DISTRICT COURTUNITED STATES

SOUTHERN DISTRICT OF NEW YORK e CAP^0^

ZUBAIR PATEL, Individually and On Behalfof All Others Similarly Situated,

Plaintiff,

L-3 COMMUNICATIONS HOLDINGS, INC.,MICHAEL T. STRIANESE, and RALPH G.D'AMBROSIO,

Defendants

COMPLAINT FOR VIOLATION O 4HI

Case No

JUDGE

14 CV 6038CLASS ACTION

. •>

en ~-^ a

DEMAND FOR JURY TRIAL u > c -n

o

's- %

CJ

FEDERAL SECURITIES LAWS

individually and on behalf of all other personsPlaintiff Zubair Patel ("Plaintiff), i

similarly situated, by his undersigned attorneys:

following based upon personal knowledge as 1

belief as to all other matters, based upon, inter

his attorneys, which included, among other thi

conference calls and announcements made by

Commission ("SEC") filings, wire and

Communications Holdings, Inc. ("L-3" or

about the Company, and information readily

substantial evidentiary support will exist for

opportunity for discovery.

for t is complaint against defendants, alleges the

himself and his own acts, and information and

dlia, the investigation conducted by and through

;s, a review of the defendants' public documents,

fend ants, United States Securities and Exchange

releases published by and regarding L-3

"Company"), analysts' reports and advisories

dbtainable on the Internet. Plaintiff believes that

thing:

deil

pr<:sii

thb

tie allegations set forth herein after a reasonable

NATURE OF THE ACTION

1. This is a federal securities class action on behalf of a class consisting of all

who purchased or otherwise acquired L-3

20141 both dates inclusive (the "Class Period").

Defendants' violations of the federal securities laws

persons other than Defendants (defined

securities between April 25, 2013 and July 30,

Plaintiff seeks to recover damages caused by

and to pursue remedies under Sections 10(b)

(the "Exchange Act") and Rule 10b-5 promulg;

of its top officials.

2. L-3 is a prime contractor in

3 is also a leading provider of a broad rangi

products used on military and commercial

Communications Corporation, L-3 provides

surveillance, and reconnaissance systems; aircraft

security solutions in the United States and i

3. The Company operates in four s

Communication Systems, and National

headquartered in New York, New York. L-3

under the ticker symbol "LLL".

4. AsofDecember31,2013,

sales were generated from contracts (revenue ai

to design, develop, manufacture, modify, u]

electronic equipment, and to provide related er,

buyer's specifications. According to the

generally fixed-price, cost-plus, or time-and

belo w)

aid 20ia) of the Securities Exchange Act of 1934

thereunder, against the Company and certainiited

aerospace systems and national security solutions. L-

of communication and electronic systems and

platforms. Through its subsidiary, L-3

c|)rjimand, control, communications, intelligence,

modernization and maintenance; and national

inten tation illy

cgments: Aerospace Systems, Electronic Systems,

Security Solutions. L-3 was founded in 1997 and is

trades on the New York Stock Exchange ("NYSE")

appro!ximat ly 47% of the Company's consolidated net

e(ments), which mostly require the Company

test and integrate complex aerospace and

gineeting and technical services according to the

Comp}ii].y, tiese revenue arrangements or contracts are

material type and are covered by accounting

anger

pgrade:

standards for construction-type and production-type contracts and federal government

contractors.

5. Substantially all of L-3's cost-p

U.S. Government, primarily the Department of

Government are multi-year contracts that are

these multi-year contracts are based on amounts!

6. Throughout the Class Period

statements regarding accounting matters at |]

Specifically, Defendants made false and/or

(1) L-3's financial statements contained errors

on a fixed-price maintenance and logistics

operating income; (2) net sales with respect to

contract were overstated; (3) the Company lacjkid

reporting; and (4) as a result of the foregi

materially false and misleading at all relevant tifnfes.

7. On July 31, 2014, before the

"Preliminary Second Quarter 2014 Results,

to the disclosure of a concurrent internal

uls and time-and-material contracts are with the

Defense. Certain of the contracts with the U.S.

funded annually by the customer, and sales on

abprdpriated (funded) by the U.S. Government.

Defendants made materially false and misleading

(fompany's Aerospace Systems segment.

misldadirlg statements and/or failed to disclose that:

he

rejlatefi to the improper deferral of cost overruns

^ppokt contract resulting in overstatement of

fixed-price maintenance and logistics support

adequate internal and control over financial

o nig, the Company's financial statements were

hi

he

markets opened for trading, L-3 announced

Company announced preliminary results due

ac<|oUntihg review into matters at the Company's

Aerospace Systems segment. According to the press -elease

The review relates to accounting mattessegment, and is being conducted withlegal advisors. The Company currentlycharge of $84 million against operatin jsales of approximately $43 million. Ofrelates to periods prior to 2014, and appfrcjxim|atelyhalf of 2014, of which $30 millionAdditionally, as a result of the review,operating income for the Aerospacemillion for the second half of 2014.

