not upholding our allegations in the securities fraud action now the crux of this action are the defendants for knowingly false and misleading statements regarding their ability within one nine hundred ninety eight to deliver thirty of these c one thirty j cargo planes these fifty million dollars planes as well as the false financials that they issued for third quarter nine hundred ninety eight which included a secret hundred twenty million dollar thompson the disclosure itself it was buried within the within the within the ten to ten q more importantly the so called disclosure occurred two weeks after the statement was made to the market  primes the market for the third quarter results on september twentieth when they told the market we are going to be things are going great this quarter we expect to have third quarter nine hundred ninety eight earnings per share of a dollar sixty seven a month later on october twenty third come out and make the fischel announcement guess what investors we have met our earnings per share for this quarter we have come in at exactly a dollar sixty seven per share and by the way things are going to be even better in the fourth quarter because all of our sales etc are weighted in the fourth quarter the actual filing of that ten q does not occur until two weeks later on november second and it is in that particular filing that it's  just a two line item buried in all these pages of financial discussions and as the wall street journal pointed out on november eleventh that wasn't much of a disclosure at all in fact when the wall street journal came out and described exactly what they had done with one hundred twenty million who sing their quarterly earnings fully by one quarter just by reducing the reserve in one area and putting the money it went to the other area as quote net income on that c one thirty cargo planes to throw the entire for one class period the defendants fed a constant montra of we're going to make these deliveries they started off with class three by saying we're going to make these deliveries in third quarter and fourth quarter nine hundred ninety eight that is we're going to deliver thirty of these fifty million dollars planes on july august september and then october november december and that was just not true it was impossible the only four main customers there on four customers part of the four these type of planes the italian government the australians the british government and the americans i know i've covered this my brief but i just want to hit upon it briefly  times we're going to take any they weren't going to take any in one thousand nine hundred eight that wasn't going to occur until one thousand nine hundred ninety the australians themselves had come to lockheed four months prior to the class period and said there are some unacceptable safety risks with these planes that you're showing to us we don't want to take these planes until you fix these problems and mr walker of the australian aerospace acquisition division says and we quote him in our complaint that lockheed came back to him and said came back to the australians and said well if that's what you need we can't do that for you and so mid one nine hundred ninety nine the district court determined that the lot that these statements were subject to the forward looking although they were not identified just for looking at the time when there was no cautionary language was the law require that they be labelled as such it certainly does it's within the statute for the safe harbor protection if you're going to use that  protection in the safe harbor statute says that the statements must be identified as forward looking and accompanied by i mean not enough to say we expect to our projections or etc we have to covered by safe harbor you've played the show knowing they were knowingly false or misleading and that's that's a subtle distinction i think that both the district court and the defense have missed i think both the district court and the defendants are trying to tell this court the day when mr kaufman tells the market we're going to deliver thirty flames in third quarter and fourth quarter one thousand nine hundred eighty mr coffin must know at that exact moment that there is no way he's they have pointed to a one simple bullet point line item in an annual report that is from from outside the complaint that states we delivered one thousand see one thirty's during one nine hundred ninety eight they delivered none now our allegation must be accepted as true they're coming in here with a simple bullet points statement no other evidence at all they've produced no other evidence of the ninety deliveries during one nine hundred ninety eight nor should they be able to on a motion to dismiss but be that as as it may for all the paperwork that's flying around in this case i mean through is a freedom of information act we've been able to plead and describe the specificity in the charge of the entire c one thirty production lines over marietta georgia we've got all that saying that these deliveries were not happening and on the other side of the equation the defense had come in and pointed to one well i'll say representation you know that bothered me too how did that in your report information even get in here to this consideration as to whether the complaint was well the district court did say that she was not going to  based upon what we were told by a lockheed test flight engineer who was responsible for those certifications and that is how it first got mentioned it was never mentioned below for the purpose that it's trying to invent used for now to upper management at lockheed that the c one thirty project was doing it was a coffee of sound and it was you know it was coming from all over it was coming from their customers it was coming from some of their top employees  make the c one thirty deliveries quite as early as we thought they have now slipped out all the way to december one thousand nine hundred eighty the very end of the fiscal year and united states air force general tommy walters wrote in a contempora contemporaneous memorandum at the time that even that december delivery was considered medium to high risk and of course fast forward to december nine hundred ninety eight and what happens the defendants go to the air force and try to convince the air force to take the planes that aren't even ready yet they say to the air force please enter into these ships and these ship in place agreements with us let us keep the planes here on our tarmac and keep on working at colonel allen who says the same thing that lockheed came to the air force in the late one nine hundred ninety eight and i believe the strong inference is that it was in december one thousand nine hundred eight and said those planes those first deliveries that we're going to give to you have slipped out even further but would you please allow us to take them if you please allow us to say that we have delivered them in one thousand nine hundred eighty and we can tell from the complaint what the defense idea of delivery was because they made one so