-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, VLV9dTFGXzaVorXYQJIOp6zTSB/r3gyDmWZ2gYfc2TwRzG0Xf6+jxTdcebQm/RuL 142zZGs8XtTALpfwJxQWMw== 0000088255-00-000006.txt : 20000323 0000088255-00-000006.hdr.sgml : 20000323 ACCESSION NUMBER: 0000088255-00-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20000101 FILED AS OF DATE: 20000322 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEARS ROEBUCK ACCEPTANCE CORP CENTRAL INDEX KEY: 0000088255 STANDARD INDUSTRIAL CLASSIFICATION: SHORT-TERM BUSINESS CREDIT INSTITUTIONS [6153] IRS NUMBER: 510080535 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 001-04040 FILM NUMBER: 575468 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 10-K 1 UNITED STATES 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 January 1, 2000 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: 302/434-3100 Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registered 6.75% Notes due September 15, 2005 New York Stock Exchange 7.00% Notes due March 1, 2038 New York Stock Exchange 6.95% Notes due October 23, 2038 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, 2000, the Registrant had 350,000 shares of capital stock outstanding, all of which were held by Sears, Roebuck and Co. Registrant meets the conditions set forth in General Instruction II(a) and (b) of Form 10-K and is therefore filing this report with a reduced disclosure format. DOCUMENTS INCORPORATED BY REFERENCE 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 receivable balances to, SRAC. SRAC obtains funds through the issuance of commercial paper and long-term debt, which includes 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 are F-1 from Fitch IBCA, Inc., D-1- from Duff & Phelps Credit Rating Co, P-2 from Moody's Investor Services, Inc., and A-2 from Standard & Poor's, . Long-term ratings are A from Fitch IBCA, Inc., A- from Duff & Phelps Credit Rating Co., A3 from Moody's Investor Services, Inc., and A- from Standard & Poor's. SRAC and Sears have entered into agreements for the benefit of certain debtholders of SRAC under which Sears, for so long as required by the applicable documents, will continue to own all of the outstanding voting stock of SRAC and will pay SRAC such amounts that, when added to other available earnings, will be sufficient for SRAC to maintain an earnings to fixed charges ratio of not less than 1.10. SRAC provides backup support for its commercial paper portfolio through its committed credit facilities. SRAC manages its credit facilities and associated costs in response to changes in its projected short-term funding requirements. In April 1999, SRAC reduced the commitment amount on the $1 billion revolving credit facility to $500 million. This agreement terminated November 1999. The $40 million credit facililty with 42-minority owned banks expired in November 1999. As of January 1, 2000, SRAC had backup facilities totaling $5.06 billion that continued to provide support for 100% of commercial paper outstanding. 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 as low as 1.15) without the approval of such banks. 2 SRAC ended 1999 with an equity position of $2.9 billion and a debt-to-equity ratio of 4.9:1 compared to 5.5:1 at the end of 1998. As of March 1, 2000 SRAC had 10 employees. Item 2. Properties. SRAC leases 5,865 square feet of an office building located in Greenville, Delaware. 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. None. Item 6. Selected Financial Data. Not applicable. 3 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations. Financial Condition SRAC's investment in Sears notes decreased to $16.8 billion at year-end 1999 from $18.0 billion at the end of 1998. Short-term borrowings at the end of 1999 were $2.7 billion, a $1.6 billion decrease from the prior year. Total debt outstanding decreased in 1999 to $14.2 billion from $15.3 billion. SRAC's investment in the Notes of Sears decreased as a result of reduced funding requirements of Sears. In response to its lower investments, SRAC reduced the level of its debt outstanding. Results of Operations SRAC's total revenues of $1,201 million for 1999 decreased from $1,234 million in 1998 and increased from $960 million in 1997. The revenue decrease for 1999 resulted from a 21 basis point reduction in the