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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
_X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
Commission file number 1-4040
SEARS ROEBUCK ACCEPTANCE CORP.
(Exact name of registrant as specified in its charter)
Delaware 51-0080535
(State of Incorporation) (I.R.S. Employer Identification No.)
3711 Kennett Pike, Greenville, Delaware 19807
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 302/888-3100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
6 3/4 Notes due September 15, 2005 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for the past
90 days. Yes X . No .
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of
registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. [X]
As of February 29, 1996, the Registrant had 350,000 shares of capital stock
outstanding, all of which was held by Sears, Roebuck and Co.
Registrant meets the conditions set forth in General Instruction (J)(1)(a)
and (b) of Form 10-K and is therefore filing this report with a reduced
disclosure format.
DOCUMENTS INCORPORATED BY REFERENCE
Part of Form 10-K
None
PART I
Item 1. Business.
Sears Roebuck Acceptance Corp. ("SRAC") is a wholly-owned
finance subsidiary of Sears, Roebuck and Co. ("Sears"). To meet certain
capital requirements of its businesses, Sears borrows on a short-term basis
through the issuance of notes to, and, from time to time, sells customer
receivables balances to, SRAC. SRAC obtains funds through the issuance of
short-term and long-term debt. Short-term borrowings include commercial
paper and agreements with bank trust departments. Long-term debt includes
intermediate-term loans, medium-term notes and discrete underwritten debt.
SRAC's income is derived primarily from the earnings on its
investment in the notes and receivable balances of Sears. Under a letter
agreement between SRAC and Sears, the interest rate on Sears notes is
calculated so that SRAC maintains an earnings to fixed charges ratio of at
least 1.25. The yield on the investment in Sears notes is related to
SRAC's borrowing costs and, as a result, SRAC's earnings fluctuate in
response to movements in interest rates and changes in Sears borrowing
requirements.
SRAC's commercial paper ratings provide for first tier
eligibility under the Securities and Exchange Commission regulation 2a-7.
Ratings are P-1 from Moody's, F-1 from Fitch, and D-1 from Duff and Phelps.
SRAC's commercial paper is also rated A-2 by Standard & Poor's.
SRAC returned to the public term debt market in 1995 and has
current long-term ratings of A2 from Moody's, A from Fitch, A from Duff and
Phelps and BBB from Standard & Poor's. In January 1996, Standard & Poor's
placed SRAC's BBB rating on watch with positive implications.
In March 1995, SRAC filed a $3 billion shelf registration
statement with the Securities and Exchange Commission for the public
issuance of term debt securities. This expansion of securities offered
allows SRAC to leverage its direct relationships with investors and benefit
from direct issuance opportunities across the entire term interest rate
spectrum. Subsequently, SRAC launched its return to the public term debt
market with a $250 million underwritten transaction and the introduction of
a continuously offered medium-term note program.
SRAC and Sears have entered into agreements for the benefit of
certain debtholders of SRAC under which Sears will, for so long as required
by the applicable indentures, pay SRAC such amounts that, when added to
other available earnings, will be sufficient for SRAC to maintain a fixed
charge ratio of no less than 1.10 and will continue to own all of the
outstanding voting stock of SRAC.
In June of 1995, SRAC amended its existing $4.5 billion
syndicated credit agreement maturing in 1999, increasing the amount to
$4.7 billion and extending the maturity to the year 2000. The facility is
composed of 56 valued relationship banks. At year-end, 95% of the aggregate
commitments of the credit facility were extended by banks rated at least A2
by Moody's or A from Standard & Poor's. Simultaneously, SRAC replaced
$550 million of uniform credit agreements with a $1.0 billion 364-day
syndicated credit agreement. In December, Sears and SRAC jointly entered
into a $40 million credit facility with 48 minority-owned banks. This
action demonstrated a continuation of the strong commitment by the
companies to support local communities across the country. These new
facilities provide increased support and extend for a longer term when
compared to the previous agreements. SRAC continued to provide support for
100% of commercial paper outstanding through its credit lines and highly
liquid investment portfolio.
Pursuant to the syndicated credit agreements between SRAC and
various banks, the letter agreement between SRAC and Sears concerning
SRAC's investment in Sears notes may not be amended, waived, terminated or
modified (except that SRAC's fixed charge coverage ratio may be reduced to
1.15) without the approval of such banks.
