<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 October 1, 2000
---------------
COMES NOW, SERVICE MERCHANDISE COMPANY, INC.
---------------------------------
Debtor-In-Possession, and hereby submits its Monthly Operating Report for the
period commencing August 28, 2000 and ending October 1, 2000 as shown by the
report and exhibits consisting of 15 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: October 23, 2000
----------------
DEBTOR-IN-POSSESSION
By: /s/ KENNETH A. CONWAY
-----------------------------------------------------
Name and Title: KENNETH A. CONWAY, VICE PRESIDENT AND CONTROLLER
-----------------------------------------------------
Address: 7100 SERVICE MERCHANDISE DRIVE
-----------------------------------------------------
BRENTWOOD, TENNESSEE 37027
-----------------------------------------------------
Telephone No: (615) 660-3340
-----------------------------------------------------
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: AUGUST 28, 2000 THROUGH OCTOBER 1, 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 38,065.97 6,500.54 17,693.29
C. STEVEN MOORE SENIOR VICE PRESIDENT, CHIEF ADMINISTRATIVE OFFICER,
GENERAL COUNSEL AND SECRETARY 34,483.63 23,124.93 2,185.87 8,873.68
THOMAS L. GARRETT, JR. SENIOR VICE PRESIDENT AND CHIEF FINANCIAL OFFICER 22,554.32 15,855.27 - 6,524.93
CHARLES K. SEPTER PRESIDENT AND CHIEF OPERATING OFFICER 48,845.20 30,910.82 3,411.01 13,592.87
ROBERT J. PINDRED VICE PRESIDENT AND TREASURER 14,443.50 11,169.63 615.93 2,437.24
JOE M. ELLIOTT VICE PRESIDENT, PROPERTY ADMINISTRATION 14,481.75 10,348.53 678.42 2,637.56
KARREN PRASIFKA ASSISTANT GENERAL COUNSEL VICE PRESIDENT 18,318.90 12,403.86 1,169.98 4,605.56
BILLY STEWART ASSISTANT TAX VICE PRESIDENT 9,629.62 7,265.73 310.71 1,226.41
KENNETH A. CONWAY VICE PRESIDENT AND CONTROLLER 15,412.15 10,307.91 506.10 1,988.69
ERIC A. KOVATS SENIOR VICE PRESIDENT, STORES 27,288.93 18,767.22 1,536.50 6,259.51
ROSE C. SEPTER SENIOR VICE PRESIDENT, JEWELRY MERCHANDISING 26,558.50 18,380.58 1,647.15 6,414.62
JERRY E. FOREMAN SENIOR VICE PRESIDENT, MERCHANDISING 32,111.43 21,588.24 2,022.83 8,169.56
</TABLE>
Page 2
<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: August 28, 2000 THROUGH October 1, 2000
2. INSURANCE
<TABLE>
<CAPTION>
COVERAGE POLICY EXPIRATION PREMIUM DATE COVERAGE
TYPE NAME OF CARRIER AMOUNT NUMBER DATE AMOUNT PAID THROUGH
---------------------------------------------------------------------------------------------------------------------------------
<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 3
<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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000
3. BANK ACCOUNTS
TOTAL CASH AND CASH EQUIVALENTS
<TABLE>
<S> <C>
CASH IN STORES AND HOME OFFICE
------------------------------
HOME OFFICE $ 7,670
RETAIL SAFE FUNDS 1,945,253
CORPORATE ACCOUNTS 1,773,725
STORE DEPOSITORY ACCOUNTS
FIRST TENNESSEE 533,205
KEY NATIONAL BANK 343,765
BANK OF BOSTON 268,507
BANK OF BOSTON CONNECTICUT 173,115
FIRST UNION 2,305,149
HARRIS TRUST 144,179
BANK ONE LOUISIANA 358,120
ABN - AMRO BANK 198,957
COMERICA BANK 222,651
AM SOUTH 296,848
BANK OF AMERICA CALIFORNIA 144,274
BANK OF OKLAHOMA 138,203
CHASE BANK OF TEXAS 602,504
SINGLE STORE DEPOSITORY ACCOUNTS 291,067
WELLS FARGO BANK 111,720
BANK OF AMERICA 124,106
BANK ONE, IN 196,932
PNC BANK 568,000
OAK BROOK BANK 488,419
CREDIT CARD CASH ACCOUNTS (SALES PROCESSED BY CREDIT CARD COMPANY) 10,134,545
