Tech Data (TECD)

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, direct marketers, retailers and corporate resellers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

A key tenet of our strategy is our ability to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our vendors and customers. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our vendors, including those terms related to rebates, price protection, product returns and other incentives. We expect these conditions to continue in the foreseeable future and, therefore, we will continue to proactively evaluate our pricing policies and inventory management practices in response to potential changes in our vendor terms and conditions and the general market environment.

15

Table of Contents

In addition to focusing on superior execution, we continue to drive diversification and the realignment of our customer and vendor portfolio to help drive long-term profitability throughout all of our operations. For example, our joint venture with Brightstar Corporation, one of the world’s largest wireless distributors and supply chain solutions providers, distributes mobile phones and other wireless devices to a variety of customers including mobile operators, dealers, agents, retailers and e-tailers in certain European markets. The joint venture also allows us to sell our core IT products to a new customer base serving the mobility market. In addition, we continue to strengthen our position with the small- and medium-business customer segment in several countries we operate, both organically and through acquisition. We are also expanding our product portfolio to include leading consumer electronics offerings and are exploring innovative third party logistics fulfillment services with certain vendor partners. As we continue to diversify, we continuously monitor the extension of credit and other terms and conditions offered to our customers to prudently balance risk, profitability and return on invested capital.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. At April 30, 2009, we had a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total equity) of 17%.

The current economic environment has presented a number of challenges. The rapid decline in IT demand in several markets has required payroll and other cost reductions to mitigate the impact of the decline in sales and gross profit. In addition, the impact of the downturn has resulted in vendor incentive goals being more difficult to achieve in certain markets where IT demand has declined. This may result in even greater pressure on our gross margin, as we may not be able to completely offset the reduced vendor incentives by increasing our prices to our customers or reducing our costs. Finally, the downturn has resulted in a global tightening of credit. This has recently extended to those institutions insuring us against credit risks in several markets, primarily in Europe. This recent trend could impact the credit lines we offer to our customers. On the other hand, this trend could have a positive effect on our results to the extent that our vendors rely more on distributors with the financial strength of Tech Data to distribute their products. In addition, these constraints could impact the financing available to our customers through financial institutions and as a result, we may experience a higher level of customer defaults than we have seen in recent years. All of these trends are expected to continue throughout fiscal 2010. As we manage through these challenges and evaluate our pricing, credit management and purchasing policies and make adjustments, if any, within our customer or vendor portfolio or our cost structure, we may continue to experience sales declines in many of the markets we operate, negatively impacting our financial results. The extent of the negative impact on our operating results will depend upon the length and severity of the global economic downturn.

While we continued to face the challenges of the aforementioned uncertain macroeconomic environment and continued softness in demand for technology products and services globally throughout the first quarter of fiscal 2010, overall we were pleased with the Company’s first quarter fiscal 2010 financial performance. Our first quarter fiscal 2010 net sales were negatively impacted by the decline in IT spending, but our strength in execution and prudent management discipline drove continued improvement in our operating performance. We achieved a year-over-year increase in gross margin, primarily as a result of solid execution of our inventory, pricing and freight management policies, most notably in Europe. Our strong execution in the region also resulted in the realization of incremental vendor incentives during the quarter. In addition, we improved our market share position within several countries in Europe during the quarter. In the Americas, we continued to experience heightened competitive pricing conditions and felt pressure from economic softness in the region. While the Americas results may not be at the level of recent years, considering the economic environment, we believe the region continues to provide solid profitability and returns on invested capital. We continue to focus on improving our sales execution, pricing and vendor rebate management practices to improve profitability in the region.

During the first quarter of fiscal 2010, we made several business acquisitions in the European distribution marketplace. While the acquisitions are not anticipated to have a significant impact on our consolidated results of operations during fiscal 2010, we believe the acquisitions will further diversify our product and customer portfolio and are important additions in their respective markets, while leveraging our existing infrastructure, in Europe.

