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Kraft Heinz To Reissue Its Previous Earnings Due To Employee Misconduct


05/06/2019


Kraft Heinz To Reissue Its Previous Earnings Due To Employee Misconduct
Kraft Heinz Co., which is being investigated by the United States Securities and Exchange Commission in relation to its procurement activities, would be restating its annual financial results for the financial years 2016 and 2017, as well as for the nine months of 2018 because of misreporting of facts by a section of its procurement staff.
 
It had found several instances of misconduct on the part of its staff on a number of occasions in its procurement operations, the company said in a regulatory filing to the SEC. All of the misconducts that were wrongly reported in its earlier financial statements have since been corrected and adjustments for the same have been made in the newly prepared financial statements. The adjustments mainly resulted in increase of the total cost of products that had been sold during the reporting period mentioned earlier – when the misconduct had taken place. None of the members of the senior management team of the company wer5e found to be part of that those misconducts following an investigation.
 
The internal investigation that was conducted by the company was "substantially complete" and that the misstatements were "not quantitatively material to any quarter", Kraft said.
 
The company also found some misconducts on the part of the suppliers which may or may not have resulted from the misconduct tied to its procurement operations, after review of the suppliers, the company said. All of the affected financial statements are being corrected by the company.
 
About $208 million in required adjustments have been identified by Kraft and about $27 million of that was recorded and reported in the fourth quarter of 2018 towards the cost of products sold in that period.
 
An additional subpoena was also received by it from the SEC on March 1, Kraft also mentioned in its regulatory filing. That subpoena is related to the manner in which the company had assessed goodwill and intangible asset impairments and that the SEC may ask the company for additional requests for information which could include through a subpoena. It continues to fully co-operate with the SEC, the company said.
 
Kraft Heinz has his confidence, billionaire Warren Buffett said during a television interview on Monday. About one quarter of Kraft Heinz is owned by Buffett's Berkshire Hathaway.
 
In the fourth quarter of 2018, Kraft Heinz reported a loss of $12.6 billion in its rennet sale revenues and the growth for net revenues was flat year on year. In addition to slashing its dividend, the company had also taken a $25 million charge because of the SEC investigation. The delays in its 2018 annual filing means that it would not be able to file its first quarter financial results on time, Kraft Heinz said.
 
The rising trend of consumers looking to consume food that they perceive is healthier or fresh has delivered a hit to the Pittsburgh and Chicago based company. Consumers have been staying away from its familiar stable of brands like Jell-O, Kool-Aid and Velveeta towards fresher, healthier food.
 
(Source:www.bnnbloomberg.com)