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<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-28-1996
<PERIOD-END> JUN-29-1996
<CASH> 282,900,000
<SECURITIES> 0
<RECEIVABLES> 9,899,300,000
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<BONDS> 4,525,100,000
<COMMON> 35,000,000
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0
<OTHER-SE> 1,400,900,000
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<SALES> 0
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<TOTAL-COSTS> 246,000,000
<OTHER-EXPENSES> 800,000
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<INCOME-PRETAX> 63,100,000
<INCOME-TAX> 22,100,000
<INCOME-CONTINUING> 41,000,000
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</TABLE>
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 29, 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 July 31, 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
JUNE 29, 1996
Page No.
PART 1. FINANCIAL INFORMATION:
Item 1. Financial Statements
Statements of Financial Position
June 29, 1996 and June 30, 1995 (unaudited)
and December 30, 1995 (audited) 1
Statements of Income (unaudited)
Three and Six Months ended
June 29, 1996 and June 30, 1995 2
Statements of Cash Flows (unaudited)
Six Months ended June 29, 1996
and June 30, 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)
(audited)
millions June 29, June 30, Dec. 30,
1996 1995 1995
--------- --------- ---------
Assets
Notes of Sears $ 9,805.9 $ 7,154.3 $ 8,396.4
Customer receivable balances
purchased from Sears 93.4 89.5 81.2
Cash and invested cash 282.9 278.8 143.0
Other assets 20.2 7.4 13.7
--------- --------- ---------
Total assets $10,202.4 $ 7,530.0 $ 8,634.3
========= ========= =========
Liabilities
Commercial paper (net of
unamortized discount of
$19.5, $28.9 and $23.8) $ 4,109.5 $ 4,971.0 $ 4,450.6
Agreements with bank
trust departments 92.2 144.0 137.0
Intermediate-term loans 895.0 895.0 895.0
Medium-term notes 2,882.0 55.0 1,383.5
Discrete underwritten debt 748.1 249.0 498.9
Accrued interest and
other liabilities 39.7 8.5 24.5
--------- --------- ---------
Total liabilities 8,766.5 6,322.5 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 150.1 -- --
Retained income 1,250.8 1,172.5 1,209.8
--------- --------- ---------
Total stockholder's equity 1,435.9 1,207.5 1,244.8
--------- --------- ---------
Total liabilities and
stockholder's equity $10,202.4 $ 7,530.0 $ 8,634.3
========= ========= =========
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(unaudited)
millions Three Months Ended Six Months Ended
June 29, June 30, June 29, June 30,
1996 1995 1996 1995
------- ------- ------- -------
Revenues
Earnings on notes of Sears $ 155.9 $ 120.9 $ 300.8 $ 219.9
Earnings on customer receivable
balances purchased from Sears 1.9 1.7 3.4 3.4
Earnings on invested cash 2.5 2.1 4.9 7.2
------- ------- ------- -------
Total revenues 160.3 124.7 309.1 230.5
------- ------- ------- -------
Expenses
Interest and amortization of debt
discount and expense 127.6 99.3 245.2 183.5
Operating expenses 0.3 0.6 0.8 1.2
------- ------- ------- -------
Total expenses 127.9 99.9 246.0 184.7
------- ------- ------- -------
Income before income taxes 32.4 24.8 63.1 45.8
Income taxes 11.4 8.7 22.1 16.0
------- ------- ------- -------
Net income $ 21.0 $ 16.1 $ 41.0 $ 29.8
======= ======= ======= =======
Ratio of earnings
to fixed charges 1.25 1.25 1.26 1.25
See notes to financial statements.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(unaudited)
millions Six Months Ended
June 29, June 30,
1996 1995
--------- ---------
Cash flows from operating activities:
Net income $ 41.0 $ 29.8
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation, amortization and other
noncash items 1.8 0.3
Decrease in other assets 0.1 2.4
Increase in other liabilities 15.2 0.3
--------- ---------
Net cash provided by operating activities 58.1 32.8
Cash flows from investing activities:
(Increase) in notes of Sears (1,409.5) (311.8)
(Increase) in receivable balances
purchased from Sears (12.2) (8.0)
--------- ---------
Net cash (used in) investing activities (1,421.7) (319.8)
Cash flows from financing activities:
(Decrease) increase in commercial paper,
primarily 90 days or less (341.1) 58.1
(Decrease) increase in agreements with
bank trust departments (44.8) 56.6
Proceeds from issuance of
intermediate-term loans, medium-term
notes, and discrete underwritten debt 1,764.4 349.0
Payments for redemption of
intermediate-term loans, medium-term
notes, and discrete underwritten debt (25.0) --
Proceeds from capital infusion 150.0
--------- ---------
Net cash provided by financing activities 1,503.5 463.7
--------- ---------
Net increase in cash and invested cash 139.9 176.7
Cash and invested cash at beginning
of period 143.0 102.1
--------- ---------
Cash and invested cash at end of period $ 282.9 $ 278.8
========= =========
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 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 June 29, 1996
Expiration Date (millions)
- -------------------------------------------------------------
June 2001 $5,000
December 1996 40
- -------------------------------------------------------------
Total credit facilities $5,040
=============================================================
3. Intermediate-term loans
At the close of the second quarter of 1996 and 1995, $895.0 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 six months of 1996 was 5.83% compared to 6.30% in the
comparable 1995 period.
