SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
FORM 10-K
_X_ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 30, 2000
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to _________
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: 302/434-3100
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
6.75% Notes due September 15, 2005 New York Stock Exchange
7.00% Notes due March 1, 2038 New York Stock Exchange
6.95% Notes due October 23, 2038 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 .
Disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is
not contained herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K.
[X]
As of February 28, 2001, 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 I (1)(a)
and (b) of Form 10-K and is therefore filing this report with a reduced
disclosure format.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Item 1. Business.
Sears Roebuck Acceptance Corp.("SRAC") is a wholly-owned finance
subsidiary of Sears, Roebuck and Co.("Sears"). To meet certain capital
requirements of its businesses, Sears borrows on a short-term basis through
the issuance of notes to, and from time to time sells receivable balances
to, SRAC. SRAC obtains funds through the issuance of commercial paper and
long-term debt, which includes medium-term notes and discrete underwritten
debt.
SRAC's income is derived primarily from the earnings on its
investment in the notes and receivable balances of Sears. Under a letter
agreement between SRAC and Sears, the interest rate on Sears notes is
calculated so that SRAC maintains an earnings to fixed charges ratio of
at least 1.25. 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 borrowing
requirements.
SRAC's commercial paper ratings are F-2 from Fitch Inc., P-2
from Moody's Investor Services, Inc., and A-2 from Standard & Poor's.
Long-term debt ratings are A- from Fitch Inc., A3 from Moody's Investor
Services, Inc., and A- from Standard & Poor's.
SRAC and Sears have entered into agreements for the benefit
of certain debtholders of SRAC under which Sears, for so long as required
by the applicable documents, will continue to own all of the outstanding
voting stock of SRAC and will pay SRAC such amounts that, when added to
other available earnings, will be sufficient for SRAC to maintain an
earnings to fixed charges ratio of not less than 1.10.
SRAC provides backup support for its commercial paper portfolio
through its committed credit facilities. As of December 30, 2000, SRAC
commercial paper was supported by $5.060 billion of syndicated credit
agreements; $875 million of which expires in 2002 and $4.185 billion of
which expires in 2003.
Pursuant to the syndicated credit agreements between SRAC and
various banks, the letter agreement between SRAC and Sears concerning
SRAC's investment in Sears notes may not be amended, waived, terminated,
or modified (except that SRAC's fixed charge coverage ratio may be reduced
to as low as 1.15) without the approval of such banks.
SRAC ended 2000 with an equity position of $3.1 billion and
a debt-to-equity ratio of 4.6:1 compared to 4.9:1 at the end of 1999.
As of March 1, 2001 SRAC had nine employees.
2
Item 2. Properties.
SRAC leases 5,865 square feet of an office building located in
Greenville, Delaware.
Item 3. Legal Proceedings.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters.
None.
Item 6. Selected Financial Data.
Not applicable.
3
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Financial Condition
SRAC's investment in Sears notes increased to $16.9 billion
at year-end 2000 from $16.8 billion at the end of 1999. Short-term
borrowings at the end of 1999 were $3.9 billion, a $1.2 billion
increase from the prior year. Total debt outstanding decreased in
2000 to $14.1 billion from $14.2 billion. SRAC's investment in the
Notes of Sears increased as a result of increased funding requirements
of Sears.
On January 26, 2001, SRAC issued an $800 million ten-year
discrete underwritten bond with a 7% coupon.
Results of Operations
SRAC's total revenues of $1,216 million for 2000 increased
from $1,201 million in 1999 and decreased from $1,234 million in 1998.
The revenue increase for 2000 resulted primarily from a 30 basis point
increase in the average rates on earning assets from 1999 to 2000 which
was partially offset by a $500 million reduction in average earning
asset levels during 2000 versus 1999. The revenue decrease for 1999
resulted from a 21 basis point reduction in the average rate on earning
assets from 1998 to 1999.
SRAC's interest and related expenses were $966 million,
$955 million and $979 million in 2000, 1999, and 1998, respectively.
In 2000, SRAC's average cost of short-term funds increased 141 basis
points from 5.25% in 1999 to 6.66%. SRAC's average cost of term debt
increased to 6.60% in 2000 compared to 6.59% in 1999. Increases in
interest and related expenses resulted from higher average interest
rates in 2000. These increases were partially offset by a reduction
in average debt levels. Average outstanding short-term debt of
$3.2 billion in 2000 decreased nearly $500 million from the $3.7 billion
average daily 1999 level. Average outstanding term debt in 2000 was
$11.1 billion compared to $11.2 billion in 1999.
