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x
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MAY 3, 2014
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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D
ELAWARE
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20-1920798
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
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3333 B
EVERLY
R
OAD
, H
OFFMAN
E
STATES
, I
LLINOIS
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60179
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(Address of principal executive offices)
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(Zip Code)
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Page
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PART I – FINANCIAL INFORMATION
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Item 1.
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Financial Statements
|
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Item 2.
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Item 3.
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Item 4.
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PART II – OTHER INFORMATION
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Item 1.
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Item 2.
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Item 4.
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Item 6.
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13 Weeks Ended
|
||||||
millions, except per share data
|
May 3,
2014 |
|
May 4,
2013 |
||||
REVENUES
|
|
|
|
||||
Merchandise sales and services
(1)
|
$
|
7,879
|
|
|
$
|
8,452
|
|
COSTS AND EXPENSES
|
|
|
|
||||
Cost of sales, buying and occupancy
(1)
|
6,051
|
|
|
6,296
|
|
||
Selling and administrative
|
2,089
|
|
|
2,218
|
|
||
Depreciation and amortization
|
155
|
|
|
191
|
|
||
Impairment charges
|
5
|
|
|
8
|
|
||
Gain on sales of assets
|
(46
|
)
|
|
(14
|
)
|
||
Total costs and expenses
|
8,254
|
|
|
8,699
|
|
||
Operating loss
|
(375
|
)
|
|
(247
|
)
|
||
Interest expense
|
(71
|
)
|
|
(61
|
)
|
||
Interest and investment income
|
4
|
|
|
7
|
|
||
Other loss
|
(3
|
)
|
|
—
|
|
||
Loss before income taxes
|
(445
|
)
|
|
(301
|
)
|
||
Income tax benefit
|
3
|
|
|
9
|
|
||
Net loss
|
(442
|
)
|
|
(292
|
)
|
||
Loss attributable to noncontrolling interests
|
40
|
|
|
13
|
|
||
NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(402
|
)
|
|
$
|
(279
|
)
|
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
||||
Basic loss per share
|
$
|
(3.79
|
)
|
|
$
|
(2.63
|
)
|
Diluted loss per share
|
$
|
(3.79
|
)
|
|
$
|
(2.63
|
)
|
Basic weighted average common shares outstanding
|
106.2
|
|
|
106.0
|
|
||
Diluted weighted average common shares outstanding
|
106.2
|
|
|
106.0
|
|
|
13 Weeks Ended
|
||||||
millions
|
May 3,
2014 |
|
May 4,
2013 |
||||
Net loss
|
$
|
(442
|
)
|
|
$
|
(292
|
)
|
Other comprehensive income
|
|
|
|
||||
Pension and postretirement adjustments, net of tax
|
30
|
|
|
46
|
|
||
Deferred loss on derivatives, net of tax
|
(1
|
)
|
|
—
|
|
||
Currency translation adjustments, net of tax
|
11
|
|
|
(7
|
)
|
||
Total other comprehensive income
|
40
|
|
|
39
|
|
||
Comprehensive loss
|
(402
|
)
|
|
(253
|
)
|
||
Comprehensive loss attributable to noncontrolling interests
|
34
|
|
|
14
|
|
||
Comprehensive loss attributable to Holdings' shareholders
|
$
|
(368
|
)
|
|
$
|
(239
|
)
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
831
|
|
|
$
|
471
|
|
|
$
|
1,028
|
|
Restricted cash
|
11
|
|
|
10
|
|
|
10
|
|
|||
Accounts receivable
(1)
|
562
|
|
|
608
|
|
|
553
|
|
|||
Merchandise inventories
|
6,726
|
|
|
7,900
|
|
|
7,034
|
|
|||
Prepaid expenses and other current assets
|
397
|
|
|
462
|
|
|
334
|
|
|||
Total current assets
|
8,527
|
|
|
9,451
|
|
|
8,959
|
|
|||
Property and equipment, net
|
5,190
|
|
|
5,910
|
|
|
5,394
|
|
|||
Goodwill
|
269
|
|
|
379
|
|
|
379
|
|
|||
Trade names and other intangible assets
|
2,312
|
|
|
2,871
|
|
|
2,850
|
|
|||
Other assets
|
632
|
|
|
785
|
|
|
679
|
|
|||
TOTAL ASSETS
|
$
|
16,930
|
|
|
$
|
19,396
|
|
|
$
|
18,261
|
|
LIABILITIES
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Short-term borrowings
(2)
|
$
|
1,230
|
|
|
$
|
1,754
|
|
|
$
|
1,332
|
|
Current portion of long-term debt and capitalized lease obligations
|
78
|
|
|
72
|
|
|
83
|
|
|||
Merchandise payables
|
2,612
|
|
|
2,862
|
|
|
2,496
|
|
|||
Other current liabilities
|
2,284
|
|
|
2,403
|
|
|
2,527
|
|
|||
Unearned revenues
|
889
|
|
|
922
|
|
|
900
|
|
|||
Other taxes
|
435
|
|
|
440
|
|
|
460
|
|
|||
Short-term deferred tax liabilities
|
484
|
|
|
382
|
|
|
387
|
|
|||
Total current liabilities
|
8,012
|
|
|
8,835
|
|
|
8,185
|
|
|||
Long-term debt and capitalized lease obligations
(3)
|
2,821
|
|
|
1,929
|
|
|
2,834
|
|
|||
Pension and postretirement benefits
|
1,837
|
|
|
2,638
|
|
|
1,942
|
|
|||
Other long-term liabilities
|
1,998
|
|
|
2,107
|
|
|
2,008
|
|
|||
Long-term deferred tax liabilities
|
800
|
|
|
966
|
|
|
1,109
|
|
|||
Total Liabilities
|
15,468
|
|
|
16,475
|
|
|
16,078
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
||||||
EQUITY
|
|
|
|
|
|
||||||
Total Equity
|
1,462
|
|
|
2,921
|
|
|
2,183
|
|
|||
TOTAL LIABILITIES AND EQUITY
|
$
|
16,930
|
|
|
$
|
19,396
|
|
|
$
|
18,261
|
|
|
13 Weeks Ended
|
||||||
millions
|
May 3,
2014 |
|
May 4,
2013 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net loss
|
$
|
(442
|
)
|
|
$
|
(292
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
155
|
|
|
191
|
|
||
Impairment charges
|
5
|
|
|
8
|
|
||
Gain on sales of assets
|
(46
|
)
|
|
(14
|
)
|
||
Pension and postretirement plan contributions
|
(102
|
)
|
|
(89
|
)
|
||
Settlement of Canadian dollar hedges
|
1
|
|
|
—
|
|
||
Change in operating assets and liabilities (net of acquisitions and dispositions):
|
|
|
|
||||
Deferred income taxes
|
(25
|
)
|
|
(1
|
)
|
||
Merchandise inventories
|
(37
|
)
|
|
(350
|
)
|
||
Merchandise payables
|
153
|
|
|
105
|
|
||
Income and other taxes
|
(92
|
)
|
|
(60
|
)
|
||
Mark-to-market adjustments and settlements on Sears Canada derivative instruments
|
5
|
|
|
—
|
|
||
Other operating assets
|
(44
|
)
|
|
18
|
|
||
Other operating liabilities
|
(91
|
)
|
|
(229
|
)
|
||
Net cash used in operating activities
|
(560
|
)
|
|
(713
|
)
|
||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of property and investments
|
79
|
|
|
5
|
|
||
Net increase in investments and restricted cash
|
—
|
|
|
(1
|
)
|
||
Purchases of property and equipment
|
(72
|
)
|
|
(60
|
)
|
||
Net cash provided by (used in) investing activities
|
7
|
|
|
(56
|
)
|
||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from debt issuances
|
—
|
|
|
1
|
|
||
Repayments of long-term debt
|
(20
|
)
|
|
(28
|
)
|
||
Increase (decrease) in short-term borrowings, primarily 90 days or less
|
(102
|
)
|
|
660
|
|
||
Lands' End, Inc. pre-separation funding
|
515
|
|
|
—
|
|
||
Separation of Lands' End, Inc.
