SHEBOYGAN, Wis. -- What does Fresh Brands here, which owns 27 stores and distributes to another 73 franchisees, have in common with such giants of American business as General Electric Co. and Xerox Corp.?
A&P, Montvale, N.J., and Supervalu, Minneapolis, have also had to correct their previous statements.)
In Fresh Brands' case, the problem stems from its relationship with one of its direct-store-delivery meat vendors. The company said orders from the nine supermarkets were delivered by the vendor to Fresh Brands' meat distribution center and shipped from there to the stores. Sales were properly recorded, Fresh Brands explained, but the company failed to record accurately the corresponding cost of goods sold.
In late July, Fresh Brands said it would have to restate earnings for fiscal 1999, 2000 and 2001. It expected that the aggregate after-tax impact to earnings would be $400,000, plus an additional $180,000 after-tax in accounting and legal costs.
In August, when Armand Go, Fresh Brands' chief financial officer, left the company, Fresh Brands clearly stated, in both a release and a conference call, that his departure had nothing to do with the restatement. In the interview for the accompanying article, Elwood Winn, Fresh Brands' president and chief executive officer, added that the restatement had nothing to do with the company's June hiring of KPMG to succeed Arthur Andersen as its independent auditor.
"We had inadvertently failed to record accurately the cost of goods sold as part of a unique relationship with one of our direct-delivery-beef vendors," he said.