By the Final Judgment and Order of Dismissal with Prejudice signed by U.S. District Judge Clarence Cooper and entered on May 31, 2005, the Court approves the settlement as set forth in the Stipulation of Settlement. The Plan of Allocation is also approved and Plaintiffs Co-Lead Counsel are awarded 33 1/3% of the settlement fund in fees and $735,628 in reimbursement of expenses. The action is dismissed with prejudice.
According to a press release dated March 3, 2005, PRG-Schultz International Inc, formerly Profit Recovery Group International Inc., reported that on February 8, 2005, the Company entered into a Stipulation of Settlement of the Securities Class Action Litigation on behalf of all putative class members, pursuant to which it agreed to settle the consolidated class action for $6.75 million, which payment is expected to be made by the insurance carrier for the Company. On February 10, 2005, the United States District Court for the Northern District of Georgia, Atlanta Division preliminarily approved the terms of the Settlement. The Court will hold a final approval hearing on May 26, 2005. Final settlement of the consolidated class action is subject to final approval by the Court.
As summarized by the Company’s FORM 10-K for the fiscal year ended December 31, 2004, beginning on June 6, 2000, three putative class action lawsuits were filed against the Company and certain of its present and former officers in the United States District Court for the Northern District of Georgia, Atlanta Division. These cases were subsequently consolidated into one proceeding styled: In re Profit Recovery Group International, Inc. Sec. Litig., Civil Action File No. 1:00-CV-1416-CC (the “Securities Class Action Litigation”). On November 13, 2000, the Plaintiffs in these cases filed a Consolidated and Amended Complaint (the “Complaint”). In that Complaint, Plaintiffs allege that the Company and certain Individual Defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder by allegedly disseminating false and misleading information about a change in the Company’s method of recognizing revenue and in connection with revenue reported for a division. Plaintiffs purport to bring this action on behalf of a class of persons who purchased the Company’s stock between July 19, 1999 and July 26, 2000. Plaintiffs seek an unspecified amount of compensatory damages, payment of litigation fees and expenses, and equitable and/or injunctive relief. On January 24, 2001, Defendants filed a Motion to Dismiss the Complaint for failure to state a claim under the Private Securities Litigation Reform Act, 15 U.S.C. § 78u-4 et seq. The Court denied Defendant’s Motion to Dismiss on June 5, 2001. Defendants served their Answer to Plaintiffs’ Complaint on June 19, 2001. The Court granted Plaintiffs’ Motion for Class Certification on December 3, 2002.
The lawsuit charges Profit Recovery and certain of its officers, with violations of the federal securities laws by issuing materially false and misleading financial statements for the Company’s 1999 fiscal fourth quarter on February 16, 2000. On March 29, 2000 Profit Recovery announced that it would restate its reported fourth quarter financial results due to improperly recording revenue. Profit Recovery’s common stock plunged from $26 per share to $18 3/8 per share on March 30, 2000.