|
(31
|
)
|
|
—
|
|
||
Debt issuance costs
|
(11
|
)
|
|
—
|
|
||
Net cash provided by financing activities
|
351
|
|
|
633
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
5
|
|
|
(2
|
)
|
||
NET DECREASE IN CASH AND CASH EQUIVALENTS
|
(197
|
)
|
|
(138
|
)
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
1,028
|
|
|
609
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
831
|
|
|
$
|
471
|
|
Supplemental Cash Flow Data:
|
|
|
|
||||
Income taxes paid, net of refunds
|
$
|
76
|
|
|
$
|
16
|
|
Cash interest paid
|
84
|
|
|
68
|
|
||
Unpaid liability to acquire equipment and software
|
24
|
|
|
26
|
|
|
Equity Attributable to Holdings’ Shareholders
|
|
|
||||||||||||||||||||
millions
|
Number
of Shares |
Common
Stock |
Treasury
Stock |
Capital in
Excess of Par Value |
Retained Earnings (Deficit)
|
Accumulated
Other Comprehensive Income (Loss) |
Noncontrolling
Interests |
Total
|
|||||||||||||||
Balance at February 2, 2013
|
106
|
|
$
|
1
|
|
$
|
(5,970
|
)
|
$
|
9,298
|
|
$
|
885
|
|
$
|
(1,459
|
)
|
$
|
417
|
|
$
|
3,172
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(279
|
)
|
—
|
|
(13
|
)
|
(292
|
)
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
44
|
|
2
|
|
46
|
|
|||||||
Currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
(3
|
)
|
(7
|
)
|
|||||||
Total Comprehensive Loss
|
|
|
|
|
|
|
|
(253
|
)
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
(1
|
)
|
2
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Balance at May 4, 2013
|
106
|
|
$
|
1
|
|
$
|
(5,970
|
)
|
$
|
9,300
|
|
$
|
606
|
|
$
|
(1,419
|
)
|
$
|
403
|
|
$
|
2,921
|
|
Balance at February 1, 2014
|
106
|
|
$
|
1
|
|
$
|
(5,963
|
)
|
$
|
9,298
|
|
$
|
(480
|
)
|
$
|
(1,117
|
)
|
$
|
444
|
|
$
|
2,183
|
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(402
|
)
|
—
|
|
(40
|
)
|
(442
|
)
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
29
|
|
1
|
|
30
|
|
|||||||
Deferred loss on derivatives, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
—
|
|
(1
|
)
|
|||||||
Currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
6
|
|
5
|
|
11
|
|
|||||||
Total Comprehensive Loss
|
|
|
|
|
|
|
|
(402
|
)
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Separation of Lands' End, Inc.
|
—
|
|
—
|
|
—
|
|
(323
|
)
|
—
|
|
2
|
|
—
|
|
(321
|
)
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Balance at May 3, 2014
|
106
|
|
$
|
1
|
|
$
|
(5,962
|
)
|
$
|
8,976
|
|
$
|
(882
|
)
|
$
|
(1,081
|
)
|
$
|
410
|
|
$
|
1,462
|
|
millions
|
Sears Domestic
|
||
Balance, February 1, 2014:
|
|
||
Goodwill
|
$
|
379
|
|
2014 activity:
|
|
||
Separation of Lands' End, Inc.
|
(110
|
)
|
|
Balance, May 3, 2014
|
$
|
269
|
|
millions
|
Sears Domestic
|
|
Total
|
||||
Balance, February 1, 2014:
|
|
|
|
||||
Trade names and intangible assets
|
$
|
2,651
|
|
|
$
|
2,850
|
|
2014 activity:
|
|
|
|
||||
Separation of Lands' End, Inc.
|
(531
|
)
|
|
(531
|
)
|
||
Amortization expense
|
(5
|
)
|
|
(7
|
)
|
||
Balance, May 3, 2014
|
$
|
2,115
|
|
|
$
|
2,312
|
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
159
|
|
|
$
|
377
|
|
|
$
|
9
|
|
Secured borrowings
|
1,071
|
|
|
1,377
|
|
|
1,323
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
2,569
|
|
|
1,582
|
|
|
2,571
|
|
|||
Capitalized lease obligations
|
330
|
|
|
419
|
|
|
346
|
|
|||
Total borrowings
|
$
|
4,129
|
|
|
$
|
3,755
|
|
|
$
|
4,249
|
|
millions
|
Total Fair Value Amounts at May 3, 2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash equivalents
(1)
|
$
|
172
|
|
|
$
|
172
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
(2)
|
11
|
|
|
11
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency derivative assets
(3)
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Total
|
$
|
185
|
|
|
$
|
183
|
|
|
$
|
2
|
|
|
$
|
—
|
|
millions
|
Total Fair Value Amounts at May 4, 2013
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash equivalents
(1)
|
$
|
35
|
|
|
$
|
35
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
(2)
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
45
|
|
|
$
|
45
|
|
|
$
|
—
|
|
|
$
|
—
|
|
millions
|
Total Fair Value Amounts at February 1, 2014
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Cash equivalents
(1)
|
$
|
346
|
|
|
$
|
346
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Restricted cash
(2)
|
10
|
|
|
10
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency derivative assets
(3)
|
8
|
|
|
—
|
|
|
8
|
|
|
—
|
|
||||
Total
|
$
|
364
|
|
|
$
|
356
|
|
|
$
|
8
|
|
|
$
|
—
|
|
(1)
|
Included within Cash and cash equivalents in our Condensed Consolidated Balance Sheets.
|
(2)
|
Included within Restricted cash in our Condensed Consolidated Balance Sheets.
|
(3)
|
Included within Prepaid expenses and other current assets in our Condensed Consolidated Balance Sheets.
|
millions
|
Markdowns
(1)
|
|
Severance Costs
(2)
|
|
Lease Termination Costs
(2)
|
|
Other Charges
(2)
|
|
Impairment and Accelerated Depreciation
(3)
|
|
Total Store Closing Costs
|
||||||||||||
Kmart
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
$
|
—
|
|
|
$
|
9
|
|
Sears Domestic
|
2
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
5
|
|
|
5
|
|
||||||
Sears Canada
|
—
|
|
|
5
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
10
|
|
||||||
Total for the 13-week period ended May 3, 2014
|
$
|
7
|
|
|
$
|
6
|
|
|
$
|
3
|
|
|
$
|
3
|
|
|
$
|
5
|
|
|
$
|
24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Kmart
|
$
|
5
|
|
|
$
|
1
|
|
|
$
|
(1
|
)
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
9
|
|
Sears Domestic
|
3
|
|
|
1
|
|
|
(3
|
)
|
|
2
|
|
|
8
|
|
|
11
|
|
||||||
Sears Canada
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2
|
|
||||||
Total for the 13-week period ended May 4, 2013
|
$
|
8
|
|
|
$
|
4
|
|
|
$
|
(4
|
)
|
|
$
|
5
|
|
|
$
|
9
|
|
|
$
|
22
|
|
(1)
|
Recorded within Cost of sales, buying and occupancy on the Condensed Consolidated Statements of Operations.
|
(2)
|
Recorded within Selling and administrative on the Condensed Consolidated Statements of Operations. Lease termination costs are net of estimated sublease income, and include the reversal of closed store reserves for which the lease agreement has been terminated and the reversal of deferred rent balances related to closed stores.
|
(3)
|
Costs for the 13-week period ended
May 3, 2014
are recorded within Impairment charges on the Condensed Consolidated Statement of Operations. Costs for the 13-week period ended
May 4, 2013
include
$8 million
recorded within Impairment charges and
$1 million
recorded within Depreciation and amortization on the Condensed Consolidated Statements of Operations
.
|
millions
|
Severance
Costs |
|
Lease
Termination Costs |
|
Other
Charges |
|
Total
|
||||||||
Balance at May 4, 2013
|
$
|
26
|
|
|
$
|
127
|
|
|
$
|
16
|
|
|
$
|
169
|
|
Store closing costs
|
55
|
|
|
7
|
|
|
15
|
|
|
77
|
|
||||
Store closing capital lease obligations
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||
Payments/utilizations
|
(18
|
)
|
|
(17
|
)
|
|
(14
|
)
|
|
(49
|
)
|
||||
Balance at February 1, 2014
|
63
|
|
|
119
|
|
|
17
|
|
|
199
|
|
||||
Store closing costs
|
6
|
|
|
6
|
|
|
3
|
|
|
15
|
|
||||
Payments/utilizations
|
(20
|
)
|
|
(5
|
)
|
|
(9
|
)
|
|
(34
|
)
|
||||
Balance at May 3, 2014
|
$
|
49
|
|
|
$
|
120
|
|
|
$
|
11
|
|
|
$
|
180
|
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
Pension and postretirement adjustments (net of tax of $(327), $(442) and $(328), respectively)
|
$
|
(1,007
|
)
|
|
$
|
(1,364
|
)
|
|
$
|
(1,036
|
)
|
Cumulative unrealized derivative gain (net of tax of $0 for all periods presented)
|
1
|
|
|
—
|
|
|
2
|
|
|||
Currency translation adjustments (net of tax of $(37), $(40) and $(38), respectively)
|
(75
|
)
|
|
(55
|
)
|
|
(83
|
)
|
|||
Accumulated other comprehensive loss
|
$
|
(1,081
|
)
|
|
$
|
(1,419
|
)
|
|
$
|
(1,117
|
)
|
|
13 Weeks Ended May 3, 2014
|
|
13 Weeks Ended May 4, 2013
|
||||||||||||||||||||
millions
|
Before
Tax Amount |
|
Tax
Expense |
|
Net of
Tax Amount |
|
Before
Tax Amount |
|
Tax (Expense) Benefit
|
|
Net of
Tax Amount |
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pension and postretirement adjustments
(1)
|
$
|
31
|
|
|
$
|
(1
|
)
|
|
$
|
30
|
|
|
$
|
48
|
|
|
$
|
(2
|
)
|
|
$
|
46
|
|
Deferred loss on derivatives
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Currency translation adjustments
|
12
|
|
|
(1
|
)
|
|
11
|
|
|
(8
|
)
|
|
1
|
|
|
(7
|
)
|
||||||
Total other comprehensive income
|
$
|
42
|
|
|
$
|
(2
|
)
|
|
$
|
40
|
|
|
$
|
40
|
|
|
$
|
(1
|
)
|
|
$
|
39
|
|
(1)
|
Included in the computation of net periodic benefit expense. See Note 8 to the Condensed Consolidated Financial Statements.
