Computer Associates to settle shareholder litigation

* Civil class action and derivative cases included.

* 5.7 million shares will be issued.

* Settlement removes uncertainty, clears distractions.

* CA plans to take charge in current quarter.

Computer Associates International, Inc today announced plans to settle all outstanding litigation related to claims about past accounting issues. Included are shareholder and ERISA class-action suits and related derivative litigation. As part of the settlement, CA plans to issue to the shareholder classes up to 5.7 million shares of CA common stock.

In anticipation of final settlement the company said it plans to take a charge in the current quarter of approximately $144 million before taxes. The charge is based on CA`s New York Stock Exchange closing price of $25 on Friday, 22 August and certain administrative costs associated with settlement. The after-tax impact of this charge is currently estimated to be approximately $97 million or $0.17 per diluted share on a GAAP basis.

"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 Chairman and Chief Executive Officer Sanjay Kumar. "While confident in our position, the board of directors concluded that a settlement - especially one that puts more equity in the hands of shareholders - was the best course of action. It became clear that it was a far better option than continuing with the expense and distraction of a protracted legal battle that began five years ago."

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The settlement was reviewed by the independent directors who chair the board`s Governance, Audit, and Compensation and Human Resource Committees as well as by all non-interested, independent directors who were not named in any of the suits. It was approved by the board`s independent directors and will be submitted for approval to the United States District Court for the Eastern District of New York. As part of the approval process, additional details concerning the settlement will be provided to all interested parties.

Harvard Professor Jay W Lorsch, chairman of the board`s Governance Committee, said: "This settlement removes a significant overhang that has helped divert attention from CA`s progress. Throughout the course of this litigation, CA management under Sanjay Kumar`s leadership remained focused on its customers and its business. As a result, CA has made tremendous progress on all fronts - operational, financial and in corporate governance - over the past several years."

Upon court approval, CA will issue 5.7 million shares of CA common stock to the shareholders represented in the three class action lawsuits. Plaintiffs` attorney fees will be covered by this stock issuance. If CA`s share price is 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 $51.546 million in cash. In that case, the stock portion of the settlement would be reduced to no less than 3.5 million shares. In settling the derivative suit, CA committed to maintaining measures aimed at ensuring that it remains a leader in its corporate governance practices.

CA noted that the settlement of these cases is separate from the continuing and previously reported investigations by the Securities and Exchange Commission and the US Attorney`s Office for the Eastern District of New York. The company is cooperating with those investigations and continues to respond to requests from those agencies, and the board continues to exercise oversight and review of these issues. CA is unable to predict the outcome of the government investigations.

Because this settlement calls for payment in stock, calculation of its final cost will be based on the actual price of CA shares at the time of distribution. Therefore, until the settlement shares are issued, CA will review the projected impact each quarter and adjust this charge accordingly. The impact to GAAP earnings reflects the current estimate of the tax benefit associated with such charge.