ATACHMENT TO FORM 8937 REPORT OF ORGANIZATIONAL ACTIONSAFFECTING BASIS OF SECURITIES

Transcription

1

2

3 ATACHMENT TO FORM 8937 REPORT OF ORGANIZATIONAL ACTIONSAFFECTING BASIS OF SECURITIES Part I, Items 1-2 Issuer Name and EIN Sears Holdings Corporation Taxpayer Identification # Part I, Items 3-7 Contact information Non-registered ( street name ) shareholders should contact their brokerage firm directly for inquiries pertaining to their account. Registered shareholders should contact the Transfer Agent for Sears Holdings Corporation for inquiries pertaining to their account. Transfer Agent: Computershare Trust Company, N.A. P.O. Box Providence, RI Tel: (800) Sears Holdings Shareholder Services 3333 Beverly Road, B6-256B Hoffman Estates, Illinois Tel: (847) shareholders@searshc.com Part I, Item 8 Date of action December 30, 2011 Part I, Items 9-12 Security information Sears Holdings Corporation ( Sears ) Common Stock CUSIP # Ticker Symbol: SHLD Part II, Item 14 Description of organizational action Orchard Supply Hardware Stores Corporation ( OSH ) Class A Common Stock CUSIP # Ticker Symbol: OSH Series A Preferred Stock CUSIP # Ticker Symbol: OSHSP Pro rata distribution of Class A Common Stock and Series A Preferred Stock of OSH to holders of Sears common stock effective as of 11:59 p.m. New York City Time on December 30, 2011 (the Distribution ). Every shares of Sears common stock outstanding as of the close of business on December 16, 2011, the record date, received one (1) share of OSH Class A Common Stock and one (1) share of OSH Series A Preferred Stock (cash was distributed in lieu of fractional shares of OSH Class A Common Stock and OSH Series A Preferred Stock)

4 Part II, Item 15 Part II, Item 16 Part II, Items Part II, Item 19 Description of the quantitative effect of the organizational action on the basis of the security in the hands of the U.S. taxpayer as an adjustment per share or as a percentage of old stock basis Description of the calculation of the change in basis and the data that supports the calculation List the applicable Internal Revenue Code section(s) and subsection(s) upon which the tax treatment is based and ability of any resulting loss to be recognized. Provide any other information necessary to implement the adjustment As a result of the Distribution, Sears shareholders will be required to allocate the aggregate tax basis in their Sears common stock held immediately before the Distribution among such shares, the shares of OSH Class A Common Stock received in the Distribution and the OSH Series A Preferred Stock received in the Distribution (including any fractional share interest in OSH stock for which cash is received). A shareholder s aggregate tax basis in his or her shares of Sears common stock held immediately prior to the Distribution should be allocated in proportion to the relative fair market value of the OSH Class A Common Stock, the OSH Series A Preferred Stock and the Sears common stock. For additional information on the quantitative effect of the Distribution, please see the discussion below under General Guidance Regarding in a Tax-Free Spin-Off. Please see the discussion below under General Guidance Regarding in a Tax-Free Spin-Off. Sears shareholders will not recognize income, gain or loss for U.S. federal income tax purposes on the receipt of OSH Class A common stock and OSH Series A Preferred Stock pursuant to the Distribution as a result of Section 355(a)(1) of the Internal Revenue Code of 1986, as amended (the Code ). The tax basis calculations resulting from the Distribution are governed by Code Sections 358(a) and (b). Sears shareholders receiving cash in lieu of fractional shares of OSH Class A common stock will recognize gain or loss measured by the difference between the amount of cash received and the basis of such fractional shares pursuant to Code Section 1001(a). Sears shareholders receiving cash in lieu of fractional shares of OSH Series A Preferred Stock generally will be required to treat the receipt of such cash as ordinary dividend income and the tax basis otherwise allocable to such fractional shares generally will be re-allocated to the tax basis of their Sears common stock pursuant to Code Section 306(a) and the regulations thereunder. However, Sears shareholders receiving only cash in lieu of fractional shares of OSH common and preferred stock in the Distribution (and no whole shares of OSH common or preferred stock) generally will be required to recognize gain or loss measured by the difference between the amount of cash received and the basis of such fractional shares pursuant to Code Sections 306(b) and 1001(a). The tax basis allocation adjustments resulting from the Distribution are generally effective as of the date of the Distribution, December 30, Any adjustments to the tax basis of Sears common stock as a result of reallocating basis attributable to the receipt of cash in lieu of OSH preferred stock fractional shares are generally effective no earlier than the date when the fractional shares were sold, which for calendar year taxpayers would be in

