Computer Associates to Expense Stock Options

Computer Associates International CA on Monday announced it will expense new stock options starting in the next fiscal year.

The Islandia, N.Y., company's new fiscal year begins April 1, 2003.

The world's fourth-largest software maker, whose accounting practices are under investigation by the Securities and Exchange Commission and the U.S. Attorney's office, said it expects the new expense to reduce earnings by about 2 cents a share in the first year following its adoption.

Prior to the announcement, analysts expected CA to earn 29 cents a year in its fiscal year 2004.

Computer Associates joins a small cadre of companies such as Coca-Cola KO that are planning to record stock-option grants as expenses at a time when Congress is considering legislation to clamp down on stock option treatments.

"The new policy puts options on an equal footing with other kinds of compensation and will allow us to continue to design compensation packages that motivate employees and align their interests with those of all shareowners," CA's President and CEO Sanjay Kumar said.

Before the announcement, shares of Computer Associates rose 60 cents, or 7.4%, to close regular trading at $8.70. Shares inched up to $8.71 in after-hours activity.