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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~October~~April 3130, ~~2019~~2020

☐ 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

(State or other jurisdiction of

incorporation or organization)

5350 Tech Data Drive Clearwater, Florida

(Address of principal executive offices)

No. 59-1578329

(I.R.S. Employer

Identification Number)

33760

(Zip Code)

(Registrant’s Telephone Number, including Area Code): (727) 539-7429

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading symbol	Name of each exchange which registered
Common stock, par value $.0015 per share	TECD	NASDAQ

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “accelerated filer”, “large accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):



Large Accelerated Filer	☒	Accelerated Filer	☐

Non-accelerated Filer	☐	Smaller Reporting Company Filer	☐

		Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

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 ~~November~~May 2628, ~~2019~~2020
Common stock, par value $.0015 per share	35,~~422~~658,~~796~~571

Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES

Form 10-Q for the Three ~~and Nine~~ Months Ended ~~October~~April 3130, ~~2019~~2020

INDEX

		PAGE
PART I.	FINANCIAL INFORMATION
ITEM 1.	Financial Statements	3
	Consolidated Balance Sheet	3
	Consolidated Statement of Income	4
	Consolidated Statement of Comprehensive Income (Loss)	5
	Consolidated Statement of Comprehensive (Loss) Income	5
	Consolidated Statement of Shareholders' Equity	6
	Consolidated Statement of Cash Flows	7
	Notes to Consolidated Financial Statements	8
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2924
ITEM 3.	Quantitative and Qualitative Disclosures about Market Risk	4941
ITEM 4.	Controls and Procedures	5042
PART II.	OTHER INFORMATION	5143
ITEM 1.	Legal Proceedings	5143
ITEM 1A.	Risk Factors	5143
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5244
ITEM 3.	Defaults Upon Senior Securities	5244
ITEM 4.	Mine Safety Disclosures	5244
ITEM 5.	Other Information	5244
ITEM 6.	Exhibits	5345
SIGNATURES		5446

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)

	October 31, 2019			January 31, 2019
	April 30, 2020			January 31, 2020
ASSETS	(Unaudited)
Current assets:
Cash and cash equivalents	$	~~964~~828,~~146~~941		$	~~799~~841,~~123~~366
Accounts receivable, net	5,768,940			6,241,740
Accounts receivable, less allowances of $80,400 and $79,440	5,367,227			6,192,203
Inventories	3,~~145~~066,~~381~~273			3,~~297~~042,~~385~~541
Prepaid expenses and other assets	~~341~~388,~~075~~790			~~354~~362,~~601~~182
Total current assets	109,~~219~~651,~~542~~231			10,~~692~~438,~~849~~292
Property and equipment, net	~~275~~280,~~013~~736			~~274~~287,~~917~~150
Goodwill	~~888~~975,~~165~~923			~~892~~973,~~990~~257
Intangible assets, net	~~884~~1,~~560~~052,033			~~950~~1,~~858~~094,676
Other assets, net	~~427~~416,~~456~~685			~~174~~475,~~938~~234
Total assets	$	12,~~694~~376,~~736~~608		$	1213,~~986~~268,~~552~~609
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,~~963~~393,~~941~~221		$	7,~~496~~259,~~466~~246
Accrued expenses and other liabilities	1,~~030~~122,~~457~~656			1,~~000~~112,~~126~~457
Revolving credit loans and current maturities of long-term debt, net	~~123~~108,~~271~~157			~~110~~112,~~368~~882
Total current liabilities	87,~~117~~624,~~669~~034			8,~~606~~484,~~960~~585
Long-term debt, less current maturities	1,~~294~~337,~~186~~541			1,~~300~~338,~~554~~136
Other long-term liabilities	~~314~~308,~~596~~542			~~142~~326,~~315~~433
Total liabilities	9,~~726~~270,~~451~~117			10,~~049~~149,~~829~~154
Commitments and contingencies (Note 12)
Commitments and contingencies (Note 10)
Shareholders’ equity:
Common stock, par value $.0015; 200,000,000 shares authorized; 59,245,585 shares issued at October 31, 2019 and January 31, 2019	89			89
Common stock, par value $.0015; 200,000,000 shares authorized; 59,245,585 shares issued at April 30, 2020 and January 31, 2020	89			89
Additional paid-in capital	~~846~~838,~~636~~882			~~844~~855,~~206~~020
Treasury stock, at cost (23,798,037 and 22,305,464 shares at October 31, 2019 and January 31, 2019)	(1,195,148		)	(1,037,872		)
Treasury stock, at cost (23,587,200 and 23,819,230 shares at April 30, 2020 and January 31, 2020)	(1,186,461		)	(1,198,132		)
Retained earnings	3,~~311~~509,~~934~~079			3,~~086~~461,~~514~~014
Accumulated other comprehensive income	4,774			43,786
Accumulated other comprehensive (loss) income	(55,098		)	1,464
Total shareholders' equity	23,~~968~~106,~~285~~491			23,~~936~~119,~~723~~455
Total liabilities and shareholders' equity	$	12,~~694~~376,~~736~~608		$	1213,~~986~~268,~~552~~609

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

Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three months ended October 31,						Nine months ended October 31,
	Three months ended April 30,
	2019			2018			2019			2018
	2020			2019
Net sales	$	98,~~118~~175,~~944~~174		$	98,~~340~~406,~~029~~424		$	~~26,617,612~~		$	~~26,774,449~~
Cost of products sold	87,~~558~~643,~~557~~515			87,~~783~~897,~~425~~045			~~24,986,196~~			~~25,167,698~~
Gross profit	~~560~~531,~~387~~659			~~556~~509,~~604~~379			~~1,631,416~~			~~1,606,751~~
Operating expenses:
Selling, general and administrative expenses	~~415~~427,~~242~~863			~~396~~405,~~675~~534			~~1,252,752~~			~~1,234,355~~
Acquisition, integration and restructuring expenses	417,~~647~~681			206,~~277~~221			~~16,077~~			~~66,799~~
Legal settlements and other, net	—			(7,207		)	(282		)	(15,406		)
	445,544			411,755
Gain on disposal of subsidiary	(1,390		)	(29		)	(1,390		)	(6,746		)
Operating income	86,115			97,624
	418,499			409,716			1,267,157			1,279,002
Interest expense	17,034			26,257
Operating income	141,888			146,888			364,259			327,749
Other expense (income), net	8,948			(693		)
Interest expense	21,033			25,405			68,276			79,380
Income before income taxes	60,133			72,060
Other expense, net	4,348			4,961			6,551			7,779
Provision for income taxes	12,068			16,660
Income before income taxes	116,507			116,522			289,432			240,590
Net income	$	48,065		$	55,400
Provision for income taxes	25,737			2,306			64,012			16,809
Earnings per share:
Net income	$	90,770		$	114,216		$	225,420		$	223,781
Basic	$	1.35		$	1.50
Earnings per share:
Diluted	$	1.34		$	1.49
Basic	$	2.54		$	2.98		$	6.19		$	5.83
Weighted average common shares outstanding:
Diluted	$	2.52		$	2.96		$	6.15		$	5.80
Basic	35,688			37,011
Weighted average common shares outstanding:
Diluted	36,002			37,247
Basic	35,720			38,358			36,395			38,357
Diluted	35,968			38,526			36,630			38,559

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

Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF COMPREHENSIVE ~~INCOME~~ (LOSS) INCOME

(In thousands)

(Unaudited)

	Three months ended October 31,						Nine months ended October 31,
	Three months ended April 30,
	2019			2018			2019			2018
	2020			2019
Net income	$	9048,~~770~~065		$	~~114~~55,~~216~~400		$	~~225,420~~		$	~~223,781~~
Other comprehensive income (loss):
Other comprehensive loss:
Foreign currency translation adjustment, net of tax	33(56,~~255~~547		)	(9140,~~430~~523		)	~~(39,090~~		)	~~(281,737~~		)
Unrealized gain on cash flow hedges, net of tax	20			—			78			—
Unrealized loss on cash flow hedges, net of tax	(15		)	(211		)
Other comprehensive income (loss)	33,275			(91,430		)	(39,012		)	(281,737		)
Other comprehensive loss	(56,562		)	(40,734		)
Total comprehensive income (loss)	$	124,045		$	22,786		$	186,408		$	(57,956	)
Total comprehensive (loss) income	$	(8,497	)	$	14,666

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

Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

(In thousands)

(Unaudited)

	Common Stock			Additional paid-in capital			Treasury stock			Retained earnings		Accumulated other comprehensive income (loss)			Total shareholders' equity
	Shares	Amount
Balance at January 31, 2019	59,246	$	89	$	844,206		$	(1,037,872	)	$	3,086,514	$	43,786		$	2,936,723
Balance at January 31, 2020	59,246	$	89	$	855,020		$	(1,198,132	)	$	3,461,014	$	1,464		$	3,119,455
Repurchases of common stock	—	—		—			(35,681		)	—		—			(35,681		)
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(22,445		)	11,671			—		—			(10,774		)
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(16,003		)	7,896			—		—			(8,107		)
Stock-based compensation expense	—	—		6,307			—			—		—			6,307
Stock-based compensation expense	—	—		8,305			—			—		—			8,305
Total other comprehensive loss	—	—		—			—			—		(56,562		)	(56,562		)
Total other comprehensive loss	—	—		—			—			—		(40,734		)	(40,734		)
Net income	—	—		—			—			48,065		—			48,065
Net income	—	—		—			—			55,400		—			55,400
Balance at April 30, 2020	59,246	$	89	$	838,882		$	(1,186,461	)	$	3,509,079	$	(55,098	)	$	3,106,491
Balance at April 30, 2019	59,246	89		836,508			(1,065,657		)	3,141,914		3,052			2,915,906
Repurchases of common stock	—	—		—			(82,011		)	—		—			(82,011		)
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(1,404		)	1,379			—		—			(25		)
Stock-based compensation expense	—	—		8,055			—			—		—			8,055
Total other comprehensive loss	—	—		—			—			—		(31,553		)	(31,553		)
Net income	—	—		—			—			79,250		—			79,250
Balance at July 31, 2019	59,246	89		843,159			(1,146,289		)	3,221,164		(28,501		)	2,889,622
Repurchases of common stock	—	—		—			(49,300		)	—		—			(49,300		)
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(196		)	441			—		—			245
Stock-based compensation expense	—	—		7,347			—			—		—			7,347
Purchase of noncontrolling interest	—	—		(3,674		)	—			—		—			(3,674		)
Total other comprehensive income	—	—		—			—			—		33,275			33,275
Net income	—	—		—			—			90,770		—			90,770
Balance at October 31, 2019	59,246	$	89	$	846,636		$	(1,195,148	)	$	3,311,934	$	4,774		$	2,968,285

	Common Stock			Additional paid-in capital			Treasury stock			Retained earnings		Accumulated other comprehensive income (loss)			Total shareholders' equity
	Shares	Amount
Balance at January 31, 2018	59,246	$	89	$	827,301		$	(940,124	)	$	2,745,934	$	288,292		$	2,921,492
Balance at January 31, 2019	59,246	$	89	$	844,206		$	(1,037,872	)	$	3,086,514	$	43,786		$	2,936,723
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(12,771		)	6,957			—		—			(5,814		)
Repurchases of common stock	—	—		—			(35,681		)	—		—			(35,681		)
Stock-based compensation expense	—	—		7,587			—			—		—			7,587
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(16,003		)	7,896			—		—			(8,107		)
Total other comprehensive loss	—	—		—			—			—		(88,252		)	(88,252		)
Stock-based compensation expense	—	—		8,305			—			—		—			8,305
Net income	—	—		—			—			33,699		—			33,699
Total other comprehensive loss	—	—		—			—			—		(40,734		)	(40,734		)
Balance at April 30, 2018	59,246	89		822,117			(933,167		)	2,779,633		200,040			2,868,712
Net income	—	—		—			—			55,400		—			55,400
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(1,083		)	1,303			—		—			220
Balance at April 30, 2019	59,246	$	89	$	836,508		$	(1,065,657	)	$	3,141,914	$	3,052		$	2,915,906
Stock-based compensation expense	—	—		7,968			—			—		—			7,968
Total other comprehensive loss	—	—		—			—			—		(102,055		)	(102,055		)
Net income	—	—		—			—			75,866		—			75,866
Balance at July 31, 2018	59,246	89		829,002			(931,864		)	2,855,499		97,985			2,850,711
Repurchases of common stock	—	—		—			(43,798		)	—		—			(43,798		)
Issuance of treasury stock for benefit plan and equity-based awards exercised	—	—		(621		)	572			—		—			(49		)
Stock-based compensation expense	—	—		8,139			—			—		—			8,139
Total other comprehensive loss	—	—		—			—			—		(91,430		)	(91,430		)
Net income	—	—		—			—			114,216		—			114,216
Balance at October 31, 2018	59,246	$	89	$	836,520		$	(975,090	)	$	2,969,715	$	6,555		$	2,837,789

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

Table of Contents

TECH DATA CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

	Nine months ended October 31,
	Three months ended April 30,
	2019			2018
	2020			2019
Cash flows from operating activities:
Cash received from customers	$	3511,~~335~~386,~~867~~818		$	3411,~~190~~913,~~821~~347
Cash paid to vendors and employees	(3411,~~774~~356,~~608~~142		)	(3311,~~891~~800,~~567~~318		)
Interest paid, net	(7930,~~482~~207		)	(8235,~~829~~101		)
Income taxes paid	(698,~~174~~198		)	(6714,~~107~~739		)
Net cash provided by operating activities	412,603			149,318
Net cash (used in) provided by operating activities	(7,729		)	63,189
Cash flows from investing activities:
Proceeds from sale of business, net of cash divested	—			8,985
Expenditures for property and equipment	(5,596		)	(7,745		)
Acquisition of businesses, net of cash acquired	—			(124,223		)
Software and software development costs	(13,944		)	(7,534		)
Expenditures for property and equipment	(30,503		)	(24,830		)
Proceeds from settlement of net investment hedges	44,377			—
Software and software development costs	(21,147		)	(15,323		)
Other	(764		)	(548		)
Other	315			1,105
Net cash provided by (used in) investing activities	24,073			(15,827		)
Net cash used in investing activities	(51,335		)	(154,286		)
Cash flows from financing activities:
Borrowings on long-term debt	300,000			—
Principal borrowings (payments) on long-term debt	4,515			(5,224		)
Principal payments on long-term debt	(311,925		)	(207,854		)
Cash paid for debt issuance costs	—			(1,028		)
Cash paid for debt issuance costs	(4,341		)	—
Net (repayments) borrowings on revolving credit loans	(472		)	14,227
Net borrowings (repayments) on revolving credit loans	15,035			(9,274		)
Payments for employee tax withholdings on equity awards	(10,774		)	(8,602		)
Payments for employee tax withholdings on equity awards	(9,337		)	(6,988		)
Proceeds from the reissuance of treasury stock	—			495
Proceeds from the reissuance of treasury stock	1,450			1,322
Repurchases of common stock	—			(35,681		)
Acquisition of noncontrolling interest	(7,553		)	—
Other	(563		)	—
Repurchases of common stock	(166,992		)	(43,798		)
Net cash used in financing activities	(7,294		)	(35,813		)
Other	529			—
Effect of exchange rate changes on cash and cash equivalents	(21,475		)	(13,172		)
Net cash used in financing activities	(183,134		)	(266,592		)
Net decrease in cash and cash equivalents	(12,425		)	(1,623		)
Effect of exchange rate changes on cash and cash equivalents	(13,111		)	(37,589		)
Cash and cash equivalents at beginning of year	841,366			799,123
Net increase (decrease) in cash and cash equivalents	165,023			(309,149		)
Cash and cash equivalents at end of period	$	828,941		$	797,500
Cash and cash equivalents at beginning of year	799,123			955,628
Reconciliation of net income to net cash (used in) provided by operating activities:
Cash and cash equivalents at end of period	$	964,146		$	646,479
Net income	$	48,065		$	55,400
Reconciliation of net income to net cash provided by operating activities:
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Net income	$	225,420		$	223,781
Depreciation and amortization	41,991			37,257
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for losses on accounts receivable	10,832			1,765
Gain on disposal of subsidiary	(1,390		)	(6,746		)
Stock-based compensation expense	6,307			8,305
Depreciation and amortization	112,726			119,641
Accretion of debt discount and debt issuance costs	847			860
Provision for losses on accounts receivable	19,176			11,545
Changes in operating assets and liabilities:
Stock-based compensation expense	23,707			23,694
Accounts receivable	690,145			751,836
Accretion of debt discount and debt issuance costs	3,195			2,983
Inventories	(60,180		)	2,450
Deferred income taxes	4,577			(11,567		)
Prepaid expenses and other assets	(37,739		)	1,763
Changes in operating assets and liabilities, net of acquisitions and disposition:
Accounts payable	(752,022		)	(706,381		)
Accounts receivable	372,594			(309,390		)
Accrued expenses and other liabilities	44,025			(90,066		)
Inventories	113,168			(397,692		)
Total adjustments	(55,794		)	7,789
Prepaid expenses and other assets	38,991			(3,720		)
Net cash (used in) provided by operating activities	$	(7,729	)	$	63,189
Accounts payable	(443,413		)	474,214
Accrued expenses and other liabilities	(56,148		)	22,575
Total adjustments	187,183			(74,463		)
Net cash provided by operating activities	$	412,603		$	149,318

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

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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 IT distribution and solutions companies. Tech Data serves a critical role in the center of the IT ecosystem, bringing products from the world’s leading technology vendors to market, as well as helping customers create solutions best suited to maximize business outcomes for their end-user customers. Tech Data’s customers include value-added resellers, direct marketers, retailers, corporate resellers and managed service providers who support the diverse technology needs of end users. The Company manages its operations in three geographic segments: the Americas, Europe and Asia-Pacific.

On November 12, 2019, the Company entered into an Agreement and Plan of Merger, as subsequently amended on November 27, 2019 (the ''Merger Agreement''), with the affiliates of certain funds (the “Apollo Funds”), managed by affiliates of Apollo Global Management, LLC (“Apollo”), a leading global alternative investment manager. Pursuant to the Merger Agreement, the affiliates of Apollo Funds will acquire all the outstanding shares of the Company’s common stock ~~for $145 per share in cash~~ (~~the~~other ~~“Merger”).~~than ~~The~~shares ~~completion~~held ofby the ~~Merger~~Company isas ~~subject~~treasury tostock ~~customary~~or ~~closing~~held ~~conditions, including the adoption of the Merger Agreement~~ by acertain ~~majority~~affiliates of the ~~holders~~Apollo ofFunds) ~~the~~for ~~outstanding~~$145 ~~shares~~per ofshare ~~the~~in ~~Company’s~~cash ~~common stock,~~ (the ~~expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, certain foreign regulatory approvals and other customary closing conditions~~“Merger”).

On February 12, 2020, the Company held a special meeting of shareholders. At such meeting, the Merger Agreement was approved and adopted by a majority of the outstanding shares of the Company’s common stock entitled to vote thereon. The Company has received all regulatory approvals necessary to complete the Merger, except for the approval of the Australian Foreign Investment Review Board (“AFIRB”), which has the matter under consideration. The Company and Apollo are still targeting a closing in the first half of calendar year 2020, although this timing may shift based on the timeline for receipt of Australian regulatory approval. The Company and Apollo expect to proceed with closing the transaction promptly after the final approval from the AFIRB is received, taking into account the timing requirements of the Merger Agreement, including the Marketing Period (as defined in the Merger Agreement).

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 ("U.S.") Securities and Exchange Commission (“SEC”). The Company prepares its financial statements in conformity with generally accepted accounting principles in the U.S. (“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 ~~October~~April 3130, ~~2019,~~2020 and its consolidated statements of income, comprehensive ~~income~~ (loss) income, ~~and~~ shareholders' equity ~~for the three~~ and ~~nine months ended October 31, 2019 and 2018, and its consolidated~~ cash flows for the ~~nine~~three months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019.

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 we sell. Narrow operating margins may magnify the impact of these factors on the Company's quarterly operating results. Historical seasonal variations have included an increase in European demand during the Company’s fiscal fourth quarter and decreased demand in other fiscal quarters. 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 half of the Company's fiscal year, particularly in the Company's fourth quarter. Therefore, the results of operations for the three and nine months ended October 31, 2019 and 2018 are not necessarily indicative of the results that can be expected for the entire fiscal year ended January 31, 2020.

~~Revenue~~Furthermore, ~~Recognition~~in March 2020, the World Health Organization declared the outbreak of the 2019 novel coronavirus ("COVID-19") a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility, impacting customer demand and impeding global supply chains. The Company cannot at this time accurately predict what effects these conditions will have on its operations and financial condition, including due to uncertainties relating to the ultimate geographic spread of the virus, the severity and duration of the pandemic, the effect on its customers and customer demand and the length of the restrictions and closures imposed by various governments. Therefore, the results of operations for the three months ended April 30, 2020 are not necessarily indicative of the results that can be expected for the entire fiscal year ended January 31, 2021.

The Company’s revenues primarily result from the sale of various technology products and services. The Company recognizes revenue as control of products is transferred to customers, which generally happens at the point of shipment. Products sold by the Company are delivered via shipment from the Company’s facilities, dropshipment directly from the vendor, or by electronic delivery of keys for software products. In relation to product support, supply chain management and other services performed by the Company, revenue is recognized over time as the services are performed. Service revenues and related contract liabilities were not material for the periods presented.

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~~revenue~~Revenue is recognized in the amount of the net fee associated with serving as an agent. These arrangements primarily relate to certain fulfillment contracts, as well as sales of software services and extended warranty services.Recognition

The Company has contracts with certain customers where the Company’s performance obligation is to arrange for the products or services to be provided by another party. In these arrangements, as the Company assumes an agency relationship in the transaction, revenue is recognized in the amount of the net fee associated with serving as an agent. These arrangements primarily relate to certain fulfillment contracts, as well as sales of software services and extended warranty services.