5 Information Regarding for the Distribution of Orchard Supply Hardware Class A Common Stock and Series A Preferred Stock as of December 30, 2011 On December 30, 2011, Sears Holdings Corporation ( Sears ) distributed 4,806,000 shares of the Class A common stock and all of the outstanding shares of the Series A Preferred Stock of Orchard Supply Hardware Stores Corporation ( OSH ) on a pro rata basis to the holders of Sears common stock (the Distribution ). Pursuant to the terms of the Distribution, Sears shareholders as of the close of business on the record date of December 16, 2011, received one (1) share of OSH Class A Common Stock and one (1) share of OSH Series A Preferred Stock for every shares of Sears common stock they held. CONSULT YOUR TAX ADVISOR The information contained herein provides a general summary regarding the application of certain provisions of the U.S. Internal Revenue Code of 1986, as amended (the Code ), and the Treasury regulations thereunder (the Regulations ) relating to the allocation of tax basis among Sears common stock, OSH common stock and OSH preferred stock following the Distribution. The information contained herein does not constitute tax advice and does not purport to be complete or to describe the consequences that may apply to particular categories of shareholders. Sears does not provide tax advice to its shareholders. The example below is provided solely for illustrative purposes and as a convenience to shareholders and their tax advisors when establishing their specific tax position. You are urged to consult your own tax advisor regarding the particular consequences of the Distribution to you, including the applicability and effect of all U.S. federal, state, local and foreign tax laws. We urge you to read the prospectus for OSH filed with the Securities and Exchange Commission and dated as of December 12, 2011 (the Prospectus ), noting especially the discussion on pages under the heading Material U.S. Federal Income Tax Consequences of the Distribution. You may access the Prospectus at our website at If you did not receive the Distribution of OSH Class A Common Stock and OSH Series A Preferred Stock on December 30, 2011, this information does not apply to you. APPLICABILITY OF THE TAX BASIS CONSEQUENCES DESCRIBED BELOW The discussion below regarding tax basis applies generally to U.S. Holders. For purposes of this discussion, a U.S. Holder is a beneficial owner of Sears common stock that holds such stock as a capital asset (generally, for investment purposes) and is, for U.S. federal income tax purposes: (i) a citizen or resident of the United States; (ii) a corporation (or other entity treated as a corporation) created or organized in or under the laws of the United States, any state thereof or the District of Columbia; (iii) an estate, the income of which is subject to U.S. federal income taxation regardless of its source; or (iv) a trust if it (x) is subject to the primary supervision of a court within the United States and one or more United States persons have the authority to control all substantial decisions of the trust or (y) has a valid election in effect under applicable United States Treasury regulations to be treated as a United States person. GENERAL GUIDANCE REGARDING TAX BASIS IN A TAX-FREE SPIN-OFF As described in the Prospectus, Sears shareholders will be required to allocate the aggregate tax basis in their Sears common stock held immediately before the Distribution among their shares of Sears common stock, the shares of OSH common stock received in the Distribution and the shares of OSH preferred stock received in the Distribution (including any fractional share interest in OSH stock for which cash is received). In general, a shareholder s aggregate tax basis in his or her shares of Sears common stock held immediately before the Distribution should be allocated in proportion to the relative fair market value of OSH common stock, OSH preferred stock and the Sears common stock on the date of the Distribution. Shareholders that acquired Sears common stock at different times or different prices will need to calculate their tax basis in each block of stock and then allocate a portion of that tax basis to the Sears common stock, OSH common stock and OSH preferred stock received with respect to such shares. Fair market value generally is the price at which property would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the facts. U.S. federal income tax law does not specifically prescribe how you should determine the fair market values of the Sears common stock, OSH common stock and OSH preferred stock for purposes of allocating your tax basis. You should consult your tax advisor - 3 -

