UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
For Annual and Transition Reports pursuant to Sections 13 or 15(d) of the
Securities Exchange Act of 1934
X ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended January 1, 2000
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 1-416
SEARS, ROEBUCK AND CO.
(Exact Name of Registrant as Specified in Its Charter)
New York 36-1750680
(State of Incorporation) (I.R.S. Employer Identification No.)
3333 Beverly Road, Hoffman Estates, Illinois 60179
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (847) 286-2500
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange on
Title of each class Which Registered
Common Shares, par value $0.75 per share New York Stock Exchange
Chicago Stock Exchange
Pacific Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
On January 31, 2000, the Registrant had 367,179,362 common shares
outstanding. Of these, 297,378,733 common shares, having an aggregate market
value (based on the closing price of these shares as reported in a summary of
composite transactions in The Wall Street Journal for stocks listed on the New
York Stock Exchange on January 31, 2000) of approximately $9.2 billion, were
owned by shareholders other than (i) directors and executive officers of the
Registrant and (ii) any person known by the Registrant as of the date thereof
to beneficially own five percent or more of Registrant's common shares.
Indicate by check mark whether the 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
Indicate by check mark if 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 the 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 ]
Documents Incorporated By Reference
Parts I and II of this Form 10-K incorporate by reference certain
information from the Registrant's 1999 Annual Report to Shareholders (the "1999
Annual Report"). Part III of this Form 10-K incorporates by reference certain
information from the Registrant's definitive Proxy Statement, dated March 17,
2000, for its Annual Meeting of Shareholders to be held on May 11, 2000 (the
"2000 Proxy Statement").
2
PART I
Item 1. Business
Sears, Roebuck and Co. ("Sears") originated from an enterprise established
in 1886 and was incorporated under the laws of New York in 1906. Its principal
executive offices are located at 3333 Beverly Road, Hoffman Estates, Illinois.
Sears (together with its consolidated subsidiaries, the "Company") is a multi-
line retailer that provides a wide array of merchandise and services through
five segments - Retail, Services, Credit, Corporate and International. The
Company is among the largest retailers of merchandise and services in the world.
The Company's segments in the United States and Puerto Rico are Retail
(comprised of Full-line Stores and Specialty Stores), Services (comprised of
Home Services and Direct Response), Credit (comprised of the domestic credit
operations) and Corporate (comprised of activities which are of a holding
company nature and its investment in Sears Online).
The International segment consists of similar retail, services, credit and
corporate operations conducted through a majority-owned subsidiary in Canada.
For further information, see "Retail," "Services," "Credit," "Corporate"
and "International" below and "Management's Analysis of Consolidated
Operations" and "Management's Analysis of Consolidated Financial Condition"
beginning on pages 17 and 25, respectively, of the 1999 Annual Report,
incorporated herein by reference in response to Item 7 hereof.
________________________________
Information regarding revenues, operating income and assets of the
Company's Retail, Services, Credit, Corporate and International segments for
each of the three fiscal years ended January 1, 2000, January 2, 1999 and
January 3, 1998 is in Note 15 of the Notes to Consolidated Financial Statements
on page 40 of the 1999 Annual Report, incorporated herein by reference in
response to Item 8 hereof. Information on the components of revenues is
included in the "Management's Analysis of Consolidated Operations" beginning on
page 17 of the 1999 Annual Report, incorporated herein by reference in response
to Item 7 hereof.
The Company employs approximately 326,000 people worldwide.
3
RETAIL
The Company's Retail operations consist of the following:
Full-line Stores
At January 1, 2000, the Full-line Store operations consist primarily of
858 mall-based retail stores selling the following categories of
merchandise:
- Softlines, which consists of apparel and accessories for the
entire family, plus cosmetics, fine jewelry and home fashions. The
Softlines departments seek to be the price/value leader among
mall-based stores.
- Hardlines, which consists of a full assortment of appliances,
electronics and computers for the home, home improvement products,
- sporting goods, lawn and garden equipment and seasonal items. The
Hardlines departments compete with off-the-mall specialty stores
in the same product categories.
- Licensed Businesses, which consist of third party concessions
primarily operated within the Full-line Stores, and include
portrait studios, optical and other licensees.
Specialty Stores
At January 1, 2000, Specialty Stores operations consist of formats
designed to offer the Company's hardlines and home fashion merchandise
through outlets other than the Full-line Stores. The specific store
formats are as follows:
- 738 Sears Dealer Stores that are primarily independently owned and
operated and offer appliances, electronics, hardware, lawn and
garden equipment, and automobile batteries. Dealer Stores carry
exclusive brands such as CRAFTSMAN, KENMORE and DIEHARD, as
well as a wide assortment of national brands and are located in
smaller rural, and urban markets.
- 267 free-standing, neighborhood Hardware stores, operating under
the Sears Hardware and Orchard Supply Hardware names, which carry
Sears proprietary brands such as CRAFTSMAN tools, as well as a
wide assortment of national brands and other home repair products.
- The Great Indoors, which currently has two test stores in
operation, is a prototype format for home decorating and
remodeling.
- Contract Sales primarily targets home builders, remodelers and
property managers for appliance purchases, as well as vocational
schools, factory maintenance and service companies for industrial
tool purchases. Contract Sales has also implemented the Appliance
Select, which utilizes 78 Full-line Stores as showrooms to target
the new home buyer and offers a full selection of KENMORE(r) and
other major national brand kitchen and home appliances.
- Automotive Stores, which consists of 798 Sears Auto Centers
primarily located at the mall-based Full-line Stores and 310 NTB
National Tire & Battery stores. These stores sell and install
tires, DIEHARD(r) and other automotive batteries, and related goods
4
and services. The Automotive Stores, which are the country's
largest seller of tires and auto batteries, are positioned to
compete effectively with companies that specialize in tires,
batteries and related services.
SERVICES
At January 1, 2000, the Services operations consist of:
Home Services, which includes:
- Product Services (repair services), which provides product repair
on all major brands of appliances, consumer electronics, and
heating and air conditioning systems, regardless of where
purchased.
- Service Contracts, which provide extended warranty coverage
through maintenance agreements.
- Installed Home Improvements, which includes the following services
provided by Sears associates and outside contractors:
- Home Improvement Services, which sells and installs siding,
windows, roofing, cabinet refacing, and other home
improvements and provides services such as pest control,
carpet cleaning, home security, and plumbing services.
