<PAGE> 1
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: July 26, 1999
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 (Commission File Number) (I.R.S. Employer
of incorporation) 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)
<PAGE> 2
Item 5. Other Events
Service Merchandise Company, Inc. (the "Company") has filed its monthly
operating report for the period commencing May 31, 1999 and ending July 4, 1999
(the "Operating Report") with the United States Bankruptcy Court for the Middle
District of Tennessee, a copy of which is attached hereto as Exhibit 99, 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.
The Company cautions investors or potential investors not to place
undue reliance upon the information contained therein. The Operating Report
contains unaudited information, and is in a format, prescribed by the applicable
bankruptcy laws. There can be no assurance that, from the prospective of an
investor or potential investor in the Company's securities, the Operating Report
is complete. The Operating Report also contains information for periods which
may be shorter or otherwise different from those contained in the Company's
reports pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Such information may not be indicative of the Company's
financial condition or operating results for the periods reflected in the
Company's financial statements or in its reports pursuant to the Exchange Act
and investors and potential investors in the Company's securities are cautioned
to refer to the Exchange Act filings. Moreover, the Operating Report and other
communications from the Company may include forward-looking statements subject
to various assumptions regarding the Company's operating performance that may
not be realized and subject to significant business, economic and competitive
uncertainties and contingencies, including those described in this report, many
of which are beyond the Company's control. Consequently such matters should not
be regarded as a representation or warranty by the Company that such matters
will be realized or are indicative of the Company's financial condition or
operating results for future periods or the periods covered in the Company's
reports pursuant to the Exchange Act. Actual results for such periods may differ
materially from the information contained in the Operating Report and the
Company undertakes no obligation to update or revise such Operating Report.
The Operating Report includes a Rolling Revised Cash Flow Forecast
which is a forward-looking statement subject to various assumptions regarding
the Company's business, operating performance and other factors including
revenues, expenses, asset dispositions, trade terms and capital expenditures,
and various risks and uncertainties including those set forth below. This
information should be read in conjunction with the Company's reports filed
pursuant to the Exchange Act. Investors and potential investors in the Company's
securities are cautioned that such information is being reported publicly
because it is being distributed to a large number of the Company's vendors for
purposes of their credit analyses. The Company undertakes no obligation to
update such information or to disclose similar information in future Operating
Reports. The Rolling Revised Cash Flow Forecast was not examined, reviewed or
compiled by the Company's independent public accountants. The Rolling Revised
Cash Flow Forecast is subject to future adjustments, if any, that could
materially affect such information.
2
<PAGE> 3
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: the ability of the Company to continue as a going concern;
the ability of the Company to operate pursuant to the terms of the DIP Facility;
the ability of the Company to operate successfully under a Chapter 11
proceeding; approval of plans and activities by the Bankruptcy Court; risks
associated with operating a business in Chapter 11; the ability of the Company
to create and have approved a reorganization plan in the Chapter 11 Cases;
adverse developments with respect to the Company's liquidity or results of
operations; the ability of the Company to obtain shipments and negotiate terms
with vendors and service providers for current orders; the ability to conduct
inventory liquidation sales to improve liquidity; the ability to develop, fund
and execute an operating plan for the Company; the ability of the Company to
attract and retain key executives and associates; competitive pressures from
other retailers, including specialty retailers and discount stores, which may
affect the nature and viability of the Company's business strategy; 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 to maintain gross profit
margins; the seasonal nature of the Company's business (including risks related
to seasonal inventory increases) and the ability of the Company to predict
consumer demand as a whole, as well as demand for specific goods; the ability of
the Company to attract and retain customers; costs associated with the shipping,
handling and control of inventory and the Company's ability to optimize its
supply chain; potential adverse publicity; availability and cost of management
and labor employed; real estate occupancy and development costs, including the
substantial fixed investment costs associated with opening, maintaining or
closing a Company store; the potential delisting of the Company's securities and
the absence of an active public trading market; the ability of the Company to
provide a private label credit card; and the ability to effect conversions to
new technological systems, including becoming Year 2000 compliant.
3
<PAGE> 4
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: July 27, 1999 By: /s/ C. Steven Moore
------------------------------------
C. Steven Moore
Vice President
4
<PAGE> 5
EXHIBIT INDEX
No. Exhibit
- --------- ---------------------------------------------------
99 Operating Report for the period ending July 4, 1999
<PAGE> 1
EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
In re:
SERVICE MERCHANDISE COMPANY, INC.
