Tech Data Reports Fiscal 2006 Second-Quarter Results - Records $19.3 million of restructuring charges and a $56.0 million charge to increase the deferred tax assets valuation allowance

Tech Data Corporation (NASDAQ:TECD), a leadingdistributor of IT products, today announced results for the secondquarter ended July 31, 2005.
Second-Quarter Results At A Glance
----------------------------------------------------------------------
Three months ended
July 31, 2005
----------------------------------------------------------------------
GAAP Basis:
Net Sales $4.8 billion
Operating Income $13.8 million
Net Loss $(59.4) million
Net Loss Per Diluted Share $(1.02) per share
Non-GAAP Basis(1):
Operating Income $35.2 million
Net Income $16.1 million
Net Income Per Diluted Share $.27 per share
----------------------------------------------------------------------

(1) Please refer to the Reconciliation of GAAP to Non-GAAP Measures
that is contained in the attached financial summary. This
information is also available on the Investor Relations section of
Tech Data's website at www.techdata.com.

Net sales for the second quarter ended July 31, 2005, were $4.8billion, an increase of 5.5 percent from $4.6 billion in the secondquarter of fiscal 2005 and a decrease of 4.9 percent from the firstquarter of the current fiscal year. Operating income, based uponGenerally Accepted Accounting Principles ("GAAP"), for the secondquarter was $13.8 million, or .29 percent of net sales, a decreasefrom $49.9 million, or 1.09 percent of net sales, in the secondquarter of fiscal 2005. Results for the second quarter of fiscal 2006include $19.3 million of charges related to the company's EMEArestructuring program announced in May 2005 and $2.1 million ofconsulting costs incurred in the EMEA region (Europe, Middle East andexport sales to Africa). Excluding the restructuring charges andconsulting costs, operating income, on a non-GAAP basis, was $35.2million, or .73 percent of net sales. As reported earlier this month,the company's second-quarter operating performance was affected by alower-than-expected gross margin, primarily in the EMEA region.

The company reported a net loss, on a GAAP basis, of $(59.4)million, or $(1.02) per diluted share for the second quarter of fiscal2006, compared to net income of $30.7 million, or $.52 per dilutedshare, for the prior year period. In addition to the restructuringcharges and consulting costs noted above, results for the secondquarter of fiscal 2006 included a $56.0 million non-cash charge toincrease the valuation allowance against certain deferred tax assetsrelated to the EMEA operations. Excluding the noted charges and costs,net income, on a non-GAAP basis, for the second quarter of fiscal 2006totaled $16.1 million, or $.27 per diluted share.

"We generated industry-leading sales growth and operating resultsin the Americas for the second quarter while implementing ourrestructuring program to improve our performance in EMEA," commentedSteven A. Raymund, Tech Data's chairman and chief executive officer."Although the challenges within our EMEA operation have impacted ouroverall financial results, we are confident that our restructuringprogram will deliver cost savings, efficiencies and operationalimprovements."

Financial Summary

-- Net sales in the Americas during the second quarter were $2.3 billion, or 48 percent of worldwide net sales, while net sales in EMEA totaled $2.5 billion, or 52 percent of worldwide net sales. The Americas' net sales increased 13.2 percent while net sales in EMEA decreased 0.9 percent (2.0 percent on a local currency basis) over the second quarter of fiscal 2005. Compared to the first quarter of the current fiscal year, net sales in the Americas increased 3.4 percent and in EMEA decreased 11.6 percent (6.2 percent on a local currency basis).

-- Gross margin for the second quarter was 5.22 percent of net sales, a decrease from 5.84 percent of net sales in the second quarter of fiscal 2005. The year-over-year decline in gross margin was primarily attributable to continued challenges in the company's EMEA operations and to a much lesser extent, changes in customer and product mix in the Americas.

