Management Report of U.S. Attorney's
Required Extension of Examination
(September 14, 2006)
CA announced in a September 14, 2006 press release that
the U.S. Attorney's Office, the SEC, and the company's Independent Examiner had
agreed to extend the original 18 month term of the Independent Examiner's
oversight from September 16, 2006 to May 1, 2007, allowing management an
additional 7 months to comply with the conditions of its
September 2004 Deferred Prosecution Agreement ("DFA"). The
U.S. Attorney's Office summarized management's failure to complete required
reforms in a letter to the court, as follows:
"...certain issues regarding CA’s 'internal accounting controls' (
¶19(b)), and “reorganization of the CA Finance Department” (¶ 15). At
this time, the USAO, SEC, IE and CA believe that the proposed
extension to May 1, 2007 is appropriate in light of (i) the
control-environment and commission-related Material Weaknesses
announced in the Form 10-K filed by CA on July 31, 2006, a copy of
which is annexed hereto, and (ii) issues concerning the reorganization
of the CA Finance Department to be addressed by the Company’s new
Chief Financial Officer, appointed August 15, 2006. The
commission-accrual errors caused the financial reporting for CA’s
third quarter for Fiscal Year 2006 to be materially incorrect and
resulted in CA restating its financial results for that quarter. In
addition, issues surrounding the Company’s commission expenses were a
factor in the recent departure of several high-level CA executives."
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The full U.S. Attorney's letter and press release are copied below, from the company's
Form 8-K filed on
September 14, 2006.
EX-99.1
2
y25036exv99w1.htm
EX-99.1: PRESS RELEASE
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Contacts:
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Dan Kaferle |
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Olivia Bellingham |
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Public Relations |
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Investor Relations |
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(631) 342-2111 |
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(631) 342-4687 |
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daniel.kaferle@ca.com |
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olivia.bellingham@ca.com |
CA ANNOUNCES THAT TERM OF INDEPENDENT EXAMINER EXTENDED
TO MAY 1, 2007
ISLANDIA, N.Y., September 14, 2006 — CA (NYSE:CA) today announced that
the U.S. Attorney’s Office for the Eastern District of New York has
extended the term of the Company’s Independent Examiner to May 1, 2007
or such earlier date as the U.S. Attorney’s Office in its discretion
determines in the future under the terms of the Deferred Prosecution
Agreement (DPA), dated September 22, 2004. The Independent Examiner’s
term was scheduled to expire on September 16, 2006.
In the attached filing with the United States District Court, Eastern
District of New York, the U.S. Attorney’s Office, the Securities and
Exchange Commission (SEC), the Independent Examiner and CA all agreed
that the extension was appropriate given the control environment and
commission-related material weaknesses announced in the Company’s Annual
Report on Form 10-K for the fiscal year ended March 31, 2006 and filed
on July 31, 2006, and issues concerning the reorganization of CA’s
Finance Department to be addressed by CA's new chief financial officer.
During the extension period, the Independent Examiner intends to focus
primarily on those issues.
Beyond the control issues identified, the U.S. Attorney’s Office advised
the Court that CA has, to date, substantially complied with the terms of
the DPA. If the control issues described above are resolved by May 1,
2007 or such earlier date as the U.S. Attorney's Office in its
discretion determines, and CA is otherwise in compliance with the DPA,
the U.S. Attorney's Office will seek the Court's dismissal with
prejudice of the information filed against CA shortly after the
Independent Examiner issues his final report, and the SEC also will
evaluate CA's compliance with the civil final judgment.
About CA
CA (NYSE:CA), one of the world’s largest information technology
(IT) management software companies, unifies and simplifies the
management of enterprise-wide IT. Founded in 1976, CA is headquartered
in Islandia, N.Y., and serves customers in more than 140 countries. For
more information, please visit http://ca.com
# # #
Copyright ©
2006 CA. All Rights Reserved. One CA Plaza, Islandia, N.Y. 11749. All
trademarks, trade names, service marks, and logos referenced herein
belong to their respective companies.