average rates on earning assets from 1998 to 1999. Higher levels of average earning assets in 1998 resulted in increased revenues from 1997. SRAC's interest and related expenses were $955 million for 1999, $979 million in 1998 and $763 million in 1997. In 1999, SRAC's average cost of short-term funds decreased 33 basis points to 5.25%. Average outstanding short-term debt of $3.7 billion in 1999 decreased nearly $800 million from the 1998 level. Decreases in short-term debt levels were partially offset by increases in long term debt levels. Average outstanding term debt in 1999 was $11.2 billion compared to $10.6 billion in 1998. SRAC's average cost of term debt of 6.59% was relatively flat compared to 1998. During 1999, SRAC issued $1.1 billion in term debt securities as follows: *$99 million of fixed-rate medium-term notes, with an average coupon of 6.51% and an average term of 4.3 years *$250 million of variable-rate medium-term notes, with an average term of 1.8 years and *$750 million of 6.25%, 10-year global notes, at a yield of 6.43%. SRAC's management of the debt portfolio during 1999 resulted in a $200 million reduction from 1998 average debt levels and a 2 basis point reduction in average cost. This resulted in decreases in interest and related expenses throughout 1999. SRAC's net income was $158 million in 1999, $163 million in 1998 and $125 million in 1997. On December 15, 1999, Moody's Investor Services, Inc. lowered its rating on SRAC's commercial paper to P2 from P1 and SRAC's long-term rating to A-3 from A-2. On February 24, 2000, Duff & Phelps lowered its ratings on SRAC's commercial paper to D-1- from D-1 and SRAC's long-term debt to A- from A. With a Fitch IBCA F-1 rating and the rating from Duff & Phelps, SRAC's commercial paper remains top tier eligible under SEC Rule 2a-7. 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 investment in Sears notes are set to provide fixed charge coverage of at least 1.25 times, thereby insulating SRAC from the effects of inflation-based interest rate increases. 4 Year 2000 Year 2000 compliance is the ability of information systems to recognize and process dates and date-sensitive information including the year 2000 and beyond (commonly referred to as Year 2000 or Y2K). Year 2000 compliance is critical to SRAC because SRAC and many of its service providers, as well as other third parties that facilitate trades in SRAC securities, rely on information systems to operate their businesses. SRAC used only internal resources and Sears resources to complete its Year 2000 compliance initiatives. The costs associated with this effort, together with SRAC's share of the costs relating to Sears corporate-wide Year 2000 effort, were not material. SRAC did not experience any significant Y2K problems. SRAC's facilities opened as planned and systems were operational continuously. Cautionary Statement Regarding Forward Looking Information Certain statements made in this Annual Report on Form 10-K are forward looking statements and are made in reliance on the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. As such, they involve risks and uncertainties that could cause actual results to differ materially. SRAC's forward looking statements are based on assumptions about many important factors, including ongoing competitive conditions in the capital markets, economic conditions such as interest rates, and normal business uncertainty. While SRAC believes its assumptions are reasonable, it cautions that it is impossible to predict the impact of certain factors which could cause actual results to differ materially from expected results. Item 7A. Market Risk SRAC's outstanding debt securities are subject to repricing risk. The Company's policy is to manage interest rate risk through the strategic use of fixed and variable rate debt. All debt securities are considered non-trading. At year-end 1999 and 1998, 31% and 32%, respectively of the funding portfolio was variable rate (including current maturities of fixed-rate long-term debt that will reprice in the next 12 months). Based on SRAC's funding portfolio as of year-end 1999 and 1998, which totaled $14.2 billion and $15.3 billion, respectively, a 100 basis point change in interest rates would affect annual pre-tax funding cost by approximately $44 million and $49 million, respectively. This calculation assumes the funding portfolio balance at year end remains constant for an annual period and that the 100 basis point change occurs at the beginning of the annual period. The effect on net earnings is mitigated by the fixed charge coverage agreement with Sears. 