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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
OCTOBER 29, 2016
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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
|
20-1920798
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(State of Incorporation)
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(I.R.S. Employer Identification No.)
|
|
|
3333 B
EVERLY
R
OAD
, H
OFFMAN
E
STATES
, I
LLINOIS
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60179
|
(Address of principal executive offices)
|
(Zip Code)
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Page
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PART I – FINANCIAL INFORMATION
|
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Item 1.
|
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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||
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Item 2.
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Item 6.
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13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions, except per share data
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Merchandise sales and services
(1)(2)
|
$
|
5,029
|
|
|
$
|
5,750
|
|
|
$
|
16,086
|
|
|
$
|
17,843
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
(1)(3)
|
4,067
|
|
|
4,488
|
|
|
12,687
|
|
|
13,628
|
|
||||
Selling and administrative
|
1,543
|
|
|
1,630
|
|
|
4,530
|
|
|
5,005
|
|
||||
Depreciation and amortization
|
91
|
|
|
94
|
|
|
278
|
|
|
330
|
|
||||
Impairment charges
|
3
|
|
|
17
|
|
|
18
|
|
|
71
|
|
||||
Gain on sales of assets
|
(51
|
)
|
|
(97
|
)
|
|
(166
|
)
|
|
(730
|
)
|
||||
Total costs and expenses
|
5,653
|
|
|
6,132
|
|
|
17,347
|
|
|
18,304
|
|
||||
Operating loss
|
(624
|
)
|
|
(382
|
)
|
|
(1,261
|
)
|
|
(461
|
)
|
||||
Interest expense
|
(105
|
)
|
|
(74
|
)
|
|
(289
|
)
|
|
(249
|
)
|
||||
Interest and investment income (loss)
|
(8
|
)
|
|
17
|
|
|
(25
|
)
|
|
(27
|
)
|
||||
Loss before income taxes
|
(737
|
)
|
|
(439
|
)
|
|
(1,575
|
)
|
|
(737
|
)
|
||||
Income tax (expense) benefit
|
(11
|
)
|
|
(14
|
)
|
|
(39
|
)
|
|
189
|
|
||||
Net loss
|
(748
|
)
|
|
(453
|
)
|
|
(1,614
|
)
|
|
(548
|
)
|
||||
Income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(748
|
)
|
|
$
|
(454
|
)
|
|
$
|
(1,614
|
)
|
|
$
|
(549
|
)
|
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
|
|
|
|
||||||||
Basic loss per share
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
Diluted loss per share
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
Basic weighted average common shares outstanding
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
||||
Diluted weighted average common shares outstanding
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
(1)
|
Includes merchandise sales to Sears Hometown and Outlet Stores, Inc. ("SHO") of
$271 million
and
$315 million
for the
13
weeks ended
October 29, 2016
and
October 31, 2015
, respectively, and
$847 million
and
$1.0 billion
for the
39
weeks ended
October 29, 2016
and
October 31, 2015
, respectively. Pursuant to the terms of the separation, merchandise is sold to SHO at cost.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Net loss
|
$
|
(748
|
)
|
|
$
|
(453
|
)
|
|
$
|
(1,614
|
)
|
|
$
|
(548
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
||||||||
Pension and postretirement adjustments, net of tax
|
64
|
|
|
65
|
|
|
192
|
|
|
196
|
|
||||
Total other comprehensive income
|
64
|
|
|
65
|
|
|
192
|
|
|
196
|
|
||||
Comprehensive loss
|
(684
|
)
|
|
(388
|
)
|
|
(1,422
|
)
|
|
(352
|
)
|
||||
Comprehensive loss attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
Comprehensive loss attributable to Holdings' shareholders
|
$
|
(684
|
)
|
|
$
|
(389
|
)
|
|
$
|
(1,422
|
)
|
|
$
|
(353
|
)
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
258
|
|
|
$
|
294
|
|
|
$
|
238
|
|
Accounts receivable
(1)
|
372
|
|
|
475
|
|
|
419
|
|
|||
Merchandise inventories
|
5,032
|
|
|
6,208
|
|
|
5,172
|
|
|||
Prepaid expenses and other current assets
(2)
|
304
|
|
|
242
|
|
|
216
|
|
|||
Total current assets
|
5,966
|
|
|
7,219
|
|
|
6,045
|
|
|||
Property and equipment (net of accumulated depreciation and amortization of $2,886, $2,925 and $2,960)
|
2,392
|
|
|
2,668
|
|
|
2,631
|
|
|||
Goodwill
|
269
|
|
|
269
|
|
|
269
|
|
|||
Trade names and other intangible assets
|
1,904
|
|
|
2,090
|
|
|
1,909
|
|
|||
Other assets
|
334
|
|
|
510
|
|
|
483
|
|
|||
TOTAL ASSETS
|
$
|
10,865
|
|
|
$
|
12,756
|
|
|
$
|
11,337
|
|
LIABILITIES
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Short-term borrowings
(3)
|
$
|
618
|
|
|
$
|
686
|
|
|
$
|
797
|
|
Current portion of long-term debt and capitalized lease obligations
(4)
|
594
|
|
|
71
|
|
|
71
|
|
|||
Merchandise payables
|
1,556
|
|
|
2,295
|
|
|
1,574
|
|
|||
Other current liabilities
(5)
|
1,848
|
|
|
1,927
|
|
|
1,925
|
|
|||
Unearned revenues
|
759
|
|
|
793
|
|
|
787
|
|
|||
Other taxes
|
355
|
|
|
324
|
|
|
284
|
|
|||
Total current liabilities
|
5,730
|
|
|
6,096
|
|
|
5,438
|
|
|||
Long-term debt and capitalized lease obligations
(6)
|
3,087
|
|
|
2,111
|
|
|
2,108
|
|
|||
Pension and postretirement benefits
|
1,997
|
|
|
2,133
|
|
|
2,206
|
|
|||
Deferred gain on sale-leaseback
|
656
|
|
|
775
|
|
|
753
|
|
|||
Sale-leaseback financing obligation
|
164
|
|
|
164
|
|
|
164
|
|
|||
Other long-term liabilities
|
1,716
|
|
|
1,811
|
|
|
1,731
|
|
|||
Long-term deferred tax liabilities
|
890
|
|
|
959
|
|
|
893
|
|
|||
Total Liabilities
|
14,240
|
|
|
14,049
|
|
|
13,293
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|||
DEFICIT
|
|
|
|
|
|
||||||
Total Deficit
|
(3,375
|
)
|
|
(1,293
|
)
|
|
(1,956
|
)
|
|||
TOTAL LIABILITIES AND DEFICIT
|
$
|
10,865
|
|
|
$
|
12,756
|
|
|
$
|
11,337
|
|
(1)
|
Includes
$20 million
,
$85 million
and
$51 million
at
October 29, 2016
,
October 31, 2015
and
January 30, 2016
, respectively, of net amounts receivable from SHO, and
$4 million
of net amounts receivable from Lands' End at
October 31, 2015
. Also, includes
$14 million
,
$8 million
and
$7 million
of net amounts receivable from Seritage at
October 29, 2016
,
October 31, 2015
and
January 30, 2016
, respectively.
|
(6)
|
Includes balances held by related parties of
$1.2 billion
,
$629 million
and
$603 million
at
October 29, 2016
,
October 31, 2015
and
January 30, 2016
, respectively, related to our Senior Secured Notes, Subsidiary Notes, Senior Unsecured Notes, Second Lien Term Loan and 2016 Term Loan. See Note 11 for further information.
|
|
39 Weeks Ended
|
||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net loss
|
$
|
(1,614
|
)
|
|
$
|
(548
|
)
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Deferred tax valuation allowance
|
(37
|
)
|
|
(500
|
)
|
||
Depreciation and amortization
|
278
|
|
|
330
|
|
||
Impairment charges
|
18
|
|
|
71
|
|
||
Gain on sales of assets
|
(166
|
)
|
|
(730
|
)
|
||
Pension and postretirement plan contributions
|
(261
|
)
|
|
(246
|
)
|
||
Mark-to-market adjustments of financial instruments
|
22
|
|
|
33
|
|
||
Amortization of deferred gain on sale-leaseback
|
(66
|
)
|
|
(30
|
)
|
||
Change in operating assets and liabilities (net of acquisitions and dispositions):
|
|
|
|
||||
Deferred income taxes
|
34
|
|
|
213
|
|
||
Merchandise inventories
|
140
|
|
|
(1,265
|
)
|
||
Merchandise payables
|
(18
|
)
|
|
674
|
|
||
Income and other taxes
|
97
|
|
|
(40
|
)
|
||
Other operating assets
|
3
|
|
|
7
|
|
||
Other operating liabilities
|
162
|
|
|
(23
|
)
|
||
Net cash used in operating activities
|
(1,408
|
)
|
|
(2,054
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of property and investments
(1)
|
274
|
|
|
2,708
|
|
||
Purchases of property and equipment
|
(115
|
)
|
|
(152
|
)
|
||
Net cash provided by investing activities
|
159
|
|
|
2,556
|
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from debt issuances
(2)
|
1,528
|
|
|
—
|
|
||
Repayments of debt
(3)
|
(50
|
)
|
|
(1,387
|
)
|
||
Increase (decrease) in short-term borrowings, primarily 90 days or less
|
(179
|
)
|
|
471
|
|
||
Proceeds from sale-leaseback financing
(1)
|
—
|
|
|
508
|
|
||
