****UNITED STATES**
**SECURITIES AND EXCHANGE COMMISSION**
**Washington, D.C. 20549**
**FORM 10-K****For Annual and TransitionReports pursuant to Sections 13 or 15(d) of the****Securities Exchange Act of 1934****x****ANNUAL REPORT PURSUANTTO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934****For the fiscal year endedDecember 30, 2000** **OR****o****TRANSITION REPORTPURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**
**Commission file number1-416**
**SEARS, ROEBUCK AND CO.****(Exact Name of Registrantas Specified in Its Charter)****New York****(State of Incorporation)****36-1750680****(I.R.S. Employer IdentificationNo.)**  **3333 Beverly Road,Hoffman Estates, Illinois****(Address of PrincipalExecutive Offices)****60179****(Zip Code)**  **Registrant's telephonenumber, including area code: (847) 286-2500****Securities registeredpursuant to Section 12(b) of the Act:** **Title of eachclass****Common Shares, par value$0.75 per share****Name of Each Exchangeon****Which Registered****New York Stock Exchange****Chicago Stock Exchange****Pacific Stock Exchange**
**Securities registeredpursuant to Section 12(g) of the Act: None**
**On January 31, 2001, theRegistrant had 333,275,518 common shares outstanding. Of these, 265,891,074common shares, having an aggregate market value (based on the closing priceof these shares as reported in a summary of composite transactions in *TheWall Street Journal* for stocks listed on the New York Stock Exchangeon January 31, 2001) of approximately $10.3 billion, were owned by shareholdersother than (i) directors and executive officers of the Registrant and (ii)any person known by the Registrant as of the date thereof to beneficiallyown five percent or more of Registrant's common shares.**  
Indicate by check mark whetherthe Registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months and (2) has been subject to such filing requirements for thepast 90 days.
Yes  X  No ___
Indicate by check mark ifdisclosure of delinquent filers pursuant to Item 405 of Regulation S-Kis not contained herein, and will not be contained, to the best of theRegistrant's knowledge, in definitive proxy or information statements incorporatedby reference in Part III of this Form 10-K or any amendment to this Form10-K. [ ]
Documents Incorporated ByReference
Parts I and II of this Form10-K incorporate by reference certain information from the Registrant's2000 Annual Report to Shareholders (the "2000 Annual Report"). Part IIIof this Form 10-K incorporates by reference certain information from theRegistrant's definitive Proxy Statement, dated March 23, 2001, for itsAnnual Meeting of Shareholders to be held on May 10, 2001 (the "2001 ProxyStatement").
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                   PART I
*Item 1. Business* Sears, Roebuck and Co. ("Sears")originated from an enterprise established in 1886 and was incorporatedunder the laws of New York in 1906. Its principal executive offices arelocated at 3333 Beverly Road, Hoffman Estates, Illinois. Sears (togetherwith its consolidated subsidiaries, the "Company") is a multi-line retailerthat provides a wide array of merchandise and services. As of December30, 2000, the Company organized its business into four domestic segmentsand one international segment. The Company is among the largest retailersof merchandise and services in the world. The Company's segments in theUnited States and Puerto Rico are Retail (comprised of Full-line Storesand Specialty Stores), Services (comprised of Home Services and DirectResponse), Credit (comprised of the domestic credit operations) and Corporate(comprised of activities which are of a holding company nature and itsinvestment in Sears Online). The International segment consistsof similar retail, services, credit and corporate operations conductedthrough a majority-owned subsidiary in Canada. For further information, see"Retail," "Services," "Credit," "Corporate" and "International" below and"Management's Discussion and Analysis" beginning on page 17 of the 2000Annual 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 yearsended December 30, 2000, January 1, 2000 and January 2, 1999 is in Note14 of the Notes to Consolidated Financial Statements on pages 43 and 44of the 2000 Annual Report, incorporated herein by reference in responseto Item 8 hereof. Information on the components of revenues is includedin the "Management's Discussion and Analysis" beginning on page 17 of the2000 Annual Report, incorporated herein by reference in response to Item7 hereof.The Company employs approximately323,000 people worldwide.
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**RETAIL**The Company's Retail operationsconsist of the following:
**Full-line Stores**
At December 30, 2000, theFull-line Store operations consist primarily of 863 mall-based retail storesselling the following categories of merchandise: -  Softlines, which consists ofapparel and accessories for the entire family, plus cosmetics, fine jewelryand home fashions. The Softlines departments seek to be the price/valueleader among mall-based stores.
-  Hardlines, which consists ofa full assortment of appliances, electronics and computers for the home,home improvement products, sporting goods, lawn and garden equipment andseasonal items. The Hardlines departments compete with off-the-mall specialtystores in the same product categories.
-  Licensed Businesses, which consistof third party concessions primarily operated within the Full-line Stores,and include optical, portrait studios and other licensees.

 **Specialty Stores**
At December 30, 2000, SpecialtyStores operations consist of formats designed to offer the Company's hardlinesand home fashion merchandise through outlets other than the Full-line Stores.The specific store formats are as follows:-  274 free-standing, neighborhoodHardware stores, operating under the Sears Hardware and Orchard SupplyHardware names, which carry Sears proprietary brands such as CRAFTSMAN®tools, as well as a wide assortment of national brands and other home improvementproducts.
-  790 Sears Dealer Stores thatare primarily independently owned and operated and offer appliances, electronics,hardware, lawn and garden equipment, and automobile batteries. Dealer Storesare located primarily in smaller communities and carry exclusive Companybrands such as CRAFTSMAN®, KENMORE® and DIEHARD®, as well asa wide assortment of national brands.
-  The Great Indoors, which currentlyoperates four stores, serves the home decorating and remodeling shoppingoccasion. The Company has identified The Great Indoors as a growth opportunityand plans to open approximately ten new stores in 2001.
-  Commercial Sales primarily targetshome builders, remodelers and property managers for appliance purchases,as well as vocational schools, factory maintenance and service companiesfor industrial tool purchases. Commercial Sales has also implemented theAppliance Select program, which utilizes 79 Full-line Stores as showroomsto target the new home buyer and offers a full selection of KENMORE®and other major national brand kitchen and home appliances.
