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 July 29, 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 July 2, 2001 and ending July 29, 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: 8/20/01 DEBTOR-IN-POSSESSION
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: JULY 2, 2001 THROUGH JULY 29, 2001
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- ------------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $ 57,717.35 $ 36,959.59 $ 5,147.06 $15,180.07
JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $196,250.00 $136,831.56 $49,366.31 $10,052.13
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 27,752.86 $ 18,888.57 $ 2,108.22 $ 6,480.84
GENERAL COUNSEL AND SECRETARY
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 80,153.33 $ 50,466.62 $16,090.66 $ 5,400.18
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $ 22,000.46 $ 15,314.41 $ 1,479.16 $ 4,581.66
KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $ 14,665.05 $ 10,068.66 $ 1,130.29 $ 3,336.57
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 13,121.02 $ 9,376.71 $ 627.54 $ 1,840.83
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 11,648.13 $ 7,955.86 $ 625.94 $ 1,774.34
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING $ 8,864.66 $ 5,522.92 $ 634.99 $ 1,889.17
AND ASSISTANT TREASURER
The following associate received a payment, in accordance with the terms of her
employment agreement, that is included in the amounts above.
JANE F. GILMARTIN $156,250.00
The following associate received a bonus that is included the amounts above.
MICHAEL E. HOGREFE $ 56,250.00
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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: JULY 2, 2001 THROUGH JULY 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
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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: JULY 2, 2001 THROUGH JULY 29, 2001
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 4,950
RETAIL SAFE FUNDS 1,765,256
CORPORATE ACCOUNTS 2,877,504
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE 478,938
KEY NATIONAL BANK 251,579
BANK OF BOSTON 407,900
BANK OF BOSTON CONNECTICUT --
FIRST UNION 2,349,080
BANK ONE LOUISIANA 281,978
ABN - AMRO BANK 215,563
COMERICA BANK 137,158
AM SOUTH 259,627
BANK OF AMERICA 216,026
BANK OF OKLAHOMA 111,792
CHASE BANK OF TEXAS 708,625
SINGLE STORE DEPOSITORY ACCOUNTS 270,147
WELLS FARGO BANK 49,936
BANK ONE, IN 120,678
PNC BANK 425,086
OAK BROOK BANK 500,102
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 7,692,627
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. 73,333
OTHER CASH ACCOUNTS 169,642
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TOTAL CASH PER GENERAL LEDGER $ 19,367,527
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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: JULY 2, 2001 THROUGH JULY 29, 2001
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 07/02/01 07/09/01 07/16/01 07/23/01 07/02/01
Sunday 07/08/01 07/15/01 07/22/01 07/29/01 07/29/01
-------- -------- -------- -------- --------
Receipts:
Sales receipts $ 13,660 $16,364 $17,433 $17,852 $65,309
Miscellaneous receipts 450 486 -- 7,147 8,083
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Total available collections 14,110 16,850 17,433 24,999 73,392
Disbursements:
Merchandise disbursements 5,697 6,933 4,595 7,223 24,448
Non-merchandise disbursements 12,039 8,448 11,063 8,579 40,129
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Total disbursements 17,736 15,381 15,658 15,802 64,577
-------- ------- ------- ------- -------
Net receipts/(disbursements) $ (3,626) $ 1,469 $ 1,775 $ 9,197 $ 8,815
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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: JULY 2, 2001 THROUGH JULY 29, 2001
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
Actual Actual Forecast Forecast Forecast
07/29/01 08/12/01 08/26/01 09/30/01 10/28/01
-------- -------- -------- -------- --------
Ending total revolver balance $185,003 $186,380 $186,296 $203,182 $257,746
Term loan 60,000 60,000 60,000 60,000 60,000
Standby letters of credit 24,491 24,335 24,335 24,179 24,022
Trade letters of credit 32,278 40,733 37,679 25,083 19,270
-------- -------- -------- -------- --------
Total extensions of credit 301,772 311,448 308,310 312,444 361,038
Borrowing base 409,572 402,670 398,433 428,448 490,498
-------- -------- -------- -------- --------
Availability $107,800 $ 91,222 $ 90,123 $116,004 $129,460
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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: JULY 2, 2001 THROUGH JULY 29, 2001
4. PAYMENTS TO PROFESSIONALS JULY 2, 2001 THROUGH JULY 29, 2001
Vendor # Vendor Name Check Amt. Check Date Check #
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94005 Donald A. Blum $5,337.50 07/10/01 50047105
57117 Deloitte & Touche $68,950.00 07/16/01 50047680
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $22,119.75 07/16/01 B0025257
93547 D'Assaro and Hall $4,836.00 07/17/01 50047709
101606 Service Real Estate $146,284.00 07/17/01 B0025268
101993 Rothschild, Inc. $63,725.80 07/17/01 B0025269
71217 Bass, Berry & Sims $112,098.02 07/17/01 B0025271
98378 Skadden, Arps, Meagher & Flom $379,650.00 07/17/01 B0025274
99104 Jay Alix and Associates $78,225.06 07/17/01 B0025275
99391 Otterbourg, Steindler, Houston and Rosen, PC $113,264.93 07/17/01 B0025276
2642 Waller, Lansden, Dortch and Davis $4,720.31 07/18/01 50047798
71403 Seyfarth, Shaw, Fairweather and Geraldson $4,842.22 07/18/01 50047810
57117 Deloitte & Touche $18,000.00 07/18/01 50047857
57117 Deloitte & Touche $68,950.00 07/19/01 50047926
50995 Brann and Isaacson $2,378.34 07/20/01 50048112
57117 Deloitte & Touche $14,788.00 07/20/01 50048113
101232 E & Y Capital Advisors, LLC $81,736.00 07/23/01 B0025322
101993 Rothschild, Inc. $89,930.74 07/23/01 B0025323
79108 Ernst and Young $6,388.00 07/23/01 B0025325
99104 Jay Alix and Associates $3,283.68 07/23/01 B0025326
99444 Sitrick and Company $3,690.85 07/23/01 B0025327
57117 Deloitte & Touche $32,796.31 07/25/01 50048489
2642 Waller, Lansden, Dortch and Davis $8,195.90 07/27/01 70001135
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FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
