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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~October~~July 29, ~~2016~~2017 or

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

For the transition period from to

Commission file number 1-16097

TAILORED BRANDS, INC.

(Exact Name of Registrant as Specified in its Charter)

Texas		47-4908760
(State or Other Jurisdiction of		(I.R.S. Employer
Incorporation or Organization)		Identification Number)

6380 Rogerdale Road
Houston, Texas		77072-1624
(Address of Principal Executive Offices)		(Zip Code)

(281) 776-7000

(~~Registrant’s~~Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒. No ☐.

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒. No ☐.

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of ~~“large~~"large accelerated ~~filer”~~filer", ~~“accelerated filer”~~"accelerated filer" and ~~“smaller~~"smaller reporting ~~company”~~company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐	(Do not check if a smaller reporting company)	Smaller reporting company ☐

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

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

The number of shares of common stock of the Registrant, par value $.01 per share, outstanding at ~~November 25, 2016~~August 26, 2017 was ~~48,744,325.~~

49,195,390.

Table of Contents

REPORT INDEX


Part and Item No.		Page No.

PART I — Financial Information

Item 1 — Condensed Consolidated Financial Statements (unaudited)

Condensed Consolidated Balance Sheets as of ~~October~~July 29, 2017, July 30, 2016 ~~October 31, 2015~~ and January ~~30, 2016~~28, 2017		2

Condensed Consolidated Statements of Earnings ~~(Loss)~~ for the Three and ~~Nine~~Six Months Ended ~~October~~July 29, ~~2016~~2017 and ~~October 31, 2015~~July 30, 2016		3

Condensed Consolidated Statements of Comprehensive Income ~~(Loss)~~ for the Three and ~~Nine~~Six Months Ended ~~October~~July 29, ~~2016~~2017 and ~~October 31, 2015~~July 30, 2016		4

Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Six Months Ended ~~October~~July 29, ~~2016~~2017 and ~~October 31, 2015~~July 30, 2016		5

Notes to Condensed Consolidated Financial Statements		6

Item 2 — ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations		29 30

Item 3 — Quantitative and Qualitative Disclosures about Market Risk		42 43

Item 4 — Controls and Procedures		42 43

PART II — Other Information		44

Item 1 — Legal Proceedings		43

~~Item 1A — Risk Factors~~		43 44

Item 6 — Exhibits		43 44

SIGNATURES		44 46

Table of Contents

Forward-Looking ~~and Cautionary~~ Statements

Certain information included in this report or in other materials we have filed or will file with the Securities and Exchange Commission ("SEC") (as well as information included in oral statements or other written statements made ~~in this Quarterly Report on Form 10-Q and in other public filings and press releases~~or to be made by ~~the Company (as defined below)~~us) contains or may contain ~~“forward-looking” information~~forward-looking statements (as defined in the Private Securities Litigation Reform Act of 1995) ~~that involves risk~~, including, but not limited to, statements regarding our future financial performance and ~~uncertainty.~~financial condition. Words such as "expects," "anticipates," "envisions," "targets," "goals," "projects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. Forward-looking statements reflect our current views regarding certain events that could affect our financial condition or results of operations and may include, but are not limited to, references to future sales, comparable sales, ~~earnings,~~ margins, costs, earnings, number and costs of store openings, closings, remodels, relocations and expansions, ~~profitability,~~ capital expenditures, potential acquisitions, synergies from acquisitions, business strategies, demand for clothing or rental product, market trends in the retail and corporate apparel clothing business, currency fluctuations, inflation and various political, legal, regulatory, social, economic and business trends. Forward-looking statements ~~may be made by management orally~~are based upon management's current beliefs or ~~in writing, including, but not limited~~expectations and are inherently subject to ~~Management’s Discussion~~significant business, economic and ~~Analysis~~competitive risks, uncertainties and contingencies and third party approvals, many of ~~Financial Condition and Results of Operations included in this Quarterly Report on Form 10-Q and other sections of~~which are beyond our ~~filings with the Securities and Exchange Commission under the Securities Exchange Act of 1934, as amended, and the Securities Act of 1933, as amended.~~control.

~~Forward-looking~~Any forward-looking statements that we make herein and in future reports are not guarantees of future performance, and ~~a variety of factors could cause~~ actual results tomay differ materially from ~~the anticipated or expected results expressed~~those in ~~or suggested by these~~such forward-looking ~~statements.~~statements as a result of various factors. Factors that might cause or contribute to such differences include, but are not limited to: actions by governmental entities; domestic and international macro-economic conditions; inflation or deflation; the loss of, or changes in, key personnel; success, or lack thereof, in formulating or executing our internal strategies and operating plans including new store and new market expansion plans, cost reduction initiatives, store rationalization plans, profit improvement plans, revenue enhancement ~~strategies and~~strategies; the impact of ~~opening~~the termination of our tuxedo ~~shops within Macy’s stores;~~rental license agreement with Macy's; changes in demand for ~~clothing;~~clothing or rental product; market trends in the retail business; customer confidence and spending patterns; changes in traffic trends in our stores; customer acceptance of our merchandise strategies; performance issues with key suppliers; disruptions in our supply chain; severe weather; foreign currency fluctuations; government export and import policies; advertising or marketing activities of competitors; and legal proceedings.

Forward-looking statements are based upon management’s current beliefs or expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies and third party approvals, many of which are beyond our control. Refer to “Risk Factors” contained Please also see "Item 1A. Risk Factors" in Part I of our Annual Report on Form 10-K for the year ended January ~~30, 2016, Part 1A of~~28, 2017, as the same may be updated from time to time in our ~~Quarterly Report on Form 10-Q for~~subsequent filings with the ~~quarter ended July 30, 2016, and elsewhere herein~~SEC, for a more complete discussion of these and other factors that might affect our performance and financial results.

Forward-looking statements are intended to convey the ~~Company’s~~Company's expectations about the future, and speak only as of the date they are made. We undertake no obligation to publicly update or revise any forward-looking statements that may be made from time to time, whether as a result of new information, future developments or otherwise, ~~unless~~except as required ~~to do so~~ by applicable law.

~~All~~ However, any further disclosures made on related subjects in our subsequent reports on Forms 10-K, 10-Q and 8-K should be consulted. This discussion is provided as permitted by the Private Securites Litigation Reform Act of 1995, and all written or oral forward-looking statements that are made by or attributable to us are expressly qualified in their entirety by the cautionary statements contained or referenced in this ~~cautionary notice.~~section.

Table of Contents

PART I – FINANCIAL INFORMATION

ITEM 1 – CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	34,948	$	53,654	$	29,980	$	112,741	$	11,430	$	70,889
Accounts receivable, net		71,898		66,902		63,890		71,900		84,348		65,714
Inventories		1,047,915		1,060,247		1,022,504		944,783		1,023,603		955,512
Other current assets		60,190		168,071		143,546		55,432		81,113		73,602
Total current assets		1,214,951		1,348,874		1,259,920		1,184,856		1,200,494		1,165,717
PROPERTY AND EQUIPMENT, net		501,391		548,481		521,824		459,530		510,520		484,165
RENTAL PRODUCT, net		160,101		147,344		157,460		139,397		171,469		152,610
GOODWILL		116,026		890,991		118,586		119,880		118,307		117,026
INTANGIBLE ASSETS, net		172,337		568,171		178,510		170,113		174,752		171,659
OTHER ASSETS		10,323		8,518		8,019		5,948		9,012		6,695
TOTAL ASSETS	$	2,175,129	$	3,512,379	$	2,244,319	$	2,079,724	$	2,184,554	$	2,097,872
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	200,199	$	233,520	$	237,114	$	140,156	$	169,820	$	177,380
Accrued expenses and other current liabilities		280,658		265,993		256,762		276,616		295,707		267,899
Income taxes payable		917		13,218		—		6,310		1,150		1,262
Current portion of long-term debt		7,000		7,000		42,451		8,750		14,000		13,379
Total current liabilities		488,774		519,731		536,327		431,832		480,677		459,920
LONG-TERM DEBT, net		1,588,873		1,649,206		1,613,473		1,532,255		1,600,402		1,582,150
DEFERRED TAXES AND OTHER LIABILITIES		175,179		358,059		194,605
DEFERRED TAXES, net AND OTHER LIABILITIES								162,313		192,125		163,420
Total liabilities		2,252,826		2,526,996		2,344,405		2,126,400		2,273,204		2,205,490
COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' (DEFICIT) EQUITY:
SHAREHOLDERS' DEFICIT:
Preferred stock		—		—		—		—		—		—
Common stock		487		485		485		491		486		487
Capital in excess of par		466,817		452,666		455,765		478,174		461,143		470,801
(Accumulated deficit) retained earnings		(499,663)		541,672		(524,876)
Accumulated deficit								(497,160)		(519,068)		(538,823)
Accumulated other comprehensive loss		(45,338)		(6,356)		(28,486)		(28,181)		(31,211)		(40,083)
Treasury stock, at cost		—		(3,084)		(2,974)
Total shareholders' (deficit) equity		(77,697)		985,383		(100,086)
TOTAL LIABILITIES AND SHAREHOLDERS’ (DEFICIT) EQUITY	$	2,175,129	$	3,512,379	$	2,244,319
Total shareholders' deficit								(46,676)		(88,650)		(107,618)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT							$	2,079,724	$	2,184,554	$	2,097,872

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ~~(LOSS)~~

(In thousands, except per share data)

(Unaudited)


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	October 29, 2016		October 31, 2015		October 29, 2016		October 31, 2015		July 29, 2017		July 30, 2016		July 29, 2017		July 30, 2016
Net sales:
Retail clothing product	$	575,046	$	615,874	$	1,806,660	$	1,931,926	$	594,994	$	615,946	$	1,178,579	$	1,231,614
Rental services		138,724		132,443		403,564		392,621		151,978		165,009		246,798		264,840
Alteration and other services		49,919		53,070		149,888		160,024		46,026		49,226		92,926		99,969
Total retail sales		763,689		801,387		2,360,112		2,484,571		792,998		830,181		1,518,303		1,596,423
Corporate apparel clothing product		83,245		64,059		225,328		186,038		57,760		79,503		115,361		142,083
Total net sales		846,934		865,446		2,585,440		2,670,609		850,758		909,684		1,633,664		1,738,506
Cost of sales:
Retail clothing product		247,978		274,348		796,215		850,782		248,630		277,882		501,509		548,237
Rental services		22,958		21,431		65,943		62,866		23,957		27,101		40,125		42,985
Alteration and other services		33,526		36,260		104,085		109,528		35,076		34,409		69,548		70,559
Occupancy costs		108,923		114,629		327,673		341,980		103,326		108,615		208,415		218,750
Total retail cost of sales		413,385		446,668		1,293,916		1,365,156		410,989		448,007		819,597		880,531
Corporate apparel clothing product		56,343		45,787		152,173		132,229		43,073		51,373		84,931		95,830
Total cost of sales		469,728		492,455		1,446,089		1,497,385		454,062		499,380		904,528		976,361
Gross margin:
Retail clothing product		327,068		341,526		1,010,445		1,081,144		346,364		338,064		677,070		683,377
Rental services		115,766		111,012		337,621		329,755		128,021		137,908		206,673		221,855
Alteration and other services		16,393		16,810		45,803		50,496		10,950		14,817		23,378		29,410
Occupancy costs		(108,923)		(114,629)		(327,673)		(341,980)		(103,326)		(108,615)		(208,415)		(218,750)
Total retail gross margin		350,304		354,719		1,066,196		1,119,415		382,009		382,174		698,706		715,892
Corporate apparel clothing product		26,902		18,272		73,155		53,809		14,687		28,130		30,430		46,253
Total gross margin		377,206		372,991		1,139,351		1,173,224		396,696		410,304		729,136		762,145
Advertising expense		45,656		47,991		138,547		143,628		39,888		44,963		82,140		92,891
Selling, general and administrative expenses		270,494		271,301		849,122		822,485		248,343		305,709		507,529		578,628
Tradename impairment charge		—		90,100		—		90,100
Operating income (loss)		61,056		(36,401)		151,682		117,011
Operating income										108,465		59,632		139,467		90,626
Interest income		52		50		102		140		98		37		165		50
Interest expense		(25,476)		(26,457)		(77,853)		(79,475)		(25,167)		(25,876)		(50,788)		(52,377)
Gain (loss) on extinguishment of debt, net		1,808		—		1,737		(12,675)		3,281		(71)		3,996		(71)
Earnings (loss) before income taxes		37,440		(62,808)		75,668		25,001
Provision (benefit) for income taxes		9,007		(35,654)		20,623		(5,993)
Net earnings (loss)	$	28,433	$	(27,154)	$	55,045	$	30,994
Net earnings (loss) per common share allocated to common shareholders:
Earnings before income taxes										86,677		33,722		92,840		38,228
Provision for income taxes										28,206		8,747		32,530		11,616
Net earnings									$	58,471	$	24,975	$	60,310	$	26,612
Net earnings per common share allocated to common shareholders:
Basic	$	0.58	$	(0.56)	$	1.13	$	0.64	$	1.19	$	0.51	$	1.23	$	0.55
Diluted	$	0.58	$	(0.56)	$	1.13	$	0.64	$	1.19	$	0.51	$	1.23	$	0.55
Weighted-average common shares outstanding:
Basic		48,655		48,339		48,570		48,258		49,107		48,609		48,958		48,527
Diluted		48,812		48,339		48,691		48,513		49,172		48,639		49,162		48,630
Cash dividends declared per common share	$	0.18	$	0.18	$	0.54	$	0.54	$	0.18	$	0.18	$	0.36	$	0.36

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~

(In thousands)

(Unaudited)

For the Three Months Ended

For the Nine Months Ended


October 29,

October 31,

October 29,

October 31,

2016

2015

2016

2015

Net earnings (loss)

$
28,433

$
(27,154)

$
55,045

$
30,994

Currency translation adjustments

(15,075)

(2,024)

(18,246)

(378)

Unrealized gain (loss) on cash flow hedges, net of tax

948

(222)

1,394

(307)

Comprehensive income (loss)

$
14,306

$
(29,400)

$
38,193

$
30,309


	For the Three Months Ended				For the Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2017		2016		2017		2016

Net earnings	$	58,471	$	24,975	$	60,310	$	26,612
Currency translation adjustments		14,773		(19,600)		16,114		(3,171)
Unrealized (loss) gain on cash flow hedges, net of tax		(746)		206		(4,212)		446
Comprehensive income	$	72,498	$	5,581	$	72,212	$	23,887

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	For the Nine Months Ended				For the Six Months Ended
	October 29,		October 31,		July 29,		July 30,
	2016		2015		2017		2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	55,045	$	30,994	$	60,310	$	26,612
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization		87,838		98,162		53,407		60,275
Rental product amortization		35,982		30,496		21,205		23,176
Tradename impairment charge		—		90,100
(Gain) loss on extinguishment of debt, net		(1,737)		12,675		(3,996)		71
Amortization of deferred financing costs		4,922		5,151
Amortization of discount on long-term debt		728		848
Loss (gain) on disposition of assets		616		(833)
Amortization of deferred financing costs and discount on long-term debt						3,661		3,798
Loss on disposition of assets						1,381		49
Asset impairment charges		4,293		1,695		2,867		3,864
Share-based compensation		13,958		12,614		8,095		8,739
Excess tax benefits from share-based plans		—		(1,104)
Deferred tax benefit		(13,233)		(61,108)
Deferred tax (benefit) expense						(242)		1,890
Deferred rent expense and other		(1,281)		3,141		309		(637)
Changes in operating assets and liabilities:
Accounts receivable		(13,273)		7,116		(4,832)		(22,955)
Inventories		(32,833)		(122,294)		15,701		(2,223)
Rental product		(37,817)		(45,704)		(8,521)		(35,952)
Other assets		84,844		6,210		16,112		64,513
Accounts payable, accrued expenses and other current liabilities		(4,314)		29,778		(28,444)		(29,412)
Income taxes payable		(2,065)		13,357		4,964		1,150
Other liabilities		(4,789)		942		(1,448)		(2,654)
Net cash provided by operating activities		176,884		112,236		140,529		100,304
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		(80,550)		(86,406)		(33,973)		(55,912)
Acquisition of business, net of cash						(457)		—
Proceeds from sales of property and equipment		605		2,613		2,157		605
Net cash used in investing activities		(79,945)		(83,793)		(32,273)		(55,307)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan		(40,701)		(6,250)		(8,129)		(38,951)
Proceeds from asset-based revolving credit facility		520,550		5,500		181,550		305,549
Payments on asset-based revolving credit facility		(520,550)		(5,500)		(181,550)		(305,549)
Repurchase and retirement of senior notes		(25,000)		—		(45,167)		(5,546)
Deferred financing costs		—		(3,566)
Cash dividends paid		(26,438)		(26,269)		(18,033)		(17,676)
Proceeds from issuance of common stock		1,451		2,454		927		932
Tax payments related to vested deferred stock units		(1,258)		(4,538)		(1,644)		(1,258)
Excess tax benefits from share-based plans		—		1,104
Repurchases of common stock		—		(277)
Net cash used in financing activities		(91,946)		(37,342)		(72,046)		(62,499)
Effect of exchange rate changes		(25)		292		5,642		(1,048)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		4,968		(8,607)		41,852		(18,550)
Balance at beginning of period		29,980		62,261		70,889		29,980
Balance at end of period	$	34,948	$	53,654	$	112,741	$	11,430

See Notes to Condensed Consolidated Financial Statements.

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Significant Accounting Policies

Basis of Presentation — Effective January 31, 2016, Tailored Brands, Inc., a Texas corporation (“Tailored Brands”), became the successor reporting company to The Men’s Wearhouse, Inc. (“Men’s Wearhouse”), pursuant to a holding company reorganization (the “Reorganization”). Upon completion of the Reorganization, each issued and outstanding share of common stock of Men's Wearhouse was automatically converted into one share of common stock of Tailored Brands, having the same designations, preferences, limitations, and relative rights and corresponding obligations as the shares of common stock of Men's Wearhouse. In addition, as part of the Reorganization, Men's Wearhouse's treasury shares were canceled. The consolidated assets and liabilities of Tailored Brands and its subsidiaries immediately after the Reorganization were the same as the consolidated assets and liabilities of Men's Wearhouse immediately prior to the Reorganization.

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

Our business results historically have fluctuated throughout the year and, as a result, the operating results of the interim periods presented are not necessarily indicative of the results that may be achieved for the full year. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended January ~~30, 2016.~~28, 2017.

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

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

Recent Accounting Pronouncements — We have considered all new accounting pronouncements and have concluded there are no new pronouncements that may have a material impact on our financial position, results of operations, ~~financial condition,~~ or cash flows, based on current information, except for those listed below.

In ~~March~~February 2016, the Financial Accounting Standards Board ~~(“FASB”~~("FASB") issued Accounting Standards Update ~~(“ASU”~~("ASU") ~~No. 2016-09,~~ ~~Compensation-Stock Compensation~~. ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for public companies for annual reporting periods beginning after December 15, 2016, and interim periods within those fiscal years with early adoption permitted. We will adopt ASU 2016-09 beginning in the first quarter of fiscal 2017 and we do not expect it will have a material impact on our financial position, results of operations or cash flows. However, under certain circumstances, this guidance could have an impact on our effective tax rate as changes between tax and book treatment of equity compensation will be recognized in the provision for income taxes beginning in fiscal 2017.

~~In February 2016, the FASB issued ASU~~ No. 2016-02, Leases. ASU 2016-02 increases transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The main difference between previous U.S. GAAP and ASU 2016-02 is the recognition of lease assets and lease liabilities by lessees for those leases classified as operating leases under previous U.S. GAAP. ASU 2016-02 is effective for public companies for annual reporting periods beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of ASU 2016-02 is permitted. The guidance is required to be adopted

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~~(Unaudited)~~

using the modified retrospective approach. We are currently evaluating the impact ASU 2016-02 will have on our financial position, results of operations and cash flows but expect that it will result in a significant increase in our long-term assets and liabilities given we have a significant number of leases.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles used to recognize revenue for all entities. In August 2015, the FASB issued ASU No. 2015-14 which deferred the effective date of ASU 2014-09 by one year. As a result of this deferral, ASU 2014-09 is effective for annual and interim periods beginning after December 15, 2017 and early adoption is permitted for annual reporting periods beginning after December 15, 2016. The guidance allows for either a full retrospective or a modified retrospective transition method. Based on our preliminary assessment, we determined that the adoption of ASU 2014-09 will impact the timing of revenue recognition related to our customer loyalty program and gift cards. Upon adoption, for our customer loyalty program, we will no longer use the incremental cost method approach, rather we will use a deferred revenue model. For income from breakage of gift cards, which is currently recognized as a reduction of selling, general and administrative expenses ("SG&A") when the redemption of the gift card is remote, the new guidance requires classification within net sales with breakage recognized proportionately over the expected redemption period. Additionally, under the new guidance, we expect to recognize allowances for estimated sales returns on a gross basis rather than net basis on the consolidated balance sheets. We are continuing ~~to evaluate~~ our ~~method of~~assessment for ASU 2014-09, which may identify other impacts, and evaluating the transition methods for adoption and ~~the impact this guidance, including recent amendments and interpretations, may have on our financial position, results of operations and cash flows.~~ additional disclosure requirements.

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2. Termination of Tuxedo Rental License Agreement with Macy's

During the first quarter of fiscal 2017, we reached an agreement with Macy's to wind down operations under the tuxedo rental license agreement established between Macy's and The Men's Wearhouse, Inc. ("The Men's Wearhouse") in 2015. The winding down of our tuxedo shops within Macy's is complete and all tuxedo shops within Macy's closed in the second quarter of 2017.

As a result of the agreement, during the first quarter of fiscal 2017, we incurred $17.2 million of termination-related costs, of which $14.6 million are cash charges. These costs include $12.3 million related to contract termination, $1.4 million of rental product write-offs, $1.2 million of asset impairment charges and $2.3 million of other costs, all of which relate to our retail segment. Of the $17.2 million in termination-related costs, $15.8 million is recorded in SG&A and $1.4 million is included in cost of sales in the condensed consolidated statement of earnings. At July 29, 2017, $1.7 million of such costs are included in accrued expenses and other current liabilities in the condensed consolidated balance sheet.

