FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 (Mark One) [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934. For the quarterly period ended October 28, 2000 ----------------------- OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended ____________to_________________ ______________________________________________________________ Commission File No. 0-20234 ------- Today's Man, Inc. -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) Pennsylvania 23-1743137 ------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 835 Lancer Drive, Moorestown, NJ 08057 -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number 856-235-5656 ---------------------------- Not Applicable -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. YES X NO . --- --- APPLICABLE ONLY TO REGISTRANTS INVOLVED IN A BANKRUPTCY DURING THE PRECEDING FIVE YEARS Indicate by check mark whether the Registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. YES X NO . --- --- 27,040,725 common shares were outstanding as of December 8, 2000. TODAY'S MAN INC. INDEX

PAGE ---- PART I. FINANCIAL INFORMATION: Item 1. Condensed Consolidated Financial Statements - Unaudited Consolidated Balance Sheets ~~July~~October 2928, 2000 and January 29, 2000....................................................~~...~~1 Consolidated Statements of Operations Thirteen weeks ended ~~July~~October 2928, 2000 and ~~July~~October 3130, 1999...............................~~......~~2 Consolidated Statements of Operations ~~Twenty~~Thirty-~~six~~nine weeks ended ~~July~~October 2928, 2000 and ~~July~~October 3130, 1999............................~~.......~~3 Consolidated Statements of Cash Flows ~~Twenty~~Thirty-~~six~~nine weeks ended ~~July~~October 2928, 2000 and ~~July~~October 3130, 1999............................~~.......~~4 Notes to Consolidated Financial Statements.............................................5-76 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.............................................................87-1110 Item 3. Quantitative and Qualitative Disclosures about Market Risks.............................1110 PART II. OTHER INFORMATION Item 1. Legal Proceedings......................................................................1211 Item 2. Changes in Securities and Use of Proceeds..............................................1211 Item 3. Defaults Upon Senior Securities........................................................1211 Item 4. Submission of Matters to a Vote of Security Holders....................................1211 Item 5. Other Information......................................................................1211 Item 6. Exhibits and Reports on Form 8-K.......................................................1211 Signatures......................................................................................1312

TODAY'S MAN, INC. CONSOLIDATED BALANCE SHEETS

~~July~~October 2928, January 29, 2000 2000 --------- -- --------- ~~2000 2000~~ ---- ~~-----~~ (Unaudited) ASSETS Current assets: Cash and cash equivalents $ ~~126~~134,~~200~~600 $ 392,700 Due from credit card companies and other receivables, net 1,~~951~~809,~~300~~800 1,692,900 Inventory 3438,~~610~~113,~~000~~200 39,334,700 Prepaid expenses and other current assets 2,~~013~~404,~~900~~300 2,270,700 Prepaid inventory purchases 1480,~~013,600~~000 1,847,900 -----------~~--------~~ -----------~~---------~~ Total current assets 3942,~~715~~941,~~000~~900 45,538,900 Property and equipment, less accumulated depreciation and amortization 30$29,~~367~~775,~~500~~700 $34,235,300 Loans to shareholders - 228,400 Rental deposits and other noncurrent assets 23,~~563~~036,~~100~~600 1,864,600 -----------~~--------~~ -----------~~---------~~ $7275,~~645~~754,~~600~~200 $81,867,200 ===========~~========~~ ===========~~=========~~ LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 89,~~788~~504,~~000~~400 $ 9,014,700 Accrued expenses and other current liabilities 56,~~527~~553,~~900~~700 6,408,300 Current maturities of capital lease obligations 401,600 401,600 -----------~~--------~~ -----------~~--------~~ Total current liabilities 1416,~~717~~459,~~500~~700 15,824,600 Capital lease obligations, less current maturities ~~583~~471,700 936,600 Deferred rent and other 4,~~122~~033,~~100~~200 4,559,800 ~~Obligation~~Obligations under revolving credit facility 2125,~~487~~423,~~700~~600 21,145,100 -----------~~--------~~ -----------~~--------~~ 4046,~~911~~388,~~000~~200 42,466,100 Shareholders' equity: Preferred stock, no par value, 5,000,000 shares authorized, none issued - - Common stock, no par value, 100,000,000 shares authorized, 27,040,725 and 27,040,725 shares issued and outstanding at ~~July~~October 2928, 2000 and January 29, 2000, respectively 48,513,700 48,513,700 Accumulated deficit (1619,~~779~~147,~~100~~700) (9,112,600) -----------~~--------~~ -----------~~--------~~ Total shareholders' equity 3129,~~734~~366,~~600~~000 39,401,100 -----------~~--------~~ -----------~~--------~~ $7275,~~645~~754,~~600~~200 $81,867,200 ===========~~========~~ ===========~~========~~