|
|
13 Weeks Ended
|
||||||
millions
|
May 3, 2014
|
|
May 4, 2013
|
||||
Components of net periodic expense:
|
|
|
|
||||
Interest cost
|
$
|
69
|
|
|
$
|
75
|
|
Expected return on plan assets
|
(77
|
)
|
|
(77
|
)
|
||
Amortization of experience losses
|
31
|
|
|
48
|
|
||
Net periodic expense
|
$
|
23
|
|
|
$
|
46
|
|
(i)
|
Hardlines—consists of home appliances, consumer electronics, lawn & garden, tools & hardware, automotive parts, household goods, toys, housewares and sporting goods;
|
(ii)
|
Apparel and Soft Home—includes women's, men's, kids', footwear, jewelry, accessories and soft home;
|
(iii)
|
Food and Drug—consists of grocery & household, pharmacy and drugstore;
|
(iv)
|
Service—includes repair, installation and automotive service and extended contract revenue; and
|
(v)
|
Other—includes revenues earned in connection with our agreements with SHO and Lands' End, as well as credit revenues and licensed business revenues.
|
|
13 Weeks Ended May 3, 2014
|
||||||||||||||
millions
|
Kmart
|
|
Sears
Domestic |
|
Sears
Canada |
|
Sears
Holdings |
||||||||
Merchandise sales and services
|
|
|
|
|
|
|
|
||||||||
Hardlines
|
$
|
817
|
|
|
$
|
2,151
|
|
|
$
|
355
|
|
|
$
|
3,323
|
|
Apparel and Soft Home
|
951
|
|
|
1,022
|
|
|
300
|
|
|
2,273
|
|
||||
Food and Drug
|
1,109
|
|
|
2
|
|
|
—
|
|
|
1,111
|
|
||||
Service
|
4
|
|
|
584
|
|
|
31
|
|
|
619
|
|
||||
Other
|
16
|
|
|
526
|
|
|
11
|
|
|
553
|
|
||||
Total merchandise sales and services
|
2,897
|
|
|
4,285
|
|
|
697
|
|
|
7,879
|
|
||||
Costs and expenses
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
|
2,302
|
|
|
3,216
|
|
|
533
|
|
|
6,051
|
|
||||
Selling and administrative
|
691
|
|
|
1,172
|
|
|
226
|
|
|
2,089
|
|
||||
Depreciation and amortization
|
23
|
|
|
114
|
|
|
18
|
|
|
155
|
|
||||
Impairment charges
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
||||
(Gain) loss on sales of assets
|
(21
|
)
|
|
(26
|
)
|
|
1
|
|
|
(46
|
)
|
||||
Total costs and expenses
|
2,995
|
|
|
4,481
|
|
|
778
|
|
|
8,254
|
|
||||
Operating loss
|
$
|
(98
|
)
|
|
$
|
(196
|
)
|
|
$
|
(81
|
)
|
|
$
|
(375
|
)
|
Total assets
|
$
|
3,803
|
|
|
$
|
11,140
|
|
|
$
|
1,987
|
|
|
$
|
16,930
|
|
Capital expenditures
|
$
|
13
|
|
|
$
|
49
|
|
|
$
|
10
|
|
|
$
|
72
|
|
|
13 Weeks Ended May 4, 2013
|
||||||||||||||
millions
|
Kmart
|
|
Sears
Domestic |
|
Sears
Canada |
|
Sears
Holdings |
||||||||
Merchandise sales and services
|
|
|
|
|
|
|
|
||||||||
Hardlines
|
$
|
898
|
|
|
$
|
2,183
|
|
|
$
|
441
|
|
|
$
|
3,522
|
|
Apparel and Soft Home
|
993
|
|
|
1,165
|
|
|
354
|
|
|
2,512
|
|
||||
Food and Drug
|
1,190
|
|
|
3
|
|
|
—
|
|
|
1,193
|
|
||||
Service
|
5
|
|
|
615
|
|
|
32
|
|
|
652
|
|
||||
Other
|
17
|
|
|
541
|
|
|
15
|
|
|
573
|
|
||||
Total merchandise sales and services
|
3,103
|
|
|
4,507
|
|
|
842
|
|
|
8,452
|
|
||||
Costs and expenses
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
|
2,398
|
|
|
3,293
|
|
|
605
|
|
|
6,296
|
|
||||
Selling and administrative
|
713
|
|
|
1,255
|
|
|
250
|
|
|
2,218
|
|
||||
Depreciation and amortization
|
33
|
|
|
133
|
|
|
25
|
|
|
191
|
|
||||
Impairment charges
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Gain on sales of assets
|
(13
|
)
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
||||
Total costs and expenses
|
3,131
|
|
|
4,688
|
|
|
880
|
|
|
8,699
|
|
||||
Operating loss
|
$
|
(28
|
)
|
|
$
|
(181
|
)
|
|
$
|
(38
|
)
|
|
$
|
(247
|
)
|
Total assets
|
$
|
4,284
|
|
|
$
|
12,829
|
|
|
$
|
2,283
|
|
|
$
|
19,396
|
|
Capital expenditures
|
$
|
21
|
|
|
$
|
29
|
|
|
$
|
10
|
|
|
$
|
60
|
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
Unearned revenues
|
$
|
827
|
|
|
$
|
848
|
|
|
$
|
836
|
|
Self-insurance reserves
|
691
|
|
|
713
|
|
|
686
|
|
|||
Other
|
480
|
|
|
546
|
|
|
486
|
|
|||
Total
|
$
|
1,998
|
|
|
$
|
2,107
|
|
|
$
|
2,008
|
|
•
|
SHO obtains a significant amount of its merchandise from the Company. We have also entered into certain agreements with SHO to provide logistics, handling, warehouse and transportation services. SHO also pays a royalty related to the sale of Kenmore, Craftsman and DieHard products and fees for participation in the SHOP YOUR WAY program.
|
•
|
SHO receives commissions from the Company for the sale of merchandise made through www.sears.com, extended service agreements, delivery and handling services and credit revenues.
|
•
|
The Company provides SHO with shared corporate services. These services include accounting and finance, legal, human resources, information technology and real estate.
