Sears 2014 Annual Report Download - page 60

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Impairment of Long-Lived Assets
In accordance with accounting standards governing the impairment or disposal of long-lived assets, the
carrying value of long-lived assets, including property and equipment and definite-lived intangible assets, is
evaluated whenever events or changes in circumstances indicate that a potential impairment has occurred relative to
a given asset or assets. Factors that could result in an impairment review include, but are not limited to, a current
period cash flow loss combined with a history of cash flow losses, current cash flows that may be insufficient to
recover the investment in the property over the remaining useful life, or a projection that demonstrates continuing
losses associated with the use of a long-lived asset, significant changes in the manner of use of the assets or
significant changes in business strategies. An impairment loss is recognized when the estimated undiscounted cash
flows expected to result from the use of the asset plus net proceeds expected from disposition of the asset (if any) are
less than the carrying value of the asset. When an impairment loss is recognized, the carrying amount of the asset is
reduced to its estimated fair value as determined based on quoted market prices or through the use of other valuation
techniques.
As a result of this impairment testing, the Company recorded impairment charges of $34 million, $220 million
and $35 million during 2014, 2013 and 2012, respectively. Our impairment testing includes uncertainty because it
requires management to make assumptions and to apply judgment to estimate future cash flows and asset fair values.
If actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset
fair values, we may be exposed to additional impairment charges in the future, which could be material to our results
of operations.
New Accounting Pronouncements
See Note 1 of Notes to Consolidated Financial Statements for information regarding new accounting
pronouncements.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
Certain statements made in this Annual Report on Form 10-K and in other public announcements by us
contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements are subject to risks and uncertainties that may cause our actual results, performance or
achievements to be materially different from any future results, performance or achievements expressed or implied
by these forward-looking statements. Forward-looking statements include information concerning our future
financial performance, business strategy, plans, goals and objectives. Statements preceded or followed by, or that
otherwise include, the words "believes," "expects," "anticipates," "intends," "estimates," "plans," "forecast," "is
likely to" and similar expressions or future or conditional verbs such as "will," "may" and "could" are generally
forward-looking in nature and not historical facts. Such statements are based upon the current beliefs and
expectations of the Company's management and are subject to significant risks and uncertainties. Actual results may
differ materially from those set forth in the forward-looking statements.
The following factors, among others, could cause actual results to differ from those set forth in the forward-
looking statements: our ability to offer merchandise and services that our customers want, including our proprietary
brand products; our ability to successfully implement our integrated retail strategy to transform our business; our
ability to successfully manage our inventory levels; initiatives to improve our liquidity through inventory
management and other actions; competitive conditions in the retail and related services industries; worldwide
economic conditions and business uncertainty, including the availability of consumer and commercial credit,
changes in consumer confidence and spending, the impact of rising fuel prices, and changes in vendor relationships;
vendors’ lack of willingness to provide acceptable payment terms or otherwise restricting financing to purchase
inventory or services; possible limits on our access to our domestic credit facility, which is subject to a borrowing
base limitation and a springing fixed charge coverage ratio covenant, capital markets and other financing sources,
including additional second lien financings, with respect to which we do not have commitments from lenders; our
ability to successfully achieve our plans to generate liquidity through potential transactions or otherwise; potential
liabilities in connection with the separation of Lands’ End and disposition of a portion of our ownership interest in
Sears Canada; our ability to enter into or complete possible transactions, including the potential REIT transaction, in
each case, on acceptable terms, on intended timetables or at all, the form or terms and conditions of any such