10-Q 1 tenq.txt 10-Q 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 November 3, 2001 ---------------------------------- 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 ------- Today's Man, Inc. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 23-1743137 -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 835 Lancer Drive, Moorestown, NJ 08057 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number 856-235-5656 --------------------------------------------------- Not Applicable -------------------------------------------------------------------------------- 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 December 12, 2001. TODAY'S MAN INC. INDEX

~~TODAY'S MAN INC. ---------------- INDEX -----~~ PAGE ---- PART I. FINANCIAL INFORMATION: Item 1. Condensed Consolidated Financial Statements - Unaudited Consolidated Balance Sheets ~~August~~November 43, 2001 and February 3, 2001......................................................1 Consolidated Statements of Operations Thirteen weeks ended ~~August~~November 43, 2001 and ~~July~~October 2928, 2000...............................~~.....~~2 Consolidated Statements of Operations ~~Twenty~~Thirty-~~six~~nine weeks ended ~~August~~November 43, 2001 and ~~July~~October 2928, 2000............................~~......~~3 Consolidated Statements of Cash Flows ~~Twenty~~Thirty-~~six~~nine weeks ended ~~August~~November 43, 2001 and ~~July~~October 2928, 2000............................~~......~~4 Notes to Consolidated Financial Statements...............................................5-6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations..............................................................67-910 Item 3. Quantitative and Qualitative Disclosures about Market Risks..............................911 PART II. OTHER INFORMATION Item 1. Legal Proceedings.......................................................................1012 Item 2. Changes in Securities and Use of Proceeds...............................................1012 Item 3. Defaults Upon Senior Securities.........................................................1012 Item 4. Submission of Matters to a Vote of ~~Shareholders~~Security Holders.....................................~~....10~~12 Item 5. Exhibits and Reports on Form 8-K........................................................1012 Signatures.......................................................................................1113

TODAY'S MAN, INC. CONSOLIDATED BALANCE SHEETS

~~TODAY'S~~November ~~MAN~~3, ~~INC. CONSOLIDATED BALANCE SHEETS August 4, 2001~~ February 3, 2001 2001 -----------~~---~~ -----------~~-----~~ (Unaudited) ASSETS Current assets: Cash $ ~~125~~141,~~800~~300 $ 480,200 Due from credit card companies and other receivables, net 1,~~053~~495,~~000~~100 1,576,000 Inventory 2733,~~744~~355,~~700~~600 30,941,100 Prepaid expenses and other current assets ~~781~~2,~~700~~418,000 1,024,700 Prepaid inventory purchases ~~758~~969,~~300~~200 1,589,300 --------------- ---------------- Total current assets 3038,~~463~~379,~~500~~200 35,611,300 Property and equipment, less accumulated depreciation and amortization 25$ 24,~~623~~268,000 $ 27,976,100 Rental deposits and other noncurrent assets 2,~~504~~536,~~400~~000 1,992,300 --------------- ---------------- $ 5865,~~590~~183,~~900~~200 $ 65,579,700 =============== ================ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 916,~~696~~577,~~800~~600 $ 11,555,500 Accrued expenses and other current liabilities 52,~~494~~145,600 6,318,900 Current maturities of capital lease obligations 224,100 224,100 Current portion of long term debt - 3,000,000 --------------- ---------------- Total current liabilities 1518,~~415~~947,~~500~~300 21,098,500 Capital lease obligations, less current maturities ~~527~~451,200 713,500 Deferred rent and other 5,~~592~~639,~~900~~000 2,684,800 ~~Obligation~~Obligations under revolving credit facility 1622,~~642~~399,~~000~~600 15,706,000 --------------- ---------------- 3847,~~177~~437,~~600~~100 40,202,800 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 shares issued and outstanding 48,513,700 48,513,700 Accumulated deficit (2830,~~100~~767,~~400~~600) (23,136,800) --------------- ---------------- Total shareholders' equity 2017,~~413~~746,~~300~~100 25,376,900 --------------- ---------------- $ 5865,~~590~~183,~~900~~200 $ 65,579,700 =============== ================

