Sears Holdings Reports Third Quarter Results

Sears Holdings Corporation ("Holdings" or the "Company") (NASDAQ: SHLD) today reported net income of $196 million, or $1.27 per diluted share, for the third quarter ended October 28, 2006, compared with net income of $58 million, or $0.35 per diluted share, for the third quarter ended October 29, 2005. Third quarter results for 2006 include $101 million (or $0.42 per diluted share) of income from the Company's investment of a portion of its surplus cash. Third quarter fiscal 2006 results also include $6 million of net income (or $0.04 per diluted share), in the form of lower tax expense, related to the resolution of certain income tax matters related to Kmart Corporation (a predecessor operating company of Kmart). Additionally, both the current and prior year third quarter periods included restructuring charges: $4 million (or $0.02 per diluted share) in 2006 and $59 million (or $0.13 per diluted share) in 2005. The diluted earnings per share impact of these items is illustrated below:

  Diluted earnings per share impact of certain significant items (1):



                                                         13 Weeks Ended
                                                    October 28,  October 29,
                                                       2006         2005
    Earnings per diluted share - as reported          $1.27         $0.35
    Less:
      Total return swap income                         0.42            --
      Income tax settlements                           0.04            --
      Restructuring charges                           (0.02)        (0.13)
    Earnings per diluted share - excluding above
     items                                            $0.83         $0.48

  (1) Total return swap income as well as periodic restructuring and other
      periodic events or activities affect the Company's results; however,
      the amounts of these types of items may vary significantly from period
      to period and may have a disproportionate effect on the periods
      presented, which affects the comparability of the Company's financial
      performance. Management considers the total impact of these items,
      along with reported results, when it reviews and evaluates the
      Company's financial performance.

The Company's improved quarterly results reflect increased operating income, driven primarily by reduced expenses across all businesses and increased gross margins at both Sears Domestic and Sears Canada. Third quarter operating results at both Sears Domestic and Sears Canada improved relative to the same quarter last year, while operating results at Kmart declined due to lower sales levels and gross margins, partially offset by reduced expenses. Earnings per diluted share for the quarter also benefited from lower average diluted shares outstanding during the current year quarter as compared with the third quarter of fiscal 2005.

"We continue to manage our costs effectively as we make the changes necessary to become a customer-driven organization," said Aylwin Lewis, Sears Holdings' chief executive officer and president. He added, "We are excited to enter the holiday sales period with the products we believe our customers want and an approach that focuses our entire organization in support of our stores in delivering superior customer service across all of our businesses and formats."

Third Quarter Revenues and Comparable Store Sales

For the quarter, domestic comparable store sales declined 3.0% in the aggregate, with Sears Domestic comparable store sales declining 4.8% and Kmart comparable store sales declining 0.7%. The comparable store sales declines at both Kmart and Sears Domestic reflect the impact of increased competition and lower transaction volumes. At Kmart, comparable store sales declined across a number of categories, including home goods, hardlines, food and consumables, and general merchandise, partially offset by increased comparable store sales within apparel and pharmacy. At Sears Domestic, comparable store sales declined across most categories and formats, with more pronounced sales declines within both the home fashion and lawn and garden categories. These declines were partially offset by pronounced sales increases in women's apparel, reflecting what the Company believes are improved assortments in this business relative to last year. Last year, Sears Domestic modified its apparel assortment to a more "fashion forward" offering, which was not successful and led to significant sales declines within Sears Domestic's apparel business during the second half of fiscal 2005.

Total revenues declined $0.3 billion to $11.9 billion for the 13 weeks ended October 28, 2006, as compared to total revenues of $12.2 billion for the 13 weeks ended October 29, 2005. Sears revenues declined $0.1 billion as compared to the third quarter last year, primarily reflecting the impact of comparable store sales declines, partially offset by an increase in the total number of Sears Full-line stores in operation, resulting mainly due to conversions from the Kmart format. Total revenues at Kmart declined $0.2 billion as compared to the prior year period, primarily reflecting a reduction in the total number of Kmart stores in operation and, to a lesser degree, the impact of comparable store sales declines.