The Company allows its customers to return product for exchange or credit subject to certain limitations. A liability is recorded at the time of sale for estimated product returns based upon historical experience and an asset is recognized for the amount expected to be recorded in inventory upon product return. The Company also provides volume rebates and other discounts to certain customers which are considered variable consideration. A provision for customer rebates and other discounts is recorded as a reduction of revenue at the time of sale based on an evaluation of the contract terms and historical experience.

The Company considers shipping &and handling activities as costs to fulfill the sales of products. Shipping revenue is included in net sales when control of the product is transferred to the customer, and the related shipping and handling costs are included in cost of products sold. Taxes imposed by governmental authorities on the Company’s revenue producing activities with customers, such as sales taxes and value added taxes, are excluded from net sales.

The Company disaggregates its operating segment revenue by geography, which the Company believes provides a meaningful depiction of the nature of its revenue. Net sales shown in Note 1311 – Segment Information includes service revenues, which are not a significant component of total revenue and are aggregated within the respective geographies.

The following table provides a comparison of sales generated from products purchased from vendors that exceeded 10% of the Company's consolidated net sales for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019 (as a percent of consolidated net sales):

	Three months ended October 31,		Nine months ended October 31,
	Three months ended April 30,
	2019	2018	2019	2018
	2020	2019
Apple, Inc.	1714%	1713%	~~15%~~	~~15%~~
Cisco Systems, Inc.	1112%	1011%	~~11%~~	~~11%~~
HP Inc.	1011%	1110%	~~11%~~	~~11%~~

~~Legal~~Accounts ~~settlements and other, net~~Receivable

The Company ~~has~~maintains ~~been~~an aallowance ~~claimant~~for incredit ~~proceedings~~losses ~~seeking~~related ~~damages~~to ~~from~~accounts ~~certain~~receivable ~~manufacturers~~for offuture ~~LCD~~expected ~~flat~~credit ~~panel~~losses ~~and~~resulting ~~cathode~~from ~~ray~~the ~~tube~~inability ~~displays,~~or asunwillingness ~~well~~of asits ~~reimbursement~~customers ~~from~~to ~~insurance~~make ~~providers~~required ofpayments. ~~certain~~In ~~costs~~estimating ~~incurred~~the byrequired allowance, the Company ~~associated~~takes ~~with~~into ~~the~~consideration ~~restatement~~historical ofcredit ~~certain~~losses, ofcurrent ~~the~~conditions ~~Company’s~~and ~~consolidated~~reasonable ~~financial~~and ~~statements~~supportable ~~and~~forecasts. ~~other~~Adjustments ~~financial~~to historical loss information ~~from~~are ~~fiscal~~made ~~2009~~for todifferences ~~2013~~in current conditions as well as changes in forecasted macroeconomic conditions, such as changes in unemployment rates or gross domestic product growth. ~~The~~Expected ~~Company~~credit ~~reached~~losses ~~settlement~~are ~~agreements~~estimated ~~during~~on ~~the~~a ~~periods~~pool ~~presented~~basis ~~and~~when ~~has~~similar ~~recorded~~risk ~~these~~characteristics ~~amounts,~~exist ~~net~~using ofan ~~attorney~~age-based ~~fees~~reserve ~~and~~model. ~~expenses,~~Receivables inthat ~~“legal~~do ~~settlements~~not ~~and~~share ~~other,~~risk ~~net”~~characteristics inare ~~the~~evaluated ~~Consolidated~~on ~~Statement~~an ofindividual ~~Income~~basis.

~~Accounts~~The ~~Receivable~~Company ~~Purchase~~has ~~Agreements~~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 continue to service, administer and collect the sold accounts receivable. At April 30, 2020 and January 31, 2020, the Company had a total of $569.0 million and $739.2 million, respectively, of accounts receivable sold to and held by financial institutions under these agreements. During the three months ended April 30, 2020 and 2019, discount fees recorded under these facilities were $3.1 million and $3.7 million, respectively. These discount fees are included as a component of "other expense (income), net" in the Consolidated Statement of Income.

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 continue to service, administer and collect the sold accounts receivable. At October 31, 2019 and January 31, 2019, the Company had a total of $921 million and $1.1 billion, respectively, of accounts receivable sold to and held by financial institutions under these agreements. During both the three months ended October 31, 2019 and 2018, discount fees recorded under these facilities were $4.1 million. During the nine months ended October 31, 2019 and 2018, discount fees recorded under these facilities were $11.8 million and $10.5 million, respectively. These discount fees are included as a component of "other expense, net" in the Consolidated Statement of Income.

Recently Adopted Accounting Standards

In ~~February~~June 2016, the FASB issued an accounting standard which ~~requires~~revises the ~~recognition~~methodology offor ~~assets~~measuring ~~and~~credit ~~liabilities~~losses ~~arising from lease transactions~~ on ~~the~~financial ~~balance~~instruments ~~sheet~~ and the ~~disclosure~~timing of ~~additional~~the ~~information~~recognition ~~about~~of ~~leasing~~those ~~arrangements~~losses. Under the new ~~guidance~~standard, ~~for~~financial ~~all~~assets ~~leases,~~measured ~~interest~~at ~~expense~~an ~~and~~amortized ~~amortization~~cost ofbasis ~~the right-of-use asset~~ are ~~recorded for leases determined~~ to be ~~finance~~presented ~~leases~~net ~~and~~of ~~straight-line~~the ~~lease~~amount ~~expense~~not isexpected ~~recorded for leases determined~~ to be ~~operating~~collected ~~leases.~~via ~~Lessees~~an ~~are~~allowance ~~required to initially recognize assets~~ for ~~the~~credit ~~right to use the leased assets and liabilities for the obligations created by those leases~~losses. InEstimated ~~July~~credit ~~2018,~~losses ~~the~~are ~~FASB issued additional updates~~ to ~~the~~be ~~new~~based ~~accounting~~on standard which provided entities with a transition option to initially account for the impact of the adoption with a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. The Company adopted the standard and elected this transition option during the quarter ending April 30, 2019. The Company also elected the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical ~~accounting~~information ~~relating~~adjusted ~~to lease identification and classification~~ for ~~existing~~management's ~~leases~~expectation atthat ~~the~~current ~~time~~conditions ~~of adoption. The adoption of this standard resulted in the Company recognizing initial right-of-use assets of $206.8 million~~ and ~~corresponding~~supportable ~~lease~~forecasts differ

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~~liabilities~~from ofhistorical ~~$205~~experience.8 ~~million~~The asCompany ofadopted this standard during the quarter ending April 30, ~~2019~~2020. The adoption of this standard had no material impact on ~~the~~its ~~Company's~~consolidated ~~Consolidated~~financial ~~Statements of Income and Cash Flows~~statements. ~~See Note 11 – Leases for additional information.~~

In August 2017, the FASB issued a new accounting standard that amends and simplifies guidance related to hedge accounting to more accurately portray the economics of an entity’s risk management activities in its financial statements. The Company adopted this standard during the quarter ended April 30, 2019. The adoption of this standard had no material impact on the Company's consolidated financial statements.

In August 2018, the FASB issued a new accounting standard which aligns the capitalization requirements for implementation costs incurred in a cloud computing hosting arrangement that is a service contract with the existing capitalization requirements for implementation costs incurred to develop or obtain internal-use software. The Company early adopted this standard on a prospective basis during the quarter ended April 30, 2019. The adoption of this standard had no material impact on the Company's consolidated financial statements.

Recently Issued Accounting Standards

In ~~June~~December ~~2016~~2019, the FASB issued an accounting standard which ~~revises~~simplifies ~~the methodology for measuring credit losses on financial instruments~~ and ~~the~~clarifies ~~timing~~various ofaspects ~~the recognition~~ of ~~those losses. Under~~ the ~~new~~income ~~standard,~~tax ~~financial~~accounting ~~assets measured at an amortized cost basis are to be presented net of the amount not expected to be collected via an allowance for credit losses~~guidance. ~~Estimated credit losses are to be based on historical information adjusted for management's expectation that current conditions and supportable forecasts differ from historical experience.~~ The accounting standard is effective for the Company beginning with the quarter ending April 30, ~~2020~~2021, with early adoption permitted. ~~The~~Certain ~~Company~~amendments ~~does~~should ~~not~~be ~~expect~~applied ~~the~~prospectively, ~~adoption~~while ofother ~~this~~amendments ~~standard~~should be applied retrospectively to ~~have~~all aperiods ~~material~~presented. ~~impact~~The onCompany ~~its~~is ~~consolidated~~currently ~~financial~~evaluating ~~statements~~the impact of this new standard.

In March 2020, the FASB issued an accounting standard which provides optional guidance to ease the potential burden in accounting for reference rate reform on financial reporting. This guidance provides optional expedients and exceptions for applying existing guidance to contract modifications, hedging relationships and other transactions that are expected to be affected by reference rate reform, if certain criteria are met. The amendments in the guidance are elective and were effective upon issuance for all entities through December 31, 2022. The Company is currently evaluating the impact of this new standard.

Reclassifications

Certain reclassifications have been made to the prior period amounts to conform to the current period presentation. These reclassifications did not have a material impact on previously reported amounts.

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NOTE 2 — EARNINGS PER SHARE ("EPS")

The Company presents the computation of earnings per share on a basic and diluted basis. 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 (see Note 76 – Stock-Based Compensation for further discussion) using the treasury stock method. The composition of basic and diluted EPS is as follows:

	Three months ended October 31,				Nine months ended October 31,
	Three months ended April 30,
	2019		2018		2019		2018
	2020		2019
(in thousands, except per share data)
Net income	$	9048,~~770~~065	$	~~114~~55,~~216~~400	$	~~225,420~~	$	~~223,781~~
Weighted average common shares - basic	35,~~720~~688		3837,~~358~~011		~~36,395~~		~~38,357~~
Effect of dilutive securities:
Equity based awards	~~248~~314		~~168~~236		~~235~~		~~202~~
Weighted average common shares - diluted	3536,~~968~~002		3837,~~526~~247		~~36,630~~		~~38,559~~
Earnings per share:
Basic	$	21.5435	$	21.9850	$	~~6.19~~	$	~~5.83~~
Diluted	$	21.5234	$	21.9649	$	~~6.15~~	$	~~5.80~~

For the three months ended ~~October~~April 3130, ~~2019~~2020 ~~and 2018,~~ there were ~~485~~no ~~and 45,072~~ shares, ~~respectively,~~ excluded from the computation of diluted earnings per share because their effect would have been antidilutive. For the ~~nine~~three months ended ~~October~~April 3130, 2019 ~~and 2018,~~ there were ~~485~~322 ~~and 43,783~~ shares, ~~respectively,~~ excluded from the computation of diluted earnings per share because their effect would have been antidilutive.

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NOTE 3 — ~~ACQUISITION, INTEGRATION AND RESTRUCTURING EXPENSES~~ACQUISITIONS

~~Acquisition,~~DLT integration and restructuring expenses are primarily comprised of costs related to the fiscal 2018 acquisition of Avnet, Inc.'s ("Avnet") Technology Solutions business ("TS") and restructuring costs related to the Global Business Optimization Program which was initiated in fiscal 2019. Acquisition

~~Acquisitions~~On November 25, 2019, the Company completed the acquisition of DLT Solutions ("DLT"), a premier software and cloud solutions aggregator focused on the U.S. public sector. The Company acquired all of the outstanding shares of DLT for a preliminary purchase price of approximately $210 million in cash, subject to certain working capital and other adjustments. The DLT acquisition enables Tech Data to proactively develop opportunities, accelerate growth and simplify complexity for its channel partners that are serving the U.S. public sector space.

OnThe ~~February~~Company ~~27,~~has ~~2017,~~accounted ~~Tech~~for ~~Data~~the ~~acquired~~DLT ~~all~~acquisition ofas ~~the~~a ~~outstanding~~business ~~shares~~combination ofand TSallocated ~~for~~the anpreliminary ~~aggregate~~estimated purchase price ofto ~~approximately~~the ~~$2.8~~estimated ~~billion,~~fair ~~comprised~~values of ~~approximately~~assets ~~$2.5~~acquired ~~billion in cash~~ and ~~2,785,402~~liabilities ~~shares~~assumed. ofThe ~~the~~ Company's ~~common~~has ~~stock.~~not ~~Acquisition,~~yet ~~integration~~completed ~~and~~its ~~restructuring~~evaluation ~~expenses~~and ~~related~~determination ~~to the acquisition~~ of TScertain ~~are~~assets ~~primarily~~acquired ~~comprised~~and ofliabilities ~~restructuring costs~~assumed, ITprimarily related ~~costs,~~to ~~professional~~the ~~services,~~final ~~transaction~~assessment ~~related costs~~ and ~~other~~valuation ~~costs. Restructuring costs are comprised~~ of ~~severance~~certain ~~and~~other ~~facility~~assets ~~exit~~acquired ~~costs. IT related costs consist primarily of data center~~ and ~~non-ERP~~liabilities ~~application migration and integration costs~~assumed, asincluding ~~well~~accounts asreceivable, ITdeferred ~~related professional services. Professional services are primarily comprised of integration related activities~~taxes, ~~including~~accrued ~~professional~~expenses ~~fees for project management, accounting, tax~~ and other ~~consulting services~~liabilities. ~~Transaction related costs primarily consist of investment banking fees~~Therefore, ~~legal~~the ~~expenses~~final ~~and~~fair ~~due~~values ~~diligence costs incurred in connection with the completion~~ of the ~~transaction.~~assets ~~Other~~acquired ~~costs includes payroll related costs including retention, stock compensation, relocation~~ and ~~travel~~liabilities ~~expenses,~~assumed ~~incurred~~may asvary ~~part~~from of the ~~integration~~Company's ofpreliminary TSestimates. ~~For~~During the ~~nine~~three months ended ~~October~~April 3130, ~~2018~~2020, ~~other~~the ~~costs~~Company ~~are~~updated ~~partially~~its ~~offset~~estimated byfair avalues ~~gain~~ of ~~$9.6~~certain ~~million~~assets ~~related~~acquired toand ~~the~~liabilities ~~final~~assumed, ~~working~~including ~~capital~~an ~~adjustment~~increase ~~for~~in ~~the~~goodwill ~~acquisition~~ of $15 TSmillion asand ~~part~~a ofdecrease ain ~~settlement~~intangible ~~agreement~~assets ~~with~~of $15 ~~Avnet~~million.

The preliminary allocation of the estimated purchase price to assets acquired and liabilities assumed is as follows:

	Three months ended October 31,		Nine months ended October 31,
(in thousands)
	2018		2018
Cash	$	545
(in thousands)
Accounts receivable	219,543
Restructuring costs	$	1,618	$	16,267
Prepaid expenses and other current assets	22,832
IT related costs	2,120		10,606
Property and equipment, net	4,207
Professional services	807		5,213
Goodwill	97,481
Transaction related costs	268		1,461
Intangible assets	211,400
Other costs	2,340		1,785
Other assets, net	52,539
Total	$	7,153	$	35,332
Total assets	608,547
Accounts payable, accrued expenses and other current liabilities	297,833
Revolving credit loans and other long-term debt	91,026
Other long-term liabilities	9,220
Total liabilities	398,079
Estimated purchase price	$	210,468

~~During~~The allocation of the ~~three~~ ~~months~~value ~~ended~~of ~~October~~identifiable ~~31,~~intangible ~~2018,~~assets ~~the~~is ~~Company~~comprised ~~recorded~~of ~~restructuring~~approximately ~~costs~~$193.0 ~~related~~million toof ~~the~~customer ~~acquisition~~and ofvendor TSrelationships with an amortization period of 15 years and $118.64 million inof ~~Europe~~trade names with an amortization period of 10 years. ~~During~~Goodwill is the ~~nine~~ ~~months~~excess ~~ended~~of ~~October~~the ~~31,~~consideration ~~2018,~~transferred over the ~~Company~~net ~~recorded~~assets ~~restructuring~~recognized ~~costs~~and ~~related~~primarily torepresents the ~~acquisition~~expected ofcost TSsynergies of ~~$3.6~~the ~~million~~combined incompany ~~the~~and ~~Americas~~assembled workforce and ~~$12~~is expected to be deductible for tax purposes.7 ~~million~~Pro informa ~~Europe~~information has not been provided as the acquisition was not material to the Company's consolidated financial position or results of operations.

Additionally, the Company incurred $1.8 million of transaction related costs during the three and nine months ended October 31, 2019 related to the proposed Merger with the affiliates of Apollo Funds and the acquisition of DLT Solutions (see Note 14 - Subsequent Events for further discussion).

Global Business Optimization Program

In fiscal 2019, the Company's Board of Directors approved the Global Business Optimization Program (the "GBO Program") to increase investment in the Company’s strategic priorities and implement operational initiatives to drive productivity and enhance profitability. Under the GBO Program, the Company expects to incur cash charges of approximately $70 million to $80 million, primarily comprised of $40 million to $45 million of charges in Europe and $30 million to $35 million of charges in the Americas. The cash charges primarily consist of severance costs, and also include professional services and other costs.

	Three months ended October 31,				Nine months ended October 31,				Cumulative Amounts Incurred to Date
	2019		2018		2019		2018
(in thousands)
Severance costs	$	1,851	$	8,741	$	9,185	$	17,615	$	35,612
Professional services and other costs	1,030		4,383		5,126		13,852		21,240
Total	$	2,881	$	13,124	$	14,311	$	31,467	$	56,852

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	Three months ended October 31,				Nine months ended October 31,
	2019		2018		2019		2018
(in thousands)
Americas	$	1,902	$	2,502	$	6,154	$	9,838
Europe	975		10,099		7,228		20,981
Asia-Pacific	4		523		929		648
Total	$	2,881	$	13,124	$	14,311	$	31,467

NOTE 4 — ACQUISITION, INTEGRATION AND RESTRUCTURING EXPENSES

~~Restructuring~~Acquisition, ~~activity~~integration ~~during~~and ~~the nine~~restructuring ~~months~~expenses ~~ended~~are ~~October~~primarily ~~31,~~comprised ~~2019~~of costs related to the ~~GBO~~Global Business Optimization Program iswhich aswas ~~follows:~~initiated in fiscal 2019, the proposed Merger and the fiscal 2020 acquisition of DLT.

	Nine months ended October 31, 2019
	Severance			Professional services and other costs			Total
(in thousands)
Balance at January 31, 2019	$	14,798		$	631		$	15,429
Fiscal 2020 restructuring expenses	9,185			5,126			14,311
Cash payments	(14,858		)	(5,721		)	(20,579		)
Foreign currency translation	(293		)	(23		)	(316		)
Balance at October 31, 2019	$	8,832		$	13		$	8,845

Global Business Optimization Program

~~NOTE~~In 4fiscal —2019, ~~GAIN~~the ONCompany's ~~DISPOSAL~~Board OFof ~~SUBSIDIARY~~Directors approved the Global Business Optimization Program (the "GBO Program") to increase investment in the Company’s strategic priorities and implement operational initiatives to drive productivity and enhance profitability. Under the GBO Program, the Company expects to incur cumulative cash charges through fiscal 2021 of approximately $70 million to $80 million, primarily comprised of $40 million to $45 million of charges in Europe and $30 million to $35 million of charges in the Americas. The cash charges primarily consist of severance costs, and also include professional services and other costs.

Restructuring costs related to the GBO Program are comprised of the following:

During the second quarter of fiscal 2019, the Company executed an agreement to sell certain of its operations in Ireland for a total sales price of approximately $15.3 million. The Company recorded a gain on sale of $6.7 million during the nine months ended October 31, 2018, which includes the reclassification of $5.1 million from accumulated other comprehensive income for cumulative translation adjustments associated with the Company’s investment in this foreign entity. The Company recorded an additional gain on the sale of this entity of $1.4 million during the three and nine months ended October 31, 2019. The operating results of this entity during the nine months ended October 31, 2018 were insignificant relative to the Company's consolidated financial results.



	Three months ended April 30,				Cumulative Amounts Incurred to Date
	2020		2019		Cumulative Amounts Incurred to Date
(in thousands)
Severance costs	$	1,379	$	4,147	$	39,773
Professional services and other costs	290		2,074		21,808
Total	$	1,669	$	6,221	$	61,581

Restructuring costs related to the GBO Program by segment are as follows:



	Three months ended April 30,					Cumulative Amounts Incurred to Date
	2020			2019		Cumulative Amounts Incurred to Date
(in thousands)
Americas	$	1,017		$	2,911	$	20,994
Europe	(251		)	3,024		37,165
Asia-Pacific	903			286		3,422
Total	$	1,669		$	6,221	$	61,581

Restructuring activity during the three months ended April 30, 2020 related to the GBO Program is as follows:



	Three months ended April 30, 2020
	Severance			Professional services and other costs			Total
(in thousands)
Balance at January 31, 2020	$	8,718		$	17		$	8,735
Fiscal 2021 restructuring expenses	1,379			290			1,669
Cash payments	(4,187		)	(302		)	(4,489		)
Foreign currency translation	(165		)	(1		)	(166		)
Balance at April 30, 2020	$	5,745		$	4		$	5,749

Pending Merger and DLT Acquisition

During the three months ended April 30, 2020, the Company incurred professional services and other transaction related costs of $15.1 million related to the proposed Merger and $0.9 million related to the acquisition of DLT. The costs are primarily related to professional services fees for operational, tax, legal and other consulting services.

