<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- -----
Exchange Act of 1934 for the quarterly period ended May 2, 1998 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 0-7264
PAUL HARRIS STORES, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-0907402
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6003 Guion Rd., Indianapolis, IN 46254
(Address of principal executive offices) (Zip Code)
(317) 293-3900
(Registrant's telephone number, including area code)
Indicate by check mark 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 periods that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
---------- ---------
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 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
--------- ---------
As of June 8, 1998, 11,262,131 common shares were outstanding.
<PAGE>
INDEX
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets -- May 3, 1997,
January 31, 1998 and May 2, 1998 3
Consolidated Statements of Income -- For the thirteen
weeks ended May 3, 1997 and May 2, 1998 4
Consolidated Statements of Cash Flows -- For the
thirteen weeks ended May 3, 1997 and May 2, 1998 5
Consolidated Statements of Shareholders' Equity --
For the thirteen weeks ended May 3, 1997 and May 2, 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Part II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 10
Item 6. Exhibits and Reports on Form 8-K 12
2
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<TABLE><CAPTION>
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
May 3, January 31, May 2,
1997 1998 1998
------------- ------------- -------------
(unaudited) (unaudited)
<S> <C> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 16,713 $ 17,990 $ 17,995
Merchandise inventories 18,319 31,940 28,531
Other receivables 189 3,330 2,205
Prepaid expenses 856 1,359 1,496
Deferred income taxes - 124 90
------------- ------------- -------------
Total current assets 36,077 54,743 50,317
------------- ------------- -------------
Property, fixtures and equipment
Land, building and improvements 5,801 5,871 5,895
Store fixtures and equipment 15,240 25,838 27,900
Leasehold improvements and other 13,180 19,462 21,692
------------- ------------- -------------
34,221 51,171 55,487
Less: accumulated depreciation and amortization (14,072) (16,368) (17,823)
------------- ------------- -------------
Property, fixtures and equipment, net 20,149 34,803 37,664
Deferred income taxes - 952 82
Other assets 722 800 76
------------- ------------- -------------
$ 56,948 $ 91,298 $ 89,573
============= ============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable $ 7,470 $ 12,725 $ 9,118
Compensation and related taxes 1,756 2,780 1,702
Income taxes payable 133 377 76
Other accrued expenses 4,042 4,345 5,211
Current maturities of long-term debt 120 120 1,890
------------- ------------- -------------
Total current liabilities 13,521 20,347 18,687
------------- ------------- -------------
Long-term debt 1,890 1,810 -
Other non-current liabilities 2,551 3,137 3,248
Shareholders' equity
Preferred stock (no par value)
Authorized 1,000 shares; none issued
Common stock (no par value)
Authorized 20,000 shares; issued and outstanding
10,120, 11,256 and 11,262 respectively 1,938 17,354 17,387
Additional paid-in capital 10,707 13,904 13,933
Retained earnings 26,341 34,746 36,318
------------- ------------- -------------
Total shareholders' equity 38,986 66,004 67,638
------------- ------------- -------------
$ 56,948 $ 91,298 $ 89,573
============ ============= ============
See accompanying "Notes To Consolidated Financial Statements".
3
</TABLE>
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<TABLE><CAPTION>
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED
(in thousands, except per share data)
For the For the
thirteen thirteen
weeks ended weeks ended
May 3, May 2,
1997 1998
------------ ------------
<S> <C> <C>
Net sales $ 43,838 $ 52,278
Cost of sales, including occupancy expenses
exclusive of depreciation 28,016 31,981
------------ ------------
Gross income 15,822 20,297
Selling, general and administrative expenses 12,888 16,370
Depreciation and amortization 920 1,469
----------- -----------
Operating income 2,014 2,458
Interest income, net 210 123
------------ ------------
Income before income taxes 2,224 2,581
Provision for income taxes 900 1,009
------------ ------------
Net income $ 1,324 $ 1,572
=========== ===========
Basic earnings per share $ 0.13 $ 0.14
=========== ===========
Weighted average number of shares outstanding 10,119 11,260
=========== ===========
Diluted earnings per share $ 0.13 $ 0.14
=========== ===========
Weighted average number of shares and
share equivalents outstanding 10,559 11,554
=========== ===========
See accompanying "Notes To Consolidated Financial Statements".
4
</TABLE>
<PAGE>
<TABLE><CAPTION>
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
(in thousands)
For the For the
thirteen thirteen
weeks ended weeks ended
May 3, May 2,
1997 1998
---------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net income $ 1,324 $ 1,572
Adjustments to reconcile earnings to cash provided:
Depreciation and amortization 920 1,469
Net disposal of assets 75 -
Deferred income taxes - 159
Utilization of net operating loss carryforward 744 -
(Increase) decrease in current assets:
Merchandise inventories 1,440 3,409
Other receivables 672 1,125
Prepaid expenses (20) (137)
Increase (decrease) in current liabilities:
Accounts payable (1,045) (3,607)
Compensation and related taxes (2,018) (1,078)
Income taxes payable 96 389
Other accrued expenses 488 866
Other 180 133
---------- ----------
Net cash flow from operating activities 2,856 4,300
---------- ----------
Net cash flow for investing activities:
Additions to fixed assets (2,112) (4,317)
---------- ----------
Cash flow (for) from financing activities:
Repayment of long-term debt (40) (40)
Proceeds from issuance of common stock and related
tax benefits 8 62
---------- ----------
Net cash flow (for) from financing activities (32) 22
---------- ----------
$ 712 $ 5
========== ==========
Cash and cash equivalents
At beginning of period $ 16,001 $ 17,990
At end of period 16,713 17,995
---------- ----------
$ 712 $ 5
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for interest $ 100 $ 88
========== ==========
Cash paid during the period for income taxes $ 59 $ 427
========== ==========
See accompanying "Notes To Consolidated Financial Statements".
