-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HRJbKn2bRuWUD7qX1fg5JeFJtQVadAOYe/1u8q1ZGk5VyM16nMzHduj7XtOojWQp zpMoqImQB1PFN7RbzijgmQ== 0000950129-96-002110.txt : 19960911 0000950129-96-002110.hdr.sgml : 19960911 ACCESSION NUMBER: 0000950129-96-002110 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19960803 FILED AS OF DATE: 19960910 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MENS WEARHOUSE INC CENTRAL INDEX KEY: 0000884217 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-APPAREL & ACCESSORY STORES [5600] IRS NUMBER: 741790172 STATE OF INCORPORATION: TX FISCAL YEAR END: 0202 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20036 FILM NUMBER: 96628138 BUSINESS ADDRESS: STREET 1: 5803 GLENMONT DR CITY: HOUSTON STATE: TX ZIP: 77081 BUSINESS PHONE: 7132957200 MAIL ADDRESS: STREET 1: 5083 GLENMONT DR CITY: HOUSTON STATE: TX ZIP: 77081 10-Q 1 THE MEN'S WAREHOUSE, INC. - DATED 08/03/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (x) Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Quarterly Period Ended August 3, 1996. ( ) Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934 for the Transition Period from _________ to __________. Commission File No. 0-20036 THE MEN'S WEARHOUSE, INC. (Exact name of registrant as specified in its charter) -------------------- Texas 74-1790172 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 5803 Glenmont Drive Houston, Texas 77081 (Address of principal executive offices) (Zip code) (713) 295-7200 (Registrant's telephone number including area code) Indicate by check mark whether registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No X --------- --------- As of September 6, 1996 there were 20,919,017 common shares, $.01 par value, of the registrant outstanding. 2 PART 1 - FINANCIAL INFORMATION Item 1. Financial Statements THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
July 29, August 3, February 3, ASSETS 1995 1996 1996 ---------------- ----------------- ---------------- (UNAUDITED) (UNAUDITED) CURRENT ASSETS: Cash $ 1,209,000 $ 12,795,000 $ 2,547,000 Inventories 139,057,000 161,002,000 136,797,000 Other current assets 5,337,000 6,770,000 5,663,000 ---------------- ----------------- ---------------- Total Current Assets 145,603,000 180,567,000 145,007,000 ---------------- ----------------- ---------------- PROPERTY AND EQUIPMENT, NET 50,432,000 63,954,000 57,145,000 OTHER ASSETS 1,883,000 10,015,000 1,953,000 ---------------- ----------------- ---------------- TOTAL $ 197,918,000 $ 254,536,000 $ 204,105,000 ================ ================= ================ LIABILITIES AND SHAREHOLDERS' EQUITY CURRENT LIABILITIES: Accounts payable $ 34,563,000 $ 29,888,000 $ 33,810,000 Accrued expenses 11,489,000 12,905,000 16,507,000 Income taxes payable 1,288,000 2,196,000 5,276,000 Current portion of obligations under capital leases 650,000 513,000 616,000 ---------------- ----------------- ---------------- Total Current Liabilities 47,990,000 45,502,000 56,209,000 LONG-TERM DEBT 54,109,000 57,500,000 4,250,000 OBLIGATIONS UNDER CAPITAL LEASES 755,000 212,000 415,000 OTHER LONG-TERM LIABILITIES 4,394,000 6,346,000 6,270,000 ---------------- ----------------- ---------------- Total Liabilities 107,248,000 109,560,000 67,144,000 ---------------- ----------------- ---------------- SHAREHOLDERS' EQUITY: Common stock 128,000 210,000 209,000 Capital in excess of par 42,619,000 78,054,000 77,299,000 Retained earnings 48,642,000 67,291,000 60,173,000 ---------------- ----------------- ---------------- Total 91,389,000 145,555,000 137,681,000 Treasury common stock, at cost (719,000) (579,000) (720,000) ---------------- ----------------- ---------------- Total Shareholders' Equity 90,670,000 144,976,000 136,961,000 ---------------- ----------------- ---------------- TOTAL $ 197,918,000 $ 254,536,000 $ 204,105,000 ================ ================= ================
See notes to consolidated financial statements. 3 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) FOR THE INTERIM PERIODS ENDED JULY 29, 1995 AND AUGUST 3, 1996
Three Months Ended -------------------------------- 1995 1996 ----------- ------------ Net Sales $85,714,000 $ 98,885,000 Cost of goods sold, including buying and occupancy costs 52,074,000 59,923,000 ----------- ------------ Gross margin 33,640,000 38,962,000 Selling, general and administrative expenses 27,775,000 31,640,000 ----------- ------------ Operating income 5,865,000 7,322,000 Interest expense (net of interest income of $2,000 and $395,000 in 1995 and 1996, respectively) 842,000 500,000 ----------- ------------ Earnings before income taxes 5,023,000 6,822,000 Provision for income taxes 2,072,000 2,813,000 ----------- ------------ Net earnings $ 2,951,000 $ 4,009,000 =========== ============ Net earnings per share of common stock $ 0.15 $ 0.19 =========== ============ Weighted average number of common and common equivalent shares outstanding 19,398,000 21,213,000 =========== ============
See notes to the consolidated financial statements. 4 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS (UNAUDITED) FOR THE INTERIM PERIODS ENDED JULY 29, 1995 AND AUGUST 3, 1996
Six Months Ended -------------------------------- 1995 1996 ------------- ------------ Net Sales $ 167,069,000 $202,582,000 Cost of goods sold, including buying and occupancy costs 102,993,000 124,658,000 ------------- ------------ Gross margin 64,076,000 77,924,000 Selling, general and administrative expenses 54,124,000 64,971,000 ------------- ------------ Operating income 9,952,000 12,953,000 Interest expense (net of interest income of $37,000 and $762,000 in 1995 and 1996, respectively) 1,480,000 839,000 ------------- ------------ Earnings before income taxes 8,472,000 12,114,000 Provision for income taxes 3,495,000 4,996,000 ------------- ------------ Net earnings $ 4,977,000 $ 7,118,000 ============= ============ Net earnings per share of common stock $ 0.26 $ 0.34 ============= ============ Weighted average number of common and common equivalent shares outstanding 19,349,000 21,212,000 ============= ============
See notes to the consolidated financial statements. 5 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE INTERIM PERIODS ENDED JULY 29, 1995 AND AUGUST 3, 1996
Six Months Ended ------------------------------- 1995 1996 ------------- ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net Earnings $ 4,977,000 $ 7,118,000 Adjustments to reconcile net earnings to net cash provided (used) by operating activities: Depreciation and amortization 4,372,000 5,652,000 Increase in inventories (30,869,000) (24,205,000) (Increase) decrease in other assets 46,000 (1,257,000) Increase (decrease) in accounts payable and accrued expenses 3,572,000 (6,900,000) Decrease in income taxes payable (1,332,000) (2,038,000) Decrease in other liabilities 229,000 76,000 ------------- ------------ Net cash provided (used) by operating activities (19,005,000) (21,554,000) ------------- ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures (10,889,000) (18,373,000) ------------- ------------ Net cash used by investing activities (10,889,000) (18,373,000) ------------- ------------ CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from sale of Notes - 55,500,000 Bank borrowings 36,609,000 18,750,000 Principal payments on bank debt (6,000,000) (23,000,000) Principal payments under capital lease obligations (389,000) (306,000) Payments of deferred loan costs (104,000) - Exercise of stock options 368,000 582,000 Option shares relinquished for tax obligations (610,000) (1,351,000) ------------- ------------ Net cash provided by financing activities 29,874,000 50,175,000 ------------- ------------ INCREASE IN CASH (20,000) 10,248,000 ------------- ------------ CASH: Beginning of period 1,229,000 2,547,000 ------------- ------------ End of period $ 1,209,000 $ 12,795,000 ============= ============
See notes to consolidated financial statements. 6 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) 1. Basis of Presentation The consolidated balance sheets as of July 29, 1995 and August 3, 1996 and the consolidated statements of earnings and cash flows for the interim periods ended July 29, 1995 and August 3, 1996 have been prepared by the Company, without audit. In the opinion of management, all adjustments (which include only normal recurring accruals) considered necessary to present fairly the financial position, results of operations and cash flows of the Company at July 29, 1995 and August 3, 1996 and for all periods presented, have been made. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with generally accepted accounting principles have been omitted from these interim financial statements. It is suggested that these consolidated financial statements be read in conjunction with the consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K. The results of operations for the six months ended August 3, 1996 are not necessarily indicative of the operating results that may be expected for the year ending February 1, 1997. 2. Earnings per Share The computation of net earnings per share for the six months ended July 29, 1995 has been retroactively adjusted to give effect to the 3-for-2 stock split declared on October 20, 1995, which was effected as a 50% stock dividend to shareholders. 3. Supplemental Disclosures of Cash Flow Information
