According to the law firm press release, KBR operates as an engineering, construction and services company, supporting the energy, hydrocarbons, power, minerals, civil infrastructure, government services, industrial and commercial market segments. The Complaint alleges that throughout the Class Period defendants issued false and/or misleading statements and/or failed to disclose material adverse facts concerning KBR’s business, operations and prospects. Specifically, defendants misrepresented and/or failed to disclose that: the Company had improperly estimated costs to complete certain contracts; the Company’s revenue and financial results were overstated as a result of accounting errors in timing the recognition of revenues and from understating its income tax provision; the Company’s financial statements were not prepared in accordance with Generally Accepted Accounting Principles; the Company lacked adequate internal and financial controls; and as a result of the foregoing, the Company’s financial statements were materially false and misleading at all relevant times.
On May 5, 2014, KBR announced that the Audit Committee of the Company’s Board of Directors concluded that KBR’s previously issued consolidated financial statements for the year ended December 31, 2013, should no longer be relied upon and should be restated. KBR determined that the estimated costs to complete seven Canadian pipe fabrication and module assembly contracts that were awarded during 2012-2013 will result in pre-tax charges of more than $150 million, including the reversal of more than $20 million in previously recognized pre-tax profits. The Company further announced that it intends to restate its consolidated financial statement for fiscal 2013, and will postpone filing its Form 10-Q for the period ended March 31, 2014, until after the amended Form 10-K for 2013 is complete. As a result of this news, KBR shares declined $1.61, nearly 7%, to close on May 5, 2014, at $24.23 per share, on unusually heavy volume.
On July 8, 2014, an amended complaint was filed.
On September 8, 2014, the Court issued an Order appointing lead plaintiff and approving the selection of lead counsel. Lead plaintiff filed an amended complaint on October 20. Defendants responded with a Motion to Dismiss filed on December 5.