------------------------------------------------------------------
OTHER DEPOSITORY ACCOUNTS
SERVICE MERCHANDISE - MUSCULAR DYSTROPHY ASSOC 93,837
OTHER CASH ACCOUNTS 910,868
-----------
TOTAL CASH PER GENERAL LEDGER $22,375,619
===========
</TABLE>
Page 4
<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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000
RECEIPTS AND DISBURSEMENTS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL TOTAL
Monday 08/28/00 09/04/00 09/11/00 09/18/00 09/25/00 08/28/00
Sunday 09/03/00 09/10/00 09/17/00 09/24/00 10/01/00 10/01/00
-------- -------- -------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Receipts:
Sales receipts $ 19,219 $ 17,579 $ 16,688 $ 15,878 $20,319 $ 89,683
Miscellaneous receipts -- -- 460 -- 23,067 23,527
-------- -------- -------- -------- ------- ---------
Total available collections 19,219 17,579 17,148 15,878 43,386 113,210
Disbursements:
Merchandise disbursements 15,445 9,956 17,877 22,683 17,941 83,902
Non-merchandise disbursements 13,081 14,379 17,463 21,247 16,628 82,798
-------- -------- -------- -------- ------- ---------
Total disbursements 28,526 24,335 35,340 43,930 34,569 166,700
-------- -------- -------- -------- ------- ---------
Net receipts/(disbursements) $ (9,307) $ (6,756) $(18,192) $(28,052) $ 8,817 $ (53,490)
======== ======== ======== ======== ======= =========
</TABLE>
Page 5
<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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000
ROLLING REVISED CASH FLOW FORECAST
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Actual Forecast Forecast Forecast
10/15/00 10/29/00 11/26/00 12/31/00
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Ending total revolver balance $181,822 $234,461 $306,845 $ 81,232
Term loan 60,000 60,000 60,000 60,000
Standby letters of credit 25,729 25,810 27,269 25,728
Trade letters of credit 25,934 12,888 18,264 21,163
-------- -------- -------- --------
Total extensions of credit 293,485 333,159 412,378 188,123
Borrowing base 475,709 485,347 535,048 425,549
-------- -------- -------- --------
Availability $182,224 $152,188 $122,670 $237,426
======== ======== ======== ========
</TABLE>
Page 6
<PAGE> 7
CHAPTER 11
MONTHLY OPERATING REPORT
MONTHLY REPORTING QUESTIONNAIRE
CASE NAME: SERVICE MERCHANDISE CONPANY, INC. et. al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD: August 28, 2000 THROUGH October 1, 2000
4. Payments to Professionals August 28, 2000 through October 1, 2000
<TABLE>
<CAPTION>
Vendor # Vendor Name Check Amt. Check Date Check #
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
89708 Deloitte & Touche $77,513.50 08/28/00 50015312
101606 Service Real Estate Venture $1,702.12 09/07/00 B0022748
99444 Sitrick & Company $36,613.77 09/08/00 70000012
99329 Aegis Property Tax Specialists $36,613.77 09/08/00 70000012
101232 E & Y Restructuring $60,249.00 09/15/00 B0022853
101625 DG Hart Associates $51,869.49 09/15/00 B0022854
101625 DG Hart Associates $55,312.35 09/15/00 B0022855
101625 DG Hart Associates $64,152.82 09/15/00 B0022856
71217 Bass, Berry & Sims $87,889.72 09/15/00 B0022858
86237 Brusniak, Clement, Harrison & McCool, PC $318.63 09/19/00 50017487
99459 Robert L. Berger & Associates $32,556.83 09/21/00 B0022887
57117 Deloitte & Touche $106,250.00 09/25/00 50018419
50995 Brann & Issacson $157.05 09/25/00 50018434
48779 Loss, Pavone & Orel $401.50 09/26/00 50018563
57117 Deloitte & Touche $19,740.24 09/26/00 50018564
63010 Rives & Peterson $904.16 09/26/00 50018565
67017 Barkley & Thompson $6,064.90 09/26/00 50018567
80443 Coudert Brothers $671.55 09/26/00 50018568
80679 McLain & Merritt $704.61 09/26/00 50018569
44013 McCarter & English $11,240.20 09/26/00 70000024
53703 Barron & Stadfeld, PC $1,514.10 09/27/00 50018671
71403 Seyfarth, Shaw, Fairweather & Geraldson $6,266.18 09/27/00 50018673
97660 Schnader, Harrison, Segal & Lewis $495.00 09/27/00 50018678
2642 Waller, Landsen, Dortch & Davis $1,976.32 09/28/00 50019034
53703 Barron & Stadfeld, PC $4,303.71 09/28/00 50019038
84573 Buchanan & Ingersoll $3,656.05 09/28/00 50019041
84740 Taft, Stettinius & Hollister $287.20 09/28/00 50019042
88778 Kenny, Nachwalter, Seymour, Arnold, Critchlow & Specter 5/15/00 09/28/00 50019043
94025 Littler, Mendelson, Fastiff, Tichy & Mathiason $347.20 09/28/00 50019046
96684 Jeffrey S. Sherbow $655.14 09/28/00 50019049
101993 Rothschild, Inc. $110,944.72 09/28/00 B0022934
98378 Skadden, Arps, Slate, Meagher & Flom $448,114.00 09/28/00 B0022935
99104 Jay Alix & Associates $110,215.41 09/28/00 B0022936
99391 Otterbourg, Steindler, Houston & Rosen $98,024.89 09/28/00 B0022937
99454 Harwell, Howard, Hyne, Gabbert & Manner, PC $28,173.70 09/28/00 B0022938
102132 E & Y Restructuring $103,396.00 09/28/00 B0022967
</TABLE>
Page 7
<PAGE> 8
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
OCTOBER 1, AUGUST 27,
2000 2000
----------- -----------
<S> <C> <C>
ASSETS
Current Assets:
Cash and cash equivalents $ 22,376 $ 22,000
Accounts receivable 7,906 6,920
Inventories 523,968 481,408
Prepaid expenses and other assets 22,641 14,213
----------- -----------
TOTAL CURRENT ASSETS 576,891 524,541
----------- -----------
PROPERTY AND EQUIPMENT
Owned assets, net of accumulated depreciation 347,253 353,353
Capitalized leases, net of accumulated amortization 12,921 13,135
----------- -----------
TOTAL PROPERTY AND EQUIPMENT 360,174 366,488
----------- -----------
Other assets and deferred charges 48,865 48,261
TOTAL ASSETS $ 985,930 $ 939,290
=========== ===========
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
Liabilities Not Subject To Compromise
Current Liabilities:
Notes payable to banks $ 139,485 $ 85,923
Accounts payable 77,873 66,305
Accrued expenses 151,250 149,637
State & local sales tax 10,423 12,108
Current maturities capitalized leases 88 90
----------- -----------
TOTAL CURRENT LIABILITIES 379,119 314,063
Long-Term Liabilities:
Long-term debt 60,000 60,000
Capitalized lease obligations 2,420 2,428
Liabilities Subject To Compromise:
Accrued restructuring costs 42,329 42,359
Capitalized lease obligations 23,229 23,542
Long-term debt 419,465 420,883
Accounts payable 196,787 196,302
Accrued expenses 67,364 68,102
----------- -----------
Total Liabilities Subject To Compromise 749,174 751,188
TOTAL LIABILITIES 1,190,713 1,127,679
----------- -----------
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY
Common stock 49,954 49,964
Additional paid-in-capital 6,017 6,094
Deferred compensation (327) (379)
Accumulated other comprehensive loss -- --
Retained (deficit) earnings (260,427) (244,068)
----------- -----------
TOTAL SHAREHOLDERS' (DEFICIT) EQUITY (204,783) (188,389)
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY $ 985,930 $ 939,290
=========== ===========
</TABLE>
Page 8
<PAGE> 9
CHAPTER 11
MONTHLY OPERATING REPORT
CASE NAME: SERVICE MERCHANDISE COMPANY, INC. et al.
