It’s not just their food that’s fattening…

December 17, 2003

Investors in AFC Enterprises (AFCE.PK) lost big when the company announced earlier this year that its stock was being delisted from NASDAQ because of its failure to file its 2002 10-K. Since August, the stock for the company that owns and franchises Popeye’s and Church’s fried chicken restaurants, as well as Cinnabon stores, has been trading in the pink sheets because of its inability to file the 10-K. But on Monday, the company, which went public in March 2001, finally filed and restated its financials all the way back to 1998. In a conference call yesterday, Chairman and CEO Frank Belatti basically chalked up the restatements to “accounting errors”, adding that “there was no intentional fraud”. That must be why the company’s former CFO, Gerald Wilkins, who resigned for the oft-used “personal reasons” back in April and presumably oversaw the inflated financials that misled investors, walked away with a heap of goodies, according to the 10-K. In addition to $647,000 in severance and a $129,550 consulting contract, AFC accelerated the vesting of approximately 65,000 stock options, including 5,000 shares with a strike price of $13.13, well below the $18.75 the stock is currently trading at. Wilkins also received $37,000 in what the company describes as “additional benefits” and still owes the company around $400,000 for money he borrowed back in 1999 to purchase AFC stock. Now that’s a pretty fattening meal!

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