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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sears Holdings Corporation (CE) | USOTC:SHLDQ | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.10 | 0.00 | 01:00:00 |
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED
MAY 5, 2018
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
D
ELAWARE
|
20-1920798
|
(State of Incorporation)
|
(I.R.S. Employer Identification No.)
|
|
|
3333 B
EVERLY
R
OAD
, H
OFFMAN
E
STATES
, I
LLINOIS
|
60179
|
(Address of principal executive offices)
|
(Zip Code)
|
|
|
|
|
|
Page
|
|
PART I – FINANCIAL INFORMATION
|
|
|
|
|
|
Item 1.
|
Financial Statements
|
|
|
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Item 2.
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||
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Item 3.
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||
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Item 4.
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||
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PART II – OTHER INFORMATION
|
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|
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|
|
Item 1.
|
||
|
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|
Item 2.
|
||
|
|
|
Item 6.
|
|
13 Weeks Ended
|
||||||
millions, except per share data
|
May 5,
2018 |
|
April 29,
2017 |
||||
REVENUES
|
|
|
|
||||
Merchandise sales
|
$
|
2,212
|
|
|
$
|
3,329
|
|
Services and other
(1)(2)
|
679
|
|
|
870
|
|
||
Total revenues
|
2,891
|
|
|
4,199
|
|
||
COSTS AND EXPENSES
|
|
|
|
||||
Cost of sales, buying and occupancy - merchandise sales
(3)
|
1,899
|
|
|
2,779
|
|
||
Cost of sales and occupancy - services and other
(1)
|
387
|
|
|
489
|
|
||
Total cost of sales, buying and occupancy
|
2,286
|
|
|
3,268
|
|
||
Selling and administrative
|
906
|
|
|
1,221
|
|
||
Depreciation and amortization
|
67
|
|
|
87
|
|
||
Impairment charges
|
14
|
|
|
15
|
|
||
Gain on sales of assets
|
(165
|
)
|
|
(741
|
)
|
||
Total costs and expenses
|
3,108
|
|
|
3,850
|
|
||
Operating income (loss)
|
(217
|
)
|
|
349
|
|
||
Interest expense
|
(166
|
)
|
|
(128
|
)
|
||
Interest and investment income (loss)
|
1
|
|
|
(2
|
)
|
||
Other loss
|
(33
|
)
|
|
(46
|
)
|
||
Income (loss) before income taxes
|
(415
|
)
|
|
173
|
|
||
Income tax (expense) benefit
|
(9
|
)
|
|
72
|
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(424
|
)
|
|
$
|
245
|
|
NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
||||
Basic earnings (loss) per share
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
Diluted earnings (loss) per share
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
Basic weighted average common shares outstanding
|
108.0
|
|
|
107.2
|
|
||
Diluted weighted average common shares outstanding
|
108.0
|
|
|
107.2
|
|
(1)
|
Includes merchandise sales to Sears Hometown and Outlet Stores, Inc. ("SHO") of
$184 million
and
$254 million
for the
13
weeks ended
May 5, 2018
and
April 29, 2017
, respectively. Pursuant to the terms of the separation, merchandise is sold to SHO at cost.
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
Net income (loss)
|
$
|
(424
|
)
|
|
$
|
245
|
|
Other comprehensive income
|
|
|
|
||||
Pension and postretirement adjustments, net of tax
|
36
|
|
|
50
|
|
||
Currency translation adjustments, net of tax
|
1
|
|
|
1
|
|
||
Total other comprehensive income
|
37
|
|
|
51
|
|
||
Comprehensive income (loss) attributable to Holdings' shareholders
|
$
|
(387
|
)
|
|
$
|
296
|
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
ASSETS
|
|
|
|
|
|
||||||
Current assets
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
186
|
|
|
$
|
236
|
|
|
$
|
182
|
|
Restricted cash
|
280
|
|
|
28
|
|
|
154
|
|
|||
Accounts receivable
(1)
|
345
|
|
|
479
|
|
|
343
|
|
|||
Merchandise inventories
|
2,838
|
|
|
3,884
|
|
|
2,798
|
|
|||
Prepaid expenses and other current assets
(2)
|
305
|
|
|
327
|
|
|
346
|
|
|||
Total current assets
|
3,954
|
|
|
4,954
|
|
|
3,823
|
|
|||
Property and equipment (net of accumulated depreciation and amortization of $2,357, $2,803 and $2,381)
|
1,626
|
|
|
2,130
|
|
|
1,729
|
|
|||
Goodwill
|
269
|
|
|
269
|
|
|
269
|
|
|||
Trade names and other intangible assets
|
1,160
|
|
|
1,251
|
|
|
1,168
|
|
|||
Other assets
|
274
|
|
|
483
|
|
|
284
|
|
|||
TOTAL ASSETS
|
$
|
7,283
|
|
|
$
|
9,087
|
|
|
$
|
7,273
|
|
LIABILITIES
|
|
|
|
|
|
||||||
Current liabilities
|
|
|
|
|
|
||||||
Short-term borrowings
(3)
|
$
|
1,704
|
|
|
$
|
551
|
|
|
$
|
915
|
|
Current portion of long-term debt and capitalized lease obligations
(4)
|
432
|
|
|
584
|
|
|
968
|
|
|||
Merchandise payables
|
494
|
|
|
961
|
|
|
576
|
|
|||
Other current liabilities
(5)
|
1,471
|
|
|
1,712
|
|
|
1,575
|
|
|||
Unearned revenues
|
616
|
|
|
725
|
|
|
641
|
|
|||
Other taxes
|
204
|
|
|
293
|
|
|
247
|
|
|||
Total current liabilities
|
4,921
|
|
|
4,826
|
|
|
4,922
|
|
|||
Long-term debt and capitalized lease obligations
(6)
|
3,043
|
|
|
3,146
|
|
|
2,249
|
|
|||
Pension and postretirement benefits
|
1,329
|
|
|
1,677
|
|
|
1,619
|
|
|||
Deferred gain on sale-leaseback
|
329
|
|
|
504
|
|
|
362
|
|
|||
Sale-leaseback financing obligation
|
347
|
|
|
183
|
|
|
247
|
|
|||
Other long-term liabilities
|
1,302
|
|
|
1,637
|
|
|
1,474
|
|
|||
Long-term deferred tax liabilities
|
125
|
|
|
647
|
|
|
126
|
|
|||
Total Liabilities
|
11,396
|
|
|
12,620
|
|
|
10,999
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|||
DEFICIT
|
|
|
|
|
|
||||||
Total Deficit
|
(4,113
|
)
|
|
(3,533
|
)
|
|
(3,726
|
)
|
|||
TOTAL LIABILITIES AND DEFICIT
|
$
|
7,283
|
|
|
$
|
9,087
|
|
|
$
|
7,273
|
|
(1)
|
Includes
$23 million
,
$36 million
and
$28 million
of net amounts receivable from SHO, and
$1 million
,
$3 million
and
$1 million
of amounts receivable from Seritage at
May 5, 2018
,
April 29, 2017
and
February 3, 2018
, respectively. Also includes
$1 million
of net amounts receivable from Lands' End at February 3, 2018.
|
(6)
|
Includes balances held by related parties of
$2.0 billion
,
$1.6 billion
and
$1.5 billion
at
May 5, 2018
,
April 29, 2017
and
February 3, 2018
, respectively, related to our Subsidiary Notes, Old Senior Unsecured Notes, Second Lien Term Loan, 2016 Term Loan and 2017 Secured Loan Facility for all periods presented, our FILO Loan, Mezzanine Loan, Additional Mezzanine Loans, New Senior Secured Notes, New Senior Unsecured Notes at May 5, 2018, our Term Loan Facility at May 5, 2018 and February 3, 2018, and our Old Senior Secured Notes at April 29, 2017. See Note 2 for defined terms and Notes 2 and Note 11 for further information.
