Green Mountain Coffee Roasters Inc could face a class action lawsuit because of questions related to its accounting practices and a recent stock sale. Another shareholder has filed a separate suit in Burlington seeking damages and changes in certain management practices at the rapidly growing Waterbury coffee company. And at least five other firms are filing suits or considering such from out-of-state.
The Security and Exchange Commission’s Division of Enforcement is conducting an inquiry into how GMCR recognizes revenue, according to company documents included in a filing with the SEC. GMCR and the SEC declined to comment on the nature of the investigation.
GMCR’s stock (GMCR) has lost more than 25 percent of its value since the SEC investigation was made public last week. As of October 7, the stock price hovered around $28, down from its 52-week high of $37.97 ‘ the closing price on September 27. GMCR has a market cap of $3.72 billion. GMCR has about 1,000 employees in Vermont, according to Vermont Business Magazine.
On September, 28, 2010, the company filed a REPORT with the SEC, which mentioned the investigation of its revenue policies. This was attached to the same SEC filing in which GMCR announced that it had finalized a deal to sell stock to Italian coffee giant Luigi Lavazza for $250 million.
In the SEC filing by GMCR, two big transactions were reported. The first was the completion of that $250 million stock sale to Lavazza, an Italian coffee company. The second was an acquisition planned for Van Houtte, a Canadian gourmet coffee brand, to be financed by $1.35 billion in debt.
In that filing, GMCR acknowledged an accounting mistake, calling it ‘immaterial.’
The shareholder suit claims that the mistake was not immaterial but a willful attempt by certain executives and board members to inflate the stock price for their personal gain. The plaintiff, Daniel Himmel, is alleging in federal court in Burlington that the defendants, Robert P Stiller, R Scott McCreary, David E Moran, Jules A Del Vecchio, Hinda Miller, Lawrence J Blanford, Michelle Stacy, Frances G Rathke, William D Davis, Barbara D Carlini, Michael J Mardy, Douglas N Daft and Green Mountain Coffee Roasters, Inc violated their duties and wasted corporate assets. Himmel is represented by Vermont law firm Langrock Sperry and Wool.
There are at least six other law firms looking into the case that could result in a class action suit against GMCR (SEE PRESS RELEASES BELOW). The lead attorney for such action would be decided by the end of November. Of the six firms, one filed suit in Burlington, The Rosen Law Firm, PA, from New York City.
Barrack Rodos & Bacine of Philadelphia announced November 2, 2010, that it has filed a class action lawsuit in the United States District Court for the District of Vermont, Blank v. Green Mountain Coffee Roasters et al.
Rosen states on its Web site that: ‘A Class Action lawsuit has been filed against Green Mountain Coffee Roasters alleging that the Company and certain of its officers issued inaccurate and unreliable financial statements to the public.
‘On September 28, 2010, Green Mountain disclosed that the SEC had launched an investigation of the Company's revenue recognition accounting. In addition, the Company is expected to restate its financial statements because of improper accounting practices ‘ rendering the Company's prior reported financial statements materially misleading. Following this news, the Company's stock price immediately declined over 15%.’
In part, GMCR’s SEC Form 8-K statement said: ‘In connection with the preparation of its financial results for its fourth fiscal quarter, the Company’s management discovered an immaterial accounting error relating to the margin percentage it had been using to eliminate the inter-company markup in its K-Cup inventory balance residing at its Keurig business unit. Management discovered that the gross margin percentage used to eliminate the inter-company markup resulted in a lower margin applied to the Keurig ending inventory balance effectively overstating consolidated inventory and understating cost of sales. Management determined that the accounting error arose during fiscal 2007 and analyzed the quantitative impact from that point forward to June 26, 2010.
‘As of June 26, 2010, there is a cumulative $7.6 million overstatement of pre-tax income. Net of tax, the cumulative error resulted in a $4.4 million overstatement of net income or a $0.03 cumulative impact on earnings per share.