See accompanying notes. 1 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

~~TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)~~ FOR THIRTEEN WEEKS ENDED ~~August~~November 43, ~~2001~~October ~~July 29~~28, 2001 2000 -----------~~---~~ ------------- Net sales $ 3425,~~916~~908,~~500~~400 $ 4138,~~617~~227,~~300~~200 Cost of goods sold 2014,~~790~~567,900 2622,~~390~~957,~~600~~000 ---------------- ---------------- Gross profit 1411,~~125~~340,~~600~~500 15,~~226~~270,~~700~~200 Selling, general and administrative expenses 16(includes $465,~~531~~700 in store closing and other unusual charges in fiscal 2001) 13,~~300~~633,700 1716,~~033~~967,800 ---------------- ---------------- Loss from operations (2,~~405~~293,~~700~~200) (1,~~807~~697,~~100~~600) Interest expense and other income, net ~~354~~374,~~300~~000 ~~626~~671,000 ---------------- ---------------- Loss before income taxes (2,~~760~~667,~~000~~200) (2,~~433~~368,~~100~~600) Income tax benefit - - ---------------- ---------------- Net loss $ (2,~~760~~667,~~000~~200) $ (2,~~433~~368,~~100~~600) ================ ================ Loss per share - basic and diluted $ (0.10) $ (0.09) ~~Weighted average shares outstanding - basic and diluted 27,040,725 27,040,725~~ ================ ================ Weighted average shares outstanding - basic and diluted 27,040,725 27,040,725

See accompanying notes. 2 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

~~TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)~~ FOR ~~TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED ~~August~~November 43, ~~2001~~October ~~July 29~~28, 2001 2000 -----------~~---~~ ------------- Net sales $ 6692,~~481~~389,~~400~~800 $ 82120,~~688~~915,~~700~~900 Cost of goods sold 3954,~~512~~080,~~900~~800 5174,~~547~~504,800 --------------- ---------------- Gross profit 2638,~~968~~309,~~500~~000 3146,~~140~~411,~~900~~100 Selling, general and administrative expenses (includes $465,700 and $3,987,600 in store closing and other unusual charges in fiscal 2001 and fiscal 2000 respectively) 3144,~~160~~794,~~400~~100 3754,~~575~~543,~~700~~500 --------------- ---------------- Loss from operations (46,~~191~~485,~~900~~100) (68,~~434~~132,~~800~~400) Interest expense and other income, net ~~771~~1,145,700 1,~~231~~902,700 --------------- ---------------- Loss before income taxes (47,~~963~~630,~~600~~800) (710,~~666~~035,~~500~~100) Income tax benefit - - --------------- ---------------- Net loss $ (47,~~963~~630,~~600~~800) $ (710,~~666~~035,~~500~~100) =============== ================ Loss per share - basic and diluted $ (0.1828) $ (0.2837) =============== ================ Weighted average shares outstanding - basic and diluted 27,040,725 27,040,725

See accompanying notes. 3 TODAY'S MAN, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

FOR ~~TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED ~~August~~November 43, ~~2001~~October ~~July 29~~28, 2001 2000 -----------~~---~~ ------------- Operating activities Net loss $ (47,~~963~~630,~~600~~800) $ (710,~~666~~035,~~500~~100) Adjustments to reconcile net loss to cash (used in) ~~provided by~~ operating activities: Depreciation and amortization 23,~~574~~949,~~900~~800 23,~~043~~048,~~200~~500 Reserve for ~~asset~~store ~~impairment~~closing ~~charges~~ and ~~lease~~other ~~termination~~unusual ~~costs~~charges -465,700 3,987,600 Deferred credits (9145,~~900~~800) (~~437~~526,~~700~~600) Reserve of loans to shareholders - 228,400 Changes in operating assets and liabilities: Decrease (increase) in receivables ~~523~~80,~~000~~900 (~~258~~116,~~400~~900) ~~Decrease~~(Increase) decrease in inventory 3(2,~~196~~414,~~400~~500) 41,~~724~~221,~~700~~500 ~~Decrease~~(Increase) decrease in prepaid expenses and other current assets and prepaid inventory purchases 1(773,~~074,000~~200) 1,~~091~~234,~~100~~300 Increase in rental deposits and other non current assets (~~512~~543,~~100~~700) (~~698~~1,~~500~~172,000) ~~Decrease~~Increase (decrease) in accounts ~~payable~~payables, accrued expenses, and other liabilities (2527,~~683,000)~~500 (21,~~878~~136,~~200~~000) --------------- --------------- Total adjustments 41,~~081~~246,~~300~~700 (76,~~802~~768,~~200)~~800 --------------- --------------- Net cash (used in) ~~provided by~~ operating activities (~~882~~6,~~300~~384,100) ~~135~~(3,~~700~~266,300) Cash flow used in investing activities: Capital expenditures (~~221~~386,~~800~~100) (~~391~~805,~~900~~400) --------------- --------------- Net cash used in investing activities (~~221~~386,~~800~~100) (~~391~~805,~~900~~400) Cash flow provided by ~~(used in)~~ financing activities: ~~Repayments~~Repayment onof capital lease obligations (~~186~~262,300) (~~352~~464,900) Borrowings under revolving credit facility 6493,~~544~~481,~~000~~400 78118,~~309~~317,~~500~~800 ~~Repayments~~Repayment of revolving credit facility (6689,~~608~~787,~~000~~800) (77114,~~966~~039,~~900~~300) Advances from landlord 3,000,000 - --------------- --------------- Net cash provided by ~~(used in)~~ financing activities ~~749~~6,~~700 (10~~431,300) 3,813,600 Net decrease in cash ~~and cash equivalents~~ (~~354~~338,~~400~~900) (~~266~~258,~~500~~100) Cash ~~and cash equivalents~~ at beginning of period 480,200 392,700 --------------- --------------- Cash ~~and cash equivalents~~ at end of period $ ~~125~~141,~~800~~300 $ ~~126~~134,~~200~~600 =============== ===============

