CA settles shareholder suit


CA settles shareholder suit

Computer Associates is to settle all outstanding litigation related to claims about its past accounting.

The deal covers shareholder and Employee Shareholder Income Security Act (ERISA) class action suits and related litigation.

As part of the settlement, CA will issue as many as 5.7 million shares of its common stock to shareholders represented in the three class-action suits.

Anticipating the settlement, the company will take a charge in the current quarter of $144m (£92m) before taxes, with an after-tax impact estimated at about $97m. The final cost will be based on the price of CA shares at the time of distribution.

The charge is based on CA's stock price of $25 on Friday (22 August). If the stock price is below $23.43 per share when the settlement is distributed, as many as 2.2 million shares of the settlement would be payable in cash, for a maximum of $51.5m (£33m) in cash.

CA said it is confident in its position but decided that reaching a settlement would be better than continuing the expense and distraction of the long legal battle, which began five years ago.

The settlement is separate from the investigations by the US Securities and Exchange Commission and the US Attorney's Office for the Eastern District court, according to CA, adding that CA continues to co-operate with those investigations.

Stephen Lawson writes for IDG News Service

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