Sears 2011 Annual Report Download - page 40

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Financing Activities and Cash Flows
Holdings generated net cash from financing activities from continuing operations of $47 million in 2011.
Net cash used in financing activities from continuing operations was $64 million in 2010 and $935 million in
2009. The financing activities in 2011 reflect an increase in debt to fund operations, and common share
repurchase activity. The financing activities in 2010 reflect purchases of Sears Canada shares, debt repayments
and common share repurchase activity, which were funded in part from $1.25 billion of proceeds from our senior
secured notes offering in October 2010. Financing activities in 2009 primarily reflect common share repurchase
activity and debt repayments.
Repayments of long-term debt were $611 million, $358 million and $319 million in 2011, 2010 and 2009,
respectively. These repayments were offset by an increase of $815 million in total short-term borrowings and
proceeds of $104 million from Sears Canada’s credit facility in 2011, and $1.4 billion in proceeds from debt
issuance in 2010.
In 2010, we took various financing actions to extend our capital structure. These actions included Sears
Holdings issuing $1.25 billion of 6
5
⁄
8
% senior secured notes due 2018 which are secured by domestic inventory
and credit card accounts receivable and Sears Canada entering into a five-year $800 million Canadian credit
facility which is secured by a first lien on Sears Canada’s inventory and receivable balances.
During 2010, we acquired approximately 19 million additional Sears Canada common shares. We paid a
total of $560 million for the additional shares. In addition, Sears Canada purchased and cancelled approximately
2.2 million common shares during 2010 under their Normal Course Issuer Bid, at a cost of $43 million. Sears
Canada declared and paid cash dividends of $7.00 Canadian per common share, or approximately $754 million
Canadian ($708 million U.S.). Accordingly, Sears Canada paid $69 million to minority shareholders in
connection with these dividends. For further information, see Note 2 of Notes to Consolidated Financial
Statements.
We repurchased $183 million, $394 million and $424 million of our common stock pursuant to our common
share repurchase program in 2011, 2010 and 2009, respectively. The common share repurchase program was
initially announced in 2005 and had a total authorization since inception of the program of $6.5 billion. At
January 28, 2012, we had approximately $504 million of remaining authorization under the program. The share
repurchase program has no stated expiration date and share repurchases may be implemented using a variety of
methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated
share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any
combination of such methods.
Uses and Sources of Liquidity
Our primary need for liquidity is to fund working capital requirements of our businesses, capital
expenditures and for general corporate purposes, including debt repayment, pension plan contributions and
common share repurchases. We consider ourselves to be an asset-rich enterprise with substantial liquidity and
financial flexibility benefiting from multiple funding resources such as our $3.275 billion domestic revolving
credit facility through April 2016, an $800 million credit Canadian revolver through September 2015, $1.24
billion of senior secured notes due in 2018. Further, there is approximately $500 million of remaining Sears,
Roebuck and Co. debt from the merger. These funding resources are described in more detail below. As of
January 28, 2012, we had $3.2 billion of liquidity with cash balances of $754 million and nearly $2.5 billion of
capacity on the domestic and Canadian revolving credit facilities.
The revolver and senior secured notes are firmly in place for the next several years and are supported by an
asset base which includes $8.4 billion of inventory, owned and leased real estate assets, market leading
proprietary brands such as Kenmore, Craftsman and DieHard, and successful stand-alone businesses such as
Lands’ End and Sears Canada. This asset base provides us flexibility as we seek to transform our business.
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