<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
Pursuant to Section 15(d) of the
Securities and Exchange Act of 1934
For the Plan Year Ended December 31, 1995
Commission File Number: 1-9223
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
SERVICE MERCHANDISE COMPANY, INC.
P.O. Box 24600, Nashville, Tennessee 37202-4600
(mailing address)
7100 Service Merchandise Drive, Brentwood, Tennessee 37027
(address of principal executive office)
<PAGE> 2
<TABLE>
Financial Statements and Schedules
<CAPTION>
Description Page
- ----------- ----
<S> <C>
Financial Statements:
Independent Auditors' Report . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Statements of Net Assets Available for Plan Benefits as of
December 31, 1995 and December 31, 1994 . . . . . . . . . . . . . . . . . . . . 4
Statements of Changes in Net Assets Available for Plan Benefits for the
Plan Years Ended December 31, 1995 and December 31, 1994 . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 6-15
Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Supplemental Schedules:
Schedule I - Line 27a--Schedule of Assets Held for Investment
Purposes as of December 31, 1995 . . . . . . . . . . . . . . . . . . . . . . . . 17
Schedule II - Line 27d--Schedule of Reportable Transactions for the
Plan Year Ended December 31, 1995. . . . . . . . . . . . . . . . . . . . . . . . 18
Consent:
Independent Auditors' Consent (Exhibit 23). . . . . . . . . . . . . . . . . . . . 19
NOTE: Other schedules not included have been omitted as they are not applicable.
</TABLE>
<PAGE> 3
DELOITTE & TOUCHE LLP
- --------------------- --------------------------------------------------
Suite 2400 Telephone (615) 259-1800
424 Church Street Facsimile (615) 259-1857
Sun Trust Center
Nashville, Tennessee 37219-2396
INDEPENDENT AUDITORS' REPORT
Employee Benefits Committee
Service Merchandise Company, Inc.
Savings and Investment Plan
Nashville, Tennessee
We have audited the accompanying statements of net assets available for Plan
benefits of the Service Merchandise Company, Inc. Savings and Investment Plan
as of December 31, 1995 and 1994, and the related statement of changes in
net assets available for Plan benefits for the years then ended. These
financial statements are the responsibility of the Plan's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for Plan benefits of the
Service Merchandise Company, Inc. Savings and Investment Plan as of December
31, 1995 and 1994 and the changes in its net assets available for Plan
benefits for the years then ended, in conformity with generally accepted
accounting principles.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental schedules of (1)
assets held for investment purposes and (2) reportable transactions are
presented for the purpose of additional analysis and are not a required part
of the basic financial statements but are supplementary information required
by the Department of Labor's Rules and Regulations for Reporting and Disclosure
under the Employee Retirement Income Security Act of 1974. The supplemental
schedules, which are the responsibility of the Plan's management, have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are fairly stated in all material
respects when considered in relation to the basic financial statements taken
as a whole.
/s/ Deloitte & Touche LLP
June 10, 1996
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
<PAGE> 4
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
<CAPTION>
December 31,
---------------------------------------
1995 1994
----------------- -----------------
<S> <C> <C>
Assets:
Investments - current value
(cost: $70,892,072 and $67,314,604, respectively) $69,898,133 $59,738,992
Receivables:
Loans to participants 4,567,525 4,409,231
Employee contributions 176,628 179,194
Employer contributions 41,397 68,960
Dividends and interest 6,768 5,793
----------------- -----------------
Total assets 74,690,451 64,402,170
----------------- -----------------
Liabilities:
Payable to Plan participants 237,914 241,962
----------------- -----------------
Total liabilities 237,914 241,962
----------------- -----------------
Net assets available for Plan benefits $74,452,537 $64,160,208
================= =================
See Notes to Financial Statements.
