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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 2002
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
---------------------- -----------------------
Commission file number 1-11084
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KOHL'S CORPORATION
- --------------------------------------------------------------------------------
(Exact name of the registrant as specified in its charter)
WISCONSIN 39-1630919
--------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
N56 W17000 Ridgewood Drive, Menomonee Falls, Wisconsin 53051
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (262) 703-7000
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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 Days.
Yes X No
--------- ---------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: August 26, 2002 Common
Stock, Par Value $.01 per Share, 336,920,548 shares outstanding.
KOHL'S CORPORATION
INDEX
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Condensed Consolidated Balance Sheets at
August 3, 2002, February 2, 2002 and August 4, 2001 3
Condensed Consolidated Statements of Income for the
Three Months and Six Months Ended August 3, 2002
and August 4, 2001 4
Condensed Consolidated Statement of Changes in
Shareholders' Equity for the Six Months Ended
August 3, 2002 5
Condensed Consolidated Statements of Cash Flows for
the Six Months Ended August 3, 2002 and
August 4, 2001 6
Notes to Condensed Consolidated Financial Statements 7-9
Item 2 Management's Discussion and Analysis of Financial
Conditions and Results of Operations 10-14
Item 4 Controls and Procedures 15
PART II OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders 16-17
Item 6 Exhibits and Reports on Form 8-K 17
Signatures 18
Certifications 19-20
-2-
KOHL'S CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
August 3, February 2, August 4,
2002 2002 2001
----------- ----------- -----------
(Unaudited) (Audited) (Unaudited)
(In thousands)
Assets
------
Current assets:
Cash and cash equivalents $ 85,039 $ 106,722 $ 4,563
Short-term investments 113,230 229,377 164,663
Accounts receivable, net 828,649 835,946 703,630
Merchandise inventories 1,454,419 1,198,307 1,167,652
Deferred income taxes 40,593 52,292 40,770
Other 56,182 41,400 37,437
----------- ----------- -----------
Total current assets 2,578,112 2,464,044 2,118,715
Property and equipment, net 2,425,389 2,199,494 1,909,180
Other assets 89,945 81,850 76,843
Favorable lease rights 171,007 174,860 174,707
Goodwill 9,338 9,338 11,938
----------- ----------- -----------
Total assets $ 5,273,791 $ 4,929,586 $ 4,291,383
=========== =========== ===========
Liabilities and Shareholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 590,942 $ 478,870 $ 397,330
Accrued liabilities 246,148 259,598 175,276
Income taxes payable 69,253 125,085 28,685
Short-term debt - - 5,000
Current portion of long-term debt 11,141 16,418 16,358
----------- ----------- -----------
Total current liabilities 917,484 879,971 622,649
Long-term debt 1,089,695 1,095,420 1,091,150
Deferred income taxes 134,847 114,228 96,348
Other long-term liabilities 52,251 48,561 43,565
Shareholders' equity:
Common stock 3,368 3,351 3,346
Paid-in capital 1,062,251 1,005,169 985,491
Retained earnings 2,013,895 1,782,886 1,448,834
----------- ----------- -----------
Total shareholders' equity 3,079,514 2,791,406 2,437,671
----------- ----------- -----------
Total liabilities and shareholders' equity $ 5,273,791 $ 4,929,586 $ 4,291,383
=========== =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements
3
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months (13 Weeks) Ended Six Months (26 Weeks) Ended
------------------------------- ----------------------------
August 3, August 4, August 3, August 4,
2002 2001 2002 2001
----------- ----------- ----------- ----------
(In thousands, except per share data)
Net sales $1,921,830 $1,515,750 $3,792,418 $3,004,083
Cost of merchandise sold 1,234,773 978,915 2,448,594 1,946,450
---------- ---------- ---------- ----------
Gross margin 687,057 536,835 1,343,824 1,057,633
Operating expenses:
Selling, general, and administrative 423,698 343,898 835,525 682,141
Depreciation and amortization 47,426 37,079 91,395 72,589
Goodwill amortization - 1,300 - 2,600
Preopening expenses 2,939 2,208 19,878 15,443
---------- ---------- ---------- ----------
Operating income 212,994 152,350 397,026 284,860
Interest expense, net 13,013 12,756 25,628 23,332
---------- ---------- ---------- ----------
Income before income taxes 199,981 139,594 371,398 261,528
Provision for income taxes 75,593 53,081 140,389 99,904
---------- ---------- ---------- ----------