During 2000, SRAC issued $295 million in term debt
securities as follows:
*$270 million of variable-rate medium-term notes, with an
average term of 1.5 years; and
*$25 million zero coupon medium-term note, with a yield to
maturity of 7.60% and a term of 6.0 years
SRAC's management of the debt portfolio during 1999
resulted in a $200 million reduction from 1998 average debt levels
and a 2 basis point reduction in average cost. This resulted in
decreases in interest and related expenses throughout 1999.
SRAC's net income was $161 million in 2000, $158 million in
1999 and $163 million in 1998.
On June 1, 2000, Duff & Phelps Credit Rating Co. merged
with Fitch IBCA, Inc to form Fitch, Inc. and SRAC's ratings were
harmonized to a single overall rating.
4
The financial information appearing in this Annual Report on
Form 10-K is presented in historical dollars, which do not reflect the
decline in purchasing power that results from inflation. As is the case
for most financial companies, substantially all of SRAC's assets and
liabilities are monetary in nature. Interest rates on SRAC's investment
in Sears notes are set to provide fixed charge coverage of at least 1.25
times, thereby insulating SRAC from the effects of inflation-based
interest rate increases.
Item 7A. Market Risk
SRAC's outstanding debt securities are subject to repricing risk.
The Company's policy is to manage interest rate risk through the strategic
use of fixed and variable rate debt. All debt securities are considered
non-trading. At year-end 2000 and 1999, 45% and 31%, respectively of the
funding portfolio was variable rate (including current maturities of
fixed-rate long-term debt that will reprice in the next 12 months).
Based on SRAC's funding portfolio as of year-end 2000 and 1999, which
both totaled $14.2 billion, a 100 basis point change in interest rates
would affect annual pre-tax funding cost by approximately $63 million and
$44 million, respectively. This calculation assumes the funding portfolio
balance at year end remains constant for an annual period and that the
100 basis point change occurs at the beginning of the annual period.
The effect on net earnings is mitigated by the fixed charge coverage
agreement with Sears.
5
Item 8. Financial Statements and Supplementary Data.
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF INCOME
(millions, except ratio of earnings to fixed charges)
2000 1999 1998
------ ------ ------
Revenues
--------
Earnings on notes of Sears $1,204 $1,189 $1,221
Earnings on commercial customer
receivable balances purchased
from Sears - 4 8
Earnings on cash equivalents 12 8 5
----- ----- -----
Total revenues 1,216 1,201 1,234
Expenses
--------
Interest expense and amortization of
debt discount/premium 966 955 979
Operating expenses 2 3 4
----- ----- -----
Total expenses 968 958 983
----- ----- -----
Income before income taxes 248 243 251
Income taxes 87 85 88
----- ----- -----
Net income $161 $158 $163
----- ----- -----
Ratio of earnings to fixed charges 1.26 1.25 1.26
See notes to financial statements.
6
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF FINANCIAL POSITION
(millions, except share data) 2000 1999
------- -------
Assets
------
Cash and cash equivalents $ 442 $ 454
Notes of Sears 16,879 16,806
Other assets 45 64
--------- ---------
Total assets $17,366 $17,324
--------- ---------
Liabilities
-----------
Commercial paper (net of unamortized
discount of $25 and $12) $3,934 $2,675
Medium-term notes (net of unamortized
discount of $7 and $0) 4,608 5,716
Discrete underwritten debt(net of
unamortized discount of $21 and $23) 5,579 5,827
Accrued interest and other liabilities 151 173
--------- ---------
Total liabilities 14,272 14,391
--------- ---------
Commitments and contingent liabilities
Shareholder's Equity
--------------------
Common share, par value $100 per share
500,000 shares authorized
350,000 shares issued and outstanding 35 35
Capital in excess of par value 1,150 1,150
Retained earnings 1,909 1,748
--------- ---------
Total shareholder's equity 3,094 2,933
--------- ---------
Total liabilities and
shareholder's equity $17,366 $17,324
--------- ---------
See notes to financial statements.