Six Months Ended ---------------- 1995 1996 ---- ---- Cash paid during the period for: Interest $ 1,322,000 $ 269,000 =========== ============ Income taxes $ 4,826,000 $ 7,034,000 =========== ============ Non-cash investing and financing activities: Additional paid in capital resulting from tax benefit recognized upon exercise of stock options $ 491,000 $ 1,042,000 =========== ============ Treasury stock issued to employee stock ownership plan $ 500,000 $ 625,000 =========== ============
7 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General In large part, changes in net sales and operating results are impacted by the number of stores operating during the fiscal period. The following information is provided with respect to stores in operation during each of the respective fiscal periods. References herein to years are to the Company's 52 - or 53 - week fiscal year which ends on the Saturday nearest January 31 in the following calendar year. For example, references to "1996" mean the fiscal year ending February 1, 1997.
Three Months Ended Six Months Ended Fiscal Year Ended ------------------- ------------------ ----------------- July 29, August 3, July 29, August 3, February 3, 1995 1996 1995 1996 1996 ------------------- ------------------ ----------------- Stores open at beginning of 242 285 231 278 231 period Opened during period 16 12 28 19 48 Closed during period - (1) - (1) ---- ------ ----- ------ --- - - Stores open at end of period 258 297 258 297 278 ==== ====== ===== ====== ===
Results of Operations - Three Months Net sales in the second quarter of 1996 increased $13.2 million, or 15.4%, over the prior year due to a comparable store sales increase as well as sales from stores opened after July 29, 1995. Comparable store sales (which are calculated by excluding the net sales of a store for any month of one period if the store was not open throughout the same month of the prior year) increased .7% over the second quarter of 1995. Comparable store sales increased 6.4% in the second quarter of 1995 over the second quarter of 1994. In the second quarter of 1996, gross margin increased by $5.3 million as compared to the second quarter of 1995 and as a percentage of net sales increased from 39.2% to 39.4%. This improvement in gross margin resulted from a decrease in product and alteration costs as a percentage of net sales, partially offset by an increase in occupancy costs as a percentage of net sales. Selling, general and administrative costs for the second quarter of 1996 increased $3.9 million as compared to the second quarter of 1995, yet as a percentage of net sales decreased from 32.4% to 32.0%. All the principal components of selling, general and administrative costs increased as a result of the Company's growth. As a percentage of net sales, advertising expense decreased from 6.9% to 6.4%, store salaries decreased from 13.4% to 13.2% and other store and non-store general and administrative costs increased from 12.1% to 12.5%. Interest expense, net of interest income, decreased from $842,000 in the second quarter of 1995 to $500,000 in the second quarter of 1996. Weighted average borrowings outstanding, including obligations under capital leases, increased from $41.2 million in the second quarter of 1995 to $58.3 million in the second quarter of 1996, while the weighted average interest rate on outstanding indebtedness decreased from 8.2% to 6.1%, respectively. The effective interest rate includes committment fees pursuant to the Credit Agreement (see Liquidity and Capital Resources) under which no indebtedness was outstanding during the second quarter of 1996. Interest expense associated with the 5 1/4% Convertible Subordinated Notes (see Liquidity and Capital Resources) was offset by interest income of $395,000 resulting from the investment of excess cash in short-term securities during the second quarter of 1996. The effective tax rate remained unchanged between the quarters at approximately 41.3%. 8 The factors discussed above resulted in net earnings of $4,009,000, or 4.1% of net sales, for the second quarter of 1996 as compared to $2,951,000, or 3.4% of net sales, for the second quarter of 1995. Results of Operations - Six Months Net sales in the first six months of 1996 increased $35.5 million, or 21.3%, over the prior year due to a comparable store sales increase as well as sales from stores opened in 1995 and 1996. Comparable store sales increased 4.1% over the first six months of 1995. Comparable store sales increased 5.3% in the first six months of 1995 as compared to the first six months of 1994. In the first six months of 1996, gross margin increased by $13.8 million as compared to the first six months of 1995 and as a percentage of net sales increased from 38.4% to 38.5%. This improvement in gross margin resulted from a decrease in product and alteration costs as a percentage of net sales, partially offset by an increase in occupancy costs as a percentage of net sales. Selling, general and administrative costs for the first six months of 1996 increased $10.8 million as compared to the first six months of 1995, yet as a percentage of net sales decreased from 32.4% to 32.1%. All the principal components of selling, general and administrative costs increased as a result of the Company's growth. As a percentage of net sales, advertising expense decreased from 6.9% to 6.8%, store salaries decreased from 13.3% to 12.9% and other store and non-store general and administrative costs increased from 12.2% to 12.3%. Interest expense, net of interest income, decreased from $1.5 million in the first six months of 1995 to $839,000 in the first six months of 1996. Weighted average borrowings outstanding, including obligations under capital leases, increased from $36.6 million in the first six months of 1995 to $51.5 million in the first six months of 1996, while the weighted average interest rate on outstanding indebtedness decreased from 8.3% to 6.2%, respectively. The effective interest rate includes committment fees paid pursuant to the Credit Agreement (see Liquidity and Capital Resources) under which indebtedness was outstanding for only a portion of the first quarter of 1996. Interest expense associated with the 5 1/4% Convertible Subordinated Notes (see Liquidity and Capital Resources) was offset by interest income of $762,000 resulting from the investment of excess cash in short-term securities during the first six months of 1996. The effective tax rate remained unchanged between the periods at approximately 41.3%. The factors discussed above resulted in net earnings of $7,118,000, or 3.5% of net sales, for the first six months of 1996 as compared to $4,977,000, or 3.0% of net sales, for the first six months of 1995. Liquidity and Capital Resources In March 1996, the Company sold $57.5 million of 5 1/4% Convertible Subordinated Notes (the "Notes") due 2003. The Notes are convertible into Common Stock at a conversion price of $34.125 per share. A portion of the net proceeds from the Notes was used to repay outstanding indebtedness under the Credit Agreement and the balance has been invested in short-term interest bearing securities or otherwise used to minimize borrowings under the Credit Agreement, pending use for strategic opportunities or other general corporate purposes. Interest on the Notes is payable semi-annually on March 1 and September 1 of each year. 9 The change in the Company's cash position during the six months ended August 3, 1996 results from the following combination of factors: o Receipt of net proceeds from the sale of the Notes. o Application of the net proceeds from the sale of the Notes against the Company's indebtedness under the Credit Agreement. o Net cash used in operations, principally related to an inventory increase due to seasonal inventory buildup and the addition of 19 stores opened during the six months ended August 3, 1996, as well as the purchase