Quarterly sales at Rite Aid's 3,600 stores rose to $3.9 billion from $3.7 billion a year earlier, adding an income-tax benefit of $44 million and subtracting $20 million in expenses for a federal investigation of its former management's accounting practices. In its profit statement, Rite Aid reported net income of $2.6 million for the quarter - up from a $211 million loss in the same period last year.
The net income total excludes a $7.2 million payment to preferred-stock shareholders as part of an equation in a footnote at the end of the report. The footnote explains why Rite Aid also lost a penny a share during the quarter, compared with a 56-cent loss for the earlier period.
Moderator Comment: Did Rite Aid make a mistake in how it accounted for payments made to preferred-stock shareholders?
You would think that just to avoid the appearance of any slight of hand accounting acts, Rite Aid would have reported that its net income total excluded the $7.2 million payment to the company's preferred-stock shareholders. This is the first big mistake that we've seen the chain make since Robert Miller took charge.
The good news is that Mr. Miller's reputation is as a person of integrity. We do not foresee any type of scandals coming to Rite Aid. Mr. Miller foresees further losses for this year with the company posting profits beginning in 2003. [George Anderson - Moderator]