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Mix-Ansicht- SEC hat die Donat-Bäcker auf dem Kieker - kingsolomon, 09.10.2004, 16:48
SEC hat die Donat-Bäcker auf dem Kieker
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SEC PROBES KRISPY'S BOOKS
NY POST
October 9, 2004 -- Krispy Kreme Doughnuts Inc. said the U.S. Securities and Exchange Commission opened a formal investigation of the company's accounting practices. Shares of the No. 2 U.S. doughnut maker fell as much as 8.3 percent.
The SEC notified the company of the decision yesterday, Winston-Salem, N.C.-based Krispy Kreme said in a statement that provided no other details. Formal investigations, which commissioners must vote to approve, give SEC staff the power to subpoena documents and call witnesses to testify.
Shares of Krispy Kreme, a favorite of growth investors after the collapse of the Internet bubble, had dropped 30 percent since July 29, when the SEC said it was looking into how Krispy Kreme accounted for the repurchase of franchises and lowered profit forecasts. Some investors faulted Chief Executive Scott Livengood, 52, for not saying enough about issues related to the probe.
"It's not an Enron, but it's definitely up there in terms of some pretty shady dealings, very poor governance and aggressive accounting," said Donn Vickrey, executive vice president of Camelback Research Alliance inc., an independent research firm based in Scottsdale, Ariz."I think they are going to have to make some restatements."
Krispy Kreme spokeswoman Amy Hughes and SEC spokesman John Nester declined to comment on the probe.
Some accounting experts, including Vickrey, say Krispy Kreme, which trails Dunkin' Donuts Inc. in sales, may have used questionable accounting to inflate profit when it bought back the Michigan franchise for $32.1 million last year.
Livengood defended the transaction on a May 25 conference call.
"The accounting for the Michigan acquisition was in accordance with generally accepted accounting principles and any assertion to the contrary is false and inaccurate," he said.
The $67.5 million the doughnut chain spent to buy back franchises in Dallas and Shreveport, Louisiana, was too high a price according to Glenn Surowiec, of Alsin Capital Management. Bloomberg
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