Mmmmh, audits.....
Posted on 07/31/2004 5:35:35 PM PDT by Libloather
SEC investigators probe Krispy Kreme's books
Daily Herald Reports
Posted 7/30/2004
Krispy Kreme Doughnuts Inc. said Thursday the Securities and Exchange Commission is investigating how the company accounted for the repurchase of franchises and earnings forecasts. Shares of the Winston-Salem, N.C.-based company fell 16 percent.
Chief Executive Scott Livengood, 51, has been buying stores back from franchisees, with some investors and analysts questioning the prices.
Krispy Kreme, which had its first loss as a public company in last quarter, cut its annual profit forecast in May, triggering a 30 percent share drop.
"It's just one more blow to their credibility," said Joe Bonner, an analyst at Argus Research in New York.
Livengood, in the statement, said Krispy Kreme is "confident in our practices" and that the company will "cooperate fully" with the SEC inquiry. Krispy Kreme spokeswoman Amy Hughes declined to comment further. SEC spokesman John Heine declined comment.
Shares of Krispy Kreme fell $2.95 to $15.71. They have fallen 57 percent this year.
Some accounting experts say Krispy Kreme may have used questionable accounting to inflate its earnings when it bought back its Michigan franchise last year, the Wall Street Journal reported in its "Heard on the Street" column Thursday. The company didn't disclose, when it acquired its Northern California franchise in January, that Livengood's former wife was one of the sellers, the newspaper said.
"The accounting for the Michigan acquisition was in accordance with generally accepted accounting principles and any assertion to the contrary is false and inaccurate," Livengood said on a May 25 earnings conference call.
Krispy Kreme purchased rights to the Michigan market for $32.1 million and its remaining interest in the Northern California market for $16.8 million, according to the company's regulatory filings.
Krispy Kreme became a Wall Street darling after its April 2000 initial public offering. The shares rose almost 10-fold to $49.74 each by August 2003.
Founded in 1937, Krispy Kreme currently operates 387 factory stores in 45 U.S. states, Australia, Canada, Mexico and the United Kingdom.
That could almost be considered dunking the issue - no?
I donut know.
Just a lot of hot air, like their donuts.
Awwww...crapola. I love their donuts....they were getting ready to build a store here in Peoria, Il. Don't that about figure.
Krispy Kreme and the KC Royals have one of the most popular promotions in baseball. Any home game the Royals get 12 or more hits you can redeem your ticket stub for a dozen free glazed donuts. Alas, not near as many free donuts this year as last.
NO! NO, NO, NO!!!!! I MUST HAVE MY KRISPY KREMES!!
> Krispy Kreme became a Wall Street darling after its
> April 2000 initial public offering. The shares rose
> almost 10-fold to $49.74 each by August 2003.
And then the world discovered "low carb". Although a
preoccupation with carbs may be a passing fad, what
it's likely to get replaced with ("balance") still
leaves KK pushing a nutritionally unsound and perhaps
increasingly unpopular product.
KK has belatedly attempted to sell low-carb donuts,
and theoretically they could make a Zone-like
balanced donut, but an actual Zone Perfect bar is
much more convenient.
So before the SEC closes them down, be sure to buy a
dozen Kremes, and save them to sell at fantastic profit
on eBay in a decade or two :-)
Krispy Kreme blows.
Id dunk this stock just due to atkins
L0L!-
Big Donut is going down....
low carb isnt all that sustainable just because it takes a lot more work and money to raise animals than flour and corn.
Iy also is easier to store flour and corn.
Im not sure how this will all work out, but in the short term I think Krispy Kreem is toast
They're fried...
I've got tickets for one of the NYY games in KC in September. Thanks for cluing me in on this. (Sure, they'll get 12 hits against the Yankees, sure they will.)
Hmmmmmmmmm! Can you say Arthur Annnnnnnnnnnnnderson....
Ouch, somebody stop me before I pun again.
> low carb isnt all that sustainable just because it
> takes a lot more work and money to raise animals
> than flour and corn.
Assuming that you're speaking of boosting protein, the
way that most "low-carb" foods are doing it is to add
soy, not meat. The protein in Zone Perfect and Balance
Bars is soy.
I would say that the reason LC isn't sustainable is that
it doesn't work over the long term. We eat "balanced"
(including the occasional Kreme), and I find 40-30-30
balanced to be very satisfying - no urge to snack at all.
> Im not sure how this will all work out, but in the
> short term I think Krispy Kreem is toast
I was a bit astonished to see the rise of Krispy Kreme in
the first place. We already had this happen at least once
in the 20th century, with Dunkin Donuts and Mister Donut.
I guess KK was counting on a new generation of buyers who
thought it was something brilliantly novel.
Fads make risky investments.
That's one way of saying you don't like their doughnuts.
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