<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: October 27, 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 August 30, 1999 and ending October 3,
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: October 27, 1999 By: /s/ C. STEVEN MOORE
-------------------------------------
C. Steven Moore
Vice President
4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Exhibit
--- -------
<S> <C>
99 Operating Report for the period ending October 3, 1999
</TABLE>
<PAGE> 1
EXHIBIT 99
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 October 3, 1999
---------------------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
--------------------------------------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the
period commencing August 30, 1999 and ending October 3, 1999 as shown by
the report and exhibits consisting of 16 pages 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: DEBTOR - IN - POSSESSION
--------------------
By:
-------------------------------------------
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
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 03, 1999
1. Payroll
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 62,688.10 39,784.64 4,438.05 17,829.41
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL & SECRETARY 35,254.46 23,631.35 2,401.50 8,949.16
TOM GARRETT SENIOR VICE PRESIDENT & CFO 31,917.91 23,001.10 1,843.14 6,724.37
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 31,281.03 19,941.46 1,949.79 8,028.35
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 48,845.24 30,827.46 3,358.63 13,677.36
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION SERVICES
& CHIEF INFORMATION OFFICER 28,695.20 19,362.85 1,713.01 7,104.24
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 21,481.29 15,663.65 501.26 4,269.08
JOE M. ELLIOTT AVP, PROPERTY ADMINISTRATION 10,164.30 6,970.56 352.37 1,420.67
ERIC KOVATS VICE PRESIDENT, STORES 21,695.40 15,160.49 1,158.34 4,627.74
KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VP 23,407.27 14,952.53 1,193.23 7,219.49
SUZY WILSON ASSISTANT VICE PRESIDENT, LEGAL 9,645.90 7,377.01 389.62 1,563.02
BILLY STEWART ASSISTANT VICE PRESIDENT, TAX 8,183.10 5,791.38 214.17 1,179.50
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 21,412.15 14,972.63 846.70 5,529.02
The associates listed below received relocation which is included in the amounts
above.
ROBERT PINDRED 8,000.94
KARREN PRASIFKA 7,031.98
KENNETH A. CONWAY 6,000.00
</TABLE>
<PAGE> 3
CHAPTER 11 MONTHLY REPORTING QUESTIONNAIRE
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 03, 1999
2. INSURANCE
<TABLE>
<CAPTION>
COVERAGE POLICY EXPIRATION PREMIUM DATE 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 1/1/00 $ 25,000 1/1/00
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 1/1/00
Workers' Compensation Pacific Employers Ins Co Statutory WLRC42316830 1/1/00 $ 17,797 1/1/00
WC Excess Cigna Insurance Co Statutory XWCO11865 1/1/00 $ 1,748 1/1/00
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19307992 1/1/00 $ 4,990 1/1/00
Auto Pacific Employers Ins Co $1 Million ISAHO7569488 1/1/00 $ 2,742 1/1/00
</TABLE>
<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: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
3. BANK ACCOUNTS
<TABLE>
<S> <C>
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
- - ------------------------------
HOME OFFICE $ 11,950
RETAIL SAFE FUNDS $ 2,044,540
CORPORATE ACCOUNTS $ 3,785,640
- - ------------------
STORE DEPOSITORY ACCOUNTS
- - -------------------------
FIRST TENNESSEE $ 889,143
FIRSTAR $ 50,223
SOCIETY NATIONAL BANK $ 593,155
BANK OF BOSTON $ 588,271
BANK OF BOSTON CONNECTICUT $ 255,025
MERCANTILE BANK $ 129,515
FIRST UNION $ 3,245,545
HARRIS TRUST $ 1,131,805
BANK ONE LOUISIANA $ 641,133
FLEET $ 112,412
ABN - AMRO BANK $ 353,843
COMERICA BANK $ 439,592
AM SOUTH $ 336,139
