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Hastings Entertainment, Inc. Conclusion: As reported by the Company’s FORM 10-K for the fiscal year ended January 31, 2003, the settlement received final approval by the Court on March 10, 2003. The settlement required a payment of $5.75 million on behalf of the defendants in the lawsuits ($3.15 million of which was funded from amounts remaining under the Company’s director and officer insurance policy after the payment of litigation expenses) and the assignment to the plaintiff settlement class of any claims the Company may have had against KPMG Peat Marwick, LLP, the Company’s outside auditors at the time of the March 7, 2000 announcement. The settlement resolves all claims against the Company, the Company’s current and former defendant officers and directors and the defendant underwriters. Based on the foregoing, the Company recorded a loss contingency of $2.6 million, or $0.22 per share, during fiscal 2002 and all amounts required by the settlement agreement were funded by January 31, 2003. The plaintiff settlement class separately settled all claims against KPMG.
By the Notice of Pendency and Proposed Settlement, the parties reached an agreement-in-principle to settle the action. The proposed settlement creates a fund in the amount of $6,350,000 (the "Settlement Fund") and will include interest that accrues on the Settlement Fund prior to distribution. Based on Representative Plaintiffs' estimate of the number of shares entitled to participate in the settlement, and the anticipated number of claims to be submitted by Class Members, the average distribution per share would be approximately $2.63 before deduction of court-approved fees and expenses.
If the settlement is approved by the Court, counsel for the plaintiffs will apply to the Court for attorneys' fees of 30% of the settlement proceeds and reimbursement of out-of-pocket expenses not to exceed $635,000 to be paid from the settlement proceeds. If the amount requested by counsel is approved by the Court, the average cost per share would be $1.05.
Nine purported class action lawsuits were filed in the United States District Court for the Northern District of Texas against the Company and certain of its current and former directors and officers asserting various claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Although four of the lawsuits were originally filed in the Dallas Division of the Northern District of Texas, all of the five pending actions were transferred to the Amarillo Division of the Northern District and were consolidated. One of the Section 10(b) and 20(a) lawsuits filed in the Dallas Division was voluntarily dismissed. On May 15, 2000, a lawsuit was filed in the United States District Court for the Northern District of Texas against the Company, its current and former directors and officers at the time of the Company’s June 1998 initial public offering and three underwriters, Salomon Smith Barney, A.G. Edwards & Sons, Inc. and Furman Selz, LLC asserting various claims under Sections 11, 12(2) and 15 of the Securities Act of 1933. Motions to dismiss these actions were filed by the Company and, on September 25, 2001, were denied by the Court. On September 12, 2002, the Company announced that an agreement in principle to settle the actions described above had been reached.
The original complaint charges Hastings and certain of its officers and directors with violations of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, Hastings reported record results, and up until the end of the Class Period, the defendants maintained that the Company's growth would continue through the third quarter 1999 and beyond. While defendants were publicly reporting profits of more than $12 million during the Class Period, they used Hastings common stock to keep the fiction of its growth and profitability alive by raising almost $40 million in an initial public offering ("IPO").
INDUSTRY CLASSIFICATION:
SIC Code: 5942
Sector: Services
Industry: Retail (Specialty)
| COMPANY/ISSUER NAME: | Hastings Entertainment, Inc. |
| COMPANY/ISSUER TICKER: | HAST |
| COMPANY WEBSITE: | http://www.gohastings.com |
| FIRST IDENTIFIED COMPLAINT IN THE DATABASE | |||||||||||||||||
| Mitchell S. Warstadt, et al. v. Hastings Entertainment, Inc., et al. | |||||||||||||||||
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| DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT | |||
| Original Complaint - Class Action For Violation Of The Federal Securities Laws | |||
| Type: Complaint | Date on the document: 03/14/2000 | ||
| REFERENCE COMPLAINT | |||||||||||||||||
| Mitchell S. Warstadt, et al. v. Hastings Entertainment, Inc., et al. | |||||||||||||||||
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| DOCUMENTS FOR THE REFERENCE COMPLAINT | |||
| Consolidated Class-Action Complaint for Violation of the Federal Securities Laws | |||
| Type: Complaint | Date on the document: 10/27/2000 | ||
| Order Denying Motion to Dismiss | |||
| Type: Order | Date on the document: 09/25/2001 | ||
| Amended Stipulation and Agreement of Settlement | |||
| Type: Settlement | Date on the document: 01/09/2003 | ||
| Notice Of Pendency And Proposed Settlement Of Class Actions | |||
| Type: Settlement | Date on the document: 01/13/2003 | ||
| Final Judgment and Order of Dismissal with Prejudice | |||
| Type: Order | Date on the document: 03/10/2003 | ||
| Order Awarding Plaintiffs' Counsel's Attorneys' Fees And Reimbursement Of Expenses | |||
| Type: Order | Date on the document: 03/10/2003 | ||
| U.S. District Court Civil Docket | |||
| Type: Docket | Date on the document: 03/10/2003 | ||
| OTHER DOCUMENTS | |||
| Class Action Complaint | |||
| Case Name and/or Number: Caudle | |||
| Type: Complaint | Date on the document: 03/17/2000 | ||
| U.S. District Court Civil Docket | |||
| Case Name and/or Number: Caudle | |||
| Type: Docket | Date on the document: 06/22/2000 | ||
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