-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HTBiWP6MYrhIHM6U53Rk20yWu7sB2OESFsoYXAIgu35o2k7dwL8LDF6DpuC9j5ZC fpjPaBFo3eI8ak2jEI9DeQ== 0000950144-02-003344.txt : 20020415 0000950144-02-003344.hdr.sgml : 20020415 ACCESSION NUMBER: 0000950144-02-003344 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20011231 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020401 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SERVICE MERCHANDISE CO INC CENTRAL INDEX KEY: 0000089107 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-MISC GENERAL MERCHANDISE STORES [5399] IRS NUMBER: 620816060 STATE OF INCORPORATION: TN FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-09223 FILM NUMBER: 02598575 BUSINESS ADDRESS: STREET 1: 7100 SERVICE MERCHANDISE BLVD CITY: BRENTWOOD STATE: TN ZIP: 37027 BUSINESS PHONE: 6156606000 MAIL ADDRESS: STREET 1: PO BOX 24600 CITY: NASHVILLE STATE: TN ZIP: 37202 8-K 1 g74916e8-k.htm SERVICE MERCHANDISE COMPANY e8-k
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

Date of Report: December 31, 2001

SERVICE MERCHANDISE COMPANY, INC.
(Debtor-in-Possession as of March 27, 1999)

(Exact name of registrant as specified in its charter)
         
Tennessee   1-9223   62-0816060
 
 
(State or other jurisdiction
of incorporation)		   (Commission File Number)   (I.R.S. Employer
Identification No.)
     
7100 Service Merchandise Boulevard, Brentwood, TN   37027
 
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code: (615) 660-6000

Not Applicable

(Former name or former address, if changed since last report)

Item 5. Other Events
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
SIGNATURES
EXHIBIT INDEX
PARTIAL MONTHLY REPORT-1/27/02
PARTIAL MONTHLY REPORT-2/24/02

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Item 5.   Other Events

     I.     Service Merchandise Adopts Modified Reporting to Securities and Exchange Commission.

     On January 4, 2002, Service Merchandise Company, Inc. (the “Company”) announced that it would cease continuing business operations, beginning with the commencement of going-out-of-business sales at more than 200 stores in 32 states on January 19, 2002, subject to approval by the Bankruptcy Court. On January 18, 2002, the Bankruptcy Court approved various forms of relief requested by the Company including (a) the proposed conduct of the going-out-of-business sales and the Company’s selection of a consultant to assist with these sales and (b) extension of the Company’s exclusive periods within which to file and solicit acceptances of a plan of liquidation under which the Company’s existing shareholders would not receive any distribution. The Company’s going-out-of-business sales were completed and all but one of its stores closed as of March 27, 2002. The Company intends to file a plan of liquidation with the Bankruptcy Court by September 30, 2002.

     The Company has determined that it is in the best interests of the Company to adopt modified reporting to the Securities and Exchange Commission (the “SEC”). Until the completion of its anticipated liquidation, the Company intends to file with the SEC (i) the monthly operating reports, including the final report upon liquidation to be filed with Bankruptcy Court, as exhibits to Current Reports on Form 8-K, no later than fifteen days after such reports are submitted to and/or filed with the United States Bankruptcy Court for the Middle District of Tennessee, (the “Bankruptcy Court”); (ii) Current Reports on Form 8-K disclosing (a) material events relating to the liquidation, and (b) the likelihood of any liquidation payments being made to security holders of the Company; (iii) Current Reports on Form 8-K disclosing the amounts of any liquidation payments, including expenses; and (iv) a final report on Form 8-K, together with a Form 15 terminating its obligation to file reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), upon completion of the anticipated liquidation. Except as described above, the Company intends to make filings other than those on Forms 10-K and 10-Q as required by the Exchange Act. However, there can be no assurance the Company will be able to file such reports with the SEC within the anticipated time frames or at all.

     The Company reached its decision to cease filing annual and quarterly reports and to adopt modified reporting in light of its intention to liquidate, its limited resources, its inability to continue filing such reports without unreasonable effort and expense, its belief that modified reports will provide adequate information to interested parties and other factors.

