<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 1, 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 May 3, 1999 and ending May 30, 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 complied 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 1, 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 May 30, 1999
<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 30, 1999.
<PAGE> 2
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 May 30, 1999
---------------------------------------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
------------------------------------------------------------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the period commencing May 3, 1999
----------------------------
and ending May 30, 1999 as shown by the report and exhibits consisting of 16 pages and
----------------- ----------
containing the following as indicated:
</TABLE>
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.
<TABLE>
<S> <C>
Date: 6/21/99 DEBTOR - IN - POSSESSION
-----------------
Note:
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
</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 3, 1999 THROUGH MAY 30, 1999
* 1. Payroll
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 50,727.28 34,876.65 4,590.41 14,577.09
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER, GENERAL
COUNSEL & SECRETARY 27,929.50 18,215.40 2,047.22 6,534.57
TOM GARRETT SENIOR VICE PRESIDENT & CFO 25,942.11 18,599.93 1,682.46 5,310.83
STEVE MCCANN SENIOR VICE PRESIDENT, FINANCE 19,053.21 11,057.68 1,391.45 4,287.07
& CHIEF ACCOUNTING OFFICER
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 25,349.57 14,950.96 1,987.80 5,542.37
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 39,363.51 23,871.89 3,475.39 9,807.40
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION
SERVICES & CHIEF INFORMATION OFFICER 23,252.02 14,638.78 1,690.34 4,970.13
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 22,890.73 15,862.79 785.26 6,278.68
SANDRA CARY VICE PRESIDENT, ASST. TAX: FIN 7,709.37 5,523.82 524.69 1,555.80
J0E M. ELLIOTT AVP, PROPERTY ADMINISTRATION 8,180.28 5,081.67 505.47 1,431.74
ERIC KOVATS VICE PRESIDENT, REGIONAL: STORES. 15,487.59 12,990.01 1,167.99 3,444.45
The associate listed below received bonus and relocation assistance which is included in the amounts above
ROBERT PINDRED 12,121.49
</TABLE>
* Excludes drawings under prepetition letters of credit
<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: MAY 3, 1999 THROUGH MAY 30, 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>
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 6/30/99
Workers' Compensation Pacific Employers Ins Co Statutory WLRC42316830 1/1/00 $17,797 6/30/99
WC Excess Cigna Insurance Co Statutory XWCO11865 1/1/00 $1,748 6/30/99
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19307992 1/1/00 $4,990 6/30/99
Auto Pacific Employers Ins Co $1 Million ISAHO7569488 1/1/00 $2,742 6/30/99
</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: MAY 3, 1999 THROUGH MAY 30, 1999
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
CASH IN STORES AND HOME OFFICE
<TABLE>
<S> <C>
HOME OFFICE $ 14,750
RETAIL SAFE FUNDS $ 2,314,964
CORPORATE ACCOUNTS
TOTAL $ 1,631,893
STORE DEPOSITORY ACCOUNTS
SOCIETY NATIONAL BANK $ 304,983
BANK OF BOSTON $ 954,244
BANK OF BOSTON CONNECTICUT $ 258,415
MERCANTILE BANK $ 21,414
FIRST UNION $ 3,740,333
HARRIS TRUST $ 1,240,357
BANK ONE LOUISIANA $ 1,072,538
FLEET BANK $ 5,338
ABN - AMRO BANK $ 805,771
COMERICA BANK $ 265,618
AM SOUTH $ 1,280,206
BANK OF AMERICA CALIFORNIA $ 1,146,102
NORWEST BANK $ 638,131
FIRST AMERICAN NATIONAL BANK $ 1,810,244
BANK OF OKLAHOMA $ 185,014
CHASE BANK OF TEXAS $ 1,235,219
HIBERNIA $ 149,333
SINGLE STORE DEPOSITORY ACCOUNTS $ 4,307,614
FIRST NATIONAL BANK OF MARYLAND $ 153,587
FIFTH THIRD BANK $ 74,495
WELLS FARGO BANK $ 1,646,038
NATIONSBANK $ 1,092,518
NBD $ 490,850
PNC BANK $ 646,795
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY)
TOTAL $15,269,084
OTHER DEPOSITORY ACCOUNTS
MUSCULAR DYSTROPHY ASSOCIATION $ 657,997
OTHER CASH ACCOUNTS $ 99,590
TOTAL CASH & CASH EQUIVALENTS PER GENERAL LEDGER $43,513,435
</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 3, 1999 THROUGH MAY 30, 1999
4. Payments to Professionals May 3, 1999 through May 30, 1999
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
99329 Aegis Property Tax $11,319.31 5/21/99 30001959
3323 AvTax $7,676.25 5/7/99 13005165
99104 Deloitte & Touche $75,209.00 5/28/99 B0017555
