According to Little Switzerland, Inc.’s Form 10-K for the fiscal year ended May 25, 2002, the Company recorded a settlement amount of $1.05 million which was paid from the proceeds of the Company's existing insurance coverage.
On June 6, 2002, the Court entered the Order by U.S. District Judge Sue L. Robinson granted the motion for Order Authorizing the Distribution of the Net Settlement to the Class Members. Earlier, on March 21, 2002, the Court entered the Order granting in part and denying in part the motion to Dismiss First Amended Complaint. A Stipulation and Agreement of Compromise, Settlement, and Release was later filed on October 23, 2001. Then, on January 8, 2002, the Court entered the Order approving the proposed settlement, finding it fair, reasonable, and adequate. Plaintiffs’ counsel was awarded 33 1/3% of the settlement fund and reimbursement of expenses in the amount of $27,105.54, plus interest earned. The Court entered the Final Judgment of Judge Sue L. Robinson dismissing the action with prejudice and the case was closed.
The original complaint alleges on or about February 4, 1998, defendants represented that DRHC had obtained a firm financing commitment to purchase Little Switzerland's shares at a price of $8.10 each. However, each of the defendants knew, but failed to disclose, that the financing commitment would expire on April 30, 1998, before Little Switzerland's shareholders were scheduled to vote to approve the merger at their May 8, 1998 Special Meeting of Shareholders. Defendants concealed this expiration of DRHC's financing until after the close of the markets on May 4, 1998. On May 5, 1998, after it was revealed that the financing commitment had expired, and that the lender did not intend to extend or renew it, Little Switzerland's stock dropped from its previous closing price of $7.953 to close at $5.688, a decline of over 28%, on unusually high volume of 562,200 shares.