UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-Q
Washington, D.C. 20549
| x | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 1996
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 0-15385
ONE PRICE CLOTHING STORES, INC.
(Exact name of Registrant as specified in its Charter)
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DELAWARE 57-0779028
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Highway 290, Commerce Park
1875 East Main Street
Duncan, South Carolina 29334
(Address of principal executive offices) (Zip Code)
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Registrant's telephone number, including area code: (864) 433-8888
---------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of the Registrant's Common Stock outstanding as of August
30, 1996 was 10,435,531.
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INDEX
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets -- August 3, 1996, December
30, 1995 and July 29, 1995
Condensed consolidated statements of income -- Three-month and
six-month periods ended August 3, 1996 and July 29, 1995
Condensed consolidated statements of cash flows -- Six-month
periods ended August 3, 1996 and July 29, 1995
Notes to unaudited condensed consolidated financial statements -- August 3, 1996
Independent accountants' report on review of interim financial information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
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SIGNATURES
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PART I. FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS
One Price Clothing Stores, Inc. and Subsidiary
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August 3, December 30, July 29,
1996 1995 1995
(Unaudited) (1) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 96,000 $ 668,000 $ 421,000
Merchandise inventories 37,310,000 28,961,000 40,355,000
Prepaid Federal and state income taxes 2,778,000 1,363,000 648,000
Deferred income taxes 1,992,000 2,093,000 2,316,000
Other current assets 5,464,000 2,865,000 4,930,000
------------- ------------- -------------
TOTAL CURRENT ASSETS 47,640,000 35,950,000 48,670,000
------------ ------------ ------------
PROPERTY & EQUIPMENT, at cost 57,439,000 58,759,000 56,560,000
Less accumulated depreciation 19,701,000 17,575,000 15,606,000
------------ ------------- -------------
37,738,000 41,184,000 40,954,000
------------ ------------ ------------
OTHER ASSETS 2,970,000 2,230,000 1,412,000
------------- ------------- -------------
$88,348,000 $79,364,000 $91,036,000
=========== =========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $18,376,000 $10,298,000 $13,884,000
Note payable 3,014,000 412,000 10,762,000
Current portion of long-term debt 1,579,000 921,000 1,500,000
Sundry liabilities 7,594,000 6,963,000 6,513,000
------------- ------------- -------------
TOTAL CURRENT LIABILITIES 30,563,000 18,594,000 32,659,000
------------ ------------ ------------
LONG-TERM DEBT 5,658,000 6,579,000 4,500,000
------------- ------------- -------------
DEFERRED INCOME TAXES AND OTHER
LIABILITIES 2,341,000 2,310,000 1,952,000
------------- ------------- -------------
SHAREHOLDERS' EQUITY
Preferred Stock, par value $0.01
--authorized and unissued 500,000 shares
Common Stock, par value $0.01
--authorized 35,000,000 shares,
issued and outstanding 10,435,531,
10,335,031 and 10,311,781 shares 104,000 103,000 103,000
Additional paid-in capital 11,453,000 11,002,000 10,928,000
Retained earnings 38,229,000 40,776,000 40,894,000
------------ ------------ ------------
49,786,000 51,881,000 51,925,000
------------ ------------ ------------
$88,348,000 $79,364,000 $91,036,000
=========== =========== ===========
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(1) Derived from audited financial statements.
