Sears 2015 Annual Report Download - page 85

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Equity securities, which include common and preferred stocks, are actively traded and valued at the closing
price reported in the active market in which the security is traded and are assigned to Level 1.
Common collective trusts are portfolios of underlying investments held by investment managers and are
valued at the unit value reported by the investment managers as of the end of each period presented. Collective
short-term investment funds are stated at net asset value (NAV) as determined by the investment managers.
Investment managers value the underlying investments of the funds at amortized cost, which approximates fair
value, and have assigned a Level 2 to the valuation of those investments. Fixed income securities are assigned to
Level 2 as they are primarily valued by institutional bid evaluation, which determines the estimated price a dealer
would pay for a security and which is developed using proprietary models established by the pricing vendors for this
purpose.
Certain mortgage-backed and other asset-backed debt securities are assigned to Level 3 based on the relatively
low position in the preferred hierarchy of the pricing source. Valuation of the Plan's non-public limited partnerships
requires significant judgment by the general partners due to the absence of quoted market value, inherent lack of
liquidity, and the long-term nature of the assets, and may result in fair value measurements that are not indicative of
ultimate realizable value. Our Level 3 assets, including activity related to our Level 3 assets, are immaterial.
Agreement with the Pension Benefit Guaranty Corporation
On September 4, 2015, the Company announced it had entered into a term sheet with the Pension Benefit
Guaranty Corporation ("PBGC"), concerning a five-year pension plan protection and forbearance agreement with
the PBGC. The Company is in discussions with the PBGC to enter into a definitive agreement with the PBGC on
terms consistent with the previously disclosed term sheet, pursuant to which the Company would continue to
protect, or "ring-fence," pursuant to customary covenants, the assets of certain special purpose subsidiaries (the
"Relevant Subsidiaries") holding real estate and/or intellectual property assets. Also under the proposed agreement,
the Relevant Subsidiaries would grant the PBGC a springing lien on the ring-fenced assets, which lien would be
triggered only by (a) failure to make required contributions to the Company's pension plan (the "Plan"), (b)
prohibited transfers of ownership interests in the Relevant Subsidiaries, (c) termination events with respect to the
Plan, and (d) bankruptcy events with respect to the Company or certain of its material subsidiaries. The Relevant
Subsidiaries would consist of the REMIC and KCD IP, LLC, as further discussed in the Wholly-owned Insurance
Subsidiary and Intercompany Securities section of Note 3.€
NOTE 8—EARNINGS PER SHARE
The following table sets forth the components used to calculate basic and diluted loss per share attributable to
Holdings' shareholders. Warrants, restricted stock awards and restricted stock units, totaling 5.0 million shares, 5.0
million shares and 0.2 million shares in 2015, 2014 and 2013, respectively, were not included in the computation of
diluted loss per share attributable to Holdings' shareholders because the effect of their inclusion would have been
antidilutive.
millions, except earnings per share 2015 2014 2013
Basic weighted average shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.6 106.3 106.1
Dilutive effect of restricted stock awards, restricted stock units and warrants . . ———
Diluted weighted average shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.6 106.3 106.1
Net loss attributable to Holdings' shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . $(1,129) $ (1,682) $ (1,365)
Loss per share attributable to Holdings' shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(10.59) $ (15.82) $ (12.87)
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(10.59) $ (15.82) $ (12.87)
SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
85