</TABLE>
4
<PAGE>
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR PLAN BENEFITS
<CAPTION>
December 31,
---------------------------------------
1995 1994
------------------ -----------------
<S> <C> <C>
Net assets available for Plan benefits, beginning of year $64,160,208 $70,044,328
------------------ -----------------
Additions:
Employee contributions 9,137,087 9,408,232
Employer contributions 2,098,312 3,657,306
Dividends and interest income 3,594,163 3,205,407
Net appreciation (depreciation) in investments 6,035,467 (13,755,377)
------------------ -----------------
Total additions 20,865,029 2,515,568
------------------ -----------------
Deductions:
Payments to Plan participants 10,572,700 8,399,688
------------------ -----------------
Total deductions 10,572,700 8,399,688
------------------ -----------------
Net additions (deductions) 10,292,329 (5,884,120)
------------------ -----------------
Net assets available for Plan benefits, end of year 74,452,537 $64,160,208
================== =================
See Notes to Financial Statements.
</TABLE>
5
<PAGE> 6
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 1: Description of Plan
The Service Merchandise Company, Inc. Savings and Investment Plan (the
"Plan") is a qualified defined contribution plan, under Section 401(a) and
401(k) of the Internal Revenue Code, covering eligible associates of
Service Merchandise Company, Inc. (the "Company"). The Plan was created on
July 1, 1983 and amended and restated February 6, 1991, effective January
1, 1989. The Plan is subject to the provisions of the Employee Retirement
Income Security Act of 1974 ("ERISA"), as amended.
The following brief description of the Plan is intended to give a general
summary of its principal provisions. Participants should refer to the Plan
agreement for more complete information.
Eligibility
All associates are eligible upon completing one year of qualified service,
as defined in the Plan agreement, and reaching a minimum age of 21.
Contributions
Associates may contribute through salary deferral from 1% to 15% of their
annual salary, up to a maximum allowed by law. The Plan provides for a
matching contribution to be made by the Company based on the ratio of "net
profit," as defined, to net sales of the Company for the fiscal year
corresponding with the previous Plan year. "Net profit" is defined as the
Company's net profit 1) excluding any additional interest and expenses
attributable to the Company's 1989 recapitalization and 2) excluding the
provision for income taxes and any extraordinary items.
Net Profit as a Percentage of Company
Sales for Fiscal Year Corresponding Employer Match
with Previous Plan Year Percentage
----------------------------------------- ---------------------------
0% 0%
Greater than 0% but less than 1% 10%
1% or more but less than 2% 20%
2% or more but less than 3% 30%
3% or more but less than 4% 40%
4% or more 50%
The Company's maximum matching contribution is limited to the first 6% of a
participant's compensation, as defined in the Plan. In accordance with the
aforementioned calculation, the Company's matching contribution was 30% and
50%, respectively, for the 1995 and 1994 Plan years.
6
<PAGE> 7
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
Vesting
Participants are immediately 100% vested in all associate and Company
contributions.
Participant Accounts
Each participant's account is credited with the participant's contribution
and Company's matching contribution. Plan earnings are allocated based on
the participant's pro-rata share of each investment fund.
Investment Options
Under the Plan, participants have a variety of investment options
available. Except for the Service Merchandise Company, Inc. Common Stock
Fund, the funds are proprietary products of T. Rowe Price, the investment
manager and Plan trustee.
Participants may invest their account, in minimum whole increments of 1%,
in any of the following investment options:
Service Merchandise Company, Inc. Common Stock Fund: consists exclusively
of the Company's registered common stock.
New Income Fund: consists primarily of income-producing investment-grade
debt securities.
U.S. Treasury Fund: consists exclusively of short-term U.S.
government-backed securities, primarily U.S. Treasuries.
Equity Income Fund: consists primarily of dividend-paying common stocks,
with emphasis on established companies, with prospects for both increasing
dividends and capital appreciation.
Capital Appreciation Fund: consists of investments in common stocks
believed by T. Rowe Price to be undervalued in relation to various
measures, such as assets or earnings, and also investments in fixed income
and other securities.
Spectrum Growth Fund: consists of investments in primarily T. Rowe Price
domestic stock funds and also in a T. Rowe Price foreign stock fund.