Debt issuance costs
|
(30
|
)
|
|
(50
|
)
|
||
Net cash provided by (used in) financing activities
|
1,269
|
|
|
(458
|
)
|
||
|
|
|
|
||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
20
|
|
|
44
|
|
||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
238
|
|
|
250
|
|
||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
258
|
|
|
$
|
294
|
|
|
|
|
|
||||
Supplemental Cash Flow Data:
|
|
|
|
||||
Income taxes paid, net of refunds
|
$
|
18
|
|
|
$
|
36
|
|
Cash interest paid
(4)
|
186
|
|
|
191
|
|
||
Unpaid liability to acquire equipment and software
|
15
|
|
|
11
|
|
|
Deficit Attributable to Holdings' Shareholders
|
|
|
||||||||||||||||||||
dollars and shares in 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 January 31, 2015
|
107
|
|
$
|
1
|
|
$
|
(5,949
|
)
|
$
|
9,189
|
|
$
|
(2,162
|
)
|
$
|
(2,030
|
)
|
$
|
6
|
|
$
|
(945
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(549
|
)
|
—
|
|
1
|
|
(548
|
)
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
196
|
|
—
|
|
196
|
|
|||||||
Total Comprehensive Loss
|
|
|
|
|
|
|
|
(352
|
)
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
11
|
|
(11
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||||
Balance at October 31, 2015
|
107
|
|
$
|
1
|
|
$
|
(5,934
|
)
|
$
|
9,178
|
|
$
|
(2,711
|
)
|
$
|
(1,834
|
)
|
$
|
7
|
|
$
|
(1,293
|
)
|
Balance at January 30, 2016
|
107
|
|
$
|
1
|
|
$
|
(5,928
|
)
|
$
|
9,173
|
|
$
|
(3,291
|
)
|
$
|
(1,918
|
)
|
$
|
7
|
|
$
|
(1,956
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(1,614
|
)
|
—
|
|
—
|
|
(1,614
|
)
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
192
|
|
—
|
|
192
|
|
|||||||
Total Comprehensive Loss
|
|
|
|
|
|
|
|
(1,422
|
)
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
19
|
|
(20
|
)
|
—
|
|
—
|
|
—
|
|
(1
|
)
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
6
|
|
|
|
—
|
|
—
|
|
—
|
|
6
|
|
|||||||
Distribution to noncontrolling interest
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
(2
|
)
|
|||||||
Balance at October 29, 2016
|
107
|
|
$
|
1
|
|
$
|
(5,903
|
)
|
$
|
9,153
|
|
$
|
(4,905
|
)
|
$
|
(1,726
|
)
|
$
|
5
|
|
$
|
(3,375
|
)
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
248
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Secured borrowings
|
370
|
|
|
677
|
|
|
797
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
3,517
|
|
|
1,976
|
|
|
1,984
|
|
|||
Capitalized lease obligations
|
164
|
|
|
206
|
|
|
195
|
|
|||
Total borrowings
|
$
|
4,299
|
|
|
$
|
2,868
|
|
|
$
|
2,976
|
|
millions
|
Markdowns
(1)
|
|
Severance Costs
(2)
|
|
Lease Termination Costs
(2)
|
|
Other Charges
(2)
|
|
Impairment and Accelerated Depreciation
(3)
|
|
Total Store Closing Costs
|
||||||||||||
Kmart
|
$
|
36
|
|
|
$
|
5
|
|
|
$
|
58
|
|
|
$
|
8
|
|
|
$
|
2
|
|
|
$
|
109
|
|
Sears Domestic
|
2
|
|
|
2
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
6
|
|
||||||
Total for the 13 week period ended October 29, 2016
|
$
|
38
|
|
|
$
|
7
|
|
|
$
|
59
|
|
|
$
|
9
|
|
|
$
|
2
|
|
|
$
|
115
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Kmart
|
$
|
5
|
|
|
$
|
—
|
|
|
$
|
(5
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
1
|
|
Sears Domestic
|
1
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
(2
|
)
|
||||||
Total for the 13 week period ended October 31, 2015
|
$
|
6
|
|
|
$
|
—
|
|
|
$
|
(8
|
)
|
|
$
|
1
|
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Kmart
|
$
|
90
|
|
|
$
|
11
|
|
|
$
|
39
|
|
|
$
|
19
|
|
|
$
|
6
|
|
|
$
|
165
|
|
Sears Domestic
|
12
|
|
|
4
|
|
|
3
|
|
|
4
|
|
|
1
|
|
|
24
|
|
||||||
Total for the 39 week period ended October 29, 2016
|
$
|
102
|
|
|
$
|
15
|
|
|
$
|
42
|
|
|
$
|
23
|
|
|
$
|
7
|
|
|
$
|
189
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Kmart
|
$
|
14
|
|
|
$
|
2
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
$
|
—
|
|
|
$
|
42
|
|
Sears Domestic
|
3
|
|
|
2
|
|
|
(12
|
)
|
|
1
|
|
|
2
|
|
|
(4
|
)
|
||||||
Total for the 39 week period ended October 31, 2015
|
$
|
17
|
|
|
$
|
4
|
|
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
2
|
|
|
$
|
38
|
|
(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
- and
39
- week periods ended
October 29, 2016
and
October 31, 2015
are recorded within depreciation and amortization on the Condensed Consolidated Statement of Operations.
|
millions
|
Severance Costs
|
|
Lease Termination Costs
|
|
Other Charges
|
|
Total
|
||||||||
Balance at October 31, 2015
|
$
|
28
|
|
|
$
|
126
|
|
|
$
|
4
|
|
|
$
|
158
|
|
Store closing costs
|
33
|
|
|
(4
|
)
|
|
6
|
|
|
35
|
|
||||
Payments/utilizations
|
(3
|
)
|
|
(8
|
)
|
|
(2
|
)
|
|
(13
|
)
|
||||
Balance at January 30, 2016
|
58
|
|
|
114
|
|
|
8
|
|
|
180
|
|
||||
Store closing costs
|
15
|
|
|
42
|
|
|
23
|
|
|
80
|
|
||||
Payments/utilizations
|
(36
|
)
|
|
(23
|
)
|
|
(23
|
)
|
|
(82
|
)
|
||||
Balance at October 29, 2016
|
$
|
37
|
|
|
$
|
133
|
|
|
$
|
8
|
|
|
$
|
178
|
|
|
13 Weeks Ended October 29, 2016
|
|
13 Weeks Ended October 31, 2015
|
||||||||||||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||||||||
Straight-line rent expense
|
$
|
7
|
|
|
$
|
37
|
|
|
$
|
44
|
|
|
$
|
9
|
|
|
$
|
41
|
|
|
$
|
50
|
|
Amortization of deferred gain on sale-leaseback
|
(4
|
)
|
|
(18
|
)
|
|
(22
|
)
|
|
(5
|
)
|
|
(18
|
)
|
|
(23
|
)
|
||||||
Rent expense
|
$
|
3
|
|
|
$
|
19
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
$
|
23
|
|
|
$
|
27
|
|
|
39 Weeks Ended October 29, 2016
|
|
39 Weeks Ended October 31, 2015
|
||||||||||||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||||||||
Straight-line rent expense
|
$
|
24
|
|
|
$
|
114
|
|
|
$
|
138
|
|
|
$
|
11
|
|
|
$
|
62
|
|
|
$
|
73
|
|
Amortization of deferred gain on sale-leaseback
|
(13
|
)
|
|
(53
|
)
|
|
(66
|
)
|
|
(6
|
)
|
|
(24
|
)
|
|
(30
|
)
|
||||||
Rent expense
|
$
|
11
|
|
|
$
|
61
|
|
|
$
|
72
|
|
|
$
|
5
|
|
|
$
|
38
|
|
|
$
|
43
|
|
|
2015
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Gain
|
$
|
154
|
|
|
$
|
471
|
|
|
$
|
625
|
|
Loss
|
(17
|
)
|
|
(100
|
)
|
|
(117
|
)
|
|||
Immediate Net Gain
|
$
|
137
|
|
|
$
|
371
|
|
|
$
|
508
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions, except earnings per share
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Basic weighted average shares
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
||||
Diluted weighted average shares
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net loss attributable to Holdings' shareholders
|
$
|
(748
|
)
|
|
$
|
(454
|
)
|
|
$
|
(1,614
|
)
|
|
$
|
(549
|
)
|
|
|
|
|
|
|
|
|
||||||||
Loss per share attributable to Holdings' shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
Diluted
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
Pension and postretirement adjustments (net of tax of $(296) for all periods presented)
|
$
|
(1,723
|
)
|
|
$
|
(1,832
|
)
|
|
$
|
(1,915
|
)
|
Currency translation adjustments (net of tax of $0 for all periods presented)
|
(3
|
)
|
|
(2
|
)
|
|
(3
|
)
|
|||
Accumulated other comprehensive loss
|
$
|
(1,726
|
)
|
|
$
|
(1,834
|
)
|
|
$
|
(1,918
|
)
|
|
13 Weeks Ended October 29, 2016
|
|
13 Weeks Ended October 31, 2015
|
||||||||||||||||||||
millions
|
Before
Tax Amount |
|
Tax
Expense |
|
Net of
Tax Amount |
|
Before
Tax Amount |
|
Tax Expense
|
|
Net of
Tax Amount |
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pension and postretirement adjustments
(1)
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
65
|
|
Total other comprehensive income
|
$
|
64
|
|
|
$
|
—
|
|
|
$
|
64
|
|
|
$
|
65
|
|
|
$
|
—
|
|
|
$
|
65
|
|
|
39 Weeks Ended October 29, 2016
|
|
39 Weeks Ended October 31, 2015
|
||||||||||||||||||||
millions
|
Before
Tax Amount |
|
Tax
Expense |
|
Net of
Tax Amount |
|
Before
Tax Amount |
|
Tax Expense
|
|
Net of
Tax Amount |
||||||||||||
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Pension and postretirement adjustments
(1)
|
$
|
192
|
|
|
$
|
—
|
|
|
$
|
192
|
|
|
$
|
196
|
|
|
$
|
—
|
|
|
$
|
196
|
|
Total other comprehensive income
|
$
|
192
|
|
|
$
|
—
|
|
|
$
|
192
|
|
|
$
|
196
|
|
|
$
|
—
|
|
|
$
|
196
|
|
(1)
|
Included in the computation of net periodic benefit expense. See Note 5 to the Condensed Consolidated Financial Statements.