See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Three-Month Period Ended Six-Month Period Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
---------------- ------------- ----------------- ----------
NET SALES $87,450,000 $86,157,000 $163,744,000 $153,879,000
Cost of goods sold, distribution
and buying costs 56,230,000 55,016,000 103,797,000 98,011,000
------------ ------------ ------------- --------------
GROSS MARGIN 31,220,000 31,141,000 59,947,000 55,868,000
------------ ------------ -------------- --------------
Selling, general and
administrative expenses 18,553,000 18,839,000 36,945,000 35,189,000
Store rent and related expenses 6,289,000 6,196,000 12,837,000 12,209,000
Depreciation and
amortization expense 1,159,000 1,038,000 2,348,000 2,020,000
Interest expense 437,000 269,000 998,000 570,000
-------------- -------------- ---------------- ----------------
26,438,000 26,342,000 53,128,000 49,988,000
Interest income 67,000 15,000 78,000 26,000
--------------- --------------- ----------------- -----------------
NET EXPENSES 26,371,000 26,327,000 53,050,000 49,962,000
------------ ------------ -------------- --------------
INCOME BEFORE
INCOME TAXES 4,849,000 4,814,000 6,897,000 5,906,000
Provision for income taxes 1,909,000 1,878,000 2,720,000 2,303,000
------------- ------------- --------------- ----------------
NET INCOME $ 2,940,000 $ 2,936,000 $ 4,177,000 $ 3,603,000
============ ============ ============== ===============
Net income per common
share -- Note B $ 0.28 $ 0.28 $ 0.40 $ 0.35
================ ================ ================== =================
Weighted average number of
common shares outstanding
-- Note B 10,444,250 10,340,116 10,393,778 10,358,307
============ ============ ============== ==============
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See notes to unaudited condensed consolidated financial statements
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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiary
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Six-Month Period Ended
August 3, July 29,
1996 1995
------------------- ----------
OPERATING ACTIVITIES:
Net income $4,177,000 $ 3,603,000
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization 2,348,000 2,020,000
Decrease (increase) in other noncurrent assets 294,000 (136,000)
Deferred income tax provision (benefit) 707,000 (451,000)
Loss on disposal of property and equipment 325,000 348,000
Changes in operating assets and liabilities 1,441,000 (8,903,000)
----------- -------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 9,292,000 (3,519,000)
----------- -------------
INVESTING ACTIVITIES:
Purchases of property and equipment (1,039,000) (6,587,000)
Purchases of other noncurrent assets (218,000) (22,000)
------------ ---------------
NET CASH USED IN INVESTING ACTIVITIES (1,257,000) (6,609,000)
----------- ------------
FINANCING ACTIVITIES:
Net (repayments of) borrowings from revolving credit facility (9,801,000) 2,698,000
Proceeds from issuance of long-term debt 7,500,000 6,000,000
Repayment of long-term debt (5,763,000) --
Debt financing costs incurred (710,000) (60,000)
Decrease in amount due to related party (21,000) (20,000)
Proceeds from exercise of Common Stock options 452,000 26,000
------------ ---------------
NET CASH (USED IN) PROVIDED BY
FINANCING ACTIVITIES (8,343,000) 8,644,000
----------- -------------
DECREASE IN CASH AND CASH EQUIVALENTS (308,000) (1,484,000)
Cash and cash equivalents at beginning of period 404,000 1,905,000
------------ -------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 96,000 $ 421,000
============ =============
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 788,000 $ 541,000
Income taxes paid 63,000 393,000
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See notes to unaudited condensed consolidated financial statements
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NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
One Price Clothing Stores, Inc. and Subsidiary
August 3, 1996
NOTE A -- BASIS OF PRESENTATION
The accompanying condensed consolidated financial statements are unaudited and
include the accounts of One Price Clothing Stores, Inc. and its wholly-owned
subsidiary (the "Company"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
These financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and the
instructions 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.
For interim reporting, the Company uses an estimated gross profit as calculated
on a current quarterly basis by its inventory management system. Beginning in
1996, inventories are stated on the first-in, first-out (FIFO) retail method.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included. Due
to the seasonality of the Company's sales, operating results for the three-month
and six-month periods ended August 3, 1996 are not necessarily indicative of the
results that may be expected for the year ending February 1, 1997. For further
information, refer to the financial statements and footnotes thereto included in
the Company's Annual Report on Form 10-K for the year ended December 30, 1995.
Certain previously reported amounts have been reclassified to conform with the
current year presentation.
NOTE B -- EARNINGS PER SHARE
Earnings per share were computed based upon the weighted average number of
common and common equivalent shares outstanding. Common equivalent shares
consist of shares under option.
