<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934.
For the quarterly period ended July 29, 2000
-------------------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended _______________________ to ______________________
_________________________________________________________
Commission File No.0-20234
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Today's Man, Inc.
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1743137
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
835 Lancer Drive, Moorestown, NJ 08057
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number 856-235-5656
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Not Applicable
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Former name, former address and former fiscal year,
if changed since last report
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, and (2) has been subject to such filing requirements
for the past 90 days.
YES X NO .
--------- ------------
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN A BANKRUPTCY DURING THE
PRECEDING FIVE YEARS
Indicate by check mark whether the Registrant has filed all
documents and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of securities
under a plan confirmed by a court.
YES X NO .
--------- ------------
27,040,725 common shares were outstanding as of September 8, 2000.
<PAGE>
TODAY'S MAN INC.
----------------
INDEX
-----
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Item 1. Condensed Consolidated Financial Statements - Unaudited
Consolidated Balance Sheets
July 29, 2000 and January 29, 2000.......................................................1
Consolidated Statements of Operations
Thirteen weeks ended July 29, 2000 and July 31, 1999.....................................2
Consolidated Statements of Operations
Twenty-six weeks ended July 29, 2000 and July 31, 1999...................................3
Consolidated Statements of Cash Flows
Twenty-six weeks ended July 29, 2000 and July 31, 1999...................................4
Notes to Consolidated Financial Statements.............................................5-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................................8-11
Item 3. Quantitative and Qualitative Disclosures about Market Risks.............................11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings......................................................................12
Item 2. Changes in Securities and Use of Proceeds..............................................12
Item 3. Defaults Upon Senior Securities........................................................12
Item 4. Submission of Matters to a Vote of Security Holders....................................12
Item 5. Other Information......................................................................12
Item 6. Exhibits and Reports on Form 8-K.......................................................12
Signatures......................................................................................13
</TABLE>
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
July 29, January 29,
--------- -----------
2000 2000
---- -----
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 126,200 $ 392,700
Due from credit card companies and other receivables, net 1,951,300 1,692,900
Inventory 34,610,000 39,334,700
Prepaid expenses and other current assets 2,013,900 2,270,700
Prepaid inventory purchases 1,013,600 1,847,900
------------------- --------------------
Total current assets 39,715,000 45,538,900
Property and equipment, less accumulated depreciation and amortization
30,367,500 34,235,300
Loans to shareholders - 228,400
Rental deposits and other noncurrent assets 2,563,100 1,864,600
------------------- --------------------
$72,645,600 $81,867,200
=================== ====================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 8,788,000 $9,014,700
Accrued expenses and other current liabilities 5,527,900 6,408,300
Current maturities of capital lease obligations 401,600 401,600
------------------- -------------------
Total current liabilities 14,717,500 15,824,600
Capital lease obligations, less current maturities 583,700 936,600
Deferred rent and other 4,122,100 4,559,800
Obligation under revolving credit facility 21,487,700 21,145,100
------------------- -------------------
40,911,000 42,466,100
Shareholders' equity:
Preferred stock, no par value, 5,000,000 shares authorized, none issued - -
Common stock, no par value, 100,000,000 shares authorized, 27,040,725 and
27,040,725 shares issued and outstanding at July 29, 2000 and January 29, 2000
respectively 48,513,700 48,513,700
Accumulated deficit (16,779,100) (9,112,600)
------------------- -------------------
Total shareholders' equity 31,734,600 39,401,100
------------------- -------------------
$72,645,600 $81,867,200
=================== ===================
</TABLE>
See accompanying notes.
1
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR THIRTEEN WEEKS ENDED
July 29, July 31,
--------- --------
2000 1999
---- ----
<S> <C> <C>
Net sales $ 41,617,300 $45,470,700
Cost of goods sold 26,390,600 29,112,700
-------------------- -------------------
Gross profit 15,226,700 16,358,000
Selling, general and administrative expenses 17,033,800 17,590,500
-------------------- -------------------
Loss from operations (1,807,100) (1,232,500)
Interest expense and other income, net 626,000 287,900
-------------------- -------------------
Loss before income taxes (2,433,100) (1,520,400)
Income tax benefit - (559,000)
-------------------- -------------------
Net loss $ (2,433,100) $ (961,400)
==================== ===================
Loss per share - basic and diluted $ (0.09) $ (0.04)
Weighted average shares outstanding - basic and diluted 27,040,725 27,014,533
==================== ===================
</TABLE>
See accompanying notes.
