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 MARCH 31, 1994
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-4040
SEARS ROEBUCK ACCEPTANCE CORP.
(Exact name of registrant as specified in its charter)
Delaware 51-0080535
(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: 302/888-3114
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 April 30, 1994, the Registrant had 350,000 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.
SEARS ROEBUCK ACCEPTANCE CORP.
INDEX TO QUARTERLY REPORT ON FORM 10-Q
MARCH 31, 1994
Page No.
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statements of Financial Position
March 31, 1994 and 1993 (unaudited)
and December 31, 1993 1
Statements of Income
Three Months ended
March 31, 1994 and 1993 (unaudited) 2
Statements of Cash Flows
Three Months ended March 31, 1994
and 1993 (unaudited) 3
Notes to Financial Statements (unaudited) 4
Independent Accountants' Report 5
Item 2. Analysis of Results of Operations 6
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 7
SEARS ROEBUCK ACCEPTANCE CORP.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL POSITION
millions March 31, December 31,
1994 1993 1993*
--------- --------- ---------
(unaudited)
Assets
Notes of Sears $ 3,901.0 $ 6,333.0 $ 3,403.9
Customer receivable balances
purchased from Sears 87.1 946.9 88.0
Cash and invested cash 676.2 672.5 650.7
Other assets 3.0 10.3 3.2
--------- --------- ---------
Total assets $ 4,667.3 $ 7,962.7 $ 4,145.8
========= ========= =========
Liabilities
Commercial paper (net of
unamortized discount of
$7.5, $16.3 and $5.1) $ 2,914.3 $ 4,021.8 $ 2,475.0
Agreements with bank
trust departments 106.8 418.9 139.8
Zero coupon notes 392.3 344.0 379.8
Term notes 100.0 -- --
Accrued interest and
other liabilities 9.0 24.7 10.7
Deferred federal income taxes 1.0 8.3 3.0
--------- --------- ---------
Total liabilities 3,523.4 4,817.7 3,008.3
--------- --------- ---------
Stockholder's Equity
Capital stock, par value $100 per share:
500,000 shares authorized
350,000 shares issued and
outstanding 35.0 35.0 35.0
Capital in excess of par value -- 330.2 --
Retained income 1,108.9 2,779.8 1,102.5
--------- --------- ---------
Total stockholder's equity 1,143.9 3,145.0 1,137.5
--------- --------- ---------
Total liabilities and
stockholder's equity $ 4,667.3 $ 7,962.7 $ 4,145.8
========= ========= =========
*The Statement of Financial Position at December 31, 1993 has
been taken from the audited financial statements at that date.
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(unaudited)
millions Three Months Ended
March 31,
1994 1993
------- -------
Revenues
Earnings on notes of Sears $ 45.9 $ 94.4
Earnings on customer receivable
balances purchased from Sears 1.7 29.3
Earnings on invested cash 3.5 9.3
Other revenues -- 0.2
------- -------
Total revenues 51.1 133.2
------- -------
Expenses
Interest and amortization of debt
discount and expense 40.3 96.7
Provision for credit losses -- 9.8
Operating expenses 0.8 1.2
------- -------
Total expenses 41.1 107.7
------- -------
Income before income taxes 10.0 25.5
Income taxes 3.6 8.7
------- -------
Net Income $ 6.4 $ 16.8
======= =======
Ratio of earnings to fixed charges 1.25 1.26
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
millions Three Months Ended
March 31,
1994 1993
--------- ---------
Cash flows from operating activities:
Net income $ 6.4 $ 16.8
Adjustments to reconcile net income
to net cash provided by operating
activities:
Earnings amortization on retail
customer receivable balances discount -- (25.3)
Provision for credit losses -- 9.8
Depreciation, amortization and other
noncash items 12.6 13.6
Decrease in deferred federal income
taxes (2.0) (1.8)
Increase in other assets -- (0.2)
Decrease in other liabilities (1.6) (6.8)
--------- ---------
Net cash provided by operating activities 15.4 6.1
Cash flows from investing activities:
(Increase) decrease in notes of Sears (497.1) 4,160.6
Decrease in customer receivable balances
purchased from Sears 0.9 31.9
--------- ---------
Net cash (used in) provided by
investing activities (496.2) 4,192.5
Cash flows from financing activities:
Increase (decrease) in commercial paper,
primarily 90 days or less 439.3 (4,493.5)
(Decrease) increase in agreements with
bank trust departments (33.0) 20.9
Proceeds from issuance of term notes 100.0 --
--------- ---------
Net cash provided by (used in)
financing activities 506.3 (4,472.6)
--------- ---------
Net increase (decrease) in cash and
invested cash 25.5 (274.0)
Cash and invested cash at beginning
of period 650.7 946.5
--------- ---------
Cash and invested cash at end of period $ 676.2 $ 672.5
========= =========
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
NOTES TO FINANCIAL STATEMENTS
(unaudited)
1. Significant Accounting Policies
The unaudited interim financial statements of Sears Roebuck
Acceptance Corp. (SRAC), a wholly-owned subsidiary of Sears,
Roebuck and Co. (Sears), reflect all adjustments (consisting only
of normal recurring accruals) which are, in the opinion of
management, necessary for a fair statement of the results for the
interim periods presented.
