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<p><font face="Arial"><font size=+2>UNITED STATES</font></font>
<p><font face="Arial"><font size=+2>SECURITIES AND EXCHANGE COMMISSION</font></font>
<p><b><font face="Arial"><font size=-2>Washington, D.C. 20549</font></font></b>
<br><b>_______________</b>
<p><font face="Arial"><font size=+2>FORM 10-Q</font></font></center>
<p><br>
<br>
<br>
<br>
<br>
<br>
<br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 >
<tr>
<td>x</td>
<td WIDTH="90%">
<center>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
<br>SECURITIES EXCHANGE ACT OF 1934
<br>FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2000</center>
</td>
</tr>
<tr>
<td></td>
<td>
<center>OR</center>
</td>
</tr>
<tr>
<td><font face="Wingdings">¨</font></td>
<td>
<dir>
<center>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
<br>FOR THE TRANSITION PERIOD FROM __________ TO __________</center>
</dir>
</td>
</tr>
</TABLE>
<center>
<p><font face="Arial"><font size=-2>Commission file number 0-17955</font></font>
<p><font face="Arial"><font size=+3>SEARS DC CORP.</font></font>
<p><font face="Arial"><font size=-2>(Exact Name of Registrant as Specified
in Its Charter)</font></font></center>
<p><font face="Arial"><font size=-1>
Delaware
36-3533346</font></font>
<br><font face="Arial"><font size=-1>(State of Incorporation)
( I.R.S. Employer Identification No.)</font></font>
<p><font face="Arial"><font size=-1>3711 Kennett Pike, Greenville, Delaware
19807</font></font>
<br><font face="Arial"><font size=-1>(Address of Principal Executive Offices)
(Zip Code)</font></font>
<p><font face="Arial"><font size=-2>Registrant's telephone number, including
area code: 302/434-3100</font></font>
<p><font face="Arial"><font size=-2>Securities registered pursuant to Section
12(b) of the Act: None</font></font>
<p><font face="Arial"><font size=-2>Securities registered pursuant to Section
12(g) of the Act: Common Stock par value $1.00 per share.</font></font>
<p><font face="Arial"><font size=-1>R</font><font size=-2>egistrant (1)
has filed all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934</font></font>
<br><font face="Arial"><font size=-2>during the preceding 12 months, and
(2) has been subject to such filing requirements for the past 90 days.</font></font>
<br><font face="Arial"><font size=-2>Yes <u>X </u>. No .</font></font>
<p><font face="Arial"><font size=-2>As of March 31, 2000, the Registrant
had 1,000 shares of common stock outstanding, all of which were held by
Sears,</font></font>
<br><font face="Arial"><font size=-2>Roebuck and Co.</font></font>
<p><font face="Arial"><font size=-2>Registrant meets the conditions set
forth in General Instruction H(1) (a) and (b) of Form 10-Q and is therefore
filing this</font></font>
<br><font face="Arial"><font size=-2>form with a reduced disclosure format.</font></font>
<br>
<br>
<p>
<hr ALIGN="RIGHT" SIZE=4>
<center>
<p><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>INDEX TO QUARTERLY REPORT ON FORM
10-Q</font></font></u>
<br><u><font face="Arial"><font size=-1>13 WEEKS ENDED APRIL 1, 2000</font></font></u></center>
<p><br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<table COLS=2 WIDTH="100%" >
<tr>
<td><font face="Arial">Part I - Financial Information</font></td>
<td>
<div align=right><b>Page</b></div>
</td>
</tr>
</TABLE>
<table COLS=1 WIDTH="100%" >
<tr>
<td><font face="Arial"><font size=-1>Item 1. Financial Statements</font></font></td>
</tr>
</TABLE>
<table COLS=2 WIDTH="100%" >
<tr>
<td><font face="Arial"><font size=-1>
Statements of Income (unaudited) -</font></font>
<br><font face="Arial"><font size=-1>
13 Weeks Ended April 1, 2000 and April 3, 1999</font></font></td>
<td>
<div align=right><font face="Arial"><font size=-1>1</font></font></div>
</td>
</tr>
<tr>
<td>
<br><font face="Arial"><font size=-1>
Statements of Financial Position -</font></font>
<br><font face="Arial"><font size=-1>
April 1, 2000 (unaudited), April 3, 1999 </font></font>
<br><font face="Arial"><font size=-1>
(unaudited), January 1, 2000 </font></font></td>
<td>
<div align=right><font face="Arial"><font size=-1>2</font></font></div>
</td>
</tr>
<tr>
<td>
<br><font face="Arial"><font size=-1>
Statements of Cash Flows (unaudited) -</font></font>
<br><font face="Arial"><font size=-1>
13 Weeks Ended April 1, 2000 and April 3, 1999</font></font></td>
<td>
<div align=right><font face="Arial"><font size=-1> 3</font></font></div>
</td>
</tr>
<tr>
<td>
<br><font face="Arial"><font size=-1>
Notes to Financial Statements (unaudited) </font></font></td>
<td>
<div align=right><font face="Arial"><font size=-1>4</font></font></div>
</td>
</tr>
<tr>
<td>
<br><font face="Arial"><font size=-1>Item 2. Management's Discussion and
Analysis of</font></font>
<br><font face="Arial"><font size=-1>
Financial Condition and Results of Operations </font></font></td>
<td>
<div align=right>5</div>