We believe our strategy focused on execution, diversification and innovation will provide further improvements to our financial results. However, the current macroeconomic environment and related softening demand in IT spending within the markets in which we conduct business may hinder our ability to maintain or improve our operating margins, both in Europe and the Americas. As a result, we are constantly monitoring the factors that we can control, including our management of costs, working capital and capital spending and we will continue to work to manage our net sales, profitability and market share. We will also continue to make targeted strategic investments across our operations in IT enhancements and new business opportunities.

16

Table of Contents

Effective February 1, 2009, we adopted the provisions of Financial Accounting Standards Board Staff Position (“FSP”) APB 14-1, APB 14-1, “Accounting for Convertible Debt Instruments that May be Settled in Cash Upon Conversion (Including Partial Cash Settlement)” (“FSP 14-1”). FSP 14-1 changes the accounting treatment for convertible debt instruments that require or permit partial cash settlement upon conversion. The accounting changes require issuers to separate convertible debt instruments into two components: a non-convertible bond and a conversion option. The separation of the conversion option creates an original issue discount in the bond component which is to be accreted as interest expense over the term of the instrument using the interest method, resulting in an increase to interest expense and a decrease in net income and earnings per share. The provisions of FSP 14-1 require retrospective application to all periods presented and we have applied the provisions of FSP 14-1 to the Company’s $350.0 million convertible senior debentures issued in December 2006. The impact of the adoption of FSP 14-1 will be an increase in non-cash interest expense of approximately $10.0 million, partially offset by the related tax benefit of approximately $4.0 million, resulting in a decrease in net income of approximately $6.0 million on an annual basis during fiscal 2010 and through the remaining periods the debentures are outstanding through the Company’s assumed redemption date of December 20, 2011. The adoption of FSP 14-1 has had no impact on the Company’s consolidated cash flows. The accompanying comparative consolidated financial statements and footnotes have been adjusted for all periods presented to reflect the retrospective application of FSP 14-1. See further discussion related to our adoption of FSP 14-1 included in Note 1 of Notes to the Consolidated Financial Statements.

Overview

The Board of Directors believes the effective use of equity-based incentive plans is integral to the Company’s long-term performance and success in the marketplace. Accordingly, the Board has approved the 2009 Equity Incentive Plan of Tech Data Corporation (the “2009 Equity Plan”) and is recommending that our shareholders approve the 2009 Equity Plan. The 2009 Equity Plan will maintain the flexibility that the Company needs to keep pace with the industry and effectively attract, retain and motivate the caliber of employees essential to the Company’s success. The Board believes that long-term equity compensation aligns employees’ interests with those of other shareholders.

The 2009 Equity Plan contains the following important features:

If the 2009 Equity Plan is approved by shareholders, it will immediately replace the Amended and Restated 2000 Equity Incentive Plan of Tech Data Corporation (the “2000 Plan”), which expires by its term on June 20, 2010. Outstanding awards under the 2000 Plan will continue to be governed by the terms of the 2000 Plan until exercised, expired or otherwise terminated or canceled. As of April  2, 2009, 5,152,177 shares of Common Stock were subject to outstanding awards under the 2000 Plan.

Overview

Tech Data Corporation (“Tech Data,” “we,” “our,” “us,” or the “Company”), ranked 105th on the FORTUNE 500(R), is a leading distributor of information technology (“IT”) products, logistics management and other value-added services worldwide. We serve more than 125,000 value-added resellers (“VARs”), direct marketers, retailers and corporate resellers in more than 100 countries throughout North America, Latin America and Europe. Throughout this document we will make reference to the two primary geographic markets we serve as the Americas (including North America and Latin America) and Europe. For a discussion of our geographic reporting segments, see “Item 8. Financial Statements and Supplemental Data.”

We offer a variety of products from manufacturers and publishers such as Acer, Adobe, American Power, Apple, Asus Computer, Autodesk, Canon, Cisco Systems, Epson, Fujitsu-Siemens, Hewlett-Packard, IBM, Intel, Lexmark, Lenovo, Logitech, McAfee, Microsoft, Nortel Networks, Samsung, Sony, Symantec, Toshiba, Western Digital and Xerox. Products are generally shipped from regionally located logistics centers the same day the orders are received.

