Sears, Roebuck and Co., a wholly owned subsidiary of Sears Holdings Corporation, today announced the company has reached a preliminary agreement to settle class action litigation brought on behalf of purchasers of Sears, Roebuck securities during the period from October 24, 2001 through and including October 14, 2002 that had been pending in the United States District Court for the Northern District of Illinois and captioned In re Sears, Roebuck and Co. Securities Litigation, No. 02 C 07527. The litigation concerned statements made by Sears Roebuck concerning its credit card business during the class period. Sears, Roebuck sold that business in November 2003.
“As we move forward, Sears Holdings believes it is important to put this matter behind us so that we can continue to focus on building a great retail company,” said Aylwin Lewis, chief executive officer and president of Sears Holdings.
Under the settlement, Sears, Roebuck is required to make a payment of $215 million. The company has made claims under relevant insurance policies, and expects that, after giving effect to anticipated insurance proceeds, the cash payment for settlement by Sears, Roebuck will be approximately $85 million on a pre-tax basis. Because Sears Holdings had established a reserve for the expected settlement by Sears, Roebuck, the settlement is not expected to have an effect on earnings. The settlement is subject to judicial approval.
In agreeing to the settlement, the company did not admit any wrongdoing and denies committing any violation of law. The company agreed to the settlement solely to eliminate the uncertainties, burden and expense of further protracted litigation.
The settlement will resolve all claims asserted concerning the credit card business disclosures, other than claims asserted under ERISA or relating to SRAC notes, which are described in Sears Holdings’ Report on Form 10-K for the fiscal year ended January 28, 2006.
Public notices detailing the settlement and providing more information will be printed in major newspapers across the U.S. and in a notice to be distributed to class members after approval of the court.