Sears 2006 Annual Report Download - page 68

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
the composition of the governing body of the combined entity and the designation of certain senior management
positions. Accordingly, the historical financial statements of Kmart serve as the historical financial statements of
Holdings. The Company completed the purchase price allocation for the Merger during the first quarter of fiscal
2006. As a result, goodwill attributable to the Merger increased by approximately $37 million, primarily based
on the receipt of additional information regarding the fair values of certain properties and certain pre-acquisition
legal contingencies. The following summarizes the assets acquired and liabilities assumed as of the March 24,
2005 Merger date, based on the final purchase price allocation.
millions
Cash and cash equivalents ............................................ $ 4,351
Merchandise inventories ............................................. 6,134
Other current assets ................................................. 1,977
Land ............................................................. 2,023
Buildings and leasehold improvements .................................. 5,958
Furniture, fixtures and equipment ...................................... 1,750
Goodwill .......................................................... 1,721
Tradenames and other intangible assets .................................. 3,914
Other assets ....................................................... 475
Total assets acquired ............................................ 28,303
Merchandise payables and other current liabilities ......................... 6,784
Unearned revenues (including non-current portion) ........................ 1,896
Total debt and capitalized lease obligations ............................... 4,421
Deferred income taxes ............................................... 658
Pension and postretirement benefits ..................................... 1,647
Minority interest and other liabilities .................................... 1,035
Total liabilities assumed .......................................... 16,441
Net assets acquired .................................................. $11,862
The Company allocated approximately $3.9 billion to identifiable intangible assets, of which approximately
$2.8 billion related to the indefinite-lived tradenames of Sears, Kenmore, Craftsman, Lands’ End and DieHard.
These indefinite-lived tradenames are not subject to amortization as management expects these tradenames to
generate cash flows indefinitely. The remaining intangible assets of $1.1 billion recorded at the time of the
Merger included finite-lived tradenames, favorable leases, contractual arrangements and customer lists, and will
be amortized over their estimated useful lives. Approximately $0.4 billion of contractual-arrangement-related
intangibles were eliminated subsequent to the Merger in connection with the sale of Sears Canada’s Credit and
Financial Services Operations in November 2005.
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