Flow General Inc. has offered to pay $1.68 million to settle a class action lawsuit by investors who claim they lost money because of misleading financial reports issued by the McLean high-tech company.
Flow General disclosed the settlement offer in its second-quarter earnings statement yesterday and reported a loss of $1.34 million (17 cents a share) for the quarter, including a write-off of 14 cents a share for the lawsuit settlement.
Flow General lost $196,000 (3 cents) from operations for the quarter, in contrast to a profit of $2.34 million (28 cents) in the same period a year ago. For the six-month fiscal period ending Dec. 31, Flow General reported an operating loss of $470,000 (6 cents) and a total loss, including the lawsuit settlement, of $1.62 million (20 cents). A year earlier, Flow showed a profit of $4.74 million (56 cents).
The slip in earnings came despite a sharp jump in revenues to $41.4 million from $30.6 million for the quarter and to $79.6 million from $60.8 million for the six months.
Flow General said it will take an after-tax write-off of $1.15 million for a proposed settlement in the shareholder suits filed against the company last year.
The lawsuits were filed on behalf of all persons who bought Flow General stock between Sept. 25, 1980, and May 28, 1982. No details were disclosed of how the $1.68 million will be distributed.
In two separate lawsuits that later were combined, several Flow General shareholders accused the company of putting out false and misleading financial reports. Investors who bought Flow General stock lost money when the price of the shares plummeted after a series of unfavorable disclosures about the company's operations, the lawsuits allege.
The stock fell by 60 percent after the Army accused General Research, a Flow General subsidiary, of conspiring to rig bids for a contract. Last May, General Research pleaded guilty to one count of conspiracy.