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
574
|
|
|
$
|
257
|
|
|
$
|
—
|
|
|
$
|
831
|
|
Intercompany receivables
|
—
|
|
|
—
|
|
|
26,059
|
|
|
(26,059
|
)
|
|
—
|
|
|||||
Accounts receivable
|
—
|
|
|
445
|
|
|
117
|
|
|
—
|
|
|
562
|
|
|||||
Merchandise inventories
|
—
|
|
|
6,071
|
|
|
655
|
|
|
—
|
|
|
6,726
|
|
|||||
Prepaid expenses and other current assets
|
43
|
|
|
852
|
|
|
426
|
|
|
(913
|
)
|
|
408
|
|
|||||
Total current assets
|
43
|
|
|
7,942
|
|
|
27,514
|
|
|
(26,972
|
)
|
|
8,527
|
|
|||||
Total property and equipment, net
|
—
|
|
|
3,739
|
|
|
1,451
|
|
|
—
|
|
|
5,190
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
297
|
|
|
2,284
|
|
|
—
|
|
|
2,581
|
|
|||||
Other assets
|
13
|
|
|
421
|
|
|
2,520
|
|
|
(2,322
|
)
|
|
632
|
|
|||||
Investment in subsidiaries
|
14,058
|
|
|
25,336
|
|
|
—
|
|
|
(39,394
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
14,114
|
|
|
$
|
37,735
|
|
|
$
|
33,769
|
|
|
$
|
(68,688
|
)
|
|
$
|
16,930
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
1,230
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,230
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
65
|
|
|
13
|
|
|
—
|
|
|
78
|
|
|||||
Merchandise payables
|
—
|
|
|
2,340
|
|
|
272
|
|
|
—
|
|
|
2,612
|
|
|||||
Intercompany payables
|
12,175
|
|
|
13,884
|
|
|
—
|
|
|
(26,059
|
)
|
|
—
|
|
|||||
Short-term deferred tax liabilities
|
2
|
|
|
504
|
|
|
—
|
|
|
(22
|
)
|
|
484
|
|
|||||
Other current liabilities
|
4
|
|
|
2,318
|
|
|
2,177
|
|
|
(891
|
)
|
|
3,608
|
|
|||||
Total current liabilities
|
12,181
|
|
|
20,341
|
|
|
2,462
|
|
|
(26,972
|
)
|
|
8,012
|
|
|||||
Long-term debt and capitalized lease obligations
|
1,238
|
|
|
3,813
|
|
|
74
|
|
|
(2,304
|
)
|
|
2,821
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
1,574
|
|
|
263
|
|
|
—
|
|
|
1,837
|
|
|||||
Long-term deferred tax liabilities
|
—
|
|
|
—
|
|
|
924
|
|
|
(124
|
)
|
|
800
|
|
|||||
Other long-term liabilities
|
—
|
|
|
765
|
|
|
1,482
|
|
|
(249
|
)
|
|
1,998
|
|
|||||
Total Liabilities
|
13,419
|
|
|
26,493
|
|
|
5,205
|
|
|
(29,649
|
)
|
|
15,468
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder’s equity
|
695
|
|
|
11,242
|
|
|
28,564
|
|
|
(39,449
|
)
|
|
1,052
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
410
|
|
|
410
|
|
|||||
Total Equity
|
695
|
|
|
11,242
|
|
|
28,564
|
|
|
(39,039
|
)
|
|
1,462
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
14,114
|
|
|
$
|
37,735
|
|
|
$
|
33,769
|
|
|
$
|
(68,688
|
)
|
|
$
|
16,930
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
347
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
471
|
|
Intercompany receivables
|
—
|
|
|
—
|
|
|
25,818
|
|
|
(25,818
|
)
|
|
—
|
|
|||||
Accounts receivable
|
—
|
|
|
497
|
|
|
111
|
|
|
—
|
|
|
608
|
|
|||||
Merchandise inventories
|
—
|
|
|
7,019
|
|
|
881
|
|
|
—
|
|
|
7,900
|
|
|||||
Prepaid expenses and other current assets
|
92
|
|
|
951
|
|
|
459
|
|
|
(1,030
|
)
|
|
472
|
|
|||||
Total current assets
|
92
|
|
|
8,814
|
|
|
27,393
|
|
|
(26,848
|
)
|
|
9,451
|
|
|||||
Total property and equipment, net
|
—
|
|
|
4,309
|
|
|
1,601
|
|
|
—
|
|
|
5,910
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
961
|
|
|
2,289
|
|
|
—
|
|
|
3,250
|
|
|||||
Other assets
|
16
|
|
|
229
|
|
|
3,118
|
|
|
(2,578
|
)
|
|
785
|
|
|||||
Investment in subsidiaries
|
16,174
|
|
|
25,105
|
|
|
—
|
|
|
(41,279
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
16,282
|
|
|
$
|
39,418
|
|
|
$
|
34,401
|
|
|
$
|
(70,705
|
)
|
|
$
|
19,396
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
1,754
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,754
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
55
|
|
|
17
|
|
|
—
|
|
|
72
|
|
|||||
Merchandise payables
|
—
|
|
|
2,522
|
|
|
340
|
|
|
—
|
|
|
2,862
|
|
|||||
Intercompany payables
|
12,556
|
|
|
13,262
|
|
|
—
|
|
|
(25,818
|
)
|
|
—
|
|
|||||
Short-term deferred tax liabilities
|
3
|
|
|
412
|
|
|
—
|
|
|
(33
|
)
|
|
382
|
|
|||||
Other current liabilities
|
4
|
|
|
2,379
|
|
|
2,379
|
|
|
(997
|
)
|
|
3,765
|
|
|||||
Total current liabilities
|
12,563
|
|
|
20,384
|
|
|
2,736
|
|
|
(26,848
|
)
|
|
8,835
|
|
|||||
Long-term debt and capitalized lease obligations
|
1,237
|
|
|
2,937
|
|
|
132
|
|
|
(2,377
|
)
|
|
1,929
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
2,229
|
|
|
409
|
|
|
—
|
|
|
2,638
|
|
|||||
Long-term deferred tax liabilities
|
—
|
|
|
12
|
|
|
943
|
|
|
11
|
|
|
966
|
|
|||||
Other long-term liabilities
|
—
|
|
|
843
|
|
|
1,512
|
|
|
(248
|
)
|
|
2,107
|
|
|||||
Total Liabilities
|
13,800
|
|
|
26,405
|
|
|
5,732
|
|
|
(29,462
|
)
|
|
16,475
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder’s equity
|
2,482
|
|
|
13,013
|
|
|
28,669
|
|
|
(41,646
|
)
|
|
2,518
|
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
403
|
|
|
403
|
|
|||||
Total Equity
|
2,482
|
|
|
13,013
|
|
|
28,669
|
|
|
(41,243
|
)
|
|
2,921
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
$
|
16,282
|
|
|
$
|
39,418
|
|
|
$
|
34,401
|
|
|
$
|
(70,705
|
)
|
|
$
|
19,396
|
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
|
$
|
—
|
|
|
$
|
537
|
|
|
$
|
491
|
|
|
$
|
—
|
|
|
$
|
1,028
|
|
Intercompany receivables
|
|
—
|
|
|
—
|
|
|
25,884
|
|
|
(25,884
|
)
|
|
—
|
|
|||||
Accounts receivable
|
|
—
|
|
|
425
|
|
|
128
|
|
|
—
|
|
|
553
|
|
|||||
Merchandise inventories
|
|
—
|
|
|
6,356
|
|
|
678
|
|
|
—
|
|
|
7,034
|
|
|||||
Prepaid expenses and other current assets
|
|
44
|
|
|
873
|
|
|
375
|
|
|
(948
|
)
|
|
344
|
|
|||||
Total current assets
|
|
44
|
|
|
8,191
|
|
|
27,556
|
|
|
(26,832
|
)
|
|
8,959
|
|
|||||
Total property and equipment, net
|
|
—
|
|
|
3,906
|
|
|
1,488
|
|
|
—
|
|
|
5,394
|
|
|||||
Goodwill and intangible assets
|
|
—
|
|
|
944
|
|
|
2,285
|
|
|
—
|
|
|
3,229
|
|
|||||
Other assets
|
|
13
|
|
|
240
|
|
|
2,603
|
|
|
(2,177
|
)
|
|
679
|
|
|||||
Investment in subsidiaries
|
|
14,743
|
|
|
25,303
|
|
|
—
|
|
|
(40,046
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
|
$
|
14,800
|
|
|
$
|
38,584
|
|
|
$
|
33,932
|
|
|
$
|
(69,055
|
)
|
|
$
|
18,261
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
|
$
|
—
|
|
|
$
|
1,332
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,332
|
|
Current portion of long-term debt and capitalized lease obligations
|
|
—
|
|
|
70
|
|
|
13
|
|
|
—
|
|
|
83
|
|
|||||
Merchandise payables
|
|
—
|
|
|
2,213
|
|
|
283
|
|
|
—
|
|
|
2,496
|
|
|||||
Intercompany payables
|
|
12,103
|
|
|
13,781
|
|
|
—
|
|
|
(25,884
|
)
|
|
—
|
|
|||||
Short-term deferred tax liabilities
|
|
