Tech Data Reports Third Quarter Fiscal Year 2020 Results

CLEARWATER, Fla.--(BUSINESS WIRE)--Tech Data (NASDAQ: TECD) (the “Company”) today announced its financial results for the third quarter ended October 31, 2019.

	Third quarter ended October 31,			Nine months ended October 31,
($ in millions, except per share amounts)	2019	2018	Y/Y Change	2019	2018	Y/Y Change
Net Sales	$9,118.9	$9,340.0	-2%	$26,617.6	$26,774.4	-1%
Gross profit	$560.4	$556.6	1%	$1,631.4	$1,606.8	2%
Gross margin	6.15%	5.96%	19 bps	6.13%	6.00%	13 bps
SG&A expenses (GAAP)*	$415.2	$396.7	5%	$1,252.8	$1,234.4	1%
% of net sales	4.55%	4.25%	30 bps	4.71%	4.61%	10 bps
SG&A expenses (Non-GAAP)*	$394.1	$368.6	7%	$1,189.0	$1,159.7	3%
% of net sales	4.32%	3.95%	37 bps	4.47%	4.33%	14 bps
Operating income (GAAP)*	$141.9	$146.9	-3%	$364.3	$327.7	11%
Operating margin (GAAP)*	1.56%	1.57%	-1 bps	1.37%	1.22%	15 bps
Operating income (Non-GAAP)*	$166.3	$188.0	-12%	$442.4	$447.0	-1%
Operating margin (Non-GAAP)*	1.82%	2.01%	-19 bps	1.66%	1.67%	-1 bps
Net income (GAAP)*	$90.8	$114.2	-21%	$225.4	$223.8	1%
Net income (Non-GAAP)*	$108.8	$116.3	-6%	$283.3	$264.8	7%
EPS - diluted (GAAP)*	$2.52	$2.96	-15%	$6.15	$5.80	6%
EPS - diluted (Non-GAAP)*	$3.02	$3.02	0%	$7.73	$6.87	13%

* Third quarter ended October 31, 2018 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.

This information is also available on the Investor Relations section of Tech Data’s website at www.techdata.com/investor.

	Third quarter ended October 31,			Nine months ended October 31,
($ in millions)	2019	2018	Y/Y Change	2019	2018	Y/Y Change
AMERICAS
Net Sales	$4,202.3	$4,137.9	2%	$12,308.2	$11,799.4	4%
% of WW net sales	46%	44%		46%	44%
Operating income (GAAP)*	$82.4	$112.4	-27%	$244.1	$261.7	-7%
% of net sales	1.96%	2.72%	-76 bps	1.98%	2.22%	-24 bps
Operating income (Non-GAAP)*	$99.4	$124.8	-20%	$292.0	$306.1	-5%
% of net sales	2.37%	3.01%	-64 bps	2.37%	2.59%	-22 bps
EUROPE
Net Sales	$4,622.3	$4,920.2	-6%	$13,371.4	$14,131.0	-5%
% of WW net sales	51%	53%		50%	53%
Operating income (GAAP)	$66.5	$39.9	67%	$140.6	$86.3	63%
% of net sales	1.44%	0.81%	63 bps	1.05%	0.61%	44 bps
Operating income (Non-GAAP)	$72.4	$66.2	9%	$165.3	$154.1	7%
% of net sales	1.57%	1.34%	23 bps	1.24%	1.09%	15 bps
ASIA PACIFIC
Net Sales	$294.4	$282.0	4%	$938.0	$844.1	11%
% of WW net sales	3%	3%		4%	3%
Operating income (GAAP)	$0.3	$2.7	-90%	$3.2	$3.5	-7%
% of net sales	0.09%	0.97%	-88 bps	0.34%	0.41%	-7 bps
Operating income (Non-GAAP)	$1.8	$4.6	-62%	$8.8	$8.2	8%
% of net sales	0.60%	1.64%	-104 bps	0.94%	0.97%	-3 bps

Regional Financial Highlights:

* Third quarter ended October 31, 2018 includes a $25 million benefit from the collection of an accounts receivable balance previously considered uncollectible.

Note: WW = worldwide
Stock-based compensation expense was $7.3 million, a decrease of $0.8 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).