- Air Conditioning and Heating Systems, which sells and
installs heating, ventilation and air conditioning for
homes.
- Installation Services, which installs water heaters,
dishwashers and other products purchased at Sears retail
stores.
Direct Response, which includes specialty catalogs, insurance (credit
protection and traditional life and health products), clubs and
services and impulse and continuity merchandise marketed through
multiple media.
________________________
The pricing strategy for the Retail and Services businesses is to offer
customers good values every day, as well as to have special sales events and
promotions offering additional values. Through these operations, the Company
offers a mixture of national brands and high quality private label merchandise.
5
CREDIT
The products offered by the Company's domestic credit operations ("Credit")
make it more attractive for customers to purchase goods and services from the
Retail and Services businesses. As of January 1, 2000, Credit had approximately
24 million active customer credit accounts (accounts with balances as of the end
of December 1999) with an average balance of $1,121. Sears Card, the
traditional credit card, accounted for approximately 90% of total receivables.
There were approximately 39 million Sears Card customers with accounts that
carried a balance during any month in 1999.
Sears stores also accept third party credit and debit cards such as VISA,
MasterCard, American Express and Discover Card. Sears Card sales as a
percentage of total sales in Full-line Stores and the majority of the Specialty
Store formats was approximately 47.9%, 51.6% and 55.1% for fiscal years 1999,
1998 and 1997, respectively. Since Sears began to accept VISA, MasterCard and
American Express cards at all Sears stores, the Company has focused intensely on
marketing and other initiatives that are designed to maintain the penetration of
Credit's products in all sales and service channels, as well as to increase the
revenues of the Retail and Services businesses.
Sears has an ongoing securitization program through which a wholly-owned
subsidiary of Sears transfers a portion of the Company's domestic customer
receivable balances to a master trust (the "Master Trust") that issues credit
account pass-through certificates to public and private investors. To the
extent the pass-through certificates are sold to third parties, the related
transferred balances qualify as sales for financial statement purposes and as
such the receivables are removed from the Company's consolidated balance sheet.
The balance of the receivables in the Master Trust for which pass-through
certificates are not sold to third parties, is presented as retained interest in
transferred credit card receivables. Pursuant to contractual agreements, Sears
remains the servicer on the accounts and receives a fee for the services
performed. See "Management's Analysis of Consolidated Operations,"
"Management's Analysis of Consolidated Financial Condition" and Notes 1 and 8 of
the Notes to Consolidated Financial Statements beginning on pages 17, 25, 30 and
36, respectively, of the 1999 Annual Report, incorporated herein by reference in
response to Items 7 and 8 hereof.
Credit's operations are subject to federal and state legislation and
regulation. From time to time, such legislation, as well as competitive
conditions, may affect, among other things, credit card finance charges. While
the Company cannot predict the effect of future competitive conditions and
legislation or the measures the Company might take in response thereto, a
significant reduction in the finance charges imposed by Credit would have an
adverse effect on the Company. In addition, changes in general U.S. economic
conditions, including, but not limited to, higher interest rates and
increases in delinquencies, charge-offs and personal bankruptcies could have an
adverse effect on the Company.
Sears National Bank (the "Bank"), a wholly-owned subsidiary of Sears based
in Arizona, is a limited purpose credit card bank engaging in credit card
operations. The Bank is subject to certain other restrictions applicable to
credit card banks under federal law, as well as Arizona credit card lending
guidelines. The Bank originates Sears Card accounts in all fifty states.
Certain of the Company's other customer credit accounts have also been
transferred to or are being originated by the Bank.
6
CORPORATE
Corporate operations include activities that are of an overall holding
company nature, primarily consisting of administrative activities, the costs of
which are not allocated to the Company's businesses. Corporate operations also
include the Company's investment in Sears Online, which consists of the
Company's e-commerce activities including the sale of appliances, tools, repair
parts, and other products through Sears.com. Sears Online will continue to
expand its product and service offerings and its integration with the Company's
retail operations throughout 2000.
INTERNATIONAL
The Company conducts similar retail, services, credit and corporate
operations in Canada through Sears Canada Inc. ("Sears Canada"), a
consolidated, 54.6% owned subsidiary of Sears. On December 30, 1999,
Sears Canada completed a share purchase transaction with The T. Eaton
Company Limited ("Eaton's"). Sears Canada acquired 16 store locations and
three leased Eaton's store locations, among other assets. Of the 19 Eaton's
locations acquired, Sears Canada plans to convert 10 locations to Sears
Canada Full-line stores (three in replacement of Sears Canada
stores in close proximity to the Eaton's locations), one to a Sears Furniture
Store, one to an outlet store and continue to operate seven Full-line stores
under the Eaton's banner. As of March 1, 2000, Sears Canada operates 116
Full-line stores (including five Full-line stores formerly operating as
Eaton's and one operating under the Eaton's banner), 25 Sears Furniture
Stores and 12 outlet stores, and has 2,005 independent catalog merchant
agents operating under local ownership, 110 independently operated dealer
stores and seven active warehouses. During fiscal 1999, Sears Canada o
tores, open one outlet store, open 15 dealer stores and 45 catalog merchant
agent locations, as well as renovate four Full-line stores. Sears Canada
continues to seek opportunities for expansion in desirable locations.
As of January 1, 2000, Sears Canada employed approximately 46,000 full and
part-time employees.
Sears Canada has an ongoing securitization program pursuant to which
undivided co-ownership interests in its pool of customer charge account
receivables are sold to trusts established to issue debt and trust units
(representing the residual equity interest in the trust) to third parties.
Effective January 1, 1997, these securitizations do not qualify as sales under
United States generally accepted accounting principles. Therefore, the
customer charge account receivables are maintained on the Company's balance
sheet and related proceeds are recorded as debt. Sears Canada acts as
servicer of the customer charge account receivables.
7
Strategic Initiatives
The Company's strategic initiatives form the framework for competing in
the continually changing retail landscape. The Company's objective is to
develop an on-going, enduring relationship with all North American consumers
and is centered around five strategic initiatives.
First, make the Company a compelling place to shop anytime and anywhere.
The Company will position its businesses to become a multi-channel retailer of
merchandise and services, reaching customers through its Full-line Stores,
Specialty Stores, catalogs and the Internet. The Company strives to serve its
customers throughout the various stages of their lives via multiple delivery
channels. The Company's ability to sell, finance, deliver, install and service
a wide array of consumer products will help make it a compelling place to shop
anytime and anywhere.
