Sears 2014 Annual Report Download - page 102

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SEARS HOLDINGS CORPORATION
Notes to Consolidated Financial Statements—(Continued)
102
holder thereof to purchase one share of the Company’s common stock at an exercise price of $28.41 per share under
the terms of the warrant agreement, which exercise price is payable in cash or by surrendering 8% senior unsecured
notes due 2019 with a principal amount at least equal to the exercise price. The exercise price and the number of
shares of common stock issuable upon exercise of a warrant are both subject to adjustment in certain circumstances.
The warrants may be exercised at any time after November 24, 2014. Unless earlier exercised, the warrants will
expire on December 15, 2019.
We accounted for the warrants in accordance with accounting standards applicable to distinguishing liabilities
from equity and debt with conversion and other options. Accordingly, the warrants have been classified as
Additional Paid-In Capital on the Consolidated Balance Sheet based on the relative fair value of the warrants and the
related 8% Senior Unsecured Notes due 2019 at the time of issuance. The fair value of the warrants and the related
8% Senior Unsecured Notes due 2019 was estimated based on quoted market prices for the same issues using Level
1 measurements as defined in Note 5.