10-Q

not

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended November 2, 2019 or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-16097

TAILORED BRANDS, INC.

(Exact Name of Registrant as Specified in its Charter)

Texas	47-4908760
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)
6380 Rogerdale Road
Houston, Texas	77072-1624
(Address of Principal Executive Offices)	(Zip Code)

(281) 776-7000

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $.01 per share	TLRD	New York Stock Exchange

Indicate by check mark whether the 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 ☒. No ☐.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒. No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ☒	Accelerated filer  ☐	Non-accelerated filer  ☐
Smaller reporting company  ☐	Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐. No ☒.

The number of shares of common stock of the Registrant, par value $.01 per share, outstanding at November 29, 2019 was 48,422,534.

REPORT INDEX

Part and Item No.	Page No.
PART I — Financial Information
Item 1 — Condensed Consolidated Financial Statements (unaudited)
Condensed Consolidated Balance Sheets as of November 2, 2019, November 3, 2018 and February 2, 2019	2
Condensed Consolidated Statements of (Loss) Earnings for the Three and Nine Months Ended November 2, 2019 and November 3, 2018	3
Condensed Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended November 2, 2019 and November 3, 2018	4
Condensed Consolidated Statements of Shareholders’ (Deficit) Equity for the Three and Nine Months Ended November 2, 2019 and November 3, 2018	5
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended November 2, 2019 and November 3, 2018	6
Notes to Condensed Consolidated Financial Statements	7
Item 2 — Management's Discussion and Analysis of Financial Condition and Results of Operations	39
Item 3 — Quantitative and Qualitative Disclosures about Market Risk	53
Item 4 — Controls and Procedures	53
PART II — Other Information	54
Item 1 — Legal Proceedings	54
Item 2 — Unregistered Sales of Equity Securities and Use of Proceeds	54
Item 6 — Exhibits	54
SIGNATURES	56

Forward-Looking Statements

Certain statements made in this Quarterly Report on Form 10-Q or in other materials we have filed or will file with the Securities and Exchange Commission (“SEC”) (as well as information included in oral statements or other written statements made or to be made by us) contains or may contain forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995), including, but not limited to, statements regarding our future financial performance and financial condition.  Words such as “expects,” “anticipates,” “envisions,” “targets,” “goals,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” variations of such words and similar expressions are intended to identify such forward-looking statements.  Forward-looking statements reflect our current views regarding certain events that could affect our financial condition or results of operations and may include, but are not limited to, references to future sales, comparable sales, margins, costs, earnings, number and costs of store openings, closings, remodels, refreshes, relocations and expansions, capital expenditures, potential acquisitions or divestitures, synergies from acquisitions, business strategies, demand for our retail clothing or rental products, economic conditions, market trends in the retail business, currency fluctuations, inflation and various political, legal, regulatory, social, economic and business trends. Forward-looking statements are based upon management’s current beliefs or expectations and are inherently subject to significant business, economic and competitive risks, uncertainties and contingencies and third party approvals, many of which are beyond our control.

Any forward-looking statements that we make herein and in future reports are not guarantees of future performance, and actual results may differ materially from those in such forward-looking statements as a result of various factors. Factors that might cause or contribute to such differences include, but are not limited to: actions or inactions by governmental entities; domestic and international macro-economic conditions; inflation or deflation; the loss of, or changes in, key personnel; success, or lack thereof, in formulating or executing our internal strategies and operating plans including new store and new market expansion plans; cost reduction initiatives and revenue enhancement strategies; changes to our capital allocation policy; changes in demand for our retail clothing or rental products; market trends in the retail or rental business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies, including custom clothing; performance issues with key suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import policies, including the enactment of duties or tariffs; advertising or marketing activities of competitors; the impact of cybersecurity threats or data breaches; legal proceedings and the impact of climate change.

Forward-looking statements are intended to convey the Company’s expectations about the future, and speak only as of the date they are made.  We undertake no obligation to publicly update or revise any forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law. However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted.  This discussion is provided as permitted by the Private Securities Litigation Reform Act of 1995, and all written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by the cautionary statements contained or referenced in this section.

1

PART I — FINANCIAL INFORMATION

ITEM 1 — CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	November 2,		November 3,		February 2,
	2019		2018		2019
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	21,193	$	56,293	$	32,671
Accounts receivable, net		42,056		34,637		34,686
Inventories		778,342		772,206		724,086
Other current assets		60,778		66,063		66,823
Current assets - discontinued operations		—		165,358		171,376
Total current assets		902,369		1,094,557		1,029,642
PROPERTY AND EQUIPMENT, net		405,000		416,061		424,316
OPERATING LEASE RIGHT-OF-USE ASSETS		908,505		—		—
RENTAL PRODUCT, net		92,785		102,540		99,770
GOODWILL		79,392		79,475		79,491
INTANGIBLE ASSETS, net		146,890		154,144		153,711
OTHER ASSETS		5,450		17,232		8,489
NON-CURRENT ASSETS - DISCONTINUED OPERATIONS		—		25,531		25,071
TOTAL ASSETS	$	2,540,391	$	1,889,540	$	1,820,490
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	210,165	$	218,114	$	204,775
Accrued expenses and other current liabilities		250,706		290,422		268,698
Current portion of operating lease liabilities		184,422		—		—
Income taxes payable		9,928		12,360		13,478
Current portion of long-term debt		9,000		9,000		11,619
Current liabilities - discontinued operations		—		33,661		40,025
Total current liabilities		664,221		563,557		538,595
LONG-TERM DEBT, net		1,111,732		1,167,906		1,153,242
OPERATING LEASE LIABILITIES		754,956		—		—
DEFERRED TAXES, net AND OTHER LIABILITIES		73,968		144,138		119,545
NON-CURRENT LIABILITIES - DISCONTINUED OPERATIONS		—		4,452		5,477
Total liabilities		2,604,877		1,880,053		1,816,859
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY:
Preferred stock		—		—		—
Common stock		507		501		501
Capital in excess of par		513,106		501,835		505,157
Accumulated deficit		(534,979)		(464,993)		(468,048)
Accumulated other comprehensive loss		(33,120)		(27,856)		(33,979)
Treasury stock, at cost		(10,000)		—		—
Total shareholders' (deficit) equity		(64,486)		9,487		3,631
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY	$	2,540,391	$	1,889,540	$	1,820,490

See Notes to Condensed Consolidated Financial Statements.

2

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS

(In thousands, except per share data)

(Unaudited)

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Retail clothing product	$	573,854	$	588,447	$	1,749,533	$	1,807,879
Rental services		120,021		124,697		334,090		350,019
Alteration and other services		35,606		38,597		106,665		116,600
Total net sales		729,481		751,741		2,190,288		2,274,498
Cost of sales:
Retail clothing product		266,481		254,385		794,970		790,565
Rental services		16,041		17,319		48,831		51,342
Alteration and other services		33,151		33,022		100,612		100,949
Occupancy costs		105,780		101,521		314,097		304,312
Total cost of sales		421,453		406,247		1,258,510		1,247,168
Gross margin:
Retail clothing product		307,373		334,062		954,563		1,017,314
Rental services		103,980		107,378		285,259		298,677
Alteration and other services		2,455		5,575		6,053		15,651
Occupancy costs		(105,780)		(101,521)		(314,097)		(304,312)
Total gross margin		308,028		345,494		931,778		1,027,330
Advertising expense		34,031		37,116		111,527		116,241
Selling, general and administrative expenses		228,453		233,100		687,414		698,833
Operating income		45,544		75,278		132,837		212,256
Interest income		147		207		400		414
Interest expense		(17,572)		(18,757)		(54,493)		(61,602)
Loss on extinguishment of debt, net		(77)		(9,420)		(77)		(30,253)
Earnings before income taxes		28,042		47,308		78,667		120,815
Provision for income taxes		254		12,521		14,743		26,018
Net earnings from continuing operations		27,788		34,787		63,924		94,797
Loss from discontinued operations, net of tax		(117,378)		(20,912)		(112,106)		(17,775)
Net (loss) earnings	$	(89,590)	$	13,875	$	(48,182)	$	77,022
Net earnings from continuing operations per common share:
Basic	$	0.56	$	0.70	$	1.27	$	1.90
Diluted	$	0.56	$	0.69	$	1.27	$	1.87
Net loss from discontinued operations per common share:
Basic	$	(2.36)	$	(0.42)	$	(2.23)	$	(0.36)
Diluted	$	(2.35)	$	(0.41)	$	(2.23)	$	(0.35)
Net (loss) earnings per common share:
Basic	$	(1.80)	$	0.28	$	(0.96)	$	1.55
Diluted	$	(1.80)	$	0.27	$	(0.96)	$	1.52
Weighted-average common shares outstanding:
Basic		49,803		50,000		50,210		49,766
Diluted		49,905		50,722		50,372		50,764

See Notes to Condensed Consolidated Financial Statements.

3

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)

	For the Three Months Ended				For the Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Net (loss) earnings	$	(89,590)	$	13,875	$	(48,182)	$	77,022
Currency translation adjustments		3,223		(4,056)		(5,691)		(26,023)
Unrealized (loss) gain on cash flow hedges, net of tax		(2,656)		4,980		(20,335)		8,949
Release of cumulative foreign currency translation adjustment to loss from discontinued operations		26,885		—		26,885		—
Comprehensive (loss) income	$	(62,138)	$	14,799	$	(47,323)	$	59,948

See Notes to Condensed Consolidated Financial Statements.

4

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ (DEFICIT) EQUITY

(In thousands)

(Unaudited)

							Accumulated
			Capital				Other		Treasury		Total
	Common		in Excess		Accumulated		Comprehensive		Stock, at		Equity
	Stock		of Par		Deficit		Loss		Cost		(Deficit)
BALANCES — February 2, 2019	$	501	$	505,157	$	(468,048)	$	(33,979)	$	—	$	3,631
Net earnings		—		—		7,142		—		—		7,142
Other comprehensive loss		—		—		—		(7,199)		—		(7,199)
Cumulative adjustment upon ASC 842 adoption (see Note 14)		—		—		(402)		—		—		(402)
Cash dividends — $0.18 per share		—		—		(9,103)		—		—		(9,103)
Share-based compensation		—		2,398		—		—		—		2,398
Common stock issued — 306,505 shares		3		424		—		—		—		427
Tax payments related to vested deferred stock units		—		(940)		—		—		—		(940)
BALANCES — May 4, 2019	$	504	$	507,039	$	(470,411)	$	(41,178)	$	—	$	(4,046)
Net earnings		—		—		34,266		—		—		34,266
Other comprehensive loss		—		—		—		(19,394)		—		(19,394)
Cash dividends — $0.18 per share		—		—		(9,247)		—		—		(9,247)
Share-based compensation		—		2,644		—		—		—		2,644
Common stock issued — 155,210 shares		2		450		—		—		—		452
Tax payments related to vested deferred stock units		—		(112)		—		—		—		(112)
BALANCES — August 3, 2019	$	506	$	510,021	$	(445,392)	$	(60,572)	$	—	$	4,563
Net loss		—		—		(89,590)		—		—		(89,590)
Other comprehensive income		—		—		—		567		—		567
True-up to cash dividends		—		—		3		—		—		3
Release of cumulative foreign currency translation adjustment to loss from discontinued operations		—		—		—		26,885		—		26,885
Share-based compensation		—		2,811		—		—		—		2,811
Common stock issued — 116,839 shares		1		340		—		—		—		341
Tax payments related to vested deferred stock units		—		(66)		—		—		—		(66)
Treasury stock repurchased — 2,336,852 shares		—		—		—		—		(10,000)		(10,000)
BALANCES — November 2, 2019	$	507	$	513,106	$	(534,979)	$	(33,120)	$	(10,000)	$	(64,486)

							Accumulated
			Capital				Other		Treasury		Total
	Common		in Excess		Accumulated		Comprehensive		Stock, at		Equity
	Stock		of Par		Deficit		Loss		Cost		(Deficit)
BALANCES — February 3, 2018	$	492	$	491,648	$	(479,166)	$	(10,782)	$	—	$	2,192
Net earnings		—		—		13,909		—		—		13,909
Other comprehensive loss		—		—		—		(11,343)		—		(11,343)
Cumulative adjustment upon ASC 606 adoption (see Note 6)		—		—		(35,824)		—		—		(35,824)
Cash dividends — $0.18 per share		—		—		(9,360)		—		—		(9,360)
Share-based compensation		—		4,581		—		—		—		4,581
Common stock issued — 445,932 shares		4		3,645		—		—		—		3,649
Tax payments related to vested deferred stock units		—		(5,025)		—		—		—		(5,025)
BALANCES — May 5, 2018	$	496	$	494,849	$	(510,441)	$	(22,125)	$	—	$	(37,221)
Net earnings		—		—		49,238		—		—		49,238
Other comprehensive loss		—		—		—		(6,655)		—		(6,655)
Cash dividends — $0.18 per share		—		—		(9,174)		—		—		(9,174)
Share-based compensation		—		4,835		—		—		—		4,835
Common stock issued — 178,647 shares		2		462		—		—		—		464
Tax payments related to vested deferred stock units		—		(1,476)		—		—		—		(1,476)
BALANCES — August 4, 2018	$	498	$	498,670	$	(470,377)	$	(28,780)	$	—	$	11
Net earnings		—		—		13,875		—		—		13,875
Other comprehensive loss		—		—		—		924		—		924
Cash dividends — $0.18 per share		—		—		(8,491)		—		—		(8,491)
Share-based compensation		—		2,140		—		—		—		2,140
Common stock issued — 183,431 shares		3		2,034		—		—		—		2,037
Tax payments related to vested deferred stock units		—		(1,009)		—		—		—		(1,009)
BALANCES — November 3, 2018	$	501	$	501,835	$	(464,993)	$	(27,856)	$	—	$	9,487

5

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	For the Nine Months Ended
	November 2, 2019		November 3, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings	$	(48,182)	$	77,022
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation and amortization		79,394		78,088
Non-cash lease expense		147,602		—
Rental product amortization		29,739		30,720
Goodwill impairment charge		—		23,991
Loss on extinguishment of debt, net		77		30,253
Amortization of deferred financing costs and discount on long-term debt		1,431		2,936
Loss on divestiture of business		82,808		3,766
Loss on release of cumulative foreign currency translation adjustment		26,885		—
Loss on disposition of assets		1,942		4,833
Asset impairment charges		1,185		504
Share-based compensation		7,853		11,555
Deferred tax benefit		(1,540)		(2,956)
Other		67		395
Changes in operating assets and liabilities:
Accounts receivable		1,078		(5,661)
Inventories		(55,116)		(49,739)
Rental product		(25,798)		(14,665)
Other assets		(16,804)		10,560
Accounts payable, accrued expenses and other current liabilities		(13,076)		70,924
Income taxes payable		(5,239)		10,313
Other liabilities		(148,744)		(5,022)
Net cash provided by operating activities		65,562		277,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(63,408)		(46,927)
Proceeds from divestiture of business, net		45,034		17,755
Net cash used in investing activities		(18,374)		(29,172)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on original term loan		—		(993,420)
Proceeds from new term loan		—		895,500
Payments on new term loan		(9,370)		(6,750)
Proceeds from asset-based revolving credit facility		1,065,000		465,500
Payments on asset-based revolving credit facility		(1,046,000)		(407,000)
Repurchase and retirement of senior notes		(54,425)		(199,365)
Deferred financing costs		—		(6,713)
Cash dividends paid		(27,938)		(27,833)
Proceeds from issuance of common stock		1,220		6,149
Tax payments related to vested deferred stock units		(1,118)		(7,510)
Repurchases of common stock		(10,000)		—
Net cash used in financing activities		(82,631)		(281,442)
Effect of exchange rate changes		1,205		(2,385)
DECREASE IN CASH AND CASH EQUIVALENTS		(34,238)		(35,182)
Balance at beginning of period		55,431		103,607
Balance at end of period	$	21,193	$	68,425

See Notes to Condensed Consolidated Financial Statements.

6

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Significant Accounting Policies

Basis of Presentation — The condensed consolidated financial statements herein include the accounts of Tailored Brands, Inc. and its subsidiaries (the "Company") and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").  As applicable under such regulations, certain information and footnote disclosures have been condensed or omitted.  We believe the presentation and disclosures herein are adequate to make the information not misleading, and the condensed consolidated financial statements reflect all elimination entries and normal recurring adjustments which are necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented.  Certain prior period amounts have been reclassified to conform to the current period presentation.

Our business results historically have fluctuated throughout the year and, as a result, the operating results of the interim periods presented are not necessarily indicative of the results that may be achieved for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended February 2, 2019.

Unless the context otherwise requires, "Company", "we", "us" and "our" refer to Tailored Brands, Inc. and its subsidiaries.

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts and related disclosures.  Actual amounts could differ from those estimates.

As discussed in Note 2, during the third quarter of 2019, we completed the sale of our corporate apparel business.    Amounts presented on the condensed consolidated balance sheet and condensed consolidated statements of (loss) earnings for all prior periods related to the corporate apparel business have been reclassified as discontinued operations.  Unless noted otherwise, discussion in these notes to the condensed consolidated financial statements pertain to our continuing operations.

In addition, as a result of this change in our organizational structure, we reassessed our segment reporting presentation.  We determined that the results from our four merchandising brands:  Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank, K&G and Moores Clothing for Men (“Moores”) represent separate operating segments that should continue to be aggregated into a reportable segment and, as a result, we have only one reportable segment.  Please see Note 6 for revenue information by brand and by major source.  

Recent Accounting Pronouncements Not Yet Adopted — We have considered all new accounting pronouncements not yet adopted and have concluded there are no new pronouncements that may have a material impact on our financial position, results of operations, or cash flows, based on current information, except for those listed below.  

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for public companies for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption of ASU 2018-15 is permitted.  We are currently evaluating the impact ASU 2018-15 may have on our financial position, results of operations or cash flows.

7

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

2. Discontinued Operations

On August 15, 2019, our Board of Directors approved and on August 16, 2019, we completed the sale of MWUK Limited, our UK corporate apparel operations conducted under the Dimensions, Alexandra, and Yaffy brand names to Project Dart Bidco Limited, pursuant to a Share Purchase Agreement entered into on August 16, 2019.  In addition, we also completed the sale of Twin Hill Acquisition Company, Inc. (“Twin Hill”), our U.S. corporate apparel operation, to TH Holdco Inc., pursuant to a Stock Purchase Agreement entered into on August 16, 2019.  The aggregate consideration for all of the outstanding equity of MWUK Limited and Twin Hill (collectively, the “corporate apparel business”) was approximately $62 million, subject to certain working capital adjustments. After consideration of working capital adjustments and other related items, we received $49.3 million in cash during the third quarter of 2019 and approximately $6.0 million will be received in the first quarter of fiscal 2020.  Prior to its sale, the corporate apparel business was its own reportable segment.

We determined that the sale of the corporate apparel business represents a strategic shift that will have a major effect on our results of operations and, as a result, have reported the disposal as discontinued operations.  We have presented the results of the corporate apparel business including the loss on the sale of the corporate apparel business within loss from discontinued operations, net in the condensed consolidated statement of (loss) earnings for all periods presented.  Certain costs previously allocated to the corporate apparel business for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations.  In addition, the goodwill impairment charge of $24.0 million recorded during the third quarter of 2018 and related to the corporate apparel business has been reclassified to discontinued operations.

Also, U.S. GAAP requires cumulative foreign currency translation adjustment balances to be released into earnings once the sale or liquidation of the net assets of a foreign entity occurs.  As we have sold the operating entities associated with the corporate apparel business during the third quarter of 2019, we determined the cumulative foreign currency translation adjustment balance totaling $26.9 million should be released to earnings and classified within loss from discontinued operations.

The related assets and liabilities of the corporate apparel business are presented as current and non-current assets and liabilities of discontinued operations in the condensed consolidated balance sheets as of November 3, 2018 and February 2, 2019.  The following table provides details of the carrying amounts of major classes of assets and liabilities related to discontinued operations as of November 3, 2018 and February 2, 2019 (in thousands):

	November 3,		February 2,
	2018		2019
ASSETS
Cash and cash equivalents	$	12,132	$	22,760
Accounts receivable, net		46,059		38,387
Inventories		102,797		106,340
Other current assets		4,370		3,889
Total current assets		165,358		171,376
Property and equipment, net		14,817		14,856
Other assets		10,714		10,215
Total assets	$	190,889	$	196,447
LIABILITIES
Accounts payable	$	17,844	$	24,204
Accrued expenses and other current liabilities		15,817		15,821
Total current liabilities		33,661		40,025
Other liabilities		4,452		5,477
Total liabilities	$	38,113	$	45,502

8

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides details of the amounts reflected in loss from discontinued operations, net of tax in the condensed consolidated statements of (loss) earnings for the three and nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales	$	7,376	$	61,006	$	117,444	$	179,643
Cost of sales		5,507		43,765		85,042		130,112
Selling, general and administrative expenses		2,200		13,427		30,049		41,812
Goodwill impairment charge		—		23,991		—		23,991
Loss on sale of corporate apparel business		83,723		—		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—		26,885		—
Loss from discontinued operations before taxes		(110,939)		(20,177)		(107,340)		(16,272)
Income tax expense		6,439		735		4,766		1,503
Loss from discontinued operations, net of tax	$	(117,378)	$	(20,912)	$	(112,106)	$	(17,775)

The cash flows related to discontinued operations have not been segregated, and are included in the condensed consolidated statement of cash flows.  The following table provides selected information on cash flows related to discontinued operations for the nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Nine Months Ended
	November 2, 2019		November 3, 2018
Depreciation and amortization	$	3,102	$	4,382
Capital expenditures		2,677		3,198
Significant non-cash operating and investing items:
Goodwill impairment charge		—		23,991
Loss on divestiture of business		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—
Receivable related to sale of corporate apparel business	$	6,048	$	—

3. Divestiture of MW Cleaners

On February 28, 2018, we entered into a definitive agreement to divest our MW Cleaners business for approximately $18.0 million, subject to certain adjustments, and the transaction closed on March 3, 2018.  During the first nine months of 2018, we received cash proceeds of $17.8 million and recorded a loss on the divestiture totaling $3.8 million, which is included within selling, general and administrative expenses (“SG&A”) in the condensed consolidated statement of (loss) earnings.  

We determined that the sale of the MW Cleaners business did not represent a strategic shift and will not have a major effect on our consolidated results of operations, financial position or cash flows. Accordingly, we have not presented the sale as a discontinued operation in the condensed consolidated financial statements.

9

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

4. (Loss) Earnings Per Share

Basic (loss) earnings per common share is computed by dividing net (loss) earnings by the weighted-average common shares outstanding during the period.  Diluted (loss) earnings per common share is calculated using the treasury stock method.  Basic and diluted (loss) earnings per common share are computed using the actual net (loss) earnings and the actual weighted-average common shares outstanding rather than the rounded numbers presented within our condensed consolidated statement of (loss) earnings and the accompanying notes.  As a result, it may not be possible to recalculate (loss) earnings per common share in our condensed consolidated statement of (loss) earnings and the accompanying notes. The following table sets forth the computation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):

	For the Three Months Ended				For the Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Numerator
Net earnings from continuing operations	$	27,788	$	34,787	$	63,924	$	94,797
Loss from discontinued operations, net of tax		(117,378)		(20,912)		(112,106)		(17,775)
Net (loss) earnings	$	(89,590)	$	13,875	$	(48,182)	$	77,022
Denominator
Basic weighted-average common shares outstanding		49,803		50,000		50,210		49,766
Dilutive effect of share-based awards		102		722		162		998
Diluted weighted-average common shares outstanding		49,905		50,722		50,372		50,764
Net earnings from continuing operations per common share:
Basic	$	0.56	$	0.70	$	1.27	$	1.90
Diluted	$	0.56	$	0.69	$	1.27	$	1.87
Net loss from discontinued operations per common share:
Basic	$	(2.36)	$	(0.42)	$	(2.23)	$	(0.36)
Diluted	$	(2.35)	$	(0.41)	$	(2.23)	$	(0.35)
Net (loss) earnings per common share:
Basic	$	(1.80)	$	0.28	$	(0.96)	$	1.55
Diluted	$	(1.80)	$	0.27	$	(0.96)	$	1.52

For the three and nine months ended November 2, 2019, 4.5 million and 3.7 million anti-dilutive shares of common stock were excluded from the calculation of diluted (loss) earnings per common share, respectively. For the three and nine months ended November 3, 2018, 0.8 million and 0.6 million anti-dilutive shares of common stock were excluded from the calculation of diluted (loss) earnings per common share, respectively.

5. Debt

In 2014, The Men's Wearhouse entered into a term loan credit agreement that provided for a senior secured term loan in the aggregate principal amount of $1.1 billion (the "Original Term Loan") and a $500.0 million asset-based revolving credit agreement (the "ABL Facility", and together with the Original Term Loan, the "Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People, one of our Canadian subsidiaries, as co-borrowers. Proceeds from the Original Term Loan were reduced by an $11.0 million original issue discount ("OID"), which was presented as a reduction of the outstanding balance on the Original Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the Original Term Loan. In addition, in 2014, The Men's Wearhouse issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the "Senior Notes").

10

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In October 2017, The Men’s Wearhouse amended the ABL Facility in part to increase the principal amount available to $550.0 million and extend the maturity date to October 2022. In April 2018, The Men’s Wearhouse refinanced its Original Term Loan, and in October 2018, amended its term loan to reduce the interest rate margin. See Credit Facilities section below for additional information.

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios.  Should our total leverage ratio and secured leverage ratio exceed certain thresholds specified in the agreements, we would be subject to certain additional restrictions, including limitations on our ability to make significant acquisitions and incur additional indebtedness. As of November 2, 2019, our total leverage ratio is below the maximum specified in the agreements, however, our secured leverage ratio is above the maximum level.  As a result, we are now subject to additional restrictions, primarily related to the size of any incremental term loan facilities being limited to a maximum of $250.0 million. In addition, as a result of the refinancing of our Original Term Loan and amending of our ABL Facility, our ability to pay dividends on our common stock has increased from a maximum of $10.0 million per quarter to a maximum of $15.0 million per quarter.

Credit Facilities

In April 2018, we refinanced our Original Term Loan.  Immediately prior to the refinancing, the Original Term Loan consisted of $593.4 million in aggregate principal amount with an interest rate of LIBOR plus 3.50% (with a floor of 1.0%) and $400.0 million in aggregate principal amount with a fixed rate of 5.0% per annum.  Upon entering into the refinancing, we made a prepayment of $93.4 million on the Original Term Loan using cash on hand.

As a result, we refinanced $900.0 million in aggregate principal amount of term loans then outstanding with a new Term Loan totaling $900.0 million (the “New Term Loan”).  Additionally, we may continue to request additional term loans or incremental equivalent debt borrowings, all of which are uncommitted, in an aggregate amount up to the greater of (1) $250.0 million and (2) an aggregate principal amount such that, on a pro forma basis (giving effect to such borrowings), our senior secured leverage ratio will not exceed 2.5 to 1.0.  As noted above, we are currently limited to a maximum of $250.0 million for such incremental borrowings.

The New Term Loan will amortize in an annual amount equal to 1.0% of the principal amount of the New Term Loan, payable quarterly commencing on May 1, 2018.  Proceeds from the New Term Loan were reduced by a $4.5 million OID, which was presented as a reduction of the outstanding balance on the New Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the New Term Loan.  The New Term Loan extends the maturity date of the Original Term Loan from June 18, 2021 until April 9, 2025, subject to a maturity provision that would accelerate the maturity of the New Term Loan to April 1, 2022 if any of the Company’s obligations under its Senior Notes remain outstanding on April 1, 2022.

The New Term Loan bears interest at a rate per annum equal to an applicable margin plus, at the Company’s option, either LIBOR (with a floor of 1.0%) or the base rate (with a floor of 2.0%).  In October 2018, we amended the New Term Loan resulting in a reduction in the interest rate margin of 25 basis points.  As a result of the amendment, the margins for borrowings under the New Term Loan are 3.25% for LIBOR and 2.25% for the base rate and the OID was eliminated.  In connection with the October 2018 amendment of the New Term Loan, we incurred deferred financing costs of $1.1 million, which will be amortized over the life of the New Term Loan using the interest method.  The maturity date for the New Term Loan remains April 9, 2025, and all other material provisions of the New Term Loan remain unchanged.  For the three and nine months ended November 3, 2018, we recorded a loss on extinguishment of debt totaling $9.4 million and $21.3 million, respectively, consisting of the elimination of unamortized deferred financing costs and OID related to the Original Term Loan and refinancing of the New Term Loan.

The interest rate on the New Term Loan is based on 1-month LIBOR, which was 1.77% at November 2, 2019, plus the applicable margin of 3.25%, resulting in a total interest rate of 5.02%.  We have two interest rate swap agreements where the variable rates due under the New Term Loan have been exchanged for a fixed rate. At November 2, 2019, the total

11

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

notional amount under these interest rate swaps is $705.0 million.  Please see Note 17 for additional information on our interest rate swaps.

As a result of our interest rate swaps, 80% of the variable interest rate under the New Term Loan has been converted to a fixed rate and, as of November 2, 2019, the New Term Loan had a weighted average interest rate of 5.63%.

In October 2017, we amended our ABL Facility, which now provides for a senior secured revolving credit facility of $550.0 million, with possible future increases to $650.0 million under an expansion feature, that matures in October 2022, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices:  (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate ("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the New York Federal Reserve Bank (“NYFRB”) rate plus 0.5% or adjusted LIBOR for a one-month interest period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 1.75%.  The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.25% to 1.75%, and a fee on unused commitments of 0.25%.  As of November 2, 2019, $67.5 million in borrowings were outstanding under the ABL Facility at a weighted average interest rate of approximately 3.5%. During the nine months ended November 2, 2019, the maximum borrowing outstanding under the ABL Facility was $100.0 million.

We utilize letters of credit primarily as collateral for workers compensation claims.  At November 2, 2019, letters of credit totaling approximately $26.7 million were issued and outstanding. Borrowings available under the ABL Facility as of November 2, 2019 were $455.8 million.

The obligations under the Credit Facilities are secured on a senior basis by a first priority lien on substantially all of the assets of the Company, The Men’s Wearhouse and its U.S. subsidiaries and, in the case of the ABL Facility, Moores The Suit People. The Credit Facilities and the related guarantees and security interests granted thereunder are senior secured obligations of, and will rank equally with all present and future senior indebtedness of the Company, the co-borrowers and the respective guarantors.  

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature in July 2022.  Interest on the Senior Notes is payable on January 1 and July 1 of each year.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices set forth in the indenture governing the Senior Notes.  Upon the occurrence of certain specific changes of control, we may be required to offer to purchase the Senior Notes at 101% of their aggregate principal amount plus accrued and unpaid interest thereon to the date of purchase.

During the third quarter of 2019, we repurchased and retired $54.8 million in face value of Senior Notes through open market repurchases. As a result, we recorded a net loss on extinguishment totaling $0.1 million, consisting of the elimination of unamortized deferred financing costs totaling $0.5 million partially offset by a $0.4 million gain upon repurchase, which is included as a separate line in the condensed consolidated statement of (loss) earnings.  

For the nine months ended November 3, 2018, as a result of the partial redemption of $175.0 million in face value of our Senior Notes in the second quarter of 2018 as well as the repurchase and retirement of $17.6 million in face value of Senior Notes through open market transactions in the first quarter of 2018, we recorded a net loss on extinguishment totaling $8.9 million, which is included as a separate line in the condensed consolidated statement of (loss) earnings.  The net loss on extinguishment reflects a $6.7 million loss upon repurchase and the elimination of unamortized deferred financing costs totaling $2.2 million related to the Senior Notes.

12

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Long-Term Debt

The following table provides details on our long-term debt as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Term Loan	$	881,630	$	893,250	$	891,000
Senior Notes		173,816		228,607		228,607
ABL Facility		67,500		58,500		48,500
Less: Deferred financing costs related to the Term Loan and Senior Notes		(2,214)		(3,451)		(3,246)
Total long-term debt, net		1,120,732		1,176,906		1,164,861
Current portion of long-term debt		(9,000)		(9,000)		(11,619)
Total long-term debt, net of current portion	$	1,111,732	$	1,167,906	$	1,153,242

6. Revenue Recognition

Adoption of ASC 606

Effective February 4, 2018, we adopted ASC 606, Revenue from Contracts with Customers and all related amendments (“ASC 606”), to all contracts using the modified retrospective approach.  We recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings.  The adoption had no impact to our previously reported results of operations or cash flows.  

The following table depicts the cumulative effect of the changes made to our February 3, 2018 balance sheet for the adoption of ASC 606 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 3,		Adoption of		February 3,
	2018		ASC 606		2018
Assets:
Accounts receivable, net	$	36,288	$	(303)	$	35,985
Other current assets		77,228		2,753		79,981
Current assets - discontinued operations		182,862		(17,837)		165,025
Liabilities:
Accrued expenses and other current liabilities		246,946		52,673		299,619
Current liabilities - discontinued operations		62,188		(20,295)		41,893
Deferred taxes, net and other liabilities		160,163		(12,555)		147,608
Non-current liabilities - discontinued operations		4,028		614		4,642
Equity:
Accumulated deficit	$	(479,166)	$	(35,824)	$	(514,990)

The adoption of ASC 606 primarily impacted the timing of revenue recognition related to our customer loyalty program, gift cards and e-commerce sales, as discussed in more detail below.  In addition, for our corporate apparel business which has been reclassified to discontinued operations, certain deferred revenue balances along with related inventory amounts were eliminated as part of the cumulative adjustment to opening retained earnings.  Also, for estimated sales returns, we recognize allowances for estimated sales returns on a gross basis rather than a net basis on the condensed consolidated balance sheets.

13

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Revenues

The following table depicts the disaggregation of revenue by major source (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Men's tailored clothing product	$	326,036	$	342,972	$	1,001,467	$	1,055,213
Men's non-tailored clothing product		229,514		227,069		687,257		691,780
Women's clothing product		15,029		15,109		51,207		52,138
Other (1)		3,275		3,297		9,602		8,748
Total retail clothing product		573,854		588,447		1,749,533		1,807,879
Rental services		120,021		124,697		334,090		350,019
Alteration services		35,606		38,597		106,665		114,049
Retail dry cleaning services (2)		—		—		—		2,551
Total alteration and other services		35,606		38,597		106,665		116,600
Total net sales	$	729,481	$	751,741	$	2,190,288	$	2,274,498

(1) Other consists of franchise and licensing revenues and gift card breakage.  Franchise revenues are generally recognized at a point in time while licensing revenues consist primarily of minimum guaranteed royalty amounts recognized over an elapsed time period.

(2) On March 3, 2018, we completed the divestiture of our MW Cleaners business.  Please see Note 3 for additional information.

Additional net sales information is as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Men's Wearhouse(1)	$	438,088	$	454,927	$	1,289,364	$	1,347,933
Jos. A. Bank		168,432		169,318		501,383		510,821
K&G		71,859		72,610		242,245		245,535
Moores		51,102		54,886		157,296		167,658
MW Cleaners(2)		—		—		—		2,551
Total net sales	$	729,481	$	751,741	$	2,190,288	$	2,274,498

(1) Consists of Men's Wearhouse, Men's Wearhouse and Tux and Joseph Abboud.

(2) On March 3, 2018, we completed the divestiture of our MW Cleaners business.  Please see Note 3 for additional information.

For retail clothing product revenue, we transfer control and recognize revenue at a point in time, upon sale or shipment of the merchandise, net of actual sales returns and an accrual for estimated sales returns.  For rental and alteration services, we transfer control and recognize revenue at a point in time, upon receipt by the customer.  Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.  Sales, use and value added taxes we collect from our customers and are remitted to governmental agencies are excluded from revenue.    

14

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loyalty Program

We maintain a customer loyalty program for our Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank and Moores brands in which customers receive points for purchases. Points are generally equivalent to dollars spent on a one-to-one basis, excluding any sales tax dollars, and, historically, did not expire.  During the fourth quarter of 2018, we finalized our decision to implement an expiration policy for loyalty program points beginning in the second quarter of fiscal 2019, which was completed.  Upon reaching 500 points, customers are issued a $50 rewards certificate which they may redeem for purchases at our stores or online. Generally, reward certificates earned must be redeemed no later than six months from the date of issuance.  We believe our loyalty programs represents a customer option that is a material right and, accordingly, is a performance obligation in the contract with our customer.  Therefore, we record our obligation for future point redemptions using a deferred revenue model.  

When loyalty program members earn points, we recognize a portion of the transaction as revenue for merchandise product sales or services and defer a portion of the transaction representing the value of the related points. The value of the points is recorded in deferred revenue on our condensed consolidated balance sheet and recognized into revenue when the points are converted into a rewards certificate and the certificate is used.

We account for points earned and certificates issued that will not be redeemed by loyalty members, which we refer to as breakage. We review our breakage estimates at least annually based upon the latest available information regarding redemption and expiration patterns.

Our estimate of the expected usage of points and certificates requires significant management judgment. Current and future changes to our assumptions or to loyalty program rules may result in material changes to the deferred revenue balance as well as recognized revenues from the loyalty programs.  

