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CLASS ACTION COMPLAINT
GLANCY BINKOW & GOLDBERG LLP
Lionel Z. Glancy
Michael Goldberg
Robert V. Prongay
Casey E. Sadler
1925 Century Park East, Suite 2100
Los Angeles, California 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
Attorneys for Plaintiff
UNITED STATES DISTRICT COURT
DISTRICT OF NEW HAMPSHIRE
PLAINTIFF, Individually and on Behalf of
All Others Similarly Situated,
Plaintiff,
v.
GT ADVANCED TECHNOLOGIES INC.,
THOMAS GUTIERREZ, KANWARDEV
RAJA SINGH BAL, and RICHARD J.
GAYNOR
Defendants.
Case No. DRAFT
CLASS ACTION COMPLAINT FOR
VIOLATIONS OF THE FEDERAL
SECURITIES LAWS
JURY TRIAL DEMANDED
CLASS ACTION COMPLAINT
1
Plaintiff (“Plaintiff”), by and through his attorneys, alleges the following upon
information and belief, except as to those allegations concerning Plaintiff, which are alleged
upon personal knowledge. Plaintiff’s information and belief is based upon, among other things,
his counsel’s investigation, which includes without limitation: (a) review and analysis of
regulatory filings made by GT ADVANCED TECHNOLOGIES INC. (“GT Advanced” or the
“Company”), with the United States (“U.S”) Securities and Exchange Commission (“SEC”); (b)
review and analysis of press releases and media reports issued by and disseminated by GT
Advanced; and (c) review of other publicly available information concerning GT Advanced.
NATURE OF THE ACTION AND OVERVIEW
1. This is a class action on behalf of purchasers of GT Advanced securities between
November 4, 2013 and October 3, 2014, inclusive (the “Class Period”), seeking to pursue
remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).
2. GT Advanced is a diversified technology company producing advanced materials
and innovative crystal growth equipment for the global consumer electronics, power electronics,
solar and LED industries.
3. On September 9, 2014, Apple revealed that its new iPhone 6 and iPhone 6 Plus
smartphones featured Corning’s Gorilla Glass instead of GT Advanced’s sapphire cover as
investors were expecting.
4. On this news, shares of GT Advanced declined $2.29 per share, nearly 13%, to
close on September 9, 2014, at 14.94 per share, on unusually heavy volume.
5. On October 6, 2014, GT Advanced announced that the Company was filing for
bankruptcy protection under Chapter 11. According to the Company, as of September 29, 2014
GT Advanced had approximately $85 million of cash remaining and the Company was seeking
CLASS ACTION COMPLAINT
2
debtor-in-possession financing in order to obligations associated with the daily operation of its
business.
6. On this news, shares of GT Advanced declined $10.25 per share, nearly 93%, to
close on October 6, 2014, at $0.80 per share, on unusually heavy volume.
7. Throughout the Class Period, Defendants made false and/or misleading
statements, as well as failed to disclose material adverse facts about the Company’s business,
operations, and prospects. Specifically, Defendants made false and/or misleading statements
and/or failed to disclose: (1) that the Company’s sapphire display would not be used in the new
Apple iPhone 6 devices; (2) that the Company did not have sufficient cash on hand to satisfy its
customary obligations for daily operations; and (3) that, as a result of the foregoing, Defendants’
statements about GT Advanced’s business, operations, and prospects were false and misleading
and/or lacked a reasonable basis.
8. As a result of Defendants’ wrongful acts and omissions, and the precipitous
decline in the market value of the Company’s securities, Plaintiff and other Class members have
suffered significant losses and damages.
JURISDICTION AND VENUE
9. The claims asserted herein arise under Sections 10(b) and 20(a) of the Exchange
Act (15 U.S.C. §§78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder by the SEC (17
C.F.R. § 240.10b-5).
10. This Court has jurisdiction over the subject matter of this action pursuant to 28
U.S.C. §1331 and Section 27 of the Exchange Act (15 U.S.C. §78aa).
11. Venue is proper in this Judicial District pursuant to 28 U.S.C. §1391(b) and
Section 27 of the Exchange Act (15 U.S.C. §78aa(c)). Substantial acts in furtherance of the
CLASS ACTION COMPLAINT
3
alleged fraud or the effects of the fraud have occurred in this Judicial District. Many of the acts
charged herein, including the preparation and dissemination of materially false and/or misleading
information, occurred in substantial part in this Judicial District. Additionally, GT Advanced’s
principal executive offices are located within this Judicial District.
12. In connection with the acts, transactions, and conduct alleged herein, Defendants
directly and indirectly used the means and instrumentalities of interstate commerce, including the
United States mail, interstate telephone communications, and the facilities of a national securities
exchange.
PARTIES
13. Plaintiff, as set forth in the accompanying certification, incorporated by reference
herein, purchased GT Advanced common stock during the Class Period, and suffered damages as
a result of the federal securities law violations and false and/or misleading statements and/or
material omissions alleged herein.
14. Defendant GT Advanced is a Delaware corporation with its principal executive
offices located at 243 Daniel Webster Highway Merrimack, New Hampshire 03054.
15. Defendant Thomas Gutierrez (“Gutierrez”) was, at all relevant times, Chief
Executive Officer (“CEO”) and a director of GT Advanced.
16. Defendant Kanwardev Raja Singh Bal (“Bal”) was, at all relevant times, Chief
Financial Officer (“CFO”) of GT Advanced since March 7, 2014.
17. Defendant Richard J. Gaynor (“Gaynor”) was, at all relevant times, Chief
Financial Officer (“CFO”) of GT Advanced until March 6, 2014.
18. Defendants Gutierrez, Bal, and Gaynor are collectively referred to hereinafter as
the “Individual Defendants.” The Individual Defendants, because of their positions with the
CLASS ACTION COMPLAINT
4
Company, possessed the power and authority to control the contents of GT Advanced’s reports
to the SEC, press releases and presentations to securities analysts, money and portfolio managers
and institutional investors, i.e., the market. Each defendant was provided with copies of the
Company’s reports and press releases alleged herein to be misleading prior to, or shortly after,
their issuance and had the ability and opportunity to prevent their issuance or cause them to be
corrected. Because of their positions and access to material non-public information available to
them, each of these defendants knew that the adverse facts specified herein had not been
disclosed to, and were being concealed from, the public, and that the positive representations
which were being made were then materially false and/or misleading. The Individual
Defendants are liable for the false statements pleaded herein, as those statements were each
“group-published” information, the result of the collective actions of the Individual Defendants.
SUBSTANTIVE ALLEGATIONS
Background
19. GT Advanced is a diversified technology company producing advanced materials
and innovative crystal growth equipment for the global consumer electronics, power electronics,
solar and LED industries.
