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.
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.
Item 3.
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.
Item 4. Submission of Matters to a Vote of Security Holders - ------- ---------------------------------------------------
Not applicable.
Executive Officers of the Registrant
The following table sets forth information concerning the executive officers of the Registrant as of February 7, 1994.
* Effective May 1, 1994
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.
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.
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.
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.
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
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.
Item 9. Changes in and Disagreements with Accountants on Accounting and - ------- --------------------------------------------------------------- Financial Disclosure -------------------- Not applicable.
PART III
Item 10.
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.
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.
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.
Item 13. Certain Relationships and Related Transactions. - -------- ----------------------------------------------- Not applicable.
PART IV
Item 14.
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.
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
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.
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.
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
KMART CORPORATION AND SUBSIDIARY COMPANIES SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (1)
(Millions)
(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.
KMART CORPORATION AND SUBSIDIARY COMPANIES SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (1)
(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.
KMART CORPORATION AND SUBSIDIARY COMPANIES SCHEDULE IX - SHORT-TERM BORROWINGS (a)
(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.
KMART CORPORATION AND SUBSIDIARY COMPANIES SCHEDULE X - SUPPLEMENTARY INCOME STATEMENT INFORMATION
Advertising expense for the prior periods have been restated for discontinued operations.
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