EX-99 3 g72272ex99.txt OPERATING REPORT 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 September 30, 2001 COMES NOW, SERVICE MERCHANDISE COMPANY, INC. Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing August 27, 2001 and ending September 30, 2001 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: 10/22/01 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 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 1. PAYROLL
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID ---------------------------------------------------------------------------------------------------------------------------------- S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $ 72,309.70 $ 46,134.19 $ 5,147.07 $20,327.14 JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $206,548.20 $143,973.05 $ 3,387.77 $58,606.33 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 34,542.58 $ 23,464.65 $ 2,108.22 $ 8,585.21 GENERAL COUNSEL AND SECRETARY MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 29,728.08 $ 20,464.92 $ 1,744.61 $ 7,140.95 ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES $ 27,364.68 $ 18,990.20 $ 1,479.16 $ 6,056.97 KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $ 32,206.15 $ 22,169.16 $ 1,343.86 $ 8,476.98 KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 24,934.35 $ 18,725.71 $ 686.38 $ 5,129.59 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 22,142.40 $ 15,075.55 $ 677.86 $ 4,595.68 KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND ASSISTANT TREASURER $ 16,594.70 $ 10,995.78 $ 673.79 $ 4,154.66 The following associate received a payment, in accordance with the terms of her employment agreement, that is included in the amounts above. JANE F. GILMARTIN $156,250.00 The following associates received Supplemental Incentive Bonuses (SIP) included in the amounts above. KARREN M. PRASIFKA $ 10,935.00 KENNETH A. CONWAY $ 8,500.00 JOE M. ELLIOTT $ 7,500.00 KIMBERLY B. SOUTHARD $ 5,500.00
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 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 01MXI97600751 12/31/01 $685,000 12/31/01 Royal Indemnity Co. $ 5 Million RHD317182 12/31/01 $ 90,250 12/31/01 Westchester Fire $15 Million 1XA394430-0 12/31/01 $ 64,125 12/31/01 Allianz Insurance Co $12 Million CLP1036568 12/31/01 $ 26,583 12/31/01 TIG Insurance Co $13 Million XPT38844629 12/31/01 $ 28,730 12/31/01 Westchester Fire $20 Million 1XA394429-0 12/31/01 $ 13,500 12/31/01 Allianz Insurance Co $30 Million CLP1036568 12/31/01 $ 20,250 12/31/01 Allianz Insurance Co $25 Million CLP1036568 12/31/01 $ 8,500 12/31/01 Boiler & Machinery Hartford Steam Boiler $10 Million 4914359 12/31/01 $ 9,934 12/31/01 Transit Fireman's Fund Insurance Co $ 1 Million CCIMG72820 12/31/01 $ 10,000 12/31/01 Ocean Cargo Fireman's Fund Insurance Co $10 Million CR37211 12/31/01 $ 40,000 12/31/01 General Liability Ace American Ins Co $ 5 Million XSLG20577009 12/31/01 $212,279 12/31/01 Workers' Compensation Pacific Employers Ins Co Statutory WLRC43024516 12/31/01 $136,566 12/31/01 WC Excess Ace American Ins Co Statutory XWC014026 12/31/01 $ 12,108 12/31/01 WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG20577344 12/31/01 $ 20,500 12/31/01 Auto Pacific Employers Ins Co $ 1 Million ISAH07968358 12/31/01 $ 33,518 12/31/01 Umbrella Ohio Casualty Group $50 Million BXO52805120 12/31/01 $ 88,250 12/31/01 Excess Liability Zurich American of Illinois $50 Million AEC287610703 12/31/01 $ 30,000 12/31/01 International Ace American Ins Co $ 1 Million PHF051491 12/31/01 $ 2,500 12/31/01 Punitive Damages Magna Carta Ins. Ltd. $50 Million MCPD201058 12/31/01 $ 40,000 12/31/01 Punitive Damages - Excess Zurich Ins. Co Bermuda Branch $50 Million ZICBB-091 PD 12/31/01 $ 5,000 12/31/01 Directors & Officers Continental Insurance Co $10 Million 300714943 03/01/02 $200,000 03/01/02 Federal Insurance Co $10 Million 81278902-A 03/01/02 $190,000 03/01/02 Royal Insurance Co $10 Million PSF000009 03/01/02 $175,000 03/01/02 Greenwich Ins. Co. $10 Million ELU82217-01 03/01/02 $198,949 03/01/02 Zurich-American Ins. Co. $10 Million DOC3746468-00 03/01/02 $146,704 03/01/02 Kemper Insurance Co $10 Million 3DY00200100 03/01/02 $ 99,110 03/01/02 Crime National Union Fire Ins Co $10 Million 8726439 03/01/02 $ 53,833 03/01/02 Fiduciary National Union Fire Ins Co $10 Million 8726812 03/01/02 $ 25,839 03/01/02 Employment Practices Liability Chubb Insurance Co $ 5 Million 81278901A 03/01/02 $100,000 03/01/02 National Union Fire Ins Co $ 5 Million 8727499 03/01/02 $ 70,000 03/01/02 Royal Insurance Co $10 Million PSF000010 03/01/02 $ 85,000 03/01/02 Special Crime Reliance Insurance Co $25 Million NFK1951937 05/01/02 $ 13,458 05/01/02
