EXHIBIT 99.2
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. Judge: PAINE
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Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING January 27, 2002
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COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
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Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing December 31, 2001
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and ending January 27, 2002 as shown by the report and exhibits consisting of 10 pages and
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containing the following as indicated:
X Monthly Reporting Questionnaire (Attachment 1)
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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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Schedule of Postpetition Liabilities (Form OPR-4)
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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.
On January 18, 2002, the United States Bankruptcy Court for the Middle District of Tennessee, Nashville Division (the
"Bankruptcy Court") approved the request of Service Merchandise Company, Inc. and its Subsidiaries (the "Company") to
immediately begin liquidating the inventory at all of its stores and to conduct store closing sales on a
final basis and to discontinue operations at the stores.
The financial statements and schedules related to the Company included herein have not been prepared on a liquidation basis
in accordance with generally accepted accounting principles ("GAAP"). The information needed to prepare the financial
statements and schedules on a liquidation basis is not currently available to management. Attempting to obtain such
information necessary to prepare the financial statements and schedules on a liquidation basis would cause undue hardship
and expense to the Company. Preparation of the financial statements and schedules on a liquidation basis of accounting would
result in material adjustments to the financial statements and schedules. Consequently, no representation is made regarding
the sufficiency of the financial statements and schedules. The Company cautions readers not to place undue reliance on
the financial statements and schedules contained herein.
The Debtor and the U.S. Trustee agreed that the Debtor will file the remaining forms by March 18, 2002. I also here by
certify that the original Monthly Operating Report was filed with the Bankruptcy Court Clerk and a copy delivered to the U.S.
Trustee.
Date: 2-19-02 DEBTOR - IN - POSSESSION
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By: /s/ Michael E. Hogrefe
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Name and Title: MICHAEL E. HOGREFE, SR. VP AND CHIEF FINANCIAL OFFICER
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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
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD:DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
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S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $252,717.35 $149,748.46 $ 5,726.24 $93,362.02
JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $ 40,149.10 $ 24,025.92 $ 3,980.39 $11,767.41
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND SECRETARY $113,305.69 $ 66,265.79 $ 2,342.13 $42,234.67
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 23,903.33 $ 14,164.73 $ 1,957.96 $ 6,080.98
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $859,899.35 $597,129.75 $224,315.08 $27,176.44
KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $ 53,116.74 $ 36,201.20 $ 1,594.14 $15,182.89
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 46,534.60 $ 32,528.80 $ 807.73 $11,941.31
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 39,398.16 $ 27,412.75 $ 790.86 $10,302.58
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND
ASSISTANT TREASURER $ 16,594.70 $ 10,736.92 $ 790.31 $ 4,770.07
The following associates received the remainder of the Stay Bonus included in
the amounts above.
S. CUSANO $195,000.00
C. STEVEN MOORE $ 78,750.01
ERIC A. KOVATS $ 51,562.58
KARREN M. PRASIFKA $ 25,200.01
KENNETH A. CONWAY $ 21,600.25
JOE M. ELLIOTT $ 20,250.03
The following associates received the remainder of the SIP Bonus included in the
amounts above.
KARREN M. PRASIFKA $ 10,935.00
JOE M. ELLIOTT $ 7,500.00
KENNETH A. CONWAY $ 8,500.00
KIMBERLY B. SOUTHARD $ 5,500.00
The following associate received severance and term vacation included in the
amounts above.
ERIC A. KOVATS $ 20,112.25 Vacation
$776,801.00 Severance
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
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 01MXI9761300 12/31/02 $453,750 06/30/02
Royal Indemnity Co. $5 Million RHD317182 12/31/02 $60,000 06/30/02
Westchester Fire $15 Million WXA663479-0 12/31/02 $51,500 06/30/02
Commonwealth Ins Co $25 Million CLP 10333 12/31/02 $79,459 06/30/02
Boiler & Machinery Hartford Steam Boiler $10 Million FBP4914359 12/31/02 $20,248 12/31/02
Transit Fireman's Fund Insurance Co $1 Million OIMXI97600751 12/31/02 $10,000 12/31/02
General Liability Ace American Ins Co $5 Million XSLG2057804A 12/31/02 $250,000 12/31/02
Tenants Liability - AOS Pacific Employers Ins. Co. $5 Million HDOG20578129 12/31/02 Incl. In GL 12/31/02
Tenants Liability-First
Union Pacific Employers Ins. Co. $5 Million HODG20578087 12/31/02 Incl. In GL 12/31/02
Workers' Compensation-AOS Pacific Employers Ins Co Statutory WLRC43124456 12/31/02 $201,195 12/31/02
WC Excess Ace American Ins Co Statutory XWC014136 12/31/02 $24,034 12/31/02
Workers' Compensation-DAS Pacific Employers Ins Co Statutory WLRC43124493 12/31/02 Incl. In WC Excess 12/31/02
WC Retro Pacific Employers Ins. Co. Statutory SCFC43031673 12/31/02 Incl. In WC Excess 12/31/02
