Exhibit 99.2

 

UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

Overview

 

On August 16, 2019, Tailored Brands, Inc. (the “Company”) completed the sale of MWUK Limited, its UK corporate apparel operations conducted by Dimensions, Alexandra, and Yaffy to Project Dart Bidco Limited, pursuant to a Share Purchase Agreement entered into on August 16, 2019.  In addition, the Company also completed the sale of Twin Hill Acquisition Company, Inc. (“Twin Hill”), to TH Holding Company, pursuant to a Stock Purchase Agreement entered into on August 16, 2019.  The aggregate consideration paid for all of the outstanding equity of MWUK Limited and Twin Hill (collectively, the “corporate apparel business”) was approximately $62 million, subject to certain working capital adjustments.  Of the $62 million in total consideration, approximately $56 million was received upon closing and approximately $6 million is deferred to the first quarter of fiscal 2020. For purposes of the unaudited Pro Forma Condensed Consolidated Financial Statements, the sale of MWUK and Twin Hill are collectively referred to as the “Disposition.”

 

The following unaudited Pro Forma Condensed Consolidated Balance Sheet, as of May 4, 2019, reflects the Company’s financial position as if the Disposition had occurred on that date. The following unaudited Pro Forma Condensed Consolidated Statements of Earnings for the three months ended May 4, 2019 and the three fiscal years ended February 2, 2019, February 3, 2018, and January 28, 2017, reflect the Company’s results of operations as if the Disposition had occurred on January 31, 2016, the beginning of the earliest period presented.  All fiscal years for which financial information is included herein had 52 weeks with the exception of the fiscal year ended February 3, 2018, which had 53 weeks.

 

These unaudited Pro Forma Condensed Consolidated Financial Statements and the accompanying notes are based upon and should be read in conjunction with the Consolidated Financial Statements and Notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2019 and Quarterly Report on Form 10-Q for the three months ended May 4, 2019. The accompanying unaudited Pro Forma Condensed Consolidated Statements of Earnings are provided for informational purposes only and should not be considered indicative of the financial position or results of operations that would have occurred if the Disposition had been consummated on the dates indicated, nor are they indicative of the future financial position or results of operations of the Company.

 

The historical financial information has been adjusted in the unaudited Pro Forma Condensed Consolidated Financial Statements to give effect to pro forma events that are directly attributable, factually supportable, and with respect to the unaudited Pro Forma Condensed Statement of Earnings, expected to have a continuing impact on the consolidated results.

 

1


 

TAILORED BRANDS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Three Months Ended May 4, 2019

 

 

 

Company As
Reported (a)

 

Less: Corporate
Apparel (b)

 

Company
Pro Forma

 

Net sales

 

$

  781,387

 

$

56,725

 

$

724,662

 

Cost of sales

 

460,831

 

41,044

 

419,787

 

Gross margin

 

320,556

 

15,681

 

304,875

 

Advertising expense

 

45,043

 

374

 

44,669

 

Selling, general and administrative expenses

 

245,211

 

14,009

 

231,202

 

Operating income

 

30,302

 

1,298

 

29,004

 

Interest income

 

96

 

 

96

 

Interest expense

 

(18,663

)

 

(18,663

)

Earnings before income taxes

 

11,735

 

1,298

 

10,437

 

Provision for income taxes

 

4,593

 

636

 

3,957

 

Net earnings

 

$

7,142

 

$

662

 

$

6,480

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic

 

$

0.14

 

 

 

$

0.13

 

Diluted

 

$

0.14

 

 

 

$

0.13

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

50,280

 

 

 

50,280

 

Diluted

 

50,587

 

 

 

50,587

 

 

2


 

TAILORED BRANDS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Fiscal Year End February 2, 2019

 

 

 

Company As
Reported (a)

 

Less: Corporate
Apparel (b) 

 

Company
Pro Forma

 

Net sales

 

$

3,239,902

 

$

235,391

 

$

  3,004,511

 

Cost of sales

 

1,862,435

 

168,532

 

1,693,903

 

Gross margin

 

1,377,467

 

66,859

 

1,310,608

 

Advertising expense

 

166,457

 

1,209

 

165,248

 

Selling, general and administrative expenses

 

974,054

 

55,282

 

918,772

 

Goodwill impairment charge

 

23,991

 

23,991

 

 

Asset impairment charges

 

1,026

 

 

