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 January 26, 2003
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating
Report for the period commencing December 30, 2002 and ending January 26, 2003
as shown by the report and 15 pages and exhibits consisting of 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: 2/18/03 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: DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
1. PAYROLL
WAGES TAXES
----------------------- --------------------
OFFICERS TITLE GROSS NET DUE PAID
- ------------------------------------------------------------------------------------------------------------------------------
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY $27,693.91 $19,022.92 $2,049.91 $6,369.72
MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $23,847.83 $16,586.27 $1,697.58 $5,312.62
Note: The disclosure on page one is an integral part of these 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 30, 2003 THROUGH JANUARY 26, 2003
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 06/30/03 $20,625 06/30/03
Royal Indemnity Co. $5.5 Million R2HD325112 06/30/03 $60,000 06/30/03
Boiler & Machinery Hartford Steam Boiler $16.5 Million FBP4914359 12/31/03 $20,248 12/31/03
General Liability Ace American Ins Co $5 Million XSLG2057804A 12/31/03 $8,500 12/31/03
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 12/31/03 $2,500 12/31/03
Umbrella Westchester Fire $25 Million CUA151233 06/30/03 $280,400 06/30/03
Directors & Officers Continental Insurance Co $10 Million 300714943 12/31/03 $514,286 12/31/03
Federal Insurance Co $10 Million 81278902-A 12/31/03 $470,250 12/31/03
Royal Insurance Co $10 Million PSF000009 12/31/03 $470,250 12/31/03
Fiduciary National Union Fire Ins Co $3 Million 2678130 12/31/03 $60,000 12/31/03
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 30, 2002 THROUGH JANUARY 26, 2003
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CORPORATE ACCOUNTS $1,080,108
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 11,722
OTHER DEPOSITORY ACCOUNTS
OTHER CASH ACCOUNTS 14,889
INVESTMENTS
SHORT TERM INVESTMENTS 94,575,222
------------
TOTAL CASH PER GENERAL LEDGER $95,681,941
============
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 30, 2002 THOUGH JANUARY 26, 2003
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
MONDAY 12/30/02 01/06/03 01/13/03 01/20/03 12/30/02
SUNDAY 01/05/03 01/12/03 01/19/03 01/26/03 01/26/03
------ -------- -------- -------- -------- --------
Receipts:
Sales receipts/Profit Sharing $ -- $ -- $ -- $ -- $ --
Miscellaneous receipts 232 107 259 63 $ 661
Real Estate Proceeds/Settlement -- -- -- -- $ --
Expense reiumbursements -- -- -- -- $ --
------- ------- ------- ------- -------
Total available collections 232 107 259 63 $ 661
Disbursements:
All disbursements 591 478 1,005 533 $ 2,607
------- ------- ------- ------- -------
Total disbursements 591 478 1,005 533 $ 2,607
------- ------- ------- ------- -------
Net receipts/(disbursements) $ (359) $ (371) $ (746) $ (470) $(1,946)
======= ======= ======= ======= =======
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 30, 2002 THROUGH JANUARY 26, 2003
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
ACTUAL
01/26/03
--------
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 $ --
======
(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: DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
4. PAYMENTS TO PROFESSIONALS DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
- -------------------------------------------------------------------------------------------------------------------------------
48779 Loss, Pavone and Orel 1,671.35 01/16/03 70002344
57117 Deloitte and Touche 17,000.00 01/16/03 70002296
67017 Barkley and Thompson 219.67 01/16/03 70002340
71217 Bass, Berry and Sims 98,495.36 01/15/03 B0027495
80679 McLain and Merritt 10,000.00 01/13/03 70002322
99329 The Aegis Group 563.00 01/15/03 70002330
99319 Otterbourg, Steindler, Houston and Rosen, PC 52,371.68 01/15/03 B0027498
99444 Sitrick and Company 665.00 01/15/03 B0027497
99459 Robert L. Berger and Associates 97,536.02 01/15/03 B0027500
99459 Robert L. Berger and Associates 17,308.95 01/24/03 B0027502
Note: The disclosure on page one is an integral part of these 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)
JANUARY 26,
2003
-----------
ASSETS
Current Assets:
Cash and cash equivalents $ 95,682
Accounts receivable 405
Prepaid Expenses 100
--------
TOTAL CURRENT ASSETS 96,187
--------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 36,924
Capitalized leases, net of accumulated amortization --
--------
TOTAL PROPERTY AND EQUIPMENT 36,924
--------
Other assets and deferred charges 15,767
--------
TOTAL ASSETS $148,878
========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ --
Accounts payable 12,268
Accrued expenses 27,355
State & Local tax 358
Current maturities capitalized leases --
--------
TOTAL CURRENT LIABILITIES 39,981
--------
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 220,215
Accrued expenses 108,106
---------
Total Liabilities Subject To Compromise 684,950
TOTAL LIABILITIES 724,931
---------
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 (631,870)
---------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (576,053)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 148,878
=========
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: DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
SUMMARY OF ACCOUNTS RECEIVABLE
MONTH ENDED: JANUARY 26, 2003
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: DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
MONTH ENDED: 1/26/2003
FORM OPR-4
Total
-------
Trade Accounts Payable (Merchandise) $12,268
Total
-------
Expense & other payables $27,355
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: DECEMBER 30, 2002 THROUGH JANUARY 26, 2003
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 $ (194)
------------
SUBTOTAL $ (194)
------------
Sales/use tax SUBTOTAL * Various Various $ 565
------------
Personal property tax * Various Various $ 119
Real estate taxes * Various Various $3,716
Inventory taxes * Various Various $ (388)
Gross receipts/bus licenses * Various Various $ 4
Franchise taxes * Various Various $ 588
------------
SUBTOTAL $4,039
------------
------------
TOTAL TAXES PAYABLE $4,410
============
* 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: DECEMBER 30, 2002 THOUGH JANUARY 26, 2003
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
DATE TOTAL DUE
INCURRED DATE DUE (1/26/03 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 --
------
TOTAL EXTENSIONS OF CREDIT $4,805
======
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
DECEMBER 30, 2002
THROUGH
JANUARY 26, 2003
-----------------
Net Sales $ --
Costs of merchandise sold and buying and occupancy expense 83
-----
Gross margin after cost of merchandise sold and buying and occupancy expenses (83)
Selling, General and Administrative Expenses:
Net Employment Expense 130
Net Advertising --
Banking and Other Fees (98)
Real Estate and Other Taxes 1
Supplies 1
Communication and Equipment 5
Travel 0
UCC and Other Services --
Legal and Professional 25
Sales and Shipping --
Insurance --
Miscellaneous (173)
Credit Card Services --
-----
Total Selling, General and Administrative Expenses (109)
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 Statements of Operations (Unaudited)
(Debtor-in-Possession)
(In thousands)
Restructuring charge (credit) --
Depreciation and amortization --
-----
Earnings (loss) before interest, reorganization items, and income tax 26
Interest expense - debt --
Interest expense - capitalized leases --
-----
Earnings (loss) before reorganization items, and income tax 26
Reorganization Items:
Legal and Professional 42
(Gain) on Disposal of Assets --
Miscellaneous (56)
Close Store Charges 361
-----
Total Reorganization Items 347
Earnings (loss) before income tax (321)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
-----
Net earnings (loss) $(321)
=====
Note: The disclosure on page 1 is an integral part of these consolidated
financial statements and schedules.
Page 15