Balanced Fund: consists of a diversified portfolio consisting of
approximately 60% in common stocks and the balance in fixed income
securities and cash reserves.
7
<PAGE> 8
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
Earnings from the funds, consisting primarily of interest and dividends, are
automatically reinvested in their respective fund.
At December 31, 1995, there were a total of 6,739 participants in the Plan.
Employee participation, by fund, at December 31, 1995 was as follows:
Service Merchandise Company, Inc.
Common Stock Fund 3,576
New Income Fund 2,400
U.S. Treasury Fund 3,334
Equity Income Fund 2,670
Capital Appreciation Fund 1,352
Spectrum Growth Fund 1,496
Balanced Fund 1,156
Payment of Benefits
Upon termination of employment prior to retirement, all participant balances
less than $3,500 are distributed in a lump-sum amount. Balances $3,500 and
above may, at the participant's option, be distributed in a lump-sum or held
until retirement. As of December 31, 1995 and 1994, net assets available for
benefits included $997,089 and $1,293,467, respectively, due to participants
who have withdrawn from participation in the Plan.
Upon becoming permanently and totally disabled or upon normal retirement, the
participant has the option of receiving his or her balance as a lump-sum, in
installments, or as a combination.
Distributions upon the death of a participant are paid in a lump-sum amount.
Tax Effect on Participants
Participants' contributions, subject to certain regulatory maximums, are in tax
deferred dollars. Company matching contributions and investment earnings
allocated to participants' accounts are not taxable to the participant until the
amounts are distributed from the Plan.
8
<PAGE> 9
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 2: Summary of Accounting Policies
Method of Accounting
The Plan's financial statements are prepared on the accrual basis of
accounting.
Investments
Investments are valued based on quoted market prices as of the last
business day of the Plan year.
Net Appreciation (Depreciation) on Investments
Net appreciation (depreciation) on investments includes both realized and
unrealized appreciation (depreciation). The net appreciation
(depreciation) for the Plan year ended December 31, 1995 was $6,035,467 as
compared to ($13,755,377) for the year ended December 31, 1994. In
addition to the overall stock market decline, the significant net
depreciation for the year ended 1994 was primarily related to the net
depreciation in the Service Merchandise Company, Inc. Common Stock Fund as
the market price decreased to $4.75 at December 31, 1994 from $10.00 at
December 31, 1993.
NOTE 3: Share or Unit Values
Units of each investment fund are allocated daily based on changes in
market valuation and participant contributions; Company contributions are
allocated quarterly. The market value, per share or unit, by fund was as
follows:
<TABLE>
<CAPTION>
Fund December 31, 1994 March 31, 1995 June 30, 1995 September 30,1995 December 31, 1995
- ------------------- ----------------- ------------------ ---------------- ------------------ ------------------
Shares Shares Shares Shares Shares
or Market or Market or Market or Market or Market
Units Value Units Value Units Value Units Value Units Value
--------- ------ --------- ------- --------- ------- --------- -------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Service Merchandise
Company, Inc.
Common Stock Fund 2,591,211 $4.75 2,736,192 $5.00 2,837,821 $4.91 2,796,855 $7.12 2,736,140 $4.88
New Income Fund 1,263,569 $8.39 1,271,857 $8.64 1,264,049 $8.99 1,256,359 $9.02 1,257,930 $9.28
U. S. Treasury Fund 17,211,268 $1.00 17,386,155 $1.00 17,127,641 $1.00 17,221,910 $1.00 16,999,699 $1.00
Equity Income Fund 718,706 $15.98 720,667 $16.98 739,441 $17.96 747,761 $19.12 790,898 $20.01
Capital
Appreciation Fund 240,636 $12.10 252,161 $12.85 262,312 $13.67 259,008 $14.38 289,642 $13.67
Spectrum Growth
Fund 273,875 $11.13 275,447 $11.85 280,766 $12.71 305,489 $13.77 362,269 $13.49
Balanced Fund 188,100 $11.14 199,572 $11.66 208,369 $12.37 222,146 $12.85 241,117 $13.22
</TABLE>
9
<PAGE> 10
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 4: Investments
The following table presents the fair values, as determined by quoted market
prices as of the last day of the Plan year, of the Plan's investments.