Materially False and Misleading
Statements Issued During the Class Period
20. The Class Period begins on November 4, 2013. On this day, the Company issued
a press release entitled, “GT Advanced Technologies Inc. Announces Results for Third Quarter
Fiscal Year 2013; Signs Multi-Year Sapphire Materials Agreement With Apple(R).” Therein,
the Company, in relevant part, stated:
Repays $96 million credit facility
CLASS ACTION COMPLAINT
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Resets Fiscal 2013 guidance
Will discuss long-range outlook on webcasted conference call today
GT Advanced Technologies Inc. (Nasdaq:GTAT) today reported results for the
third quarter of fiscal year 2013, which ended September 28, 2013.
The company also announced that it has entered into a multi-year supply
agreement with Apple Inc. to provide sapphire material. GT will own and operate
ASF® furnaces and related equipment to produce the material at an Apple facility
in Arizona where GT expects to employ over 700 people. Apple will provide GT
with a prepayment of approximately $578 million. GT will reimburse Apple for
the prepayment over five years, starting in 2015.
Although the agreement does not guarantee volumes, it does require GT to
maintain a minimum level of capacity. GT will be subject to certain exclusivity
terms during the duration of the agreement. GT expects this arrangement to be
cash positive and accretive to earnings starting in 2014. Gross margins from this
new materials business are expected to be substantially lower than GT’s historical
equipment margins. However, the company believes the strategic nature of this
agreement and the benefits associated with building a recurring revenue stream
are important to its continued diversification.
Continuing to Drive Sapphire Manufacturing Cost Improvements
GT has accelerated the development of its next generation, large capacity ASF
furnaces to deliver low cost, high volume manufacturing of sapphire material.
These R&D efforts will support its non-LED initiative with its new customer and
are expected to enable the expansion of GT’s LED, industrial and specialty
sapphire businesses by positioning GT and its equipment customers as the
industry’s lowest cost sapphire producers.
Management Commentary
“We are very excited about this agreement with Apple as it represents a
significant milestone in GT’s long term diversification strategy,” said Tom
Gutierrez, GT’s president and chief executive officer.
“We believe that it is in the long-term best interests of our company, employees
and shareholders to build a robust sapphire materials business with recurring
revenues,” Gutierrez continued. “By leveraging the new materials operation and
our enhanced R&D efforts, we will be well positioned to drive the growth of other
sapphire opportunities, including the expansion of our LED and industrial
sapphire businesses in partnership with our ASF customers.
“We remain committed to our other established and emerging capital equipment
businesses, including our HVPE solution for downstream LED manufacturing,
CLASS ACTION COMPLAINT
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Hyperion thin substrate solutions, silicon carbide (SiC) growth platform and
technologies to drive the next-generation of low cost solar. We are encouraged by
the improving market conditions in each of these sectors and the technical
progress we continue to make across these platforms. As a result, we remain
confident in our ability to grow these businesses over the next several years,”
Gutierrez concluded.
Third Quarter Financial Details
To service the sapphire material agreement announced today, the company has
dedicated the vast majority of its ASF capacity in the second half of 2013 to
expanding its own materials capacity. This shift in business model has effectively
precluded the company from shipping significant levels of ASF units to other
customers during the second half of 2013 and will continue to do so for the
balance of the year. Q3 results, as presented below, reflect this shift in strategy.
[Table omitted].
Revenue for the third quarter came in at $40.3 million including $28.6 million in
polysilicon, $4.4 million in photovoltaic (PV), and $7.3 million in sapphire. This
compares to revenue in the second quarter of $168.3 million and $110.1 million in
the third quarter of fiscal 2012. Revenue for the first nine months of 2013 was
$266.4 million compared to $631.2 million for the first nine months of 2012.
Gross profit for the third quarter was $17.8 million, or 44.1 percent of revenue.
This compares to $58.6 million, or 34.8 percent of revenue in the second quarter
and $35.0 million, or 31.8 percent of revenue for the third quarter of fiscal 2012.
Gross profit for the first nine months of 2013 was $90.0 million, or 33.8 percent
of revenue compared to $247.6 million, or 39.2 percent of revenue, for the first
nine months of 2012.
Non-GAAP net income was a loss of $19.4 million in the third quarter, compared
to income of $18.1 million in the second quarter and $692 thousand for the third
quarter of fiscal 2012. Non-GAAP net income for the first nine months of 2013
was a loss of $10.2 million compared to income of $106.0 million for the first
nine months of 2012.
Net income in the third quarter was a loss of $38.1 million, compared to earnings
of $11.9 million in the second quarter and $2.3 million for the third quarter of
fiscal 2012. Net income for the first nine months of 2013 was a loss of $44.9
million compared to earnings of $96.2 million for the first nine months of 2012.
Non-GAAP earnings per share on a fully-diluted basis was a loss of $0.16 in the
third quarter. This compares to non-GAAP earnings per share of $0.15 in the
second quarter and non-GAAP earnings per share of $0.01 in the third quarter of
CLASS ACTION COMPLAINT
7
fiscal 2012. Non-GAAP earnings per share for the first nine months of 2013 was a
loss of $0.09 compared to earnings of $0.88 for the first nine months of 2012.
Earnings per share on a fully-diluted basis was a loss of $0.31 in the third quarter,
compared to earnings of $0.10 for the second quarter and earnings of $0.02 for the
third quarter of fiscal 2012. Earnings per share for the first nine months of 2013
was a loss of $0.37 compared to earnings of $0.80 for the first nine months of
2012.
Q3 Orders, Backlog
New orders during the third quarter were approximately $7 million including $3
million of PV and $4 million of sapphire orders.
As of September 28, 2013 the company’s reported backlog was $658 million.
This included $301 million in the polysilicon segment, $2 million in the PV
segment and $355 million in the sapphire segment. Included in the total backlog
was approximately $62 million of deferred revenue.
Cash & Debt
At the end of the third quarter, the company had cash and cash equivalents on its
balance sheet totaling $258.5 million and total debt of $261.3 million which
included $95.9 million related to the company’s credit facility and $165.4 million
related to the carrying value of the company’s convertible bonds. During the
quarter, operations consumed $33.5 million of cash. The company had $294.7
million of cash and cash equivalents on its balance sheet and total debt of $260.4
million at the end of the second quarter of fiscal 2013 and $479.2 million of cash
and cash equivalents and $298.1 million of total debt at the end of the third
quarter of fiscal 2012.
Pay Down of Credit Facility
Subsequent to the close of the third quarter, the company used approximately $96
million of cash to pay down its credit facility and terminate its credit agreement in
order to eliminate restrictions that would have impeded its ability to pursue the
sapphire materials agreement announced today.
