-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Jz7dKZ4ci7dS7BUi7lTPiVUa+8gdBYw8DY3P7/U4y/W5lBwLCKtc8nO+aKZUl7Bb di94KFlZU29I9CndQ0eamg== 0000950124-02-003245.txt : 20021021 0000950124-02-003245.hdr.sgml : 20021021 20021021090059 ACCESSION NUMBER: 0000950124-02-003245 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021018 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20021021 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KMART CORP CENTRAL INDEX KEY: 0000056824 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-VARIETY STORES [5331] IRS NUMBER: 380729500 STATE OF INCORPORATION: MI FISCAL YEAR END: 0129 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-00327 FILM NUMBER: 02793285 BUSINESS ADDRESS: STREET 1: 3100 W BIG BEAVER RD CITY: TROY STATE: MI ZIP: 48084 BUSINESS PHONE: 2486431000 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 8-K 1 k72484e8vk.txt CURRENT REPORT DATED 10/18/02 UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-K CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED) OCTOBER 18, 2002 KMART CORPORATION (EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER) MICHIGAN 1-327 38-0729500 - -------------------------------------------------------------------------------- (STATE OR OTHER (COMMISSION (IRS EMPLOYER JURISDICTION OF FILE NUMBER) IDENTIFICATION NO.) INCORPORATION) 3100 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 248-463-1000 ------------ NOT APPLICABLE - -------------------------------------------------------------------------------- FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT ITEM 9. OTHER EVENTS AND REGULATION FD DISCLOSURE Kmart Corporation (the "Company") filed its monthly operating report for the period commencing August 29, 2002 and ended September 25, 2002 (the "Operating Report") with the United States Bankruptcy Court for the Northern District of Illinois, a copy of which is attached hereto as Exhibit 99, in connection with its voluntary petitions for reorganization under Chapter 11 of title 11 of the United States Bankruptcy Code in Case No. 02-B02474. The Company cautions readers not to place reliance upon the information contained therein. The Operating Report contains unaudited information, is limited in scope, covers a limited time period and is in a format prescribed by the applicable bankruptcy laws. There can be no assurance that the Operating Report is complete. The Company also cautions readers to read the Cautionary Statement contained as part of the Operating Report. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (c) Exhibit. Document Description 99 Monthly Operating Report for the Period August 28, 2002 to September 25, 2002. 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 hereunto duly authorized. Kmart Corporation (Registrant) Date: October 21, 2002 By: /s/ A. A. Koch --------------------- A. A. Koch Chief Financial Officer EXHIBIT INDEX Exhibit Number Document Description 99 Monthly Operating Report For The Period August 28, 2002 to September 25, 2002. 3 EX-99 3 k72484exv99.txt MONTHLY OPERATING REPORT EXHIBIT 99 UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Chapter 11 Case No.: 02 B 02474 Hon. Susan Pierson Sonderby In re Kmart Corporation, et al. Debtors. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - MONTHLY OPERATING REPORT FOR THE PERIOD AUGUST 29, 2002 TO SEPTEMBER 25, 2002 DEBTORS' ADDRESS: Kmart Corporation, et al. 3100 West Big Beaver Road Troy, MI 48084 DEBTORS' ATTORNEYS: John Wm. Butler, Jr. J. Eric Ivester SKADDEN, ARPS, SLATE, MEAGHER & FLOM (ILLINOIS) 333 West Wacker Drive Chicago, Illinois 60606-1285 REPORT PREPARER: Kmart Corporation, et al. The undersigned, having reviewed the attached report acting as the duly authorized agent for the Debtors in Possession declares under penalty of perjury under the laws of the United States that the figures, statements, disbursement itemizations, and account balances listed in this Monthly Report of the Debtors are true and correct as of the date of this report to the best of my knowledge, information and belief. Date: October 21, 2002 KMART CORPORATION, ET AL. /s/ A. A. Koch ------------------------------------ A. A. Koch, Chief Financial Officer KMART CORPORATION, ET AL. U.S. TRUSTEE MONTHLY OPERATING REPORT FOR THE FOUR-WEEK PERIOD ENDED SEPTEMBER 25, 2002 I. Kmart Corporation Unaudited Consolidated Financial Statements A. Consolidated Statement of Operations for the four-week period ended September 25, 2002 B. Consolidated Balance Sheet as of September 25, 2002 C. Consolidated Statement of Cash Flows for the four-week period ended September 25, 2002 D. Cash Receipts and Disbursements for the four-week period ended September 25, 2002 E. Schedule of Professional Fees and Expenses for the period January 22, 2002 through September 25, 2002 F. Notes to Unaudited Consolidated Financial Statements II. Tax Questionnaire KMART CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FOUR-WEEK PERIOD ENDED SEPTEMBER 25, 2002 ----------------------- SALES $ 1,967 Cost of sales, buying & occupancy 1,678 ----------------------- GROSS MARGIN 289 Selling, general and administrative expenses 468 ----------------------- LOSS BEFORE INTEREST, INCOME TAXES AND REORGANIZATION ITEMS, NET (179) Reorganization items, net 11 ----------------------- LOSS BEFORE INTEREST AND INCOME TAXES (190) Net interest expense 8 Income taxes 1 ----------------------- CONTINUING NET LOSS (199) Income from discontinued operations 23 ----------------------- NET LOSS $ (176) =======================