Operating Income

Operating income was $276 million for the 13 weeks ended October 28, 2006, as compared to $119 million for the 13 weeks ended October 29, 2005. Operating income in the third quarter of last year was negatively impacted by $59 million in restructuring charges at Sears Canada and Kmart as compared with $4 million in such charges at Kmart in the current year quarter. Excluding the impact of these charges, prior year third quarter operating income was $178 million. In addition to the above-noted impact of lower restructuring charges, reduced selling and administrative expenses (which declined $147 million compared to the third quarter of last year) and increased total gross margin dollars also favorably impacted overall operating income in the current year quarter.

Financial Position

The Company had cash and cash equivalents of $2.1 billion at October 28, 2006 (of which $1.8 billion is domestic and $0.3 billion is at Sears Canada) as compared to $1.2 billion at October 29, 2005 and $4.4 billion at January 28, 2006. During the current quarter, cash and cash equivalents declined $1.6 billion from the $3.7 billion balance at the end of the second quarter. Approximately $1.1 billion of that decrease was due to cash being used to build inventories for the holiday selling season (net of merchandise payables). Other cash uses in the quarter included $289 million for share repurchases, $267 million for pension contributions (including a voluntary accelerated contribution of $200 million), debt repayments of $258 million (net of new borrowings) and $153 million of capital expenditures.

Merchandise inventories at October 28, 2006 were approximately $11.5 billion, as compared to $10.8 billion as of October 29, 2005. The increase reflects planned increases due to earlier receipt of product, the expansion of product assortment this year and increases in apparel and other merchandise categories where the Company believes business trends support higher inventory levels. Merchandise payables were $4.2 billion at October 28, 2006, as compared to $4.3 billion as of October 29, 2005.

As the result of resolving certain tax matters during the third quarter of 2006 pertaining to the bankruptcy of Kmart Corporation, a predecessor operating company of Kmart, the Company recorded approximately $104 million of deferred tax assets with an offsetting credit recorded to capital in excess of par value. In accordance with AICPA Statement of Position 90-7, "Financial Reporting by Entities in Reorganization under the Bankruptcy Code," resolution of these matters result in a direct credit to capital in excess of par value within shareholders' equity.

Share Repurchase

During the third quarter of 2006, the Company repurchased approximately 2 million common shares at a total cost of $289 million, or an average price of $141.89 per share. As of October 28, 2006, the Company had remaining authorization to repurchase $618 million of common shares under its existing share repurchase program approved by the board of directors. The remaining shares may be purchased in the open market, through self-tender offers or through privately negotiated transactions. Timing will depend on prevailing market conditions, alternative uses of capital and other factors.

Interest and Investment Income

The following table sets forth the components of interest and investment income as reported on the Company's condensed consolidated income statement. Amounts from prior periods have been reclassified to interest and investment income to conform to current period presentation. The Company previously reported interest income on cash and cash equivalents as a component of net interest expense, and reported other investment income as a component of other income.

                                13 Weeks Ended          39 Weeks Ended
                            October 28, October 29,  October 28, October 29,
  millions                      2006       2005          2006      2005

  Interest and investment
   income
     Interest income on cash
      and cash equivalents       $36        $16           $112       $51
     Total return swap income    101         --            101        --
     Other investment income       3         24             28        35
                  Total         $140        $40           $241       $86


The Company, from time to time, invests its surplus cash in various securities and financial instruments, including total return swaps, which are derivative contracts that synthetically replicate the economic return characteristics of one or more underlying marketable equity securities. In exchange for receiving the return tied to the position underlying a total return swap, the Company pays a floating rate of interest tied to LIBOR on the notional amount of the contract. The fair value of a total return swap is based on the quoted market price of the underlying position and changes in fair value of the total return swaps are recognized currently in earnings. During the third quarter of fiscal 2006, the Company entered into total return swaps and recognized $101 million of investment income consisting of realized gains of $66 million and unrealized gains of $38 million less $3 million of interest cost. As of October 28, 2006, the total return swaps had an aggregate notional amount of $387 million and a fair value of $38 million. These investments are highly concentrated and involve substantial risks. Accordingly, the Company's financial position and quarterly and annual results of operations may be positively or negatively materially affected based on the timing, magnitude and performance of these investments.

