EX-99 3 g78393exv99.txt PARTIAL MONTHLY OPERATING REPORT 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 August 25, 2002 -------------------------- COMES NOW, SERVICE MERCHANDISE COMPANY, INC. ------------------------------------------ Debtor-In-Possession, and hereby submits its Preliminary Monthly Operating Report for the period commencing July 29, 2002 and ending August 25, 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: September 17, 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: JULY 29,2002 THROUGH AUGUST 25, 2002 1. Payroll
WAGES TAXES OFFICERS TITLE GROSS NET DUE PAID ------------------------------------------------------------------------------------------------------------------------------------ C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER, $ 27,693.91 $ 19,023.59 $ 2,049.91 $ 6,369.05 GENERAL COUNSEL AND SECRETARY MICHAEL E. HOGREFE SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER $ 23,847.83 $ 16,586.80 $ 1,697.59 $ 5,312.08
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: JULY 29, 2002 THROUGH AUGUST 25, 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 $478,750 12/31/02 Royal Indemnity Co. 11.5 Million R2HD325112 12/31/02 $ 50,000 12/31/02 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 TN-Work Comp Assigned Rsk Continental Casualty Co Statutory 6S59UB878X943102 06/01/03 $ 3,989 06/01/03 Auto Pacific Employers Ins Co $ 1 Million ISAH07969661 12/31/02 $ 43,572 12/31/02 Umbrella Westchester Fire $25 Million CUA151233 06/30/03 $280,400 06/30/03 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 $ 29,839 12/31/02
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: JULY 29 THOUGH AUGUST 25, 2002 3. BANK ACCOUNTS TOTAL CASH AND CASH EQUIVALENTS CASH IN STORES AND HOME OFFICE - ------------------------------ CORPORATE ACCOUNTS 1,087,290 ------------------ CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 18,300 ------------------------------------------------------------------ OTHER DEPOSITORY ACCOUNTS ------------------------- OTHER CASH ACCOUNTS 10,913 INVESTMENTS ----------- SHORT TERM INVESTMENTS 93,041,959 TOTAL CASH PER GENERAL LEDGER 94,158,462 ============
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: JULY 29 THOUGH AUGUST 25, 2002 RECEIPTS AND DISBURSEMENTS (DOLLARS IN THOUSANDS)
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL Monday 07/29/02 08/05/02 08/12/02 08/19/02 07/29/02 Sunday 08/04/02 08/11/02 08/18/02 08/25/02 08/25/02 ------- ------- ------- ------- ------- Receipts: Sales receipts/Profit Sharing $ -- $ -- $ -- $ -- $ -- Miscellaneous receipts 734 1,253 463 174 2,624 Real Estate Proceeds/Settlement -- 494 -- -- 494 Expense reimbursements 2 -- -- 3 5 ------- ------- ------- ------- ------- Total available collections 736 1,747 463 177 3,123 Disbursements: All disbursements 2,356 2,324 1,708 2,028 8,416 ------- ------- ------- ------- ------- Total disbursements 2,356 2,324 1,708 2,028 8,416 ------- ------- ------- ------- ------- Net receipts/(disbursements) $(1,620) $ (577) $(1,245) $(1,851) $(5,293) ======= ======= ======= ======= =======
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: JULY 29 THOUGH AUGUST 25, 2002 ROLLING REVISED CASH FLOW FORECAST (DOLLARS IN THOUSANDS)
Actual 08/25/02 -------- Ending total revolver balance $ -- Term loan -- Standby letters of credit 8,027 Trade letters of credit -- ------ Total extensions of credit 8,027 Borrowing base -- ------ Availability $ -- ======
(1) As of 4/16/02, The Standby Letters of Credit were fully cash collateralized 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: July 29, 2002 THROUGH August 25, 2002 4. Payments to Professionals July 29, 2002 through August 25, 2002
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK # ------------------------------------------------------------------------------------------------------------------- 99329 Aegis Property Tax Specialists $ 2,250.00 07/30/02 50071968 48779 Loss, Pavone and Orel $ 545.00 08/02/02 50072068 103608 Abacus Advisory and Consulting $ 400,000.00 08/09/02 50072170 57117 Deloitte and Touche $ 22,950.00 08/09/02 50072171 57117 Deloitte and Touche $ 5,000.00 08/09/02 50072172 86237 Brusniak, Clement, Harrison and McCool, PC $ 285.00 08/12/02 50072187 95384 Deloitte and Touche, LLP $ 4,211.00 08/13/02 50072199 44013 McCarter and English $ 5,295.15 08/15/02 50072276 103439 Ernst and Young Corporate Finance $ 36,668.00 08/15/02 B0027397 71217 Bass, Berry and Sims $ 138,036.84 08/15/02 B0027398 101730 CBIZ Property Tax Solutions $ 12,000.00 08/16/02 50072301 99459 Robert L. Berger and Associates $ 10,639.21 08/16/02 B0027405 67017 Barkley and Thompson $ 119.79 08/19/02 50072320 71403 Seyfarth, Shaw, Fairweather and Geraldson $ 165.00 08/22/02 50072416 44013 McCarter and English $ 52.49 08/22/02 50072435 48779 Loss, Pavone and Orel $ 1,446.50 08/22/02 50072436 99391 Otterbourg, Steindler, Houston and Rosen, PC $ 34,578.02 08/23/02 B0027400 98378 Skadden, Arps, Slate, Meagher and Flom $ 208,268.00 08/23/02 B0027401 99454 Harwell, Howard, Hynem Gabbert and Manner, PC $ 11,433.39 08/23/02 B0027402
