According to the docket, on July 31, 2003, the Court entered the Order by U.S. District Judge Lawrence L. Piersol preliminarily approving the Settlement. On February 25, 2004, the Court entered the Memorandum, Opinion and Order granting the motion for final approval of the settlement and plan of allocation of the settlement proceeds, and granting in part and denying in part the motion for attorney fees. The Court further entered that day the Judgment signed by Judge Piersol.
By the Notice of Pendency and Settlement, the parties reached an agreement-in-principle to settle the action. The proposed Settlement creates a fund of $8,000,000. Depending on the number of eligible shares purchased by Settlement Class Members who elect to participate in the Settlement and when those shares were purchased and sold, the estimated average recovery per share will be approximately $0.30 before deduction of Court-approved fees and expenses.
If the Settlement is approved by the Court, counsel for the Representative Plaintiffs will apply to the Court for attorneys' fees of 30% of the Settlement Fund. Counsel also plan to seek reimbursement of out-of-pocket expenses from the Settlement proceeds. If the amount requested by counsel is approved by the Court, the average cost per share would be $0.10.
The original Complaint alleges, among other things, that IBP and certain of its top officers issued false and misleading public statements about IBP's earnings and revenue during the Class Period in its public filings with the Securities and Exchange Commission ("SEC") and press releases. Plaintiff alleges that on January 25, 2001, IBP belatedly disclosed that the SEC had sent IBP's lawyers a comment letter on December 29, 2000, citing 45 apparent instances of improper accounting in financial reports filed by the Company, including the accounting at its DFG Foods Subsidiary ("DFG"). As a result, in a press release on January 26, 2001, IBP announced that it would take a pre-tax charge of at least $47 million against year 2000 earnings to compensate for the accounting errors involving DFG, and that it may need to further adjust its financial results to reflect impairment of goodwill or other long-lived assets associated with DFG. The public dissemination of materially misleading financial information caused IBP's common stock to be artificially inflated throughout the Class Period. The market price of IBP stock dropped almost $4.00, or about 15%, following the Company's belated disclosure of the accounting irregularities.