<PAGE>
This Prospectus Supplement,
filed pursuant to Rule 424(b)(5),
relates to Registration Statement
No. 33-58139 and Prospectus dated
January 18, 1996
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED JANUARY 18, 1996
$250,000,000
SEARS ROEBUCK ACCEPTANCE CORP.
6 1/8% NOTES DUE JANUARY 15, 2006
----------------
Interest on the Notes is payable on July 15 and January 15 of each year,
commencing on July 15, 1996. The Notes are not redeemable prior to maturity.
The Notes will be issued only in registered form in denominations of $1,000
and integral multiples thereof. See "Description of Notes".
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR
THE PROSPECTUS TO WHICH IT RELATES. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
----------------
<TABLE>
<CAPTION>
INITIAL
PRICE PROCEEDS TO
TO PUBLIC UNDERWRITING COMPANY
(1) DISCOUNT (2) (1)(3)
------------ ------------ ------------
<S> <C> <C> <C>
Per Note................................. 99.637% .625% 99.012%
Total.................................... $249,092,500 $1,562,500 $247,530,000
</TABLE>
- --------
(1) Plus accrued interest, if any, from January 23, 1996.
(2) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933.
(3) Before deduction of expenses payable by the Company, estimated to be
$137,500.
----------------
The Notes are offered severally by the Underwriters, as specified herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of the Notes will
be made in New York, New York, on or about January 23, 1996 against payment
therefor in immediately available funds.
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
----------------
The date of this Prospectus Supplement is January 18, 1996.
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. NEITHER THIS PROSPECTUS SUPPLEMENT NOR THE
PROSPECTUS CONSTITUTES AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY
ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES OR AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH SECURITIES IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Recent Financial Information............................................... S-3
Description of Notes....................................................... S-4
Underwriting............................................................... S-4
Legal Opinions............................................................. S-5
PROSPECTUS
Available Information...................................................... 3
Reports to Holders of Debt Securities...................................... 3
Incorporation of Certain Documents by Reference............................ 3
Sears Roebuck Acceptance Corp.............................................. 4
Use of Proceeds............................................................ 4
Summary Financial Information.............................................. 5
Ratio of Earnings to Fixed Charges......................................... 6
Description of Debt Securities............................................. 6
Plan of Distribution....................................................... 9
Legal Opinion.............................................................. 10
Experts.................................................................... 10
</TABLE>
----------------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE SECURITIES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
S-2
<PAGE>
RECENT FINANCIAL INFORMATION
The following table sets forth certain summary financial information of
Sears Roebuck Acceptance Corp. (the "Company") for the three- and nine-month
periods ended September 30, 1995 and 1994. The summary information is
unaudited, but in the opinion of management, all adjustments (consisting only
of normal recurring accruals) necessary to present fairly the results of
operations of the Company have been included. The operating results for the
three- and nine-month periods ended September 30, 1995 are not necessarily
indicative of results to be expected for the full year. The summary
information should be read in conjunction with the financial statements
incorporated in the Prospectus by reference.
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30 SEPTEMBER 30
(UNAUDITED) (UNAUDITED)
------------ ------------------
1995 1994 1995 1994
------ ----- -------- --------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C>
Operating Results
Total revenues................................ $131.5 $76.3 $ 362.0 $ 184.5
Expenses
Interest and related expenses............... 103.6 55.0 287.1 140.5
Total Expenses.............................. 104.2 55.8 288.9 142.6
Income taxes.................................. 9.6 7.4 25.6 15.1
Net Income.................................... 17.7 13.1 47.5 26.8
Financial Position
Assets
Notes of Sears.............................. $7,981.5 $5,771.1
Customer receivables balances purchased from
Sears...................................... 85.5 70.7
Total assets................................ 8,311.7 6,254.8
Liabilities
Debt payable within one year
Commercial paper.......................... 4,974.7 4,223.7
Agreements with bank trust departments.... 185.2 111.1
Debentures and notes........................ 1,908.9 745.0
Total liabilities........................... 7,086.5 5,090.5
Sears, Roebuck and Co. investment in SRAC
Capital stock (including capital in excess
of par value).............................. 35.0 35.0
Retained income............................. 1,190.2 1,129.3
Debt as percentage of equity.................. 578% 437%
Other Pertinent Data
Contractual Credit Facilities (quarter-end)... 5,712.0 4,700.0
</TABLE>
During the third quarter of 1995, the Company's revenues increased 72.0% to
$131.5 million from $76.3 million in the comparable 1994 period. For the first
nine months of 1995, revenues were up 96% to $362.0 million from $184.5
million for the comparable period in 1994. The increase in revenue is
attributable to both the increase in short-term interest rates and the
Company's higher average earning assets as a result of Sears, Roebuck and
Co.'s ("Sears") increased funding requirements. In the third quarter of 1995,
the average rate on earning assets was 6.61% compared to 5.63% in the
comparable 1994 period. In the first nine months of 1995, the average rate on
earning assets was 6.59% compared to 4.94% in 1994. The Company's average
assets were $2.5 billion higher in the third quarter and $2.3 billion higher
in the first nine months of 1995 when compared to the same periods in 1994.
