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CA to Settle Shareholder Suits

August 26, 2003|From Reuters

Business software maker Computer Associates International Inc. said Monday that it had agreed to settle all outstanding litigation related to claims about its past accounting issues, and would take a related charge of about 17 cents per diluted share in its current quarter.

Computer Associates, which makes software for mainframes and network computers, said the settlement covers shareholder and Employee Retirement Income Security Act class-action suits as well as related litigation. The ERISA suits cover shareholders who bought Computer Associates stock through their company retirement plans.

As part of the settlement, Computer Associates said it would issue to the shareholder classes as many as 5.7 million shares of its common stock. CA said it would take a related charge in the current second quarter of about $144 million before taxes. The after-tax effect of the charge is expected to be about $97 million, or 17 cents per diluted share.

The proposed settlement will be submitted to the U.S. District Court for the Eastern District of New York for approval.

Computer Associates, based in Islandia, N.Y., has been dogged for more than five years by questions about its past accounting practices along with other disruptions including two proxy battles for control of the company.

It still remains under investigation by the Securities and Exchange Commission and the Department of Justice. The probes relate mainly to the way the company recorded revenue and whether it improperly booked it in order to inflate its top line.

Investigations into the company also have focused on hefty compensation packages awarded to some top executives in past years.

The company has repeatedly defended the soundness of its accounting but said Monday that it chose to settle the lawsuits to avoid the further cost and distraction of contesting them.

"I think all things considered, we're satisfied with the terms of the settlement," a company spokesman said.

Computer Associates shares fell 22 cents on Monday to $24.78 on the New York Stock Exchange, before the settlement was announced.

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