Gift Card Breakage

Proceeds from the sale of gift cards are recorded as a liability and are recognized as net sales from products and services when the cards are redeemed.  Our gift cards do not have expiration dates.  In addition, we recognize revenue for gift cards for which the likelihood of redemption is deemed to be remote and for which there is no legal obligation to remit the value of such unredeemed gift cards to any relevant jurisdictions (commonly referred to as gift card breakage) under the redemption recognition method. This method records gift card breakage as revenue on a proportional basis over the redemption period based on our historical gift card breakage rate. We review our gift card breakage estimate based on our historical redemption patterns.  

Sales Returns

Revenue from merchandise product sales is reported net of sales returns, which includes an estimate of future returns based on historical return rates, with a corresponding reduction to cost of sales. Our refund liability for sales returns was $5.8 million at November 2, 2019, which is included in accrued and other current liabilities and represents the expected value of the refund that will be due to our customers.  We also have a corresponding asset included in other current assets that represents the right to recover products from customers associated with sales returns of $2.8 million at November 2, 2019.  

15

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Contract Liabilities

The following table summarizes the opening and closing balances of our contract liabilities (in thousands):

	Balance at		Increase		Balance at
	February 2, 2019		(Decrease)		November 2, 2019
Contract liabilities	$	121,796	$	(3,058)	$	118,738

	Balance at		Increase		Balance at
	February 3, 2018		(Decrease)		November 3, 2018
	As Adjusted
Contract liabilities	$	139,809	$	1,139	$	140,948

Contract liabilities include cash payments received from customers in advance of our performance, including amounts which are refundable.  These liabilities primarily consist of customer deposits related to rental product or custom clothing transactions since we typically receive payment from our customers prior to our performance and deferred revenue related to our loyalty programs and unredeemed gift cards.  These amounts are primarily included as “Customer deposits, prepayments and refunds payable,” “Loyalty program liabilities” and “Unredeemed gift cards,” respectively, within the accrued expenses and other current liabilities line item on our condensed consolidated balance sheet.  Please see Note 10 for additional information on our accrued expenses and other current liabilities.

The amount of revenue recognized for the three months and nine months ended November 2, 2019 that was included in the respective opening contract liability balance was $8.2 million and $75.6 million, respectively.  The amount of revenue recognized for the three and nine months ended November 3, 2018 that was included in the opening contract liability balance was $10.1 million and $75.0 million, respectively. This revenue primarily consists of recognition of deposits for completed transactions as well as redeemed certificates related to our loyalty program and gift card redemptions.

7. Supplemental Cash Flows

Supplemental disclosure of cash flow information is as follows (in thousands):

	For the Nine Months Ended
	November 2,		November 3,
	2019		2018
Cash paid for interest	$	50,332	$	55,856
Cash paid for income taxes, net	$	26,811	$	3,331
Schedule of noncash investing and financing activities:
Receivable related to sale of corporate apparel business	$	6,048	$	—

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of approximately $8.3 million and $12.8 million at November 2, 2019 and November 3, 2018, respectively.  Capital expenditure purchases are recorded as cash outflows from investing activities in the condensed consolidated statement of cash flows in the period they are paid.   Please see Note 14 for other cash flow disclosures related to leases.

8. Inventories

The following table provides details on our inventories as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Finished goods	$	647,715	$	666,087	$	581,953
Raw materials and merchandise components		130,627		106,119		142,133
Total inventories	$	778,342	$	772,206	$	724,086

16

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

9. Income Taxes

Our effective income tax rate from continuing operations for the third quarter of 2019 was 0.9% compared to 26.5% for the third quarter of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.9 million of valuation allowances in the third quarter of 2019.

Our effective income tax rate from continuing operations for the first nine months of 2019 was 18.7% compared to 21.5% for the first nine months of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.4 million of valuation allowances in the first nine months of 2019.

Additionally, we are currently undergoing several tax audits; however, we currently do not believe these audits will result in any material charge to tax expense in the future.

10. Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

The following table provides details on our other current assets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Prepaid expenses	$	42,175	$	53,176	$	53,455
Tax receivable		5,111		457		—
Assets held for sale		4,949		—		—
Other		8,543		12,430		13,368
Total other current assets	$	60,778	$	66,063	$	66,823

The decrease in prepaid expenses as of November 2, 2019, is primarily due to the impact on prepaid rent resulting from the adoption of Accounting Standards Codification 842, Leases (“ASC 842”), effective February 3, 2019.  Please see Note 14 for additional information.

During the third quarter of 2019, we reclassified property and equipment, primarily related to recently closed distribution centers, as assets held for sale.  Assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell.  As we believe the fair value less costs to sell of these assets exceeds their carrying amount, no adjustment to their carrying value was recorded in the third quarter of 2019.  

The following table provides details on our accrued expenses and other current liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Accrued salary, bonus, sabbatical, vacation and other benefits	$	52,247	$	67,360	$	78,297
Loyalty program liabilities		46,781		64,944		44,434
Customer deposits, prepayments and refunds payable		38,248		42,520		38,436
Sales, value added, payroll, property and other taxes payable		30,000		27,094		20,930
Unredeemed gift cards		24,389		26,279		32,178
Accrued workers compensation and medical costs		22,442		25,601		23,893
Unrealized loss on interest rate swaps		6,998		797		1,625
Accrued interest		4,557		6,055		1,828
Accrued royalties		3,651		3,287		1,286
Accrued dividends		889		10,320		10,480
Other		20,504		16,165		15,311
Total accrued expenses and other current liabilities	$	250,706	$	290,422	$	268,698

17

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides details on our deferred taxes, net and other liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Deferred and other income tax liabilities, net	$	45,223	$	78,930	$	48,199
Unrealized loss on interest rate swaps		25,245		—		7,605
Deferred rent and landlord incentives		—		58,297		57,351
Unfavorable lease liabilities		—		2,085		1,797
Other		3,500		4,826		4,593
Total deferred taxes, net and other liabilities	$	73,968	$	144,138	$	119,545

The elimination of deferred rent and landlord incentives and unfavorable lease liabilities is due to the adoption of ASC 842, effective February 3, 2019. Please see Note 14 for additional information.

11. Accumulated Other Comprehensive (Loss) Income

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 2, 2019 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 2, 2019	$	(29,820)	$	(4,314)	$	155	$	(33,979)
Other comprehensive loss before reclassifications		(5,691)		(26,871)		—		(32,562)
Amounts reclassified from accumulated other comprehensive loss		—		(114)		—		(114)
Release of cumulative foreign currency translation adjustment to loss from discontinued operations (see Note 2)		26,885		—		—		26,885
Tax Effect		—		6,650		—		6,650
Net current-period other comprehensive loss		21,194		(20,335)		—		859
BALANCE— November 2, 2019	$	(8,626)	$	(24,649)	$	155	$	(33,120)

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 3, 2018 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 3, 2018	$	(11,116)	$	145	$	189	$	(10,782)
Other comprehensive (loss) income before reclassifications		(26,023)		9,151		—		(16,872)
Amounts reclassified from accumulated other comprehensive income		—		2,487		—		2,487
Tax Effect		—		(2,689)		—		(2,689)
Net current-period other comprehensive (loss) income		(26,023)		8,949		—		(17,074)
BALANCE— November 3, 2018	$	(37,139)	$	9,094	$	189	$	(27,856)

Amounts reclassified from other comprehensive (loss) income for the nine months ended November 2, 2019 relate to changes in the fair value of our interest rate swaps which is recorded within interest expense in the condensed consolidated statement of (loss) earnings and the impact of the cancellation of cash flow hedges related to inventory purchases for our recently sold corporate apparel business, which is recorded within loss on discontinued operations.  Amounts reclassified from other comprehensive (loss) income for the nine months ended November 3, 2018 relate to changes in the fair value of our interest rate swaps and changes in the fair value of cash flow hedges related to inventory purchases, which is recorded within cost of sales in the condensed consolidated statement of (loss) earnings.

18

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12. Share Repurchases

In March 2013, our Board of Directors (the “Board”) approved a share repurchase program for our common stock.  During the third quarter of 2019, we repurchased 2,336,852 shares through open market repurchases at a cost of $10.0 million for an average price of $4.28 per share.  At November 2, 2019, the remaining balance available under the Board’s authorization was $38.0 million.  No shares were repurchased during 2018.

Share repurchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.  

13. Share-Based Compensation Plans

For a discussion of our share-based compensation plans, please see Note 14 in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

Non-Vested Deferred Stock Units and Performance Units

The following table summarizes the activity of time-based and performance-based awards (collectively, "DSUs") for the nine months ended November 2, 2019:

			Weighted-Average
	Units		Grant-Date Fair Value
	Time-	Performance-	Time-		Performance-
	Based	Based	Based		Based
Non-Vested at February 2, 2019	939,086	336,906	$	22.60	$	18.59
Granted	162,162	—		5.55		—
Vested(1)	(455,288)	(28,686)		21.88		17.43
Forfeited	(113,937)	(44,459)		22.78		18.44
Non-Vested at November 2, 2019	532,023	263,761	$	17.97	$	18.74

(1) Includes 150,785 shares relinquished for tax payments related to vested DSUs for the nine months ended November 2, 2019.

As of November 2, 2019, we have unrecognized compensation expense related to non-vested DSUs of $7.6 million, which is expected to be recognized over a weighted-average period of 1.1 years.

Stock Options and Stock Appreciation Rights (“SARs”)

The following table summarizes the activity of stock options for the nine months ended November 2, 2019:

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	1,252,072	$	23.64
Granted	3,188,732		7.49
Exercised	—		—
Forfeited	(209,921)		10.52
Expired	(56,584)		25.72
Outstanding at November 2, 2019	4,174,299	$	11.94
Exercisable at November 2, 2019	916,464	$	24.89

During the first quarter of 2019, we granted SARs, which vest ratably over a period of three years, and will be settled in stock. Each vested SAR entitles the holder to the right of the difference between the value of our common stock on the

19

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

date of exercise and the common stock price on the date of grant. We use the Black-Scholes option pricing model to estimate the fair value of SARs on the date of grant.

The following table summarizes the activity of SARs for the nine months ended November 2, 2019:

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	—	$	—
Granted	414,476		7.62
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding at November 2, 2019	414,476	$	7.62
Exercisable at November 2, 2019	—	$	—

The weighted-average grant date fair value of the 3,188,732 stock options and 414,476 SARs granted during the nine months ended November 2, 2019 was $2.99 and $3.01 per share, respectively. The following table summarizes the weighted-average assumptions used to fair value the stock options and SARs at the date of grant using the Black-Scholes option model for the nine months ended November 2, 2019:

	For the Nine Months Ended
	November 2,
	2019
Risk-free interest rate	2.36%
Expected lives	5.0 years
Dividend yield(1)	4.17%
Expected volatility	62.53%

(1) Awards granted after announcement of the suspension of our dividend assume a dividend yield of 0%.

As November 2, 2019, we have unrecognized compensation expense related to non-vested stock options and SARs of $9.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Cash Settled Awards

We have granted stock-based awards to certain employees, which vest over a period of three years, and will be settled in cash ("cash settled awards").  The fair value of the cash settled awards at each reporting period is based on the price of our common stock.  The fair value of the cash settled awards will be remeasured at each reporting period until the awards are settled.  Cash settled awards are classified as liabilities in the condensed consolidated balance sheets.  At November 2, 2019, the liability associated with the cash settled awards was $1.6 million and was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

20

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table summarizes the activity of cash settled awards, based on their initial grant date values, for the nine months ended November 2, 2019 (in thousands):

	Cash Settled Awards
Non-Vested at February 2, 2019	$	5,072
Granted		4,382
Vested		(2,401)
Forfeited		(683)
Non-Vested at November 2, 2019	$	6,370

As of November 2, 2019, we have unrecognized compensation expense related to non-vested cash settled awards of $2.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Share-Based Compensation Expense

Share-based compensation expense, including cash settled awards, recognized for the three and nine months ended November 2, 2019 was $3.2 million and $7.5 million, respectively.  Share-based compensation expense, including cash settled awards, recognized for the three and nine months ended November 3, 2018 was $2.9 million and $14.6 million, respectively, of which $0.7 million, net of the impact of forfeited awards, was related to the retirement of our former Chief Executive Officer.

14.  Leases

Adoption of ASC 842

Effective February 3, 2019, we adopted ASU No. 2016-02, Leases (Topic 842), and all related amendments (“ASC 842”) using the modified retrospective approach.  As part of the adoption, we made the following elections:

● We elected the package of practical expedients under which we did not reassess our prior conclusions about lease identification, lease classification and initial direct costs.

● We elected to not separate lease and non-lease components for all leases.

● We elected to exempt leases with an initial term of twelve months or less from balance sheet recognition.

● We elected the land easement practical expedient under which we did not reassess whether existing land easements not accounted for as leases under previous guidance are or contain leases under ASC 842.

● We did not elect the hindsight practical expedient for all leases.

In addition, in July 2018, the FASB approved an optional transition method that removed the requirement to restate prior period financial statements upon adoption of the standard with a cumulative-effect adjustment to retained earnings in the period of adoption and we elected to apply this transition method.  As a result, the comparative period information has not been restated and continues to be reported under the accounting standards in effect for the period presented.  The adoption of ASC 842 had no impact to our previously reported results of operations or cash flows.

21

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table depicts the cumulative effect of the changes made to our February 2, 2019 balance sheet for the adoption of ASC 842 effective on February 3, 2019 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 2,		Adoption of		February 3,
	2019		ASC 842		2019
Assets:
Other current assets	$	66,823	$	(20,604)	$	46,219
Current assets - discontinued operations		171,376		(150)		171,226
Operating lease right-of-use assets		—		887,064		887,064
Intangible assets, net		153,711		(6,682)		147,029
Non-current assets - discontinued operations		25,071		9,206		34,277
Current Liabilities:
Accrued expenses and other current liabilities		268,698		(151)		268,547
Current portion of operating lease liabilities		—		181,931		181,931
Current liabilities - discontinued operations		40,025		1,795		41,820
Noncurrent Liabilities:
Operating lease liabilities		—		737,750		737,750
Deferred taxes, net and other liabilities		119,545		(59,349)		60,196
Noncurrent liabilities - discontinued operations		5,477		7,260		12,737
Equity:
Accumulated deficit	$	(468,048)	$	(402)	$	(468,450)

The adoption of ASC 842 primarily resulted in the recognition of operating lease liabilities totaling $928.8 million, based upon the present value of the remaining minimum rental payments using discount rates as of the adoption date, with $183.7 million within current liabilities and $745.1 million in noncurrent liabilities.  In addition, we recorded corresponding right-of-use assets totaling $896.3 million based upon the operating lease liabilities adjusted for favorable lease intangible assets, previously included within intangible assets, net and deferred rent and unfavorable lease liabilities, previously included within deferred taxes, net and other liabilities.  In addition, we recorded a $0.4 million cumulative effect of initially applying ASC 842 as an adjustment to the opening balance of accumulated deficit.

Lease Information

We lease store locations, office and warehouse facilities, vehicles and equipment under various non-cancelable operating leases expiring in various years through 2032.  

Substantially all of our stores are leased, generally for five to ten year initial terms.  Certain store leases include one or more options to renew, with renewal terms that range from one to ten years.  Management uses its judgment to determine if a renewal option is reasonably certain of being exercised including consideration of the significant investment related to the identification, opening and operation of these store locations.  In addition, under our real estate leases, we pay costs such as real estate taxes and common area maintenance and certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels.  These costs are generally considered variable lease payments, and are recognized when deemed probable of payment. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.  In addition, we sublease certain real estate to third parties.  Amounts related to subleases were immaterial to the condensed consolidated financial statements.

22

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date.  Operating lease liabilities represent the present value of lease payments.  Operating lease right-of-use assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, lease incentives and impairment of operating lease right-of-use assets.  To determine the present value of the lease payments, we estimated our incremental borrowing rate based on our current credit rating as well as comparisons to comparable borrowing rates of similarly-rated companies.

The components of lease cost are as follows (in thousands):

	For the Three Months Ended		For the Nine Months Ended
	November 2, 2019		November 2, 2019
Operating lease cost	$	62,098	$	186,778
Variable lease cost		18,228		55,680
Total lease cost	$	80,326	$	242,458

Operating lease expense is recognized on a straight-line basis over the lease term.  Total lease costs for stores and our distribution network are included in cost of sales while other total lease costs are included in SG&A expenses.

Supplemental balance sheet information related to operating leases consists of the following (in thousands):

	November 2, 2019
Operating lease right-of-use assets	$	908,505
Current portion of operating lease liabilities	$	184,422
Noncurrent portion operating lease liabilities		754,956
Total operating lease liabilities	$	939,378

Lease term and discount rate for operating leases were as follows:

	November 2, 2019
Weighted average remaining lease term	4.7 years
Weighted average discount rate	5.24%

Supplemental disclosures of cash flow information consists of the following (in thousands):

	For the Nine Months Ended
	November 2, 2019
Cash paid for operating leases	$	191,309
Operating lease assets obtained in exchange for operating lease liabilities	$	1,054,182

23

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At November 2, 2019, we have approximately $939.4 million of non-cancelable operating lease commitments and no finance leases.  The following table summarizes the undiscounted annual future minimum lease payments, as of November 2, 2019, for each of the next five years and in the aggregate (in thousands):

	Operating Leases
Year 1	$	229,077
Year 2		239,009
Year 3		201,540
Year 4		155,022
Year 5		111,953
Thereafter		152,806
Total lease payments	$	1,089,407
Less: Interest		(150,029)
Present value of lease liabilities	$	939,378

Disclosures Related to Periods Prior to Adoption of ASC 842

As previously disclosed in our 2018 Annual Report on Form 10-K and under the accounting standards then in effect, minimum future rental payments under non-cancelable leases as of February 2, 2019 for each of the next five years and in the aggregate are as follows (in thousands):

Fiscal Year	Operating Leases
2019	$	236,539
2020		206,652
2021		173,294
2022		131,800
2023		86,127
Thereafter		140,256
Total lease payments	$	974,668

15.  Goodwill and Other Intangible Assets

Goodwill

Changes in the net carrying amount of goodwill for the nine months ended November 2, 2019 are as follows (in thousands):

	Total
Balance at February 2, 2019	$	79,491
Translation adjustment		(99)
Balance at November 2, 2019	$	79,392

Goodwill is evaluated for impairment at least annually. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, new significant negative industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock.  During the third quarter of 2019, we determined that a triggering event occurred as a result of the sustained decline in the market price of our stock and performed an interim goodwill impairment test, which indicated no goodwill impairment at this time.

24

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

We estimated the fair values of each of our reporting units using a combined income and market comparable approach.  Our income approach uses projected future cash flows that are discounted using a weighted-average cost of capital analysis that reflects current market conditions.  The market comparable approach primarily considers earnings multiples of comparable companies and applies those multiples to certain key drivers of the reporting unit.  We believe these two approaches are appropriate valuation techniques and we weighted the two approaches equally as an estimate of reporting unit fair value for the purposes of our impairment testing.  In addition, we compared the total fair values of our reporting units to our market capitalization and noted that the implied control premium was within what we consider to be a reasonable range.  

If the current market price of our stock further decreases, or if other events or circumstances change that would more likely than not reduce the fair value of our reporting units below their respective carrying values, all or a portion of our goodwill may be impaired in future periods and such an impairment charge could have a material effect on our results of operations and financial condition.  

Intangible Assets

The gross carrying amount and accumulated amortization of our identifiable intangible assets are as follows (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Amortizable intangible assets:
Carrying amount:
Trademarks, tradenames and franchise agreements	$	13,506	$	13,506	$	13,506
Favorable leases		—		12,695		11,844
Total carrying amount		13,506		26,201		25,350
Accumulated amortization:
Trademarks, tradenames and franchise agreements		(9,816)		(9,628)		(9,677)
Favorable leases		—		(5,629)		(5,162)
Total accumulated amortization		(9,816)		(15,257)		(14,839)
Total amortizable intangible assets, net		3,690		10,944		10,511
Indefinite-lived intangible assets:
Trademarks and tradename		143,200		143,200		143,200
Total intangible assets, net	$	146,890	$	154,144	$	153,711

The elimination of favorable leases is due to the adoption of ASC 842, effective February 3, 2019.  Please see Note 14 for additional information.  In addition, the decrease in trademarks, tradenames and franchise agreements and the elimination of customer relationships is due to the sale of our corporate apparel business.  Please see Note 2 for additional information.

During the third quarter of 2019, based on the recent performance of the Jos. A. Bank brand, we determined that a triggering event occurred related to our Jos. A. Bank tradename, an indefinite-lived intangible asset.  As a result, we completed an interim impairment test, which indicated no impairment at this time.

We estimated the fair value of the Jos. A. Bank tradename based on an income approach using the relief-from-royalty method.  This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables.

If events or circumstances change that would more likely than not reduce the fair value of our indefinite-lived intangible assets below their respective carrying values, we may be required to record an impairment charge, which could have a material effect on our results of operations and financial condition.  

Amortization expense associated with intangible assets subject to amortization totaled less than $0.1 million and $0.1 million for the three and nine months ended November 2, 2019, respectively. Amortization expense associated with

25

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

intangible assets subject to amortization totaled $0.4 million and $1.1 million for the three and nine months ended November 3, 2018, respectively. Amortization expense associated with intangible assets subject to amortization at November 2, 2019 is estimated to be less than $0.1 million for the remainder of fiscal 2019 and $0.2 million each year for fiscal years 2020-2024.

16. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value.  The hierarchy can be described as follows:  Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.  The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

	Fair Value Measurements at Reporting Date
	Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
November 2, 2019—
Assets:
Derivative financial instruments	$	—	$	—	$	—	$	—
Liabilities:
Derivative financial instruments	$	—	$	32,287	$	—	$	32,287
November 3, 2018—
Assets:
Derivative financial instruments	$	—	$	11,881	$	—	$	11,881
Liabilities:
Derivative financial instruments	$	—	$	797	$	—	$	797
February 2, 2019—
Assets:
Derivative financial instruments	$	—	$	2,965	$	—	$	2,965
Liabilities:
Derivative financial instruments	$	—	$	9,307	$	—	$	9,307

At November 2, 2019, derivative financial instruments are comprised of interest rate swap agreements to minimize our exposure to interest rate changes on our outstanding indebtedness and foreign currency forward exchange contracts primarily entered into related to our direct sourcing programs, specifically related to the Canadian dollar.

These derivative financial instruments are recorded in the condensed consolidated balance sheets at fair value based upon observable market inputs, primarily pricing models based on current market rates. Derivative financial instruments in an asset position are included within other current assets or other assets in the condensed consolidated balance sheets. Derivative financial instruments in a liability position are included within accrued expenses and other current liabilities or noncurrent liabilities in the condensed consolidated balance sheets. Please see Note 17 for further information regarding our derivative instruments.

26

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Assets and Liabilities that are Measured at Fair Value on a Non-Recurring Basis

Long-lived assets, such as property and equipment, operating lease right-of-use assets and identifiable intangibles, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.  

During the three and nine months ended November 2, 2019, we incurred $0.9 million and $1.2 million, respectively, of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of (loss) earnings, related to underperforming stores. In addition, during the nine months ended November 2, 2019, we recognized a write-off of $2.9 million of rental product related to the closure of a Canadian distribution center, which is included within cost of sales in our condensed consolidated statement of (loss) earnings.

During the three and nine months ended November 3, 2018, we incurred $0.2 million and $0.5 million, respectively, of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of (loss) earnings, related to underperforming stores. In addition, during the nine months ended November 3, 2018, we recognized a write-off of $4.0 million of rental product related to the closure of a rental product distribution center, which is included within cost of sales in our condensed consolidated statement of (loss) earnings.

We estimated the fair value of the long-lived assets based on an income approach using projected future cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions, which we classify as Level 3 within the fair value hierarchy.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities and our Term Loan and Senior Notes.  Management estimates that, as of November 2, 2019, November 3, 2018, and February 2, 2019, the carrying value of our financial instruments, other than our Term Loan and Senior Notes, approximated their fair value due to the highly liquid or short-term nature of these instruments.  We believe that the borrowings under our ABL Facility approximate their fair value because interest rates are adjusted on a short-term basis.

The fair values of our Term Loan were valued based upon observable market data provided by a third party for similar types of debt, which we classify as a Level 2 input within the fair value hierarchy.   The fair value of our Senior Notes is based on quoted prices in active markets, which we classify as a Level 1 input within the fair value hierarchy.  The table below shows the fair value and carrying value of our long-term debt, including current portion (in thousands):

	November 2, 2019				November 3, 2018				February 2, 2019
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount(1)		Fair Value		Amount(1)		Fair Value		Amount(1)		Fair Value
Term Loan and Senior Notes, including current portion	$	1,053,232	$	809,934	$	1,118,406	$	1,130,202	$	1,116,361	$	1,120,296
(1) The carrying value of the Term Loan and Senior Notes, including current portion is net of deferred financing costs of $2.2 million, $3.5 million and $3.2 million as of November 2, 2019, November 3, 2018 and February 2, 2019, respectively.

27

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

17. Derivative Financial Instruments

Effective February 3, 2019, we adopted ASU 2017-12, Derivatives and Hedging:  Targeted Improvements to Accounting for Hedging Activities.  The adoption of ASU 2017-12 did not have an impact on our financial position, results of operations or cash flows.

In April 2017, we entered into an interest rate swap contract on an initial notional amount of $260.0 million that matures in June 2021 with periodic interest settlements. At November 2, 2019, the notional amount totaled $320.0 million. Under this interest rate swap contract, we receive a floating rate based on 1-month LIBOR and pay a fixed rate of 5.31% (including the applicable margin of 3.25%) on the outstanding notional amount.

In June 2018, we entered into an interest rate swap contract on an initial notional amount of $320.0 million that matures in April 2025 with periodic interest settlements. At November 2, 2019, the notional amount totaled $385.0 million. Under this interest rate swap contract, we receive a floating rate based on 1-month LIBOR and pay a fixed rate of 6.18% (including the applicable margin of 3.25%) on the outstanding notional amount.

We have designated each interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to changes in the LIBOR benchmark rate and the fair value of the swaps is reported as a component of accumulated other comprehensive (loss) income.  For both swaps, changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings.  Over the next 12 months, $7.0 million of the amounts related to the interest rate swaps is expected to be reclassified from accumulated other comprehensive (loss) income into earnings within interest expense.  

Historically, we also utilized derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro.  As a result of the sale of our corporate apparel business, these instruments were cancelled during the third quarter of 2019 and any amounts included in accumulated other comprehensive (loss) income were reclassified to expense and included within loss from discontinued operations.

In addition, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs, specifically related to the Canadian dollar.  As a result, from time to time, we may enter into derivative instruments to hedge this foreign exchange risk.  We have not elected to apply hedge accounting to these derivative instruments. At November 2, 2019, the notional amount of these instruments totaled $6.1 million. Amounts related to these transactions were immaterial to our condensed consolidated financial statements.  

28

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table provides details on our derivative instruments recorded in the condensed consolidated balance sheets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2, 2019			November 3, 2018			February 2, 2019
	Balance	Estimated		Balance	Estimated		Balance	Estimated
	Sheet Location	Fair Value		Sheet Location	Fair Value		Sheet Location	Fair Value
Interest rate contracts	Other current assets	$	—	Other current assets	$	2,316	Other current assets	$	1,610
Interest rate contracts	Other assets		—	Other assets		9,559	Other assets		1,355
Foreign exchange contracts	Other current assets		—	Other current assets		6	Other current assets		—
Total assets		$	—		$	11,881		$	2,965
Interest rate contracts	Accrued expenses and other current liabilities	$	6,998	Accrued expenses and other current liabilities	$	797	Accrued expenses and other current liabilities	$	1,625
Interest rate contracts	Deferred taxes, net and other liabilities		25,245	Deferred taxes, net and other liabilities		—	Deferred taxes, net and other liabilities		7,605
Foreign exchange contracts	Accrued expenses and other current liabilities		44	Accrued expenses and other current liabilities		—	Accrued expenses and other current liabilities		77
Total liabilities		$	32,287		$	797		$	9,307

The following table provides details on our derivative instruments recorded in the condensed consolidated statements of (loss) earnings and comprehensive (loss) income for the three and nine months ended in November 2, 2019 and November 3, 2018 (in thousands):

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Three Months Ended					For the Three Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(2,051)	$	4,012	Interest expense	$	556	$	413

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Nine Months Ended					For the Nine Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(20,189)	$	4,797	Interest expense	$	669	$	720

29

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

18. Legal Matters

On August 2, 2017, two American Airlines employees, Thor Zurbriggen and Dena Catan, filed a putative class action lawsuit against our Twin Hill subsidiary in the United States District Court for the Northern District of Illinois (Case No. 1:17-cv-05648). The complaint alleged claims for strict liability, negligence, and medical monitoring based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. On September 28, 2017, the plaintiffs filed an amended complaint adding nine additional named plaintiffs, adding American Airlines, Inc. as a defendant, and adding claims for civil battery and intentional infliction of emotional distress. Plaintiffs filed a Seconded Amended Complaint on October 4, 2018 on behalf of 39 named plaintiffs, adding PSA Airlines, Inc. and Envoy Air Inc. as defendants, adding new factual allegations and adding a new claim of fraud against American.  The Second Amended Complaint included plaintiffs from the Onody (Case No. 1:18-cv-02303) and Joy (Case No. 1:18-cv-05808) matters we reported in prior filings. As a result, on October 16, 2018, the judge dismissed the separate Onody and Joy matters. We have timely answered the Second Amended Complaint and the matter will proceed in due course. We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose, and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

On September 27, 2017, Heather Poole and numerous other American Airlines employees filed a lawsuit against our Twin Hill subsidiary in the Superior Court for the State of California for the County of Alameda (Case No. RG17876798).  The complaint attempts to allege claims for strict liability and negligence based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. On December 11, 2017, the Company filed a demurrer to Plaintiff’s complaint.  On February 20, 2018, the Court granted our demurrer and dismissed the plaintiffs’ Complaint. Plaintiffs filed an amended complaint on April 10, 2018 and again on April 27, 2018, which added allegations regarding Plaintiffs’ alleged injuries and named Tailored Brands as a defendant. This case was consolidated for pretrial purposes only with other complaints containing identical allegations, including the Agnello, Hughes, Mackonochie and Wagoner cases that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019.    We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose, and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

In addition, we are involved in various routine legal proceedings, including ongoing litigation, incidental to the conduct of our business.  Management does not believe that any of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

19. Condensed Consolidating Information

As discussed in Note 5, 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.

30

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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.

As discussed in Note 2, on August 16, 2019, we completed the sale of our corporate apparel business.  Given the immateriality of the domestic portion of the corporate apparel business, we have elected not to restate the condensed consolidating financial information to reflect the change in guarantor status of the domestic portion of the corporate apparel business and instead will maintain the operational history of the guarantors.  As such, the financial information for the domestic portion of the corporate apparel business is reflected within the guarantor balances for the periods indicated, while the international portion is reflected within the non-guarantor balances for the periods indicated.   However, the condensed consolidating financial information has been recast to reflect the impact of discontinued operations for all periods presented.

31

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 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	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193
Accounts receivable, net		—		30,148		178,025		48,848		(214,965)		42,056
Inventories		—		136,033		503,709		138,600		—		778,342
Other current assets		9,287		4,545		37,680		9,266		—		60,778
Total current assets		9,287		171,799		721,174		215,074		(214,965)		902,369
Property and equipment, net		—		180,273		203,570		21,157		—		405,000
Operating lease right-of-use assets		—		474,788		381,008		52,709		—		908,505
Rental product, net		—		76,463		6,836		9,486		—		92,785
Goodwill		—		6,160		52,129		21,103		—		79,392
Intangible assets, net		—		—		146,890		—		—		146,890
Investments in subsidiaries		115,082		1,100,045		—		—		(1,215,127)		—
Other assets		—		4,958		438		3,954		(3,900)		5,450
Total assets	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	182,242	$	81,886	$	92,053	$	68,949	$	(214,965)	$	210,165
Accrued expenses and other current liabilities		2,671		168,824		63,589		25,550		—		260,634
Current portion of operating lease liabilities		—		97,917		74,751		11,754		—		184,422
Current portion of long-term debt		—		9,000		—		—		—		9,000
Total current liabilities		184,913		357,627		230,393		106,253		(214,965)		664,221
Long-term debt, net		—		1,111,732		—		—		—		1,111,732
Operating lease liabilities		—		400,518		312,774		41,664		—		754,956
Deferred taxes, net and other liabilities		3,942		29,527		28,063		16,336		(3,900)		73,968
Shareholders' (deficit) equity		(64,486)		115,082		940,815		159,230		(1,215,127)		(64,486)
Total liabilities and shareholders' equity	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391

32

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 3, 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	$	—	$	981	$	2,133	$	53,179	$	—	$	56,293
Accounts receivable, net		—		25,010		223,001		55,299		(268,673)		34,637
Inventories		—		149,157		500,579		122,470		—		772,206
Other current assets		220		26,657		34,718		4,468		—		66,063
Current assets - discontinued operations		—		—		46,470		118,888		—		165,358
Total current assets		220		201,805		806,901		354,304		(268,673)		1,094,557
Property and equipment, net		—		190,905		204,147		21,009		—		416,061
Rental product, net		—		83,554		4,367		14,619		—		102,540
Goodwill		—		6,160		52,128		21,187		—		79,475
Intangible assets, net		—		—		154,144		—		—		154,144
Investments in subsidiaries		157,114		1,344,748		—		—		(1,501,862)		—
Other assets		—		16,046		635		80,786		(80,235)		17,232
Non-current assets - discontinued operations		—		—		2,045		23,486		—		25,531
Total assets	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	134,700	$	188,583	$	88,627	$	74,877	$	(268,673)	$	218,114
Accrued expenses and other current liabilities		7,952		170,406		100,839		23,585		—		302,782
Current portion of long-term debt		—		9,000		—		—		—		9,000
Current liabilities - discontinued operations		—		—		6,635		27,026		—		33,661
Total current liabilities		142,652		367,989		196,101		125,488		(268,673)		563,557
Long-term debt, net		—		1,167,906		—		—		—		1,167,906
Deferred taxes, net and other liabilities		5,195		150,209		46,186		22,783		(80,235)		144,138
Non-current liabilities - discontinued operations		—		—		1,451		3,001		—		4,452
Shareholders' equity		9,487		157,114		980,629		364,119		(1,501,862)		9,487
Total liabilities and shareholders' equity	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540

33

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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	$	1,434	$	30,267	$	—	$	32,671
Accounts receivable, net		—		23,954		255,091		53,610		(297,969)		34,686
Inventories		—		149,923		429,952		144,211		—		724,086
Other current assets		—		30,699		37,621		3,773		(5,270)		66,823
Current assets - discontinued operations		—		—		41,404		129,972		—		171,376
Total current assets		—		205,546		765,502		361,833		(303,239)		1,029,642
Property and equipment, net		—		194,290		207,934		22,092		—		424,316
Rental product, net		—		81,809		3,426		14,535		—		99,770
Goodwill		—		6,160		52,128		21,203		—		79,491
Intangible assets, net		—		—		153,711		—		—		153,711
Investments in subsidiaries		160,057		1,234,005		—		—		(1,394,062)		—
Other assets		—		7,590		640		5,059		(4,800)		8,489
Non-current assets - discontinued operations		—		—		1,906		23,165		—		25,071
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	$	67,044	$	91,200	$	(297,969)	$	204,775
Accrued expenses and other current liabilities		6,697		146,683		105,022		29,044		(5,270)		282,176
Current portion of long-term debt		—		11,619		—		—		—		11,619
Current liabilities - discontinued operations		—		—		7,073		32,952		—		40,025
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		43,495		17,822		(4,800)		119,545
Non-current liabilities - discontinued operations		—		—		1,574		3,903		—		5,477
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

34

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

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 November 2, 2019
Net sales	$	—	$	436,671	$	386,754	$	69,270	$	(163,214)	$	729,481
Cost of sales		—		227,407		309,577		47,683		(163,214)		421,453
Gross margin		—		209,264		77,177		21,587		—		308,028
Operating expenses		991		131,183		129,975		14,693		(14,358)		262,484
Operating (loss) income		(991)		78,081		(52,798)		6,894		14,358		45,544
Other income and expenses, net		—		—		14,984		(626)		(14,358)		—
Interest (expense) income, net		(939)		(17,380)		1,036		(142)		—		(17,425)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(1,930)		60,624		(36,778)		6,126		—		28,042
(Benefit) provision for income taxes		(45)		548		(289)		40		—		254
(Loss) earnings before equity in net income of subsidiaries		(1,885)		60,076		(36,489)		6,086		—		27,788
Equity in (loss) earnings of subsidiaries		(87,705)		(121,473)		—		—		209,178		—
Net (loss) earnings from continuing operations		(89,590)		(61,397)		(36,489)		6,086		209,178		27,788
Net loss from discontinued operations, net of tax		—		(26,308)		(6,166)		(84,904)		—		(117,378)
Net (loss) earnings	$	(89,590)	$	(87,705)	$	(42,655)	$	(78,818)	$	209,178	$	(89,590)
Comprehensive (loss) income	$	(62,138)	$	(64,403)	$	(31,136)	$	(79,788)	$	175,327	$	(62,138)
Three Months Ended November 3, 2018
Net sales	$	—	$	453,316	$	355,710	$	102,896	$	(160,181)	$	751,741
Cost of sales		—		219,036		273,793		73,599		(160,181)		406,247
Gross margin		—		234,280		81,917		29,297		—		345,494
Operating expenses		1,443		135,498		131,431		16,786		(14,942)		270,216
Operating (loss) income		(1,443)		98,782		(49,514)		12,511		14,942		75,278
Other income and expenses, net		—		—		14,942		—		(14,942)		—
Interest (expense) income, net		(1,062)		(20,017)		1,970		559		—		(18,550)
Loss on extinguishment of debt, net		—		(9,420)		—		—		—		(9,420)
(Loss) earnings before income taxes		(2,505)		69,345		(32,602)		13,070		—		47,308
(Benefit) provision for income taxes		(505)		17,304		(6,848)		2,570		—		12,521
(Loss) earnings before equity in net income of subsidiaries		(2,000)		52,041		(25,754)		10,500		—		34,787
Equity in earnings (loss) of subsidiaries		15,875		(36,166)		—		—		20,291		—
Net earnings (loss) from continuing operations		13,875		15,875		(25,754)		10,500		20,291		34,787
Net gain (loss) from discontinued operations, net of tax		—		—		176		(21,088)		—		(20,912)
Net earnings (loss)	$	13,875	$	15,875	$	(25,578)	$	(10,588)	$	20,291	$	13,875
Comprehensive income (loss)	$	14,799	$	20,300	$	(25,578)	$	(14,089)	$	19,367	$	14,799

