JDA Software Group (JDAS)
Q2 2012 Earnings Call
August 06, 2012 5:00 pm ET
Mike Burnett - Group Vice President of Treasury & Investor Relations
Peter S. Hathaway - Chief Financial Officer, Principal Accounting Officer and Executive Vice President
Hamish N. J. Brewer - Chief Executive Officer, President and Director
Richard T. Williams - Cross Research LLC
Jeffrey Van Rhee - Craig-Hallum Capital Group LLC, Research Division
Brian Murphy - Sidoti & Company, LLC
Mark W. Schappel - The Benchmark Company, LLC, Research Division
Previous Statements by JDAS
» JDA Software Group's CEO Discusses Q1 2012 Results - Earnings Call Transcript
» JDA Software Group's CEO Discusses Q4 2011 Results - Earnings Call Transcript
» JDA Software Group's CEO Discusses Q3 2011 Results - Earnings Call Transcript
Ladies and gentlemen, thank you for standing by, and welcome to the JDA Software Group, Inc. Second Quarter 2012 Earnings Conference Call. [Operator Instructions] This conference is being recorded today, Monday, August 6, 2012. And I would now like to turn the conference over to Mike Burnett, Group Vice President, Investor Relations. Please go ahead.
All right. Thank you, Michaela. Good afternoon, and welcome to the JDA Software's Second Quarter 2012 Earnings Call. We will be covering a number of different areas today, including the review of the impact of the financial restatement on our previously reported results, as well as the year-to-date results for 2012 and a discussion of our outlook for the remainder of the year.
Before we begin discussing these results, let me remind you that our comments today will contain certain forward-looking statements that often involve risks, uncertainties and assumptions. All statements other than statements of historical facts are statements that could be deemed to be forward-looking. These risks are described from time to time in our SEC reports including, but not limited to, our Annual Report on Form 10-K for the year ended December 31, 2011. The presentation also includes certain non-GAAP measures, which JDA uses internally in budgeting and performance monitoring activities to gauge our business performance.
We believe these measures provide useful information to our investors in evaluating JDA's ongoing business results. We prepared a reconciliation of each of these measures to the most directly comparable GAAP measure in our press release, which is posted on our website at jda.com. Additionally, we have posted a supplemental presentation slide deck on our Investor Relations website to accompany the review of our results.
You saw earlier today, we filed our 2011 Form 10-K containing restated selected financial data for 2007 and 2008, restated full financial statements for 2009 and 2010 and full financial statements for 2011, reflecting the impact of the restatement adjustments. In addition, we filed our Forms 10-Q for both the first and second fiscal quarters in 2012. With these actions we are again compliant with our filings, which should satisfy the rules of the Securities and Exchange Commission, as well as the listing requirements of NASDAQ. We've also fulfilled over covenant requirements under our credit facility and our senior notes indenture, and we'll cease paying the additional 50 basis points on the notes that we incurred beginning June 1 of this year.
Also, I'd like to point out that we will be holding our 2012 Investor and Analyst Meeting in New York on Tuesday, September 18. During that morning, Hamish and Pete, along with members of our executive leadership team covering global sales, global services, retail and manufacturing license sales and cloud services, will be discussing JDA's strategy and views on each of these areas of our business. We hope to see many of you there in September.
We'll begin the call today with a discussion of the financial restatement by Pete Hathaway, our Chief Financial Officer. JDA President and CEO, Hamish Brewer, will join Pete for a discussion of the business and operating results for the first half 2012, as well as our outlook for the remainder of 2012 before we open the call to questions.
Because of the amount of content and the quantitative nature of much of what we will be discussing, we have included additional slides related to the restatement in the supplemental slide deck to assist the overall communications, which can be found on our website.
With that, I will now turn the call over to Pete Hathaway.
Peter S. Hathaway
Thanks, Mike. First, I will discuss the significant elements of the investigation undertaken over the past 8 months. Second, I will describe the findings from that process and how the restatement has been reflected in JDA's financial statements. Lastly, I will describe the corrections we have made to our internal control environment.
As we have reported 8 months ago, we received a comment letter from the Division of Corporation Finance of the U.S. Securities and Exchange Commission, as well as a subpoena requesting documentation about our revenue recognition, policies and practices from the SEC's Division of Enforcement. Since that time, we have worked diligently to investigate and resolve any issues related to this matter.
The Audit Committee of the Board of Directors immediately began an investigation of the company's revenue recognition accounting policies and practices for the years 2008, 2009 and 2010 corresponding to the years referenced in the subpoena. We expanded the review to include the years 2006, 2007 and 2011. The Audit Committee engaged independent legal counsel, who in turn engaged independent accountants to investigate with the committee and to report their findings back to Deloitte, our auditors.
Over the past several months, we provided the SEC with the documents requested in the subpoena, and we responded to all comments and questions communicated to us by the Division of Corporation Finance. In all, there were nearly 3.7 million documents collected, nearly 100,000 documents reviewed and over 11,000 documents delivered to the SEC.
In addition, independent counsel conducted 42 interview sessions with current and former employees, supported by the full cooperation of management. We believe that the third-party legal and accounting cost of this effort will approximate $17 million for 2012, of which we incurred $11 million through June 30.
The financial statements are back on file, but the investigation of the Division of Enforcement has yet to be concluded. We do not know when the investigation will conclude.