EX-99 2 ex99.txt OPERATING REPORT 1 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 July 2, 2000 ------------ COMES NOW, SERVICE MERCHANDISE COMPANY, INC. --------------------------------- Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing May 29, 2000 and ending July 2, 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 29, 2000 THROUGH JULY 2, 2000 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID ----------------------------------------------------------------------------------------------------------------------------------- SAM CUSANO CHIEF EXECUTIVE OFFICER 62,688.10 40,015.85 4,500.54 17,743.41 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND SECRETARY 34,483.63 23,082.41 2,186.06 8,916.21 THOMAS L. GARRETT, JR. SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 31,147.08 21,457.10 1,836.10 7,475.93 GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 31,627.86 20,594.61 2,043.23 8,023.64 CHARLES K. SEPTER PRESIDENT AND CHIEF OPERATING OFFICER 48,845.20 30,822.33 3,404.61 13,609.83 ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 14,443.50 10,549.32 562.27 2,245.76 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION 14,481.75 9,731.75 624.77 2,442.48 ERIC A. KOVATS VICE PRESIDENT, STORES 27,288.93 18,733.98 1,536.49 6,292.76 KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT 16,389.85 11,183.92 1,023.70 4,048.73 BILLY STEWART ASSISTANT TAX VICE PRESIDENT, TAX 8,766.67 6,596.12 310.72 1,082.53 KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 15,412.15 11,749.73 649.17 2,586.50
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 29, 2000 THROUGH July 2, 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
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 29, 2000 THROUGH JULY 2, 2000 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE ------------------------------ HOME OFFICE $ 9,250 RETAIL SAFE FUNDS 1,985,836 CORPORATE ACCOUNTS 3,520,076 ------------------ --------- STORE DEPOSITORY ACCOUNTS ------------------------- FIRST TENNESSEE 693,744 SOCIETY NATIONAL BANK 786,710 BANK OF BOSTON 391,382 BANK OF BOSTON CONNECTICUT 195,329 FIRST UNION 2,528,377 HARRIS TRUST 390,903 BANK ONE LOUISIANA 1,170,818 ABN - AMRO BANK 259,431 COMERICA BANK 286,350 AM SOUTH 313,512 BANK OF AMERICA CALIFORNIA 671,243 FIRST AMERICAN NATIONAL BANK 281,333 HERITAGE BANK OF NEVADA 775 BANK OF OKLAHOMA 450,413 CHASE BANK OF TEXAS 768,162 SINGLE STORE DEPOSITORY ACCOUNTS 81,548 WELLS FARGO BANK 111,664 NATIONSBANK 89,398 BANK ONE, IN 223,544 PNC BANK 881,339 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 11,913,273 ------------------------------------------------------------------ OTHER DEPOSITORY ACCOUNTS ------------------------- SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 68,855 OTHER CASH ACCOUNTS 1,646,104 ----------- TOTAL CASH PER GENERAL LEDGER $29,719,369 ===========
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 29, 2000 THROUGH JULY 2, 2000 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 05/29/00 06/05/00 06/12/00 06/19/00 06/26/00 05/29/00 Sunday 06/04/00 06/11/00 06/18/00 06/25/00 07/02/00 07/02/00 ---------------------------------------------------------------------------- Receipts: Sales receipts $ 34,648 $ 38,032 $ 38,145 $ 39,424 $ 32,472 $ 182,721 Miscellaneous receipts - - 2,020 - - 2,020 ---------------------------------------------------------------------------- Total available collections 34,648 38,032 40,165 39,424 32,472 184,741 Disbursements: Merchandise disbursements 13,502 13,938 8,168 10,159 12,925 58,692 Non-merchandise disbursements 16,675 14,600 15,811 18,855 18,119 84,060 ---------------------------------------------------------------------------- Total disbursements: 30,177 28,538 23,979 29,014 31,044 142,752 ---------------------------------------------------------------------------- Net receipts/(disbursements) $ 4,471 $ 9,494 $ 16,186 $ 10,410 $ 1,428 $ 41,989 ============================================================================
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 29, 2000 THROUGH JULY 2, 2000 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
