SEARS HOLDINGS CORP

CIK:0001310067|SEC Filings

Condensed Consolidated Statements of Operations - USD ($)
shares in Millions, $ in Millions

3 Months Ended

9 Months Ended

Nov. 03, 2018

Aug. 04, 2018

May 05, 2018

Oct. 28, 2017

Jul. 29, 2017

Apr. 29, 2017

Nov. 03, 2018

Oct. 28, 2017

REVENUES

Revenues

$ 2,742

$ 3,575

$ 8,815

$ 12,052

COSTS AND EXPENSES

Cost of sales, buying and occupancy

2,315

2,871

7,081

9,445

Selling and administrative

856

1,091

2,626

3,435

Depreciation and amortization

198

259

Impairment charges

236

327

Gain on sales of assets

(76)

(316)

(344)

(1,437)

Total costs and expenses

3,396

3,744

9,888

11,731

Operating income (loss)

(654)

(169)

(1,073)

321

Reorganization items, net

(131)

Interest expense

(178)

(136)

(532)

(387)

Interest and investment income (loss)

(14)

Other loss

(37)

(248)

(209)

(540)

Income (loss) before income taxes

(990)

(553)

(1,932)

(620)

Income tax (expense) benefit

(3)

NET LOSS ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS

$ (950)

$ (508)

$ (424)

$ (556)

$ (250)

$ 245

$ (1,882)

$ (561)

NET LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS

Basic loss per share (in USD per share)

$ (8.72)

$ (5.17)

$ (17.35)

$ (5.23)

Diluted loss per share (in USD per share)

$ (8.72)

$ (5.17)

$ (17.35)

$ (5.23)

Basic weighted average common shares outstanding (in shares)

109.0

107.5

108.5

107.3

Diluted weighted average common shares outstanding (in shares)

109.0

107.5

108.5

107.3

Merchandise sales

REVENUES

Revenues

$ 2,069

$ 2,810

$ 6,709

$ 9,553

COSTS AND EXPENSES

Cost of sales, buying and occupancy

^[1]

1,945

2,448

5,899

8,042

Services and other

REVENUES

Revenues

^[2],[3]

673

765

2,106

2,499

COSTS AND EXPENSES

Cost of sales, buying and occupancy

^[2]

$ 370

$ 423

$ 1,182

$ 1,403

[1]	Includes rent expense (consisting of straight-line rent expense offset by amortization of a deferred gain on sale-leaseback) of $11 million and $17 million for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively, and $38 million and $55 million for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively, pursuant to the master lease with Seritage Growth Properties ("Seritage"). Also includes installment expenses of $8 million and $10 million for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively, and $26 million and $34 million for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively, pursuant to the master leases with Seritage.
[2]	Includes merchandise sales to Sears Hometown and Outlet Stores, Inc. ("SHO") of $157 million and $209 million for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively, and $538 million and $720 million for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. Pursuant to the terms of the separation, merchandise is sold to SHO at cost.
[3]	Includes revenue from Lands' End, Inc. ("Lands' End") for retail services and rent for Lands' End Shops at owned Sears locations, participation in the Shop Your Way® program and corporate shared services of $8 million and $12 million for the 13 weeks ended November 3, 2018 and October 28, 2017, respectively, and $24 million and $36 million for the 39 weeks ended November 3, 2018 and October 28, 2017, respectively.

Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Millions

9 Months Ended

Nov. 03, 2018

Oct. 28, 2017

CASH FLOWS FROM OPERATING ACTIVITIES

Net loss

$ (1,882)

$ (561)

Adjustments to reconcile net loss to net cash used in operating activities:

Deferred tax valuation allowance

(11)

(120)

Tax benefit resulting from Other Comprehensive Income allocation

(27)

Depreciation and amortization

198

259

Reorganization items, net

^[1]

127

Impairment charges

327

Gain on sales of assets

(344)

(1,437)

Pension and postretirement plan contributions

(345)

(271)

Pension plan settlements

120

403

Payment for insurance transaction

(208)

Proceeds from Citibank amendment

425

Mark-to-market adjustments of financial instruments

Amortization of deferred gain on sale-leaseback

(50)

(59)

Amortization of debt issuance costs and accretion of debt discount

Non-cash PIK interest

Other

(8)

(36)

Change in operating assets and liabilities (net of acquisitions and dispositions):

Deferred income taxes

(33)

Merchandise inventories

474

490

Merchandise payables

185

(276)

Income and other taxes

(53)

(30)

Other operating assets

(13)

Other operating liabilities

(153)

(413)

Net cash used in operating activities

(1,123)

(1,901)

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sales of property and investments

402

867

Proceeds from Craftsman Sale

572

Proceeds from sales of receivables

^[2]

293

Purchases of property and equipment

(45)

(59)

Net cash provided by investing activities

357

1,673

CASH FLOWS FROM FINANCING ACTIVITIES

Increase in debtor-in-possession credit facility

112

Debtor-in-possession credit facility debt issuance costs

(10)

Proceeds from debt issuances

^[3]

1,423

638

Repayments of debt

^[4]

(1,024)

(887)

Increase in short-term borrowings, primarily 90 days or less

565

464

Proceeds from sale-leaseback financing

206

106

Debt issuance costs

^[5]

(35)

(25)

Net cash provided by (used in) financing activities

1,237

296

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

471

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF YEAR

336

286

CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD

807

354

Supplemental Cash Flow Data:

Income taxes paid, net of refunds

Cash interest paid

^[6]