Adjusted EBITDA

For purposes of evaluating operating performance, the Company's management uses an Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA") measurement computed as operating income appearing on the statement of operations less depreciation and amortization and gains/(losses) on sales of assets. In addition, it is adjusted to exclude certain merger-related costs, nonrecurring gains and restructuring charges. Adjusted EBITDA is used by management to evaluate the operating performance of the Company's businesses for comparable periods. Adjusted EBITDA should not be used by investors or other third parties as the sole basis for formulating investment decisions as it excludes a number of important cash and non-cash recurring items. Management compensates for this limitation by using GAAP financial measures as well in managing the Company's businesses.

While Adjusted EBITDA is a non-GAAP measurement, management believes that it is an important indicator of operating performance because:

  -- EBITDA excludes the effects of financing and investing activities by
     eliminating the effects of interest and depreciation costs;
  -- Management considers gains/(losses) on the sale of assets to result
     from investing decisions rather than ongoing operations;
  -- Restructuring activities, while periodically affecting the Company's
     results, may vary significantly from period to period and have a
     disproportionate effect in a given period, which affects the
     comparability of results; and
  -- Adjusted EBITDA excludes a one-time gain resulting from the settlement
     of Visa/MasterCard litigation and vice chairman separation expenses,
     both of which were recorded in the second quarter of fiscal 2006, as
     well as merger transaction costs which result from extraordinary
     activities that are not part of normal operations.


  Adjusted EBITDA was determined as follows:


                                 13 Weeks Ended          39 Weeks Ended
                            October 28, October 29,  October 28, October 29,
                                2006        2005         2006       2005
                                                                     Pro
                                                                    Forma
  Operating income per
   statement of income          $276        $119        $1,124       $543
  Plus depreciation and
   amortization                  278         263           843        826
  Less gain on sale of assets     (8)        (15)          (32)       (26)
  Before excluded items          546         367         1,935      1,343

  Vice Chairman separation
   expense                        --          --             8         --
  Visa/MasterCard settlement      --          --           (36)        --
  Merger transaction costs        --          --            --         34
  Restructuring charges            4          59            27        104
  Adjusted EBITDA as defined    $550        $426        $1,934     $1,481

  % to  revenues                 4.6 %       3.5 %         5.3 %     3.9 %

Adjusted EBITDA for the Company's domestic (United States operations) and Sears Canada operations is as follows:

                         13 Weeks Ended                39 Weeks Ended
                   Adjusted                       Adjusted
                   EBITDA     % To Revenues       EBITDA     % To Revenues
                 Oct.   Oct.    Oct.  Oct.       Oct.   Oct.  Oct.   Oct.
                  28,    29,     28,   29,        28,    29,   28,    29,
                 2006   2005    2006   2005      2006   2005  2006   2005
                                                        Pro           Pro
                                                       Forma         Forma
  Domestic
   operations    $439   $367    4.1 %  3.3 %   $1,692 $1,319  5.1 %   3.8 %
  Sears Canada    111     59    8.9 %  4.8 %      242    162  6.8 %   4.6 %
    Total
    Adjusted
     EBITDA      $550   $426    4.6 %  3.5 %   $1,934 $1,481  5.3 %   3.9 %


  Quarterly Report on Form 10-Q

The Company plans to file with the SEC its Quarterly Report on Form 10-Q for the third quarter 2006 on or before December 7, 2006.

Forward-Looking Statements

Results are preliminary and unaudited. This press release contains forward-looking statements about the Company's goals. Forward-looking statements are subject to risks and uncertainties that may cause the Company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. Such statements include, but are not limited to, statements about the expected benefits of the business combination of Sears and Kmart, the potential benefits of our investments and future financial and operating results. Such statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. Risks and uncertainties include the possibility that we fail to offer products and services that satisfy the desires of our customers, whose preferences may change in the future, or other factors outside the control of Holdings. Actual results may differ materially from those set forth in the forward- looking statements. The Company intends the forward-looking statements to speak only as of the time made and does not undertake to update or revise them as more information becomes available.