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NOTE 5 — DEBT

The carrying value of the Company's outstanding debt consists of the following (in thousands):

As of:	~~October~~April 3130, ~~2019~~2020			January 31, ~~2019~~2020
Senior Notes, interest at 3.70% payable semi-annually, due February 15, 2022	$	500,000		$	500,000
Senior Notes, interest at 4.95% payable semi-annually, due February 15, 2027	500,000			500,000
Term Loans, interest rate of 2.84% and 3.99% at October 31, 2019 and January 31, 2019, respectively	300,000			300,000
Term Loan, interest rate of 1.45% and 2.70% at April 30, 2020 and January 31, 2020, respectively	300,000			300,000
Other committed and uncommitted revolving credit facilities, average interest rate of 7.26% and 8.05% at October 31, 2019 and January 31, 2019, respectively	116,895			102,271
Other committed and uncommitted revolving credit facilities, average interest rate of 6.17% and 6.79% at April 30, 2020 and January 31, 2020, respectively	104,563			108,449
Other long-term debt	646,~~973~~681			1548,~~817~~547
Less—unamortized debt discount and debt issuance costs	(65,~~411~~546		)	(75,~~166~~978		)
	1,417,457			1,410,922
	1,445,698			1,451,018
Less—current maturities (included as “revolving credit loans and current maturities of long-term debt, net”)	(~~123~~108,~~271~~157		)	(~~110~~112,~~368~~882		)
Total long-term debt	$	1,~~294~~337,~~186~~541		$	1,~~300~~338,~~554~~136

Senior Notes

In January 2017, the Company issued $500.0 million aggregate principal amount of 3.70% Senior Notes due February 15, 2022 (the "3.70% Senior Notes") and $500.0 million aggregate principal amount of 4.95% Senior Notes due February 15, 2027 (the "4.95% Senior Notes") (collectively the "2017 Senior Notes"). The Company pays interest on the 2017 Senior Notes semi-annually in arrears on February 15 and August 15 of each year. The interest rate payable on the 2017 Senior Notes will be subject to adjustment from time to time if the credit rating assigned to such series of notes changes. At no point will the interest rate be reduced below the interest rate payable on the notes on the date of the initial issuance or increase more than 2.00% above the interest rate payable on the notes of the series on the date of their initial issuance. The 2017 Senior Notes are senior unsecured obligations of the Company and will rank equally with all other unsecured and unsubordinated indebtedness from time to time outstanding.

The Company, at its option, may redeem the 3.70% Senior Notes at any time prior to January 15, 2022 and the 4.95% Senior Notes at any time prior to November 15, 2026, in each case in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2017 Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the 2017 Senior Notes to be redeemed, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable Treasury Rate plus 30 basis points for the 3.70% Senior Notes and 40 basis points for the 4.95% Senior Notes, plus the accrued and unpaid interest on the principal amount being redeemed up to the date of redemption. The Company may also redeem the 2017 Senior Notes, at any time in whole or from time to time in part, on or after January 15, 2022 for the 3.70% Senior Notes and November 15, 2026 for the 4.95% Senior Notes, in each case, at a redemption price equal to 100% of the principal amount of the 2017 Senior Notes to be redeemed.

~~Other~~On ~~Credit~~March ~~Facilities~~10, 2020, Tiger Merger Sub Co., an affiliate of certain investment funds managed by affiliates of Apollo, launched an offer to purchase for cash any and all of the Company’s outstanding 3.70% Senior Notes and any and all of the Company’s outstanding 4.95% Senior Notes and a consent solicitation to amend the indenture and global securities establishing the 3.70% Senior Notes and the 4.95% Senior Notes to (i) eliminate the requirement to make a “change of control” offer in connection with the proposed merger of Tiger Merger Sub Co. into the Company pursuant to the Merger Agreement and (ii) make certain other customary changes for a privately-held company to the “change of control” provisions (the “Proposed Amendments”). Concurrently with, but separate from, the aforementioned offer to purchase and consent solicitation, Tiger Merger Sub Co. launched a consent solicitation for the Proposed Amendments for holders of the 4.95% Senior Notes. On March 24, 2020, Tiger Merger Sub Co. announced that the requisite more than 50% of consents were received to adopt the Proposed Amendments. The aforementioned consent solicitations were conducted by Tiger Merger Sub Co. pursuant to the terms of, and subject to the conditions set forth in, the offer to purchase and consent solicitation statement, dated March 10, 2020 (the “Offer to Purchase and Consent Solicitation”), and the separate consent solicitation statement, dated March 10, 2020 (the “4.95% Consent Solicitation” and, together with the Offer to Purchase and Consent Solicitation, the “Offer to Purchase and Consent Solicitation Statements”). On March 24, 2020, the Company entered into a Supplemental Indenture with respect to the Indenture and Global Security for the 3.70% Senior Notes (the “3.70% Supplemental Indenture”) and a Supplemental Indenture with respect to the Indenture and Global Security for the 4.95% Senior Notes (the “4.95% Supplemental Indenture” and, together with the 3.70% Supplemental Indenture, the “Supplemental Indentures”) effecting the Proposed Amendments.

The ~~Company~~Proposed ~~has~~Amendments aimplemented ~~$1.5~~by ~~billion~~the ~~revolving~~Supplemental ~~credit~~Indentures ~~facility~~will ~~with~~become aoperative ~~syndicate~~with ofrespect ~~banks~~to (the ~~“Credit~~2017 ~~Agreement”)~~Senior ~~which,~~Notes ~~among~~only ~~other~~at ~~things,~~such ~~provides~~time ~~for~~as ~~(i)~~the afollowing ~~maturity~~conditions ~~date~~are ofsatisfied ~~May~~or 15otherwise waived, ~~2024~~if applicable, by Tiger Merger Sub Co.: (ii1) anthe ~~interest~~2017 ~~rate~~Senior onNotes ~~borrowings,~~that ~~facility~~are ~~fees~~validly tendered (and ~~letter~~not ofvalidly ~~credit~~withdrawn) ~~fees~~have ~~based~~been onaccepted ~~the~~for ~~Company’s~~purchase ~~debt~~by ~~rating,~~Tiger ~~(iii)~~Merger ~~the~~Sub ~~ability~~Co. toin ~~increase~~accordance with the ~~facility~~terms toof athe ~~maximum~~Offer ofto ~~$1.75~~Purchase ~~billion,~~and ~~subject~~Consent toSolicitation ~~certain~~Statements ~~conditions~~ (and, ~~(iv)~~in ~~certain~~the ~~subsidiaries~~case of the ~~Company~~4.95% toSenior beNotes, ~~designated~~when asTiger ~~borrowers~~Merger Sub Co. ~~The~~provides ~~applicable~~notice ~~borrower~~that it will pay ~~interest on advances under~~ the ~~Credit~~consent ~~Agreement~~fee ~~based~~as onpart ~~LIBOR~~of ~~(or~~the ~~similar~~4.95% ~~interbank~~Consent ~~offered~~Solicitation) ~~rates~~and ~~depending~~(2) onthe ~~currency~~other ~~draw)~~conditions ~~plus~~to athe ~~predetermined~~consent ~~margin~~solicitations ~~that~~set isforth ~~based~~in on the ~~Company’s~~Offer ~~debt~~to ~~rating.~~Purchase ~~There~~and ~~were~~Consent noSolicitation ~~amounts~~Statements, ~~outstanding~~including ~~under~~ the ~~Credit~~substantially ~~Agreement~~concurrent atconsummation ~~October 31,~~of ~~2019~~the ~~and January 31~~Merger, ~~2019~~have been satisfied.

The Company entered into a term loan credit agreement in November 2016 with a syndicate of banks (the "2016 Term Loan Credit Agreement") which provided for the borrowing of senior unsecured term loans in an original aggregate principal amount of up to $1.0 billion. The Company paid interest on advances under the 2016 Term Loan Credit Agreement at a variable rate based on LIBOR plus a predetermined margin based on the Company's debt rating. The Company had $300 million outstanding under the 2016 Term Loan Credit Agreement at January 31, 2019. On August 2, 2019, the Company entered into a new term loan credit agreement (the “2019 Term Loan Credit Agreement”), the proceeds of which were used to repay in full the amounts outstanding under the 2016 Term Loan Credit Agreement. The 2019 Term Loan Credit Agreement, among other things, (i) provides for a $300 million term loan credit facility with a maturity date of August 2, 2021, (ii) provides for an interest rate on the outstanding principal amount of the loan that is based on LIBOR plus a predetermined margin, and (iii) may be increased up to a total of $500 million, subject to certain conditions. The Company had $300.0 million outstanding under the 2019 Term Loan Credit Agreement at October 31, 2019.

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 collateral for borrowings up to a maximum of $1.0 billion. The scheduled termination date of the agreement is April 16, 2021. Under this program, the Company

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~~transfers~~Other ~~certain~~Credit ~~U.S.~~Facilities trade receivables into a wholly-owned bankruptcy remote special purpose entity. Such receivables, which are recorded in the Consolidated Balance Sheet, totaled approximately $1.7 billion at both October 31, 2019 and January 31, 2019. As collections reduce accounts receivable balances included in the collateral pool, the Company may transfer interests in new receivables to bring the amount available to be borrowed up to the maximum. 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 the Receivables Securitization Program at October 31, 2019 and January 31, 2019.

InThe ~~addition~~Company tohas ~~the~~a ~~facilities~~$1.5 ~~described~~billion ~~above,~~revolving credit facility with a syndicate of banks (the ~~Company~~“Credit ~~has~~Agreement”) ~~various~~which, among other ~~committed~~things, ~~and~~provides ~~uncommitted~~for ~~lines~~(i) a maturity date of ~~credit~~May 15, ~~short-term~~2024, ~~loans~~(ii) an interest rate on borrowings, facility fees and ~~overdraft~~letter ~~facilities~~of ~~totaling~~credit ~~approximately~~fees ~~$394.9~~based ~~million~~on atthe ~~October 31~~Company’s debt rating, ~~2019~~(iii) the ability to ~~support~~increase ~~its~~the ~~operations.~~facility ~~Most~~to a maximum of ~~these~~$1.75 ~~facilities~~billion, ~~are~~subject ~~provided~~to oncertain anconditions ~~unsecured,~~and ~~short-term~~(iv) ~~basis~~certain ~~and~~subsidiaries ~~are~~of ~~reviewed~~the ~~periodically~~Company ~~for~~to ~~renewal.~~be ~~There~~designated ~~was~~as ~~$116~~borrowers.9 ~~million~~The ~~outstanding~~applicable borrower will pay interest on ~~these~~advances ~~facilities~~under atthe ~~October 31,~~Credit ~~2019,~~Agreement atbased on LIBOR (or similar interbank offered rates depending on currency draw) plus a ~~weighted~~predetermined ~~average~~margin ~~interest~~that ~~rate~~is ofbased ~~7.26%,~~on ~~and~~the ~~there~~Company’s ~~was~~debt ~~$102~~rating.3 ~~million~~There ~~outstanding~~were atno ~~January 31,~~amounts ~~2019,~~outstanding atunder athe ~~weighted~~Credit ~~average~~Agreement ~~interest~~at ~~rate~~April 30, of2020 ~~8.05%.~~and January 31, 2020.

AtOn ~~October 31~~August 2, 2019, the Company ~~had~~entered ~~also~~into ~~issued~~a ~~standby~~term ~~letters~~loan of credit ofagreement (the “2019 Term Loan Credit Agreement”) which, among other things, (i) provides for a $~~32.0~~300 million. ~~These~~term ~~letters~~loan credit facility with a maturity date of ~~credit~~August ~~typically~~2, ~~act~~2021, as(ii) aprovides ~~guarantee~~for an interest rate on the outstanding principal amount of ~~payment~~the toloan ~~certain~~that ~~third~~is ~~parties~~based inon ~~accordance~~LIBOR ~~with~~plus ~~specified~~a ~~terms~~predetermined margin, and ~~conditions.~~(iii) ~~The~~may ~~issuance~~be ofincreased ~~certain~~up ofto ~~these~~a ~~letters~~total of ~~credit~~$500 ~~reduces~~million, ~~the~~subject to certain conditions. The Company's ~~borrowing~~had ~~availability~~$300 ~~under~~million ~~certain~~outstanding ofunder the ~~above-mentioned~~2019 ~~credit~~Term ~~facilities.~~Loan Credit Agreement at both April 30, 2020 and January 31, 2020.

~~Certain~~The Company also has an agreement with a syndicate of banks (the “Receivables Securitization Program”) that allows the Company’s ~~credit~~to ~~facilities~~transfer ~~contain~~an ~~limitations~~undivided interest in a designated pool of U.S. accounts receivable, on ~~the~~an ~~amounts~~ongoing basis, to provide collateral for borrowings up to a maximum of ~~annual~~$1.0 ~~dividends~~billion. ~~and~~The ~~repurchases~~scheduled termination date of ~~common~~the ~~stock~~agreement ~~and~~is ~~require~~April ~~compliance~~16, ~~with~~2021. ~~other~~Under ~~obligations~~this program, ~~warranties~~the ~~and~~Company ~~covenants~~transfers certain U.S. ~~The~~trade ~~financial~~receivables ~~ratio~~into ~~covenants~~a ~~under~~wholly-owned ~~these~~bankruptcy ~~credit~~remote ~~facilities~~special ~~include~~purpose aentity. ~~maximum~~Such ~~total~~receivables, ~~leverage~~which ~~ratio~~are ~~and~~recorded ain ~~minimum~~the ~~interest~~Consolidated ~~coverage~~Balance ~~ratio~~Sheet, totaled approximately $1.6 Atbillion ~~October~~at both April 30, 2020 and January 31, ~~2019~~2020. As collections reduce accounts receivable balances included in the collateral pool, the Company ~~was~~may transfer interests in ~~compliance~~new ~~with~~receivables ~~all~~to ~~such~~bring ~~financial~~the ~~covenants~~amount available to be borrowed up to the maximum. 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 the Receivables Securitization Program at April 30, 2020 and January 31, 2020.

In addition to the facilities described above, the Company has various other committed and uncommitted lines of credit, short-term loans and overdraft facilities totaling approximately $458.2 million at April 30, 2020 to support its operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal. There was $104.6 million outstanding on these facilities at April 30, 2020, at a weighted average interest rate of 6.17%, and there was $108.4 million outstanding at January 31, 2020, at a weighted average interest rate of 6.79%.

At April 30, 2020, the Company had also issued standby letters of credit of $39.6 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 certain of these letters of credit reduces the Company's borrowing availability under certain of the above-mentioned credit facilities.

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 under these credit facilities include a maximum total leverage ratio and a minimum interest coverage ratio. At April 30, 2020, the Company was in compliance with all such financial covenants.

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NOTE 6 — ~~INCOME~~STOCK-BASED ~~TAXES~~COMPENSATION

UThe Company recorded $6.S3 million and $8.3 ~~Tax~~million, ~~Reform~~respectively, of stock-based compensation expense for the three months ended April 30, 2020 and 2019.

OnThe ~~December~~2018 ~~22,~~Equity ~~2017,~~Incentive ~~the~~Plan ~~U.S.~~was ~~federal~~approved ~~government~~by ~~enacted~~ the ~~U.S.~~Company’s ~~Tax~~shareholders ~~Cuts~~in ~~and~~June ~~Jobs~~2018 ~~Act~~and ~~(“U~~includes 2.S.0 ~~Tax~~million ~~Reform”)~~shares ~~which~~available ~~significantly~~for ~~revised~~grant, ~~U.S.~~of ~~corporate~~which ~~income~~approximately ~~tax~~1.7 ~~law~~million ~~by,~~shares ~~among~~remain ~~other~~available ~~things,~~for ~~reducing~~future ~~the~~grant ~~U.S.~~at ~~federal~~April 30, ~~corporate~~2020. ~~income~~The ~~tax~~Company ~~rate~~is ~~from~~authorized ~~35%~~ to ~~21%~~award ~~and~~officers, ~~implementing~~employees, aand ~~modified~~non-employee ~~territorial~~members ~~tax~~of ~~system~~the ~~that~~Board ~~included~~of aDirectors ~~one-time~~restricted ~~transition~~stock, ~~tax~~options onto ~~deemed~~purchase ~~repatriated~~common ~~earnings~~stock, ofstock ~~foreign~~appreciation ~~subsidiaries.~~rights ~~Due~~and toperformance ~~the~~awards ~~complexities~~that ~~involved~~are independent ~~accounting~~upon ~~for~~achievement ~~U.S.~~of ~~Tax~~specified ~~Reform,~~performance ~~the~~goals. ~~SEC~~Equity-based ~~issued~~compensation ~~Staff~~awards ~~Accounting~~have ~~Bulletin~~a ~~(“SAB”)~~maximum ~~118~~term ~~which~~of ~~required~~ten ~~that~~years, ~~the~~unless ~~Company~~a ~~include~~shorter inperiod ~~its~~is ~~financial~~specified ~~statements~~by the ~~reasonable~~Compensation ~~estimate~~Committee of the ~~impact~~Board of ~~U.S.~~Directors ~~Tax~~("Compensation ~~Reform~~Committee") onor ~~earnings~~is torequired ~~the~~under ~~extent~~local ~~such~~law. ~~reasonable~~Awards ~~estimate~~under ~~had~~the ~~been~~plan ~~determined.~~are ~~SAB~~priced ~~118~~as ~~allowed~~determined by the ~~Company~~Compensation toCommittee ~~report~~and ~~provisional~~are ~~amounts~~required ~~within~~to abe ~~measurement~~priced ~~period~~at, upor toabove, ~~one~~the ~~year~~fair ~~due~~market tovalue of the ~~complexities~~Company’s ~~inherent~~common instock ~~adopting~~on the ~~changes~~date of grant. ~~During~~Awards ~~the~~generally ~~three~~vest ~~and~~between ~~nine~~one ~~months~~year ~~ended~~and ~~October~~three ~~31,~~years ~~2018,~~from the ~~Company~~date ~~decreased~~of ~~its~~grant. ~~provisional~~The ~~estimate~~Company’s ofpolicy ~~the~~is ~~one-time~~to ~~transition~~utilize ~~tax~~shares byof ~~$24.0~~its ~~million~~treasury ~~upon~~stock, ~~further~~to ~~analysis~~the ofextent ~~earnings~~available, ~~and~~to ~~profits~~satisfy ofits ~~the~~obligation ~~Company's~~to ~~foreign~~issue ~~subsidiaries~~shares ~~and~~upon ~~utilization~~the exercise of ~~foreign tax credits~~awards.

Tax Indemnifications

In connection with the acquisition of TS, pursuant to the interest purchase agreement, the Company and Avnet agreed to indemnify each other in relation to certain tax matters. As a result, the Company has recorded certain indemnification assets for expected amounts to be received from Avnet related to liabilities recorded for unrecognized tax benefits. The Company has also recorded certain indemnification liabilities for expected amounts to be paid to Avnet. The Company recorded a benefit in income tax expense of $5.5 million during the three months ended October 31, 2018 and a benefit in income tax expense of $0.6 million and $6.1 million during the nine months ended October 31, 2019 and 2018, respectively, due to the resolution of certain pre-acquisition tax matters.

Effective Tax Rate

The Company's effective tax rate was 22.1% and 2.0% for the three months ended October 31, 2019 and 2018, respectively, and 22.1% and 7.0% for the nine months ended October 31, 2019 and 2018, respectively. On an absolute dollar basis, the provision for income taxes increased to $25.7 million for the third quarter of fiscal 2020 compared to $2.3 million for the third quarter of fiscal 2019 and increased to $64.0 million for the nine months ended October 31, 2019 compared to $16.8 million for the nine months ended October 31, 2018.

The increase in both the effective tax rate and the provision for income taxes for the three and nine months ended October 31, 2019, as compared to the prior year is primarily due to the prior year decrease in the provisional estimate of the one-time transition tax related to U.S. Tax Reform and the impact of the resolution of certain pre-acquisition tax matters related to TS. The increase in both the effective tax rate and the provision for income taxes for the nine months ended October 31, 2019, as compared to the prior year, is also impacted by a $13.0 million income tax benefit recognized during the nine months ended October 31, 2018. The income tax benefit was due to the Company's finalization of the geographic allocation of the purchase price for the acquisition of TS for tax reporting purposes as part of a settlement agreement with Avnet, which resulted in the recognition of a deferred tax asset in the U.S. for future tax deductions related to the amortization of goodwill for tax purposes. Additionally, the increase in the absolute dollar value of the provision for income taxes for the nine months ended October 31, 2019 as compared to the prior year is due to an increase in taxable earnings.

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NOTE 7 — STOCK-BASED COMPENSATION

The Company recorded $23.7 million of stock-based compensation expense for both the nine months ended October 31, 2019 and 2018.

The 2018 Equity Incentive Plan was approved by the Company’s shareholders in June 2018 and includes 2.0 million shares available for grant, of which approximately 1.7 million shares remain available for future grant at October 31, 2019. The Company is authorized to award officers, employees, and non-employee members of the Board of Directors restricted stock, options to purchase common stock, stock appreciation rights 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 plan are priced as determined by the Compensation Committee and 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 year and three years from the date of grant. 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.

Restricted stock units

A summary of the Company’s restricted stock activity for the three months ended April 30, 2020 is as follows:

	Shares
Nonvested at January 31, 2019	649,122
Nonvested at January 31, 2020	574,980
Granted	228,528
Vested	(231,256	)
Vested	(263,334	)
Canceled	(2,409	)
Canceled	(29,851	)
Nonvested at April 30, 2020	341,315
Nonvested at October 31, 2019	584,465

Pursuant to the terms of the Merger Agreement with the affiliates of Apollo Funds, upon closing of the Merger all nonvested RSU’s will vest and be cancelled and converted into the right to receive an amount of $145 per share in cash.

