Informix Corp appears to have finally put its legal woes behind it, announcing yesterday that it has settled a series of class action lawsuits dating back to 1997. A total of $142m will be handed over to shareholders who sued the database software maker after it announced in November of 1997 that it would restate prior financial results. The suits alleged that the company and its officers had misled investors about its earnings outlook and fudged quarterly numbers by booking revenue before products were actually sold through to the end user.
Losers in the suit include Informix, certain of its current and former officers and directors, and Ernst & Young LLP, the company’s former accountants. Informix says the settlement resolves all of the litigation, with the exception of two very small cases. Pending court approval, the company will pay roughly $3.2m in cash and a minimum of 9 million shares of common stock worth $91m. Insurance companies for Informix brass will contribute a further $13.8m on their behalf and Ernst & Young will pay $34m in cash.
Informix claims that, given the bulk of the $108m it is responsible for in the settlement is being paid through insurance and stock, it has come away with favorable terms and can protect its roughly $210m in cash reserves. It also admitted no wrongdoing and asserts that it decided to settle the suits solely by its desire to remove the uncertainty, expense and distraction of continuing litigation.
