Sears 2012 Annual Report Download - page 99

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
99
Store closing cost accruals of $193 million and $159 million at February 2, 2013 and January 28, 2012,
respectively, were as follows:
millions Severance
Costs
Lease
Termination
Costs Other
Charges Total
Balance at January 29, 2011. . . . . . . . . . . . . . . $ 2 $ 68 $ 2 $ 72
Store closing costs . . . . . . . . . . . . . . . . . . . . . . 73 5 46 124
Payments/utilizations . . . . . . . . . . . . . . . . . . . . (16) (9)(12)(37)
Balance at January 28, 2012. . . . . . . . . . . . . . . 59 64 36 159
Store closing costs . . . . . . . . . . . . . . . . . . . . . . 31 86 7 124
Store closing capital lease obligations . . . . . . . — 9 — 9
Payments/utilizations . . . . . . . . . . . . . . . . . . . . (49) (21)(29)(99)
Balance at February 2, 2013. . . . . . . . . . . . . . . $ 41 $ 138 $ 14 $ 193
Goodwill
See Note 12 for further information regarding our goodwill impairment charges recorded in 2012 and 2011.
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 2012 and 2011 that indicated an
impairment might have occurred. The impairment review was triggered by the non-cash charges related to
impairment of goodwill balances and establishing a valuation allowance against certain deferred income tax assets
as well as a decline in operating performance at certain locations. As a result of this impairment testing, the
Company recorded impairment charges of $35 million and $16 million during 2012 and 2011, respectively. The
impairment charges recorded during 2012 included a $10 million charge at Kmart and a $25 million charge at Sears
Domestic. The impairment charges recorded during 2011 included a $10 million charge at Kmart and a $6 million
charge at Sears Domestic.
NOTE 14—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 2012 2011 2010
Minimum rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $824 $837 $844
Percentage rentals. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 19 21
Less-Sublease rentals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (47)(30)(52)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $794 $826 $813