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

FOR THIRTEEN WEEKS ENDED ~~July~~October 2928, ~~July~~October 3130, ~~--------- --------~~ 2000 1999 ---- ---- Net sales $ 4138,~~617~~227,~~300~~200 $4540,~~470~~214,700 Cost of goods sold 2622,~~390~~957,~~600~~000 2924,~~112~~301,~~700~~900 -----------~~---------~~ ----------~~---------~~ Gross profit 15,~~226~~270,~~700~~200 1615,~~358~~912,~~000~~800 Selling, general and administrative expenses 1716,~~033~~967,800 1718,~~590~~079,~~500~~600 -----------~~---------~~ ----------~~---------~~ Loss from operations (1,~~807~~697,~~100~~600) (12,~~232~~166,~~500~~800) Interest expense and other income, net ~~626~~671,000 ~~287~~364,~~900~~400 -----------~~---------~~ -----------~~--------~~ Loss before income taxes (2,~~433~~368,~~100~~600) (12,~~520~~531,~~400~~200) Income tax benefit - (~~559~~936,~~000~~700) -----------~~---------~~ -----------~~--------~~ Net loss $ (2,~~433~~368,~~100~~600) $ (~~961~~1,~~400~~594,500) ===========~~=========~~ ===========~~========~~ Loss per share - basic and diluted $ (0.09) $ (0.0406) =========== =========== Weighted average shares outstanding - basic and diluted 27,040,725 27,014,~~533 ==================== ===================~~635

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

FOR ~~TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED ~~July~~October 2928, ~~July~~October 3130, ~~--------- --------~~ 2000 1999 ---- ---- Net sales $82120,~~688~~915,~~700~~900 $88128,~~247~~462,~~900~~600 Cost of goods sold 5174,~~547~~504,800 5579,~~641~~942,~~000~~900 ------------~~-------~~ ------------~~------~~ Gross profit 3146,~~140~~411,~~900~~100 3248,~~606~~519,~~900~~700 Selling, general and administrative expenses (includes $3,987,600 in asset impairment charges and lease termination costs in fiscal 2000) 3754,~~575~~543,~~700~~500 3452,~~300~~379,~~000~~600 ------------~~-------~~ ------------~~------~~ Loss from operations (68,~~434~~132,~~800~~400) (13,~~693~~859,~~100~~900) Interest expense and other income, net 1,~~231~~902,700 ~~534~~899,~~700~~100 ------------~~-------~~ ------------~~------~~ Loss before income taxes (710,~~666~~035,~~500~~100) (24,~~227~~759,~~800~~000) Income tax benefit - (~~762~~1,~~500~~699,200) ------------~~-------~~ ------------~~------~~ Net loss $ (710,~~666~~035,~~500~~100) $ (13,~~465~~059,~~300~~800) ============~~=======~~ ============~~======~~ Loss per share - basic and ~~assuming~~diluted ~~dilution~~ $ (0.2837) $ (0.0511) =============~~======~~ ============~~======~~ Weighted average shares outstanding - basic and ~~assuming~~diluted ~~dilution~~ 27,040,725 27,014,~~533~~601

