-----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, ActeSQAC8dQBud+oncdLx2um9fvKTn9vMFVGAVz8QcQ10ZnCLkFG19VXa7N8Zpzv aXiLdw8mUfufL8z5qn7CQQ== 0000950131-98-006408.txt : 19981210 0000950131-98-006408.hdr.sgml : 19981210 ACCESSION NUMBER: 0000950131-98-006408 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19981031 FILED AS OF DATE: 19981209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KOHLS CORPORATION CENTRAL INDEX KEY: 0000885639 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-DEPARTMENT STORES [5311] IRS NUMBER: 391630919 STATE OF INCORPORATION: WI FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-11084 FILM NUMBER: 98766069 BUSINESS ADDRESS: STREET 1: N56 W17000 RIDGEWOOD DR CITY: MENOMONEE FALLS STATE: WI ZIP: 53051 BUSINESS PHONE: 4147835800 MAIL ADDRESS: STREET 1: N54 W13600 WOODALE DR CITY: MENOMONEE FALLS STATE: WI ZIP: 53051 10-Q 1 FORM 10-Q UNITED STATES 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 October 31, 1998 ----------------------------------- 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 number 1-11084 -------- KOHL'S CORPORATION - ------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) WISCONSIN 39-1630919 - ----------------------------------- --------------------------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin 53051 - ------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (414) 703-7000 -------------- 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 ----- ----- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: December 3, 1998 Common ----------------------- Stock, Par Value $.01 per Share, 158,274,022 shares Outstanding. - ---------------------------------------------------------------- KOHL'S CORPORATION INDEX PART I. FINANCIAL INFORMATION Item 1 Financial Statements: Condensed Consolidated Balance Sheets at October 31, 1998, January 31, 1998 and November 1, 1997 3 Condensed Consolidated Statements of Income for the Three Months and Nine Months Ended October 31, 1998 and November 1, 1997 4 Consolidated Statement of Changes in Shareholders' Equity for the Nine Months Ended October 31, 1998 5 Condensed Consolidated Statements of Cash Flows for the Nine Months Ended October 31, 1998 and November 1, 1997 6 Notes to Condensed Consolidated Financial Statements 7-8 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 9-15 PART II. OTHER INFORMATION Item 6 Exhibits and Reports on Form 8-K 16 Signatures 17
2 KOHL'S CORPORATION CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands except share and per share amounts)
October 31, January 31, November 1, 1998 1998 1997 -------------------------------------- (Unaudited) (Audited) (Unaudited) Assets ------ Current assets: Cash and cash equivalents $ 17,757 $ 44,161 $ 8,366 Accounts receivable, trade 123,459 239,617 56,869 Merchandise inventories 832,338 515,790 752,665 Deferred income taxes 6,576 6,615 1,042 Other 5,180 5,259 6,296 ---------- ---------- ---------- Total current assets 985,310 811,442 825,238 Property and equipment, at cost 1,075,652 926,534 887,769 Less accumulated depreciation 192,050 176,885 163,750 ---------- ---------- ---------- 883,602 749,649 724,019 Other assets 20,783 12,643 10,258 Favorable lease rights 14,153 15,849 16,583 Goodwill 26,238 30,138 31,438 ---------- ---------- ---------- Total assets $1,930,086 $1,619,721 $1,607,536 ========== ========== ========== Liabilities and Shareholders' Equity ------------------------------------ Current liabilities: Accounts payable $ 315,770 $ 150,679 $ 259,989 Accrued liabilities 88,283 95,185 87,682 Income taxes payable 13,141 38,482 7,789 Current portion of long-term debt 1,559 1,845 1,769 ---------- ---------- ---------- Total current liabilities 418,753 286,191 357,229 Long-term debt 379,076 310,366 310,932 Deferred income taxes 51,318 45,104 43,472 Other long-term liabilities 24,001 23,278 21,342 Shareholders' equity Common stock-$.01 par value, 400,000,000 shares authorized, 158,202,170, 157,757,956 and 157,576,790 issued at October 31, 1998, January 31, 1998 and November 1, 1997, respectively 1,582 1,578 1,528 Paid-in capital 492,498 488,550 480,977 Retained earnings 562,858 464,654 392,056 ---------- ---------- ---------- Total shareholders' equity 1,056,938 954,782 874,561 ---------- ---------- ---------- Total liabilities and shareholders' equity $1,930,086 $1,619,721 $1,607,536 ========== ========== ==========
See accompanying Notes to Condensed Consolidated Financial Statements 3 KOHL'S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
