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): March 9, 1999
SEARS, ROEBUCK AND CO.
(Exact Name of Registrant as Specified in Charter)
New York 1-416 36-1750680
(State or Other (Commission File Number) (IRS Employer
Jurisdiction of Identification No.)
Incorporation)
3333 Beverly Road, Hoffman Estates, Illinois 60179
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (847) 286-2500
Item 5. Other Events.
On March 9, 1999, the Registrant issued the press release attached
hereto as Exhibit 99.1. As reported in the press release, the Registrant has
reached an agreement to settle a class action lawsuit stemming from an
increase in the annual percentage rate assessed on certain balances of some
of the Registrant's credit customers.
In an unrelated event, on March 10, 1999, the Registrant issued the
press release attached hereto as Exhibit 99.2. As reported in the press
release, the Registrant has announced that it will acquire up to $1.5 billion
of its common shares. It is anticipated that the repurchase program will be
completed by December 31, 2001.
Certain of the statements contained in the attached press releases are
forward looking and as such involve risks and uncertainties that could cause
actual results to differ materially. The Registrant's forward-looking
statements are based on assumptions about many important factors, including
the court's approval of the settlement agreement, prevailing market
conditions, alternative uses of capital and other factors. While the
Registrant believes that its assumptions are reasonable, it cautions that it
is impossible to predict the impact of certain factors that could cause
actual results to differ materially from predicted results.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
The Exhibit Index on page E-1 is incorporated herein by reference.
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: March 10, 1999 By: /s/ Alan J. Lacy
ALAN J. LACY
Chief Financial Officer
EXHIBITS
99.1 Sears, Roebuck and Co. press release dated March 9, 1999.
99.2 Sears, Roebuck and Co. press release dated March 10, 1999.
E-1
Exhibit 99.1
CONTACT
Janice R. Drummond
(847) 286-8316
FOR IMMEDIATE RELEASE
March 9, 1999
SEARS IN AGREEMENT TO SETTLE SUIT
RELATED TO CREDIT FINANCE CHARGES
HOFFMAN ESTATES, Ill. -- Sears, Roebuck and Co. has reached an
agreement to settle a class action lawsuit stemming from an increase in the
annual percentage rate (APR) assessed on certain balances of some Sears
credit customers.
The agreement reached with plaintiffs in a suit known as Henry v. Sears
was filed today in United States District Court, Northern District of
Illinois and is subject to court approval. The settlement also is expected
to resolve related lawsuits entitled Kistler v. Sears and Theiss v. Sears.
The settlement is made by Sears and a subsidiary, Sears National Bank, N.A.
The Henry action was brought on behalf of a nationwide class of Sears
credit customers who had outstanding balances when their accounts were
transferred to Sears National Bank from 1994 through 1996, and who had not
fully paid off those balances as of the effective dates of an April 1997
Notice of Change in Credit Terms.
Prior to the 1997 change in credit terms, there had been no change in
the APR applied to the outstanding balances that had existed on these
accounts before they were transferred to Sears National Bank. However, under
the 1997 change in credit terms, any remaining balances that had existed
prior to an account's transfer to Sears National Bank and were being assessed
an APR less than the rate then being applied by Sears National Bank on new
balances were raised to Sears National Bank's uniform APR.
Plaintiffs' principal claim in the litigation was that earlier notices
to account holders included a commitment not to increase the rate on the
pre-transfer balances. Sears believes that the 1997 change in credit terms
was proper. However, because some account holders may have misunderstood the
earlier communications about changes in credit terms, Sears has agreed to the
settlement.
"This settlement has been reached in order to avoid costly and
time-consuming litigation," said Alan J. Lacy, president, Sears Credit. "It
also will assure our customers that we value their continued business and
want them to be satisfied with Sears in all respects."
Sears previously reserved for the estimated cost of the settlement;
therefore, the proposed settlement will not have a material impact on Sears
earnings or financial position. The settlement does not require any changes
in Sears credit practices.
Terms of the settlement include Sears paying approximately $36 million
in cash to approximately 3 million customers whose APR on pre-existing
balances was increased as a result of the 1997 change in credit terms.
In addition, those customers will receive coupons with a face value
equal to the individual cash payments, also totaling approximately $36
million. The coupons will be usable to purchase products at Sears stores
nationwide. The combined amount of cash and coupons represents 50 percent of
the estimated incremental APR class members have paid and are expected to pay
as a result of the 1997 change in credit terms.
Sears estimates that the average amount these 3 million customers will
receive under those provisions will be $23.80 (part in cash and part in
coupons). The settlement agreement also calls for Sears to send additional
coupons, each with a face value of $7.50, to all 11 million class members.
Sears has further agreed, in connection with one of the related cases,
to pay approximately $3 million for the furtherance of consumer counseling,
protection and education.
If the settlement agreement is finally approved by the court, it is
anticipated that cash and coupons will be mailed to affected customers in the
fall.
There is no need for members of the class to identify themselves in
order to receive compensation. A detailed, printed notice will be mailed to
class members shortly. All customer questions should be directed to the
settlement administrator at 1-800-955-1642. In particular, account holders
who believe that they are members of the class affected by the settlement and
who have not received a copy of the notice by May 10, 1999, may call the
settlement administrator to request a copy of the notice. Customers should
not call their Sears credit service number or their local store.
Sears is a leading U.S. retailer of apparel, home and automotive
products and services, serving American households through 845 full-line
department stores and more than 2,000 specialized retail locations
nationwide. More than 63 million U.S. households have Sears credit accounts.
###
Exhibit 99.2
CONTACT
Janice R. Drummond
(847) 286-8316
FOR IMMEDIATE RELEASE
March 10, 1999
SEARS ANNOUNCES $1.5 BILLION SHARE REPURCHASE
HOFFMAN ESTATES, Ill. -- The Board of Directors of Sears, Roebuck and Co.
(NYSE: S) today approved a common share repurchase program to acquire up to
$1.5 billion of the company's common shares.
"The share repurchase program reflects our confidence in the performance
of Sears, and our commitment to increasing shareholder value," said Arthur C.
Martinez, chairman and CEO. "In addition, we will continue to pursue
appropriate growth opportunities with capital expenditures in excess of $1
billion this year."
The shares will be purchased in the open market or privately negotiated
transactions. Timing will be dependent on prevailing market conditions,
alternative uses of capital and other factors. The program is expected to be
completed by December 31, 2001.
Sears is a leading U.S. retailer of apparel, home and automotive
products and services, serving American households through 845 full-line
department stores and more than 2,000 specialized retail locations
nationwide.
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