See accompanying notes. 4 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 accounting principles generally accepted in the United States 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 accounting principles generally accepted in the United States 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 store closing and other unusual charges disclosed in Note 4) 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 2, 2002. 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 February 3, 2001. 2. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States 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. Store Openings During the thirteen weeks ended November 3,2001, the Company opened a new 8,700 square foot retail store location in the Arundel Mills Mall in Hanover, Maryland with a lease term of three months. Subsequent to the third quarter of fiscal 2001, the Company opened an additional five retail stores in various shopping mall locations in its existing markets (see Note 5). 4. Store Closings and Other Unusual Charges During the thirteen weeks ended November 3, 2001, the Company recorded store closing and other unusual charges of $465,700 to cover $321,300 in estimated lease termination costs and $144,400 in asset impairment charges primarily related to the closing of its Germantown, Maryland location in October, 2001. This location generated sales of $382,000 and $461,000 for the thirteen weeks ended November 3, 2001 and October 28, 2000, respectively and $1.3 million and $1.5 million in the thirty-nine weeks ended November 3, 2001 and October 28, 2000. During the thirteen weeks ended April 29, 2000, the Company recorded store closing and unusual charges of $3,987,600 to cover estimated lease termination costs and asset impairment charges primarily related to store closings. As of November 3, 2001, $548,200 of these fiscal 2000 charges have not been paid and are reported in accrued expenses and other current liabilities. 5 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 5. Subsequent Events Subsequent to the third quarter of fiscal 2001 the Company opened five retail store locations in the following shopping mall locations: Franklin Mills Mall, Philadelphia, Pennsylvania; Hamilton Mall, Mays Landing, New Jersey; Lake Forest Mall, Gaithersburg, Maryland; Palisades Mall, West Nyack, New York and the Broadway Mall in Hicksville, New York. These stores have lease terms ranging from two to fifteen months and square footage ranging from 4,500 square feet to 9,100 square feet. Additionally, Mr. Neal Fox, Vice Chairman, Merchandising and Marketing , resigned effective November 30, 2001. Mr. Fox will continue to serve as a member of the Company's Board of Directors and has agreed to work as a consultant for the Company. The Company has promoted Mr. Les Schwartzberg to the position of Senior Vice President and General Merchandise Manager. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 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 February 3, 2001, 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 2001 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. 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 week and thirty-nine week periods ended November 3, 2001 and October 28, 2000, respectively.

PERCENTAGE OF NET SALES THIRTEEN ~~WEEKS TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED WEEKS ENDED ~~August~~Nov. 43, ~~July~~Oct. 2928, ~~August~~Nov. 43, ~~July~~Oct. 2928, 2001 2000 2001 2000 -----------------------------~~----~~ ----------------------------~~----~~ Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 5956.52 6360.40 5958.45 6261.36 -----------------------------~~----~~ ----------------------------~~----~~ Gross profit 4043.58 3640.60 4041.65 3738.74 Selling, general and administrative expenses 4752.46 4044.94 4648.95 45.41 -----------------------------~~----~~ ----------------------------~~----~~ Loss from operations (68.98) (4.34) (67.30) (76.7) Interest expense and other income, net 1.04 1.58 1.2 1.56 -----------------------------~~----~~ ----------------------------~~----~~ Loss before income taxes (710.92) (56.82) (78.52) (98.23) Income ~~taxes~~tax benefit 0.0 0.0 0.0 0.0 -----------------------------~~---~~ ----------------------------~~-----~~ Net loss (710.92)% (56.82)% (78.52)% (98.23)% =============================~~====~~ ============================~~====~~

7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) THIRTEEN WEEKS ENDED NOVEMBER 3, 2001 AND OCTOBER 28, 2000: NET SALES. Net sales decreased $12,318,800 or 32.2% in the third quarter of fiscal 2001 compared to the year ago period. Comparative store sales, based on 25 stores opened in both periods, decreased 26.4%. The decrease in net sales was a result of the decline in foot traffic the Company has experienced. There were 24 superstores and 1 mall location in operation at November 3, 2001 and 28 superstores in operation at October 28, 2000. GROSS PROFIT. Gross profit as a percentage of net sales increased to 43.8% for the third quarter of 2001 compared to 40.0% for the third quarter of 2000. The increase in the gross profit percentage was a result of the Company's strategy of higher initial mark-ups on its inventory purchases. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased $3,334,100 or 19.6% in the third quarter of fiscal 2001, and increased as a percentage of sales to 52.6% from 44.4% in the third quarter of fiscal 2000. The third quarter of fiscal 2001 included $465,700 in store closing and other unusual charges for an underperforming store closed in the third quarter of fiscal 2001. The dollar decrease was primarily due to a reduction in advertising expenses of $2,642,600. INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and other expense, net decreased by $297,000 for the third quarter of fiscal 2001. The decrease in interest expense was attributable to the decreased amount of average borrowings outstanding ($18,764,000 in the third quarter of fiscal 2001 versus $22,368,200 in the third quarter of fiscal 2000), as well as the decrease in the interest rate charged (6.125% as of November 3, 2001 versus 10.25% as of October 28, 2000) under the Company's Amended Loan and Security Agreement with LaSalle Bank (successor to Mellon Bank). As a result of revolving credit borrowings, the Company recorded interest expense of $374,000 during the quarter ended November 3, 2001 as compared to $671,000 during the quarter ended October 28, 2000. THIRTY-NINE WEEKS ENDED NOVEMBER 3, 2001 AND OCTOBER 28, 2000: NET SALES. Net sales decreased $28,526,100 or 23.6% for the first nine months of fiscal 2001 compared to the year ago period. Comparative store sales, based on 25 stores opened in both periods, decreased 17.6%. The decrease in net sales was a result of the decline in foot traffic the Company experienced. There were 24 superstores and 1 mall location in operation at November 3, 2001 and 28 superstores in operation at October 28, 2000. GROSS PROFIT. Gross profit as a percentage of net sales increased to 41.5% for the first nine months of 2001 compared to 38.4% for the first nine months of 2000. The increase in gross profit percentage was a result of the Company's strategy of higher initial mark-ups on its inventory purchases. 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased $9,749,400 or 17.9% in the first nine months of fiscal 2001, and increased as a percentage of sales to 48.5% from 45.1% in the third quarter of fiscal 2000. The nine month period ended November 3, 2001 included $465,700 in store closing and other unusual charges for an underperforming store closed in the third quarter of fiscal 2001 compared to $3,987,600 in store closing and other unusual charges incurred in the nine month period ended October 28, 2000 for underperforming stores closed in fiscal 2000. Store payroll, rent and occupancy and credit card expenses decreased $2,758,100 as a result of operating 25 stores in the nine month period ended November 3, 2001 versus 28 stores in the nine month period ended October 28, 2000. Advertising expenses decreased $1,841,600 from the prior year nine month period. INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and other expense, net decreased by $757,000 from the first nine months of fiscal 2000. The decrease in interest expense is attributable to the decreased amount of average borrowings outstanding ($17,710,300 for the nine month period ended November 3, 2001 versus $22,727,200 for the nine month period ended October 28, 2000) as well as the decrease in the interest rate charged (6.125% as of November 3, 2001 versus 10.25% as of October 28, 2000) under the Company's Amended Loan and Security Agreement with LaSalle Bank (successor to Mellon Bank). As a result of revolving credit borrowings, the Company recorded interest expense of $1,145,700 during the nine month period ended November 3, 2001 as compared to $1,902,700 during the nine month period ended October 28, 2000. 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 November 4, 2001, the Company had working capital of $19,431,900 as compared with $14,512,800 at February 3, 2001. The Company is party to a Loan and Security Agreement with LaSalle Bank, N.A. (successor to Mellon Bank, N.A.), individually and as agent. The Loan and Security Agreement, as amended, provides for a $28.0 million revolving credit facility with a $15.0 million sublimit for letters of credit. The facility bears interest at 1.125% per annum above LaSalle's prime rate and expires on February 3, 2003. The Company must pay a termination fee of $1,050,000 if the facility is terminated after March 15, 2001 but on or before February 3, 2003. Availability under the revolver is determined by a formula based on inventory and credit card receivables, less applicable