3 Months 3 Months 9 Months 9 Months (13 Weeks) (13 Weeks) (39 Weeks) (39 Weeks) Ended Ended Ended Ended October 31, November 1, October 31, November 1, 1998 1997 1998 1997 ----------------------------------------------------- (In thousands except per share data) Net sales $888,897 $757,773 $2,392,215 $1,982,257 Cost of merchandise sold 589,275 503,892 1,582,547 1,317,121 -------- -------- ---------- ---------- Gross margin 299,622 253,881 809,668 665,136 Operating expenses: Selling, general, and administrative 202,156 173,065 565,280 472,061 Depreciation and amortization 16,839 13,392 47,483 37,913 Goodwill amortization 1,300 1,300 3,900 3,900 Preopening expenses 8,049 6,421 15,591 18,589 -------- -------- ---------- ---------- Operating income 71,278 59,703 177,414 132,673 Interest expense, net 5,367 5,583 15,627 18,405 -------- -------- ---------- ---------- Income before income taxes 65,911 54,120 161,787 114,268 Provision for income taxes 25,903 21,594 63,583 45,593 -------- -------- ---------- ---------- Net income $40,008 $32,526 $98,204 $68,675 ======== ======== ========== ========== Earnings per share: Basic Net income $0.25 $0.21 $0.62 $0.46 Average number of shares 158,132 156,045 158,007 150,732 Diluted Net income $0.25 $0.20 $0.60 $0.45 Average number of shares 162,723 159,999 162,492 154,270
See accompanying Notes to Condensed Consolidated Financial Statements 4 KOHL'S CORPORATION CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
Common Stock ------------------ Paid-In Retained Shares Amount Capital Earnings Total ---------------------------------------------------------- (In thousands) Balance at January 31, 1998 157,758 $1,578 $488,550 $464,654 $ 954,782 Net income - - - 98,204 98,204 Exercise of stock options (net) 444 4 3,948 - 3,952 ---------------------------------------------------------- Balance at October 31, 1998 158,202 $1,582 $492,498 $562,858 $1,056,938 ==========================================================
See accompanying Notes to Condensed Consolidated Financial Statements 5 KOHL'S CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
9 Months 9 Months (39 Weeks) (39 Weeks) Ended Ended October 31, 1998 November 1, 1997 ---------------------------------- (In thousands) Operating activities Net income $ 98,204 $ 68,675 Adjustments to reconcile net income to net cash provided by operating activities Depreciation and amortization 51,532 42,107 Deferred income taxes 6,253 1,155 Other noncash charges 1,573 1,593 Accounts receivable, trade 116,158 (30,158) Other working capital (181,396) (203,857) --------- --------- Net cash provided by (used in) operating activities 92,324 (120,485) Investing activities Acquisition of property and equipment, net (183,784) (163,921) Other (8,270) (3,455) --------- --------- Net cash used in investing activities (192,054) (167,376) Financing activities Net borrowings under working capital loan 69,500 -- Proceeds from long-term debt 1,187 -- Repayments of long-term debt (1,313) (993) Payment of financing fees on debt -- (101) Net proceeds from issuance of common stock (including stock options) 3,952 288,415 --------- --------- Net cash provided by financing activities 73,326 287,321 --------- --------- Net decrease in cash and cash equivalents (26,404) (540) Cash and cash equivalents at beginning of period 44,161 8,906 --------- --------- Cash and cash equivalents at end of period $ 17,757 $ 8,366 ========= =========
See accompanying Notes to Condensed Consolidated Financial Statements 6 KOHL'S CORPORATION NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for fiscal year end financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. For further information, refer to the financial statements and footnotes thereto included in the Company's Form 10-K (Commission File No. 1-11084) filed with the Securities and Exchange Commission. Shareholders' equity, share and per share amounts for all periods presented have been adjusted for the 2 for 1 stock split declared by the Company's Board of Directors on March 9, 1998, effected in the form of a stock dividend. 2. Inventories The Company uses the last-in, first out (LIFO) method of accounting for merchandise inventory because it results in a better matching of cost and revenues. The following information is provided to show the effects of the LIFO provision on the quarter, as well as to provide users with the information to compare to other companies not on LIFO.