-- Second-quarter selling, general and administrative expenses (SG&A) were $218.9 million, or 4.53 percent of net sales compared to $217.7 million, or 4.75 percent of net sales in the second quarter of fiscal 2005. Excluding the $2.1 million of consulting costs incurred in the EMEA region, SG&A totaled $216.8 million, or 4.49 percent of net sales in the second quarter of fiscal 2006. The decline in SG&A as a percent of net sales was the result of continued cost-saving initiatives and productivity improvements.

-- Second-quarter operating income in the Americas was 1.60 percent of net sales compared to 1.62 percent of net sales in the second quarter of fiscal 2005. In EMEA, the company reported an operating loss of (.95) percent of net sales compared to operating income of .66 percent of net sales in the second quarter of fiscal 2005. On a non-GAAP basis, excluding restructuring charges and consulting costs, the company had an operating loss of (.09) percent of net sales in EMEA. The decline reflects the lower-than-expected gross margin.

-- Total debt to total capital was 16 percent at July 31, 2005, compared to 18 percent at July 31, 2004.

-- During the second quarter, the company purchased 978 thousand shares of common stock at a cost of $35.2 million under its $100 million stock repurchase program. Year-to-date, the company has purchased a total of 1.2 million shares under the program at a cost of $45.2 million.

EMEA Restructuring Program

The company recorded $19.3 million of charges during the secondquarter of fiscal 2006 related to its EMEA restructuring program whichwere comprised of $10.6 million related to workforce reductions and$8.7 million for facility consolidations and the write-off of fixedassets. These actions are expected to result in annualized savings ofapproximately the same amount. The program and related actions aredesigned to better align the EMEA operating cost structure with thecurrent business environment. Excluding any consulting costs, thecompany expects to incur total charges in the range of $40 million to$50 million related to the EMEA restructuring program. Efforts relatedto the restructuring are anticipated to generate annualized savings inthe same range.

Six-month Results

Net sales for the six-month period ended July 31, 2005, were $9.9billion, an increase of 5.4 percent from $9.4 billion in the six-monthperiod ended July 31, 2004. On a regional basis, net sales in theAmericas represented 46 percent of net sales, and increased 11.7percent to $4.6 billion from $4.1 billion in the prior-year period.EMEA represented 54 percent of net sales, and increased 0.4 percent(decreased 3.2 percent on a local currency basis) to $5.31 billionfrom $5.28 billion for the six-month period ended July 31, 2004.

Gross margin for the six-month period was 5.34 percent, down from5.77 percent in the prior-year comparable period. As noted above, theyear-over-year decline in gross margin was primarily attributable tothe EMEA operations and to a much lesser extent, changes in customerand product mix in the Americas.

Operating income, on a GAAP basis, for the six-month period endedJuly 31, 2005, was $67.8 million, or .68 percent of net sales,compared with $103.6 million, or 1.10 percent of net sales, in theprior year. On a non-GAAP basis, excluding restructuring charges andconsulting costs recorded during the second quarter of fiscal 2006,operating income for the six-month period ended July 31, 2005 totaled$89.2 million, or .90 percent of net sales.

For the six-month period ended July 31, 2005, the company incurreda net loss of $(25.9) million, or $(0.44) per diluted share, on a GAAPbasis, compared with net income of $65.3 million, or $1.11 per dilutedshare, in the prior year. On a non-GAAP basis, excluding therestructuring program charges, consulting costs and the $56.0 millioncharge to increase the valuation allowance against certain deferredtax assets, net income was $49.7 million, or $.84 per diluted sharefor the six-month period ended July 31, 2005.

Business Outlook

The following statements are based on current expectations and thecompany's internal plan. These statements are forward-looking and, asoutlined in the company's periodic filings with the Securities andExchange Commission, actual results may differ materially.

The outlook for the third quarter ending October 31, 2005,excluding any restructuring charges and consulting costs related tothe EMEA region which are estimated to be $10 to $11 million, or othercharges, is as follows:

-- Net sales are expected to be in the range of $4.85 billion to $5.0 billion.