Customers are provided with a high level of customer service through the Company’s technical support, electronic commerce tools (including on-line order entry and electronic data interchange (“EDI”) services), product integration services, customized shipping documents and flexible financing programs. While we strive to provide our customers with a full array of services, revenues generated from the direct sale of services contributed less than 10% to Tech Data’s overall net sales.

Overview

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, direct marketers, retailers and corporate resellers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

A key tenet of our strategy is our ability to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our vendors and customers. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our vendors, including those terms related to rebates, price protection, product returns and other incentives. We expect these conditions to continue in the foreseeable future and, therefore, we will continue to proactively evaluate our pricing policies and inventory management practices in response to potential changes in our vendor terms and conditions and the general market environment.

18

Table of Contents

In addition to focusing on superior execution, we continue to drive diversification and the realignment of our customer and vendor portfolio to help drive long-term profitability throughout all of our operations. For example, our joint venture with Brightstar Corporation, one of the world’s largest wireless distributor and supply chain solutions providers, distributes mobile phones and other wireless devices to a variety of customers including mobile operators, dealers, agents, retailers and e-tailers in certain European markets. The joint venture also allows us to sell our core IT products to a new customer base serving the mobility market. In addition, we continue to strengthen our position with the small- and medium-business customer segment in several countries we operate, both organically and through acquisition. As we continue to diversify, we continuously monitor the extension of credit and other terms and conditions offered to our customers to prudently balance risk, profitability and return on invested capital.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. At January 31, 2009, we had a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 20%.

The current economic environment has presented a number of challenges. The rapid decline in IT demand in several markets has required payroll and other cost reductions to mitigate the impact of the decline in sales and gross profit. In addition, the downturn has resulted in vendor rebate goals being more difficult to achieve in those markets where IT demand has declined. This has put even greater pressure on our gross margin, as we may not be able to completely offset the reduced vendor rebates by increasing our prices to our customers or reducing our costs. Finally, the downturn has resulted in a global tightening of credit. This has recently extended to those institutions insuring us against credit risks in several markets, primarily in Europe. This recent trend could impact the credit lines we offer to our customers. On the other hand, this trend could have a positive effect on our results to the extent that our vendors rely more on distributors with the financial strength of Tech Data to distribute their products. In addition, these constraints could impact the financing available to our customers through financial institutions and as a result, we may experience a higher level of customer defaults than we have seen in recent years. All of these trends are expected to continue throughout fiscal 2010. As we manage through these challenges and evaluate our pricing, credit management and purchasing policies and make adjustments, if any, within our customer or vendor portfolio or our cost structure, we may experience sales declines in many of the markets we operate, negatively impacting our financial results. The extent of the negative impact on our operating results will depend upon the length and severity of the global economic downturn.

In spite of the recent global challenges, throughout fiscal 2009, we made measurable progress towards improving the profitability of our European operations. However, our business was challenged during both our third and fourth quarters as a result of the weakness in the global economy and the rapid devaluation of most foreign currencies against the U.S. dollar, particularly in the month of October. During the third quarter of fiscal 2009, we incurred a foreign currency exchange loss of approximately $23.5 million, with approximately 73% of this loss occurring in the European region. During the fourth quarter of fiscal 2009, the Company continued to experience foreign currency volatility and recorded a $5.5 million foreign currency exchange loss, with approximately 89% of this loss occurring in the European region. The primary factor contributing to the foreign currency exchange loss in both the third and fourth quarters was the use of certain portions of inventory as an economic hedge against foreign currency exposure in accounts payable. In such situations, we normally expect our product selling prices to customers to fluctuate with changes in the foreign currency exchange rates when such product is purchased in a currency other than the currency in which the inventory is sold. We were able to recover a significant portion of this foreign currency exchange loss through increased gross margin in both the third and fourth quarters of fiscal 2009. This is a strong example of our disciplined pricing and inventory management practices in action. However, to the extent that foreign currencies remain volatile and the market conditions remain competitive, we may incur significant foreign currency exchange losses in the future and there can be no assurance as to the amount of additional gross margin we will be able to realize to offset such losses.

