Sears 2009 Annual Report Download - page 11

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We may be subject to periodic litigation and other regulatory proceedings. These proceedings may be
affected by changes in laws and government regulations or changes in the enforcement thereof.
From time to time, we may be involved in lawsuits and regulatory actions relating to our business, certain of
which may be in jurisdictions with reputations for aggressive application of laws and procedures against
corporate defendants. We are impacted by trends in litigation, including class-action allegations brought under
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,” as well as
Note 19 to the Consolidated Financial Statements in this report on Form 10-K.
Our pension and postretirement benefit plan obligations are currently underfunded, and we may have to
make significant cash payments to some or all of these plans, which would reduce the cash available for
our businesses.
We have unfunded obligations under our domestic and foreign pension and postretirement benefit plans.
The funded status of our pension plans is dependent upon many factors, including returns on invested assets, the
level of certain market interest rates and the discount rate used to determine pension obligations. Unfavorable
returns on the plan assets or unfavorable changes in applicable laws or regulations could materially change the
timing and amount of required plan funding, which would reduce the cash available for our businesses. In
addition, a decrease in the discount rate used to determine pension obligations could result in an increase in the
valuation of pension obligations, which could affect the reported funding status of our pension plans and future
contributions, as well as the periodic pension cost in subsequent fiscal years.
Item 1B. Unresolved Staff Comments
None.
Item 2. Properties
The following table summarizes the locations of our Kmart and Sears Domestic stores as of January 30,
2010:
Kmart Sears Domestic
State/Territory
Discount
Stores
Super
Centers
Full-line
Mall Stores
Sears
Essentials/
Grand Stores
Specialty
Stores
Alabama ...................................... 25 — 11 2 31
Alaska ....................................... — — 3 — 3
Arizona ...................................... 17 — 14 1 19
Arkansas ..................................... 5 — 7 — 36
California ..................................... 99 — 80 9 140
Colorado ..................................... 18 — 13 2 22
Connecticut ................................... 7 — 8 1 11
Delaware ..................................... 6 — 4 — 6
District of Columbia ............................ — — — — 1
Florida ....................................... 88 — 54 6 42
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