New York law firm files suit over Spirit AeroSystems’ third-quarter charge
06/04/2013 11:05 AM
08/08/2014 10:17 AM
A class action lawsuit against Spirit AeroSystems and two of its directors was filed Monday in U.S. District Court, District of Kansas, alleging violations of federal securities laws.
The complaint alleges that company officials made false and misleading statements about the company’s business, including problems about development programs that led to a $590 million charge in the third quarter of 2012.
News about the financial loss last fall caused Spirit’s stock to drop $6.55 per share to $15.11, a drop of 30 percent.
The suit was filed by the law firm of Pomerantz Grossman Hufford Dahlstrom & Gross, which is based in New York and has offices in Chicago, Florida and San Diego.
The class action seeks to recover damages.
Defendants named in the suit include Spirit; Jeff Turner, then CEO and president; and chief financial officer Philip Anderson.
Spirit AeroSystems spokesman Ken Evans said it’s not uncommon for such lawsuits to follow disappointing financial news.
“The company strongly believes that these claims are baseless and intends to vigorously defend against them,” Evans said in an e-mailed statement.
The complaint alleges that between May 5, 2011, and Oct. 24, 2012, Spirit failed to disclose that it was having difficulties executing its diversification and growth strategy as it expanded its customer base, manufacturing sites and product design capabilities while managing multiple development programs with significant design changes and schedule delays.
It alleges that Spirit also lacked adequate internal and financial controls, specifically controls over cost overruns on the Boeing 787 program, the Gulfstream G540 and G280 wing programs and the BR725 program.
As a result, the company’s financial statements were “materially false and misleading at all relevant times.”
On Oct. 25, 2012, the company disclosed that it expected to take a record $590 million charge, attributed to operational problems across multiple product lines. The magnitude of the loss surprised analysts.
“How could you have made a miss quite that big and not seen it earlier?” one analyst asked Spirit officials, the complaint said.
The complaint references press releases and filings with the Securities and Exchange Commission on its financial and operating results up to the charge.
The plaintiffs are requesting a trial by jury.