Technology distributor Tech Data has admitted accounting irregularities originating in a UK subsidiary over the past three years.
After the close of trading on Nasdaq today, US-based distributor Tech Data announced that it will need to restate its quarterly and annual financial statements from financial years 2011 to 2013, as a result of poor accounting practices in a UK subsidiary, following the advice of accountants Ernst & Young LLP.
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The restatement will include its recently released earnings from March 4, 2013
In a statement (PDF) on its website, the company said that "investors should no longer rely upon the company's previously released financial statements and other financial data relating to these periods".
The statement went on to say that "the company anticipates that the restatement will be made to correct improprieties primarily related to how the company's UK subsidiary reflected vendor accounting.
"The company estimates that the restatement will reduce previously reported consolidated operating income by an aggregate amount of approximately $30m [£19.8m] to $40m [£26.4m], and consolidated net income by an aggregate amount of approximately $25m [£16.5m] to $33m [£21.7m], over the three fiscal year periods... As a result of this investigation, the company is in the process of evaluating deficiencies in its internal controls over financial reporting."
Tech Data's stock closed at $49.55 (£32.64), down 1.3 per cent at the end of the trading day, but fell to $44.25 in after hours trading following the release of the statement - a drop of 10.7 per cent.
CEO Robert Dutkowsky stated, "We are working diligently to resolve this matter as soon as possible. We do not plan to comment further during the course of the investigation unless any material developments arise."
Tech Data is the world's second-largest technology distributor and is the parent company of familiar UK channel names Computer 2000, its audiovisual arm Maverick and network distributor Azlan. It was not clear at time of writing where the inconsistencies had occurred.
Value added reseller 2e2 went bankrupt in January under circumstances that are still unclear, and has since been bought by Logicalis.
