According to the docket dated October 4, 2003, the court gave final approval for the settlement on October 4, 2003.
According to the Proposed Settlement dated July 30, 2003, the parties agreed to settle the case with the defendants paying $5,375,000 in cash.
On February 26, 2003, the Court entered the Order granting the motion to appointed lead plaintiff and for approval of lead plaintiff's selection of lead counsel and liaison counsel. Vijay Sherma was appointed lead plaintiff and the law firm of Schiffrin & Barroway, LLP was approved as lead and the law firm of Weisman Goldbert & Weisman Co., LPA was approved as liaison counsel. On June 25, 2003, an Amended Complaint was filed, and on July 15, 2003 a Stipulation of Settlement was filed.
The original Complaint charges that during the Class Period, Cole National Corporation and certain of its officers and directors issued and/or failed to correct false and misleading financial statements and press releases concerning the Company's publicly reported revenues and earnings directed to the investing public. Specifically, (i) that the Company's revenues from optical warranties and net income for 1998, 1999, 2000, 2001 and for the two quarters of 2002 have been seriously overstated; (ii) because of these problems, the value of the Company's balance sheet and income statement were materially overstated at all relevant times; and (iii) despite Cole National's representations to the contrary, the Company's Class Period financial statements did not comply with GAAP, causing Cole National to investigate and consider restating its financial statements.
On November 26, 2002, the Company shocked the market and revealed that (i) the Company would conduct a re-audit of the financial statements for fiscal years 1998, 1999, 2000, 2001 and 2002 previously audited by Arthur Andersen LLP; (ii) re-audits would likely result in the restatement of the Company's financial statements; (iii) the Company was advised to recognize the revenues earned on the sale of the optical warranties at the time of sale; and (iv) as a result of these adjustments, material changes are likely in the timing of the recognition of the revenue and operating profits associated with these sales, in current and prior balance sheets relating to deferred revenue and shareholders' equity.
Further, the Company reported that the filing of its Form 10-Q for the third quarter of 2002 will be delayed and most likely the required restatements will be available at the time of the filing of its Form 10-K for its fiscal year ending February 1, 2003. The Company also stated that the investors should not rely on its previous financial statements.
In response to the news that Cole National's previously-reported financial results may not in fact be what they seemed (an accurate financial summary of the Company's operations), the Company's shares fell $1.25 or approximately 10% per share to close at $11.09 on November 26, 2002.