Considering the various challenges faced during fiscal 2009, including an uncertain macroeconomic environment, volatile currencies, deteriorating financial markets and an overall decline in demand for technology products and services globally, we were pleased with the Company’s fiscal 2009 financial performance. We achieved year-over-year sales growth in Europe (on a euro basis) when several of our competitors experienced a decline in sales in the region. We believe our improved performance allowed us to improve our market share position during fiscal 2009. We continue to make investments in the region to leverage our pan-European infrastructure and to diversify our product portfolio. In the Americas, we continued to experience heightened competitive pricing conditions and felt pressure from economic softness in the region. Within our Canadian and Latin American operations, we also experienced foreign currency volatility against the U.S. dollar, although the impact on the overall Americas business was not as significant as the European region. As a result, our fiscal 2009 net sales growth and operating margins in the Americas fell short of prior year levels achieved in the region. While the Americas results may not be at the level of recent years, considering the economic environment, we believe the region continues to provide solid profitability and returns on invested capital. In fiscal 2009, we continued to make strategic investments in the Americas, through the enhancement of our customer-facing tools and general IT infrastructure related to logistics, finance and other functions in the region.

19

Table of Contents

In May 2008, we completed the acquisition of certain assets of Scribona, AB, a publicly–traded IT distributor in the Nordic region of Europe, with operations in Sweden, Finland and Norway (“Scribona”). The acquisition expands the Company’s presence in the Nordics. In connection with the acquisition, we paid approximately $78.3 million in cash for the net value of the acquired assets including inventory and certain other assets and the assumption of certain liabilities. The asset purchase agreement also provides for an additional earn-out payment of up to up to 1.5 million euros ($1.9 million at January 31, 2009), if certain performance objectives are met. We believe the acquisition is an important step in our strategy to drive growth and leverage our infrastructure in the European region.

We believe our strategy focused on execution, diversification and innovation will provide further improvements to our financial results. However, the current macroeconomic environment and related softening demand in IT spending within the markets in which we conduct business may hinder our ability to maintain or improve our operating margins, both in Europe and the Americas. As a result, we are constantly monitoring the factors that we can control, including our management of costs, working capital and capital spending and we will continue to work to manage our net sales, profitability and market share. We will also continue to make targeted strategic investments across our operations in IT enhancements and new business opportunities.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

Our strategy is to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our suppliers and customers. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates, product returns and other incentives and price protection. We

15

Table of Contents

expect these competitive pricing pressures to continue in the foreseeable future and may be heightened in the relative near term given the challenging economic environment that currently exists in most of the markets in which we operate. We constantly evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms and conditions and the general market environment. We remain focused on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to help drive long-term profitability throughout all of our operations. We continuously monitor the extension of credit and other terms and conditions offered to our customers to prudently balance risk, profitability and return on invested capital. As we evaluate our pricing, credit management and purchasing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level. In addition, given the current economic environment and the worldwide credit constraints, we may experience a higher level of customer defaults than we have seen in recent years.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and available cash for our working capital needs. We believe our balance sheet at October 31, 2008 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 20%.

Throughout the first nine months of fiscal 2009, we believe we have made measurable progress towards improving our profitability in our European operations. However, our international business was challenged during our third quarter as a result of the weakness in the global economy and the rapid devaluation of most foreign currencies against the U.S. dollar, particularly in the month of October. We incurred a foreign currency exchange loss of approximately $23.5 million during our third fiscal quarter, with approximately 73% of this loss occurring in the European region. The primary factor contributing to the foreign currency exchange loss was the use of certain portions of inventory as a hedge against foreign currency exposure in accounts payable. In such situations, we would normally expect our product selling prices to customers to fluctuate with changes in the foreign currency exchange rates when such product is purchased in a currency other than the currency in which the inventory is sold. We were able to recover a portion of this foreign currency exchange loss through increased gross margin and we expect to recover additional amounts in future periods as the remaining inventory at October 31, 2008 is sold. However, to the extent that foreign currencies remain volatile and the market conditions remain competitive, there can be no assurance as to the amount of additional gross margin we will be able to realize in future periods. Considering the various challenges faced during the quarter, we were pleased with our achievement of year-over-year third fiscal quarter sales growth in Europe (on a euro basis) when several recent indicators have pointed to flat or decreased IT spending in the region. We continue to make investments in the region to leverage our pan-European infrastructure and to diversify our product portfolio. In the Americas, we continued to experience heightened competitive pricing conditions and felt pressure from economic softness in the region. Within our Canadian and Latin American operations, we also experienced foreign currency volatility against the U.S. dollar, although the impact on the overall Americas business was not as significant as the European region. As a result, our third fiscal quarter net sales growth and operating margins in the Americas fell short of prior year levels achieved in the region. While the Americas results may not be at the level of recent years, considering the economic environment, we believe the region continues to provide solid profitability and returns on invested capital. We continue to make strategic investments in the Americas, through the enhancement of our customer-facing tools and general IT infrastructure related to logistics, finance and other functions in the region.

