Condensed Consolidating Information

6 Months Ended

Aug. 03, 2019

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Condensed Consolidating Information

18. Condensed Consolidating Information

As discussed in Note 4, The Men's Wearhouse (the "Issuer") issued $600.0 million in aggregate principal amount of Senior Notes. The Senior Notes are guaranteed jointly and severally, on an unsecured basis by Tailored Brands, Inc. (the "Parent") and certain of our U.S. subsidiaries (the "Guarantors"). Our foreign subsidiaries (collectively, the "Non-Guarantors") are not guarantors of the Senior Notes. Each of the Guarantors is 100% owned and all guarantees are joint and several.  In addition, the guarantees are full and unconditional except for certain automatic release provisions related to the Guarantors.

These automatic release provisions are considered customary and include the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor, the release or discharge of a guarantor's guarantee of the obligations under the Term Loan other than a release or discharge through payment thereon, the designation in accordance with the Indenture of a guarantor as an unrestricted subsidiary or the satisfaction of the requirements for defeasance or discharge of the Senior Notes as provided for in the Indenture.

The tables in the following pages present the condensed consolidating financial information for the Parent, the Issuer, the Guarantors and the Non-Guarantors, together with eliminations, as of and for the periods indicated.  The consolidating financial information may not necessarily be indicative of the financial positions, results of operations or cash flows had the Issuer, Guarantors and Non-Guarantors operated as independent entities.

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

August 3, 2019

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	1,158	$	2,091	$	16,227	$	—	$	19,476
Accounts receivable, net		—		23,397		174,552		74,042		(206,815)		65,176
Inventories		—		130,301		485,873		230,778		—		846,952
Other current assets		9,744		31,154		27,632		45,885		(50,533)		63,882
Total current assets		9,744		186,010		690,148		366,932		(257,348)		995,486
Property and equipment, net		—		185,823		201,464		33,901		—		421,188
Operating lease right-of-use assets		—		479,760		376,922		61,859		—		918,541
Rental product, net		—		80,973		7,225		10,887		—		99,085
Goodwill		—		6,160		52,128		20,995		—		79,283
Intangible assets, net		—		—		146,937		8,372		—		155,309
Investments in subsidiaries		177,425		1,157,995		—		—		(1,335,420)		—
Other assets		—		5,250		485		4,271		(4,200)		5,806
Total assets	$	187,169	$	2,101,971	$	1,475,309	$	507,217	$	(1,596,968)	$	2,674,698
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	165,067	$	79,695	$	59,303	$	90,696	$	(206,815)	$	187,946
Accrued expenses and other current liabilities		11,523		157,294		123,864		57,764		(50,533)		299,912
Current portion of operating lease liabilities		—		98,618		73,346		13,836		—		185,800
Current portion of long-term debt		—		9,000		—		—		—		9,000
Total current liabilities		176,590		344,607		256,513		162,296		(257,348)		682,658
Long-term debt, net		—		1,145,651		—		—		—		1,145,651
Operating lease liabilities		—		405,847		308,974		49,044		—		763,865
Deferred taxes, net and other liabilities		6,016		28,441		28,172		19,532		(4,200)		77,961
Shareholders' equity		4,563		177,425		881,650		276,345		(1,335,420)		4,563
Total liabilities and shareholders' equity	$	187,169	$	2,101,971	$	1,475,309	$	507,217	$	(1,596,968)	$	2,674,698

