Pursuant to an investigation into its procurement practices, based on an SEC notification, packaged food company Kraft Heinz (Nasdaq: KHC) has decided to restate its financial reports for a period of more than two years to rectify certain errors. The company’s stock declined following the report early Monday but regained momentum as trading processed.
Due to the rectification process, the release of the company’s first-quarter results, which was originally scheduled for this month, will be rescheduled to a later date.
With the probe already in its final stage, the company assured it will cooperate with the authorities and also pointed out that the errors in the accounting statements were not “quantitatively material” to the financial reports. It was found that earnings were not calculated properly, between the reporting periods, due to the discrepancies.
Due to the rectification process, the release of the company’s first-quarter results will be rescheduled to a later date
While the procedures for fixing the anomalies – caused by the misconduct of certain employees – were progressing, the company received a fresh subpoena from the SEC a couple of months ago, in connection with impairments of assets and goodwill.
The review of the financial reports has called for adjustments of approximately $208 million to the costs of products sold. While misstatements were found in the financial reports for the fiscal years 2016, 2017 and 2018, the probe ruled out any involvement by the senior management of the company.
As per the findings of the investigation, a previously announced write-down of the Kraft and Oscar Mayer brands will increase by $13 million. Earlier the amount was pegged at $15.5 billion.
Shares of Kraft opened Monday’s trading notably higher but pared the gains in the early trading hours. The stock is yet to recover from the heavy loss it suffered at the beginning of the year after reporting dismal results for the fourth quarter.