CASE NUMBER: 399-02649 THROUGH 399-02680
PERIOD:AUGUST 29, 2000 THROUGH OCTOBER 1, 2000
SUMMARY OF ACCOUNTS RECEIVABLE
Month Ended: 10/01/00
FORM OPR-3 NOT APPLICABLE
Page 9
<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: August 28, 2000 THROUGH October 1, 2000
SCHEDULE OF POST PETITION LIABILITIES-ACCOUNTS PAYABLE
Month Ended: 10/01/2000
FORM OPR-4
<TABLE>
<CAPTION>
Total
--------
<S> <C>
Trade Accounts Payable (Merchandise) $ 77,873
<CAPTION>
Total
--------
Expense & other payables $151,250
</TABLE>
Page 10
<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: AUGUST 28, 2000 THROUGH OCTOBER 1, 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 (74,921)
----------
SUBTOTAL 7,768,521
----------
Sales/use tax SUBTOTAL * Various Various 10,422,644
----------
Personal property tax * Various Various 3,496,744
Real estate taxes * Various Various 12,342,194
Inventory taxes * Various Various -
Gross receipts/bus. licenses * Various Various 1,956
Franchise taxes * Various Various 485,031
----------
SUBTOTAL 16,325,925
----------
TOTAL TAXES PAYABLE 34,517,090
==========
</TABLE>
* liability included in accrued expenses on OPR-2
** tax reserve
Page 11
<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: AUGUST 28, 2000 THROUGH OCTOBER 1, 2000
SCHEDULE OF POST PETITION LIABILITIES
FORM OPR-4
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
DATE TOTAL DUE
INCURRED DATE DUE (10/01/00 BALANCE)
-----------------------------------------------
<S> <C> <C> <C>
POST PETITION SECURED DEBT
Revolver borrowings 04/14/00 04/14/04 $139,485
Facility standby letters of credit 04/14/00 04/14/04 25,902
Facility trade letters of credit 04/14/00 04/14/04 30,694
Term loans 04/14/00 04/14/04 60,000
--------
TOTAL EXTENSIONS OF CREDIT $256,081
========
ACCRUED INTEREST PAYABLE $ 1,873
========
</TABLE>
Page 12
<PAGE> 13
SERVICE MERCHANDISE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(DEBTOR-IN-POSSESSION)
(IN THOUSANDS)
<TABLE>
<CAPTION>
ACTIVITY
AUGUST 28, 2000
THROUGH
OCTOBER 1, 2000
---------------
<S> <C>
Net Sales $ 83,142
Costs of merchandise sold and buying and occupancy expense 62,374
--------
Gross margin after cost of merchandise sold and buying and occupancy expenses 20,768
Selling, General and Administrative Expenses:
Net Employment Expense 20,749
Net Advertising 9,097
Banking and Other Fees 1,244
Real Estate and Other Taxes 2,156
Supplies 946
Communication and Equipment 367
Travel 600
UCC and Other Services (361)
Legal and Professional 342
Sales and Shipping 96
Insurance 467
Miscellaneous (356)
Credit Card Services (52)
--------
Total Selling, General and Administrative Expenses 35,295
Other expense/(income), net (15)
Restructuring charge (credit) --
Depreciation and amortization 3,611
--------
Earnings (loss) before interest, reorganization items, and income tax (18,123)
Interest expense - debt 3,270
Interest expense - capitalized leases 288
--------
Earnings (loss) before reorganization items, and income tax (21,681)
Reorganization Items:
Legal and Professional 2,683
Miscellaneous fees 249
Loss (Gain) on Disposal of Assets (8,977)
Close Store Charges 723
--------
Total Reorganization Items (5,322)
Earnings (loss) before income tax (16,359)
Income tax benefit --
Cumulative Effect of Change in Accounting Principles --
--------
Net earnings (loss) $(16,359)
========
</TABLE>
Page 13
