-----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, KCHlaDeYUb8ksy27j8jqRi2KKkIoZTJg/x+kzQ7Pf/DHav4s0kTg70Qf9IXm0WvJ +NMkONZC6d0Da81r0LYWcQ== 0000088255-97-000085.txt : 19970728 0000088255-97-000085.hdr.sgml : 19970728 ACCESSION NUMBER: 0000088255-97-000085 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970628 FILED AS OF DATE: 19970725 SROS: NYSE 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: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-04040 FILM NUMBER: 97645118 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 EX-27 1
5 6-MOS JAN-03-1998 JUN-28-1997 113,000,000 0 12,992,000,000 0 0 13,105,000,000 0 0 13,105,000,000 3,443,000,000 7,919,000,000 35,000,000 0 0 1,708,000,000 13,105,000,000 0 433,000,000 0 346,000,000 1,000,000 0 345,000,000 87,000,000 31,000,000 56,000,000 0 0 0 56,000,000 0 0
10-Q 2 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 28, 1997 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: 302/888-3100 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 June 28, 1997, 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 June 28, 1997 Page No. PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Statements of Financial Position June 28, 1997 and June 29, 1996 (unaudited) and December 28, 1996 (audited) 1 Statements of Income (unaudited) Three and Six Months ended June 28, 1997 and June 29, 1996 2 Statements of Cash Flows (unaudited) Six Months ended June 28, 1997 and June 29, 1996 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 SEARS ROEBUCK ACCEPTANCE CORP. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION (unaudited) millions June 28, June 29, Dec. 28, 1997 1996 1996 Assets Notes of Sears $ 12,910 $ 9,806 $ 11,609 Receivable balances purchased from Sears 82 93 76 Cash and invested cash 12 283 228 Other assets 101 20 91 Total assets $ 13,105 $ 10,202 $ 12,004 Liabilities Commercial paper (net of unamortized discount of $13, $19 and $18) $ 3,298 $ 4,109 $ 3,324 Agreements with bank trust departments 69 92 82 Intermediate-term loans 715 895 715 Medium-term notes 5,302 2,882 4,834 Discrete underwritten debt 1,902 748 1,298 Accrued interest and other liabilities 76 40 64 Total liabilities 11,362 8,766 10,317 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 350 150 350 Retained income 1,358 1,251 1,302 Total stockholder's equity 1,743 1,436 1,687 Total liabilities and stockholder's equity $ 13,105 $ 10,202 $ 12,004 See notes to financial statements. SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF INCOME (unaudited) millions Three Months Ended Six Months Ended June 28, June 29, June 28, June 29, 1997 1996 1997 1996 Revenues Earnings on notes of Sears $ 222 $ 156 $ 427 $ 301 Earnings on receivable balances purchased from Sears 2 2 4 3 Earnings on invested cash 1 2 2 5 Total revenues 225 160 433 309 Expenses Interest and amortization of debt discount and expense 179 128 345 245 Operating expenses - - 1 1 Total expenses 179 128 346 246 Income before income taxes 46 32 87 63 Income taxes 17 11 31 22 Net Income $ 29 $ 21 $ 56 $ 41 Ratio of earnings to fixed charges 1.25 1.25 1.25 1.26 See notes to financial statements. SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF CASH FLOWS (unaudited) millions Six Months Ended June 28, June 29, 1997 1996 Cash flows from operating activities: Net income $ 56 $ 41 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash items 4 1 Increase in other assets (3) - Increase in other liabilities 12 16 Net cash provided by operating activities 69 58 Cash flows from investing activities: Increase in notes of Sears (1,301) (1,409) Increase in receivable balances purchased from Sears (6) (12) Net cash used in investing activities (1,307) (1,421) Cash flows from financing activities: Decrease in commercial paper, primarily 90 days or less (26) (342) Decrease in agreements with bank trust departments (13) (45) Proceeds from issuance of long-term debt 1,253 1,765 Payments for redemption of long-term debt (192) (25) Proceeds from capital infusion - 150 Net cash provided by financing activities 1,022 1,503 (Decrease) increase in cash and invested cash (216) 140 Cash and invested cash at beginning of period 228 143 Cash and invested cash at end of period $ 12 $ 283 See notes to financial statements 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 year ended December 28, 1996, 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. Credit Facilities as of June 28, 1997 SRAC continued to provide support for 100% of its commercial paper outstanding through its investment portfolio and a syndicated $5.0 billion credit facility with a five year term through April 2002. 3. Intermediate-term loans At the end of the second quarter of 1997, $715 million in intermediate-term loans were outstanding compared to $895 million at the end of the second quarter of 1996. The rates on these intermediate-term loans are variable rate, indexed to LIBOR with a set basis point spread. The average weighted rate on the intermediate-term loans in the first six months of 1997 was 5.97% compared to 5.83% in the comparable 1996 period. As of June 28, 1997, the amounts of intermediate-term loans maturing in the next five years were as follows: millions 1997 1998 1999 2000 2001 Total $245 $25 $375 $25 $45 4. Medium-term notes SRAC issued $659 million of medium-term notes in the second quarter of 1997 with either a floating rate indexed to LIBOR or a fixed rate. The average weighted rate on medium-term notes in the first six months of 1997 was 6.46% compared to 6.13% in 1996. Medium-term notes outstanding have terms ranging from one to ten years. As of June 28, 1997, the