3. Restructuring and Other Charges

During the fourth quarter of fiscal 2015, we began implementing initiatives intended to reduce costs and improve operating performance. These initiatives ~~include~~included a store rationalization program ~~which identified approximately 250 stores to be closed~~ as well as a profit improvement program to drive operating efficiencies and improve our expense structure. ~~The store rationalization program includes~~These programs were substantially completed in fiscal 2016 and resulted in the closure of ~~approximately 80 to 90~~75 Jos. A. Bank full line stores, the closure of ~~all~~56 factory and outlet stores at Jos. A. Bank and ~~Men’s~~Men's Wearhouse ~~(58 stores)~~ and the closure of ~~between 100 and 110 Men’s~~102 Men's Wearhouse and Tux ~~stores primarily as the result of the rollout of our shops within Macy’s~~ stores. ~~We expect the store rationalization and profit improvement programs to be completed in fiscal 2016.~~

A summary of the charges incurred for the three and nine months ended October 29, 2016 along with cumulative charges incurred under these initiatives since inception is presented in the table below (amounts in thousands):

For the Three Months Ended

For the Nine Months Ended


October 29,

October 29,

2016

2016

Cumulative

Lease termination costs

$
8,667

$
37,004

$
37,004

Store asset impairment charges and accelerated depreciation, net of deferred rent

(844)

2,330

25,476

Consulting costs

1,806

13,583

14,501

Inventory reserve charges

—

—

11,008

Favorable lease impairment charges

—

—

5,533

Severance and employee-related costs

481

4,643

4,643

Other costs

839

1,565

2,423

Total pre-tax restructuring and other charges(1)

$
10,949

$
59,125

$
100,588

⁽¹⁾

~~Consists of $12.4 million included in selling, general and administrative expenses (“SG&A”) offset by a $1.5 million reduction in cost of sales for the three months ended October 29, 2016~~. ~~Consists of $61.8 million included in SG&A offset by a $2.7 million reduction in cost of sales for the nine months ended October 29, 2016~~. For the three and nine months ended October 29, 2016 and cumulatively since inception of the initiatives, of the total amounts recorded in the table above, $9.1 million, $42.7 million and $82.6 million relate to our retail segment and the remainder are recorded in shared services.

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(Unaudited)

AsNo charges were incurred under these initiatives for the three and six months ended July 29, 2017. A summary of ~~October 29, 2016, we estimate that cumulative pre-tax restructuring and other~~the charges ~~related to these actions will approximate $114.0 million to $120.0 million, of which approximately $72.0 million to $75.0 million are estimated to be cash expenses. Included~~incurred in the ~~estimate~~three and six months ended July 30, 2016 incurred under these initiatives since inception is presented in the table below (amounts in thousands):



	For the Three Months Ended		For the Six Months Ended
	July 30, 2016		July 30, 2016
Lease termination costs	$	26,446	$	28,337
Store asset impairment charges and accelerated depreciation, net of deferred rent		1,164		3,174
Consulting costs		6,825		11,777
Severance and employee-related costs		406		4,162
Other costs		174		726
Total pre-tax restructuring and other charges(1)	$	35,015	$	48,176

(1) Consists of $36.4 million in SG&A offset by a $1.4 million reduction in cost of sales for the three months ended July 30, 2016. Of the total ~~pre-tax charges are approximately:~~amount recorded for the three months ended July 30, 2016, $27.9 million relates to our retail segment and $7.1 million relates to shared services. Consists of $49.4 million included in SG&A offset by a $1.2 million reduction in cost of sales for the six months ended July 30, 2016. Of the total amount recorded for the six months ended July 30, 2016, $33.6 million relates to our retail segment and $14.6 million relates to shared services.

~~Approximately $50.0 million of lease termination costs;~~

~~$42.0 million to $45.0 million of inventory and long-lived and intangible asset impairment charges, including accelerated depreciation relating to store closures; and~~

~~$22.0 million to $25.0 million of consulting, severance and other costs.~~

The following table is a rollforward of amounts included in accrued expenses and other current liabilities in the condensed consolidated balance sheet related to the pre-tax restructuring and other charges (amounts in thousands):


	Severance and		Lease								Severance and		Lease
	Employee-		Termination		Consulting		Other				Employee-		Termination		Consulting		Other
	Related Costs		Costs		Costs		Costs		Total		Related Costs		Costs		Costs		Costs		Total
Beginning Balance, January 30, 2016	$	—	$	—	$	918	$	858	$	1,776
Beginning Balance, January 28, 2017											$	986	$	4,834	$	60	$	25	$	5,905
Charges, excluding non-cash items		4,643		37,004		13,583		1,565		56,795		—		—		—		—		—
Payments		(4,179)		(30,562)		(13,983)		(2,398)		(51,122)		(504)		(3,434)		(60)		(25)		(4,023)
Ending Balance, October 29, 2016	$	464	$	6,442	$	518	$	25	$	7,449
Ending Balance, July 29, 2017											$	482	$	1,400	$	—	$	—	$	1,882

In addition to the restructuring costs described above, for the three months ended July 30, 2016, we incurred integration and other costs related to Jos. A. Bank totaling ~~$1.4 million and $5.0 million for the three months ended October 29, 2016 and October 31, 2015, respectively. For the three months ended October 29, 2016, $0.9~~$2.0 million, of ~~the integration costs~~which $1.5 million are included in SG&A and $0.5 million are included in cost of sales in the condensed consolidated statement of earnings (loss). For the three months ended October 31, 2015, $5.2 million of the integration costs are included in SG&A offset by a $0.2 million reduction in in cost of sales in the condensed consolidated statement of earnings (loss).earnings.

For the ~~nine~~six months ended ~~October 29,~~July 30, 2016, ~~and October 31, 2015,~~ we incurred integration and other costs related to Jos. A. Bank totaling ~~$7.1 million and $15.9 million, respectively. For the nine months ended October 29, 2016, $5.5~~$5.6 million, of ~~the integration costs~~which $4.6 million are included in SG&A and ~~$1.6~~$1.0 million are included in cost of sales in the condensed consolidated statement of earnings (loss). For the nine months ended October 31, 2015, $15.6 million of the integration costs are included in SG&A and $0.3 million are included in cost of sales in the condensed consolidated statement of earnings (loss). earnings.

3.4. Earnings ~~(Loss) per~~Per Share

Basic earnings ~~(loss)~~ per common share allocated to common shareholders is ~~determined using the two-class method and is~~ computed by dividing net earnings ~~(loss) allocated to common shareholders~~ by the weighted-average common shares outstanding during the period. Diluted earnings ~~(loss)~~ per common share reflect the more dilutive earnings ~~(loss)~~ per common share amount calculated using the treasury stock method or the two-class method. For the three and six months ended July 29, 2017, the treasury stock method is used to calculate diluted earnings per common share while the two-class method was used for the three and six months ended July 30, 2016.

Basic and diluted earnings per common share allocated to common shareholders are computed using the actual net earnings allocated to common shareholders and the actual weighted-average common shares outstanding rather than the rounded numbers presented within our condensed consolidated statement of earnings and the accompanying notes. As a result, it may not be possible to recalculate earnings per common share allocated to common shareholders in our condensed

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


	For the Three Months Ended				For the Nine Months Ended				For the Three Months Ended				For the Six Months Ended
	October 29,		October 31,		October 29,		October 31,		July 29,		July 30,		July 29,		July 30,
	2016		2015		2016		2015		2017		2016		2017		2016
Numerator
Net earnings (loss)	$	28,433	$	(27,154)	$	55,045	$	30,994
Net earnings									$	58,471	$	24,975	$	60,310	$	26,612
Net earnings allocated to participating securities (restricted stock and deferred stock units)		(33)		—		(65)		(31)		—		(31)		—		(31)
Net earnings (loss) allocated to common shareholders	$	28,400	$	(27,154)	$	54,980	$	30,963
Net earnings allocated to common shareholders									$	58,471	$	24,944	$	60,310	$	26,581
Denominator
Basic weighted-average common shares outstanding		48,655		48,339		48,570		48,258		49,107		48,609		48,958		48,527
Dilutive effect of share-based awards		157		—		121		255		65		30		204		103
Diluted weighted-average common shares outstanding		48,812		48,339		48,691		48,513		49,172		48,639		49,162		48,630
Net earnings (loss) per common share allocated to common shareholders:
Net earnings per common share allocated to common shareholders:
Basic	$	0.58	$	(0.56)	$	1.13	$	0.64	$	1.19	$	0.51	$	1.23	$	0.55
Diluted	$	0.58	$	(0.56)	$	1.13	$	0.64	$	1.19	$	0.51	$	1.23	$	0.55

For the three and ~~nine~~six months ended ~~October~~July 29, ~~2016, 1.9~~2017, 2.5 million and ~~1.7~~2.0 million anti-dilutive shares of common stock were excluded from the calculation of diluted earnings ~~(loss)~~ per common share, respectively. For the three and ~~nine~~six months ended ~~October 31, 2015, 0.4~~July 30, 2016, 2.0 million and ~~0.3~~1.6 million anti-dilutive shares of common stock were excluded from the calculation of diluted earnings ~~(loss)~~ per common share, respectively.

4.5. Debt

~~On June 18,~~In 2014, The Men's Wearhouse ~~Inc.~~ entered into a term loan credit agreement that provides for a senior secured term loan in the aggregate principal amount of $1.1 billion (the ~~“Term Loan”~~"Term Loan") and a $500.0 million asset-based revolving credit agreement (the ~~“ABL Facility”~~"ABL Facility", and together with the Term Loan, the ~~“Credit Facilities”~~"Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People Inc., one of our Canadian subsidiaries, as co-borrowers. Proceeds from the Term Loan were reduced by an $11.0 million original issue discount ~~(“OID”~~("OID"), which is presented as a reduction of the outstanding balance on the Term Loan on the balance sheet and will be amortized to interest expense over the contractual life of the Term Loan. In addition, ~~on June 18,~~in 2014, The ~~Men’s~~Men's Wearhouse ~~Inc.~~ issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the ~~“Senior Notes”~~"Senior Notes").

As of July 29, 2017, our total leverage ratio and secured leverage ratio were below the maximums specified in the agreements but these ratios may increase above the maximums specified in the agreements during the remainder of fiscal 2017. Currently, we believe our total leverage ratio and secured leverage ratio will remain below the maximums specified in the agreements during fiscal 2018 and beyond, which will result in the elimination of these additional restrictions. In addition, in accordance with the terms of the Credit Facilities, we made a mandatory excess cash flow prepayment offer of $4.6 million to the Term

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Loan lenders prior to April 28, 2017. On May 2, 2017, the entire $4.6 million prepayment was made together with normal principal and interest payments on the Term Loan.

Credit Facilities

The Term Loan is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries and will mature onin June ~~18,~~ 2021. The interest rate on the Term Loan is based on ~~3-month~~1-month LIBOR, which was approximately ~~0.89%~~1.23% at ~~October~~July 29, ~~2016. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum,~~2017, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of ~~4.50%~~4.73%. In January 2015, we entered into an interest rate swap agreement, in which the variable rate payments due under a portion of the Term Loan were exchanged for a fixed rate. In April 2017, we entered into an additional interest rate ~~(see~~swap agreement to exchange variable rate payments under a portion of the Term Loan for a fixed rate. At July 29, 2017, the total notional amount under our interest rate swaps is $540.0 million. See Note ~~12).~~14 for additional information on our interest rate swaps.

In ~~April~~ 2015, The Men's Wearhouse ~~Inc.~~ entered into Incremental Facility Agreement No. 1 (the ~~“Incremental Agreement”~~"Incremental Agreement") resulting in a refinancing of $400.0 million aggregate principal amount of the Term Loan from a variable rate to a fixed rate of 5.0% per annum. The Incremental Agreement did not impact the total amount borrowed under the Term Loan, the maturity date of the Term Loan, ~~of June 18, 2021,~~ or collateral and guarantees under the Term Loan. In connection with the Incremental Agreement, we incurred deferred financing costs of $3.6 million, which will be amortized over the life of the remaining term using the interest method. In addition, as a result of entering into the Incremental Agreement, we recorded a loss on extinguishment of debt totaling $12.7 million consisting of the elimination of unamortized deferred financing costs and OID related to the Term Loan, which is included as a separate line in the condensed consolidated statement of earnings (loss).

As a result of ~~the~~our interest rate ~~swap~~swaps and the Incremental Agreement, we have converted a ~~majority~~significant portion of the variable interest rate under the Term Loan to a fixed rate and, as of ~~October~~July 29, ~~2016,~~2017, the Term Loan had a weighted average interest rate of ~~4.89%~~5.14%.

The ABL Facility provides for a senior secured revolving credit facility of $500.0 million, with possible future increases to $650.0 million under an expansion feature that matures onin June ~~18,~~ 2019, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate ~~(“CDOR”~~("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or adjusted LIBOR for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%. As of ~~October~~July 29, ~~2016,~~2017, there were no borrowings outstanding under the ABL Facility. During the ~~three and nine~~six months ended ~~October~~July 29, ~~2016,~~2017, the maximum borrowing outstanding under the ABL Facility was ~~$68.5~~$34.7 million.

We utilize letters of credit primarily ~~to secure inventory purchases and~~ as collateral for workers compensation ~~claims.~~claims and to secure inventory purchases. At ~~October~~July 29, ~~2016,~~2017, letters of credit totaling approximately ~~$28.9~~$33.4 million were issued and outstanding. Borrowings available under the ABL Facility as of ~~October~~July 29, ~~2016~~2017 were ~~$427.2~~$466.6 million.

Senior Notes

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

Long-Term Debt

~~On May 2, 2016, in accordance with~~During the terms of the Credit Facilities, we made a mandatory excess cash flow prepayment of $35.5 million on the Term Loan. As a result of this prepayment, we recorded a loss on extinguishment of debt totaling $0.9 million consisting of the elimination of unamortized deferred financing costs and OID related to the Term Loan.

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~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~In addition, during the third~~second quarter of ~~2016,~~2017, we repurchased and retired ~~$18.5~~$42.6 million in face value of Senior Notes through open market transactions, which were consummated via borrowings on our ABL Facility. As a result, we recorded a net gain on extinguishment totaling ~~$1.8~~$3.3 million, which is included as a separate line in the condensed consolidated statement of

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

earnings. The net gain on extinguishment reflects a ~~$2.1~~$4.0 million gain upon repurchase partially offset by the elimination of unamortized deferred financing costs totaling ~~$0.3~~$0.7 million related to the Senior Notes.

For the ~~nine~~six months ended ~~October~~July 29, ~~2016,~~2017, as a result of ~~our excess cash flow prepayment and~~ the repurchase and retirement of a total of ~~$25.0~~$50.0 million in face value of Senior Notes and our excess cash flow prepayment, we recorded a net gain on extinguishment totaling ~~$1.7~~$4.0 million, which reflects a ~~$3.1~~$4.8 million gain upon repurchase partially offset by the elimination of unamortized deferred financing costs of ~~$1.4~~$0.8 million, which is included as a separate line in the condensed consolidated statement of ~~earnings (loss).~~earnings.

The following table provides details on our long-term debt as of ~~October~~July 29, 2017, July 30, 2016 ~~October 31, 2015~~ and January ~~30, 2016~~28, 2017 (in thousands):


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
Term Loan (net of unamortized OID of $4.4 million at October 29, 2016, $5.6 million at October 31, 2015 and $5.4 million at January 30, 2016)	$	1,044,173	$	1,085,392	$	1,083,891
Term Loan (net of unamortized OID of $3.6 million at July 29, 2017, $4.6 million at July 30, 2016, and $4.1 million at January 28, 2017)							$	1,035,030	$	1,045,686	$	1,042,660
Senior Notes		575,000		600,000		600,000		525,000		593,500		575,000
Less: Deferred financing costs related to the Term Loan and Senior Notes		(23,300)		(29,186)		(27,967)		(19,025)		(24,784)		(22,131)
Total long-term debt, net		1,595,873		1,656,206		1,655,924		1,541,005		1,614,402		1,595,529
Current portion of long-term debt		(7,000)		(7,000)		(42,451)		(8,750)		(14,000)		(13,379)
Total long-term debt, net of current portion	$	1,588,873	$	1,649,206	$	1,613,473	$	1,532,255	$	1,600,402	$	1,582,150

5.6. Supplemental Cash Flows

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

For the Nine Months Ended

October 29,

October 31,

2016

2015

Cash paid for interest

$
62,450

$
61,895

Cash (refunded) paid for income taxes, net

$
(44,961)

$
32,932

Schedule of noncash investing and financing activities:

Cash dividends declared

$
9,572

$
9,028


	For the Six Months Ended
	July 29,		July 30,
	2017		2016

Cash paid for interest	$	51,052	$	48,746
Cash paid (refunded) for income taxes, net	$	14,591	$	(52,547)

We had unpaid capital expenditure purchases included in accounts payable and accrued expenses and other current liabilities of approximately ~~$7.8~~$6.9 million and ~~$7.3~~$11.8 million at ~~October~~July 29, ~~2016~~2017 and ~~October 31, 2015,~~July 30, 2016, respectively. Capital expenditure purchases are recorded as cash outflows from investing activities in the condensed consolidated statement of cash flows in the period they are paid. Cash dividends declared of $9.4 million and $9.0 million at July 29, 2017 and July 30, 2016, respectively, are included in accrued expenses and other current liabilities.

6.7. Inventories

The following table provides details on our inventories as of ~~October~~July 29, 2017, July 30, 2016 ~~October 31, 2015~~ and January ~~30, 2016~~28, 2017 (in thousands):


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
Finished goods	$	963,036	$	1,006,182	$	919,623	$	841,101	$	929,428	$	846,585
Raw materials and merchandise components		84,879		54,065		102,881		103,682		94,175		108,927
Total inventories	$	1,047,915	$	1,060,247	$	1,022,504	$	944,783	$	1,023,603	$	955,512

8. Income Taxes

Our effective income tax rate increased to 32.5% for the second quarter of 2017 from 25.9% for the second quarter of 2016 primarily due to higher U.S. income as compared to income earned in foreign jurisdictions this year compared to last year.

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(Unaudited)

~~7. Income Taxes~~

Our effective income tax rate increased to ~~24.1%~~35.0% for the ~~third quarter~~first six months of 2017 from 30.4% for the first six months of 2016 ~~from a benefit of (56.8)% for the third quarter of 2015~~ primarily as a result of the Jos. A. Bank tradename impairment charge of $90.1 million in last year’s third quarter, which generated a book loss in our U.S. entities and significantly impacted our effective tax rate. In addition, the effective tax rate for the third quarter of 2016 is impacted by lowerdue to higher U.S. income as compared to income earned in foreign jurisdictions ~~which have lower statutory tax rates.~~

~~Our effective income tax rate increased~~this year compared to 27.3% for the first nine months of 2016 from a benefit of (24.0)% for the first nine months of 2015 primarily due to the impact of the aforementioned Jos. A. Bank tradename impairment charge, which resulted in our effective tax rate being a benefit for the first nine months of 2015.last year. In addition, the effective income tax rate for the first ~~nine~~six months of ~~2016 is~~2017 was impacted by ~~lower U.S. income as compared~~$2.2 million of tax deficiencies related to ~~income earned in foreign jurisdictions, which have lower statutory tax rates.~~the vesting of stock-based awards resulting from the adoption of new accounting guidance related to stock-based compensation. See Note 11 for additional information.

~~Lastly,~~Additionally, we are currently undergoing several federal, foreign and state ~~audits which~~audits; however, we ~~are vigorously defending and~~ currently do not believe ~~should~~these audits will result in any material ~~change~~charge to tax ~~expense.~~expense in the future.

