<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended January 26, 1994
or
/_/ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to .
Commission File No. 1-327
Kmart Corporation
-----------------
(Exact name of registrant as specified in its charter)
Michigan 38-0729500
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3100 West Big Beaver Road - Troy, Michigan 48084
- --------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code (810) 643-1000
--------------
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE SECURITIES EXCHANGE ACT
OF 1934:
<TABLE>
<CAPTION>
Name of each Exchange
Title of each class on which registered
------------------- -------------------
<S> <C>
Common Stock, $1.00 par value New York, Pacific and
Chicago Stock Exchanges
Series A Conversion Preferred Stock, no par value New York, Pacific and
Chicago Stock Exchanges
12-1/8% Notes Due 1995 New York Stock Exchange
8-3/8% Debentures Due 2017 New York Stock Exchange
</TABLE>
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE SECURITIES EXCHANGE ACT
OF 1934:
None
----
(Continued)
<PAGE> 2
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 by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
The aggregate market value of voting stock including common stock, Series A
conversion preferred stock and Series B convertible preferred stock, held by
non-affiliates of the registrant on March 23, 1994 was $8,796,523,458. The
market value of the common and Series A conversion preferred stock is based on
the closing price on the New York Stock Exchange. The market value of the
Series B convertible preferred stock is based on the current conversion formula
for the stock.
As of March 23, 1994, 409,171,850 shares of Common Stock of the Registrant,
held by 87,410 shareholders, were outstanding.
Documents Incorporated by Reference
-----------------------------------
The following documents are incorporated by reference into this Form 10-K:
<TABLE>
<CAPTION>
Part of Form 10-K into which
Documents the Document is Incorporated
--------- ----------------------------
<S> <C>
Portions of the Registrant's definitive Proxy Part I (Items 1 and 2);
Statement dated April 28, 1994, filed with the Part II (Items 5 through 8);
Securities and Exchange Commission Part III (Items 10 through 12); and
pursuant to Regulation 14A Part IV (Item 14)
</TABLE>
2
<PAGE> 3
PART I
Item 1. Business
- ------- --------
Information regarding the business description of Kmart Corporation
("Kmart" or the "Registrant") appearing in the "Business Description" of the
Kmart Group in Annex VI pages VI-21 through VI-24 of the Registrant's
definitive Proxy Statement dated April 28, 1994 filed with the Securities and
Exchange Commission (SEC) pursuant to Regulation 14A is incorporated herein by
reference.
Information regarding the Registrant's discontinued operations,
acquisitions and dispositions appearing in the "Notes to Consolidated Financial
Statements" in Annex V pages V-28 through V-29 of the Registrant's definitive
Proxy Statement dated April 28, 1994 filed with the SEC pursuant to Regulation
14A is incorporated herein by reference.
Information regarding the consolidated operations and the analysis of
U.S. General Merchandise, International General Merchandise and Specialty
Retail operations appearing on Annex V pages V-3 through V-19 of the
Registrant's definitive Proxy Statement dated April 28, 1994 filed with the SEC
pursuant to Regulation 14A is incorporated herein by reference.
Information regarding the Registrant's business group information,
appearing in the "Notes to Consolidated Financial Statements" on Annex V pages
V-38 through V-39 in the Registrant's definitive Proxy Statement dated April
28, 1994 filed with the SEC pursuant to Regulation 14A is incorporated herein
by reference.
Compliance with federal, state and local provisions which have been
enacted or adopted regulating the discharge of materials into the environment,
or otherwise relating to the protection of the environment, has not had, and is
not expected to have, a material effect on the capital expenditures, earnings
or competitive position of the Registrant and its subsidiaries.
Item 2. Properties
- ------- ----------
Information regarding store locations, property and leases for the U.S.
and International General Merchandise appearing on Annex VI page VI-21 through
VI-22 in the Registrant's definitive Proxy Statement, dated April 28, 1994
filed with the SEC pursuant to Regulation 14A is incorporated herein by
reference.
The Registrant owns 13 department stores and various other properties in
the Czech Republic and Slovakia.
Builders Square, Inc., based in San Antonio, Texas, owns one
administrative facility and leases 174 of its 177 store locations (three
locations are owned pending sale and lease-back).
Walden Book Company, Inc. owns its headquarters in Stamford,
Connecticut and leases four regional offices. Walden leases all of its stores,
owns one distribution center and leases three other distribution facilities.
The Sports Authority, Inc. leases its administrative facility in Fort
Lauderdale, Florida and all 80 of its stores.
OfficeMax, Inc. leases its headquarters in Shaker Heights, Ohio, one
distribution center and all of its 328 stores.
Borders, Inc. owns its headquarters in Ann Arbor, Michigan and two of
its 44 stores and leases one distribution center.
The Registrant intends to sell and lease-back or mortgage the majority
of its owned but unfinanced retail properties. During fiscal 1993, the
Registrant mortgaged two Kmart stores and sold and leased-back 23 Kmart stores,
one distribution center and four Builders Square stores.
3
<PAGE> 4
Item 3. Legal Proceedings
- ------- -----------------
The Registrant and its subsidiaries are parties to a substantial number
of legal proceedings, most of which are routine and all of which are incidental
to their business. Some matters involve claims for large amounts of damages as
well as other relief. Although the consequences are not presently
determinable, in the opinion of management, they will not materially affect the
Registrant's liquidity, financial position or results of operations.
Item 4. Submission of Matters to a Vote of Security Holders
- ------- ---------------------------------------------------
Not applicable.
4
<PAGE> 5
Executive Officers of the Registrant
The following table sets forth information concerning the executive
officers of the Registrant as of February 7, 1994.
<TABLE>
<CAPTION>
Served In
Position
Name Position Age Since
--------------------------- --------------------------------------- --- -----------
<S> <C> <C> <C>
Joseph E. Antonini Chairman of the Board, President and
Chief Executive Officer 52 10/87
Donald W. Keeble Executive Vice President, Merchandising
and Operations 45 1/94
Richard S. Miller Executive Vice President,
Super Kmart Centers 54 10/93
George R. Mrkonic Executive Vice President, Specialty Retailing 41 11/90
Thomas F. Murasky Executive Vice President and
Chief Financial Officer 48 12/91
Anthony N. Palizzi Executive Vice President, General Counsel 51 12/92
Joseph R. Thomas Executive Vice President,
U.S. Kmart Stores 58 10/93
David M. Carlson Senior Vice President, Corporate
Information Systems 53 1/89
Frederic M. Comins, Jr. Senior Vice President, Executive and
Organization Resources 45 11/92
Paul J. Hueber Senior Vice President, Sales and Operations 45 1/94
Anthony R. Mauro Senior Vice President, Distribution
and Transportation 59 2/91
Michael L. Skiles Senior Vice President, Corporate Facilities 48 2/91
William D. Underwood Senior Vice President, General Merchandise
Manager-Hardlines 53 10/88
Thomas W. Watkins Senior Vice President,
International Operations 48 1/93
F. Kevin Browett Vice President, Hardlines Merchandising 39 1/94
Ronald L. Buch Vice President, Fashions Merchandising 59 1/94
James P. Churilla Vice President and Treasurer 52 7/87
James E. Ford Vice President, Eastern Region 51 2/91
G. William Gryson, Jr. Vice President, Midwestern Region 52 1/94
Gerald K. Habeck Vice President, Advertising 51 6/91
Nancie W. LaDuke Vice President and Secretary 53 2/91
Michael T. Macik Vice President, Human Resources -
U.S. Kmart Stores 47 8/92
David R. Marsico Vice President, Super Kmart Centers 45 2/93
Douglas M. Meissner Vice President, Western Region 45 1/94
James L. Moser Vice President, Quality Assurance, Import Sourcing
and Fashion Services 55 6/92
Thomas M. Nielsen Vice President, Executive Resources 50 11/92
Peter J. Palmer Vice President, Labor Relations and
Assistant General Counsel 53 2/88
William H. Parker Vice President, Merchandising - Books and Sundries 46 8/91
Jay D. Scussel Vice President, Systems Development 50 1/89
A. Robert Stevenson Vice President, Public Affairs 56 1/88
Frederick C. Tinsey, III Vice President, Finance and Accounting 41 *
John S. Valenti Vice President, Southern Region 53 2/91
Michael G. Wellman Vice President, Marketing 53 10/87
</TABLE>
* Effective May 1, 1994
5
<PAGE> 6
There is no family relationship between any of the foregoing persons.
Officers of the Registrant are elected each year at the Annual Meeting
of the Board of Directors to serve for the ensuing year and until their
successors are elected and qualified.
With the exception of Frederick C. Tinsey, III, F. Kevin Browett,
Frederic M. Comins, Jr., George R. Mrkonic, and William H. Parker, all of the
executive officers of the Registrant named above have held various executive or
managerial positions with the Registrant for more than five years. Effective
May 1, 1994, Frederick C. Tinsey, III will be promoted to Vice President,
Accounting and Finance. He joined the Registrant as Director of Strategic
Planning and Development in March of 1993 and was subsequently promoted to
Divisional Vice President, Chief Financial and Administrative Officer for
Super Kmart Centers in October, 1993. Prior to joining the Registrant, Mr.
Tinsey was Managing Partner, National Retail Services Group, for Price
Waterhouse. In January 1994, F. Kevin Browett was promoted to Vice President,
Hardlines Merchandising. He joined the Registrant as Senior Director, Pharmacy
Operations in January 1991. Prior to joining the Registrant, he was Corporate
Vice President, Pharmacy Operations, of Peoples Drug Stores, Inc. In November
1992, Frederic M. Comins, Jr. was promoted to Senior Vice President, Executive
and Organization Resources. He joined the Registrant as Director, Executive
Resources in July 1990. Prior to joining the Registrant, Mr. Comins was Vice
President, Human Resources for Britches of Georgetown. Before that, he held
executive positions in human resources at Federated Department Stores and L.
