EX-99 2 g64859ex99.txt OPERATING REPORT FOR THE PERIOD ENDING 10/1/00 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 October 1, 2000 --------------- COMES NOW, SERVICE MERCHANDISE COMPANY, INC. --------------------------------- Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing August 28, 2000 and ending October 1, 2000 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. 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: October 23, 2000 ---------------- DEBTOR-IN-POSSESSION By: /s/ KENNETH A. CONWAY ----------------------------------------------------- Name and Title: KENNETH A. CONWAY, VICE PRESIDENT AND CONTROLLER ----------------------------------------------------- Address: 7100 SERVICE MERCHANDISE DRIVE ----------------------------------------------------- BRENTWOOD, TENNESSEE 37027 ----------------------------------------------------- Telephone No: (615) 660-3340 ----------------------------------------------------- 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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID -------------------------------------------------------------------------------------------------------------------------------- SAM CUSANO CHIEF EXECUTIVE OFFICER 62,688.10 38,065.97 6,500.54 17,693.29 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND SECRETARY 34,483.63 23,124.93 2,185.87 8,873.68 THOMAS L. GARRETT, JR. SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 22,554.32 15,855.27 - 6,524.93 CHARLES K. SEPTER PRESIDENT AND CHIEF OPERATING OFFICER 48,845.20 30,910.82 3,411.01 13,592.87 ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 14,443.50 11,169.63 615.93 2,437.24 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION 14,481.75 10,348.53 678.42 2,637.56 KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT 18,318.90 12,403.86 1,169.98 4,605.56 BILLY STEWART ASSISTANT TAX VICE PRESIDENT 9,629.62 7,265.73 310.71 1,226.41 KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 15,412.15 10,307.91 506.10 1,988.69 ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES 27,288.93 18,767.22 1,536.50 6,259.51 ROSE C. SEPTER SENIOR VICE PRESIDENT, JEWELRY MERCHANDISING 26,558.50 18,380.58 1,647.15 6,414.62 JERRY E. FOREMAN SENIOR VICE PRESIDENT, MERCHANDISING 32,111.43 21,588.24 2,022.83 8,169.56
Page 2 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: August 28, 2000 THROUGH October 1, 2000 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 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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE ------------------------------ HOME OFFICE $ 7,670 RETAIL SAFE FUNDS 1,945,253 CORPORATE ACCOUNTS 1,773,725 STORE DEPOSITORY ACCOUNTS FIRST TENNESSEE 533,205 KEY NATIONAL BANK 343,765 BANK OF BOSTON 268,507 BANK OF BOSTON CONNECTICUT 173,115 FIRST UNION 2,305,149 HARRIS TRUST 144,179 BANK ONE LOUISIANA 358,120 ABN - AMRO BANK 198,957 COMERICA BANK 222,651 AM SOUTH 296,848 BANK OF AMERICA CALIFORNIA 144,274 BANK OF OKLAHOMA 138,203 CHASE BANK OF TEXAS 602,504 SINGLE STORE DEPOSITORY ACCOUNTS 291,067 WELLS FARGO BANK 111,720 BANK OF AMERICA 124,106 BANK ONE, IN 196,932 PNC BANK 568,000 OAK BROOK BANK 488,419 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 10,134,545 ------------------------------------------------------------------ OTHER DEPOSITORY ACCOUNTS SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 93,837 OTHER CASH ACCOUNTS 910,868 ----------- TOTAL CASH PER GENERAL LEDGER $22,375,619 ===========
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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 08/28/00 09/04/00 09/11/00 09/18/00 09/25/00 08/28/00 Sunday 09/03/00 09/10/00 09/17/00 09/24/00 10/01/00 10/01/00 -------- -------- -------- -------- -------- --------- Receipts: Sales receipts $ 19,219 $ 17,579 $ 16,688 $ 15,878 $20,319 $ 89,683 Miscellaneous receipts -- -- 460 -- 23,067 23,527 -------- -------- -------- -------- ------- --------- Total available collections 19,219 17,579 17,148 15,878 43,386 113,210 Disbursements: Merchandise disbursements 15,445 9,956 17,877 22,683 17,941 83,902 Non-merchandise disbursements 13,081 14,379 17,463 21,247 16,628 82,798 -------- -------- -------- -------- ------- --------- Total disbursements 28,526 24,335 35,340 43,930 34,569 166,700 -------- -------- -------- -------- ------- --------- Net receipts/(disbursements) $ (9,307) $ (6,756) $(18,192) $(28,052) $ 8,817 $ (53,490) ======== ======== ======== ======== ======= =========
