UNITED STATES
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 October 30, 1999
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 identification No.)
incorporation or organization)
Highway 290, Commerce Park
1875 East Main Street
Duncan, South Carolina 29334
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (864) 433-8888
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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 December
1, 1999 was 10,489,091.
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INDEX
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Condensed consolidated balance sheets - October 30, 1999, January 30, 1999 and October 31, 1998
Condensed consolidated statements of operations - Three-month and nine-month periods ended October 30, 1999 and
October 31, 1998
Condensed consolidated statements of cash flows - Nine-month periods ended October 30, 1999 and October 31, 1998
Notes to unaudited condensed consolidated financial statements - October 30, 1999
Independent accountants' report on review of interim financial information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
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
SIGNATURES
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PART I. FINANCIAL INFORMATION
Item I. Financial Statements (Unaudited)
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiaries
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October 30, January 30, October 31,
1999 1999 1998
------------------ ------------------ ----------------
(1)
Assets
CURRENT ASSETS
Cash and cash equivalents $ 4,321,000 $ 2,418,000 $ 2,500,000
Merchandise inventories 55,197,000 45,639,000 52,197,000
Deferred income taxes 1,745,000 768,000 --
Other current assets 7,484,000 6,562,000 6,751,000
------------------ ------------------ ----------------
TOTAL CURRENT ASSETS 68,747,000 55,387,000 61,448,000
------------------ ------------------ ----------------
PROPERTY AND EQUIPMENT, at cost 64,903,000 62,084,000 60,700,000
Less accumulated depreciation 31,794,000 28,638,000 27,553,000
------------------ ------------------ ----------------
33,109,000 33,446,000 33,147,000
------------------ ------------------ ----------------
OTHER ASSETS 4,698,000 3,994,000 3,889,000
------------------ ------------------ ----------------
$ 106,554,000 $ 92,827,000 $ 98,484,000
================== ================== ================
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 33,109,000 $ 24,750,000 $ 28,975,000
Current portion of long-term debt and revolving credit
facility 11,191,000 11,998,000 13,141,000
Sundry liabilities 7,880,000 7,993,000 8,798,000
------------------ ------------------ ----------------
TOTAL CURRENT LIABILITIES 52,180,000 44,741,000 50,914,000
------------------ ------------------ ----------------
LONG-TERM DEBT 7,626,000 7,755,000 7,795,000
------------------ ------------------ ----------------
OTHER NONCURRENT LIABILITIES 2,907,000 2,914,000 2,895,000
------------------ ------------------ ----------------
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
10,474,091, 10,439,531, and 10,439,531, respectively 105,000 104,000 104,000
Additional paid-in capital 11,560,000 11,465,000 11,465,000
Retained earnings 32,176,000 25,848,000 25,311,000
------------------ ------------------ ----------------
43,841,000 37,417,000 36,880,000
------------------ ------------------ ----------------
$ 106,554,000 $ 92,827,000 $ 98,484,000
================== ================== ================
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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 OPERATIONS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiaries
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Three-Month Period Ended Nine-Month Period Ended
------------------------------- -------------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
-------------- ------------- -------------- --------------
NET SALES $ 70,428,000 $ 69,732,000 $ 255,446,000 $ 248,031,000
Cost of goods sold 45,301,000 45,496,000 162,425,000 158,664,000
-------------- ------------- -------------- --------------
GROSS MARGIN 25,127,000 24,236,000 93,021,000 89,367,000
-------------- ------------- -------------- --------------
Selling, general and administrative expenses 19,766,000 18,953,000 58,798,000 56,619,000
Store rent and related expenses 6,811,000 6,504,000 20,388,000 20,122,000
Depreciation and amortization expense 1,289,000 1,149,000 3,972,000 3,809,000
Interest expense 412,000 436,000 1,374,000 1,594,000
-------------- ------------- -------------- --------------
28,278,000 27,042,000 84,532,000 82,144,000
-------------- ------------- -------------- --------------
(LOSS) INCOME BEFORE INCOME TAXES (3,151,000) (2,806,000) 8,489,000 7,223,000
