SEC Probes Twinkies' Maker

Wed Jul 28, 2004

CHICAGO (Reuters) - Interstate Bakeries Corp. (IBC.N: Quote, Profile, Research) on Wednesday said the U.S. Securities and Exchange Commission started an informal inquiry after the company's audit committee hired lawyers to look into how it set workers' compensation and other reserves.

Shares of Interstate Bakeries fell 5 percent to their lowest level since March 2003.

The maker of Wonder bread and Hostess Twinkies said it was fully cooperating with the inquiry, and the SEC had not determined that any law was broken.

Earlier this month, Interstate Bakeries said its audit committee had hired the law firm of Skadden, Arps, Slate, Meagher & Flom to investigate the way it set workers' compensation and other reserves. The company delayed its fourth-quarter results until the review is completed.

Interstate Bakeries said in June it would take a $40 million charge to boost reserves for workers' compensation, and it may have to restate results for some periods, depending on the timing of the charge.

The stock was down 51 cents, or 5 percent, at $9.61 on the New York Stock Exchange on Wednesday morning.

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