EX-99 2 ex99.txt OPERATING REPORT FOR THE PERIOD ENDING 5/28/00 1 EXHIBIT 99 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 28, 2000 ------------ COMES NOW, SERVICE MERCHANDISE COMPANY, INC. --------------------------------- Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing and ending May 28, 2000 as shown by the report and exhibits consisting of 16 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. 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: DEBTOR-IN-POSSESSION --------------------------- By: /s/ Thomas L. Garrett, Jr. --------------------------------------------------- Name and Title: THOMAS L. GARRETT, JR., SENIOR VICE PRESIDENT & CFO --------------------------------------------------- Address: 7100 SERVICE MERCHANDISE DRIVE --------------------------------------------------- BRENTWOOD, TENNESSEE 37027 --------------------------------------------------- Telephone No: (615) 660-3477 ---------------------------------------------------
Note: Report subject to further verification and account reconciliation procedures 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: MAY 1, 2000 THROUGH MAY 28, 2000 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID ---------------------------------------------------------------------------------------------------------------------------- SAM CUSANO CHIEF EXECUTIVE OFFICER 50,188.10 31,987.21 4,513.07 13,590.92 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND SECRETARY 27,752.86 18,561.35 2,196.49 6,743.91 THOMAS L. GARRETT, JR SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 25,089.38 17,455.62 1,848.25 5,465.60 GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 25,507.28 16,555.40 2,053.47 6,074.48 CHARLES K. SEPTER PRESIDENT AND CHIEF OPERATING OFFICER 39,229.81 24,600.80 3,599.30 10,069.30 ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 11,558.88 8,433.50 568.06 1,684.32 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION 11,597.13 7,777.69 629.65 1,831.86 ERIC A. KOVATS VICE PRESIDENT, STORES 22,000.46 13,083.63 1,544.80 4,776.32 KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT 13,120.61 8,939.99 1,028.54 3,036.55 BILLY STEWART ASSISTANT TAX VICE PRESIDENT, TAX 6,549.73 4,638.37 332.85 986.41 KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 12,335.22 9,392.90 655.55 1,939.87
Page 2 3 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE CONPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: May 1, 2000 THROUGH May 28, 2000 2. INSURANCE
DATE COVERAGE POLICY EXPIRATION PREMIUM COVERAGE TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THRU ----------------------------------------------------------------------------------------------------------------------------------- Property Fireman's Fund Insurance Co $5 Million CCIPW12011 12/31/00 $1,441,249 12/31/00 Royal $5 Million RHD314289 12/31/00 $ 100,000 12/31/00 Westchester Fire $15 Million 1XA394310 12/31/00 $ 50,100 12/31/00 Allianz Insurance Co $12 Million CLP1034720 12/31/00 $ 20,040 12/31/00 TIG Insurance Co $13 Million XPT38797667 12/31/00 $ 32,500 12/31/00 Westchester Fire $20 Million 1XA394311 12/31/00 $ 10,020 12/31/00 Allianz Insurance Co $30 Million CLP1034720 12/31/00 $ 15,030 12/31/00 Allianz Insurance Co $25 Million CLP1034720 12/31/00 $ 6,680 12/31/00 Boiler & Machinery Hartford Steam Boiler $10 Million 4914539 12/31/00 $ 8,383 12/31/00 Transit Fireman's Fund Insurance Co $1 Million CCIMG72820 12/31/00 $ 8,525 12/31/00 Ocean Cargo Fireman's Fund Insurance Co $10 Million CR37211 12/31/00 $ 25,000 12/31/00 Special Crime Reliance Insurance Co $25 Million NFK1951937 05/01/02 $ 13,458 05/01/02 Crime National Union Fire Ins Co $10 Million 858-0797 03/01/01 $ 56,505 03/01/01 Fiduciary National Union Fire Ins Co $10 Million 267-81-30 03/01/01 $ 19,140 03/01/01 Employment Practices Liability Chubb Insurance Co $10 Million 81278901A 03/01/01 $ 130,845 03/01/01 Royal Insurance Co $10 Million PSF000010 03/01/01 $ 56,364 03/01/01 Directors & Officers Continental Insurance Co $10 Million 300714943 03/01/01 $ 453,500 03/01/01 Chubb