-----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, V6jMKGtwcgJsr/ojuJMfF38+Ga0hAkUtuKDbTsL9iAIeEDdW/AyTiELg4mLU051n De+k04VEjT8kFJRO3P9P/A== 0000950124-03-000816.txt : 20030324 0000950124-03-000816.hdr.sgml : 20030324 20030324141424 ACCESSION NUMBER: 0000950124-03-000816 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20030324 ITEM INFORMATION: Financial statements and exhibits ITEM INFORMATION: Regulation FD Disclosure FILED AS OF DATE: 20030324 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: 03613634 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 k75649be8vk.txt CURRENT REPORT DATED 03/24/03 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) MARCH 24, 2003 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 January 30, 2002 and ended February 26, 2003 (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 January 30, 2002 to February 26, 2003. 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: March 24, 2003 By: /s/ A. A. Koch ---------------------------------- A. A. Koch Chief Financial Officer EXHIBIT INDEX Exhibit Number Document Description 99 Monthly Operating Report For The Period January 30, 2003 to February 26, 2003. 3 EX-99 3 k75649bexv99.txt MONTHLY OPERATIN 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 JANUARY 30, 2003 TO FEBRUARY 26, 2003 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: March 24, 2003 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 FEBRUARY 26, 2003 I. Kmart Corporation Unaudited Consolidated Financial Statements A. Consolidated Statement of Operations for the four-week period ended February 26, 2003 B. Consolidated Balance Sheet as of February 26, 2003 C. Consolidated Statement of Cash Flows for the four-week period ended February 26, 2003 D. Cash Receipts and Disbursements for the four-week period ended February 26, 2003 E. Schedule of Professional Fees and Expenses for the period January 22, 2002 through February 26, 2003 F. Notes to Unaudited Consolidated Financial Statements II. Tax Questionnaire KMART CORPORATION Consolidated Statement of Operations (Unaudited) - -------------------------------------------------------------------------------- ($ millions)
FOUR-WEEK PERIOD ENDED FEBRUARY 26, 2003 ------------------ SALES $ 2,172 Cost of sales, buying & occupancy 1,715 ----------------- GROSS MARGIN 457 Selling, general and administrative expenses 490 ----------------- LOSS BEFORE INTEREST, INCOME TAXES AND REORGANIZATION ITEMS, NET (33) Reorganization items, net 3 ----------------- LOSS BEFORE INTEREST AND INCOME TAXES (36) Net interest expense 18 Income taxes - ----------------- NET LOSS $ (54) =================
KMART CORPORATION CONSOLIDATED BALANCE SHEET (Unaudited) - -------------------------------------------------------------------------------- ($ MILLIONS)
FEBRUARY 26, 2003 ------------- ASSETS CURRENT ASSETS Cash and cash equivalents $ 1,007 Merchandise inventories 4,639 Other current assets 621 ------------- TOTAL CURRENT ASSETS 6,267 Property and equipment, net 4,813 Other assets and deferred charges 245 ------------- TOTAL ASSETS $ 11,325 ============= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES Accounts payable $ 1,343 Accrued payroll and other liabilities 749 Taxes other than income taxes 159 ------------- TOTAL CURRENT LIABILITIES 2,251 Debtor-in-possession credit facility - Capital lease obligations 618 Other long-term liabilities 185 ------------- TOTAL LIABILITIES NOT SUBJECT TO COMPROMISE 3,054 LIABILITIES SUBJECT TO COMPROMISE 7,980 Company obligated mandatorily redeemable convertible preferred securities of a subsidiary trust holding solely 7 3/4% convertible junior subordinated debentures of Kmart 646 Common stock, $1 par value, 1,500,000,000 shares authorized; 519,123,988 shares issued 519 Capital in excess of par value 1,922 Accumulated deficit (2,796) ------------- TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 11,325 ============= Memo: LIABILITIES SUBJECT TO COMPROMISE Debt and notes payable $ 3,348 Accounts payable 2,341 Pension obligation 747 Closed store reserves 721 Public liability and workers compensation 318 Taxes payable 285 Other liabilities 220 ------------- $ 7,980 =============
KMART CORPORATION Consolidated Statement of Cash Flows (Unaudited) - -------------------------------------------------------------------------------- ($ millions)