Bamberger and Company. In November 1990, George R. Mrkonic joined the
Registrant as Executive Vice President, Specialty Retailing. Most recently,
Mr. Mrkonic had been President of Eyelab, Inc. Prior to that he was President
and Chief Executive Officer of Herman's Sporting Goods, Inc. In August 1991,
William H. Parker was promoted to Vice President, Merchandising - Books and
Sundries. In November 1989 he was appointed to the newly created position of
Vice President, Sales and Marketing, and in July prior to that he was appointed
to the newly created position of Vice President, Sales. Prior to joining the
Registrant, Mr. Parker served as Senior Vice President and General Merchandise
Manager for Carson Pirie Scott in Chicago, Illinois. Before that, he worked
for Dayton Hudson Corporation as Divisional Merchandise Manager for Hudson's,
General Manager of Hudson's Oakland and Northland Mall stores and Divisional
Merchandise Manager for Target.
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
- ------- ---------------------------------------------------------------------
Information as to the market for the Registrant's common stock and
related stockholder matters as set forth in the "Quarterly Stock
Market Information and Dividend Highlights" appearing on Annex V page V-45 of
the Registrant's definitive Proxy Statement dated April 28, 1994 filed with the
SEC pursuant to Regulation 14A, is incorporated herein by reference.
Item 6. Selected Financial Data
- ------- -----------------------
The "Selected Financial Data Summary" appearing on Annex V page V-2 of
the Registrant's definitive Proxy Statement dated April 28, 1994 filed with the
SEC pursuant to Regulation 14A, insofar as it relates to the five years ended
January 26, 1994, is incorporated herein by reference.
Sales and store statistics for the three fiscal years ending January 26,
1994 appearing on Annex V pages V-3 through V-19 of the Registrant's
definitive Proxy Statement dated April 28, 1994 filed with the SEC pursuant to
Regulation 14A, are incorporated herein by reference.
Total square footage of retail selling area appearing on Annex VI page
VI-14 through VI-15 of the Registrant's definitive proxy statement dated April
28, 1994 filed with the SEC pursuant to Regulation 14A, is incorporated herein
by reference.
Item 7. Management's Discussion and Analysis of Financial Condition and
- ------- ---------------------------------------------------------------
Results of Operations
- ---------------------
The information under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" appearing on Annex V pages V-3
through V-19 of the Registrant's definitive Proxy Statement dated April 28,
1994 filed with the SEC pursuant to Regulation 14A, is incorporated herein by
reference.
Item 8. Financial Statements and Supplementary Data
- --------------------------------------------------
The financial statements of the Registrant consisting of the
consolidated balance sheets at January 26, 1994 and January 27, 1993 and the
related consolidated statements of income, shareholders' equity and cash flows
for each of the three fiscal years ended January 26, 1994, and the notes to
consolidated financial statements, together with the report of
6
<PAGE> 7
Price Waterhouse, appearing on Annex V pages V-20 through V-45 of the
Registrant's definitive Proxy Statement dated April 28, 1994 filed with the SEC
pursuant to Regulation 14A, are incorporated herein by reference. The
information under the caption "Quarterly Stock Market Information and Dividend
Highlights" appearing on Annex page V-45 of the Registrant's definitive Proxy
Statement dated April 28, 1994 filed with the SEC pursuant to Regulation 14A,
is incorporated herein by reference.
Item 9. Changes in and Disagreements with Accountants on Accounting and
- ------- ---------------------------------------------------------------
Financial Disclosure
--------------------
Not applicable.
PART III
Item 10. Directors of the Registrant
The information set forth under the caption "Election of Directors" on
pages 29 through 33 of the Registrant's definitive Proxy Statement dated April
28, 1994 filed with the SEC pursuant to Regulation 14A is incorporated herein
by reference.
Item 11. Executive Compensation
- -------- ----------------------
The information set forth on pages 34 through 41 of the Registrant's
definitive Proxy Statement dated April 28, 1994 filed with the SEC pursuant to
Regulation 14A is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
- -------- --------------------------------------------------------------
The information set forth on page 28 of the Registrant's definitive
Proxy Statement dated April 28, 1994 filed with the SEC pursuant to Regulation
14A is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions.
- -------- -----------------------------------------------
Not applicable.
7
<PAGE> 8
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
- -------- ---------------------------------------------------------------
a) The following documents are filed as part of this report:
1. FINANCIAL STATEMENTS
The following consolidated financial statements of the
Registrant are incorporated herein by reference from the
Registrant's definitive Proxy Statement dated April 28,
1994 filed with the SEC pursuant to Regulation 14A.
<TABLE>
<CAPTION>
Page(s) in
Registrant's
Proxy Statement
---------------
<S> <C>
Report of Independent Accountants V-21
Consolidated Statements of Income for each of the
three fiscal years ended January 26, 1994 V-22
Consolidated Balance Sheets at January 26, 1994
and January 27, 1993 V-23
Consolidated Statements of Cash Flows for each
of the three fiscal years ended January 26, 1994 V-24
Consolidated Statements of Shareholders' Equity for
each of the three fiscal years ended January 26, 1994 V-25
Notes to Consolidated Financial Statements V-26 through V-45
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES
Report of Independent Accountants on Financial
Statement Schedules
For each of the three fiscal years ended January 26, 1994:
V - Property, Plant and Equipment
VI - Accumulated Depreciation and Amortization
of Property, Plant and Equipment
IX - Short-Term Borrowings
X - Supplementary Income Statement Information
3. EXHIBITS
See Exhibit Index included in this report.
b) REPORTS ON FORM 8-K
Not Applicable
8
<PAGE> 9
c) All other schedules are omitted because they are not applicable or the
required information is shown in the Registrant's definitive Proxy
Statement dated April 28, 1994 filed with the SEC pursuant to Regulation
14A, which is incorporated herein by reference.
d) The individual financial statements of the Registrant and of 50% or less
owned persons have been omitted because they are not required. The
condensed individual financial statements of 50% or less owned persons
are included in the Notes to Consolidated Financial Statements appearing
on Annex V pages V-31 through V-32 of the Registrant's definitive Proxy
Statement dated April 28, 1994 filed with the SEC pursuant to Regulation
14A, which is incorporated herein by reference.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized on April 25, 1994.
Each signatory hereby acknowledges and adopts the typed form of his or
her name in the electronic filing of this document with the Securities and
Exchange Commission.
Kmart Corporation
By Joseph E. Antonini
------------------
(Joseph E. Antonini)
Chairman of the Board,
President and Chief Executive Officer
By Thomas F. Murasky
------------------
(Thomas F. Murasky)
Executive Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons, on behalf of the
Registrant and in the capacities indicated, on April 25, 1994.
Each signatory hereby acknowledges and adopts the typed form of his or
her name in the electronic filing of this document with the Securities and
Exchange Commission.
<TABLE>
<S> <C>
Lilyan H. Affinito David B. Harper
----------------------------------- -----------------------------------
Lilyan H. Affinito, Director David B. Harper, Director
Joseph E. Antonini F. James McDonald
----------------------------------- -----------------------------------
Joseph E. Antonini F. James McDonald, Director
Chairman of the Board
President and Chief Executive Officer Richard S. Miller
(Principal Executive Officer) -----------------------------------
and Director Richard S. Miller, Director
Joseph A. Califano, Jr. J. Richard Munro
----------------------------------- -----------------------------------
Joseph A. Califano, Jr., Director J. Richard Munro, Director
Willie D. Davis Donald S. Perkins
----------------------------------- -----------------------------------
Willie D. Davis, Director Donald S. Perkins, Director
Enrique C. Falla Gloria M. Shatto
----------------------------------- -----------------------------------
Enrique C. Falla, Director Gloria M. Shatto, Director
Joseph P. Flannery Joseph R. Thomas
----------------------------------- -----------------------------------
Joseph P. Flannery, Director Joseph R. Thomas, Director
</TABLE>
10
<PAGE> 11
REPORT OF INDEPENDENT ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULES
TO THE BOARD OF DIRECTORS
OF KMART CORPORATION
Our audits of the consolidated financial statements referred to in our
report dated March 15, 1994 appearing on Annex V page V-21 of the Registrant's
definitive Proxy Statement dated April 28, 1994 filed with the Securities and
Exchange Commission pursuant to Regulation 14A is incorporated herein by
reference, also included an audit of the Financial Statement Schedules listed
in Item 14(a)(2) of this Form 10-K. In our opinion, these Financial Statement
Schedules present fairly, in all material respects, the information set forth
therein when read in conjunction with the related consolidated financial
statements.
