-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, Cd4G4Ax6qVRirMlQF3Nw3NXj/HEEkn+UdxVf/Vw6/tLeyOQ5NcrrtF4skK/QXl81 vIrWbGNLcqMRw0TV+2ke0w== 0000950124-94-001103.txt : 19940617 0000950124-94-001103.hdr.sgml : 19940617 ACCESSION NUMBER: 0000950124-94-001103 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19940427 FILED AS OF DATE: 19940608 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KMART CORP CENTRAL INDEX KEY: 0000056824 STANDARD INDUSTRIAL CLASSIFICATION: 5331 IRS NUMBER: 380729500 STATE OF INCORPORATION: MI FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-00327 FILM NUMBER: 94533318 BUSINESS ADDRESS: STREET 1: 3100 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 3136431000 MAIL ADDRESS: STREET 1: 3100 W. BIG BEAVER ROAD CITY: TROY STATE: MI ZIP: 48084 FORMER COMPANY: FORMER CONFORMED NAME: KRESGE S S CO DATE OF NAME CHANGE: 19770921 10-Q 1 FORM 10-Q 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended April 27, 1994 OR __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________ to __________________ Commission File No. 1-327 Kmart Corporation (Exact name of registrant as specified in its charter) Michigan 38-0729500 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3100 West Big Beaver Road - Troy, Michigan 48084 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (810) 643-1000 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [ X ] No [ ] Number of shares of Common Stock outstanding at May 25, 1994: 409,856,404 1 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS KMART CORPORATION CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN MILLIONS, EXCEPT PER-SHARE DATA)
13 WEEKS ENDED ----------------------- APRIL 27, APRIL 28, 1994 1993 --------- --------- (Unaudited) Sales $7,810 $7,352 Licensee fees and rental income 60 53 Equity in income of affiliated retail companies 8 10 ------ ------ 7,878 7,415 ------ ------ Cost of merchandise sold (includes buying and occupancy costs) 5,840 5,466 Selling, general and administrative expenses 1,886 1,744 Interest expense: Debt -- net 67 74 Capital lease obligations and other 57 48 ------ ------ 7,850 7,332 ------ ------ Income from continuing retail operations before income taxes 28 83 Income taxes 10 25 ------ ------ Net income from continuing retail operations before extraordinary item and the effect of accounting changes 18 58 Discontinued operations including the effect of accounting changes, net of income taxes of $1 -- 7 Extraordinary item, net of income taxes of $(6) -- (10) Effect of accounting changes, net of income taxes of $(37) -- (32) ------ ------ Net income $ 18 $ 23 ------ ------ ------ ------ Earnings per common and common equivalent share: Net income from continuing retail operations before extraordinary item and the effect of accounting changes $ .04 $ .12 Discontinued operations including the effect of accounting changes, net of income taxes -- .02 Extraordinary item, net of income taxes -- (.02) Effect of accounting changes, net of income taxes -- (.07) ------ ------ $ .04 $ .05 ------ ------ ------ ------ Dividends declared per common share $ .24 $ .24 ------ ------ ------ ------ Weighted average shares 455.9 456.6 ------ ------ ------ ------
See accompanying Notes to Consolidated Financial Statements. The consolidated statement of income for the prior period has been restated for discontinued operations. 2 3 KMART CORPORATION CONSOLIDATED BALANCE SHEETS (DOLLARS IN MILLIONS)
APRIL 27, APRIL 28, JANUARY 26, 1994 1993 1994 ---------- ---------- ---------- (Unaudited) ASSETS Current Assets: Cash (includes temporary investments of $352, $113 and $32, respectively) $ 650 $ 416 $ 449 Merchandise inventories 7,815 9,747 7,252 Accounts receivable and other current assets 1,219 1,236 1,235 Discontinued operations 611 -- 911 -------- -------- --------- Total current assets 10,295 11,399 9,847 Investments in Affiliated Retail Companies 599 559 606 Property and Equipment -- net 5,972 6,528 5,886 Other Assets and Deferred Charges 406 369 469 Goodwill -- net of accumulated amortization of $63, $101 and $59, respectively 691 1,235 696 -------- -------- --------- $17,963 $20,090 $17,504 -------- -------- --------- -------- -------- --------- LIABILITIES AND SHAREHOLDERS' EQUITY Current Liabilities: Long-term debt due within one year $ 398 $ 113 $ 390 Notes payable 1,134 1,824 918 Accounts payable -- trade 3,097 3,142 2,763 Accrued payrolls and other liabilities 1,240 1,132 1,347 Taxes other than income taxes 384 436 271 Income taxes -- 159 35 -------- -------- --------- Total current liabilities 6,253 6,806 5,724 Capital Lease Obligations 1,764 1,762 1,720 Long-Term Debt 2,224 3,041 2,227 Other Long-Term Liabilities (includes store restructuring obligations) 1,712 821 1,740 Deferred Income Taxes -- 196 -- Shareholders' Equity: Preferred stock, 10,000,000 shares authorized; Series A, 5,750,000 shares authorized and issued 986 986 986 Series B, 796,827 shares authorized; 784,938 shares issued 157 157 157 Common stock, 1,500,000,000 shares authorized; shares issued 416,669,993, 416,037,375 and 416,546,780, respectively 417 416 417 Capital in excess of par value 541 518 538 Performance restricted stock deferred compensation (3) (5) (3) Retained earnings 4,136 5,603 4,237 Treasury shares (105) (119) (109) Foreign currency translation adjustment (119) (92) (130) -------- -------- --------- Total shareholders' equity 6,010 7,464 6,093 -------- -------- --------- $17,963 $20,090 $17,504 -------- -------- --------- -------- -------- ---------
See accompanying Notes to Consolidated Financial Statements. 3 4 KMART CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN MILLIONS)
13 WEEKS ENDED --------------------- APRIL 27, APRIL 28, 1994 1993 --------- --------- (Unaudited) CASH PROVIDED BY (USED FOR): OPERATIONS Net income from continuing retail operations before extraordinary item and the effect of accounting changes $ 18 $ 58 Adjustments to reconcile net income to operating cash flows: Depreciation and amortization 190 172 Deferred income taxes 43 (25) Increase (decrease) in other long-term liabilities (28) 15 Other -- net 63 53 Cash used for current assets and current liabilities (230) (934) ------ ------ Total cash provided by (used for) continuing retail operations 56 (661) ------ ------ Discontinued Operations Proceeds from the sale of discontinued operations -- net 540 -- Income from discontinued operations -- 7 Items not affecting cash -- net -- 25 Cash used for discontinued operations (239) -- ------ ------ Total cash provided by discontinued operations 301 32 ------ ------ Net cash provided by (used for) operations 357 (629) ------ ------ INVESTING Capital expenditures -- owned property (237) (196) Acquisitions -- (268) Proceeds from the sale of assets 3 3 Other -- net 8 1 ------ ----- Net cash used for investing (226) (460) ------ ----- FINANCING Proceeds from issuance of long-term debt and notes payable 269 1,240 Reduction in long-term debt and notes payable (49) (204) Reduction in capital lease obligations (29) (29) Issuance of common stock 3 9 Reissuance of treasury shares 4 3 Extraordinary item for bond redemptions -- (10) Dividends paid (128) (115) ------ ------ Net cash provided by financing 70 894 ------ ------ NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 201 (195) Cash and Equivalents at Beginning of Year 449 611 ------ ------ CASH AND EQUIVALENTS AT END OF PERIOD $ 650 $ 416 ------ ------ ------ ------
See accompanying Notes to Consolidated Financial Statements. Certain prior year amounts have been restated for the effect of discontinued operations. 4 5 KMART CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars in millions, except per-share data) (Unaudited) BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements do not include all information and footnotes necessary for the annual presentation of financial position, results of operations and cash flows in conformity with generally accepted accounting principles. In the opinion of Kmart Corporation, all adjustments necessary for a fair statement of the results for the interim periods have been included. All adjustments were of a normal and recurring nature. DISCONTINUED OPERATIONS Discontinued operations include the results of PayLess Drug Stores Northwest, Inc. and PACE Membership Warehouse, Inc. which have been reclassified to reflect their respective plans for disposition announced in the fourth quarter of 1993. In January 1994, PACE sold the assets and lease obligations of 93 of its warehouses and virtually all