-----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, T0JqWq+q7w7VDn4R9QKOTyRdwPsgU+uvt8HG9qF2LFAofHuaIWJ028iQQ4D/fSLb VUcB7ZOQwNVetyS3+435Xw== 0000088255-99-000018.txt : 19991108 0000088255-99-000018.hdr.sgml : 19991108 ACCESSION NUMBER: 0000088255-99-000018 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991002 FILED AS OF DATE: 19991105 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: SEC FILE NUMBER: 001-04040 FILM NUMBER: 99742264 BUSINESS ADDRESS: STREET 1: 3711 KENNETT PIKE CITY: GREENVILLE STATE: DE ZIP: 19807 BUSINESS PHONE: 3028883112 EX-27 1
5 9-MOS JAN-1-2000 OCT-2-1999 60000000 0 17323000000 0 0 17391000000 0 0 17453000000 3289000000 11271000000 0 0 35000000 2858000000 17453000000 0 898000000 0 0 3000000 0 714000000 181000000 63000000 118000000 0 0 0 118000000 0 0 Current assets consist of cash and cash equivalents, notes of Sears, receivable balances purchased from Sears and other assets, excluding the non-current portion of deferred capitalized issuance costs and fixed assets.
10-Q 2 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 OCTOBER 2, 1999 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 October 31, 1999, 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 the reduced disclosure format. DOCUMENTS INCORPORATED BY REFERENCE Part I of this Form 10-Q incorporates by reference certain information from Sears, Roebuck and Co.'s third quarter 1999 Form 10-Q. SEARS ROEBUCK ACCEPTANCE CORP. INDEX TO QUARTERLY REPORT ON FORM 10-Q 13 WEEKS AND 39 WEEKS ENDED OCTOBER 2, 1999 PART I. FINANCIAL INFORMATION: Page No. Item 1. Financial Statements Statements of Financial Position October 2, 1999 and October 3, 1998 (unaudited) and January 2, 1999 (audited) 1 Statements of Income (unaudited) 13 Weeks and 39 Weeks ended October 2, 1999 and October 3, 1998 2 Statements of Cash Flows (unaudited) 39 Weeks ended October 2, 1999 and October 3, 1998 3 Notes to Financial Statements (unaudited) 4,5 Independent Accountants' Report 6 Item 2. Analysis of Results of Operations 7-9 PART II. OTHER INFORMATION: Item 6. Exhibits and Reports on Form 8-K 10 SEARS ROEBUCK ACCEPTANCE CORP. PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS STATEMENTS OF FINANCIAL POSITION (unaudited) (millions, except share data) Oct. 2, Oct. 3, Jan. 2, 1999 1998 1999 Assets Cash and cash equivalents $ 60 $ 3 $ 94 Notes of Sears 17,316 18,592 17,990 Receivable balances purchased from Sears 7 94 90 Other assets 70 67 73 Total assets $ 17,453 $ 18,756 $ 18,247 Liabilities Commercial paper (net of unamortized discount of $16, $20 and $25) $ 3,068 $ 5,129 $ 4,243 Medium-term notes 5,444 6,385 5,976 Discrete underwritten debt (net of unamortized discount of $23, $8 and $16) 5,827 4,542 5,084 Accrued interest and other liabilities 221 217 169 Total liabilities $ 14,560 $ 16,273 $ 15,472 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 1,150 900 1,150 Retained income 1,708 1,548 1,590 Total stockholder's equity 2,893 2,483 2,775 Total liabilities and stockholder's equity $ 17,453 $ 18,756 $ 18,247 See notes to financial statements. 1 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF INCOME (unaudited) (millions) 13 Weeks Ended 39 Weeks Ended Oct. 2, Oct. 3, Oct. 2, Oct. 3, 1999 1998 1999 1998 Revenues Earnings on notes of Sears $ 293 $ 302 $ 891 $ 905 Earnings on receivable balances purchased from Sears 1 1 4 5 Earnings on cash equivalents 1 1 3 4 Total revenues 295 304 898 914 Expenses Interest expense and amortization of debt discount/premium 234 241 714 725 Operating expenses 1 1 3 3 Total expenses 235 242 717 728 Income before income taxes 60 62 181 186 Income taxes 21 22 63 65 Net income $ 39 $ 40 $ 118 $ 121 Ratio of earnings to fixed charges 1.26 1.26 1.25 1.26 See notes to financial statements. 2 SEARS ROEBUCK ACCEPTANCE CORP. STATEMENTS OF CASH FLOWS (unaudited) (millions) 39 Weeks Ended Oct. 2, Oct.3, 1999 1998 Cash flows from operating activities: Net income $ 118 $ 121 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and other noncash items 9 9 Decrease in other assets - 2 Increase in other liabilities 52 94 Net cash provided by operating activities 179 226 Cash flows from investing activities: Decrease(increase)in notes of Sears 674 (2,031) Decrease(increase)in receivable balances purchased from Sears 83 (5) Net cash provided by(used in) investing activities 757 (2,036) Cash flows from financing activities: Decrease in commercial paper, primarily 90 days or less (1,175) (120) Proceeds from issuance of long-term debt 772 1,939 Payments for redemption of long-term debt (562) (195) Issue costs paid to issue debt (5) (16) Proceeds from capital infusion - 200 Net cash (used in)provided by financing activities (970) 1,808 Net decrease in cash and cash equivalents (34) (2) Cash and cash equivalents at beginning of period 94 5 Cash and cash equivalents at end of period $ 60 $ 3 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 2, 1999, 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 commercial paper outstanding through its investment portfolio and credit facilities. SRAC's investment portfolio fluctuated from a low of $3 million to a high of $393 million in the third quarter of 1999. Credit facilities as of October 2, 1999 were as follows: Expiration Date (millions) - ------------------------------------------------------------ April 2003 $4,185 April 2002 875 November 1999 500 November 1999 40 - ------------------------------------------------------------ $5,600 ============================================================ 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. 