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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: January 3, 2000
SERVICE MERCHANDISE COMPANY, INC.
(Debtor-in-Possession as of March 27, 1999)
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(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Tennessee 1-9223 62-0816060
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(State or other jurisdiction of incorporation) (Commission File Number) (I.R.S. Employer
Identification No.)
7100 Service Merchandise Boulevard, Brentwood, TN 37027
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(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (615) 660-6000
Not Applicable
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(Former name or former address, if changed since last report)
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Item 5. Other Events
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Service Merchandise Company, Inc. (the "Company") has filed the
Comparative Balance Sheets, Schedule of Postpetition Liabilities and Statement
of Income (Loss) for its monthly operating report for the period commencing
January 3, 1999 and ending January 30, 2000 (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 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: approval of plans and activities by the Bankruptcy Court,
including the proposed extension of the exclusivity period; 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; risks associated with third parties
seeking and obtaining Court action to terminate or shorten the exclusivity
period; the ability of the Company to operate successfully under a Chapter 11
proceeding, achieve planned sales and margin, and create and have approved a
reorganization plan in the Chapter 11 Cases; potential adverse developments with
respect to the Company's liquidity or results of operations; the ability of the
Company to obtain shipments, negotiate and maintain terms with vendors and
service providers for current orders; the ability to develop, fund and execute a
Year 2000 Business Plan; the ability of the Company to attract, retain and
compensate key executives and associates; competitive
2
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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 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; real estate occupancy and development
costs, including the substantial fixed investment costs associated with opening,
maintaining or closing a Company store; uncertainties with respect to continued
public trading in the Company's securities; and the ability to effect
conversions to new technological systems.
3
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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: March 13, 2000 By: /s/ C. Steven Moore
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C. Steven Moore
Senior Vice President, Chief Administrative
Officer, Secretary and General Counsel
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EXHIBIT INDEX
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No. Exhibit
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99 Operating Report for the period ending January 30, 2000
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EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
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<S> <C>
In re: Case No.: 399-02649 THROUGH 399-02680
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SERVICE MERCHANDISE COMPANY, INC.
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Judge: PAINE
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Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING January 30, 2000
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COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
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Debtor-In-Possession, and hereby submits its Final Monthly Operating Report for
the period commencing January 3, 2000
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and ending January 30, 2000 as shown by the report and exhibits consisting of 7 pages and
---------------- --
containing the following as indicated:
Monthly Reporting Questionnaire (Attachment 1)
[X] Comparative Balance Sheets (Forms OPR-1 & OPR-2)
Summary of Accounts Receivable (Form OPR-3)
[X] Schedule of Postpetition Liabilities (Form OPR-4)
Only the secured liability (postpetition) schedule
was filed with the preliminary report.
[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: 3/6/00 DEBTOR - IN - POSSESSION
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By: /s/ Tom Garrett
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Name and Title: TOM GARRETT, SENIOR VICE PRESIDENT & CFO
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Address: 7100 SERVICE MERCHANDISE DRIVE
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BRENTWOOD, TENNESSEE 37027
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Telephone No: 660-3477
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Note: Report subject to further verification and account reconciliation
procedures
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SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
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<CAPTION>
January 30, January 2,
2000 2000
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<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents (a) $ 28,695 $ 61,591
Accounts receivable 11,113 13,171
Inventories 675,440 642,997
Prepaid expenses and other assets 26,080 29,135
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TOTAL CURRENT ASSETS 741,328 746,894
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PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 351,000 353,078
Capitalized leases, net of accumulated amortization 14,673 14,636
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TOTAL PROPERTY AND EQUIPMENT 365,673 367,714
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Other assets and deferred charges 45,389 47,336
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TOTAL ASSETS $ 1,152,390 $ 1,161,944
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LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks (b) $ 81,313 $ 42,977
Accounts payable 71,070 67,318
Accrued expenses 166,390 181,898
State & local sales tax (c) 9,743 28,737
Current maturities of long-term debt 1,000 1,000
Current maturities capitalized leases 86 86
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TOTAL CURRENT LIABILITIES 329,601 322,016
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SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
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<CAPTION>
January 30, January 2,
2000 2000
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<S> <C> <C>
Long-Term Liabilities:
Long-term debt 98,250 98,500
Capitalized lease obligations 2,482 2,514
Liabilities Subject To Compromise:
Accrued restructuring costs 46,035 46,691
Capitalized lease obligations 27,687 29,150
Long-term debt 428,869 429,507
Accounts payable 190,839 189,877
Accrued expenses 60,560 60,750
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Total Liabilities Subject To Compromise 753,991 755,975
TOTAL LIABILITIES 1,184,323 1,179,005
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COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 50,006 50,006
Additional paid-in-capital 6,424 6,424
Deferred compensation (688) (708)
Accumulated other comprehensive loss -- --
Retained (deficit) earnings (87,674) (72,783)
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TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (31,932) (17,061)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 1,152,390 $ 1,161,944
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Notes:
(a) Cash and cash equivalents decreased primarily due to collection of in
transit cash and pending electronic funds transfer for the New Year's
holiday.