NOTE C -- CHANGE IN FISCAL YEAR END
Beginning in fiscal 1996, the Company changed its fiscal year end from the
Saturday nearest December 31 to the Saturday nearest January 31. This change was
made to conform the Company's fiscal calendar to the seasonal patterns it
experiences, as well as to enhance comparability of its fiscal quarterly and
annual results with other retail companies. The period December 31, 1995 to
February 3, 1996 (the "Transition Period") was previously reported in the
Company's Form 10-Q for the quarter ended May 4, 1996. Certain unaudited
proforma results of operations for previous periods were presented in Note D to
the Unaudited Condensed Consolidated Financial Statements therein and are
incorporated by reference.
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NOTE D -- CHANGES IN ACCOUNTING PRINCIPLES
The Financial Accounting Standards Board ("FASB") issued Statement No. 121 (SFAS
121), "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." This statement essentially requires that when the
Company commits to closing specific stores and for other stores which may be
impaired, the fixed assets for such stores must be written down to fair market
value. The adoption of SFAS 121, required for years beginning after December 15,
1995, resulted in a decrease in net fixed assets for stores to be closed of
approximately $1,630,000 and a charge of approximately $1,397,000 (net of income
taxes) which is included in the cumulative effect of changes in accounting
principles in the Statement of Operations for the Transition Period previously
reported in the Company's Form 10-Q for the quarter ended May 4, 1996 (see Note
C).
The Company also elected to change certain methods of accounting for merchandise
inventories beginning in the Transition Period. The Company changed from the
lower of average first-in, first-out (FIFO) cost or market method of accounting
to the lower of cost (computed using the FIFO retail method) or market. The
Company believes that the FIFO retail method provides improved information for
the operation of its business in a manner consistent with the method used widely
in the retail industry. The Company is also capitalizing into inventory certain
merchandise acquisition and distribution costs to provide a better matching of
revenues and expenses, particularly in interim periods. The effect of the change
in the FIFO retail method was to reduce merchandise inventories by approximately
$1,207,000, and the effect of capitalizing into inventory certain merchandise
acquisition and distribution costs was to increase merchandise inventories by
approximately $1,698,000. The resulting net increase in merchandise inventories
of approximately $491,000 and a benefit of approximately $307,000 (net of income
taxes) is included in the cumulative effect of changes in accounting principles
in the Statement of Operations for the Transition Period in the Company's Form
10-Q for the quarter ended May 4, 1996.
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INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina
We have reviewed the accompanying condensed consolidated balance sheets of One
Price Clothing Stores, Inc. and subsidiary (the "Company") as of August 3, 1996
and July 29, 1995, the related condensed consolidated statements of income for
the three-month and six-month periods then ended, and the related condensed
consolidated statements of cash flows for the six-month periods then ended.
These financial statements are the responsibility of the Company's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and of making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in accordance
with generally accepted auditing standards, the objective of which is the
expression of an opinion regarding the financial statements taken as a whole.
Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to such condensed consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of One Price Clothing Stores, Inc. and
subsidiary as of December 30, 1995, and the related consolidated statements of
income, shareholders' equity, and cash flows for the year then ended (not
presented herein); and in our report dated February 15, 1996 (March 25, 1996 as
to Note B and Note H), we expressed an unqualified opinion on those financial
statements. In our opinion, the information set forth in the accompanying
condensed consolidated balance sheet as of December 30, 1995 is fairly stated,
in all material respects, in relation to the consolidated balance sheet from
which it has been derived.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
August 21, 1996
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Net sales for the second quarter ended August 3, 1996 increased approximately 2%
to $87,450,000 compared to $86,157,000 for the same quarter ended July 29, 1995.
Net sales for the six-month period ended August 3, 1996 increased approximately
6% to $163,744,000 compared to $153,879,000 for the comparable six-month period
ended July 29, 1995. Comparable store sales decreased 2% for the quarter and 2%
year-to-date compared to the same periods last year. The Company considers
stores that are 18 months or older as comparable for this purpose, and there
were 568 such stores at August 3, 1996.
Management believes that sales during the first half of fiscal 1996 reflect the
continued softness in consumer spending on women's apparel which has continued
thus far into the third quarter. Sales and operating performance during the
remainder of the year will be largely dependent upon consumer spending on
women's apparel, the level of competitor promotional activity, and the general
health of the economy. The Company is implementing new marketing campaigns,
managing inventory levels and mix and controlling expenses in an effort to
improve sales and earnings.