SRAC continues to be a strongly capitalized company, with an
equity position of $1.2 billion. The company's debt-to-equity ratio was
5.9:1 at the end of 1995 compared to 5.0:1 at the end of 1994.
At February 29, 1996, SRAC had 11 employees.
Item 2. Properties.
None.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
There is no established public trading market for SRAC's common
stock. As of February 29, 1996, Sears owned all outstanding shares of
SRAC's common stock. SRAC does not intend to pay any cash or other
dividends on its common stock in the foreseeable future.
Item 6. Selected Financial Data.
Not applicable.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition
SRAC's investment in Sears notes increased to $8.4 billion at
year-end 1995, from $6.8 billion at the end of 1994, due to increased
funding requirements of Sears. In addition to commercial paper and
intermediate-term loans, in 1995, SRAC began to issue continuously offered
medium-term notes and underwritten unsecured term debt. By the close of
1995, SRAC had issued $1.4 billion in medium-term notes and $500 million in
discrete underwritten transactions against a $3 billion shelf registration.
As a result of these issuances, term debt increased from $845 million at
the beginning of the year to $2.8 billion at the close of 1995. The sharp
decline in long-term interest rates in 1995 allowed SRAC to satisfy Sears
maturing debt and increased borrowing needs by extending maturities and
issuing low cost fixed rate debt.
In November 1995, in anticipation of future funding
requirements, SRAC filed a second registration statement for an additional
$2 billion in public term debt securities. The filing was amended and
became effective in early March 1996. As of March 28, 1996, there has been
no debt issued against this registration.
Short-term borrowings decreased from $5.0 billion at the end of
1994 to $4.6 billion at the close of 1995. SRAC had investments in highly
liquid short-term securities of $142.0 million at the end of 1995, as part
of its liability management program.
In January 1996, SRAC issued $250 million of discrete
underwritten debt with a coupon of 6 1/8% and a term of 10 years.
Results of Operations
Under an agreement with Sears, SRAC is presently earning a rate
on the notes of Sears providing a ratio of earnings to fixed charges of at
least 1.25. SRAC's total revenues of $510.3 million increased
$227.6 million from $282.7 million in 1994, due to increases in both the
average Sears note balances and the level of interest rates during 1995.
In 1995, SRAC's average cost of short-term funds increased
149 basis points to 6.06% from 4.57% in 1994. Average outstanding short-
term debt of $5,116.8 million increased $1,377.1 million from
$3,739.7 million in 1994. In 1995, SRAC's average cost of long-term funds
increased 98 basis points to 6.31% compared to 5.33% in 1994, due primarily
to the issuance in 1995 of long-term debt with extended maturities.
Average outstanding long-term debt of $1,211.2 million increased
$851.1 million compared to $360.1 million in 1994. The increase in average
outstanding debt and the higher level of interest rates during 1995,
resulted in a $186.1 million, or 85%, increase in interest and related
expenses to $404.6 million in 1995 from $218.5 million in 1994. SRAC's
1995 net income increased $26.9 million, or 67%, to $67.1 million from
$40.2 million in 1994.
The financial information appearing in this annual report on
Form 10-K is presented in historical dollars which do not reflect the
decline in purchasing power that results from inflation. As is the case
for most financial companies, substantially all of SRAC's assets and
liabilities are monetary in nature. Interest rates on SRAC's combined
investment in Sears notes (set to provide a fixed charge coverage of at
least 1.25 times) and customer receivable balances help insulate SRAC from
the effects of inflation-based interest rate increases.
