In an unexpected development, CA Tuesday delayed issuing its final fourth-quarter and full fiscal 2006 results and restated
its third-quarter results, in part due to the impact of a new sales-commission plan.
"Clearly we are disappointed that what would have been a solid year was impacted by execution issues relating to commissions,
which adversely affected our fourth quarter performance and led to a restatement of our third quarter results," CA President
and Chief Executive Officer John Swainson said in a statement. He added that the company is working to ensure that there's
not a recurrence of the issue.
For its fourth quarter and fiscal 2006 ended March 31, 2006, CA Tuesday announced more preliminary results, some at variance
with an earlier profit warning it released in late April. The company has more work to do around both sales-commission expense and income taxes before it
can finalize the financials, CA said.
For the fourth quarter of fiscal 2006, CA's preliminary revenue was US$947 million, in the ballpark of the $940 million to
$950 million range the company announced in April. However, CA now expects to record a preliminary loss per share of $0.07
instead of the $0.00 and $0.02 it forecast last month.
A contributing factor to the loss per share was CA paying out higher sales commissions than it had expected under a new plan.
The sales commission plan also affected third-quarter results. CA is restating those financials to reflect about $26 million
of extra commission expense that should have been reported in the third quarter. This lowered earnings per share by $0.03
while not affecting previously issued total revenue for the quarter.
CA may need to make further adjustments to both its third-quarter, fourth-quarter and full fiscal 2006 results pending its
ongoing internal review into the sales commission plan.
In the wake of an accounting scandal several years ago, CA is still struggling to reinvent its entire operations.
In April, former CA CEO Sanjay Kumar pleaded guilty to financial fraud charges, along with co-defendant Stephen Richards, previously head of worldwide sales at
CA. The two men had been set to go to trial May 8 in a case brought by U.S. government prosecutors accusing them of fraudulent
accounting practices involving the false reporting of hundreds of millions of dollars in licensing revenue.
Originally due out Tuesday, CA now expects to release its final fourth-quarter and fiscal 2006 results when it files its annual
Form 10-K report, but the company didn't provide a definitive date for that filing. In an 8-K filing Tuesday with the U.S.
Securities and Exchange Commission (SEC), CA stated the annual 10-K report could appear in "the coming weeks."
Due to the preliminary nature of the financials, CA will not hold a conference call Tuesday afternoon to discuss the results,
according to a company spokesman. The company has also postponed a planned financial analyst day, which was to take place
June 8.
Recently, several top CA executives have left the company, including Robert Davis, the company's chief financial officer, and Chief Technology Officer Mark Barrenechea.
In early trading Tuesday, CA's share price fell $1.24 on the news to $20.92 from its Friday closing price of $22.16.
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