According to a press release dated May 17, 2005, Core Laboratories N.V. (CLB) announced that the lead plaintiff in a securities class action has voluntarily dismissed its amended complaint. The federal district court granted the motion and dismissed the case with prejudice. In connection with the dismissal, no monies will be paid to the plaintiff, but the parties agreed to be responsible for their own costs and legal fees.
As previously reported by the Company’s FORM 10-K for the fiscal year ended December 31, 2004, in April 2003, four putative class action lawsuits were filed against the Company and certain of its officers in the United States District Court for the Southern District of New York; these cases have since been consolidated and transferred to the United States District Court for the Southern District of Texas. On March 22, 2004, lead plaintiffs filed their consolidated amended complaint, which generally alleges, among other things, that the defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements about the Company's financial results for 2001 and 2002 and by employing inadequate internal controls. The amended complaint seeks unspecified monetary damages. Defendants filed a motion to dismiss on May 21, 2004. On March 8, 2005, the Court denied without prejudice defendants' motion to dismiss subject to Plaintiffs filing a Second Amended Complaint that sets forth with particularity allegations that meet the heightened pleading requirements of Federal Rule of Civil Procedure 9(b) and the Private Securities Litigation Reform Act of 1995. The order requires the Second Amended Complaint to be filed by May 9, 2005 and requires the defendants to answer or otherwise respond by July 8, 2005. If defendants file a motion to dismiss the Second Amended Complaint, plaintiffs must respond by August 22, 2005 and defendants shall reply by September 12, 2005. Discovery will remain stayed.
The original Complaint alleges that defendants violated Sections 10(b) and 20(a)
of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated
thereunder, by issuing a series of material misrepresentations to the
market between May 6, 2002, and March 31, 2003, thereby artificially
inflating the price of Core common stock. Throughout the Class Period,
as alleged in the Complaint, defendants issued numerous statements and
filed quarterly reports with the SEC which described the Company's
increasing financial performance. The Complaint alleges that these
statements were materially false and misleading because they failed to
disclose and/or misrepresented the following adverse facts, among
others: (i) that the Company had materially overstated its net income
and earnings per share; (ii) that the Company had overstated its ability
to collect on certain accounts receivable; (iii) that the Company had
improperly delayed the booking of expenses and foreign exchange
translation losses from certain field locations; (iv) that the Company
lacked adequate internal controls and was therefore unable to ascertain
the true financial condition of the Company; and (v) that as a result,
the value of the Company's net income and financial results was
materially overstated at all relevant times.
On March 31, 2003, after the markets had closed trading for the day, the
Company shocked the market by announcing that it would be restating its
financial results for prior 2002 quarterly operating results because of:
(a) the issuance of duplicate invoices in the Company's Mexico
operations; (b) the need for higher provisions for doubtful accounts
receivables; (c) the need for timely booking of expenses and foreign
exchange translation losses from certain field locations; (d) changes in
the estimated life of certain assets; and (e) and consolidation costs of
two Nigerian offices. Following this announcement, shares of Core common
stock fell $1.31 per share, or more than 12.5%, to close at $9.09 per
share, on volume of 515,300 shares traded, or almost four times the
average daily volume.