Six Krispy Kreme execs ousted

updated 11:28 a.m. ET June 21, 2005

WINSTON-SALEM, N.C. - Doughnut maker Krispy Kreme Doughnuts Inc. said Tuesday that a special committee of the company's independent directors has decided that six unnamed company officers should be fired. Five of the executives have resigned and one has retired.

Krispy Kreme shares were recently halted for trading, having closed Monday at $7.67 on the New York Stock Exchange. 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.

The company said the six officers include four senior vice presidents and were in the areas of operations, finance, business development, and manufacturing and distribution. Krispy Kreme intends, for the time being, to fill these positions with existing personnel.

The company's special committee is continuing its investigation. Krispy Kreme said it is cooperating fully with the U.S. Attorney's Office for the Southern District of New York and the Securities and Exchange Commission in their respective investigations.

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.

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