Performance based restricted stock units

The Company's performance based restricted stock unit awards are subject to vesting conditions, including meeting specified cumulative performance objectives over a period of three years. Each performance based award recipient could vest in 0% to 150% of the target shares granted, contingent on the achievement of the Company's financial performance metrics. A summary of the Company’s performance based restricted stock activity, assuming maximum achievement for nonvested awards, for the three months ended April 30, 2020 is as follows:

	Shares
Nonvested at January 31, 2019	293,216
Nonvested at January 31, 2020	363,563
Granted	108,771
Vested	(87,985	)
Vested	(16,996	)
Canceled	(34,305	)
Canceled	(18,648	)
Nonvested at April 30, 2020	241,273
Nonvested at October 31, 2019	366,343

17Pursuant to the terms of the Merger Agreement with the affiliates of Apollo Funds, upon closing of the Merger nonvested PRSU’s will be cancelled and converted into the right to receive an amount of $145 per share in cash determined as follows: (i) for PRSU’s granted during fiscal 2019, the number of shares shall equal 130% of the target shares granted and (ii) for PRSU’s granted during fiscal 2020, the number of shares shall equal 110% of the target shares granted.

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NOTE 87 — 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:

October 31, 2019

January 31, 2019

April 30, 2020

January 31, 2020

Fair value measurement category

Balance sheet location

Level 1

Level 2

Level 3

Level 1

Level 2

Level 3

(in thousands)

ASSETS

Net investment hedges:

Foreign currency forward contracts

Prepaid expenses and other assets

~~527~~—

—812

Foreign currency forward contracts

Other assets, net

~~16,307~~—

—24,933

Cash flow hedges:

Cross-currency swap

Prepaid expenses and other assets

~~133~~—

—124

Derivatives not designated as hedging instruments:

Foreign currency forward contracts

Prepaid expenses and other assets

23,~~992~~113

3,~~830~~675

LIABILITIES

Cash flow hedges:

Cross-currency swap

Accrued expenses and other liabilities

~~238~~—

—492

Derivatives not designated as hedging instruments:

Foreign currency forward contracts

Accrued expenses and other liabilities

54,~~268~~480

65,~~641~~916

The Company's derivative instruments 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 (see Note 98 – Derivative Instruments for further discussion).

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 returns of the various investments 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 was $4238.82 million and $4238.63 million, respectively, at ~~October~~April 3130, ~~2019~~2020 and $3941.21 million and $3941.10 million, respectively, at January 31, ~~2019~~2020.

The carrying value of the 2017 Senior Notes discussed in Note 5 – Debt represents cost less unamortized debt discount and debt issuance costs. The estimated fair value of the 2017 Senior Notes is based upon quoted market information (Level 1). The estimated fair value of the 2017 Senior Notes was $~~1.05~~983 ~~billion~~million and $~~988~~1.04 ~~million~~billion, respectively, at ~~October~~April 3130, ~~2019~~2020 and January 31, ~~2019~~2020 and the carrying value was $994.09 million and $~~992~~994.83 million, respectively, at ~~October~~April 3130, ~~2019~~2020 and January 31, ~~2019~~2020. The carrying amounts of accounts receivable, accounts payable and accrued expenses approximate fair value because of the short maturity of these items. The carrying amounts of debt outstanding pursuant to revolving credit facilities and term loan credit agreements approximated fair value as the majority of these instruments have variable interest rates which approximate current market rates (Level 2 criteria).

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NOTE 98 — 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 ishas been to protect earnings and cash flows from the impact of exchange rate changes primarily through the use of foreign currency forward contracts and a cross-currency swap.

Net Investment Hedges

~~The~~In ~~Company~~fiscal ~~has~~2020, the Company entered into foreign currency forward contracts to hedge a portion of its net investment in euro denominated foreign operations which ~~are~~were designated as net investment hedges. The Company entered into the net investment hedges to offset the risk of change in the U.S. dollar value of the Company's investment in a euro functional subsidiary due to fluctuating foreign exchange rates. The Company terminated these net investment hedge contracts during the three months ended April 30, 2020. Gains and losses on the net investment hedges ~~are~~have been recorded in other comprehensive income (loss) and will remain in other comprehensive income (loss) until the sale or ~~substantially~~substantial ~~complete~~ liquidation of the underlying assets of the Company's investment. The initial fair value of hedge components excluded from the assessment of effectiveness ishas been recognized in the Consolidated Statement of Income. ~~under~~The aCompany ~~systematic~~classifies ~~and~~cash ~~rational~~flows ~~method~~related ~~over~~to the ~~life~~settlement of its net investment hedges as investing activities in the ~~hedging~~Consolidated ~~instrument~~Statement of Cash Flows.

The ~~aggregate~~following ~~notional~~tables ~~values~~present the effects of the Company's ~~outstanding~~ net investment ~~hedge~~hedges ~~contracts~~on byaccumulated ~~year~~other ofcomprehensive ~~maturity~~income as("AOCI") ofand ~~October 31,~~earnings ~~2019~~for ~~are~~the asthree ~~follows~~months ended April 30, 2020 and 2019:

Fiscal Year:	Notional Value
	Three months ended April 30, 2020
(in millions)
Derivatives designated as net investment hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income		Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)		Location of gain (loss) recognized in income (amount excluded from effectiveness testing)
2020 (remaining 3 months)	$	—
(in thousands)
2021	21.6
Foreign currency forward contracts	$	24,934	$	—	$	3,316	Interest expense
2022	21.6
2023	267.0
2024	12.4
Thereafter	293.4
Total	$	616.0

The following tables present the effects of the Company's net investment hedges on accumulated other comprehensive income ("AOCI") and earnings for the three and nine months ended October 31, 2019:



	Three months ended April 30, 2019
Derivatives designated as net investment hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income		Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)		Location of gain (loss) recognized in income (amount excluded from effectiveness testing)
(in thousands)
Foreign currency forward contracts	$	2,496	$	—	$	316	Interest expense

	Three months ended October 31, 2019
Derivatives designated as net investment hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income		Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)		Location of gain (loss) recognized in income (amount excluded from effectiveness testing)
(in thousands)
Foreign currency forward contracts	$	13,490	$	—	$	3,381	Interest expense

	Nine months ended October 31, 2019
Derivatives designated as net investment hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income		Amount of gain (loss) recognized in income (amount excluded from effectiveness testing)		Location of gain (loss) recognized in income (amount excluded from effectiveness testing)
(in thousands)
Foreign currency forward contracts	$	10,048	$	—	$	6,786	Interest expense

The Company had no net investment hedges outstanding during the three and nine months ended October 31, 2018.

Cash Flow Hedges

The Company ~~has~~ entered into a cross-currency swap to hedge its cash flows related to certain foreign-currency denominated debt which iswas designated as a cash flow hedge. The notional value of this swap was $4.5 million at ~~October~~ January 31, ~~2019~~2020 and the swap ~~has~~matured ain ~~maturity date of~~ February 2020. The effective portion of changes in the fair value of derivatives designated and qualifying as cash flow hedges iswas initially reported as a component of other comprehensive income (loss). ~~These~~Gains ~~gains~~ and losses ~~are~~were subsequently reclassified into earnings in the same period during which the hedged transaction ~~affects~~affected earnings and ~~are~~have been presented in the same income statement line item as the earnings effect of the hedged item. The Company has classified cash flows related to the settlement of its cash flow hedges as financing activities in the Consolidated Statement of Cash Flows.

19The following tables present the effects of the Company's cash flow hedges on AOCI and earnings for the three months ended April 30, 2020 and 2019:



	Three months ended April 30, 2020
Derivatives designated as cash flow hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income			Location of gain (loss) reclassified from AOCI into income
(in thousands)
Cross-currency swap	$	402	$	(90	)	Interest expense
			507			Other expense (income), net
Total	$	402	$	417

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The following tables present the effects of the Company's cash flow hedges on AOCI and earnings for the three and nine months ended October 31, 2019:



	Three months ended April 30, 2019
Derivatives designated as cash flow hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)			Amount of gain (loss) reclassified from AOCI into income			Location of gain (loss) reclassified from AOCI into income
(in thousands)
Cross-currency swap	$	(575	)	$	120		Interest expense
				(484		)	Other expense (income), net
Total	$	(575	)	$	(364	)

	Three months ended October 31, 2019
Derivatives designated as cash flow hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income			Location of gain (loss) reclassified from AOCI into income
(in thousands)
Cross-currency swap	$	75	$	169		Interest expense
			(114		)	Other expense, net
Total	$	75	$	55

	Nine months ended October 31, 2019
Derivatives designated as cash flow hedges:	Amount of gain (loss) recognized in other comprehensive income (loss)		Amount of gain (loss) reclassified from AOCI into income			Location of gain (loss) reclassified from AOCI into income
(in thousands)
Cross-currency swap	$	220	$	457		Interest expense
			(315		)	Other expense, net
Total	$	220	$	142

The Company had no cash flow hedges outstanding during the three and nine months ended October 31, 2018.

Derivatives Not Designated as Hedges

The Company additionally utilizes forward contracts that are not designated as hedging instruments to hedge intercompany loans, accounts receivable and accounts payable. The Company’s foreign currency exposure relates primarily to international transactions 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: Australian dollar, British pound, Canadian dollar, Czech koruna, Danish krone, euro, Indian rupee, Indonesian rupiah, Mexican peso, Norwegian krone, Polish zloty, Singapore dollar, Swedish krona, Swiss franc and U.S. dollar.

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 recognizes foreign currency exchange gains and losses on its derivative instruments not designated as hedges that are 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 recognizes foreign currency exchange gains and losses on its derivative instruments not designated as hedges that are 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 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 Company classifies cash flows related to the settlement of forward contracts that are not designated as hedging instruments as operating activities in the Consolidated Statement of Cash Flows.

The total amount of gains (losses) recognized in earnings on the Company's derivatives not designated as hedges for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019 are as follows:

		Gains (losses) recognized in earnings
		Three months ended October 31,						Nine months ended October 31,
		Three months ended April 30,
Derivatives not designated as hedges	Income statement location	~~2019~~2020			~~2018~~2019			~~2019~~			~~2018~~
(in millions)
Foreign currency forward contracts	Cost of products sold	$	(38.02	)	$	100.49		$	—		$	~~22.5~~
Foreign currency forward contracts	Other expense (income), net	3(14.21		)	(310.93		)	~~(0.1~~		)	~~(43.4~~		)
Total		$	0(5.29	)	$	~~(21~~0.56	)	$	~~(0.1~~	)	$	~~(20.9~~	)

20The Company's average notional amounts of derivatives not designated as hedges outstanding during the three months ended April 30, 2020 and 2019 were approximately $1.3 billion and $1.3 billion, respectively, with average maturities of 22 days and 24 days, respectively. As discussed above, under the Company's hedging policies, gains and losses on these derivative financial instruments are largely offset by the gains and losses on the underlying assets or liabilities being hedged.

The Company’s derivatives are also discussed in Note 7 – Fair Value Measurements.

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~~The~~NOTE ~~Company's~~9 ~~average~~— notional amounts of derivatives not designated as hedges outstanding during the three months ended October 31, 2019 and 2018 were approximately $1.1 billion and $1.5 billion, respectively, with average maturities of 28 days and 24 days, respectively. The CompanySHAREHOLDERS's ~~average~~EQUITY notional amounts of derivatives not designated as hedges outstanding during the nine months ended October 31, 2019 and 2018 were approximately $1.2 billion and $1.4 billion, respectively, with average maturities of 26 days and 27 days, respectively. As discussed above, under the Company's hedging policies, gains and losses on these derivative financial instruments are largely offset by the gains and losses on the underlying assets or liabilities being hedged.

The Company’s derivatives are also discussed in Note 8 – Fair Value Measurements.

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NOTE 10 — SHAREHOLDERS' EQUITY

Share Repurchase Program

In October 2018, the Company's Board of Directors authorized a share repurchase program for up to $200.0 million of the Company's common stock. In February 2019, the Board of Directors approved a $100.0 million increase to the program. In August 2019, the Company's Board of Directors authorized the repurchase of up to an additional $200.0 million of the Company's common stock, resulting in a total share repurchase authorization of $500.0 million. In conjunction with the Company’s share repurchase program, a 10b5-1 plan was executed that instructs the broker selected by the Company to repurchase shares on behalf of the Company. The amount of common stock repurchased in accordance with the 10b5-1 plan on any given trading day is determined by a formula in the plan, which is based on the market price of the Company’s common stock. Shares repurchased by the Company are held in treasury for general corporate purposes, including issuances under equity incentive and benefit plans. The reissuance of shares from treasury stock is based on the weighted average purchase price of the shares.

~~The~~As of April 30, 2020, the Company’s had $222.8 million available for future repurchases of its common stock under the authorized share ~~issuance~~repurchase ~~activity~~program. ~~for~~Pursuant to the ~~nine~~terms ~~months~~of ~~ended~~the ~~October~~Merger 31Agreement with the affiliates of Apollo Funds, ~~2019~~the isCompany ~~summarized~~suspended its share repurchase program as ~~follows:~~ of November 13, 2019.

	Shares		Weighted-average price per share
Treasury stock balance at January 31, 2019	22,305,464		$	46.53
Shares of treasury stock repurchased under share repurchase program	1,697,609		98.37
Shares of treasury stock reissued for equity incentive plans	(205,036	)
Treasury stock balance at October 31, 2019	23,798,037		$	50.22

The Company’s common share issuance activity for the three months ended April 30, 2020 is summarized as follows:

As of October 31, 2019, the Company had $226.0 million available for future repurchases of its common stock under the authorized share repurchase program. Pursuant to the terms of the Merger Agreement with the affiliates of Apollo Funds, the Company suspended its share repurchase program as of November 13, 2019.



	Shares		Weighted-average price per share
Treasury stock balance at January 31, 2020	23,819,230		$	50.30
Shares of treasury stock reissued for equity incentive plans	(232,030	)
Treasury stock balance at April 30, 2020	23,587,200		$	50.30

Accumulated Other Comprehensive Income

The following tables summarize the change in the components of AOCI for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019:

	Foreign currency translation adjustment, net of taxes			Unrealized gains (losses) on cash flow hedges, net of taxes			Total
(in thousands)
Balance at July 31, 2019	$	(28,559	)	$	58		$	(28,501	)
Balance at January 31, 2020	$	1,449		$	15		$	1,464
Other comprehensive income (loss) before reclassification	33(56,~~255~~547		)	75402			33(56,~~330~~145		)
Reclassification of (gain) loss from AOCI into income	—			(55417		)	(55417		)
Balance at October 31, 2019	$	4,696		$	78		$	4,774
Balance at April 30, 2020	$	(55,098	)	$	—		$	(55,098	)

	Foreign currency translation adjustment, net of taxes			Unrealized gains (losses) on cash flow hedges, net of taxes			Total
(in thousands)
Balance at July 31, 2018	$	97,985		$	—		$	97,985
Balance at January 31, 2019	$	43,786		$	—		$	43,786
Other comprehensive income (loss) before reclassification	(9140,~~430~~523		)	—(575		)	(9141,~~430~~098		)
Reclassification of (gain) loss from AOCI into income	—			—364			—364
Balance at October 31, 2018	$	6,555		$	—		$	6,555
Balance at April 30, 2019	$	3,263		$	(211	)	$	3,052

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	Foreign currency translation adjustment, net of taxes			Unrealized gains (losses) on cash flow hedges, net of taxes			Total
(in thousands)
Balance at January 31, 2019	$	43,786		$	—		$	43,786
Other comprehensive income (loss) before reclassification	(39,090		)	220			(38,870		)
Reclassification of (gain) loss from AOCI into income	—			(142		)	(142		)
Balance at October 31, 2019	$	4,696		$	78		$	4,774

NOTE 10 — COMMITMENTS AND CONTINGENCIES

	Foreign currency translation adjustment, net of taxes			Unrealized gains (losses) on cash flow hedges, net of taxes		Total
(in thousands)
Balance at January 31, 2018	$	288,292		$	—	$	288,292
Other comprehensive income (loss) before reclassification	(276,664		)	—		(276,664		)
Reclassification of (gain) loss from AOCI into income	(5,073		)	—		(5,073		)
Balance at October 31, 2018	$	6,555		$	—	$	6,555

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NOTE 11 — LEASES

At contract inception, the Company determines if an arrangement contains a lease and whether that lease meets the classification criteria of a finance or operating lease. The Company has operating leases for certain logistics centers, office facilities, vehicles and equipment. The Company’s finance leases are not material. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. Certain of the Company’s operating leases contain options to extend the lease, which are included in the lease term when it is reasonably certain that the option will be exercised. Certain of the Company's operating leases contain options to terminate the lease; periods after the date of the termination option are included in the lease term when it is reasonably certain that the Company will not exercise the option to terminate the lease. The Company has elected to not separately recognize the lease and non-lease components of a contract for all operating leases.

Operating leases are included in “other assets, net”, “accrued expenses and other liabilities” (for the current portion of lease liabilities) and “other long-term liabilities” on the Consolidated Balance Sheet. These assets and liabilities are recognized at the lease commencement date based on the present value of remaining lease payments over the lease term using the Company's incremental borrowing rate. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is recognized in “selling, general and administrative expenses” on the Consolidated Statement of Income. Variable lease costs are recognized as incurred.

Fiscal year:
(in thousands)
2020 (remaining 3 months)	$	16,914
2021	65,146
2022	46,204
2023	36,642
2024	27,393
Thereafter	66,699
Total payments	$	258,998
Less amount of lease payments representing interest	(32,395		)
Total present value of lease payments	$	226,603

Rental expense for all operating leases totaled $21.6 million and $65.0 million during the three and nine months ended October 31, 2019, respectively. These costs primarily relate to fixed costs for long-term operating leases, but also include immaterial amounts for variable lease costs and short-term operating leases.

Operating leases	Balance sheet location	October 31, 2019
(in thousands)
Operating lease right-of-use assets	Other assets, net	$	227,875
Current operating lease liabilities	Accrued expenses and other liabilities	64,547
Non-current operating lease liabilities	Other long-term liabilities	162,056

Cash flow information	Nine months ended October 31, 2019
(in thousands)
Cash paid for amounts included in the measurement of lease liabilities:	$	52,121
Non-cash right-of-use assets obtained in exchange for lease liabilities:	58,691

Operating lease term and discount rate	Operating Leases
Weighted-average remaining lease term	5.7 years
Weighted-average discount rate	4.8	%

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NOTE 12 — COMMITMENTS AND CONTINGENCIES

Guarantees

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.

Contingencies

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 related to the CIDE tax, including interest, was approximately $1914.23 million at ~~October~~April 3130, ~~2019~~2020. 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. Accordingly, the Company has not recorded an accrual for the total estimated CIDE tax exposure. 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.

InThe ~~June 2013, the Company was subject to a document seizure by the~~ French Autorité de la Concurrence ("“Competition Authority"”) ~~following~~began ~~allegations~~in of2013 ~~anticompetitive~~an ~~distribution~~investigation ~~practices~~into in the French market for ~~the~~certain products of ~~one~~Apple, ofInc., for which the Company's ~~suppliers~~is a distributor. In ~~October~~March ~~2018~~2020, the Competition Authority ~~delivered~~imposed afines ~~notification~~on ~~des~~the ~~griefs~~Company, ~~(statement~~on ofanother ~~objections)~~distributor, toand ~~the~~on ~~Company~~Apple, ~~stating~~finding that the ~~Competition~~Company ~~Authority~~entered isinto ~~pursuing~~an ~~charges~~anticompetitive ~~against~~agreement with Apple regarding volume allocations of Apple products. The fine imposed on the Company inwas ~~this~~€76 ~~matter~~million. The InCompany ~~July~~has ~~2019,~~vigorously contested the arguments of the Competition Authority, ~~delivered~~and athe ~~rapport~~Company ~~(report),~~intends ~~which~~to isappeal aits ~~further~~determination ~~step~~to ~~towards~~the ~~proposing~~French ~~charges~~courts, inseeking ~~this~~to ~~matter~~set aside or reduce the fine. The ~~Competition~~Company ~~Authority~~believes it has ~~taken~~strong ~~similar~~arguments ~~action~~on ~~against~~appeal, but the Company's ~~supplier~~is ~~and~~unable ~~another~~to ofpredict the ~~supplier's~~outcome, ~~distributors. The~~among ~~administrative~~other ~~proceedings~~reasons ~~could~~because ~~result~~of in the ~~imposition~~novelty of athe ~~fine~~case ~~against~~and the ~~Company,~~unprecedented ~~which~~size ~~could~~of bethe ~~material~~fines inimposed ~~amount.~~for Ifthis akind ~~fine~~of ~~is imposed~~practice, ~~the~~or ~~Company~~how ~~would~~long beit ~~entitled~~will take to ~~appeal~~achieve ~~the~~a ~~administrative~~final ~~determination~~resolution. toUnder ~~the~~ French ~~courts~~law, ~~although~~however, the pendency of the Company’s ~~would~~appeal bedoes ~~required~~not suspend the obligation to pay the fine, ~~before~~and ~~doing~~the ~~so.~~Company Atexpects ~~this~~that ~~time,~~it will be required to pay the ~~Company~~full ~~cannot~~fine ~~assess~~assessed by the ~~likelihood~~Competition ~~that~~Authority ~~these~~before ~~proceedings~~the ~~will~~Company’s beappeal is finally ~~resolved~~determined. At ~~against~~this ~~Tech Data~~time, ~~and~~ the Company cannot reasonably estimate the amount of ~~fine~~loss ~~that~~in ~~may~~these beproceedings ~~imposed~~and therefore has not accrued for any loss.

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.

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NOTE 1311 — SEGMENT INFORMATION

The Company 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 three geographic segments: the Americas, Europe and Asia-Pacific. The Company does not consider stock-based compensation expense in assessing the performance of its operating segments, and therefore the Company excludes stock-based compensation expense from segment information. The accounting policies of the segments are the same as those described in Note 1 – Business and Summary of Significant Accounting Policies.

