EX-99.1 2 dex991.htm PRESS RELEASE Press release

Exhibit 99.1

NEWS MEDIA CONTACT:

Sears Holdings Public Relations

(847) 286-8371

FOR IMMEDIATE RELEASE:

August 18, 2011

SEARS HOLDINGS REPORTS SECOND QUARTER RESULTS

HOFFMAN ESTATES, Ill. – Sears Holdings Corporation (“Holdings,” “we,” “us,” “our” or the “Company”) (NASDAQ: SHLD) today reported its second quarter 2011 results. In summary, we reported:

 

 

Net loss attributable to Holdings’ shareholders for the quarter of $146 million, or $1.37 loss per diluted share, in 2011, and $39 million, or $0.35 loss per diluted share, in 2010;

 

 

Adjusted loss per diluted share for the second quarter of $1.13 in 2011 and $0.19 in 2010;

 

 

Adjusted EBITDA for the quarter of $79 million ($51 million domestic and $28 million at Sears Canada) in 2011 and $254 million ($178 million domestic and $76 million at Sears Canada) in 2010;

 

 

Kmart’s comparable store sales were flat, Sears Domestic comparable store sales declined 1.2%;

 

 

Store closing and severance charges of $48 million recognized in the second quarter of fiscal 2011 as part of restructuring initiatives;

 

 

Domestic inventory declined $75 million from the prior year balance; and

 

 

Cash on hand of $679 million and nearly $3 billion of availability on domestic and Canadian revolving credit facilities.

Lou D’Ambrosio, Sears Holdings’ Chief Executive Officer and President, said, “We are not satisfied with our results and are taking actions to turn around our performance in a challenging economic environment. While we improved our revenue trend, including growing our online business by over 30%, we had lower gross margins. The margin decline was due to markdowns taken to clear seasonal inventory and promotional activity. Inventory was tightly managed, as we finished the quarter with domestic inventory $75 million lower than prior year compared to the first quarter when inventory was $416 million higher than prior year.”

Mr. D’Ambrosio added, “We implemented targeted expense actions, continued to invest in the business to serve our customers, and welcomed talented new leaders to the team, including Rob Schriesheim as CFO, Edgar Huber to lead Lands’ End and Monica Woo as head of Sears marketing. We are launching new exclusive brands in apparel - the Kardashian Kollection at Sears and Sofia by Sofia Vergara at Kmart. We also introduced innovative products, such as the newly launched 31 cubic foot Kenmore Trio refrigerator, as Kenmore recaptured the leadership position in major appliances.”

During the second quarter, we recognized $48 million of costs associated with various actions to improve our productivity as follows:

 

   

Closing 29 stores, which consist of 10 Kmart stores, three Full-line stores, 12 Hardware and Appliance stores, two Sears Auto Centers and two The Great Indoors stores;

 

   

Converting 14 Sears Grand stores to Kmart stores;

 

   

Closing seven product repair center locations; and

 

   

In addition to position reductions from the above actions, reducing approximately 250 existing support positions.

These actions are expected to generate cash from the liquidation of inventory and other proceeds and result in estimated annualized savings of approximately $50 million. The two Great Indoors store locations were sold during the quarter


and the sale generated proceeds of $33 million and a gain of $21 million. The gain reported in “gain on sale of assets” on the income statement. The list of stores closing can be found at www.searsmedia.com.

Second Quarter Revenues and Comparable Store Sales

Total revenues decreased $125 million to $10.3 billion for the quarter ended July 30, 2011, as compared to total revenues of $10.5 billion for the quarter ended July 31, 2010. The decline in total revenue for the quarter was primarily a result of a 0.7% decrease in domestic comparable store sales and the effect of having fewer Kmart and Sears Full-line stores in operation, in addition to a 5.8% decline in comparable store sales at Sears Canada, partially offset by an increase of $86 million due to changes in the Canadian foreign exchange rate.

The domestic comparable store sales trend improved over the first quarter decline of 3.6%, and included a decrease at Sears Domestic of 1.2%, while sales at Kmart were flat. Decreases in sales for the quarter at Sears Domestic were primarily driven by consumer electronics. Excluding the consumer electronics decline, domestic comparable store sales would have been flat. The Kmart quarterly comparable store sales included increases in several categories, such as outdoor living, grocery and household, tools, appliances, and footwear, which were offset by decreases in the consumer electronics, pharmacy and drug categories.

