Sears Holdings Reports Third Quarter Results
Sears Holdings Corporation ("Holdings" or the "Company") (NASDAQ: SHLD) today reported net income of $196 million, or $1.27 per diluted share, for the third quarter ended October 28, 2006, compared with net income of $58 million, or $0.35 per diluted share, for the third quarter ended October 29, 2005. Third quarter results for 2006 include $101 million (or $0.42 per diluted share) of income from the Company's investment of a portion of its surplus cash. Third quarter fiscal 2006 results also include $6 million of net income (or $0.04 per diluted share), in the form of lower tax expense, related to the resolution of certain income tax matters related to Kmart Corporation (a predecessor operating company of Kmart). Additionally, both the current and prior year third quarter periods included restructuring charges: $4 million (or $0.02 per diluted share) in 2006 and $59 million (or $0.13 per diluted share) in 2005. The diluted earnings per share impact of these items is illustrated below:
Diluted earnings per share impact of certain significant items (1):
13 Weeks Ended
October 28, October 29,
2006 2005
Earnings per diluted share - as reported $1.27 $0.35
Less:
Total return swap income 0.42 --
Income tax settlements 0.04 --
Restructuring charges (0.02) (0.13)
Earnings per diluted share - excluding above
items $0.83 $0.48
(1) Total return swap income as well as periodic restructuring and other
periodic events or activities affect the Company's results; however,
the amounts of these types of items may vary significantly from period
to period and may have a disproportionate effect on the periods
presented, which affects the comparability of the Company's financial
performance. Management considers the total impact of these items,
along with reported results, when it reviews and evaluates the
Company's financial performance.
The Company's improved quarterly results reflect increased operating income, driven primarily by reduced expenses across all businesses and increased gross margins at both Sears Domestic and Sears Canada. Third quarter operating results at both Sears Domestic and Sears Canada improved relative to the same quarter last year, while operating results at Kmart declined due to lower sales levels and gross margins, partially offset by reduced expenses. Earnings per diluted share for the quarter also benefited from lower average diluted shares outstanding during the current year quarter as compared with the third quarter of fiscal 2005.
"We continue to manage our costs effectively as we make the changes necessary to become a customer-driven organization," said Aylwin Lewis, Sears Holdings' chief executive officer and president. He added, "We are excited to enter the holiday sales period with the products we believe our customers want and an approach that focuses our entire organization in support of our stores in delivering superior customer service across all of our businesses and formats."
Third Quarter Revenues and Comparable Store Sales
For the quarter, domestic comparable store sales declined 3.0% in the aggregate, with Sears Domestic comparable store sales declining 4.8% and Kmart comparable store sales declining 0.7%. The comparable store sales declines at both Kmart and Sears Domestic reflect the impact of increased competition and lower transaction volumes. At Kmart, comparable store sales declined across a number of categories, including home goods, hardlines, food and consumables, and general merchandise, partially offset by increased comparable store sales within apparel and pharmacy. At Sears Domestic, comparable store sales declined across most categories and formats, with more pronounced sales declines within both the home fashion and lawn and garden categories. These declines were partially offset by pronounced sales increases in women's apparel, reflecting what the Company believes are improved assortments in this business relative to last year. Last year, Sears Domestic modified its apparel assortment to a more "fashion forward" offering, which was not successful and led to significant sales declines within Sears Domestic's apparel business during the second half of fiscal 2005.
Total revenues declined $0.3 billion to $11.9 billion for the 13 weeks ended October 28, 2006, as compared to total revenues of $12.2 billion for the 13 weeks ended October 29, 2005. Sears revenues declined $0.1 billion as compared to the third quarter last year, primarily reflecting the impact of comparable store sales declines, partially offset by an increase in the total number of Sears Full-line stores in operation, resulting mainly due to conversions from the Kmart format. Total revenues at Kmart declined $0.2 billion as compared to the prior year period, primarily reflecting a reduction in the total number of Kmart stores in operation and, to a lesser degree, the impact of comparable store sales declines.
