<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: November 24, 1999
SERVICE MERCHANDISE COMPANY, INC.
(Debtor-in-Possession as of March 27, 1999)
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Tennessee 1-9223 62-0816060
- ---------------------------------------------------- -------------------------- ---------------------
<S> <C> <C>
(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
7100 Service Merchandise Boulevard, Brentwood, TN 37027
- ------------------------------------------------------------------ --------------------
(Address of principal executive offices) (Zip Code)
</TABLE>
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 October 4, 1999 and ending October
31, 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
potential delisting of the Company's securities and the 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: November 24, 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 October 31, 1999
</TABLE>
<PAGE> 1
EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
Case No.: 399-02649 THROUGH 399-02680
----------------------------
In re:
SERVICE MERCHANDISE COMPANY, INC.
- -----------------------------------
Judge: PAINE
----------------------------
Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING October 31, 1999
-------------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
----------------------------------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the
period commencing October 4, 1999
---------------
and ending October 31, 1999 as shown by the report and exhibits consisting
-----------------
of 16 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: OCTOBER 04, 1999 THROUGH OCTOBER 31, 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 31,788.27 4,515.25 13,314.16
STEVE MOORE SENIOR VICE PRESIDENT, CHIEF
ADMINISTRATIVE OFFICER, GENERAL
COUNSEL & SECRETARY 26,982.03 18,030.13 2,198.69 6,523.46
TOM GARRETT SENIOR VICE PRESIDENT & CFO 24,318.55 17,524.19 1,648.99 4,848.38
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 25,507.28 16,576.01 2,054.12 6,076.38
CHARLES SEPTER PRESIDENT & CHIEF OPERATING OFFICER 39,229.81 24,613.40 3,417.43 10,259.92
KENNETH BRAME SENIOR VICE PRESIDENT, INFORMATION
SERVICES & CHIEF INFORMATION OFFICER 23,118.27 15,577.35 1,762.74 5,341.49
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 19,607.64 14,157.52 507.36 4,101.16
J0E M. ELLIOTT AVP, PROPERTY ADMINISTRATION 8,139.03 5,574.21 363.55 1,057.12
ERIC KOVATS VP, STORES 17,368.47 12,164.20 1,181.10 3,475.02
KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VP 14,359.65 9,842.40 1,024.97 3,411.38
SUZY WILSON ASSISTANT LEGAL VICE PRESIDENT 1,780.77 1,423.31 -- 357.43
BILLY STEWART ASSISTANT TAX VICE PRESIDENT, TAX 6,548.48 4,888.38 217.12 642.54
KENNETH A CONWAY VICE PRESIDENT AND CONTROLLER 12,335.22 8,819.64 846.69 2,508.19
The associates listed below received relocation which is included in the amounts above.
ROBERT PINDRED 8,819.60
KARREN PRASIFKA 369.18
</TABLE>
<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: OCTOBER 4, 1999 THROUGH OCTOBER 31, 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
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
<TABLE>
<S> <C>
CASH IN STORES AND HOME OFFICE
HOME OFFICE $ 11,750
RETAIL SAFE FUNDS $2,055,897
CORPORATE ACCOUNTS $9,573,896
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE $1,475,025
FIRSTAR $ 51,355
SOCIETY NATIONAL BANK $ 434,670
BANK OF BOSTON $ 531,455
BANK OF BOSTON CONNECTICUT $ 262,260
MERCANTILE BANK $ 221,116
FIRST UNION $3,430,000
HARRIS TRUST $ 961,186
BANK ONE LOUISIANA $ 789,662
FLEET $ 143,995
ABN - AMRO BANK $ 262,102
COMERICA BANK $ 336,171
AM SOUTH $ 341,686
BANK OF AMERICA CALIFORNIA $ 183,505
FIRST AMERICAN NATIONAL BANK $ 128,370
HERITAGE BANK OF NEVADA $ 2,077
BANK OF OKLAHOMA $ 226,203
CHASE BANK OF TEXAS $ 965,594
</TABLE>
Page 1 of 2
<PAGE> 5
<TABLE>
<S> <C>
HIBERNIA $ 55,716
SINGLE STORE DEPOSITORY ACCOUNTS $ 793,278
FIRST NATIONAL BANK OF MARYLAND $ 59,182
FIFTH THIRD BANK $ 42,090
WELLS FARGO BANK $ 110,857
NATIONSBANK $ 1,455,490
NBD $ 119,528
PNC BANK $ 321,920
BANK ONE, TEXAS $ 80,564
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY
CREDIT CARD COMPANY) $15,844,954
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC $ 172,099
OTHER CASH ACCOUNTS $ 1,651,437
TOTAL CASH PER GENERAL LEDGER 43,095,089
</TABLE>
Page 2 of 2
<PAGE> 6
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
RECEIPTS AND DISBURSEMENTS
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
MONDAY 10/4/99 10/11/99 10/18/99 10/25/99 10/4/99
SUNDAY 10/10/99 10/17/99 10/24/99 10/31/99 10/31/99
--------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Receipts:
Sales Receipts $ 33,171 $ 31,904 $ 31,964 $ 34,568 $ 131,607
Miscellaneous Receipts 1,300 13 626 -- 1,939
-----------------------------------------------------------------------------------
Total Available collections 34,471 31,917 32,590 34,568 133,546
Disbursements:
Merchandise disbursements 33,662 38,114 55,590 44,295 171,661
Non-merchandise disbursements 23,147 17,305 20,253 21,052 81,757
