Sears 2006 Annual Report Download - page 72

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
The Company’s consolidated financial statements include the results of Sears Canada’s Credit and Financial
Services operations from March 25, 2005 up to November 14, 2005.
NOTE 6—RESTRUCTURING ACTIVITIES
In fiscal 2005, the Company initiated a number of restructuring activities including actions to integrate the
home office functions of Kmart and Sears Domestic and align its workforce accordingly. Approximately 1,435
Kmart associates were notified that their positions had been relocated, were under review, or had been
eliminated, and approximately 780 former Sears employees were notified of the decision to eliminate their
positions in connection with the home office integration efforts. Also during fiscal 2005, Sears Canada
implemented a series of productivity improvement initiatives, which included a workforce reduction of
approximately 1,200 associates. These initiatives resulted in the recognition of $28 million and $111 million of
restructuring costs for fiscal 2006 and fiscal 2005, respectively.
As of February 3, 2007, all actions related to these activities have been substantially completed. The
remaining reserve balance of $8 million at February 3, 2007 represents payments to be made in fiscal 2007 in
accordance with the Company’s severance and relocation plans.
Following is a summary of the fiscal 2006 activity in the reserves established for these integration and
productivity initiatives:
millions
Estimated
Total
Cumulative
Costs to be
Incurred
Cumulative
Costs
recognized
through
February 3,
2007
Ending
Reserve
Balance
January 28,
2006
Fiscal
2006
Additions
Fiscal
2006
Cash
Payments
Ending
Reserve
Balance
February 3,
2007
Kmart ............................ $ 63 $ 63 $21 $ 9 $26 $ 4
Sears Domestic ..................... 59 59 2 — 2 —
Sears Canada ...................... 76 76 13 19 28 4
Total ............................. $198 $198 $36 $ 28 $56 $ 8
NOTE 7—BORROWINGS
Total borrowings outstanding as of February 3, 2007 and January 28, 2006 were $3.6 billion and
$4.0 billion, respectively. Short-term borrowings consist of unsecured commercial paper of $94 million and
$178 million at February 3, 2007 and January 28, 2006, respectively. The weighted-average annual interest rate
paid on short-term debt was 5.2% in fiscal 2006 and 2.7% in fiscal 2005.
72