-----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, IJPFj0ZtoV6/uRTZ4qu8q6fh4NSQQS7y9L8t5JnglEbJKZQXNwxFbAXheQ9EwGwd yT0rjfYBnlvIL1X+H5Pxvg== /in/edgar/work/20000810/0000088255-00-000012/0000088255-00-000012.txt : 20000921 0000088255-00-000012.hdr.sgml : 20000921 ACCESSION NUMBER: 0000088255-00-000012 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000701 FILED AS OF DATE: 20000810 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SEARS ROEBUCK ACCEPTANCE CORP CENTRAL INDEX KEY: 0000088255 STANDARD INDUSTRIAL CLASSIFICATION: [6153 ] IRS NUMBER: 510080535 STATE OF INCORPORATION: DE FISCAL YEAR END: 0102 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-04040 FILM NUMBER: 691551 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 EX-27 1 0001.txt
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10-Q 2 0002.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JULY 1, 2000 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 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 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 __ As of July 31, 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 H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with a reduced disclosure format. SEARS ROEBUCK ACCEPTANCE CORP. INDEX TO QUARTERLY REPORT ON FORM 10-Q 13 WEEKS AND 26 WEEKS ENDED JULY 1, 2000 PART I. FINANCIAL INFORMATION: Page No. Item 1. Financial Statements Statements of Financial Position July 1, 2000 and July 3, 1999 (unaudited) and January 1, 2000 (audited) 1 Statements of Income (unaudited) 13 Weeks and 26 Weeks ended July 1, 2000 and July 3, 1999 2 Statements of Cash Flows (unaudited) 26 Weeks ended July 1, 2000 and July 3, 1999 3 Notes to Financial Statements (unaudited) 4,5 Independent Accountants' Report 6 Item 2. Analysis of Results of Operations 7 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K 8 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF FINANCIAL POSITION (unaudited) (millions, except share data) July 1, July 3, Jan. 1, 2000 1999 2000 Assets Cash and cash equivalents $ 31 $ 68 $ 454 Notes of Sears 16,505 17,560 16,806 Commercial customer receivable balances purchased from Sears - 81 - Other assets 57 76 64 Total assets $ 16,593 $ 17,785 $ 17,324 Liabilities Commercial paper (net of unamortized discount of $9, $11 and $12) $ 2,284 $ 3,501 $ 2,675 Medium-term notes (net of unamortized discount of $8, $0 and $0) 5,564 5,444 5,716 Discrete underwritten debt (net of unamortized discount of $22, $24 and $23) 5,578 5,826 5,827 Accrued interest and other liabilities 155 160 173 Total liabilities $ 13,581 $ 14,931 $ 14,391 Stockholder's Equity Capital stock, par value $100 per share: 500,000 shares authorized 350,000 shares issued and outstanding $ 35 $ 35 $ 35 Capital in excess of par value 1,150 1,150 1,150 Retained income 1,827 1,669 1,748 Total stockholder's equity 3,012 2,854 2,933 Total liabilities and stockholder's equity $ 16,593 $ 17,785 $ 17,324 See notes to financial statements. 1 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF INCOME (unaudited) (millions, except ratio) 13 Weeks Ended 26 Weeks Ended July 1, July 3, July 1, July 3, 2000 1999 2000 1999 Revenues Earnings on notes of Sears $ 296 $ 293 $ 595 $ 598 Earnings on commercial customer receivable balances purchased from Sears - 1 - 3 Earnings on cash equivalents 3 1 6 2 Total revenues 299 295 601 603 Expenses Interest expense and amortization of debt discount/premium 237 235 477 480 Operating expenses 1 1 2 2 Total expenses 238 236 479 482 Income before income taxes 61 59 122 121 Income taxes 22 20 43 42 Net income $ 39 $ 39 $ 79 $ 79 Ratio of earnings to fixed charges 1.26 1.25 1.26 1.25 See notes to financial statements. 2 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF CASH FLOWS (unaudited) (millions) 26 Weeks Ended July 1, July 3, 2000 1999 Cash flows from operating activities: Net income $ 79 $ 79 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash items 9 5 Increase in other assets - (3) Decrease in other liabilities (18) (9) Net cash provided by operating activities 70 72 Cash flows from investing activities: Decrease in notes of Sears 301 430 Decrease in commercial customer receivable balances purchased from Sears - 9 Net cash provided by investing activities 301 439 Cash flows from financing activities: Decrease in commercial paper, primarily 90 days or less (391) (742) Proceeds from issuance of long-term debt 86 767 Payments for redemption of long-term debt (489) (562) Net cash used in financing activities (794) (537) Net decrease in cash and cash equivalents (423) (26) Cash and cash equivalents at beginning of period 454 94 Cash and cash equivalents at end of period $ 31 $ 68 See notes to financial statements. 