• Worldwide net sales were $9.1 billion, a decrease of 2 percent compared to the prior-year quarter. On a constant currency basis, net sales were flat.
  • Americas: Net sales were $4.2 billion, an increase of 2 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 2 percent.
  • Europe: Net sales were $4.6 billion, a decrease of 6 percent compared to the prior-year quarter. On a constant currency basis, net sales decreased 2 percent.
  • Asia Pacific: Net sales were $0.3 billion, an increase of 4 percent compared to the prior-year quarter. On a constant currency basis, net sales increased 4 percent.
  • Three vendors represented 10 percent or more of worldwide net sales: Apple Inc. 17%; Cisco Systems 11%; and HP Inc. 10%.
• Net cash generated by operations during the quarter was $310 million. The cash conversion cycle improved by one day to 17 days, compared to the year-ago period.
• At October 31, 2019, the company had approximately $1.6 billion of goodwill and acquired intangibles.
• Return on invested capital for the trailing twelve months was 12 percent, compared to 8 percent in the prior year. Adjusted return on invested capital for the trailing twelve months was 15 percent, compared to 12 percent in the year-ago period.
• In the quarter, the company repurchased 518,433 shares for $49 million at an average purchase price of $95.09 per share. In connection with the subsequent events described below, the company has suspended its share repurchase program.

“We delivered solid third quarter results while continuing to execute on our strategy and portfolio optimization actions,” said Rich Hume, chief executive officer. “In Q3, we also announced our intention to acquire DLT Solutions, a premier software and cloud solutions aggregator focused on the U.S. public sector. This acquisition reflects our strategy of delivering higher value – strengthening our end-to-end portfolio and accelerating our capabilities in next-generation technologies.”

Subsequent Events

On November 13, 2019, Tech Data announced it had entered into a definitive agreement (the “Merger Agreement”) to be acquired by Tiger Midco, LLC, an affiliate of funds managed by affiliates of Apollo Global Management, Inc. (NYSE: APO), a leading global alternative investment manager (“Apollo”). The Merger Agreement provides that Tiger Midco, LLC will acquire all of the outstanding shares of Tech Data common stock for $130 per share in cash. Tech Data filed a Current Report on Form 8-K on November 13, 2019 providing further information with respect to the Merger Agreement. As previously announced, due to the pending acquisition by affiliates of the Apollo Funds, 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, 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. This information can also be obtained from the Company’s Investor Relations website at www.techdata.com/investor.

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 Tech Data’s shareholders to approve the proposed merger or 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.

No Offer or Solicitation

This communication shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities, in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offering of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

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 10 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 October 31,						Nine months ended October 31,
	2019			2018			2019			2018
Net sales	$	9,118,944		$	9,340,029		$	26,617,612		$	26,774,449
Cost of products sold		8,558,557			8,783,425			24,986,196			25,167,698
Gross profit		560,387			556,604			1,631,416			1,606,751
Operating expenses:
Selling, general and administrative expenses		415,242			396,675			1,252,752			1,234,355
Acquisition, integration, and restructuring expenses		4,647			20,277			16,077			66,799
Legal settlements and other, net		—			(7,207	)		(282	)		(15,406	)
Gain on disposal of subsidiary		(1,390	)		(29	)		(1,390	)		(6,746	)
		418,499			409,716			1,267,157			1,279,002
Operating income		141,888			146,888			364,259			327,749
Interest expense		21,033			25,405			68,276			79,380
Other expense, net		4,348			4,961			6,551			7,779
Income before income taxes		116,507			116,522			289,432			240,590
Provision for income taxes		25,737			2,306			64,012			16,809
Net income	$	90,770		$	114,216		$	225,420		$	223,781
Earnings per share:
Basic	$	2.54		$	2.98		$	6.19		$	5.83
Diluted	$	2.52		$	2.96		$	6.15		$	5.80
Weighted average common shares outstanding:
Basic		35,720			38,358			36,395			38,357
Diluted		35,968			38,526			36,630			38,559

