According to the Company’s FORM 10-Q for the quarterly period ended June 30, 2000, on June 21, 2000, the court approved a Settlement Order which dismissed the class allegations from the amended complaint, amended the caption to delete the class allegations and dismissed the action on the merits and with prejudice, without costs to any of the parties, except as provided in the Stipulation of Settlement. Pursuant to the Stipulation of Settlement dated June 1, 2000, the defendants collectively agreed to pay a total of $150,000 in full satisfaction and final settlement of all claims and in consideration for a full release as to any future claims arising out of or relating in any way to the matters set forth in the complaint. The entire settlement amount was paid to plaintiff's counsel by the Company's insurer on or about June 23, 2000. The June 21, 2000 Settlement Order also provided that the Stipulation of Settlement did not vacate, alter or modify the determinations made by the District Court in the Memorandum and Order of March 29, 1999 and/or the Memorandum and Order of August 13, 1999, which dismissed the earlier filed complaints.
As previously reported by the Company’s FORM 10K for the fiscal year ended December 31, 1999, on March 29, 1999, the court granted the Company’s Motion to Dismiss, but gave the plaintiff until April 19, 1999 to file an amended complaint. The plaintiff filed an amended complaint on April 19, 1999. On August 16, 1999, the court granted the Company’s Motion to Dismiss the plaintiff ’s amended complaint, without leave to amend. The plaintiff filed a notice of appeal on September 15, 1999.
The original Complaint alleges that National Steel, certain of its officers and directors, and its controlling shareholder, NKK U.S.A. Corp., violated the Securities and Exchange Act of 1934 by issuing a series of false and misleading statements concerning the Company's annual financial results for 1992 through 1996, its quarterly financial results for each quarter of 1996, and its quarterly financial results for the first two quarters of 1997. In particular, it is alleged that defendants managed the Company's earnings when they materially misstated the Company's earnings and net income by creating excess cash reserves and then apportioning those reserves to income in future quarterly and annual reporting periods, in violation of generally accepted accounting principles.