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income (loss)
|
$
|
(424
|
)
|
|
$
|
245
|
|
Adjustments to reconcile net loss to net cash used in operating activities:
|
|
|
|
||||
Deferred tax valuation allowance
|
—
|
|
|
(278
|
)
|
||
Depreciation and amortization
|
67
|
|
|
87
|
|
||
Impairment charges
|
14
|
|
|
15
|
|
||
Gain on sales of assets
|
(165
|
)
|
|
(741
|
)
|
||
Pension and postretirement plan contributions
|
(287
|
)
|
|
(68
|
)
|
||
Payment for insurance transaction
|
(208
|
)
|
|
—
|
|
||
Mark-to-market adjustments of financial instruments
|
—
|
|
|
5
|
|
||
Amortization of deferred gain on sale-leaseback
|
(18
|
)
|
|
(21
|
)
|
||
Amortization of debt issuance costs and accretion of debt discount
|
32
|
|
|
32
|
|
||
Non-cash PIK interest
|
14
|
|
|
—
|
|
||
Change in operating assets and liabilities (net of acquisitions and dispositions):
|
|
|
|
||||
Deferred income taxes
|
(1
|
)
|
|
182
|
|
||
Merchandise inventories
|
(40
|
)
|
|
58
|
|
||
Merchandise payables
|
(82
|
)
|
|
(87
|
)
|
||
Income and other taxes
|
(40
|
)
|
|
(36
|
)
|
||
Other operating assets
|
59
|
|
|
4
|
|
||
Other operating liabilities
|
(71
|
)
|
|
(277
|
)
|
||
Net cash used in operating activities
|
(1,150
|
)
|
|
(880
|
)
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of property and investments
|
164
|
|
|
193
|
|
||
Proceeds from Craftsman Sale
|
—
|
|
|
572
|
|
||
Purchases of property and equipment
|
(14
|
)
|
|
(22
|
)
|
||
Net cash provided by investing activities
|
150
|
|
|
743
|
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Proceeds from debt issuances
(1)
|
919
|
|
|
—
|
|
||
Repayments of debt
(2)
|
(518
|
)
|
|
(430
|
)
|
||
Increase in short-term borrowings, primarily 90 days or less
|
630
|
|
|
551
|
|
||
Proceeds from sale-leaseback financing
|
130
|
|
|
—
|
|
||
Debt issuance costs
(3)
|
(31
|
)
|
|
(6
|
)
|
||
Net cash provided by financing activities
|
1,130
|
|
|
115
|
|
||
|
|
|
|
||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
130
|
|
|
(22
|
)
|
||
TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, BEGINNING OF YEAR
|
336
|
|
|
286
|
|
||
TOTAL CASH, CASH EQUIVALENTS, AND RESTRICTED CASH, END OF PERIOD
|
$
|
466
|
|
|
$
|
264
|
|
|
|
|
|
||||
Supplemental Cash Flow Data:
|
|
|
|
||||
Income taxes paid, net of refunds
|
$
|
6
|
|
|
$
|
15
|
|
Cash interest paid
(4)
|
101
|
|
|
99
|
|
||
Unpaid liability to acquire equipment and software
|
8
|
|
|
8
|
|
||
PIK interest included within other operating liabilities
|
9
|
|
|
—
|
|
||
Receivable from Craftsman Sale
|
—
|
|
|
235
|
|
|
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 28, 2017
|
107
|
|
$
|
1
|
|
$
|
(5,891
|
)
|
$
|
9,130
|
|
$
|
(5,519
|
)
|
$
|
(1,552
|
)
|
$
|
—
|
|
$
|
(3,831
|
)
|
Comprehensive income
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net income
|
—
|
|
—
|
|
—
|
|
—
|
|
245
|
|
—
|
|
—
|
|
245
|
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
50
|
|
—
|
|
50
|
|
|||||||
Currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|||||||
Total Comprehensive Income
|
|
|
|
|
|
|
|
296
|
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
15
|
|
(14
|
)
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
1
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
|||||||
Balance at April 29, 2017
|
107
|
|
$
|
1
|
|
$
|
(5,875
|
)
|
$
|
9,116
|
|
$
|
(5,274
|
)
|
$
|
(1,501
|
)
|
$
|
—
|
|
$
|
(3,533
|
)
|
Balance at February 3, 2018
|
108
|
|
$
|
1
|
|
$
|
(5,820
|
)
|
$
|
9,063
|
|
$
|
(5,898
|
)
|
$
|
(1,072
|
)
|
$
|
—
|
|
$
|
(3,726
|
)
|
Comprehensive loss
|
|
|
|
|
|
|
|
|
|||||||||||||||
Net loss
|
—
|
|
—
|
|
—
|
|
—
|
|
(424
|
)
|
—
|
|
—
|
|
(424
|
)
|
|||||||
Pension and postretirement adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
36
|
|
—
|
|
36
|
|
|||||||
Currency translation adjustments, net of tax
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
1
|
|
—
|
|
1
|
|
|||||||
Total Comprehensive Loss
|
|
|
|
|
|
|
|
(387
|
)
|
||||||||||||||
Stock awards
|
—
|
|
—
|
|
48
|
|
(52
|
)
|
—
|
|
—
|
|
—
|
|
(4
|
)
|
|||||||
Associate stock purchase
|
—
|
|
—
|
|
4
|
|
—
|
|
—
|
|
—
|
|
—
|
|
4
|
|
|||||||
Balance at May 5, 2018
|
108
|
|
$
|
1
|
|
$
|
(5,768
|
)
|
$
|
9,011
|
|
$
|
(6,322
|
)
|
$
|
(1,035
|
)
|
$
|
—
|
|
$
|
(4,113
|
)
|
•
|
The Company elected not to disclose the aggregate amount of the transaction price allocated to remaining performance obligations for its contracts that are one year or less, as the revenue is expected to be recognized within the next year;
|
•
|
The Company has applied the accounting guidance using the portfolio approach as we believe that the effects of applying the guidance to the portfolio would not differ materially from applying the guidance to the individual contracts within that portfolio;
|
•
|
For completed contracts, the Company has elected to not restate contracts that begin and end within the same annual reporting period;
|
•
|
For completed contracts that have variable consideration, the Company has elected to use the transaction price at the date the contract was completed rather than estimating variable consideration amounts in the comparative reporting periods;
|
•
|
The Company applied the update retrospectively for each period presented, but for all reporting periods presented before the date of initial application, the Company elected not to disclose the amount of the transaction price allocated to the remaining performance obligations or an explanation of when the entity expects to recognize that amount as revenue;
|
•
|
For contracts that were modified before the beginning of the earliest reporting period, the Company has elected to not retrospectively restate the contract for those contract modifications and there was no aggregate effect of modifications that occurred before the beginning of the earliest period.
|
Condensed Consolidated Statement of Operations
|
|
|
|
|
|
||||||
|
13 Weeks Ended
|
||||||||||
|
April 29, 2017
|
||||||||||
millions, except per share data
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Adoption of New Standard
|
||||||
Merchandise sales
|
$
|
3,429
|
|
|
$
|
3,329
|
|
|
$
|
(100
|
)
|
Services and other
|
872
|
|
|
870
|
|
|
(2
|
)
|
|||
Cost of sales, buying and occupancy - merchandise sales
|
2,883
|
|
|
2,779
|
|
|
(104
|
)
|
|||
Operating income
|
302
|
|
|
349
|
|
|
47
|
|
|||
Net income attributable to Holdings' Shareholders
|
244
|
|
|
245
|
|
|
1
|
|
|||
Basic earnings per share
|
2.28
|
|
|
2.29
|
|
|
0.01
|
|
Condensed Consolidated Balance Sheets
|
|
|
|
|
|
||||||
|
January 28, 2017
|
||||||||||
millions
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Adoption of New Standard
|
||||||
Prepaid expenses and other current assets
|
$
|
285
|
|
|
$
|
300
|
|
|
$
|
15
|
|
Other current liabilities
|
1,956
|
|
|
1,971
|
|
|
15
|
|
|||
Other long-term liabilities
|
1,641
|
|
|
1,648
|
|
|
7
|
|
|||
Total Deficit
|
(3,824
|
)
|
|
(3,831
|
)
|
|
(7
|
)
|
|||
|
|
|
|
|
|
||||||
|
April 29, 2017
|
||||||||||
millions
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Adoption of New Standard
|
||||||
Prepaid expenses and other current assets
|
$
|
311
|
|
|
$
|
327
|
|
|
$
|
16
|
|
Other current liabilities
|
1,697
|
|
|
1,712
|
|
|
15
|
|
|||
Other long-term liabilities
|
1,630
|
|
|
1,637
|
|
|
7
|
|
|||
Total Deficit
|
(3,527
|
)
|
|
(3,533
|
)
|
|
(6
|
)
|
|||
|
|
|
|
|
|
||||||
|
February 3, 2018
|
||||||||||
millions
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Adoption of New Standard
|
||||||
Prepaid expenses and other current assets
|
$
|
335
|
|
|
$
|
346
|
|
|
$
|
11
|
|
Other current liabilities
|
1,568
|
|
|
1,575
|
|
|
7
|
|
|||
Other long-term liabilities
|
1,467
|
|
|
1,474
|
|
|
7
|
|
|||
Total Deficit
|
(3,723
|
)
|
|
(3,726
|
)
|
|
(3
|
)
|
Condensed Consolidated Statements of Cash Flows
|
|
|
|
|
|
||||||
|
13 Weeks Ended
|
||||||||||
|
April 29, 2017
|
||||||||||
millions
|
As Originally Reported
|
|
As Adjusted
|
|
Effect of Adoption of New Standard
|
||||||
Net income
|
$
|
244
|
|
|
$
|
245
|
|
|
$
|
1
|
|
Change in other operating liabilities
|
(276
|
)
|
|
(277
|
)
|
|
(1
|
)
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Cash and cash equivalents
|
$
|
104
|
|
|
$
|
136
|
|
|
$
|
113
|
|
Cash posted as collateral
|
5
|
|
|
3
|
|
|
4
|
|
|||
Credit card deposits in transit
|
77
|
|
|
97
|
|
|
65
|
|
|||
Total cash and cash equivalents
|
186
|
|
|
236
|
|
|
182
|
|
|||
Restricted cash
|
280
|
|
|
28
|
|
|
154
|
|
|||
Total cash balances
|
$
|
466
|
|
|
$
|
264
|
|
|
$
|
336
|
|
•
|
Securing an additional
$100 million
incremental real estate loan, pursuant to an amendment to the Second Amended and Restated Loan Agreement;
|
•
|
Closing on a new secured loan (the "Secured Loan") and mezzanine loan (the "Mezzanine Loan"), pursuant to which the Company initially received aggregate gross proceeds of
$440 million
,
in connection with the release of
138
of our properties from the ring-fence arrangement with the PBGC as described above. The properties serve as collateral for the Secured Loan, and the Mezzanine Loan is secured by
pledge of the equity interests in the direct parent company of the entities that own such properties. The Company contributed approximately
$282 million
of the proceeds of such loans to our pension plans, and deposited
$125 million
into an escrow for the benefit of our pension plans. The Mezzanine Loan Agreement contains an uncommitted accordion feature pursuant to which the Mezzanine Loan Borrower may incur additional loans ("Additional Mezzanine Loans"), under which the Company obtained additional borrowings of
$144 million
during the first quarter 2018. The
|
•
|
Obtaining a
$125 million
FILO term loan (the "FILO Loan") under our Amended Domestic Credit Agreement, for which the net proceeds of
$122 million
were used to reduce outstanding borrowings under our revolving credit facility;
|
•
|
Completing the previously announced private exchange offers for outstanding
8%
Senior Unsecured Notes Due 2019 and 6 5/8% Senior Secured Notes Due 2018 and negotiated exchanges of and amendments to certain other indebtedness;
|
•
|
Executed amendments to the LC Facility in April 2018, which extended the maturity to December 28, 2019;
|
•
|
Entering into an agreement with a third party insurance company pursuant to which the Company paid
$206 million
to the insurance company in exchange for such company assuming certain of Holdings' workers' compensation and auto per occurrence deductible losses (the "Insurance Transaction"). In addition, in connection with the Insurance Transaction, the beneficiary under certain letters of credit agreed to cancel
$254 million
of such letters of credit, as the related insurance liabilities had been extinguished. The agreement will also result in reduced administrative costs associated with the management of the related insurance liabilities;
|
•
|
Entering into an amendment (the "Amendment") to the program agreement with Citibank, N.A., subsequent to the end of the first quarter, pursuant to which Citibank offers Sears proprietary and co-branded credit cards and administers the associated credit card program. The Amendment provides for a
five
year extension of our
15
-year co-brand and private label credit card relationship along with long-term marketing arrangements that include ongoing enhancements to the Shop Your Way Mastercard rewards program. Pursuant to the Amendment, Citibank paid Sears
$425 million
, and Sears funded a reserve for the benefit of Citibank in the amount of
$25 million
through an irrevocable standby letter of credit from a third party financial institution; and
|
•
|
Generating approximately
$290 million
of proceeds from real estate sales during the first quarter of 2018.