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Components of net periodic expense:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
58
|
|
|
$
|
54
|
|
|
$
|
174
|
|
|
$
|
162
|
|
Expected return on plan assets
|
(51
|
)
|
|
(62
|
)
|
|
(152
|
)
|
|
(187
|
)
|
||||
Amortization of experience losses
|
64
|
|
|
65
|
|
|
192
|
|
|
196
|
|
||||
Net periodic expense
|
$
|
71
|
|
|
$
|
57
|
|
|
$
|
214
|
|
|
$
|
171
|
|
(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 October 29, 2016
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales and services
|
|
|
|
|
|
||||||
Hardlines
|
496
|
|
|
1,651
|
|
|
$
|
2,147
|
|
||
Apparel and Soft Home
|
639
|
|
|
539
|
|
|
1,178
|
|
|||
Food and Drug
|
735
|
|
|
1
|
|
|
736
|
|
|||
Service
|
2
|
|
|
533
|
|
|
535
|
|
|||
Other
|
16
|
|
|
417
|
|
|
433
|
|
|||
Total merchandise sales and services
|
1,888
|
|
|
3,141
|
|
|
5,029
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy
|
1,605
|
|
|
2,462
|
|
|
4,067
|
|
|||
Selling and administrative
|
555
|
|
|
988
|
|
|
1,543
|
|
|||
Depreciation and amortization
|
17
|
|
|
74
|
|
|
91
|
|
|||
Impairment charges
|
3
|
|
|
—
|
|
|
3
|
|
|||
Gain on sales of assets
|
(30
|
)
|
|
(21
|
)
|
|
(51
|
)
|
|||
Total costs and expenses
|
2,150
|
|
|
3,503
|
|
|
5,653
|
|
|||
Operating loss
|
$
|
(262
|
)
|
|
$
|
(362
|
)
|
|
$
|
(624
|
)
|
Total assets
|
$
|
2,857
|
|
|
$
|
8,008
|
|
|
$
|
10,865
|
|
Capital expenditures
|
$
|
11
|
|
|
$
|
29
|
|
|
$
|
40
|
|
|
13 Weeks Ended October 31, 2015
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales and services
|
|
|
|
|
|
||||||
Hardlines
|
$
|
620
|
|
|
$
|
1,832
|
|
|
$
|
2,452
|
|
Apparel and Soft Home
|
701
|
|
|
639
|
|
|
1,340
|
|
|||
Food and Drug
|
915
|
|
|
1
|
|
|
916
|
|
|||
Service
|
3
|
|
|
538
|
|
|
541
|
|
|||
Other
|
8
|
|
|
493
|
|
|
501
|
|
|||
Total merchandise sales and services
|
2,247
|
|
|
3,503
|
|
|
5,750
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy
|
1,774
|
|
|
2,714
|
|
|
4,488
|
|
|||
Selling and administrative
|
585
|
|
|
1,045
|
|
|
1,630
|
|
|||
Depreciation and amortization
|
17
|
|
|
77
|
|
|
94
|
|
|||
Impairment charges
|
10
|
|
|
7
|
|
|
17
|
|
|||
Gain on sales of assets
|
(12
|
)
|
|
(85
|
)
|
|
(97
|
)
|
|||
Total costs and expenses
|
2,374
|
|
|
3,758
|
|
|
6,132
|
|
|||
Operating income
|
$
|
(127
|
)
|
|
$
|
(255
|
)
|
|
$
|
(382
|
)
|
Total assets
|
$
|
3,650
|
|
|
$
|
9,106
|
|
|
$
|
12,756
|
|
Capital expenditures
|
$
|
10
|
|
|
$
|
56
|
|
|
$
|
66
|
|
|
39 Weeks Ended October 29, 2016
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales and services
|
|
|
|
|
|
||||||
Hardlines
|
$
|
1,722
|
|
|
$
|
5,228
|
|
|
$
|
6,950
|
|
Apparel and Soft Home
|
2,127
|
|
|
1,681
|
|
|
3,808
|
|
|||
Food and Drug
|
2,349
|
|
|
4
|
|
|
2,353
|
|
|||
Service
|
7
|
|
|
1,610
|
|
|
1,617
|
|
|||
Other
|
43
|
|
|
1,315
|
|
|
1,358
|
|
|||
Total merchandise sales and services
|
6,248
|
|
|
9,838
|
|
|
16,086
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy
|
5,100
|
|
|
7,587
|
|
|
12,687
|
|
|||
Selling and administrative
|
1,597
|
|
|
2,933
|
|
|
4,530
|
|
|||
Depreciation and amortization
|
51
|
|
|
227
|
|
|
278
|
|
|||
Impairment charges
|
7
|
|
|
11
|
|
|
18
|
|
|||
Gain on sales of assets
|
(120
|
)
|
|
(46
|
)
|
|
(166
|
)
|
|||
Total costs and expenses
|
6,635
|
|
|
10,712
|
|
|
17,347
|
|
|||
Operating loss
|
$
|
(387
|
)
|
|
$
|
(874
|
)
|
|
$
|
(1,261
|
)
|
Total assets
|
$
|
2,857
|
|
|
$
|
8,008
|
|
|
$
|
10,865
|
|
Capital expenditures
|
$
|
34
|
|
|
$
|
81
|
|
|
$
|
115
|
|
|
39 Weeks Ended October 31, 2015
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales and services
|
|
|
|
|
|
||||||
Hardlines
|
$
|
1,986
|
|
|
$
|
5,704
|
|
|
$
|
7,690
|
|
Apparel and Soft Home
|
2,274
|
|
|
1,917
|
|
|
4,191
|
|
|||
Food and Drug
|
2,749
|
|
|
5
|
|
|
2,754
|
|
|||
Service
|
10
|
|
|
1,619
|
|
|
1,629
|
|
|||
Other
|
43
|
|
|
1,536
|
|
|
1,579
|
|
|||
Total merchandise sales and services
|
7,062
|
|
|
10,781
|
|
|
17,843
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy
|
5,562
|
|
|
8,066
|
|
|
13,628
|
|
|||
Selling and administrative
|
1,802
|
|
|
3,203
|
|
|
5,005
|
|
|||
Depreciation and amortization
|
56
|
|
|
274
|
|
|
330
|
|
|||
Impairment charges
|
12
|
|
|
59
|
|
|
71
|
|
|||
Gain on sales of assets
|
(173
|
)
|
|
(557
|
)
|
|
(730
|
)
|
|||
Total costs and expenses
|
7,259
|
|
|
11,045
|
|
|
18,304
|
|
|||
Operating loss
|
$
|
(197
|
)
|
|
$
|
(264
|
)
|
|
$
|
(461
|
)
|
Total assets
|
$
|
3,650
|
|
|
$
|
9,106
|
|
|
$
|
12,756
|
|
Capital expenditures
|
$
|
21
|
|
|
$
|
131
|
|
|
$
|
152
|
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
Unearned revenues
|
$
|
669
|
|
|
$
|
703
|
|
|
$
|
694
|
|
Self-insurance reserves
|
574
|
|
|
604
|
|
|
567
|
|
|||
Other
|
473
|
|
|
504
|
|
|
470
|
|
|||
Total
|
$
|
1,716
|
|
|
$
|
1,811
|
|
|
$
|
1,731
|
|
•
|
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, human resources and information technology.
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
258
|
|
Intercompany receivables
|
—
|
|
|
—
|
|
|
27,564
|
|
|
(27,564
|
)
|
|
—
|
|
|||||
Accounts receivable
|
—
|
|
|
351
|
|
|
21
|
|
|
—
|
|
|
372
|
|
|||||
Merchandise inventories
|
—
|
|
|
5,032
|
|
|
—
|
|
|
—
|
|
|
5,032
|
|
|||||
Prepaid expenses and other current assets
|
114
|
|
|
505
|
|
|
246
|
|
|
(561
|
)
|
|
304
|
|
|||||
Total current assets
|
114
|
|
|
6,114
|
|
|
27,863
|
|
|
(28,125
|
)
|
|
5,966
|
|
|||||
Total property and equipment, net
|
—
|
|
|
1,638
|
|
|
754
|
|
|
—
|
|
|
2,392
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
362
|
|
|
1,909
|
|
|
(98
|
)
|
|
2,173
|
|
|||||
Other assets
|
—
|
|
|
235
|
|
|
1,594
|
|
|
(1,495
|
)
|
|
334
|
|
|||||
Investment in subsidiaries
|
9,751
|
|
|
27,194
|
|
|
—
|
|
|
(36,945
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
9,865
|
|
|
$
|
35,543
|
|
|
$
|
32,120
|
|
|
$
|
(66,663
|
)
|
|
$
|
10,865
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
618
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
618
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
594
|
|
|
—
|
|
|
—
|
|
|
594
|
|
|||||
Merchandise payables
|
—
|
|
|
1,556
|
|
|
—
|
|
|
—
|
|
|
1,556
|
|
|||||
Intercompany payables
|
12,431
|
|
|
15,133
|
|
|
—
|
|
|
(27,564
|
)
|
|
—
|
|
|||||
Other current liabilities
|
20
|
|
|
2,341
|
|
|
1,162
|
|
|
(561
|
)
|
|
2,962
|
|
|||||
Total current liabilities
|
12,451
|
|
|
20,242
|
|
|
1,162
|
|
|
(28,125
|
)
|
|
5,730
|
|
|||||
Long-term debt and capitalized lease obligations
|
718
|
|
|
3,770
|
|
|
—
|
|
|
(1,401
|
)
|
|
3,087
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
1,993
|
|
|
4
|
|
|
—
|
|
|
1,997
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
656
|
|
|
—
|
|
|
—
|
|
|
656
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||
Long-term deferred tax liabilities
|
58
|
|
|
15
|
|
|
774
|
|
|
43
|
|
|
890
|
|
|||||
Other long-term liabilities
|
—
|
|
|
826
|
|
|
1,107
|
|
|
(217
|
)
|
|
1,716
|
|
|||||
Total Liabilities
|
13,227
|
|
|
27,666
|
|
|
3,047
|
|
|
(29,700
|
)
|
|
14,240
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(3,362
|
)
|
|
7,877
|
|
|
29,073
|
|
|
(36,968
|
)
|
|
(3,380
|
)
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
5
|
|
|
5
|
|
|||||
Total Equity (Deficit)
|
(3,362
|
)
|
|
7,877
|
|
|
29,073
|
|
|
(36,963
|
)
|
|
(3,375
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
9,865
|
|
|
$
|
35,543
|
|
|
$
|
32,120
|
|
|
$
|
(66,663
|
)
|
|
$
|
10,865
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
256
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
294
|
|
Intercompany receivables
|
—
|
|
|
—
|
|
|
27,181
|
|
|
(27,181
|
)
|
|
—
|
|
|||||
Accounts receivable
|
9
|
|
|
441
|
|
|
25
|
|
|
—
|
|
|
475
|
|
|||||
Merchandise inventories
|
—
|
|
|
6,208
|
|
|
—
|
|
|
—
|
|
|
6,208
|
|
|||||
Prepaid expenses and other current assets
|
39
|
|
|
611
|
|
|
261
|
|
|
(669
|
)
|
|
242
|
|
|||||
Total current assets
|
48
|
|
|
7,516
|
|
|
27,505
|
|
|
(27,850
|
)
|
|
7,219
|
|
|||||
Total property and equipment, net
|
—
|
|
|
1,852
|
|
|
816
|
|
|
—
|
|
|
2,668
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
270
|
|
|
2,089
|
|
|
—
|
|
|
2,359
|
|
|||||
Other assets
|
—
|
|
|
268
|
|
|
2,129
|
|
|
(1,887
|
)
|
|
510
|
|
|||||
Investment in subsidiaries
|
11,328
|
|
|
25,701
|
|
|
—
|
|
|
(37,029
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
11,376
|
|
|
$
|
35,607
|
|
|
$
|
32,539
|
|
|
$
|
(66,766
|
)
|
|
$
|
12,756
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