Business Outlook
Given the impact of its shift from ASF equipment sales to building ASF capacity
for its own internal use as the company prepares to service the Apple agreement,
GT is revising guidance for fiscal year 2013, which ends December 31, 2013, as
follows:
Revenue in the range of $290 million to $320 million
CLASS ACTION COMPLAINT
8
Gross margin in the range of 30% to 32%
Non-GAAP EPS in the range of a loss of $0.40 to a loss of $0.50
In addition to the items typically excluded from non-GAAP, the company’s non-
GAAP EPS guidance excludes restructuring charges, asset impairment charges,
any potential DSS Purchase Order cancellation fees and any gain/loss associated
with the disposition of the company’s facility in St. Louis.
The company also indicated that it expects 2014 revenues to be in the range of
$600 to $800 million with its sapphire segment comprising up to approximately
80% of the year’s total revenue. The company’s sapphire segment will include its
ASF equipment business, its LED, industrial and specialty materials business, and
the new materials business with Apple.
21. On November 7, 2013, GT Advanced filed its Quarterly Report with the SEC on
Form 10-Q for the 2013 fiscal third quarter. The Company’s Form 10-Q was signed by
Defendants Gutierrez and Gaynor, and reaffirmed the Company’s financial results previously
announced on November 4, 2013.
22. On December 5, 2013, the Company announced the pricing of $190,000,000
aggregate principal amount of its 3.00% Convertible Senior Notes due 2020 and 8,650,000
shares of its common stock at a price of $8.65 per share in concurrent underwritten registered
public offerings (collectively, the “Offerings”). Also on this date, the Company filed a
prospectus supplement on Form 424(b)(5) in connection with the Offerings, which incorporates
the prospectus dated on December 2, 2013 and subsequent amendments.
23. On February 24, 2014, the Company issued a press release entitled, “GT
Advanced Technologies Inc. Announces Results for Fourth Quarter and Fiscal Year 2013.”
Therein, the Company, in relevant part, stated:
GT Advanced Technologies Inc. (Nasdaq:GTAT) today reported results for the
fourth quarter and fiscal year 2013, which ended December 31, 2013.
Management Commentary
CLASS ACTION COMPLAINT
9
“Our results for the December quarter were in line with our guidance and the
anticipated growth trajectory of our business remains unchanged,” said Tom
Gutierrez, president and chief executive officer. “We expect to return to
profitability during the second half of 2014.
“Our arrangement to supply sapphire materials to Apple is progressing well and
we started to build out the facility in Arizona and staff the operation during the
quarter,” said Gutierrez. “We are pleased to have Apple as a sapphire customer
and to be in a position to leverage our proprietary know-how to enable the supply
of this versatile material. While our primary focus during the balance of the year
is to continue to execute on our commitments in Arizona, our aim is to position
GT not only as an exceptional sapphire supplier to Apple but also as an
unparalleled world-class supplier of sapphire material and equipment to a variety
of customers.
“Although we have significant opportunities in sapphire, the GT story is not only
about our emerging sapphire materials business. In fact, our entry into sapphire
materials may enable us to expand into other materials segments once we have
fully ramped the operation in Arizona. The many diversification and investment
seeds we have planted over the last several years in the LED, power electronics,
advanced solar and industrial markets are expected to begin to bear fruit over the
next 18 months. We are seeing significant interest in our new products and now
expect equipment orders from these initiatives to be received during the latter part
of 2014, with meaningful revenue recognition beginning in early 2015.
“During the last year, we worked to ensure that our balance sheet continues to
provide us with the strategic and operational flexibility necessary to take
advantage of the many growth opportunities that we have identified,” concluded
Gutierrez.
Fourth Quarter and Full Year 2013 Financial Results
During 2013, the company made the strategic decision to forego ASF equipment
sales while building out its new sapphire materials capacity. This decision has
had, and will have, a clear negative impact on the company’s fourth quarter and
full year results for 2013 and near term future results.
Revenue for the fourth quarter came in at $32.6 million including $2.5 million in
polysilicon, $11.3 million in photovoltaic (PV), and $18.8 million in sapphire.
This compares to revenue in the third quarter of $40.3 million and $102.3 million
in the fourth quarter of fiscal 2012. Revenue for the year ended December 31,
2013 was $299.0 million compared to $733.5 million for the year ended
December 31, 2012.
[Table omitted].
CLASS ACTION COMPLAINT
10
Cash, Backlog and Orders
At the end of the fourth quarter, the balance sheet had cash, cash equivalents and
restricted cash of $593.0 million and debt of $283.9 million. This compares to
$418.1 million of cash and cash equivalents at the end of the fourth quarter of
calendar 2012 which included $297.0 million of total debt. During the fourth
quarter, the company received the first of a series of prepayments under its multi-
year sapphire material supply agreement with Apple. Additionally, the company
completed a concurrent common stock and convertible debt offering in December
2013 that resulted in net proceeds of approximately $290.0 million. The company
also paid off an outstanding term loan of $96.0 million.
As of December 31, 2013, the company’s total backlog was $602.2 million
comprised of equipment orders only. This included $298.7 million in the
polysilicon segment, $11.3 million in the PV segment and $292.1 million in the
sapphire segment. New orders during the fourth quarter of calendar 2013 were
$23.8 million. The company adjusted backlog down by approximately $47.3
million during the quarter primarily related to an arrangement with an ASF
customer that was modified. All orders for sapphire material have been and will
continue to be excluded from backlog going forward.
Business Outlook
The company expects that 2014 will be a transformational year, one in which it
builds a sapphire materials business while continuing to invest in the new
technologies that will drive its equipment business in 2015 and beyond.
The company expects that revenue and profitability will be back end loaded, with
its sapphire materials business ramping as the year progresses, and with
improving financial performance during the second half of 2014.
On an annualized basis, during 2014, the company expects revenues to range from
$600 million to $800 million, with approximately 15% of total revenues occurring
in the first half of the year. The company expects that its sapphire segment will
account for more than 80% of total revenue in 2014. The sapphire segment
includes the company’s equipment and materials businesses in the LED, industrial
and consumer electronics markets.
During the first quarter of 2014, the company expects to generate revenues in the
range of $20 million to $30 million with a non-GAAP loss per share of $0.20 to
$0.25.
Consolidated gross margins for 2014 are expected to be in the range of 25% to
27%, reflecting lower margin material shipments during the year, inefficiencies
related to the ramp up of the sapphire materials business and underutilization of
the company’s equipment operations.