FOUR-WEEK PERIOD ENDED FEBRUARY 26, 2003 ---------------- Cash Flows from Operating Activities Net loss $ (54) Adjustments to reconcile net loss to net cash provided by operating activities: Restructuring, impairments and employee severance 39 Reorganization items, net 3 Depreciation and amortization 45 Equity income in unconsolidated subsidiaries (1) Changes in: Inventory 208 Accounts payable 93 Deferred taxes and other taxes payable 10 Other assets 32 Other liabilities 32 Cash used for store closings and other charges (22) ---------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 385 ---------------- NET CASH PROVIDED BY REORGANIZATION ITEMS 18 CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditures (4) ---------------- NET CASH USED FOR INVESTING ACTIVITIES (4) ---------------- CASH FLOWS FROM FINANCING ACTIVITIES Payments on capital lease obligations (5) ---------------- NET CASH USED FOR FINANCING ACTIVITIES (5) ---------------- NET CHANGE IN CASH AND CASH EQUIVALENTS 394 CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 613 ---------------- CASH AND CASH EQUIVALENTS, END OF PERIOD $ 1,007 ================
KMART CORPORATION Cash Receipts and Disbursements (Unaudited) - -------------------------------------------------------------------------------- ($ millions)
FOUR-WEEK PERIOD ENDED FEBRUARY 26, 2003 ----------- Cash Receipts: Store $ 2,191 Other 209 ----------- CASH INFLOWS 2,400 ----------- Cash Disbursements: Accounts payable 1,352 Fleming 218 Payroll and benefits 302 Taxes 114 Rent 20 ----------- CASH OUTFLOWS 2,006 ----------- TOTAL CASH FLOWS BEFORE BORROWINGS 394 ----------- DIP Credit Facility Borrowings (Repayments) - ----------- NET CASH INFLOWS $ 394 ===========
KMART CORPORATION SCHEDULE OF PROFESSIONAL FEES AND EXPENSES (Unaudited) - --------------------------------------------------------------------------------
FOR THE PERIOD JANUARY 22, 2002 THROUGH FEBRUARY 26, 2003 ------------------------------------------------------------------------------- BILLED NAME AMOUNT* PAID UNPAID HOLDBACK ACCRUED** TOTAL - ----------- ----------- ----------- ----------- ----------- ----------- ----------- Abacus Advisory and Consulting Corporation, LLC $ 3,608,293 $ 3,608,293 $ - $ - $ - $ 3,608,293 Dewey Ballantine 400,396 - 400,396 37,959 400,396 DKW/ Miller Buckfire & Lewis 3,222,092 2,798,057 424,035 202,500 - 3,222,092 DJM 1,012,794 1,012,794 - - - 1,012,794 Erwin Katz 42,096 38,946 3,150 3,861 42,096 Ernst & Young, Corporate Finance LLC 1,204,238 1,204,238 - - - 1,204,238 FTI Policano & Manzo 6,633,917 6,121,275 512,642 512,641 - 6,633,917 Goldberg, Kohn, Bell 1,215,252 992,994 222,258 102,656 - 1,215,252 Jones, Day, Reavis & Pogue 3,238,175 3,022,502 215,673 215,672 - 3,238,175 Jones Day Committee Member Expenses 35,631 35,631 - - - 35,631 KPMG, LLP 6,895,136 5,482,425 1,412,711 515,099 - 6,895,136 Morgan, Lewis & Bockius LLP 685,123 661,997 23,126 - - 685,123 Otterbourg, Steindler, Houston & Rosen, PC 5,083,681 4,272,100 811,581 371,488 - 5,083,681 Otterbourg Committee Member Expenses 113,088 107,423 5,665 - - 113,088 PricewaterhouseCoopers LLP 8,449,354 8,264,250 185,104 185,104 - 8,449,354 Rockwood Gemini Advisors 2,396,360 2,238,860 157,500 157,500 - 2,396,360 Saybrook Capital 1,285,763 1,089,988 195,775 119,226 - 1,285,763 Skadden, Arps, Slate, Meagher & Flom (Illinois) 33,144,275 31,134,770 2,009,505 2,009,505 - 33,144,275 Standard and Poor's 339,666 - 339,666 33,009 339,666 Traub, Bonacquist & Fox 1,132,351 1,018,361 113,990 113,990 - 1,132,351 Traub Committee Member Expenses 63,581 49,127 14,454 - - 63,581 Trumbull Services 3,700,245 3,700,245 - - - 3,700,245 U.S. Trustee 470,750 470,750 - - - 470,750 Winston & Strawn 1,637,256 1,165,579 471,677 120,010 - 1,637,256 Accrued - - - - 28,540,726 28,540,726 ----------- ----------- ----------- ----------- ----------- ------------ TOTAL $86,009,513 $78,490,605 $ 7,518,908 $ 4,700,220 $28,540,726 $114,550,239 =========== =========== =========== =========== =========== ============
* Billed amounts include fees and expenses. ** Accrued amount represents 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 for the payment of certain pre-petition claims and the funding of working capital and other general operating needs. 