</td>
</tr>
<tr>
<td>
<br><font face="Arial">Part II - Other Information</font></td>
<td></td>
</tr>
<tr>
<td>
<br><font face="Arial"><font size=-1>Item 6. Exhibits
and Reports on Form 8-K </font></font></td>
<td>
<div align=right>6</div>
</td>
</tr>
</TABLE>
<br>
<p>
<hr WIDTH="100%">
<br>
<br>
<br>
<br>
<center>
<p><font face="Arial"><font size=-1>-1-</font></font>
<p><u><font face="Arial"><font size=-1>PART I. FINANCIAL INFORMATION</font></font></u>
<br><u><font face="Arial"><font size=-1>ITEM I. FINANCIAL STATEMENTS</font></font></u>
<br><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>STATEMENTS OF INCOME</font></font></u>
<br><font face="Arial"><font size=-1>(Unaudited)</font></font></center>
<p><br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="644" >
<tr>
<td VALIGN=TOP ROWSPAN="2" WIDTH="37%" HEIGHT="13"><font face="Arial"><font size=-1> </font></font></td>
<td VALIGN=TOP COLSPAN="3" WIDTH="25%" HEIGHT="13">
<center><font face="Arial"><font size=-1> <u>13 Weeks Ended</u></font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" ROWSPAN="2" WIDTH="13%" HEIGHT="13"></td>
<td VALIGN=TOP COLSPAN="5" WIDTH="25%" HEIGHT="13"></td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="3" WIDTH="25%" HEIGHT="17"></td>
<td VALIGN=TOP COLSPAN="5" WIDTH="25%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%">
<center><font face="Arial"><font size=-1> April 1,</font></font></center>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<center><font face="Arial"><font size=-1> April
3,</font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="13%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="18%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP WIDTH="6%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><i><font face="Arial"><font size=-1>(thousands,
except ratios)</font></font></i></td>
<td VALIGN=BOTTOM WIDTH="11%"><font face="Arial"><font size=-1> <u>
2000</u></font></font></td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<center><font face="Arial"><font size=-1> <u>1999</u></font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="13%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="18%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP WIDTH="6%"> </td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="11"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%" HEIGHT="22"><font face="Arial"><font size=-1>Revenues</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="22"></td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="22"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="22"></td>
<td VALIGN=TOP WIDTH="7%" HEIGHT="22"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%" HEIGHT="22"></td>
<td VALIGN=TOP WIDTH="1%" HEIGHT="22"></td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%" HEIGHT="22"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>
Earnings on notes of Sears</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>$ 4,809</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>$ 7,106</font></font></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>Expenses</font></font></td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%" HEIGHT="35"><font face="Arial"><font size=-1>
Interest and related expenses</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="35">
<div align=right><font face="Arial"><font size=-1>4,773</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="35"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="35">
<div align=right><font face="Arial"><font size=-1>7,058</font></font></div>
</td>
<td VALIGN=TOP WIDTH="7%" HEIGHT="35"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%" HEIGHT="35"></td>
<td VALIGN=TOP WIDTH="1%" HEIGHT="35"></td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%" HEIGHT="35"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1> Operating
expenses</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><u><font face="Arial"><font size=-1>
12</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><u><font face="Arial"><font size=-1>
13</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>
Total expenses</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>4,785</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>7,071</font></font></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>Income before
income taxes</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>24</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1> 35</font></font></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>Income taxes</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><u><font face="Arial"><font size=-1>
8</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><u><font face="Arial"><font size=-1>
