SHLD - Unrealized losses on their own stock. They blew all their cash.
Eddie Lampert losing his shirt within his hedge fund as well as he tries to support the stock
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NOTE 6 – SHAREHOLDERS’ EQUITY
Share Repurchase Program
During the 13- and 39-week periods ended November 3, 2007, we repurchased 6.7 million and 16.4 million of our common shares at a total cost of $0.9 billion and $2.4 billion, or an average price of $131.72 and $144.55 per share, respectively, under our share repurchase program. As of November 3, 2007, we had $736 million of remaining authorization under our common share repurchase program. The share repurchase program, authorized by our Board of Directors, 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.
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SEARS HOLDINGS CORPORATION
13 and 39 Weeks Ended November 3, 2007 and October 28, 2006
We had cash and cash equivalents of $1.5 billion at November 3, 2007 as compared to $2.1 billion at October 28, 2006 and $4.0 billion at February 3, 2007. The decline in domestic cash and cash equivalents from February 3, 2007 primarily reflects share repurchases made pursuant to our share repurchase program, as further discussed in the “Financing Activities” below. During the first nine months of fiscal 2007, we repurchased 16.4 million common shares at a cost of $2.4 billion. Other significant uses of cash and cash equivalents for the nine months ended November 3, 2007 included the use of cash and cash equivalents in the seasonal build up of merchandise inventories in advance of the holiday selling season (approximately $0.9 billion, net of increased merchandise payables) and to fund capital expenditures (approximately $0.4 billion). These usages of cash and cash equivalents were primarily funded by operating cash inflows and an approximate $0.4 billion increase in borrowings, net of repayments, as further detailed in the “financing activities” section.
At various times, we have posted cash collateral for certain outstanding letters of credit and self-insurance programs. Such cash collateral is classified within cash and cash equivalents given its ready availability to us as we have the ability to substitute letters of credit at any time for this cash collateral.
Credit card deposits in transit include deposits in-transit from banks for payments related to third-party credit card and debit card transactions.
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 were $351 million, $356 million and $353 million as of November 3, 2007, October 28, 2006 and February 3, 2007, respectively.
Investment of Available Capital
As previously disclosed in our Annual Report on Form 10-K for our fiscal year ended February 3, 2007, our Board of Directors has delegated authority to direct investment of any surplus cash to our Chairman, Edward S. Lampert, subject to various limitations that have been or may be from time to time adopted by the Board of Directors and/or Finance Committee of the Board of Directors. We, from time to time, invest our surplus cash in various securities and financial instruments, including total return swaps, which, as used by the Company in the past, were derivative instruments designed to synthetically replicate the economic return characteristics of one or more underlying marketable equity securities.
Though no total return swap investments were outstanding as of November 3, 2007, as such investments may be highly concentrated and involve substantial risks, should we enter into total return swaps in the future, our financial position and quarterly and annual results of operations may be positively or negatively materially affected based on the nature, timing, magnitude and performance of such investments if, and when they are made.
Operating Activities
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Comparable Store Sales and Total Revenues
For the quarter, Sears Domestic’s comparable store sales and total sales declined 4.2% and 3.1%, respectively. For the first nine months of fiscal 2007, Sears Domestic’s comparable store sales and total sales declined 4.0% and 2.9%, respectively, as compared to the first nine months last year. For the quarter, notable declines were recorded in apparel, particularly women’s apparel, within tools and in lawn and garden. For the first nine months, the most notable decline occurred in home appliances, reflecting in part, sales declines which occurred during the first half of fiscal 2007 within weather-driven products, such as room air conditioners, as well as the impact of the same external factors effecting comparable store sales, as noted in the above discussion of consolidated results. Primarily as a function of first-half performance, year-to-date comparable store sales within home appliances declined to a greater degree than the average year-to-date decline for Sears Domestic in total. For the third quarter, comparable store sales performance within home appliances, while still negative relative to the same quarter in fiscal 2006, was largely in line with Sears Domestic’s overall comparable store sales decline for the quarter. Decreased sales performance within these areas was partially offset by strong comparable store sales increases within Sears Domestic’s home electronics business for both the third quarter and first nine months of fiscal 2007, primarily reflecting increased market demand for flat-panel televisions. |
