U.S.: Back-room accounting error? (Aurora Foods)

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"Aurora said an error in how it keeps track of spending led to greater spending on promotions."


Headline: Aurora Foods Notches Down Cash Flow View

Source: Reuters, 8 August 2001

URL: http://www.nytimes.com/reuters/business/business-food-aurora-.html

ST. LOUIS - Aurora Foods Inc., the maker of Duncan Hines cake mixes and Log Cabin syrup, on Wednesday cut its cash flow expectations for 2001 by almost 3 percent after it spent more than planned on promotions.

The St. Louis-based company, in the midst of a turnaround, said it expects adjusted earnings before interest, taxes, depreciation and amortization, a measure of cash flow known as EBITDA, to be in a range of $170 million to $175 million, down $5 million from expectations of $175 million to $180 million.

Aurora said an error in how it keeps track of spending led to greater spending on promotions. The error was charged to the second quarter and has been corrected.

On a bright note, the company said its growth in cash flow showed the improving state of the company's finances. EBITDA was $152.7 million in 2000.

The company said that its case volume in July increased 16 percent from year-ago levels. Carry-over orders going into August were also up significantly.

``Our second-quarter financials clearly demonstrate the improving health of the company,'' said Chief Executive James Smith in a statement. ``The first six months double-digit EBITDA growth was well in excess of current projected food company averages, and we expect similar growth in the balance of the year.''

-- Andre Weltman (aweltman@state.pa.us), August 08, 2001

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