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 29, 2001
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, 2002, 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 form 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 in the past sold receivable balances
to, SRAC. SRAC obtains funds through the issuance of unsecured 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 Rating's,
P-2 from Moody's Investor Services, Inc., and A-2 from Standard & Poor's.
Long-term debt ratings are A- from Fitch Rating's, 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 liquidity support for its outstanding commercial
paper through its investment portfolio and committed credit facilities. As
of December 29, 2001, SRAC commercial paper was supported by a $5.1 billion
syndicated credit agreement; $875 million of which expires in April 2002 and
$4.2 billion of which expires in April 2003.
Pursuant to the syndicated credit agreement 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 2001 with an equity position of $3.2 billion and
a debt-to-equity ratio of 4.2:1 compared to 4.6:1 at the end of 2000.
As of February 28, 2002 SRAC had ten 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 decreased to $16.0 billion
at year-end 2001 from $16.9 billion at year-end 2000, as a result of
decreased funding requirements of Sears. Short-term borrowings
at the end of 2001 were $3.2 billion, a $700 million decrease from the prior
year. Total debt outstanding decreased to $13.3 billion at year-end 2001 from
$14.1 billion at year-end 2000.
Results of Operations
SRAC's total revenues of $1,089 million for 2001 decreased
from $1,216 million in 2000 and from $1,201 million in 1999.
The revenue decrease for 2001 resulted primarily from a 61 basis point
decrease in the average rates on earning assets from 2000 to 2001 and
a $400 million reduction in average earning asset levels during 2001
versus 2000. The revenue increase for 2000 resulted primarily from a
30 basis point increase in the average rate on earning assets from 1999
to 2000.
SRAC's interest and related expenses were $866 million,
$966 million and $955 million in 2001, 2000, and 1999, respectively.
In 2001, SRAC's average cost of short-term funds decreased 191 basis
points from 6.66% in 2000 to 4.75%. SRAC's average cost of term debt
remained at 6.60% for 2001 and 2000. Decreases in interest and related
expenses resulted from lower interest rates throughout 2001 and a reduction
in overall debt levels. Average daily outstanding short-term debt in 2001
was $3.3 billion compared to $3.2 billion in 2000. Average daily outstanding
term debt of $10.5 billion in 2001 decreased nearly $600 million from
the $11.1 billion average level in 2000.
The following unsecured securities were issued by SRAC during 2001:
*$1.8 billion of discrete underwritten notes, weighted average
coupon of 6.89% and an average term of 10 years; and
*$270 million of variable-rate medium-term notes, weighted
average coupon of 3 month LIBOR + 1.06% and an
average term of 2.3 years;
During 2000, SRAC's management of the debt portfolio
resulted in a $600 million reduction from 1999 average debt levels
offset by a 36 basis point increase in average cost. This resulted in
increases in interest and related expenses throughout 2000.
SRAC's net income was $144 million in 2001, $161 million in
2000 and $158 million in 1999.
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
The primary market risk exposure faced by SRAC is interest
rate risk and arises from SRAC's debt obligations. 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 2001 and 2000, 39% and 45%, 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 2001 and 2000, which
totaled $13.3 and $14.2 billion, respectively, a 100 basis point change in
interest rates would affect annual pre-tax funding cost by approximately
$52 million and $63 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)
2001 2000 1999
------ ------ ------
Revenues
--------
Earnings on notes of Sears $1,075 $1,204 $1,189
Earnings on commercial customer
receivable balances purchased
from Sears - - 4
Earnings on cash equivalents 14 12 8
----- ----- -----
Total revenues 1,089 1,216 1,201
Expenses
--------
Interest expense and amortization of
debt discount/premium 866 966 955
Operating expenses 2 2 3
----- ----- -----
Total expenses 868 968 958
----- ----- -----
Income before income taxes 221 248 243
Income taxes 77 87 85
----- ----- -----
Net income $ 144 $ 161 $ 158
===== ===== =====
Ratio of earnings to fixed charges 1.26 1.26 1.25
See notes to financial statements.