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

Other current assets consist of the following (in thousands):


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
Prepaid expenses	$	39,935	$	42,824	$	42,166	$	45,718	$	47,088	$	47,057
Tax receivable		4,697		69,830		85,153		2,428		21,037		15,794
Current deferred tax assets		—		38,736		—
Other		15,558		16,681		16,227		7,286		12,988		10,751
Total other current assets	$	60,190	$	168,071	$	143,546	$	55,432	$	81,113	$	73,602

Accrued expenses and other current liabilities consist of the following (in thousands):


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
Accrued salary, bonus, sabbatical, vacation and other benefits	$	70,631	$	71,921	$	75,373	$	61,431	$	64,580	$	72,589
Customer deposits, prepayments and refunds payable								54,043		47,993		28,384
Unredeemed gift cards								36,245		36,217		40,865
Sales, value added, payroll, property and other taxes payable		36,021		35,486		27,505		33,472		34,589		31,188
Unredeemed gift certificates		34,693		34,477		40,884
Accrued workers compensation and medical costs		30,818		28,408		30,877		27,009		30,786		31,609
Customer deposits, prepayments and refunds payable		29,371		25,715		25,218
Accrued interest		25,884		27,207		16,282		12,477		16,067		15,457
Accrued dividends								10,456		9,307		9,842
Loyalty program reward certificates		10,704		8,181		9,215		9,226		9,963		9,840
Cash dividends declared		9,572		9,028		9,150
Accrued royalties		7,977		6,630		3,727		4,515		7,545		3,720
Lease termination and other store closure costs		6,442		92		—		3,135		20,918		4,834
Other		18,545		18,848		18,531		24,607		17,742		19,571
Total accrued expenses and other current liabilities	$	280,658	$	265,993	$	256,762	$	276,616	$	295,707	$	267,899

Deferred taxes, net and other liabilities consist of the following (in thousands):


	July 29,		July 30,		January 28,
	2017		2016		2017
Deferred and other income tax liabilities, net	$	90,957	$	115,735	$	92,079
Deferred rent and landlord incentives		60,467		63,367		61,215
Unfavorable lease liabilities		3,760		6,141		4,693
Other		7,129		6,882		5,433
Total deferred taxes, net and other liabilities	$	162,313	$	192,125	$	163,420

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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Deferred taxes and other liabilities consist of the following (in thousands):~~

October 29,

October 31,

January 30,


2016

2015

2016

Deferred and other income tax liabilities

$
102,243

$
275,213

$
112,469

Deferred rent and landlord incentives

61,641

65,764

66,075

Unfavorable lease liabilities

5,394

9,129

8,279

Other

5,901

7,953

7,782

Total deferred taxes and other liabilities

$
175,179

$
358,059

$
194,605

9.10. Accumulated Other Comprehensive (Loss) Income

The following table summarizes the components of accumulated other comprehensive (loss) income for the ~~nine~~six months ended ~~October~~July 29, ~~2016~~2017 (in thousands and net of tax):

Foreign

Currency

Cash Flow

Pension


Translation

Hedges

Plan

Total

BALANCE— January 30, 2016

$
(26,659)

$
(2,007)

$
180

$
(28,486)

Other comprehensive (loss) income before reclassifications

(18,246)

354

—

(17,892)

Amounts reclassified from accumulated other comprehensive loss

—

1,040

—

1,040

Net other comprehensive (loss) income

(18,246)

1,394

—

(16,852)

BALANCE— October 29, 2016

$
(44,905)

$
(613)

$
180

$
(45,338)


	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— January 28, 2017		(40,205)		(82)		204		(40,083)
Other comprehensive income (loss) before reclassifications		16,114		(5,482)		—		10,632
Amounts reclassified from accumulated other comprehensive loss		—		1,270		—		1,270
Net current-period other comprehensive income (loss)		16,114		(4,212)		—		11,902
BALANCE— July 29, 2017	$	(24,091)	$	(4,294)	$	204	$	(28,181)

The following table summarizes the components of accumulated other comprehensive (loss) income for the ~~nine~~six months ended ~~October 31, 2015~~July 30, 2016 (in thousands and net of tax):

Foreign

Currency

Interest Rate

Pension


Translation

Swap

Plan

Total

BALANCE— January 31, 2015

$
(4,232)

$
(1,665)

$
226

$
(5,671)

Other comprehensive income (loss) before reclassifications

(378)

(1,531)

—

(1,909)

Amounts reclassified from accumulated other comprehensive income

—

1,224

—

1,224

Net current-period other comprehensive loss

(378)

(307)

—

(685)

BALANCE— October 31, 2015

$
(4,610)

$
(1,972)

$
226

$
(6,356)


	Foreign
	Currency		Cash Flow		Pension
	Translation		Hedges		Plan		Total
BALANCE— January 30, 2016	$	(26,659)	$	(2,007)	$	180	$	(28,486)
Other comprehensive loss before reclassifications		(3,171)		(276)		—		(3,447)
Amounts reclassified from accumulated other comprehensive loss		—		722		—		722
Net current-period other comprehensive (loss) income		(3,171)		446		—		(2,725)
BALANCE— July 30, 2016	$	(29,830)	$	(1,561)	$	180	$	(31,211)

Amounts reclassified from other comprehensive (loss) income for the ~~nine~~six months ended ~~October~~July 29, ~~2016 and October 31, 2015, respectively,~~2017 relate to changes in the fair value of our interest rate swaps which is recorded within interest expense in the condensed consolidated statement of earnings and changes in the fair value of cash flow hedges related to inventory purchases, which is recorded within cost of sales in the condensed consolidated statement of earnings. Amounts reclassified from other comprehensive (loss) income for the six months ended July 30, 2016 relate to changes in the fair value of our interest rate swap, which is recorded within interest expense in the condensed consolidated statement of ~~earnings (loss).~~earnings.

~~10.~~11. Share-Based Compensation Plans

For a discussion of our share-based compensation plans, refer to Note 13 in our Annual Report on Form 10-K for the fiscal year ended January ~~30, 2016.~~28, 2017.

During the first quarter of fiscal 2017, we adopted ASU No. 2016-09, ~~In June 2016 our shareholders approved the Tailored Brands, Inc. 2016 Long-Term Incentive Plan (the “2016 LTIP”), which replaced our 2004 Long-Term Incentive Plan (the “2004 LTIP”)~~Compensation-Stock Compensation. ~~Awards are no longer available for grant under the 2004 LTIP but outstanding awards under the 2004 LTIP remain in effect in accordance with the terms~~ASU 2016-09 simplifies several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on the ~~2004 LTIP.~~statement of cash flows. The recognition of excess tax benefits and deficiencies related to the vesting of stock-based awards in the statement of earnings and presentation of excess tax benefits on the statement of cash flows were adopted prospectively, with no adjustments made to prior periods. See Note 8 for additional information. In addition, upon adoption, we did not change our policy on accounting for forfeitures, which is to estimate the number of ~~shares~~awards expected to be forfeited and adjusting the estimate as needed. Overall, the adoption of ASU 2016-09 did not have a material impact on our ~~common stock authorized for awards under the 2016 LTIP is 6.4 million, subject to adjustments. Under the 2016 LTIP, 18,328 awards have been issued as of October 29, 2016.~~financial statements.

We account for share-based awards in accordance with the authoritative guidance regarding share-based payments, which requires the compensation cost resulting from all share-based payment transactions be recognized in the financial

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

statements. The amount of compensation cost is measured based on the grant-date fair value of the instrument issued and is recognized over the vesting period. Share-based compensation expense recognized for the three and nine months ended October 29, 2016 was $5.2 million and $14.0 million, respectively. Share-based compensation expense recognized for the three and nine months ended October 31, 2015 was $4.2 million and $12.6 million, respectively.

Non-Vested Deferred Stock Units, Performance Units and Restricted Stock

The following table summarizes the activity of time-based and performance-based (collectively, "DSUs") awards for the ~~nine~~six months ended ~~October~~July 29, ~~2016:~~2017:


			Weighted-Average						Weighted-Average
	Units		Grant-Date Fair Value				Units		Grant-Date Fair Value
	Time-	Performance-	Time-		Performance-		Time-	Performance-	Time-		Performance-
	Based	Based	Based		Based		Based	Based	Based		Based
Non-Vested at January 30, 2016	478,106	168,656	$	49.60	$	47.87
Non-Vested at January 28, 2017							1,061,965	523,948	$	24.31	$	28.28
Granted	830,002	258,168		16.68		17.43	428,881	507,528		11.35		11.36
Vested(1)	(216,936)	—		49.01		—	(449,248)	—		25.49		—
Forfeited	(24,426)	(59,943)		39.49		33.72	(26,193)	(737)		23.85		54.26
Non-Vested at October 29, 2016	1,066,746	366,881	$	24.34	$	28.76
Non-Vested at July 29, 2017							1,015,405	1,030,739	$	18.31	$	19.93

⁽¹⁾

Includes ~~71,896~~123,050 shares relinquished for tax payments related to vested ~~deferred stock units~~DSUs for the ~~nine~~six months ended ~~October~~July 29, ~~2016.~~2017.

On April 3, 2013, our Board of Directors approved a change in the form of award agreements to be issued for grants of deferred stock units (“DSUs”). As revised, the award agreements provide that dividend equivalents, if any, will be accrued during the vesting period for such DSU awards and paid out only upon vesting of the underlying DSUs. As such, grants of DSU awards on or after April 3, 2013 earn dividends throughout the vesting period which are subject to the same vesting terms as the underlying share award. Grants of DSUs generally vest over a period of three years. DSU awards granted prior to April 3, 2013 are entitled to receive non-forfeitable dividend equivalents, if any, when and if paid to shareholders of record at the payment date. Included in the non-vested time-based awards as of October 29, 2016 are 11,288 DSUs granted prior to April 3, 2013.

The performance units granted in the first nine months of 2016 represent a contingent right to earn shares of common stock, subject to the achievement of a Company-specific performance target for fiscal 2016-2017. Assuming the performance target is achieved, 50% of the award will vest on the two year anniversary of the grant date and the remaining 50% of the award will vest on the three year anniversary of the grant date. Performance units that are unvested at the end of the performance period will lapse and be forfeited. The performance units earn dividends throughout the vesting period that are subject to the same vesting terms as the underlying performance-based awards.

The following table summarizes the activity of restricted stock for the ~~nine~~six months ended ~~October~~July 29, ~~2016:~~2017:


		Weighted- Average			Weighted- Average
	Shares	Grant-Date Fair Value		Shares	Grant-Date Fair Value
Non-Vested at January 30, 2016	33,157	$	27.93
Non-Vested at January 28, 2017				36,878	$	15.56
Granted	18,646		17.37	—		—
Vested	(6,951)		58.44	(36,878)		15.56
Forfeited	—		—	—		—
Non-Vested at October 29, 2016	44,852	$	18.81
Non-Vested at July 29, 2017				—	$	—

Restricted stock awards receive non-forfeitable dividends, if any, when and if paid to shareholders of record at the payment date.

As of July 29, 2017, we have unrecognized compensation expense related to non-vested DSUs of approximately $24.1 million, which is expected to be recognized over a weighted-average period of 1.7 years.

Stock Options

The following table summarizes the activity of stock options for the six months ended July 29, 2017:


		Weighted-
	Number of	Average
	Shares	Exercise Price
Outstanding at January 28, 2017	1,194,690	$	29.70
Granted	550,804		11.36
Exercised	—		—
Forfeited	(1,553)		52.27
Expired	(40,243)		41.23
Outstanding at July 29, 2017	1,703,698	$	23.48
Exercisable at July 29, 2017	726,137	$	33.22

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

As of October 29, 2016, we have unrecognized compensation expense related to non-vested DSUs, performance units, and shares of restricted stock of approximately $24.6 million, which is expected to be recognized over a weighted-average period of 1.5 years.

~~Stock Options~~

~~The following table summarizes the activity of stock options for the nine months ended October 29, 2016:~~

Weighted-

Number of

Average

Shares

Exercise Price

Outstanding at January 30, 2016

681,117

$
39.65

Granted

593,509

17.43

Exercised

—

—

Forfeited

(3,051)

48.31

Expired

(1,525)

48.31

Outstanding at October 29, 2016

1,270,050

$
29.23

Exercisable at October 29, 2016

450,630

$
36.25

The weighted-average grant date fair value of the ~~593,509~~550,804 stock options granted during the ~~nine~~six months ended ~~October~~July 29, ~~2016~~2017 was ~~$5.18~~$3.80 per share. The following table summarizes the weighted-average assumptions used to fair value the stock options at the date of grant using the Black-Scholes option ~~pricing~~ model for the ~~nine~~six months ended ~~October~~July 29, ~~2016:~~ 2017:


		For the ~~Nine~~Six Months Ended
		~~October~~July 29,
		~~2016~~2017
Risk-free interest rates		~~1.22%~~1.76%
Expected lives		5.0 years
Dividend yield		~~4.13%~~4.68%
Expected volatility		~~47.95%~~55.12%

As of ~~October~~July 29, ~~2016,~~2017, we have unrecognized compensation expense related to non-vested stock options of approximately ~~$4.5~~$4.2 million, which is expected to be recognized over a weighted-average period of ~~1.4~~1.5 years.

~~11. Goodwill and Other Intangible Assets~~Cash Settled Awards

~~Please refer~~During the second quarter of 2017, we granted stock-based awards to ~~Note 3~~certain employees, which vest over a period of three years, and will be settled in cash ("cash settled awards"). The fair value of the ~~Notes to Consolidated Financial Statements~~cash settled awards at each reporting period is based on the price of our common stock and includes a market condition. The fair value of the cash settled awards will be remeasured at each reporting period until the awards are settled. Cash settled awards are classified as liabilities in ~~our Annual Report on Form 10-K~~the condensed consolidated balance sheets. At July 29, 2017, the liability associated with the cash settled awards was $0.9 million with $0.5 million recorded in accrued expenses and other current liabilities and $0.4 million recorded in other liabilities in the condensed consolidated balance sheets.

The following table summarizes the activity of cash settled awards for the ~~year ended January 30, 2016 for information on impairment charges recorded in fiscal 2015 related to goodwill and intangible assets for Jos. A. Bank.~~

~~Goodwill~~

~~Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the nine~~six months ended ~~October~~July 29, ~~2016 are as follows~~2017 (in thousands):

Corporate


Retail

Apparel

Total

Balance at January 30, 2016

$
93,201

$
25,385

$
118,586

Translation adjustment

921

(3,481)

(2,560)

Balance at October 29, 2016

$
94,122

$
21,904

$
116,026


	Cash Settled Awards
Non-Vested at January 28, 2017	$	—
Granted		8,184
Vested		—
Forfeited		(31)
Non-Vested at July 29, 2017	$	8,153

Share-Based Compensation Expense

Share-based compensation expense recognized for the three and six months ended July 29, 2017 was $4.2 million and $9.0 million, respectively. Share-based compensation expense recognized for the three and six months ended July 30, 2016 was $4.6 million and $8.7 million, respectively.

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

12. Goodwill and Other Intangible Assets

Goodwill

Goodwill allocated to our reportable segments and changes in the net carrying amount of goodwill for the six months ended July 29, 2017 are as follows (in thousands):


			Corporate
	Retail		Apparel		Total
Balance at January 28, 2017	$	94,511	$	22,515	$	117,026
Goodwill of acquired business		—		695		695
Translation adjustment		1,173		986		2,159
Balance at July 29, 2017	$	95,684	$	24,196	$	119,880

The goodwill of acquired business resulted from an immaterial acquisition by our United Kingdom ("UK") based operations. Goodwill is evaluated for impairment at least annually. A more frequent evaluation is performed if events or circumstances indicate that impairment could have occurred. Such events or circumstances could include, but are not limited to, new significant negative industry or economic trends, unanticipated changes in the competitive environment, decisions to significantly modify or dispose of operations and a significant sustained decline in the market price of our stock. No impairment evaluation was considered necessary during the first ~~nine~~six months ended ~~October~~July 29, ~~2016.~~2017.

Intangible Assets

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


	October 29,		October 31,		January 30,		July 29,		July 30,		January 28,
	2016		2015		2016		2017		2016		2017
Amortizable intangible assets:
Carrying amount:
Trademarks and tradenames	$	15,897	$	16,516	$	16,292
Trademarks, tradenames and franchise agreements							$	16,076	$	16,097	$	15,966
Favorable leases		14,381		24,118		14,675		13,475		14,381		13,826
Customer relationships		24,750		85,515		29,129		26,630		26,862		25,483
Total carrying amount		55,028		126,149		60,096		56,181		57,340		55,275
Accumulated amortization:
Trademarks and tradenames		(9,930)		(9,679)		(9,728)
Trademarks, tradenames and franchise agreements								(10,302)		(9,886)		(10,055)
Favorable leases		(4,045)		(4,025)		(2,739)		(4,481)		(3,529)		(3,961)
Customer relationships		(12,891)		(24,507)		(13,459)		(15,534)		(13,432)		(13,804)
Total accumulated amortization		(26,866)		(38,211)		(25,926)		(30,317)		(26,847)		(27,820)
Total amortizable intangible assets, net		28,162		87,938		34,170		25,864		30,493		27,455
Indefinite-lived intangible assets:
Trademarks and tradename, net		144,175		480,233		144,340
Trademarks and tradename								144,249		144,259		144,204
Total intangible assets, net	$	172,337	$	568,171	$	178,510	$	170,113	$	174,752	$	171,659

Pre-tax amortization expense associated with intangible assets subject to amortization totaled $1.0 million and $2.1 million for the three and six months ended July 29, 2017. Pre-tax amortization expense associated with intangible assets subject to amortization totaled $1.2 million and ~~$3.7~~$2.5 million for the three and ~~nine~~six months ended ~~October 29,~~and July 30, 2016. ~~Pre-tax amortization expense associated with intangible assets subject to amortization totaled $3.4 million and $10.5 million for the three and nine months ended October 31, 2015, respectively.~~ Pre-tax amortization associated with intangible assets subject to amortization at ~~October~~July 29, ~~2016~~2017 is estimated to be ~~$1.2~~$2.1 million for the remainder of fiscal ~~2016, $4.2 million for fiscal~~ 2017, ~~$4.0~~$3.8 million for fiscal 2018, ~~$3.8~~$3.6 million for fiscal 2019, ~~and $3.6~~$3.4 million for fiscal ~~2020.~~2020 and $3.3 million for fiscal 2021.

In the third quarter of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. The fair value of the Jos. A. Bank tradename was estimated using a relief from royalty method, which calculated the present value of savings resulting from the right to sell products without having to pay a royalty fee. Critical assumptions that were used in this method included future sales projections, an estimated royalty rate and a discount rate. Based on this analysis, during the third quarter of 2015, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash impairment charge of $90.1 million, which is included as a separate line in the condensed statement of earnings (loss), and relates to our retail segment.

~~12. Derivative Financial Instruments~~

As discussed in Note 4, in January 2015, we entered into an interest rate swap agreement on a notional amount of $520.0 million that matures in August 2018 with periodic interest settlements. At October 29, 2016, the notional amount totaled $390.0 million. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to changes in the LIBOR benchmark interest rate. At October 29, 2016, the fair value of the interest rate swap was a liability of $1.9 million with $1.6 million recorded in accrued expenses and other current liabilities and $0.3 million in other liabilities in

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

our condensed consolidated balance sheet. The effective portion of the swap is reported as a component of accumulated other comprehensive (loss) income. There was no hedge ineffectiveness at October 29, 2016. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings.

Over the next 12 months, $1.6 million of the effective portion of the interest rate swap is expected to be reclassified from accumulated other comprehensive (loss) income into earnings. If, at any time, the interest rate swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the interest rate swap determined to be ineffective will be recognized as a gain or loss in the statement of earnings for the applicable period.

Furthermore, as a result of recent exchange rate fluctuations in Europe, we have entered into derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro. We have designated these instruments as cash flow hedges of the variability in exchange rates for those foreign currencies. At October 29, 2016, the fair value of these cash flow hedges was a liability of $0.6 million recorded in accrued expenses and other current liabilities in our consolidated balance sheet. The effective portion of the hedges is reported as a component of accumulated other comprehensive (loss) income. There was no hedge ineffectiveness at October 29, 2016. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings. Over the next 12 months, $0.3 million of the effective portion of the cash flow hedges is expected to be reclassified from accumulated other comprehensive (loss) income into earnings.

In addition, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs and our operations in foreign countries. As a result, from time to time, we may enter into derivative instruments to hedge our foreign exchange risk. We have not elected to apply hedge accounting to these derivative instruments. ~~At October 29, 2016, the fair value of our derivative instruments was an asset of $0.8 million included in other current assets in our consolidated balance sheet.~~

For the three and nine months ended October 29, 2016, we recognized net pre-tax gains of $0.4 million and $2.3 million, respectively, in cost of sales in the condensed consolidated statement of earnings (loss) for our derivative financial instruments not designated as cash flow hedges. For the three and nine months ended October 31, 2015, we recognized a net pre-tax gain of $0.4 million and a net pre-tax loss of $1.0 million, respectively, in cost of sales in the condensed consolidated statement of earnings (loss) for our derivative financial instruments not designated as cash flow hedges.

13. Fair Value Measurements

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

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


	Fair Value Measurements at Reporting Date
	Using
	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
July 29, 2017—
Assets:
Derivative financial instruments	$	—	$	3	$	—	$	3
Liabilities:
Derivative financial instruments	$	—	$	6,170	$	—	$	6,170
January 28, 2017—
Assets:
Derivative financial instruments	$	—	$	460	$	—	$	460
Liabilities:
Derivative financial instruments	$	—	$	2,413	$	—	$	2,413
July 30, 2016—
Assets:
Derivative financial instruments	$	—	$	1,734	$	—	$	1,734
Liabilities:
Derivative financial instruments	$	—	$	2,557	$	—	$	2,557

~~For the periods presented and described in Note 12, derivative~~Derivative financial instruments ~~were~~are comprised of (1) foreign currency forward exchange contracts primarily entered into to minimize our foreign currency exposure related to forecasted purchases of certain inventories denominated in a currency different from the ~~only assets~~operating entity's functional currency, (2) foreign currency forward exchange contracts primarily entered into to minimize our foreign currency exposure related to forecasted revenues from our UK operations denominated in a currency different from the UK's functional currency and ~~liabilities measured at fair value~~(3) interest rate swap agreements to minimize our exposure to interest rate changes on ~~a recurring basis.~~our outstanding indebtedness. These derivative financial instruments are recorded in the condensed consolidated balance sheets at fair value based upon observable market ~~inputs, which we classify as~~inputs. Derivative financial instruments in an asset position are included within other current assets in the condensed consolidated balance sheets. Derivative financial instruments in a ~~Level 2 input~~liability position are included within accrued expenses and other current liabilities or noncurrent liabilities in the ~~fair value hierarchy.~~

~~Table of Contents~~

~~TAILORED BRANDS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

condensed consolidated balance sheets. See Note 14 for further information regarding our derivative instruments.

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

Long-lived assets, such as property and equipment, goodwill and identifiable intangibles, are periodically evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

recoverable. If the asset carrying amount exceeds its fair value, an impairment charge is recognized in the amount by which the carrying amount exceeds the fair value of the asset.

During the ~~nine~~six months ended ~~October~~July 29, ~~2016,~~2017, we incurred ~~$2.1~~$2.9 million of asset impairment charges, which is included within SG&A expenses in our condensed consolidated statement of earnings, ~~(loss),~~ primarily related to ~~store locations~~underperforming stores as well as long-lived assets related to ~~be closed and underperforming stores.~~our tuxedo rental license agreement with Macy's. We estimated the fair value of the long-lived assets based on an income approach using projected future cash flows discounted using a weighted-average cost of capital analysis that reflects current market conditions, which we classify as Level 3 within the fair value hierarchy.

In addition, during the nine months October 29, 2016, we recorded a $2.2 million impairment charge related to a long-lived asset reclassified as held for sale, which is included within SG&A expenses in our condensed consolidated statement of earnings (loss). ~~We estimated the fair value of the asset held for sale using market values for similar assets which would fall within Level 2 of the fair value hierarchy.~~

During the third quarter of 2015, we recorded an impairment charge related to our Jos. A. Bank tradename totaling $90.1 million. The fair value of the Jos. A. Bank tradename was based on our own judgments about the assumptions that market participants would use in pricing the asset, which we classified as Level 3 within the fair value hierarchy.

