SEC Formally Investigating CA

Computer Associates International

"The Company has produced documents and information in response to a request for the voluntary production of documents, and understands that third parties have received subpoenas from the SEC for documents issued pursuant to a formal order of investigation," CA said in its annual report. "Such an order gives the SEC staff authority to issue subpoenas and take testimony, though the Company understands that the issuance of such an order does not reflect any finding or determination that any violation of law has occurred."

The SEC and the U. S Attorney's Office are jointly conducting the investigation, which launched in February as an informal inquiry.

"The investigation appears generally to be focusing on issues relating to the Company's historical revenue recognition policies and practices," CA said in the filing.

CA was not immediately available for comment.

The filing comes one day after CA reported a narrowed loss and increased revenue for its fourth quarter.

"We continue to believe that our historical accounting practices were consistent with GAAP [Generally Accepted Accounting Principles and what was required of us and look forward to having those matters behind us," said Sanjay Kumar, president and CEO of Islandia-based CA, speaking Tuesday during a conference call with analysts and investors to discuss CA's fourth-quarter results.

Kumar said CA continues to voluntarily cooperate with the federal probe.

Last month CA settled a lawsuit filed by the U. S. Department of Justice alleging CA and Platinum Technology violated federal antitrust laws when CA acquired Platinum in May 1999. Without admitting any wrongdoing, CA agreed to pay the government $638,000 in fines.

Also last month, CA said the Justice Department closed an inquiry concerning the vendor's March 2000 acquisition of Sterling Software without taking any action.

For the quarter ended March 31, CA reported a loss of $238 million, or 41 cents per share, compared with a loss of $410 million, or 71 cents per share, the same quarter a year ago.

Revenue for the quarter increased to $772 million, up from $730 the same quarter last year.

Shares of CA traded down 80 cents at $18.30 Wednesday.