According to a press release dated January 11, 2006, Aerosonic Corporation, a provider of precision flight products for commercial, business and military aircraft, announced today the final disposition of the Company's class action litigation and derivative litigation. These suits were settled earlier in 2005, and were approved by the United States District Court and the Thirteenth Judicial Circuit Court of Hillsborough County, Florida, respectively, in November 2005, subject to possible objection and appellate review, if any, before the end of December 2005. There were no timely objections raised or appeals filed in connection with the settlements of the suits.
In a press release dated September 9, 2005, a hearing will be held on November 18, 2005 at 1:30 p.m. in Courtroom 14A, Sam M. Gibbons U.S. Courthouse, 801 North Florida Avenue, Tampa, FL 33602 to determine: (1) whether to certify the above-captioned action ("Action") as a class action and appoint Class Representatives and their counsel to represent Class Members; (2) whether the proposed settlement (the "Settlement") of the above-captioned action ("Action") for $5,350,000 in cash plus accrued interest (the "Settlement Fund") should be approved by the Court as fair, reasonable, and adequate; (3) whether to approve a plan to allocate the available Settlement Fund among Class Members who submit timely and valid claims; (4) whether the motion of Lead Plaintiffs' Counsel for an award of attorneys' fees and reimbursement of costs and expenses and for an award to Lead Plaintiffs for costs and expenses should be approved; and (5) whether the Action should be dismissed with prejudice and claims, including claims asserted in this Action, derivative claims, and other claims, should be released and barred, as to and between all of the defendants and related persons and entities.
In a press release dated April 5, 2005, Aerosonic Corporation announced that it and the other parties to the Aerosonic Corporation Securities Litigation filed a Notice of Settlement with the court on April 1, 2005, confirming that all parties had executed a Memorandum of Understanding ("MOU") to settle its pending class action litigation. The MOU defines a total settlement of $5.35 million, of which Aerosonic will pay $800,000. This settlement is contingent upon preliminary and final court approval and could be voided if opt-outs exceed a certain agreed-upon threshold.
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between May 3, 1999 and March 17, 2003, thereby artificially inflating the price of Aerosonic common stock. The Complaint alleges that, throughout the Class Period, defendants issued numerous statements and filed quarterly and annual reports with the SEC which described the Company's financial performance. As alleged in the complaint, these statements were materially false and misleading because they failed to disclose and/or misrepresented the following adverse facts, among others: (i) that the Company had materially falsified its inventory records and improperly recognized revenues; (ii) that the Company's financial returns were in violation of Generally Accepted Accounting Procedures ('GAAP'); (iii) that the Company lacked adequate internal controls and was therefore unable to ascertain the true financial condition of the Company; and (iv) that as a result, the value of the Company's net income and financial results was materially overstated at all relevant times.
Further, the Complaint alleges that on March 17, 2003, Aerosonic announced that it had discovered what appeared to be certain discrepancies which pertain to previously reported financial information concerning inventory accounting and revenue recognition. The market reacted swiftly to this news, with the Company's stock falling 24%, or $3.32 per share from a high of $13.32 per share on March 17, 2003 to close at $10.10 per share on March 18, 2003.