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 as defined in the DIP Credit Facility), 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. The DIP Credit Facility was again amended on January 9, 2003, with the approval of the court, to allow for the closure of additional stores and modifications to the EBITDA covenants. As of February 26, 2003 the Company had no borrowings outstanding and had utilized $350 million of the DIP Credit Facility for letters of credit issued for ongoing import purchasing operations, contractual and regulatory purposes. Outlined below is a summary of availability under the DIP Credit Facility: ($ millions) DIP Credit Facility capacity $2,000 5% Holdback (100) DIP loans outstanding - Letters of credit outstanding (350) ------ Total Available as of February 26, 2003 $1,550 ====== 3. On January 24, 2003 Kmart received approval from the Court for $2 billion in exit financing from GE Commercial Finance, Fleet Retail Finance, Inc. and Bank of America, N.A. This credit facility, which will be collateralized by inventory, would replace our current $2 billion DIP Credit Facility on the effective date of our Plan of Reorganization. The financing is subject to satisfaction of customary conditions to closing and would be available to Kmart to help meet its ongoing working capital needs, including borrowings for seasonal increases in inventory. 4. Comparable store sales for the four-week period ended February 26, 2003 were 2.5% lower than the same period last year. Comparable store sales do not include the going out of business sales at our 316 closing locations. KMART CORPORATION NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS - -------------------------------------------------------------------------------- 5. Reorganization items, net, of $3 million of expense includes $17 million for stay bonuses under the Key Employee Retention Program approved by the Court and $8 million of professional fees, partially offset by $22 million of income related to the sale of pharmacy lists in the 316 closing stores. 6. On January 24, 2003, we filed a Plan of Reorganization and related Disclosure Statement with the Court. On February 25, 2003, we filed our First Amended Joint Plan of Reorganization (the "Plan of Reorganization") and a related amended Disclosure Statement with the Court. The Plan of Reorganization received the formal endorsement of our statutory creditors committees and, on February 25, 2003, the Court approved our amended Disclosure Statement. All holders of claims as of February 18, 2003 received the amended Disclosure Statement, which was mailed to creditors and shareholders on or about March 7, 2003. We are presently scheduled to seek confirmation of the Plan of Reorganization by the Court at a hearing scheduled for April 14 and 15, 2003 and, if confirmed, plan to emerge from Chapter 11 by April 30, 2003. 7. On February 3, 2003 we announced that we had terminated our supply relationship with Fleming by means of a rejection of the 2001 contract through Kmart's Chapter 11 reorganization. Fleming continued to supply food and consumable products to us until March 8, 2003. We now facilitate the supply of food and consumables ourselves. Kmart has experienced little business interruption in the transition. As part of the bankruptcy proceedings, Fleming has filed a claim of $1.5 billion as of March 11, 2003. On March 18, 2003, we came to an agreement with Fleming in regards to their claim for $15 million representing an administrative claim and $450 million as a pre-petition claim. Our estimate of our liability related to this claim is not yet represented in our results of operations in the first quarter of 2003. 8. 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 2003. 9. Cash Receipts and Disbursements for the four-week period ended February 26, 2003 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 February 26, 2003 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 29, 2003 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. There can be no assurance, however, that the Plan of Reorganization submitted by Kmart will be confirmed by the Court, or that such Plan of Reorganization will be consummated; in addition, the timing of such actions may be other than currently planned by Kmart. A Plan of Reorganization cannot become effective until confirmed by the Court, upon certain findings being made by the Court which are required by the Bankruptcy Code. The Court may confirm a plan notwithstanding the non-acceptance of the plan by an impaired class of creditors or equity security holders if certain requirements of the Bankruptcy Code are met. If it is determined, as is expected, that liabilities subject to compromise in the Chapter 11 cases exceed the fair value of the assets available to satisfy them, unsecured claims may be satisfied at less than 100% of their face value and the equity interests of Kmart's shareholders may have no value. -----END PRIVACY-ENHANCED MESSAGE-----