6 to determine what measure of fair market value is appropriate. There are several possible methods for determining the fair market values of Sears common stock, OSH common stock and OSH preferred stock. One possible method is to use the volume weighted average trading prices of Sears common stock listed on the NASDAQ Global Select Market, OSH common stock listed on the NASDAQ Capital Market and OSH preferred stock quoted on an over-the-counter quotation system on the first trading day following the Distribution. The following is an example of how you might use this method to allocate your tax basis in your Sears common stock immediately before the Distribution among the Sears common stock, the OSH common stock and the OSH preferred stock you receive (including any fractional share, for which you will receive cash). The example is based on the volume weighted average trading prices on the first trading day after the Distribution, January 3, You should consult your tax advisor to determine what measure of fair market value is appropriate. The example is provided solely for illustrative purposes and as a convenience to Sears stockholders and their tax advisors. HYPOTHETICAL EXAMPLE OF BASIS ALLOCATIONS Assumptions: Your shares of Sears common stock: Your tax basis in your Sears shares: Your aggregate basis in your Sears shares: Shares of OSH common stock you receive in the Distribution (including fractional shares) Shares of OSH preferred stock you receive in the Distribution (including fractional shares) 100 shares $25 per share $2,500 (100 shares x $25 per share) 4.52 shares (100 shares/ ) 4.52 shares (100 shares/ ) Step 1: Formula for Calculating Aggregate Fair Market Values of Shares in the Distribution To determine the aggregate fair market value of your shares of Sears common stock, OSH common stock and OSH preferred stock, multiply the number of such shares by the applicable average fair market value of one such share. TABLE 1 Volume Weighted Average Price on 1/3/2012 Number of Shares Aggregate Fair Market Value Sears Common Stock $ x 100 = $ 3, OSH Common Stock $ x 4.52 = $ OSH Preferred Stock $ x 4.52 = $ 3.72 Total $ 3, Step 2: Formula for Calculating Share Basis Allocation Percentage in the Distribution To find the share basis allocation percentage for your Sears common stock, divide the aggregate fair market value of your shares of Sears common stock by the sum of the aggregate fair market values of your shares of Sears common stock, OSH common stock and OSH preferred stock (including any fractional shares), each as calculated in Step 1 (in the example, the amount in column (d) from Table 1 in Step 1)

7 To find the share basis allocation percentage for your OSH common stock and OSH preferred stock (including any fractional shares), divide the aggregate fair market value of your shares of OSH common stock and OSH preferred stock (including any fractional shares) by the sum of the aggregate fair market values of your shares of Sears common stock and your shares of OSH common stock and OSH preferred stock (including any fractional shares), each as calculated in Step 1 (in the example, the amount in column (d) from Table 1 in Step 1). TABLE 2 Aggregate Fair Market Value Aggregate Combined Fair Market Value Allocation Percentage Sears Common Stock $ 3, $ 3, = 96.28% OSH Common Stock $ $ 3, = 3.61% OSH Preferred Stock $ 3.72 $ 3, = 0.11% Step 3: Formula for Calculating Allocation to Shares of OSH Common and Preferred Stock in the Distribution The method for determining your tax basis allocation for your Sears common stock is described in Step 6 below. To find the tax basis allocation for your OSH common stock and OSH preferred stock (including any fractional shares), multiply your aggregate tax basis in your shares of Sears common stock immediately prior to the Distribution by your OSH tax basis allocation percentages calculated in Step 2 (in the example, the amount in column (d) from Table 2 in Step 2). To find your OSH tax basis allocation per share, divide this number by the number of OSH common and preferred shares (including any fractional shares). TABLE 3 Aggregate Number of Sears Allocation Allocation Allocation Shares Percentage Per Share (e) (f) OSH Common Stock $ 2, x 3.61% = $ = $ OSH Preferred Stock $ 2, x 0.11% = $ = $ 0.62 Step 4: Formula for Allocating Aggregate Basis to Whole and Fractional Shares of OSH Common Stock To find the tax basis allocation for the whole shares of OSH common stock you receive in the Distribution, multiply the number of whole shares of OSH common stock you receive by the OSH tax basis allocation per share calculated in Step 3 (in the example, the amount in column (f) from Table 3 in Step 3). To find the tax basis allocation for any fractional shares of OSH common stock sold on your behalf for cash, multiply each fraction of a share you would have received by the OSH tax basis allocation per share calculated in Step 3 (in the example, the amount in column (f) from Table 3 in Step 3). This is the basis you should use to compute your gain or loss recognized with respect to the cash you receive in lieu of fractional shares