1999 Avg. Orig. 1998 Avg. Orig. Volume Coupon Term Volume Coupon Term ------ ------ ---- ------ ------ ---- 13 Weeks Ended: Medium-term notes $ - -% - $ 45 6.27% 11.9 Discrete debt $ - -% - $ - -% - 39 Weeks Ended: Medium-term notes $ 30 5.92% 10.0 $ 498 6.00% 5.1 Discrete debt $ 750 6.25% 10.0 $1,450 6.40% 14.5 GROSS OUTSTANDING Avg. Avg. 10/02/99 Avg. Remain. 10/03/98 Avg. Remain. Balance Coupon Term Balance Coupon Term -------- ------ ------ ------- ------ ------- Medium-term notes $5,444 6.54% 2.5 $6,385 6.47% 3.9 Discrete debt $5,850 6.65% 11.9 $4,550 6.69% 10.7 MATURITIES Medium-term Discrete Year notes debt - --------------------------------- 1999 $ 48 $ - 2000 1,231 250 2001 2,018 - 2002 813 600 2003 900 1,250 Thereafter 434 3,750 - --------------------------------- Total $5,444 $5,850 ================================= 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 October 2, 1999 and October 3, 1998, and the related statements of income for the 13 week and 39 week periods then ended and cash flows for the 39 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 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 January 2, 1999 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, 1999, 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 2, 1999 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 October 14, 1999 6 SEARS ROEBUCK ACCEPTANCE CORP. ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS During the third quarter of 1999, Sears Roebuck Acceptance Corp.'s ("SRAC") revenues decreased 3% to $295 million from $304 million in the comparable 1998 period. For the first nine months of 1999, revenues declined 2% to $898 million from $914 million for the comparable 1998 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 decrease in revenue is attributable to lower interest rates on SRAC's average earning assets. SRAC's interest and related expenses decreased 3% to $234 million from $241 million and 2% to $714 million from $725 million for the third quarter and first 39 weeks of 1999, respectively, as compared to the comparable 1998 periods. Interest and related expenses decreased due to decreases in average short-term borrowings and cost of short-term funds. SRAC's cost of short-term funds averaged 5.26% in the third quarter and 5.10% in the first nine months of 1999 compared to 5.59% and 5.61% for the same periods in 1998. SRAC's short-term borrowings averaged $3.4 billion and $3.9 billion for the third quarter and first nine months of 1999; respectively, compared to $4.0 billion and $4.3 billion for the respective 1998 periods. Interest expense reductions from short-term borrowings were partially offset by increased interest expense related to increased long-term debt levels. SRAC's average long-term debt of $11.3 billion in the third quarter of 1999 and $11.1 billion in the first nine months of 1999 reflect increases of 3% and 6%, respectively, compared with $11.0 billion and $10.5 billion for the same periods in 1998. SRAC's net income of $39 million and $118 million for the third quarter and first nine months of 1999, respectively, reflects decreases from the comparable 1998 period amounts of $40 million and $121 million. SRAC's ratio of earnings to fixed charges for the third quarter and first nine months of 1999 was 1.26 and 1.25 compared to 1.26 for the comparable 1998 periods. 7 YEAR 2000 This description updates the full description of SRAC's Year 2000 project included beginning on page 5 of SRAC's filing on Form 10-K for the fiscal year ended January 2, 1999 (the "10-K"), beginning on page 8 of its Form 10-Q quarterly report for the quarter ended April 3, 1999 and page 8 of its Form 10-Q for the quarter ended July 3, 1999. SRAC is implementing its Year 2000 plan in coordination with Sears for information systems, equipment and third party relationships that are specific to SRAC and not otherwise used corporate-wide at Sears. Pursuant to an agreement between SRAC and Sears, SRAC is relying on Sears implementation of Sears Year 2000 effort as to information systems, equipment and third party relationships that SRAC uses in conjunction with Sears. For a detailed description of Sears Year 2000 plan see "Year 2000" beginning on page 17 of Sears filing on Form 10-Q for the fiscal quarter ending October 2, 1999. STATE OF READINESS SRAC completed the inventorying, assessment, remediation and initial testing of information systems that are specific to SRAC in the second quarter of 1999. SRAC completed final certification of its mission critical information systems during the third quarter of 1999. The results of certification did not indicate that key business systems will encounter any material problems in the year 