7
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF SHAREHOLDER'S EQUITY
(millions) 2000 1999 1998
-------- -------- --------
Common share $35 $35 $35
-------- -------- --------
Capital in excess of par value:
Beginning of year 1,150 1,150 700
Capital contribution - - 450
-------- -------- --------
End of year $1,150 $1,150 $1,150
-------- -------- --------
Retained earnings:
Beginning of year $1,748 $1,590 $1,427
Net income 161 158 163
-------- -------- --------
End of year $1,909 $1,748 $1,590
-------- -------- --------
Total shareholder's equity $3,094 $2,933 $2,775
-------- -------- --------
See notes to financial statements.
8
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(millions) 2000 1999 1998
-------- -------- --------
Cash Flows From Operating Activities
------------------------------------
Net income $161 $158 $163
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and
other noncash items 15 12 11
Decrease in other assets 7 4 6
(Decrease)increase in other liabilities (22) 4 46
-------- -------- --------
Net cash provided by
operating activities 161 178 226
Cash Flows From Investing Activities
------------------------------------
(Increase)decrease in notes of Sears (73) 1,184 (1,429)
Decrease(increase) in commercial customer
receivable balances purchased from Sears - 90 (1)
-------- -------- --------
Net cash(used in) provided by
investing activities (73) 1,274 (1,430)
Cash Flows From Financing Activities
------------------------------------
Increase(decrease)in commercial paper,
primarily 90 days or less 1,259 (1,568) (1,006)
Proceeds from issuance of long-term debt 286 1,091 2,511
Payments for redemption of long-term debt (1,645) (610) (634)
Issue cost paid to issue debt - (5) (28)
Proceeds from capital contribution - - 450
-------- -------- --------
Net cash(used in)provided by
financing activities (100) (1,092) 1,293
-------- -------- --------
Net(decrease)increase
in cash and cash equivalents (12) 360 89
Cash and cash equivalents, beginning of year 454 94 5
-------- -------- --------
Cash and cash equivalents, end of year $442 $454 $ 94
-------- -------- --------
Supplemental Disclosure of Cash Flow Information
Cash paid during the year
Interest paid $972 $936 $947
Income taxes 86 84 93
See notes to financial statements
9
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Sears Roebuck Acceptance Corp.("SRAC"), a wholly-owned subsidiary of Sears,
Roebuck and Co. ("Sears"), is principally engaged in the business of acquiring
short-term notes of Sears and, to a lesser extent, purchasing receivable
balances from Sears, using proceeds from its short-term borrowing programs
(primarily the direct placement of commercial paper) and the issuance of
long-term debt (medium-term notes and discrete underwritten debt).
Under a letter agreement between SRAC and Sears, the interest rate on the
Sears notes is presently calculated so that SRAC maintains an earnings to
fixed charges ratio of at least 1.25.
Cash and cash equivalents is defined to include all highly liquid investments
with maturities of three months or less. Receivables purchased from Sears are
purchased at par and are interest-bearing.
The results of operations of SRAC are included in the consolidated federal
income tax return of Sears. Tax liabilities and benefits are allocated as
generated by SRAC, regardless of whether such benefits would be currently
available on a separate return basis.
SRAC's fiscal year ends on the Saturday closest to December 31. Fiscal
year-ends were December 30, 2000 (52 weeks), January 1, 2000 (52 weeks),
and January 2, 1999 (52 weeks).
Certain reclassifications have been made in the 1998 financial statements
to conform with the current year presentation.
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the reported amounts
of income and expenses during the reporting period. Actual results could
differ from those estimates.
Statement of Financial Accounting Standards (SFAS) No. 133, Accounting for
Derivative Instruments and Hedging Activities, is effective for all fiscal
years beginning after June 15, 2000. SFAS 133, as amended, establishes
accounting and reporting standards for derivative instruments, including
certain derivative instruments embedded in other contracts and for hedging
activities. Under SFAS 133, certain contracts that were not formerly
considered derivatives now meet the definition of a derivative. SRAC
adopted SFAS 133 effective December 30, 2001. The adoption of SFAS 133
resulted in no transition adjustment.
2. FEDERAL INCOME TAXES
Federal income taxes provided for by SRAC amounted to $87 million,
$85 million and $88 million for the fiscal years 2000, 1999 and 1998,
respectively. These amounts represent current income tax provisions
calculated at an effective income tax rate of 35%. No deferred tax
provisions were necessary.
