According to the docket, on February 12, 2002, the settlement conference was held before Judge Joanna Seybert, and the Court approved the settlement and issued the Order and Final Judgment. By the Order and Final Judgment entered on February 13, 2002, it was ordered that action satisfied the applicable prerequisites for class action treatment under Fed. R. Civ. P. 23(a) and (b), and the case closed.
As reported in the firm's 10-K dated June 17, 2002, in late 1998 through early 1999, nine shareholder complaints purporting to be class action lawsuits were filed in the United States District Court for the Eastern District of New York. Plaintiffs filed a Consolidated and Amended Complaint on or about May 27, 1999 and, on or about November 24, 1999 filed a Second Amended and Consolidated Complaint (the "Complaint"). The Complaint named as defendants the Company and Individual Defendants as well as PricewaterhouseCoopers LLP. The Complaint alleged, inter alia, that certain defendants issued false and misleading statements concerning the Company's publicly reported earnings in violation of the federal securities laws. The
Complaint sought certification of a class of persons who purchased the Company's
Common Stock between July 1, 1997 and February 19, 1999, inclusive, and did not
specify the amount of damages sought.
On May 23, 2000, the Company entered into an agreement in principle with
the plaintiffs for the settlement of the class action lawsuit, as reflected in a
Memorandum of Understanding. On June 5, 2001, a Stipulation of Settlement was
executed, under which all claims against the Company and the Individual
Defendants were to be dismissed without presumption or admission of any
liability or wrongdoing. The principal terms of the settlement agreement called
for payment to the Plaintiffs, for the benefit of the class, of the sum of $3.4
million. The settlement amount will be paid in its entirety by the Company's
insurance carrier and is not expected to have any material impact on the
financial results of the Company.
The Complaint alleges that the Company and certain individual defendants knowingly or recklessly misstated the Company's financial condition during the Class Period by, among other things, improperly inflating reported revenues and accounts receivables by the inclusion of sales that were incomplete or uncollectible. Specifically, the price of Schick's common stock fell dramatically after the Company announced on December 10, 1998, that it would be forced to take a $5 million charge against earnings for the third quarter of fiscal year 1999, ending December 31, 1998, for bad debt that had ?accumulated as accounts receivable. The $5 million charge represents a substantial percentage of the $16.1 million accounts receivable on the Company's books as of September 30, 1998.