-  Automotive Stores, which consistsof 822 Sears Auto Centers primarily located in or adjacent to the Company'small-based Full-line Stores and 229 National Tire & Battery

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(NTB) stores. These storessell and install tires, DIEHARD® and other automotive batteries, andrelated goods and services. The Automotive Stores, which are the country'slargest seller of tires, are positioned to compete effectively with companiesthat specialize in tires, batteries and related services. **SERVICES** At December 30, 2000, theServices operations consist of:
**Home Services, which includes:**-  Product Installation and RepairServices, which provides product installation and repair on all major brandsof appliances, consumer electronics, and heating and air conditioning systems,regardless of where purchased, and provides plumbing services.
-  Service Contracts, which provideextended warranty coverage through maintenance agreements.
-  Installed Home Improvements,which includes the following services provided by Sears owned businessesand affiliated, non-owned service providers:

Home Improvement Services, whichsells and installs siding, windows, cabinet refacing, and other home improvementsand provides services such as pest control and carpet cleaning.

Air Conditioning and HeatingSystems, which sells and installs heating, ventilation and air conditioningfor homes.

**Direct Response**,which includes direct-response marketing, which markets insurance (creditprotection, life and health), clubs and services memberships, merchandisethrough specialty catalogs and impulse and continuity merchandise._________________
The Company has positionedits businesses to be a multi-channel retailer of merchandise and services,reaching customers through its Full-line Stores, Specialty Stores, catalogs,service offerings and the Internet. The Company strives to serve its customersthroughout the various stages of their lives via multiple channels. TheCompany's ability to sell, finance, deliver, install and service a widearray of consumer products makes it a more attractive shopping destinationfor consumers, regardless of the vehicle they use to shop.
The Company will also focuson winning customers by communicating and delivering the Company's uniquevalue proposition. The Company offers competitive prices and strong assortmentof national brands complemented with outstanding proprietary brands suchas KENMORE®, CRAFTSMAN®, CIRCLE OF BEAUTY(TM);and CANYON RIVER BLUES®. This value proposition is intended to retainexisting customers and also attract new customers into a long-term relationshipwith Sears.
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**CREDIT**
The products offered by theCompany's domestic credit operations ("Credit") make it more attractivefor customers to purchase goods and services from the Retail and Servicesbusinesses. The Company's credit card portfolio consists primarily of SearsCard, SearsCharge Plus and Sears Gold MasterCard account balances. Credithad approximately 26 million active customer credit accounts during December2000 with an average year-end balance of $1,113. The Company had approximately40 million credit card customers with accounts that carried a balance duringany month in 2000.
Sears stores also acceptthird party credit and debit cards such as VISA, MasterCard, American Expressand Discover Card. Sears credit card sales as a percentage of total salesin Full-line Stores and the majority of the Specialty Store formats wasapproximately 47.4%, 48.5% and 52.3% for fiscal years 2000, 1999 and 1998,respectively. Since Sears began to accept VISA, MasterCard and AmericanExpress cards at all Sears stores, the Company has focused intensely onmarketing and other initiatives that are designed to maintain the penetrationof Credit's products in the Company's various sales and service channels,as well as to increase the revenues of the Retail and Services businesses.
Sears has an ongoing securitizationprogram through which a wholly-owned subsidiary of Sears transfers a portionof the Company's domestic customer receivable balances to a master trust(the "Master Trust") that issues credit account pass-through certificatesto public and private investors. To the extent the pass-through certificatesare sold to third parties, the related transferred balances qualify assales for financial statement purposes and as such the receivables areremoved from the Company's consolidated balance sheet. The balance of thereceivables in the Master Trust for which pass-through certificates arenot sold to third parties, is presented as retained interest in transferredcredit card receivables. Pursuant to contractual agreements, Sears remainsthe servicer on the accounts and receives a fee for the services performed.See "Management's Discussion and Analysis" and Notes 1, 3 and 5 of theNotes to Consolidated Financial Statements beginning on pages 17, 31, 35and 37, respectively, of the 2000 Annual Report, incorporated herein byreference in response to Items 7 and 8 hereof.
Credit's operations are subjectto federal and state legislation and regulation. From time to time, suchlegislation, as well as competitive conditions, may affect, among otherthings, credit card finance charges. While the Company cannot predict theeffect of future competitive conditions and legislation or the measuresthe Company might take in response thereto, a significant reduction inthe finance charges imposed by Credit would have an adverse effect on theCompany. 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 theCompany.
Sears National Bank (the"Bank"), a wholly-owned subsidiary of Sears based in Arizona, is a limitedpurpose credit card bank engaging in credit card operations. The Bank issubject to certain other restrictions applicable to credit card banks underfederal law, as well as Arizona credit card lending guidelines. The Bankoriginates Sears Card accounts in all fifty states. Certain of the Company'sother customer credit accounts have also been transferred to or are beingoriginated by the Bank.
In 2000, the Bank substitutedSears Gold MasterCard accounts for the Sears Card accounts of approximatelyseven million accounts that were not incurring finance charges, eitherbecause cardholders were not using their cards or because they were usingthe cards only for convenience, generally making full payments within thegrace periods. The Bank plans to substitute Sears Gold MasterCard accountsfor the Sears Card accounts of additional customers during 2001 and inthe future may begin offering the Sears Gold MasterCard to new customers.
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**CORPORATE**
Corporate operations includeactivities that are of an overall holding company nature, primarily consistingof administrative activities, the costs of which are not allocated to theCompany's businesses. Corporate operations also include the Company's investmentin Sears Online, which consists of the Company's e-commerce activitiesincluding the sale of appliances, home electronics, home office equipment,tools and other products through the Company's internet site at www.sears.com.