Item 8. Financial Statements and Supplementary Data.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
Year Ended December 31
millions 1995 1994 1993
------- ------- -------
Revenues
- --------
Earnings on notes of Sears $490.7 $257.9 $209.1
Earnings on receivable balances
purchased from Sears (Note 3) 7.1 6.2 105.4
Earnings on invested cash 12.3 18.4 22.6
Other revenues 0.2 0.2 0.4
------- ------- -------
Total revenues 510.3 282.7 337.5
Expenses
- --------
Interest and amortization of
debt discount and expense 404.6 218.5 236.1
Provision for credit losses -- -- 33.8
Operating expenses 2.4 1.9 6.8
------- ------- -------
Total expenses 407.0 220.4 276.7
------- ------- -------
Income before income taxes 103.3 62.3 60.8
Income taxes (Note 2) 36.2 22.1 21.3
------- ------- -------
Net income $67.1 $40.2 $39.5
------- ------- -------
Ratio of earnings to fixed charges 1.26 1.29 1.26
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF FINANCIAL POSITION
December 31
millions 1995 1994
--------- ---------
Assets
- ------
Notes of Sears $8,396.4 $6,842.5
Customer receivable balances
purchased from Sears (Note 3) 81.2 81.5
Cash and invested cash 143.0 102.1
Other assets 13.7 5.1
--------- ---------
Total assets $8,634.3 $7,031.2
--------- ---------
Liabilities
- -----------
Commercial paper (net of unamortized
discount of $23.8 and $22.3) $4,450.6 $4,912.9
Agreements with bank trust departments 137.0 87.4
Intermediate-term loans 895.0 845.0
Medium-term notes 1,383.5 -
Discrete underwritten debt 498.9 -
Accrued interest and other liabilities 24.5 8.2
--------- ---------
Total liabilities 7,389.5 5,853.5
--------- ---------
Commitments (Note 9)
Stockholder's Equity
- --------------------
Capital stock, par value $100 per share
500,000 shares authorized
350,000 shares issued and outstanding 35.0 35.0
Capital in excess of par value - -
Retained income 1,209.8 1,142.7
--------- ---------
Total stockholder's equity 1,244.8 1,177.7
--------- ---------
Total liabilities and
stockholder's equity $8,634.3 $7,031.2
--------- ---------
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF STOCKHOLDER'S EQUITY
Year Ended December 31
millions 1995 1994 1993
-------- -------- --------
Capital stock $35.0 $35.0 $35.0
-------- -------- --------
Capital in excess of par value:
Beginning of year - - $330.2
Return of capital paid to Sears* - - (330.2)
-------- -------- --------
End of year $- $- $-
-------- -------- --------
Retained income:
Beginning of year $1,142.7 $1,102.5 $2,763.0
Net income 67.1 40.2 39.5
Dividend paid to Sears - - (1,700.0)
-------- -------- --------
End of year $1,209.8 $1,142.7 $1,102.5
-------- -------- --------
Total stockholder's equity $1,244.8 $1,177.7 $1,137.5
-------- -------- --------
* Characterized as a dividend under Delaware General Corporation Law.
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS Year Ended December 31
millions 1995 1994 1993
-------- -------- --------
Cash Flows From Operating Activities
- ------------------------------------
Net income $67.1 $40.2 $39.5
Adjustments to reconcile net income to net
cash provided by operating activities:
Earnings amortization on retail customer
receivable balances discount - - (125.9)
Provision for credit losses - - 33.8
Depreciation, amortization and
other noncash items 1.2 20.9 58.7
Decrease in deferred federal income taxes - (3.0) (7.1)
Decrease (increase) in other assets 2.4 (2.2) (2.5)
Increase (decrease) in other liabilities 16.3 (2.5) (20.9)
-------- -------- --------
Net cash provided by (used in)
operating activities 87.0 53.4 (24.4)
Cash Flows From Investing Activities
- ------------------------------------
(Increase) decrease in notes of Sears (1,553.9) (3,438.6) 5,059.5
Decrease in receivable
balances purchased from Sears 0.3 6.5 967.5
-------- -------- --------
Net cash (used in) provided by
investing activities (1,553.6) (3,432.1) 6,027.0
Cash Flows From Financing Activities
- ------------------------------------
(Decrease) increase in commercial paper,
primarily 90 days or less (462.3) 2,437.9 (6,040.3)
Increase (decrease) in agreements with bank
trust departments 49.6 (52.4) (258.1)
Payments for redemption of zero coupon notes - (400.0) -
Proceeds from issuance of long-term debt 1,920.2 844.6 -
-------- -------- --------
Net cash provided by (used in)
financing activities 1,507.5 2,830.1 (6,298.4)
-------- -------- --------
Net increase (decrease)
in cash and invested cash 40.9 (548.6) (295.8)
Cash and invested cash, beginning of year 102.1 650.7 946.5
-------- -------- --------
Cash and invested cash, end of year $143.0 $102.1 $650.7
-------- -------- --------
Supplemental Disclosure of Cash Flow Information
Cash paid during the year
Interest $361.5 $231.1 $200.5
Income taxes 36.8 21.7 37.1
See notes to financial statements.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Sears Roebuck Acceptance Corp. ("SRAC"), a wholly-owned subsidiary of
Sears, Roebuck and Co. ("Sears"), is principally engaged in the business of
acquiring short-term notes of Sears and to a lesser extent purchasing
outstanding customer receivable balances from Sears, using proceeds from
its short-term borrowing programs (primarily the direct placement of
commercial paper), and issuance of intermediate-term loans, medium-term
notes and discrete underwritten debt.