686
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
686
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
69
|
|
|
2
|
|
|
—
|
|
|
71
|
|
|||||
Merchandise payables
|
—
|
|
|
2,295
|
|
|
—
|
|
|
—
|
|
|
2,295
|
|
|||||
Intercompany payables
|
11,987
|
|
|
15,194
|
|
|
—
|
|
|
(27,181
|
)
|
|
—
|
|
|||||
Other current liabilities
|
28
|
|
|
2,215
|
|
|
1,470
|
|
|
(669
|
)
|
|
3,044
|
|
|||||
Total current liabilities
|
12,015
|
|
|
20,459
|
|
|
1,472
|
|
|
(27,850
|
)
|
|
6,096
|
|
|||||
Long-term debt and capitalized lease obligations
|
675
|
|
|
3,051
|
|
|
39
|
|
|
(1,654
|
)
|
|
2,111
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
2,128
|
|
|
5
|
|
|
—
|
|
|
2,133
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
775
|
|
|
—
|
|
|
—
|
|
|
775
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||
Long-term deferred tax liabilities
|
59
|
|
|
2
|
|
|
968
|
|
|
(70
|
)
|
|
959
|
|
|||||
Other long-term liabilities
|
—
|
|
|
865
|
|
|
1,181
|
|
|
(235
|
)
|
|
1,811
|
|
|||||
Total Liabilities
|
12,749
|
|
|
27,444
|
|
|
3,665
|
|
|
(29,809
|
)
|
|
14,049
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(1,373
|
)
|
|
8,163
|
|
|
28,874
|
|
|
(36,964
|
)
|
|
(1,300
|
)
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|||||
Total Equity (Deficit)
|
(1,373
|
)
|
|
8,163
|
|
|
28,874
|
|
|
(36,957
|
)
|
|
(1,293
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
11,376
|
|
|
$
|
35,607
|
|
|
$
|
32,539
|
|
|
$
|
(66,766
|
)
|
|
$
|
12,756
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
200
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
238
|
|
Intercompany receivables
|
—
|
|
|
—
|
|
|
26,935
|
|
|
(26,935
|
)
|
|
—
|
|
|||||
Accounts receivable
|
7
|
|
|
383
|
|
|
29
|
|
|
—
|
|
|
419
|
|
|||||
Merchandise inventories
|
—
|
|
|
5,172
|
|
|
—
|
|
|
—
|
|
|
5,172
|
|
|||||
Prepaid expenses and other current assets
|
114
|
|
|
453
|
|
|
257
|
|
|
(608
|
)
|
|
216
|
|
|||||
Total current assets
|
121
|
|
|
6,208
|
|
|
27,259
|
|
|
(27,543
|
)
|
|
6,045
|
|
|||||
Total property and equipment, net
|
—
|
|
|
1,829
|
|
|
802
|
|
|
—
|
|
|
2,631
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
269
|
|
|
1,909
|
|
|
—
|
|
|
2,178
|
|
|||||
Other assets
|
—
|
|
|
265
|
|
|
1,910
|
|
|
(1,692
|
)
|
|
483
|
|
|||||
Investment in subsidiaries
|
10,419
|
|
|
26,616
|
|
|
—
|
|
|
(37,035
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
10,540
|
|
|
$
|
35,187
|
|
|
$
|
31,880
|
|
|
$
|
(66,270
|
)
|
|
$
|
11,337
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
797
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
797
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
70
|
|
|
1
|
|
|
—
|
|
|
71
|
|
|||||
Merchandise payables
|
—
|
|
|
1,574
|
|
|
—
|
|
|
—
|
|
|
1,574
|
|
|||||
Intercompany payables
|
11,892
|
|
|
15,043
|
|
|
—
|
|
|
(26,935
|
)
|
|
—
|
|
|||||
Other current liabilities
|
20
|
|
|
2,273
|
|
|
1,311
|
|
|
(608
|
)
|
|
2,996
|
|
|||||
Total current liabilities
|
11,912
|
|
|
19,757
|
|
|
1,312
|
|
|
(27,543
|
)
|
|
5,438
|
|
|||||
Long-term debt and capitalized lease obligations
|
685
|
|
|
2,998
|
|
|
1
|
|
|
(1,576
|
)
|
|
2,108
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
2,201
|
|
|
5
|
|
|
—
|
|
|
2,206
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
753
|
|
|
—
|
|
|
—
|
|
|
753
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
164
|
|
|
—
|
|
|
—
|
|
|
164
|
|
|||||
Long-term deferred tax liabilities
|
58
|
|
|
—
|
|
|
873
|
|
|
(38
|
)
|
|
893
|
|
|||||
Other long-term liabilities
|
—
|
|
|
832
|
|
|
1,128
|
|
|
(229
|
)
|
|
1,731
|
|
|||||
Total Liabilities
|
12,655
|
|
|
26,705
|
|
|
3,319
|
|
|
(29,386
|
)
|
|
13,293
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(2,115
|
)
|
|
8,482
|
|
|
28,561
|
|
|
(36,891
|
)
|
|
(1,963
|
)
|
|||||
Noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
7
|
|
|||||
Total Equity (Deficit)
|
(2,115
|
)
|
|
8,482
|
|
|
28,561
|
|
|
(36,884
|
)
|
|
(1,956
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
10,540
|
|
|
$
|
35,187
|
|
|
$
|
31,880
|
|
|
$
|
(66,270
|
)
|
|
$
|
11,337
|
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
5,045
|
|
|
$
|
714
|
|
|
$
|
(730
|
)
|
|
$
|
5,029
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
4,190
|
|
|
272
|
|
|
(395
|
)
|
|
4,067
|
|
|||||
Selling and administrative
|
|
1
|
|
|
1,628
|
|
|
249
|
|
|
(335
|
)
|
|
1,543
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
73
|
|
|
18
|
|
|
—
|
|
|
91
|
|
|||||
Impairment charges
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(51
|
)
|
|
—
|
|
|
—
|
|
|
(51
|
)
|
|||||
Total costs and expenses
|
|
1
|
|
|
5,843
|
|
|
539
|
|
|
(730
|
)
|
|
5,653
|
|
|||||
Operating income (loss)
|
|
(1
|
)
|
|
(798
|
)
|
|
175
|
|
|
—
|
|
|
(624
|
)
|
|||||
Interest expense
|
|
(99
|
)
|
|
(160
|
)
|
|
(3
|
)
|
|
157
|
|
|
(105
|
)
|
|||||
Interest and investment income (loss)
|
|
4
|
|
|
42
|
|
|
(15
|
)
|
|
(39
|
)
|
|
(8
|
)
|
|||||
Income (loss) before income taxes
|
|
(96
|
)
|
|
(916
|
)
|
|
157
|
|
|
118
|
|
|
(737
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
38
|
|
|
(8
|
)
|
|
(41
|
)
|
|
(11
|
)
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(729
|
)
|
|
146
|
|
|
—
|
|
|
583
|
|
|
—
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
(825
|
)
|
|
$
|
(732
|
)
|
|
$
|
149
|
|
|
$
|
660
|
|
|
$
|
(748
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
5,766
|
|
|
$
|
725
|
|
|
$
|
(741
|
)
|
|
$
|
5,750
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
4,616
|
|
|
291
|
|
|
(419
|
)
|
|
4,488
|
|
|||||
Selling and administrative
|
|
1
|
|
|
1,706
|
|
|
245
|
|
|
(322
|
)
|
|
1,630
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
76
|
|
|
18
|
|
|
—
|
|
|
94
|
|
|||||
Impairment charges
|
|
—
|
|
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(97
|
)
|
|
—
|
|
|
—
|
|
|
(97
|
)
|
|||||
Total costs and expenses
|
|
1
|
|
|
6,318
|
|
|
554
|
|
|
(741
|
)
|
|
6,132
|
|
|||||
Operating income (loss)
|
|
(1
|
)
|
|
(552
|
)
|
|
171
|
|
|
—
|
|
|
(382
|
)
|
|||||
Interest expense
|
|
(60
|
)
|
|
(117
|
)
|
|
(21
|
)
|
|
124
|
|
|
(74
|
)
|
|||||
Interest and investment income (loss)
|
|
(3
|
)
|
|
8
|
|
|
136
|
|
|
(124
|
)
|
|
17
|
|
|||||
Income (loss) before income taxes
|
|
(64
|
)
|
|
(661
|
)
|
|
286
|
|
|
—
|
|
|
(439
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
33
|
|
|
(47
|
)
|
|
—
|
|
|
(14
|
)
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(390
|
)
|
|
138
|
|
|
—
|
|
|
252
|
|
|
—
|
|
|||||
Net income (loss)
|
|
(454
|
)
|
|
(490
|
)
|
|
239
|
|
|
252
|
|
|
(453
|
)
|
|||||
Income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
(454
|
)
|
|
$
|
(490
|
)
|
|
$
|
238
|
|
|
$
|
252
|
|
|
$
|
(454
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
16,173
|
|
|
$
|
2,092
|
|
|
$
|
(2,179
|
)
|
|
$
|
16,086
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
13,052
|
|
|
784
|
|
|
(1,149
|
)
|
|
12,687
|
|
|||||
Selling and administrative
|
|
3
|
|
|
4,823
|
|
|
734
|
|
|
(1,030
|
)
|
|
4,530
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
224
|
|
|
54
|
|
|
—
|
|
|
278
|
|
|||||
Impairment charges
|
|
—
|
|
|
18
|
|
|
—
|
|
|
—
|
|
|
18
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(262
|
)
|
|
(2
|
)
|
|
98
|
|
|
(166
|
)
|
|||||
Total costs and expenses
|
|
3
|
|
|
17,855
|
|
|
1,570
|
|
|
(2,081
|
)
|
|
17,347
|
|
|||||
Operating income (loss)
|
|
(3
|
)
|
|
(1,682
|
)
|
|
522
|
|
|
(98
|
)
|
|
(1,261
|
)
|
|||||
Interest expense
|
|
(288
|
)
|
|
(464
|
)
|
|
(9
|
)
|
|
472
|
|
|
(289
|
)
|
|||||
Interest and investment income (loss)
|
|
15
|
|
|
118
|
|
|
196
|
|
|
(354
|
)
|
|
(25
|
)
|
|||||
Income (loss) before income taxes
|
|
(276
|
)
|
|
(2,028
|
)
|
|
709
|
|
|
20
|
|
|
(1,575
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
108
|
|
|
(106
|
)
|
|
(41
|
)
|
|
(39
|
)
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(1,317
|
)
|
|
432
|
|
|
—
|
|
|
885
|
|
|
—
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
(1,593
|
)
|
|
$
|
(1,488
|
)
|
|
$
|
603
|
|
|
$
|
864
|
|
|
$
|
(1,614
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales and services
|
|
$
|
—
|
|
|
$
|
17,954
|
|
|
$
|
2,160
|
|
|
$
|
(2,271
|
)
|
|
$
|
17,843
|
|
Cost of sales, buying and occupancy
|
|
—
|
|
|
13,997
|
|
|
838
|
|
|
(1,207
|
)
|
|
13,628
|
|
|||||
Selling and administrative
|
|
2
|
|
|
5,326
|
|
|
741
|
|
|
(1,064
|
)
|
|
5,005
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
276
|
|
|
54
|
|
|
—
|
|
|
330
|
|
|||||
Impairment charges
