Freds 8K Regulation FD Disclosure | FRED 11 Mar 20

Exhibit 99.1

UNITED STATES BANKRUPTCY COURT

DISTRICT OF DELAWARE


In re:FRED’S, INC., et al.		Case No. 19-11984 (CSS)
		Reporting Period: January 5, 2020 to February 1, 2020

MONTHLY OPERATING REPORT

File with Court and submit copy to United States Trustee within 20 days after end of month

Submit copy of report to any official committee appointed in the case.

REQUIRED DOCUMENTS

Form No.

Document
Attached

Explanation
Attached

Affidavit/Supplement
Attached

Schedule of Cash Receipts and Disbursements

MOR-1

✓

Bank Reconciliation (or copies of debtor’s bank reconciliations)

MOR-1a

✓

Schedule of Professional Fees Paid

MOR-1b

✓

Copies of bank statements

Cash disbursements journals

Statement of Operations

MOR-2

✓

Balance Sheet

MOR-3

✓

Status of Postpetition Taxes

MOR-4

✓

Copies of IRS Form 6123 or payment receipt

Copies of tax returns filed during reporting period

Summary of Unpaid Postpetition Debts

MOR-4

✓

Listing of aged accounts payable

MOR-4

✓

Accounts Receivable Reconciliation and Aging

MOR-5

✓

Debtor Questionnaire

MOR-5

✓

I declare under penalty of perjury (28 U.S.C. Section 1746) that this report and the attached documents are true and correct to the best of my knowledge and belief.



Signature of Debtor				Date


Signature of Joint Debtor				Date

/s/ Mark Renzi				3/5/2020
Signature of Authorized Individual*				Date

Mark Renzi				Chief Restructuring Officer
Printed Name of Authorized Individual				Title of Authorized Individual

*	Authorized individual must be an officer, director or shareholder if debtor is a corporation; a partner if debtor is a partnership; a manager or member if debtor is a limited liability company.

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

SCHEDULE OF CASH RECEIPTS AND DISBURSEMENTS

For period from January 5, 2020 to February 1, 2020


($ in 000’s) Cash Flow Summary	Current Month			Cumulative
Receipts
FS Collections		—			28,296
Rx Collections⁽¹⁾		2,458			34,470
Asset Sales		335			61,138
Other Collections		296			4,474

Total Cash Receipts		3,089			128,378
Disbursements
FS Merchandise		—			(856	)
RX Merchandise		—			(10,670	)
Payroll and Other Employee Obligations		(147	)		(12,327	)
Rent		(111	)		(2,269	)
Sales Tax		—			(3,971	)
Utilities		(52	)		(2,470	)
Other Operating Disbursements		(815	)		(11,739	)
Third Party Rx Reimbursement		(3,823	)		(10,062	)
OtherNon-Operating Disbursements		(295	)		(27,892	)

Total Cash Disbursements		(5,243	)		(82,257	)
Net Cash Flow⁽²⁾		(2,154	)		46,121

(1)

The Company collected pharmacy proceeds on behalf 3rd party buyers for sold pharmacies during this period; generally a one week delay from collecting to disbursing those proceeds.

(2)

The Company was operating under cash collateral over the cumulative period and cash was used to pay down the DIP loan.

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Total Disbursements by Filed Legal Entity (unaudited, in thousands)


For period from January 5, 2020 to February 1, 2020
Legal Entity	Case Number		Disbursements
Fred’s, Inc.		19-11984	$	5,132
Fred’s Stores of Tennessee, Inc.		19-11982	$	111
505 N. Main Opp, LLC		19-11983	$	—
National Equipment Management and Leasing, Inc.		19-11985	$	—
National Pharmaceutical Network, Inc.		19-11986	$	—
Summit Properties – Bridgeport, LLC		19-11987	$	—
Summit Properties – Jacksboro, LLC		19-11988	$	—
Reeves-Sain Drug Store, Inc.		19-11989	$	—

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Bank Reconciliations (unaudited)

Values in $

Debtor Name

Name of Institution

Type of Account

Account Number
(last 4 digits)

Account balance as of 2/1

Fred’s, Inc.

Regions Bank

Pharmacy Lockbox

7214

13,397

Fred’s, Inc.

Regions Bank

Payroll

5469

—

Fred’s, Inc.

Regions Bank

Master

5477

34,065

Fred’s, Inc.

Regions Bank

Master Funding

4352

117,848

Fred’s, Inc.

Regions Bank

Controlled Disbursement

3377

—

Fred’s, Inc.

Regions Bank

Sales Tax

2459

—

Fred’s, Inc.

Bank of America

EDI

4407

96,157

Fred’s, Inc.

MetaBank

Payroll Pay Cards

0011

16,752

Fred’s, Inc.

Regions Bank

Stub Rent Escrow Acct

5920

84,788

Fred’s, Inc.

Regions Bank

Utility Escrow Acct

5742

359,258

Fred’s, Inc.