**INTERNATIONAL**
The Company conducts similarretail, services, credit and corporate operations in Canada through SearsCanada Inc. ("Sears Canada"), a consolidated, 54.5% owned subsidiary ofSears. On December 30, 1999, Sears Canada completed a share purchase transactionwith The T. Eaton Company Limited ("Eaton's"). Sears Canada acquired 16Eaton's store locations and an additional three leased Eaton's store locations,among other assets. Of the 19 Eaton's locations acquired, during fiscal2000, Sears Canada converted 10 locations to Sears Canada department stores(three in replacement of existing Sears Canada stores in close proximityto the Eaton's locations), one to a Sears Furniture Store, one to an outletstore and opened seven stores under the Eatons banner. As of December 30,2000, Sears Canada operates 125 department stores (118 under the SearsCanada banner and seven under the Eatons banner), 33 Sears Furniture Stores,15 outlet stores, 128 dealer stores operated under independent local ownership,2,103 catalog selling locations, 1,794 of which are operated under independent,local ownership and ten active warehouses. During fiscal 2000, Sears Canadaopened eight new Sears Furniture Stores and 18 new dealer stores. No off-malllocations were relocated during the year. Subject to the availability ofsuitable store locations on appropriate terms, in 2001, Sears Canada plansto open four new Sears Furniture Stores, five outlet stores, 12 dealerstores and 37 catalog merchant agent locations, as well as renovate fourdepartment stores. Sears Canada continues to seek opportunities for expansionin desirable locations. As of December 30, 2000, Sears Canada employedapproximately 56,000 full and part-time employees.
Sears Canada has an ongoingsecuritization program pursuant to which undivided co-ownership interestsin its pool of customer charge account receivables are sold to trusts establishedto issue debt and trust units (representing the residual equity interestin the trust) to third parties. Effective January 1, 1997, these securitizationsdo not qualify as sales under United States generally accepted accountingprinciples. Therefore, the customer charge account receivables are maintainedon the Company's balance sheet and related proceeds are recorded as debt.Sears Canada acts as servicer of the customer charge account receivables.
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*Sources of Merchandise*
At December 30, 2000, theRetail and Services businesses purchased goods primarily from approximately2,800 domestic suppliers, down from approximately 2,850 suppliers in theprior year, most of which have been suppliers for many years.
*Seasonality*
Due to holiday buying patterns,merchandise sales traditionally are higher in the fourth quarter than inthe other quarterly periods and the Company typically earns a disproportionateshare of operating income in the fourth quarter. Similarly, sales and operatingincome generally are lowest in the first quarter.
*Trademarks*
The name "SEARS" is usedextensively in the Company's domestic operations and other businesses.The Company's right to the name "SEARS" domestically continues so longas it uses the name. The name is also the subject of numerous renewableUnited States and foreign trademark registrations. This trademark is materialto the Company's domestic operations and other related businesses.
The Company sells privatelabel merchandise under a number of brand names which are important toits domestic operations. Sears KENMORE®, CRAFTSMAN® and DIEHARD®brands are among the strongest private label brands in retailing. Thesenames are the subject of numerous renewable United States and foreign trademarkand service mark registrations. Other important and well-recognized Companytrademarks and service marks include BRAND CENTRAL®, CIRCLE OF BEAUTY(TM),CANYON RIVER BLUES®, WISHBOOK®, NTB®, ORCHARD®, APOSTROPHE®,TKS BASICS®, CROSSROADS and The Good Life at a Great Price. Guaranteed.(SM)ad campaign. The Company's right to all of its brand names continues solong as it uses the names.
*Competition*
The domestic retail, servicesand credit businesses are highly competitive. The principal factors thatdifferentiate competitors include convenience of shopping facilities, qualityof merchandise, competitive prices, brand names and availability of servicessuch as credit, product delivery, repair and installation. The Companybelieves it is able to compete very effectively despite strong competitivepressures in recent years.
*Employees*
The Company employs approximately267,000 people in the United States and Puerto Rico, and 56,000 peoplein Canada, including part-time employees.
The Company will maintainits focus on associate satisfaction, reducing turnover and increasing diversityin the workforce while continuing to set higher performance standards throughoutits organization.
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**FINANCE SUBSIDIARIES**
To meet certain capital requirementsof its businesses, Sears borrows on a short-term basis through the issuanceof notes to, and from time to time sells receivable balances to, SearsRoebuck Acceptance Corp. ("SRAC"), a wholly-owned finance subsidiary. SRACobtains funds primarily by issuing commercial paper and through medium-termnotes and discrete underwritten debt.
Sears DC Corp. ("SDC"), awholly-owned finance subsidiary of Sears, was formed to borrow in domesticand foreign debt markets and lend the proceeds of such borrowings to Searsand certain of its direct and indirect subsidiaries in exchange for theirunsecured notes. SDC raised funds through the sale of its medium-term notesand direct placement of commercial paper with corporate and institutionalinvestors. The only outstanding debt of SDC is two outstanding series ofmedium-term notes. SDC does not plan to issue additional debt.
Substantially all the debtand related interest expense of SRAC and SDC support the Company's creditcard receivables portfolio.
In addition, various subsidiariesof Sears have engaged in securitization programs in which pass-throughcertificates representing interests in credit card receivables are soldin public or private transactions. See "Credit," and "International," onpages 6 and 7 hereof, respectively, and Notes 1, 3 and 5 of the Notes toConsolidated Financial Statements beginning on pages 31, 35 and 37, respectively,in the 2000 Annual Report, incorporated herein by reference to Item 8 hereof.