2000 due to the inability to recognize dates in the year 2000. SRAC has reviewed public disclosures regarding Year 2000 made by key external parties including banks, issuing agents, and transfer agents. No matter has come to SRAC's attention concerning the state of readiness of these key third parties that causes management to believe any of these parties will be unable to provide continuous service to SRAC. COSTS SRAC's costs related to its Year 2000 efforts have not been material. CONTINGENCY PLANS SRAC has for many years had in place a continuity plan to address business interruptions. SRAC, with assistance from Sears, has modified its continuity plan to address the particular challenges that would arise if critical systems, equipment or third parties were not Year 2000 compliant. SRAC finalized these modifications in the third quarter of 1999. 8 RISKS SRAC believes that its most significant Year 2000 risk factor is the failure of any of the following to be Year 2000 compliant: the securities depository through which trades in SRAC securities are settled; the participant bank that is SRAC's conduit to the securities depository; or the federal reserve wire system (which SRAC's banks use to transfer activities). The most likely worst case scenario that SRAC would face is that computer operations would be suspended for up to a week commencing on January 1, 2000. SRAC's contingency plan provides for these scenarios including a complete backup of all key data on December 31, 1999 and both electronic and printed reports generated for all critical data up to and including December 31, 1999. Although the occurrence of any of these scenarios could have a material adverse affect on SRAC, SRAC does not believe that any of these scenarios or any other Year 2000 compliance issues that would materially affect SRAC's operations are reasonably likely to occur. CAUTIONARY STATEMENT The foregoing statements relating to SRAC's expectations as to its Year 2000 efforts include 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. The forward-looking statements are based on SRAC's best estimates and on assumptions about many important factors, including the technical skills of employees and independent contractors of SRAC and Sears and the representations and preparedness of third parties. While SRAC believes that these estimates and assumptions are reasonable, SRAC cautions that it is impossible to predict the impact of certain facts that could cause actual results to differ from expected results. 9 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 10 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) November 5, 1999 11 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.* 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 November 5, 1999 concerning unaudited financial information.* 27 Financial Data Schedule.* 99 Pages 17 and 18 of the Sears, Roebuck and Co. Quarterly Report on Form 10-Q for the quarter ended October 2, 1999.* * Filed herewith. By-Laws of SEARS ROEBUCK ACCEPTANCE CORP. as amended to October 20, 1999 ARTICLE I OFFICES Section 1. The corporation may have offices at such places within the State of Delaware as the Board of Directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. All meetings of the stockholders shall be held at the office of the corporation in Wilmington, Delaware, or at such other place within or without the State of Delaware and the United States of America as shall be designated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings of Stockholders for the election of Directors and for transaction of such other business as may properly be brought before the meeting shall be held on the second Tuesday of December in each year if not a legal holiday, and if a legal holiday, then on the next secular day following at 10:00 A.M., or at such time and on such other date as the Board of Directors shall each year fix. Section 3. Special Meetings of the Stockholders, for any purpose or purposes, may be called to be held at any time by a majority of the members of the Board of Directors then in office, or at the request in writing, addressed to the President or the Secretary, of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Section 4. Written notice of the time and place of each Annual Meeting of Stockholders, and of the time, place and purpose or purposes of each Special Meeting of Stockholders, shall be given by the Secretary, either personally or by mail, to each stockholder entitled to vote at such meeting, not less than ten nor more than sixty days before the date of such meeting, except when otherwise required by law. If mailed, the notice shall be addressed to each stockholder entitled to vote at such meeting at his address. 