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Kmart Confirms Continued Strong Cash Position

Kmart Corporation (NYSE: KM), in response to inquiries regarding its July cash position as reported in the Company's August 14 press release, "Kmart Files Motion to Amend Credit Agreement," today issued confirmation of its continued strong liquidity position with approximately $2.5 billion in cash on hand and available credit under its $2 billion debtor-in-possession ("DIP") credit facility.

As of July 31, 2002, Kmart's balance sheet cash position is approximately $1.0 billion. This includes approximately $300 million of store level cash and is before deducting approximately $250 million of outstanding checks. Kmart said that the change in its cash positions during July is primarily attributable to an increase in inventory on hand, a decline in its accounts payable balances and payments for expenses related to its recent store closures. The Company also reported that in addition to the $1.0 billion cash balance, it had availability under its debtor-in-possession facility of $1.5 billion at the end of July.

Kmart said that it planned to file its July Monthly Operating Report with the Bankruptcy Court on September 16, 2002 to coincide with the filing of its Form 10-Q for the second quarter of 2002. The Company's earlier August 14 press release, which reported certain net cash amounts excluding store level cash and outstanding checks, was issued in connection with a motion filed yesterday with the US Bankruptcy Court for the Northern District of Illinois seeking to amend the Company's $2 billion DIP.

Kmart Corporation is a mass merchandising company that serves America with more than 1,800 Kmart and Kmart SuperCenter retail outlets. Kmart in 2001 had sales of $36 billion.

Cautionary Statement Regarding Forward-Looking Information

Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements. 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 30, 2002 or in other filings made, from time to time, by Kmart with the Securities and Exchange Commission. 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, including the terms of any reorganization plan ultimately confirmed, can affect the value of our various pre-petition liabilities, common stock and/or other equity securities. No assurance can be given as to what values, if any, will be ascribed in the bankruptcy proceedings to each of these constituencies. A plan of reorganization could result in holders of Kmart common stock receiving no value for their interests. Because of such possibilities, the value of the common stock is highly speculative. Accordingly, we urge that appropriate caution be exercised with respect to existing and future investments in any of these liabilities and/or securities.

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SOURCE: Kmart Corporation

CONTACT: Kmart Media Relations, +1-248-463-1021

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