KMART CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
SEPTEMBER 25, 2002 ------------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 336 Merchandise inventories 5,843 Other current assets 657 ------------------- TOTAL CURRENT ASSETS 6,836 Property and equipment, net 5,806 Other assets and deferred charges 258 ------------------- TOTAL ASSETS $ 12,900 ------------------- LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,597 Accrued payroll and other liabilities 702 Taxes other than income taxes 257 ------------------- TOTAL CURRENT LIABILITIES 2,556 Debtor-in-possession credit facility 35 Capital lease obligations 667 Other long-term liabilities 146 ------------------- TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 3,404 LIABILITIES SUBJECT TO COMPROMISE 7,278 Company obligated mandatorily redeemable convertible preferred securities of a subsidiary trust holding solely 7-3/4% convertible junior subordinated debentures of Kmart (redemption value of $898) 889 Common stock, $1 par value, 1,500,000,000 shares authorized; 502,471,545 shares issued 502 Capital in excess of par value 1,694 Accumulated deficit (867) ------------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 12,900 ------------------- Memo: LIABILITIES SUBJECT TO COMPROMISE Debt and notes payable $ 3,326 Accounts payable 2,358 Closed store reserves 719 Public liability and workers compensation 272 Other liabilities 260 Pension obligation 182 Taxes payable 161 ------------------- $ 7,278 -------------------
KMART CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FOUR-WEEK PERIOD ENDED SEPTEMBER 25, 2002 ----------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (176) Adjustments to reconcile net loss to net cash used for operating activities: Discontinued operations, net (23) Restructuring, impairments and employee severance (1) Reorganization items, net 11 Depreciation and amortization 56 Equity income in unconsolidated subsidiaries (3) Changes in: Inventory (355) Accounts payable 14 Other assets (53) Other liabilities 36 Cash used for store closings and other charges (1) ----------------- NET CASH USED FOR OPERATING ACTIVITIES (495) ----------------- NET CASH USED FOR REORGANIZATION ITEMS (8) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (23) ----------------- NET CASH USED FOR INVESTING ACTIVITIES (23) ----------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from DIP facility 35 Payments on capital lease obligations (5) ----------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 30 ----------------- NET CHANGE IN CASH AND CASH EQUIVALENTS (496) CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 832 ----------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 336 -----------------
KMART CORPORATION CASH RECEIPTS AND DISBURSEMENTS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FOUR-WEEK PERIOD ENDED SEPTEMBER 25, 2002 ------------- Cash Receipts: Store $ 1,977 Other 158 ------------- CASH INFLOWS 2,135 ------------- Cash Disbursements: Accounts payable 1,931 Fleming 311 Payroll and benefits 319 Taxes 94 Rent 11 ------------- CASH OUTFLOWS 2,666 ------------- TOTAL CASH FLOWS BEFORE BORROWINGS (531) ------------- DIP Facility Borrowings 35 ------------- NET CASH OUTFLOWS $ (496) -------------
KMART CORPORATION Schedule of Professional Fees and Expenses (Unaudited) - --------------------------------------------------------------------------------
FOR THE PERIOD JANUARY 22, 2002 THROUGH SEPTEMBER 25, 2002 --------------------------------------------------------------------------------- BILLED NAME AMOUNT* PAID UNPAID HOLDBACK ACCRUED** TOTAL - ---- ----------- ----------- ----------- ----------- ----------- ----------- Abacus Advisory and Consulting Corporation, LLC $ 2,455,037 $ 2,023,202 $ 431,835 $ - $ - $ 2,455,037 DKW/ Miller Buckfire & Lewis 1,671,952 1,536,932 135,020 135,000 - 1,671,952 DJM 1,001,076 - 1,001,076 - - 1,001,076 Ernst & Young, Corporate Finance LLC 1,204,238 1,094,808 109,429 109,429 - 1,204,238 FTI Policano & Manzo 2,855,042 1,912,992 942,051 268,516 - 2,855,042 Goldberg, Kohn, Bell 351,331 202,193 149,138 31,188 - 351,331 Jones, Day, Reavis & Pogue 2,084,637 1,482,174 602,463 194,585 - 2,084,637 Jones Day Committee Member Expenses 28,689 28,689 - - - 28,689 KPMG, LLP 2,773,076 1,968,715 804,361 260,265 - 2,773,076 Morgan, Lewis & Bockius LLP 535,796 535,796 - - - 535,796 Otterbourg, Steindler, Houston & Rosen, PC 2,785,567 2,187,263 598,304 264,661 - 2,785,567 Otterbourg Committee Member Expenses 59,196 59,196 - - - 59,196 PricewaterhouseCoopers LLP 8,449,354 7,351,112 1,098,242 743,567 - 8,449,354 Rockwood Gemini Advisors 1,389,686 1,019,277 370,409 112,500 - 1,389,686 Saybrook Capital 517,969 191,914 326,055 51,000 - 517,969 Skadden, Arps, Slate, Meagher & Flom (Illinois) 10,647,039 9,828,854 818,185 818,185 - 10,647,039 Traub, Bonacquist & Fox 509,387 323,486 185,901 48,655 - 509,387 Traub Committee Member Expenses 9,165 - 9,165 - - 9,165 Trumbull Services 3,700,245 3,700,245 - - - 3,700,245 U.S. Trustee 242,000 242,000 - - - 242,000 Winston & Strawn 554,736 415,097 139,639 51,785 - 554,736 Accrued - - - - 28,823,828 28,823,828 ----------- ----------- ----------- ----------- ----------- ----------- TOTAL $43,825,218 $36,103,945 $ 7,721,273 $ 3,089,336 $28,823,828 $72,649,046 =========== =========== =========== =========== =========== ===========