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG20577794 12/31/02 $15,750 12/31/02
Auto Pacific Employers Ins Co $1 Million ISAH07969661 12/31/02 $43,572 12/31/02
Umbrella Ohio Casualty Group $25 Million BX(02)O52805120 06/30/02 $52,006 06/30/02
Excess Liability American Guarantee & Lia. Ins. $50 Million AEC287610704 03/31/02 $12,500 03/31/02
Excess Liability Great American Assurance $25 Million EXC5752226 06/30/02 $18,600 06/30/02
International Ace American Ins Co $1 Million PHF051491 12/31/02 $2,500 12/31/02
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
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 4,950
CORPORATE ACCOUNTS 8,993,676
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 4,426,870
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. 92,779
OTHER CASH ACCOUNTS 92,231
INVESTMENTS
SHORT TERM INVESTMENTS 279,725
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TOTAL CASH PER GENERAL LEDGER $ 13,890,231
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Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
Actual Actual
12/31/01 01/27/02
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Ending total revolver balance $149,699 $ --
Term loan 60,000 --
Standby letters of credit 20,727 20,571
Trade letters of credit 29,210 11,948
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Total extensions of credit 259,636 32,519
Borrowing base 433,322 118,250
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Availability $173,686 $ 85,731
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Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (1/27/02 Balance)
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POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ --
Facility standby letters of credit 04/14/00 04/14/04 20,571
Facility trade letters of credit 04/14/00 04/14/04 11,948
Term loans 04/14/00 04/14/04 --
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TOTAL EXTENSIONS OF CREDIT $32,519
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ACCRUED INTEREST PAYABLE $ 799
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Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
4. PAYMENTS TO PROFESSIONALS DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
Vendor # Vendor Name Check Amt. Check Date Check #
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57117 Deloitte and Touche $68,950.00 12/31/01 50062484
102914 Ernst and Young, LLP $3,189.00 12/31/01 50062544
57117 Deloitte and Touche $16,276.00 12/31/01 50062547
99391 Otterbourg , Steindler, Houston and Rosen, PC $164,657.93 01/08/02 B0026445
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $27,789.26 01/09/02 B0026446
57117 Deloitte and Touche $30,000.00 01/15/02 50063396
99444 Sitrick and Company, Inc. $3,248.69 01/16/02 B0026697
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $21,561.64 01/16/02 B0026698
99459 Robert L.Berger and Associates $12,034.79 01/18/02 B0026678
101730 CBIZ Property Tax Solutions, Inc. $1,027.35 01/23/02 50063972
101730 CBIZ Property Tax Solutions, Inc. $4,011.04 01/23/02 50063973
101730 CBIZ Property Tax Solutions, Inc. $1,800.47 01/23/02 50063974
50995 Brann and Isaacson $582.96 01/23/02 50063976
86237 Brusniak, Clement, Harrison and McCool, PC $114.56 01/23/02 50063977
101606 Service Real Estate Venture $201.70 01/24/02 50063990
95384 Deloitte and Touche, LLP $43,930.47 01/24/02 50064013
57117 Deloitte and Touche $74,154.00 01/24/02 50064203
71217 Bass, Berry and Sims $164,320.00 01/25/02 B0026585
99391 Otterbourg , Steindler, Houston and Rosen, PC $121,254.64 01/25/02 B0026587
101993 Rothschild, Inc. $89,800.84 01/25/02 B0026740
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 7
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: JANUARY 27, 2002
FORM OPR-3 NOT APPLICABLE
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 8
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
Date Date Total
TAXES PAYABLE Incurred Due Due
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Federal income tax ** Various Various $ 1,730
State income tax Various Various (6)
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SUBTOTAL $ 1,724
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Sales/use tax SUBTOTAL * Various Various $ 6,556
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Personal property tax * Various Various 919
Real estate taxes * Various Various 10,174
Inventory taxes * Various Various -
Gross receipts/bus licenses * Various Various 30
Franchise taxes * Various Various 752
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SUBTOTAL $11,875
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TOTAL TAXES PAYABLE $20,155
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* liability included in accrued expenses on OPR-2
** tax reserve
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 9
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: DECEMBER 31, 2001 THROUGH JANUARY 27, 2002
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
Actual Actual Actual Actual Total
Monday 12/31/02 01/07/03 01/14/03 01/21/03 12/31/02
Sunday 01/06/02 01/13/02 01/20/02 01/27/02 01/27/02
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Receipts:
Sales receipts $ 21,206 $ 8,892 $ 15,040 $ -- $ 45,138
Miscellaneous receipts -- -- -- 242,769 242,769
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Total available collections 21,206 8,892 15,040 242,769 287,907
Disbursements:
Merchandise disbursements 6,579 4,022 3,660 4,726 18,987
Non-merchandise disbursements 17,738 11,826 16,923 12,382 58,869
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Total disbursements 24,317 15,848 20,583 17,108 77,856
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Net receipts/(disbursements) $ (3,111) $ (6,956) $ (5,543) $225,661 $210,051
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Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 10