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CINCINNATI and BOISE, Idaho -- Like many other public companies in the supermarket retailing community, The Kroger Co. and Albertson's Inc. here said yesterday they would restate their financial results after determining that their accounting for leases was not in conformity with the new accounting principles (GAAP) published by the Securities and Exchange Commission.
The two leading chains join other retailers and restaurant franchises that have opted to review their accounting practices following a Securities and Exchange Commission letter in early February that clarified accounting practices for the amortization of rent payments, gains from improvements to property, and discounts written into certain leases.
Kroger will restate results going back to 2001, and estimated the cumulative effect on opening 2001 accumulated earnings to be a reduction of less than $25 million. Annual net earnings for any year affected by the change currently are estimated to be reduced by less than $0.01 per share.
These adjustments will have no effect on historical or future cash flows or the timing of payments under the related leases, the company said.
Albertson's said it would take a non-cash lease expense of $8 million pretax, or $5 million after taxes, in the fourth quarter of 2004.
The chain said it will not restate its prior years' financial statements, since the issue is immaterial to its results for fiscal 2004 or any prior year.