|
•
|
Sales of the remaining properties securing the remaining principal amount of the Secured Loan to fund the repayment of such Secured Loan;
|
•
|
Additional borrowings under the Mezzanine Loan Agreement and the Term Loan Facility;
|
•
|
Monetization of the Kenmore brand;
|
•
|
Extension of maturities beyond May 2019 of Line of Credit Loans under the Second Lien Credit Agreement, the 2016 Secured Loan Facility, the Incremental Loans and the Term Loan under the Amended Domestic Credit Agreement;
|
•
|
Additional borrowings secured by real estate assets or borrowings under the short-term basket; and
|
•
|
Further restructurings to help manage expenses and improve profitability.
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Secured borrowings
|
901
|
|
|
536
|
|
|
271
|
|
|||
Line of credit loans
|
570
|
|
|
—
|
|
|
500
|
|
|||
Incremental loans
|
140
|
|
|
—
|
|
|
144
|
|
|||
Secured loan
|
93
|
|
|
—
|
|
|
—
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
3,409
|
|
|
3,625
|
|
|
3,145
|
|
|||
Capitalized lease obligations
|
66
|
|
|
105
|
|
|
72
|
|
|||
Total borrowings
|
$
|
5,179
|
|
|
$
|
4,281
|
|
|
$
|
4,132
|
|
millions
|
Markdowns
(1)
|
|
Severance Costs
(2)
|
|
Lease Termination Costs
(2)
|
|
Other Charges
(2)
|
|
Impairment and Accelerated Depreciation
(3)
|
|
Total Store Closing Costs
|
||||||||||||
Kmart
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
29
|
|
|
$
|
1
|
|
|
$
|
1
|
|
|
$
|
29
|
|
Sears Domestic
|
12
|
|
|
3
|
|
|
31
|
|
|
2
|
|
|
3
|
|
|
51
|
|
||||||
Total for the 13 week period ended May 5, 2018
|
$
|
9
|
|
|
$
|
4
|
|
|
$
|
60
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Kmart
|
$
|
10
|
|
|
$
|
5
|
|
|
$
|
16
|
|
|
$
|
3
|
|
|
$
|
1
|
|
|
$
|
35
|
|
Sears Domestic
|
5
|
|
|
11
|
|
|
25
|
|
|
1
|
|
|
5
|
|
|
47
|
|
||||||
Total for the 13 week period ended April 29, 2017
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
41
|
|
|
$
|
4
|
|
|
$
|
6
|
|
|
$
|
82
|
|
(1)
|
Recorded within cost of sales, buying and occupancy in the Condensed Consolidated Statements of Operations.
|
(2)
|
Recorded within selling and administrative in the Condensed Consolidated Statements of Operations. Lease termination costs are net of estimated sublease income, and include the reversal of closed store reserves for which the lease agreement has been terminated and the reversal of deferred rent balances related to closed stores.
|
(3)
|
Costs for the
13
week periods ended
May 5, 2018
and
April 29, 2017
are recorded within depreciation and amortization in the Condensed Consolidated Statements of Operations.
|
millions
|
Severance Costs
|
|
Lease Termination Costs
|
|
Other Charges
|
|
Total
|
||||||||
Balance at April 29, 2017
|
$
|
44
|
|
|
$
|
191
|
|
|
$
|
11
|
|
|
$
|
246
|
|
Store closing costs
|
67
|
|
|
108
|
|
|
28
|
|
|
203
|
|
||||
Store closing capital lease obligations
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Payments/utilizations
|
(62
|
)
|
|
(107
|
)
|
|
(27
|
)
|
|
(196
|
)
|
||||
Balance at February 3, 2018
|
49
|
|
|
200
|
|
|
12
|
|
|
261
|
|
||||
Store closing costs
|
4
|
|
|
69
|
|
|
3
|
|
|
76
|
|
||||
Payments/utilizations
|
(20
|
)
|
|
(38
|
)
|
|
(7
|
)
|
|
(65
|
)
|
||||
Balance at May 5, 2018
|
$
|
33
|
|
|
$
|
231
|
|
|
$
|
8
|
|
|
$
|
272
|
|
|
13 Weeks Ended May 5, 2018
|
|
13 Weeks Ended April 29, 2017
|
||||||||||||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||||||||
Straight-line rent expense
|
$
|
4
|
|
|
$
|
30
|
|
|
$
|
34
|
|
|
$
|
6
|
|
|
$
|
37
|
|
|
$
|
43
|
|
Amortization of deferred gain on sale-leaseback
|
(2
|
)
|
|
(16
|
)
|
|
(18
|
)
|
|
(4
|
)
|
|
(17
|
)
|
|
(21
|
)
|
||||||
Rent expense
|
$
|
2
|
|
|
$
|
14
|
|
|
$
|
16
|
|
|
$
|
2
|
|
|
$
|
20
|
|
|
$
|
22
|
|
|
13 Weeks Ended
|
||||||
millions, except loss per share
|
May 5,
2018 |
|
April 29,
2017 |
||||
Basic weighted average shares
|
108.0
|
|
|
107.2
|
|
||
Diluted weighted average shares
|
108.0
|
|
|
107.2
|
|
||
|
|
|
|
||||
Net income (loss) attributable to Holdings' shareholders
|
$
|
(424
|
)
|
|
$
|
245
|
|
|
|
|
|
||||
Earnings (loss) per share attributable to Holdings' shareholders:
|
|
|
|
|
|
||
Basic
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
Diluted
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Pension and postretirement adjustments (net of tax of $(225) for all periods presented)
|
$
|
(1,035
|
)
|
|
$
|
(1,499
|
)
|
|
$
|
(1,071
|
)
|
Currency translation adjustments (net of tax of $0 for all periods presented)
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|||
Accumulated other comprehensive loss
|
$
|
(1,035
|
)
|
|
$
|
(1,501
|
)
|
|
$
|
(1,072
|
)
|
|
13 Weeks Ended May 5, 2018
|
|
13 Weeks Ended April 29, 2017
|
||||||||||||||||||||
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)
|
$
|
36
|
|
|
$
|
—
|
|
|
$
|
36
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
50
|
|
Currency translation adjustments
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total other comprehensive income
|
$
|
37
|
|
|
$
|
—
|
|
|
$
|
37
|
|
|
$
|
51
|
|
|
$
|
—
|
|
|
$
|
51
|
|
(1)
|
Included in the computation of net periodic benefit expense. See Note 5 to the Condensed Consolidated Financial Statements.
