1
EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
In re: Case No.: 399-02649 THROUGH 399-02680
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SERVICE MERCHANDISE COMPANY, INC.
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Judge: PAINE
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Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING May 27, 2001
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COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
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Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing April 30, 2001
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and ending May 27, 2001 as shown by the report and exhibits consisting of 15 pages and
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containing the following as indicated:
X Monthly Reporting Questionnaire (Attachment 1)
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X Comparative Balance Sheets (Forms OPR-1 & OPR-2)
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N/A Summary of Accounts Receivable (Form OPR-3)
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X Schedule of Postpetition Liabilities (Form OPR-4)
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X Statement of Income (Loss) (Form OPR-5)
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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: 6/15/01 DEBTOR - IN - POSSESSION
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By: /S/ Kenneth A. Conway
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Name and Title: KENNETH A. CONWAY, VICE PRESIDENT AND CONTROLLER
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Address: 7100 SERVICE MERCHANDISE DRIVE
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BRENTWOOD, TENNESSEE 37027
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Telephone No: (615) 660-3340
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Note: Report subject to further verification and account reconciliation procedures
Page 1
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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 30, 2001 THROUGH MAY 27, 2001
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- ------------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $50,188.10 $32,024.85 $4,498.37 $13,263.50
JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $ 8,000.00 $ 4,886.11 $3,113.89 $ --
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $27,752.86 $18,664.50 $2,165.43 $ 6,650.70
GENERAL COUNSEL AND SECRETARY
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $23,958.83 $16,344.30 $1,792.73 $ 5,604.16
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $22,000.46 $15,153.78 $1,519.89 $ 4,701.56
JERRY E. FOREMAN SENIOR VICE PRESIDENT, MERCHANDISING $25,861.43 $17,429.50 $2,003.15 $ 6,124.90
KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $14,665.05 $ 9,947.12 $1,161.05 $ 3,427.35
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $13,121.02 $ 9,610.15 $ 643.76 $ 1,888.33
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $11,648.13 $ 7,893.92 $ 642.25 $ 1,819.99
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND $ 8,864.66 $ 5,482.31 $ 645.28 $ 1,919.49
ASSISTANT TREASURER
JANE F. GILMARTIN RECEIVED A PAYMENT IN THE AMOUNT OF $1,250,000.00 UNDER THE
TERMS OF HER EMPLOYMENT AGREEMENT, WHICH IS NOT INCLUDED IN THE AMOUNT ABOVE.
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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 30, 2001 THROUGH MAY 27, 2001
2. INSURANCE
COVERAGE POLICY EXPIRATION PREMIUM DATE COVERAGE
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THROUGH
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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
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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 30, 2001 THROUGH MAY 27, 2001
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
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HOME OFFICE $ 5,950
RETAIL SAFE FUNDS 1,763,291
CORPORATE ACCOUNTS 3,234,386
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STORE DEPOSITORY ACCOUNTS
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FIRST TENNESSEE 803,741
KEY NATIONAL BANK 452,047
BANK OF BOSTON 564,030
BANK OF BOSTON CONNECTICUT --
FIRST UNION 3,054,083
BANK ONE LOUISIANA 406,206
ABN - AMRO BANK 310,636
COMERICA BANK 303,993
AM SOUTH 447,171
BANK OF AMERICA 371,491
BANK OF OKLAHOMA 192,992
CHASE BANK OF TEXAS 1,005,183
SINGLE STORE DEPOSITORY ACCOUNTS 399,543
WELLS FARGO BANK 99,336
BANK ONE, IN 199,182
PNC BANK 831,243
OAK BROOK BANK 790,741
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 10,968,389
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OTHER DEPOSITORY ACCOUNTS
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SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. 65,113
OTHER CASH ACCOUNTS 3,086,181
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TOTAL CASH PER GENERAL LEDGER $29,354,928
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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 30, 2001 THROUGH MAY 27, 2001
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 04/30/01 05/07/01 05/14/01 05/21/01 04/30/01
Sunday 05/06/01 05/13/01 05/20/01 05/27/01 05/27/01
-------- -------- -------- -------- --------
Receipts:
Sales receipts $ 17,439 $29,322 $38,945 $25,862 $111,568
Miscellaneous receipts -- 464 -- 170 634
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Total available collections 17,439 29,786 38,945 26,032 112,202
Disbursements:
Merchandise disbursements 11,803 10,384 8,876 9,372 40,435
Non-merchandise disbursements 12,697 9,701 15,122 9,441 46,961
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Total disbursements 24,500 20,085 23,998 18,813 87,396
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Net receipts/(disbursements) $ (7,061) $ 9,701 $14,947 $ 7,219 $ 24,806
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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 30, 2001 THROUGH MAY 27, 2001
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL FORECAST FORECAST FORECAST
05/27/01 06/10/01 07/01/01 07/29/01 08/26/01
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Ending total revolver balance $208,460 $203,425 $195,858 $192,964 $194,315
Term loan 60,000 60,000 60,000 60,000 60,000
Standby letters of credit 24,304 23,688 24,188 24,491 24,335
Trade letters of credit 6,621 10,615 15,309 22,535 33,747
-------- -------- -------- -------- --------
Total extensions of credit 299,385 297,728 295,355 299,990 312,397
Borrowing base 425,137 418,826 409,041 401,448 402,508
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Availability $125,752 $121,098 $113,686 $101,458 $ 90,111
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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 30, 2001 THROUGH MAY 27, 2001
4. PAYMENTS TO PROFESSIONALS APRIL 30, 2001 THROUGH MAY 27, 2001
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
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53703 Barron and Stadfeld, PC $16.50 04/30/01 50040775
2642 Waller, Lansden, Dortch & Davis $259.80 05/02/01 50041074
67017 Barkley & Thompson $3,219.96 05/02/01 50041079
84573 Buchanan & Ingersol, PC $1,766.10 05/02/01 50041081
