<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) March 21, 1996
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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 March 7, 1996, Kmart Corporation issued a press release announcing 1995
year-end and fourth quarter results attached hereto as Exhibit 99. Certain
amounts in this exhibit in the Consolidated Condensed Statements of Cash Flows
have been reclassified to reflect the final audited balances of the statements.
<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: March 21, 1996
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
- ----------- -----------
<S> <C>
99 Press Release dated March 7, 1996
</TABLE>
<PAGE> 1
EXHIBIT 99
March 7, 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 ANNOUNCES 1995 YEAR-END, FOURTH QUARTER RESULTS
TROY, Mich., March 7, 1996--Kmart Corporation (NYSE:KM) today reported net
income from continuing retail operations of $21 million, or $0.05 per share,
for the fourth quarter of 1995. These results exclude a non-cash charge of
$390 million, net of tax, or $0.85 per share, taken in the quarter for the
adoption of Statement of Financial Accounting Standard No. 121 ("FAS 121"),
reflecting management's assessment of the impairment of the Company's
investment in Builders Square, and certain International operations. Including
the FAS 121 charge, the net loss from continuing operations for the quarter was
$369 million, or $0.80 per share. This compares to a net loss from continuing
retail operations of $16 million, or $0.04 per share, for the fourth quarter
of 1994.
In addition, during the fourth quarter of 1995, the Company recorded an
extraordinary charge of $51 million, net of tax, or $0.11 per share, for a
previously announced restructuring of its real estate and bank debt. After
these charges and including income and gains from discontinued operations in
the prior year, Kmart reported a net loss of $420 million, or $0.91 per share,
for the fourth quarter of 1995, compared with net income of $145 million, or
$0.31 per share, for the fourth quarter of 1994.
For the full year ended January 31, 1996, Kmart reported a net loss of
$571 million, or $1.25 per share, compared to net income of $296 million, or
$0.63 per share, in 1994. Before the FAS 121 charge, the net loss from
continuing retail operations for 1995 was $100 million, or $0.23 per share.
<PAGE> 2
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 2-2-2
The following table recaps these key elements of net earnings for the fourth
quarter and full year:
<TABLE>
<CAPTION>
(Amounts in millions) FY 1995 FY 1994 4Q 1995 4Q 1994
------- ------- ------- -------
<S> <C> <C> <C> <C>
Net Income (Loss) from Continuing Retail Operations ($100) $104 $ 21 ($16)
Asset Impairment Charges, net of income taxes ($390) ($390)
"Put" Debt-related charge, net of income taxes ($ 51) ($ 51)
Gain (Loss) from Discontinued Operations, net ($ 30) $192 $161
------- ---- ----- ----
Net Income (Loss) as Reported ($571) $296 ($420) $145
</TABLE>
Commenting on 1995 results, Floyd Hall, Chairman, President and CEO said:
"Kmart's poor financial performance reflects a major financial and strategic
restructuring of the Company. These results represent the bottoming out of
Kmart's financial decline. In 1995, Kmart bit the bullet by closing
underperforming stores, clearing out discontinued inventory, and divesting
non-core assets.
"We resolved the puttable real estate debt and took the one-time writedown
related to Builders Square and our international operations, and continued to
make good progress in restructuring and strengthening our financial flexibility
and stability.
"We will build on last year's cost-cutting efforts by reducing SG&A expense by
an additional $400 million. In 1996, merchandising and operational initiatives
already underway will result in improved assortments, better in-stock
positions, cleaner and more orderly stores, and dramatic gains in customer
service. We are confident that our 1995 actions, our new management team, and
an intense customer focus will produce a return to profitability in 1996 and
longer term."
FOURTH QUARTER 1995 RESULTS OF OPERATIONS
Total sales in the fourth quarter of 1995 were $10.531 billion, an increase of
6.6% from $9.876 billion for the fourth quarter of 1994. On a comparable store
basis, excluding the fifty-third week in 1995, consolidated sales were up 4.7%.
Sales in U.S. Kmart stores increased 5.9% on the same basis.
Gross margin for the fourth quarter of 1995 was 20.4% of sales versus 20.3% in
the prior year. The fourth quarter gross margin was favorably impacted by the
implementation of a previously-
<PAGE> 3
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 3-3-3
announced inventory accounting change made in the first quarter of 1995.
Pretax LIFO credits of $43 million and $57 million were recorded during the
fourth quarters of 1995 and 1994, respectively. Selling, general and
administrative expenses, as a percentage of sales, for the fourth quarter were
20.2% in 1995 versus 20.8% in 1994.
FULL YEAR 1995 RESULTS OF OPERATIONS
Total sales during 1995 were $34.389 billion, an increase of 5.8% from
$32.514 billion in the preceding year. On a comparable store basis, and
excluding the fifty-third week in 1995, consolidated sales were up 4.3%. Sales
in U.S. Kmart stores increased 5.6% on that same basis.