Net income $ 124,388 $ 86,513 $ 231,009 $ 161,624
========== ========== ========== ==========
Earnings per share:
Basic
Net income $ 0.37 $ 0.26 $ 0.69 $ 0.48
Average number of shares 336,662 334,159 336,260 333,472
Diluted
Net income $ 0.36 $ 0.25 $ 0.67 $ 0.47
Average number of shares 343,439 342,118 342,942 341,583
See accompanying Notes to Condensed Consolidated Financial Statements
4
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
Common Stock
------------------ Paid-In Retained
Shares Amount Capital Earnings Total
------ ------ ------- -------- -----
(In thousands, except share amounts)
Balance at February 2, 2002 335,138,497 $ 3,351 $ 1,005,169 $ 1,782,886 $ 2,791,406
Exercise of stock options 1,636,772 17 21,807 - 21,824
Income tax benefit from exercise of stock options - - 35,275 - 35,275
Net income - - - 231,009 231,009
----------- ------- ----------- ----------- -----------
Balance at August 3, 2002 336,775,269 $ 3,368 $ 1,062,251 $ 2,013,895 $ 3,079,514
=========== ======= =========== =========== ===========
See accompanying Notes to Condensed Consolidated Financial Statements
5
KOHL'S CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months (26 Weeks) Ended
---------------------------------
August 3, 2002 August 4, 2001
-------------- --------------
(In thousands)
Operating activities
Net income $231,009 $161,624
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 91,810 75,575
Amortization of debt discount 4,658 4,523
Deferred income taxes 32,318 10,853
Changes in operating assets and liabilities:
Accounts receivable 7,297 (22,374)
Merchandise inventories (256,112) (164,362)
Other current assets (14,782) (11,838)
Accounts payable 112,072 (2,609)
Accrued and other long-term liabilities (8,119) (10,475)
Income taxes (20,557) (38,624)
-------- --------
Net cash provided by operating activities 179,594 2,293
Investing activities
Acquisition of property and equipment
and favorable lease rights, net (310,096) (299,140)
Net sales (purchases) of short-term investments 116,147 (116,063)
Other (12,556) (15,705)
-------- --------
Net cash used in investing activities (206,505) (430,908)
Financing activities
Proceeds from public debt offering, net - 299,503
Payments of other long-term debt, net (15,660) (16,167)
Payments of financing fees on debt (936) (1,569)
Proceeds from stock option exercises 21,824 27,790
-------- --------
Net cash provided by financing activities 5,228 309,557
-------- --------
Net decrease in cash and cash equivalents (21,683) (119,058)
Cash and cash equivalents at beginning of period 106,722 123,621
-------- --------
Cash and cash equivalents at end of period $ 85,039 $ 4,563
======== ========
See accompanying Notes to Condensed Consolidated Financial Statements
6
KOHL'S CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying financial statements have been prepared in accordance with
accounting principles generally accepted in the United States for interim
financial information. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for fiscal
year end financial statements. In the opinion of management, all adjustments
(consisting of normal recurring accruals) considered necessary for a fair
presentation have been included. For further information, refer to the financial
statements and footnotes thereto included in the Company's Form 10-K (Commission
File No. 1-11084) filed with the Securities and Exchange Commission.
2. Reclassifications
Certain reclassifications have been made to the prior periods' financial
statements to conform to the fiscal 2002 presentation.
3. New Accounting Pronouncements
During June 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other
Intangible Assets," effective for fiscal years beginning after December 15,
2001. The Company adopted this statement on February 3, 2002. Under SFAS No.
142, goodwill and intangible assets deemed to have indefinite lives will no
longer be amortized. Goodwill is now subject to fair value based impairment
tests. In addition, a transitional goodwill impairment test is required as of
the adoption date. The Company completed the transitional impairment test during
the first quarter of 2002 and determined there was no impairment losses on
existing goodwill. The remaining balance of goodwill is $9.3 million. In
accordance with SFAS No. 142, the Company ceased amortization of its remaining
goodwill. Under SFAS No. 142, the Company would have had $1.3 million of
additional pretax income and net income in the second quarter of fiscal 2001 and
$2.6 million for the six months ended August 4, 2001. The impact on basic and
diluted earnings per share would have been less than $0.01.
In August 2001, The Financial Accounting Standards Board issued SFAS No.