	Three months ended October 31,						Nine months ended October 31,
	2019			2018			2019			2018
Net sales:
Americas (1)	$	4,202,320		$	4,137,852		$	12,308,249		$	11,799,389
Europe	4,622,270			4,920,156			13,371,397			14,130,985
Asia-Pacific	294,354			282,021			937,966			844,075
Total	$	9,118,944		$	9,340,029		$	26,617,612		$	26,774,449
Operating income:
Americas (2), (3), (4)	$	82,420		$	112,399		$	244,138		$	261,671
Europe (5), (6), (7)	66,536			39,889			140,605			86,292
Asia-Pacific	279			2,739			3,223			3,480
Stock-based compensation expense	(7,347		)	(8,139		)	(23,707		)	(23,694		)
Total	$	141,888		$	146,888		$	364,259		$	327,749
Depreciation and amortization:
Americas	$	24,163		$	23,394		$	71,602		$	70,244
Europe	11,763			13,679			35,294			42,686
Asia-Pacific	2,041			2,169			5,830			6,711
Total	$	37,967		$	39,242		$	112,726		$	119,641
Capital expenditures:
Americas	$	11,191		$	11,493		$	29,989		$	24,105
Europe	6,373			4,742			19,158			13,821
Asia-Pacific	576			1,195			2,503			2,227
Total	$	18,140		$	17,430		$	51,650		$	40,153

The Company does not consider stock-based compensation expense in assessing the performance of its operating segments, and therefore the Company excludes stock-based compensation expense from segment information. The accounting policies of the segments are the same as those described in Note 1 – Business and Summary of Significant Accounting Policies.

Financial information by geographic segment is as follows (in thousands):



	Three months ended April 30,
	2020			2019
Net sales:
Americas ⁽¹⁾	$	3,944,760		$	3,789,198
Europe	3,971,130			4,309,500
Asia-Pacific	259,284			307,726
Total	$	8,175,174		$	8,406,424

Operating income (loss):
Americas ⁽²⁾	$	49,783		$	68,633
Europe	45,884			36,420
Asia-Pacific	(3,245		)	876
Stock-based compensation expense	(6,307		)	(8,305		)
Total	$	86,115		$	97,624

Depreciation and amortization:
Americas	$	28,213		$	23,649
Europe	11,992			11,510
Asia-Pacific	1,786			2,098
Total	$	41,991		$	37,257

Capital expenditures:
Americas	$	9,385		$	8,272
Europe	8,880			6,127
Asia-Pacific	1,275			880
Total	$	19,540		$	15,279

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As of:	~~October~~April 3130, ~~2019~~2020		January 31, ~~2019~~2020
Identifiable assets:
Americas	$	5,~~670~~494,~~555~~992	$	56,~~402~~147,~~316~~771
Europe	6,~~420~~391,~~274~~331		6,~~970~~518,~~822~~761
Asia-Pacific	~~603~~490,~~907~~285		~~613~~602,~~414~~077
Total	$	12,~~694~~376,~~736~~608	$	1213,~~986~~268,~~552~~609
Long-lived assets:
Americas (1)	$	~~219~~226,~~300~~234	$	~~217~~231,~~863~~401
Europe	5150,~~051~~124		5251,~~162~~331
Asia-Pacific	4,~~662~~378		4,~~892~~418
Total	$	~~275~~280,~~013~~736	$	~~274~~287,~~917~~150
Goodwill & acquisition-related intangible assets, net:
Americas	$	1,~~045~~321,~~627~~621	$	1,~~083~~339,~~699~~375
Europe	~~545~~517,~~625~~584		~~575~~541,~~776~~102
Asia-Pacific	5551,~~495~~159		6054,~~154~~090
Total	$	1,~~646~~890,~~747~~364	$	1,~~719~~934,~~629~~567

(1) Net sales in the United States represented 9189% ~~of the total Americas' net sales for both the three months ended October 31, 2019~~ and ~~2018 and 90~~88%, respectively, of the total Americas' net sales for ~~both~~ the ~~nine~~three months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019. Total long-lived assets in the United States represented 97% and 96%, respectively, of the Americas' total long-lived assets at ~~both~~April ~~October 31~~30, ~~2019~~2020 and January 31, ~~2019~~2020.

(2) Operating income in the Americas for the three months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019 includes acquisition, integration and restructuring expenses of $317.~~5 million and $6.~~0 million, ~~respectively. Operating income in the Americas for the nine months ended October 31, 2019~~ and ~~2018 includes acquisition, integration and restructuring expenses of~~ $72.89 million ~~and $19.0 million~~, respectively (see further discussion in Note 34 – Acquisition, Integration and Restructuring Expenses).

(3) Operating income in the Americas includes a gain related to legal settlements and other, net, of $7.2 million for the three months ended October 31, 2018. Operating income in the Americas includes a gain related to legal settlements and other, net, of $0.3 million and $15.4 million for the nine months ended October 31, 2019 and 2018, respectively (see further discussion in Note 1 – Business and Summary of Significant Accounting Policies).23

(4) Operating income in the Americas for the three and nine months ended October 31, 2018 includes a benefit of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible.

(5) Operating income in Europe for the three months ended October 31, 2019 and 2018 includes acquisition, integration and restructuring expenses of $1.0 million and $13.1 million, respectively. Operating income in Europe for the nine months ended October 31, 2019 and 2018 includes acquisition, integration and restructuring expenses of $7.2 million and $44.4 million, respectively.

(6) Operating income in Europe for the three and nine months ended October 31, 2018 includes expenses of $5.5 million and $6.5 million, respectively, related to the recognition of certain tax indemnification liabilities (see further discussion in Note 6 – Income Taxes).

(7) Operating income in Europe for both the three and nine months ended October 31, 2019 includes a gain on disposal of a subsidiary of $1.4 million. Operating income in Europe for the nine months ended October 31, 2018 includes a gain on disposal of a subsidiary of $6.7 million (see further discussion in Note 4 – Gain on Disposal of Subsidiary).

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~~NOTE~~ITEM 2. Management’s 14Discussion -and ~~SUBSEQUENT~~Analysis ~~EVENTS~~of Financial Condition and Results of Operations

On November 25, 2019, the Company completed the acquisition of DLT Solutions ("DLT"), a premier software and cloud solutions aggregator focused on the U.S. public sector. The Company acquired all of the outstanding shares of DLT for a purchase price of approximately $205 million in cash, subject to certain working capital and other adjustments. The DLT acquisition enables Tech Data to proactively develop opportunities, accelerate growth and simplify complexity for its channel partners that are serving the U.S. public sector space.

Since the closing of this acquisition occurred subsequent to the end of the Company's third quarter, the allocation of the purchase price to the underlying assets acquired and liabilities assumed is subject to a formal valuation process, which has not yet been completed. The major classes of assets and liabilities acquired include accounts receivable, accounts payable, intangible assets and goodwill. The Company's fourth quarter fiscal 2020 operating results will include the results from DLT following the date of acquisition. Based on the timing of the acquisition and lack of available information, the Company has determined it to be impracticable to disclose a preliminary purchase price allocation at this time.

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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 our future financial performance, our anticipated growth and trends in our businesses, the impact of the COVID-19 pandemic 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 I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended January 31, ~~2019~~2020 for further information with respect to important risks and other factors that could cause actual results to differ materially from those in the forward-looking statements. We undertake no obligation to revise or update publicly any forward-looking statements for any reason.



OVERVIEW

We are one of the world’s largest IT distribution and solutions companies. We serve a critical role in the center of the IT ecosystem, bringing products from the world’s leading technology vendors to market, as well as helping our customers create solutions best suited to maximize business outcomes for their end-user customers. We distribute and market products from many of the world’s leading technology hardware manufacturers and software publishers, as well as suppliers of next-generation technologies and delivery models such as converged and hyperconverged infrastructure, the cloud, security, analytics/Internet of things ("IoT"), and services. Our customers include value-added resellers, direct marketers, retailers, corporate resellers and managed service providers who support the diverse technology needs of end users.

Some of our key financial objectives are the following:


•	Growing faster than the industry in select markets by gaining profitable market share in key geographies within select product categories with leading vendors.


•	Improving operating income by growing gross profit faster than operating costs.


•	Delivering a return on invested capital above our weighted average cost of capital.

To strengthen our role at the center of the IT ecosystem well into the future and achieve our financial objectives, we are moving to higher value, focused on the following strategic priorities:


•	Invest in next-generation technologies and delivery models such as the cloud, security, analytics/IoT, and services.


•	Strengthen our end-to-end portfolio of products, services and solutions.


•	Transform our company digitally through greater automation, which we believe will enhance the customer experience, improve productivity and reduce costs.

• Optimize our global footprint by enhancing the operational efficiency and effectiveness of our businesses around the world. We are focused on enhancing the long-term profitability of our business and delivering a better return on invested capital through targeted actions to remove business with lower returns, which we refer to as portfolio optimization. Portfolio optimization actions allow working capital to be re-deployed in our strategic focus areas, however, those actions may have a short-term impact on revenues and gross profit.

On November 25, 2019, we completed the acquisition of DLT Solutions ("DLT"), a premier software and cloud solutions aggregator focused on the U.S. public sector. We acquired all of the outstanding shares of DLT for a preliminary purchase price of approximately $210 million in cash, subject to certain working capital and other adjustments. The DLT acquisition enables us to proactively develop opportunities, accelerate growth and simplify complexity for our channel partners that are serving the U.S. public sector space.

Planned Acquisition

On November 12, 2019, we entered into an Agreement and Plan of Merger, as subsequently amended on November 27, 2019 (the ''Merger Agreement''), with the affiliates of certain funds (the “Apollo Funds”), managed by affiliates of Apollo Global Management, LLC (“Apollo”), a leading global alternative investment manager. Pursuant to the Merger Agreement, the affiliates of Apollo Funds will acquire all the outstanding shares of the Company’s common stock ~~for $145 per share in cash~~ (~~the~~other ~~“Merger”).~~than ~~The~~shares ~~completion~~held ofby the ~~Merger~~Company isas ~~subject~~treasury tostock ~~customary~~or ~~closing~~held ~~conditions, including the adoption of the Merger Agreement~~ by acertain ~~majority~~affiliates of the ~~holders~~Apollo ofFunds) ~~the~~for ~~outstanding~~$145 ~~shares~~per ofshare ~~the~~in ~~Company’s~~cash ~~common stock,~~ (the ~~expiration or early termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, certain foreign regulatory approvals and other customary closing conditions~~“Merger”).

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On February 12, 2020, we held a special meeting of shareholders. At such meeting, the Merger Agreement was approved and adopted by a majority of the outstanding shares of the Company’s common stock entitled to vote thereon. The waiting period with respect to the premerger notification and report form filed by the parties under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, has expired. The Company has received all regulatory approvals necessary to complete the Merger, except for the approval of the Australian Foreign Investment Review Board (“AFIRB”), which has the matter under consideration. The Company and Apollo are still targeting a closing in the first half of calendar year 2020, although this timing may shift based on the timeline for receipt of Australian regulatory approval. The Company and Apollo expect to proceed with closing the transaction promptly after the final approval from the AFIRB is received, taking into account the timing requirements of the Merger Agreement, including the Marketing Period (as defined in the Merger Agreement).

Impact of the COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of the 2019 novel coronavirus (“COVID-19”) a pandemic. The global impact of the COVID-19 pandemic has had a negative effect on the global economy, disrupting the financial markets and creating increasing volatility, impacting customer demand and impeding global supply chains. In response to COVID-19, the company continues to operate with more than 95% of our global workforce participating in work-from-home arrangements and substantially all of our logistics centers are open and functioning with strict health and safety guidelines in place. We cannot at this time accurately predict what effects these conditions will have on our operations and financial condition, including due to uncertainties relating to the ultimate geographic spread of the virus, the severity and duration of the pandemic, the effect on our customers and customer demand and the length of the restrictions and closures imposed by various governments; however, we expect to see a negative impact to our revenue and earnings from the COVID-19 pandemic in the second quarter, which may continue into the third quarter or beyond. Accordingly, the operating results and financial condition discussed herein may not be indicative of future operating results and trends.

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NON-GAAP FINANCIAL INFORMATION

In addition to disclosing financial results that are determined in accordance with generally accepted accounting principles in the U.S. (“GAAP”), the Company also discloses certain non-GAAP financial information. Certain of these measures are presented as adjusted for the impact of changes in foreign currencies (referred to as “impact of changes in foreign currencies”). Removing the impact of the changes in foreign currencies provides a framework for assessing our financial performance as compared to prior periods. The impact of changes in foreign currencies is calculated by using the exchange rates from the prior year comparable period applied to the results of operations for the current period. The non-GAAP financial measures presented in this document include:


•	Net sales, as adjusted, which is defined as net sales adjusted for the impact of changes in foreign currencies;


•	Gross profit, as adjusted, which is defined as gross profit as adjusted for the impact of changes in foreign currencies;


•	Selling, general and administrative expenses (“SG&A”), as adjusted, which is defined as SG&A as adjusted for the impact of changes in foreign currencies;

• Non-GAAP operating income, which is defined as operating income as adjusted to exclude acquisition, integration and restructuring expenses, legal settlements and other, net, acquisition-related intangible assets amortization expense, ~~gain on disposal of subsidiary~~ and tax indemnifications;

• Non-GAAP net income, which is defined as net income as adjusted to exclude acquisition, integration and restructuring expenses, legal settlements and other, net, acquisition-related intangible assets amortization expense, ~~gain on disposal of subsidiary,~~ tax indemnifications, ~~value added tax assessments~~ and ~~related interest expense,~~ the income tax effects of these adjustments~~, the reversal of deferred tax valuation allowances and the impact of the U.S. Tax Reform~~;

• Non-GAAP earnings per share-diluted, which is defined as earnings per share-diluted as adjusted to exclude the per share impact of acquisition, integration and restructuring expenses, legal settlements and other, net, acquisition-related intangible assets amortization expense, ~~gain on disposal of subsidiary,~~ tax indemnifications, ~~value added tax assessments~~ and ~~related interest expense,~~ the income tax effects of these adjustments~~, the reversal of deferred tax valuation allowances and the impact of the U~~.~~S. Tax Reform.~~

Management believes that providing this additional information is useful to the reader to assess and understand our financial performance as compared with results from previous periods. Management also uses these non-GAAP measures to evaluate performance against certain operational goals and under certain of our performance-based compensation plans. However, analysis of results on a non-GAAP basis should be used as a complement to, and in conjunction with, data presented in accordance with GAAP. Additionally, because these non-GAAP measures are not calculated in accordance with GAAP, they may not necessarily be comparable to similarly titled measures reported by other companies.

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RESULTS OF OPERATIONS

The following table sets forth our Consolidated Statement of Income as a percentage of net sales:

	Three months ended October 31,							Nine months ended October 31,
	Three months ended April 30,
	2019				2018			2019			2018
	2020			2019
Net sales	100.00	%	%	100.00	~~100.00~~	%	%	~~100.00~~		%	~~100.00~~		%
Cost of products sold	93.8550			93.94	~~94.04~~			~~93.87~~			~~94.00~~
Gross profit	6.1550			6.06	~~5.96~~			~~6.13~~			~~6.00~~
Operating expenses:
Selling, general and administrative expenses	45.5523			4.82	~~4.25~~			~~4.71~~			~~4.61~~
Acquisition, integration and restructuring expenses	0.0522			0.08	~~0.22~~			~~0.06~~			~~0.25~~
Legal settlements and other, net	—				(0.08	)		—			(0.06	)
	5.45			4.90
Gain on disposal of subsidiary	(0.01	)			—			(0.01	)		(0.02	)
Operating income	1.05			1.16
	4.59				4.39			4.76			4.78
Interest expense	0.21			0.31
Operating income	1.56				1.57			1.37			1.22
Other expense (income), net	0.10			(0.01	)
Interest expense	0.23				0.27			0.26			0.29
Income before income taxes	0.74			0.86
Other expense, net	0.05				0.05			0.02			0.03
Provision for income taxes	0.15			0.20
Income before income taxes	1.28				1.25			1.09			0.90
Net income	0.59	%		0.66		%
Provision for income taxes	0.28				0.03			0.24			0.06
Net income	1.00		%		1.22		%	0.85		%	0.84		%

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NET SALES

~~QUARTERLY~~The ~~RESULTS~~following table summarizes our net sales and change in net sales by geographic region for the three months ended April 30, 2020 and 2019:

The following table summarizes our net sales and change in net sales by geographic region for the three months ended October 31, 2019 and 2018:



	Three months ended April 30,				Change
	2020		2019		$			%
(in millions)
Consolidated net sales, as reported	$	8,175	$	8,406	$	(231	)	(2.7	)%
Impact of changes in foreign currencies	175		—		175
Consolidated net sales, as adjusted	$	8,350	$	8,406	$	(56	)	(0.7	)%

Americas net sales, as reported	$	3,945	$	3,789	$	156		4.1	%
Impact of changes in foreign currencies	25		—		25
Americas net sales, as adjusted	$	3,970	$	3,789	$	181		4.8	%

Europe net sales, as reported	$	3,971	$	4,309	$	(338	)	(7.8	)%
Impact of changes in foreign currencies	138		—		138
Europe net sales, as adjusted	$	4,109	$	4,309	$	(200	)	(4.6	)%

Asia-Pacific net sales, as reported	$	259	$	308	$	(49	)	(15.9	)%
Impact of changes in foreign currencies	12		—		12
Asia-Pacific net sales, as adjusted	$	271	$	308	$	(37	)	(12.0	)%

	Three months ended October 31,					Change
	2019			2018		$			%
(in millions)
Consolidated net sales, as reported	$	9,119		$	9,340	$	(221	)	(2.4	)%
Impact of changes in foreign currencies	228			—		228
Consolidated net sales, as adjusted	$	9,347		$	9,340	$	7		0.1	%
Americas net sales, as reported	$	4,202		$	4,138	$	64		1.5	%
Impact of changes in foreign currencies	14			—		14
Americas net sales, as adjusted	$	4,216		$	4,138	$	78		1.9	%
Europe net sales, as reported	$	4,623		$	4,920	$	(297	)	(6.0	)%
Impact of changes in foreign currencies	215			—		215
Europe net sales, as adjusted	$	4,838		$	4,920	$	(82	)	(1.7	)%
Asia-Pacific net sales, as reported	$	294		$	282	$	12		4.3	%
Impact of changes in foreign currencies	(1		)	—		(1		)
Asia-Pacific net sales, as adjusted	$	293		$	282	$	11		3.9	%

QUARTERLY COMMENTARY

AMERICAS

• The increase in Americas net sales, as adjusted, of $78181 million is primarily due to growth in ~~software~~personal computer systems, including increased customer demand related to remote workforce enablement as a result of COVID-19. Net sales also increased due to the acquisition of DLT in November 2019. The increase in net sales was partially offset by a decrease in data center products, including impacts due to COVID-19, coupled with portfolio optimization actions which reduced total Americas net sales by approximately 2 percent.

EUROPE

• The decrease in Europe net sales, as adjusted, of $82200 million is primarily due to portfolio optimization actions which reduced total Europe net sales by approximately 3 percent, a decline in mobility products, as well as a decrease in data center products, including impacts due to COVID-19. The decrease in net sales was partially offset by growth in ~~software~~personal computer systems, including increased customer demand related to remote workforce enablement as a result of COVID-19. The impact of changes in foreign currencies is primarily due to the weakening of the euro against the U.S. dollar.

ASIA-PACIFIC

• The ~~increase~~decrease in Asia-Pacific net sales, as adjusted, of $1137 million is primarily due to ~~growth~~a decrease in data center products, including portfolio optimization actions which reduced total Asia-Pacific net sales by approximately 12 percent and ~~software~~impacts due to COVID-19.

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YEAR TO DATE RESULTS

The following table summarizes our net sales and change in net sales by geographic region for the nine months ended October 31, 2019 and 2018:

	Nine months ended October 31,				Change
	2019		2018		$			%
(in millions)
Consolidated net sales, as reported	$	26,618	$	26,774	$	(156	)	(0.6	)%
Impact of changes in foreign currencies	864		—		864
Consolidated net sales, as adjusted	$	27,482	$	26,774	$	708		2.6	%
Americas net sales, as reported	$	12,308	$	11,799	$	509		4.3	%
Impact of changes in foreign currencies	55		—		55
Americas net sales, as adjusted	$	12,363	$	11,799	$	564		4.8	%
Europe net sales, as reported	$	13,372	$	14,131	$	(759	)	(5.4	)%
Impact of changes in foreign currencies	791		—		791
Europe net sales, as adjusted	$	14,163	$	14,131	$	32		0.2	%
Asia-Pacific net sales, as reported	$	938	$	844	$	94		11.1	%
Impact of changes in foreign currencies	18		—		18
Asia-Pacific net sales, as adjusted	$	956	$	844	$	112		13.3	%

YEAR TO DATE COMMENTARY

AMERICAS

• The increase in Americas net sales, as adjusted, of $564 million is primarily due to growth in software, data center products and personal computer systems.

EUROPE

• The increase in Europe net sales, as adjusted, of $32 million is primarily due to growth in software. The impact of changes in foreign currencies is primarily due to the weakening of the euro against the U.S. dollar.

ASIA-PACIFIC

• The increase in Asia-Pacific net sales, as adjusted, of $112 million is primarily due to growth in data center products and software.

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MAJOR VENDORS

The following table provides a comparison of net sales generated from products purchased from vendors that exceeded 10% of our consolidated net sales for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019 (as a percent of consolidated net sales):

	Three months ended October 31,		Nine months ended October 31,
	Three months ended April 30,
	2019	2018	2019	2018
	2020	2019
Apple, Inc.	1714%	1713%	~~15%~~	~~15%~~
Cisco Systems, Inc.	1112%	1011%	~~11%~~	~~11%~~
HP Inc.	1011%	1110%	~~11%~~	~~11%~~

There were no customers that exceeded 10% of our consolidated net sales for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019.