<TABLE>
<CAPTION>
December 31, December 31,
1995 1994
------------------------------------------------ ----------------------------------------------
Number of Number of
Shares or Shares or
Units Units
of Current of Current
Description Participation Cost Value Participation Cost Value
- --------------------------------- -------------------------------------------- ---------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Service Merchandise Company, Inc.
Common Stock Fund 2,736,140 18,504,038 13,338,683 2,591,211 $18,979,124 $12,308,252
Service Merchandise Company, Inc.
Common Stock - Cash - 26,316 26,316 - 77,852 77,852
New Income Fund 1,257,930 11,213,877 11,673,588 1,263,569 11,268,568 10,601,342
U.S. Treasury Fund 16,999,699 16,999,699 16,999,699 17,211,268 17,211,268 17,211,268
Equity Income Fund 790,898 13,143,271 15,825,861 718,706 11,452,160 11,484,918
Capital Appreciation Fund 289,642 3,707,476 3,959,405 240,636 2,975,182 2,911,694
Spectrum Growth Fund 362,269 4,449,483 4,887,011 273,875 3,199,227 3,048,228
Balanced Fund 241,117 2,847,912 3,187,570 188,100 2,151,223 2,095,438
------------ ------------ ------------ ------------
Total Investments $70,892,072 $69,898,133 $67,314,604 $59,738,992
============ ============ ============ ============
</TABLE>
The allocation by investment fund, of net assets available for benefits as of
December 31, 1995 and 1994 and changes in net assets available for benefits for
the years ended December 31, 1995 and 1994 are as follows on pages 11 through
14:
10
<PAGE> 11
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
TO INVESTMENT PROGRAMS
FOR THE PLAN YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Service
Merchandise
Company, Inc. New U.S. Equity Capital Spectrum Participant
Common Income Treasury Income Appreciation Growth Balanced Loan
Stock Fund Fund Fund Fund Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
current value $13,364,999 $11,673,588 $16,999,699 $15,825,861 $3,959,405 $4,887,011 $3,187,570 - $69,898,133
Receivables:
Loans to participants 7,968 4,958 10,680 6,688 1,515 2,352 1,149 $4,532,215 4,567,525
Employee contributions 39,818 22,153 37,016 33,314 15,132 17,884 11,311 - 176,628
Employer contributions 8,653 5,287 8,541 8,316 3,476 4,418 2,706 - 41,397
Dividends and interest 1,461 960 1,932 1,403 311 493 208 - 6,768
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total assets 13,422,899 11,706,946 17,057,868 15,875,582 3,979,839 4,912,158 3,202,944 4,532,215 74,690,451
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Liabilities:
Payable to Plan
participants 61,232 32,507 21,000 71,083 13,488 21,130 17,474 - 237,914
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total liabilities 61,232 32,507 21,000 71,083 13,488 21,130 17,474 - 237,914
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Net assets available
for Plan Benefits $13,361,667 $11,674,439 $17,036,868 $15,804,499 $3,966,351 $4,891,028 $3,185,470 $4,532,215 $74,452,537
=========== =========== =========== =========== ========== ========== ========== ========== ===========
</TABLE>
11
<PAGE> 12
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
ALLOCATION OF NET ASSETS AVAILABLE FOR PLAN BENEFITS
TO INVESTMENT PROGRAMS
FOR THE PLAN YEAR ENDED DECEMBER 31, 1994
<CAPTION>
Service
Merchandise
Company, Inc. New U.S. Equity Capital Spectrum Participant
Common Income Treasury Income Appreciation Growth Balanced Loan
Stock Fund Fund Fund Fund Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Assets:
Investments -
current value $12,386,104 $10,601,342 $17,211,268 $11,484,918 $2,911,694 $3,048,228 $2,095,438 - $59,738,992
Receivables:
Loans to participants 9,082 5,691 11,251 5,621 1,225 1,612 1,056 $4,373,693 4,409,231