2
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
FOR TWENTY-SIX WEEKS ENDED
July 29, July 31,
--------- --------
2000 1999
---- ----
<S> <C> <C>
Net sales $82,688,700 $88,247,900
Cost of goods sold 51,547,800 55,641,000
------------------- ------------------
Gross profit 31,140,900 32,606,900
Selling, general and administrative expenses(includes $3,987,600
in asset impairment charges and lease termination costs in
fiscal 2000) 37,575,700 34,300,000
------------------- ------------------
Loss from operations (6,434,800) (1,693,100)
Interest expense and other income, net 1,231,700 534,700
------------------- ------------------
Loss before income taxes (7,666,500) (2,227,800)
Income tax benefit - (762,500)
------------------- ------------------
Net loss $ (7,666,500) $ (1,465,300)
===================
==================
Loss per share - basic and assuming dilution $ (0.28) $ (0.05)
=================== ==================
Weighted average shares outstanding - basic and assuming
dilution 27,040,725 27,014,533
</TABLE>
See accompanying notes.
3
<PAGE>
TODAY'S MAN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
FOR TWENTY-SIX WEEKS ENDED
July 29, July 31,
--------- --------
2000 1999
---- ----
<S> <C> <C>
Operating activities
Net loss $ (7,666,500) $ (1,465,300)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation and amortization 2,043,200 1,798,100
Reserve for asset impairment charges and lease termination costs 3,987,600 -
Deferred credits (437,700) (112,500)
Reserve of loans to shareholders 228,400 -
Changes in operating assets and liabilities:
Increase in receivables (258,400) (503,100)
Decrease in inventory 4,724,700 575,600
Decrease in prepaid expenses and other current assets and
prepaid inventory purchases 1,091,100 790,700
Increase in rental deposits and other non current assets (698,500) (91,500)
Decrease in payables and accrued expenses (2,878,200) (3,670,100)
-------------------- -------------------
Total adjustments 7,802,200 (1,212,800)
-------------------- -------------------
Net cash provided by (used in) operating activities 135,700 (2,678,100)
Cash flow used in investing activities:
Capital expenditures (391,900) (539,600)
Fixtures and equipment in process - (1,782,000)
-------------------- -------------------
Net cash used in investing activities (391,900) (2,321,600)
Cash flow (used in) provided by financing activities:
Repayment of capital leases (352,900) (513,500)
Borrowings under revolving credit facility 78,309,500 83,987,800
Repayment of revolving credit facility (77,966,900) (79,425,200)
Proceeds from exercise of stock options and common stock
purchase warrants - 400
-------------------- -------------------
Net cash (used in) provided by financing activities (10,300) 4,049,500
Net decrease in cash and cash equivalents (266,500) (950,200)
Cash and cash equivalents at beginning of period 392,700 1,181,100
-------------------- -------------------
Cash and cash equivalents at end of period $ 126,200 $ 230,900
==================== ===================
</TABLE>
See accompanying notes.
4
<PAGE>
TODAY'S MAN, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Financial Statement Presentation
The accompanying unaudited consolidated financial statements, which
include the accounts of the Company and its wholly owned subsidiaries, have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. All significant intercompany transactions and accounts
have been eliminated in consolidation. In the opinion of management, all
adjustments (consisting of normal recurring accruals and the asset impairment
charges and lease termination costs disclosed in Note 5) considered necessary
for a fair presentation have been included. Due to the seasonal nature of the
Company's sales, operating results for the interim period are not necessarily
indicative of results that may be expected for the fiscal year ending February
3, 2001. For further information, refer to the consolidated financial statements
and footnotes thereto which are included in the Company's Annual Report on Form
10-K for the fiscal year ended January 29, 2000.
2. Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.
3. Earnings (Loss) per Common Share
Earnings (loss) per share is calculated following Financial Accounting
Standards Board Statement No. 128 Earnings per Share. Statement 128 requires
companies to present basic and diluted earnings per share. Basic earnings per
share excludes any dilutive effect of outstanding stock options whereas diluted
earnings per share includes the effect of such items. There is no difference
between basic and diluted earnings per share for the current period because the
effect of the Company's common share equivalents would be anti-dilutive.
4. Recent Accounting Pronouncements
In December 1999, the Securities and Exchange Commission (SEC) issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial
Statements", which effectively changes previous guidance related to revenue
recognition and the recording of license business revenues for retail companies.
