-----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, CTuoXjee98SebxSE9UtrC7cCHJcdceVbeJjUWuHfiL+ny4TWSZjKgs1Tv0TUcFw0 gB9FetVV+t/tUTSZ47JlMQ== 0000950124-02-003903.txt : 20021223 0000950124-02-003903.hdr.sgml : 20021223 20021223100413 ACCESSION NUMBER: 0000950124-02-003903 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021223 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: FILED AS OF DATE: 20021223 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: 02866117 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 k73598e8vk.txt CURRENT REPORT 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) DECEMBER 23, 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 October 31, 2002 and ended November 27, 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 October 31, 2002 to November 27, 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: December 23, 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 October 31, 2002 to November 27, 2002. 3 EX-99 3 k73598exv99.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 OCTOBER 31, 2002 TO NOVEMBER 27, 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: December 23, 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 NOVEMBER 27, 2002 I. Kmart Corporation Unaudited Consolidated Financial Statements A. Consolidated Statement of Operations for the four-week period ended November 27, 2002 B. Consolidated Balance Sheet as of November 27, 2002 C. Consolidated Statement of Cash Flows for the four-week period ended November 27, 2002 D. Cash Receipts and Disbursements for the four-week period ended November 27, 2002 E. Schedule of Professional Fees and Expenses for the period January 22, 2002 through November 27, 2002 F. Notes to Unaudited Consolidated Financial Statements II. Tax Questionnaire KMART CORPORATION CONSOLIDATED STATEMENT OF OPERATIONS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FIVE-WEEK PERIOD ENDED NOVEMBER 27, 2002 ----------------- SALES $ 2,466 Cost of sales, buying & occupancy 2,011 ----------------- GROSS MARGIN 455 Selling, general and administrative expenses 468 ----------------- LOSS BEFORE INTEREST, INCOME TAXES AND REORGANIZATION ITEMS, NET (13) Reorganization items, net 8 ----------------- LOSS BEFORE INTEREST AND INCOME TAXES (21) Net interest expense 16 Income taxes 3 ----------------- CONTINUING NET LOSS (40) Discontinued operations, net - ----------------- NET LOSS $ (40) =================
KMART CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
NOVEMBER 27, 2002 ---------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 442 Merchandise inventories 6,693 Other current assets 732 ---------------- TOTAL CURRENT ASSETS 7,867 Property and equipment, net 5,713 Other assets and deferred charges 233 ---------------- TOTAL ASSETS $ 13,813 ================ LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 2,095 Accrued payroll and other liabilities 698 Taxes other than income taxes 311 ---------------- TOTAL CURRENT LIABILITIES 3,104 Debtor-in-possession credit facility 777 Capital lease obligations 654 Other long-term liabilities 214 ---------------- TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 4,749 LIABILITIES SUBJECT TO COMPROMISE 7,103 Company obligated mandatorily redeemable convertible preferred securities of a subsidiary trust holding solely 7 3/4% convertible junior subordinated debentures of Kmart 660 Common stock, $1 par value, 1,500,000,000 shares authorized; 517,791,396 shares issued 518 Capital in excess of par value 1,909 Accumulated deficit (1,126) ---------------- TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,813 ================ Memo: LIABILITIES SUBJECT TO COMPROMISE Debt and notes payable $ 3,324 Accounts payable 2,244 Closed store reserves 704 Public liability and workers compensation 258 Other liabilities 229 Pension obligation 178 Taxes payable 166 ---------------- $ 7,103 ================
KMART CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FIVE-WEEK PERIOD ENDED NOVEMBER 27, 2002 ------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (40) Adjustments to reconcile net loss to net cash used for operating activities: Discontinued operations, net - Restructuring, impairments and employee severance (5) Reorganization items, net 8 Depreciation and amortization 56 Equity income in unconsolidated subsidiaries (2) Changes in: Inventory (363) Accounts payable 251 Deferred taxes and other taxes payable 21 Other assets (133) Other liabilities 102 Cash used for store closings and other charges (5) ------------------- NET CASH USED FOR OPERATING ACTIVITIES (110) ------------------- NET CASH USED FOR REORGANIZATION ITEMS (14) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (11) ------------------- NET CASH USED FOR INVESTING ACTIVITIES (11) ------------------- CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from DIP facility 202 Payments on capital lease obligations (6) ------------------- NET CASH PROVIDED BY FINANCING ACTIVITIES 196 ------------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 61 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 381 ------------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 442 ===================
KMART CORPORATION CASH RECEIPTS AND DISBURSEMENTS (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FIVE-WEEK PERIOD ENDED NOVEMBER 27, 2002 ----------------- Cash Receipts: Store $ 2,478 Other 184 ----------------- CASH INFLOWS 2,662 ----------------- Cash Disbursements: Accounts payable 1,945 Fleming 391 Payroll and benefits 327 Taxes 121 Rent 14 Other 5 ----------------- CASH OUTFLOWS 2,803 ----------------- TOTAL CASH FLOWS BEFORE BORROWINGS (141) ----------------- DIP Facility Borrowings 202 ----------------- NET CASH OUTFLOWS $ 61 =================