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

August 4, 2018

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	2,086	$	2,215	$	63,914	$	—	$	68,215
Accounts receivable, net		—		25,994		321,918		50,882		(333,695)		65,099
Inventories		—		162,588		434,499		189,423		—		786,510
Other current assets		3,719		18,975		53,284		11,513		—		87,491
Total current assets		3,719		209,643		811,916		315,732		(333,695)		1,007,315
Property and equipment, net		—		191,503		201,939		33,665		—		427,107
Rental product, net		—		91,843		4,066		15,436		—		111,345
Goodwill		—		6,160		53,422		44,104		—		103,686
Intangible assets, net		—		—		154,580		11,301		—		165,881
Investments in subsidiaries		141,149		1,377,602		—		—		(1,518,751)		—
Other assets		—		12,290		655		81,087		(80,535)		13,497
Total assets	$	144,868	$	1,889,041	$	1,226,578	$	501,325	$	(1,932,981)	$	1,828,831
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	126,871	$	237,341	$	53,847	$	61,617	$	(333,695)	$	145,981
Accrued expenses and other current liabilities		13,049		146,213		124,928		35,788		—		319,978
Current portion of long-term debt		—		9,000		—		—		—		9,000
Total current liabilities		139,920		392,554		178,775		97,405		(333,695)		474,959
Long-term debt, net		—		1,207,377		—		—		—		1,207,377
Deferred taxes, net and other liabilities		4,937		147,961		47,365		26,756		(80,535)		146,484
Shareholders' equity		11		141,149		1,000,438		377,164		(1,518,751)		11
Total liabilities and shareholders' equity	$	144,868	$	1,889,041	$	1,226,578	$	501,325	$	(1,932,981)	$	1,828,831

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

February 2, 2019

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	970	$	1,496	$	52,965	$	—	$	55,431
Accounts receivable, net		—		23,954		264,884		82,204		(297,969)		73,073
Inventories		—		149,923		461,153		219,350		—		830,426
Other current assets		—		30,699		37,969		7,314		(5,270)		70,712
Total current assets		—		205,546		765,502		361,833		(303,239)		1,029,642
Property and equipment, net		—		194,290		209,814		35,068		—		439,172
Rental product, net		—		81,809		3,426		14,535		—		99,770
Goodwill		—		6,160		52,128		21,203		—		79,491
Intangible assets, net		—		—		153,712		10,189		—		163,901
Investments in subsidiaries		160,057		1,234,005		—		—		(1,394,062)		—
Other assets		—		7,590		665		5,059		(4,800)		8,514
Total assets	$	160,057	$	1,729,400	$	1,185,247	$	447,887	$	(1,702,101)	$	1,820,490
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	142,701	$	201,799	$	69,485	$	112,963	$	(297,969)	$	228,979
Accrued expenses and other current liabilities		6,697		146,683		109,654		40,233		(5,270)		297,997
Current portion of long-term debt		—		11,619		—		—		—		11,619
Total current liabilities		149,398		360,101		179,139		153,196		(303,239)		538,595
Long-term debt, net		—		1,153,242		—		—		—		1,153,242
Deferred taxes, net and other liabilities		7,028		56,000		45,069		21,725		(4,800)		125,022
Shareholders' equity		3,631		160,057		961,039		272,966		(1,394,062)		3,631
Total liabilities and shareholders' equity	$	160,057	$	1,729,400	$	1,185,247	$	447,887	$	(1,702,101)	$	1,820,490

Tailored Brands, Inc.

Condensed Consolidating Statement of Earnings (Loss)

