EXHIBIT 99.01
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 March 31, 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 February 25, 2002 and ending
March 31, 2002 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.
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.
This report includes those reports agreed upon as appropriate at this
time between the Debtor and the U.S. Trustee. 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: April 22, 2002 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
1. Payroll
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- -----------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD $71,875.00 $46,414.70 $5,092.06 $25,460.30
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL AND SECRETARY $34,490.18 $20,945.68 $1,924.07 $ 9,222.82
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL
OFFICER $29,672.58 $17,627.38 $1,957.96 $ 7,988.10
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $14,532.75 $ 9,656.08 $ 790.85 $ 2,998.27
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING
AND ASSISTANT TREASURER $11,076.70 $ 6,630.56 $ 790.30 $ 3,044.71
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
2. INSURANCE
DATE
COVERAGE
COVERAGE POLICY EXPIRATION PREMIUM PAID
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT THROUGH
- ------------------------------------------------------------------------------------------------------------------------------------
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 Included 12/31/02
WC Retro Pacific Employers Ins. Co. Statutory SCFC43031673 12/31/02 Included 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 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 12/31/02 $514,286 12/31/02
Federal Insurance Co $10 Million 81278902-A 12/31/02 $470,250 12/31/02
Royal Insurance Co $10 Million PSF000009 12/31/02 $470,250 12/31/02
Fiduciary National Union Fire Ins Co $5 Million 8726812 12/31/02 $28,423 12/31/02
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 150
CORPORATE ACCOUNTS 15,273,701
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY
CREDIT CARD COMPANY) --
OTHER DEPOSITORY ACCOUNTS
OTHER CASH ACCOUNTS 82,905
INVESTMENTS
SHORT TERM INVESTMENTS 72,552,091
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TOTAL CASH PER GENERAL LEDGER $ 87,908,847
============
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
Actual Actual Actual Actual Actual Total
Monday 02/25/02 03/04/02 03/11/02 03/18/02 03/25/02 02/25/02
Sunday 03/03/02 03/10/02 03/17/02 03/24/02 03/31/02 03/31/02
-------- -------- -------- -------- -------- --------
Receipts:
Sales receipts/Profit Sharing $ -- $ -- $ 7,500 $ 6,000 $9,000 $ 22,500
Miscellaneous receipts 801 1,416 363 50,541 127 53,248
Expense reimbursements 8,843 8,947 16,634 4,521 -- 38,945
------ -------- ------- ------- ------ --------
Total available collections 9,644 10,363 24,497 61,062 9,127 114,693
Disbursements:
Merchandise disbursements 112 2 -- 13 -- 127
Non-merchandise disbursements 7,352 12,435 7,901 20,994 8,188 56,870
------ -------- ------- ------- ------ --------
Total disbursements 7,464 12,437 7,901 21,007 8,188 56,997
------ -------- ------- ------- ------ --------
Net receipts/(disbursements) $2,180 $ (2,074) $16,596 $40,055 $ 939 $ 57,696
====== ======== ======= ======= ====== ========
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 5
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
ROLLING REVISED CASH FLOW
(DOLLARS IN THOUSANDS)
Actual Actual
02/24/02 03/31/02
-------- --------
Ending total revolver balance $ -- $ --
Term loan -- --
Standby letters of credit 20,141 18,070
Trade letters of credit 9,610 --
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Total extensions of credit 29,751 18,070
Borrowing base 122,940 183,934
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Availability $ 93,189 $165,864
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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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
4. Payments to Professionals February 25, 2002 through March 31, 2002
Vendor # Vendor Name Check Amt. Check Date Check #
- -----------------------------------------------------------------------------------------------------------
101993 Rothschild, Inc. $ 92,899.61 02/25/02 B0026890
99391 Otterbourg, Steindler, houston and Rosen, PC $ 72,037.93 02/25/02 B0026893
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 6,272.59 02/25/02 B0026894
27428 Sharretts, Paley, Carter and Blauvert, PC $ 3,926.59 02/26/02 50066050
99329 Aegis Property Tax Specialists $ 3,917.15 02/26/02 50066074
99329 Aegis Property Tax Specialists $ 11,052.98 02/26/02 50066075
99329 Aegis Property Tax Specialists $ 36,380.19 02/26/02 50066076
99459 Robert L. Berger and Associates $ 15,357.81 02/27/02 B0026927
95912 Kightlinger and Gray $ 805.10 02/28/02 50066142
96221 Holt and Babington $ 55.80 02/28/02 50066143
48779 Loss, Pavone and Orel $ 225.00 02/28/02 50066150
44013 McCarter and English $ 600.16 03/04/02 50066377
67017 Barkley and Thompson $ 5,000.00 03/05/02 50066409
44013 McCarter and English $ 145.50 03/12/02 50066786
48779 Loss, Pavone and Orel $ 1,438.50 03/12/02 50066787
86237 Brusniak, Clement, Harrison and McCool, PC $ 100.69 03/13/02 50066808
103608 Abacus Advisory and Consulting $341,075.38 03/14/02 50066862
71217 Bass, Berry and Sims $192,456.80 03/15/02 B0027006
99104 Jay Alix and Associates $ 22,996.95 03/15/02 B0027007
99444 Sitrick and Company, Inc. $ 93,630.34 03/15/02 B0027008
99459 Robert L. Berger and Associates $ 18,196.19 03/15/02 B0027014
95384 Deloitte and Touche, LLP $ 24,447.51 03/19/02 50067081
