-----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, QDQm0ZdggbHoOPc2LO8rWcNT6+0ka8FLrIRUxFGNTyGgwCZHwPPwkLRNseCvzcOI r6KLRdYoX4p1R/yf9MBMJQ== 0000088255-01-500002.txt : 20010810 0000088255-01-500002.hdr.sgml : 20010810 ACCESSION NUMBER: 0000088255-01-500002 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20010630 FILED AS OF DATE: 20010809 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04040 FILM NUMBER: 1702158 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 10-Q 1 r2q01d.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 JUNE 30, 2001 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, 2001, 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 JUNE 30, 2001 PART I. FINANCIAL INFORMATION: Page No. Item 1. Financial Statements Statements of Financial Position June 30, 2001 and July 1, 2000 (unaudited) and December 30, 2000 (audited) 1 Statements of Income (unaudited) 13 Weeks and 26 Weeks ended June 30, 2001 and July 1, 2000 2 Statements of Cash Flows (unaudited) 26 Weeks ended June 30, 2001 and July 1, 2000 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) June 30, July 1, Dec. 30, 2001 2000 2000 Assets Cash and cash equivalents $ 163 $ 31 $ 442 Notes of Sears 16,210 16,505 16,879 Other assets 49 57 45 Total assets $ 16,422 $ 16,593 $ 17,366 Liabilities Commercial paper (net of unamortized discount of $11, $9 and $25) $ 2,892 $ 2,284 $ 3,934 Medium-term notes (net of unamortized discount of $7, $8 and $7) 3,820 5,564 4,608 Discrete underwritten debt (net of unamortized discount of $26, $22 and $21) 6,374 5,578 5,579 Accrued interest and other liabilities 165 155 151 Total liabilities 13,251 13,581 14,272 Shareholder's Equity Common share, 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 1,986 1,827 1,909 Total shareholder's equity 3,171 3,012 3,094 Total liabilities and shareholder's equity $ 16,422 $ 16,593 $ 17,366 See notes to financial statements. 1 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF INCOME (unaudited) (millions, except ratios) 13 Weeks Ended 26 Weeks Ended June 30, July 1, June 30, July 1, 2001 2000 2001 2000 Revenues Earnings on notes of Sears $ 274 $ 296 $ 574 $ 595 Earnings on cash equivalents 2 3 6 6 Total revenues 276 299 580 601 Expenses Interest expense and amortization of debt discount/premium 220 237 461 477 Operating expenses - 1 1 2 Total expenses 220 238 462 479 Income before income taxes 56 61 118 122 Income taxes 19 22 41 43 Net income $ 37 $ 39 $ 77 $ 79 Ratios of earnings to fixed charges 1.25 1.26 1.26 1.26 See notes to financial statements. 2 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF CASH FLOWS (unaudited) (millions) 26 Weeks Ended June 30, July 1, 2001 2000 Cash flows from operating activities: Net income $ 77 $ 79 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash items 5 9 Increase in other assets (4) - Increase(decrease)in other liabilities 14 (18) Net cash provided by operating activities 92 70 Cash flows from investing activities: Decrease in notes of Sears 669 301 Net cash provided by investing activities 669 301 Cash flows from financing activities: Decrease in commercial paper, primarily 90 days or less (1,042) (391) Proceeds from issuance of long-term debt 793 86 Payments for redemption of long-term debt (788) (489) Issue costs paid to issue debt (3) - Net cash used in financing activities (1,040) (794) Net decrease in cash and cash equivalents (279) (423) Cash and cash equivalents at beginning of period 442 454 Cash and cash equivalents at end of period $ 163 $ 31 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 accounting principles generally accepted in the United States of America 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 December 30, 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 $1 million to a high of $704 million in the second quarter of 2001. Available credit facilities as of June 30, 2001 were as follows: Expiration Date (millions) - ------------------------------------------------------------ April 2002 $ 875 April 2003 4,185 - ------------------------------------------------------------ $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. 2001 Avg. Orig. 2000 Avg. Orig. Volume Rate Term Volume Rate Term ------ ------ ---- ------ ------ ---- 13 Weeks Ended: Medium-term notes $ - -% - $ - -% - Discrete debt $ - -% - $ - -% - 26 Weeks Ended: Medium-term notes $ - -% - $ 95 6.58% 3.6 Discrete debt $ 800 7.00% 10.0 $ - -% - GROSS OUTSTANDING Avg. Avg. 06/30/01 Avg. Remain. 