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**EXECUTIVE OFFICERS OFTHE REGISTRANT**
The following table setsforth the names of the executive officers of the Company, the current positionsand offices with the Company held by them, the date they first became officersof the Company and their current ages:**Name****Position****Date First BecameOfficer****Age**AlanJ. LacyChairmanof the Board of Directors, President and Chief Executive Officer199447JeffreyN. BoyerSeniorVice President and Chief Financial Officer199642JamesR. CliffordPresidentand Chief Operating Officer, Full-Line Stores199355MaryE. ConwayPresident,Stores199852E.Ronald CulpSeniorVice President, Public Relations and Government Affairs199353LyleG. HeidemannPresident,Hardlines199255KevinT. KeleghanPresident,Credit Services199643AnastasiaD. KellyExecutiveVice President, General Counsel199951GregA. LeeSeniorVice President, Human Resources200151GeraldN. MillerSeniorVice President, Chief Information Officer199553WilliamG. PagonisExecutiveVice President, Logistics199359DavidW. SelbySeniorVice President, Marketing199744MichaelJ. TowerSeniorVice President, Strategy199742
Messrs. Lacy, Boyer, Clifford,Culp, Heidemann, Keleghan, Miller and Pagonis and Ms. Conway have heldthe positions set forth in the above tables for at least the last fiveyears or have served the Company in various executive or administrativecapacities for at least that length of time. The remaining executive officershave held the following positions for such five-year period:
Ms. Kelly joined Sears asExecutive Vice President, General Counsel and Secretary in March 1999 andhas 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 GeneralCounsel and Secretary since 1996. Prior to joining Fannie Mae, she wasa partner in the law firm of Wilmer, Cutler & Pickering.
Mr. Lee joined Sears as SeniorVice President, Human Resources in January 2001. Prior to joining Sears,he had been Senior Vice President, Human Resources of Whirlpool Corp. sinceJune 1998. Prior to joining Whirlpool, Mr. Lee served in the same capacityfor St. Paul Companies, a property and casualty insurance company.
Mr. Selby joined Sears asVice President of Marketing Services in 1997 and was promoted to SeniorVice President of Retail Marketing prior to being named Senior Vice President,Marketing in 2001. Prior to joining Sears, Mr. Selby held a number of seniorpositions with The Leo Burnett Company, an advertising agency. He completedhis 18 years at Leo Burnett as senior vice president.
Mr. Tower joined Sears asVice President, Corporate Strategy and Business Development in 1997. Mr.Tower became Senior Vice President Strategy in February 2001. Prior tojoining Sears, Mr. Tower held a number of senior positions with A.T. Kearney,a consulting firm. He completed his ten years at A.T. Kearney as Partnerand Vice President.
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**CAUTIONARY STATEMENT REGARDINGFORWARD LOOKING INFORMATION**
Certain statements made inthis Annual Report on Form 10-K are forward looking statements made inreliance on the safe harbor provisions of the Private Securities LitigationReform Act of 1995. As such, they involve risks and uncertainties thatcould cause actual results to differ materially. The Company's forwardlooking statements are based on assumptions about many important factors,including competitive conditions in the retail industry; changes in consumerconfidence in the United States and Canada; delinquency and charge-offtrends in the credit card receivables portfolio; the successful implementationand customer acceptance of Sears Gold MasterCard program, particularlyafter promotional introductory interest rates expire; the ability of theCompany to develop appropriate new sites for The Great Indoors; the successfulre-launch of Eaton's stores, direct-to-customer strategy and other initiatives;anticipated cash flow; general United States and Canada economic conditions,such as interest rates and unemployment; the effect and timing of the adoptionof SFAS No. 140; and normal business uncertainty. In addition, the Companytypically earns a disproportionate share of its operating income in thefourth quarter due to holiday buying patterns, which are difficult to forecastwith certainty. While the Company believes that its assumptions are reasonable,it cautions that it is impossible to predict the impact of such factorsthat could cause actual results to differ materially from predicted results.The Company intends the forward-looking statements in this Annual Reporton Form 10-K and the exhibits hereto to speak only at the time of its filingand does not undertake to update or revise these projections as more informationbecomes available.
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*Item 2. Properties*
The Company's principal executiveoffices are located on a 200-acre site owned by the Company at PrairieStone, in Hoffman Estates, Illinois. The complex consists of six interconnectedoffice buildings totaling approximately two million gross square feet ofoffice space.
The following table setsforth information concerning stores operated by the Company's domesticRetail operations.      Full-lineAutoStores_________Specialty    Stores____________StoresTirePartsHomeLifeHardwareDealerOther(a)Total**Storesat December 30, 2000:**Owned492 548 --13 2 22 1,077 Leased(b)371 503 --261 10 21 1,166 Independentlyowned andOperated Dealer Stores-----778 -778 **TotalStores at Fiscal Year-End**19978331,106615101 255576 44 3,530Storesopened during fiscal 199823 50 43 4 18 101 1 240 Storesclosed during fiscal 1998(11) (20) (658)(c)(5) (8) (24) (1)(727) 19988451,136-100 26565344 3,043Storesopened during fiscal 199919 24 -5 18 100 1 167 Storesclosed during fiscal 1999(6)(52)-(105)(d)(16)(15) (5)(199) 1999858 1,108--267 738 403,011 Storesopened during fiscal 200011 17 --10 70 4112 Storesclosed during fiscal 2000(6)(74)--(3) (18) (1)(102)20008631,051(e)--274(e)790433,021**GrossRetail Area at ****Fiscal Year-End ****(square feet in millions)**2000114.315.1 --9.3 6.52.1 147.3 1999113.7 15.8 --8.9 6.1 1.9 146.4 1998112.4 16.2 -3.6 8.8 5.4 1.9 148.3 **RetailSelling Area at****Fiscal Year-End ****(square feet in millions)**200075.8 2.2 --7.2 4.3 1.4 90.9 199975.3 2.2 --6.9 4.01.3 89.7 199873.3 2.3 -3.0 6.9 3.6 1.3 90.4   **RetailStore Revenues per Selling Square Foot(f)**2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3331999. . . . . . . . . . . . . . . . . . . . . . . . . . . . .$3271998 . . . . . . . . . . . . . . . . . . . . . . . . . . .  .$319
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(a) Consists of small-sizeappliance 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 containrenewal options and contingent rentals (for additional information, seeNote 10 of the Notes to Consolidated Financial Statements beginning onpage 39 of the 2000 Annual Report, incorporated herein by reference toItem 8 hereof).
(c)Includes 652 Western Autostores that were sold in November 1998.
(d) Effective January 30,1999, Sears sold its HomeLife business, including five retail outlet storestransferred to the HomeLife organization in January 1999.