Actual Forecast Forecast Forecast Forecast 07/16/00 07/23/00 07/30/00 08/27/00 10/01/00 -------- -------- -------- -------- -------- Ending total revolver balance $ 68,095 $ 76,374 $ 85,388 $128,662 $159,434 Term loan 60,000 60,000 60,000 60,000 60,000 Standby letters of credit 27,364 27,112 27,112 27,056 27,056 Trade letters of credit 27,894 30,270 32,128 31,118 28,386 -------- -------- -------- -------- -------- Total extensions of credit 183,353 193,756 204,628 246,836 274,876 Borrowing base 453,134 449,690 443,950 429,605 460,655 -------- -------- -------- -------- -------- Availability $269,781 $255,934 $239,322 $182,769 $185,779 ======== ======== ======== ======== ========
7 CHAPTER 11 MONTHLY OPERATING REPORT MONTHLY REPORTING QUESTIONNAIRE CASED NAME: SERVICE MERCHANDISE COMPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: May 29, 2000 THROUGH July 2, 2000 4. Payments to Professionals May 29, 2000 through July 2, 2000
Vendor # Vendor Name Check Amt. Check Date Check # ----------------------------------------------------------------------------------------------------------------- 101730 CBIZ Property Tax Solutions, Inc. $7,645.19 06/01/00 50004983 101730 CBIZ Property Tax Solutions, Inc. $1,496.32 06/01/00 50004984 99459 Robert L. Berger & Associates $44,772.57 06/05/00 B0021957 86237 Brusniak, Clement, Harrison & McCool, PC $250.00 06/06/00 50005352 101606 Service Real Estate Venture $170,430.26 06/09/00 B0022000 57117 Deloitte & Touche $850.00 06/13/00 50006055 99329 Aegis Property Tax Specialists $4,118.83 06/13/00 50006056 99391 Otterbourg, Steindler, Houston & Rosen, PC $102,820.40 06/15/00 B0022029 98378 Skadden, Arps, Slate, Meagher & Flom $558,487.00 06/15/00 B0022030 99444 Sitrick & Company $187,999.55 06/15/00 B0022031 101993 Rothschild, Inc. $86,640.87 06/15/00 B0022032 99444 Sitrick & Company $55,432.25 06/15/00 B0022035 101607 Price Waterhouse Coopers LLP $403,960.00 06/23/00 50007161 57117 Deloitte & Touche $16,691.50 06/23/00 50007172 99459 Robert L. Berger & Associates $50,112.46 06/23/00 B0022105 101730 CBIZ Property Tax Solutions, Inc. $328.97 06/26/00 50007336 101730 CBIZ Property Tax Solutions, Inc. $50.81 06/26/00 50007337 101730 CBIZ Property Tax Solutions, Inc. $2,313.53 06/26/00 50007338 101730 CBIZ Property Tax Solutions, Inc. $11,216.52 06/26/00 50007339 101730 CBIZ Property Tax Solutions, Inc. $1,898.12 06/26/00 50007340 100906 Peter J Solomon Company $116,540.25 06/27/00 B0022121 101232 E & Y Restructuring $66,958.00 06/27/00 B0022122 71217 Bass, Berry & Sims $92,225.55 06/27/00 B0022123 99104 Jay Alix & Associates $171,510.68 06/27/00 B0022124 99454 Harwell, Howard, Hyne, Gabbert & Manner $29,354.17 06/27/00 B0022125 57117 Deloitte & Touche $43,670.56 06/30/00 50008125 **Payments issued in a prior period that were inadvertently not reported** 101730 CBIZ Property Tax Solutions, Inc. $5,212.50 04/05/00 30043492 101730 CBIZ Property Tax Solutions, Inc. $13,450.00 04/05/00 30043493 101730 CBIZ Property Tax Solutions, Inc. $4,931.25 05/16/00 50003081 101730 CBIZ Property Tax Solutions, Inc. $2,757.74 05/18/00 50003404 101730 CBIZ Property Tax Solutions, Inc. $12,000.00 05/19/00 50003559 101730 CBIZ Property Tax Solutions, Inc. $13,075.00 05/19/00 50003560
8 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
July 2, May 28, 2000 2000 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 29,719 $ 56,793 Accounts receivable 8,268 7,821 Inventories 513,592 589,546 Prepaid expenses and other assets 16,968 20,111 ----------- ----------- TOTAL CURRENT ASSETS 568,547 674,271 ----------- ----------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 348,190 348,714 Capitalized leases, net of accumulated amortization 13,410 13,650 ----------- ----------- TOTAL PROPERTY AND EQUIPMENT 361,599 362,364 ----------- ----------- Other assets and deferred charges 51,836 52,624 ----------- ----------- TOTAL ASSETS $ 981,982 $ 1,089,259 =========== =========== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ 76,192 $ 130,000 Accounts payable 54,753 62,718 Accrued expenses 153,338 