According to the Company’s FORM 10-K/A for the fiscal year ended March 31, 2005, in August 2003, the Company announced the settlement of all outstanding litigation related to these actions. Under the settlement, the Company agreed to issue a total of up to 5.7 million shares of common stock to the shareholders represented in the three class action lawsuits, including payment of attorneys’ fees. In January 2004, approximately 1.6 million settlement shares were issued along with approximately $3.3 million to the plaintiffs’ attorneys for attorney fees and related expenses. In March 2004, approximately 200,000 settlement shares were issued to participants and beneficiaries of the CASH Plan. On October 8, 2004, the Federal Court signed an order approving the distribution of the remaining 3.8 million settlement shares, less administrative expenses. All the remaining shareholder litigation settlement shares were issued in December 2004. Of the 3.8 million settlement shares, approximately 51,000 were used for the payment of administrative expenses in connection with the settlement, approximately 76,000 were liquidated for cash distributions to class members entitled to receive a cash distribution, and the remaining settlement shares were distributed to class members entitled to receive a distribution of shares. The final shareholder litigation settlement value of approximately $174 million was calculated using the New York Stock Exchange (NYSE) closing price of the Company’s common stock on December 14, 2004, the date the settlement shares were issued, and also includes certain administrative costs associated with the settlement. An initial estimate for the value of the shareholder litigation settlement was established on August 22, 2003.

As summarized by the latest docket posted, on January 6, 2004, the Court entered the Amended Judgment, that the complaint that the complaint in Case No. CV-98-4839 is dismissed in its entirety; that the motion to dismiss filed by defendant, Ernst & Young, in Case No. CV-02-1226 is granted; and, that the claims against the CA Defendants in Case No. CV-02-1226 are dismissed.

Previously, on December 29, 2003, the Court entered the Amended Order and Final Judgment approving the Securities Class Stipulation and dismissing the complaint in Master File No. 98CV4839 in its entirety. The final judgment also dismisses the claims in Master File No. 02CV1226 against the CA defendants only, not including the claims against Ernst & Young in Master File No. 02CV1226.

By the Order entered on August 29, 2003, the Plaintiffs in the 1998 class action are hereby granted leave to amend the complaint in the 1998 Class Action to include the allegations against the CA defendants contained in the 2002 action and to include the Settlement Class Period 1/20/98 through 2/25/02.

The Complaint filed in 2002 alleges that defendants violated sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, by issuing materially false and misleading statements to the market. Specifically, beginning prior to May, 1999, the Company falsely indicated that it had penetrated the distributed systems market when, in fact, it was giving away its distributed system software free, or at nominal additional cost, to customers who were also extending mainframe software licenses, and attributed large portions of the resulting revenue to the non-mainframe products. Also, beginning prior to May, 1999, and ending in October, 2000, when the Company extended a license during its term, it recognized revenue for the entire new license. Until June, 2000, when CA began using new auditors, CA did not "back out" the revenue from the unexpired portion of the old license, double-counting this revenue. After June, 2000, CA began backing out this figure in an obscure line item -- but never disclosed that this caused revenue to be overstated by more than one hundred million dollars each quarter prior June, 2000. In order to hide a severe drop in revenue as measured by Generally Accepted Accounting Principles ("GAAP"), defendants announced a "new business model," which they represented involved offering more flexible licensing terms to customers. In fact, the "new business model" was a cover to institute new, non-GAAP compliant accounting (which the Company called "pro forma, pro rata"), and to obscure the fact that the switch from long-term licenses to flexible subscriptions was not a pro-active move, but a symptom of the obsolescence of CA's main product line. While the stated goal of the "new business model" was to provide customers more flexible terms, the real purpose was to cover up the fact that CA could no longer get many of their mainframe customers to purchase the long-term licences of mainframe software which have been the Company's mainstay. After the announcement of the "new business model" in October, 2000, the Company issued press releases heralding moderate growth, though the GAAP figures showed a revenue decrease of nearly sixty percent. The "pro forma, pro rata" method counted revenue from old license sales in current and future periods, using old revenues to buttress the current, deteriorating sales. Defendants attempted to have their cake and eat it, too: in a strong economy, CA recognized all the revenue from its sales immediately, even double-counting some revenue, showing impressive numbers. In a sagging economy, they obscured the real loss of sales by changing to a method of accounting so back-loaded that it does not conform to GAAP. The "pro forma, pro rata" method also did not make the distinctions between product and service revenue required by GAAP, obscuring the distinction and further hiding the deterioration in sales. CA has continued to report its GAAP figures, as it is required by the Securities and Exchange Commission ("SEC") to do. Incredibly, defendants have falsely stated that the GAAP figures are not reflective of the Company's financial position, and that the "pro forma, pro rata" figures do accurately reflect the Company's financial position. The Company's true condition, however, is shown by the conduct of defendants during the Class Period. After announcing the "new business model" but before reporting under it for the first time, and contrary to the Company's representations that the rosy picture created by the "pro forma, pro rata" figures was an accurate portrayal of the Company's position, the defendants engineered a clandestine, firm-wide layoff, hiding the terminations as individual performance-based firings. They fired possibly as many as a thousand employees with no severance package, and continue to deny that the firings were a layoff, even though executives involved in the layoff confirmed it to the New York Times (as reported on March 20, 2001). More recently, the Company was forced to withdraw a planned debt offering after Moody's questioned the quality of the Company's credit. As a result, CA admits, it was forced to draw down $600 million on one credit line to pay another. The desperate cost-cutting by secret layoff, use of its new unrecognized accounting just when its revenue dropped sharply, and the use of credit lines to service existing debt, demonstrate defendants are keenly aware of the precarious financial condition of the Company, and have deliberately misled the investing public. The misleading picture the Company has presented has not gone unquestioned. On February 22, 2002, the Company confirmed it was aware that both the SEC and FBI were investigating the Company's accounting for civil, and in the case of the FBI, criminal violations. News of the criminal and civil probes, which began to surface on February 20, caused investors to flee the stock, which fell from a February 19 closing price of $25.31 to a February 22 close of $15.99, a drop of 36.8%.

The original complaint filed in 1998 charges Computer Associates and certain of its officers and directors with violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Specifically, the complaint alleges that during the Class Period, defendants disseminated materially false and misleading information to securities analysts and the investment community that the Company's financial condition and business prospects were sound and that the Company was not planning any significant business acquisitions.