<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: June 8, 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 March 16, 1999 and ending May 2, 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 in the Company's securities are cautioned to refer to the Ex-
change Act filings. Moreover, the Operating Report may include forward-looking
statements or information which is subject to various assumptions regarding the
Company's operating performance that may not be realized and which is 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 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
2
<PAGE> 3
for the types of goods sold by the Company; the ability to maintain gross profit
margins; the seasonal nature of the Company's business 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: June 8, 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 May 2, 1999
</TABLE>
<PAGE> 1
EXHIBIT 99
OPERATING REPORT
The following is the text of the Operating Report filed with the Bankruptcy
Court by Service Merchandise Company, Inc. for the period ending May 2, 1999.
<PAGE> 2
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 May 2, 1999
-----------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC. Debtor-In-Possession, and
hereby submits its Monthly Operating Report for the period commencing March 16,
1999 and ending May 2, 1999 as shown by the report and exhibits consisting of 17
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: 6-2-99 DEBTOR - IN - POSSESSION
-------
By: /s/
----------------------------------------
Name and Title: TOM GARRETT, SENIOR VICE PRESIDENT & CFO
----------------------------------------
Address: 7100 SERVICE MERCHANDISE DRIVE
----------------------------------------
BRENTWOOD, TENNESSEE 37027
----------------------------------------
Telephone No: 660-3477
----------------------------------------
NOTE: On March 15, 1999, an involuntary bankruptcy petition was filed against
Service Merchandise Company, Inc. ("SMC"). On March 27, 1999 SMC and 31
of its affiliates filed voluntary Chapter 11 petitions. This
consolidated report includes the period March 16, 1999 through March
26, 1999 so at to include the "gap period" for SMC.
<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: MARCH 16, 1999 THROUGH MAY 2, 1999
1. Payroll
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 406,573.28 278,234.67 4,590.42 118,635.58
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE
OFFICER, GENERAL COUNSEL & SECRETARY 60,635.26 38,064.56 2,047.22 16,503.49
TOM GARRETT SENIOR VICE PRESIDENT & CFO 78,941.47 53,602.49 1,682.46 19,028.37
STEVE MCCANN SENIOR VICE PRESIDENT, FINANCE & CHIEF
ACCOUNTING OFFICER 57,775.34 34,863.19 1,391.45 16,045.88
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 44,578.56 25,876.93 1,987.80 11,477.30
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 568,645.48 393,068.08 3,246.93 166,404.29
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION
SERVICES & CHIEF INFORMATION OFFICER 40,927.11 25,136.51 1,690.35 10,608.39
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 5,785.75 4,277.84 825.46 682.45
SANDRA CARY VICE PRESIDENT, ASST. TAX : FIN 19,264.90 13,377.66 524.69 5,174.45
J0E M. ELLIOTT AVP, PROPERTY ADMINISTRATION 19,133.64 11,766.29 505.47 4,521.73
ERIC KOVATS VICE PRESIDENT, REGIONAL: STORG. 25,379.02 15,662.13 1,193.09 6,258.78
</TABLE>
The associates listed below received a bonus which is included in the amounts
above.:
<TABLE>
<S> <C>
SAM CUSANO 322,000.00
CHARLES SEPTER 500,000.00
STEVE MOORE 15,587.30
TOM GARRETT 38,217.47
STEVE MCCANN 19,599.76
SANDRA CARY 5,769.24
JOE M. ELLIOTT 4,798.41
</TABLE>
<PAGE> 4
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: MARCH 16, 1999 THROUGH MAY 2, 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 1/1/02 $ 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 5/30/99
Workers' Compensation Pacific Employers Ins Co Statutory WLRC42316830 1/1/00 $ 17,797 5/30/99