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE HOME OFFICE $ 4,950 RETAIL SAFE FUNDS 1,768,235 CORPORATE ACCOUNTS 2,365,820 STORE DEPOSITORY ACCOUNTS FIRST TENNESSEE 615,131 KEY NATIONAL BANK 254,311 FLEET BOSTON 320,691 FIRST UNION 2,148,644 BANK ONE LOUISIANA 274,451 ABN - AMRO BANK 84,888 COMERICA BANK 116,428 AM SOUTH 242,956 BANK OF AMERICA 192,614 BANK OF OKLAHOMA 140,823 CHASE BANK OF TEXAS 625,181 SINGLE STORE DEPOSITORY ACCOUNTS 253,978 WELLS FARGO BANK 52,930 BANK ONE, IN 114,866 PNC BANK 339,589 OAK BROOK BANK 421,257 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 6,768,628 OTHER DEPOSITORY ACCOUNTS SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 81,270 OTHER CASH ACCOUNTS 572,300 ----------- TOTAL CASH PER GENERAL LEDGER $17,759,941 ===========
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 08/27/01 09/03/01 09/10/01 09/17/01 09/24/01 08/27/01 Sunday 09/02/01 09/09/01 09/16/01 09/23/01 09/30/01 09/30/01 -------- -------- -------- -------- -------- --------- Receipts: Sales receipts $ 11,462 $16,603 $ 11,770 $ 12,885 $ 16,470 $ 69,190 Miscellaneous receipts 1,515 8,813 -- 250 -- 10,578 -------- ------- -------- -------- -------- --------- Total available collections 12,977 25,416 11,770 13,135 16,470 79,768 Disbursements: Merchandise disbursements 14,062 10,403 9,500 21,177 17,711 72,853 Non-merchandise disbursements 8,219 13,661 7,430 10,293 10,831 50,434 -------- ------- -------- -------- -------- --------- Total disbursements 22,281 24,064 16,930 31,470 28,542 123,287 -------- ------- -------- -------- -------- --------- Net receipts/(disbursements) $ (9,304) $ 1,352 $ (5,160) $(18,335) $(12,072) $ (43,519) ======== ======= ======== ======== ======== =========
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL FORECAST FORECAST FORECAST 09/30/01 10/14/01 10/28/01 10/28/01 12/31/01 -------- -------- -------- -------- -------- Ending total revolver balance $231,312 $264,910 $283,021 $324,612 $ 64,392 Term loan 60,000 60,000 60,000 60,000 60,000 Standby letters of credit 23,729 23,572 23,572 24,416 22,310 Trade letters of credit 42,639 31,563 27,416 21,640 25,308 -------- -------- -------- -------- -------- Total extensions of credit 357,680 380,045 394,009 430,668 172,010 Borrowing base 456,262 482,700 492,590 531,415 393,213 -------- -------- -------- -------- -------- Availability $ 98,582 $102,655 $ 98,581 $100,747 $221,203 ======== ======== ======== ======== ========
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 4. PAYMENTS TO PROFESSIONALS AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK # -------------------------------------------------------------------------------------------------------- 57117 Deloitte and Touche $ 68,950.00 08/29/01 50051743 57117 Deloitte and Touche $ 18,000.00 08/29/01 50051811 57117 Deloitte and Touche $ 16,967.27 08/30/01 50051892 99459 Robert L. Berger and Associates $ 11,274.23 08/30/01 B0025585 50995 Brann and Isaacson $ 2,385.88 08/31/01 50051987 101232 E & Y Capital Advisors, LLC $ 86,338.00 08/31/01 B0025592 101993 Rothschild, Inc. $ 87,976.72 08/31/01 B0025593 98378 Skadden, Arps, Slate, Meagher and Flom $370,119.00 08/31/01 B0025594 99391 Otterbourg, Steindler, Houston and Rosen, PC $ 46,961.88 08/31/01 B0025595 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 8,341.29 08/31/01 B0025596 57117 Deloitte and Touche $ 17,137.69 09/07/01 50052364 57117 Deloitte and Touche $ 46,080.00 09/13/01 50052919 57117 Deloitte and Touche $ 5,500.00 09/14/01 50053064 95384 Deloitte and Touche $ 25,058.00 09/17/01 50053190 99444 Sitrick and Company, Inc. $ 4,326.73 09/17/01 B0025714 101232 E & Y Capital Advisors, LLC $ 97,489.00 09/17/01 B0025720 71217 Bass, Berry and Sims $211,458.90 09/17/01 B0025721 50995 Brann and Isaacson $ 395.00 09/19/01 50053316 86237 Brusniak, Clement, Harrison and McCool, PC $ 800.00 09/19/01 50053398 99459 Robert L. Berger and Associates $ 17,684.52 09/19/01 B0025727
