Tech Data Corporation Reports Fourth Quarter and Fiscal Year 2020 Results
Tech Data (NASDAQ: TECD) (the “Company”) today announced its financial results for the fourth quarter and fiscal year ended January 31, 2020.
Fourth quarter ended January 31, Twelve months ended January 31, ($ in millions,except per share amounts)
2020
2019
Y/Y Change
2020
2019
Y/Y Change
Net Sales$10,380.8
$10,464.5
-1%
$36,998.4
$37,239.0
-1%
Gross profit
$666.2
$649.1
3%
$2,297.6
$2,255.9
2%
Gross margin6.42%
6.20%
22 bps
6.21%
6.06%
15 bps
SG&A expenses (GAAP)*
$438.6
$414.5
6%
$1,691.3
$1,648.9
3%
% of net sales4.22%
3.96%
26 bps
4.57%
4.43%
14 bps
SG&A expenses (Non-GAAP)*
$414.2
$388.3
7%
$1,603.2
$1,548.0
4%
% of net sales3.99%
3.71%
28 bps
4.33%
4.16%
17 bps
Operating income (GAAP)*
$218.1
$166.1
31%
$582.3
$493.8
18%
Operating margin (GAAP)*2.10%
1.59%
51 bps
1.57%
1.33%
24 bps
Operating income (Non-GAAP)*
$252.0
$260.9
-3%
$694.4
$707.9
-2%
Operating margin (Non-GAAP)*2.43%
2.49%
-6 bps
1.88%
1.90%
-2 bps
Net income (GAAP)*
$149.1
$116.8
28%
$374.5
$340.6
10%
Net income (Non-GAAP)*$175.5
$171.1
3%
$458.8
$435.9
5%
EPS - diluted (GAAP)*
$4.15
$3.11
33%
$10.27
$8.89
16%
EPS - diluted (Non-GAAP)*$4.88
$4.55
7%
$12.58
$11.38
11%
* Twelve months ended January 31, 2019 includes a $25 million benefit ($18 million net of tax; $0.47 cents per diluted share) from the collection of an accounts receivable balance previously considered uncollectible.
A reconciliation of GAAP to non-GAAP financial measures is presented in the financial tables of this press release.
Regional Financial Highlights:
Fourth quarter ended January 31, Twelve months ended January 31, ($ in millions)2020
2019
Y/Y Change
2020
2019
Y/Y Change
AMERICAS
Net Sales
$4,291.8
$4,241.7
1%
$16,600.0
$16,041.1
3%
% of WW net sales41%
41%
45%
43%
Operating income (GAAP)*
$89.1
$105.0
-15%
$333.2
$366.6
-9%
% of net sales2.08%
2.47%
-39 bps
2.01%
2.29%
-28 bps
Operating income (Non-GAAP)*
$113.1
$125.2
-10%
$405.1
$431.3
-6%
% of net sales2.63%
2.95%
-32 bps
2.44%
2.69%
-25 bps
EUROPE
Net Sales
$5,760.6
$5,895.1
-2%
$19,132.0
$20,026.1
-4%
% of WW net sales56%
56%
52%
54%
Operating income (GAAP)
$131.9
$109.1
21%
$272.5
$195.4
39%
% of net sales2.29%
1.85%
44 bps
1.42%
0.98%
44 bps
Operating income (Non-GAAP)
$140.8
$133.4
6%
$306.1
$287.5
6%
% of net sales2.44%
2.26%
18 bps
1.60%
1.44%
16 bps
ASIA PACIFIC
Net Sales
$328.4
$327.7
0%
$1,266.4
$1,171.8
8%
% of WW net sales3%
3%
3%
3%
Operating income (loss) (GAAP)
$5.6
($40.2)
NM
$8.8
($36.7)
NM
% of net sales1.69%
-12.26%
NM
0.69%
-3.13%
NM
Operating income (Non-GAAP)
$6.1
$9.7
-37%
$15.0
$17.9
-16%
% of net sales1.87%
2.97%
-110 bps
1.18%
1.53%
-35 bps
* Twelve months ended January 31, 2019 includes a $25 million benefit ($18 million net of tax; $0.47 cents per diluted share) from the collection of an accounts receivable balance previously considered uncollectible.
Note: WW = worldwide
Stock-based compensation expense was $8.5 million, an increase of $0.7 million, compared to the prior-year quarter. These expenses are excluded from the regional operating results and presented as a separate line item in the company’s segment reporting (see the GAAP to non-GAAP reconciliation in the financial tables of this press release).
