Court Approves Computer Associates Settlement

Computer AssociatesCA has won court approval of shareholder and class-action lawsuit settlements that require the company to issue 5.7 million shares.

But Computer Associates isn't out of the woods yet. A former saleswoman recently filed a whistleblower lawsuit against the company even as it remains under investigation for accounting irregularities, and a senior finance executive resigned last week.

Islandia, N.Y.-based Computer Associates, which announced the federal court approval Thursday, will issue 5.7 million shares of common stock to shareholders represented in three class-action suits. If CA's stock price falls below $23.43 at the time of distribution, up to 2.2 million of the 5.7 million shares will be paid in cash instead -- with a cap of $51.5 million set on the cash payment.

Shares of Computer Associates were recently up 34 cents, or 1.5%, to $23.40.

CA took an after-tax charge of $97 million, or 17 cents a share, in connection with the settlements. Until the settlement shares are issued, the projected impact will be reviewed quarterly and the expense adjusted accordingly, the company said.

The suits alleged, among other things, that the company made misleading statements or omitted facts related to the company's financial performance. CA has been under fire since it changed to a subscription-based model for charging customers in late 2000, a move that prompted charges that the company double-booked some sales and was trying to hide slower growth. The switch came at a time when CA's top executives stood to receive special stock rewards based on the company's performance.

CA, which has been under investigation by the Securities and Exchange Commission and U.S. attorney's office for accounting irregularities for almost two years, ousted its CFO and two other senior finance executives two months ago over revenue-recognition practices.

Late Wednesday, Dow Jones Newswires reported that Senior Vice President of Finance David Kaplan resigned from Computer Associates on Friday. The company told the wire service he left to "pursue other opportunities."

Meanwhile, former saleswoman Laura Heinemann filed a whistleblower lawsuit last week against Computer Associates claiming she was harassed and fired after reporting improper accounting and employment practices to the company and government officials, according to news reports. CA, which sued Heinemann in June, claimed in court documents that she was fired for forging or attempting to forge a sales contract, as reported here Wednesday.