57117 Jay Alix & Associates $57,886.27 5/27/99 30003450
98818 Resources Connection LLC $1,950.00 5/19/99 30000595
40443 Robert J. Bard, Esq. $500.00 5/3/99 13004736
99459 Robert L. Berger & Associates $23,598.48 5/11/99 B0017145
99459 Robert L. Berger & Associates $44,612.91 5/19/99 B0017351
99277 Rosemont & Associates $21,137.50 5/7/99 13005179
99445 SGO Joint Venture $99,962.05 5/3/99 13004744
99445 SGO Joint Venture $8,978.11 5/4/99 13004798
99445 SGO Joint Venture $15,068.33 5/5/99 13004903
99445 SGO Joint Venture $12,511.84 5/6/99 13004988
99445 SGO Joint Venture $34,693.16 5/10/99 13005351
98378 Skadden Arps, Slate, Meagher & Flom $95,711.00 5/28/99 B0017554
</TABLE>
<PAGE> 7
CHAPTER 11 Attachment 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: MAY 3, 1999 THROUGH MAY 30, 1999
RECEIPTS AND DISBURSEMENTS May 3, 1999 - May 30, 1999 (Dollars in Thousands)
<TABLE>
<CAPTION>
Actual Actual Actual Actual Total
Monday 5/3/99 5/10/99 5/17/99 5/24/99 5/3/99
Sunday 5/9/99 5/16/99 5/23/99 5/30/99 5/30/99
-------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts 49,606 53,223 36,933 37,989 177,751
Miscellaneous Receipts -- 6,139 -- -- 6,139
-------------------------------------------------------------
Total Available collections $49,606 $59,362 $36,933 $37,989 $183,890
Disbursements:
Merchandise disbursements $ 7,065 $12,446 $14,350 $18,483 52,344
Non-merchandise disbursements 20,829 14,431 15,886 17,502 68,648
-------------------------------------------------------------
Total Disbursements: $27,894 $26,877 $30,236 $35,985 $120,992
-------------------------------------------------------------
Change in cash $21,712 $32,485 $ 6,697 $ 2,004 $ 62,898
-------------------------------------------------------------
</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 3, 1999 THROUGH MAY 30, 1999
Rolling Revised Cash Flow Forecast
(Dollars in Thousands)
Note: This forecast is based on a number of assumptions and is subject to a
number of risk factors, which are set forth in the Company's filings with the
Securities and Exchange Commission. This forecast should be read in conjunction
with such assumptions and risk factors.
<TABLE>
<CAPTION>
Actual Forecast Forecast Forecast Forecast
Week 1 Week 1 Week 1 Week 1
Monday 6/7/99 6/14/99 7/12/99 8/9/99 9/6/99
Sunday 6/13/99 6/20/99 7/18/99 8/15/99 9/12/99
----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ending Total Revolver Balance $ 45,420 $ 49,181 $ 52,331 $ 98,035 $154,738
----------------------------------------------------------------
Term Loan 100,000 100,000 99,750 99,750 99,750
Standby Letters of Credit 30,167 30,167 30,167 30,167 30,167
Trade Letters of Credit 33,725 36,000 50,000 55,000 55,000
----------------------------------------------------------------
Total Extensions of Credit $209,312 $215,348 $232,248 $282,952 $339,655
----------------------------------------------------------------
----------------------------------------------------------------
Borrowing Base (Net of Interim Reserve) $436,828 $454,648 $461,120 $485,954 $515,584
----------------------------------------------------------------
Availability (Net of Interim Reserve) $227,516 $239,300 $228,872 $203,002 $175,929
----------------------------------------------------------------
Borrowing Base (Before Interim Reserve) $486,828 $504,648 $511,120 $535,954 $565,584
----------------------------------------------------------------
Availability (Before Interim Reserve) $277,516 $289,300 $278,872 $253,002 $225,929
</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>
MAY 2, MAY 30,
1999 1999
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 67,699 $ 43,513 {A}
Accounts receivable 31,344 32,813
Inventories 649,836 598,834
Prepaid expenses and other assets 44,471 39,972 {B}
----------- -----------
TOTAL CURRENT ASSETS 793,350 715,132
Net property and equipment - owned 404,513 401,987
Net property and equipment - leased 19,620 19,230
Other assets and deferred charges 48,928 49,660
----------- -----------
TOTAL ASSETS $ 1,266,411 $ 1,186,009
=========== ===========
LIABILITIES AND SHAREHOLDER'S EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable $ 132,994 $ 65,303 {C}
Accounts payable 9,504 12,925 {D}
Accrued expenses 131,960 135,010
Sales & Local Sales Tax 16,704 13,410
Income taxes 7,631 7,625
Current maturities long-term debt 1,000 1,000
----------- -----------
TOTAL CURRENT LIABILITIES 299,794 235,273
</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 99,000 99,000
Liabilities Subject To Compromise:
Restructure 93,834 89,559