3 SEARS ROEBUCK ACCEPTANCE CORP. NOTES TO FINANCIAL STATEMENTS (unaudited) 1. Significant Accounting Policies The unaudited interim financial statements of Sears Roebuck Acceptance Corp. ("SRAC"), a wholly-owned subsidiary of Sears, Roebuck and Co. ("Sears"), reflect all adjustments (consisting only of normal recurring accruals) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. The significant accounting policies used in the presentation of these financial statements are consistent with the summary of significant accounting policies set forth in SRAC's Annual Report on Form 10-K for the 52 weeks ended January 1, 2000, and these financial statements should be read in conjunction with the financial statements and notes found therein. The results of operations for the interim periods should not be considered indicative of the results to be expected for the full year. 2. Back-up Liquidity SRAC continued to provide support for 100% of its outstanding commercial paper through its short term liquid investments and available credit facilities. SRAC's liquid investments fluctuated from a low of $3 million to a high of $671 million in the second quarter of 2000. Available credit facilities as of July 1, 2000 were as follows: Expiration Date (millions) - ------------------------------------------------------------ April 2003 $4,185 April 2002 875 - ------------------------------------------------------------ $5,060 ============================================================ 4 3. 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; terms in years) ISSUANCE Avg. Avg. 2000 Avg. Orig. 1999 Avg. Orig. Volume Rate Term Volume Rate Term ------ ------ ---- ------ ------ ---- 13 Weeks Ended: Medium-term notes $ - -% - $ 5 6.00% 10.0 Discrete debt $ - -% - $ 750 6.25% 10.0 26 Weeks Ended: Medium-term notes $ 95 6.58% 3.6 $ 30 5.92% 10.0 Discrete debt $ - -% - $ 750 6.25% 10.0 GROSS OUTSTANDING Avg. Avg. 07/01/00 Avg. Remain. 07/03/99 Avg. Remain. Balance Coupon Term Balance Coupon Term -------- ------ ------ ------- ------ ------- Medium-term notes $5,572 6.55% 2.2 $5,444 6.51% 2.7 Discrete debt $5,600 6.60% 11.7 $5,850 6.61% 12.2 MATURITIES Medium-term Discrete Year notes debt - --------------------------------- 2000 $1,162 $ - 2001 2,018 - 2002 863 600 2003 1,071 1,250 2004 201 - Thereafter 257 3,750 - --------------------------------- Total $5,572 $5,600 ================================= 5 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Stockholder of Sears Roebuck Acceptance Corp.: We have reviewed the accompanying statements of financial position of Sears Roebuck Acceptance Corp. (a wholly-owned subsidiary of Sears, Roebuck and Co.) as of July 1, 2000 and July 3, 1999, and the related statements of income for the 13 week and 26 week periods then ended and cash flows for the 26 week periods then ended. These financial statements are the responsibility of Sears Roebuck Acceptance Corp.'s management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and of making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with auditing standards generally accepted in the United States of America, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with auditing standards generally accepted in the United States of America, the statement of financial position of Sears Roebuck Acceptance Corp. as of January 1, 2000 and the related statements of income, stockholder's equity and cash flows for the year then ended (not presented herein); and in our report dated January 14, 2000, we expressed an unqualified opinion on those financial statements. In our opinion, the information set forth in the accompanying statement of financial position as of January 1, 2000 is fairly stated, in all material respects, in relation to the statement of financial position from which it has been derived. /s/ Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania July 11, 2000 6 SEARS ROEBUCK ACCEPTANCE CORP. ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS Sears Roebuck Acceptance Corp.'s ("SRAC") income is derived primarily from the earnings on its investment in the notes and receivable balances of Sears, Roebuck and Co. ("Sears") and invested cash. During the second quarter of 2000, SRAC revenues increased to $299 million from $295 million in the comparable 1999 period. The increase in revenue resulted from a 29 basis point increase in the average rates on earning assets which was partially offset by lower asset balances from 1999 to 2000. For the first six months of 2000, SRAC's revenues declined to $601 million from $603 million for the comparable 1999 period primarily due to decreased funding requirements of Sears. Cash inflows from the reduced investment in the Notes of Sears allowed SRAC to reduce the level of its debt outstanding. In the first half of 2000, total debt outstanding declined $810 million from 1999 year-end balances. SRAC reduced its short-term borrowings while rates associated with short-term funds increased throughout the period. Despite the maturity of $250 million of discrete debt towards the end of the second quarter, average long-term debt remained relatively stable in the first half of 2000. SRAC's interest and related expenses increased to $237 million from $235 million and decreased to $477 million from $480 million for the second quarter and first half of 2000, respectively, when compared to the same periods in 1999. In the second quarter of 2000, interest and related expenses increased primarily as a result of increased costs associated with short-term funds and increased average long-term debt levels as compared to the prior year. SRAC's average cost of short-term funds increased to 6.49% in the second quarter and 6.27% in the first six months of 2000 compared to 4.97% and 5.03% for the same periods in 1999. SRAC's average long-term debt of $11.5 billion in both the second quarter and first six months of 2000 reflect increases of 4% and 5%, respectively, compared with $11.1 billion and $11.0 billion for the same periods in 1999. In the first six months of 2000, interest and related expenses decreased as a result of decreases in average short-term funding which was partially offset by increases in short-term rates and higher long-term debt balances.. SRAC's average short-term borrowings declined to $2.6 billion and $2.7 billion for the second quarter and first half of 2000, compared to $3.7 billion and $4.2 billion for the respective 1999 periods. On May 24, 2000 Thomson Financial Bankwatch initiated coverage of SRAC and assigned a short-term debt rating of TBW-1 and an A- long-term debt rating. On June 1, 2000, Fitch IBCA assigned SRAC ratings of F-2 on commercial paper and A- for long term debt, a result of the harmonization of ratings from the merger of Fitch IBCA and Duff & Phelps. SRAC's net income of $39 million and $79 million for the second quarter and first half of 2000, respectively, were unchanged from the comparable 1999 period amounts. SRAC's ratio of earnings to fixed charges for both the second quarter and first half of 2000 was 1.26 compared to 1.25 for the comparable 1999 periods. 7 SEARS ROEBUCK ACCEPTANCE CORP. PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) The exhibits listed in the "Exhibit Index" are filed as part of this report. (b) Reports on Form 8-K: There were no reports filed on Form 8-K. 8 SEARS ROEBUCK ACCEPTANCE CORP. SIGNATURE Pursuant to the requirements 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: /s/ George F. Slook ------------------- George F. Slook Vice President, Finance and Assistant Secretary (principal financial officer and authorized officer of Registrant) August 10, 2000 9 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 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. 12 Calculation of ratio of earnings to fixed charges.* 15 Acknowledgment of awareness from Deloitte & Touche LLP, dated August 10, 2000 concerning unaudited financial information.* 27 Financial Data Schedule.* * Filed herewith. 10 Exhibit 12 SEARS ROEBUCK ACCEPTANCE CORP. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES 13 Weeks Ended 26 Weeks Ended July 1, July 3, July 1, July 3, (millions) 2000 1999 2000 1999 INCOME BEFORE INCOME TAXES $ 61 $ 59 $ 122 $ 121 PLUS FIXED CHARGES: Interest 232 233 468 475 Amortization of debt discount/premium 5 2 9 5 Total fixed charges 237 235 477 480 EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $ 298 $ 294 $ 599 $ 601 RATIO OF EARNINGS TO FIXED CHARGES 1.26 1.25 1.26 1.25 11 EXHIBIT 15 Sears Roebuck Acceptance Corp. Greenville, Delaware We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim financial information of Sears Roebuck Acceptance Corp. for the periods ended July 1, 2000 and July 3, 1999, as indicated in our report dated July 11, 2000; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended July 1, 2000, is incorporated by reference in Registration Statement Nos.333-30879 and 333-62847 on Forms S-3. We are also aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. Deloitte & Touche LLP Philadelphia, Pennsylvania August 10, 2000 12 -----END PRIVACY-ENHANCED MESSAGE-----