Fair Value of Financial Instruments

Our financial instruments consist of cash, accounts receivable, accounts payable, accrued expenses and other current liabilities and long-term debt. Management estimates that, as of ~~October~~July 29, 2017, July 30, 2016, ~~October 31, 2015,~~ and January ~~30, 2016,~~28, 2017, the carrying value of ~~cash, accounts receivable, accounts payable and accrued expenses and~~our financial instruments other ~~current liabilities~~than long-term debt approximated their fair value due to the highly liquid or short-term nature of these instruments.

The fair values of our Term Loan were valued based upon observable market data provided by a third party for similar types of debt, which we classify as a Level 2 input within the fair value hierarchy. ~~Beginning in June 2015, the~~The fair value of our Senior Notes is based on quoted prices in active markets, which we classify as a Level 1 input within the fair value hierarchy. ~~In prior periods, the fair value of our Senior Notes was based on trading data in active markets, which we classified as a Level 2 input within the fair value hierarchy.~~ The table below shows the fair value and carrying value of our long-term debt, including current portion (in thousands):

October 29, 2016

October 31, 2015

January 30, 2016

Carrying

Estimated

Carrying

Estimated

Carrying

Estimated


Amount

Fair Value

Amount

Fair Value

Amount

Fair Value

Long-term debt, including current portion

$
1,595,873

$
1,556,661

$
1,656,206

$
1,711,104

$
1,655,924

$
1,410,651


	July 29, 2017				July 30, 2016				January 28, 2017
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount(1)		Fair Value		Amount(1)		Fair Value		Amount(1)		Fair Value
Long-term debt, including current portion	$	1,541,005	$	1,465,502	$	1,614,402	$	1,555,785	$	1,595,529	$	1,556,200
(1) The carrying value of the long-term debt, including current portion is net of deferred financing costs of $19.0 million, $24.8 million and $22.1 million as of July 29, 2017, July 30, 2016 and January 28, 2017, respectively.

14. ~~Segment Reporting~~Derivative Financial Instruments

As discussed in Note 5, in January 2015, we entered into an interest rate swap agreement on an initial notional amount of $520.0 million that matures in August 2018 with periodic interest settlements. At July 29, 2017, the notional amount totaled $260.0 million. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to changes in the LIBOR benchmark interest rate.

In addition, in April 2017, we entered into an interest rate swap agreement on an initial notional amount of $260.0 million that matures in June 2021 with periodic interest settlements. At July 29, 2017, the ~~first quarter~~notional amount totaled $280.0 million. Under this interest rate swap agreement, we receive a floating rate based on 1-month LIBOR and pay a fixed rate of ~~2016, we revised our segment reporting presentation~~5.56% (including the applicable margin of 3.50%) on the outstanding notional amount. We have designated the interest rate swap as a cash flow hedge of the variability of interest payments under the Term Loan due to ~~reflect~~ changes in ~~how we manage our business, including resource allocation~~the LIBOR benchmark interest rate.

At July 29, 2017, the fair value of the interest rate swaps was a liability of $4.3 million with $2.7 million recorded in accrued expenses and performance assessment. Specifically, we are now presenting expenses related to our shared services platform separately from the results of our operating segments to promote enhanced comparability of our operating segments. Previously, these shared service expenses were primarily includedother current liabilities and $1.6 million in other liabilities in our ~~retail segment. Comparable prior~~condensed consolidated balance sheet. The effective portion of the swaps is reported as a component of accumulated other comprehensive (loss) income. There was no hedge ineffectiveness at July 29, 2017. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period ~~information has been recast to reflect our revised segment presentation.~~that the hedged item affects earnings.

~~Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities.~~

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Over the next 12 months, $2.7 million of the effective portion of the interest rate swaps is expected to be reclassified from accumulated other comprehensive (loss) income into earnings within interest expense. If, at any time, either interest rate swap is determined to be ineffective, in whole or in part, due to changes in the interest rate swap or underlying debt agreements, the fair value of the portion of the interest rate swap determined to be ineffective will be recognized as a gain or loss in the statement of earnings for the applicable period.

Also, we have entered into derivative instruments to hedge our foreign exchange risk, specifically related to the British pound and Euro. We have designated these instruments as cash flow hedges of the variability in exchange rates for those foreign currencies. At July 29, 2017, the fair value of these cash flow hedges was a liability of $1.2 million recorded in accrued expenses and other current liabilities in our condensed consolidated balance sheet. The effective portion of the hedges is reported as a component of accumulated other comprehensive (loss) income. Hedge ineffectiveness at July 29, 2017 was immaterial. Changes in fair value are reclassified from accumulated other comprehensive (loss) income into earnings in the same period that the hedged item affects earnings. Over the next 12 months, $1.7 million of the effective portion of the cash flow hedges is expected to be reclassified from accumulated other comprehensive (loss) income into earnings within cost of sales.

In addition, we are exposed to market risk associated with foreign currency exchange rate fluctuations as a result of our direct sourcing programs and our operations in foreign countries. As a result, from time to time, we may enter into derivative instruments to hedge our foreign exchange risk. We have not elected to apply hedge accounting to these derivative instruments. At July 29, 2017, the fair value of our derivative instruments was a liability of $0.7 million included in accrued expenses and other current liabilities in our condensed consolidated balance sheet.

For the three and six months ended July 29, 2017, we recognized net pre-tax losses of $0.8 million and $0.6 million, respectively, in cost of sales in the condensed consolidated statement of earnings for our derivative financial instruments not designated as cash flow hedges. For the three and six months ended July 30, 2016, we recognized net pre-tax gains of $2.7 million and $1.8 million, respectively, in cost of sales in the condensed consolidated statement of earnings for our derivative financial instruments not designated as cash flow hedges.

15. Segment Reporting

Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities.

The retail segment includes the results from our four retail merchandising brands: ~~Men’s~~Men's Wearhouse/~~Men’s~~Men's Wearhouse and Tux, Jos. A. Bank, Moores Clothing for Men ~~(“Moores”~~("Moores") and K&G. These four brands are operating segments that have been aggregated into the retail reportable segment. MW Cleaners is also aggregated in the retail segment as these operations have not had a significant effect on our revenues or expenses. Specialty apparel merchandise offered by our four retail merchandising concepts include suits, suit separates, sport coats, slacks, business casual, denim, sportswear, outerwear, dress ~~and casual~~ shirts, shoes and accessories for men. ~~Ladies’~~Women's career and casual apparel, sportswear and accessories, including shoes, ~~as well as children’s~~and children's apparel ~~are also~~is offered at most of our K&G stores. ~~Tuxedo and suit rentals are~~Rental product is offered at our ~~Men’s~~Men's Wearhouse/~~Men’s~~Men's Wearhouse and Tux, Jos. A. Bank and Moores retail ~~stores and our tuxedo shops within Macy’s~~ stores.

The corporate apparel segment includes the results from our corporate apparel and uniform operations conducted by ~~Twin Hill in the U.S. and~~ Dimensions, Alexandra, and Yaffy in the ~~United Kingdom (“UK”)~~UK and Twin Hill in the U.S., which provide ~~clothing~~corporate apparel uniforms and workwear to workforces. ~~The Twin Hill and UK operations constitute one operating segment.~~

We measure segment profitability based on operating income, defined as income before interest expense, interest income, gain (loss) on extinguishment of debt, net and income taxes, before shared service expenses. Shared service expenses include costs incurred and directed primarily by our corporate offices that are not allocated to segments.

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

For the Three Months Ended

For the Nine Months Ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015

Net sales:









MW(1)

$
461,806

$
465,396

$
1,386,347

$
1,391,782

Jos. A. Bank

165,992

198,936

530,482

636,704

K&G

70,874

72,733

252,007

257,448

Moores

56,520

55,862

166,203

173,281

MW Cleaners

8,497

8,460

25,073

25,356

Total retail segment

763,689

801,387

2,360,112

2,484,571

Total corporate apparel segment

83,245

64,059

225,328

186,038

Total net sales

$
846,934

$
865,446

$
2,585,440

$
2,670,609

⁽¹⁾

~~MW includes Men’s Wearhouse, Men’s Wearhouse and Tux, Joseph Abboud and tuxedo shops within Macy’s.~~

~~The following table sets forth supplemental products and services sales information for the Company (in thousands):~~

For the Three Months Ended

For the Nine Months Ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015

Net sales:









Men's tailored clothing product

$
326,741

$
351,269

$
1,025,495

$
1,109,665

Men's non-tailored clothing product

230,146

245,250

718,233

756,699

Ladies' clothing product

15,626

16,228

55,940

56,827

Other

2,533

3,127

6,992

8,735

Total retail clothing product

575,046

615,874

1,806,660

1,931,926

Rental services

138,724

132,443

403,564

392,621

Alteration services

41,422

44,610

124,815

134,668

Retail dry cleaning services

8,497

8,460

25,073

25,356

Total alteration and other services

49,919

53,070

149,888

160,024

Corporate apparel clothing product

83,245

64,059

225,328

186,038

Total net sales

$
846,934

$
865,446

$
2,585,440

$
2,670,609

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TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~Operating income (loss) by reportable segment, shared service expense, and the reconciliation to earnings (loss) before income taxes~~Additional net sales information is as follows (in thousands):

For the Three Months Ended

For the Nine Months Ended


October 29, 2016

October 31, 2015

October 29, 2016

October 31, 2015

Operating income (loss):









Retail

$
97,629

$
512

$
278,732

$
233,143

Corporate apparel

10,314

2,623

24,288

6,429

Shared service expense

(46,887)

(39,536)

(151,338)

(122,561)

Operating income

61,056

(36,401)

151,682

117,011

Interest income

52

50

102

140

Interest expense

(25,476)

(26,457)

(77,853)

(79,475)

Gain (loss) on extinguishment of debt, net

1,808

—

1,737

(12,675)

Earnings (loss) before income taxes

$
37,440

$
(62,808)

$
75,668

$
25,001

As a result of our revised segment presentation, total assets for our reportable segments have changed. There were no changes to consolidated total assets. Total assets by reportable segment are as follows (in thousands):

October 29,

October 31,

January 30,


2016

2015

2016

Segment assets:

Retail

$
1,719,572

$
2,802,991

$
1,705,728

Corporate apparel

196,085

216,920

211,820

Shared services(1)

259,472

492,468

326,771

Total assets

$
2,175,129

$
3,512,379

$
2,244,319


	For the Three Months Ended				For the Six Months Ended
	July 29, 2017		July 30, 2016		July 29, 2017		July 30, 2016
Net sales:
MW(1)	$	458,751	$	482,895	$	878,818	$	924,541
Jos. A. Bank		174,325		186,040		341,553		364,490
K&G		85,811		86,374		174,494		181,133
Moores		65,312		66,454		106,125		109,683
MW Cleaners		8,799		8,418		17,313		16,576
Total retail segment		792,998		830,181		1,518,303		1,596,423
Total corporate apparel segment		57,760		79,503		115,361		142,083
Total net sales	$	850,758	$	909,684	$	1,633,664	$	1,738,506

⁽¹⁾

~~Shared service assets consist primarily of cash~~MW includes Men's Wearhouse, Men's Wearhouse and ~~cash equivalents, assets related to our distribution network~~Tux, tuxedo shops within Macy's and ~~tax-related assets.~~Joseph Abboud.

The following table sets forth supplemental products and services sales information for the Company (in thousands):


	For the Three Months Ended				For the Six Months Ended
	July 29, 2017		July 30, 2016		July 29, 2017		July 30, 2016
Net sales:
Men's tailored clothing product	$	341,182	$	349,226	$	673,812	$	698,754
Men's non-tailored clothing product		234,093		246,154		462,792		488,087
Women's clothing product		18,100		18,468		37,927		40,314
Other		1,619		2,098		4,048		4,459
Total retail clothing product		594,994		615,946		1,178,579		1,231,614
Rental services		151,978		165,009		246,798		264,840
Alteration services		37,227		40,808		75,613		83,393
Retail dry cleaning services		8,799		8,418		17,313		16,576
Total alteration and other services		46,026		49,226		92,926		99,969
Corporate apparel clothing product		57,760		79,503		115,361		142,083
Total net sales	$	850,758	$	909,684	$	1,633,664	$	1,738,506

Operating income by reportable segment, shared service expense, and the reconciliation to earnings before income taxes is as follows (in thousands):


	For the Three Months Ended				For the Six Months Ended
	July 29, 2017		July 30, 2016		July 29, 2017		July 30, 2016
Operating income:
Retail	$	155,221	$	101,227	$	228,646	$	181,102
Corporate apparel		2,103		11,920		4,078		13,974
Shared service expense		(48,859)		(53,515)		(93,257)		(104,450)
Operating income		108,465		59,632		139,467		90,626
Interest income		98		37		165		50
Interest expense		(25,167)		(25,876)		(50,788)		(52,377)
Gain (loss) on extinguishment of debt, net		3,281		(71)		3,996		(71)
Earnings before income taxes	$	86,677	$	33,722	$	92,840	$	38,228

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

~~15.~~16. Legal Matters

On March 29, 2016, ~~Peter Makhlouf filed~~ a putative class action lawsuit was filed against the Company and its Chief Executive Officer, ~~("CEO"),~~ Douglas S. Ewert, in the United States District Court for the Southern District of Texas (Case No. 4:16-cv-00838). The complaint attempts to allege claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of a putative class of persons who purchased or otherwise acquired the Company's securities between June 18, 2014 and December 9, ~~2015.~~2015 (the "Class Period"). On May 26, 2017, Lead Plaintiff Strathclyde Pension Fund filed an Amended Complaint alleging that during the Class Period Defendants omitted facts about the Company's Jos. A. Bank's business, financial status, and operations, the omission of which rendered Defendants' statements about the Jos. A. Bank business false or misleading. The amended complaint also named Jon W. Kimmins, the Company's former Chief Financial Officer, and Mary Beth Blake, the Company's current Brand President, Jos. A. Bank, as additional named defendants. We believe that the claims are without merit and are defending the lawsuit vigorously. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

On February 17, 2016, Anthony Oliver filed a putative class action lawsuit against our Men's Wearhouse subsidiary in the United States District Court for the Central District of California (Case No. 2:16-cv-01100). The complaint attempts to allege claims under the Telephone Consumer Protection Act. In particular the complaint alleges that the Company sent unsolicited text messages to cellular telephones beginning October 1, 2013 to the present day. After we demonstrated that the Company had the plaintiff's permission to send him texts, the plaintiff filed an amended complaint alleging the Company sent text messages exceeding the number plaintiff had agreed to receive each week. The parties filed cross-motions for summary judgment and ~~its CEO made certain statements about~~ the ~~Company's acquisition and subsequent integration of Jos. A. Bank that were false and misleading and omitted material facts.~~case is stayed pending the Court's decision on those motions. We believe that the claims are without merit and intend to defend the lawsuit vigorously. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

On August 2, 2017, two American Airlines employees filed a putative class action lawsuit against our Twin Hill subsidiary in the United States District Court for the Northern District of Illinois (Case No. 1:17-cv-05648). The complaint attempts to allege claims for strict liability and negligence based on allegedly defective uniforms Twin Hill supplied to American Airlines for its employees. We believe that any lawsuit filed on the basis of the safety of the Twin Hill uniforms supplied to American Airlines is without merit, and we intend to contest this action vigorously. Twin Hill has substantial and convincing evidence of the uniforms' safety and fitness for their intended purpose and we believe that there is no evidence linking any of the plaintiffs' alleged injuries to our uniforms. The range of loss, if any, is not reasonably estimable at this time. We do not currently believe, however, that it will have a material adverse effect on our financial position, results of operations or cash flows.

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

~~16. Condensed Consolidating Information~~

As discussed in Note 4, The Men’s Wearhouse, Inc. (the “Issuer”) issued $600.0 million in aggregate principal amount of 7.00% Senior Notes. The Senior Notes are guaranteed jointly and severally, on an unsecured basis by Tailored Brands,

2021

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

17. Condensed Consolidating Information

As discussed in Note 5, The Men's Wearhouse (the "Issuer") issued $600.0 million in aggregate principal amount of 7.00% Senior Notes. The Senior Notes are guaranteed jointly and severally, on an unsecured basis by Tailored Brands, Inc. (the "Parent") and certain of our U.S. subsidiaries (the ~~“Guarantors”~~"Guarantors"). Our ~~Canadian and U.K.~~foreign subsidiaries (collectively, the ~~“Non-Guarantors”~~"Non-Guarantors") are not guarantors of the Senior Notes. Each of the Guarantors is 100% owned and all guarantees are joint and several. In addition, the guarantees are full and unconditional except for certain automatic release provisions related to the Guarantors.

These automatic release provisions are considered customary and include the sale or other disposition of all or substantially all of the assets or all of the capital stock of any subsidiary guarantor, the release or discharge of a ~~guarantor’s~~guarantor's guarantee of the obligations under the Term Loan other than a release or discharge through payment thereon, the designation in accordance with the Indenture of a guarantor as an unrestricted subsidiary or the satisfaction of the requirements for defeasance or discharge of the Senior Notes as provided for in the Indenture.

The tables in the following pages present the condensed consolidating financial information for the Parent, the Issuer, the Guarantors and the Non-Guarantors, together with eliminations, as of and for the periods indicated. The consolidating financial information may not necessarily be indicative of the financial positions, results of operations or cash flows had the Issuer, Guarantors and Non-Guarantors operated as independent entities. Certain of our current Guarantor subsidiaries did not exist and were created as part of the Reorganization. As a result, prior periods presented have been retrospectively adjusted and contain certain allocations to reflect our current organizational structure.

~~Table of Contents~~

~~TAILORED BRANDS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Tailored Brands, Inc.~~

~~Condensed Consolidating Balance Sheet~~

~~October 29, 2016~~

~~(in thousands)~~

Tailored

The Men’s

Guarantor

Non-Guarantor






Brands, Inc.

Wearhouse, Inc.

Subsidiaries

Subsidiaries

Eliminations

Consolidated

ASSETS

CURRENT ASSETS:

Cash and cash equivalents

$
—

$
5,435

$
1,984

$
27,529

$
—

$
34,948

Accounts receivable, net

7,373

17,112

455,368

31,140

(439,095)

71,898

Inventories

—

253,482

459,159

335,274

—

1,047,915

Other current assets

7,102

22,155

42,995

6,963

(19,025)

60,190

Total current assets

14,475

298,184

959,506

400,906

(458,120)

1,214,951

Property and equipment, net

—

249,797

217,156

34,438

—

501,391

Rental product, net

—

139,386

3,677

17,038

—

160,101

Goodwill

—

6,160

68,510

41,356

—

116,026

Intangible assets, net

—

105

157,788

14,444

—

172,337

Investments in subsidiaries

(67,257)

1,375,395

—

—

(1,308,138)

—

Other assets

3,257

6,004

939

7,623

(7,500)

10,323

Total assets

$
(49,525)

$
2,075,031

$
1,407,576

$
515,805

$
(1,773,758)

$
2,175,129

LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY

CURRENT LIABILITIES:

Accounts payable

$
16,216

$
337,499

$
99,597

$
185,982

$
(439,095)

$
200,199

Accrued expenses and other current liabilities

9,617

143,023

105,446

42,514

(19,025)

281,575

Current portion of long-term debt

—

7,000

—

—

—

7,000

Total current liabilities

25,833

487,522

205,043

228,496

(458,120)

488,774

Long-term debt, net

—

1,588,873

—

—

—

1,588,873

Deferred taxes and other liabilities

2,339

65,893

104,512

9,935

(7,500)

175,179

Shareholders' (deficit) equity

(77,697)

(67,257)

1,098,021

277,374

(1,308,138)

(77,697)

Total liabilities and shareholders' (deficit) equity

$
(49,525)

$
2,075,031

$
1,407,576

$
515,805

$
(1,773,758)

$
2,175,129

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

~~October 31, 2015~~July 29, 2017

(in thousands)


	Tailored		The Men’s		Guarantor		Non-Guarantor						Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	771	$	2,128	$	50,755	$	—	$	53,654	$	—	$	13,482	$	1,924	$	97,335	$	—	$	112,741
Accounts receivable, net		5,766		13,382		356,111		33,203		(341,560)		66,902		7,380		18,103		430,884		102,613		(487,080)		71,900
Inventories		—		252,520		652,080		155,647		—		1,060,247		—		186,831		403,875		354,077		—		944,783
Other current assets		15,727		49,061		95,210		8,073		—		168,071		7,310		204,477		26,431		9,346		(192,132)		55,432
Total current assets		21,493		315,734		1,105,529		247,678		(341,560)		1,348,874		14,690		422,893		863,114		563,371		(679,212)		1,184,856
Property and equipment, net		—		272,192		236,624		39,665		—		548,481		—		218,122		204,641		36,767		—		459,530
Rental product, net		—		121,983		7,150		18,211		—		147,344		—		116,525		4,894		17,978		—		139,397
Goodwill		—		6,159		837,532		47,300		—		890,991		—		6,160		68,510		45,210		—		119,880
Intangible assets, net		—		213		546,937		21,021		—		568,171		—		24		156,307		13,782		—		170,113
Investments in subsidiaries		983,834		2,570,579		—		—		(3,554,413)		—		(16,512)		1,436,555		—		—		(1,420,043)		—
Other assets		13,353		24,616		3,850		8,831		(42,132)		8,518		—		4,790		897		6,861		(6,600)		5,948
Total assets	$	1,018,680	$	3,311,476	$	2,737,622	$	382,706	$	(3,938,105)	$	3,512,379	$	(1,822)	$	2,205,069	$	1,298,363	$	683,969	$	(2,105,855)	$	2,079,724
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	18,891	$	393,176	$	116,028	$	46,985	$	(341,560)	$	233,520	$	26,528	$	480,565	$	60,420	$	59,723	$	(487,080)	$	140,156
Accrued expenses and other current liabilities		9,592		142,648		105,170		21,801		—		279,211		17,967		119,314		113,058		217,443		(184,856)		282,926
Current portion of long-term debt		—		7,000		—		—		—		7,000		—		8,750		—		—		—		8,750
Total current liabilities		28,483		542,824		221,198		68,786		(341,560)		519,731		44,495		608,629		173,478		277,166		(671,936)		431,832
Long-term debt, net		—		1,649,206		—		33,432		(33,432)		1,649,206		—		1,532,255		—		—		—		1,532,255
Deferred taxes and other liabilities		4,814		135,612		215,092		11,241		(8,700)		358,059
Shareholders' equity		985,383		983,834		2,301,332		269,247		(3,554,413)		985,383
Total liabilities and shareholders' equity	$	1,018,680	$	3,311,476	$	2,737,622	$	382,706	$	(3,938,105)	$	3,512,379
Deferred taxes, net and other liabilities														359		80,697		84,509		10,624		(13,876)		162,313
Shareholders' (deficit) equity														(46,676)		(16,512)		1,040,376		396,179		(1,420,043)		(46,676)
Total liabilities and shareholders' (deficit) equity													$	(1,822)	$	2,205,069	$	1,298,363	$	683,969	$	(2,105,855)	$	2,079,724

