According to the Company’s FORM 10-K for the fiscal year ended January 31, 2004, two shareholders filed lawsuits, purporting to be class actions, against the Company and its Chief Executive Officer in the United States District Court, for the Southern District of Ohio, Western Division, were consolidated as Case No. 1:01-CV-265. The court dismissed the suit and the appeal period has run without an appeal having been filed. Furthermore, the Company has been notified by the staff of the SEC that its inquiry relating to the restatement has been terminated and no enforcement action has been recommended to the SEC against the Company.
The original complaint charges Kroger and one of its officers and directors with issuing false and misleading statements concerning its business and financial condition. Specifically, the complaint alleges that on March 5, 2001, Kroger announced that it would have to restate earnings back to its fiscal 1998 year as a result of improper accounting practices at its ``Ralphs'' subsidiary. Plaintiff further alleges that Defendants had knowledge of the improper accounting practices since September 2000. The complaint alleges that Defendants' misstatements artificially inflated the market price of Kroger common stock purchased by the Class.