For the thirteen weeks ended April 29, 2000, the Company changed its method of
recording licensed shoe department sales. This change reduces reported sales and
reported expenses, but has no impact on operating or net income. Net licensed
shoe department sales were $446,800 and $417,000 in the thirteen weeks ended
July 29, 2000 and July 31, 1999 respectively, and $894,000 and $894,000 in the
twenty-six weeks ended July 29, 2000 and July 31, 1999, respectively. Prior year
sales have been reduced by $2,047,600 for the thirteen weeks ended July 31, 1999
and $4,154,400 for the twenty-six weeks ended July 31, 1999 with a corresponding
reduction in cost of sales. The Company will adopt the remaining provisions of
SAB 101 as of the fiscal quarter ended February 3, 2001. The Company is
currently in the process of evaluating the impact that SAB 101 will have on its
consolidated financial position and results of operations.
5
<PAGE>
TODAY'S MAN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
5. Store Closings
During the thirteen weeks ended April 29, 2000, the Company recorded a
charge to operations of approximately $4.0 million relating to the announced
closing of three underperforming store locations. The Company recognized
$1,990,500 in fixed asset write-offs and $1,997,100 in lease termination costs
related to the anticipated closing of the stores in the third quarter of fiscal
2000. The closing of the Manhasset, New York store was completed during this
quarter. The Company has included $1,997,100 in accrued expenses and other
current liabilities related to the lease termination costs. The three stores
generated sales of $3.3 million and $3.2 million for the thirteen weeks ended
July 29, 2000 and July 31, 1999, respectively, and $6.0 million and $6.2 million
in the twenty-six weeks ended July 29, 2000 and July 31, 1999, respectively.
Investment Considerations
In analyzing whether to make, or to continue, an investment in the
Company, investors should consider, among other factors, certain investment
considerations more particularly described in "Item 1: Business - Investment
Considerations" in the Company's Annual Report on Form 10-K for the year ended
January 29, 2000, a copy of which can be obtained, without charge except for
exhibits to the Report, upon written request to Mr. Frank E. Johnson, Executive
Vice President and Chief Financial Officer, Today's Man, Inc., 835 Lancer Drive,
Moorestown, New Jersey 08057.
Safe Harbor Statement under Private Securities Litigation Reform Act of 1995
Certain statements in this Form 10-Q which are not historical facts,
including, without limitation, statements as to the Company's plans for 2000,
e-commerce strategy, or as to management's beliefs, expectations, or opinions,
are forward looking statements that involve risks and uncertainties and are
subject to change at any time. Certain factors, including, without limitation
the risk that the assumptions upon which the forward-looking statements are
based ultimately may prove incorrect, risks relating to the Company's growth
strategy, small store base and geographic concentration, the declining unit
sales of men's tailored clothing, seasonality and global economic conditions,
and the other risks detailed from time to time in the Company's filings with the
Securities and Exchange Commission, including, without limitation, its Annual
Report on Form 10-K, can cause actual results and developments to be materially
different from those expressed or implied by such forward-looking statements.
See "Investment Considerations" above, for instructions on how to receive a copy
of the Company's Annual Report.
6
<PAGE>
TODAY'S MAN, INC.
NOTES TO FINANCIAL STATEMENTS (Continued)
(Unaudited)
RESULTS OF OPERATIONS:
----------------------
The following table sets forth, as a percentage of net sales, certain
items appearing in the consolidated statements of operations for the thirteen
and twenty-six week periods ended July 29, 2000 and July 31, 1999, respectively.
<TABLE>
<CAPTION>
PERCENTAGE OF NET SALES
THIRTEEN AND TWENTY-SIX WEEKS ENDED
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
----------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold 63.4 64.0 62.3 63.1
----------------------------------------------------------
Gross profit 36.6 36.0 37.7 36.9
Selling, general and administrative expenses 40.9 38.7 45.4 38.9
----------------------------------------------------------
Loss from operations (4.3) (2.7) (7.7) (2.0)
Interest expense and other income, net 1.5 0.6 1.5 0.6
----------------------------------------------------------
Loss before income taxes (5.8) (3.3) (9.2) (2.6)
Income taxes (benefit) 0.0 (1.2) 0.0 (0.9)
----------------------------------------------------------
Net loss (5.8)% (2.1)% (9.2)% (1.7)%
==========================================================
</TABLE>
THIRTEEN WEEKS ENDED JULY 29, 2000 AND JULY 31, 1999:
-----------------------------------------------------
NET SALES. Net sales decreased $3,853,400 or 8.5% in the second quarter
of fiscal 2000 compared to the year ago period. Comparative store sales
decreased 12.2%. The decrease in net sales is a result of decline in foot
traffic the Company has experienced. There were 28 and 29 superstores in
operation at July 29, 2000 and July 31, 1999, respectively. The Manhasset, New
York store was closed in the second quarter of fiscal 2000.