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Balance Sheet

~~January~~July 30, 2016

(in thousands)


	Tailored		The Men’s		Guarantor		Non-Guarantor						Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	724	$	2,243	$	27,013	$	—	$	29,980	$	—	$	1,245	$	1,813	$	8,372	$	—	$	11,430
Accounts receivable, net		—		23,067		392,944		29,845		(381,966)		63,890		7,373		18,217		256,591		28,754		(226,587)		84,348
Inventories		—		253,472		630,407		138,625		—		1,022,504		—		198,656		686,178		138,769		—		1,023,603
Other current assets		19,037		79,964		36,308		8,237		—		143,546		3,562		18,087		52,709		44,082		(37,327)		81,113
Total current assets		19,037		357,227		1,061,902		203,720		(381,966)		1,259,920		10,935		236,205		997,291		219,977		(263,914)		1,200,494
Property and equipment, net		—		254,335		230,209		37,280		—		521,824		—		254,315		219,595		36,610		—		510,520
Rental product, net		—		124,468		16,224		16,768		—		157,460		—		142,198		11,066		18,205		—		171,469
Goodwill		—		6,160		68,510		43,916		—		118,586		—		6,160		68,510		43,637		—		118,307
Intangible assets, net		—		186		159,530		18,794		—		178,510		—		132		158,351		16,269		—		174,752
Investments in subsidiaries		(109,188)		1,439,187		-		-		(1,329,999)		—		(82,294)		1,394,831		—		—		(1,312,537)		—
Other assets		—		6,914		992		8,513		(8,400)		8,019		1,498		6,457		935		7,922		(7,800)		9,012
Total assets	$	(90,151)	$	2,188,477	$	1,537,367	$	328,991	$	(1,720,365)	$	2,244,319	$	(69,861)	$	2,040,298	$	1,455,748	$	342,620	$	(1,584,251)	$	2,184,554
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	—	$	419,187	$	153,717	$	46,176	$	(381,966)	$	237,114	$	7,008	$	247,569	$	98,318	$	43,512	$	(226,587)	$	169,820
Accrued expenses and other current liabilities		7,602		154,014		75,676		19,470		—		256,762		9,431		193,497		109,835		21,421		(37,327)		296,857
Current portion of long-term debt		—		42,451		-		—		—		42,451		—		14,000		—		—		—		14,000
Total current liabilities		7,602		615,652		229,393		65,646		(381,966)		536,327		16,439		455,066		208,153		64,933		(263,914)		480,677
Long-term debt, net		—		1,613,473		-		—		—		1,613,473		—		1,600,402		—		—		—		1,600,402
Deferred taxes and other liabilities		2,333		68,540		121,531		10,601		(8,400)		194,605
Deferred taxes, net and other liabilities														2,350		67,124		119,773		10,678		(7,800)		192,125
Shareholders' (deficit) equity		(100,086)		(109,188)		1,186,443		252,744		(1,329,999)		(100,086)		(88,650)		(82,294)		1,127,822		267,009		(1,312,537)		(88,650)
Total liabilities and shareholders' (deficit) equity	$	(90,151)	$	2,188,477	$	1,537,367	$	328,991	$	(1,720,365)	$	2,244,319	$	(69,861)	$	2,040,298	$	1,455,748	$	342,620	$	(1,584,251)	$	2,184,554

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating ~~Statement of Earnings (Loss)~~Balance Sheet

January 28, 2017

(in thousands)

Tailored

The Men’s

Guarantor

Non-Guarantor






Brands, Inc.

Wearhouse, Inc.

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Three Months Ended October 29, 2016

Net sales

$
—

$
460,432

$
466,476

$
105,474

$
(185,448)

$
846,934

Cost of sales

—

230,110

361,117

63,949

(185,448)

469,728

Gross margin

—

230,322

105,359

41,525

—

377,206

Operating expenses

974

146,398

153,439

29,662

(14,323)

316,150

Operating (loss) income

(974)

83,924

(48,080)

11,863

14,323

61,056

Other income and expenses, net

—

—

14,323

—

(14,323)

—

Interest income

—

60

517

49

(574)

52

Interest expense

(8)

(25,890)

—

(152)

574

(25,476)

Gain on extinguishment of debt, net

—

1,808

—

—

—

1,808

(Loss) earnings before income taxes

(982)

59,902

(33,240)

11,760

—

37,440

(Benefit) provision for income taxes

(247)

14,763

(8,119)

2,610

—

9,007

(Loss) earnings before equity in net income of subsidiaries

(735)

45,139

(25,121)

9,150

—

28,433

Equity in earnings of subsidiaries

29,168

(15,971)

—

—

(13,197)

—

Net earnings (loss)

$
28,433

$
29,168

$
(25,121)

$
9,150

$
(13,197)

$
28,433

Comprehensive income (loss)

$
14,306

$
30,116

$
(25,121)

$
(5,925)

$
930

$
14,306

Three Months Ended October 31, 2015

Net sales

$
—

$
464,380

$
448,712

$
109,306

$
(156,952)

$
865,446

Cost of sales

—

241,412

340,652

67,343

(156,952)

492,455

Gross margin

—

222,968

108,060

41,963

—

372,991

Operating expenses

783

182,912

200,671

29,487

(4,461)

409,392

Operating (loss) income

(783)

40,056

(92,611)

12,476

4,461

(36,401)

Other income and expenses, net

—

4,461

—

—

(4,461)

—

Interest income

—

682

1,003

40

(1,675)

50

Interest expense

—

(27,278)

(579)

(275)

1,675

(26,457)

(Loss) earnings before income taxes

(783)

17,921

(92,187)

12,241

—

(62,808)

(Benefit) provision for income taxes

(254)

5,654

(41,735)

681

—

(35,654)

(Loss) earnings before equity in net income of subsidiaries

(529)

12,267

(50,452)

11,560

—

(27,154)

Equity in earnings of subsidiaries

(26,625)

(38,892)

—

—

65,517

—

Net (loss) earnings

$
(27,154)

$
(26,625)

$
(50,452)

$
11,560

$
65,517

$
(27,154)

Comprehensive (loss) income

$
(29,400)

$
(26,847)

$
(50,452)

$
9,536

$
67,763

$
(29,400)


	Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	—	$	1,002	$	1,881	$	68,006	$	—	$	70,889
Accounts receivable, net		7,376		15,499		476,742		56,777		(490,680)		65,714
Inventories		—		230,264		438,167		287,081		—		955,512
Other current assets		12,773		134,225		28,436		8,448		(110,280)		73,602
Total current assets		20,149		380,990		945,226		420,312		(600,960)		1,165,717
Property and equipment, net		—		232,090		216,248		35,827		—		484,165
Rental product, net		—		131,287		3,369		17,954		—		152,610
Goodwill		—		6,160		68,510		42,356		—		117,026
Intangible assets, net		—		78		157,270		14,311		—		171,659
Investments in subsidiaries		(109,788)		1,425,622		—		—		(1,315,834)		—
Other assets		—		5,615		959		7,321		(7,200)		6,695
Total assets	$	(89,639)	$	2,181,842	$	1,391,582	$	538,081	$	(1,923,994)	$	2,097,872
LIABILITIES AND SHAREHOLDERS' (DEFICIT) EQUITY
CURRENT LIABILITIES:
Accounts payable	$	15,352	$	509,572	$	82,337	$	60,799	$	(490,680)	$	177,380
Accrued expenses and other current liabilities		2,627		111,617		129,420		135,777		(110,280)		269,161
Current portion of long-term debt		—		13,379		—		—		—		13,379
Total current liabilities		17,979		634,568		211,757		196,576		(600,960)		459,920
Long-term debt, net		—		1,582,150		—		—		—		1,582,150
Deferred taxes, net and other liabilities		—		74,912		85,477		10,231		(7,200)		163,420
Shareholders' (deficit) equity		(107,618)		(109,788)		1,094,348		331,274		(1,315,834)		(107,618)
Total liabilities and shareholders' (deficit) equity	$	(89,639)	$	2,181,842	$	1,391,582	$	538,081	$	(1,923,994)	$	2,097,872

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of Earnings (Loss)

(in thousands)


	Tailored		The Men’s		Guarantor		Non-Guarantor						Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Nine Months Ended October 29, 2016
Three Months Ended July 29, 2017
Net sales	$	—	$	1,382,515	$	1,300,852	$	315,060	$	(412,987)	$	2,585,440	$	—	$	457,870	$	369,476		135,125	$	(111,713)	$	850,758
Cost of sales		—		676,761		992,265		190,050		(412,987)		1,446,089		—		208,789		265,051		91,935		(111,713)		454,062
Gross margin		—		705,754		308,587		125,010		—		1,139,351		—		249,081		104,425		43,190		—		396,696
Operating expenses		2,554		452,661		486,419		88,958		(42,923)		987,669		779		134,389		138,023		28,904		(13,864)		288,231
Operating (loss) income		(2,554)		253,093		(177,832)		36,052		42,923		151,682		(779)		114,692		(33,598)		14,286		13,864		108,465
Other income and expenses, net		—		—		42,923		—		(42,923)		—		—		—		14,138		(274)		(13,864)		—
Interest income		2		70		1,393		89		(1,452)		102		242		1,689		1,909		93		(3,835)		98
Interest expense		(13)		(78,932)		—		(360)		1,452		(77,853)		—		(27,018)		(206)		(1,778)		3,835		(25,167)
Gain on extinguishment of debt, net		—		1,737		—		—		—		1,737		—		3,281		—		—		—		3,281
(Loss) earnings before income taxes		(2,565)		175,968		(133,516)		35,781		—		75,668		(537)		92,644		(17,757)		12,327		—		86,677
(Benefit) provision for income taxes		(671)		46,915		(34,900)		9,279		—		20,623		(167)		30,215		(6,205)		4,363		—		28,206
(Loss) earnings before equity in net income of subsidiaries		(1,894)		129,053		(98,616)		26,502		—		55,045		(370)		62,429		(11,552)		7,964		—		58,471
Equity in earnings of subsidiaries		56,939		(72,114)		—		—		15,175		—		58,841		(3,588)		—		—		(55,253)		—
Net earnings (loss)	$	55,045	$	56,939	$	(98,616)	$	26,502	$	15,175	$	55,045	$	58,471	$	58,841	$	(11,552)	$	7,964	$	(55,253)	$	58,471
Comprehensive income (loss)	$	38,193	$	58,333	$	(98,616)	$	8,256	$	32,027	$	38,193	$	72,498	$	58,544	$	(11,552)	$	22,288	$	(69,280)	$	72,498

Nine Months Ended October 31, 2015

Three Months Ended July 30, 2016
Net sales	$	—	$	1,388,910	$	1,369,352	$	328,755	$	(416,408)	$	2,670,609	$	—	$	481,585	$	431,149	$	112,816	$	(115,866)	$	909,684
Cost of sales		—		701,191		1,010,107		202,495		(416,408)		1,497,385		—		226,104		325,754		63,388		(115,866)		499,380
Gross margin		—		687,719		359,245		126,260		—		1,173,224		—		255,481		105,395		49,428		—		410,304
Operating expenses		2,138		470,716		505,267		90,649		(12,557)		1,056,213		863		157,776		176,067		30,881		(14,915)		350,672
Operating (loss) income		(2,138)		217,003		(146,022)		35,611		12,557		117,011		(863)		97,705		(70,672)		18,547		14,915		59,632
Other income and expenses, net		—		11,543		1,014		—		(12,557)		—		—		—		14,915		—		(14,915)		—
Interest income		—		1,831		2,672		103		(4,466)		140		—		5		580		32		(580)		37
Interest expense		—		(81,579)		(1,535)		(827)		4,466		(79,475)		(5)		(26,355)		—		(96)		580		(25,876)
Loss on extinguishment of debt, net		—		(12,675)		—		—		—		(12,675)
Loss on extinguishment of debt														—		(71)		—		—		—		(71)
(Loss) earnings before income taxes		(2,138)		136,123		(143,871)		34,887		—		25,001		(868)		71,284		(55,177)		18,483		—		33,722
(Benefit) provision for income taxes		(706)		44,778		(58,691)		8,626		—		(5,993)		(221)		17,608		(13,736)		5,096		—		8,747
(Loss) earnings before equity in net income of subsidiaries		(1,432)		91,345		(85,180)		26,261		—		30,994		(647)		53,676		(41,441)		13,387		—		24,975
Equity in earnings of subsidiaries		32,426		(58,919)		—		—		26,493		—		25,622		(28,054)		—		—		2,432		—
Net earnings (loss)		30,994		32,426		(85,180)		26,261		26,493		30,994
Comprehensive income (loss)	$	30,309	$	32,119	$	(85,180)	$	25,883	$	27,178	$	30,309
Net (loss) earnings													$	24,975	$	25,622	$	(41,441)	$	13,387	$	2,432	$	24,975
Comprehensive (loss) income													$	5,581	$	25,828	$	(41,441)	$	(6,213)	$	21,826	$	5,581

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of ~~Cash Flows~~

~~For the Nine Months Ended October 29, 2016~~Earnings (Loss)

(in thousands)

Tailored

The Men’s

Guarantor

Non-Guarantor


Brands, Inc.

Wearhouse, Inc.

Subsidiaries

Subsidiaries

Eliminations

Consolidated

Net cash provided by (used in) operating activities

$
26,245

$
156,148

$
36,198

$
(15,269)

$
(26,438)

$
176,884

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

—

(40,273)

(37,055)

(3,222)

—

(80,550)

Intercompany activities

—

(19,025)

—

—

19,025

—

Proceeds from sale of property and equipment

—

—

598

7

—

605

Net cash used in investing activities

—

(59,298)

(36,457)

(3,215)

19,025

(79,945)

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments on term loan

—

(40,701)

—

—

—

(40,701)

Proceeds from asset-based revolving credit facility

—

517,500

—

3,050

—

520,550

Payments on asset-based revolving credit facility

—

(517,500)

—

(3,050)

—

(520,550)

Repurchase and retirement of senior notes

—

(25,000)

—

—

—

(25,000)

Intercompany activities

—

(26,438)

—

19,025

7,413

—

Cash dividends paid

(26,438)

—

—

—

—

(26,438)

Proceeds from issuance of common stock

1,451

—

—

—

—

1,451

Tax payments related to vested deferred stock units

(1,258)

—

—

—

—

(1,258)

Net cash (used in) provided by financing activities

(26,245)

(92,139)

—

19,025

7,413

(91,946)

Effect of exchange rate changes

—

—

—

(25)

—

(25)

Increase (decrease) in cash and cash equivalents

—

4,711

(259)

516

—

4,968

Cash and cash equivalents at beginning of period

—

724

2,243

27,013

—

29,980

Cash and cash equivalents at end of period

$
—

$
5,435

$
1,984

$
27,529

$
—

$
34,948


	Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Six Months Ended July 29, 2017
Net sales	$	—	$	876,795	$	741,740	$	270,383	$	(255,254)	$	1,633,664
Cost of sales		—		421,288		543,682		194,812		(255,254)		904,528
Gross margin		—		455,507		198,058		75,571		—		729,136
Operating expenses		1,682		290,172		271,555		54,856		(28,596)		589,669
Operating (loss) income		(1,682)		165,335		(73,497)		20,715		28,596		139,467
Other income and expenses, net		—		—		28,870		(274)		(28,596)		—
Interest income		352		2,991		3,581		155		(6,914)		165
Interest expense		—		(54,212)		(320)		(3,170)		6,914		(50,788)
Gain on extinguishment of debt, net		—		3,996		—		—		—		3,996
(Loss) earnings before income taxes		(1,330)		118,110		(41,366)		17,426		—		92,840
Provision (benefit) for income taxes		1,778		38,684		(13,957)		6,025		—		32,530
(Loss) earnings before equity in net income of subsidiaries		(3,108)		79,426		(27,409)		11,401		—		60,310
Equity in earnings of subsidiaries		63,418		(16,008)		—		—		(47,410)		—
Net earnings (loss)	$	60,310	$	63,418	$	(27,409)	$	11,401	$	(47,410)	$	60,310
Comprehensive (loss) income	$	72,212	$	61,464	$	(27,409)	$	25,257	$	(59,312)	$	72,212

Six Months Ended July 30, 2016
Net sales	$	—	$	922,083	$	834,376	$	209,586	$	(227,539)	$	1,738,506
Cost of sales		—		446,651		631,148		126,101		(227,539)		976,361
Gross margin		—		475,432		203,228		83,485		—		762,145
Operating expenses		1,580		306,263		332,980		59,296		(28,600)		671,519
Operating (loss) income		(1,580)		169,169		(129,752)		24,189		28,600		90,626
Other income and expenses, net		—		—		28,600		—		(28,600)		—
Interest income		2		10		876		40		(878)		50
Interest expense		(5)		(53,042)		—		(208)		878		(52,377)
Loss on extinguishment of debt, net		—		(71)		—		—		—		(71)
(Loss) earnings before income taxes		(1,583)		116,066		(100,276)		24,021		—		38,228
(Benefit) provision for income taxes		(424)		32,152		(26,781)		6,669		—		11,616
(Loss) earnings before equity in net income of subsidiaries		(1,159)		83,914		(73,495)		17,352		—		26,612
Equity in earnings (loss) of subsidiaries		27,771		(56,143)		—		—		28,372		—
Net earnings (loss)		26,612		27,771		(73,495)		17,352		28,372		26,612
Comprehensive income (loss)	$	23,887	$	28,217	$	(73,495)	$	14,181	$	31,097	$	23,887

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the Six Months Ended July 29, 2017

(in thousands)


	Tailored		The Men's		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by (used in) operating activities	$	18,750	$	288,017	$	17,196	$	(165,401)	$	(18,033)	$	140,529

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(11,384)		(19,310)		(3,279)		—		(33,973)
Acquisition of business, net of cash		—		—		—		(457)		—		(457)
Intercompany activities		—		(192,824)		—		—		192,824		—
Proceeds from sale of property and equipment		—		—		2,157		—		—		2,157
Net cash used in investing activities		—		(204,208)		(17,153)		(3,736)		192,824		(32,273)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan		—		(8,129)		—		—		—		(8,129)
Proceeds from asset-based revolving credit facility		—		181,550		—		—		—		181,550
Payments on asset-based revolving credit facility		—		(181,550)		—		—		—		(181,550)
Repurchase and retirement of senior notes		—		(45,167)		—		—		—		(45,167)
Intercompany activities		—		(18,033)		—		192,824		(174,791)		—
Cash dividends paid		(18,033)		—		—		—		—		(18,033)
Proceeds from issuance of common stock		927		—		—		—		—		927
Tax payments related to vested deferred stock units		(1,644)		—		—		—		—		(1,644)
Net cash (used in) provided by financing activities		(18,750)		(71,329)		—		192,824		(174,791)		(72,046)
Effect of exchange rate changes		—		—		—		5,642		—		5,642
Increase in cash and cash equivalents		—		12,480		43		29,329		—		41,852
Cash and cash equivalents at beginning of period		—		1,002		1,881		68,006		—		70,889
Cash and cash equivalents at end of period	$	—	$	13,482	$	1,924	$	97,335	$	—	$	112,741

Table of Contents

TAILORED BRANDS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Tailored Brands, Inc.