10
3. COMMERCIAL CUSTOMER RECEIVABLE BALANCES
SRAC has purchased commercial customer receivable balances ("CCRB") from
Sears. The receivables were purchased, with recourse, and SRAC earned
interest on the outstanding balance. The receivables were made up of credit
accounts Sears has established with merchants and contractors for bulk
purchases from Sears and are predominantly paid within 30 days.
Each month, SRAC purchased new receivables and receives collections on
previously purchased receivables. SRAC discontinued this program as of the
end of 1999.
4. COMMERCIAL PAPER AND OTHER SHORT-TERM BORROWINGS
SRAC obtains funds through the direct placement of commercial paper
issued in maturities of one to 270 days. Selected details of SRAC's
borrowings are shown below. Weighted-average interest rates are based
on the actual number of days in the year, and borrowings are net of
unamortized discount.
(millions) 2000 1999
-------- --------
Commercial paper outstanding $3,959 $2,687
Less: Unamortized discount 25 12
-------- --------
Commercial paper outstanding(net) $3,934 $2,675
-------- --------
Average and Maximum Balances(net) 2000 1999
------------------- -------------------
Maximum Maximum
(millions) Average (month-end) Average (month-end)
------------------- -------------------
Commercial paper $3,202 $4,461 $3,740 $4,697
------------------- -------------------
Weighted Average Interest Rates 2000 1999
------------------- -------------------
Average Year-end Average Year-end
------------------- -------------------
Commercial paper 6.66% 7.35% 5.25% 6.21%
------------------- -------------------
11
5. MEDIUM-TERM NOTES AND DISCRETE UNDERWRITTEN DEBT
Medium-term notes and discrete underwritten debt are issued with either
a floating rate indexed to LIBOR or a fixed rate.
(dollars in millions; term in years)
ISSUANCE
Avg. Avg.
2000 Avg. Orig. 1999 Avg. Orig.
Volume Coupon Term Volume Coupon Term
------ ------ ---- ------ ------ ----
Fourth Quarter:
Medium-term notes $200 6.84% 1.0 $319 6.42% 1.9
Discrete debt $ - - - $ - - -
Year:
Medium-term notes $295 6.76% 1.8 $349 6.38% 2.4
Discrete debt $ - - - $750 6.25% 10.0
GROSS OUTSTANDING
Avg. Avg.
12/30/00 Avg. Remain. 01/01/00 Avg. Remain.
Balance Coupon Term Balance Coupon Term
-------- ------ ----- ------- ------ ------
Medium-term notes $4,615 6.67% 1.7 $5,716 6.53% 2.2
Discrete debt $5,600 6.60% 11.2 $5,850 6.64% 11.7
MATURITIES
Medium-term Discrete
Year notes debt
---------------------------------
2001 $2,118 $ -
2002 958 600
2003 1,075 1,250
2004 202 -
2005 36 250
Thereafter 226 3,500
---------------------------------
Total $4,615 $5,600
=================================
12
6. BACK-UP LIQUIDITY
SRAC continued to provide support for 100% of its outstanding commercial paper
through its investment portfolio and credit facilities. SRAC's investment
portfolio fluctuated from a low of $1 million to a high of $1,170 million in
2000. Committed credit facilities as of December 30, 2000 were as follows:
Expiration Date (millions)
----------------------------------------------------------------
April 2002 875
April 2003 $4,185
----------------------------------------------------------------
$5,060
================================================================
SRAC pays commitment fees on the unused portions of its credit facilities.
The annualized fees at December 30, 2000 on these credit lines were
$3.7 million.
7. LETTERS OF CREDIT AND OTHER COMMITMENTS
SRAC is the guarantor of a $70 million promissory note issued by Sears,
Roebuck de Puerto Rico, Inc. under the terms of a July 1998 private
placement. The note is renewable on a nine-month cycle.
SRAC issues import letters of credit to facilitate Sears purchase of goods
from foreign suppliers. At December 30, 2000, letters of credit totaling
$166 million were outstanding. SRAC has no liabilities with respect to this
program other than the obligation to pay drafts under the letters of credit
that, if not reimbursed by Sears on the day of the disbursement, are
automatically converted into demand borrowings by Sears from SRAC. To date,
all SRAC disbursements have been reimbursed on a same-day basis. SRAC also
issues irrevocable letters of credit to third parties on behalf of Sears.