of the inventory and membership files in the 34 warehouses not included in the transaction to Sam's Club, a division of Wal*Mart. Operations of the 34 remaining PACE sites not included in the transaction were discontinued, and PACE is in the process of evaluating and marketing these leased sites as well as leased premises for unopened warehouses and corporate facilities. In addition, in April 1994, Kmart sold its PayLess Drug Stores subsidiary to Thrifty PayLess Holdings, Inc. (TPH) and its subsidiary Thrifty PayLess, Inc. for approximately $595 in cash, $100 in Senior Notes of TPH and approximately 46% of the common equity of TPH. Of the cash proceeds, $50 has been invested in Senior Subordinated Notes of Thrifty PayLess, Inc. which Kmart subsequently sold in May 1994 at a slight premium. It is Kmart Corporation's intention to divest substantially all of its interest in TPH within one year. Management expects the disposition to be achieved either through a private offering or other alternative means. Accordingly, Kmart Corporation has reported PayLess as a discontinued operation and has recorded its investment in TPH at net realizable value. Kmart Corporation called for early redemption in June 1994 of all $300 of its 8 3/8% debentures due January 15, 2017 using the proceeds of the sale of the PayLess Drug Stores subsidiary to redeem the issue. The resulting redemption premium and associated cost of $18, net of applicable income taxes, was recorded in 1993 as part of the loss on disposal of discontinued operations. Accordingly, the $300 principal amount has been included in the current portion of long-term debt. EXTRAORDINARY ITEM AND ACCOUNTING CHANGES In August 1993, Kmart Corporation called for early redemption of all $200 of its 8 1/8% debentures due January 1, 1997. The debentures were redeemed at 100% of the principal amount plus interest accrued to the date of redemption. In April 1993, Kmart Corporation called for early redemption of all $200 of its 10 1/2% Sinking Fund Debentures due December 1, 2017. The resulting redemption premium of $10, net of applicable income taxes, has been reported as an extraordinary item. Kmart Corporation adopted Financial Accounting Standard No. 109 "Accounting for Income Taxes" (FAS 109) in the first quarter of 1993. FAS 109 requires that deferred taxes be calculated using the liability approach rather than the deferred method. In addition, the standard requires adjustment of deferred tax liabilities to reflect enacted changes in the statutory federal income tax rate. As a result of the adjustment of deferred tax balances to the enacted tax rate at the date of adoption, a benefit of $45, or $0.10 per share, has been recorded as the cumulative effect of the accounting change. Kmart Corporation also adopted Financial Accounting Standard No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106) at the beginning of fiscal 1993. This statement requires that Kmart Corporation accrue for future postretirement medical benefits. In prior years, these claims were expensed when paid. Net of applicable tax, a charge of $77, or $0.17 per share, has been included in net income as the effect of an accounting change. 5 6 KMART CORPORATION NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED (Dollars in millions, except per-share data) (Unaudited) ACQUISITION On March 4, 1993, OfficeMax, Inc. purchased all of the outstanding shares of BizMart, Inc. ("BizMart"), a chain of 105 office products superstores. During 1993, BizMart was completely integrated into OfficeMax operations and BizMart stores converted to the OfficeMax format. The excess of the cost over fair value of the assets acquired totaled $186. This acquisition has been accounted for as a purchase and, accordingly, the results of operations have been consolidated from the date of acquisition. INVENTORIES AND COST OF MERCHANDISE SOLD A substantial portion of the inventories is accounted for using the last-in, first-out (LIFO) method. If the first-in, first-out (FIFO) method of inventory accounting had been used by Kmart Corporation, inventories would have been $871, $1,044 and $861 higher than reported at April 27, 1994, April 28, 1993 and January 26, 1994, respectively. SHAREHOLDERS' EQUITY