Financial Highlights for the Fourth Quarter Ended January 31, 2020:
Worldwide net sales were $10.4 billion, a decrease of 1 percent compared to the prior-year quarter. On a constant currency basis, net sales were flat. Americas: Net sales were $4.3 billion, an increase of 1 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 1 percent. Europe: Net sales were $5.8 billion, a decrease of 2 percent compared to the prior-year quarter. On a constant currency basis, net sales were flat. Asia Pacific: Net sales were $0.3 billion, flat compared to the prior-year quarter. On a constant currency basis, net sales were also flat. The following vendor represented 10 percent or more of worldwide net sales in the fourth quarter: Apple Inc. 19 percent. Net cash generated by operations during the quarter was $180 million. The cash conversion cycle was 15 days, equal to the year-ago period.Financial Highlights for the Fiscal Year Ended January 31, 2020:
Worldwide net sales were $37.0 billion, a decrease of 1 percent compared to the prior year. On a constant currency basis, net sales increased 2 percent. Americas: Net sales were $16.6 billion, an increase of 3 percent compared to the prior year. On a constant currency basis, net sales increased 4 percent. Europe: Net sales were $19.1 billion, a decrease of 4 percent compared to the prior year. On a constant currency basis, net sales were flat. Asia Pacific: Net sales were $1.3 billion, an increase of 8 percent compared to the prior year. On a constant currency basis, net sales increased 10 percent. Net cash generated by operations during the fiscal year was $593 million. At January 31, 2020, the company had approximately $1.9 billion of goodwill and acquired intangibles. Return on invested capital for the trailing twelve months was 13 percent, compared to 12 percent in the prior year. Adjusted return on invested capital for the trailing twelve months was 15 percent, compared to 14 percent in the year-ago period.“Our fourth quarter capped a momentous year for Tech Data,” said Rich Hume, chief executive officer. “For the fiscal year 2020, we delivered a strong financial performance while making strategic progress and continuing to deliver higher value to our channel partners, colleagues and shareholders. We ended the year by reaching our biggest milestone yet—the agreement to be acquired by Apollo. We look forward to completing the transaction and working with the Apollo team to accelerate investments in our business.”
Subsequent Events
Tech Data previously announced its entry into a definitive agreement (the “Merger Agreement”) with Tiger Midco, LLC (“Parent”), an affiliate of funds managed by affiliates of Apollo Global Management (NYSE: APO), a leading global alternative investment manager (“Apollo”).
The Merger Agreement provides that Parent will acquire all of the outstanding shares of Tech Data common stock for $145 per share in cash. Tech Data filed Current Reports on Form 8-K on November 13, 2019 and November 29, 2019 providing further information with respect to the Merger Agreement and the Amendment No. 1 thereto. On February 12, 2020 Tech Data’s shareholders voted to approve and adopt the Merger Agreement at a special meeting of shareholders, which was one of the conditions to the closing of the merger. The closing of the merger remains subject to the satisfaction or waiver of other customary closing conditions. The transaction is expected to close during the first half of 2020, subject to the receipt of regulatory approvals.
For additional information on the merger, please see Tech Data’s definitive proxy statement filed on January 10, 2020 as supplemented by the Current Report on Form 8-K filed on February 4, 2020.
As previously announced, due to the pending transaction with affiliates of Apollo, Tech Data does not plan to host an earnings conference call nor provide forward-looking guidance.
Non-GAAP Financial Information
The non-GAAP financial information contained in this release is included with the intention of providing investors a more complete understanding of the Company’s operational results and trends, but should only be used in conjunction with results reported in accordance with Generally Accepted Accounting Principles (“GAAP”). Certain non-GAAP measures presented in this release or other releases, presentations and similar documents issued by the Company include sales, income or expense items as adjusted for the impact of changes in foreign currencies (referred to as “constant currency”), non-GAAP operating income, non-GAAP operating margin, non-GAAP net income, non-GAAP earnings per diluted share and Adjusted Return on Invested Capital. Certain non-GAAP measures also exclude acquisition-related intangible assets amortization expense, benefits associated with legal settlements, acquisition, integration and restructuring expenses, goodwill impairment, value-added tax assessments and related interest expense, gain on disposal of subsidiary, tax indemnifications, changes in deferred tax valuation allowances and the impact of U.S. tax reform. A detailed reconciliation of the adjustments between results calculated using GAAP and non-GAAP in this release is contained in the attached financial schedules.
