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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, 1995
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, 1995, 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, 1995
Page No.
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statements of Financial Position
March 31, 1995 and 1994
and December 31, 1994 (unaudited) 1
Statements of Income
Three Months ended
March 31, 1995 and 1994 (unaudited) 2
Statements of Cash Flows
Three Months ended March 31, 1995
and 1994 (unaudited) 3
Notes to Financial Statements (unaudited) 4,5
Independent Certified Public Accountants'
Review Report 6
Item 2. Analysis of Results of Operations 7
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 8
SEARS ROEBUCK ACCEPTANCE CORP.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL POSITION
(unaudited)
millions March 31, December 31,
1995 1994 1994
--------- --------- ---------
Assets
Notes of Sears $ 6,072.0 $ 3,901.0 $ 6,842.5
Customer receivable balances
purchased from Sears 82.6 87.1 81.5
Cash and invested cash 277.3 676.2 102.1
Other assets 3.4 3.0 5.1
--------- --------- ---------
Total assets $ 6,435.3 $ 4,667.3 $ 7,031.2
========= ========= =========
Liabilities
Commercial paper (net of
unamortized discount of
$32.0, $7.5 and $22.3) $ 4,221.4 $ 2,914.3 $ 4,912.9
Agreements with bank
trust departments 139.4 106.8 87.4
Zero coupon notes -- 392.3 --
Intermediate-term loans 870.0 100.0 845.0
Accrued interest and
other liabilities 13.1 9.0 8.2
Deferred federal income taxes -- 1.0 --
--------- --------- ---------
Total liabilities 5,243.9 3,523.4 5,853.5
--------- --------- ---------
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 -- -- --
Retained income 1,156.4 1,108.9 1,142.7
--------- --------- ---------
Total stockholder's equity 1,191.4 1,143.9 1,177.7
--------- --------- ---------
Total liabilities and
stockholder's equity $ 6,435.3 $ 4,667.3 $ 7,031.2
========= ========= =========
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(unaudited)
millions Three Months Ended
March 31,
1995 1994
------- -------
Revenues
Earnings on notes of Sears $ 99.0 $ 45.9
Earnings on customer receivable
balances purchased from Sears 1.7 1.7
Earnings on invested cash 5.1 3.5
------- -------
Total revenues 105.8 51.1
------- -------
Expenses
Interest and amortization of debt
discount and expense 84.2 40.3
Operating expenses 0.6 0.8
------- -------
Total expenses 84.8 41.1
------- -------
Income before income taxes 21.0 10.0
Income taxes 7.3 3.6
------- -------
Net Income $ 13.7 $ 6.4
======= =======
Ratio of earnings to fixed charges 1.25 1.25
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
millions Three Months Ended
March 31,
1995 1994
--------- ---------
Cash flows from operating activities:
Net income $ 13.7 $ 6.4
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and other
noncash items 0.1 12.6
Decrease in deferred federal income
taxes -- (2.0)
Decrease in other assets 1.6 --
Increase (decrease) in other liabilities 4.9 (1.6)
--------- ---------
Net cash provided by operating activities 20.3 15.4
Cash flows from investing activities:
Decrease(increase) in notes of Sears 770.5 (497.1)
(Increase) decrease in receivable balances
purchased from Sears (1.1) 0.9
--------- ---------
Net cash provided by (used in)
investing activities 769.4 (496.2)
Cash flows from financing activities:
(Decrease) increase in commercial paper,
primarily 90 days or less (691.5) 439.3
Increase (decrease) in agreements with
bank trust departments 52.0 (33.0)
Proceeds from issuance of
intermediate-term loans 25.0 100.0
--------- ---------
Net cash (used in) provided by
financing activities (614.5) 506.3
--------- ---------
Net increase in cash and
invested cash 175.2 25.5
Cash and invested cash at beginning
of period 102.1 650.7
--------- ---------
Cash and invested cash at end of period $ 277.3 $ 676.2
========= =========
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, 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.