APRIL 27, APRIL 28, JANUARY 26, 1994 1993 1994 ----------- ----------- ----------- Preferred Stock -- 10,000,000 shares authorized: Series A conversion preferred stock; shares authorized and issued 5,750,000 $ 986 $ 986 $ 986 Series A junior participating preferred stock; shares designated 500,000; none issued None None None Series B convertible preferred stock; 796,827 shares authorized; 784,938 shares issued 157 157 157 Common Stock -- 1,500,000,000 shares authorized; 46,000,000 shares reserved for conversion of Series A conversion preferred stock; 5,092,050 shares reserved for conversion of Series B convertible preferred stock; shares issued 416,669,993, 416,037,375 and 416,546,780, respectively 417 416 417 Capital in Excess of Par Value 541 518 538 Restricted Stock Deferred Compensation (3) (5) (3) Retained Earnings: Balance at beginning of fiscal year 4,237 5,700 5,700 Net income 18 23 (974) Cash dividends declared: Common stock (98) (99) (392) Series A conversion preferred stock (19) (19) (78) Series B convertible preferred stock (2) (2) (9) Minimum pension liability in excess of intangible pension asset -- -- (10) ----- ----- ----- Total Retained Earnings 4,136 5,603 4,237 Less: Treasury Stock -- 7,220,431, 8,458,769 and 7,468,564 shares, at cost, respectively (105) (119) (109) Cumulative Foreign Currency Translation Adjustment (119) (92) (130) ----- ----- ----- Total Shareholders' Equity $6,010 $7,464 $6,093 ----- ----- ----- ----- ----- -----
6 7 KMART CORPORATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE 13 WEEKS ENDED APRIL 27, 1994 RESULTS OF OPERATIONS Kmart Corporation's store activity during the first quarter of 1994 is summarized as follows:
FIRST QUARTER ACTIVITY IN OPERATION AT ----------------- IN OPERATION AT General Merchandise JANUARY 26, 1994 OPENED CLOSED APRIL 27, 1994 ------------------- ---------------- ------ ------ -------------- Kmart United States 2,323 36 (29) 2,330 Canada 127 -- -- 127 Czech Republic and Slovakia 13 -- -- 13 Other 23 4 (6) 21 -------- ------ ------ -------- Total General Merchandise 2,486 40 (35) 2,491 -------- ------ ------ -------- Specialty Retail ----------------- Borders-Walden Group Borders 44 6 -- 50 Walden 1,159 3 (23) 1,139 Builders Square 177 7 (4) 180 OfficeMax 328 4 (9) 323 The Sports Authority 80 2 -- 82 -------- ------ ------ -------- Total Specialty Retail 1,788 22 (36) 1,774 -------- ------ ------ -------- Total Stores 4,274 62 (71) 4,265 -------- ------ ------ -------- -------- ------ ------ --------
Sales for the 13 weeks ended April 27, 1994 were $7.81 billion, a 6.2% increase over sales of $7.35 billion in the same period in the prior year (see table below). Comparable store sales for the first quarter of 1994 increased 1.2% over the same period last year. Comparable store sales were affected by the major inventory mix adjustments and reductions that have been made over the last six months.
13 WEEKS ENDED --------------------- % CHANGE APRIL 27, APRIL 28, --------------------------------- SALES ($ MILLIONS) 1994 1993 ALL STORES COMPARABLE STORES ------------------ ---------- ---------- ---------- ----------------- General Merchandise ------------------- United States $6,018 $5,825 3.3 (0.2) International 212 229 (7.4) 0.5 (a) ----- ----- Total General Merchandise 6,230 6,054 2.9 (0.2) Specialty Retail ----------------- Borders-Walden Group 303 287 5.6 N/A (b) Builders Square 683 602 13.5 6.2 OfficeMax 420 290 44.8 20.8 The Sports Authority 174 119 46.2 9.5 ----- ----- Total Specialty Retail 1,580 1,298 21.7 8.1 ----- ----- Consolidated $7,810 $7,352 6.2 1.2 ----- ----- ----- -----
(a) International comparable store sales change is calculated on sales in the applicable local currency. (b) Borders sales in millions were $72 and $42 in the 1994 and 1993 periods, respectively, and Walden Book Company sales were $231 and $244 in the respective periods. Comparable store sales were up 19.6% at Borders and down 0.4% at Walden Book Company. 