BALA CYNWYD, Pa., March 26, 2003 (PRIMEZONE) -- Law offices of Brodsky & Smith, LLC today announced that a securities class action lawsuit has been filed on behalf of shareholders who purchased the common stock and other securities. The class action lawsuit was filed in the United States District Court for the Northern District of Georgia on behalf of all purchasers of the common stock of AFC Enterprises, Inc. ("AFC" or the "Company") (Nasdaq:AFCE) from March 2, 2001 through March 24, 2003, inclusive (the "Class Period").
The Complaint alleges that defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and Rule 10b-5 promulgated thereunder, by issuing a series of material misrepresentations to the market between March 2, 2001 and March 24, 2003, thereby artificially inflating the price of AFC securities.
The Complaint alleges that these statements were materially false and misleading because they failed to disclose and misrepresented the following adverse facts, among others: (a) that the Company was improperly accounting for the value of certain long-lived assets, thereby artificially inflating its operating results; (b) that the Company was improperly accounting for the sale of corporate-owned stores to franchisees, thereby artificially inflating its operating results; (c) that the Company was improperly accounting for cooperative advertising costs, thereby understating its advertising expenses and artificially inflating its operating results; (d) that the Company's Seattle Coffee Company was improperly accounting for inventory, sales allowances and slotting fees; and (e) as a result of the foregoing, the Company's financial statements published during the Class Period were not prepared in accordance with Generally Accepted Accounting Principles and, therefore, it was not true that the Company's financial statements were a ``fair presentation'' of the Company's financial position.
Indeed, by announcing its intention to restate its financial statements, AFC has admitted that its prior financial statements were materially false and misleading when issued.
On March 24, 2003, after the market closed, AFC shocked the market by announcing that it would be restating its financial statements for fiscal year 2001 and the first three-quarters of 2002. The Company also reported that it was examining whether or not its financial statements for fiscal year 2000 should be restated. In response to this negative announcement the price of AFC common stock dropped precipitously, falling to as low as $12.30 per share, on extremely heavy trading volume.
No class has yet been certified in the above action. Until a class is certified, you are not represented by counsel unless you retain one. If you purchased the stock listed above during the Class Period, you have certain rights. To be a member of the class you need not take any action at this time, and you may retain counsel of your choice.
If you were a purchaser of this stock between March 2, 2001 through March 24, 2003 and want to discuss your legal rights, you may call the law office of Brodsky & Smith, LLC (Marc L. Ackerman, Esquire or Evan J. Smith, Esquire ) at toll free 877.534.2590, who will, without obligation or cost to you, attempt to answer your questions. You may also contact us at Brodsky & Smith, LLC, Two Bala Plaza, Suite 602, Bala Cynwyd, PA 19004, or by e-mail at clients@brodsky-smith.com. Please also feel free to visit our website at www.brodsky-smith.com to access a certification.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca