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                                                 Delaware                                         36-3533346
                                         (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: 302/434-3100

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: Common Stock par value $1.00 per share

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 28, 2001, the Registrant had 1,000 shares of common stock outstanding, all of which were held by Sears, Roebuck and Co.

Registrant meets the conditions set forth in General Instruction (I)(1)(a) and (b) of Form 10-K and is therefore filing this report with a reduced disclosure format.

None

Item 1. Business

                                         At February 28, 2001, SDC had no employees on its payroll and its officers and directors
                                         consisted of employees of affiliated companies. Its offices are located at 3711 Kennett Pike,
                                         Greenville, Delaware 19807.
 
 

Item 2. Properties.

None.

Item 3. Legal Proceedings.

None.

Item 4. Submission of Matters to a Vote of Security Holders.

Not applicable.

Item 5. Market for Registrant's Common Equity and
          Related Stockholder Matters.

Not applicable.
 
 

Item 7. Management's Discussion and Analysis of Financial Condition and
          Results of Operations (thousands).

                                         Financial Condition

Item 8. Financial Statement and Supplementary Data
 

SEARS DC CORP.
STATEMENTS OF INCOME
(thousands, except ratios)
					2000			1999			1998
Revenues
Earnings on notes of Sears				$	19,252		$	22,076		$	32,290
Expenses
Interest and related expenses					19,122			21,916			32,035
Operating expenses					35			51			95
Total expenses					19,157			21,967			32,130
Income before income taxes					95			109			160
Income taxes					33			38			56
Net income				$	62		$	71		$	104
Ratio of earnings to fixed charges					1.005			1.005			1.005
See notes to financial statements

 
 

SEARS DC CORP.
STATEMENTS OF FINANCIAL POSITION
(thousands, except share data)
						2000			1999
Assets
Cash and cash equivalents					$	-		$	-
Notes of Sears						224,166			223,993
Interest receivable and other assets						299			420
Total assets					$	224,465		$	224,413
Liabilities
Medium-term notes					$	213,025		$	213,025
Interest payable and other liabilities						6,052			6,062
Total liabilities						219,077			219,087
Stockholder's Equity
Common stock, par value $1.00 per share,
1,000 shares authorized and outstanding						1			1
Capital in excess of par value						7			7
Retained income						5,380			5,318
Total stockholder's equity						5,388			5,326
Total liabilities and stockholder's equity					$	224,465		$	224,413
See notes to financial statements

 
 
 
 

SEARS DC CORP.
STATEMENTS OF STOCKHOLDER'S EQUITY
(thousands)
					2000			1999			1998
Capital stock				$	1		$	1		$	1
Capital in excess of par value					7			7			7
Retained income
Beginning of year					5,318			5,247			5,143
Net income					62			71			104
End of year					5,380			5,318			5,247
Total stockholder's equity				$	5,388		$	5,326		$	5,255
See notes to financial statements

 
 

SEARS DC CORP.
STATEMENTS OF CASH FLOWS
(thousands)						2000			1999			1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income					$	62		$	71		$	104
Adjustment to reconcile net income to net cash
provided by (used in) operating activities:
Net change in interest receivable and other assets
and interest payable and other liabilities						111			(2,614)			(2,322)
Net cash provided by (used in) operating activities						173			(2,543)			(2,218)
CASH FLOWS FROM INVESTING ACTIVITIES:
(Increase) decrease in notes of Sears						(173)			121,965			113,497
Net cash provided by (used in) investing activities						(173)			121,965			113,497
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayments of medium-term notes						- -			(119,480)			(111,275)
Net cash used in financing activities						- -			(119,480)			(111,275)
Net cash increase (decrease) in cash and equivalents						-			(58)			4
Balance at beginning of year						- -			58			54
Balance at end of year					$	- -		$	- -		$	58
Supplemental Disclosure of Cash Flow Information
Cash paid during the year
Interest					$	19,078		$	24,561		$	34,512
Incomes taxes						38			56			83
See notes to financial statements

 
 

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Sears DC Corp. ("SDC"), a wholly-owned subsidiary of Sears, Roebuck and Co. ("Sears"), was principally engaged in borrowing in domestic and foreign debt markets and lending the proceeds of such borrowings to Sears and certain direct and indirect subsidiaries of Sears in exchange for their unsecured notes.