The Company's interest and related expenses increased 88% to $103.6 million
from $55.0 million and 104% to $287.1 million from $140.5 million for the
third quarter and first nine months of 1995,
S-3
<PAGE>
respectively, as compared to the corresponding 1994 periods. The Company's
cost of short-term funds averaged 6.0% in the third quarter and 6.13% in the
first nine months of 1995 compared to 4.68% and 4.15% for the same periods in
1994. The Company's short-term borrowings averaged $5.2 billion and $5.0
billion for the third quarter and first nine months of 1995, a 30% and 47%
increase from the 1994 levels of $4.0 billion and $3.4 billion.
The Company's net income of $17.7 million and $47.5 million for the third
quarter and first nine months of 1995, respectively, reflects increases of 35%
and 77% from the comparable 1994 period amounts of $13.1 million and $26.8
million.
DESCRIPTION OF NOTES
The following description of the particular terms of the Notes offered
hereby (referred to in the Prospectus as the "Offered Debt Securities")
supplements the description of the general terms and provisions of Debt
Securities set forth in the Prospectus, to which description reference is
hereby made.
The Notes are to be issued under an Indenture, dated as of May 15, 1995,
between the Company and The Chase Manhattan Bank, N.A., as Trustee.
The Notes will mature on January 15, 2006 and will be limited in aggregate
principal amount to $250,000,000. The Notes will be issued in fully registered
form only, in denominations of $1,000 and integral multiples thereof. Each
Note will bear interest at the rate per annum shown on the cover page of this
Prospectus Supplement from January 23, 1996, or from the most recent Interest
Payment Date to which interest has been paid or provided for, payable semi-
annually on July 15 and January 15 of each year, commencing July 15, 1996, to
the person in whose name the Note is registered at the close of business on
the July 1 or January 1, respectively, next preceding such Interest Payment
Date.
UNDERWRITING
Under the terms and subject to the conditions of the Underwriting Agreement
dated the date hereof, the Underwriters named below have severally agreed to
purchase from the Company the respective principal amounts of Notes set forth
opposite their names in the table below:
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT OF
UNDERWRITER NOTES
----------- ------------
<S> <C>
Goldman, Sachs & Co.......................................... $50,000,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..................................... 50,000,000
J.P. Morgan Securities Inc................................... 50,000,000
Morgan Stanley & Co. Incorporated............................ 50,000,000
Salomon Brothers Inc......................................... 50,000,000
------------
Total.................................................... $250,000,000
============
</TABLE>
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the Notes are subject to approval of certain
legal matters by their counsel and to certain other conditions. The
Underwriters are committed to take and pay for all of the Notes if any are
taken.
The Company has been advised by the Underwriters that they propose to offer
part of the Notes directly to the public at the public offering price and on
the terms set forth on the cover page of this
S-4
<PAGE>
Prospectus Supplement and part to certain dealers at a price that represents a
concession not in excess of .375% of the principal amount of the Notes. The
Underwriters may allow, and such dealers may reallow, a concession not in
excess of .250% of the principal amount of the Notes to certain other dealers.
After the initial offering of the Notes, the offering price and other selling
terms may be varied by the Underwriters.
The Company does not intend to apply for listing of the Notes on a national
securities exchange, but has been advised by the Underwriters that they
presently intend to make a market in the Notes as permitted by applicable laws
and regulations. The Underwriters are not obligated, however, to make a market
in the Notes and any such market-making may be discontinued at any time at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading market for, the Notes.
The Company has agreed to indemnify the Underwriters against certain civil
liabilities, including liabilities under the Securities Act of 1933.
In the ordinary course of business, the Underwriters and their affiliates
have engaged and may engage in the future in transactions with the Company and
its affiliates.
LEGAL OPINIONS
The legality of the Notes is being passed upon for the Company by Robert J.
Pence, Senior Counsel, Corporate Law, of Sears. At December 31, 1995, Mr.
Pence owned 818 Sears common shares, including shares credited to his account
in The Savings and Profit Sharing Fund of Sears Employees as of November 30,
1995, and had options granted under Sears employee stock plans relating to
3,520 Sears common shares. The legality of the Notes is being passed upon for
the Underwriters by Wachtell, Lipton, Rosen & Katz. Wachtell, Lipton, Rosen &
Katz from time to time performs legal services for Sears.
S-5
<PAGE>
SEARS ROEBUCK ACCEPTANCE CORP.
DEBT SECURITIES
----------------
Sears Roebuck Acceptance Corp. ("SRAC") from time to time may offer up to
$3,000,000,000 aggregate initial offering price of its debt securities
consisting of debentures, notes and/or other unsecured evidences of
indebtedness (the "Debt Securities"). If so provided in the accompanying
Prospectus Supplement, the Debt Securities of any series may be represented in
whole or in part by one or more Global Securities ("Global Securities")
registered in the name of a depository's nominee and, if so represented,
beneficial interests in such Global Securities will be shown on, and transfers
thereof will be effected only through, records maintained by the depository
and its participants. The Debt Securities may be offered as separate series in
amounts, at prices and on terms to be set forth in supplements to this
Prospectus. It is anticipated that SRAC will sell Debt Securities directly to
institutional investors and may sell Debt Securities to or through
underwriters, and also may sell Debt Securities directly to other purchasers
or through agents. See "Plan of Distribution." The accompanying Prospectus
Supplement or Prospectus Supplements (the "Prospectus Supplement") sets forth
the names of any underwriters or agents involved in the sale of the Debt
Securities in respect of which this Prospectus is being delivered, the
principal amounts, if any, to be purchased by underwriters and the
compensation, if any, of such underwriters or agents.