35

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Nine Months Ended November 2, 2019
Net sales	$	—	$	1,285,018	$	1,147,368	$	433,343	$	(675,441)	$	2,190,288
Cost of sales		—		675,840		908,308		349,803		(675,441)		1,258,510
Gross margin		—		609,178		239,060		83,540		—		931,778
Operating expenses		2,487		401,100		390,436		62,458		(57,540)		798,941
Operating (loss) income		(2,487)		208,078		(151,376)		21,082		57,540		132,837
Other income and expenses, net		—		—		57,019		521		(57,540)		—
Interest (expense) income, net		(3,178)		(53,956)		3,611		(570)		—		(54,093)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(5,665)		154,045		(90,746)		21,033		—		78,667
(Benefit) provision for income taxes		(2,919)		30,428		(14,997)		2,231		—		14,743
(Loss) earnings before equity in net income of subsidiaries		(2,746)		123,617		(75,749)		18,802		—		63,924
Equity in (loss) earnings of subsidiaries		(45,436)		(143,482)		—		—		188,918		—
Net (loss) earnings from continuing operations		(48,182)		(19,865)		(75,749)		18,802		188,918		63,924
Net (loss) gain from discontinued operations, net of tax		—		(25,571)		2,013		(88,548)		—		(112,106)
Net (loss) earnings	$	(48,182)	$	(45,436)	$	(73,736)	$	(69,746)	$	188,918	$	(48,182)
Comprehensive (loss) income	$	(47,323)	$	(38,071)	$	(73,736)	$	(76,252)	$	188,059	$	(47,323)
Nine Months Ended November 3, 2018
Net sales	$	—	$	1,343,248	$	1,095,988	$	303,913	$	(468,651)	$	2,274,498
Cost of sales		—		664,219		834,458		217,142		(468,651)		1,247,168
Gross margin		—		679,029		261,530		86,771		—		1,027,330
Operating expenses		3,408		405,344		397,110		51,305		(42,093)		815,074
Operating (loss) income		(3,408)		273,685		(135,580)		35,466		42,093		212,256
Other income and expenses, net		—		—		42,093		—		(42,093)		—
Interest (expense) income, net		(2,749)		(66,141)		6,115		1,587		—		(61,188)
Loss on extinguishment of debt, net		—		(30,253)		—		—		—		(30,253)
(Loss) earnings before income taxes		(6,157)		177,291		(87,372)		37,053		—		120,815
(Benefit) provision for income taxes		(1,624)		37,882		(17,075)		6,835		—		26,018
(Loss) earnings before equity in net income of subsidiaries		(4,533)		139,409		(70,297)		30,218		—		94,797
Equity in earnings (loss) of subsidiaries		81,555		(57,854)		—		—		(23,701)		—
Net earnings (loss) from continuing operations		77,022		81,555		(70,297)		30,218		(23,701)		94,797
Net gain (loss) from discontinued operations, net of tax		—		—		4,247		(22,022)		—		(17,775)
Net earnings (loss)	$	77,022	$	81,555	$	(66,050)	$	8,196	$	(23,701)	$	77,022
Comprehensive income (loss)	$	59,948	$	87,072	$	(66,050)	$	(14,395)	$	(6,627)	$	59,948

36

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 2, 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	$	37,836	$	329,070	$	34,951	$	(284,857)	$	(51,438)	$	65,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(21,879)		(34,687)		(6,842)		—		(63,408)
Proceeds from divestiture of business, net		—		—		—		45,034		—		45,034
Intercompany activities		—		(238,423)		—		(30,953)		269,376		—
Net cash (used in) provided by investing activities		—		(260,302)		(34,687)		7,239		269,376		(18,374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on new term loan		—		(9,370)		—		—		—		(9,370)
Proceeds from asset-based revolving credit facility		—		1,065,000		—		—		—		1,065,000
Payments on asset-based revolving credit facility		—		(1,046,000)		—		—		—		(1,046,000)
Repurchase and retirement of senior notes		—		(54,425)		—		—		—		(54,425)
Intercompany activities		—		(23,870)		—		241,808		(217,938)		—
Cash dividends paid		(27,938)		—		—		—		—		(27,938)
Proceeds from issuance of common stock		1,220		—		—		—		—		1,220
Tax payments related to vested deferred stock units		(1,118)		—		—		—		—		(1,118)
Repurchases of common stock		(10,000)		—		—		—		—		(10,000)
Net cash (used in) provided by financing activities		(37,836)		(68,665)		—		241,808		(217,938)		(82,631)
Effect of exchange rate changes		—		—		—		1,205		—		1,205
Increase (decrease) in cash and cash equivalents		—		103		264		(34,605)		—		(34,238)
Cash and cash equivalents at beginning of period		—		970		1,496		52,965		—		55,431
Cash and cash equivalents at end of period	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193

37

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 3, 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	$	29,194	$	470,656	$	11,157	$	(205,357)	$	(27,833)	$	277,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(12,962)		(28,853)		(5,112)		—		(46,927)
Proceeds from divestiture of business		—		—		17,755		—		—		17,755
Intercompany activities		—		(228,450)		—		—		228,450		—
Net cash (used in) provided by investing activities		—		(241,412)		(11,098)		(5,112)		228,450		(29,172)
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		—		(6,750)		—		—		—		(6,750)
Proceeds from asset-based revolving credit facility		—		465,500		—		—		—		465,500
Payments on asset-based revolving credit facility		—		(407,000)		—		—		—		(407,000)
Repurchase and retirement of senior notes		—		(199,365)		—		—		—		(199,365)
Deferred financing costs		—		(6,713)		—		—		—		(6,713)
Intercompany activities		—		(27,833)		—		228,450		(200,617)		—
Cash dividends paid		(27,833)		—		—		—		—		(27,833)
Proceeds from issuance of common stock		6,149		—		—		—		—		6,149
Tax payments related to vested deferred stock units		(7,510)		—		—		—		—		(7,510)
Net cash (used in) provided by financing activities		(29,194)		(280,081)		—		228,450		(200,617)		(281,442)
Effect of exchange rate changes		—		—		—		(2,385)		—		(2,385)
(Decrease) increase in cash and cash equivalents		—		(50,837)		59		15,596		—		(35,182)
Cash and cash equivalents at beginning of period		—		51,818		2,180		49,609		—		103,607
Cash and cash equivalents at end of period	$	—	$	981	$	2,239	$	65,205	$	—	$	68,425

38

ITEM 2 — MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We encourage you to read this "Management's Discussion and Analysis of Financial Condition and Results of Operations" ("MD&A") in conjunction with the corresponding section included in our Annual Report on Form 10-K for the year ended February 2, 2019.  References herein to years are to our 52-week or 53-week fiscal year, which ends on the Saturday nearest January 31 in the following calendar year.  For example, references to "2019" mean the 52-week fiscal year ending February 1, 2020.

Executive Overview

Background

We are a leading omni-channel specialty retailer of menswear, including suits, formalwear, and a broad selection of business casual offerings.  We help our customers look and feel their best by delivering personalized products and services through our convenient network of stores and e-commerce sites.  Our brands include Men’s Wearhouse, Jos. A. Bank, Joseph Abboud, K&G and Moores Clothing for Men (“Moores”).

Please see Note 2 of Notes to the Condensed Consolidated Financial Statements for information concerning the divestiture of our corporate apparel business on August 16, 2019.  Subsequent to this divestiture, we have reassessed our segment presentation and determined that the results of our four retail merchandising brands, Men’s Wearhouse, Jos. A. Bank, K&G and Moores are separate operating segments that should continue to be aggregated into a reportable segment and, as a result, we have only one reportable segment.

Third Quarter Discussion

For the third quarter of 2019, we delivered sequential comparable sales improvement at both Men’s Wearhouse and Jos. A. Bank, with a return to positive comparable sales at Jos. A. Bank.  On a sequential basis, both brands generated higher transactions and increased comparable sales across multiple merchandise categories.  Our third quarter performance reflects continued progress in each of our transformational strategies, including improved sales in our polished casual categories, higher online sales driven by enhanced e-commerce experiences and digital marketing, and new customer acquisition reflecting more effective marketing campaigns and channel strategies. While we still have much more work ahead, we are encouraged by the improved momentum in the business.

Key operating metrics for continuing operations for the quarter ended November 2, 2019 include:

● Net sales decreased 3.0% primarily due to a decrease in retail segment comparable sales.

● Comparable sales decreased 2.8% at Men’s Wearhouse, 1.5% at K&G and 5.5% at Moores. Comparable sales at Jos. A. Bank increased 0.5%. Overall, comparable sales decreased 2.2%.

● Operating income was $45.5 million for the third quarter of 2019 compared to operating income of $75.3 million in the third quarter of 2018.

● Diluted earnings per share were $0.56 for the third quarter of 2019 compared to diluted earnings per share of $0.69 in the third quarter of 2018.

Key liquidity metrics for the nine months ended November 2, 2019 include:

● Cash and cash equivalents at the end of the third quarter of 2019 were $21.2 million, a decrease of $35.1 million compared to the end of the third quarter of 2018 primarily due to the decrease in sales and the use of cash on hand for costs related to our multi-year cost savings and operational excellence programs and debt reduction.

● Cash provided by operating activities was $65.6 million for the first nine months of 2019 compared to $277.8 million for the first nine months of 2018. The decrease was primarily driven by lower net earnings after adjusting for non-cash items, timing fluctuations in accounts payable, accrued liabilities and other current liabilities and anniversarying a $15.0 million income tax refund received in last year’s third quarter.

● Capital expenditures were $63.4 million for the first nine months of 2019 compared to $46.9 million for the first nine months of 2018.

● Total debt at the end of the third quarter of 2019 was approximately $1.1 billion, down $56.2 million compared to the end of the third quarter of 2018.  During the third quarter of 2019, the Company repurchased and retired $54.8 million in face value of its senior notes and made its scheduled $2.3 million payment on its term loan, while borrowings outstanding on our revolving credit facility increased $22.5 million.  

● We had $67.5 million of borrowings outstanding on our revolving credit facility as of November 2, 2019.

● We repurchased 2.4 million shares for a total of $10.0 million at an average price of $4.28.

39

Items Affecting Comparability of Results from Continuing Operations

The following table depicts the effect on pretax income from continuing operations related to certain items that have impacted the comparability of our results in 2019 and 2018 (dollars in millions):

	For the Three Months Ended				For the Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Costs related to multi-year cost savings and operational excellence programs (1)	$	6.2	$	—		21.9		—
Loss on extinguishment of debt (2)		—		9.4		—		29.4
CEO retirement costs (3)		—		6.4		—		6.4
Closure of rental product distribution center (4)		—		0.6		—		5.0
Loss on divestiture of MW Cleaners (5)		—		—		—		3.8
Total (6)	$	6.2	$	16.4	$	21.9	$	44.6

(1) For the three months ended November 2, 2019, consists of $5.5 million in consulting costs, $0.6 million in severance costs and $0.1 million in lease termination costs. For the nine months ended November 2, 2019, consists of $14.7 million in consulting costs, $3.8 million in severance costs, $2.9 million of rental product write-offs related to the closure of a distribution center in Canada and $0.5 million in lease termination costs.

(2) For the three months ended November 3, 2018, consists of $9.4 million related to the repricing of the Term Loan.  For the nine months ended November 3, 2018, consists of $11.9 million related to the refinancing of our Term Loan, $9.4 million related to the repricing of the Term Loan and $8.1 million related to the partial redemption of our Senior Notes. Please see Note 5 to the condensed consolidated financial statements for additional information.

(3) Consists of $5.4 million in severance and consulting costs, $0.7 million related to the accelerated vesting of certain share-based awards (net of the impact of forfeited awards) and $0.3 million of other costs.

(4) For the three months ended November 3, 2018, consists of $0.3 million of closure related costs, $0.2 million of severance costs and $0.1 million of accelerated depreciation.  For the nine months ended November 3, 2018, consists of $4.0 million of rental product write-offs, $0.4 million of severance costs, $0.3 million of closure related costs, and $0.3 million of accelerated depreciation.

(5) Please see Note 3 to the condensed consolidated financial statements for additional information.

(6) For the three months ended November 2, 2019, $6.2 million is included in selling, general and administrative expenses ("SG&A"). For the nine months ended November 2, 2019, $3.2 is included in cost of sales and $18.7 million is included in SG&A. For the three months ended November 3, 2018, less than $0.1 million is included in cost of sales, $7.0 million is included in SG&A and $9.4 million is included in loss on extinguishment of debt. For the nine months ended November 3, 2018, $4.1 million is included in cost of sales, $11.1 million is included in SG&A and $29.4 million is included in loss on extinguishment of debt.      

40

Update on 2019 Initiatives

During the third quarter of 2019, we have remained focused on initiatives to address three core customer needs: delivering personalized products and services, creating inspiring and seamless experiences in and across every channel and building brands that stand for something more than just price.  Addressing these areas are essential elements of our growth strategies and will require incremental investments in people, analytics and technology.  

Also, we have completed the first phase of a comprehensive review of our operations including an assessment of SG&A expenses and business processes across the organization to identify cost savings opportunities.  However, many of the identified opportunities require additional testing and review to ensure we continue to deliver a superior customer experience.  We expect to complete our testing by the end of fiscal 2019.

Store Data

The following table presents information with respect to retail apparel stores in operation during each of the respective fiscal periods:

	For the Three Months Ended		For the Nine Months Ended		For the Year Ended
	November 2,	November 3,	November 2,	November 3,	February 2,
	2019	2018	2019	2018	2019
Open at beginning of period:	1,455	1,469	1,464	1,477	1,477
Opened	1	2	2	3	3
Closed	(5)	(2)	(15)	(11)	(16)
Open at end of the period	1,451	1,469	1,451	1,469	1,464
Men’s Wearhouse(1)	716	721	716	721	720
Men’s Wearhouse and Tux	45	49	45	49	46
Jos. A. Bank (2)	475	485	475	485	484
K&G	89	88	89	88	88
Moores	126	126	126	126	126
	1,451	1,469	1,451	1,469	1,464

(1) Includes one Joseph Abboud store.

(2) Excludes franchise stores.

During the third quarter of 2019, we opened one K&G store and closed five stores (four Men’s Wearhouse stores and one Jos. A. Bank store).

Seasonality

Our sales and net earnings are subject to seasonal fluctuations and may vary by brand. Typically, our rental product revenues are heavily concentrated in the second and third quarters (prom and wedding season) while the fourth quarter is the seasonal low point.  Because of these fluctuations, results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

41

Results of Operations

For the Three Months Ended November 2, 2019 Compared to the Three Months Ended November 3, 2018

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:

	For the Three Months Ended(1)
	November 2,		November 3,
	2019		2018
Net sales:
Retail clothing product	78.7	%	78.3	%
Rental services	16.5		16.6
Alteration and other services	4.9		5.1
Total net sales	100.0	%	100.0	%
Cost of sales(2):
Retail clothing product	46.4		43.2
Rental services	13.4		13.9
Alteration and other services	93.1		85.6
Occupancy costs	14.5		13.5
Total cost of sales	57.8		54.0
Gross margin(2):
Retail clothing product	53.6		56.8
Rental services	86.6		86.1
Alteration and other services	6.9		14.4
Occupancy costs	(14.5)		(13.5)
Total gross margin	42.2		46.0
Advertising expense	4.7		4.9
Selling, general and administrative expenses	31.3		31.0
Operating income	6.2		10.0
Interest income	0.0		0.0
Interest expense	(2.4)		(2.5)
Loss on extinguishment of debt, net	(0.0)		(1.3)
Earnings before income taxes	3.8		6.3
Provision for income taxes	0.0		1.7
Net earnings from continuing operations	3.8		4.6
Loss from discontinued operations, net of tax	(16.1)		(2.8)
Net (loss) earnings	(12.3)	%	1.8	%

(1) Percentage line items may not sum to totals due to the effect of rounding.

(2) Calculated as a percentage of related sales.

42

The following discussion of our results of operations relates to our continuing operations. Please see Note 2 of Notes to the Condensed Consolidated Financial Statements for information concerning discontinued operations.

Net Sales

Total net sales decreased $22.3 million, or 3.0%, to $729.5 million for the third quarter of 2019 as compared to the third quarter of 2018 primarily due to a $14.6 million decrease in clothing product sales, driven by the decrease in comparable sales, a $4.7 million decrease in rental service revenues and a $3.0 million decrease in alteration and other services revenues. The decrease in total net sales is further described below:

(in millions)		Amount Attributed to
$	(12.1)	2.8% decrease in comparable sales at Men's Wearhouse.
	0.7	0.5% increase in comparable sales at Jos. A. Bank.
	(1.0)	1.5% decrease in comparable sales at K&G.
	(2.9)	5.5% decrease in comparable sales at Moores(1).
	(1.7)	Decrease in non-comparable sales.
	(0.8)	Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
	(4.5)	Other (primarily decrease in alteration revenues).
$	(22.3)	Decrease in total net sales.

(1) Comparable sales percentages for Moores are calculated using Canadian dollars.

Comparable sales is defined as net sales from stores open at least twelve months at period end, excluding stores where the square footage has changed by more than 25% within the past year, and includes e-commerce sales. We operate our business using an omni-channel approach and do not differentiate e-commerce sales from our other channels.

The decrease in comparable sales at Men's Wearhouse resulted from a decrease in average unit retail (net selling price) offset by increases in transactions for clothing and units per transaction. Rental service comparable sales at Men’s Wearhouse decreased 2.6%, primarily reflecting a decrease in rental transactions.  The increase at Jos. A. Bank resulted primarily from an increase in both units per transaction and transactions partially offset by a decrease in average unit retail.  The decrease at K&G resulted primarily from a decrease in both units per transaction and transactions partially offset by an increase in average unit retail. The decrease at Moores resulted primarily from a decrease in both average unit retail and transactions while units per transaction were essentially flat.  

Gross Margin

Procurement and distribution costs are included in determining our retail clothing product gross margins.  Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of sales while others, like us, include all or a portion of such costs in cost of sales and exclude them from SG&A expenses.  Distribution costs are not included in determining our rental services gross margin but are included in SG&A expenses.

Our total gross margin decreased $37.5 million, or 10.8%, to $308.0 million in the third quarter of 2019 as compared to the third quarter of 2018 primarily as a result of lower sales.  As a percentage of total sales, gross margin decreased to 42.2% in the third quarter of 2019 from 46.0% in the third quarter of 2018 primarily due to increased promotional activities and deleveraging of occupancy costs as a percent of sales.

Occupancy costs, which includes store related operating lease costs, utilities, repairs and maintenance, security, property taxes and depreciation, increased $4.3 million primarily due to the impact of store refreshes and other enhancements of our store fleet. Occupancy costs as a percentage of total net sales increased to 14.5% in the third quarter of 2019 as compared to 13.5% in the third quarter of 2018.

Advertising Expense

Advertising expense decreased to $34.0 million in the third quarter of 2019 from $37.1 million in the third quarter of 2018, a decrease of $3.1 million, or 8.3%.   The decrease was primarily driven by reductions in television advertising reflecting a shift to digital advertising as well as the timing of marketing spend.  As a percentage of total net sales, advertising expense decreased to 4.7% in the third quarter of 2019 from 4.9% in the third quarter of 2018.

43

Selling, General and Administrative Expenses

SG&A expenses decreased to $228.5 million in the third quarter of 2019 from $233.1 million in the third quarter of 2018, a decrease of $4.6 million, or 2.0%.  As a percentage of total net sales, these expenses increased to 31.3% in the third quarter of 2019 from 31.0% in the third quarter of 2018. The components of this 0.3% increase in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

%	in millions		Attributed to
(0.1)	$	(0.8)	For the third quarter of 2019, we incurred certain costs that impact the comparability of our results totaling $6.2 million related to our multi-year cost savings and operational excellence programs. For the third quarter of 2018, costs that impacted the comparability of our results totaled $7.0 million and consisted of $6.4 million related to the retirement of our former CEO and $0.6 million related to the closure of a rental product distribution center. As a percentage of sales, these costs decreased to 0.8% in the third quarter of 2019 from 0.9% in the third quarter of 2018.
0.1		(2.0)	Store salaries decreased $2.0 million and increased as a percentage of sales to 13.5% in the third quarter of 2019 from 13.4% in the third quarter of 2018 primarily due to deleveraging from lower sales.
0.3		(1.8)	Other SG&A expenses decreased $1.8 million primarily due to lower employee-related benefit costs. As a percentage of sales, other SG&A expenses increased to 16.9% in the third quarter of 2019 from 16.6% in the third quarter of 2018 due to deleveraging from lower sales.
0.3	$	(4.6)	Total

Net Loss on Extinguishment of Debt

For the third quarter of 2019, net loss on extinguishment totaled $0.1 million related to open market repurchases of $54.8 million in face value of our Senior Notes.  For the third quarter of 2018, the net loss on extinguishment of debt was $9.4 million related to the repricing of our Term Loan and consisted of the elimination of unamortized deferred financing costs and original issue discount (“OID”).  

Provision for Income Tax

Our effective income tax rate from continuing operations for the third quarter of 2019 was 0.9% compared to 26.5% for the third quarter of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.9 million of valuation allowances in the third quarter of 2019.

For the third quarters of 2019 and 2018, the statutory tax rates in U.S., Canada, and Hong Kong were approximately 21%, 26% and 16.5%, respectively. For the third quarters of 2019 and 2018, tax expense for our continuing operations in foreign jurisdictions totaled $0.8 million and $3.8 million, respectively.

Our continuing operations income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws.  

In addition, if our financial results in fiscal 2019 generate a loss or certain deferred tax liabilities decrease, we may need to establish additional valuation allowances on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations. Lastly, we are currently undergoing several tax audits, however, we currently do not believe these audits will result in any material charge to tax expense in the future.

Net Earnings from Continuing Operations

Net earnings from continuing operations were $27.8 million for the third quarter of 2019 compared with net earnings from continuing operations of $34.8 million for the third quarter of 2018.

44

For the Nine Months Ended November 2, 2019 Compared to the Nine Months Ended November 3, 2018

The following table sets forth our results of operations expressed as a percentage of net sales for the periods indicated:

	For the Nine Months Ended(1)
	November 2,		November 3,
	2019		2018
Net sales:
Retail clothing product	79.9	%	79.5	%
Rental services	15.3		15.4
Alteration and other services	4.9		5.1
Total net sales	100.0	%	100.0	%
Cost of sales(2):
Retail clothing product	45.4		43.7
Rental services	14.6		14.7
Alteration and other services	94.3		86.6
Occupancy costs	14.3		13.4
Total cost of sales	57.5		54.8
Gross margin(2):
Retail clothing product	54.6		56.3
Rental services	85.4		85.3
Alteration and other services	5.7		13.4
Occupancy costs	(14.3)		(13.4)
Total gross margin	42.5		45.2
Advertising expense	5.1		5.1
Selling, general and administrative expenses	31.4		30.7
Operating income	6.1		9.3
Interest income	0.0		0.0
Interest expense	(2.5)		(2.7)
Loss on extinguishment of debt, net	(0.0)		(1.3)
Earnings before income taxes	3.6		5.3
Provision for income taxes	0.7		1.1
Net earnings from continuing operations	2.9		4.2
Loss from discontinued operations, net of tax	(5.1)		(0.8)
Net (loss) earnings	(2.2)	%	3.4	%

(1) Percentage line items may not sum to totals due to the effect of rounding.

(2) Calculated as a percentage of related sales.

45

The following discussion of our results of operations relates to our continuing operations. Please see Note 2 of Notes to the Condensed Consolidated Financial Statements for information concerning discontinued operations.

Net Sales

Total net sales decreased $84.2 million, or 3.7%, to $2,190.3 million for the first nine months of 2019 as compared to the first nine months of 2018 due to a $58.4 million decrease in clothing product sales primarily due to a decrease in comparable sales, a $15.9 million decrease in rental services revenue primarily reflecting a decrease in rental transactions and a $9.9 million decrease in alteration and other services revenues. The decrease in total net sales is further described below:

(in millions)		Amount Attributed to
$	(49.1)	3.9% decrease in comparable sales at Men's Wearhouse.
	(5.5)	1.2% decrease in comparable sales at Jos. A. Bank.
	(2.5)	1.1% decrease in comparable sales at K&G.
	(6.4)	4.1% decrease in comparable sales at Moores(1).
	(4.7)	Decrease in non-comparable sales.
	(3.9)	Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
	(12.1)	Other (primarily resulting from a decrease in alterations revenue and the divestiture of MW Cleaners).
$	(84.2)	Decrease in total net sales.

(1) Comparable sales percentages for Moores are calculated using Canadian dollars.

Comparable sales is defined as net sales from stores open at least twelve months at period end, excluding stores where the square footage has changed by more than 25% within the past year, and includes e-commerce sales. We operate our business using an omni-channel approach and do not differentiate e-commerce sales from our other channels.  

The decrease in comparable sales at Men's Wearhouse resulted primarily from a decrease in average unit retail and transactions for clothing while units per transaction were essentially flat.  At Men's Wearhouse, rental service comparable sales decreased 3.8% primarily reflecting a decrease in rental transactions.  The decrease at Jos. A. Bank resulted primarily from a decrease in average unit retail partially offset by increases in units per transaction and transactions. The decrease at K&G resulted from a decrease in both units per transaction and transactions partially offset by an increase in average unit retail. The decrease at Moores resulted from a decrease in transactions and units per transaction partially offset by an increase in average unit retail.  

Gross Margin

Procurement and distribution costs are included in determining our retail clothing product gross margins. Our gross margin may not be comparable to other specialty retailers, as some companies exclude costs related to their distribution network from cost of sales while others, like us, include all or a portion of such costs in cost of sales and exclude them from SG&A expenses.  Distribution costs are not included in determining our rental services gross margin but are included in SG&A expenses.

Our total gross margin decreased $95.6 million, or 9.3%, to $931.8 million in the first nine months of 2019 as compared to the first nine months of 2018 primarily as a result of lower sales. As a percentage of total sales, gross margin decreased to 42.5% in the first nine months of 2019 from 45.2% in the first nine months of 2018 primarily due to increased promotional activities and deleveraging of occupancy costs as a percent of sales.

Occupancy costs, which includes store related operating lease costs, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, increased $9.8 million primarily due to increased lease costs and the impact of store refreshes and other enhancements of our store fleet. Occupancy costs as a percentage of total net sales increased to 14.3% in the first nine months of 2019 from 13.4% in the first nine months of 2018.

Advertising Expense

Advertising expense decreased to $111.5 million in the first nine months of 2019 from $116.2 million in the first nine months of 2018, a decrease of $4.7 million, or 4.1%.  The decrease in advertising expense was driven primarily by reductions in television advertising reflecting a shift to digital advertising as well as the timing of marketing spend partially offset by the launch of new brand campaigns for Men’s Wearhouse and Jos. A. Bank and the impact of certain marketing test initiatives. As a percentage of total net sales, advertising expense was flat at 5.1% for both the first nine months of 2019 and 2018.

46

Selling, General and Administrative Expenses

SG&A expenses decreased to $687.4 million in the first nine months of 2019 from $698.8 million in the first nine months of 2018, a decrease of $11.4 million, or 1.6%.  As a percentage of total net sales, these expenses increased to 31.4% in the first nine months of 2019 from 30.7% in the first nine months of 2018. The components of this 0.7% increase in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

%	in millions		Attributed to
0.4	$	7.6	For the first nine months of 2019, we incurred certain costs that impact the comparability of our results totaling $18.7 million. These costs related to our multi-year cost savings and operational excellence programs. For the first nine months of 2018, costs that impacted the comparability of our results totaled $11.1 million including $6.4 million related to the retirement of our former CEO, a $3.8 million loss on divestiture of our MW Cleaners business and $0.9 million related to the closure of a rental product distribution center. As a percentage of sales, these costs increased to 0.8% in the first nine months of 2019 from 0.4% in the first nine months of 2018.
0.3		(5.6)	Store salaries decreased $5.6 million and increased as a percentage of sales to 13.7% in the first nine months of 2019 from 13.4% in the first nine months of 2018 primarily due to deleveraging from lower sales.
—		(13.4)	Other SG&A expenses decreased $13.4 million primarily due to lower incentive and share-based compensation costs as well as lower employee-related benefit and travel and entertainment costs. As a percentage of sales, other SG&A expenses were flat at 16.8% in the first nine months of 2019 and 2018.
0.7	$	(11.4)	Total

Net Loss on Extinguishment of Debt

For the first nine months of 2019, net loss on extinguishment of debt totaled $0.1 million related to open market repurchases of $54.8 million in face value of our Senior Notes.  For the first nine months of 2018, net loss on extinguishment of debt totaled $30.3 million and consisted of the elimination of unamortized deferred financing costs and OID related to the refinancing and repricing of our Term Loan totaling $21.4 million and $8.9 million of loss on repurchase and elimination of unamortized deferred financing costs related to our Senior Notes.

Provision for Income Tax

Our effective income tax rate from continuing operations for the first nine months of 2019 was 18.7% compared to 21.5% for the first nine months of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.4 million of valuation allowances in the first nine months of 2019.

For the first nine months of 2019 and 2018, the statutory tax rates in U.S., Canada and Hong Kong were approximately 21%, 26%, and 16.5%, respectively. For the first nine months of 2019 and 2018, tax expense for our continuing operations in foreign jurisdictions totaled $2.2 million and $8.7 million, respectively.

Our continuing operations income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws.  

In addition, if our financial results in fiscal 2019 generate a loss or certain deferred tax liabilities decrease, we may need to establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations.  Lastly, we are currently undergoing several federal, foreign and state audits; however, we currently do not believe these audits will result in any material change to tax expense in the future.

Net Earnings from Continuing Operations

Net earnings from continuing operations were $63.9 million for the first nine months of 2019 compared with net earnings from continuing operations of $94.8 million for the first nine months of 2018.

47

Liquidity and Capital Resources

Our primary sources of working capital are cash flows from operations and available borrowings under our revolving credit agreement, as described below.  The following table provides details on our cash and cash equivalents and working capital position as of November 2, 2019, November 3, 2018 and February 2, 2019:

	November 2,		November 3,		February 2,
	2019		2018		2019
Cash and cash equivalents	$	21,193	$	56,293	$	32,671
Working capital	$	238,148	$	531,000	$	491,047

The decrease in working capital from November 2, 2019 compared to February 2, 2019 is primarily due to the adoption of new accounting guidance related to leases, specifically the current portion of operating lease liabilities which totals $184.4 million as of November 2, 2019 as well as the divestiture of our corporate apparel business.  Please see Note 2 and Note 14 of the Notes to the Condensed Consolidated Financial Statements for additional information.

In 2014, The Men's Wearhouse entered into a term loan credit agreement that provided for a senior secured term loan in the aggregate principal amount of $1.1 billion (the "Original Term Loan") and a $500.0 million asset-based revolving credit agreement (the "ABL Facility", and together with the Original Term Loan, the "Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People, one of our Canadian subsidiaries, as co-borrowers. Proceeds from the Original Term Loan were reduced by an $11.0 million OID, which was presented as a reduction of the outstanding balance on the Original Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the Original Term Loan. In addition, in 2014, The Men's Wearhouse issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the "Senior Notes").

In October 2017, The Men’s Wearhouse amended the ABL Facility in part to increase the principal amount available to $550.0 million and extend the maturity date to October 2022.  In April 2018, The Men’s Wearhouse refinanced its Original Term Loan, and in October 2018, amended its term loan to reduce the interest rate margin.  See Credit Facilities section below for additional information.  

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios.  Should our total leverage ratio and secured leverage ratio exceed certain thresholds specified in the agreements, we would be subject to certain additional restrictions, including limitations on our ability to make significant acquisitions and incur additional indebtedness. As of November 2, 2019, our total leverage ratio is below the maximum specified in the agreements, however, our secured leverage ratio is above the maximum level.  As a result, we are now subject to additional restrictions, primarily related to the size of any incremental term loan facilities being limited to a maximum of $250 million.  In addition, as a result of the refinancing of our Original Term Loan and amending of our ABL Facility, our ability to pay dividends on our common stock has increased from a maximum of $10.0 million per quarter to a maximum of $15.0 million per quarter.

Credit Facilities

In April 2018, we refinanced our Original Term Loan.  Immediately prior to the refinancing, the Original Term Loan consisted of $593.4 million in aggregate principal amount with an interest rate of LIBOR plus 3.50% (with a floor of 1.0%) and $400.0 million in aggregate principal amount with a fixed rate of 5.0% per annum.  Upon entering into the refinancing, we made a prepayment of $93.4 million on the Original Term Loan using cash on hand.

As a result, we refinanced $900.0 million in aggregate principal amount of term loans then outstanding with a new Term Loan totaling $900.0 million (the “New Term Loan”).  Additionally, we may continue to request additional term loans or incremental equivalent debt borrowings, all of which are uncommitted, in an aggregate amount up to the greater of (1) $250.0 million and (2) an aggregate principal amount such that, on a pro forma basis (giving effect to such borrowings), our senior secured leverage ratio will not exceed 2.5 to 1.0.

The New Term Loan will amortize in an annual amount equal to 1.0% of the principal amount of the New Term Loan, payable quarterly commencing on May 1, 2018.  Proceeds from the New Term Loan were reduced by a $4.5 million OID, which was presented as a reduction of the outstanding balance on the New Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the New Term Loan.  The New Term Loan extends the maturity date of the Original Term Loan from June 18, 2021 until April 9, 2025, subject to a maturity provision that would accelerate

48

the maturity of the New Term Loan to April 1, 2022 if any of the Company’s obligations under its Senior Notes remain outstanding on April 1, 2022.

The New Term Loan bears interest at a rate per annum equal to an applicable margin plus, at the Company’s option, either LIBOR (with a floor of 1.0%) or the base rate (with a floor of 2.0%).  In October 2018, we amended the New Term Loan resulting in a reduction in the interest rate margin of 25 basis points.  As a result of the amendment, the margins for borrowings under the New Term Loan are 3.25% for LIBOR and 2.25% for the base rate and the OID was eliminated.  In connection with the October 2018 amendment of the New Term Loan, we incurred deferred financing costs of $1.1 million, which will be amortized over the life of the New Term Loan using the interest method.  The maturity date for the New Term Loan remains April 9, 2025, and all other material provisions of the New Term Loan remain unchanged.

The interest rate on the New Term Loan is based on 1-month LIBOR, which was 1.77% at November 2, 2019, plus the applicable margin of 3.25%, resulting in a total interest rate of 5.02%.  We have two interest rate swap agreements where the variable rates due under the New Term Loan have been exchanged for a fixed rate.  At November 2, 2019, the total notional amount under these interest rate swaps is $705.0 million.  Please see Note 17 for additional information on our interest rate swaps.

As a result of our interest rate swaps, 80% of the variable interest rate under the New Term Loan has been converted to a fixed rate and, as of November 2, 2019, the New Term Loan had a weighted average interest rate of 5.63%.

In October 2017, we amended our ABL Facility, which now provides for a senior secured revolving credit facility of $550.0 million, with possible future increases to $650.0 million under an expansion feature, that matures in October 2022, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices:  (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate ("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the New York Federal Reserve Bank (“NYFRB”) rate plus 0.5% or adjusted LIBOR for a one-month interest period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 1.75%.  The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.25% to 1.75%, and a fee on unused commitments of 0.25%.  As of November 2, 2019, $67.5 million in borrowings were outstanding under the ABL Facility at a weighted average interest rate of approximately 3.5%.

We utilize letters of credit primarily as collateral for workers compensation claims.  At November 2, 2019, letters of credit totaling approximately $26.7 million were issued and outstanding. Borrowings available under the ABL Facility as of November 2, 2019 were $455.8 million.