‘After evaluating the quantitative and qualitative aspects of the error in accordance with applicable accounting literature, including Staff Accounting Bulletins published by the SEC, the Company, with the participation of the audit committee of the Board of Directors, has determined that the correction in the margin calculation represents a correction of an error in accordance with Accounting Standards Codification 250 Accounting Changes and Error Corrections, that the correction was not material to the fiscal years and the respective quarters ended 2007, 2008 and 2009 and that the Company anticipates that the correction will not be material to fiscal year 2010 and the respective quarters of fiscal 2010. As a result, the Company anticipates the cumulative amount of the accounting correction will be made in the quarter ended September 25, 2010.
‘The Company does not intend to provide further updates regarding the correction of this error or the Company’s results for fiscal year 2010 until its fiscal 2010 fourth quarter earnings release and conference call. Additional details regarding the correction of this error will be provided in the Company’s Annual Report on Form 10-K for the fiscal year ended September 25, 2010.’
On the SEC inquiry, the company said in the statement: ‘On September 20, 2010, the staff of the SEC’s Division of Enforcement informed the Company that it was conducting an inquiry and made a request for a voluntary production of documents and information. Based on the request, the Company believes the focus of the inquiry concerns certain revenue recognition practices and the Company’s relationship with one of its fulfillment vendors. The Company, at the direction of the audit committee of the Company’s board of directors, is cooperating fully with the SEC staff’s inquiry.’
GMCR ranked number 2 in a Fortune Magazine listing of the 100 fastest-growing companies worldwide. The Lavazza deal in August was put forth as a collaboration between Lavazza and GMCR in the development of a single-serve espresso system. It would go well with the Keurig single-cup coffee brewing business that has been behind the company’s growth. GMCR acquired two others, California’s Diedrich Coffee for $300 million in May and Timothy’s Coffees of the World of Toronto for $157 million last November.
On October 1, Hagens Berman made the announcement about a lawsuit that was filed against GMCR. The company and some of its Officers are accused of making false statements having to do with the company’s business and operations in violation of the SEC. The company allegedly used invalid financial statements that weren’t prepared with Generally Accepted Accounting Principles and SEC rules, which would have checked the statements for accuracy.
The complaint states that GMCR completed a sale of 8,566,649 shares of its stock to Luigi Lavazza on August 28 with the $250 million purchase price, even though the company was aware that the reported financial statements weren’t true. Also, it didn’t have sufficient internal operational and financial control systems.
Hagens Berman, in investigating this situation, has been paying close attention to the relationship between GMCR and its vendors, which include M Block & Sons Inc. The investigation goes back three years, when management admitted that there were some inconsistencies in its accounting.
In addition, the Law Office of Robbins Umeda LLP conducted an investigation concerning whether the company’s directors and officers caused them to inaccurately state revenue and overstate income. On September 28, it was revealed that Green Mountain had been notified by the SEC of this investigation as early as September 20, and that it was assumed the company would take a restatement charge in the near term.
PRESS RELEASES
Law Offices of Howard G. Smith Announces Investigation On Behalf of Shareholders of Green Mountain Coffee Roasters, Inc.
BENSALEM, Pa.--(BUSINESS WIRE)--Law Offices of Howard G. Smith announces that it is investigating potential claims by Green Mountain Coffee Roasters, Inc. (’Green Mountain’ or the ‘Company’) (NASDAQ:GMCR) concerning possible violations of federal securities law. Green Mountain markets coffee, tea, cocoa and single-cup brewers to retailers such as department stores and club stores, and single-cup brewers to distributors and supermarkets, in the United States and internationally.
‘the Company believes the focus of the inquiry concerns certain revenue recognition practices and the Company’s relationship with one of its fulfillment vendors.’
The investigation concerns the Company’s September 28, 2010, disclosure in a Form 8-K filed with U.S. Securities and Exchange Commission (’SEC’) that on September 20, 2010, the SEC’s Division of Enforcement informed the Company that the SEC was conducting an inquiry and made a request for a voluntary production of documents and information. The Form 8-K further stated that ‘the Company believes the focus of the inquiry concerns certain revenue recognition practices and the Company’s relationship with one of its fulfillment vendors.’
If you purchased shares of Green Mountain between July 28, 2010 and September 28, 2010, if you have information or would like to learn more about these claims, or if you wish to discuss these matters or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Howard G. Smith, Esquire, of Law Offices of Howard G. Smith, 3070 Bristol Pike, Suite 112, Bensalem, Pennsylvania 19020 by telephone at (215) 638-4847, Toll Free at (888) 638-4847, or by email to [email protected], or visit our website at http://www.howardsmithlaw.com.
