<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: December 22, 1999
SERVICE MERCHANDISE COMPANY, INC.
(Debtor-in-Possession as of March 27, 1999)
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
Tennessee 1-9223 62-0816060
- ---------------------------------------------- ------------------------ -------------------
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
</TABLE>
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 November 1, 1999 and ending November
28, 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 achieve planned sales; 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
delisting of the Company's securities and the potential absence of an active
public trading market; 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: December 22, 1999 By: /s/ C. Steven Moore
-------------------------------------------
C. Steven Moore
Senior Vice President, Chief Administrative
Officer, Secretary and General Counsel
4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
No. Exhibit
- --------- ------------------------------------------------------------
<S> <C>
99 Operating Report for the period ending November 28, 1999
</TABLE>
<PAGE> 1
Exhibit 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
<TABLE>
<S> <C>
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 November 28, 1999
---------------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
-----------------------------------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing November 1, 1999
----------------
and ending November 28, 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: 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
</TABLE>
<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: NOVEMBER 01, 1999 THROUGH NOVEMBER 28, 1999
1. PAYROLL
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 50,188.10 31,788.26 4,515.26 13,314.16
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER, GENERAL
COUNSEL & SECRETARY 27,752.86 18,573.95 2,198.69 6,753.47
TOM GARRETT SENIOR VICE PRESIDENT & CFO 25,089.38 18,068.01 1,648.99 5,075.39
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 29,818.48 17,317.48 2,504.11 9,196.12
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 39,229.81 24,613.39 3,417.43 10,259.94
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION
SERVICES & CHIEF INFORMATION OFFICER 23,118.27 15,577.34 1,762.74 5,341.50
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 10,788.04 7,935.29 507.37 1,503.78
JOE M. ELLIOTT AVP, PROPERTY ADMINISTRATION 8,139.03 5,574.22 363.54 1,057.12
ERIC KOVATS VP, STORES 17,368.47 12,164.21 1,181.09 3,475.02
KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VP 13,271.06 9,074.40 1,024.97 3,090.79
BILLY STEWART ASSISTANT TAX VICE PRESIDENT, TAX 6,548.48 4,888.39 217.12 642.49
KENNETH A CONWAY VICE PRESIDENT AND CONTROLLER 12,335.22 8,868.88 797.46 2,508.18
</TABLE>
The associate listed below received relocation which is included in the
amounts above.
KARREN PRASIFKA 165.00
The associate listed below received payment for financial planning which is
included in the amounts above.
GARY SEASE 4,311.20
<PAGE> 3
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: November 1, 1999 THROUGH November 28, 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 1/1/00
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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
<TABLE>
<S> <C>
CASH IN STORES AND HOME OFFICE
- ------------------------------
HOME OFFICE $ 10,750
RETAIL SAFE FUNDS $ 3,168,303
CORPORATE ACCOUNTS $ 6,218,844
- ------------------
STORE DEPOSITORY ACCOUNTS
- -------------------------
FIRST TENNESSEE $ 3,926,835
FIRSTAR $ 127,934
SOCIETY NATIONAL BANK $ 1,464,812
BANK OF BOSTON $ 1,612,693
BANK OF BOSTON CONNECTICUT $ 805,494
MERCANTILE BANK $ 305,295
FIRST UNION $ 9,621,769
HARRIS TRUST $ 2,718,726
BANK ONE LOUISIANA $ 2,144,660
FLEET $ 143,995
ABN - AMRO BANK $ 948,118
COMERICA BANK $ 985,521
AM SOUTH $ 1,245,210
BANK OF AMERICA CALIFORNIA $ 522,073
FIRST AMERICAN NATIONAL BANK $ 644,845
HERITAGE BANK OF NEVADA $ 2,077
BANK OF OKLAHOMA $ 538,720
CHASE BANK OF TEXAS $ 3,304,105
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
HIBERNIA $ 222,834
SINGLE STORE DEPOSITORY ACCOUNTS $ 2,273,420
FIRST NATIONAL BANK OF MARYLAND $ 183,951
FIFTH THIRD BANK $ 219,838
WELLS FARGO BANK $ 356,517
NATIONSBANK $ 1,030,751
BANK ONE, IN $ 735,908
PNC BANK $ 1,916,797
BANK ONE, TEXAS $ 142,234
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) $48,096,731
- ------------------------------------------------------------------
OTHER DEPOSITORY ACCOUNTS
- -------------------------
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC. $ 169,197
OTHER CASH ACCOUNTS $ 1,157,673
TOTAL CASH PER GENERAL LEDGER 96,966,627
</TABLE>
NOTE:
The high level of Cash, per the general ledger, was attributable to the Cash
in-transit balances from Thanksgiving weekend sales.