amounts of medium-term notes maturing in the next five years were as follows: millions 1997 1998 1999 2000 2001 Total $275 $585 $560 $723 $1,760 5. Discrete underwritten debt During the first six months of 1997, SRAC issued $600 million in discrete unsecured underwritten debt. As of June 28, 1997, SRAC had seven discrete underwritten issues outstanding in an aggregate principal amount of $1,900 million and original terms ranging from five to ten years. Discrete underwritten debt pays interest annually or semiannually. As of June 28, 1997, SRAC's discrete underwritten debt is comprised of the following: millions 6.50% Notes, due 2000 $250 6.625% Notes, due 2002 $300 6.95% Notes, due 2002 $300 6.90% Notes, due 2003 $250 6.75% Notes, due 2005 $250 6.125% Notes, due 2006 $250 6.70% Notes, due 2006 $300 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 June 28, 1997 and June 29, 1996, and the related Statements of Income for the three-month and six-month periods then ended and Cash Flows for the six-month periods then ended. These financial statements are the responsibility of the Corporation'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 generally accepted auditing standards, 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 generally accepted auditing standards, the Statement of Financial Position of Sears Roebuck Acceptance Corp. as of December 28, 1996, 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 22, 1997, 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 28, 1996 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, 1997 SEARS ROEBUCK ACCEPTANCE CORP. ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS During the second quarter of 1997, Sears Roebuck Acceptance Corp.'s ("SRAC") revenues increased 41% to $225 million from $160 million in the comparable 1996 period. For the first six months of 1997, revenues were up 40% to $433 million from $309 million for the comparable 1996 period, SRAC's 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. The increase in revenue is attributable to SRAC's higher level of average earning assets due to Sears continued funding needs related to its business growth. SRAC's average assets were $2.6 billion higher in the second quarter and $3.4 billion higher in the first half of 1997 when compared to the same periods in 1996. SRAC's interest and related expenses increased 40% to $179 million from $128 million and 41% to $345 million from $245 million for the second quarter and first half of 1997, respectively, as compared to the comparable 1996 periods. Interest and related expenses increased due to increases in average outstanding long-term debt. SRAC's cost of short-term funds averaged 5.59% in the second quarter and 5.48% in the first six months of 1997 compared to 5.42% and 5.50% for the same periods in 1996. SRAC's short-term borrowings averaged $3.9 billion for both the second quarter and first half of 1997, compared to the respective 1996 levels of $4.7 billion and $4.8 billion. SRAC's average long-term debt of $7.5 billion in the second quarter of 1997 and $7.2 billion in the first six months of 1997 reflect increases of 83% and 100%, respectively, compared with $4.1 billion and $3.6 billion for the same periods in 1996. In early July, SRAC issued a $500 million ten-year global discrete underwritten debt offering with an annual 7.00% coupon. Also in July 1997, in anticipation of future borrowing requirements, SRAC filed an additional registration statement with the Securities and Exchange Commission for issuance of $4.5 billion in debt securities. SRAC's net income of $29 million and $56 million for the second quarter and first half of 1997 reflects increases of 38% and 37% from the comparable 1996 period amounts of $21 million and $41 million. SRAC's ratio of earnings to fixed charges for both the second quarter and first half of 1997 was 1.25 compared to 1.25 and 1.26 for the comparable 1996 periods. 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: Registrant filed a current report on Form 8-K dated April 28, 1997 [Item 5]. 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, and Assistant Secretary (authorized officer of Registrant) July 25, 1997 EXHIBIT INDEX 12 - Calculation of ratio of earnings to fixed charges 15 - Acknowledgment of awareness from Deloitte & Touche LLP, dated July 23, 1997, concerning unaudited financial information. 27 - Financial Data Schedule Exhibit 12 SEARS ROEBUCK ACCEPTANCE CORP. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES Six Months Ended June 28, June 29, millions 1997 1996 INCOME BEFORE INCOME TAXES $ 87 $ 63 PLUS FIXED CHARGES: Interest 342 243 Amortization of debt discount and expense 3 2 Total fixed charges 345 245 EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $ 432 $ 308 RATIO OF EARNINGS TO FIXED CHARGES 1.25 1.26 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 March 29, 1997 and March 30, 1996 and June 28, 1997 and June 29, 1996, as indicated in our reports dated April 10, 1997 and July 10, 1997; because we did not perform an audit, we expressed no opinion on that information. We are aware that our reports referred to above, which are included in your Quarterly Reports on Form 10-Q for the quarters ended March 29, 1997 and June 28, 1997, are incorporated by reference in Registration Statement No.333-9817 on Form S-3. We are also aware that the aforementioned reports, pursuant to Rule 436(c) under the Securities Act of 1933, are 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. /s/Deloitte & Touche LLP Deloitte & Touche LLP Philadelphia, Pennsylvania July 23, 1997 -----END PRIVACY-ENHANCED MESSAGE-----