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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
Actual Forecast Forecast Forecast 10/15/00 10/29/00 11/26/00 12/31/00 -------- -------- -------- -------- Ending total revolver balance $181,822 $234,461 $306,845 $ 81,232 Term loan 60,000 60,000 60,000 60,000 Standby letters of credit 25,729 25,810 27,269 25,728 Trade letters of credit 25,934 12,888 18,264 21,163 -------- -------- -------- -------- Total extensions of credit 293,485 333,159 412,378 188,123 Borrowing base 475,709 485,347 535,048 425,549 -------- -------- -------- -------- Availability $182,224 $152,188 $122,670 $237,426 ======== ======== ======== ========
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: August 28, 2000 THROUGH October 1, 2000 4. Payments to Professionals August 28, 2000 through October 1, 2000
Vendor # Vendor Name Check Amt. Check Date Check # ---------------------------------------------------------------------------------------------------------------------- 89708 Deloitte & Touche $77,513.50 08/28/00 50015312 101606 Service Real Estate Venture $1,702.12 09/07/00 B0022748 99444 Sitrick & Company $36,613.77 09/08/00 70000012 99329 Aegis Property Tax Specialists $36,613.77 09/08/00 70000012 101232 E & Y Restructuring $60,249.00 09/15/00 B0022853 101625 DG Hart Associates $51,869.49 09/15/00 B0022854 101625 DG Hart Associates $55,312.35 09/15/00 B0022855 101625 DG Hart Associates $64,152.82 09/15/00 B0022856 71217 Bass, Berry & Sims $87,889.72 09/15/00 B0022858 86237 Brusniak, Clement, Harrison & McCool, PC $318.63 09/19/00 50017487 99459 Robert L. Berger & Associates $32,556.83 09/21/00 B0022887 57117 Deloitte & Touche $106,250.00 09/25/00 50018419 50995 Brann & Issacson $157.05 09/25/00 50018434 48779 Loss, Pavone & Orel $401.50 09/26/00 50018563 57117 Deloitte & Touche $19,740.24 09/26/00 50018564 63010 Rives & Peterson $904.16 09/26/00 50018565 67017 Barkley & Thompson $6,064.90 09/26/00 50018567 80443 Coudert Brothers $671.55 09/26/00 50018568 80679 McLain & Merritt $704.61 09/26/00 50018569 44013 McCarter & English $11,240.20 09/26/00 70000024 53703 Barron & Stadfeld, PC $1,514.10 09/27/00 50018671 71403 Seyfarth, Shaw, Fairweather & Geraldson $6,266.18 09/27/00 50018673 97660 Schnader, Harrison, Segal & Lewis $495.00 09/27/00 50018678 2642 Waller, Landsen, Dortch & Davis $1,976.32 09/28/00 50019034 53703 Barron & Stadfeld, PC $4,303.71 09/28/00 50019038 84573 Buchanan & Ingersoll $3,656.05 09/28/00 50019041 84740 Taft, Stettinius & Hollister $287.20 09/28/00 50019042 88778 Kenny, Nachwalter, Seymour, Arnold, Critchlow & Specter 5/15/00 09/28/00 50019043 94025 Littler, Mendelson, Fastiff, Tichy & Mathiason $347.20 09/28/00 50019046 96684 Jeffrey S. Sherbow $655.14 09/28/00 50019049 101993 Rothschild, Inc. $110,944.72 09/28/00 B0022934 98378 Skadden, Arps, Slate, Meagher & Flom $448,114.00 09/28/00 B0022935 99104 Jay Alix & Associates $110,215.41 09/28/00 B0022936 99391 Otterbourg, Steindler, Houston & Rosen $98,024.89 09/28/00 B0022937 99454 Harwell, Howard, Hyne, Gabbert & Manner, PC $28,173.70 09/28/00 B0022938 102132 E & Y Restructuring $103,396.00 09/28/00 B0022967
Page 7 8 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
