The bankrupt US discount retailing giant Kmart has vowed to put the record straight after its losses over the last three-and-a-half years were found to be bigger than it had said.

The retailer will restate its financial figures to give a true picture of the size of its losses since April 1999.

Kmart has estimated that its losses during the period were $200m (£127m) greater than it had reported, bringing the total to $4bn rather than $3.8bn as its now defunct accounts suggest.

About half the additional losses were incurred during the April to September period this year, bringing the losses for this period to $1.9bn.

During the previous three financial years, Kmart's losses reached $2.1bn when the latest revelations are taken into account.

Faulty software

Kmart's problems were uncovered when the company reviewed its accounting practices.

The company blamed an error in its accounting software and the failure to set aside sufficient sums to cover rent expenses.

The computer program was written during the late 1980s, Kmart said.

"We do not expect this restatement to affect our ability to conduct business," said the company's chief financial officer, Al Koch.

"It's not material to their results. It's a matter of shifting some numbers around," said Morningstar retail stock analyst Mike Porter.

Kmart shares closed down just under 3 cents on Monday.

BBC

-- Anonymous, December 19, 2002

Answers

The adjustments are related to several items, including a software programming error in Kmart's accounts payable system and leasing issues. Kmart says past estimates for the cost of some leases was too small, and it didn't set aside enough to cover the true cost of some past rent expenses.

The programming error was a logic error in a computer program that was written more than 15 years ago, Chief Financial Officer Al Koch says. The error was restricted to a single vendor and resulted in some paid invoices not being treated correctly in Kmart's financial statements.

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-- Anonymous, December 19, 2002

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