2
|
|
|
408
|
|
|
—
|
|
|
(23
|
)
|
|
387
|
|
|||||
Other current liabilities
|
|
26
|
|
|
2,412
|
|
|
2,374
|
|
|
(925
|
)
|
|
3,887
|
|
|||||
Total current liabilities
|
|
12,131
|
|
|
20,216
|
|
|
2,670
|
|
|
(26,832
|
)
|
|
8,185
|
|
|||||
Long-term debt and capitalized lease obligations
|
|
1,238
|
|
|
3,781
|
|
|
76
|
|
|
(2,261
|
)
|
|
2,834
|
|
|||||
Pension and postretirement benefits
|
|
—
|
|
|
1,681
|
|
|
261
|
|
|
—
|
|
|
1,942
|
|
|||||
Long-term deferred tax liabilities
|
|
—
|
|
|
128
|
|
|
955
|
|
|
26
|
|
|
1,109
|
|
|||||
Other long-term liabilities
|
|
—
|
|
|
805
|
|
|
1,453
|
|
|
(250
|
)
|
|
2,008
|
|
|||||
Total Liabilities
|
|
13,369
|
|
|
26,611
|
|
|
5,415
|
|
|
(29,317
|
)
|
|
16,078
|
|
|||||
EQUITY
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder’s equity
|
|
1,431
|
|
|
11,973
|
|
|
28,517
|
|
|
(40,182
|
)
|
|
1,739
|
|
|||||
Noncontrolling interest
|
|
—
|
|
|
—
|
|
|
—
|
|
|
444
|
|
|
444
|
|
|||||
Total Equity
|
|
1,431
|
|
|
11,973
|
|
|
28,517
|
|
|
(39,738
|
)
|
|
2,183
|
|
|||||
TOTAL LIABILITIES AND EQUITY
|
|
$
|
14,800
|
|
|
$
|
38,584
|
|
|
$
|
33,932
|
|
|
$
|
(69,055
|
)
|
|
$
|
18,261
|
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
7,201
|
|
|
$
|
1,522
|
|
|
$
|
(844
|
)
|
|
$
|
7,879
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
5,614
|
|
|
857
|
|
|
(420
|
)
|
|
6,051
|
|
|||||
Selling and administrative
|
|
—
|
|
|
1,991
|
|
|
522
|
|
|
(424
|
)
|
|
2,089
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
116
|
|
|
39
|
|
|
—
|
|
|
155
|
|
|||||
Impairment charges
|
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(33
|
)
|
|
(13
|
)
|
|
—
|
|
|
(46
|
)
|
|||||
Total costs and expenses
|
|
—
|
|
|
7,693
|
|
|
1,405
|
|
|
(844
|
)
|
|
8,254
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
(492
|
)
|
|
117
|
|
|
—
|
|
|
(375
|
)
|
|||||
Interest (expense) income
|
|
(51
|
)
|
|
(110
|
)
|
|
5
|
|
|
85
|
|
|
(71
|
)
|
|||||
Interest and investment income
|
|
—
|
|
|
9
|
|
|
80
|
|
|
(85
|
)
|
|
4
|
|
|||||
Other loss
|
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|||||
Income (loss) before income taxes
|
|
(51
|
)
|
|
(593
|
)
|
|
199
|
|
|
—
|
|
|
(445
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
46
|
|
|
(43
|
)
|
|
—
|
|
|
3
|
|
|||||
Equity (loss) in earnings in subsidiaries
|
|
(391
|
)
|
|
49
|
|
|
—
|
|
|
342
|
|
|
—
|
|
|||||
Net income (loss)
|
|
(442
|
)
|
|
(498
|
)
|
|
156
|
|
|
342
|
|
|
(442
|
)
|
|||||
Loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
40
|
|
|
40
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS
|
|
$
|
(442
|
)
|
|
$
|
(498
|
)
|
|
$
|
156
|
|
|
$
|
382
|
|
|
$
|
(402
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
7,578
|
|
|
$
|
1,695
|
|
|
$
|
(821
|
)
|
|
$
|
8,452
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
5,767
|
|
|
912
|
|
|
(383
|
)
|
|
6,296
|
|
|||||
Selling and administrative
|
|
—
|
|
|
2,087
|
|
|
569
|
|
|
(438
|
)
|
|
2,218
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
144
|
|
|
47
|
|
|
—
|
|
|
191
|
|
|||||
Impairment charges
|
|
—
|
|
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
(14
|
)
|
|||||
Total costs and expenses
|
|
—
|
|
|
7,992
|
|
|
1,528
|
|
|
(821
|
)
|
|
8,699
|
|
|||||
Operating income (loss)
|
|
—
|
|
|
(414
|
)
|
|
167
|
|
|
—
|
|
|
(247
|
)
|
|||||
Interest expense
|
|
(55
|
)
|
|
(94
|
)
|
|
(26
|
)
|
|
114
|
|
|
(61
|
)
|
|||||
Interest and investment income
|
|
—
|
|
|
9
|
|
|
112
|
|
|
(114
|
)
|
|
7
|
|
|||||
Income (loss) before income taxes
|
|
(55
|
)
|
|
(499
|
)
|
|
253
|
|
|
—
|
|
|
(301
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
49
|
|
|
(40
|
)
|
|
—
|
|
|
9
|
|
|||||
Equity (loss) in earnings in subsidiaries
|
|
(237
|
)
|
|
127
|
|
|
—
|
|
|
110
|
|
|
—
|
|
|||||
Net income (loss)
|
|
(292
|
)
|
|
(323
|
)
|
|
213
|
|
|
110
|
|
|
(292
|
)
|
|||||
Loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
13
|
|
|
13
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS
|
|
$
|
(292
|
)
|
|
$
|
(323
|
)
|
|
$
|
213
|
|
|
$
|
123
|
|
|
$
|
(279
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(442
|
)
|
|
$
|
(498
|
)
|
|
$
|
156
|
|
|
$
|
342
|
|
|
$
|
(442
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
28
|
|
|
2
|
|
|
—
|
|
|
30
|
|
|||||
Deferred loss on derivatives, net of tax
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|||||
Currency translation adjustments, net of tax
|
|
1
|
|
|
—
|
|
|
10
|
|
|
—
|
|
|
11
|
|
|||||
Unrealized net loss, net of tax
|
|
—
|
|
|
—
|
|
|
(49
|
)
|
|
49
|
|
|
—
|
|
|||||
Total other comprehensive income (loss)
|
|
—
|
|
|
28
|
|
|
(37
|
)
|
|
49
|
|
|
40
|
|
|||||
Comprehensive income (loss)
|
|
(442
|
)
|
|
(470
|
)
|
|
119
|
|
|
391
|
|
|
(402
|
)
|
|||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34
|
|
|
34
|
|
|||||
Comprehensive income (loss) attributable to Holdings’ shareholders
|
|
$
|
(442
|
)
|
|
$
|
(470
|
)
|
|
$
|
119
|
|
|
$
|
425
|
|
|
$
|
(368
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(292
|
)
|
|
$
|
(323
|
)
|
|
$
|
213
|
|
|
$
|
110
|
|
|
$
|
(292
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
42
|
|
|
4
|
|
|
—
|
|
|
46
|
|
|||||
Currency translation adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
1
|
|
|
56
|
|
|
(57
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
43
|
|
|
53
|
|
|
(57
|
)
|
|
39
|
|
|||||
Comprehensive income (loss)
|
|
(292
|
)
|
|
(280
|
)
|
|
266
|
|
|
53
|
|
|
(253
|
)
|
|||||
Comprehensive income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
14
|
|
|
14
|
|
|||||
Comprehensive income (loss) attributable to Holdings’ shareholders
|
|
$
|
(292
|
)
|
|
$
|
(280
|
)
|
|
$
|
266
|
|
|
$
|
67
|
|
|
$
|
(239
|
)
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash used in operating activities
|
$
|
—
|
|
|
$
|
(559
|
)
|
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(560
|
)
|
Proceeds from sales of property and investments
|
—
|
|
|
79
|
|
|
—
|
|
|
—
|
|
|
79
|
|
|||||
Purchases of property and equipment
|
—
|
|
|
(62
|
)
|
|
(10
|
)
|
|
—
|
|
|
(72
|
)
|
|||||
Net investing with Affiliates
|
—
|
|
|
—
|
|
|
(43
|
)
|
|
43
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
—
|
|
|
17
|
|
|
(53
|
)
|
|
43
|
|
|
7
|
|
|||||
Repayments of long-term debt
|
—
|
|
|
(17
|
)
|
|
(3
|
)
|
|
—
|
|
|
(20
|
)
|
|||||
Decrease in short-term borrowings, primarily 90 days or less
|
—
|
|
|
(102
|
)
|
|
—
|
|
|
—
|
|
|
(102
|
)
|
|||||
Lands' End, Inc. pre-separation funding
|
—
|
|
|
515
|
|
|
—
|
|
|
—
|
|
|
515
|
|
|||||
Separation of Lands' End, Inc.