67017 Barkley and Thompson $ 2,332.14 03/19/02 50067094
44013 McCarter and English $ 1,046.74 03/20/02 50067112
44013 McCarter and English $ 684.00 03/22/02 50067226
101993 Rothschild, Inc. $ 60,000.00 03/22/02 B0027064
71217 Bass, Berry and Sims $101,583.33 03/22/02 B0027066
99104 Jay Alix and Associates $ 11,920.65 03/22/02 B0027067
99391 Otterbourg, Steindler, houston and Rosen, PC $ 76,746.22 03/22/02 B0027068
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 14,471.99 03/22/02 B0027069
98378 Skadden, Arps, Slate, Meagher and Flom $293,945.00 03/22/02 B0027075
67017 Barkley and Thompson $ 26.00 03/25/02 50067267
99391 Otterbourg, Steindler, houston and Rosen, PC $174,508.40 03/25/02 B0027041
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 22,379.40 03/25/02 B0027042
40443 Robert J. Bard, Esq. $ 3,500.00 03/27/02 50067520
44013 McCarter and English $ 1,396.86 03/29/02 50067621
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 7
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
March 31,
2002
---------
ASSETS
Current Assets:
Cash and cash equivalents $ 87,909
Accounts receivable 95,650
Prepaid Expenses 6,275
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TOTAL CURRENT ASSETS 189,834
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PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 39,807
Other assets and deferred charges 9,640
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TOTAL ASSETS $ 239,281
=========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Accounts payable $ 38,698
Accrued expenses 76,659
State & Local tax 7,297
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TOTAL CURRENT LIABILITIES 122,654
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Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 8
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
March 31,
2002
---------
Liabilities Subject To Compromise:
Accrued restructuring costs 42,067
Long-term debt 314,562
Accounts payable 209,177
Accrued expenses 84,985
---------
Total Liabilities Subject To Compromise 650,791
TOTAL LIABILITIES 773,445
---------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,936
Additional paid-in-capital 5,881
Deferred compensation (63)
Retained (deficit) earnings (589,919)
---------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (534,164)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 239,281
=========
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 9
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: MARCH 31, 2002
FORM OPR-3 NOT APPLICABLE
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 03/31/2002
FORM OPR-4
Total
--------
Trade Accounts Payable (Merchandise) $ 38,698
Total
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Expense & other payables $ 74,087
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
Date Date Total
TAXES PAYABLE Incurred Due Due
--------------------------------------------
Federal income tax ** Various Various $ 1,684
State income tax Various Various (72)
--------
SUBTOTAL $ 1,612
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Sales/use tax SUBTOTAL * Various Various $ 7,368
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Personal property tax * Various Various 1,296
Real estate taxes * Various Various 9,158
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various (61)
Franchise taxes * Various Various 814
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SUBTOTAL $ 11,207
--------
--------
TOTAL TAXES PAYABLE $ 20,187
========
* 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 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (3/31/02 BALANCE)
------------------------------------------------------
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $ --
Facility standby letters of credit 04/14/00 04/14/04 18,070
Facility trade letters of credit 04/14/00 04/14/04 --
Term loans 04/14/00 04/14/04 --
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TOTAL EXTENSIONS OF CREDIT $ 18,070
========
ACCRUED INTEREST PAYABLE $ 1,025
========
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 13
February 25, 2002
through
March 31, 2002
-----------------
Net Sales $ 24,200
Costs of merchandise sold and buying and occupancy expense/(reimbursement) (3,904)
--------
Gross margin after cost of merchandise sold and buying and occupancy expenses/(reimbursement) 28,104
Selling, General and Administrative Expenses:
Net Employment Expense 7,615
Net Advertising (7)
Banking and Other Fees 128
Real Estate and Other Taxes 2,167
Supplies 11
Communication and Equipment 190
Travel 23
UCC and Other Services 215
Legal and Professional 63
Sales and Shipping 16
Insurance 884
Miscellaneous expense/(reimbursement) (5,398)
Credit Card Services (48)
--------
Total Selling, General and Administrative Expenses 5,859
Other expense/(income), net (149)
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 14
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
Activity
February 25, 2002
through
March 31, 2002
-----------------
Restructuring charge (credit) --
Depreciation and amortization --
--------
Earnings (loss) before interest, reorganization items, and income tax 22,394
Interest expense - debt 1,332
Interest expense - capitalized leases 229
--------
Earnings (loss) before reorganization items, and income tax 20,833
Reorganization Items:
Legal and Professional 621
Miscellaneous (2)
Loss (Gain) on Disposal of Assets 53,468
Close Store Charges 451
--------
Total Reorganization Items 54,538
Earnings (loss) before income tax (33,705)
Income tax --
--------
Net earnings (loss) $(33,705)
========
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 15