7 8 KMART CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED FOR THE 13 WEEKS ENDED APRIL 27, 1994 Cost of merchandise sold, including buying and occupancy costs, for the 13 weeks ended April 27, 1994 was $5,840 million as compared to $5,466 million in the same period in the prior year. Gross margin as a percent of sales was 25.2% and 25.7% in 1994 and 1993, respectively. The decrease, as a percent of sales, primarily reflects the effect of lower than expected comparable store sales on fixed occupancy costs and the increasing impact of the grocery component of the Super Kmart Centers. The impact of inflation included in the cost of merchandise sold reduced pretax earnings by $11 million for the first 13 weeks of 1994 and $12 million for the comparable period of 1993. Selling, general and administrative expense for the 13 weeks ended April 27, 1994 was $1,886 million, or 24.1% of sales, as compared to $1,744 million, or 23.7% of sales, in the same period in the prior year. The increase as a percent of sales resulted from lower than expected comparable store sales which more than offset the cost control programs that have been implemented at the Kmart store division. Operating income from continuing retail operations for the 13 weeks ended April 27, 1994 was $145 million, or 1.9% of sales, as compared to $196 million, or 2.7% of sales, in the same period in the prior year (see table below). The decrease in operating income resulted primarily from the lower gross margin and higher selling, general and administrative expense as a percent of sales.
13 WEEKS ENDED --------------------- APRIL 27, APRIL 28, OPERATING INCOME ($ MILLIONS) 1994 1993 % CHANGE ----------------------------- ------ ------ --------- General Merchandise ------------------- United States $ 134 $ 202 (33.7) International 1 -- -- ------ ------ Total General Merchandise 135 202 (33.2) Specialty Retail ----------------- Borders-Walden Group (4) (7) 42.9 Builders Square 3 -- -- OfficeMax 9 -- -- The Sports Authority 2 1 100.0 ------ ------ Total Specialty Retail 10 (6) -- ------ ------ Consolidated $ 145 $ 196 (26.0) ------ ------ ------ ------
Net interest expense for the 13 weeks ended April 27, 1994 was $124 million, or 1.6% of sales, as compared to $122 million, or 1.7% of sales, for the same period in the prior year. Net interest expense on debt was down 9.5% in the 1994 first quarter, primarily as a result of reduced borrowings resulting from lower inventory levels in the 1994 period and the early retirement of high-cost, long-term debt in 1993. Interest expense related to capital lease obligations and other increased as a result of interest expense related to the discounting of closed store lease obligations included in the 1993 store restructuring reserve. Income from continuing retail operations before income taxes for the 13 weeks ended April 27, 1994 was $28 million, or 0.4% of sales, as compared to $83 million, or 1.1% of sales, in the same period last year. Income tax expense for the 13 weeks ended April 27, 1994 was $10 million with an effective tax rate of 34.5% as compared to $25 million with an effective tax rate of 30.2% in the same period of 1993 due to a higher projected annual tax rate for 1994, including the August 1993 1% increase in the statutory federal corporate rate. Net income from continuing retail operations before extraordinary item and the effect of accounting changes for the 13 weeks ended April 27, 1994 was $18 million, or 0.2% of sales, as compared to $58 million, or 0.8% of sales, in the same period last year. 8 9 KMART CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED FOR THE 13 WEEKS ENDED APRIL 27, 1994 Net income from discontinued operations for the 13 weeks ended April 28, 1993 was $7 million, or 0.1% of sales. Discontinued operations include the results of PayLess Drug Stores Northwest, Inc. and PACE Membership Warehouse, Inc. which have been reclassified to reflect their respective dispositions announced in the fourth quarter of 1993. Extraordinary item. In August 1993, Kmart Corporation called for early redemption of all $200 million of its 8 1/8% debentures due January 1, 1997. The debentures were redeemed at 100% of the principal amount plus interest accrued to the date of redemption. In April 1993, Kmart Corporation called for early redemption of all $200 million of its 10 1/2% Sinking Fund Debentures due December 1, 2017. The resulting redemption premium of $10 million, net of applicable income taxes, has been reported as an extraordinary item. Effect of accounting changes. Kmart Corporation adopted