Tech Data reviews its results
Broadliner Tech Data has concluded an independent investigation by the Audit Committee of the Board of Directors into certain accounting practices within the company and also finally filed with the US Securities and Exchange Commission its Annual Report on Form 10-K for the fiscal year ended January 31, 2013. In a matter unrelated to the Audit Committee's investigation and as previously disclosed in the Company's periodic reports, prior to fiscal 2004, Tech Data España was audited in relation to various VAT matters. As a result of those audits, the Spanish subsidiary received notices of assessment that allege the subsidiary did not properly collect and remit VAT. During the fourth quarter of fiscal year 2014, the Spanish National Appellate Court issued an opinion upholding the assessment for several of the assessed years. Although the Company believes the Spanish subsidiary's defense to the assessments has solid legal grounds, and is continuing to vigorously defend its position by appealing to the Spanish Supreme Court, the risk that the assessments will be upheld has significantly increased. The Spanish National Appellate Court opinion represents a subsequent event that occurred prior to the issuance of the fiscal 2013 financial statements in relation to a loss contingency that existed as of January 31, 2013. As a result of this subsequent event, the Company has increased its accrual for costs associated with this matter by recording a charge of €31m in the fiscal 2013 Consolidated Statement of Income, including €22.4m recorded in "value added tax assessment" to cover the assessment and various penalties and €8.7m recorded in "interest expense" for interest that could be assessed. The Company estimates the total exposure for these assessments, including various penalties and interest, is approximately €42.2m, which is included in "accrued expenses and other liabilities" in the Consolidated Balance Sheet at January 31, 2013. On March 21, 2013, Tech Data announced that it would restate some or all of its previously issued quarterly and audited annual financial statements for the fiscal years 2011 and 2012, and some or all of the quarters of fiscal year 2013. At that time, the Company estimated the restatement would reduce previously reported consolidated operating income by an aggregate amount of approximately €23 to €30m, and consolidated net income by an aggregate amount of approximately €19m to €25m, over the three fiscal year period. In addition to fiscal years 2011, 2012, and 2013, the restatement, described in detail in the Company's Annual Report, includes restated selected financial data for fiscal years 2009 and 2010. The cumulative effect of the restatement, excluding the Spanish VAT matter described above, on selected financial data for the Restated Periods is as follows:
- consolidated operating income for the Restated Periods was reduced by a cumulative amount of €34.9m, or 3 percent of the previously reported cumulative operating income for the periods. Excluding an adjustment unrelated to the investigation findings to reclassify gains (losses) on investments related to the Company's non-qualified deferred compensation plan, which had no impact on previously reported pre-tax or net income, the cumulative adjustment to the previously reported operating income for the Restated Periods was €31.1m.
- consolidated net income for the Restated Periods was reduced by a cumulative amount of €20.5m, or 3 percent of the previously reported cumulative net income for the periods.
- earnings per diluted share ("EPS") for the Restated Periods were reduced by a cumulative amount of €0.47, or 3 percent of the previously reported cumulative EPS for the periods.
- the restatement did not have a material impact on the balance sheet or statement of cash flows during the restated periods.
Tech Data introduces worldwide mobile business
American behemoth Tech Data has introduced Tech Data Mobile Solutions, its new worldwide mobile business. Company veteran Rod Millar has been appointed to the new position of senior vice president, Tech Data Mobile Solutions, in which he will lead the strategic direction, operations, and go-to-market execution of Tech Data's worldwide mobile business, including Tech Data Mobile in Europe. Millar will report to Nestor Cano, president, Europe and Joe Quaglia, president, the Americas. Millar has relocated from the United Kingdom and will be based in the company's headquarters in Clearwater, Florida. Millar has been with Tech Data since 2007, serving as President of Tech Data Mobile in Europe. Previously, he was with the Caudwell Group, a leading UK-based telecommunications company, for more than seven years. The company also announced the promotion of Heather Murray to vice president, Tech Data Mobile Solutions. In this role, she will lead the sales, marketing, and operational functions of Tech Data's mobile business in the U.S. A 15-year veteran of the company, Murray has helped lead the company's US mobile strategy since the formation of TDMobility. She has been responsible for the development and delivery of complete end-to-end mobile solutions to enable the company's channel of VARs, from devices to the data center, as well as the recruitment of new vendor partners to TDMobility. Murray, who currently serves as chair of the executive board of CompTIA's Mobility Community, will report directly to Millar. She holds a BBA from the University of Tampa.