Capital Lease Obligations 47,433 46,924
Long Term Debt 465,317 465,317
Accounts Payable 190,580 195,125
Accrued Expense 71,509 70,896
----------- -----------
Liabilities Subject To Compromise 868,673 867,821
TOTAL LIABILITIES 1,267,467 1,205,093
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDER'S EQUITY
Common Stock 50,084 50,084
Additional paid-in-capital 7,027 7,027
Deferred Compensation (1,353) (1,322)
Accumulated other comprehensive income (869) (869)
Retained Earnings (55,945) (71,006)
----------- -----------
Shareholders' equity (1,056) (16,086)
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY $ 1,266,411 $ 1,186,009
=========== ===========
</TABLE>
{A} Reduction in cash is primarily a result of Note payable paydowns from
high cash in transit at May 2, 1999
{B} Prepaid rent of approximately $6,000 was included in the May 2 balance
due to payment timing
{C} Cash generated from store closing sales was used to pay down Notes
payable
{D} While the Company has received credit terms from some of its vendors,
the lead time involved in ordering goods has not yet resulted in a
material increase in accounts payable
<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 3, 1999 THROUGH MAY 30, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 05/30/99
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 3, 1999 THROUGH MAY 30, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 05/30/99
FORM OPR-4
<TABLE>
<CAPTION>
Total current
------------ ------------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $ 12,924,916 $ 12,924,916
Total current
------------ ------------
Expense & other payables $135,010,586 $135,010,586
</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 3, 1999 THROUGH MAY 30, 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 (76,425) (76,425)
--------------------------------
SUBTOTAL 7,624,366 7,624,366
--------------------------------
Sales/Use Tax Various Various 13,409,530 13,409,530
--------------------------------
Personal Property Tax * Various Various 418,628 418,628
Real Estate Taxes * Various Various 4,483,049 4,483,049
Inventory Taxes * Various Various 840,491 840,491
Gross Receipts/Bus Licenses * Various Various 33,100 33,100
Franchise Taxes * Various Various 41,414 41,414
--------------------------------
SUBTOTAL 5,816,682 5,816,682
--------------------------------
--------------------------------
TOTAL TAXES PAYABLE 26,850,578 26,850,578
================================
</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: MAY 3, 1999 THROUGH MAY 30, 1999
SCHEDULE OF POST PETITION LIABILITIES
Month Ended: 05/30/99
FORM OPR-4
(In thousands)
<TABLE>
<CAPTION>
TOTAL DUE
DATE (5/30/99
INCURRED DATE DUE Balance) 0 - 30 DAYS
<S> <C> <C> <C> <C>
POSTPETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 $ 65,303 $ 65,303
Facility Standby by L/C's 3/27/99 6/30/01 30,167 -
Facility Trade L/C's 3/27/99 6/30/01 23,769 -
Term Loans 3/27/99 6/30/01 100,000 100,000
---------
TOTAL EXTENSIONS OF CREDIT 219,239
POST PETITION UNSECURED DEBT -
ACCRUED INTEREST PAYABLE 425
</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 3, 1999
THROUGH
MAY 30, 1999
-------------
<S> <C>
Net Sales $ 157,206
Costs of merchandise sold and buying and occupancy expense 124,575
---------
Gross margin after cost of merchandise sold and buying and occupancy expenses 32,631
Selling, General and Administrative Expenses:
Net Employment Expense 23,468
Net Advertising 4,103
Banking and Other Fees 1,754
Real Estate and Other Taxes 1,870
Supplies 1,071
Communication and Equipment 773
Travel 385
Security and Other Services 251
Legal and Professional 853
</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>
Insurance 826
Miscellaneous 2,441
Credit Card Services 967
---------
Total Selling, General and Administrative Expenses 38,763
Other income, net 4
Depreciation and amortization 3,366
---------
Earnings (loss) before interest, reorganization items, and income tax (9,502)
Interest expense - debt 3,341
Interest expense - capitalized leases 363
---------
Earnings (loss) before reorganization items, and income tax (13,206)
Reorganization Items:
Legal and Professional 1,853
---------
Earnings (loss) before income tax (15,060)
Income tax benefit --
---------
Net earnings (loss) $ (15,060)
=========
</TABLE>
Note: The Consolidated Statement of Operations reflects results of continuing
stores and 121 stores closed by May 1999. The Company recorded net earnings of
$5,320 on Net Sales of $154,592 from continuing operations.