reserves. The amended agreement provides for an over-advance facility. The agreement contains financial covenants including tangible net worth, indebtedness to tangible net worth, maximum net loss per month and limitations on new store openings and capital expenditures as well as restrictions on the payment of dividends. The Company granted LaSalle Bank a lien on its tangible and intangible assets to secure this facility. Additionally, Mr. David Feld, Chairman of the Board and principal shareholder of the Company, provided additional collateral to secure the credit facility. On June 14, 2001, the Company and LaSalle Bank entered into the Ninth Amendment to the revolving credit facility. The amendment recasts certain of the Company's financial covenants and extended the term of the loan to August 31, 2002 from March 14, 2002. 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) On September 21, 2001, the Company and LaSalle Bank entered into the Tenth Amendment to the revolving credit facility. The amendment provides permitted out-of-formula advances may not exceed $4,000,000 from September 21, 2001 to December 14, 2001. The overadvance facility is then reduced to $2,000,000 on December 15, 2001 and expires on December 30, 2001. On December 31, 2001 the outstanding revolving credit facility usage (including the permitted out-of-formula advances) is reduced to $25,000,000 from $28,000,000. On December 14, 2001, the Company and LaSalle Bank entered into the Eleventh Amendment to the revolving credit facility. The amendment extends the term of the loan to February 3, 2003 and recasts certain of the Company's financial covenants required by the loan as discussed above. In fiscal 2000, the Company closed four under-performing stores. The Company also closed its e-commerce website, Todaysman.com. The closing of the four stores and e-commerce website resulted in a charge to operations in fiscal 2000 of approximately $6.3 million for the write-off of furniture and fixtures and the accrual of lease termination costs. In October 2001, the Company closed its Germantown, Maryland location. The closing resulted in a charge to operations in the third quarter of fiscal 2001 of approximately $465,700 for the write-off of $144,400 in furniture and fixtures and $321,300 for the accrual of lease termination costs. This location generated sales of $382,000 and $461,000 for the thirteen weeks ended November 3, 2001 and October 28, 2000, respectively, and $1.3 million and $1.5 million in the thirty-nine weeks ended November 3, 2001 and October 28, 2000, respectively. On October 11, 2001, the Company opened a new 8,700 square foot retail location in the Arundel Mills Mall in Hanover, Maryland with a lease term of three months. Subsequent to the third quarter of fiscal 2001 the Company opened five retail store locations in the following shopping mall locations: Franklin Mills Mall, Philadelphia, Pennsylvania; Hamilton Mall, Mays Landing, New Jersey; Lake Forest Mall, Gaithersburg, Maryland; Palisades Mall, West Nyack, New York and the Broadway Mall in Hicksville, New York. These stores have lease terms ranging from two to fifteen months and square footage ranging from 4,500 square feet to 9,100 square feet. The capital requirements associated with these store openings are considered immaterial. The Company has been substantially dependent upon borrowings under its credit facility to finance its operations including the over-advance facility which expires December 30, 2001 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 2002, include the execution of the amended credit facility, a layoff of non-operating personnel in January 2001, the closing of four under-performing stores in fiscal 2000, the closing of the e-commerce website, and the closing of the Germantown, Maryland location in fiscal 2001. Management believes the Company's cash requirements in 2001 will be generated by operations and borrowings under the Company's credit facility. Management also believes that the actions initiated and its 2001 plans will result in the successful funding of its working capital and cash requirements while enabling the Company to meet its financial covenants under its credit facility. 10 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 November 3, 2001, 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 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 None - not applicable Item 5. Exhibits and Reports on Form 8-K Exhibits 10.27 Tenth Amendment to Loan and Security Agreement with LaSalle Bank, N.A. (successor to Mellon Bank, N.A.) 10.28 Eleventh Amendment to Loan and Security Agreement with LaSalle Bank, N.A. (successor to Mellon Bank, N.A.) Reports on Form 8-K None - not applicable 12 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: December 18, 2001 /s/David Feld ------------------------------------- David Feld Chairman of the Board Date: December 18, 2001 /s/Bruce Weitz ------------------------------------- Bruce Weitz President and Chief Executive Officer Date: December 18, 2001 /s/Frank E. Johnson ------------------------------------- Frank E. Johnson Executive Vice President, Chief Financial Officer and Treasurer Principal Financial Officer Date: December 18, 2001 /s/David J. Brown ------------------------------------- David J. Brown Vice President and Controller Principal Accounting Officer 13

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