5
</TABLE>
<PAGE>
<TABLE><CAPTION>
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
UNAUDITED
(in thousands)
For the thirteen For the thirteen
weeks ended weeks ended
May 3, 1997 May 2, 1998
-------------------- ------------------
SHARES AMOUNT SHARES AMOUNT
------ --------- ------ ----------
<S> <C> <C> <C> <C>
PREFERRED STOCK (1,000 AUTHORIZED):
COMMON STOCK (20,000 AUTHORIZED):
Beginning balance 10,115 $ 1,930 11,256 $ 17,354
Exercise of stock options 5 8 6 33
------ ---------- ------ ---------
Ending balance 10,120 $ 1,938 11,262 $ 17,387
====== ========== ====== =========
ADDITIONAL PAID IN CAPITAL:
Beginning balance $ 9,963 $ 13,904
Tax benefit on exercise of stock options - 29
Benefit of net operating loss carryforward 744 -
---------- ---------
Ending balance $ 10,707 $ 13,933
========= =========
RETAINED EARNINGS:
Beginning balance $ 25,017 $ 34,746
Net income 1,324 1,572
---------- ---------
Ending balance $ 26,341 $ 36,318
========== =========
See accompanying "Notes To Consolidated Financial Statements".
6
</TABLE>
<PAGE>
PAUL HARRIS STORES, INC., AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Paul Harris Stores, Inc. and subsidiaries (the "Company"). The
Company is a specialty retailer of moderately priced private-label sportswear
and accessories for women.
The unaudited financial statements of the Company have been prepared in
accordance with instructions to Form 10-Q and Article 10 of Regulation S-X and
accordingly certain information and footnote disclosures have been condensed or
omitted. These condensed financial statements should be read in conjunction
with the financial statements and notes thereto included in the Company's
January 31, 1998, Annual Report on Form 10-K.
In the opinion of management, all adjustments, which include only normal
recurring adjustments, necessary to present fairly the financial position,
results of operations and cash flows at May 2, 1998, and for all other periods
presented, have been made.
The Company's fiscal year ends on the Saturday closest to January 31. All
references in this report to fiscal years are to the calendar years which such
fiscal years began. For example, fiscal 1998 refers to the fiscal year that
began on February 1, 1998, and will end on January 30, 1999.
The results of operations for the first quarter of fiscal 1998 are not
necessarily indicative of the results to be expected for all of fiscal 1998.
The Company has historically produced a majority of its income in the fourth
quarter of the fiscal year due to the stronger sales experienced during the
month of December.
2. Earnings Per Share
In fiscal 1997, the Company adopted Statement of Financial Accounting Standards
No. 128 (SFAS 128), "Earnings per Share." Prior period earnings per share
amounts have been restated in accordance with the provisions of SFAS 128. The
following table (in thousands) reconciles the numerators and denominators used
in the basic and diluted earnings per share computations:
For the thirteen weeks ended
---------------------------------------------
May 3, 1997 May 2, 1998
--------------------- --------------------
Net Income Shares Net Income Shares
---------- ------ ---------- ------
Basic earnings per share $ 1, 324 10,119 $ 1,572 10,260
Effect of dilutive options 440 294
---------- ------ ---------- ------
Diluted earning per share $ 1,324 10,559 $ 1,572 11,554
========== ====== ========== ======
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
Certain statements made in this report may constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors that may cause the actual results, performances
or achievements of the Company or the retailing industry to be materially
different from any future results, performances or achievements expressed or
implied by such forward-looking statements. Such factors include, among
others: local, regional and national economic conditions; extreme or
unseasonable weather conditions; legislation and regulatory matters affecting
payroll costs or other aspects of retailing; the ability to identify and
respond to emerging fashion trends; and governmental actions such as import or
trade restrictions.
Overview
The Company is a specialty retailer of moderately-priced causal attire and
accessories for women sold under the Paul Harris, Paul Harris Design, and Paul
Harris Denim brand names. As of May 2, 1998 the Company operated 282 stores in
29 states with the greatest concentration of stores in the Midwest.
7
<PAGE>
The Company is expanding and remodeling some of its store base. The Company's
stores currently average approximately 4,400 gross square feet and are located
primarily in regional enclosed shopping malls and, to a lesser extent, strip
shopping centers. During the first quarter of fiscal 1998, the Company opened
eight stores and closed one store. The Company plans to open 75 net new stores
in fiscal 1998. In addition, the Company plans to remodel 80 to 100 stores in
fiscal 1998 through fiscal 2000. The Company expects that new stores will be
generally located in the Company's existing markets in order to enhance
recognition of the Paul Harris name, leverage field management, facilitate
targeted marketing efforts and utilize the Company's sales team at its greatest
operational efficiency.
Results of Operations
The following discussion is based upon the unaudited financial statements
appearing elsewhere in this report. The following table sets forth certain
income statement items as a percentage of net sales.
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS AS A
PERCENTAGE OF NET SALES
Thirteen weeks ended
------------------------
May 3, May 2,
1997 1998
-------- --------
Net sales 100.0% 100.0%
Cost of sales, including occupancy
expenses exclusive of depreciation (1) 63.9% 61.2%
-------- --------
Gross income 36.1% 38.8%
Selling, general and administrative expenses (2) 29.4% 31.3%
Depreciation and amortization 2.1% 2.8%
-------- --------
Operating income 4.6% 4.7%
Interest income, net 0.5% 0.2%
-------- --------
Income before income taxes 5.1% 4.9%
Provision for income taxes 2.1% 1.9%
-------- --------
Net income 3.0% 3.0%
======== ========
- -------------------------------
(1) Occupancy expenses include store level base rent, percentage rent and real
estate taxes.
(2) Includes all store level occupancy expenses not included in cost of sales.
8
<PAGE>
The Company's net sales increased to $52.3 million in the first quarter of
fiscal 1998 from $43.8 million in the first quarter of fiscal 1997, an increase
of $8.5 million or 19.3%. The increase in net sales was primarily attributable
to a 27.6 % increase in store count. The Company operated 282 stores as of May
2, 1998, compared to 221 stores on May 3, 1997. Comparable store sales were
flat for the quarter.
Gross income increased to $20.3 million in the first quarter of fiscal 1998
from $15.8 million in the prior year, an increase of $4.5 million or 28.3%.