314

285

Unpaid liability to acquire equipment and software

PIK interest included within other operating liabilities

$ 14

$ 0

[1]	Reorganization items, net includes cash flows from financing activities of $10 million for debtor-in-possession credit facility debt issuance costs.
[2]	Proceeds in 2017 include $63 million from JPP, LLC and JPP II, LLC, entities affiliated with ESL (as defined in Note 1), for the sale of receivables.
[3]	Proceeds in 2018 include $928 million from related parties in connection with the Consolidated Secured Loan Facility, FILO Loan, Mezzanine Loan, Additional Mezzanine Loans, Line of Credit Loans and additional borrowings from the 2017 Secured Loan Facility. Proceeds in 2017 include $553 million from related parties in connection with the Line of Credit Loans and Incremental Loans. See Notes 3 and 12 for further information.
[4]	Repayments in 2018 include $67 million to related parties in connection with the Term Loan Facility, 2017 Secured Loan Facility, Incremental Loans and 2016 Secured Loan Facility. Repayments in 2017 include $299 million to related parties in connection with the 2017 Secured Loan Facility, 2016 Secured Loan Facility, Incremental Loans, 2016 Term Loan and Line of Credit Loans. See Notes 3 and 12 for further information.
[5]	Includes fees related to our borrowings of $13 million paid to related parties during the 39 weeks ended November 3, 2018. Includes a one-time extension fee equal to $4 million to JPP, LLC and JPP II, LLC, entities affiliated with ESL (as defined in Note 1) during the 39 weeks ended October 28, 2017. See Note 3 for further information.
[6]	Cash interest paid includes $140 million and $114 million interest paid to related parties related to our borrowings during the 39 weeks ended November 3, 2018 and October 28, 2017, respectively. See Notes 3 and 12 for further information.

Condensed Consolidated Balance Sheets - USD ($)
$ in Millions

Nov. 03, 2018

Feb. 03, 2018

Oct. 28, 2017

Current assets

Cash and cash equivalents

$ 526

$ 182

$ 200

Restricted cash

281

154

Accounts receivable

^[1]

354

343

378

Merchandise inventories

2,324

2,798

3,452

Prepaid expenses and other current assets

^[2]

310

346

364

Total current assets

3,795

3,823

4,548

Property and equipment (net of accumulated depreciation and amortization of $2,311, $2,451 and $2,381)

1,495

1,729

1,855

Goodwill

269

Trade names and other intangible assets

861

1,168

1,244

Other assets

257

284

294

TOTAL ASSETS

6,677

7,273

8,210

Current liabilities

Short-term borrowings

^[3]

934

915

1,061

Current portion of long-term debt and capitalized lease obligations

^[4]

513

968

1,310

Debtor-in-possession credit facility

112

Merchandise payables

102

576

772

Intercompany payables

^[5]

991

1,575

1,547

Unearned revenues

619

641

676

Other taxes

177

247

290

Total current liabilities

3,448

4,922

5,656

Long-term debt and capitalized lease obligations

^[6]

1,779

2,249

2,032

Pension and postretirement benefits

137

1,619

1,641

Deferred gain on sale-leaseback

249

362

446

Sale-leaseback financing obligation

424

247

Unearned revenues

809

539

563

Other long-term liabilities

464

935

1,001

Long-term deferred tax liabilities

126

634

Total liabilities not subject to compromise

7,393

10,999

12,220

Liabilities subject to compromise

^[7]

4,595

Commitments and contingencies

DEFICIT

Total Deficit

(5,311)

(3,726)

(4,010)

TOTAL LIABILITIES AND DEFICIT

$ 6,677

$ 7,273

$ 8,210

[1]	Includes $29 million, $26 million and $28 million of net amounts receivable from SHO, and $1 million, $7 million and $1 million of amounts receivable from Seritage at November 3, 2018, October 28, 2017 and February 3, 2018, respectively. Also includes $1 million of net amounts receivable from Lands' End at February 3, 2018.
[2]	Includes $4 million and $6 million prepaid rent to Seritage at November 3, 2018 and February 3, 2018, respectively.
[3]	Includes balances held by related parties of $553 million and $645 million at October 28, 2017 and February 3, 2018, respectively, related to our Line of Credit Loans and Incremental Loans at October 28, 2017 and February 3, 2018, and unsecured commercial paper at October 28, 2017. See Note 3 for defined terms and Notes 3 and 12 for further information.
[4]	Includes balances held by related parties of $513 million at November 3, 2018 related to our Mezzanine Loan and Additional Mezzanine Loans and $199 million and $146 million at October 28, 2017 and February 3, 2018, respectively, related to our 2016 Secured Loan Facility and our Old Senior Secured Notes for both periods. See Note 3 for defined terms and Notes 3 and 12 for further information.
[5]	Includes $2 million of amounts payable to Lands' End at November 3, 2018.
[6]	Includes balances held by related parties of $1.0 billion, $1.2 billion and $1.5 billion at November 3, 2018, October 28, 2017 and February 3, 2018, respectively, related to our 2016 Term Loan for all periods presented, our Consolidated Secured Loan Facility and FILO Loan at November 3, 2018, our Term Loan Facility at November 3, 2018 and February 3, 2018, our 2017 Secured Loan Facility, Subsidiary Notes, Old Senior Unsecured Notes and Second Lien Term Loan at October 28, 2017 and February 3, 2018, and our Old Senior Secured Notes at October 28, 2017. See Note 3 for defined terms and Notes 3 and Note 12 for further information.
[7]	Includes balances held by related parties of $1.3 billion at November 3, 2018 related to our Second Lien Term Loan, Line of Credit Loans, New Senior Secured Notes, Old Senior Unsecured Notes and New Senior Unsecured Notes.