Sears 2007 Annual Report Download - page 11

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various consumer protection and employment laws, including wage and hour laws. Due to the inherent
uncertainties of litigation and regulatory proceedings, we cannot accurately predict the ultimate outcome of any
such proceedings. An unfavorable outcome could have a material adverse impact on our business, financial
condition and results of operations. In addition, regardless of the outcome of any litigation or regulatory
proceedings, these proceedings could result in substantial costs and may require that we devote substantial
resources to defend our Company. Further, changes in governmental regulations both in the United States and in
the other countries where we operate could have adverse effects on our business and subject us to additional
regulatory actions. For a description of current legal proceedings, see Item 3, “Legal Proceedings” in this
Form 10-K.
Our failure to successfully invest available surplus cash could negatively affect our performance
Our performance with respect to the investment of surplus cash is substantially dependent on the
performance of Edward S. Lampert, to whom our Board of Directors has delegated authority to direct such
investments, subject to certain limitations.
There can be no assurance that we will be successful in our efforts to identify investment opportunities that
meet our requirements. Any such investments may include significant and highly concentrated direct
investments, related derivative positions, or both, with respect to the equity securities of public companies. In
addition, any such investments will involve risks, and Holdings’ balance sheet and results of operations may
fluctuate, depending on the extent of excess funds and the timing, magnitude and performance of our
investments. Furthermore, such investments would be subject to volatility due to market conditions and other
conditions over which we may not have control, which may affect both the recorded value of the investments as
well as our periodic earnings. Accordingly, the poor performance of a significant investment could have a
material adverse effect on the results of operations and financial condition.
Item 1B. Unresolved Staff Comments
None.
11