OCTOBER 1, AUGUST 27, 2000 2000 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 22,376 $ 22,000 Accounts receivable 7,906 6,920 Inventories 523,968 481,408 Prepaid expenses and other assets 22,641 14,213 ----------- ----------- TOTAL CURRENT ASSETS 576,891 524,541 ----------- ----------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 347,253 353,353 Capitalized leases, net of accumulated amortization 12,921 13,135 ----------- ----------- TOTAL PROPERTY AND EQUIPMENT 360,174 366,488 ----------- ----------- Other assets and deferred charges 48,865 48,261 TOTAL ASSETS $ 985,930 $ 939,290 =========== =========== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ 139,485 $ 85,923 Accounts payable 77,873 66,305 Accrued expenses 151,250 149,637 State & local sales tax 10,423 12,108 Current maturities capitalized leases 88 90 ----------- ----------- TOTAL CURRENT LIABILITIES 379,119 314,063 Long-Term Liabilities: Long-term debt 60,000 60,000 Capitalized lease obligations 2,420 2,428 Liabilities Subject To Compromise: Accrued restructuring costs 42,329 42,359 Capitalized lease obligations 23,229 23,542 Long-term debt 419,465 420,883 Accounts payable 196,787 196,302 Accrued expenses 67,364 68,102 ----------- ----------- Total Liabilities Subject To Compromise 749,174 751,188 TOTAL LIABILITIES 1,190,713 1,127,679 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,954 49,964 Additional paid-in-capital 6,017 6,094 Deferred compensation (327) (379) Accumulated other comprehensive loss -- -- Retained (deficit) earnings (260,427) (244,068) ----------- ----------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (204,783) (188,389) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 985,930 $ 939,290 =========== ===========
Page 8 9 CHAPTER 11 MONTHLY OPERATING REPORT CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD:AUGUST 29, 2000 THROUGH OCTOBER 1, 2000 SUMMARY OF ACCOUNTS RECEIVABLE Month Ended: 10/01/00 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: August 28, 2000 THROUGH October 1, 2000 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 10/01/2000 FORM OPR-4
Total -------- Trade Accounts Payable (Merchandise) $ 77,873 Total -------- Expense & other payables $151,250
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: AUGUST 28, 2000 THROUGH OCTOBER 1, 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 (74,921) ---------- SUBTOTAL 7,768,521 ---------- Sales/use tax SUBTOTAL * Various Various 10,422,644 ---------- Personal property tax * Various Various 3,496,744 Real estate taxes * Various Various 12,342,194 Inventory taxes * Various Various - Gross receipts/bus. licenses * Various Various 1,956 Franchise taxes * Various Various 485,031 ---------- SUBTOTAL 16,325,925 ---------- TOTAL TAXES PAYABLE 34,517,090 ==========
* 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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (10/01/00 BALANCE) ----------------------------------------------- POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $139,485 Facility standby letters of credit 04/14/00 04/14/04 25,902 Facility trade letters of credit 04/14/00 04/14/04 30,694 Term loans 04/14/00 04/14/04 60,000 -------- TOTAL EXTENSIONS OF CREDIT $256,081 ======== ACCRUED INTEREST PAYABLE $ 1,873 ========
Page 12 13 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
ACTIVITY AUGUST 28, 2000 THROUGH OCTOBER 1, 2000 --------------- Net Sales $ 83,142 Costs of merchandise sold and buying and occupancy expense 62,374 -------- Gross margin after cost of merchandise sold and buying and occupancy expenses 20,768 Selling, General and Administrative Expenses: Net Employment Expense 20,749 Net Advertising 9,097 Banking and Other Fees 1,244 Real Estate and Other Taxes 2,156 Supplies 946 Communication and Equipment 367 Travel 600 UCC and Other Services (361) Legal and Professional 342 Sales and Shipping 96 Insurance 467 Miscellaneous (356) Credit Card Services (52) -------- Total Selling, General and Administrative Expenses 35,295 Other expense/(income), net (15) Restructuring charge (credit) -- Depreciation and amortization 3,611 -------- Earnings (loss) before interest, reorganization items, and income tax (18,123) Interest expense - debt 3,270 Interest expense - capitalized leases 288 -------- Earnings (loss) before reorganization items, and income tax (21,681) Reorganization Items: Legal and Professional 2,683 Miscellaneous fees 249 Loss (Gain) on Disposal of Assets (8,977) Close Store Charges 723 -------- Total Reorganization Items (5,322) Earnings (loss) before income tax (16,359) Income tax benefit -- Cumulative Effect of Change in Accounting Principles -- -------- Net earnings (loss) $(16,359) ========
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