at Ihe Company's Aerospace Systemsassistance of outside accounting and

expects to incur an aggregate pre-taxincome and a related reduction in net

diarges, approximately $50 million$34 million relates to the first

? to the second quarter of 2014.CCompany has lowered its estimated

ems segment by approximately $35

:he

The adjustments primarily relateinappropriately deferred and overstatementsrespect to a fixed-price maintenance aid loyistiof performance on this contract beganon January 31, 2015. The Company bjbljevethese adjustments are the result of rr isconductAerospace Systems segment. The miscjpiiduqtCorporate staff and external auditors

hsse

relate

the

Syst

to contract cost overruns that were

of net sales, in each case withics support contract. The period

1, 2010, and is scheduled to ends that the amounts associated with

and accounting errors at theincluded concealment from L-3's

8. Moreover, according to the lily 3 1, 2014 press release, L-3 management

immediately terminated certain employees in thjb Aerospace Systems segment.

9. As a result of this news, sharps

extremely heavy volume, to close at $104.96 on

10. As a result of Defendants'

decline in the market value of the Company's

suffered significant losses and damages.

JURISDICTION AND VENUE

11. The claims asserted herein arise!

Exchange Act (15 U.S.C. §§78j(b) and §78t(a

SEC(17C.F.R. §240.10b-5).

12. This Court has jurisdiction over

§1331 and §27 of the Exchange Act.

of L-3 fell $14.68, or more than 12%, on

Jfilyi 1,2014.

wrongful acts and omissions, and the precipitous

sjbdurit es, Plaintiff and other Class members have

4nder and pursuant to §§10(b) and 20(a) of the

|) ^nd Rule 10b-5 promulgated thereunder by the

the subject matter of this action under 28 U.S.C.

13. Venue is proper in this District

§78aa) and 28 U.S.C. §1391(b) as a significant

subsequent damages, took place within this District.

14. In connection with the acts, conflict

Defendants, directly or indirectly, used the mefcfls

including but not limited to, the United States

facilities of the national securities exchange.

tnfrsu&nt to §27 of the Exchange Act (15 U.S.C.

portion of the Defendants' actions, and the

aad other wrongs alleged in this Complaint,

ard instrumentalities of interstate commerce,

, interstate telephone communications and therjiail

15. Plaintiff, as set forth in the accotnpan

reference herein, acquired L-3 securities at artificiallj

was damaged upon the revelation of the alleged

16. Defendant L-3 is a prime contractor

solutions. L-3 is also a leading provider of

systems and products used on military and

York, New York and trades on the NYSE undei

17. Defendant Michael T. Strianese

the "Individual Defendants."

PARTIES

dng Certification, which is incorporated by

inflated prices during the Class Period and

cbrrebtive disclosures.

n aerospace systems and national security

broad range of communication and electronic

al platforms. L-3 is headquartered in New

the s;/mbol "LLL".

Strianese") has served, at all relevant times, as

'fleer ("CEO") of L-3.

$io ("D'Ambrosio") has served, at all relevant

Cfficer("CFO")ofL-3.

rh *n 17 - 18 are sometimes referred to herein as

con mierc

('

the Chairman, President and Chief Executive O

18. Defendant Ralph G. D'Ambro

times, as Senior Vice President and Chief Financial

19. The defendants referenced above

20. Defendant L-3 and the Individu il Defendants are referred to herein, collectively,

as the "Defendants."

SUBSTANTIVE ALL ;gations

Background

21. L-3 Holdings, a Delaware corporation

operating income and cash flows from its

Corporation. L-3 Communications Corporation

Intelligence, Surveillance and Reconnaissance

Communications ("C3") systems, platform and

and ground vehicles, and national security solutibns

range of electronic systems used on military

the United States Department of Defense ("

intelligence agencies, the U.S. Department of

State (DoS), allied international government!

yr|oll>

De

organized in April 1997, derives all of its

•owned subsidiary, L-3 Communications

aware corporation, is a prime contractor in

("ISR") systems, Command, Control,

ics solutions for aircraft, maritime vessels

L-3 is also a leading provider of a broad

conlimercial platforms. L-3 customers include

") and its prime contractors, U.S. Government

Ifcjmeland Security ("DHS"), U.S. Department of

and domestic and international commercial

logis

and

'DoD

customers.

22. The Company has four reportabl ?

as the Platform & Logistics Solutions ("P&LS

("AM&M") reportable segments), (2)

(4) National Security Solutions.

23. As of December 31, 2013,

were generated from contracts (revenue arraij;

develop, manufacture, modify, upgrade, test

equipment, and to provide related engineering]

specifications. These revenue arrangements orj

time-and-material type and are covered by

production-type contracts and federal governmeht

^egnjients: (1) Aerospace Systems (also reported

Aircraft Modernization and Maintenanceand

Electro lie Systems, (3) Communication Systems, and

appfokimMely 47% of L-3's consolidated net sales

;emetits) that require the Company to design,

j^nd irtegrate complex aerospace and electronic

and technical services according to the buyer's

contracts are generally fixed-price, cost-plus, or

Recounting standards for construction-type and

cor tractors.

