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 September 30, 2001
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
Debtor-In-Possession, and hereby submits its Monthly Operating Report
for the period commencing August 27, 2001 and ending September 30, 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: 10/22/01 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
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
----------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $ 72,309.70 $ 46,134.19 $ 5,147.07 $20,327.14
JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $206,548.20 $143,973.05 $ 3,387.77 $58,606.33
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 34,542.58 $ 23,464.65 $ 2,108.22 $ 8,585.21
GENERAL COUNSEL AND SECRETARY
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 29,728.08 $ 20,464.92 $ 1,744.61 $ 7,140.95
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $ 27,364.68 $ 18,990.20 $ 1,479.16 $ 6,056.97
KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $ 32,206.15 $ 22,169.16 $ 1,343.86 $ 8,476.98
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 24,934.35 $ 18,725.71 $ 686.38 $ 5,129.59
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 22,142.40 $ 15,075.55 $ 677.86 $ 4,595.68
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND
ASSISTANT TREASURER $ 16,594.70 $ 10,995.78 $ 673.79 $ 4,154.66
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 associates received Supplemental Incentive Bonuses (SIP) included
in the amounts above.
KARREN M. PRASIFKA $ 10,935.00
KENNETH A. CONWAY $ 8,500.00
JOE M. ELLIOTT $ 7,500.00
KIMBERLY B. SOUTHARD $ 5,500.00
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 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
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 4,950
RETAIL SAFE FUNDS 1,768,235
CORPORATE ACCOUNTS 2,365,820
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE 615,131
KEY NATIONAL BANK 254,311
FLEET BOSTON 320,691
FIRST UNION 2,148,644
BANK ONE LOUISIANA 274,451
ABN - AMRO BANK 84,888
COMERICA BANK 116,428
AM SOUTH 242,956
BANK OF AMERICA 192,614
BANK OF OKLAHOMA 140,823
CHASE BANK OF TEXAS 625,181
SINGLE STORE DEPOSITORY ACCOUNTS 253,978
WELLS FARGO BANK 52,930
BANK ONE, IN 114,866
PNC BANK 339,589
OAK BROOK BANK 421,257
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 6,768,628
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 81,270
OTHER CASH ACCOUNTS 572,300
-----------
TOTAL CASH PER GENERAL LEDGER $17,759,941
===========
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 08/27/01 09/03/01 09/10/01 09/17/01 09/24/01 08/27/01
Sunday 09/02/01 09/09/01 09/16/01 09/23/01 09/30/01 09/30/01
-------- -------- -------- -------- -------- ---------
Receipts:
Sales receipts $ 11,462 $16,603 $ 11,770 $ 12,885 $ 16,470 $ 69,190
Miscellaneous receipts 1,515 8,813 -- 250 -- 10,578
-------- ------- -------- -------- -------- ---------
Total available collections 12,977 25,416 11,770 13,135 16,470 79,768
Disbursements:
Merchandise disbursements 14,062 10,403 9,500 21,177 17,711 72,853
Non-merchandise disbursements 8,219 13,661 7,430 10,293 10,831 50,434
-------- ------- -------- -------- -------- ---------
Total disbursements 22,281 24,064 16,930 31,470 28,542 123,287
-------- ------- -------- -------- -------- ---------
Net receipts/(disbursements) $ (9,304) $ 1,352 $ (5,160) $(18,335) $(12,072) $ (43,519)
======== ======= ======== ======== ======== =========
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL FORECAST FORECAST FORECAST
09/30/01 10/14/01 10/28/01 10/28/01 12/31/01
-------- -------- -------- -------- --------
Ending total revolver balance $231,312 $264,910 $283,021 $324,612 $ 64,392
Term loan 60,000 60,000 60,000 60,000 60,000
Standby letters of credit 23,729 23,572 23,572 24,416 22,310
Trade letters of credit 42,639 31,563 27,416 21,640 25,308
-------- -------- -------- -------- --------
Total extensions of credit 357,680 380,045 394,009 430,668 172,010
Borrowing base 456,262 482,700 492,590 531,415 393,213
-------- -------- -------- -------- --------
Availability $ 98,582 $102,655 $ 98,581 $100,747 $221,203
======== ======== ======== ======== ========
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
4. PAYMENTS TO PROFESSIONALS AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
--------------------------------------------------------------------------------------------------------
57117 Deloitte and Touche $ 68,950.00 08/29/01 50051743
57117 Deloitte and Touche $ 18,000.00 08/29/01 50051811
57117 Deloitte and Touche $ 16,967.27 08/30/01 50051892
99459 Robert L. Berger and Associates $ 11,274.23 08/30/01 B0025585
50995 Brann and Isaacson $ 2,385.88 08/31/01 50051987
