Islandia, N.Y. (April 27, 2004) -- Troubled software maker Computer Associates International Inc. said that it will restate $2.2 billion in revenue that it prematurely booked during fiscal 2000 and 2001, and announced more changes to its management team.
As expected, the company -- which is still under investigation for past accounting practices by the Securities and Exchange Commission and the U.S. Attorney's Office -- said that independent director Kenneth D. Cron will serve as its interim chief executive officer as the company begins its search for a replacement for Sanjay Kumar, who stepped down under pressure last week. Kumar is staying on as chief software architect. Cron, the former chief executive of Vivendi Universal SA's games division, became a CA director in 2002.
The firm also named chief financial officer Jeff Clarke as its chief operating officer. Prior to joining CA earlier this month, Clarke, 42, was CFO of Compaq Computer Corp. CA appointed Greg Corgan senior vice president for worldwide sales, succeeding Stephen Richards, who CA said resigned.
Last week, CA fired nine employees in its legal and finance departments following an investigation by the board's audit committee into the company's accounting practices. Earlier this month, three former CA employees, including former CFO Ira Zar, pled guilty to federal charges, including conspiracy to obstruct justice and conspiracy to commit securities fraud, and settled civil fraud charges with the SEC.
CA said it prematurely recognized a total of $1.782 billion in fiscal 2000 and $445 million in fiscal 2001. The firm's fiscal 2000 revenue fell $2 million from $6.094 billion to $6.092 billion. Fiscal 2001 revenue rose $558 million from $4.19 billion to $4.748 billion. The company's net loss for the year narrowed by $333 million from a loss of $591 million to $258 million. Its loss per share narrowed to $0.44 from $1.02. The company said that the restatement wouldn't impact its financial results for the fiscal year ended March 31, 2004.
Prior to October 2000, the company prematurely recognized revenue on software license agreements for several years by holding the financial period open after the end of the fiscal quarter in order to recognize revenue from contracts that weren't executed by the end of the quarter.
"This '35-day month' practice was wrong, and CA has taken and will take any remedial steps necessary," Walter P. Schuetze, the former SEC chief accountant who headed the internal probe by Computer Associate's audit committee, said in a statement. “The board is confident that CA's current financial reporting is sound."
CA expects to report its fourth quarter and full 2004 fiscal year results on May 12.
-- WebCPA staff
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