According to the firm's 10-K filing dated March 28, 2001, in August 2000, the parties entered into a Stipulation of Settlement dated as of August 28, 2000 to resolve the Federal Securities Actions. Among other things, the Stipulation of Settlement provided for the dismissal with prejudice of the Federal Securities Actions upon final approval of the settlement by the District Court. On December 19, 2000, the District Court finally approved the settlement and entered orders and judgments dismissing the Federal Securities Actions with prejudice in accordance with the terms of the Stipulation of Settlement. Amounts paid under the Stipulation of Settlement were funded entirely by the Company's insurance carrier.

In a news article dated August 17, 2000, Oakley Inc. has tentatively agreed to a $17.5-million payment to settle a lawsuit alleging that the sunglasses maker and its executives misled investors. The Foothill Ranch company disclosed the proposed settlement in a regulatory document filed this week but did not list the amount. Financial terms were revealed by one of the plaintiffs' attorneys. Oakley said Tuesday that its insurance carrier, which is paying the bill, opted to settle the case. The insurance company was not identified. The proposed settlement, which must be signed by both sides and approved by Judge Gary Taylor, would resolve a flurry of lawsuits filed against Oakley in 1997 by shareholders.

As reported by the Company’s FORM 10-Q For the Quarterly Period Ended September 30, 2000, on July 10, 1998, the defendants filed motions to dismiss the Federal Securities Actions. On January 14, 1999, the District Court denied the motions to dismiss filed by the Company and the other defendants. On March 3, 1999, the defendants filed answers to the consolidated amended complaints in the Federal Securities Actions. On April 2, 1999, plaintiffs filed motions for class certification in the Federal Securities Actions. On June 24, 1999, the parties submitted to the District Court stipulations and proposed orders for class certification in the Federal Securities Actions. On June 29, 1999, the District Court approved the stipulations and entered orders for class certification in the Federal Securities Actions. In July 2000, an agreement in principle was reached to settle the Federal Securities Action.

The Company and certain of its officers and directors have been named as defendants in five putative class action lawsuits filed in October, November and December 1997 in the United States District Court for the Central District of California, Southern Division. On January 26, 1998, the District Court granted the plaintiffs' motions for appointment of lead plaintiffs and for the selection of lead counsel to the purported plaintiff classes. The District Court further ordered that all of the Federal Securities Actions be consolidated for pretrial purposes. On April 3, 1998, plaintiffs filed consolidated amended complaints in the Federal Securities Actions.

The original complaint alleges that Oakley and its management violated section 10(b) of the Securities Exchange Act of 1934 by making misrepresentations about the company's retail distribution strategy, the demand for its products and new products that it claimed were being successfully developed. The complaint further alleges that defendants misrepresented the truth about whether the difficulties its principal customer (Sunglass Hut) was having would have a negative effect on Oakley. The complaint also alleges that certain Oakley insiders sold stock worth over $200 million.