ATLANTA, March 28, 2003 (PRIMEZONE) -- Chitwood & Harley announces that it has filed a class action lawsuit in the United States District Court for the Northern District of Georgia on behalf of purchasers of securities of AFC Enterprises, Inc. ("AFC" or the "Company") (Nasdaq:AFCE) between March 2, 2001 and March 24, 2003 (the "Class Period"). The civil action number is 03-EV-0836. A copy of the complaint is available on our website, www.classlaw.com.
The suit is brought against AFC, Frank J. Bellati (CEO), and Gerald J. Wilkins (CFO). The deadline to file lead plaintiff papers, for those class members wishing to serve in this capacity, is May 27, 2003. There are certain legal requirements to serve as lead plaintiff, which we would be happy to discuss with you. Any member of the purported class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. If you wish to discuss this action or have any questions concerning this notice or your rights with respect to this matter, you may contact Lauren Antonino or Jennifer Morris at 1-888-873-3999 (toll-free) or by e-mail at jlm@classlaw.com. You may also contact us through our website at www.classlaw.com by clicking on AFC ENTERPRISES.
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.
Chitwood & Harley LLP is a class action firm that concentrates its practice in representing victims of securities fraud and corporate mismanagement, as well as other complex litigation. Chitwood & Harley has been appointed lead counsel in major actions throughout the United States and has been instrumental in recovering billions of dollars on behalf of its clients. Clients and courts alike have praised the results achieved by Chitwood & Harley. Recently, the federal judge in In re BankAmerica Securities Litigation, which resulted in the highest recovery last year in a securities class action, commented favorably on counsel's performance stating: "Class members were well served by experienced attorneys who, through considerable time and effort, obtained a significant recovery for their clients," and, "(a)s the Court has remarked throughout this litigation, class counsel ... have performed at exceptionally high levels, and all parties have been exceedingly well represented."
For more information about Chitwood & Harley, please visit our website at www.classlaw.com or contact Jennifer Morris at 1-888-873-3999 (toll-free), by e-mail at jlm@classlaw.com or at 1230 Peachtree Street, Suite 2300, Atlanta, Georgia 30309.