Insurance Co $10 Million 81278902-A 03/01/01 $ 266,666 03/01/01 Royal Insurance Co $10 Million PSF000009 03/01/01 $ 133,000 03/01/01 Umbrella Federal Insurance Co $50 Million 79763295 12/31/01 $ 63,357 12/31/00 Excess Liability American Guarantee & Liab $50 Million AEC287610700 12/31/00 $ 25,000 12/31/00 International Ace American Ins Co $1 Million PHF051491 12/31/00 $ 2,500 12/31/00 Punitive Damages Chubb Atlantic Indemnity $50 Million (00) 3310-05-98 12/31/00 $ 17,160 12/31/00 Punitive Damages - Excess Zurich International Bermuda $50 Million ZGEB-091 PD 12/31/00 $ 5,000 12/31/00 General Liability Ace American Ins Co $5 Million XSLG19903254 12/31/00 $ 11,032 12/31/00 Workers' Compensation Pacific Employers Ins Co Statutory WLRC42662112 12/31/00 $ 19,978 12/31/00 WC Excess Ace American Ins Co Statutory XWC011950 12/31/00 $ 1,601 12/31/00 WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19903461 12/31/00 $ 2,083 12/31/00 WC Nevada Ace American Ins Co Statutory NWCC42662173 12/31/00 $ 1,737 12/31/00 Auto Pacific Employers Ins Co $1 Million ISAH07571008 12/31/00 $ 2,083 12/31/00
Page 3 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: MAY 1, 2000 THROUGH MAY 28, 2000 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE ------------------------------ HOME OFFICE $ 12,250 RETAIL SAFE FUNDS 1,953,792 CORPORATE ACCOUNTS 5,688,636 ------------------ --------- STORE DEPOSITORY ACCOUNTS ------------------------- FIRST TENNESSEE 976,003 FIRSTAR 52,705 SOCIETY NATIONAL BANK 643,423 BANK OF BOSTON 646,524 BANK OF BOSTON CONNECTICUT 330,526 MERCANTILE BANK 95,330 FIRST UNION 4,091,177 HARRIS TRUST 984,577 BANK ONE LOUISIANA 1,115,766 ABN - AMRO BANK 282,283 COMERICA BANK 356,657 AM SOUTH 433,652 BANK OF AMERICA CALIFORNIA 1,568,008 FIRST AMERICAN NATIONAL BANK 417,846 HERITAGE BANK OF NEVADA 775 BANK OF OKLAHOMA 387,012 CHASE BANK OF TEXAS 1,327,633 HIBERNIA 144,704 SINGLE STORE DEPOSITORY ACCOUNTS 243,197 WELLS FARGO BANK 145,239 NATIONSBANK 316,721 BANK ONE, IN 289,649 PNC BANK 1,176,708 BANK ONE, TEXAS 66,872 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 18,789,511 ------------------------------------------------------------------ OTHER DEPOSITORY ACCOUNTS ------------------------- SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 62,477 OTHER CASH ACCOUNTS 14,192,872 ----------- TOTAL CASH PER GENERAL LEDGER $56,792,524 ===========
Page 4 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: MAY 1, 2000 THROUGH MAY 28, 2000 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 05/01/00 05/08/00 05/15/00 05/22/00 05/01/00 Sunday 05/07/00 05/14/00 05/21/00 05/28/00 05/28/00 ------------------------------------------------------------- Receipts: Sales receipts $ 31,774 $38,647 $52,123 $34,863 $157,407 Miscellaneous receipts -- -- -- -- -- ------------------------------------------------------------- Total available collections 31,774 38,647 52,123 34,863 157,407 Disbursements: Merchandise disbursements 14,432 14,143 13,109 13,482 55,166 Non-merchandise disbursements 21,133 12,675 16,135 13,749 63,692 ------------------------------------------------------------- Total disbursements: 35,565 26,818 29,244 27,231 118,858 ------------------------------------------------------------- Net receipts/(disbursements) $ (3,791) $11,829 $22,879 $ 7,632 $ 38,549 =============================================================
Page 5 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: MAY 1, 2000 THROUGH MAY 28, 2000 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
Actual Forecast Forecast Forecast Forecast 6/11/2000 6/18/2000 7/2/2000 7/30/2000 8/27/2000 --------- --------- -------- --------- --------- Ending Total Revolver Balance $110,000 $108,707 $111,186 $127,950 $143,713 Term Loan 60,000 60,000 60,000 60,000 60,000 Standby Letters of Credit 33,142 31,072 30,362 27,112 27,056 Trade Letters of Credit 10,314 17,191 21,478 38,241 39,393 -------- -------- -------- -------- -------- Total Extensions of Credit 213,456 216,970 223,026 253,303 270,162 Borrowing Base 488,928 480,212 463,866 447,168 431,705 -------- -------- -------- -------- -------- Availability $275,472 $263,242 $240,840 $193,865 $161,543 ======== ======== ======== ======== ========
