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Tech Data announces internal changes, releases new financials after audit

Tech Data, a Clearwater-based technology distributor, has concluded its 11-month investigation into financial improprieties stemming from its London office.

DIRK SHADD | Times

Tech Data, a Clearwater-based technology distributor, has concluded its 11-month investigation into financial improprieties stemming from its London office.

An 11-month investigation into an overseas accounting scandal has prompted Tech Data to rid itself of some employees involved in the "improprieties," appoint a chief ethics and compliance officer and make some sweeping internal changes.

But the embarrassing episode for Tampa Bay's largest public company has fallen short of triggering any changes at the top.

"The audit committee, its independent counsel and forensic accountants performed a thorough investigation of the company's accounting practices," Charles E. Adair, chairman of Tech Data's audit committee, said in releasing results of an internal probe late Wednesday. "The board of directors is confident the company is addressing the problems that led to the restatement and has complete confidence in Tech Data's executive management team."

The news came late Wednesday as the Clearwater-based technology distributor ended months of silence, finally issuing its annual report for the fiscal year that ended Jan. 31, 2013. Its filing indicated total revenues of $25.4 billion for the year, down 1 percent from $25.6 billion in fiscal 2012.

Tech Data has long been the biggest public company by revenue headquartered in the Tampa Bay area. But over the past year — as the investigation dragged on — no one could say for sure just how big.

The company blamed its woes on vendor accounting "improprieties" within its United Kingdom subsidiary. Last March, the company said it would restate some or all of its previously issued quarterly and annual financial statements for fiscal years 2011, 2012 and 2013.

It said the cumulative effect of the restatement was to reduce net income by about $27 million, or 3 percent of the previously reported figures.

In response to the investigation, the audit committee unveiled a nine-point action plan that included bringing in external experts to help with internal auditing and fraud detection; improving its training; improving accounting controls; and hiring of the ethics officer.

As filings were postponed during the probe, Tech Data began fighting a threatened delisting from the Nasdaq Stock Market. NASDAQ regulations state that quarterly reports must be filed within 45 days of a fiscal period closing; Tech Data has not filed a quarterly or annual report with the Securities and Exchange Commission since Nov. 28.

CEO Bob Dutkowsky has declined to talk to the media or hold analyst conference calls throughout the year, but that's expected to change soon. The company has indicated plans to hold a conference call with analysts after it files quarterly reports for last year. Those three quarterly reports for periods ending in April, July, and October 2013 are now due to be filed by Feb. 28.

Separately, a New Orleans law firm said Wednesday it was investigating whether Tech Data's board and certain executives breached their fiduciary duties. The O'Bell Law Firm said that on March 8 — just four days after the company issued a press release reporting its fiscal 2013 financial results — Dutkowsky sold about 40,000 shares of company stock. After announcement of the restatement barely two weeks later, the stock price dropped 10.7 percent.

The results of the investigation and annual report were both released after the close of market Wednesday. Tech Data's stock closed at $51.51 a share, up 24 cents.

Tech Data announces internal changes, releases new financials after audit 02/05/14 [Last modified: Wednesday, February 5, 2014 10:08pm]
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