Financial Accounting Standard No. 109 "Accounting for Income Taxes" (FAS 109) in the first quarter of 1993. FAS 109 requires that deferred taxes be calculated using the liability approach rather than the deferred method. As a result of the adjustment of deferred tax balances to the enacted tax rate at the date of adoption, Kmart Corporation has recorded a benefit of $45 million, as the cumulative effect of an accounting change. Kmart Corporation also adopted Financial Accounting Standard No. 106 "Employers' Accounting for Postretirement Benefits Other Than Pensions" (FAS 106) at the beginning of fiscal 1993. This statement requires that Kmart Corporation accrue for future postretirement medical benefits. In prior years, these claims were expensed when paid. Net of applicable tax, a charge of $77 million has been included in net income as the effect of an accounting change. In addition, Kmart Corporation adopted Financial Accounting Standard No. 112 "Employers' Accounting for Postemployment Benefits" (FAS 112) in the first quarter of 1993. FAS 112 is an extension of the concepts underlying FAS 106 for similar benefits provided to terminated or laid-off employees. The financial effects of this statement were not material. As the result of the foregoing factors, net income for the 13 weeks ended April 27, 1994 was $18 million, or 0.2% of sales, as compared to $23 million, or 0.3% of sales, in the same period in the prior year. LIQUIDITY AND CAPITAL RESOURCES Cash flows generated by operating, investing and financing activities as reported in the Consolidated Statements of Cash Flows for the 13 weeks ending April 27, 1994 are summarized below. The net increase in cash and equivalents for the 13 weeks ended April 27, 1994 was $201 million as compared to a $195 million decrease in the same period in the prior year. Total cash provided by (used for) continuing retail operations for the 13 weeks ended April 27, 1994 was $56 million as compared to $(661) million in the same period of 1993. The change is primarily attributable to a lower rate of increase in merchandise inventories and increased accounts payable financing of inventory. Merchandise inventories, which were primarily accounted for under the LIFO method of inventory valuation, decreased 19.8% to $7,815 million at April 27, 1994 from $9,747 million at April 28, 1993. The decrease was largely the result of the PACE and PayLess dispositions and the improved inventory management in U.S. Kmart stores. U.S. Kmart inventory was reduced by $892 million on a FIFO basis, or 11.8%. Total cash provided by discontinued operations for the 13 weeks ended April 27, 1994 was $301 million as compared to $32 million in the same period last year. The increase was primarily attributable to the proceeds from the sale of PayLess. Net cash used for investing for the 13 weeks ended April 27, 1994, was $226 million as compared to $460 million in the same period last year. The decrease was primarily due to the prior year acquisition of BizMart. The 13 weeks ended April 27, 1994 reflect the activity for the U.S. Kmart store modernization program including 14 new locations, 22 relocations with 29 closings, 15 expansions and 3 refurbishments. 9 10 KMART CORPORATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS-CONTINUED FOR THE 13 WEEKS ENDED APRIL 27, 1994 Net cash provided by financing of $70 million during the 13 weeks ended April 27, 1994 was attributable to a net increase in long-term debt and notes payable of $220 million. The $894 million provided by financing during the 13 weeks ended April 28, 1993 was attributable to a $1,036 million net increase in long-term debt and notes payable. The decrease in proceeds from notes payable is primarily attributable to lower borrowings resulting from lower inventory levels. Kmart Corporation's working capital ratio was 1.6 at April 27, 1994 and 1.7 at April 28, 1993. Total working capital at April 27, 1993 was $4,042 million compared with $4,593 million at April 28, 1993, a decrease of $551 million. 10 11 PART II. OTHER INFORMATION ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) The following exhibit is filed as a part of this report: 1. (11) - Information on Computation of Per Share Earnings (b) Reports on Form 8-K. There were no reports on Form 8-K filed by the Registrant during the thirteen weeks ended April 27, 1994. 