151,770 State & local sales tax 14,985 14,868 Current maturities of long-term debt -- -- Current maturities capitalized leases 305 329 ----------- ----------- TOTAL CURRENT LIABILITIES 299,573 359,684 Long-Term Liabilities: Long-term debt 60,000 60,000 Capitalized lease obligations 1,639 1,918 Liabilities Subject To Compromise: Accrued restructuring costs 43,337 44,477 Capitalized lease obligations 24,798 24,798 Long-term debt 424,003 424,872 Accounts payable 195,538 194,098 Accrued expenses 66,609 66,270 ----------- ----------- Total Liabilities Subject To Compromise 754,285 754,514 TOTAL LIABILITIES 1,115,497 1,176,116 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,979 49,979 Additional paid-in-capital 6,211 6,211 Deferred compensation (467) (486) Accumulated other comprehensive loss -- -- Retained (deficit) earnings (189,238) (142,562) ----------- ----------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (133,515) (86,858) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 981,982 $ 1,089,259 =========== ===========
9 CHAPTER 11 MONTHLY OPERATING REPORT CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: MAY 28, 2000 THROUGH JULY 2, 2000 SUMMARY OF ACCOUNTS RECEIVABLE Month Ended: 07/02/00 FORM OPR-3 NOT APPLICABLE 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 29, 2000 THROUGH July 2, 2000 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 07/2/00 FORM OPR-4
Total -------- Trade Accounts Payable (Merchandise) $ 54,753 Total -------- Expense & other payables $153,338
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 29 2000 THROUGH JULY 2, 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 (45,452) ----------- SUBTOTAL 7,797,990 ----------- Sales/use tax SUBTOTAL Various Various 14,985,434 ----------- Personal property tax * Various Various 2,805,056 Real estate taxes * Various Various 10,807,335 Inventory taxes * Various Various - Gross receipts/bus. licenses * Various Various 97,185 Franchise taxes * Various Various 389,460 ----------- SUBTOTAL 14,099,036 ----------- =========== TOTAL TAXES PAYABLE 36,882,460 ===========
* liability included in accrued expenses on OPR-2 ** tax reserve 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 29, 2000 THROUGH JULY 2, 2000 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4
(Dollars in Thousands) DATE TOTAL DUE INCURRED DATE DUE (7/2/00 Balance) ------------------------------------------------ POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $ 76,192 Facility standby letters of credit 04/14/00 04/14/04 27,363 Facility trade letters of credit 04/14/00 04/14/04 18,333 Term loans 04/14/00 04/14/04 60,000 ---------- TOTAL EXTENSIONS OF CREDIT $ 181,888 ========== ACCRUED INTEREST PAYABLE $ 1,108 ==========
13 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
ACTIVITY MAY 30, 2000 THROUGH JULY 2, 2000 ------------ Net Sales $ 156,660 Costs of merchandise sold and buying and occupancy expense 139,135 --------- Gross margin after cost of merchandise sold and buying and occupancy expenses 17,525 Selling, General and Administrative Expenses: Net Employment Expense 33,922 Net Advertising 8,335 Banking and Other Fees 2,324 Real Estate and Other Taxes 2,315 Supplies 1,179 Communication and Equipment 363 Travel 665 UCC and Other Services 277 Legal and Professional 312 Sales and Shipping 79 Insurance 773 Miscellaneous (58) Credit Card Services (54) --------- Total Selling, General and Administrative Expenses 50,432 Other expense/(income), net 156 Restructuring charge (credit) (838) Depreciation and amortization 3,856 --------- Earnings (loss) before interest, reorganization items, and income tax (36,081) Interest expense - debt 2,988 Interest expense - capitalized leases 281 --------- Earnings (loss) before reorganization items, and income tax (39,350) Reorganization Items: Legal and Professional 6,922 Miscellaneous fees 681 Close Store Charges (275) --------- Total Reorganization Items 7,328 Earnings (loss) before income tax (46,678) Income tax benefit -- Cumulative Effect of Change in Accounting Principles -- --------- Net earnings (loss) $ (46,678) =========