About Sears Holdings Corporation

Sears Holdings Corporation is the nation's third largest broadline retailer, with approximately $55 billion in annual revenues, and with approximately 3,800 full-line and specialty retail stores in the United States and Canada. Sears Holdings is the leading home appliance retailer as well as a leader in tools, lawn and garden, home electronics and automotive repair and maintenance. Key proprietary brands include Kenmore, Craftsman and DieHard, and a broad apparel offering, including such well-known labels as Lands' End, Jaclyn Smith and Joe Boxer, as well as the Apostrophe and Covington brands. It also has Martha Stewart Everyday products, which are offered exclusively in the U.S. by Kmart and in Canada by Sears Canada. The company is the nation's largest provider of home services, with more than 13 million service calls made annually. For more information, visit Sears Holdings' website at http://www.searsholdings.com/.

                           Sears Holdings Corporation
                              Statements of Income
                                  (Unaudited)

    Amounts are Preliminary and
    Subject to Change            13 Weeks Ended          39 Weeks Ended
                                    Reported          Reported     Pro forma
     millions, except per      Oct. 28,  Oct. 29, Oct. 28, Oct. 29, Oct. 29,
     common share data           2006     2005     2006     2005     2005
  REVENUES
    Merchandise sales and
     services                   $11,941  $12,118  $36,724  $32,867  $37,918
    Credit and financial
     products revenues                -       84        -      171      257
       Total revenues            11,941   12,202   36,724   33,038   38,175

  COSTS AND EXPENSES
    Cost of sales, buying and
     occupancy                    8,557    8,795   26,380   23,997   27,669
    Gross margin dollars          3,384    3,323   10,344    8,870   10,249
    Gross margin rate             28.3%    27.4%    28.2%    27.0%    27.0%

    Selling and administrative    2,834    2,981    8,382    7,718    9,059
    Selling and administrative
     expense as a percentage of
     total revenues               23.7%    24.4%    22.8%    23.4%    23.7%

    Depreciation and
     amortization                   278      263      843      650      826
    Gain on sales of assets          (8)     (15)     (32)     (25)     (26)
    Restructuring charges             4       59       27      104      104
        Total costs and
         expenses                11,665   12,083   35,600   32,444   37,632

  Operating income                  276      119    1,124      594      543
  Interest and investment
   income                          (140)     (40)    (241)     (86)    (118)
  Interest expense                   89       87      255      235      290
  Other income                        -        -      (15)     (31)     (31)

  Income before income taxes,
   minority interest and
   cumulative effect of change
   in accounting principle          327       72    1,125      476      402
  Income taxes                      119       28      438      183      172
  Minority interest                  12      (14)      17       (7)      (1)

  Income before cumulative
   effect of change in
   accounting principle             196       58      670      300      231
  Cumulative effect of change
   in accounting principle
   (net of income tax benefit
   of $58)                            -        -        -      (90)     (90)
  NET INCOME                       $196      $58     $670     $210     $141

  EARNINGS PER COMMON SHARE
    Diluted earnings per share
     before cumulative effect
     of change in accounting
     principle                    $1.27    $0.35    $4.29    $1.98    $1.42
    Diluted earnings per share    $1.27    $0.35    $4.29    $1.39    $0.87

    Diluted weighted average
     common shares outstanding    154.4    163.6    156.3    151.4    162.2



                         Sears Holdings Corporation
                           Condensed Balance Sheets


  Amounts are Preliminary and Subject
   to Change                                       (Unaudited)

                                     October 28,    October 29,  January 28,
  millions                               2006          2005         2006
  ASSETS
  Current assets
     Cash and cash equivalents          $2,096        $1,202       $4,440
     Receivables                           909           698          811
     Merchandise inventories            11,508        10,750        9,068
     Assets held for sale                    -         1,724            -
     Other current assets                  902           901          888
     Total current assets               15,415        15,275       15,207