Second, the Company will focus on winning with the customers by
communicating and delivering the Company's unique value proposition. The
Company offers a competitive price and strong assortment of national brands
complemented with outstanding proprietary brands such as KENMORE(r),
CRAFTSMAN(r), CIRCLE OF BEAUTY(tm) and CANYON RIVER BLUES(r). This value
proposition should retain existing customers and also attract new customers
into a long-term relationship with Sears.
Third, the Company will continue to stress a localized focus via the
utilization of our customer data warehouse. With more than 60 million
households in the data warehouse, the Company can execute merchandising and
marketing programs on a highly targeted basis.
Fourth, the Company will further emphasize cost and asset productivity.
This initiative involves ongoing improvements in cost containment and inventory
leverage throughout the Company. It also involves the allocation and
redeployment of assets to uses that enhance shareholder value.
Fifth, the Company will continue to build a winning culture internally.
This will be accomplished by focusing on associate satisfaction, reducing
turnover, and increasing diversity in the workforce.
Sources of Merchandise
At January 1, 2000, the Retail and Services businesses purchased goods
primarily from approximately 4,300 domestic suppliers, most of which have been
suppliers for many years.
Seasonality
Due to holiday buying patterns, merchandise sales are traditionally higher
in the fourth quarter than in the other quarterly periods and the Company
typically earns a disproportionate share of operating income in the fourth
quarter. Similarly, sales and operating income are generally lowest in the
first quarter.
Trademarks
The name "SEARS" is used extensively in the Company's domestic operations
and other businesses. The Company's right to the name "SEARS" domestically
continues so long as it uses the name. The name is also the subject of
numerous renewable United States and foreign trademark registrations. This
trademark is material to the Company's domestic operations and other
related businesses.
8
The Company sells private label merchandise under a number of brand names
which are important to its domestic operations. Sears KENMORE(r), CRAFTSMAN(r)
and DIEHARD(r) brands are among the strongest private label brands in
retailing. These names are the subject of numerous renewable United States
and foreign trademark and service mark registrations. Other important and
well-recognized Company trademarks and service marks include BRAND CENTRAL(r),
CIRCLE OF BEAUTY(tm), CANYON RIVER BLUES(r), WISHBOOK(r), NTB(r), ORCHARD(r)
and The Good Life at a Great Price. Guaranteed.SM ad campaign. The Company's
right to all of its brand names continues so long as it uses the names.
Competition
The domestic retail, services and credit businesses are highly
competitive. The principal factors that differentiate competitors include
convenience of shopping facilities, quality of merchandise, competitive
prices, brand names and availability of services such as credit, product
delivery, repair and installation. The Company believes it is able to
compete very effectively despite strong competitive pressures in recent years.
Employees
The Company employs approximately 280,000 people in the United States and
Puerto Rico, and 46,000 people in Canada, including part-time employees.
FINANCE SUBSIDIARIES
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, Sears Roebuck Acceptance Corp. ("SRAC"), a wholly-owned
finance subsidiary. SRAC obtains funds primarily by issuing commercial paper
and through medium-term notes and discrete underwritten debt.
Sears DC Corp. ("SDC"), a wholly-owned finance subsidiary of Sears, was
formed to borrow in domestic and foreign debt markets and lend the proceeds of
such borrowings to Sears and certain of its direct and indirect subsidiaries in
exchange for their unsecured notes. SDC raised funds through the sale of its
medium-term notes and direct placement of commercial paper with corporate and
institutional investors. The only outstanding debt of SDC is two outstanding
series of medium-term notes. SDC does not plan to issue additional debt.
Substantially all the debt and related interest expense of SRAC and SDC
support the Company's credit card receivables portfolio.
In addition, various direct and indirect subsidiaries of Sears have
engaged in securitization programs in which pass-through certificates
representing interests in credit card receivables are sold in public or
private transactions. See "Credit," and "International," beginning on pages
6 and 7 hereof, respectively, and Notes 1 and 8 of the Notes to Consolidated
Financial Statements beginning on pages 30 and 36, respectively, in the
1999 Annual Report, incorporated herein by reference to Item 8 hereof.
9
EXECUTIVE OFFICERS OF THE REGISTRANT
The following table sets forth the names of the executive officers of the
Company, the current positions and offices with the Company held by them, the
date they first became officers of the Company and their current ages:
Date First
Became
Name Position Officer Age
Arthur C. Martinez Chairman of the Board of Directors, 1992 60
President and Chief Executive Officer
M. Shan Atkins Executive Vice President, Strategic 1996 42
Initiatives
Jeffrey N. Boyer Chief Financial Officer 1996 41
James R. Clifford President and Chief Operating Officer,
Full-Line Stores 1993 54
Mark A. Cohen President, Softlines, 1998 51
Chief Marketing Officer
Mary E. Conway President, Stores 1998 51
Julian C. Day Executive Vice President and 1999 47
Chief Operating Officer
Lyle G. Heidemann President, Hardlines 1992 54
Anastasia D. Kelly Executive Vice President, General Counsel 1999 50
Alan J. Lacy President, Services 1994 46
Gerald N. Miller Senior Vice President, Chief Information 1995 52
Officer
William G. Pagonis Executive Vice President, Logistics 1993 58
John T. Sloan Executive Vice President, Human Resources 1996 48
Messrs. Martinez, Clifford, Heidemann, Lacy, Miller and Pagonis and Ms.
Conway have held the positions set forth in the above tables for at least the
last five years or have served the Company in various executive or
administrative capacities for at least that length of time. The remaining
executive officers have held the following positions for such five-year period:
Ms. Atkins joined Sears in 1996 as Vice President - Strategy, Merchandise
Planning Office, Imports. From 1998 until 1999 she served as Vice
President/General Merchandising Manager Lawn & Garden. In 1999 she was
appointed to the position of Senior Vice President - Strategy. She was elected
to her current position in September 1999. Prior to joining Sears, she had
been Vice President and Partner at Bain & Company, a consulting firm, from
1990 to 1996.
Mr. Boyer joined Sears in 1996 as Vice President, Finance - Full-Line
Stores. From 1998 until September 1999 he served as Vice President and
Controller. In September 1999, he became Chief Financial Officer. Prior to
joining Sears, Mr. Boyer had been Vice President, Business Development of The
Pillsbury Company from 1995 to 1996. From 1994 to 1995, he held the position
of Vice President of Finance - General Foods at Kraft General Foods.