At December 30, 2000, irrevocable letters of credit totaling $33 million
were outstanding.
13
8. FINANCIAL INSTRUMENTS
In the normal course of business, SRAC invests in certain notes of Sears and
from time to time, purchases commercial customer receivable balances from Sears.
SRAC's financial instruments (both assets and liabilities), with the exception
of medium-term notes and discrete underwritten debt, are short-term or variable
in nature and as such their carrying value approximates fair value.
Medium-term notes and discrete underwritten debt are valued based on quoted
market prices when available or discounted cash flows, using interest rates
currently available to SRAC on similar borrowings. The fair values of these
financial instruments are as follows:
---------------------------------------------------------------------------
2000 1999
Carrying Fair Carrying Fair
(millions) Value Value Value Value
---------------------------------------------------------------------------
Medium-term notes (net) $4,608 $4,544 $5,716 $5,628
Discrete underwritten debt(net) 5,579 5,311 5,827 5,323
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
First Second Third Fourth
Quarter Quarter Quarter Quarter
2000 1999 2000 1999 2000 1999 2000 1999
(millions) ------------ ------------ ----------- ------------
Operating Results
Combined earnings from
Sears notes and CCRB $299 $307 $296 $294 $298 $294 $311 $298
Total revenues 302 308 299 295 300 295 315 303
Interest & related
expenses 240 245 237 235 239 234 250 241
Total expenses 241 246 238 236 239 235 250 241
Income before
income taxes 61 62 61 59 61 60 65 62
Net income 40 40 39 39 40 39 42 40
Ratio of earnings to
fixed charges 1.25 1.25 1.26 1.25 1.26 1.26 1.26 1.26
(billions)
--------
Averages
Earning assets* $17.6 $18.6 $17.3 $17.9 $17.3 $17.7 $17.9 $17.8
Short-term debt 2.9 4.6 2.6 3.7 3.1 3.4 4.2 3.3
Long-term debt 11.6 10.9 11.5 11.1 11.0 11.3 10.4 11.4
Cost of
short-term debt 6.07% 5.08% 6.49% 4.97% 6.87% 5.26% 7.02% 5.82%
long-term debt 6.60% 6.63% 6.59% 6.59% 6.58% 6.55% 6.64% 6.57%
*Notes and receivable balances of Sears and invested cash.
14
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure.
None.
PART III
Item 10. Directors and Executive Officers of the Registrant.
Not applicable.
Item 11. Executive Compensation.
Not applicable.
Item 12. Security Ownership of Certain Beneficial Owners
and Management.
Not applicable.
Item 13. Certain Relationships and Related Transactions.
Not applicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) The following documents are filed as a part of this report:
1. An "Index to Financial Statements" has been filed as a part
of this report on page S-1 hereof.
2. No financial statement schedules are included herein because
they are not required or because the information is
contained in the financial statements and notes thereto, as
noted in the "Index to Financial Statements" filed as part
of this report.
3. An "Exhibit Index" has been filed as part of this report
beginning on page E-1 hereof.
(b) Reports on Form 8-K:
There were no reports filed on Form 8-K.
15
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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)
/S/ George F. Slook
By George F. Slook*
Vice President, Finance
and Assistant Secretary
March 22, 2001
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
Keith E. Trost* Director and President )
(Principal Executive )
Officer) )
)
)
George F. Slook* Director and )
Vice President, Finance ) March 22, 2001
and Assistant Secretary )
(Principal Financial and )
Accounting Officer) )
)
)
Jeffrey N. Boyer* Director )
)
)
Larry R. Raymond* Director )
)
)
Glenn R. Richter* Director )
*/S/ George F. Slook, Individually and as Attorney-in-Fact
16
SEARS ROEBUCK ACCEPTANCE CORP.
INDEX TO FINANCIAL STATEMENTS
PAGE
STATEMENTS OF INCOME 6
STATEMENTS OF FINANCIAL POSITION 7
STATEMENTS OF SHAREHOLDER'S EQUITY 8
STATEMENTS OF CASH FLOWS 9
NOTES TO FINANCIAL STATEMENTS 10-14
INDEPENDENT AUDITORS' REPORT S-2
S-1
INDEPENDENT AUDITORS' REPORT
To the Shareholder and Board of Directors of
Sears Roebuck Acceptance Corp.
