On March 6, 2002, the Court entered the Order by U.S. District Judge Allen Sharp granting the motion to approve distribution of the settlement fund. Garden City Group Inc. was awarded $89,970.32 in fees and reimbursement of expenses for processing the claims, administering the Settlement and filing the required Federal and State tax returns. Earlier, on December 4, 2001, Judge Allen Sharp dismissed the case with prejudice and without costs. Plaintiffs’ counsel was awarded fees in the amount of $25,000.00 or 5% of the Settlement Fund, plus reimbursement of expenses in the amount of $124,000.00 with interest. Class Representatives Jaime Vizcaino, Barry Silverberg and Khader Hamide were awarded $2,500.00 each, paid out of the Settlement Fund. The Stipulation of Settlement dated September 25, 2001, was preliminarily approved by Judge Sharp on October 1, 2001.
In late 1997, the Company converted its manufacturing information systems. The conversion of Wabash's manufacturing information systems impacted its ability to determine its inventory costs on an interim basis during the first nine months of 1998. Although the defendants knew that the conversion made the Company unable to determine its inventory costs, they knowingly or recklessly implemented the conversion rather than admit the problem or implement a more conservative and accurate interim method of inventory control. Indeed, the Company's Chief Executive Officer was reported to have admitted that "for a while we were flying partially blind." On January 19, 1999, the Company finally admitted to the investing public that its new manufacturing information systems caused the Company to misrepresent its financial statements for the first, second, and third quarters of fiscal 1998, and that Wabash would file restated financial statements for those periods with the United States Securities and Exchange Commission. The restated financials revealed a reduction of approximately 20% in earnings over the nine month period. The Company also admitted that it had underreported the cost of sales and had overstated gross profits, income before taxes, net income and earnings per share in its earlier financials. The Complaint alleges that the false and misleading financial statements were knowingly or recklessly made by defendants during the Class Period in violation of Generally Accepted Accounting Principles; and, moreover, that these knowing or reckless misstatements of material facts artificially inflated the price of Wabash common stock throughout the Class Period. During the Class Period, Wabash common stock traded as high as $31 per share. On the last trading day before the January 19, 1999 announcement, the price of Wabash shares closed at $20 per share. After the announcement, the price of Wabash common stock fell to a closing average price of $15 15/16 per share, a loss of 20% of the value of the stock.