|
|
—
|
|
|
71
|
|
|
—
|
|
|
|
|
71
|
|
||||||
Gain on sales of assets
|
|
—
|
|
|
(722
|
)
|
|
(8
|
)
|
|
—
|
|
|
(730
|
)
|
|||||
Total costs and expenses
|
|
2
|
|
|
18,948
|
|
|
1,625
|
|
|
(2,271
|
)
|
|
18,304
|
|
|||||
Operating income (loss)
|
|
(2
|
)
|
|
(994
|
)
|
|
535
|
|
|
—
|
|
|
(461
|
)
|
|||||
Interest expense
|
|
(204
|
)
|
|
(355
|
)
|
|
(63
|
)
|
|
373
|
|
|
(249
|
)
|
|||||
Interest and investment income (loss)
|
|
(14
|
)
|
|
28
|
|
|
332
|
|
|
(373
|
)
|
|
(27
|
)
|
|||||
Income (loss) before income taxes
|
|
(220
|
)
|
|
(1,321
|
)
|
|
804
|
|
|
—
|
|
|
(737
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
332
|
|
|
(143
|
)
|
|
—
|
|
|
189
|
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(329
|
)
|
|
342
|
|
|
—
|
|
|
(13
|
)
|
|
—
|
|
|||||
Net income (loss)
|
|
(549
|
)
|
|
(647
|
)
|
|
661
|
|
|
(13
|
)
|
|
(548
|
)
|
|||||
Income attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
(549
|
)
|
|
$
|
(647
|
)
|
|
$
|
660
|
|
|
$
|
(13
|
)
|
|
$
|
(549
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(825
|
)
|
|
$
|
(732
|
)
|
|
$
|
149
|
|
|
$
|
660
|
|
|
$
|
(748
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
85
|
|
|
(85
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
64
|
|
|
85
|
|
|
(85
|
)
|
|
64
|
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
(825
|
)
|
|
$
|
(668
|
)
|
|
$
|
234
|
|
|
$
|
575
|
|
|
$
|
(684
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(454
|
)
|
|
$
|
(490
|
)
|
|
$
|
239
|
|
|
$
|
252
|
|
|
$
|
(453
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
27
|
|
|
(27
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
65
|
|
|
27
|
|
|
(27
|
)
|
|
65
|
|
|||||
Comprehensive income (loss)
|
|
(454
|
)
|
|
(425
|
)
|
|
266
|
|
|
225
|
|
|
(388
|
)
|
|||||
Comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
(454
|
)
|
|
$
|
(425
|
)
|
|
$
|
266
|
|
|
$
|
224
|
|
|
$
|
(389
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(1,593
|
)
|
|
$
|
(1,488
|
)
|
|
$
|
603
|
|
|
$
|
864
|
|
|
$
|
(1,614
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
192
|
|
|
—
|
|
|
—
|
|
|
192
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
148
|
|
|
(148
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
192
|
|
|
148
|
|
|
(148
|
)
|
|
192
|
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
(1,593
|
)
|
|
$
|
(1,296
|
)
|
|
$
|
751
|
|
|
$
|
716
|
|
|
$
|
(1,422
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(549
|
)
|
|
$
|
(647
|
)
|
|
$
|
661
|
|
|
$
|
(13
|
)
|
|
$
|
(548
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
196
|
|
|
—
|
|
|
—
|
|
|
196
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
11
|
|
|
(11
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
196
|
|
|
11
|
|
|
(11
|
)
|
|
196
|
|
|||||
Comprehensive income (loss)
|
|
(549
|
)
|
|
(451
|
)
|
|
672
|
|
|
(24
|
)
|
|
(352
|
)
|
|||||
Comprehensive loss attributable to noncontrolling interests
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1
|
)
|
|
(1
|
)
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
(549
|
)
|
|
$
|
(451
|
)
|
|
$
|
672
|
|
|
$
|
(25
|
)
|
|
$
|
(353
|
)
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
209
|
|
|
$
|
(1,883
|
)
|
|
$
|
482
|
|
|
$
|
(216
|
)
|
|
$
|
(1,408
|
)
|
Proceeds from sales of property and investments
|
|
|
|
161
|
|
|
113
|
|
|
|
|
|
274
|
|
|||||
Purchases of property and equipment
|
|
|
|
(108
|
)
|
|
(7
|
)
|
|
|
|
|
(115
|
)
|
|||||
Net investing with Affiliates
|
(209
|
)
|
|
—
|
|
|
(377
|
)
|
|
586
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
(209
|
)
|
|
53
|
|
|
(271
|
)
|
|
586
|
|
|
159
|
|
|||||
Proceeds from debt issuances
|
—
|
|
|
1,528
|
|
|
—
|
|
|
—
|
|
|
1,528
|
|
|||||
Repayments of long-term debt
|
—
|
|
|
(49
|
)
|
|
(1
|
)
|
|
—
|
|
|
(50
|
)
|
|||||
Decrease in short-term borrowings, primarily 90 days or less
|
—
|
|
|
(179
|
)
|
|
—
|
|
|
—
|
|
|
(179
|
)
|
|||||
Debt issuance costs
|
—
|
|
|
(30
|
)
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
|||||
Intercompany dividend
|
—
|
|
|
|
|
|
(216
|
)
|
|
216
|
|
|
—
|
|
|||||
Net borrowing with Affiliates
|
—
|
|
|
586
|
|
|
—
|
|
|
(586
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
—
|
|
|
1,856
|
|
|
(217
|
)
|
|
(370
|
)
|
|
1,269
|
|
|||||
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
26
|
|
|
(6
|
)
|
|
—
|
|
|
20
|
|
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
—
|
|
|
200
|
|
|
38
|
|
|
—
|
|
|
238
|
|
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
32
|
|
|
$
|
—
|
|
|
$
|
258
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
249
|
|
|
$
|
(2,691
|
)
|
|
$
|
642
|
|
|
$
|
(254
|
)
|
|
$
|
(2,054
|
)
|
Proceeds from sales of property and investments
|
—
|
|
|
2,703
|
|
|
5
|
|
|
—
|
|
|
2,708
|
|
|||||
Purchases of property and equipment
|
—
|
|
|
(146
|
)
|
|
(6
|
)
|
|
—
|
|
|
(152
|
)
|
|||||
Net investing with Affiliates
|
(249
|
)
|
|
—
|
|
|
(378
|
)
|
|
627
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
(249
|
)
|
|
2,557
|
|
|
(379
|
)
|
|
627
|
|
|
2,556
|
|
|||||
Repayments of long-term debt
|
—
|
|
|
(1,385
|
)
|
|
(2
|
)
|
|
—
|
|
|
(1,387
|
)
|
|||||
Increase in short-term borrowings, primarily 90 days or less
|
—
|
|
|
471
|
|
|
—
|
|
|
—
|
|
|
471
|
|
|||||
Proceeds from sale-leaseback financing
|
—
|
|
|
508
|
|
|
—
|
|
|
—
|
|
|
508
|
|
|||||
Debt issuance costs
|
—
|
|
|
(50
|
)
|
|
—
|
|
|
—
|
|
|
(50
|
)
|
|||||
Intercompany dividend
|
—
|
|
|
—
|
|
|
(254
|
)
|
|
254
|
|
|
—
|
|
|||||
Net borrowing with Affiliates
|
—
|
|
|
627
|
|
|
—
|
|
|
(627
|
)
|
|
—
|
|
|||||
Net cash provided by (used in) financing activities
|
—
|
|
|
171
|
|
|
(256
|
)
|
|
(373
|
)
|
|
(458
|
)
|
|||||
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
—
|
|
|
37
|
|
|
7
|
|
|
—
|
|
|
44
|
|
|||||
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR
|
—
|
|
|
219
|
|
|
31
|
|
|
—
|
|
|
250
|
|
|||||
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
$
|
—
|
|
|
$
|
256
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
294
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions, except per share data
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
REVENUES
|
|
|
|
|
|
|
|
||||||||
Merchandise sales and services
|
$
|
5,029
|
|
|
$
|
5,750
|
|
|
$
|
16,086
|
|
|
$
|
17,843
|
|
COSTS AND EXPENSES
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
|
4,067
|
|
|
4,488
|
|
|
12,687
|
|
|
13,628
|
|
||||
Gross margin dollars
|
962
|
|
|
1,262
|
|
|
3,399
|
|
|
4,215
|
|
||||
Gross margin rate
|
19.1
|
%
|
|
21.9
|
%
|
|
21.1
|
%
|
|
23.6
|
%
|
||||
Selling and administrative
|
1,543
|
|
|
1,630
|
|
|
4,530
|
|
|
5,005
|
|
||||
Selling and administrative expense as a percentage of total revenues
|
30.7
|
%
|
|
28.3
|
%
|
|
28.2
|
%
|
|
28.1
|
%
|
||||
Depreciation and amortization
|
91
|
|
|
94
|
|
|
278
|
|
|
330
|
|
||||
Impairment charges
|
3
|
|
|
17
|
|
|
18
|
|
|
71
|
|
||||
Gain on sales of assets
|
(51
|
)
|
|
(97
|
)
|
|
(166
|
)
|
|
(730
|
)
|
||||
Total costs and expenses
|
5,653
|
|
|
6,132
|
|
|
17,347
|
|
|
18,304
|
|
||||
Operating loss
|
(624
|
)
|
|
(382
|
)
|
|
(1,261
|
)
|
|
(461
|
)
|
||||
Interest expense
|
(105
|
)
|
|
(74
|
)
|
|
(289
|
)
|
|
(249
|
)
|
||||
Interest and investment income (loss)
|
(8
|
)
|
|
17
|
|
|
(25
|
)
|
|
(27
|
)
|
||||
Loss before income taxes
|
(737
|
)
|
|
(439
|
)
|
|
(1,575
|
)
|
|
(737
|
)
|
||||
Income tax (expense) benefit
|
(11
|
)
|
|
(14
|
)
|
|
(39
|
)
|
|
189
|
|
||||
Net loss
|
(748
|
)
|
|
(453
|
)
|
|
(1,614
|
)
|
|
(548
|
)
|
||||
Income attributable to noncontrolling interests
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(1
|
)
|
||||
NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(748
|
)
|
|
$
|
(454
|
)
|
|
$
|
(1,614
|
)
|
|
$
|
(549
|
)
|
NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
|
|
|
|
||||||||
Basic loss per share
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
Diluted loss per share
|
$
|
(6.99
|
)
|
|
$
|
(4.26
|
)
|
|
$
|
(15.10
|
)
|
|
$
|
(5.15
|
)
|
Basic weighted average common shares outstanding
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
||||
Diluted weighted average common shares outstanding
|
107.0
|
|
|
106.6
|
|
|
106.9
|
|
|
106.5
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Net loss attributable to Holdings per statement of operations
|
$
|
(748
|
)
|
|
$
|
(454
|
)
|
|
$
|
(1,614
|
)
|
|
$
|
(549
|
)
|
Income attributable to noncontrolling interests
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||