Under a letter agreement between SRAC and Sears, the interest rate on the
Sears notes is presently calculated so that SRAC maintains an earnings to
fixed charge ratio of at least 1.25.
Cash and invested cash is defined to include all highly liquid investments
with maturities of three months or less. Customer receivables purchased
from Sears are purchased at par and are interest-bearing.
Debt discount and issue expenses are amortized on a straight-line basis
over the terms of the related obligation.
The results of operations of SRAC are included in the consolidated federal
income tax return of Sears. Tax liabilities and benefits are allocated as
generated by SRAC, whether or not such benefits would be currently
available on a separate return basis.
Certain reclassifications have been made in the 1994 cash flow statement to
conform to current accounting classifications. No reclassifications were
necessary to be made in the 1993 cash flow statement.
For 1995, SRAC changed its fiscal year-end from December 31 to a 52 or
53 week year ending on the Saturday closest to December 31.
2. FEDERAL INCOME TAXES
millions 1995 1994 1993
------- ------- -------
Current $36.6 $25.5 $28.4
Deferred (0.4) (3.4) (7.1)
------- ------- -------
Financial statement income tax provision $36.2 $22.1 $21.3
------- ------- -------
Effective income tax rates 35% 35% 35%
3. CUSTOMER RECEIVABLE BALANCES
SRAC has purchased customer receivable balances ("CRB") from Sears. CRB
are purchased with recourse at par, with SRAC earning interest on the
receivables. CRB are made up of credit accounts Sears has established with
merchants and contractors for bulk purchases from Sears. The CRB are
predominately paid within 30 days.
Each month, SRAC purchases the balance increases in the CRB accounts
attributable to additional credit sales and receives the collections
related to the previously purchased balances. Sears pays interest to SRAC
on the balances in these accounts at a rate equivalent to the prime rate.
4. COMMERCIAL PAPER AND OTHER SHORT-TERM BORROWINGS
SRAC obtains funds through the direct placement of commercial paper (issued
in maturities of one to 270 days) and borrowings under agreements with bank
trust departments. Selected details of SRAC's borrowings are shown below.
Weighted interest rates are based on the actual number of days in the year
and borrowings net of unamortized discount.
millions 1995 1994
-------- --------
Commercial paper outstanding $4,474.4 $4,935.2
Less: Unamortized discount 23.8 22.3
-------- --------
Commercial paper outstanding (net) 4,450.6 4,912.9
Agreements with bank trust departments 137.0 87.4
-------- --------
Total short-term borrowings $4,587.6 $5,000.3
-------- --------
Average and Maximum Balances 1995 1994
------------------- -------------------
Maximum Maximum
millions Average (month-end) Average (month-end)
------------------- -------------------
Commercial paper $4,962.8 $5,776.6 $3,615.3 $4,912.9
Agreements with bank trust dept. 154.0 185.2 124.4 142.2
------------------- -------------------
Weighted Interest Rates 1995 1994
------------------- -------------------
Average Year-End Average Year-End
------------------- -------------------
Commercial paper 6.07% 5.89% 4.58% 5.82%
Agreements with bank trust dept. 6.01% 5.87% 4.38% 6.06%
------------------- -------------------
5. INTERMEDIATE-TERM LOANS
As of December 30, 1995, $895 million in intermediate-term loans were
outstanding with private institutions compared to $845 million at year-end
1994. The rates on most of these variable rate intermediate-term loans are
indexed to LIBOR with a set basis point spread. The average weighted rate
on the intermediate-term loans in 1995 was 6.23% compared to 5.41% in 1994.
As of December 30, 1995, intermediate-term loans maturing in the next five
years were as follows:
(millions)
1996 1997 1998 1999 2000
------ ------ ------ ------ ------
$200.0 $320.0 $25.0 $325.0 $25.0
6. MEDIUM-TERM NOTES
SRAC issued $1,383.5 million of medium-term notes with either a floating
rate indexed to Libor or a fixed rate. As of December 30, 1995, SRAC had
medium-terms notes outstanding with an average weighted rate of 6.25% and
terms ranging from two to ten years.
