International Rectifier Corporation Case 04/17/2007: UPDATE
International Rectifier Corporation (NYSE:IRF) announced that it has reached an agreement in principle to settle a securities class action lawsuit pending against the Company and certain of its former officers or directors, ..Civil Action No. 07-02544-JFW (VBKx), in the United States District Court for the Central District of California (the Litigation”). The Litigation was originally filed against the Company and certain of its former officers and directors in April, 2007. The putative class consists of purchasers of Company stock (excluding insiders) during the period July 31, 2003 through February 11, 2008.

The settlement is subject to negotiation and execution of a formal settlement agreement and is dependent upon final approval by the United States District Court for the Central District of California. The proposed settlement would resolve all class members’ claims against the Company and certain of its former officers and directors. It would provide for a payment to the plaintiffs of $90 million, of which $45 million is to be paid by the Company’s insurance carriers and $45 million by the Company.

Class members will receive notice and have a right to object to and/or opt out of the settlement. Final consummation of the settlement will occur upon the entry of final judgment by the court approving the settlement as fair to all class members. The timing of approval process is dependent on the court’s calendar. However, the Company expects that the approval process will be completed before the end of the calendar year 2009.

The proposed settlement of this class action lawsuit is a significant step in our efforts to resolve the legacy legal issues of the Company,” said Oleg Khaykin, President and Chief Executive Officer of International Rectifier. We are pleased to have an agreement in principle so we can focus our time and efforts on core activities and the growth of our business.”

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August 20, 2010 - The court ordered the authorization of the distribution of the net settlement fund.

February 8, 2010 - The court approved the settlement, entered the orders approving the plan of allocation, the motion for attorneys' fees and expenses, and dismissed the action with prejudice.

February 6, 2010 - The court held a final settlement hearing.

September 25, 2009 - The court preliminarily approved the settlement.

December 31, 2008 - The court denied in part and granted in part defendants' motions to dismiss.

November 10, 2008 - Defendants filed a motion to dismiss.

October 17, 2008 - The lead plaintiffs filed a second amended consolidated complaint on behalf of investors who purchased IRF common shares between July 31, 2003 and February 11, 2008. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between July 31, 2003 and February 11, 2008.

May 23, 2008 - The court granted the defendants' motions to dismiss. Claims against some of the defendants were dismissed without prejudice and the plaintiffs were granted leave to file an amended complaint.

March 6, 2008 - Defendants filed a motion to dismiss and then filed a corrected amended motion to dismiss.

January 14, 2008 - The lead plaintiffs filed an amended consolidated complaint on behalf of investors who purchased IRF common shares between July 31, 2003 and August 29, 2007. The lead plaintiff alleges that the defendants violated the Securities Exchange Act of 1934 by issuing false and misleading statements between July 31, 2003 and August 29, 2007.

July 23, 2007 - The lead plaintiffs and lead counsel were appointed.

June 18, 2007 - Lead plaintiff motions were filed.

April 17, 2007 - An investor in shares of International Rectifier Corporation (NYSE: IRF) filed a lawsuit in the U.S. District Court for the Central District of California against International Rectifier Corporation over alleged false and misleading statements made between October 27, 2005 and April 9, 2007.

The complaint alleges that between October 27, 2005 and April 9, 2007, defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by publicly issuing a series of false and misleading statements regarding International Rectifier Corporation’s business and financial results, thus causing IRF’s common stock to trade at artificially inflated prices. In particular, the complaint alleges that, unknown to investors, defendants knew or recklessly disregarded that IRF’s: (i) revenues, (ii) gross profits (iii) earnings, and (iv) accounts receivable were false and misleading, in violation of generally accepted accounting principles. In addition, the complaint alleges that International Rectifier Corporation’s internal control were inadequate.

The complaint further alleges that on April 9, 2007, before the markets opened, IRF disclosed, among other things, that an internal investigation at International Rectifier Corporation revealed “accounting irregularities” at one of International Rectifier Corporation’s foreign subsidiaries. International Rectifier Corporation further disclosed that the accounting irregularities included among other things premature revenue recognition of product sales. In addition, according to the complaint, based on an interim report of the investigation, the Audit Committee of the Board of Directors concluded that International Rectifier Corporation’s financial statements for the quarters ended December 31, 2006, September 30, 2006, March 31, 2006, December 31, 2005 and September 30, 2005, and for the year ended June 30, 2006, should no longer be relied upon. Furthermore, the complaint alleges that International Rectifier Corporation cited “material weaknesses in the internal control over financial reporting at a foreign unit.”

On April 9, 2007, in reaction to IRF’s surprising disclosure, its shares declined from $38.80 per share at the close of trading on April 5, 2007, to close at $35.97 per share, a decline of $2.83 per share or approximately 7.3%, on unusually heavy volume.

The complaint also alleges that certain individual defendants collectively sold approximately 364,000 International Rectifier Corporation (NYSE: IRF) shares at artificially inflated prices for proceeds of approximately $13 million.