The terms of the Debt Securities, including, where applicable, the specific
designation, aggregate principal amount, denominations, maturity, premium, if
any, rate (which may be fixed or variable) and time of payment of interest, if
any, terms for redemption at the option of SRAC or the Holder, terms for
sinking fund payments, the initial public offering price, the names of, and
the principal amounts, if any, to be purchased by underwriters and the
compensation of such underwriters, deferred pricing arrangements, if any, and
the other terms in connection with the offering and sale of the Debt
Securities in respect of which this Prospectus is being delivered, are set
forth in the accompanying Prospectus Supplement.
As used herein, Debt Securities shall include securities denominated in U.S.
dollars or, at the option of SRAC if so specified in the applicable Prospectus
Supplement, in any other currency or in composite currencies or in amounts
determined by reference to an index.
----------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
January 18, 1996
<PAGE>
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN
OFFER TO BUY SUCH SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information...................................................... 3
Reports to Holders of Debt Securities...................................... 3
Incorporation of Certain Documents by Reference............................ 3
Sears Roebuck Acceptance Corp.............................................. 4
Use of Proceeds............................................................ 4
Summary Financial Information.............................................. 5
Ratio of Earnings to Fixed Charges......................................... 6
Description of Debt Securities............................................. 6
Plan of Distribution....................................................... 9
Legal Opinion.............................................................. 10
Experts.................................................................... 10
</TABLE>
2
<PAGE>
AVAILABLE INFORMATION
SRAC and Sears, Roebuck and Co. ("Sears"), SRAC's parent, are subject to the
informational requirements of the Securities Exchange Act of 1934, as amended
(the "Exchange Act") and in accordance therewith file reports and other
information with the Securities and Exchange Commission (the "Commission").
Sears also files proxy statements with the Commission. Such reports, proxy
statements and other information can be inspected and copied at the public
reference facilities of the Commission in Room 1024, 450 Fifth Street N.W.,
Washington, D.C. 20549; 7 World Trade Center, 13th Floor, New York, New York
10048; and Suite 1400, Northwestern Atrium Center, 500 W. Madison Street,
Chicago, Illinois 60606; and copies of such materials can be obtained from the
public reference section of the Commission at 450 Fifth Street N.W.,
Washington, D.C. 20549, at prescribed rates. Reports, proxy statements and
other information concerning Sears can also be inspected at the offices of the
New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005, the
Chicago Stock Exchange Incorporated, 440 South LaSalle Street, Chicago,
Illinois 60605, and the Pacific Stock Exchange, Inc., 301 Pine Street, San
Francisco, California 94104.
Additional information regarding SRAC, Sears and the Debt Securities is
contained in the Registration Statement and the exhibits relating thereto,
filed with the Commission under the Securities Act of 1933, as amended (the
"Act"). For further information pertaining to SRAC, Sears and the Debt
Securities, reference is made to the Registration Statement, and the exhibits
thereto, which may be inspected without charge at the office of the Commission
at 450 Fifth Street N.W., Washington, D.C. 20549, and copies thereof may be
obtained from the Commission at prescribed rates.
REPORTS TO HOLDERS OF DEBT SECURITIES
Holders of Debt Securities will receive annual reports containing
information, including financial information that has been audited and
reported on by independent public accountants, about SRAC.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Annual Reports on Form 10-K for the year ended December 31, 1994 and the
Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, June
30 and September 30, 1995 and April 1, July 1 and September 30, 1995,
respectively, filed by SRAC and Sears, and the Current Reports on Form 8-K for
January 17, February 7, April 20, April 25, May 15, June 1, June 20 and
November 8, 1995 filed by Sears and for June 8 and November 4, 1995 filed by
SRAC with the Commission pursuant to Section 13 of the Exchange Act, are
incorporated in and made part of this Prospectus by reference. Pursuant to
Rule 412 promulgated by the Commission pursuant to the Act, the information
incorporated by reference in Sears Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 under Items 6 (Selected Financial Data), 7
(Management's Discussion and Analysis of Financial Condition and Results of
Operations) and 8 (Financial Statements and Supplementary Data) has been
superseded by the restated financial information included in Sears Current
Report on Form 8-K for May 15, 1995 reflecting Sears Allstate Insurance Group
as discontinued operations.
All documents filed by SRAC or Sears with the Commission pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date
of this Prospectus and prior to the termination of the offering of the Debt
Securities (other than those portions of such documents described in
paragraphs (i), (k) and (l) of Item 402 of Regulation S-K promulgated by the
Commission) shall be deemed to be incorporated by reference in this Prospectus
and to be a part hereof from the date of filing of such documents.