Gross income, as a percentage of net sales, increased to 38.8% in the first
quarter of fiscal 1998 from 36.1% of net sales in the first quarter of fiscal
1997. Gross income primarily increased due to the increase in net sales.
Gross income, as a percentage of net sales, increased as a result of a
management decision to offer fewer sales promotions for the first quarter of
fiscal 1998 compared to the first quarter of fiscal 1997.
Selling, general and administrative expenses increased to $16.4 million, or
31.3% of net sales, for the first quarter of fiscal 1998 from $12.9 million, or
29.4% of net sales, for the first quarter of fiscal 1997. The increase of $3.5
million was primarily the result of increased payroll and related benefits
costs for 61 net new stores (including the effect of the increase in minimum
wage effective September 1, 1997) and increased common area maintenance charges
in some of the newer stores.
Depreciation and amortization increased to $1.5 million for the first quarter
of fiscal 1998 from $920,000 for the first quarter of fiscal 1997, an increase
of 59.7%. The increase is a result of an approximately $21.3 million increase
in fixed assets at the end of the first quarter of fiscal 1998 compared to the
end of the first quarter of fiscal 1997. In addition, new point of sale
equipment purchased during fiscal 1997 has a shorter depreciable life than the
majority of the other assets of the Company. As a percentage of net sales,
depreciation and amortization increased to 2.8% in the first quarter of fiscal
1998 from 2.1% in the first quarter of fiscal 1997.
Operating income increased to $2.5 million in the first quarter of fiscal 1998
from $2.0 million for the first quarter of fiscal 1997, an increase of 22.0% as
a result of the factors discussed above. As a percentage of net sales,
operating income increased to 4.7% in the first quarter of fiscal 1998 from
4.6% in the first quarter of fiscal 1997.
Interest income, net, of $123,000 for the first quarter of fiscal 1998
decreased by $87,000 from interest income, net, of $210,000 for the first
quarter of fiscal 1997. The decrease was primarily due to lower average cash
balances during the first quarter of fiscal 1998 compared to the first quarter
of fiscal 1997 as a result of increased capital spending (see "Liquidity and
Capital Resources").
The provision for income taxes was $1.0 million for the first quarter of fiscal
1998 as compared to $900,000 for the first quarter of fiscal 1997, an increase
of $100,000 or 12.1%, primarily as a result of the increase in income before
income taxes. The Company's effective tax rate of 39.1% for the first quarter
of fiscal 1998 decreased from 40.5% for the first quarter of fiscal 1997
primarily as a result of lower state effective income tax rates.
As a result of the above factors, the Company's net income increased to $1.6
million for the first quarter of fiscal 1998 from $1.3 million for the first
quarter of fiscal 1997, an increase of $300,000 or 18.7%.
Seasonality
The Company's business, like that of most retailers, is subject to seasonal
influences. A significant portion of the Company's net sales and profits are
realized during the Company's fourth fiscal quarter, which includes the holiday
selling season. Results for any quarter are not necessarily indicative of the
results that may be achieved for a full fiscal year. Quarterly results may
fluctuate materially depending upon, among other things, the timing of new
store openings, net sales and profitability contributed by new stores,
increases or decreases in comparable store
9
<PAGE>
sales, adverse weather conditions, shifts in the timing of certain holidays and
promotions, and changes in the Company's merchandise mix.
Liquidity and Capital Resources
The Company's primary sources of working capital consist of internally
generated cash and its $30.0 million secured, revolving credit facility.
While this credit facility is principally intended for letters of credit for
import merchandise, the Company may make direct borrowings of up to the maximum
amount of the credit facility. The credit facility expires June 30, 1999. The
annual interest rate on borrowings outstanding under the credit facility is a
variable rate equal to the prime rate of the Company's lender plus 0.25%. In
addition, letters of credit carry an initial issuance fee plus a fee of 0.25%
of the face amount of such letters of credit. The credit facility also
contains certain financial covenants that set limits on tangible net worth and
cash flow from operations. The credit facility is secured by a security
interest in the Company's inventory, equipment, fixtures, cash and an
assignment of leases. At May 2, 1998, there were outstanding letters of credit
issued in favor of the Company under the credit facility in an aggregate amount
of $6.3 million. On the same date, there were no outstanding direct borrowings
under the credit facility.
The Company made capital expenditures of approximately $4.3 million in the
first quarter of fiscal 1998, primarily for opening new stores (approximately
$2.4 million) for remodeling existing stores (approximately $1.3 million) and
for the purchase of point of sale equipment (approximately $530,000). The
Company anticipates opening 75 net new stores in fiscal 1998. In addition, the
Company plans to remodel 80 to 100 stores in fiscal 1998 through fiscal 2000.
Net cash flow from operating activities was $4.3 million in the first quarter
of fiscal 1998 compared to $2.9 million in the first quarter of fiscal 1997.
The primary reason for the increase in net cash flow from operating activities
was a result of higher earnings before depreciation and amortization charges.
Net cash flow from financing activities aggregated $22,000 in the first quarter
of fiscal 1998.
Cash and cash equivalents were the $18.0 million both at the beginning and at
the end of the first quarter of fiscal 1998.
Management believes that cash generated from operations and borrowings under
the Company's credit facility, if any, will be sufficient to meet the Company's
working capital and capital expenditure needs in the foreseeable future.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On May 21, 1998, the Company held its annual meeting of shareholders.
The shareholders elected the following directors by the vote indicated, to
serve until the annual meeting of shareholders as indicated:
TERM
Name of Nominee FOR WITHHELD EXPIRES
--------- ---------- --------
Leslie Nathanson Juris, Ph.D 9,597,529 136,100 2001
John E. Peters 9,598,264 136,835 2001
There were 0 broker non-votes.
