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 May 26, 2002
------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
Debtor-In-Possession, and hereby submits its Preliminary Monthly
Operating Report for the period commencing April 29, 2002 and ending
May 26, 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: June 17, 2002 DEBTOR - IN - POSSESSION
--------------
By: /s/ MICHAEL E. HOGREFE
------------------------------------------------------
Name and Title: MICHAEL E. HOGREFE, SR. VP AND CHIEF FINANCIAL OFFICER
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: APRIL 29, 2002 THROUGH MAY 26, 2002
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- ----------------------------------------------------------------------------------------------------------------------------------
S. CUSANO CHAIRMAN OF THE BOARD $ 14,592.35 $ 9,195.90 $ -- $ 5,179.10
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY $ 828,706.40 $ 591,042.60 $ 2,095.48 $ 233,516.56
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 826,162.32 $ 589,622.59 $ 1,779.55 $ 232,939.22
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 11,538.48 $ 7,702.00 $ 748.89 $ 2,246.71
KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING
AND ASSISTANT TREASURER $ 63,869.24 $ 42,658.29 $ -- $ 21,169.64
The associates listed below received term vacation and/or severance
included in the amounts above:
C. STEVEN MOORE $ 798,700.00 Severance
MICHAEL E. HOGREFE $ 800,002.00 Severance
KIMBERLY B. SOUTHARD $ 4,157.70 Term Vacation
$ 57,500.00 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: APRIL 29, 2002 THROUGH MAY 26, 2002
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 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
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: APRIL 29, 2002 THOUGH MAY 26, 2002
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
CORPORATE ACCOUNTS 9,715,741
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) (29,383)
OTHER DEPOSITORY ACCOUNTS
OTHER CASH ACCOUNTS 81,110
-------------
INVESTMENTS
SHORT TERM INVESTMENTS 111,165,944
TOTAL CASH PER GENERAL LEDGER $ 120,933,412
=============
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: APRIL 29, 2002 THOUGH MAY 26, 2002
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 04/29/02 05/06/02 05/13/02 05/20/02 04/29/02
Sunday 05/05/02 05/12/02 05/19/02 05/26/02 05/26/02
-------- -------- -------- -------- --------
Receipts:
Sales receipts/Profit Sharing $ -- $ -- $ 3,992 $ -- $ 3,992
Miscellaneous receipts 1,135 1,613 746 239 3,733
Real Estate Proceeds -- -- 6 -- 6
Expense reimbursements -- 3,131 -- -- 3,131
-------- -------- -------- -------- --------
Total available collections 1,135 4,744 4,744 239 10,862
Disbursements:
All disbursements 8,451 6,100 2,822 3,521 20,894
-------- -------- -------- -------- --------
Total disbursements 8,451 6,100 2,822 3,521 20,894
-------- -------- -------- -------- --------
Net receipts/(disbursements) $ (7,316) $ (1,356) $ 1,922 $ (3,282) $(10,032)
======== ======== ======== ======== ========
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: APRIL 29, 2002 THOUGH MAY 26, 2002
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
Actual
05/26/02
--------
Ending total revolver balance $ --
Term loan --
Standby letters of credit 18,068
Trade letters of credit --
--------
Total extensions of credit 18,068
Borrowing base --
--------
Availability $ --
========
(1) As of 4/16/02, The Standby Letters of Credit were fully cash collateralized
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: April 29, 2002 THROUGH May 26, 2002
4. Payments to Professionals April 29, 2002 through May 26, 2002
Vendor # Vendor Name Check Amt. Check Date Check #
- -------------------------------------------------------------------------------------------------------------------------
99329 Aegis Property Tax Specialists $ 2,037.11 04/29/02 50069096
71403 Seyfarth, Shaw, Fairweather, and Geraldson $ 407.50 04/30/02 50069117
98378 Skadden, Arps, Slate, Meagher and Flom $1,342,348.00 04/30/02 B0027236
67017 Barkley and Thompson $ 288.14 05/01/02 50069348
57117 Deloitte and Touche $ 3,478.00 05/03/02 50069432
2642 Waller, Lansden, Dortch and Davis $ 229.50 05/06/02 50069442
95913 Locke Reynolds, LLP $ 217.26 05/06/02 50069446
44013 McCarter and English $ 813.43 05/06/02 50069459
57117 Deloitte and Touche $ 20,000.00 05/06/02 50069460
69583 McCarthy, Fingar, Donovan, Drazen, and Smith, LLP $ 620.50 05/06/02 50069461
96684 Sherbow and Mitchell, PC $ 225.00 05/07/02 50069479
27428 Sharretts, Paley, Carter, and Blauvelt, PC $ 813.66 05/10/02 50069626
44013 McCarter and English $ 2,801.31 05/10/02 50069633
48779 Loss, Pavone and Orel $ 300.00 05/13/02 50069663
86237 Brusniak, Clement, Harrison and McCool, PC, Inc. $ 256.50 05/13/02 50069667
44013 McCarter and English $ 2,818.02 05/14/02 50069689
99459 Robert L. Berger and Associates $ 29,498.08 05/14/02 B0027265
99444 Sitrick and Company, Inc. $ 5,489.55 05/15/02 B0027263
71217 Bass, Berry and Sims $ 180,619.67 05/15/02 B0027264