Price Waterhouse
Detroit, Michigan
March 15, 1994
11
<PAGE> 12
KMART CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (1)
(Millions)
<TABLE>
<CAPTION>
Balance at
Beginning Retirements Discontinued Balance at
Description of Year Additions and other(2) Operations(3) end of year
- ---------------------------- --------------- --------------- --------------- -------------- --------------
Year ended January 26, 1994:
- ----------------------------
<S> <C> <C> <C> <C> <C>
Land $ 204 $ 4 $ (28) $ 92 $ 144
Buildings 657 6 14 198 451
Leasehold improvements 1,706 108 (96) 205 1,705
Furniture and fixtures 5,516 416 (43) 487 5,488
Construction in progress 85 489 448 1 125
--------------- --------------- --------------- -------------- --------------
$ 8,168 $ 1,023 $ 295 $ 983 $ 7,913
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
Property under capital leases $ 2,861 $ 185 $ 69 $ 28 $ 2,949
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
Year ended January 27, 1993:
- ----------------------------
Land $ 171 $ 2 $ (31) $ $ 204
Buildings 485 33 (139) 657
Leasehold improvements 1,349 122 (235) 1,706
Furniture and fixtures 4,726 502 (288) 5,516
Construction in progress 116 776 807 85
--------------- --------------- --------------- -------------- --------------
$ 6,847 $ 1,435 $ 114 $ $ 8,168
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
Property under capital leases $ 2,712 $ 185 $ 36 $ $ 2,861
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
Year ended January 29, 1992:
- ----------------------------
Land $ 142 $ 39 $ 10 $ $ 171
Buildings 404 45 (36) 485
Leasehold improvements 1,020 79 (250) 1,349
Furniture and fixtures 4,098 388 (240) 4,726
Construction in progress 92 778 754 116
--------------- --------------- --------------- -------------- --------------
$ 5,756 $ 1,329 $ 238 $ $ 6,847
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
Property under capital leases $ 2,583 $ 157 $ 28 $ $ 2,712
--------------- --------------- --------------- -------------- --------------
--------------- --------------- --------------- -------------- --------------
</TABLE>
(1) See Notes to Consolidated Financial Statements on Annex V page V-30
through V-31 of the Registrant's definitive Proxy Statement filed
with the SEC pursuant to Regulation 14A on April 28, 1994.
(2) Retirements and other includes acquired fixed assets of BizMart in 1993;
Borders, Pay'n Save, OW Office Warehouse and 13 department stores in
Slovakia and Czech Republic in 1992; and OfficeMax in 1991.
(3) See Notes to Consolidated Financial Statements on Annex V page V-28
through V-29 of the Registrant's definitive Proxy Statement filed with
the SEC pursuant to Regulation 14A on April 28, 1994.
12
<PAGE> 13
KMART CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION
OF PROPERTY, PLANT AND EQUIPMENT (1)
<TABLE>
<CAPTION>
(Millions)
Additions
Balance at charged to
Beginning profit and Retirements Discontinued Balance at
Description of Year loss and other(2) Operations(3) end of year
- -------------------------- ---------- ----------- ------------ ------------- -----------
<S> <C> <C> <C> <C> <C>
Year ended January 26, 1994
- ---------------------------
Buildings $ 103 $ 14 $ -- $ 26 $ 91
Furniture and fixtures 2,611 481 51 139 2,902
--------- ------- ------- ------- -------
2,714 495 51 165 2,993
Leasehold improvements 492 72 -- 49 515
--------- ------- ------- ------- -------
$ 3,206 $ 567 $ 51 $ 214 $ 3,508
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
Property under
capital leases $ 1,418 $ 117 $ 64 $ 3 $ 1,468
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
Year ended January 27, 1993:
- ----------------------------
Buildings $ 80 $ 15 $ (8) $ $ 103
Furniture and fixtures 2,444 449 282 2,611
--------- ------- ------- ------- -------
2,524 464 274 2,714
Leasehold improvements 425 73 6 492
--------- ------- ------- ------- -------
$ 2,949 $ 537 $ 280 $ $ 3,206
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
Property under
capital leases $ 1,345 $ 114 $ 41 $ $ 1,418
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
Year ended January 29, 1992:
- ----------------------------
Buildings $ 69 $ 12 $ 1 $ $ 80
Furniture and fixtures 2,288 355 199 2,444
--------- ------- ------- ------- -------
2,357 367 200 2,524
Leasehold improvements 363 75 13 425
--------- ------- ------- ------- -------
$ 2,720 $ 442 $ 213 $ $ 2,949
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
Property under
capital leases $ 1,258 $ 110 $ 23 $ $ 1,345
--------- ------- ------- ------- -------
--------- ------- ------- ------- -------
</TABLE>
(1) See Notes to Consolidated Financial Statements on Annex V page V-30
through V-31 of the Registrant's definitive Proxy Statement filed
with the SEC pursuant to Regulation 14A on April 28, 1994.
(2) The balance in accumulated depreciation at January 26, 1994, January 27,
1993 and January 29, 1992, include $282, $99 and $145, respectively,
related to estimated fixed asset write-offs resulting from the store
restructuring and other charges.
(3) See Notes to Consolidated Financial Statements on Annex V page V-28
through V-29 of the Registrant's definitive Proxy Statement filed
with the SEC pursuant to Regulation 14A on April 28, 1994.
13
<PAGE> 14
KMART CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE IX - SHORT-TERM BORROWINGS (a)
<TABLE>
<CAPTION>
(Millions) Maximum Average Weighted
Amount Amount Average
Balance Weighted Outstanding Outstanding Interest Rate
Category of Aggregate at End Average During the During the During the
Short-term Borrowings of Period Interest Rate Period (b) Period (c) Period (d)
--------------------- --------- ------------- ---------- ---------- ------------
<S> <C> <C> <C> <C> <C>
YEAR 1993
Commercial paper.......... $918 3.4% $3,220 $2,079 3.2%
YEAR 1992
Commercial paper.......... $590 3.2% $2,371 $1,136 3.6%
YEAR 1991
Commercial paper.......... -- -- $1,509 $1,093 6.1%
</TABLE>
(a) Commercial paper is issued on a discount basis at prevailing market rates.
(b) Represents maximum amount outstanding for each category of aggregate
short-term borrowings at various month-ends.
(c) Average short-term borrowings are the sum of dollar-days of borrowings
divided by actual days in the year.
(d) Average interest rates are determined by dividing actual interest accrued
by average short-term borrowings.
14
<PAGE> 15
KMART CORPORATION AND SUBSIDIARY COMPANIES
SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
<TABLE>
<CAPTION>
(MILLIONS)
FISCAL YEAR ENDED
---------------------------------------
JANUARY 26, JANUARY 27 JANUARY 29,
CHARGED TO COSTS AND EXPENSES 1994 1993 1992
- ----------------------------- ----------- ---------- -----------
<S> <C> <C> <C>
ADVERTISING $482 $472 $537
---- ---- ----
---- ---- ----
</TABLE>
Advertising expense for the prior periods have been restated for discontinued
operations.
15
<PAGE> 16
EXHIBIT INDEX
Exhibit Description
The Exhibit marked with one asterisk below was filed as an Exhibit to
the Form 10-K Report of the Registrant for the fiscal year ended January 25,
1989 (file number 1-327) and is incorporated herein by reference. The Exhibits
marked with two asterisks below were filed as Exhibits to the Form 10-K Report
of the Registrant for the year ended January 31, 1990 (file number 1-327) and
are incorporated herein by reference. The Exhibits marked with three asterisks
below were filed as Exhibits to the Form 10-K Report of the Registrant for the
year ended January 27, 1992 (file number 1-327) and are incorporated herein by
reference. The Exhibits marked with four asterisks below were filed as
Exhibits to Form 10-K Report of the Registrant for the year ended January 27,
1993 (file number 1-327) and are incorporated herein by reference. The numbers
in brackets are the Exhibit numbers in the Form 10-K Reports for the fiscal
years ended; January 25, 1989; January 31, 1990; January 29, 1992 and January
27, 1993, respectively.
**** (3a) Restated Articles of Incorporation of Kmart Corporation as
amended [3a]
(3b) Bylaws of Kmart Corporation as amended [3b]
**** (10a) Kmart Corporation 1973 Stock Option Plan as amended [10a] [A]
**** (10b) Kmart Corporation 1981 Stock Option Plan as amended [10b] [A]
*** (10c) Kmart Corporation Supplemental Executive Retirement Plan [10c]
[A]
** (10d) Kmart Corporation Directors Retirement Plan as amended [10d]
[A]
(10e) Kmart Corporation Performance Restricted Stock Plan [10e] [A]
* (10f) Form of Severance Agreement with Executive Officers [10f] [A]
*** (10g) Deferred Compensation Plan for Non-Employee Directors as
amended [10g] [A]
**** (10h) Kmart Corporation 1992 Stock Option Plan [10h] [A]
*** (10i) Kmart Corporation Directors Stock Plan [10i] [A]
(10j) Form of Employment Agreement with Executive Officers [10j] [A]
(11) Statement Regarding Computation of Per Share Earnings
(12) Statement Regarding Computation of Ratios
** (18) Letter Regarding Change in Accounting Principle
(22) List of Significant Subsidiaries of Kmart Corporation
(24) Consent of Independent Accountants
[A] This document is a management contract or compensatory plan.
The Registrant agrees to furnish a copy to the Commission upon
request of the following instruments defining the rights of
holders of long-term debt:
Kmart Corporation and The Bank of New York, Trustee Indenture
dated as of February 1, 1985
12-1/8% Notes Due 1995
12-1/2% Debentures Due 2005
8-1/8% Notes Due 2006
8-3/8% Debentures Due 2017
8-1/4% Notes Due 2022
8-3/8% Debentures Due 2022
7-3/4% Debentures Due 2012
Fixed-Rate Medium-Term Notes
16
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EXHIBIT 3B
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BY-LAWS
OF KMART CORPORATION
A MICHIGAN CORPORATION
(Inc. Mar. 9, 1916)
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- --------------------------------
MAY 1993
<PAGE> 2
I, , Secretary of Kmart Corporation, a Michigan
corporation, hereby certify that the following is a true and complete copy of
the By-Laws of said corporation as amended to the date of this certificate and
now in force.