BANK OF AMERICA CALIFORNIA $ 215,025
FIRST AMERICAN NATIONAL BANK $ 59,018
HERITAGE BANK OF NEVADA $ 2,077
BANK OF OKLAHOMA $ 208,864
CHASE BANK OF TEXAS $ 1,132,617
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
HIBERNIA $ 56,971
SINGLE STORE DEPOSITORY ACCOUNTS $ 634,263
FIRST NATIONAL BANK OF MARYLAND $ 67,774
FIFTH THIRD BANK $ 45,611
WELLS FARGO BANK $ 114,060
NATIONSBANK $ 1,361,930
NBD $ 334,751
PNC BANK $ 625,975
BANK ONE, TEXAS $ 64,387
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) $15,368,301
- - ------------------------------------------------------------------
OTHER DEPOSITORY ACCOUNTS
- - -------------------------
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. $ 171,965
OTHER CASH ACCOUNTS $ 1,851,359
TOTAL CASH PER GENERAL LEDGER $36,922,879
</TABLE>
<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: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
RECEIPTS AND DISBURSEMENTS
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Actual Actual Actual Actual Total
Monday 8/30/99 9/6/99 9/13/99 9/20/99 9/27/99 8/30/99
Sunday 9/5/99 9/12/99 9/19/99 9/26/99 10/3/99 10/3/99
--------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts $ 31,812 $33,469 $ 26,569 $ 37,146 $ 33,347 $ 162,343
Miscellaneous Receipts 4,817 10,288 33 17,011 13 32,162
--------------------------------------------------------------------
Total Available collections 36,629 43,757 26,602 54,157 33,360 194,505
Disbursements:
Merchandise disbursements 35,187 15,681 40,366 42,273 45,637 179,144
Non-merchandise disbursements 14,619 24,979 22,023 19,475 19,184 100,280
--------------------------------------------------------------------
Total Disbursements: $ 49,806 $40,660 $ 62,389 $ 61,748 $ 64,821 $ 279,424
--------------------------------------------------------------------
Change in cash $(13,177) $ 3,097 $(35,787) $ (7,591) $(31,461) $ (84,919)
--------------------------------------------------------------------
</TABLE>
<PAGE> 7
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
4. PAYMENTS TO PROFESSIONALS AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
<TABLE>
<CAPTION>
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
- - ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
63078 Weil, Gotshal & Manges, LLP $ 50,788.10 8/30/99 B0019172
71217 Bass, Berry & Sims, PLC $126,590.04 8/30/99 B0019173
79108 Ernst & Young LLP $172,600.00 8/30/99 B0019174
98378 Skadden Arps Slate, Meagher & Flom $715,394.00 8/30/99 B0019175
99104 Jay Alix & Associates $358,322.33 8/30/99 B0019176
99391 Otterbourg, Steindler, Houston & Rosed, PC $160,293.09 8/30/99 B0019177
99444 Sitrick & Company $ 54,198.62 8/30/99 B0019178
99454 Harwell, Howard, Hyne, Gabbert & Manner, PC $ 19,058.15 8/30/99 B0019179
96684 Jeffrey S Sherbow PC $ 5,467.26 8/31/99 30016040
57117 Deloitte & Touche $ 20,882.38 9/1/99 30016190
67017 Barkley & Thompson $ 736.52 9/1/99 30016191
95384 Deloitte & Touche LLP $ 36,591.95 9/1/99 B0019224
85611 Wright, Robinson, Osthimer & Tatum $ 1,092.40 9/2/99 30016412
92760 Underwood, Kinsey, Warren & Tucker $ 894.70 9/2/99 30016414
95569 Talbot & Alsop $ 648.00 9/2/99 30016416
95911 Kelly, Lucas & Pacific LLP $ 9,617.00 9/2/99 30016417
50995 Brann & Isaacson LLP $ 395.38 9/3/99 30016529
57117 Deloitte & Touche $ 78,799.00 9/8/99 30016787
86237 Brusnisk, Clement, Harrison & McCool PC $ 1,174.13 9/14/99 30017345
99459 Robert L Berger & Associates $ 10,051.99 9/22/99 B0019449
57117 Deloitte & Touche $ 65,310.65 9/23/99 30018616
57117 Deloitte & Touche $ 17,496.15 9/24/99 30018880
63078 Weil, Gotshal & Manges, LLP $ 49,515.86 9/24/99 B0019519
71217 Bass, Berry & Sims, PLC $ 92,904.79 9/24/99 B0019520
79108 Ernst & Young LLP $267,068.00 9/24/99 B0019521
99104 Jay Alix & Associates $265,421.97 9/24/99 B0019522
99391 Otterbourg, Steindler, Houston & Rosed, PC $157,139.18 9/24/99 B0019523