GROSS PROFIT

The following tables provide a comparison of our gross profit and gross profit as a percentage of net sales for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019:

QUARTERLY RESULTS



	Three months ended April 30,				Change
	2020		2019		$		%
(in millions)
Gross profit, as reported	$	531.7	$	509.4	$	22.3	4.4	%
Impact of changes in foreign currencies	11.6		—		11.6
Gross profit, as adjusted	$	543.3	$	509.4	$	33.9	6.7	%

	Three months ended October 31,				Change
	2019		2018		$		%
(in millions)
Gross profit, as reported	$	560.4	$	556.6	$	3.8	0.7	%
Impact of changes in foreign currencies	13.3		—		13.3
Gross profit, as adjusted	$	573.7	$	556.6	$	17.1	3.1	%

The increase in gross profit, as adjusted, of $33.9 million and gross profit as a percentage of net sales, as reported, of 44 basis points is primarily due to lower inventory losses and the impact of the acquisition of DLT.

~~YEAR TO DATE RESULTS~~29

	Nine months ended October 31,				Change
	2019		2018		$		%
(in millions)
Gross profit, as reported	$	1,631.4	$	1,606.8	$	24.6	1.5	%
Impact of changes in foreign currencies	50.6		—		50.6
Gross profit, as adjusted	$	1,682.0	$	1,606.8	$	75.2	4.7	%

The quarter to date increase in gross profit, as adjusted, of $17.1 million is primarily due to the mix of products sold. The year to date increase in gross profit, as adjusted of $75.2 million is primarily due to an increase in net sales volume and the mix of products sold. The quarter to date and year to date increase in gross profit as a percentage of net sales, as reported, of 19 basis points and 13 basis points, respectively, is primarily due to the mix of products sold.

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OPERATING EXPENSES

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

The following ~~tables~~table ~~provide~~provides a comparison of our selling, general and administrative expenses for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019:

	Three months ended October 31,						Change
	Three months ended April 30,						Change
	2019			2018			$		%
	2020			2019			$		%
(in millions)
SG&A, as reported	$	~~415~~427.29		$	~~396~~405.75		$	1822.54	45.75	%
Impact of changes in foreign currencies	109.48			—			109.48
SG&A, as adjusted	$	~~425~~437.67		$	~~396~~405.75		$	2832.92	7.39	%
SG&A as a percentage of net sales, as reported	45.5523		%	4.2582		%			3041 bps

	Nine months ended October 31,						Change
	2019			2018			$		%
(in millions)
SG&A, as reported	$	1,252.8		$	1,234.4		$	18.4	1.5	%
Impact of changes in foreign currencies	42.0			—			42.0
SG&A, as adjusted	$	1,294.8		$	1,234.4		$	60.4	4.9	%
SG&A as a percentage of net sales, as reported	4.71		%	4.61		%			10 bps

The increase in SG&A, as adjusted, and SG&A as a percentage of net sales is primarily due to increased payroll costs, including the impact of the acquisition of DLT, and higher credit costs.

The quarter and year to date increase in SG&A, as adjusted, and SG&A as a percentage of net sales is primarily due to a benefit in the prior year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible, as well as increased investments in our strategic priorities. The increase in SG&A is partially offset by savings from our Global Business Optimization Program and an expense of $5.5 million in the prior year to record an indemnification liability to Avnet due to the resolution of a pre-acquisition tax matter. The expense recorded in SG&A in the prior year related to an indemnification liability is offset by a benefit recorded in the provision for income taxes (see Note 6 of Notes to Consolidated Financial Statements for further discussion).

ACQUISITION, INTEGRATION AND RESTRUCTURING EXPENSES

Acquisition, integration and restructuring expenses are primarily comprised of costs related to the ~~fiscal~~Global ~~2018~~Business ~~acquisition~~Optimization ofProgram ~~Avnet,~~which ~~Inc.'s~~was ~~("Avnet")~~initiated ~~Technology~~in ~~Solutions~~fiscal ~~business~~2019, ~~("TS")~~the ~~and~~proposed ~~restructuring~~Merger ~~costs~~and ~~related to~~ the ~~Global~~fiscal ~~Business~~2020 ~~Optimization~~acquisition ~~Program~~of ~~which was initiated in fiscal 2019~~DLT.

Acquisitions

On February 27, 2017, we acquired all of the outstanding shares of TS for an aggregate purchase price of approximately $2.8 billion, comprised of approximately $2.5 billion in cash and 2,785,402 shares of our common stock. Acquisition, integration and restructuring expenses related to the acquisition of TS are primarily comprised of restructuring costs, Information Technology ("IT") related costs, professional services, transaction related costs and other costs. Restructuring costs are comprised of severance and facility exit costs. IT related costs consist primarily of data center and non-ERP application migration and integration costs, as well as, IT related professional services. Professional services are primarily comprised of integration related activities, including professional fees for project management, accounting, tax and other consulting services. Transaction related costs primarily consist of investment banking fees, legal expenses and due diligence costs incurred in connection with the completion of the transaction. Other costs includes payroll related costs including retention, stock compensation, relocation and travel expenses, incurred as part of the integration of TS. For the nine months ended October 31, 2018, other costs are partially offset by a gain of $9.6 million related to the final working capital adjustment for the acquisition of TS as part of a settlement agreement with Avnet.

We incurred no acquisition, integration and restructuring expenses related to the acquisition of TS during the three and nine months ended October 31, 2019 and do not expect to incur any additional costs in future periods. Acquisition, integration and restructuring expenses for the three and nine months ended October 31, 2018 related to the acquisition of TS are comprised of the following:

	Three months ended October 31,		Nine months ended October 31,
	2018		2018
(in millions)
Restructuring costs	$	1.6	$	16.3
IT related costs	2.1		10.6
Professional services	0.8		5.2
Transaction related costs	0.3		1.4
Other costs	2.4		1.8
Total	$	7.2	$	35.3

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Additionally, we incurred $1.8 million of transaction related costs during the three and nine months ended October 31, 2019 related to the proposed Merger with the affiliates of Apollo Funds and the acquisition of DLT Solutions (see Note 14 of Notes to Consolidated Financial Statements for further discussion).

Global Business Optimization Program

In fiscal 2019, our Board of Directors approved the Global Business Optimization Program (the “GBO Program”) to increase investment in our strategic priorities and implement operational initiatives to drive productivity and enhance profitability. Under the GBO Program, we expect to incur cumulative cash charges through fiscal 2021 of approximately $70 million to $80 million, primarily comprised of $40 million to $45 million of charges in Europe and $30 million to $35 million of charges in the Americas. The cash charges primarily consist of severance costs, and also include professional services and other costs. The GBO Program is expected to result in annual cost savings of $70 million to $80 million by the end of fiscal 2021, of which approximately half is expected to be reinvested to accelerate our strategic priorities.

Restructuring expenses related to the GBO Program are comprised of the following:

	Three months ended October 31,				Nine months ended October 31,				Cumulative Amounts Incurred to Date
	Three months ended April 30,				Cumulative Amounts Incurred to Date
	2019		2018		2019		2018
	2020		2019
(in thousands)
(in millions)
Severance costs	$	1.94	$	84.71	$	939.28	$	~~17.6~~	$	~~35.6~~
Professional services and other costs	1.0.3		42.41		521.18		~~13.9~~		~~21.3~~
Total	$	21.97	$	136.12	$	1461.36	$	~~31.5~~	$	~~56.9~~

Restructuring expenses related to the GBO Program by segment are as follows:

	Three months ended October 31,					Nine months ended October 31,
	Three months ended April 30,					Cumulative Amounts Incurred to Date
	2019			2018		2019		2018
	2020			2019
(in thousands)
(in millions)
Americas	$	1.90		$	2.59	$	621.20	$	~~9.8~~
Europe	1.(0.2		)	103.10		737.2		~~21.0~~
Asia-Pacific	—0.9			0.53		03.94		~~0.7~~
Total	$	21.97		$	136.12	$	1461.36	$	~~31.5~~

~~LEGAL~~Pending ~~SETTLEMENTS~~Merger ~~AND~~and ~~OTHER,~~DLT ~~NET~~Acquisition

WeDuring ~~have~~the ~~been~~three amonths ~~claimant~~ended inApril ~~proceedings~~30, ~~seeking~~2020, ~~damages~~we ~~from~~incurred ~~certain~~professional ~~manufacturers~~services ~~of LCD flat panel~~ and ~~cathode~~other ~~ray~~transaction ~~tube~~related ~~displays,~~costs ~~as well as reimbursement from insurance providers~~ of ~~certain~~$15.1 ~~costs~~million ~~associated~~related ~~with~~to the ~~restatement~~proposed ofMerger ~~our consolidated financial statements~~ and ~~other~~$0.9 ~~financial~~million ~~information~~related ~~from~~to ~~fiscal~~the ~~2009~~acquisition toof ~~2013~~DLT. WeThe ~~reached~~costs ~~settlement~~are ~~agreements~~primarily ~~during~~related ~~the~~to ~~periods~~professional ~~presented~~services ~~and~~fees ~~have~~for ~~recorded these amounts~~operational, ~~net of attorney fees and expenses~~tax, ~~in “~~legal ~~settlements~~ and other, ~~net”~~consulting ~~in the Consolidated Statement of Income~~services.

~~GAIN ON DISPOSAL OF SUBSIDIARY~~30

During the second quarter of fiscal 2019, we executed an agreement to sell certain of our operations in Ireland for a total sales price of approximately $15.3 million. We recorded a gain on sale of $6.7 million during the nine months ended October 31, 2018, which includes the reclassification of $5.1 million from accumulated other comprehensive income for cumulative translation adjustments associated with our investment in this foreign entity. We recorded an additional gain on the sale of this entity of $1.4 million during the three and nine months ended October 31, 2019. The operating results of this entity during the nine months ended October 31, 2018 were insignificant relative to the consolidated financial results.

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OPERATING INCOME

CONSOLIDATED RESULTS

The following tables provide an analysis of GAAP operating income and non-GAAP operating income on a consolidated and regional basis as well as a reconciliation of GAAP operating income to non-GAAP operating income on a consolidated and regional basis for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019:

QUARTERLY RESULTS($ in millions)



	Three months ended April 30,
	2020		2019
(in millions)
Operating income	$	86.1	$	97.6
Acquisition, integration and restructuring expenses	17.7		6.2
Legal settlements and other, net	—		(0.3		)
Acquisition-related intangible assets amortization expense	24.5		21.0
Tax indemnifications	0.6		0.3
Non-GAAP operating income	$	128.9	$	124.8

YEAR TO DATE RESULTS($ in millions)

	Three months ended October 31,						Nine months ended October 31,
	2019			2018			2019			2018
(in millions)
Operating income	$	141.9		$	146.9		$	364.3		$	327.7
Acquisition, integration and restructuring expenses	4.6			20.3			16.1			66.8
Legal settlements and other, net	—			(7.2		)	(0.3		)	(15.4		)
Acquisition-related intangible assets amortization expense	21.1			22.5			63.1			68.5
Gain on disposal of subsidiary	(1.4		)	—			(1.4		)	(6.7		)
Tax indemnifications	0.1			5.5			0.6			6.1
Non-GAAP operating income	$	166.3		$	188.0		$	442.4		$	447.0

CONSOLIDATED COMMENTARY

• The ~~quarter to date~~ decrease in GAAP operating income of $511.05 million is primarily due to aan ~~benefit~~increase in ~~the~~acquisition, ~~prior~~integration ~~year~~and ofrestructuring ~~approximately~~expenses, ~~$25~~payroll ~~million~~costs ~~related~~and tocredit ~~the collection of an accounts receivable balance previously considered uncollectible~~costs, partially offset by alower ~~decrease~~inventory ~~in acquisition, integration and restructuring expenses~~losses.

• The ~~year to date~~ increase in non-GAAP operating income of $364.61 million is primarily due to alower ~~decrease~~inventory ~~in acquisition~~losses, ~~integration and restructuring expenses and an increase in net sales volume, excluding the impact of changes in foreign currencies. The increase in GAAP operating income is~~ partially offset by aan ~~benefit~~increase in ~~the~~payroll ~~prior~~costs ~~year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible~~ and ~~lower~~credit ~~gains from legal settlements~~costs.

• The quarter to date decrease in non-GAAP operating income of $21.7 million is primarily due to a benefit in the prior year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible.31

• The year to date decrease in non-GAAP operating income of $4.6 million is primarily due to a benefit in the prior year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible, partially offset by an increase in net sales volume, excluding the impact of changes in foreign currencies.

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AMERICAS

QUARTERLY RESULTS($ in millions)



	Three months ended April 30,
	2020		2019
(in millions)
Operating income - Americas	$	49.8	$	68.6
Acquisition, integration and restructuring expenses	17.0		2.9
Legal settlements and other, net	—		(0.3		)
Acquisition-related intangible assets amortization expense	16.9		13.5
Non-GAAP operating income - Americas	$	83.7	$	84.7

YEAR TO DATE RESULTS($ in millions)

	Three months ended October 31,					Nine months ended October 31,
	2019		2018			2019			2018
(in millions)
Operating income - Americas	$	82.4	$	112.4		$	244.2		$	261.7
Acquisition, integration and restructuring expenses	3.5		6.0			7.8			19.0
Legal settlements and other, net	—		(7.2		)	(0.3		)	(15.4		)
Acquisition-related intangible assets amortization expense	13.5		13.6			40.3			40.8
Non-GAAP operating income - Americas	$	99.4	$	124.8		$	292.0		$	306.1

AMERICAS COMMENTARY

• The ~~quarter to date~~ decrease in GAAP operating income of $3018.08 million is primarily due to aan ~~benefit~~increase in ~~the~~acquisition, ~~prior~~integration ~~year~~and ofrestructuring ~~approximately~~expenses, ~~$25~~payroll ~~million~~costs ~~related~~and tocredit ~~the~~costs, ~~collection~~partially ofoffset anby ~~accounts receivable balance previously considered uncollectible and~~ lower ~~gains~~inventory ~~from legal settlements~~losses.

• The ~~year to date~~ decrease in non-GAAP operating income of $171.50 million is primarily due to aan ~~benefit~~increase in ~~the~~payroll ~~prior~~costs ~~year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible, lower gains from legal settlements~~ and ~~increased~~credit ~~investments in our strategic priorities~~costs, partially offset by anlower ~~increase~~inventory ~~in net sales volume and a decrease in acquisition, integration and restructuring expenses~~losses.

• The quarter to date decrease in non-GAAP operating income of $25.4 million is primarily due to a benefit in the prior year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible.32

• The year to date decrease in non-GAAP operating income of $14.1 million is primarily due to a benefit in the prior year of approximately $25 million related to the collection of an accounts receivable balance previously considered uncollectible and increased investments in our strategic priorities, partially offset by an increase in net sales volume.

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EUROPE

QUARTERLY RESULTS($ in millions)



	Three months ended April 30,
	2020			2019
(in millions)
Operating income - Europe	$	45.9		$	36.4
Acquisition, integration and restructuring expenses	(0.2		)	3.0
Acquisition-related intangible assets amortization expense	6.3			6.2
Non-GAAP operating income - Europe	$	52.0		$	45.6

YEAR TO DATE RESULTS($ in millions)

	Three months ended October 31,					Nine months ended October 31,
	2019			2018		2019			2018
(in millions)
Operating income - Europe	$	66.5		$	39.9	$	140.6		$	86.2
Acquisition, integration and restructuring expenses	1.0			13.1		7.2			44.4
Acquisition-related intangible assets amortization expense	6.3			7.7		18.9			23.7
Gain on disposal of subsidiary	(1.4		)	—		(1.4		)	(6.7		)
Tax indemnifications	—			5.5		—			6.5
Non-GAAP operating income - Europe	$	72.4		$	66.2	$	165.3		$	154.1

EUROPE COMMENTARY

• The ~~quarter~~increases ~~and~~in ~~year~~both toGAAP ~~date~~operating ~~increase~~income inand non-GAAP operating income of $269.65 million and $546.4 million, respectively, isare primarily due to alower ~~reduction~~inventory ~~in acquisition~~losses, ~~integration~~partially ~~and~~offset ~~restructuring~~by ~~expenses, changes in the mix of products sold and~~ an ~~expense~~increase in ~~the~~payroll ~~prior year to record an indemnification liability to Avnet due to the resolution of a pre-acquisition tax matter~~costs.

~~• The quarter and year to date increase in non-GAAP operating income of $6.2 million and $11.2 million, respectively, is primarily due to changes in the mix of products sold.~~33

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ASIA-PACIFIC

QUARTERLY RESULTS



	Three months ended April 30,
	2020					2019
	$ in millions			as a % of net sales		$ in millions		as a % of net sales
Operating (loss) income - Asia-Pacific	$	(3.3	)	(1.25	)%	$	0.9	0.28	%
Acquisition, integration and restructuring expenses	0.9					0.3
Acquisition-related intangible assets amortization expense	1.3					1.3
Tax indemnifications	0.6					0.3
Non-GAAP operating (loss) income - Asia-Pacific	$	(0.5	)	(0.19	)%	$	2.8	0.91	%

	Three months ended October 31,
	2019				2018
	$ in millions		as a % of net sales		$ in millions		as a % of net sales
Operating income - Asia-Pacific	$	0.3	0.09	%	$	2.7	0.97	%
Acquisition, integration and restructuring expenses	0.1				0.6
Acquisition-related intangible assets amortization expense	1.3				1.3
Tax indemnifications	0.1				—
Non-GAAP operating income - Asia-Pacific	$	1.8	0.60	%	$	4.6	1.64	%

YEAR TO DATE RESULTS

	Nine months ended October 31,
	2019				2018
	$ in millions		as a % of net sales		$ in millions			as a % of net sales
Operating income - Asia-Pacific	$	3.2	0.34	%	$	3.5		0.41	%
Acquisition, integration and restructuring expenses	1.1				1.1
Acquisition-related intangible assets amortization expense	3.9				4.0
Tax indemnifications	0.6				(0.4		)
Non-GAAP operating income - Asia-Pacific	$	8.8	0.94	%	$	8.2		0.97	%

ASIA-PACIFIC COMMENTARY

• The ~~quarter~~decreases ~~to date decrease~~ in both GAAP operating income and non-GAAP operating income isof ~~primarily~~$4.2 ~~due~~million toand ~~increased credit costs~~$3.3 ~~Year~~million, torespectively, ~~date~~are ~~GAAP~~primarily ~~and~~due ~~non-GAAP~~to ~~operating~~a ~~income~~decrease ~~were~~in ~~both~~net ~~relatively~~sales ~~flat~~volume, ~~when~~including ~~compared~~impacts tofrom ~~the prior year~~COVID-19.



OPERATING INCOME BY REGION

We do not consider stock-based compensation expenses in assessing the performance of our operating segments, and therefore we report stock-based compensation expenses separately. The following table reconciles our operating income by geographic region to our consolidated operating income:

	Three months ended October 31,						Nine months ended October 31,
	Three months ended April 30,
	2019			2018			2019			2018
	2020			2019
(in millions)
Americas	$	8249.48		$	~~112~~68.46		$	~~244.2~~		$	~~261.7~~
Europe	6645.59			3936.94			~~140.6~~			~~86.2~~
Asia-Pacific	0(3.3		)	20.79			~~3.2~~			~~3.5~~
Stock-based compensation expense	(76.3		)	(8.13		)	~~(23.7~~		)	~~(23.7~~		)
Operating income	$	~~141~~86.91		$	~~146~~97.96		$	~~364.3~~		$	~~327.7~~

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INTEREST EXPENSE

Interest expense decreased by $49.42 million to $2117.0 million in the ~~third~~first quarter of fiscal ~~2020~~2021 compared to $2526.43 million in the ~~third~~first quarter of fiscal ~~2019~~2020, primarily due to alower ~~benefit~~interest inrates ~~interest~~and ~~expense~~average borrowings on our credit facilities and a benefit of $3.4 million related to our net investment hedges (see further discussion in Note 98 of Notes to Consolidated Financial Statements). Interest expense decreased by $11.1 million to $68.3 million in the first nine months of fiscal 2020 compared to $79.4 million in the same period of the prior fiscal year, primarily due to a benefit in interest expense of $6.8 million related to our net investment hedges and lower amounts outstanding on term loan credit agreements.

OTHER EXPENSE (INCOME), NET

"Other expense (income), net," consists primarily of gains and losses on the investments contained within life insurance policies used to fund our 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," ~~decreased~~increased to $48.39 million of expense in the ~~third~~first quarter of fiscal ~~2020~~2021 compared to $5.0.7 million of ~~expense~~income in the ~~third~~first quarter of the prior year, primarily due to ~~higher gains on the investments contained within life insurance policies. On~~ a ~~year~~decline ~~to date basis, "other expense, net" decreased to $6.6 million of expense~~ in the ~~first~~fair ~~nine~~value ~~months~~ of ~~fiscal 2020 compared to $7.8 million of expense in~~ the ~~same period of the prior fiscal year. The year to date decrease in other expense, net, is primarily due to higher gains on the~~ investments contained within life insurance policies, ~~partially~~and ~~offset~~increased byhedging ~~higher discounts on the sale of accounts receivables~~costs. The ~~gains~~losses on investments are substantially offset in our payroll costs, which are reflected in SG&A as part of operating income.

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PROVISION FOR INCOME TAXES

The following table provides a comparison of our provision for income taxes and our effective tax rate for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019:

QUARTERLY RESULTS



	Three months ended April 30,
	2020	2019
Effective tax rate	20.1%	23.1%

~~YEAR~~The TOdecrease ~~DATE~~in ~~RESULTS~~the effective tax rate for the three months ended April 30, 2020, as compared to the prior year, is primarily due to higher excess tax benefits related to stock-based compensation. The decrease in the absolute dollar value of the provision for income taxes for the three months ended April 30, 2020, as compared to the prior year, is primarily due a decrease in taxable earnings.