11 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. The signatory hereby acknowledges and adopts the typed form of his name in the electronic filing of this document with the Securities and Exchange Commission. Date: June 8, 1994 Kmart Corporation ----------------------- (Registrant) By T. F. Murasky ----------------------- T. F. Murasky EXECUTIVE VICE PRESIDENT CHIEF FINANCIAL OFFICER (Duly Authorized Officer and Principal Accounting Officer) 12 EX-11 2 EXHIBIT 11 1 KMART CORPORATION AND SUBSIDIARY COMPANIES EXHIBIT 11 - INFORMATION ON COMPUTATION OF PER SHARE EARNINGS
(Millions, except per-share data) 13 Weeks Ended ------------------------------ April 27, April 28, 1994 1993 -------- -------- I. Earnings per common share assuming no dilution: (a) Income before extraordinary item and the effect of accounting changes $ 18 $ 50 (b) Extraordinary item, net of income tax - (10) (c) Effect of accounting changes, net of income tax - (17) ------ ------ (d) Net income $ 18 $ 23 ------ ------ ------ ------ Weighted average common shares outstanding 409.3 407.3 Weighted average $3.41 Depositary Shares outstanding (1/4 share Series A conversion preferred) 46.0 46.0 ------ ------ (e) Weighted average number of shares outstanding 455.3 453.3 ------ ------ ------ ------ Earnings per common share assuming no dilution: Income before extraordinary item and the effect of accounting changes (a)/(e) $ 0.04 $ 0.11 Extraordinary item (b)/(e) - (0.02) Effect of accounting changes (c)/(e) - (0.04) ------ ------ Net income (d)/(e) $ 0.04 $ 0.05 ------ ------ ------ ------ II. Earnings per common and common equivalent share: Income before extraordinary item and the effect of accounting changes $ 18 $ 50 Less--Series B convertible preferred shares dividend declared (2) (2) ------ ------ (f) Adjusted income before extraordinary item and the effect of accounting changes 16 48 (g) Extraordinary item, net of income tax - (10) (h) Effect of accounting changes, net of income tax - (17) ------ ------ (i) Adjusted net income $ 16 $ 21 ------ ------ ------ ------ Weighted average common shares outstanding 409.3 407.3 Weighted average $3.41 Depositary Shares outstanding (1/4 share Series A conversion preferred) 46.0 46.0 Stock Options -- Common shares assumed issued 7.9 17.0 Less--common shares assumed repurchased (7.3) (13.7) ------ ------ 0.6 3.3 ------ ------ (j) Applicable common shares, as adjusted 455.9 456.6 ------ ------ ------ ------ Earnings per common and common equivalent share: Adjusted income before extraordinary item and the effect of accounting changes (f)/(j) $ 0.04 $ 0.11 Extraordinary item (g)/(j) - (0.02) Effect of accounting changes (h)/(j) - (0.04) ------ ------ Net income (i)/(j) $ 0.04 $ 0.05 ------ ------ ------ ------
2 KMART CORPORATION AND SUBSIDIARY COMPANIES EXHIBIT 11- INFORMATION ON COMPUTATION OF PER SHARE EARNINGS
(Millions, except per-share data) 13 Weeks Ended ----------------------- April 27, April 28, 1994 1993 -------- -------- III. Earnings per common and common equivalent share assuming full dilution: (k) Income before extraordinary item and the effect of accounting changes $ 18 $ 50 (l) Extraordinary item, net of income tax - (10) (m) Effect of accounting changes, net of income tax - (17) ------- ------- (n) Net income $ 18 $ 23 ------- ------- ------- ------- Weighted average common shares outstanding 409.3 407.3 Weighted average $3.41 Depositary Shares outstanding (1/4 share Series A conversion preferred) 46.0 46.0 Weighted average Series B convertible preferred shares outstanding 9.7 6.8 Stock options-- Common shares assumed issued 7.9 17.0 Less--common shares assumed repurchased (7.3) (13.7) ------- ------- 0.6 3.3 ------- ------- (o) Applicable common shares, as adjusted 465.6 463.4 ------- ------- ------- ------- Earnings per common and common equivalent share assuming full dilution: Income before extraordinary item and the effect of accounting changes (k)/(o) $ 0.04 $ 0.11 Extraordinary item (l)/(o) - (0.02) Effect of accounting changes (m)/(o) - (0.04) ------- ------- Net income (n)/(o) $ 0.04 $ 0.05 ------ ------- ------ -------
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