CLASS ACTION COMPLAINT
11
The company expects that 2014 non-GAAP earnings per share will be in the
range of $0.02 to $0.18. This assumes an average outstanding share count of 148
million shares.
The company’s cash balance at year end is currently expected to be in the range
of $400 million to $500 million.
24. On March 11, 2014, GT Advanced filed its Annual Report with the SEC on Form
10-K for the 2013 fiscal year. The Company’s Form 10-K was signed by Defendants Gutierrez
and Gaynor, and reaffirmed the Company’s financial results previously announced on February
24, 2014.
25. On May 7, 2014, the Company issued a press release entitled, “GT Advanced
Technologies Inc. Announces Results for First Quarter Fiscal Year 2014.” Therein, the
Company, in relevant part, stated:
Reiterates FY2014 Revenue, Gross Margin and Non-GAAP EPS Guidance
GT Advanced Technologies Inc. (Nasdaq:GTAT) today reported results for the
first quarter of fiscal year 2014, which ended March 29, 2014.
[Table omitted].
Revenue for the first quarter was $22.5 million including $13.2 million in
photovoltaic (PV), $5.6 million for the sapphire segment and $3.7 million for the
polysilicon segment. This compares to $32.6 million of revenue in the fourth
quarter of calendar 2013 and $57.8 million of revenue in the first quarter of fiscal
year 2013.
Non-GAAP gross profit for the first quarter was $1.9 million, or 8.5 percent of
revenue, compared to $6.8 million, or 21.0 percent of revenue in the fourth
quarter of calendar 2013 and $14.3 million, or 24.7 percent of revenue for the first
quarter of calendar 2013.
During the first quarter, PV and polysilicon non-GAAP gross margins were 37%
and 57%, respectively, largely in line with historical ranges. The sapphire
segment had a negative gross margin during the first quarter, which reflected the
impact of minimal ASF® revenues and the ongoing build-out of the company’s
sapphire materials operation in Arizona.
CLASS ACTION COMPLAINT
12
During the quarter, the company incurred non-GAAP operating expenses of $43.4
million, consisting of $23.5 million in R&D and $19.9 million in SG&A.
Non-GAAP loss per share was $0.22 in the first quarter, which was in line with
guidance. This compares to a non-GAAP loss per share of $0.22 in the fourth
quarter of 2013 and non-GAAP loss per share of $0.07 in the first quarter of
calendar 2013.
Management Commentary
“Our results for the March quarter were in line with our expectations,” said Tom
Gutierrez, president and chief executive officer. “We continue to expect that 2014
will be a transformational and significant year for GT as our sapphire materials
business ramps up and we continue to execute on our strategy of investing in new
technologies that will help drive growth in 2015 and beyond.
“With respect to our Arizona project, we have now received three of the four
prepayments from Apple,” Gutierrez continued. “We continue to expect our
sapphire segment to contribute meaningfully to revenue this year.
“In addition, the favorable dynamics in our served markets continue to drive
renewed customer interest in our ASF™, Polysilicon, HiCz™, and DSS™
solutions. Beyond these product lines, we continue to make significant progress
with new game-changing technologies such as our Merlin™ solar module
metallization and interconnect solution, our Hyperion™ ion implanter and the
recently announced initiatives to develop coating and bonding solutions.”
Cash, Backlog and Orders
The company ended the quarter with $509 million of cash, cash equivalents and
restricted cash, compared to $593 million in December.
During the first quarter the company received its second prepayment from Apple
in the amount of $111 million. Shortly after the end of the first quarter, the
company received its third prepayment from Apple in the amount of $103 million,
which is not reflected in the first quarter’s ending balance sheet. Inclusive of the
third prepayment, the company has received approximately $440 million out of
the $578 million total prepayments that it is eligible to receive under the
agreement with Apple. The company expects that the total prepayments it
receives from Apple will fully fund its capital outlays related to the project in
Arizona.
Equipment orders booked during the quarter were $29 million, including $15
million in PV and $14 million in Sapphire. The company ended the quarter with
$609 million of equipment backlog, consisting of $300 million of ASF™ orders,
$296 million of polysilicon orders and $13 million related to PV equipment.
CLASS ACTION COMPLAINT
13
Subsequent to the close of the quarter, the company booked a $58 million order
for high temperature specialty furnaces, which will be reflected in the Q2 reported
backlog.
Business Outlook
GT reiterates the following guidance for fiscal year 2014, which ends December
31, 2014:
Revenue in the range of $600 to $800 million,
Non-GAAP gross margin in the range of 25% to 27%, and
Fully diluted Non-GAAP earnings per share in the range of $.02 to $.18
26. On March 11, 2014, GT Advanced filed its Annual Report with the SEC on Form
10-K for the 2013 fiscal year. The Company’s Form 10-K was signed by Defendants Gutierrez
and Gaynor, and reaffirmed the Company’s financial results previously announced on February
24, 2014.
27. On May 7, 2014, the Company issued a press release entitled, “GT Advanced
Technologies Inc. Announces Results for First Quarter Fiscal Year 2014.” Therein, the
Company, in relevant part, stated:
Reiterates FY2014 Revenue, Gross Margin and Non-GAAP EPS Guidance
GT Advanced Technologies Inc. (Nasdaq:GTAT) today reported results for the
first quarter of fiscal year 2014, which ended March 29, 2014.
[Table omitted].
Revenue for the first quarter was $22.5 million including $13.2 million in
photovoltaic (PV), $5.6 million for the sapphire segment and $3.7 million for the
polysilicon segment. This compares to $32.6 million of revenue in the fourth
quarter of calendar 2013 and $57.8 million of revenue in the first quarter of fiscal
year 2013.
Non-GAAP gross profit for the first quarter was $1.9 million, or 8.5 percent of
revenue, compared to $6.8 million, or 21.0 percent of revenue in the fourth
quarter of calendar 2013 and $14.3 million, or 24.7 percent of revenue for the first
quarter of calendar 2013.
CLASS ACTION COMPLAINT
14
During the first quarter, PV and polysilicon non-GAAP gross margins were 37%
and 57%, respectively, largely in line with historical ranges. The sapphire
segment had a negative gross margin during the first quarter, which reflected the
impact of minimal ASF® revenues and the ongoing build-out of the company’s
sapphire materials operation in Arizona.
During the quarter, the company incurred non-GAAP operating expenses of $43.4
million, consisting of $23.5 million in R&D and $19.9 million in SG&A.
Non-GAAP loss per share was $0.22 in the first quarter, which was in line with
guidance. This compares to a non-GAAP loss per share of $0.22 in the fourth
quarter of 2013 and non-GAAP loss per share of $0.07 in the first quarter of
calendar 2013.
