<PAGE> 1
EXHIBIT 99
UNITED STATES BANKRUPTCY COURT
MIDDLE DISTRICT OF TENNESSEE
In re: Case No.:399-02649 THROUGH 399-02680
---------------------------
SERVICE MERCHANDISE COMPANY, INC.
---------------------------------
Judge: PAINE
---------------------------
Chapter 11
Debtor(s)
MONTHLY OPERATING REPORT FOR PERIOD ENDING July 2, 2000
------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
---------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the
period commencing May 29, 2000 and ending July 2, 2000 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: /s/ THOMAS L. GARRETT, JR.
-----------------------------------------------------
Name and Title: THOMAS L. GARRETT, JR., SENIOR VICE PRESIDENT & CFO
-----------------------------------------------------
Address: 7100 SERVICE MERCHANDISE DRIVE
-----------------------------------------------------
BRENTWOOD, TENNESSEE 37027
-----------------------------------------------------
Telephone No: (615) 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: MAY 29, 2000 THROUGH JULY 2, 2000
1. Payroll
<TABLE>
<CAPTION>
WAGES TAXES
OFFICERS TITLE GROSS NET DUE PAID
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
SAM CUSANO CHIEF EXECUTIVE OFFICER 62,688.10 40,015.85 4,500.54 17,743.41
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY 34,483.63 23,082.41 2,186.06 8,916.21
THOMAS L. GARRETT, JR. SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 31,147.08 21,457.10 1,836.10 7,475.93
GARY SEASE SENIOR VICE PRESIDENT, LOGISTICS 31,627.86 20,594.61 2,043.23 8,023.64
CHARLES K. SEPTER PRESIDENT AND CHIEF OPERATING OFFICER 48,845.20 30,822.33 3,404.61 13,609.83
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 14,443.50 10,549.32 562.27 2,245.76
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION 14,481.75 9,731.75 624.77 2,442.48
ERIC A. KOVATS VICE PRESIDENT, STORES 27,288.93 18,733.98 1,536.49 6,292.76
KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT 16,389.85 11,183.92 1,023.70 4,048.73
BILLY STEWART ASSISTANT TAX VICE PRESIDENT, TAX 8,766.67 6,596.12 310.72 1,082.53
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 15,412.15 11,749.73 649.17 2,586.50
</TABLE>
<PAGE> 3
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE CONPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: May 29, 2000 THROUGH July 2, 2000
2. INSURANCE
<TABLE>
<CAPTION>
DATE
COVERAGE POLICY EXPIRATION PREMIUM COVERAGE
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THRU
--------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Property Fireman's Fund Insurance Co $5 Million CCIPW12011 12/31/00 $1,441,249 12/31/00
Royal $5 Million RHD314289 12/31/00 $100,000 12/31/00
Westchester Fire $15 Million 1XA394310 12/31/00 $50,100 12/31/00
Allianz Insurance Co $12 Million CLP1034720 12/31/00 $20,040 12/31/00
TIG Insurance Co $13 Million XPT38797667 12/31/00 $32,500 12/31/00
Westchester Fire $20 Million 1XA394311 12/31/00 $10,020 12/31/00
Allianz Insurance Co $30 Million CLP1034720 12/31/00 $15,030 12/31/00
Allianz Insurance Co $25 Million CLP1034720 12/31/00 $6,680 12/31/00
Boiler & Machinery Hartford Steam Boiler $10 Million 4914539 12/31/00 $8,383 12/31/00
Transit Fireman's Fund Insurance Co $1 Million CCIMG72820 12/31/00 $8,525 12/31/00
Ocean Cargo Fireman's Fund Insurance Co $10 Million CR37211 12/31/00 $25,000 12/31/00
Special Crime Reliance Insurance Co $25 Million NFK1951937 05/01/02 $13,458 05/01/02
Crime National Union Fire Ins Co $10 Million 858-0797 03/01/01 $56,505 03/01/01
Fiduciary National Union Fire Ins Co $10 Million 267-81-30 03/01/01 $19,140 03/01/01
Employment Practices
Liability Chubb Insurance Co $10 Million 81278901A 03/01/01 $130,845 03/01/01
Royal Insurance Co $10 Million PSF000010 03/01/01 $56,364 03/01/01
Directors & Officers Continental Insurance Co $10 Million 300714943 03/01/01 $453,500 03/01/01
Chubb Insurance Co $10 Million 81278902-A 03/01/01 $266,666 03/01/01