(Benefit from) provision for income taxes (1,983,000) (1,090,000) 2,161,000 3,377,000
--------------- -------------- ------------- --------------
NET (LOSS) INCOME $ (1,168,000) $ (1,716,000) $ 6,328,000 $ 3,846,000
============== ============== ============= ==============
Net (loss) income per common share -- basic $ (0.11) $ (0.16) $ 0.61 $ 0.37
=============== ============== ============= ==============
Net (loss) income per common share -- diluted $ (0.11) $ (0.16) $ 0.60 $ 0.37
=============== ============== ============= ==============
Weighted average number of common shares
outstanding -- basic 10,469,272 10,437,817 10,454,518 10,436,293
============== ============= ============== ==============
Weighted average number of common shares
outstanding -- diluted 10,469,272 10,437,817 10,626,242 10,466,709
============== ============= ============== ==============
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See notes to unaudited condensed consolidated financial statements
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
One Price Clothing Stores, Inc. and Subsidiaries
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Nine-Month Period Ended
---------------------------------------
October 30, October 31,
1999 1998
-------------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,328,000 $ 3,846,000
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,972,000 3,809,000
Provision for supplemental post-retirement benefits 70,000 98,000
Decrease in other noncurrent assets 54,000 42,000
Decrease in other noncurrent liabilities (47,000) (46,000)
Deferred income taxes (977,000) --
Loss on disposal of property and equipment 353,000 396,000
Changes in operating assets and liabilities (2,284,000) (7,009,000)
-------------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 7,469,000 1,136,000
-------------------- -----------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (3,599,000) (1,084,000)
Purchases of other noncurrent assets (653,000) (520,000)
Repayment of related party loan -- 30,000
-------------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (4,252,000) (1,574,000)
-------------------- -----------------
CASH FLOWS FROM FINANCING ACTIVITIES:
(Repayment of) net borrowings from revolving credit facility (816,000) 1,468,000
Repayment of long-term debt (120,000) (111,000)
Debt financing costs incurred (69,000) (42,000)
Payment of capital lease obligations (289,000) (168,000)
Decrease in amount due to related parties (101,000) (47,000)
Proceeds from exercise of common stock options 81,000 11,000
-------------------- -----------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,314,000) 1,111,000
-------------------- -----------------
INCREASE IN CASH AND CASH EQUIVALENTS 1,903,000 673,000
Cash and cash equivalents at beginning of period 2,418,000 1,827,000
-------------------- -----------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,321,000 $ 2,500,000
==================== =================
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 1,193,000 $ 1,560,000
Income taxes paid 2,370,000 361,000
Noncash financing activity - capital leases 505,000 --
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See notes to unaudited condensed consolidated financial statements
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
One Price Clothing Stores, Inc. and Subsidiaries
October 30, 1999
NOTE A - BASIS OF PRESENTATION AND CERTAIN ACCOUNTING POLICIES
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and
include the accounts of One Price Clothing Stores, Inc. and its subsidiaries,
all of which are wholly-owned (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's gross profit is calculated on a current
quarterly basis by its inventory management system. Inventories are stated at
the lower of cost (using the first-in, first-out (FIFO) retail method) or
market.
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 nine-month periods ended October 30, 1999 are not necessarily indicative of
the results that may be expected for the year ending January 29, 2000. 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 January
30, 1999.
The Company's sales and operating results are seasonal. Sales and operating
results have been the highest in the first quarter (February - April) and second
quarter (May - July) and lowest in the third quarter (August - October) and
fourth quarter (November - January).
Segments and Related Information
The Company operates in only one industry segment: Retail sales of apparel and
accessories to the general public.
NOTE B - EARNINGS PER SHARE
Basic earnings per share are computed based upon the weighted average number of
common shares outstanding. Diluted earnings per share are computed based upon
the weighted average number of common and common equivalent shares outstanding.
