1 EXHIBIT 99 UNITED STATES BANKRUPTCY COURT MIDDLE DISTRICT OF TENNESSEE In re: Case No.: 399-02649 THROUGH 399-02680 SERVICE MERCHANDISE COMPANY, INC. --------------------------- --------------------------------- Judge: PAINE --------------------------- Chapter 11 Debtor(s) MONTHLY OPERATING REPORT FOR PERIOD ENDING January 28, 2001 ---------------- COMES NOW, SERVICE MERCHANDISE COMPANY, INC. ----------------------------------------------------- Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing January 1, 2001 and ending January 28, 2001 as shown by the report and exhibits consisting of 8 pages and containing the following as indicated: X Remaining portion of the Monthly Reporting Questionnaire (Attachment 1) ----- X Comparative Balance Sheets (Forms OPR-1 & OPR-2) ----- N/A Summary of Accounts Receivable (Form OPR-3) ----- X Schedule of Postpetition Liabilities (Form OPR-4) ----- X Statement of Income (Loss) (Form OPR-5) ----- I declare under penalty of perjury that this report and all the attachments are true and correct to the best of my knowledge and belief. This report is based on preliminary unaudited results, and includes those reports agreed upon as appropriate at this time between the Debtor and the U.S. Trustee. The Debtor has filed with the U. S. Trustee on February 16, 2001, the preliminary January 28, 2001, Monthly Operating Report, which included certain schedules, including payroll, insurance, receipts and disbursements, payment to professionals and bank accounts. I also hereby certify that the original Monthly Operating Report was filed with the Bankruptcy Court Clerk and a copy delivered to the U.S. Trustee. Date: 3/5/01 DEBTOR - IN - POSSESSION -------- By: /s/ KENNETH A. CONWAY ------------------------------------------------ Name and Title: KENNETH A. CONWAY, VICE PRESIDENT AND CONTROLLER ------------------------------------------------ Address: 7100 SERVICE MERCHANDISE DRIVE ------------------------------------------------ BRENTWOOD, TENNESSEE 37027 ------------------------------------------------ Telephone No: (615) 660-3340 ------------------------------------------------ Note: Report subject to further verification and account reconciliation procedures Page 1 2 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: JANUARY 1, 2001 THROUGH JANUARY 28, 2001 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS) ACTUAL ACTUAL FORECAST FORECAST FORECAST 01/28/01 02/25/01 03/04/01 04/01/01 04/29/01 --------- --------- --------- --------- --------- Ending total revolver balance $ 141,748 $ 155,713 $ 154,514 $ 175,699 $ 213,559 Term loan 60,000 60,000 60,000 60,000 60,000 Standby letters of credit 24,934 23,895 23,895 23,895 23,895 Trade letters of credit 20,912 23,538 24,816 20,196 19,979 --------- --------- --------- --------- --------- Total extensions of credit 247,594 263,146 263,225 279,790 317,433 -- Borrowing base 393,983 409,138 400,087 401,644 422,615 --------- --------- --------- --------- --------- Availability $ 146,389 $ 145,992 $ 136,862 $ 121,854 $ 105,182 ========= ========= ========= ========= ========= Page 2 3 FORM OPR- 1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (DOLLARS IN THOUSANDS) JANUARY 28, DECEMBER 31, 2001 2000 ----------- ------------ ASSETS Current Assets: Cash and cash equivalents $ 19,426 $ 31,838 Accounts receivable 5,641 7,061 Inventories 452,277 440,324 Prepaid expenses and other assets 17,564 11,025 --------- --------- TOTAL CURRENT ASSETS 494,908 490,248 --------- --------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 362,410 364,898 Capitalized leases, net of accumulated amortization 12,138 12,330 --------- --------- TOTAL PROPERTY AND EQUIPMENT 374,548 377,228 --------- --------- Other assets and deferred charges 56,942 58,376 --------- --------- TOTAL ASSETS $ 926,398 $ 925,852 ========= ========= LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ 141,747 $ 89,143 Accounts payable 37,060 48,570 Accrued expenses 151,114 158,843 State & local sales tax 6,299 16,300 Current maturities capitalized leases 94 93 --------- --------- TOTAL CURRENT LIABILITIES 336,314 312,949 --------- --------- Page 3 