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Krispy Kreme Doughnuts, Inc. Message Board

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  • di_vur_se_fi di_vur_se_fi Feb 21, 2005 11:25 AM Flag

    Tangible Book Value May Be Negative

    We already knew that: the UNCONSOLIDATED franchisees were financed with equity investments, loans, loan guarantees, and (mother kkd) accounts receivable to purchase equipment at greatly inflated prices.

    What we didn't know is that kkd was apparently (if the 10-k statement is to be taken literally and why shouldn't it be, as perspicuator says) using the inflated prices to markup equipment that they SOLD TO THEMSELVES, i.e. the COMPANY STORES and CONSOLIDATED franchisees, to book additional profits (thru a reduction in costs which is the same thing).

    The action in the first paragraph was one of the main reasons I was short from $36 (and above) down to under $10 (and is allowed by gaap). The second paragraph is more than ample reason to be short to $0 (and is in no way allowed by gaap, in fact, it's the antithesis of gaap), imo.

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