Income tax expense (benefit)
|
11
|
|
|
14
|
|
|
39
|
|
|
(189
|
)
|
||||
Interest expense
|
105
|
|
|
74
|
|
|
289
|
|
|
249
|
|
||||
Interest and investment (income) loss
|
8
|
|
|
(17
|
)
|
|
25
|
|
|
27
|
|
||||
Operating loss
|
(624
|
)
|
|
(382
|
)
|
|
(1,261
|
)
|
|
(461
|
)
|
||||
Depreciation and amortization
|
91
|
|
|
94
|
|
|
278
|
|
|
330
|
|
||||
Gain on sales of assets
|
(51
|
)
|
|
(97
|
)
|
|
(166
|
)
|
|
(730
|
)
|
||||
Before excluded items
|
(584
|
)
|
|
(385
|
)
|
|
(1,149
|
)
|
|
(861
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Closed store reserve and severance
|
113
|
|
|
(1
|
)
|
|
182
|
|
|
36
|
|
||||
Pension expense
|
72
|
|
|
58
|
|
|
216
|
|
|
172
|
|
||||
Other
(1)
|
43
|
|
|
2
|
|
|
52
|
|
|
(87
|
)
|
||||
Amortization of deferred Seritage gain
|
(22
|
)
|
|
(23
|
)
|
|
(66
|
)
|
|
(30
|
)
|
||||
Impairment charges
|
3
|
|
|
17
|
|
|
18
|
|
|
71
|
|
||||
Adjusted EBITDA
|
$
|
(375
|
)
|
|
$
|
(332
|
)
|
|
$
|
(747
|
)
|
|
$
|
(699
|
)
|
|
13 Weeks Ended
|
||||||||||||||||||
|
October 29, 2016
|
|
October 31, 2015
|
||||||||||||||||
millions
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
||||||||||||
Operating loss per statement of operations
|
$
|
(262
|
)
|
$
|
(362
|
)
|
$
|
(624
|
)
|
|
$
|
(127
|
)
|
$
|
(255
|
)
|
$
|
(382
|
)
|
Depreciation and amortization
|
17
|
|
74
|
|
91
|
|
|
17
|
|
77
|
|
94
|
|
||||||
Gain on sales of assets
|
(30
|
)
|
(21
|
)
|
(51
|
)
|
|
(12
|
)
|
(85
|
)
|
(97
|
)
|
||||||
Before excluded items
|
(275
|
)
|
(309
|
)
|
(584
|
)
|
|
(122
|
)
|
(263
|
)
|
(385
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Closed store reserve and severance
|
107
|
|
6
|
|
113
|
|
|
1
|
|
(2
|
)
|
(1
|
)
|
||||||
Pension expense
|
—
|
|
72
|
|
72
|
|
|
—
|
|
58
|
|
58
|
|
||||||
Other
(1)
|
—
|
|
43
|
|
43
|
|
|
1
|
|
1
|
|
2
|
|
||||||
Amortization of deferred Seritage gain
|
(4
|
)
|
(18
|
)
|
(22
|
)
|
|
(5
|
)
|
(18
|
)
|
(23
|
)
|
||||||
Impairment charges
|
3
|
|
—
|
|
3
|
|
|
10
|
|
7
|
|
17
|
|
||||||
Adjusted EBITDA
|
$
|
(169
|
)
|
$
|
(206
|
)
|
$
|
(375
|
)
|
|
$
|
(115
|
)
|
$
|
(217
|
)
|
$
|
(332
|
)
|
% to revenues
|
(9.0
|
)%
|
(6.6
|
)%
|
(7.5
|
)%
|
|
(5.1
|
)%
|
(6.2
|
)%
|
(5.8
|
)%
|
|
39 Weeks Ended
|
||||||||||||||||||
|
October 29, 2016
|
|
October 31, 2015
|
||||||||||||||||
millions
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
||||||||||||
Operating loss per statement of operations
|
$
|
(387
|
)
|
$
|
(874
|
)
|
$
|
(1,261
|
)
|
|
$
|
(197
|
)
|
$
|
(264
|
)
|
$
|
(461
|
)
|
Depreciation and amortization
|
51
|
|
227
|
|
278
|
|
|
56
|
|
274
|
|
330
|
|
||||||
Gain on sales of assets
|
(120
|
)
|
(46
|
)
|
(166
|
)
|
|
(173
|
)
|
(557
|
)
|
(730
|
)
|
||||||
Before excluded items
|
(456
|
)
|
(693
|
)
|
(1,149
|
)
|
|
(314
|
)
|
(547
|
)
|
(861
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Closed store reserve and severance
|
159
|
|
23
|
|
182
|
|
|
42
|
|
(6
|
)
|
36
|
|
||||||
Pension expense
|
—
|
|
216
|
|
216
|
|
|
—
|
|
172
|
|
172
|
|
||||||
Other
(1)
|
8
|
|
44
|
|
52
|
|
|
9
|
|
(96
|
)
|
(87
|
)
|
||||||
Amortization of deferred Seritage gain
|
(13
|
)
|
(53
|
)
|
(66
|
)
|
|
(6
|
)
|
(24
|
)
|
(30
|
)
|
||||||
Impairment charges
|
7
|
|
11
|
|
18
|
|
|
12
|
|
59
|
|
71
|
|
||||||
Adjusted EBITDA
|
$
|
(295
|
)
|
$
|
(452
|
)
|
$
|
(747
|
)
|
|
$
|
(257
|
)
|
$
|
(442
|
)
|
$
|
(699
|
)
|
% to revenues
|
(4.7
|
)%
|
(4.6
|
)%
|
(4.6
|
)%
|
|
(3.6
|
)%
|
(4.1
|
)%
|
(3.9
|
)%
|
|
13 Weeks Ended October 29, 2016
|
||||||||||||||||||||||||||
|
|
Adjustments
|
|||||||||||||||||||||||||
millions, except per share data
|
GAAP
|
Pension Expense
|
Closed Store Reserve, Store Impairments and Severance
|
Gain on Sales of Assets
|
Mark-to-Market Adjustments
|
Amortization of Deferred Seritage Gain
|
Other
(1)
|
Tax Matters
|
As
Adjusted |
||||||||||||||||||
Gross margin impact
|
$
|
962
|
|
$
|
—
|
|
$
|
38
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(22
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
978
|
|
Selling and administrative impact
|
1,543
|
|
(72
|
)
|
(75
|
)
|
—
|
|
—
|
|
—
|
|
(43
|
)
|
—
|
|
1,353
|
|
|||||||||
Depreciation and amortization impact
|
91
|
|
—
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
89
|
|
|||||||||
Impairment charges impact
|
3
|
|
—
|
|
(3
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Gain on sales of assets impact
|
(51
|
)
|
—
|
|
—
|
|
16
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(35
|
)
|
|||||||||
Operating loss impact
|
(624
|
)
|
72
|
|
118
|
|
(16
|
)
|
—
|
|
(22
|
)
|
43
|
|
—
|
|
(429
|
)
|
|||||||||
Interest and investment loss impact
|
(8
|
)
|
—
|
|
—
|
|
—
|
|
9
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||||
Income tax expense impact
|
(11
|
)
|
(27
|
)
|
(44
|
)
|
6
|
|
(3
|
)
|
8
|
|
(16
|
)
|
287
|
|
200
|
|
|||||||||
After tax and noncontrolling interests impact
|
(748
|
)
|
45
|
|
74
|
|
(10
|
)
|
6
|
|
(14
|
)
|
27
|
|
287
|
|
(333
|
)
|
|||||||||
Diluted loss per share impact
|
$
|
(6.99
|
)
|
$
|
0.42
|
|
$
|
0.69
|
|
$
|
(0.09
|
)
|
$
|
0.06
|
|
$
|
(0.13
|
)
|
$
|
0.25
|
|
$
|
2.68
|
|
$
|
(3.11
|
)
|
|
13 Weeks Ended October 31, 2015
|
||||||||||||||||||||||||||
|
|
Adjustments
|
|||||||||||||||||||||||||
millions, except per share data
|
GAAP
|
Pension
Expense |
Closed Store Reserve, Store Impairments and Severance
|
Gain on Sales of Assets
|
Mark-to-Market Adjustments
|
Amortization of Deferred Seritage Gain
|
Other
(1)
|
Tax Matters
|
As Adjusted
|
||||||||||||||||||
Gross margin impact
|
$
|
1,262
|
|
$
|
—
|
|
$
|
6
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(23
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
1,245
|
|
Selling and administrative impact
|
1,630
|
|
(58
|
)
|
7
|
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
—
|
|
1,577
|
|
|||||||||
Depreciation and amortization impact
|
94
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
94
|
|
|||||||||
Impairment charges impact
|
17
|
|
—
|
|
(17
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Gain on sales of assets impact
|
(97
|
)
|
—
|
|
—
|
|
83
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(14
|
)
|
|||||||||
Operating loss impact
|
(382
|
)
|
58
|
|
16
|
|
(83
|
)
|
—
|
|
(23
|
)
|
2
|
|
—
|
|
(412
|
)
|
|||||||||
Interest and investment income impact
|
17
|
|
—
|
|
—
|
|
—
|
|
(17
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Income tax expense impact
|
(14
|
)
|
(22
|
)
|
(6
|
)
|
31
|
|
6
|
|
9
|
|
(1
|
)
|
179
|
|
182
|
|
|||||||||
After tax and noncontrolling interests impact
|
(454
|
)
|
36
|
|
10
|
|
(52
|
)
|
(11
|
)
|
(14
|
)
|
1
|
|
179
|
|
(305
|
)
|
|||||||||
Diluted loss per share impact
|
$
|
(4.26
|
)
|
$
|
0.34
|
|
$
|
0.09
|
|
$
|
(0.49
|
)
|
$
|
(0.10
|
)
|
$
|
(0.13
|
)
|
$
|
0.01
|
|
$
|
1.68
|
|
$
|
(2.86
|
)
|
|
39 Weeks Ended October 29, 2016
|
||||||||||||||||||||||||||
|
|
Adjustments
|
|
||||||||||||||||||||||||
millions, except per share data
|
GAAP
|
Pension Expense
|
Closed Store Reserve, Store Impairments and Severance
|
Gain on Sales of Assets
|
Mark-to-Market Adjustments
|
Amortization of Deferred Seritage Gain
|
Other
(1)
|
Tax Matters
|
As
Adjusted |
||||||||||||||||||
Gross margin impact
|
$
|
3,399
|
|
$
|
—
|
|
$
|
102
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(66
|
)
|
$
|
—
|
|
$
|
—
|
|
$
|
3,435
|
|
Selling and administrative impact
|
4,530
|
|
(216
|
)
|
(80
|
)
|
—
|
|
—
|
|
—
|
|
(52
|
)
|
—
|
|
4,182
|
|
|||||||||
Depreciation and amortization impact
|
278
|
|
—
|
|
(7
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
271
|
|
|||||||||
Impairment charges
|
18
|
|
—
|
|
(18
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Gain on sales of assets impact
|
(166
|
)
|
—
|
|
—
|
|
63
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(103
|
)
|
|||||||||
Operating loss impact
|
(1,261
|
)
|
216
|
|
207
|
|
(63
|
)
|
—
|
|
(66
|
)
|
52
|
|
—
|
|
(915
|
)
|
|||||||||
Interest and investment loss impact
|
(25
|
)
|
—
|
|
—
|
|
—
|
|
29
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||||||
Income tax expense impact
|
(39
|
)
|
(81
|
)
|
(78
|
)
|
24
|
|
(11
|
)
|
25
|
|
(20
|
)
|
630
|
|
450
|
|
|||||||||
After tax and noncontrolling interests impact
|
(1,614
|
)
|
135
|
|
129
|
|
(39
|
)
|
18
|
|
(41
|
)
|
32
|
|
630
|
|
(750
|
)
|
|||||||||
Diluted loss per share impact
|
$
|
(15.10
|
)
|
$
|
1.26
|
|
$
|
1.21
|
|
$
|
(0.36
|
)
|
$
|
0.17
|
|
$
|
(0.39
|
)
|
$
|
0.30
|
|
$
|
5.89
|
|
$
|
(7.02
|
)
|
|
39 Weeks Ended October 31, 2015
|
||||||||||||||||||||||||||
.