Beginning with the first quarter of 2011, we include in comparable stores sales online sales from sears.com and kmart.com shipped directly to customers. These online sales increased 32% over last year and the change resulted in a positive benefit of approximately 60 basis points to total domestic comparable sales for the second quarter.

Operating Income

Operating loss for the quarter was $177 million in 2011 compared to operating income of $5 million in 2010. The decline in operating income of $182 million was primarily the result of a decline in our gross margin dollars, given lower overall sales and a decline in our gross margin rate of 120 basis points and an increase in selling and administrative expenses at Sears Canada.

For the quarter, we generated gross margin of $2.7 billion in fiscal 2011 and $2.8 billion last year. The total decline in gross margin dollars of $158 million was primarily driven by decreases in the gross margin rate at Kmart and Sears Domestic and included an increase of $26 million related to the impact of foreign currency exchange rates on gross margin at Sears Canada.

Kmart’s gross margin rate declined 160 basis points mainly due to increased promotional and clearance markdowns in apparel and home, as well as declines in other categories. Sears Domestic’s gross margin rate declined 110 basis points mainly due to reduced margins in the home appliance category, driven primarily by increased promotional activity, including the use of instant free delivery, increased promotional markdowns in apparel and declines in home services.

Selling and administrative expenses at Sears Canada increased $53 million from last year, and included an increase of $22 million related to the impact of foreign currency exchange rates. On a Canadian dollar basis, selling and administrative expenses increased by $31 million primarily due to increased investment in strategic projects, partially offset by reductions in payroll and advertising expenses. This increase was partially offset by reductions at Sears Domestic.

Operating loss for the second quarter of 2011 includes expenses of $66 million related to domestic pension plans, store closings and severance. Operating income for the second quarter of 2010 included expenses of $37 million related to domestic pension plans, store closings and severance. See the attached schedule, “Adjusted Earnings per Share,” for a reconciliation from GAAP to as adjusted amounts, including adjusted earnings per diluted share.

Financial Position

We had cash balances of $679 million at July 30, 2011 ($477 million domestic and $202 million at Sears Canada), $1.2 billion at July 31, 2010 and $1.4 billion at January 29, 2011. Significant uses of our cash during the first half of 2011 included capital expenditures of $199 million, repurchases of our common stock of $154 million, contributions to our pension and post-retirement benefit plans of $143 million and working capital increases.

 

2


Merchandise inventories at July 30, 2011 and July 31, 2010 were $9.4 billion. Domestic inventory decreased approximately $75 million from $8.6 billion at July 31, 2010. The decrease was primarily at Sears Domestic and was due to declines in consumer electronic, appliance, and home categories, partially offset by increased apparel inventory at both Lands’ End and Kmart. Sears Canada’s inventory levels increased approximately $70 million from July 31, 2010 to $872 million at July 30, 2011, primarily due to exchange rate.

Total debt (consisting of short-term borrowings, long-term debt and capital lease obligations) was $3.6 billion at July 30, 2011, up from $3.2 billion at July 31, 2010, due primarily to our $1.25 billion senior secured notes offering in October 2010, partially offset by repayment of long-term debt by Sears Domestic and Sears Canada. Availability under our credit facilities was $2.9 billion ($2.2 billion domestic and $0.7 billion at Sears Canada).

Adjusted EBITDA

For purposes of evaluating operating performance, we use an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) measurement computed as net (loss) income attributable to Sears Holdings Corporation appearing on the statements of operations excluding (loss) income attributable to noncontrolling interest, income tax expense (benefit), interest and investment income, other loss, interest expense, gain on sales of assets and depreciation and amortization. In addition, it is adjusted to exclude certain significant items as set forth below. Our management uses Adjusted EBITDA to evaluate the operating performance of our businesses, as well as executive compensation metrics, for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items.

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because:

 

 

EBITDA excludes the effects of financing 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 the comparability of results.

Adjusted EBITDA was determined as follows:

 

     13 Weeks Ended     26 Weeks Ended  
     July 30,
2011
    July 31,
2010
    July 30,
2011
    July 31,
2010
 

Net loss attributable to Holdings’ Shareholders

   $ (146   $ (39   $ (316   $ (23

Income (loss) attributable to noncontrolling interest

     2        5        (2     6   

Income tax benefit

     (94     (19     (173     (4

Interest and investment income

     (12     (6     (25     (21

Other (income) loss

     (4     (5     8        9   

Interest expense

     77        69        157        136   

Gain on sales of assets

     (29     (9     (31     (53

Depreciation and amortization

     227        221        445        442   
  

 

 

   