Condensed Consolidating Statement of Cash Flows

For the ~~Nine~~Six Months Ended ~~October 31, 2015~~July 30, 2016

(in thousands)


	Tailored		The Men’s		Guarantor		Non-Guarantor						Tailored		The Men’s		Guarantor		Non-Guarantor
	Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated		Brands, Inc.		Wearhouse, Inc.		Subsidiaries		Subsidiaries		Eliminations		Consolidated
Net cash provided by operating activities	$	27,680	$	55,665	$	35,437	$	19,723	$	(26,269)	$	112,236	$	18,002	$	55,289	$	22,725	$	21,964	$	(17,676)	$	100,304

CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures		—		(39,657)		(38,347)		(8,402)		—		(86,406)		—		(29,922)		(23,753)		(2,237)		—		(55,912)
Intercompany activities														—		37,327		—		—		(37,327)		—
Proceeds from sale of property and equipment		—		2,586		27		—		—		2,613		—		—		598		7		—		605
Net cash used in investing activities		—		(37,071)		(38,320)		(8,402)		—		(83,793)
Net cash provided by (used in) investing activities														—		7,405		(23,155)		(2,230)		(37,327)		(55,307)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on term loan		—		(6,250)		—		—		—		(6,250)		—		(38,951)		—		—		—		(38,951)
Proceeds from asset-based revolving credit facility		—		5,500		—		—		—		5,500		—		302,500		—		3,049		—		305,549
Payments on asset-based revolving credit facility		—		(5,500)		—		—		—		(5,500)		—		(302,500)		—		(3,049)		—		(305,549)
Deferred financing costs		—		(3,566)		—		—		—		(3,566)
Repurchase and retirement of senior notes														—		(5,546)		—		—		—		(5,546)
Intercompany activities		—		(26,269)		—		—		26,269		—		—		(17,676)		—		(37,327)		55,003		—
Cash dividends paid		(26,269)		—		—		—		—		(26,269)		(17,676)		—		—		—		—		(17,676)
Proceeds from issuance of common stock		2,454		—		—		—		—		2,454		932		—		—		—		—		932
Tax payments related to vested deferred stock units		(4,538)		—		—		—		—		(4,538)		(1,258)		—		—		—		—		(1,258)
Excess tax benefits from share-based plans		950		—		154		—		—		1,104
Repurchases of common stock		(277)		—		—		—		—		(277)
Net cash (used in) provided by financing activities		(27,680)		(36,085)		154		—		26,269		(37,342)
Net cash used in financing activities														(18,002)		(62,173)		—		(37,327)		55,003		(62,499)
Effect of exchange rate changes		—		—		—		292		—		292		—		—		—		(1,048)		—		(1,048)
(Decrease) increase in cash and cash equivalents		—		(17,491)		(2,729)		11,613		—		(8,607)
Increase (decrease) in cash and cash equivalents														—		521		(430)		(18,641)		—		(18,550)
Cash and cash equivalents at beginning of period		—		18,262		4,857		39,142		—		62,261		—		724		2,243		27,013		—		29,980
Cash and cash equivalents at end of period	$	—	$	771	$	2,128	$	50,755	$	—	$	53,654	$	—	$	1,245	$	1,813	$	8,372	$	—	$	11,430

2829

Table of Contents

ITEM 2 - ~~MANAGEMENT’S~~MANAGEMENT'S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We encourage you to read this ~~“Management’s~~"Management's Discussion and Analysis of Financial Condition and Results of ~~Operations” (“~~Operations" ("MD~~&A”~~&A") in conjunction with the corresponding section included in our Annual Report on Form 10-K for the year ended January ~~30, 2016.~~28, 2017. References herein to years are to our 52-week or 53-week fiscal year, which ends on the Saturday nearest January 3031 in the following calendar year. For example, references to ~~“2016”~~"2017" mean the ~~52-week~~53-week fiscal year ending ~~January 28, 2017.~~February 3, 2018.

Executive Overview

Background

We are ~~the largest specialty retailer of men’s suits~~a leading authority on helping men dress for work, special occasions and ~~the largest provider of apparel rental product~~everyday life. We serve our customers through an expansive omni-channel network that includes over 1,400 locations in the United States ("U.S.") and Canada ~~with 1,710 stores including tuxedo shops within Macy’s stores.~~as well as our branded e-commerce websites. Our operations are conducted in two reportable segments, retail and corporate apparel, based on the way we manage, evaluate and internally report our business activities. Refer to Note 1415 of Notes to Condensed Consolidated Financial Statements and the discussion included in ~~“Results~~"Results of ~~Operations”~~Operations" below for additional information and disclosures regarding our ~~reporting~~reportable segments.

We conduct our retail segment as a specialty apparel retailer offering suits, suit separates, sport coats, slacks, business casual, sportswear, outerwear, dress and casual shirts, shoes and accessories, primarily for men. We offer our products and services through multiple brands including The Men’s Wearhouse/Men’s Wearhouse and Tux (“Men’s Wearhouse”), Jos. A. Bank, Moores Clothing for Men (“Moores”), K&G and Joseph Abboud and through multiple channels including physical stores, online at www.menswearhouse.com, www.josbank.com and www.josephabboud.com, and our call center. Our stores are located throughout the United States (“U.S.”), Puerto Rico and Canada and carry a wide selection of exclusive and non-exclusive merchandise brands. Tuxedo and suit rentals are offered at our Men’s Wearhouse, Jos. A. Bank and Moores retail stores and our tuxedo shops within Macy’s stores. In addition, we offer our customers alteration services and most of our K&G stores offer ladies’ career apparel, sportswear, accessories and shoes and children’s apparel. We also conduct retail dry cleaning, laundry and heirlooming operations through MW Cleaners in Texas.

The corporate apparel segment includes the results from our corporate apparel and uniform operations conducted by Twin Hill in the U.S. and Dimensions, Alexandra, and Yaffy in the United Kingdom (“UK”). These operations provide corporate clothing uniforms and workwear to workforces through multiple channels including managed corporate accounts, catalogs and the internet at www.dimensions.co.uk and www.alexandra.co.uk.

In the first quarter of 2016, we revised our segment reporting presentation to reflect changes in how we manage our business, including resource allocation and performance assessment. Specifically, we are now presenting expenses related to our shared services platform separately from the results of our operating segments to promote enhanced comparability of our operating segments. Previously, these shared service expenses were primarily included in our retail segment. Comparable prior period information has been recast to reflect our revised segment presentation.

~~Third~~Second Quarter Discussion

~~Our~~We saw improved trends in our comparable sales across all retail brands in the second quarter of 2017. We delivered greater profitability ~~this~~in the second quarter ~~reflects solid progress~~of 2017 compared to the second quarter of 2016 as a result of our focus on ~~our~~disciplined cost ~~reduction initiatives as we continue to navigate the turnaround of Jos. A. Bank~~management and a ~~choppy retail environment.~~

~~Men’s Wearhouse’s 0.1%~~more efficient operating structure. However, while we have several growth initiatives underway to increase transactions and comparable sales, ~~increase reflects the softening traffic trend we initially saw after Father’s Day, which has continued. While~~ the retail environment remains challenging, we have experienced positive response to premium clothing, custom clothing and performance wear, including the recently launched Kenneth Cole performance wear offering. We plan to drive greater awareness of these innovative offerings and view them as significant growth drivers in 2017. In addition, we continued to strengthen our omnichannel capabilities during the third quarter, which we believe will help drive additional traffic as we make it easy for customers to shop with us both online and in-store.

Our Jos. A. Bank turnaround is gaining traction. Jos. A. Bank’s comparable sales decline of 9.8% in the third quarter was better than expected, particularly since we were up against last year’s final “Buy-One-Get-Three Free” event in October. While there is still work to be done, we are encouraged by the healthier trends we are seeing at Jos. A. Bank that reflect

~~Table of Contents~~

~~our investments in elevating the brand and customer experience through marketing, merchandising and a more engaging sales experience.~~ challenging.

We are ~~on track~~executing our plan to ~~achieve~~innovate the best men's specialty retailer of the future. Our custom suit business continues to grow and exemplifies our ~~targeted $50 million of cost savings~~unique ability to deliver exclusivity, personalization and fit at unsurpassed value and convenience. We are advancing our omni-channel capabilities with new services such as guided shopping, which makes it easy for ~~fiscal 2016.~~men to find the perfect look. In addition, we ~~continue~~are reaching our customers across all channels to ~~make progress~~let them know what we stand for – helping men love how they look.

We remain focused on ~~our~~operational excellence and fiscal discipline. Our rationalized store ~~base rationalization initiative. During the third quarter,~~footprint and more efficient expense structure enable us to generate strong cash flow that we ~~closed 83 stores, including 74 Men’s Wearhouse~~are deploying towards capital investment, dividend payment and Tux stores, bringing our total year-to-date closures to 187 stores. We expect to close approximately 63 stores in the fourth quarter of fiscal 2016 for a total of approximately 250 store closures during fiscal 2016. debt reduction.

Key operating metrics for the quarter ended ~~October~~July 29, ~~2016~~2017 include:

Net sales ~~decrease~~decreased 6.5% primarily due to the impact of ~~2.1%~~last year's store closures.

Comparable sales increased ~~0.1%~~7.8% at ~~Men’s Wearhouse~~Jos. A. Bank and 0.3% at Moores while comparable sales decreased 2.2% at ~~Jos. A. Bank, Moores~~Men's Wearhouse and 1.7% at K~~&G by 9.8%, 0.4% and 3.0%, respectively.~~&G. Overall, comparable sales for our retail segment increased 0.1%.

Operating income ~~increased to $61.1~~was $108.5 million for the second quarter of 2017 compared to an operating ~~loss~~income of ~~$36.4~~$59.6 million in the ~~third~~second quarter of ~~fiscal~~ ~~2015. Results for the third quarter of fiscal 2015 included a pre-tax, non-cash tradename impairment charge for Jos. A. Bank of $90.1~~ ~~million.~~2016.

Diluted earnings per share of ~~$0.58~~$1.19 for the second quarter of 2017 compared to diluted ~~loss~~earnings per share of ~~$0.56~~$0.51 in the ~~third~~second quarter of ~~fiscal 2015.~~2016.

Key liquidity metrics for the ~~nine~~six months ended ~~October~~July 29, ~~2016~~2017 include:

Cash and cash equivalents at the end of the second quarter of 2017 were $112.7 million, an increase of $101.3 million compared to the end of the second quarter of 2016.

Cash provided by operating activities was ~~$176.9~~$140.5 million for the first ~~nine~~six months of ~~fiscal 2016~~2017 compared to ~~$112.2~~$100.3 million for the first ~~nine~~six months of ~~fiscal 2015.~~2016.

Capital expenditures were ~~$80.6~~$34.0 million for the first ~~nine~~six months of fiscal ~~2016~~2017 compared to ~~$86.4~~$55.9 million for the first ~~nine~~six months of fiscal ~~2015.~~2016.

We repaid ~~$40.7~~$8.1 million on our term loan, repurchased and retired ~~$25.0~~$50.0 million in face value of senior notes and had no borrowings outstanding on our revolving credit facility as of ~~October~~July 29, ~~2016.~~2017.

Dividends paid totaled ~~$26.4~~$18.0 million for the ~~nine~~six months ended ~~October~~July 29, ~~2016.~~2017.

Table of Contents

Items Affecting Comparability of Results

The comparability of our results has been impacted by certain items, including costs to terminate our tuxedo rental license agreement with Macy's, restructuring and other costs consisting of costs related to our profit improvement and store rationalization programs and integration costs for Jos. A. Bank. A summary of the effect of these items on pretax income for each applicable period is presented below (dollars in millions):

For the Quarter Ended

For the Nine Months Ended

October 29,

October 31,

October 29,

October 31,


2016

2015

2016

2015

Tradename impairment charge

$
—

$
90.1

$
—

$
90.1

Restructuring and other charges (1)

10.9

—

59.1

—

Integration costs related to Jos. A. Bank(2)

1.4

5.0

7.1

15.9

Purchase accounting adjustment for the step up of Jos. A. Bank inventory

—

—

—

0.8

Other purchase accounting related charges

—

2.2

(0.6)

7.0

(Gain) loss on extinguishment of debt, net

(1.8)

—

(1.7)

12.7

Separation costs with a former executive

—

—

—

3.7

Other

—

0.1

2.6

0.1

Total (3)

$
10.5

$
97.4

$
66.5

$
130.3


	For the Three Months Ended				For the Six Months Ended
	July 29,		July 30,		July 29,		July 30,
	2017		2016		2017		2016
Costs to terminate Macy's agreement (1)	$	—	$	—	$	17.2	$	—
Restructuring and other charges(2)		—		35.0		—		48.2
Integration costs related to Jos. A. Bank(3)		—		2.0		—		5.6
Purchase accounting related charges for Jos. A. Bank		—		—		—		(0.6)
Other		—		2.4		—		2.7
Total (4)	$	—	$	39.4	$	17.2	$	55.9

⁽¹⁾

See Note 2 to the condensed consolidated financial statements for additional ~~information on restructuring and other costs.~~information.

⁽²⁾

~~For~~See Note 3 to the quarters ended October 29, 2016 and October 31, 2015, integration costs related to Jos. A. Bank included $0.1 million and $0.5 million of severance costs, respectively. For the nine months ended October 29, 2016 and October 31, 2015, integration costs related to Jos. A. Bank included $2.0 million and $5.9 million of severance and employee-related costs, respectively.condensed consolidated financial statements for additional information.

⁽³⁾

For the ~~quarter~~three months ended ~~October 29,~~July 30, 2016, ~~includes $13.3~~integration costs related to Jos. A. Bank included $0.3 million ~~within~~of severance costs. For the six months ended July 30, 2016, integration costs related to Jos. A. Bank included $2.0 million of severance costs.

⁽⁴⁾

For the three months ended July 30, 2016, consists of $40.2 million included in selling, general and administrative expenses (“("SG~~&A”~~&A") offset by a ~~$1.0~~$0.8 million ~~reduction in cost of sales and a $1.8 million gain on extinguishment of debt, net.~~

~~Table of Contents~~

~~For the quarter ended October 31, 2015, includes $90.1 million for a tradename impairment charge and $7.4 million within SG&A offset by a $0.1~~ reduction in cost of sales. For the ~~nine~~six months ended ~~October~~July 29, 2017, $15.8 million is included in SG&A and $1.4 million is included in cost of sales. For the six months ended July 30, 2016, ~~includes $69.9~~consists of $56.6 million ~~within~~included in SG&A offset by a ~~$1.7~~$0.7 million reduction in cost of ~~sales and a $1.7 million gain on extinguishment of debt, net~~. For the nine months ended October 31, 2015, includes $90.1 million for the tradename impairment charge, $25.5 million included in SG&A, $2.0 million in cost of sales and a $12.7 million loss on extinguishment of debt~~. Tradename impairment charge and gain (loss) on extinguishment of debt, net amounts are shown as separate lines in the condensed consolidated statement of earnings (loss).~~sales.

Store Data

The following table presents information with respect to retail apparel stores and tuxedo shops within ~~Macy’s~~Macy's stores in operation during each of the respective fiscal periods:


	For the Three Months Ended		For the Nine Months Ended		For the Year Ended	For the Three Months Ended		For the Six Months Ended		For the Year Ended
	October 29,	October 31,	October 29,	October 31,	January 30,	July 29,	July 30,	July 29,	July 30,	January 28,
	2016	2015	2016	2015	2016	2017	2016	2017	2016	2017

Open at beginning of period:	1,767	1,754	1,724	1,758	1,758	1,663	1,846	1,667	1,724	1,724
Opened ~~(2)~~(1)	26	18	173	32	42	1	7	2	147	178
Closed(2)	(83)	(24)	(187)	(42)	(76)	(180)	(86)	(185)	(104)	(235)
Open at end of the period	1,710	1,748	1,710	1,748	1,724	1,484	1,767	1,484	1,767	1,667

Men’s Wearhouse(2)	713	709	713	709	714
Men’s Wearhouse and Tux	61	183	61	183	160
Tuxedo shops @ Macy’s	170	12	170	12	12
Men's Wearhouse(3)						718	710	718	710	716
Men's Wearhouse and Tux						54	135	54	135	58
Tuxedo shops @ Macy's						—	150	—	150	170
Jos. A. Bank~~(3)~~(4)	550	633	550	633	625	496	557	496	557	506
Moores	126	123	126	123	124	126	126	126	126	126
K&G	90	88	90	88	89	90	89	90	89	91
	1,710	1,748	1,710	1,748	1,724	1,484	1,767	1,484	1,767	1,667

⁽¹⁾

Includes 138 and 158 tuxedo shops within ~~Macy’s~~Macy's stores opened in ~~2016.~~the six months ended July 30, 2016 and in the year ended January 28, 2017, respectively.

⁽²⁾

~~Includes one Joseph Abboud store opened~~All 170 tuxedo shops within Macy's stores were closed in ~~2015.~~the three months ended July 29, 2017.

⁽³⁾

Includes one Joseph Abboud store.

⁽⁴⁾

Excludes franchise stores.

During the ~~third~~second quarter of ~~2016,~~2017, we opened ~~26 stores/tuxedo shops (20~~one Men's Wearhouse store and closed 180 stores (all 170 tuxedo shops within ~~Macy’s~~Macy's stores, ~~four Men’s Wearhouse stores, one~~seven Jos. A. Bank ~~store~~stores, two Men's Wearhouse and Tux stores and one K&G store). ~~We closed 83 stores (74 Men’s Wearhouse and Tux stores, eight Jos. A. Bank stores and one Men’s Wearhouse store).~~

Table of Contents

Seasonality

Our sales and net earnings are subject to seasonal fluctuations. Our rental service revenues are heavily concentrated in the second and third quarters (prom and wedding season) while the fourth quarter is ~~considered~~ the seasonal low point. In addition, Jos. A. Bank has ~~historically~~generally experienced increased customer traffic during the holiday season and its increased marketing efforts during the holiday season have ~~historically~~generally resulted in significantly larger sales and net earnings generated in the fourth quarter, ~~which are significantly larger~~ as compared to the other three quarters. This trend did not occur in the fourth quarter of 2015 as a result of our decision to change the brand’s promotional strategy. We currently expect this trend to resume at some point in the future. With respect to ~~our~~ corporate apparel sales and operating results, seasonal fluctuations are not significant but the acquisition of new customers or existing customer decisions to rebrand or revise their corporate wear programs can cause significant variations in period results. Because of these fluctuations, ~~in our sales,~~ results for any quarter are not necessarily indicative of the results that may be achieved for the full year.

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Results of Operations

For the Three Months Ended ~~October~~July 29, ~~2016~~2017 Compared to the Three Months Ended ~~October 31, 2015~~July 30, 2016

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


	For the Three Months Ended(1)				For the Three Months Ended(1)
	October 29,		October 31,		July 29,		July 30,
	2016		2015		2017		2016
Net sales:
Retail clothing product	67.9	%	71.2	%	69.9	%	67.7	%
Rental services	16.4		15.3		17.9		18.1
Alteration and other services	5.9		6.1		5.4		5.4
Total retail sales	90.2		92.6		93.2		91.3
Corporate apparel clothing product	9.8		7.4		6.8		8.7
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales(2):
Retail clothing product	43.1		44.5		41.8		45.1
Rental services	16.5		16.2		15.8		16.4
Alteration and other services	67.2		68.3		76.2		69.9
Occupancy costs	14.3		14.3		13.0		13.1
Total retail cost of sales	54.1		55.7		51.8		54.0
Corporate apparel clothing product	67.7		71.5		74.6		64.6
Total cost of sales	55.5		56.9		53.4		54.9
Gross margin(2):
Retail clothing product	56.9		55.5		58.2		54.9
Rental services	83.5		83.8		84.2		83.6
Alteration and other services	32.8		31.7		23.8		30.1
Occupancy costs	(14.3)		(14.3)		(13.0)		(13.1)
Total retail gross margin	45.9		44.3		48.2		46.0
Corporate apparel clothing product	32.3		28.5		25.4		35.4
Total gross margin	44.5		43.1		46.6		45.1
Advertising expense	5.4		5.5		4.7		4.9
Selling, general and administrative expenses	31.9		31.3		29.2		33.6
Tradename impairment charge	—		10.4
Operating income (loss)	7.2		(4.2)
Operating income					12.7		6.6
Interest income	0.0		0.0		0.0		0.0
Interest expense	(3.0)		(3.1)		(3.0)		(2.8)
Gain on extinguishment of debt, net	0.2		—
Earnings (loss) before income taxes	4.4		(7.3)
Provision (benefit) for income taxes	1.1		(4.1)
Net earnings (loss)	3.4	%	(3.1)	%
Gain (loss) on extinguishment of debt, net					0.4		(0.0)
Earnings before income taxes					10.2		3.7
Provision for income taxes					3.3		1.0
Net earnings					6.9	%	2.7	%

⁽¹⁾

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

⁽²⁾

Calculated as a percentage of related sales.

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Net Sales

Total net sales decreased ~~$18.5~~$58.9 million, or ~~2.1%~~6.5%, to ~~$846.9~~$850.8 million for the ~~third~~second quarter of ~~2016~~2017 as compared to the ~~third~~second quarter of ~~2015.~~2016.

Total retail sales decreased ~~$37.7~~$37.2 million, or ~~4.7%~~4.5%, to ~~$763.7~~$793.0 million for the ~~third~~second quarter of ~~2016~~2017 as compared to the ~~third~~second quarter of ~~2015~~2016 primarily due to a ~~$40.8~~$21.0 million decrease in clothing product revenues primarily ~~at our Jos. A. Bank brand~~reflecting the impact of last year's store closures, a $13.0 million decrease in rental service revenues and a $3.2 million decrease in alteration and other services ~~revenues, partially offset by a $6.3 million increase in rental service~~ revenues. The net decrease is attributable to the following:


(in millions)		~~Amount��~~Amount Attributed to
$	~~0.5~~ (9.6)	~~0.1% increase~~2.2% decrease in comparable sales at Men's Wearhouse.
	~~(16.6)~~ 11.8	~~9.8% decrease~~7.8% increase in comparable sales at Jos. A. Bank.
	~~(2.1)~~ (1.4)	~~3.0%~~1.7% decrease in comparable sales at K&G.
	~~(0.2)~~ 0.2	~~0.4% decrease~~0.3% increase in comparable sales at Moores(1).
	~~(15.2)~~ (33.1)	Decrease in non-comparable sales (primarily due to closed stores).
	~~0.3~~ (1.4)	~~Increase~~Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
	~~(4.4)~~ (3.7)	Other (primarily decrease in alteration revenues).
$	~~(37.7)~~ (37.2)	Decrease in total retail sales.

⁽¹⁾

Comparable sales percentages for Moores are calculated using Canadian dollars.

Comparable sales ~~exclude the~~is defined as net sales ~~of a store for any month of one~~from stores open at least twelve months at period ~~if the store was not owned or open throughout the same month of the prior period~~end and ~~include~~includes e-commerce ~~net~~ sales. We operate our business using an ~~omnichannel~~omni-channel approach and do not differentiate e-commerce sales from our other channels.

The ~~slight increase~~decrease in comparable sales at ~~Men’s~~Men's Wearhouse resulted primarily from ~~higher rental services revenue while comparable sales for clothing decreased primarily due to decreases~~a decrease in ~~average~~ transactions ~~per store~~ and ~~units sold per transaction partially offset by increased average unit retails (net selling prices). The~~a slight decrease ~~at Jos. A. Bank resulted primarily from decreased average transactions per store and decreased average unit retails partially offset by higher~~in units per transaction ~~and higher rental services revenue. The decrease at K&G resulted from lower average transactions per store~~ partially offset by an increase in average unit ~~retails~~retail (net selling prices). The increase at Jos. A. Bank resulted primarily from an increase in transactions and units ~~sold~~ per ~~transaction.~~transaction that more than offset a decrease in average unit retail. The decrease at K&G resulted from lower transactions partially offset by an increase in units per transaction and average unit retail. The increase at Moores resulted from ~~decreased average transactions per store partially offset by increased~~increases in both average unit ~~retails with~~retail and transactions that more than offset a decrease in units ~~sold~~ per ~~transaction essentially flat.~~transaction. At ~~Men’s~~Men's Wearhouse, rental service comparable sales ~~increased 4.9%~~decreased 2.1% primarily due to ~~an increase in rental rates partially offset by~~ a decrease in unit ~~rentals.~~rentals as well as a slight decrease in rental rates.