---------------------------------
Case No.: 399-02649 THROUGH 399-02680
---------------------------
Judge: PAINE
---------------------------
Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING July 4, 1999
------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
---------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the
period commencing May 31, 1999 and ending July 4, 1999 as shown by the report
------------ ------------
and exhibits consisting of 16 pages and containing the following as indicated:
--------
X Monthly Reporting Questionnaire (Attachment 1)
----
X Comparative Balance Sheets (Forms OPR-1 & OPR-2)
----
N/A Summary of Accounts Receivable (Form OPR-3)
----
X Schedule of Postpetition Liabilities (Form OPR-4)
----
X Statement of Income (Loss) (Form OPR-5)
----
I declare under penalty of perjury that this report and all the
attachments are true and correct to the best of my knowledge and belief. I also
hereby certify that the original Monthly Operating Report was filed with the
Bankruptcy Court Clerk and a copy delivered to the U.S. Trustee.
Date: 7-26-99 DEBTOR - IN - POSSESSION
---------
By: /s/ Tom Garrett
-----------------------------------------
Name and Title: TOM GARRETT, SENIOR VICE PRESIDENT & CFO
-----------------------------------------
Address: 7100 SERVICE MERCHANDISE DRIVE
-----------------------------------------
BRENTWOOD, TENNESSEE 37027
-----------------------------------------
Telephone No: 660-3477
-----------------------------------------
Note: Report subject to further verification and account reconciliation
procedures
<PAGE> 2
CHAPTER 11 Attachment 1 (Page 1)
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
* 1. Payroll
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
-------- ----- --------- --------- -------- ---------
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 62,863.66 39,682.56 4,438.05 17,901.49
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER,GENERAL
COUNSEL & SECRETARY 34,496.73 23,205.25 2,401.49 8,678.68
TOM GARRETT SENIOR VICE PRESIDENT & CFO 31,830.16 22,970.43 1,843.13 6,755.05
STEVE MCCANN SENIOR VICE PRESIDENT, FINANCE
& CHIEF ACCOUNTING OFFICER 22,596.20 13,919.80 1,368.81 5,667.28
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 31,470.15 18,945.24 1,929.24 7,524.31
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 48,978.90 30,772.58 3,358.63 13,732.24
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION
SERVICES & CHIEF INFORMATION OFFICER 28,828.95 18,194.21 1,592.55 6,653.99
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 13,461.55 9,714.90 632.37 2,629.66
SANDRA CARY VICE PRESIDENT, ASST. TAX : FIN 9,615.40 6,906.29 518.60 2,080.51
J0E M. ELLIOTT AVP, PROPERTY ADMINISTRATION 10,205.55 6,339.83 475.11 1,928.66
ERIC KOVATS VICE PRESIDENT, REGIONAL: STORES 20,192.34 13,641.40 1,080.45 3,851.61
</TABLE>
<PAGE> 3
CHAPTER 11 Attachment 1 (Page 1)
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
2. INSURANCE
<TABLE>
<CAPTION>
DATE
COVERAGE POLICY EXPIRATION PREMIUM COVERAGE
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THRU
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property Security Ins Co of Hartford $5 Million CCIPW12011 5/1/00 $921,750 5/1/00
Commonwealth $5 Million US2387 5/1/00 $92,419 5/1/00
Westchester Fire $15 Million 1XA394310 5/1/00 $75,000 5/1/00
Allianz Insurance Co $12 Million CLP1034720 5/1/00 $30,000 5/1/00
TIG Insurance Co $13 Million XPT38797554 5/1/00 $32,500 5/1/00
Westchester Fire $30 Million 1XA394311 5/1/00 $15,000 5/1/00
Allianz Insurance Co $12 Million CLP1034720 5/1/00 $22,500 5/1/00
Allianz Insurance Co $25 Million CLP1034720 5/1/00 $10,000 5/1/00
Boiler & Machinery Hartford Steam Boiler $10 Million BMTBD 5/1/00 $11,900 5/1/00
Transit Security Ins Co of Hartford $1 Million CCIMG72820 5/1/00 $10,000 5/1/00
Ocean Cargo Phoenix Assurance Co of NY $10 Million CR37211 5/1/00 $40,000 5/1/00
Special Crime Reliance Insurance Co $25 Million NFK1951937 5/1/02 $13,458 5/1/02
Crime National Union Fire Ins Co $10 Million 858-0797 3/1/00 $56,505 3/1/00
Fiduciary National Union Fire Ins Co $10 Million 267-81-30 3/1/00 $19,462 3/1/00