of inventory for stores to be opened in the third quarter of 1996. o Use of cash in connection with capital expenditures related to new stores opened during the quarter ended, or under construction at, August 3, 1996, telecommunication and computer equipment and other purposes. In March 1995, the Company entered into a second amended and restated Credit Agreement with its bank group (the "1995 Credit Agreement") that became effective on June 30, 1995. The 1995 Credit Agreement provides for borrowings under two separate revolving facilities of up to $100 million through June 30, 1998 and may be extended for a maximum of two years subject to approval of all of the banks. The first facility allows the Company to borrow up to $75 million and the second facility, which can be activated and deactivated at the discretion of the Company, allows the Company to borrow up to $25 million. On June 30, 1998 (subject to extension as discussed above), the Company may convert all amounts then outstanding under the revolving facilities to a term loan that is payable in equal quarterly principal installments (based on a five year amortization schedule) and matures at the end of three years (June 30, 2003, assuming extensions). As of August 3, 1996, the Company had no indebtedness outstanding under the Credit Agreement. Advances under the Credit Agreement bear interest at a rate per annum equal to, at the Company's option, (i) the bank's prime rate or (ii) the reserve adjusted LIBOR rate plus an interest rate margin varying between 1.00% to 1.50%. The Credit Agreement provides for facility fees applicable to commitments under each facility of (i) .125% with respect to the first facility and (ii) .1875% with respect to the second facility during periods in which it is activated or .0625% with respect to periods in which it is not activated. The Credit Agreement contains certain restrictive and financial covenants, including a requirement to maintain a minimum amount of Consolidated Tangible Net Worth (as defined in the Credit Agreement). The Credit Agreement also specifies that for 30-day periods that include the last day of each fiscal year during the revolving period, amounts drawn under the revolving credit facility cannot exceed $60 million. The Company is also required to maintain certain debt to equity, cash flow and current ratios and must keep its average store inventories below certain specified amounts. In addition, the Company is prohibited, subject to certain exceptions, from incurring additional indebtedness (including capital leases) or creating liens, making certain Restricted Payments (as defined in the Credit Agreement), making Investments (as defined in the Credit Agreement) and paying dividends on the Common Stock, other than in shares of Common Stock. The Credit Agreement also permits but has certain limitations regarding the Company's ability to merge or consolidate with another company, sell or dispose of its property, make acquisitions, issue options or enter into transactions with affiliates. As of August 3, 1996, the Company is in compliance with the covenants in the Credit Agreement. 10 The Company anticipates opening a total of approximately 50 new stores in the current fiscal year, including the 19 opened in the first six months. The continuing consolidation of the men's tailored clothing industry and recent financial difficulties of significant menswear retailers may present the Company with opportunities to acquire retail chains significantly larger than the Company's past acquisitions. Any such acquisitions may be undertaken as an alternative to opening new stores. The Company has received, and from time to time in the past has received, inquiries concerning its interest in possible acquisitions and has requested information with respect thereto. The Company may use cash on hand, together with its cash flow from operations and borrowings under the Credit Agreement, to take advantage of significant acquisition opportunities. The Company anticipates that its existing cash and cash flow from operations, supplemented by borrowings under the Credit Agreement, will be sufficient to fund its planned store openings, other capital expenditures and other operating cash requirements for at least the next twelve months. In connection with the Company's direct sourcing program, the Company may enter into purchase commitments that are denominated in a foreign currency. The Company generally enters into forward exchange contracts to reduce the risk of currency fluctuations related to such commitments. The majority of the forward exchange contracts are with one financial institution. Therefore, the Company is exposed to credit risk in the event of nonperformance by this party. However, due to the creditworthiness of this major financial institution, full performance is anticipated. The Company may also be exposed to market risk as a result of changes in foreign exchange rates. This market risk should be substantially offset by changes in the valuation of the underlying transactions being hedged. 11 PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On June 2, 1996 the Company settled its trademark dispute with T.H.C. Inc. relating to the use of the name "The Men's Wearhouse" in the Detroit area. Under the terms of the settlement agreement the Company has the right and will continue to use its name in the Detroit area and T.H.C. Inc. will withdraw its action requesting cancellation of the Company's federally registered trade and service marks - The Men's Wearhouse. T.H.C. Inc. will continue to use its trademark in the Detroit area. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At the Company's Annual Meeting of Shareholders held on June 25, 1996 the Company's shareholders (i) elected nine directors to the Company's Board of Directors, (ii) approved the Company's 1996 Stock Option Plan, (iii) approved an amendment to the Company's 1992 Non-Employee Director Stock Option Plan and (iv) ratified the appointment of Deloitte & Touche as independent auditors of the Company for 1996. The number of shares voted for and withheld with respect to the election of each director was as follows:
Name Shares Voted For Shares Withheld ---- ---------------- --------------- George Zimmer 16,724,862 8,633 David Edwab 16,724,862 8,633 Richard E. Goldman 16,724,862 8,633 Robert E. Zimmer 16,724,862 8,633 James E. Zimmer 16,724,862 8,633 Harry M. Levy 16,724,862 8,633 Rinaldo Brutoco 16,724,862 8,633 Michael L. Ray 16,724,112 9,383 Sheldon I. Stein 16,724,862 8,633
The number of shares voted in favor, against, or abstained related to the ratification of the Company's 1996 Stock Option Plan was as follows:
Voted For Voted Against Abstained ---------- ------------- --------- Proposal (ii) 15,554,954 1,172,489 6,052
The number of shares voted in favor, against, or abstained related to the ratification of the amendment to the Company's 1992 Non-Employee Director Stock Option Plan was as follows:
Voted For Voted Against Abstained --------- ------------- --------- Proposal (iii) 16,162,959 563,339 7,197
The number of shares voted in favor, against, or abstained related to the ratification of the appointment of independent auditors was as follows:
Voted For Voted Against Abstained ---------- ------------- --------- Proposal (iv) 16,726,196 2,750 4,549
12 ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits 10.1 First Amendment to Second Amended and Restated Credit Agreement dated as of August 5, 1996, by and among the Company, NationsBank N.A. of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Union Bank and Wells Fargo Bank, N.A. 10.2 1996 Stock Option Plan 10.3 Second Amendment to Non-Employee Director Stock Option Plan 11.1 Statement of Computation of Net Earnings Per Share. (b) The Company was not required to file any reports on Form 8-K during the 26 weeks ended August 3, 1996. 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. The Men's Wearhouse, Inc. (REGISTRANT) /s/ DAVID H. EDWAB - -------------------------------------- David H. Edwab Chief Operating and Financial Officer September 10, 1996 /s/ GARY G. CKODRE - -------------------------------------- Gary G. Ckodre Chief Accounting Officer September 10, 1996 14 INDEX TO EXHIBITS 10.1 First Amendment to Second Amended and Restated Credit Agreement dated as of August 5, 1996, by and among the Company, NationsBank N.A. of Texas, N.A., as Agent, and NationsBank of Texas, N.A., Union Bank and Wells Fargo Bank, N.A. 10.2 1996 Stock Option Plan 10.3 Second Amendment to Non-Employee Director Stock Option Plan 11.1 Statement of Computation of Net Earnings Per Share.
