Lead Plaintiffs Jerry Warchol, Robert M. and Jennifer M. Nichols,LorenMarc Schmerlerand Mike Shanley (“Plaintiffs” or “Lead Plaintiffs”), have alleged the following based upon theinvestigation of Plaintiffs’ counsel, which included information obtained from confidentialwitnesses, including former Green Mountain Coffee Roasters, Inc. (“GMCR” or the “Company”)and M.Block & Sons, Inc. (“MBlock”) employees, a review of United States Securities andExchange Commission (“SEC”) filings by GMCR, as well as regulatory filings and reports,securities analysts’ reports and advisories about the Company, and media reports, press releases andother public statements issued by or about the Company. Plaintiffs believe that substantial additionalevidentiary support will exist for the allegations set forth herein after a reasonable opportunity fordiscovery.
NATURE OF THE ACTION
This is a federal securities class action on behalf of purchasers of the common stock of GMCR between July 28, 2010 and September 28, 2010, inclusive (the “Class Period”), seeking topursue remedies under the Securities Exchange Act of 1934 (the “Exchange Act”).2.
Defendant GMCR is engaged in the specialty coffee and coffee maker business,selling a variety of whole bean and ground coffee, cocoa, and teas under more than a dozen brandnames. The Company’s business is largely concentrated in the manufacture and marketing of gourmet single-cup coffee and tea brewing systems under the Keurig brand name. The Keurigbrewing system consists primarily of K-Cups, or single-cup brewing packages, and K-Cup brewersand related accessories, which, during fiscal 2010, respectively accounted for approximately 62%and 24% of the Company’s total revenue.3.
This case concerns deceptive accounting and financial reporting practices at GMCR.As detailed further herein, GMCR has admitted to certain improper accounting practices, which areprimarily associated with the Company’s reporting of revenue, and has restated its previously issued
Case 2:10-cv-00227-wks Document 65-2 Filed 03/27/12 Page 2 of 64