Royal Insurance Co $10 Million PSF000009 03/01/01 $133,000 03/01/01
Umbrella Federal Insurance Co $50 Million 79763295 12/31/01 $63,357 12/31/00
Excess Liability American Guarantee & Liab $50 Million AEC287610700 12/31/00 $25,000 12/31/00
International Ace American Ins Co $1 Million PHF051491 12/31/00 $2,500 12/31/00
Punitive Damages Chubb Atlantic Indemnity $50 Million (00) 3310-05-98 12/31/00 $17,160 12/31/00
Punitive Damages - Excess Zurich International Bermuda $50 Million ZGEB-091 PD 12/31/00 $5,000 12/31/00
General Liability Ace American Ins Co $5 Million XSLG19903254 12/31/00 $11,032 12/31/00
Workers' Compensation Pacific Employers Ins Co Statutory WLRC42662112 12/31/00 $19,978 12/31/00
WC Excess Ace American Ins Co Statutory XWC011950 12/31/00 $1,601 12/31/00
WC Contractual Indemnity Illinois Union Insurance Co Statutory CTPG19903461 12/31/00 $2,083 12/31/00
WC Nevada Ace American Ins Co Statutory NWCC42662173 12/31/00 $1,737 12/31/00
Auto Pacific Employers Ins Co $1 Million ISAH07571008 12/31/00 $2,083 12/31/00
</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: MAY 29, 2000 THROUGH JULY 2, 2000
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
<TABLE>
<S> <C>
CASH IN STORES AND HOME OFFICE
------------------------------
HOME OFFICE $ 9,250
RETAIL SAFE FUNDS 1,985,836
CORPORATE ACCOUNTS 3,520,076
------------------ ---------
STORE DEPOSITORY ACCOUNTS
-------------------------
FIRST TENNESSEE 693,744
SOCIETY NATIONAL BANK 786,710
BANK OF BOSTON 391,382
BANK OF BOSTON CONNECTICUT 195,329
FIRST UNION 2,528,377
HARRIS TRUST 390,903
BANK ONE LOUISIANA 1,170,818
ABN - AMRO BANK 259,431
COMERICA BANK 286,350
AM SOUTH 313,512
BANK OF AMERICA CALIFORNIA 671,243
FIRST AMERICAN NATIONAL BANK 281,333
HERITAGE BANK OF NEVADA 775
BANK OF OKLAHOMA 450,413
CHASE BANK OF TEXAS 768,162
SINGLE STORE DEPOSITORY ACCOUNTS 81,548
WELLS FARGO BANK 111,664
NATIONSBANK 89,398
BANK ONE, IN 223,544
PNC BANK 881,339
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 11,913,273
------------------------------------------------------------------
OTHER DEPOSITORY ACCOUNTS
-------------------------
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 68,855
OTHER CASH ACCOUNTS 1,646,104
-----------
TOTAL CASH PER GENERAL LEDGER $29,719,369
===========
</TABLE>
<PAGE> 5
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 29, 2000 THROUGH JULY 2, 2000
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 05/29/00 06/05/00 06/12/00 06/19/00 06/26/00 05/29/00
Sunday 06/04/00 06/11/00 06/18/00 06/25/00 07/02/00 07/02/00
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Receipts:
Sales receipts $ 34,648 $ 38,032 $ 38,145 $ 39,424 $ 32,472 $ 182,721
Miscellaneous receipts - - 2,020 - - 2,020
----------------------------------------------------------------------------
Total available collections 34,648 38,032 40,165 39,424 32,472 184,741
Disbursements:
Merchandise disbursements 13,502 13,938 8,168 10,159 12,925 58,692
Non-merchandise disbursements 16,675 14,600 15,811 18,855 18,119 84,060
----------------------------------------------------------------------------
Total disbursements: 30,177 28,538 23,979 29,014 31,044 142,752
----------------------------------------------------------------------------
Net receipts/(disbursements) $ 4,471 $ 9,494 $ 16,186 $ 10,410 $ 1,428 $ 41,989
============================================================================
</TABLE>
<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: MAY 29, 2000 THROUGH JULY 2, 2000
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Actual Forecast Forecast Forecast Forecast
07/16/00 07/23/00 07/30/00 08/27/00 10/01/00
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Ending total revolver balance $ 68,095 $ 76,374 $ 85,388 $128,662 $159,434
Term loan 60,000 60,000 60,000 60,000 60,000
Standby letters of credit 27,364 27,112 27,112 27,056 27,056
Trade letters of credit 27,894 30,270 32,128 31,118 28,386
-------- -------- -------- -------- --------