LIFO Expense 9 Months Ended Quarter October 31, 1998 November 1, 1997 ------- ---------------- ---------------- (In Thousands) First $1,861 $1,501 Second 1,896 1,560 Third 1,900 1,895 ------ ------ Total $5,657 $4,956
Inventories would have been $10,440,000, $4,783,000 and $9,832,000 higher at October 31, 1998, January 31, 1998 and November 1, 1997, respectively if they had been valued using the first-in, first-out (FIFO) method. 3. Contingencies The Company is involved in various legal matters arising in the normal course of business. In the opinion of management, the outcome of such proceedings and litigation will not have a material 7 adverse impact on the Company's financial position or results of operations. 4. Net Income Per Share In February, 1997 the Financial Accounting Standards Board (FASB) issued SFAS No. 128, "Earnings per Share", which specifies the computation, presentation and disclosure requirements of earnings per share. All net income per share amounts for all periods have been presented to conform to SFAS No. 128 disclosure requirements. The numerator for the calculation of basic and diluted net income per share is net income. The denominator is summarized as follows (in thousands):
3 Months 9 Months Ended Ended Ended Ended October 31, November 1, October 31, November 1, 1998 1997 1998 1997 ---- ---- ---- ---- Denominator for basic earnings per share - weighted average shares 158,132 156,045 158,007 150,732 Employee stock options 4,591 3,954 4,485 3,538 ------- ------- ------- ------- Denominator for diluted earnings per share 162,723 159,999 162,492 154,270 ======= ======= ======= =======
8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF --------------------------------------- FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS ---------------------------------------------- THREE MONTHS AND NINE MONTHS ENDED OCTOBER 31, 1998 --------------------------------------------------- Results of Operations - --------------------- At October 31, 1998, the Company operated 214 stores compared with 182 stores at the same time last year. The Company opened 17 stores during the third quarter: three stores in the Washington, D.C. market; two stores in the Philadelphia market; two stores in the Charlotte, NC market; two stores in the Detroit, MI market; two stores in the Chicago market; two stores in the Columbus, OH market and stores in Toledo, OH; Charleston, WV; Akron, OH and Lawrence, KS market. In addition, the Company relocated one of its Indianapolis stores and one of its Milwaukee stores to larger locations. The Company plans to open eighteen stores in the spring of 1999: five stores in the Denver, CO market; two stores in the Harrisburg, PA market; two additional stores in the Washington, D.C. market; two additional stores in the Chicago market; two additional stores in the Detroit, MI market; and additional stores in the Philadelphia; Lexington, KY; Omaha, NE; Goshen/Elkhart, IN; and Indianapolis, IN markets. Kohl's will open 22-27 additional stores in the fall of 1999 including its entry into the St. Louis market. To support its expansion plans, the Company plans to open its fourth distribution center in the spring of 2000. The distribution center will be located in the Kansas City area. Net sales increased $131.1 million or 17.3% to $888.9 million for the three months ended October 31, 1998 from $757.8 million for the three months ended November 1, 1997. Of the increase, $99.3 million is attributable to the inclusion of 12 new stores opened in 1997 and 32 new stores opened in 1998. The remaining $31.8 million is attributable to comparable store sales growth of 4.3%. Net sales increased $409.9 million or 20.7% to $2,392.2 million for the nine months ended October 31, 1998 from $1,982.3 million for the nine months ended November 1, 1997. Of the increase, $252.2 million is attributable to the inclusion of 32 new stores opened in 1997 and in 1998, respectively. The remaining $157.8 million is attributable to comparable stores sales growth of 8.8%. Gross margin for the three months ended October 31, 1998 was 33.7% compared to 33.5% for the three months ended November 1, 1997. Gross margin for the nine months ended October 31, 1998 was 33.8% compared to 33.6% for the nine months ended November 1, 1997. These increases are primarily attributable to a change in merchandise mix. 9 The Company incurred $8.0 million of pre-opening expenses associated with the opening of 17 new stores and relocating two stores during the three months ended October 31, 1998 compared to $6.4 million for 10 new stores during the three months