6
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF FINANCIAL POSITION
(millions, except share data) 2001 2000
------- -------
Assets
------
Cash and cash equivalents $ 599 $ 442
Notes of Sears 16,014 16,879
Other assets 125 45
--------- ---------
Total assets $16,738 $17,366
========= =========
Liabilities
-----------
Commercial paper (net of unamortized
discount of $9 and $25) $ 3,225 $ 3,934
Medium-term notes (net of unamortized
discount of $6 and $7) 2,762 4,608
Discrete underwritten debt(net of
unamortized discount of $29 and $21) 7,321 5,579
Accrued interest and other liabilities 192 151
--------- ---------
Total liabilities 13,500 14,272
--------- ---------
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 2,053 1,909
--------- --------
Total shareholder's equity 3,238 3,094
--------- --------
Total liabilities and
shareholder's equity $16,738 $17,366
========= ========
See notes to financial statements.
7
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF SHAREHOLDER'S EQUITY
(millions) 2001 2000 1999
-------- -------- --------
Common share $ 35 $ 35 $ 35
-------- -------- --------
Capital in excess of par value:
Beginning of year 1,150 1,150 1,150
Capital contribution - - -
-------- -------- --------
End of year $1,150 $1,150 $1,150
-------- -------- --------
Retained earnings:
Beginning of year $1,909 $1,748 $1,590
Net income 144 161 158
-------- -------- --------
End of year $2,053 $1,909 $1,748
-------- -------- --------
Total shareholder's equity $3,238 $3,094 $2,933
======== ======== ========
See notes to financial statements.
8
SEARS ROEBUCK ACCEPTANCE CORP.
STATEMENTS OF CASH FLOWS
(millions) 2001 2000 1999
-------- -------- --------
Cash Flows From Operating Activities
------------------------------------
Net income $ 144 $ 161 $ 158
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and
other noncash items 13 15 12
(Increase)decrease in other assets (80) 7 4
Increase (decrease) in other liabilities 41 (22) 4
-------- -------- --------
Net cash provided by
operating activities 118 161 178
Cash Flows From Investing Activities
------------------------------------
Decrease(increase) in notes of Sears 865 (73) 1,184
Decrease in commercial customer
receivable balances purchased from Sears - - 90
-------- -------- --------
Net cash provided by (used in)
investing activities 865 (73) 1,274
Cash Flows From Financing Activities
------------------------------------
(Decrease)increase in commercial paper,
primarily 90 days or less (709) 1,259 (1,568)
Proceeds from issuance of long-term debt 2,009 286 1,091
Payments for redemption of long-term debt (2,117) (1,645) (610)
Issue cost paid to issue debt (9) - (5)
-------- -------- --------
Net cash used in
financing activities (826) (100) (1,092)
-------- -------- --------
Net increase(decrease)
in cash and cash equivalents 157 (12) 360
Cash and cash equivalents, beginning of year 442 454 94
-------- -------- --------
Cash and cash equivalents, end of year $ 599 $ 442 $ 454
======== ======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the year
Interest paid $842 $972 $936
Income taxes 61 86 84
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 using proceeds from its unsecured
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 nearest December 31. Fiscal
year-ends were December 29, 2001 (52 weeks), December 30, 2000 (52 weeks),
and January 1, 2000 (52 weeks).
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, 2000. The adoption of SFAS 133
resulted in no transition adjustment.
2. FEDERAL INCOME TAXES
Federal income taxes provided for by SRAC amounted to $77 million,
$87 million and $85 million for the fiscal years 2001, 2000 and 1999,
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
In the past, SRAC purchased commercial customer receivable balances
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 established with merchants and
contractors for bulk purchases from Sears and were predominantly
paid within 30 days.
Each month, SRAC purchased new receivables and received collections
on previously purchased receivables. SRAC discontinued this program
as of the end of 1999.
