View
220
Download
0
Category
Preview:
Citation preview
l l
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
MILBERG WEISS BERSHADHYNES & LERACH LLP
WILLIAM S . LERACH (68581 )DARREN J . ROBBINS (168593)KATHERINE L . BLANCK (149110)600 West Broadway, Suite 1800San Diego, CA 92101Telephone : 619/231-1058619/231-7423 (fax )
-and-PATRICK J . . COUGHLIN (111070)100 Pine Street, Suite 2600San Francisco, CA 94111Telephone : 415/288-4545415/288-4534 (fax )
HOFFMAN & EDELSONMARC H . EDELSON45 W . Court StreetDoylestown, PA 18901Telephone : 215/230-8043215/230-8735 (fax )
Attorneys for Plaintiff
i 4,._~ . D
SCOTT & SCOTT, LLCDAVID R . SCOTTNEIL ROTHSTEIN108 Norwich AvenueColchester, CT 06415Telephone : 860/537-3818860/537-4432 (fax )
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
WESTERN DIVISION
ORLANDO MARTINEZ, On Behalf ofHimself and All Others SimilarlySituated,
Plaintiff,
hNo . fl1-O33?9 NCLASS ACTION
COMPLAINT FOR VIOLATION OF THEFEDERAL SECURITIES LAW S
vs .
CALIFORNIA AMPLIFIER, INC .,
Defendant .DEMAND FOR JURY TRIAL
1 SUMMARY AND OVERVIEW
2 1. This is a securities fraud class action on behalf of all
3 purchasers of the publicly traded securities of California
4 Amplifier, Inc . ("California Amplifier" or the "Company") between
5 April 7, 2000 and March 28, 2001 (the "Class Period"), against
6 California Amplifier for violations of the Securities Exchange Act
7 of 1934 (the "1934 Act") . California Amplifier designs,
8 manufactures and markets microwave components used in both defense
9 and commercial markets . The Company's products are used for the
10 amplification and conversion of microwave signals for satellite
11 television, Global Positioning Satellite, wireless cable, two-way
12 voice and data communications, and broadband applications .
13 2 . On March 29, 2001, California Amplifier announced that it
14 will restate its fiscal 2000 financial statements because of
15 accounting misstatements . The press release issued in connection
16 with the announcement stated, in part :
17 California Amplifier Inc . today announced that during
18 preparation for the Company's fiscal year 2001 audit
19 examination, the Company's corporate controller abruptly
20 resigned and advised by letter that in fiscal year 2000
21 he made certain adjustments to the Company's accounting
22 records that caused a reduction in recorded expenses
23 which may have resulted in overstating net income for the
24 fiscal year ended February 26, 2000 by as much as $2 .2
25 million, or $ .18 per basic share . The Company is
26 actively investigating the circumstances reported by th e
"27 controller but has not yet been able to interview the
28 controller fully and, as a result, is unable at this tim e
- 1 -
1 to reach any definitive conclusions as to the exact
2 expenses or fiscal year 2000 quarters that are affected
3 by this alleged overstatement . . . . Due to these
4 developments, the previously scheduled release of
5 earnings for the fourth quarter and the fiscal year ended
6 March 3, 2001 on April 19, 2001 will be postponed to a
7 future date to be announced . If the investigation
8 ultimately confirms an overstatement of income in fiscal
9 year 2000, the Company will be required to restate its
10 fiscal year 2000 consolidated financial statements .
11 3 . On this news, trading in California Amplifier shares was
12 halted at $5 .03 - or more than 90% lower than the Class Period high
13 of $59 .25 .
14 JURISDICTION AND VENUE
15 4 . Jurisdiction is conferred by §27 of the 1934 Act . The
16 claims asserted herein arise under §§10(b) and 20(a) of the 1934
17 Act and Rule lOb-5 .
18 5 . Venue is proper in this District pursuant to §27 of the
19 1934 Act . Many of the false and misleading statements were made in
20 or issued from this District .