Our strategy of focusing on execution, diversification and innovation is intended to improve our financial results. However, there continues to be uncertainty surrounding the economic environment and its impact on IT spending. This economic uncertainty coupled with a very competitive pricing environment, especially in the Americas, may hinder our ability to improve our operating margins. As a result, we are constantly monitoring the factors that we can control, including our management of costs, working capital and capital spending and we will continue to work to manage our net sales, profitability and market share. We will also continue to make targeted strategic investments across our operations in IT enhancements and new business opportunities.

In May 2008, we completed the acquisition of certain assets of Scribona, AB, a publicly–traded IT distributor in the Nordic region of Europe, with operations in Sweden, Finland and Norway (“Scribona”). The acquisition expands the Company’s presence in the Nordics. In connection with the acquisition, we paid approximately $78.3 million in cash for the net value of the acquired assets including inventory and certain other assets and the assumption of certain liabilities. The total purchase price has been paid in several installments, of which $68.2 million had been paid through October 31, 2008 with the final installment paid in the fourth quarter of fiscal 2009. The asset purchase agreement also provides for an additional earn-out payment of up to up to 1.5 million euros ($1.9 million at October 31, 2008) , if certain performance objectives are met.

16

Table of Contents

Through October 31, 2008, we have recognized approximately $7.5 million of integration costs, primarily associated with customer transition, relocation initiatives, consulting and other integration activities related to the acquisition, which are included in “selling, general and administrative expenses” in the Consolidated Statement of Operations. We expect total integration costs to be approximately $9.0 million, all of which are anticipated to be incurred during fiscal 2009. While this acquisition is not anticipated to have a material impact on our fiscal 2009 results of operations, we believe the acquisition is an important step in our strategy to drive growth and leverage our infrastructure in the European region.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

Our strategy is to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our suppliers and customers. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing

15

Table of Contents

policies and terms and conditions offered to our customers in response to changes in our vendors’ terms and conditions and the general market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to help drive long-term profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at July 31, 2008 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 18%.

Throughout the first half of fiscal 2009, we continued to make measurable progress towards improving our profitability in our European operations and exceeded our second quarter operating income targets. We were also pleased with achieving year-over-year sales growth in Europe (on a euro basis) when recent indicators have pointed to a relatively soft macro demand environment in the region. In the Americas, we saw heightened competitive pricing conditions and felt pressure from continued economic softness in the region. As a result, our second quarter revenue growth and operating margin in the region fell short of recent levels achieved in the region as well as our expectations for the quarter. We continued to make strategic investments in the Americas, such as increasing our investment in SAP surrounding warehouse management and financial systems in the region.

We believe our strategy focused on execution, diversification and innovation will provide further improvements to our financial results. However, there continues to be uncertainty surrounding the economic environment and its impact on future demand for IT products. This economic uncertainty coupled with a very competitive pricing environment, especially in the Americas, may hinder our ability to improve our operating margins. As a result, we are constantly monitoring the factors that we can control, including our management over costs and capital spending and we will continue to work to selectively grow our net sales, profitability and market share. We will also continue to make targeted strategic investments across our operations in IT enhancements, sales coverage programs and new business opportunities.