Management Commentary
“Our results for the March quarter were in line with our expectations,” said Tom
Gutierrez, president and chief executive officer. “We continue to expect that 2014
will be a transformational and significant year for GT as our sapphire materials
business ramps up and we continue to execute on our strategy of investing in new
technologies that will help drive growth in 2015 and beyond.
“With respect to our Arizona project, we have now received three of the four
prepayments from Apple,” Gutierrez continued. “We continue to expect our
sapphire segment to contribute meaningfully to revenue this year.
“In addition, the favorable dynamics in our served markets continue to drive
renewed customer interest in our ASF™, Polysilicon, HiCz™, and DSS™
solutions. Beyond these product lines, we continue to make significant progress
with new game-changing technologies such as our Merlin™ solar module
metallization and interconnect solution, our Hyperion™ ion implanter and the
recently announced initiatives to develop coating and bonding solutions.”
Cash, Backlog and Orders
The company ended the quarter with $509 million of cash, cash equivalents and
restricted cash, compared to $593 million in December.
During the first quarter the company received its second prepayment from Apple
in the amount of $111 million. Shortly after the end of the first quarter, the
company received its third prepayment from Apple in the amount of $103 million,
which is not reflected in the first quarter’s ending balance sheet. Inclusive of the
third prepayment, the company has received approximately $440 million out of
the $578 million total prepayments that it is eligible to receive under the
agreement with Apple. The company expects that the total prepayments it
CLASS ACTION COMPLAINT
15
receives from Apple will fully fund its capital outlays related to the project in
Arizona.
Equipment orders booked during the quarter were $29 million, including $15
million in PV and $14 million in Sapphire. The company ended the quarter with
$609 million of equipment backlog, consisting of $300 million of ASF™ orders,
$296 million of polysilicon orders and $13 million related to PV equipment.
Subsequent to the close of the quarter, the company booked a $58 million order
for high temperature specialty furnaces, which will be reflected in the Q2 reported
backlog.
Business Outlook
GT reiterates the following guidance for fiscal year 2014, which ends December
31, 2014:
Revenue in the range of $600 to $800 million,
Non-GAAP gross margin in the range of 25% to 27%, and
Fully diluted Non-GAAP earnings per share in the range of $.02 to $.18
28. On May 8, 2014, GT Advanced filed its Quarterly Report with the SEC on Form
10-Q for the 2014 fiscal first quarter. The Company’s Form 10-Q was signed by Defendants
Gutierrez and Bal, and reaffirmed the Company’s financial results previously announced on May
7, 2014.
29. On August 4, 2014, GT Advanced issued a press release entitled, “GT Advanced
Technologies Inc. Announces Results for Second Quarter Fiscal Year 2014.” Therein, the
Company, in relevant part, stated:
Updates Fiscal Year 2014 Guidance; Reiterates 2016 Non-GAAP EPS Target at
or Above $1.50
GT Advanced Technologies Inc. (Nasdaq:GTAT) today reported results for the
second quarter of fiscal year 2014, which ended June 28, 2014.
[Table omitted].
During the second quarter revenue was $58.0 million including $44.1 million in
sapphire equipment and materials, $11.0 million in photovoltaic (PV), and $2.9
million in polysilicon. Revenue for the first six months of 2014 was $80.5 million
CLASS ACTION COMPLAINT
16
including $49.7 million in sapphire equipment and materials, $24.2 million in
photovoltaic (PV) and $6.6 million in polysilicon.
Non-GAAP gross profit for the second quarter was $14.6 million, or 25.2 percent
of revenue. Non-GAAP gross profit for the first six months of 2014 was $16.5
million, or 20.5 percent of revenue.
During the second quarter, PV and polysilicon non-GAAP gross margins were 45
percent and 12 percent, respectively. Sapphire gross margins were 20 percent,
reflecting the contribution of higher margin equipment sales partially offset by
negative margins associated with the company’s materials operation in Arizona.
During the quarter, the company incurred non-GAAP operating expenses of $33.6
million and for the six months ended June 28, 2014, non-GAAP operating
expenses were $76.3 million.
Non-GAAP loss per share was $0.16 in the second quarter. Non-GAAP loss per
share for the first six months of 2014 was $0.48.
Management Commentary
“Results during the second quarter were in line with our guidance,” said Tom
Gutierrez, president and chief executive officer. “We have continued to see strong
interest in our suite of sapphire production tools, including our ASF™ equipment.
In fact, the sapphire segment of our business accounted for over 75% of the
revenue in the quarter, with the majority of it related to the sale of sapphire
production equipment.
“The build-out of our Arizona facility, which has involved taking a 1.4 million
square foot facility from a shell to a functional structure as well as the installation
of sapphire growth and fabrication equipment, is nearly complete and we are
commencing the transition to volume production,” Gutierrez continued. “We
remain confident about the long-term potential of the sapphire materials business
for GT.
“The response from partners and potential customers for Merlin™ and
Hyperion™, two of our high growth opportunities, has been very strong. We
remain confident in our ability to achieve our 2016 non-GAAP earnings per share
target of at or above $1.50. This is driven by the expected contributions of Merlin,
Hyperion and our other new technology platforms, along with the growth of our
sapphire, polysilicon and PV businesses,” Gutierrez concluded.
Cash, Backlog and Orders
The company ended the second quarter with $333 million of cash, cash
equivalents and restricted cash, compared to $509 million at the end of the first
CLASS ACTION COMPLAINT
17
quarter of fiscal year 2014. The second quarter ending cash balance reflects the
receipt of $103 million of prepayments for the Arizona sapphire materials project.
The fourth prepayment from Apple is contingent upon the achievement of certain
operational targets by GT. GT expects to achieve these targets and receive the
final $139 million prepayment by the end of October 2014.
Equipment orders booked during the quarter were $75 million, including $72
million in sapphire equipment. The company ended the quarter with $628 million
of equipment backlog, consisting of $333 million of sapphire equipment, $292
million of polysilicon and $3 million of PV.
Business Outlook
The company is updating its guidance for fiscal year 2014, which ends December
31, 2014, as follows:
Revenue of $600 to $700 million, the lower end of the previously
provided guidance range.
Fully diluted non-GAAP earnings per share of $0.12 to $0.18, the higher
end of the previously provided guidance range reflecting an expected
change in mix and more favorable gross margins in the second half of the
year.
The company also reiterated its 2016 non-GAAP EPS target at or above $1.50.
30. On August 7, 2014, GT Advanced filed its Quarterly Report with the SEC on
Form 10-Q for the 2014 fiscal second quarter. The Company’s Form 10-Q was signed by
Defendants Gutierrez and Bal, and reaffirmed the Company’s financial results previously
announced on August 4, 2014.