The obligations under the Credit Facilities are secured on a senior basis by a first priority lien on substantially all of the assets of the Company, The Men’s Wearhouse and its U.S. subsidiaries and, in the case of the ABL Facility, Moores The Suit People. The Credit Facilities and the related guarantees and security interests granted thereunder are senior secured obligations of, and will rank equally with all present and future senior indebtedness of the Company, the co-borrowers and the respective guarantors.  

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature in July 2022.  Interest on the Senior Notes is payable in January and July of each year.

49

Cash Flow Activities

Operating activities — Net cash provided by operating activities was $65.6 million and $277.8 million for the first nine months of 2019 and 2018, respectively.  The $212.3 million decrease was driven by lower net earnings, after adjusting for non-cash items, fluctuations in accounts payable, accrued expenses and other current liabilities primarily due to timing and  anniversarying a $15.0 million income tax refund received in the third quarter last year.  

Investing activities — Net cash used in investing activities was $18.4 million and $29.2 million for the first nine months of 2019 and 2018, respectively. Capital expenditures were $63.4 million for the first nine months of 2019 compared to $46.9 million for the first nine months of 2018 with the increase primarily driven by additional investments in our store fleet, technology and other corporate assets resulting from projects that shifted from fiscal 2018 to fiscal 2019.  For the first nine months of 2019, net proceeds from the divestiture of a business totaled $45.0 million related to our corporate apparel business while net proceeds from the divestiture of a business for the first nine months of 2018 totaling $17.8 million related to the divestiture of MW Cleaners.

Financing activities — Net cash used in financing activities was $82.6 million and $281.4 million for the first nine months of 2019 and 2018, respectively.  The $198.8 million decrease primarily reflects the impact of a reduction in debt repayments this year compared to last year.

Dividends — Cash dividends paid were $27.9 million and $27.8 million for the first nine months of 2019 and 2018, respectively.

Share repurchase program — In March 2013, the Board approved a share repurchase program for our common stock.  During the third quarter of 2019, we repurchased 2,336,852 shares through open market repurchases at a cost of $10.0 million.  At November 2, 2019, the remaining balance available under the Board's authorization was $38.0 million.  No shares were repurchased during 2018.

Capital allocation policy update — After extensive review, on September 11, 2019, the Company announced its Board approved an update to the Company’s capital allocation policy.  Effective in the fourth quarter of 2019, our quarterly cash dividend will be suspended and redeployed for accelerated debt reduction and opportunistic share repurchases.  Suspending the quarterly cash dividend of $0.18 per share is expected to make available approximately $36.5 million on an annualized basis.  

Future Sources and Uses of Cash

Our primary uses of cash are to finance working capital requirements of our operations and to repay our indebtedness.  In addition, we will use cash to fund capital expenditures, income taxes, operating leases, share repurchases and various other commitments and obligations, as they arise.

During the first nine months of 2019, we borrowed and repaid amounts under our ABL Facility with the maximum borrowing outstanding at any point in time totaling $100.0 million.

For fiscal 2019, we now expect capital expenditures of $90.0 million to $95.0 million. Capital expenditures will include costs for store refreshes and other enhancements of our store fleet, investments in technology, and investment in other corporate assets.

Additionally, market conditions may produce attractive opportunities for us to make acquisitions. Any such acquisitions may be undertaken as an alternative to opening new stores. We may use cash on hand, together with cash flow from operations, borrowings under our Credit Facilities and issuances of debt or equity securities, to take advantage of any acquisition opportunities.

Current and future domestic and global economic conditions could negatively affect our future operating results as well as our existing cash and cash equivalents balances. In addition, conditions in the financial markets could limit our access to further capital resources, if needed, and could increase associated costs. We believe based on our current business plan that our existing cash and cash flows from operations and availability under our ABL Facility will be sufficient to fund our operating cash requirements, repayment of current indebtedness, and capital expenditures.

50

Contractual Obligations

There have been no material changes to our contractual obligations as discussed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 except for our open market repurchases of our Senior Notes as discussed in Note 5 of the Notes to the Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements requires the appropriate application of accounting policies in accordance with generally accepted accounting principles.  In many instances, this also requires management to make estimates and assumptions about future events that affect the amounts and disclosures included in our financial statements.  We base our estimates on historical experience and various assumptions that we believe are reasonable under our current business model.  However, because future events and conditions and their effects cannot be determined with certainty, actual results will differ from our estimates and such differences could be material to our financial statements.  Other than the adoption of the new lease accounting standard as discussed in Note 14 of the Notes to the Condensed Consolidated Financial Statements, there have been no significant changes to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 except as described below:

Goodwill and Other Indefinite-Lived Intangible Assets

As of November 2, 2019, goodwill totaled $79.4 million, with $58.3 million allocated to our Men’s Wearhouse reporting unit and $21.1 million allocated to our Moores reporting unit.  Goodwill is evaluated for impairment at least annually. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, new significant negative industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock.  

During the third quarter of 2019, we determined that a triggering event occurred as a result of the sustained decline in the market price of our stock and performed an interim goodwill impairment test, which indicated no goodwill impairment at this time.  

We estimated the fair values of each of our reporting units using a combined income and market comparable approach.  Our income approach uses projected future cash flows that are discounted using a weighted-average cost of capital analysis that reflects current market conditions.  The market comparable approach primarily considers earnings multiples of comparable companies and applies those multiples to certain key drivers of the reporting unit.  

Management judgment is a significant factor in the goodwill impairment evaluation process. The computations require management to make estimates and assumptions. Actual values may differ significantly from these judgments, particularly if there are significant adverse changes in the operating environment for our reporting units. Critical assumptions that are used as part of these evaluations include:

● The potential future cash flows of the reporting unit.  The income approach relies on the timing and estimates of future cash flows. The projections use management’s estimates of economic and market conditions over the projected period, including growth rates in revenue, gross margin and expense. The cash flows are based on our most recent business operating plans and various growth rates have been assumed for years beyond the current business plan period.

● Selection of an appropriate discount rate.  The income approach requires the selection of an appropriate discount rate, which is based on a weighted-average cost of capital analysis. The discount rate is affected by changes in short-term interest rates and long-term yield as well as variances in the typical capital structure of marketplace participants. Given current economic conditions, it is possible that the discount rate will fluctuate in the near term. The weighted-average cost of capital used to discount the cash flows for the interim goodwill impairment test for the reporting units that have goodwill ranged from 9.5% to 11.0%.

51

● Selection of comparable companies within the industry.  For purposes of the market comparable approach, valuations were determined by calculating average earnings multiples of relevant key drivers from a group of companies that are comparable to the reporting unit being tested and applying those price multiples to the key drivers of the reporting unit. While the market price multiple is not an assumption, a presumption that it provides an indicator of the value of the reporting unit is inherent in the valuation. The determination of the market comparable also involves a degree of judgment. Earnings multiples used in the market comparable approach for the interim goodwill impairment test for the reporting units that have goodwill ranged from 5.2 to 5.7.

We believe these two approaches are appropriate valuation techniques and we weighted the two approaches equally as an estimate of reporting unit fair value for the purposes of our impairment testing.  In addition, we compared the total fair values of our reporting units to our market capitalization and noted that the implied control premium was within what we consider to be a reasonable range.  As the reporting units have fair values that significantly exceed their carrying values, no reporting units are current deemed “at risk” for goodwill impairment.

However, if the current market price of our stock further decreases, or if other events or circumstances change that would more likely than not reduce the fair value of our reporting units below their respective carrying values, all or a portion of our goodwill may be impaired in future periods and such an impairment charge could have a material effect on our results of operations and financial condition.  

In addition, during the third quarter of 2019, based on the recent performance of the Jos. A. Bank brand, we determined that a triggering event occurred related to our Jos. A. Bank tradename, an indefinite-lived intangible asset.  As a result, we completed an interim impairment test, which indicated no impairment at this time.  

We estimated the fair values of the Jos. A. Bank tradename based on an income approach using the relief-from-royalty method.  This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables.  

If events or circumstances change that would more likely than not reduce the fair value of our indefinite-lived intangible assets below their respective carrying values, we may be required to record an impairment charge, which could have a material effect on our results of operations and financial condition.

Other Matters

During 2018, the U.S. imposed tariffs on certain goods imported from China and expressed a willingness to impose further tariffs on additional goods imported from China.  For tariffs enacted through the third quarter of 2019, we believe the impact has been immaterial to our results of operations.  Additionally, on August 1, 2019, the U.S. announced tariffs on other categories of U.S. imports from China that became effective on September 1, 2019.  We believe that we have mitigated the risk associated with tariffs primarily by reducing our dependence on Chinese-made direct-sourced product and through negotiations with certain vendors for production that remains in China. As a result, we currently believe that existing tariffs on goods imported from China will have a minimal impact on our results of operations for fiscal 2019.

52

ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risks relating to our operations result primarily from changes in foreign currency exchange rates and changes in interest rates.

We are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs and our operations in foreign countries.  In connection with our direct sourcing programs, we may enter into merchandise purchase commitments that are denominated in a currency different from the functional currency of the operating entity.  Our risk management policy is to hedge a portion of forecasted merchandise purchases for our direct sourcing programs that bear foreign exchange risk using foreign exchange forward contracts.

As the foreign exchange forward contracts are with financial institutions, we are exposed to credit risk in the event of nonperformance by these parties but due to the creditworthiness of these major financial institutions, full performance is anticipated.

As discussed in Note 5 and Note 17 of the Notes to the Condensed Consolidated Financial Statements, we have undertaken steps to mitigate our exposure to changes in interest rates on our New Term Loan.  As of November 2, 2019, 80% of the variable interest rate under the New Term Loan has been converted to a fixed rate.  At November 2, 2019, the effect of one percentage point change in interest rates would result in an approximate $1.8 million change in annual interest expense on our New Term Loan.

In addition, borrowings under our ABL Facility bear a floating rate of interest.  As of November 2, 2019, the outstanding borrowings under the ABL Facility were $67.5 million.  At November 2, 2019, the effect of a one percentage point change in interest rates would result in an approximate $0.7 million change in annual interest expense on our ABL borrowings.

ITEM 4 — CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company's management, with the participation of the Company's principal executive officer ("CEO") and principal financial officer ("CFO"), evaluated the effectiveness of the Company's disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) as of the end of the period covered by this report.  Based on this evaluation, the CEO and CFO have concluded that, as of the end of such period, the Company's disclosure controls and procedures were effective to ensure information that is required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms and (ii) accumulated and communicated to the Company's management, including the CEO and CFO, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company's internal control over financial reporting that occurred during the fiscal third quarter ended November 2, 2019 that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

53

PART II. OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note 18 of the Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(c)   The following table presents information with respect to our purchases of common stock made during the quarter ended November 2, 2019 as defined by Rule 10b-18(a)(3) under the Exchange Act (dollars in thousands, except per share data):

	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plan		Approximate Dollar Value of Shares that May Yet Be Purchased Under the Publicly Announced Plans(1)
August 4, 2019 - August 31, 2019		—	$	—		—	$	48,032
September 1, 2019 - October 5, 2019		1,710,971	$	4.38		1,710,971	$	40,533
October 6, 2019 - November 2, 2019		625,881	$	4.00		625,881	$	38,032
Total		2,336,852	$	4.28		2,336,852	$	38,032

⁽¹⁾  Please see Note 12 of Notes to Condensed Consolidated Financial Statements for information regarding our share repurchases.  

ITEM 6 — EXHIBITS

Exhibits filed with this quarterly report on Form 10-Q are incorporated herein by reference as set forth in the Index to Exhibits beginning on the next page.

54

EXHIBIT INDEX

Exhibit Number		Exhibit Index
31.1	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith).
31.2	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith).
32.1	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (furnished herewith). †
32.2	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (furnished herewith). †
101.1	—	The following financial information from Tailored Brands, Inc.’s Quarterly Report on Form 10-Q for the three and nine months ended November 2, 2019 formatted in iXBRL (Inline eXtensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of (Loss) Earnings; (iii) the Condensed Consolidated Statements of Comprehensive (Loss) Income; (iv) the Condensed Consolidated Statements of Shareholders’ (Deficit) Equity; (v) the Condensed Consolidated Statements of Cash Flows; and (vi) the Notes to Condensed Consolidated Financial Statements.
104	—	The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended November 2, 2019, formatted in Inline XBRL (included within Exhibit 101).

† This exhibit will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.  Such exhibit shall not be deemed incorporated into any filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

55

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant, Tailored Brands, Inc., has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Dated: December 12, 2019	TAILORED BRANDS, INC.
	By	/s/ JACK P. CALANDRA
		Jack P. Calandra
		Executive Vice President, Chief Financial Officer and Treasurer

56

EX-31

Exhibit 31.1

Certifications

I, Dinesh S. Lathi, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tailored Brands, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  December 12, 2019
	By	/s/ DINESH S. LATHI
		Dinesh S. Lathi
		President and Chief Executive Officer

EX-31.2

Exhibit 31.2

Certifications

I, Jack P. Calandra, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Tailored Brands, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15 (e) and 15d-15 (e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated:  December 12, 2019
	By	/s/ JACK P.  CALANDRA
		Jack P.  Calandra
		Executive Vice President, Chief Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

In connection with the Quarterly Report of Tailored Brands, Inc. (the “Company”) on Form 10-Q for the period ending November 2, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dinesh S. Lathi,  President and Chief Executive Officer of the Company, certify, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirement of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  December 12, 2019
	By	/s/ DINESH S. LATHI
		Dinesh S. Lathi
		President and Chief Executive Officer

EX-32.2

Exhibit 32.2

Certification Pursuant to
18 U.S.C. Section 1350,
as Adopted Pursuant to
Section 906 of The Sarbanes-Oxley Act of 2002

Not Filed Pursuant to the Securities Exchange Act of 1934

In connection with the Quarterly Report of Tailored Brands, Inc. (the “Company”) on Form 10-Q for the period ending November 2, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jack P.  Calandra, Chief Financial Officer of the Company, certify, pursuant to 18 U. S. C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Report fully complies with the requirement of Section 13(a) or 15 (d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:  December 12, 2019
	By	/s/ JACK P.  CALANDRA
		Jack P.  Calandra
		Executive Vice President, Chief Financial Officer and Treasurer

XML

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Other current assets
Prepaid expenses	$ 42,175	$ 53,455	$ 53,176
Tax receivable	5,111		457
Assets held for sale	4,949
Other	8,543	13,368	12,430
Total other current assets	60,778	66,823	66,063
Accrued expenses and other current liabilities
Accrued salary, bonus, sabbatical, vacation and other benefits	52,247	78,297	67,360
Loyalty program liabilities	46,781	44,434	64,944
Customer deposits, prepayments and refunds payable	38,248	38,436	42,520
Sales, value added, payroll, property and other taxes payable	30,000	20,930	27,094
Unredeemed gift cards	24,389	32,178	26,279
Accrued workers compensation and medical costs	22,442	23,893	25,601
Unrealized loss on interest rate swaps	6,998	1,625	797
Accrued interest	4,557	1,828	6,055
Accrued royalties	3,651	1,286	3,287
Accrued dividends	889	10,480	10,320
Other	20,504	15,311	16,165
Total accrued expenses and other current liabilities	250,706	268,698	290,422
Deferred taxes and other liabilities
Deferred and other income tax liabilities, net	45,223	48,199	78,930
Unrealized loss on interest rate swaps	25,245	7,605
Deferred rent and landlord incentives		57,351	58,297
Unfavorable lease liabilities		1,797	2,085
Other	3,500	4,593	4,826
Total deferred taxes, net and other liabilities	$ 73,968	$ 119,545	$ 144,138

XML

Share-Based Compensation Plans - Stock Options (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Share-based compensation
Share-based compensation expense	$ 3.2	$ 2.9	$ 7.5	$ 14.6
Stock Options
Number of Shares
Outstanding at the beginning of the period (in shares)			1,252,072
Granted (in shares)			3,188,732
Forfeited (in shares)			(209,921)
Expired (in shares)			(56,584)
Outstanding at the end of the period (in shares)	4,174,299		4,174,299
Exercisable at the end of the period (in shares)	916,464		916,464
Weighted-Average Exercise Price
Outstanding at the beginning of the period (in dollars per share)			$ 23.64
Granted (in dollars per share)			7.49
Forfeited (in dollars per share)			10.52
Expired (in dollars per share)			25.72
Outstanding at the end of the period (in dollars per share)	$ 11.94		11.94
Exercisable at the end of the period (in dollars per share)	$ 24.89		24.89
Additional disclosures
Weighted-average grant date fair value of stock options granted (in dollars per share)			$ 2.99
Stock Appreciation Rights ("SARs")
Number of Shares
Granted (in shares)			414,476
Outstanding at the end of the period (in shares)	414,476		414,476
Weighted-Average Exercise Price
Granted (in dollars per share)			$ 7.62
Outstanding at the end of the period (in dollars per share)	$ 7.62		7.62
Additional disclosures
Weighted-average grant date fair value of stock options granted (in dollars per share)			$ 3.01
Assumptions used to value stock options
Risk-free interest rate (as a percent)			2.36%
Expected lives (in years)			5 years
Dividend yield (as a percent)			4.17%
Expected volatility (as a percent)			62.53%
Stock Options And Stock Appreciation Rights ("SARs")
Assumptions used to value stock options
Dividend yield (as a percent)			0.00%
Unrecognized compensation cost
Unrecognized compensation cost, non-vested awards	$ 9.8		$ 9.8
Compensation recognition period, non-vested awards			1 year 7 months 6 days
Chief Executive Officer
Share-based compensation
Share-based compensation expense		$ 0.7		$ 0.7

XML

Earnings Per Share - Narrative (Details) - shares shares in Millions	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Share-based awards
Antidilutive Securities Excluded from Computation of (Loss) Earnings Per Share
Anti-dilutive shares of common stock excluded from the calculation of diluted earnings (loss) per common share (in shares)	4.5	0.8	3.7	0.6

XML

Discontinued Operations - Condensed Consolidated Statements Of Earnings (Details) - USD ($)	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Disposal Group, Including Discontinued Operation, Income Statement Disclosures [Abstract]
Net sales	$ 7,376,000	$ 61,006,000	$ 117,444,000	$ 179,643,000
Cost of sales	5,507,000	43,765,000	85,042,000	130,112,000
Selling, general and administrative expenses	2,200,000	13,427,000	30,049,000	41,812,000
Goodwill impairment charge	0	23,991,000		23,991,000
Loss on sale of corporate apparel business	83,723,000		82,808,000
Loss on release of cumulative foreign currency translation adjustment before tax	26,885,000		26,885,000
Loss from discontinued operations before taxes	(110,939,000)	(20,177,000)	(107,340,000)	(16,272,000)
Income tax expense	6,439,000	735,000	4,766,000	1,503,000
Loss from discontinued operations, net of tax	$ (117,378,000)	$ (20,912,000)	$ (112,106,000)	$ (17,775,000)

XML

Condensed Consolidating Information (Tables)

9 Months Ended

Nov. 02, 2019

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Condensed Consolidating Balance Sheet

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 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	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193
Accounts receivable, net		—		30,148		178,025		48,848		(214,965)		42,056
Inventories		—		136,033		503,709		138,600		—		778,342
Other current assets		9,287		4,545		37,680		9,266		—		60,778
Total current assets		9,287		171,799		721,174		215,074		(214,965)		902,369
Property and equipment, net		—		180,273		203,570		21,157		—		405,000
Operating lease right-of-use assets		—		474,788		381,008		52,709		—		908,505
Rental product, net		—		76,463		6,836		9,486		—		92,785
Goodwill		—		6,160		52,129		21,103		—		79,392
Intangible assets, net		—		—		146,890		—		—		146,890
Investments in subsidiaries		115,082		1,100,045		—		—		(1,215,127)		—
Other assets		—		4,958		438		3,954		(3,900)		5,450
Total assets	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	182,242	$	81,886	$	92,053	$	68,949	$	(214,965)	$	210,165
Accrued expenses and other current liabilities		2,671		168,824		63,589		25,550		—		260,634
Current portion of operating lease liabilities		—		97,917		74,751		11,754		—		184,422
Current portion of long-term debt		—		9,000		—		—		—		9,000
Total current liabilities		184,913		357,627		230,393		106,253		(214,965)		664,221
Long-term debt, net		—		1,111,732		—		—		—		1,111,732
Operating lease liabilities		—		400,518		312,774		41,664		—		754,956
Deferred taxes, net and other liabilities		3,942		29,527		28,063		16,336		(3,900)		73,968
Shareholders' (deficit) equity		(64,486)		115,082		940,815		159,230		(1,215,127)		(64,486)
Total liabilities and shareholders' equity	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 3, 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	$	—	$	981	$	2,133	$	53,179	$	—	$	56,293
Accounts receivable, net		—		25,010		223,001		55,299		(268,673)		34,637
Inventories		—		149,157		500,579		122,470		—		772,206
Other current assets		220		26,657		34,718		4,468		—		66,063
Current assets - discontinued operations		—		—		46,470		118,888		—		165,358
Total current assets		220		201,805		806,901		354,304		(268,673)		1,094,557
Property and equipment, net		—		190,905		204,147		21,009		—		416,061
Rental product, net		—		83,554		4,367		14,619		—		102,540
Goodwill		—		6,160		52,128		21,187		—		79,475
Intangible assets, net		—		—		154,144		—		—		154,144
Investments in subsidiaries		157,114		1,344,748		—		—		(1,501,862)		—
Other assets		—		16,046		635		80,786		(80,235)		17,232
Non-current assets - discontinued operations		—		—		2,045		23,486		—		25,531
Total assets	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	134,700	$	188,583	$	88,627	$	74,877	$	(268,673)	$	218,114
Accrued expenses and other current liabilities		7,952		170,406		100,839		23,585		—		302,782
Current portion of long-term debt		—		9,000		—		—		—		9,000
Current liabilities - discontinued operations		—		—		6,635		27,026		—		33,661
Total current liabilities		142,652		367,989		196,101		125,488		(268,673)		563,557
Long-term debt, net		—		1,167,906		—		—		—		1,167,906
Deferred taxes, net and other liabilities		5,195		150,209		46,186		22,783		(80,235)		144,138
Non-current liabilities - discontinued operations		—		—		1,451		3,001		—		4,452
Shareholders' equity		9,487		157,114		980,629		364,119		(1,501,862)		9,487
Total liabilities and shareholders' equity	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540

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	$	1,434	$	30,267	$	—	$	32,671
Accounts receivable, net		—		23,954		255,091		53,610		(297,969)		34,686
Inventories		—		149,923		429,952		144,211		—		724,086
Other current assets		—		30,699		37,621		3,773		(5,270)		66,823
Current assets - discontinued operations		—		—		41,404		129,972		—		171,376
Total current assets		—		205,546		765,502		361,833		(303,239)		1,029,642
Property and equipment, net		—		194,290		207,934		22,092		—		424,316
Rental product, net		—		81,809		3,426		14,535		—		99,770
Goodwill		—		6,160		52,128		21,203		—		79,491
Intangible assets, net		—		—		153,711		—		—		153,711
Investments in subsidiaries		160,057		1,234,005		—		—		(1,394,062)		—
Other assets		—		7,590		640		5,059		(4,800)		8,489
Non-current assets - discontinued operations		—		—		1,906		23,165		—		25,071
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	$	67,044	$	91,200	$	(297,969)	$	204,775
Accrued expenses and other current liabilities		6,697		146,683		105,022		29,044		(5,270)		282,176
Current portion of long-term debt		—		11,619		—		—		—		11,619
Current liabilities - discontinued operations		—		—		7,073		32,952		—		40,025
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		43,495		17,822		(4,800)		119,545
Non-current liabilities - discontinued operations		—		—		1,574		3,903		—		5,477
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

Condensed Consolidating Statement of Earnings (Loss)

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 November 2, 2019
Net sales	$	—	$	436,671	$	386,754	$	69,270	$	(163,214)	$	729,481
Cost of sales		—		227,407		309,577		47,683		(163,214)		421,453
Gross margin		—		209,264		77,177		21,587		—		308,028
Operating expenses		991		131,183		129,975		14,693		(14,358)		262,484
Operating (loss) income		(991)		78,081		(52,798)		6,894		14,358		45,544
Other income and expenses, net		—		—		14,984		(626)		(14,358)		—
Interest (expense) income, net		(939)		(17,380)		1,036		(142)		—		(17,425)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(1,930)		60,624		(36,778)		6,126		—		28,042
(Benefit) provision for income taxes		(45)		548		(289)		40		—		254
(Loss) earnings before equity in net income of subsidiaries		(1,885)		60,076		(36,489)		6,086		—		27,788
Equity in (loss) earnings of subsidiaries		(87,705)		(121,473)		—		—		209,178		—
Net (loss) earnings from continuing operations		(89,590)		(61,397)		(36,489)		6,086		209,178		27,788
Net loss from discontinued operations, net of tax		—		(26,308)		(6,166)		(84,904)		—		(117,378)
Net (loss) earnings	$	(89,590)	$	(87,705)	$	(42,655)	$	(78,818)	$	209,178	$	(89,590)
Comprehensive (loss) income	$	(62,138)	$	(64,403)	$	(31,136)	$	(79,788)	$	175,327	$	(62,138)
Three Months Ended November 3, 2018
Net sales	$	—	$	453,316	$	355,710	$	102,896	$	(160,181)	$	751,741
Cost of sales		—		219,036		273,793		73,599		(160,181)		406,247
Gross margin		—		234,280		81,917		29,297		—		345,494
Operating expenses		1,443		135,498		131,431		16,786		(14,942)		270,216
Operating (loss) income		(1,443)		98,782		(49,514)		12,511		14,942		75,278
Other income and expenses, net		—		—		14,942		—		(14,942)		—
Interest (expense) income, net		(1,062)		(20,017)		1,970		559		—		(18,550)
Loss on extinguishment of debt, net		—		(9,420)		—		—		—		(9,420)
(Loss) earnings before income taxes		(2,505)		69,345		(32,602)		13,070		—		47,308
(Benefit) provision for income taxes		(505)		17,304		(6,848)		2,570		—		12,521
(Loss) earnings before equity in net income of subsidiaries		(2,000)		52,041		(25,754)		10,500		—		34,787
Equity in earnings (loss) of subsidiaries		15,875		(36,166)		—		—		20,291		—
Net earnings (loss) from continuing operations		13,875		15,875		(25,754)		10,500		20,291		34,787
Net gain (loss) from discontinued operations, net of tax		—		—		176		(21,088)		—		(20,912)
Net earnings (loss)	$	13,875	$	15,875	$	(25,578)	$	(10,588)	$	20,291	$	13,875
Comprehensive income (loss)	$	14,799	$	20,300	$	(25,578)	$	(14,089)	$	19,367	$	14,799

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Nine Months Ended November 2, 2019
Net sales	$	—	$	1,285,018	$	1,147,368	$	433,343	$	(675,441)	$	2,190,288
Cost of sales		—		675,840		908,308		349,803		(675,441)		1,258,510
Gross margin		—		609,178		239,060		83,540		—		931,778
Operating expenses		2,487		401,100		390,436		62,458		(57,540)		798,941
Operating (loss) income		(2,487)		208,078		(151,376)		21,082		57,540		132,837
Other income and expenses, net		—		—		57,019		521		(57,540)		—
Interest (expense) income, net		(3,178)		(53,956)		3,611		(570)		—		(54,093)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(5,665)		154,045		(90,746)		21,033		—		78,667
(Benefit) provision for income taxes		(2,919)		30,428		(14,997)		2,231		—		14,743
(Loss) earnings before equity in net income of subsidiaries		(2,746)		123,617		(75,749)		18,802		—		63,924
Equity in (loss) earnings of subsidiaries		(45,436)		(143,482)		—		—		188,918		—
Net (loss) earnings from continuing operations		(48,182)		(19,865)		(75,749)		18,802		188,918		63,924
Net (loss) gain from discontinued operations, net of tax		—		(25,571)		2,013		(88,548)		—		(112,106)
Net (loss) earnings	$	(48,182)	$	(45,436)	$	(73,736)	$	(69,746)	$	188,918	$	(48,182)
Comprehensive (loss) income	$	(47,323)	$	(38,071)	$	(73,736)	$	(76,252)	$	188,059	$	(47,323)
Nine Months Ended November 3, 2018
Net sales	$	—	$	1,343,248	$	1,095,988	$	303,913	$	(468,651)	$	2,274,498
Cost of sales		—		664,219		834,458		217,142		(468,651)		1,247,168
Gross margin		—		679,029		261,530		86,771		—		1,027,330
Operating expenses		3,408		405,344		397,110		51,305		(42,093)		815,074
Operating (loss) income		(3,408)		273,685		(135,580)		35,466		42,093		212,256
Other income and expenses, net		—		—		42,093		—		(42,093)		—
Interest (expense) income, net		(2,749)		(66,141)		6,115		1,587		—		(61,188)
Loss on extinguishment of debt, net		—		(30,253)		—		—		—		(30,253)
(Loss) earnings before income taxes		(6,157)		177,291		(87,372)		37,053		—		120,815
(Benefit) provision for income taxes		(1,624)		37,882		(17,075)		6,835		—		26,018
(Loss) earnings before equity in net income of subsidiaries		(4,533)		139,409		(70,297)		30,218		—		94,797
Equity in earnings (loss) of subsidiaries		81,555		(57,854)		—		—		(23,701)		—
Net earnings (loss) from continuing operations		77,022		81,555		(70,297)		30,218		(23,701)		94,797
Net gain (loss) from discontinued operations, net of tax		—		—		4,247		(22,022)		—		(17,775)
Net earnings (loss)	$	77,022	$	81,555	$	(66,050)	$	8,196	$	(23,701)	$	77,022
Comprehensive income (loss)	$	59,948	$	87,072	$	(66,050)	$	(14,395)	$	(6,627)	$	59,948

Condensed Consolidating Statement of Cash Flows

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 2, 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	$	37,836	$	329,070	$	34,951	$	(284,857)	$	(51,438)	$	65,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(21,879)		(34,687)		(6,842)		—		(63,408)
Proceeds from divestiture of business, net		—		—		—		45,034		—		45,034
Intercompany activities		—		(238,423)		—		(30,953)		269,376		—
Net cash (used in) provided by investing activities		—		(260,302)		(34,687)		7,239		269,376		(18,374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on new term loan		—		(9,370)		—		—		—		(9,370)
Proceeds from asset-based revolving credit facility		—		1,065,000		—		—		—		1,065,000
Payments on asset-based revolving credit facility		—		(1,046,000)		—		—		—		(1,046,000)
Repurchase and retirement of senior notes		—		(54,425)		—		—		—		(54,425)
Intercompany activities		—		(23,870)		—		241,808		(217,938)		—
Cash dividends paid		(27,938)		—		—		—		—		(27,938)
Proceeds from issuance of common stock		1,220		—		—		—		—		1,220
Tax payments related to vested deferred stock units		(1,118)		—		—		—		—		(1,118)
Repurchases of common stock		(10,000)		—		—		—		—		(10,000)
Net cash (used in) provided by financing activities		(37,836)		(68,665)		—		241,808		(217,938)		(82,631)
Effect of exchange rate changes		—		—		—		1,205		—		1,205
Increase (decrease) in cash and cash equivalents		—		103		264		(34,605)		—		(34,238)
Cash and cash equivalents at beginning of period		—		970		1,496		52,965		—		55,431
Cash and cash equivalents at end of period	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 3, 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	$	29,194	$	470,656	$	11,157	$	(205,357)	$	(27,833)	$	277,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(12,962)		(28,853)		(5,112)		—		(46,927)
Proceeds from divestiture of business		—		—		17,755		—		—		17,755
Intercompany activities		—		(228,450)		—		—		228,450		—
Net cash (used in) provided by investing activities		—		(241,412)		(11,098)		(5,112)		228,450		(29,172)
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		—		(6,750)		—		—		—		(6,750)
Proceeds from asset-based revolving credit facility		—		465,500		—		—		—		465,500
Payments on asset-based revolving credit facility		—		(407,000)		—		—		—		(407,000)
Repurchase and retirement of senior notes		—		(199,365)		—		—		—		(199,365)
Deferred financing costs		—		(6,713)		—		—		—		(6,713)
Intercompany activities		—		(27,833)		—		228,450		(200,617)		—
Cash dividends paid		(27,833)		—		—		—		—		(27,833)
Proceeds from issuance of common stock		6,149		—		—		—		—		6,149
Tax payments related to vested deferred stock units		(7,510)		—		—		—		—		(7,510)
Net cash (used in) provided by financing activities		(29,194)		(280,081)		—		228,450		(200,617)		(281,442)
Effect of exchange rate changes		—		—		—		(2,385)		—		(2,385)
(Decrease) increase in cash and cash equivalents		—		(50,837)		59		15,596		—		(35,182)
Cash and cash equivalents at beginning of period		—		51,818		2,180		49,609		—		103,607
Cash and cash equivalents at end of period	$	—	$	981	$	2,239	$	65,205	$	—	$	68,425

XML

Share-Based Compensation Plans

9 Months Ended

Nov. 02, 2019

Share-Based Compensation Plans

Share-Based Compensation Plans

13. Share-Based Compensation Plans

For a discussion of our share-based compensation plans, please see Note 14 in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019.

Non-Vested Deferred Stock Units and Performance Units

The following table summarizes the activity of time-based and performance-based awards (collectively, "DSUs") for the nine months ended November 2, 2019:

			Weighted-Average
	Units		Grant-Date Fair Value
	Time-	Performance-	Time-		Performance-
	Based	Based	Based		Based
Non-Vested at February 2, 2019	939,086	336,906	$	22.60	$	18.59
Granted	162,162	—		5.55		—
Vested(1)	(455,288)	(28,686)		21.88		17.43
Forfeited	(113,937)	(44,459)		22.78		18.44
Non-Vested at November 2, 2019	532,023	263,761	$	17.97	$	18.74

(1) Includes 150,785 shares relinquished for tax payments related to vested DSUs for the nine months ended November 2, 2019.

As of November 2, 2019, we have unrecognized compensation expense related to non-vested DSUs of $7.6 million, which is expected to be recognized over a weighted-average period of 1.1 years.

Stock Options and Stock Appreciation Rights (“SARs”)

The following table summarizes the activity of stock options for the nine months ended November 2, 2019:

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	1,252,072	$	23.64
Granted	3,188,732		7.49
Exercised	—		—
Forfeited	(209,921)		10.52
Expired	(56,584)		25.72
Outstanding at November 2, 2019	4,174,299	$	11.94
Exercisable at November 2, 2019	916,464	$	24.89

During the first quarter of 2019, we granted SARs, which vest ratably over a period of three years, and will be settled in stock. Each vested SAR entitles the holder to the right of the difference between the value of our common stock on the

date of exercise and the common stock price on the date of grant. We use the Black-Scholes option pricing model to estimate the fair value of SARs on the date of grant.

The following table summarizes the activity of SARs for the nine months ended November 2, 2019:

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	—	$	—
Granted	414,476		7.62
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding at November 2, 2019	414,476	$	7.62
Exercisable at November 2, 2019	—	$	—

The weighted-average grant date fair value of the 3,188,732 stock options and 414,476 SARs granted during the nine months ended November 2, 2019 was $2.99 and $3.01 per share, respectively. The following table summarizes the weighted-average assumptions used to fair value the stock options and SARs at the date of grant using the Black-Scholes option model for the nine months ended November 2, 2019:

	For the Nine Months Ended
	November 2,
	2019
Risk-free interest rate	2.36%
Expected lives	5.0 years
Dividend yield(1)	4.17%
Expected volatility	62.53%

(1) Awards granted after announcement of the suspension of our dividend assume a dividend yield of 0%.

As November 2, 2019, we have unrecognized compensation expense related to non-vested stock options and SARs of $9.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Cash Settled Awards

We have granted stock-based awards to certain employees, which vest over a period of three years, and will be settled in cash ("cash settled awards").  The fair value of the cash settled awards at each reporting period is based on the price of our common stock.  The fair value of the cash settled awards will be remeasured at each reporting period until the awards are settled.  Cash settled awards are classified as liabilities in the condensed consolidated balance sheets.  At November 2, 2019, the liability associated with the cash settled awards was $1.6 million and was recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets.

The following table summarizes the activity of cash settled awards, based on their initial grant date values, for the nine months ended November 2, 2019 (in thousands):

	Cash Settled Awards
Non-Vested at February 2, 2019	$	5,072
Granted		4,382
Vested		(2,401)
Forfeited		(683)
Non-Vested at November 2, 2019	$	6,370

As of November 2, 2019, we have unrecognized compensation expense related to non-vested cash settled awards of $2.8 million, which is expected to be recognized over a weighted-average period of 1.6 years.

Share-Based Compensation Expense

Share-based compensation expense, including cash settled awards, recognized for the three and nine months ended November 2, 2019 was $3.2 million and $7.5 million, respectively.  Share-based compensation expense, including cash settled awards, recognized for the three and nine months ended November 3, 2018 was $2.9 million and $14.6 million, respectively, of which $0.7 million, net of the impact of forfeited awards, was related to the retirement of our former Chief Executive Officer.

