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<PERIOD-END> MAR-30-1995
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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 30, 1996
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: 302/888-3100
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, 1996, 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 30, 1996
Page No.
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statements of Financial Position (unaudited)
March 30, 1996 and March 31, 1995
and December 30, 1995 1
Statements of Income(unaudited)
Three Months ended
March 30, 1996 and March 31, 1995 2
Statements of Cash Flows (unaudited)
Three Months ended March 30, 1996
and March 31, 1995 3
Notes to Financial Statements (unaudited) 4,5
Independent Accountants' 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 30, March 31, Dec. 30,
1996 1995 1995
--------- --------- ---------
Assets
Notes of Sears $ 8,824.3 $ 6,072.0 $ 8,396.4
Customer receivable balances
purchased from Sears 68.9 82.6 81.2
Cash and invested cash 427.5 277.3 143.0
Other assets 17.4 3.4 13.7
--------- --------- ---------
Total assets $ 9,338.1 $ 6,435.3 $ 8,634.3
========= ========= =========
Liabilities
Commercial paper (net of
unamortized discount of
$24.3, $32.0 and $23.8) $ 4,380.9 $ 4,221.4 $ 4,450.6
Agreements with bank
trust departments 124.1 139.4 137.0
Intermediate-term loans 870.0 870.0 895.0
Medium-term notes 1,893.7 -- 1,383.5
Discrete underwritten debt 748.1 -- 498.9
Accrued interest and
other liabilities 56.5 13.1 24.5
--------- --------- ---------
Total liabilities 8,073.3 5,243.9 7,389.5
--------- --------- ---------
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 1,229.8 1,156.4 1,209.8
--------- --------- ---------
Total stockholder's equity 1,264.8 1,191.4 1,244.8
--------- --------- ---------
Total liabilities and
stockholder's equity $ 9,338.1 $ 6,435.3 $ 8,634.3
========= ========= =========
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(unaudited)
millions Three Months Ended
March 30, March 31,
1996 1995
-------- --------
Revenues
Earnings on notes of Sears g $ 144.9 $ 99.0
Earnings on customer receivable
balances purchased from Sears 1.5 1.7
Earnings on invested cash 2.4 5.1
------- -------
Total revenues 148.8 105.8
------- -------
Expenses
Interest and amortization of debt
discount and expense 117.6 84.2
Operating expenses 0.5 0.6
------- -------
Total expenses 118.1 84.8
------- -------
Income before income taxes 30.7 21.0
Income taxes 10.7 7.3
------- -------
Net income $ 20.0 $ 13.7
======= =======
Ratio of earnings to fixed charges 1.26 1.25
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
millions Three Months Ended
March 30, March 31,
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 20.0 $ 13.7
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and other
noncash items 0.8 0.1
Decrease in other assets 0.1 1.6
Increase in other liabilities 32.0 4.9
--------- ---------
Net cash provided by operating activities 52.9 20.3
Cash flows from investing activities:
(Increase) decrease in notes of Sears (427.9) 770.5
Decrease (increase) in receivable balances
purchased from Sears 12.3 (1.1)
--------- ---------
Net cash (used in) provided by
investing activities (415.6) 769.4
Cash flows from financing activities:
Decrease in commercial paper,
primarily 90 days or less (69.7) (691.5)
(Decrease) increase in agreements with
bank trust departments (12.9) 52.0
Proceeds from issuance of
intermediate-term loans, medium-term
notes, and discrete underwritten debt 754.8 25.0
Payments for redemption of
intermediate-term loans, medium-term
notes, and discrete underwritten debt (25.0) --
--------- ---------
Net cash provided by (used in)
financing activities 647.2 (614.5)
--------- ---------
Net increase in cash and invested cash 284.5 175.2
Cash and invested cash at beginning
of period 143.0 102.1
--------- ---------
Cash and invested cash at end of period $ 427.5 $ 277.3
========= =========
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 30, 1995, 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 30, 1996
Expiration Date (millions)
- -------------------------------------------------------------
June 2000 $4,680
June 1996 1,000
December 1996 40
- -------------------------------------------------------------
Total credit facilities $5,720
=============================================================
3. Intermediate-term loans
In both the first quarter of 1996 and 1995, $870.0 million
in intermediate-term loans were outstanding with private
institutions. The rates on most of these variable rate
intermediate-term loans are indexed to LIBOR with a set basis
point spread. The average weighted rate on the intermediate-term
loans in the first quarter of 1996 was 5.78% compared to 6.43% in
the comparable 1995 period.