|
—
|
|
|
(31
|
)
|
|
—
|
|
|
—
|
|
|
(31
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
(11
|
)
|
|
—
|
|
|
—
|
|
|
(11
|
)
|
|||||
Intercompany dividend
|
—
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|||||
Net borrowing with Affiliates
|
—
|
|
|
223
|
|
|
(180
|
)
|
|
(43
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
—
|
|
|
579
|
|
|
(185
|
)
|
|
(43
|
)
|
|
351
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
5
|
|
|
—
|
|
|
5
|
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
37
|
|
|
(234
|
)
|
|
—
|
|
|
(197
|
)
|
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
—
|
|
|
537
|
|
|
491
|
|
|
—
|
|
|
1,028
|
|
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
—
|
|
|
$
|
574
|
|
|
$
|
257
|
|
|
$
|
—
|
|
|
$
|
831
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(816
|
)
|
|
$
|
103
|
|
|
$
|
—
|
|
|
$
|
(713
|
)
|
Proceeds from sales of property and investments
|
—
|
|
|
5
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|||||
Net increase in investments and restricted cash
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
Purchases of property and equipment
|
—
|
|
|
(50
|
)
|
|
(10
|
)
|
|
—
|
|
|
(60
|
)
|
|||||
Net investing with Affiliates
|
—
|
|
|
—
|
|
|
45
|
|
|
(45
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
—
|
|
|
(45
|
)
|
|
34
|
|
|
(45
|
)
|
|
(56
|
)
|
|||||
Proceeds from debt issuances
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Repayments of long-term debt
|
—
|
|
|
(27
|
)
|
|
(1
|
)
|
|
—
|
|
|
(28
|
)
|
|||||
Increase in short-term borrowings, primarily 90 days or less
|
—
|
|
|
660
|
|
|
—
|
|
|
—
|
|
|
660
|
|
|||||
Intercompany dividend
|
112
|
|
|
—
|
|
|
(112
|
)
|
|
—
|
|
|
—
|
|
|||||
Net borrowing with Affiliates
|
(112
|
)
|
|
255
|
|
|
(188
|
)
|
|
45
|
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
—
|
|
|
888
|
|
|
(300
|
)
|
|
45
|
|
|
633
|
|
|||||
Effect of exchange rate changes on cash and cash equivalents
|
—
|
|
|
—
|
|
|
(2
|
)
|
|
—
|
|
|
(2
|
)
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
27
|
|
|
(165
|
)
|
|
—
|
|
|
(138
|
)
|
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
—
|
|
|
320
|
|
|
289
|
|
|
—
|
|
|
609
|
|
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
—
|
|
|
$
|
347
|
|
|
$
|
124
|
|
|
$
|
—
|
|
|
$
|
471
|
|
|
13 Weeks Ended
|
||||||
millions, except per share data
|
May 3,
2014 |
|
May 4,
2013 |
||||
REVENUES
|
|
|
|
||||
Merchandise sales and services
|
$
|
7,879
|
|
|
$
|
8,452
|
|
COSTS AND EXPENSES
|
|
|
|
||||
Cost of sales, buying and occupancy
|
6,051
|
|
|
6,296
|
|
||
Gross margin dollars
|
1,828
|
|
|
2,156
|
|
||
Gross margin rate
|
23.2
|
%
|
|
25.5
|
%
|
||
Selling and administrative
|
2,089
|
|
|
2,218
|
|
||
Selling and administrative expense as a percentage of total revenues
|
26.5
|
%
|
|
26.2
|
%
|
||
Depreciation and amortization
|
155
|
|
|
191
|
|
||
Impairment charges
|
5
|
|
|
8
|
|
||
Gain on sales of assets
|
(46
|
)
|
|
(14
|
)
|
||
Total costs and expenses
|
8,254
|
|
|
8,699
|
|
||
Operating loss
|
(375
|
)
|
|
(247
|
)
|
||
Interest expense
|
(71
|
)
|
|
(61
|
)
|
||
Interest and investment income
|
4
|
|
|
7
|
|
||
Other loss
|
(3
|
)
|
|
—
|
|
||
Loss before income taxes
|
(445
|
)
|
|
(301
|
)
|
||
Income tax benefit
|
3
|
|
|
9
|
|
||
Net loss
|
(442
|
)
|
|
(292
|
)
|
||
Loss attributable to noncontrolling interests
|
40
|
|
|
13
|
|
||
NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(402
|
)
|
|
$
|
(279
|
)
|
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
||||
Basic loss per share
|
$
|
(3.79
|
)
|
|
$
|
(2.63
|
)
|
Diluted loss per share
|
$
|
(3.79
|
)
|
|
$
|
(2.63
|
)
|
Basic weighted average common shares outstanding
|
106.2
|
|
|
106.0
|
|
||
Diluted weighted average common shares outstanding
|
106.2
|
|
|
106.0
|
|
•
|
EBITDA excludes the effects of financings and investing activities by eliminating the effects of interest and depreciation costs;
|
•
|
Management considers gains/(losses) on the sale of assets to result from investing decisions rather than ongoing operations; and
|
•
|
Other significant items, while periodically affecting our results, may vary significantly from period to period and have a disproportionate effect in a given period, which affects comparability of results. Adjustments to EBITDA include impairment charges related to fixed assets and intangible assets, closed store and severance charges, domestic pension expense and the Lands' End separation. We have adjusted our results for these items to make our statements more comparable and therefore more useful to investors as the items are not representative of our ongoing operations and reflect past investment decisions.
|
|
|
13 Weeks Ended
|
||||||
millions
|
|
May 3,
2014 |
|
May 4,
2013 |
||||
Net loss attributable to SHC per statement of operations
|
|
$
|
(402
|
)
|
|
$
|
(279
|
)
|
Loss attributable to noncontrolling interests
|
|
(40
|
)
|
|
(13
|
)
|
||
Income tax benefit
|
|
(3
|
)
|
|
(9
|
)
|
||
Interest expense
|
|
71
|
|
|
61
|
|
||
Interest and investment income
|
|
(4
|
)
|
|
(7
|
)
|
||
Other loss
|
|
3
|
|
|
—
|
|
||
Operating loss
|
|
(375
|
)
|
|
(247
|
)
|
||
Depreciation and amortization
|
|
155
|
|
|
191
|
|
||
Gain on sales of assets
|
|
(46
|
)
|
|
(14
|
)
|
||
Before excluded items
|
|
(266
|
)
|
|
(70
|
)
|
||
|
|
|
|
|
||||
Closed store reserve and severance
|
|
28
|
|
|
13
|
|
||
Domestic pension expense
|
|
22
|
|
|
41
|
|
||
Impairment charges
|
|
5
|
|
|
8
|
|
||
Adjusted EBITDA
|
|
(211
|
)
|
|
(8
|
)
|
||
|
|
|
|
|
||||
Lands' End separation
|
|
(10
|
)
|
|
(18
|
)
|
||
Adjusted EBITDA as defined
(1)
|
|
$
|
(221
|
)
|
|
$
|
(26
|
)
|
% to revenues
(2)
|
|
(2.9
|
)%
|
|
(0.3
|
)%
|
|
13 Weeks Ended
|
||||||||||||||||||||||||
|
May 3, 2014
|
|
May 4, 2013
|
||||||||||||||||||||||
millions
|
Kmart
|
Sears Domestic
|
Sears Canada
|
Sears Holdings
|
|
Kmart
|
Sears Domestic
|
Sears Canada
|
Sears Holdings
|
||||||||||||||||
Operating loss per statement of operations
|
$
|
(98
|
)
|
$
|
(196
|
)
|
$
|
(81
|
)
|
$
|
(375
|
)
|
|
$
|
(28
|
)
|
$
|
(181
|
)
|
$
|
(38
|
)
|
$
|
(247
|
)
|
Depreciation and amortization
|
23
|
|
114
|
|
18
|
|
155
|
|
|
33
|
|
133
|
|
25
|
|
191
|
|
||||||||
(Gain) loss on sales of assets
|
(21
|
)
|
(26
|
)
|
1
|
|
(46
|
)
|
|
(13
|
)
|
(1
|
)
|
—
|
|
(14
|
)
|
||||||||
Before excluded items
|
(96
|
)
|
(108
|
)
|
(62
|
)
|
(266
|
)
|
|
(8
|
)
|
(49
|
)
|
(13
|
)
|
(70
|
)
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Closed store reserve and severance
|
9
|
|
—
|
|
19
|
|
28
|
|
|
8
|
|
3
|
|
2
|
|
13
|
|
||||||||
Domestic pension expense
|
—
|
|
22
|
|
—
|
|
22
|
|
|
—
|
|
41
|
|
—
|
|
41
|
|
||||||||
Impairment charges
|
—
|
|
5
|
|
—
|
|
5
|
|
|
—
|
|
8
|
|
—
|
|
8
|
|
||||||||
Adjusted EBITDA
|
$
|
(87
|
)
|
$
|
(81
|
)
|
$
|
(43
|
)
|
$
|
(211
|
)
|
|
$
|
—
|
|
$
|
3
|
|
$
|
(11
|
)
|
$
|
(8
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Lands' End separation
|
—
|
|
(10
|
)
|
—
|
|
(10
|
)
|
|
—
|
|
(18
|
)
|
—
|
|
(18
|
)
|
||||||||
Adjusted EBITDA as defined
(1)
|
$
|
(87
|
)
|
$
|
(91
|
)
|
$
|
(43
|
)
|
$
|
(221
|
)
|
|
$
|
—
|
|
$
|
(15
|
)
|
$
|
(11
|
)
|
$
|
(26
|
)
|
% to revenues
(2)
|
(3.0
|
)%
|
(2.2
|
)%
|
(6.2
|
)%
|
(2.9
|
)%
|
|
—
|
%
|
(0.4
|
)%
|
(1.3
|
)%
|
(0.3
|
)%
|
•
|
Impairment charges – Accounting standards require the Company to evaluate the carrying value of fixed assets, goodwill and intangible assets for impairment. As a result of the Company’s analysis, we have recorded impairment charges related to certain fixed asset balances.
|
•
|
Closed store reserve and severance – We are transforming our Company to a less asset-intensive business model. Throughout this transformation, we continue to make choices related to our stores, which could result in sales, closures, lease terminations or a variety of other decisions.
|
•
|
Domestic pension expense – Contributions to our pension plans remain a significant use of our cash on an annual basis. Cash contributions to our pension and postretirement plans are separately disclosed on the cash flow statement. While the Company's pension plan is frozen, and thus associates do not currently earn pension benefits, we have a legacy pension obligation for past service performed by Kmart and Sears associates. The annual pension expense included in our statement of operations related to these legacy domestic pension plans was relatively minimal in years prior to 2009. However, due to the severe decline in the capital markets that occurred in the latter part of 2008, our domestic pension expense was $162 million in 2013, $165 million in 2012 and $74 million in 2011. Pension expense is comprised of interest cost, expected return on plan assets and amortization of experience losses. This adjustment eliminates the entire pension expense from the statement of operations to improve comparability. Pension expense is included in the determination of Net Income. The components of the adjustments to EBITDA related to domestic pension expense were as follows:
|
|
13 Weeks Ended
|
||||||
millions
|
May 3,
2014 |
|
May 4,
2013 |
||||
Components of net periodic expense:
|
|
|
|
||||
Interest cost
|
$
|
55
|
|
|
$
|
54
|
|
Expected return on plan assets
|
(62
|
)
|
|
(55
|
)
|
||
Amortization of experience losses
|
29
|
|
|
42
|
|
||
Net periodic expense
|
$
|
22
|
|
|
$
|
41
|
|
•
|
Lands' End separation – The results of the Lands' End business that were included in our results of operations prior to the separation.