In witness whereof, I have hereunto set my hand and affixed the seal of the
Corporation at the City of Troy, Michigan, this ______________ day of
_____________ A.D. 19__.
________________________
Secretary
<PAGE> 3
BY-LAWS
OF KMART CORPORATION
A MICHIGAN CORPORATION
(Inc. Mar. 9, 1916)
ARTICLE I
STOCKHOLDERS' MEETINGS
SECTION 1. ANNUAL MEETING. The annual meeting of stockholders for the
election of directors and for the transaction of any other business authorized
or required to be transacted by the stockholders, shall be held at the
principal office of the Company on the fourth Tuesday in May in each year at
nine o'clock A.M., or at such other place and time as the Board of Directors
may designate. Any annual meeting not held at the time prescribed therefor may
be held at any time thereafter to which said meeting may be adjourned or for
which it may be called.
SECTION 2. SPECIAL STOCKHOLDERS' MEETINGS. Special meetings of stockholders
other than those regulated by statute may be called by the Chairman or Vice
Chairman of the Board, or by the Board of Directors, either by a Director's
resolution or a written instrument signed by a majority of the Directors.
SECTION 3. NOTICE OF MEETINGS. Written notice of the time, place and purposes
of a meeting of stockholders shall be given not less than twenty (20) nor more
than sixty (60) days before
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the date of the meeting, either personally or by mail, to each stockholder of
record entitled to vote at the meeting. If mailed, such notice shall be deemed
to be given when deposited in the United States mail, addressed to the
stockholder at his or her address as it appears on the stock transfer books of
the Company, with postage prepaid.
SECTION 4. QUORUM. At all meetings of stockholders, except where it is
otherwise provided by law, the holders of a majority of the outstanding shares
entitled to vote, being present in person or represented by proxy, shall
constitute a quorum for all purposes.
SECTION 5. INSPECTORS OF ELECTION. Prior to the annual meeting of
stockholders, the Chairman or Vice Chairman of the Board or the President
shall appoint at least two Inspectors of Election to act as inspectors at such
meeting and at any meeting of stockholders which may be held during the ensuing
year. It shall be the duty of Inspectors of Election to receive and classify
all proxies as received, and check same with the record of stockholders
entitled to vote at such meetings, to tabulate votes, and to report to the
chairman of the meeting the total number of shares represented at the meeting
in person or by proxy, and the result of the voting.
SECTION 6. VOTING. At all meetings of stockholders, every stockholder of
record as of the applicable record date shall be entitled to vote, either in
person or by proxy appointed by instrument in writing, subscribed by such
stockholder or by his authorized agent. Each outstanding share of capital
stock is entitled to one vote on each matter submitted to a vote, except as
otherwise provided in the Articles of Incorporation. A vote may be cast either
orally or in writing, at the discretion of the chairman of the meeting.
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AMENDMENTS TO BY-LAWS
12/21/93
ARTICLE I
SECTION 7. ADJOURNMENTS. Any annual or special meeting of stockholders,
whether or not a quorum is present, may be adjourned from time to time by a
majority vote of the shares present in person or by proxy. Unless the Board of
Directors fixes a new record date for the adjourned meeting, it is not
necessary to give notice of the adjourned meeting if the time and place to which
the meeting is adjourned are announced at the meeting at which the adjournment
is taken and at the adjourned meeting only such business is transacted as might
have been transacted at the original meeting.
SECTION 8. CONDUCT OF BUSINESS. Only such business shall be conducted at a
meeting of stockholders as is specified in the notice of meeting (or any
supplement thereto) or as may be properly brought before the meeting by or at
the direction of the Board of Directors or by a stockholder entitled to vote at
such meeting. In addition to any other applicable requirements and limitations
(including requirements of the Securities Exchange Act of 1934, as amended, and
rules and regulations thereunder with respect to inclusion of proposals in the
Company's proxy solicitation materials), for business to be properly brought
before a meeting by a stockholder (other than the nomination of candidates for
election as directors as provided in Article II, Section 2), notice thereof in
writing must be delivered to the Secretary of the Company not later than (a)
with respect to an annual meeting of stockholders, ninety (90) days in advance
of such meeting, provided, however, if the annual meeting is not held on or
within eight (8) days of the date set forth in Article 1, Section 1 and if less
than one hundred (100) days notice or public disclosure of the date of the
meeting is given to stockholders, such notice by a stockholder must be not
later than the tenth day following the date on which notice or public
disclosure of the date of the meeting was first given the stockholders and (b)
with respect to a special meeting of stockholders, such notice by a stockholder
must be not later than the tenth day following the date on which notice or
public disclosure of the date of the meeting was first given the stockholders.
A stockholder's notice to the Secretary shall set forth as to any matter the
stockholder proposes to bring before the meeting (a) the name and address of
the stockholder, (b) a brief description of the business desired to be
brought before the meeting and the reasons for conducting such business at the
meeting, and (c) any material interest of the stockholder in such business.
The chairman of the meeting may rule out of order any business not properly
brought before the meeting in compliance with the foregoing procedures.
<PAGE> 6
ARTICLE II
DIRECTORS
SECTION 1. NUMBER AND TERM OF OFFICE. The number of directors constituting
the entire Board of Directors of the Company shall be not less than seven (7)
nor more than twenty-one (21) and shall be determined in the manner set forth
in the Article of Incorporation. Classifications of directors pursuant to the
Articles of Incorporation shall be by the Board of Directors. All directors
shall be stockholders in the Company. At each annual meeting of stockholders,
directors shall be elected by a plurality of the votes cast, to hold office as
provided in the Articles of Incorporation and until their successors are
elected and qualified.
ARTICLE II
SECTION 2. NOMINATIONS OF DIRECTOR CANDIDATES. Nominations of candidates for
election as directors may be made by the Board of Directors or by any
stockholder entitled to vote for the election of directors. Nominations by a
stockholder must be made by notice in writing delivered to the Secretary of the
Company not later than (a) with respect to an election to be held at an annual
meeting of stockholders, ninety (90) days in advance of such meeting, provided,
however, if the annual meeting is not held on or within eight (8) days of the
date set forth in Article 1, Section 1 and if less than one hundred (100) days
notice or public disclosure of the date of the meeting is given to
stockholders, such notice by a stockholder must be not later than the tenth
day following the date on which notice or public disclosure of the date of the
meeting was first given the stockholders and (b) with respect to an election
to be held at a special meeting of stockholders, such notice by a stockholder
must be not later than the tenth day following the date on which notice or
public disclosure of the date of the meeting was first given the stockholders.
A stockholder's notice to the Secretary shall set forth: (a) the name and
address of the stockholder, (b) the name, age and business address of each
nominee proposed in such notice, (c) such other information concerning each
nominee as must be disclosed of nominees in proxy solicitations pursuant to
proxy rules of the Securities and Exchange Commission, and (d) the written
consent of each nominee to serve as a director if so elected. The chairman of
the meeting may refuse to acknowledge the nomination of any person not made in
compliance with the foregoing procedures. A stockholder's compliance with the
foregoing procedures shall not require the Company to include a proposed
nominee in the Company's proxy solicitation materials.
<PAGE> 7
SECTION 3. REMOVAL OF DIRECTORS. Subject to the rights of holders of any
series of preferred stock then outstanding, any director may be removed from
office at any time either (a) by vote of the holders of a majority of the shares
entitled to vote at an election of directors, but only for cause, or (b) by
vote of a majority of the other directors, with or without cause.
SECTION 4. VACANCIES. Any vacancy in the Board of Directors through death,
resignation, disqualification or other cause, or because of an increase in the
number of directors, may be filled by the affirmative vote of a majority of the
remaining directors though less than a quorum, for a term of office continuing
only until the next election of directors by the stockholders.
SECTION 5. REGULAR MEETINGS. Regular meetings of the Board of Directors shall
be held at the principal office of the Company on the third Tuesday of the
month at nine A.M., unless otherwise specified (1) by the Chairman or Vice
Chairman of the Board or the President, provided that notice is given
personally or by mail or telegram to the last known address of
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each director at least three (3) days before such meeting, or (2) by resolution
of the Board of Directors. No notice shall be required to be given of any
regular meeting, except as provided above.
SECTION 6. SPECIAL MEETINGS. Special meetings of the Board of Directors may be
held whenever called by the Chairman or Vice Chairman of the Board, or the
President, or a Vice President or the Secretary of the Company, or pursuant to
resolution of the Board of Directors. Notice thererof shall be given personally
or by mail or telegram to the last known address of each director at least
three (3) days before such meeting. Any director may waive notice of any
meeting. Neither the business to be transacted at, nor the purpose of, a
special meeting need be specified in the notice or waiver of notice of the
meeting.
SECTION 7. QUORUM AND VOTING. A majority of the members of the Board then in
office shall constitute a quorum for the transaction of business, except where
otherwise provided by law or the Articles of Incorporation or the By-Laws; but
a majority of members present at any regular or special meeting, although less
than a quorum, may adjourn the meeting from time to time, without notice. The
vote of the majority of members present at a meeting at which a quorum is
present constitutes the action of the Board, unless the vote of a larger number
is required by law of the Articles of Incorporation or the By-Laws.
SECTION 8. ACTION OF DIRECTORS WITHOUT A MEETING. Except as otherwise provided
by law, action required or permitted to be taken pursuant to authorization
voted at a meeting of the Board or a committee thereof may be taken without a
meeting if, before or after the action, all members of the Board or of the
committee consent thereto in writing. The written consents
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shall be filed with the minutes of the proceedings of the Board or committee.
The consent has the same effect as a vote of the Board or committee for all
purposes.
ARTICLE III
OFFICERS
SECTION 1. OFFICERS. The officers of the Company shall be a Chairman of the
Board, a President, one or more Vice Presidents, a Secretary and a Treasurer.