Employment Practices Chubb Insurance Co $10 Million 81278901A 3/1/00 $221,575 3/1/00
Liability Royal Insurance Co $10 Million PSF000010 3/1/00 $88,200 3/1/00
Directors & Officers Continental Insurance Co $10 Million 300714943 3/1/01 $453,500 3/1/01
Chubb Insurance Co $10 Million 81278902-A 3/1/01 $266,666 3/1/01
Royal Insurance Co $10 Million PSF000009 3/1/01 $133,000 3/1/01
Umbrella Federal Insurance Co $50 Million 79763295 1/1/02 $79,196 1/1/02
Excess Liability American Guarantee & Liab $50 Million EUO2876107-01 1/1/02 $25,000 1/1/02
International Cigna Insurance Co $1 Million PHFTBD 1/1/00 $2,500 1/1/00
Punitive Damages Chubb Atlantic Indemnity $50 Million PUNTBD1 1/1/00 $17,160 1/1/00
Punitive Damages - Excess Zurich International Bermuda $50 Million PUNTBD2 1/1/00 $5,000 1/1/00
General Liability - Va. Beach Hartford Fire Insurance Co $2 Million 20UENTBD 1/1/00 $8,020 1/1/00
General Liability Cigna Insurance Co $5 Million XSLG19307931 1/1/00 $13,225 7/31/99
Workers' Compensation Pacific Employers Ins Co Statutory WLRC42316830 1/1/00 $17,797 7/31/99
WC Excess Cigna Insurance Co Statutory XWCO11865 1/1/00 $1,748 7/31/99
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19307992 1/1/00 $4,990 7/31/99
Auto Pacific Employers Ins Co $1 Million ISAHO7569488 1/1/00 $2,742 7/31/99
</TABLE>
<PAGE> 4
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. et. A1.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
3. BANK ACCOUNTS
<TABLE>
<S> <C>
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 14,615
RETAIL SAFE FUNDS $ 2,241,862
CORPORATE ACCOUNTS $ 1,101,606
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE $ 401,140
FIRSTAR $ 27,735
SOCIETY NATIONAL BANK $ 1,222,199
BANK OF BOSTON $ 482,129
BANK OF BOSTON CONNECTICUT $ 219,235
MERCANTILE BANK $ 127,593
FIRST UNION $ 3,343,499
HARRIS TRUST $ 980,716
BANK ONE LOUISIANA $ 1,711,929
ABN - AMRO BANK $ 954,654
COMERICA BANK $ 297,597
AM SOUTH $ 820,561
BANK OF AMERICA CALIFORNIA $ 165,231
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
NORWEST BANK $ 640,162
FIRST AMERICAN NATIONAL BANK $ 604,824
HERITAGE BANK OF NEVADA $ 2,077
BANK OF OKLAHOMA $ 192,873
CHASE BANK OF TEXAS $ 937,025
HIBERNIA $ 517,843
SINGLE STORE DEPOSITORY ACCOUNTS $ 4,237,370
FIRST NATIONAL BANK OF MARYLAND $ 114,854
FIFTH THIRD BANK $ 45,029
WELLS FARGO BANK $ 701,434
NATIONSBANK $ 1,313,625
NBD $ 894,346
PNC BANK $ 442,740
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) $12,261,014
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC $ 648,713
OTHER CASH ACCOUNTS $ 192,047
TOTAL CASH & CASH EQUIVALENTS PER GENERAL LEDGER $37,858,274
</TABLE>
<PAGE> 6
CHAPTER 11 Attachment 1 (Page 2)
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
4. Payments to Professionals May 31, 1999 through July 4, 1999
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
79108 Ernst & Young LLP $ 3,595.00 6/2/99 30003892
71217 Bass, Berry & Sims, PLC $ 44,587.65 6/2/99 30003890
99459 Robert L. Berger & Associates $ 62,672.29 6/7/99 B0017712
99444 Sitrick and Company $ 151,821.08 6/8/99 30004894
99459 Robert L. Berger & Associates $ 58,917.06 6/17/99 B0017960
50995 Brann & Issacson, LLP $ 2,469.52 6/21/99 30006669
86237 Brusniak Clement Harrison & McCool, PC Inc. $ 694.52 6/22/99 30006839
98818 Resources Connection LLC Corp $ 13,050.00 6/24/99 30007184
94005 Donald A Blum $ 1,487.50 6/24/99 30007188
71217 Bass, Berry & Sims, PLC $ 133,837.40 7/1/99 B0018279
99444 Sitrick and Company $ 63,210.48 7/1/99 B0018276
99454 Harwell, Howard, Hyne, Gabbert & Manner, P.C. $ 28,609.91 7/1/99 B0018277
98378 Skadden, Arps, Slate, Meagher, & Flom $ 495,553.00 7/1/99 B0018278
79108 Ernst & Young LLP $ 121,246.00 7/1/99 B0018280
99391 Otterbourg, Steindler, Houston & Rosen, P.C. $ 262,827.86 7/1/99 B0018281
63078 Weil, Gotshal & Manges, LLP $ 223,293.53 7/1/99 B0018282
99104 Jay Alix & Associates $ 331,929.08 7/1/99 B0018285
99445 SGO Joint Venture $ 1,070,416.00 7/2/99 B0018300
</TABLE>
<PAGE> 7
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. et. A1.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
RECEIPTS AND DISBURSEMENTS