-----------------------------------------------------------------------------------
Total Disbursements: $ 56,809 $ 55,419 $ 75,843 $ 65,347 $ 253,418
-----------------------------------------------------------------------------------
Change in cash $(22,338) $(23,502) $(43,253) $(30,779) $(119,872)
-----------------------------------------------------------------------------------
</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: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
4. PAYMENTS TO PROFESSIONALS OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
<TABLE>
<CAPTION>
VENDOR # VENDOR NAME CHECK AMT. CHECK DATE CHECK #
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
57117 Deloitte & Touche $ 78,799.00 10/6/99 30020374
94005 Donald A Blum $ 1,006.25 10/15/99 30021548
99459 Robert L. Berger & Associates $ 15,531.31 10/25/99 B0019885
63078 Weil Gotshal & Manges $ 18,777.66 10/25/99 B0019899
71217 Bass, Berry & Sims $ 78,102.40 10/25/99 B0019900
71217 Bass, Berry & Sims $103,959.68 10/25/99 B0019901
79108 Ernst & Young $172,897.00 10/25/99 B0019902
95384 Deloitte & Touche $ 5,557.05 10/25/99 B0019903
98378 Skadden, Arps, Slate, Meagher & Flom $414,855.00 10/25/99 B0019904
99104 Jay Alix & Associates $205,146.16 10/25/99 B0019905
99104 Jay Alix & Associates $222,701.10 10/25/99 B0019906
99444 Sitrick & Company $ 39,186.58 10/25/99 B0019907
99454 Harwell, Howard, Hyne, Gabbert, & Manner PC, Inc. $ 20,207.02 10/25/99 B0019908
98378 Skadden, Arps, Slate, Meagher & Flom $416,209.00 10/25/99 B0019909
99391 Otterbourg, Steindler, Houston, Rosen PC $179,204.66 10/25/99 B0019910
100906 Peter J. Solomon Company Limited $145,388.08 10/25/99 B0019911
50995 Brann & Isaacson $ 586.28 10/26/99 30023079
57117 Deloitte & Touche $ 23,678.25 10/26/99 30023082
44013 McCarter & English $ 2.30 10/28/99 30023485
53703 Barron & Stadfeld $ 124.20 10/28/99 30023487
67017 Barkley & Thompson $ 868.25 10/28/99 30023488
85716 Rissman, Weisberg, Barrett, Hurt, Donahue & McClain PA $ 74.28 10/28/99 30023491
94280 Best, Sharp, Holden, Best, Sullivan & Kempfert $ 12.50 10/28/99 30023495
95911 Kelly Lucas & Pacifico LLP $ 3,450.00 10/28/99 30023502
96221 Holt & Babbington $ 234.57 10/28/99 30023503
96684 Jeffrey S Sherbow PC $ 232.95 10/28/99 30023504
97660 Schnader, Harrison, Segal & Lewis LLP $ 5.88 10/28/99 30023506
95911 Kelly Lucas & Pacifico LLP $ 2,250.00 10/29/99 30023671
</TABLE>
<PAGE> 8
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL FORECAST FORECAST FORECAST
11/7/99 11/14/99 11/28/99 1/2/00
--------------------------------------------------
<S> <C> <C> <C> <C>
Ending Total Revolver Balance $350,292 $386,536 $399,949 $ 93,830
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 $ 57,601 $ 54,152 $ 47,255 $ 39,641
-------- -------- -------- --------
Total Extensions of Credit $535,042 $567,837 $574,353 $260,620
-------- -------- -------- --------
Borrowing Base $701,094 $741,415 $750,000 $547,704
Availability $166,052 $173,578 $175,647 $287,084
</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>
OCTOBER 31, OCTOBER 3,
1999 1999
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 43,095 $ 36,923
Accounts receivable 20,302 18,742
Inventories 890,121 772,299
Prepaid expenses and other assets (a) 57,498 78,666
---------- ----------
TOTAL CURRENT ASSETS 1,011,016 906,631
---------- ----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 356,783 359,057
Capitalized leases, net of accumulated amortization 13,786 14,012
---------- ----------
TOTAL PROPERTY AND EQUIPMENT 370,570 373,069
---------- ----------
Other assets and deferred charges (b) 55,570 62,281
---------- ----------
TOTAL ASSETS $1,436,658 $1,341,981
========== ==========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 326,221 $ 203,633
Accounts payable 112,781 112,833
Accrued expenses 165,874 166,404
State & local sales tax 15,593 16,008
Current maturities of long-term debt 1,000 1,000
---------- ----------
TOTAL CURRENT LIABILITIES 621,469 499,879
</TABLE>
Page 1 of 2
<PAGE> 10
FORM OPR - 1 AND 2 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 31, OCTOBER 3,
1999 1999
<S> <C> <C>
Long-Term Liabilities:
Long-term debt 98,500 98,500
Liabilities Subject To Compromise:
Accrued restructuring costs 52,912 55,353
Capitalized lease obligations 30,998 31,333
Long-term debt 435,099 439,558
Accounts payable 189,913 190,749
Accrued expenses 68,679 67,379
----------- -----------
Total Liabilities Subject To Compromise 777,600 784,372
TOTAL LIABILITIES 1,497,569 1,382,751
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 50,012 50,012
Additional paid-in-capital 6,465 4,965
Deferred compensation (780) (800)
Accumulated other comprehensive loss (869) (869)
Retained (deficit) earnings (115,738) (94,077)
----------- -----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (60,910) (40,770)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 1,436,658 $ 1,341,981
=========== ===========
</TABLE>
(a) Prepaid expenses and other assets decreased primarily due to cash in
advance payments decreasing by approximately $11,000.
