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Peregrine Stock at Center of Lawsuits

Peregrine Stock at Center of Lawsuits

Proxy Reveals Ex-Iomega CEO Received


by Mike Allen, Senior Staff Writer

$542,000 as Part of Separation Agreement

Shareholders of Peregrine Systems continued their legal onslaught, filing lawsuit upon lawsuit against the San Diego software company and its board, alleging mainly that it manipulated the company’s financials to prop up the stock.

By the middle of last week, the number of lawsuits was 20 and counting.

While investors may have a case, records also show some management may be a lot smarter than others in handling their personal stock holdings.

Founder and current board member Christopher Coles sold 500,000 shares in February while Peregrine was trading between $6.53 and $7.62, providing about $4 million.

Perhaps even smarter was the sale by acting chairman John Moores last fall, when he sold off 112,000 shares when the stock was trading between $18.14 and $18.58, giving him $2 million.

Not so smart, perhaps, was the purchase by former CEO Steve Gardner of 9,500 shares of Peregrine in February at $7.43; and the purchase, also in February, by former CFO Matt Gless of 5,000 shares at $6.60.

Both Gardner and Gless resigned earlier this month as the company and its new auditor KPMG disclosed it may have to restate earnings for 2001 and 2000 because of “accounting inaccuracies.”

According to Peregrine’s most recent proxy statement, Coles remains one of the largest individual investors with about 1.6 million shares. Other top investors are Moores, with 1.1 million; and director William Savoy with 2.1 million.

Putnam Investments Inc., a Boston mutual fund, owns about 12 percent of the stock.

– – –

Using A Parachute: We don’t know yet the amount of Mr. Gardner’s golden parachute from Peregrine, but if it’s anything like the one locally based Iomega gave to former President and CEO Bruce Albertson, he’ll be quite happy.

According to the company’s proxy, Albertson was paid more than $890,000 in 2001, even though he resigned last May. That’s because about $542,000 of that amount was paid as part of Albertson’s separation agreement.

The pact provides Albertson to be paid his last annual salary of $500,000 plus a $500,000 bonus for a year following his departure.

Iomega also helped its former boss out by repurchasing 900,000 shares he owned for a total of about $367,000, and will pay him another $50,000 before June 1 as part of the agreement.

Current CEO Werner Heid now earns $475,000 annually. He was also paid a one-time signing bonus of $200,000 plus 200,000 in stock options.

For 2001, Iomega, the maker of ZIP disk storage devices for PCs, reported a net loss of $93 million, compared to a net profit of $169.6 million for the prior year.

The company moved its headquarters to San Diego from Utah last fall, but its presence here is purely administrative, with only 50 employees.

Iomega has a global staff of about 1,750, with most of them still in Utah. Some are at facilities in Singapore and Geneva, Switzerland.

Iomega switched its auditors in March from Arthur Andersen to Ernst & Young. For 2001, the company paid Andersen more than $1.5 million, including $789,882 in auditing fees, and $747,864 in other fees.

Iomega, traded as IOM on the New York Stock Exchange, closed at $12.26 May 15, while its 52-week range was $5.50 and $17.75.

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nStor Buys Firm: nStor Technologies, a San Diego-based maker of network storage equipment, must be feeling fairly confident in its efforts to survive.

Last week, it struck an agreement to purchase a telecom management and consulting firm with about 50 employees, but didn’t disclose the name or any other details.

CEO Tom Gruber said once the definitive agreement is signed by the end of the month, the name will be released.

The purchase price is $10 million in nStor stock based on a strike price of 37 cents per share, but could be as high as $13.2 million should future earnings exceed projections, the company said.

Once having about 120 employees, nStor is down to 70 workers, mostly at its Sorrento Mesa headquarters.

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