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

FOR ~~TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED ~~July~~October 2928, ~~July~~October 3130, ~~--------- --------~~ 2000 1999 ---- ---- Operating activities Net loss $ (710,~~666~~035,~~500~~100) $ (13,~~465~~059,~~300~~800) Adjustments to reconcile net loss to cash ~~provided by (~~used in) operating activities: Depreciation and amortization 23,~~043~~048,~~200~~500 12,~~798~~685,~~100~~600 Reserve for asset impairment charges and lease termination costs 3,987,600 - Deferred credits (~~437~~526,~~700~~600) (~~112~~169,~~500~~400) Reserve of loans to shareholders 228,400 - Changes in operating assets and liabilities: Increase in receivables (~~258~~116,~~400~~900) (~~503~~641,~~100~~700) Decrease (increase) in inventory 41,~~724~~221,~~700~~500 ~~575~~(11,~~600~~227,200) Decrease in prepaid expenses and other current assets and prepaid inventory purchases 1,~~091~~234,~~100~~300 ~~790~~479,~~700~~100 Increase in rental deposits and other non current assets (~~698~~1,~~500~~172,000) (91179,~~500~~700) (Decrease) increase in payables and accrued expenses (21,~~878~~136,~~200~~000) (31,~~670~~467,~~100)~~700 ------------~~--------~~ -------------~~------~~ Total adjustments 76,~~802~~768,~~200~~800 (17,~~212~~585,~~800~~600) ------------~~--------~~ -------------~~------~~ Net cash ~~provided by (~~used in) operating activities ~~135~~(3,~~700~~266,300) (210,~~678~~645,~~100~~400) ~~Cash~~Investing ~~flow used in investing~~ activities: Capital expenditures (~~391~~805,~~900~~400) (~~539~~2,~~600~~333,400) Fixtures and equipment in process - (1,~~782~~770,000) ------------~~--------~~ -------------~~------~~ Net cash used in investing activities (~~391~~805,~~900~~400) (24,~~321~~103,~~600~~400) ~~Cash~~Financing ~~flow (used in) provided by financing~~ activities: Repayment of capital leases (~~352~~464,900) (~~513~~784,~~500~~300) Borrowings under revolving credit facility 78118,~~309~~317,~~500~~800 83130,~~987~~775,800 Repayment of revolving credit facility (77114,~~966~~039,~~900~~300) (79116,~~425~~298,~~200~~000) Proceeds from exercise of stock options and common stock purchase warrants - 400 ------------~~--------~~ -------------~~------~~ Net cash ~~(used in)~~ provided by financing activities ~~(10~~3,~~300)~~813,600 413,~~049~~693,~~500~~900 Net decrease in cash and cash equivalents (~~266~~258,~~500~~100) (~~950~~1,~~200~~054,900) Cash and cash equivalents at beginning of period 392,700 1,181,100 ------------~~--------~~ -------------~~------~~ Cash and cash equivalents at end of period $ ~~126~~134,~~200~~600 $ ~~230~~126,~~900~~200 ============~~========~~ =============~~======~~