|
|
Adjustments
|
|
||||||||||||||||||||||||
millions, except per share data
|
GAAP
|
Pension
Expense |
Closed Store Reserve, Store Impairments and Severance
|
Gain on Sales of Assets
|
Mark-to-Market Adjustments
|
Amortization of Deferred Seritage Gain
|
Other
(1)
|
Tax Matters
|
As Adjusted
|
||||||||||||||||||
Gross margin impact
|
$
|
4,215
|
|
$
|
—
|
|
$
|
17
|
|
$
|
—
|
|
$
|
—
|
|
$
|
(30
|
)
|
$
|
(126
|
)
|
$
|
—
|
|
$
|
4,076
|
|
Selling and administrative impact
|
5,005
|
|
(172
|
)
|
(19
|
)
|
—
|
|
—
|
|
—
|
|
(39
|
)
|
—
|
|
4,775
|
|
|||||||||
Depreciation and amortization impact
|
330
|
|
—
|
|
(2
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
328
|
|
|||||||||
Impairment charges impact
|
71
|
|
—
|
|
(71
|
)
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||||
Gain on sales of assets impact
|
(730
|
)
|
—
|
|
—
|
|
687
|
|
—
|
|
—
|
|
—
|
|
—
|
|
(43
|
)
|
|||||||||
Operating loss impact
|
(461
|
)
|
172
|
|
109
|
|
(687
|
)
|
—
|
|
(30
|
)
|
(87
|
)
|
—
|
|
(984
|
)
|
|||||||||
Interest and investment loss impact
|
(27
|
)
|
—
|
|
—
|
|
—
|
|
25
|
|
—
|
|
—
|
|
—
|
|
(2
|
)
|
|||||||||
Income tax benefit impact
|
189
|
|
(65
|
)
|
(41
|
)
|
258
|
|
(9
|
)
|
11
|
|
33
|
|
87
|
|
463
|
|
|||||||||
After tax and noncontrolling interests impact
|
(549
|
)
|
107
|
|
68
|
|
(429
|
)
|
16
|
|
(19
|
)
|
(54
|
)
|
87
|
|
(773
|
)
|
|||||||||
Diluted loss per share impact
|
$
|
(5.15
|
)
|
$
|
1.00
|
|
$
|
0.64
|
|
$
|
(4.03
|
)
|
$
|
0.15
|
|
$
|
(0.18
|
)
|
$
|
(0.51
|
)
|
$
|
0.82
|
|
$
|
(7.26
|
)
|
•
|
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. 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.
|
•
|
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, and the resulting abnormally low interest rates, which continue to persist, our domestic pension expense was $229 million in 2015, $89 million in 2014 and $162 million in 2013. Pension expense is comprised of interest cost, expected return on plan assets and recognized net loss and other. 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 (loss).
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Components of net periodic expense:
|
|
|
|
|
|
|
|
||||||||
Interest cost
|
$
|
57
|
|
|
$
|
53
|
|
|
$
|
171
|
|
|
$
|
158
|
|
Expected return on plan assets
|
(51
|
)
|
|
(62
|
)
|
|
(152
|
)
|
|
(187
|
)
|
||||
Recognized net loss and other
|
66
|
|
|
67
|
|
|
197
|
|
|
201
|
|
||||
Net periodic expense
|
$
|
72
|
|
|
$
|
58
|
|
|
$
|
216
|
|
|
$
|
172
|
|
•
|
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.
|
•
|
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 and indefinite-lived intangible asset balances.
|
•
|
Gains on sales of assets – We have recorded significant gains on sales of assets, as well as gains on sales of joint venture interests, which were primarily attributable to several real estate transactions, including gains recognized due to recaptures by Seritage and the JVs. Management considers these gains on sale of assets to result from investing decisions rather than ongoing operations.
|
•
|
Mark-to-market adjustments – We elected the fair value option for the equity method investment in Sears Canada, and the change in fair value is recorded in interest and investment income on the Condensed Consolidated Statement of Operations. Management considers activity related to our retained investment in Sears Canada to result from investing decisions rather than ongoing operations. Furthermore, we do not consider the short term fluctuations in Sears Canada's stock price useful in assessing our operating performance.
|
•
|
Amortization of deferred Seritage gain – A portion of the gain on the Seritage transaction was deferred and will be recognized in proportion to the related rent expense, which is a component of cost of sales, buying and occupancy, on the Condensed Consolidated Statement of Operations, over the lease term. Management considers the amortization of the deferred Seritage gain to result from investing decisions rather than ongoing operations.
|
•
|
Other – consists of one-time credits from vendors, transaction costs associated with strategic initiatives, expenses associated with legal matters and other expenses.
|
•
|
Domestic tax matters – In 2011, 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
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions, except number of stores
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Merchandise sales and services
|
$
|
1,888
|
|
|
$
|
2,247
|
|
|
$
|
6,248
|
|
|
$
|
7,062
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
|
1,605
|
|
|
1,774
|
|
|
5,100
|
|
|
5,562
|
|
||||
Gross margin dollars
|
283
|
|
|
473
|
|
|
1,148
|
|
|
1,500
|
|
||||
Gross margin rate
|
15.0
|
%
|
|
21.1
|
%
|
|
18.4
|
%
|
|
21.2
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative
|
555
|
|
|
585
|
|
|
1,597
|
|
|
1,802
|
|
||||
Selling and administrative expense as a percentage of total revenues
|
29.4
|
%
|
|
26.0
|
%
|
|
25.6
|
%
|
|
25.5
|
%
|
||||
Depreciation and amortization
|
17
|
|
|
17
|
|
|
51
|
|
|
56
|
|
||||
Impairment charges
|
3
|
|
|
10
|
|
|
7
|
|
|
12
|
|
||||
Gain on sales of assets
|
(30
|
)
|
|
(12
|
)
|
|
(120
|
)
|
|
(173
|
)
|
||||
Total costs and expenses
|
2,150
|
|
|
2,374
|
|
|
6,635
|
|
|
7,259
|
|
||||
Operating loss
|
$
|
(262
|
)
|
|
$
|
(127
|
)
|
|
$
|
(387
|
)
|
|
$
|
(197
|
)
|
Adjusted EBITDA
|
$
|
(169
|
)
|
|
$
|
(115
|
)
|
|
$
|
(295
|
)
|
|
$
|
(257
|
)
|
Number of stores
|
|
|
|
|
801
|
|
|
952
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions, except number of stores
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Merchandise sales and services
|
$
|
3,141
|
|
|
$
|
3,503
|
|
|
$
|
9,838
|
|
|
$
|
10,781
|
|
|
|
|
|
|
|
|
|
||||||||
Cost of sales, buying and occupancy
|
2,462
|
|
|
2,714
|
|
|
7,587
|
|
|
8,066
|
|
||||
Gross margin dollars
|
679
|
|
|
789
|
|
|
2,251
|
|
|
2,715
|
|
||||
Gross margin rate
|
21.6
|
%
|
|
22.5
|
%
|
|
22.9
|
%
|
|
25.2
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Selling and administrative
|
988
|
|
|
1,045
|
|
|
2,933
|
|
|
3,203
|
|
||||
Selling and administrative expense as a percentage of total revenues
|
31.5
|
%
|
|
29.8
|
%
|
|
29.8
|
%
|
|
29.7
|
%
|
||||
Depreciation and amortization
|
74
|
|
|
77
|
|
|
227
|
|
|
274
|
|
||||
Impairment charges
|
—
|
|
|
7
|
|
|
11
|
|
|
59
|
|
||||
Gain on sales of assets
|
(21
|
)
|
|
(85
|
)
|
|
(46
|
)
|
|
(557
|
)
|
||||
Total costs and expenses
|
3,503
|
|
|
3,758
|
|
|
10,712
|
|
|
11,045
|
|
||||
Operating loss
|
$
|
(362
|
)
|
|
$
|
(255
|
)
|
|
$
|
(874
|
)
|
|
$
|
(264
|
)
|
Adjusted EBITDA
|
$
|
(206
|
)
|
|
$
|
(217
|
)
|
|
$
|
(452
|
)
|
|
$
|
(442
|
)
|
Number of:
|
|
|
|
|
|
|
|
||||||||
Full-line stores
|
|
|
|
|
676
|
|
|
708
|
|
||||||
Specialty stores
|
|
|
|
|
26
|
|
|
27
|
|
||||||
Total Sears Domestic Stores
|
|
|
|
|
702
|
|
|
735
|
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
Cash and equivalents
|
$
|
145
|
|
|
$
|
159
|
|
|
$
|
141
|
|
Cash posted as collateral
|
3
|
|
|
1
|
|
|
2
|
|
|||
Credit card deposits in transit
|
110
|
|
|
134
|
|
|
95
|
|
|||
Total cash balances
|
$
|
258
|
|
|
$
|
294
|
|
|
$
|
238
|
|
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
January 30,
2016 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
248
|
|
|
$
|
9
|
|
|
$
|
—
|
|
Secured borrowings
|
370
|
|
|
677
|
|
|
797
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
3,517
|
|
|
1,976
|
|
|
1,984
|
|
|||
Capitalized lease obligations
|
164
|
|
|
206
|
|
|
195
|
|
|||
Total borrowings
|
$
|
4,299
|
|
|
$
|
2,868
|
|
|
$
|
2,976
|
|
|
13 Weeks Ended
|
|
39 Weeks Ended
|
||||||||||||
millions
|
October 29,
2016 |
|
October 31,
2015 |
|
October 29,
2016 |
|
October 31,
2015 |
||||||||
Secured borrowings:
|
|
|
|
|
|
|
|
||||||||
Maximum daily amount outstanding during the period
|
$
|
370
|
|
|
$
|
677
|
|
|
$
|
1,150
|
|
|
$
|
799
|
|
Average amount outstanding during the period
|
159
|
|
|
135
|
|
|
362
|
|
|
367
|
|
||||
Amount outstanding at period-end
|
370
|
|
|
677
|
|
|
370
|
|
|
677
|
|
||||
Weighted average interest rate
|
5.0
|
%
|
|
3.5
|
%
|
|
4.5
|
%
|
|
3.0
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Unsecured commercial paper:
|
|
|
|
|
|
|
|
||||||||
Maximum daily amount outstanding during the period
|
$
|
250
|
|
|
$
|
9
|
|
|
$
|
250
|
|
|
$
|
104
|
|
Average amount outstanding during the period
|
152
|
|
|
5
|
|
|
93
|
|
|
18
|
|
||||
Amount outstanding at period-end
|
248
|
|
|
9
|
|
|
248
|
|
|
9
|
|
||||
Weighted average interest rate
|
7.8
|
%
|
|
4.3
|
%
|
|
7.8
|
%
|
|
4.1
|
%
|
||||
|
|
|
|
|
|
|
|
||||||||
Secured short-term loan:
|
|
|
|
|
|
|
|
||||||||
Maximum daily amount outstanding during the period
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
400
|
|
Average amount outstanding during the period
|
—
|
|
|
—
|
|
|
—
|
|
|
112
|
|
||||
Amount outstanding at period-end
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Weighted average interest rate
|
—
|
%
|
|
—
|
%
|
|
—
|
%
|
|
5.0
|
%
|
|
Total Number of Shares Purchased
|
|
Average Price Paid per Share
|
|
Total Number of Shares Purchased as Part of Publicly Announced Program
(1)
|
|
Average Price Paid per Share for Publicly Announced Program
|
|
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
|
||||||||
July 31, 2016 to August 27, 2016
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
|
||
August 28, 2016 to October 1, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
October 2, 2016 to October 29, 2016
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
||||
Total
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
503,907,832
|
|
(1)
|
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.