Employee contributions 45,638 25,036 42,449 29,659 12,931 13,853 9,628 - 179,194
Employer contributions 17,477 9,665 16,642 11,313 4,893 5,243 3,727 - 68,960
Dividends and interest 1,585 944 1,739 910 186 267 162 - 5,793
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total assets 12,459,886 10,642,678 17,283,349 11,532,421 2,930,929 3,069,203 2,110,011 4,373,693 64,402,170
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Liabilities:
Payable to Plan
participants 50,559 42,775 43,479 59,729 16,843 12,228 16,349 - 241,962
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total liabilities 50,559 42,775 43,479 59,729 16,843 12,228 16,349 - 241,962
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Net assets available ----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
for Plan benefits $12,409,327 $10,599,903 $17,239,870 $11,472,692 $2,914,086 $3,056,975 $2,093,662 $4,373,693 $64,160,208
=========== =========== =========== =========== ========== ========== ========== ========== ===========
</TABLE>
12
<PAGE> 13
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS TO INVESTMENT PROGRAMS
FOR THE PLAN YEAR ENDED DECEMBER 31, 1995
<CAPTION>
Service
Merchandise
Company, Inc. New U.S. Equity Capital Spectrum Participant
Common Income Treasury Income Appreciation Growth Balanced Loan
Stock Fund Fund Fund Fund Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ---------- ---------- --------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets
available for
Plan benefits,
beginning of year $12,409,327 $10,599,903 $17,239,870 $11,472,692 $2,914,086 $3,056,975 $2,093,662 $4,373,693 64,160,208
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Additions:
Employee
contributions 2,188,714 1,210,578 2,078,612 1,588,998 732,204 789,862 548,119 - 9,137,087
Employer
contributions 506,429 284,548 487,564 361,216 158,324 177,473 122,758 - 2,098,312
Dividends and
interest income 76,516 807,283 967,705 935,756 322,068 339,273 145,562 - 3,594,163
Net appreciation
in investments 503,060 1,121,382 - 2,954,390 387,855 640,364 428,416 - 6,035,467
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total additions 3,274,719 3,423,791 3,533,881 5,840,360 1,600,451 1,946,972 1,244,855 - 20,865,029
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Deductions:
Payments to Plan
participants 1,720,088 1,784,617 2,908,743 2,114,904 659,517 536,358 281,295 567,178 10,572,700
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total deductions 1,720,088 1,784,617 2,908,743 2,114,904 659,517 536,358 281,295 567,178 10,572,700
Net transfer
between funds (145,818) (190,697) 146,961 1,237,808 229,103 579,389 228,373 (2,085,119) -
Participant loans
processed (456,473) (373,941) (975,101) (631,457) (117,772) (155,950) (100,125) 2,810,819 -
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Net additions
(deductions) 952,340 1,074,536 (203,002) 4,331,807 1,052,265 1,834,053 1,091,808 158,522 10,292,329
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Net assets
available for
Plan benefits,
end of year $13,361,667 $11,674,439 $17,036,868 $15,804,499 $3,966,351 $4,891,028 $3,185,470 $4,532,215 $74,452,537
=========== =========== =========== =========== ========== ========== ========== ========== ===========
</TABLE>
13
<PAGE> 14
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
ALLOCATION OF CHANGES IN NET ASSETS AVAILABLE
FOR PLAN BENEFITS TO INVESTMENT PROGRAMS
FOR THE PLAN YEAR ENDED DECEMBER 31, 1994
<CAPTION>
Service
Merchandise
Company, Inc. New U.S. Equity Capital Spectrum Participant
Common Income Treasury Income Appreciation Growth Balanced Loan
Stock Fund Fund Fund Fund Fund Fund Fund Fund Total