07/01/00 Avg. Remain. Balance Coupon Term Balance Coupon Term -------- ------ ------ ------- ------ ------- Medium-term notes $3,827 6.46% 1.5 $5,572 6.55% 2.2 Discrete debt $6,400 6.65% 10.5 $5,600 6.60% 11.7 MATURITIES Medium-term Discrete Year notes debt - --------------------------------- 2001 $1,330 $ - 2002 958 600 2003 1,075 1,250 2004 202 - 2005 36 250 Thereafter 226 4,300 - --------------------------------- Total $3,827 $6,400 ================================= 5 INDEPENDENT ACCOUNTANTS' REPORT To the Board of Directors and Shareholder 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 June 30, 2001 and July 1, 2000, 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 accounting principles generally accepted in the United States of America. 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 December 30, 2000 and the related statements of income, shareholder's equity and cash flows for the year then ended (not presented herein); and in our report dated January 19, 2001, 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 December 30, 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 10, 2001 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 2001, SRAC revenues decreased to $276 million from $299 million in the comparable 2000 period. For the first six months of 2001, SRAC's revenues declined to $580 million from $601 million for the comparable 2000 period. The decrease in revenue resulted from a reduction in the average rates on earning assets and lower asset balances from 2000 to 2001. Cash inflows from the reduced investment in the Notes of Sears allowed SRAC to reduce the level of its debt outstanding. SRAC's interest and related expenses decreased 7% to $220 million from $237 million and 3% to $461 million from $477 million for the second quarter and first half of 2001, respectively, as compared to the comparable 2000 periods. Interest and related expenses decreased during the second quarter and first half of 2001 due to decreases in both the cost of short-term funds and average long-term debt levels. SRAC's cost of short-term funds averaged 5.08% in the second quarter and 6.18% in the first six months of 2001 compared to 6.49% and 6.27% for the same periods in 2000. SRAC's average long-term debt of $10.5 billion in the second quarter of 2001 and $10.6 billion in the first six months of 2001 reflect decreases of 9% and 8%, respectively, compared with $11.5 billion for the same periods in 2000. Reductions in interest and related expenses were partially offset during these periods by increases in average short-term debt levels and the average cost of long-term funds. SRAC's short-term borrowings averaged $3.4 billion for both the second quarter and first half of 2001, compared to $2.6 billion and $2.7 billion for the respective 2000 periods. SRAC's cost of long-term funds averaged 6.64% in the second quarter and 6.68% in the first six months of 2001 compared to 6.59% and 6.60% for the same periods in 2000. SRAC's net income of $37 million and $77 million for the second quarter and first half of 2001, respectively, decreased from the comparable 2000 period amounts of $39 million and $79 million. SRAC's ratio of earnings to fixed charges for the second quarter and first half of 2001 was 1.25 and 1.26, respectively compared to 1.26 for the comparable 2000 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 9, 2001 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 ratios of earnings to fixed charges.* 15 Acknowledgment of awareness from Deloitte & Touche LLP, dated August 9, 2001 concerning unaudited financial information.* *Filed herewith. 1 Exhibit 12 SEARS ROEBUCK ACCEPTANCE CORP. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES 13 Weeks Ended 26 Weeks Ended June 30, July 1, June 30, July 1, (millions) 2001 2000 2001 2000 INCOME BEFORE INCOME TAXES $ 56 $ 61 $ 118 $ 122 PLUS FIXED CHARGES: Interest 219 232 456 468 Amortization of debt discount/premium 1 5 5 9 Total fixed charges 220 237 461 477 EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $ 276 $ 298 $ 579 $ 599 RATIO OF EARNINGS TO FIXED CHARGES 1.25 1.26 1.26 1.26 1 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 June 30, 2001 and July 1, 2000, as indicated in our report dated July 10, 2001; 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 June 30, 2001, 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 9, 2001 12 -----END PRIVACY-ENHANCED MESSAGE-----