|
|
13 Weeks Ended May 3, 2014
|
||||||||||||||||||||
|
|
Adjustments
|
|
||||||||||||||||||
millions, except per share data
|
GAAP
|
Domestic
Pension Expense |
Closed Store Reserve, Store Impairments and Severance
|
Gain on Sales of Assets
|
Tax Matters
|
Lands' End Separation
|
As Adjusted
(1)
|
||||||||||||||
Gross margin impact
|
$
|
1,828
|
|
$
|
—
|
|
$
|
7
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(87
|
)
|
$
|
1,748
|
|
Selling and administrative impact
|
2,089
|
|
(22
|
)
|
(21
|
)
|
—
|
|
—
|
|
(77
|
)
|
1,969
|
|
|||||||
Depreciation and amortization impact
|
155
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(3
|
)
|
152
|
|
|||||||
Impairment charges impact
|
5
|
|
—
|
|
(5
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Gain on sales of assets impact
|
(46
|
)
|
—
|
|
—
|
|
13
|
|
—
|
|
—
|
|
(33
|
)
|
|||||||
Operating loss impact
|
(375
|
)
|
22
|
|
33
|
|
(13
|
)
|
—
|
|
(7
|
)
|
(340
|
)
|
|||||||
Income tax benefit impact
|
3
|
|
(8
|
)
|
(10
|
)
|
5
|
|
156
|
|
3
|
|
149
|
|
|||||||
Loss attributable to noncontrolling interest impact
|
40
|
|
—
|
|
(7
|
)
|
—
|
|
(10
|
)
|
—
|
|
23
|
|
|||||||
After tax and noncontrolling interest impact
|
(402
|
)
|
14
|
|
16
|
|
(8
|
)
|
146
|
|
(4
|
)
|
(238
|
)
|
|||||||
Diluted loss per share impact
|
$
|
(3.79
|
)
|
$
|
0.13
|
|
$
|
0.15
|
|
$
|
(0.07
|
)
|
$
|
1.37
|
|
$
|
(0.03
|
)
|
$
|
(2.24
|
)
|
|
13 Weeks Ended May 4, 2013
|
||||||||||||||||||||
|
|
Adjustments
|
|
|
|
||||||||||||||||
millions, except per share data
|
GAAP
|
Domestic Pension Expense
|
Closed Store Reserve, Store Impairments and Severance
|
Tax Matters
|
As Adjusted - Reported
|
Lands' End Separation
|
As Adjusted
(1)
|
||||||||||||||
Gross margin impact
|
$
|
2,156
|
|
$
|
—
|
|
$
|
8
|
|
$
|
—
|
|
$
|
2,164
|
|
$
|
(132
|
)
|
$
|
2,032
|
|
Selling and administrative impact
|
2,218
|
|
(41
|
)
|
(5
|
)
|
—
|
|
2,172
|
|
(114
|
)
|
2,058
|
|
|||||||
Depreciation and amortization impact
|
191
|
|
—
|
|
(1
|
)
|
—
|
|
190
|
|
(6
|
)
|
184
|
|
|||||||
Impairment charges impact
|
8
|
|
—
|
|
(8
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Operating loss impact
|
(247
|
)
|
41
|
|
22
|
|
—
|
|
(184
|
)
|
(12
|
)
|
(196
|
)
|
|||||||
Income tax benefit impact
|
9
|
|
(15
|
)
|
(9
|
)
|
104
|
|
89
|
|
5
|
|
94
|
|
|||||||
Loss attributable to noncontrolling interest impact
|
13
|
|
—
|
|
(1
|
)
|
—
|
|
12
|
|
—
|
|
12
|
|
|||||||
After tax and noncontrolling interest impact
|
(279
|
)
|
26
|
|
12
|
|
104
|
|
(137
|
)
|
(7
|
)
|
(144
|
)
|
|||||||
Diluted loss per share impact
|
$
|
(2.63
|
)
|
$
|
0.25
|
|
$
|
0.11
|
|
$
|
0.98
|
|
$
|
(1.29
|
)
|
$
|
(0.07
|
)
|
$
|
(1.36
|
)
|
•
|
Gains on sales of assets - We have recorded significant gains on sales of assets which were primarily attributable to several real estate transactions. Management considers these gains on sale of assets to result from investing decisions rather than ongoing operations.
|
•
|
Tax Matters - In 2011, and again in 2013, we recorded a non-cash charge to establish a valuation allowance against substantially all of our domestic deferred tax assets. Accounting rules generally require that a valuation reserve be established when income has not been generated over a three-year cumulative period to support the deferred tax asset. While an accounting loss was recorded, we believe no economic loss has occurred as these net operating losses and tax benefits remain available to reduce future taxes as income is generated in subsequent periods. As this valuation allowance has a significant impact on the effective tax rate, we have adjusted our results to reflect a standard effective tax rate for the Company beginning in fiscal 2011 when the valuation allowance was first established.
|
|
13 Weeks Ended
|
||||||
millions, except number of stores
|
May 3,
2014 |
|
May 4,
2013 |
||||
Merchandise sales and services
|
$
|
2,897
|
|
|
$
|
3,103
|
|
|
|
|
|
||||
Cost of sales, buying and occupancy
|
2,302
|
|
|
2,398
|
|
||
Gross margin dollars
|
595
|
|
|
705
|
|
||
Gross margin rate
|
20.5
|
%
|
|
22.7
|
%
|
||
|
|
|
|
||||
Selling and administrative
|
691
|
|
|
713
|
|
||
Selling and administrative expense as a percentage of total revenues
|
23.9
|
%
|
|
23.0
|
%
|
||
Depreciation and amortization
|
23
|
|
|
33
|
|
||
Gain on sales of assets
|
(21
|
)
|
|
(13
|
)
|
||
Total costs and expenses
|
2,995
|
|
|
3,131
|
|
||
Operating loss
|
$
|
(98
|
)
|
|
$
|
(28
|
)
|
Adjusted EBITDA
|
$
|
(87
|
)
|
|
$
|
—
|
|
Number of stores
|
1,123
|
|
|
1,211
|
|
|
13 Weeks Ended
|
||||||
millions, except number of stores
|
May 3,
2014 |
|
May 4,
2013 |
||||
Merchandise sales and services
|
$
|
4,285
|
|
|
$
|
4,507
|
|
|
|
|
|
||||
Cost of sales, buying and occupancy
|
3,216
|
|
|
3,293
|
|
||
Gross margin dollars
|
1,069
|
|
|
1,214
|
|
||
Gross margin rate
|
24.9
|
%
|
|
26.9
|
%
|
||
|
|
|
|
||||
Selling and administrative
|
1,172
|
|
|
1,255
|
|
||
Selling and administrative expense as a percentage of total revenues
|
27.4
|
%
|
|
27.8
|
%
|
||
Depreciation and amortization
|
114
|
|
|
133
|
|
||
Impairment charges
|
5
|
|
|
8
|
|
||
Gain on sales of assets
|
(26
|
)
|
|
(1
|
)
|
||
Total costs and expenses
|
4,481
|
|
|
4,688
|
|
||
Operating loss
|
$
|
(196
|
)
|
|
$
|
(181
|
)
|
Adjusted EBITDA
|
$
|
(81
|
)
|
|
$
|
3
|
|
Lands' End separation
|
(10
|
)
|
|
(18
|
)
|
||
Adjusted EBITDA as defined
(1)
|
$
|
(91
|
)
|
|
$
|
(15
|
)
|
Number of:
|
|
|
|
||||
Full-line stores
|
765
|
|
|
798
|
|
||
Specialty stores
|
36
|
|
|
53
|
|
||
Total Domestic Sears Stores
|
801
|
|
|
851
|
|
|
13 Weeks Ended
|
||||||
millions, except number of stores
|
May 3,
2014 |
|
May 4,
2013 |
||||
Merchandise sales and services
|
$
|
697
|
|
|
$
|
842
|
|
|
|
|
|
||||
Cost of sales, buying and occupancy
|
533
|
|
|
605
|
|
||
Gross margin dollars
|
164
|
|
|
237
|
|
||
Gross margin rate
|
23.5
|
%
|
|
28.1
|
%
|
||
|
|
|
|
||||
Selling and administrative
|
226
|
|
|
250
|
|
||
Selling and administrative expense as a percentage of total revenues
|
32.4
|
%
|
|
29.7
|
%
|
||
Depreciation and amortization
|
18
|
|
|
25
|
|
||
Loss on sales of assets
|
1
|
|
|
—
|
|
||
Total costs and expenses
|
778
|
|
|
880
|
|
||
Operating loss
|
$
|
(81
|
)
|
|
$
|
(38
|
)
|
Adjusted EBITDA
|
$
|
(43
|
)
|
|
$
|
(11
|
)
|
Number of:
|
|
|
|
||||
Full-line stores
|
113
|
|
|
118
|
|
||
Specialty stores
|
326
|
|
|
343
|
|
||
Total Sears Canada Stores
|
439
|
|
|
461
|
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
Domestic
|
|
|
|
|
|
||||||
Cash and equivalents
|
$
|
422
|
|
|
$
|
197
|
|
|
$
|
428
|
|
Cash posted as collateral
|
18
|
|
|
19
|
|
|
18
|
|
|||
Credit card deposits in transit
|
156
|
|
|
162
|
|
|
131
|
|
|||
Total domestic cash and cash equivalents
|
596
|
|
|
378
|
|
|
577
|
|
|||
Sears Canada
|
235
|
|
|
93
|
|
|
451
|
|
|||
Total cash and cash equivalents
|
831
|
|
|
471
|
|
|
1,028
|
|
|||
Restricted cash
|
11
|
|
|
10
|
|
|
10
|
|
|||
Total cash balances
|
$
|
842
|
|
|
$
|
481
|
|
|
$
|
1,038
|
|
millions
|
May 3,
2014 |
|
May 4,
2013 |
|
February 1,
2014 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
159
|
|
|
$
|
377
|
|
|
$
|
9
|
|
Secured borrowings
|
1,071
|
|
|
1,377
|
|
|
1,323
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
2,569
|
|
|
1,582
|
|
|
2,571
|
|
|||
Capitalized lease obligations
|
330
|
|
|
419
|
|
|
346
|
|
|||
Total borrowings
|
$
|
4,129
|
|
|
$
|
3,755
|
|
|
$
|
4,249
|
|
|
13 Weeks Ended
|
||||||
millions
|
May 3,
2014 |
|
May 4,
2013 |
||||
Secured borrowings:
|
|
|
|
||||
Maximum daily amount outstanding during the period
|
$
|
1,568
|
|
|
$
|
1,448
|
|
Average amount outstanding during the period
|
1,308
|
|
|
1,027
|
|
||
Amount outstanding at period-end
|
1,071
|
|
|
1,377
|
|
||
Weighted average interest rate
|
2.8
|
%
|
|
2.8
|
%
|
||
|
|
|
|
||||
Unsecured commercial paper:
|
|
|
|
||||
Maximum daily amount outstanding during the period
|
$
|
159
|
|
|
$
|
398
|
|
Average amount outstanding during the period
|
29
|
|
|
369
|
|
||
Amount outstanding at period-end
|
159
|
|
|
377
|
|
||
Weighted average interest rate
|
2.6
|
%
|
|
2.7
|
%
|
Moody’s
Investors Service |
Standard & Poor’s
Ratings Services |
Fitch Ratings
|
Caa1
|
CCC+
|
CCC
|
|
Total Number of Shares Purchased
(1)
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(2)
|
|
Average Price Paid per Share for Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||||
February 2, 2014 to March 1, 2014
|
547
|
|
|
$
|
44.75
|
|
|
—
|
|
|
$
|
—
|
|
|
|
||
March 2, 2014 to April 5, 2014
|
195
|
|
|
48.62
|
|
|
—
|
|
|
—
|
|
|
|
||||
April 6, 2014 to May 3, 2014
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
Total
|
742
|
|
|
$
|
45.77
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
503,907,832
|
|
(1)
|
Consists entirely of
742
shares acquired from associates to meet withholding tax requirements from the vesting of restricted stock.
|
(2)
|
Our common share repurchase program was initially announced on September 14, 2005 and has a total authorization since inception of the program of $6.5 billion, including the authorizations to purchase up to an additional $500 million of common stock on each of December 17, 2009 and May 2, 2011. The program has no stated expiration date.
|
(a)
|
Exhibits.
|
3.1
|