(e) In December 2000, theCompany announced the planned closure of 89 stores. As of year-end 2000,53 NTB stores and two Sears Hardware stores had been closed and are excludedfrom the year-end store count. The remaining 34 stores will close in 2001and are included in the year-end store count.
(f) Includes net commissionsearned from licensed businesses operating within the Retail stores.In addition, at December 30,2000, there were 826 other sales offices and service facilities, most ofwhich are occupied under short-term leases or are a part of other Searsfacilities included in the above table. There were also 108 distributionfacilities, most of which are leased for terms ranging from one to 10 years.
Credit principally servicesits accounts at nine regional credit card operations centers ("RCCOCs"),one national account authorization center ("NAAC"), three Credit ProcessingCenters, at the headquarters of the Bank in Tempe, Arizona and at the Company'sheadquarters in Hoffman Estates. The Company owns one of the RCCOCs andleases eight RCCOCs for remaining terms ranging from one to nine years.The Company owns the NAAC. The Company owns one of the Credit ProcessingCenters and leases two for remaining terms ranging from seven to eightyears.
For the Company's operations,the capital expenditures for expansion and remodeling and other improvements(excluding capitalized financing leases) amounted to $1.1 billion for thefiscal year ended December 30, 2000. In fiscal 2001, the Company planscapital expenditures of approximately $1.3 billion. The planned increasein domestic capital spending over 2000 is largely to support The GreatIndoors, with approximately ten new store openings planned in 2001. The2001 domestic capital plan also includes the opening of approximately tenFull-line Stores and more than 115 Specialty Stores. International capitalspending is projected to decline in 2001 from 2000 spending levels. TheCompany's ability to attain this growth will depend on, among other things,the availability of suitable store locations on appropriate terms. TheCompany may also pursue selective strategic acquisitions.
For additional information,see "International" on page 7 hereof and "Management's Discussion and Analysis"beginning on page 17 of the 2000 Annual Report, incorporated herein byreference in response to Item 7 hereof.
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*Item 3. Legal Proceedings*
The Company is subject tovarious legal and governmental proceedings, many involving routine litigationincidental to the businesses. Other matters contain allegations that arenon-routine and involve compensatory, punitive or treble damage claimsin very large amounts, as well as other types of relief. The consequencesof these matters are not presently determinable but, in the opinion ofmanagement of the Company after consulting with legal counsel, the ultimateliability in excess of reserves currently recorded is not expected to havea material effect on annual results of operations, financial position,liquidity or capital resources of the Company.  
*Item 4. Submission ofMatters to a Vote of Security Holders*
None
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PART II
*Item 5. Market for Registrant'sCommon Equity and Related Stockholder Matters*
DESCRIPTION OF SEARS COMMONSHARES
The summary contained hereinof certain provisions of the Restated Certificate of Incorporation, asamended (the "Certificate of Incorporation:), of Sears does not purportto be complete and is qualified in its entirety by reference to the provisionsof such Certificate of Incorporation filed as Exhibit 3.(i) hereto andincorporated by reference herein.
The Certificate of Incorporationauthorizes the issuance of 1,000,000,000 common shares, par value $0.75per share, and 50,000,000 preferred shares, par value $1.00 per share.As of the date hereof, there are no preferred shares outstanding. Preferredshares may be issued in series with rights and privileges as authorizedby the Board of Directors.
Subject to the restrictionson dividends mentioned below and the rights of the holders of any preferredshares which may hereafter be issued, each holder of common shares is entitledto 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 orits holdings after payment of all liabilities and obligations. The holdersof common shares have no preemption, redemption, subscription or conversionrights.
Sears Board of Directorsis divided into three classes serving staggered three-year terms. Becausethe Board is classified, shareholders wishing to exercise cumulative votingrights to assure the election of one or more directors must own approximatelythree 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 atleast 75% of the shares entitled to vote. Such a vote is also requiredto alter, amend or repeal, or to adopt any provision inconsistent with,Article 5 of the Certificate of Incorporation concerning directors, orto fix the number of directors by shareholder vote.
There are no restrictionson repurchases or redemption of shares by Sears which do not impair itscapital, except that the indentures relating to certain of Sears long-termdebt and an agreement pursuant to which Sears has provided a credit facilityin support of certain tax increment revenue bonds issued by the Villageof Hoffman Estates, Illinois, in connection with the construction of itsheadquarters 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 Rentalsto drop below 150% of Liabilities plus such Capitalized Rentals (as suchterms are defined in the indentures and the agreement). The amount by whichsuch Unencumbered Assets plus Capitalized Rentals exceeds 150% of suchLiabilities plus Capitalized Rentals, as computed under certain of theindenture provisions, is set forth in Note 8 of the Notes to ConsolidatedFinancial Statements on page 38 of the 2000 Annual Report.
Information regarding theprincipal market for Sears common shares, the number of shareholders andthe prices of, and dividends paid on, Sears common shares is incorporatedherein by reference to the section headed "Common Stock Market Informationand Dividend Highlights" on page 47 of the 2000 Annual Report and to theinformation under the heading "Shareholders' equity - Dividend payments"contained in Note 8 of the Notes to Consolidated Financial Statements onpage 38 of the 2000 Annual Report.
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*Item 6. Selected FinancialData*
The material under the caption"Five-Year Summary of Consolidated Financial Data" on page 46 of the 2000Annual Report is incorporated herein by reference.
*Item 7. Management's Discussionand Analysis*
The information containedunder the caption "Management's Discussion and Analysis" beginning on page17 of the 2000 Annual Report, is incorporated herein by reference.
Item 7a. *Quantitativeand Qualitative Disclosures About Market Risk*
The information containedunder the caption "Market Risk" included in "Management's Discussion andAnalysis" on page 24 of the 2000 Annual Report is incorporated herein byreference.
*Item 8. Financial Statementsand Supplementary Data*
The consolidated financialstatements of the Company, including the notes to all such statements,and other information on pages 27 - 47 (other than that incorporated byreference to Item 7 hereof) of the 2000 Annual Report is incorporated hereinby reference.