As of December 30, 1995, medium-term notes maturing in the next five years
were as follows:
(millions)
1996 1997 1998 1999 2000
------ ------ ------ ------ ------
- $255.0 $285.0 $88.0 $722.8
7. DISCRETE UNDERWRITTEN DEBT
During 1995, SRAC issued two discrete underwritten notes, both with face
values of $250 million and coupon rates of 6 1/2% and 6 3/4%, respectively.
These notes mature on June 15, 2000 and September 15, 2005 and pay interest
semiannually.
8. BACK-UP LIQUIDITY
SRAC continued to provide support for 100% of commercial paper outstanding
through its investment portfolio and credit lines. SRAC's investment
portfolio fluctuated from zero to a high of $987.7 million throughout 1995.
Credit facilities as of December 30, 1995 were as follows:
Expiration Date (millions)
- ------------------------------------------------------------------
June 2000 $4,680.0
June 1996 1,000.0
December 1996 40.0
- ------------------------------------------------------------------
Total credit facilities $5,720.0
==================================================================
Commitment fees are paid on the unused portions of the above credit
facilities. The annualized fees at December 30, 1995 on these lines were
$4.9 million.
9. LETTERS OF CREDIT AND OTHER COMMITMENTS
SRAC issues import letters of credit to facilitate Sears purchase of goods
from foreign suppliers. At December 30, 1995, letters of credit totaling
$121.0 million were outstanding. SRAC has no liabilities with respect to
this program other than the obligation to pay drafts under the letters of
credit which, if not reimbursed by Sears on the day of the disbursement,
are automatically converted into demand borrowings by Sears from SRAC. To
date, all SRAC disbursements have been reimbursed on a same-day basis.
SRAC issues standby letters of credit on behalf of its affiliate, Western
Auto Supply Company ("Western Auto"), which are used by Western Auto to
secure its obligation to repurchase any defaulted account receivables sold
to a financial institution. At December 30, 1995, a $73.0 million standby
letter of credit was outstanding.
Under the terms of a 1986 agreement, Sears agreed to make all payments
required to be made by SRAC to Sears Overseas Finance N.V. ("SOFNV") in
accordance with certain loan agreements between SRAC and SOFNV. SRAC
remains liable to SOFNV for such loan agreements, which total
$342.8 million as of December 30, 1995. The terms of the loan agreements
with SOFNV were negotiated between related parties; accordingly, the fair
value of these instruments are not provided.
10. FINANCIAL INSTRUMENTS
In the normal course of business, SRAC invests in the Notes of Sears and
purchases customer receivable balances from Sears. These transactions are
negotiated between related parties; accordingly, the fair value of these
instruments are not provided.
SRAC's other financial instruments (both assets and liabilities), with the
exception of medium-term notes and discrete underwritten debt, are
short-term or variable in nature and as such, their carrying value
approximates fair value. Medium-term notes and discrete underwritten debt
are valued based on quoted market prices when available or discounted cash
flows, using interest rates currently available to the Company on similar
borrowings. The fair value of these financial instruments are as follows:
- ---------------------------------------------------------------------------
December 31
- ---------------------------------------------------------------------------
1995 1994
- ---------------------------------------------------------------------------
Carrying Fair Carrying Fair
(millions) Value Value Value Value
- ---------------------------------------------------------------------------
Medium-term notes 1,383.5 1,413.6 - -
Discrete underwritten debt 498.9 516.7 - -
11. QUARTERLY FINANCIAL DATA (UNAUDITED)
First Second Third Fourth
Quarter Quarter Quarter Quarter
1995 1994 1995 1994 1995 1994 1995 1994
(millions) ------------- ------------- ------------ -------------
Operating Results
Combined earnings from
Sears notes and CRB $100.7 $47.6 $122.6 $53.9 $128.6 $72.3 $145.9 $90.3
Total Revenues 105.8 51.1 124.7 57.1 131.5 76.3 148.3 98.2
Interest & related
expenses 84.2 40.3 99.3 45.2 103.6 55.0 117.5 78.0
Total expenses 84.8 41.1 99.9 45.7 104.2 55.8 118.1 77.8
Income before
income taxes 21.0 10.0 24.8 11.4 27.3 20.5 30.2 20.4
Net income 13.7 6.4 16.1 7.3 17.7 13.1 19.6 13.4
Ratio of earnings to
fixed charges 1.25 1.25 1.25 1.25 1.26 1.37 1.26 1.26
(billions)
Averages
Earning assets* $6.6 $ 4.5 $7.5 $4.8 $7.9 $5.4 $9.0 $6.7
Short-term debt 4.6 3.0 5.3 3.2 5.2 4.0 5.4 4.7
Cost of
short-term debt 6.14% 3.45% 6.25% 4.11% 6.00% 4.68% 5.93% 5.45%
*Notes and receivable balances of Sears and invested cash.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Not applicable.