Mr. Cohen joined Sears in February 1998 as Senior Vice President,
Cosmetics, Accessories, Fine Jewelry, Footwear and Home Fashions. In 1999 he
served as Executive Vice President - Marketing, and as President Softlines,
Chief Marketing Officer since September 1999. Prior to joining Sears, he had
been Chairman and Chief Executive Officer of Bradlees, Inc. from 1994 to 1997.
10
Mr. Day joined Sears in March 1999, as Executive Vice President and Chief
Financial Officer, and became Executive Vice President and Chief Operating
Officer and a member of the Office of the Chief Executive in September 1999.
Prior to joining Sears, he had been Executive Vice President & Chief Financial
Officer of Safeway, Inc. from 1992 to 1998.
Ms. Kelly joined Sears as Executive Vice President, General Counsel and
Secretary in March 1999 and has been Executive Vice President, General Counsel
since September 1999. Prior to joining Sears, she had been Senior Vice
President of Fannie Mae, a financial services company, since 1995 and had been
Fannie Mae's General Counsel and Secretary since 1996. Prior to joining Fannie
Mae, she was a partner in the law firm of Wilmer, Cutler & Pickering.
Mr. Sloan has been Executive Vice President, Human Resources since 1999.
Prior to that, he served as Senior Vice President, Human Resources since April
1998. He joined Sears in September 1996 as Vice President, Human Resources,
Full-Line Stores. Prior to joining Sears, he had been Senior Vice President,
Administration, of Tribune Company, a diversified media company, since 1993.
CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION
Certain statements made in this Annual Report on Form 10-K are forward
looking statements made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. As such, they involve
risks and uncertainties that could cause actual results to differ materially.
The Company's forward looking statements are based on assumptions about many
important factors, including ongoing competitive conditions in the retail
industry, changes in consumer confidence and spending, acceptance of new
products, the ability of the Company to successfully implement its promotional
plan and cost control strategy, success of technological advances, general
United States economic conditions, such as interest rates, and normal business
uncertainty. In addition, the Company typically earns a disproportionate share
of its operating income in the fourth quarter due to holiday buying patterns,
which are difficult to forecast with certainty. While the Company believes
that its assumptions are reasonable, it cautions that it is impossible to
predict the impact of such factors that could cause actual results to differ
materially from predicted results. The Company intends the forward-looking
statements in this Annual Report on Form 10-K and the exhibits hereto to
speak only at the time of its filing and does not undertake to update or
revise these projections as more information becomes available.
11
Item 2. Properties
The Company's principal executive offices are located on a 200-acre site
owned by the Company at Prairie Stone, in Hoffman Estates, Illinois. The
complex consists of six interconnected office buildings totaling approximately
two million gross square feet of office space.
The following table sets forth information concerning stores operated by
the Company's domestic Retail operations.
Auto Stores Specialty Stores
Full-line ----------- ------------------------------------
Stores Tire Parts HomeLife Hardware Dealer Other(a) Total
Stores at
January 1,
2000:
Owned 483 630 - - 12 2 19 1,146
Leased(b) 375 478 - - 255 - 21 1,129
Independently - - - - - 736 - 736
owned and
Operated Dealer
Stores
Total Stores at
Fiscal Year-End
1996 821 1,058 627 107 229 469 60 3,371
Stores opened
during fiscal
1997 21 68 90 3 33 124 0 339
Stores closed
during fiscal
1997 (9) (20) (102) (9) (7) (17) (16) (108)
1997 833 1,106 615 101 255 576 44 3,530
Stores opened
during fiscal
1998 23 50 43 4 18 101 1 240
Stores closed
during fiscal
1998 (11) (20) (658)(c) (5) (8) (24) (1) (727)
1998 845 1,136 - 100 265 653 44 3,043
Stores opened
during fiscal
1999 19 24 - 5 18 100 1 167
Stores closed
during fiscal
1999 (6) (52) - (105)(d) (16) (15) (5) (199)
1999 858 1,108 - - 267 738 40 3,011
Gross Retail
Area at Fiscal
Year-End
(square feet
in millions)
1999 113.7 15.8 - - 8.9 6.1 1.9 146.4
1998 112.4 16.2 - 3.6 8.8 5.4 1.9 148.3
1997 110.3 15.9 6.6 3.6 8.2 4.7 1.7 151.0
Retail Selling
Area at Fiscal
Year-End
(square feet
in millions)
1999 75.3 2.2 - - 6.9 4.0 1.3 89.7
1998 73.3 2.3 - 3.0 6.9 3.6 1.3 90.4
1997 71.9 2.2 4.7 3.0 6.5 3.1 1.3 92.7
12
Retail Store Revenues per Selling Square Foot
1999. . . . . . . . . . . . . . . . . . .$325
1998. . . . . . . . . . . . . . . . . . .$317
1997. . . . . . . . . . . . . . . . . . .$318
_____________
(a) Consists of small-size appliance stores, retail outlet stores and The
Great Indoors stores. Excludes "Other" facilities owned or leased as
part of Full-line Store properties.
(b) Many of the leases contain renewal options and contingent rentals
(for additional information, see Note 7 of the Notes to Consolidated
Financial Statements beginning on page 36 of the 1999 Annual Report,
incorporated herein by reference to Item 8 hereof).
(c) Includes 652 Western Auto stores that were sold in November 1998.
(d) Effective January 30, 1999, Sears sold its HomeLife business,
including five retail outlet stores transferred to the HomeLife
organization in January 1999.
In addition, at January 1, 2000, there were 842 other sales offices and
service facilities, most of which are occupied under short-term leases or are a
part of other Sears facilities included in the above table. There were also 96
distribution facilities, most of which are leased for terms ranging from one to
20 years.
Credit principally services its accounts at nine regional credit card
operations centers ("RCCOCs"), one national account authorization center
("NAAC"), four Credit Processing Centers, at the headquarters of the Bank in
Tempe, Arizona and at the Company's headquarters in Hoffman Estates. The
Company owns one of the RCCOCs and leases eight for remaining terms ranging
from four to ten years. The Company owns the NAAC. The Company owns one
of the Credit Processing Centers and leases three for remaining terms
ranging from one to six years.
