UNITED STATES


SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549


FORM 8-K


CURRENT REPORT




Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934


Date of Report (Date of earliest event reported):  April 21, 2006



KOHL’S CORPORATION

(Exact name of registrant as specified in its charter)



      Wisconsin      

    1-11084   

      39-1630919      

(State or other jurisdiction
of incorporation)

(Commission
File Number)

(IRS Employer
Identification No.)


N56 W17000 Ridgewood Drive

        Menomonee Falls, Wisconsin             

 


   53051  

(Address of principal executive offices)

 

(Zip Code)

   


Registrant’s telephone number, including area code:  (262) 703-7000


Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:


¨

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

  

¨

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

  

¨

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

  

¨

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))







Item 2.01.  Completion of Acquisition or Disposition of Assets.


On April 21, 2006, Kohl’s Department Stores, Inc. completed the previously announced sale of its proprietary credit card accounts to JPMorgan Chase.  The press release issued by Kohl’s on April 21, 2006 with respect to the completion of the transaction is filed as Exhibit 99.1 hereto and is incorporated herein by reference.


Under the Purchase and Sale Agreement, dated as of March 5, 2006 (the “Purchase Agreement”), Kohl’s sold to Chase all right, title and interest in its approximately 13 million proprietary credit card accounts and outstanding balances associated with those accounts for approximately $1.6 billion in cash.


In connection with the execution and delivery of the Purchase Agreement, Kohl’s entered into a Private Label Credit Card Program Agreement, dated March 5, 2005 (the “Program Agreement”), pursuant to which Chase will offer private label credit cards to new and existing customers of Kohl’s and Kohl’s will receive ongoing payments related to the profitability of the credit card program.  Kohl’s will continue to handle all customer service functions and will continue to be responsible for all advertising and marketing related to its credit card customers.  In addition, Kohl’s retained the option to repurchase the program assets from Chase upon expiration of the initial five year term or upon earlier termination of the Program Agreement.


The Purchase Agreement and Program Agreement were filed as exhibits to the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2006.


Item 9.01.  Financial Statements and Exhibits.

(b)

Unaudited Pro Forma Consolidated Financial Statements

The following unaudited pro forma consolidated financial statements are based on the consolidated financial statements of Kohl’s adjusted to give effect to the sale of the credit card accounts and the Program Agreement.

The unaudited pro forma consolidated financial statements are presented for illustrative purposes only and, therefore, are not necessarily indicative of the operating results and financial position that might have been achieved had the transactions occurred as of an earlier date, nor are they necessarily indicative of operating results and financial position that may occur in the future.  The unaudited pro forma consolidated financial statements do not reflect the use of the net cash proceeds in the Company’s on-going operations or the effect on the Company’s future financial position, except where used to reduce short-term borrowings.  The unaudited pro forma consolidated financial statements should be read in conjunction with the historical consolidated financial statements and notes thereto in the Annual Report on Form 10-K for the fiscal year ended January 28, 2006.





KOHL'S CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Per Share Data)

For the 12 months ended January 28, 2006

         
  



As Reported

 

Remove

Historical

Amounts


Proforma

Adjustments



Proforma

        

Net sales

 $         13,402,217

     

 $ 13,402,217

Cost of merchandise sold

 $           8,639,278

     

 $   8,639,278

         

Gross margin

 $           4,762,939

     

 $   4,762,939

Operating expenses:

       
 

Selling, general and administrative

 $           2,963,472

 

 $           133,256

2

 $       (79,736)

  4

 $   3,016,992

 

Depreciation and amortization

 $              338,916

     

 $      338,916

 

Preopening expenses

 $                44,370

     

 $        44,370

         

Total operating expenses

 $           3,346,758

 

 $           133,256

 

 $       (79,736)

 

 $   3,400,278

         

Operating income

 $           1,416,181

 

 $         (133,256)

 

 $         79,736

 

 $   1,362,661

         

Other expense (income):

       
 

Interest expense, net

 $                70,391

 

 $             (3,419)

1

  

 $        66,972

         

Income before income taxes

 $           1,345,790

 

 $         (129,837)

 

 $         79,736

 

