KMART PURCHASES OVER $200 MILLION IN NEW IBM SYSTEMS AND SERVICES.

IBM (NYSE: IBM) and Kmart Corporation (NYSE: KM) have announced a purchase agreement worth in excess of $200 million for new Internet-enabled IBM point-of-sale systems to be used in more than 2,100 Kmart stores. Featuring advanced technology, multimedia and Internet capabilities, Kmart's new IBM SurePOS 700 systems are designed to dramatically improve the customer checkout experience.

Kmart selected IBM's new SurePOS 700 units as its new POS system due to the system's Universal Serial Bus (USB) connectivity, Internet capabilities and IBM's implementation services and support, as well as IBM's depth and breadth of experience in the retail industry.

The IBM SurePOS 700 units will be installed at all Kmart locations. The new units have already been installed in the highest volume Kmart stores this year, with the remainder of them being completed by 2002.

"One of our strategic imperatives is focused on dramatically improving the customer experience at checkout. IBM's SurePOS 700 along with our other technological investments are enabling us to leapfrog to a new generation of POS technology to make this experience reality," said Mike Jones, Divisional Vice President of Information Systems, Kmart. "Not only will these units keep us ahead of the competition, they will increase our customer service, which is our top priority."

"The advanced capabilities of the IBM SurePOS 700 work with Kmart's other information technology systems, giving Kmart a powerful tool to improve both customer service and operations," said Tom Peterson, general manager, IBM Retail Store Solutions. "IBM is the leader in point-of-sale and e-business technology, and we see more and more major retailers looking to leverage technology at the point of sale as part of an overall e-business infrastructure."

All of the SurePOS 700 units will run IBM's POS operating system and each is powered by a 500 MHz Intel Celeron processor. Each unit will be fitted with a hand-held barcode scanner from Symbol Technologies, a flatbed bioptic scanner from NCR, an IBM SureMark 4610 thermal printer and an IBM 4820 SurePoint touchscreen. All are designed to work together to improve customer checkout. For example, the increased processing power and advanced technology of the SurePOS 700 will significantly speed the checkout process. In addition, the handheld scanner helps with large bulky items and the new receipt printer provides faster receipt printing and credit transaction processing. The touchscreens have multiple capabilities; they can be used for training, run product advertisement, and show the customer transaction information at the point of purchase.

The SurePOS 700 also has highly advanced multimedia capabilities for such applications as POS training, important in an industry that has seasonal employee turnover and shortages of qualified labor in select markets. The multimedia features of the SurePOS 700 can be used to train cashiers more efficiently by running a training program that provides step-by-step instructions right at the checkout station.

Kmart's overall IT system includes a back-end of more than 8,000 IBM Netfinity servers running both the Windows NT and SCO operating systems, which run all the technology and applications in the store environment.