Gross margin for the year was 21.5% of sales versus 23.5% during 1994.
Pretax LIFO credits of $36 million and $57 million were recorded during 1995
and 1994, respectively, reflecting lower inventory and inflation levels.
Selling, general and administrative expenses, as a percentage of sales, were
22.0% during 1995 versus 22.7% during 1994.
Kmart Corporation serves America with 2,168 Kmart plus 167 Builders Square
retail outlets and 147 stores internationally.
Kmart Corporation common stock is listed on the New York, Pacific, and Chicago
Stock Exchanges.
<PAGE> 4
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 4-4-4
KMART CORPORATION
SALES AND OPERATING RESULTS BY BUSINESS
14 WEEKS ENDED JANUARY 31, 1996 AND 13 WEEKS ENDED JANUARY 25, 1995
SALES
<TABLE>
<CAPTION>
% Change
All Comparable
(Millions U.S. $) 1-31-96 1-25-95 Stores Stores (b)
<S> <C> <C> <C> <C> <C>
General Merchandise-
United States $ 9,467 $ 8,793 7.7 5.9
International 434 404 7.2 3.7 (a)
Total General Merchandise 9,901 9,197 7.6 5.8
Specialty Retail-
Builders Square 630 679 (7.2) (10.7)
Total Kmart $ 10,531 $ 9,876 6.6 4.7
</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 period ended 1-24-96.
OPERATING RESULTS
<TABLE>
<CAPTION>
(Millions U.S. $) 1-31-96 1-25-95 % Change
<S> <C> <C> <C>
General Merchandise-
United States $ 124 $ 29 -
International (a) (7) 14 (150.0)
Total General Merchandise 117 43 172.1
Specialty Retail-
Builders Square (a) (12) (2) -
Total Kmart (a) $ 105 $ 41 156.1
</TABLE>
(a) Excludes $532 million total charges for FAS 121 in the fourth quarter
of 1995.
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KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 5-5-5
KMART CORPORATION
SALES AND OPERATING RESULTS BY BUSINESS
53 WEEKS ENDED JANUARY 31, 1996 AND 52 WEEKS ENDED JANUARY 25, 1995
SALES
<TABLE>
<CAPTION>
% Change
All Comparable
(Millions U.S. $) 1-31-96 1-25-95 Stores Stores (b)
<S> <C> <C> <C> <C> <C>
General Merchandise-
United States $ 30,429 $ 28,386 7.2 5.6
International 1,284 1,177 9.1 3.0 (a)
Total General Merchandise 31,713 29,563 7.3 5.5
Specialty Retail-
Builders Square 2,676 2,951 (9.3) (8.7)
Total Kmart $ 34,389 $ 32,514 5.8 4.3
</TABLE>
(a) International comparable store sales change is calculated on sales in the
applicable local currency.
(b) Comparable store sales are based on the 52 week period ended 1-24-96.
OPERATING RESULTS
<TABLE>
<CAPTION>
(Millions U.S. $) 1-31-96 1-25-95 % Change
<S> <C> <C> <C>
General Merchandise-
United States $ 262 $ 505 (48.1)
International (a) (17) 23 (173.9)
Total General Merchandise 245 528 (53.6)
Specialty Retail-
Builders Square (a) (17) 28 (160.7)
Total Kmart (a) $ 228 $ 556 (59.0)
</TABLE>
(a) Excludes $532 million total charges for FAS 121 in the fourth quarter
of 1995.
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KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 6-6-6
KMART CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
14 Weeks 13 Weeks
Ended Ended
(Amounts in millions, except per share data) 1-31-96 1-25-95
<S> <C> <C>
Sales $ 10,531 $ 9,876
Licensee fees and other income 78 91
10,609 9,967
Cost of merchandise sold 8,378 7,869
Selling, general and administrative expenses 2,126 2,057
Asset impairment charges 532 -
Interest expense, net 127 120
Loss from continuing retail operations before income taxes
and equity income (554) (79)
Equity in net income of unconsolidated companies 15 20
Income tax credit (170) (43)
Net loss from continuing retail operations before
extraordinary item (369) (16)
Income from discontinued operations, net of income taxes 1 44
Gain on disposal of discontinued operations, net of income
taxes (1) 117
Extraordinary debt restructuring charges, net of income taxes (51) -
Net income (loss) ($ 420) $ 145
Earnings (loss) per common share:
Continuing retail operations before asset impairment charges $ 0.05 ($ 0.04)
Asset impairment charges ($ 0.85) -
Continuing retail operations ($ 0.80) ($ 0.04)
Income from discontinued operations - $ 0.09
Gain on disposal of discontinued operations - $ 0.26
Extraordinary debt restructuring charges ($ 0.11) -
Net income (loss) ($ 0.91) $ 0.31
Weighted average shares outstanding 461.6 457.9
</TABLE>
* The consolidated statement of operations for the prior period has been
restated for discontinued operations.