24. Substantially all of L-3's cost-plus

with the U.S. Government, primarily the TjoD

Government are multi-year contracts that are

these multi-year contracts are based on amounts

Materially False

type and time-and-material type contracts are

Certain of the contracts with the U.S.

funded annually by the customer, and sales on

appropriated by the U.S. Government.

and Misleading

Statements Issuecj During the Period

25. On April 25, 2013, the Company

first quarter ended March 29, 2013. For the

$2.11, a net sales increase of 1% to $3.2 bil

million, funded orders of $2.9 billion, funded

financial guidance. With respect to the P&LS

issued a press release announcing results for the

qjiajrterJ L-3 reported diluted earnings per share of

ion, net cash from operating activities of $146

backlog of $10.5 billion, and reaffirmed 2013

reportable segment, L-3 reported:

increased by $3 million compared to theP&LS net sales for the2013 first quarte^2012 first quarter [$616.5 million v.increased by $56 million, which was n<million for Logistics Solutions. Theprimarily due to increased volumeDepartment of National Defence, EC-1international head-of-state aircraft modli

decrease in Logistics Solutions was prirlaplyorder for U.S. Army contract field telamwhich was completed in 2012.

$614 million]. Platform Solutions salesejarly tally offset by a sales decline of $53

Platform Solutions sales increase was

aircraft maintenance for the Canadian

aircraft for the U.S. Air Force (USAF),i^icat ons, and the Australia C-27J. The

due to the competitive loss of a tasksupport services in Southwest Asia,

fa:

P&LS operating income for the 2013 fii stcompared to the 2012 first quarter [$i 7margin declined by 80 basis points tomix for Platform Solutions.

26. On May 7, 2013, the Compary

signed by defendant D'Ambrosio, and reiterated

financial results and financial position. In

certifications pursuant to the Sarbanes-Oxley 4-ct of

quarter decreased by $5 million, or 8%,5 million v. $62.3 million]. Operating

$% primarily due to lower margin sales

filed a Form 10-Q with the SEC which was

the Company's previously announced quarterly

addtion, the Form 10-Q contained signed

2002 ("SOX") by defendants Strianese and

D'Ambrosio, stating that the financial information

disclosed any material changes to the Company

27. On July 25, 2013, the Company

second quarter ended June 28, 2013. For the qiiahter

$2.03, a net sales increase of 2% to $3.2 bill

million, funded orders of $3.5 billion, funded

contained in the Form 10-Q was accurate and

internal control over financial reporting.

is!sue<| a press release announcing results for the

•, L-3 reported diluted earnings per share of

ic-n, rjet cash from operating activities of $250

backlog of $10.8 billion, and updated 2013

financial guidance. With respect to the P&LS reportable segment, L-3 reported

Second Quarter. P&LS net sales for tl emillion, or 5%, compared to the 2012Platform Solutions sales increased by $46sales decline of $17 million for Logistic sincrease was primarily due to increasec iolutnemaintenance for the Canadian Departme ntfor U.S. Air Force (USAF) EC-130aircraft. The decrease in Logistics Soluiotns \Vasloss of a task order for U.S. ArmySouthwest Asia, which was completedservices due to the loss of the Joint Primarycontract for the USAF, partially offset t yand sustainment services for USAF trair irig ailrcraft

2013 second quarter increased by $29ijecoid quarter [$620.3M v. $591.5M].

million, which was partially offset by aSolutions. The Platform Solutions sales

for the Australia C-27J, aircraftof1National Defence, and modifications

aircraft and international head-of-stateprimarily due to the competitive

c<t>ntr&ct field team support services in12, and reduced fleet managementAircraft Training Systems (JPATS)

inci eased volume for field maintenance

in 2C

P&LS operating income for the 2013 s|cbnd$14 million, or 28%, compared to the 2012increased by 190 basis points to 10.6% prim;for Logistics Solutions.

quarter of $66 million increased bysecond quarter. Operating margin

rily due to higher margin sales mix

First Half: P&LS net sales for the 2013compared to the 2012 first half [$1,23sales increased by $102 million, which$71 million for Logistics Solutions. TheLogistics Solutions sales decrease werequarter.

first half increased by $31 million, or 3%,

P&LS operating income for the 2013million, or 8%, compared to the 2012basis points to 10.0% primarily dueSolutions.

