Sears 2014 Annual Report Download - page 33

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33
Depreciation and Amortization
Depreciation and amortization expense decreased by $151 million during 2014 to $581 million and included
charges of $8 million and $11 million in 2014 and 2013, respectively, taken in connection with store closings.
Depreciation and amortization expense also included expense of $52 million and $114 million related to Sears
Canada and the Lands' End business in 2014 and 2013, respectively. The decrease in 2014 is primarily due to having
fewer assets available for depreciation.
Impairment Charges
We recorded impairment charges of $63 million and $233 million in 2014 and 2013, respectively, related to the
impairment of long-lived assets. Impairment charges recorded in both years are described further in Note 13 in
Notes to Consolidated Financial Statements.
Gain on Sales of Assets
We recorded total gains on sales of assets of $207 million in 2014 and $667 million in 2013, which were
primarily attributable to several significant real estate transactions.
The gain on the sales of assets in 2014 included a gain of $64 million recognized on the sale of three Sears
Full-line stores for which we received $106 million of cash proceeds, $13 million recognized on the sale of a
distribution facility in our Sears Domestic segment for which we received $16 million of cash proceeds and a gain of
$10 million recognized on the sale of a Kmart store for which we received $10 million of cash proceeds.
The gain on sales of assets in 2013 included a gain of $180 million recognized on the amendment and early
termination of the leases on two properties operated by Sears Canada, for which Sears Canada received $184 million
($191 million Canadian) in cash proceeds. We also recorded a gain on sales of assets of $357 million in 2013
recognized on the surrender and early termination of the leases of five properties operated by Sears Canada, for
which Sears Canada received $381 million ($400 million Canadian) in cash proceeds. Finally, gain on sales of assets
in 2013 also included a gain of $67 million related to the sale of a store previously operated under The Great Indoors
format, two Sears Full-line stores and two Kmart stores for which the Company received $98 million in cash
proceeds.
Operating Loss
We recorded an operating loss of $1.5 billion and $927 million in 2014 and 2013, respectively. The operating
loss for 2014 included expenses related to domestic pension plans, store closings, store impairments, severance,
expenses associated with legal matters, transactions costs and other expenses, as well as operating loss from Sears
Canada, operating income from the Lands' End business and gains on the sales of assets, which aggregated to
expense of $461 million. The operating loss for 2013 included expenses related to domestic pension plans, store
closings, store impairments and severance, as well as operating income from Sears Canada, operating income from
the Lands' End business and gains on the sales of assets, which aggregated to operating income of $108 million.
Excluding these items, we would have reported an operating loss of $1.0 billion in both 2014 and 2013.
Interest Expense
We incurred $313 million and $254 million in interest expense during 2014 and 2013, respectively. The
increase is due to an increase in average outstanding borrowings in 2014.
Interest and Investment Income
We recorded interest and investment income of $132 million and $207 million during 2014 and 2013,
respectively. During 2014, investment income included a gain of $70 million on the de-consolidation of Sears
Canada as a result of the rights offering, as well as a gain of $35 million related to the sale of joint venture interests
for which Sears Canada received $65 million ($71 million Canadian) in cash proceeds. During 2013, investment
income included a gain of $163 million related to the sale of 50% joint venture interests in eight properties Sears
Canada owned with The Westcliff Group of Companies, for which Sears Canada received $270 million ($297
million Canadian) in cash proceeds.