For the Company's operations, the capital expenditures for expansion and
remodeling and other improvements (excluding capitalized financing leases)
amounted to $1.0 billion for the fiscal year ended January 1, 2000. In fiscal
2000, the Company plans capital expenditures of approximately $1.2 billion for
the opening of approximately 10 new Full-line Stores and over 175 Specialty
Stores. The Company's ability to attain this growth will depend on, among
other things, the availability of suitable store locations on appropriate
terms. The Company may also pursue selective strategic acquisitions.
For additional information, see "International" on page 7 hereof and
"Management's Analysis of Consolidated Financial Condition" beginning on page
25 of the 1999 Annual Report, incorporated herein by reference in response
to Item 7 hereof.
13
Item 3. Legal Proceedings
The Company remains a party to two cases arising from the Company's
purchase of garments produced under allegedly illegal labor conditions on the
island of Saipan in the Commonwealth of the Northern Marianas Islands. The two
actions were filed on January 13, 1999, the first on behalf of ten "Doe"
plaintiffs in the United States District Court for the Central District of
California against eighteen domestic clothes retailers and eleven foreign
clothing suppliers (which case subsequently was transferred to the United
States District Court for the District of Hawaii), and the second by various
interest groups, purportedly on behalf of the general public of the State of
California, in the San Francisco County Superior Courts. Plaintiffs in the
suits seek various injunctive relief, damages (including punitive and
treble damages), restitution and disgorgement of profits, interest, and
attorney fees and costs. On February 23, 2000, the Company entered into a
settlement agreement with the plaintiffs that provides for the dismissal of
both cases with respect to the Company. While continuing to deny plaintiffs'
claims and contentions, the Company agreed to an immaterial one-time cash
payment to the plaintiffs. The Company further agreed that following the
effective date of the agreement, it would only purchase garments produced in
Saipan from factories that adhere to the terms of a monitoring program
provided for in the settlement agreement. The settlement of the cases is
subject to the final approval of both courts. In the event that the
settlement is not approved and the cases continue against the Company, their
consequences are not presently determinable, but in the opinion
of the management of the Company, the ultimate liability is not expected to
have a material effect on the results of operations, financial position,
liquidity or capital resources of the Company.
The Company is subject to various other legal and governmental proceedings
pending against the Company, many involving routine litigation incidental to
the businesses. Other matters contain allegations that are nonroutine and
involve compensatory, punitive or antitrust treble damage claims in very
large amounts, as well as other types of relief. The consequences of these
matters are not presently determinable but, in the opinion of management of
the Company after consulting with legal counsel, the ultimate liability in
excess of reserves currently recorded is not expected to have a material
effect on annual results of operations, financial position, liquidity or
capital resources of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
None
14
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder
Matters
DESCRIPTION OF SEARS COMMON SHARES
The summary contained herein of certain provisions of the Restated
Certificate of Incorporation, as amended (the "Certificate of Incorporation"),
of Sears does not purport to be complete and is qualified in its entirety by
reference to the provisions of such Certificate of Incorporation filed as
Exhibit 3.(i) hereto and incorporated by reference herein.
The Certificate of Incorporation authorizes the issuance of 1,000,000,000
common shares, par value $0.75 per share, and 50,000,000 preferred shares, par
value $1.00 per share. As of the date hereof, there are no preferred shares
outstanding. Preferred shares may be issued in series with rights and
privileges as authorized by the Board of Directors.
Subject to the restrictions on dividends mentioned below and the rights of
the holders of any preferred shares which may hereafter be issued, each holder
of common shares is entitled to one vote per share, to vote cumulatively for
the election of directors, to dividends declared by the Board of Directors,
and, upon liquidation, to share in the assets of Sears pro rata in accordance
with his, her or its holdings after payment of all liabilities and obligations.
The holders of common shares have no preemption, redemption, subscription or
conversion rights.
Sears Board of Directors is divided into three classes serving staggered
three-year terms. Because the Board is classified, shareholders wishing to
exercise cumulative voting rights to assure the election of one or more
directors must own approximately three times as many shares as would be
required if the Board were not classified. Directors may be removed only for
cause upon the affirmative vote of at least 75% of the shares entitled to
vote. Such a vote is also required to alter, amend or repeal, or to adopt
any provision inconsistent with, Article 5 of the Certificate of
Incorporation concerning directors, or to fix the number of directors by
shareholder vote.
There are no restrictions on repurchases or redemption of shares by Sears
which do not impair its capital, except that the indentures relating to certain
of Sears long-term debt and an agreement pursuant to which Sears has provided a
credit facility in support of certain tax increment revenue bonds issued by the
Village of Hoffman Estates, Illinois, in connection with the construction of
its headquarters facility, provide that Sears will not take certain actions,
including the declaration of cash dividends and the repurchase of shares, which
would cause Unencumbered Assets plus certain Capitalized Rentals to drop below
150% of Liabilities plus such Capitalized Rentals (as such terms are defined in
the indentures and the agreement). The amount by which such Unencumbered
Assets plus Capitalized Rentals exceeds 150% of such Liabilities plus
Capitalized Rentals, as computed under certain of the indenture provisions,
is set forth in Note 13 of the Notes to Consolidated Financial Statements on
page 38 of the 1999 Annual Report.
Information regarding the principal market for Sears common shares, the
number of shareholders and the prices of, and dividends paid on, Sears common
shares is incorporated herein by reference to the section headed "Common Stock
Market Information and Dividend Highlights" on page 44 of the 1999 Annual
Report and to the information under the heading "Shareholders' equity -
Dividend payments" contained in Note 13 of the Notes to Consolidated Financial
Statements on page 38 of the 1999 Annual Report.
15
Item 6. Selected Financial Data
The material under the caption "Five-Year Summary of Consolidated
Financial Data" on page 43 of the 1999 Annual Report is incorporated herein
by reference.
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The information contained under the captions "Management's Analysis of
Consolidated Operations" on pages 17 - 23 and "Management's Analysis of
Consolidated Financial Condition" on pages 25, 27 and 29, of the 1999 Annual
Report, is incorporated herein by reference.
Item 7a. Quantitative and Qualitative Disclosures About Market Risk
The information contained under the caption "Market Risk" included in
"Management's Analysis of Consolidated Operations" on page 23 of the 1999
Annual Report is incorporated herein by reference.
Item 8. Financial Statements and Supplementary Data
The consolidated financial statements of the Company, including the notes
to all such statements, and other information on pages 16 - 44 (other than that
incorporated by reference to Item 7 hereof) of the 1999 Annual Report is
incorporated herein by reference.