Operating Income
Operating income was $276 million for the 13 weeks ended October 28, 2006, as compared to $119 million for the 13 weeks ended October 29, 2005. Operating income in the third quarter of last year was negatively impacted by $59 million in restructuring charges at Sears Canada and Kmart as compared with $4 million in such charges at Kmart in the current year quarter. Excluding the impact of these charges, prior year third quarter operating income was $178 million. In addition to the above-noted impact of lower restructuring charges, reduced selling and administrative expenses (which declined $147 million compared to the third quarter of last year) and increased total gross margin dollars also favorably impacted overall operating income in the current year quarter.
Financial Position
The Company had cash and cash equivalents of $2.1 billion at October 28, 2006 (of which $1.8 billion is domestic and $0.3 billion is at Sears Canada) as compared to $1.2 billion at October 29, 2005 and $4.4 billion at January 28, 2006. During the current quarter, cash and cash equivalents declined $1.6 billion from the $3.7 billion balance at the end of the second quarter. Approximately $1.1 billion of that decrease was due to cash being used to build inventories for the holiday selling season (net of merchandise payables). Other cash uses in the quarter included $289 million for share repurchases, $267 million for pension contributions (including a voluntary accelerated contribution of $200 million), debt repayments of $258 million (net of new borrowings) and $153 million of capital expenditures.
Merchandise inventories at October 28, 2006 were approximately $11.5 billion, as compared to $10.8 billion as of October 29, 2005. The increase reflects planned increases due to earlier receipt of product, the expansion of product assortment this year and increases in apparel and other merchandise categories where the Company believes business trends support higher inventory levels. Merchandise payables were $4.2 billion at October 28, 2006, as compared to $4.3 billion as of October 29, 2005.
As the result of resolving certain tax matters during the third quarter of 2006 pertaining to the bankruptcy of Kmart Corporation, a predecessor operating company of Kmart, the Company recorded approximately $104 million of deferred tax assets with an offsetting credit recorded to capital in excess of par value. In accordance with AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code," resolution of these matters result in a direct credit to capital in excess of par value within shareholders' equity.
Share Repurchase
During the third quarter of 2006, the Company repurchased approximately 2 million common shares at a total cost of $289 million, or an average price of $141.89 per share. As of October 28, 2006, the Company had remaining authorization to repurchase $618 million of common shares under its existing share repurchase program approved by the board of directors. The remaining shares may be purchased in the open market, through self-tender offers or through privately negotiated transactions. Timing will depend on prevailing market conditions, alternative uses of capital and other factors.
Interest and Investment Income
The following table sets forth the components of interest and investment income as reported on the Company's condensed consolidated income statement. Amounts from prior periods have been reclassified to interest and investment income to conform to current period presentation. The Company previously reported interest income on cash and cash equivalents as a component of net interest expense, and reported other investment income as a component of other income.
13 Weeks Ended 39 Weeks Ended
October 28, October 29, October 28, October 29,
millions 2006 2005 2006 2005
Interest and investment
income
Interest income on cash
and cash equivalents $36 $16 $112 $51
Total return swap income 101 -- 101 --
Other investment income 3 24 28 35
Total $140 $40 $241 $86
The Company, from time to time, invests its surplus cash in various securities and financial instruments, including total return swaps, which are derivative contracts that synthetically replicate the economic return characteristics of one or more underlying marketable equity securities. In exchange for receiving the return tied to the position underlying a total return swap, the Company pays a floating rate of interest tied to LIBOR on the notional amount of the contract. The fair value of a total return swap is based on the quoted market price of the underlying position and changes in fair value of the total return swaps are recognized currently in earnings. During the third quarter of fiscal 2006, the Company entered into total return swaps and recognized $101 million of investment income consisting of realized gains of $66 million and unrealized gains of $38 million less $3 million of interest cost. As of October 28, 2006, the total return swaps had an aggregate notional amount of $387 million and a fair value of $38 million. These investments are highly concentrated and involve substantial risks. Accordingly, the Company's financial position and quarterly and annual results of operations may be positively or negatively materially affected based on the timing, magnitude and performance of these investments.
Adjusted EBITDA
For purposes of evaluating operating performance, the Company's management uses an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") measurement computed as operating income appearing on the statement of operations less depreciation and amortization and gains/(losses) on sales of assets. In addition, it is adjusted to exclude certain merger-related costs, nonrecurring gains and restructuring charges. Adjusted EBITDA is used by management to evaluate the operating performance of the Company's businesses 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. Management compensates for this limitation by using GAAP financial measures as well in managing the Company's businesses.