SRAC WILL PROVIDE WITHOUT CHARGE TO EACH PERSON TO WHOM A COPY OF THIS
PROSPECTUS IS DELIVERED, ON THE WRITTEN OR ORAL REQUEST OF ANY SUCH PERSON, A
COPY OF ANY OR ALL OF THE DOCUMENTS INCORPORATED HEREIN BY REFERENCE (NOT
INCLUDING EXHIBITS TO SUCH DOCUMENTS UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE IN SUCH DOCUMENTS). WRITTEN OR TELEPHONE REQUESTS
FOR SUCH COPIES SHOULD BE DIRECTED TO SEARS ROEBUCK ACCEPTANCE CORP., 3711
KENNETT PIKE, GREENVILLE, DELAWARE 19807, ATTENTION: VICE PRESIDENT, FINANCE
(302/888-3100).
3
<PAGE>
SEARS ROEBUCK ACCEPTANCE CORP.
SRAC is a wholly-owned subsidiary of Sears and was incorporated in 1956
under the laws of Delaware. Its general offices are located at 3711 Kennett
Pike, Greenville Delaware 19807 (302/888-3100). SRAC raises funds primarily
from the direct placement of commercial paper with corporate and institutional
investors and through intermediate-term loans, discrete underwritten debt and
medium-term notes. SRAC uses borrowing proceeds to acquire short-term notes of
Sears and purchase outstanding customer receivable balances from Sears. Sears,
which is a multi-line retailer that conducts Domestic and International
merchandising operations, uses the funds obtained from SRAC for general
funding purposes. SRAC, and not Sears, will be the sole obligor on the Debt
Securities.
SRAC's income is derived primarily from the earnings on its investment in
the notes and receivable balances of Sears. The interest rate on Sears notes
is presently calculated so that SRAC maintains an earnings to fixed charge
ratio of at least 1.25 times. The yield on the investment in Sears notes is
related to SRAC's borrowing costs and, as a result, SRAC's earnings fluctuate
in response to movements in interest rates and changes in Sears short-term
borrowing requirements. Subject to the provisions of the Indenture relating to
the Debt Securities, SRAC will be required to maintain a ratio of earnings to
fixed charges (determined in accordance with Item 503(d) of Regulation S-K
promulgated by the Commission) of not less than 1.10 for any fiscal quarter
and cause Sears to maintain ownership of all voting stock of SRAC as long as
any Debt Securities are outstanding, and Sears has agreed to pay SRAC such
amounts as may be necessary for such purpose and to maintain such ownership.
See "Description of Debt Securities."
At December 31, 1995, SRAC had eleven employees.
USE OF PROCEEDS
The net proceeds to be received by SRAC from the sale of the Debt Securities
offered hereby will be added to its general funds and initially used to reduce
short-term indebtedness. As indicated under "Sears Roebuck Acceptance Corp.,"
SRAC's principal business is the purchase of short-term notes of Sears; also,
on occasion, SRAC purchases customer receivable balances from Sears Domestic
credit operations. SRAC expects to incur additional indebtedness, but the
amount and nature thereof have not yet been determined and will depend on
economic conditions and certain capital requirements of Sears. It is
anticipated that Sears and its subsidiaries will continue their practice of
short-term borrowing and will, from time to time, incur additional long-term
debt and engage in securitization programs in which credit card receivables
are sold in public or private transactions. Sears also may, from time to time,
issue equity securities.
4
<PAGE>
SUMMARY FINANCIAL INFORMATION
The following table sets forth certain summary financial information of SRAC
for the five years ended December 31, 1994. The summary information should be
read in conjunction with the financial statements of SRAC and the notes
thereto incorporated herein by reference.
<TABLE>
<CAPTION>
1994 1993 1992 1991 1990
-------- -------- --------- --------- ---------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C> <C> <C>
Operating Results
Total revenues............ $ 282.7 $ 337.5 $ 696.5 $ 1,100.8 $ 1,347.4
Expenses
Interest and related
expenses............... 218.5 236.1 482.8 825.9 1,072.1
Total Expenses.......... 220.4 276.7 532.3 894.1 1,077.2
Income taxes.............. 22.1 21.3 56.1 70.3 91.8
Net income................ 40.2 39.5 108.1 136.4 178.4
Financial Position
Assets
Notes of Sears.......... $6,842.5 $3,403.9 $10,493.6 $12,214.5 $14,578.2
Customer receivable
balances purchased from
Sears.................. 81.5 88.0 963.4 1,042.8 --
Total assets............ 7,031.2 4,145.8 12,415.2 14,676.2 15,373.3
Liabilities
Debt payable within one
year
Commercial paper...... $4,912.9 $2,475.0 $ 8,515.3 $10,205.8 $10,331.0
Agreements with bank
trust departments.... 87.4 139.8 397.9 510.1 571.9
Debentures and notes.... 845.0 -- -- 204.0 925.0
Loan agreements with
SOFNV.................. -- 379.8 332.1 683.2 590.7
Total liabilities....... 5,853.5 3,008.3 9,287.0 11,656.1 12,489.6
Sears, Roebuck and Co.