The Board of Directors shall have power to add designations to the aforesaid
offices and to create such other offices as it may from time to time deem
expedient, and shall, at some convenient time after each annual meeting, elect
officers of the Company for the ensuing year.
SECTION 2. CHAIRMAN OF THE BOARD. The Chairman of the Board shall preside at
all meetings of stockholders and of the Board of Directors. The Chairman of the
Board shall perform such duties as may be designated by the Board of Directors,
and shall have authority to execute on behalf of the Company any and all
contracts, agreements, bonds, deeds, mortgages, leases or other obligations of
the Company. In the absence or incapacity of the Chairman, the Board of
Directors shall determine which other officer shall perform the duties of that
office.
SECTION 3. VICE CHAIRMAN OF THE BOARD. If the Board of Directors has elected a
Vice Chairman of the Board, the Vice Chairman shall perform such duties as may
be designated by the Chairman of the Board, subject to the direction of the
Board of Directors, and shall have authority to execute on behalf of the Company
any and all contracts, agreements, bonds, deeds, mortgages, leases or other
obligations of the Company.
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SECTION 4. THE PRESIDENT. The President shall perform such duties as may be
designated by the Board of Directors, and shall have authority to execute on
behalf of the Company any and all contracts, agreements, bonds, deeds,
mortgages, leases or other obligations of the Company. In the absence or
incapacity of the President, the Board of Directors shall determine which other
officer shall perform the duties of that office.
SECTION 5. THE VICE PRESIDENTS. The Vice Presidents shall perform such duties as
may be designated by the Chairman of the Board or the President, subject to the
direction of the Board of Directors. Any Vice President shall have authority
to execute on behalf of the Company any and all contracts, agreements, bonds,
deeds, mortgages, leases or other obligations of the Company.
SECTION 6. THE TREASURER. The Treasurer shall have the custody of and be
responsible for all funds and securities of the Company, subject to the control
of the Board of Directors. The Treasurer shall keep bank accounts in the name
of the Company and shall exhibit the books and accounts to any director upon
application at the principal office of the Company during ordinary business
hours. The Treasurer shall perform all duties incident to the position of
Treasurer, subject to the control of the Board of Directors, and shall have
authority to sign and endorse all notes, checks, drafts and other obligations
of the Company.
SECTION 7. THE SECRETARY. The Secretary shall keep a record in proper books
provided for that purpose of all the meetings and proceedings of the Board of
Directors and the minutes of the stockholders' meetings, and shall keep such
other records and shall perform such other duties as the Board of Directors or
Chairman of the Board shall designate. The Secretary shall notify the
directors and stockholders of their respective meetings, shall attend to the
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giving and serving of all notices of the Company, and shall in general do and
perform all the duties pertaining to the office, subject to control of the
Board of Directors.
The Secretary shall keep a stock certificate book and transfer book at the
office of the Company, or at such other place or places as may be chosen by the
Board of Directors. The Sectetary shall keep careful data from which a list of
stockholders can be compiled, and shall furnish such list upon order of the
Board of Directors. The Secretary shall have the custody of the seal of the
Company, and shall attach the same to instruments required to be executed under
the seal of the Company.
ARTICLE III
SECTION 8. DIVISIONAL VICE PRESIDENTS AND JUNIOR OFFICERS. The Board of
Directors may elect such junior officers as may from time to time be deemed
expedient. In addition, the Chairman of the Board, the President or the Board
of Directors may elect such Divisional Vice Presidents as may from time to time
be deemed by any such person to be necessary or desirable in the conduct
of the Company's business. The Divisional Vice President and junior officers
shall have such powers and authority and shall perform such duties as may be
assigned to them by the Chairman of the Board, the President, the Board of
Directors or the senior officer to whom they report.
SECTION 10. VACANCIES. Vacancies among officers of the Company during the year
may be filled by the Board of Directors for the unexpired portion of the term.
ARTICLE IV
COMMITTEES
SECTION 1. EXECUTIVE/FINANCE COMMITTEE. There shall be an Executive and Finance
Committee chosen by the Board of Directors at its first meeting after this
By-Law is adopted and
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thereafter at its first meeting following the annual meeting of stockholders of
the Company each year. The Executive and Finance Committee shall consist of
not less than three members of the Board, one of whom shall be the Chairman of
the Board. One member shall be designated as chairman by the Board. During the
intervals between meetings of the Board of Directors and subject to such
limitations as provided by law or by resolution of the Board, the Committee
shall possess and may exercise all powers and authority of the Board of
Directors in the management and direction of the affairs of the Company and
shall be responsible for review of corporate financial policies and procedures
and shall recommend to the Board dividend policy, corporate financing, the
issuance and sale of company securities and investment of funds, and shall
perform such other duties as the Board may prescribe. The Committee shall keep
minutes of its proceedings, and all action by the Committee shall be reported
at the next meeting of the Board of Directors.
SECTION 2. AUDIT COMMITTEE. There shall be an Audit Committee chosen by the
Board of Directors at its first meeting after this By-Law is adopted and
thereafter at its first meeting following the annual meeting of stockholders
each year. The Audit Committee shall consist of not less than three members
of the Board, none of whom shall be an officer of the Company or any of its
subsidiaries. One member shall be designated as chairman by the Board. The
Committee shall recommend to the Board the conditions, compensation and term of
appointment of independent certified public accountants for the auditing of the
books and accounts of the Company and its subsidiaries. From time to time, as
considered necessary and desirable, the Committee shall confer with such
accountants for the exchanging of views relating to the scope and results of
the auditing books and accounts of the Company and its subsidiaries and shall
provide to the Board such assistance as may be required with respect to the
corporate and reporting practices of the Company. The Committee shall perform
such other duties as the Board may prescribe.
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SECTION 3. COMPENSATION AND INCENTIVES COMMITTEE. There shall be a Compensation
and Incentives Committee chosen by the Board of Directors at its first meeting
after this By-Law is adopted and thereafter at its first meeting following the
annual meeting of stockholders each year. The Committee shall consist of not
less than three members of the Board, none of whom shall be an officer of the
Company or any of its subsidiaries. No person may be a member of this Committee
who is, or within one year prior to his appointment to the Committee was,
eligible for selection as a person to whom rights or benefits may be granted
pursuant to any stock option or other long term incentive plan of the Company
or any of its subsidiaries. One member shall be designated as chairman by the
Board. The Committee shall determine the nature and amount of compensation of
all senior officers of the Company. As may be prescibed by the Board of
Directors, the Committee shall administer any stock option or other long term
incentive plan of the Company and perform other prescibed duties.
SECTION 4. NOMINATING COMMITTEE. There shall be a Nominating Committee chosen
by the Board of Directors at its first meeting following the annual meeting of
stockholders each year. The Nominating Committee shall consist of not less
than three members of the Board, none of whom shall be an officer of the
Company or any of its subsidiaries. One member shall be designated as chairman
by the Board. The Committee shall recommend to the Board nominees for
election as directors, and shall perform such other duties as the Board may
prescribe.
SECTION 5. PUBLIC ISSUES COMMITTEE. There shall be a Public Issues Committee
chosen by the Board of Directors at its first meeting after this By-Law is
adopted and thereafter at its first meeting following the annual meeting of
stockholders each year. The Committee shall consist of not less than three
members of the Board. One member shall be designated as chairman
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by the Board. The Committee shall consider the extent to which Company
policies and activities relate to and are in proper accord with public
interest, shall make appropriate recommendations in that regard to management
or the Board, and shall perform such other duties as the Board may prescribe.
SECTION 6. HEALTH CARE COMMITTEE. There shall be a Health Care Committee chosen
by the Board of Directors at its meeting at which this By-Law is adopted and
thereafter at its first meeting following the annual meeting of stockholders of
the Company each year. The Health Care Committee shall consist of not less
than three persons, a majority of whom shall be members of the Board. One
member shall be designated as chair by the Board. The Committee shall review
and monitor the Company's health care programs, their adequacy and cost
effectiveness, shall make recommendations in that regard to management or the
Board, and shall perform such other duties as the Board may prescribe.
SECTION 7. COMMITTEE VACANCIES; QUORUM, VOTING AND PROCEDURES. Each member of a
committee shall serve at the pleasure of the Board of Directors, and vacancies
on a committee may be filled by the Board at any time. The Board may also
increase the number of members of a committee at any time. A majority of all
members of a committee shall constitute a quorum, and the affirmative vote of a
majority of all the members of a committee shall constitute the action of the
committee. Each committee shall determine its own rules of procedure and shall
meet as provided by such rules, or by resolution of the Board, or on the call
of the committee chairman or any member thereof.
SECTION 8. OTHER COMMITTEES. The Board of Directors may by resolution establish
such other committees as may be desirable, the responsibilities and duties of
which may be prescibed by the Board, subject to such limitations as provided by
law.
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ARTICLE V
CAPITAL STOCK
SECTION 1. CERTIFICATES. Certificates of shares of the capital stock of the
Company shall be in such form as shall be approved by the Board of Directors,
signed by the Chairman or Vice Chairman of the Board, the President or a Vice
President and also by the Secretary or an Assistant Secretary or by the
Treasurer or an Assistant Treasurer. The seal of the Company may be engraved
on the certificates instead of being manually affixed, and the signatures of
officers may be facsimile signatures if the certificate is countersigned by a
transfer agent or registered by a registrar other than the Company itself or
its employee. All certificates of stock shall be consecutively numbered, and
the name(s) and address of the person(s) to whom issued, the number of shares
and date of issue, shall be entered on the stock transfer books of the Company.