Two new stores were opened during the second quarter of 1996 and 22
underperforming stores were closed. For the six-month period ended August 3,
1996, the Company opened 12 new stores and closed 37 underperforming stores. At
August 3, 1996, the Company operated 663 stores in 28 states and Puerto Rico.
The Company expects to open approximately 35 stores (including an estimated 12
relocations) and close approximately 60 stores during fiscal 1996.
The Company's sales and operating results are seasonal, as is typical in the
women's retail apparel industry. As previously reported, the Company changed its
fiscal year end to conform the fiscal calendar to the seasonal patterns it
experiences. Based on the former fiscal calendar (January - December), the
Company's sales historically were lowest during the first quarter (January -
March) and third quarter (July - September) and highest during the second
quarter (April - June) and fourth quarter (October - December). Reduced sales
volumes in first and third quarters coincided with the transition of seasonal
merchandise. Therefore, increased levels of markdowns occurred during those
transitional periods, and operating expenses, when expressed as a percentage of
sales, were typically higher. On a restated basis, fiscal 1995 and fiscal 1994
produced higher sales and operating results in the first quarter (February -
April) and second quarter (May - July) compared to the third quarter (August -
October) and fourth quarter (November - January). The fourth quarter 1995 and
1994 sales and operating results reflected disappointing holiday sales which
resulted in increased markdowns.
Gross margin decreased to 35.7% of net sales in the second quarter of fiscal
1996 as compared to 36.1% of net sales for the comparable quarter ended July 29,
1995. Gross margin for the six-month period ended August 3, 1996 was 36.6% of
net sales compared to 36.3% for the six-month period ended July 29, 1995. Gross
margin results reflect the change (effective beginning January 1996) in
accounting for merchandise inventories to include the cost of certain
distribution and buying costs. Distribution and buying costs, which were
previously classified as selling, general and administrative expenses, were
reclassified as a component of cost of goods sold in the condensed consolidated
statements of income for the second quarter
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and the first six months of fiscal 1995 to conform to the current year
presentation. The decrease in gross margin as a percentage of net sales for the
second quarter of fiscal 1996 compared to the same period last year was
primarily the result of taking increased levels of markdowns as a result of
lower than expected July sales. The increase in gross margin for the six-month
period ended August 3, 1996 compared to the same period last year resulted from
efficiencies in the Company's distribution center which were partially offset by
the increased markdowns discussed above.
Selling, general and administrative expenses decreased as a percentage of net
sales to 21.2% in the second quarter of fiscal 1996 from 21.9% in the same
period of 1995. The decrease in selling, general and administrative expenses
when expressed as a percentage of net sales is due to higher average store sales
volumes experienced in the second quarter of fiscal 1996 compared to the same
period last year. The Company's selling, general and administrative expenses per
average store in the second quarter ended August 3, 1996 were 1% lower than the
same period last year primarily due to the continued control of expenses at the
home office, lower store operating costs and a lower provision for loss on store
closings than last year.
For the first six months of fiscal 1996, selling, general and administrative
expenses decreased to 22.6% of net sales from 22.9% of net sales for the
comparable period of 1995. The decrease in selling, general and administrative
expenses when expressed as a percentage of net sales is due to higher average
store sales volumes compared to the same period last year. The Company's
selling, general and administrative expenses in dollars per average store for
the six-month-period ended August 3, 1996, were approximately 2% more than the
same period last year primarily due to the accrual of severance costs in the
1996 first quarter for the former President and Chief Operating Officer.
Selling, general and administrative expenses in dollars increased during the
first six months of fiscal 1996 compared to the same period last year primarily
due to an average of 20 more stores than last year and to the accrual of
severance costs discussed above.