144, "Accounting for the Impairment or Disposal of Long-Lived Assets," effective
for fiscal years beginning after December 15, 2001. SFAS No. 144 addresses
financial accounting and reporting for impairment or disposal of long-lived
assets and supersedes SFAS No. 121. The Company adopted SFAS No. 144 on February
3, 2002. The adoption of this statement did not have an impact on the Company's
results of operations or financial position.
7
4. Merchandise Inventories
The Company uses the last-in, first-out (LIFO) method of accounting for
merchandise inventory. The following information is provided to show the effects
of the LIFO provision on each quarter, as well as to provide users with the
information to compare to other companies not on LIFO.
LIFO Expense
------------
Quarter Fiscal 2002 Fiscal 2001
------- ----------- -----------
(In Thousands)
First $2,243 $1,786
Second 2,305 1,819
------ ------
Total Year to Date $4,548 $3,605
====== ======
Inventories would have been $11,658,000, $7,110,000, and $8,456,000 higher
at August 3, 2002, February 2, 2002, and August 4, 2001, respectively, if they
had been valued using the first-in, first-out (FIFO) method.
5. Debt
During the quarter, the Company executed two new unsecured revolving bank
credit facilities. The first agreement consists of a $532 million facility
maturing July 10, 2007. The second agreement consists of a $133 million facility
maturing July 10, 2003. These agreements replace a $300 million unsecured
revolving bank credit facility which would have matured on June 13, 2003.
Depending on the type of advance under the new facilities, amounts borrowed bear
interest at competitive bid rates; the LIBOR plus a margin, based on the
Company's long-term unsecured debt rating; or the agent bank's base rate. No
amounts were outstanding under any of these facilities as of August 3, 2002, or
August 4, 2001.
6. Contingencies
The Company is involved in various legal matters arising in the normal
course of business. In the opinion of management, the outcome of such
proceedings and litigation will not have a material adverse impact on the
Company's financial position or results of operations.
8
7. Net Income Per Share
The numerator for the calculation of basic and diluted net income per share
is net income. The denominator is summarized as follows:
Six Months ended
---------------------------------
August 3, 2002 August 4, 2001
-------------- --------------
(In Thousands)
Denominator for basic earnings per share
- - weighted average shares 336,260 333,472
Impact of dilutive employee stock options 6,682 8,111
------- -------
Denominator for dilutive earnings per share 342,942 341,583
======= =======
9
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED AUGUST 3, 2002
Results of Operations
- ---------------------
During the first half of the year, the Company successfully opened 38 new
stores including entering the Houston market with 12 stores; the Boston market
with 13 stores and the Nashville market with four stores along with three
additional stores in New York; two stores in Dallas, TX; two stores in New
Jersey; and a store each in Huntsville, AL and Indianapolis, IN.
The Company plans to open another 33 prototype stores in the second half of
the year, five in August and 28 in October. In August, the Company opened two
new stores in the Columbia, SC market; one store in the Detroit, MI market; one
store in the Toledo, OH market; and an additional store in Manchester, CT. In
October, the Company plans to enter the Providence, RI market with four stores
and add three stores in the Milwaukee, WI market; two stores in the Boston, MA
market; two stores in the Philadelphia, PA market; five stores in Ohio; three
stores in New Jersey; two stores in Minnesota; and one additional store each in
New York, Virginia, North Carolina, Iowa, Illinois, Indiana and Texas.
In addition, the Company plans to open 4 stores as a small market test.
These stores will average 62,000 square feet and are designed to take the Kohl's
concept into a smaller footprint for lower population markets. Three of these
stores opened in August: one in Wisconsin, one in Iowa and one in Michigan. The
fourth will open in October in North Carolina. That will bring the total number
of stores the Company plans to open this year to 75 and the Company anticipates
ending the fiscal year with 457 stores.
In 2003, the Company plans to open approximately 80 new stores. The Company
anticipates opening 30-35 stores in the first quarter including the Company's
entry into the Los Angeles, CA market. In the fall season, the Company plans to
open approximately 45-50 new stores including entries into the Phoenix, AZ and
Las Vegas, NV markets. A distribution center, located in San Bernardino, CA, is
currently under construction and will be opened at the end of fiscal 2002 to
support the Company's growth in the southwest.
Net sales increased $406.1 million or 26.8% to $1,921.8 million for the
three months ended August 3, 2002, from $1,515.7 million for the three months
ended August 4, 2001. Net sales increased $245.3 million due to the opening of
38 new stores in the first half of 2002 and the inclusion of 28 new stores
opened in 2001. The remaining $160.8 million is attributable to comparable store
sales growth of 10.6%.