5 Item 8. Financial Statements and Supplementary Data. SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF INCOME (millions, except ratio of earnings to fixed charges) 1999 1998 1997 ------ ------ ------ Revenues - -------- Earnings on notes of Sears $1,189 $1,221 $948 Earnings on commercial customer receivable balances purchased from Sears 4 8 7 Earnings on cash equivalents 8 5 5 ----- ----- ----- Total revenues 1,201 1,234 960 Expenses - -------- Interest expense and amortization of debt discount/premium 955 979 763 Operating expenses 3 4 4 ----- ----- ----- Total expenses 958 983 767 ----- ----- ----- Income before income taxes 243 251 193 Income taxes 85 88 68 ----- ----- ----- Net income $158 $163 $125 ----- ----- ----- Ratio of earnings to fixed charges 1.25 1.26 1.25 See notes to financial statements. 6 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF FINANCIAL POSITION (millions, except share data) 1999 1998 ------- ------- Assets - ------ Cash and cash equivalents $ 454 $ 94 Notes of Sears 16,806 17,990 Commercial customer receivable balances purchased from Sears - 90 Other assets 64 73 --------- --------- Total assets $17,324 $18,247 --------- --------- Liabilities - ----------- Commercial paper (net of unamortized discount of $12 and $25) $2,675 $4,243 Medium-term notes 5,716 5,976 Discrete underwritten debt(net of unamoritized discount of $23 and $16) 5,827 5,084 Accrued interest and other liabilities 173 169 --------- --------- Total liabilities 14,391 15,472 --------- --------- Commitments and Contingent Liabilities Stockholder's Equity - -------------------- Capital stock, par value $100 per share 500,000 shares authorized 350,000 shares issued and outstanding 35 35 Capital in excess of par value 1,150 1,150 Retained income 1,748 1,590 --------- --------- Total stockholder's equity 2,933 2,775 --------- --------- Total liabilities and stockholder's equity $17,324 $18,247 --------- --------- See notes to financial statements. 7 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF STOCKHOLDER'S EQUITY (millions) 1999 1998 1997 -------- -------- -------- Capital stock $35 $35 $35 -------- -------- -------- Capital in excess of par value: Beginning of year 1,150 700 350 Capital contribution - 450 350 -------- -------- -------- End of year $1,150 $1,150 $700 -------- -------- -------- Retained income: Beginning of year $1,590 $1,427 $1,302 Net income 158 163 125 -------- -------- -------- End of year $1,748 $1,590 $1,427 -------- -------- -------- Total stockholder's equity $2,933 $2,775 $2,162 -------- -------- -------- See notes to financial statements. 8 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF CASH FLOWS (millions) 1999 1998 1997 -------- -------- -------- Cash Flows From Operating Activities - ------------------------------------ Net income $158 $163 $125 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash items 12 11 8 Decrease in other assets 4 6 47 Increase in other liabilities 4 46 59 -------- -------- -------- Net cash provided by operating activities 178 226 239 Cash Flows From Investing Activities - ------------------------------------ Decrease (increase) in notes of Sears 1,184 (1,429) (4,952) Decrease (increase) in commercial customer receivable balances purchased from Sears 90 (1) (13) -------- -------- -------- Net cash provided by (used in) investing activities 1,274 (1,430) (4,965) Cash Flows From Financing Activities - ------------------------------------ (Decrease)increase in commercial paper, primarily 90 days or less (1,568) (1,006) 1,925 Decrease in agreements with bank trust departments - - (82) Proceeds from issuance of long-term debt 1,091 2,511 3,467 Payments for redemption of long-term debt (610) (634) (1,132) Issue cost paid to issue debt (5) (28) (25) Proceeds from capital contribution - 450 350 -------- -------- -------- Net cash (used in) provided by financing activities (1,092) 1,293 4,503 -------- -------- -------- Net