10
<PAGE>
In addition, the following directors continue in office until the annual
meeting of shareholders in the year indicated:
Term
Name Expires
---------------------- -------
Richard A. Feinberg, Ph.D 1999
Charlotte G. Fischer 2000
James T. Morris 2000
Sally M. Tassani 2000
First amendment to the Company's 1996 Stock Option and Incentive Plan was
approved by the following vote:
7,834,727 For 1,865,559 Against 33,978 Abstentions 100 Broker Non-votes
The Company's 1998 Cash Bonus Performance Plan for Executive Officers was
approved by the following vote:
7,709,526 For 1,772,259 Against 169,414 Abstentions 83,165 Broker Non-votes
Price Waterhouse LLP was approved as auditors for the Company for the fiscal
year 1998 by the following vote:
9,683,685 For 17,092 Against 33,587 Abstentions 0 Broker Non-votes
11
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: (10)(m) First Amendment to Rights Agreement
(10)(n) First Amendment to the 1996 Stock Option and
Incentive Plan
(10)(o) 1998 Cash Bonus Performance Plan
(27) Financial Data Schedule
(27) Restated 9 months ended November 2, 1996
(27) Restated 3 months ended May 3, 1997
(27) Restated 6 months ended August 2, 1997
(27) Restated 9 months ended November 1, 1997
(27) Restated 12 months ended February 1, 1997
(b) Reports on Form 8-K: None
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.
Paul Harris Stores, Inc.
(Registrant)
Date: June 15, 1998 /s/ John H. Boyers
----------------------
Senior Vice President -- Finance and Treasurer
(Signing on behalf of the registrant and as
principal financial officer)
12
EXHIBIT (10)(m)
FIRST AMENDMENT TO RIGHTS AGREEMENT dated as of April 15, 1998, between
PAUL HARRIS STORES, INC., an Indiana corporation (the "Company"), and AMERICAN
STOCK TRANSFER & TRUST COMPANY, as Rights Agent (the "Rights Agent").
WHEREAS, the Company and The First National Bank of Boston are parties to
a Rights Agreement dated April 10, 1997 (the "Agreement");
WHEREAS, on March 4, 1998, the Company appointed American Stock Transfer &
Trust Company as the successor Rights Agent pursuant to Section 22 of the
Agreement;
WHEREAS, Section 26 of the Agreement permits the Company and the Rights
Agent (if so instructed by the Company) to amend the Rights Agreement,
including the definition of "Acquiring Person"; and
WHEREAS, the Company has approved and authorized the execution of this
Amendment and has instructed the Rights Agent to execute this Agreement.
NOW, THEREFORE, the parties agree as follows:
1. The definition of "Acquiring Person" contained in Section 1 of the
Agreement is hereby amended as follows:
"Acquiring Person" shall mean any Person who or which, alone
or together with all Affiliates and Associates of such Person,
shall be the Beneficial Owner of more than 15% of the Common
Shares then outstanding but shall not include (a) the Company, any
subsidiary of the Company, any employee benefit or compensation
plan of the Company or of any of its subsidiaries, or any Person
holding Common Shares for or pursuant to the terms of any such
employee benefit or compensation plan, (b) any such Person who
has become and is such a Beneficial Owner solely as a result of a
transaction or series of transaction approved prior to such
transaction or series of transactions by the Board of Directors of
the Company, (c) Neumeier Investment Counsel LLC and its
Affiliates and Associates with respect to the Beneficial Ownership
of not more than 18.5% of the outstanding Common Shares
through June 15, 1998, or (d) any such Person who has become
and is such a Beneficial Owner solely because (i) of a change in
the aggregate number of Common Shares outstanding since the last
date on which such Person acquired Beneficial Ownership of any
Common Shares or (ii) it acquired such Beneficial Ownership in
the good faith belief that such acquisition would not (x) cause
such Beneficial Ownership to exceed 15% of the Common Shares then
outstanding and such Person relied in good faith in computing the
percentage of its Beneficial Ownership on publicly filed reports or
documents of the Company which are inaccurate or out-of-date or
(y) otherwise cause a Distribution Date or the adjustment provided
for in Section 11(a) to occur. Notwithstanding clause (d)(ii) of
the prior sentence, if any Person that is not an Acquiring Person
due to such clause (d)(ii) does not reduce its percentage of
Beneficial Ownership of Common Shares to 15% or less by the Close
of Business on the fifth Business Day after notice from the Company
(the date of notice being the first day) that such Person's
Beneficial Ownership of Common Shares so exceeds 15%, such Person
shall, at the end of such five Business Day period, become an
Acquiring Person (and such clause (d)(ii) shall no longer apply to
such Person). For purposes of this definition, the determination
whether any Person acted in "good faith" shall be conclusively
determined by the Board of Directors of the Company, acting by a
vote of those directors of the Company whose approval would be
required to redeem the Rights under Section 24."
2. Except as expressly amended herein, the Agreement shall remain in
full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed as of the day and year first above written.
PAUL HARRIS STORES, INC.
By: /s/ Charlotte G. Fischer
-----------------------------
Charlotte G. Fischer, Chairman
of the Board, President, and
Chief Executive Officer
AMERICAN STOCK TRANSFER & TRUST
COMPANY, as Rights Agent
By: /s/ Herbert J. Lemmer
-------------------------------
Name: Herbert J. Lemmer
Title: Vice President
EXHIBIT (10)(n)
PAUL HARRIS STORES, INC.
1996 STOCK OPTION AND INCENTIVE PLAN
FIRST AMENDMENT
This Paul Harris Stores, Inc. 1996 Stock Option and Incentive Plan (the
"Plan") is hereby amended as follows:
1. The definition of "Award" in Section 2 of the Plan is amended to
read:
"Award" - means the grant by the Committee of Incentive Stock
Options, Non-Qualified Stock Options, SARs, Restricted Stock, Performance
Shares, or any combination thereof as provided in the Plan.
2. The following new definitions are added to Section 2 of the Plan:
"Performance Cycle" -- means the period of time, designated by the
Committee, over which Performance Shares may be earned.
"Performance Shares" -- means Shares awarded pursuant to Section 9A
of the Plan upon the attainment or other satisfaction of performance goals
within the Performance Cycle.
3. Section 5(a) of the Plan is amended to read as follows:
(a) The maximum number of Shares with respect to which Awards may
be made under the Plan is 1,000,000 Shares. The Shares with respect to which
Awards may be made under the Plan may either be authorized and unissued shares
or unissued shares heretofore or hereafter reacquired and held as treasury
shares. Any Award which terminates or is surrendered for cancellation or with
respect to Restricted Stock or Performance Shares which is forfeited (so long
as any cash dividends paid on such Shares are also forfeited), may be subject
to new Awards under the Plan with respect to the number of Shares as to which
such termination or forfeiture has occurred.