	Three months ended October 31,		Nine months ended October 31,
	2019	2018	2019	2018
Effective tax rate	22.1%	2.0%	22.1%	7.0%

The increase in both the effective tax rate and the provision for income taxes for the three and nine months ended October 31, 2019, as compared to the prior year, is primarily due to the impact of the following:

• During the three and nine months ended October 31, 2018, we decreased our provisional estimate of the one-time transition tax related to U.S. Tax Reform by $24.0 million.

• During the three and nine months ended October 31, 2018, we recorded income tax benefits of $5.5 million and $6.1 million, respectively, due to the resolution of certain pre-acquisition tax matters related to TS.

• During the nine months ended October 31, 2018, we recorded an income tax benefit of $13.0 million in relation to a settlement agreement reached with Avnet (see Note 6 of Notes to Consolidated Financial Statements for further discussion).

Additionally, the increase in the absolute dollar value of the provision for income taxes for the nine months ended October 31, 2019 as compared to the prior year is due to an increase in taxable earnings.

U.S. Tax Reform

On December 22, 2017, the U.S. federal government enacted the U.S. Tax Cuts and Jobs Act (“U.S. Tax Reform”) which significantly revised U.S. corporate income tax law by, among other things, reducing the U.S. federal corporate income tax rate from 35% to 21% and implementing a modified territorial tax system that includes a one-time transition tax on deemed repatriated earnings of foreign subsidiaries. The SEC provided accounting and reporting guidance that allowed us to report provisional amounts within a measurement period up to one year due to the complexities inherent in adopting the changes. During the three and nine months ended October 31, 2018, we decreased our provisional estimate of the one-time transition tax by $24.0 million upon further analysis of earnings and profits of our foreign subsidiaries and utilization of foreign tax credits.

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Tax Indemnifications

In connection with the acquisition of TS, pursuant to the interest purchase agreement, the Company and Avnet agreed to indemnify each other in relation to certain tax matters. As a result, we have recorded certain indemnification assets and liabilities for expected amounts to be received from and paid to Avnet. We recorded a benefit in income tax expense of $5.5 million during the three months ended October 31, 2018 and a benefit in income tax expense of $0.6 million and $6.1 million during the nine months ended October 31, 2019 and 2018, respectively, due to the resolution of certain pre-acquisition tax matters. As a result, in SG&A we recorded an expense of $5.5 million during the three months ended October 31, 2018 and expenses of $0.6 million and $6.1 million during the nine months ended October 31, 2019 and 2018, respectively. The net impact of these items had no impact on our net income.

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NET INCOME AND EARNINGS PER SHARE-DILUTED

~~QUARTERLY~~The ~~RESULTS~~following table provides an analysis of GAAP and non-GAAP net income and earnings per share-diluted as well as a reconciliation of results recorded in accordance with GAAP and non-GAAP financial measures for the three months ended April 30, 2020 and 2019 ($ in millions, except per share data):

The following table provides an analysis of GAAP and non-GAAP net income and earnings per share-diluted as well as a reconciliation of results recorded in accordance with GAAP and non-GAAP financial measures for the three months ended October 31, 2019 and 2018 ($ in millions, except per share data):



CONSOLIDATED GAAP TO NON-GAAP RECONCILIATION
	Net Income						Earnings per Share-Diluted
Three months ended April 30:	2020			2019			2020			2019
(in millions, except per share data)
GAAP results	$	48.1		$	55.4		$	1.34		$	1.49
Acquisition, integration and restructuring expenses	17.7			6.2			0.49			0.17
Legal settlements and other, net	—			(0.3		)	—			(0.01		)
Acquisition-related intangible assets amortization expense	24.5			21.0			0.68			0.56
Tax indemnifications	0.6			0.3			0.02			0.01
Income tax effect of tax indemnifications	(0.6		)	(0.3		)	(0.02		)	(0.01		)
Income tax effect of other adjustments above	(10.2		)	(6.4		)	(0.29		)	(0.17		)
Non-GAAP results	$	80.1		$	75.9		$	2.22		$	2.04

CONSOLIDATED GAAP TO NON-GAAP RECONCILIATION
	Net Income						Earnings per Share-Diluted
Three months ended October 31:	2019			2018			2019			2018
(in millions, except per share data)
GAAP results	$	90.8		$	114.2		$	2.52		$	2.96
Acquisition, integration and restructuring expenses	4.6			20.3			0.13			0.53
Legal settlements and other, net	—			(7.2		)	—			(0.19		)
Acquisition-related intangible assets amortization expense	21.1			22.5			0.59			0.58
Gain on disposal of subsidiary	(1.4		)	—			(0.04		)	—
Tax indemnifications	0.1			5.5			—			0.14
Income tax effect of tax indemnifications	(0.1		)	(5.5		)	—			(0.14		)
Income tax effect of other adjustments above	(6.3		)	(8.8		)	(0.18		)	(0.23		)
Income tax benefit from acquisition settlement	—			(0.2		)	—			—
Reversal of deferred tax valuation allowances	—			(0.5		)	—			(0.01		)
Impact of U.S. Tax Reform	—			(24.0		)	—			(0.62		)
Non-GAAP results	$	108.8		$	116.3		$	3.02		$	3.02

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YEAR TO DATE RESULTS

The following table provides an analysis of GAAP and non-GAAP net income and earnings per share-diluted as well as a reconciliation of results recorded in accordance with GAAP and non-GAAP financial measures for the nine months ended October 31, 2019 and 2018 ($ in millions, except per share data):

CONSOLIDATED GAAP TO NON-GAAP RECONCILIATION
	Net Income						Earnings per Share-Diluted
Nine months ended October 31:	2019			2018			2019			2018
(in millions, except per share data)
GAAP results	$	225.4		$	223.8		$	6.15		$	5.80
Acquisition, integration and restructuring expenses	16.1			66.8			0.44			1.73
Legal settlements and other, net	(0.3		)	(15.4		)	(0.01		)	(0.40		)
Acquisition-related intangible assets amortization expense	63.1			68.5			1.72			1.78
Gain on disposal of subsidiary	(1.4		)	(6.7		)	(0.04		)	(0.17		)
Tax indemnifications	0.6			6.1			0.02			0.16
Value added tax assessment and related interest expense	—			(0.9		)	—			(0.02		)
Income tax effect of tax indemnifications	(0.6		)	(6.1		)	(0.02		)	(0.16		)
Income tax effect of other adjustments above	(19.6		)	(31.2		)	(0.53		)	(0.81		)
Income tax benefit from acquisition settlement	—			(13.0		)	—			(0.34		)
Reversal of deferred tax valuation allowances	—			(3.1		)	—			(0.08		)
Impact of U.S. Tax Reform	—			(24.0		)	—			(0.62		)
Non-GAAP results	$	283.3		$	264.8		$	7.73		$	6.87

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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:

Nine months ended October 31:	2019			2018
Three months ended April 30:	2020			2019
(in millions)
Net cash provided by (used in):
Net cash (used in) provided by:
Operating activities	$	~~412~~(7.67	)	$	~~149~~63.32
Investing activities	~~(51~~24.31		)	(~~154~~15.38		)
Financing activities	(~~183~~7.13		)	(~~266~~35.68		)
Effect of exchange rate changes on cash and cash equivalents	(1321.25		)	(3713.52		)
Net increase (decrease) in cash and cash equivalents	$	165.0		$	(309.1	)
Net decrease in cash and cash equivalents	$	(12.4	)	$	(1.6	)

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"). The following tables present the components of our cash conversion cycle, in days, as of ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019, and January 31, ~~2019~~2020 and ~~2018~~2019:

As of:	~~October~~April 3130, ~~2019~~2020		January 31, ~~2019~~2020		As of:	~~October~~April 3130, ~~2018~~2019		January 31, ~~2018~~2019
DSO	5860		54		DSO	5859		5554
DOS	3336		3129		DOS	3338		2931
DPO	(7476	)	(7068	)	DPO	(7378	)	(6870	)
Net cash days	1720		15		Net cash days	1819		1615

The net ~~increase~~decrease in cash provided by operating activities of $~~263~~70.39 million is primarily due to the impact of changes in working capital. The ~~decrease~~increase in cash ~~used~~provided inby investing activities of $~~103~~39.09 million is primarily due to $~~120~~44.4 million ~~paid~~of toproceeds ~~Avnet~~from in the ~~prior~~settlement ~~year related to the final working capital adjustment for the acquisition~~ of ~~TS,~~our ~~partially~~net ~~offset~~investment ~~by increased capital expenditures in the current year of $11~~hedges.5 ~~million.~~ The decrease in cash used in financing activities of $8328.5 million is primarily due to the ~~prior~~suspension ~~year repayment~~ of ~~$200~~our ~~million~~share ofrepurchase ~~borrowings~~program ~~under~~pursuant to the ~~2016~~terms ~~Term~~of ~~Loan~~the ~~Credit~~Merger Agreement ~~and~~with anthe ~~increase~~affiliates ~~in net borrowings on revolving credit loans~~ of ~~$24.3~~Apollo ~~million, partially offset by an increase of $123~~Funds.2 ~~million in cash paid to repurchase common stock under our share repurchase program.~~

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CAPITAL RESOURCES AND DEBT COMPLIANCE

Our debt to total capital ratio was 32% at ~~October~~April 3130, ~~2019~~2020. 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. WeOur liquidity is subject to many factors, including the potential impact of the COVID-19 pandemic on financial markets; however, we believe that our existing sources of liquidity, including our financing facilities, ~~and~~trade credit from vendors, cash resources, as well as cash expected to be provided by operating activities will be sufficient to meet our working capital needs and cash requirements for at least the next 12 months.

AtThe ~~October 31, 2019, we had approximately $964.1 million in cash and cash equivalents, of which approximately $813.2 million was held in our foreign subsidiaries. As discussed above, the~~ Company currently has sufficient resources, cash flows and liquidity within the U.S. to fund current and expected future working capital requirements. WeHowever, ~~plan~~future torepatriation ~~continue~~of ~~reinvesting~~foreign ~~future~~cash ~~foreign~~will ~~earnings~~be ~~indefinitely~~considered ~~outside~~to the Uextent the funds can be remitted with no material tax consequences.S. Any future remittances of foreign cash could be subject to additional foreign withholding tax, U.S. state taxes and certain tax impacts relating to foreign currency exchange effects.

The following is a discussion of our various financing facilities:

Senior notes

In January 2017, we issued $500.0 million aggregate principal amount of 3.70% Senior Notes due February 15, 2022 (the "3.70% Senior Notes") and $500.0 million aggregate principal amount of 4.95% Senior Notes due February 15, 2027 (the "4.95% Senior Notes") (collectively the "2017 Senior Notes"). We pay interest on the 2017 Senior Notes semi-annually in arrears on February 15 and August 15 of each year. The interest rate payable on the 2017 Senior Notes will be subject to adjustment from time to time if the credit rating assigned to such series of notes changes. At no point will the interest rate be reduced below the interest rate payable on the notes on the date of the initial issuance or increase more than 2.00% above the interest rate payable on the notes of the series on the date of their initial issuance. The 2017 Senior Notes are our senior unsecured obligations and will rank equally with all of our other unsecured and unsubordinated indebtedness ~~outstanding~~ from time to time outstanding.

We, at our option, may redeem the 3.70% Senior Notes at any time prior to January 15, 2022 and the 4.95% Senior Notes at any time prior to November 15, 2026, in each case in whole or in part, at a redemption price equal to the greater of (i) 100% of the principal amount of the 2017 Senior Notes to be redeemed or (ii) the sum of the present values of the remaining scheduled payments of principal and interest on the 2017 Senior Notes to be redeemed, discounted to the date of redemption on a semi-annual basis at a rate equal to the sum of the applicable Treasury Rate plus 30 basis points for the 3.70% Senior Notes and 40 basis points for the 4.95% Senior Notes, plus the accrued and unpaid interest on the principal amount being redeemed up to the date of redemption. We may also redeem the 2017 Senior Notes, at any time in whole or from time to time in part, on or after January 15, 2022 for the 3.70% Senior Notes and November 15, 2026 for the 4.95% Senior Notes, in each case, at a redemption price equal to 100% of the principal amount of the 2017 Senior Notes to be redeemed.

~~Other~~On ~~credit~~March ~~facilities~~10, 2020, Tiger Merger Sub Co., an affiliate of certain investment funds managed by affiliates of Apollo, launched an offer to purchase for cash any and all of our outstanding 3.70% Senior Notes and any and all of our outstanding 4.95% Senior Notes and a consent solicitation to amend the indenture and global securities establishing the 3.70% Senior Notes and the 4.95% Senior Notes to (i) eliminate the requirement to make a “change of control” offer in connection with the proposed merger of Tiger Merger Sub Co. into the Company pursuant to the Merger Agreement and (ii) make certain other customary changes for a privately-held company to the “change of control” provisions (the “Proposed Amendments”). Concurrently with, but separate from, the aforementioned offer to purchase and consent solicitation, Tiger Merger Sub Co. launched a consent solicitation for the Proposed Amendments for holders of the 4.95% Senior Notes. On March 24, 2020, Tiger Merger Sub Co. announced that the requisite more than 50% of consents were received to adopt the Proposed Amendments. The aforementioned consent solicitations were conducted by Tiger Merger Sub Co. pursuant to the terms of, and subject to the conditions set forth in, the offer to purchase and consent solicitation statement, dated March 10, 2020 (the “Offer to Purchase and Consent Solicitation”), and the separate consent solicitation statement, dated March 10, 2020 (the “4.95% Consent Solicitation” and, together with the Offer to Purchase and Consent Solicitation, the “Offer to Purchase and Consent Solicitation Statements”). On March 24, 2020, we entered into a Supplemental Indenture with respect to the Indenture and Global Security for the 3.70% Senior Notes (the “3.70% Supplemental Indenture”) and a Supplemental Indenture with respect to the Indenture and Global Security for the 4.95% Senior Notes (the “4.95% Supplemental Indenture” and, together with the 3.70% Supplemental Indenture, the “Supplemental Indentures”) effecting the Proposed Amendments.

WeThe ~~have~~Proposed aAmendments ~~$1.5~~implemented ~~billion~~by ~~revolving~~the ~~credit~~Supplemental ~~facility~~Indentures ~~with~~will abecome ~~syndicate~~operative ofwith ~~banks~~respect (to the ~~“Credit~~2017 ~~Agreement”)~~Senior ~~which,~~Notes ~~among~~only ~~other~~at ~~things,~~such ~~provides~~time ~~for~~as ~~(i)~~the afollowing ~~maturity~~conditions ~~date~~are ofsatisfied ~~May~~or ~~15,~~otherwise ~~2024~~waived, ~~(ii)~~if anapplicable, ~~interest~~by ~~rate~~Tiger onMerger ~~borrowings,~~Sub ~~facility~~Co.: ~~fees~~(1) ~~and~~the ~~letter~~2017 ofSenior ~~credit~~Notes ~~fees~~that ~~based~~are onvalidly ~~the~~tendered ~~Company’s~~(and ~~debt~~not ~~rating,~~validly ~~(iii~~withdrawn) ~~the~~have ~~ability~~been toaccepted ~~increase~~for ~~the~~purchase ~~facility~~by toTiger aMerger ~~maximum~~Sub ~~of $1~~Co.75 ~~billion,~~in ~~subject~~accordance towith ~~certain~~the ~~conditions~~terms ~~and (iv) certain subsidiaries~~ of the ~~Company~~Offer to bePurchase ~~designated~~and asConsent ~~borrowers.~~Solicitation ~~The~~Statements ~~applicable~~(and, ~~borrower~~in ~~will pay interest on advances under~~ the ~~Credit~~case ~~Agreement~~of at the ~~applicable~~4.95% ~~LIBOR~~Senior ~~rate~~Notes, ~~(or~~when ~~similar~~Tiger ~~interbank~~Merger ~~offered~~Sub ~~rates~~Co. ~~depending~~provides onnotice ~~currency~~that ~~draw)~~it ~~plus~~will apay ~~predetermined~~the ~~margin~~consent ~~that~~fee isas ~~based~~part onof ~~our~~the ~~debt rating~~4.95% ~~Our~~Consent ~~borrowings~~Solicitation) ~~under~~and (2) the ~~Credit~~other ~~Agreement~~conditions ~~vary~~to ~~within~~ the ~~period~~consent ~~primarily~~solicitations ~~based~~set onforth ~~changes~~ in ~~our~~the ~~working~~Offer ~~capital.~~to ~~There~~Purchase ~~were~~and noConsent ~~amounts~~Solicitation ~~outstanding~~Statements, ~~under~~including the ~~Credit~~substantially ~~Agreement~~concurrent atconsummation ~~October 31,~~of ~~2019~~the ~~and January 31~~Merger, ~~2019.~~have been satisfied.

We entered into a term loan credit agreement in November 2016 with a syndicate of banks (the "2016 Term Loan Credit Agreement") which provided for the borrowing of senior unsecured term loans in an original aggregate principal amount of up to $1.0 billion. We paid interest on advances under the 2016 Term Loan Credit Agreement at a variable rate based on LIBOR plus a predetermined margin based on our debt rating. We had $300 million outstanding under the 2016 Term Loan Credit Agreement at January 31, 2019. On August 2, 2019, we entered into a term loan credit agreement (the “2019 Term Loan Credit Agreement”), the proceeds of which were used to repay in full the amounts outstanding under our 2016 Term Loan Credit Agreement. The 2019 Term Loan Credit Agreement, among other things, (i) provides for a $300 million term loan credit facility with a maturity date of August 2, 2021, (ii) provides for an interest rate on the outstanding principal amount of the loan that is based on LIBOR plus a predetermined margin, and (iii) may be increased up to a total of $500 million, subject to certain conditions. We had $300.0 million outstanding under the 2019 Term Loan Credit Agreement at October 31, 2019.38

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 collateral for borrowings up to a maximum of $1.0 billion. The scheduled termination date of the agreement is April 16, 2021. Under this program, we transfer 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 approximately $1.7 billion at both October 31, 2019 and January 31, 2019. As collections reduce

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~~accounts~~Other ~~receivable~~credit balances included in the collateral pool, we may transfer interests in new receivables to bring the amount available to be borrowed up to the maximum. We pay interest on advances under the Receivables Securitization Program at designated commercial paper or LIBOR-based rates plus an agreed-upon margin. Our borrowings under the Receivables Securitization Agreement vary within the period primarily based on changes in our working capital. There were no amounts outstanding under the Receivables Securitization Program at October 31, 2019 and January 31, 2019.facilities

InWe ~~addition~~have toa $1.5 billion revolving credit facility with a syndicate of banks (the ~~facilities~~“Credit ~~described~~Agreement”) ~~above~~which, weamong ~~have~~other ~~various~~things, ~~other~~provides ~~committed~~for ~~and~~(i) ~~uncommitted~~a ~~lines~~maturity date of ~~credit~~May 15, ~~short-term~~2024, ~~loans~~(ii) an interest rate on borrowings, facility fees and ~~overdraft~~letter ~~facilities~~of ~~totaling~~credit ~~approximately~~fees based on the Company’s debt rating, (iii) the ability to increase the facility to a maximum of $~~394~~1.975 ~~million at October 31~~billion, ~~2019~~ subject to ~~support~~certain ~~our~~conditions ~~operations.~~and ~~Most~~(iv) certain subsidiaries of ~~these~~the ~~facilities~~Company ~~are~~to ~~provided~~be designated as borrowers. The applicable borrower will pay interest on anadvances ~~unsecured,~~under ~~short-term~~the ~~basis~~Credit ~~and~~Agreement ~~are~~based ~~reviewed~~on ~~periodically~~LIBOR ~~for~~(or ~~renewal~~similar interbank offered rates depending on currency draw) plus a predetermined margin that is based on our debt rating. Our borrowings under ~~these~~the ~~facilities~~Credit Agreement vary within the period primarily based on changes in our working capital. There ~~was~~were ~~$116.9~~no ~~million~~amounts outstanding onunder ~~these~~the ~~facilities~~Credit Agreement at ~~October~~April 3130, ~~2019,~~2020 ~~at a weighted average interest rate of 7.26%,~~ and ~~there was $102.3 million outstanding at~~ January 31, ~~2019, at a weighted average interest rate of 8~~2020.~~05%.~~

~~At October 31~~On August 2, 2019, we ~~had~~entered ~~also~~into ~~issued~~a ~~standby~~term ~~letters~~loan of credit ofagreement (the “2019 Term Loan Credit Agreement”) which, among other things, (i) provides for a $~~32.0~~300 million. ~~These~~term ~~letters~~loan credit facility with a maturity date of ~~credit~~August ~~typically~~2, ~~act~~2021, as(ii) aprovides ~~guarantee~~for an interest rate on the outstanding principal amount of ~~payment~~the toloan ~~certain~~that ~~third~~is ~~parties~~based inon ~~accordance~~LIBOR ~~with~~plus ~~specified~~a ~~terms~~predetermined margin, and ~~conditions.~~(iii) ~~The~~may ~~issuance~~be increased up to a total of $500 million, subject to certain ofconditions. ~~these~~We ~~letters~~had of$300 ~~credit~~million ~~reduces~~outstanding under the ~~Company's~~2019 ~~borrowing~~Term ~~availability~~Loan ~~under~~Credit ~~certain~~Agreement ofat ~~the~~both ~~above-mentioned~~April 30, ~~credit~~2020 ~~facilities~~and January 31, 2020.

