A US federal court has approved Computer Associates International Inc.'s (CA's) plans to settle all outstanding litigation about its often-questioned past accounting practices, the company said Thursday.
CA said in August it would spend nearly US$100 million to settle three class-action lawsuits against the company, a plan now approved by the U.S. District Court for the Eastern District of New York. CA, based in Islandia, New York, will issue 5.7 million shares of stock to shareholders represented in the lawsuits. If CA's share price is below US$23.43 at the time of distribution, up to 2.2 million of those shares will be payable in cash at that price. CA's shares ended trading on the New York Stock Exchange Wednesday at US$23.06.
Special charges related to litigation settlements pushed CA into the red in its most recently ended quarter, the second of its fiscal year.
CA revamped its accounting and business model in late 2000, moving to a subscription plan that recognizes contracted revenue gradually, rather than in one lump sum up-front when a contract is signed. Questions about the CA's accounting and sales practices before that change have dogged the company for several years, and CA remains the subject of a joint investigation by the U.S. Securities and Exchange Commission and U.S. Department of Justice.
CA's board is also conducting an internal investigation of its past accounting. Preliminary results from that inquiry prompted the company to request in October the resignations of its chief financial officer (CFO) and several other financial executives. CA is still seeking a permanent new CFO.