Item 9. Changes in and Disagreements with Independent Auditors on
Accounting and Financial Disclosure
None
17
PART III
Item 10. Directors and Executive Officers of the Registrant
Information regarding directors and executive officers of Sears is
incorporated herein by reference to the descriptions under "Item 1: Election of
Directors" on pages 4 - 7 of the 2000 Proxy Statement and to Item 1 of this
Report under the caption "Executive Officers of the Registrant" on pages
10 - 11.
Item 11. Executive Compensation
Information regarding executive compensation is incorporated by reference
to the material under the captions "Item 1: Election of Directors," "Directors'
Compensation and Benefits," "Executive Compensation," "Stock Options," "Long-
Term Incentive Plan," "Pension Plan Table," "Termination and Change in Control
Arrangements" and "Compensation Committee Interlocks and Insider Participation"
on pages 4 - 7, 12 - 16, 14 - 15, 15, 16, 17 - 19 and 22, respectively, of the
2000 Proxy Statement.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information regarding security ownership of certain beneficial owners and
management is incorporated herein by reference to the material under the
heading "Beneficial Ownership" on pages 10 - 11 of the 2000 Proxy Statement.
Item 13. Certain Relationships and Related Transactions
None
17
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form
8-K
(a) 1 and 2 - An "Index to Financial Statements and Financial
Statement Schedules" has been filed as a part of this Report beginning on page
S-1 hereof.
(a)3 - Exhibits:
An "Exhibit Index" has been filed as a part of this Report beginning on
page E-1 hereof and is incorporated herein by reference.
(b) - Reports on Form 8-K:
A Current Report on Form 8-K dated December 16, 1999 was filed with the
Securities and Exchange Commission (the "Commission") on December 16, 1999 to
report, under Item 5, that Moody's Investor Service had lowered the
Registrant's long-term debt rating.
18
SIGNATURES
Pursuant to the requirements of Section 13 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") the Registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SEARS, ROEBUCK AND CO.
(Registrant)
/S/ Jeffrey N. Boyer
By: Jeffrey N. Boyer
Chief Financial Officer
March 22, 2000
Pursuant to the requirements of the Exchange Act, this report has been
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Signature Title Date
/*S/Arthur C. Martinez*
Arthur C. Martinez Director, Chairman of the )
Board of Directors, President )
and Chief Executive Officer )
)
)
)
/S/Jeffrey N. Boyer* )
Jeffrey N. Boyer Chief Financial Officer )
(Principal Financial Officer )
)
)
)
/S/Glenn R. Richter* )
Glenn R. Richter Vice President and )
Controller (Principal )
Accounting Officer) )
)
)March 22,
) 2000
/S/Hall Adams, Jr.* )
Hall Adams, Jr. Director )
)
/S/Brenda C. Barnes* )
Brenda C. Barnes Director )
)
)
/S/Warren L. Batts* )
Warren L. Batts Director )
)
19
)
/S/Alston D. Correll, Jr.* )
Alston D. Correll, Jr. Director )
)
)
/S/W. James Farrell* )
W. James Farrell Director )
)
)
/S/Michael A. Miles* )
Michael A. Miles Director )
)
)
/S/Richard C. Notebaert* )
Richard C. Notebaert Director )
)
)March 22,
) 2000
/S/Hugh B. Price* )
Hugh B. Price Director )
)
)
/S/Patrick G. Ryan* )
Patrick G. Ryan Director )
)
)
/S/Dorothy A. Terrell* )
Dorothy A. Terrell Director )
*By: /s/ Jeffrey N. Boyer Individually and as Attorney-in-fact
Jeffrey N. Boyer
20
SEARS, ROEBUCK AND CO.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Year Ended January 1, 2000
The following consolidated financial statements, notes thereto and related
information of Sears, Roebuck and Co., are incorporated herein by reference to
the Company's 1999 Annual Report.
Incorporated by reference in Item 8 herein: Page*
Consolidated Statements of Income 16
Consolidated Balance Sheets 24
Consolidated Statements of Cash Flows 26
Consolidated Statements of Shareholder's Equity 28
Notes to Consolidated Financial Statements 30
Independent Auditors' Report 42
Five-Year Summary of Consolidated Financial Data 43
Quarterly Results 44
Incorporated by reference in Item 5 herein:
Common Stock Market Information and Dividend Highlights 44
Incorporated by reference in Item 7a herein:
Market Risk (included in Management's Analysis of
Consolidated Operations) 23
*Refers to page number in Company's Annual Report
S-1
SEARS, ROEBUCK AND CO.
INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
Year Ended January 1, 2000
The following additional statement schedule, Independents Auditors' Report and
Consent of Independent Auditors are furnished herewith pursuant to the
requirements of Form 10-K.
Page
Schedule required to be filed under the provisions
of regulation S-X Article 5:
Schedule II - Valuation and Qualifying Accounts S-3
Independent Auditors' Report S-4
Consent of Independent Auditors S-5
All other schedules are omitted because they are not applicable or not required.
S-2
SEARS, ROEBUCK AND CO.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
(millions)
Additions
Balance at Charged to Balance at
Beginning Cost and Deductions End of
of Period Expenses (Describe) Period
Year Ended January 1, 2000
Allowance for uncollectible
accounts $ 974 $ 871 $1,085 (A) $ 760
Year Ended January 2, 1999
Allowance for uncollectible
accounts $1,113 $1,287 $1,426 (B) $ 974
Year Ended January 3, 1998
Allowance for uncollectible
accounts $ 801 $1,532 $1,220 (A) $1,113
(A) Represents uncollectible credit card receivable accounts which have
been charged off.
(B) Represents uncollectible credit card receivable accounts which have
been charged off and $106 million transferred to retained interest
in transferred credit card receivables related to receivables which
were transferred to the Master Trust in 1998.
S-3
INDEPENDENT AUDITORS' REPORT
To the Shareholders and Board of Director Sears, Roebuck and Co.
We have audited the Consolidated Balance Sheets of Sears, Roebuck and Co.
as of January 1, 2000 and January 2, 1999, and the related Consolidated
Statements of Income, Shareholders' Equity and Cash Flows for each of the three
years in the period ended January 1, 2000, as set forth in the Index to
Financial Statements and Financial Statement Schedules on page S-1, and have
issued our report thereon dated February 7, 2000; such consolidated financial
statements and report are included in your 1999 Annual Report to Shareholders
and are incorporated herein by reference. Our audits also included the
financial statement schedule of Sears, Roebuck and Co., listed on page S-2.