1,026

 

Operating income (loss)

 

211,939

 

(13,623

)

225,562

 

Interest income

 

563

 

 

563

 

Interest expense

 

(79,573

)

(3

)

(79,570

)

Loss on extinguishment of debt, net

 

(30,253

)

 

(30,253

)

Earnings (loss) before income taxes

 

102,676

 

(13,626

)

116,302

 

Provision for income taxes

 

19,436

 

1,730

 

17,706

 

Net earnings (loss)

 

$

83,240

 

$

(15,356

)

$

98,596

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic

 

$

1.67

 

 

 

$

1.98

 

Diluted

 

$

1.64

 

 

 

$

1.94

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

49,856

 

 

 

49,856

 

Diluted

 

50,725

 

 

 

50,725

 

 

3


 

TAILORED BRANDS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Fiscal Year End February 3, 2018

 

 

 

Company As
Reported (a)

 

Less: Corporate
Apparel (b)

 

Company
Pro Forma

 

Net sales

 

$

3,304,346

 

$

251,325

 

$

3,053,021

 

Cost of sales

 

1,895,580

 

183,987

 

1,711,593

 

Gross margin

 

1,408,766

 

67,338

 

1,341,428

 

Advertising expense

 

173,411

 

1,410

 

172,001

 

Selling, general and administrative expenses

 

1,000,892

 

52,608

 

948,284

 

Goodwill impairment charge

 

1,500

 

 

1,500

 

Asset impairment charges

 

3,547

 

 

3,547

 

Operating income

 

229,416

 

13,320

 

216,096

 

Interest income

 

564

 

 

564

 

Interest expense

 

(100,471

)

 

(100,471

)

Gain on extinguishment of debt, net

 

5,445

 

 

5,445

 

Earnings before income taxes

 

134,954

 

13,320

 

121,634

 

Provision for income taxes

 

38,251

 

3,634

 

34,617

 

Net earnings

 

$

96,703

 

$

9,686

 

$

87,017

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic

 

$

1.97

 

 

 

$

1.77

 

Diluted

 

$

1.95

 

 

 

$

1.76

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

49,094

 

 

 

49,094

 

Diluted

 

49,468

 

 

 

49,468

 

 

4


 

TAILORED BRANDS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(In thousands, except per share data)

(Unaudited)

 

 

 

For the Fiscal Year End January 28, 2017

 

 

 

Company As
Reported (a)

 

Less: Corporate
Apparel (b)

 

Company
Pro Forma

 

Net sales

 

$

  3,378,703

 

$

280,302

 

$

3,098,401

 

Cost of sales

 

1,937,235

 

191,792

 

1,745,443

 

Gross margin

 

1,441,468

 

88,510

 

1,352,958

 

Advertising expense

 

189,956

 

1,606

 

188,350

 

Selling, general and administrative expenses

 

1,099,328

 

60,300

 

1,039,028

 

Asset impairment charges

 

19,358

 

 

19,358

 

Operating income

 

132,826

 

26,604

 

106,222

 

Interest income

 

167

 

 

167

 

Interest expense

 

(103,149

)

 

(103,149

)

Gain on extinguishment of debt, net

 

1,737

 

 

1,737

 

Earnings before income taxes

 

31,581

 

26,604

 

4,977

 

Provision (benefit) for income taxes

 

6,625

 

8,806

 

(2,181

)

Net earnings

 

$

24,956

 

$

17,798

 

$

7,158

 

Net earnings per common share:

 

 

 

 

 

 

 

Basic

 

$

0.51

 

 

 

$

0.15

 

Diluted

 

$

0.51

 

 

 

$

0.15

 

Weighted-average common shares outstanding:

 

 

 

 

 

 

 

Basic

 

48,607

 

 

 

48,607

 

Diluted

 

48,786

 

 

 

48,786

 

 

5


 

TAILORED BRANDS, INC. AND SUBSIDIARIES

PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET

AS OF MAY 4, 2019

(In thousands)

(Unaudited)

 

 

 

Company As
Reported (a)

 

Less: Corporate
Apparel (b)

 

Pro Forma
Adjustments

 

Company
Pro Forma

 

 

 

 

 

 

 

 

 

 

 

ASSETS

 

 

 

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

29,749

 

$

9,290

 

$

55,379

(c)

$

75,838

 

Accounts receivable, net

 

80,623

 