See accompanying notes. 4 TODAY'S MAN, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Financial Statement Presentation The accompanying unaudited consolidated financial statements, which include the accounts of the Company and its wholly owned subsidiaries, have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. All significant intercompany transactions and accounts have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring accruals and the asset impairment charges and lease termination costs disclosed in Note 5) considered necessary for a fair presentation have been included. Due to the seasonal nature of the Company's sales, operating results for the interim period are not necessarily indicative of results that may be expected for the fiscal year ending February 3, 2001. For further information, refer to the consolidated financial statements and footnotes thereto which are included in the Company's Annual Report on Form 10-K for the fiscal year ended January 29, 2000. 2. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. 3. Earnings (Loss) per Common Share Earnings (loss) per share is calculated following Financial Accounting Standards Board Statement No. 128 Earnings per Share. Statement 128 requires companies to present basic and diluted earnings per share. Basic earnings per share excludes any dilutive effect of outstanding stock options whereas diluted earnings per share includes the effect of such items. There is no difference between basic and diluted earnings per share for the current period because the effect of the Company's common share equivalents would be anti-dilutive. 4. Recent Accounting Pronouncements In December 1999, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements", which effectively changes previous guidance related to revenue recognition and the recording of license business revenues for retail companies. As of the thirteen weeks ended April 29, 2000, the Company changed its method of recording licensed shoe department sales. This change reduces reported sales and reported expenses, but has no impact on operating or net income. Net licensed shoe department sales were $336,000 and $411,600 in the thirteen weeks ended October 28, 2000 and October 30, 1999 respectively, and $1,230,000 and $1,305,300 in the thirty-nine weeks ended October 28, 2000 and October 30, 1999, respectively. Prior year sales have been reduced by $1,876,200 for the thirteen weeks ended October 30, 1999 and $6,030,600 for the thirty-nine weeks ended October 30, 1999 with a corresponding reduction in cost of sales. The Company will adopt the remaining provisions of SAB 101 as of the fiscal quarter ended February 3, 2001. The Company is currently in the process of evaluating the impact that SAB 101 will have on its consolidated financial position and results of operations. In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities." This statement will be adopted effective February 4, 2001, but it is not expected to materially impact the Company's financial statements. 5 TODAY'S MAN, INC. NOTES TO FINANCIAL STATEMENTS (Continued) (Unaudited) 5. Store Closings During the thirteen weeks ended April 29, 2000, the Company recorded a charge to operations of approximately $4.0 million relating to the announced closing of three underperforming store locations. The Company recognized $1,990,500 in fixed asset write-offs and $1,997,100 in lease termination costs related to the closing of these three underperforming store locations. The closing of the Manhasset, New York store was completed in fiscal June 2000, and the closing of the Norwalk, CT store was completed in fiscal November 2000. The Chestnut Street, Philadelphia, PA location is expected to close in the fourth quarter of fiscal 2000. The Company has included $1,997,100 in accrued expenses and other current liabilities related to the lease termination costs. The Chestnut Street, Philadelphia, PA and the Norwalk, CT stores generated sales of $2.3 million and $1.7 million for the thirteen weeks ended October 28,2000 and October 30, 1999, respectively, and $6.5 million and $5.6 million in the thirty-nine weeks ended October 28,2000 and October 30, 1999, respectively. The Manhasset, NY store generated sales of $1.0 million in the thirteen weeks ended October 30, 1999, and $3.1 million in the thirty-nine weeks ended October 30, 1999. 6 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Investment Considerations In analyzing whether to make, or to continue, an investment in the Company, investors should consider, among other factors, certain investment considerations more particularly described in "Item 1: Business - Investment Considerations" in the Company's Annual Report on Form 10-K for the year ended January 29, 2000, a copy of which can be obtained, without charge except for exhibits to the Report, upon written request to Mr. Frank E. Johnson, Executive Vice President and Chief Financial Officer, Today's Man, Inc., 835 Lancer Drive, Moorestown, New Jersey 08057. Safe Harbor Statement under Private Securities Litigation Reform Act of 1995 Certain statements in this Form 10-Q which are not historical facts, including, without limitation, statements as to the Company's plans for 2000, e-commerce strategy, or as to management's beliefs, expectations, or opinions, are forward looking statements that involve risks and uncertainties and are subject to change at any time. Certain factors, including, without limitation the risk that the assumptions upon which the forward-looking statements are based ultimately may prove incorrect, risks relating to the Company's growth strategy, small store base and geographic concentration, the declining unit sales of men's tailored clothing, seasonality and global economic conditions, and the other risks detailed from time to time in the Company's filings with the Securities and Exchange Commission, including, without limitation, its Annual Report on Form 10-K, can cause actual results and developments to be materially different from those expressed or implied by such forward-looking statements. See "Investment Considerations" above, for instructions on how to receive a copy of the Company's Annual Report. RESULTS OF OPERATIONS: ---------------------- The following table sets forth, as a percentage of net sales, certain items appearing in the consolidated statements of operations for the thirteen week and thirty-nine week periods ended October 28, 2000 and October 30, 1999, respectively.

