Krispy Kreme CEO expects snack maker to miss filing deadline | VailDaily.com
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Krispy Kreme CEO expects snack maker to miss filing deadline

CHARLOTTE, N.C. – A number-by-number revision of flawed financial statements dating back four years will probably keep Krispy Kreme Doughnuts Inc. from meeting a Dec. 15 deadline set by its lenders for submitting the overdue reports, the company’s interim chief executive said Wednesday.”To ensure they are properly stated and accounted for, it gets done at a very molecular level,” turnaround specialist Stephen Cooper told The Associated Press in a telephone interview from the company’s Winston-Salem headquarters.”The whole objective here is to ensure that when they come out, the statements are the statements,” he said. “Our plan is to get it right and not be careless and rush it.”Cooper took over the formerly trendy doughnut chain earlier this year, following the ouster of CEO Scott Livengood and other top executives amid a federal securities probe and allegations of padded sales figures.Krispy Kreme has not filed quarterly financial results since November 2004, two months before Livengood was ousted. Since then, the Securities and Exchange Commission and federal prosecutors have opened investigations of the company and numerous groups have sued, including franchisees and workers who allege the loss of retirement savings.Financial statements going as far back as 2001 are being re-examined and revised, Cooper said Wednesday.Krispy Kreme’s troubles began in May 2004, when the company warned of a coming earnings drop that it blamed on the popularity of low-carbohydrate diets. The company’s stock, a Wall Street darling since a 2000 initial public offering, plummeted.Shares of Krispy Kreme, which traded for $105 in November 2000 before a pair of two-for-one stock splits, fell 6 cents, or 1.2 percent, to close at $4.95 Wednesday on the New York Stock Exchange. Its shares have traded in a range of $3.91 to $5.31 over the past 52 weeks.The stock plunge began a downward spiral that led to store closings, Livengood’s ouster and the hiring of Cooper to try to bring the company back. An August report by a special committee of independent directors blamed Livengood and former Chief Operating Officer John Tate for most of the company’s problems, saying they tried to “manage earnings” to meet Wall Street expectations.Cooper said he does not expect that missing the Dec. 15 filing deadline will be a problem for the company’s lenders. The date was set when the company refinanced its debt in April, taking a credit line of $225 million from Credit Suisse First Boston and others, he said.”It (the deadline) was based on our best estimates at the time,” he said. “I believe if we do not meet it, they (lenders) will be more than accommodating.”The company informed the SEC last week that it was “highly unlikely” it would deliver audited financial statements for fiscal 2005 and restated accounts for earlier periods by Dec. 15.Before coming to Krispy Kreme in January, Cooper oversaw turnaround efforts at Polaroid, TWA, Enron and Boston Chicken. He said Wednesday he does not expect Krispy Kreme to seek bankruptcy protection.”We are weeding out the unproductive stores in a reasonable and rational fashion,” he said, adding that the goal is to remake the chain as a leaner company.”I do believe we need an urban model that will ultimately have a smaller footprint,” he said. “That is just the reality of the world today. You can’t operate in 4,000-square-foot shops.”Cooper said he also wants to focus on increasing sales of coffee and other beverages.”We have a great product with our doughnuts, and we want the public to know we also have a great selection of coffee and other beverages,” he said.—On the NetKrispy Kreme Doughnuts Inc.: http://www.krispykreme.com.Vail, Colorado


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