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
Components of net periodic expense:
|
|
|
|
||||
Interest cost
|
$
|
37
|
|
|
$
|
53
|
|
Expected return on plan assets
|
(40
|
)
|
|
(57
|
)
|
||
Amortization of experience losses
|
36
|
|
|
50
|
|
||
Net periodic expense
|
$
|
33
|
|
|
$
|
46
|
|
(i)
|
Hardlines—consists of home appliances, consumer electronics, lawn & garden, tools & hardware, automotive parts, household goods, toys, housewares and sporting goods;
|
(ii)
|
Apparel and Soft Home—includes women's, men's, kids', footwear, jewelry, accessories and soft home;
|
(iii)
|
Food and Drug—consists of grocery & household, pharmacy and drugstore;
|
(iv)
|
Service—includes repair, installation and automotive service and extended contract revenue; and
|
(v)
|
Other—includes revenues earned in connection with our agreements with SHO and Lands' End, as well as credit revenues and rental revenues.
|
|
13 Weeks Ended May 5, 2018
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales
|
|
|
|
|
|
||||||
Hardlines
|
$
|
199
|
|
|
$
|
1,061
|
|
|
$
|
1,260
|
|
Apparel and Soft Home
|
300
|
|
|
361
|
|
|
661
|
|
|||
Food and Drug
|
290
|
|
|
1
|
|
|
291
|
|
|||
Total merchandise sales
|
789
|
|
|
1,423
|
|
|
2,212
|
|
|||
Services and other
|
|
|
|
|
|
||||||
Services
|
1
|
|
|
377
|
|
|
378
|
|
|||
Other
|
7
|
|
|
294
|
|
|
301
|
|
|||
Total services and other
|
8
|
|
|
671
|
|
|
679
|
|
|||
Total revenues
|
797
|
|
|
2,094
|
|
|
2,891
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy - merchandise sales
|
641
|
|
|
1,258
|
|
|
1,899
|
|
|||
Cost of sales and occupancy - services and other
|
3
|
|
|
384
|
|
|
387
|
|
|||
Total cost of sales, buying and occupancy
|
644
|
|
|
1,642
|
|
|
2,286
|
|
|||
Selling and administrative
|
251
|
|
|
655
|
|
|
906
|
|
|||
Depreciation and amortization
|
9
|
|
|
58
|
|
|
67
|
|
|||
Impairment charges
|
6
|
|
|
8
|
|
|
14
|
|
|||
Gain on sales of assets
|
(40
|
)
|
|
(125
|
)
|
|
(165
|
)
|
|||
Total costs and expenses
|
870
|
|
|
2,238
|
|
|
3,108
|
|
|||
Operating loss
|
$
|
(73
|
)
|
|
$
|
(144
|
)
|
|
$
|
(217
|
)
|
Total assets
|
$
|
1,655
|
|
|
$
|
5,628
|
|
|
$
|
7,283
|
|
Capital expenditures
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
14
|
|
|
13 Weeks Ended April 29, 2017
|
||||||||||
millions
|
Kmart
|
|
Sears Domestic
|
|
Sears Holdings
|
||||||
Merchandise sales
|
|
|
|
|
|
||||||
Hardlines
|
$
|
366
|
|
|
$
|
1,428
|
|
|
$
|
1,794
|
|
Apparel and Soft Home
|
513
|
|
|
469
|
|
|
982
|
|
|||
Food and Drug
|
552
|
|
|
1
|
|
|
553
|
|
|||
Total merchandise sales
|
1,431
|
|
|
1,898
|
|
|
3,329
|
|
|||
Services and other
|
|
|
|
|
|
||||||
Services
|
1
|
|
|
468
|
|
|
469
|
|
|||
Other
|
15
|
|
|
386
|
|
|
401
|
|
|||
Total services and other
|
16
|
|
|
854
|
|
|
870
|
|
|||
Total revenues
|
1,447
|
|
|
2,752
|
|
|
4,199
|
|
|||
Costs and expenses
|
|
|
|
|
|
||||||
Cost of sales, buying and occupancy - merchandise sales
|
1,180
|
|
|
1,599
|
|
|
2,779
|
|
|||
Cost of sales and occupancy - services and other
|
4
|
|
|
485
|
|
|
489
|
|
|||
Total cost of sales, buying and occupancy
|
1,184
|
|
|
2,084
|
|
|
3,268
|
|
|||
Selling and administrative
|
392
|
|
|
829
|
|
|
1,221
|
|
|||
Depreciation and amortization
|
13
|
|
|
74
|
|
|
87
|
|
|||
Impairment charges
|
5
|
|
|
10
|
|
|
15
|
|
|||
Gain on sales of assets
|
(597
|
)
|
|
(144
|
)
|
|
(741
|
)
|
|||
Total costs and expenses
|
997
|
|
|
2,853
|
|
|
3,850
|
|
|||
Operating income (loss)
|
$
|
450
|
|
|
$
|
(101
|
)
|
|
$
|
349
|
|
Total assets
|
$
|
2,245
|
|
|
$
|
6,842
|
|
|
$
|
9,087
|
|
Capital expenditures
|
$
|
6
|
|
|
$
|
16
|
|
|
$
|
22
|
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Unearned revenues
|
$
|
515
|
|
|
$
|
611
|
|
|
$
|
539
|
|
Self-insurance reserves
|
348
|
|
|
531
|
|
|
491
|
|
|||
Other
|
439
|
|
|
495
|
|
|
444
|
|
|||
Total
|
$
|
1,302
|
|
|
$
|
1,637
|
|
|
$
|
1,474
|
|
millions
|
Unearned Revenues
|
||
Balance at April 29, 2017
|
$
|
1,251
|
|
Sales of service contracts
|
512
|
|
|
Revenue recognized on existing service contracts
|
(649
|
)
|
|
Balance at February 3, 2018
|
1,114
|
|
|
Sales of service contracts
|
153
|
|
|
Revenue recognized on existing service contracts
|
(196
|
)
|
|
Balance at May 5, 2018
|
$
|
1,071
|
|
•
|
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 and information technology.
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
157
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
186
|
|
Restricted cash
|
280
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
280
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
28,872
|
|
|
(28,872
|
)
|
|
—
|
|
|||||
Accounts receivable
|
—
|
|
|
320
|
|
|
25
|
|
|
—
|
|
|
345
|
|
|||||
Merchandise inventories
|
—
|
|
|
2,838
|
|
|
—
|
|
|
—
|
|
|
2,838
|
|
|||||
Prepaid expenses and other current assets
|
307
|
|
|
849
|
|
|
726
|
|
|
(1,577
|
)
|
|
305
|
|
|||||
Total current assets
|
587
|
|
|
4,164
|
|
|
29,652
|
|
|
(30,449
|
)
|
|
3,954
|
|
|||||
Total property and equipment, net
|
—
|
|
|
963
|
|
|
663
|
|
|
—
|
|
|
1,626
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
338
|
|
|
1,189
|
|
|
(98
|
)
|
|
1,429
|
|
|||||
Other assets
|
178
|
|
|
1,321
|
|
|
918
|
|
|
(2,143
|
)
|
|
274
|
|
|||||
Investment in subsidiaries
|
8,481
|
|
|
28,032
|
|
|
—
|
|
|
(36,513
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
9,246
|
|
|
$
|
34,818
|
|
|
$
|
32,422
|
|
|
$
|
(69,203
|
)
|
|
$
|
7,283
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
140
|
|
|
$
|
1,653
|
|
|
$
|
93
|
|
|
$
|
(182
|
)
|
|
$
|
1,704
|
|
Current portion of long-term debt and capitalized lease obligations
|
134
|
|
|
530
|
|
|
—
|
|
|
(232
|
)
|
|
432
|
|
|||||
Merchandise payables
|
—
|
|
|
494
|
|
|
—
|
|
|
—
|
|
|
494
|
|
|||||
Intercompany payables
|
11,171
|
|
|
17,701
|
|
|
—
|
|
|
(28,872
|
)
|
|
—
|
|
|||||
Other current liabilities
|
24
|
|
|
1,807
|
|
|
1,382
|
|
|
(922
|
)
|
|
2,291
|
|
|||||
Total current liabilities
|
11,469
|
|
|
22,185
|
|
|
1,475
|
|
|
(30,208
|
)
|
|
4,921
|
|
|||||
Long-term debt and capitalized lease obligations
|
2,285
|
|
|
2,863
|
|
|
371
|
|
|
(2,476
|
)
|
|
3,043
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
1,326
|
|
|
3
|
|
|
—
|
|
|
1,329
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
319
|
|
|
10
|
|
|
—
|
|
|
329
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
128
|
|
|
219
|
|
|
—
|
|
|
347
|
|
|||||
Long-term deferred tax liabilities
|
—
|
|
|
—
|
|
|
350
|
|
|
(225
|
)
|
|
125
|
|
|||||
Other long-term liabilities
|
—
|
|
|
978
|
|
|
494
|
|
|
(170
|
)
|
|
1,302
|
|
|||||
Total Liabilities
|
13,754
|
|
|
27,799
|
|
|
2,922
|
|
|
(33,079
|
)
|
|
11,396
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(4,508
|
)
|
|
7,019
|
|
|
29,500
|
|
|
(36,124
|
)
|
|
(4,113
|
)
|
|||||
Total Equity (Deficit)
|
(4,508
|
)
|
|
7,019
|
|
|
29,500
|
|
|
(36,124
|
)
|
|
(4,113
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
9,246
|
|
|
$
|
34,818
|
|
|
$
|
32,422
|
|
|
$
|
(69,203
|
)
|
|
$
|
7,283
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
198
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
236
|
|
Restricted cash
|
—
|
|
|
28
|
|
|
—
|
|
|
—
|
|
|
28
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
27,570
|
|
|
(27,570
|
)
|
|
—
|
|
|||||
Accounts receivable
|
78
|
|
|
385
|
|
|
16
|
|
|
—
|
|
|
479
|
|
|||||
Merchandise inventories
|
—
|
|
|
3,884
|
|
|
—
|
|
|
—
|
|
|
3,884
|
|
|||||
Prepaid expenses and other current assets
|
23
|
|
|
697
|
|
|
375
|
|
|
(768
|
)
|
|
327
|
|
|||||
Total current assets
|
101
|
|
|
5,192
|
|
|
27,999
|
|
|
(28,338
|
)
|
|
4,954
|
|
|||||
Total property and equipment, net
|
—
|
|
|
1,409
|
|
|
721
|
|
|
—
|
|
|
2,130
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
357
|
|
|
1,261
|
|
|
(98
|
)
|
|
1,520
|
|
|||||
Other assets
|
563
|
|
|
1,307
|
|
|
1,605
|
|
|
(2,992
|
)
|
|
483
|
|
|||||
Investment in subsidiaries
|
9,350
|
|
|
27,538
|
|
|
—
|
|
|
(36,888
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
10,014
|
|
|
$
|
35,803
|
|
|
$
|
31,586
|
|
|
$
|
(68,316
|
)
|
|
$
|
9,087
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
—
|
|
|
$
|
674
|
|
|
$
|
—
|
|
|
$
|
(123
|
)
|
|
$
|
551
|
|
Current portion of long-term debt and capitalized lease obligations
|
—
|
|
|
584
|
|
|
—
|
|
|
—
|
|
|
584
|
|
|||||
Merchandise payables
|
—
|
|
|
961
|
|
|
—
|
|
|
—
|
|
|
961
|
|
|||||
Intercompany payables
|
11,316
|
|
|
16,254
|
|
|
—
|
|
|
(27,570
|
)
|
|
—
|
|
|||||
Other current liabilities
|
35
|
|
|
2,148
|
|
|
1,192
|
|
|
(645
|
)
|
|
2,730
|
|
|||||
Total current liabilities
|
11,351
|
|
|
20,621
|
|
|
1,192
|
|
|
(28,338
|
)
|
|
4,826
|
|
|||||
Long-term debt and capitalized lease obligations
|
2,155
|
|
|
3,752
|
|
|
—
|
|
|
(2,761
|
)
|
|
3,146
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
1,674
|
|
|
3
|
|
|
—
|
|
|
1,677
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
504
|
|
|
—
|
|
|
—
|
|
|
504
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
183
|
|
|
—
|
|
|
—
|
|
|
183
|
|
|||||
Long-term deferred tax liabilities
|
48
|
|
|
—
|
|
|
738
|
|
|
(139
|
)
|
|
647
|
|
|||||
Other long-term liabilities
|
—
|
|
|
1,263
|
|
|
571
|
|
|
(197
|
)
|
|
1,637
|
|
|||||
Total Liabilities
|
13,554
|
|
|
27,997
|
|
|
2,504
|
|
|
(31,435
|
)
|
|
12,620
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(3,540
|
)
|
|
7,806
|
|
|
29,082
|
|
|
(36,881
|
)
|
|
(3,533
|
)
|
|||||
Total Equity (Deficit)
|
(3,540
|
)
|
|
7,806
|
|
|
29,082
|
|
|
(36,881
|
)
|
|
(3,533
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
10,014
|
|
|
$
|
35,803
|
|
|
$
|
31,586
|
|
|
$
|
(68,316
|
)
|
|
$
|
9,087
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Current assets
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
$
|
—
|
|
|
$
|
152
|
|
|
$
|
30
|
|
|
$
|
—
|
|
|
$
|
182
|
|
Restricted cash
|
154
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
154
|
|
|||||
Intercompany receivables
|
—
|
|
|
—
|
|
|
27,993
|
|
|
(27,993
|
)
|
|
—
|
|
|||||
Accounts receivable
|
—
|
|
|
322
|
|
|
21
|
|
|
—
|
|
|
343
|
|
|||||
Merchandise inventories
|
—
|
|
|
2,798
|
|
|
—
|
|
|
—
|
|
|
2,798
|
|
|||||
Prepaid expenses and other current assets
|
309
|
|
|
910
|
|
|
478
|
|
|
(1,351
|
)
|
|
346
|
|
|||||
Total current assets
|
463
|
|
|
4,182
|
|
|
28,522
|
|
|
(29,344
|
)
|
|
3,823
|
|
|||||
Total property and equipment, net
|
—
|
|
|
1,043
|
|
|
686
|
|
|
—
|
|
|
1,729
|
|
|||||
Goodwill and intangible assets
|
—
|
|
|
346
|
|
|
1,189
|
|
|
(98
|
)
|
|
1,437
|
|
|||||
Other assets
|
179
|
|
|
1,331
|
|
|
1,159
|
|
|
(2,385
|
)
|
|
284
|
|
|||||
Investment in subsidiaries
|
8,787
|
|
|
27,774
|
|
|
—
|
|
|
(36,561
|
)
|
|
—
|
|
|||||
TOTAL ASSETS
|
$
|
9,429
|
|
|
$
|
34,676
|
|
|
$
|
31,556
|
|
|
$
|
(68,388
|
)
|
|
$
|
7,273
|
|
Current liabilities
|
|
|
|
|
|
|
|
|
|
||||||||||
Short-term borrowings
|
$
|
144
|
|
|
$
|
937
|
|
|
$
|
—
|
|
|
$
|
(166
|
)
|
|
$
|
915
|
|
Current portion of long-term debt and capitalized lease obligations
|
303
|
|
|
897
|
|
|
—
|
|
|
(232
|
)
|
|
968
|
|
|||||
Merchandise payables
|
—
|
|
|
576
|
|
|
—
|
|
|
—
|
|
|
576
|
|
|||||
Intercompany payables
|
11,099
|
|
|
16,894
|
|
|
—
|
|
|
(27,993
|
)
|
|
—
|
|
|||||
Other current liabilities
|
16
|
|
|
1,970
|
|
|
1,426
|
|
|
(949
|
)
|
|
2,463
|
|
|||||
Total current liabilities
|
11,562
|
|
|
21,274
|
|
|
1,426
|
|
|
(29,340
|
)
|
|
4,922
|
|
|||||
Long-term debt and capitalized lease obligations
|
1,991
|
|
|
2,734
|
|
|
—
|
|
|
(2,476
|
)
|
|
2,249
|
|
|||||
Pension and postretirement benefits
|
—
|
|
|
1,616
|
|
|
3
|
|
|
—
|
|
|
1,619
|
|
|||||
Deferred gain on sale-leaseback
|
—
|
|
|
360
|
|
|
2
|
|
|
—
|
|
|
362
|
|
|||||
Sale-leaseback financing obligation
|
—
|
|
|
158
|
|
|
89
|
|
|
—
|
|
|
247
|
|
|||||
Long-term deferred tax liabilities
|
—
|
|
|
—
|
|
|
349
|
|
|
(223
|
)
|
|
126
|
|
|||||
Other long-term liabilities
|
—
|
|
|
1,138
|
|
|
514
|
|
|
(178
|
)
|
|
1,474
|
|
|||||
Total Liabilities
|
13,553
|
|
|
27,280
|
|
|
2,383
|
|
|
(32,217
|
)
|
|
10,999
|
|
|||||
EQUITY (DEFICIT)
|
|
|
|
|
|
|
|
|
|
||||||||||
Shareholder's equity (deficit)
|
(4,124
|
)
|
|
7,396
|
|
|
29,173
|
|
|
(36,171
|
)
|
|
(3,726
|
)
|
|||||
Total Equity (Deficit)
|
(4,124
|
)
|
|
7,396
|
|
|
29,173
|
|
|
(36,171
|
)
|
|
(3,726
|
)
|
|||||
TOTAL LIABILITIES AND EQUITY (DEFICIT)
|
$
|
9,429
|
|
|
$
|
34,676
|
|
|
$
|
31,556
|
|
|
$
|
(68,388
|
)
|
|
$
|
7,273
|
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales
|
|
$
|
—
|
|
|
$
|
2,203
|
|
|
$
|
—
|
|
|
$
|
9
|
|
|
$
|
2,212
|
|
Services and other
|
|
—
|
|
|
680
|
|
|
517
|
|
|
(518
|
)
|
|
679
|
|
|||||
Total revenues
|
|
—
|
|
|
2,883
|
|
|
517
|
|
|
(509
|
)
|
|
2,891
|
|
|||||
Cost of sales, buying and occupancy - merchandise sales
|
|
—
|
|
|
1,866
|
|
|
—
|
|
|
33
|
|
|
1,899
|
|
|||||
Cost of sales and occupancy - services and other
|
|
—
|
|
|
477
|
|
|
212
|
|
|
(302
|
)
|
|
387
|
|
|||||
Total cost of sales, buying and occupancy
|
|
—
|
|
|
2,343
|
|
|
212
|
|
|
(269
|
)
|
|
2,286
|
|
|||||
Selling and administrative
|
|
3
|
|
|
955
|
|
|
188
|
|
|
(240
|
)
|
|
906
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
53
|
|
|
14
|
|
|
—
|
|
|
67
|
|
|||||
Impairment charges
|
|
—
|
|
|
11
|
|
|
3
|
|
|
—
|
|
|
14
|
|
|||||
Gain on sales of assets
|
|
—
|
|
|
(107
|
)
|
|
(58
|
)
|
|
—
|
|
|
(165
|
)
|
|||||
