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. Judge: PAINE
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Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING November 24, 2002
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating
Report for the period commencing October 28, 2002 and ending November 24, 2002
as shown by the report and exhibits consisting of 15 pages and containing the
following as indicated:
X Monthly Reporting Questionnaire (Attachment 1)
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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: 12/16/02 DEBTOR-IN-POSSESSION
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By: /s/ Michel 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: OCTOBER 28, 2002 THROUGH NOVEMBER 24, 2002
1. PAYROLL
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- -----------------------------------------------------------------------------------------------------------------------------------
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 27,693.91 $ 19,022.92 $ 2,049.91 $ 6,369.72
GENERAL COUNSEL AND SECRETARY
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 23,847.83 $ 16,586.26 $ 1,697.58 $ 5,312.63
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: OCTOBER 28, 2002 THROUGH NOVEMBER 24, 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 $478,750 12/31/02
Royal Indemnity Co. 11.5Million R2HD325112 12/31/02 $50,000 12/31/02
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
TN-Work Comp Assigned Rsk Continental Casualty Co Statutory 6S59UB878X943102 06/01/03 $3,989 06/01/03
Auto Pacific Employers Ins Co $1 Million ISAH07969661 12/31/02 $43,572 12/31/02
Umbrella Westchester Fire $25 Million CUA151233 06/30/03 $280,400 06/30/03
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 $29,839 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: OCTOBER 28 THOUGH NOVEMBER 24, 2002
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CORPORATE ACCOUNTS 2,127,110
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 12,202
OTHER DEPOSITORY ACCOUNTS
OTHER CASH ACCOUNTS 14,332
INVESTMENTS
SHORT TERM INVESTMENTS 92,239,717
-----------
TOTAL CASH PER GENERAL LEDGER $94,393,361
===========
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: OCTOBER 28 THOUGH NOVEMBER 24, 2002
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 10/28/02 11/04/02 11/11/02 11/18/02 10/28/02
Sunday 11/03/02 11/10/02 11/17/02 11/24/02 11/24/02
-------- -------- -------- -------- --------
Receipts:
Sales receipts/Profit Sharing $ -- $ -- $ -- $ -- $ --
Miscellaneous receipts 555 322 344 101 1,322
Real Estate Proceeds/Settlement 51 1,266 -- -- 1,317
Expense reiumbursements -- -- -- -- --
---- ------ ------- ----- -------
Total available collections 606 1,588 344 101 2,639
Disbursements:
All disbursements 601 1,539 1,258 402 3,800
---- ------ ------- ----- -------
Total disbursements 601 1,539 1,258 402 3,800
---- ------ ------- ----- -------
Net receipts/(disbursements) $ 5 $ 49 $ (914) $(301) $(1,161)
==== ====== ======= ===== =======
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: OCTOBER 28 THOUGH NOVEMBER 24, 2002
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
Actual
11/24/02
--------
Ending total revolver balance $ --
Term loan --
Standby letters of credit 4,805
Trade letters of credit --
------
Total extensions of credit 4,805
Borrowing base --
------
Availability $ --
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(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: October 28, 2002 THROUGH November 24, 2002
4. PAYMENTS TO PROFESSIONALS OCTOBER 28, 2002 THROUGH NOVEMBER 24, 2002
Vendor # Vendor Name Check Amt. Check Date Check #
- -------- ----------- ---------- ---------- -------
67017 Barkley and Thompson $ 621.31 10/31/02 70001935
57117 Deloitte and Touche $20,000.00 11/05/02 70001964
95913 Locke, Reynolds, Boyd and Weisell $ 324.99 11/06/02 70001970
95384 Deloitte and Touche $ 4,774.87 11/07/02 70002005
99329 Aegis Group $ 2,874.71 11/07/02 70002006
57117 Deloitte and Touche $37,800.00 11/08/02 70002010
99391 Otterbourg, Steindler, Houston & Rosen, PC $20,379.37 11/08/02 0027463
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 4,557.67 11/08/02 0027464
103439 Ernst and Young, LLP $16,328.00 11/08/02 0027466
98378 Skadden, Arps Meagher and Flom $95,938.00 11/08/02 0027468
71217 Bass, Berry and Sims $74,747.88 11/08/02 0027469
84740 Taft, Stettinius and Hollister $ 881.06 11/11/02 70002012
48779 Loss, Pavone and Orel $ 825.00 11/12/02 70002015
95384 Deloitte and Touche $ 1,619.34 11/15/02 70002041
99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 6,699.23 11/15/02 0027472
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)
November 24,
2002
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ASSETS
Current Assets:
Cash and cash equivalents $ 94,393
Accounts receivable 6,113
Inventories 0
Prepaid Expenses 100
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TOTAL CURRENT ASSETS 100,606
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PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 36,924