Under an agreement between SDC and Sears, the interest rate paid by Sears is designed to produce earnings sufficient to cover SDC's fixed charges at least 1.005 times. Required payments of principal and interest to SDC under the Sears borrowing agreement are intended to be sufficient to allow SDC to make timely payments of principal and interest to the holders of its securities.

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates.

SDC's fiscal year ends on the Saturday nearest December 31. Unless otherwise stated, references to years in this report relate to fiscal years rather than to calendar years.

Fiscal year                                                                Ended                                                  Weeks

2000                                                               December 30, 2000                                             52
1999                                                               January 1, 2000                                                   52
1998                                                               January 2, 1999                                                   52

Cash and cash equivalents includes all highly liquid investments with maturities of three months or less at the date of purchase.

The results of operations of SDC are included in the consolidated federal income tax return of Sears. Tax liabilities and benefits are allocated as generated by SDC, whether or not such benefits would be currently available on a separate return basis. Taxes are provided based on the statutory federal income tax rate.

2. BORROWINGS

The medium-term notes are not redeemable by SDC except for notes having a stated maturity at the time of issue of more than seven years which may be redeemed under certain circumstances, primarily in the event of a significant decline in Discover Card receivables of Sears former subsidiary, Dean Witter, which is now part of Morgan Stanley Dean Witter & Co. The fair market value of medium-term notes approximated $224,863 and $220,482 at December 30, 2000, and January 1, 2000, respectively, based on discounted cash flows using interest rates currently available to Sears. Selected details of SDC's borrowings are shown below.
 

							2000			1999
8.52% to 9.26% medium-term notes due through 2012							$213,025			$213,025
At December 30, 2000 medium-term note maturities for the next five years and thereafter were as follows:
			2001			$	135,500
			2002				24,725
			2003				9,000
			2004				-
			2005				-
			Thereafter				43,800
						$	213,025

 
 
 

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

None.
 
 

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.
 
 

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:
                None.
 
 

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 DC CORP.
                                             (Registrant)

                                             By: /s/ MICHAEL J. CLEARY
                                                 Michael J. Cleary
                                                 Vice President and Controller
 
 

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
 
 

/s/LARRY R. RAYMOND                                   Director, President and                   )
Larry R. Raymond                                             Chief Executive Officer                    )
                                                                       (Principal Executive Officer)             )
                                                                                                                             )
                                                                                                                             )
/s/KEITH E. TROST                                         Vice President and Treasurer            )
Keith E. Trost                                                  (Principal Financial Officer)               )
                                                                                                                             )
                                                                                                                               )
                                                                                                                               )
/s/MICHAEL J. CLEARY                                      Vice President and Controller         )                      March 22, 2001
Michael J. Cleary                                                 (Principal Accounting Officer)         )
                                                                                                                              )
                                                                                                                              )
                                                                                                                              )
/s/JEFFERY N. BOYER                                      Director                                        )
Jeffery N. Boyer                                                                                                      )
                                                                                                                              )
                                                                                                                              )
                                                                                                                              )
                                                                                                                              )
/s/GLENN RICHTER                                          Director                                         )
Glen Richter                                                                                                           )
                                                                                                                              )
 
 

                                                                                                                      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

INDEPENDENT AUDITORS' REPORT                                                              S-2
 
 

INDEPENDENT AUDITORS' REPORT
 
 

To the Stockholder and Board of Directors
Sears DC Corp.
Greenville, DE
 

We have audited the accompanying Statements of Financial Position of Sears DC Corp. (a wholly-owned subsidiary of Sears, Roebuck and Co.) as of December 30, 2000 and January 1, 2000, and the related Statements of Income, Stockholder's Equity and Cash Flows for each of the three years in the period ended December 30, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 DC Corp. as of December 30, 2000 and January 1, 2000, and the results of its operations and its cash flows for each of the three years in the period ended December 30, 2000, in conformity with accounting principles generally accepted in the United States of America.
 

/s/ Deloitte & Touche LLP
Chicago, Illinois
March 15, 2001