investment in SRAC
Capital stock (including
capital in excess of
par value)............. 35.0 35.0 365.2 365.2 365.2
Retained income......... 1,142.7 1,102.5 2,763.0 2,654.9 2,518.5
Debt as percentage of
equity................... 496% 263% 296% 384% 431%
Other Pertinent Data
Commercial paper
Average daily
outstandings........... $ 3,615 $ 3,812 $ 9,328 $ 10,543 $ 10,340
Agreements with bank trust
departments
Average daily
outstandings........... 124 402 747 643 848
Contractual Credit
Facilities (year-end).... 5,132 4,200 10,812 11,801 10,775
</TABLE>
5
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for SRAC for each of the years ended
December 31, 1994, 1993, 1992, 1991 and 1990 was 1.29, 1.26, 1.34, 1.25 and
1.25, respectively, and for the nine-month period ended September 30, 1995 was
1.26. Earnings consist of net income plus fixed charges and income taxes.
Fixed charges consist of interest costs and amortization of debt discount and
expense; rental expense is insignificant with no effect on the calculation.
The interest rate paid by Sears to SRAC on its investment in Sears notes is
presently calculated to produce earnings sufficient to cover SRAC's fixed
charges at least 1.25 times.
The ratio of income to fixed charges for Sears and its consolidated
subsidiaries for each of the years ended December 31, 1994, 1993, 1991 and
1990 was 2.06, 1.66, 1.16 and 0.96, respectively, and for the nine- and
twelve-month periods ended September 30, 1995 was 1.84 and 2.08, respectively.
For the year ended December 31, 1992, earnings did not cover fixed charges by
$2,869 million. In the computation of the ratio of income to fixed charges for
Sears and its consolidated subsidiaries, income consists of income from
continuing operations less undistributed net income of unconsolidated
subsidiaries plus fixed charges (excluding capitalized interest) and federal
and state income taxes. Fixed charges consist of interest costs plus the
portion of operating lease rentals which is estimated to represent the
interest element in such rentals.
DESCRIPTION OF DEBT SECURITIES
The following descriptions of the terms of the Debt Securities set forth
certain general terms and provisions of the Debt Securities to which any
Prospectus Supplement may relate. The particular terms of the Debt Securities
offered by any Prospectus Supplement (the "Offered Debt Securities") and the
extent, if any, to which such general provisions may apply to the Debt
Securities so offered will be described in the Prospectus Supplement relating
to such Offered Debt Securities.
The Debt Securities are to be issued under one of the Indentures (each, an
"Indenture") referred to in the following sentence, a copy of the form of
which has been filed as an exhibit to the Registration Statement. SRAC has
entered into an Indenture with The Chase Manhattan Bank, N.A., as Trustee, and
may enter into Indentures with one or more other Trustees eligible to act as
Trustee under an Indenture pursuant to the Trust Indenture Act of 1939, as
amended (each, a "Trustee"). The particular Indenture under which any series
of Debt Securities is to be issued, and the identity of the Trustee under such
Indenture, will be identified in the Prospectus Supplement relating to such
series of Debt Securities. The following summaries of certain provisions of
the Debt Securities and the Indenture do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, all the
provisions of the Indenture, including the definitions therein of certain
terms. Whenever particular provisions or defined terms in the Indenture are
referred to herein, such provisions or defined terms are incorporated by
reference.
GENERAL
The Debt Securities will be unsecured obligations of SRAC.
The Indenture does not limit the amount of Debt Securities that may be
issued thereunder and provides that Debt Securities may be issued thereunder
from time to time in one or more series.
Reference is made to the Prospectus Supplement relating to the particular
series of Offered Debt Securities offered thereby for the following terms of
the Offered Debt Securities: (i) the title of the Offered Debt Securities;
(ii) any limit on the aggregate principal amount of the Offered Debt
Securities; (iii) the date or dates on which the Offered Debt Securities will
mature; (iv) the price (expressed as a percentage of the aggregate principal
amount thereof) at which the Offered Debt Securities will be issued; (v) the
rate or rates (which may be fixed or variable) per annum at which the Offered
Debt Securities will bear interest, if any; (vi) the date from which such
interest, if any, on the Offered Debt Securities will accrue, the dates on
which such interest, if any, will be payable, the date on which payment of
such interest, if any, will commence and the Regular Record Dates for such
Interest Payment Dates, if any; (vii) the date or dates, if any, after or on
which and the price or prices at which the Offered Debt Securities may,
pursuant to any optional or mandatory redemption, conversion or exchange
provisions, be redeemed, converted or exchanged at the option of SRAC or of
the Holder
6
<PAGE>
thereof and the other detailed terms and provisions of such optional or
mandatory redemption; (viii) any subordination provisions; (ix) the dates, if
any, on which and the price or prices at which the Offered Debt Securities
will, pursuant to any mandatory sinking fund provisions, or may, pursuant to
any optional sinking fund provisions, be redeemed by SRAC, and the other
detailed terms and provisions of such sinking fund; (x) if other than the
principal amount thereof, the amount of Offered Debt Securities which shall be
payable upon declaration of acceleration of the Maturity thereof; (xi) the
terms of any warrants attached to the Offered Debt Securities; (xii) the
currency or currencies, including European Currency Units or other composite
currencies, in which Offered Debt Securities may be purchased and in which
principal, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable; (xiii) any index used to determine the amount of
payments of principal, premium, if any, and interest, if any, on the Offered
Debt Securities; (xiv) whether the Offered Debt Securities are issuable in
whole or in part as one or more Global Securities and, in such case, the name
of the Depository for such Global Security or Global Securities; (xv) the
place or places, if other than as set forth in the Indenture, where the
principal, premium, if any, and interest, if any, on the Offered Debt
Securities will be payable; and (xvi) any other terms relating to the Offered
Debt Securities not inconsistent with the Indenture but which may modify or
delete any provision of the Indenture insofar as it applies to such series;
provided that no term thereof shall be modified or deleted if imposed under
the Trust Indenture Act and that any modification or deletion of the rights,
duties or immunities of the Trustee shall have been consented to in writing by
the Trustee.
