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 April 29, 2001
------------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
-----------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for
the period commencing April 2, 2001 and ending April 29, 2001 as shown by
------------- --------------
the report and exhibits consisting of 15 pages and containing the following
--
as indicated:
X 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. 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: 5/21/01 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: APRIL 2, 2001 THROUGH APRIL 29, 2001
1. Payroll
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- ------------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD, CHIEF EXECUTIVE OFFICER AND $ 50,188.10 $ 32,024.84 $ 4,498.38 $13,263.50
PRESIDENT
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 27,752.86 $ 18,664.49 $ 2,165.43 $ 6,650.71
GENERAL COUNSEL AND SECRETARY
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 23,847.83 $ 15,663.10 $ 1,738.03 $ 5,212.27
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER $176,884.91 $123,880.27 $ - $51,789.64
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 11,648.13 $ 7,893.93 $ 642.24 $ 1,819.99
KARREN M. PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT $ 14,665.05 $ 9,947.11 $ 1,161.01 $ 3,427.35
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 13,123.87 $ 9,609.23 $ 643.75 $ 1,889.26
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $ 22,000.46 $ 15,153.77 $ 1,519.89 $ 4,701.57
JERRY E. FOREMAN SENIOR VICE PRESIDENT, MERCHANDISING $ 25,861.43 $ 17,429.51 $ 2,003.15 $ 6,124.89
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND $ 8,864.66 $ 5,455.55 $ 645.28 $ 1,946.25
ASSISTANT TREASURER
The associate listed below received the remainder of the Stay bonus, terminated
vacation and severance included above.
ROBERT J. PINDRED $ 20,250.04 Stay
$ 6,634.63 Terminated
Vacation
$150,000.24 Severance
The former associate listed below received a taxable value insurance benefit,
based on his employment agreement, dated 3/23/99.
CHARLES K. SEPTER (Taxable value - no net check provided to former $ 1,490.34 COBRA
associate)
Page 2
3
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 2, 2001 THROUGH APRIL 29, 2001
2. INSURANCE
COVERAGE POLICY EXPIRATION PREMIUM DATE COVERAGE
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THROUGH
- ------------------------------------------------------------------------------------------------------------------------------------
Property Fireman's Fund Insurance Co $5 Million 01MXI97600751 12/31/01 $685,000 12/31/01
Royal Indemnity Co. $5 Million RHD317182 12/31/01 $ 90,250 12/31/01
Westchester Fire $15 Million 1XA394430-0 12/31/01 $ 64,125 12/31/01
Allianz Insurance Co $12 Million CLP1036568 12/31/01 $ 26,583 12/31/01
TIG Insurance Co $13 Million XPT38844629 12/31/01 $ 28,730 12/31/01
Westchester Fire $20 Million 1XA394429-0 12/31/01 $ 13,500 12/31/01
Allianz Insurance Co $30 Million CLP1036568 12/31/01 $ 20,250 12/31/01
Allianz Insurance Co $25 Million CLP1036568 12/31/01 $ 8,500 12/31/01
Boiler & Machinery Hartford Steam Boiler $10 Million 4914359 12/31/01 $ 9,934 12/31/01
Transit Fireman's Fund Insurance Co $1 Million CCIMG72820 12/31/01 $ 10,000 12/31/01
Ocean Cargo Fireman's Fund Insurance Co $10 Million CR37211 12/31/01 $ 40,000 12/31/01
General Liability Ace American Ins Co $5 Million XSLG20577009 12/31/01 $212,279 12/31/01
Workers' Compensation Pacific Employers Ins Co Statutory WLRC43024516 12/31/01 $136,566 12/31/01
WC Excess Ace American Ins Co Statutory XWC014026 12/31/01 $ 12,108 12/31/01
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG20577344 12/31/01 $ 20,500 12/31/01
Auto Pacific Employers Ins Co $1 Million ISAH07968358 12/31/01 $ 33,518 12/31/01
Umbrella Ohio Casualty Group $50 Million BXO52805120 12/31/01 $ 88,250 12/31/01
Excess Liability Zurich American of Illinois $50 Million AEC287610703 12/31/01 $ 30,000 12/31/01
International Ace American Ins Co $1 Million PHF051491 12/31/01 $ 2,500 12/31/01
Punitive Damages Magna Carta Ins. Ltd. $50 Million MCPD201058 12/31/01 $ 40,000 12/31/01
Punitive Damages - Excess Zurich Ins. Co Bermuda Branch $50 Million ZICBB-091 PD 12/31/01 $ 5,000 12/31/01
Directors & Officers Continental Insurance Co $10 Million 300714943 03/01/02 $200,000 03/01/02
Federal Insurance Co $10 Million 81278902-A 03/01/02 $190,000 03/01/02
Royal Insurance Co $10 Million PSF000009 03/01/02 $175,000 03/01/02
Greenwich Ins. Co. $10 Million ELU82217-01 03/01/02 $198,949 03/01/02
Zurich-American Ins. Co. $10 Million DOC3746468-00 03/01/02 $146,704 03/01/02
Kemper Insurance Co $10 Million 3DY00200100 03/01/02 $ 99,110 03/01/02