Addendum: U.S. Attorney’s Office letter
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U.S. Department of Justice |
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United States Attorney |
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Eastern District of New York |
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One Pierrepont Plaza |
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Brooklyn, New York 11201 |
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Mailing Address:
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147 Pierrepont Street |
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Brooklyn, New York 11201 |
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September 14, 2006 |
By ECF
The Honorable I. Leo Glasser
United States District Judge
Eastern District of New York
225 Cadman Plaza East
Brooklyn, NY 11201
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United States v. CA, Inc.
Docket Nos. 04-CR-837; 04-CV-4088 (ILG) |
Dear Judge Glasser:
This letter is respectfully submitted to inform the Court that
the United States Attorney’s Office for the Eastern District of New York
(“USAO”) has determined to extend the term of Lee Richards, Esq., as
Independent Examiner (“IE”) in the above-referenced case to May 1, 2007
(or such earlier date as the USAO, in its discretion, determines in the
future) under the terms of the Deferred Prosecution Agreement (“DPA”)
dated September 22, 2004. The IE’s term was otherwise set to expire on
September 16, 2006. The IE is appointed pursuant to both the DPA and the
Civil Final Judgment in the above-referenced SEC action.
The extension is made pursuant to paragraph 22 of the DPA and
with the consent of CA, Inc., formerly known as Computer Associates
International, Inc. (“CA”). Paragraph 22 provides that the IE’s term may
be extended by the USAO, in its discretion, if at the end of the IE’s
initial 18-month term, (1) “less than all recommended reforms (to the
extent deemed significant by the [USAO]) have been substantially
implemented for at least two successive quarters,” or (2) “significant
exceptions have been noted in the course of the [IE’s] most recent
quarterly review.” (DPA ¶ 22.)
The IE’s most recent report, dated June 15, 2006, described
certain issues regarding CA’s “internal accounting controls” ( ¶19(b)),
and “reorganization of the CA Finance Department” (¶ 15). At this time,
the USAO, SEC, IE and CA believe that the proposed extension to May 1,
2007 is appropriate in light of (i) the control-environment and
commission-related Material Weaknesses announced in the Form 10-K filed
by CA on July 31, 2006, a copy
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of which is annexed hereto, and (ii) issues concerning the
reorganization of the CA Finance Department to be addressed by the
Company’s new Chief Financial Officer, appointed August 15, 2006. The
commission-accrual errors caused the financial reporting for CA’s third
quarter for Fiscal Year 2006 to be materially incorrect and resulted in
CA restating its financial results for that quarter. In addition, issues
surrounding the Company’s commission expenses were a factor in the
recent departure of several high-level CA executives. During the period
of the extension, the IE intends to focus his review primarily on these
issues.
Beyond the control issues identified in the IE’s most recent
report, CA has, to date, substantially complied with the terms of the
DPA. Among other things, CA has paid $225 million in restitution to
current and former shareholders damaged by CA’s past accounting
misconduct (DPA ¶ 3, 8); cooperated with the USAO and the SEC, including
in connection with the USAO’s criminal prosecutions and the SEC’s civil
proceedings involving former CA executives (¶ 5-6, 21); added three new
independent directors to its Board of Directors (¶ 12(a)); and
implemented substantial additional reforms to its corporate governance
practices. If the control issues described above are resolved by May 1,
2007 (or such earlier date as the USAO, in its discretion, determines)
and CA is otherwise in compliance with the DPA, the USAO will seek the
Court’s dismissal with prejudice of the Information filed against CA
shortly after the IE issues his final report (¶ 24), and the SEC also
will evaluate CA’s compliance with the civil final judgment.
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Respectfully submitted, |
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ROSLYNN R. MAUSKOPF |
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United States Attorney |
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By: |
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/s/ Eric Komitee |
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Eric R. Komitee |
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Jason Jones |
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Assistant U.S. Attorneys |
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(718) 254-6240 / 7553 |
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Enclosure
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cc:
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Lee Richards, Esq. |
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Independent Examiner |
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Alex Vasilescu, Esq. |
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Securities and Exchange Commission |
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Robert Giuffra, Esq. |
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Counsel to CA, Inc. |
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