-- Net income is expected to be in the range of $25.0 million to $28.0 million.

-- Net income per diluted share is expected to be in the range of $.43 to $.49.

Non-GAAP Financial Information

The non-GAAP data contained in this release is included with theintention of providing investors a more complete understanding of ouroperational results and trends, but should only be used in conjunctionwith results reported in accordance with Generally Accepted AccountingPrinciples ("GAAP"). Our management also uses this informationinternally for forecasting, budgeting and other analytical purposes.The non-GAAP financial measures enable investors to analyze the corefinancial and operating performance of the company and to facilitateperiod-to-period comparisons and analysis of operating trends.Non-GAAP measures presented in this release or other releases,presentations and similar documents issued by the company, excludesrestructuring charges, certain consulting costs, impairment charges,changes in valuation allowances for certain deferred tax assets,extraordinary gains or losses and other infrequent or unusual items. Adetailed reconciliation of the adjustments between results calculatedusing GAAP and non-GAAP in this release is contained in the attachedfinancial summary. This information is also available for review onthe Investor Relations section of Tech Data's website atwww.techdata.com.

Forward-Looking Statements

Certain matters discussed in this news release are forward-lookingstatements, based on the company's current expectations that involve anumber of risks and uncertainties. Factors that could cause actualresults to differ materially include the following: intensecompetition both domestically and internationally; narrow profitmargins; risk of declines in inventory value; dependence oninformation systems; credit exposure due to the deterioration in thefinancial condition of our customers; the inability to obtain requiredcapital; fluctuations in interest rates; potential adverse effects ofacquisitions; foreign currency exchange risks and exposure to foreignmarkets; potential asset impairments resulting from declines inoperating performance; the impact of changes in income tax and otherregulatory legislation; changes in accounting rules; product supplyand availability; dependence on independent shipping companies;changes in vendor terms and conditions; exposure to natural disasters,war and terrorism; potential impact of labor strikes; and thevolatility of common stock. Additional discussion of these and otherfactors affecting the company's business and prospects is contained inthe company's periodic filings with the Securities and ExchangeCommission, copies of which can be obtained at the company's investorrelations website at www.techdata.com. All information in this releaseis as of August 25, 2005. The company undertakes no duty to update anyforward-looking statements herein to actual results or changes in thecompany's expectations.

Webcast Details

Tech Data will be discussing its second-quarter results along withits outlook for the third-quarter on a conference call today at 10:00a.m. (EDT). A webcast of the call, including supplemental schedules,will be available to all interested parties and can be accessed atwww.techdata.com. The webcast will be available for replay until 5:00p.m. (EDT) on Thursday, September 1, 2005.

About Tech Data

Founded in 1974, Tech Data Corporation (NASDAQ/NMS:TECD) is aleading distributor of IT products, with more than 90,000 customers inover 100 countries. The company's business model enables technologysolution providers, manufacturers and publishers to cost-effectivelysell to and support end users ranging from small-to-midsize businesses(SMB) to large enterprises. Ranked 110th on the FORTUNE 500(R), TechData generated $19.8 billion in net sales for its fiscal year endedJanuary 31, 2005. For more information, visit www.techdata.com.
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(In thousands, except per share amounts)

Three months ended Six months ended
July 31, July 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
Net sales $4,828,588 $4,578,835 $9,908,422 $9,401,127
Cost of products sold 4,576,598 4,311,210 9,379,313 8,858,310
----------- ----------- ----------- -----------
Gross profit 251,990 267,625 529,109 542,817
Selling, general and
administrative
expenses 218,863 217,739 442,035 439,253
Restructuring charges 19,289 - 19,289 -
----------- ----------- ----------- -----------
Operating income 13,838 49,886 67,785 103,564
Interest expense, net 6,670 5,268 12,150 10,906
Net foreign currency
exchange loss (gain) 812 797 1,392 (682)
----------- ----------- ----------- -----------
Income before income
taxes 6,356 43,821 54,243 93,340
Provision for income
taxes 65,770 13,147 80,134 28,002
----------- ----------- ----------- -----------
Net (loss) income $ (59,414) $ 30,674 $ (25,891) $ 65,338
=========== =========== =========== ===========
Net (loss) income per
common share:
Basic $ (1.02) $ .53 $ (0.44) $ 1.13
=========== =========== =========== ===========
Diluted $ (1.02) $ .52 $ (0.44) $ 1.11
=========== =========== =========== ===========
Weighted average common
shares outstanding:
Basic 58,313 58,062 58,617 57,939
Diluted 58,313 59,003 58,617 58,984
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET (UNAUDITED)
(In thousands)