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Three Months Ended August 3, 2019
Net sales	$	—	$	422,224	$	371,325	$	273,723	$	(277,784)	$	789,488
Cost of sales		—		220,362		288,849		224,334		(277,784)		455,761
Gross margin		—		201,862		82,476		49,389		—		333,727
Operating expenses		652		129,357		130,373		42,220		(29,465)		273,137
Operating (loss) income		(652)		72,505		(47,897)		7,169		29,465		60,590
Other income and expenses, net		—		—		28,318		1,147		(29,465)		—
Interest (expense) income, net		(1,084)		(18,097)		1,100		(20)		—		(18,101)
(Loss) earnings before income taxes		(1,736)		54,408		(18,479)		8,296		—		42,489
(Benefit) provision for income taxes		(321)		11,417		(4,254)		1,381		—		8,223
(Loss) earnings before equity in net income of subsidiaries		(1,415)		42,991		(14,225)		6,915		—		34,266
Equity in earnings (loss) of subsidiaries		35,681		(7,310)		—		—		(28,371)		—
Net earnings (loss)	$	34,266	$	35,681	$	(14,225)	$	6,915	$	(28,371)	$	34,266
Comprehensive income (loss)	$	14,872	$	22,838	$	(14,225)	$	364	$	(8,977)	$	14,872
Three Months Ended August 4, 2018
Net sales	$	—	$	443,685	$	386,319	$	164,525	$	(171,099)	$	823,430
Cost of sales		—		220,210		288,057		117,360		(171,099)		454,528
Gross margin		—		223,475		98,262		47,165		—		368,902
Operating expenses		1,083		132,573		132,681		29,064		(14,485)		280,916
Operating (loss) income		(1,083)		90,902		(34,419)		18,101		14,485		87,986
Other income and expenses, net		—		—		14,485		—		(14,485)		—
Interest (expense) income, net		(923)		(22,458)		2,131		508		—		(20,742)
Loss on extinguishment of debt, net		—		(8,122)		—		—		—		(8,122)
(Loss) earnings before income taxes		(2,006)		60,322		(17,803)		18,609		—		59,122
(Benefit) provision for income taxes		(461)		9,505		(2,557)		3,397		—		9,884
(Loss) earnings before equity in net income of subsidiaries		(1,545)		50,817		(15,246)		15,212		—		49,238
Equity in earnings (loss) of subsidiaries		50,783		(34)		—		—		(50,749)		—
Net earnings (loss)	$	49,238	$	50,783	$	(15,246)	$	15,212	$	(50,749)	$	49,238
Comprehensive income (loss)	$	42,583	$	50,681	$	(15,246)	$	8,659	$	(44,094)	$	42,583

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Six Months Ended August 3, 2019
Net sales	$	—	$	848,347	$	784,433	$	450,322	$	(512,227)	$	1,570,875
Cost of sales		—		448,433		615,772		364,614		(512,227)		916,592
Gross margin		—		399,914		168,661		85,708		—		654,283
Operating expenses		1,496		269,003		265,206		70,868		(43,182)		563,391
Operating (loss) income		(1,496)		130,911		(96,545)		14,840		43,182		90,892
Other income and expenses, net		—		—		42,035		1,147		(43,182)		—
Interest (expense) income, net		(2,239)		(36,576)		2,575		(428)		—		(36,668)
(Loss) earnings before income taxes		(3,735)		94,335		(51,935)		15,559		—		54,224
(Benefit) provision for income taxes		(787)		19,484		(9,335)		3,454		—		12,816
(Loss) earnings before equity in net income of subsidiaries		(2,948)		74,851		(42,600)		12,105		—		41,408
Equity in earnings (loss) of subsidiaries		44,356		(30,495)		—		—		(13,861)		—
Net earnings (loss)	$	41,408	$	44,356	$	(42,600)	$	12,105	$	(13,861)	$	41,408
Comprehensive income (loss)	$	14,815	$	26,332	$	(42,600)	$	3,536	$	12,732	$	14,815
Six Months Ended August 4, 2018
Net sales	$	—	$	889,932	$	767,740	$	292,192	$	(308,470)	$	1,641,394
Cost of sales		—		445,183		579,000		211,555		(308,470)		927,268
Gross margin		—		444,749		188,740		80,637		—		714,126
Operating expenses		1,965		269,846		271,076		57,507		(27,151)		573,243
Operating (loss) income		(1,965)		174,903		(82,336)		23,130		27,151		140,883
Other income and expenses, net		—		—		27,151		—		(27,151)		—
Interest (expense) income, net		(1,687)		(46,124)		4,145		1,028		—		(42,638)
Loss on extinguishment of debt, net		—		(20,833)		—		—		—		(20,833)
(Loss) earnings before income taxes		(3,652)		107,946		(51,040)		24,158		—		77,412
(Benefit) provision for income taxes		(1,119)		20,578		(10,568)		5,374		—		14,265
(Loss) earnings before equity in net income of subsidiaries		(2,533)		87,368		(40,472)		18,784		—		63,147
Equity in earnings (loss) of subsidiaries		65,680		(21,688)		—		—		(43,992)		—
Net earnings (loss)	$	63,147	$	65,680	$	(40,472)	$	18,784	$	(43,992)	$	63,147
Comprehensive income (loss)	$	45,149	$	66,772	$	(40,472)	$	(306)	$	(25,994)	$	45,149