  Property and equipment, net            9,247         9,944        9,823
  Goodwill                               1,880         1,731        1,684
  Tradenames and other intangible
   assets                                3,467         3,648        3,448
  Other assets                             460           396          411
     TOTAL ASSETS                      $30,469       $30,994      $30,573

  LIABILITIES
  Current liabilities
     Short-term borrowings and current
      portion of long-term debt           $577          $796         $748
     Merchandise payables                4,195         4,314        3,458
     Unearned revenues                   1,078         1,073        1,047
     Liabilities held for sale               -           133            -
     Other current liabilities           5,271         4,939        5,097
     Total current liabilities          11,121        11,255       10,350

  Long-term debt and capitalized lease
   obligations                           2,955         3,264        3,268
  Pension and postretirement benefits    2,092         2,161        2,421
  Minority interest and other
   liabilities                           2,677         3,369        2,923
     Total Liabilities                  18,845        20,049       18,962

     Total Shareholders' Equity         11,624        10,945       11,611

     TOTAL LIABILITIES AND
      SHAREHOLDERS' EQUITY             $30,469       $30,994      $30,573


  Total common shares outstanding        153.9         161.2        159.8



                          Sears Holdings Corporation
                               Segment Results
                                 (Unaudited)
  Amounts are Preliminary and
   Subject to Change

  2006 - Reported                         13 Weeks Ended October 28, 2006
  millions
                                                      Sears         Sears
                                         Kmart  Domestic  Canada   Holdings
  Merchandise sales and services
   revenue                               $4,042   $6,655   $1,244   $11,941

  Cost of sales, buying and occupancy     3,096    4,611      850     8,557
  Gross margin dollars                      946    2,044      394     3,384
  Gross margin rate                        23.4%    30.7%    31.7%     28.3%

  Selling and administrative                889    1,662      283     2,834
  Selling and administrative expense as
   a percentage of total revenues          22.0%    25.0%    22.7%     23.7%
  Depreciation and amortization              22      223       33       278
  Gain on sales of assets                    (9)       1        -        (8)
  Restructuring charges                       4        -        -         4
  Total costs and expenses                4,002    6,497    1,166    11,665
  Operating income                          $40     $158      $78      $276

  Number of:
    Kmart Stores                          1,394        -        -     1,394
    Full-Line Stores                          -      933      123     1,056
    Specialty Stores                          -    1,083      252     1,335
    Total Stores                          1,394    2,016      375     3,785




  2005 - Reported                         13 Weeks Ended October 29, 2005
  millions
                                                      Sears         Sears
                                         Kmart  Domestic  Canada   Holdings
  Merchandise sales and services         $4,172   $6,803   $1,143   $12,118
  Credit and financial products
   revenues                                   -        -       84        84
    Total revenues                        4,172    6,803    1,227    12,202

  Cost of sales, buying and occupancy     3,157    4,805      833     8,795
  Gross margin dollars                    1,015    1,998      310     3,323
  Gross margin rate                       24.3%    29.4%    27.1%     27.4%

  Selling and administrative                930    1,716      335     2,981
  Selling and administrative expense as
   a percentage of total revenues         22.3%    25.2%    27.3%     24.4%
  Depreciation and amortization              13      214       36       263
  Gain on sales of assets                   (17)       -        2       (15)
  Restructuring charges                       6        -       53        59
  Total costs and expenses                4,089    6,735    1,259    12,083
  Operating income                          $83      $68     $(32)     $119

  Number of:
    Kmart Stores                          1,426        -        -     1,426
    Full-Line Stores                          -      926      122     1,048
    Specialty Stores                          -    1,146      248     1,394
    Total Stores                          1,426    2,072      370     3,868




  2006 - Reported                          39 Weeks Ended October 28, 2006
  millions
                                                        Sears        Sears
                                           Kmart  Domestic  Canada Holdings
  Merchandise sales and services revenue  $12,768  $20,403  $3,553  $36,724

  Cost of sales, buying and occupancy       9,726   14,156   2,498   26,380
  Gross margin dollars                      3,042    6,247   1,055   10,344
  Gross margin rate                         23.8%    30.6%   29.7%    28.2%