4 FORM OPR- 1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (DOLLARS IN THOUSANDS) Long-Term Liabilities: Long-term debt $ 60,000 $ 60,000 Capitalized lease obligations 2,388 2,396 Liabilities Subject To Compromise: Accrued restructuring costs 42,188 42,189 Capitalized lease obligations 21,968 22,288 Long-term debt 416,041 416,709 Accounts payable 197,839 197,830 Accrued expenses 69,115 68,235 --------- --------- Total Liabilities Subject To Compromise 747,151 747,251 TOTAL LIABILITIES 1,145,853 1,122,596 --------- --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,936 49,935 Additional paid-in-capital 5,881 5,881 Deferred compensation (212) (221) Retained (deficit) earnings (275,060) (252,339) --------- --------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (219,455) (196,744) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 926,398 $ 925,852 ========= ========= Page 4 5 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: JANUARY 1, 2001 THROUGH JANUARY 28, 2001 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE MONTH ENDED: 01/28/2001 FORM OPR-4 (DOLLAR IN THOUSANDS) TOTAL --------- Trade Accounts Payable (Merchandise) $ 37,060 TOTAL --------- Expense & other payables $ 151,114 Page 5 6 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: JANUARY 1, 2001 THROUGH JANUARY 28, 2001 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS) DATE DATE TOTAL TAXES PAYABLE INCURRED DUE DUE ------------------------------------------ Federal income tax ** Various Various $ 7,342 State income tax Various Various $ (1) --------- SUBTOTAL $ 7,341 --------- Sales/use tax SUBTOTAL * Various Various $ 6,437 --------- Personal property tax * Various Various $ 1,657 Real estate taxes * Various Various $ 10,633 Inventory taxes * Various Various $ -- Gross receipts/bus licenses * Various Various $ 222 Franchise taxes * Various Various $ 375 --------- SUBTOTAL $ 12,887 --------- --------- TOTAL TAXES PAYABLE $ 26,665 ========= * liability included in accrued expenses on OPR-2 ** tax reserve Page 6 7 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: JANUARY 1, 2001 THROUGH JANUARY 28, 2001 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS) DATE TOTAL DUE INCURRED DATE DUE (1/28/01 BALANCE) ----------------------------------------------- POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $ 141,747 Facility standby letters of credit 04/14/00 04/14/04 24,934 Facility trade letters of credit 04/14/00 04/14/04 20,912 Term loans 04/14/00 04/14/04 60,000 --------- TOTAL EXTENSIONS OF CREDIT $ 247,593 ========= ACCRUED INTEREST PAYABLE $ 1,337 ========= Page 7 8 FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (DOLLARS IN THOUSANDS) ACTIVITY JANUARY 1, 2001 THROUGH JANUARY 28, 2001 ---------------- Net Sales $ 41,127 Costs of merchandise sold and buying and occupancy expense 34,120 ---------- Gross margin after cost of merchandise sold and buying and occupancy expenses 7,007 Selling, General and Administrative Expenses: Net Employment Expense 16,995 Net Advertising 768 Banking and Other Fees 637 Real Estate and Other Taxes 1,954 Supplies 492 Communication and Equipment 341 Travel 249 UCC and Other Services (873) Legal and Professional 393 Sales and Shipping 24 Insurance 486 Miscellaneous 29 Credit Card Services (56) ---------- Total Selling, General and Administrative Expenses 21,439 Other expense/(income), net (14) Page 8 9 FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (DOLLARS IN THOUSANDS) Restructuring charge (credit) $ -- Depreciation and amortization 3,179 ---------- Earnings (loss) before interest, reorganization items, and income tax (17,597) Interest expense - debt 2,732 Interest expense - capitalized leases 275 Earnings (loss) before reorganization items, and income tax (20,604) ---------- Reorganization Items: Legal and Professional 1,949 Miscellaneous fees 209 Loss (Gain) on Disposal of Assets (62) Close Store Charges 21 ---------- Total Reorganization Items 2,117 Earnings (loss) before income tax (22,721) Income tax benefit -- Cumulative Effect of Change in Accounting Principles -- ---------- Net earnings (loss) $ (22,721) ========== Page 9