SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) February 7, 1995
SEARS, ROEBUCK AND CO.
(Exact name of registrant as specified in charter)
New York 1-416 36-1750680
(State or Other (Commission (IRS Employer
Jurisdiction of File Number) Identification No.)
Incorporation)
Sears Tower, Chicago, Illinois 60684
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (312) 875-2500
<PAGE>
Item 5. Other Events.
On February 7, 1995, the Registrant issued its fourth
quarter earnings press release attached hereto as Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
Exhibit Description
99 Sears, Roebuck and Co. press release dated February 7,
1995.
<PAGE>
SIGNATURES
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 AND CO.
Date: February 7, 1995 By: /s/JAMES M. DENNY
JAMES M. DENNY
Vice Chairman and Acting
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
99 Sears, Roebuck and Co. press release dated February 7,
1995.
Exhibit 99
contact
Perry Chlan
(312) 875-7079
FOR IMMEDIATE RELEASE
February 7, 1995
Sears, Roebuck Reports 1994 Earnings
CHICAGO -- Sears, Roebuck and Co. today reported fourth-quarter
consolidated net income of $685 million, or $1.74 per common share,
compared with net income of $545 million, or $1.39 per common share, in 1993.
Fourth-quarter earnings included a $195-million extraordinary gain
resulting from the early extinguishment of debt related to Sears Tower,
a $104-million provision for additional California earthquake
catastrophe losses announced by The Allstate Corporation in January, and an $80-
million charge for Allstate's early retirement program.
Excluding these items, fourth-quarter income would have been $674
million, or $1.71 per common share.
For 1994, Sears reported consolidated net income of $1.45 billion, or $3.66
per common share, which included $781 million in insurance
catastrophe losses from the California earthquake (net of a $65-million benefit
after taxes and minority interest from the release of other
catastrophe reserves), the extraordinary gain resulting from the early
extinguishment of debt related to Sears Tower and the charge for
Allstate's early retirement program. Excluding these items, 1994 income would
have been $2.12 billion, or $5.38 per common share.
- more -
Consolidated net income in 1993 was $2.37 billion, or $6.13 per
common share, which included an $87-million favorable tax adjustment
resulting from federal income tax legislation, a $635-million gain from the
initial public offering of Allstate, $176 million of income from
discontinued operations and $211 million of extraordinary losses related to the
early pay down of debt. Excluding these items, 1993 income would have been
$1.69 billion, or $4.33 per common share.
Sears Chairman and Chief Executive Officer Edward A. Brennan said,
"Although several unusual items impacted our results, the fundamental
operating performance of Sears Merchandise Group and Allstate continues to be
strong, which positions them well going forward as two separate
entities.
"The Merchandise Group turned in its best income performance since 1984,"
Brennan said, "while Allstate's underlying business performance
was the best in its company's history, excluding the impact of the
earthquake." Brennan said Sears corporate expenses in 1994 declined to $34
million from $127 million in 1993, primarily due to its successful
corporate repositioning program.
Consolidated revenues for 1994 rose 6.1 percent to $53.92 billion
from $50.84 billion in 1993. Revenues for the fourth quarter rose 5.3
percent to $15.44 billion from $14.66 billion for the same period in
1993.
Sears said it was proceeding on its proposed spin-off of its 80.2
percent ownership of Allstate to Sears shareholders in mid-1995.
Shareholders will be asked to vote on the proposed spin-off at a special
shareholders meeting in the spring.
- more -
Sears Merchandise Group
Merchandise Group income for 1994 increased 18.4 percent to $890
million from $752 million in 1993. Brennan said the Merchandise Group
recorded improved operating results for the second consecutive year, as revenues
grew 8.7 percent and earnings increased 28.0 percent over 1993, excluding a $56
million favorable impact from federal income tax
legislation in 1993. Revenues for 1994 were $32.12 billion, compared
with $29.56 billion in 1993.
