Sears 2008 Annual Report Download - page 63

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
fiscal years beginning on or after December 15, 2008, with early adoption prohibited. Before SFAS No. 160 was
issued, limited guidance existed for reporting noncontrolling interests and many companies reported such interest
as a liability in its balance sheet under the heading “Minority Interest.” SFAS No. 160 requires companies to
report noncontrolling interests of consolidated subsidiaries as a component of equity in the consolidated
statement of financial position. As a result, upon adoption of this Statement, Holdings will reclassify its
noncontrolling interest in Sears Canada and OSH (which represents 27% and 19.9% of the subsidiaries’
ownership, respectively) from its current classification within the long-term liabilities section of Holdings’
consolidated balance sheet to classification within the shareholders’ equity section. See Note 17 for the amount
of Holdings’ noncontrolling interest in Sears Canada and OSH (reported as Minority Interest) at January 31, 2009
and February 2, 2008.
In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging
Activities, an amendment of SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities.” SFAS No. 161 expands the disclosure requirements of SFAS No. 133 to require entities to make
qualitative disclosures regarding objectives and strategies for using derivatives, quantitative disclosures regarding
fair value amounts of and gains and losses on derivative instruments, and disclosures regarding credit-risk-related
contingent features in derivative instruments. SFAS No. 161 is effective for fiscal years beginning after
November 15, 2008 and we plan to adopt this standard beginning in the first quarter of fiscal 2009. As this
statement relates only to disclosure requirements, we do not expect it to have a material impact on our financial
condition or operating results.
In December 2008, the FASB issued FSP FAS No. 132(R)-1, “Employers’ Disclosures about Postretirement
Benefit Plan Assets,” which requires additional disclosures for employers’ pension and other postretirement
benefit plan assets. As pension and other postretirement benefit plan assets were not included within the scope of
SFAS No. 157, the FSP requires employers to disclose information about fair value measurements of plan assets
similar to the disclosures required under SFAS No. 157, the investment policies and strategies for the major
categories of plan assets, and significant concentrations of risk within plan assets. FSP FAS 132(R)-1 is effective
for fiscal years ending after December 15, 2009. As FSP FAS 132(R)-1 provides only disclosure requirements,
the adoption of this standard will not have a material impact on our financial condition or operating results.
NOTE 2—CHANGES IN ACCOUNTING PRINCIPLE
Change in Sears Canada Year End
During the fourth quarter of 2007, Sears Canada changed its fiscal year end from the Saturday nearest to
December 31st to the Saturday nearest to January 31st. Prior to this change, Sears Canada’s results were
consolidated into the consolidated results of Holdings on a one-month lag. While our historical policy of
consolidating the results of Sears Canada on a one-month lag was considered acceptable, the elimination of the
one-month reporting lag was considered preferable because it allows a full seasonal cycle, including the
liquidation of holiday merchandise, for Sears Canada to be included in the results of Holdings. Furthermore,
Sears Canada’s fiscal year end is now aligned with the fiscal year end of Holdings.
In accordance with SFAS No. 154, “Accounting Changes and Error Corrections—A Replacement of APB
Opinion No. 20 and SFAS No. 3,” changes in accounting policy are to be reported through retrospective
application of the new policy to all prior financial statement periods presented. Accordingly, the Company’s
financial statements for periods prior to 2007 have been adjusted to reflect the period-specific effects of applying
this change. This change resulted in a one-month shift backwards of periods previously reported for Sears
Canada. The impact of this change in accounting policy was not material to the Company’s consolidated
financial position, results of operations or cash flows for fiscal 2007 or 2006. See Note 20 for the impact of this
change to the Company’s quarterly results of operations for 2007.
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