Dean Foods Could Face SEC Lawsuit

CHICAGO - Dean Foods Co. said Wednesday that federal securities regulators are considering filing civil charges against the company alleging that it assisted bankrupt Fleming Cos. with questionable bookkeeping entries.

Dean, the largest U.S. dairy processor, also said its quarterly earnings surged, helped by a one-time gain from the sale of its frozen whipped topping business.Dean shares were slightly lower in early trading.

The Dallas-based company said the SEC believes it assisted Fleming in characterizing two payments Dean made to the food distributor as current income rather than deferred revenue. Dean said the SEC has made no allegations about its own financial statements. It said it expensed the payments, which totaled $2.7 million, when they were made in the second and third quarters of 2002.

Dean said it had been notified by the SEC of the possible charges against the company. Under SEC procedures, Dean has the opportunity to respond in writing before the agency makes a formal decision. Dean said it is cooperating fully with the SEC and does not expect the matter to have any material impact on the company.

Dean 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. Excluding one-time items, the company earned 52 cents per share, in line with the average estimate among analysts polled by Reuters Research, a unit of Reuters Group Plc.

Sales rose 3 percent to $2.3 billion, due in part to higher raw material costs the company passed on to customers. The company said it continues to expect fourth-quarter earnings of 54 cents to 56 cents a share and full-year profit of $2.03 to $2.05 a share. For 2004, the company expects profit of $2.28 to $2.34 a share, excluding nonrecurring items. Analysts on average expect fourth-quarter earnings of 55 cents a share, full-year 2003 earnings of $2.06 a share, and 2004 earnings of $2.33 a share.

Dean shares were down 20 cents to $30.50 on the New York Stock Exchange.
X
This ad will auto-close in 10 seconds