XML

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
CURRENT ASSETS:
Cash and cash equivalents	$ 21,193	$ 32,671	$ 56,293
Accounts receivable, net	42,056	34,686	34,637
Inventories	778,342	724,086	772,206
Other current assets	60,778	66,823	66,063
Current assets - discontinued operations		171,376	165,358
Total current assets	902,369	1,029,642	1,094,557
PROPERTY AND EQUIPMENT, net	405,000	424,316	416,061
OPERATING LEASE RIGHT-OF-USE ASSETS	908,505
RENTAL PRODUCT, net	92,785	99,770	102,540
GOODWILL	79,392	79,491	79,475
INTANGIBLE ASSETS, net	146,890	153,711	154,144
OTHER ASSETS	5,450	8,489	17,232
NON-CURRENT ASSETS - DISCONTINUED OPERATIONS		25,071	25,531
TOTAL ASSETS	2,540,391	1,820,490	1,889,540
CURRENT LIABILITIES:
Accounts payable	210,165	204,775	218,114
Accrued expenses and other current liabilities	250,706	268,698	290,422
Current portion of operating lease liabilities	184,422
Income taxes payable	9,928	13,478	12,360
Current portion of long-term debt	9,000	11,619	9,000
Current liabilities - discontinued operations		40,025	33,661
Total current liabilities	664,221	538,595	563,557
LONG-TERM DEBT, net	1,111,732	1,153,242	1,167,906
OPERATING LEASE LIABILITIES	754,956
DEFERRED TAXES, net AND OTHER LIABILITIES	73,968	119,545	144,138
NON-CURRENT LIABILITIES - DISCONTINUED OPERATIONS		5,477	4,452
Total liabilities	2,604,877	1,816,859	1,880,053
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY:
Preferred stock
Common stock	507	501	501
Capital in excess of par	513,106	505,157	501,835
Accumulated deficit	(534,979)	(468,048)	(464,993)
Accumulated other comprehensive loss	(33,120)	(33,979)	(27,856)
Treasury stock, at cost	(10,000)
Shareholders' (deficit) equity	(64,486)	3,631	9,487
TOTAL LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY	$ 2,540,391	$ 1,820,490	$ 1,889,540

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) (Parenthetical) - $ / shares	3 Months Ended
	Nov. 02, 2019	Aug. 03, 2019	May 04, 2019	Nov. 03, 2018	Aug. 04, 2018	May 05, 2018
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT)
Cash dividends declared per common share (in dollars per share)		$ 0.18	$ 0.18	$ 0.18	$ 0.18	$ 0.18
Common stock issued (in shares)	116,839	155,210	306,505	183,431	178,647	445,932
Treasury stock reissued (in shares)	2,336,852

XML

Derivative Financial Instruments

9 Months Ended

Nov. 02, 2019

Derivative Financial Instruments

Derivative Financial Instruments

17. Derivative Financial Instruments

Effective February 3, 2019, we adopted ASU 2017-12, Derivatives and Hedging:  Targeted Improvements to Accounting for Hedging Activities.  The adoption of ASU 2017-12 did not have an impact on our financial position, results of operations or cash flows.

In April 2017, we entered into an interest rate swap contract on an initial notional amount of $260.0 million that matures in June 2021 with periodic interest settlements. At November 2, 2019, the notional amount totaled $320.0 million. Under this interest rate swap contract, we receive a floating rate based on 1-month LIBOR and pay a fixed rate of 5.31% (including the applicable margin of 3.25%) on the outstanding notional amount.

In June 2018, we entered into an interest rate swap contract on an initial notional amount of $320.0 million that matures in April 2025 with periodic interest settlements. At November 2, 2019, the notional amount totaled $385.0 million. Under this interest rate swap contract, we receive a floating rate based on 1-month LIBOR and pay a fixed rate of 6.18% (including the applicable margin of 3.25%) on the outstanding notional amount.

We have designated each interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to changes in the LIBOR benchmark rate and the fair value of the swaps is reported as a component of accumulated other comprehensive (loss) income.  For both swaps, changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings.  Over the next 12 months, $7.0 million of the amounts related to the interest rate swaps is expected to be reclassified from accumulated other comprehensive (loss) income into earnings within interest expense.  

Historically, we also utilized derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro.  As a result of the sale of our corporate apparel business, these instruments were cancelled during the third quarter of 2019 and any amounts included in accumulated other comprehensive (loss) income were reclassified to expense and included within loss from discontinued operations.

In addition, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs, specifically related to the Canadian dollar.  As a result, from time to time, we may enter into derivative instruments to hedge this foreign exchange risk.  We have not elected to apply hedge accounting to these derivative instruments. At November 2, 2019, the notional amount of these instruments totaled $6.1 million. Amounts related to these transactions were immaterial to our condensed consolidated financial statements.  

The following table provides details on our derivative instruments recorded in the condensed consolidated balance sheets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2, 2019			November 3, 2018			February 2, 2019
	Balance	Estimated		Balance	Estimated		Balance	Estimated
	Sheet Location	Fair Value		Sheet Location	Fair Value		Sheet Location	Fair Value
Interest rate contracts	Other current assets	$	—	Other current assets	$	2,316	Other current assets	$	1,610
Interest rate contracts	Other assets		—	Other assets		9,559	Other assets		1,355
Foreign exchange contracts	Other current assets		—	Other current assets		6	Other current assets		—
Total assets		$	—		$	11,881		$	2,965
Interest rate contracts	Accrued expenses and other current liabilities	$	6,998	Accrued expenses and other current liabilities	$	797	Accrued expenses and other current liabilities	$	1,625
Interest rate contracts	Deferred taxes, net and other liabilities		25,245	Deferred taxes, net and other liabilities		—	Deferred taxes, net and other liabilities		7,605
Foreign exchange contracts	Accrued expenses and other current liabilities		44	Accrued expenses and other current liabilities		—	Accrued expenses and other current liabilities		77
Total liabilities		$	32,287		$	797		$	9,307

The following table provides details on our derivative instruments recorded in the condensed consolidated statements of (loss) earnings and comprehensive (loss) income for the three and nine months ended in November 2, 2019 and November 3, 2018 (in thousands):

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Three Months Ended					For the Three Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(2,051)	$	4,012	Interest expense	$	556	$	413

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Nine Months Ended					For the Nine Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(20,189)	$	4,797	Interest expense	$	669	$	720

XML

Discontinued Operations (Tables)

9 Months Ended

Nov. 02, 2019

Discontinued Operations

Summary of information attributable to discontinued operations

	November 3,		February 2,
	2018		2019
ASSETS
Cash and cash equivalents	$	12,132	$	22,760
Accounts receivable, net		46,059		38,387
Inventories		102,797		106,340
Other current assets		4,370		3,889
Total current assets		165,358		171,376
Property and equipment, net		14,817		14,856
Other assets		10,714		10,215
Total assets	$	190,889	$	196,447
LIABILITIES
Accounts payable	$	17,844	$	24,204
Accrued expenses and other current liabilities		15,817		15,821
Total current liabilities		33,661		40,025
Other liabilities		4,452		5,477
Total liabilities	$	38,113	$	45,502

The following table provides details of the amounts reflected in loss from discontinued operations, net of tax in the condensed consolidated statements of (loss) earnings for the three and nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales	$	7,376	$	61,006	$	117,444	$	179,643
Cost of sales		5,507		43,765		85,042		130,112
Selling, general and administrative expenses		2,200		13,427		30,049		41,812
Goodwill impairment charge		—		23,991		—		23,991
Loss on sale of corporate apparel business		83,723		—		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—		26,885		—
Loss from discontinued operations before taxes		(110,939)		(20,177)		(107,340)		(16,272)
Income tax expense		6,439		735		4,766		1,503
Loss from discontinued operations, net of tax	$	(117,378)	$	(20,912)	$	(112,106)	$	(17,775)

The cash flows related to discontinued operations have not been segregated, and are included in the condensed consolidated statement of cash flows.  The following table provides selected information on cash flows related to discontinued operations for the nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Nine Months Ended
	November 2, 2019		November 3, 2018
Depreciation and amortization	$	3,102	$	4,382
Capital expenditures		2,677		3,198
Significant non-cash operating and investing items:
Goodwill impairment charge		—		23,991
Loss on divestiture of business		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—
Receivable related to sale of corporate apparel business	$	6,048	$	—

XML

Fair Value Measurements (Tables)

9 Months Ended

Nov. 02, 2019

Fair Value Measurements

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

	Fair Value Measurements at Reporting Date
	Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
November 2, 2019—
Assets:
Derivative financial instruments	$	—	$	—	$	—	$	—
Liabilities:
Derivative financial instruments	$	—	$	32,287	$	—	$	32,287
November 3, 2018—
Assets:
Derivative financial instruments	$	—	$	11,881	$	—	$	11,881
Liabilities:
Derivative financial instruments	$	—	$	797	$	—	$	797
February 2, 2019—
Assets:
Derivative financial instruments	$	—	$	2,965	$	—	$	2,965
Liabilities:
Derivative financial instruments	$	—	$	9,307	$	—	$	9,307

Schedule of fair value and carrying value of long-term debt, including current portion

The table below shows the fair value and carrying value of our long-term debt, including current portion (in thousands):

	November 2, 2019				November 3, 2018				February 2, 2019
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount(1)		Fair Value		Amount(1)		Fair Value		Amount(1)		Fair Value
Term Loan and Senior Notes, including current portion	$	1,053,232	$	809,934	$	1,118,406	$	1,130,202	$	1,116,361	$	1,120,296
(1) The carrying value of the Term Loan and Senior Notes, including current portion is net of deferred financing costs of $2.2 million, $3.5 million and $3.2 million as of November 2, 2019, November 3, 2018 and February 2, 2019, respectively.

XML

Accumulated Other Comprehensive (Loss) Income (Tables)

9 Months Ended

Nov. 02, 2019

Accumulated Other Comprehensive (Loss) Income

Summary of components of accumulated other comprehensive (loss) income

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 2, 2019 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 2, 2019	$	(29,820)	$	(4,314)	$	155	$	(33,979)
Other comprehensive loss before reclassifications		(5,691)		(26,871)		—		(32,562)
Amounts reclassified from accumulated other comprehensive loss		—		(114)		—		(114)
Release of cumulative foreign currency translation adjustment to loss from discontinued operations (see Note 2)		26,885		—		—		26,885
Tax Effect		—		6,650		—		6,650
Net current-period other comprehensive loss		21,194		(20,335)		—		859
BALANCE— November 2, 2019	$	(8,626)	$	(24,649)	$	155	$	(33,120)

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 3, 2018 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 3, 2018	$	(11,116)	$	145	$	189	$	(10,782)
Other comprehensive (loss) income before reclassifications		(26,023)		9,151		—		(16,872)
Amounts reclassified from accumulated other comprehensive income		—		2,487		—		2,487
Tax Effect		—		(2,689)		—		(2,689)
Net current-period other comprehensive (loss) income		(26,023)		8,949		—		(17,074)
BALANCE— November 3, 2018	$	(37,139)	$	9,094	$	189	$	(27,856)

XML

Revenue Recognition (Tables)

9 Months Ended

Nov. 02, 2019

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Schedule of disaggregation of revenue

The following table depicts the disaggregation of revenue by major source (in thousands):

Additional net sales information is as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Men's Wearhouse(1)	$	438,088	$	454,927	$	1,289,364	$	1,347,933
Jos. A. Bank		168,432		169,318		501,383		510,821
K&G		71,859		72,610		242,245		245,535
Moores		51,102		54,886		157,296		167,658
MW Cleaners(2)		—		—		—		2,551
Total net sales	$	729,481	$	751,741	$	2,190,288	$	2,274,498

(1) Consists of Men's Wearhouse, Men's Wearhouse and Tux and Joseph Abboud.

(2) On March 3, 2018, we completed the divestiture of our MW Cleaners business.  Please see Note 3 for additional information.

Schedule of opening and closing balance of contract liabilities

The following table summarizes the opening and closing balances of our contract liabilities (in thousands):

	Balance at		Increase		Balance at
	February 2, 2019		(Decrease)		November 2, 2019
Contract liabilities	$	121,796	$	(3,058)	$	118,738

	Balance at		Increase		Balance at
	February 3, 2018		(Decrease)		November 3, 2018
	As Adjusted
Contract liabilities	$	139,809	$	1,139	$	140,948

Cumulative adjustment upon ASC 606 adoption

Revenue, Initial Application Period Cumulative Effect Transition [Line Items]

Schedule of cumulative effect of changes in adoption of ASU 606

The following table depicts the cumulative effect of the changes made to our February 3, 2018 balance sheet for the adoption of ASC 606 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 3,		Adoption of		February 3,
	2018		ASC 606		2018
Assets:
Accounts receivable, net	$	36,288	$	(303)	$	35,985
Other current assets		77,228		2,753		79,981
Current assets - discontinued operations		182,862		(17,837)		165,025
Liabilities:
Accrued expenses and other current liabilities		246,946		52,673		299,619
Current liabilities - discontinued operations		62,188		(20,295)		41,893
Deferred taxes, net and other liabilities		160,163		(12,555)		147,608
Non-current liabilities - discontinued operations		4,028		614		4,642
Equity:
Accumulated deficit	$	(479,166)	$	(35,824)	$	(514,990)

XML

Debt

9 Months Ended

Nov. 02, 2019

Debt

Debt

5. Debt

In 2014, The Men's Wearhouse entered into a term loan credit agreement that provided for a senior secured term loan in the aggregate principal amount of $1.1 billion (the "Original Term Loan") and a $500.0 million asset-based revolving credit agreement (the "ABL Facility", and together with the Original Term Loan, the "Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People, one of our Canadian subsidiaries, as co-borrowers. Proceeds from the Original Term Loan were reduced by an $11.0 million original issue discount ("OID"), which was presented as a reduction of the outstanding balance on the Original Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the Original Term Loan. In addition, in 2014, The Men's Wearhouse issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the "Senior Notes").

In October 2017, The Men’s Wearhouse amended the ABL Facility in part to increase the principal amount available to $550.0 million and extend the maturity date to October 2022. In April 2018, The Men’s Wearhouse refinanced its Original Term Loan, and in October 2018, amended its term loan to reduce the interest rate margin. See Credit Facilities section below for additional information.

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios.  Should our total leverage ratio and secured leverage ratio exceed certain thresholds specified in the agreements, we would be subject to certain additional restrictions, including limitations on our ability to make significant acquisitions and incur additional indebtedness. As of November 2, 2019, our total leverage ratio is below the maximum specified in the agreements, however, our secured leverage ratio is above the maximum level.  As a result, we are now subject to additional restrictions, primarily related to the size of any incremental term loan facilities being limited to a maximum of $250.0 million. In addition, as a result of the refinancing of our Original Term Loan and amending of our ABL Facility, our ability to pay dividends on our common stock has increased from a maximum of $10.0 million per quarter to a maximum of $15.0 million per quarter.

Credit Facilities

In April 2018, we refinanced our Original Term Loan.  Immediately prior to the refinancing, the Original Term Loan consisted of $593.4 million in aggregate principal amount with an interest rate of LIBOR plus 3.50% (with a floor of 1.0%) and $400.0 million in aggregate principal amount with a fixed rate of 5.0% per annum.  Upon entering into the refinancing, we made a prepayment of $93.4 million on the Original Term Loan using cash on hand.

As a result, we refinanced $900.0 million in aggregate principal amount of term loans then outstanding with a new Term Loan totaling $900.0 million (the “New Term Loan”).  Additionally, we may continue to request additional term loans or incremental equivalent debt borrowings, all of which are uncommitted, in an aggregate amount up to the greater of (1) $250.0 million and (2) an aggregate principal amount such that, on a pro forma basis (giving effect to such borrowings), our senior secured leverage ratio will not exceed 2.5 to 1.0.  As noted above, we are currently limited to a maximum of $250.0 million for such incremental borrowings.

The New Term Loan will amortize in an annual amount equal to 1.0% of the principal amount of the New Term Loan, payable quarterly commencing on May 1, 2018.  Proceeds from the New Term Loan were reduced by a $4.5 million OID, which was presented as a reduction of the outstanding balance on the New Term Loan on the balance sheet and was to be amortized to interest expense over the contractual life of the New Term Loan.  The New Term Loan extends the maturity date of the Original Term Loan from June 18, 2021 until April 9, 2025, subject to a maturity provision that would accelerate the maturity of the New Term Loan to April 1, 2022 if any of the Company’s obligations under its Senior Notes remain outstanding on April 1, 2022.

The New Term Loan bears interest at a rate per annum equal to an applicable margin plus, at the Company’s option, either LIBOR (with a floor of 1.0%) or the base rate (with a floor of 2.0%).  In October 2018, we amended the New Term Loan resulting in a reduction in the interest rate margin of 25 basis points.  As a result of the amendment, the margins for borrowings under the New Term Loan are 3.25% for LIBOR and 2.25% for the base rate and the OID was eliminated.  In connection with the October 2018 amendment of the New Term Loan, we incurred deferred financing costs of $1.1 million, which will be amortized over the life of the New Term Loan using the interest method.  The maturity date for the New Term Loan remains April 9, 2025, and all other material provisions of the New Term Loan remain unchanged.  For the three and nine months ended November 3, 2018, we recorded a loss on extinguishment of debt totaling $9.4 million and $21.3 million, respectively, consisting of the elimination of unamortized deferred financing costs and OID related to the Original Term Loan and refinancing of the New Term Loan.

The interest rate on the New Term Loan is based on 1-month LIBOR, which was 1.77% at November 2, 2019, plus the applicable margin of 3.25%, resulting in a total interest rate of 5.02%.  We have two interest rate swap agreements where the variable rates due under the New Term Loan have been exchanged for a fixed rate. At November 2, 2019, the total

notional amount under these interest rate swaps is $705.0 million.  Please see Note 17 for additional information on our interest rate swaps.

As a result of our interest rate swaps, 80% of the variable interest rate under the New Term Loan has been converted to a fixed rate and, as of November 2, 2019, the New Term Loan had a weighted average interest rate of 5.63%.

In October 2017, we amended our ABL Facility, which now provides for a senior secured revolving credit facility of $550.0 million, with possible future increases to $650.0 million under an expansion feature, that matures in October 2022, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices:  (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate ("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the New York Federal Reserve Bank (“NYFRB”) rate plus 0.5% or adjusted LIBOR for a one-month interest period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 1.75%.  The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.25% to 1.75%, and a fee on unused commitments of 0.25%.  As of November 2, 2019, $67.5 million in borrowings were outstanding under the ABL Facility at a weighted average interest rate of approximately 3.5%. During the nine months ended November 2, 2019, the maximum borrowing outstanding under the ABL Facility was $100.0 million.

We utilize letters of credit primarily as collateral for workers compensation claims.  At November 2, 2019, letters of credit totaling approximately $26.7 million were issued and outstanding. Borrowings available under the ABL Facility as of November 2, 2019 were $455.8 million.

The obligations under the Credit Facilities are secured on a senior basis by a first priority lien on substantially all of the assets of the Company, The Men’s Wearhouse and its U.S. subsidiaries and, in the case of the ABL Facility, Moores The Suit People. The Credit Facilities and the related guarantees and security interests granted thereunder are senior secured obligations of, and will rank equally with all present and future senior indebtedness of the Company, the co-borrowers and the respective guarantors.  

Senior Notes

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes and the related guarantees are senior unsecured obligations of the Company and the guarantors, respectively, and will rank equally with all of the Company's and each guarantor's present and future senior indebtedness. The Senior Notes will mature in July 2022.  Interest on the Senior Notes is payable on January 1 and July 1 of each year.

We may redeem some or all of the Senior Notes at any time on or after July 1, 2017 at the redemption prices set forth in the indenture governing the Senior Notes.  Upon the occurrence of certain specific changes of control, we may be required to offer to purchase the Senior Notes at 101% of their aggregate principal amount plus accrued and unpaid interest thereon to the date of purchase.

During the third quarter of 2019, we repurchased and retired $54.8 million in face value of Senior Notes through open market repurchases. As a result, we recorded a net loss on extinguishment totaling $0.1 million, consisting of the elimination of unamortized deferred financing costs totaling $0.5 million partially offset by a $0.4 million gain upon repurchase, which is included as a separate line in the condensed consolidated statement of (loss) earnings.  

For the nine months ended November 3, 2018, as a result of the partial redemption of $175.0 million in face value of our Senior Notes in the second quarter of 2018 as well as the repurchase and retirement of $17.6 million in face value of Senior Notes through open market transactions in the first quarter of 2018, we recorded a net loss on extinguishment totaling $8.9 million, which is included as a separate line in the condensed consolidated statement of (loss) earnings.  The net loss on extinguishment reflects a $6.7 million loss upon repurchase and the elimination of unamortized deferred financing costs totaling $2.2 million related to the Senior Notes.

Long-Term Debt

The following table provides details on our long-term debt as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Term Loan	$	881,630	$	893,250	$	891,000
Senior Notes		173,816		228,607		228,607
ABL Facility		67,500		58,500		48,500
Less: Deferred financing costs related to the Term Loan and Senior Notes		(2,214)		(3,451)		(3,246)
Total long-term debt, net		1,120,732		1,176,906		1,164,861
Current portion of long-term debt		(9,000)		(9,000)		(11,619)
Total long-term debt, net of current portion	$	1,111,732	$	1,167,906	$	1,153,242

XML

Income Taxes

9 Months Ended

Nov. 02, 2019

Income Taxes

Income Taxes

9. Income Taxes

Our effective income tax rate from continuing operations for the third quarter of 2019 was 0.9% compared to 26.5% for the third quarter of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.9 million of valuation allowances in the third quarter of 2019.

Our effective income tax rate from continuing operations for the first nine months of 2019 was 18.7% compared to 21.5% for the first nine months of 2018.  The decrease in the effective income tax rate from continuing operations is primarily due to the net release of $5.4 million of valuation allowances in the first nine months of 2019.

Additionally, we are currently undergoing several tax audits; however, we currently do not believe these audits will result in any material charge to tax expense in the future.

XML

Fair Value Measurements - Financial Instruments (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Fair Value of Financial Instruments
Carrying Amount	$ 1,120,732	$ 1,164,861	$ 1,176,906
Deferred financing costs	2,200	3,200	3,500
Reported Value Measurement [Member] | Term Loan and Senior Notes | Level 1 and Level 2
Fair Value of Financial Instruments
Carrying Amount	1,053,232	1,116,361	1,118,406
Estimate of Fair Value Measurement [Member] | Term Loan and Senior Notes | Level 1 and Level 2
Fair Value of Financial Instruments
Estimated Fair Value	$ 809,934	$ 1,120,296	$ 1,130,202

XML

Goodwill and Other Intangible Assets - Goodwill (Details) - USD ($)	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Changes in the net carrying amount of goodwill
Balance at the beginning of the period			$ 79,491,000
Goodwill impairment charge	$ 0	$ 23,991,000		$ 23,991,000
Translation adjustment			(99,000)
Balance at the end of the period	$ 79,392,000	$ 79,475,000	$ 79,392,000	$ 79,475,000

XML

CONDENSED CONSOLIDATING INFORMATION - Earnings (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Condensed Consolidating Statement of Earnings (Loss)
Total net sales	$ 729,481	$ 751,741	$ 2,190,288	$ 2,274,498
Total cost of sales	421,453	406,247	1,258,510	1,247,168
Total gross margin	308,028	345,494	931,778	1,027,330
Operating expenses	262,484	270,216	798,941	815,074
Operating income	45,544	75,278	132,837	212,256
Interest (expense) income, net	(17,425)	(18,550)	(54,093)	(61,188)
Loss on extinguishment of debt, net	(77)	(9,420)	(77)	(30,253)
Earnings before income taxes	28,042	47,308	78,667	120,815
(Benefit) provision for income taxes	254	12,521	14,743	26,018
(Loss) earnings before equity in net income of subsidiaries	27,788	34,787	63,924	94,797
Net earnings from continuing operations	27,788	34,787	63,924	94,797
Loss from discontinued operations, net of tax	(117,378)	(20,912)	(112,106)	(17,775)
Net (loss) earnings	(89,590)	13,875	(48,182)	77,022
Comprehensive income (loss)	(62,138)	14,799	(47,323)	59,948
Eliminations
Condensed Consolidating Statement of Earnings (Loss)
Total net sales	(163,214)	(160,181)	(675,441)	(468,651)
Total cost of sales	(163,214)	(160,181)	(675,441)	(468,651)
Operating expenses	(14,358)	(14,942)	(57,540)	(42,093)
Operating income	14,358	14,942	57,540	42,093
Other income and expenses, net	(14,358)	(14,942)	(57,540)	(42,093)
Equity in earnings (loss) of subsidiaries	209,178	20,291	188,918	(23,701)
Net earnings from continuing operations	209,178	20,291	188,918	(23,701)
Net (loss) earnings	209,178	20,291	188,918	(23,701)
Comprehensive income (loss)	175,327	19,367	188,059	(6,627)
Tailored Brands, Inc. | Reportable Legal Entities
Condensed Consolidating Statement of Earnings (Loss)
Operating expenses	991	1,443	2,487	3,408
Operating income	(991)	(1,443)	(2,487)	(3,408)
Interest (expense) income, net	(939)	(1,062)	(3,178)	(2,749)
Earnings before income taxes	(1,930)	(2,505)	(5,665)	(6,157)
(Benefit) provision for income taxes	(45)	(505)	(2,919)	(1,624)
(Loss) earnings before equity in net income of subsidiaries	(1,885)	(2,000)	(2,746)	(4,533)
Equity in earnings (loss) of subsidiaries	(87,705)	15,875	(45,436)	81,555
Net earnings from continuing operations	(89,590)	13,875	(48,182)	77,022
Net (loss) earnings	(89,590)	13,875	(48,182)	77,022
Comprehensive income (loss)	(62,138)	14,799	(47,323)	59,948
The Men's Wearhouse, Inc. | Reportable Legal Entities
Condensed Consolidating Statement of Earnings (Loss)
Total net sales	436,671	453,316	1,285,018	1,343,248
Total cost of sales	227,407	219,036	675,840	664,219
Total gross margin	209,264	234,280	609,178	679,029
Operating expenses	131,183	135,498	401,100	405,344
Operating income	78,081	98,782	208,078	273,685
Interest (expense) income, net	(17,380)	(20,017)	(53,956)	(66,141)
Loss on extinguishment of debt, net	(77)	(9,420)	(77)	(30,253)
Earnings before income taxes	60,624	69,345	154,045	177,291
(Benefit) provision for income taxes	548	17,304	30,428	37,882
(Loss) earnings before equity in net income of subsidiaries	60,076	52,041	123,617	139,409
Equity in earnings (loss) of subsidiaries	(121,473)	(36,166)	(143,482)	(57,854)
Net earnings from continuing operations	(61,397)	15,875	(19,865)	81,555
Loss from discontinued operations, net of tax	(26,308)		(25,571)
Net (loss) earnings	(87,705)	15,875	(45,436)	81,555
Comprehensive income (loss)	(64,403)	20,300	(38,071)	87,072
Guarantor Subsidiaries | Reportable Legal Entities
Condensed Consolidating Statement of Earnings (Loss)
Total net sales	386,754	355,710	1,147,368	1,095,988
Total cost of sales	309,577	273,793	908,308	834,458
Total gross margin	77,177	81,917	239,060	261,530
Operating expenses	129,975	131,431	390,436	397,110
Operating income	(52,798)	(49,514)	(151,376)	(135,580)
Other income and expenses, net	14,984	14,942	57,019	42,093
Interest (expense) income, net	1,036	1,970	3,611	6,115
Earnings before income taxes	(36,778)	(32,602)	(90,746)	(87,372)
(Benefit) provision for income taxes	(289)	(6,848)	(14,997)	(17,075)
(Loss) earnings before equity in net income of subsidiaries	(36,489)	(25,754)	(75,749)	(70,297)
Net earnings from continuing operations	(36,489)	(25,754)	(75,749)	(70,297)
Loss from discontinued operations, net of tax	(6,166)	176	2,013	4,247
Net (loss) earnings	(42,655)	(25,578)	(73,736)	(66,050)
Comprehensive income (loss)	(31,136)	(25,578)	(73,736)	(66,050)
Non-Guarantor Subsidiaries | Reportable Legal Entities
Condensed Consolidating Statement of Earnings (Loss)
Total net sales	69,270	102,896	433,343	303,913
Total cost of sales	47,683	73,599	349,803	217,142
Total gross margin	21,587	29,297	83,540	86,771
Operating expenses	14,693	16,786	62,458	51,305
Operating income	6,894	12,511	21,082	35,466
Other income and expenses, net	(626)		521
Interest (expense) income, net	(142)	559	(570)	1,587
Earnings before income taxes	6,126	13,070	21,033	37,053
(Benefit) provision for income taxes	40	2,570	2,231	6,835
(Loss) earnings before equity in net income of subsidiaries	6,086	10,500	18,802	30,218
Net earnings from continuing operations	6,086	10,500	18,802	30,218
Loss from discontinued operations, net of tax	(84,904)	(21,088)	(88,548)	(22,022)
Net (loss) earnings	(78,818)	(10,588)	(69,746)	8,196
Comprehensive income (loss)	$ (79,788)	$ (14,089)	$ (76,252)	$ (14,395)

XML

Debt - Summary, Narrative (Details) - USD ($) $ in Millions		21 Months Ended
	Feb. 03, 2018	Nov. 02, 2019	Apr. 30, 2018	Oct. 28, 2017	Jan. 31, 2015
Debt
Maximum quarterly dividends on common stock per debt covenants	$ 10.0	$ 15.0
Senior Notes
Debt
Aggregate principal amount of debt issued					$ 600.0
Interest rate (as a percent)					7.00%
Incremental Term Loan Facilities
Debt
Credit facility		$ 250.0
2014 Credit Facilities | Original Term Loan
Debt
Aggregate principal amount of debt issued			$ 900.0		$ 1,100.0
Unamortized OID					11.0
2014 Credit Facilities | ABL Facility
Debt
Credit facility				$ 550.0	$ 500.0

XML

Revenue Recognition - Adoption of ASC 606 (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018	Feb. 03, 2018
Assets
Accounts receivable, net	$ 42,056	$ 34,686	$ 34,637
Other current assets	60,778	66,823	66,063
Current assets - discontinued operations		171,376	165,358
Liabilities
Accrued expenses and other current liabilities	250,706	268,698	290,422
Current liabilities - discontinued operations		40,025	33,661
Deferred taxes, net and other liabilities	73,968	119,545	144,138
Non-current liabilities - discontinued operations		5,477	4,452
Equity:
Accumulated deficit	$ (534,979)	$ (468,048)	$ (464,993)
Cumulative adjustment upon ASC 606 adoption
Assets
Accounts receivable, net				$ 35,985
Other current assets				79,981
Current assets - discontinued operations				165,025
Liabilities
Accrued expenses and other current liabilities				299,619
Current liabilities - discontinued operations				41,893
Deferred taxes, net and other liabilities				147,608
Non-current liabilities - discontinued operations				4,642
Equity:
Accumulated deficit				(514,990)
Impact of Adoption of ASU 606 | Cumulative adjustment upon ASC 606 adoption
Assets
Accounts receivable, net				(303)
Other current assets				2,753
Current assets - discontinued operations				(17,837)
Liabilities
Accrued expenses and other current liabilities				52,673
Current liabilities - discontinued operations				(20,295)
Deferred taxes, net and other liabilities				(12,555)
Non-current liabilities - discontinued operations				614
Equity:
Accumulated deficit				(35,824)
Reported Balance | Cumulative adjustment upon ASC 606 adoption
Assets
Accounts receivable, net				36,288
Other current assets				77,228
Current assets - discontinued operations				182,862
Liabilities
Accrued expenses and other current liabilities				246,946
Current liabilities - discontinued operations				62,188
Deferred taxes, net and other liabilities				160,163
Non-current liabilities - discontinued operations				4,028
Equity:
Accumulated deficit				$ (479,166)

XML

Revenue Recognition - Contract Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Revenue Recognition
Beginning Balance			$ 121,796	$ 139,809
Increase (Decrease)			(3,058)	1,139
Ending Balance	$ 118,738	$ 140,948	118,738	140,948
Revenue recognized included in contract liability balance	$ 8,200	$ 10,100	$ 75,600	$ 75,000

XML

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities (Tables)

9 Months Ended

Nov. 02, 2019

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

Other current assets

The following table provides details on our other current assets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Prepaid expenses	$	42,175	$	53,176	$	53,455
Tax receivable		5,111		457		—
Assets held for sale		4,949		—		—
Other		8,543		12,430		13,368
Total other current assets	$	60,778	$	66,063	$	66,823

Accrued expenses and other current liabilities

The following table provides details on our accrued expenses and other current liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Accrued salary, bonus, sabbatical, vacation and other benefits	$	52,247	$	67,360	$	78,297
Loyalty program liabilities		46,781		64,944		44,434
Customer deposits, prepayments and refunds payable		38,248		42,520		38,436
Sales, value added, payroll, property and other taxes payable		30,000		27,094		20,930
Unredeemed gift cards		24,389		26,279		32,178
Accrued workers compensation and medical costs		22,442		25,601		23,893
Unrealized loss on interest rate swaps		6,998		797		1,625
Accrued interest		4,557		6,055		1,828
Accrued royalties		3,651		3,287		1,286
Accrued dividends		889		10,320		10,480
Other		20,504		16,165		15,311
Total accrued expenses and other current liabilities	$	250,706	$	290,422	$	268,698

Deferred taxes, net and other liabilities

The following table provides details on our deferred taxes, net and other liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Deferred and other income tax liabilities, net	$	45,223	$	78,930	$	48,199
Unrealized loss on interest rate swaps		25,245		—		7,605
Deferred rent and landlord incentives		—		58,297		57,351
Unfavorable lease liabilities		—		2,085		1,797
Other		3,500		4,826		4,593
Total deferred taxes, net and other liabilities	$	73,968	$	144,138	$	119,545

XML

Debt (Tables)

9 Months Ended

Nov. 02, 2019

Debt

Schedule of long-term debt

The following table provides details on our long-term debt as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Term Loan	$	881,630	$	893,250	$	891,000
Senior Notes		173,816		228,607		228,607
ABL Facility		67,500		58,500		48,500
Less: Deferred financing costs related to the Term Loan and Senior Notes		(2,214)		(3,451)		(3,246)
Total long-term debt, net		1,120,732		1,176,906		1,164,861
Current portion of long-term debt		(9,000)		(9,000)		(11,619)
Total long-term debt, net of current portion	$	1,111,732	$	1,167,906	$	1,153,242

XML

Goodwill and Other Intangible Assets (Tables)

9 Months Ended

Nov. 02, 2019

GOODWILL AND INTANGIBLE ASSETS

Changes in the net carrying amount of goodwill

Changes in the net carrying amount of goodwill for the nine months ended November 2, 2019 are as follows (in thousands):

	Total
Balance at February 2, 2019	$	79,491
Translation adjustment		(99)
Balance at November 2, 2019	$	79,392

Gross carrying amount and accumulated amortization of identifiable intangible assets

The gross carrying amount and accumulated amortization of our identifiable intangible assets are as follows (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Amortizable intangible assets:
Carrying amount:
Trademarks, tradenames and franchise agreements	$	13,506	$	13,506	$	13,506
Favorable leases		—		12,695		11,844
Total carrying amount		13,506		26,201		25,350
Accumulated amortization:
Trademarks, tradenames and franchise agreements		(9,816)		(9,628)		(9,677)
Favorable leases		—		(5,629)		(5,162)
Total accumulated amortization		(9,816)		(15,257)		(14,839)
Total amortizable intangible assets, net		3,690		10,944		10,511
Indefinite-lived intangible assets:
Trademarks and tradename		143,200		143,200		143,200
Total intangible assets, net	$	146,890	$	154,144	$	153,711

XML

Revenue Recognition

9 Months Ended

Nov. 02, 2019

Revenue Recognition

Revenue Recognition

6. Revenue Recognition

Adoption of ASC 606

Effective February 4, 2018, we adopted ASC 606, Revenue from Contracts with Customers and all related amendments (“ASC 606”), to all contracts using the modified retrospective approach.  We recognized the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of retained earnings.  The adoption had no impact to our previously reported results of operations or cash flows.  

The following table depicts the cumulative effect of the changes made to our February 3, 2018 balance sheet for the adoption of ASC 606 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 3,		Adoption of		February 3,
	2018		ASC 606		2018
Assets:
Accounts receivable, net	$	36,288	$	(303)	$	35,985
Other current assets		77,228		2,753		79,981
Current assets - discontinued operations		182,862		(17,837)		165,025
Liabilities:
Accrued expenses and other current liabilities		246,946		52,673		299,619
Current liabilities - discontinued operations		62,188		(20,295)		41,893
Deferred taxes, net and other liabilities		160,163		(12,555)		147,608
Non-current liabilities - discontinued operations		4,028		614		4,642
Equity:
Accumulated deficit	$	(479,166)	$	(35,824)	$	(514,990)

The adoption of ASC 606 primarily impacted the timing of revenue recognition related to our customer loyalty program, gift cards and e-commerce sales, as discussed in more detail below.  In addition, for our corporate apparel business which has been reclassified to discontinued operations, certain deferred revenue balances along with related inventory amounts were eliminated as part of the cumulative adjustment to opening retained earnings.  Also, for estimated sales returns, we recognize allowances for estimated sales returns on a gross basis rather than a net basis on the condensed consolidated balance sheets.