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;
-- Restructuring activities, while periodically affecting the Company's
results, may vary significantly from period to period and have a
disproportionate effect in a given period, which affects the
comparability of results; and
-- Adjusted EBITDA excludes a one-time gain resulting from the settlement
of Visa/MasterCard litigation and vice chairman separation expenses,
both of which were recorded in the second quarter of fiscal 2006, as
well as merger transaction costs which result from extraordinary
activities that are not part of normal operations.
Adjusted EBITDA was determined as follows:
13 Weeks Ended 39 Weeks Ended
October 28, October 29, October 28, October 29,
2006 2005 2006 2005
Pro
Forma
Operating income per
statement of income $276 $119 $1,124 $543
Plus depreciation and
amortization 278 263 843 826
Less gain on sale of assets (8) (15) (32) (26)
Before excluded items 546 367 1,935 1,343
Vice Chairman separation
expense -- -- 8 --
Visa/MasterCard settlement -- -- (36) --
Merger transaction costs -- -- -- 34
Restructuring charges 4 59 27 104
Adjusted EBITDA as defined $550 $426 $1,934 $1,481
% to revenues 4.6 % 3.5 % 5.3 % 3.9 %
Adjusted EBITDA for the Company's domestic (United States operations) and Sears Canada operations is as follows:
13 Weeks Ended 39 Weeks Ended
Adjusted Adjusted
EBITDA % To Revenues EBITDA % To Revenues
Oct. Oct. Oct. Oct. Oct. Oct. Oct. Oct.
28, 29, 28, 29, 28, 29, 28, 29,
2006 2005 2006 2005 2006 2005 2006 2005
Pro Pro
Forma Forma
Domestic
operations $439 $367 4.1 % 3.3 % $1,692 $1,319 5.1 % 3.8 %
Sears Canada 111 59 8.9 % 4.8 % 242 162 6.8 % 4.6 %
Total
Adjusted
EBITDA $550 $426 4.6 % 3.5 % $1,934 $1,481 5.3 % 3.9 %
Quarterly Report on Form 10-Q
The Company plans to file with the SEC its Quarterly Report on Form 10-Q for the third quarter 2006 on or before December 7, 2006.
Forward-Looking Statements
Results are preliminary and unaudited. This press release contains forward-looking statements about the Company's goals. Forward-looking statements are subject to risks and uncertainties that may cause the Company's 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 include, but are not limited to, statements about the expected benefits of the business combination of Sears and Kmart, the potential benefits of our investments and future financial and operating results. Such statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Risks and uncertainties include the possibility that we fail to offer products and services that satisfy the desires of our customers, whose preferences may change in the future, or other factors outside the control of Holdings. Actual results may differ materially from those set forth in the forward- looking statements. The Company intends the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available.
About Sears Holdings Corporation
Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 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, home electronics and automotive repair and maintenance. 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 Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The company is the nation's largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at http://www.searsholdings.com/.