4. The following new Section 9A is added to the Plan:
9A. PERFORMANCE SHARES. The Committee, in its sole discretion,
may from time to time authorize the grant of Performance Shares upon the
achievement of performance goals (which may be cumulative and/or alternative)
as may be established, in writing, by the Committee based on any one or any
combination of the following business criteria: (a) earnings per Share; (b)
return on equity; (c) return on assets; (d) comparable store sales; (e) sales
volume; (f) total sales; (g) operating income; (h) Market Value per Share; (i)
costs; (j) market shares; (k) total annual return to shareholders; (l) total
sales volume; (m) net income; or (n) earnings before interest, taxes,
depreciation and amortization. At the time as it is certified, in writing, by
the Committee that the performance goals established by the Committee have been
attained or otherwise satisfied within the Performance Cycle, the Committee
shall authorize the payment of cash in lieu of Performance Shares or the
issuance of Performance Shares registered in the name of the Participant, or a
combination of cash and Shares. The grant of an Award of Performance Shares
shall be evidenced by an award agreement containing the terms and conditions of
the Award as determined by the Committee. To the extent required under Code
Section 162(m), the business criteria under which performance goals are
determined by the Committee shall be resubmitted to shareholders for reapproval
no later than the first shareholder meeting that occurs in the fifth year
following the year in which shareholders previously approved this Section.
If the Participant ceases Continuous Service before the end of a
Performance Cycle for any reason other than retirement, disability, or death,
the Participant shall forfeit all rights with respect to any Performance Shares
that have not been earned as of the date the Participant ceases Continuous
Service. The Committee, in its sole discretion, may establish guidelines
providing that if a Participant ceases Continuous Service before the end of a
Performance Cycle by reason of retirement, disability, death, or Change in
Control, the Participant shall be entitled to a prorated payment with respect
to any Performance Shares that have not been earned as of the date the
Participant ceases Continuous Service. The Participant shall be entitled to
receive any Performance Shares earned as of the date the Participant ceases
Continuous Service if the performance goals, as established by the Committee,
have been attained or otherwise satisfied within the Performance Cycle.
Performance Shares granted under this Section 9A of the Plan shall
be treated the same as Shares of Restricted Stock for purposes of Section 12(b)
of the Plan.
5. Except as expressly amended, the provisions of the Plan shall
remain in full force and effect.
6. This Amendment shall be effective immediately upon approval by the
Company's Board. However, any Award of Performance Shares granted pursuant to
Section 9A is expressly conditioned upon the approval and adoption of this
Amendment by the shareholders at the 1998 annual meeting of shareholders or
thereafter.
Adopted by the Board
this 1st day of April, 1998
Approved by the Shareholders
this 21st day of May, 1998
EXHIBIT (10)(o)
PAUL HARRIS STORES, INC.
1998 CASH BONUS PERFORMANCE PLAN
FOR EXECUTIVE OFFICERS
Section 1. Purpose of Plan
The purpose of the Plan is to promote the success of the Company by
providing to participating executives bonus incentives that qualify as
performance-based compensation within the meaning of Section 162(m) of the
Code.
Section 2. Definitions and Terms
2.1 Accounting Terms. Except as otherwise expressly provided or the
context otherwise requires, financial and accounting terms are used as defined
for purposes of, and shall be determined in accordance with, generally accepted
accounting principles, as from time to time in effect, as applied and reflected
in the consolidated financial statements of the Company, prepared in the
ordinary course of business.
2.2 Specific Terms. The following words and phrases as used herein shall
have the following meanings unless a different meaning is plainly required by
the context:
"Annual Total Return To Shareholders" means the Company's return to
shareholders as represented by share price appreciation plus dividends paid on
one share of stock during any Year during a Performance Period.
"Base Salary" in respect of any Performance Period means the aggregate
base annualized salary of a Participant from the Company and all affiliates of
the Company at the time the Participant is selected to participate for that
Performance Period, exclusive of any commissions or other actual or imputed
income from any Company-provided benefits or perquisites, but prior to any
reductions for salary deferred pursuant to any deferred compensation plan or
for contributions to a plan qualifying under Section 401(k) of the Code or
contributions to a cafeteria plan under Section 125 of the Code.
"Base Salary Multiple" means an amount equal to two times Base Salary.
"Bonus" means a cash payment or payment opportunity as the context
requires.
"Business Criteria" means any one or any combination of Annual Total
Return to Shareholders, Comparable Store Sales, Total Sales Volume, Total
Sales, Net Income, Return on Equity, Return on Assets, EPS, or EBITDA.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Committee" means the committee of the Board of Directors or any successor
committee which will administer the Plan in accordance with Section 3 and
Section 162(m) of the Code.
"Company" means Paul Harris Stores, Inc. and its wholly-owned
subsidiaries, and any successor, whether by merger, ownership of all or
substantially all of its assets or otherwise.
"Comparable Store Sales" for any Year means the net sales from the
Company's stores that are open for more than one year.
"EBITDA" for any Year means earnings before interest, taxes, depreciation
and amortization.
"EPS" for any Year means earnings per share of the Company, as reported in
the Company's audited consolidated financial statements for the Year.
"Executive" means a key employee (including any officer) of the Company
who is (or in the opinion of the Committee may during the applicable
Performance Period become) an "executive officer" as defined in Rule 3b-7 under
the Securities Exchange Act of 1934.
"Net Income" for any Year means the consolidated net income of the
Company, as reported in the Company's audited consolidated financial statements
for the Year.
"Participant" means an Executive selected to participate in the Plan by
the Committee.
"Performance Period" means the Year or Years with respect to which the
Performance Targets are set by the Committee.
"Performance Target(s)" means the specific objective goal or goals (which
may be cumulative and/or alternative) that are timely set in writing by the
Committee for each Executive for the Performance Period in respect of any one
or more of the Business Criteria.
"Plan" means this 1998 Cash Bonus Performance Plan for Executive Officers
of the Company, as amended from time to time.