Common equivalent shares consist solely of shares under option. A reconciliation
of basic and diluted weighted average shares outstanding is presented below:
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Three-Month Period Ended Nine-Month Period Ended
---------------------------------- ----------------------------------
October 30, October 31, October 30, October 31,
1999 1998 1999 1998
---------------- --------------- ---------------- ---------------
Weighted average number of common
shares outstanding - basic 10,469,272 10,437,817 10,454,518 10,436,293
Net effect of dilutive stock options - based
on the treasury stock method using the
average market price - - 171,724 30,416
---------------- ---------------- ---------------- ----------------
Weighted average number of common
shares outstanding - diluted 10,469,272 10,437,817 10,626,242 10,466,709
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NOTE C - CREDIT FACILITIES
The Company has a revolving credit facility of up to $37,500,000 (including a
letter of credit sub-facility of up to $25,000,000) with its primary lender
through March 2001. Borrowings under the credit agreement with the primary
lender are collateralized by all assets owned by the Company during the term of
the agreement (other than the land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). Under the agreement, the
borrowings bear interest, at the Company's option (subject to certain
limitations in the agreement), at the Prime Rate plus 0.25% or the Adjusted
Eurodollar Rate, as defined, plus 2.0%. Maximum borrowings under the revolving
credit facility and utilization of the letter of credit facility are based on a
borrowing base formula determined with respect to eligible inventory as defined
in the agreement. Availability under the revolving credit facility fluctuates in
accordance with the Company's seasonal variations in inventory levels. At
October 30, 1999, the Company had approximately $16.7 million of excess
availability under the borrowing base formula. The lending formula may be
revised from time to time in response to changes in the composition of the
Company's inventory or other business conditions.
The Company's revolving credit agreement contains certain covenants which, among
other things, restrict the ability of the Company to incur other indebtedness,
or encumber or dispose of assets and prohibit the Company from repurchasing its
Common Stock or paying dividends. The Company is required to maintain a
$5,000,000 minimum level of working capital and to maintain a minimum adjusted
net worth of $25,000,000 (both as defined in the revolving credit agreement).
The Company was in compliance with these financial covenants at October 30,
1999.
The Company also has an agreement (as amended) with a commercial bank to provide
a separate letter of credit facility of up to $5,000,000. Letters of credit
issued under the agreement are collateralized by inventories purchased using
such letters of credit. The agreement contains working capital and minimum net
worth requirements of the same level as that required by the Company's primary
lender under the revolving credit agreement. In March 1999, the letter of credit
agreement was amended to extend the expiration date of the facility by one year
to the earlier of June 2000 or termination of the Company's revolving credit
facility with its primary lender. The letter of credit agreement, as amended,
contains certain restrictive covenants which are substantially the same as those
within the Company's revolving credit facility discussed above.
The Company also has a twenty-year mortgage agreement with a commercial bank.
The agreement, entered into in June 1997 with an original balance of $8,125,000,
is secured by the Company's real property located at its corporate offices
including land, buildings, fixtures and improvements. The mortgage loan, which
had a balance of $7,795,000 at October 30, 1999, is payable in consecutive equal
monthly installments (including interest at the rate of 9.125% per annum)
through July 2017. Certain fees may be payable by the Company if the mortgage
loan is repaid prior to June 2014. The mortgage agreement contains certain
nonfinancial covenants with which the Company was in compliance at October 30,
1999.
NOTE D - EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," which, as amended, is effective for the fiscal year ending
February 2, 2002. This new standard requires recognition of all derivatives,
including certain derivative instruments embedded in other contracts, as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
To the 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 subsidiaries (the "Company") as of October 30,
1999 and October 31, 1998, and the related condensed consolidated statements of
operations for the three-month and nine-month periods then ended and the
condensed consolidated statements of cash flows for the nine-month periods then
ended. These financial statements are the responsibility of the Company's
management.
We conducted our reviews 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 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 reviews, 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 the Company as of January 30, 1999,
and the related consolidated statements of operations, shareholders' equity, and
cash flows for the year then ended (not presented herein); and in our report
dated March 17, 1999 (March 31, 1999 as to Note B), we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying condensed consolidated balance sheet
as of January 30, 1999 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
November 18, 1999
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
Net sales for the nine-month period ended October 30, 1999 increased 3.0% to
$255,446,000 compared to $248,031,000 for the same time period in 1998.
Comparable store sales for the nine-month period ended October 30, 1999
increased 3.8% compared to a 7.1% increase for the same time period in 1998. We
consider stores that have been open 18 months or more to be comparable, and
there were 602 such stores at October 30, 1999. We believe that these
year-to-date sales results were generated by having more fashion at our core
price points and better execution of our micro-merchandising strategy, based
upon improved demographic profiling of our stores.
Net sales for the quarter ended October 30, 1999 increased 1.0% to $70,428,000
compared to $69,732,000 for the quarter ended October 31, 1998. Despite the
increase in total sales, comparable store sales for the third quarter of fiscal
1999 decreased 0.3% compared to a 12.1% increase for the same quarter last year.