Principal, premium, if any, and interest, if any, will be payable, and the
Debt Securities (other than Debt Securities represented by Global Securities)
will be transferable, at the office or agency of SRAC maintained for such
purposes in the Borough of Manhattan of The City of New York, and at such
other places, if any, in the city in which the principal executive offices of
SRAC or the city in which the principal corporate trust office of the Trustee
are located, as SRAC may designate, which, except as otherwise specified in
the Prospectus Supplement relating to a particular series of Offered Debt
Securities, will initially include the principal corporate trust office of the
Trustee in the Borough of Manhattan of The City of New York and the principal
executive offices of SRAC in Greenville, Delaware. Unless other arrangements
are made, interest on the Debt Securities (other than Debt Securities
represented by Global Securities) will be paid by checks mailed to the Holders
at their registered addresses. (Sections 1.1, 2.5, 3.1, 3.2) Information with
respect to payment of principal, premium, if any, and interest, if any, on,
and transfers of beneficial interests in, Debt Securities represented by
Global Securities will be set forth in the Prospectus Supplement relating
thereto.
If the principal, premium, if any, and interest, if any, will be payable in
a currency other than U.S. dollars, including European Currency Units or
another composite currency, and such currency is not available for payment due
to the imposition of exchange controls or other circumstances beyond the
control of SRAC, SRAC shall satisfy its payment obligations in U.S. dollars on
the basis of the Market Exchange Rate for such currency on the latest date for
which such rate was established on or before the date on which payment is due.
(Section 2.12)
Unless otherwise indicated in the Prospectus Supplement relating thereto,
the Debt Securities will be issued only in fully registered form, without
coupons, in denominations of $1,000 or any integral multiple thereof. No
service charge will be made for any registration of transfer or exchange of
the Offered Debt Securities, but SRAC may require payment of a sum sufficient
to cover any tax or other governmental charge payable in connection therewith.
(Sections 2.2, 2.5)
Debt Securities may be issued under the Indenture as Original Issue Discount
Securities to be offered and sold at a substantial discount below their stated
principal amount. Federal income tax consequences and other special
considerations applicable to any such Original Issue Discount Securities will
be described in the Prospectus Supplement relating thereto. "Original Issue
Discount Security" means any security which provides for an amount less than
the principal amount thereof to be due and payable upon the declaration of
acceleration of the Maturity thereof upon the occurrence of a default and the
continuation thereof. (Sections 1.1, 6.1)
CERTAIN RESTRICTIONS
The Indenture provides that SRAC will maintain a Fixed Charge Coverage Ratio
for any fiscal quarter of not less than 1.10 and that SRAC will cause Sears to
maintain ownership of all the voting stock of SRAC. "Fixed Charge Coverage
Ratio" means SRAC's ratio of earnings to fixed charges determined in
accordance with Item 503(d) of Regulation S-K promulgated by the Commission,
as in
7
<PAGE>
effect on the date of the Indenture. Pursuant to a letter agreement between
SRAC and Sears (the "Fixed Charge Coverage and Ownership Agreement"), Sears
has agreed, for the benefit of holders of outstanding Debt Securities, that,
(i) as long as SRAC is so required to maintain such Fixed Charge Coverage
Ratio, Sears will pay SRAC such amounts which, together with any other
earnings available therefore, are sufficient for SRAC to maintain such Fixed
Charge Coverage Ratio and (ii) as long as SRAC is so required to cause Sears
to maintain ownership of SRAC, Sears will maintain such ownership. The
Indenture provides that SRAC (i) will cause Sears to observe and perform in
all material respects all covenants or agreements of Sears contained in the
Fixed Charge Coverage and Ownership Agreement and (ii) will not amend, waive,
terminate or otherwise modify any provision of the Fixed Charge Coverage and
Ownership Agreement. (Sections 1.1, 3.6)
DEFAULTS
The following are defaults with respect to any series of Debt Securities:
(a) failure to pay the principal amount (and premium, if any) on such series
when due and payable; (b) failure to pay any interest on such series when due,
continued for 30 days (unless the entire amount of such payment is deposited
by SRAC with the Trustee or with a paying agent prior to the expiration of 30
days); (c) failure to perform any other covenant of SRAC in the Indenture
(other than a covenant included in the Indenture solely for the benefit of any
series of Debt Securities other than that series), continued for 60 days after
written notice; (d) acceleration of $100,000,000 or more in principal amount
of indebtedness for borrowed money of SRAC (including acceleration with
respect to Debt Securities other than that series) or Sears under the terms of
the instrument under which such indebtedness is issued or secured (including
the Indenture), if such indebtedness shall not have been discharged or such
acceleration is not annulled within 30 days after written notice or prior to
the time principal owed on the outstanding Debt Securities of that series
shall be declared due and payable, except as a result of compliance with
applicable laws, orders or decrees; and (e) certain events of bankruptcy,
insolvency, or reorganization. In addition, a particular series of Debt