6J8M v. $1,205.5M]. Platform Solutionswas partially offset by a sales decline ofPlatf )rm Solutions sales increase and the

due to trends similar to the 2013 second

first half of $123 million increased by $10fij-sl: half. Operating margin increased by 60tip higher margin sales mix for Logistics

28. On August 1, 2013, the Compafiy

signed by defendant D'Ambrosio, and reiterated

financial results and financial position. In additior

certifications by defendants Strianese and D

,r filed a Form 10-Q with the SEC which was

the Company's previously announced quarterly

:., the Form 10-Q contained signed SOX

Arhbrcsio, stating that the financial information

contained in the Form 10-Q was accurate and disclosed any material changes to the Company's

internal control over financial reporting.

29. On October 29, 2013, the Compkriy islsued a press release announcing results for

the third quarter ended September 27, 2013

share from continuing operations of $2.23,

activities of $221 million, funded orders of $

F|or the? quarter, L-3 reported diluted earnings per

nelt saleb of $3.0 billion, net cash from operating

1.1 billion, funded backlog of $10.6 billion, and

updated 2013 financial guidance. With respect :o the P&LS reportable segment, L-3 reported:

Third Quarter. P&LS net sales formillion, or 9%, compared to the 2012Solutions sales decreased by $71 millionincrease of $12 million for Logisticsdecrease was primarily for the Australikdeliverables, U.S. Navy maritime patrolsequestration and reduced deliveries ofILogistics Solutions was primarily dueand sustainment services for U.S. Air

new competitively won contract.

the 20 3 third quarter decreased by $59thij-d qiiarter [$590M v. $649M]. Platform

, which was partially offset by a salesSblutons. The Platform Solutions sales

C-2'M aircraft due to timing of contractaircraft due to reduced funding caused byaircraft cabin assemblies. The increase in

increased volume for field maintenance

(USAF) training aircraft driven by ato

P&LS operating income for the 2013$13 million, or 20%, compared todecreasedby 120basis points to 8.8% pfiijnariLogistics Solutions.

Force

1hird quarter of $52 million decreased bythird quarter. Operating margin

y due to lower margin sales mix forthe 2012

Year-to-Date: P&LS net sales for the

million, or 1%, compared to the2012 ye|ar-Logistics Solutions sales decreased bya sales increase of $32 million for PlatformSolutions was primarily dueto the comietitivlecontract field team support services in2012, and reduced fleet managementAircraft Training Systems contract for •'.

2)13 year-to-date period decreased by $27iate period [$1,827M v. $1,854M].

million, which was partially offset bySolutions. The decrease in Logistics

loss of a task order for U.S. ArmyS<f>uth|west Asia, which was completed in

due to the loss of the Joint PrimaryU5j>AF. These decreases were partially

•to-

59

se -vices

he

offset by increased volume for field niainteitianceUSAF training aircraft. Platform Solutionsincreased volume for USAF EC-130 i

aircraft maintenance for the Canadian iDebartjnentoffset by lower volume for the Jointaircraft, and U.S. Navy maritime patrolaircraft cabin assemblies.

Carg

and sustainment services for

sales increased primarily due tointelrnational head of state aircraft, and

of National Defence, partially;b Aircraft (JCA), Australia C-27J

aircraft, as well as reduced deliveries of

P&LS operating income for the 2013decreased by $3 million, or 2%, confip&recOperating margin decreased by 10 bajsiisdecrease in sales for Logistics Solutions;

year-to-date period of $176 millionto the 2012 year-to-date period,

to 9.6%) primarily due to the

30. Also, on October 29, 2013, the

was signed by defendant D'Ambrosio, and

quarterly financial results and financial positidn,

SOX certifications by defendants Strianese

information contained in the Form 10-Q was

Company's internal control over financial report

31. On January 30, 2014, the Compiijy

the fourth quarter ended December 31, 2013. |:

share from continuing operations of $2.17, n<t

activities of $646 million, funded orders of $'. >

issued initial financial guidance for 2014. With

reported:

pc ints

<Pqmpftny filed a Form 10-Q with the SEC which

^iterated the Company's previously announced

addition, the Form 10-Q contained signed

D'Ambrosio, stating that the financial

aftctiratfc and disclosed any material changes to the

In

and

mg.

or th

sales

Obi

issued a press release announcing results for

5 quarter, L-3 reported diluted earnings per

of $3.3 billion, net cash from operating

lion, funded backlog of $10.3 billion, and

resbect to the P&LS reportable segment, L-3

Fourth Quarter: P&LS net sales formillion, or 2%, compared to the 2012 fduithSolutions sales decreased by $31 millis!;, w.increase of $18 million for Logisticsdecrease was primarily due to loweraircraft resulting from reduced fundirigsequestration cuts and lower U.S. Air Forcevolume as the program nears comple ionaircraft due to timing of contract deliveries

tin 20 3 fourth quarter decreased by $13quarter [$616M v. $629M]. Platformlich was partially offset by a sales

. The Platform Solutions sales

for U.S. Navy maritime patroltaused by the U.S. Government;USAF) Joint Cargo Aircraft (JCA)

partially offset by Australia C-27JThe increase in Logistics Solutions

Solut.ons

volurie

10

for field maintenance and sustainmentwas primarily due to increased volumeservices for USAF training aircraft dri\and U.S. Army C-12 aircraft.

