UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): July 24, 1996
Sears Credit Account Master Trust II
(Exact name of registrant as specified in charter)
Illinois 33-79186-01 Not Applicable
(State of (Commission File (IRS Employer
Organization) Number) Identification No.)
c/o Sears Receivables Financing Group, Inc.
3711 Kennett Pike 19807
Greenville, Delaware (Zip Code)
(Address of principal executive offices)
Registrant's Telephone Number, including area code: (302) 888-3176
Former name, former address and former fiscal year, if changed since last
report: Not Applicable
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Item 5. Other Events
On July 24, 1996, the registrant made available to
prospective investors a series term sheet setting forth a description of the
collateral pool and the proposed structure of $500,000,000.00 aggregate
principal amount of Series 1996-3 Fixed Rate Class A Credit Card Pass-Through
Certificates and $22,500,000.00 aggregate principal amount of Series 1996-3
Fixed Rate Class B Credit Card Pass-Through Certificates of Sears Credit
Account Master Trust II. The Series Term Sheet is attached hereto as
Exhibit 99.
Item 7. Financial Statements, Pro Forma Financial Information and
Exhibits
Exhibit 99 Series Term Sheet dated July 24, 1996 of Sears Credit Account
Master Trust II, Series 1996-3.
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SIGNATURES
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 Credit Account Master Trust II
(Registrant)
By: Sears Receivables Financing Group, Inc.
Date: July 25, 1996 By: /S/ Gary D. Farrar
Vice President, Administration
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EXHIBIT INDEX
Exhibit 99 Series Term Sheet dated July 24, 1996 of Sears Credit Account
Master Trust II, Series 1996-3.
Exhibit 99
SUBJECT TO REVISION
SERIES TERM SHEET DATED JULY 24, 1996
SEARS CREDIT ACCOUNT MASTER TRUST II
$500,000,000 ____% Class A Master Trust Certificates, Series 1996-3
$22,500,000 ____% Class B Master Trust Certificates, Series 1996-3
Sears, Roebuck and Co.
Servicer
Sears Receivables Financing Group, Inc.
Seller
THE INVESTOR CERTIFICATES WILL REPRESENT
FRACTIONAL UNDIVIDED INTERESTS IN THE SEARS CREDIT ACCOUNT MASTER
TRUST II (THE "TRUST") AND DO NOT REPRESENT INTERESTS IN OR
OBLIGATIONS OF SEARS, ROEBUCK AND CO. ("SEARS"), SEARS NATIONAL
BANK, SEARS RECEIVABLES FINANCING GROUP, INC. ("SRFG") OR ANY
AFFILIATE THEREOF. NEITHER THE INVESTOR CERTIFICATES NOR THE
UNDERLYING ACCOUNTS OR RECEIVABLES ARE INSURED OR GUARANTEED BY THE
FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER GOVERNMENTAL
AGENCY.
THIS SERIES TERM SHEET CONTAINS STRUCTURAL AND
COLLATERAL INFORMATION WITH RESPECT TO THE INVESTOR CERTIFICATES;
HOWEVER, THIS SERIES TERM SHEET DOES NOT CONTAIN COMPLETE
INFORMATION WITH RESPECT TO THE OFFERING OF THE INVESTOR
CERTIFICATES. THE INFORMATION HEREIN IS PRELIMINARY AND WILL BE
SUPERSEDED BY THE INFORMATION CONTAINED IN THE PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS. ADDITIONAL INFORMATION WILL BE
CONTAINED IN THE PROSPECTUS SUPPLEMENT AND THE PROSPECTUS.
PURCHASERS ARE URGED TO READ BOTH THE PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS.
THIS SERIES TERM SHEET SHALL NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY NOR SHALL
THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION
OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SALES OF THE INVESTOR CERTIFICATES MAY NOT BE CONSUMMATED UNLESS
THE PURCHASER HAS RECEIVED BOTH THE PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS.
Underwriters of the Class A Certificates
Merrill Lynch & Co.
CS First Boston
Goldman, Sachs & Co.
<PAGE>
This Series Term Sheet will be superseded in its entirety by the information
appearing in the Prospectus Supplement and the Prospectus.
