Sears 2008 Annual Report Download - page 43

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Contractual Obligations and Off-Balance Sheet Arrangements
Information concerning our obligations and commitments to make future payments under contracts such as
debt and lease agreements, and under contingent commitments, is aggregated in the following tables.
Payments Due by Period
Contractual Obligations Total Within 1 Year 1-3 Years 4-5 Years After 5 Years Other
millions
Operating leases ....................... $ 6,563 $ 821 $1,389 $1,037 $3,316 $—
Short-term debt ....................... 442 442 — — — —
Capital lease obligations ................ 1,162 130 247 229 556 —
Royalty license fees(1) .................. 128 94 29 5 — —
Purchase obligations ................... 71 20 25 26 — —
Pension funding obligations .............. 2,057 171 988 898 — —
Long-term debt ........................ 2,569 361 835 272 1,101 —
FIN 48 liability and interest(2) ............ 447 — — — — 447
Total contractual obligations ............. $13,439 $2,039 $3,513 $2,467 $4,973 $447
(1) We pay royalties under various merchandise license agreements, which are generally based on sales of
products covered under these agreements. We currently have license agreements for which we pay royalties,
including those to use the Jaclyn Smith, Joe Boxer, and Martha Stewart Everyday trademarks. Royalty
license fees represent the minimum Holdings is obligated to pay, regardless of sales, as guaranteed royalties
under these license agreements.
(2) As of January 31, 2009, our FIN 48 liability and FIN 48 gross interest payable were $360 million and $87
million, respectively. We are unable to reasonably estimate the timing of FIN 48 liability and interest
payments in individual years due to the uncertainties in the timing of the effective settlement of tax
positions.
Other Commercial Commitments
We issue various types of guarantees in the normal course of business. We had the following guarantees
outstanding as of January 31, 2009:
millions
Bank
Issued
SRAC
Issued Other Total
Standby letters of credit ............................................ $976 $119 $— $1,095
Commercial letters of credit ......................................... 79 98 — 177
Secondary lease obligations and performance guarantee ................... — — 18 18
The secondary lease obligations relate to certain store leases of previously divested Sears businesses. We
remain secondarily liable if the primary obligor defaults.
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