DOYLESTOWN, Pa., April 11, 2003 (PRIMEZONE) -- Hoffman & Edelson, LLC today announced that it has filed a class action in the United States District Court for the Northern District of Georgia on behalf of purchasers of the securities of AFC Enterprises, Inc. ("AFC" or the "Company") (Nasdaq:AFCE) during the period from March 2, 2001 through March 24, 2003, inclusive (the "Class Period"), and who suffered damages thereby, against AFC and certain of its officers.
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. According to the complaint, the Company's Class Period statements were materially false and misleading because the press releases and SEC filings issued during the Class Period failed to reveal that AFC inflated its operating results by:(1) improperly accounting for the sale of corporate-owned stores to franchisees; (2) improperly accounting for the value of certain long-lived assets; (3) understating advertising costs; and (4) improperly accounting for inventory at the Company's Seattle Coffee Company division. As a result of the Company's fraudulent accounting, AFC'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 by over 20% on extremely heavy trading volume. AFC insiders privy to the Company's fraudulent accounting practices did not share investors' losses. In a December 2001 public offering, AFC insiders unloaded 7,000,000 shares of their holdings at $23 per share . Indeed, during the Class Period, defendants and other Company insiders cashed out at prices as high as $34 per share, reaping profits of over $30 million.
If you purchased the securities of AFC during the Class Period, you may, no later than May 27, 2003, request that the Court appoint you as lead plaintiff. A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, you must meet certain legal requirements. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as lead plaintiff. You may retain Hoffman & Edelson, LLC, or other counsel of your choice, to serve as your counsel in this action.
If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, please contact Jerold B. Hoffman at Hoffman & Edelson, LLC, 45 W. Court Street, Doylestown, PA 18901 at 877-537-6532 (toll free), fax number 215-230-8735 or by e-mail at jhoffman@hofedlaw.com.
More information on this and other class actions can be found on the Class Action Newsline at www.primezone.com/ca.