TROY, Mich., May 11, 2000 --Kmart Corporation (NYSE:KM) today reported net income of $22 million, or $0.05 per share for the 13 weeks ended April 26, 2000, compared with net income of $56 million, or $0.11 per share (restated for SAB 101) for the 13 weeks ended April 28, 1999
Total consolidated sales in the first quarter of 2000 were $8.195 billion, an increase of 1.5% from $8.078 billion for the first quarter of 1999. Comparable sales for the quarter were flat. The gross margin rate for the quarter was 20.8% of sales versus 21.1% last year. Selling, general and administrative (SG&A) expenses for the quarter increased to $1.581 billion compared with $1.539 billion for 1999, resulting in a SG&A to sales ratio of 19.3% for 2000 versus 19.0% for 1999.
For the first time, Kmart's quarterly results reflect the company's majority ownership of BlueLight.com., with operating losses included in SG&A expenses. For the first quarter, Kmart’s share of BlueLight.com operating losses amounted to $17 million pre-tax, $11 million after tax, or approximately $0.02 per share.
Commenting on the first quarter 2000 performance, Kmart Chairman, President and CEO, Floyd Hall said: “Our overall performance fell short in April, and consequently for the first quarter, as we simply did not generate the promotional excitement necessary to extend our string of 15 consecutive quarterly earnings increases. Several departments, however, outperformed compared to last year including seasonal, outdoor living, home electronics, home décor, jewelry, prescription drugs, cosmetics and fragrances. We are taking steps to regain our sales momentum and remain confident that we can meet or exceed the Company’s financial plans for the year."
Kmart Corporation serves America with 2,171 Kmart retail outlets. Kmart Corporation common stock is listed on the New York, Pacific, and Chicago Stock Exchanges.
Cautionary Statement Regarding Forward-looking Information
Statements, other than those based on historical facts, which address activities, events, or developments that the Company expects or anticipates may occur in the future are forward-looking statements which are based upon a number of assumptions concerning further conditions that may ultimately prove to be inaccurate. Actual events and results may materially differ from anticipated results described in any forward-looking statements. The Company's ability to achieve such results is subject to certain risks and uncertainties, including, but not limited to, economic and weather conditions which affect buying patterns of the Company's customers, changes in consumer spending and the Company's ability to anticipate buying patterns and implement appropriate inventory strategies, continued availability of capital and financing, competitive factors, and other factors affecting business beyond the Company's control. Consequently, all of the forward-looking statements are qualified by these cautionary statements and there can be no assurance that the results or developments anticipated by the Company will be realized or that they will have the expected effects on the Company or its business or operations.
KMART
CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
| (Dollars in millions, except per share data) |
13 Weeks Ended April 26, 2000 |
13 Weeks Ended April 28, 1999 |
| Sales |
$ 8,195 |
$ 8,078 |
| Cost of sales, buying and occupancy |
6,494 |
6,370 |
| Gross margin |
1,701 |
1,708 |
| Selling, general and administrative expenses |
1,581 |
1,539 |
| Income before interest, income taxes and dividends on convertible preferred securities of subsidiary trust |
120 |
169 |
| Interest expense, net |
69 |
66 |
| Income tax provision |
18 |
34 |
| Dividends on convertible preferred securities of subsidiary trust, net of income taxes |
11 |
13 |
| Net income |
$ 22 |
$ 56 |
| Basic/Diluted earnings per common share |
$ 0.05 |
$ 0.11 |
| Basic weighted average shares (millions) |
481.3 |
494.1 |
| Diluted weighted average shares (millions) |
545.9 |
567.1 |
KMART CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| (Dollars in millions) |
April 26, 2000 |
April 28, 1999 |
| ASSETS |
|
|
| Current Assets: |
|
|
| Cash and cash equivalents |
$ 350 |
$ 619 |
| Merchandise inventories |
7,290 |
7,445 |
| Other current assets |
735 |
657 |
| Total current assets |
8,375 |
8,721 |
| |
| Property and equipment, net |
6,356 |
5,965 |
| Other assets and deferred charges |
417 |
441 |
| TOTAL ASSETS TOTAL ASSETS |
$ 15,148 |
$ 15,127 |
| |
| LIABILITIES AND EQUITY |
|
|
| Current Liabilities: |
|
|
| Long-term debt due within one year |
$ 67 |
$ 77 |
| Trade accounts payable |
2,575 |
3,040 |
| Accrued payroll and other liabilities |
1,314 |
1,243 |
| Taxes other than income taxes |
234 |
245 |
| Total current liabilities |
4,190 |
4,605 |
| |
| Long-term debt and notes payable |
1,844 |
1,529 |
| Capital lease obligations |
995 |
1,073 |
| Other long-term liabilities |
907 |
866 |
| Convertible preferred securities |
891 |
985 |
| Common stock |
481 |
495 |
| Capital in excess of par value |
1,554 |
1,688 |
| Retained earnings |
4,286 |
3,886 |
| TOTAL LIABILITIES AND EQUITY
|
$ 15,148 |
$ 15,127 |
KMART CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| (Dollars in millions) |
13 Weeks Ended April 26, 2000 |
13 Weeks Ended April 28, 1999 |
| CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
Net income from continuing operations |
$ 22 |
$ 56 |
| Adjustments to reconcile net income from continuing operations to net cash provided by operating activities: |
|
|
| Depreciation and amortization |
196 |
186 |
|
Cash used for store restructuring and other charges |
(17) |
(24) |
| Increase in inventories |
(189) |
(909) |
| Decrease (increase) in accounts receivable |
22 |
(49) |
| Increase in trade accounts payable |
371 |
1,024 |
| Deferred income taxes and taxes payable |
(59) |
(8) |
| (Decrease) increase in other long-term liabilities |
(32) |
13 |
| Equity loss in BlueLight.com |
17 |
- |
| Changes in other assets and liabilities |
(126) |
(48) |
| Net cash provided by continuing operations |
205 |
241 |
| Net cash used for discontinued operations |
(26) |
(14) |
| Net cash provided by operating activities |
179 |
227 |
| |
| CASH FLOW FROM INVESTING ACTIVITIES |
|
|
| Capital expenditures |
(141) |
(233) |
| Acquisition of Caldor leases |
- |
(76) |
| Net cash used for investing activities |
(141) |
(309) |
| |
| CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Proceeds from revolving credit facility |
91 |
- |
| Purchase of convertible preferred securities |
(80) |
- |
| Purchase of common shares |
(36) |
- |
| Issuanc of common shares |
17 |
18 |
| Payments on long-term debt |
(5) |
(9) |
| Payments on capital lease obligations |
(19) |
(18) |
| Net cash used for financing activities |
(32) |
(9) |
| |
| Net increase (decrease) in cash and cash equivalents |
6 |
(91) |
| Cash and cash equivalents, beginning of year |
344 |
710 |
|
Cash and cash equivalents, end of period
|
$ 350 |
$ 619 |
 |