en b> a new competitively won contract

P&LS operating income for the 2013included severance charges of $2 milcompared to the 2012 fourth quarter,points to 8.3% primarily due to lowerpartially offset by improved contract

fouith quarter of $51 million, whichion, decreased by $6 million, or 11%,

Opera:ing margin decreased by 80 basis(nargin sales mix for Logistics Solutions,brmance for Platform Solutions.perf(

Full Year: P&LS net sales for the year$40 million, or 2%, compared to the yeardecline for Logistics Solutions [$2,441»N|1remained substantially the same as 201^primarily due to the competitive loss ofteam support services in Southwestreduced fleet management services dueTraining Systems (JPATS) contract for ;'offset by increased volume for field maintenanceUSAF training aircraft and U.S. Arm/higher volume on USAF EC-130 andaircraft maintenance for the Canadian Dbp-artrhentby lower volume for U.S. Navy mari1:reduced deliveries of aircraft cabin assemblies

ended December 31, 2013 decreased by^ndefd December 31, 2012 due to a sales

$2,483]. Platform Solutions salesdecrease in Logistics Solutions was

task order for U.S. Army contract fieldwhich was completed in 2012, and

th 5 loss of the Joint Primary AircraftUSAF. These decreases were partially

and sustainment services for

C-112 aircraft. For Platform Solutions,ipteqiational head of state aircraft, and

of National Defence was offset

riatrol aircraft and JCA, as well as

v.

The

A sia.

to

•he

P&LS operating income for the yearwhich included severance charges of $7compared to the year ended December20 basis points to 9.3% primarily duSolutions.

er)d<led December 31, 2013 of $227 million,rjiilli rjn, decreased by $9 million, or 4%,

2(12. Operating margin decreased byto fie decrease in sales for Logistics

32. On February 25, 2014, the

was signed by defendants D'Ambrosio and

announced quarterly and annual financial result^

K contained signed SOX certifications by defendants

financial information contained in the Form

changes to the Company's internal control over

ComjbaW lied its annual report on Form 10-K which

Sti(ianes$, and reiterated the Company's previously

^nd financial position. In addition, the Form 10-

Strianese and D'Ambrosio, stating that the

was accurate and disclosed any material10-K

financial reporting.

11

33. On May 1, 2014, the Company Hs$uea;

first quarter ended March 28, 2014. For the qftafter.

$2.01, net sales of $3.0 billion, funded orders

and increased 2014 financial guidance. With

segment, L-3 reported:

of $3

2014Aerospace Systems net sales for theor 9%, compared to the 2013 first quar|e|"$62 million for Platform Systems andLogistics Solutions remained substantiadecreased: (1) $24 million due to lovjAircraft (JCA) volume as the contract n pafs c<pdue to lower volume for aircraft main

National Defense due to timing and redi^dvolume for U.S. Navy maritime patrolcaused by U.S. Government sequestrfetireduced deliveries of aircraft cabin as pepiblioffset by a sales increase of $19 millionof contract deliverables. ISR Systemsand volume for small ISR aircraft and

drawdown in Afghanistan, partially off^ejt b>and fleet management services to thecustomers.

firs':

[$$(42illy

er U

a press release announcing results for the

L-3 reported diluted earnings per share of

0 billion, funded backlog of $10.4 billion,

respect to the Aerospace Systems reportable

quarter decreased by $104 million,,082M v. $1,186]. Sales decreased

million for ISR Systems. Sales fordie same. Platform Systems salesS. Air Force (USAF) Joint Cargompletion, (2) $22 million primarily

for the Canadian Department offjinding, (3) $19 million due to lower

iircraft resulting from reduced fundingcuts, and (4) $16 million due toes. These decreases were partially

Alustralia C-27J aircraft due to timingdeclined primarily due to lower sales

aircraft systems due to the U.S. militaryhigher volume for logistic support

anjd ISR platforms for foreign military

:e:ianoe

on

for.

sjkles

DbD

Aerospace Systems operating income f<million, or 19%, compared to the 2013margin declined by 130 basis points to fQ.5°Abasis points primarily due to lowerpartially offset by 70 basis points due tc60 basis points due to improved contrac

the 2014 first quarter decreased by $26rist quarter [$114M v. $140M]. Operating

Operating margin declined by 260arid mix changes. This decrease was

lbwejr pension expense of$8 million andperformance.

sajieis

34. The statements referenced in

=1

1][ 25 |- 33 above were materially false and/or

failed to disclose the following adverse factsmisleading because they misrepresented and

pertaining to accounting matters at the ComrJaijiy's

known to Defendants or recklessly disregarded by

and/or misleading statements and/or failed t<|>

contained errors related to the improper deferral

Aerospace Systems segment, which were

tftiem. Specifically, Defendants made false

disclose that: (1) L-3's financial statements

of eost overruns on a fixed-price maintenance

12

and logistics support contract resulting in

respect to the fixed-price maintenance and loJ$i$tics

Company lacked adequate internal and control

foregoing, the Company's financial statements

relevant times.