     II.     Service Merchandise Files Operating Reports.

     The Company has filed (1) the remaining portion of its monthly operating report for the period commencing December 31, 2001 and ended January 27, 2002 (the “Finished Operating Report”); and (2) a monthly operating report for the period commencing January 28, 2002 and ended February 24, 2002 (the “Complete Operating Report”) (collectively, the “Operating Reports”) with the Bankruptcy Court in connection with its voluntary petitions for reorganization under Chapter 11 of title 11 of the United States Bankruptcy Code in Case No. 399-02649, a copy of which is attached hereto as Exhibit 99.

     The Company cautions readers not to place undue reliance upon the information contained in the Operating Reports. The Operating Reports contain unaudited information, and are in a format prescribed by the applicable bankruptcy laws. The financial statements and schedules related to the Company included in the Operating Reports have not been prepared on a liquidation basis in accordance with generally accepted accounting principles (“GAAP”). 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.

     There can be no assurance that the Operating Reports are complete in all material respects. The Operating Reports also contain information for periods which may be shorter or otherwise different from those contained in standard reports filed pursuant to the Exchange Act. Moreover, the Operating Reports and other communications from the Company may include forward-looking statements subject to various assumptions regarding the Company’s performance or its anticipated liquidation or anticipated distributions that may not be realized and are subject to significant business, judicial, economic and competitive uncertainties and potential contingencies, including those described in this report, many of which are beyond the Company’s control. Consequently

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such matters should not be regarded as a representation or warranty by the Company that such matters will be realized. Actual results may differ materially from that contemplated in any forward-looking statement and the Company undertakes no obligation to update or revise any such statement or Operating Report.

     The results of the Company’s planned liquidation and related distributions and the Company’s liquidity, capital resources and results of operations are subject to a number of risks and uncertainties including, but not limited to, the following: matters affecting the timing and amounts of anticipated distributions to creditors; the ability of the Company to successfully conduct going-out-of-business sales, sell its real estate assets, maximize asset value and control expenses; the ability of the Company to comply with the terms of the DIP to Exit Facility; the ability of the Company to reduce its workforce and related expenses and to achieve anticipated cost savings; potential adverse developments with respect to the Company’s activities; competitive pressures from other retailers, including specialty retailers and discount stores, which may affect the effectiveness of the planned liquidation; trends in the economy as a whole which may affect consumer confidence and consumer demand for the types of goods sold by the Company; the ability of the Company to retain and compensate key executives and associates; potential adverse publicity; and real estate costs, including the substantial fixed investment costs associated with disposing of Company stores.

     
Item 7.   Financial Statements, Pro Forma Financial Information and Exhibits
     
(c)   Exhibits
 
99.1   Finished Monthly Operating Report for period ended January 27, 2002.
 
99.2   Complete Monthly Operating Report for period ended February 24, 2002.

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SIGNATURES

     Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

         
 
 
  SERVICE MERCHANDISE COMPANY, INC.
 