86237 Brusniak, Clement, Harrison & McCool, PC, Inc. $781.80 05/02/01 50041083
57117 Deloitte & Touche $66,250.00 05/08/01 50041438
57117 Deloitte & Touche $17,426.00 05/09/01 50041635
102914 Ernst & Young, LLP $5,048.00 05/10/01 50041702
57117 Deloitte & Touche $9,868.95 05/14/01 50041902
99444 Sitrick & Company, Inc. $84,490.36 05/15/01 B0024805
99459 Robert L. Berger & Associates $13,464.63 05/18/01 B0024840
94005 Donald A. Blum $2,450.00 05/24/01 50042943
101232 E & Y Capital Adivisors, LLC $220,785.00 05/25/01 B0024889
101993 Rothschild, Inc. $94,271.38 05/25/01 B0024890
71217 Bass, Berry & Sims $269,102.57 05/25/01 B0024891
98378 Skadden, Arps,Slate, Meagher & Flom $657,526.00 05/25/01 B0024892
99104 Jay Alix & Associates $124,265.22 05/25/01 B0024893
99391 Otterbourg, Steindler, Houston & Rosen, PC $213,225.75 05/25/01 B0024894
99454 Harwell, Howard, Hyne, Gabbert & Manner, PC, Inc. $43,277.45 05/25/01 B0024895
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FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
MAY 27, APRIL 29,
2001 2001
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ASSETS
Current Assets: $ 29,355 $ 25,199
Cash and cash equivalents 7,433 6,435
Accounts receivable 452,689 482,707
Inventories 14,052 21,196
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TOTAL CURRENT ASSETS 503,529 535,537
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PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 356,654 358,748
Capitalized leases, net of accumulated amortization 11,402 11,568
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TOTAL PROPERTY AND EQUIPMENT 368,056 370,316
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Other assets and deferred charges 48,025 48,466
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TOTAL ASSETS $ 919,610 $ 954,319
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LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 208,460 $ 233,212
Accounts payable 33,678 40,727
Accrued expenses 126,965 122,573
State & local sales tax 8,126 7,956
Current maturities capitalized leases 96 96
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TOTAL CURRENT LIABILITIES 377,325 404,564
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FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
MAY 27, APRIL 29,
2001 2001
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Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 2,355 2,363
Liabilities Subject To Compromise:
Accrued restructuring costs 42,066 42,071
Capitalized lease obligations 20,855 21,123
Long-term debt 412,617 413,285
Accounts payable 198,061 198,082
Accrued expenses 72,589 71,864
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Total Liabilities Subject To Compromise 746,188 746,425
TOTAL LIABILITIES 1,185,868 1,213,352
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,936 49,936
Additional paid-in-capital 5,881 5,881
Deferred compensation (170) (180)
Accumulated other comprehensive loss (2,697) (2,697)
Retained (deficit) earnings (319,208) (311,973)
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TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (266,258) (259,033)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 919,610 $ 954,319
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CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: APRIL 30, 2001 THROUGH MAY 27, 2001
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: MAY 27, 2001
FORM OPR-3 NOT APPLICABLE
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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 30, 2001 THROUGH MAY 27, 2001
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: MAY 27, 2001
FORM OPR-4
Total
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Trade Accounts Payable (Merchandise) $ 33,678
Total
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Expense & other payables $ 126,965
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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 30, 2001 THROUGH MAY 27, 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 $ 7,915
State income tax Various Various (440)
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SUBTOTAL $ 7,475
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Sales/use tax SUBTOTAL Various Various $10,416
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Personal property tax * Various Various 2,232
Real estate taxes * Various Various 9,800
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various 192
Franchise taxes * Various Various 496
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SUBTOTAL $12,720
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TOTAL TAXES PAYABLE $30,611
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* liability included in accrued expenses on OPR-2
** tax reserve
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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 30, 2001 THROUGH MAY 27, 2001
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (5/27/01 BALANCE)
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POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ 208,460
Facility standby letters of credit 04/14/00 04/14/04 24,304
Facility trade letters of credit 04/14/00 04/14/04 6,621
Term loans 04/14/00 04/14/04 60,000
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TOTAL EXTENSIONS OF CREDIT $ 299,385
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ACCRUED INTEREST PAYABLE $ 893
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FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY
APRIL 30, 2001
THROUGH
MAY 27, 2001
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Net Sales $ 109,094
Costs of merchandise sold and buying and occupancy expense 74,788
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Gross margin after cost of merchandise sold and buying and occupancy expenses 34,306
Selling, General and Administrative Expenses:
Net Employment Expense 14,226
Net Advertising 12,324
Banking and Other Fees 1,799
Real Estate and Other Taxes 1,710
Supplies 504
Communication and Equipment 319
Travel 313
UCC and Other Services 252
Legal and Professional 244
Sales and Shipping 35
Insurance 445
Miscellaneous (46)
Credit Card Services (40)
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Total Selling, General and Administrative Expenses 32,085
Other expense/(income), net (34)
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FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY
APRIL 30, 2001
THROUGH
MAY 27, 2001
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Restructuring charge (credit) --
Depreciation and amortization 3,257
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Earnings (loss) before interest, reorganization items, and income tax (1,002)
Interest expense - debt 3,190
Interest expense - capitalized leases 262
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Earnings (loss) before reorganization items, and income tax (4,454)
Reorganization Items:
Legal and Professional 2,390
Miscellaneous 201
Loss (Gain) on Disposal of Assets 190
Close Store Charges --
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Total Reorganization Items 2,781
Earnings (loss) before income tax (7,235)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
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Net earnings (loss) $ (7,235)
=========