JDA Software Group Inc. dropped in midday trading Wednesday after the company said that its financial reports for the past three years can no longer be relied upon.
THE SPARK: JDA said Tuesday after the market closed that it will restate its quarterly and annual financial results from March 2008 through September 2011. The decision is part of an ongoing review of JDA’s revenue accounting by its audit committee.
JDA said it does not expect to file its results for the quarter ended March 31 on time next month. It expects to file restated financial statements “over the course of the next few months,” the company said.
THE BIG PICTURE: JDA, which sells retail management software, says it was counting income from some license agreements before the agreements were signed. That revenue will be pushed into later quarters.
The company, based in Scottsdale, Ariz., also is reviewing contracts from 2008, 2009 and 2010 to see if the revenue should be spread over three years instead of counted up front. One set of contracts promised to protect customers from discontinued products. If JDA decides that promise constitutes a financial obligation, the revenue must be spread over a three-year period.
JDA does not expect to restate cash flow from operations or reported cash balances. However, it expects some adjustments based on items that previously were deemed too small to affect its results.
JDA is cooperating with an investigation by the Securities and Exchange Commission. It announced on Jan 31 that the SEC had requested financial information about past fiscal years.
SHARE ACTION: JDA fell 52 cents, or 2 percent, to $26.34 in midday trading. It is down 20 percent over the past three months.