Dean Foods in settlement talks with SEC
May 12, 2004
According to Reuters, dairy processor Dean Foods Co., and the U.S. Securities and Exchange Commission (SEC) are in settlement talks of an investigation into Dean''s dealings with bankrupt food distributor Fleming Cos., the company said. In a quarterly regulatory report filed on Monday, Dean said it does not expect either the probe or the settlement to have "a material adverse impact on our company." Dallas-based Dean is one of several U.S. food companies that received notices late last year from the SEC, known as "Wells Notices," regarding allegations that they helped Fleming inflate its revenue. According to the notices, employees at Dean, Kraft Foods Inc. and PepsiCo Inc. unit Frito-Lay signed documents that allowed Fleming to book revenue as current income rather than as deferred revenue to be recognized in future periods. Dean has said 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. Fleming, which was once the leading U.S. grocery distributor, 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.