The Law Office of Robbins Umeda LLP Announces an Investigation of Green Mountain Coffee Roasters, Inc.
SAN DIEGO--(BUSINESS WIRE)--Robbins Umeda LLP has commenced an investigation into possible breaches of fiduciary duty and other violations of the law by certain officers and directors at Green Mountain Coffee Roasters, Inc. ("Green Mountain" or the "Company") (NASDAQ: GMCR). Green Mountain operates in the specialty coffee industry in the United States and internationally. The Company sells approximately 200 whole bean and ground coffee selections, cocoa, teas, and coffees. Green Mountain was founded in 1981 and is headquartered in Waterbury, Vermont.
Robbins Umeda LLP's investigation concerns whether the Company's directors and officers caused the Company to incorrectly recognize revenue, overstate income, and issue materially false and misleading statements related to Green Mountain's business and operations. Specifically, the investigation concerns whether these directors and officers knew that the Company's reported financial statements were untrue and that Green Mountain lacked adequate systems of internal operational and financial controls.
On September 28, 2010, it came to light that Green Mountain was the subject of a U.S. Securities and Exchange Commission ("SEC") investigation regarding the Company's revenue recognition. Further, it was disclosed that Green Mountain had been notified by the SEC of this investigation as early as September 20, 2010, and that the Company was expected to take a restatement charge in the near term. Upon this news, the Company's value fell from $37.01 on September 28, 2010, to close at $31.06 on September 29, 2010, a one day decline of $5.95, or approximately 15%.
If you are a shareholder of Green Mountain, plan to continue to hold your shares, and would like more information about your rights as a shareholder, please contact attorney Gregory E. Del Gaizo at 800-350-6003 or by e-mail at [email protected].
Robbins Umeda LLP is a securities litigation firm, which has significant experience representing investors in shareholder derivative actions, securities fraud class actions, and merger-related shareholder class actions. For more information about the firm, please go to http://www.robbinsumeda.com.
Hagens Berman Announces Securities Fraud Class Action Lawsuit Filed Against Green Mountain Coffee
Investors Who Wish to Be a Lead Plaintiff Must Move by November 29, 2010
SAN FRANCISCO--(BUSINESS WIRE)--Hagens Berman announced today that a securities fraud class action lawsuit has been filed against Green Mountain Coffee Roasters Inc. (Nasdaq: GMCR) in U.S. District Court in Vermont.
Investors who purchased Green Mountain common stock between July 28, 2010 and September 28, 2010, and who wish to move to be a lead plaintiff, must file a motion by November 29, 2010. You may contact our attorneys below to discuss this matter.
Green Mountain and certain of its Officers are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934. The Complaint alleges that Green Mountain artificially inflated the Company's stock price during the Class Period by issuing inaccurate and unreliable financial statements, which were not prepared in accordance with Generally Accepted Accounting Principles and U.S. Securities and Exchange Commission rules.
The Complaint also alleges that Green Mountain completed a sale of 8,566,649 shares of its common stock to Luigi Lavazza on August 28, 2010, for an aggregate purchase price of $250 million, despite the fact that the Company knew its reported financial statements were untrue and that it lacked adequate internal operational and financial control systems.
Following the close of trading on September 28, 2010, shareholders learned that the SEC had launched an inquiry into Green Mountain’s revenue recognition, that it had been notified by the SEC of this investigation as early as September 20, 2010, and that the Company was expected to take a restatement charge in the near term ‘ rendering the Company's prior reported financial statements and reports unreliable, false and materially misleading.
Following this announcement, shares of the Company fell from $37 per share to a low of $27.47 per share.
Hagens Berman has been investigating this matter and, in particular, is focused on the relationship between Green Mountain and its fulfillment vendors, including M Block & Sons Inc. (which accounted for 51 percent of the accounts receivable last year), and the possibility that channel stuffing may have hidden slowing growth. The investigation goes back to 2007 when management admits that its accounting irregularities arose.
If you want to consider moving to be a lead plaintiff, and you bought Green Mountain shares between 2007 and September 28, 2010, you are encouraged to call Reed R. Kathrein at 510-725-3000 for a personal consultation, or contact the Hagens Berman legal team at [email protected].