increase (decrease) in cash and cash equivalents 360 89 (223) Cash and cash equivalents, beginning of year 94 5 228 -------- -------- -------- Cash and cash equivalents, end of year $454 $94 $ 5 -------- -------- -------- Supplemental Disclosure of Cash Flow Information Cash paid during the year Interest paid $936 $947 $694 Income taxes 84 93 66 See notes to financial statements 9 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 receivable balances from Sears, using proceeds from its short-term borrowing programs (primarily the direct placement of commercial paper) and the issuance of long-term debt (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 charges ratio of at least 1.25. Cash and cash equivalents is defined to include all highly liquid investments with maturities of three months or less. Receivables purchased from Sears are purchased at par and are interest-bearing. 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, regardless of whether such benefits would be currently available on a separate return basis. SRAC's fiscal year ends on the Saturday closest to December 31. Fiscal year-ends were January 1, 2000 (52 weeks), January 2, 1999 (52 weeks) and January 3, 1998 (53 weeks). In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS No. 133 "Accounting for Derivative Instruments and Hedging Activities". In May 1999, the FASB voted to delay the adoption of SFAS No.133 by one year. This statement is now required to be adopted in years beginning after June 15, 2000. SRAC is currently evaluating the effect this statement might have on its financial position or results of operations. Certain reclassifications have been made in the 1998 and 1997 financial statements to conform with the current year presentation. 2. FEDERAL INCOME TAXES Federal income taxes provided for by SRAC amounted to $85 million, $88 million and $68 million for the fiscal years 1999, 1998 and 1997, respectively. These amounts represent current income tax provisions calculated at an effective income tax rate of 35%. No deferred tax provisions were necessary. 3. COMMERCIAL CUSTOMER RECEIVABLE BALANCES SRAC purchases commercial customer receivable balances ("CCRB") from Sears. The receivables were purchased, with recourse, and SRAC earns interest on the outstanding balance. The receivables were made up of credit accounts Sears has established with merchants and contractors for bulk purchases from Sears and are predominantly paid within 30 days. Each month, SRAC purchases new receivables and receives collections on previously purchased receivables. SRAC discontinued this program as of the end of 1999. 10 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. Selected details of SRAC's borrowings are shown below. Weighted-average interest rates are based on the actual number of days in the year, and borrowings are net of unamortized discount. (millions) 1999 1998 -------- -------- Commercial paper outstanding $2,687 $4,268 Less: Unamortized discount 12 25 -------- -------- Commercial paper outstanding (net) $2,675 $4,243 -------- -------- Average and Maximum Balances(net) 1999 1998 ------------------- ------------------- Maximum Maximum (millions) Average (month-end) Average (month-end) ------------------- ------------------- Commercial paper $3,740 $4,697 $4,514 $5,366 ------------------- ------------------- Weighted Average Interest Rates 1999 1998 ------------------- ------------------- Average Year-end Average Year-end ------------------- ------------------- Commercial paper 5.25% 6.21% 5.58% 5.40% ------------------- ------------------- 11 5. MEDIUM-TERM NOTES AND DISCRETE UNDERWRITTEN DEBT Medium-term notes and discrete underwritten debt are issued with either a floating rate indexed to LIBOR or a fixed rate. (dollars in millions; term in years) ISSUANCE Avg. Avg. 1999 Avg. Orig. 1998 Avg. Orig. Volume Coupon Term Volume Coupon Term ------ ------ ---- ------ ------ ---- Fourth Quarter: Medium-term notes $ 319 6.42% 1.9 $ 30 5.73% 7.3 Discrete debt $ - - - $ 550 6.86% 34.6 Year: Medium-term notes $ 349 6.38% 2.4 $ 528 6.00% 5.3 Discrete debt $ 750 6.25% 10.0 $2,000 6.53% 20.0 GROSS OUTSTANDING Avg. Avg. 01/01/00 Avg. Remain. 