 

 

   

 

 

   

 

 

 

Before excluded items

     21        217        63        492   

Domestic pension expense

     18        31        37        57   

Closed store reserve and severance

     40        6        42        9   
  

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA as defined

   $ 79      $ 254      $ 142      $ 558   
  

 

 

   

 

 

   

 

 

   

 

 

 

% to revenues

     0.8     2.4     0.7     2.7

 

3


Adjusted EBITDA for our segments are as follows:

 

     13 Weeks Ended  
     Adjusted EBITDA      % To Revenues  
     July 30,
2011
     July 31,
2010
     July 30,
2011
    July 31,
2010
 

Kmart

   $ 26       $ 57         0.7     1.6

Sears Domestic

     25         121         0.5     2.1

Sears Canada

     28         76         2.4     6.6
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Adjusted EBITDA

   $ 79       $ 254         0.8     2.4
  

 

 

    

 

 

    

 

 

   

 

 

 
     26 Weeks Ended  
     Adjusted EBITDA      % To Revenues  
     July 30,
2011
     July 31,
2010
     July 30,
2011
    July 31,
2010
 

Kmart

   $ 82       $ 148         1.2     2.1

Sears Domestic

     47         287         0.4     2.6

Sears Canada

     13         123         0.6     5.6
  

 

 

    

 

 

    

 

 

   

 

 

 

Total Adjusted EBITDA

   $ 142       $ 558         0.7     2.7
  

 

 

    

 

 

    

 

 

   

 

 

 

Forward-Looking Statements

Results are preliminary and unaudited. This press release contains forward-looking statements about our expectations for the second quarter of fiscal 2011. Forward-looking statements are subject to risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Such statements are based upon the current beliefs and expectations of our management and are subject to significant risks and uncertainties. The following factors, among others, could cause actual results to differ from those set forth in the forward-looking statements: our ability to offer merchandise and services that our customers want, including our proprietary brand products; our ability to successfully implement initiatives to improve inventory management and other capabilities; competitive conditions in the retail and related services industries; worldwide economic conditions and business uncertainty, including the impact of rising fuel prices, the availability of consumer and commercial credit, changes in consumer confidence, tastes, preferences and spending, and changes in vendor relationships, including the impact of increases in the cost of raw materials experienced by certain of our vendors; the impact of seasonal buying patterns, including seasonal fluctuations due to weather conditions, which are difficult to forecast with certainty; our dependence on sources outside the United States for significant amounts of our merchandise; our extensive reliance on computer systems to process transactions, summarize results and manage our business; our reliance on third parties to provide us with services in connection with the administration of certain aspects of our business; impairment charges for goodwill and intangible assets or fixed-asset impairment for long-lived assets; our ability to attract, motivate and retain key executives and other associates; the outcome of pending and/or future legal proceedings, including product liability claims and proceedings with respect to which the parties have reached a preliminary settlement; and the timing and amount of required pension plan funding. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available.

About Sears Holdings Corporation

Sears Holdings Corporation is the nation’s fourth largest broadline retailer with over 4,000 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, consumer electronics and automotive repair and maintenance. Sears Holdings is the 2011 ENERGY STAR® Retail Partner of the Year. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands’ End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has the Country Living collection, which is offered by Sears and Kmart. We are the nation’s largest provider of home services, with more than 11 million service calls made annually. Sears Holdings Corporation operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. For more information, visit Sears Holdings’ website at www.searsholdings.com.

* * * * *

 

4


Sears Holdings Corporation

Consolidated Statements of Operations

(Unaudited)

Amounts are Preliminary and Subject to Change

 

     13 Weeks Ended     26 Weeks Ended  
millions, except per share data    July 30,
2011
    July 31,
2010
    July 30,
2011
    July 31,
2010
 

REVENUES

        

Merchandise sales and services

   $ 10,333      $ 10,458      $ 20,038      $ 20,504   
  

 

 

   

 

 

   

 

 

   

 

 

 

COSTS AND EXPENSES

        

Cost of sales, buying and occupancy

     7,668        7,635        14,772        14,851   

Gross margin dollars

     2,665        2,823        5,266        5,653   

Gross margin rate

     25.8 %      27.0 %      26.3 %      27.6 % 

Selling and administrative

     2,644        2,606        5,203        5,161   

Selling and administrative expense as a percentage of total revenues

     25.6     24.9     26.0     25.2

Depreciation and amortization

     227        221        445        442   

Gain on sales of assets

     (29     (9     (31     (53
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     10,510        10,453        20,389        20,401   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (177     5        (351     103   