*Item 9. Changes in andDisagreements with Independent Auditors on Accounting and Financial Disclosure*
None
16      
PART III
*Item 10. Directors andExecutive Officers of the Registrant*
Information regarding directorsand executive officers of Sears is incorporated herein by reference tothe descriptions under "Item 1: Election of Directors" on pages 4 - 6 ofthe 2001 Proxy Statement and to Item 1 of this Report under the caption"Executive Officers of the Registrant" on page 10 hereof.
*Item 11. Executive Compensation*
Information regarding executivecompensation 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 pages4 - 6, 9, 12 - 13, 14 - 15, 15, 16, 17 - 19 and 21, respectively, of the2001 Proxy Statement.
*Item 12. Security Ownershipof Certain Beneficial Owners and Management*
Information regarding securityownership of certain beneficial owners and management is incorporated hereinby reference to the material under the heading "Beneficial Ownership" onpages 10 - 11 of the 2001 Proxy Statement.
*Item 13. Certain Relationshipsand Related Transactions*
None
17      
PART IV
*Item 14. Exhibits, FinancialStatement Schedules, and Reports on Form 8-K*(a)1 and 2 - An "Indexto 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 beenfiled 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 Form8-K dated October 19, 2000 was filed with the                             Securities and Exchange Commission (the "Commission") on October 19, 2000                             to report, under Item 5, third quarter earnings of the Registrant.18      
SIGNATURES
Pursuant to the requirementsof Section 13 of the Securities Exchange Act of 1934, as amended (the "ExchangeAct") the Registrant has duly caused this report to be signed on its behalfby the undersigned, thereunto duly authorized.SEARS, ROEBUCK AND CO.(Registrant)
*Glenn R. RichterBy: Glenn R. RichterVice President and Controller
March 20, 2001Pursuant to the requirementsof the Exchange Act, this report has been signed below by the followingpersons on behalf of the Registrant and in the capacities and on the datesindicated. Signature Title  Date  *AlanJ. Lacy Alan J. LacyDirector,Chairman of the Board of Directors, President and Chief Executive Officer)))*JeffreyN. Boyer Jeffrey N. BoyerSeniorVice President and Chief Financial Officer (Principal Financial Officer))))) *GlennR. Richter Glenn R. RichterVicePresident andController (Principal Accounting Officer))))) 
March 20, 2001*HallAdams, Jr. Hall Adams, Jr.Director)))) *BrendaC. Barnes Brenda C. BarnesDirector)))) *WarrenL. Batts Warren L. BattsDirector))))     Signature Title  Date*JamesR. Cantalupo James R. CantalupoDirector)))) *W.James Farrell W. James FarrellDirector)))) *MichaelA. Miles Michael A. MilesDirector)))March20, 2001*HughB. Price Hugh B. PriceDirector)))) *DorothyA. Terrell Dorothy A. TerrellDirector))))   
*By: /S/Glenn R. RichterIndividually and as Attorney-in-fact      Glenn R. Richter  
SEARS, ROEBUCK AND CO.INDEX TO FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULESYear Ended December 30,2000

The following consolidatedfinancial statements, notes thereto and related information of Sears, Roebuckand Co., are incorporated herein by reference to the Company's 2000 AnnualReport.  Incorporatedby reference in Item 8 herein: Page*     ConsolidatedStatements of Income 27     ConsolidatedBalance Sheets 28     ConsolidatedStatements of Cash Flows 29     ConsolidatedStatements of Shareholders' Equity 30     Notesto Consolidated Financial Statements  31     IndependentAuditors' Report 45     Five-YearSummary of Consolidated Financial Data 46     QuarterlyResults 47        Incorporatedby reference in Item 5 herein:   CommonStock Market Information and Dividend Highlights 47        Incorporatedby reference in Item 7a herein:       MarketRisk (included in Management's Discussion and Analysis) 24    *Refersto page number in Company's Annual Report      
 S-1     
SEARS, ROEBUCK AND CO.INDEX TO FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULESYear Ended December 30,2000

The following additionalstatement schedule, Independent Auditors' Reports and Consent of IndependentAuditors are furnished herewith pursuant to the requirements of Form 10-K.    PageSchedulerequired to be filed under the provisions of regulation S-X Article 5:     SCHEDULEII - VALUATION AND QUALIFYING ACCOUNTS S-3
     IndependentAuditors' ReportS-4    IndependentAuditors' Report S-5    Consentof Independent AuditorsS-6            
All other schedules are omittedbecause they are not applicable or not required.  
S-2          
SEARS, ROEBUCK AND CO.SCHEDULE II - VALUATIONAND QUALIFYING ACCOUNTS
  *(millions)*Balance at Beginningof PeriodAdditions Chargedto Cost and ExpensesDeductions (Describe)  
 Balanceat End ofPeriod            YearEnded December 30, 2000           Allowancefor uncollectible acocunts$760 $884 $958(A)$686            YearEnded January 1, 2000           Allowancefor uncollectible accounts$974 $871 $1,085(B)$760            YearEnded January 2, 1999           Allowancefor uncollectible accounts$1,113  $1,287 $1,426(C)$974                                                (A)Represents uncollectible credit card receivable accounts which have beencharged off and $111 million transferred to retained interest in transferredcredit card receivables which were transferred to the Master Trust in 2000.
(B) Represents uncollectiblecredit card receivable accounts which have been charged off.
(C) Represents uncollectiblecredit card receivable accounts which have been charged off and $106 milliontransferred to retained interest in transferred credit card receivablesrelated to receivables which were transferred to the Master Trust in 1998.                
S-3

INDEPENDENT AUDITORS' REPORT
To the Shareholders and Boardof DirectorsSears, Roebuck and Co.
