SAN DIEGO and HOUSTON, May 14, 2014 /PRNewswire/ -- Shareholder rights law firm Robbins Arroyo LLP announces that an investor of KBR, Inc. (NYSE: KBR) has filed a federal securities fraud class action complaint in the U.S. District Court for the Southern District of Texas. The complaint alleges that the company and certain of its officers and directors violated the Securities Exchange Act of 1934 between April 25, 2013 and May 5, 2014 (the "Class Period"). KBR is a global engineering, construction, and services company worldwide.
KBR Is Accused of Failing to Follow Generally Accepted Accounting Principles
According to the complaint, shares of KBR fell nearly 7%, or $1.61 per share, to close at $24.23 on May 5, 2014, following a company-issued press release announcing that the Audit Committee of KBR's Board of Directors had determined that the company's financial statements for the fiscal year ended December 31, 2013 contained material errors. Specifically, KBR revealed that costs associated with the completion of seven third-party contracts awarded during 2012-2013 would result in a pre-tax charge of $158 million. Included in that cost is the elimination of $23 million in previously recognized pre-tax profits and the recognition of approximately $135 million in pre-tax estimated losses. In that same press release, KBR disclosed an additional overstatement error of approximately $9 million pre-tax on a long-term construction project, as well as an error resulting in the $6.5 million understatement in the company's income tax provision. As a result of these errors, KBR's financial statements for the period ended December 31, 2013, should no longer be relied upon and should be restated.
The complaint further alleges that, during the class period, the company made false and/or misleading statements and failed to disclose to investors that: (i) KBR improperly estimated the completion costs of certain contracts; (ii) KBR's financial statements contained accounting errors resulting from understating its income tax provision and revenue recognition timing; and (iii) as a result, KBR's revenues were overstated during the Class Period and its financial statements were not prepared in accordance with Generally Accepted Accounting Principles.