* Billed amounts include fees and expenses ** Accrued amount is the total of holdback and services provided, but not yet billed. KMART CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 1. On January 22, 2002 ("Petition Date"), Kmart Corporation and 37 of its U.S. subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the federal bankruptcy code ("Bankruptcy Code" or "Chapter 11") in the United States Bankruptcy Court for the Northern District of Illinois ("Court"). The reorganization is being jointly administered under the caption "In re Kmart Corporation, et al., Case No. 02 B 02474." Included in the consolidated financial statements are subsidiaries operating outside of the United States, which have not commenced Chapter 11 cases or other similar proceedings elsewhere, and are not debtors ("non-filing subsidiaries"). The assets and liabilities of such non-filing subsidiaries are not considered material to the consolidated financial statements. Kmart Corporation and all of its consolidated subsidiaries, whether or not considered filing or non-filing subsidiaries, are collectively referred to herein as "the Company." 2. To supplement operating cash flow during the reorganization process, the Company secured a $2 billion senior secured debtor-in-possession financing facility ("DIP Credit Facility") from JP Morgan Chase Bank, Fleet Retail Finance, Inc., General Electric Capital Corporation, and Credit Suisse First Boston. On the Petition Date, the Court gave interim approval authorizing borrowings up to $1.15 billion of the DIP Credit Facility for the payment of certain pre-petition claims and the funding of working capital and other general operating needs. On March 6, 2002, the Court approved the full amount of the $2 billion DIP Credit Facility. The DIP Credit Facility requires that we restrict future liens, indebtedness, capital expenditures, dividend payments and sales of assets, and that we maintain certain financial covenants, one of which requires minimum levels of cumulative EBITDA (earnings before interest, taxes, depreciation and amortization), the amounts of which vary throughout the year. The DIP Credit Facility was amended as of August 29, 2002, with the approval of the Court, to provide additional flexibility under the financial covenant contained therein that requires minimum levels of cumulative EBITDA. As of September 25, 2002 the Company had $35 million outstanding and had utilized $360 million of the DIP Credit Facility for letters of credit issued for ongoing import purchasing operations, contractual and regulatory purposes. Outlined below is a summary of availability under the DIP Credit Facility: ($ millions) DIP Credit Facility capacity $2,000 5% Holdback (100) DIP loans outstanding (35) Letters of credit outstanding (360) ------ Total Available as of September 25, 2002 $1,505 ------ 3. Comparable store sales for the five-week period ended October 2, 2002 were 6.9% lower than the same period last year. 4. Income from Discontinued operations of $23 million consisted of $16 million of income to reduce reserves for our remaining lease obligations on closed stores and $7 million of income related to recovery of claims through the bankruptcy of Hechinger Company. 5. Reorganization items, net, of $11 million includes $6 million of professional fees, $4 million of stay bonus expense under the Key Employee Retention Program previously approved by the Court and $1 million of other reorganization expenses. KMART CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 6. Cash used for operating activities primarily reflects a planned increase in inventory purchases in anticipation of the holiday season. 7. In accordance with SFAS No. 109, "Accounting for Income Taxes," the Company has recorded a valuation allowance against net deferred tax assets. Based on the Company's bankruptcy filing, realization of such assets in future years is uncertain. Accordingly, the Company has not recognized any tax benefit from its losses in fiscal 2002. Taxes of $1 million in the current month include income taxes paid to U.S. Territories. 8. Cash Receipts and Disbursements for the four-week period ended September 25, 2002 are summarized as actual receipts and disbursements during the period, as compiled from the Company's daily cash records. IN THE UNITED STATES BANKRUPTCY COURT FOR THE NORTHERN DISTRICT OF ILLINOIS EASTERN DIVISION CASE NAME: Kmart Corporation, et al. CASE NO.: 02 B 02474 ------------------------- ---------- For Month Ending September 25, 2002 TAX QUESTIONNAIRE Debtors in possession and trustees are required to pay all taxes incurred after the filing of their Chapter 11 petition on an as due basis. Please indicate whether the following post petition taxes or withholdings have been paid currently. 