01/02/99 Avg. Remain. Balance Coupon Term Balance Coupon Term -------- ------ ------ ------- ------ ------- Medium-term notes $5,716 6.53% 2.2 $5,976 6.55% 3.9 Discrete debt $5,850 6.64% 11.7 $5,100 6.70% 14.0 MATURITIES Medium-term Discrete Year notes debt - --------------------------------- 2000 $1,400 $ 250 2001 2,018 - 2002 863 600 2003 1,000 1,250 2004 202 - Thereafter 233 3,750 - --------------------------------- Total $5,716 $5,850 ================================= 12 6. BACK-UP LIQUIDITY SRAC continued to provide support for 100% of its outstanding commercial paper through its investment portfolio and credit facilities. SRAC's investment portfolio fluctuated from a low of $3 million to a high of $767 million in 1999. Committed credit facilities as of January 1, 2000 were as follows: Expiration Date (millions) - ---------------------------------------------------------------- April 2003 $4,185 April 2002 875 - ---------------------------------------------------------------- $5,060 ================================================================ SRAC pays commitment fees on the unused portions of its credit facilities. The annualized fees at January 1, 2000 on these credit lines were $3.7 million. 7. LETTERS OF CREDIT AND OTHER COMMITMENTS SRAC is the guarantor of a $70 million promissory note issued by Sears, Roebuck de Puerto Rico, Inc. under the terms of a July 1998 private placement. The note is renewable on a nine-month cycle. SRAC issues import letters of credit to facilitate Sears purchase of goods from foreign suppliers. At January 1, 2000, letters of credit totaling $168 million were outstanding. SRAC has no liabilities with respect to this program other than the obligation to pay drafts under the letters of credit that, 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 also issues irrevocable letters of credit to third parties on behalf of Sears. At January 1, 2000, irrevocable letters of credit totaling $25 million were outstanding. 13 8. FINANCIAL INSTRUMENTS In the normal course of business, SRAC invests in certain notes of Sears and from time to time, purchases commercial customer receivable balances from Sears. SRAC's 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 SRAC on similar borrowings. The fair values of these financial instruments are as follows: - --------------------------------------------------------------------------- 1999 1998 Carrying Fair Carrying Fair (millions) Value Value Value Value - --------------------------------------------------------------------------- Medium-term notes $ 5,716 $5,628 $ 5,976 $6,135 Discrete underwritten debt(net) 5,827 5,323 5,084 5,308 9. QUARTERLY FINANCIAL DATA (UNAUDITED) First Second Third Fourth Quarter Quarter Quarter Quarter 1999 1998 1999 1998 1999 1998 1999 1998 (millions) ------------ ------------ ----------- ------------ Operating Results Combined earnings from Sears notes and CCRB $307 $302 $294 $305 $294 $303 $298 $319 Total revenues 308 304 295 306 295 304 303 320 Interest & related expenses 245 241 235 243 234 241 241 254 Total expenses 246 242 236 244 235 242 241 255 Income before income taxes 62 62 59 62 60 62 62 65 Net income 40 40 39 41 39 40 40 42 Ratio of earnings to fixed charges 1.25 1.26 1.25 1.26 1.26 1.26 1.26 1.26 (billions) Averages - -------- Earning assets* $18.6 $17.6 $17.9 $17.5 $17.7 $17.6 $17.8 $19.0 Short-term debt 4.6 5.1 3.7 3.9 3.4 4.0 3.3 5.1 Long-term debt 10.9 9.7 11.1 10.9 11.3 11.0 11.4 10.9 Cost of short-term debt 5.08% 5.63% 4.97% 5.56% 5.26% 5.59% 5.82% 5.35% long-term debt 6.63% 6.58% 6.59% 6.56% 6.55% 6.52% 6.57% 6.58% *Notes and receivable balances of Sears and invested cash. 14 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 dated December 15, 1999 was filed with the Securities and Exchange Commission on December 16, 1999 [Item 5]. 15 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) \S\ George F. Slook By George F. Slook* Vice President, Finance and Assistant Secretary March 22, 2000 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) ) ) ) George F. Slook* Director and ) Vice President, Finance ) March 22, 2000 and Assistant Secretary ) (Principal Financial and ) Accounting Officer) ) ) ) Jeffrey N. Boyer* Director ) ) ) Joseph E Laughlin* Director ) ) ) Larry R. Raymond* Director ) *\S\ George F. Slook, Individually and as Attorney-in-Fact 16 SEARS ROEBUCK ACCEPTANCE CORP. INDEX TO FINANCIAL STATEMENTS PAGE STATEMENTS OF INCOME 6 STATEMENTS OF FINANCIAL POSITION 7 STATEMENTS OF STOCKHOLDER'S EQUITY 8 STATEMENTS OF CASH FLOWS 9 NOTES TO FINANCIAL STATEMENTS 10-14 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 January 1, 2000 and January 2, 1999, and the related statements of income, stockholder's equity, and cash flows for each of the three years in the period ended January 1, 2000. 