31. The statements contained in ¶¶__-__ were materially false and/or misleading
when made because defendants failed to disclose or indicate the following: (1) that the
Company’s sapphire display would not be used in the new Apple iPhone 6 devices; (2) that the
Company did not have sufficient cash on hand to satisfy its customary obligations for daily
operations; and (3) that, as a result of the foregoing, Defendants’ statements about GT
CLASS ACTION COMPLAINT
18
Advanced’s business, operations, and prospects were false and misleading and/or lacked a
reasonable basis.
Disclosures at the End of the Class Period
32. On September 9, 2014, Apple unveiled its new iPhone 6 and iPhone 6 Plus
smartphones to the public. The new devices featured Corning’s Gorilla Glass on the phone
instead of a sapphire cover as many investors were expecting.
33. On this news, shares of GT Advanced declined $2.29 per share, nearly 13%, to
close on September 9, 2014, at 14.94 per share, on unusually heavy volume.
34. On October 6, 2014, GT Advanced issued a press release entitled, “GT Advanced
Technologies Inc. and Its Subsidiaries File for Bankruptcy Court Protection Under Chapter 11.”
Therein, the Company, in relevant part, stated:
Expects to Continue “Business As Usual” With Approximately $85 Million of
Cash on the Balance Sheet and Plans to Obtain Debtor-In-Possession
Financing
GT Advanced Technologies Inc., (Nasdaq:GTAT), announced today that it had,
together with certain of its direct and indirect subsidiaries (collectively, GT),
commenced voluntary cases under chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the District of New Hampshire. GT expects
the court will authorize the company to continue to conduct business as usual
while it devotes renewed efforts to resolve its current issues and develops a
reorganization plan.
GT indicated that as of September 29, 2014 it had approximately $85 million of
cash. In addition, it is now seeking debtor-in-possession financing, which, once
obtained, would provide the company with an immediate source of additional
funds. These funding sources will enable GT to satisfy the customary obligations
associated with the daily operation of its business, including the timely payment
of employee wages and other obligations.
As a result of the filing, and as is customary with public companies, NASDAQ
may temporarily halt trading in the company’s stock pending the receipt of
additional information on the company’s financial condition. The company is
cooperating with NASDAQ and will be providing any requested information as
promptly as possible.
CLASS ACTION COMPLAINT
19
“GT has a strong and fundamentally sound underlying business,” said Tom
Gutierrez, president and chief executive officer of GT. “Today’s filing does not
mean we are going out of business; rather, it provides us with the opportunity to
continue to execute our business plan on a stronger footing, maintain operations
of our diversified business, and improve our balance sheet.
“We are convinced that the rehabilitative process of chapter 11 is the best way to
reorganize, protect our company and provide a path to our future success. We
remain committed to our roots in innovation and our diversification strategy. We
plan to continue to operate as a technology leader across our core set of
businesses.”
35. On this news, shares of GT Advanced declined $10.25 per share, nearly 93%, to
close on October 6, 2014, at $0.80 per share, on unusually heavy volume.
CLASS ACTION ALLEGATIONS
36. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil
Procedure 23(a) and (b)(3) on behalf of a class, consisting of all those who purchased GT
Advanced’s securities between November 4, 2013 and October 3, 2014, inclusive (the “Class
Period”) and who were damaged thereby (the “Class”). Excluded from the Class are Defendants,
the officers and directors of the Company, at all relevant times, members of their immediate
families and their legal representatives, heirs, successors or assigns and any entity in which
Defendants have or had a controlling interest.
37. The members of the Class are so numerous that joinder of all members is
impracticable. Throughout the Class Period, GT Advanced’s securities were actively traded on
the Nasdaq Stock Market (the “NASDAQ”). While the exact number of Class members is
unknown to Plaintiff at this time and can only be ascertained through appropriate discovery,
Plaintiff believes that there are hundreds or thousands of members in the proposed Class.
Millions of GT Advanced shares were traded publicly during the Class Period on the NASDAQ.
As of August 1, 2014, GT Advanced had 137,539,773 shares of common stock outstanding.
CLASS ACTION COMPLAINT
20
Record owners and other members of the Class may be identified from records maintained by
GT Advanced or its transfer agent and may be notified of the pendency of this action by mail,
using the form of notice similar to that customarily used in securities class actions.
38. Plaintiff’s claims are typical of the claims of the members of the Class as all
members of the Class are similarly affected by Defendants’ wrongful conduct in violation of
federal law that is complained of herein.
39. Plaintiff will fairly and adequately protect the interests of the members of the
Class and has retained counsel competent and experienced in class and securities litigation.
40. Common questions of law and fact exist as to all members of the Class and
predominate over any questions solely affecting individual members of the Class. Among the
questions of law and fact common to the Class are:
(a) whether the federal securities laws were violated by Defendants’ acts as
alleged herein;
(b) whether statements made by Defendants to the investing public during the
Class Period omitted and/or misrepresented material facts about the business, operations, and
prospects of GT Advanced; and
(c) to what extent the members of the Class have sustained damages and the
proper measure of damages.
41. A class action is superior to all other available methods for the fair and efficient
adjudication of this controversy since joinder of all members is impracticable. Furthermore, as
the damages suffered by individual Class members may be relatively small, the expense and
burden of individual litigation makes it impossible for members of the Class to individually
CLASS ACTION COMPLAINT
21
redress the wrongs done to them. There will be no difficulty in the management of this action as
a class action.
UNDISCLOSED ADVERSE FACTS
42. The market for GT Advanced’s securities was open, well-developed and efficient
at all relevant times. As a result of these materially false and/or misleading statements, and/or
failures to disclose, GT Advanced’s securities traded at artificially inflated prices during the
Class Period. Plaintiff and other members of the Class purchased or otherwise acquired GT
Advanced’s securities relying upon the integrity of the market price of the Company’s securities
and market information relating to GT Advanced, and have been damaged thereby.
43. During the Class Period, Defendants materially misled the investing public,
thereby inflating the price of GT Advanced’s securities, by publicly issuing false and/or
misleading statements and/or omitting to disclose material facts necessary to make Defendants’
statements, as set forth herein, not false and/or misleading. Said statements and omissions were
materially false and/or misleading in that they failed to disclose material adverse information
and/or misrepresented the truth about GT Advanced’s business, operations, and prospects as
alleged herein.