99444 Sitrick & Company $ 99,840.84 9/24/99 B0019524
99454 Harwell, Howard, Hyne, Gabbert & Manner, PC $ 21,928.12 9/24/99 B0019525
98378 Skadden Arps Slate, Meagher & Flom $420,311.32 9/24/99 B0019526
99459 Robert L Berger & Associates $ 22,794.08 9/28/99 B0019541
</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
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
ROLLING REVISED CASH FLOW FORECAST
(Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Forecast Forecast Forecast
As of and for the week ending 10/17/99 10/24/99 11/28/99 1/2/00
-------- -------- -------- ------
<S> <C> <C> <C> <C>
Ending Total Revolver Balance $249,447 $280,775 $389,034 $ 87,593
Term Loan $ 99,500 $ 99,500 $ 99,500 $ 99,500
Standby Letters of Credit $ 27,649 $ 27,649 $ 27,649 $ 27,649
Trade Letters of Credit $ 65,434 $ 57,551 $ 28,508 $ 22,711
-------- -------- -------- --------
Total Extensions of Credit $442,030 $465,475 $544,691 $237,453
-------- -------- -------- --------
Borrowing Base $644,012 $645,742 $724,974 $526,593
Availability $201,982 $180,267 $180,283 $289,140
</TABLE>
<PAGE> 9
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(Debtor - in - Possession)
(In thousands)
<TABLE>
<CAPTION>
OCTOBER 3, AUGUST 29,
1999 1999
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 36,923 $ 36,869
Accounts receivable 18,742 14,428
Inventories 772,299 662,533
Prepaid expenses and other assets (a) 78,666 64,064
----------- -----------
TOTAL CURRENT ASSETS 906,630 777,895
----------- -----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 359,057 362,727
Capitalized leases, net of accumulated amortization 14,012 15,453
----------- -----------
TOTAL PROPERTY AND EQUIPMENT 373,069 378,180
----------- -----------
Other assets and deferred charges (b) 62,281 80,002
----------- -----------
TOTAL ASSETS $ 1,341,980 $ 1,236,077
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 203,633 $ 120,714
Accounts payable 112,833 62,140
Accrued expenses 166,403 142,281
Sales & local sales tax 16,008 14,945
Current maturities of long-term debt 1,000 1,000
----------- -----------
TOTAL CURRENT LIABILITIES 499,878 341,080
</TABLE>
<PAGE> 10
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (Unaudited)
(Debtor - in - Possession)
(In thousands)
<TABLE>
<CAPTION>
OCTOBER 3, AUGUST 29,
1999 1999
<S> <C> <C>
Long-Term Liabilities:
Accrued restructuring-Noncurrent -- (27)
Long-term debt 98,500 98,750
Liabilities Subject To Compromise:
Accrued restructuring costs (c) 55,353 67,729
Capitalized lease obligations 31,333 33,754
Long-term debt 439,558 465,055
Accounts payable 190,749 193,424
Accrued expenses (d) 67,379 81,589
----------- -----------
Total Liabilities Subject To Compromise 784,371 841,552
TOTAL LIABILITIES 1,382,749 1,281,354
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 50,012 50,024
Additional paid-in-capital 4,965 6,562
Deferred compensation (800) (897)
Accumulated other comprehensive loss (869) (869)
Retained (deficit) earnings (94,076) (100,097)
----------- -----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (40,769) (45,277)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 1,341,980 $ 1,236,077
=========== ===========
</TABLE>
Notes:
(a) Cash in advance payments increased by approximately $15,000 in accordance
with seasonal purchasing patterns increasing prepaid expenses and other
assets.
(b) Net auction proceeds recorded as restricted cash included in the line
other assets and deferred charges decreased by approximately $18,000.
(c) Includes changes in the restructure accrual estimate and the reversal of
the 502(b)(6) accrual for auctioned real estate properties, which were
settled during the period.
(d) Includes changes in the close store accrual estimate and the reversal of
the 502(b)(6) accrual for auctioned real estate properties, which were
settled during the period.