21 6. The Company's corporate headquarters are in Camarillo,
22 California, where the day-to-day operations of the Company are
23 directed and managed .
24 THE PARTIES
25 7 . Plaintiff Orlando Martinez purchased California Amplifier
26 publicly traded securities as described in the attached
A27 certification and was damaged thereby .
28
- 2 -
1 8 . Defendant California Amplifier designs, manufactures and
2 markets microwave components used in both defense and commercial
3 markets . The Company's products are used for the amplification and
4 conversion of microwave signals for satellite television, Global
5 Positioning Satellite, wireless cable, two-way voice and data
6 communications, and broadband applications .
7 FRAUDULENT SCHEME AND COURSE OF BUSINESS
8 9. California Amplifier is liable for (i) making false
9 statements, or (ii) failing to disclose adverse facts about its
10 financial results . Defendant's fraudulent scheme and course of
11 business that operated as a fraud or deceit on purchasers of
12 California Amplifier publicly traded securities was a success, as
13 it : (i) deceived the investing public regarding California
14 Amplifier's prospects and business ; (ii) artificially inflated the
15 prices of California Amplifier's publicly traded securities ; and
16 (iii)-caused plaintiff and other members of the Class to purchase
17 California Amplifier publicly traded securities at inflated prices .
18 DEFENDANT'S FALSE AND MISLEADIN GSTATEMENTS ' ISSUED DURING THE CLASS PERIOD
1910 . On April 6, 2000, after the close of the market,
20California Amplifier reported fiscal 2000 Q4 and year-end results
21in a press release which stated, in part :
22California Amplifier, Inc . today reported results
23for its fiscal 2000 fourth quarter and year ended
24February 26, 2000 .
25Sales for the fourth quarter ended February 26, 2000
26increased 175% to $27,709,000 as compared to $10,077,000
27for the fourth quarter of the prior year . The Company
28reported net income for the quarter, before th e
- 3 -
1 $9,500,000 charge for the previously announced settlement
2 of class action securities litigation, of $1,842,000 or
.3 $0 .13 per fully diluted share, as compared to $91,000, or
4 $0 .01 per share for the fourth quarter of fiscal year
5 1999 .
6
7 The fourth quarter and fiscal year 2000 net losses
8 which include the $9,500,000 charge for settlement of
9 litigation were $4,237,000, or $ .34 per share, and
10 $1,393,000, or $ .12 per share, respectively .
11 Fred Sturm, Chief Executive Officer, commented, "in
12 fiscal year 2000 we achieved record sales and returned to
13 quarterly and annual operational profitability. "
14 11. On June 8, 2000, California Amplifier reported fiscal
15 2001 Q1 results and its highest quarterly sales and net income in
16 Company history . The press release stated, in part :
17 California Amplifier, Inc . today reported results for its
18 first quarter ended May 27, 2000 . Sales for the quarter
19 increased 147% to $32,284,000, from $13,093,000 for the
20 first quarter of the prior year . First quarter net
21 income increased 493% to $2,122,000, or $ .15 per fully
22 diluted share, compared to net income of $358,000, or
23 $0 .03 per share, for the first quarter ended May 29,
24 1999 .
25 Fred Sturm, Chief Executive Officer, commented,
26 "Sales of Satellite products in the first quarter were at
-27 record levels, and increased 20% sequentially from th e
28 fourth quarter . This is due to continued strong deman d
- 4 -
1 for U .S . satellite products and our entry into certain
2 European markets, supported by expansion of our supplier
3 base for key electronic components . "
4 12. On September 7, 2000, California Amplifier reported
5 fiscal 2001 Q2 growth in broadband wireless products, which fueled
6 record quarterly sales . The press release stated, in part :
7 California Amplifier, Inc . today reported results for its
8 second quarter and six months ended August 26, 2000 .
9 Fiscal year 2001 second quarter sales increased 83%,
10 or $15,457,000 to $34,032,000, from $18,575,000 for the
11 second quarter of fiscal year 2000 . Second quarter net
12 income increased 149% to $2,240,000, or $ .16 per diluted
13 share from $901,000, or $0 .07 per diluted share, for the
14 second quarter of the prior year .
