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Statement From Sears Holdings Following Fitch Ratings Announcement

    HOFFMAN ESTATES, Ill., Sept. 19 /PRNewswire-FirstCall/ -- Today Fitch
Ratings ("Fitch") issued a press release in which it downgraded the ratings
associated with certain of Sears Holdings Corporation's ("SHC") outstanding
debt obligations. SHC does not agree with Fitch's action given our current
liquidity position, reduced debt levels, demonstrated history of cash flow
generation and available assets. We believe that we are being unfairly
treated, as many of our biggest competitors have dramatically increased
debt levels over the past several years with little or no consequence to
their ratings.

    SHC has consistently maintained a strong capital structure and
generated significant cash flow from operations. In fact, SHC has generated
$5.2 billion of operating cash since the merger and $1.5 billion last year.
The $4 billion credit facility entered into at the time of the Sears/Kmart
merger was structured to provide significantly more liquidity than Sears
Holdings anticipated requiring in order to provide flexibility to fund our
working capital needs and to pursue a variety of value creating strategies.
Since the merger in March 2005, the largest amount outstanding under the
facility at any time to date has been $1.8 billion, of which $1 billon
represented standby letters of credit issued primarily to support our
insurance programs. Over this same period, SHC has paid down approximately
$2 billion of the outstanding debt assumed from Sears at the time of the
merger. SHC has also made contributions of approximately $1 billion to fund
the frozen pension plans of its predecessor companies. This credit
facility, by its terms, continues through March 2010 and carries no
financial ratio covenants that are applicable (the financial ratio
covenants contained in the agreement are only applicable at SHC's
election).

    SHC has significant assets, including cash of $1.5 billion, owned and
attractive long-term leased real estate, a stable of nationally recognized
proprietary brands (Kenmore, Craftsman, Lands' End and DieHard) and a 70%
equity interest in Sears Canada. In addition, SHC has $9 billion of
inventory that currently secures the $4 billion credit facility.

    We wish to thank Fitch for retracting the incorrect statement that
appeared in its Retail Register Report published on September 17, 2008 in
which reference was made to concerns stemming from the elimination of the
Bank of America cash-backed letter of credit facility. As noted in the
correction issued today by Fitch, that facility did not provide incremental
liquidity over and above the existing $4 billion credit facility. The Bank
of America facility was designed as a less expensive means for Sears
Holdings to issue letters of credit at a time when we had several billions
of dollars of excess cash with which to collateralize the facility. With
lower cash levels, the facility no longer made economic or operational
sense and was significantly reduced, with a small amount retained to
continue certain outstanding international letters of credit. Bank of
America continues to hold one of the largest commitments in our existing $4
billion credit agreement.

    Given that Fitch's rating change utilizes mid-year debt levels and
credit metrics, we have requested that Fitch monitor our credit rating for
upgrade as soon as the calculations on which their decision is based no
longer govern. At a time when many companies are suffering from excessive
leverage undertaken over the past several years, Sears Holdings is well
positioned from decisions we made to reduce our leverage since the merger
and to allow for the inevitable cycles that tend to occur in the retail
business.

    Forward-Looking Statements

    This press release contains forward-looking statements about our
financial condition. 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. Such statements are based upon the current beliefs and
expectations of our management and are subject to significant risks and
uncertainties. 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 initiatives to improve inventory management and other
capabilities; competitive conditions in the retail and related services
industries; the impact of seasonal buying patterns, including seasonal
fluctuations due to weather conditions, which are difficult to forecast
with certainty; general economic conditions and normal business
uncertainty, changes in consumer confidence, tastes, preferences and
spending, including the impact of fuel costs and spending patterns, the
availability and level of consumer debt, and unanticipated increases in our
costs; our dependence on sources outside the United States for significant
amounts of our merchandise; our extensive reliance on computer systems to
process transactions, summarize results and manage our business; our
reliance on third parties to provide us with services in connection with
the administration of certain aspects of our business; our ability to
properly implement and realize the expected benefits from our new
organizational structure and operating model; our ability to attract,
motivate and retain key executives and other associates; the outcome of
pending and/or future legal proceedings, including product liability claims
and bankruptcy claims, including proceedings with respect to which the
parties have reached a preliminary settlement; and our ability to
successfully invest available capital. We intend the forward-looking
statements to speak only as of the time made and do not undertake to update
or revise them as more information becomes available.

    About Sears Holdings Corporation

    Sears Holdings Corporation is the nation's fourth largest broadline
retailer, with over $50 billion in annual revenues, and approximately 3,900
full-line and specialty retail stores in the United States and Canada.
Sears Holdings is the leading home appliance retailer as well as a leader
in tools, lawn and garden, home electronics and automotive repair and
maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard,
and a broad apparel offering, including such well-known labels as Lands'
End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington
brands. We also have Martha Stewart Everyday products, which are offered
exclusively in the U.S. by Kmart and in Canada by Sears Canada. We are the
nation's largest provider of home services, with more than 13 million
service calls made annually. For more information, visit Sears Holdings'
website at http://www.searsholdings.com.


SOURCE Sears Holdings Corporation





 

 
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CONTACT: Sears Holdings Public Relations, +1-847-286-8371