12</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>Net income</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>$ 16</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>$ 23</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="7%"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"><font face="Arial"><font size=-1>Ratio of earnings
to fixed charges</font></font></td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>1.005</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%">
<div align=right><font face="Arial"><font size=-1>1.005</font></font></div>
</td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="37%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP WIDTH="11%"> </td>
<td VALIGN=TOP WIDTH="7%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="14%"> </td>
<td VALIGN=TOP WIDTH="1%"> </td>
<td VALIGN=TOP COLSPAN="3" WIDTH="16%"> </td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="11"><font face="Arial"><font size=-1>See notes
to financial statements.</font></font></td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="11"> </td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="11"> </td>
</tr>
</TABLE>
<br>
<p>
<hr WIDTH="100%">
<center>
<p><font face="Arial"><font size=-1>-2-</font></font>
<br>
<br>
<p><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>STATEMENTS OF FINANCIAL POSITION</font></font></u></center>
<p><br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="633" >
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="13"></td>
<td VALIGN=TOP COLSPAN="6" WIDTH="45%" HEIGHT="13"><font face="Arial"><font size=-1> <u>
(Unaudited) </u></font></font></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<center><font face="Arial"><font size=-1>April 1,</font></font></center>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=CENTER WIDTH="11%" HEIGHT="16">
<center><font face="Arial"><font size=-1>April 3,</font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<center><font face="Arial"><font size=-1>January 1,</font></font></center>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><i><font face="Arial"><font size=-1>(thousands,
except share data)</font></font></i></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial"><font size=-1>2000</font></font></u></center>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=CENTER WIDTH="11%" HEIGHT="16">
<center><u><font face="Arial"><font size=-1>1999</font></font></u></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<center><u><font face="Arial"><font size=-1>2000</font></font></u></center>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=CENTER COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>Assets</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Cash and cash equivalents</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1> $
- - </font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$
58 </font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"><font face="Arial"><font size=-1>$
- -</font></font></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Notes of Sears</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>228,802</font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>304,290</font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>223,993</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial,Helvetica"><font size=-1>
Interest receivable and other assets</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>
391</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>
528</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>
420</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Total assets</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$ 229,193</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$ 304,876</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$ 224,413</font></font>
<hr WIDTH="100%"></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>Liabilities</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Medium-term notes</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$ 213,025</font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$
298,175</font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$
213,025</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Interest payable and other liabilities</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>10,826</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>1,423</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>6,062</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Total liabilities</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>223,851</font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>299,598</font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>219,087</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>Stockholder's
