Fresh Brands, the Sheboygan, Wis.-based supermarket retailer and grocery wholesaler, has discovered a mistake that resulted in the understatement of its cost of goods sold, and thus will restate prior years' earnings for 2001, 2000 and 1999.

The restatement should impact previously reported earnings per share (EPS) in 2001 by US$0.03, 2000 by US$0.02 and 1999 by US$0.02, to make them US$1.45, US$1.31 and US$1.28, respectively.

The cost of completing the restatements, said the company, should mean that it incurs a US$180,000 charge during its Q3 and Q4 2002, and as a result, Fresh Brands now expects FY 2002 EPS to be in the range of US$1.53 to US$1.58.

Understatement

The understatement error is related to a unique supply relationship the company has with one of its direct store delivery meat vendors. Orders from nine supermarkets were delivered by the vendor to the company's meat distribution center and shipped by the company to the stores. Sales were properly recorded, but the company inadvertently failed to record accurately the corresponding cost of goods sold.

Elwood F. Winn, President and CEO said: "It is unfortunate in this current environment of earnings restatements that we must report one due to a simple mistake.

"We are disappointed that this oversight occurred and have acted responsibly in taking the appropriate actions to disclose the situation and correct the earnings for the affected years.

"With this behind us, we will continue to focus on our growth strategies and on building value for our shareholders."