Doughtie's Foods Inc., a Portsmouth, Va., manufacturer and distributor of meat products, said yesterday that it may have to restate earnings for one or more fiscal years after discovering over-reporting of inventory at its William F. Gravins division in Richmond.
A company official said most of the over-reporting might have been in the prior fiscal year, but that hasn't been clearly established at this point in an internal investigation.
Initial indications are that the total of the over-reporting may be about $500,000, Doughtie's said. The purpose of the over-reporting appears to have been an attempt to show improved operational results at the Richmond distribution facility, the company added.
A similar disclosure was made in May by McCormick &. Co., the Baltimore spice maker. McCormick said that it used fictitious records and other improper accounting practices to inflate sales and profits over a four-year period.
Doughtie's is conducting an inquiry with the assistance of counsel, said George D. Spicer, vice president-finance. The irregularity has been reported to the Securities and Exchange Commission, Spicer added, but he said no external investigation has been started.
Spicer said a company investigation that began two weeks ago resulted in the firing of the general manager at the Gravins division last week.
There is no evidence at this stage of theft or diversion of corporate funds, and no other employes have been terminated, Spicer said.
Doughtie's said it is still trying to determine the after-tax effect on earnings during the periods in question but, "We're not in a position to know that now," Spicer said. "We have sort of a handle on it, but we don't know what period it applies to. We think most of it might be in the prior fiscal year, but we don't know exactly."
For the first quarter ended March 27, Doughtie's, which makes sausages, hot dogs and barbecue meats, reported earnings of $153,000 (20 cents a share) on sales of $11 million, compared with a profit of $64,000 (eight cents) on sales of $11 million in the year-earlier period. The Gravins division has annual sales of approximately $2.5 million.
Doughtie's said the restated figures will be made public as soon as possible.