Securities may provide for additional events of default, as may be described
in the Prospectus Supplement. If a default shall occur and be continuing with
respect to any series of Debt Securities, the Trustee or the Holders of a
majority in principal amount of the outstanding Debt Securities of that series
may declare the principal amount of such series (or, if the Debt Securities of
that series are Original Issue Discount Securities, such portion of the
principal amount as may be specified in the terms of that series) due and
payable immediately, which declaration may, in certain instances, be annulled
by the Holders of a majority of the principal amount of outstanding Debt
Securities of that series. In the case of such declaration, there would become
due and payable such principal amount plus any accrued interest or other
periodic payments. (Section 6.1)
No Holder of any Debt Security of any series will have any right to
institute any proceeding with respect to the Indenture or for any remedy
thereunder, unless such Holder previously shall have given to the Trustee
written notice of a default and unless also the Holders of a majority of the
principal amount of outstanding Debt Securities of that series shall have made
written request upon the Trustee, offering reasonable indemnity, to institute
such proceeding as Trustee, and the Trustee shall have neglected or refused to
institute such proceeding within a reasonable time. However, the right of any
Holder of any Debt Security of that series to enforce the payment of principal
and interest on such Debt Security, on or after the due dates expressed in
such Debt Security, may not be impaired or affected. (Section 6.7)
SRAC is required to furnish annually to the Trustee statements as to the
performance or fulfillment of its covenants, agreements or conditions in the
Indenture and as to the absence of default. (Section 3.4)
MODIFICATION OR AMENDMENT OF THE INDENTURE
Modifications and alterations of the Indenture may be made by SRAC with the
consent of the Holders of a majority of the aggregate principal amount of the
outstanding Debt Securities of each series affected by the modification or
alteration, provided that no such change shall be made without the consent of
the Holders of each Debt Security then outstanding affected thereby which will
(a)
8
<PAGE>
permit the extension of the time of payment of any payment on any such Debt
Security, or a reduction in any such payment or (b) reduce the above-stated
percentage of Holders of any series of Debt Securities whose consent is
required to modify or alter the Indenture. (Article XI)
DEFEASANCE
Unless otherwise provided for in the accompanying Prospectus Supplement,
SRAC may discharge the Indenture with respect to Debt Securities of any series
(except for certain obligations to register the transfer or exchange of Debt
Securities of such series, replace mutilated, destroyed, lost and stolen Debt
Securities of such series, maintain paying agencies and hold moneys for
payment in trust) upon the deposit with the Trustee or a paying agent, in
trust, of (1) money in an amount sufficient, or (2) U.S. Government
Obligations (if the Debt Securities are denominated in U.S. dollars) or
Eligible Obligations (if the Debt Securities are denominated in a Foreign
Currency) which through the payment of interest and principal in respect
thereof in accordance with their terms will provide money in an amount
sufficient, or (3) any combination thereof in an amount sufficient, to pay the
principal, premium, if any, and each installment of interest on the Debt
Securities of such series on the dates such payments are due in accordance
with the terms of the Indenture and such Debt Securities. Such a trust may
only be established if, among other things, SRAC has received a ruling from
the Internal Revenue Service or an opinion of recognized counsel who is not an
employee of SRAC, in either case to the effect that, among other things, the
Holders of the Debt Securities of such series will not recognize income, gain
or loss for federal income tax purposes as a result of such deposit and
defeasance of the Indenture and will be subject to federal income tax on the
same amount and in the same manner and at the same times, as would have been
the case if such deposit and defeasance had not occurred. Notwithstanding such
deposit, the obligations of SRAC under the Indenture to pay interest and
principal shall remain in full force and effect until the Debt Securities of
such series have been paid in full. (Section 13.4)
If and when a ruling from the Internal Revenue Service or an opinion of
recognized counsel can be provided without reliance upon the continuation of
SRAC's obligations regarding the payment of interest and principal, then such
obligations of SRAC shall cease upon delivery to the Trustee of such ruling or
opinion and compliance with the other conditions precedent provided for in the
Indenture. Under present ruling positions of the Internal Revenue Service,
such a ruling is not obtainable. (Section 13.4)
REGARDING THE TRUSTEE
The Chase Manhattan Bank, N.A., which is a Trustee under an Indenture,
performs other services for SRAC.
PLAN OF DISTRIBUTION
General. SRAC may sell Debt Securities to or through underwriters, and also
may sell Debt Securities directly to other purchasers or through agents. It is
anticipated that SRAC will offer Debt Securities directly to brokers or
dealers, investment companies, insurance companies, banks, savings and loan
associations, trust companies or similar institutions, and trusts for which a
bank, savings and loan association, trust company or investment adviser is the
trustee or authorized to make investment decisions.