Crime National Union Fire Ins Co $10 Million 8726439 03/01/02 $ 53,833 03/01/02
Fiduciary National Union Fire Ins Co $10 Million 8726812 03/01/02 $ 25,839 03/01/02
Employment Practices Liability Chubb Insurance Co $5 Million 81278901A 03/01/02 $100,000 03/01/02
National Union Fire Ins Co $5 Million 8727499 03/01/02 $ 70,000 03/01/02
Royal Insurance Co $10 Million PSF000010 03/01/02 $ 85,000 03/01/02
Special Crime Reliance Insurance Co $25 Million NFK1951937 05/01/02 $ 13,458 05/01/02
Page 3
4
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 2, 2001 THROUGH APRIL 29, 2001
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 5,950
RETAIL SAFE FUNDS 1,790,196
CORPORATE ACCOUNTS 2,681,104
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE 684,425
KEY NATIONAL BANK 339,166
BANK OF BOSTON 283,440
BANK OF BOSTON CONNECTICUT 136,431
FIRST UNION 2,837,413
BANK ONE LOUISIANA 329,528
ABN - AMRO BANK 173,976
COMERICA BANK 272,707
AM SOUTH 408,400
BANK OF AMERICA 31,995
BANK OF OKLAHOMA 249,522
CHASE BANK OF TEXAS 745,495
SINGLE STORE DEPOSITORY ACCOUNTS 303,376
WELLS FARGO BANK 53,769
BANK ONE, IN 168,418
PNC BANK 612,000
OAK BROOK BANK 651,374
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 9,267,005
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. 60,952
OTHER CASH ACCOUNTS 3,111,917
-----------
TOTAL CASH PER GENERAL LEDGER $25,198,559
===========
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: APRIL 2, 2001 THROUGH APRIL 29, 2001
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 04/02/01 04/09/01 04/16/01 04/23/01 04/02/01
Sunday 04/08/01 04/15/01 04/22/01 04/29/01 04/29/01
-------- -------- -------- -------- ---------
Receipts:
Sales receipts $ 16,208 $ 14,603 $ 14,683 $ 20,961 $ 66,455
Miscellaneous receipts 791 578 -- 137 1,506
-------- -------- -------- -------- ---------
Total available collections 16,999 15,181 14,683 21,098 67,961
Disbursements:
Merchandise disbursements 11,340 12,432 13,825 15,597 53,194
Non-merchandise disbursements 15,338 11,693 15,244 10,150 52,425
-------- -------- -------- -------- ---------
Total disbursements 26,678 24,125 29,069 25,747 105,619
-------- -------- -------- -------- ---------
Net receipts/(disbursements) $ (9,679) $ (8,944) $(14,386) $ (4,649) $ (37,658)
======== ======== ======== ======== =========
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: APRIL 2, 2001 THROUGH APRIL 29, 2001
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
Actual Actual Forecast Forecast Forecast
04/29/01 05/13/01 05/27/01 07/01/01 07/29/01
-------- -------- -------- -------- --------
Ending total revolver balance $233,211 $230,575 $212,069 $189,762 $186,822
Term loan 60,000 60,000 60,000 60,000 60,000
Standby letters of credit 23,895 22,595 22,595 23,095 23,554
Trade letters of credit 7,207 6,817 8,071 12,194 20,168
-------- -------- -------- -------- --------
Total extensions of credit 324,313 319,987 302,735 285,051 290,544
Borrowing base 439,912 442,800 422,199 402,478 394,639
-------- -------- -------- -------- --------
Availability $115,599 $122,813 $119,464 $117,427 $104,095
======== ======== ======== ======== ========
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: April 2, 2001 THROUGH April 29, 2001
4. Payments to Professionals April 2, 2001 through April 29, 2001
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
- ---------------------------------------------------------------------------------------------------
99459 Robert L. Berger & Associates $21,886.51 04/03/01 B0024463
71217 Bass, Berry & Sims $188,100.00 04/05/01 B0024465
57117 Deloitte & Touche $18,000.00 04/06/01 50038644
57117 Deloitte & Touche $66,250.00 04/06/01 50038645
57117 Deloitte & Touche $5,843.00 04/06/01 50038660
98378 Skadden, Arps, Meagher & Flom $782,962.00 04/20/01 B0024604
99459 Robert L. Berger & Associates $19,702.07 04/26/01 B0024635
57117 Deloitte & Touche $60,423.63 04/27/01 50040669
101606 Service Real Estate Venture $105,846.00 04/27/01 B0024605
101232 E & Y Capital Advisors, LLC $122,924.00 04/27/01 B0024681
101993 Rothschild, Inc. $110,689.27 04/27/01 B0024682
63078 Weil, Gotshal & Manges, LLP $391.00 04/27/01 B0024683
71217 Bass, Berry & Sims $248,523.03 04/27/01 B0024684
99104 Jay Alix & Associates $129,428.80 04/27/01 B0024686
99391 Otterbourg, Steindler, Houston & Rosen, PC $177,739.81 04/27/01 B0024687
99444 Sitrick & Company $43,012.46 04/27/01 B0024688
99454 Harwell, Howard, Hyne, Gabbert & Manner, PC $51,939.62 04/27/01 B0024689
Page 7
8
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
April 29, April 1,
2001 2001
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 25,199 $ 23,913
Accounts receivable 6,435 6,298
Inventories 482,707 458,963
Prepaid expenses and other assets 21,196 21,539
