EX-99.1 3 g75957ex99-1.txt PARTIAL MONTHLY OPERATING REPORT JANUARY 27, 2002 EXHIBIT 99.01 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 March 31, 2002 --------------------- COMES NOW, SERVICE MERCHANDISE COMPANY, INC. ---------------------------------- Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing February 25, 2002 and ending March 31, 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: April 22, 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID ----------------------------------------------------------------------------------------------------------------------------------- S. CUSANO CHAIRMAN OF THE BOARD $71,875.00 $46,414.70 $5,092.06 $25,460.30 C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, GENERAL COUNSEL AND SECRETARY $34,490.18 $20,945.68 $1,924.07 $ 9,222.82 MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $29,672.58 $17,627.38 $1,957.96 $ 7,988.10 JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION $14,532.75 $ 9,656.08 $ 790.85 $ 2,998.27 KIMBERLY B. SOUTHARD ASSISTANT VICE PRESIDENT, STRATEGIC PLANNING AND ASSISTANT TREASURER $11,076.70 $ 6,630.56 $ 790.30 $ 3,044.71
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 2. INSURANCE
DATE COVERAGE COVERAGE POLICY EXPIRATION PREMIUM PAID TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT 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 Included 12/31/02 WC Retro Pacific Employers Ins. Co. Statutory SCFC43031673 12/31/02 Included 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 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 12/31/02 $514,286 12/31/02 Federal Insurance Co $10 Million 81278902-A 12/31/02 $470,250 12/31/02 Royal Insurance Co $10 Million PSF000009 12/31/02 $470,250 12/31/02 Fiduciary National Union Fire Ins Co $5 Million 8726812 12/31/02 $28,423 12/31/02 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE HOME OFFICE $ 150 CORPORATE ACCOUNTS 15,273,701 CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) -- OTHER DEPOSITORY ACCOUNTS OTHER CASH ACCOUNTS 82,905 INVESTMENTS SHORT TERM INVESTMENTS 72,552,091 ------------ TOTAL CASH PER GENERAL LEDGER $ 87,908,847 ============
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
Actual Actual Actual Actual Actual Total Monday 02/25/02 03/04/02 03/11/02 03/18/02 03/25/02 02/25/02 Sunday 03/03/02 03/10/02 03/17/02 03/24/02 03/31/02 03/31/02 -------- -------- -------- -------- -------- -------- Receipts: Sales receipts/Profit Sharing $ -- $ -- $ 7,500 $ 6,000 $9,000 $ 22,500 Miscellaneous receipts 801 1,416 363 50,541 127 53,248 Expense reimbursements 8,843 8,947 16,634 4,521 -- 38,945 ------ -------- ------- ------- ------ -------- Total available collections 9,644 10,363 24,497 61,062 9,127 114,693 Disbursements: Merchandise disbursements 112 2 -- 13 -- 127 Non-merchandise disbursements 7,352 12,435 7,901 20,994 8,188 56,870 ------ -------- ------- ------- ------ -------- Total disbursements 7,464 12,437 7,901 21,007 8,188 56,997 ------ -------- ------- ------- ------ -------- Net receipts/(disbursements) $2,180 $ (2,074) $16,596 $40,055 $ 939 $ 57,696 ====== ======== ======= ======= ====== ========
Note: The disclosure on page 1 is an integral part of these consolidated financial statements and schedules. Page 5 CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al. CASE NUMBER: 399-02649 THROUGH 399-02680 PERIOD: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 ROLLING REVISED CASH FLOW (DOLLARS IN THOUSANDS)
Actual Actual 02/24/02 03/31/02 -------- -------- Ending total revolver balance $ -- $ -- Term loan -- -- Standby letters of credit 20,141 18,070 Trade letters of credit 9,610 -- -------- -------- Total extensions of credit 29,751 18,070 Borrowing base 122,940 183,934 -------- -------- Availability $ 93,189 $165,864 ======== ========
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 4. Payments to Professionals February 25, 2002 through March 31, 2002
Vendor # Vendor Name Check Amt. Check Date Check # ----------------------------------------------------------------------------------------------------------- 101993 Rothschild, Inc. $ 92,899.61 02/25/02 B0026890 99391 Otterbourg, Steindler, houston and Rosen, PC $ 72,037.93 02/25/02 B0026893 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 6,272.59 02/25/02 B0026894 27428 Sharretts, Paley, Carter and Blauvert, PC $ 3,926.59 02/26/02 50066050 99329 Aegis Property Tax Specialists $ 3,917.15 02/26/02 50066074 99329 Aegis Property Tax Specialists $ 11,052.98 02/26/02 50066075 99329 Aegis Property Tax Specialists $ 36,380.19 02/26/02 50066076 99459 Robert L. Berger and Associates $ 15,357.81 02/27/02 B0026927 95912 Kightlinger and Gray $ 805.10 02/28/02 50066142 96221 Holt and Babington $ 55.80 02/28/02 50066143 48779 Loss, Pavone and Orel $ 225.00 02/28/02 50066150 44013 McCarter and English $ 600.16 03/04/02 50066377 67017 Barkley and Thompson $ 5,000.00 03/05/02 50066409 44013 McCarter and English $ 145.50 03/12/02 50066786 48779 Loss, Pavone and Orel $ 1,438.50 03/12/02 50066787 86237 Brusniak, Clement, Harrison and McCool, PC $ 100.69 03/13/02 50066808 103608 Abacus Advisory and Consulting $341,075.38 03/14/02 50066862 71217 Bass, Berry and Sims $192,456.80 03/15/02 B0027006 99104 Jay Alix and Associates $ 22,996.95 03/15/02 B0027007 99444 Sitrick and Company, Inc. $ 93,630.34 03/15/02 B0027008 99459 Robert L. Berger and Associates $ 18,196.19 03/15/02 B0027014 95384 Deloitte and Touche, LLP $ 24,447.51 03/19/02 50067081 67017 Barkley and Thompson $ 2,332.14 03/19/02 50067094 44013 McCarter and English $ 1,046.74 03/20/02 50067112 44013 McCarter and English $ 684.00 03/22/02 50067226 101993 Rothschild, Inc. $ 60,000.00 03/22/02 B0027064 71217 Bass, Berry and Sims $101,583.33 03/22/02 B0027066 99104 Jay Alix and Associates $ 11,920.65 03/22/02 B0027067 99391 Otterbourg, Steindler, houston and Rosen, PC $ 76,746.22 03/22/02 B0027068 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 14,471.99 03/22/02 B0027069 98378 Skadden, Arps, Slate, Meagher and Flom $293,945.00 03/22/02 B0027075 67017 Barkley and Thompson $ 26.00 03/25/02 50067267 99391 Otterbourg, Steindler, houston and Rosen, PC $174,508.40 03/25/02 B0027041 99454 Harwell, Howard, Hyne, Gabbert and Manner, PC $ 22,379.40 03/25/02 B0027042 40443 Robert J. Bard, Esq. $ 3,500.00 03/27/02 50067520 44013 McCarter and English $ 1,396.86 03/29/02 50067621
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)
March 31, 2002 --------- ASSETS Current Assets: Cash and cash equivalents $ 87,909 Accounts receivable 95,650 Prepaid Expenses 6,275 --------- TOTAL CURRENT ASSETS 189,834 --------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 39,807 Other assets and deferred charges 9,640 --------- TOTAL ASSETS $ 239,281 ========= LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Accounts payable $ 38,698 Accrued expenses 76,659 State & Local tax 7,297 --------- TOTAL CURRENT LIABILITIES 122,654 ---------
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)
March 31, 2002 --------- Liabilities Subject To Compromise: Accrued restructuring costs 42,067 Long-term debt 314,562 Accounts payable 209,177 Accrued expenses 84,985 --------- Total Liabilities Subject To Compromise 650,791 TOTAL LIABILITIES 773,445 --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,936 Additional paid-in-capital 5,881 Deferred compensation (63) Retained (deficit) earnings (589,919) --------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (534,164) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 239,281 =========
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 SUMMARY OF ACCOUNTS RECEIVABLE MONTH ENDED: MARCH 31, 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 03/31/2002 FORM OPR-4
Total -------- Trade Accounts Payable (Merchandise) $ 38,698
Total -------- Expense & other payables $ 74,087
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: FEBRUARY 25, 2002 THROUGH MARCH 31, 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 (72) -------- SUBTOTAL $ 1,612 -------- Sales/use tax SUBTOTAL * Various Various $ 7,368 -------- Personal property tax * Various Various 1,296 Real estate taxes * Various Various 9,158 Inventory taxes * Various Various -- Gross receipts/bus licenses * Various Various (61) Franchise taxes * Various Various 814 -------- SUBTOTAL $ 11,207 -------- -------- TOTAL TAXES PAYABLE $ 20,187 ========
* 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: FEBRUARY 25, 2002 THROUGH MARCH 31, 2002 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (3/31/02 BALANCE) ------------------------------------------------------ POST PETITION SECURED DEBT Revolver borrowings 04/14/00 04/14/04 $ -- Facility standby letters of credit 04/14/00 04/14/04 18,070 Facility trade letters of credit 04/14/00 04/14/04 -- Term loans 04/14/00 04/14/04 -- -------- TOTAL EXTENSIONS OF CREDIT $ 18,070 ======== ACCRUED INTEREST PAYABLE $ 1,025 ========
Note: The disclosure on page 1 is an integral part of these consolidated financial statements and schedules. Page 13
February 25, 2002 through March 31, 2002 ----------------- Net Sales $ 24,200 Costs of merchandise sold and buying and occupancy expense/(reimbursement) (3,904) -------- Gross margin after cost of merchandise sold and buying and occupancy expenses/(reimbursement) 28,104 Selling, General and Administrative Expenses: Net Employment Expense 7,615 Net Advertising (7) Banking and Other Fees 128 Real Estate and Other Taxes 2,167 Supplies 11 Communication and Equipment 190 Travel 23 UCC and Other Services 215 Legal and Professional 63 Sales and Shipping 16 Insurance 884 Miscellaneous expense/(reimbursement) (5,398) Credit Card Services (48) -------- Total Selling, General and Administrative Expenses 5,859 Other expense/(income), net (149)
Note: The disclosure on page 1 is an integral part of these consolidated financial statements and schedules. Page 14 FORM OPR-1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (UNAUDITED) (DEBTOR-IN-POSSESSION) (IN THOUSANDS)
Activity February 25, 2002 through March 31, 2002 ----------------- Restructuring charge (credit) -- Depreciation and amortization -- -------- Earnings (loss) before interest, reorganization items, and income tax 22,394 Interest expense - debt 1,332 Interest expense - capitalized leases 229 -------- Earnings (loss) before reorganization items, and income tax 20,833 Reorganization Items: Legal and Professional 621 Miscellaneous (2) Loss (Gain) on Disposal of Assets 53,468 Close Store Charges 451 -------- Total Reorganization Items 54,538 Earnings (loss) before income tax (33,705) Income tax -- -------- Net earnings (loss) $(33,705) ========
Note: The disclosure on page 1 is an integral part of these consolidated financial statements and schedules. Page 15