10
Net sales increased $788.3 million or 26.2% to $3,792.4 million for the six
months ended August 3, 2002, from $3,004.1 million for the six months ended
August 4, 2001. Net sales increased $518.5 million due to the opening of 38 new
stores in the first half of 2002 and the inclusion of 62 new stores opened in
2001. The remaining $269.8 million is attributable to comparable store sales
growth of 9.6%.
Gross margin for the three months ended August 3, 2002, was $687.1 million,
or 35.8% compared to $536.8 million, or 35.4% for the three months ended August
4, 2001. Gross margin for the six months ended August 3, 2002, was $1,343.8
million, or 35.4% compared to $1,057.6 million, or 35.2% for the six months
ended August 4, 2001. The increase in gross margin was primarily due to the
growth in sales and improved margin rate by merchandise category for the three
months and six months ended August 3, 2002.
Selling, general and administrative (S,G&A) expenses include all direct
store expenses such as payroll, occupancy and store supplies and all costs
associated with the Company's distribution centers, advertising and corporate
functions, but exclude depreciation and amortization. The S,G&A expenses
declined to 22.0% of net sales for the three months ended August 3, 2002, from
22.7% of net sales for the three months ended August 4, 2001. Of the 64 basis
points of rate improvement, 38 basis points are due to leverage of store
operating expenses while the remainder is due to leverage of other S,G&A costs.
The S,G&A expenses declined to 22.0% of net sales for the six months ended
August 3, 2002, from 22.7% of net sales for the six months ended August 4, 2001.
Of the 68 basis points of rate improvement, 33 basis points are due to leverage
of store operating expenses while the remainder is due to the leverage of other
S,G&A costs.
Depreciation and amortization for the three months ended August 3, 2002,
was $47.4 million compared to $38.4 million for the three months ended August 4,
2001. Depreciation and amortization for the six months ended August 3, 2002, was
$91.4 million compared to $75.2 million for the six months ended August 4, 2001.
The increase is primarily attributable to the addition of new stores, the
opening of two new distribution centers and the remodeling and expansion of
existing stores.
Preopening expenses are expensed as incurred and relate to the costs
associated with new store openings including advertising, hiring and training
costs for new employees, and processing and transporting initial merchandise.
Preopening expense for the three months ended August 3, 2002, was $2.9 million
compared to $2.2 million for the three months ended August 4, 2001. Preopening
expense for the six months ended August 3, 2002, was $19.9 million compared to
$15.4 million for the six months ended August 4, 2001. The increase is primarily
due to an increase in the number of new stores opened and the timing of related
expenses.
As a result of the above factors, operating income for the three months
ended August 3, 2002, increased $60.6 million or 39.8% over the three months
ended August 4,
11
2001. Operating income for the six months ended August 3, 2002, increased $112.2
million or 39.4% over the six months ended August 4, 2001.
Net interest expense for the three months ended August 3, 2002, was $13.0
million compared to $12.8 million for the three months ended August 4, 2001. Net
interest expense for the six months ended August 3, 2002, was $25.6 million
compared to $23.3 million for the six months ended August 4, 2001. The Company
incurred incremental interest expense as a result of the $300 million of
non-callable unsecured notes issued March 2001.
Net income for the three months ended August 3, 2002, increased 43.8% to
$124.4 million from $86.5 million for the three months ended August 4, 2001.
Earnings were $0.36 per diluted share for the three months ended August 3, 2002,
compared to $0.25 per diluted share for the three months ended August 4, 2001.
Net income for the six months ended August 3, 2002, increased 42.9% to $231.0
million from $161.6 million for the six months ended August 4, 2001. Earnings
were $0.67 per diluted share for the six months ended August 3, 2002, compared
to $0.47 per diluted share for the six months ended August 4, 2001.
Seasonality & Inflation
The Company's business, like that of most retailers, is subject to
seasonal influences, with the major portion of sales and income typically
realized during the last half of each fiscal year, which includes the
back-to-school and holiday seasons. Approximately 16% and 31% of sales typically
occur during the back-to-school and holiday seasons, respectively. Because of
the seasonality of the Company's business, results for any quarter are not
necessarily indicative of the results that may be achieved for a full fiscal
year. In addition, quarterly results of operations depend significantly upon the
timing and amount of revenues and costs associated with the opening of new
stores.
