DXP Enterprises files amended 10-K/A with SEC
DXP Enterprises has filed an amended 10-K/A report with the the Securities Exchange Commission to amend its Annual Report on Form 10-K for the year ended Dec. 31, 2020.
The report was filed to correct the untimely clearing of unvouchered purchase order discrepancies arising from "our three-way matching process and the recognition of true-up consideration in business combination accounting," the company said in the filing.
The Houston-based company is restating its consolidated balance sheets as of Dec. 31, 2020 and 2019 and consolidated statements of operations and comprehensive income, cash flows, and equity for 2020, 2019 and 2018. The restatement showed an increase in net income for 2018 and 2019 and a decrease for 2020.
In a press release issued after the filing with the SEC, Gene Padgett, DXPE's chief accounting officer, commented, “While a restatement is never ideal, measuring both the quantitative and qualitative impacts to the respective periods is keenly important. Quantitatively, our restatement analysis shows ultimate impacts of 7.6 percent, 2.8 percent and 1.9 percent to net income for the 2018, 2019 and 2020 fiscal year ends, respectively. For 2018 and 2019, these were positive impacts or increases to net income, while 2020 was a slight decrease based upon the accounting treatment associated with the exercise and other passed adjustments."
Kent Yee, chief financial officer, said that the company transitioned the accounts payable process from primarily being manual to becoming more automated based on high invoice activity.
"In Q1 of 2019, we went live with a full procure-to-pay platform to assist DXP in handling purchase order backed, non-purchase order and employee expense activity. As a part of this initiative, we had to address and validate all existing and known liabilities. We have come to the end of that process and as a result we ended with a restatement and material weaknesses. Over 77 percent of the unvouchered purchase order receipts being written off are associated with balances from Q1 2019 and prior. While we wish we could have gone through the process in a timelier manner, DXP respects the accounting and auditor procedures, in a situation of this kind,” Yee said.
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