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) April 20, 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
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Item 5. Other Events.
On April 20, 1995, the Registrant issued the press release
attached hereto as Exhibit 99.
On March 31, 1995, a former employee filed a lawsuit (Mathews
v. Sears Pension Plan and Sears, Roebuck and Co., United States
District Court for the Northern District of Illinois, Eastern
Division) seeking recovery of purported deficiencies in lump sum
pension payouts, on behalf of himself and a class consisting of each
participant in Sears Pension Plan (the "Plan") who received a lump
sum pension payout since January 1, 1986 based on a Pension Benefit
Guaranty Corporation ("PBGC") interest rate in effect at the
beginning of the distribution year that was higher than the interest
rate in effect at the time the payout was actually made, which
plaintiff alleges violated the terms of the Plan. The lawsuit also
seeks injunctive relief requiring that future lump sum payouts be
made in accordance with plaintiff's interpretation of the Plan, on
behalf of all Plan participants who may become entitled or required
to receive a lump sum payout at a time when the PBGC interest rate
is lower than the rate in effect at the beginning of the year in
which such payout is made. The Company and the Plan deny the
material allegations of the complaint, assert that the Plan
Administrator has consistently complied with applicable law in
determining the appropriate PBGC interest rates for lump sum payouts
and plan to vigorously contest the claims. Due to the early stage
of development of these proceedings, the Company's ultimate exposure
to loss, if any, cannot presently be predicted.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits.
99. Press release of the Registrant issued April 20, 1995.
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<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: April 20, 1995 By: /S/ DAVID SHUTE
DAVID SHUTE
Senior Vice President, General
Counsel and Secretary
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EXHIBITS
99. Press release of the Registrant issued April 20,
1995.
CONTACT
Perry Chlan
(312) 875-7079
FOR IMMEDIATE RELEASE
April 20, 1995
Sears Reports Record First-Quarter Results
CHICAGO -- Sears, Roebuck and Co. today reported record
first-quarter 1995 consolidated net income of $559 million, or $1.41 per
common share, compared with a loss of $98 million, or a loss of 27 cents
per common share, for the first quarter of 1994, which included
catastrophe losses of $495 million, or a loss of $1.28 per common share,
after taxes and minority interest, related to the Northridge, Calif.,
earthquake at Allstate Insurance Group. Excluding the earthquake
losses, consolidated net income in the first quarter of 1994 would have
been $397 million, or $1.01 per common share.
Consolidated revenues in first-quarter 1995 rose 5.6 percent to
$13.02 billion from $12.33 billion in 1994.
Sears Chairman and Chief Executive Officer Edward A. Brennan said,
"Operating performance at the Merchandise Group was strong and Allstate
recorded an excellent quarter. Both groups' business plans are sound,
their fundamentals are on track, and they are positioned well to operate
as separate entities."
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Page 2
On March 31, Sears shareholders overwhelmingly approved the
company's proposal to distribute its 80.3 percent ownership in Allstate
to Sears common shareholders through a tax-free dividend. Sears expects
the spin-off to occur by mid-summer, subject to confirmation of the
tax-free nature of the distribution and a final review by the Sears
board of directors.
Sears also is in the process of divesting Homart Development Co.,
which it anticipates completing in 1995.
First-quarter income from Sears Merchandise Group and Corporate,
which will be the continuing components of Sears after the proposed
distribution of Allstate and the sale of Homart, was $124 million, or 30
cents per common share, compared with $118 million, or 29 cents per
common share for the same period in 1994. First-quarter revenues were
$7.45 billion, compared with $7.10 billion in 1994.
Sears Merchandise Group
Merchandise Group income for first-quarter 1995 was $125 million,
compared with $130 million in 1994. Domestic operations income improved
2.4 percent to $139 million from $136 million, despite heavy promotional
activity and the shift in some Easter-related apparel sales in 1995 to
the second quarter from the first quarter.
International operations reported a loss of $14 million, compared
with a loss of $6 million in 1994, primarily due to exchange losses as a
result of further devaluation of the Mexican peso since the end of 1994.
