According to a press release dated on June 27, 2008, Concord Camera Corp. ("Concord" or the "Company") (NASDAQ: LENS) today announced that on June 19, 2008, the United States District Court for the Southern District of Florida issued its final approval of the Stipulations and Agreements of Settlement in the securities class action suit filed in September 2004 against the Company and certain of its current and former officers (United States District Court for the Southern District of Florida, Case No.: 04-61159-CIV-LENARD/KLEIN)). In addition, a related shareholder derivative action suit was also filed in November 2004 against certain of the Company's current and former officers and directors. (United States District Court for the Southern District of Florida, Case No.: 05-60574-CIV-LENARD/KLEIN)) and both actions were dismissed with prejudice. The Company sought coverage from its insurance carrier for these lawsuits under its directors' and officers' liability insurance policy and the insurance carrier defended the actions under a reservation of rights. Hence, the agreed upon settlement amounts were within the policy limits and the insurance carrier has agreed to pay such amounts.
As of August 9, 2007 the parties were actively participating in discovery proceedings.
On June 16, 2005, the Court entered the Order signed by U.S. District Judge Joan A. Lenard granting the motion to consolidate cases, appoint lead plaintiff and approve lead plaintiff’s selection of lead counsel. On August 31, 2005, the plaintiff filed a Consolidated Class Action Complaint. Jury trial has been set for 9:00 am, on December 10, 2007, before Judge Joan A. Lenard.
The original complaint charges Concord and certain of its officers with violations of Sections 10(b)-5 and 20(a) of the Securities Exchange Act of 1934, and Rule 10(b)-5 promulgated thereunder. Concord designs, develops, manufactures and sells easy-to-use image capture products on a worldwide basis. More specifically, the complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them: (1) that the Company's inventory levels were materially inflated; (2) the Company's financial results were materially impacted by the significant inventory provisions, ranging from $6 to $7 million; (3) the Company's net loss was artificially deflated through the application of manufacturing labor and overhead costs to inventory; and (4) that as a result, the Company's financial results were materially inflated at all relevant times.
More specifically, on May 11, 2004, Concord announced that it would file Form 12b-25 with the SEC extending the Company's time to file a Form 10-Q for the period ended March 27, 2004. News of this shocked the market. Shares of Concord fell $1.58 per share or 34.20 percent, on May 11, 2004, to close at $3.04 per share.