Regions Bank

Asset Disposition

4585

30,626,465

NOTE: Account Balances provided as of 2/1/2020 or date of latest account activity

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Total Disbursements to Retained Professionals (unaudited, in thousands)


For period from January 5, 2020 to February 1, 2020
Retained Professionals	Role		Current Month Disbursements		Cumulative Disbursements
Morris, Nichols, Arsht & Tunnell LLP		Debtor Counsel		47		438
Akin Gump Strauss		Debtor Counsel		—		512
Kasowitz Benson Torres LLP		Debtor Counsel		459		1,768
Berkeley Research Group		Debtor Financial Advisor		469		1,567
Epiq Corporate Restructuring LLC		Claims Agent		—		463
Alvarez & Marsal LLC		UCC Financial Advisor		120		445
Lowenstein Sandler LLP		UCC Counsel		—		735
Womble Bond Dickinson		UCC Counsel		—		42

Total			$	1,096	$	5,969

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

MOR 2 - CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited, in thousands)


For period from January 5, 2020 to February 1, 2020
Net sales	8
Cost of goods sold⁽¹⁾	17,857

Gross profit	(17,849	)
Depreciation and amortization	—
Selling, general and administrative expenses	6,221

Operating income (loss)	(24,070	)
Gain (loss) from disposal of assets/liabilities	—
Interest expense (income)	213

Income (loss) before income taxes	(24,283	)
Provision (benefit) for income taxes	—

Net income (loss) from continuing operations	(24,283	)
Net income (loss) from discontinued operations	—

Net income (loss)	(24,283	)

(1)	Retail method of accounting used; inventorytrue-ups expensed to COGS as part of theyear-end close process; no cash impact

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

MOR 3 - CONSOLIDATED BALANCE SHEETS (unaudited, in thousands)


	As of Feb. 1 2020
ASSETS
Current assets:
Cash and cash equivalents⁽¹⁾		31,349
Inventories		—
Receivables, less allowance for doubtful accounts of $2,084		674
Othernon-trade receivables⁽²⁾		9,085
Prepaid expenses and other current assets		855

Total current assets		41,964
Property and equipment, less accumulated depreciation and amortization		55
Goodwill		—
Intangible assets, net		—
Other noncurrent assets, net⁽³⁾		11,053

Total assets		53,072

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable		71,184
Current portion of indebtedness		68
Accrued expenses and other		12,054

Total current liabilities		83,306
Long-term portion of indebtedness		14,388
Other noncurrent liabilities		5,005

Total liabilities		102,699

Shareholders’ equity:
Preferred stock, nonvoting, no par value		—
Preferred stock, Series A junior participating nonvoting, no par value		—
Preferred stock, Series C junior participating voting, no par value		—
Common stock, Class A voting, no par value		128,131
Common stock, Class B nonvoting, no par value		—
Treasury Stock, at cost		(10,826	)
Retained earnings		(167,487	)
Accumulated other comprehensive income		555

Total shareholders’ equity		(49,627	)

Total liabilities and shareholders’ equity		53,072

(1)	Cash includes pharmacy proceeds the Company collected on behalf of 3rd party buyers for sold pharmacies that had not been disbursed as of 2/1/20; the Company generally holds1-2 weeks of 3rd party pharmacy proceeds before disbursing funds

(2)	OtherNon-Trade Receivables include franchise receivables, scan-down receivables, pharmacy rebates, and other receivables; subject to adjustment due to collectability and other factors

(3)	OtherNon-Current Assets include outstanding letters of credit and utility deposits; subject to adjustment due to collectability and other factors

Note: This does not include potential lease rejection damages.

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

MOR - 4 Status of Post Petition Taxes

The Debtors continue to pay post-petition taxes as they become due and are current on those payments.

If payments become past due the Debtors will include a schedule in the MOR listing past due post-petition taxes.

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Summary of Unpaid Post-Petition Debts (unaudited, in Thousands)


Post-Petition Debts Aging Amount	Total
Current		—
0 - 30 Days Old		68
31 - 60 Days Old		178
61 - 90 Days Old		112
91+ Days Old		446

Total Post-Petition Debts		804

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Trade Receivable Aging (unaudited, in Thousands)


Trade Receivable Aging Amount	Credit Card		Pharmacy		Total		Allowance for Doubtful Accounts		Total, less Allowance for Doubtful Accounts
Current		—		—		—		—		—
0 - 30 Days Old		—		2,758		—		2,084		674
31 - 60 Days Old		—		—		—		—		—
61 - 90 Days Old		—		—		—		—		—
91+ Days Old		—		—		—		—		—

Total Trade Receivable		—		2,758		—		2,084		674

FRED’S, INC., et al.

DEBTORS AND DEBTORS IN POSSESSION

Questionnaire


				Yes	No
1. Have any assets been sold or transferred outside the normal course of business this reporting period? If yes, provide an explanation below. One owned store was sold to a third-party buyer during this period.				X
2. Have any funds been disbursed from any account other than a debtor in possession account this reporting period? If yes, provide an explanation below.					X
3. Have all post-petition tax returns been filed timely? If no, provide an explanation below.				X
4. Are workers compensation, general liability, and other necessary insurance coverages in effect? If no, provide an explanation below.				X
5. Has any bank account been opened during the reporting period? If yes, provide documentation identifying the opened account(s). If an investment has been opened provide the required documentation pursuant to the Delaware Local Rule4001-3.					X

Account Name	Purpose	Business	Acct Number	Bank Name	Date

Freds (FRED) 8-KRegulation FD Disclosure