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(In thousands, except par value and share amounts)
	October 31,			January 31,
	2019			2019
ASSETS	(unaudited)
Current assets:
Cash and cash equivalents	$	964,146		$	799,123
Accounts receivable, net		5,768,940			6,241,740
Inventories		3,145,381			3,297,385
Prepaid expenses and other assets		341,075			354,601
Total current assets		10,219,542			10,692,849
Property and equipment, net		275,013			274,917
Goodwill		888,165			892,990
Intangible assets, net		884,560			950,858
Other assets, net		427,456			174,938
Total assets	$	12,694,736		$	12,986,552
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,963,941		$	7,496,466
Accrued expenses and other liabilities		1,030,457			1,000,126
Revolving credit loans and current maturities of long-term debt, net		123,271			110,368
Total current liabilities		8,117,669			8,606,960
Long-term debt, less current maturities		1,294,186			1,300,554
Other long-term liabilities		314,596			142,315
Total liabilities	$	9,726,451		$	10,049,829
Shareholders’ equity:
Common stock, par value $0.0015; 200,000,000 shares authorized; 59,245,585 shares issued at October 31, 2019 and January 31, 2019	$	89		$	89
Additional paid-in capital		846,636			844,206
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	)
Retained earnings		3,311,934			3,086,514
Accumulated other comprehensive income		4,774			43,786
Total shareholders' equity		2,968,285			2,936,723
Total liabilities and shareholders' equity	$	12,694,736		$	12,986,552

TECH DATA CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(In thousands)
(Unaudited)
	Nine months ended October 31,
	2019			2018
Cash flows from operating activities:
Cash received from customers	$	35,335,867		$	34,190,821
Cash paid to vendors and employees		(34,774,608	)		(33,891,567	)
Interest paid, net		(79,482	)		(82,829	)
Income taxes paid		(69,174	)		(67,107	)
Net cash provided by operating activities		412,603			149,318
Cash flows from investing activities:
Proceeds from sale of business, net of cash divested		—			8,985
Acquisition of businesses, net of cash acquired		—			(124,223	)
Expenditures for property and equipment		(30,503	)		(24,830	)
Software and software development costs		(21,147	)		(15,323	)
Other		315			1,105
Net cash used in investing activities		(51,335	)		(154,286	)
Cash flows from financing activities:
Borrowings on long-term debt		300,000			—
Principal payments on long-term debt		(311,925	)		(207,854	)
Cash paid for debt issuance costs		(4,341	)		—
Net borrowings (repayments) on revolving credit loans		15,035			(9,274	)
Payments for employee tax withholdings on equity awards		(9,337	)		(6,988	)
Proceeds from the reissuance of treasury stock		1,450			1,322
Acquisition of noncontrolling interest		(7,553	)		—
Repurchases of common stock		(166,992	)		(43,798	)
Other		529			—
Net cash used in financing activities		(183,134	)		(266,592	)
Effect of exchange rate changes on cash and cash equivalents		(13,111	)		(37,589	)
Net increase (decrease) in cash and cash equivalents		165,023			(309,149	)
Cash and cash equivalents at beginning of year		799,123			955,628
Cash and cash equivalents at end of period	$	964,146		$	646,479
Reconciliation of net income to net cash provided by operating activities:
Net income	$	225,420		$	223,781
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on disposal of subsidiary		(1,390	)		(6,746	)
Depreciation and amortization		112,726			119,641
Provision for losses on accounts receivable		19,176			11,545
Stock-based compensation expense		23,707			23,694
Accretion of debt discount and debt issuance costs		3,195			2,983
Deferred income taxes		4,577			(11,567	)
Changes in operating assets and liabilities, net of acquisitions and disposition:
Accounts receivable		372,594			(309,390	)
Inventories		113,168			(397,692	)
Prepaid expenses and other assets		38,991			(3,720	)
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

TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
	Three months ended October 31, 2019
	Americas^(1)			Europe ^(1)			Asia Pacific ^(1)			Stock Compensation Expense			Consolidated
Net Sales	$	4,202,320		$	4,622,270		$	294,354					$	9,118,944
Operating income (GAAP) (1)	$	82,420		$	66,536		$	279		$	(7,347	)	$	141,888
Acquisition, integration and restructuring expenses		3,551			975			121			-			4,647
Acquisition-related intangible assets amortization expense		13,438			6,312			1,294						21,044
Gain on disposal of subsidiary		-			(1,390	)		-						(1,390	)
Tax indemnifications		-			-			62						62
Total non-GAAP operating income adjustments	$	16,989		$	5,897		$	1,477		$	-		$	24,363
Operating income (non-GAAP)	$	99,409		$	72,433		$	1,756		$	(7,347	)	$	166,251
Operating margin (GAAP)		1.96	%		1.44	%		0.09	%					1.56	%
Operating margin (non-GAAP)		2.37	%		1.57	%		0.60	%					1.82	%
^(1) GAAP operating income does not include stock compensation expense at the regional level.
	Three months ended October 31, 2018
	Americas ^(1)			Europe ^(1)			Asia Pacific ^(1)			Stock Compensation Expense			Consolidated
Net Sales	$	4,137,852		$	4,920,156		$	282,021					$	9,340,029
Operating income (GAAP) (1)	$	112,399		$	39,889		$	2,739		$	(8,139	)	$	146,888
Acquisition, integration and restructuring expenses		5,989			13,132			578			578			20,277
Legal settlements and other, net		(7,207	)		-			-						(7,207	)
Acquisition-related intangible assets amortization expense		13,569			7,640			1,314						22,523
Gain on disposal of subsidiary		-			(29	)		-						(29	)
Tax indemnifications		-			5,541			-						5,541
Total non-GAAP operating income adjustments	$	12,351		$	26,284		$	1,892		$	578		$	41,105
Operating income (non-GAAP)	$	124,750		$	66,173		$	4,631		$	(7,561	)	$	187,993
Operating margin (GAAP)		2.72	%		0.81	%		0.97	%					1.57	%
Operating margin (non-GAAP)		3.01	%		1.34	%		1.64	%					2.01	%
^(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)
	Nine months ended October 31, 2019
	Americas ^(1)			Europe ^(1)			Asia Pacific ^(1)			Stock Compensation Expense			Consolidated
Net Sales	$	12,308,249		$	13,371,397		$	937,966					$	26,617,612
Operating income (GAAP) (1)	$	244,138		$	140,605		$	3,223		$	(23,707	)	$	364,259
Acquisition, integration and restructuring expenses		7,803			7,228			1,046			-			16,077
Legal settlements and other, net		(282	)		-			-						(282	)
Acquisition-related intangible assets amortization expense		40,318			18,857			3,930						63,105
Gain on disposal of subsidiary		-			(1,390	)		-						(1,390	)
Tax indemnifications		-			-			647						647
Total non-GAAP operating income adjustments	$	47,839		$	24,695		$	5,623		$	-		$	78,157
Operating income (non-GAAP)	$	291,977		$	165,300		$	8,846		$	(23,707	)	$	442,416
Operating margin (GAAP)		1.98	%		1.05	%		0.34	%					1.37	%
Operating margin (non-GAAP)		2.37	%		1.24	%		0.94	%					1.66	%
^(1) GAAP operating income does not include stock compensation expense at the regional level.
	Nine months ended October 31, 2018
	Americas ^(1)			Europe ^(1)			Asia Pacific ^(1)			Stock Compensation Expense			Consolidated
Net Sales	$	11,799,389		$	14,130,985		$	844,075					$	26,774,449
Operating income (GAAP) (1)	$	261,671		$	86,292		$	3,480		$	(23,694	)	$	327,749
Acquisition, integration and restructuring expenses		19,061			44,462			1,030			2,246			66,799
Legal settlements and other, net		(15,406	)		-			-						(15,406	)
Acquisition-related intangible assets amortization expense		40,782			23,696			4,064						68,542
Gain on disposal of subsidiary		-			(6,746	)		-						(6,746	)
Tax indemnifications		-			6,451			(356	)					6,095
Total non-GAAP operating income adjustments	$	44,437		$	67,863		$	4,738		$	2,246		$	119,284
Operating income (non-GAAP)	$	306,108		$	154,155		$	8,218		$	(21,448	)	$	447,033
Operating margin (GAAP)		2.22	%		0.61	%		0.41	%					1.22	%
Operating margin (non-GAAP)		2.59	%		1.09	%		0.97	%					1.67	%
^(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 October 31,
	2019			2018
Net Sales	$	9,118,944		$	9,340,029
SG&A Expenses (GAAP)	$	415,242		$	396,675
Tax indemnifications		(62	)		(5,541	)
Acquisition-related intangible assets amortization expense		(21,044	)		(22,523	)
SG&A Expenses (non-GAAP)	$	394,136		$	368,611
SG&A Expenses (GAAP) %		4.55	%		4.25	%
SG&A Expenses (non-GAAP) %		4.32	%		3.95	%
	Nine months ended October 31,
	2019			2018
Net Sales	$	26,617,612		$	26,774,449
SG&A Expenses (GAAP)	$	1,252,752		$	1,234,355
Tax indemnifications		(647	)		(6,095	)
Acquisition-related intangible assets amortization expense		(63,105	)		(68,542	)
SG&A Expenses (non-GAAP)	$	1,189,000		$	1,159,718
SG&A Expenses (GAAP) %		4.71	%		4.61	%
SG&A Expenses (non-GAAP) %		4.47	%		4.33	%

TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
(In thousands)
	Three months ended October 31,
	2019		2018
	Net Income	Diluted EPS	Net Income	Diluted EPS
GAAP Results	$90,770	$2.52	$114,216	$2.96
Acquisition, integration and restructuring expenses	4,647	0.13	20,277	0.53
Legal settlements and other, net	-	-	(7,207)	(0.19)
Acquisition-related intangible assets amortization expense	21,044	0.59	22,523	0.58
Gain on disposal of subsidiary	(1,390)	(0.04)	(29)	-
Tax indemnifications	62	-	5,541	0.14
Income tax effect of tax indemnifications	(62)	-	(5,541)	(0.14)
Income tax effect of other adjustments above	(6,306)	(0.18)	(8,798)	(0.23)
Income tax benefit from acquisition settlement	-	-	(207)	-
Change in deferred tax valuation allowances	-	-	(473)	(0.01)
Impact of US tax reform	-	-	(24,000)	(0.62)
Non-GAAP Results	$108,765	$3.02	$116,302	$3.02
	Nine months ended October 31,
	2019		2018
	Net Income	Diluted EPS	Net Income	Diluted EPS
GAAP Results	$225,420	$6.15	$223,781	$5.80
Acquisition, integration and restructuring expenses	16,077	0.44	66,799	1.73
Legal settlements and other, net	(282)	(0.01)	(15,406)	(0.40)
Acquisition-related intangible assets amortization expense	63,105	1.72	68,542	1.78
Gain on disposal of subsidiary	(1,390)	(0.04)	(6,746)	(0.17)
Tax indemnifications	647	0.02	6,095	0.16
Value added tax assessments and related interest expense	-	-	(928)	(0.02)
Income tax effect of tax indemnifications	(647)	(0.02)	(6,095)	(0.16)
Income tax effect of other adjustments above	(19,642)	(0.53)	(31,110)	(0.81)
Income tax benefit from acquisition settlement	-	-	(13,046)	(0.34)
Change in deferred tax valuation allowances	-	-	(3,073)	(0.08)
Impact of US tax reform	-	-	(24,000)	(0.62)
Non-GAAP Results	$283,288	$7.73	$264,813	$6.87

TECH DATA CORPORATION AND SUBSIDIARIES
GAAP TO NON-GAAP RECONCILIATION
	(In thousands)
Return on Invested Capital (ROIC)
		Twelve months ended October 31,
	TTM Net Operating Profit After Tax (NOPAT)*:	2019			2018
	Operating income	$	530,312		$	479,652
	Income taxes on operating income ^(1)		(100,387	)		(184,189	)
	NOPAT	$	429,925		$	295,463
	Average Invested Capital:
	Short-term debt (5-qtr end average)	$	119,103		$	117,542
	Long-term debt (5-qtr end average)		1,298,291			1,504,148
	Shareholders' Equity (5-qtr end average)		2,909,665			2,840,505
	Total average capital		4,327,059			4,462,195
	Less: Cash (5-qtr end average)		(789,103	)		(660,638	)
	Average invested capital less average cash	$	3,537,956		$	3,801,557
	ROIC		12	%		8	%
	* 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 October 31,
	TTM Net Operating Profit After Tax (NOPAT), as adjusted*:	2019			2018
	Non-GAAP operating income ^(1)	$	703,269		$	662,984
	Income taxes on non-GAAP operating income ^(2)		(166,278	)		(180,184	)
	NOPAT, as adjusted	$	536,991		$	482,800
	Average Invested Capital, as adjusted:
	Short-term debt (5-qtr end average)	$	119,103		$	117,542
	Long-term debt (5-qtr end average)		1,298,291			1,504,148
	Shareholders' Equity (5-qtr end average)		2,909,665			2,840,505
	Tax effected impact of non-GAAP adjustments ^(3)		48,846			90,378
	Total average capital, as adjusted		4,375,905			4,552,573
	Less: Cash (5-qtr end average)		(789,103	)		(660,638	)
	Average invested capital less average cash	$	3,586,802		$	3,891,935
	Adjusted ROIC		15	%		12	%
	* 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.