2. Credit Facilities as of March 31, 1995
Expiration Date (millions)
- ---------------------------------------------------------------
June 1999 $4,500
September 1995 200
October 1995 32
December 1995 350
- -------------------------------------------------------------
Total credit facilities $5,082
=============================================================
3.Intermediate-term loans
SRAC borrowed $25 million of intermediate-term loans in the
first quarter of 1995. SRAC's intermediate-term loans with
private institutions were as follows at March 31, 1995:
Term (millions)
- --------------------------------------------------------------
Loans expiring in 1996 $200
Loans expiring in 1997 320
Loans expiring in 1998 25
Loans expiring in 1999 325
- --------------------------------------------------------------
Total loans $870
==============================================================
The rates on most of these variable rate intermediate-term loans
are set periodically at Libor plus a set basis point spread. The
average weighted rate on the intermediate-term loans in the first
quarter of 1995 was 6.43%.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REVIEW 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, 1995 and
1994, and the related Statements of Income and Cash Flows 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, 1994, and the related
Statements of Income, Stockholder's Equity and Cash Flows for the
year then ended (not presented herein); and in our report dated
January 26, 1995, 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, 1994 is fairly stated, in all material respects, in
relation to the Statement of Financial Position from which it has
been derived.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
April 12, 1995
SEARS ROEBUCK ACCEPTANCE CORP.
ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS
During the first quarter of 1995, Sears Roebuck Acceptance
Corp.'s revenues increased 107.1% to $105.8 million from
$51.1 million in the comparable 1994 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 increase in revenue is primarily attributable
to a $2.1 billion or 46.7% increase in SRAC's average earning
assets compared to the first quarter of 1994 as a result of Sears
increased funding requirements. Additionally, rates on SRAC's
earning assets increased due to an increase in short-term
interest rates.
SRAC's interest and related expenses increased 108.9% to
$84.2 million from $40.3 million for the first quarter of 1994.
SRAC's cost of short-term funds averaged 6.14%, a 269 basis point
increase from 3.45% for the first three months of last year.
SRAC's short-term borrowings averaged $4.6 billion, a 53.3%
increase from the 1994 first quarter average of $3.0 billion.
Commercial paper outstanding was $4.2 billion at March 31, 1995.
In March 1995, SRAC filed a registration statement with the
Securities and Exchange Commission for the registration of debt
securities. SRAC anticipates that borrowings will increase
during 1995 as Sears continues to refinance a portion of its
maturing long-term borrowings.
SRAC's net income increased 114.1% for the first quarter of
1995 to $13.7 million from $6.4 million in 1994. SRAC's ratio of
earnings to fixed charges was 1.25 for the first quarter of 1995
and 1994.
SEARS ROEBUCK ACCEPTANCE CORP.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) The exhibits listed in the "Exhibit
Index" are filed as part of this
report.
(b) Reports on Form 8-K:
There were no reports on Form 8-K
filed during the three months
ended March 31, 1995.
SEARS ROEBUCK ACCEPTANCE 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 ROEBUCK ACCEPTANCE CORP.
(Registrant)
By: /s/ Stephen D. Carp
------------------
Stephen D. Carp
Vice President, Finance
and Assistant Secretary
(principal financial officer
authorized officer of Registrant)
May 15, 1995
EXHIBIT INDEX
12 - Calculation of ratio of earnings to fixed charges
15 - Acknowledgement of awareness from Deloitte & Touche LLP,
dated April 12, 1995, concerning unaudited interim
financial information.
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended March 31,
(MILLIONS) 1995 1994
INCOME BEFORE INCOME TAXES $ 21.0 $ 10.0
PLUS FIXED CHARGES:
Interest 82.7 25.6
Amortization of debt
discount and expense 1.5 14.7
------- -------
84.2 40.3
------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $105.2 $ 50.3
======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.25 1.25
EXHIBIT 15
Sears Roebuck Acceptance Corp.
Greenville, Delaware
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited
interim financial information of Sears Roebuck Acceptance Corp. for
the periods ended March 31, 1995 and 1994, as indicated in our report
dated April 12, 1995, because we did not perform an audit, we
expressed no opinion on that information.
We are aware that our report referred to above, which is included in
your Quarterly Report on Form 10-Q for the quarter ended March 31,
1995, incorporated by reference in Registration Statement No. 33-58139
on Form S-3.
We are also aware that the aforementioned report, pursuant to Rule
436(c) under the Securities Act, is not considered a part of the
Registration Statement prepared or certified by an accountant or a
report prepared or certified by an accountant within the meaning of
Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
April 12, 1995
