Updated from 9:16 a.m.
on Monday delayed filing its annual report for the second time, citing problems with its books that the company said could end up pushing it to "consider alternative courses of action."
Shares in the Kansas City, Mo., bakery company plunged 28% after Interstate said it would defer filing its 10-K for the year, ended May 29, until it was able to make better judgments about its financial status. The company said the latest delay arose out of "initial data entry and training deficiencies" in its reporting systems, as well as uncertainty about its first-quarter numbers stemming from those deficiencies.
Interstate Bakeries said that because of a lack of dependable financial information, it is unclear whether the company is in violation of any lending covenants or whether its auditors may need to issue a going concern qualification on its financials. Interstate said it would talk with its banks, but warned that a third failure to file -- this time by Sept. 26 -- could result in lenders cutting off the company's credit. Interstate said such a scenario could force the company "to consider alternative courses of action that are typically considered by companies in similar circumstances."
Interstate hired Alvarez & Marsal to "aggressively deal with these matters and pursue an effective going-forward business strategy."
The company said it had gotten an extension last Friday to file the 10-K "because of delays encountered in finalizing its audited financial statements for its 2004 fiscal year, arising from its previously announced investigation of the company's manner of setting its workers' compensation reserves and other reserves."
On Monday, Interstate fell $2.23 to $5.67.