Total costs and expenses
|
|
3
|
|
|
3,255
|
|
|
359
|
|
|
(509
|
)
|
|
3,108
|
|
|||||
Operating income (loss)
|
|
(3
|
)
|
|
(372
|
)
|
|
158
|
|
|
—
|
|
|
(217
|
)
|
|||||
Interest expense
|
|
(182
|
)
|
|
(286
|
)
|
|
(16
|
)
|
|
318
|
|
|
(166
|
)
|
|||||
Interest and investment income
|
|
33
|
|
|
59
|
|
|
227
|
|
|
(318
|
)
|
|
1
|
|
|||||
Other loss
|
|
—
|
|
|
(33
|
)
|
|
—
|
|
|
—
|
|
|
(33
|
)
|
|||||
Income (loss) before income taxes
|
|
(152
|
)
|
|
(632
|
)
|
|
369
|
|
|
—
|
|
|
(415
|
)
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
34
|
|
|
(43
|
)
|
|
—
|
|
|
(9
|
)
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(272
|
)
|
|
259
|
|
|
—
|
|
|
13
|
|
|
—
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
(424
|
)
|
|
$
|
(339
|
)
|
|
$
|
326
|
|
|
$
|
13
|
|
|
$
|
(424
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Merchandise sales
|
|
$
|
—
|
|
|
$
|
3,324
|
|
|
$
|
—
|
|
|
$
|
5
|
|
|
$
|
3,329
|
|
Services and other
|
|
—
|
|
|
871
|
|
|
598
|
|
|
(599
|
)
|
|
870
|
|
|||||
Total revenues
|
|
—
|
|
|
4,195
|
|
|
598
|
|
|
(594
|
)
|
|
4,199
|
|
|||||
Cost of sales, buying and occupancy - merchandise sales
|
|
—
|
|
|
2,752
|
|
|
—
|
|
|
27
|
|
|
2,779
|
|
|||||
Cost of sales and occupancy - services and other
|
|
—
|
|
|
604
|
|
|
223
|
|
|
(338
|
)
|
|
489
|
|
|||||
Total cost of sales, buying and occupancy
|
|
—
|
|
|
3,356
|
|
|
223
|
|
|
(311
|
)
|
|
3,268
|
|
|||||
Selling and administrative
|
|
1
|
|
|
1,286
|
|
|
217
|
|
|
(283
|
)
|
|
1,221
|
|
|||||
Depreciation and amortization
|
|
—
|
|
|
71
|
|
|
16
|
|
|
—
|
|
|
87
|
|
|||||
Impairment charges
|
|
—
|
|
|
15
|
|
|
—
|
|
|
—
|
|
|
15
|
|
|||||
Gain on sales of assets
|
|
(492
|
)
|
|
(249
|
)
|
|
—
|
|
|
—
|
|
|
(741
|
)
|
|||||
Total costs and expenses
|
|
(491
|
)
|
|
4,479
|
|
|
456
|
|
|
(594
|
)
|
|
3,850
|
|
|||||
Operating income (loss)
|
|
491
|
|
|
(284
|
)
|
|
142
|
|
|
—
|
|
|
349
|
|
|||||
Interest expense
|
|
(117
|
)
|
|
(221
|
)
|
|
(4
|
)
|
|
214
|
|
|
(128
|
)
|
|||||
Interest and investment income (loss)
|
|
10
|
|
|
39
|
|
|
163
|
|
|
(214
|
)
|
|
(2
|
)
|
|||||
Other loss
|
|
—
|
|
|
(46
|
)
|
|
—
|
|
|
—
|
|
|
(46
|
)
|
|||||
Income (loss) before income taxes
|
|
384
|
|
|
(512
|
)
|
|
301
|
|
|
—
|
|
|
173
|
|
|||||
Income tax (expense) benefit
|
|
—
|
|
|
129
|
|
|
(57
|
)
|
|
—
|
|
|
72
|
|
|||||
Equity (deficit) in earnings in subsidiaries
|
|
(139
|
)
|
|
173
|
|
|
—
|
|
|
(34
|
)
|
|
—
|
|
|||||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
$
|
245
|
|
|
$
|
(210
|
)
|
|
$
|
244
|
|
|
$
|
(34
|
)
|
|
$
|
245
|
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
(424
|
)
|
|
$
|
(339
|
)
|
|
$
|
326
|
|
|
$
|
13
|
|
|
$
|
(424
|
)
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
36
|
|
|
—
|
|
|
—
|
|
|
36
|
|
|||||
Currency translation adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
3
|
|
|
(3
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
36
|
|
|
4
|
|
|
(3
|
)
|
|
37
|
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
(424
|
)
|
|
$
|
(303
|
)
|
|
$
|
330
|
|
|
$
|
10
|
|
|
$
|
(387
|
)
|
millions
|
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net income (loss)
|
|
$
|
245
|
|
|
$
|
(210
|
)
|
|
$
|
244
|
|
|
$
|
(34
|
)
|
|
$
|
245
|
|
Other comprehensive income
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Pension and postretirement adjustments, net of tax
|
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|||||
Currency translation adjustments, net of tax
|
|
—
|
|
|
—
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|||||
Unrealized net gain, net of tax
|
|
—
|
|
|
—
|
|
|
26
|
|
|
(26
|
)
|
|
—
|
|
|||||
Total other comprehensive income
|
|
—
|
|
|
50
|
|
|
27
|
|
|
(26
|
)
|
|
51
|
|
|||||
Comprehensive income (loss) attributable to Holdings' shareholders
|
|
$
|
245
|
|
|
$
|
(160
|
)
|
|
$
|
271
|
|
|
$
|
(60
|
)
|
|
$
|
296
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
4
|
|
|
$
|
(1,195
|
)
|
|
$
|
41
|
|
|
$
|
—
|
|
|
$
|
(1,150
|
)
|
Proceeds from sales of property and investments
|
—
|
|
|
76
|
|
|
88
|
|
|
—
|
|
|
164
|
|
|||||
Purchases of property and equipment
|
—
|
|
|
(12
|
)
|
|
(2
|
)
|
|
—
|
|
|
(14
|
)
|
|||||
Net investing with Affiliates
|
(94
|
)
|
|
(126
|
)
|
|
(589
|
)
|
|
809
|
|
|
—
|
|
|||||
Net cash used in investing activities
|
(94
|
)
|
|
(62
|
)
|
|
(503
|
)
|
|
809
|
|
|
150
|
|
|||||
Proceeds from debt issuances
|
140
|
|
|
195
|
|
|
584
|
|
|
—
|
|
|
919
|
|
|||||
Repayments of long-term debt
|
(48
|
)
|
|
(372
|
)
|
|
(98
|
)
|
|
—
|
|
|
(518
|
)
|
|||||
Increase in short-term borrowings, primarily 90 days or less
|
—
|
|
|
630
|
|
|
—
|
|
|
—
|
|
|
630
|
|
|||||
Proceeds from sale-leaseback financing
|
—
|
|
|
130
|
|
|
—
|
|
|
—
|
|
|
130
|
|
|||||
Debt issuance costs
|
(2
|
)
|
|
(4
|
)
|
|
(25
|
)
|
|
—
|
|
|
(31
|
)
|
|||||
Net borrowing with Affiliates
|
126
|
|
|
683
|
|
|
—
|
|
|
(809
|
)
|
|
—
|
|
|||||
Net cash provided by financing activities
|
216
|
|
|
1,262
|
|
|
461
|
|
|
(809
|
)
|
|
1,130
|
|
|||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
126
|
|
|
5
|
|
|
(1
|
)
|
|
—
|
|
|
130
|
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF YEAR
|
154
|
|
|
152
|
|
|
30
|
|
|
—
|
|
|
336
|
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD
|
$
|
280
|
|
|
$
|
157
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
466
|
|
millions
|
Parent
|
|
Guarantor
Subsidiaries |
|
Non-
Guarantor Subsidiaries |
|
Eliminations
|
|
Consolidated
|
||||||||||
Net cash provided by (used in) operating activities
|
$
|
—
|
|
|
$
|
(1,052
|
)
|
|
$
|
172
|
|
|
$
|
—
|
|
|
$
|
(880
|
)
|
Proceeds from sales of property and investments
|
—
|
|
|
193
|
|
|
—
|
|
|
—
|
|
|
193
|
|
|||||
Proceeds from Craftsman Sale
|
572
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
572
|
|
|||||
Purchases of property and equipment
|
—
|
|
|
(19
|
)
|
|
(3
|
)
|
|
—
|
|
|
(22
|
)
|
|||||
Net investing with Affiliates
|
(572
|
)
|
|
—
|
|
|
(157
|
)
|
|
729
|
|
|
—
|
|
|||||
Net cash provided by (used in) investing activities
|
—
|
|
|
174
|
|
|
(160
|
)
|
|
729
|
|
|
743
|
|
|||||
Repayments of long-term debt
|
—
|
|
|
(430
|
)
|
|
—
|
|
|
—
|
|
|
(430
|
)
|
|||||
Increase in short-term borrowings, primarily 90 days or less
|
—
|
|
|
551
|
|
|
—
|
|
|
—
|
|
|
551
|
|
|||||
Debt issuance costs
|
—
|
|
|
(6
|
)
|
|
—
|
|
|
—
|
|
|
(6
|
)
|
|||||
Net borrowing with Affiliates
|
—
|
|
|
729
|
|
|
—
|
|
|
(729
|
)
|
|
—
|
|
|||||
Net cash provided by financing activities
|
—
|
|
|
844
|
|
|
—
|
|
|
(729
|
)
|
|
115
|
|
|||||
NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH
|
—
|
|
|
(34
|
)
|
|
12
|
|
|
—
|
|
|
(22
|
)