PERCENTAGE OF NET SALES THIRTEEN ~~AND TWENTY~~THIRTY-~~SIX~~NINE WEEKS ENDED ~~July~~WEEKS 29ENDED Oct. 28, ~~July~~Oct. 3130, ~~July~~Oct. 2928, ~~July~~Oct. 3130, 2000 1999 2000 1999 ----------------------------- ----------------------------- Net sales 100.0% 100.0% 100.0% 100.0% Cost of goods sold 6360.0 60.4 6461.06 62.32 ~~63.1~~ ----------------------------- ----------------------------- Gross profit 3640.0 39.6 3638.04 37.78 ~~36.9~~ Selling, general and administrative expenses 4044.94 3845.70 45.41 3840.98 ----------------------------- ----------------------------- Loss from operations (4.34) (25.74) (76.7) (23.0) Interest expense and other income, net 1.58 0.69 1.56 0.67 ----------------------------- ----------------------------- Loss before income taxes (56.82) (36.3) (98.23) (23.67) Income ~~taxes~~tax (benefit) 0.0 (1.2.3) 0.0 (01.93) ----------------------------- ----------------------------- Net loss (56.82)% (24.10)% (98.23)% (12.74)% ============================= =============================

7 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) THIRTEEN WEEKS ENDED OCTOBER 28, 2000 AND OCTOBER 30, 1999: ----------------------------------------------------------- NET SALES. Net sales decreased $1,987,500 or 4.9% in the third quarter of fiscal 2000 compared to the year ago period. Comparative store sales decreased 6.3%. The decrease in net sales was a result of the decline in foot traffic the Company has experienced. There were 28 and 29 superstores in operation at October 28, 2000 and October 30, 1999, respectively. GROSS PROFIT. Gross profit as a percentage of net sales increased to 40.0% for the third quarter of 2000 compared to 39.6% for the third quarter of 1999. The increase in the gross profit percentage was a result of the Company's strategy of higher initial mark-ups on its inventory purchases. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses decreased $1,111,800 or 6.1% in the third quarter of fiscal 2000, and decreased as a percentage of sales to 44.4% from 45.0% in the third quarter of fiscal 1999. The dollar decrease was primarily due to a reduction in advertising expenses of $895,100. INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and other expense, net increased by $306,600 for the third quarter of fiscal 2000. The increase in interest expense was attributable to the increased amount of average borrowings outstanding ($22,368,200 in the third quarter of fiscal 2000 versus $18,505,700 in the third quarter of fiscal 1999) due to the decline in sales revenues as discussed above, as well as the increase in the interest rate charged (10.25% as of October 28,2000 versus 8.25% as of October 30, 1999) under the Company's Amended Loan and Security Agreement with Mellon Bank. As a result of revolving credit borrowings, the Company recorded interest expense of $671,000 during the quarter ended October 28, 2000. THIRTY-NINE WEEKS ENDED OCTOBER 28, 2000 AND OCTOBER 30, 1999: -------------------------------------------------------------- NET SALES. Net sales decreased $7,546,700 or 5.9% for the first nine months of fiscal 2000 compared to the year ago period. Comparative store sales decreased 9.4%. The decrease in net sales was a result of the decline in foot traffic the Company experienced. There were 28 and 29 superstores in operation at October 28, 2000 and October 30, 1999, respectively. GROSS PROFIT. Gross profit as a percentage of net sales increased to 38.4% for the first nine months of 2000 compared to 37.8% for the first nine months of 1999. The increase in gross profit percentage was a result of the Company's strategy of higher initial mark-ups on its inventory purchases. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES. Selling, general and administrative expenses increased $2,163,900 or 4.1% in the first nine months of fiscal 2000, and increased as a percentage of sales to 45.1% from 40.8% in the third quarter of fiscal 1999. The dollar increase was due to the charge taken in the first quarter of fiscal 2000 related to the announced planned closing of three underperforming store locations (two of which have been completed as of November, 2000). The Company recognized $1,990,500 in fixed asset write-offs and $1,997,100 in lease termination costs related to the fiscal 2000 store closings as discussed below. Partially offsetting this increase was a decrease in advertising expenses of $1,824,300. INTEREST EXPENSE AND OTHER INCOME, NET. Interest expense, interest income and other expense, net increased by $1,003,600 from the first nine months of fiscal 1999. The increase in interest expense is attributable the increased amount of average borrowings outstanding ($22,727,200 for the nine month period ended October 28, 2000 versus $15,118,900 for the nine month period ended October 30, 1999) due to the decline in sales revenues as discussed above, as well as the increase in the interest rate charged (10.25% as of October 28, 2000 versus 8.25% as of October 30, 1999) under the 8 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) Company's Amended Loan and Security Agreement with Mellon Bank. As a result of revolving credit borrowings, the Company recorded interest expense of $1,902,700 during the nine month period ended October 28, 2000. LIQUIDITY AND CAPITAL RESOURCES ------------------------------- The Company's primary sources of working capital are cash flow from operations and borrowings under the revolving credit facility. At October 28, 2000, the Company had working capital of $26,482,200 as compared with $29,714,300 at January 29, 2000. In December 1998, the Company entered into a Loan and Security Agreement with Mellon Bank, N.A., ("Mellon"). Proceeds from this loan were used to refinance the Company's previous revolving credit facility and term loan from Foothill Capital Corporation. The agreement, as amended, provides for a $35.0 million revolving credit facility (which reduces to $30.0 million on November 30, 2000) with a $15.0 million sublimit for letters of credit. The facility bears interest at 0.75% per annum above Mellon Bank's prime rate (prime was 9.50% at October 28, 2000) and expires on March 15, 2002. Availability under the revolver is determined by a formula based on inventory and credit card receivables, less applicable reserves. The amended agreement provides for an over-advance facility of $4.5 million above the calculated borrowing base, which is reduced to $4.0 million on October 16, 2000 and $2.75 million on November 16, 2000 and expires on December 15, 2000. The agreement contains financial covenants including tangible net worth, indebtedness to tangible net worth, maximum net loss per month and limitations on new store openings and capital expenditures as well as restrictions on the payment of dividends. The Company granted Mellon a lien on its tangible and intangible assets to secure this facility. Additionally, Mr. David Feld, Chairman of the Board, has provided additional collateral to secure the credit facility. The agreement also provides that the Company must pay a termination fee of $1,050,000 if the facility is terminated on or before March 14, 2002. On November 14, 2000, the Company and Mellon bank entered into Amendment No. 7 to the revolving credit facility. The agreement amends the credit facility to extend the expiration date of the over-advance facility of $4,500,000 from October 15, 2000 to November 30, 2000. The over-advance is reduced to $4,250,000 on December 1, 2000, $3,500,000 on December 8, 2000, $3,000,000 on December 15, 2000, $1,500,000 on December 22, 2000 and expires on December 29, 2000. The outstanding revolving credit facility usage (including permitted out-of-formula advances) may not exceed $35,000,000 at any time through November 29, 2000 or $30,000,000 at any time after November 29, 2000. The Company announced on March 15, 2000 that it had engaged Wasserstein Perella & Co., Inc., an investment-banking firm, to enhance the Company's shareholder value. This may take the form of an equity investment in the Company or debt. In April 2000, the Company decided to close three under-performing stores, including one store located in a building owned by Mr. David Feld, Chairman of the Board. The planned closing of the three stores resulted in a charge to operations in the first quarter of fiscal 2000 of $4.0 million consisting of $1,990,500 for the write-off of furniture and fixtures and $1,997,100 for lease termination costs. The lease termination costs are expected to be incurred ratably from the date of the store closings through the end of the anticipated lease terms