Store rent and related expenses as a percentage of net sales was 7.2% in both
the second quarter of fiscal 1996 and fiscal 1995. For the first six months of
fiscal 1996, store rent expense decreased to 7.8% of net sales compared to 7.9%
of net sales for the comparable period of 1995. This decrease in store rent and
related expenses when expressed as a percentage of net sales is due to the
increase in average store sales during the period. Store rent and related
expenses in dollars per average store for the quarter and for the six-month
period ended August 3, 1996 compared to the same periods of 1995 increased 2%
due to the impact of entering into leases in larger, more costly, urban and
metropolitan markets with higher base rent structures and the closing of older,
underperforming stores which generally had lower average rent. Management
believes that the trend of increasing average store rent expense in dollars may
continue.
Depreciation and amortization expense increased to 1.3% of net sales in the
second quarter of fiscal 1996 compared to 1.2% of net sales for the second
quarter of fiscal 1995. Depreciation and amortization expense increased to 1.4%
of net sales from 1.3% for the six-month period ended August 3, 1996 compared to
the same period in 1995. These increases in depreciation and amortization
expense are primarily due to the expansion of the Company's distribution center
which was completed during the second half of fiscal 1995.
Interest expense increased to 0.5% of net sales in the second quarter of fiscal
1996 as compared to 0.3% of net sales for the second quarter of fiscal 1995.
Interest expense increased
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to 0.6% of net sales from 0.4% for the six-month period ended August 3, 1996
compared to the same period in 1995. The increase in interest expense is
primarily due to amortization of loan origination fees under the Company's new
credit facilities effective in March 1996 and increased average borrowings in
the six-month period ended August 3, 1996.
The Company's effective tax benefit rate for restated fiscal 1995 was 42.5%.
Management expects the effective tax rate to decrease in fiscal 1996 because the
items creating the fiscal 1995 increase (the benefit arising from the carry back
of the Targeted Jobs Tax Credits and recognition of the tax benefit relating to
the future benefit of the prior year Puerto Rico net operating loss) will not be
repeated. The Company's estimated annual effective tax rate for fiscal 1996 is
approximately 39.4%.
New Legislation
In August 1996, legislation was signed to increase the Federal Minimum Wage from
its current level of $4.25 per hour to $4.75 per hour effective October 1, 1996
and from $4.75 per hour to $5.15 per hour effective September 1, 1997. This
legislation is expected to affect primarily part-time store associates.
Management estimates the October 1996 increase in the Federal Minimum Wage to
increase payroll expense for the period October 1, 1996 through February 1, 1997
by approximately $180,000. The effect of the September 1997 minimum wage
increase on the Company's payroll expense is expected to be more significant,
primarily due to a larger number of affected store associates. The estimated
impact, however, has not yet been determined.
Liquidity and Capital Resources
During the first six months of fiscal 1996, $9,292,000 was provided by operating
activities, primarily due to the results of operations and the decrease in
inventories due to controlled management of inventory levels and mix. During the
first six months of fiscal 1995, $3,519,000 was used in operating activities,
primarily due to an increase in inventories and a decrease in accounts payable.
Total inventories at the end of the second quarter of fiscal 1996 and 1995 were
$37,310,000 and $40,355,000, respectively. Total inventories at December 30,
1995 were $28,961,000. The level of inventories is subject to fluctuations
because of the Company's opportunistic buying strategy and prevailing business
conditions. The above amounts represent total inventory, whether located at the
stores, in the distribution center or in-transit. The total average inventory
per store was $56,000 and $60,000 at the end of the second quarter of fiscal
1996 and 1995, respectively. The decrease in average inventory per store is due
to a decrease in spring and summer merchandise in the Company's stores compared
to last year and a decrease in inventory in the distribution center due to lower
quantities of goods in storage. The decreases in inventory were partially offset
by an increase for the capitalization of certain distribution and buying costs.
The average inventory per store was approximately $41,000 at December 30, 1995,
when the Company's inventory is typically at its lowest level.
The total of accounts payable and amounts outstanding under the credit
facilities at the end of the second quarter of fiscal 1996 and 1995,
respectively, was $28,627,000 and $30,646,000. The decrease in the accounts
payable and amounts outstanding under the credit facilities is primarily due to
the lower levels of inventory as described above. In comparison, total accounts
payable and amounts outstanding under the credit facilities at December 30, 1995
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were $18,210,000. The total of accounts payable and amounts outstanding under
the credit facilities is subject to fluctuations because of the Company's
seasonal operations, opportunistic buying strategy, rate of capital expenditures
and prevailing business conditions.
