Kmart Corporation (Pink Sheets: KMRTQ) today announced the implementation of an anticipated strategic restructuring of its corporate and headquarters operations initiative, aimed at aligning these functions with the Company's go-forward store base and preparing the organization for emergence from Chapter 11 reorganization next month.
"The realignment and restructuring of our corporate headcount and operations to more closely support our stores is absolutely critical to Kmart's future success after it completes its Chapter 11 reorganization," said Julian C. Day, President and Chief Executive Officer of Kmart. "We continue to take the necessary actions to create a financially healthy, cost-effective organization that is positioned to compete in the discount sector. We are similarly committed to continuing to regain the confidence of Kmart's many stakeholders and are appreciative of the strong support of our reorganization plan and timetable by our employees, statutory creditors committees, emergence lenders and plan investors."
Day said this cost-reduction initiative realigns the organization to better reflect the Company's ongoing business needs following the completion of its Chapter 11 store closure program and also reflects the "new" Kmart's disciplined, low-risk approach to managing its business.
As part of the initiative, beginning today, the Company will eliminate approximately 400 positions at Kmart's corporate headquarters and 123 positions located nationally that provide corporate support. The Company also will eliminate 137 positions that are currently open. The Company expects to notify most of the individuals affected by the end of today. Kmart stores and distribution centers are not impacted by this initiative.
Day continued, "The decisions resulting in today's announcement were very difficult. As we prepare to exit Chapter 11 in April, we are extremely appreciative of the contributions our associates have made while the Company has undergone this major restructuring. Throughout the process, we have been, and continue to be, committed to treating our associates with dignity and respect."
Associates affected are eligible for severance considerations that include health care subsidies and outplacement services that will assist them with career transition.
Upon completion of this initiative, Kmart expects to achieve a savings of $90 million for the 2003 fiscal year and $150 million annually.
Kmart Corporation is a mass merchandising company that serves America through its Kmart and Kmart SuperCenter retail outlets. The Company's common stock is currently quoted on the Pink Sheets Electronic Quotation Service www.pinksheets.com under the symbol KMRTQ.
Cautionary Statement Regarding Forward-Looking Information and Related Matters
Bankruptcy law does not permit solicitation of acceptances of the Plan of Reorganization until the Court approves the applicable Disclosure Statement relating to the Plan of Reorganization as providing adequate information of a kind, and in sufficient detail, as far as is reasonably practicable in light of the nature and history of the debtor and the condition of the debtor's books and records, that would enable a hypothetical reasonable investor typical of the holder of claims or interests of the relevant class to make an informed judgment about the Plan of Reorganization. On February 25, 2003, the Bankruptcy Court approved the Company's Disclosure Statement with respect to the First Amended Joint Plan of Reorganization and authorized a balloting and solicitation process that will conclude on April 4, 2003. A hearing on confirmation of the First Amended Joint Plan of Reorganization is scheduled to commence in the Bankruptcy Court on April 14, 2003. Accordingly, any disclosure by the Company during the plan solicitation period, including this announcement, is not intended to be, nor should it be construed as, a solicitation for a vote on the Plan, which can only occur based on the official disclosure statement package that was mailed on or about March 7, 2003. The Company will emerge from Chapter 11 if and when the Plan receives the requisite creditor approvals and is confirmed by the Bankruptcy Court.
Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future, including certain of the information contained in the Plan of Reorganization and Disclosure Statement, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect the Company's current views with respect to current and future events and financial performance. Such forward- looking statements are and will be, as the case may be, subject to many risks and uncertainties, including, but not limited to, Kmart's having filed for bankruptcy and factors relating to Kmart's operations and the business environment in which Kmart operates, which may cause the actual results of Kmart to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include those set forth in Kmart's Annual Report on Form 10-K for the fiscal year ended January 29, 2003, or in other filings made, from time to time, by Kmart with the Securities and Exchange Commission (the "Company Filings"). The forward- looking statements speak only as of the date when made and Kmart does not undertake to update such statements.
Similarly, these and other factors set forth in the Company Filings, including the terms of the final reorganization plan ultimately confirmed by the bankruptcy court, can affect the value of our various pre-petition liabilities, common stock and/or other securities. Until Kmart's Plan of Reorganization is confirmed by the Bankruptcy Court, the recoveries of pre- petition claims holders are subject to change.
If the final Plan of Reorganization confirmed by the Bankruptcy Court is consistent with the Plan of Reorganization recently filed with the Court, it would result in the cancellation of the existing Kmart common stock, with holders thereof receiving no distributions under the plan other than, possibly, for a minor interest in a creditor litigation trust to be established pursuant to the plan. In light of the foregoing, the Company considers the value of the common stock to be highly speculative and cautions equity holders that the stock may ultimately be determined to have no value.
Accordingly, the Company urges that appropriate caution be exercised with respect to existing and future investments in Kmart common stock or any claims relating to pre-petition liabilities and/or other Kmart securities.
SOURCE: Kmart Corporation
CONTACT: Kmart Media Relations, +1-248-463-1021
Web site: http://www.kmart.com/