Restated Certificate of Incorporation (incorporated by reference to Exhibit 3.1 to Registrant's Current Report on Form 8-K, dated March 24, 2005, filed on March 24, 2005 (File No. 000-51217)).
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3.2
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Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to Registrant's Current Report on Form 8-K, dated December 2, 2009, filed on December 4, 2009 (File No. 000-51217)).
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*10.1
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Sears Holdings Corporation Annual Incentive Plan (Amended and Restated Effective February 12, 2014).
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*10.2
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2014 Additional Definitions under Sears Holdings Corporation Annual Incentive Plan.
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*10.3
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2014 Additional Definitions under Sears Holdings Corporation Long-Term Incentive Program.
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*10.4
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Form of Cash Award - Addendum to Restricted Stock Award(s) (Lands’ End Make-Whole).
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*10.5
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Form of Cash Award - Addendum to Restricted Stock Unit Award(s) (Lands’ End Make-Whole).
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*10.6
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Addendum, dated April 21, 2014, to letter from Registrant to Edward S. Lampert relating to employment dated March 18, 2013 (Lands’ End Make-Whole).
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10.7
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Form of Sears Holdings Corporation Restricted Stock Award Agreement: Terms and Conditions (incorporated by reference to Exhibit 10.17 to Registrant's Annual Report on Form 10-K for the fiscal year ended February 1, 2014).
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10.8
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Form of Sears Holdings Corporation Restricted Stock Unit Award Agreement: Terms and Conditions (incorporated by reference to Exhibit 10.18 to Registrant's Annual Report on Form 10-K for the fiscal year ended February 1, 2014).
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*31.1
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Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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*31.2
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Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
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*32
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Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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101
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The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended May 3, 2014, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Statements of Operations (Unaudited) for the 13 Weeks Ended May 3, 2014 and May 4, 2013; (ii) the Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) for the 13 Weeks Ended May 3, 2014 and May 4, 2013 (iii) the Condensed Consolidated Balance Sheets (Unaudited) as of May 3, 2014, May 4, 2013 and February 1, 2014; (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited) for the 13 Weeks Ended May 3, 2014 and May 4, 2013; (v) the Condensed Consolidated Statements of Equity (Unaudited) for the 13 Weeks Ended May 3, 2014 and May 4, 2013; and (vi) the Notes to the Condensed Consolidated Financial Statements (Unaudited).
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*
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Filed herewith.
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•
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Excluding: (a) Sears Canada Inc.; (b) SHC Israel Ltd.; and (c) Sears IT Management Services India Pvt. Ltd other than with respect to U.S.-based employees of Sears Global Technology Services LLC designated for participation in accordance with Section 2.1
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Date of Grant
|
Unvested RSSs
|
Cash Award
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Vesting Date
|
Month Day, Year
|
X,XXX
|
$XX.XX
|
Month Day, Year
|
Date of Grant
|
Unvested RSSs
|
Cash Award(s)
|
Vesting Date
|
Month Day, Year
|
X,XXX
|
$XX.XX
|
Month Day, Year
|
Month Day, Year
|
X,XXX
|
$XX.XX
|
Month Day, Year
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Title:
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VP, Talent and
Human Capital Services |
Date of Grant
|
Unvested RSUs
|
Cash Award
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Vesting Date
|
Month Day, Year
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X,XXX
|
$XX.XX
|
Month Day, Year
|
Date of Grant
|
Unvested RSSUs
|
Cash Award(s)
|
Vesting Date
|
Month Day, Year
|
X,XXX
|
$XX.XX
|
Month Day, Year
|
Month Day, Year
|
X,XXX
|
$XX.XX
|
Month Day, Year
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Title:
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VP, Talent and
Human Capital Services |
Title:
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VP, Talent and Human Capital Services
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Date of Grant
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Post-Record Date Shares
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Make-Whole Award Shares
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Total Shares
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March 31, 2014
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10,311
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--
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10,311
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April 21, 2014
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--
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2,313
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2,313
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April 30, 2014
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10,311
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2,313
|
12,624
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May 30, 2014
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10,310
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2,314
|
12,624
|
June 30, 2014
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10,311
|
2,313
|
12,624
|
July 31, 2014
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10,311
|
2,313
|
12,624
|
August 29, 2014
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10,310
|
2,314
|
12,624
|
September 30, 2014
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10,311
|
2,313
|
12,624
|
October 31, 2014
|
10,311
|
2,313
|
12,624
|
November 28, 2014
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10,310
|
2,314
|
12,624
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December 31, 2014
|
10,311
|
2,313
|
12,624
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January 30, 2015
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10,311
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2,313
|
12,624
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Total
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113,418
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25,446
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138,864
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1.
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I have reviewed this quarterly report on Form 10-Q of Sears Holdings Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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1.
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I have reviewed this quarterly report on Form 10-Q of Sears Holdings Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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(a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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(b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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(c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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(d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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(a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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(b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Edward S. Lampert
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Edward S. Lampert
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Chairman of the Board and Chief Executive Officer
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/s/ Robert A. Schriesheim
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Robert A. Schriesheim
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Executive Vice President and
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Chief Financial Officer
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