This financial statement schedule is the responsibility of the Company's
management. Our responsibility is to express an opinion based on our audits.
In our opinion, such financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, presents
fairly in all material respects the information set forth therein.
We have also previously audited, in accordance with generally accepted
auditing standards, the Consolidated Balance Sheets of Sears, Roebuck and Co.
as of January 3, 1998, December 28, 1996, and December 30, 1995, and the
related Consolidated Statements of Income, Shareholders' Equity and Cash
Flows for the years ended December 28, 1996 and December 30, 1995 (none of
which are presented herein); and we expressed unqualified opinions on those
consolidated financial statements.
Our audits were conducted for the purpose of forming an opinion on the
basic consolidated financial statements taken as a whole. The additional
information set forth under "Operating Results" and "Financial Position" and on
the lines captioned "Book value per common share", "Average common and
equivalent shares outstanding", and "Earnings per common share - diluted" for
each of the five years in the period ended January 1, 2000, appearing under the
caption "Five Year Summary of Consolidated Financial Data" on page 43 of your
1999 Annual Report to Shareholders is presented for the purpose of additional
analysis and is not a required part of the basic consolidated financial
statements. This additional information is the responsibility of the Company's
management. Such information has been subjected to the auditing procedures
applied in our audits of the basic consolidated financial statements and, in
our opinion, is fairly stated in all material respects when considered in
relation to the basic consolidated financial statements taken as a whole.
/S/Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
February 7, 2000
S-4
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in Registration Statement
Nos. 2-64879, 2-80037, 33-18081, 33-23793, 33-41485, 33-43459, 33-45479,
33-55825, 33-58851, 33-64345, 333-8141, and 333-38131 of Sears, Roebuck and
Co.; Registration Statement Nos. 33-58139, 33-64215, 33-9817, 333-30879,
and 333-62847 of Sears, Roebuck and Co. and Sears Roebuck Acceptance Corp.;
Registration Statement Nos. 33-64775, 333-18591, and 333-43309 of Sears,
Roebuck and Co. and Sears, Roebuck and Co. Deferred Compensation Plan;
Registration Statement Nos. 33-57205, 333-11973, 333-53149, and 333-92501
of Sears Roebuck and Co. and the Sears 401(k) Profit Sharing Plan (formerly,
The Savings and Profit Sharing Fund of Sears Employees); and Registration
Statement No. 33-44671 of Sears, Roebuck and Co. and Sears DC Corp.; of our
report dated February 7, 2000, incorporated by reference in the Annual
Report on Form 10-K of Sears, Roebuck and Co. for the year ended January 1,
2000.
/S/Deloitte & Touche LLP
Deloitte & Touche LLP
Chicago, Illinois
March 22, 2000
S-5
EXHIBIT INDEX
Sears, Roebuck and Co. Form 10-K
For the Year Ended January 1, 2000
3.(i) Restated Certificate of Incorporation, as amended to May 13, 1996
(incorporated by reference to Exhibit 3(a) to Registration
Statement No. 333-8141).
*3.(ii) By-Laws as amended to February 1, 2000.
4.(i) Forms of restricted stock grants under Registrant's 1990 Employees
Stock Plan (incorporated by reference to Exhibit 4.(i) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1993).**
4.(ii) Form of restricted stock grants under Registrant's 1994 Employees
Stock Plan (incorporated by reference to Exhibit 4.(ii) to the
Registrant's Annual Report on Form 10-K for the year ended
December 31, 1994).**
4.(iii) Forms of Performance-Based Stock Options granted under
Registrant's 1994 Employees Stock Plan (incorporated by reference
to Exhibit 4(iii) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 3, 1998).**
4.(iv) Forms of Performance-Based Restricted Stock grants under
Registrant's 1994 Employees Stock Plan (incorporated by reference
to Exhibit 4(iv) to the Registrant's Annual Report on Form 10-K
for the fiscal year ended January 3, 1998).**
4.(v) Forms of stock options granted under Registrant's 1994 Employees
Stock Plan (incorporated by reference to Exhibit 4(v) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
January 2, 1999).**
4.(vi) Registrant hereby agrees to furnish to the Commission, upon
request, with the instruments defining the rights of holders of
each issue of long-term debt of the Registrant and its
consolidated subsidiaries.
10.(i)(a) Separation Agreement dated February 20, 1995 between Registrant
and The Allstate Corporation (incorporated by reference to Exhibit
10(a) to The Allstate Corporation's Current Report on Form 8-K
dated February 22, 1995).***
10.(i)(b) Marketing File Separation Agreement dated February 20, 1995
between Registrant and The Allstate Corporation (incorporated by
reference to Exhibit 10(b) to The Allstate Corporation's Current
Report on Form 8-K dated February 22, 1995).***
10.(i)(c) Research Services Agreement dated February 20, 1995 between
Registrant and The Allstate Corporation (incorporated by reference
to Exhibit 10(c) to The Allstate Corporation's Current Report on
Form 8-K dated February 22, 1995).***
10.(i)(d) Tax Sharing Agreement dated May 14, 1993 between Registrant and
its subsidiaries (incorporated by reference to Exhibit 10.6 to
Amendment No. 3 to The Allstate Corporation's Registration
Statement No. 33-59676).
10.(i)(e) Supplemental Tax Sharing Agreement dated January 27, 1995 between
Registrant and The Allstate Corporation (incorporated by reference
to Exhibit 10(d) to The Allstate Corporation's Current Report on
Form 8-K dated February 22, 1995).***
10.(ii)(1) Registrant's 1979 Incentive Compensation Plan (incorporated by
reference to Exhibit 10.(iii)(1) to the Registrant's Quarterly
Report on Form 10-Q for the fiscal quarter ended March 31,
1985).** ****
10.(ii)(2) Registrant's 1978 Employes Stock Plan, as amended (incorporated by
reference to Exhibit 10.(iii)(2) to the Registrant's Annual Report
on Form 10-K for the fiscal year ended December 31, 1989).** ****
*10.(ii)(3) Registrant's Deferred Compensation Plan for Directors, as amended
and restated on August 11, 1999.
