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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
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<RECEIVABLES> 7,243,800,000
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<INCOME-TAX> 16,000,000
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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 JUNE 30, 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 July 31, 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
JUNE 30, 1995
Page No.
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statements of Financial Position
June 30, 1995 and 1994
and December 31, 1994 (unaudited) 1
Statements of Income
Three and Six Months ended
June 30, 1995 and 1994 (unaudited) 2
Statements of Cash Flows
Six Months ended June 30, 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 7,8
PART II. OTHER INFORMATION:
Item 6. Exhibits and Reports on Form 8-K 9
SEARS ROEBUCK ACCEPTANCE CORP.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEMENTS OF FINANCIAL POSITION
(unaudited)
millions June 30, December 31,
1995 1994 1994
--------- --------- ---------
Assets
Notes of Sears $ 7,154.3 $ 4,772.3 $ 6,842.5
Customer receivable balances
purchased from Sears 89.5 73.0 81.5
Cash and invested cash 278.8 335.8 102.1
Other assets 7.4 3.0 5.1
--------- --------- ---------
Total assets $ 7,530.0 $ 5,184.1 $ 7,031.2
========= ========= =========
Liabilities
Commercial paper (net of
unamortized discount of
$28.9, $12.7 and $22.3) $ 4,971.0 $ 3,678.3 $ 4,912.9
Agreements with bank
trust departments 144.0 98.1 87.4
Term Debt 1,199.0 250.0 845.0
Accrued interest and
other liabilities 8.5 6.5 8.2
Deferred federal income taxes -- -- --
--------- --------- ---------
Total liabilities 6,322.5 4,032.9 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 1,172.5 1,116.2 1,142.7
--------- --------- ---------
Total stockholder's equity 1,207.5 1,151.2 1,177.7
--------- --------- ---------
Total liabilities and
stockholder's equity $ 7,530.0 $ 5,184.1 $ 7,031.2
========= ========= =========
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(unaudited)
millions Three Months Ended Six Months Ended
June 30, June 30,
1995 1994 1995 1994
------- ------- ------- -------
Revenues
Earnings on notes of Sears $ 120.9 $ 52.6 $ 219.9 $ 98.5
Earnings on customer receivable
balances purchased from Sears 1.7 1.3 3.4 3.0
Earnings on invested cash 2.1 3.2 7.2 6.7
------- ------- ------- -------
Total revenues 124.7 57.1 230.5 108.2
------- ------- ------- -------
Expenses
Interest and amortization of debt
discount and expense 99.3 45.2 183.5 85.5
Operating expenses 0.6 0.5 1.2 1.3
------- ------- ------- -------
Total expenses 99.9 45.7 184.7 86.8
------- ------- ------- -------
Income before income taxes 24.8 11.4 45.8 21.4
Income taxes 8.7 4.1 16.0 7.7
------- ------- ------- -------
Net Income $ 16.1 $ 7.3 $ 29.8 $ 13.7
======= ======= ======= =======
Ratio of earnings
to fixed charges 1.25 1.25 1.25 1.25
See notes to financial statements
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
millions Six Months Ended
June 30,
1995 1994
--------- ---------
Cash flows from operating activities:
Net income $ 29.8 $ 13.7
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and other
noncash items 0.3 20.6
Decrease in deferred federal income
taxes -- (3.2)
Increase in other assets (2.6) (0.2)
Increase in other liabilities 0.3 (4.0)
--------- ---------
Net cash provided by operating activities 27.8 26.9
Cash flows from investing activities:
(Increase) in notes of Sears (311.8) (1,368.4)
(Increase) decrease in receivable balances
purchased from Sears (8.0) 15.0
--------- ---------
Net cash (used in)
investing activities (319.8) (1,353.4)
Cash flows from financing activities:
Increase in commercial paper,
primarily 90 days or less 58.1 1,203.3
Increase (decrease) in agreements with
bank trust departments 56.6 (41.7)
Proceeds from issuance of
term debt 354.0 250.0
Payments for redemption of SOFNV -- (400.0)
--------- ---------
Net cash provided by
financing activities 468.7 1,011.6
--------- ---------
Net increase (decrease) in cash and
invested cash 176.7 (314.9)
Cash and invested cash at beginning
of period 102.1 650.7
--------- ---------
Cash and invested cash at end of period $ 278.8 $ 335.8
========= =========
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 June 30, 1995
Expiration Date (millions)
---------------------------------------------------------------
June 2000 $4,680
June 1996 1,000
October 1995 32
-------------------------------------------------------------
Total credit facilities $5,712
=============================================================
3.Term Debt
Term Debt includes intermediate-term loans, discrete
underwritten debt and medium-term notes.