Forward-Looking Statements
This communication includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements are inherently uncertain, and shareholders and other potential investors must recognize that actual results may differ materially from Tech Data’s expectations as a result of a variety of factors. Such forward-looking statements are based upon management’s current expectations and include known and unknown risks, uncertainties and other factors, many of which Tech Data is unable to predict or control, that may cause Tech Data’s actual results, performance, or plans to differ materially from any future results, performance or plans expressed or implied by such forward-looking statements. Risks and uncertainties related to the proposed merger include, but are not limited to, the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the failure of the parties to satisfy conditions to completion of the proposed merger, including the failure of the parties to obtain required regulatory approvals; the risk that regulatory or other approvals are delayed or are subject to terms and conditions that are not anticipated; and the risks, uncertainties, and other factors detailed from time to time in Tech Data’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed or furnished with the Securities and Exchange Commission (the “SEC”).
Many of these factors are beyond Tech Data’s control. Tech Data cautions investors that any forward-looking statements made by Tech Data are not guarantees of future performance. Tech Data disclaims any obligation to update any such factors or to announce publicly the results of any revisions to any of the forward-looking statements to reflect future events or developments.
About Tech Data
Tech Data connects the world with the power of technology. Our end-to-end portfolio of products, services and solutions, highly specialized skills, and expertise in next-generation technologies enable channel partners to bring to market the products and solutions the world needs to connect, grow and advance. Tech Data is ranked No. 88 on the Fortune 500® and has been named one of Fortune’s World’s Most Admired Companies for 11 straight years. To find out more, visit www.techdata.com or follow us on Twitter, LinkedIn, Facebook and Instagram.
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Three months ended January 31, Twelve months ended January 31,
2020
2019
2020
2019
Net sales
$
10,380,809
$
10,464,501
$
36,998,421
$
37,238,950
Cost of products sold
9,714,578
9,815,353
34,700,774
34,983,051
Gross profit
666,231
649,148
2,297,647
2,255,899
Operating expenses: Selling, general and administrative expenses
438,559
414,540
1,691,311
1,648,895
Acquisition, integration and restructuring expenses
9,953
21,121
26,030
87,920
Goodwill impairment
—
47,434
—
47,434
Legal settlements and other, net
(351
)
—
(633
)
(15,406
)
Gain on disposal of subsidiary — —
(1,390
)
(6,746
)
448,161
483,095
1,715,318
1,762,097
Operating income
218,070
166,053
582,329
493,802
Interest expense
17,729
27,345
86,005
106,725
Other expense, net
5,235
6,013
11,786
13,792
Income before income taxes
195,106
132,695
484,538
373,285
Provision for income taxes
46,026
15,896
110,038
32,705
Net income
$
149,080
$
116,799
$
374,500
$
340,580
Earnings per share Basic
$
4.19
$
3.13
$
10.35
$
8.94
Diluted
$
4.15
$
3.11
$
10.27
$
8.89
Weighted average common shares outstanding: Basic
35,564
37,316
36,186
38,094
Diluted
35,928
37,577
36,460
38,317
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value and share amounts)
January 31,
January 31,
2020
2019
ASSETS (unaudited) Current assets: Cash and cash equivalents$
841,366
$
799,123
Accounts receivable, net
6,192,203
6,241,740
Inventories
3,042,541
3,297,385
Prepaid expenses and other assets
362,182
354,601
Total current assets
10,438,292
10,692,849
Property and equipment, net
287,150
274,917
Goodwill and intangible assets, net
2,067,933
1,843,848
Other assets, net
475,234
174,938
Total assets
$
