- Company Name
- Welbilt, Inc.
- Stock Symbol
- Class Period
- February 24, 2017 to November 2, 2018
- Motion Deadline
- February 11, 2019
- Middle District of Florida
The complaint charges Welbilt and certain of its officers with violations of the Securities Exchange Act of 1934. Welbilt is a commercial foodservice equipment company. Welbilt designs, manufactures, and supplies food and beverage equipment for the global commercial foodservice market, offering its customers operator and patron insights, collaborative kitchen solutions, culinary expertise, and implementation support and service.
The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements and/or failed to disclose adverse information regarding Welbilt’s business and financial condition. Specifically, the complaint alleges defendants failed to disclose that, due to the Company’s lack of effective internal control over financial reporting, the Company incorrectly recorded the tax basis of foreign subsidiaries and the amortization of their intangible assets, which would result in Welbilt having to restate certain of its financial statements for prior years. As a result of defendants’ false statements and/or omissions, the price of Welbilt stock was artificially inflated to more than $23 per share during the Class Period.
On November 5, 2018, Welbilt filed a Form 8-K for the third quarter of 2018, in which it stated that, after considering the recommendation of management and consulting with its independent registered public accounting firm, Welbilt had determined that its “previously issued consolidated financial statements as of and for the year ended December 31, 2016 and the related report of [its auditor] as it relates to such period as included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017 should no longer be relied upon because of prior period errors. The errors primarily relate to the computation of income taxes associated with intercompany distributions by foreign entities and intercompany obligations in accordance with underlying agreements.” As a result of these errors, Welbilt announced that “the consolidated financial statements of the Company as of and for the year ended December 31, 2016 will be restated, and as of and for the years ended December 31, 2015 and 2017 are expected to be revised . . . to reflect the correction of these tax errors.” On this news, the price of Welbilt stock declined $5.06 per share, or more than 26%, to close at $14.26 per share on November 5, 2018.