Sears 2010 Annual Report Download - page 38

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We repurchased $394 million, $424 million and $678 million of our common stock pursuant to our common
share repurchase program in 2010, 2009 and 2008, respectively. The common share repurchase program was
initially announced in 2005 and has a total authorization since inception of the program of $6.0 billion. At
January 29, 2011, we had approximately $187 million of remaining authorization under the program. The share
repurchase program has no stated expiration date and share repurchases may be implemented using a variety of
methods, which may include open market purchases, privately negotiated transactions, block trades, accelerated
share repurchase transactions, the purchase of call options, the sale of put options or otherwise, or by any
combination of such methods.
Uses and Sources of Liquidity
Our primary need for liquidity is to fund working capital requirements of our retail businesses, capital
expenditures and for general corporate purposes, including debt repayment, pension plan contributions and
common share repurchases. We believe that these needs will be adequately funded by our operating cash flows,
credit terms received from vendors and borrowings under our credit agreements (described below). At
January 29, 2011, $2.2 billion was available under our domestic credit facility and $510 million under Sears
Canada’s credit facility.
Our year end 2010 and 2009 outstanding borrowings were as follows:
millions
January 29,
2011
January 30,
2010
Short-term borrowings:
Unsecured commercial paper ........................................... $ 360 $ 206
Secured borrowings .................................................. — 119
Long-term debt, including current portion:
Notes and debentures outstanding ....................................... 2,575 1,545
Capitalized lease obligations ........................................... 597 635
Total borrowings ......................................................... $3,532 $2,505
In 2005, the Finance Committee of our 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. The source of funds for the purchases is our cash from operations or borrowings under
the Credit Agreement. Our wholly owned finance subsidiary, Sears Roebuck Acceptance Corp. (“SRAC”), has
repurchased $215 million of its outstanding notes, including $6 million repurchased during 2009 and $49 million
repurchased during 2008, thereby reducing the unused balance of this authorization to $285 million. We
recognized a gain of $13 million on the repurchases made during 2008.
Certain of our debt is variable rate and we therefore manage interest rate risk through the use of fixed and
variable-rate funding and interest rate derivatives. At both January 30, 2010 and January 31, 2009, we had
interest rate derivatives with notional amounts of $120 million and nominal fair values.
Debt Ratings
Our corporate family debt rating at January 29, 2011 appear in the table below:
Moody’s
Investors
Service
Standard &
Poor’s
Ratings
Services
Fitch
Ratings
Ba2 BB- B+
38