"Return on Assets" means Net Income divided by the average of the total
assets of the Company at the end of the fiscal quarters of the Year, as
reported in the Company's audited consolidated financial statements for the
Year.
"Return on Equity" means the Net Income divided by the average of the
shareholders equity of the Company at the end of each of the fiscal quarters of
the Year, as reported in the Company audited consolidated financial statements.
"Section 162(m)" means Section 162(m) of the Code, and the regulations
promulgated thereunder, all as amended from time to time.
"Total Sales" means the Company net sales for a Performance Period as
reported in the Company's consolidated audited financial statements for the
Year.
"Total Sales Volume" means the average total sales volume per Company
store for the Performance Period, as reported by the Company in its periodic
reports under the Securities Exchange Act of 1934, as amended.
"Year" means any one or more fiscal years of the Company commencing on or
after February 1, 1998 that represent(s) the applicable Performance Period and
end(s) no later than February 1, 2003.
Section 3. Administration of the Plan
3.1 The Committee. The Plan shall be administered by a Committee
consisting of at least two members of the Board of Directors of the Company,
duly authorized by the Board of Directors of the Company to administer the
Plan, who (i) are not eligible to participate in the Plan and (ii) are "outside
directors" within the meaning of Section 162(m).
3.2 Powers of the Committee. The Committee shall have the sole authority
to establish and administer the Performance Target(s) and the responsibility of
determining from among the Executives those persons who will participate in and
receive Bonuses under the Plan and, subject to Sections 4 and 5 of the Plan,
the amount of such Bonuses and shall otherwise be responsible for the
administration of the Plan, in accordance with its terms. The Committee shall
have the authority to construe and interpret the Plan (except as otherwise
provided herein) and any agreement or other document relating to any Bonus
under the Plan, may adopt rules and regulations governing the administration of
the Plan, and shall exercise all other duties and powers conferred on it by the
Plan, or which are incidental or ancillary thereto. For each Performance
Period, the Committee shall determine, at the time the Business Criteria and
the Performance Target(s) are set, those Executives who are selected as
Participants in the Plan.
3.3 Requisite Action. A majority (but not fewer than two) of the members
of the Committee shall constitute a quorum. The vote of a majority of those
present at a meeting at which a quorum is present or the unanimous written
consent of the Committee shall constitute action by the Committee.
3.4 Express Authority (and Limitations on Authority) to Change Terms and
Conditions of Bonus. Without limiting the Committee's authority under other
provisions of the Plan, but subject to any express limitations of the Plan and
Section 5.8, the Committee shall have the authority to accelerate a Bonus
(after the attainment of the applicable Performance Target(s)) and to waive
restrictive conditions for a Bonus (including any forfeiture conditions, but
not Performance Target(s)), in such circumstances as the Committee deems
appropriate. In the case of any acceleration of a Bonus after the attainment
of the applicable Performance Target(s), the amount payable shall be discounted
to its present value using an interest rate equal to Moody's Average Corporate
Bond Yield for the month preceding the month in which such acceleration occurs.
Section 4. Bonus Provisions.
4.1 Provision for Bonus. Each Participant may receive a Bonus if and
only if the Performance Target(s) established by the Committee, relative to the
applicable Business Criteria, are attained. The applicable Performance Period
and Performance Target(s) shall be determined by the Committee consistent with
the terms of the Plan and Section 162(m). Notwithstanding the fact that the
Performance Target(s) have been attained, the Company may pay a Bonus of less
than the amount determined by the formula or standard established pursuant to
Section 4.2 or may pay no Bonus at all, unless the Committee otherwise
expressly provides by written contract or other written commitment.
4.2 Selection of Performance Target(s). The specific Performance
Target(s) with respect to the Business Criteria must be established by the
Committee in advance of the deadlines applicable under Section 162(m) and while
the performance relating to the Performance Target(s) remains substantially
uncertain within the meaning of Section 162(m). At the time the Performance
Target(s) are selected, the Committee shall provide, in terms of an objective
formula or standard for each Participant, and for any person who may become a
Participant after the Performance Target(s) are set, the method of computing
the specific amount that will represent the maximum amount of Bonus payable to
the Participant if the Performance Target(s) are attained, subject to
Sections 4.1, 4.3, 4.7, 5.1 and 5.8.
4.3 Maximum Individual Bonus. Notwithstanding any other provision
hereof, no Executive shall receive a Bonus under the Plan for any Year in
excess of $2 million or, if less, his or her Base Salary Multiple. No
Executive shall receive aggregate bonuses under this Plan in excess of $8.5
million.
4.4 Selection of Participants. For each Performance Period, the
Committee shall determine, at the time the Business Criteria and the
Performance Target(s) are set, those Executives who will participate in the
Plan.
4.5 Effect of Mid-Year Commencement of Service. To the extent compatible
with Sections 4.2 and 5.8, if an Executive commences employment with the
Company after the adoption of the Plan and the Performance Target(s) are
established for a Performance Period, the Committee may grant a Bonus for that
Performance Period that is proportionately adjusted based on the period of
actual service during such Performance Period.
4.6 Changes Resulting From Material Acquisitions, Dispositions or
Recapitalizations; Extraordinary Items; Accounting Changes. Subject to
Section 5.8, if, after the Performance Target(s) are established for a
Performance Period, a change occurs in the applicable accounting principles or
practices, the amount of the Bonuses paid under this Plan for such Performance
Period shall be determined without regard to such change.
4.7 Committee Discretion to Determine Bonuses. The Committee has the
sole discretion to determine the standard or formula pursuant to which each
Participant's Bonus shall be calculated (in accordance with Section 4.2),
whether all or any portion of the amount so calculated will be paid, and the
specific amount (if any) to be paid to each Participant, subject in all cases
to the terms, conditions and limits of the Plan and of any other written
commitment authorized by the Committee. In addition to the establishment of
Performance Targets as provided in Section 4.2, the Committee may at any time
establish additional conditions and terms of payment of Bonuses (including but
not limited to the achievement of other financial, strategic or individual
goals, which may be objective or subjective) as it may deem desirable in
carrying out the purposes of the Plan and may take into account such other
factors as it deems appropriate in administering any aspect of the Plan. The
Committee may not, however, increase the maximum amount permitted to be paid to
any individual under Section 4.2 or 4.3 of the Plan or award a Bonus under this
Plan if the applicable Performance Target(s) have not been satisfied.
