Sears 2008 Annual Report Download - page 65

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
one additional year. As management of OSH has both the ability and intent to extend the term for an
additional year, we have classified the carrying value of this loan within long-term debt and capitalized
lease obligations on our consolidated balance sheet as of January 31, 2009 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 $1.7 billion and $2.5 billion at
January 31, 2009 and February 2, 2008, 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 January 31, 2009, long-term debt maturities for the next five years and thereafter were as follows:
millions
2009 .............................................................. $ 345
2010 .............................................................. 443
2011 .............................................................. 492
2012 .............................................................. 191
2013 .............................................................. 99
Thereafter .......................................................... 907
$2,477
Interest
millions 2008 2007 2006
COMPONENTS OF INTEREST EXPENSE
Interest expense ................................................. $243 $253 $281
Accretion of obligations at net present value .......................... 24 26 45
Amortization of debt issuance costs .................................579
Interest expense ................................................. $272 $286 $335
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 in open market or
privately negotiated transactions. Our wholly-owned finance subsidiary, Sears Roebuck Acceptance Corp.
(“SRAC”), has repurchased $209 million of its outstanding notes, including $49 million repurchased during
fiscal 2008, thereby reducing the unused balance of this authorization to $291 million.
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