Foodservice

NEW YORK -- A Rhode Island food vendor was sentenced to home detention yesterday on charges that he bought shares of U.S. Foodservice after he was secretly tipped about a takeover of the company by Dutch supermarket chain Royal Ahold NV. Brady Schofield, who was president of Seafood Marketing Specialists Inc., was given six months' home confinement and three years' probation and fined $13,000 by U.S. District Judge George Daniels in New York. Schofield admitted in June that he bought shares in Columbia, Md.-based U.S. Foodservice in 2000, after he was tipped to the takeover by a company executive.

Dutch food company Royal Ahold NV said yesterday that it will sell Columbia-based U.S. Foodservice, the nation's second-largest food wholesaler, as part of a major restructuring but will keep the struggling Giant Food grocery chain and try to revive it with an "everyday low price" strategy. Giant will have fewer sales, carry more private-label merchandise and limit its assortment, extending an experiment that began in its produce departments in September. Ahold also said it will improve the freshness of its foods and develop "easy-to-stock store formats that will enhance the overall customer experience in our stores, making shopping more convenient."

NEW YORK -- Mark P. Kaiser, former marketing chief of Royal Ahold NV's U.S. unit, was falsely accused of helping lead a fraud at the company by a colleague trying to win leniency from prosecutors, his lawyer told jurors yesterday at the start of Kaiser's trial. Kaiser is the last of more than 15 people to face criminal charges stemming from what the government says was an $800 million fraud at Columbia, Md.-based U.S. Foodservice. In his opening statement, defense lawyer Richard Morvillo said his client was falsely implicated by former purchasing chief Timothy Lee, who later pleaded guilty.

Federal prosecutors will not pursue a criminal case against Dutch food conglomerate Royal Ahold NV related to a 2000 accounting scandal at its U.S. Foodservice division in Columbia. U.S. Foodservice overstated income by about $800 million from 2000 to 2003. Ahold's market value plunged two-thirds after the accounting fraud was uncovered. U.S. Foodservice, the nation's No. 2 distributor to restaurants and other food-service establishments, recorded false promotional allowances that inaccurately reduced its cost of sales and inflated its earnings.

Royal Ahold NV obviously needs to do something. But this? European papers report that Ahold, owner of Giant Food and Columbia's U.S. Foodservice, is exploring a potential merger with Delhaize, owner of Food Lion. If consummated, the marriage would produce a Euro-grocery monster along the East Coast of the United States. But it's hard to see how this is an improvement for shoppers or shareholders, even if the companies get clearance from U.S. antitrust cops. Ahold, based in the Netherlands, and Delhaize, headquartered in Belgium, may resemble each other on the outside.

LONDON -- Royal Ahold NV, the owner of Giant Food supermarket chain and Columbia's U.S. Foodservice, said yesterday that its sales growth stagnated in the second quarter as competition with Wal-Mart Stores Inc. and Kroger Co. intensified. Revenue was 10.5 billion euros ($14 billion), compared with 10.4 billion euros in the quarter last year, the Dutch company said. Increased discounting and a wider product offering at rival chains are hurting its U.S. businesses, which account for two-thirds of sales, the company said.

WILMINGTON, Del. -- U.S. Foodservice, the food-distributing unit of Royal Ahold NV, says lawyers for two former company executives charged in a criminal case are charging too much and a judge should intervene. Columbia, Md.-based U.S. Foodservice is paying the legal fees of Michael J. Resnick, a former chief financial officer, and Mark Kaiser, a former chief marketing officer. The pair were indicted in July 2004, accused by the U.S. government of falsifying rebates that the company received from suppliers to inflate reported profits and increase their bonuses.

Two outside auditors found evidence early on of the irregularities that later enveloped U.S. Foodservice Inc. in a billion-dollar accounting scandal, but ignored several red flags and didn't pass on what they uncovered, the Securities and Exchange Commission contended yester- day. The federal regulatory agency released a report yesterday that accused Kevin M. Hall, 51, and Rosemary K. Meyer, 35, both partners at the Baltimore office of the accounting firm...

The owner of Columbia-based U.S. Foodservice said yesterday that it is eliminating about 700 jobs at its unit as part of a nationwide restructuring plan aimed at cutting costs by $100 million. A spokesman for Royal Ahold NV, the Netherlands-based food marketing conglomerate, said it was too soon to say how many of the jobs will come from the Columbia headquarters. But it is estimated that up to 500 of the cuts will be to administrative jobs spread throughout its 70 divisions nationwide.

U.S. Foodservice has laid off an unspecified number of workers this week as it continues to recover from an accounting scandal and rebuild its food distribution businesses. "We're trying to reduce expenses and bring them in line with the needs of the business," said Rob Meyne, vice president of corporate communications at the Columbia company, which is a subsidiary of Dutch food company Royal Ahold NV. "To the extent possible, we tried to consolidate and make the business more efficient by reducing excess operations and losing people."