Total extensions of credit 183,353 193,756 204,628 246,836 274,876
Borrowing base 453,134 449,690 443,950 429,605 460,655
-------- -------- -------- -------- --------
Availability $269,781 $255,934 $239,322 $182,769 $185,779
======== ======== ======== ======== ========
</TABLE>
<PAGE> 7
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASED NAME: SERVICE MERCHANDISE COMPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: May 29, 2000 THROUGH July 2, 2000
4. Payments to Professionals May 29, 2000 through July 2, 2000
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
101730 CBIZ Property Tax Solutions, Inc. $7,645.19 06/01/00 50004983
101730 CBIZ Property Tax Solutions, Inc. $1,496.32 06/01/00 50004984
99459 Robert L. Berger & Associates $44,772.57 06/05/00 B0021957
86237 Brusniak, Clement, Harrison & McCool, PC $250.00 06/06/00 50005352
101606 Service Real Estate Venture $170,430.26 06/09/00 B0022000
57117 Deloitte & Touche $850.00 06/13/00 50006055
99329 Aegis Property Tax Specialists $4,118.83 06/13/00 50006056
99391 Otterbourg, Steindler, Houston & Rosen, PC $102,820.40 06/15/00 B0022029
98378 Skadden, Arps, Slate, Meagher & Flom $558,487.00 06/15/00 B0022030
99444 Sitrick & Company $187,999.55 06/15/00 B0022031
101993 Rothschild, Inc. $86,640.87 06/15/00 B0022032
99444 Sitrick & Company $55,432.25 06/15/00 B0022035
101607 Price Waterhouse Coopers LLP $403,960.00 06/23/00 50007161
57117 Deloitte & Touche $16,691.50 06/23/00 50007172
99459 Robert L. Berger & Associates $50,112.46 06/23/00 B0022105
101730 CBIZ Property Tax Solutions, Inc. $328.97 06/26/00 50007336
101730 CBIZ Property Tax Solutions, Inc. $50.81 06/26/00 50007337
101730 CBIZ Property Tax Solutions, Inc. $2,313.53 06/26/00 50007338
101730 CBIZ Property Tax Solutions, Inc. $11,216.52 06/26/00 50007339
101730 CBIZ Property Tax Solutions, Inc. $1,898.12 06/26/00 50007340
100906 Peter J Solomon Company $116,540.25 06/27/00 B0022121
101232 E & Y Restructuring $66,958.00 06/27/00 B0022122
71217 Bass, Berry & Sims $92,225.55 06/27/00 B0022123
99104 Jay Alix & Associates $171,510.68 06/27/00 B0022124
99454 Harwell, Howard, Hyne, Gabbert & Manner $29,354.17 06/27/00 B0022125
57117 Deloitte & Touche $43,670.56 06/30/00 50008125
**Payments issued in a prior period that were inadvertently not reported**
101730 CBIZ Property Tax Solutions, Inc. $5,212.50 04/05/00 30043492
101730 CBIZ Property Tax Solutions, Inc. $13,450.00 04/05/00 30043493
101730 CBIZ Property Tax Solutions, Inc. $4,931.25 05/16/00 50003081
101730 CBIZ Property Tax Solutions, Inc. $2,757.74 05/18/00 50003404
101730 CBIZ Property Tax Solutions, Inc. $12,000.00 05/19/00 50003559
101730 CBIZ Property Tax Solutions, Inc. $13,075.00 05/19/00 50003560
</TABLE>
<PAGE> 8
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
July 2, May 28,
2000 2000
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 29,719 $ 56,793
Accounts receivable 8,268 7,821
Inventories 513,592 589,546
Prepaid expenses and other assets 16,968 20,111
----------- -----------
TOTAL CURRENT ASSETS 568,547 674,271
----------- -----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 348,190 348,714
Capitalized leases, net of accumulated amortization 13,410 13,650
----------- -----------
TOTAL PROPERTY AND EQUIPMENT 361,599 362,364
----------- -----------
Other assets and deferred charges 51,836 52,624
----------- -----------
TOTAL ASSETS $ 981,982 $ 1,089,259
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 76,192 $ 130,000
Accounts payable 54,753 62,718
Accrued expenses 153,338 151,770
State & local sales tax 14,985 14,868
Current maturities of long-term debt -- --
Current maturities capitalized leases 305 329
----------- -----------
TOTAL CURRENT LIABILITIES 299,573 359,684
Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 1,639 1,918
Liabilities Subject To Compromise:
Accrued restructuring costs 43,337 44,477
Capitalized lease obligations 24,798 24,798
Long-term debt 424,003 424,872
