The Audit Committee requested Company management to review the investigation's findings regarding timing of recording of inventory markdowns and to review timing of recording of vendor markdown allowances. This supplemental inquiry has now been completed.
The Audit Committee's supplemental inquiry did not find any overcollections of vendor markdown allowances in any of the merchandising divisions of SFAE that had not been the subject of the Audit Committee's initial investigation. Steps to confirm amounts of markdown allowances collected from certain vendors during specified seasons have begun, and this work is ongoing. In addition, the supplemental inquiry did not find any fraudulent activities with respect to billing/logistics/transportation compliance chargebacks.
The Company's March 3, 2005 press release disclosed that the Company expected to restate its financial statements for fiscal 1999 through the third quarter of fiscal 2004. The Company expects that its restatement work will be completed, and the 2004 Form 10-K will be filed, on or shortly after September 1, 2005. The Company also expects that its Quarterly Reports on Form 10-Q for the fiscal quarters ended April 30, 2005 and July 30, 2005 will be filed on or shortly after September 30, 2005.
As previously disclosed, the Company has informed the Securities and Exchange Commission and the Office of the United States Attorney for the Southern District of New York of the Audit Committee's initial investigation and its supplemental inquiry. The Company is continuing to cooperate fully with investigations being conducted by the SEC and the Office of the United States Attorney.
US based Saks Incorporated operates Saks Fifth Avenue Enterprises (SFAE), which consists of 56 Saks Fifth Avenue stores, 50 Saks Off 5th stores, and saks.com. The Company also operates its Saks Department Store Group (SDSG) with 182 department stores under the names of Parisian, Younkers, Herberger's, Carson Pirie Scott, Bergner's, and Boston Store and 49 Club Libby Lu specialty stores.
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