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended August 3, 2019

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	18,957	$	204,479	$	21,748	$	(193,077)	$	(18,784)	$	33,323
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(13,550)		(21,153)		(4,389)		—		(39,092)
Intercompany activities		—		(192,290)		—		(30,953)		223,243		—
Net cash used in investing activities		—		(205,840)		(21,153)		(35,342)		223,243		(39,092)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on new term loan		—		(7,120)		—		—		—		(7,120)
Proceeds from asset-based revolving credit facility		—		673,500		—		—		—		673,500
Payments on asset-based revolving credit facility		—		(677,000)		—		—		—		(677,000)
Intercompany activities		—		12,169		—		192,290		(204,459)		—
Cash dividends paid		(18,784)		—		—		—		—		(18,784)
Proceeds from issuance of common stock		879		—		—		—		—		879
Tax payments related to vested deferred stock units		(1,052)		—		—		—		—		(1,052)
Net cash (used in) provided by financing activities		(18,957)		1,549		—		192,290		(204,459)		(29,577)
Effect of exchange rate changes		—		—		—		(609)		—		(609)
Increase (decrease) in cash and cash equivalents		—		188		595		(36,738)		—		(35,955)
Cash and cash equivalents at beginning of period		—		970		1,496		52,965		—		55,431
Cash and cash equivalents at end of period	$	—	$	1,158	$	2,091	$	16,227	$	—	$	19,476

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended August 4, 2018

(in thousands)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	21,132	$	320,774	$	(2,235)	$	(122,936)	$	(18,744)	$	197,991
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(6,058)		(15,485)		(3,102)		—		(24,645)
Proceeds from divestiture of business		—		—		17,755		—		—		17,755
Intercompany activities		—		(142,775)		—		—		142,775		—
Net cash (used in) provided by investing activities		—		(148,833)		2,270		(3,102)		142,775		(6,890)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on original term loan		—		(993,420)		—		—		—		(993,420)
Proceeds from new term loan		—		895,500		—		—		—		895,500
Payments on new term loan		—		(4,500)		—		—		—		(4,500)
Proceeds from asset-based revolving credit facility		—		199,500		—		—		—		199,500
Payments on asset-based revolving credit facility		—		(95,000)		—		—		—		(95,000)
Repurchase and retirement of senior notes		—		(199,365)		—		—		—		(199,365)
Deferred financing costs		—		(5,644)		—		—		—		(5,644)
Intercompany activities		—		(18,744)		—		142,775		(124,031)		—
Cash dividends paid		(18,744)		—		—		—		—		(18,744)
Proceeds from issuance of common stock		4,113		—		—		—		—		4,113
Tax payments related to vested deferred stock units		(6,501)		—		—		—		—		(6,501)
Net cash (used in) provided by financing activities		(21,132)		(221,673)		—		142,775		(124,031)		(224,061)
Effect of exchange rate changes		—		—		—		(2,432)		—		(2,432)
(Decrease) increase in cash and cash equivalents		—		(49,732)		35		14,305		—		(35,392)
Cash and cash equivalents at beginning of period		—		51,818		2,180		49,609		—		103,607
Cash and cash equivalents at end of period	$	—	$	2,086	$	2,215	$	63,914	$	—	$	68,215