"We're trying to reduce expenses and bring them in line with the needs of the business," Rob Meyne, vice president of corporate communications, was quoted as saying. "To the extent possible, we tried to consolidate and make the business more efficient by reducing excess operations and losing people."
Meyne said he would not know until the end of the month how many of the country's second largest distributorship's 29,000 employees would lose their jobs. About half of the discharged people were in administrative positions and the remainder worked at the company's 70 divisions across the country, he said. Some of the jobs were duplicate ones created over the years as U.S. Foodservice acquired other companies, the distributorship explained.
U.S. Foodservice, a division of Dutch-based Royal Ahold, recently closed or scaled back two facilities.
Meyne said he expected the personnel downsizing to be completed in a couple of weeks.
"What we hope to do is roll through the majority of this process by the end of the year. Our intention is to get this process behind us and start 2006 with a fresh plate and a great team in place," he said.
The source of the distributorship's troubles has been its overstating profits by more than $1 billion from 2000 to 2002, which Ahold revealed in February 2003. The company had improperly reported hundreds of millions of dollars in volume rebates and promotions that food manufacturers pay to distributors in exchange for shelf space in warehouses.
Federal regulators stated that U.S. Foodservice provided auditors with false information by persuading their vendors to corroborate overstated promotional allowances. Several former U.S. Foodservice executives and vendors that did business with the company still face criminal charges.
In November, Ahold agreed to pay $1.1 billion to settle a securities fraud class action lawsuit brought by U.S. shareholders and announced it was splitting U.S. Foodservice into two divisions