Offered Certificates
$500,000,000 ___% Class A Master Trust Certificates, Series
1996-3 (the"Class A Certificates") and $22,500,000 ___% Class
B Master Trust Certificates, Series 1996-3 (the "Class B
Certificates," and together with the Class A Certificates, the
"Offered Certificates").
Seller Retained Certificates
$39,330,000 Class C Master Trust Certificates, Series 1996-3
(the "Class C Certificates," and together with the Offered
Certificates, the "Investor Certificates").
Interest on Offered Certificates
Class A Certificates: ____% per annum.
Class B Certificates: ____% per annum.
Interest on the Offered Certificates will be calculated on the
basis of a 360-day year of twelve 30-day months.
Principal Payment Dates
Principal is expected to be paid to the Class A Certificateholders in 24
equal monthly payments and to the Class B Certificateholders
in a single payment. Certain payments of principal with respect to
the Class C Certificates may be made prior to payment in full of
the Class A Certificates, such that the Class C Certificateholders'
interest in the Trust will decline proportionately to the decline
in the Class A Certificateholders' interest in the Trust, but the
remaining amount of principal payments with respect to the Class C
Certificates will not be made to the Class C Certificateholders
until the final payment of principal has been made with respect to
the Class B Certificates.
Interest Payment Dates
The 15th day of each month (or, if any such day is not a business day, the
next succeeding business day), commencing on August 15,
1996 (each a "Distribution Date").
Class A Controlled Amortization Amount
For each Distribution Date with respect to the period commencing on the
August 2002 Distribution Date and ending on the July 2004
Distribution Date, the Class A Controlled Amortization Amount is
expected to be $20,833,333.34.
<PAGE>
Class B Controlled Amortization Amount
For the August 2004 Distribution Date, the Class B Controlled
Amortization Amount is expected to be $22,500,000.00.
Class A Expected Final Payment Date
The July 2004 Distribution Date.
Class B Expected Final Payment Date
The August 2004 Distribution Date
Receivables
The aggregate amount of receivables in the Accounts (as defined
below) as of the last day of the Due Period ending in June 1996 was
$7,206,757,204.03 consisting of $7,092,780,062.58 of principal
receivables and $113,977,141.45 of finance charge receivables.
"Due Period" for any Account is the period included in the monthly billing
cycle applicable to such Account.
Subordination; Additional Amounts Available to Class A and Class B
Certificateholders
The Class B Certificates and the Class C Certificates will be
subordinated to the extent available to fund certain payments with
respect to the Class A Certificates. In addition, the Class C
Certificates will be subordinated to the extent available to fund
certain payments with respect to the Class B Certificates.
Series Termination Date
The day following the July 2008 Distribution Date.
ERISA Considerations
Under the regulations issued by the Department of Labor, the
Trust's assets would not be deemed "plan assets" of any employee
benefit plan holding interests in the Class A Certificates if
certain conditions are met, such that the Class A Certificates
would constitute "publicly-offered securities," including that
interests in the Class A Certificates be held by at least 100
persons independent of SRFG and each other upon completion of the
public offering of the Offered Certificates. The Class A
Underwriters expect, although no assurance can be given, that
interests in the Class A Certificates will be held by at least 100
such persons, and it is anticipated that the other conditions of
the "publicly-offered security" exception contained in the
regulations will be met. The Class B Underwriter does not expect
that the Class B Certificates will be held by 100 or more
independent persons. If the Trust's assets were deemed to be "plan
assets" of such a plan, there is uncertainty as to whether existing
exemptions from the "prohibited transaction" rules of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), would
apply to all transactions involving the Trust's assets.
Accordingly, employee benefit plans contemplating purchasing
interests in Investor Certificates should consult their counsel
before making a purchase.
Class A Certificate Rating
It is a condition to the issuance of the Class A Certificates that they be
rated in the highest rating category by at least two
nationally recognized rating agencies. The rating of the Class A
Certificates is based primarily on the value of the receivables in
the Trust and the subordination of the Class B Certificates and the Class C
Certificates.
