last few years has clearly demonstrated one of our key strengths — the ability to successfully navigate the ever-changing IT market landscape. For example, two years ago when we set our three-year goal of achieving a 1.5 percent operating margin* in fiscal 2013, tablets did not even appear on our line card. In fiscal 2012, our tablet sales exceeded $1 billion, proving not only the speed at which technology is changing, but also the resiliency of our business model to adapt to these technological shifts and capitalize on the opportunities.

*Before stock compensation expense

We have proven that our flexible business model provides us with multiple levers to pull to help us achieve our goals. While we cannot predict economic cycles or what breakthrough products will once again change the IT landscape, we are confident that we are uniquely positioned in the specialty areas that provide the greatest opportunities for profitable growth. We believe the strength of our regional operations, our end-to-end continuum of offerings, financial soundness and disciplined capital deployment strategy will continue to support our long-term strategic financial goals and to create shareholder value.

In closing, we thank our customers and vendors for their continued partnership. My thanks to our employees, who are Tech Data's greatest strength. Our performance reflects their exemplary collective efforts. And as always, we thank you, our shareholders, for your continued support and confidence in Tech Data.

Sincerely,

Bob Dutkowsky
Chief Executive Officer

CONTINUE READING

Néstor Cano
President, Europe

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Jeff Howells
Executive Vice President
and CFO

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Caryl Lucarelli
Vice President,
Human Resources

Read More...

John Tonnison
Executive Vice President
and CIO

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Murray Wright
President, the Americas

Read More...

Board of Directors

Steven A. Raymund
Chairman of the Board of Directors

Charles E. Adair
Partner,
Cordova Ventures and
Kowaliga Capital, Inc.

Maximilian Ardelt
Managing Director,
ConDigit Consult GmbH

Robert M. Dutkowsky
Chief Executive Officer,
Tech Data Corporation

Harry J. Harczak, Jr.
Retired Executive Vice President,
CDW Corporation

Jeffery P. Howells
Executive Vice President and
Chief Financial Officer,
Tech Data Corporation

Kathy Misunas
Founder and Principal,
Essential Ideas

Thomas I. Morgan
Chairman and Chief Executive Officer,
Baker & Taylor, Inc.

Savio W. Tung
Chief Executive Officer, North America,
Investcorp

David M. Upton
American Standard Companies
Professor of Operations,
Oxford University

Officers

Robert M. Dutkowsky
Chief Executive Officer

Jeffery P. Howells
Executive Vice President and
Chief Financial Office

Néstor Cano
President, Europe

Murray Wright
President, the Americas

John Tonnison
Executive Vice President and
Chief Information Officer

Charles V. Dannewitz
Senior Vice President, Treasurer

Joseph B. Trepani
Senior Vice President,
Corporate Controller

David R. Vetter
Senior Vice President, General Counsel
and Secretary

Corporate Headquarters

Tech Data Corporation
5350 Tech Data Drive
Clearwater, FL 33760
727-539-7429
www.techdata.com

Independent Registered Certified Public Accounting Firm

Ernst & Young LLP, Tampa, FL

Ethics Reporting Hotline

866-TD ETHIC—866-833-8442

Stock Listing

The NASDAQ Stock Market, Inc.
Ticker symbol: TECD

Transfer Agent

Wells Fargo Shareowner Services
P.O. BOX 64874
St. Paul, MN 55164-0874
800-468-9716
www.shareowneronline.com

Annual Meeting of Shareholders

All interested parties are cordially invited to attend the Annual Meeting of Shareholders on Wednesday, May 30, 2012, at 3:00 p.m. at the corporate headquarters, 5350 Tech Data Drive, Clearwater, FL 33760.

Financial Reports

Financial reports, including Form 10-K and annual reports, can be accessed online at www.techdata.com/investor.
You may also obtain a copy upon written request to:

Tech Data Corporation
Attention: Investor Relations
5350 Tech Data Drive
Clearwater, FL 33760

Investor Inquiries

Investor Relations
Phone: 800-292-7906
Fax: 727-538-5860
Email: ir@techdata.com