ended November 1, 1997. The Company incurred $15.6 million of pre- opening expenses associated with the opening of 32 new stores and the relocation of two stores in the nine months ended October 31, 1998 compared to $18.6 million for 32 new stores and the relocation of one store in the nine months ended November 1, 1997. The expenses relate to the cost associated with new store openings, including hiring and training costs for new employees, Kohl's charge account solicitations and processing and transporting initial merchandise. Operating income for the three months ended October 31, 1998, increased $11.6 million or 19.4% over the three months ended November 1, 1997. Operating income for the nine months ended October 31, 1998 increased $44.7 million or 33.7% over the nine months ended November 1, 1997. Excluding pre-opening expenses, operating income increased 27.6% for the nine months ended October 31, 1998. These increases resulted from the increased sales, higher gross margin rates and the Company's ability to leverage its selling, general and administrative expenses as net sales increased. Selling, general and administrative expenses declined to 22.7% of net sales for the three months ended October 31, 1998 from 22.8% of net sales for the three months ended November 1, 1997. Selling, general and administrative expenses declined to 23.6% of net sales for the nine months ended October 31, 1998 from 23.8% of the net sales for the nine months ended November 1, 1997. Net interest expense for the three months ended October 31, 1998 decreased $0.2 million from the three months ended November 1, 1997. Net interest expense for the nine months ended October 31, 1998 decreased $2.8 million from the nine months ended November 1, 1997. The decreases were primarily due to a reduction in borrowings under its revolving credit facility and increased interest income on short-term investments. For the three months ended October 31, 1998, net income increased 23.0% to $40.0 million from $32.5 million in the three months ended November 1, 1997. Earnings were $.25 per diluted share for the three months ended October 31, 1998 compared to $.20 per diluted share for the three months ended November 1, 1997. Net income for the nine months ended October 31, 1998 increased 43.0% to $98.2 million or $.60 per diluted share from $68.7 million or $.45 per diluted share in the nine months ended November 1, 1997. 10 Impact of Year 2000 - ------------------- The Company currently has a Year 2000 Readiness Plan implemented. Defined in the plan are compliance definitions and testing guidelines for in-house developed applications and computer hardware platforms. The plan defines a methodology for assessing in-house developed applications and provides a means for documentation. Team members and their responsibilities are defined including senior executives that participate on the Year 2000 steering committee. The plan defines three phases to address the Year 2000 problem: . The Assessment phase involves the inventory of all in-house developed applications, purchased software and hardware, merchandise vendors, non-IT systems, utilities and service providers. The Assessment phase also includes developing a plan for addressing each item and/or vendor to ensure Year 2000 compliance. . The Remediation phase is implementing the change to reach compliance and unit testing. This includes correspondence with vendors that have products or services that impact the Company's ability to continue normal business operations. . The Verification phase is system testing the change(s) in similar environments. This includes testing with vendors and service provider organizations. The Company changed its client server and mainframe date routine standards to incorporate four digits for all new systems development a number of years ago. As a result, there are many systems that need only to be certified and have the interfaces reviewed and tested. There are however, legacy and package financial systems that are not Year 2000 compliant. The Company has assessed these systems and presently believes that with modification to existing software and conversions to new software, the Year 2000 issue will not pose significant operational problems. The Company is utilizing both internal and external resources to reprogram, or replace and test the software for Year 2000 modifications. The Company is in the remediation phase of its Year 2000 plan. The Company anticipates completing the necessary project code modifications by January 31, 1999 and the replacement code in the second quarter of 1999. The last phase, "Verification/System testing" has started and will be completed in 1999. The Company has installed a Year 2000 test lab that is identical to the production environment. Year 2000 date simulation testing can be performed without affecting production files. 