over$tar.em|ent of operating income; (2) net sales with

support contract were overstated; (3) the

Oyer ffnancial reporting; and (4) as a result of the

were materially false and misleading at all

The Tru<h Emerges

35. On July 31, 2014, before the

"Preliminary Second Quarter 2014 Results."

to the disclosure of a concurrent internal acdoimtih:

marjcets opened for trading, L-3 announced

h|e Cbmpany announced preliminary results due

g review into matters at the Company's

Aerospace Systems segment. According to the Dress -elease:

The review relates to accounting matterssegment, and is being conducted withlegal advisors. The Company currencharge of $84 million against operatingsales of approximately $43 million. Ofrelates to periods prior to 2014, andhalf of 2014, of which $30 millionAdditionally, as a result of the reviewoperating income for the Aerospacemillion for the second halfof 2014.

at

itly

g

these

die Company's Aerospace Systemstlje assistance of outside accounting and

expects to incur an aggregate pre-taxincipme and a related reduction in net

charges, approximately $50 millionapiflroxm Lately $34 million relates to the first

relates to the second quarter of 2014.the Company has lowered its estimatedsteris segment by approximately $35>y

The adjustments primarily relateinappropriately deferred and overstaten^eni^respect to a fixed-price maintenanceof performance on this contract beganon January 31, 2015. The Company rMlevelsthese adjustments are the result ofAerospace Systems segment. The misdbriducttCorporate staff and external auditors.

ti contract cost overruns that were

and

of net sales, in each case withlotistics support contract. The period

E^eeemper 1, 2010, and is scheduled to endthat the amounts associated with

rfi^conjduct and accounting errors at theincluded concealment from L-3's

36. Moreover, according to the July 31, 2014 press release, L-3 management

immediately terminated certain employees in trie

37. As a result of this news, shares

heavy volume, to close at $104.96 on July 31,

cf

20

Aerospace Systems segment.

-3 fell $14.68, or more than 12% on extremely

14.

13

38. As a result of Defendants' wrongful acts and omissions, and the precipitous

decline in the market value of the Company's spquriqes, Plaintiff and other Class members have

suffered significant losses and damages.

PLAINTIFF'S CLASS ACTION ALLEGATIONS

39. Plaintiff brings this action as a

Procedure 23(a) and (b)(3) on behalf of a

otherwise acquired L-3 securities traded on the

were damaged upon the revelation of the all^

Class are Defendants herein, the officers and

members of their immediate families and their

class action pursuant to Federal Rule of Civil

CJtlaJss, consisting of all those who purchased or

MYSlf during the Class Period (the "Class"); and

ed corrective disclosures. Excluded from the

pirectors of the Company, at all relevant times,

gal representatives, heirs, successors or assigns

controlling interest.

so numerous that joinder of all members is

urities were actively traded on the NYSE.

imkhown to Plaintiff at this time and can be

and any entity in which Defendants have or had

40. The members of the Class ar^i

-:> se<impracticable. Throughout the Class Period, h

While the exact number of Class members i|

i

ascertained only through appropriate discovery

thousands of members in the proposed Class.

may be identified from records maintained by 11-3 or

pendency of this action by mail, using the forni of

securities class actions.

41. Plaintiffs claims are typical of

members of the Class are similarly affected t y

federal law that is complained of herein.

Plaintiff believes that there are hundreds or

R[eco "d owners and other members of the Class

its transfer agent and may be notified of the

notice similar to that customarily used in

trie claims of the members of the Class as all

Defendants' wrongful conduct in violation of

14

42. Plaintiff will fairly and adequately

Class and has retained counsel competent an|o

Plaintiffhas no interests antagonistic to or in cohffict

43. Common questions of law and fact

predominate over any questions solely affectinlg

questions of law and fact common to the Class are

protect the interests of the members of the

experienced in class and securities litigation.

with those of the Class.

sxist as to all members of the Class and

individual members of the Class. Among the

• whether the federal securities

alleged herein;la!ws sre violated by Defendants' acts asw

• whether statements made by DeClass Period misrepresented maand management of L-3;

whether the Individual Deferld^ntsmisleading financial statements <luring

• whether Defendants acted kno\fri}iglyj or recklessly in issuing false andmisleading financial statements; j

• whether the prices of L-3 sejctritifcsartificially inflated because of theherein; and,

• whether the members of the Claj sis the proper measure of damage ?.

ehdarits to the investing public during thetefial facts about the business, operations

caused L-3 to issue false and

the Class Period;

during the Class Period wereDefendants' conduct complained of

hav i sustained damages and, if so, what

44. A class action is superior to all

adjudication of this controversy since joinder

the damages suffered by individual Class mergers

burden of individual litigation make it impo|si|ble

redress the wrongs done to them. There will b(

a class action

45. Plaintiff will rely, in part, upon jhe presumption of reliance established by the

fraud-on-the-market doctrine in that:

