CHS does Q4 sums for the second time

CHS Electronics has been forced to revise its fourth-quarter figures after it was confirmed that the distributor had overstated its results.

The distributor originally posted its disappointing financial results in late February causing its stock price to plummet by 25 per cent (PC Dealer, 3 March). At the time, an auditor was called in to look at vendor incentives because rebates were supported with invalid documentation.

Claudio Osorio, chairman and chief executive of CHS, said: 'The investigation concluded that the discrepancies were limited to the head office of our European operations and did not affect rebates recorded at subsidiary level.'

In light of the restatement, Pascal Giorvano, executive vice president for CHS Europe, resigned.

'It is not a case of him being made a scapegoat,' said Peter Rigby, marketing director of CHS. 'He has done the honourable thing by taking responsibility for the European operations.'

Net income for the fourth quarter was $13 million, or 23 cents per share, instead of 47 cents per share initially posted in February. For the year ended 31 December 1998, CHS has now posted a net income of $45.7 million, or 82 cents per share, compared with $1.61 per share.

In an attempt to cut costs, CHS has drawn up a realignment plan to reduce capital expenditure. 'The goal is to cut operating expenses by $40 million and increase cash flow by $50 million in 1999,' said Osorio.

The realignment will streamline the number of CHS global operations from 10 to six units and reduce its workforce by 10 per cent.