Sears 2008 Annual Report Download - page 37

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ANALYSIS OF CONSOLIDATED FINANCIAL CONDITION
Cash Balances
Cash and cash equivalents include all highly liquid investments with original maturities of three months or
less at the date of purchase. Our cash and cash equivalents balances as of the fiscal years ended January 31, 2009
and February 2, 2008 are detailed in the following table.
millions
January 31,
2009
February 2,
2008
Domestic
Cash and equivalents ............................................ $ 337 $ 595
Cash posted as collateral ......................................... 14 29
Credit card deposits in transit ..................................... 159 119
Total domestic cash and cash equivalents ........................... 510 743
Sears Canada .................................................. 663 879
Total cash and cash equivalents ................................... 1,173 1,622
Restricted cash ................................................ 124 —
Total cash balances ............................................. $1,297 $1,622
We had total cash balances of $1.3 billion at January 31, 2009 as compared to $1.6 billion at February 2,
2008. The decline in cash and cash equivalents from February 2, 2008 primarily reflects a decrease in net
operating cash flows generated during fiscal 2008 as compared to fiscal 2007 due to lower income and increased
cash uses for merchandise payables and other operating liabilities, partially offset by an increase in cash
generated from inventory. Significant uses of cash and cash equivalents for the fiscal year ended January 31,
2009 included the funding of share repurchases of $678 million and capital expenditures of $497 million, as well
as $286 million in contributions to our pension and post-retirement plans.
Our invested cash may include, from time to time, investments in, but not limited to, commercial paper,
U.S. federal, state and municipal government securities, floating-rate notes, repurchase agreements and money
market funds. Cash amounts held in these short-term investments are readily available to us and included
$7 million and $20 million as of fiscal year end 2008 and fiscal year end 2007, respectively, invested in support
of our wholly-owned insurance subsidiary. Additionally, as explained below, our Board of Directors has
delegated authority to direct investment of surplus cash to Edward S. Lampert, subject to various limitations that
have been or may be from time to time adopted by the Board of Directors and/or the Finance Committee of the
Board of Directors.
Domestically we have posted cash collateral for certain outstanding letters of credit and self-insurance
programs. Such cash collateral is classified within cash and cash equivalents as it is readily available to us and
we have the ability to substitute letters of credit at any time for this cash collateral.
Credit card deposits in transit include deposits in-transit from banks for payments related to third-party
credit card and debit card transactions.
Restricted cash consists of cash related to Sears Canada’s cash balances which have been pledged as
collateral for letters of credit obligations issued under its offshore merchandise purchasing program and with
counterparties related to outstanding derivative contracts, as well as funds held in trust in accordance with
regulatory requirements governing advance ticket sales related to Sears Travel.
Our January 31, 2009 cash balance excludes $38 million on deposit with The Reserve Primary Fund, a
money market fund which temporarily suspended withdrawals while it liquidates its holdings to generate cash to
distribute. As a result, we reclassified $38 million from cash to the prepaid expenses and other current assets line
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