All certificates of stock surrendered to the Company for transfer shall be
cancelled and, except in the case of lost or destroyed certificates as
hereinafter provided, no new certificate shall be issued until the former
certificate or certificates for the shares represented thereby shall have been
surrendered and cancelled.
SECTION 2. LOST CERTIFICATES. When a certificate of stock previously issued
is alleged to have been lost or destroyed, a new certificate may be issued
therefor upon such terms and indemnity to the Company as the Board of Directors
may prescribe.
SECTION 3. TRANSFER OF SHARES. Transfer of shares of stock of the Company
shall be made only on the stock transfer books of the Company, and the Company
may decline to recognize the holder of any certificate of stock of the Company
as a stockholder until the shares represented by such certificate are
transferred into his or her name on the stock transfer
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books of the Company. The Company shall be entitled to treat the holder of
record of any shares of stock as the absolute owner thereof, and shall not be
bound to recognize any equitable or other claim to or interest in such shares
on the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by law. The Board of Directors
may appoint one or more stock transfer agents and registrars (which functions
may be combined), and may require all stock certificates to bear the signature
of such transfer agent and such registrar.
SECTION 4. FIXING OF RECORD DATE. For the purpose of determining stockholders
entitled to notice of and to vote at a meeting of stockholders or an
adjournment thereof, or for the purpose of determining stockholders entitled to
receive payment of a dividend or allotment of a right, or for the purpose of
any other action, the Board of Directors may fix in advance a date as the record
date for any such determination of stockholders. The date shall not be more
than sixty (60) nor less than (10) days before the date of the meeting, nor
more than sixty (60) days before any other action.
ARTICLE VI
SALE OF THE ASSETS OF THE COMPANY
SECTION 1. The entire assets, business and good will of the Company may be
sold to any person, firm or corporation, either within or without the State of
Michigan, upon such terms and conditions, and for such lawful consideration, as
may be authorized by vote of majority of the whole Board of Directors, and
approved by vote in person or by proxy, of the holders of not less than
three-fourths (3/4) of the outstanding capital stock of the Company, given at
an annual or at a special meeting of the stockholders called and held for that
purpose.
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ARTICLE VII
MISCELLANEOUS
SECTION 1. SEAL. The seal of the Company shall be circular in form, with the
words "Kmart Corporation, Michigan" on the circumference, and shall be kept in
the charge and custody of the Secretary, to be affixed to all instruments
requiring a seal.
SECTION 2. FISCAL YEAR. The fiscal year of the Company shall end on the last
Wednesday in January in each year.
SECTION 3. INDEMNIFICATION. Any director or officer of the Company who is or
was a party or is threatened to be made a party or is otherwise involved in any
threatened, pending or completed action (including any civil, criminal,
administrative or investigative suit or proceeding) by reason of the fact that
he or she is or was a director or officer of the Company or is or was serving
another corporation, partnership, joint venture, trust or other enterprise at
the request of the Company, including service with respect to employee benefit
plans, shall be indemnified by the Company against expenses, including
attorneys' fees, judgments, penalties, fines and amounts paid or to be paid in
settlement reasonably incurred by such person in connection with the action.
Such indemnification shall include the right to be paid by the Company any
reasonable expenses incurred by such person in defending such action in advance
of its final disposition.
Indemnification hereunder shall be to the fullest extent now or hereafter
authorized by the Michigan Business Corporation Act, and shall be determined in
the manner provided therein; provided, however, that the Company shall
indemnify any person seeking indemnity in
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connection with an action (or part thereof) initiated by such person only if
the action (or part thereof) was authorized by the Board of Directors. It
shall be a defense to any claim for indemnity hereunder that the claimant has
not met the applicable standard of conduct for which indemnification is
permitted under the Michigan Business Corporation Act.
The Company may, by action of its Board of Directors, provide indemnification
to employees and agents to the same or a lesser extent as the foregoing
indemnification of directors and officers.
Indemnification provided hereunder shall be a contract right between the
Company and each director or officer of the Company who serves in such capacity
at any time while this Section 3 is in effect; shall continue to a person who
has ceased to serve in such capacity and shall inure to the benefit of the
heirs, executors and administrators of such person; and shall not be
exclusive of any other right which any person may have or hereafter acquire
under any other written contractual agreement.
Neither the Company nor its directors or officers nor any person acting on its
behalf shall be liable to anyone for any determination as to the existence or
absence of conduct which would provide a basis for making or refusing to make
any payment hereunder or for taking or omitting to take any other action
hereunder, in reliance upon advice of counsel.
SECTION 4. CONTROL SHARE ACQUISITIONS. Chapter 7B of the Michigan Business
Corporation Act (being Section 450.1790 through 450.1799 of Michigan Compiled
Laws) shall not apply to control share acquisitions of shares of the Company's
capital stock.
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ARTICLE VIII
AMENDMENTS
SECTION 1. BY DIRECTORS. These By-Laws may be amended, altered or repealed
and new By-Laws may be adopted, at any meeting of the Board of Directors by a
majority vote of the members of the Board then in office; provided, however,
that the Board of Directors shall not amend, alter or repeal Article VI of
these By-Laws.
SECTION 2. BY STOCKHOLDERS. These By-Laws may also be amended, altered or
repealed and new By-Laws may be adopted at any meeting of stockholders, if such
purpose is contained in the notice of meeting (pursuant to Article 1, Section
3), by a majority of the votes cast by the holders of shares entitled to vote
thereon; provided, however, that Article VI of these By-Laws shall not be
amended, altered or repealed without the consent of the holders of at least
two-thirds (2/3) of the issued and outstanding capital stock of the Company,
given in person or by proxy, at an annual or special meeting of the
stockholders called and held for the purpose.
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EXHIBIT 10 E
KMART CORPORATION
PERFORMANCE RESTRICTED STOCK PLAN
1. Purpose
The Kmart Corporation Performance Restricted Stock Plan (the "Plan") is
intended to attract and retain officers and other key senior executive
employees of Kmart Corporation (the "Company") and its Subsidiaries
(corporations of which a majority of the stock is owned directly or indirectly
by the Company and other business entities, a majority of which is owned
directly or indirectly by the Company); to increase the proprietary interest in
the Company of such persons by providing further opportunity for ownership of
the Company's common stock (the "Stock"); and to provide incentives to such
persons to contribute to the success of the Company's business.
2. Administration
2.1 The Plan shall be administered by the Compensation and Incentives
Committee (the "Committee") consisting of not less than two directors of the
Company appointed by its Board of Directors. No person may be a member of the
Committee if he or she has been, within one year prior to his or her
appointment to the Committee, or at any time during his or her service on the
Committee, granted an award under the Plan or any other plan of the Company or
any of its Subsidiaries to the extent such grant would cause such person to
fail to be a "disinterested person" under subsection (c)(2) of Rule 16b-3 under
the Securities Exchange Act of 1934, as amended, as such Rule may be amended
from time to time ("Rule 16b-3"); provided, however, that membership on the
Committee shall not affect or impair any right of a member with respect to any
award granted to him or her when he or she was not a member of the Committee.
2.2 The Committee may make such rules and regulations and establish
such procedures for the administration of the Plan as it deems appropriate.
The interpretation and application of the Plan or of any term or condition of a
grant under the Plan or of any rule, regulation or procedure, and any other
matter relating to or necessary to the administration of the Plan, shall be
determined by the Committee, and any such determinations shall be final and
binding on all persons.
3. Awards
3.1 The Committee may grant awards under the Plan ("Awards") to
officers and other key senior executive employees of the Company or its
Subsidiaries, including directors who are full time employees. Awards shall
consist of shares of Stock which are restricted as provided herein ("Restricted
Stock") or an agreement to issue Stock or Restricted Stock upon the
satisfaction of such terms and conditions as may be prescribed by the
Committee, or a combination thereof, and shall be evidenced by a written
agreement ("Agreement").
<PAGE> 2
3.2 The Committee shall have the sole discretion, in accordance with
the provisions of the Plan, to determine (i) the time or times when Awards are
granted, (ii) to whom an Award is granted (a "Participant"), (iii) the number
of shares of Stock or Restricted Stock which may be issued to a Participant,
(iv) the period and terms and conditions of each Award and of the restrictions
applicable thereto, and (v) the form and provisions of each Agreement, which in
each case need not be the same as to each Participant or Award. In making such
determinations, the Committee shall consider the position and responsibilities
of the employee, the nature and value to the Company of his or her services,
his or her present and potential contribution to the success of the Company,
and such other factors as the Committee may deem relevant.
3.3 Awards granted under the Plan shall be subject to and governed by
the provisions of the Plan and the Agreement evidencing the Award, and by such
terms and conditions, not inconsistent with the Plan, as shall be determined by
the Committee.
3.4 A person to whom an Award is granted shall not have any rights with
respect to such Award unless and until he or she shall have executed the
Agreement evidencing the Award. If an Award or any term or condition of an
Award is rejected or not accepted in a timely manner, such Award shall be
deemed to have not been granted and shall be of no effect.
4. Shares of Stock
Shares of Stock which may be subject to Awards or issued under the Plan
may be either authorized and unissued shares or issued shares which have been
reacquired by the Company, provided that the total amount of Stock which may be
subject to Awards or issued under the Plan shall not exceed 4,000,000 shares.
Such number of shares is subject to adjustment in accordance with Section 7
hereof. In the event that any Award or portion thereof is forfeited, or any
shares of Restricted Stock are forfeited and reacquired by the Company, the
shares forfeited or allocable to such forfeiture shall again become available
for use under the Plan to the extent permitted by Rule 16b-3.
5. Rights of Participant
5.1 A Participant shall have no rights as a stockholder with respect to
shares of Stock or Restricted Stock under the Plan until the issuance of a
certificate evidencing such shares or the Participant's Restricted Stock
Account has been credited with such shares.