~~Certain~~We also have an agreement with a syndicate of ~~our~~banks ~~credit~~(the ~~facilities~~"Receivables ~~contain~~Securitization ~~limitations~~Program") that allows us to transfer an undivided interest in a designated pool of U.S. accounts receivable, on ~~the~~an ~~amounts~~ongoing basis, to provide collateral for borrowings up to a maximum of ~~annual~~$1.0 ~~dividends~~billion. ~~and~~The ~~repurchases~~scheduled termination date of ~~common~~the ~~stock~~agreement ~~and~~is ~~require~~April ~~compliance~~16, ~~with~~2021. ~~other~~Under ~~obligations~~this program, ~~warranties~~we ~~and~~transfer ~~covenants~~certain U.S. ~~The~~trade ~~financial~~receivables ~~ratio~~into ~~covenants~~a ~~within~~wholly-owned ~~these~~bankruptcy ~~credit~~remote ~~facilities~~special ~~include~~purpose aentity. ~~maximum~~Such ~~total~~receivables, ~~leverage~~which ~~ratio~~are ~~and~~recorded ain ~~minimum~~the ~~interest~~Consolidated ~~coverage~~Balance ~~ratio~~Sheet, totaled approximately $1.6 Atbillion at both April ~~October~~30, 2020 and January 31, ~~2019~~2020. As collections reduce accounts receivable balances included in the collateral pool, we ~~were~~may transfer interests in ~~compliance~~new ~~with~~receivables ~~all~~to ~~such~~bring ~~financial~~the ~~covenants~~amount available to be borrowed up to the maximum. We pay interest on advances under the Receivables Securitization Program at designated commercial paper or LIBOR-based rates plus an agreed-upon margin. Our borrowings under the Receivables Securitization Agreement vary within the period primarily based on changes in our working capital. There were no amounts outstanding under the Receivables Securitization Program at April 30, 2020 and January 31, 2020.

In addition to the facilities described above, we have various other committed and uncommitted lines of credit, short-term loans and overdraft facilities totaling approximately $458.2 million at April 30, 2020 to support our operations. Most of these facilities are provided on an unsecured, short-term basis and are reviewed periodically for renewal, which may be impacted by the COVID-19 pandemic. Our borrowings under these facilities vary within the period primarily based on changes in our working capital. There was $104.6 million outstanding on these facilities at April 30, 2020, at a weighted average interest rate of 6.17%, and there was $108.4 million outstanding at January 31, 2020, at a weighted average interest rate of 6.79%.

At April 30, 2020, we had also issued standby letters of credit of $39.6 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 certain of these letters of credit reduces the Company's borrowing availability under certain of the above-mentioned credit facilities.

Certain of our 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 within these credit facilities include a maximum total leverage ratio and a minimum interest coverage ratio. At April 30, 2020, we were in compliance with all such financial covenants.

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 which may be impacted by the COVID-19 pandemic. In addition, certain of these agreements also require that we continue to service, administer and collect the sold accounts receivable. At ~~October~~April 3130, ~~2019~~2020 and January 31, ~~2019~~2020, we had a total of $~~921~~569.0 million and $1739.12 ~~billion~~million, respectively, of accounts receivable sold to and held by financial institutions under these agreements. During ~~both~~ the three months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018, discount fees recorded under these facilities were $4.1 million. During the nine months ended October 31,~~ 2019 ~~and 2018~~, discount fees recorded under these facilities were $113.81 million and $103.57 million, respectively. These discount fees are included as a component of "other expense (income), net" in our Consolidated Statement of Income.

Share Repurchase Program

In October 2018, our Board of Directors authorized a share repurchase program for up to $200.0 million of our common stock. In February 2019, the Board of Directors approved a $100.0 million increase to the program. In August 2019, our Board of Directors authorized the repurchase of up to an additional $200.0 million of our common stock, resulting in a total share repurchase authorization of $500.0 million. In conjunction with our share repurchase program, a 10b5-1 plan was executed that instructs the broker selected by the Company to repurchase shares on our behalf. The amount of common stock repurchased in accordance with the 10b5-1 plan on any given trading day is determined by a formula in the plan, which is based on the market price of our common stock. Shares we repurchase are held in treasury for general corporate purposes, including issuances under equity incentive and benefit plans.

We repurchased 1,697,609 shares of our common stock at a cost of $167.0 million during the nine months ended October 31, 2019. As of October 31, 2019, we had $226.0 million available for future repurchases of our common stock under the authorized share repurchase program. Pursuant to the terms of the Merger Agreement with the affiliates of Apollo Funds, we suspended our share repurchase program as of November 13, 2019.39

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We repurchased 345,927 shares of our common stock at a cost of $35.7 million during the three months ended April 30, 2019. As of April 30, 2020, we had $222.8 million available for future repurchases of our common stock under the authorized share repurchase program. Pursuant to the terms of the Merger Agreement with the affiliates of Apollo Funds, we suspended our share repurchase program as of November 13, 2019.



CRITICAL ACCOUNTING POLICIES AND ESTIMATES

~~There~~Except as presented below, there have been no material changes to the critical accounting policies and estimates disclosed in our Annual Report on Form 10-K for the year ended January 31, ~~2019~~2020.

Accounts Receivable

We maintain an allowance for credit losses related to accounts receivable for future expected credit losses resulting from the inability or unwillingness of our customers to make required payments. In estimating the required allowance, we take into consideration historical credit losses, current conditions and reasonable and supportable forecasts. Adjustments to historical loss information are made for differences in current conditions as well as changes in forecasted macroeconomic conditions, such as changes in unemployment rates or gross domestic product growth. Expected credit losses are estimated on a pool basis when similar risk characteristics exist using an age-based reserve model. Receivables that do not share risk characteristics are evaluated on an individual basis.



RECENT ACCOUNTING PRONOUNCEMENTS

See Note 1 of Notes to Consolidated Financial Statements for the discussion on recent accounting pronouncements.

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ITEM 3. Quantitative and Qualitative Disclosures About Market Risk.

For a description of the Company’s market risks, see Part II, Item 7A. "Quantitative and Qualitative Disclosures About Market Risk” in our Annual Report on Form 10-K for the fiscal year ended January 31, ~~2019~~2020.

No material changes have occurred in our market risks since January 31, ~~2019~~2020.

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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 ~~October~~April 3130, ~~2019~~2020. Based on that evaluation, the Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as of ~~October~~April 3130, ~~2019~~2020.

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 during our ~~third~~first quarter of fiscal ~~2020~~2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. Legal Proceedings.

In December 2010, in a non-unanimous decision, a Brazilian appellate court overturned a 2003 trial court which had previously ruled in favor of our 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.” We estimate the total exposure related to the CIDE tax, including interest, was approximately $1914.23 million at ~~October~~April 3130, ~~2019~~2020. 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, we believe 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, we have concluded that it is reasonably possible that the Brazilian subsidiary may incur a loss up to the total exposure described above. We believe the resolution of this litigation will not be material to the Company’s consolidated net assets or liquidity.

InThe ~~June 2013, we were subject to a document seizure by the~~ French Autorité de la Concurrence (“Competition Authority”) ~~following~~began ~~allegations~~in of2013 ~~anticompetitive~~an ~~distribution~~investigation ~~practices~~into in the French market for ~~the~~certain products of ~~one~~Apple, ofInc., ~~our~~for ~~suppliers~~which we are a distributor. In ~~October~~March ~~2018~~2020, the Competition Authority ~~delivered~~imposed afines ~~notification~~on ~~des~~us, ~~griefs~~on ~~(statement~~another ofdistributor, ~~objections)~~and toon ~~the Company~~Apple, ~~stating~~finding that ~~the~~we ~~Competition~~entered ~~Authority~~into isan ~~pursuing~~anticompetitive ~~charges~~agreement ~~against~~with ~~the~~Apple ~~Company~~regarding involume ~~this~~allocations ~~matter~~of Apple products. InThe ~~July~~fine ~~2019,~~imposed on us was €76 million. We have vigorously contested the arguments of the Competition Authority, ~~delivered~~and awe ~~rapport~~intend ~~(report),~~to ~~which~~appeal isits adetermination ~~further~~to ~~step~~the ~~towards~~French ~~proposing~~courts, ~~charges~~seeking into ~~this~~set ~~matter~~aside or reduce the fine. ~~The~~ ~~Competition~~We ~~Authority~~believe ~~has~~we ~~taken~~have ~~similar~~strong ~~action~~arguments ~~against~~on ~~our~~appeal, ~~supplier~~but ~~and~~we ~~another~~are ofunable to predict the ~~supplier's~~outcome, ~~distributors.~~among ~~The~~other ~~administrative~~reasons ~~proceedings~~because ~~could~~of ~~result~~the innovelty of the ~~imposition~~case and the unprecedented size of athe ~~fine~~fines ~~against~~imposed usfor this kind of practice, ~~which~~or ~~could~~how belong ~~material~~it inwill ~~amount.~~take Ifto achieve a ~~fine~~final isresolution. ~~imposed~~Under French law, wehowever, ~~would~~the bependency ~~entitled~~of toour appeal ~~the~~does ~~administrative~~not ~~determination~~suspend the obligation to pay the ~~French courts~~fine, ~~although~~and we ~~would~~expect that we will be required to pay the full fine ~~before~~assessed ~~doing~~by ~~so. At this time, we cannot assess~~ the ~~likelihood~~Competition ~~that~~Authority ~~these~~before ~~proceedings~~our ~~will~~appeal beis finally ~~resolved~~determined. At ~~against~~this ustime, ~~and~~ we cannot reasonably estimate the amount of ~~fine~~loss ~~that~~in ~~may~~these beproceedings ~~imposed~~and therefore have not accrued for any loss.

We are subject to various other legal proceedings and claims arising in the ordinary course of business. Our management does not expect that the outcome in any of these other legal proceedings, individually or collectively, will have a material adverse effect on our 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, ~~2019~~2020, 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, ~~2019~~2020. Except as presented below, there have been no material changes to those risk factors previously disclosed in our Annual Report on Form 10-K for the year ended January 31, ~~2019~~2020.

WeThe ~~have~~COVID-19 ~~inventory~~pandemic ~~that~~may ~~could~~negatively ~~lose value due to risks and uncertainties associated with the~~ impact ofour ~~trade~~business ~~discussions~~operations ~~between the United States~~ and ~~China,~~financial ~~and related U~~results.~~S. security risks and export controls.~~

WeIn ~~are~~March ~~subject~~2020, tothe ~~risks~~World ~~and~~Health ~~uncertainties~~Organization ~~associated~~declared ~~with~~ the ~~impact~~outbreak of ~~trade discussions between~~ the ~~United~~2019 ~~States~~novel ~~and~~coronavirus ~~China~~(COVID-19) ~~and~~a ~~related U~~pandemic.S. ~~security~~The ~~risks~~global ~~and~~impact ~~export~~of ~~controls. On~~the ~~May~~COVID-19 ~~15,~~pandemic ~~2019,~~has ~~the~~had ~~President~~a ofnegative ~~the~~effect ~~United~~on ~~States~~the ~~issued~~global aneconomy, ~~Executive~~disrupting ~~Order~~the ~~that~~financial ~~authorized~~markets ~~export~~and ~~controls~~creating onincreasing ~~Chinese~~volatility, ~~entities~~and ~~determined~~impacting tocustomer bedemand aincluding ~~U.S.~~changes ~~security~~in ~~threat.~~the Atmix ~~the~~of ~~same~~demand ~~time,~~for ~~the~~products ~~U.S.~~within ~~Commerce~~our ~~Dept~~portfolio. ~~placed~~COVID-19 ~~certain~~has ~~Chinese~~also ~~companies~~impeded ~~and~~global ~~their~~supply ~~subsidiaries~~chains, onincluding ~~the~~our Uown.S. ~~Entity~~Our ~~List~~suppliers ~~requiring~~are ~~U.S.~~experiencing ~~companies~~delays toin ~~obtain~~the ~~export~~production ~~licensing~~and ~~approval~~export ~~before providing certain technology. We hold inventory~~ of their products ~~impacted~~and byfailure ~~the~~to ~~recent~~obtain ~~government~~adequate ~~action~~product ~~and~~supplies ~~there~~from isour ~~uncertainty~~vendors ~~relating~~may toresult ~~the~~in ~~disposition~~a loss of ~~this~~revenue ~~inventory~~and ~~due~~profitability. toWe ~~restrictions~~have ~~that~~also ~~would~~experienced ~~prevent~~impacts ~~purchasers~~to ~~from~~our ~~updating~~freight ~~software~~and onlogistic ~~the~~operations, ~~products~~including inincreased ~~the future~~costs. ~~While~~Additionally, we ~~continue~~may need to ~~take~~close ~~steps~~logistics tocenters ~~mitigate~~for ~~our~~a ~~exposure~~period toof ~~this~~time ~~developing~~as ~~situation,~~a ifresult ~~the~~of ~~sale~~government ofmandates ~~these~~or ~~products~~self-imposed ishealth ~~delayed~~and orsafety initiatives. While we ~~are~~have ~~unable~~initiated toshort-term ~~return~~measures orto ~~dispose~~address ofdelays in our ~~inventory~~supply onchain, ~~favorable~~including ~~economic~~advance ~~terms~~purchases, wesuch measures may ~~incur~~not ~~additional~~be ~~carrying~~sufficient ~~costs~~to ~~for~~fully mitigate the ~~inventory~~effects orof ~~otherwise~~the ~~record~~COVID-19 ~~losses~~pandemic, ~~associated~~and ~~with~~such ~~the~~steps ~~inventory~~may negatively impact our financial condition.

~~Risks~~The ~~Related~~potential impact of the COVID-19 pandemic on financial and credit markets, including impacts on the ability of our customers to obtain access to sources of liquidity, heightens the ~~Merger~~risk of customer bankruptcies and delays in payment which could result in increased credit losses. Future deterioration in the credit markets could result in reduced availability of credit insurance to cover customer accounts. This, in turn, may result in our reducing the credit lines we provide to customers, thereby having a negative impact on our net sales, gross profits and net income.

~~The~~Our ~~Merger~~business isrequires ~~subject~~substantial capital to operate. We have historically relied upon cash generated from operations, bank credit lines, trade credit from vendors and accounts receivable purchase agreements to satisfy our capital needs and to finance growth. Significant changes in vendor payment terms or payment arrangements due to the COVID-19 pandemic could negatively impact our liquidity and financial condition. We have various ~~closing~~committed ~~conditions~~and uncommitted lines of credit, short-term loans and ~~other~~overdraft ~~risks~~facilities which are provided on an unsecured, short-term basis and are reviewed periodically for renewal, which may ~~cause~~be impacted by the ~~Merger~~COVID-19 pandemic. Additionally, financial institutions' willingness to bepurchase ~~delayed~~receivables orunder ~~not~~accounts ~~completed~~receivable atpurchase ~~all~~agreements ormay ~~have~~be ~~other~~impacted ~~adverse~~by ~~consequences~~the COVID-19 pandemic.

The Merger is subject to various closing conditions that must be satisfied or waived to complete the Merger. There can be no assurance that these conditions will be satisfied or waived or that the Merger will be completed in a timely manner or at all. Failure to satisfy or obtain waivers of any closing condition may jeopardize or delay the completion of the Merger and result in additional expenditures of money and resources (including the potential payment of termination fees and other costs). The Merger is also subject to approval by the Company’s stockholders. There is no assurance that the Company’s stockholders will approve the Merger. In addition, the Merger is contingent upon the receipt of certain regulatory clearances or approvals. There can be no assurance that the conditions to closing will be satisfied or waived or that other events will not intervene to delay or prevent the closing of the Merger. If the Merger is not completed for any reason, the price of our Common Stock may decline to the extent that the current market price reflects an assumption that the 43

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~~Merger~~We ~~will~~cannot beat ~~consummated.~~this ~~Furthermore,~~time ifaccurately ~~the~~predict ~~Merger~~what iseffects ~~not~~these ~~completed~~conditions ~~for~~will ~~any~~have ~~reason,~~on our ~~ongoing~~operations ~~business~~ and financial ~~results~~condition, ~~would~~including bedue ~~subject~~ to auncertainties ~~number~~relating ofto ~~risks,~~the ~~including~~ultimate ~~negative~~geographic ~~reactions~~spread ~~from~~of ~~analysts~~the virus, ~~media~~the severity and ~~financial~~duration ~~markets~~of the pandemic, ~~negative~~the ~~reactions~~effect ~~from~~on our customers orand ~~employees,~~customer ~~distraction~~demand and the length of ~~management~~the ~~attention,~~restrictions and ~~litigation~~closures ~~related~~imposed by various governments; however, we expect to ~~the~~see ~~Merger~~a ornegative impact to our revenue and earnings from the ~~Company’s~~COVID-19 ~~failure~~pandemic toin ~~perform~~the ~~its~~second ~~obligations~~quarter, ~~under~~which may continue into the ~~Merger~~third ~~Agreement~~quarter or beyond.

~~Legal proceedings instituted against the Company and others relating to the Merger Agreement also could delay or prevent the Merger from becoming effective within the agreed upon timeframe~~ITEM 2. Unregistered InSales ~~addition, we may elect to terminate the Merger Agreement in certain circumstances, and the parties can mutually decide to terminate the Merger Agreement at any time prior to the consummation~~ of ~~the~~Equity ~~Merger~~Securities ~~before or after stockholder approval. Further, uncertainty among our employees about their future roles after the completion of the Merger may impair our ability to attract, retain~~ and ~~motivate~~Use ~~key personnel, and the pendency~~ of the Merger may disrupt our business relationships with our existing and potential customers, suppliers, vendors, landlords, and other business partners, who may attempt to negotiate changes in existing business relationships or consider entering into business relationships with parties other than us. The adverse consequence of the pendency of the Merger could be exacerbated by any delays in completion of the Merger or termination of the Merger Agreement.Proceeds

While the Merger Agreement is in effect, we are subject to restrictions on our business activities.

While the Merger Agreement is in effect, we are subject to restrictions on the business activities we may engage in without the prior written consent of an affiliate of the Apollo Funds, including, among other things, restrictions on our ability to acquire other businesses and assets, dispose of our assets, make investments, enter into certain contracts, repurchase or issue securities, pay dividends, make capital expenditures, amend our organizational documents, incur indebtedness and settle litigation. These restrictions could prevent us from pursuing strategic business opportunities, taking actions with respect to our business that we may consider advantageous and responding effectively and/or timely to competitive pressures and industry developments, which may as a result materially adversely affect our business, results of operations and financial condition.

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents information with respect to purchases of common stock by the Company under the share repurchase program during the quarter ended October 31, 2019:

	Issuer Purchases of Equity Securities
Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of a publicly announced plan or program	Maximum dollar value of shares that may yet be purchased under the plan or programs
August 1 - August 31, 2019	359,632	$	89.27	359,632	$	243,178,396
September 1 - September 30, 2019	78,052	102.47		78,052	235,180,219
October 1 - October 31, 2019	80,749	113.90		80,749	225,983,059
Total	518,433	$	95.09	518,433

ITEM 3. Defaults Upon Senior Securities.

Not applicable.

ITEM 4 3. ~~Mine~~Defaults ~~Safety~~Upon ~~Disclosures.~~Senior Securities

Not applicable.

ITEM 54. ~~Other~~Mine ~~Information.~~Safety Disclosures

Not applicable.

ITEM 5. Other Information

None.

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ITEM 6. Exhibits.


(a)	Exhibits

2-1(3)	Agreement and Plan of Merger, dated as of November 12, 2019, by and among Tech Data Corporation, Tiger Midco, LLC and Tiger Merger Sub Co.
2-2(4)	Amendment No. 1 to Agreement and Plan of Merger, dated as of November 27, 2019, by and among Tech Data Corporation, Tiger Midco, LLC and Tiger Merger Sub Co.
3-1(2)	Amended and Restated Articles of Incorporation of Tech Data Corporation filed on June 4, 2014 with the Secretary of the State of Florida
3-2(2)	Bylaws of Tech Data Corporation as adopted by the Board of Directors and approved by the Shareholders on June 4, 2014
10-1(1)	~~First~~ Amendment toNo. ~~the~~1 ~~2018~~to ~~Equity~~Term ~~Incentive~~Loan ~~Plan~~Credit Agreement, dated as of ~~September~~April 529, ~~2019~~2020
10-2(1)	Amendment No. 1 to Third Amended and Restated Revolving Credit Agreement, dated as of April 29, 2020
10-3(1)	Second Amendment to the Amended and Restated Transfer and Administration Agreement, dated as of April 23, 2020
31-A(1)	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(1)	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(1)	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(1)	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(5),(6)	Interactive data files pursuant to Rule 405 of Regulation S-T: (i) Consolidated Balance Sheet as of ~~October~~April 3130, ~~2019~~2020 and January 31, ~~2019~~2020; (ii) Consolidated Statement of Income for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019; (iii) Consolidated Statement of Comprehensive ~~Income~~ (Loss) Income for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019; (iv) Consolidated Statement of Shareholders' Equity for the three ~~and nine~~ months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019 (v) Consolidated Statement of Cash Flows for the ~~nine~~three months ended ~~October~~April 3130, ~~2019~~2020 and ~~2018~~2019; and (vi) Notes to Consolidated Financial Statements, detail tagged.
104(5)	The cover page from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~October~~April 3130, ~~2019~~2020, formatted in Inline XBRL (included in Exhibit 101).


⁽¹⁾	Filed herewith.


⁽²⁾	Incorporated by reference to the Exhibits included in the Company’s Form 10-Q for the quarter ended April 30, 2014, File No. 0-14625.

(3) Incorporated by reference to the Exhibits included in the Company’s Form 8-K dated November 1312, 2019, File No. 0-14625.

(4) Incorporated by reference to the Exhibits included in the Company’s Form 8-K dated November 2927, 2019, File No. 0-14625.


⁽⁵⁾	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.


⁽⁶⁾	The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.

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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.

TECH DATA CORPORATION

(Registrant)

Signature	Title	Date
/s/ RICHARD T. HUME	Chief Executive Officer, Director (principal executive officer)	~~December~~June 43, ~~2019~~2020
Richard T. Hume
/s/ CHARLES V. DANNEWITZ	Executive Vice President, Chief Financial Officer (principal financial officer)	~~December~~June 43, ~~2019~~2020
Charles V. Dannewitz

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Filing Compare · TECH DATA CORP