7
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GROSS PROFIT. Gross profit as a percentage of net sales increased to
36.6% for the second quarter of fiscal 2000 compared to 36.0% for second quarter
of fiscal 1999. The increase in gross profit percentage is a result of the
Company's strategy of higher initial mark-ups to accommodate pre-planned
markdowns on various point of sale events.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses decreased $556,700 or 3.2% in the second quarter of
fiscal 2000, and increased as a percentage of sales to 40.9% from 38.7% in the
second quarter of fiscal 1999. This dollar decrease is primarily attributable to
a reduction in advertising expenses of $540,000.
INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest
income and other expense, net increased by $338,100 from the second quarter of
fiscal 1999. The increase in interest expense was attributable to the increased
amount of average borrowings incurred ($21,545,800 in the second quarter of
fiscal 2000 versus $13,225,900 in the second quarter of fiscal 1999) due to the
decline in sales revenues as discussed above, as well as the increase in the
interest rate charged (10.25% as of July 29, 2000 versus 8.0% as of July 31,
1999) as per the Company's amended Loan and Security Agreement with Mellon Bank.
As a result of revolving credit borrowings, the Company recorded interest
expense of $626,000 during the quarter ended July 29, 2000
TWENTY-SIX WEEKS ENDED JULY 29, 2000 AND JULY 31, 1999:
-------------------------------------------------------
NET SALES. Net sales decreased $5,559,200 or 6.3% for the first six
months of fiscal 2000 compared to the year ago period. Comparative store sales
decreased 10.7%. The decrease in net sales is a result of the decline in foot
traffic the Company has experienced. There were 28 and 29 superstores in
operation at July 29, 2000 and July 31, 1999, respectively. The Manhasset, New
York store was closed in the second quarter of fiscal 2000.
GROSS PROFIT. Gross profit as a percentage of net sales increased to
37.7% for the first six months of 2000 compared to 36.9% for the first six
months 1999. The increase in the gross profit percentage is a result of the
Company's strategy of higher initial mark-ups to accommodate pre-planned
markdowns on various point of sale events.
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and
administrative expenses increased $3,275,700 or 9.6% in the first six months of
fiscal 2000, and increased as a percentage of sales to 45.4% from 38.9% in the
comparable period of fiscal 1999. The dollar increase was due to the charge
taken in the first quarter of fiscal 2000 related to the announced planned
closing of three underperforming store locations (one of which was completed in
the second quarter of fiscal 2000). The Company recognized $1,990,500 in fixed
asset write-offs and $1,997,100 in lease termination costs related to the fiscal
2000 store closings as discussed below.
INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest
income and other expense, net increased by $697,000 from the first six months of
fiscal 1999. The increase in interest expense is attributable to the increased
amount of average borrowings incurred ($22,905,400 for the six month period
ended July 29, 2000 versus $13,438,800 for the six month period ended July 31,
1999) due to the decline in sales revenues as discussed above, as well as the
increase in the interest rate charged (10.25% as of July 29, 2000 versus 8.0% as
of July 31, 1999) as per the Company's Amended Loan and Security Agreement with
Mellon Bank. As a result of revolving credit borrowings, the Company recorded
interest expense of $1,231,700 during the six month period ended July 29, 2000.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company's primary sources of working capital are cash flow from
operations and borrowings under the revolving credit facility. At July 29, 2000,
the Company had working capital of $24,997,500 as compared with $29,714,300 at
January 29, 2000.
On December 4, 1998, the Company entered into a Loan and Security
Agreement with Mellon Bank, N.A., ("Mellon") individually and as agent. The Loan
and Security Agreement provided for a $45.0 million revolving credit facility
with a $20.0 million sublimit for letters of credit. The Mellon Loan and
Security Agreement contains financial covenants including tangible net worth,
indebtedness to tangible net worth and fixed charge coverage ratios, and
limitations on new store openings and capital expenditures as well as
restrictions on the payment of dividends. The Company granted Mellon a lien on
its tangible and intangible assets to secure this revolving credit facility.