101232 E & Y Capital Advisors, LLC $ 86,338.00 08/31/01 B0025592
101993 Rothschild, Inc. $ 87,976.72 08/31/01 B0025593
98378 Skadden, Arps, Slate, Meagher and Flom $370,119.00 08/31/01 B0025594
99391 Otterbourg, Steindler, Houston and Rosen, PC $ 46,961.88 08/31/01 B0025595
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 8,341.29 08/31/01 B0025596
57117 Deloitte and Touche $ 17,137.69 09/07/01 50052364
57117 Deloitte and Touche $ 46,080.00 09/13/01 50052919
57117 Deloitte and Touche $ 5,500.00 09/14/01 50053064
95384 Deloitte and Touche $ 25,058.00 09/17/01 50053190
99444 Sitrick and Company, Inc. $ 4,326.73 09/17/01 B0025714
101232 E & Y Capital Advisors, LLC $ 97,489.00 09/17/01 B0025720
71217 Bass, Berry and Sims $211,458.90 09/17/01 B0025721
50995 Brann and Isaacson $ 395.00 09/19/01 50053316
86237 Brusniak, Clement, Harrison and McCool, PC $ 800.00 09/19/01 50053398
99459 Robert L. Berger and Associates $ 17,684.52 09/19/01 B0025727
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
--------------------------------------------------------------------------------------------------------
57117 Deloitte and Touche $ 24,074.00 09/20/01 50053497
101730 CBIZ Property Tax Solutions, Inc. $ 14,318.75 09/25/01 50053882
101730 CBIZ Property Tax Solutions, Inc. $ 714.72 09/25/01 50053883
101730 CBIZ Property Tax Solutions, Inc. $ 710.04 09/25/01 50053884
101730 CBIZ Property Tax Solutions, Inc. $ 4,142.63 09/25/01 50053885
101730 CBIZ Property Tax Solutions, Inc. $ 132.42 09/25/01 50053886
101730 CBIZ Property Tax Solutions, Inc. $ 1,324.14 09/25/01 50053887
101730 CBIZ Property Tax Solutions, Inc. $ 706.71 09/25/01 50053888
101730 CBIZ Property Tax Solutions, Inc. $ 3,570.36 09/25/01 50053889
101730 CBIZ Property Tax Solutions, Inc. $ 922.17 09/25/01 50053890
101730 CBIZ Property Tax Solutions, Inc. $ 3,868.59 09/25/01 50053891
101730 CBIZ Property Tax Solutions, Inc. $ 4,043.74 09/25/01 50053892
101730 CBIZ Property Tax Solutions, Inc. $ 2,938.65 09/25/01 50053893
71217 Bass, Berry and Sims $190,328.46 09/26/01 70001143
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 1,666.68 09/26/01 70001144
101993 Rothschild, Inc. $ 87,967.34 09/28/01 B0025796
44013 McCarter and English $ 1,326.39 09/28/01 B0025798
44013 McCarter and English $ 18,456.81 09/28/01 B0025799
99391 Otterbourg, Steindler, Houston and Rosen, PC $ 38,227.88 09/28/01 B0025800
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 5,392.72 09/28/01 B0025801
Page 7
FORM OPR - 1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
SEPTEMBER 30, AUGUST 26,
2001 2001
----------- -----------
ASSETS
Current Assets:
Cash and cash equivalents $ 17,760 $ 26,218
Accounts receivable 7,895 6,670
Inventories 483,632 425,960
Prepaid Expenses 12,365 10,969
----------- -----------
TOTAL CURRENT ASSETS 521,652 469,817
----------- -----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 346,148 348,404
Capitalized leases, net of accumulated amortization 10,705 10,910
----------- -----------
TOTAL PROPERTY AND EQUIPMENT 356,853 359,314
----------- -----------
Other assets and deferred charges 36,296 38,482
----------- -----------
TOTAL ASSETS $ 914,801 $ 867,613
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 231,312 $ 188,014
Accounts payable 66,646 45,650
Accrued expenses 88,189(a) 90,464
State & local sales tax 9,110 8,435
Current maturities capitalized leases 99 99
----------- -----------
TOTAL CURRENT LIABILITIES 395,356 332,662
----------- -----------
Page 8
FORM OPR - 1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
SEPTEMBER 30, AUGUST 26,
2001 2001
----------- -----------
Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 2,321 2,329
Liabilities Subject To Compromise:
Accrued restructuring costs 42,068 42,077
Capitalized lease obligations 19,767 20,040
Long-term debt 408,470 409,138
Accounts payable 198,522 198,749
Accrued expenses 93,195(a) 91,822
----------- -----------
Total Liabilities Subject To Compromise 762,022 761,826
TOTAL LIABILITIES 1,219,699 1,156,817
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,935 49,935
Additional paid-in-capital 5,881 5,881
Deferred compensation (125) (137)
Accumulated other comprehensive loss (1,941) (2,545)
Retained (deficit) earnings (358,648) (342,338)
----------- -----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (304,898) (289,204)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 914,801 $ 867,613
=========== ===========
NOTE:
(a) Approximately $17 million of pre-petition expired gift certificates and
credit slips were reclassified to liabilities subject to compromise
during September 2001. The prior period was restated for comparability.
