| | Krispy Kreme pressured again
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 12:35 PM ET Sept. 13, 2004
CHICAGO (CBS.MW) -- Krispy Kreme shares dropped to four-year lows Monday on news that the doughnut maker's auditor refused to finish its job until an outside law firm completed "additional procedures" related to an unspecified acquisition.
Shares of the Winston-Salem, N.C.-based company dipped 3 percent to $11.65. In the last year, shareholders have wiped out 75 percent of Krispy Kreme's (KKD: news, chart, profile) value.
In a filing with the Securities and Exchange Commission, Krispy Kreme said the law firm already had investigated the matter to the company's and its audit committee's satisfaction. However, it authorized the further review of certain electronic files at the request of PricewaterhouseCoopers.
The disclosure comes at a time when Krispy Kreme's accounting policies and certain franchisee acquisitions, as well as the Montana Mills purchase in 2003, are under federal scrutiny. Krispy Kreme reported a steep falloff in sales and declining earnings last month. See full story.
The company has insisted that its policies are in order, but shareholders apparently have been concerned.
The dollar amount related to the acquisition, which occurred during the 2004 fiscal year, is considered "immaterial from a quantitative standpoint," according to the filing with regulators.
The independent law firm, which also was not identified, had said after the first probe that neither the company nor any of its employees "engaged in any intentional misconduct related to the matter," the filing states.
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