<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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 11/1/99 11/8/99 11/15/99 11/22/99 11/1/99
Sunday 11/7/99 11/14/99 11/21/99 11/28/99 11/28/99
----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts $ 34,229 $ 30,821 $ 51,226 $ 45,625 $ 161,901
Miscellaneous Receipts - 336 - 24 360
----------------------------------------------------------------------------------
Total Available collections 34,229 31,157 51,226 45,649 162,261
Disbursements:
Merchandise disbursements 41,976 22,351 44,042 23,458 131,827
Non-merchandise disbursements 19,093 25,471 22,682 17,769 85,015
----------------------------------------------------------------------------------
Total Disbursements: $ 61,069 $ 47,822 $ 66,724 $ 41,227 $ 216,842
----------------------------------------------------------------------------------
Net Receipts/(Disbursements) $(26,840) $(16,665) $(15,498) $ 4,422 $ (54,581)
----------------------------------------------------------------------------------
</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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
4. PAYMENTS TO PROFESSIONALS NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
<TABLE>
<CAPTION>
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
80443 Coudert Brothers $ 2,566.00 11/1/99 30023829
71403 Seyfarth, Shaw, Fairweather & Lewis $ 8,552.38 11/4/99 30024357
57117 Deloitte & Touche $ 78,799.00 11/5/99 30024514
94414 Keen Realty Consultants $ 11,405.66 11/5/99 B0020073
99459 Robert L. Berger & Associates $ 21,575.22 11/12/99 B0020166
44013 McCarter & English $ 60.98 11/17/99 20000319
99277 Rosemont & Associates $ 11,110.36 11/17/99 30025788
99277 Rosemont & Associates $ 3,781.18 11/17/99 30025789
99277 Rosemont & Associates $ 25,194.96 11/17/99 30025790
99277 Rosemont & Associates $ 18,126.81 11/17/99 30025791
99277 Rosemont & Associates $ 10,969.22 11/17/99 30025792
99329 Aegis Property Tax Specialists $ 2,611.25 11/17/99 30025793
99329 Aegis Property Tax Specialists $ 9,682.08 11/17/99 30025794
99329 Aegis Property Tax Specialists $ 669.32 11/17/99 30025795
99329 Aegis Property Tax Specialists $ 6,871.95 11/17/99 30025796
99329 Aegis Property Tax Specialists $ 336.70 11/17/99 30025797
50995 Brann & Isaacson $ 672.80 11/18/99 30026198
99329 Aegis Property Tax Specialists $ 3,504.09 11/18/99 30026202
57117 Deloitte & Touche $ 13,691.05 11/24/99 30027114
57117 Deloitte & Touche $ 1,700.00 11/24/99 30027134
100906 Peter J Solomon $116,979.77 11/26/99 B0020280
63078 Weil, Gotshal & Manges $ 24,769.47 11/26/99 B0020281
71217 Bass, Berry & Sims $117,761.62 11/26/99 B0020283
79108 Ernst & Young $179,553.00 11/26/99 B0020284
98378 Skadden, Arps, Slate, Meagher & Flom $263,291.00 11/26/99 B0020285
99104 Jay Alix & Associates $183,355.05 11/26/99 B0020286
99391 Otterbourg, Steindler, Houston & Rosen PC $115,328.58 11/26/99 B0020287
99444 Sitrick & Company $ 23,902.18 11/26/99 B0020288
99454 Harwell, Howard, Hyne Gabbert & Manner PC, Inc. $ 45,071.92 11/26/99 B0020289
99454 Harwell, Howard, Hyne Gabbert & Manner PC, Inc. $ 13,044.65 11/26/99 B0020290
</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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL FORECAST FORECAST
11/28/99 12/12/99 1/2/00 1/30/00
-----------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ending Total Revolver Balance $ 377,884 $ 272,492 $ 66,753 $ 145,228
Term Loan $ 99,500 $ 99,500 $ 99,500 $ 99,250
Standby Letters of Credit $ 30,952 $ 30,952 $ 30,952 $ 30,952
Trade Letters of Credit $ 60,098 $ 64,796 $ 47,270 $ 41,873
--------- --------- --------- ---------
Total Extensions of Credit $ 568,434 $ 467,740 $ 244,475 $ 317,303
--------- --------- --------- ---------
Borrowing Base $ 748,833 $ 724,605 $ 557,312 $ 559,348
Availability $ 180,399 $ 256,865 $ 312,837 $ 242,045
</TABLE>
<PAGE> 9
FORM OPR- 1 AND 2
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
November 28, October 31,
1999 1999
------------ ----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (a) $ 96,967 $ 43,095
Accounts receivable (b) 26,078 20,302
Inventories 898,504 890,121
Prepaid expenses and other assets (c) 36,564 57,498
---------- ----------
TOTAL CURRENT ASSETS 1,058,113 1,011,016
---------- ----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 357,563 356,783
Capitalized leases, net of accumulated amortization 13,624 13,786
---------- ----------
TOTAL PROPERTY AND EQUIPMENT 371,187 370,570
---------- ----------
Other assets and deferred charges 53,701 55,072
---------- ----------
TOTAL ASSETS $1,483,001 $1,436,658
========== ==========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks (a) $ 377,884 $ 326,221
Accounts payable 102,016 112,781
Accrued expenses 179,131 165,875
State & local sales tax 19,946 15,593
Current maturities of long-term debt 1,000 1,000
---------- ----------
TOTAL CURRENT LIABILITIES 679,978 621,469
</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 98,500 98,500
Liabilities Subject To Compromise:
Accrued restructuring costs 49,464 52,912
Capitalized lease obligations 30,680 30,998
Long-term debt 434,333 435,099
Accounts payable 192,152 189,913
Accrued expenses 68,158 68,679
---------- ----------
Total Liabilities Subject To Compromise 774,787 777,600
TOTAL LIABILITIES 1,553,268 1,497,569
---------- ----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 50,012 50,012
Additional paid-in-capital 6,465 6,465
Deferred compensation (759) (780)
Accumulated other comprehensive loss (869) (869)
Retained (deficit) earnings (125,115) (115,738)
---------- ----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (70,267) (60,910)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $1,483,001 $1,436,658
========== ==========
</TABLE>
(a) Cash and cash equivalents increased primarily due to in-transit cash and
unprocessed credit card receipts arising as a consequence of the bank
holiday and the holiday shopping weekend. This factor contributed
significantly to the increase in Revolver outstandings at month end as
compared to the prior month.