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK # -------------------------------------------------------------------------------------------------------- 57117 Deloitte and Touche $ 24,074.00 09/20/01 50053497 101730 CBIZ Property Tax Solutions, Inc. $ 14,318.75 09/25/01 50053882 101730 CBIZ Property Tax Solutions, Inc. $ 714.72 09/25/01 50053883 101730 CBIZ Property Tax Solutions, Inc. $ 710.04 09/25/01 50053884 101730 CBIZ Property Tax Solutions, Inc. $ 4,142.63 09/25/01 50053885 101730 CBIZ Property Tax Solutions, Inc. $ 132.42 09/25/01 50053886 101730 CBIZ Property Tax Solutions, Inc. $ 1,324.14 09/25/01 50053887 101730 CBIZ Property Tax Solutions, Inc. $ 706.71 09/25/01 50053888 101730 CBIZ Property Tax Solutions, Inc. $ 3,570.36 09/25/01 50053889 101730 CBIZ Property Tax Solutions, Inc. $ 922.17 09/25/01 50053890 101730 CBIZ Property Tax Solutions, Inc. $ 3,868.59 09/25/01 50053891 101730 CBIZ Property Tax Solutions, Inc. $ 4,043.74 09/25/01 50053892 101730 CBIZ Property Tax Solutions, Inc. $ 2,938.65 09/25/01 50053893 71217 Bass, Berry and Sims $190,328.46 09/26/01 70001143 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 1,666.68 09/26/01 70001144 101993 Rothschild, Inc. $ 87,967.34 09/28/01 B0025796 44013 McCarter and English $ 1,326.39 09/28/01 B0025798 44013 McCarter and English $ 18,456.81 09/28/01 B0025799 99391 Otterbourg, Steindler, Houston and Rosen, PC $ 38,227.88 09/28/01 B0025800 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 5,392.72 09/28/01 B0025801
Page 7 FORM OPR - 1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR - IN - POSSESSION) (IN THOUSANDS)
SEPTEMBER 30, AUGUST 26, 2001 2001 ----------- ----------- ASSETS Current Assets: Cash and cash equivalents $ 17,760 $ 26,218 Accounts receivable 7,895 6,670 Inventories 483,632 425,960 Prepaid Expenses 12,365 10,969 ----------- ----------- TOTAL CURRENT ASSETS 521,652 469,817 ----------- ----------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 346,148 348,404 Capitalized leases, net of accumulated amortization 10,705 10,910 ----------- ----------- TOTAL PROPERTY AND EQUIPMENT 356,853 359,314 ----------- ----------- Other assets and deferred charges 36,296 38,482 ----------- ----------- TOTAL ASSETS $ 914,801 $ 867,613 =========== =========== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ 231,312 $ 188,014 Accounts payable 66,646 45,650 Accrued expenses 88,189(a) 90,464 State & local sales tax 9,110 8,435 Current maturities capitalized leases 99 99 ----------- ----------- TOTAL CURRENT LIABILITIES 395,356 332,662 ----------- -----------
Page 8 FORM OPR - 1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR - IN - POSSESSION) (IN THOUSANDS)
SEPTEMBER 30, AUGUST 26, 2001 2001 ----------- ----------- Long-Term Liabilities: Long-term debt 60,000 60,000 Capitalized lease obligations 2,321 2,329 Liabilities Subject To Compromise: Accrued restructuring costs 42,068 42,077 Capitalized lease obligations 19,767 20,040 Long-term debt 408,470 409,138 Accounts payable 198,522 198,749 Accrued expenses 93,195(a) 91,822 ----------- ----------- Total Liabilities Subject To Compromise 762,022 761,826 TOTAL LIABILITIES 1,219,699 1,156,817 ----------- ----------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,935 49,935 Additional paid-in-capital 5,881 5,881 Deferred compensation (125) (137) Accumulated other comprehensive loss (1,941) (2,545) Retained (deficit) earnings (358,648) (342,338) ----------- ----------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (304,898) (289,204) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 914,801 $ 867,613 =========== ===========
NOTE: (a) Approximately $17 million of pre-petition expired gift certificates and credit slips were reclassified to liabilities subject to compromise during September 2001. The prior period was restated for comparability. Page 9 CHAPTER 11 MONTHLY OPERATING REPORT CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 SUMMARY OF ACCOUNTS RECEIVABLE MONTH ENDED: SEPTEMBER 30, 2001 FORM OPR-3 NOT APPLICABLE 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE MONTH ENDED: 09/30/2001 FORM OPR-4