S&P devices Tech Data outlook to BBB-
American broadliner Tech Data has disclosed that due to accounting improprieties it will be forced to restate its financial results for all years and quarters from 2011 through the present. The restatement will result in a reduction of previously reported operating income and net income by up to $40 million and $33 million, respectively. The company has not filed its 2013 10-K or recent 10-Qs. Tech Data has extended its waiver agreement until Oct. 31, 2013, to deliver its audited and unaudited financial statements. For all these reasons, S&P has decided to revise its rating outlook to negative from stable and affirmed its 'BBB-' corporate credit and senior unsecured ratings on the company.
Tech Data changes its European organisation
Tech Data Europe has unveiled changes to its European organisation which will enable it to optimise its efficiency whilst enhancing the support for its country operations. As a result of its acquisition strategy in Europe and the diversification of its distribution business, a new European Executive Board (EEB) has been formed to represent the company's technology areas and country and business operations. The EEB will drive the strategic direction of the company's European operations and ensure it takes advantage of the growth opportunities that exist in both its traditional IT business, its specialist divisions and its services. In addition, to provide greater focus and consistency in execution, the European country operations have been divided between two Regional Senior Vice Presidents. One will be led by Andy Gass who will be responsible for the following country operations: Belgium & Luxembourg, France, Ireland, Italy, the Netherlands, Portugal, Spain and the United Kingdom. The other will be led by Jonas Elmgren who will have responsibility for Austria, Czech Republic, Denmark, Finland, Germany, Hungary, Norway, Poland, Slovakia, Sweden and Switzerland. Both Regional Senior Vice Presidents will report into Néstor Cano, President, Europe. "The formation of an EEB and two regional operations will enable the company to be even more efficient and agile in its decision making at a strategic level, while allowing us to benefit from the strength and experience of country managers in their own markets," said Néstor Cano, President, Europe. "These changes are consistent with our major business goals and provide our country operations with the opportunity to take full advantage of the technology areas in which we operate, utilising our existing pan-European infrastructure and resources, whilst they focus on excellence in execution in sales and marketing to develop and grow our business."
The EEB members are:
- Néstor Cano, President, Europe
- Alain Amsellem, Senior Vice President, Finance & Business Operations
- Andy Gass, Regional Senior Vice President
- Henk Makaske, Senior Vice President, Triade (Consumer Electronics)
- Jonas Elmgren, Regional Senior Vice President
- Nimesh Davé, Senior Vice President Broadline & Processes
- Rod Millar, President Brightstar Tech Data (Mobility)
- Simon England, Senior Vice President, Value Added Business, responsible for Azlan (Enterprise), Datech (Design Software) and Maverick (Professional Audio Visual)
Tech Data leaves Brasil
Broadliner Tech Data has decided to close its Brasilian subsidiary. The closure is due to Brazil’s complex tax, legal and regulatory environments, which make it difficult for the distributor to generate a sufficient return on invested capital. The American broadliner will continue to do business with Brazilian resellers, but will handle those transactions as export business, through its Miami-based facilities. The closure will cost Tech Data between €15m and €18m in fourth quarter operating income, between €5.5m and €7m in foreign currency exchange losses and between €5.5m and €7m in taxes, after tax-deferred assets in Brazil are written off. Those numbers could push the company’s combined net losses on the closure up to €32m for the quarter.
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