(b) Accounts receivable increased primarily because of cooperation advertising
caused during the holiday weekend but not, remitted by vendors and because
customers increase in Layaway terms.
(c) Prepaid expenses and other assets decreased primarily because cash-in-
advance payments for merchandise decreased.
<PAGE> 11
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 11/28/99
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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 11/28/99
FORM OPR-4
(In Thousands)
<TABLE>
<CAPTION>
TOTAL CURRENT
--------- ---------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $ 102,016 $ 102,016
TOTAL CURRENT
--------- ---------
Expense & other payables $ 179,131 $ 179,131
</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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 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 123,232 123,232
------------------------------------
SUBTOTAL 8,534,680 8,534,680
------------------------------------
Sales/Use Tax SUBTOTAL * Various Various 19,946,232 19,946,232
------------------------------------
Personal Property Tax * Various Various 833,380 833,380
Real Estate Taxes * Various Various 8,283,777 8,283,777
Inventory Taxes * Various Various 1,488,012 1,488,012
Gross Receipts/Bus Licenses * Various Various 233,933 233,933
Franchise Taxes * Various Various 551,260 551,260
------------------------------------
SUBTOTAL 11,390,362 11,390,362
------------------------------------
------------------------------------
TOTAL TAXES PAYABLE 39,871,274 39,871,274
====================================
</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: NOVEMBER 1, 1999 THROUGH NOVEMBER 28, 1999
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DATE TOTAL DUE
INCURRED DATE DUE (11/28/99 BALANCE)
------------------------------------------------------------
<S> <C> <C> <C>
POST PETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 377,884
Facility Standby Letters of Credit 3/27/99 6/30/01 30,952
Facility Trade Letters of Credit 3/27/99 6/30/01 60,098
Term Loans 3/27/99 6/30/01 99,500
-----------------
TOTAL EXTENSIONS OF CREDIT 568,434
ACCRUED INTEREST PAYABLE $ 2,729
</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
NOVEMBER 1, 1999
THROUGH
NOVEMBER 28, 1999
-----------------
<S> <C>
Net Sales $ 207,739
Costs of merchandise sold and buying and occupancy expense 156,913
----------
Gross margin after cost of merchandise sold and buying and
occupancy expenses $ 50,825
Selling, General and Administrative Expenses:
Net Employment Expense 31,577
Net Advertising 13,141
Banking and Other Fees 2,847
Real Estate and Other Taxes 2,042
Supplies 1,058
Communication and Equipment 454
Travel 457
UCC and Other Services (a) (1,467)
Legal and Professional 319
Sales and Shipping 105
Insurance 520
Miscellaneous (57)
Credit Card Services 621
----------
Total Selling, General and Administrative Expenses 51,617
</TABLE>
<PAGE> 16
FORM OPR-5
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
<S> <C>
Other expense/(income), net 1,718
Restructuring charge (b) (2,490)
Depreciation and amortization 3,032
---------
Earnings (loss) before interest, reorganization items, and
income tax (3,052)
Interest expense - debt 4,950
Interest expense - capitalized leases 299
---------
Earnings (loss) before reorganization items, and income tax (8,301)
Reorganization Items:
Legal and Professional 690
Miscellaneous fees 133
Close Store Charges 259
---------
Total Reorganization Items 1,081
Earnings (loss) before income tax (9,383)
Income tax benefit --
---------
Net earnings (loss) $ (9,383)
=========
</TABLE>
(a) Includes Uniform Inventory Cost Capitalization adjustment to reflect
revised estimate of inventoriable costs.
(b) Includes restructure charge estimate true-up.