SRAC borrowed $25.0 million in intermediate-term loans in
the second quarter of 1995 from private institutions. 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 six
months of 1995 was 6.30%.
In June 1995, $250.0 million of discrete underwritten debt
was issued with a coupon rate of 6 1/2%. This debt matures on
June 15, 2000 and pays interest semiannually.
In the second quarter of 1995, SRAC issued $55.0 million of
medium-term notes with a floating rate indexed to Libor.
Total term debt balances were as follows at June 30, 1995:
Maturity (millions)
--------------------------------------------------------------
1996 $200
1997 350
1998 25
1999 325
2000 299
--------------------------------------------------------------
Total $1,199
==============================================================
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 June 30, 1995 and
1994, and the related Statements of Income for the three-month
and six-month periods then ended and Cash Flows for the six-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
July 12, 1995
SEARS ROEBUCK ACCEPTANCE CORP.
ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS
During the second quarter of 1995, Sears Roebuck Acceptance
Corp.'s (SRAC) revenues increased 118.0% to $124.7 million from
$57.1 million in the comparable 1994 period. For the first six months of
1995, revenues were up 113% to $230.5 million from $108.2 million for the
comparable period in 1994. SRAC's revenues are derived from earnings on
its investments in the notes and customer receivable balances of Sears,
Roebuck and Co. (SEARS) and invested cash. The increase in revenue is
attributable to both the increase in short-term interest rates and SRAC's
higher average earning assets as a result of Sears increased funding
requirements. In the second quarter of 1995, the average rate on earning
assets was 6.69% compared to 4.77% in the comparable 1994 period. In the
first six months of 1995, the average rate on earning assets was 6.59%
compared to 4.68% in 1995. SRAC's average assets were $2.7 billion higher
in the second quarter and $2.4 billion higher in the first half of 1995
when compared to the same periods in 1994.
SRAC's interest and related expenses increased 120% to $99.3 million
from $45.2 million and 115% to $183.5 million from $85.5 million for the
second quarter and first half of 1995, respectively, as compared to the
comparable 1994 periods. SRAC's cost of short-term funds averaged 6.25% in
the second quarter and 6.20% in the first six months of 1995 compared to
4.11% and 3.80% for the same periods in 1994. SRAC's short-term borrowings
averaged $5.3 billion and $5.0 billion for the second quarter and first
half of 1995, a 66% and 61% increase from the 1994 levels of $3.2 billion
and $3.1 billion.
SRAC's net income of $16.1 million and $29.8 million for the second
quarter and first half of 1995 reflects increases of 121% and 118% from the
comparable 1994 period amounts of $7.3 million and $13.7 million. SRAC's
ratio of earning to fixed charges for both the second quarter and first
half of 1995 was 1.25 compared to 1.25 for the comparable 1994 periods.
In March 1995, SRAC filed a registration statement with the Securities
and Exchange Commission for public issuance of term debt securities. In
May 1995, SRAC amended this filing permitting it to offer up to
$3.0 billion of Debt Securities. In June 1995, SRAC issued $250.0 million
of discrete underwritten debt with a coupon rate of 6 1/2% and a term of
five years against this registration. Additionally, SRAC initiated a
$2.0 billion take-down from the above referenced filing for the issuance of
medium-term notes. SRAC, a direct issuer of medium-term notes, complements
the four named agents in this medium-term note program. The offering
provides for a fixed or variable rate option with terms of greater than
nine months. As of June 30, 1995, medium-term notes were placed with an
average maturity of 3.3 years. SRAC anticipates that borrowings will
increase during 1995 as Sears continues to refinance a portion of its
maturing long-term borrowings.
On June 29, 1995, SRAC amended its existing $4.5 billion syndicated
credit agreement which was to terminate in June, 1999, to a $4.7 billion
syndicated credit agreement terminating in June, 2000. In addition, SRAC
replaced its $550 million of uniform credit agreements with a $1 billion
364-day syndicated credit agreement. The new facilities provide increased
support and extend for a longer term when compared to the previous
agreements. At June 30, 1995, SRAC had backup credit facilities totaling
$5.7 billion.
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:
A report on Form 8-K was filed by the
Registrant dated
June 29, 1995 (Items 5 and 7)
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 and accounting
officer and authorized officer of
Registrant)
August 14, 1995
EXHIBIT INDEX
12 - Calculation of ratio of earnings to fixed charges
27 - Financial Data Schedule
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended
June 30,
(Millions) 1995 1994
INCOME BEFORE INCOME TAXES $ 45.8 $ 21.4
PLUS FIXED CHARGES:
Interest 180.0 70.8
Amortization of debt
discount and expense 3.5 14.7
------- -------
183.5 85.5
------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $229.3 $106.9
======= =======
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