As of March 30, 1996, intermediate-term loans maturing in the
next five years were as follows:
(millions) 1996 1997 1998 1999 2000
- ---------------------------------------------------------------
Total $200.0 $295.0 $25.0 $325.0 $25.0
- ---------------------------------------------------------------
4. Medium-term notes
SRAC issued $510.2 million of medium-term notes in the first
quarter of 1996 with either a floating rate indexed to LIBOR or a
fixed rate. The average weighted rate on medium-term notes in
the first quarter of 1996 was 6.08% with terms ranging from one
to ten years.
As of March 30, 1996, medium-term notes maturing in the next five
years were as follows:
(millions) 1996 1997 1998 1999 2000
- ---------------------------------------------------------------
Total $-- $267.0 $334.5 $185.0 $722.8
- ---------------------------------------------------------------
5. Discrete underwritten debt
SRAC issued $250.0 million of discrete underwitten debt in the
first quarter of 1996. As of March 30, 1996, SRAC had three
discrete underwritten notes outstanding with face values totaling
$750.0 million and terms ranging from five to ten years.
Discrete underwitten debt pays interest semiannually.
As of March 30, 1996, discrete underwritten debt is comprised of
the following:
(millions)
- -----------------------------------
6 1/2% Notes, due 2000 $250.0
6 3/4% Notes, due 2005 $250.0
6 1/8% Notes, due 2006 $250.0
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 30, 1996 and
March 31, 1995, and the related Statements of Income and Cash
Flows for the three-month periods then ended. These financial
statements are the responsibility of Sears Roebuck Acceptance
Corp.'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 30, 1995, 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 19, 1996, 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 30, 1995 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 11, 1996
SEARS ROEBUCK ACCEPTANCE CORP.
ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS
During the first quarter of 1996, Sears Roebuck Acceptance
Corp.'s ("SRAC") revenues increased 40.6% to $148.8 million from
$105.8 million in the comparable 1995 period. SRAC's income is
derived primarily from the earnings on its investment in the
notes and receivable balances of Sears, Roebuck and Co. ("Sears")
and invested cash. The increase in revenue is attributable to a
$2.7 billion or 40.9% increase in SRAC's average earning assets
compared to the first quarter of 1995 as a result of Sears
increased funding requirements.
SRAC's interest and related expenses increased 39.7% to
$117.6 million from $84.2 million for the first quarter of 1995
due to an increase in average outstanding debt. SRAC's short-term
borrowings averaged $4.8 billion, a 4.3% increase from the 1995
first quarter average of $4.6 billion. SRAC's cost of short-term
funds averaged 5.57%, a 57 basis point decrease from 6.14% for
the first three months of last year. Average outstanding long-
term debt of $3.2 billion in the first quarter of 1996 increased
$2.3 billion compared to $0.9 billion in the comparable 1995
period.
In early March 1996, the registration statement filed in
November 1995 for an additional $2 billion in public term debt
securities became effective. As of March 30, 1996, there has
been no debt issued against this registration. SRAC anticipates
that borrowings will increase during 1996 as Sears continues to
refinance a portion of its maturing long-term borrowings and fund
its asset growth.
In April 1996, in anticipation of future borrowings, SRAC
received a capital infusion of $150 million from Sears which
provides additional strength to SRAC's balance sheet.
SRAC's net income increased 46.0% for the first quarter of
1996 to $20.0 million from $13.7 million in 1995. SRAC's ratio
of earnings to fixed charges was 1.26 and 1.25 for the first
quarter of 1996 and 1995.
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 January 23, 1996
(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)
May 10, 1996
EXHIBIT INDEX
12 - Calculation of ratio of earnings to fixed charges
15 - Acknowledgement of awareness from Deloitte & Touche, LLP,
dated May 10, 1996, concerning unaudited financial
information.
27 - Financial Data Schedule
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Three Months Ended
March 30, March 31,
(MILLIONS) 1996 1995
--------- ---------
INCOME BEFORE INCOME TAXES $ 30.7 $ 21.0
PLUS FIXED CHARGES:
Interest 115.5 82.7
Amortization of debt
discount and expense 2.1 1.5
------- -------
Total fixed charges 117.6 84.2
------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $148.3 $105.2
======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.26 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 30, 1996 and
March 31, 1995, as indicated in our report dated April 11, 1996;
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 30, 1996, is incorporated by reference in Registration
Statement Nos. 33-58139 and 33-64215 on Form S-3.
We are also aware that the aforementioned report, pursuant to
Rule 436(c) under the Securities Act of 1933, 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
May 10, 1996
