Case-in-Point, True Religion Apparel Incorporated. Let's take a look at our case company to see how a 13-week cash flow statement was used in real life. True Religion Apparel is a designer and seller of premium fashion apparel. It made its name in the Jeans Revolution in the early part of the century. The company skyrocketed to success using branding and product extension and became a retailing and wholesaling force. A decade later, the luster faded on a crowded premium jeans market, and by 2017, the company was in bankruptcy. It emerged from bankruptcy later that year only to find its problems had not really gone away. There had been tremendous pressure on all retailers from Amazon and some of the niche fashion e-commerce sites. This has driven all mall traffic way down. TRA has also faced pressure from the change in tastes away from jeans in into more athletic and leisure wear type apparel that has resulted in a loss of trendiness for the brand. Let's take a look at what is happening here for True Religion. First off, the structure of the 13-week cash flow statement is pretty much consistent anytime you look at one. We have operating receipts and disbursements, along with non-operating disbursements. This gives us a cash balance or necessary to finance. Now let's talk about what is being forecast here as this is a very unique situation. We have a struggling company in a struggling brick and mortar retail industry. Also being devastated by shutdowns from the Covid 19 lockdowns. Malls and stores are shuttered globally and for long periods of time in the US. We see the expectation that stores will start to reopen by the warmer summer months of June and July. But before that can happen, there is a massive liquidity crunch. On the operating side, we see that disbursements will rise, along with that projected reopening in the summer months. We also see a rather lumpy distribution of payments that is not uncommon in a company with both hourly and salaried employees. We will see this as well, with our next case in point. The surplus cash necessary to finance is showing significant cash needs. We can't see on this slide if they have a cash cushion or any available liquidity via their borrowing facilities but chances are they are not covered for these kinds of cash needs. TRA is going to try several things to stop the bleeding, including cutting costs and shifting sales to other outlets. Much of this will depend on availability under their current borrowings as well as the terms of those facilities. What TRA wants is to avoid bankruptcy. Let's take a look at some of the steps that TRA has taken both pre and post lockdowns. The first thing they tried to do was lower their cost of goods sold through aggressive negotiating and changing providers. TRA isn't a manufacturer of denim, they simply source the denim from other jeans manufacturers. They significantly reduced overhead costs and cleared non-selling inventory which had also been a problem for TRA. They redirected resources in support of digital commerce, wholesale commerce, and customer intelligence. This again, dovetailed with the shift away from bricks and mortar retail. They reduced wages of all non-furloughed employees earning more than 70,000 by 20%. These would be primarily the people not working in the stores. They then furloughed 90% of the workforce due to the pandemic shutdown. Companies that responded quickly to the shutdowns by furloughing or laying off employees and cutting expenses seemed to do the best. That included a significant number of employees for TRA due to the fact that they had many stores. They also sought third party financing with new lenders to relieve this liquidity crunch that we saw on the previous slide. Here we can see the entire picture without a lot of the detail, in each of the categories. Once we have net cash flow, we can begin to assess the liquidity picture. We are going to discuss how we arrived at all of these numbers, including the financing solution or proposed solution later in the course. But for now, this is just to map out our direction. We need to know two things. First, how much do we need? And secondly, how much is available? Here we can see already that despite the revolver because the net cash flow is so negative, they will need additional funds and are proposing a term loan, which we can also see here. Note, in restructurings like this and in bankruptcy, when the company becomes what is known as a debtor in possession, most banks will agree to lending funds but under a tight leash and on an as-needed basis. So if we look at the advance of term loan line, we can see that it's kind of being parceled out in increments not available all upfront. This is one of the reasons for the 13-week cash flow statement, to map out those needs. We also see that as a result of the term loan or proposed term loan, the negative cash flows are effectively remedied by the added liquidity, which along with the a ABL loan, with the asset-backed loan or revolver leaves the company with pretty decent liquidity moving through this crisis. Now let's take a look at how we got here. TRA had previously been in bankruptcy after rapid expansion followed meteoric growth, which unfortunately did not remain meteoric. Michael Buckley, who oversaw the previous growth of the company in 2006 to 2010, rejoins the company in November, 2019 to sort out some of the problems that we already mentioned regarding the product line and the retail sector. Still struggling, TRA went to existing lenders, primarily private equity and private debt groups to arrange a new loan just prior to the COVID 19 lockdowns, in the US at least. Stalled negotiations coupled with those lockdowns, TRA realized at this point that there was really no way out of this and they sought court protection under Chapter 11. They developed a 13-week cashflow to demonstrate the current needs for debtor in possession financing and the ability to maintain liquidity after the capital infusion once stores begin reopening.