According to the Company’s FORM 10-Q for the quarterly period ended September 30, 2005, on August 2, 2005, the judge's order of dismissal was entered by the court and the time for the plaintiff to appeal the judge's decision expired thirty days thereafter.
Previously, on July 22, 2005, a complaint by a plaintiff purporting to bring a proposed consolidated class action on behalf of himself and others similarly situated in the United States District Court of Connecticut entitled In re EMCOR Group, Inc. Securities Litigation against EMCOR and three of its officers.
The original complaint alleges that, during the Class Period, 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 false and misleading statements regarding the financial condition of EMCOR and the Company's ability to earn profits in 2003. The complaint specifically alleges that, throughout the Class Period, Defendants concealed from investors that, as a result of a fundamental shift in EMCOR's business to less profitable public sector and quasi-public sector construction, as well as facilities management, the Company would not be able to meet its earnings projections for 2003 absent a significant and expeditious increase in private sector construction revenues in the form of smaller, short-term projects generating revenues of less than $250,000, which EMCOR is heavily dependent upon to earn profits, and an immediate accretion to its contract backlog in the form of larger, more profitable private sector construction projects.
The complaint further alleges that throughout the Class Period, the complaint alleges, Defendants knew that EMCOR had no reasonable expectation of obtaining such an increase in private sector business but, nevertheless, continued to assure the investing public of its ability to earn significant profits in 2003. On July 24, 2003, Defendants were forced to admit that, for the second quarter of 2003, although EMCOR had met its revenue expectations, it had performed abysmally in terms of earnings and that full- year 2003 results would fall short of expectations. In response to this news, the price of the Company's common stock fell more than 17% in value on unusually high trading volume. Nevertheless, the complaint pleads, Defendants continued to offer materially false information to the investing public regarding EMCOR's ability to earn profits in 2003 and sought to diminish the importance of its poor earnings performance by attributing that poor performance to exceptional circumstances that would not be recurring in nature.
Also, complaint alleges that on October 2, 2003, the Defendants again shocked the market by slashing its earnings guidance for 2003 by approximately 50% of the previously reduced earnings guidance provided on July 24, 2003. The market reacted swiftly to this devastating news -- with shares of EMCOR falling another 20% in value on unusually high trading volume. The complaint pleads that, in a conference call on October 3, 2003, Defendants were forced to admit that their prior earnings guidance had been predicated upon a hope for improved private sector construction spending -- even though Defendants previously had assured the market during the Class Period that their earnings guidance was not based upon any such assumptions. In sum, the complaint alleges that Defendants knowingly concealed the true financial condition of EMCOR and its ability to generate earnings from the investing public throughout the Class Period.