Interest expense

     (77     (69     (157     (136

Interest and investment income

     12        6        25        21   

Other income (loss)

     4        5        (8     (9
  

 

 

   

 

 

   

 

 

   

 

 

 

Loss before income taxes

     (238     (53     (491     (21

Income tax benefit

     94        19        173        4   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net loss

     (144     (34     (318     (17

(Income) loss attributable to noncontrolling interest

     (2     (5     2        (6
  

 

 

   

 

 

   

 

 

   

 

 

 

NET LOSS ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS

   $ (146   $ (39   $ (316   $ (23
  

 

 

   

 

 

   

 

 

   

 

 

 

LOSS PER COMMON SHARE ATTRIBUTABLE TO HOLDINGS’ SHAREHOLDERS

        

Diluted loss per share

   $ (1.37   $ (0.35   $ (2.95   $ (0.20

Diluted weighted average common shares outstanding

     106.8        112.6        107.3        113.6   

 

5


Sears Holdings Corporation

Condensed Consolidated Balance Sheets

Amounts are Preliminary and Subject to Change

 

     (Unaudited)         
millions    July 30,
2011
     July 31,
2010
     January 29,
2011
 

ASSETS

        

Current assets

        

Cash and cash equivalents

   $ 658       $ 1,193       $ 1,375   

Restricted cash

     21         6         15   

Accounts receivable

     782         754         683   

Merchandise inventories

     9,426         9,430         9,123   

Prepaid expenses and other current assets

     417         378         339   
  

 

 

    

 

 

    

 

 

 

Total current assets

     11,304         11,761         11,535   

Property and equipment, net

     7,159         7,485         7,365   

Goodwill

     1,392         1,392         1,392   

Trade names and other intangible assets

     3,106         3,173         3,139   

Other assets

     839         1,022         837   
  

 

 

    

 

 

    

 

 

 

TOTAL ASSETS

   $ 23,800       $ 24,833       $ 24,268   
  

 

 

    

 

 

    

 

 

 

LIABILITIES

        

Current liabilities

        

Short-term borrowings

   $ 927       $ 1,218       $ 360   

Current portion of long-term debt and capitalized lease obligations

     299         590         509   

Merchandise payables

     3,324         3,673         3,101   

Unearned revenues

     963         997         976   

Accrued expenses and other current liabilities

     3,416         3,600         3,672   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     8,929         10,078         8,618   

Long-term debt and capitalized lease obligations

     2,413         1,378         2,663   

Pension and post-retirement benefits

     2,044         2,172         2,151   

Other long-term liabilities

     2,264         2,586         2,222   
  

 

 

    

 

 

    

 

 

 

Total Liabilities

     15,650         16,214         15,654   
  

 

 

    

 

 

    

 

 

 

Total Equity

     8,150         8,619         8,614   
  

 

 

    

 

 

    

 

 

 

TOTAL LIABILITIES AND EQUITY

   $ 23,800       $ 24,833       $ 24,268   
  

 

 

    

 

 

    

 

 

 

Total common shares outstanding

     106.9         110.7         108.9   

 

6


Sears Holdings Corporation

Segment Results

(Unaudited)

Amounts are Preliminary and Subject to Change

 

     13 Weeks Ended July 30, 2011  
millions, except store data    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Merchandise sales and services

   $  3,624      $  5,534      $  1,175      $  10,333   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales, buying and occupancy

     2,799        4,048        821        7,668   

Gross margin dollars

     825        1,486        354        2,665   

Gross margin rate

     22.8%        26.9%        30.1%        25.8%   

Selling and administrative

     809        1,509        326        2,644   

Selling and administrative expense as a percentage of total revenues

     22.3     27.3     27.7     25.6

Depreciation and amortization

     37        164        26        227   

Gain on sales of assets

     (5     (24     —          (29
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     3,640        5,697        1,173        10,510   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ (16   $ (163   $ 2      $ (177
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of:

        

Kmart Stores

     1,304        —          —          1,304   

Full-Line Stores

     —          884        122        1,006   

Specialty Stores

     —          1,370        373        1,743   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Stores

     1,304        2,254        495        4,053   
  

 

 

   

 

 

   

 

 

   

 

 

 
          
     13 Weeks Ended July 31, 2010  
millions, except store data    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Merchandise sales and services

   $ 3,630      $ 5,674      $ 1,154      $ 10,458   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales, buying and occupancy