Revenues

The following table depicts the disaggregation of revenue by major source (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Men's tailored clothing product	$	326,036	$	342,972	$	1,001,467	$	1,055,213
Men's non-tailored clothing product		229,514		227,069		687,257		691,780
Women's clothing product		15,029		15,109		51,207		52,138
Other (1)		3,275		3,297		9,602		8,748
Total retail clothing product		573,854		588,447		1,749,533		1,807,879
Rental services		120,021		124,697		334,090		350,019
Alteration services		35,606		38,597		106,665		114,049
Retail dry cleaning services (2)		—		—		—		2,551
Total alteration and other services		35,606		38,597		106,665		116,600
Total net sales	$	729,481	$	751,741	$	2,190,288	$	2,274,498

(1) Other consists of franchise and licensing revenues and gift card breakage.  Franchise revenues are generally recognized at a point in time while licensing revenues consist primarily of minimum guaranteed royalty amounts recognized over an elapsed time period.

(2) On March 3, 2018, we completed the divestiture of our MW Cleaners business.  Please see Note 3 for additional information.

Additional net sales information is as follows (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales:
Men's Wearhouse(1)	$	438,088	$	454,927	$	1,289,364	$	1,347,933
Jos. A. Bank		168,432		169,318		501,383		510,821
K&G		71,859		72,610		242,245		245,535
Moores		51,102		54,886		157,296		167,658
MW Cleaners(2)		—		—		—		2,551
Total net sales	$	729,481	$	751,741	$	2,190,288	$	2,274,498

(1) Consists of Men's Wearhouse, Men's Wearhouse and Tux and Joseph Abboud.

(2) On March 3, 2018, we completed the divestiture of our MW Cleaners business.  Please see Note 3 for additional information.

For retail clothing product revenue, we transfer control and recognize revenue at a point in time, upon sale or shipment of the merchandise, net of actual sales returns and an accrual for estimated sales returns.  For rental and alteration services, we transfer control and recognize revenue at a point in time, upon receipt by the customer.  Revenue is measured as the amount of consideration we expect to receive in exchange for transferring goods or providing services.  Sales, use and value added taxes we collect from our customers and are remitted to governmental agencies are excluded from revenue.    

Loyalty Program

We maintain a customer loyalty program for our Men’s Wearhouse, Men’s Wearhouse and Tux, Jos. A. Bank and Moores brands in which customers receive points for purchases. Points are generally equivalent to dollars spent on a one-to-one basis, excluding any sales tax dollars, and, historically, did not expire.  During the fourth quarter of 2018, we finalized our decision to implement an expiration policy for loyalty program points beginning in the second quarter of fiscal 2019, which was completed.  Upon reaching 500 points, customers are issued a $50 rewards certificate which they may redeem for purchases at our stores or online. Generally, reward certificates earned must be redeemed no later than six months from the date of issuance.  We believe our loyalty programs represents a customer option that is a material right and, accordingly, is a performance obligation in the contract with our customer.  Therefore, we record our obligation for future point redemptions using a deferred revenue model.  

When loyalty program members earn points, we recognize a portion of the transaction as revenue for merchandise product sales or services and defer a portion of the transaction representing the value of the related points. The value of the points is recorded in deferred revenue on our condensed consolidated balance sheet and recognized into revenue when the points are converted into a rewards certificate and the certificate is used.

We account for points earned and certificates issued that will not be redeemed by loyalty members, which we refer to as breakage. We review our breakage estimates at least annually based upon the latest available information regarding redemption and expiration patterns.

Our estimate of the expected usage of points and certificates requires significant management judgment. Current and future changes to our assumptions or to loyalty program rules may result in material changes to the deferred revenue balance as well as recognized revenues from the loyalty programs.  

Gift Card Breakage

Proceeds from the sale of gift cards are recorded as a liability and are recognized as net sales from products and services when the cards are redeemed.  Our gift cards do not have expiration dates.  In addition, we recognize revenue for gift cards for which the likelihood of redemption is deemed to be remote and for which there is no legal obligation to remit the value of such unredeemed gift cards to any relevant jurisdictions (commonly referred to as gift card breakage) under the redemption recognition method. This method records gift card breakage as revenue on a proportional basis over the redemption period based on our historical gift card breakage rate. We review our gift card breakage estimate based on our historical redemption patterns.  

Sales Returns

Revenue from merchandise product sales is reported net of sales returns, which includes an estimate of future returns based on historical return rates, with a corresponding reduction to cost of sales. Our refund liability for sales returns was $5.8 million at November 2, 2019, which is included in accrued and other current liabilities and represents the expected value of the refund that will be due to our customers.  We also have a corresponding asset included in other current assets that represents the right to recover products from customers associated with sales returns of $2.8 million at November 2, 2019.  

Contract Liabilities

The following table summarizes the opening and closing balances of our contract liabilities (in thousands):

	Balance at		Increase		Balance at
	February 2, 2019		(Decrease)		November 2, 2019
Contract liabilities	$	121,796	$	(3,058)	$	118,738

	Balance at		Increase		Balance at
	February 3, 2018		(Decrease)		November 3, 2018
	As Adjusted
Contract liabilities	$	139,809	$	1,139	$	140,948

Contract liabilities include cash payments received from customers in advance of our performance, including amounts which are refundable.  These liabilities primarily consist of customer deposits related to rental product or custom clothing transactions since we typically receive payment from our customers prior to our performance and deferred revenue related to our loyalty programs and unredeemed gift cards.  These amounts are primarily included as “Customer deposits, prepayments and refunds payable,” “Loyalty program liabilities” and “Unredeemed gift cards,” respectively, within the accrued expenses and other current liabilities line item on our condensed consolidated balance sheet.  Please see Note 10 for additional information on our accrued expenses and other current liabilities.

The amount of revenue recognized for the three months and nine months ended November 2, 2019 that was included in the respective opening contract liability balance was $8.2 million and $75.6 million, respectively.  The amount of revenue recognized for the three and nine months ended November 3, 2018 that was included in the opening contract liability balance was $10.1 million and $75.0 million, respectively. This revenue primarily consists of recognition of deposits for completed transactions as well as redeemed certificates related to our loyalty program and gift card redemptions.

XML

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

9 Months Ended

Nov. 02, 2019

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

10. Other Current Assets, Accrued Expenses and Other Current Liabilities and Deferred Taxes, net and Other Liabilities

The following table provides details on our other current assets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Prepaid expenses	$	42,175	$	53,176	$	53,455
Tax receivable		5,111		457		—
Assets held for sale		4,949		—		—
Other		8,543		12,430		13,368
Total other current assets	$	60,778	$	66,063	$	66,823

The decrease in prepaid expenses as of November 2, 2019, is primarily due to the impact on prepaid rent resulting from the adoption of Accounting Standards Codification 842, Leases (“ASC 842”), effective February 3, 2019.  Please see Note 14 for additional information.

During the third quarter of 2019, we reclassified property and equipment, primarily related to recently closed distribution centers, as assets held for sale.  Assets held for sale are measured at the lower of their carrying amount or fair value less costs to sell.  As we believe the fair value less costs to sell of these assets exceeds their carrying amount, no adjustment to their carrying value was recorded in the third quarter of 2019.  

The following table provides details on our accrued expenses and other current liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Accrued salary, bonus, sabbatical, vacation and other benefits	$	52,247	$	67,360	$	78,297
Loyalty program liabilities		46,781		64,944		44,434
Customer deposits, prepayments and refunds payable		38,248		42,520		38,436
Sales, value added, payroll, property and other taxes payable		30,000		27,094		20,930
Unredeemed gift cards		24,389		26,279		32,178
Accrued workers compensation and medical costs		22,442		25,601		23,893
Unrealized loss on interest rate swaps		6,998		797		1,625
Accrued interest		4,557		6,055		1,828
Accrued royalties		3,651		3,287		1,286
Accrued dividends		889		10,320		10,480
Other		20,504		16,165		15,311
Total accrued expenses and other current liabilities	$	250,706	$	290,422	$	268,698

The following table provides details on our deferred taxes, net and other liabilities as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Deferred and other income tax liabilities, net	$	45,223	$	78,930	$	48,199
Unrealized loss on interest rate swaps		25,245		—		7,605
Deferred rent and landlord incentives		—		58,297		57,351
Unfavorable lease liabilities		—		2,085		1,797
Other		3,500		4,826		4,593
Total deferred taxes, net and other liabilities	$	73,968	$	144,138	$	119,545

The elimination of deferred rent and landlord incentives and unfavorable lease liabilities is due to the adoption of ASC 842, effective February 3, 2019. Please see Note 14 for additional information.

XML

Fair Value Measurements - Recurring and Non-Recurring (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018	Feb. 02, 2019
Liabilities:
Asset impairment charges			$ 1,185	$ 504
Recurring
Assets:
Derivative financial instruments		$ 11,881		11,881	$ 2,965
Liabilities:
Derivative financial instruments	$ 32,287	797	32,287	797	9,307
Recurring | Level 2
Assets:
Derivative financial instruments		11,881		11,881	2,965
Liabilities:
Derivative financial instruments	32,287	797	32,287	797	$ 9,307
Selling, general and administrative expenses
Liabilities:
Asset impairment charges	$ 900	$ 200	1,200	500
Cost of sales
Liabilities:
Asset impairment charges			$ 2,900	$ 4,000

XML

Leases - Undiscounted Annual Future Minimum Lease Payments and Minimum Future Rental Payments (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019
Leases
Year 1	$ 229,077
Year 2	239,009
Year 3	201,540
Year 4	155,022
Year 5	111,953
Thereafter	152,806
Total lease payments	1,089,407
Less: Interest	(150,029)
Present value of lease liabilities	$ 939,378
2019		$ 236,539
2020		206,652
2021		173,294
2022		131,800
2023		86,127
Thereafter		140,256
Total lease payments		$ 974,668

XML

CONDENSED CONSOLIDATING INFORMATION - Balance Sheet (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018	Jan. 31, 2015
CURRENT ASSETS:
Cash and cash equivalents	$ 21,193	$ 32,671	$ 56,293
Accounts receivable, net	42,056	34,686	34,637
Inventories	778,342	724,086	772,206
Other current assets	60,778	66,823	66,063
Current assets - discontinued operations		171,376	165,358
Total current assets	902,369	1,029,642	1,094,557
Property and equipment, net	405,000	424,316	416,061
Operating lease right-of-use assets	908,505
Rental product, net	92,785	99,770	102,540
Goodwill	79,392	79,491	79,475
Intangible assets, net	146,890	153,711	154,144
Other assets	5,450	8,489	17,232
NON-CURRENT ASSETS - DISCONTINUED OPERATIONS		25,071	25,531
Total assets	2,540,391	1,820,490	1,889,540
CURRENT LIABILITIES:
Accounts payable	210,165	204,775	218,114
Accrued expenses and other current liabilities	260,634	282,176	302,782
Current portion of operating lease liabilities	184,422
Current liabilities - discontinued operations		40,025	33,661
Current portion of long-term debt	9,000	11,619	9,000
Total current liabilities	664,221	538,595	563,557
Long-term debt, net	1,111,732	1,153,242	1,167,906
Operating lease liabilities	754,956
Deferred taxes, net and other liabilities	73,968	119,545	144,138
Non-current liabilities - discontinued operations		5,477	4,452
Shareholders' (deficit) equity	(64,486)	3,631	9,487
Total liabilities and shareholders' (deficit) equity	2,540,391	1,820,490	1,889,540
Eliminations
CURRENT ASSETS:
Accounts receivable, net	(214,965)	(297,969)	(268,673)
Other current assets		(5,270)
Total current assets	(214,965)	(303,239)	(268,673)
Investments in subsidiaries	(1,215,127)	(1,394,062)	(1,501,862)
Other assets	(3,900)	(4,800)	(80,235)
Total assets	(1,433,992)	(1,702,101)	(1,850,770)
CURRENT LIABILITIES:
Accounts payable	(214,965)	(297,969)	(268,673)
Accrued expenses and other current liabilities		(5,270)
Total current liabilities	(214,965)	(303,239)	(268,673)
Deferred taxes, net and other liabilities	(3,900)	(4,800)	(80,235)
Shareholders' (deficit) equity	(1,215,127)	(1,394,062)	(1,501,862)
Total liabilities and shareholders' (deficit) equity	(1,433,992)	(1,702,101)	(1,850,770)
Senior Notes
Condensed Consolidating Balance Sheet
Aggregate principal amount of debt issued				$ 600,000
Tailored Brands, Inc. | Reportable Legal Entities
CURRENT ASSETS:
Other current assets	9,287		220
Total current assets	9,287		220
Investments in subsidiaries	115,082	160,057	157,114
Total assets	124,369	160,057	157,334
CURRENT LIABILITIES:
Accounts payable	182,242	142,701	134,700
Accrued expenses and other current liabilities	2,671	6,697	7,952
Total current liabilities	184,913	149,398	142,652
Deferred taxes, net and other liabilities	3,942	7,028	5,195
Shareholders' (deficit) equity	(64,486)	3,631	9,487
Total liabilities and shareholders' (deficit) equity	124,369	160,057	157,334
The Men's Wearhouse, Inc. | Reportable Legal Entities
CURRENT ASSETS:
Cash and cash equivalents	1,073	970	981
Accounts receivable, net	30,148	23,954	25,010
Inventories	136,033	149,923	149,157
Other current assets	4,545	30,699	26,657
Total current assets	171,799	205,546	201,805
Property and equipment, net	180,273	194,290	190,905
Operating lease right-of-use assets	474,788
Rental product, net	76,463	81,809	83,554
Goodwill	6,160	6,160	6,160
Investments in subsidiaries	1,100,045	1,234,005	1,344,748
Other assets	4,958	7,590	16,046
Total assets	2,014,486	1,729,400	1,843,218
CURRENT LIABILITIES:
Accounts payable	81,886	201,799	188,583
Accrued expenses and other current liabilities	168,824	146,683	170,406
Current portion of operating lease liabilities	97,917
Current portion of long-term debt	9,000	11,619	9,000
Total current liabilities	357,627	360,101	367,989
Long-term debt, net	1,111,732	1,153,242	1,167,906
Operating lease liabilities	400,518
Deferred taxes, net and other liabilities	29,527	56,000	150,209
Shareholders' (deficit) equity	115,082	160,057	157,114
Total liabilities and shareholders' (deficit) equity	$ 2,014,486	1,729,400	1,843,218
Guarantor Subsidiaries
Condensed Consolidating Balance Sheet
Ownership of Guarantor subsidiaries (as a percent)	100.00%
Guarantor Subsidiaries | Reportable Legal Entities
CURRENT ASSETS:
Cash and cash equivalents	$ 1,760	1,434	2,133
Accounts receivable, net	178,025	255,091	223,001
Inventories	503,709	429,952	500,579
Other current assets	37,680	37,621	34,718
Current assets - discontinued operations		41,404	46,470
Total current assets	721,174	765,502	806,901
Property and equipment, net	203,570	207,934	204,147
Operating lease right-of-use assets	381,008
Rental product, net	6,836	3,426	4,367
Goodwill	52,129	52,128	52,128
Intangible assets, net	146,890	153,711	154,144
Other assets	438	640	635
NON-CURRENT ASSETS - DISCONTINUED OPERATIONS		1,906	2,045
Total assets	1,512,045	1,185,247	1,224,367
CURRENT LIABILITIES:
Accounts payable	92,053	67,044	88,627
Accrued expenses and other current liabilities	63,589	105,022	100,839
Current portion of operating lease liabilities	74,751
Current liabilities - discontinued operations		7,073	6,635
Total current liabilities	230,393	179,139	196,101
Operating lease liabilities	312,774
Deferred taxes, net and other liabilities	28,063	43,495	46,186
Non-current liabilities - discontinued operations		1,574	1,451
Shareholders' (deficit) equity	940,815	961,039	980,629
Total liabilities and shareholders' (deficit) equity	1,512,045	1,185,247	1,224,367
Non-Guarantor Subsidiaries | Reportable Legal Entities
CURRENT ASSETS:
Cash and cash equivalents	18,360	30,267	53,179
Accounts receivable, net	48,848	53,610	55,299
Inventories	138,600	144,211	122,470
Other current assets	9,266	3,773	4,468
Current assets - discontinued operations		129,972	118,888
Total current assets	215,074	361,833	354,304
Property and equipment, net	21,157	22,092	21,009
Operating lease right-of-use assets	52,709
Rental product, net	9,486	14,535	14,619
Goodwill	21,103	21,203	21,187
Other assets	3,954	5,059	80,786
NON-CURRENT ASSETS - DISCONTINUED OPERATIONS		23,165	23,486
Total assets	323,483	447,887	515,391
CURRENT LIABILITIES:
Accounts payable	68,949	91,200	74,877
Accrued expenses and other current liabilities	25,550	29,044	23,585
Current portion of operating lease liabilities	11,754
Current liabilities - discontinued operations		32,952	27,026
Total current liabilities	106,253	153,196	125,488
Operating lease liabilities	41,664
Deferred taxes, net and other liabilities	16,336	17,822	22,783
Non-current liabilities - discontinued operations		3,903	3,001
Shareholders' (deficit) equity	159,230	272,966	364,119
Total liabilities and shareholders' (deficit) equity	$ 323,483	$ 447,887	$ 515,391

XML

Supplemental Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Feb. 02, 2019
Supplemental Cash Flows
Cash paid for interest	$ 50,332	$ 55,856
Cash paid for income taxes, net	26,811	3,331
Schedule of noncash investing and financing activities:
Receivable related to sale of corporate apparel business	6,048	46,059	$ 38,387
Unpaid capital expenditure purchases
Unpaid capital expenditure purchases	$ 8,300	$ 12,800

XML

Debt - Credit Facilities, Narrative (Details) $ in Thousands	1 Months Ended			3 Months Ended		9 Months Ended
	Oct. 31, 2018 USD ($)	Apr. 30, 2018 USD ($)	Oct. 28, 2017 USD ($)	Nov. 02, 2019 USD ($)	Nov. 03, 2018 USD ($)	Nov. 02, 2019 USD ($) agreement	Nov. 03, 2018 USD ($)	Jan. 31, 2015 USD ($)
Debt
(Loss) gain on extinguishment of debt				$ (77)	$ (9,420)	$ (77)	$ (30,253)
Amended New Term Loan
Debt
Number of interest rate swap agreements | agreement						2
Senior Notes
Debt
Aggregate principal amount of debt issued								$ 600,000
(Loss) gain on extinguishment of debt				(100)			(8,900)
Senior Notes | Upon the occurrence of certain specific changes of control
Debt
Redemption price as a percentage of the principal amount of debt						101.00%
Incremental Term Loan Facilities
Debt
Credit facility				$ 250,000		$ 250,000
2014 Credit Facilities | Original Term Loan
Debt
Aggregate principal amount of debt issued		$ 900,000						1,100,000
Fixed rate on refinanced amount (as a percent)		5.00%
Prepayment		$ 93,400
Unamortized OID								11,000
2014 Credit Facilities | Original Term Loan | LIBOR
Debt
Margin added to Base rate (as a percent)		3.50%
Floor rate (as a percent)		1.00%
2014 Credit Facilities | Amended New Term Loan | London Interbank Offered Rate One Month Libor [Member]
Debt
Debt Instrument, Description of Variable Rate Basis						1-month LIBOR
Variable interest rate basis						1-month LIBOR
2014 Credit Facilities | Amended ABL Facility | LIBOR
Debt
Margin added to Base rate (as a percent)			1.00%
2014 Credit Facilities | ABL Facility
Debt
Credit facility			$ 550,000					$ 500,000
Variable Rate Interest Rate | Original Term Loan
Debt
Aggregate principal amount of debt issued		$ 593,400
Fixed Rate Interest Rate | Original Term Loan
Debt
Aggregate principal amount of debt issued		$ 400,000
Fixed rate on refinanced amount (as a percent)		5.00%
2018 Credit Facilities | Amended New Term Loan
Debt
Reduction in the interest rate margin	0.25%
Total variable interest rate (as a percent)				5.02%		5.02%
Deferred financing costs	$ 1,100
Weighted average interest rate (as a percent)				5.63%		5.63%
2018 Credit Facilities | Amended New Term Loan | LIBOR
Debt
Margin added to Base rate (as a percent)	3.25%					3.25%
Actual LIBOR rate (as a percent)				1.77%		1.77%
2018 Credit Facilities | Amended New Term Loan | Base Rate
Debt
Margin added to Base rate (as a percent)	2.25%
2018 Credit Facilities | Amended New Term Loan | Interest rate swap
Debt
Notional amount of interest rate swaps				$ 705,000		$ 705,000
Percentage of variable interest rate converted to a fixed rate						80.00%
2018 Credit Facilities | New Term Loan
Debt
Aggregate principal amount of debt issued		$ 900,000
Secured leverage ratio				2.5		2.5
Credit facility				$ 250,000		$ 250,000
Amortized percentage				1.00%		1.00%
(Loss) gain on extinguishment of debt					$ 9,400		$ 21,300
Unamortized OID		$ 4,500
2018 Credit Facilities | New Term Loan | LIBOR
Debt
Floor rate (as a percent)				1.00%		1.00%
2018 Credit Facilities | New Term Loan | Base Rate
Debt
Floor rate (as a percent)				2.00%		2.00%
Amended ABL Facility [Member] | Amended ABL Facility
Debt
Credit facility			550,000
Weighted average interest rate (as a percent)				3.50%		3.50%
Total credit facility with expansion feature			$ 650,000
Fees on unused commitments (as a percent)			0.25%
Letters of credit issued and outstanding				$ 67,500		$ 67,500
Amended ABL Facility [Member] | Amended ABL Facility | Line of Credit
Debt
Letters of credit issued and outstanding				26,700		26,700
Amended ABL Facility [Member] | Amended ABL Facility | LIBOR
Debt
Period for variable rate basis			1 month
Amended ABL Facility [Member] | Amended ABL Facility | Federal funds rate
Debt
Margin added to Base rate (as a percent)			0.50%
Amended ABL Facility [Member] | Amended ABL Facility | Minimum
Debt
Fees on amounts available to be drawn (as a percent)			1.25%
Amended ABL Facility [Member] | Amended ABL Facility | Maximum
Debt
Varying interest rate margin (as a percent)			1.75%
Fees on amounts available to be drawn (as a percent)			1.75%
Maximum borrowing outstanding under the ABL Facility during the period						100,000
Amended ABL Facility [Member] | ABL Facility
Debt
Borrowings available under credit facility				$ 455,800		$ 455,800

XML

Revenue Recognition - Disaggregation of revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Disaggregation of Revenue [Line Items]
Total net sales	$ 729,481	$ 751,741	$ 2,190,288	$ 2,274,498
Rental services | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	120,021	124,697	334,090	350,019
Retail clothing product | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	573,854	588,447	1,749,533	1,807,879
Men's tailored clothing product | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	326,036	342,972	1,001,467	1,055,213
Men's non-tailored clothing product | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	229,514	227,069	687,257	691,780
Women's clothing product | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	15,029	15,109	51,207	52,138
Other | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	3,275	3,297	9,602	8,748
Total alteration and other services | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	35,606	38,597	106,665	116,600
Alteration services | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales	$ 35,606	$ 38,597	$ 106,665	114,049
Retail dry cleaning services | Retail Segment
Disaggregation of Revenue [Line Items]
Total net sales				$ 2,551

XML

Accumulated Other Comprehensive (Loss) Income (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 02, 2019	Nov. 02, 2019	Nov. 03, 2018
Change in accumulated other comprehensive (loss) income components
Balance at the beginning of the period		$ 3,631
Release of cumulative foreign currency translation adjustment to loss from discontinued operations	$ 26,885	26,885
Balance at the end of the period	(64,486)	(64,486)	$ 9,487
Accumulated Other Comprehensive Loss
Change in accumulated other comprehensive (loss) income components
Balance at the beginning of the period		(33,979)	(10,782)
Other comprehensive (loss) income before reclassifications		(32,562)	(16,872)
Amounts reclassified from accumulated other comprehensive (loss) income		(114)	2,487
Release of cumulative foreign currency translation adjustment to loss from discontinued operations	26,885	26,885
Tax Effect		6,650	(2,689)
Net current-period other comprehensive (loss) income		859	(17,074)
Balance at the end of the period	(33,120)	(33,120)	(27,856)
Foreign Currency Translation
Change in accumulated other comprehensive (loss) income components
Balance at the beginning of the period		(29,820)	(11,116)
Other comprehensive (loss) income before reclassifications		(5,691)	(26,023)
Release of cumulative foreign currency translation adjustment to loss from discontinued operations		26,885
Net current-period other comprehensive (loss) income		21,194	(26,023)
Balance at the end of the period	(8,626)	(8,626)	(37,139)
Cash Flow Hedges
Change in accumulated other comprehensive (loss) income components
Balance at the beginning of the period		(4,314)	145
Other comprehensive (loss) income before reclassifications		(26,871)	9,151
Amounts reclassified from accumulated other comprehensive (loss) income		(114)	2,487
Tax Effect		6,650	(2,689)
Net current-period other comprehensive (loss) income		(20,335)	8,949
Balance at the end of the period	(24,649)	(24,649)	9,094
Pension Plan
Change in accumulated other comprehensive (loss) income components
Balance at the beginning of the period		155	189
Balance at the end of the period	$ 155	$ 155	$ 189

XML

Share-Based Compensation Plans - Cash Settled Awards (Details) shares in Thousands, $ in Millions	9 Months Ended
	Nov. 02, 2019 USD ($) shares
Stock Appreciation Rights ("SARs")
Share-based compensation
Vesting period (in years)	3 years
Cash Settled Awards
Share-based compensation
Vesting period (in years)	3 years
Liability associated with the cash settled awards | $	$ 1.6
Awards
Non-Vested at the beginning of the period (in shares)	5,072
Granted (in shares)	4,382
Vested (in shares)	(2,401)
Forfeited (in shares)	(683)
Non-Vested at the end of the period (in shares)	6,370
Unrecognized compensation cost
Unrecognized compensation cost, non-vested awards | $	$ 2.8
Compensation recognition period, non-vested awards	1 year 7 months 6 days

XML

Discontinued Operations - Condensed Consolidated Statements Of Balance Sheet (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
ASSETS
Cash and cash equivalents		$ 22,760	$ 12,132
Receivable related to sale of corporate apparel business	$ 6,048	38,387	46,059
Inventories		106,340	102,797
Other current assets		3,889	4,370
Total current assets		171,376	165,358
Property and equipment, net		14,856	14,817
Other assets		10,215	10,714
Total assets		196,447	190,889
LIABILITIES
Accounts payable		24,204	17,844
Accrued expenses and other current liabilities		15,821	15,817
Total current liabilities		40,025	33,661
Other liabilities		5,477	4,452
Total liabilities		$ 45,502	$ 38,113

XML

Derivative Financial Instruments (Tables)

9 Months Ended

Nov. 02, 2019

Derivative Financial Instruments

Schedule of derivative instruments recorded in the condensed consolidated balance sheets

The following table provides details on our derivative instruments recorded in the condensed consolidated balance sheets as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2, 2019			November 3, 2018			February 2, 2019
	Balance	Estimated		Balance	Estimated		Balance	Estimated
	Sheet Location	Fair Value		Sheet Location	Fair Value		Sheet Location	Fair Value
Interest rate contracts	Other current assets	$	—	Other current assets	$	2,316	Other current assets	$	1,610
Interest rate contracts	Other assets		—	Other assets		9,559	Other assets		1,355
Foreign exchange contracts	Other current assets		—	Other current assets		6	Other current assets		—
Total assets		$	—		$	11,881		$	2,965
Interest rate contracts	Accrued expenses and other current liabilities	$	6,998	Accrued expenses and other current liabilities	$	797	Accrued expenses and other current liabilities	$	1,625
Interest rate contracts	Deferred taxes, net and other liabilities		25,245	Deferred taxes, net and other liabilities		—	Deferred taxes, net and other liabilities		7,605
Foreign exchange contracts	Accrued expenses and other current liabilities		44	Accrued expenses and other current liabilities		—	Accrued expenses and other current liabilities		77
Total liabilities		$	32,287		$	797		$	9,307

Schedule of derivative instruments recorded in the condensed consolidated statements of earnings and comprehensive income (loss)

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Three Months Ended					For the Three Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(2,051)	$	4,012	Interest expense	$	556	$	413

	Amount of Gain/(Loss) Recognized in Other Comprehensive Loss, net of tax				Location of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings	Amount of Gain/(Loss) Reclassified from Accumulated Other Comprehensive Loss into Earnings
	For the Nine Months Ended					For the Nine Months Ended
	November 2, 2019		November 3, 2018			November 2, 2019		November 3, 2018
Derivatives in Cash Flow Hedging Relationships:
Interest rate contracts	$	(20,189)	$	4,797	Interest expense	$	669	$	720

XML

Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Numerator
Net earnings from continuing operations	$ 27,788	$ 34,787	$ 63,924	$ 94,797
Loss from discontinued operations, net of tax	(117,378)	(20,912)	(112,106)	(17,775)
Net (loss) earnings	$ (89,590)	$ 13,875	$ (48,182)	$ 77,022
Denominator
Basic weighted-average common shares outstanding (in shares)	49,803	50,000	50,210	49,766
Dilutive effect of share-based awards (in shares)	102	722	162	998
Diluted weighted-average common shares outstanding (in shares)	49,905	50,722	50,372	50,764
Net earnings from continuing operations per common share:
Basic (in dollars per share)	$ 0.56	$ 0.70	$ 1.27	$ 1.90
Diluted (in dollars per share)	0.56	0.69	1.27	1.87
Net loss from discontinued operations per common share:
Basic (in dollars per share)	(2.36)	(0.42)	(2.23)	(0.36)
Diluted (in dollars per share)	(2.35)	(0.41)	(2.23)	(0.35)
Net (loss) earnings per common share:
Basic (in dollars per share)	(1.80)	0.28	(0.96)	1.55
Diluted (in dollars per share)	$ (1.80)	$ 0.27	$ (0.96)	$ 1.52

XML

Earnings Per Share (Tables)

9 Months Ended

Nov. 02, 2019

(Loss) Earnings Per Share

Computation of basic and diluted earnings per common share

The following table sets forth the computation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):

	For the Three Months Ended				For the Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Numerator
Net earnings from continuing operations	$	27,788	$	34,787	$	63,924	$	94,797
Loss from discontinued operations, net of tax		(117,378)		(20,912)		(112,106)		(17,775)
Net (loss) earnings	$	(89,590)	$	13,875	$	(48,182)	$	77,022
Denominator
Basic weighted-average common shares outstanding		49,803		50,000		50,210		49,766
Dilutive effect of share-based awards		102		722		162		998
Diluted weighted-average common shares outstanding		49,905		50,722		50,372		50,764
Net earnings from continuing operations per common share:
Basic	$	0.56	$	0.70	$	1.27	$	1.90
Diluted	$	0.56	$	0.69	$	1.27	$	1.87
Net loss from discontinued operations per common share:
Basic	$	(2.36)	$	(0.42)	$	(2.23)	$	(0.36)
Diluted	$	(2.35)	$	(0.41)	$	(2.23)	$	(0.35)
Net (loss) earnings per common share:
Basic	$	(1.80)	$	0.28	$	(0.96)	$	1.55
Diluted	$	(1.80)	$	0.27	$	(0.96)	$	1.52

XML

Leases

9 Months Ended

Nov. 02, 2019

Leases

Leases

14.  Leases

Adoption of ASC 842

Effective February 3, 2019, we adopted ASU No. 2016-02, Leases (Topic 842), and all related amendments (“ASC 842”) using the modified retrospective approach.  As part of the adoption, we made the following elections:

● We elected the package of practical expedients under which we did not reassess our prior conclusions about lease identification, lease classification and initial direct costs.

● We elected to not separate lease and non-lease components for all leases.

● We elected to exempt leases with an initial term of twelve months or less from balance sheet recognition.

● We elected the land easement practical expedient under which we did not reassess whether existing land easements not accounted for as leases under previous guidance are or contain leases under ASC 842.

● We did not elect the hindsight practical expedient for all leases.

In addition, in July 2018, the FASB approved an optional transition method that removed the requirement to restate prior period financial statements upon adoption of the standard with a cumulative-effect adjustment to retained earnings in the period of adoption and we elected to apply this transition method.  As a result, the comparative period information has not been restated and continues to be reported under the accounting standards in effect for the period presented.  The adoption of ASC 842 had no impact to our previously reported results of operations or cash flows.

The following table depicts the cumulative effect of the changes made to our February 2, 2019 balance sheet for the adoption of ASC 842 effective on February 3, 2019 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 2,		Adoption of		February 3,
	2019		ASC 842		2019
Assets:
Other current assets	$	66,823	$	(20,604)	$	46,219
Current assets - discontinued operations		171,376		(150)		171,226
Operating lease right-of-use assets		—		887,064		887,064
Intangible assets, net		153,711		(6,682)		147,029
Non-current assets - discontinued operations		25,071		9,206		34,277
Current Liabilities:
Accrued expenses and other current liabilities		268,698		(151)		268,547
Current portion of operating lease liabilities		—		181,931		181,931
Current liabilities - discontinued operations		40,025		1,795		41,820
Noncurrent Liabilities:
Operating lease liabilities		—		737,750		737,750
Deferred taxes, net and other liabilities		119,545		(59,349)		60,196
Noncurrent liabilities - discontinued operations		5,477		7,260		12,737
Equity:
Accumulated deficit	$	(468,048)	$	(402)	$	(468,450)

The adoption of ASC 842 primarily resulted in the recognition of operating lease liabilities totaling $928.8 million, based upon the present value of the remaining minimum rental payments using discount rates as of the adoption date, with $183.7 million within current liabilities and $745.1 million in noncurrent liabilities.  In addition, we recorded corresponding right-of-use assets totaling $896.3 million based upon the operating lease liabilities adjusted for favorable lease intangible assets, previously included within intangible assets, net and deferred rent and unfavorable lease liabilities, previously included within deferred taxes, net and other liabilities.  In addition, we recorded a $0.4 million cumulative effect of initially applying ASC 842 as an adjustment to the opening balance of accumulated deficit.

Lease Information

We lease store locations, office and warehouse facilities, vehicles and equipment under various non-cancelable operating leases expiring in various years through 2032.  

Substantially all of our stores are leased, generally for five to ten year initial terms.  Certain store leases include one or more options to renew, with renewal terms that range from one to ten years.  Management uses its judgment to determine if a renewal option is reasonably certain of being exercised including consideration of the significant investment related to the identification, opening and operation of these store locations.  In addition, under our real estate leases, we pay costs such as real estate taxes and common area maintenance and certain of our lease agreements include rental payments based on a percentage of retail sales over contractual levels.  These costs are generally considered variable lease payments, and are recognized when deemed probable of payment. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.  In addition, we sublease certain real estate to third parties.  Amounts related to subleases were immaterial to the condensed consolidated financial statements.

Operating lease right-of-use assets and operating lease liabilities are recognized at the lease commencement date.  Operating lease liabilities represent the present value of lease payments.  Operating lease right-of-use assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments or accrued lease payments, lease incentives and impairment of operating lease right-of-use assets.  To determine the present value of the lease payments, we estimated our incremental borrowing rate based on our current credit rating as well as comparisons to comparable borrowing rates of similarly-rated companies.

The components of lease cost are as follows (in thousands):

	For the Three Months Ended		For the Nine Months Ended
	November 2, 2019		November 2, 2019
Operating lease cost	$	62,098	$	186,778
Variable lease cost		18,228		55,680
Total lease cost	$	80,326	$	242,458

Operating lease expense is recognized on a straight-line basis over the lease term.  Total lease costs for stores and our distribution network are included in cost of sales while other total lease costs are included in SG&A expenses.