11 The Company has initiated formal communications with all significant suppliers to determine the extent to which the Company's interface systems are vulnerable to those parties' failure to remediate their own Year 2000 issues. The Company is currently unit testing in-house developed applications, EDI and non-IT systems. The Company continues to refine its contingency plans and is enhancing and adding to the plans for each business area. The Company has identified that it may experience certain inconveniences or inefficiencies as a result of a supplier's failure to remediate its Year 2000 issue. The Company believes however, the vast majority of the Company's business will proceed without any significant interruption. The Company's total Year 2000 project costs and estimates to complete include the impact of third party Year 2000 issues based on presently available information. The total cost of the Year 2000 project is estimated at $10 million and is being funded through operating cash flows. Of the total project cost, approximately $6 million is attributable to the purchase of new software and hardware that will be capitalized. The remaining $4 million of programming and testing costs will be expensed as incurred and is not expected to have a material effect on the results of the operations. Of the capital, approximately $4 million is for a new financial system. The new financial system was a previously planned project that supports the Company's growth, provides significant business enablement and eliminates a substantial Year 2000 effort. To date, the Company has incurred approximately $4.0 million ($1.4 million expensed and $2.6 million capitalized) related to the assessment of, and preliminary efforts on, its Year 2000 project and the development of a modification plan, purchase of new systems and systems modifications. The cost of the project and the date on which the Company believes it will complete the Year 2000 modifications are based on management's best estimates. However, there can be no guarantee that these estimates will be achieved and actual results could differ materially from those anticipated. In addition to the Company's reliance on certain third parties to remediate their own Year 2000 issues, specific factors that might cause such material differences include, but are not limited to, the continued availability and cost of personnel trained in this area and the ability to locate and correct all relevant computer codes. Seasonality & Inflation - ----------------------- The Company's business, like that of most retailers, is subject to seasonal influences, with the major portion of sales and income realized during the last half of each fiscal year, which includes the back-to-school and holiday seasons. Because of the seasonality of the Company's business, results for any quarter are not necessarily indicative of the results that may be achieved for 12 a full fiscal year. In addition, quarterly results of operations depend significantly upon the timing and amount of revenues and costs associated with the opening of new stores. The Company does not believe that inflation has had a material effect on the results during the periods presented. However, there can be no assurance that the Company's business will not be affected in the future. Financial Condition and Liquidity - --------------------------------- The Company's primary ongoing cash requirements are for inventory purchases, capital expenditures in connection with the Company's expansion and remodeling programs and pre-opening expenses. The Company's primary sources of funds for its business activities are cash flow from operations, sales of its proprietary accounts receivable, borrowings under its revolving credit facility and short-term trade credit. Short-term trade credit, in the form of extended payment terms for inventory purchases or third party factor financing, represents a significant source of financing for merchandise inventories. The Company's working capital and inventory levels typically build throughout the fall, peaking during the Christmas selling season. At October 31, 1998, the Company's merchandise inventories had increased $316.5 million over the January 31, 1998 balance and $79.7 million over the November 1, 1997 balance. These increases reflect the purchase of fall inventory as well as