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)
AUGUST 25, 2002 ---------- ASSETS Current Assets: Cash and cash equivalents $ 94,158 Accounts receivable 13,681 Prepaid Expenses 409 -------- TOTAL CURRENT ASSETS 108,248 -------- PROPERTY AND EQUIPMENT Owned assets, net of accumulated depreciation 36,924 Other assets and deferred charges 19,788 -------- TOTAL ASSETS $164,960 ======== LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY Liabilities Not Subject To Compromise Current Liabilities: Accounts payable $ 13,226 Accrued expenses 36,777 State & Local tax 454 -------- TOTAL CURRENT LIABILITIES 50,457 --------
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) Long -Term Liabilities: Liabilities Subject To Compromise: Accrued restructuring costs 42,066 Long-term debt 314,562 Accounts payable 218,973 Accrued expenses 103,464 --------- Total Liabilities Subject To Compromise 679,065 TOTAL LIABILITIES 729,522 --------- COMMITMENTS AND CONTINGENCIES SHAREHOLDERS' (DEFICIT) EQUITY Common stock 49,936 Additional paid-in-capital 5,881 Retained (deficit) earnings (620,379) --------- TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (564,562) TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 164,960 =========
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: JULY 29, 2002 THROUGH AUGUST 25, 2002 SUMMARY OF ACCOUNTS RECEIVABLE MONTH ENDED: AUGUST 25, 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: July 29, 2002 THROUGH August 25, 2002 SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE Month Ended: 08/25/2002 FORM OPR-4
Total ---------------- Trade Accounts Payable (Merchandise) $ 13,226
Total ---------------- Expense & other payables * $ 36,777
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: JULY 29, 2002 THROUGH AUGUST 25 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 $ (1,925) State income tax Various Various $ (118) -------- SUBTOTAL $ (2,043) -------- Sales/use tax SUBTOTAL * Various Various $ 560 -------- Personal property tax * Various Various $ 716 Real estate taxes * Various Various $ 6,049 Inventory taxes * Various Various $ -- Gross receipts/bus licenses * Various Various $ 4 Franchise taxes * Various Various $ 676 -------- SUBTOTAL $ 7,445 -------- -------- TOTAL TAXES PAYABLE $ 5,962 ========
* 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: JULY 29 THOUGH AUGUST 25, 2002 SCHEDULE OF POST PETITION LIABILITIES FORM OPR-4 (DOLLARS IN THOUSANDS)
DATE TOTAL DUE INCURRED DATE DUE (8/25/02 BALANCE) ----------------------------------------- POST PETITION SECURED DEBT Revolver borrowings 04/14/00 NA $ -- Facility standby letters of credit 04/14/00 NA 8,027 Facility trade letters of credit 04/14/00 NA -- Term loans 04/14/00 NA -- -------- TOTAL EXTENSIONS OF CREDIT $ 8,027 ======== ACCRUED INTEREST PAYABLE $ -- ========
As of 4/16/02, The Standby Letters of Credit were fully cash collateralized 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 JULY 29, 2002 THROUGH AUGUST 25, 2002 --------------- Net Sales $ 57 Costs of merchandise sold and buying and occupancy expense 170 ------- Gross margin after cost of merchandise sold and buying and occupancy exp (113) Selling, General and Administrative Expenses: Net Employment Expense 297 Net Advertising (13) Banking and Other Fees (125) Real Estate and Other Taxes 599 Supplies 6 Communication and Equipment 70 Travel 2 UCC and Other Services 1 Legal and Professional 52 Sales and Shipping -- Insurance 3 Miscellaneous (10) Credit Card Services -- ------- Total Selling, General and Administrative Expenses 882 Other expense/(income), net (8)
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) Restructuring charge (credit) -- Depreciation and amortization -- ------- Earnings (loss) before interest, reorganization items, and income tax (987) Interest expense - debt (204) Interest expense - capitalized leases -- ------- Earnings (loss) before reorganization items, and income tax (783) Reorganization Items: Legal and Professional 752 Miscellaneous (348) Loss (Gain) on Disposal of Assets -- Close Store Charges 1,587 ------- Total Reorganization Items 1,991 Earnings (loss) before income tax (2,774) Income tax benefit 3,597 Cumulative Effect of Change in Accounting Principles -- ------- Net earnings (loss) $ 823 =======
NOTE: THE DISCLOSURE ON PAGE 1 IS AN INTEGRAL PART OF THESE CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULES. Page 15