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 January 1, 2000 and January 2, 1999, and the results of its operations and its cash flows for each of the three years in the period ended January 1, 2000 in conformity with generally accepted accounting principles. /S/ Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania January 14, 2000 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 October 20, 1999 [Incorporated by reference to Exhibit 3(b) to the Registrant's Quarterly Report on Form 10-Q for the quarter ended October 2, 1999*]. 4(a) $5,000,000,000 Credit Agreement dated as of April 28, 1997 among the Registrant, the Banks listed on the signature pages thereof, the Agent, the Senior Managing Agent, the Managing Agents, Co-Arrangers, Co-Agents and Lead Managers referred to therein [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated April 28, 1997*]. 4(b) Form of Registrant's Investment Note Agreement [Incorporated by reference to Exhibit 4(c) to the Registrant's Annual Report on Form 10-K for the year ended December 31, 1991*]. 4(c) 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(d) Form of 6.90% Note [Incorporated by reference to Exhibit 4 to the Registrant's Current Report on Form 8-K dated August 2, 1996*]. 4(e) Form of 6 1/2% Note [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated June 8, 1995*]. 4(f) Form of Fixed-Rate Medium-Term Note Series I [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated June 8, 1995*]. 4(g) Form of Floating Rate Medium-Term Note Series I [Incorporated by reference to Exhibit 4(c) to the Registrant's Current Report on Form 8-K dated June 8, 1995*]. 4(h) Form of 6 3/4% Note [Incorporated by reference to Exhibit 4(d) to the Registrant's Current Report on Form 8-K dated June 8, 1995*]. - ---------------------------------- *Sec File No. 1-4040 E-1 EXHIBIT INDEX (cont'd) 4(i) Fixed Charge Coverage and Ownership Agreement dated May 15, 1995 between Sears, Roebuck and Co. and the Registrant [Incorporated by reference to Exhibit 4(e) to the Registrant's Current Report on Form 8-K dated June 8, 1995*]. 4(j) Fixed Charge Coverage and Ownership Agreement dated February 20, 1997 between Sears, Roebuck and Co. and the Registrant [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated April 28, 1997*]. 4(k) Form of 6.70% Note [Incorporated by reference to Exhibit 4 to the Registrant's Current Report on Form 8-K dated November 19, 1996*]. 4(l) Form of 6 1/8% Note [Incorporated by reference to Exhibit 4 to the Registrant's Current Report on Form 8-K dated January 23, 1996*]. 4(m) Form of Fixed-Rate Medium-Term Note Series II [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated March 28, 1996*]. 4(n) Form of Floating Rate Medium-Term Note Series II [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated March 28, 1996*]. 4(o) Form of Fixed-Rate Medium-Term Note Series III Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated August 22, 1996*]. 4(p) Form of Floating Rate Medium-Term Note Series III [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated August 22, 1996*]. 4(q) Indenture dated as of May 15, 1995 between the Registrant and The Chase Manhattan Bank [Incorporated by reference to Exhibit 4(b) to Amendment No. 1 to Registration Statement No. 33-64215*]. 4(r) Extension Agreement dated March 1, 1996, between Sears, Roebuck and Co. and the Registrant [Incorporated by reference to Exhibit 4(k) to the Registrant's Annual Report on Form 10-K dated December 30, 1995*]. ________________________ * SEC File No. 1-4040. E-2 EXHIBIT INDEX (cont'd) 4(s) Extension Agreement dated August 22, 1996, between Sears, Roebuck and Co. and the Registrant [Incorporated by reference to Exhibit 4(c) to the Registrant's Current Report on Form 8-K dated August 22, 1996*]. 4(t) Extension Agreement dated September 18, 1997, between Sears, Roebuck and Co and the Registrant.