In May 2008, we completed the acquisition of certain assets of Scribona, AB, a publicly–traded IT distributor in the Nordic region of Europe, with operations in Sweden, Finland and Norway (“Scribona”). The acquisition expands the Company’s presence in the Nordics. In connection with the acquisition, we will pay approximately $82.1 million in cash for the net value of the acquired assets including inventory and certain other assets and the assumption of certain liabilities. The total purchase price is being paid in several installments, of which $68.2 million has been paid through July 31, 2008 and the final installment is to be paid in the fourth quarter of fiscal 2009. The asset purchase agreement also provides for an additional earn-out payment of up to $2.3 million if certain future performance objectives are met.

Through July 31, 2008, we have recognized approximately $7.0 million of integration costs, primarily associated with customer transition, relocation initiatives, consulting and other integration activities related to the acquisition, which are included in “selling, general and administrative expenses” in the Consolidated Statement of Operations. We expect total integration costs to be approximately $9.5 million, all of which are anticipated to be incurred during fiscal 2009. While this acquisition is not anticipated to have a material impact on our fiscal 2009 results of operations, we believe the acquisition is an important step in our strategy to drive growth and leverage our infrastructure in the European region.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

Our strategy is to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our suppliers and customers. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms

13

Table of Contents

and conditions and the general market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to support a sustainable higher margin business that will help drive long-term profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at April 30, 2008 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 17%.

In the first quarter of fiscal 2009, we delivered solid and consistent performance in the Americas, achieving an operating margin of 1.51% while at the same time continuing to invest in our strategic growth and productivity initiatives. In Europe, we are making measurable progress towards improving our profitability with our European operations exceeding our first quarter sales plans and showing year-over-year improvements in gross margin.

We believe our strategy focused on execution, diversification and innovation will provide further improvements to our financial results. However, there continues to be uncertainty surrounding the economic environment and its impact on future demand for IT products. This economic uncertainty coupled with a very competitive pricing environment, especially in the Americas, may hinder our ability to improve our operating margins. As a result, we are constantly monitoring the factors that we can control, including our management over costs and capital spending and we will continue to work to selectively grow our net sales, profitability and market share. We will also continue to make targeted strategic investments across our operations in IT enhancements, sales coverage programs and new business opportunities.

In mid-May 2008, we completed the acquisition of certain assets of Scribona, AB, a publicly traded IT distribution company in the Nordic region of Europe, with operations in Sweden, Finland and Norway (“Scribona”). Pursuant to the asset purchase agreement, we will pay approximately $83.0 million in cash, including a $23.0 million premium, for the net value of the transferred assets including inventory, customer lists, office equipment and certain other assets. The total purchase price will be paid over a period of six months. During fiscal 2009, we expect to recognize approximately $11.0 million of integration costs primarily associated with customer transition, relocation initiatives, consulting and other integration activities related to the acquisition. While this acquisition is not anticipated to have a material impact on our fiscal 2009 results of operations, we believe the acquisition is an important step in our strategy to drive growth and leverage our infrastructure in the European region.

Overview

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

Our strategy is to leverage our efficient cost structure combined with our multiple service offerings to generate demand and cost efficiencies for our suppliers and customers around the world. The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms

17

Table of Contents

and conditions and the general market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to support a sustainable higher margin business that will help drive long-term profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at January 31, 2008 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 17%.

In fiscal 2008, we delivered solid and consistent performance in the Americas, achieving an operating margin in excess of 1.5% while at the same time continuing to invest in growth and productivity enhancement initiatives. In Europe, we are making measurable progress towards improving our profitability with improving sales coverage in many of our European regions. We have executed our restructuring programs throughout Europe, which are improving our operating performance going forward. In fiscal 2008, the vast majority of our European businesses delivered improved operating income and cash metrics in comparison with fiscal 2007. We continue to fall short of our operating targets in Germany and in response, we have made significant changes to our German management structure. The new team is taking aggressive action to improve our execution throughout our German operations. These changes will take time to take effect. While we still have opportunities and expectations for additional improvement, we believe that our current performance within the majority of the European countries is a positive indicator of the Company’s ability to improve our operating performance.