13 Section 5. Business transacted at all Special Meetings shall be confined to the objects stated in the call. Section 6. The holders of a majority of the total number of outstanding shares of the stock of the corporation entitled to vote, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At any adjourned meeting at which a quorum is present or represented, any business may be transacted that might have been transacted at the meeting as originally convened. Section 7. If a quorum is present at any meeting of stockholders, the vote of the holders of a majority of the stock then outstanding and entitled to vote present in person or represented by proxy shall be sufficient for the transaction of any business, unless otherwise provided by law. Section 8. At each meeting of the stockholders, each stockholder having the right to vote shall be entitled to vote in person, or by proxy appointed by an instrument in writing subscribed by such stockholder and bearing a date not more than three years prior to said meeting, unless said instrument provides for a longer period. At all elections of directors of the corporation, each stockholder shall be entitled to as many votes as shall equal the number of votes which (except for such provision as to cumulative voting) he would be entitled to cast for the election of directors with respect to his shares of stock multiplied by the number of directors to be elected, and he may cast all of such votes for a single director or may distribute them among the number to be voted for, or for any two or more of them as he may see fit. Section 9. Whenever the vote of stockholders at a meeting thereof is required or permitted to be taken in connection with any corporate action by any provisions of the statutes or of the certificate of incorporation or of these By-Laws, the meeting and vote of stockholders may be dispensed with, if all the stockholders who would have been entitled to vote upon the action if such meeting were held, shall consent in writing to such corporate action being taken. ARTICLE III DIRECTORS Section 1. The business, property and officers of the Company shall be managed and controlled by a Board of Directors. The number of directors of the Company shall be fixed and may from time to time be increased or decreased by the Board of Directors or the stockholders but in no event shall the number of directors be less than five or more than twelve. The directors shall be elected at the Annual Meeting of the Stockholders, except as provided in Section 2 of this Article, and each director elected shall hold office until his successor shall be elected and shall qualify. Directors may be removed at any time by the vote of the holders of a majority of the stock then outstanding and entitled to vote. Directors need not be stockholders. Section 2. Vacancies and newly created directorships resulting from any increase in the number of directors may be filled by a majority of the directors then in office, though less than a quorum, or by the stockholders, and the directors so chosen shall hold office until the next annual election and until their successors are duly elected and shall qualify, unless sooner displaced. 14 Section 3. Any director may resign at any time by giving written notice to the President or to the Secretary of the Company. Such resignation shall take effect at the date of receipt of such notice or at any later time specified therein; and, unless otherwise specified therein, the acceptance of such resignation by the Board of Directors shall not be necessary to make it effective. MEETINGS OF THE BOARD Section 4. The Board of Directors may hold its meetings, both regular and special, either within or without the State of Delaware, as the Board of Directors may from time to time determine. Section 5. A meeting of the Board of Directors to be known as the annual meeting of the Board of Directors shall be held following the meeting of the stockholder at which such Board of Directors is elected, at the same place as the annual meeting of the stockholder is held or as shall otherwise be fixed by the Board of Directors, for the purpose of electing the officers of the Corporation and the standing committees of the Board of Directors, and of transacting such other business as may properly come before the meeting. It shall not be necessary to give notice of this meeting. Section 6. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the board. Section 7. Special meetings of the Board of Directors may be called by the President or Secretary on the written request of two directors. Written notice of special meetings of the Board of Directors shall be given to each director at least two days before the date of the meeting. Section 8. At all meetings of the Board of Directors, the presence of a majority of all directors in office at the time (but not less than one-third of the total number of directors) shall constitute a quorum for the transaction of business and the action of a majority of the directors present at any meeting at which a quorum is present shall be the act of the Board of Directors. If a quorum is not present at any meeting of the Board of Directors, a majority of the directors present may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 9. Any action that may be taken at a meeting of the Board of Directors or of any Committee thereof, may be taken as follows: (i) without a meeting if all members of the Board or of a committee of the Board, as the case may be, consent thereto in writing; or (ii) by means of a telephone conference or similar communications equipment by which all persons participating in the meeting can hear each other -- provided a majority of such members consent in writing to the recording of such communications in the corporate records -- in which case such participation shall constitute presence in person at a meeting. 