Tech Data 2014 Annual Report Download - page 15

Table of Contents
Not applicable.
Our executive offices are located in Clearwater, Florida. As of January 31, 2014, we operated a total of 28 logistics centers to provide our
customers timely delivery of products. Fourteen of these logistics centers are located in the Americas and fourteen are located in Europe.
As of January 31, 2014, we leased or owned approximately 7.8 million square feet of space. The majority of our office facilities and logistics
centers are leased. Our facilities are well maintained and are adequate to conduct our current business. We do not anticipate significant difficulty
in renewing our leases as they expire or securing replacement facilities.
Prior to fiscal 2004, one of the Company’s subsidiaries, located in Spain, was audited in relation to various value added tax (“VAT”)
matters. As
a result of those audits, the Spanish subsidiary received notices of assessment from the Regional Inspection Unit of Spain’s taxing authority that
allege the subsidiary did not properly collect and remit VAT. The Spanish subsidiary appealed these assessments to the Madrid Central
Economic Administrative Courts beginning in March 2010. Following the administrative court proceedings the matter was appealed to the
Spanish National Appellate Court. 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 that 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. The
Company increased its accrual for costs associated with this matter by recording a charge of $41.0 million in the fiscal 2013 Consolidated
Statement of Income, including $29.5 million recorded in "value added tax assessment" to cover the assessment and various penalties and $11.5
million recorded in "interest expense" for interest that could be assessed. The Company estimates the total exposure for these assessments
(including previously recorded amounts), including various penalties and interest, was approximately $56.4 million and $55.6 million at January
31, 2014 and 2013, respectively, which is included in "accrued expenses and other liabilities" in the Consolidated Balance Sheet.
In December 2010, in a non-unanimous decision, a Brazilian appellate court overturned a 2003 trial court which had previously ruled in favor of
the Company’
s Brazilian subsidiary related to the imposition of certain taxes on payments abroad related to the licensing of commercial software
products, commonly referred to as “CIDE tax.” The Company estimates the total exposure where the CIDE tax, including interest, may be
considered due to be approximately $25.3 million at January 31, 2014. The Brazilian subsidiary has appealed the unfavorable ruling to the
Supreme Court and Superior Court, Brazil's two highest appellate courts. Based on the legal opinion of outside counsel, the Company believes
that the chances of success on appeal of this matter are favorable and the Brazilian subsidiary intends to vigorously defend its position that the
CIDE tax is not due. However, due to the lack of predictability of the Brazilian court system, the Company has concluded that it is reasonably
possible that the Brazilian subsidiary may incur a loss up to the total exposure described above. The Company believes the resolution of this
litigation will not be material to the Company’s consolidated net assets or liquidity; however, it could be material to the Company’s operating
results for any particular period, depending upon the level of income for such period. In addition to the discussion regarding the CIDE tax above,
the Company’s Brazilian subsidiary has been undergoing several examinations of non-income related taxes. Given the complexity and lack of
predictability of the Brazilian tax system, the Company believes that it is reasonably possible that a loss may have been incurred. However, due
to the early stages of the examination, the complex nature of the Brazilian tax system and the absence of communication from the local tax
authorities regarding these examinations, the Company is currently unable to determine the likelihood of these examinations resulting in
assessments nor estimate the amount of loss, if any, that may be reasonably possible if such assessment were to be made.
The SEC has requested information from the Company with respect to the restatement of certain of our consolidated financial statements and
other financial information from fiscal 2009 to 2013. The Company is cooperating with the SEC’s request for information.
The Company is subject to various other legal proceedings and claims arising in the ordinary course of business. The Company’s management
does not expect that the outcome in any of these other legal proceedings, individually or collectively, will have a material adverse effect on the
Company’s financial condition, results of operations, or cash flows.
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ITEM 1B.
Unresolved Staff Comments.
ITEM 2.
Properties.
ITEM 3.
Legal Proceedings.