10.(ii)(4) Registrant's Annual Incentive Compensation Plan, amended and
restated as of January 1, 1994 (incorporated by reference to
Appendix B to the Registrant's Proxy Statement dated March 23,
1994).** ****
10.(ii)(5) Registrant's Long-Term Incentive Compensation Plan, amended and
restated as of January 1, 1994 (incorporated by reference to
Appendix C to the Registrant's Proxy Statement dated March 23,
1994).** ****
10.(ii)(6) Registrant's 1982 Employees Stock Plan (incorporated by reference
to Exhibit 4(a)(1) to Registration Statement No. 2-80037 of the
Registrant).****
10.(ii)(7) Description of Registrant's Supplemental Life Insurance Plan,
amended as of December 31, 1986 (incorporated by reference to the
second and third full paragraphs on page 10 of the Registrant's
Proxy Statement dated March 26, 1987).** ****
10.(ii)(8) Registrant's Non-Employee Directors' Retirement Plan, as amended
and restated to March 13, 1996 (incorporated by reference to
Exhibit 10.(iii)(8) to Registrant's Annual Report on Form 10-K for
the year ended December 30, 1995).** ****
10.(ii)(9) Description of Registrant's Non-Employee Director Life Insurance
Plan (incorporated by reference to the first paragraph on page 10
of the Registrant's Proxy Statement dated March 26, 1998).** ****
10.(ii)(10) Registrant's 1990 Employees Stock Plan, amended as of May 12,
1994 (incorporated by reference to Exhibit 10.20 to The Allstate
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994).*** ****
10.(ii)(11) Registrant's Supplemental Retirement Income Plan, as amended and
restated effective March 25, 1997.
10.(ii)(12) Registrant's 1986 Employees Stock Plan, amended as of May 12,
1994 (incorporated by reference to Exhibit 10.19 to The Allstate
Corporation's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994).*** ****
10.(ii)(13) Registrant's Transferred Executives Pension Supplement
(incorporated by reference to Exhibit 10.(iii)(13) to the
Registrant's Annual Report on Form 10-K for the fiscal year ended
December 31, 1988).** ****
10.(ii)(14) Amendment to Registrant's Transferred Executives Pension
Supplement adopted on March 13, 1996 (incorporated by reference
to Exhibit 10.(iii)(14) to the Registrant's Annual Report on Form
10-K for the fiscal year ended December 30, 1995).** ****
10.(ii)(15) Registrant's Supplemental Long-Term Disability Plan
(incorporated by reference to Exhibit 10.d to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 1995).** ****
10.(ii)(16) Registrant's Deferred Compensation Plan, as amended and restated
on October 14, 1998 (incorporated by reference to Exhibit
10(ii)(17) to the Registrant's Annual Report on Form 10-K for the
fiscal year ended January 2, 1999).**
10.(ii)(17) Registrant's Management Supplemental Deferred Profit Sharing Plan
(incorporated by reference to Exhibit 10(b) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended October 1,
1994).** ****
10.(ii)(18) Registrant's Non-Employee Director Stock Plan (incorporated by
reference to Appendix B of the Registrant's Proxy Statement dated
March 20, 1996).** ****
10.(ii)(19) Registrant's 1994 Employees Stock Plan (incorporated by reference
to Appendix A to the Registrant's Proxy Statement dated March 23,
1994).** ****
10.(ii)(20) Registrant's Associate Stock Ownership Plan (incorporated by
reference to Exhibit 10.(iii)(21) to the Registrant's Annual
Report on Form 10-K for the fiscal year ended January 3, 1998).**
10.(ii)(21) Employment Agreement between Registrant and Arthur C. Martinez
dated August 10, 1992 (incorporated by reference to Exhibit
10.(a) to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended September 30, 1992).** ****
10.(ii)(22) Agreement dated November 13, 1995 amending employment contract of
Arthur C. Martinez dated August 10, 1992 (incorporated by
reference to Exhibit 10. (iii)(21) to Registrant's Annual Report
on Form 10-K for the year ended December 30, 1995).** ****
10.(ii)(23) Extension of employment contract of Arthur C. Martinez, dated
August 9, 1995 (incorporated by reference to Exhibit 10(c) to the
Registrant's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1995).** ****
10.(ii)(24) Letter from the Registrant to Alan J. Lacy dated December 14,
1994 relating to employment (incorporated by reference to Exhibit
10(d) to the Registrant's Current Report on Form 8-K dated June
20, 1995).** ****
10.(ii)(25) Letter from the Registrant to Anastasia D. Kelly dated December
14, 1998 relating to employment (incorporated by reference to
Exhibit 10 to the Registrant's Quarterly Report on Form 10-Q for
the quarterly period ended April 3, 1999).** ***
*10.(ii)(26) Letter from the Registrant to Julian Day dated February 19, 1999
relating to employment.
10.(ii)(27) Form of severance and non-compete agreement for executive
officers of the Registrant (incorporated by reference to Exhibit
10 to the Registrant's Quarterly Report on Form 10-Q for the
quarterly period ended July 3, 1999).** ****
10.(ii)(28) Sears Executive Retirement Plan Arrangements dated March 27, 1997
(incorporated by reference to Exhibit 10.2 to the Registrant's
Quarterly Report on Form 10-Q for the quarterly period ended June
28, 1997).** ****
*12.(a) Computation of ratio of income to fixed charges for Registrant
and consolidated subsidiaries.
*12.(b) Computation of ratio of income to combined fixed charges and
preferred share dividends for Registrant and consolidated
subsidiaries.
*13. Portions of Registrant's Annual Report incorporated by reference
into Part I or Part II of Registrant's Annual Report on Form 10-K
for the fiscal year ended January 1, 2000.
*21. Subsidiaries of the Registrant.
*23. Consent of Deloitte & Touche LLP.
*24. Power of Attorney of certain officers and directors of the
Registrant.
*27. Financial Data Schedules.
*99.(i) Sears 401(k) Profit Sharing Plan, as amended and restated
effective January 1, 2000.
*99.(ii) Third Amendment to the Sears Profit Sharing Trust Agreement dated
as of March 31, 1999.
*99.(iii) Sears Pension Plan, as amended and restated effective January 1,
2000.
* Filed herewith
** SEC File No. 1-416
*** SEC File No. 1-11840
**** A management contract or compensatory plan or arrangement required to
be filed as an exhibit to this report pursuant to Item 14(c) of Form
10-K.