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Page 3
Domestic operations posted a comparable-store sales increase of 4.2
percent in the quarter, following a 13.0 percent increase in 1994, led
by double-digit revenue growth in Brand Central and continued strength
in the home improvement department. Revenue growth in the apparel
department was tempered by the Easter shift and the extremely strong
comparisons in the prior year results.
As a result of the competitive retail environment and a modest
shift in the sales mix toward home-related merchandise, domestic gross
margin as a percent of merchandise sales and services declined to 25.3
percent in the quarter from 26.4 percent in the year-ago period.
Selling and administrative expenses as a percent of revenues improved
about 110 basis points in the quarter to 22.4 percent from 23.5 percent
a year ago, as a result of continuing strong expense control. Domestic
credit operations benefited from growth in the accounts receivables
portfolio, as SearsCharge share was maintained at a high level.
Merchandise Group revenues increased 5.0 percent in the first
quarter to $7.45 billion from $7.10 billion in 1994.
Allstate Insurance Group
Allstate reported first-quarter income of $435 million, after
minority interest of $107 million, compared with a loss of $221 million,
net of minority interest, in 1994, which included the impact of the
Northridge, Calif., earthquake.
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Page 4
Property-liability's income for the first quarter was $453 million,
compared with a loss of $329 million in 1994. Pretax catastrophe losses
were $171 million in 1995, compared with $1.11 billion in 1994.
Favorable trends in auto injury severity (average cost per claim) and
auto frequency (rate of claim occurrence) also contributed to the 1995
improvement in earnings.
Income from the life operations for the first quarter totaled $99
million, compared with $64 million for the same period in 1994. The
improvement was due to increased investment income, lower expenses,
favorable mortality rates and increased realized capital gains.
Allstate's revenues for the quarter rose 6.5 percent to $5.57
billion from $5.23 billion in 1994.
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SEARS, ROEBUCK AND CO.
CONSOLIDATED INCOME
Three Months Ended
April 1, April 2, Percent
(millions, except per common share data) 1995 1994 Change
Revenues
Sears Merchandise Group $ 7,449 $ 7,095 5.0
Allstate Insurance Group 5,573 5,233 6.5
Total revenues 13,022 12,328 5.6
Expenses
Costs and expenses 11,807 12,396 (4.7)
Interest 351 336 4.4
Total expenses 12,158 12,732 (4.5)
Operating income (loss) 864 (404) -
Other income 29 31 (6.8)
Income (loss) before income taxes (benefit)
and minority interest 893 (373) -
Income taxes (benefit) 232 (213) -
Minority interest (102) 57 -
Income (loss) from continuing operations 559 (103) -
Income from discontinued operations,
net of income taxes - 5 -
Net income (loss) $ 559 $ (98) -
Income (loss) from continuing operations
consists of:
Sears Merchandise Group $ 125 $ 130 (3.6)
Allstate Insurance Group 435 (221) -
Corporate (1) (12) -
Income (loss) from continuing operations $ 559 $ (103) -
Earnings (loss) per common share, after
allowing for dividends on preferred shares:
Income (loss) from continuing operations $ 1.41 $ (0.28)
Discontinued operations - 0.01
Net income (loss) $ 1.41 $ (0.27)
Average common and common
equivalent shares outstanding 389.9 386.5
SEARS, ROEBUCK AND CO.
SEARS MERCHANDISE GROUP
STATEMENTS OF INCOME
Three Months Ended
April 1, April 2,
(millions) 1995 1994
Revenues
Merchandise sales and services $ 6,502 $ 6,217
Credit revenues 947 878
Total revenues 7,449 7,095
Costs and expenses
Cost of sales, buying and occupancy 4,896 4,616
Selling and administrative 1,662 1,661
Depreciation and amortization 134 118
Provision for uncollectible accounts 198 179
Interest 346 309
Total costs and expenses 7,236 6,883
Operating income 213 212
Other income (loss) (10) 6
Income before income taxes and minority interest 203 218
Income taxes 83 90
Minority interest 5 2
Group income $ 125 $ 130
Contribution to Income
Domestic operations $ 139 $ 136
International operations (14) (6)
Group income $ 125 $ 130
SEARS, ROEBUCK AND CO.
