PHILADELPHIA, Sept. 27, 2002 (PRIMEZONE) -- The law firm of Spector, Roseman & Kodroff, P.C. announces that a class action lawsuit was filed on behalf of purchasers of the securities of Electronic Data Systems Corporation ("EDS" or the "Company") (NYSE:EDS) between April 19, 2002 and September 24, 2002, inclusive (the "Class Period ").
The 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 April 19, 2002 and September 24, 2002, thereby artificially inflating the price of EDS securities. The complaint alleges that defendants issued numerous statements which highlighted the Company's strong financial performance and reassured investors that the Company's "business and financial fundamentals are sound" and the Company's balance sheet is "rock solid." These statements were materially false and misleading because they failed to disclose and/or misrepresented: (a) that the Company's program to "manage" its future stock issuance under its employee stock option program was essentially an un-hedged bet on the price of EDS common stock, which was exposing the Company to substantial liabilities which were not reflected in the Company's financial statements; (b) that the Company was recording and reporting as assets (e.g. accounts receivable) and as revenue, purported receipts from contracts structured as percentage-of-completion payment arrangements where the requirements of Generally Accepted Accounting Principles ("GAAP") for such recording were not met and where sufficient evidential matter did not exist to support the claimed positive impact on EDS's books; (c) that the Company improperly recorded revenue on contracts for software that did not meet GAAP requirements for such revenue recognition; (d) that the Company was experiencing difficulties with certain of its European contracts such that these contracts were not performing according to the Company's expectations; and (e) as a result of the foregoing, defendants' statements concerning the Company, its earnings, accounting practices and prospects were lacking in a reasonable basis at all relevant times.
On September 18, 2002, EDS announced that it expects "revenues and earnings for its third quarter of 2002 to be lower than company guidance." On September 24, 2002, certain analysts downgraded their rating on EDS stock, citing the Company's obligations on certain put contracts and that in order to close out the position, EDS would have to pay $225 million. In response, EDS issued a press release in which it acknowledged that it had borrowed money in the commercial paper markets to close out the put contracts. In later public comments, an EDS spokesperson confirmed that the Company borrowed $225 million. In response to these announcements, the price of EDS common stock plunged further, falling from the previous day's close of $16.52 per share to close at $11.68 per share.
If you purchased EDS securities during the Class Period, you may, no later than November 25, 2002 move to be appointed as a Lead Plaintiff in this class action. A Lead Plaintiff is a representative, chosen by the Court, that acts on behalf of other class members in directing the litigation. The Private Securities Litigation Reform Act of 1995 directs Courts to assume that the class member(s) with the "largest financial interest" in the outcome of the case will best serve the class in this capacity. Courts have discretion in determining which class member(s) have the "largest financial interest," and have appointed Lead Plaintiffs with substantial losses in both absolute terms and as a percentage of their net worth. If you have sustained substantial losses in EDS securities during the Class Period, please contact Spector, Roseman & Kodroff, P.C. at classaction@srk-law.com for a more thorough explanation of the Lead Plaintiff selection process. If you have relatively small losses, your ability to participate in any recovery will be protected by the Lead Plaintiff(s), and you need take no affirmative steps at this time.
If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff's counsel Robert M. Roseman toll-free at 888-844-5862 or via E-mail at classaction@srk-law.com. For more detailed information about the firm please visit its website at http://www.srk-law.com.
Spector, Roseman & Kodroff, P.C., located in Philadelphia, Pennsylvania and San Diego, California, concentrates its practice in complex litigation including actions dealing with securities laws, antitrust, contract and commercial claims. The firm is active in major litigation pending in federal and state courts throughout the United States. The firm's reputation for excellence has been recognized on repeated occasions by courts which have appointed the firm as lead counsel in numerous major class actions involving violations of the federal securities laws and the federal antitrust laws, and consumer fraud. As a result of the efforts of the firm, and its members, hundreds of millions of dollars have been recovered on behalf of thousands of defrauded shareholders and companies.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.