Total -------- Trade Accounts Payable (Merchandise) $ 66,646 Total -------- Expense & other payables $ 88,189
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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (Dollars in Thousands)
Date Date Total TAXES PAYABLE Incurred Due Due -------- -------- --------- Federal income tax ** Various Various $ 7,921 State income tax Various Various (621) --------- SUBTOTAL $ 7,300 --------- Sales/use tax SUBTOTAL * Various Various $ 9,878 --------- Personal property tax * Various Various $ 2,677 Real estate taxes * Various Various 12,954 Inventory taxes * Various Various -- Gross receipts/bus licenses * Various Various 209 Franchise taxes * Various Various 525 -------- SUBTOTAL $ 16,365 -------- TOTAL TAXES PAYABLE $ 33,543 ========
* liability included in accrued expenses on OPR-2 ** tax reserve 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: AUGUST 27, 2001 THROUGH SEPTEMBER 30, 2001 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (9/30/01 BALANCE) --------- -------- ---------------- POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $ 231,312 Facility standby letters of credit 04/14/00 04/14/04 23,729 Facility trade letters of credit 04/14/00 04/14/04 42,639 Term loans 04/14/00 04/14/04 60,000 --------- TOTAL EXTENSIONS OF CREDIT $ 357,680 ========= ACCRUED INTEREST PAYABLE $ 1,285 =========
Page 13 FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR - IN - POSSESSION) (IN THOUSANDS)
ACTIVITY ACTIVITY ACTIVITY YTD ACTIVITY YTD AUGUST 27, AUGUST 28, AUGUST 27, AUGUST 28, 2001 2000 2001 2000 THROUGH THROUGH THROUGH THROUGH SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1, 2001 2000 2001 2000 -------- ------- -------- ----------- Net Sales $ 64,350 $ 83,142 $ 636,647 $ 1,034,915 Costs of merchandise sold and buying and occupancy expense 49,907 62,374 470,156 820,467 -------- ------- -------- ----------- Gross margin after cost of merchandise sold and buying and occupancy expenses 14,443 20,768 166,491 214,448 Selling, General and Administrative Expenses: Net Employment Expense 14,871 20,749 125,218 219,974 Net Advertising 778 9,097 38,614 54,535 Banking and Other Fees 999 1,245 11,935 14,833 Real Estate and Other Taxes 1,849 2,156 16,944 17,429 Supplies 708 945 5,677 8,070 Communication and Equipment 316 367 2,874 3,531 Travel 471 600 3,065 4,693 UCC and Other Services (690) (362) (3,298) (6,690) Legal and Professional 299 342 3,052 2,839 Sales and Shipping 162 96 971 1,025 Insurance 533 467 3,886 3,533 Miscellaneous 63 (353) 475 (72) Credit Card Services (9) (52) (22,037) (446) -------- ------- -------- ----------- Total Selling, General and Administrative Expenses 20,350 35,297 187,376 323,254 Other expense/(income), net (8) (15) 1,383 (14,791)
Page 14 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR - IN - POSSESSION) (IN THOUSANDS)
ACTIVITY ACTIVITY ACTIVITY YTD ACTIVITY YTD AUGUST 27, AUGUST 28, AUGUST 27, AUGUST 28, 2001 2000 2001 2000 THROUGH THROUGH THROUGH THROUGH SEPTEMBER 30, OCTOBER 1, SEPTEMBER 30, OCTOBER 1, 2001 2000 2001 2000 -------- -------- -------- --------- Restructuring charge (credit) -- -- -- (2,524) Depreciation and amortization 3,964 3,611 31,074 29,351 -------- -------- -------- --------- Earnings (loss) before interest, reorganization items, and income tax (9,863) (18,125) (53,342) (120,842) Interest expense - debt 3,747 3,270 28,707 26,922 Interest expense - capitalized leases 251 287 2,362 2,692 -------- -------- -------- --------- Earnings (loss) before reorganization items, and income tax (13,861) (21,682) (84,411) (150,456) Reorganization Items: Severance -- -- -- 9,423 Legal and Professional 2,137 2,668 18,673 30,367 Miscellaneous 261 263 2,126 2,142 Loss (Gain) on Disposal of Assets 51 (8,978) 1,078 (5,206) Close Store Charges -- 723 21 462 Total Reorganization Items 2,449 (5,324) 21,898 37,188 -------- -------- -------- --------- Earnings (loss) before income tax (16,310) (16,358) (106,309) (187,644) Income tax benefit -- -- -- -- Cumulative Effect of Change in Accounting Principles -- -- -- -- -------- -------- -------- --------- Net earnings (loss) $(16,310) $(16,358) $(106,309) $(187,644) ======== ======== ======== =========
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