4.8 Committee Certification. No Executive shall receive any payment
under the Plan unless the Committee has certified, by resolution or other
appropriate action in writing that the amount thereof has been accurately
determined in accordance with the terms, conditions and limits of the Plan and
that the Performance Target(s) and any other material terms previously
established by the Committee or set forth in the Plan were in fact satisfied.
4.9 Time of Payment. Any Bonuses granted by the Committee under the Plan
shall be paid as soon as practicable following the Committee's determinations
under this Section 4 and the certification of the Committee's findings under
Section 4.8. Any such payment shall be in cash or cash equivalent, subject to
applicable withholding requirements. Notwithstanding the foregoing, the
Committee may, in its sole discretion (but subject to any prior written
commitments and to any conditions consistent with Section 5.8 that it deems
appropriate), defer the payout or vesting of any Bonus. In the case of the
delay of a Bonus otherwise payable at or after the attainment and certification
of the applicable Performance Target(s), any additional amount payable shall be
based on Moody's Average Corporate Bond Yield over the deferral period.
Section 5. General Provisions
5.1 No Right to Bonus or Continued Employment. Neither the establishment
of the Plan nor the provision for or payment of any amounts hereunder nor any
action of the Company (including, for purposes of this Section 5.1, any
predecessor or subsidiary), the Board of Directors of the Company or the
Committee in respect of the Plan, shall be held or construed to confer upon any
person any legal right to receive, or any interest in, a Bonus or any other
benefit under the Plan, or any legal right to be continued in the employ of the
Company unless otherwise provided by the Committee by contract or agreement.
The Company expressly reserves any and all rights to discharge an Executive in
its sole discretion, without liability of any person, entity or governing body
under the Plan or otherwise. Notwithstanding any other provision hereof and
notwithstanding the fact that the Performance Target(s) have been attained
and/or the individual maximum amounts pursuant to Section 4.2 have been
calculated, the Company shall have no obligation to pay any Bonus hereunder nor
to pay the maximum amount so calculated, unless the Committee otherwise
expressly provides by written contract or other written commitment.
5.2 Discretion of Company, Board of Directors and Committee. Any
decision made or action taken by the Company or by the Board of Directors of
the Company or by the Committee arising out of or in connection with the
creation, amendment, construction, administration, interpretation and effect of
the Plan shall be within the absolute discretion of such entity and shall be
conclusive and binding upon all persons. No member of the Committee shall have
any personal liability for actions taken or omitted under the Plan by the
member or any other person.
5.3 Absence of Liability. A member of the Board of Directors of the
Company or a member of the Committee of the Company or any officer of the
Company shall not be personally liable for any act or inaction hereunder,
whether of commission or omission.
5.4 No Funding of Plan. The Company shall not be required to fund or
otherwise segregate any cash or any other assets which may at any time be paid
to Participants under the Plan. The Plan shall constitute an "unfunded" plan
of the Company. The Company shall not, by any provisions of the Plan, be
deemed to be a trustee of any property, and any obligations of the Company to
any Participant under the Plan shall be those of a debtor and any rights of any
Participant or former Participant shall be limited to those of a general
unsecured creditor.
5.5 Non-Transferability of Benefits and Interests. Except as expressly
provided by the Committee, no benefit payable under the Plan shall be subject
in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance or charge, and any such attempted action shall be void and no such
benefit shall be in any manner liable for or subject to debts, contracts,
liabilities, engagements or torts of any Participant or former Participant.
This Section 5.5 shall not apply to an assignment of a contingency or payment
due after the death of the Executive to the deceased Executive's legal
representative or beneficiary.
5.6 Law to Govern. All questions pertaining to the construction,
regulation, validity and effect of the provisions of the Plan shall be
determined in accordance with the internal laws of the State of Indiana.
5.7 Non-Exclusivity. Subject to Section 5.8, the Plan does not limit the
authority of the Company, the Board of Directors of the Company or the
Committee, or any subsidiary of the Company, to grant awards or authorize any
other compensation under any other plan or authority, including, without
limitation, awards or other compensation based on the same Performance
Target(s) used under the Plan. In addition, Executives not selected to
participate in the Plan may participate in other plans of the Company.
5.8 Section 162(m) Conditions; Bifurcation of Plan. It is the intent of
the Company that the Plan and Bonuses paid hereunder satisfy and be interpreted
in a manner, that, in the case of Participants who are or may be persons whose
compensation is subject to Section 162(m), satisfies any applicable
requirements as performance-based compensation. Any provision, application or
interpretation of the Plan inconsistent with this intent to satisfy the
standards in Section 162(m) of the Code shall be disregarded. Notwithstanding
anything to the contrary in the Plan, the provisions of the Plan may at any
time be bifurcated by the Board of Directors of the Company or the Committee in
any manner so that certain provisions of the Plan or any Bonus intended (or
required in order) to satisfy the applicable requirements of Section 162(m) are
only applicable to persons whose compensation is subject to Section 162(m).
Section 6. Amendments, Suspension or Termination of Plan
Except as otherwise expressly agreed to in writing by the Committee, the Board
of Directors of the Company or the Committee may, from time to time amend,
suspend or terminate, in whole or in part, the Plan, and if suspended or
terminated, may reinstate, any or all of the provisions of the Plan; provided
no amendment, suspension or termination of the Plan shall in any manner affect
any Bonus theretofore granted pursuant to the Plan (whether or not the
applicable Performance Targets have been attained) without the consent of the
Participant to whom the Bonus was granted. Notwithstanding the foregoing, no
amendment may be effective without Board of Directors of the Company and/or
shareholder approval if such approval is necessary to comply with the
applicable rules under Section 162(m) of the Code.
Approved by the Board of Directors
on March 4, 1998.
Approved by the shareholders
on May 21, 1998.
