San Francisco based family specialty retail brands products provider Gymboree Corporation announced that it has reached a tentative agreement to fully resolve all claims related to a previously disclosed wage and hour lawsuit filed as a class action in California Superior Court, Riverside County. The settlement is subject to final documentation and court approval.
As a result of mediation proceedings held on November 18, 2005, the Company and the plaintiffs entered into a binding Memorandum of Understanding. The Memorandum of Understanding provides for a settlement in the total amount of up to approximately $2.3 million, payable on a claims-made basis. Court hearings to review the fairness of the terms of the settlement are expected to be held in the first quarter of fiscal 2006.
The settlement will result in a charge of approximately $1.5 million after tax. Because the Company has not yet filed a Form 10-Q for its third quarter ended October 29, 2005, generally accepted accounting principles require that this charge be included in the results of operations for the third quarter. Net income from continuing operations for the third quarter was $11.1 million or $0.35 per diluted share after including the impact of the settlement.
The Company does not expect the settlement to have a material effect on future earnings and continues to expect fourth fiscal quarter income from continuing operations to be in the range of $0.37 to $0.39 per diluted share. For the full fiscal year 2005, after reflecting the effect of this settlement, the Company now expects income from continuing operations to be in the range of $0.77 to $0.79 per diluted share.
marketing@alchempro.com