called delivery to the british public statements the shows are believed to deliver these planes on time as we said well we know that's not true we have a contemporaneous memorandum written by united states air force colonel i believe  pointing out yes colonel fletcher pointing out that it wasn't a delivery at all the first actual fixed the plane was going to be delivered returned to lockheed for further work it wasn't ready yet the first actual acceptance by the british he writes in his memorandum was going to be in mid one nine hundred ninety nine the first actual acceptance was on hold because of quote known deficiencies with the plan so i think there's little doubt based on the pleated facts in the complaint defendant's actual knowledge of what they were doing when they told certain things to the markets weren't happening for example on the day that they divulged that they would not be making a certain number of deliveries in one thousand nine hundred eighty they turned around in their press release and they blamed the shortfall of the deliveries on who the australians they said of the of the thirty planes we were going to deliver this year up to one third of them have been cut by the australians in the united states air force now can they point actually australians when they were told back in april one thousand nine hundred eighty by the australians we don't want these planes with their unacceptable safety risks and so nine hundred ninety nine it just boggles the mind this what you want to save you guy that i'm going to i'm going to go through five i want to talk a little bit about some other factors the bolster the defendant's actual knowledge in this case i think all those facts are just mentioned to you not only do they show falsity but they show court said temple proximity alone most of what we don't have temple proximity alone we have we have a cough any of memoranda and highly placed lockheed employees but we also have a bolstered by the fact that right up until the bitter end to defend its we're telling investors and telling the market we're going to deliver these fifty million dollar claims there weren't that many of the newer thirty of them it's not it's not too difficult to keep track of thirty fifty million dollars planes in assembly line and the wall street journal the bible of the american financial industry was so upset with lockheed it took lucky to the woodshed it said until yesterday on december twenty fourth it's that until yesterday this company had been telling us a different story i think that is a very of the temporal proximity there is a very strong indication of defendants knowledge the importance of the items to read right pardon me to lucky again we're not talking about windshield wipers on ford explorers on an assembly line up in dearborn michigan we're talking about a fifty million dollars behemoths cargo plane when something goes wrong with a fifty million dollars cargo plane that you are counting upon to make your annual numbers and your quarterly numbers you know that is being discussed and that id and worried about in threaded over at the very top levels of the company you're now and i will sit down thank you counsel thank you for your argument we'll hear from jets were phone were looking statements and if so whether plaintiffs pleaded with sufficient particularity that each the firm then actually knew that his statements were false or misleading when made actual knowledge not reasonable basis but actual knowledge the legal framework the judge spells are used in dismissing the plaintiff's fourth attempt to plead a viable claims or thirty minute complaint original complaint first second third of the complaint for opportunities to plead gone they have to identify each statement that was supposedly false and explain why it was false the reform act with respect to forward looking statements requires i think the phrase is meaningful cautionary statements any falsity in the f c c filings they went out to look at the the press releases or statements made at investor conferences and elsewhere where those statements are are made but it's hard to get into the record because you need to have a transcript and witnesses but counsel the state of the round and judge sheltered i quoted the statutes are there to prosecute as either or it is destructive and the reason this congress intended or cartridge companies to give projections that's what that's an important part of the reform congress said we want companies to give us your projections your forecasts tell us how you see the future happening but if you do we will not hold you liable if you either give us the cautionary language or unless there is actual knowledge so this is congress's intent as laid taken delivery on this that's the analogy that could be an analogy let me give a closer analogy when you purchase a car from a car dealer and you pay for the bike and you want the kargil to install some additional things on it maybe you want some different wheels reform act and say that lockheed martin has to declare that no aircraft were delivered and they have no source for that for all of the freedom of information act quotes and sources and documents that they say have been flying around here there's absolutely december twenty third one thousand nine hundred eight when lockheed martin announced its disappointing results and announced that it would not be able to make the delivery of the that the delivery schedule for the c one thirty j has left that's what they claimed was the truth on the market and the so we have perhaps a calmly versus gibson resolve all doubts in favor of the pleader in most cases reform act says no you don't do that you take only reason when for instance from the complaint and you also take competing inferences that not lay out fraud and if they with united arab governments for four f sixteen fighter planes it was never announced that this was going to have anything to do with earnings this was a pure cash flow issue the way defense contracts work they would have taken the cash and they would not be able to that lockheed martin never announced that they have no source for that in the complaint we are here on the complaint right they said that that our ally israel would not have the technology for five years that's what they said aircraft with technology five years advanced from what we had provided to our ally israel well whatever it if that was the case and that was then that was known to the public at the time the statement was made that any analyst looking doesn't add up to fraud here and if that's the case then the world no and the world could discount that in the market could discount the fact that they've made that statement about the f sixteen they say it was more than five years that it was signed within two years but there's no causation for flow numbers so there's nothing there's no harm to the investors based on the fact that the contract was not signed within the year but again forward looking statement and they have to have contemporaneous knowledge of the time the statements made about the f sixteen signing that