Equity</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Common stock, par value $1.00 per share, 1,000 </font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Shares authorized and outstanding</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>1</font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>1</font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>1</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Capital in excess of par value </font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>7</font></font></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>7</font></font></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>7</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Retained income </font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,334</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,270</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,318</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Total stockholder's equity</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,342</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,278</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>5,326</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>
Total liabilities and stockholder's equity</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$ 229,193</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$
304,876</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16">
<div align=right><font face="Arial"><font size=-1>$
224,413</font></font>
<hr WIDTH="100%"></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"><font face="Arial"><font size=-1>See
notes to financial statements.</font></font></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="55%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="11%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="5%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="12%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="16"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="16"></td>
</tr>
</TABLE>
<br>
<br>
<br>
<br>
<center>
<p>
<hr WIDTH="100%">
<br><font face="Arial"><font size=-1>-3-</font></font>
<br>
<p><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>STATEMENTS OF CASH FLOWS</font></font></u>
<br><font face="Arial"><font size=-1>(Unaudited)</font></font></center>
<p><br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="611" >
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="21"></td>
<td VALIGN=TOP COLSPAN="5" WIDTH="33%" HEIGHT="21">
<br>
<br>
<br>
<br>
<center>
<p><font face="Arial"><font size=-1> <u> 13
Weeks Ended </u></font></font></center>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP WIDTH="15%">
<center><font face="Arial"><font size=-1>
April 1,</font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<center><font face="Arial"><font size=-1>
April 3,</font></font></center>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><i><font face="Arial"><font size=-1>(thousands)</font></font></i></td>
<td VALIGN=TOP WIDTH="15%">
<center><font face="Arial"><font size=-1> <u>
2000</u></font></font></center>
</td>
<td VALIGN=TOP COLSPAN="2" WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<center><font face="Arial"><font size=-1> <u>
1999</u></font></font></center>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="28"><font face="Arial"><font size=-1>CASH
FLOWS FROM OPERATING ACTIVITIES:</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="28"></td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="28"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="28"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="10"><font face="Arial"><font size=-1>Net
income</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="10">
<div align=right><font face="Arial"><font size=-1>$
16 </font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="10"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="10">
<div align=right><font face="Arial"><font size=-1>$
23</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>Adjustments
to reconcile net income to net cash provided by</font></font>
<br><font face="Arial"><font size=-1>(used in) operating activities:</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>
Net change in interest receivable and other assets </font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="16"><font face="Arial"><font size=-1>
and interest payable and other liabilities</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>
4,793</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="16"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="16">
<div align=right><u><font face="Arial"><font size=-1>
(7,361)</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>
Net cash provided by (used in) operating activities</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
4,809</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
(7,338)</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>CASH FLOWS