Sears Holdings Corporation
Statements of Income
(Unaudited)
Amounts are Preliminary and
Subject to Change 13 Weeks Ended 39 Weeks Ended
Reported Reported Pro forma
millions, except per Oct. 28, Oct. 29, Oct. 28, Oct. 29, Oct. 29,
common share data 2006 2005 2006 2005 2005
REVENUES
Merchandise sales and
services $11,941 $12,118 $36,724 $32,867 $37,918
Credit and financial
products revenues - 84 - 171 257
Total revenues 11,941 12,202 36,724 33,038 38,175
COSTS AND EXPENSES
Cost of sales, buying and
occupancy 8,557 8,795 26,380 23,997 27,669
Gross margin dollars 3,384 3,323 10,344 8,870 10,249
Gross margin rate 28.3% 27.4% 28.2% 27.0% 27.0%
Selling and administrative 2,834 2,981 8,382 7,718 9,059
Selling and administrative
expense as a percentage of
total revenues 23.7% 24.4% 22.8% 23.4% 23.7%
Depreciation and
amortization 278 263 843 650 826
Gain on sales of assets (8) (15) (32) (25) (26)
Restructuring charges 4 59 27 104 104
Total costs and
expenses 11,665 12,083 35,600 32,444 37,632
Operating income 276 119 1,124 594 543
Interest and investment
income (140) (40) (241) (86) (118)
Interest expense 89 87 255 235 290
Other income - - (15) (31) (31)
Income before income taxes,
minority interest and
cumulative effect of change
in accounting principle 327 72 1,125 476 402
Income taxes 119 28 438 183 172
Minority interest 12 (14) 17 (7) (1)
Income before cumulative
effect of change in
accounting principle 196 58 670 300 231
Cumulative effect of change
in accounting principle
(net of income tax benefit
of $58) - - - (90) (90)
NET INCOME $196 $58 $670 $210 $141
EARNINGS PER COMMON SHARE
Diluted earnings per share
before cumulative effect
of change in accounting
principle $1.27 $0.35 $4.29 $1.98 $1.42
Diluted earnings per share $1.27 $0.35 $4.29 $1.39 $0.87
Diluted weighted average
common shares outstanding 154.4 163.6 156.3 151.4 162.2
Sears Holdings Corporation
Condensed Balance Sheets
Amounts are Preliminary and Subject
to Change (Unaudited)
October 28, October 29, January 28,
millions 2006 2005 2006
ASSETS
Current assets
Cash and cash equivalents $2,096 $1,202 $4,440
Receivables 909 698 811
Merchandise inventories 11,508 10,750 9,068
Assets held for sale - 1,724 -
Other current assets 902 901 888
Total current assets 15,415 15,275 15,207
Property and equipment, net 9,247 9,944 9,823
Goodwill 1,880 1,731 1,684
Tradenames and other intangible
assets 3,467 3,648 3,448
Other assets 460 396 411
TOTAL ASSETS $30,469 $30,994 $30,573
LIABILITIES
Current liabilities
Short-term borrowings and current
portion of long-term debt $577 $796 $748
Merchandise payables 4,195 4,314 3,458
Unearned revenues 1,078 1,073 1,047
Liabilities held for sale - 133 -
Other current liabilities 5,271 4,939 5,097
Total current liabilities 11,121 11,255 10,350
Long-term debt and capitalized lease
obligations 2,955 3,264 3,268
Pension and postretirement benefits 2,092 2,161 2,421
Minority interest and other
liabilities 2,677 3,369 2,923
Total Liabilities 18,845 20,049 18,962
Total Shareholders' Equity 11,624 10,945 11,611
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $30,469 $30,994 $30,573
Total common shares outstanding 153.9 161.2 159.8
Sears Holdings Corporation
Segment Results
(Unaudited)
Amounts are Preliminary and
Subject to Change
2006 - Reported 13 Weeks Ended October 28, 2006
millions
Sears Sears
Kmart Domestic Canada Holdings
Merchandise sales and services
revenue $4,042 $6,655 $1,244 $11,941
Cost of sales, buying and occupancy 3,096 4,611 850 8,557
Gross margin dollars 946 2,044 394 3,384
Gross margin rate 23.4% 30.7% 31.7% 28.3%
Selling and administrative 889 1,662 283 2,834
Selling and administrative expense as
a percentage of total revenues 22.0% 25.0% 22.7% 23.7%
Depreciation and amortization 22 223 33 278
