Sears 2012 Annual Report Download - page 42

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to period. In addition, we review leases that will expire in the short term in order to determine the appropriate action
to take with respect to them. During 2012, we purchased one previously leased operating property for $6 million
while in 2011, we purchased five previously leased operating properties for $17 million. We did not make any such
purchases 2010.
Financing Activities and Cash Flows
Net cash used in financing activities from continuing operations was $27 million in 2012 and $64 million in
2010, while, in 2011, the Company generated net cash from financing activities of $47 million. Financing activities
for 2012 included gross cash proceeds of $446.5 million as a result of the separation of SHO, which consisted of
$346.5 million in cash proceeds received for the sale of SHO common shares and $100 million received through a
dividend from SHO prior to the separation. The proceeds received were used to fund repayments on our domestic
revolving credit facility. The financing activities in 2011 reflect an increase in debt to fund operations, and common
share repurchase activity while 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.
Repayments of long-term debt were $335 million, $611 million and $358 million in 2012, 2011 and 2010,
respectively. These repayments were offset by gross cash proceeds of $446.5 million as a result of the separation of
SHO in 2012, 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 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 its 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.
During 2012, we did not repurchase any of our common shares under our share repurchase program. We did
repurchase $183 million and $394 million of our common stock pursuant to our common share repurchase program
in 2011 and 2010, 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 February 2, 2013, we had approximately $504
million of remaining authorization under the program. The common 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 Source 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 Canadian revolving credit facility through September 2015, which may be subject to
potential reserves, and $1.24 billion of senior secured notes due in 2018. Further, there is approximately $338
million of remaining Sears debt from the Merger. These funding resources are described in more detail below. At
February 2, 2013, we had liquid assets of $5.4 billion consisting of cash balances of $618 million and $4.8 billion of
inventory, net of payables.
The domestic revolving credit facility and senior secured notes are firmly in place for the next several years
and are supported by an asset base which includes $6.8 billion of inventory, owned and leased real estate assets,