<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) May 24, 1996
--------------------
KMART CORPORATION
(Exact Name of Registrant as Specified in its Charter)
MICHIGAN
(State or Other Jurisdiction of Incorporation)
1-327 38-0729500
(Commission File Number) (I.R.S. Employer Identification No.)
3100 WEST BIG BEAVER ROAD, TROY, MICHIGAN 48084
(Address of Principal Executive Offices)(Zip Code)
(810) 643-1000
(Registrant's Telephone Number, Including Area Code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
<PAGE> 2
ITEM 5. OTHER EVENTS
On May 21, 1996, Kmart Corporation issued a press release announcing 1996
first quarter results attached hereto as Exhibit 99.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
KMART CORPORATION
(Registrant)
By: /s/ Martin E. Welch III
--------------------------------
Martin E. Welch III
Senior Vice President and
Chief Financial Officer
Date: May 24, 1996
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
23.1 Consent of Independent Accountants
99 Press Release dated May 21, 1996
</TABLE>
<PAGE> 1
EXHIBIT 23.1
Consent of Independent Accountants
We hereby consent to the use in the Prospectus Supplement constituting
part of the Registration Statement on Form S-3 (No. 33-64905) of our report
dated March 7, 1996, relating to the consolidated financial statements of Kmart
Corporation, which appears in such Prospectus Supplement. We also consent to
the reference to us under the heading "Experts" in the Prospectus and
Prospectus Supplement. We also consent to the reference to us under the
headings "Summary Historical Consolidated Financial Information" and "Selected
Historical Consolidated Financial Information" in the Prospectus Supplement.
However, it should be noted that Price Waterhouse LLP has not prepared or
certified such "Summary Historical Consolidated Financial Information" or
"Selected Historical Consolidated Financial Information".
Price Waterhouse LLP
Detroit, MI
May 24, 1996
<PAGE> 1
EXHIBIT 99
May 21, 1996
Robert M. Burton
Director, Investor Relations
(810) 643-1040
Shawn M. Kahle
Vice President, Corporate Affairs
(810) 637-4201
FOR IMMEDIATE RELEASE
KMART CORPORATION REPORTS 1996 FIRST-QUARTER RESULTS
TROY, Mich., May 21, 1996 -- Kmart Corporation (NYSE: KM) today reported a loss
from continuing operations of $38 million, or $0.08 per share, compared with a
loss from continuing operations of $109 million, or $0.24 per share in the
first quarter of 1995, before giving effect to the impact of discontinued
operations and non-recurring activities in 1996 and 1995, respectively.
Kmart's net loss for the first quarter of 1996 was $99 million, or $0.21 per
share. The first quarter of 1996 included a net charge for discontinued
operations of $61 million, or $0.13 per share, resulting from participation in
the recent initial public offering of Thrifty PayLess Holdings, Inc. and the
revaluation of the Company's remaining holding. This compares to a net loss of
$28 million, or $0.06 per share, in the first quarter of 1995, which included
the positive impact of a pension curtailment gain of $84 million net of tax, or
$0.18 per share, relating to the freezing of the Kmart defined benefit pension
plan.
Total sales in the first quarter were $7.580 billion, an increase of 1.8% from
$7.443 billion for the first quarter of 1995. Sales levels were adversely
affected by lower numbers of operating stores and colder weather during the
period. The gross margin for the first quarter was 21.9% of sales versus 22.2%
last year, reflecting increased volumes of lower-margin items and consumables
in the mix of sales. The selling, general and administrative (SG&A) expense
ratio for the quarter was 21.9% of sales versus 23.7% for the comparable 1995
period.
<PAGE> 2
KMART CORPORATION REPORTS FIRST QUARTER 1996 RESULTS 2-2-2
Commenting on first quarter results, Floyd Hall, chairman, president and chief
executive officer, said, "Our overall performance for the quarter was on plan.