The Company does not believe that inflation has had a material effect on
the results during the periods presented. However, there can be no assurance
that the Company's business will not be affected in the future.
Financial Condition and Liquidity
The Company's primary ongoing cash requirements are for seasonal and new
store inventory purchases, the growth in credit card accounts receivable and
capital expenditures in connection with expansion and remodeling programs. The
Company's primary sources of funds for its business activities are cash flow
from operations, $225 million of available financing secured by its proprietary
accounts receivable, seasonal borrowings under its $665 million revolving credit
facilities and short-term trade credit. Short-term trade credit, in the form of
extended payment terms for inventory purchases, represents a significant source
of financing for merchandise inventories. The Company's working capital and
inventory levels typically build throughout the fall, peaking during
12
the holiday selling season. In addition, the Company periodically accesses the
capital markets, as needed, to finance its growth. The Company expects to
generate adequate cash flows from operating activities to sustain current levels
of operations.
During the quarter, the Company executed two new unsecured revolving bank
credit facilities. The new agreements consist of a $532 million facility
maturing July 10, 2007, and an additional $133 million facility maturing July
10, 2003. The credit facilities will be used for general corporate purposes,
including continued store growth.
In March 2002, the Company filed a shelf registration statement on Form S-3
with the SEC, which was effective June 6, 2002. The registration statement
allows the Company to publicly offer and sell securities from time to time for
an aggregate offering price of up to $300 million. As of August 3, 2002, no
amounts were sold under this registration statement.
Cash provided by operating activities was $179.6 million for the six months
ended August 3, 2002, compared to $2.3 million for the six months ended August
4, 2001. Excluding changes in operating assets and liabilities, cash provided by
operating activities was $359.8 million for the six months ended August 3, 2002,
compared to $252.6 million for the six months ended August 4, 2001.
The following table summarizes information related to the Company's
proprietary credit card receivables:
August 3, February 2, August 4,
2002 2002 2001
--------- ----------- ---------
Gross accounts receivable $847,644 $853,726 $715,764
Allowance for doubtful accounts $ 18,995 $ 17,780 $ 12,134
Allowance as a % of gross accounts receivable 2.2% 2.1% 1.7%
Accounts receivable turnover (rolling 12 months)* 3.3x 3.2x 3.1x
* Calculated as credit card sales divided by average quarterly gross accounts
receivable
Proprietary credit card sales increased to $1.268.0 million, or 33.4% of
net sales, for the six months ended August 3, 2002, from $942.0 million, or
31.3% of net sales, for the six months ended August 4, 2001. The Company's
payment percent of billed balances ranged from 27% to 28% for the six months
ended August 3, 2002, versus 24% to 25% for the six months ended August 4, 2001.
The increase in the allowance for doubtful accounts as a percent of gross
receivables is attributable to the increase in the rate of write-offs related to
customer bankruptcies and delinquent accounts due to the economic environment in
fiscal 2001.
13
The Company's merchandise inventories increased $286.8 million over the
August 4, 2001 balance and $256.1 million over the February 2, 2002 balance. The
increases were primarily the result of higher merchandise levels required to
support existing stores and new store locations. Accounts payable increased
$193.6 million from August 4, 2001 and $112.1 from February 2, 2002.
Fluctuations in the level of accounts payable are primarily attributable to the
timing of inventory receipts and invoice dating arrangements with vendors.
Capital expenditures for the six months ended August 3, 2002, were $310.1
million compared to the $299.1 million for the same period a year ago.
The increase in expenditures is primarily attributable to the timing of spending
related to new stores.
Total capital expenditures for fiscal 2002 are expected to be approximately
$750 million. This estimate includes new store spending as well as base capital
needs. The actual amount of the Company's future annual capital expenditures
will depend primarily on the number of new stores opened, whether such stores
are owned or leased by the Company and the number of existing stores remodeled
or refurbished. During fiscal 2002, the Company plans to open 75 new stores. In
fiscal 2003, the Company plans to open approximately 80 additional stores.
14
Item 4. Controls and Procedures
In the quarter ended August 3, 2002, there were no significant changes in
the Company's internal controls or in other factors that could significantly
affect these controls, including any corrective actions with regard to
significant deficiencies and material weaknesses. Management periodically
reviews the Company's internal controls for effectiveness and plans to conduct
quarterly evaluations of its disclosure controls and procedures.