44. At all relevant times, the material misrepresentations and omissions particularized
in this Complaint directly or proximately caused or were a substantial contributing cause of the
damages sustained by Plaintiff and other members of the Class. As described herein, during the
Class Period, Defendants made or caused to be made a series of materially false and/or
misleading statements about GT Advanced’s financial well-being and prospects. These material
misstatements and/or omissions had the cause and effect of creating in the market an
unrealistically positive assessment of the Company and its financial well-being and prospects,
CLASS ACTION COMPLAINT
22
thus causing the Company’s securities to be overvalued and artificially inflated at all relevant
times. Defendants’ materially false and/or misleading statements during the Class Period
resulted in Plaintiff and other members of the Class purchasing the Company’s securities at
artificially inflated prices, thus causing the damages complained of herein.
LOSS CAUSATION
45. Defendants’ wrongful conduct, as alleged herein, directly and proximately caused
the economic loss suffered by Plaintiff and the Class.
46. During the Class Period, Plaintiff and the Class purchased GT Advanced’s
securities at artificially inflated prices and were damaged thereby. The price of the Company’s
securities significantly declined when the misrepresentations made to the market, and/or the
information alleged herein to have been concealed from the market, and/or the effects thereof,
were revealed, causing investors’ losses.
SCIENTER ALLEGATIONS
47. As alleged herein, Defendants acted with scienter in that Defendants knew that
the public documents and statements issued or disseminated in the name of the Company were
materially false and/or misleading; knew that such statements or documents would be issued or
disseminated to the investing public; and knowingly and substantially participated or acquiesced
in the issuance or dissemination of such statements or documents as primary violations of the
federal securities laws. As set forth elsewhere herein in detail, Defendants, by virtue of their
receipt of information reflecting the true facts regarding GT Advanced, his/her control over,
and/or receipt and/or modification of GT Advanced’s allegedly materially misleading
misstatements and/or their associations with the Company which made them privy to
CLASS ACTION COMPLAINT
23
confidential proprietary information concerning GT Advanced, participated in the fraudulent
scheme alleged herein.
APPLICABILITY OF PRESUMPTION OF RELIANCE
(FRAUD-ON-THE-MARKET DOCTRINE)
48. The market for GT Advanced’s securities was open, well-developed and efficient
at all relevant times. As a result of the materially false and/or misleading statements and/or
failures to disclose, GT Advanced’s securities traded at artificially inflated prices during the
Class Period. On July 7, 2014, the Company’s stock closed at a Class Period high of $19.77 per
share. Plaintiff and other members of the Class purchased or otherwise acquired the Company’s
securities relying upon the integrity of the market price of GT Advanced’s securities and market
information relating to GT Advanced, and have been damaged thereby.
49. During the Class Period, the artificial inflation of GT Advanced’s stock was
caused by the material misrepresentations and/or omissions particularized in this Complaint
causing the damages sustained by Plaintiff and other members of the Class. As described herein,
during the Class Period, Defendants made or caused to be made a series of materially false
and/or misleading statements about GT Advanced’s business, prospects, and operations. These
material misstatements and/or omissions created an unrealistically positive assessment of GT
Advanced and its business, operations, and prospects, thus causing the price of the Company’s
securities to be artificially inflated at all relevant times, and when disclosed, negatively affected
the value of the Company stock. Defendants’ materially false and/or misleading statements
during the Class Period resulted in Plaintiff and other members of the Class purchasing the
Company’s securities at such artificially inflated prices, and each of them has been damaged as a
result.
CLASS ACTION COMPLAINT
24
50. At all relevant times, the market for GT Advanced’s securities was an efficient
market for the following reasons, among others:
(a) GT Advanced stock met the requirements for listing, and was listed and
actively traded on the NASDAQ, a highly efficient and automated market;
(b) As a regulated issuer, GT Advanced filed periodic public reports with the
SEC and/or the NASDAQ;
(c) GT Advanced regularly communicated with public investors via
established market communication mechanisms, including through regular dissemination of
press releases on the national circuits of major newswire services and through other wide-
ranging public disclosures, such as communications with the financial press and other similar
reporting services; and/or
(d) GT Advanced was followed by securities analysts employed by brokerage
firms who wrote reports about the Company, and these reports were distributed to the sales force
and certain customers of their respective brokerage firms. Each of these reports was publicly
available and entered the public marketplace.
51. As a result of the foregoing, the market for GT Advanced’s securities promptly
digested current information regarding GT Advanced from all publicly available sources and
reflected such information in GT Advanced’s stock price. Under these circumstances, all
purchasers of GT Advanced’s securities during the Class Period suffered similar injury through
their purchase of GT Advanced’s securities at artificially inflated prices and a presumption of
reliance applies.
NO SAFE HARBOR
CLASS ACTION COMPLAINT
25
52. The statutory safe harbor provided for forward-looking statements under certain
circumstances does not apply to any of the allegedly false statements pleaded in this Complaint.
The statements alleged to be false and misleading herein all relate to then-existing facts and
conditions. In addition, to the extent certain of the statements alleged to be false may be
characterized as forward looking, they were not identified as “forward-looking statements” when
made and there were no meaningful cautionary statements identifying important factors that
could cause actual results to differ materially from those in the purportedly forward-looking
statements. In the alternative, to the extent that the statutory safe harbor is determined to apply to
any forward-looking statements pleaded herein, Defendants are liable for those false forward-
looking statements because at the time each of those forward-looking statements was made, the
speaker had actual knowledge that the forward-looking statement was materially false or
misleading, and/or the forward-looking statement was authorized or approved by an executive
officer of GT Advanced who knew that the statement was false when made.
FIRST CLAIM
Violation of Section 10(b) of
The Exchange Act and Rule 10b-5
Promulgated Thereunder Against All Defendants
53. Plaintiff repeats and realleges each and every allegation contained above as if
fully set forth herein.
54. During the Class Period, Defendants carried out a plan, scheme and course of
conduct which was intended to and, throughout the Class Period, did: (i) deceive the investing
public, including Plaintiff and other Class members, as alleged herein; and (ii) cause Plaintiff and
other members of the Class to purchase GT Advanced’s securities at artificially inflated prices.
In furtherance of this unlawful scheme, plan and course of conduct, defendants, and each of
them, took the actions set forth herein.
CLASS ACTION COMPLAINT
26
55. Defendants (i) employed devices, schemes, and artifices to defraud; (ii) made
untrue statements of material fact and/or omitted to state material facts necessary to make the
statements not misleading; and (iii) engaged in acts, practices, and a course of business which
operated as a fraud and deceit upon the purchasers of the Company’s securities in an effort to
maintain artificially high market prices for GT Advanced’s securities in violation of Section
10(b) of the Exchange Act and Rule 10b-5. All Defendants are sued either as primary
participants in the wrongful and illegal conduct charged herein or as controlling persons as
alleged below.