About Hagens Berman
Seattle-based Hagens Berman Sobol Shapiro LLP represents institutions and investors in complex securities fraud litigation. The firm has offices in Boston, Chicago, Los Angeles, Phoenix, San Francisco and Washington, D.C. Founded in 1993. More about the law firm and its successes can be found at www.hbsslaw.com. Visit the firm’s securities blog atwww.meaningfuldisclosure.com.
GMCR Securities Fraud Lawsuit Update: Kahn Swick & Foti, LLC and Former Louisiana State Attorney General Update Information on Filed Securities Fraud Class Action Against Green Mountain Coffee Roasters
NEW ORLEANS, La.--(BUSINESS WIRE)--Kahn Swick & Foti, LLC ("KSF") and Former Louisiana Attorney General Charles C. Foti, Jr. filed a securities fraud class action lawsuit yesterday against Green Mountain Coffee Roasters, Inc. ("Green Mountain" or the "Company") (NASDAQ:GMCR) in the United States District Court for the District of Vermont, on behalf of purchasers of the common stock of the Company between July 28, 2010 and September 28, 2010, inclusive (the "Class Period"). No class has yet been certified in this action. This complaint, the first filed against the Company, was designated Civil Action No. 2:10-CV-227.
‘sent the company’s stocks tumbling and its estimated the decline wiped out $800 million from Green Market Coffee Roasters market value.’
Today, VPR News reporter Mitch Wertlieb wrote that the disclosure of the news about the GMCR SEC inquiry ‘sent the company’s stocks tumbling and its estimated the decline wiped out $800 million from Green Market Coffee Roasters market value.’ Yesterday, Anders Bylund of The Motley Fool stated that ‘if Green Mountain did indeed fiddle with its revenue policies, that puts the entire income statement in a bad light. If you can’t trust the top line, how on earth could you rely on what the bottom line says after adjustments?’ KSF, which filed this complaint on behalf of shareholders, continues to investigate this case as the stock has dropped again by as much as 6% today. Green Mountain and certain of its Officers (Lawrence J. Blanford, Frances G. Rathke, Richard Scott McCreary, and Michelle V. Stacy) are charged with making a series of materially false and misleading statements related to the Company's business and operations in violation of the Securities Exchange Act of 1934.
On September 28, 2010, following the close of trading, shareholders first learned that Green Mountain was the subject of an SEC investigation into its revenue recognition, that it had been notified by the SEC of this investigation as early as September 20, 2010, and that the Company was also expected to take a restatement charge in the near term -- rendering the Company's prior reported financial statements and reports unreliable, false, and materially misleading. Following this announcement, shares of the Company immediately declined in after-market trading, falling over 15% -- from a close of above $37.00 per share, to a low of $31.25 per share yesterday. Its further decline has taken it down to as low as $27.47 today.
If you are a Green Mountain shareholder and would like to discuss your legal rights and how this case might affect you and your right to recover for your economic loss, you may, without obligation or cost to you, e-mail or call KSF Director of Client Relations, Neil Rothstein, Esq. ([email protected]), toll free at 877-694-9510, or via cell phone any time at 330-860-4092, or KSF Managing Partner, Lewis Kahn ([email protected]), toll free 1-866-467-1400, ext. 200, or via cell phone any time at 504-301-7900. If you wish to serve as a lead plaintiff in this class action by overseeing lead counsel with the goal of obtaining a fair and just resolution, you must request this position by application to the Court by November 29, 2010. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. KSF encourages both institutional and individual purchasers of Green Mountain to contact the firm. The ultimate resolution of any securities class action is strengthened through the involvement of aggrieved shareholders and lead plaintiffs who have large financial interests.
KSF, whose partners include the Former Louisiana Attorney General Charles C. Foti, Jr., is a law firm focused on securities class action litigation with offices in New York and Louisiana. KSF's lawyers have significant experience litigating complex securities class actions nationwide on behalf of both institutional and individual shareholders. To learn more about KSF, you may visit www.ksfcounsel.com.
