Friday, July 30, 2004

SEC probes Krispy Kreme accounting and Donuts are not a health food

SEC probes Krispy Kreme accounting - Jul. 29, 2004: "Krispy Kreme Doughnuts Inc. announced Thursday that the Securities and Exchange Commission was conducting an informal, non-public probe into the company's accounting."

The stock, which is down over 67% since last August, fell about 15% on the news.

This just continues a very bad year for the firm. In May the company's executives were sued for "disregarding signs that the company had expanded too quickly, that its wholesale business undermined sales at its retail stores, and that it faced stiff competition."

The current problems stem from the accounting treatment of the company's repurchasing of franchises and its May earnings forecast. As the Motley Fool reports, at least one of the repurchases was from the CEO's ex-wife.

Gee, what is this world coming to? The next thing you know someone will come out with a study that donuts are high in calories. ;)

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