4. COMMERCIAL PAPER
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) 2001 2000
-------- --------
Commercial paper outstanding $3,234 $3,959
Less: Unamortized discount 9 25
-------- --------
Commercial paper outstanding(net) $3,225 $3,934
-------- --------
Average and Maximum Balances(net) 2001 2000
------------------- -------------------
Maximum Maximum
(millions) Average (month-end) Average (month-end)
------------------- -------------------
Commercial paper $3,328 $3,872 $3,202 $4,461
------------------- -------------------
Weighted Average Interest Rates 2001 2000
------------------- -------------------
Average Year-end Average Year-end
------------------- -------------------
Commercial paper 4.75% 2.98% 6.66% 7.35%
------------------- -------------------
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.
2001 Avg. Orig. 2000 Avg. Orig.
Volume Coupon Term Volume Coupon Term
------ ------ ---- ------ ------ ----
Fourth Quarter:
Medium-term notes $ 270 3.45% 2.3 $200 6.84% 1.0
Discrete debt $ - - - $ - - -
Year:
Medium-term notes $ 270 3.45% 2.3 $295 6.76% 1.8
Discrete debt $1,750 6.89% 10.0 $ - - -
GROSS OUTSTANDING
Avg. Avg.
12/29/01 Avg. Remain. 12/30/00 Avg. Remain.
Balance Coupon Term Balance Coupon Term
-------- ------ ----- ------- ------ ------
Medium-term notes $2,768 5.95% 1.7 $4,615 6.67% 1.7
Discrete debt $7,350 6.67% 10.0 $5,600 6.60% 11.2
MATURITIES
Medium-term Discrete
Year notes debt
---------------------------------
2002 $ 958 $ 600
2003 1,246 1,250
2004 302 -
2005 36 250
2006 40 550
Thereafter 186 4,700
---------------------------------
Total $2,768 $7,350
=================================
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 $899 million in
2001. Committed credit facilities as of December 29, 2001 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 29, 2001 on these credit lines were
$3.7 million.
7. LETTERS OF CREDIT AND OTHER COMMITMENTS
SRAC has been a 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 was paid off January 8, 2002 and the guaranty
terminated.
SRAC is the guarantor of an office lease entered into by GlobalNetXchange,
LLC(GNX) as of October 6, 2000 and expiring on January 31, 2006. At
December 29, 2001, SRAC's obligation for the remaining lease payments
totaled $6.2 million. SRAC's exposure is mitigated by an indemnification
agreement dated as of February 12, 2001 by which certain members of GNX
have severally agreed to indemnify SRAC in connection with its liability under
the lease guaranty. Futhermore, GNX has secured a letter of credit with SRAC
as beneficiary to cover the exposure of a member who is not a party to the
indemnification agreement.
SRAC issues import letters of credit to facilitate Sears purchase of goods
from foreign suppliers. At December 29, 2001, letters of credit totaling
$185 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 and
its subsidiaries. At December 29, 2001, irrevocable letters of credit totaling
$37 million were outstanding.