Date: March 25, 2002   By: /s/ C. Steven Moore
 
  C. Steven Moore
Senior Vice President, Chief Administrative
Officer, Secretary and General Counsel

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EXHIBIT INDEX

     
No.   Exhibit
 
 
99.1   Partial Monthly Operating Report for the period ended January 27, 2002.
 
99.2   Partial Monthly Operating Report for the period ended February 24, 2002.
EX-99.1 3 g74916ex99-1.txt PARTIAL MONTHLY REPORT-1/27/02 EXHIBIT 99.1 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 27, 2002 COMES NOW, SERVICE MERCHANDISE COMPANY, INC. Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing December 31, 2001 and ending January 27, 2002 as shown by the report and exhibits consisting of 6 pages and containing the following as indicated: 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. The Debtor has filed with the U. S. Trustee on February 18, 2002, the preliminary January 27, 2002 Monthly Operating Report, which included certain schedules, including payroll, insurance, receipts and disbursements, payment to professionals and bank accounts, etc. 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: 3-18-02 DEBTOR-IN-POSSESSION By: /s/ M. 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 FORM OPR-1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS) JANUARY 27, 2002 ASSETS Current Assets: Cash and cash equivalents $ 13,890 Accounts receivable 13,414 Inventories 15,492 Prepaid Expenses 2,235 --------- TOTAL CURRENT ASSETS 45,031 --------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 338,274 Capitalized leases, net of accumulated amortization 10,219 --------- TOTAL PROPERTY AND EQUIPMENT 348,493 --------- Other assets and deferred charges 16,543 --------- TOTAL ASSETS $ 410,067 ========= LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Notes payable to banks $ -- Accounts payable 39,105 Accrued expenses 72,781 State & Local tax 6,420 Current maturities capitalized leases 102 --------- TOTAL CURRENT LIABILITIES 118,408 ---------
Note: The disclosure on page 1 is an integral part of these consolidated statements and schedules. Page 2 FORM OPR-1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS) JANUARY 27, 2002 Long-Term Liabilities: Long-term debt -- Capitalized lease obligations 2,286 Liabilities Subject To Compromise: Accrued restructuring costs 42,067 Capitalized lease obligations 18,647 Long-term debt 403,973 Accounts payable 208,701 Accrued expenses 109,176 --------- Total Liabilities Subject To Compromise 782,564 TOTAL LIABILITIES 903,258 --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,936 Additional paid-in-capital 5,881 Deferred compensation (85) Accumulated other comprehensive loss -- Retained (deficit) earnings (548,923) --------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (493,191) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 410,067 =========
Note: The disclosure on page 1 is an integral part of these consolidated 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 31, 2001 THROUGH JANUARY 27, 2002 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 1/27/02 FORM OPR-4
Total ------- Trade Accounts Payable (Merchandise) $39,105
Total ------- Expense & other payables $ 72,781
Note: The disclosure on page 1 is an integral part of these consolidated statements and schedules. Page 4 FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
ACTIVITY DECEMBER 31, 2001 THROUGH JANUARY 27, 2002 ----------------- Net Sales $ 289,909 Costs of merchandise sold and buying and occupancy expense 400,146 --------- Gross margin after cost of merchandise sold and buying and occupancy expenses (110,237) Selling, General and Administrative Expenses: Net Employment Expense 17,390 Net Advertising 2,515 Banking and Other Fees 887 Real Estate and Other Taxes 1,877 Supplies 5,160 Communication and Equipment 241 Travel 102 UCC and Other Services 406 Legal and Professional 234 Sales and Shipping 124 Insurance 1,574 Miscellaneous (150) Credit Card Services 1 --------- Total Selling, General and Administrative Expenses 30,361 Other expense/(income), net 36
Note: The disclosure on page 1 is an integral part of these consolidated statements and schedules. Page 5 FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
