Broadline retailer Sears gets $30bn of asset in Q1 2005

08 Jun '05

6 min read

Holdings ended the first quarter with $1.6 billion of cash and cash equivalents. Prior to the consummation of the merger, Kmart and Sears had approximately $7.4 billion of cash and cash equivalents in aggregate. The decrease in cash reflects the $5.4 billion paid to former Sears shareholders and option holders in connection with the merger and the repayment of $346 million of commercial paper borrowings. In addition to the $1.6 billion of cash on hand, Holdings has access to a $4 billion credit facility that is secured by domestic inventory and credit card accounts receivable.

Holdings' inventory level at April 30, 2005 was approximately $9.5 billion, an increase of $6.1 billion over the prior year as a result of the merger. The current year inventory balance includes a purchase accounting step up adjustment of $48 million on Sears inventory above its FIFO value. As of the prior year period, the combined inventory on a FIFO basis of Sears and Kmart was approximately $9.7 billion. The merchandise payable balance is $3.7 billion at April 30, 2005 as compared to $3.9 billion for Sears and Kmart combined as of April 28, 2004.

During the first quarter of 2005, Holdings spent $66 million on capital expenditures as compared to $55 million and $88 million spent by Kmart and Sears, respectively, during the same 13-week period in the prior year. The current year spending of $66 million excludes approximately $40 million of capital expenditures made bexcludes approximately $40 million of capital expenditures made by Sears during the period January 30, 2005 through March 24, 2005 (pre-merger period).

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