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 30, 1995
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-17955
SEARS DC CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-3533346
(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: 302/888-3190
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 July 31, 1995, the Registrant had 1,000 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.
<PAGE>
SEARS DC CORP.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
June 30, 1995
PART I. FINANCIAL INFORMATION: Page No.
Item 1. Financial Statements
Statements of Financial Position (unaudited)
June 30, 1995 and 1994 and December 31, 1994 1
Statements of Income (unaudited)
Three and Six Months ended June 30, 1995 and 1994 2
Statements of Cash Flows (unaudited)
Six Months ended June 30, 1995 and 1994 3
Notes to Financial Statements (unaudited) 4
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 5
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 6
<PAGE>
- 1 -
SEARS DC CORP.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL POSITION (UNAUDITED)
<TABLE>
<CAPTION>
June 30 December 31
millions 1995 1994 1994
<S>
Assets
Notes receivable from <C> <C> <C>
Sears, Roebuck and Co. $ 1,395.0 $ 1,818.3 $ 1,552.6
Cash and invested cash 0.1 0.1 0.1
Accrued interest income
and other assets 2.8 4.4 3.6
--------- --------- ---------
Total assets $ 1,397.9 $ 1,822.8 $ 1,556.3
========= ========= =========
Liabilities
Medium-term notes $ 1,366.0 $ 1,787.1 $ 1,521.4
Accrued interest expense
and other liabilities 27.3 31.6 30.6
--------- --------- ---------
Total liabilities 1,393.3 1,818.7 1,552.0
--------- --------- ---------
Stockholder's equity
Capital stock,
par value $1.00 per share: -- -- --
Authorized, issued and
outstanding, 1,000 shares
Retained income 4.6 4.1 4.3
--------- --------- ---------
Total stockholder's equity 4.6 4.1 4.3
--------- --------- ---------
Total liabilities and
stockholder's equity $ 1,397.9 $ 1,822.8 $ 1,556.3
========= ========= =========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
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SEARS DC CORP.
STATEMENTS OF INCOME
(unaudited)
<TABLE>
<CAPTION> Three Months Ended Six Months Ended
June 30 June 30
millions 1995 1994 1995 1994
<S>
Revenues
<C> <C> <C> <C>
Earnings on notes of Sears $ 30.4 $ 36.1 $ 62.1 $ 74.3
------ ------ ------ ------
Total revenues 30.4 36.1 62.1 74.3
------ ------ ------ ------
Expenses
Interest and related expenses 30.3 35.8 61.8 73.7
Operating expenses -- 0.1 -- 0.2
------ ------ ------ ------
Total expenses 30.3 35.9 61.8 73.9
------ ------ ------ ------
Income before income taxes 0.1 0.2 0.3 0.4
Income taxes -- -- 0.1 0.1
------ ------ ------ ------
Net income $ 0.1 $ 0.2 $ 0.2 $ 0.3
====== ====== ====== ======
Ratio of earnings
to fixed charges 1.005 1.006 1.005 1.006
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
- 3 -
SEARS DC CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Six Months Ended
June 30
millions 1995 1994
<S>
Cash flows from operating activities
<C> <C>
Net income $ 0.2 $ 0.3
Adjustments to reconcile net income to
net cash provided by operating activities:
Net change in accrued interest income and
other assets and accrued interest expense
and other liabilities (2.5) (15.7)
-------- --------
Net cash used in operating activities (2.3) (15.4)
-------- --------
Cash flows from investing activities
Decrease in notes of
Sears, Roebuck and Co. 157.7 376.1
-------- --------
Net cash provided by investing activities 157.7 376.1
-------- --------
Cash flows from financing activities
Repayments of medium-term notes (155.4) (360.7)
-------- --------
Net cash used in financing activities (155.4) (360.7)
-------- --------
Net increase (decrease) in cash and -- --
invested cash
Cash and invested cash at beginning of period 0.1 0.1
-------- --------
Cash and invested cash at end of period $ 0.1 $ 0.1
======== ========
<FN>
See notes to financial statements.
</FN>
</TABLE>
<PAGE>
- 4 -
SEARS DC CORP.