5.2 Upon the issuance of shares of Restricted Stock, either (i) a stock
certificate or certificates representing such shares shall be registered in the
Participant's name, shall bear an appropriate legend referring to the
restrictions applicable thereto, and shall be
2
<PAGE> 3
held in custody by the Company or its designee for the account of the
Participant, or (ii) the Company's stock transfer agent or other designee shall
credit such shares to the Participant's Restricted Stock account, which shares
shall be subject to the restrictions applicable thereto under the Plan.
5.3 Except as provided in the Plan or in the Agreement evidencing the
Award, a Participant to whom Restricted Stock is issued shall generally have
the rights and privileges of a stockholder as to the Restricted Stock,
including the right to vote such shares.
5.4 At the discretion of the Committee, dividends with respect to
Restricted Stock may be either paid to the Participant or withheld by the
Company for the Participant's account, and interest may be paid on any
dividends withheld at a rate and subject to such terms as determined by the
Committee.
5.5 No Award or shares of Restricted Stock or the right to vote or
receive dividends on such shares may be sold, transferred, assigned, pledged or
otherwise encumbered or disposed of, or subject to any debts or liabilities of
a Participant.
5.6 Unless and until the restrictions and other terms and conditions
applicable to an Award or shares of Restricted Stock expire or are terminated
or otherwise satisfied, such Award or shares of Restricted Stock and any
dividends applicable thereto which were withheld by the Company (and any
interest thereon) shall be forfeited and reacquired by the Company if the
Participant's employment with the Company or any of its Subsidiaries
terminates. Employment with a Subsidiary shall be deemed terminated on the
date a former Subsidiary ceases to be a Subsidiary of the Company.
5.7 If and to the extent that the restrictions and other terms and
conditions applicable to an Award or shares of Restricted Stock do not expire
or are not terminated or otherwise satisfied, such Award or such shares of
Restricted Stock and any dividends applicable thereto which were withheld by
the Company (and any interest thereon) shall be forfeited and reacquired by the
Company, and all rights of the Participant shall terminate to the extent of the
forfeiture without further obligation on the part of the Company.
5.8 The Committee may in its discretion terminate, shorten or
accelerate any period of restrictions or waive any terms or conditions
applicable to all or any portion of an Award or shares of Restricted Stock,
including without limitation in the event of the Participant's death,
disability or retirement.
5.9 Upon the expiration or termination of the restrictions and the
satisfaction of any other terms and conditions applicable to an Award and any
shares of Restricted Stock issued thereunder, a stock certificate or
certificates representing shares of Stock free of the restrictions and any
legend, except as may be imposed by law, shall be issued to the Participant or
to the Participant's beneficiary, estate or legal representative, as the case
may be, along with any
3
<PAGE> 4
dividends applicable thereto which have been withheld by the Company (and any
interest thereon). No payment will be required from the Participant for such
shares (other than the rendering of services to the Company or a Subsidiary as
provided in the Agreement), except as to any applicable taxes which are
required to be withheld.
5.10 The Company may defer delivery of Stock until satisfactory
arrangements have been made for the payment of any tax attributable to delivery
of Stock hereunder. The Committee may, in its sole discretion, permit a
Participant to elect, in such form and at such time as the Committee may
prescribe, to pay all or a portion of all taxes arising in connection with the
delivery of Stock by electing to (i) have the Company withhold whole shares of
Stock, or (ii) deliver other whole shares of Stock previously owned by the
Participant having a fair market value not greater than the amount to be
withheld; provided, however, that the amount to be withheld shall not exceed
the Participant's estimated total Federal, State and local tax obligations
associated with the transaction.
6. Employment
Neither the action of the Company in establishing the Plan, nor any
provision of the Plan, nor any term or condition of any Award or Agreement, nor
any action taken by the Committee, the Company or any Subsidiary pursuant to
the Plan, shall give or be construed as giving a Participant or any other
employee any right to be retained in the employ of the Company or of any
Subsidiary, or affect or limit in any way the right of the Company or any
Subsidiary to terminate the employment of a Participant or any other employee.
7. Capital Adjustments
In the event of an increase or decrease in the number of issued shares
of Stock as a result of reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, offering of rights, or
any other change in the structure of shares of Stock, the Committee may make
such adjustment in the number of shares of Stock which may be issued under the
Plan or which are subject to Awards as it deems appropriate.
8. Term of Plan
8.1 The Plan, which was approved by the Board of Directors of the
Company on March 22, 1988, shall become effective as of May 24, 1988 upon
approval by the stockholders of the Company; provided, however, if prior
approval is required by any governmental agency, the Plan shall not become
effective until such approval is obtained.
8.2 No Award shall be granted under the Plan after March 21, 1998.
Awards granted prior thereto, however, may extend beyond such
4
<PAGE> 5
period and the provisions of the Plan shall continue to apply thereto.
9. Amendments
9.1 The Board of Directors of the Company may from time to time alter,
amend, suspend or discontinue the Plan; provided, however, that no amendment
which requires stockholder approval in order for the exemptions available under
Rule 16b-3 to be applicable to the Plan shall be effective unless the same
shall be approved by the stockholders of the Company entitled to vote thereon.
Any such amendment may be effective in respect of all past and future Awards
granted hereunder in the sole discretion of the Board of Directors of the
Company.
9.2 The Plan and each Award under the Plan shall be subject to all
applicable laws, rules, regulations and governmental and stockholder approvals,
and the Committee may make such amendment or modification thereto as it shall
deem necessary to comply with any such laws, rules and regulations or to obtain
any such approvals.
10. Severability
If any provision of the Plan, or any term or condition of any Award or
Agreement or form executed or to be executed thereunder, or any application
thereof to any person or circumstances is invalid, such provision, term,
condition or application shall to that extent be void (or, in the discretion of
the Committee, such provision, term or condition may be amended to avoid such
invalidity), and shall not affect other provisions, terms or conditions or
applications thereof, and to this extent such provisions, terms and conditions
are severable.
(As amended April 27, l993)
5
<PAGE> 1
EXHIBIT 10 J
Dear:
This letter will confirm our understanding concerning your employment with
Kmart Corporation (the "Company").
1. If your employment with the Company is terminated by the Company other than
for Cause or Disability or if you terminate your employment with the Company
for Good Reason, the Company will pay to you:
(a) Your base salary through the month during which termination
occurred, plus any other amount due you at the time of
termination under any bonus plan of the Company; and
(b) Monthly severance payments equal to (i) your monthly base salary
at the time of termination, plus (ii) 1/12th of the "on plan"
bonus amount targeted for you for the fiscal year in which
termination occurred.
Such monthly severance payments shall commence in the month following
termination (to be paid on or about the 15th day of the month) and shall
continue for twelve months. Provided, however, that you agree to make
reasonable efforts to seek (and to immediately notify the Company of) other
employment, and to the extent you receive compensation from other employment,
the severance payments provided herein shall be correspondingly reduced.
No payments shall be due if your employment with the Company is terminated
because of your retirement or death or is terminated by the Company for Cause
or Disability or by you other than for Good Reason (except for any benefits
which may be due you in normal course under any employee benefit plan of the
Company which provides benefits after termination of employment).
All payments hereunder shall be subject to applicable withholding and
deductions.
2. Termination by the Company for "Cause" means termination based on (i)
conduct which is a material violation of Company policy or which is fraudulent
or unlawful or which materially interferes with your ability to perform your
duties, (ii) misconduct which damages or injures the Company or substantially
damages the Company's reputation, or (iii) gross negligence in the performance
of, or wilful failure to perform, your duties and responsibilities.
3. Termination by the Company for "Disability" means termination based on
inability to perform your duties and responsibilities by reason of illness or
incapacity for a total of 180 days in any twelve-month period.
<PAGE> 2
-2-
4. Termination by you for "Good Reason" means termination based on the
occurrence without your express consent of any of the following: (i) a
significant diminuition by the Company of your role with the Company or a
significant detrimental change in the nature and/or scope of your status with
the Company, other than for Cause or Disability or (ii) a reduction in your
base salary, other than for Cause or Disability and other than as part of an
across-the-board salary reduction generally imposed on executives of the
Company.
5. The severance payments hereunder may not be transferred, assigned or
encumbered in any manner, either voluntarily or involuntarily. In the event of
your death, any payments then or thereafter due hereunder will be made to your
estate.
6. The payments provided hereunder shall constitute the exclusive payments due
you from, and the exclusive obligation of, the Company in the event of any
termination of your employment, except for any benefits which may be due you in
normal course under any employee benefit plan of the Company which provides
benefits after termination of employment and except as provided in paragraph 10
hereof.
The obligation to make the payments hereunder is conditioned upon your
execution and delivery to the Company of a release, in form satisfactory to the
Company, of any claims you may have as a result of your employment or
termination of employment under any federal, state or local law, excluding any
claim for benefits which may be due you in normal course under any employee
benefit plan of the Company which provides benefits after termination of
employment. The obligation to make the payments hereunder is further
conditioned upon the terms set forth in paragraph 7 hereof.
7. You agree that any right to receive severance payments hereunder will cease
if during the one-year period following your termination of employment you
directly or indirectly become an employee, director, advisor of, or otherwise
affiliated with, any other entity or enterprise whose business is in
competition with the business of the Company.
8. Notwithstanding anything herein to the contrary, your employment with the
Company is terminable at will with or without cause; provided, however, that a
termination of your employment shall be governed in accordance with the terms
hereof except as provided in paragraph 10.
