Informix pays out for accounting mistakes

Database software maker, Informix, has agreed to a $142m settlement for allegedly lying about company revenues and trading on inside information.

In the settlement, announced on Wednesday in the US, Informix will pay approximately $3.2m in cash. An additional amount of approximately $13.8m of insurance proceeds will be made on behalf of the company's current and former officers and directors. The company will also contribute a minimum of nine million shares of Informix common stock worth $91m.

Ernst & Young, Informix's independent accountants also named in the lawsuit, will pay $34m in cash.

In a statement Informix said: "The company believes the settlement terms are very favourable. The company's decision to settle was driven solely by the company's desire to remove the uncertainty, expense and distraction of continuing litigation."

Informix's problems began with a string of lawsuits filed after an April 1997 announcement that the company would lose money in the first quarter of that year. The losses were blamed on slow sales of a new database technology.

But plaintiffs' lawyers contended that top executives had been lying about revenues for years by claiming to have sold software that was merely shipped to customers temporarily and returned to Informix the next financial quarter.

The federal Securities and Exchange Commission questioned Informix about recording revenue for unshipped products and other accounting irregularities. In November 1997 the company was forced to restate its financial results for the previous 14 quarters. The restatements wiped out almost $240m in profits.

The irregularities happened while founder Philip White was CEO but separately earlier this month Informix's present CEO, Bob Finocchio, said he would step down in mid-July. Jean-Yves Dexmier, chief financial officer, will succeed him. Finocchio, who has been president and chief executive since July 1997 - after the accounting problems surfaced - will remain chairman.