Posted on: Tuesday, December 14, 2004

Krispy Kreme late in filing with SEC

By Paul Nowell
Associated Press

CHARLOTTE, N.C. — Krispy Kreme Doughnuts Inc. missed a deadline last week for making a regular quarterly filing with the U.S. Securities and Exchange Commission, the commission said yesterday.

The troubled company filed for an extension late yesterday afternoon, giving it an additional five days to make the required 10-Q report, the SEC said.

The delay renewed questions about Krispy Kreme, which has been battered by financial losses and an SEC investigation in recent months.

In filing the extension form, Krispy Kreme chief financial officer Michael Phalen said the company was still analyzing the accounting of "certain franchise matters in the company's third fiscal quarter, primarily concerning the company's consolidation of KremeKo Inc.," which develops Krispy Kreme stores in Canada.

"The financial information provided above is subject to change as the company completes its analysis and finalizes its financial statements for the third fiscal quarter ended October 31, 2004," he wrote.

KremeKo, 34 percent of which is owned by Krispy Kreme, announced yesterday it will close three stores in Ontario, reducing the number of stores there from nine to six.

Krispy Kreme's fiscal third quarter ended Oct. 31; companies are required to file quarterly 10-Q reports no later than 40 days after the quarter's end, SEC spokesman John Heine said.

For the quarter that ended Oct. 31, he said, the report should have been filed by the end of business Friday. Krispy Kreme had until the close of business yesterday to file the NT 10-Q extension form.

A Krispy Kreme spokeswoman did not immediately return a telephone message seeking comment.

The once-high-flying company last month posted a $3 million third-quarter loss, its second losing quarter of 2004. Shares of the company are now trading at less than a quarter of their 52-week high.

Krispy Kreme's stock closed at $9.68, down 17 cents, or 1.7 percent, on the New York Stock Exchange.

Another source of concern is an ongoing SEC investigation that the company has said is looking into franchise buybacks and its future earnings outlooks.

Krispy Kreme said previously that it incurred about $3 million in fees during the third quarter from the SEC probe and related matters, and expects more such expenses going forward.

The company also has said it has set aside $2 million to deal with potential expenses related to accounting issues involving two franchisées.