We have audited the ConsolidatedBalance Sheets of Sears, Roebuck and Co. as of December 30, 2000 and January1, 2000, and the related Consolidated Statements of Income, Shareholders'Equity and Cash Flows for each of the three years in the period ended December30, 2000, as set forth in the Index to Financial Statements and FinancialStatement Schedules on page S-1, and have issued our report thereon datedFebruary 12, 2001; such consolidated financial statements and report areincluded in your 2000 Annual Report to Shareholders and are incorporatedherein by reference. Our audits also included the financial statement scheduleof Sears, Roebuck and Co., listed on page S-2. This financial statementschedule is the responsibility of the Company's management. Our responsibilityis to express an opinion based on our audits. In our opinion, such financialstatement schedule, when considered in relation to the basic consolidatedfinancial statements taken as a whole, presents fairly in all materialrespects the information set forth therein.  
/S/Deloitte & ToucheLLP
Deloitte & Touche LLPChicago, IllinoisFebruary 12, 2001  
S-4

INDEPENDENT AUDITORS' REPORT
To the Shareholders and Boardof DirectorsSears, Roebuck and Co.  
We have previously audited,in accordance with auditing standards generally accepted in the UnitedStates of America, the Consolidated Balance Sheets of Sears, Roebuck andCo. as of December 30, 2000, January 1, 2000, January 2, 1999, January3, 1998, and December 28, 1996, and the related Consolidated Statementsof Income, Shareholders' Equity and Cash Flows for each of the years thenended (none of which are presented herein); and we expressed unqualifiedopinions on those consolidated financial statements.
In our opinion, the informationset forth under "Operating Results" and "Financial Position" and on thelines captioned "Book value per common share", "Average common and equivalentshares outstanding", and "Earnings per common share - diluted" for eachof the five years in the period ended December 30, 2000, appearing underthe caption "Five Year Summary of Consolidated Financial Data" on page46 of your 2000 Annual Report to Shareholders, is fairly stated, in allmaterial respects, in relation to the consolidated financial statementsfrom which it has been derived.  
 /S/ Deloitte &Touche LLP
Deloitte & Touche LLPChicago, IllinoisFebruary 12, 2001  
S-5      
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporationby 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, 333-8141,333-38131 and 333-52056 of Sears, Roebuck and Co.; Registration StatementNos. 33-58139, 33-64215, 33-9817, 333-30879, and 333-62847 of Sears, Roebuckand 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, 333-92501 and 333-56272 of Sears Roebuckand Co. and the Sears 401(k) Savings Plan (formerly, The Savings and ProfitSharing Fund of Sears Employees and the Sears 401(k) Profit Sharing Plan);and Registration Statement No. 33-44671 of Sears, Roebuck and Co. and SearsDC Corp.; of our report dated February 12, 2001, incorporated by referencein the Annual Report on Form 10-K of Sears, Roebuck and Co. for the yearended December 30, 2000.  
/S/Deloitte & ToucheLLP
Deloitte & Touche LLPChicago, IllinoisMarch 20, 2001  
S-6        
EXHIBIT INDEX
Sears, Roebuck and Co. Form 10-KFor the Year Ended December 30, 2000
3.(i) RestatedCertificate of Incorporation, as amended to May 13, 1996 (incorporatedby reference to Exhibit 3(a) to Registration Statement No. 333-8141).*3.(ii) By-Lawsas amended to February 14, 2001.4.(i) Formsof restricted stock grants under Registrant's 1990 Employees Stock Plan(incorporated by reference to Exhibit 4.(i) to the Registrant's AnnualReport on Form 10-K for the year ended December 31, 1993).**4.(ii) Formof restricted stock grants under Registrant's 1994 Employees Stock Plan(incorporated by reference to Exhibit 4.(ii) to the Registrant's AnnualReport on Form 10-K for the year ended December 31, 1994).**4.(iii) Formsof Performance-Based Stock Options granted under Registrant's 1994 EmployeesStock Plan (incorporated by reference to Exhibit 4(iii) to the Registrant'sAnnual Report on Form 10-K for the fiscal year ended January 3, 1998).**4.(iv) Formsof Performance-Based Restricted Stock grants under Registrant's 1994 EmployeesStock Plan (incorporated by reference to Exhibit 4(iv) to the Registrant'sAnnual Report on Form 10-K for the fiscal year ended January 3, 1998).**4.(v) Formsof stock options granted under Registrant's 1994 Employees Stock Plan (incorporatedby reference to Exhibit 4(v) to the Registrant's Annual Report on Form10-K for the fiscal year ended January 2, 1999).**4.(vi) Registranthereby agrees to furnish to the Commission, upon request, with the instrumentsdefining the rights of holders of each issue of long-term debt of the Registrantand its consolidated subsidiaries.10.(i)(a) SeparationAgreement dated February 20, 1995 between Registrant and The Allstate Corporation(incorporated by reference to Exhibit 10(a) to The Allstate Corporation'sCurrentReport on Form 8-K dated February 22, 1995).***10.(i)(b) MarketingFile Separation Agreement dated February 20, 1995 between Registrant andThe Allstate Corporation (incorporated by reference to Exhibit 10(b) toThe Allstate Corporation's Current Report on Form 8-K dated February 22,1995).***10.(i)(c) ResearchServices Agreement dated February 20, 1995 between Registrant and The AllstateCorporation (incorporated by reference to Exhibit 10(c) to The AllstateCorporation's Current Report on Form 8-K dated February 22, 1995).***10.(i)(d) TaxSharing Agreement dated May 14, 1993 between Registrant and its subsidiaries(incorporated by reference to Exhibit 10.6 to Amendment No. 3 to The AllstateCorporation's Registration Statement No. 33-59676).10.(i)(e) SupplementalTax Sharing Agreement dated January 27, 1995 between Registrant and TheAllstate Corporation (incorporated by reference to Exhibit 10(d) to TheAllstate Corporation's Current Report on Form 8-K dated February 22, 1995).***10.