Notes: The anticipated increase in revolver borrowings and decrease in availability in July and August reflects, among other things, the capital expenditures for the store conversions pursuant to the 2000 Business Plan. Page 6 7 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASE NAME: SERVICE MERCHANDISE CONPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: May 1, 2000 THROUGH May 28, 2000 4. Payments to Professionals May 1, 2000 through May 28, 2000
Vendor # Vendor Name Check Amt. Check Date Check # ------------------------------------------------------------------------------------------------------------------------- 44013 MCCARTER & ENGLISH $ 645.89 5/1/2000 50001725 67017 BARKLEY & THOMPSON $ 2,354.20 5/1/2000 50001728 71403 SEYFARTH SHAW FAIRWEATHER & GERALDSON $ 9,565.40 5/1/2000 50001729 96683 GORR MOSER DELL & LOGHNEY $ 80.36 5/1/2000 50001736 101606 SERVICE REAL ESTATE VENTURE $ 150,000.00 5/2/2000 B0021682 57117 DELOITTE & TOUCHE $ 1,650.00 5/3/2000 50001938 63010 RIVES & PETERSON $ 907.50 5/11/2000 50002712 50995 BRANN & ISAACSON $ 432.25 5/16/2000 50003101 98378 SKADDEN, ARPS, SLATE, MEAGHER & FLOM $ 621,030.00 5/16/2000 B0021794 99104 JAY ALIX & ASSOCIATES $ 201,008.09 5/16/2000 B0021795 99329 AEGIS PROPERTY TAX SPECIALISTS $ 9,225.00 5/17/2000 50003282 71403 SEYFARTH SHAW FAIRWEATHER & GERALDSON $ 2,210.29 5/18/2000 50003326 57117 DELOITTE & TOUCHE $ 15,369.28 5/23/2000 50003888 99329 AEGIS PROPERTY TAX SPECIALISTS $ 837.96 5/25/2000 50004233 99329 AEGIS PROPERTY TAX SPECIALISTS $ 7,621.78 5/25/2000 50004253 99329 AEGIS PROPERTY TAX SPECIALISTS $ 1,536.84 5/25/2000 50004254 101232 E & Y RESTRUCTURING, LLC $ 239,163.00 5/25/2000 B0021860 71217 BASS BERRY & SIMS $ 105,574.44 5/25/2000 B0021861 79108 ERNST & YOUNG LLP $ 33,538.00 5/25/2000 B0021862 99391 OTTERBOURG, STEINDLER, HOUSTON & ROSEN, PC $ 165,538.29 5/25/2000 B0021863 99454 HARWELL, HOWARD, HYNE, GABBERT & MANNER, PC $ 36,845.96 5/25/2000 B0021864 48779 LOSS, PAVONE & OREL $ 407.00 5/26/2000 50004378 53703 BARRON & STADFELD, PC $ 370.75 5/26/2000 50004379 57809 MCNEILL & TAYLOR, PA $ 1,149.70 5/26/2000 50004380 63010 RIVES & PETERSON $ 404.85 5/26/2000 50004381 67017 BARKLEY & THOMPSON $ 5,561.81 5/26/2000 50004383 71403 SEYFARTH SHAW FAIRWEATHER & GERALDSON $ 7,283.93 5/26/2000 50004384 93547 D'ASSARO & HALL $ 1,308.00 5/26/2000 50004395 95569 TALBOTT & ALSOP $ 108.00 5/26/2000 50004397 95911 KELLY LUCAS & PACIFICO, LLP $ 750.00 5/26/2000 50004398 95913 LOCKE, REYNOLDS, BOYD & WEISELL $ 909.12 5/26/2000 50004399 99329 AEGIS PROPERTY TAX SPECIALISTS $ 9,937.50 5/26/2000 50004406 100906 PETER J SOLOMON COMPANY LIMITED $ 119,548.00 5/26/2000 B0021883
Page 7 8 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Unaudited) (Debtor - in - Possession) (In thousands)
MAY 28, APRIL 30, 2000 2000 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 56,793 $ 37,501 Accounts receivable 7,821 7,282 Inventories 589,546 636,445 Prepaid expenses and other assets 20,111 23,757 ----------- ----------- TOTAL CURRENT ASSETS 674,271 704,986 ----------- ----------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 348,714 348,316 Capitalized leases, net of accumulated amortization 13,650 13,840 ----------- ----------- TOTAL PROPERTY AND EQUIPMENT 362,364 362,157 ----------- ----------- Other assets and deferred charges 52,624 52,408 ----------- ----------- TOTAL ASSETS $ 1,089,259 $ 1,119,551 =========== =========== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ 130,000 $ 156,655 Accounts payable 62,718 63,461 Accrued expenses 151,769 139,802 State & local sales tax 14,868 12,487 Current maturities of long-term debt -- -- Current maturities capitalized leases 329 353 ----------- ----------- TOTAL CURRENT LIABILITIES 359,684 372,758 Long-Term Liabilities: Long-term debt 60,000 60,000 Capitalized lease obligations 1,918 2,194 Liabilities Subject To Compromise: Accrued restructuring costs 