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Government Exhibit # 2ND CONSOLIDATED AMENDED COMPLAINT
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EXTRACTED KEY WORDS
DEFENDANTS
SECONDARY PUBLIC OFFERING
STOCK
CLASS PERIOD
REVENUES
LEASE
PRICE
DOUBTFUL ACCOUNTS
COMMON STOCK
SALES
ACCOUNTS RECEIVABLES
EQUIPMENT
PLAINTIFFS
TOTAL REVENUES
INDIVIDUAL DEFENDANTS
SECURITIES
MATERIALLY FALSE
TRADE RECEIVABLES
SEISMIC EQUIPMENT
DOUBTFUL ACCOUNTS EXPENSE
UNDERWRITERS
MISLEADING
SECURITIES EXCHANGE
BANKRUPTCY
OPERATING LEASES
UNITED STATES DISTRICT
REPRESENTATIONS
LEASE TERM
MISREPRESENTATIONS
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IN THE UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DMSION --~@wal-k~f~~~
STANLEY MOSKOWITZ, et al., On Behalf of 0 Master File No. H-98-1244
Themselves and All Others Similarly Situated, $
4
Plaintiffs, 6 Judge Vanessa D. &more
6
vs. 0
MITCHAM INDUSTRIES, INC., BILLY F.
MITCHAM, JR., ROBERTO RIOS, JEFFERIES & $
COMPANY, INC., GAINES, BERLAND INC., $
and RAUSCHER PIERCE REFSNES, INC.,
Defendants. 4
6
In re MTTCHAM INDUSTRIES, INC 0
SECURITIES LITIGATION
6
This Document Relates To: 4
ALL ACTIONS.
§ 8 Plaintiffs Demand A
§ Trial Bv Jurv
SECOND CONSOLIDATED AMENDED CLASS ACTION COMPLAINT
FOR VIOLATION OF THE SECURITIES ACT OF 1933
AND THE SECURITIES EXCHANGE ACT OF 1934
TO THE HONORABLE UNITED STATES DISTRICT JUDGE:
COME NOW, Plaintiffs in the above-referenced cause and file this their Second
Consolidated Class Action Complaint and in support thereof would show unto this Honorable
as follows:
INTRODUCTION AND OVERVIEW
1. This is a class action for violations of the federal
of all purchasers of the common stock of Mitcham Industries, Inc. ("Mitcham" or the
SNIPPETS:
MITCHAM, JR., ROBERTO RIOS, JEFFERIES & $
TO THE HONORABLE UNITED STATES DISTRICT JUDGE:
Plaintiffs in the above-referenced cause and file this their Second Amended
on December 17,1997 ("Secondary Public Offering") and throughout the Class Period.
artificially inflate the price of Mitcham's common stock throughout the Class Period,
indirectly through securities analysts employed by defendants Jefferies & Company,
misled plaintiffs and the investing public by issuing materially false financial
to a low margin seismic equipment reselling business.
to purchase Mitcham stock false and misleading.
volatility (because of the relatively high price of the product), and its income growth was
constrained (because of the materially lower margins on sales).
leasing and downplayed the increasing reliance on sales for the bulk of the Company's
While growth in lease revenue was slowing, the Company prematurely recognized revenue from
required by Generally Accepted Accounting Principles for operating leases.
during the Class Period due to the bankruptcy of its largest customer -- Grant Geophysical,
1998, as the Individual Defendants sold off 165,350 shares of their own Mitcham stock for
the Securities Exchange Act of 1934, 15 U.S.C. §78aa, $22 of the Securities
Jefferies, Rauscher and Gaines served as co-lead underwriters of Mitcham's December 17, 1997
leasing of 3-D seismic equipment to the oil and gas exploration industry.
derived from Grant accounted for $1 million of Mitcham's total revenues as of that date.
had made adequate provisions for doubtful accounts.
million, or 29.4% of total accounts receivable, and the Company's doubtful accounts expense
Additionally, at least $1.2 million of trade receivables, or over
and trade accounts receivables were substantially increasing, yet the allowance for doubtful
Through such misrepresentations, the Company
which was based on tid repeated specific representations provided to the
ownership of the leased property at the end of the lease term.
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