101730 CBIZ Property Tax Solutions, Inc. $ 1,739.56 05/16/02 50069765
57117 Deloitte and Touche $ 813.00 05/21/02 50069854
71403 Seyfarth, Shaw, Fairweather, and Geraldson $ 491.80 05/22/02 50069878
44013 McCarter and English $ 15.51 05/22/02 50069885
67017 Barkley and Thompson $ 178.38 05/22/02 50069887
67017 Barkley and Thompson $ 432.00 05/22/02 50069888
95384 Deloitte and Touche, LLP $ 37,785.00 05/22/02 50069900
103608 Abacus Advisory and Consulting $ 85,150.00 05/23/02 50069912
44013 McCarter and English $ 456.00 05/23/02 50069927
67017 Barkley and Thompson $ 122.02 05/23/02 50069928
67017 Barkley and Thompson $ 67.50 05/24/02 50070105
99391 Otterbourg, Steindler, Houston, Rosen, PC $ 79,309.65 05/24/02 B0027280
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC, Inc. $ 10,624.33 05/24/02 B0027281
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)
May 26,
2002
----------
ASSETS
Current Assets:
Cash and cash equivalents $ 120,933
Accounts receivable 9,143
Prepaid Expenses 2,218
----------
TOTAL CURRENT ASSETS 132,294
----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 39,983
Other assets and deferred charges 28,169
----------
TOTAL ASSETS $ 200,446
==========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Accounts payable $ 30,976
Accrued expenses 57,566
State & Local tax 474
----------
TOTAL CURRENT LIABILITIES 89,016
----------
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)
Liabilities Subject To Compromise:
Accrued restructuring costs 42,067
Long-term debt 314,562
Accounts payable 218,713
Accrued expenses 98,384
----------
Total Liabilities Subject To Compromise 673,726
TOTAL LIABILITIES 762,742
----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,936
Additional paid-in-capital 5,881
Deferred compensation (43)
Retained (deficit) earnings (618,070)
----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (562,296)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 200,446
==========
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: APRIL 29, 2002 THROUGH MAY 26, 2002
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: MAY 26, 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: April 29, 2002 THROUGH May 26, 2002
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 05/26/2002
FORM OPR-4
Total
--------
Trade Accounts Payable (Merchandise) $ 30,976
Total
--------
Expense & other payables * $ 57,566
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: APRIL 29, 2002 THROUGH MAY 26, 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 $ (250)
--------
SUBTOTAL $ 1,434
--------
Sales/use tax SUBTOTAL * Various Various $ 723
--------
Personal property tax * Various Various $ 1,021
Real estate taxes * Various Various $ 7,742
Inventory taxes * Various Various $ --
Gross receipts/bus licenses * Various Various $ (88)
Franchise taxes * Various Various $ 753
--------
SUBTOTAL $ 9,428
--------
--------
TOTAL TAXES PAYABLE $ 11,585
========
* 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: APRIL 29, 2002 THOUGH MAY 26, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (5/26/02 BALANCE)
--------------------------------------------------------
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 NA $ --
Facility standby letters of credit 04/14/00 04/14/04 18,068
Facility trade letters of credit 04/14/00 NA --
Term loans 04/14/00 NA --
----------------
TOTAL EXTENSIONS OF CREDIT $ 18,068
================
ACCRUED INTEREST PAYABLE $ --
================
As of 4/16/02, The Standby Letters of Credit were fully cash
collateralized
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 13
FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY
APRIL 29, 2002
THROUGH
MAY 26, 2002
----------------
Net Sales $ 59
Costs of merchandise sold and buying and occupancy expense 1,769
----------------
Gross margin after cost of merchandise sold and buying and occupancy exp (1,710)
Selling, General and Administrative Expenses:
Net Employment Expense 628
Net Advertising --
Banking and Other Fees (7)
Real Estate and Other Taxes 349
Supplies 2
Communication and Equipment 110
Travel 2
UCC and Other Services 18
Legal and Professional 7
Sales and Shipping 73
Insurance 23
Miscellaneous (1,291)
Credit Card Services --
----------------
Total Selling, General and Administrative Expenses (86)
Other expense/(income), net (25)
Restructuring charge (credit) --
Depreciation and amortization --
----------------
Earnings (loss) before interest, reorganization items, and income tax (1,599)
Interest expense - debt 6
Interest expense - capitalized leases --
----------------
Earnings (loss) before reorganization items, and income tax (1,605)
Reorganization Items:
Legal and Professional 4,145
Miscellaneous 49
Loss (Gain) on Disposal of Assets 45
Close Store Charges 12,255
----------------
Total Reorganization Items 16,494
Earnings (loss) before income tax (18,099)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
----------------
Net earnings (loss) $ (18,099)
================
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 14