Sales in our U.S. Kmart stores increased 4.5% on a comparable store basis in
the first quarter, despite weather-related softness around the Easter holiday.
Our gross margin rates also felt the effects of cold weather on higher-margin
seasonal goods, together with ongoing promotional activity in the hardlines
area."
"We made major improvements in the area of cost reduction," Hall said. "Our
first quarter SG&A expenses were reduced by $105 million over last year,
reflecting some of the decisions of 1995, predominantly the closing of
unproductive stores and the sale of the auto service business. We expect to
see solid progress in expense control over the remainder of the year."
Kmart Corporation serves America with 2,159 Kmart plus 167 Builders Square
retail outlets and 134 stores internationally.
Kmart Corporation common stock is listed on the New York, Pacific, and Chicago
Stock Exchanges.
<PAGE> 3
KMART CORPORATION REPORTS FIRST QUARTER 1996 RESULTS 3-3-3
KMART CORPORATION
SALES AND OPERATING RESULTS BY BUSINESS
13 WEEKS ENDED MAY 1, 1996 AND APRIL 26, 1995
SALES
<TABLE>
<CAPTION>
% Change
All Comparable
(Millions U.S. $) 5-1-96 4-26-95 Stores Stores (b)
--------- --------- ---------------------
<S> <C> <C> <C> <C>
General Merchandise-
United States $ 6,692 $ 6,564 2.0 4.5
International 283 249 13.7 4.5 (a)
--------- ---------
Total General Merchandise 6,975 6,813 2.4 4.5
Specialty Retail-
Builders Square 605 630 (4.0) (0.8)
--------- ---------
Total Kmart $ 7,580 $ 7,443 1.8 2.3
========= =========
</TABLE>
(a) International comparable store sales change is calculated on sales in the
applicable local currency.
(b) Comparable store sales are based on the 13 week accounting periods ended
5-1-96 and 4-26-95.
OPERATING RESULTS
<TABLE>
<CAPTION>
(Millions U.S.$) 5-1-96 4-26-95 % Change
--------- --------- ----------
<S> <C> <C> <C>
General Merchandise-
United States (a) $ 58 $ 86 (32.6)
International (1) (5) (80.0)
--------- ---------
Total General Merchandise 57 81 (29.6)
Specialty Retail-
Builders Square 0 (11) 100.0
--------- ---------
Total Kmart (a) (b) $ 57 $ 70 (18.6)
========= =========
</TABLE>
(a) 1995 includes $124 million one time gain resulting from pension curtailment.
(b) The pretax LIFO charge for the 1996 period was $8 million, compared with $7
million for the 1995 first quarter.
<PAGE> 4
KMART CORPORATION REPORTS FIRST QUARTER 1996 RESULTS 4-4-4
KMART CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
13 Weeks 13 Weeks %
Ended Ended Inc.
(Amounts in millions, except per share data) 5-1-96 4-26-95 (Dec)
--------- --------- -------
<S> <C> <C> <C>
Sales $ 7,580 $7,443 1.8
Cost of merchandise sold 5,921 5,788 2.3
--------- ---------
Gross profit 1,659 1,655 0.2
Licensee fees and other income 60 58 3.4
Selling, general and administrative expenses 1,662 1,767 (5.9)
Gain on pension curtailment - (124) -
--------- ---------
Operating income 57 70 (18.6)
Interest expense, net 116 109 6.4
Loss from continuing retail operations before income --------- ---------
taxes and equity income (59) (39) 51.3
Equity in net income of unconsolidated companies 2 2 -
Income tax benefit (19) (12) 58.3
--------- ---------
Net loss from continuing retail operations (38) (25) 52.0
Loss from discontinued operations, net of income taxes - (3) -
Loss on disposal of discontinued operations, net of
income taxes (61) - -
--------- ---------
Net loss ($ 99) ($ 28) -
========= =========
Loss per common share:
Continuing retail operations ($ 0.08) ($ 0.06)
Loss from discontinued operations - ( 0.00)
Loss on disposal of discontinued operations ( 0.13) -
---------- --------
Net loss ($ 0.21) ($ 0.06)
========== ========
Weighted average shares outstanding 482.1 458.8
* The consolidated statement of operations for the prior period has been
restated for discontinued operations.