Capitalized leases, net of accumulated amortization --
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TOTAL PROPERTY AND EQUIPMENT 36,924
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Other assets and deferred charges 15,762
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TOTAL ASSETS $ 153,292
=========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ --
Accounts payable 11,763
Accrued expenses 31,069
State & Local tax 365
Current maturities capitalized leases --
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TOTAL CURRENT LIABILITIES 43,197
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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)
Long-Term Liabilities:
Long-term debt --
Capitalized lease obligations --
Liabilities Subject To Compromise:
Accrued restructuring costs 42,067
Capitalized lease obligations --
Long-term debt 314,562
Accounts payable 219,784
Accrued expenses 108,785
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Total Liabilities Subject To Compromise 685,198
TOTAL LIABILITIES 728,395
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,936
Additional paid-in-capital 5,881
Deferred compensation --
Accumulated other comprehensive loss --
Retained (deficit) earnings (630,920)
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TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (575,103)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 153,292
=========
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: October 28, 2002 THROUGH November 24, 2002
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: NOVEMBER 24, 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: October 28, 2002 THROUGH November 24, 2002
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 11/24/2002
FORM OPR-4
Total
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Trade Accounts Payable (Merchandise) $11,763
Total
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Expense & other payables $31,069
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: OCTOBER 28, 2002 THROUGH NOVEMBER 24, 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 --
State income tax Various Various $ (188)
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SUBTOTAL $ (188)
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Sales/use tax SUBTOTAL * Various Various $ 565
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Personal property tax * Various Various $ 90
Real estate taxes * Various Various $5,109
Inventory taxes * Various Various --
Gross receipts/bus licenses * Various Various $ 4
Franchise taxes * Various Various $ 611
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SUBTOTAL $5,814
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TOTAL TAXES PAYABLE $6,191
======
* 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: OCTOBER 28 THOUGH NOVEMBER 24, 2002
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (11/24/02 BALANCE)
-------- -------- ------------------
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 NA $ --
Facility standby letters of credit 04/14/00 NA 4,805
Facility trade letters of credit 04/14/00 NA --
Term loans 04/14/00 NA --
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TOTAL EXTENSIONS OF CREDIT $4,805
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ACCRUED INTEREST PAYABLE $ --
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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 STATEMENT OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
ACTIVITY
OCTOBER 28,2002
THROUGH
NOVEMBER 24, 2002
-----------------
Net Sales $ --
Costs of merchandise sold and buying and occupancy expense 351
-------
Gross margin after cost of merchandise sold and buying and occupancy expenses (351)
Selling, General and Administrative Expenses:
Net Employment Expense 225
Net Advertising --
Banking and Other Fees (128)
Real Estate and Other Taxes (1)
Supplies 1
Communication and Equipment 17
Travel 3
UCC and Other Services --
Legal and Professional 45
Sales and Shipping --
Insurance --
Miscellaneous (598)
Credit Card Services --
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Total Selling, General and Administrative Expenses (436)
Other expense/(income), net --
Note: The disclosure on page 1 is an integral part of
these consolidated financial statements and schedules. Page 14
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
Restructuring charge (credit) --
Depreciation and amortization --
-------
Earnings (loss) before interest, reorganization items, and income tax 85
Interest expense - debt --
Interest expense - capitalized leases --
-------
Earnings (loss) before reorganization items, and income tax 85
Reorganization Items:
Legal and Professional 365
(Gain) on Disposal of Assets --
Miscellaneous 539
Close Store Charges 2,489
-------
Total Reorganization Items 3,393
Earnings (loss) before income tax (3,308)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
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Net earnings (loss) $(3,308)
=======
Note: The disclosure on page 1 is an integral part of
these consolidated financial statements and schedules. Page 15