Item 11. Executive Compensation.
Not applicable.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
Not applicable.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as a part of this report:
1. An "Index to Financial Statements" has been filed as a part
of this report on page S-1 hereof.
2. No financial statement schedules are included herein
because they are not required or because the information is
contained in the financial statements and notes thereto, as
noted in the "Index to Financial Statements" filed as part
of this report.
3. An "Exhibit Index" has been filed as part of this report
beginning on page E-1 hereof.
(b) Reports on Form 8-K:
A current report on Form 8-K for November 4, 1995 was filed
with the Securities and Exchange Commission on
November 29, 1995 to report under item 7, the establishment
of the Form of Fixed Rate-Put Option Note Series I as
provided in the indenture dated as of May 15, 1995.
A current report on Form 8-K for June 8, 1995
was filed with the Securities and Exchange Commission
on October 27, 1995 to report under item 5 regarding
underwriting agreements executed in June and September 1995
for the issuance of two discrete debt offerings for
$250 million with a coupon of 6 1/2% and 6 3/4% maturing on
June 15, 2000 and September 15, 2005, and a distribution
agreement for Medium-Term Notes Series I dated
June 15, 1995. Item 7 of this filing also reported the
underwriting, pricing, and distribution agreements and
related note forms for these offerings.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
SEARS ROEBUCK ACCEPTANCE CORP.
(Registrant)
By Stephen D. Carp*
Vice President, Finance
and Assistant Secretary
March 28, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
Keith E. Trost* Director and President )
(Principal Executive )
Officer) )
)
)
Stephen D. Carp* Vice President, Finance ) March 28, 1996
and Assistant Secretary )
(Principal Financial and )
Accounting Officer) )
)
)
James A. Blanda* Director )
)
)
James D. Constantine* Director )
)
)
Alan J. Lacy* Director )
)
)
Alice M. Peterson* Director )
)
)
Larry R. Raymond* Director )
)
)
George F. Slook* Director )
*By \s\ Stephen D. Carp Individually and as Attorney-in-Fact
SEARS ROEBUCK ACCEPTANCE CORP.
INDEX TO FINANCIAL STATEMENTS
PAGE
STATEMENTS OF INCOME 5
STATEMENTS OF FINANCIAL POSITION 6
STATEMENTS OF STOCKHOLDER'S EQUITY 7
STATEMENTS OF CASH FLOWS 8
NOTES TO FINANCIAL STATEMENTS 9-14
INDEPENDENT AUDITORS' REPORT S-2
S-1
INDEPENDENT AUDITORS' REPORT
To the Stockholder and Board of Directors of
Sears Roebuck Acceptance Corp.
Greenville, Delaware
We have audited the accompanying Statements of Financial Position of Sears
Roebuck Acceptance Corp. (a wholly-owned subsidiary of Sears, Roebuck and Co.)
as of December 30, 1995 and December 31, 1994, and the related Statements of
Income, Stockholder's Equity, and Cash Flows for each of the three years in the
period ended December 30, 1995. These financial statements are the
responsibility of Sears Roebuck Acceptance Corp.'s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Sears Roebuck Acceptance Corp. as of
December 30, 1995 and December 31, 1994, and the results of its operations and
its cash flows for each of the three years in the period ended December 30,
1995 in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
January 19, 1996
Philadelphia, Pennsylvania
S-2
EXHIBIT INDEX
3(a) Certificate of Incorporation of the Registrant,
as in effect at November 13, 1987 [Incorporated
by reference to Exhibit 28(c) to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1987*].
