Headline: IBP Cost May Hit $161.9 Milion for Unit’s Mess

Source: Wall Street Journal, 23 Feb 2001, page A8 [excerpt]

[No URL, this is hand typed]

IBP Inc. said it might take an additional pretax charge of up to $108 million against its 2000 results to reflect accounting irregularities at a small Chicago appetizer business it bought two years ago.

This latest move increases the Dakota Dunes, S.D. meatpacking company’s estimate of the potential cost for fixing the accounting debacle to as much as $161.9 million.

IBP is under pessure to quickly clean up the mess. Tyson Foods Inc…has balked at going through with its $3.2 billion takeover agreement...until it knows the full extent of the fallout from the IBP appetizer unit, which is called DFG Foods...

...Among other things, it still isn’t clear to outsiders what exactly went so spectacularly wrong at IBP’s appetizer unit, or why it wasn’t caught sooner by IBP or its independent auditor, PricewaterhouseCooper. What IBP has said so far is that the accounting problems are due in part to overstated inventory value...

"...IBP will pursue all parties responsible for the misrepresentations and inaccuracies identified" the company said...

...The problems at IBP’s appetizer business first came to light in November [2000], when IBP took a $9 million pretax charge against third-quarter earnings to reflect "overstated inventory value" in the financial records of the DFG Foods unit...

[Andre’s comment: Gee, could the mysterious "accounting debacle" be yet another Y2K-related back-office snafu? Of course not, as we know that nothing did you hear me NOTHING went wrong from Y2K...]

-- Andre Weltman (aweltman@state.pa.us), February 26, 2001