Forward Looking Statements
- --------------------------
Item 2 of this form 10-Q contains "forward looking statements," subject to
protections under federal law. The Company intends words such as "believes",
"anticipates", "plans", "may", "will", "should", "expects", and similar
expressions to identify forward-looking statements. In addition, statements
covering the Company's future sales or financial performance and the Company's
plans, objectives, expectations or intentions are forward-looking statements,
such as statements regarding the Company's liquidity, debt service requirements,
planned capital expenditures, future store openings and adequacy and capital
resources and reserves. Such statements are subject to certain risks and
uncertainties that could cause actual results to differ materially from those
anticipated by the forward looking statements. These risks and uncertainties
include but are not limited to those described in Exhibit 99.1 to the Company's
annual report on Form 10-K filed with the SEC on April 15, 2002, which is
expressly incorporated herein by reference, and such other factors as may
periodically be described in the Company's filings with the SEC.
15
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
The Annual Meeting of Stockholders of Kohl's Corporation was held on May
21, 2002:
1. To elect four directors to serve for a three-year term;
2. To ratify the appointment of Ernst & Young LLP as independent
auditors;
3. To vote on a shareholder proposal; and
4. To act upon any other business that may properly come before the
meeting or any adjournment thereof.
Proxies for the meeting were solicited pursuant to Section 14(a) of the
Securities Exchange Act of 1934 and there was no solicitation in opposition to
management's solicitations. All of management's nominees for directors as listed
in the proxy statement were elected, the appointment of Ernst & Young LLP as
independent auditors was ratified and the shareholder proposal was rejected.
The results of the voting were as follows:
1. Election of directors:
James D. Ericson
For - 300,382,964 shares
Withheld - 7,405,127 shares
William S. Kellogg
For - 299,108,764 shares
Withheld - 8,679,327 shares
Arlene Meier
For - 298,950,365 shares
Withheld - 8,837,726 shares
R. Elton White
For - 298,668,683 shares
Withheld - 9,119,408 shares
2. Ratification of Ernst & Young LLP as independent auditors:
For - 295,405,333 shares
Against - 11,256,193 shares
Abstain - 1,126,565 shares
16
3. Shareholder proposal:
For - 11,434,824 shares
Against - 263,604,607 shares
Abstain - 9,958,659 shares
Broker Non-Votes - 22,790,001 shares
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
10.1 364-Day Credit Agreement dated as of July 10, 2002 among
Kohl's Corporation, the lenders party thereto, Bank One, NA,
as Syndication Agent, U.S. Bank, National Association,
Wachovia Bank, National Association and Fleet National Bank,
as Co-Documentation Agents and The Bank of New York, as
Administrative Agent.
10.2 Five-Year Credit Agreement dated as of July 10, 2002 among
Kohls Corporation, the lenders party thereto, Bank One, NA,
as Syndication Agent, U.S. Bank, National Association,
Wachovia Bank, National Association and Fleet National Bank,
as Co-Documentation Agents, and The Bank of New York as
Issuing Bank, Swing Line Lender and Administrative Agent.
12.1 Statement regarding calculation of ratio of earnings to fixed
charges.
99.1 Certification of Periodic Report by Chief Financial Officer
99.2 Certification of Periodic Report by Chief Executive Officer
b) Reports on Form 8-K
There were no reports on form 8-K filed for three months ended
August 3, 2002.
17
SIGNATURES
----------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Kohl's Corporation
(Registrant)
Date: September 13, 2002 /s/ R. Lawrence Montgomery
--------------------------
R. Lawrence Montgomery
Chief Executive Officer and Director
Date: September 13, 2002 /s/ Patricia Johnson
--------------------
Patricia Johnson
Chief Financial Officer
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CERTIFICATIONS
I, R. Lawrence Montgomery, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Kohl's Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
Dated: September 13, 2002
/s/ R. LAWRENCE MONTGOMERY
-----------------------------
R. Lawrence Montgomery
Chief Executive Officer
(Principal Executive Officer)
I, Patricia Johnson, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Kohl's Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report; and
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report.
Dated: September 13, 2002
/s/ PATRICIA JOHNSON
-----------------------------
Patricia Johnson
Chief Financial Officer
(Principal Financial Officer)
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EXPLANATORY NOTE REGARDING CERTIFICATIONS: Representations 4, 5 and 6 of the
Certifications as set forth in Form 10-Q have been omitted, consistent with the
Transition Provisions of SEC Exchange Act Release No. 34-46427, because this
Quarterly Report on Form 10-Q covers a period ending before the Effective Date
of Rules 13a-14 and 15d-14.
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