<TABLE> <S> <C>
<ARTICLE> 5
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-Q FOR YEAR-TO-DATE ENDED May 2, 1998
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-30-1999
<PERIOD-END> MAY-02-1998
<CASH> 17,995,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 28,531,000
<CURRENT-ASSETS> 50,317,000
<PP&E> 55,487,000
<DEPRECIATION> (17,823,000)
<TOTAL-ASSETS> 89,573,000
<CURRENT-LIABILITIES> 18,687,000
<BONDS> 0
<COMMON> 17,387,000
0
0
<OTHER-SE> 50,251,000
<TOTAL-LIABILITY-AND-EQUITY> 89,573,000
<SALES> 52,278,000
<TOTAL-REVENUES> 52,278,000
<CGS> 31,981,000
<TOTAL-COSTS> 31,981,000
<OTHER-EXPENSES> 17,839,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (123,000)
<INCOME-PRETAX> 2,581,000
<INCOME-TAX> 1,009,000
<INCOME-CONTINUING> 1,572,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,572,000
<EPS-PRIMARY> 0.14
<EPS-DILUTED> 0.14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-Q FOR YEAR-TO-DATE ENDED NOVEMBER 2, 1996
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> NOV-02-1996
<CASH> 11,825,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 31,318,000
<CURRENT-ASSETS> 44,742,000
<PP&E> 31,004,000
<DEPRECIATION> (12,821,000)
<TOTAL-ASSETS> 63,744,000
<CURRENT-LIABILITIES> 22,697,000
<BONDS> 12,450,000
<COMMON> 1,804,000
0
0
<OTHER-SE> 24,346,000
<TOTAL-LIABILITY-AND-EQUITY> 63,744,000
<SALES> 121,733,000
<TOTAL-REVENUES> 121,733,000
<CGS> 78,312,000
<TOTAL-COSTS> 78,312,000
<OTHER-EXPENSES> 39,019,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,045,000
<INCOME-PRETAX> 3,397,000
<INCOME-TAX> 1,374,000
<INCOME-CONTINUING> 2,023,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,023,000
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-Q FOR YEAR-TO-DATE ENDED May 3, 1997
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> MAY-03-1997
<CASH> 16,713,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 18,319,000
<CURRENT-ASSETS> 36,077,000
<PP&E> 34,221,000
<DEPRECIATION> (14,072,000)
<TOTAL-ASSETS> 56,948,000
<CURRENT-LIABILITIES> 13,521,000
<BONDS> 1,890,000
<COMMON> 1,938,000
0
0
<OTHER-SE> 37,048,000
<TOTAL-LIABILITY-AND-EQUITY> 56,948,000
<SALES> 43,838,000
<TOTAL-REVENUES> 43,838,000
<CGS> 28,016,000
<TOTAL-COSTS> 28,016,000
<OTHER-EXPENSES> 13,808,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (210,000)
<INCOME-PRETAX> 2,224,000
<INCOME-TAX> 900,000
<INCOME-CONTINUING> 1,324,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,324,000
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-Q FOR YEAR-TO-DATE ENDED August 2, 1997
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> AUG-02-1997
<CASH> 25,876,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 23,497,000
<CURRENT-ASSETS> 51,813,000
<PP&E> 38,169,000
<DEPRECIATION> (14,959,000)
<TOTAL-ASSETS> 75,732,000
<CURRENT-LIABILITIES> 15,246,000
<BONDS> 1,870,000
<COMMON> 17,073,000
0
0
<OTHER-SE> 38,869,000
<TOTAL-LIABILITY-AND-EQUITY> 75,732,000
<SALES> 84,758,000
<TOTAL-REVENUES> 84,758,000
<CGS> 53,512,000
<TOTAL-COSTS> 53,512,000
<OTHER-EXPENSES> 27,619,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (555,000)
<INCOME-PRETAX> 4,182,000
<INCOME-TAX> 1,693,000
<INCOME-CONTINUING> 2,489,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,489,000
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CAPTION>
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-Q FOR YEAR-TO-DATE ENDED November 1, 1997
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> NOV-01-1997
<CASH> 16,049,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 41,741,000
<CURRENT-ASSETS> 60,510,000
<PP&E> 45,997,000
<DEPRECIATION> (15,313,000)
<TOTAL-ASSETS> 94,130,000
<CURRENT-LIABILITIES> 27,151,000
<BONDS> 1,840,000
<COMMON> 17,310,000
0
0
<OTHER-SE> 44,848,000
<TOTAL-LIABILITY-AND-EQUITY> 94,130,000
<SALES> 135,814,000
<TOTAL-REVENUES> 135,814,000
<CGS> 84,178,000
<TOTAL-COSTS> 84,178,000
<OTHER-EXPENSES> 43,587,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (743,000)
<INCOME-PRETAX> 8,792,000
<INCOME-TAX> 2,834,000
<INCOME-CONTINUING> 5,958,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,958,000
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.53
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<RESTATED>
<CAPTION>
FINANCIAL DATA SCHEDULE - EXHIBIT 27
PAUL HARRIS STORES, INC. AND SUBSIDIARIES
FORM 10-K FOR THE YEAR ENDED FEBRUARY 1, 1997
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> FEB-01-1997
<CASH> 16,001,000
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 19,759,000
<CURRENT-ASSETS> 37,457,000
<PP&E> 32,421,000
<DEPRECIATION> (13,315,000)
<TOTAL-ASSETS> 57,319,000
<CURRENT-LIABILITIES> 16,000,000
<BONDS> 1,930,000
<COMMON> 1,930,000
0
0
<OTHER-SE> 34,981,000
<TOTAL-LIABILITY-AND-EQUITY> 57,319,000
<SALES> 190,288,000
<TOTAL-REVENUES> 190,288,000
<CGS> 118,006,000
<TOTAL-COSTS> 118,006,000
<OTHER-EXPENSES> 56,570,000
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,035,000
<INCOME-PRETAX> 14,417,000
<INCOME-TAX> 5,598,000
<INCOME-CONTINUING> 8,819,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,819,000
<EPS-PRIMARY> 0.88
<EPS-DILUTED> 0.85
</TABLE>