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net assets
available for
Plan benefits,
beginning of year $20,428,240 $11,970,534 $16,116,595 $11,399,028 $2,094,019 $1,784,106 $1,734,577 $4,517,229 $70,044,328
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Additions:
Employee
contributions 2,448,197 1,392,561 2,243,375 1,582,592 623,104 639,195 479,208 - 9,408,232
Employer
contributions 954,490 549,240 899,614 599,794 226,833 243,302 184,033 - 3,657,306
Dividends and
interest income 89,619 871,659 658,466 997,708 236,038 235,780 116,137 - 3,205,407
Net depreciation
in investments (11,717,746) (1,088,224) - (455,765) (144,063) (208,432) (141,147) - (13,755,377)
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total additions (8,225,440) 1,725,236 3,801,455 2,724,329 941,912 909,845 638,231 - 2,515,568
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Deductions:
Payments to
Plan participants 1,415,147 1,232,373 2,228,621 1,939,428 387,064 505,294 199,512 492,249 8,399,688
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Total deductions 1,415,147 1,232,373 2,228,621 1,939,428 387,064 505,294 199,512 492,249 8,399,688
Net transfer
between funds 2,047,755 (1,355,814) 387,427 (324,390) 344,132 979,531 32,667 (2,111,308) -
Participant loans
processed (426,081) (507,680) (836,986) (386,847) (78,913) (111,213) (112,301) 2,460,021 -
----------- ----------- ----------- ----------- ---------- ---------- ---------- --------- -----------
Net additions
(deductions) (8,018,913) (1,370,631) 1,123,275 73,664 820,067 1,272,869 359,085 (143,536) (5,884,120)
----------- ----------- ----------- ----------- ---------- ---------- ---------- ---------- -----------
Net assets
available for
Plan benefits,
end of year $12,409,327 $10,599,903 $17,239,870 $11,472,692 $2,914,086 $3,056,975 $2,093,662 $4,373,693 $64,160,208
=========== =========== =========== =========== ========== ========== ========== ========== ===========
</TABLE>
14
<PAGE> 15
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
PLAN YEARS ENDED DECEMBER 31, 1995 AND 1994
NOTE 5: Loans to Participants
Participants may borrow from their account subject to certain restrictions
and limitations. Outstanding loans cannot exceed 50% of the participant's
account balance and are subject to a maximum of $50,000 and a minimum of
$1,000. The Plan requires the trustee to establish the interest rate on the
date of loan origination which is comparable to the interest rate charged
by lending institutions for loans made under similiar circumstances.
Currently, loans bear interest at 1% over the prime rate in effect. Loan
repayment periods generally range from one to five years. At December 31,
1995, 2,002 participants had loans outstanding from the Plan.
NOTE 6: Administration of the Plan
The Plan is administered by the Employee Benefit Plan Committee appointed
by the Company's Board of Directors. T. Rowe Price of Baltimore, Maryland
serves as trustee and investment manager. Currently, trustee fees are paid
directly by the Company.
NOTE 7: Plan Termination
Although it has not expressed any intent to do so, the Company has the
right under the Plan to discontinue its contributions at any time and to
terminate the Plan subject to the provisions of ERISA. In the event of Plan
termination, Plan assets will be distributed, if permissible, or
transferred for the benefit of participants in relation to their vested
account balances.
NOTE 8: Tax Status
The Plan has received a determination letter indicating it is qualified
under Section 401(a) and meets the additional requirements of Section
401(k) of the Internal Revenue Code. The Plan is exempt from federal income
tax under Section 501(a) of the Internal Revenue Code.