As of June 29, 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 $1,498.5 million of medium-term notes in the first six months of
1996 compared to $55.0 million in the 1995 comparable period. Medium-term notes
were issued with either a floating rate indexed to LIBOR or a fixed rate. The
average weighted rate on medium-term notes in the first six months of 1996 was
6.13% compared to 6.21% in 1995. These notes have terms ranging from one to ten
years.
As of June 29, 1996, medium-term notes maturing in the next five years were as
follows:
(millions) 1996 1997 1998 1999 2000
- ---------------------------------------------------------------
Total $-- $267.0 $560.0 $185.0 $722.8
- ---------------------------------------------------------------
5. Discrete underwritten debt
SRAC issued $250.0 million of discrete underwitten debt in January 1996. As
of June 29, 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 June 29, 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 June 29, 1996 and
June 30, 1995, 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 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
July 10, 1996
SEARS ROEBUCK ACCEPTANCE CORP.
ITEM 2. ANALYSIS OF RESULTS OF OPERATIONS
During the second quarter of 1996, Sears Roebuck Acceptance Corp.'s
("SRAC") revenues increased 28.5% to $160.3 million from $124.7 million in the
comparable 1995 period. For the first six months of 1996, revenues were up
34.1% to $309.1 million from $230.5 million for 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 SRAC's higher level of average
earning assets due to Sears continued refinancing of its maturing borrowings and
funding of its business growth. SRAC's average assets were $2.7 billion higher
in the second quarter and $2.6 billion higher in the first half of 1996 when
compared to the same periods in 1995.
SRAC's interest and related expenses increased 28.5% to $127.6 million
from $99.3 million and 33.6% to $245.2 million from $183.5 million for the
second quarter and first half of 1996, respectively, as compared to the
comparable 1995 periods. SRAC's cost of short-term funds averaged 5.42% in the
second quarter and 5.50% in the first six months of 1996 compared to 6.25% and
6.20% for the same periods in 1995. SRAC's short-term borrowings averaged
$4.7 billion and $4.8 billion for the second quarter and first half of 1996,
respectively, compared to the 1995 levels of $5.3 billion and $5.0 billion.
Decreases in interest expense from short-term borrowings were offset by
increased long-term debt levels. SRAC's long-term debt averaged $4.1 billion
and $3.6 billion in the second quarter and first half of 1996, compared with
$0.9 billion in both the second quarter and first half of 1995.
On June 28, 1996, SRAC replaced both its $4.7 billion syndicated credit
aagreement which was to terminate in June 2000 and its $1 billion
364-day syndicated credit agreement with a $5.0 billion syndicated credit
agreement, terminating in June 2001. Sears and SRAC have a joint $40 million
credit facility with 48 minority-owned banks expiring in December 1996.
In August 1996, in anticipation of future borrowing requirements, SRAC
filed an additional registration statement with the Securities and Exchange
Commission for issuance of $4 billion in debt securities.
Also, during August 1996, SRAC issued $250.0 million of discrete
underwritten debt with a coupon rate of 6.90% and a term of seven years.
SRAC's net income of $21.0 million and $41.0 million for the second
quarter and first half of 1996 reflects increases of 30.4% and 37.6% from the
comparable 1995 period amounts of $16.1 million and $29.8 million. SRAC's
ratio of earnings to fixed charges for the second quarter and first half
of 1996 was 1.25 and 1.26 respectively, compared to 1.25 for the comparable
1995 periods.
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 28, 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)
August 13, 1996
EXHIBIT INDEX
12 - Calculation of ratio of earnings to fixed charges
15 - Acknowledgement of awareness from Deloitte & Touche, LLP,
dated August 13, 1996, concerning unaudited financial information.
27 - Financial Data Schedule
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
Six Months Ended
June 29, June 30,
(MILLIONS) 1996 1995
--------- ---------
INCOME BEFORE INCOME TAXES $ 63.1 $ 45.8
PLUS FIXED CHARGES:
Interest 243.4 180.0
Amortization of debt
discount and expense 1.8 3.5
------- -------
Total fixed charges 245.2 183.5
------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $308.3 $229.3
======= =======
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, and June 29, 1996 and June 30, 1995, as indicated in
our reports dated April 11, 1996 and July 10, 1996, respectively; because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our reports referred to above, which are included in your
Quarterly Reports on Form 10-Q for the quarters ended March 30, 1996 and
June 29, 1996 are incorporated by reference in Registration Statement Nos.
33-58139, 33-64215 and 33-9817 on Form S-3.
We are also aware that the aforementioned reports, pursuant to Rule 436(c)
under the Securities Act of 1933, are not considered a part of the Registration
Statement prepared or certified by an accountant or reports prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
Deloitte & Touche LLP
Philadelphia, Pennsylvania
August 13, 1996