     2,746        4,084        805        7,635   

Gross margin dollars

     884        1,590        349        2,823   

Gross margin rate

     24.4     28.0     30.2     27.0

Selling and administrative

     830        1,503        273        2,606   

Selling and administrative expense as a percentage of total revenues

     22.9     26.5     23.7     24.9

Depreciation and amortization

     36        160        25        221   

Gain on sales of assets

     (1     (8     —          (9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     3,611        5,739        1,103        10,453   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 19      $ (65   $ 51      $ 5   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of:

        

Kmart Stores

     1,309        —          —          1,309   

Full-Line Stores

     —          897        122        1,019   

Specialty Stores

     —          1,335        316        1,651   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Stores

     1,309        2,232        438        3,979   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

7


Sears Holdings Corporation

Segment Results

(Unaudited)

Amounts are Preliminary and Subject to Change

 

     26 Weeks Ended July 30, 2011  
millions, except store data    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Merchandise sales and services

   $ 7,103      $ 10,746      $ 2,189      $ 20,038   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales, buying and occupancy

     5,433        7,792        1,547        14,772   

Gross margin dollars

     1,670        2,954        642        5,266   

Gross margin rate

     23.5     27.5     29.3     26.3

Selling and administrative

     1,598        2,976        629        5,203   

Selling and administrative expense as a percentage of total revenues

     22.5     27.7     28.7     26.0

Depreciation and amortization

     74        320        51        445   

Gain on sales of assets

     (7     (24     —          (31
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     7,098        11,064        2,227        20,389   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 5      $ (318   $ (38   $ (351
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of:

        

Kmart Stores

     1,304        —          —          1,304   

Full-Line Stores

     —          884        122        1,006   

Specialty Stores

     —          1,370        373        1,743   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Stores

     1,304        2,254        495        4,053   
  

 

 

   

 

 

   

 

 

   

 

 

 
          
     26 Weeks Ended July 31, 2010  
millions, except store data    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Merchandise sales and services

   $ 7,213      $ 11,109      $ 2,182      $ 20,504   
  

 

 

   

 

 

   

 

 

   

 

 

 

Cost of sales, buying and occupancy

     5,457        7,873        1,521        14,851   

Gross margin dollars

     1,756        3,236        661        5,653   

Gross margin rate

     24.3     29.1     30.3     27.6

Selling and administrative

     1,612        3,011        538        5,161   

Selling and administrative expense as a percentage of total revenues

     22.3     27.1     24.7     25.2

Depreciation and amortization

     72        320        50        442   

Gain on sales of assets

     (6     (47     —          (53
  

 

 

   

 

 

   

 

 

   

 

 

 

Total costs and expenses

     7,135        11,157        2,109        20,401   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income (loss)

   $ 78      $ (48   $ 73      $ 103   
  

 

 

   

 

 

   

 

 

   

 

 

 

Number of:

        

Kmart Stores

     1,309        —          —          1,309   

Full-Line Stores

     —          897        122        1,019   

Specialty Stores

     —          1,335        316        1,651   
  

 

 

   

 

 

   

 

 

   

 

 

 

Total Stores

     1,309        2,232        438        3,979   
  

 

 

   

 

 

   

 

 

   

 

 

 

 

8


Sears Holdings Corporation

Adjusted EBITDA

Amounts are Preliminary and Subject to Change

 

     13 Weeks Ended  
millions    July 30, 2011     July 31, 2010  
     Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Operating income (loss) per statement of operations

   $ (16   $ (163   $ 2      $ (177   $ 19      $ (65   $ 51      $ 5   

Depreciation and amortization

     37        164        26        227        36        160        25        221   

Gain on sales of assets

     (5     (24     —          (29     (1     (8     —          (9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Before excluded items

     16        (23     28        21        54        87        76        217   

Closed store reserve and severance

     10        30        —          40        3        3        —          6   

Domestic pension expense

     —          18        —          18        —          31        —          31   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA as defined

   $ 26      $ 25      $ 28      $ 79      $ 57      $ 121      $ 76      $ 254   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% to revenues

     0.7     0.5     2.4     0.8     1.6     2.1     6.6     2.4
     26 Weeks Ended  
millions    July 30, 2011     July 31, 2010  
     Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
    Kmart     Sears
Domestic
    Sears
Canada
    Sears
Holdings
 

Operating income (loss) per statement of operations

   $ 5      $ (318   $ (38   $ (351   $ 78      $ (48   $ 73      $ 103   

Depreciation and amortization

     74        320        51        445        72        320        50        442   

Gain on sales of assets

     (7     (24     —          (31     (6     (47     —          (53
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Before excluded items