ACTIVITY DECEMBER 31, 2001 THROUGH JANUARY 27, 2002 ----------------- Restructuring charge (credit) -- Depreciation and amortization -- --------- Earnings (loss) before interest, reorganization items, and income tax (140,634) Interest expense - debt 14,249 Interest expense - capitalized leases 625 --------- Earnings (loss) before reorganization items, and income tax (155,508) Reorganization Items: Legal and Professional 2,665 Severance and Miscellaneous 48,065 Loss (Gain) on Disposal of Assets -- Close Store Charges 5,263 --------- Total Reorganization Items 55,993 Earnings (loss) before income tax (211,501) Income tax benefit (130) Cumulative Effect of Change in Accounting Principles -- --------- Net earnings (loss) $(211,631) =========
Note: The disclosure on page 1 is an integral part of these consolidated statements and schedules. Page 6 EX-99.2 4 g74916ex99-2.txt PARTIAL MONTHLY REPORT-2/24/02 EXHIBIT 99.2 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 February 24, 2002 ----------------- COMES NOW, SERVICE MERCHANDISE COMPANY, INC. --------------------------------- Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing January 28, 2002 and ending February 24, 2002 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. 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: March 18, 2002 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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID - --------------------------------------------------------------------------------------------------------------------------------- S. CUSANO CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER $2,479,014.38 $1,759,808.37 $5,043.76 $708,221.44 JANE F. GILMARTIN PRESIDENT AND CHIEF MERCHANDISING OFFICER $1,060,765.00 $ 755,093.16 $ -- $305,671.84 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND SECRETARY SENIOR $ 27,759.41 $ 16,292.08 $2,342.13 $ 7,184.77 MICHAEL E. HOGREFE VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 23,903.33 $ 14,191.91 $1,957.96 $ 6,053.80 KARREN M. PRASIFKA VICE PRESIDENT, ASSISTANT GENERAL COUNSEL $ 233,646.39 $ 162,448.83 $ -- $ 71,177.59 KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER $ 177,939.29 $ 123,138.60 $ -- $ 54,800.69 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $ 11,648.13 $ 7,716.61 $ 790.85 $ 2,248.70 KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND ASSISTANT TREASURER $ 8,864.66 $ 5,496.84 $ 790.30 $ 2,350.70
The following associates received payment for accrued vacation: S. CUSANO $ 52,914.38 JANE F. GILMARTIN $ 20,765.00 KARREN M. PRASIFKA $ 9,415.58 KENNETH A. CONWAY $ 7,939.33 The following associates received pay for severance: S. CUSANO $2,368,600.00 JANE F. GILMARTIN $1,040,000.00 KARREN M. PRASIFKA $ 220,000.04 KENNETH A. CONWAY $ 169,999.96
Note: The disclosure on page 1 is an integral part of these consolidated 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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 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 12/31/02 $453,750 06/30/02 Royal Indemnity Co. $5 Million RHD317182 12/31/02 $ 60,000 06/30/02 Westchester Fire $15 Million WXA663479-0 12/31/02 $ 51,500 06/30/02 Commonwealth Ins Co $25 Million CLP 10333 12/31/02 $ 79,459 06/30/02 Boiler & Machinery Hartford Steam Boiler $10 Million FBP4914359 12/31/02 $ 20,248 12/31/02 Transit Fireman's Fund Insurance Co $1 Million OIMXI97600751 12/31/02 $ 10,000 12/31/02 General Liability Ace American Ins Co $5 Million XSLG2057804A 12/31/02 $250,000 12/31/02 Tenants Liability - AOS Pacific Employers Ins. Co. $5 Million HDOG20578129 12/31/02 Incl. In GL 12/31/02 Tenants Liability-First Union Pacific Employers Ins. Co. $5 Million HODG20578087 12/31/02 Incl. In GL 12/31/02 Workers' Compensation-AOS Pacific Employers Ins Co Statutory WLRC43124456 12/31/02 $201,195 12/31/02 WC Excess Ace American Ins Co Statutory XWC014136 12/31/02 $ 24,034 12/31/02 Workers' Compensation-DAS Pacific Employers Ins Co Statutory WLRC43124493 12/31/02 Incl. In Excess 12/31/02 WC Retro Pacific Employers Ins. Co. Statutory SCFC43031673 12/31/02 Incl. In Excess 12/31/02 WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG20577794 12/31/02 $ 15,750 12/31/02 Auto Pacific Employers Ins Co $1 Million ISAH07969661 12/31/02 $ 43,572 12/31/02 Umbrella Ohio Casualty Group $25 Million BX(02)O52805120 06/30/02 $ 52,006 06/30/02 Excess Liability American Guarantee & Lia. Ins. $50 Million AEC287610704 03/31/02 $ 12,500 03/31/02 Excess Liability Great American Assurance $25 Million EXC5752226 06/30/02 $ 18,600 06/30/02 International Ace American Ins Co $1 Million PHF051491 12/31/02 $ 2,500 12/31/02 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
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE HOME OFFICE $ 2,950 CORPORATE ACCOUNTS 9,145,874 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 4,707,975 OTHER DEPOSITORY ACCOUNTS SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 92,808 OTHER CASH ACCOUNTS 97,827 ------------- INVESTMENTS SHORT TERM INVESTMENTS 16,850,239 TOTAL CASH PER GENERAL LEDGER $ 30,897,673 =============