________________
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Financial Statements
Sears DC Corp. ("SDC"), a wholly-owned subsidiary of Sears,
Roebuck and Co. ("Sears"), is principally engaged in the
borrowing in domestic and foreign debt markets and lending
the proceeds of such borrowings to Sears and certain direct
and indirect subsidiaries of Sears in exchange for their
unsecured notes. In the last quarter of 1992, SDC stopped
selling medium-term notes and in March 1993, SDC discontinued
issuing commercial paper.
On March 9, 1993, SDC entered into a loan agreement with
Sears for the investment of available funds. The interest
rate paid to SDC by Sears under this agreement was designed
to produce earnings sufficient to cover SDC's fixed charges
(principally interest on SDC's indebtedness) at least 1.25
times. On March 22, 1994, the agreement was amended to
reduce the fixed charge coverage to 1.005. Required payments
of principal and interest to SDC under the Sears borrowing
agreement will be sufficient to allow SDC to make timely
payments of principal and interest to the holders of its
securities.
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 SDC's Annual Report on Form 10-K for the year ended
December 31, 1994, 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.
<PAGE>
- 5 -
SEARS DC CORP.
________________
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
SDC has invested funds in the promissory notes of Sears,
which pay interest sufficient to cover SDC's fixed charges
1.005 times, and in highly liquid short-term investments.
SDC discontinued the sale of medium-term notes in the last
quarter of 1992. The $1.37 billion in outstanding medium-
term notes as of June 30, 1995 are not redeemable prior to
their stated maturity except for notes having a stated
maturity at the time of issue of more than seven years which
may be redeemed under certain circumstances in the event of
declining Discover Card receivables of Sears former
subsidiary, Dean Witter, Discover & Co.
Results of Operations
Due to the significant reduction in SDC's outstanding debt,
interest and related expenses decreased 15.5% and 16.2% for
the three and six months, respectively, ended June 30, 1995
from the same periods in 1994. Earnings covered fixed
charges 1.005 times for the three and six months ended June
30, 1995 compared to 1.006 times for the comparable periods
in 1994.
<PAGE>
- 6 -
SEARS DC CORP.
________________
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
An Exhibit Index has been filed as part of this Report
on Page E-1.
(b) Reports on Form 8-K.
None
<PAGE>
- 7 -
SEARS DC 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 DC Corp.
(Registrant)
By: Paul D. Melancon
---------------------
Paul D. Melancon
Vice President and Controller
(authorized officer of
Registrant)
August 14, 1995
<PAGE>
E-1
EXHIBIT INDEX
SEARS DC CORP.
Quarter Ended June 30, 1995
Exhibit No.
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.
27 Financial Data Schedule.
28(a) Current Report on Form 8-K of Sears, Roebuck and Co., for
May 15, 1995. [Incorporated by Reference, File No. 1-416]
28(b) Current Report on Form 8-K of Sears, Roebuck and Co., for
June 1, 1995. [Incorporated by Reference, File No. 1-416]
28(c) Current Report on Form 8-K of Sears, Roebuck and Co., for
June 20, 1995. [Incorporated by Reference, File No. 1-416]
28(d) Quarterly Report on Form 10-Q of Sears, Roebuck and Co.,
for the quarter ended April 1, 1995. [Incorporated by
reference, File No. 1-416]
28(e) Quarterly Report on Form 10-Q of Sears, Roebuck and Co.,
for the quarter ended July 1, 1995. [Incorporated by
reference, File No. 1-416]
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF FINANCIAL POSITION, INCOME AND CASH FLOWS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 0
<SECURITIES> 0<F1>
<RECEIVABLES> 1,395
<ALLOWANCES> 0<F1>
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 0<F1>
<PP&E> 0<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 1,398
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 1,366
<COMMON> 0<F1>
0<F1>
0<F1>
<OTHER-SE> 5
<TOTAL-LIABILITY-AND-EQUITY> 1,398
<SALES> 0<F1>
<TOTAL-REVENUES> 62
<CGS> 0<F1>
<TOTAL-COSTS> 0<F1>
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 62
<INCOME-PRETAX> 0
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0<F1>
<EXTRAORDINARY> 0<F1>
<CHANGES> 0<F1>
<NET-INCOME> 0
<EPS-PRIMARY> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>NOT APPLICABLE
</FN>
</TABLE>