-------- --------
TOTAL CURRENT ASSETS 535,537 510,713
-------- --------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 358,748 359,539
Capitalized leases, net of accumulated amortization 11,568 11,735
-------- --------
TOTAL PROPERTY AND EQUIPMENT 370,316 371,274
-------- --------
Other assets and deferred charges 48,466 57,206
-------- --------
TOTAL ASSETS $954,319 $939,193
======== ========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $233,212 $195,906
Accounts payable 40,727 47,942
Accrued expenses 122,573 126,219
State & local sales tax 7,956 8,288
Current maturities capitalized leases 96 95
-------- --------
TOTAL CURRENT LIABILITIES 404,564 378,450
-------- --------
Page 8
9
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
April 29, April 1,
2001 2001
---------- ----------
Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 2,363 2,372
Liabilities Subject To Compromise:
Accrued restructuring costs 42,071 42,182
Capitalized lease obligations 21,123 21,388
Long-term debt 413,285 413,954
Accounts payable 198,082 198,054
Accrued expenses 71,864 70,828
---------- ----------
Total Liabilities Subject To Compromise 746,425 746,406
TOTAL LIABILITIES 1,213,352 1,187,228
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,936 49,936
Additional paid-in-capital 5,881 5,881
Deferred compensation (180) (190)
Accumulated other comprehensive loss (2,697) (2,697)
Retained (deficit) earnings (311,973) (300,965)
---------- ----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (259,033) (248,035)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 954,319 $ 939,193
========== ==========
Page 9
10
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 2, 2001 THROUGH APRIL 29, 2001
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 04/29/01
FORM OPR-3 NOT APPLICABLE
Page 10
11
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: April 2, 2001 THROUGH April 29, 2001
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
MONTH ENDED: 04/29/2001
FORM OPR-4
Total
---------
Trade Accounts Payable (Merchandise) $ 40,727
Total
---------
Expense & other payables $ 122,573
Page 11
12
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 2, 2001 THROUGH APRIL 29 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 $ 8,628
State income tax Various Various (430)
--------
SUBTOTAL $ 8,198
--------
Sales/use tax SUBTOTAL * Various Various $ 8,648
--------
Personal property tax * Various Various 2,002
Real estate taxes * Various Various 9,126
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various 145
Franchise taxes * Various Various 447
--------
SUBTOTAL $ 11,720
--------
--------
TOTAL TAXES PAYABLE $ 28,566
========
* liability included in accrued expenses on OPR-2
** tax reserve
Page 12
13
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 2, 2001 THROUGH APRIL 29, 2001
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (4/29/01 BALANCE)
-------------------------------------------
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ 233,212
Facility standby letters of credit 04/14/00 04/14/04 23,895
Facility trade letters of credit 04/14/00 04/14/04 7,207
Term loans 04/14/00 04/14/04 60,000
---------
TOTAL EXTENSIONS OF CREDIT $ 324,314
=========
ACCRUED INTEREST PAYABLE $ 939
=========
Page 13
14
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY
APRIL 2, 2001
THROUGH
APRIL 29, 2001
--------------
Net Sales $ 61,540
Costs of merchandise sold and buying and occupancy expense 44,641
----------
Gross margin after cost of merchandise sold and buying and occupancy expenses 16,899
Selling, General and Administrative Expenses:
Net Employment Expense 11,938
Net Advertising 1,537
Banking and Other Fees 891
Real Estate and Other Taxes 1,796
Supplies 401
Communication and Equipment 310
Travel 320
UCC and Other Services (430)
Legal and Professional 207
Sales and Shipping 39
Insurance (65)
Miscellaneous 207
Credit Card Services (45)
----------
Total Selling, General and Administrative Expenses 17,106
Other expense/(income), net 723
Page 14
15
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
Restructuring charge (credit) --
Depreciation and amortization 3,233
--------
Earnings (loss) before interest, reorganization items, and income tax (4,163)
Interest expense - debt 3,183
Interest expense - capitalized leases 265
--------
Earnings (loss) before reorganization items, and income tax (7,611)
Reorganization Items:
Legal and Professional 3,276
Miscellaneous 200
Loss (Gain) on Disposal of Assets (83)
Close Store Charges --
--------
Total Reorganization Items 3,393
Earnings (loss) before income tax (11,004)
Income tax benefit 4
Cumulative Effect of Change in Accounting Principles --
--------
Net earnings (loss) $(11,008)
========
Page 15