39,863

 

6,047

(d)

46,807

 

Inventories

 

874,412

 

106,718

 

 

 

767,694

 

Other current assets

 

49,904

 

3,717

 

 

 

46,187

 

Total current assets

 

1,034,688

 

159,588

 

61,426

 

936,526

 

PROPERTY AND EQUIPMENT, net

 

428,380

 

14,745

 

 

 

413,635

 

OPERATING LEASE RIGHT-OF-USE ASSETS

 

955,970

 

11,439

 

 

 

944,531

 

RENTAL PRODUCT, net

 

103,895

 

 

 

 

103,895

 

GOODWILL

 

78,964

 

 

 

 

78,964

 

INTANGIBLE ASSETS, net

 

156,614

 

9,631

 

 

 

146,983

 

OTHER ASSETS

 

6,942

 

25

 

 

 

6,917

 

TOTAL ASSETS

 

$

2,765,453

 

$

195,428

 

$

61,426

 

$

2,631,451

 

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

 

 

 

Accounts payable

 

$

218,492

 

$

16,397

 

$

 

 

$

202,095

 

Accrued expenses and other current liabilities

 

316,821

 

16,132

 

 

 

300,689

 

Current portion of operating lease liabilities

 

183,011

 

2,519

 

 

 

180,492

 

Income taxes payable

 

15,923

 

1,974

 

2,375

(e)

16,324

 

Current portion of long-term debt

 

9,000

 

 

 

 

9,000

 

Total current liabilities

 

743,247

 

37,022

 

2,375

 

708,600

 

LONG-TERM DEBT, net

 

1,151,196

 

 

 

 

1,151,196

 

OPERATING LEASE LIABILITIES

 

804,895

 

9,058

 

 

 

795,837

 

DEFERRED TAXES, net AND OTHER LIABILITIES

 

70,161

 

5,370

 

 

 

64,791

 

Total liabilities

 

2,769,499

 

51,450

 

2,375

 

2,720,424

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ (DEFICIT) EQUITY

 

(4,046

)

143,978

 

59,051

(c),(e)

(88,973

)

TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY

 

$

2,765,453

 

$

195,428

 

$

61,426

 

$

2,631,451

 

 

6


 

Notes to Unaudited Pro Forma Condensed Consolidated Financial Statements

 


(a)         Represents the Company’s historical financial statements for the periods presented and does not reflect any adjustments related to the Disposition.  The historical condensed consolidated balance sheet as of May 4, 2019 and the condensed consolidated statements of earnings for the three months ended May 4, 2019 were derived from the Company’s unaudited condensed consolidated financial statements included in its Quarterly Report on Form 10-Q for the quarter ended May 4, 2019. The historical consolidated statements of earnings for each of the years ended February 2, 2019, February 3, 2018 and January 28, 2017 were derived from the Company’s audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended February 2, 2019.

 

(b)         Reflects the historical financial results from operations and financial position of the corporate apparel business reflecting the effect of the Disposition of the corporate apparel business on assets, liabilities, revenues and expenses directly attributable to the Disposition.  Certain amounts historically allocated to the corporate apparel business’s results of operations are not reflected in this adjustment because they relate to costs that the Company will recognize on an ongoing basis after the Disposition.

 

(c)          Reflects the cash proceeds, net of $0.4 million in transaction costs, received upon closing of the Disposition totaling $55.4 million.

 

(d)         Reflects the establishment of a receivable for the amount of consideration related to Disposition deferred to the first quarter of fiscal 2020 totaling $6.0 million.

 

(e)          Reflects the estimated after-tax loss to be recorded on the Disposition.  This loss is not included in the pro forma condensed consolidated statements of earnings as the loss is considered non-recurring and is not expected to have a continuing impact on the Company’s operations.  The tax effect on the Disposition differs from the blended statutory rate for the corporate apparel business primarily due to the exclusion of the loss for U.K. purposes and the recognition of withholding tax on the proceeds of the Disposition.  The estimated after-tax loss is preliminary and may change based on finalization of certain items and was calculated as follows (amounts in thousands):

 

Net proceeds related to the Disposition

 

$

61,426

 

Net assets of corporate apparel business

 

(143,978

)

Pre-tax loss on Disposition

 

(82,552

)

Tax effect on Disposition

 

2,375

 

After-tax loss on Disposition

 

$

(84,927

)

 

7