May 31, 1999 - July 4, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Actual Actual Actual Actual Total
Monday 5/31/99 6/7/99 6/14/99 6/21/99 6/28/99 5/31/99
Sunday 6/6/99 6/13/99 6/20/99 6/27/99 7/4/99 7/4/99
-------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts $32,373 $37,498 $42,200 $40,312 $ 37,434 $189,817
Miscellaneous Receipts 2,900 3 -- 2,500 8 5,411
-------------------------------------------------------------------------
Total Available collections 35,273 37,501 42,200 42,812 37,442 195,228
Disbursements:
Merchandise disbursements 7,867 13,922 14,391 26,938 21,136 84,254
Non-merchandise disbursements 13,433 18,579 19,464 14,112 18,748 84,336
-------------------------------------------------------------------------
Total Disbursements: $21,300 $32,501 $33,855 $41,050 $ 39,884 $168,590
-------------------------------------------------------------------------
Change in cash $13,973 $ 5,000 $ 8,345 $ 1,762 $ (2,442) $ 26,638
-------------------------------------------------------------------------
</TABLE>
<PAGE> 8
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
MONTH OF: MAY 31, 1999 THROUGH JULY 4, 1999
SERVICE MERCHANDISE COMPANY INC.
Rolling Revised Cash Flow Forecast
(Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Forecast Forecast Forecast Forecast
Monday 7/12/99 7/19/99 8/16/99 9/13/99 10/11/99
Sunday 7/18/99 7/25/99 8/22/99 9/19/99 10/17/99
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ending Total Revolver Balance $ 28,815 $ 47,663 $116,316 $170,349 $259,412
----------------------------------------------------------------
Term Loan 99,750 99,750 99,750 99,750 99,500
Standby Letters of Credit 43,039 30,167 30,167 29,800 29,800
Trade Letters of Credit 64,410 65,000 55,000 53,000 40,000
----------------------------------------------------------------
Total Extensions of Credit $236,014 $242,580 $301,233 $352,899 $428,712
----------------------------------------------------------------
----------------------------------------------------------------
Borrowing Base (Before Interim Reserve) $479,613 $497,532 $517,634 $538,686 $595,073
----------------------------------------------------------------
Availability (Before Interim Reserve) $243,599 $254,952 $216,401 $185,787 $166,361
</TABLE>
Note: The anticipated increase in revolver borrowings and decrease in
availability in August and September reflects, among other things, seasonal
inventory increases relating to the Fall Selling Season
<PAGE> 9
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 4, May 30,
1999 1999
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 37,858 $ 43,513
Accounts receivable {a} 16,565 32,813
Inventories 553,711 598,834
Prepaid expenses and other assets {b} 86,974 39,972
---------- ----------
TOTAL CURRENT ASSETS 695,108 715,132
Net property and equipment - owned {b} 364,581 401,987
Net property and equipment - leased 17,588 19,230
Other assets and deferred charges 49,844 49,660
---------- ----------
TOTAL ASSETS $1,127,121 $1,186,009
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable $ 33,624 $ 65,303
Accounts payable 26,435 12,925
Accrued expenses {a} 125,962 135,010
Sales & Local Sales Tax 15,233 13,410
Income taxes 8,237 7,625
Current maturities long-term debt 1,000 1,000
---------- ----------
TOTAL CURRENT LIABILITIES 210,491 235,273
</TABLE>
<PAGE> 10
FORM OPR-1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<S> <C> <C>
Long Term Liabilities:
Long-term debt 98,750 99,000
Liabilities Subject To Compromise:
Restructure {c} 73,096 89,559
Capital Lease Obligations 43,752 46,924
Long Term Debt 465,317 465,317
Accounts Payable 191,406 195,125
Accrued Expense {c} 87,502 70,896
---------- ----------
Liabilities Subject To Compromise 861,073 867,821
TOTAL LIABILITIES 1,170,314 1,202,095
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common Stock 50,049 50,084
Additional paid-in-capital 6,756 7,027
Deferred Compensation (1,086) (1,322)
Accumulated other comprehensive income (869) (869)
Retained Earnings (98,043) (71,006)
---------- ----------
Shareholders' equity (43,193) (16,086)
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,127,121 $1,186,009