Izard Nobel LLP Announces Class Action Lawsuit Against Green Mountain Coffee Roasters
WEST HARTFORD, CT, Oct 06, 2010 (MARKETWIRE via COMTEX) ‘ The law firm of Izard Nobel LLP, which has significant experience representing investors in prosecuting claims of securities fraud, announces that a lawsuit seeking class action status has been filed in the United States District Court for the District of Vermont on behalf of purchasers of the common stock of Green Mountain Coffee Roasters ("Green Mountain" or the "Company") (NASDAQ: GMCR) between July 28, 2010 and September 28, 2010, inclusive (the "Class Period").
The Complaint charges Green Mountain and certain of its officers and directors with violations of federal securities laws. It is alleged that defendants made materially false and misleading statements related to the Company's business and operations. Specifically, the Complaint alleges that Green Mountain issued inaccurate and unreliable financial statements that were not prepared in accordance with Generally Accepted Accounting Principles and SEC rules, which artificially inflated the Company's stock price.
On September 28, 2010, after the close of trading, the Company announced it was under investigation by the SEC for issues related to improper revenue recognition. The announcement also revealed that certain of the Company's previously issued financial statements would be restated. On this news, shares of the Company's stock fell from $37 per share to a close of $31.06 per share on the following trading day.
If you are a member of the class, you may, no later than November 29, 2010, request that the Court appoint you as lead plaintiff of the class. A lead plaintiff is a class member that acts on behalf of other class members in directing the litigation. Although your ability to share in any recovery is not affected by the decision whether or not to seek appointment as a lead plaintiff, lead plaintiffs make important decisions which could affect the overall recovery for class members.
While Izard Nobel LLP has not filed a lawsuit against the defendants, to view a copy of the Complaint initiating the class action or for more information about the case, and your rights, visit: www.izardnobel.com/greenmountain/, or contact Izard Nobel LLP toll-free: (800) 797-5499, or by e-mail: [email protected]. For more information about class action cases in general, please visit our website: www.izardnobel.com.
Barrack, Rodos & Bacine Files Class Action Lawsuit Against Green Mountain Coffee Roasters, Inc.
PHILADELPHIA, Nov. 2, 2010 /PRNewswire/ -- Barrack Rodos & Bacine announces that it has filed a class action lawsuit in the United States District Court for the District of Vermont, Blank v. Green Mountain Coffee Roasters et al., Civil Action No. 2:10-CV-267, on behalf of purchasers of common stock of Green Mountain Coffee Roasters, Inc. (Nasdaq: GMCR) ("Green Mountain")during the period from July 28, 2010 through September 28, 2010 (the "Class Period").
The complaint charges Green Mountain and its senior executives with violations of the Securities Exchange Act of 1934. Green Mountain is a leader in the specialty coffee and coffee maker businesses. It sells over 200 whole bean and ground coffee selections, cocoa and teas in the United States and abroad.
The complaint alleges that during the Class Period, defendants issued a series of false and misleading statements based on improper accounting methods used for the company's financial statements. After the close of trading on September 28, 2010, defendants filed a Form 8-K that revealed, for the first time, that Green Mountain was the subject of an SEC investigation into its revenue recognition practices. In the SEC filing, the defendants disclosed that the company had been notified by the SEC of this investigation on September 20, 2010 and that the company believed the focus of the inquiry concerns certain revenue recognition practices and its relationship with one of its vendors. On this news, the price of Green Mountain's common stock dropped from a closing price of $37.01 on September 28, 2010, to close at $31.06 on September 29, 2010, a decline of 16%, on heavy trading volume.
Plaintiff seeks to recover damages on behalf of all purchasers of common stock of Green Mountain during the Class Period. The plaintiff is represented by Barrack Rodos & Bacine, which has significant experience in prosecuting class actions on behalf of investors in cases involving financial and corporate fraud.
If you wish to serve as lead plaintiff, you must move the Court no later than November 29, 2010. To discuss your rights regarding the appointment of lead plaintiff and for additional information about your interest in this class action, please contact plaintiff's counsel, Barrack Rodos & Bacine, at the following toll-free number: 877-386-3304, or via e-mail to Jeffrey Gittleman [email protected]. A copy of the complaint is available from the Court or from Barrack Rodos & Bacine.
www.barrack.com
SOURCE Barrack, Rodos & Bacine
- 30 -