Class B Certificate Rating
It is a condition to the issuance of the Class B Certificates that they be
rated in one of the three highest rating categories by at
least two nationally recognized rating agencies. The rating of
the Class B Certificates is based primarily on the value of the
Receivables in the Trust and the subordination of the Class C
Certificates.
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COMPOSITION AND HISTORICAL PERFORMANCE OF THE SEARS PORTFOLIO
All of the information describing the composition and
historical performance of Sears open-end charge plan accounts set
forth below reflects the composition and historical performance of
the Sears Portfolio, and not that of the accounts from which
receivables are included in the Trust (the "Accounts").
Composition of the Sears Portfolio
Composition of Accounts by Credit Limit
The credit accounts in the Sears Portfolio have the following
distributions of credit limits(1):
Percentage of Sears
Portfolio as of
Billing Cycles ended
Credit Limit in December 1995
$0 - $ 99(2). . . . . . . . . . . . . . . . 10.3%
100 - 499 . . . . . . . . . . . . . . . . .0.7%
500 - 999 . . . . . . . . . . . . . . . . .6.0%
1,000 - 1,499 . . . . . . . . . . . . . . . .9.0%
1,500 - 1,999 . . . . . . . . . . . . . . . .9.9%
2,000 - 2,999 . . . . . . . . . . . . . . . 21.2%
3,000 - 3,999 . . . . . . . . . . . . . . . 16.8%
4,000 and over. . . . . . . . . . . . . . . 26.1%
100.0%
_______________
(1) Information based on accounts with balances at any time
in the twenty-four months ended with the billing cycles ended in
December 1995. Includes accounts from Puerto Rico, which are not
included in the Accounts.
(2) Zero credit limits may be imposed due to delinquency,
upon customer request, temporarily in the case of lost or stolen
credit cards or under other circumstances where obligor's credit
may be in question. Specific approval (which, in general, is
automatic for accounts delinquent for up to one billing cycle and
automatically denied for accounts delinquent more than two billing
cycles) is required for purchases on an account with a zero credit
limit.
<PAGE>
Largest States
The Sears Portfolio has not been concentrated
geographically. As of the billing cycles ended in December 1995,
the five states with the largest receivables balances and number of
accounts were as follows(1):
Sears Portfolio California Florida New York Pennsylvania Texas
% of active accounts 9.9% 6.8% 6.3% 6.3% 6.8%
% of balances 9.9% 7.5% 5.7% 5.7% 8.1%
_______________
(1) Excludes accounts from Puerto Rico, which were not
included in the Accounts.
No other state accounted for more than 5% of the number
of active accounts in the Sears Portfolio or 5% of the balances as
of the billing cycles ended in December 1995.
Seasoning
More than 57% of the accounts in the Sears Portfolio were
at least five years old as of the billing cycles ended in December
1995. The distribution of the age of accounts in the Sears
Portfolio is as follows(1):
Percentage of Sears
Portfolio as of
Billing Cycles ended
Age of Accounts in December 1995
Up to 1 year. .. . . . . . . . . 12.9%
1-2 years . . .. . . . . . . . . 11.4%
2-3 years . . .. . . . . . . . . 10.5%
3-4 years . . .. . . . . . . . . .4.9%
4-5 years . . .. . . . . . . . . .3.0%
5-10 years. . .. . . . . . . . . 16.6%
10 years and older. . .. . . . . 40.7%
100.0%
_______________
(1) Information based on accounts with balances at any time
in the twenty-four months ended with the billing cycles ended in
December 1995. Excludes accounts from Puerto Rico, which were
not included in the Accounts.
<PAGE>
Summary Yield Information
The annualized aggregate monthly yield for the Sears
Portfolio is summarized as follows(1):
Twelve months
ended
June 30,1996 1995(2) 1994(2) 1993(2)
Aggregate Monthly Yield. 17.62% 17.36% 17.67% 17.65%
_______________
(1) The average aggregate monthly yield for the three-month
period ended June 30, 1996 was 17.70%. Aggregate monthly yield is
the average of monthly yields annualized for each period shown.