8 OSH Common Whole Shares OSH Common Fractional Share Number of Shares TABLE 4 Allocation Per Share Allocation 4.00 x $ = $ x $ = $ The difference between the amount you receive for your fractional share and the basis thereof (in the example, basis = from column (d) in Table 4 above) will be recognized as long-term capital gain or loss if your holding period for your Sears common stock exceeds one year. Step 5: Formula for Allocating Aggregate Basis to Whole and Fractional Shares of OSH Preferred Stock To find the tax basis allocation for the whole shares of OSH preferred stock you receive in the Distribution, multiply the number of whole shares of OSH preferred stock you receive by the OSH tax basis allocation per share calculated in Step 3 (in the example, the amount in column (f) from Table 3 in Step 3). To find the tax basis allocation for any fractional shares of OSH preferred stock sold on your behalf for cash, multiply each fraction of a share you would have received by the OSH tax basis allocation per share calculated in Step 3 (in the example, the amount in column (f) from Table 3 in Step 3). OSH Preferred Whole Shares OSH Preferred Fractional Share Number of Shares TABLE 5 Allocation Per Share Allocation 4.00 x $ 0.62 = $ x $ 0.62 = $ 0.32 Because the OSH preferred stock is Section 306 stock, as further described in the Prospectus, no tax basis will be allocated to any fractional shares of OSH preferred stock for which you receive cash in lieu of such fractional shares in the Distribution. Instead, such cash generally will be treated as ordinary dividend income and the tax basis allocation for fractional shares of your OSH preferred stock (in the example, basis = $0.32 from column (d) in Table 5 above) generally will be re-allocated to the tax basis of your Sears common stock, as described in Step 6 below. However, if you receive only cash in lieu of fractional shares of OSH common and preferred stock in the Distribution (and no whole shares of OSH common or preferred stock), the receipt of such cash will generally be treated in the same manner as cash received in lieu fractional shares of OSH common stock received by you. In such a case, to find your tax basis allocation for such fractional shares of OSH preferred stock, multiply each fraction of a share you would have received by your OSH tax basis allocation per share, as would generally be determined under the above Steps. This is the basis you should use to compute your gain or loss recognized with respect to the cash you receive in lieu of such fractional shares. The difference between the amount you receive for your fractional share and the basis thereof will be recognized as longterm capital gain or loss if your holding period for your Sears common stock exceeds one year

9 Step 6: Formula for Calculating Allocation to Shares of Sears Common Stock in the Distribution To find the preliminary tax basis allocation for your Sears common stock, multiply your aggregate tax basis in your shares of Sears common stock immediately prior to the Distribution by your Sears share basis allocation percentage calculated in Step 2 (in the example, the amount in column (d) from Table 2 in Step 2). Aggregate Sears TABLE 6 Allocation Percentage Preliminary Tax Basis Allocation Sears Common Stock $ 2, x 96.28% = $ 2, To find the final tax basis allocation for your Sears common stock, add the tax basis that would otherwise have been allocated to your fractional shares of OSH preferred stock (in the example, the amount in column (d) from Table 5 in Step 5) to the tax basis allocation for your shares of Sears common stock (in the example, the amount in column (d) from Table 6 above). Preliminary Allocation TABLE 7 Fractional Preferred Tax Basis Allocation Final Tax Basis Allocation Sears Common Stock $ 2, $ 0.32 = $ 2, Please note that some brokerage firms may not use the information provided in this document, and the information is provided only as an example of one possible method. There are various ways brokerage firms may calculate tax basis, including but not limited to a method based on January 3, 2012 opening, closing, or average prices. Please contact your brokerage firm to determine which calculation they may have used, and contact your tax advisor for additional information and clarification. * * * * * YOU SHOULD CONSULT YOUR OWN TAX ADVISOR WITH RESPECT TO THE U.S. FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE DISTRIBUTION. THIS SUMMARY IS NOT INTENDED TO BE, NOR SHOULD IT BE CONSTRUED TO BE, LEGAL OR TAX ADVICE TO ANY PARTICULAR INVESTOR, AND IS NOT INTENDED TO BE USED, AND CANNOT BE USED, FOR THE PURPOSE OF (A) AVOIDING PENALTIES UNDER THE INTERNAL REVENUE CODE OR (B) PROMOTING, MARKETING OR RECOMMENDING ANY TRANSACTION OR MATTER ADDRESSED HEREIN. " - 7 -