9. If a dispute arises concerning any provisions of this agreement, it shall
be resolved by arbitration in Troy, Michigan in accordance with the rules of
the American Arbitration Association. Judgment on the award rendered may be
entered in any court having jurisdiction and enforced accordingly.
10. This agreement sets forth the entire understanding with respect to the
subject matter hereof and supersedes all prior agreements, written or oral or
express or implied, between you and the Company as to such subject matter.
Provided, however, that this agreement shall not supersede
<PAGE> 3
-3-
the agreement dated ************* between you and the Company concerning
severance benefits which may be payable in the event of a change in control of
the Company ("Change in Control Agreement"). Such Change in Control Agreement
shall, during its term, govern in the event of a termination of your employment
following a change in control of the Company (as defined therein). In no event
are you to receive severance benefits under both this agreement and the Change
in Control Agreement in the event of a termination of employment. This
agreement may not be amended, nor may any provision hereof be modified or
waived, except by an instrument in writing duly signed by you and the Company.
11. If any provision of this agreement, or any application thereof to any
circumstances, is invalid, in whole or in part, such provision or application
shall to that extent be severable and shall not affect other provisions or
applications of this agreement.
Please indicate your agreement by signing below and retain one copy for your
records.
Sincerely,
KMART CORPORATION
By:__________________________
Agreed:
_______________________
Date:__________________
<PAGE> 1
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 11 - INFORMATION ON COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Fiscal Year Ended
----------------------------------------------------------------
January 26, January 27, January 29, January 30, January 31,
($ Millions except per share amounts) 1994 1993 1992 1991 1990
------------ ------------ ----------- ----------- -------------
<S> <C> <C> <C> <C> <C>
I. Earnings per common share assuming no dilution:
(a) Net income (loss) (1) $ (974) $ 941 $ 859 $ 756 $ 323
------------ ------------ ----------- ----------- -------------
------------ ------------ ----------- ----------- -------------
Weighted average common shares outstanding 408.1 405.7 401.5 399.6 399.5
Weighted average Series A conversion
preferred stock outstanding 46.0 46.0 20.1 - -
------------ ------------ ----------- ----------- -------------
(b) Weighted average number of shares
outstanding 454.1 451.7 421.6 399.6 399.5
------------ ------------ ----------- ----------- -------------
------------ ------------ ----------- ----------- -------------
Earnings (loss) per common share assuming
no dilution: (a)/(b) $ ($2.14) $ $2.08 $ $2.04 $ $1.89 $ $0.81
------------ ------------ ----------- ----------- -------------
------------ ------------ ----------- ----------- -------------
</TABLE>
(1) Net income (loss) includes an after tax provision of $862 million or
$1.89 per share and $422 million or $1.05 per share for fiscal years
1993 and 1989, respectively, for store restructuring and other charges.
<PAGE> 2
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 11 - INFORMATION ON COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------------------
January 26, January 27, January 29, January 30, January 31,
($ Millions except per share amounts) 1994 1993 1992 1991 1990
------------- ------------- ------------- ------------ ------------
<S> <C> <C> <C> <C> <C>
II. Earnings per common and common equivalent share:
(c) Net income (loss) (1) $ (974) $ 941 $ 859 $ 756 $ 323
Less Series B convertible
preferred dividend payment (9) (3)
------------- ------------- ------------- ------------ ------------
Adjusted net income (loss) $ (983) $ 938 $ 859 $ 756 $ 323
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Weighted average common shares outstanding 408.1 405.7 401.5 399.6 399.5
Weighted average Series A conversion preferred
stock outstanding 46.0 46.0 20.1 - -
------------- ------------- ------------- ------------ ------------
Weighted average number of shares outstanding 454.1 451.7 421.6 399.6 399.5
Stock Options --
Shares assumed issued 16.1 17.2 15.5 2.6 8.4
Less -- Shares assumed repurchased 13.5 13.3 12.7 2.0 6.5
------------- ------------- ------------- ------------ ------------
2.6 3.9 2.8 0.6 1.9
------------- ------------- ------------- ------------ ------------
(d) Applicable shares, as adjusted 456.7 455.6 424.4 400.2 401.4
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Earnings (loss) per common and common
equivalent shares: (c)/(d) $ (2.15) $ 2.06 $ 2.02 $ 1.89 $ 0.80
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
Percent dilution of earnings (loss)per common
and common equivalent share: 0.5% 0.9% 0.7% 0.2% 0.6%
------------- ------------- ------------- ------------ ------------
------------- ------------- ------------- ------------ ------------
</TABLE>
(1) Net income (loss) includes an after tax provision of $862 million or
$1.89 per share and $422 million or $1.05 per share for fiscal years
1993 and 1989, respectively, for store restructuring and other charges.
<PAGE> 3
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 11 - INFORMATION ON COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
Fiscal Year Ended
-------------------------------------------------------------------
January 26, January 27, January 29, January 30, January 31,
($ Millions except per share amounts) 1994 1993 1992 1991 1990
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
III. Earnings per common and common equivalent share:
(e) Net income (loss)(1) $ (974) $ 941 $ 859 $ 756 $ 323
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Weighted average common shares outstanding 408.1 405.7 401.5 399.6 399.5
Weighted average Series A conversion preferred
stock outstanding 46.0 46.0 20.1 -- --
Weighted average Series B convertible preferred
stock outstanding 8.0 1.7 -- -- --
----------- ----------- ----------- ----------- -----------
Weighted average number of shares outstanding 462.1 453.4 421.6 399.6 399.5
Stock Options -
Shares assumed issued 16.6 18.1 19.2 2.6 8.2
Less - Shares assumed repurchased 14.5 13.7 14.6 2.0 6.3
----------- ----------- ----------- ----------- -----------
2.1 4.4 4.6 0.6 1.9
----------- ----------- ----------- ----------- -----------
(f) Applicable shares, as adjusted 464.2 457.8 426.2 400.2 401.4
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
Earnings (loss) per common and common equivalent
shares assuming full dilution: (e)/(f) (2) $ (2.10) $ 2.06 $ 2.02 $ 1.89 $ 0.80
----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- -----------
</TABLE>
(1) Net income (loss) includes an after tax provision of $862 million or
$1.89 per share and $422 million or $1.05 per share for fiscal
years 1993 and 1989, respectively, for store restructuring and other
charges.
(2) This calculation is submitted in accordance with Regulation S-K item
601(b)(11) although it is contrary to paragraph 40 of APB Opinion No. 15
because it produces an anti-dilutive result.
<PAGE> 1
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 12 - INFORMATION ON RATIO OF EARNINGS
TO FIXED CHARGES COMPUTATION
<TABLE>
<CAPTION>
Fiscal Year Ended
--------------------------------------------
January 26, January 27, January 29,
1994 1993 1992
(Millions) --------- ------------- -----------
<S> <C> <C> <C>
Net income (loss) from continuing retail operations
before extraordinary items and the effect of
accounting changes $ (328) $ 882 $ 789
Income taxes (222) 445 400
--------- ------- --------
Pretax income (loss) from continuing retail operations (550) 1,327 1,189
Equity income of unconsolidated affiliated
retail companies that exceeds distributions (19) (11) (26)
Fixed charges per below 764 664 582
Less interest capitalized during the period (12) (14) (10)
--------- ------- --------
Earnings from continuing retail operations $ 183 $ 1,966 $ 1,735
--------- ------- --------
--------- ------- --------
Fixed Charges:
Interest expense $ 490 $ 442 $ 399
Rent expense - portion of operating rentals
representative of the interest factor 260 206 172
Other 14 16 11
--------- ------- --------
$ 764 $ 664 $ 582
--------- ------- --------
--------- ------- --------
Ratio of income to fixed charges (1) -- 3.0 3.0
--------- ------- --------
--------- ------- --------
</TABLE>
(1) The deficiency of earnings from continuing retail operations versus fixed
charges was $581 for the fiscal year ended January 26, 1994.
<PAGE> 1
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 22 - SUBSIDIARIES
The Registrant has no parent but has the following significant subsidiaries as
of January 26, 1994.
<TABLE>
<CAPTION>
Percentage
Jurisdiction of of voting
Name incorporation securities held
- ------------------------ ------------------ -----------------
<S> <C> <C>
Kmart Canada Limited Dominion of Canada 100 %
Kmart CR a.s. Czech Republic 100 %
Kmart SR a.s. Slovakia 100 %
MAJ a.s. Czech Republic 96.85 %
PayLess Drug Stores Northwest, Inc. (1) Maryland 100 %
Walden Book Company, Inc. New York 100 %
Builders Square, Inc. Delaware 100 %
PACE Membership Warehouse, Inc Colorado 100 %
The Sports Authority, Inc. Delaware 100 %
OfficeMax, Inc. Ohio See Note (2)
Borders, Inc. Delaware 100 %
</TABLE>
(1) The Registrant divested this subsidiary on April 20, 1994.
(2) The Registrant currently holds a greater than 90% interest in OfficeMax,
Inc. and is currently negotiating with the minority stockholders of
OfficeMax, Inc. to purchase their remaining interest, thereby bringing
the Registrant's ownership interest in OfficeMax, Inc. to 100%.
<PAGE> 1
KMART CORPORATION AND SUBSIDIARY COMPANIES
EXHIBIT 24 - CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statements on Form S-8 (Registration No. 33-48490, No. 33-48673, No. 33-52797
and No. 33-52799) of Kmart Corporation of our report dated March 15, 1994
appearing on Annex V page V-21 of the Registrant's definitive Proxy Statement
dated April 28, 1994. We also consent to the incorporation by reference of our
report on the Financial Statement Schedules, which appears on page 11 of this
Form 10-K.
Price Waterhouse
Detroit, Michigan
April 28, 1994
