By the Order and Final Judgment, entered on July 24, 2002, the Stipulation is approved as fair, reasonable and adequate, and the Consolidated Complaint is hereby dismissed with prejudice and without costs, except as provided in the Stipulation.
According to the Notice Of Pendency Of Class Action, a hearing will be held before the Honorable Robert E. Keeton in the United States Courthouse, One Courthouse Way, Boston, Massachusetts 02210, at 2:00 p.m., on July 24, 2002 (the “Settlement Fairness Hearing”) to determine whether a proposed settlement as set forth in the Stipulation and Agreement of Settlement and Dismissal dated April 30, 2002, is fair, reasonable and adequate, and to consider approval of the Plan of Allocation and the application of class counsel for attorneys’ fees and reimbursement of expenses. A Settlement Fund consisting of $3.25 million in cash has been established on behalf of defendants.
On August 7, 2001, the Court entered an order granting Plaintiffs’ motion to consolidate the pending actions, appointing Lead Plaintiffs, appointing and Milberg Weiss Bershad Hynes & Lerach LLP as Plaintiffs’ Lead Counsel, and appointing Moulton & Gans LLP as Plaintiffs’ Liaison Counsel. On October 16, 2001, Plaintiffs filed and served their Consolidated Amended Class Action Complaint. On December 4, 2001, the Defendants responded by filing a motion to dismiss the Consolidated Amended Class Action Complaint.
The original complaint alleges that PRI promoted itself as a leading supplier of factory automation systems for semiconductor manufacturers. Throughout the Class Period, defendants represented that the Company was ramping up production of its state-of-the-art Turbostocker XT. Defendants also repeatedly claimed that PRI was "well positioned" to meet the surging demand for factory automation systems and that PRI had an edge over its competitors due to its "technological leadership" and "specialized manufacturing skills." The complaint alleges that, as result of these misrepresentations, PRI's share price increased, from $75.43 at the commencement of the Class Period to a Class Period high closing price of $89.56 on March 9, 2000. Company insiders took advantage of the artificial inflation of the Company's stock price; between March 1 to March 15, 2000, when as a result of defendants' misrepresentations, PRI stock was trading at or near the Class Period high, insiders sold 36,600 PRI shares for proceeds of $3,214,800. In addition, prior to the disclosure of the adverse facts, PRI completed a public offering of 1,705,000 shares netting proceeds of approximately $85.1 million for the Company and $18.5 million PRI insiders. The complaint alleges that, unbeknownst to investors, PRI was experiencing significant and material manufacturing problems and that therefore, PRI was not "well positioned" to take advantage of the surging demand for automation systems. The truth emerged on September 11, 2000 when, after the close of trading, defendants disclosed in a conference call with analysts, and an announcement over the PR Newswire, that it was having "manufacturability, capacity and supply chain problems" in its Factory Systems Division relating to the new Turbostocker XT, which had been scheduled to transition into high volume production during the quarter. Defendants warned that, as a result of these problems, they expected PRI's net income for the quarter to be breakeven, not counting one-time special charges, down from net income of $9.8 million, or $0.38 per share in the third quarter. On news of PRI's earnings warning, the Company's shares fell 39% in a single day, from a closing price of $42.68 on September 11, 2000 to a closing price of $25.87 on September 12, 2000, making PRI one the day's five biggest NASDAQ losers.