  Selling and administrative                2,618    4,951     813    8,382
  Selling and administrative expense as a
   percentage of total revenues             20.5%    24.3%   22.9%    22.8%
  Depreciation and amortization                55      687     101      843
  Gain on sales of assets                     (26)      (6)      -      (32)
  Restructuring charges                         8        -      19       27
  Total costs and expenses                 12,381   19,788   3,431   35,600
  Operating income                           $387     $615    $122   $1,124

  Number of:
    Kmart Stores                            1,394        -       -    1,394
    Full-Line Stores                          -        933     123    1,056
    Specialty Stores                          -      1,083     252    1,335
    Total Stores                            1,394    2,016     375    3,785




  2005 - Reported                          39 Weeks Ended October 29, 2005
  millions
                                                        Sears        Sears
                                           Kmart  Domestic  Canada Holdings
  Merchandise sales and services          $13,354  $17,141  $2,372  $32,867
  Credit and financial products revenues      -        -       171      171
    Total revenues                         13,354   17,141   2,543   33,038

  Cost of sales, buying and occupancy      10,154   12,109   1,734   23,997
  Gross margin dollars                      3,200    5,032     638    8,870
  Gross margin rate                         24.0%    29.4%   26.9%    27.0%

  Selling and administrative                2,850    4,178     690    7,718
  Selling and administrative expense as a
   percentage of total revenues             21.3%    24.4%   27.1%    23.4%
  Depreciation and amortization                33      541      76      650
  Gain on sales of assets                     (25)     -       -        (25)
  Restructuring charges                        51      -        53      104
  Total costs and expenses                 13,063   16,828   2,553   32,444
  Operating income                           $291     $313    $(10)    $594

  Number of:
    Kmart Stores                            1,426      -       -      1,426
    Full-Line Stores                          -        926     122    1,048
    Specialty Stores                          -      1,146     248    1,394
    Total Stores                            1,426    2,072     370    3,868




  2005 - Pro Forma                         39 Weeks Ended October 29, 2005
  millions
                                                        Sears        Sears
                                           Kmart  Domestic  Canada Holdings
  Merchandise sales and services          $13,354  $21,311  $3,253  $37,918
  Credit and financial products revenues               -       257      257
    Total revenues                         13,354   21,311   3,510   38,175

  Cost of sales, buying and occupancy      10,154   15,127   2,388   27,669
  Gross margin dollars                      3,200    6,184     865   10,249
  Gross margin rate                         24.0%    29.0%   26.6%    27.0%

  Selling and administrative                2,850    5,249     960    9,059
  Selling and administrative expense as a
   percentage of total revenues             21.3%    24.6%   27.4%    23.7%
  Depreciation and amortization                33      683     110      826
  Gain on sales of assets                     (25)      (1)    -        (26)
  Restructuring charges                        51      -        53      104
  Total costs and expenses                 13,063   21,058   3,511   37,632
  Operating income                           $291     $253     $(1)    $543



                          Sears Holdings Corporation
                               Adjusted EBITDA

  Amounts are Preliminary and Subject
   to Change
                                           13 Weeks Ended
                            October 28, 2006            October 29, 2005
                        Domestic  Sears   Sears    Domestic   Sears  Sears
                       Operations Canada Holdings Operations Canada Holdings

  Operating income per
   statement of income    $198     $78     $276      $151     $(32)   $119
  Plus depreciation and
   amortization            245      33      278       227       36     263
  Less gain on sale of
   assets/businesses        (8)      -       (8)      (17)       2     (15)
  Before excluded items    435     111      546       361        6     367

  Vice Chairman separation
   expense                   -       -        -         -        -       -
  Visa/MasterCard
   settlement                -       -        -         -        -       -
  Restructuring charges      4       -        4         6       53      59
  Adjusted EBITDA as
   defined                $439    $111     $550      $367      $59    $426
  % to  revenues           4.1%    8.9%     4.6%      3.3%     4.8%    3.5%



