According to a press release dated December 10, 2001, REMEC, Inc. (Nasdaq: REMC) announced that the United States District Court for the Southern District of California has dismissed with prejudice the securities class action lawsuit filed against it in April 1999. REMEC and certain of its officers and directors, and the investment bankers who served as co-lead underwriters of REMEC's February, 1998 secondary offering, were sued by the law firm of Milberg Weiss Bershad Hynes & Lerach LLP and two of its co-counsel as counsel for Charles Vezzetti et al and all others similarly situated, alleging violations of the Securities Exchange Act of 1934 between December 1, 1997 and June 12, 1998. On October 31, 2001, the Court granted REMEC's motion to dismiss the complaint, but gave the plaintiffs the opportunity to file an amended complaint. Plaintiffs did not amend. On December 7, 2001, at the parties' request, the Court signed an Order dismissing the case in its entirety with prejudice. REMEC did not make or promise to make any payment, direct or indirect, to the plaintiffs or their counsel for the dismissal of the action.
The original complaint charges REMEC and certain of its officers and directors and its underwriters with violations of the Securities Exchange Act of 1934. The
complaint alleges that defendants' false statements about continuing strong
demand for REMEC's microwave electronic products (especially for the commercial
market), its growing backlog of orders (especially for commercial products),
the success of REMEC's Q-bit Corp. acquisition and REMEC's prospects for strong
continuing revenue, profit margin and net income growth for the next several
years, which would result in EPS of $.89-$.91 and $1.21-$1.22 for F99-F00 to
end 1/31/99 and 1/31/00, respectively, and 30%-40% EPS growth going forward,
artificially inflated REMEC's stock to $30 on 2/17/98 from $19-1/2 on 12/1/97.
On 2/25/98, REMEC and its insiders sold 2,990,000 shares of REMEC stock, in a
secondary offering at $26.50 per share for $79.2 million. REMEC stock went on
to reach its Class Period high of $30-1/4 on 4/6/98. But then, between 5/28/98
and 6/12/98, REMEC's stock dropped on a series of adverse revelations. First,
on 5/28/98, when REMEC revealed adjustments to orders from its largest
customers, REMEC's stock plunged by $7.72, 36%, to $13-13/16 on huge volume of
over four million shares, the largest one-day percentage price decline on the
largest one-day trading volume in REMEC's history as a public company. Then, on
6/12/98, when REMEC revealed that its 2ndQ F99 revenues would decline from its
1stQ F99 revenues and that its F99-F00 EPS would be much worse than earlier
forecast, REMEC's stock fell to $9 and then continued to decline to as low as
$7 by 7/98.