Sears 2007 Annual Report Download - page 73

Download and view the complete annual report

Please find page 73 of the 2007 Sears annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
approximately $178 million as of February 2, 2008. The term of the loan may be extended for up to two
additional years. As management of OSH has both the ability and intent to extend the term for an additional
two years, we have classified the carrying value of this loan within long-term debt and capitalized lease
obligations on our consolidated balance sheet as of February 2, 2008, and have included the principal
amount due under the loan within fiscal 2010 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 $2.5 billion and $2.8 billion at
February 2, 2008 and February 3, 2007, respectively. The fair value of our debt was estimated based on quoted
market prices for the same or similar issues or on current rates offered to us for debt of the same remaining
maturities.
As of February 2, 2008, long-term debt maturities for the next five years and thereafter were as follows:
millions
2008 .............................................................. $ 242
2009 .............................................................. 373
2010 .............................................................. 502
2011 .............................................................. 499
2012 and thereafter ................................................... 1,232
$2,848
Interest
millions 2007 2006 2005
COMPONENTS OF INTEREST EXPENSE
Interest expense ......................................... $253 $281 $241
Accretion of obligations at net present value .................. 26 45 62
Amortization of debt issuance costs .........................798
Accretion of debt discount on 9% convertible note ............. — — 17
Interest expense ......................................... $286 $335 $328
Debt Repurchase Authorization
In fiscal 2005, our Finance Committee of the Board of Directors authorized the repurchase, subject to
market conditions and other factors, of up to $500 million of our outstanding indebtedness and our subsidiaries in
open market or privately negotiated transactions. Our wholly-owned finance subsidiary, Sears Roebuck
Acceptance Corp. (“SRAC”), has repurchased $160 million of its outstanding notes, including $2 million
repurchased during fiscal 2007, thereby reducing the unused balance of this authorization to $340 million.
73