Sears 2010 Annual Report Download - page 86

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
Aggregate Amortization Expense
2010 ............................................................ $ 69
2009 ............................................................ 74
2008 ............................................................ 84
Estimated Amortization
2011 ............................................................ $ 63
2012 ............................................................ 59
2013 ............................................................ 36
2014 ............................................................ 27
2015 ............................................................ 14
Thereafter ....................................................... 129
Goodwill is the excess of the purchase price over the fair value of the net assets acquired in business
combinations accounted for under the purchase method. We recorded $1.7 billion in goodwill in connection with
the Merger. We recorded $12 million in connection with our acquisition of an additional 3% interest in Sears
Canada during 2008.
Changes in the carrying amount of goodwill by segment during years 2009 and 2010 are as follows:
millions
Sears
Domestic
Sears
Canada Total
Balance, January 30, 2010 and January 29, 2011:
Goodwill ....................................................... $1,359 $295 $1,654
Accumulated impairment charges .................................... (262) — (262)
$1,097 $295 $1,392
In accordance with accounting standards for goodwill and other intangible assets, goodwill is not amortized
but requires testing for potential impairment, at a minimum on an annual basis, or when indications of potential
impairment exist. The impairment test for goodwill utilizes a fair value approach. The impairment test for
identifiable intangible assets not subject to amortization is also performed annually or when impairment
indications exist, and consist of a comparison of the fair value of the intangible asset with its carrying amount.
Identifiable intangible assets that are subject to amortization are evaluated for impairment using a process similar
to that used to evaluate other long-lived assets. Our annual impairment analysis is performed at the last day of
our November accounting period each year. See Note 14 for further information regarding our impairment
charges recorded in 2008.
NOTE 14—STORE CLOSINGS AND IMPAIRMENTS
Store Closings and Severance
We closed 11, 43 and 24 stores in our Kmart segment and 15, 19 and 22 stores in our Sears Domestic
segment during 2010, 2009 and 2008, respectively. For 2010, 2009 and 2008, we recorded charges related to
these store closings of $13 million, $65 million and $27 million at Kmart, respectively, which included $6
million, $27 million and $15 million recorded in cost of sales for inventory clearance markdowns and $7 million,
$35 million and $12 million recorded in selling and administrative expenses for store closing and severance
costs. For 2009, we recorded charges of $3 million in depreciation expense for accelerated depreciation on assets
in stores we decided to close. For 2010, 2009 and 2008, we recorded charges related to these store closings of
$13 million, $49 million and $50 million at Sears Domestic, respectively, which included $6 million, $10 million
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