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Showing posts from April, 2012

Is Green Mountain Coffee’s Inventory a Toxic Brew?

Does Green Mountain Coffee Roasters (NASDAQ: GMCR) have a problem managing its inventory levels or is the company inflating its inventories to overstate its reported profits as alleged in a class action lawsuit against the company? The Securities and Exchange Commission is investigating Green Mountain Coffee's accounting practices.

Decreasing inventory turnover

Over the last two fiscal years, Green Mountain Coffee’s inventory turnover substantially decreased to 3.74 turns per year in the fiscal year ended September 24, 2011 compared to 4.72 turns per year in the previous fiscal year ended September 25, 2010. It took the company an average of 97.69 days to sell its inventory in fiscal year 2011 company compared to 77.36 days to sell its inventory in fiscal year 2010. In other words, it took about 22 days longer for the company sell its inventory in fiscal year 2011 than in fiscal year 2010.

The above consolidated numbers appear to mask the full extent of Green Mountain Coffee’s decl…

Green Mountain Coffee Roasters Disclosure Controls: Have They Really Improved?

Green Mountain Coffee Roasters (NASDAQ: GMCR) claims to have gone to great lengths to remediate its internal control and compliance problems since the Securities and Exchange Commission started an inquiry of the company in September 2010 and since it restated its financial reports due to material accounting errors. However, certain contradictory disclosures by the company call into question the sincerity of its remedial efforts.

In a press release dated February 22, 2011, Green Mountain Coffee announced:

WATERBURY, Vt.--(BUSINESS WIRE)-- Green Mountain Coffee Roasters, Inc. (NASDAQ: GMCR), a leader in specialty coffee and coffee makers, announced today the appointment of Linda Kazanova as Vice President and Chief Human Resources Officer effective Thursday, February 17, 2011. [Emphasis added.]
On November 14, 2011 Green Mountain Coffee filed its fiscal year ended September 24, 2011 10-K report with the Securities and Exchange Commission. On page F-43, the company reiterated that Linda …