Domestic operations income for 1994 increased 20.7 percent to $897 million
from $744 million in 1993. Income for 1994 increased 30.5
percent over 1993, excluding the tax adjustment. The 8.3 percent
comparable-store sales increase during 1994, following an 8.9 percent
comparable-store sales increase in 1993, reflects the gain in market
share over the past two years. The growth was driven by robust
durable-goods sales throughout the year and strong apparel sales during the
fourth quarter, following the completion of the remodeling of 140
stores.
Gross margins as a percentage of merchandise sales declined to 29.0 percent
from 29.3 percent due to a shift in the sales mix as a result of the strong
home-group sales and the competitive retail environment. The ratio of
selling and administrative expenses to revenues for the year
improved to 25.8 percent from 26.6 percent in 1993, as a result of the
revenue growth and ongoing expense reductions. Domestic credit
operations contributed to the income improvement as a result of a lower
provision for uncollectible accounts due to a favorable trend in
write-offs and higher net finance charge income due to receivables
growth.
- more -
International operations posted a loss of $7 million in 1994,
compared with income of $8 million in 1993, due to lower results at
Sears Mexico resulting from its merchandising repositioning program
earlier in the year and the peso devaluation in the fourth quarter.
For the fourth quarter, Merchandise Group income rose 17.5 percent to $365
million from $310 million in 1993. Revenues were $9.93 billion, compared with
$9.29 billion in 1993. Domestic operations income rose to $359 million from
$291 million for the same period in 1993. The income improvement was due to
higher revenues, a lower provision for
uncollectible credit accounts and a lower ratio of selling and
administrative expenses to revenues, which were partially offset by
lower gross margins due to the competitive retail environment.
International operations reported income of $6 million, compared with
$19 million in 1993.
Allstate Insurance Group
Allstate reported 1994 income of $388 million, after minority
interest of $96 million, compared with record 1993 income of $1.16
billion, after minority interest of $141 million. Brennan said although the
forces of nature seriously impacted Allstate's earnings for the
year, it reported exceptional operating results in its core property,
liability and life insurance businesses. The 1994 results were impacted by
pretax catastrophe losses of $1.5 billion related to the California
earthquake (net of a $125-million pretax benefit from the release of
other catastrophe reserves). The establishment of estimated losses is
an inherently uncertain process and there can be no assurance that
ultimate losses will not exceed estimated losses.
- more -
Property-liability income in 1994 was $312 million, compared with
$1.19 billion in 1993. Favorable trends in automobile claims, higher
investment income and a lower expense ratio were more than offset by
California earthquake losses.
Income from life operations in 1994 rose 29.4 percent to $211
million from $163 million in 1993. The improvement was primarily due to
stronger operating income.
Allstate revenues for 1994 were $21.46 billion, compared with
$20.95 billion in 1993.
For the fourth quarter, Allstate reported income of $131 million,
after minority interest of $32 million, compared with income of $208
million, after minority interest of $51 million, for the same period in 1993.
In the fourth-quarter, about 600 Allstate employees accepted the early
retirement program, which resulted in an $80-million charge (after taxes and
minority interest) and will save the company about $28 million annually (after
taxes and minority interest). The quarter also included $104 million (after
taxes and minority interest) in additional California earthquake catastrophe
losses.
For the fourth quarter, Allstate property-liability income was $144
million, compared with $228 million in 1993. Income from life
operations for the fourth quarter was $29 million, compared with $42
million in 1993.
Revenues for the quarter increased 2.8 percent to $5.43 billion
from $5.28 billion for the same period in 1993.
Sears operations include Sears Merchandise Group, its 80.2 percent
ownership in Allstate, Homart Development Co., and Corporate, which
includes its interests in Prodigy Services Company and Advantis.
- 30 -
SEARS, ROEBUCK AND CO.