WC Excess Cigna Insurance Co Statutory XWCO11865 1/1/00 $ 1,748 5/30/99
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19307992 1/1/00 $ 4,990 5/30/99
Auto Pacific Employers Ins Co $1 Million ISAHO7569488 1/1/00 $ 2,742 5/30/99
</TABLE>
<PAGE> 5
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: MARCH 16, 1999 THROUGH MAY 2, 1999
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
<TABLE>
<S> <C>
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 14,750
RETAIL SAFE FUNDS $ 2,574,745
CORPORATE ACCOUNTS
FAB - SMC - CORPORATE ACCOUNTS $ 7,610,007
CITIBANK OPERATING ACCOUNT $ 351,432
CITIBANK TAX ACCOUNT $ 1,841,110
STORE DEPOSITORY ACCOUNTS
SOCIETY NATIONAL BANK $ 480,423
BANK OF BOSTON $ 1,204,048
BANK OF BOSTON CONNECTICUT $ 251,441
MERCANTILE BANK $ 239,859
FIRST UNION $ 4,601,959
HARRIS TRUST $ 1,287,491
BANK ONE LOUISIANA $ 2,187,021
FLEET BANK $ 187,437
ABN - AMRO BANK $ 1,565,321
COMERICA BANK $ 278,067
AM SOUTH $ 1,378,766
BANK OF AMERICA CALIFORNIA $ 1,161,198
NORWEST BANK $ 639,983
FIRST AMERICAN NATIONAL BANK $ 583,435
DEPOSIT GUARANTY NATIONAL BANK $ 846,025
BANK OF OKLAHOMA $ 301,162
CHASE BANK OF TEXAS $ 4,435,640
SINGLE STORE DEPOSITORY ACCOUNTS $ 1,018,018
FIRST NATIONAL BANK OF MARYLAND $ 119,795
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
FIFTH THIRD BANK $ 77,725
WELLS FARGO BANK $ 979,576
NATIONSBANK $ 1,654,577
NBD $ 689,640
PNC BANK $ 841,179
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY)
TOTAL $21,852,613
OTHER DEPOSITORY ACCOUNTS
FOUNTAINHEAD FUNDING ACCOUNT (EMPLOYEE HEALTHCARE CLAIMS) $ 106,134
OTHER CASH ACCOUNTS $ 368,879
INVESTMENT ACCOUNTS
SER PLUS ASSURANCE GOLDMAN SACHS INVESTMENT $ 5,969,800
TOTAL CASH & CASH EQUIVALENTS PER GENERAL LEDGER $67,699,257
</TABLE>
<PAGE> 7
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: MARCH 16, 1999 THROUGH MAY 2, 1999
4. Payments to Professionals March 16, 1999 through May 2, 1999
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
6985 Bass, Berry & Sims, PLC $ 175,000.00 3/23/99 B0015479
50995 Brann & Issacson, LLP $ 2,437.19 3/23/99 40003579
99486 DJM Asset Management LLC $ 35,000.00 4/2/99 13000551
99486 DJM Asset Management LLC $ 103,000.00 4/15/99 B0016530
79108 Ernst & Young LLP $ 100,000.00 3/26/99 B0015931
99454 Harwell, Howard, Hyne, Gabbert & Manner, P.C. $ 9,102.90 3/25/99 B0015789
99454 Harwell, Howard, Hyne, Gabbert & Manner, P.C. $ 10,000.00 3/26/99 B0015934
99104 Jay Alix & Associates $ 96,961.47 3/19/99 B0015349
99104 Jay Alix & Associates $ 250,126.88 3/26/99 B0015955
99391 Otterbourg, Steindler, Houston & Rosen, P.C. $ 100,000.00 3/26/99 B0015933
98818 Resources Connection LLC Corp $ 13,620.00 3/25/99 B0015904
98818 Resources Connection LLC Corp $ 8,475.00 4/20/99 13002344
98818 Resources Connection LLC Corp $ 2,550.00 4/27/99 13003199
99459 Robert L. Berger & Associates $ 50,000.00 3/26/99 B0015956
99459 Robert L. Berger & Associates $ 29,727.94 4/16/99 B0016566
71403 Seyfarth, Shaw, Fairweather & Geraldson $ 1,721.98 3/23/99 40003580
99445 SGO Joint Venture $ 20,637.14 3/18/99 40003506
99445 SGO Joint Venture $ 15,351.60 3/19/99 40003511
99445 SGO Joint Venture $ 103,634.85 3/22/99 40003533
99445 SGO Joint Venture $ 32,807.02 3/23/99 40003552
99445 SGO Joint Venture $ 25,517.13 3/24/99 B0015555
99445 SGO Joint Venture $ 61,911.30 3/25/99 B0015708
99445 SGO Joint Venture $ 112,020.45 3/26/99 B0015879
99445 SGO Joint Venture $ 467,114.07 3/31/99 B0016018
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
99445 SGO Joint Venture $ 314,159.49 4/5/99 B0016165
99445 SGO Joint Venture $ 129,946.14 4/6/99 B0016208
99445 SGO Joint Venture $ 113,240.46 4/8/99 13000917
99445 SGO Joint Venture $ 88,635.56 4/8/99 13000942
99445 SGO Joint Venture $ 132,337.70 4/9/99 13001103
99445 SGO Joint Venture $ 400,923.33 4/12/99 13001289
99445 SGO Joint Venture $ 72,094.84 4/13/99 13001506
99445 SGO Joint Venture $ 87,845.13 4/14/99 13001659
99445 SGO Joint Venture $ 74,008.43 4/15/99 13001862
