Good News, Bad News Day for Fleming
By George Anderson
Yesterday was one of those good news/bad news days for Fleming.
First, the good news. Fleming announced that Save Mart Supermarkets has agreed to buy 28 Food4Less stores in California. The sale is expected to net up to $165 million for the wholesaler, which intends to pay down existing debt with the proceeds.
The bad news came with a company announcement that it was under informal investigation by the Securities and Exchange Commission (SEC).
The SEC investigation will include:
- Fleming’s vendor trade practices
- The company’s presentation of second quarter 2001 adjusted earnings per share data in Fleming’s second quarter 2001 and 2002 earnings press releases
- The company’s accounting for drop-ship sales transactions with an unaffiliated vendor in Fleming’s discontinued retail operations
- The company’s calculation of comparable store sales in its discontinued retail operations.
After pledging support for the SEC investigation, Fleming’s chairman of the board and chief executive officer, Mark Hansen said, “I hope, however, that this event does not detract from the very significant announcement we made earlier today regarding the first agreement to sell a number of our retail stores and the supply agreement we entered into with Save Mart Supermarkets.”
Moderator’s Comment: Is Fleming’s glass half full or
half empty?
The SEC investigation is the least of Fleming’s problems,
right now. [George
Anderson – Moderator]