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