1. Federal Income Taxes Yes (x) No ( ) 2. FICA withholdings Yes (x) No ( ) 3. Employee's withholdings Yes (x) No ( ) 4. Employer's FICA Yes (x) No ( ) 5. Federal Unemployment Taxes Yes (x) No ( ) 6. State Income Tax Yes (x) No ( ) 7. State Employee withholdings Yes (x) No ( ) 8. All other state taxes Yes (x) No ( ) If any of the above have not been paid, state below the tax not paid, the amount past due and the date of last payment. KMART CORPORATION CAUTIONARY STATEMENT - -------------------------------------------------------------------------------- The Company cautions readers not to place undue reliance upon the information contained therein. The Operating Report contains unaudited information, is limited in scope, covers a limited time period and is in a format prescribed by the applicable bankruptcy laws. There can be no assurance that the Operating Report is complete. The Monthly Operating Report ("Operating Report") contains information for periods which may be shorter or otherwise different from those contained in the Company's reports pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Such information may not be indicative of the Company's financial condition or operating results for the periods reflected in the Company's financial statements or in its reports pursuant to the Exchange Act and readers are cautioned to refer to the Exchange Act filings. Moreover, the Operating Report and other communications from the Company may include forward-looking statements subject to various assumptions regarding the Company's operating performance that may not be realized and are subject to significant business, economic and competitive uncertainties and contingencies, including those described in this report, many of which are beyond the Company's control. Consequently such matters should not be regarded as a representation or warranty by the Company that such matters will be realized or are indicative of the Company's financial condition or operating results for future periods or the periods covered in the Company's reports pursuant to the Exchange Act. Actual results for such periods may differ materially from the information contained in the Operating Report and the Company undertakes no obligation to update or revise the Operating Report. The Operating Report, as well as other statements made by the Company, may contain forward-looking statements that reflect, when made, the Company's current views with respect to current events and financial performance. Such forward looking statements are and will be, as the case may be, subject to many risks, uncertainties and factors relating to the Company's operations and business environment which may cause the actual results of the Company to be materially different from any future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, the following: the ability of the Company to continue as a going concern; the ability of the Company to operate pursuant to the terms of the DIP facility; the Company's ability to obtain court approval with respect to motions in the Chapter 11 proceeding prosecuted by it from time to time; the ability of the Company to develop, prosecute, confirm and consummate one or more plans of reorganization with respect to the chapter 11 cases; risks associated with third parties seeking and obtaining court approval to terminate or shorten the exclusivity period for the Company to propose and confirm one or more plans of reorganization, for the appointment of a chapter 11 trustee or to convert the cases to chapter 7 cases; the ability of the Company to obtain and maintain normal terms with vendors and service providers; the ability of our vendors to obtain satisfactory credit terms from factors and other financing sources; the Company's ability to maintain contracts that are critical to its operations; the potential adverse impact of the Chapter 11 cases on the Company's liquidity or results of operations; the ability of the Company to fund and execute its business plan; the ability of the Company to attract, motivate and/or retain key executives and associates; and the ability of the Company to attract and retain customers. Other risk factors are listed from time to time in the Company's SEC reports, including, but not limited to the Annual Report on Form 10-K for the year ended January 30, 2002 and the quarterly report on Form 10-Q for the Company's most recent fiscal quarter. Kmart disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Similarly, these and other factors, including the terms of any reorganization plan ultimately confirmed, can affect the value of the Company's various pre-petition liabilities, common stock and/or other equity securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies. A plan of reorganization could result in holders of Kmart common stock receiving no value for their interests. Because of such possibilities, the value of the common stock is highly speculative. Accordingly, the Company urges that the appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities. -----END PRIVACY-ENHANCED MESSAGE-----