Sears 2006 Annual Report Download - page 105

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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
The Company’s management, with the participation of the Company’s principal executive officer and
principal financial officer, conducted an evaluation of the effectiveness of the design and operation of the
Company’s disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this report (the “Evaluation
Date”). Based on this evaluation, the principal executive officer and principal financial officer concluded that, as
of the Evaluation Date, the Company’s disclosure controls and procedures were effective in ensuring that
information required to be disclosed by the Company in the reports that it files or submits under the Exchange
Act (i) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms and (ii) is accumulated and communicated to the Company’s management, including its principal
executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.
In addition, based on that evaluation, no changes in the Company’s internal control over financial reporting
have occurred during the Company’s last fiscal quarter that have materially affected, or are reasonably likely to
materially affect, the Company’s internal control over financial reporting.
The Company is in the process of converting the information technology systems of the Sears Domestic and
Kmart segments to a common platform. The objectives of the systems conversion is to establish a common set of
processes and systems for Sears Domestic and Kmart and to improve the customer experience. The information
technology conversion plan is expected to be completed over the next two years. For fiscal 2007, the Company’s
information technology plan involves the conversions of a number of key financial systems, including the general
ledger and stock ledger, among others. Such conversions involve significant changes to internal processes and
internal controls over financial reporting. Although the conversion has proceeded to date without material
adverse effects, the possibility exists that our conversion to new or common systems could adversely affect the
Company’s disclosure controls and procedures or our results of operations in future periods. We are reviewing
each system as it is being implemented and the controls affected by the implementation of the new systems, and
are making appropriate changes to affected internal controls as we implement the new systems. We believe that
the controls as modified are appropriate and functioning effectively.
See Management’s Annual Report On Internal Control Over Financial Reporting and the Attestation Report
of the Registered Public Accounting Firm included in Item 8 of this Report, which reports are incorporated
herein by this reference.
Item 9B. Other Information
None.
105