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Six Krispy Kreme Execs Out Amid Accounting Probe

By Fox News
Published | Updated

Doughnut giant Krispy Kreme Doughnuts Inc. (KKD) Tuesday said six officers have left the company under pressure from a special board committee that is looking into accounting practices and other matters that are the subject of a federal probe.

Five of the executives have resigned and one has retired.

The officers include four senior vice presidents and were in the areas of operations, finance, business development, and manufacturing and distribution, the company said. It did not identify them by name.

The company said on Tuesday that it continues to cooperate the U.S. Attorney's Office for the Southern District of New York and the Securities and Exchange Commission in their investigations into the company.

Krispy Kreme shares were halted for trading early Tuesday. They closed Monday at $7.67 on the New York Stock Exchange (search). The stock has steadily declined from its year-ago high of $21, hitting a 52-week low of $5.05 in February. Shares are down about 39 percent so far this year.

Krispy Kreme intends, for the time being, to fill these positions with existing personnel.

The company has not filed any financial statements with the Securities and Exchange Commission (search) since September and said earlier this month it lost money in its fiscal first quarter that ended May 1, as sales dropped 17 percent.

Last fall, the company formed a special committee of independent directors to examine whether earnings should be restated. Krispy Kreme also has been hit with several lawsuits, including one that alleges workers lost millions of dollars in retirement savings because executives at the company hid evidence of declining sales and profits.

In addition, the company faces a criminal inquiry by a federal prosecutor in New York and an investigation by the SEC into financial irregularities.

Last week, Krispy Kreme said it will miss a deadline for filing financial results for the first quarter that ended May 1, and expects to post a loss when it does file the report. In a filing with the SEC, Krispy Kreme said it was unable to file the quarterly report because of the ongoing internal review of its accounting practices for fiscal 2005 and earlier years.

Reuters and the Associated Press contributed to this report.