Supplemental balance sheet information related to operating leases consists of the following (in thousands):

	November 2, 2019
Operating lease right-of-use assets	$	908,505
Current portion of operating lease liabilities	$	184,422
Noncurrent portion operating lease liabilities		754,956
Total operating lease liabilities	$	939,378

Lease term and discount rate for operating leases were as follows:

	November 2, 2019
Weighted average remaining lease term	4.7 years
Weighted average discount rate	5.24%

Supplemental disclosures of cash flow information consists of the following (in thousands):

	For the Nine Months Ended
	November 2, 2019
Cash paid for operating leases	$	191,309
Operating lease assets obtained in exchange for operating lease liabilities	$	1,054,182

At November 2, 2019, we have approximately $939.4 million of non-cancelable operating lease commitments and no finance leases.  The following table summarizes the undiscounted annual future minimum lease payments, as of November 2, 2019, for each of the next five years and in the aggregate (in thousands):

	Operating Leases
Year 1	$	229,077
Year 2		239,009
Year 3		201,540
Year 4		155,022
Year 5		111,953
Thereafter		152,806
Total lease payments	$	1,089,407
Less: Interest		(150,029)
Present value of lease liabilities	$	939,378

Disclosures Related to Periods Prior to Adoption of ASC 842

As previously disclosed in our 2018 Annual Report on Form 10-K and under the accounting standards then in effect, minimum future rental payments under non-cancelable leases as of February 2, 2019 for each of the next five years and in the aggregate are as follows (in thousands):

Fiscal Year	Operating Leases
2019	$	236,539
2020		206,652
2021		173,294
2022		131,800
2023		86,127
Thereafter		140,256
Total lease payments	$	974,668

XML

CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) EARNINGS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Net sales:
Total net sales	$ 729,481	$ 751,741	$ 2,190,288	$ 2,274,498
Cost of sales:
Total cost of sales	421,453	406,247	1,258,510	1,247,168
Gross margin:
Total gross margin	308,028	345,494	931,778	1,027,330
Advertising expense	34,031	37,116	111,527	116,241
Selling, general and administrative expenses	228,453	233,100	687,414	698,833
Operating income	45,544	75,278	132,837	212,256
Interest income	147	207	400	414
Interest expense	(17,572)	(18,757)	(54,493)	(61,602)
Loss on extinguishment of debt, net	(77)	(9,420)	(77)	(30,253)
Earnings before income taxes	28,042	47,308	78,667	120,815
Provision for income taxes	254	12,521	14,743	26,018
Net earnings from continuing operations	27,788	34,787	63,924	94,797
Loss from discontinued operations, net of tax	(117,378)	(20,912)	(112,106)	(17,775)
Net (loss) earnings	$ (89,590)	$ 13,875	$ (48,182)	$ 77,022
Net earnings from continuing operations per common share:
Basic (in dollars per share)	$ 0.56	$ 0.70	$ 1.27	$ 1.90
Diluted (in dollars per share)	0.56	0.69	1.27	1.87
Net loss from discontinued operations per common share:
Basic (in dollars per share)	(2.36)	(0.42)	(2.23)	(0.36)
Diluted (in dollars per share)	(2.35)	(0.41)	(2.23)	(0.35)
Net (loss) earnings per common share:
Basic (in dollars per share)	(1.80)	0.28	(0.96)	1.55
Diluted (in dollars per share)	$ (1.80)	$ 0.27	$ (0.96)	$ 1.52
Weighted-average common shares outstanding:
Basic (in shares)	49,803	50,000	50,210	49,766
Diluted (in shares)	49,905	50,722	50,372	50,764
Retail clothing product | Retail Segment
Net sales:
Total net sales	$ 573,854	$ 588,447	$ 1,749,533	$ 1,807,879
Cost of sales:
Total cost of sales	266,481	254,385	794,970	790,565
Gross margin:
Total gross margin	307,373	334,062	954,563	1,017,314
Rental services | Retail Segment
Net sales:
Total net sales	120,021	124,697	334,090	350,019
Cost of sales:
Total cost of sales	16,041	17,319	48,831	51,342
Gross margin:
Total gross margin	103,980	107,378	285,259	298,677
Total alteration and other services | Retail Segment
Net sales:
Total net sales	35,606	38,597	106,665	116,600
Cost of sales:
Total cost of sales	33,151	33,022	100,612	100,949
Gross margin:
Total gross margin	2,455	5,575	6,053	15,651
Occupancy costs | Retail Segment
Cost of sales:
Total cost of sales	105,780	101,521	314,097	304,312
Gross margin:
Total gross margin	$ (105,780)	$ (101,521)	$ (314,097)	$ (304,312)

XML

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)	9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net (loss) earnings	$ (48,182,000)	$ 77,022,000
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:
Depreciation and amortization	79,394,000	78,088,000
Non-cash lease expense	147,602,000
Rental product amortization	29,739,000	30,720,000
Goodwill impairment charge		23,991,000
Loss on extinguishment of debt, net	77,000	30,253,000
Amortization of deferred financing costs and discount on long-term debt	1,431,000	2,936,000
Loss on divestiture of business	82,808,000	3,766,000
Loss on release of cumulative foreign currency translation adjustment	26,885,000
Loss on disposition of assets	1,942,000	4,833,000
Asset impairment charges	1,185,000	504,000
Share-based compensation	7,853,000	11,555,000
Deferred tax benefit	(1,540,000)	(2,956,000)
Other	67,000	395,000
Changes in operating assets and liabilities:
Accounts receivable	1,078,000	(5,661,000)
Inventories	(55,116,000)	(49,739,000)
Rental product	(25,798,000)	(14,665,000)
Other assets	(16,804,000)	10,560,000
Accounts payable, accrued expenses and other current liabilities	(13,076,000)	70,924,000
Income taxes payable	(5,239,000)	10,313,000
Other liabilities	(148,744,000)	(5,022,000)
Net cash provided by operating activities	65,562,000	277,817,000
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(63,408,000)	(46,927,000)
Proceeds from divestiture of business, net	45,034,000	17,755,000
Net cash used in investing activities	(18,374,000)	(29,172,000)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on original term loan		(993,420,000)
Proceeds from new term loan		895,500,000
Payments on new term loan	(9,370,000)	(6,750,000)
Proceeds from asset-based revolving credit facility	1,065,000,000	465,500,000
Payments on asset-based revolving credit facility	(1,046,000,000)	(407,000,000)
Repurchase and retirement of senior notes	(54,425,000)	(199,365,000)
Deferred financing costs		(6,713,000)
Cash dividends paid	(27,938,000)	(27,833,000)
Proceeds from issuance of common stock	1,220,000	6,149,000
Tax payments related to vested deferred stock units	(1,118,000)	(7,510,000)
Repurchases of common stock	(10,000,000)
Net cash used in financing activities	(82,631,000)	(281,442,000)
Effect of exchange rate changes	1,205,000	(2,385,000)
DECREASE IN CASH AND CASH EQUIVALENTS	(34,238,000)	(35,182,000)
Balance at beginning of period	55,431,000	103,607,000
Balance at end of period	$ 21,193,000	$ 68,425,000

XML

Legal Matters

9 Months Ended

Nov. 02, 2019

COMMITMENTS AND CONTINGENCIES

Legal Matters

18. Legal Matters

On August 2, 2017, two American Airlines employees, Thor Zurbriggen and Dena Catan, filed a putative class action lawsuit against our Twin Hill subsidiary in the United States District Court for the Northern District of Illinois (Case No. 1:17-cv-05648). The complaint alleged claims for strict liability, negligence, and medical monitoring based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. On September 28, 2017, the plaintiffs filed an amended complaint adding nine additional named plaintiffs, adding American Airlines, Inc. as a defendant, and adding claims for civil battery and intentional infliction of emotional distress. Plaintiffs filed a Seconded Amended Complaint on October 4, 2018 on behalf of 39 named plaintiffs, adding PSA Airlines, Inc. and Envoy Air Inc. as defendants, adding new factual allegations and adding a new claim of fraud against American.  The Second Amended Complaint included plaintiffs from the Onody (Case No. 1:18-cv-02303) and Joy (Case No. 1:18-cv-05808) matters we reported in prior filings. As a result, on October 16, 2018, the judge dismissed the separate Onody and Joy matters. We have timely answered the Second Amended Complaint and the matter will proceed in due course. We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose, and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

On September 27, 2017, Heather Poole and numerous other American Airlines employees filed a lawsuit against our Twin Hill subsidiary in the Superior Court for the State of California for the County of Alameda (Case No. RG17876798).  The complaint attempts to allege claims for strict liability and negligence based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. On December 11, 2017, the Company filed a demurrer to Plaintiff’s complaint.  On February 20, 2018, the Court granted our demurrer and dismissed the plaintiffs’ Complaint. Plaintiffs filed an amended complaint on April 10, 2018 and again on April 27, 2018, which added allegations regarding Plaintiffs’ alleged injuries and named Tailored Brands as a defendant. This case was consolidated for pretrial purposes only with other complaints containing identical allegations, including the Agnello, Hughes, Mackonochie and Wagoner cases that were disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended February 2, 2019.    We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose, and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

In addition, we are involved in various routine legal proceedings, including ongoing litigation, incidental to the conduct of our business.  Management does not believe that any of these matters will have a material adverse effect on our financial position, results of operations or cash flows.

XML

(Loss) Earnings Per Share

9 Months Ended

Nov. 02, 2019

(Loss) Earnings Per Share

(Loss) Earnings Per Share

4. (Loss) Earnings Per Share

Basic (loss) earnings per common share is computed by dividing net (loss) earnings by the weighted-average common shares outstanding during the period.  Diluted (loss) earnings per common share is calculated using the treasury stock method.  Basic and diluted (loss) earnings per common share are computed using the actual net (loss) earnings and the actual weighted-average common shares outstanding rather than the rounded numbers presented within our condensed consolidated statement of (loss) earnings and the accompanying notes.  As a result, it may not be possible to recalculate (loss) earnings per common share in our condensed consolidated statement of (loss) earnings and the accompanying notes. The following table sets forth the computation of basic and diluted (loss) earnings per common share (in thousands, except per share amounts):

	For the Three Months Ended				For the Nine Months Ended
	November 2,		November 3,		November 2,		November 3,
	2019		2018		2019		2018
Numerator
Net earnings from continuing operations	$	27,788	$	34,787	$	63,924	$	94,797
Loss from discontinued operations, net of tax		(117,378)		(20,912)		(112,106)		(17,775)
Net (loss) earnings	$	(89,590)	$	13,875	$	(48,182)	$	77,022
Denominator
Basic weighted-average common shares outstanding		49,803		50,000		50,210		49,766
Dilutive effect of share-based awards		102		722		162		998
Diluted weighted-average common shares outstanding		49,905		50,722		50,372		50,764
Net earnings from continuing operations per common share:
Basic	$	0.56	$	0.70	$	1.27	$	1.90
Diluted	$	0.56	$	0.69	$	1.27	$	1.87
Net loss from discontinued operations per common share:
Basic	$	(2.36)	$	(0.42)	$	(2.23)	$	(0.36)
Diluted	$	(2.35)	$	(0.41)	$	(2.23)	$	(0.35)
Net (loss) earnings per common share:
Basic	$	(1.80)	$	0.28	$	(0.96)	$	1.55
Diluted	$	(1.80)	$	0.27	$	(0.96)	$	1.52

For the three and nine months ended November 2, 2019, 4.5 million and 3.7 million anti-dilutive shares of common stock were excluded from the calculation of diluted (loss) earnings per common share, respectively. For the three and nine months ended November 3, 2018, 0.8 million and 0.6 million anti-dilutive shares of common stock were excluded from the calculation of diluted (loss) earnings per common share, respectively.

XML

Inventories

9 Months Ended

Nov. 02, 2019

Inventories

Inventories

8. Inventories

The following table provides details on our inventories as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Finished goods	$	647,715	$	666,087	$	581,953
Raw materials and merchandise components		130,627		106,119		142,133
Total inventories	$	778,342	$	772,206	$	724,086

XML

Share Repurchases

9 Months Ended

Nov. 02, 2019

Share Repurchases

Share Repurchases

12. Share Repurchases

In March 2013, our Board of Directors (the “Board”) approved a share repurchase program for our common stock.  During the third quarter of 2019, we repurchased 2,336,852 shares through open market repurchases at a cost of $10.0 million for an average price of $4.28 per share.  At November 2, 2019, the remaining balance available under the Board’s authorization was $38.0 million.  No shares were repurchased during 2018.

Share repurchases are accounted for under the cost method whereby the entire cost of the acquired stock is recorded as treasury stock.  

XML

Share-Based Compensation Plans (Tables)

9 Months Ended

Nov. 02, 2019

Summary of time-based and performance-based awards activity

			Weighted-Average
	Units		Grant-Date Fair Value
	Time-	Performance-	Time-		Performance-
	Based	Based	Based		Based
Non-Vested at February 2, 2019	939,086	336,906	$	22.60	$	18.59
Granted	162,162	—		5.55		—
Vested(1)	(455,288)	(28,686)		21.88		17.43
Forfeited	(113,937)	(44,459)		22.78		18.44
Non-Vested at November 2, 2019	532,023	263,761	$	17.97	$	18.74

(1) Includes 150,785 shares relinquished for tax payments related to vested DSUs for the nine months ended November 2, 2019.

Stock Options

Summary of activity

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	1,252,072	$	23.64
Granted	3,188,732		7.49
Exercised	—		—
Forfeited	(209,921)		10.52
Expired	(56,584)		25.72
Outstanding at November 2, 2019	4,174,299	$	11.94
Exercisable at November 2, 2019	916,464	$	24.89

Stock Appreciation Rights ("SARs")

Summary of activity

		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at February 2, 2019	—	$	—
Granted	414,476		7.62
Exercised	—		—
Forfeited	—		—
Expired	—		—
Outstanding at November 2, 2019	414,476	$	7.62
Exercisable at November 2, 2019	—	$	—

Weighted-average assumptions used to calculate fair value of stock options

	For the Nine Months Ended
	November 2,
	2019
Risk-free interest rate	2.36%
Expected lives	5.0 years
Dividend yield(1)	4.17%
Expected volatility	62.53%

(1) Awards granted after announcement of the suspension of our dividend assume a dividend yield of 0%.

Cash Settled Awards

Summary of share-based compensation of cash settled awards

The following table summarizes the activity of cash settled awards, based on their initial grant date values, for the nine months ended November 2, 2019 (in thousands):

	Cash Settled Awards
Non-Vested at February 2, 2019	$	5,072
Granted		4,382
Vested		(2,401)
Forfeited		(683)
Non-Vested at November 2, 2019	$	6,370

XML

Supplemental Cash Flows (Tables)

9 Months Ended

Nov. 02, 2019

Supplemental Cash Flows

Schedule of supplemental disclosure of cash flow information

Supplemental disclosure of cash flow information is as follows (in thousands):

	For the Nine Months Ended
	November 2,		November 3,
	2019		2018
Cash paid for interest	$	50,332	$	55,856
Cash paid for income taxes, net	$	26,811	$	3,331
Schedule of noncash investing and financing activities:
Receivable related to sale of corporate apparel business	$	6,048	$	—

XML

Debt - Components (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018	Oct. 31, 2018
Debt
Total long-term debt, net	$ 1,120,732	$ 1,164,861	$ 1,176,906
Current portion of long-term debt	(9,000)	(11,619)	(9,000)
Total long-term debt, net of current portion	1,111,732	1,153,242	1,167,906
Senior Notes
Debt
Long-term debt	173,816	228,607	228,607
Amended ABL Facility
Debt
Long-term debt	67,500	48,500	58,500
Term Loan and Senior Notes
Debt
Less: Deferred financing costs	(2,214)	(3,246)	(3,451)
2018 Credit Facilities | Amended New Term Loan
Debt
Long-term debt	$ 881,630	$ 891,000	$ 893,250
Less: Deferred financing costs				$ (1,100)

XML

Revenue Recognition - Sales by Segment (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Net sales:
Total net sales	$ 729,481	$ 751,741	$ 2,190,288	$ 2,274,498
Retail Segment | Men's Wearhouse
Net sales:
Total net sales	438,088	454,927	1,289,364	1,347,933
Retail Segment | Jos. A. Bank
Net sales:
Total net sales	168,432	169,318	501,383	510,821
Retail Segment | K&G
Net sales:
Total net sales	71,859	72,610	242,245	245,535
Retail Segment | Moores
Net sales:
Total net sales	$ 51,102	$ 54,886	$ 157,296	167,658
Retail Segment | MW Cleaners
Net sales:
Total net sales				$ 2,551

XML

Derivative Financial Instruments (Details) - USD ($) $ in Millions	9 Months Ended
	Nov. 02, 2019	Jun. 30, 2018	Apr. 30, 2017
Interest rate swap | Designated as hedging instruments
Derivative Financial Instruments
Effective portion of the loss expected to be reclassified from accumulated other comprehensive (loss) income into earnings over the next 12 months	$ (7.0)
Interest rate swap matures in June 2021
Derivative Financial Instruments
Notional amount	$ 320.0		$ 260.0
Fixed rate payable (as a percent)	5.31%
Applicable margin included in fixed rate (as a percent)	3.25%
Interest rate swap matures in June 2021 | London Interbank Offered Rate One Month Libor [Member]
Derivative Financial Instruments
Debt Instrument, Description of Variable Rate Basis	1
Interest rate swap matures in April 2025
Derivative Financial Instruments
Notional amount	$ 385.0	$ 320.0
Fixed rate payable (as a percent)	6.18%
Applicable margin included in fixed rate (as a percent)	3.25%
Interest rate swap matures in April 2025 | London Interbank Offered Rate One Month Libor [Member]
Derivative Financial Instruments
Debt Instrument, Description of Variable Rate Basis	1
Foreign exchange forward | Not designated as hedging instrument | Canada, Dollars
Derivative Financial Instruments
Notional amount	$ 6.1

XML

CONDENSED CONSOLIDATING INFORMATION - Cash Flows (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	$ 65,562	$ 277,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(63,408)	(46,927)
Proceeds from divestiture of business, net	45,034	17,755
Net cash used in investing activities	(18,374)	(29,172)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on original term loan		(993,420)
Proceeds from new term loan		895,500
Payments on new term loan	(9,370)	(6,750)
Proceeds from asset-based revolving credit facility	1,065,000	465,500
Payments on asset-based revolving credit facility	(1,046,000)	(407,000)
Repurchase and retirement of senior notes	(54,425)	(199,365)
Deferred financing costs		(6,713)
Cash dividends paid	(27,938)	(27,833)
Proceeds from issuance of common stock	1,220	6,149
Tax payments related to vested deferred stock units	(1,118)	(7,510)
Repurchases of common stock	(10,000)
Net cash used in financing activities	(82,631)	(281,442)
Effect of exchange rate changes	1,205	(2,385)
Increase (decrease) in cash and cash equivalent	(34,238)	(35,182)
Balance at beginning of period	55,431	103,607
Balance at end of period	21,193	68,425
Eliminations
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	(51,438)	(27,833)
CASH FLOWS FROM INVESTING ACTIVITIES:
Intercompany activities	269,376	228,450
Net cash used in investing activities	269,376	228,450
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activities	(217,938)	(200,617)
Net cash used in financing activities	(217,938)	(200,617)
Tailored Brands, Inc. | Reportable Legal Entities
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	37,836	29,194
CASH FLOWS FROM FINANCING ACTIVITIES:
Cash dividends paid	(27,938)	(27,833)
Proceeds from issuance of common stock	1,220	6,149
Tax payments related to vested deferred stock units	(1,118)	(7,510)
Repurchases of common stock	(10,000)
Net cash used in financing activities	(37,836)	(29,194)
The Men's Wearhouse, Inc. | Reportable Legal Entities
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	329,070	470,656
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(21,879)	(12,962)
Intercompany activities	(238,423)	(228,450)
Net cash used in investing activities	(260,302)	(241,412)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on original term loan		(993,420)
Proceeds from new term loan		895,500
Payments on new term loan	(9,370)	(6,750)
Proceeds from asset-based revolving credit facility	1,065,000	465,500
Payments on asset-based revolving credit facility	(1,046,000)	(407,000)
Repurchase and retirement of senior notes	(54,425)	(199,365)
Deferred financing costs		(6,713)
Intercompany activities	(23,870)	(27,833)
Net cash used in financing activities	(68,665)	(280,081)
Increase (decrease) in cash and cash equivalent	103	(50,837)
Balance at beginning of period	970	51,818
Balance at end of period	1,073	981
Guarantor Subsidiaries | Reportable Legal Entities
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	34,951	11,157
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(34,687)	(28,853)
Proceeds from divestiture of business, net		17,755
Net cash used in investing activities	(34,687)	(11,098)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in cash and cash equivalent	264	59
Balance at beginning of period	1,496	2,180
Balance at end of period	1,760	2,239
Non-Guarantor Subsidiaries | Reportable Legal Entities
Condensed Consolidating Statement of Cash Flows
Net cash provided by (used in) operating activities	(284,857)	(205,357)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(6,842)	(5,112)
Proceeds from divestiture of business, net	45,034
Intercompany activities	(30,953)
Net cash used in investing activities	7,239	(5,112)
CASH FLOWS FROM FINANCING ACTIVITIES:
Intercompany activities	241,808	228,450
Net cash used in financing activities	241,808	228,450
Effect of exchange rate changes	1,205	(2,385)
Increase (decrease) in cash and cash equivalent	(34,605)	15,596
Balance at beginning of period	52,965	49,609
Balance at end of period	$ 18,360	$ 65,205

XML

Goodwill and Other Intangible Assets - Amortization (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Amortizable intangible assets:
Carrying amount	$ 13,506	$ 25,350	$ 26,201
Accumulated amortization	(9,816)	(14,839)	(15,257)
Total amortizable intangible assets, net	3,690	10,511	10,944
Indefinite-lived intangible assets:
Trademarks and tradename	143,200	143,200	143,200
Total intangible assets, net	146,890	153,711	154,144
Trademarks, tradenames and franchise agreements
Amortizable intangible assets:
Carrying amount	13,506	13,506	13,506
Accumulated amortization	$ (9,816)	(9,677)	(9,628)
Favorable leases
Amortizable intangible assets:
Carrying amount		11,844	12,695
Accumulated amortization		$ (5,162)	$ (5,629)

XML

Leases - Components of Lease Cost (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Nov. 02, 2019	Nov. 02, 2019
Components of lease cost
Operating lease cost	$ 62,098	$ 186,778
Variable lease cost	18,228	55,680
Total lease cost	$ 80,326	$ 242,458

XML

Derivative Financial Instruments - Gain loss on derivatives (Details) - Interest rate contracts - Interest Expense. - Cash flow hedges. - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Derivative Financial Instruments
Other comprehensive (loss) income before reclassifications	$ (2,051)	$ 4,012	$ (20,189)	$ 4,797
Amounts reclassified from accumulated other comprehensive (loss) income	$ 556	$ 413	$ 669	$ 720

XML

Discontinued Operations - Condensed Consolidated Statements Of Cash flows (Details) - USD ($)	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018	Feb. 02, 2019
Discontinued Operation, Alternative Cash Flow Information [Abstract]
Depreciation and amortization			$ 3,102,000	$ 4,382,000
Capital expenditures			2,677,000	3,198,000
Significant non-cash operating and investing items:
Goodwill impairment charge	$ 0	$ 23,991,000		23,991,000
Loss on divestiture of business			82,808,000	3,766,000
Loss on release of cumulative foreign currency translation adjustment			26,885,000
Receivable related to sale of corporate apparel business	$ 6,048,000	$ 46,059,000	$ 6,048,000	$ 46,059,000	$ 38,387,000

XML

Significant Accounting Policies (Details)	9 Months Ended
	Nov. 02, 2019 segment
Segment Reporting Information [Line Items]
Number of Reportable Segments	1
Retail Segment
Segment Reporting Information [Line Items]
Number Of Merchandising Brands	4

XML

Income Taxes (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Income Taxes
Effective income tax rate (as a percent)	0.90%	26.50%	18.70%	21.50%
Release of state valuation allowances	$ (5.9)		$ (5.4)

XML

Share-Based Compensation Plans - Deferred Stock Units, Performance Units and Restricted Stock (Details) $ / shares in Units, $ in Millions	9 Months Ended
	Nov. 02, 2019 USD ($) $ / shares shares
Deferred stock units
Additional information
Shares relinquished for tax withholding	150,785
Unrecognized compensation cost
Unrecognized compensation cost, non-vested awards | $	$ 7.6
Compensation recognition period, non-vested awards	1 year 1 month 6 days
Time-Based DSUs
Awards
Non-Vested at the beginning of the period (in shares)	939,086
Granted (in shares)	162,162
Vested (in shares)	(455,288)
Forfeited (in shares)	(113,937)
Non-Vested at the end of the period (in shares)	532,023
Weighted-Average Grant-Date Fair Value
Non-Vested at the beginning of the period (in dollars per share) | $ / shares	$ 22.60
Granted (in dollars per share) | $ / shares	5.55
Vested (in dollars per share) | $ / shares	21.88
Forfeited (in dollars per share) | $ / shares	22.78
Non-Vested at the end of the period (in dollars per share) | $ / shares	$ 17.97
Performance-Based DSUs
Awards
Non-Vested at the beginning of the period (in shares)	336,906
Vested (in shares)	(28,686)
Forfeited (in shares)	(44,459)
Non-Vested at the end of the period (in shares)	263,761
Weighted-Average Grant-Date Fair Value
Non-Vested at the beginning of the period (in dollars per share) | $ / shares	$ 18.59
Vested (in dollars per share) | $ / shares	17.43
Forfeited (in dollars per share) | $ / shares	18.44
Non-Vested at the end of the period (in dollars per share) | $ / shares	$ 18.74

XML

Leases - Lease Information (Details)	9 Months Ended
	Nov. 02, 2019
Lessee, Lease, Description [Line Items]
Renewal options	true
Minimum
Lessee, Lease, Description [Line Items]
Initial term	5 years
Renewal term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Initial term	10 years
Renewal term	10 years

XML

Discontinued Operations

9 Months Ended

Nov. 02, 2019

Discontinued Operations

Discontinued Operations

2. Discontinued Operations

On August 15, 2019, our Board of Directors approved and on August 16, 2019, we completed the sale of MWUK Limited, our UK corporate apparel operations conducted under the Dimensions, Alexandra, and Yaffy brand names to Project Dart Bidco Limited, pursuant to a Share Purchase Agreement entered into on August 16, 2019.  In addition, we also completed the sale of Twin Hill Acquisition Company, Inc. (“Twin Hill”), our U.S. corporate apparel operation, to TH Holdco Inc., pursuant to a Stock Purchase Agreement entered into on August 16, 2019.  The aggregate consideration for all of the outstanding equity of MWUK Limited and Twin Hill (collectively, the “corporate apparel business”) was approximately $62 million, subject to certain working capital adjustments. After consideration of working capital adjustments and other related items, we received $49.3 million in cash during the third quarter of 2019 and approximately $6.0 million will be received in the first quarter of fiscal 2020.  Prior to its sale, the corporate apparel business was its own reportable segment.

We determined that the sale of the corporate apparel business represents a strategic shift that will have a major effect on our results of operations and, as a result, have reported the disposal as discontinued operations.  We have presented the results of the corporate apparel business including the loss on the sale of the corporate apparel business within loss from discontinued operations, net in the condensed consolidated statement of (loss) earnings for all periods presented.  Certain costs previously allocated to the corporate apparel business for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations.  In addition, the goodwill impairment charge of $24.0 million recorded during the third quarter of 2018 and related to the corporate apparel business has been reclassified to discontinued operations.

Also, U.S. GAAP requires cumulative foreign currency translation adjustment balances to be released into earnings once the sale or liquidation of the net assets of a foreign entity occurs.  As we have sold the operating entities associated with the corporate apparel business during the third quarter of 2019, we determined the cumulative foreign currency translation adjustment balance totaling $26.9 million should be released to earnings and classified within loss from discontinued operations.

The related assets and liabilities of the corporate apparel business are presented as current and non-current assets and liabilities of discontinued operations in the condensed consolidated balance sheets as of November 3, 2018 and February 2, 2019.  The following table provides details of the carrying amounts of major classes of assets and liabilities related to discontinued operations as of November 3, 2018 and February 2, 2019 (in thousands):

	November 3,		February 2,
	2018		2019
ASSETS
Cash and cash equivalents	$	12,132	$	22,760
Accounts receivable, net		46,059		38,387
Inventories		102,797		106,340
Other current assets		4,370		3,889
Total current assets		165,358		171,376
Property and equipment, net		14,817		14,856
Other assets		10,714		10,215
Total assets	$	190,889	$	196,447
LIABILITIES
Accounts payable	$	17,844	$	24,204
Accrued expenses and other current liabilities		15,817		15,821
Total current liabilities		33,661		40,025
Other liabilities		4,452		5,477
Total liabilities	$	38,113	$	45,502

The following table provides details of the amounts reflected in loss from discontinued operations, net of tax in the condensed consolidated statements of (loss) earnings for the three and nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Three Months Ended				For the Nine Months Ended
	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Net sales	$	7,376	$	61,006	$	117,444	$	179,643
Cost of sales		5,507		43,765		85,042		130,112
Selling, general and administrative expenses		2,200		13,427		30,049		41,812
Goodwill impairment charge		—		23,991		—		23,991
Loss on sale of corporate apparel business		83,723		—		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—		26,885		—
Loss from discontinued operations before taxes		(110,939)		(20,177)		(107,340)		(16,272)
Income tax expense		6,439		735		4,766		1,503
Loss from discontinued operations, net of tax	$	(117,378)	$	(20,912)	$	(112,106)	$	(17,775)

The cash flows related to discontinued operations have not been segregated, and are included in the condensed consolidated statement of cash flows.  The following table provides selected information on cash flows related to discontinued operations for the nine months ended November 2, 2019 and November 3, 2018 (in thousands):

	For the Nine Months Ended
	November 2, 2019		November 3, 2018
Depreciation and amortization	$	3,102	$	4,382
Capital expenditures		2,677		3,198
Significant non-cash operating and investing items:
Goodwill impairment charge		—		23,991
Loss on divestiture of business		82,808		—
Loss on release of cumulative foreign currency translation adjustment		26,885		—
Receivable related to sale of corporate apparel business	$	6,048	$	—

XML

Fair Value Measurements

9 Months Ended

Nov. 02, 2019

Fair Value Measurements

Fair Value Measurements

16. Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The authoritative guidance for fair value measurements establishes a three-tier fair value hierarchy, categorizing the inputs used to measure fair value.  The hierarchy can be described as follows:  Level 1- observable inputs such as quoted prices in active markets; Level 2- inputs other than the quoted prices in active markets that are observable either directly or indirectly; and Level 3- unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.  The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

	Fair Value Measurements at Reporting Date
	Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
November 2, 2019—
Assets:
Derivative financial instruments	$	—	$	—	$	—	$	—
Liabilities:
Derivative financial instruments	$	—	$	32,287	$	—	$	32,287
November 3, 2018—
Assets:
Derivative financial instruments	$	—	$	11,881	$	—	$	11,881
Liabilities:
Derivative financial instruments	$	—	$	797	$	—	$	797
February 2, 2019—
Assets:
Derivative financial instruments	$	—	$	2,965	$	—	$	2,965
Liabilities:
Derivative financial instruments	$	—	$	9,307	$	—	$	9,307

At November 2, 2019, derivative financial instruments are comprised of interest rate swap agreements to minimize our exposure to interest rate changes on our outstanding indebtedness and foreign currency forward exchange contracts primarily entered into related to our direct sourcing programs, specifically related to the Canadian dollar.

These derivative financial instruments are recorded in the condensed consolidated balance sheets at fair value based upon observable market inputs, primarily pricing models based on current market rates. Derivative financial instruments in an asset position are included within other current assets or other assets in the condensed consolidated balance sheets. Derivative financial instruments in a liability position are included within accrued expenses and other current liabilities or noncurrent liabilities in the condensed consolidated balance sheets. Please see Note 17 for further information regarding our derivative instruments.

Assets and Liabilities that are Measured at Fair Value on a Non-Recurring Basis

Long-lived assets, such as property and equipment, operating lease right-of-use assets and identifiable intangibles, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.  

During the three and nine months ended November 2, 2019, we incurred $0.9 million and $1.2 million, respectively, of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of (loss) earnings, related to underperforming stores. In addition, during the nine months ended November 2, 2019, we recognized a write-off of $2.9 million of rental product related to the closure of a Canadian distribution center, which is included within cost of sales in our condensed consolidated statement of (loss) earnings.

During the three and nine months ended November 3, 2018, we incurred $0.2 million and $0.5 million, respectively, of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of (loss) earnings, related to underperforming stores. In addition, during the nine months ended November 3, 2018, we recognized a write-off of $4.0 million of rental product related to the closure of a rental product distribution center, which is included within cost of sales in our condensed consolidated statement of (loss) earnings.

We estimated the fair value of the long-lived assets based on an income approach using projected future cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions, which we classify as Level 3 within the fair value hierarchy.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities and our Term Loan and Senior Notes.  Management estimates that, as of November 2, 2019, November 3, 2018, and February 2, 2019, the carrying value of our financial instruments, other than our Term Loan and Senior Notes, approximated their fair value due to the highly liquid or short-term nature of these instruments.  We believe that the borrowings under our ABL Facility approximate their fair value because interest rates are adjusted on a short-term basis.

The fair values of our Term Loan were valued based upon observable market data provided by a third party for similar types of debt, which we classify as a Level 2 input within the fair value hierarchy.   The fair value of our Senior Notes is based on quoted prices in active markets, which we classify as a Level 1 input within the fair value hierarchy.  The table below shows the fair value and carrying value of our long-term debt, including current portion (in thousands):

	November 2, 2019				November 3, 2018				February 2, 2019
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount(1)		Fair Value		Amount(1)		Fair Value		Amount(1)		Fair Value
Term Loan and Senior Notes, including current portion	$	1,053,232	$	809,934	$	1,118,406	$	1,130,202	$	1,116,361	$	1,120,296
(1) The carrying value of the Term Loan and Senior Notes, including current portion is net of deferred financing costs of $2.2 million, $3.5 million and $3.2 million as of November 2, 2019, November 3, 2018 and February 2, 2019, respectively.

XML

Document and Entity Information - shares	9 Months Ended
	Nov. 02, 2019	Nov. 29, 2019
Document and Entity Information
Document Type	10-Q
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Nov. 02, 2019
Entity File Number	1-16097
Entity Registrant Name	TAILORED BRANDS, INC.
Entity Incorporation, State or Country Code	TX
Entity Tax Identification Number	47-4908760
Entity Address, Address Line One	6380 Rogerdale Road
Entity Address, City or Town	Houston
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77072-1624
City Area Code	281
Local Phone Number	776-7000
Title of 12(b) Security	Common Stock
Trading Symbol	TLRD
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,422,534
Current Fiscal Year End Date	--02-01
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q3
Entity Central Index Key	0000884217
Amendment Flag	false

XML

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands	Common Stock	Capital in Excess of Par	Accumulated Deficit	Accumulated Other Comprehensive Loss	Treasury Stock, at Cost	Total
Balance at the beginning of the year at Feb. 03, 2018	$ 492	$ 491,648	$ (479,166)	$ (10,782)		$ 2,192
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			13,909			13,909
Other comprehensive (loss) income				(11,343)		(11,343)
Cash dividends - $0.18 per share			(9,360)			(9,360)
Share-based compensation		4,581				4,581
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	4	3,645				3,649
Tax payments related to vested deferred stock units		(5,025)				(5,025)
Balance at the end of the year at May. 05, 2018	496	494,849	(510,441)	(22,125)		(37,221)
Balance at the beginning of the year at Feb. 03, 2018	492	491,648	(479,166)	(10,782)		2,192
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings						77,022
Balance at the end of the year at Nov. 03, 2018	501	501,835	(464,993)	(27,856)		9,487
Increase (Decrease) in Shareholders' Equity
Cumulative adjustment | Cumulative adjustment upon ASC 606 adoption			(35,824)			(35,824)
Balance at the beginning of the year at May. 05, 2018	496	494,849	(510,441)	(22,125)		(37,221)
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			49,238			49,238
Other comprehensive (loss) income				(6,655)		(6,655)
Cash dividends - $0.18 per share			(9,174)			(9,174)
Share-based compensation		4,835				4,835
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	2	462				464
Tax payments related to vested deferred stock units		(1,476)				(1,476)
Balance at the end of the year at Aug. 04, 2018	498	498,670	(470,377)	(28,780)		11
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			13,875			13,875
Other comprehensive (loss) income				924		924
Cash dividends - $0.18 per share			(8,491)			(8,491)
Share-based compensation		2,140				2,140
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	3	2,034				2,037
Tax payments related to vested deferred stock units		(1,009)				(1,009)
Balance at the end of the year at Nov. 03, 2018	501	501,835	(464,993)	(27,856)		9,487
Balance at the beginning of the year at Feb. 02, 2019	501	505,157	(468,048)	(33,979)		3,631
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			7,142			7,142
Other comprehensive (loss) income				(7,199)		(7,199)
Cash dividends - $0.18 per share			(9,103)			(9,103)
Share-based compensation		2,398				2,398
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	3	424				427
Tax payments related to vested deferred stock units		(940)				(940)
Balance at the end of the year at May. 04, 2019	504	507,039	(470,411)	(41,178)		(4,046)
Balance at the beginning of the year at Feb. 02, 2019	501	505,157	(468,048)	(33,979)		3,631
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings						(48,182)
Release of cumulative foreign currency translation adjustment to loss from discontinued operations				26,885		26,885
Balance at the end of the year at Nov. 02, 2019	507	513,106	(534,979)	(33,120)	$ (10,000)	(64,486)
Increase (Decrease) in Shareholders' Equity
Cumulative adjustment | Cumulative adjustment upon ASC 842 adoption (see Note 12)			(402)			(402)
Balance at the beginning of the year at May. 04, 2019	504	507,039	(470,411)	(41,178)		(4,046)
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			34,266			34,266
Other comprehensive (loss) income				(19,394)		(19,394)
Cash dividends - $0.18 per share			(9,247)			(9,247)
Share-based compensation		2,644				2,644
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	2	450				452
Tax payments related to vested deferred stock units		(112)				(112)
Balance at the end of the year at Aug. 03, 2019	506	510,021	(445,392)	(60,572)		4,563
Increase (Decrease) in Shareholders' Equity
Net (loss) earnings			(89,590)			(89,590)
Other comprehensive (loss) income				567		567
True-up to cash dividends			3			3
Release of cumulative foreign currency translation adjustment to loss from discontinued operations				26,885		26,885
Share-based compensation		2,811				2,811
Common stock issued - 306,505 and 155,210 and 116,839 shares for quarters ending May 4, 2019, Aug 3, 2019 and Nov 2, 2019 respectively and 445,932 and 178,647 and 183,431 shares for quarters ending May 5, 2018, Aug 4, 2018 and Nov 3, 2018 respectively	1	340				341
Tax payments related to vested deferred stock units		(66)				(66)
Treasury stock reissued - 2,336,852 and shares for 2019 respectively					(10,000)	(10,000)
Balance at the end of the year at Nov. 02, 2019	$ 507	$ 513,106	$ (534,979)	$ (33,120)	$ (10,000)	$ (64,486)

XML

Significant Accounting Policies (Policies)

9 Months Ended

Nov. 02, 2019

Significant Accounting Policies

Basis of Presentation

Basis of Presentation — The condensed consolidated financial statements herein include the accounts of Tailored Brands, Inc. and its subsidiaries (the "Company") and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").  As applicable under such regulations, certain information and footnote disclosures have been condensed or omitted.  We believe the presentation and disclosures herein are adequate to make the information not misleading, and the condensed consolidated financial statements reflect all elimination entries and normal recurring adjustments which are necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented.  Certain prior period amounts have been reclassified to conform to the current period presentation.