FROM INVESTING ACTIVITIES:</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="18"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="18"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="18"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%" HEIGHT="18"><font face="Arial"><font size=-1>(Increase)
decrease in notes of Sears</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="18">
<div align=right><u><font face="Arial"><font size=-1>
(4,809)</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%" HEIGHT="18"></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%" HEIGHT="18">
<div align=right><u><font face="Arial"><font size=-1>
41,668</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>
Net cash provided by (used in) investing activities</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
(4,809)</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
41,668</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>CASH FLOWS
FROM FINANCING ACTIVITIES:</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>Repayments
of medium-term not</font><font size=-2>es</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
- - </font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1> (34,330)</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>
Net cash used in financing activities</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
- - </font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1> (34,330)</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>Net increase
in cash and cash</font><font size=-2> </font><font size=-1>equivalents</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><font face="Arial"><font size=-1>-</font></font></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><font face="Arial"><font size=-1>-</font></font></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>Cash and cash
equivalents at beginning of period</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
- -</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><u><font face="Arial"><font size=-1>
58</font></font></u></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>Cash and cash
equivalents at end of period</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><font face="Arial"><font size=-1>$
- -</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%">
<div align=right><font face="Arial"><font size=-1>$
58</font></font>
<hr WIDTH="100%"></div>
</td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="67%"><font face="Arial"><font size=-1>See notes to
financial statements.</font></font></td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
<td VALIGN=TOP WIDTH="3%"> </td>
<td VALIGN=TOP COLSPAN="2" WIDTH="15%"> </td>
</tr>
</TABLE>
<center>
<p>
<hr WIDTH="100%">
<br><font face="Arial"><font size=-1>-4-</font></font>
<br>
<p><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>NOTES TO FINANCIAL STATEMENTS</font></font></u>
<br><font face="Arial"><font size=-1>(Unaudited)</font></font></center>
<p><br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<p><font face="Arial">Notes to Financial Statements</font>
<p><font face="Arial"><font size=-1>Sears DC Corp. ("SDC"), a wholly-owned
subsidiary of Sears, Roebuck and Co. ("Sears"), was formed to</font></font>
<br><font face="Arial"><font size=-1>borrow in domestic and foreign debt
markets and lend the proceeds of such borrowings to Sears and</font></font>
<br><font face="Arial"><font size=-1>certain direct and indirect subsidiaries
of Sears in exchange for their unsecured notes. SDC raised funds</font></font>
<br><font face="Arial"><font size=-1>through the sale of its medium-term
notes and direct placement of commercial paper with corporate and</font></font>
<br><font face="Arial"><font size=-1>institutional investors. The only
current outstanding debt of SDC is two series of medium-term notes.</font></font>
<br><font face="Arial"><font size=-1>SDC does not plan to issue additional
debt.</font></font>
<p><font face="Arial"><font size=-1>Under an agreement between SDC and
Sears, the interest rate paid by Sears on its unsecured notes is</font></font>
<br><font face="Arial"><font size=-1>designed to produce earnings sufficient
to cover SDC's fixed charges at least 1.005 times. Required</font></font>
<br><font face="Arial"><font size=-1>payments of principal and interest
to SDC under the Sears borrowing agreement are intended to be</font></font>
<br><font face="Arial"><font size=-1>sufficient to allow SDC to make timely
payments of principal and interest to the holders of its securities.</font></font>
<p><font face="Arial"><font size=-1>Certain information and footnote disclosures
normally included in financial statements prepared in</font></font>
<br><font face="Arial"><font size=-1>accordance with generally accepted
accounting principles have been condensed or omitted. The</font></font>
<br><font face="Arial"><font size=-1>significant accounting policies used
in the presentation of these financial statements are consistent with</font></font>