15 Sales for the six month period of fiscal year 2001
16 increased $34,648,000, or 109%, to $66,316,000, compared
17 to sales of $31,668,000, or the six month period of the
18 prior year . Six month net income increased 246% to
19 $4,362,000, or $ .31 per diluted share from $1,259,000, or
20 $0.10 per diluted share for the six month period of
21 fiscal year 2000 .
22 Fred Sturm, Chief Executive Officer, commented, "The
23 significant increase in sales for the second quarter and
24 the six month period as compared to the prior year were
25 generated by sales growth in each of the Company's three
26 individual business units . The most encouraging
`27 development was the better than anticipated shipments of
28 two-way MMDS transceivers for the emerging fixed wireles s
- 5 -
1 markets . This reflects our leadership position as a
2 supplier of subscriber transceivers used by operators of
3 MMDS fixed wireless systems in North America . "
4 13 . On December 7, 2000, California Amplifier reported fiscal
5 2001 Q3 wireless product sales growth of 39% sequentially, which
6 accounted for 31% of total sales . The press release stated, in
7 part :
8 California Amplifier, Inc . today reported results for its
9 third quarter and nine months ended November 25, 2000 .
10 Fiscal year 2001 third quarter sales were
11 $32,634,000 as compared to $26,251,000 for the third
12 quarter of fiscal year 2000 . Third quarter net income
13 was $2,290,000, or $ .16 per diluted share, as compared to
14 $1,585,000, or $ .12 per diluted share for the third
15 quarter of the prior year .
16 Sales for the nine-month period of fiscal year 2001
17 were $98, 950, 000, as compared to $57, 919, 000 for the nine
18 months of the prior year . Nine month net income was
19 $6,652,000, or $ .47 per fully diluted share, as compared
20 to $2,844,000, or $ .22 per diluted share for the nine-
21 month period of fiscal year 2000 .
22 14 . On March 29, 2001, California Amplifier announced
23 shocking revelations in a press release that stated, in part :
24 California Amplifier Inc . today announced that during
25 preparation for the Company's fiscal year 2001 audit
26 examination, the Company's corporate controller abruptl y
,27 resigned and advised by letter that in fiscal year 2000
28 he made certain adjustments to the Company's accountin g
- 6 -
1 records that caused a reduction in recorded expenses
2 which may have resulted in overstating net income for the
3 fiscal year ended February 26, 2000 by as much as $2 .2
4 million, or $ .18 per basic share . The Company is
5 actively investigating the circumstances reported by the
6 controller but has not yet been able to interview the
7 controller fully and, as a result, is unable at this time
8 to reach any definitive conclusions as to the exact
9 expenses or fiscal year 2000 quarters that are affecte d
10 by this alleged overstatement . The audit examination for
11 fiscal year 2001 is currently underway. Due to these
12 developments, the previously scheduled release of
13 earnings for the fourth quarter and the fiscal year ended
14 March 3, 2001 on April 19, 2001 will be postponed to a
15 future date to be announced . If the investigation
16 ultimately confirms an overstatement of income in fiscal
17 year 2000, the Company will be required to restate its
18 fiscal year 2000 consolidated financial statements .
19 15. The fact that California Amplifier will restate its
20 financial statements, for fiscal 2000 (and possibly beyond) is an
21 admission that the financial statements originally issued were
22 false and that the overstatement of revenues and income was
23 material . Pursuant to GAAP, as set forth in Accounting Principles
24 Board Opinion ("APB") No . 20, the type of restatement announced by
25 California Amplifier was to correct for material errors in its
26 previously issued financial statements . See APB No . 20, 1 1 7-13 .