** 4(u) Extension Agreement dated October 23, 1998, between Sears, Roebuck and Co and the Registrant.** 4(v) Form of 6.625% Note [Incorporated by reference to Exhibit 4 to the Registrant's Current Report on Form 8-K dated February 27, 1997*]. 4(w) Form of 6.95% Note [Incorporated by reference to Exhibit 4.1 to the Registrant's Current Report on Form 8-K dated July 9, 1997*]. 4(x) Form of 7.00% Note [Incorporated by reference to Exhibit 4.4 to the Registrant's Current Report on Form 8-K dated July 9, 1997*]. 4(y) Form of Fixed-Rate Medium-Term Note Series IV [Incorporated by reference to Exhibit 4.2 to the Registrant's Current Report on Form 8-K dated July 9, 1997*]. 4(z) Form of Floating Rate Medium-Term Note Series IV [Incorporated by reference to Exhibit 4.3 to the Registrant's Current Report on Form 8-K dated July 9, 1997*]. 4(aa) Form of 6.70% Note [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated October 14, 1997*]. 4(bb) Form of 7.50% Note [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated October 14, 1997*]. 4(cc) Form of 6.875% Note [Incorporated by reference to Exhibit 4(c) to the Registrant's Current Report on Form 8-K dated October 14, 1997*]. 4(dd) Form of 6.75% Note [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated January 8, 1998*]. 4(ee) Form of Fixed-Rate Medium-Term Note Series V [Incorporated by reference to Exhibit 4(a) to the Registrant's Current Report on Form 8-K dated February 23, 1998*] __________________________ * SEC File No. 1-4040. ** Filed herewith. E-3 EXHIBIT INDEX (cont'd) 4(ff) Form of Floating Rate Medium-Term Note Series V [Incorporated by reference to Exhibit 4(b) to the Registrant's Current Report on Form 8-K dated February 23, 1998*]. 4(gg) Form of Global 7.00% Note [Incorporated by reference to Exhibit 4(c)to the Registrant's Current Report on Form 8-K dated February 23, 1998*]. 4(hh) Form of Global 6.00% Note [Incorporated by reference to Exhibit 4(c)to the Registrant's Current Report on Form 8-K dated March 13, 1998*]. 4(ii) Form of Global 6.95% Note [Incorporated by reference to Exhibit 4(c)to the Registrant's Current Report on Form 8-K dated October 16, 1998*]. 4(jj) Form of Global 6.50% Note [Incorporated by reference to Exhibit 4(c)to the Registrant's Current Report on Form 8-K dated November 24, 1998*]. 4(kk) Form of 6.25% Note [Incorporated by reference to Exhibit 4(c)to the Registrant's Current Report on Form 8-K dated April 29, 1999*]. 4(ll) Form of Extension Agreement extending the term of aggregate commitments of $4,125 million under the Amended and Restated $5,000,000,000 Credit Agreement dated as of April 28, 1997. [Incorporated by reference to Exhibit 4(jj) to the Registrant's Annual Report on form 10-K for the Year ended January 2, 1999.] 4(mm) Letter Agreement dated October 30, 1998 between the Registrant and The Huntington National Bank relating to a $60 million commitment under the Amended and Restated $5,000,000,000 Credit Agreement dated April 28, 1997. 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*]. * SEC File No. 1-4040. ** Filed herewith. E-4 EXHIBIT INDEX (cont'd) 10(b)(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(b)(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(b)(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 & Touche LLP.** 24 Power of attorney.** 27 Financial Data Schedule.** _______________________ * SEC File No. 1-4040. ** Filed herewith. ***SEC File No. 1-416 E-5 Exhibit 12 SEARS ROEBUCK ACCEPTANCE CORP. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES 1999 1998 1997 (dollars in millions) INCOME BEFORE INCOME TAXES $243 $251 $ 193 PLUS FIXED CHARGES: Interest 943 968 755 Amortization of debt discount/premium 12 11 8 ------- ------- ------- TOTAL FIXED CHARGES 955 979 763 ------- ------- ------- EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $1,198 $1,230 $956 ======= ======= ======= RATIO OF EARNINGS TO FIXED CHARGES 1.25 1.26 1.25 EXHIBIT 23 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in Registration Statement Nos. 333-30879 and 333-62847 of Sears Roebuck Acceptance Corp. on Forms S-3 of our report dated January 14, 2000, appearing in this Annual Report on Form 10-K of Sears Roebuck Acceptance Corp. for the year ended January 1, 2000. \s\Deloitte & Touche LLP DELOITTE & TOUCHE