<br><font face="Arial"><font size=-1>the summary of significant accounting
policies set forth in SDC's Annual Report on Form 10-K for the fiscal</font></font>
<br><font face="Arial"><font size=-1>year ended January 1, 2000, and these
financial statements should be read in conjunction with the</font></font>
<br><font face="Arial"><font size=-1>financial statements and notes found
therein. The interim financial statements reflect all adjustments</font></font>
<br><font face="Arial"><font size=-1>(consisting only of normal recurring
accruals) which are, in the opinion of management, necessary for a</font></font>
<br><font face="Arial"><font size=-1>fair statement of the results for
the interim periods presented. The results of operations for the interim</font></font>
<br><font face="Arial"><font size=-1>periods should not be considered indicative
of the results to be expected for the full year.</font></font>
<p><font face="Arial"><font size=-1>The medium-term notes are not redeemable
except for notes having a stated maturity at the time of issue</font></font>
<br><font face="Arial"><font size=-1>of more than seven years which may
be redeemed under certain circumstances in the event of declining</font></font>
<br><font face="Arial"><font size=-1>Discover Card receivables of Sears
former subsidiary, Dean Witter, which is now a part of Morgan Stanley</font></font>
<br><font face="Arial"><font size=-1>Dean Witter & Co. Selected details
of SDC's borrowings are shown below.</font></font>
<br>
<br>
<br>
<br>
<table BORDER=0 CELLSPACING=5 CELLPADDING=0 WIDTH="88%" >
<tr>
<td>(<i>millions</i>)</td>
<td>
<center>April 1,
<br><u>2000</u></center>
</td>
<td></td>
<td>
<center>April 3,
<br><u>1999</u></center>
</td>
</tr>
<tr>
<td></td>
<td></td>
<td></td>
<td></td>
</tr>
<tr>
<td>8.52% to 9.26% medium-term notes due through 2012</td>
<td>$ 213.0
<hr WIDTH="100%"></td>
<td></td>
<td>$ 298.2
<hr WIDTH="100%"></td>
</tr>
</TABLE>
<br>
<br>
<p><font face="Arial"><font size=-1>At April 1, 2000, medium-term note
maturities for the remainder of 2000, the next four years, and thereafter
are as follows:</font></font>
<br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="530" >
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP COLSPAN="2" WIDTH="25%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>2000</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"><font face="Arial"><font size=-1>$</font></font></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><font face="Arial"><font size=-1>-</font></font></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>2001</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><font face="Arial"><font size=-1>135.5</font></font></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>2002</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><font face="Arial"><font size=-1>24.7</font></font></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>2003</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><font face="Arial"><font size=-1>9.0</font></font></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>2004</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><font face="Arial"><font size=-1>-</font></font></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="17"><font face="Arial"><font size=-1>Thereafter</font></font></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17">
<div align=right><u><font face="Arial"><font size=-1>
43.8</font></font></u></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="17"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="17"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="3"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="3"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"><font face="Arial"><font size=-1>$</font></font></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18">
<div align=right><font face="Arial"><font size=-1>213.0</font></font>
<hr WIDTH="100%"></div>
</td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="18"></td>
</tr>
<tr>
<td VALIGN=TOP WIDTH="13%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="16%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="9%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="2%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="12%" HEIGHT="18"></td>
<td VALIGN=TOP WIDTH="4%" HEIGHT="18"></td>
</tr>
</TABLE>
<br>
<p>
<hr WIDTH="100%">
<center>
<p><font face="Arial"><font size=-1>-5-</font></font>
<br>
<br>
<p><u><font face="Arial"><font size=-1>ITEM 2. MANAGEMENT'S DISCUSSION
AND ANALYSIS</font></font></u>
<br><u><font face="Arial"><font size=-1>OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS</font></font></u>
<br><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>13 WEEKS ENDED APRIL 1, 2000 AND
APRIL 3, 1999</font></font></u></center>
<p><br>
<br>
<br>
<br>
<p><u><font face="Arial"><font size=-1>Financial Condition:</font></font></u>