EX-10.1 2 1ST AMEND. TO 2ND AMEND. & RESTATED CREDIT AGMT. 1 EXHIBIT 10.1 2 FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT First Amendment, dated as of August 5, 1996 ("First Amendment"), by and among THE MEN'S WEARHOUSE, INC., a Texas corporation ("Borrower"), the banks listed on the signature pages hereof and any bank that may hereafter become a party hereto (each individually a "Bank" and collectively the "Banks"), and NATIONSBANK OF TEXAS, N.A. (in its individual capacity, "NationsBank") as Agent (in its capacity as Agent, the "Agent") for the Banks to the Second Amended and Restated Credit Agreement, dated as of March 14, 1995 ("Second Restated Credit Agreement"), by and among the Borrower, the Bank and the Agent. Terms used herein and not otherwise defined shall have the meanings assigned to them in the Second Restated Credit Agreement; WHEREAS, the Borrower, the Banks and the Agent are parties to the Second Restated Credit Agreement; and WHEREAS, the Borrower, the Banks and the Agent desire to amend certain provisions of the Second Restated Credit Agreement; NOW, THEREFORE, in consideration of the premises and consideration of the mutual promises set forth herein and other good valuable consideration, receipt of which is hereby acknowledged, the parties hereto agree that from and after the date hereof, the Second Restated Credit Agreement is hereby amended as follows: 1. Subsection (d) of Section 8.03 of the Second Restated Credit Agreement is hereby deleted and there is substituted therefor the following: 3 "(d) the Borrower may repurchase shares of its common stock in an aggregate amount not to exceed $15,000,000 to be held by it as treasury stock," 2. The figure "$78,500,000" appearing in Section 8.14(a)(i) is hereby deleted and there is substituted therefor the figure "$63,500,000". This First Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which counterparts, when so executed and delivered, shall be deemed to be an original and all of which counterparts, taken together, shall constitute but one and the same agreement. Except as amended hereby, the terms and provisions of the Second Restated Credit Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties hereto have duly executed this First Amendment as of the day and year first above written. THE MEN'S WEARHOUSE, INC. By: /s/ Gary Ckodre ------------------------------------ Name: Gary Ckodre -------------------------- Title: Vice President ------------------------- NATIONSBANK OF TEXAS, N.A., Agent By: /s/ Richard L. Nichols, Jr. ------------------------------------ Name: Richard L. Nichols, Jr. -------------------------- Title: Vice President ------------------------- EX-10.2 3 1996 STOCK OPTION PLAN 1 EXHIBIT 10.2 2 THE MEN'S WEARHOUSE, INC. 1996 STOCK OPTION PLAN 1. Purpose. This 1996 Stock Option Plan (the "Plan") of The Men's Wearhouse, Inc. (the "Company"), for certain full-time key employees, excluding George Zimmer, Richard Goldman, James Zimmer and Robert Zimmer, is intended to advance the best interests of the Company by providing such personnel, who have substantial responsibility for its management and growth, with additional incentive and by increasing their proprietary interest in the success of the Company - thereby encouraging them to remain in its employ. 2. Administration. The Plan shall be administered by the 1996 Stock Option Committee of the Board of Directors of the Company (the "Committee"), which Committee shall have two or more members. For the purposes of this Plan, a majority of the members of the Committee shall constitute a quorum for the transaction of business, and the vote of a majority of those members present at any meeting shall decide any question brought before that meeting. In addition, the Committee may take any action otherwise proper under the Plan by the affirmative vote, taken without a meeting, of a majority of its members. No member of the Committee shall be liable for any act or omission of any other member of the Committee or for any act or omission on his own part, including but not limited to the exercise of any power or discretion given to him under the Plan, except those resulting from his own gross negligence or willful misconduct. All questions of interpretation and application of the Plan, or as to options granted hereunder (the "Options"), shall be subject to the determination, which shall be final and binding, of a majority of the whole Committee. When appropriate, the Plan shall be administered in order to qualify certain of the Options granted hereunder as "incentive stock options" described in Section 422 of the Internal Revenue Code of 1986, as amended (the "Code"). 3. Option Shares. The stock subject to the Options and other provisions of the Plan shall be shares of the Company's Common Stock $.01 value (or such other par value as may be designated by act of the Company's stockholders) (the "Common Stock"). The total amount of the Common Stock with respect to which Options may be granted shall not exceed in the aggregate 750,000 shares; provided, that the class and aggregate number of shares which may be subject to the Options granted hereunder shall be subject to adjustment in accordance with the provisions of Paragraph 16 hereof. Such shares may be treasury shares or authorized but unissued shares. The maximum number of shares of Common Stock subject to Options that may be awarded under the Plan to any employee during any consecutive three year period is 500,000. In the event that any outstanding Option for any reason shall expire or terminate by reason of the death or severance of employment of the optionee, the surrender of any such Option, or any other cause, the shares of Common Stock allocable to the unexercised portion of such Option may again be subject to an Option under the Plan. 3 4. Authority to Grant Options. The Committee may grant the following options from time to time to such eligible employees of the Company as it shall from time to time determine: (a) "Incentive" Stock Options. The Committee may grant to an eligible employee an Option, or Options, to buy a stated number of shares of Common Stock under the terms and conditions of the Plan, so that the Option will be an "incentive stock option" within the meaning of Section 422 of the Code (an "incentive stock option"). (b) "Non-statutory" Stock Options. The Committee may grant to an eligible employee an Option, or Options, to buy a stated number of shares of Common Stock under the terms and conditions of the Plan, even though such Option or Options would not constitute an "incentive stock option" within the meaning of Section 422 of the Code (a "non-statutory stock option"). Each Option granted shall be approved by the Committee. Subject only to any applicable limitations set forth in the Plan, the number of shares of Common Stock to be covered by any Option and the price at which shares may be purchased pursuant to an Option shall be as determined by the Committee. 5. Eligibility. The individuals who shall be eligible to participate in the Plan shall be such full-time key employees, including directors if they are also employees of the Company, or of any parent or subsidiary corporation, or, solely with respect to non-statutory stock options, any entity that is affiliated with the Company within the meaning of Section 414 of the Code, as the Committee shall determine from time to time; provided that George Zimmer, Richard Goldman, James Zimmer and Robert Zimmer shall not be eligible to participate in the Plan. No eligible employee who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation shall be eligible to receive an Option which is an incentive stock option unless at the time that such Option is granted the Option price is at least one hundred ten percent (110%) of the fair market value of the Common Stock at the time such Option is granted and such Option by its own terms is not exercisable after the expiration of five years from the date such Option is granted. No individual shall be eligible to receive an Option under the Plan while such individual is a member of the Committee. For the purposes of the preceding paragraph, an employee will be considered as owning the stock owned, directly or indirectly, by or for his brothers and sisters (whether by the whole or half blood), spouse, ancestors, and lineal descendants; and stock owned, directly or indirectly, by or for a corporation, partnership, estate or trust will be considered as being owned proportionately by or for its shareholders, partners or beneficiaries. Except as otherwise provided, for all purposes of the Plan, the term "parent corporation" shall mean any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, on the date of grant of the Option in question, each of the corporations other than the Company owns stock -2- 4 possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain; and the term "subsidiary corporation" shall mean any corporation in an unbroken chain of corporations, beginning with the Company if, on the date of grant of the Option in question, each of the corporations, other than the last corporation in the chain, owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. 