ID NEWS: Financial media gets inside peek at USF problems

According to a Dow Jones story released late Wednesday afternoon, U.S. Foodservice (USF), Columbia, MD, pushed distribution centers to stock up on inventories that "at times weren't needed and wouldn't be sold for months," in order to meet vendor commitments (Dow Jones cites access to internal memos concerning these mandated "buy-ins.")

Volume programs were a high priority-too high a priority-- according to this and other media reports.

Problems in accounting of manufacturer promo monies tied to volume programs forced USF parent Royal Ahold, Zaandam, The Netherlands, to announce last week it would have to restate earnings. The announcement sparked class action suits by investors and announcements of investigations by the Securities and Exchange Commission (SEC) and U.S. Attorney's office.

Key purchasing and marketing personnel at USF have been suspended pending the outcome of the investigations. A key problem: USF promo allowances were "in some instances booked too high," the chairman of Ahold's supervisory board, Henny de Ruiter, told the New York Times.

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