<PAGE> 11
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 10/03/99
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: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 10/03/99
FORM OPR-4
<TABLE>
<CAPTION>
Total Current
-------------- --------------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $ 112,833 $ 112,833
<CAPTION>
Total Current
-------------- --------------
<S> <C> <C>
Expense & other payables $ 166,403 $ 166,403
</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: AUGUST 30, 1999 THROUGH OCTOBER 3, 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 8,411,448 8,411,448
State Income Tax * Various Various (218,706) (218,706)
--------------------------
SUBTOTAL 8,192,742 8,192,742
--------------------------
State & Local Sales Tax Various Various 16,008,268 16,008,268
--------------------------
Personal Property Tax * Various Various 902,111 902,111
Real Estate Taxes * Various Various 7,583,521 7,583,521
Inventory Taxes * Various Various 1,423,898 1,423,898
Gross Receipts/Bus Licenses * Various Various 109,631 109,631
Franchise Taxes * Various Various 166,635 166,635
--------------------------
SUBTOTAL 10,185,796 10,185,796
--------------------------
--------------------------
TOTAL TAXES PAYABLE 34,386,806 34,386,806
==========================
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
<PAGE> 14
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: AUGUST 30, 1999 THROUGH OCTOBER 3, 1999
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(Dollars in Thousands)
<TABLE>
<CAPTION>
DATE TOTAL DUE
INCURRED DATE DUE (10/3/99 Balance)
<S> <C> <C> <C>
POST PETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 203,633
Facility Standby Letters of Credit 3/27/99 6/30/01 27,649
Facility Trade Letters of Credit 3/27/99 6/30/01 73,265
Term Loans 3/27/99 6/30/01 99,500
----------
TOTAL EXTENSIONS OF CREDIT 404,047
POST PETITION UNSECURED DEBT --
ACCRUED INTEREST PAYABLE $ 2,284
</TABLE>
<PAGE> 15
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(Debtor - in - Possession)
(In thousands)
<TABLE>
<CAPTION>
ACTIVITY
AUGUST 30, 1999
THROUGH
OCTOBER 3, 1999
---------------
<S> <C>
Net Sales $ 153,233
Costs of merchandise sold and buying and occupancy expense 116,159
---------
Gross margin after cost of merchandise sold and buying and
occupancy expenses 37,074
Selling, General and Administrative Expenses:
Net Employment Expense 28,790
Net Advertising 11,286
Banking and Other Fees 2,052
Real Estate and Other Taxes 2,235
Supplies 1,364
Communication and Equipment 621
Travel 448
UCC and Other Services (a) (2,211)
Legal and Professional 645
Sales and Shipping 105
Insurance 756
Miscellaneous (b) (10,641)
Credit Card Services (50)
---------
Total Selling, General and Administrative Expenses 35,400
</TABLE>
<PAGE> 16
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Statements of Operations (Unaudited)
(Debtor - in - Possession)
(In thousands)
<TABLE>
<CAPTION>
ACTIVITY
AUGUST 30, 1999
THROUGH
OCTOBER 3, 1999
---------------
<S> <C>
Other expense/(income), net 171
Restructuring charge (c) (14,153)
Depreciation and amortization 3,797
--------
Earnings (loss) before interest, reorganization items,
and income tax 11,860
Interest expense - debt 5,001
Interest expense - capitalized leases 317
--------
Earnings (loss) before reorganization items, and income tax 6,541
Reorganization Items:
Legal and Professional 2,551
Miscellaneous fees 568
Close Store Charges (d) (2,599)
--------
Total Reorganization Items 521
Earnings (loss) before income tax 6,020
Income tax benefit --
--------
Net earnings (loss) $ 6,020
========
</TABLE>
Notes:
(a) Includes Uniform Inventory Cost Capitalization adjustment to reflect
revised estimate of inventoriable costs.
(b) Includes income from proceeds received to terminate and exit certain
operating leases.
(c) Includes changes in the restructure accrual estimate and the reversal of
the 502(b)(6) accrual for auctioned real estate properties, which were
settled during the period.
(d) Includes changes in the close store accrual estimate and the reversal of
the 502(b)(6) accrual for auctioned real estate properties, which were
settled during the period.