|
(b)
|
Exhibits
|
|
S
EARS
H
OLDINGS
C
ORPORATION
|
|
|
|
|
Date: December 8, 2016
|
By:
|
/s/
R
OBERT
A. R
IECKER
|
|
Name:
|
Robert A. Riecker
|
|
Title:
|
Controller and Head of Capital Market Activities*
|
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)).
|
|
|
|
|
|
3.2
|
|
|
|
Amended and Restated By-Laws (incorporated by reference to Exhibit 3.2 to Registrant's Current Report on Form 8-K, dated January 22, 2014, filed on January 24, 2014 (File No. 000-51217)).
|
|
|
|
|
|
10.1
|
|
|
|
Second Lien Credit Agreement, dated as of September 1, 2016, between Sears Holdings Corporation, Sears Roebuck Acceptance Corp. and Kmart Corporation, the lenders party thereto, and JPP, LLC, as administrative agent and collateral administrator (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K, dated September 1, 2016, filed on September 2, 2016 (File No. 001-36693)).
|
|
|
|
|
|
10.2
|
|
|
|
First Amendment to Security Agreement, dated as of September 1, 2016, between Sears Holdings Corporation, the other Grantors party thereto and Wilmington Trust, National Association, as collateral agent (incorporated by reference to Exhibit 10.2 to Registrant's Current Report on Form 8-K, dated September 1, 2016, filed on September 2, 2016 (File No. 001-36693)).
|
|
|
|
|
|
10.3
|
|
|
|
Amended and Restated Intercreditor Agreement, dated as of September 1, 2016, by and among Bank of America, N.A. and Wells Fargo Bank, National Association as ABL Agents, and Wilmington Trust, National Association, as trustee (incorporated by reference to Exhibit 10.3 to Registrant’s Current Report on Form 8-K, dated September 1, 2016, filed on September 2, 2016 (File No. 001-36693)).
|
|
|
|
|
|
*10.4
|
|
|
|
Letter from Registrant to Jason M. Hollar, dated as of September 18, 2014
|
|
|
|
|
|
10.5
|
|
|
|
Letter from Registrant to Jason M. Hollar, dated as of October 13, 2016 (incorporated by reference to Exhibit 10.1 to Registrant's Current Report on Form 8-K, dated October 13, 2016, filed on October 14, 2016 (File No. 001-36693)).
|
|
|
|
|
|
31.1
|
|
|
|
Certifications of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
31.2
|
|
|
|
Certifications of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.1
|
|
|
|
Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
32.2
|
|
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
|
|
|
|
101
|
|
|
|
The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended October 29, 2016, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Statements of Operations (Unaudited) for the 13 and 39 weeks ended October 29, 2016 and October 31, 2015; (ii) the Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the 13 and 39 weeks ended October 29, 2016 and October 31, 2015; (iii) the Condensed Consolidated Balance Sheets (Unaudited) as of October 29, 2016, October 31, 2015 and January 30, 2016; (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited) for the 39 weeks ended October 29, 2016 and October 31, 2015; (v) the Condensed Consolidated Statements of Deficit (Unaudited) for the 39 weeks ended October 29, 2016 and October 31, 2015; and (vi) the Notes to the Condensed Consolidated Financial Statements (Unaudited).
|
•
|
Annual base salary at a rate of $600,000.
|
•
|
You will receive a one-time sign-on bonus of $750,000 (gross). This sign-on bonus will be payable within thirty (30) days following your start date. In the event you voluntarily terminate your employment with SHC or are terminated by SHC for misconduct or integrity issues within twenty-four (24) months of your start date, you will be required to repay the full amount of the payment paid to you, including any taxes withheld, unless prohibited by law, to SHC within thirty (30) days of your last day worked.
|
•
|
Participation in the Sears Holdings Corporation Annual Incentive Plan (“AIP”) with an annual target incentive opportunity of 100% of your base salary. Your target incentive under the 2014 AIP will be prorated from your start date through January 31, 2015, the last day of SHC’s 2014 fiscal year. Any incentive payable with respect to a fiscal year will be paid by April 15th of the following fiscal year, provided that you are actively employed at the payment date. Further details regarding your 2014 AIP target award will be provided to you following your start date.
|
•
|
You will be eligible to receive a Special Incentive Award with respect to each of SHC’s 2014, 2015 and 2016 fiscal years, payable by April 15th of the fiscal year following the applicable fiscal year, provided that you are actively employed at the applicable payment date, subject to the following terms:
|
•
|
Fiscal Year 2014 – 100% of your target under the 2014 AIP, subject to reduction by any amount payable to you under the 2014 AIP;
|
•
|
Fiscal Year 2015 – 50% of your target under the 2015 AIP, subject to reduction by any amount payable to you under the 2015 AIP; and
|
•
|
Fiscal Year 2016 – 50% of your target under the 2016 AIP, subject to reduction by any amount payable to you under the 2016 AIP.
|
•
|
Participation in the SHC long-term incentive program (“LTI”). Your target incentive opportunity under the 2014 SHC LTI will be 100% of your base salary. Your participation in the 2014 LTI will be prorated from your start date through January 28, 2017, the last day of SHC’s 2016 fiscal year. Further details regarding your 2014 SHC LTI target award will be provided to you following your start date.
|
•
|
An additional long-term incentive award of $1,000,000 (gross) (“Special LTI Award”). This award will be payable on a graded basis, with one-third of the Special LTI Award being payable as of each of the first three (3) anniversaries of your start date. Payment will be made as soon as administratively feasible following the forgoing anniversary dates and not later than the fifteenth (15th) day of the third (3rd) month following each such date, in all events, provided you are actively employed on the applicable anniversary. Notwithstanding the above, you will receive any unpaid scheduled payment above if you are terminated by SHC (other than for misconduct or integrity issues) before the relevant anniversary date; any such payment will be paid as a one-time lump sum within thirty (30) days following your last day worked. Further, in the event you are terminated by SHC for misconduct or integrity issues within twelve (12) months following a payment date, you will be required to repay any such payment to SHC within thirty (30) days of your last day worked.
|
•
|
You represent and warrant to SHC that (a) as of your start date with SHC, you are not subject to any obligation, written or oral, containing any non-competition provision or any other restriction (including, without limitation, any confidentiality provision) that would result in any restriction on your ability to accept and perform this or any other position with SHC or any of its affiliates and (b) you are not (i) a member of any board of directors, board of trustees or similar governing body of any for-profit, non-profit or not-for-profit entity, or (ii) a party to any agreement, written or oral, with any entity under which you would receive remuneration for your services, except as disclosed to and approved by SHC in advance of your start date. You agree that you will not (A) become a member of any board or body described in clause (b)(i) of the preceding sentence or (B) become a party to any agreement described in clause (b)(ii) of the preceding sentence, in each case without the prior written consent of SHC, such consent not to be unreasonably withheld. Further, you agree you will not disclose or use, in violation of an obligation of confidentiality, any information that you acquired as a result of any previous employment or otherwise.
|
•
|
You will be required to sign an Executive Severance Agreement (“Agreement”). The terms are generally as follows: If your employment is terminated by SHC (other than for Cause, death or Disability) or by you for Good Reason (as such capitalized terms are defined in the Agreement), you will receive twelve (12) months of salary continuation, equal to your base salary at the time of termination, subject to mitigation. Under the Agreement, you agree, among other things, not to disclose confidential information and for twelve (12) months following termination of employment not to solicit employees. You also agree not to aid, assist or render services for any “Sears Competitor” or “Sears Vendor” (as such terms are defined in the Agreement) for twelve (12) months following termination of employment. The non-disclosure, non-solicitation, non-compete and non-affiliation provisions apply regardless of whether you receive severance benefits under this Agreement. This offer is contingent upon you signing the Agreement. Upon signing the Agreement, you agree that the consideration you are receiving for doing so includes not only your employment with SHC but also the other compensation and benefits you will be receiving (or are eligible to receive) from SHC as outlined herein and which you would not have been offered or received (or have been eligible to receive) without your signing the Agreement.
|
•
|
You will be eligible for relocation assistance in accordance with company’s standard
relocation policy. To receive relocation assistance, you must sign a Relocation Repayment Agreement which will be
|
•
|
Home sale assistance and moving and storage of household goods (includes shipment of up to two ( 2) automobiles); and
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•
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A relocation lump sum in the amount of $45,000 (net) to assist with your move to the new work location. The relocation vendor will process 50% of that amount no earlier than 30 days prior to your start date, upon receipt of your fully executed repayment agreement and banking instructions. The remaining 50% of the relocation lump sum will be paid by the relocation vendor upon (1) delivery of your household goods to within 50 miles of the new work location, (2) purchase a home within 50 miles of the new work location, or (3) sell your home in the departure location in conjunction with signing a long-term lease (at least one year) within 50 miles of the new work location.
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•
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You will be covered under and subject to the terms and conditions of the Non-Accrual Vacation Policy.
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•
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You will be eligible to participate in all retirement, health and welfare programs on a basis no less favorable than other executives at your level, in accordance with the applicable terms, conditions and availability of those programs.
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•
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This offer also is contingent upon satisfactory completion of a background reference check, employment authorization verification and pre-employment drug test.
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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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|
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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, as amended; 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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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, as amended; 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/ Jason M. Hollar
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Jason M. Hollar
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Chief Financial Officer
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