July 31, January 31,
ASSETS 2005 2005
----------- -----------
Current assets:
Cash and cash equivalents $ 232,690 $ 195,056
Accounts receivable, net 1,897,118 2,217,474
Inventories 1,408,143 1,492,479
Prepaid expenses and other assets 168,455 151,480
----------- -----------
Total current assets 3,706,406 4,056,489
Property and equipment, net 144,134 146,144
Goodwill 137,304 149,719
Other assets, net 141,870 205,384
----------- -----------
Total assets $4,129,714 $4,557,736
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Revolving credit loans $ 17,897 $ 68,343
Accounts payable 1,550,275 1,757,838
Current portion of long-term debt 291,554 291,625
Accrued expenses and other liabilities 454,044 450,066
----------- -----------
Total current liabilities 2,313,770 2,567,872
Long-term debt 15,091 17,215
Other long-term liabilities 44,093 45,178
----------- -----------
Total liabilities 2,372,954 2,630,265
----------- -----------
Total shareholders' equity 1,756,760 1,927,471
----------- -----------
Total liabilities and shareholders' equity $4,129,714 $4,557,736
=========== ===========
TECH DATA CORPORATION AND SUBSIDIARIES
RECONCILIATION OF GAAP TO NON-GAAP MEASURES (UNAUDITED)
(In thousands, except per share amounts)

Three months ended Six months ended
July 31, July 31,
----------------------- -----------------------
2005 2004 2005 2004
----------- ----------- ----------- -----------
GAAP operating income $ 13,838 $ 49,886 $ 67,785 $ 103,564
Restructuring charges 19,289 - 19,289 -
Other costs (1) 2,091 - 2,091 -
----------- ----------- ----------- -----------
Non-GAAP operating
income $ 35,218 $ 49,886 $ 89,165 $ 103,564
=========== =========== =========== ===========

GAAP net (loss) income $ (59,414) $ 30,674 $ (25,891) $ 65,338
Restructuring charges 19,289 - 19,289 -
Other costs (1) 2,091 - 2,091 -
Tax effect on
restructuring charges
and other costs (1,866) - (1,866) -
Deferred tax assets
valuation allowance 56,039 - 56,039 -
----------- ----------- ----------- -----------
Non-GAAP net income $ 16,139 $ 30,674 $ 49,662 $ 65,338
=========== =========== =========== ===========

GAAP (loss) income
per diluted share $ (1.02) $ .52 $ (0.44) $ 1.11
Restructuring charges .33 - .33 -
Other costs (1) .04 - .04 -
Tax effect on
restructuring charges
and other costs (.03) - (.03) -
Deferred tax assets
valuation allowance .95 - .94 -
----------- ----------- ----------- -----------
Non-GAAP income per
diluted share $ .27 $ .52 $ .84 $ 1.11
=========== =========== =========== ===========
GAAP weighted average
common shares
outstanding
Basic 58,313 58,062 58,617 57,939
Diluted 58,313 59,003 58,617 58,984
Non-GAAP weighted
average common shares
outstanding
Basic 58,313 58,062 58,617 57,939
Diluted 58,923 59,003 59,332 58,984

(1) Other costs represent consulting costs related to the company's
EMEA Restructuring Program.