<PAGE> 7
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 7-7-7
KMART CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
(Amounts in millions, except per share data) 1-31-96 1-25-95
<S> <C> <C>
Sales $ 34,389 $ 32,514
Licensee fees and other income 265 286
34,654 32,800
Cost of merchandise sold 26,996 24,868
Selling, general and administrative expenses 7,554 7,376
Asset impairment charges 532 -
Gain on pension curtailment (124) -
Interest expense, net 446 493
Loss from continuing retail operations before income taxes
and equity income (750) 63
Equity in net income of unconsolidated companies 38 52
Income tax provision (credit) (222) 11
Net income (loss) from continuing retail operations before
extraordinary item (490) 104
Income from discontinued operations, net of income taxes - 75
Gain (loss) on disposal of discontinued operations, net of
income taxes (30) 117
Extraordinary debt restructuring charges, net of income taxes (51) -
Net income (loss) ($571) $ 296
Earnings (loss) per common share:
Continuing retail operations before asset impairment charges ($0.23) $ 0.21
Asset impairment charges ($0.85) -
Continuing retail operations ($1.08) $ 0.21
Income from discontinued operations - $ 0.16
Gain (loss) on disposal of discontinued operations ($0.06) $ 0.26
Extraordinary debt restructuring charges ($0.11) -
Net income (loss) ($1.25) $ 0.63
Weighted average shares outstanding 459.9 456.6
</TABLE>
* The consolidated statement of operations for the prior period has been
restated for discontinued operations.
<PAGE> 8
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 8-8-8
KMART CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
53 Weeks 52 Weeks
Ended Ended
(Amounts in millions) 1-31-96 1-25-95
<S> <C> <C>
Cash Provided by (Used for) Operations:
Income (loss) from continuing retail operations $ (490) $ 104
Adjustments to reconcile net income to net cash
provided by (used for) operations
Extraordinary item (51) -
Asset impairment charges 532 -
Depreciation and amortization 729 680
Cash used for store restructuring and other charges (231) (133)
Deferred income taxes (9) 40
Decrease (increase) in inventories 236 (628)
Increase (decrease) in accounts payable (645) 420
Other, net (301) 227
Net cash provided by (used for) continuing retail
operations (230) 710
Discontinued operations:
Gain (loss) on disposal and income from discontinued
operations (30) 192
Cash used for discontinued operations (22) (362)
Items not affecting cash, net 178 (636)
Total from discontinued operations 126 (806)
Net cash used for operations (104) (96)
Investing:
Capital additions (578) (1,125)
Proceeds from asset sales and subsidiary public
offerings 1,245 2,431
Other, net (346) (229)
Net cash provided by investing 321 1,077
Financing:
Net proceeds from (repayments of ) long-term debt and
notes payable 963 (453)
Dividends paid (283) (474)
Reduction in capital lease obligations and other (155) (80)
Net cash provided by (used for) financing 525 (1,007)
Net increase (decrease) in cash 742 (26)
Cash at beginning of year 353 379
Cash at end of year $1,095 $ 353
</TABLE>
* The consolidated cash flow statement for the prior period has been restated
for discontinued operations.
<PAGE> 9
KMART CORPORATION REPORTS FOURTH QUARTER AND FULL YEAR 1995 RESULTS 9-9-9
KMART CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
(Amounts in millions) 1-31-96 1-25-95
<S> <C> <C>
ASSETS
Current Assets:
Cash (including temporary investments of
$637 and $32, respectively) $ 1,095 $ 353
Merchandise inventories 6,635 6,853
Other current assets 1,092 1,290
Net current assets of discontinued operations - 369
Total current assets 8,822 8,865
Investments in affiliated retail companies 94 108
Property and equipment - net 5,301 6,011
Other assets and deferred charges 1,180 913
Net long-term assets of discontinued operations - 745
TOTAL ASSETS $15,397 $16,642
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Long-Term debt due within one year $ 7 $ 235
Notes payable - 748
Accounts payable - trade 1,993 2,638
Accrued payrolls and other liabilities 1,076 1,158
Taxes other than income taxes 188 268
Income taxes - 256
Total current liabilities 3,264 5,303
Capital lease obligations 1,629 1,777
Long-term debt and notes payable 3,935 2,003
Other long-term liabilities 1,289 1,527
Shareholders' Equity:
Preferred stock, 10,000,000 shares authorized;
Series C, 790,287 shares authorized; 658,315
shares issued at January 25, 1995 - 132
Common stock, 1,500,000,000 shares authorized;
shares issued 486,511,184, and 464,549,561,
respectively 486 465
Capital in excess of par value 1,624 1,505
Retained earnings 3,326 4,074
Treasury shares and restricted stock (92) (86)
Foreign currency translation adjustment (64) (58)
Total shareholders' equity 5,280 6,032
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $15,397 $16,642
</TABLE>
* The consolidated balance sheet for the prior period has been restated for
discontinued operations.
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