CA delays final Q4, fiscal 2006 financials, restates Q3

CA delayed issuing final Q4 and full fiscal 2006 financials as well as restating its Q3 results in part due to a new sales commission plan.

In an unexpected development, CA has 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," president and CEO, John Swainson, said in a statement. He added that the company was working to ensure there would not be a recurrence.

For its fourth quarter and fiscal 2006 ended March 31, 2006, CA 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 finalise the financials, CA said.

For the fourth quarter of fiscal 2006, CA's preliminary revenue was $US947 million, in the ballpark of the $US940 million to $US950 million range the company announced in April. However, CA now expects to record a preliminary loss per share of $US0.07 instead of the $US0.00 and $US0.02 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 $US26 million of extra commission expense that should have been reported in the third quarter. This lowered earnings per share by $US0.03 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 CEO, Sanjay Kumar, pleaded guilty to financial fraud charges, along with co-defendant, Stephen Richards, previously head of worldwide sales. The two men had been set to go to trial May 8 in a case brought by US 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 US Securities and Exchange Commission (SEC), CA stated the annual 10-K report could appear in coming weeks.

Recently, several top CA executives have left the company including CFO, Robert Davis, and CTO, Mark Barrenechea.