 $   1,295,689

Provision for income taxes

 $              503,830

 

 $           (49,078)

3

 $         30,140

  3

 $      484,892

         
         

Net income

 $              841,960

 

 $           (80,759)

 

 $         49,596

 

 $      810,797

         
         

Net income per share:

       
 

Basic

 $                    2.45

 

 $               (0.23)

 

 $             0.14

 

 $            2.36

  

                 344,172

 

              344,172

 

          344,172

 

         344,172

 

Diluted

 $                    2.43

 

 $               (0.23)

 

 $             0.14

 

 $            2.34

  

                 346,772

 

              346,772

 

          346,772

 

         346,772

         

1

To reflect the removal of interest expense related to the short-term bank credit facilities

  

2

To reflect the removal of the finance charge and late fee revenue and credit and collection expenses

  

3

Tax impact of adjustments

  

4

To reflect the payments earned under the program agreement entered into with Chase and to record the amortization

 

of the deferred gain realized by the Company in connection with the transaction

  







KOHL'S CORPORATION

CONSOLIDATED BALANCE SHEETS

(In Thousands, Except Per Share Data)

 
  


January 28, 2006

Proforma Adjustments


Proforma

       

Assets

     
       

Current assets:

     
 

Cash and cash equivalents

 $       126,839

 

       1,678,400

1

 $    1,805,239

 

Short-term investments

          160,077

   

          160,077

 

Accounts receivable trade, net

       1,652,065

 

     (1,652,065)

2

                    (0)

 

Merchandise inventories

       2,237,568

   

       2,237,568

 

Deferred income taxes

            23,677

 

            (4,819)

5

            18,858

 

Other

            65,826

   

            65,826

       

Total current assets

       4,266,052

 

 $         21,516

 

       4,287,568

      

Property and equipment, net

       4,543,832

   

       4,543,832

Favorable lease rights, net

          212,380

   

          212,380

Goodwill

              9,338

   

              9,338

Other assets

          121,436

   

          121,436

       

Total assets

 $    9,153,038

 

 $         21,516

 

 $    9,174,554

       

Liabilities and Shareholders' Equity

     
       

Current liabilities:

     
 

Accounts payable

 $       829,971

   

 $       829,971

 

Accrued liabilities

          641,635

 

            10,867

3

          652,502

 

Income taxes payable

          166,908

 

              1,152

5

          168,060

 

Current portion of long-term debt and capital leases

          107,941

   

          107,941

          

Total current liabilities

       1,746,455

 

            12,019

 

       1,758,474

          

Long-term debt and capital leases

       1,046,104

   

       1,046,104

Deferred income taxes

          217,801

 

            (5,971)

   5

          211,830

Other long-term liabilities

          185,340

 

            15,468

   4

          200,808

       

Shareholders' equity:

     
 

Common stock-$.01 par value, 800,000 shares

     
 

   authorized, 345,088 shares issued and outstanding

              3,450

   

              3,450

 

Paid-in capital

       1,583,035

   

       1,583,035

 

Retained earnings

       4,370,853

   

       4,370,853

          

Total shareholders' equity

       5,957,338

   

       5,957,338

       

Total liabilities and shareholders' equity

 $    9,153,038

 

 $         21,516

 

 $    9,174,554

       

1

To reflect the cash proceeds resulting from the transaction, assuming the transaction closed on January 28, 2006

  

2

To reflect the removal of assets of the Company's private label credit card business, including proprietary credit card

 

receivable, the finance charge receivable and the related allowance for uncollectible accounts

  

3

To reflect the accrual of certain transaction costs and the current portion of the deferred gain

  

4

To record the long-term deferred gain realized by the Company in connection with the transaction

  

5

To record the impact on deferred taxes






(d)

Exhibits

 

Exhibit No.

Description



 


99.1

Press Release, dated April 21, 2006.


SIGNATURES


Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


Dated:  April 21, 2006

KOHL’S CORPORATION




By:  /s/ Richard D. Schepp                                   

Richard D. Schepp

Executive Vice President

General Counsel and Secretary






EXHIBIT INDEX



 

Exhibit No.

Description



 


99.1

Press Release dated April 21, 2006