Proceeds from this loan were used to refinance the Company's previous revolving
credit facility and term loan from Foothill Capital Corporation.
The Mellon revolving credit facility bore interest at the option of the
Company at prime (9.50% at July 29, 2000) or LIBOR plus a margin ranging from
1.75% to 3.25% depending upon the Company's EBITDA. Availability under the
revolver is determined by a formula based on inventory and credit card
receivables, less applicable reserves.
In April 1999, the Company and Mellon amended the Loan Agreement to
allow for the inclusion of participant lenders and to modify certain other
provisions including the tangible net worth and fixed charge coverage ratio
covenants.
During the fourth quarter of fiscal 1999, the Company was projecting a
liquidity shortfall in early fiscal 2000 under its revolving credit facility. To
address the liquidity shortfall, the Company obtained a temporary over-advance
of $4.5 million above its calculated borrowing base from Mellon on February 11,
2000. In addition, the Company and Mellon agreed to recast certain financial
covenants to reflect the year-end operating results. On March 15, 2000, the
Company and Mellon entered into amendment No. 3 to the Loan and Security
Agreement. The revolving credit facility was reduced to $35.0 million with a
$15.0 million sublimit for letters of credit. Within the credit facility was an
over-advance facility of $4.5 million above the calculated borrowing base which
reduced to $3.4 million on May 16, 2000 and $2.5 million on June 16, 2000 and
expired on June 30, 2000. The revolving credit facility expires on March 15,
2002 and bears interest at 0.75% per annum above Mellon Bank's prime rate. The
amended Agreement recast all of the Company's financial covenants as of and for
the year ended January 29, 2000 and for the remaining term of the loan
agreement. The amended Agreement contains financial covenants related to
tangible net worth, indebtedness to tangible net worth, fixed charge coverage
ratios, maximum net loss per month, and limitations on new store openings and
capital expenditures as well as restrictions on the payments of dividends.
Additionally, Mr. David Feld, Chairman of the Board, agreed to provide
additional collateral to secure the credit facility. The Company was in
compliance with all covenants under the amended Agreement as of January 29,
2000. The amended Agreement also includes a termination fee of $1.0 million if
the Company terminates the facility before March 15, 2001, and $700,000 if
termination occurs from March 16, 2001 through March 14, 2002.
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Company announced on March 15, 2000 that it had engaged Wasserstein
Perella & Co., Inc., an investment-banking firm, to enhance the Company's
shareholder value. This may take the form of an equity investment in the Company
or debt.
On May 1, 2000, the Company and Mellon entered into Amendment No. 4 to
include Todaysman.com, a subsidiary of the Company, in the revolving credit
facility.
In April 2000, the Company decided to close three under-performing
stores, including one store located in a building owned by Mr. David Feld,
Chairman of the Board. The planned closing of the three stores resulted in a
charge to operations in the first quarter of fiscal 2000 of $4.0 million
consisting of $1,990,500 for the write-off of furniture and fixtures and
$1,997,100 for lease termination costs. The lease termination costs are expected
to be incurred ratably from the date of the store closings through the end of
the anticipated lease terms estimated to be approximately 18 months. The three
stores generated sales of $6.0 million and $6.2 million and cost of sales of
$3.8 million and $3.9 million in the quarters ended July 29, 2000 and July 31,
1999, respectively. The three stores, which generated sales of $12,590,000 and
cost of sales of $8,156,000 in fiscal 1999, are expected to be closed by October
2000. The closing of the Manhasset, New York store was completed in the second
quarter of fiscal 2000. The estimated lease termination costs may increase if a
sub-lessor is not obtained within 18 months of the store closings. Also, the
Company may incur additional costs related to the store closings, such as
employee termination costs; however, these amounts are not determinable at this
time.
On May 11, 2000, the Company and Mellon entered into Amendment No. 5 to
the revolving credit facility. The agreement amended the credit facility to
extend the over-advance facility of $2,500,000 which previously expired on June
30, 2000 to August 15, 2000. The over-advance was reduced to $2,250,000 on
August 16, 2000, $1,250,000 on September 16, 2000, $1,000,000 on October 16,
2000 and expired on November 30, 2000. Amendment No. 5 also revised certain
financial covenants to provide a waiver for the $4.0 million charge to
operations caused by the store closings discussed above. The amendment also
provided for a reduction in the credit facility from $35 million to $30 million
effective on November 30, 2000. The termination fee was also increased to
$1,050,000 if the facility is terminated on or before March 14, 2002.