Accounts payable 195,538 194,098
Accrued expenses 66,609 66,270
----------- -----------
Total Liabilities Subject To Compromise 754,285 754,514
TOTAL LIABILITIES 1,115,497 1,176,116
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,979 49,979
Additional paid-in-capital 6,211 6,211
Deferred compensation (467) (486)
Accumulated other comprehensive loss -- --
Retained (deficit) earnings (189,238) (142,562)
----------- -----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (133,515) (86,858)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 981,982 $ 1,089,259
=========== ===========
</TABLE>
<PAGE> 9
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: MAY 28, 2000 THROUGH JULY 2, 2000
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 07/02/00
FORM OPR-3 NOT APPLICABLE
<PAGE> 10
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 29, 2000 THROUGH July 2, 2000
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 07/2/00
FORM OPR-4
<TABLE>
<CAPTION>
Total
--------
<S> <C>
Trade Accounts Payable (Merchandise) $ 54,753
Total
--------
Expense & other payables $153,338
</TABLE>
<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 29 2000 THROUGH JULY 2, 2000
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
<TABLE>
<CAPTION>
Date Date Total
TAXES PAYABLE Incurred Due Due
-------------------------------------------
<S> <C> <C> <C>
Federal income tax ** Various Various 7,843,442
State income tax Various Various (45,452)
-----------
SUBTOTAL 7,797,990
-----------
Sales/use tax SUBTOTAL Various Various 14,985,434
-----------
Personal property tax * Various Various 2,805,056
Real estate taxes * Various Various 10,807,335
Inventory taxes * Various Various -
Gross receipts/bus. licenses * Various Various 97,185
Franchise taxes * Various Various 389,460
-----------
SUBTOTAL 14,099,036
-----------
===========
TOTAL TAXES PAYABLE 36,882,460
===========
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
<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 29, 2000 THROUGH JULY 2, 2000
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
<TABLE>
<CAPTION>
(Dollars in Thousands)
DATE TOTAL DUE
INCURRED DATE DUE (7/2/00 Balance)
------------------------------------------------
POST PETITION SECURED DEBT
<S> <C> <C> <C>
Revolver borrowings 04/14/00 04/14/04 $ 76,192
Facility standby letters of credit 04/14/00 04/14/04 27,363
Facility trade letters of credit 04/14/00 04/14/04 18,333
Term loans 04/14/00 04/14/04 60,000
----------
TOTAL EXTENSIONS OF CREDIT $ 181,888
==========
ACCRUED INTEREST PAYABLE $ 1,108
==========
</TABLE>
<PAGE> 13
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACTIVITY
MAY 30, 2000
THROUGH
JULY 2, 2000
------------
<S> <C>
Net Sales $ 156,660
Costs of merchandise sold and buying and occupancy expense 139,135
---------
Gross margin after cost of merchandise sold and buying and occupancy expenses 17,525
Selling, General and Administrative Expenses:
Net Employment Expense 33,922
Net Advertising 8,335
Banking and Other Fees 2,324
Real Estate and Other Taxes 2,315
Supplies 1,179
Communication and Equipment 363
Travel 665
UCC and Other Services 277
Legal and Professional 312
Sales and Shipping 79
Insurance 773
Miscellaneous (58)
Credit Card Services (54)
---------
Total Selling, General and Administrative Expenses 50,432
Other expense/(income), net 156
Restructuring charge (credit) (838)
Depreciation and amortization 3,856
---------
Earnings (loss) before interest, reorganization items, and income tax (36,081)
Interest expense - debt 2,988
Interest expense - capitalized leases 281
---------
Earnings (loss) before reorganization items, and income tax (39,350)
Reorganization Items:
Legal and Professional 6,922
Miscellaneous fees 681
Close Store Charges (275)
---------
Total Reorganization Items 7,328
Earnings (loss) before income tax (46,678)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
---------
Net earnings (loss) $ (46,678)
=========
</TABLE>