Our business results historically have fluctuated throughout the year and, as a result, the operating results of the interim periods presented are not necessarily indicative of the results that may be achieved for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended February 2, 2019.

Unless the context otherwise requires, "Company", "we", "us" and "our" refer to Tailored Brands, Inc. and its subsidiaries.

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts and related disclosures.  Actual amounts could differ from those estimates.

As discussed in Note 2, during the third quarter of 2019, we completed the sale of our corporate apparel business.    Amounts presented on the condensed consolidated balance sheet and condensed consolidated statements of (loss) earnings for all prior periods related to the corporate apparel business have been reclassified as discontinued operations.  Unless noted otherwise, discussion in these notes to the condensed consolidated financial statements pertain to our continuing operations.

In addition, as a result of this change in our organizational structure, we reassessed our segment reporting presentation.  We determined that the results from our four merchandising brands:  Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank, K&G and Moores Clothing for Men (“Moores”) represent separate operating segments that should continue to be aggregated into a reportable segment and, as a result, we have only one reportable segment.  Please see Note 6 for revenue information by brand and by major source.  

Recent Accounting Pronouncements Not Yet Adopted

Recent Accounting Pronouncements Not Yet Adopted — We have considered all new accounting pronouncements not yet adopted and have concluded there are no new pronouncements that may have a material impact on our financial position, results of operations, or cash flows, based on current information, except for those listed below.  

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for public companies for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption of ASU 2018-15 is permitted.  We are currently evaluating the impact ASU 2018-15 may have on our financial position, results of operations or cash flows.

XML

Divestiture of MW Cleaners (Details) - USD ($) $ in Thousands	9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Feb. 28, 2018
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Proceeds from divestiture of business, net	$ 45,034	$ 17,755
Loss on divestiture	$ (82,808)	(3,766)
Disposed of by sale | MW Cleaners business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration			$ 18,000
Proceeds from divestiture of business, net		17,800
Retail Segment | Disposed of by sale | MW Cleaners business | Selling, general and administrative expenses
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Loss on divestiture		$ (3,800)

XML

Discontinued Operations (Details) - USD ($)	3 Months Ended			9 Months Ended
	May 02, 2020	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018	Aug. 16, 2019
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration received				$ 45,034,000	$ 17,755,000
Release of cumulative foreign currency translation adjustment to loss from discontinued operations		$ 26,885,000		$ 26,885,000
Goodwill impairment charge		0	$ 23,991,000		$ 23,991,000
Disposed of by sale | Corporate apparel business
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items]
Consideration						$ 62,000,000
Consideration received		$ 49,300,000
Consideration to be received	$ 6,000,000.0
Goodwill impairment charge			$ 24,000,000.0

XML

Inventories (Details) - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Inventories
Finished goods	$ 647,715	$ 581,953	$ 666,087
Raw materials and merchandise components	130,627	142,133	106,119
Total inventories	$ 778,342	$ 724,086	$ 772,206

XML

Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Millions	3 Months Ended	12 Months Ended
	Nov. 02, 2019	Feb. 02, 2019
Share Repurchases
Shares repurchased	$ 10.0
Shares repurchased and held in treasury	2,336,852	0
Remaining balance available	$ 38.0
Average price per share of common stock repurchased (in dollars per share)	$ 4.28

XML

Goodwill and Other Intangible Assets

9 Months Ended

Nov. 02, 2019

GOODWILL AND INTANGIBLE ASSETS

Goodwill and Other Intangible Assets

15.  Goodwill and Other Intangible Assets

Goodwill

Changes in the net carrying amount of goodwill for the nine months ended November 2, 2019 are as follows (in thousands):

	Total
Balance at February 2, 2019	$	79,491
Translation adjustment		(99)
Balance at November 2, 2019	$	79,392

Goodwill is evaluated for impairment at least annually. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, new significant negative industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock.  During the third quarter of 2019, we determined that a triggering event occurred as a result of the sustained decline in the market price of our stock and performed an interim goodwill impairment test, which indicated no goodwill impairment at this time.

We estimated the fair values of each of our reporting units using a combined income and market comparable approach.  Our income approach uses projected future cash flows that are discounted using a weighted-average cost of capital analysis that reflects current market conditions.  The market comparable approach primarily considers earnings multiples of comparable companies and applies those multiples to certain key drivers of the reporting unit.  We believe these two approaches are appropriate valuation techniques and we weighted the two approaches equally as an estimate of reporting unit fair value for the purposes of our impairment testing.  In addition, we compared the total fair values of our reporting units to our market capitalization and noted that the implied control premium was within what we consider to be a reasonable range.  

If the current market price of our stock further decreases, or if other events or circumstances change that would more likely than not reduce the fair value of our reporting units below their respective carrying values, all or a portion of our goodwill may be impaired in future periods and such an impairment charge could have a material effect on our results of operations and financial condition.  

Intangible Assets

The gross carrying amount and accumulated amortization of our identifiable intangible assets are as follows (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Amortizable intangible assets:
Carrying amount:
Trademarks, tradenames and franchise agreements	$	13,506	$	13,506	$	13,506
Favorable leases		—		12,695		11,844
Total carrying amount		13,506		26,201		25,350
Accumulated amortization:
Trademarks, tradenames and franchise agreements		(9,816)		(9,628)		(9,677)
Favorable leases		—		(5,629)		(5,162)
Total accumulated amortization		(9,816)		(15,257)		(14,839)
Total amortizable intangible assets, net		3,690		10,944		10,511
Indefinite-lived intangible assets:
Trademarks and tradename		143,200		143,200		143,200
Total intangible assets, net	$	146,890	$	154,144	$	153,711

The elimination of favorable leases is due to the adoption of ASC 842, effective February 3, 2019.  Please see Note 14 for additional information.  In addition, the decrease in trademarks, tradenames and franchise agreements and the elimination of customer relationships is due to the sale of our corporate apparel business.  Please see Note 2 for additional information.

During the third quarter of 2019, based on the recent performance of the Jos. A. Bank brand, we determined that a triggering event occurred related to our Jos. A. Bank tradename, an indefinite-lived intangible asset.  As a result, we completed an interim impairment test, which indicated no impairment at this time.

We estimated the fair value of the Jos. A. Bank tradename based on an income approach using the relief-from-royalty method.  This approach is dependent upon a number of factors, including estimates of future growth and trends, royalty rates, discount rates and other variables.

If events or circumstances change that would more likely than not reduce the fair value of our indefinite-lived intangible assets below their respective carrying values, we may be required to record an impairment charge, which could have a material effect on our results of operations and financial condition.  

Amortization expense associated with intangible assets subject to amortization totaled less than $0.1 million and $0.1 million for the three and nine months ended November 2, 2019, respectively. Amortization expense associated with

intangible assets subject to amortization totaled $0.4 million and $1.1 million for the three and nine months ended November 3, 2018, respectively. Amortization expense associated with intangible assets subject to amortization at November 2, 2019 is estimated to be less than $0.1 million for the remainder of fiscal 2019 and $0.2 million each year for fiscal years 2020-2024.

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
Net (loss) earnings	$ (89,590)	$ 13,875	$ (48,182)	$ 77,022
Currency translation adjustments	3,223	(4,056)	(5,691)	(26,023)
Unrealized (loss) gain on cash flow hedges, net of tax	(2,656)	4,980	(20,335)	8,949
Release of cumulative foreign currency translation adjustment to loss from discontinued operations	26,885		26,885
Comprehensive (loss) income	$ (62,138)	$ 14,799	$ (47,323)	$ 59,948

XML

Condensed Consolidating Information

9 Months Ended

Nov. 02, 2019

CONDENSED CONSOLIDATING FINANCIAL INFORMATION

Condensed Consolidating Information

19. Condensed Consolidating Information

As discussed in Note 5, 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.

As discussed in Note 2, on August 16, 2019, we completed the sale of our corporate apparel business.  Given the immateriality of the domestic portion of the corporate apparel business, we have elected not to restate the condensed consolidating financial information to reflect the change in guarantor status of the domestic portion of the corporate apparel business and instead will maintain the operational history of the guarantors.  As such, the financial information for the domestic portion of the corporate apparel business is reflected within the guarantor balances for the periods indicated, while the international portion is reflected within the non-guarantor balances for the periods indicated.   However, the condensed consolidating financial information has been recast to reflect the impact of discontinued operations for all periods presented.

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 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	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193
Accounts receivable, net		—		30,148		178,025		48,848		(214,965)		42,056
Inventories		—		136,033		503,709		138,600		—		778,342
Other current assets		9,287		4,545		37,680		9,266		—		60,778
Total current assets		9,287		171,799		721,174		215,074		(214,965)		902,369
Property and equipment, net		—		180,273		203,570		21,157		—		405,000
Operating lease right-of-use assets		—		474,788		381,008		52,709		—		908,505
Rental product, net		—		76,463		6,836		9,486		—		92,785
Goodwill		—		6,160		52,129		21,103		—		79,392
Intangible assets, net		—		—		146,890		—		—		146,890
Investments in subsidiaries		115,082		1,100,045		—		—		(1,215,127)		—
Other assets		—		4,958		438		3,954		(3,900)		5,450
Total assets	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	182,242	$	81,886	$	92,053	$	68,949	$	(214,965)	$	210,165
Accrued expenses and other current liabilities		2,671		168,824		63,589		25,550		—		260,634
Current portion of operating lease liabilities		—		97,917		74,751		11,754		—		184,422
Current portion of long-term debt		—		9,000		—		—		—		9,000
Total current liabilities		184,913		357,627		230,393		106,253		(214,965)		664,221
Long-term debt, net		—		1,111,732		—		—		—		1,111,732
Operating lease liabilities		—		400,518		312,774		41,664		—		754,956
Deferred taxes, net and other liabilities		3,942		29,527		28,063		16,336		(3,900)		73,968
Shareholders' (deficit) equity		(64,486)		115,082		940,815		159,230		(1,215,127)		(64,486)
Total liabilities and shareholders' equity	$	124,369	$	2,014,486	$	1,512,045	$	323,483	$	(1,433,992)	$	2,540,391

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

November 3, 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	$	—	$	981	$	2,133	$	53,179	$	—	$	56,293
Accounts receivable, net		—		25,010		223,001		55,299		(268,673)		34,637
Inventories		—		149,157		500,579		122,470		—		772,206
Other current assets		220		26,657		34,718		4,468		—		66,063
Current assets - discontinued operations		—		—		46,470		118,888		—		165,358
Total current assets		220		201,805		806,901		354,304		(268,673)		1,094,557
Property and equipment, net		—		190,905		204,147		21,009		—		416,061
Rental product, net		—		83,554		4,367		14,619		—		102,540
Goodwill		—		6,160		52,128		21,187		—		79,475
Intangible assets, net		—		—		154,144		—		—		154,144
Investments in subsidiaries		157,114		1,344,748		—		—		(1,501,862)		—
Other assets		—		16,046		635		80,786		(80,235)		17,232
Non-current assets - discontinued operations		—		—		2,045		23,486		—		25,531
Total assets	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable	$	134,700	$	188,583	$	88,627	$	74,877	$	(268,673)	$	218,114
Accrued expenses and other current liabilities		7,952		170,406		100,839		23,585		—		302,782
Current portion of long-term debt		—		9,000		—		—		—		9,000
Current liabilities - discontinued operations		—		—		6,635		27,026		—		33,661
Total current liabilities		142,652		367,989		196,101		125,488		(268,673)		563,557
Long-term debt, net		—		1,167,906		—		—		—		1,167,906
Deferred taxes, net and other liabilities		5,195		150,209		46,186		22,783		(80,235)		144,138
Non-current liabilities - discontinued operations		—		—		1,451		3,001		—		4,452
Shareholders' equity		9,487		157,114		980,629		364,119		(1,501,862)		9,487
Total liabilities and shareholders' equity	$	157,334	$	1,843,218	$	1,224,367	$	515,391	$	(1,850,770)	$	1,889,540

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	$	1,434	$	30,267	$	—	$	32,671
Accounts receivable, net		—		23,954		255,091		53,610		(297,969)		34,686
Inventories		—		149,923		429,952		144,211		—		724,086
Other current assets		—		30,699		37,621		3,773		(5,270)		66,823
Current assets - discontinued operations		—		—		41,404		129,972		—		171,376
Total current assets		—		205,546		765,502		361,833		(303,239)		1,029,642
Property and equipment, net		—		194,290		207,934		22,092		—		424,316
Rental product, net		—		81,809		3,426		14,535		—		99,770
Goodwill		—		6,160		52,128		21,203		—		79,491
Intangible assets, net		—		—		153,711		—		—		153,711
Investments in subsidiaries		160,057		1,234,005		—		—		(1,394,062)		—
Other assets		—		7,590		640		5,059		(4,800)		8,489
Non-current assets - discontinued operations		—		—		1,906		23,165		—		25,071
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	$	67,044	$	91,200	$	(297,969)	$	204,775
Accrued expenses and other current liabilities		6,697		146,683		105,022		29,044		(5,270)		282,176
Current portion of long-term debt		—		11,619		—		—		—		11,619
Current liabilities - discontinued operations		—		—		7,073		32,952		—		40,025
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		43,495		17,822		(4,800)		119,545
Non-current liabilities - discontinued operations		—		—		1,574		3,903		—		5,477
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 November 2, 2019
Net sales	$	—	$	436,671	$	386,754	$	69,270	$	(163,214)	$	729,481
Cost of sales		—		227,407		309,577		47,683		(163,214)		421,453
Gross margin		—		209,264		77,177		21,587		—		308,028
Operating expenses		991		131,183		129,975		14,693		(14,358)		262,484
Operating (loss) income		(991)		78,081		(52,798)		6,894		14,358		45,544
Other income and expenses, net		—		—		14,984		(626)		(14,358)		—
Interest (expense) income, net		(939)		(17,380)		1,036		(142)		—		(17,425)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(1,930)		60,624		(36,778)		6,126		—		28,042
(Benefit) provision for income taxes		(45)		548		(289)		40		—		254
(Loss) earnings before equity in net income of subsidiaries		(1,885)		60,076		(36,489)		6,086		—		27,788
Equity in (loss) earnings of subsidiaries		(87,705)		(121,473)		—		—		209,178		—
Net (loss) earnings from continuing operations		(89,590)		(61,397)		(36,489)		6,086		209,178		27,788
Net loss from discontinued operations, net of tax		—		(26,308)		(6,166)		(84,904)		—		(117,378)
Net (loss) earnings	$	(89,590)	$	(87,705)	$	(42,655)	$	(78,818)	$	209,178	$	(89,590)
Comprehensive (loss) income	$	(62,138)	$	(64,403)	$	(31,136)	$	(79,788)	$	175,327	$	(62,138)
Three Months Ended November 3, 2018
Net sales	$	—	$	453,316	$	355,710	$	102,896	$	(160,181)	$	751,741
Cost of sales		—		219,036		273,793		73,599		(160,181)		406,247
Gross margin		—		234,280		81,917		29,297		—		345,494
Operating expenses		1,443		135,498		131,431		16,786		(14,942)		270,216
Operating (loss) income		(1,443)		98,782		(49,514)		12,511		14,942		75,278
Other income and expenses, net		—		—		14,942		—		(14,942)		—
Interest (expense) income, net		(1,062)		(20,017)		1,970		559		—		(18,550)
Loss on extinguishment of debt, net		—		(9,420)		—		—		—		(9,420)
(Loss) earnings before income taxes		(2,505)		69,345		(32,602)		13,070		—		47,308
(Benefit) provision for income taxes		(505)		17,304		(6,848)		2,570		—		12,521
(Loss) earnings before equity in net income of subsidiaries		(2,000)		52,041		(25,754)		10,500		—		34,787
Equity in earnings (loss) of subsidiaries		15,875		(36,166)		—		—		20,291		—
Net earnings (loss) from continuing operations		13,875		15,875		(25,754)		10,500		20,291		34,787
Net gain (loss) from discontinued operations, net of tax		—		—		176		(21,088)		—		(20,912)
Net earnings (loss)	$	13,875	$	15,875	$	(25,578)	$	(10,588)	$	20,291	$	13,875
Comprehensive income (loss)	$	14,799	$	20,300	$	(25,578)	$	(14,089)	$	19,367	$	14,799

	Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Nine Months Ended November 2, 2019
Net sales	$	—	$	1,285,018	$	1,147,368	$	433,343	$	(675,441)	$	2,190,288
Cost of sales		—		675,840		908,308		349,803		(675,441)		1,258,510
Gross margin		—		609,178		239,060		83,540		—		931,778
Operating expenses		2,487		401,100		390,436		62,458		(57,540)		798,941
Operating (loss) income		(2,487)		208,078		(151,376)		21,082		57,540		132,837
Other income and expenses, net		—		—		57,019		521		(57,540)		—
Interest (expense) income, net		(3,178)		(53,956)		3,611		(570)		—		(54,093)
Loss on extinguishment of debt, net		—		(77)		—		—		—		(77)
(Loss) earnings before income taxes		(5,665)		154,045		(90,746)		21,033		—		78,667
(Benefit) provision for income taxes		(2,919)		30,428		(14,997)		2,231		—		14,743
(Loss) earnings before equity in net income of subsidiaries		(2,746)		123,617		(75,749)		18,802		—		63,924
Equity in (loss) earnings of subsidiaries		(45,436)		(143,482)		—		—		188,918		—
Net (loss) earnings from continuing operations		(48,182)		(19,865)		(75,749)		18,802		188,918		63,924
Net (loss) gain from discontinued operations, net of tax		—		(25,571)		2,013		(88,548)		—		(112,106)
Net (loss) earnings	$	(48,182)	$	(45,436)	$	(73,736)	$	(69,746)	$	188,918	$	(48,182)
Comprehensive (loss) income	$	(47,323)	$	(38,071)	$	(73,736)	$	(76,252)	$	188,059	$	(47,323)
Nine Months Ended November 3, 2018
Net sales	$	—	$	1,343,248	$	1,095,988	$	303,913	$	(468,651)	$	2,274,498
Cost of sales		—		664,219		834,458		217,142		(468,651)		1,247,168
Gross margin		—		679,029		261,530		86,771		—		1,027,330
Operating expenses		3,408		405,344		397,110		51,305		(42,093)		815,074
Operating (loss) income		(3,408)		273,685		(135,580)		35,466		42,093		212,256
Other income and expenses, net		—		—		42,093		—		(42,093)		—
Interest (expense) income, net		(2,749)		(66,141)		6,115		1,587		—		(61,188)
Loss on extinguishment of debt, net		—		(30,253)		—		—		—		(30,253)
(Loss) earnings before income taxes		(6,157)		177,291		(87,372)		37,053		—		120,815
(Benefit) provision for income taxes		(1,624)		37,882		(17,075)		6,835		—		26,018
(Loss) earnings before equity in net income of subsidiaries		(4,533)		139,409		(70,297)		30,218		—		94,797
Equity in earnings (loss) of subsidiaries		81,555		(57,854)		—		—		(23,701)		—
Net earnings (loss) from continuing operations		77,022		81,555		(70,297)		30,218		(23,701)		94,797
Net gain (loss) from discontinued operations, net of tax		—		—		4,247		(22,022)		—		(17,775)
Net earnings (loss)	$	77,022	$	81,555	$	(66,050)	$	8,196	$	(23,701)	$	77,022
Comprehensive income (loss)	$	59,948	$	87,072	$	(66,050)	$	(14,395)	$	(6,627)	$	59,948

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 2, 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	$	37,836	$	329,070	$	34,951	$	(284,857)	$	(51,438)	$	65,562
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(21,879)		(34,687)		(6,842)		—		(63,408)
Proceeds from divestiture of business, net		—		—		—		45,034		—		45,034
Intercompany activities		—		(238,423)		—		(30,953)		269,376		—
Net cash (used in) provided by investing activities		—		(260,302)		(34,687)		7,239		269,376		(18,374)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on new term loan		—		(9,370)		—		—		—		(9,370)
Proceeds from asset-based revolving credit facility		—		1,065,000		—		—		—		1,065,000
Payments on asset-based revolving credit facility		—		(1,046,000)		—		—		—		(1,046,000)
Repurchase and retirement of senior notes		—		(54,425)		—		—		—		(54,425)
Intercompany activities		—		(23,870)		—		241,808		(217,938)		—
Cash dividends paid		(27,938)		—		—		—		—		(27,938)
Proceeds from issuance of common stock		1,220		—		—		—		—		1,220
Tax payments related to vested deferred stock units		(1,118)		—		—		—		—		(1,118)
Repurchases of common stock		(10,000)		—		—		—		—		(10,000)
Net cash (used in) provided by financing activities		(37,836)		(68,665)		—		241,808		(217,938)		(82,631)
Effect of exchange rate changes		—		—		—		1,205		—		1,205
Increase (decrease) in cash and cash equivalents		—		103		264		(34,605)		—		(34,238)
Cash and cash equivalents at beginning of period		—		970		1,496		52,965		—		55,431
Cash and cash equivalents at end of period	$	—	$	1,073	$	1,760	$	18,360	$	—	$	21,193

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Nine Months Ended November 3, 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	$	29,194	$	470,656	$	11,157	$	(205,357)	$	(27,833)	$	277,817
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(12,962)		(28,853)		(5,112)		—		(46,927)
Proceeds from divestiture of business		—		—		17,755		—		—		17,755
Intercompany activities		—		(228,450)		—		—		228,450		—
Net cash (used in) provided by investing activities		—		(241,412)		(11,098)		(5,112)		228,450		(29,172)
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		—		(6,750)		—		—		—		(6,750)
Proceeds from asset-based revolving credit facility		—		465,500		—		—		—		465,500
Payments on asset-based revolving credit facility		—		(407,000)		—		—		—		(407,000)
Repurchase and retirement of senior notes		—		(199,365)		—		—		—		(199,365)
Deferred financing costs		—		(6,713)		—		—		—		(6,713)
Intercompany activities		—		(27,833)		—		228,450		(200,617)		—
Cash dividends paid		(27,833)		—		—		—		—		(27,833)
Proceeds from issuance of common stock		6,149		—		—		—		—		6,149
Tax payments related to vested deferred stock units		(7,510)		—		—		—		—		(7,510)
Net cash (used in) provided by financing activities		(29,194)		(280,081)		—		228,450		(200,617)		(281,442)
Effect of exchange rate changes		—		—		—		(2,385)		—		(2,385)
(Decrease) increase in cash and cash equivalents		—		(50,837)		59		15,596		—		(35,182)
Cash and cash equivalents at beginning of period		—		51,818		2,180		49,609		—		103,607
Cash and cash equivalents at end of period	$	—	$	981	$	2,239	$	65,205	$	—	$	68,425

XML

Significant Accounting Policies

9 Months Ended

Nov. 02, 2019

Significant Accounting Policies

Significant Accounting Policies

1. Significant Accounting Policies

Basis of Presentation — The condensed consolidated financial statements herein include the accounts of Tailored Brands, Inc. and its subsidiaries (the "Company") and have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC").  As applicable under such regulations, certain information and footnote disclosures have been condensed or omitted.  We believe the presentation and disclosures herein are adequate to make the information not misleading, and the condensed consolidated financial statements reflect all elimination entries and normal recurring adjustments which are necessary for a fair presentation of the financial position, results of operations and cash flows at the dates and for the periods presented.  Certain prior period amounts have been reclassified to conform to the current period presentation.

Our business results historically have fluctuated throughout the year and, as a result, the operating results of the interim periods presented are not necessarily indicative of the results that may be achieved for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended February 2, 2019.

Unless the context otherwise requires, "Company", "we", "us" and "our" refer to Tailored Brands, Inc. and its subsidiaries.

The preparation of the condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S.”) requires management to make estimates and assumptions that affect the reported amounts and related disclosures.  Actual amounts could differ from those estimates.

As discussed in Note 2, during the third quarter of 2019, we completed the sale of our corporate apparel business.    Amounts presented on the condensed consolidated balance sheet and condensed consolidated statements of (loss) earnings for all prior periods related to the corporate apparel business have been reclassified as discontinued operations.  Unless noted otherwise, discussion in these notes to the condensed consolidated financial statements pertain to our continuing operations.

In addition, as a result of this change in our organizational structure, we reassessed our segment reporting presentation.  We determined that the results from our four merchandising brands:  Men’s Wearhouse/Men’s Wearhouse and Tux, Jos. A. Bank, K&G and Moores Clothing for Men (“Moores”) represent separate operating segments that should continue to be aggregated into a reportable segment and, as a result, we have only one reportable segment.  Please see Note 6 for revenue information by brand and by major source.  

Recent Accounting Pronouncements Not Yet Adopted — We have considered all new accounting pronouncements not yet adopted and have concluded there are no new pronouncements that may have a material impact on our financial position, results of operations, or cash flows, based on current information, except for those listed below.  

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU 2018-15, Intangibles-Goodwill and Other-Internal Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. ASU 2018-15 is effective for public companies for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years.  Early adoption of ASU 2018-15 is permitted.  We are currently evaluating the impact ASU 2018-15 may have on our financial position, results of operations or cash flows.

XML

Accumulated Other Comprehensive (Loss) Income

9 Months Ended

Nov. 02, 2019

Accumulated Other Comprehensive (Loss) Income

Accumulated Other Comprehensive (Loss) Income

11. Accumulated Other Comprehensive (Loss) Income

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 2, 2019 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 2, 2019	$	(29,820)	$	(4,314)	$	155	$	(33,979)
Other comprehensive loss before reclassifications		(5,691)		(26,871)		—		(32,562)
Amounts reclassified from accumulated other comprehensive loss		—		(114)		—		(114)
Release of cumulative foreign currency translation adjustment to loss from discontinued operations (see Note 2)		26,885		—		—		26,885
Tax Effect		—		6,650		—		6,650
Net current-period other comprehensive loss		21,194		(20,335)		—		859
BALANCE— November 2, 2019	$	(8,626)	$	(24,649)	$	155	$	(33,120)

The following table summarizes the components of accumulated other comprehensive (loss) income for the nine months ended November 3, 2018 (in thousands):

	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— February 3, 2018	$	(11,116)	$	145	$	189	$	(10,782)
Other comprehensive (loss) income before reclassifications		(26,023)		9,151		—		(16,872)
Amounts reclassified from accumulated other comprehensive income		—		2,487		—		2,487
Tax Effect		—		(2,689)		—		(2,689)
Net current-period other comprehensive (loss) income		(26,023)		8,949		—		(17,074)
BALANCE— November 3, 2018	$	(37,139)	$	9,094	$	189	$	(27,856)

Amounts reclassified from other comprehensive (loss) income for the nine months ended November 2, 2019 relate to changes in the fair value of our interest rate swaps which is recorded within interest expense in the condensed consolidated statement of (loss) earnings and the impact of the cancellation of cash flow hedges related to inventory purchases for our recently sold corporate apparel business, which is recorded within loss on discontinued operations.  Amounts reclassified from other comprehensive (loss) income for the nine months ended November 3, 2018 relate to changes in the fair value of our interest rate swaps and changes in the fair value of cash flow hedges related to inventory purchases, which is recorded within cost of sales in the condensed consolidated statement of (loss) earnings.

XML

Divestiture of MW Cleaners

9 Months Ended

Nov. 02, 2019

Divestiture of MW Cleaners

Divestiture of MW Cleaners

3. Divestiture of MW Cleaners

On February 28, 2018, we entered into a definitive agreement to divest our MW Cleaners business for approximately $18.0 million, subject to certain adjustments, and the transaction closed on March 3, 2018.  During the first nine months of 2018, we received cash proceeds of $17.8 million and recorded a loss on the divestiture totaling $3.8 million, which is included within selling, general and administrative expenses (“SG&A”) in the condensed consolidated statement of (loss) earnings.  

We determined that the sale of the MW Cleaners business did not represent a strategic shift and will not have a major effect on our consolidated results of operations, financial position or cash flows. Accordingly, we have not presented the sale as a discontinued operation in the condensed consolidated financial statements.

XML

Supplemental Cash Flows

9 Months Ended

Nov. 02, 2019

Supplemental Cash Flows

Supplemental Cash Flows

7. Supplemental Cash Flows

Supplemental disclosure of cash flow information is as follows (in thousands):

	For the Nine Months Ended
	November 2,		November 3,
	2019		2018
Cash paid for interest	$	50,332	$	55,856
Cash paid for income taxes, net	$	26,811	$	3,331
Schedule of noncash investing and financing activities:
Receivable related to sale of corporate apparel business	$	6,048	$	—

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of approximately $8.3 million and $12.8 million at November 2, 2019 and November 3, 2018, respectively.  Capital expenditure purchases are recorded as cash outflows from investing activities in the condensed consolidated statement of cash flows in the period they are paid.   Please see Note 14 for other cash flow disclosures related to leases.

XML

Leases (Tables)

9 Months Ended

Nov. 02, 2019

Leases

Summary of components of lease cost

The components of lease cost are as follows (in thousands):

	For the Three Months Ended		For the Nine Months Ended
	November 2, 2019		November 2, 2019
Operating lease cost	$	62,098	$	186,778
Variable lease cost		18,228		55,680
Total lease cost	$	80,326	$	242,458

Summary of supplemental balance sheet information related to leases

Supplemental balance sheet information related to operating leases consists of the following (in thousands):

	November 2, 2019
Operating lease right-of-use assets	$	908,505
Current portion of operating lease liabilities	$	184,422
Noncurrent portion operating lease liabilities		754,956
Total operating lease liabilities	$	939,378

Summary of lease term and discount rate

Lease term and discount rate for operating leases were as follows:

	November 2, 2019
Weighted average remaining lease term	4.7 years
Weighted average discount rate	5.24%

Summary of supplemental disclosures of cash flow information

Supplemental disclosures of cash flow information consists of the following (in thousands):

	For the Nine Months Ended
	November 2, 2019
Cash paid for operating leases	$	191,309
Operating lease assets obtained in exchange for operating lease liabilities	$	1,054,182

Summary of the undiscounted annual future minimum lease payments

The following table summarizes the undiscounted annual future minimum lease payments, as of November 2, 2019, for each of the next five years and in the aggregate (in thousands):

	Operating Leases
Year 1	$	229,077
Year 2		239,009
Year 3		201,540
Year 4		155,022
Year 5		111,953
Thereafter		152,806
Total lease payments	$	1,089,407
Less: Interest		(150,029)
Present value of lease liabilities	$	939,378

Minimum future rental payments under non-cancelable operating leases

As previously disclosed in our 2018 Annual Report on Form 10-K and under the accounting standards then in effect, minimum future rental payments under non-cancelable leases as of February 2, 2019 for each of the next five years and in the aggregate are as follows (in thousands):

Fiscal Year	Operating Leases
2019	$	236,539
2020		206,652
2021		173,294
2022		131,800
2023		86,127
Thereafter		140,256
Total lease payments	$	974,668

Cumulative adjustment upon ASC 842 adoption (see Note 12)

Leases

Summary of cumulative effect of the changes made to our February 2, 2019 balance sheet

The following table depicts the cumulative effect of the changes made to our February 2, 2019 balance sheet for the adoption of ASC 842 effective on February 3, 2019 (in thousands):

	Reported				Adjusted
	Balance at		Impact of		Balance at
	February 2,		Adoption of		February 3,
	2019		ASC 842		2019
Assets:
Other current assets	$	66,823	$	(20,604)	$	46,219
Current assets - discontinued operations		171,376		(150)		171,226
Operating lease right-of-use assets		—		887,064		887,064
Intangible assets, net		153,711		(6,682)		147,029
Non-current assets - discontinued operations		25,071		9,206		34,277
Current Liabilities:
Accrued expenses and other current liabilities		268,698		(151)		268,547
Current portion of operating lease liabilities		—		181,931		181,931
Current liabilities - discontinued operations		40,025		1,795		41,820
Noncurrent Liabilities:
Operating lease liabilities		—		737,750		737,750
Deferred taxes, net and other liabilities		119,545		(59,349)		60,196
Noncurrent liabilities - discontinued operations		5,477		7,260		12,737
Equity:
Accumulated deficit	$	(468,048)	$	(402)	$	(468,450)

XML

Inventories (Tables)

9 Months Ended

Nov. 02, 2019

Inventories

Schedule of inventories

The following table provides details on our inventories as of November 2, 2019, November 3, 2018 and February 2, 2019 (in thousands):

	November 2,		November 3,		February 2,
	2019		2018		2019
Finished goods	$	647,715	$	666,087	$	581,953
Raw materials and merchandise components		130,627		106,119		142,133
Total inventories	$	778,342	$	772,206	$	724,086

XML

Debt - Senior Notes, Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Debt
(Loss) gain on extinguishment of debt	$ (77)	$ (9,420)	$ (77)	$ (30,253)
Senior Notes
Debt
Partial redemption		$ 175,000		175,000
Repurchase and retired amount	54,800			17,600
(Loss) gain on extinguishment of debt	(100)			(8,900)
Unamortized Debt Issuance Expense	500		$ 500
Loss upon repurchase				(6,700)
Unamortized deferred financing costs				$ 2,200
Gains (Losses) On Repurchase Of Debt Instrument	$ 400

XML

Revenue Recognition - Other Various Policies (Details)	9 Months Ended
	Nov. 02, 2019 USD ($) item
Loyalty Program
Points equivalency to dollars spent ratio	1
Loyalty point threshold | item	500
Amount of rewards certificates	$ 50
Period after which reward certificates earned must be redeemed	6 months
Sales Returns And Allowances For Goods [Abstract]
Refund liability current	$ 5,800,000
Right to recover	$ 2,800,000

XML

Goodwill and Other Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Nov. 02, 2019	Nov. 03, 2018	Nov. 02, 2019	Nov. 03, 2018
Intangible asset amortization expense
Pre-tax amortization expense associated with intangible assets		$ 400	$ 100	$ 1,100
Pre-tax amortization expense estimated for fiscal year 2020	$ 200		200
Pre-tax amortization expense estimated for fiscal year 2021	200		200
Pre-tax amortization expense estimated for fiscal year 2022	200		200
Pre-tax amortization expense estimated for fiscal year 2023	200		200
Pre-tax amortization expense estimated for fiscal year 2024	200		200
Intangible impairment charge	0
Maximum
Intangible asset amortization expense
Pre-tax amortization expense associated with intangible assets	100
Pre-tax amortization expense estimated for the remainder of fiscal year 2019	$ 100		$ 100

XML

Leases - Lease Term and Discount Rate and Supplemental Disclosures of Cash Flow Information (Details) $ in Thousands	9 Months Ended
	Nov. 02, 2019 USD ($)
Leases
Weighted average remaining lease term	4 years 8 months 12 days
Weighted average discount rate	5.24%
Cash paid for operating leases	$ 191,309
Operating lease assets obtained in exchange for operating lease liabilities	1,054,182
Operating lease liabilities	939,378
Finance lease	$ 0

XML

Legal Matters (Details) - plaintiff	Oct. 04, 2018	Sep. 28, 2017	Aug. 02, 2017
COMMITMENTS AND CONTINGENCIES
Number of plaintiffs			2
Additional number of plaintiffs	39	9

XML

Derivative Financial Instruments - Estimated fair value (Details) - Designated as hedging instruments - USD ($) $ in Thousands	Nov. 02, 2019	Feb. 02, 2019	Nov. 03, 2018
Derivative Financial Instruments
Derivative asset		$ 2,965	$ 11,881
Derivative liability	$ 32,287	9,307	797
Other current assets | Interest rate contracts
Derivative Financial Instruments
Interest Rate Cash Flow Hedge Asset at Fair Value		1,610	2,316
Other current assets | Foreign exchange contract
Derivative Financial Instruments
Foreign Currency Fair Value Hedge Asset at Fair Value			6
Other noncurrent assets | Interest rate contracts
Derivative Financial Instruments
Interest Rate Cash Flow Hedge Asset at Fair Value		1,355	9,559
Accrued expenses and other current liabilities | Interest rate contracts
Derivative Financial Instruments
Interest Rate Cash Flow Hedge Liability at Fair Value	6,998	1,625	$ 797
Accrued expenses and other current liabilities | Foreign exchange contract
Derivative Financial Instruments
Foreign Currency Fair Value Hedge Liability at Fair Value	44	77
Deferred taxes, net and other liabilities | Interest rate contracts
Derivative Financial Instruments
Interest Rate Cash Flow Hedge Liability at Fair Value	$ 25,245	$ 7,605