CONSOLIDATED INCOME
<TABLE>
<CAPTION>
<S>
Quarter Ended December 31,
(millions, except per Percent
common share data) 1994 1993 Change
<C> <C> <C> <C>
Revenues
Sears Merchandise Group $ 9,934 $ 9,289 6.9
Allstate Insurance Group 5,430 5,283 2.8
Corporate and Homart 85 105 (19.5)
Intergroup transactions (9) (13) -
Total revenues 15,440 14,664 5.3
Expenses
Costs and expenses 14,174 13,642 3.9
Restructuring 154 - -
Interest 359 351 2.5
Total expenses 14,687 13,993 5.0
Operating income 753 671 12.2
Other income 24 167 (85.6)
Gain on sale of subsidiary's stock - - -
Income before income taxes and
minority interest 777 838 (7.3)
Income taxes 241 230 4.8
Minority interest (46) (63) -
Income from continuing operations 490 545 (10.0)
Discontinued operations, net of income taxes
Operating income - - -
Loss on disposal - - -
Income before extraordinary gain (loss) 490 545 (10.0)
Extraordinary gain (loss) related to
early extinguishment of debt 195 - -
Net income $ 685 $ 545 25.8
Income from continuing operations
consists of:
Sears Merchandise Group $ 365 $ 310 17.5
Allstate Insurance Group 131 208 (37.0)
Homart 3 19 (85.9)
Corporate and other (9) 8 -
Gain on the initial public offering of
The Allstate Corporation - - -
Income from continuing operations $ 490 $ 545 (10.0)
Earnings per common share, after
allowing for dividends on preferred shares:
Income from continuing operations $ 1.24 $ 1.39
Discontinued operations - -
Income before extraordinary gain (loss) 1.24 1.39
Extraordinary gain (loss) 0.50 -
Net income $ 1.74 $ 1.39
Average common and common
equivalent shares outstanding 389.8 385.4
Year Ended December 31,
(millions, except per Percent
common share data) 1994 1993 Change
Revenues
Sears Merchandise Group $ 32,122 $ 29,565 8.7
Allstate Insurance Group 21,464 20,946 2.5
Corporate and Homart 376 403 (6.7)
Intergroup transactions (42) (76) -
Total revenues 53,920 50,838 6.1
Expenses
Costs and expenses 50,696 47,234 7.3
Restructuring 154 - -
Interest 1,450 1,498 (3.3)
Total expenses 52,300 48,732 7.3
Operating income 1,620 2,106 (23.1)
Other income 108 217 (50.5)
Gain on sale of subsidiary's stock - 635 -
Income before income taxes and
minority interest 1,728 2,958 (41.6)
Income taxes 358 401 (10.6)
Minority interest (111) (148) -
Income from continuing operations 1,259 2,409 (47.7)
Discontinued operations, net of income taxes
Operating income - 240 -
Loss on disposal - (64) -
Income before extraordinary gain (loss) 1,259 2,585 (51.3)
Extraordinary gain (loss) related to
early extinguishment of debt 195 (211) -
Net income $ 1,454 $ 2,374 (38.8)
Income from continuing operations
consists of:
Sears Merchandise Group $ 890 $ 752 18.4
Allstate Insurance Group 388 1,160 (66.6)
Homart 15 (11) -
Corporate and other (34) (127) -
Gain on the initial public offering of
The Allstate Corporation - 635 -
Income from continuing operations $ 1,259 $ 2,409 (47.7)
Earnings per common share, after
allowing for dividends on preferred shares:
Income from continuing operations $ 3.16 $ 6.22
Discontinued operations - 0.46
Income before extraordinary gain (loss) 3.16 6.68
Extraordinary gain (loss) 0.50 (0.55)
Net income $ 3.66 $ 6.13
Average common and common
equivalent shares outstanding 388.9 382.9
</TABLE>
SEARS, ROEBUCK AND CO.
