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Non-Tech : The Enron Scandal - Unmoderated -- Ignore unavailable to you. Want to Upgrade?

To: Glenn Petersen who wrote (2991)	4/26/2004 10:44:44 PM
From: Glenn Petersen	Read Replies (1) \| Respond to of 3602

Computer Associates Restates $2.2 Billion in Sales nytimes.com April 26, 2004 By ALEX BERENSON Computer Associates ended an internal investigation into its accounting practices today by restating $2.2 billion in sales that it improperly booked during 1999 and 2000. The restatement did not affect current sales and profits, and the company said it believed its current financial reporting is sound. Computer Associates also reshuffled its executive ranks, naming Kenneth D. Cron, a director, as interim chief executive officer, and promoting Jeff Clarke, its chief financial officer, to chief operating officer. Mr. Cron replaces Sanjay Kumar, who resigned last week as chairman and chief executive after becoming the focus of a federal criminal investigation into accounting and obstruction of justice at the company. Mr. Kumar remains at Computer Associates as chief software architect. Computer Associates also said that Stephen Richards, another focus of the federal investigation, had resigned as senior vice president for worldwide sales. Greg Corgan, who heads the company's American sales division, will replace Mr. Richards. The resignation of Mr. Richards brings to 15 the number of executives or managers who have resigned from Computer Associates since October, when the federal and internal investigations began to accelerate. The company has now forced out almost its entire executive suite and is seeking a permanent chief executive, chief financial officer, general counsel, chief accounting officer, and chief compliance officer. Mr. Cron told analysts and reporters on a conference call that he does not expect to become the permanent chief executive. "My position is contemplated to be an interim position, and I'll be serving in that capacity," he said. Based in Islandia, N.Y., Computer Associates is the fourth-largest independent software company, with 16,000 employees and more than $3 billion in sales. It specializes in mainframe utility software, programs that help big computers and computer networks run more smoothly. While Computer Associates' internal inquiry has now ended, the federal investigation is continuing. For more than two years, prosecutors in Brooklyn and the Securities and Exchange Commission have examined alleged accounting fraud at the company during the late 1990's. Since January, four former executives have pleaded guilty to securities fraud or obstruction of justice charges, including Ira H. Zar, the former chief financial officer. In their pleas, the executives have depicted a broad conspiracy to lie to prosecutors and lawyers hired by the company about Computer Associates' practice of backdating sales in order to meet Wall Street's forecasts for its sales and profits. That is the practice that led to today's restatement. Computer Associates acknowledged today that it had backdated $1.8 billion in contracts in the fiscal year ended March 2000, nearly 30 percent of its total sales. But the company emphasized that the sales were real and that the problem related to the timing of revenue recognition, not to falsifying contracts. "The restatement involved the movement of revenue from one quarter to another," said Walter P. Schuetze, the head of Computer Associates' audit committee and the former chief accountant of the S.E.C. "The Board is confident that CA's current financial reporting is sound."