In March 1995, the Plan applied for a determination letter with regard to
the Plan Amendment and Restatement and anticipates a favorable ruling on
its application.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Committee has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
June 20,1996 By: /s/ Robert C. Eimers
-------------------------------
Robert C. Eimers
Committee Chairman
June 20,1996 By: /s/ Glen A. Bodzy
-------------------------------
Glen A. Bodzy
Committee Member
June 20,1996 By: /s/ S. Cusano
-------------------------------
S. Cusano
Committee Member
June 20,1996 By: /s/ Gary M. Witkin
-------------------------------
Gary M. Witkin
Committee Member
June 20,1996 By: /s/ Raymond Zimmerman
-------------------------------
Raymond Zimmerman
Committee Member
16
<PAGE> 17
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
SCHEDULE I - LINE 27a --
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1995
<CAPTION>
(a) (b) (c) (d) (e)
Description of investment
Identity of issue, borrower, including maturity date, rate of interest, Current
lessor, of similiar party collateral, par or maturity value Cost Value
---- --------------------------------- ------------------------------------------ ------------- ---------------
<S> <C> <C> <C> <C>
* Service Merchandise Company, Inc. Common Stock 18,504,038 13,338,683
* Service Merchandise Company, Inc. Cash - common stock purchase, not settled 26,316 26,316
* T. Rowe Price New Income Fund 11,213,877 11,673,588
* T. Rowe Price U.S. Treasury Fund 16,999,699 16,999,699
* T. Rowe Price Equity Income Fund 13,143,271 15,825,861
* T. Rowe Price Capital Appreciation Fund 3,707,476 3,959,405
* T. Rowe Price Spectrum Growth Fund 4,449,483 4,887,011
* T. Rowe Price Balanced Fund 2,847,912 3,187,570
------------- ---------------
Total investments $70,892,072 $69,898,133
============= ===============
Loans to Participants Interest rate: High: 12.5 % Low: 7.0 % $ 4,567,525
===============
</TABLE>
17
<PAGE> 18
<TABLE>
SERVICE MERCHANDISE COMPANY, INC.
SAVINGS AND INVESTMENT PLAN
SCHEDULE II - LINE 27d
SCHEDULE OF REPORTABLE TRANSACTIONS
For The Plan Year Ended December 31, 1995
<CAPTION>
(a) (b) (c) (d) (e) (f) (g) (h) (i)
Description of
asset (include Current
interest rate Expense value of
and maturity incurred asset on
Identity of party in case Purchase Selling Lease with Cost of transaction Net
involved of a loan) Price Price rental transaction Asset date Gain/(Loss)
- ----------------------- -------------------- ------------ ----------- ------- ----------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Individual transactions
None applicable.
Series of transactions
Service Merchandise
Company, Inc. Common Stock $3,821,968 - - - $3,821,968 $3,864,408 ($42,440)
Service Merchandise
Company, Inc. Common Stock - $3,331,912 - - 4,168,054 3,331,912 (836,142)
T. Rowe Price New Income Fund 2,257,238 - - - 2,257,238 2,258,662 (1,424)
T. Rowe Price New Income Fund - 2,307,799 - - 2,311,481 2,307,799 (3,682)
T. Rowe Price U. S. Treasury Fund 3,963,145 - - - 3,963,145 3,963,145 -
T. Rowe Price U. S. Treasury Fund - 4,174,714 - - 4,174,714 4,174,714 -
T. Rowe Price Equity Income Fund 3,592,791 - - - 3,592,791 3,584,773 8,018
T. Rowe Price Equity Income Fund - 2,198,217 - - 1,943,410 2,198,217 254,807
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
18
DELOITTE & TOUCHE LLP Suite 2400 Telephone: (615) 259-1800
424 Church Street Facsimile: (615) 259-1857
Sun Trust Center
Nashville, Tennessee 37219-2396
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Registration Statement
No. 33-50185 of Service Merchandise Company, Inc. on Form S-8 of our
report dated June 10, 1996, appearing in this Annual Report on Form 11-K
of the Service Merchandise Company, Inc. Savings and Investment Plan for
the year ended December 31, 1995.
/s/ DELOITTE & TOUCHE LLP
- -------------------------
DELOITTE & TOUCHE LLP
June 26, 1996
- ---------------
Deloitte Touche
Tohmatsu
International
- ---------------
