Sears 2009 Annual Report Download - page 91

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Note 1 above. The first step is a comparison of each reporting unit’s fair value to its carrying value. If the
carrying value of the reporting unit is higher than its fair value, there is an indication that impairment may exist
and the second step must be performed to measure the amount of impairment loss.
After performing the first step of the process in fiscal 2008, we determined goodwill recorded at Sears
Domestic’s subsidiary, OSH, was potentially impaired. After performing the second step of the process, we
determined that the total amount of goodwill recorded at OSH was impaired and recorded a charge of $262
million.
Long-Lived Assets
In accordance with accounting standards governing the impairment or disposal of long-lived assets, we
performed an impairment test of certain of our long-lived assets (principally the value of buildings and other
fixed assets associated with our stores) due to events and changes in circumstances during 2008 that indicated an
impairment might have occurred. The impairment review was triggered by the increased severity of the economic
turmoil and weakening in the U.S. economy during the year, which had a negative impact on the performance of
our stores. As a result of this impairment testing, the Company recorded a $98 million impairment charge during
2008. This impairment charge was made up of a $21 million charge at Kmart and a $77 million charge at Sears
Domestic.
NOTE 15—LEASES
We lease certain stores, office facilities, warehouses, computers and transportation equipment.
Operating and capital lease obligations are based upon contractual minimum rents and, for certain stores,
amounts in excess of these minimum rents are payable based upon specified percentages of sales. Contingent rent
is accrued over the lease term, provided that the achievement of the specified sales level that triggers the
contingent rental is probable. Certain leases include renewal or purchase options.
Rental expense for operating leases was as follows:
millions 2009 2008 2007
Minimum rentals ................................................ $893 $890 $904
Percentage rentals ............................................... 23 28 39
Less—Sublease rentals ........................................... (52) (54) (60)
Total ......................................................... $864 $864 $883
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