13,268,609
$
12,986,552
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable
$
7,259,246
$
7,496,466
Accrued expenses and other liabilities
1,112,457
1,000,126
Revolving credit loans and current maturities of long-term debt, net
112,882
110,368
Total current liabilities
8,484,585
8,606,960
Long-term debt, less current maturities
1,338,136
1,300,554
Other long-term liabilities
326,433
142,315
Total liabilities
$
10,149,154
$
10,049,829
Shareholders’ equity: Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at January 31, 2020 and 2019
$
89
$
89
Additional paid-in capital
855,020
844,206
Treasury stock, at cost (23,819,230 and 22,305,464 shares at January 31, 2020 and 2019)
(1,198,132
)
(1,037,872
)
Retained earnings
3,461,014
3,086,514
Accumulated other comprehensive income
1,464
43,786
Total shareholders' equity
3,119,455
2,936,723
Total liabilities and shareholders' equity
$
13,268,609
$
12,986,552
TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
Twelve months ended January 31,
2020
2019
Cash flows from operating activities: Cash received from customers
$
48,892,924
$
47,836,136
Cash paid to vendors and employees
(48,118,538
)
(47,263,258
)
Interest paid, net
(87,886
)
(97,293
)
Income taxes paid
(93,410
)
(95,450
)
Net cash provided by operating activities
593,090
380,135
Cash flows from investing activities: Proceeds from sale of business, net of cash divested
—
8,985
Acquisition of businesses, net of cash acquired
(209,923
)
(124,223
)
Expenditures for property and equipment
(48,352
)
(40,995
)
Software and software development costs
(36,470
)
(20,419
)
Other
4,491
4,943
Net cash used in investing activities
(290,254
)
(171,709
)
Cash flows from financing activities: Borrowings on long-term debt
300,000
—
Principal payments on long-term debt
(345,177
)
(208,591
)
Cash paid for debt issuance costs
(4,341
)
—
Net repayments on revolving credit loans
(9,005
)
(11,288
)
Payments for employee withholdings on equity awards
(9,428
)
(7,102
)
Proceeds from the reissuance of treasury stock
1,660
1,771
Acquisition of noncontrolling interest
(7,553
)
—
Repurchases of common stock
(170,191
)
(107,025
)
Other
529
—
Net cash used in financing activities
(243,506
)
(332,235
)
Effect of exchange rate changes on cash and cash equivalents
(17,087
)
(32,696
)
Net increase (decrease) in cash and cash equivalents
42,243
(156,505
)
Cash and cash equivalents at beginning of year
799,123
955,628
Cash and cash equivalents at end of year
$
841,366
$
799,123
Reconciliation of net income to net cash provided by operating activities: Net income
$
374,500
$
340,580
Adjustments to reconcile net income to net cash provided by operating activities: Goodwill impairment
—
47,434
Gain on disposal of subsidiary
(1,390
)
(6,746
)
Depreciation and amortization
153,099
158,997
Provision for losses on accounts receivable
21,081
9,903
Stock-based compensation expense
32,187
31,513
Accretion of debt discount and debt issuance costs
4,042
3,841
Deferred income taxes
19,187
(12,482
)
Changes in operating assets and liabilities, net of acquisitions and disposition: Accounts receivable
159,569
(512,385
)
Inventories
213,344
(480,001
)
Prepaid expenses and other assets
66,777
13,581
Accounts payable
(406,839
)
852,369
Accrued expenses and other liabilities
(42,467
)
(66,469
)
Total adjustments
218,590
39,555
Net cash provided by operating activities
$
593,090
$
380,135
TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
Three months ended January 31, 2020
Americas (1) Europe (1) Asia Pacific (1) StockCompensation
Expense Consolidated Net Sales
$ 4,291,774
$ 5,760,643
$ 328,392
$ 10,380,809
Operating income (GAAP) (1)$ 89,095
$ 131,893
$ 5,562
$ (8,480)
$ 218,070
Acquisition, integration and restructuring expenses8,275
1,196
19
463
9,953
Legal settlements and other, net(351)
—
—
(351)
Acquisition-related intangible assets amortization expense16,058
6,448
1,306
23,812
Tax indemnifications—
1,295
(750)
545
Total non-GAAP operating income adjustments$ 23,982
