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More Trouble for Krispy Kreme

WINSTON-SALEM, NC- Krispy Kreme says that its financial reporting for the fiscal year contained errors and needs to be restated.

By Jennifer D. Duell | Updated on January 05, 2005

WINSTON-SALEM, NC- Krispy Kreme Doughnuts Inc. plansto restate its financial reports for the fiscal yearended February 1, 2004 due to accounting errors. Inparticular, the errors relate to the way it accountsfor acquisitions of franchisees.

The restatements of the donut maker’s financialstatements are expected to reduce net income forfiscal 2004 by between approximately $3.8 million and$4.9 million (between 6.6% and 8.6%). Net income wasfirst reported at $56.8 million. On December 28, 2004,the board of directors determined that adjustmentstotaling between $6.2 million and $8.1 million shouldbe made to reduce pre-tax income for fiscal 2004.

Moreover, Krispy Kreme says that further investigationinto its financial reporting could require morerestatements. For example, the company currently isreviewing its accounting practices for leases anddepreciation of related assets to determine whether ornot those practices fully comply with generallyaccepted accounting principles.

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