As discussed above, we believe our fiscal 2008 financial performance demonstrates our ability to execute as we delivered solid performance in the Americas and achieved significant improvements in our operating performance in Europe compared to fiscal 2007. During fiscal 2008, we announced several initiatives designed to further enhance our long-term profitability and return on invested capital in Europe, including the following:

18

Table of Contents

In early March 2008, we announced the execution of an agreement for the acquisition of certain assets of Scribona, AB, a publicly traded IT distribution company in the Nordic region of Europe, with operations in Sweden, Finland and Norway (“Scribona”). The purchase price for the assets is the net asset value plus a premium for the transferred assets, including inventory, intellectual property, material contracts, office equipment and certain other assets. The premium is estimated to be in the range of 13.5 million to 16.5 million euros (approximately $20.0 to $25.0 million). The transaction is subject to various contingencies including labor consultations, clearance from the European Union and Scribona shareholder approval with a targeted completion in the second quarter of fiscal 2009.

We have seen stronger recent performance in virtually all markets in Europe, with the exception of Germany. We believe our strategy focused on execution, diversification and innovation will provide further improvements to our financial results. However, the competitive environment and changes in general economic conditions within the markets in which we conduct business may hinder our ability to improve our operating margins, both in Europe and the Americas. We will continue to work to selectively grow our net sales, profitability and market share. We will also continue to make targeted investments across our worldwide operations in IT enhancements, sales programs and new business units.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including North America and Latin America) and Europe.

The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms and conditions and the general

15

Table of Contents

market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and product portfolio to support a sustainable higher margin business that will help drive long-term profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or product portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at October 31, 2007 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 18%.

We continue to be satisfied with our performance over the last several years within the Americas and are making measurable progress towards improving our profitability within Europe. The major initiatives surrounding our European restructuring program were completed in the third quarter of fiscal 2007, and the savings realized from our restructuring initiatives partially offset the pressure on our gross margins experienced during fiscal 2007. During the second semester of fiscal 2007 and the first nine months of fiscal 2008 we have seen our European operations, with the exception of Germany, begin to stabilize with improving gross margin, stable operating expenses and improving operating margins. While we still have opportunities and expectations for additional improvement, we believe that our current performance within the majority of the European countries is a positive indicator of the Company’s ability to improve our operating performance in Europe. Within Germany, we have continued to fall short of our operating targets. In response, we have made significant changes to our German management structure and the new team is taking aggressive action to improve upon our execution throughout the German operations. These changes will take time to stabilize.

We believe our third quarter fiscal 2008 financial performance demonstrates our ability to execute as we achieved significant improvements in our operating performance in Europe compared to the three and nine month periods ended October 31, 2006. During the first nine months of fiscal 2008, we announced several initiatives designed to further enhance our long-term profitability and return on invested capital in the region, including the following:

16

Table of Contents

We have seen stronger recent performance in virtually all markets in Europe, with the exception of Germany. We believe our strategy focused on diversification, execution and innovation will provide further improvements to our financial results in the region. However, the competitive environment and changes in general economic conditions within the markets in which we conduct business may hinder our ability to improve our operating margins, both in Europe and the Americas. We will continue to work to selectively grow our net sales, profitability and market share. We will also continue to make targeted investments across our worldwide operations in IT enhancements, sales programs and new business units.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including the United States, Canada, Latin America and export sales to the Caribbean) and Europe (including Europe, the Middle East and export sales to Africa).

The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms and conditions and the general

15

Table of Contents

market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to support a sustainable higher margin business that will help drive long-term profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at July 31, 2007 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 17%.

We continue to be satisfied with our performance over the last several years within the Americas and are making measurable progress towards improving our profitability within Europe. The major initiatives surrounding our European restructuring program were completed in the third quarter of fiscal 2007, and the savings realized from our restructuring initiatives have partially offset the pressure on our gross margins experienced during fiscal 2007 and the first half of fiscal 2008. During the second semester of fiscal 2007 and first semester of fiscal 2008 we have seen our European operations begin to stabilize with improving revenue growth, improving gross profit and stable operating expenses. While we still have opportunities and expectations for additional improvement, we believe that our current performance within several countries is a positive indicator of the Company’s ability to improve our operating performance in Europe.