The distribution of the Debt Securities may be effected from time to time in
one or more transactions at a fixed price or prices, which may be changed, or
at market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Prospectus Supplement
will describe the method of distribution of the Offered Debt Securities.
In connection with the sale of Debt Securities, underwriters may receive
compensation from SRAC or from purchasers of Debt Securities for whom they may
act as agents in the form of discounts, concessions or commissions.
Underwriters may sell Debt Securities to or through dealers, and such dealers
may receive compensation in the form of discounts, concessions or commissions
from the underwriters and/or commissions from the purchasers for whom they may
act as agent. Underwriters, dealers and agents that participate in the
distribution of Debt Securities may be deemed to be underwriters, and any
discounts or commissions received by them and any profit on the resale of Debt
9
<PAGE>
Securities by them may be deemed to be underwriting discounts and commissions,
under the Act. Any such underwriter or agent will be identified, and any such
compensation will be described, in the Prospectus Supplement.
Under agreements which may be entered into by SRAC, underwriters, dealers
and agents who participate in the distribution of Debt Securities may be
entitled to indemnification by SRAC against certain liabilities, including
liabilities under the Act.
Delayed Delivery Arrangements. If so indicated in the Prospectus Supplement,
SRAC will authorize dealers or other persons acting as SRAC agents to solicit
offers by certain institutions to purchase Debt Securities from SRAC pursuant
to contracts providing for payment and delivery on a future date. Institutions
with which such contracts may be made include commercial and savings banks,
insurance companies, pension funds, investment companies, educational and
charitable institutions and others, but in all cases such institutions must be
approved by SRAC. The obligations of any purchaser under any such contract
will not be subject to any conditions except that (i) the purchase of the
Offered Debt Securities shall not at the time of delivery be prohibited under
the laws of the jurisdiction to which such purchaser is subject, and (ii) if
the Offered Debt Securities are also being sold to underwriters, SRAC shall
have sold to such underwriters the Offered Debt Securities not sold for
delayed delivery. The dealers and such other persons will not have any
responsibility in respect of the validity or performance of such contracts.
Deferred Pricing Arrangements. The Prospectus Supplement relating to an
issue of Debt Securities will disclose any deferred pricing arrangement
between SRAC and any entity acting as an underwriter which would permit SRAC
to determine its ultimate cost of funds pertaining to such Debt Securities at
a later date through certain transactions indexed to U.S. Treasury securities.
Any such arrangement would be made pursuant to a deferred pricing agreement
signed simultaneously with the pricing agreement which supplements the
underwriting agreement. The deferred pricing agreement would contain the
formula used to determine any post-closing purchase price adjustments.
LEGAL OPINION
The legality of the Debt Securities is being passed upon for SRAC by Robert
J. Pence, Senior Counsel, Corporate Law, of Sears. At December 31, 1995, Mr.
Pence owned 818 Sears common shares, including shares credited to his account
in The Savings and Profit Sharing Fund of Sears Employees as of November 30,
1995, and had options granted under the Sears employees stock plans relating
to 3,520 shares.
EXPERTS
The financial statements and Summary Financial Information incorporated by
reference and included in this prospectus, respectively, have been audited by
Deloitte & Touche LLP, independent certified public accountants, as stated in
their reports incorporated by reference herein (which reports express
unqualified opinions and, with respect to Sears and consolidated subsidiaries,
includes an explanatory paragraph referring to Sears and consolidated
subsidiaries changing its method of accounting for postretirement benefits in
1992), and with respect to the Summary Financial Information has been included
as Exhibit 99 to the Registration Statement. Such financial statements and
Summary Financial Information have been incorporated by reference and included
herein, respectively, in the Registration Statement in reliance upon the
reports of such firm and given upon their authority as experts in accounting
and auditing.
With respect to the unaudited interim financial information which is
incorporated herein by reference, Deloitte & Touche LLP have applied limited
procedures in accordance with professional standards for a review of such
information. However, as stated in their reports included in the Quarterly
Reports on Form 10-Q for the quarters ended April 1, July 1 and September 30,
1995 for Sears and March 31, June 30 and September 30, 1995 for SRAC and
incorporated by reference herein, they did not audit and they did not express
an opinion on that interim financial information. Accordingly, the degree of
reliance on their reports on such information should be restricted in light of
the limited nature of the review procedures applied. Deloitte & Touche LLP are
not subject to the liability provisions of Section 11 of the Securities Act of
1933 for their reports on the unaudited interim financial information because
those reports are not "reports" or a "part" of the registration statement
prepared or certified by an accountant within the meaning of Sections 7 and 11
of the Act.
10
<PAGE>
SEARS ROEBUCK ACCEPTANCE CORP.
$250,000,000
6 1/8% NOTES DUE JANUARY 15, 2006
-----------
PROSPECTUS SUPPLEMENT
-----------
GOLDMAN, SACHS & CO.
MERRILL LYNCH & CO.
J.P. MORGAN SECURITIES INC.
MORGAN STANLEY & CO.
INCORPORATED
SALOMON BROTHERS INC
JANUARY 18, 1996