99445 SGO Joint Venture $ 149,848.32 4/16/99 13002156
99445 SGO Joint Venture $ 392,764.28 4/19/99 13002258
99445 SGO Joint Venture $ 137,249.23 4/20/99 13002346
99445 SGO Joint Venture $ 89,185.70 4/21/99 13002491
99445 SGO Joint Venture $ 69,600.63 4/22/99 13002574
99445 SGO Joint Venture $ 103,692.80 4/23/99 13003022
99445 SGO Joint Venture $ 221,627.90 4/26/99 13003109
99445 SGO Joint Venture $ 50,585.68 4/27/99 13003207
99445 SGO Joint Venture $ 56,582.11 4/28/99 13003335
99445 SGO Joint Venture $ 98,404.70 4/29/99 13003531
99445 SGO Joint Venture $ 103,108.30 4/30/99 13003631
99444 Sitrick and Company $ 110,000.00 3/24/99 B0015554
98378 Skadden, Arps, Slate, Meagher, & Flom $ 500,000.00 3/26/99 B0015932
99329 The Aegis Group $ 19,421.82 3/17/99 40003490
</TABLE>
<PAGE> 9
CHAPTER 11 Attachment 1 (Page 3 & 4)
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
MONTH OF: MARCH 16, 1999 THROUGH MAY 2, 1999
RECEIPTS AND DISBURSEMENTS
March 16, 1999 - May 2, 1999
(Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Actual Actual Actual Actual Actual Actual Total
Monday 3/16/99 3/22/99 3/29/99 4/5/99 4/12/99 4/19/99 4/26/99 3/16/99
Sunday 3/21/99 3/28/99 4/4/99 4/11/99 4/18/99 4/25/99 5/2/99 5/7/99
---------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts 27,703 50,534 49,629 49,785 58,401 61,791 45,147 342,990
Miscellaneous Receipts 7,521 21,192 285 -- -- -- -- 28,998
---------------------------------------------------------------------------------
Total Available collections $ 35,224 $71,726 $49,914 $49,785 $58,401 $ 61,791 $45,147 $371,988
Disbursements:
Merchandise disbursements $ 18,482 $36,327 $13,352 $10,947 $16,149 $ 14,466 $13,923 $123,646
Non-merchandise disbursements 21,547 26,838 18,123 29,499 22,387 55,216 26,171 199,781
---------------------------------------------------------------------------------
Total Disbursements: $ 40,029 $63,165 $31,475 $40,446 $38,536 $ 69,682 $40,094 $323,427
---------------------------------------------------------------------------------
Change in cash $ (4,805) $ 8,561 $18,439 $ 9,339 $19,865 $ (7,891) $ 5,053 $ 48,561
---------------------------------------------------------------------------------
</TABLE>
<PAGE> 10
FORM OPR - LAND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
Consolidated Balanced Sheets (Unaudited)
(Debtor-in-Possession)
(In thousands)
<TABLE>
<CAPTION>
March 15, May 2,
1999 1999
---------- ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 53,888 $ 67,699
Accounts receivable 36,024 31,344
Refundable income taxes 18,400
Inventories 795,327 649,836
Prepaid expenses and other assets 45,924 44,471
---------- ----------
TOTAL CURRENT ASSETS 949,564 793,350
Net property and equipment - owned 430,365 404,513
Net property and equipment - leased 20,296 19,620
Other assets and deferred charges 65,394 48,928
---------- ----------
TOTAL ASSETS $1,465,620 $1,266,411
========== ==========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable $ 173,003 $ 132,994
Trade Accounts payable 6,927 9,504
Accrued expenses 110,562 131,960
State & Local Sales Tax 14,767 16,704
Income taxes 7,631 7,631
Current maturities long-term debt 1,500 1,000
---------- ----------
TOTAL CURRENT LIABILITIES 314,391 299,794
</TABLE>
<PAGE> 11
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:
Accrued restructuring-Noncurrent
Long-term debt 148,500 99,000
Liabilities Subject To Compromise
Restructure 296,768 93,834
Capital Lease Obligations 48,155 47,433
Long Term Debt 489,120 465,317
Accounts Payable 201,812 190,580
Accrued Expense 72,372 71,509
---------- ----------
Liabilities Subject To Compromise 1,108,227 868,673
TOTAL LIABILITIES 1,571,117 1,267,467
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common Stock 50,134 50,084
Additional paid-in-capital 7,302 7,027
Deferred Compensation (1,652) (1,353)
Accumulated other comprehensive income (869) (869)
Retained Earnings (160,412) (55,945)
--------- ---------
