Sears 2008 Annual Report Download - page 70

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
The secondary lease obligations relate to certain store leases of previously divested Sears businesses. We
remain secondarily liable if the primary obligor defaults.
NOTE 6—INTEREST AND INVESTMENT INCOME
The following table sets forth the components of interest and investment income as reported in our
consolidated statements of income.
millions 2008 2007 2006
Interest income on cash and cash equivalents ..................................... $ 25 $107 $150
Total return swap (loss) income ............................................... — (14) 74
Other investment income .................................................... 21 42 29
Total .................................................................... $ 46 $135 $253
Interest Income on Cash and Cash Equivalents
We recorded interest income of $25 million, $107 million, and $150 million for fiscal 2008, fiscal 2007 and
fiscal 2006, respectively, primarily related to interest earned on cash and cash equivalents. These cash and cash
equivalents include all highly liquid investments with original maturities of three months or less at the date of
purchase. Our invested cash may include, from time to time, investments in, but not limited to, commercial
paper, U.S. federal, state and municipal government securities, floating-rate notes, repurchase agreements and
money market funds. All invested cash amounts are readily available to us.
Total Return Swap Income
As discussed above in Note 5, from time to time we invest our surplus cash in various securities and
financial instruments, including total return swaps. During fiscal 2007, we recognized investment losses of $14
million on these total return swaps. During fiscal 2006, we recognized $74 million of investment income on total
return swaps. We had no total return swaps outstanding at January 31, 2009 or February 2, 2008.
Other Investment Income
Other investment income primarily includes income generated by (and sales of investments in) certain real
estate joint ventures and other equity investments in which we do not have a controlling interest. During fiscal
2008, other investment income included a $10 million dividend received on our cost method investment in Sears
Mexico. Other investment income for fiscal 2007 included a $20 million dividend received on our cost method
investment in Sears Mexico.
NOTE 7—BENEFIT PLANS
We sponsor a number of pension and postretirement benefit plans. Expenses for retirement and
savings-related benefit plans were as follows:
millions 2008 2007 2006
Retirement/401(k) Savings Plans .................................... $ 97 $91 $ 96
Pension plans ................................................... — (21) (4)
Postretirement benefits ........................................... 28 6 46
Total .......................................................... $125 $ 76 $138
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