SAN JOSE, Calif., May 12, 2008 (PRIME NEWSWIRE) -- Bell Microproducts Inc. (Pink Sheets:BELM) today announced the completion of the independent review of certain historical accounting practices conducted by a special committee of the Board of Directors. As previously announced, the special committee was appointed to review the Company's historical accounting treatment for certain reserves, accruals and other accounting estimates reflected in its previously reported financial statements for the years 2004 and 2005 and the first two quarters of 2006. This review was in addition to the previously-announced independent investigation of historical stock option practices.
The special committee previously identified instances where it appeared errors might have been made in the Company's recording of certain reserve and accrual accounts. The Company has performed a further review and concluded that accounting errors occurred in a number of these instances. The Company has been attempting to determine the adjustments that will be required to correct these matters. As previously announced, any adjustments arising out of the reserves, accruals and estimates investigation will be included in the previously-announced restatement of the Company's financial statements. The Company currently estimates that the cumulative change to net income for the independent review period pertaining to reserves and accruals will be less than $5 million, mostly due to issues with a corresponding adjustment to be recorded either before or after the review period. The Company is continuing its work to quantify the reserve, accrual, and other adjustments in connection with the restatement. These adjustments are subject to the procedures of the Company's independent registered public accountants. As a result, the Company's estimates are subject to change.
The special committee has now concluded its investigation and has determined that accounting errors and irregularities occurred in connection with the Company's historical accounting for certain reserves and accruals, and were caused by: (i) accounting decisions and entries that appear to have been directed at achieving financial results consistent with external estimates; (ii) erroneous or unsupported judgments regarding the proper application of generally accepted accounting principles ("GAAP"); and/or (iii) inadequate supervision of employees involved in the accounting process. In order to remediate the issues identified by the investigation, the special committee has made recommendations to the Board including (i) certain finance personnel actions which have been initiated; and (ii) enhancements and changes to the Company's control environment and to upgrading the expertise and training of the Company's finance personnel. The recommendations are designed to ensure that the Company's financial statements are prepared in conformity with GAAP and to strengthen the Company's internal controls. The Audit and Corporate Governance Committees of the Board will oversee, as appropriate, the Company's implementations of the recommendations.
The special committee will continue to oversee the Company's work to determine the actions that may be required to correct the accounting for the errors and irregularities identified and to complete the restatement of the Company's financial statements to address the issues identified in the investigation.
About Bell Microproducts
Bell Microproducts is a leading international, value-added distributor of a wide range of high-tech products, solutions and services, including storage systems, servers, software, computer components and peripherals, as well as maintenance and professional services. An industry-recognized specialist in storage products, the Company is one of the world's largest storage-centric value-added distributors.
Bell Microproducts is uniquely qualified with deep technical and application expertise to service a broad range of information technology needs. From design to deployment, its products are available at any level of integration, from components to subsystem assemblies and fully-integrated, tested and certified system solutions. More information can be found in the Company's SEC filings, or by visiting the Bell Microproducts Web site at http://www.bellmicro.com.
Safe Harbor Statement
This release contains forward-looking statements that are based on the current opinions and estimates of management, and speak only as of the date on which they are made. Such forward-looking statements include, but are not limited to, the ability of the Company, with its outside accounting consultants, to complete the review in a timely manner of certain historical accounting practices regarding reserves, accruals and estimates and determine which adjustments are required.. Actual results could differ materially from such statements as a result of many risks and uncertainties, including, but not limited to: the requirement that accounting adjustments, in addition to those that have already been identified, are determined to be necessary; the preliminary estimates of the dollar amount of the accounting adjustments are not accurate; other errors in the Company's accounting could be identified resulting in additional adjustments; that the recommendations of the special committee could divert management time and attention from the operations of the Company; the enhancements to the control environment recommended by the special committee may not be adequate to ensure the Company's financial statements are prepared in conformity with GAAP or enhance the Company's internal controls; the Company may not be able to completely or timely implement the enhancements to the control environment recommended by the special committee to adequately ensure the Company's financial statements are accurate; the Company may not be able to diligently complete the restatements in a timely manner and thereby significantly delay the time in which the Company becomes current with its SEC periodic reporting obligations; the review by the Company's independent registered public accountants may reveal additional adjustments and/or material changes to the adjustments identified by the Company; and the costs incurred by the Company in 2008 for extraordinary legal, accounting, and other professional fees related to the restatement may be significant. Investors should also take into account the risks described in the Company's periodic reports filed with the SEC when making investment decisions. Investors are cautioned not to place undue reliance on these forward-looking statements, and the Company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.