(b) Net restricted cash decreased by approximately $6 million primarily
due to adequate protection payments.
Page 2 of 2
<PAGE> 11
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 10/31/99
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: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 10/31/99
FORM OPR-4
<TABLE>
<CAPTION>
TOTAL CURRENT
--------- ---------
<S> <C> <C>
Trade Accounts Payable (Merchandise) $ 112,781 $ 112,781
<CAPTION>
TOTAL CURRENT
---------- ---------
<S> <C> <C>
Expense & other payables $ 165,874 $ 165,874
</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: OCTOBER 4, 1999 THROUGH OCTOBER 31, 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 121,933 121,933
-----------------------------
SUBTOTAL 8,533,381 8,533,381
-----------------------------
Sales/Use Tax SUBTOTAL Various Various 15,592,510 15,592,510
-----------------------------
Personal Property Tax * Various Various 1,028,687 1,028,687
Real Estate Taxes * Various Various 8,203,034 8,203,034
Inventory Taxes * Various Various 1,422,934 1,422,934
Gross Receipts/Bus Licenses * Various Various 165,029 165,029
Franchise Taxes * Various Various 401,597 401,597
-----------------------------
SUBTOTAL 11,221,281 11,221,281
------------------------------
==============================
TOTAL TAXES PAYABLE 35,347,172 35,347,172
==============================
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
<PAGE> 14
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASH NAME: SERVICE MERCHANDISE COMPANY, INC. ET. AL.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: OCTOBER 4, 1999 THROUGH OCTOBER 31, 1999
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DATE TOTAL DUE
INCURRED DATE DUE (10/31/99 BALANCE)
------------------------------------------------
<S> <C> <C> <C>
POST PETITION SECURED DEBT
Revolver Borrowings 3/27/99 6/30/01 326,221
Facility Standby Letters of Credit 3/27/99 6/30/01 27,514
Facility Trade Letters of Credit 3/27/99 6/30/01 61,266
Term Loans 3/27/99 6/30/01 99,500
----------
TOTAL EXTENSIONS OF CREDIT 514,501
POST PETITION UNSECURED DEBT --
ACCRUED INTEREST PAYABLE $ 1,758
</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
OCTOBER 4, 1999
THROUGH
OCTOBER 31, 1999
-----------------
<S> <C>
Net Sales $ 121,968
Costs of merchandise sold and buying and occupancy expense 91,955
---------
Gross margin after cost of merchandise sold and buying
and occupancy expenses $ 30,012
Selling, General and Administrative Expenses:
Employment Expense 25,109
Net Advertising 11,148
Banking and Other Fees 1,657
Real Estate and Other Taxes 1,785
Supplies 1,795
Communication and Equipment 571
Travel 548
UCC and Other Services (a) (3,142)
Legal and Professional 481
Sales and Shipping 134
Insurance 683
Miscellaneous (72)
Credit Card Services (54)
---------
Total Selling, General and Administrative Expenses 40,643
</TABLE>
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<PAGE> 16
FORM OPR-5 SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR - IN - POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACTIVITY
OCTOBER 4, 1999
THROUGH
OCTOBER 31, 1999
-----------------
<S> <C>
Other expense/(income), net 2,332
Restructuring charge (b) (2,085)
Depreciation and amortization 3,079
--------
Earnings (loss) before interest, reorganization items, and income tax (13,958)
Interest expense - debt 4,389
Interest expense - capitalized leases 316
--------
Earnings (loss) before reorganization items, and income tax (18,663)
Reorganization Items:
Legal and professional 1,759
Miscellaneous fees 196
Close store charges 1,045
--------
Total Reorganization Items 3,000
Earnings (loss) before income tax (21,663)
Income tax benefit --
--------
Net earnings (loss) $(21,663)
========
</TABLE>
(a) Includes Uniform Inventory Cost Capitalization adjustment to reflect
revised estimate of inventoriable costs.
(b) Includes restructure charge accrual true-up on auctioned real estate
properties.
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