Sears 2013 Annual Report Download - page 69

SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
69
Statement of Cash Flows for the year ended January 28, 2012. The Notes to Consolidated Financial Statements
exclude the impact of Orchard for all periods presented. Prior to completion of the spin-off, Orchard’s results of
operations, financial position and cash flows were presented within the Sears Domestic segment.
Fiscal Year
Our fiscal year ends on the Saturday closest to January 31 each year. Unless otherwise stated, references to
years in this report relate to fiscal years rather than to calendar years. The following fiscal periods are presented in
this report.
Fiscal Year Ended Weeks
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 1, 2014 52
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . February 2, 2013 53
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . January 28, 2012 52
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the
United States of America requires management to make estimates and assumptions about future events. The
estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements, as well as reported amounts of revenues and expenses during
the reporting period. We evaluate our estimates and assumptions on an ongoing basis using historical experience and
other factors that management believes to be reasonable under the circumstances. Adjustments to estimates and
assumptions are made when facts and circumstances dictate. As future events and their effects cannot be determined
with absolute certainty, actual results may differ from the estimates used in preparing the accompanying
consolidated financial statements. Significant estimates and assumptions are required as part of determining
inventory and accounts receivable valuation, estimating depreciation, amortization and recoverability of long-lived
assets, establishing self-insurance, warranty, legal and other reserves, performing goodwill, intangible and long-lived
asset impairment analyses, and in establishing valuation allowances on deferred income tax assets and reserves for
tax examination exposures, and calculating retirement benefits.
Cash and Cash Equivalents
Cash equivalents include all highly liquid investments with original maturities of three months or less at the
date of purchase. We also include deposits in-transit from banks for payments related to third-party credit card and
debit card transactions within cash equivalents. The deposits in-transit balances included within cash equivalents
were $144 million and $148 million at February 1, 2014 and February 2, 2013, respectively.
We classify cash balances which have been pledged as collateral, and for which we do not have the ability to
substitute letters of credit, as restricted cash on our Consolidated Balance Sheet.
We classify outstanding checks in excess of funds on deposit within other current liabilities and reduce cash
and cash equivalents when these checks clear the bank on which they were drawn. Outstanding checks in excess of
funds on deposit included in other current liabilities were $97 million and $114 million at February 1, 2014 and
February 2, 2013, respectively.
Allowance for Doubtful Accounts
We provide an allowance for doubtful accounts based on both historical experience and a specific
identification basis. Allowances for doubtful accounts on accounts receivable balances were $28 million and $26
million at February 1, 2014 and February 2, 2013, respectively. Our accounts receivable balance on our
Consolidated Balance Sheet is presented net of our allowance for doubtful accounts and is comprised of various
vendor-related and customer-related accounts receivable, including receivables related to our pharmacy operations.