LLP Philadelphia, Pennsylvania March 22, 2000 EXHIBIT 4(t) SEARS, ROEBUCK AND CO. 3333 BEVERLY ROAD HOFFMAN ESTATES, ILLINOIS 60179 September 18, 1997 Sears Roebuck Acceptance Corp. 3711 Kennett Pike Greenville, Delaware 19807 Gentlemen: This is to confirm our agreement ("Extension Agreement") that the term "Debt Securities" as defined in the Fixed Charge Coverage and Ownership Agreement dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. ("SRAC"), and Sears, Roebuck and Co. shall be expanded to include up to $4.5 billion aggregate initial offering price of debt securities to be issued by SRAC under Registration Statement No. 333-30879. If the foregoing satisfactorily sets forth your understanding of our agreement, please indicate your acceptance by the signature of a duly authorized officer in the space provided below and on the duplicate original of this letter which is enclosed. Very truly yours, SEARS, ROEBUCK AND CO. By: /S/Alan J. Lacy Alan J. Lacy Executive Vice President and Chief Financial Officer Accepted: SEARS ROEBUCK ACCEPTANCE CORP. By: /S/Keith E. Trost Keith E. Trost President EXHIBIT 4(u) SEARS, ROEBUCK AND CO. 3333 BEVERLY ROAD HOFFMAN ESTATES, ILLINOIS 60179 October 23, 1998 Sears. Roebuck Acceptance Corp. 3711 Kennett Pike Greenville, Delaware 19807 Gentlemen: This is to confirm our agreement ("Extension Agreement") that the term "Debt Securities" as defined in the Fixed Charge Coverage and Ownership Agreement dated as of May 15, 1995 between Sears Roebuck Acceptance Corp. ("SRAC"), and Sears, Roebuck and Co. shall be expanded to include up to $5 billion aggregate initial offering price of debt securities to be issued by SRAC under Registration Statement No. 333-62847. If the foregoing satisfactorily sets forth your understanding of our agreement, please indicate your acceptance by the signature of a duly authorized officer in the space provided below and on the duplicate original of this letter which is enclosed. Very truly yours, SEARS, ROEBUCK AND CO. By: /S/Alan J. Lacy Alan J. Lacy Chief Financial Officer and President, Credit Accepted: SEARS ROEBUCK ACCEPTANCE CORP. By: /S/Keith E. Trost Keith E. Trost President EX-27 2 FDS
5 12-MOS JAN-01-2000 JAN-01-2000 454,000,000 0 16,806,000,000 0 0 17,264,000,000 0 0 17,324,000,000 2,848,000,000 11,543,000,000 35,000,000 0 0 2,898,000,000 17,324,000,000 0 1,201,000,000 0 0 3,000,000 0 955,000,000 243,000,000 85,000,000 158,000,000 0 0 0 158,000,000 0 0
EX-24 3 POWER OF ATTORNEY EXHIBIT 24 POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a director or officer, or both, of SEARS ROEBUCK ACCEPTANCE CORP., a Delaware corporation (the "Corporation"), does hereby constitute and appoint, JEFFREY N. BOYER, JAMES G..KEANE, GEORGE F. SLOOK and KEITH E. TROST, with full power to each of them to act alone, as the true and lawful attorneys and agents of the undersigned, with full power of substitution and resubstitution to each of said attorneys, to execute, file and deliver any and all instruments and to do any and all acts and things which said attorneys and agents, or any of them, deem advisable to enable the Corporation to comply with the Securities Exchange Act of 1934, as amended, and any requirements of the Securities and Exchange Commission in respect thereto, relating to annual reports on Form 10-K including specifically, but without limitation of the general authority hereby granted, the power and authority to sign his name in the name and on behalf of the Corporation, as indicated below opposite his signature, to annual reports on Form 10-K or any amendment thereto; and each of the undersigned does hereby fully ratify and confirm all that said attorneys and agents, or any of them, or the substitute of any of them, shall do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned have subscribed these presents, as of the 20th day of March, 2000. NAME TITLE /s/: KEITH E. TROST Director and President Keith E. Trost (Principal Executive Officer) /s/: GEORGE F. SLOOK Director and Vice President, Finance George F. Slook (Principal Financial and Accounting Officer) NAME TITLE /s/:JEFFREY N. BOYER Director Jeffrey N. Boyer /s/:JOSEPH E. LAUGHLIN Director Joseph E. Laughlin /s/:LARRY R. RAYMOND Director Larry R. Raymond -----END PRIVACY-ENHANCED MESSAGE-----