Sears 2011 Annual Report Download - page 38

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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 at the years ended January 28, 2012 and
January 29, 2011 are detailed in the following table.
millions
January 28,
2012
January 29,
2011
Domestic
Cash and equivalents ............................................ $182 $ 453
Cash posted as collateral ......................................... 20 324
Credit card deposits in transit ..................................... 155 166
Total domestic cash and cash equivalents ........................... 357 943
Sears Canada .................................................. 390 416
Total cash and cash equivalents ................................... 747 1,359
Restricted cash ................................................ 7 15
Total cash balances ............................................. $754 $1,374
We had total cash balances of $0.8 billion at January 28, 2012 and $1.4 billion at January 29, 2011. The
decrease in cash balances from January 29, 2011 primarily reflects a decrease in net operating cash flows
generated during 2011 due to decreased income and an increase in contributions to our pension and
postretirement benefit plans, partially offset by a decrease in working capital needs. Primary uses of cash for
2011 included $432 million for capital expenditures, contributions to our pension and postretirement benefit
plans of $390 million, $183 million for repurchases of Company shares, and other working capital needs. These
uses of cash were partially funded by a net increase in borrowings of $308 million.
At various times, we have posted cash collateral for certain outstanding letters of credit, self-insurance
programs and currency forward contracts. Such cash collateral is classified within cash and cash equivalents
given we have the ability to substitute letters of credit at any time for this cash collateral and it is therefore
readily available to us. In 2011, we substituted cash collateral with letters of credit, thus reducing the balance.
Our invested cash may include, from time to time, investments in, but not limited to, commercial paper,
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.
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 Canada’s travel business.
We classify outstanding checks in excess of funds on deposit within other current liabilities and reduce cash
balances when these checks clear the bank on which they were drawn. Outstanding checks in excess of funds on
deposit were $68 million and $122 million at January 28, 2012 and January 29, 2011, respectively.
Investment of Available Capital
Since the Merger, we have continued to invest in our businesses to transform the customer experience as the
retail industry evolves and provide the opportunity for attractive returns. Further, through January 28, 2012, we
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