6. Option Price. The price at which shares may be purchased pursuant to an Option shall be not less than 50% of the fair market value of the shares of Common Stock on the date such Option is granted. In the case of any eligible employee described in Paragraph 5 who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation (described in Paragraph 5), the option price at which shares may be so purchased pursuant to any Option which is an incentive stock option granted hereunder shall be not less than one hundred ten percent (110%) of the fair market value of the Common Stock on the date such Option is granted and with respect to any other eligible employee the option price of any Option which is an incentive stock option granted hereunder shall not be less than one hundred percent (100%) of such fair market value. 7. Duration of Options. No Option which is an incentive stock option shall be exercisable after the expiration of ten years from the date such Option is granted; and the Committee in its discretion may provide that such Option shall be exercisable throughout such ten-year period or during any lesser period of time commencing on or after the date of grant of such Option and ending upon or before the expiration of such ten-year period. In the case of any eligible employee who owns stock possessing more than ten percent of the total combined voting power of all classes of stock of the corporation employing the employee or of its parent or subsidiary corporation (described in Paragraph 5), no Option which is an incentive stock option shall be exercisable after the expiration of five years from the date such Option is granted. No Option which is a non-statutory stock option shall be exercisable after the expiration of ten years from the date such Option is granted; and the Committee in its discretion may provide that such Option shall be exercisable throughout such ten-year period or during any lesser period of time commencing on or after the date of grant of such Option and ending upon or before the expiration of such ten-year period. 8. Maximum Value of Stock Subject to Options Which Are Incentive Stock Options. To the extent that the aggregate fair market value (determined as of the date the Option is granted) of the stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee in any calendar year (under this Plan and any other incentive stock option plan(s) of the Company and any parent or subsidiary corporation) exceeds $100,000, the Options shall be treated as Non-statutory Stock Options. In making this determination, Options shall be taken into account in the order in which they were granted. 9. Amount Exercisable. The usual form of agreement granting an Option (whether incentive or non- statutory) shall, subject to any limitation on exercise -3- 5 contained in the agreement which is not inconsistent with the Plan, contain the following terms of exercise: (a) No Option granted under the Plan may be exercised until an optionee has completed one year of continuous employment with the Company or any subsidiary of the Company following the date of grant; (b) Beginning on the day after the first anniversary of the date of grant, an Option may be exercised up to 1/3 of the shares subject to the Option; (c) After the expiration of each succeeding anniversary date of the date of grant, the Option may be exercised up to an additional 1/3 of the shares initially subject to the Option, so that after the expiration of the third anniversary of the date of grant, the Option shall be exercisable in full; (d) To the extent not exercised, installments shall be cumulative and may be exercised in whole or in part until it expires on the tenth anniversary of the date of grant. However, the Committee, in its discretion, may change the terms of exercise so that any Option may be exercised so long as it is valid and outstanding from time to time in part or as a whole in such manner and subject to such conditions as it may set. In addition, the Committee, in its discretion, may accelerate the time in which any outstanding Option may be exercised. But in no event shall any Option be exercisable after the tenth anniversary of the date of the grant. 10. Exercise of Options. An optionee may exercise such optionee's Option by delivering to the Company a written notice stating (i) that such optionee wishes to exercise such Option on the date such notice is so delivered, (ii) the number of shares of stock with respect to which the Option is to be exercised and (iii) the address to which the certificate representing such shares of stock should be mailed. In order to be effective, such written notice shall be accompanied by (i) payment of the Option Price of such shares of stock and (ii) payment of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option. Each such payment shall be made by cashier's check drawn on a national banking association and payable to the order of the Company in United States dollars. If, at the time of receipt by the Company of such written notice, (i) the Company has unrestricted surplus in an amount not less than the Option Price of such shares of stock, (ii) all accrued cumulative preferential dividends and other current preferential dividends on all outstanding shares of preferred stock of the Company have been fully paid, (iii) the acquisition by the Company of its own shares of stock for the purpose of enabling such optionee to exercise such Option is otherwise permitted by applicable law, does not require any vote or consent of any stockholder of the Company and does not violate the terms of any agreement to which the Company is a party or by which it is bound, and (iv) there shall have been adopted, and there shall be in full force and effect, a resolution of the Board of Directors of the Company authorizing the acquisition by -4- 6 the Company of its own shares of stock for such purpose, then such optionee may deliver to the Company, in payment of the Option Price of the shares of stock with respect to which such Option is exercised, (x) certificates registered in the name of such optionee that represent a number of shares of stock legally and beneficially owned by such optionee (free of all liens, claims and encumbrances of every kind) and having a fair market value on the date of receipt by the Company of such written notice that is not greater than the Option Price of the shares of stock with respect to which such Option is to be exercised, such certificates to be accompanied by stock powers duly endorsed in blank by the record holder of the shares of stock represented by such certificates, with the signature of such record holder guaranteed by a national banking association, and (y) if the Option Price of the shares of stock with respect to which such Option is to be exercised exceeds such fair market value, a cashier's check drawn on a national banking association and payable to the order of the Company, in an amount, in United States dollars, equal to the amount of such excess. Notwithstanding the provisions of the immediately preceding sentence, the Committee, in its sole discretion, may refuse to accept shares of stock in payment of the Option Price of the shares of stock with respect to which such Option is to be exercised and, in that event, any certificates representing shares of stock that were received by the Company with such written notice shall be returned to such optionee, together with notice by the Company to such optionee of the refusal of the Committee to accept such shares of stock. If, at the expiration of seven business days after the delivery to such optionee of such written notice from the Company, such optionee shall not have delivered to the Company a cashier's check drawn on a national banking association and payable to the order of the Company in an amount, in United States dollars, equal to the Option Price of the shares of stock with respect to which such Option is to be exercised, such written notice from the optionee to the Company shall be ineffective to exercise such Option. As promptly as practicable after the receipt by the Company of (i) such written notice from the optionee, (ii) payment, in the form required by the foregoing provisions of this Paragraph 10, of the Option Price of the shares of stock with respect to which such Option is to be exercised, and (iii) payment, in the form required by the foregoing provisions of this Paragraph 10, of an amount of money necessary to satisfy any withholding tax liability that may result from the exercise of such Option, a certificate representing the number of shares of stock with respect to which such Option has been so exercised, such certificate to be registered in the name of such optionee, shall be delivered to such optionee, provided that such delivery shall be considered to have been made when such certificate shall have been mailed, postage