56. Defendants, individually and in concert, directly and indirectly, by the use, means
or instrumentalities of interstate commerce and/or of the mails, engaged and participated in a
continuous course of conduct to conceal adverse material information about GT Advanced’s
financial well-being and prospects, as specified herein.
57. These defendants employed devices, schemes and artifices to defraud, while in
possession of material adverse non-public information and engaged in acts, practices, and a
course of conduct as alleged herein in an effort to assure investors of GT Advanced’s value and
performance and continued substantial growth, which included the making of, or the
participation in the making of, untrue statements of material facts and/or omitting to state
material facts necessary in order to make the statements made about GT Advanced and its
business operations and future prospects in light of the circumstances under which they were
made, not misleading, as set forth more particularly herein, and engaged in transactions,
practices and a course of business which operated as a fraud and deceit upon the purchasers of
the Company’s securities during the Class Period.
CLASS ACTION COMPLAINT
27
58. Each of the Individual Defendants’ primary liability, and controlling person
liability, arises from the following facts: (i) the Individual Defendants were high-level executives
and/or directors at the Company during the Class Period and members of the Company’s
management team or had control thereof; (ii) each of these defendants, by virtue of their
responsibilities and activities as a senior officer and/or director of the Company, was privy to and
participated in the creation, development and reporting of the Company’s internal budgets, plans,
projections and/or reports; (iii) each of these defendants enjoyed significant personal contact and
familiarity with the other defendants and was advised of, and had access to, other members of the
Company’s management team, internal reports and other data and information about the
Company’s finances, operations, and sales at all relevant times; and (iv) each of these defendants
was aware of the Company’s dissemination of information to the investing public which they
knew and/or recklessly disregarded was materially false and misleading.
59. The defendants had actual knowledge of the misrepresentations and/or omissions
of material facts set forth herein, or acted with reckless disregard for the truth in that they failed
to ascertain and to disclose such facts, even though such facts were available to them. Such
defendants’ material misrepresentations and/or omissions were done knowingly or recklessly and
for the purpose and effect of concealing GT Advanced’s financial well-being and prospects from
the investing public and supporting the artificially inflated price of its securities. As
demonstrated by Defendants’ overstatements and/or misstatements of the Company’s business,
operations, financial well-being, and prospects throughout the Class Period, Defendants, if they
did not have actual knowledge of the misrepresentations and/or omissions alleged, were reckless
in failing to obtain such knowledge by deliberately refraining from taking those steps necessary
to discover whether those statements were false or misleading.
CLASS ACTION COMPLAINT
28
60. As a result of the dissemination of the materially false and/or misleading
information and/or failure to disclose material facts, as set forth above, the market price of GT
Advanced’s securities was artificially inflated during the Class Period. In ignorance of the fact
that market prices of the Company’s securities were artificially inflated, and relying directly or
indirectly on the false and misleading statements made by Defendants, or upon the integrity of
the market in which the securities trades, and/or in the absence of material adverse information
that was known to or recklessly disregarded by Defendants, but not disclosed in public
statements by Defendants during the Class Period, Plaintiff and the other members of the Class
acquired GT Advanced’s securities during the Class Period at artificially high prices and were
damaged thereby.
61. At the time of said misrepresentations and/or omissions, Plaintiff and other
members of the Class were ignorant of their falsity, and believed them to be true. Had Plaintiff
and the other members of the Class and the marketplace known the truth regarding the problems
that GT Advanced was experiencing, which were not disclosed by Defendants, Plaintiff and
other members of the Class would not have purchased or otherwise acquired their GT Advanced
securities, or, if they had acquired such securities during the Class Period, they would not have
done so at the artificially inflated prices which they paid.
62. By virtue of the foregoing, Defendants have violated Section 10(b) of the
Exchange Act and Rule 10b-5 promulgated thereunder.
63. As a direct and proximate result of Defendants’ wrongful conduct, Plaintiff and
the other members of the Class suffered damages in connection with their respective purchases
and sales of the Company’s securities during the Class Period.
SECOND CLAIM
Violation of Section 20(a) of
CLASS ACTION COMPLAINT
29
The Exchange Act Against the Individual Defendants
64. Plaintiff repeats and realleges each and every allegation contained above as if
fully set forth herein.
65. The Individual Defendants acted as controlling persons of GT Advanced within
the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level
positions, and their ownership and contractual rights, participation in and/or awareness of the
Company’s operations and/or intimate knowledge of the false financial statements filed by the
Company with the SEC and disseminated to the investing public, the Individual Defendants had
the power to influence and control and did influence and control, directly or indirectly, the
decision-making of the Company, including the content and dissemination of the various
statements which Plaintiff contends are false and misleading. The Individual Defendants were
provided with or had unlimited access to copies of the Company’s reports, press releases, public
filings and other statements alleged by Plaintiff to be misleading prior to and/or shortly after
these statements were issued and had the ability to prevent the issuance of the statements or
cause the statements to be corrected.
66. In particular, each of these Defendants had direct and supervisory involvement in
the day-to-day operations of the Company and, therefore, is presumed to have had the power to
control or influence the particular transactions giving rise to the securities violations as alleged
herein, and exercised the same.
67. As set forth above, GT Advanced and the Individual Defendants each violated
Section 10(b) and Rule 10b-5 by their acts and/or omissions as alleged in this Complaint. By
virtue of their positions as controlling persons, the Individual Defendants are liable pursuant to
Section 20(a) of the Exchange Act. As a direct and proximate result of Defendants’ wrongful
CLASS ACTION COMPLAINT
30
conduct, Plaintiff and other members of the Class suffered damages in connection with their
purchases of the Company’s securities during the Class Period.
PRAYER FOR RELIEF
WHEREFORE, Plaintiff prays for relief and judgment, as follows:
(a) Determining that this action is a proper class action under Rule 23 of the Federal
Rules of Civil Procedure;
(b) Awarding compensatory damages in favor of Plaintiff and the other Class
members against all defendants, jointly and severally, for all damages sustained as a result of
Defendants’ wrongdoing, in an amount to be proven at trial, including interest thereon;
(c) Awarding Plaintiff and the Class their reasonable costs and expenses incurred in
this action, including counsel fees and expert fees; and
(d) Such other and further relief as the Court may deem just and proper.
JURY TRIAL DEMANDED
Plaintiff hereby demands a trial by jury.
DATED:
By:___DRAFT________________
GLANCY BINKOW & GOLDBERG LLP Lionel Z. Glancy
Michael Goldberg
Robert V. Prongay
Casey E. Sadler
1925 Century Park East, Suite 2100
Los Angeles, CA 90067
Telephone: (310) 201-9150
Facsimile: (310) 201-9160
Attorneys for Plaintiff