CA settles accounting lawsuits
Published: 26 Aug 2003 12:10 BST
Computer Associates International said it would issue 5.7 million shares to settle a group of shareholder lawsuits related to the software maker's accounting practices.
The company said on Monday that it would take a charge of about $144m (｣91.45m) before taxes in to cover the cost of the settlement. The deal resolves all the outstanding shareholder litigation related to disputed accounting practices, CA said.
"Settling all of these cases at one time is a major step forward, because it removes the uncertainty that always accompanies unresolved litigation and clears distractions that have clouded the real performance of our company," chief executive officer Sanjay Kumar said in a statement.
The lawsuits stemmed from allegations by investors that the company hid slumping sales by switching to a new subscription-based licence model, which charged customers over the life of a contract instead of by collecting revenue as one lump sum. While that method allowed the company to report smoother sales figures, critics charged that it allowed the company to cover up what were actually declining sales.
CA's accounting has been under scrutiny for five years. The company, which remains under investigation by the US Securities and Exchange Commission and the US Department of Justice, said it continues to cooperate with those probes.
In July, CA reported fiscal first-quarter earnings of $10m, or 2 cents a share, on revenue of $813m, compared with a net loss of $65m, or 11 cents a share, on revenue of $765m a year earlier.
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