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Computer Associates International Inc. late on Monday announced plans to settle a string of shareholder and other lawsuits about its accounting practices in hopes of boosting its financial performance.
As part of the settlement, CA plans to issue the shareholders involved in three class actions as many as 5.7 million shares of CA stock. The final cost of the settlement will not be known until the date of distribution of the stock.
Included in the settlement are four lawsuits dating back as far as five years—three class-action shareholder cases filed between July 1998 and November 2002 and a derivative suit filed in April 2002. The Islandia, N.Y., software company plans to submit the settlement within the next week to the U.S. District Court for the Eastern Region in New York, CA spokesman Dan Kaferle 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,” said CA Chairman and CEO Sanjay Kumar in a statement.
The companys board of directors decided that a settlement “was the best course of action,” he said.
To account for the settlement, CA expects to take a charge of $144 million before taxes in its current quarter based on Fridays closing price of its stock. After taxes, CA estimates the charge to be $97 million.
For the derivative lawsuit, CA is seeking a settlement where it commits to maintain measures ensuring leading corporate governance practices, the company said.
The planned settlement is separate from federal investigations into CAs accounting practices. Both the Securities and Exchange Commission and the U.S. Attorneys Office for the Eastern District of New York have ongoing investigations, and CA said it is continuing to cooperate with them.
A year ago, CA fended off a proxy battle from dissident shareholder Sam Wyly, who had been trying to replace five CA board members including Kumar for issues such as poor stock performance. In a $10 million settlement, Wyly agreed to desist from all proxy battles for five years and to extend an existing non-compete agreement to five years, while CA added an additional independent board member.