SEC Probe Into Fleming Case Catches US Food Cos

New York, Nov 6: | Updated: Nov 7 2003, 05:30am hrs
At least two major US food companies may face civil charges from federal regulators on allegations that they helped food distributor Fleming Cos. inflate its revenue. Kraft Foods Inc., the largest North American food maker, and Dean Foods Co., the No 1 US dairy processor, both said on Wednesday they received notices from the US Securities and Exchange Commission on the matter.

According to the notices, employees at both companies signed documents that allowed now-bankrupt Fleming to book revenue as current income rather than as deferred revenue to be recognized in future periods.

Fleming Cos Inc , once the leading US grocery distributor but now a shell of its former self, is being investigated by the SEC for a host of issues, including its vendor trade practices, accounting for some sales transactions, and its presentation of earnings.

Kraft and Dean said their own accounting for the transactions was not at issue, and both said they planned to cooperate fully and respond to the SEC, which offers the companies an opportunity to explain why they should not have any action brought against them. "The company cant comment on this while its under investigation," said a Fleming spokeswoman.

In a statement, Dean noted that the payments in question totaled $2.7 million and were expensed by the company when they were made in the second and third quarters of 2002."Were very comfortable with our accounting and our treatment of this," Michelle Goolsby, Deans general counsel, said on a conference call.

Louis Camilleri, chairman of Kraft and its majority shareholder Altria Group Inc, told investors at a conference on Wednesday that the matter would not affect Altrias numbers.