27 The restatement of past financial statements is a disfavored method
28 of recognizing an accounting change as it dilutes confidence by
- 7 -
1 investors in the financial statements, it makes it difficult to
2 compare financial statements and it is often difficult, if not
3 impossible, to generate the numbers when restatement occurs . See
4 APB No . 20, 114 . Thus, GAAP provides that financial statements
5 should only be restated in limited circumstances, i .e ., when there
6 is a change in the reporting entity, a change in accounting
7 principles used or to correct an error in previously issued
8 financial statements . California Amplifier's restatement was not
9 due to a change in reporting entity or a change in accountin g
10 principles, but rather, to errors in ..previously issued financial
11 statements . Thus, the restatement is an admission by California
12 Amplifier that its previously issued financial results and its
13 public statements regarding those results were false and
14 misleading .
15 FIRST CLAIM FOR RELIEF
16 For Violation of §10 (b) of the 1934 Act and Rule 10b-5
17 16. Plaintiff incorporates 111-15 by reference .
18 17 . During the Class Period, defendant disseminated or
19 approved the false statements specified above, which it knew or
20 recklessly disregarded were misleading in that they contained
21 misrepresentations and failed to disclose material facts necessary
22 in order to make the statements made, in light of the circumstances
23 under which they were made, not misleading .
24 18 . Defendant violated §10(b) of the 1934 Act and Rule lOb-5
25 in that it :
26 (a) Employed devices, schemes, and artifices to defraud ;
27 (b) Made untrue statements of material facts or omitted
28 to state material facts necessary in order to make the statement s
- 8 -
1 made, in light of the circumstances under which they were made, not
2 misleading ; o r
3 (c) Engaged in acts, practices, and a course of business
4 that operated as a fraud or deceit upon plaintiff and others
5 similarly situated in connection with their purchases of California
6 Amplifier publicly traded securities during the Class Period .
7 19. Plaintiff and the Class have suffered damages in that, in
8 reliance on the integrity of the market, they paid artificially
9 inflated prices for California Amplifier publicly trade d
10 securities . Plaintiff and the Class would not have purchased
11 California Amplifier publicly traded securities at the prices they
12 paid, or at all, if they had been aware that the market prices had
13 been artificially and falsely inflated by defendant's misleading
14 statements .
15 20 . As a direct and proximate result of defendant's wrongful
16 conduct, plaintiff and the other members of the Class suffered
17 damages in connection with their purchases of California Amplifier
18 publicly traded securities during the Class Period .
19 SECOND CLAIM FOR RELIEF
20 For Violation of §20 (a) of the 1934 Act
21 21 . Plaintiff incorporates 111-20 by reference .
22 22 . California Amplifier controlled its controller and all of
23 its employees . By reason of such conduct, California Amplifier is
24 liable pursuant to §20(a) of the 1934 Act .
25 CLASS ACTION ALLEGATIONS
26 23. Plaintiff brings this action as a class action pursuant
27 to Rule 23 of the Federal Rules of Civil Procedure on behalf of all
28 persons who purchased California Amplifier publicly traded
- 9 -
1 securities (the "Class") on the open market during the Class
2 Period . Excluded from the Class is defendant and its officers and
3 employees .
4 24 . The members of the Class are so numerous that joinder of
5 all members is impracticable . The disposition of their claims in
6 a class action will provide substantial benefits to the parties and
7 the Court . California Amplifier had more than 13 .5 million shares
8 of stock outstanding, owned by hundreds if not thousands of
9 persons .
10 25. There is a well-defined community of interest in the
11 questions of law and fact involved in this case . Questions of law
12 and fact common to the members of the Class which predominate over
13 questions which may affect individual Class members include :
14 (a) Whether the 1934 Act was violated by defendant ;
15 (b)" Whether defendant omitted and/or misrepresented
16 material facts ;
17 (c) Whether defendant's statements omitted material
18 facts necessary to make the statements made, in light of the
19 circumstances under which they were made, not misleading ;
20 (d) Whether defendant knew or recklessly disregarded
21 that its statements were false and misleading ;
22 (e) Whether the prices of California Amplifier's
23 publicly traded securities were artificially inflated ; and
24 (f) The extent of damage sustained by Class members and
25 the appropriate measure of damages .