(ii)(1) Registrant's1979 Incentive Compensation Plan (incorporated by reference to Exhibit10.(iii)(1) to the Registrant's Quarterly Report on Form 10-Q for the fiscalquarter ended March 31, 1985).** ****10.(ii)(2) Registrant'sDeferred Compensation Plan for Directors, as amended and restated on August11, 1999 (incorporated by reference to Exhibit 10.(ii)(3) to Registrant'sAnnual Report on Form 10-K for the fiscal year ended January 1, 2000).*****10.(ii)(3) Registrant'sAnnual Incentive Compensation Plan, amended and restated as of January1, 1994 (incorporated by reference to Appendix B to the Registrant's ProxyStatement dated March 23, 1994).** ****10.(ii)(4) Registrant'sLong-Term Incentive Compensation Plan, amended and restated as of January1, 1994 (incorporated by reference to Appendix C to the Registrant's ProxyStatement dated March 23, 1994).** ****10.(ii)(5) Registrant's1982 Employees Stock Plan (incorporated by reference to Exhibit 4(a)(1)to Registration Statement No. 2-80037 of the Registrant).****10.(ii)(6) Descriptionof Registrant's Supplemental Life Insurance Plan, amended as of December31, 1986 (incorporated by reference to the second and third full paragraphson page 10 of the Registrant's Proxy Statement dated March 26, 1987).******10.(ii)(7) Registrant'sNon-Employee Directors' Retirement Plan, as amended and restated to March13, 1996 (incorporated by reference to Exhibit 10.(iii)(8) to Registrant'sAnnual Report on Form 10-K for the year ended December 30, 1995).** ****10.(ii)(8) Descriptionof Registrant's Non-Employee Director Life Insurance Plan (incorporatedby reference to the first paragraph on page 10 of the Registrant's ProxyStatement dated March 26, 1998).** ****10.(ii)(9)Registrant's1990 Employees Stock Plan, amended as of May 12, 1994 (incorporated byreference to Exhibit 10.20 to The Allstate Corporation's Annual Reporton Form 10-K for the fiscal year ended December 31, 1994).*** ****10.(ii)(10) Registrant'sSupplemental Retirement Income Plan, as amended and restated effectiveMarch 25, 1997 (incorporated by reference to Exhibit 10.(ii)(11) to Registrant'sAnnual Report on Form 10-K for the fiscal year ended January 1, 2000).******10.(ii)(11) Registrant's1986 Employees Stock Plan, amended as of May 12, 1994 (incorporated byreference to Exhibit 10.19 to The Allstate Corporation's Annual Reporton Form 10-K for the fiscal year ended December 31, 1994).*** ****10.(ii)(12) Registrant'sTransferred Executives Pension Supplement (incorporated by reference toExhibit 10.(iii)(13) to the Registrant's Annual Report on Form 10-K forthe fiscal year ended December 31, 1988).** ****10.(ii)(13) Amendmentto Registrant's Transferred Executives Pension Supplement adopted on March13, 1996 (incorporated by reference to Exhibit 10.(iii)(14) to the Registrant'sAnnual Report on Form 10-K for the fiscal year ended December 30, 1995).******10.(ii)(14) Registrant'sSupplemental Long-Term Disability Plan (incorporated by reference to Exhibit10.d to the Registrant's Quarterly Report on Form 10-Q for the quarterlyperiod ended September 30, 1995).** *****10.(ii)(15)Registrant'sDeferred Compensation Plan, as amended and restated to December 13, 2000.10.(ii)(16) Registrant'sManagement Supplemental Deferred Profit Sharing Plan (incorporated by referenceto Exhibit 10(b) to the Registrant's Quarterly Report on Form 10-Q forthe quarter ended October 1, 1994).** ****10.(ii)(17) Registrant'sNon-Employee Director Stock Plan (incorporated by reference to AppendixB of the Registrant's Proxy Statement dated March 20, 1996).** ****10.(ii)(18) Registrant's1994 Employees Stock Plan (incorporated by reference to Appendix A to theRegistrant's Proxy Statement dated March 23, 1994).** ****10.(ii)(19) Registrant'sAssociate 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 endedJanuary 3, 1998).** 10.(ii)(20)Registrant's2000 Employees Stock Plan (incorporated by reference to Appendix A to theRegistrant's Proxy Statement dated March 17, 2000).** ****10.(ii)(21)RetirementAgreement between Registrant and Arthur C. Martinez (incorporated by referenceto Exhibit 10 to Registrant's Quarterly Report on Form 10-Q for the quarterlyperiod ended July 1, 2000).** ****10. (ii)(22) Letterfrom the Registrant to Alan J. Lacy dated December 14, 1994 relating toemployment (incorporated by reference to Exhibit 10(d) to the Registrant'sCurrent Report on Form 8-K dated June 20, 1995).** *****10.(ii)(23)SeparationAgreement between the Registrant and Julian Day, effective October 1, 2000.10.(ii)(24)Letterfrom the Registrant to Anastasia D. Kelly dated December 14, 1998 relatingto employment (incorporated by reference to Exhibit 10 to the Registrant'sQuarterly Report on Form 10-Q for the quarterly period ended April 3, 1999).*****10. (ii)(25) Formof severance and non-compete agreement for executive officers of the Registrant(incorporated by reference to Exhibit 10 to the Registrant's QuarterlyReport on Form 10-Q for the quarterly period ended July 3, 1999).** ****10. (ii)(26) SearsExecutive Retirement Plan Arrangements dated March 27, 1997 (incorporatedby reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form10-Q for the quarterly period ended June 28, 1997).** *****12.(a)Computationof ratio of income to fixed charges for Registrant and consolidated subsidiaries.*12.(b)Computationof ratio of income to combined fixed charges and preferred share dividendsfor Registrant and consolidated subsidiaries.*13.  Portionsof Registrant's Annual Report incorporated by reference into Part I orPart II of Registrant's Annual Report on Form 10-K for the fiscal yearended January 1, 2000.*21.  Subsidiariesof the Registrant.*23.  Consentof Deloitte & Touche LLP.*24.  Powerof Attorney of certain officers and directors of the Registrant.      
* Filed herewith** SEC File No. 1-416*** SEC File No. 1-11840**** A management contract or compensatoryplan or arrangement required to be filed as an exhibit to this report pursuantto Item 14(c) of Form 10-K.

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