The DIP ABL Facility and the Pre-Petition ABL Credit Agreement discussed in Note 3 restrict the ability of Tuesday Morning, Inc., the borrower under the DIP ABL Facility and the Pre-Petition ABL Credit Agreement and Tuesday Morning’s principal operating subsidiary, to incur additional liens and indebtedness, make investments and dispositions, pay dividends (including to Tuesday Morning), or enter into certain other transactions, among other restrictions. As a consolidated deficit exists as of June 30, 2020, no retained earnings are free of limitation on the payment of dividends on that date.

At June 30, 2020, restricted net assets of consolidated subsidiaries were $20.0 million.


Tuesday Morning Corporation (parent company only)
Condensed Balance Sheets

	June 30,			June 30,
	2020			2019
ASSETS
Current assets:
Accounts receivable from subsidiaries	$	32,514		$	30,049
Total current assets		32,514			30,049
Noncurrent assets:
Investment in subsidiaries		(25,579	)		141,260
Total noncurrent assets		(25,579	)		141,260
Total Assets	$	6,935		$	171,309
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable to subsidiaries	$	—		$	—
Total current liabilities		—			—
Noncurrent Liabilities		—			—
Total Liabilities		—			—
Stockholders' equity:
Common stock		455			465
Additional paid-in capital		244,021			241,456
Retained deficit		(230,729	)		(63,800	)
Less: Treasury stock		(6,812	)		(6,812	)
Total stockholders' equity		6,935			171,309
Total Liabilities and Stockholders' Equity	$	6,935		$	171,309

Tuesday Morning Corporation (parent company only)
Condensed Statements of Operations

	Fiscal Years Ended June 30
	2020			2019			2018
Net sales	$	—		$	—		$	—
Cost of sales		—			—			—
Gross profit		—			—			—
Selling, general and administrative expenses		—			—			—
Operating income/(loss)		—			—			—
Other income/(expense):
Interest expense		—			—			—
Other income/(expense), net		—			—			—
Income/(loss) before taxes		—			—			—
Income tax provision		—			—			—
Net loss of subsidiaries		(166,328	)		(12,440	)		(21,938	)
Net loss	$	(166,328	)	$	(12,440	)	$	(21,938	)

In the condensed, parent company only financial statements, Tuesday Morning Corporation’s investment in subsidiaries is stated at cost plus equity in undistributed earnings of subsidiaries since the date of acquisition. These condensed parent company only financial statements should be read in conjunction with Tuesday Morning Corporation’s consolidated financial statements. Condensed statements of cash flows were not presented because Tuesday Morning Corporation had no cash flow activities during fiscal 2020, fiscal 2019, or fiscal 2018.

As of June 30, 2020, Tuesday Morning, Inc. had $33.0 million available credit on the DIP ABL Facility that provides commitments of up to $100.0 million for revolving loans and letters of credit. Tuesday Morning Corporation, Tuesday Morning Inc. and the subsidiaries of Tuesday Morning, Inc. have guaranteed all obligations under the DIP ABL Facility. In the event of default under the DIP ABL Facility, Tuesday Morning Corporation, Tuesday Morning, Inc. and the subsidiaries of Tuesday Morning, Inc. will be directly liable to the debt holders. The DIP ABL Credit Agreement includes restrictions on the ability of Tuesday Morning Corporation, Tuesday Morning, Inc. and the subsidiaries of Tuesday Morning, Inc. to incur additional liens and indebtedness, make investments and dispositions, pay dividends or make other transactions, among other restrictions. Under the DIP ABL Facility, Tuesday Morning, Inc. may not pay any dividends to Tuesday Morning Corporation except to allow Tuesday Morning Corporation (i) to pay operating expenses in the ordinary course of business and other corporate overhead, legal, accounting and other professional fees and expenses and (ii) to pay franchise or similar taxes and other fees and expenses required in connection with the maintenance of its existence and its ownership of Tuesday Morning, Inc. and in order to permit Tuesday Morning Corporation to make payments (other than cash interest payments) which would otherwise be permitted to be paid by Tuesday Morning, Inc., in each case, in accordance with the approved budget under the DIP ABL Facility.