Shareholders' equity (105,497) (1,056)
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $1,465,620 $1,266,411
========== ==========
</TABLE>
<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: MARCH 16, 1999 THROUGH MAY 2, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 05/02/99
FORM OPR-3 NOT APPLICABLE
<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: MARCH 16, 1999 THROUGH MAY 2, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 05/02/99
FORM OPR-4
<TABLE>
<CAPTION>
Total current
------------ -------------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $ 9,504,275 $ 9,504,275
</TABLE>
<TABLE>
<CAPTION>
Total current
------------ -------------
<S> <C> <C>
Expense & other payables $131,960,261 $131,960,261
</TABLE>
<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: MARCH 16, 1999 THROUGH MAY 2, 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 7,700,791 7,700,791
State Income Tax Various Various (69,791) (69,791)
--------------------------------
SUBTOTAL 7,631,000 7,631,000
--------------------------------
Sales/Use Tax SUBTOTAL Various Various 16,703,687 16,703,687
--------------------------------
Personal Property Tax * Various Various 124,362 124,362
Real Estate Taxes * Various Various 3,276,789 3,276,789
Inventory Taxes * Various Various 251,526 251,526
Gross Receipts/Bus Licenses * Various Various (132,999) (132,999)
Franchise Taxes * Various Various 29,007 29,007
--------------------------------
SUBTOTAL 3,548,685 3,548,685
--------------------------------
================================
TOTAL TAXES PAYABLE 27,883,372 27,883,372
================================
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
<PAGE> 15
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. Al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MARCH 16, 1999 THROUGH MAY 2, 1999
SCHEDULE OF POST PETITION LIABILITIES
Month Ended: 05/02/99
FORM OPR-4
<TABLE>
<CAPTION>
TOTAL DUE
DATE (5/2/99
INCURRED DATE DUE Balance 0 - 30 DAYS
<S> <C> <C> <C> <C>
POSTPETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 $132,994 $132,994
Facility Standby L/C's 3/27/99 6/30/01 39,374 -
Facility Trade L/C's 3/27/99 6/30/01 15,637 -
Term Loans 3/27/99 6/30/01 100,000 100,000
---------
Total Extensions of Credit 288,005
POSTPETITION UNSECURED DEBT -
ACCRUED INTEREST PAYABLE 427
</TABLE>
<PAGE> 16
<TABLE>
<CAPTION>
ACTIVITY
MARCH 16, 1999
THROUGH
MAY 2, 1999
----------------
<S> <C>
Net Sales $ 326,623
Costs of merchandise sold and buying and occupancy expense 289,759
---------
Gross margin after cost of merchandise sold and buying and occupancy expenses 36,864
Selling, General and Administrative Expenses:
Net Employment Expense 47,664
Net Advertising 16,662
Banking and Other Fees 4,000
Real Estate and Other Taxes 4,535
Supplies 1,833
Communication and Equipment 1,281
Travel 845
Security and Other Services 915
Legal and Professional 2,654
Insurance 434
Miscellaneous 187
Credit Card Services 11,464
---------
Total Selling, General and Administrative Expenses 92,475
Other income, net (10)
**Restructuring charge (131,791)
Depreciation and amortization 5,592
---------
Earnings (loss) before interest, reorganization items, and income tax 70,599
Interest expense - debt 7,466
Interest expense - capitalized leases 556
---------
Earnings (loss) before reorganization items, and income tax 62,577
Reorganization Items:
*1997 Restructure 502 (b) (6) Reversal (45,968)
Legal and Professional 4,077
---------
Total Reorganization Items (41,891)
Earnings (loss) before income tax 104,468
Income tax benefit 0
---------
Net earnings (loss) $ 104,468
=========
</TABLE>
* In connection with the Chapter 11 Cases, a $45.9 million change in estimate
was made to reflect the reduction allowed under Section 502 (b) (6) of the
Bankruptcy Code.
** In connection with the Chapter 11 Cases, a $158.0 million change in estimate
was made to reflect the reduction allowed under Section 502 (b) (6) of the
Bankruptcy Code.