inventory for new stores. The Company's working capital increased to $566.6 million at October 31, 1998 from $525.3 million at January 31, 1998 and $468.0 million at November 1, 1997. Of the $98.6 million increase from November 1, 1997, $66.6 million is attributable to higher credit card receivables as the Company internally financed a higher percentage of receivables. The remaining increase was primarily the result of higher merchandise inventory levels required to support existing stores and incremental new store locations offset in part by increased accounts payable. Cash provided by operating activities was $92.3 million for the nine months ended October 31, 1998 compared to cash used in operating activities of $120.5 million for the nine months ended November 1, 1997. The increase in cash provided resulted primarily from increased profitability and proceeds from sales of proprietary accounts receivable. Excluding changes in operating assets and liabilities, cash provided by operating activities was $157.6 million for the nine months ended October 31, 1998 compared to $113.5 million for the nine months ended November 1, 1997. Capital expenditures for the nine months ended October 31, 1998 were $183.8 million compared to $163.9 million for the same period a year ago. The increase in expenditures in 1998 is primarily attributable to the Company's remodel program for the nine months ended October 31, 1998 offset by construction of the 13 Winchester, Virginia distribution center in the nine months ended November 1, 1997. Total capital expenditures for fiscal 1998 are currently expected to be approximately $250.0 million (excluding assets under capital leases). The actual amount of the Company's future annual capital expenditures will depend primarily on the number of new stores opened, whether such stores are owned or leased by the Company and the number of existing stores remodeled or refurbished. The Company anticipates that it will be able to satisfy its current operating needs, planned capital expenditures and debt service requirements with current working capital, cash flows from operations, seasonal borrowings under its revolving credit facility, short-term trade credit and other lending facilities. Information in this document contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, such as statements relating to debt service requirements and planned capital expenditures. Forward-looking statements can be identified by the use of forward-looking terminology such as "believes", "expects", "may", "will", "should" or "anticipates" or the negative thereof or other variations thereon. No assurance can be given that the future results covered by the forward-looking statements will be achieved. New Accounting Pronouncements - ----------------------------- In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income," which establishes the standards for reporting and displaying comprehensive income and its components (revenue, expenses, gains and losses) as part of a full set of financial statements. This statement requires that all elements of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The statement is effective for fiscal years beginning after December 15, 1997. Since this standard applies only to presentation of comprehensive income, it will not have any impact on the Company's results of operations, financial position or cash flows. In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an Enterprise and Related Information," which is effective for fiscal years beginning after December 15, 1997. SFAS No. 131 establishes standards for the way public business enterprises report information about operating segments in annual financial statements and requires that those enterprises report selected information about operating segments in interim financial reports. It also establishes standards for related disclosures about products and services, geographic areas and major customers. The Company has one operating segment; therefore, this standard 14 will not have any impact on the Company's results of operations, financial position or cash flows. In March 1998, the AICPA issued Statement of Position (SOP) 98-1, "Accounting for the Costs of Computer Software Developed for or Obtained for Internal Use." The SOP is effective for fiscal years beginning after December 15, 1998. The SOP will require the capitalization of certain costs incurred after the date of adoption in connection with developing or obtaining software for internal use. Effective February 1, 1998, the Company adopted SOP 98-1. Prior to the adoption of this SOP, the Company expensed such costs as incurred. Based on costs incurred to date, the adoption of this SOP should not have any material impact on the Company's results of operations or financial position. In April 1998, the AICPA issued SOP 98-5, "Reporting on the Costs of Start- Up Activities." The SOP is effective for fiscal years beginning after December 15, 1998 and requires that start-up costs capitalized prior to adoption of the SOP be written off and any future costs be expensed as incurred. It is not practical to estimate at this time what the effect of this charge will be on the Company's future earnings or financial position. 