26 26. Plaintiff's claims are typical of those of the Class
'27 because plaintiff and the Class sustained damages from defendant's
28 wrongful conduct .
- 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
27 . Plaintiff will adequately protect the interests of the
Class and has retained counsel who are experienced in class action
securities litigation . Plaintiff has no interests which conflict
with those of the Class .
28 . A class action is superior to other available methods for
the fair and efficient adjudication of this controversy .
PRAYER FOR RELIEF
WHEREFORE, plaintiff prays for judgment as follows :
A. Declaring this action to be a proper class action
pursuant to Rule 23 ;
B . Awarding plaintiff and the members of the Class damages,
interest and costs ; and
C . Awarding such other relief as the Court may deem just an d
proper .
JURY DEMAND
Plaintiff demands a trial by jury .
DATED: April 11, 2001 MILBERG WEISS BERSHADHYNES & LERACH LLP
WILLIAM S . LERAC HDARREN J . ROBBINSKATHERINE L . BLANCK
JDA EN J . ROBBIN S
600 West Broadway, Suite 1800San Diego, CA 92101Telephone : 619/231-1058
MILBERG WEISS BERSHADHYNES & LERACH LLP
PATRICK J . COUGHLI N100 Pine Street, Suite 2600San Francisco, CA 94111Telephone : 415/288-4545415/288-4534 (fax )
- 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28 N :\CASES\Ca1Amp2\Ca1-Amp2 .cp4
HOFFMAN & EDELSONMARC H . EDELSON45 W . Court StreetDoylestown, PA 18901Telephone : 215/230-8043215/230-8735 (fax)
SCOTT & SCOTT, LLCDAVID R . SCOTTNEIL ROTHSTEI N108 Norwich AvenueColchester, CT 06415Telephone : 860/537-3818860/537-4432 (fax )
Attorneys for Plaintif f
- 12 -
BY :, MILBERG WEISS ET AL ; 6196856924; APR-11-01 3 :U2hM ; HAUL 2/2
Q9 O1 O2 :35p Martin ez 19137982 - 4'781 / p,1
CERTIFICATION OF NAMED PLAINTIFF
PURSUANT TO FEDERAL SECURITIES LAW S
©,qA4AJjJ i /NZ- , ("Plaintiff'), declares, as to the claims asserted under the
federal securities laws, that.
1 . Plaintiff has reviewed the Complaint and retains Sco tt & Scott, LLC and such co-counsel it deems appropriate to associate with to pursue such action on a contingent feebasis ,
2. Plaintiff did not purchase the security that is the subject of this action at the directionof Plaintiffs counsel, or in order to participate in any private action ,
3. Plaintiff is willing to serve as a representative party on behalf of the class ., includingproviding testimony at deposition and trial, if necessary.
4_ Plaintiff s transaction(s)intheCalifoniia Amplifier, Inc . ("Cal . Amp.") security thatis the subject: of this action during the Class Period is/are as follows:
No +cr Shares pgya 11
1/5Z2 .61/y.0051<2 a 0/
Date Price Per Share
5. During the three years prior to the date of this Certification, Plaintiff has neverserved, nor sought to serve, as a class representative in a federal securities fraud case .
6. Plaintiff will not accept any payment for serving as a rcpreamtative party on behalfof this class beyond the Plaintiffs pro rata share of any recove ry , except such reasonablecosts and expenses (including lost wages) directly relating to the representation of the classas ordered or approved by the Court .
I declare under penalty ofp tay that the foregoing is true and coavct. Executed thisday of 2001. at ~p (city, state) .
Your Printed Name: 9 NS'Z_,.r00 -
Signature: '
Mailing Address : 9,~'/l 1/I~4 ~7Cc~.S'7rc~✓Lr
e-4 5-Tea ; 10#9s
Telephone number : C .'4) S8c V46`
E-mail address : A-r1N, inOr1 •1. ti GOm(if any) PIP
Recommended