$ 8,939
$ 575
$ 463
$ 33,959
Operating income (non-GAAP)$ 113,077
$ 140,832
$ 6,137
$ (8,017)
$ 252,029
Operating margin (GAAP)2.08%
2.29%
1.69%
2.10%
Operating margin (non-GAAP)2.63%
2.44%
1.87%
2.43%
(1) GAAP operating income does not include stock compensation expense at the regional level.Three months ended January 31, 2019
Americas (1) Europe (1) Asia Pacific (1) StockCompensation
Expense Consolidated Net Sales
$ 4,241,714
$ 5,895,072
$ 327,715
$ 10,464,501
Operating income (GAAP) (1)$ 104,966
$ 109,083
$ (40,177)
$ (7,819)
$ 166,053
Acquisition, integration and restructuring expenses6,145
13,293
1,348
335
21,121
Goodwill impairment—
—
47,434
—
47,434
Acquisition-related intangible assets amortization expense13,414
7,977
1,315
22,706
Tax indemnifications708
3,033
(202)
3,539
Total non-GAAP operating income adjustments$ 20,267
$ 24,303
$ 49,895
$ 335
$ 94,800
Operating income (non-GAAP)$ 125,233
$ 133,386
$ 9,718
$ (7,484)
$ 260,853
Operating margin (GAAP)2.47%
1.85%
-12.26%
1.59%
Operating margin (non-GAAP)2.95%
2.26%
2.97%
2.49%
(1) GAAP operating income does not include stock compensation expense at the regional level. TECH DATA CORPORATION AND SUBSIDIARIESGAAP TO NON-GAAP RECONCILIATION
(In thousands)
Twelve months ended January 31, 2020
Americas (1)
Europe (1)
Asia Pacific (1)
Stock
Compensation
Expense
Consolidated
Net Sales$
16,600,023
$
19,132,040
$
1,266,358
$
36,998,421
Operating income (GAAP) (1)
$
333,233
$
272,498
$
8,785
$
(32,187
)
$
582,329
Acquisition, integration and restructuring expenses
16,078
8,424
1,065
463
26,030
Legal settlements and other, net
(633
)
—
—
(633
)
Acquisition-related intangible assets amortization expense
56,376
25,305
5,236
86,917
Gain on disposal of subsidiary
—
(1,390
)
—
(1,390
)
Tax indemnifications
—
1,295
(103
)
1,192
Total non-GAAP operating income adjustments
$
71,821
$
33,634
$
6,198
$
463
$
112,116
Operating income (non-GAAP)
$
405,054
$
306,132
$
14,983
$
(31,724
)
$
694,445
Operating margin (GAAP)
2.01
%
1.42
%
0.69
%
1.57
%
Operating margin (non-GAAP)
2.44
%
1.60
%
1.18
%
1.88
%
(1) GAAP operating income does not include stock compensation expense at the regional level.Twelve months ended January 31, 2019
Americas (1) Europe (1) Asia Pacific (1) StockCompensation
Expense Consolidated Net Sales
$
16,041,103
$
20,026,057
$
1,171,790
$
37,238,950
Operating income (GAAP) (1)
$
366,637
$
195,375
$
(36,697
)
$
(31,513
)
$
493,802
Acquisition, integration and restructuring expenses
25,206
57,755
2,378
2,581
87,920
Goodwill impairment
—
—
47,434
—
47,434
Legal settlements and other, net
(15,406
)
—
-
(15,406
)
Acquisition-related intangible assets amortization expense
54,196
31,673
5,379
91,248
Gain on disposal of subsidiary
—
(6,746
)
—
(6,746
)
Tax indemnifications
708
9,484
(558
)
9,634
Total non-GAAP operating income adjustments
$
64,704
$
92,166
$
54,633
$
2,581
$
214,084
Operating income (non-GAAP)
$
431,341
$
287,541
$
17,936
$
(28,932
)
$
707,886
Operating margin (GAAP)
2.29
%
0.98
%
-3.13
%
1.33
%
Operating margin (non-GAAP)
2.69
%
1.44
%
1.53
%
1.90
%
(1) GAAP operating income does not include stock compensation expense at the regional level.TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
Selling, general and administrative expenses ("SG&A")Three months ended January 31,
2020
2019
Net Sales
$
10,380,809
$
10,464,501
SG&A Expenses (GAAP)
$
438,559
$
414,540
Tax indemnifications
(545
)
(3,539
)
Acquisition-related intangible assets amortization expense
(23,812
)
(22,706
)
SG&A Expenses (non-GAAP)$
414,202
$
388,295
SG&A Expenses (GAAP) %
4.22
%
3.96
%
SG&A Expenses (non-GAAP) %
3.99
%
3.71
%
Twelve months ended January 31,
2020
2019
Net Sales
$
36,998,421
$
37,238,950
SG&A Expenses (GAAP)
$
1,691,311
$
1,648,895
Tax indemnifications
(1,192
)
(9,634
)
Acquisition-related intangible assets amortization expense
(86,917
)
(91,248
)
SG&A Expenses (non-GAAP)$
1,603,202
$
1,548,013
SG&A Expenses (GAAP) %
4.57
%
4.43
%
SG&A Expenses (non-GAAP) %
4.33