<p><font face="Arial"><font size=-1>SDC has invested funds in the promissory
notes of Sears, which pay interest sufficient to cover SDC's</font></font>
<br><font face="Arial"><font size=-1>fixed charges at least 1.005 times,
and in highly liquid short-term investments.</font></font>
<p><font face="Arial"><font size=-1>The $213.0 million in outstanding medium-term
notes as of April 1, 2000 are not redeemable prior to their</font></font>
<br><font face="Arial"><font size=-1>stated maturity except for notes having
a stated maturity at the time of issue of more than seven years</font></font>
<br><font face="Arial"><font size=-1>which may be redeemed under certain
circumstances in the event of declining Discover Card receivables</font></font>
<br><font face="Arial"><font size=-1>of Sears former subsidiary, Dean Witter,
which is now a part of Morgan Stanley Dean Witter & Co.</font></font>
<p><font face="Arial"><font size=-1>Medium-term notes outstanding decreased
28.6% to $213.0 million as of April 1, 2000 from $298.2 million</font></font>
<br><font face="Arial"><font size=-1>as of April 3, 1999. The decrease
in the notes resulted from the payment on certain notes that reached</font></font>
<br><font face="Arial"><font size=-1>their maturity date. The corresponding
decrease in the notes of Sears is due to the need to fund the</font></font>
<br><font face="Arial"><font size=-1>payments on the medium-term notes
outstanding.</font></font>
<p><u><font face="Arial"><font size=-1>Results of Operations:</font></font></u>
<p><font face="Arial"><font size=-1>Revenues decreased 32.4% from $7.1
million to $4.8 million for the 13 weeks ended April 1, 2000, and</font></font>
<br><font face="Arial"><font size=-1>April 3, 1999, respectively. The decrease
is a result of the reduction in the average amount of notes of</font></font>
<br><font face="Arial"><font size=-1>Sears outstanding during 2000 compared
to 1999. The decrease in the average amount of medium-term</font></font>
<br><font face="Arial"><font size=-1>notes outstanding led to interest
and related expenses decreasing 32.4% from $7.1 million to $4.8 million</font></font>
<br><font face="Arial"><font size=-1>for the 13 weeks ended April 1, 2000,
and April 3, 1999 respectively. Earnings covered fixed charges</font></font>
<br><font face="Arial"><font size=-1>1.005 times for the 13 weeks ended
April 1, 2000 and April 3, 1999 respectively.</font></font>
<br>
<p><u><font face="Arial"><font size=-1>Cautionary Statement Regarding Forward-Looking
Information:</font></font></u>
<p><font face="Arial"><font size=-1>Certain statements made in this Report
on Form 10-Q are forward-looking and are made in reliance on the</font></font>
<br><font face="Arial"><font size=-1>safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. As such they involve risks</font></font>
<br><font face="Arial"><font size=-1>and uncertainties that could cause
actual results to differ materially. These statements are based on a</font></font>
<br><font face="Arial"><font size=-1>number of assumptions about a variety
of factors, including the ability of Sears to perform under the</font></font>
<br><font face="Arial"><font size=-1>agreements described herein and general
economic conditions (such as interest rates). While SDC</font></font>
<br><font face="Arial"><font size=-1>believes that these assumptions are
reasonable, SDC cautions that it is impossible to predict the impact of</font></font>
<br><font face="Arial"><font size=-1>certain facts that could cause actual
results to differ from expected results.</font></font>
<br>
<br>
<br>
<p>
<hr WIDTH="100%">
<center>
<p><font face="Arial"><font size=-1>-6-</font></font></center>
<p><br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<p><font face="Arial"><font size=+0>PART II. OTHER INFORMATION</font></font>
<br>
<br>
<dir>
<dir><font face="Arial"><font size=-1>Item 6.
Exhibits and Reports on Form 8-K.</font></font>
<p><font face="Arial"><font size=-1>
(a) Exhibits.</font></font>
<p><font face="Arial"><font size=-1>
An Exhibit Index has been filed as part of this Report on Page E-1.</font></font>
<p><font face="Arial"><font size=-1>
(b) Reports on Form 8-K.</font></font>
<p><font face="Arial"><font size=-1>
None</font></font>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<p>
<hr WIDTH="100%"></dir>
</dir>
<center><font face="Arial"><font size=-1>-7-</font></font></center>
<p><br>
<br>
<br>
<br>
<br>
<br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 WIDTH="91%" >
<tr>
<td>
<center><font face="Arial"><font size=-1>
SIGNATURE</font></font></center>
</td>
</tr>
</TABLE>
<dir>
<dir>
<dir>
<dir>
<dir>
<dir>
<dir>
<dir>
<dir>
<dir> </dir>
</dir>
</dir>
</dir>
</dir>
</dir>
</dir>
</dir>
</dir>
<font face="Arial"><font size=-1>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.</font></font>
<p>
Sears DC Corp.
