Sears 2007 Annual Report Download - page 38

Download and view the complete annual report

Please find page 38 of the 2007 Sears annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

Sears Holdings
Year Ended January 28, 2006
millions, except per share data As Reported(6)
Pre-merger
Activity(1)
Purchase
Acctng Pro Forma
REVENUES
Merchandise sales and services .......................... $48,911 $5,051 $— $53,962
Credit and financial products revenues .................... 213 86 — 299
Total revenues ................................... 49,124 5,137 — 54,261
COSTS AND EXPENSES
Cost of sales, buying and occupancy ...................... 35,505 3,672 — 39,177
Gross margin dollars .................................. 13,406 1,379 — 14,785
Gross margin rate .................................... 27.4% 27.3% — % 27.4%
Selling and administrative .............................. 10,808 1,330 11(2) 12,149
Selling and administrative expense as a percentage of total
revenues .......................................... 22.0% 25.9% — % 22.4%
Depreciation and amortization ........................... 932 147 29
(3) 1,108
Gain on sales of assets ................................. (39) (1) — (40)
Gain on sale of business ................................ (317) — — (317)
Restructuring charges .................................. 111 — — 111
Total costs and expenses ........................... 47,000 5,148 40 52,188
Operating income (loss) ................................ 2,124 (11) (40) 2,073
Interest and investment income .......................... (127) (32) — (159)
Interest expense (income) .............................. 323 57 (2)
(4) 378
Other income ........................................ (37) — — (37)
Income (loss) before income taxes, minority interest and
cumulative effect of change in accounting principle ........ 1,965 (36) (38) 1,891
Income taxes expense (benefit) .......................... 716 4 (15)(5) 705
Minority interest ...................................... 301 6 — 307
Income (loss) before cumulative effect of change in accounting
principle .......................................... 948 (46) (23) 879
Cumulative effect of change in accounting principle, net of
tax............................................... (90) — — (90)
NET INCOME (LOSS) ............................... $ 858 $ (46) $ (23) $ 789
EARNINGS PER COMMON SHARE
Diluted earnings per share before cumulative effect of change in
accounting principle ................................. $ 6.17 $ 5.40
Diluted earnings per share .............................. $ 5.59 $ 4.85
(1) Represents the 2005 results of operations for the period January 30, 2005 through March 24, 2005 for Sears
Domestic and the period January 2, 2005 through March 24, 2005 for Sears Canada.
(2) Represents an increase to selling and administrative expense resulting from the adjustment to Sears’ pension
and postretirement plans based on the adjustment of such liabilities to fair value.
(3) Represents an increase in depreciation and amortization expense resulting from the adjustment to Sears’
property and equipment and identifiable intangible assets based on the adjustment of such assets to fair
value.
(4) Represents a decrease to interest expense resulting from the adjustment to Sears debt based on the
adjustments of such liabilities to fair value.
(5) Represents the aggregate pro forma effective income tax effect of notes (2) through (4) above.
38