According to the Company’s FORM 10-K For the Fiscal Year Ended August 3, 2003, on February 6, 2003, the company announced it had reached an agreement in principle to settle this case. The district court’s order approving the settlement was issued on May 22, 2003 and became effective June 23, 2003. Pursuant to the court’s order, all claims have been dismissed and the litigation has been terminated in exchange for a payment of $35 million, which was made in June 2003. The full amount of the payment was covered by insurance.
As previously reported, ten purported class action lawsuits were commenced against the company and two of its former executives in the United States District Court for the District of New Jersey. The lawsuits were subsequently consolidated, and an amended consolidated complaint was filed alleging, among other things, that the company and the former executives misrepresented the company’s financial condition between September 8, 1997 and January 8, 1999, by failing to disclose alleged shipping and revenue recognition practices in connection with the sale of certain company products at the end of the company’s fiscal quarters in violation of Section 10 (b) and 20 (a) of the Securities Exchange Act of 1934, as amended, and Rule 10b-5 promulgated thereunder.
The original complaint charged the defendants with violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder. As alleged in the Complaint, Campbell claimed to have "sold" product to major distributors or resellers when in actuality Campbell never shipped the product to its customers. Campbell claimed these phantom sales in order to meet Wall Street's earnings estimates for the Company and therefore artificially inflate the price of Campbell's stock. When Campbell disclosed that it would have declining earnings as a result of lower sales, the price of Campbell stock dropped from approximately $54 per share to approximately $46 per share and has never recovered.