According to a press release dated October 10, 2005, TriQuint Semiconductor, Inc. today reported that the United States District Court for the Middle District of Florida dismissed with prejudice the class action complaint filed against Sawtek, Inc., a wholly-owned subsidiary of TriQuint since 2001, and former officers of Sawtek.
As previously disclosed by Triquint Semiconductor, Inc.’s FORM 10-Q For the Quarterly Period Ended June 30, 2005, the cases were consolidated into one action, and an amended complaint was filed in this action on July 21, 2003. Sawtek and the individual defendants filed their motion to dismiss on September 3, 2003, and briefing on the motion was completed on November 19, 2003. The court heard oral argument on November 21, 2003, and issued an order partially denying the motion to dismiss on December 19, 2003. Specifically, the court found that the complaint was not barred by the statute of limitations, but reserved ruling on the other aspects of the motion to dismiss. Because the statute of limitations issue is a novel question of law, the court stayed the proceedings in this case to allow the defendants to file an interlocutory appeal to the Eleventh Circuit Court of Appeals. The defendants duly filed for interlocutory appeal on January 22, 2004. Because the Court of Appeals has been considering the identical issue in another matter, the appeal process has been stayed, pending the Court of Appeals’ decision in the other matter. On June 1, 2005, the Eleventh Circuit issued a memorandum decision in the unrelated case that raised the similar statute of limitations issue. The Court of Appeals held that factual issues were raised, which precluded resolution of the statute of limitations issues at this time. The Court of Appeals remanded that case to the lower court for the purpose of making factual findings. The Sawtek appeal process with respect to the statute of limitations remains stayed pending remand of this unrelated case. On June 3, 2005, the defendants requested the United States District Court to lift its stay of the proceedings in the Sawtek case, and to proceed to rule on the remaining issues raised in the motion to dismiss the complaint. The District Court has allowed the parties to file supplemental briefing on or before August 19, 2005, and scheduled a hearing for August 25, 2005 to hear re-argument on the balance of the motion to dismiss the complaint.
The complaint originated from several nearly identical putative civil class action lawsuits filed in the United States District Court for the Middle District of Florida against Sawtek and former officers of Sawtek. The cases were consolidated into one action, and an amended complaint was filed in the consolidated action on July 21, 2003. The Company filed a motion to dismiss on September 3, 2003, and the complaint was dismissed with prejudice on October 6, 2005.
The original complaint charges Sawtek, Inc. and Sawtek's CEO, CFO and a former CEO with violations of section 10(b) and 20(a) of the Securities Exchange Act of 1934 and S.E.C. Rule 10b-5. The complaint alleges that during the Class Period defendants misrepresented Sawtek's financial performance by engaging in ‘channel stuffing’ - a method for improperly inflating revenue by shipping more products than distributors can sell - and using the inflated revenue numbers to disseminate false and misleading statements concerning the Company's financial performance.
The complaint further alleges that during the Class Period defendants misled investors about Sawtek's business prospects despite a widespread downturn in the telecommunications industry. Sawtek's actual financial performance was revealed when defendants acknowledged that the company's quarterly results would fall well below its previously issued revenue guidance, causing Sawtek's stock price to plunge more than 17% the next day.