prepaid, to such optionee at the address specified for such purpose in such written notice from the optionee to the Company. For purposes of this Plan, the "fair market value" of a share of stock as of any particular date shall mean, if the stock is traded on a stock exchange, the closing price of a share of stock on that date as reported on the principal exchange on which the stock is traded, if the stock is traded in the over-the-counter market, the average between the high bid and low asked price on that date as reported in such over-the-counter market, provided that (i) if the stock is not so traded, (ii) if no closing price or bid and asked prices for the stock was so reported on that date or (iii) if, in the discretion of the Committee, another means of determining the fair market value of a -5- 7 share of stock at such date shall be necessary or advisable, the Committee may provide for another means for determining such fair market value. At any time when an optionee is required to pay to the Company an amount to be withheld under applicable income tax laws in connection with a distribution of Common Stock upon the exercise of an Option, the optionee may satisfy this obligation in whole or in part by electing, at the time of exercise and subject to approval by the Committee, to have the Company withhold from the distribution of shares otherwise issuable upon exercise of the Option a number of shares of Common Stock having a value equal to the amount required to be withheld. The value of the shares to be withheld shall be based on the fair market value of the Common Stock on the date of exercise. If an optionee is subject to Section 16(a) of the Securities Exchange Act of 1934, upon exercise of an Option granted hereunder, a number of shares of Common Stock having a value equal to the amount of the tax required to be withheld upon such exercise will automatically be withheld by the Company from the distribution of shares of Common Stock otherwise issuable upon exercise of the Option. 11. Transferability of Options. Options shall not be transferable by the optionee otherwise than by will or under the laws of descent and distribution, and shall be exercisable, during his lifetime, only by him. The terms of such Option shall be final, binding and conclusive upon the beneficiaries, executors, administrators, heirs and successors of the optionee. Any attempted sale, assignment, pledge or encumbrance of an Option, other than a transfer by will or the laws of descent and distribution, shall be void and the Company shall not be bound thereby. 12. Termination of Employment or Death of Optionee. Except as may be otherwise expressly provided herein, all Options (whether incentive or non-statutory) shall terminate on the earlier of the date of the expiration of the Option or one day less than one month after the date of the severance, upon severance of the employment relationship between the Company and the optionee, whether with or without cause, for any reason other than the death, disability or retirement of the optionee, during which period the optionee shall be entitled to exercise the Option in respect of the number of shares that the optionee would have been entitled to purchase had the optionee exercised the Option on the date of such severance of employment. Whether authorized leave of absence, or absence on military or government service, shall constitute severance of the employment relationship between the Company and the optionee shall be determined by the Committee at the time thereof. In the event of severance because of the disability of the holder of any Option (whether incentive or non-statutory) while in the employ of the Company and before the date of expiration of such Option, such Option shall terminate on the earlier of such date of expiration or one year following the date of such severance because of disability, during which period the optionee shall be entitled to exercise the Option in respect to the number of shares that the optionee would have been entitled to purchase had the optionee exercised the Option on the date of such severance because of permanent disability under the then established rules of the Company or as determined by the Committee. In the event of the death of the holder of any Option (whether incentive or non- statutory) while in the employ of the Company and before the date of expiration of such Option, such Option shall terminate on the earlier of such date of expiration or one -6- 8 year following the date of death. After the death of the optionee, his executors, administrators or any person or persons to whom his Option may be transferred by will or by the laws of descent and distribution, shall have the right, at any time prior to the termination of an Option, to exercise the Option in respect to the number of shares that the optionee would have been entitled to exercise if he had exercised the Option on the day of his death while in employment. In addition, in the event of the holder of any non-statutory stock option shall be retired in good standing from the employ of the Company for reasons of age under the then established rules of the Company before the date of expiration of such Option, such Option shall terminate on the earlier of such date of expiration or one year following the date of such retirement, and, if such optionee should die within the one year period, any rights he may have to exercise the Option shall be exercisable by his executor or administrator or the person or persons to whom the Option shall have been transferred by his will or laws of descent or distribution, as appropriate, for the remainder of the one year period. For purposes of incentive stock options issued under this Plan, an employment relationship between the Company and the optionee shall be deemed to exist during any period in which the optionee is employed by the Company, by any parent or subsidiary corporation, by a corporation issuing or assuming an option in a transaction to which Section 424(a) of the Code applies, or by a parent or subsidiary corporation of such corporation issuing or assuming an option (and for this purpose, the phrase "corporation issuing or assuming an option" shall be substituted for the word "Company" in the definitions of parent and subsidiary corporations specified in Paragraph 5 of this Plan, and the parent-subsidiary relationship shall be determined at the time of the corporate action described in Section 424(a). For purposes of non-statutory stock options issued under this Plan, an employment relationship between the Company and the optionee will exist under the circumstances described above for incentive stock options and will also exist if the optionee is transferred to an affiliated entity approved by the Committee. 13. Requirements of Law. The Company shall not be required to sell or issue any shares under any Option if the issuance of such shares shall constitute a violation by the optionee or the Company of any provisions of any law or regulation of any governmental authority. Each Option granted under the Plan shall be subject to the requirements that, if at any time the Board of Directors of the Company or the Committee shall determine that the listing, registration or qualification of the shares subject thereto upon any securities exchange or under any state or federal law of the United States or of any other country or governmental subdivision thereof, or the consent or approval of any governmental regulatory body, or investment or other representations, are necessary or desirable in connection with the issue or purchase of shares subject thereto, no such Option may be exercised in whole or in part unless such listing, registration, qualification, consent, approval or representations shall have been effected or obtained free of any conditions not acceptable to the Board of Directors. If required at any time by the Board of Directors or the Committee, an Option may not be exercised until the optionee has delivered an investment letter to the Company. In addition, specifically in connection with the Securities Act of 1933 (as now in effect or hereafter amended), upon exercise of any Option, the Company shall not be required to issue the underlying shares unless the Committee has received evidence satisfactory to it to the effect that the holder of such Option will not transfer such shares except pursuant to a registration statement in effect under such Act or unless an opinion of -7- 9 counsel satisfactory to the Company has been received by the Company to the effect that such registration is not required. Any determination in this connection by the Committee shall be final, binding and conclusive. In the event the shares issuable on exercise of an Option are not registered under the Securities Act of 1933, the Company may imprint on the certificate for such shares the following legend or any other legend which counsel for the Company considers necessary or advisable to comply with the Securities Act of 1933: "The shares of stock represented by this certificate have not been registered under the Securities Act of 1933 or under the securities laws of any state and may not be sold or transferred except upon such registration or upon receipt by the Corporation of an opinion of counsel satisfactory to the Corporation, in form and substance satisfactory to the Corporation, that registration is not required for such sale or transfer." The Company may, but shall in no event be obligated to, register any securities covered hereby pursuant to the Securities Act of 1933 (as now in effect or as hereafter amended) and, in the event any shares are so registered, the Company may remove any legend on certificates representing such shares. The Company shall not be obligated to take any other affirmative action in order to cause the exercise of an Option or the issuance of shares pursuant thereto to comply with any law or regulation of any governmental authority. 