Green Mountain Shares Plummet After $4.4 Million Accounting Error Is Revealed

Green Mountain Shares Plummet After $4.4 Million Accounting Error Is RevealedGreen Mountain Coffee Roasters' (GMCR) stock plummeted 17.4% to as low as $30.55 in morning trading Wednesday after the company announced that it had discovered accounting errors dating back to 2007, and that the Securities and Exchange Commission had started a probe. Green Mountain said the accounting error produced an overall overstatement in net income of $4.4 million, or 3 cents a share, as of June 26.

The accounting error was discovered when Green Mountain's management was preparing its fourth-quarter financial results. The company found that it had been overstating its consolidated inventory and understating its cost of sales relating to its Keurig business unit. That business unit handles Green Mountain's K-Cup inventory, according to its SEC filing.

According to the company, the error traces back to fiscal 2007, and Green Mountain applied its impact from that point forward. The company said the damage was not great enough to any one quarter or year to be retroactively applied: Instead, the cumulative effect will be reflected in the numbers for the last quarter, which ended Saturday.

SEC officials contacted Green Mountain early last week, saying Commission was conducting an inquiry and wanted various documents and information. Green Mountain says it believes regulators are focusing on how and when it accounts for its revenues and its relationship with one of its vendors that fulfills its orders.

For Green Mountain, the discovery of this error is occurring at an already busy time. Just two weeks ago, the company announced plans to acquire gourmet coffee roaster Van Houtte in an $891 million deal.

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too big too fail? allah akbar!

September 29 2010 at 1:12 PM Report abuse rate up rate down Reply

all they going to do is raise up there price of coffee and make 5 million so they smart to say they lost money greed

September 29 2010 at 12:07 PM Report abuse +1 rate up rate down Reply
1 reply to daveswrath0704's comment

They're (not there) in business to make money. They don't owe you a damn thing. Don't like their prices, don't buy their product. That's the way the markets work. If you ever ran a business, you'd charge whatever you could, too. I do. Unfortunately for me, my business has a fair amount of competition and prices have dropped a bit in the last couple of years. Are my customers saying "There, there, that's OK. We'll pay the old price"? Of course not. But I'm not sitting here calling them "greedy". That is the way markets work and I understand and accept that. Pity that more people don't.

September 29 2010 at 1:13 PM Report abuse rate up rate down Reply