In anticipation of the results of the quarter, the Company and Mellon
Bank entered into negotiations to enhance the Company's liquidity for the fall
selling season. On August 16, 2000 the Company and Mellon entered into Amendment
No. 6 to the revolving credit facility. The agreement amends the credit facility
to increase the overadvance amount from $2,500,000 to $4,500,000 effective
August 16, 2000 and ending on October 15, 2000. The overadvance is reduced to
$4,000,000 on October 16, 2000 and $2,750,000 on November 16, 2000 and expires
on December 15, 2000. Amendment No. 6 also revises the indebtedness to tangible
net worth covenant and waives the fixed charge coverage ratio covenant.
The Company has been substantially dependent upon borrowings under its
credit facility to finance its operations and received an amended credit
facility from Mellon, which allows the Company additional liquidity through an
over-advance facility through December 15, 2000 as discussed above.
Additionally, the Company is in the process of implementing a plan to reverse
the trend of losses noted above. Management's plans implemented thus far, as
well as actions initiated that will continue into fiscal 2000, include the
execution of the amended credit facility, a layoff of non-operating personnel in
January 2000, the reduction in advertising spending and the focus on the
Company's traditional advertising approach, and the announcement of the closing
of three under-performing stores in May 2000.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Management believes the Company's cash requirements in 2000 will be
generated by operations and borrowings on the Company's credit facility.
Management also believes that the actions initiated and its 2000 plans will
result in the successful funding of its working capital and cash requirements
while enabling the Company to meet its financial covenants under the credit
facility.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
--------------------------------------------------------------------
The Company is a retail company doing business within the United
States. Its primary market risk is exposure to interest rates fluctuations on
its debt instruments. The Company's bank revolving credit facility bears
interest at variable rates. The variable interest rate is the rate in effect at
the quarter ended July 29, 2000, and it fluctuates with the lending bank's prime
rate. The change in interest expense of the Company's bank revolving credit
facility resulting from a hypothetical 2% increase in interest rates would not
be material.
11
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
None - not applicable
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
None - not applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
None - not applicable
Item 4. Submission of Matters to a Vote of Shareholders
-----------------------------------------------
The Annual Meeting of Shareholders of the Company was held on July 20,
2000. At the Annual Meeting, the shareholders elected Eli Katz and Bruce Weitz
for a term of four years as described below:
Name For Withheld Authority
---- --- ------------------
Eli Katz 15,234,345 817,145
Bruce Weitz 15,236,520 814,970
In addition, the terms of the following directors continued after the
Annual Meeting:
David Feld
Larry Feld
Verna Gibson
Neal J. Fox
Leonard Wasserman
On July 19, 2000, the Company announced that the Board of Directors had
exercised its option to cancel the previously announced 1-for-4 reverse stock
split prior to the shareholder vote at the Annual Meeting of Shareholders.
Item 5. Other Information
On August 23, 2000 the Company announced that Bruce Weitz was appointed
President and Chief Executive Officer of the Company and Neal J. Fox, was
appointed to the position of Vice Chairman. Mr. Fox will report to Mr. Weitz and
will direct the merchandising and marketing aspects of the business. Both
Messrs. Weitz and Fox were appointed to the Board of Directors of the Company in
May 2000. David Feld, the Company's founder, will retain his position as
Chairman of the Board
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits
None - not applicable
Reports on Form 8-K
On July 19, 2000, the Company filed a Current Report on Form 8-K with
respect to the cancellation of the previously announced 1-for-4 reverse stock
split.
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<PAGE>
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.
TODAY'S MAN, INC.
(Registrant)
Date: September 12, 2000 /s/David Feld
-------------------------------------
David Feld
Chairman of the Board
Date: September 12, 2000 /s/Bruce Weitz
-------------------------------------
Bruce Weitz
President and Chief Executive Officer
Date: September 12, 2000 /s/Frank E. Johnson
-------------------------------------
Frank E. Johnson
Executive Vice President, Chief Financial
Officer and Treasurer
Principal Financial Officer
Date: September 12, 2000 /s/Barry S. Pine
-------------------------------------
Barry S. Pine
Vice President and Controller
Principal Accounting Officer
13
