announced late Monday that it will issue 5.7 million shares of stock and take a charge of $144 million to settle all outstanding litigation involving past accounting issues.
The Islandia, N.Y.-based software maker will issue up to 5.7 million shares of common stock to the shareholder classes represented in three class-action lawsuits. The company plans to take a charge in the current quarter of approximately $144 million before taxes, based on its closing price of $25 on Friday and administrative costs associated with the settlement. CA estimated the after-tax impact of the charge is $97 million, or 17 cents a share, under generally accepted accounting principles.
Under the settlement, if CA's share price falls below $23.43 per share at the time of distribution, up to 2.2 million of the 5.7 million shares would be payable in cash at that price -- or a maximum of $51.5 million in cash. In that case, the stock portion of the settlement would be reduced to no less than 3.5 million shares.
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. That switch came at a time when CA's top executives stood to receive special stock rewards based on the company's performance.
Shares of Computer Associates closed down 22 cents, or 0.9%, at $24.78. Shares fell to $24.66 in after-hours trading.