Krispy Kreme, which not that long ago seemed to have turned itself from a regional doughnut chain into a national marketing phenomenon, said yesterday that it will correct accounting errors and restate all of its 2004 financial results. This announcement said that this restatement means that it will have to delay filing year-end financial reports for fiscal 2005 (which ends on January 30), which will in turn cause it to default on a main credit facility. It is negotiating with lenders to get a waiver on that credit arrangement.
Analysts said that these development could raise questions about the ability of CEO Scott A. Livengood to keep his job.
In addition to raising doubts about senior management, these financial issues add fuel to the fire of shareholder lawsuits that charge the company with knowingly inflating profit and sales projections, in part by shipping more wholesale doughnuts than its customers needed or wanted.
Analysts said that these development could raise questions about the ability of CEO Scott A. Livengood to keep his job.
In addition to raising doubts about senior management, these financial issues add fuel to the fire of shareholder lawsuits that charge the company with knowingly inflating profit and sales projections, in part by shipping more wholesale doughnuts than its customers needed or wanted.
- KC's View:
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Gee, wasn’t it just yesterday that we had a story about how some business leaders would like the some of the provisions of Sarbanes-Oxley – which is supposed to force companies and CEOs to be more accountable on financial issues - to be watered down?
Hard to swallow, especially when you read stuff like this.