15 Item 6. Exhibits and Reports on Form 8-K a) Exhibits 12.1 Statement regarding calculation of ratio of earnings to fixed charges. 27.1 Financial Data Schedule - Article 5 of Regulation S-X, 9 Months ended October 31, 1998. 27.2 Financial Data Schedule - Article 5 of Regulation S-X, 3 Months ended May 3, 1997, (restated). 27.3 Financial Data Schedule - Article 5 of Regulation S-X, 6 Months ended August 2, 1997, (restated). 27.4 Financial Data Schedule - Article 5 of Regulation S-X, 9 Months ended November 1, 1997, (restated). b) Reports on Form 8-K There were no reports on Form 8-K filed for three months ended October 31, 1998 16 SIGNATURES ---------- Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Kohl's Corporation (Registrant) Date: December 7, 1998 /s/William Kellogg --------------------- William Kellogg Chairman, Chief Executive Officer Date: December 7, 1998 /s/Arlene Meier -------------------- Arlene Meier Executive Vice President - Finance Chief Financial Officer 17 EX-12.1 2 STATEMENT REGARDING CALCULATION Exhibit 12.1 Kohl's Corporation Ratio of Earnings to Fixed Charges ($000s)
39 Weeks Ended -------------- Fiscal Year (1) Oct 31, Nov 1, ------------------------------------------------------------ 1998 1997 1997 1996 1995 1994 1993 ---- ---- ---- ---- ---- ---- ---- Earnings Income before income taxes and extraordinary items $161,787 $114,268 $235,063 $171,368 $122,729 $117,451 $ 96,691 Fixed charges (3) 46,049 42,628 57,446 42,806 30,649 19,758 16,144 Less interest capitalized during period (1,215) (1,611) (2,043) (2,829) (1,287) (603) (376) -------- -------- -------- -------- -------- -------- -------- $206,621 $155,285 $290,466 $211,345 $152,091 $136,606 $112,459 ======== ======== ======== ======== ======== ======== ======== Fixed Charges Interest (expensed or capitalized) (3) $ 18,196 $ 20,174 $ 26,304 $ 20,574 $ 14,774 $ 7,911 $ 6,253 Portion of rent expense representative of interest 27,704 22,159 30,798 22,031 15,798 11,777 9,113 Amortization of deferred financing fees 149 295 344 201 77 70 778 -------- -------- -------- -------- -------- -------- -------- $ 46,049 $ 42,628 $ 57,446 $ 42,806 $ 30,649 $ 19,758 $ 16,144 ======== ======== ======== ======== ======== ======== ======== Ratio of earnings to fixed charges 4.49 3.64 5.06 4.94 4.96 (2) 6.91 6.97 ======== ======== ======== ======== ======== ======== ========
(1) Fiscal 1997, 1996, 1994 and 1993 are 52 week years and fiscal 1995 is a 53 week year. (2) Excluding the credit operations non-recurring expense of $14,052, the ratio of earnings to fixed charges would be 5.40. (3) Interest expense for fiscal 1997, 1996, and 1995 has been restated to properly reflect interest expense included on the Condensed Consolidated Statements of Income. EX-27.1 3 FDS, MONTHS ENDED 10/31/98
5 1,000 9-MOS JAN-30-1999 FEB-01-1998 OCT-31-1998 17,757 0 123,459 0 832,338 985,310 1,075,652 192,050 1,930,086 418,753 379,076 1,582 0 0 1,055,356 1,930,086 2,392,215 2,392,215 1,582,547 2,214,801 0 0 15,627 161,787 63,583 98,204 0 0 0 98,204 0.62 0.60
EX-27.2 4 FDS, MONTHS ENDED 05/03/1997 (RESTATED)
5 1,000 3-MOS JAN-31-1998 FEB-02-1997 MAY-03-1997 2,191 0 12,366 0 537,893 559,712 787,858 139,801 1,267,341 282,674 390,173 1,480 0 0 533,410 1,267,341 600,547 600,547 397,377 569,240 0 0 5,836 25,471 10,163 15,308 0 0 0 15,308 0.10 0.10
EX-27.3 5 FDS, MONTHS ENDED 08/02/1997 (RESTATED)
5 1,000 6-MOS JAN-31-1998 FEB-02-1997 AUG-02-1997 2,205 0 11,482 0 553,317 571,924 828,148 151,125 1,306,981 285,021 404,262 1,483 0 0 555,814 1,306,981 1,224,484 1,224,484 813,229 1,151,514 0 0 12,822 60,148 23,999 36,149 0 0 0 36,149 0.24 0.24
EX-27.4 6 FDS, MONTHS ENDED 11/01/1997 (RESTATED)
5 1,000 9-MOS JAN-31-1998 FEB-02-1997 NOV-01-1997 8,366 0 56,869 0 752,665 825,238 887,769 163,750 1,607,536 357,229 310,932 1,528 0 0 873,033 1,607,536 1,982,257 1,982,257 1,317,121 1,849,584 0 0 18,405 114,268 45,593 68,675 0 0 0 68,675 0.46 0.45
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