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 SRAC's Annual Report
on Form 10-K for the year ended December 31, 1993, 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.
Certain reclassifications have been made in the Statements of
Financial Position, Income and Cash Flows to conform to current
accounting classifications.
2. Credit Facilities as of March 31, 1994
Contractual Credit Facilities Expires (millions)
- ---------------------------------------------------------------
Credit Agreement dated as of
August 25, 1993 August, 1997 $3,000
Credit Agreement dated as of
August 25, 1993 August, 1994 1,000
Credit Agreement dated as of
October 1, 1993 September, 1994 200
------
Total compensated credit facilities $4,200
======
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholder of
Sears Roebuck Acceptance Corp.:
We have reviewed the accompanying Statements of Financial
Position of Sears Roebuck Acceptance Corp. (a wholly owned
subsidiary of Sears, Roebuck and Co.) as of March 31, 1994 and
1993, and the related Statements of Income for the three-month
periods then ended. These financial statements are the
responsibility of the Corporation's management.
We conducted our reviews in accordance with standards established
by the American Institute of Certified Public Accountants. A
review of interim financial information consists principally of
applying analytical procedures to financial data and of making
inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing
standards, the objective of which is the expression of an opinion
regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material
modifications that should be made to such financial statements
for them to be in conformity with generally accepted accounting
principles.
We have previously audited, in accordance with generally accepted
auditing standards, the Statement of Financial Position of Sears
Roebuck Acceptance Corp. as of December 31, 1993, and the related
Statements of Income and Retained Income and Cash Flows for the
year then ended (not presented herein); and in our report dated
February 11, 1994, we expressed an unqualified opinion on those
financial statements. In our opinion, the information set forth
in the accompanying Statement of Financial Position as of
December 31, 1993 is fairly stated, in all material respects, in
relation to the Statement of Financial Position from which it has
been derived.
April 14, 1994
Deloitte & Touche
Philadelphia, Pennsylvania
SEARS ROEBUCK ACCEPTANCE CORP.
ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS
During the first quarter of 1994, Sears Roebuck Acceptance
Corp.'s revenues declined 61.6% to $51.1 million from $133.2
million in the comparable 1993 period. SRAC's revenues are
derived from earnings on its investments in the notes and
customer receivable balances of Sears, Roebuck and Co. and
invested cash. The decrease in revenue is primarily attributable
to a $6.8 billion or 60.2% reduction in SRAC's average earning
assets compared to the first quarter of 1993 as a result of Sears
strategic repositioning. Additionally, rates on SRAC's earning
assets decreased due to a reduction in short-term rates.
SRAC's interest and related expenses declined 58.3% to $40.3
million from $96.7 million for the first quarter of 1993. SRAC's
cost of short-term funds averaged 3.45%, a 53 basis point
reduction from 3.98% for the first three months of last year.
SRAC's short-term borrowings averaged $3.0 billion, a 61.5%
decrease from the 1993 first quarter average of $7.8 billion.
Commercial paper outstanding was $2.9 billion at March 31, 1994.
SRAC anticipates that commercial paper borrowings will increase
during 1994 as Sears continues to refinance a portion of its
maturing long-term borrowings with commercial paper. In the
first quarter, SRAC borrowed $100 million on a two-year term
note. The rate on this note at March 31, 1994, was 4.66%.
SRAC's net income decreased 61.9% for the first quarter of
1994 to $6.4 million from $16.8 million in 1993. SRAC's ratio of
earnings to fixed charges for the first quarter of 1994 and 1993
were 1.25 and 1.26, respectively.
SEARS ROEBUCK ACCEPTANCE CORP.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits: None
(b) Reports on Form 8-K:
There were no reports on Form 8-K
filed during the three months
ended March 31, 1994.
SEARS ROEBUCK ACCEPTANCE CORP.
SIGNATURE
Pursuant to the requirements of the
Securities and 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 ACCEPTANCE CORP.
(Registrant)
By: /s/ Keith E. Trost
------------------
Keith E. Trost
Vice President-
Finance and Administration
(principal financial officer
authorized officer of Registrant)
May 13, 1994
