According to a press release dated May 25, 2011, the complaint charges WMS and certain of its officers and directors with violations of the Securities Exchange Act of 1934. WMS designs, manufactures and distributes both video and mechanical slot machines and video lottery terminals.
The complaint alleges that during the Class Period, the Company, in the face of a known industry-wide slowdown in demand and lengthening of the replacement cycle for gaming products, continued to report that it had and would continue to distinguish itself from its competitors by posting sales revenue and margin gains without the benefit or need for the recovery of overall demand or the casino gaming replacement cycle.
Then on April 11, 2011, the Company pre-announced its third quarter 2011 financial results, stating that it had again missed Wall Street earnings projections by $0.11 per share, reporting 0.42 as opposed to consensus estimates of $0.51. The Company also reported that its revenue forecast for the third quarter of 2011 would be cut by up to $24 million and revenues for fiscal 2011 would be cut by up to $60 million. In addition, the Company reported that it did not expect demand to recover for the remainder of fiscal 2011 or 2012 and thus cut its forecasted fiscal 2012 revenue estimates by up to $120 million. As a result of these disclosures, WMS’s stock price declined more than 17% to close at $30.01 on 9.8 million shares traded, down from a close of $36.22 on April 11, 2011.
According to the complaint, the Class Period representations by defendants concerning the Company’s current business and financial condition, including its forecasted financial results, were each materially false and misleading when made because defendants failed to disclose the following true facts which were known to defendants or recklessly disregarded: (a) the Company’s purported current “execution” on business operations was faltering and could not drive and support revenue and profitability guidance; (b) the industry-wide weak replacement cycle had negatively impacted the Company’s sales and margin growth and could not be offset by currently flawed execution and demand for WMS’s gaming machines; and (c) as a result of the above, the Company did not have a reasonable basis for its revenue and margin forecasts for fiscal 2011 in light of known negative business and industry trends.
On August 4, 2011, the Court appointed the Lead Plaintiff and approved the Lead Counsel.
The Lead Plaintiff filed an Amended Complaint on October 13, 2011.
On July 25, 2012, the Court issued an Order granting the Defendant's motion to dismiss without prejudice. Plaintiff was given leave to amend. On September 12, 2012, Lead Plaintiff filed an amended complaint.
On April 24, 2013, the Court issued an Order granting the Defendants' motion to dismiss with prejudice.
On May 22, the Lead Plaintiff filed a Notice appealing the above Order of dismissal.
On January 3, 2014, the parties entered into a Stipulation of Settlement. This Settlement was preliminarily approved by the Court on January 21st.