Total corporate apparel clothing product sales ~~increased $19.2~~decreased $21.7 million for the ~~third~~second quarter of ~~2016~~2017 as compared to the ~~third~~second quarter of ~~2015~~2016 primarily due to ~~the impact~~anniversarying last year's rollout of a large new uniform ~~program. The rollout of the new uniform~~ program ~~commenced in June 2016, was completed during the third quarter of 2016 and has now transitioned to a standard replenishment phase. The increase in corporate apparel sales was partially offset by~~as well as the impact of a weaker British pound this year compared to last ~~year.~~year of approximately $3.7 million.

Gross Margin

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

Our total gross margin ~~increased $4.2~~decreased $13.6 million, or ~~1.1%~~3.3%, to ~~$377.2~~$396.7 million in the ~~third~~second quarter of ~~2016~~2017 as compared to the ~~third~~second quarter of ~~2015.~~2016 primarily as a result of lower corporate apparel net sales. Total retail segment gross margin decreased ~~$4.4 million, or 1.2%, from the same prior year quarter to $350.3~~$0.2 million in the ~~third~~second quarter of ~~2016 primarily due~~2017 compared to ~~lower sales at Jos. A. Bank.~~same period last year.

For the retail segment, total gross margin as a percentage of related sales increased ~~from 44.3%~~to 48.2% in the ~~third~~second quarter of ~~2015 to 45.9%~~2017 from 46.0% in the ~~third~~second quarter of 2016 primarily as a result of anniversarying lower gross margins in last ~~year’s third~~year's second quarter, ~~resulting from the~~driven by clearance activity in preparation of ~~merchandise through the e-commerce channel, primarily at~~ our ~~Men’s Wearhouse brand.~~closing of our factory/outlet stores.

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Occupancy costs decreased ~~$5.7~~$5.3 million primarily due to our store rationalization efforts. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, ~~was essentially flat at 14.3%~~decreased to 13.0% for ~~both~~ the ~~third quarters~~second quarter of ~~2016 and 2015.~~2017 from 13.1% for the second quarter of 2016.

Corporate apparel gross margin ~~increased $8.6~~decreased $13.4 million, or ~~47.2%~~47.8%, in the ~~third~~second quarter of ~~2016.~~2017. For the corporate apparel segment, total gross margin as a percentage of related sales ~~increased from 28.5%~~decreased to 25.4% in the ~~third~~second quarter of ~~2015 to 32.3%~~2017 from 35.4% in the ~~third~~second quarter of 2016 primarily due to the impact of last year's rollout of a large new uniform ~~program.~~program as well as the impact of unfavorable currency fluctuations on previously negotiated pricing arrangements with our United Kingdom ("UK") customers.

Advertising Expense

Advertising expense decreased to ~~$45.7~~$39.9 million in the ~~third~~second quarter of 2017 from $45.0 million in the second quarter of 2016, ~~from $48.0 million in the third quarter of 2015,~~ a decrease of ~~$2.3~~$5.1 million, or ~~4.9%~~11.3%. The decrease in advertising expense was driven primarily by reductions in television advertising reflecting a mix shift to digital advertising, as well as the timing of marketing campaigns that will launch later in 2017. As a percentage of total net sales, advertising expense decreased ~~from 5.5%~~to 4.7% in the ~~third~~second quarter of ~~2015 to 5.4%~~2017 from 4.9% in the ~~third~~second quarter of 2016.

Selling, General and Administrative Expenses

SG&A expenses decreased to ~~$270.5~~$248.3 million in the ~~third~~second quarter of 2017 from $305.7 million in the second quarter of 2016, ~~from $271.3 million in the third quarter of 2015,~~ a decrease of ~~$0.8~~$57.4 million, or ~~0.3%~~18.8%. As a percentage of total net sales, these expenses ~~increased from 31.3%~~decreased to 29.2% in the ~~third~~second quarter of ~~2015 to 31.9%~~2017 from 33.6% in the ~~third~~second quarter of ~~2016 primarily reflecting deleveraging from lower sales.~~2016. The components of this ~~0.6%~~4.4% net ~~increase~~decrease in SG&A expenses as a percentage of total net sales and the related dollar changes were as follows:

%

in millions

Attributed to
1.0

$
8.0

Increase in restructuring, integration and other items as a percentage of sales from 0.6% in the third quarter of 2015 to 1.6% in the third quarter of 2016.  For the third quarter of 2016, these costs totaled $13.3 million, related primarily to restructuring and other costs. For the third quarter of 2015, these costs totaled $5.3 million related primarily to Jos. A. Bank integration and other costs and asset impairment charges, partially offset by a gain on the sale of property.
0.1

(2.0)

Increase in other SG&A expenses as a percentage of sales from 17.7% in the third quarter of 2015 to 17.8% in the third quarter of 2016 primarily due to deleverage in net sales. Other SG&A expenses decreased $2.0 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015 partially offset by higher incentive compensation accruals.
(0.5)

(6.8)

Store salaries decreased $6.8 million and decreased as a percentage of sales from 13.1% in the third quarter of 2015 to 12.6% in the third quarter of 2016 primarily due to cost reduction initiatives.
0.6

$
(0.8)

Total


%	in millions		Attributed to
(4.4)	$	(40.2)	Decrease in restructuring, integration and other items as a percentage of sales from 4.4% in fiscal 2016 to 0.0% in fiscal 2017. For fiscal 2017, we incurred no such costs. For fiscal 2016, these costs totaled $40.2 million related primarily to restructuring and other costs including our store rationalization and profit improvement programs.
(0.4)		(10.9)	Store salaries decreased $10.9 million primarily due to our store rationalization efforts and decreased as a percentage of sales to 12.0% in the second quarter of 2017 from 12.4% in the second quarter of 2016.
0.4		(6.3)	Increase in other SG&A expenses as a percentage of sales to 17.1% in the second quarter of 2017 from 16.7% in the second quarter of 2016 primarily due to deleveraging from lower sales. Other SG&A expenses decreased $6.3 million primarily due to decreases in employee-related benefit costs as well as decreases in store-related costs resulting from our store rationalization efforts.
(4.4)	$	(57.4)	Total

In the retail segment, SG&A expenses as a percentage of related net sales ~~increased from 27.0%~~decreased to 23.6% in the ~~third~~second quarter of ~~2015 to 27.2%~~2017 from 28.5% in the ~~third~~second quarter of ~~2016 primarily due to deleveraging resulting from lower retail sales. Retail segment~~2016. SG&A expenses decreased ~~$9.2~~$49.2 million primarily due to ~~cost reduction initiatives.~~decreases in store-related costs resulting from our store rationalization efforts as well as the impact of last year's lease termination costs.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales ~~decreased from 23.6%~~increased to 21.2% in the ~~third~~second quarter of ~~2015 to 19.4%~~2017 from 19.8% in the ~~third~~second quarter of 2016 primarily due to ~~leverage~~deleveraging from ~~higher~~lower sales. Corporate apparel segment SG&A expenses ~~increased $1.0~~decreased $3.5 million.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in SG&A. Shared service SG&A expenses as a percentage of total net sales ~~increased from 4.6%~~decreased to 5.7% in the ~~third~~second quarter of ~~2015 to 5.5%~~2017 from 5.9% in the ~~third~~second quarter of 2016. Shared service SG&A expenses ~~increased $7.4~~decreased $4.7 million primarily due to ~~higher incentive compensation accruals and~~decreases in costs associated with ~~our~~last year's profit improvement program.

~~Tradename Impairment Charge~~

During the third quarter of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. Based on our analysis, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash, pre-tax impairment charge of $90.1 million.

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Provision for Income Tax

Our effective income tax rate increased to ~~24.1%~~32.5% for the ~~third~~second quarter of 2017 from 25.9% for the second quarter of 2016 ~~from a benefit of (56.8)% for the third quarter of 2015~~ primarily as a result of the Jos. A. Bank tradename impairment charge of $90.1 million in last year’s third quarter, which generated a book loss in our U.S. entities and significantly impacted our effective tax rate. In addition, the effective tax rate for the third quarter of 2016 is impacted by lowerdue to higher U.S. income as compared to income earned in foreign ~~jurisdictions.~~jurisdictions this year compared to last year.

For the ~~third quarter~~second quarters of ~~2016~~2017 and ~~2015,~~2016, the statutory tax rates in Canada and the UK were approximately 26% and 20%, respectively. For the ~~third~~second quarter of ~~2016~~2017 and ~~2015,~~2016, tax expense for our operations in foreign jurisdictions totaled ~~$2.7~~$4.4 million and ~~$2.8~~$5.1 million, respectively.

Our income tax expense and effective income tax rate in future periods may be impacted by many factors, including our geographic mix of earnings and changes in tax laws. Currently, we expect our effective tax rate in future periods to be lower than the statutory U.S. combined federal and state tax rate based on the expected geographic mix of earnings. In addition, if our financial results in fiscal ~~2016~~2017 generate a loss or certain deferred tax liabilities decrease, we may need to establish a valuation allowance on our U.S. deferred tax assets, which could have a material impact on our financial condition and results of operations. Lastly, we are currently undergoing several federal, foreign and state ~~audits which~~audits; however, we ~~are vigorously defending and~~ currently do not believe ~~should~~these audits will result in any material change to tax ~~expense.~~expense in the future.

Net Earnings ~~(Loss)~~

Net earnings were ~~$28.4~~$58.5 million for the ~~third~~second quarter of ~~2016~~2017 compared with a net ~~loss~~earnings of ~~$27.2~~$25.0 million for the ~~third~~second quarter of ~~2015.~~2016.

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For the ~~Nine~~Six Months Ended ~~October~~July 29, ~~2016~~2017 Compared to the ~~Nine~~Six Months Ended ~~October 31, 2015~~July 30, 2016

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


	For the Nine Months Ended(1)				For the Six Months Ended(1)
	October 29,		October 31,		July 29,		July 30,
	2016		2015		2017		2016
Net sales:
Retail clothing product	69.9	%	72.3	%	72.1	%	70.8	%
Rental services	15.6		14.7		15.1		15.2
Alteration and other services	5.8		6.0		5.7		5.8
Total retail sales	91.3		93.0		92.9		91.8
Corporate apparel clothing product	8.7		7.0		7.1		8.2
Total net sales	100.0	%	100.0	%	100.0	%	100.0	%
Cost of sales(2):
Retail clothing product	44.1		44.0		42.6		44.5
Rental services	16.3		16.0		16.3		16.2
Alteration and other services	69.4		68.4		74.8		70.6
Occupancy costs	13.9		13.8		13.7		13.7
Total retail cost of sales	54.8		54.9		54.0		55.2
Corporate apparel clothing product	67.5		71.1		73.6		67.5
Total cost of sales	55.9		56.1		55.4		56.2
Gross margin(2):
Retail clothing product	55.9		56.0		57.4		55.5
Rental services	83.7		84.0		83.7		83.8
Alteration and other services	30.6		31.6		25.2		29.4
Occupancy costs	(13.9)		(13.8)		(13.7)		(13.7)
Total retail gross margin	45.2		45.1		46.0		44.8
Corporate apparel clothing product	32.5		28.9		26.4		32.5
Total gross margin	44.1		43.9		44.6		43.8
Advertising expense	5.4		5.4		5.0		5.3
Selling, general and administrative expenses	32.8		30.8		31.1		33.3
Tradename impairment charge	—		3.4
Operating income	5.9		4.4		8.5		5.2
Interest income	0.0		0.0		0.0		0.0
Interest expense	(3.0)		(3.0)		(3.1)		(3.0)
Gain (loss) on extinguishment of debt, net	0.1		(0.5)		0.2		(0.0)
Earnings before income taxes	2.9		0.9		5.7		2.2
Provision for income taxes	0.8		(0.2)		2.0		0.7
Net earnings	2.1	%	1.2	%	3.7	%	1.5	%

⁽¹⁾

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

⁽²⁾

Calculated as a percentage of related sales.

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Table of Contents

Net Sales

Total net sales decreased ~~$85.2~~$104.8 million, or ~~3.2%~~6.0%, to ~~$2,585.4~~$1,633.7 million for the first ~~nine~~six months of ~~2016~~2017 as compared to the first ~~nine~~six months of ~~2015.~~2016.

Total retail sales decreased ~~$124.5~~$78.1 million, or ~~5.0%~~4.9%, to ~~$2,360.1~~$1,518.3 million for the first ~~nine~~six months of ~~2016~~2017 as compared to the first ~~nine~~six months of ~~2015 primarily~~2016 due to a ~~$125.3~~$53.0 million decrease in clothing product revenues primarily ~~at our Jos. A. Bank brand~~reflecting the impact of last year's store closures, an $18.0 million decrease in rental services revenue and a ~~$10.1~~$7.0 million decrease in alteration and other services ~~revenues, partially offset by a $10.9 million increase in rental service~~ revenues. The ~~net~~ decrease in total retail sales is ~~attributable to the following:~~further described below:


(in millions)		Amount Attributed to
$	~~(1.7)~~ (22.3)	~~0.1%~~2.6% decrease in comparable sales at ~~Men’s~~Men's Wearhouse.
	~~(77.9)~~ 17.0	~~14.2% decrease~~5.7% increase in comparable sales at Jos. A. Bank.
	~~(3.6)~~ (8.0)	~~1.5%~~4.7% decrease in comparable sales at K&G.
	~~(2.9)~~ (2.0)	~~1.8%~~1.9% decrease in comparable sales at Moores(1).
	~~(20.5)~~ (53.9)	Decrease in non-comparable sales (primarily due to closed stores).
	~~(4.8)~~ (1.8)	Decrease in net sales resulting from change in U.S./Canadian dollar exchange rate.
	~~(13.1)~~ (7.1)	Other (primarily decrease in alteration revenues).
$	~~(124.5)~~ (78.1)	Decrease in total retail sales.

⁽¹⁾

Comparable sales percentages for Moores are calculated using Canadian dollars.

The ~~slight~~ decrease in comparable sales at ~~Men’s~~Men's Wearhouse resulted primarily from ~~decreases~~a decrease in ~~average~~ transactions ~~per store~~ and ~~units sold per transaction partially offset by increased average unit retails and higher rental services revenue. The~~a slight decrease ~~at Jos. A. Bank resulted primarily from decreased average transactions per store partially offset by higher~~in units per transaction ~~increased average unit retails and higher rental services revenue. The decrease at K&G resulted from lower average transactions per store~~ partially offset by an increase in average unit ~~retails~~retail. The increase at Jos. A. Bank resulted primarily from an increase in transactions and ~~higher~~ units per ~~transaction.~~transaction that more than offset a decrease in average unit retail. The decrease at K&G resulted from lower transactions partially offset by an increase in units per transaction and average unit retail. The decrease at Moores resulted from ~~decreased average transactions per store and~~a decrease in units ~~sold~~ per transaction partially offset by ~~increased~~a slight increase in average unit ~~retails.~~retail while transactions were essentially flat. At ~~Men’s~~Men's Wearhouse, rental service comparable sales ~~increased 2.2%~~decreased 1.6% primarily due to ~~an increase in rental rates partially offset by~~ a decrease in unit ~~rentals.~~rentals as well as a slight decrease in rental rates.

Total corporate apparel clothing product sales ~~increased $39.3~~decreased $26.7 million for the first ~~nine~~six months of ~~2016~~2017 as compared to the first ~~nine~~six months of ~~2015~~2016 primarily due to ~~the impact~~anniversarying last year's rollout of a large new uniform ~~program. The rollout of the new uniform~~ program ~~commenced in June 2016, was completed during the third quarter of 2016 and has now transitioned to a standard replenishment phase. The increase in corporate apparel sales was partially offset by~~as well as the impact of a weaker British pound this year compared to last ~~year.~~year of approximately $10.6 million.

Gross Margin

Our total gross margin decreased ~~$33.9~~$33.0 million, or ~~2.9%~~4.3%, to ~~$1,139.4~~$729.1 million in the first ~~nine~~six months of ~~2016~~2017 as compared to the first ~~nine~~six months of ~~2015.~~2016. Total retail segment gross margin decreased ~~$53.2~~$17.2 million, or ~~4.8%~~2.4%, ~~from the same prior year nine months to $1,066.2 million~~ in the first ~~nine~~six months of ~~2016~~2017 compared to the same period last year primarily due to lower sales ~~at Jos. A. Bank.~~across our retail brands.

For the retail segment, total gross margin as a percentage of ~~related~~retail sales increased ~~from 45.1%~~to 46.0% in the first ~~nine~~six months of ~~2015 to 45.2%~~2017 from 44.8% in the first ~~nine~~six months of 2016 driven primarily as a result of anniversarying lower gross margins in last ~~year’s third~~year's second quarter, ~~resulting from the~~driven by clearance activity in preparation of ~~merchandise through the e-commerce channel, primarily at~~ our ~~Men’s Wearhouse brand partially offset by the impact of the~~ closing of ~~the~~our factory/outlet ~~stores during the second quarter of 2016.~~stores.

~~Table of Contents~~

Occupancy costs decreased ~~$14.3~~$10.3 million primarily due to our store rationalization efforts. Occupancy costs as a percentage of retail sales, which is relatively constant on a per store basis and includes store related rent, common area maintenance, utilities, repairs and maintenance, security, property taxes and depreciation, ~~increased from 13.8% to 13.9%~~was flat at 13.7% for both the first ~~nine~~six months of ~~2016 compared to the first nine months~~2017 and 2016.

Table of ~~2015, primarily due to deleveraging of occupancy costs from lower sales at Jos. A. Bank.~~Contents

Corporate apparel gross margin ~~increased $19.3~~decreased $15.8 million, or ~~36.0%~~34.2%, in the first ~~nine~~six months of 2017 as compared to the first six months of 2016. For the corporate apparel segment, total gross margin as a percentage of related sales ~~increased from 28.9%~~decreased to 26.4% in the first ~~nine~~six months of ~~2015 to~~2017 from 32.5% in the first ~~nine~~six months of 2016 primarily due to the impact of last year's rollout of a large new uniform program as well as ~~pre-tax gains~~the impact of unfavorable currency fluctuations on ~~foreign currency hedging transactions.~~previously negotiated pricing arrangements with our UK customers.

Advertising Expense

Advertising expense decreased to ~~$138.5~~$82.1 million in the first ~~nine~~six months of ~~2016~~2017 from ~~$143.6~~$92.9 million in the first ~~nine~~six months of ~~2015,~~2016, a decrease of ~~$5.1~~$10.8 million, or ~~3.5%~~11.6%. The decrease in advertising expense was driven primarily by reductions in television advertising reflecting a mix shift to digital advertising, as well as the timing of marketing campaigns that will launch later in 2017. As a percentage of total net sales, advertising expense was ~~5.4%~~5.0% in the first ~~nine~~six months of ~~2016 which was flat~~2017 compared to 5.3% in the first ~~nine~~six months of ~~2015.~~2016.

Selling, General and Administrative Expenses

SG&A expenses ~~increased~~decreased to ~~$849.1~~$507.5 million in the first ~~nine~~six months of ~~2016~~2017 from ~~$822.5~~$578.6 million in the first ~~nine~~six months of ~~2015, an increase~~2016, a decrease of ~~$26.6~~$71.1 million or ~~3.2%~~12.3%. As a percentage of total net sales, these expenses ~~increased from 30.8%~~decreased to 31.1% in the first ~~nine~~six months of ~~2015 to 32.8%~~2017 from 33.3% in the first ~~nine~~six months of 2016. The components of this ~~2.0% increase~~2.2% decrease in SG&A expenses as a percentage of total net sales and the related ~~absolute~~ dollar changes were as follows:

%

in millions

Attributed to
2.0

$
50.5

Increase in restructuring, integration and other items as a percentage of sales from 0.7% in the first nine months of 2015 to 2.7% in the first nine months of 2016.  For the first nine months of 2016, these costs totaled $69.9 million, related primarily to restructuring and other costs.  For the first nine months of 2015, these costs totaled $19.4 million related primarily to separation costs with a former executive and integration and other costs related to Jos. A. Bank and asset impairment charges, partially offset by a gain on the sale of property.
(0.2)

(17.2)

Decrease in other SG&A expenses as a percentage of sales from 17.5% in the first nine months of 2015 to 17.3% in the first nine months of 2016. Other SG&A expenses decreased $17.2 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015.
0.2

(6.7)

Store salaries decreased $6.7 million primarily due to cost reduction initiatives yet increased as a percentage of sales from 12.6% in the first nine months of 2015 to 12.8% in the first nine months of 2016 primarily due to deleverage resulting from lower retail sales.
2.0

$
26.6

Total


%	in millions		Attributed to
(2.3)	$	(40.8)	Decrease in restructuring, integration and other items as a percentage of sales to 1.0% in the first six months of 2017 from 3.3% in the first six months of 2016. For the first six months of 2017, these costs totaled $15.8 million related to costs to terminate the Macy's agreement. For the first six months of 2016, these costs totaled $56.6 million related primarily to restructuring and other costs.
(0.2)		(16.7)	Store salaries decreased $16.7 million primarily due to our store rationalization efforts and decreased as a percentage of sales to 12.7% in the first six months of 2017 from 12.9% in the first six months of 2016.
0.3		(13.6)	Increase in other SG&A expenses as a percentage of sales to 17.4% in the first six months of 2017 from 17.1% in the first six months of 2016 primarily due to deleveraging from lower sales. Other SG&A expenses decreased $13.6 million primarily due to decreases in employee-related benefit costs as well as decreases in store-related costs resulting from our store rationalization efforts.
(2.2)	$	(71.1)	Total

In the retail segment, SG&A expenses as a percentage of related net sales ~~increased from 26.3%~~decreased to 25.6% in the first ~~nine~~six months of ~~2015 to 27.6%~~2017 from 27.7% in the first ~~nine~~six months of ~~2016 primarily due to deleverage resulting from lower retail sales. Retail segment~~2016. SG&A expenses decreased ~~$3.8~~$54.1 million primarily due to ~~cost reduction initiatives~~decreases in store-related costs resulting from our store rationalization efforts as well as the impact of last year's lease termination costs partially offset by ~~lease termination costs.~~costs to terminate the Macy's agreement in 2017.