SEARS MERCHANDISE GROUP
STATEMENTS OF INCOME
Quarter Ended
December 31,
(millions) 1994 1993
Revenues
Merchandise sales and services $ 9,023 $ 8,462
Credit revenues 911 827
Total revenues 9,934 9,289
Costs and expenses
Cost of sales, buying and occupancy 6,359 5,997
Selling and administrative 2,415 2,325
Provision for uncollectible accounts 197 229
Interest 325 262
Total costs and expenses 9,296 8,813
Operating income 638 476
Other income 13 64
Income before income taxes
and minority interest 651 540
Income taxes 273 218
Minority interest (13) (12)
Group income $ 365 $ 310
Contribution to Group Income
Domestic operations $ 359 $ 291
International operations 6 19
Group income $ 365 $ 310
Year Ended
December 31,
(millions) 1994 1993
Revenues
Merchandise sales and services $ 28,548 $ 26,292
Credit revenues 3,574 3,273
Total revenues 32,122 29,565
Costs and expenses
Cost of sales, buying and occupancy 20,327 18,759
Selling and administrative 8,323 7,861
Provision for uncollectible accounts 698 821
Interest 1,255 1,043
Total costs and expenses 30,603 28,484
Operating income 1,519 1,081
Other income 25 99
Income before income taxes
and minority interest 1,544 1,180
Income taxes 640 421
Minority interest (14) (7)
Group income $ 890 $ 752
Contribution to Group Income
Domestic operations $ 897 $ 744
International operations (7) 8
Group income $ 890 $ 752
SEARS, ROEBUCK AND CO.
SEARS MERCHANDISE GROUP
SUPPLEMENTARY DOMESTIC OPERATIONS INFORMATION
Quarter Ended
December 31,
(millions, except number of stores) 1994 1993
Revenues
Domestic merchandising sales
and services $ 7,947 $ 7,394
Domestic credit revenues 828 753
Total revenues 8,775 8,147
Costs and expenses
Cost of sales, buying and occupancy 5,607 5,169
Selling and administrative 2,130 2,041
Provision for uncollectible accounts 177 229
Interest 285 222
Total costs and expenses 8,199 7,661
Operating income - Domestic operations $ 576 $ 486
Pretax LIFO charge (credit) $ (58) $ (31)
Year Ended
December 31,
(millions, except number of stores) 1994 1993
Revenues
Domestic merchandising sales
and services $ 25,341 $ 23,045
Domestic credit revenues 3,249 2,970
Total revenues 28,590 26,015
Costs and expenses
Cost of sales, buying and occupancy 17,990 16,300
Selling and administrative 7,390 6,920
Provision for uncollectible accounts 650 795
Interest 1,095 883
Total costs and expenses 27,125 24,898
Operating income - Domestic operations $ 1,465 $ 1,117
Pretax LIFO charge (credit) $ (34) $ 5
Domestic inventories - FIFO $ 4,284 $ 3,750
- LIFO $ 3,592 $ 3,006
Operating
Dec. 31, 1993 Opened
Domestic merchandising stores:
Large Sized 412 3
Medium Sized 374 6
Small Hard Line 13 -
Total Multi-line Stores 799 9
Specialty Stores 1,018 176
Operating
Closed/Sold Dec. 31, 1994
Domestic merchandising stores:
Large Sized (3) 412
Medium Sized (1) 379
Small Hard Line (4) 9
Total Multi-line Stores (8) 800
Specialty Stores (54) 1,140
Gross Square Feet:
December 31, 1993 125.3
Opened 3.3
Closed (0.9)
December 31, 1994 127.7
Quarter Ended
December 31,
Domestic credit revenues: 1994 1993
Gross finance charges and other revenues $ 908 $ 866
Funding cost on securitized receivables (80) (113)
Total $ 828 $ 753
Year Ended
December 31,
Domestic credit revenues: 1994 1993
Gross finance charges and other revenues $ 3,600 $ 3,486
Funding cost on securitized receivables (351) (516)
Total $ 3,249 $ 2,970
SEARS, ROEBUCK AND CO.