     72        (22     13        63        144        225        123        492   

Closed store reserve and severance

     10        32        —          42        4        5        —          9   

Domestic pension expense

     —          37        —          37        —          57        —          57   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Adjusted EBITDA as defined

   $ 82      $ 47      $ 13      $ 142      $ 148      $ 287      $ 123      $ 558   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

% to revenues

     1.2     0.4     0.6     0.7     2.1     2.6     5.6     2.7

 

9


Sears Holdings Corporation

Adjusted Earnings per Share

Amounts are Preliminary and Subject to Change

 

     13 Weeks Ended July 30, 2011  
millions, except per share data    GAAP     Domestic
Pension
Expense
    Closed Store
Reserve and
Severance
    Mark-to-
Market Gains
    Gain on Sales
of Real Estate
    As Adjusted  

Cost of sales, buying and occupancy impact

   $ 7,668        —          (22     —        $ —        $ 7,646   

Selling and administrative impact

     2,644        (18     (18     —          —          2,608   

Depreciation and amortization impact

     227        —          (8     —          —          219   

Gain on sales of assets impact

     (29     —          —          —          21        (8

Operating loss impact

     (177     18        48        —          (21     (132

Other income impact

     4        —          —          (2     —          2   

Income tax benefit impact

     94        (7     (19     1        8        77   

Noncontrolling interest impact

     (2     —          —          —          —          (2

After tax and noncontrolling interest impact

     (146     11        29        (1     (13     (120

Diluted loss per share impact

   $ (1.37   $ 0.10      $ 0.27      $ (0.01   $ (0.12   $ (1.13

 

     13 Weeks Ended July 31, 2010  
millions, except per share data    GAAP     Domestic
Pension
Expense
    Closed Store
Reserve and
Severance
    Mark-to-
Market Gains
    As Adjusted  

Selling and administrative impact

   $ 2,606        (31     (6     —        $ 2,569   

Operating income impact

     5        31        6        —          42   

Other income impact

     5        —          —          (8     (3

Income tax benefit impact

     19        (12     (2     2        7   

Noncontrolling interest impact

     (5     —          —          1        (4

After tax and noncontrolling interest impact

     (39     19        4        (5     (21

Diluted loss per share impact

   $ (0.35   $ 0.17      $ 0.04      $ (0.05   $ (0.19

 

     26 Weeks Ended July 30, 2011  
millions, except per share data    GAAP     Domestic
Pension
Expense
    Closed Store
Reserve and
Severance
    Mark-to-
Market Losses
    Gain on Sales
of Real Estate
    As Adjusted  

Cost of sales, buying and occupancy impact

   $ 14,772        —          (23   $ —        $ —        $ 14,749   

Selling and administrative impact

     5,203        (37     (19     —          —          5,147   

Depreciation and amortization impact

     445        —          (8     —          —          437   

Gain on sales of assets impact

     (31     —          —          —          21        (10

Operating loss impact

     (351     37        50        —          (21     (285

Other loss impact

     (8     —          —          10        —          2   

Income tax benefit impact

     173        (13     (18     (3     7        146   

Noncontrolling interest impact

     2        —          —          (1     —          1   

After tax and noncontrolling interest impact

     (316     24        32        6        (14     (268

Diluted loss per share impact

   $ (2.95   $ 0.22      $ 0.30      $ 0.06      $ (0.13   $ (2.50
     26 Weeks Ended July 31, 2010  
millions, except per share data    GAAP     Domestic
Pension
Expense
    Closed Store
Reserve and
Severance
    Mark-to-
Market Losses
    Gain on Sales
of Real Estate
    As Adjusted  

Cost of sales, buying and occupancy impact

   $ 14,851      $ —        $ (2   $ —        $ —        $ 14,849   

Selling and administrative impact

     5,161        (57     (7     —          —          5,097   

Gain on sales of assets impact

     (53     —          —          —          35        (18

Operating income impact

     103        57        9        —          (35     134   

Other loss impact

     (9     —          —          2        —          (7

Income tax benefit impact

     4        (21     (3     (1     13        (8

Noncontrolling interest impact

     (6     —          —          —          —          (6

After tax and noncontrolling interest impact

     (23     36        6        1        (22     (2

Diluted loss per share impact

   $ (0.20   $ 0.32      $ 0.06      $ 0.01      $ (0.20   $ (0.01

 

10