Dean Foods Co, the Dallas TX-based dairy processor, said Securities and Exchange Commission (SEC) regulators are considering civil charges against the company alleging that it assisted bankrupt Fleming Companies with questionable bookkeeping entries.
Regulators believe Dean provided Fleming with correspondence that allowed Fleming to characterize two payments made to it by Dean as current income rather than deferred revenue to be recognized over future periods.
The SEC has made no allegations about Dean's own financial statements. It said Dean expensed the payments, which totaled $2.7 million, when they were made in the second and third quarters of 2002.
Under SEC procedures, Dean can respond in writing before the agency makes a formal decision. The company said it is cooperating fully with the SEC and does not expect the matter to have any material impact on the company.
In related news, Dean's quarterly earnings surged, helped by a one-time gain from the sale of its frozen pre-whipped topping business. The firm reported third-quarter profit of $122.2 million, or 76 cents a share, up from $68.7 million, or 45 cents a share, a year earlier.
Third-quarter net sales totaled $2.3 billion in 2003, an increase of 3% over third-quarter 2002.