                                           39 Weeks Ended
                             October 28, 2006          October 29, 2005
                        Domestic  Sears   Sears    Domestic   Sears  Sears
                       Operations Canada Holdings Operations Canada Holdings
                                                     Pro       Pro    Pro
                                                    Forma     Forma  Forma
  Operating income per
   statement of income   $1,002    $122   $1,124     $544      $(1)   $543
  Plus depreciation and
   amortization             742     101      843      716      110     826
  Less gain on sale of
   assets/businesses        (32)      -      (32)     (26)       -     (26)
  Before excluded items   1,712     223    1,935    1,234      109   1,343

  Vice Chairman separation
   expense                    8       -        8        -        -       -
  Visa/MasterCard
   settlement               (36)      -      (36)       -        -       -
  Merger transaction costs    -       -        -       34        -      34
  Restructuring charges       8      19       27       51       53     104
  Adjusted EBITDA as
   defined               $1,692    $242   $1,934   $1,319     $162  $1,481
  % to  revenues            5.1%    6.8%     5.3%     3.8%     4.6%    3.9%



                         Sears Holdings Corporation
                          Pro Forma Reconciliation

  The following tables provide a reconciliation from the as reported
  results to the pro forma results presented for Sears Holdings, Sears
  Domestic and Sears Canada for the 39-week period ended October 29, 2005.


  Sears Holdings
  millions                             39-week period ended October 29, 2005

                                                  Pre-   Purchase
                                           As     merger  Account-   Pro
                                         reported Activity  ing     Forma
  Merchandise sales and services         $32,867   $5,051     $-   $37,918
  Credit and financial products
   revenues                                  171       86      -       257
    Total revenue                         33,038    5,137      -    38,175

  Cost of sales, buying and occupancy     23,997    3,672      -    27,669
  Selling and administrative               7,718    1,330     11     9,059
  Depreciation and amortization              650      147     29       826
  Gain on sales of assets                    (25)      (1)     -       (26)
  Restructuring charges                      104        -      -       104
  Total costs and expenses                32,444    5,148     40    37,632
  Operating income (loss)                    594      (11)   (40)      543
  Interest and investment income             (86)     (32)     -      (118)
  Interest expense                           235       57     (2)      290
  Other income                               (31)       -      -       (31)
  Income before income taxes, minority
   interest and cumulative effect of
   change in accounting principle            476      (36)   (38)      402
  Income tax expense (benefit)               183        4    (15)      172
  Minority interest                           (7)       6      -        (1)
  Income before cumulative effect of
   change in accounting principle            300      (46)   (23)      231
  Cumulative effect of change in
   accounting principle, net of tax          (90)       -      -       (90)

  NET INCOME (LOSS)                         $210     $(46)  $(23)     $141



  Sears Domestic
  millions                             39-week period ended October 29, 2005

                                                    Pre-   Purchase
                                            As     merger  Account-   Pro
                                         reported Activity  ing      Forma
  Merchandise sales and services
   revenue                               $17,141   $4,170     $-   $21,311

  Cost of sales, buying and occupancy     12,109    3,018      -    15,127
  Selling and administrative               4,178    1,060     11     5,249
  Depreciation and amortization              541      116     26       683
  Gain on sales of assets                      -       (1)     -        (1)
  Total costs and expenses                16,828    4,193     37    21,058
  Operating income (loss)                   $313     $(23)  $(37)     $253



  Sears Canada
  millions                            39-week period ended October 29, 2005

                                                    Pre-   Purchase
                                            As     merger  Account-   Pro
                                         reported Activity  ing      Forma
  Merchandise sales and services          $2,372    $881      $-    $3,253
  Credit and financial product revenues      171      86       -       257
    Total revenues                         2,543     967       -     3,510

  Cost of sales, buying and occupancy      1,734     654       -     2,388
  Selling and administrative                 690     270       -       960
  Depreciation and amortization               76      31       3       110
  Gain on sales of assets                      -       -       -         -
  Restructuring charges                       53       -       -        53
  Total costs and expenses                 2,553     955       3     3,511
  Operating income (loss)                   $(10)    $12     $(3)      $(1)

SOURCE: Sears Holdings Corporation

CONTACT: Sears Holdings Public Relations, +1-847-286-8371

Web site: http://www.searsholdings.com/








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