</TABLE>
<PAGE> 5
KMART CORPORATION REPORTS FIRST QUARTER 1996 RESULTS 5-5-5
KMART CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
13 Weeks 13 Weeks
Ended Ended
(Amounts in millions) 5-1-96 4-26-95
---------- -----------
<S> <C> <C>
Cash Flows From Operating Activities:
Loss from continuing retail operations $(38) $(25)
Adjustments to reconcile net loss to net cash
provided by (used for) operations:
Depreciation and amortization 159 176
Deferred income taxes 60 80
Undistributed equity income and dividends received 62 (8)
Decrease in other long-term liabilities (52) (313)
Changes in certain assets and liabilities 157 (187)
---------- -----------
Net cash provided by (used for) continuing retail
operations 348 (277)
Discontinued operations 32 130
---------- -----------
Net cash provided by (used for) operating activities 380 (147)
Cash Flows From Investing Activities:
Capital expenditures (51) (123)
Proceeds from asset sales and divestitures, net 177 22
Other, net (4) 8
---------- -----------
Net cash provided by (used for) investing activities 122 (93)
Cash Flows From Financing Activities:
Proceeds from long-term debt and notes payable - 546
Reductions in long-term debt and notes payable (19) (194)
Reduction in capital lease obligations (25) (26)
Dividends paid - (112)
Other, net 21 6
---------- -----------
Net cash provided by (used for) financing activities (23) 220
Net increase (decrease) in cash 479 (20)
Cash at beginning of year 1,095 353
---------- -----------
Cash at end of period $1,574 $333
========== ===========
</TABLE>
* The consolidated cash flow statement for the prior period has been restated
for discontinued operations.
<PAGE> 6
KMART CORPORATION REPORTS FIRST QUARTER 1996 RESULTS 6-6-6
KMART CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Amounts in millions) 5-1-96 4-26-95
------------- ------------
<S> <C> <C>
ASSETS
Current Assets:
Cash (including temporary investments of $1,082 and $41,
respectively) $1,574 $333
Merchandise inventories 7,356 7,294
Other current assets 1,045 1,468
Net current assets of discontinued operations 157 340
------------- ----------
Total current assets 10,132 9,435
Investments in affiliated retail companies 32 111
Property and equipment - net 5,093 5,970
Other assets and deferred charges 870 262
Net long-term assets of discontinued operations - 1,099
------------- ----------
TOTAL ASSETS $16,127 $16,877
============= ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Long-term debt due within one year $248 $84
Notes payable - 1,294
Accounts payable - trade 2,756 3,127
Accrued payrolls and other liabilities 1,181 1,076
Taxes other than income taxes 226 330
Income taxes 5 83
------------- ----------
Total current liabilities 4,416 5,994
Capital lease obligations 1,601 1,754
Long-term debt and notes payable 3,674 1,957
Other long-term liabilities 1,239 1,217
Shareholders' Equity:
Preferred stock, 10,000,000 shares authorized;
Series C, 790,287 shares authorized; 654,815 shares issued at
April 26, 1995 - 131
Common stock, 1,500,000,000 shares authorized;
shares issued 486,576,469, and 464,770,564, respectively 486 465
Capital in excess of par value 1,610 1,508
Retained earnings 3,227 3,989
Treasury shares and restricted stock (59) (86)
Foreign currency translation adjustment (67) (52)
------------- ----------
Total shareholders' equity 5,197 5,955
------------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $16,127 $16,877
============= ==========
* The consolidated balance sheet for the prior period has been restated for
discontinued operations.
</TABLE>
