The restatements resulted in an increase in earnings of $0.7 million for fiscal 2004 (through the third quarter), a slight increase in earnings of $24,000 in fiscal 2003, and a reduction in earnings of $2.2 million in 2002. Cumulatively through the beginning of fiscal 2003, the decrease in earnings resulting from the restatements totaled about $7 million. According to Ingles, there was no cash flow impact from the restatements.

Previously, NASDAQ had notified Ingles that it was subject to potential delisting due to its failure to file a timely 10-K for fiscal '04. Representatives of the company attended a hearing with the NASDAQ's Listing Qualifications Panel on January 27, asking for an extension in filing its 10-K, and also an extension in filing its 10-Q quarterly report for the first quarter of fiscal 2005 (ended December 25, 2004). The panel has not yet ruled on the matter and the company's stock continues to trade on NASDAQ.

"During preparation for our annual report for 2004, and as of a result of an internal investigation initiated after informal SEC inquiries, the company determined that certain vendor allowances and other items were recognized in the incorrect accounting periods," said Brenda S. Tudor, CFO and VP-finance for the supermarket chain during Tuesday's earnings conference call. "Vendor allowance recognition has been an involving, complex issue, but we believe we now have controls in place to prevent these issues."