We believe that our second quarter fiscal 2008 financial performance firmly underscores our ability to execute as we achieved significant improvements in our operating performance in Europe compared to the three and six month periods ended July 31, 2006. During the first semester of fiscal 2008 and through August 2007, we announced several initiatives designed to further enhance our long-term profitability and return on invested capital in the region, including the following:

16

Table of Contents

We have seen stronger recent performance in Europe and we believe the initiatives outlined above will provide further improvements to our financial results in the region. However, the competitive environment and changes in general economic conditions within the markets in which we conduct business may hinder our ability to improve our operating margins. We will continue to work to selectively grow our net sales, profitability and market share. We will also continue to make targeted investments across our worldwide operations in IT enhancements, sales program and new business units.

Overview

Tech Data is a leading distributor of information technology (“IT”) products, logistics management and other value-added services. We distribute microcomputer hardware and software products to value-added resellers, corporate resellers, direct marketers and retailers. Our offering of value-added customer services includes training and technical support, external financing options, configuration services, outbound telemarketing, marketing services and a suite of electronic commerce solutions. We manage our business in two geographic segments: the Americas (including the United States, Canada, Latin America and export sales to the Caribbean) and Europe, formerly referred to as EMEA (including Europe, the Middle East and export sales to Africa).

The IT distribution industry in which we operate is characterized by narrow gross profit as a percentage of sales (“gross margin”) and narrow income from operations as a percentage of sales (“operating margin”). Historically, our gross and operating margins have been impacted by intense price competition, as well as changes in terms and conditions with our suppliers, including those terms related to rebates and other incentives and price protection. We expect these competitive pricing pressures to continue in the foreseeable future, and therefore, we will continue to evaluate our pricing policies and terms and conditions offered to our customers in response to changes in our vendors’ terms and conditions and the general market environment. We will continue to focus on not only disciplined pricing and purchasing practices, but also on realigning our customer and vendor portfolio to support a sustainable higher margin business that will help drive long-term

15

Table of Contents

profitability throughout all of our operations. As we continue to evaluate our existing pricing policies and make future changes, if any, within our customer or vendor portfolio, we may experience moderated sales growth or sales declines. In addition, increased competition and changes in general economic conditions within the markets in which we conduct business may hinder our ability to maintain and/or improve gross margin from its current level.

From a balance sheet perspective, we require working capital primarily to finance accounts receivable and inventory. We have historically relied upon debt, trade credit from our vendors, and accounts receivable financing programs for our working capital needs. We believe our balance sheet at April 30, 2007 was one of the strongest in the industry, with a debt to capital ratio (calculated as total debt divided by the aggregate of total debt and total shareholders’ equity) of 19%.

We continue to be satisfied with our performance over the last several years within the Americas. However, our profitability within Europe has been well below our expectations. We believe it will take longer than originally anticipated to reach an acceptable level of profitability in Europe. The major initiatives surrounding our European restructuring program were completed in the third quarter of fiscal 2007, and the savings realized from our restructuring initiatives have partially offset the pressure on our gross margins experienced during fiscal 2007 and the first quarter of fiscal 2008. During the second semester of fiscal 2007 and first quarter of fiscal 2008 we have seen our European operations begin to stabilize with improving revenue growth and stable operating expenses. While we still have opportunities and expectations for additional improvement, we believe that our current performance within several countries is a positive indicator of the Company’s ability to improve our operating performance in Europe. During the first quarter of fiscal 2008 and through May 2007 we announced several initiatives designed to further enhance our long-term profitability and return on invested capital in the region, including the following:

In addition, we are in the process of negotiating the sale of our operations in Israel, which would eliminate all of our “in country” operations in the Middle East. The balance sheet and results of our Israeli operations are not material to our consolidated balance sheet or results of operations.

We continue to remain cautious in our outlook. We have seen stronger recent performance in Europe and we believe the initiatives outlined above will provide further improvements to our financial results in the region. However, the competitive environment and changes in general economic conditions within the markets in which we conduct business may hinder our ability to improve our operating margins.

16

Table of Contents