Page 9
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: SEPTEMBER 30, 2001
FORM OPR-3 NOT APPLICABLE
Page 10
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
MONTH ENDED: 09/30/2001
FORM OPR-4
Total
--------
Trade Accounts Payable (Merchandise) $ 66,646
Total
--------
Expense & other payables $ 88,189
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 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 $ 7,921
State income tax Various Various (621)
---------
SUBTOTAL $ 7,300
---------
Sales/use tax SUBTOTAL * Various Various $ 9,878
---------
Personal property tax * Various Various $ 2,677
Real estate taxes * Various Various 12,954
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various 209
Franchise taxes * Various Various 525
--------
SUBTOTAL $ 16,365
--------
TOTAL TAXES PAYABLE $ 33,543
========
* liability included in accrued expenses on OPR-2
** tax reserve
Page 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (9/30/01 BALANCE)
--------- -------- ----------------
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ 231,312
Facility standby letters of credit 04/14/00 04/14/04 23,729
Facility trade letters of credit 04/14/00 04/14/04 42,639
Term loans 04/14/00 04/14/04 60,000
---------
TOTAL EXTENSIONS OF CREDIT $ 357,680
=========
ACCRUED INTEREST PAYABLE $ 1,285
=========
Page 13
FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
ACTIVITY ACTIVITY ACTIVITY YTD ACTIVITY YTD
AUGUST 27, AUGUST 28, AUGUST 27, AUGUST 28,
2001 2000 2001 2000
THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1,
2001 2000 2001 2000
-------- ------- -------- -----------
Net Sales $ 64,350 $ 83,142 $ 636,647 $ 1,034,915
Costs of merchandise sold and buying and occupancy expense 49,907 62,374 470,156 820,467
-------- ------- -------- -----------
Gross margin after cost of merchandise sold and
buying and occupancy expenses 14,443 20,768 166,491 214,448
Selling, General and Administrative Expenses:
Net Employment Expense 14,871 20,749 125,218 219,974
Net Advertising 778 9,097 38,614 54,535
Banking and Other Fees 999 1,245 11,935 14,833
Real Estate and Other Taxes 1,849 2,156 16,944 17,429
Supplies 708 945 5,677 8,070
Communication and Equipment 316 367 2,874 3,531
Travel 471 600 3,065 4,693
UCC and Other Services (690) (362) (3,298) (6,690)
Legal and Professional 299 342 3,052 2,839
Sales and Shipping 162 96 971 1,025
Insurance 533 467 3,886 3,533
Miscellaneous 63 (353) 475 (72)
Credit Card Services (9) (52) (22,037) (446)
-------- ------- -------- -----------
Total Selling, General and Administrative Expenses 20,350 35,297 187,376 323,254
Other expense/(income), net (8) (15) 1,383 (14,791)
Page 14
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
ACTIVITY ACTIVITY ACTIVITY YTD ACTIVITY YTD
AUGUST 27, AUGUST 28, AUGUST 27, AUGUST 28,
2001 2000 2001 2000
THROUGH THROUGH THROUGH THROUGH
SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1,
2001 2000 2001 2000
-------- -------- -------- ---------
Restructuring charge (credit) -- -- -- (2,524)
Depreciation and amortization 3,964 3,611 31,074 29,351
-------- -------- -------- ---------
Earnings (loss) before interest, reorganization items, and
income tax (9,863) (18,125) (53,342) (120,842)
Interest expense - debt 3,747 3,270 28,707 26,922
Interest expense - capitalized leases 251 287 2,362 2,692
-------- -------- -------- ---------
Earnings (loss) before reorganization items, and income tax (13,861) (21,682) (84,411) (150,456)
Reorganization Items:
Severance -- -- -- 9,423
Legal and Professional 2,137 2,668 18,673 30,367
Miscellaneous 261 263 2,126 2,142
Loss (Gain) on Disposal of Assets 51 (8,978) 1,078 (5,206)
Close Store Charges -- 723 21 462
Total Reorganization Items 2,449 (5,324) 21,898 37,188
-------- -------- -------- ---------
Earnings (loss) before income tax (16,310) (16,358) (106,309) (187,644)
Income tax benefit -- -- -- --
Cumulative Effect of Change in Accounting Principles -- -- -- --
-------- -------- -------- ---------
Net earnings (loss) $(16,310) $(16,358) $(106,309) $(187,644)
======== ======== ======== =========
Page 15