========== ==========
</TABLE>
{a} A credit card receivable allowance of $14,400 was reclassed between Accrued
expense and Accounts Receivable
{b} Property of $31,000 was reclassed to Prepaid and other as assets available
for sale
{c} Store closing costs of $13,859 was reclassed between Restructure and
Accrued expense
<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: MAY 31, 1999 THROUGH JULY 4, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 07/04/99
FORM OPR-3 NOT APPLICABLE
<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: MAY 31, 1999 THROUGH JULY 4, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 07/04/99
FORM OPR-4
<TABLE>
<CAPTION>
Total current
----------- -----------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $26,435,000 $26,435,000
Total current
----------- -----------
Expense & other payables $125,962,000 $125,962,000
</TABLE>
<PAGE> 13
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
<TABLE>
<CAPTION>
Date Date Total 0-30
TAXES PAYABLE Incurred Due Due Days
-------------------------------------------------------------
<S> <C> <C> <C> <C>
Federal Income Tax ** Various Various 8,365,307 8,365,307
State Income Tax Various Various (128,293) (128,293)
-------------------------------
SUBTOTAL 8,237,014 8,237,014
-------------------------------
Sales/Use Tax Various Various 15,233,066 15,233,066
-------------------------------
Personal Property Tax * Various Various 531,913 531,913
Real Estate Taxes * Various Various 5,461,255 5,461,255
Inventory Taxes * Various Various 927,098 927,098
Gross Receipts/Bus Licenses * Various Various 103,062 103,062
Franchise Taxes * Various Various 87,443 87,443
-------------------------------
SUBTOTAL 7,110,771 7,110,771
-------------------------------
TOTAL TAXES PAYABLE 30,580,851 30,580,851
===============================
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
<PAGE> 14
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. et. A1.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 31, 1999 THROUGH JULY 4, 1999
SCHEDULE OF POST PETITION LIABILITIES
Month Ended: 7/04/99
FORM OPR-4
($ IN THOUSANDS)
<TABLE>
<CAPTION>
TOTAL DUE
DATE (7/04/99
INCURRED DATE DUE Balance) 0 - 30 DAYS
<S> <C> <C> <C> <C>
POST PETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 33,624 33,624
Facility Standby Letters of Credit 3/27/99 6/30/01 28,950 --
Facility Trade Letters of Credit 3/27/99 6/30/01 61,438 --
Term Loans 3/27/99 6/30/01 99,750 99,750
-------
TOTAL EXTENSIONS OF CREDIT 223,762
POST PETITION UNSECURED DEBT --
ACCRUED INTEREST PAYABLE 592
</TABLE>
<PAGE> 15
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
Activity
May 31, 1999
through
July 4, 1999
------------
<S> <C>
Net Sales $ 172,082
Costs of merchandise sold and buying and occupancy expense 133,547
---------
Gross margin after cost of merchandise sold and buying and occupancy expenses 38,535
Selling, General and Administrative Expenses:
Net Employment Expense 29,264
Net Advertising 9,215
Banking and Other Fees 2,542
Real Estate and Other Taxes 2,177
Supplies 1,245
Communication and Equipment 617
Travel 509
Security and Other Services 315
Legal and Professional 844
Insurance 1,459
Credit Card Services 1,010
Miscellaneous (243)
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Total Selling, General and Administrative Expenses 48,954
Other income, net (236)
Restructuring charge (19,378){a}
</TABLE>
<PAGE> 16
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<S> <C>
Depreciation and amortization 4,145
---------
Earnings (loss) before interest, reorganization items, and income tax 5,050
Interest expense - debt 3,640
Interest expense - capitalized leases 782
---------
Earnings (loss) before reorganization items, and income tax 628
Reorganization Items:
Legal and professional 3,366
Loss/(gain) on sale of assets 10,290
Close store charges 14,009 {a}
---------
Reorganization items 27,665
Earnings (loss) before income tax (27,037)
Income tax benefit --
---------
Net earnings (loss) $ (27,037)
=========
</TABLE>
{a} Store closing costs of $13,859 was reclassed between Restructure and Close
store charges