15 ARTICLE IV NOTICES Section 1. Notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses bearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram. Section 2. Whenever any notice is required to be given under the provisions of the statutes or of the certificate of incorporation, or of these By-Laws, a waiver thereof in writing signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE V OFFICERS Section 1. Officers. The officers of the corporation shall be elected by the Board of Directors at the annual meeting and shall consist of a President, a Vice President, Finance, one or more additional Vice Presidents, a Secretary, and one or more Assistant Secretaries. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these By-Laws otherwise provide. The Board of Directors may appoint such other officers or agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board. Section 2. The Board of Directors, at its first meeting after each annual meeting of stockholders, shall choose the officers of the Corporation. Section 3. The Board of Directors may appoint such other officers and agents as it shall deem necessary, who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy shall be filled by the Board of Directors. PRESIDENT Section 5. The President shall be elected from among the directors and shall be the chief executive officer of the corporation. He shall preside at meetings of the Board of Directors. He shall have general and active management of the business of the corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect. 16 Section 6. The President shall execute bonds, mortgages and other contracts requiring a seal,under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation. VICE PRESIDENTS Section 8. The Vice Presidents shall perform such duties as the Board of Directors shall prescribe. THE SECRETARY AND ASSISTANT SECRETARIES Section 9. The Secretary shall attend all sessions of the Board of Directors and all meetings of the stockholders and record all votes and the minutes of all proceedings in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision he or she shall be. The Secretary shall keep in safe custody the seal of the corporation and, when authorized by the Board of Directors, affix the same to any instrument requiring it and, when so affixed, it shall be attested by his or her signature or by the signature of an Assistant Secretary. Section 10. The Assistant Secretaries in order of their seniority shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary and shall perform such other duties as the Board of Directors shall prescribe. THE VICE PRESIDENT, FINANCE Section 11. The Vice President, Finance shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors. Section 12. The Vice President, Finance shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Vice President, Finance and of the financial condition of the corporation. Section 13. If required by the Board of Directors, the Vice President, Finance shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal 17 From office, of all books, papers, vouchers money and other property of whatever kind in his possession or under his control belonging to the corporation. Section 14. The Vice President, Finance shall have general charge, control and supervision over the accounting and auditing affairs of the corporation. The Vice President, Finance shall have the responsibility for the preparation and maintenance of the books of account (but shall not have access to make direct entries to these books) and of the accounting records and papers of the corporation; shall have responsibility for the custody and safekeeping of all permanent records and papers of the corporation; shall supervise the preparation of all financial statements and reports on the operation and condition of the business; shall have responsibility for the establishment of financial procedures, records, and forms used by the corporation; shall have responsibility for the filing of all financial and tax reports and returns required by law; shall render to the President, Vice President, or the Board of Directors, whenever they may require, an account of his transactions as Vice President, Finance; and in general shall have such other powers and perform such other duties as are incident to the office of a treasurer and a controller and as from time to time may be prescribed by the Board of Directors or the President. ARTICLE VI CERTIFICATES OF STOCK Section 1. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the President or a Vice President and the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the corporation. If the corporation shall be authorized to issue more than one class of stock, the designations, preferences and relative, participating, optional or other special rights of each class and the qualifications, limitations or restrictions of such preferences and/or rights shall be set forth in full or summarized on the face or back of the certificate which the corporation shall issue to represent such class of stock. Section 2. Where a certificate is signed (1) by a transfer agent or an assistant transfer agent or (2) by a transfer clerk acting on behalf of the corporation and a registrar, the signature of any such President, Vice President, Secretary or Assistant Secretary may be facsimile. In case any officer or officers who have signed, or whose facsimile signature or signatures have been used on any such certificate or certificates shall cease to be such officer or officers of the corporation, whether because of death, resignation or otherwise, before such certificate or certificates have been delivered by the corporation, such certificate or certificates may nevertheless be adopted by the corporation and be issued and delivered as though the person or persons who signed such certificate or certificates or whose facsimile signature or signatures have been used thereon had not ceased to be such officer or officers of the corporation. TRANSFERS OF STOCK Section 3. Upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. 18 ARTICLE VII GENERAL PROVISIONS DIVIDENDS Section 1. Dividends upon the capital stock of the corporation, subject to the provisions of the certificate of incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the certificate of incorporation. Section 2. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created. ANNUAL STATEMENT Section 3. The Board of Directors shall present at each Annual Meeting and when called for by vote of the stockholders at any Special Meeting of the Stockholders, a full and clear statement of the business and condition of the corporation. CHECKS Section 4. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. FISCAL YEAR Section 5. The fiscal year of the Company shall begin on January 1 in 1995, and thereafter shall begin on the day after the Saturday closest to December 31 in each year, and shall end on the Saturday closest to December 31 in 1995 and each year thereafter. 19 ARTICLE VIII AMENDMENTS Section 1. These By-Laws may be altered or repealed at any regular meeting of the stockholders or of the Board of Directors or at any Special Meeting of the Stockholders or of the Board of Directors if notice of such alteration or repeal be contained in the notice of such Special Meeting. No change of the time or place of the meeting for the election of directors shall be made within sixty days next before the day on which such meeting is to be held, and in case of any change of such time or place, notice thereof shall be given to each stockholder in person or by letter mailed to his last known post office address at least twenty days before the meeting is held. ARTICLE IX COMMITTEES Section 1. The Board of Directors, at its annual meeting, shall, or any adjournment thereof, shall elect from among its members, by the vote of a majority of its members, an Executive Committee, a Compensation Committee and an Audit Committee, which shall be the standing committees of the corporation. The Board of Directors also shall designate the chairman of each such committee. The Board of Directors, by the vote of a majority of its members, may remove the chairman or any member of any committee, and may fill from among the directors vacancies in any committee caused by the death, resignation, or removal of any person elected thereto. Each standing committee may determine its own rules of procedure, consistent with these By-Laws. Meetings of any standing committee may be called upon direction of the President, or the chairman of the committee. Written, facsimile or electronic notice of each meeting, except meetings of the Executive Committee, shall be given to each member of the committee, by personal delivery, or by mail addressed to him at his usual business address, or by facsimile or electronic means at any facsimile number or electronic address provided by him to the corporation, at least three days (excluding Saturdays, Sundays, and holidays) prior to the meeting in case of notice by mail, and at least two days (excluding Saturdays, Sundays, and holidays) prior to the meeting in case of notice by telegram or by personal delivery. Notice of each meeting of the Executive Committee shall be given to each member of that committee, by personal delivery, or by telephone, or by mail addressed to him at his usual business address, or by facsimile or electronic means at any facsimile number or electronic address provided by him to the corporation, at least twenty-four hours prior to the meeting in the case of notice by telephone, telegram, or personal delivery, and at least two days (excluding Saturdays, Sundays, and holidays) prior to the meeting in case of notice by mail. All notices which are mailed shall be deemed to have been given when deposited in the United States mail, postage prepaid. Notice of meetings of any standing committee may be waived by any member of the committee. At meetings of each standing committee,the presence of a majority of the members of such committee shall be necessary to constitute a quorum for the transaction of business, and, if a quorum is present at any meeting the action taken by a majority of the members present shall be the act of the committee. Each standing committee shall keep a record of its acts and proceedings - and all action shall be reported to the Board of Directors at the next meeting of the Board of Directors following such action. 