15

other available methods for the fair and efficient

(If all members is impracticable. Furthermore, as

may be relatively small, the expense and

for members of the Class to individually

difficulty in the management of this action asno

• Defendants made public misrepfe^ent^tions or failed to disclose materialfacts during the Class Period;

• the omissions and misrepresentafio|ns ^ere material;

• L-3 securities are traded in efficient markets;

• the Company's shares were licju^d ahd traded with moderate to heavyvolume during the Class Period;

the Company traded on the NYS

• the misrepresentations and omissionsreasonable investor to misjudge f\$ vai

anc was covered by multiple analysts;

ass

alleged would tend to induce aue of the Company's securities; and

purchased and/or sold L-3 securitiesto disclose or misrepresented

facts were disclosed, withoutfacts.

• Plaintiff and members of the C

between the time the Defendafitkmaterial facts and the time he tijueknowledge of the omitted or misrepresented

failed

46. Based upon the foregoing, Plainnff

presumption of reliance upon the integrity of the rriarltet

47. Alternatively, Plaintiffs and tie

presumption of reliance established by the Sup rejme

of Utah v. United States, 406 U.S. 128, 92 S.

information in their Class Period statements in

and the members of the Class are entitled to a

m4mbers of the Class are entitled to the

ourt in Affiliated Ute Citizens of the State

. 2^30 (1972), as Defendants omitted material

ion of a duty to disclose such information,

Ct

viola

as detailed above.

counti:

Violation of Section 10(b) of T le Exchange Act and Rule 10b-5Against Al [Defendants

48. Plaintiff repeats and realleges ^aeh ajnd every allegation contained above as if

fully set forth herein.

49. This Count is asserted against EJeffend|ants and is based upon Section 10(b) of the

Exchange Act, 15 U.S.C. § 78j(b), andRule 10ty-£ promulgated thereunder by the SEC.

16

Defendants Engaged in a plan, scheme, conspiracy and

kno\^i^igly or recklessly engaged in acts, transactions,

operated ad a fraud and deceit upon Plaintiff and the

statements of material facts and omitted to state

50. During the Class Period,

course of conduct, pursuant to which they

practices and courses of business which

other members of the Class; made various untrue

material facts necessary in order to make the

under which they were made, not misleading:

defraud in connection with the purchase and

and, throughout the Class Period, did: (i)

other Class members, as alleged herein; (ii)

L-3 securities; and (iii) cause Plaintiff and

acquire L-3 securities and options at artificially

scheme, plan and course of conduct,

herein.

51. Pursuant to the above plan

Defendants participated directly or indirectly

and annual reports, SEC filings, press release

above, including statements made to securities

influence the market for L-3 securities

statements made, in light of the circumstances

and elmployed devices, schemes and artifices to

sMe of) securities. Such scheme was intended to,

deceiVe the investing public, including Plaintiff and

artificially inflate and maintain the market price of

members of the Class to purchase or otherwise

inflated prices. In furtherance of this unlawful

Defendafiti, aifd each of them, took the actions set forth

oth* r

schefne, conspiracy and course ofconduct, each ofthe

ii the preparation and/or issuance of the quarterly

other statements and documents described

anaysts and the media that were designed to

reports, filings, releases and statements were

fa fed tc disclose material adverse information and

and

Such

materially false and misleading in that they faj

misrepresented the truth about L-3's finances and

52. By virtue of their positions a:

materially false and misleading statements an<.

thereby to deceive Plaintiff and the other memrj

business prospects.

L-3, Defendants had actual knowledge of the

rriatoiial omissions alleged herein and intended

of the Class, or, in the alternative, Defendantsers

17

acted with reckless disregard for the truth in thp

such facts as would reveal the materially false

although such facts were readily available to D4fenda|nts

were committed willfully or with reckless disr|e,

knew or recklessly disregarded that material

described above.

the1' failed or refused to ascertain and disclose

and nisleading nature of the statements made,

Said acts and omissions of Defendants

for the truth. In addition, each defendant

were being misrepresented or omitted as

gard

facts

53. Defendants were personally motjv&ted

information necessary to make the statements r|o1

the sale of L-3 securities from theirpersonal po: tffolio|s

54. Information showing that Defenflaiits

for the truth is peculiarly within Defendants' Jbnlowl

and/or directors of L-3, the Individual Defendant ha|i

affairs.

to make false statements and omit material

55. The Individual Defendants are

misleading in order to personally benefit from

acted knowingly or with reckless disregard

^dge and control. As the senior managers

knowledge of the details of L-3's internal

liable x>th directly and indirectly for the wrongs

portions' of control and authority, the Individual

ctly, control the content of the statements of L-

company, the Individual Defendants had a duty

information with respect to L-3's businesses,

prospects. As a result of the dissemination of

releases and public statements, the market price

thjrofughbut the Class Period. In ignorance of the

inancial condition which were concealed by

the Class purchased or otherwise acquired L-3

complained of herein. Because of their

Defendants were able to and did, directly or

3. As officers and/or directors of a publicly-hel

to disseminate timely, accurate, and truthful

operations, future financial condition and

the aforementioned false andmisleading report|

for L-3's securities was artificially inflated

adverse facts concerning L-3's business andj

Defendants, Plaintiff and the other members o f

inci ire

futuje

18

securities at artificially inflated prices and relief1upon the price of the securities, the integrity of

the market for the securities and/or upon statements disseminated by Defendants, and were

damaged thereby.