During the first six months of fiscal 1996, net cash of $1,039,000 was used in
investing activities to purchase property and equipment. This consisted
principally of costs incurred for the 12 new stores and 3 relocated stores
opened during the period. In fiscal 1996, the Company plans to spend
approximately $2.5 million on capital expenditures primarily to open an
estimated 23 new stores, relocate an estimated 12 stores and renovate existing
stores.
During the first six months of fiscal 1995, $6,587,000 was used to purchase
property and equipment, principally leasehold improvements and equipment for the
55 new stores and 7 relocated stores opened during the period and for the
expansion of the Company's distribution center.
The maximum amounts outstanding under the credit facilities during the second
quarter of fiscal 1996 and fiscal 1995 were approximately $23,972,000 and
$20,586,000, respectively. The average amounts outstanding under the credit
facilities were $14,886,000 during the second quarter of fiscal 1996 and
$15,938,000 during the second quarter of fiscal 1995. The weighted average
interest rates were 8.1% and 8.0% for the second quarter of fiscal 1996 and
fiscal 1995, respectively. The maximum amounts outstanding under the credit
facilities during the first six months of fiscal 1996 and fiscal 1995 were
approximately $26,741,000 and $20,689,000, respectively. The average amounts
outstanding under the credit facilities were $19,029,000 and $16,427,000 during
the first six months of fiscal 1996 and fiscal 1995, respectively. The weighted
average interest rates were 8.0% and 8.2% for the first six months of fiscal
1996 and fiscal 1995, respectively.
The Company had outstanding letters of credit totaling approximately $11,745,000
at August 3, 1996 compared to $4,931,000 at July 29, 1995. The increase in
outstanding letters of credit is due to buying a larger proportion of direct
imports of foreign merchandise as a component of total inventory. For the first
six months of fiscal 1996, the Company purchased approximately 20% of its
merchandise directly from foreign sources compared to approximately 13% for the
first six months of fiscal 1995. Management expects this trend to continue in
the foreseeable future.
The Company's credit agreement contains certain covenants which, among other
things, restrict the ability of the Company to incur indebtedness, or encumber
or dispose of assets, and prohibit the Company from repurchasing its Common
Stock or paying dividends. Additionally, the Company must maintain a minimum
adjusted net worth (as defined in the agreement) of $34,000,000 and maintain
minimum working capital, exclusive of amounts outstanding under the credit
facilities, of $5,000,000. The Company was in compliance with these covenants at
August 3, 1996 and as of the date of this document.
The exercise of Common Stock options pursuant to the Company's stock option
plans provided cash of $452,000 in the first six months of fiscal 1996 compared
to $26,000 in the first six months of fiscal 1995.
Management believes that the Company's liquidity requirements in the foreseeable
future will be met principally through cash provided by operations and its
credit facilities. If deemed by management to be in the best interest of the
Company, additional long-term debt, capital leases
<PAGE>
or other permanent financing may be considered.
Private Securities Litigation Reform Act of 1995
The statements contained in this Item 2 (Management's Discussion and Analysis of
Financial Condition and Results of Operations) that are not historical facts may
be forward-looking statements subject to the safe harbor created by the Private
Securities Litigation Reform Act of 1995. The Company cautions readers of this
Quarterly Report on Form 10-Q that a number of important factors could cause the
Company's actual results in 1996 and beyond to differ materially from those
expressed in any such forward-looking statements. These factors include, without
limitation, the general economic and business conditions affecting women's
apparel retailers, competition from other existing or new women's apparel
retailers, the Company's ability to meet debt service obligations and other
liquidity needs, the seasonality of the Company's sales, the availability of
both domestic and foreign sources of merchandise inventories at substantially
discounted prices, Acts of God, and unusual seasonal weather patterns.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The summary of votes at the Annual Meeting of the Company's Shareholders held
May 20, 1996 are incorporated herein by reference to Item 4 in the Company's
quarterly report on Form 10-Q for the quarter ended May 4, 1996
(File No. 0-15385).