14. No Rights as Stockholder. No optionee shall have rights as a stockholder with respect to shares covered by his Option until the date of issuance of a stock certificate for such shares; and, except as otherwise provided in Paragraph 16 hereof, no adjustment for dividends, or otherwise, shall be made if the record date therefor is prior to the date of issuance of such certificate. 15. Employment Obligation. The granting of any Option shall not impose upon the Company any obligation to employ or continue to employ any optionee; and the right of the Company to terminate the employment of any officer or other employee shall not be diminished or affected by reason of the fact that an Option has been granted to him. 16. Changes in the Company's Capital Structure. The existence of outstanding Options shall not affect in any way the right or power of the Company or its stockholders to make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in the Company's capital structure or its business, or any merger or consolidation of the Company, or any issue of bonds, debentures, preferred or prior preference stock ahead of or affecting the Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise. If the Company shall effect a subdivision or consolidation of shares or other capital readjustment, the payment of a stock dividend, or other increase or reduction of the number of shares of the Common Stock outstanding, without receiving -8- 10 consideration therefor in money, services or property, then (a) the number, class and per share price of shares of stock subject to outstanding Options hereunder shall be appropriately adjusted in such a manner as to entitle an optionee to receive, upon exercise of an Option, for the same aggregate cash compensation, the same total number and class or classes of shares he would have held after such adjustment if he had exercised his Option in full immediately prior to the event requiring the adjustment; and (b) the number and class of shares then reserved for issuance under the Plan shall be adjusted by substituting for the total number and class of shares of stock then received for the number and class or classes of shares of stock that would have been received by the owner of an equal number of outstanding shares of Common Stock as the result of the event requiring the adjustment. After the merger of one or more corporations into the Company, after any consolidation of the Company and one or more corporations, or after any other corporate transaction described in Section 424(a) of the Code in which the Company shall be the surviving corporation, each optionee, at no additional cost, shall be entitled to receive, upon any exercise of his Option, in lieu of the number of shares as to which the option shall then be so exercised, the number and class of shares of stock or other securities to which the optionee would have been entitled pursuant to the terms of the agreement of merger or consolidation if at the time of such merger or consolidation such optionee had been a holder of record of a number of shares of Common Stock equal to the number of shares as to which the option shall then be so exercised. Comparable rights shall accrue to each optionee in the event of successive mergers or successive mergers or consolidations of the character described above. After a merger of the Company into one or more corporations, after a consolidation of the Company and one or more corporations, or after any other corporate transaction described in Section 424(a) of the Code in which the Company is not the surviving corporation, each optionee shall, at no additional cost, be entitled to have his then existing Option assumed or have a new option substituted for the existing Option by the surviving corporation to the transaction which is then employing him, or a parent or subsidiary of such corporation, on a basis where the excess of the aggregate fair market value of the shares subject to the option immediately after the substitution or assumption over the aggregate option price of such option is equal to the excess of the aggregate fair market value of all shares subject to the option immediately before such substitution or assumption over the aggregate option price of such shares. If a corporate transaction described in Section 424(a) of the Code which involves the Company is to take place and there is to be no surviving corporation while an Option remains in whole or in part unexercised, it shall be canceled by the Board of Directors as of the effective date of any such corporate transaction but before that date each optionee shall be provided with a notice of such cancellation and each optionee shall have the right to exercise such Option in full (without regard to any limitations set forth in or imposed pursuant to Paragraph 9 of this Plan) to the extent it is then still unexercised during a 30-day period preceding the effective date of such corporate transaction. -9- 11 Except as hereinbefore expressly provided, the issue by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, for cash or property, or for labor or services either upon direct sale or upon the exercise of rights or warrants to subscribe therefor, or upon conversion of shares or obligations of the Company convertible into such shares or other securities, shall not affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock then subject to outstanding Options. 17. Substitution Options. Options may be granted under this Plan from time to time in substitution for stock options held by employees of other corporations who are about to become employees of the Company, or whose employer is about to become a parent or subsidiary corporation, conditioned in the case of an incentive stock option upon the employee becoming an employee of the Company or a parent or subsidiary corporation of the Company, as the result of a merger of consolidation of the Company with another corporation, or the acquisition by the Company of substantially all the assets of another corporation, or the acquisition by the Company of at least 50% of the issued and outstanding stock of another corporation as the result of which it becomes a subsidiary of the Company. The terms and conditions of the substitute Options so granted may vary from the terms and conditions set forth in this Plan to such extent as the Board of Directors of the Company at the time of grant may deem appropriate to conform, in whole or in part, to the provisions of the stock options in substitution for which they are granted, but with respect to stock options which are incentive stock options, no such variation shall be such as to affect the status of any such substitute option as an "incentive stock option" under Section 422 of the Code. 18. Amendment or Termination of Plan. The Board of Directors may modify, revise or terminate this Plan at any time and from time to time; provided, however, that without the further approval of the holders of at least a majority of the outstanding shares of voting stock, or if the provisions of the corporate charter, by-laws or applicable state law prescribes a greater degree of stockholder approval for this action, without the degree of stockholder approval thus required, the Board of Directors may not (a) change the aggregate number of shares which may be issued under Options pursuant to the provisions of the Plan; (b) reduce the option price permitted for the incentive stock options; (c) extend the term during which an incentive stock option may be exercised or the termination date of this Plan; or (d) change the class of employees eligible to receive incentive stock options; provided, however, that the Board shall have the power to make such changes in the Plan and in the regulations and administrative provisions hereunder or in any outstanding Option as in the opinion of counsel for the Company may be necessary or appropriate from time to time to enable any Option granted pursuant to the Plan to qualify as incentive stock options under Section 422 of the Code, and the regulations which may be issued thereunder as in existence from time to time. 19. Written Agreement. Each Option granted hereunder shall be embodied in a written option agreement, which shall be subject to the terms and conditions prescribed above, and shall be signed by the optionee and by the appropriate officer of the Company for and in the name and on behalf of the Company. Such an option -10- 12 agreement shall contain such other provisions as the Committee in its discretion shall deem advisable. 