ST. PAUL, Minn., June 20, 2005 (PRIMEZONE) -- Reinhardt Wendorf & Blanchfield announces that a class action lawsuit was filed in the United States District Court for the District of Minnesota, on behalf of shareholders who purchased or otherwise acquired the securities of PEMSTAR, Inc. ("Pemstar" or "the Company") (Nasdaq:PMTR) between January 29, 2003 and January 24, 2005, inclusive (the "Class Period"). The case is captioned The Cornelia I Crowell GST Trust v. PEMSTAR, Inc. Et al., Civ. No. 05-1182 (D. Minn.).
The complaint charges PEMSTAR and certain of the Company's executive officers, including Allen Berning, Roy Bauer, and Gregory Lea, with issuing materially false and misleading financial statements to the investing public regarding the company's financial condition and outlook in violation of Sections 10(b) and 20(a) of the Securities and Exchange Act of 1934 and Rule 10b 5 promulgated thereunder.
If you purchased or otherwise acquired PEMSTAR securities on any world exchange between January 29, 2003 to January 24, 2005, and sustained damages, you may, no later than August 15, 2005, move the Court to serve as lead plaintiff. Shareholders outside the United States may also join the action, regardless of which exchange was used to purchase the securities.
PEMSTAR is a provider of electronics manufacturing services to OEMs in the communications, computing, data storage, industrial, and medical equipment markets.
The complaint alleges that during the Class Period defendants issued numerous positive statements that misrepresented the true financial status of the Company and its business prospects. In fact, throughout the Class Period, PEMSTAR suffered from extensive liquidity constraints that inhibited the Company's ability to achieve the necessary gross margin expansion that was required for the Company to create and sustain accounting profits. The Complaint alleges that the defendants failed to disclose that the Company needed gross margins of at least 9% in order to achieve profitability, a level which defendants knew it was years away from attaining, if ever. Moreover, defendants further misrepresented the Company's financial condition by understating its liabilities associated with its Mexican facilities and overstating the Company's accounts receivables which had become materially impaired. The complaint alleges that, in part, defendants carried out the fraudulent scheme in order to revive and strengthen the Company's image, as perceived by its customer base and enable the Company to raise much needed capital through the issuance of its common stock to the public at levels advantageous to the Company.
On January 24, 2005, the Company issued a press release announcing that it was revising its outlook for the fiscal 2005 third quarter, implementing additional cost-reduction initiatives and restating its financial results for its fiscal year ended March 21, 2004, due to accounting discrepancies at its Mexico facility. By the time the company made this disclosure, the price of the Company's common stock had declined nearly 70% from its Class Period high.
Plaintiff seeks to recover damages on behalf of all purchasers of PEMSTAR stock during the Class Period. The plaintiff is represented by Reinhardt Wendorf & Blanchfield, which has expertise in prosecuting investor class actions and extensive experience in actions involving financial fraud.
Reinhardt Wendorf & Blanchfield and its predecessor firm have devoted its practice to shareholder class actions and complex commercial litigation for more than 30 years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.