On September 12, 2006, a related action, 04-CV-00621, against auditor Deloitte & Touche LLP regarding Symbol Technologies common stock was settled for $24,000,000.
By the Order entered on February 28, 2005, discovery in the action is stayed pending the resolution of the pending criminal case. The action is administratively removed from the calendar without prejudice with the right to be restored upon written request. The Clerk of the Court is directed to close this action without prejudice.
On October 14, 2004, the Court entered a Final Judgment (partial) in favor of plaintiff and against certain Settling Defendants. The Plan of Allocation, the Net Settlement Fund and the Joint Compensation Fund were approved.
According to the docket dated June 29, 2004, all parties reached a partial agreement in principle to settle the class-action, the Stipulation and Agreement of Settlement was filed on June 08, 2004. On June 09, 2004, the Court issued the Order Preliminarily Approving Settlement and Setting Settlement Fairness Hearing: 1) Court, for purposes of this order, adopts all defined terms as set forth in the Stipulation. 2) The Court certifies the action to proceed as a class action for purposes of this Settlement. The class-action settlement is awaiting for final approval from the Court.
In a the press release dated June 04, 2004, Symbol Technologies has set aside sufficient reserves to cover the $135 million total it agreed to pay to settle allegations of accounting fraud. The company has set aside $142 million to cover the settlements. Symbol will pay the Securities and Exchange Commission $37 million in cash. It will also settle a class-action lawsuit by paying $1.75 million in cash and $96.25 million in stock.
On September 25, 2003, the Court issued Order that the Hoyle action (03cv1394) shall not be consolidated with "In re Symbol Technologies, Inc. Securities Litigation", No. 02CV1383 (LDW). The Court appointed Roy Heine as lead plaintiff in this action and approved Mr. Heine's selection of Goodkind Labaton Rudoff & Sucharow LLP to serve as lead counsel for the class. On October 3, 2003, the defendants filed a motion to dismiss. The plaintiffs filed an Amended Complaint on October 24, 2003. On June 10, 2004, the Court issued the Memorandum and Order granting the US' application to intervene in the present case, for the limited purpose of staying pretrial discovery.
On March 21, 2003, a complaint was filed against Symbol Technologies and certain individuals in the Eastern District of New York on behalf of a persons and entities that acquired securities of Symbol Technologies, Inc. in exchange for securities of Telxon Corporation on or about November 30, 2000 pursuant to the merger of Telxon and Symbol. According to the docket for that action, 03-CV-1394, on September 25, 2003, the Court issued Order that the Hoyle action (03cv1394) shall not be consolidated with "In re Symbol Technologies, Inc. Securities Litigation", No. 02CV1383 (LDW). The court appointed lead plaintiff and lead counsel, and an amended complaint was filed for the Hoyle action. Although the Hoyle action was not consolidated with this action, it was part of the approved settlement and was later dismissed with prejudice according to the Final Judgment for this action, 02-CV-1383, dated October 14, 2004.
The Complaint in the 2003 action filed against Symbol asserts that Defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act. Plaintiff alleges in essence that the financial statements of Symbol as of September 30, 2000, that were contained in the Registration Statement and Joint Proxy/Prospectus for the merger of Telxon and Symbol, were materially false and misleading and not in conformity with Generally Accepted Accounting Principles ("GAAP"). On April 18, 2002, Symbol disclosed that the Securities and Exchange Commission was conducting a formal inquiry into Symbol's fiscal year 2000 and 2001 financial statements. On August 13, 2002, Symbol announced that it might be required to restate its financial results for all of 2000 and 2001. Subsequently, on February 13, 2003, Symbol announced that the scope of its accounting problems was far greater than previously disclosed going back to 1999. In a press release, Symbol stated "that it may have to restate its revenue and income" for the years 1999 through 2002. In particular, Symbol indicated, among other things, that there would be a net reduction in revenue and income for fiscal years 1999 and 2000. It was reported on March 13, 2002 that Symbol would have to restate revenue and income for 1999 and 2000 by as much as $140 million a year. Plaintiff alleges that Symbol's undisclosed violations of GAAP that occurred prior to and at the time of the merger, as well as the false and misleading financial statements and other representations included in the Registration Statement, damaged Telxon securities holders who received Symbol securities in the merger.
The original Complaint alleges that defendants violated the federal securities laws by issuing materially false and misleading statements throughout the Class Period that had the effect of artificially inflating the market price of the Company's securities. Specifically, the Complaint alleges that defendants engaged in the following conduct which had the effect of increasing the Company's reported revenue and profits: (1) SBL booked as profit in the third quarter 2000 a one-time royalty payment in excess of $10 million, enabling the Company to make its third quarter projections; (2) SBL used expenses associated with its acquisition of Telxon to mask the fact that its sales were declining; and (3) SBL booked as having shipped in the first quarter of 2001 more than $40 million in inventory that included side provisions allowing customers to delay payments or return merchandise, or included products that "never left the warehouse." SBL subsequently had a second-quarter 2001 inventory write-down of $67.1 million after tax. On February 13, 2002, Newsday, Inc. reported that SBL had engaged in the above-described accounting practices, received an inquiry letter from the Securities and Exchange Commission, and had hired accounting and consulting firm KPMG to review its sales process. The next day, SBL announced it was lowering its outlook for 2002 earnings and that its Chief Executive Officer would retire in May 2002. In response to the Newsday article and the Company's announcements, the price of SBL stock plunged more than 53% from an opening price of $14.15 on February 14, 2002 to a low of $6.60 on February 15, 2002 on unusually heavy trading volume.