Gain on sales of assets (9) 1 - (8)
Restructuring charges 4 - - 4
Total costs and expenses 4,002 6,497 1,166 11,665
Operating income $40 $158 $78 $276
Number of:
Kmart Stores 1,394 - - 1,394
Full-Line Stores - 933 123 1,056
Specialty Stores - 1,083 252 1,335
Total Stores 1,394 2,016 375 3,785
2005 - Reported 13 Weeks Ended October 29, 2005
millions
Sears Sears
Kmart Domestic Canada Holdings
Merchandise sales and services $4,172 $6,803 $1,143 $12,118
Credit and financial products
revenues - - 84 84
Total revenues 4,172 6,803 1,227 12,202
Cost of sales, buying and occupancy 3,157 4,805 833 8,795
Gross margin dollars 1,015 1,998 310 3,323
Gross margin rate 24.3% 29.4% 27.1% 27.4%
Selling and administrative 930 1,716 335 2,981
Selling and administrative expense as
a percentage of total revenues 22.3% 25.2% 27.3% 24.4%
Depreciation and amortization 13 214 36 263
Gain on sales of assets (17) - 2 (15)
Restructuring charges 6 - 53 59
Total costs and expenses 4,089 6,735 1,259 12,083
Operating income $83 $68 $(32) $119
Number of:
Kmart Stores 1,426 - - 1,426
Full-Line Stores - 926 122 1,048
Specialty Stores - 1,146 248 1,394
Total Stores 1,426 2,072 370 3,868
2006 - Reported 39 Weeks Ended October 28, 2006
millions
Sears Sears
Kmart Domestic Canada Holdings
Merchandise sales and services revenue $12,768 $20,403 $3,553 $36,724
Cost of sales, buying and occupancy 9,726 14,156 2,498 26,380
Gross margin dollars 3,042 6,247 1,055 10,344
Gross margin rate 23.8% 30.6% 29.7% 28.2%
Selling and administrative 2,618 4,951 813 8,382
Selling and administrative expense as a
percentage of total revenues 20.5% 24.3% 22.9% 22.8%
Depreciation and amortization 55 687 101 843
Gain on sales of assets (26) (6) - (32)
Restructuring charges 8 - 19 27
Total costs and expenses 12,381 19,788 3,431 35,600
Operating income $387 $615 $122 $1,124
Number of:
Kmart Stores 1,394 - - 1,394
Full-Line Stores - 933 123 1,056
Specialty Stores - 1,083 252 1,335
Total Stores 1,394 2,016 375 3,785
2005 - Reported 39 Weeks Ended October 29, 2005
millions
Sears Sears
Kmart Domestic Canada Holdings
Merchandise sales and services $13,354 $17,141 $2,372 $32,867
Credit and financial products revenues - - 171 171
Total revenues 13,354 17,141 2,543 33,038
Cost of sales, buying and occupancy 10,154 12,109 1,734 23,997
Gross margin dollars 3,200 5,032 638 8,870
Gross margin rate 24.0% 29.4% 26.9% 27.0%
Selling and administrative 2,850 4,178 690 7,718
Selling and administrative expense as a
percentage of total revenues 21.3% 24.4% 27.1% 23.4%
Depreciation and amortization 33 541 76 650
Gain on sales of assets (25) - - (25)
Restructuring charges 51 - 53 104
Total costs and expenses 13,063 16,828 2,553 32,444
Operating income $291 $313 $(10) $594
Number of:
Kmart Stores 1,426 - - 1,426
Full-Line Stores - 926 122 1,048
Specialty Stores - 1,146 248 1,394
Total Stores 1,426 2,072 370 3,868
2005 - Pro Forma 39 Weeks Ended October 29, 2005
millions
Sears Sears
Kmart Domestic Canada Holdings
Merchandise sales and services $13,354 $21,311 $3,253 $37,918
Credit and financial products revenues - 257 257
Total revenues 13,354 21,311 3,510 38,175
Cost of sales, buying and occupancy 10,154 15,127 2,388 27,669
Gross margin dollars 3,200 6,184 865 10,249
Gross margin rate 24.0% 29.0% 26.6% 27.0%
Selling and administrative 2,850 5,249 960 9,059
Selling and administrative expense as a
percentage of total revenues 21.3% 24.6% 27.4% 23.7%
Depreciation and amortization 33 683 110 826
Gain on sales of assets (25) (1) - (26)
Restructuring charges 51 - 53 104
Total costs and expenses 13,063 21,058 3,511 37,632
Operating income $291 $253 $(1) $543
Sears Holdings Corporation
Adjusted EBITDA
Amounts are Preliminary and Subject
to Change
13 Weeks Ended
October 28, 2006 October 29, 2005
