Sears 2006 Annual Report Download - page 73

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Long-term debt is as follows:
ISSUE
February 3,
2007
January 28,
2006
millions
SEARS ROEBUCK ACCEPTANCE CORP.
6.25% to 7.50% Notes, due 2007 to 2043 .................................. $1,398 $1,526
5.20% to 7.50% Medium-Term Notes, due 2007 to 2013 ..................... 414 588
SEARS DC CORP.
9.07% to 9.20% Medium-Term Notes, due 2012 ............................ 26 27
ORCHARD SUPPLY HARDWARE STORES CORPORATION
Commercial Mortgage-Backed Loan, variable interest rate above LIBOR, due
2007(1) ........................................................... 120 120
Senior Secured Revolving Line of Credit, variable interest rate above LIBOR ..... 34 56
Senior Secured Term Loan, variable rate of interest above LIBOR, due 2013(2) .... 200 —
SEARS CANADA INC.
6.55% to 7.45% Debentures and Medium-Term Notes, due 2007 to 2010 ........ 380 551
CAPITALIZED LEASE OBLIGATIONS ..................................... 800 864
OTHER NOTES AND MORTGAGES ....................................... 90 106
Total long-term borrowings ................................................ 3,462 3,838
Current maturities ........................................................ (613) (570)
Long-term debt and capitalized lease obligations ................................ $2,849 $3,268
Weighted-average annual interest rate on long-term debt ......................... 6.8% 5.9%
(1) The Commercial Mortgage-Backed Loan is collateralized by certain real properties of an Orchard Supply
Hardware Stores Corporation (“OSH”) wholly-owned subsidiary with a total carrying value of
approximately $185 million as of February 3, 2007. The term of the loan may be extended for up to three
additional years. As management of OSH has both the ability and intent to extend the term for an additional
year period in fiscal 2007, the Company has classified the carrying value of this loan within long-term debt
and capitalized lease obligations on its consolidated balance sheet as of February 3, 2007, and has included
the principal amount due under the loan within fiscal 2008 maturities for purposes of the below schedule of
long-term debt maturities.
(2) In December 2006, a subsidiary of OSH generated $198 million of debt proceeds, net of approximately $2
million in issuance costs, in connection with its entering into a five year, $200 million Senior Secured Term
Loan. The proceeds of this borrowing were used by OSH to pay Holdings the remaining loan payable issued
in connection with OSH’s recapitalization in November 2005. The Senior Secured Term Loan is
non-recourse to Holdings. The Senior Secured Term Loan is collateralized by a priority interest in all
non-real estate assets of OSH and a second lien on OSH’s inventory, and requires quarterly repayments
equal to 0.25% of the then outstanding principal balance.
The fair value of long-term debt and capitalized lease obligations was $2.8 billion and $3.2 billion at
February 3, 2007 and January 28, 2006, respectively. The fair value of the Company’s debt was estimated based
on quoted market prices for the same or similar issues or on current rates offered to the Company for debt of the
same remaining maturities.
73