3(b) By-laws of the Registrant, as in effect at February 6,
1996.**
4(a) $4,680,000,000 Amended Credit Agreement dated
as of June 29, 1995 among the Registrant, the Banks listed
on the signature pages thereof, the Managing Agent,
Co-Arrangers, Co-Agent and Lead Managers referred to therein
and Morgan Guaranty Trust Company of New York, as Agents
[Incorporated by reference to exhibit 4(a) to
Registrant's Current Report on Form 8-K
dated June 29, 1995*].
4(b) $1,000,000,000 Credit Agreement dated
as of June 29, 1995 among the Registrant, the Banks listed
on the signature pages thereof, the Managing Agent,
Co-Arrangers, Co-Agent and Lead Managers referred to therein
and Morgan Guaranty Trust Company of New York, as Agents
[Incorporated by reference to exhibit 4(b) to
Registrant's Current Report on Form 8-K
dated June 29, 1995*].
4(c) Form of Registrant's Investment Note Agreement. [Incorporated
by reference to Exhibit 4(c) to Annual Report on
Form 10-K of the Registrant for the year
ended December 31, 1992*].
4(d) The Registrant hereby agrees to furnish the
Commission, upon request, with each instrument
defining the rights of holders of long-term debt
of the Registrant with respect to which the total
amount of securities authorized does not exceed
10% of the total assets of the Registrant.
4(e) Form of 6 1/2% Note.***
4(f) Form of Fixed-Rate Medium-Term Note Series I.***
4(g) Form of Floating Rate Medium-Term Note Series I.***
4(h) Form of 6 3/4% Note.***
4(i) Fixed Charge Coverage and Ownership Agreement dated
May 15, 1995 between Sears, Roebuck and Co. and the
Registrant.***
- ----------------------------------
* Sec File No. 1-4040
** Filed herewith.
*** [Incorporated by reference to Exhibit 4(a) to Registrant's Current Report
on Form 8-K dated June 8, 1995, File No. 1-4040.]
E-1
EXHIBIT INDEX (cont'd)
4(j) Indenture dated as of May 15, 1995 between the Registrant
and The Chase Manhattan Bank, NA [Incorporated by reference
to Exhibit 4(b) to Amendment No. 1 to Registration
Statement No. 33-64215].
4(k) Extension Agreement dated March 1, 1996, between Sears,
Roebuck and Co. and the Registrant.**
10(a) Letter Agreement dated as of October 17, 1991
between Registrant and Sears, Roebuck and Co. [Incorporated by
reference to Exhibit 10 to the Registrant's
Quarterly Report on Form 10-Q for the quarter
ended September 30, 1991*].
10(b) Letter Agreement dated as of September 2, 1986
between Registrant and Sears, Roebuck and Co. [Incorporated by
reference to Exhibit 10 to the Registrant's Current Report on
Form 8-K dated September 2, 1986*].
10(c)(1) Agreement to Issue Letters of Credit dated
December 3, 1985 between Sears, Roebuck and Co. and
Registrant [Incorporated by reference to Exhibit 10(i)(1) to
the Registrant's Annual Report on Form 10-K for the year ended
December 31, 1987*].
10(c)(2) Letter Agreement dated March 11, 1986 amending
Agreement to Issue Letters of Credit dated
December 3, 1985 [Incorporated by reference to
Exhibit 10(i)(2) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1987*].
10(c)(3) Letter Agreement dated November 26, 1986 amending
Agreement to Issue Letters of Credit dated
December 3, 1985 [Incorporated by reference to
Exhibit 10(i)(3) to the Registrant's Annual Report on
Form 10-K for the year ended December 31, 1987*].
12 Calculation of ratio of earnings to fixed charges.**
23 Consent of Deloitte and Touche LLP.**
24 Power of attorney.**
__________________________
* SEC File No. 1-4040.
** Filed herewith.
*** [Incorporated by reference to Exhibit 4(a) to Registrant's Current Report
on Form 8-K dated June 8, 1995, File No. 1-4040.]
E-2
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
1995 1994 1993
(dollars in millions)
INCOME BEFORE INCOME TAXES $103.3 $ 62.3 $ 60.8
PLUS FIXED CHARGES:
Interest 398.4 190.5 177.6
Amortization of debt
discount and expense 6.2 28.0 58.5
------- ------- -------
TOTAL FIXED CHARGES 404.6 218.5 236.1
------- ------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $ 507.9 $ 280.8 $ 296.9
======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.26 1.29 1.26