Domestic Sears Sears Domestic Sears Sears
Operations Canada Holdings Operations Canada Holdings
Operating income per
statement of income $198 $78 $276 $151 $(32) $119
Plus depreciation and
amortization 245 33 278 227 36 263
Less gain on sale of
assets/businesses (8) - (8) (17) 2 (15)
Before excluded items 435 111 546 361 6 367
Vice Chairman separation
expense - - - - - -
Visa/MasterCard
settlement - - - - - -
Restructuring charges 4 - 4 6 53 59
Adjusted EBITDA as
defined $439 $111 $550 $367 $59 $426
% to revenues 4.1% 8.9% 4.6% 3.3% 4.8% 3.5%
39 Weeks Ended
October 28, 2006 October 29, 2005
Domestic Sears Sears Domestic Sears Sears
Operations Canada Holdings Operations Canada Holdings
Pro Pro Pro
Forma Forma Forma
Operating income per
statement of income $1,002 $122 $1,124 $544 $(1) $543
Plus depreciation and
amortization 742 101 843 716 110 826
Less gain on sale of
assets/businesses (32) - (32) (26) - (26)
Before excluded items 1,712 223 1,935 1,234 109 1,343
Vice Chairman separation
expense 8 - 8 - - -
Visa/MasterCard
settlement (36) - (36) - - -
Merger transaction costs - - - 34 - 34
Restructuring charges 8 19 27 51 53 104
Adjusted EBITDA as
defined $1,692 $242 $1,934 $1,319 $162 $1,481
% to revenues 5.1% 6.8% 5.3% 3.8% 4.6% 3.9%
Sears Holdings Corporation
Pro Forma Reconciliation
The following tables provide a reconciliation from the as reported
results to the pro forma results presented for Sears Holdings, Sears
Domestic and Sears Canada for the 39-week period ended October 29, 2005.
Sears Holdings
millions 39-week period ended October 29, 2005
Pre- Purchase
As merger Account- Pro
reported Activity ing Forma
Merchandise sales and services $32,867 $5,051 $- $37,918
Credit and financial products
revenues 171 86 - 257
Total revenue 33,038 5,137 - 38,175
Cost of sales, buying and occupancy 23,997 3,672 - 27,669
Selling and administrative 7,718 1,330 11 9,059
Depreciation and amortization 650 147 29 826
Gain on sales of assets (25) (1) - (26)
Restructuring charges 104 - - 104
Total costs and expenses 32,444 5,148 40 37,632
Operating income (loss) 594 (11) (40) 543
Interest and investment income (86) (32) - (118)
Interest expense 235 57 (2) 290
Other income (31) - - (31)
Income before income taxes, minority
interest and cumulative effect of
change in accounting principle 476 (36) (38) 402
Income tax expense (benefit) 183 4 (15) 172
Minority interest (7) 6 - (1)
Income before cumulative effect of
change in accounting principle 300 (46) (23) 231
Cumulative effect of change in
accounting principle, net of tax (90) - - (90)
NET INCOME (LOSS) $210 $(46) $(23) $141
Sears Domestic
millions 39-week period ended October 29, 2005
Pre- Purchase
As merger Account- Pro
reported Activity ing Forma
Merchandise sales and services
revenue $17,141 $4,170 $- $21,311
Cost of sales, buying and occupancy 12,109 3,018 - 15,127
Selling and administrative 4,178 1,060 11 5,249
Depreciation and amortization 541 116 26 683
Gain on sales of assets - (1) - (1)
Total costs and expenses 16,828 4,193 37 21,058
Operating income (loss) $313 $(23) $(37) $253
Sears Canada
millions 39-week period ended October 29, 2005
Pre- Purchase
As merger Account- Pro
reported Activity ing Forma
Merchandise sales and services $2,372 $881 $- $3,253
Credit and financial product revenues 171 86 - 257
Total revenues 2,543 967 - 3,510
Cost of sales, buying and occupancy 1,734 654 - 2,388
Selling and administrative 690 270 - 960
Depreciation and amortization 76 31 3 110
Gain on sales of assets - - - -
Restructuring charges 53 - - 53
Total costs and expenses 2,553 955 3 3,511
Operating income (loss) $(10) $12 $(3) $(1)
SOURCE: Sears Holdings Corporation
CONTACT: Sears Holdings Public Relations, +1-847-286-8371
Web site: http://www.searsholdings.com/