The market struck Aurora Foods Inc.’s $400 million in high yield notes down 25 points earlier this month, and if the food products manufacturer issues any more bad news, its bonds could slide 10 more points, predicted a high yield analyst. Aurora, maker of Duncan Hines baking mixes, Aunt Jemima frozen breakfast products and Celeste frozen pizzas, announced on May 2 it would take a $20.1 million charge due to accounting errors for trade promotion expenses. Those expenses are accrued when the company sells inventory to retailers at discount prices in exchange for some form of marketing, such as a stand displaying the product. Normally, those expenses are taken out of net sales. Aurora’s $20.1 million charge covers trade promotion expenses stretching back over the last two fiscal years.
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