20. Indemnification of Committee. The Company shall indemnify each present and future member of the Committee against, and each member of the Committee shall be entitled without further act on his part to indemnity from the Company for, all expenses (including the amount of judgments and the amount of approved settlements made with a view to the curtailment of costs of litigation, other than amounts paid to the Company itself) reasonably incurred by him in connection with or arising out of any action, suit or proceeding in which he may be involved by reason of his being or having been a member of the Committee, whether or not he continues to be such member of the Committee at the time of incurring such expenses; provided, however, that such indemnity shall not include any expenses incurred by any such member of the Committee (a) in respect of matters as to which he shall be finally adjudged in any such action, suit or proceeding to have been guilty of gross negligence or willful misconduct in the performance of his duty as such member of the Committee, or (b) in respect of any matter in which any settlement is effected, to an amount in excess of the amount approved by the Committee on the advice of its legal counsel; and provided further, that no right of indemnification under the provisions set forth herein shall be available to or enforceable by any such member of the Committee unless, within sixty (60) days after institution of any such action, suit or proceeding, he shall have offered the Company, in writing, the opportunity to handle and defend same at its own expense. The foregoing right of indemnification shall inure to the benefit of the heirs, executors or administrators of each such member of the Committee and shall be in addition to all other rights to which such member of the Committee may be entitled to as a matter of law, contract, or otherwise. Nothing in this Section 20, shall be construed to limit or otherwise affect any right to indemnification, or payment of expense, or any provisions limiting the liability of any officer or director of the Company or any member of the Committee, provided by law, the Certificate of Incorporation of the Company or otherwise. 21. Section 83(b) Elections. No optionee shall exercise the election permitted under Section 83(b) of the Code with respect to an Option without written approval of the Committee. If the Committee permits such an election with respect to any Option, the Company shall require the optionee to pay the Company an amount necessary to satisfy the Company's tax withholding obligation. 22. Governing Law. This Plan and the rights of all persons claiming hereunder shall be construed and determined in accordance with the laws of the State of Texas. 23. Effective Date of Plan. The Plan shall become effective and shall be deemed to have been adopted on May 8, 1996, if within one year of that date it shall have been approved by the holders of at least a majority of the outstanding shares of voting stock of the Company or if the provisions of the corporate charter, by-laws or applicable state law prescribes a greater degree of stockholder approval for this action, the approval by the holders of that percentage, at a meeting of stockholders. No Option shall be granted pursuant to the Plan after May 7, 2006. -11- EX-10.3 4 2ND AMEND. TO NON-EMPLOYEE DORECTOR STOCK OP. PLAN 1 EXHIBIT 10.3 2 SECOND AMENDMENT TO THE MEN'S WEARHOUSE, INC. 1992 NON-EMPLOYEE DIRECTOR STOCK OPTION PLAN WHEREAS, the Board of Directors and the shareholders of The Men's Wearhouse, Inc., a Texas corporation (the "Company"), have approved the Company's 1992 Non-Employee Director Stock Option Plan and the First Amendment thereto (the "Plan"); and WHEREAS, the directors of the Company believe it to be in the best interest of the Company to amend the Plan to provide that non-employee directors will receive an option, on the last Friday of each fiscal year of the Company (the "Final Friday"), to purchase 2,000 shares of the Company's common stock as provided in the Plan or, if the director so elects, to receive instead an option, on the Final Friday, to purchase 1,000 shares of common stock and an annual retainer fee in cash of $10,000, all as hereinafter provided. W I T N E S S E T H: Effective upon shareholder approval of this Second Amendment, Paragraph 4 of the Plan is hereby amended to read as follows in its entirety: "4. Grant of Options. Subject to the provisions of Paragraph 16 and the availability under the Plan of a sufficient number of shares of Common Stock that may be issuable upon the exercise of outstanding Options, each person who becomes a Non-Employee Director shall be granted, on the date he or she becomes a director of the Company, an Option under the Plan to purchase 2,000 shares of Common Stock at a price per share (the "Option Price") equal to the fair market value of the Common Stock on such date. In addition, for so long as this Plan is in effect and shares are available for the grant of Options hereunder, each Non-Employee Director who is a director of the Company on the last Friday of any fiscal year of the Company (the "Final Friday") shall be granted an Option to purchase 2,000 shares of the Common Stock at an Option Price equal to the fair market value of the Common Stock as of such Final Friday. In any case where a Non-Employee Director would be entitled to receive an Option for 2,000 shares of Common Stock pursuant to the preceding sentence, he or she may, upon giving written notice to the Company no later than six months prior to the time such option would be granted, elect to receive in lieu of such Option an option for 1,000 shares of Common Stock and an annual retainer fee in cash of $10,000. All such annual retainer fees shall be payable quarterly on the last day of each of the Company's fiscal quarters during which such person served as a director of the Company. 3 For purposes of this Paragraph 4 and Paragraph 7 below, the "fair market value" of a share of Common Stock as of any particular date shall mean the closing price of a share of Common Stock on that date as reported on the National Association of Securities Dealers Automated Quotation System ("NASDAQ"), provided that if no closing price for the Common Stock was so reported on that date, then the Option Price shall be the fair market value as of the first preceding date for which such prices are reported." -2- EX-11.1 5 STATEMENT OF COMPUTATION OF NET EARNINGS PER SHARE 1 EXHIBIT 11.1 2 EXHIBIT 11.1 THE MEN'S WEARHOUSE, INC. AND SUBSIDIARIES STATEMENT OF COMPUTATION OF NET EARNINGS PER SHARE FOR THE INTERIM PERIODS ENDED JULY 29, 1995 AND AUGUST 3, 1996
Three Months Ended --------------------------- 1995 1996 ---------- ---------- Shares outstanding - beginning of period 19,073,000 20,903,000 Shares issued during period - weighted average: Options exercised 3,000 3,000 Common stock equivalents - weighted average: Shares issuable upon exercise of stock options granted (treasury stock method) 322,000 307,000 ----------- ----------- Weighted average number of common and common equivalent shares 19,398,000 21,213,000 =========== =========== Net earnings applicable to common stock $2,951,000 $4,009,000 =========== =========== Primary and fully diluted earnings per share $ .15 $ .19 =========== =========== ==================================================================================================================================== Six Months Ended ---------------- 1995 1996 ---------- ---------- Shares outstanding - beginning of period 18,986,000 20,820,000 Shares issued during period - weighted average: Options exercised 51,000 57,000 Contribution to Employee Stock Plan 21,000 14,000 Common stock equivalents - weighted average: Shares issuable upon exercise of stock options granted (treasury stock method) 291,000 321,000 ----------- ----------- Weighted average number of common and common equivalent shares 19,349,000 21,212,000 =========== =========== Net earnings applicable to common stock $4,977,000 $7,118,000 =========== =========== Primary and fully diluted earnings per share $ .26 $ .34 =========== ===========
EX-27 6 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE COMPANY'S CONSOLIDATED FINANCIAL STATEMENTS ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS FEB-01-1997 FEB-04-1996 AUG-03-1996 12,795 0 0 0 161,002 180,567 98,765 34,811 254,536 45,502 57,500 0 0 210 144,766 254,536 202,582 202,582 124,658 124,568 64,971 0 1,601 762 12,114 4,996 7,118 0 0 0 0.34 0
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