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 01/28/02 02/04/02 02/11/02 02/18/02 01/28/02 Sunday 02/03/02 02/10/02 02/17/02 02/24/02 02/24/02 -------- -------- -------- -------- -------- Receipts: Sales receipts $ -- $ -- $ -- $ -- $ -- Miscellaneous receipts 2,482 1,139 23,593 4,020 31,234 Expense reimbursements 7,150 9,032 13,930 8,483 38,595 ------- ------- ------- ------- ------- Total available collections 9,632 10,171 37,523 12,503 69,829 Disbursements: Merchandise disbursements 802 52 37 478 1,369 Non-merchandise disbursements 13,486 13,018 10,826 15,174 52,504 ------- ------- ------- ------- ------- Total disbursements 14,288 13,070 10,863 15,652 53,873 ------- ------- ------- ------- ------- Net receipts/(disbursements) $(4,656) $(2,899) $26,660 $(3,149) $15,956 ======= ======= ======= ======= =======
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
Actual Actual 01/27/02 02/24/02 -------- -------- Ending total revolver balance $ -- $ -- Term loan -- -- Standby letters of credit 20,571 20,141 Trade letters of credit 11,948 9,610 -------- -------- Total extensions of credit 32,519 29,751 Borrowing base 118,250 122,940 -------- -------- Availability $ 85,731 $ 93,189 ======== ========
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 4. Payments to Professionals January 28, 2002 through February 24, 2002
Vendor # Vendor Name Check Amt. Check Date Check # - --------------------------------------------------------------------------------------------------------------------------------- 57117 Deloitte and Touche $18,000.00 01/28/02 50064363 44013 McCarter and English $493.69 01/28/02 50064388 101730 CBIZ Property Tax Solutions, Inc. $160.92 01/28/02 50064391 101730 CBIZ Property Tax Solutions, Inc. $2,487.07 01/28/02 50064392 101730 CBIZ Property Tax Solutions, Inc. $4,670.97 01/28/02 50064393 101730 CBIZ Property Tax Solutions, Inc. $4,814.83 01/28/02 50064394 101730 CBIZ Property Tax Solutions, Inc. $5,813.53 01/28/02 50064395 101730 CBIZ Property Tax Solutions, Inc. $6,508.23 01/28/02 50064396 101730 CBIZ Property Tax Solutions, Inc. $6,515.98 01/28/02 50064397 101730 CBIZ Property Tax Solutions, Inc. $6,669.11 01/28/02 50064398 101730 CBIZ Property Tax Solutions, Inc. $6,698.29 01/28/02 50064399 101730 CBIZ Property Tax Solutions, Inc. $10,617.16 01/28/02 50064400 101730 CBIZ Property Tax Solutions, Inc. $12,000.00 01/28/02 50064401 44013 McCarter and English $284.00 01/29/02 50064429 101606 Service Real Estate Venture $51,988.00 01/29/02 B0026748 71403 Seyfarth, Shaw, Fairweather and Geraldson $7,247.03 01/30/02 50064479 96221 Holt and Babington $46.81 01/30/02 50064486 44013 McCarter and English $1,872.06 01/31/02 50064602 57117 Deloitte and Touche $27,125.00 02/01/02 50064651 44013 McCarter and English $1,495.40 02/04/02 50064725 44013 McCarter and English $382.61 02/05/02 50064804 44013 McCarter and English $175.00 02/06/02 50064863 84740 Taft, Stettinius and Hollister $10,523.46 02/08/02 50064993 95913 Locke, Reynolds, Boyd and Weisell $947.16 02/08/02 50064999 48779 Loss, Pavone and Orel $1,177.50 02/08/02 50065016 69583 McCarthy, Fingar, Donovan, Drazen and Smith, LLP $37.50 02/11/02 50065103 57117 Deloitte and Touche $24,270.00 02/11/02 50065106 44013 McCarter and English $1,488.47 02/12/02 50065162 95384 Deloitte and Touche, LLP $21,749.04 02/12/02 50065164 99329 Aegis Property Tax Specialists $10,500.00 02/13/02 50065230 99329 Aegis Property Tax Specialists $2,137.50 02/13/02 50065231 71217 Bass, Berry and Sims Escrow Account $135,082.85 02/15/02 B0026852 99104 Jay Alix and Associates $23,980.00 02/15/02 B0026853 99444 Sitrick and Company, Inc. $9,957.40 02/15/02 B0026854 57117 Deloitte and Touche $18,000.00 02/18/02 50065378 84740 Taft, Stettinius and Hollister $457.50 02/19/02 50065438 44013 McCarter and English $1,378.68 02/19/02 50065457 86237 Brusniak, Clement, Harrison and McCool, PC $115.00 02/19/02 50065509 50995 Brann and Isaacson $689.54 02/20/02 50065577 57117 Deloitte and Touche $44,741.00 02/20/02 50065579 67017 Barkley and Thompson $1,910.72 02/21/02 50065832 95384 Deloitte and Touche, LLP $55,529.67 02/21/02 50065834 84740 Taft, Stettinius and Hollister $13,948.43 02/22/02 50065944
Note: The disclosure on page 1 is an integral part of these consolidated 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)