estimated to be approximately 18 months. The Chestnut Street, Philadelphia, PA and the Norwalk, CT stores generated sales of $2.3 million and $1.7 million and cost of sales of $1.3 million and $1.1 million in the quarters ended October 28, 2000 and October 30, 1999, 9 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued) respectively. The three stores, which generated sales of $12,590,000 and cost of sales of $8,156,000 in fiscal 1999, are expected to be closed by the end of January, 2001. The closing of the Manhasset, New York store was completed in the second quarter of fiscal 2000 and the closing of the Norwalk, Connecticut store was completed in the fourth quarter of fiscal 2000. The closing of the Philadelphia, Pennsylvania store is expected to be completed in the fourth quarter of fiscal 2000. The estimated lease termination costs may increase if a sub-lessor is not obtained within 18 months of the store closings. Also, the Company may incur additional costs related to the store closings, such as employee termination costs; however, these amounts are not determinable at this time. The Company has been substantially dependent upon borrowings under its credit facility to finance its operations and received an amended credit facility from Mellon, which allows the Company additional liquidity through an over-advance facility through December 29, 2000 as discussed above. Additionally, the Company is in the process of implementing a plan to reverse the trend of losses noted above. Management's plans implemented thus far, as well as actions initiated that will continue into fiscal 2001, include the execution of the amended credit facility, a layoff of non-operating personnel in January 2000, the reduction in advertising spending and the focus on the Company's traditional advertising approach, and the announcement of the closing of three under-performing stores in May 2000. Management believes the Company's cash requirements in 2000 will be generated by operations and borrowings on the Company's credit facility. Management also believes that the actions initiated and its 2000 plans will result in the successful funding of its working capital and cash requirements while enabling the Company to meet its financial covenants under the credit facility. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS -------------------------------------------------------------------- The Company is a retail company doing business within the United States. Its primary market risk is exposure to interest rates fluctuations on its debt instruments. The Company's bank revolving credit facility bears interest at variable rates. The variable interest rate is the rate in effect at the quarter ended October 28, 2000, and it fluctuates with the lending bank's prime rate. The change in interest expense of the Company's bank revolving credit facility resulting from a hypothetical 2% increase in interest rates would not be material. 10 PART II - OTHER INFORMATION Item 1. Legal Proceedings ----------------- None - not applicable Item 2. Changes in Securities and Use of Proceeds ----------------------------------------- None - not applicable Item 3. Defaults Upon Senior Securities ------------------------------- None - not applicable Item 4. Submission of Matters to a Vote of Shareholders ----------------------------------------------- None - not applicable Item 5. Other Information ----------------- None - not applicable Item 6. Exhibits and Reports on Form 8-K -------------------------------- Exhibits None - not applicable Reports on Form 8-K None - not applicable 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. TODAY'S MAN, INC. (Registrant) Date: December 8, 2000 /s/David Feld ------------------------------------- David Feld Chairman of the Board Date: December 8, 2000 /s/Bruce Weitz ------------------------------------- Bruce Weitz President and Chief Executive Officer Date: December 8, 2000 /s/Frank E. Johnson ------------------------------------- Frank E. Johnson Executive Vice President, Chief Financial Officer and Treasurer Principal Financial Officer Date: December 8, 2000 /s/Barry S. Pine ------------------------------------- Barry S. Pine Vice President and Controller Principal Accounting Officer 12

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