44,477 44,530 Capitalized lease obligations 24,798 24,798 Long-term debt 424,872 426,089 Accounts payable 194,098 193,128 Accrued expenses 66,270 65,452 ----------- ----------- Total Liabilities Subject To Compromise 754,514 753,998 TOTAL LIABILITIES 1,176,116 1,188,947 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,979 49,979 Additional paid-in-capital 6,211 6,211 Deferred compensation (486) (503) Accumulated other comprehensive loss -- -- Retained (deficit) earnings (142,560) (125,084) ----------- ----------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (86,857) (69,398) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 1,089,259 $ 1,119,551 =========== ===========
Page 8 9 CHAPTER 11 MONTHLY OPERATING REPORT CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: MAY 1, 2000 THROUGH MAY 28, 2000 SUMMARY OF ACCOUNTS RECEIVABLE Month Ended: 05/28/00 FORM OPR-3 NOT APPLICABLE Page 9 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: May 1, 2000 THROUGH May 28, 2000 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 05/28/00 FORM OPR-4
Total Current -------- -------- Trade accounts payable (merchandise) $ 62,718 $ 62,718 Total Current -------- -------- Expense & other payables $151,769 $151,769
Page 10 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: MAY 1, 2000 THROUGH MAY 28, 2000 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4
Date Date Total TAXES PAYABLE Incurred Due Due -------- ------- ---------- Federal income tax ** Various Various 7,843,442 State income tax Various Various (57,963) ---------- SUBTOTAL 7,785,479 ---------- Sales/use tax SUBTOTAL Various Various 14,868,051 ---------- Personal property tax * Various Various 2,261,007 Real estate taxes * Various Various 9,856,357 Inventory taxes * Various Various - Gross receipts/bus. licenses * Various Various 62,054 Franchise taxes * Various Various 420,370 ---------- SUBTOTAL 12,599,788 ---------- TOTAL TAXES PAYABLE 35,253,318 ==========
* liability included in accrued expenses on OPR-2 ** tax reserve Page 11 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: MAY 1, 2000 THROUGH MAY 28, 2000 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (5/28/00 BALANCE) ------------------------------------------------ POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $130,000 Facility standby letters of credit 04/14/00 04/14/04 38,964 Facility trade letters of credit 04/14/00 04/14/04 4,770 Term loans 04/14/00 04/14/04 60,000 -------- TOTAL EXTENSIONS OF CREDIT $233,734 ======== ACCRUED INTEREST PAYABLE $ 1,842 ========
Page 12 13 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES Consolidated Statements of Operations (Unaudited) (Debtor - in - Possession) (In thousands)
ACTIVITY MAY 1, 2000 THROUGH MAY 28, 2000 ------------ Net Sales $ 154,017 Costs of merchandise sold and buying and occupancy expense 115,574 --------- Gross margin after cost of merchandise sold and buying and occupancy expenses 38,443 Selling, General and Administrative Expenses: Net Employment Expense 25,221 Net Advertising 15,016 Banking and Other Fees 2,225 Real Estate and Other Taxes 1,814 Supplies 690 Communication and Equipment 363 Travel 463 UCC and Other Services 375 Legal and Professional 290 Sales and Shipping 66 Insurance 385 Miscellaneous 76 Credit Card Services (46) --------- Total Selling, General and Administrative Expenses 46,938 Other expense/(income), net 70 Restructuring charge (credit) 85 Depreciation and amortization 3,078 --------- Earnings (loss) before interest, reorganization items, and income tax (11,729) Interest expense - debt 2,837 Interest expense - capitalized leases 283 --------- Earnings (loss) before reorganization items, and income tax (14,849) Reorganization Items: Legal and Professional 2,396 Miscellaneous fees 206 Close Store Charges 24 --------- Total Reorganization Items 2,627 Earnings (loss) before income tax (17,476) Income tax benefit -- Cumulative Effect of Change in Accounting Principles -- --------- Net earnings (loss) $ (17,476) =========
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