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Showing posts from February, 2011

Is Green Mountain Coffee Going to Get Roasted by its Exes?

Last week, lawyers representing investors filed an amended class-action lawsuit against Green Mountain Coffee Roasters (NASDAQ: GMCR) and members of its management containing new allegations of wrongdoing based on information:
…obtained from confidential witnesses, including former Green Mountain Coffee Roasters, Inc. ("GMCR" or the "Company") and M.Block & Sons, Inc. ("MBlock") employees…. [Emphasis added.]Note:Download the amended class-action complaint here.

The three exes

In law enforcement circles, there is a term known as the “three exes” for ex-lovers, ex-employees, and ex-business associates. In many cases, such informants provide crucial information to law enforcement agencies that investigate and prosecute white-collar crime. In this case, the amended complaint is based on detailed first-hand accounts of alleged wrongdoing by the company obtained from several ex-employees and ex-business associates who are identified as "confidential"…

A Question for the CFO of Green Mountain Coffee Roasters

To Green Mountain Chief Financial Officer Frances G. Rathke:

On September 20, 2010, the Securities and Exchange Commission (SEC) started an informal investigation of the Green Mountain Coffee Roasters (NASDAQ: GMCR). Since that time, I’ve written several blog posts critically examining Green Mountain’s compliance with certain accounting and disclosure rules.

This time, I have a question. How was Green Mountain Coffee Roasters able to report income before taxes in its Timothy’s Coffee of the World Inc. subsidiary that exceeded revenues in the thirteen-weeks ended June 26, 2010? While I wait for an answer from you, please let me explain to my readers why I am asking the question. You may listen in, too.

My question is based on the following computations

On November 13, 2009, Green Mountain acquired Timothy’s Coffee of the World and its operations were integrated into the company’s SCBU segment. In the quarter ended December 26, 2009 10-Q report, Green Mountain reported the following finan…

Green Mountain Coffee Roasters: Murky Financial Disclosures

Updated

Just about every time, I examine financial reports issued by Green Mountain Coffee Roasters (NASDAQ: GMCR), I find new troubling accounting practices and financial disclosures. For example, in my last blog post I questioned whether the company correctly considered a certain accounting error as an "immaterial accounting error" when it was originally reported to investors. In this blog post, I will examine Green Mountain's segment reporting and non-GAAP financial presentations and raise questions whether they properly comply applicable accounting and SEC disclosure rules. In addition, I will discuss other new reporting errors disclosed by Green Mountain in its latest 10-Q report.

Last Saturday, fellow Seeking Alpha contributor Jason Merriam noted in his article that, "The accounting practices at Green Mountain Coffee Roasters (GMCR) are not baffling...they are downright ludicrous." I think Green Mountain's financial disclosures are both baffling and lu…