The Kraft Heinz Company (NASDAQ:KHC)
Historical Stock Chart
3 Months : From Apr 2019 to Jul 2019
By Allison Prang and Heather Haddon
Kraft Heinz Co. said it is restating a host of financial statements dating as far back as 2016, after it determined they included certain misstatements.
The food company said an investigation revealed misconduct by several staffers in its procurement division. The probe is largely finished and senior management wasn't involved in the misconduct, Kraft said in a filing with the Securities and Exchange Commission.
Kraft disclosed in February that the SEC was investigating the procurement division's accounting practices.
Shares fell 1% in premarket trading Monday.
Investors have been watching for updates from Kraft in the three months since it disclosed the investigation and said it was writing down the value of some of its brands by $15 billion. Lead investor Warren Buffett has since said that Berkshire Hathaway Inc. and 3G Capital overpaid when they helped form Kraft Heinz through a merger in 2015. Mr. Buffet defended the company during his annual meeting, but reiterated that deals can sour by paying too much.
Kraft has yet to file its full-year financial report for 2018 while it has conducted an investigation into the accounting problems. Kraft entered into an agreement with its lenders to file its financial statements by May 14, it said in a filing.
A Kraft spokesman said the food giant was pleased that the investigation was wrapping up. "The Company is taking action to improve our policies and procedures and will continue to strengthen our internal financial controls," he said.
Kraft now faces lawsuits in the wake of the investigation and write-down. Several pension funds are suing in regards to the company's plunging stock. Trading firm Timber Hill has filed a case detailing allegations of insider trading.
Kraft said it is restating its financial statements for its 2016 and 2017 annual reports. It is also restating quarterly periods in its 2017 fiscal year and the year-to-date and quarterly periods that ended Sept. 29 of last year.
Kraft said it decided on May 2 that those financial statements couldn't be relied upon because of the misstatements, which it said were small.
The company said it is restating them "due to the qualitative nature of the matters identified in the investigation, including the number of years over which the misconduct occurred and the number of transactions, suppliers, and procurement employees involved."
It said its preliminary findings show that net income for 2016, 2017 and 2018 will change by less than a percentage point.
The company said it has already taken and it will continue to take personnel actions and steps to fix controls internally.
Kraft said it has adjusted what its cost of products sold has been in recent periods, adding that the misstatements are related to when some costs were recognized.
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(END) Dow Jones Newswires
May 06, 2019 08:39 ET (12:39 GMT)
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