To facilitate an understanding of SRAC's commitments the following data is
provided:
Amount of Commitment Expiration Per Period
------------------------------------------
Total
Amounts Less than After 5
thousands Committed 1 year 1-3 years 4-5 years years
--------- -------- --------- --------- -------
Other Commercial Commitments
Standby Letters of Credit 37 5 1 1 30
Guarantees 76 72 3 1 -
Import Letters of Credit 185 185 - - -
-------- -------- --------- -------- -------
Total Commitments $ 298 $ 262 $ 4 $ 2 $ 30
======== ======== ========= ======== =======
13
8. FINANCIAL INSTRUMENTS
In the normal course of business, SRAC invests in certain notes of Sears
and in the past, purchased 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:
---------------------------------------------------------------------------
2001 2000
Carrying Fair Carrying Fair
(millions) Value Value Value Value
---------------------------------------------------------------------------
Medium-term notes (net) $2,762 $2,816 $4,608 $4,544
Discrete underwritten debt(net) 7,321 7,326 5,579 5,311
9. QUARTERLY FINANCIAL DATA (UNAUDITED)
First Second Third Fourth Total
Quarter Quarter Quarter Quarter Year
2001 2000 2001 2000 2001 2000 2001 2000 2001 2000
(millions) ------------ ---------- --------- --------- ----------
Operating Results
Total revenues $304 $302 $276 $299 $260 $300 $249 $315 $1,089 $1,216
Interest & related
expenses 241 240 220 237 207 239 198 250 866 966
Total expenses 242 241 220 238 207 239 199 250 868 968
Income before
income taxes 62 61 56 61 53 61 50 65 221 248
Net income 40 40 37 39 34 40 33 42 144 161
Ratio of earnings to
fixed charges 1.26 1.25 1.26 1.26 1.26 1.26 1.25 1.26 1.26 1.26
(billions)
--------
Averages
Earning assets*$17.5 $17.6 $17.2 $17.3 $16.9 $17.3 $17.0 $17.9 $17.1 $17.5
Short-term debt 3.5 2.9 3.4 2.6 3.2 3.1 3.3 4.2 3.3 3.2
Long-term debt 10.6 11.6 10.5 11.5 10.5 11.0 10.3 10.4 10.5 11.1
Cost of
short-term debt6.65% 6.07% 5.08% 6.49% 4.02% 6.87% 3.15% 7.02% 4.75% 6.66%
long-term debt 6.70% 6.60% 6.64% 6.59% 6.56% 6.58% 6.50% 6.64% 6.60% 6.60%
*Notes 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 13, 2002
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 13, 2002
and Assistant Secretary )
(Principal Financial and )
Accounting Officer) )
)
Paul J. Liska* 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 29, 2001 and December 30, 2000, and the related statements of
income, shareholder's equity, and cash flows for each of the three years in
the period ended December 29, 2001. 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 29, 2001 and December 30, 2000, and the results of its
operations and its cash flows for each of the three years in the period
ended December 29, 2001 in conformity with accounting principles
generally accepted in the United States of America.
/S/ Deloitte & Touche LLP
Deloitte & Touche LLP
Philadelphia, Pennsylvania
January 17, 2002
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 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(f) 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(g) 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(h) 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(i) 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(j) 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(k) 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(l) 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(m) 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(n) 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(o) 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(p) 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(q) 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(r) 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(s) 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(t) 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(u) 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(v) 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(w) 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(x) 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(y) 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(z) 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(aa) 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(bb) 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(cc) 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(dd) 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(ee) 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(ff) 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(gg) 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(hh) 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(ii) 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(jj) 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(kk) 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(ll) 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.
4(mm) 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(nn) Form of 6.75% Note [Incorporated by reference to Exhibit
4 to the Registrant's Current Report on Form 8-K dated
August 8, 2001*].
_______________________
* SEC File No. 1-4040.
** Filed herewith.
E-4
EXHIBIT INDEX (cont'd)
4(oo) Form of 7.00% Note [Incorporated by reference to Exhibit
4 to the Registrant's Current Report on Form 8-K dated
September 5, 2001*].
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*].
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
2001 2000 1999
(dollars in millions)
INCOME BEFORE INCOME TAXES $ 221 $ 248 $ 243
PLUS FIXED CHARGES:
Interest 853 951 943
Amortization of debt
discount/premium 13 15 12
------- ------- -------
TOTAL FIXED CHARGES 866 966 955
------- ------- -------
EARNINGS BEFORE INCOME TAXES
AND FIXED CHARGES $1,087 $1,214 $1,198
======= ======= =======
RATIO OF EARNINGS TO FIXED
CHARGES 1.26 1.26 1.25
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 17, 2002, appearing
in this Annual Report on Form 10-K of Sears Roebuck Acceptance Corp.
for the year ended December 29, 2001.
\s\Deloitte & Touche LLP
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
March 13, 2002
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 11th day of March, 2002.
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/Paul J. Liska Director
Paul J. Liska
/s/Larry R. Raymond Director
Larry R. Raymond
/s/Glenn R. Richter Director
Glenn R. Richter