KMART CORPORATION SCHEDULE OF PROFESSIONAL FEES AND EXPENSES (Unaudited) - --------------------------------------------------------------------------------
FOR THE PERIOD JANUARY 22, 2002 THROUGH NOVEMBER 27, 2002 ---------------------------------------------------------------------------------- BILLED NAME AMOUNT* PAID UNPAID HOLDBACK ACCRUED** TOTAL - ---- -------- ----- ------- --------- ---------- ----- Abacus Advisory and Consulting Corporation, LLC $ 2,900,264 $ 2,900,264 $ - $ - $ - $ 2,900,264 Dewey Ballantine*** 333,797 - 333,797 31,639 333,797 DKW/ Miller Buckfire & Lewis 2,157,406 2,044,886 112,520 112,500 - 2,157,406 DJM 1,012,794 1,001,076 11,718 - - 1,012,794 Erwin Katz 33,251 16,677 16,574 3,166 33,251 Ernst & Young, Corporate Finance LLC 1,204,238 1,204,238 - - - 1,204,238 FTI Policano & Manzo 4,964,295 3,754,359 1,209,936 352,656 - 4,964,295 Goldberg, Kohn, Bell 715,636 474,508 241,128 64,156 - 715,636 Jones, Day, Reavis & Pogue 2,545,839 2,013,564 532,275 154,610 - 2,545,839 Jones Day Committee Member Expenses 34,815 32,096 2,719 - - 34,815 KPMG, LLP 3,240,922 3,067,142 173,780 173,780 - 3,240,922 Morgan, Lewis & Bockius LLP 656,369 656,369 - - - 656,369 Otterbourg, Steindler, Houston & Rosen, PC 3,808,270 2,989,681 818,589 248,910 - 3,808,270 Otterbourg Committee Member Expenses 94,076 72,641 21,435 - - 94,076 PricewaterhouseCoopers LLP 8,593,459 8,264,250 329,209 199,488 - 8,593,459 Rockwood Gemini Advisors 1,638,994 1,548,994 90,000 90,000 - 1,638,994 Saybrook Capital 851,359 630,101 221,258 81,000 - 851,359 Skadden, Arps, Slate, Meagher & Flom (Illinois) 28,329,591 26,764,378 1,565,213 1,565,213 - 28,329,591 Traub, Bonacquist & Fox 724,442 657,808 66,634 66,633 - 724,442 Traub Committee Member Expenses 36,048 21,595 14,453 - - 36,048 Trumbull Services 3,700,245 3,700,245 - - - 3,700,245 U.S. Trustee 356,500 356,500 - - - 356,500 Winston & Strawn 617,694 589,634 28,060 27,653 - 617,694 Accrued - - - - 16,235,264 16,235,264 ------------ ------------ ----------- ----------- ------------ ------------ TOTAL $68,550,304 $62,761,006 $5,789,298 $3,171,404 $16,235,264 $84,785,568 ============ ============ =========== =========== ============ ============
* Billed amounts include fees and expenses ** Accrued amount is the total of holdback and services provided, but not yet billed. *** Dewey Ballantine has turned in a Second Fee Review Application, fees and expenses may be covered by an insurance policy. 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, amortization and other charges), 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 November 27, 2002 the Company had $777 million of borrowings outstanding and had utilized $334 million of the DIP Credit Facility for letters of credit issued for ongoing import purchasing operations, contractual and regulatory purposes. Outlined below is a summary of availability under the DIP Credit Facility: ($ millions) DIP Credit Facility capacity $2,000 5% Holdback (100) DIP loans outstanding (777) Letters of credit outstanding (334) ----------- Total Available as of November 27, 2002 $789 ===========
3. Comparable store sales for the four-week period ended November 27, 2002 were 17.2% lower than the same period last year. In contrast to many other retailers, Kmart's fiscal period ends on the last Wednesday of the month. Accordingly, the reporting period for November 2002 does not include the sales results of Thanksgiving weekend, as it did in 2001, which resulted in an unfavorable comparison. 4. Reorganization items, net, of $8 million includes $9 million of expense for stay bonuses previously approved by the Court, $5 million of professional fees and $3 million of other reorganization expenses. These expenses are partially offset by a non-cash credit of $5 million related to the settlement of pre-petition liabilities, and $4 million of lease auction income. KMART CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5. Cash used for operating activities and the increase in borrowings from the DIP Credit Facility primarily reflect a planned increase in inventory purchases in anticipation of the holiday season. 6. 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. Income tax expense of $3 million is for New Jersey income tax payable due to a change in the provisions of the New Jersey Tax Code. 7. Cash Receipts and Disbursements for the four-week period ended November 27, 2002 are summarized as actual receipts and disbursements during the period, as compiled from the Company's daily cash records. 8. During the four-week period ended November 27, Kmart has received conversion notices from holders of 4,301,655 trust convertible preferred securities. Such securities were convertible into 14,338,706 shares of Kmart common stock. 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 November 27, 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 herein. The Monthly Operating Report ("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 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 also result in holders of Kmart common stock receiving no distribution on account of their interests and cancellation of their interests. Holders of Kmart common stock should assume that they could receive little or no value as part of a plan of reorganization. In light of the foregoing, the Company considers the value of the common stock to be highly speculative and cautions equity holders that the stock may ultimately be determined to have no value. 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-----