In the corporate apparel segment, SG&A expenses as a percentage of related net sales ~~decreased from 24.6%~~increased to 22.2% in the first ~~nine~~six months of ~~2015 to 21.1%~~2017 from 22.1% in the first ~~nine~~six months of 2016 primarily due to ~~leverage~~deleverage from ~~higher~~lower sales. Corporate apparel segment SG&A expenses ~~increased $1.6~~decreased $5.8 million.

Shared service expenses represent costs not specifically related to the operations of our business segments and are included in SG&A. Shared service SG&A expenses as a percentage of total net sales ~~increased from 4.6%~~decreased to 5.7% in the first ~~nine~~six months of ~~2015 to 5.9%~~2017 from 6.0% in the first ~~nine~~six months of 2016. Shared service SG&A expenses ~~increased $28.8~~decreased $11.2 million primarily due to decreases in costs associated with ~~our~~last year's profit improvement program.

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~~Tradename Impairment Charge~~

During the first nine months of 2015, we concluded that a triggering event occurred that required an interim impairment test for the Jos. A. Bank tradename. Based on our analysis, we concluded that the Jos. A. Bank tradename was impaired and recorded a non-cash, pre-tax impairment charge of $90.1 million.

Provision for Income Tax

Our effective income tax rate increased to ~~27.3%~~35.0% for the first ~~nine~~six months of 2017 from 30.4% for the first six months of 2016 ~~from~~primarily as a ~~benefit~~result of ~~(24.0)% for the first nine months~~$2.2 million of ~~2015 primarily due~~tax deficiencies related to the ~~impact~~vesting of stock-based awards resulting from the ~~aforementioned Jos. A. Bank tradename impairment charge, which resulted in our effective tax rate being a benefit for the first nine months~~adoption of ~~2015. In addition, the effective tax rate for the first nine months of 2016 is impacted due~~new accounting guidance related to ~~lower U.S. income as compared to income earned in foreign jurisdictions.~~stock-based compensation.

For the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, the statutory tax rates in Canada and the UK were approximately 26% and 20%, respectively. For the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, tax expense for our operations in foreign jurisdictions totaled ~~$9.3~~$6.0 million and ~~$8.1~~$6.6 million, respectively.

Net Earnings

Net earnings were ~~$55.0~~$60.3 million for the first ~~nine~~six months of ~~2016~~2017 compared with net earnings of ~~$31.0~~$26.6 million for the first ~~nine~~six months of ~~2015.~~2016.

Liquidity and Capital Resources

At ~~October~~July 29, 2017, July 30, 2016 ~~October 31, 2015~~ and January ~~30, 2016,~~28, 2017, cash and cash equivalents totaled ~~$34.9~~$112.7 million, ~~$53.7~~$11.4 million and ~~$30.0~~$70.9 million, respectively, and working capital totaled ~~$726.2~~$753.0 million, ~~$829.1~~$719.8 million and ~~$723.6~~$705.8 million, respectively. Our primary sources of working capital are cash flows from operations and available borrowings under our financing arrangements, as described below.

~~On June 18,~~In 2014, The ~~Men’s~~Men's Wearhouse ~~Inc.~~ entered into a term loan credit agreement that provides for a senior secured term loan in the aggregate principal amount of $1.1 billion (the ~~“Term Loan”~~"Term Loan") and a $500.0 million asset-based revolving credit agreement (the ~~“ABL Facility”~~"ABL Facility", and together with the Term Loan, the ~~“Credit Facilities”~~"Credit Facilities") with certain of our U.S. subsidiaries and Moores the Suit People Inc., one of our Canadian subsidiaries, as co-borrowers. In addition, ~~on June 18,~~in 2014, The ~~Men’s~~Men's Wearhouse ~~Inc.~~ issued $600.0 million in aggregate principal amount of 7.00% Senior Notes due 2022 (the ~~“Senior Notes”~~"Senior Notes").

The Credit Facilities and the Senior Notes contain customary non-financial and financial covenants, including fixed charge coverage ratios, total leverage ratios and secured leverage ratios, as well as a restriction on our ability to pay dividends on our common stock in excess of $10.0 million per quarter. Since entering into these financing arrangements, ~~and as of October 29, 2016,~~ our total leverage ratio and secured leverage ratio ~~were~~have been above the maximums specified in the agreements, which was anticipated when we entered into these arrangements. As a result, we ~~are currently~~were subject to certain additional restrictions, including limitations on our ability to make significant acquisitions and incur additional indebtedness. As of July 29, 2017, our total leverage ratio and secured leverage ratio were below the maximums specified in the agreements but these ratios may increase above the maximums specified in the agreements during the remainder of fiscal 2017. Currently, we believe our total leverage ratio and secured leverage ratio will remain below the maximums specified in the agreements during fiscal 2018 and beyond, which will result in the elimination of these additional restrictions.

The Term Loan is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries and will mature onin June ~~18,~~ 2021. The interest rate on the Term Loan is based on ~~3-month~~1-month LIBOR, which was approximately ~~0.89%~~1.23% at ~~October~~July 29, ~~2016. However, the Term Loan interest rate is subject to a LIBOR floor of 1% per annum,~~2017, plus the applicable margin which is currently 3.50%, resulting in a total interest rate of ~~4.50%~~4.73%. In January 2015, we entered into an interest rate swap agreement, ~~to swap variable-rate interest~~in which the variable rate payments due under a portion of the Term Loan were exchanged for ~~fixed-rate interest payments on~~ a ~~notional amount of $520.0 million, effective in February 2015. The~~fixed rate. In April 2017, we entered into an additional interest rate swap agreement ~~matures in August 2018 and has~~to exchange variable rate payments under a portion of the Term Loan for a fixed rate. At July 29, 2017, the total notional amount under our interest rate swaps is $540.0 million.

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periodic interest settlements. Under this interest rate swap agreement, we receive a floating rate based on 3-month LIBOR and pay a fixed rate of 5.03% (including the applicable margin of 3.50%) on the outstanding notional amount. ~~At October 29, 2016, the notional amount totaled $390.0 million.~~

In ~~April~~ 2015, The ~~Men’s~~Men's Wearhouse ~~Inc.~~ entered into Incremental Facility Agreement No. 1 (the ~~“Incremental Agreement”~~"Incremental Agreement") resulting in a refinancing of $400.0 million aggregate principal amount of ~~our~~the Term Loan from a variable rate to a fixed rate of 5.0% per annum. The Incremental Agreement did not impact the total amount borrowed under the Term Loan, the maturity date of the Term Loan, ~~of June 18, 2021,~~ or collateral and guarantees under the ~~existing~~ Term Loan.

The ABL Facility provides for a senior secured ~~asset-based~~ revolving credit facility of $500.0 million, with possible future increases to $650.0 million ~~with~~under an expansion feature ~~which~~that matures onin June ~~18,~~ 2019, and is guaranteed, jointly and severally, by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The ABL Facility has several borrowing and interest rate options including the following indices: (i) adjusted LIBOR, (ii) Canadian Dollar Offered Rate ("CDOR") rate, (iii) Canadian prime rate or (iv) an alternate base rate (equal to the greater of the prime rate, the federal funds effective rate plus 0.5% or adjusted LIBOR for a one-month period plus 1.0%). Advances under the ABL Facility bear interest at a rate per annum using the applicable indices plus a varying interest rate margin of up to 2.00%. The ABL Facility also provides for fees applicable to amounts available to be drawn under outstanding letters of credit which range from 1.50% to 2.00%, and a fee on unused commitments which ranges from 0.25% to 0.375%. As of July 29, 2017, there were no borrowings outstanding under the ABL Facility.

We utilize letters of credit primarily ~~to secure inventory purchases and~~ as collateral for workers compensation ~~claims. Except for~~claims and to secure inventory purchases. At July 29, 2017, letters of credit totaling approximately ~~$28.9~~$33.4 million were issued and ~~outstanding, no amounts were drawn on the ABL Facility as of October 29, 2016 and we have approximately $427.2 million of borrowing availability~~outstanding. Borrowings available under the ABL Facility as of ~~October~~July 29, ~~2016.~~2017 were $466.6 million.

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

The Senior Notes are guaranteed, jointly and severally, on an unsecured basis by Tailored Brands, Inc. and certain of our U.S. subsidiaries. The Senior Notes will mature onin July 1, 2022. Interest on the Senior Notes is payable onin January 1 and July 1 of each year.

Cash Flow Activities

Operating activities — Net cash provided by operating activities was ~~$176.9~~$140.5 million and ~~$112.2~~$100.3 million for the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, respectively. The ~~$64.6~~$40.2 million increase was driven by ~~changes~~higher net earnings compared to last year as well as a planned reduction in ~~other assets related to income tax refunds~~rental product purchases and a decrease in inventory purchases, ~~as we normalize inventory levels, particularly at Jos. A. Bank. These favorable impacts were~~primarily resulting from our store rationalization efforts, partially offset by ~~an increase~~a decrease in ~~accounts receivable driven by the rollout of a large new uniform program and the impact of restructuring and~~ other ~~costs.~~assets related to prior year income tax refunds.

Investing activities — Net cash used in investing activities was ~~$79.9~~$32.3 million and ~~$83.8~~$55.3 million for the first ~~nine~~six months of 2017 and 2016, respectively. The $23.0 million decrease was driven by a decrease in capital expenditures primarily due to the prior year opening of tuxedo shops within Macy's and ~~2015, respectively.~~last year's distribution center expansion project.

Financing activities — Net cash used in financing activities was ~~$91.9~~$72.0 million and ~~$37.3~~$62.5 million for the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, respectively. The ~~$54.6~~$9.5 million increase primarily reflects the impact of ~~a $35.5 million prepayment on our Term Loan and the repurchase of $25.0 million of our Senior Notes.~~additional debt repayments this year compared to last year.

Share repurchase program — ~~The~~In March 2013, the Board of Directors (the ~~“Board”~~"Board") ~~had previously~~ approved a ~~$200.0 million~~ share repurchase program for our common stock. At July 29, 2017, the remaining balance available under the Board's authorization was $48.0 million. During the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, no shares were repurchased in open market transactions under the Board's authorization.

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~~in open market transactions under the Board’s authorization. At October 29, 2016, the remaining balance available under the Board’s authorization was $48.0 million.~~

Dividends — Cash dividends paid were approximately ~~$26.4~~$18.0 million and ~~$26.3~~$17.7 million for the first ~~nine~~six months of ~~2016~~2017 and ~~2015,~~2016, respectively. During each of the quarters ended ~~October~~July 29, ~~2016~~2017 and ~~October 31, 2015,~~July 30, 2016, we declared quarterly dividends of $0.18 per share.

Future Sources and Uses of Cash

Our primary uses of cash are to finance working capital requirements of our operations and to repay our indebtedness. In addition, we will use cash to fund capital expenditures, income taxes, ~~costs related to our store rationalization and profit improvement programs including lease termination~~dividend payments, ~~dividend payments~~operating leases and various other commitments and obligations, as they arise.

During the course of the ~~year,~~first six months of 2017, we borrowed and repaid amounts under our ABL Facility ~~primarily due to costs incurred under our store rationalization and profit improvement programs. During the nine months ended October 29, 2016,~~with the maximum borrowing outstanding at any point in time ~~was $68.5~~totaling $34.7 million.

Capital expenditures are anticipated to be ~~in the range of $110.0 to $120.0~~approximately $90.0 million for ~~2016.~~2017. This amount includes the anticipated costs to open ~~158 shops within Macy’s~~four Men's Wearhouse stores and to relocate or remodel approximately 10 to 15 Men’s Wearhouse stores, three Jos. A. Bank stores, two Moores stores, and two K&G stores and to expand and/or relocate approximately 5 to 10 existing Men’s Wearhouse stores, two to six existing Jos. A. Bank stores and one existing K&G store. Duringstores. The balance of the first nine months of 2016, we opened 173 stores/tuxedo shops (158 tuxedo shops within Macy’s stores, nine Men’s Wearhouse stores, three Jos. A. Bank stores, two Moores stores and one K&G store). Capitalcapital expenditures for ~~2016~~2017 will ~~also include integration projects~~be used for ~~Jos. A. Bank,~~store refreshes, point-of-sale and other computer equipment and systems, ~~store remodeling,~~distribution facilities and investment in other corporate assets. The actual amount of future capital expenditures will depend in part on the number of new stores opened and the terms on which new stores are leased and the timing of our Jos. A. Bank integration projects, as well as on industry trends consistent with our anticipated operating plans.

Current and future domestic and global economic conditions could negatively affect our future operating results as well as our existing cash and cash equivalents balances. In addition, conditions in the financial markets could limit our access to further capital resources, if needed, and could increase associated costs. We believe based on our current business plan that our existing cash and cash flows from operations and availability under our ABL Facility will be sufficient to fund our operating cash requirements, repayment of current indebtedness ~~costs related to our store rationalization~~ and ~~profit improvement plans including lease termination payments, planned store openings, relocations and remodels and other~~ capital expenditures.

Contractual Obligations

There have been no material changes to our contractual obligations as discussed in our Annual Report on Form 10-K for the fiscal year ended January ~~30, 2016.~~28, 2017. As a result of the termination of the tuxedo rental license agreement with Macy's, our total other contractual obligations decreased by $114.9 million.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements requires the appropriate application of accounting policies in accordance with generally accepted accounting principles. In many instances, this also requires management to make estimates and assumptions about future events that affect the amounts and disclosures included in our financial statements. We base our estimates on historical experience and various assumptions that we believe are reasonable under our current business model. However, because future events and conditions and their effects cannot be determined with certainty, actual results will differ from our estimates and such differences could be material to our financial statements. There have been no significant changes to our critical accounting policies and estimates as discussed in our Annual Report on Form 10-K for the fiscal year ended January ~~30, 2016.~~28, 2017.

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ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

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

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

As discussed in Note 45 and Note 1214 of the Notes to the Condensed Consolidated Financial Statements, we have undertaken steps to mitigate our exposure to changes in interest rates on our indebtedness. As of ~~October~~July 29, ~~2016, 84%~~2017, 94% of our total debt was at a fixed rate with the remainder at a variable rate. ~~In addition, due to the existence of~~As a ~~LIBOR floor of 1.0% per annum on the portion of our debt subject to a variable rate,~~result, we believe our interest rate risk is substantially mitigated. At ~~October~~July 29, ~~2016,~~2017, the effect of one percentage point change in interest rates would result in an approximate ~~$2.6~~$1.0 million change in annual interest expense on our Term Loan.

ITEM 4 - CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

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

Changes in Internal Controls over Financial Reporting

There were no changes in the ~~Company’s~~Company's internal control over financial reporting that occurred during the fiscal ~~third~~second quarter ended ~~October~~July 29, ~~2016~~2017 that have materially affected, or are reasonably likely to materially affect, the ~~Company’s~~Company's internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

For a description of our legal proceedings, see Note 1516 of the Notes to the Condensed Consolidated Financial Statements of this Quarterly Report on Form 10-Q.

~~ITEM 1A — RISK FACTORS~~

For a more detailed explanation of the factors affecting our business, please refer to the Risk Factors section in the Form 10-K for the fiscal year ended January 30, 2016. Except as described in Part 1A of our Quarterly Report on Form 10-Q for the quarterly period ended July 30, 2016 and which is incorporated herein, there has not been a material change to the risk factors set forth in the Form 10-K for the fiscal year ended January 30, 2016.

ITEM 6 — EXHIBITS

Exhibits filed with this quarterly report on Form 10-Q are incorporated herein by reference as set forth in the Index to Exhibits on page 45.

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EXHIBIT INDEX

Exhibit Number		Exhibit Index

10.1	—	Tailored Brands, Inc. 2016 Long-Term Incentive Plan, as amended (incorporated by reference from Appendix A to the Company’s proxy statement on Schedule 14A relating to the 2017 Annual Meeting of Shareholders of the Company filed with the Commission on May 4, 2017 (File No. 1‑16097)).
10.2	—	Tailored Brands, Inc. Amended and Restated Senior Executive Change in Control Severance Plan (filed herewith).
31.1	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith).
31.2	—	Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith).
32.1	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (furnished herewith). †
32.2	—	Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (furnished herewith). †
101.1	—	The following financial information from Tailored Brands, Inc.’s Quarterly Report on Form 10‑Q for the three and six months ended July 29, 2017 formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings; (iii) the Condensed Consolidated Statements of Comprehensive Income; (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

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

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SIGNATURES

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

Dated: ~~December 8, 2016~~September 7, 2017	TAILORED BRANDS, INC.


	By	/s/ ~~JON W. KIMMINS~~JACK P. CALANDRA
		~~Jon W. Kimmins~~Jack P. Calandra
		Executive Vice President, Chief Financial Officer and Treasurer ~~and~~
		~~Principal Financial Officer~~

~~Table of Contents~~

~~EXHIBIT INDEX~~

Exhibit Number		~~Exhibit Index~~

~~31.1~~	—	~~Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (filed herewith).~~
~~31.2~~	—	~~Certification of Periodic Report Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (filed herewith).~~
~~32.1~~	—	~~Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Executive Officer (furnished herewith). †~~
~~32.2~~	—	~~Certification of Periodic Report Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by the Chief Financial Officer (furnished herewith). †~~
~~101.1~~	—	The following financial information from Tailored Brands, Inc.’s Quarterly Report on Form 10-Q for the three and nine months ended October 29, 2016, formatted in XBRL (Extensible Business Reporting Language) and filed electronically herewith: (i) the Condensed Consolidated Balance Sheets; (ii) the Condensed Consolidated Statements of Earnings (Loss); (iii) the Condensed Consolidated Statements of Comprehensive Income (Loss); (iv) the Condensed Consolidated Statements of Cash Flows; and (v) the Notes to Condensed Consolidated Financial Statements.

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

4546


	Foreign
	Currency		Interest Rate		Pension
	Translation		Swap		Plan		Total
BALANCE— January 31, 2015	$	(4,232)	$	(1,665)	$	226	$	(5,671)
Other comprehensive income (loss) before reclassifications		(378)		(1,531)		—		(1,909)
Amounts reclassified from accumulated other comprehensive income		—		1,224		—		1,224
Net current-period other comprehensive loss		(378)		(307)		—		(685)
BALANCE— October 31, 2015	$	(4,610)	$	(1,972)	$	226	$	(6,356)


	October 29, 2016				October 31, 2015				January 30, 2016
	Carrying		Estimated		Carrying		Estimated		Carrying		Estimated
	Amount		Fair Value		Amount		Fair Value		Amount		Fair Value
Long-term debt, including current portion	$	1,595,873	$	1,556,661	$	1,656,206	$	1,711,104	$	1,655,924	$	1,410,651


	For the Quarter Ended				For the Nine Months Ended
	October 29,		October 31,		October 29,		October 31,
	2016		2015		2016		2015
Tradename impairment charge	$	—	$	90.1	$	—	$	90.1
Restructuring and other charges (1)		10.9		—		59.1		—
Integration costs related to Jos. A. Bank(2)		1.4		5.0		7.1		15.9
Purchase accounting adjustment for the step up of Jos. A. Bank inventory		—		—		—		0.8
Other purchase accounting related charges		—		2.2		(0.6)		7.0
(Gain) loss on extinguishment of debt, net		(1.8)		—		(1.7)		12.7
Separation costs with a former executive		—		—		—		3.7
Other		—		0.1		2.6		0.1
Total (3)	$	10.5	$	97.4	$	66.5	$	130.3


%	in millions		Attributed to
1.0	$	8.0	Increase in restructuring, integration and other items as a percentage of sales from 0.6% in the third quarter of 2015 to 1.6% in the third quarter of 2016. For the third quarter of 2016, these costs totaled $13.3 million, related primarily to restructuring and other costs. For the third quarter of 2015, these costs totaled $5.3 million related primarily to Jos. A. Bank integration and other costs and asset impairment charges, partially offset by a gain on the sale of property.
0.1		(2.0)	Increase in other SG&A expenses as a percentage of sales from 17.7% in the third quarter of 2015 to 17.8% in the third quarter of 2016 primarily due to deleverage in net sales. Other SG&A expenses decreased $2.0 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015 partially offset by higher incentive compensation accruals.
(0.5)		(6.8)	Store salaries decreased $6.8 million and decreased as a percentage of sales from 13.1% in the third quarter of 2015 to 12.6% in the third quarter of 2016 primarily due to cost reduction initiatives.
0.6	$	(0.8)	Total


%	in millions		Attributed to
2.0	$	50.5	Increase in restructuring, integration and other items as a percentage of sales from 0.7% in the first nine months of 2015 to 2.7% in the first nine months of 2016. For the first nine months of 2016, these costs totaled $69.9 million, related primarily to restructuring and other costs. For the first nine months of 2015, these costs totaled $19.4 million related primarily to separation costs with a former executive and integration and other costs related to Jos. A. Bank and asset impairment charges, partially offset by a gain on the sale of property.
(0.2)		(17.2)	Decrease in other SG&A expenses as a percentage of sales from 17.5% in the first nine months of 2015 to 17.3% in the first nine months of 2016. Other SG&A expenses decreased $17.2 million primarily due to cost reduction initiatives and a decrease in amortization of intangible assets as a result of the impairment charges recorded in the fourth quarter of 2015.
0.2		(6.7)	Store salaries decreased $6.7 million primarily due to cost reduction initiatives yet increased as a percentage of sales from 12.6% in the first nine months of 2015 to 12.8% in the first nine months of 2016 primarily due to deleverage resulting from lower retail sales.
2.0	$	26.6	Total