vast hoffman and market spend it actually knew that it was not going to happen and they don't have that simply because of the boeing was rejected for another plane to another buyer is not actual knowledge argument i think it is  they need contemporaneous facts they need something that says on that they actually knew that wasn't going to happen and congress wanted to protect these we're looking statements and we're title to that protection thi this legislation that we've gotten back to the forms of action that we used to rule be dealing with way back when and that we got away from with your display being and now we're back to  as to this mental state they have to have contemporaneous information they have to have facts not just allegations that's what makes this these cases different from all of the federal cases are here because they have to have the facts they have to of there is there sufficient legislative history your honor and congress was getting tired of companies being sued every time their stocks happen to fluctuate and interesting president clinton first veto reform act but then it was overturned that the bill was overruled even senators kennedy and feinstein said enough is enough of these types of cases let me address now the temporal proximity argument the pla themselves say that that we had a tentative agreement with the united states air force in december of one nine hundred ninety eight to accept seven of the c one thirty cheney's and the ship in place the arrange tentative agreement with the with the government that when you're looking at someone's intent that's pretty close to saying i think we were pretty close to a deal that's not supportive of actual knowledge a fraud that's that is the temporal proximity is that the government beginning general ninety nine and a few in february one thousand nine hundred hugging of the delivery schedule that slipped by a few weeks that's not securities fraud we want to have them shipped in the fourth quarter you betcha but if they delivery schedule slipped the holidays came up earnings release which companies do this with press release and thank you for what our needs are going to be for the quarter that press release of their third quarter results so that quote that some of those results reflected quote a reserve there's no knowledge geisha that that reserve was improper when it was taken that the reversal of the reserve did not comply with generally accepted accounting principles that's not the allegation they're saying we hit it we read it well we mentioned in the press release that the on this program was doing well we mentioned the tenth you right down to the dollar how much of the reserve was being affected by the reversal of the outlaws reserve and the stock price gave a big yawn here's how the stock price for the press release came out sufficient disclosures and the stock price didn't move as a result of any of this again there's no allegation that there's any counseling impropriety or any misreporting of the financial statements that they just don't like the way the  reserve was made they say that it matched problems in the company it was fully disclosed and that's what this case is about disclosure and it was made for finally honors this court has an opportunity to provide guidance to the district courts on the group pleading presumption under the reform that we argued did not survive the reform act and the fifth circuit has recently held that most of the district courts in this inclined to affirm we don't need to reach that issue do you don't need to your honor that's less stressed that you would be providing guidance to the district courts in this circuit but you don't need to get to that point absolutely th harrison very benignly this describes the press release that talks about the plane being delivered to the british and he says we told everybody was going to be returned to us after testing well if the court would look at supplemental excerpt of record tab ninety five pages zero zero zero four and contrast that with paragraph sixty two of the complaint in that press release the defendant say we've just delivered the first new hercules to the united kingdom it's going to be assigned to the united kingdom's defense about us and research agency and then it will be transferred to the royal air force what we say in a complaint what do you know it states air force  wrote was it was given to the british for testing only it will then be returned to lockheed martin the first actual acceptance of the royal air force is the fourth plane which is quote on hold until all known deficiencies and quote are resolved which would my twenty thousand dollars that ford mustang it's still my car but i want to leave it with them so they can put a stereo on it this is the plane that's not even ready yet these are planes don't forget that the united states air force is also fusing to take because they are they are not ready yet the air force doesn't want planes that are not yet ready and that's a quote from a general and that actually leads into into another point here in rebuttal defense counsel said we had a tentative agreement in one thousand nine hundred eight with the air force to take those and that is just simply not true look at paragraph seventy one of the complaint you got the general saying this deal was turned down in one nine hundred ninety eight because it was not in the best interest of the air force we do say the air force agreed to the concept that it might make sense to do this sometime hope we don't say that it occurred in one thousand nine hundred eighty and that tentative agreement that ship in place agreement was actually not entered into until nine hundred ninety nine and mr allison talks about well so what's the big deal so we slipped a few hearts big deal we missed we missed our delivery cut off by five a few months while it mattered to investors because while the defendants were telling the investing world that we're going to deliver thirty of these fifteen million dollar planes their stock went from ninety four dollars at the beginning of for my class period all the way up into the high i think it might be one hundred thirteen i know it went at least a one zero nine because that's the price at which some of the defense sold their stock and when the bad news came out at the end of the year that we're not making these deliveries these deliveries that he euphemistically described as just slipping out a few months well wall street punishes that stock with a vengeance and drops all the way down to eighty two dollars that's why it matters whether or not you deliver a plane hundred eight we don't not have to prove a negative we don't have to show what happened to those so called one thousand planes you know of the thirteen year old to show that is part of the positive facts that have to be its port over in alabama i can't do that what i can do is plead all the facts of this complaint which is chock full of facts does and that is it shows that any any place that had a possibility of being delivered in one thousand nine hundred eight were actually the ones that ha