Greenville, Delaware
We have audited the accompanying statements of financial position of Sears
Roebuck Acceptance Corp. (a wholly-owned subsidiary of Sears, Roebuck and Co.)
as of December 30, 2000 and January 1, 2000, and the related statements of
income, shareholder's equity, and cash flows for each of the three years in
the period ended December 30, 2000. These financial statements are the
responsibility of Sears Roebuck Acceptance Corp.'s management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the financial position of Sears Roebuck Acceptance Corp. as of
December 30, 2000 and January 1, 2000, and the results of its operations
and its cash flows for each of the three years in the period ended
December 30, 2000 in conformity with accounting principles
generally accepted in the United States of America.
/S/ Deloitte & Touche LLP
Deloitte & Touche LLP
Philadelphia, Pennsylvania
January 19, 2001
S-2
EXHIBIT INDEX
3(a) Certificate of Incorporation of the Registrant, as in
effect at November 13, 1987 [Incorporated by reference to
Exhibit 28(c) to the Registrant's Quarterly Report on
Form 10-Q for the quarter ended September 30, 1987*].
3(b) By-laws of the Registrant, as in effect at October 20, 1999
[Incorporated by reference to Exhibit 3(b) to the
Registrant's Quarterly Report on Form 10-Q for the quarter ended
October 2, 1999*].
4(a) $5,000,000,000 Credit Agreement dated as of April 28, 1997
among the Registrant, the Banks listed on the signature pages
thereof, the Agent, the Senior Managing Agent, the Managing
Agents, Co-Arrangers, Co-Agents and Lead Managers
referred to therein [Incorporated by reference to
Exhibit 4(a) to the Registrant's Current Report on Form 8-K
dated April 28, 1997*].
4(b) Form of Registrant's Investment Note Agreement [Incorporated
by reference to Exhibit 4(c) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1991*].
4(c) The Registrant hereby agrees to furnish the Commission, upon
request, with each instrument defining the rights of holders of
long-term debt of the Registrant with respect to which the
total amount of securities authorized does not exceed 10% of
the total assets of the Registrant.
4(d) Form of 6.90% Note [Incorporated by reference to Exhibit 4 to
the Registrant's Current Report on Form 8-K dated
August 2, 1996*].
4(e) Form of 7.00% Note [Incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K dated
January 19, 2001*].
4(f) Form of Fixed-Rate Medium-Term Note Series I [Incorporated by
reference to Exhibit 4(b) to the Registrant's Current Report on
Form 8-K dated June 8, 1995*].
4(g) Form of Floating Rate Medium-Term Note Series I [Incorporated
by reference to Exhibit 4(c) to the Registrant's Current Report
on Form 8-K dated June 8, 1995*].
4(h) Form of 6 3/4% Note [Incorporated by reference to Exhibit 4(d)
to the Registrant's Current Report on Form 8-K dated
June 8, 1995*].
----------------------------------
*Sec File No. 1-4040
E-1
EXHIBIT INDEX (cont'd)
4(i) Fixed Charge Coverage and Ownership Agreement dated
May 15, 1995 between Sears, Roebuck and Co. and the
Registrant [Incorporated by reference to Exhibit 4(e)
to the Registrant's Current Report on Form 8-K
dated June 8, 1995*].
4(j) Fixed Charge Coverage and Ownership Agreement dated
February 20, 1997 between Sears, Roebuck and Co. and the
Registrant [Incorporated by reference to Exhibit 4(b)
to the Registrant's Current Report on Form 8-K
dated April 28, 1997*].
4(k) Form of 6.70% Note [Incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K
dated November 19, 1996*].
4(l) Form of 6 1/8% Note [Incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K
dated January 23, 1996*].
4(m) Form of Fixed-Rate Medium-Term Note Series II [Incorporated by
reference to Exhibit 4(a) to the Registrant's Current Report on
Form 8-K dated March 28, 1996*].
4(n) Form of Floating Rate Medium-Term Note Series II [Incorporated
by reference to Exhibit 4(b) to the Registrant's Current Report
on Form 8-K dated March 28, 1996*].
4(o) Form of Fixed-Rate Medium-Term Note Series III Incorporated
by reference to Exhibit 4(a) to the Registrant's Current Report
on Form 8-K dated August 22, 1996*].