20 EXECUTIVE COMMITTEE Section 2. The Executive Committee shall consist of not less than three members, including the President, as from time to time shall be prescribed by the Board of Directors and shall hold office until their respective successors are elected. The Executive Committee, unless otherwise provided by resolution of the Board of Directors,shall have and may exercise, during the time between meetings of the Board of Directors, all the powers and perform all the duties of the Board of Directors except that said Committee shall have no authority as to the following matters: (i) the submission to shareholders of any action that needs shareholders' authorization under the Delaware General Business Corporation Act; (ii) the amendment or repeal of these By-Laws or the adoption of new By-Laws; (iii) the amendment or repeal of any resolution of the Board of Directors which by its terms shall not be so amendable or repealable; (iv) action in respect of dividends to shareholders; (v) election of officers or the designation of members of committees of the Board of Directors or the filling of vacancies in the Board of Directors or in any committee of the Board of Directors; and (vi) any action which the President shall by written instrument filed with the Secretary designate as a matter which should be considered by the Board of Directors. Action taken by the Executive Committee shall be subject to revision or alteration by the Board of Directors, provided that rights or acts of third parties vested or taken in reliance on such action prior to any such revision or alteration shall not be adversely affected by such revision or alteration. The secretary of the corporation or in his absence any person as may be designated by the Chairman of the Executive Committee, shall act as secretary of the Executive Committee and keep the minutes of all meetings. COMPENSATION COMMITTEE Section 3. The Compensation Committee shall consist of such number of directors, not less than two, as shall from time to time be prescribed by the Board of Directors. As authorized by the Board of Directors, the Compensation Committee shall make recommendations to the Board of Directors with respect to the number of employees of the Company and the administration of the salaries, bonuses, and other compensation to be paid to the employees of the Company, including the terms and conditions of their employment. AUDIT COMMITTEE Section 4. The Audit Committee shall consist of not less than two directors who are not engaged in the day to day operations of the corporation, as from time to time shall be prescribed by the Board of Directors, who shall hold office until their respective successors are elected. The Audit Committee shall report to the Board of Directors annually the independent public accountants that it recommends the Board appoint to audit the books, records, and accounts of the corporation and to perform such other duties as the Board of Directors may from time to time prescribe. The Committee shall review all recommendations made by the corporation's independent public accountants to the Board of Directors with respect to the accounting methods used, the system of internal control followed by the corporation and in connection with non-audit services, and shall advise the Board of Directors with respect thereto. The Committee shall also have authority to examine into and make recommendations to the Board of Directors with respect to the scope of the audit conducted by the corporation's independent public accountants and with respect to non-audit services. 21 The Audit Committee shall review the audit plans and results of the Corporation's internal audit function and shall report to the Board of Directors with respect thereto. 22 Exhibit 12 SEARS ROEBUCK ACCEPTANCE CORP. CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES 13 Weeks Ended 39 Weeks Ended Oct. 2, Oct. 3, Oct. 2, Oct. 3, (millions) 1999 1998 1999 1998 INCOME BEFORE INCOME TAXES $ 60 $ 62 $ 181 $ 186 PLUS FIXED CHARGES: Interest 231 238 706 717 Amortization of debt discount/premium 3 3 8 8 Total fixed charges 234 241 714 725 EARNINGS BEFORE INCOME TAXES AND FIXED CHARGES $ 294 $ 303 $ 895 $ 911 RATIO OF EARNINGS TO FIXED CHARGES 1.26 1.26 1.25 1.26 2 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 October 2, 1999 and October 3, 1998, as indicated in our report dated October 14, 1999; 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 October 2, 1999, is incorporated by reference in Registration Statement Nos.333-30879 and 333-62847 on Forms S-3. We are also aware that the aforementioned report, 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 November 5, 1999 -----END PRIVACY-ENHANCED MESSAGE-----