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Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits including those incorporated by reference:
11 Statement re: Computation of Per Share Earnings
15 Acknowledgment of Deloitte & Touche LLP, Independent Accountants
27 Financial Data Schedule (electronic filing only)
(b) The Company was not required to file any report on Form 8-K for the quarter ended
August 3, 1996.
</TABLE>
<PAGE>
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.
ONE PRICE CLOTHING STORES, INC. (Registrant)
<TABLE>
<S> <C>
Date: September 13, 1996 /s/ Henry D. Jacobs, Jr.
-------------------------
Henry D. Jacobs, Jr.
Chairman, President and Chief
Executive Officer
(principal executive officer)
Date: September 13, 1996 /s/ Stephen A. Feldman
-----------------------
Stephen A. Feldman
Executive Vice President and
Chief Financial Officer
(principal financial officer)
<PAGE>
</TABLE>
EXHIBIT 11 -- Statement Re: Computation of Per Share Earnings
<TABLE>
<S> <C> <C> <C> <C>
Three-Month Period Ended Six-Month Period Ended
August 3, July 29, August 3, July 29,
1996 1995 1996 1995
------------ -------- ----------- --------
PRIMARY INCOME PER SHARE
Weighted average number of common
shares outstanding 10,397,064 10,311,781 10,366,047 10,310,540
Net effect of dilutive stock
options - based on the
treasury stock method using
the average market price 47,186 28,335 27,731 47,767
------------- -------------- -------------- --------------
TOTAL 10,444,250 10,340,116 10,393,778 10,358,307
========== =========== =========== ===========
Net income $ 2,940,000 $ 2,936,000 $ 4,177,000 $ 3,603,000
=========== =========== =========== ============
Net income per common share $ 0.28 $ 0.28$ 0.40$ 0.35
=============== ==============================================
FULLY DILUTED INCOME PER SHARE
Weighted average number of common
shares outstanding 10,397,064 10,311,781 10,366,047 10,310,540
Net effect of dilutive stock options - based on the treasury stock method
using the greater of ending or
average market price 50,481 32,028 39,744 47,853
-------------- -------------- -------------- --------------
TOTAL 10,447,545 10,343,809 10,405,791 10,358,393
=========== =========== =========== ===========
Net income $2,940,000 $ 2,936,000 $4,177,000 $3,603,000
========== =========== ========== ==========
Net income per common share $ 0.28 $ 0.28 $ 0.40 $ 0.35
============== =============== ============== ==============
<PAGE>
</TABLE>
EXHIBIT 15 -- ACKNOWLEDGMENT OF DELOITTE & TOUCHE LLP, INDEPENDENT
ACCOUNTANTS
One Price Clothing Stores, Inc. and Subsidiary
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim condensed
consolidated financial information of One Price Clothing Stores, Inc. and
subsidiary for the three-month and six-month periods ended August 3, 1996 and
July 29, 1995, as indicated in our report dated August 21, 1996; because we did
not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended August 3, 1996, is
incorporated by reference in Registration Statements No. 33-20529, 33-31623,
33-48091, and 33-61803 on Form S-8 pertaining to the 1987 Stock Option Plan, the
1988 Stock Option Plan, the 1991 Stock Option Plan, and the Director Stock
Option Plan, respectively, of One Price Clothing Stores, Inc.
We are also aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act of 1933, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
September 9, 1996
<PAGE>
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<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> FEB-01-1997
<PERIOD-END> AUG-03-1996
<CASH> 96
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 37310
<CURRENT-ASSETS> 47640
<PP&E> 57439
<DEPRECIATION> 19701
<TOTAL-ASSETS> 88348
<CURRENT-LIABILITIES> 30563
<BONDS> 0
<COMMON> 104
0
0
<OTHER-SE> 49682
<TOTAL-LIABILITY-AND-EQUITY> 88348
<SALES> 163744
<TOTAL-REVENUES> 163744
<CGS> 103797
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<OTHER-EXPENSES> 15185
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<INTEREST-EXPENSE> 998
<INCOME-PRETAX> 6897
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<EPS-PRIMARY> 0.40
<EPS-DILUTED> 0.40
<PAGE>
</TABLE>