4(p) Form of Floating Rate Medium-Term Note Series III [Incorporated
by reference to Exhibit 4(b) to the Registrant's Current
Report on Form 8-K dated August 22, 1996*].
4(q) Indenture dated as of May 15, 1995 between the Registrant
and The Chase Manhattan Bank [Incorporated by reference
to Exhibit 4(b) to Amendment No. 1 to Registration
Statement No. 33-64215*].
4(r) Extension Agreement dated March 1, 1996, between Sears,
Roebuck and Co. and the Registrant [Incorporated
by reference to Exhibit 4(k) to the Registrant's
Annual Report on Form 10-K dated December 30, 1995*].
________________________
* SEC File No. 1-4040.
E-2
EXHIBIT INDEX (cont'd)
4(s) Extension Agreement dated August 22, 1996, between Sears,
Roebuck and Co. and the Registrant [Incorporated by reference
to Exhibit 4(c) to the Registrant's Current Report on Form 8-K
dated August 22, 1996*].
4(t) Extension Agreement dated September 18, 1997, between Sears,
Roebuck and Co and the Registrant. [Incorporated
by reference to Exhibit 4(t) to the Registrant's
Annual Report on Form 10-K dated January 1, 2000*].
4(u) Extension Agreement dated October 23, 1998, between Sears,
Roebuck and Co and the Registrant. [Incorporated
by reference to Exhibit 4(u) to the Registrant's
Annual Report on Form 10-K dated January 1, 2000*].
4(v) Form of 6.625% Note [Incorporated by reference to Exhibit 4
to the Registrant's Current Report on Form 8-K dated
February 27, 1997*].
4(w) Form of 6.95% Note [Incorporated by reference to Exhibit 4.1
to the Registrant's Current Report on Form 8-K dated
July 9, 1997*].
4(x) Form of 7.00% Note [Incorporated by reference to Exhibit 4.4
to the Registrant's Current Report on Form 8-K dated
July 9, 1997*].
4(y) Form of Fixed-Rate Medium-Term Note Series IV [Incorporated by
reference to Exhibit 4.2 to the Registrant's Current Report on
Form 8-K dated July 9, 1997*].
4(z) Form of Floating Rate Medium-Term Note Series IV [Incorporated
by reference to Exhibit 4.3 to the Registrant's Current Report
on Form 8-K dated July 9, 1997*].
4(aa) Form of 6.70% Note [Incorporated by reference to Exhibit 4(a)
to the Registrant's Current Report on Form 8-K dated
October 14, 1997*].
4(bb) Form of 7.50% Note [Incorporated by reference to Exhibit 4(b)
to the Registrant's Current Report on Form 8-K dated
October 14, 1997*].
4(cc) Form of 6.875% Note [Incorporated by reference to Exhibit 4(c)
to the Registrant's Current Report on Form 8-K dated
October 14, 1997*].
4(dd) Form of 6.75% Note [Incorporated by reference to Exhibit 4(a)
to the Registrant's Current Report on Form 8-K dated
January 8, 1998*].
4(ee) Form of Fixed-Rate Medium-Term Note Series V [Incorporated
by reference to Exhibit 4(a) to the Registrant's Current
Report on Form 8-K dated February 23, 1998*]
_________________________
* SEC File No. 1-4040.
** Filed herewith.
E-3
EXHIBIT INDEX (cont'd)
4(ff) Form of Floating Rate Medium-Term Note Series V [Incorporated
by reference to Exhibit 4(b) to the Registrant's Current Report
on Form 8-K dated February 23, 1998*].
4(gg) Form of Global 7.00% Note [Incorporated by reference to Exhibit
4(c) to the Registrant's Current Report on Form 8-K dated
February 23, 1998*].
4(hh) Form of Global 6.00% Note [Incorporated by reference to Exhibit
4(c) to the Registrant's Current Report on Form 8-K dated
March 13, 1998*].
4(ii) Form of Global 6.95% Note [Incorporated by reference to Exhibit
4(c) to the Registrant's Current Report on Form 8-K dated
October 16, 1998*].
4(jj) Form of Global 6.50% Note [Incorporated by reference to Exhibit
4(c) to the Registrant's Current Report on Form 8-K dated
November 24, 1998*].