%
4.16
%
TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
Three months ended January 31,2020
2019
Net Income
Diluted EPS
Net Income
Diluted EPS
GAAP Results$149,080
$4.15
$116,799
$3.11
Acquisition, integration and restructuring expenses9,953
0.27
21,121
0.56
Goodwill impairment—
—
47,434
1.26
Legal settlements and other, net(351)
(0.01)
—
—
Acquisition-related intangible assets amortization expense23,812
0.66
22,706
0.60
Tax indemnifications545
0.02
3,539
0.09
Income tax effect of tax indemnifications(545)
(0.02)
(3,539)
(0.09)
Income tax effect of other adjustments above(8,307)
(0.23)
(8,815)
(0.23)
Change in deferred tax valuation allowances1,300
0.04
(2,914)
(0.08)
Impact of US tax reform—
—
(25,234)
(0.67)
Non-GAAP Results
$175,487
$4.88
$171,097
$4.55
Twelve months ended January 31,
2020
2019
Net Income
Diluted EPS
Net Income
Diluted EPS
GAAP Results$374,500
$10.27
$340,580
$8.89
Acquisition, integration and restructuring expenses26,030
0.71
87,920
2.29
Goodwill impairment—
—
47,434
1.24
Legal settlements and other, net(633)
(0.02)
(15,406)
(0.40)
Gain on disposal of subsidiary(1,390)
(0.04)
(6,746)
(0.18)
Value added tax assessments and related interest expense-
-
(928)
(0.02)
Acquisition-related intangible assets amortization expense86,917
2.38
91,248
2.38
Tax indemnifications1,192
0.03
9,634
0.25
Income tax effect of tax indemnifications(1,192)
(0.03)
(9,634)
(0.25)
Income tax effect of other adjustments above(27,949)
(0.76)
(39,925)
(1.04)
Income tax benefit from acquisition settlement—
—
(13,046)
(0.34)
Change in deferred tax valuation allowances1,300
0.04
(5,987)
(0.16)
Impact of US tax reform—
—
(49,234)
(1.28)
Non-GAAP Results
$458,775
$12.58
$435,910
$11.38
TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
Return on Invested Capital (ROIC)
Twelve months ended January 31, TTM Net Operating Profit After Tax (NOPAT)*:
2020
2019
Operating income
$
582,329
$
493,802
Income taxes on operating income (1)
(132,246
)
(43,264
)
NOPAT$
450,083
$
450,538
Average Invested Capital: Short-term debt (5-qtr end average)
$
119,613
$
116,931
Long-term debt (5-qtr end average)
1,305,606
1,402,967
Shareholders' Equity (5-qtr end average)
2,965,998
2,883,085
Total average capital
4,391,217
4,402,983
Less: Cash (5-qtr end average)
(828,080
)
(707,933
)
Average invested capital less average cash$
3,563,137
$
3,695,050
ROIC
13
%
12
%
* Trailing Twelve Months is abbreviated as TTM. (1) Income taxes on operating income was calculated using the trailing twelve months effective tax rate.Adjusted Return on Invested Capital (ROIC)
Twelve months ended January 31, TTM Net Operating Profit After Tax (NOPAT), as adjusted*:
2020
2019
Non-GAAP operating income (1)
$
694,445
$
707,886
Income taxes on non-GAAP operating income (2)
(160,477
)
(181,704
)
NOPAT, as adjusted$
533,968
$
526,182
Average Invested Capital, as adjusted: Short-term debt (5-qtr end average)
$
119,613
$
116,931
Long-term debt (5-qtr end average)
1,305,606
1,402,967
Shareholders' Equity (5-qtr end average)
2,965,998
2,883,085
Tax effected impact of non-GAAP adjustments (3)
57,561
88,879
Total average capital, as adjusted
4,448,778
4,491,862
Less: Cash (5-qtr end average)
(828,080
)
(707,933
)
Average invested capital less average cash$
3,620,698
$
3,783,929
Adjusted ROIC
15
%
14
%
* Trailing Twelve Months is abbreviated as TTM.(1) Represents operating income as adjusted to exclude acquisition, integration and restructuring expenses, legal settlements and other, net, gain on disposal of subsidiary, value added tax assessments, acquisition-related intangible assets amortization expense, goodwill impairment and tax indemnifications.
(2) Income taxes on non-GAAP operating income was calculated using the trailing twelve months effective tax rate adjusted for the impact of non-GAAP adjustments during the respective periods.
(3) Represents the 5 quarter average of the year-to-date impact of non-GAAP adjustments.
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