Ply Gem Sued Regarding Allegations Surrounding Financial Performance

June 5th, 2014 by Editor

The Waterford Township Police and Fire retirement System filed a suit against Ply Gem Industries on May 19, for alleged violation of federal securities laws. The suit was filed in the U.S. District Court, Southern District of New York.

According to court documents, this is a federal securities class action consisting of all persons or entities, other than defendants, who purchased the common shares of Ply Gem pursuant to the company’s initial public offering (IPO) on May 22, 2013.

Documents allege that “the registration statement negligently failed to disclose certain material events known to defendants that caused the financial information reported in the registration statement not to be indicative of Ply Gem’s future operating results. These material events included: that Ply Gem had agreed to buy back certain inventory from the Home Depot Inc. as an accommodation related to a new supply agreement between the two companies.”

Court documents also allege: the supply agreement required that Ply Gem initially sell Home Depot a large volume of lower-priced, lower margin product; that Ply Gem was experiencing ongoing labor inefficiencies and other ramp Generic Cialis Cialis up costs associated with the initial roll out of lower priced, lower margin products to Home Depot; that April 2013 was a particularly poor month for the company; and that high customer inventory at the end of the first quarter was adversely affecting the demand for and sales of Ply Gem’s siding products in April 2013 and May 2013.

The plaintiff alleges that it purchased Ply Gem common shares and “was damaged thereby.” The plaintiff is bringing this action “consisting of all persons or entities who purchased the common shares of Ply Gem pursuant and/or traceable to the company’s IPO on or about May 22, 2013.”

Court documents further state, “Unbeknownst to investors, the supply agreement obligated Ply Gem to buy back certain inventory from Home Depot as an accommodation to Home Depot for entering into the supply agreement with Ply Gem.”

“These known but undisclosed events had a material adverse effect on Ply Gem’s operating results during its second quarter ended June 29, 2013,” according to court documents.

Ply Gem did not respond to DWM magazine’s request for comment.

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