Associated Press
DETROIT — Kmart Corp. posted a loss of $2.42 billion, or $4.89 per share, in fiscal year 2001, according to a financial statement released Wednesday that also amended some previously reported earnings.
The loss is a tenfold increase over the discount retailer’s loss in 2000 of $244 million, or 48 cents a share.
Kmart had said it might have to restate some of its previously reported quarterly results following a review of its accounting methods. The company, which is in bankruptcy, said it was reviewing its accounting following an anonymous letter claiming to be from employees.
The letter was received shortly before the Troy, Mich.-based retailer’s Chapter 11 filing on Jan. 22. It was addressed to the SEC, Kmart’s auditor, PricewaterhouseCoopers, and Kmart’s board of directors.
Kmart said the review related to vendor allowances and rebates — payments it gets from vendors in the form of discounts — and general liability reserves. As a result of the accounting investigation, Kmart said an adjustment should be made "with respect to an upfront payment in a single vendor transaction that more appropriately should have been deferred and recognized over the life of the contract."
There has been heightened sensitivity about accounting issues in the wake of the collapse of energy trader Enron Corp.
Kmart also said because of the bankruptcy filing and uncertainty in estimating future vendor allowances, it is changing the method in which it reports vendor allowances and rebates.
Previously, Kmart had recorded the discounts in anticipation of receiving them.
Kmart was to have filed its annual report April 30 but asked for an extension so its new executives could review its accounting.
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