<br>
(Registrant)
<br>
<p>May 12, 2000
By: ROBERT J. PHELAN
<br>
Robert J. Phelan
<br>
Vice President and Controller
<p>
(Principal Accounting Officer
<br>
and Authorized Officer of Registrant)</dir>
<br>
<br>
<br>
<br>
<br>
<br>
<br>
<p>
<hr WIDTH="100%">
<br>
<br>
<br>
<br>
<br>
<br>
<center>
<p><font face="Arial"><font size=+0>E-1</font></font>
<br>
<p><u><font face="Arial"><font size=-1>EXHIBIT INDEX</font></font></u>
<br><u><font face="Arial"><font size=-1>SEARS DC CORP.</font></font></u>
<br><u><font face="Arial"><font size=-1>13 WEEKS ENDED APRIL 1, 2000</font></font></u></center>
<p><br>
<table BORDER=0 CELLSPACING=0 CELLPADDING=0 COLS=2 WIDTH="100%" >
<tr>
<td>Exhibit No.</td>
<td></td>
</tr>
</TABLE>
<br>
<table CELLSPACING=0 CELLPADDING=0 COLS=2 WIDTH="100%" >
<tr>
<td VALIGN=TOP WIDTH="5%">3.1</td>
<td>Certificate of Incorporation of Discover Credit Corp. dated January
9, 1987 (Incorporated
<br>by reference to Exhibit 3(a) to Form 10 of the Registrant ("Form 10")*).</td>
</tr>
<tr>
<td>3.2</td>
<td>
<br>Amendment to Certificate of Incorporation of Discover Credit Corp.
dated April 9, 1987
<br>(Incorporated by reference to Exhibit 3(b) to Form 10*).</td>
</tr>
<tr>
<td VALIGN=TOP>
<br>3.3</td>
<td VALIGN=TOP>
<br>Certificate of Amendment of Certificate of Incorporation dated May
21, 1993 to change the name of Discover Credit Corp. to Sears DC Corp.
(Incorporated by reference to Exhibit 3(c) to Form 10-K of the Registrant
for the fiscal year ended December 28, 1996*).</td>
</tr>
<tr>
<td VALIGN=TOP>
<br>3.4</td>
<td>
<br>By-laws of Sears DC Corp. as amended to February 6, 1996 (Incorporated
by reference to
<br>Exhibit 3(c) to Form 10-K of the Registrant for the fiscal year ended
December 30, 1995*).</td>
</tr>
<tr>
<td VALIGN=TOP>
<br>4</td>
<td>
<br>Registrant hereby agrees to furnish the Securities and Exchange Commission,
upon
<br>request, with the instruments defining the rights of holders of long-term
debt of the
<br>Registrant with respect to which the total amount of securities authorized
does not exceed
<br>10% of the total assets of the Registrant.</td>
</tr>
<tr>
<td>
<br>27</td>
<td>
<br>Financial Data Schedule**</td>
</tr>
</TABLE>
<dir>
<dir>
<dir>
<dir> </dir>
</dir>
</dir>
<font face="Arial"><font size=-1>_____________________</font></font>
<br>*Sec File No. 0-17955
<br>**Filed herewith</dir>
</body>
</HTML>
<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> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-30-2000
<PERIOD-END> APR-01-2000
<CASH> 0
<SECURITIES> 0<F1>
<RECEIVABLES> 228,802
<ALLOWANCES> 0<F1>
<INVENTORY> 0<F1>
<CURRENT-ASSETS> 0<F1>
<PP&E> 0<F1>
<DEPRECIATION> 0<F1>
<TOTAL-ASSETS> 229,193
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 213,025
0<F1>
0<F1>
<COMMON> 1
<OTHER-SE> 5,341
<TOTAL-LIABILITY-AND-EQUITY> 229,193
<SALES> 0<F1>
<TOTAL-REVENUES> 4,809
<CGS> 0<F1>
<TOTAL-COSTS> 0<F1>
<OTHER-EXPENSES> 12
<LOSS-PROVISION> 0<F1>
<INTEREST-EXPENSE> 4,773
<INCOME-PRETAX> 24
<INCOME-TAX> 8
<INCOME-CONTINUING> 0<F1>
<DISCONTINUED> 0<F1>
<EXTRAORDINARY> 0<F1>
<CHANGES> 0<F1>
<NET-INCOME> 16
<EPS-BASIC> 0<F1>
<EPS-DILUTED> 0<F1>
<FN>
<F1>NOT APPLICABLE
</FN>
</TABLE>