ALLSTATE INSURANCE GROUP
STATEMENTS OF INCOME
Quarter Ended
December 31,
(millions) 1994 1993
Revenues
Property-liability insurance
premiums earned $ 4,300 $ 4,138
Life insurance premium
income and contract charges 246 289
Investment income, less
investment expense 869 841
Realized capital gains 15 15
Total revenues 5,430 5,283
Costs and expenses
Property-liability insurance
claims and claims expense 3,522 3,337
Life insurance policy benefits 505 535
Policy acquisition costs 802 830
Early retirement program 154 -
Interest 15 18
Other operating costs and expenses 287 309
Total costs and expenses 5,285 5,029
Income before income taxes (benefit) 145 254
Income taxes (benefit) (18) (5)
The Allstate Corporation income 163 259
Minority interest (32) (51)
Group income $ 131 $ 208
Contribution to Group Income
Property-liability $ 144 $ 228
Life 29 42
Corporate interest expense and other costs (10) (11)
Minority interest (32) (51)
Group income $ 131 $ 208
Year Ended
December 31,
(millions) 1994 1993
Revenues
Property-liability insurance
premiums earned $ 16,808 $ 16,323
Life insurance premium
income and contract charges 1,053 1,079
Investment income, less
investment expense 3,401 3,324
Realized capital gains 202 220
Total revenues 21,464 20,946
Costs and expenses
Property-liability insurance
claims and claims expense 14,665 12,922
Life insurance policy benefits 2,031 2,103
Policy acquisition costs 3,198 3,279
Early retirement program 154 -
Interest 59 82
Other operating costs and expenses 1,130 1,184
Total costs and expenses 21,237 19,570
Income before income taxes (benefit) 227 1,376
Income taxes (benefit) (257) 75
The Allstate Corporation income 484 1,301
Minority interest (96) (141)
Group income $ 388 $ 1,160
Contribution to Group Income
Property-liability $ 312 $ 1,188
Life 211 163
Corporate interest expense and other costs (39) (50)
Minority interest (96) (141)
Group income $ 388 $ 1,160
SEARS, ROEBUCK AND CO.
ALLSTATE INSURANCE GROUP
SUPPLEMENTARY INFORMATION
Quarter Ended
December 31,
(millions, except ratios) 1994 1993
Property-liability operations
Premiums written $ 4,269 $ 4,107
Premiums earned $ 4,300 $ 4,138
Claims and claims expense 3,522 3,337
Underwriting expenses 961 1,005
Early retirement program 132 -
Underwriting loss (315) (204)
Investment income, less expense 405 383
Income tax benefit on operations (32) (31)
Operating income 122 210
Realized capital gains, after-tax 22 18
Property-liability income $ 144 $ 228
Catastrophe losses $ 308 $ 156
Operating ratios
Claims and claims expense ratio 81.9 80.7
Expense ratio 25.4 24.2
Combined ratio 107.3 104.9
Effect of catastrophe losses on combined ratio 7.2 3.8
Effect of the early retirement program on
combined ratio 3.1 -
Life operations
Statutory premiums and deposits $ 1,323 $ 1,165
Premium income and contract charges $ 246 $ 289
Investment income, less expense 464 457
Policy benefits 505 535
Early retirement program 22 -
Operating costs and expenses 128 134
Income taxes on operations 14 26
Operating income 41 51
Realized capital losses, after-tax (12) (9)
Life income $ 29 $ 42
Year Ended
December 31,
(millions, except ratios) 1994 1993
Property-liability operations
Premiums written $ 17,009 $ 16,615
Premiums earned $ 16,808 $ 16,323
Claims and claims expense 14,665 12,922
Underwriting expenses 3,834 3,885
Early retirement program 132 -
Underwriting loss (1,823) (484)
Investment income, less expense 1,573 1,460
Income tax benefit on operations (415) (63)
Operating income 165 1,039
Realized capital gains, after-tax 147 149
Property-liability income $ 312 $ 1,188
Catastrophe losses $ 1,988 $ 546
Operating ratios
Claims and claims expense ratio 87.2 79.2
Expense ratio 23.6 23.8
Combined ratio 110.8 103.0
Effect of catastrophe losses on combined ratio 11.8 3.3
Effect of the early retirement program on
combined ratio 0.8 -
Life operations
Statutory premiums and deposits $ 4,539 $ 4,086
Invested assets, including Separate Accounts (1) $ 26,589 $ 24,371
Premium income and contract charges $ 1,053 $ 1,079
Investment income, less expense 1,827 1,858
Policy benefits 2,031 2,103
Early retirement program 22 -
Operating costs and expenses 492 578
Income taxes on operations 109 87
Operating income 226 169
Realized capital losses, after-tax (15) (6)
Life income $ 211 $ 163
(1) Fixed income securities are included in invested assets at amortized cost.