JULY 29, JULY 1,
2001 2001
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ASSETS
Current Assets:
Cash and cash equivalents $ 19,368 $ 19,535
Accounts receivable 6,644 6,834
Inventories 417,795 431,746
Prepaid Expenses 11,179 12,889
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TOTAL CURRENT ASSETS 454,986 471,004
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PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 351,614 353,893
Capitalized leases, net of accumulated amortization 11,074 11,193
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TOTAL PROPERTY AND EQUIPMENT 362,688 365,086
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Other assets and deferred charges 40,612 49,066
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TOTAL ASSETS $ 858,286 $ 885,156
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LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 185,003 $ 194,844
Accounts payable 25,624 31,001
Accrued expenses 122,493 123,127
State & local sales tax 8,570 8,290
Current maturities capitalized leases 98 97
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TOTAL CURRENT LIABILITIES 341,788 357,359
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FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
JULY 29, JULY 1,
2001 2001
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Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 2,338 2,346
Liabilities Subject To Compromise:
Accrued restructuring costs 42,077 42,077
Capitalized lease obligations 20,310 20,584
Long-term debt 410,622 411,408
Accounts payable 198,651 198,712
Accrued expenses 74,420 73,147
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Total Liabilities Subject To Compromise 746,080 745,928
TOTAL LIABILITIES 1,150,206 1,165,633
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,935 49,935
Additional paid-in-capital 5,881 5,881
Deferred compensation (146) (157)
Accumulated other comprehensive loss (2,545) (2,545)
Retained (deficit) earnings (345,045) (333,591)
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TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (291,920) (280,477)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 858,286 $ 885,156
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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: JULY 2, 2001 THROUGH JULY 29, 2001
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: JULY 29, 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: JULY 2, 2001 THROUGH JULY 29, 2001
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 07/29/2001
FORM OPR-4
Total
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Trade Accounts Payable (Merchandise) $ 25,624
Total
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Expense & other payables $122,493
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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: JULY 2, 2001 THROUGH JULY 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 $ 7,919
State income tax Various Various $ (559)
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SUBTOTAL $ 7,360
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Sales/use tax SUBTOTAL * Various Various $ 9,281
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Personal property tax * Various Various $ 2,786
Real estate taxes * Various Various 11,813
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various 275
Franchise taxes * Various Various 494
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SUBTOTAL $15,368
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TOTAL TAXES PAYABLE $32,009
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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: JULY 2, 2001 THROUGH JULY 29, 2001
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (7/29/01 BALANCE)
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POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ 185,003
Facility standby letters of credit 04/14/00 04/14/04 24,491
Facility trade letters of credit 04/14/00 04/14/04 32,278
Term loans 04/14/00 04/14/04 60,000
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TOTAL EXTENSIONS OF CREDIT $ 301,772
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ACCRUED INTEREST PAYABLE $ 662
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FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY ACTIVITY
JULY 2, 2001 JULY 3, 2000
THROUGH THROUGH
JULY 29, 2001 JULY 30, 2000
------------- -------------
Net Sales $ 60,530 $ 100,587
Costs of merchandise sold and buying and occupancy expense 47,267 86,950
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Gross margin after cost of merchandise sold and buying and occupancy expenses 13,263 13,637
Selling, General and Administrative Expenses:
Net Employment Expense 11,806 23,004
Net Advertising 1,484 2,441
Banking and Other Fees 746 1,339
Real Estate and Other Taxes 1,710 1,847
Supplies 829 702
Communication and Equipment 306 391
Travel 317 508
UCC and Other Services (721) (547)
Legal and Professional 279 158
Sales and Shipping 180 232
Insurance 397 286
Miscellaneous 133 140
Credit Card Services (34) (51)
-------- ---------
Total Selling, General and Administrative Expenses 17,432 30,450
Other expense/(income), net 19 (669)
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FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY ACTIVITY
JULY 2, 2001 JULY 3, 2000
THROUGH THROUGH
JULY 29, 2001 JULY 30, 2000
------------- -------------
Restructuring charge (credit) -- (83)
Depreciation and amortization 3,100 3,009
-------- ---------
Earnings (loss) before interest, reorganization items, and income tax (7,288) (19,070)
Interest expense - debt 2,861 2,415
Interest expense - capitalized leases 256 278
-------- ---------
Earnings (loss) before reorganization items, and income tax (10,405) (21,763)
Reorganization Items:
Legal and Professional 762 5,645
Miscellaneous 288 198
Loss (Gain) on Disposal of Assets (1) (140)
Close Store Charges -- --
-------- ---------
Total Reorganization Items 1,049 5,703
Earnings (loss) before income tax (11,454) (27,466)
Income tax benefit -- --
Cumulative Effect of Change in Accounting Principles -- --
-------- ---------
Net earnings (loss) $(11,454) $ (27,466)
======== =========
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