(b) Notes payable to banks decreased due to revolver payments.
(c) State and local sales tax decreased due to cash payments.
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CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: JANUARY 3, 1999 THROUGH JANUARY 30, 2000
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 01/30/2000
FORM OPR-4
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Total Current
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<S> <C> <C>
Trade Accounts Payable (Merchandise) $71,070 $71,070
<CAPTION>
Total Current
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<S> <C> <C>
Expense & other payables $166,390 $166,390
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CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: JANUARY 3, 2000 THROUGH JANUARY 30, 2000
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
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<CAPTION>
Date Date Total 0-30
TAXES PAYABLE Incurred Due Due Days
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<S> <C> <C> <C> <C>
Federal income tax ** Various Various $ 7,552,588 $ 7,552,588
State income tax Various Various (3,253) (3,253)
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SUBTOTAL 7,549,335 7,549,335
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Sales/use tax SUBTOTAL Various Various 9,743,335 9,743,335
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Personal property tax * Various Various 1,555,395 1,555,395
Real estate taxes * Various Various 8,537,231 8,537,231
Inventory taxes * Various Various 0 0
Gross receipts/bus. licenses * Various Various 69,872 69,872
Franchise taxes * Various Various 548,350 548,350
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SUBTOTAL 10,710,848 10,710,848
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TOTAL TAXES PAYABLE $ 28,003,518 $ 28,003,518
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* liability included in accrued expenses on OPR-2
** tax reserve
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SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
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<CAPTION>
ACTIVITY
JANUARY 3, 2000
THROUGH
JANUARY 30, 2000
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Net Sales $ 76,551
Costs of merchandise sold and buying and occupancy expense 60,373
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Gross margin after cost of merchandise sold and buying and occupancy expenses 16,178
Selling, General and Administrative Expenses:
Net Employment Expense 23,627
Net Advertising 1,226
Banking and Other Fees 1,276
Real Estate and Other Taxes 1,733
Supplies 832
Communication and Equipment 407
Travel 256
UCC and Other Services (a) (3,745)
Legal and Professional 364
Sales and Shipping 84
Insurance 251
Miscellaneous 63
Credit Card Services (70)
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Total Selling, General and Administrative Expenses 26,303
Other expense/(income), net (2,425)
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SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
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<S> <C>
Restructuring charge (73)
Depreciation and amortization 3,070
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Earnings (loss) before interest, reorganization items, and income tax (10,697)
Interest expense - debt 2,926
Interest expense - capitalized leases 311
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Earnings (loss) before reorganization items, and income tax (13,934)
Reorganization Items:
Legal and Professional 808
Miscellaneous fees 133
Close Store Charges 23
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Total Reorganization Items 963
Earnings (loss) before income tax (14,897)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
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Net earnings (loss) $(14,897)
========
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Note:
(a) Includes Uniform Inventory Cost Capitalization adjustment to reflect
revised estimate of inventoriable costs.