4(kk) Form of 6.25% Note [Incorporated by reference to Exhibit
4(c) to the Registrant's Current Report on Form 8-K dated
April 29, 1999*].
4(ll) Form of Extension Agreement extending the term of aggregate
commitments of $4,125 million under the Amended and Restated
$5,000,000,000 Credit Agreement dated as of April 28, 1997.
[Incorporated by reference to Exhibit 4(jj) to the Registrant's
Annual Report on form 10-K for the Year ended January 2, 1999.]
4(mm) Letter Agreement dated October 30, 1998 between the Registrant
and The Huntington National Bank relating to a $60 million
commitment under the Amended and Restated $5,000,000,000 Credit
Agreement dated April 28, 1997.
10(a) Letter Agreement dated as of October 17, 1991 between
Registrant and Sears, Roebuck and Co. [Incorporated by
reference to Exhibit 10 to the Registrant's Quarterly Report
on Form 10-Q for the quarter ended September 30, 1991*].
* SEC File No. 1-4040.
** Filed herewith.
E-4
EXHIBIT INDEX (cont'd)
10(b)(1) Agreement to Issue Letters of Credit dated December 3, 1985
between Sears, Roebuck and Co. and Registrant [Incorporated by
reference to Exhibit 10(i)(1) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1987*].
10(b)(2) Letter Agreement dated March 11, 1986 amending Agreement to
Issue Letters of Credit dated December 3, 1985 [Incorporated by
reference to Exhibit 10(i)(2) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1987*].
10(b)(3) Letter Agreement dated November 26, 1986 amending Agreement to
Issue Letters of Credit dated December 3, 1985 [Incorporated by
reference to Exhibit 10(i)(3) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1987*].
12 Calculation of ratio of earnings to fixed charges.**
23 Consent of Deloitte & Touche LLP.**
24 Power of attorney.**
_______________________
* SEC File No. 1-4040.
** Filed herewith.
***SEC File No. 1-416
E-5
Exhibit 12
SEARS ROEBUCK ACCEPTANCE CORP.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
2000 1999 1998
(dollars in millions)
INCOME BEFORE INCOME TAXES $248 $243 $ 251
PLUS FIXED CHARGES:
Interest 951 943 968
Amortization of debt
discount/premium 15 12 11
------- ------- -------
TOTAL FIXED CHARGES 966 955 979
------- ------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $1,214 $1,198 $1,230
======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.26 1.25 1.26
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
Nos. 333-30879 and 333-62847 of Sears Roebuck Acceptance Corp. on Forms S-3
of our report dated January 19, 2001, appearing in this Annual Report on
Form 10-K of Sears Roebuck Acceptance Corp. for the year ended
December 30, 2000.
\s\Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
March 22, 2001
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each of the undersigned, being a
director or officer, or both, of SEARS ROEBUCK ACCEPTANCE CORP., a
Delaware corporation (the "Corporation"), does hereby constitute
and appoint KEITH E. TROST, GEORGE F. SLOOK and JAMES G. KEANE with
full power to each of them to act alone, as the true and lawful
attorneys and agents of the undersigned, with full power of
substitution and resubstitution to each of said attorneys, to
execute, file and deliver any and all instruments and to do any and all
acts and things which said attorneys and agents, or any of them, deem
advisable to enable the Corporation to comply with the Securities Exchange
Act of 1934, as amended, and any requirements of the Securities and
Exchange Commission in respect thereto, relating to annual reports on
Form 10-K including specifically, but without limitation of the general
authority hereby granted, the power and authority to sign his name in
the name and on behalf of the Corporation, as indicated below opposite
his signature, to annual reports on Form 10-K or any amendment thereto;
and each of the undersigned does hereby fully ratify and confirm all that
said attorneys and agents, or any of them, or the substitute of any of them,
shall do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned have subscribed these presents, as of
this 12th day of March, 2001.
NAME TITLE
/s/Keith E. Trost Director and President
Keith E. Trost (Principal Executive Officer)
/s/George F. Slook Director and Vice President, Finance
George F. Slook (Principal Financial and Accounting Officer)
/s/Jeffrey N. Boyer Director
Jeffrey N. Boyer
/s/Larry R. Raymond Director
Larry R. Raymond
/s/Glenn R. Richter Director
Glenn R. Richter