Tech Data 2013 Annual Report Download - page 8

Table of Contents
Products and Vendors
We distribute and market more than 150,000 products from more than 600 of the world’s leading technology hardware suppliers, networking
equipment suppliers, software publishers, and other suppliers of technology peripherals, physical security, consumer electronics, digital signage and
mobile phone hardware and accessories. These products are typically purchased directly from the vendor on a non-exclusive basis. Conversely, our
vendor agreements do not restrict us from selling similar products manufactured by competitors, nor do they require us to sell a specified quantity
of product. As a result, we have the flexibility to terminate or curtail sales of one product line in favor of another due to technological change,
pricing considerations, product availability, customer demand, or vendor distribution policies. Overall, we believe that our diversified and evolving
product portfolio will provide a solid platform for continued growth.
We continually evolve our product line in order to provide our customers with access to the latest technology products. However, from time to time,
the demand for certain products that we sell exceeds the supply available from the vendor. In such cases, we generally receive an allocation of the
available products. We believe that our ability to compete is not adversely affected by these periodic shortages and the resulting allocations.
We believe that our vendor agreements are in the form customarily used by manufacturers and distributors. Agreements typically contain provisions
that allow termination by either party upon a short notice period. In most instances, a vendor who elects to terminate a distribution agreement will
repurchase the vendor’s products carried in the distributor’s inventory.
Most of our vendor agreements also allow for stock rotation and price protection provisions. Stock rotation rights give us the ability, subject to
certain limitations, to return for credit or exchange a portion of those inventory items purchased from the vendor. Price protection situations occur
when a vendor credits us for declines in inventory value resulting from the vendor’s price reductions. Along with our inventory management
policies and practices, these provisions reduce our risk of loss due to slow-moving inventory, vendor price reductions, product updates or
obsolescence.
Sometimes the industry practices discussed above are not embodied in agreements and do not protect us in all cases from declines in inventory
value. However, we believe that these practices provide a significant level of protection from such declines, although no assurance can be given that
such practices will continue or that they will adequately protect us against declines in inventory value. We sell products in various countries
throughout the world, and product categories may vary from region to region. Over the years, our consolidated revenue mix, which may fluctuate
between and within different operating regions, has shifted from commoditized products to more specialized offerings. Our consolidated revenue
mix may fluctuate between and within our operating segments as well as within our product categories. These fluctuations can be influenced by our
diversification strategies, new product offerings and supply and demand fluctuations within our operating regions.
During fiscal 2013, we modified our product categories to provide greater transparency and more relevant sales information in our strategic focus
areas. Our consolidated net sales for fiscal 2013 and 2012 within our strategic focus categories approximated the following:
Our strategic focus categories include the following products:
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2013 2012
Broadline 47% 47%
Data Center 21% 23%
Software 19% 18%
Mobility 8% 6%
Consumer Electronics 5% 6%
• Broadline - We define our broadline category to include, among other products, notebooks, tablets, desktop systems, printers, supplies and
components.
• Data Center - We define our data center category to include products such as servers, server accessories, networking products, storage
hardware and networking support services.
• Software - We define our software category as a broad variety of applications containing computer instructions or data that can be stored
electronically. We offer a variety of software products, such as virtualization software, security software (firewalls, intrusion, detection and
encryption), desktop application software, operating system software, utilities software and software service and support.
• Mobility - We define our mobility category to include mobile handsets, navigation devices, aircards, SIM cards and other mobility-related
accessories.