56. During the Class Period, L-3's ^eburities were traded on an active and efficient

market. Plaintiff and the other members of

misleading statements described herein, whic

disseminated, or relying upon the integrity of trie

of L-3 securities at prices artificially inflated by

the ("lass, relying on the materially false and

he Defendants made, issued or caused to be

market, purchased or otherwise acquired shares

Defendants' wrongful conduct. Had Plaintiff

At

and the other members of the Class known the truth, they would not have purchased or otherwise

asecl or otherwise acquired them at the inflated

se:s ar d/or acquisitions by Plaintiff and the Class,

lower than the prices paid by Plaintiff and the

o|f L-|3's securities declined sharply upon public

of Plaintiff and Class members,

ed herein, Defendants knowingly or recklessly,

1.0(H) of the Exchange Act and Rule 10b-5

acquired said securities, or would not have purpb;

prices that were paid. At the time ofthe purch^

the true value of L-3 securities was substantially

other members of the Class. The market price

disclosure of the facts alleged herein to the inju y

57. By reason of the conduct allej i

directly or indirectly, have violated Section;

promulgated thereunder.

58. As a direct and proximate resulj

the other members of the Class suffered dama

pf Defendants' wrongful conduct, Plaintiffand

connection with their respective purchases,;eis in

acquisitions and sales of the Company's securities during the Class Period, upon the disclosure

that the Company had been disseminating misrepresented financial statements to the investing

public.

15

COl NT I

Violation of SettiohThe Exchange Act Again st

59. Plaintiff repeats and realleges

foregoing paragraphs as if fully set forth herein.

60. During the Class Period, the Indifidu^l

and management of L-3, and conducted and participated

of L-3's business affairs. Because of their serupr

information regarding L-3's business practices.

61. As officers and/or directors cjf

Defendants had a duty to disseminate accuratp

financial condition and results of operations,

issued by L-3 which had become materially fals^

62. Because of their positions of

Individual Defendants were able to, and did, lotntrol

releases and public filings which L-3 dissemii|al|ed

Throughout the Class Period, the Individual DMendknts

cause L-3 to engage in the wrongful acts ccj^n|plai|ned

therefore, were "controlling persons" of L-;

Exchange Act. In this capacity, they parti(firjate|

artificially inflated the market price of L-3 securities

63. Each of the Individual Defendants

20(a) ofThe Individual Defendants

each and every allegation contained in the

Defendants participated in the operation

, directly and indirectly, in the conduct

positions, they knew the adverse non-public

a publicly owned company, the Individual

and

and

truthful information with respect to L-3's

to correct promptly any public statements

or misleading.

control and authority as senior officers, the

the contents of the various reports, press

i|n the marketplace during the Class Period.

exercised their power and authority to

of herein. The Individual Defendants

within the meaning of Section 20(a) of the

in the unlawful conduct alleged which

thelrefore, acted as a controlling person of L-3.

alnd/or being directors of L-3, each of the

actions of, and exercised the same to cause, L-

By reason of their senior management positijpijis

Individual Defendants had the power to direct tihe?

2C

3 to engage in the unlawful acts and conduct

Defendants exercised control over the general

control the specific activities which comprise

the other members of the Class complain.

64. By reason of the above conduct^

Section 20(a) of the Exchange Act for the violafiobs

PRAYER

1

complained of herein. Each of the Individual

operations of L-3 and possessed the power to

pr mary violations about which Plaintiff andthe

die Individual Defendants are liable pursuant to

committed by L-3.

BELIEFIOR

WHEREFORE, Plaintiffdemands judgment

A. Determining that the instant aclifoh

Rule 23 of the Federal Rules of Civil Pribcedute

representative;

B. Requiring Defendants to pay dj^nfiage[s sustained by Plaintiff and the Class by

reason of the acts and transactions alleged hereiji

C. Awarding Plaintiff and the

judgment interest, as well as their reasonable at^orfneyjs

D. Awarding such other and further! relief

DEMAND FOR

oth&r

Plaintiff hereby demands a trial by jury.

igainst Defendants as follows:

may be maintained as a class action under

, and certifying Plaintiff as the Class

meipbers of the Class prejudgment and post-

' fees, expert fees and other costs; and

as this Court may deem just and proper.

TRIAL BY JURY

21