Monthly yield is calculated by dividing (x) monthly finance charges
minus the amount of finance charges billed to accounts that were
charged-off as uncollectible in such month ("Uncollected Finance
Charges") by (y) beginning monthly balance. If Uncollected Finance
Charges were not excluded from the calculation of monthly yield,
the annualized aggregate monthly yield for the three-month period
ended June 30, 1996, and for each of the twelve-month periods ended
June 30, 1996 and December 31, 1995, 1994 and 1993 would have been
18.18%, 18.04%, 17.75%, 18.03% and 18.02%, respectively. See
footnote (2) to the Summary Charge-Off and Delinquency Information
table. Excludes accounts from Puerto Rico, which were not included
in the Accounts.
(2) Restated to reflect reclassification of Uncollected Finance Charges as
a reduction of yield rather than as gross charge-offs. See footnote (1) above.
<PAGE>
Summary Charge-Off and Delinquency Information
Charge-off and delinquency information with regard to the
Sears Portfolio is summarized as follows:
Twelve months
ended
June 30, 1996 1995(1) 1994(1) 1993(1)
Gross Charge-Offs as
a % of balances (2) 4.38% 3.88% 3.66% 3.72%
Recoveries as a %
of balances (2)(3). . 0.75% 0.72% 0.67% 0.62%
Delinquencies as a
% of balances (4). . 4.34% 3.87% 3.64% 3.65%
_______________
(1) Restated to reflect reclassification of Uncollected Finance Charges as
a reduction of yield rather than as gross charge-offs. See footnote (2) below.
(2) The average gross charge-offs as a percentage of balances
for the three-month period ended June 30, 1996 was 4.91%. All rates
shown are unweighted averages of annualized monthly rates for the
indicated periods. The monthly rate is calculated by dividing the
amount of charge-offs of principal receivables or recoveries for
each month by the balance outstanding as of the beginning of the
month and does not reflect Uncollected Finance Charges. If gross charge-offs
included Uncollected Finance Charges, gross charge-offs as a percentage of
balances for the three-month period ended June 30, 1996, and for each of the
twelve-month periods ended June 30, 1996 and December 31, 1995, 1994 and 1993
would have been 5.40%, 4.81%, 4.27%, 4.02% and 4.09%, respectively.
See footnote (1) to the Summary Yield Information table. Excludes
accounts from Puerto Rico, which were not included in the Accounts.
(3) All recoveries with respect to charged-off receivables
will be the property of Sears, unless an election is made to
include such amounts in the Trust.
(4) The average delinquencies as a percentage of balances for
the three-month period June 30, 1996 was 4.64%. An account is
considered delinquent when it is past due a total of three or more
scheduled monthly payments. Delinquencies as of the end of each
month are divided by balances at the beginning of each such month.
<PAGE>
Summary Delinquency Aging Information
The aging of delinquent receivables with respect to the
Sears Portfolio is summarized as follows (1):
Twelve months
ended
June 30, 1996 1995 1994 1993
Delinquencies as
a % of balances
60-89 days past due. . . . 1.49% 1.34% 1.31% 1.36%
90-119 days past due . . . 1.01% 0.89% 0.83% 0.82%
120 days or more past due. 1.84% 1.64% 1.50% 1.47%
Total Delinquencies . . 4.34% 3.87% 3.64% 3.65%
_______________
(1) An account is considered delinquent when it is past due
a total of three or more scheduled monthly payments. Delinquencies
as of the end of each month are divided by balances at the
beginning of each such month. Excludes accounts from Puerto Rico,
which were not included in the Accounts.
Summary Payment Rate Information
The rate of payments in the Sears Portfolio is summarized
below as follows(1):
Twelve months
ended
Payment Rates June 30, 1996 1995 1994 1993
Average Monthly Rate. . . 6.33% 6.48% 6.87% 7.20%
High Monthly Rate . . . . 6.77% 7.09% 7.69% 7.85%
Low Monthly Rate. . . . . 6.07% 6.07% 6.54% 6.70%
_______________
(1) Payment rate is the cash received during each group of
billing cycles divided by the balance outstanding as of the
beginning of those cycles. Excludes accounts from Puerto Rico,
which were not included in the Accounts.