SEARS MERCHANDISE GROUP
SUPPLEMENTARY DOMESTIC OPERATIONS INFORMATION
Three Months Ended
April 1, April 2,
(millions, except number of stores) 1995 1994
Revenues
Domestic merchandising sales
and services $ 5,882 $ 5,542
Domestic credit revenues 859 795
Total revenues 6,741 6,337
Costs and expenses
Cost of sales, buying and occupancy 4,396 4,082
Selling and administrative 1,509 1,486
Depreciation and amortization 121 105
Provision for uncollectible accounts 188 171
Interest 300 270
Total costs and expenses 6,514 6,114
Operating income - Domestic operations $ 227 $ 223
Pretax LIFO charge $ 9 $ 9
Domestic inventories - FIFO $ 4,445 $ 3,798
- LIFO $ 3,743 $ 3,061
Operating
Dec. 31, 1994 Opened
Domestic merchandising stores:
Large Sized 412 3
Medium Sized 379 -
Small Hard Line 9 -
Total Multi-line Stores 800 3
Specialty Stores 1,140 45
Operating
Closed/Sold April 1, 1995
Domestic merchandising stores:
Large Sized - 415
Medium Sized (2) 377
Small Hard Line - 9
Total Multi-line Stores (2) 801
Specialty Stores (9) 1,176
Gross Square Feet:
December 31, 1994 127.7
Opened 1.1
Closed (0.3)
April 1, 1995 128.5
Three Months Ended
April 1, April 2,
Domestic credit revenues: 1995 1994
Gross finance charges and other revenues $ 944 $ 898
Funding cost on securitized receivables (85) (103)
Total $ 859 $ 795
SEARS, ROEBUCK AND CO.
ALLSTATE INSURANCE GROUP
STATEMENTS OF INCOME
Three Months Ended
March 31,
(millions) 1995 1994
Revenues
Property-liability insurance
premiums earned $ 4,226 $ 4,029
Life insurance premium
income and contract charges 394 270
Investment income, less
investment expense 867 821
Realized capital gains 86 113
Total revenues 5,573 5,233
Costs and expenses
Property-liability insurance
claims and claims expense 3,204 4,271
Life insurance policy benefits 640 504
Amortization of deferred policy acquisition costs 505 472
Interest 15 15
Operating costs and expenses 547 559
Total costs and expenses 4,911 5,821
Income (loss) before income taxes (benefit) and
equity in net income of unconsolidated companies 662 (588)
Income taxes (benefit) 150 (294)
Equity in net income of unconsolidated companies 30 19
The Allstate Corporation income (loss) 542 (275)
Minority interest (107) 54
Group income (loss) $ 435 $ (221)
Contribution to Group Income (Loss)
Property-liability $ 453 $ (329)
Life 99 64
Corporate interest expense and other costs (10) (10)
Minority interest (107) 54
Group income (loss) $ 435 $ (221)
SEARS, ROEBUCK AND CO.
ALLSTATE INSURANCE GROUP
SUPPLEMENTARY INFORMATION
Three Months Ended
March 31,
(millions, except ratios) 1995 1994
Property-liability operations
Premiums written $ 4,241 $ 3,977
Premiums earned $ 4,226 $ 4,029
Claims and claims expense 3,204 4,271
Underwriting expenses 942 908
Underwriting income (loss) 80 (1,150)
Investment income, less expense 379 370
Income taxes (benefit) on operations 80 (361)
Operating income (loss) 379 (419)
Realized capital gains, after-tax 44 71
Equity in net income of unconsolidated companies 30 19
Property-liability income (loss) $ 453 $ (329)
Catastrophe losses $ 171 $ 1,106
Operating ratios
Claims and claims expense ratio 75.8 106.0
Expense ratio 22.3 22.5
Combined ratio 98.1 128.5
Effect of catastrophe losses on combined ratio 4.0 27.4
Life operations
Statutory premiums and deposits $ 1,290 $ 1,037
Invested assets, including Separate Accounts (1) $ 27,124 $ 24,660
Premium income and contract charges $ 394 $ 270
Investment income, less expense 488 451
Policy benefits 640 504
Operating costs and expenses 109 122
Income taxes on operations 46 33
Operating income 87 62
Realized capital gains, after-tax 12 2
Life income $ 99 $ 64
(1) Fixed income securities are included in invested assets at amortized
cost.