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH BEGINNING OF YEAR
|
—
|
|
|
260
|
|
|
26
|
|
|
—
|
|
|
286
|
|
|||||
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH END OF PERIOD
|
$
|
—
|
|
|
$
|
226
|
|
|
$
|
38
|
|
|
$
|
—
|
|
|
$
|
264
|
|
|
13 Weeks Ended
|
||||||
millions, except per share data and percentages
|
May 5,
2018 |
|
April 29,
2017 |
||||
REVENUES
|
|
|
|
||||
Merchandise sales
|
$
|
2,212
|
|
|
$
|
3,329
|
|
Services and other
|
679
|
|
|
870
|
|
||
Total revenues
|
2,891
|
|
|
4,199
|
|
||
COSTS AND EXPENSES
|
|
|
|
||||
Cost of sales, buying and occupancy - merchandise sales
|
1,899
|
|
|
2,779
|
|
||
Gross margin dollars - merchandise sales
|
313
|
|
|
550
|
|
||
Gross margin rate - merchandise sales
|
14.2
|
%
|
|
16.5
|
%
|
||
Cost of sales and occupancy - services and other
|
387
|
|
|
489
|
|
||
Gross margin dollars - services and other
|
292
|
|
|
381
|
|
||
Gross margin rate - services and other
|
43.0
|
%
|
|
43.8
|
%
|
||
Total cost of sales, buying and occupancy
|
2,286
|
|
|
3,268
|
|
||
Total gross margin dollars
|
605
|
|
|
931
|
|
||
Total gross margin rate
|
20.9
|
%
|
|
22.2
|
%
|
||
Selling and administrative
|
906
|
|
|
1,221
|
|
||
Selling and administrative expense as a percentage of total revenues
|
31.3
|
%
|
|
29.1
|
%
|
||
Depreciation and amortization
|
67
|
|
|
87
|
|
||
Impairment charges
|
14
|
|
|
15
|
|
||
Gain on sales of assets
|
(165
|
)
|
|
(741
|
)
|
||
Total costs and expenses
|
3,108
|
|
|
3,850
|
|
||
Operating income (loss)
|
(217
|
)
|
|
349
|
|
||
Interest expense
|
(166
|
)
|
|
(128
|
)
|
||
Interest and investment income (loss)
|
1
|
|
|
(2
|
)
|
||
Other loss
|
(33
|
)
|
|
(46
|
)
|
||
Income (loss) before income taxes
|
(415
|
)
|
|
173
|
|
||
Income tax (expense) benefit
|
(9
|
)
|
|
72
|
|
||
NET INCOME (LOSS) ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
$
|
(424
|
)
|
|
$
|
245
|
|
NET INCOME (LOSS) PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS' SHAREHOLDERS
|
|
|
|
||||
Basic earnings (loss) per share
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
Diluted earnings (loss) per share
|
$
|
(3.93
|
)
|
|
$
|
2.29
|
|
Basic weighted average common shares outstanding
|
108.0
|
|
|
107.2
|
|
||
Diluted weighted average common shares outstanding
|
108.0
|
|
|
107.2
|
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
Net income (loss) attributable to Holdings per statement of operations
|
$
|
(424
|
)
|
|
$
|
245
|
|
Income tax expense (benefit)
|
9
|
|
|
(72
|
)
|
||
Interest expense
|
166
|
|
|
128
|
|
||
Interest and investment (income) loss
|
(1
|
)
|
|
2
|
|
||
Other loss
|
33
|
|
|
46
|
|
||
Operating income (loss)
|
(217
|
)
|
|
349
|
|
||
Depreciation and amortization
|
67
|
|
|
87
|
|
||
Gain on sales of assets
|
(165
|
)
|
|
(741
|
)
|
||
Impairment charges
|
14
|
|
|
15
|
|
||
Before excluded items
|
(301
|
)
|
|
(290
|
)
|
||
|
|
|
|
||||
Closed store reserve and severance
|
76
|
|
|
76
|
|
||
Other
(1)
|
18
|
|
|
15
|
|
||
Amortization of deferred Seritage gain
|
(18
|
)
|
|
(21
|
)
|
||
Adjusted EBITDA
|
$
|
(225
|
)
|
|
$
|
(220
|
)
|
|
13 Weeks Ended
|
||||||||||||||||||
|
May 5, 2018
|
|
April 29, 2017
|
||||||||||||||||
millions
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
|
Kmart
|
Sears Domestic
|
Sears Holdings
|
||||||||||||
Operating income (loss) per statement of operations
|
$
|
(73
|
)
|
$
|
(144
|
)
|
$
|
(217
|
)
|
|
$
|
450
|
|
$
|
(101
|
)
|
$
|
349
|
|
Depreciation and amortization
|
9
|
|
58
|
|
67
|
|
|
13
|
|
74
|
|
87
|
|
||||||
Gain on sales of assets
|
(40
|
)
|
(125
|
)
|
(165
|
)
|
|
(597
|
)
|
(144
|
)
|
(741
|
)
|
||||||
Impairment charges
|
6
|
|
8
|
|
14
|
|
|
5
|
|
10
|
|
15
|
|
||||||
Before excluded items
|
(98
|
)
|
(203
|
)
|
(301
|
)
|
|
(129
|
)
|
(161
|
)
|
(290
|
)
|
||||||
|
|
|
|
|
|
|
|
||||||||||||
Closed store reserve and severance
|
28
|
|
48
|
|
76
|
|
|
34
|
|
42
|
|
76
|
|
||||||
Other
(1)
|
—
|
|
18
|
|
18
|
|
|
—
|
|
15
|
|
15
|
|
||||||
Amortization of deferred Seritage gain
|
(2
|
)
|
(16
|
)
|
(18
|
)
|
|
(4
|
)
|
(17
|
)
|
(21
|
)
|
||||||
Adjusted EBITDA
|
$
|
(72
|
)
|
$
|
(153
|
)
|
$
|
(225
|
)
|
|
$
|
(99
|
)
|
$
|
(121
|
)
|
$
|
(220
|
)
|
% to revenues
|
(9.0
|
)%
|
(7.3
|
)%
|
(7.8
|
)%
|
|
(6.8
|
)%
|
(4.4
|
)%
|
(5.2
|
)%
|
millions
|
|
13 Weeks Ended May 5, 2018
|
||||||||||||||
Other Excluded Items:
|
|
Closed store reserve and severance
|
|
Other
(1)
|
|
Amortization of deferred Seritage gain
|
|
Total
|
||||||||
Gross margin impact
|
|
$
|
9
|
|
|
$
|
—
|
|
|
$
|
(18
|
)
|
|
$
|
(9
|
)
|
Selling and administrative impact
|
|
67
|
|
|
18
|
|
|
—
|
|
|
85
|
|
||||
Total
|
|
$
|
76
|
|
|
$
|
18
|
|
|
$
|
(18
|
)
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
||||||||
millions
|
|
13 Weeks Ended April 29, 2017
|
||||||||||||||
Other Excluded Items:
|
|
Closed store reserve and severance
|
|
Other
(1)
|
|
Amortization of deferred Seritage gain
|
|
Total
|
||||||||
Gross margin impact
|
|
$
|
15
|
|
|
$
|
—
|
|
|
$
|
(21
|
)
|
|
$
|
(6
|
)
|
Selling and administrative impact
|
|
61
|
|
|
15
|
|
|
—
|
|
|
76
|
|
||||
Total
|
|
$
|
76
|
|
|
$
|
15
|
|
|
$
|
(21
|
)
|
|
$
|
70
|
|
•
|
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 plans are 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 pension and postretirement benefit expense was $657 million in 2017, $317 million in 2016 and $228 million in 2015. Pension expense is comprised of interest cost, expected return on plan assets and recognized net loss and other. This adjustment eliminates total net periodic benefit expense from the statement of operations to improve comparability. Pension expense is included in the determination of net income (loss).
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
Components of net periodic expense:
|
|
|
|
||||
Interest cost
|
$
|
37
|
|
|
$
|
53
|
|
Expected return on plan assets
|
(40
|
)
|
|
(57
|
)
|
||
Recognized net loss and other
|
36
|
|
|
50
|
|
||
Net periodic expense
|
$
|
33
|
|
|
$
|
46
|
|
•
|
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.
|
•
|
Other – Consisted of items associated with an insurance transaction, natural disasters and transaction costs associated with strategic initiatives.
|
•
|
Amortization of deferred Seritage gain – A portion of the gain on the Seritage transaction and certain other sale-leaseback transactions were deferred and will be recognized in proportion to the related rent expense, which is a component of cost of sales, buying and occupancy in the Consolidated Statements of Operations, over the lease terms. Management considers the amortization of the deferred Seritage gain to result from investing decisions rather than ongoing operations.