FEBRUARY 24, 2002 ------------- ASSETS CURRENT ASSETS: Cash and cash equivalents $ 30,898 Accounts receivable 22,306 Inventories 0 Prepaid Expenses 2,161 ---------- TOTAL CURRENT ASSETS 55,365 ---------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 338,233 Capitalized leases, net of accumulated amortization 10,219 ---------- TOTAL PROPERTY AND EQUIPMENT 348,452 ---------- Other assets and deferred charges 16,228 ---------- TOTAL ASSETS $ 420,045 ========== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY LIABILITIES NOT SUBJECT TO COMPROMISE CURRENT LIABILITIES: Notes payable to banks $ -- Accounts payable 38,307 Accrued expenses 85,818 State & Local tax 12,096 Current maturities capitalized leases 103 ---------- TOTAL CURRENT LIABILITIES 136,324 ----------
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)
FEBRUARY 24, 2002 ------------- LONG-TERM LIABILITIES: Long-term debt -- Capitalized lease obligations 2,277 LIABILITIES SUBJECT TO COMPROMISE: Accrued restructuring costs 42,067 Capitalized lease obligations 18,398 Long-term debt 403,304 Accounts payable 208,656 Accrued expenses 109,491 ---------- Total Liabilities Subject To Compromise 781,916 TOTAL LIABILITIES 920,517 ---------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,936 Additional paid-in-capital 5,881 Deferred compensation (75) Accumulated other comprehensive loss -- Retained (deficit) earnings (556,214) ---------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (500,472) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 420,045 ==========
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 SUMMARY OF ACCOUNTS RECEIVABLE MONTH ENDED: FEBRUARY 24, 2002 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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 2/24/02 FORM OPR-4
Total ---------- Trade Accounts Payable (Merchandise) $ 38,307 Total ---------- Expense & other payables $ 85,818
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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (Dollars in Thousands)
Date Date Total TAXES PAYABLE Incurred Due Due --------------------------------------------- Federal income tax ** Various Various $ 1,684 State income tax Various Various (6) -------- SUBTOTAL $ 1,678 -------- Sales/use tax SUBTOTAL * Various Various $ 12,100 -------- Personal property tax * Various Various $ 998 Real estate taxes * Various Various 8,883 Inventory taxes * Various Various -- Gross receipts/bus licenses * Various Various (74) Franchise taxes * Various Various 807 -------- SUBTOTAL $ 10,614 -------- -------- TOTAL TAXES PAYABLE $ 24,392 ========
* 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: JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (2/24/02 BALANCE) --------------------------------------------------------------- POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $ -- Facility standby letters of credit 04/14/00 04/14/04 20,141 Facility trade letters of credit 04/14/00 04/14/04 9,610 Term loans 04/14/00 04/14/04 -- -------- TOTAL EXTENSIONS OF CREDIT $ 29,751 ======== ACCRUED INTEREST PAYABLE $ 1,006 ========
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 JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 ----------------- Net Sales $ 13,940 Costs of merchandise sold and buying and occupancy expense 16,591 ---------- Gross margin after cost of merchandise sold and buying and occupancy expenses (2,651) Selling, General and Administrative Expenses: Net Employment Expense 7,904 Net Advertising (30) Banking and Other Fees 427 Real Estate and Other Taxes 1,717 Supplies (9) Communication and Equipment 278 Travel 41 UCC and Other Services 83 Legal and Professional 87 Sales and Shipping 31 Insurance 93 Miscellaneous (1,806) Credit Card Services 1 ---------- Total Selling, General and Administrative Expenses 8,817 Other expense/(income), net (57)
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)
ACTIVITY JANUARY 28, 2002 THROUGH FEBRUARY 24, 2002 ----------------- Restructuring charge (credit) -- Depreciation and amortization -- ---------- Earnings (loss) before interest, reorganization items, and income tax (11,411) Interest expense - debt 880 Interest expense - capitalized leases 183 ---------- Earnings (loss) before reorganization items, and income tax (12,474) Reorganization Items: Legal and Professional (4,663) Miscellaneous (520) Loss (Gain) on Disposal of Assets -- Close Store Charges -- ---------- Total Reorganization Items (5,183) Earnings (loss) before income tax (7,291) Income tax benefit -- Cumulative Effect of Change in Accounting Principles -- ---------- Net earnings (loss) $ (7,291) ==========
Note: The disclosure on page 1 is an integral part of these consolidated financial statements and schedules. Page 15 -----END PRIVACY-ENHANCED MESSAGE-----