|
|
13 Weeks Ended
|
||||||
millions, except number of stores
|
May 5,
2018 |
|
April 29,
2017 |
||||
Total revenues
|
$
|
797
|
|
|
$
|
1,447
|
|
|
|
|
|
||||
Cost of sales, buying and occupancy
|
644
|
|
|
1,184
|
|
||
Gross margin dollars
|
153
|
|
|
263
|
|
||
Gross margin rate
|
19.2
|
%
|
|
18.2
|
%
|
||
|
|
|
|
||||
Selling and administrative
|
251
|
|
|
392
|
|
||
Selling and administrative expense as a percentage of total revenues
|
31.5
|
%
|
|
27.1
|
%
|
||
Depreciation and amortization
|
9
|
|
|
13
|
|
||
Impairment charges
|
6
|
|
|
5
|
|
||
Gain on sales of assets
|
(40
|
)
|
|
(597
|
)
|
||
Total costs and expenses
|
870
|
|
|
997
|
|
||
Operating income (loss)
|
$
|
(73
|
)
|
|
$
|
450
|
|
Adjusted EBITDA
|
$
|
(72
|
)
|
|
$
|
(99
|
)
|
Number of stores
|
365
|
|
|
624
|
|
|
13 Weeks Ended
|
||||||
millions, except number of stores
|
May 5,
2018 |
|
April 29,
2017 |
||||
Total revenues
|
$
|
2,094
|
|
|
$
|
2,752
|
|
|
|
|
|
||||
Cost of sales, buying and occupancy
|
1,642
|
|
|
2,084
|
|
||
Gross margin dollars
|
452
|
|
|
668
|
|
||
Gross margin rate
|
21.6
|
%
|
|
24.3
|
%
|
||
|
|
|
|
||||
Selling and administrative
|
655
|
|
|
829
|
|
||
Selling and administrative expense as a percentage of total revenues
|
31.3
|
%
|
|
30.1
|
%
|
||
Depreciation and amortization
|
58
|
|
|
74
|
|
||
Impairment charges
|
8
|
|
|
10
|
|
||
Gain on sales of assets
|
(125
|
)
|
|
(144
|
)
|
||
Total costs and expenses
|
2,238
|
|
|
2,853
|
|
||
Operating loss
|
$
|
(144
|
)
|
|
$
|
(101
|
)
|
Adjusted EBITDA
|
$
|
(153
|
)
|
|
$
|
(121
|
)
|
Number of:
|
|
|
|
||||
Full-line stores
|
506
|
|
|
626
|
|
||
Specialty stores
|
23
|
|
|
25
|
|
||
Total Sears Domestic Stores
|
529
|
|
|
651
|
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Cash and cash equivalents
|
$
|
104
|
|
|
$
|
136
|
|
|
$
|
113
|
|
Cash posted as collateral
|
5
|
|
|
3
|
|
|
4
|
|
|||
Credit card deposits in transit
|
77
|
|
|
97
|
|
|
65
|
|
|||
Total cash and cash equivalents
|
186
|
|
|
236
|
|
|
182
|
|
|||
Restricted cash
|
280
|
|
|
28
|
|
|
154
|
|
|||
Total cash balances
|
$
|
466
|
|
|
$
|
264
|
|
|
$
|
336
|
|
•
|
Securing an additional $100 million incremental real estate loan, pursuant to an amendment to the Second Amended and Restated Loan Agreement;
|
•
|
Closing on a new secured loan (the "Secured Loan") and mezzanine loan (the "Mezzanine Loan"), pursuant to which the Company initially received aggregate gross proceeds of $440 million,
in connection with the release of 138 of our properties from the ring-fence arrangement with the PBGC as described above. The properties serve as collateral for the Secured Loan, and the Mezzanine Loan is secured by
pledge of the equity interests in the direct parent company of the entities that own such properties. The Company contributed approximately $282 million of the proceeds of such loans to our pension plans, and deposited $125 million into an escrow for the benefit of our pension plans. The Mezzanine Loan Agreement contains an uncommitted accordion feature pursuant to which the Mezzanine Loan Borrower may incur additional loans ("Additional Mezzanine Loans"), under which the Company obtained additional borrowings of $144 million during the first quarter 2018. The Company has repaid approximately $98 million aggregate principal amount of the Secured Loan using proceeds generated from the sale of the underlying properties;
|
•
|
Obtaining a $125 million FILO term loan (the "FILO Loan") under our Amended Domestic Credit Agreement, for which the net proceeds of $122 million were used to reduce outstanding borrowings under our revolving credit facility;
|
•
|
Completing the previously announced private exchange offers for outstanding 8% Senior Unsecured Notes Due 2019 and 6 5/8% Senior Secured Notes Due 2018 and negotiated exchanges of and amendments to certain other indebtedness;
|
•
|
Executed amendments to the LC Facility in April 2018, which extended the maturity to December 28, 2019;
|
•
|
Entering into an agreement with a third party insurance company pursuant to which the Company paid $206 million to the insurance company in exchange for such company assuming certain of Holdings' workers' compensation and auto per occurrence deductible losses (the "Insurance Transaction"). In addition, in connection with the Insurance Transaction, the beneficiary under certain letters of credit agreed to cancel $254 million of such letters of credit, as the related insurance liabilities had been extinguished. The agreement will also result in reduced administrative costs associated with the management of the related insurance liabilities;
|
•
|
Entering into an amendment (the "Amendment") to the program agreement with Citibank, N.A., subsequent to the end of the first quarter, pursuant to which Citibank offers Sears proprietary and co-branded credit cards and administers the associated credit card program. The Amendment provides for a five year extension of our 15-year co-brand and private label credit card relationship along with long-term marketing arrangements that include ongoing enhancements to the Shop Your Way Mastercard rewards program. Pursuant to the Amendment, Citibank paid Sears $425 million, and Sears funded a reserve for the benefit of Citibank in the amount of $25 million through an irrevocable standby letter of credit from a third party financial institution; and
|
•
|
Generating approximately $290 million of proceeds from real estate sales during the first quarter of 2018.
|
•
|
Sales of the remaining properties securing the remaining principal amount of the Secured Loan to fund the repayment of such Secured Loan;
|
•
|
Additional borrowings under the Mezzanine Loan Agreement and the Term Loan Facility;
|
•
|
Monetization of the Kenmore brand;
|
•
|
Extension of maturities beyond May 2019 of Line of Credit Loans under the Second Lien Credit Agreement, the 2016 Secured Loan Facility, the Incremental Loans and the Term Loan under the Amended Domestic Credit Agreement;
|
•
|
Additional borrowings secured by real estate assets or borrowings under the short-term basket; and
|
•
|
Further restructurings to help manage expenses and improve profitability.
|
millions
|
May 5,
2018 |
|
April 29,
2017 |
|
February 3,
2018 |
||||||
Short-term borrowings:
|
|
|
|
|
|
||||||
Unsecured commercial paper
|
$
|
—
|
|
|
$
|
15
|
|
|
$
|
—
|
|
Secured borrowings
|
901
|
|
|
536
|
|
|
271
|
|
|||
Line of credit loans
|
570
|
|
|
—
|
|
|
500
|
|
|||
Incremental loans
|
140
|
|
|
—
|
|
|
144
|
|
|||
Secured loan
|
93
|
|
|
—
|
|
|
—
|
|
|||
Long-term debt, including current portion:
|
|
|
|
|
|
||||||
Notes and debentures outstanding
|
3,409
|
|
|
3,625
|
|
|
3,145
|
|
|||
Capitalized lease obligations
|
66
|
|
|
105
|
|
|
72
|
|
|||
Total borrowings
|
$
|
5,179
|
|
|
$
|
4,281
|
|
|
$
|
4,132
|
|
|
13 Weeks Ended
|
||||||
millions
|
May 5,
2018 |
|
April 29,
2017 |
||||
Secured borrowings:
|
|
|
|
||||
Maximum daily amount outstanding during the period
|
$
|
901
|
|
|
$
|
607
|
|
Average amount outstanding during the period
|
497
|
|
|
209
|
|
||
Amount outstanding at period-end
|
901
|
|
|
536
|
|
||
Weighted average interest rate
|
6.7
|
%
|
|
6.0
|
%
|
||
|
|
|
|
||||
Unsecured commercial paper:
|
|
|
|
||||
Maximum daily amount outstanding during the period
|
$
|
50
|
|
|
$
|
100
|
|
Average amount outstanding during the period
|
14
|
|
|
22
|
|
||
Amount outstanding at period-end
|
—
|
|
|
15
|
|
||
Weighted average interest rate
|
11.8
|
%
|
|
7.9
|
%
|
||
|
|
|
|
||||
Line of credit loans:
|
|
|
|
||||
Maximum daily amount outstanding during the period
|
$
|
570
|
|
|
$
|
—
|
|
Average amount outstanding during the period
|
559
|
|
|
—
|
|
||
Amount outstanding at period-end
|
570
|
|
|
—
|
|
||
Weighted average interest rate
|
11.1
|
%
|
|
—
|
%
|
|
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
|
||||||
February 4, 2018 to March 3, 2018
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||
March 4, 2018 to April 7, 2018
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||
April 8, 2018 to May 5, 2018
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|||
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
|
3.1
|
|
|
|
|
|
|
|
|
|
3.2
|
|
|
|
|
|
|
|
|
|
*10.1
|
|
|
|
|
|
|
|
|
|
*10.2
|
|
|
|
|
|
|
|
|
|
*10.3
|
|
|
|
|
|
|
|
|
|
*10.4
|
|
|
|
|
|
|
|
|
|
*10.5
|
|
|
|
|
|
|
|
|
|
*10.6
|
|
|
|
|
|
|
|
|
|
*10.7
|
|
|
|
|
|
|
|
|
|
*10.8
|
|
|
|
|
|
|
|
|
|
*31.1
|
|
|
|
|
|
|
|
|
|
*31.2
|
|
|
|
|
|
|
|
|
|
*32.1
|
|
|
|
|
|
|
|
|
|
*32.2
|
|
|
|
|
|
|
|
|
|
101
|
|
|
|
The following financial information from the Quarterly Report on Form 10-Q for the fiscal quarter ended May 5, 2018, formatted in XBRL (eXtensible Business Reporting Language) and furnished electronically herewith: (i) the Condensed Consolidated Statements of Operations (Unaudited) for the 13 weeks ended May 5, 2018 and April 29, 2017; (ii) the Condensed Consolidated Statements of Comprehensive Loss (Unaudited) for the 13 weeks ended May 5, 2018 and April 29, 2017; (iii) the Condensed Consolidated Balance Sheets (Unaudited) as of May 5, 2018, April 29, 2017 and February 3, 2018; (iv) the Condensed Consolidated Statements of Cash Flows (Unaudited) for the 13 weeks ended May 5, 2018 and April 29, 2017; (v) the Condensed Consolidated Statements of Deficit (Unaudited) for the 13 weeks ended May 5, 2018 and April 29, 2017; and (vi) the Notes to the Condensed Consolidated Financial Statements (Unaudited).
|
|
|
|
|
|
S
EARS
H
OLDINGS
C
ORPORATION
|
|
|
|
|
Date: May 31, 2018
|
By:
|
/s/
R
OBERT
A. R
IECKER
|
|
Name:
|
Robert A. Riecker
|
|
Title:
|
Chief Financial Officer*
|
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