The quarterly sales results were adversely affected by inadequate amounts of
inventory in several key categories and, to a lesser degree, to temporary
closings of some of our stores as a result of several hurricanes.
During the third quarter of fiscal 1999, we opened 14 stores and expanded three
of our top-performing stores. In addition, we relocated two stores and closed
six under-performing stores. At October 30, 1999, we operated 628 stores, seven
greater than at quarter-end last year. The stores are located in 27 states, the
District of Columbia, Puerto Rico and the U.S. Virgin Islands.
Gross margin was 35.7% of net sales in the third quarter of fiscal 1999 compared
to 34.8% of net sales in the third quarter of fiscal 1998. For the first nine
months of fiscal 1999, gross margin was 36.4% of net sales versus 36.0% of net
sales for the same time period in fiscal 1998. Increases in gross margin as a
percentage of net sales were realized by improvements in maintained mark-up
which were offset, in part, by slight increases in buying and other costs.
Selling, general and administrative ("SG&A") expenses were 28.1% of net sales
for the third quarter of fiscal 1999 compared to 27.2% of net sales in the third
quarter of fiscal 1998. SG&A expenses were 23.0% of net sales in the first nine
months of fiscal 1999 compared to 22.8% of net sales during the same time period
in fiscal 1998. In both periods presented for fiscal 1999, SG&A expenses
increased in dollars compared to the same time periods in fiscal 1998 due
primarily to increased payroll expense in the stores. Payroll expense in the
stores increased due to year-over-year increases in both the average hourly wage
rate and average store hours.
Store rent and related expenses per average store increased 4.4% in the third
quarter of fiscal 1999 and increased 4.2% in the first nine months of fiscal
1999 compared to the same periods last year. The increase in average store rent
and related expenses is primarily due to the Company's store expansion strategy
of opening larger, higher volume stores and thus entering more costly sites with
higher rents while closing older stores with lower average rent costs. Due to
the increase in average store rent, store rent and related expenses were 9.7% of
net sales in the third quarter of fiscal 1999 compared to 9.3% of net sales in
the third quarter of fiscal 1998. However, store rent and related expenses for
the first nine months of fiscal 1999 decreased as a percentage of net sales to
8.0% from 8.1% in fiscal 1998 primarily due to the leverage provided by higher
year-over-year sales.
Depreciation and amortization expense was 1.8% of net sales in the third quarter
of fiscal 1999 compared to 1.6% of net sales in the third quarter of fiscal
1998. Depreciation and amortization expense was 1.6% of net sales in the first
nine months of fiscal 1999 compared to 1.5% of net sales during the same time
period in fiscal 1998. In both periods presented for fiscal 1999, depreciation
and amortization expense increased in dollars compared to the same time periods
in fiscal 1998 primarily due to investments in new stores and software.
Interest expense was 0.6% of net sales in the third quarters of both fiscal 1999
and fiscal 1998 and decreased to 0.5% of net sales in the first nine months of
fiscal 1999 compared to 0.6% of net sales for the same time period in fiscal
1998. In both periods presented for fiscal 1999, interest expense decreased in
dollars compared to the same time periods in fiscal 1998 due to the combination
of lower average interest rates realized by obtaining more favorable pricing on
the Company's working capital facility and lower average levels of borrowings.
The Company's effective income tax rate was approximately 25.5% in the first
nine months of fiscal 1999. This rate is significantly less than the statutory
rate because the Company has achieved profitability in Puerto Rico sufficient to
reverse the remaining valuation allowance attributable to deferred tax assets in
its Puerto Rico subsidiary. The effective income tax rate for fiscal 1998 was
20.3%, also primarily attributable to a favorable valuation allowance
adjustment.
Outlook
Sales thus far in the fourth quarter of fiscal 1999 are slightly behind sales
for the same time period in fiscal 1998. Although the quarter began slowly, we
are encouraged by recent customer response to our current merchandise offerings
and will continue our efforts on maintaining our cost-containment targets.
During the fourth quarter of fiscal 1999, we have opened nine new stores in
existing markets and expanded or relocated three existing stores. We currently
expect to open approximately 50 stores and close approximately 15 stores during
fiscal 2000 as part of our plan to build new business while maintaining our
focus on improving sales in existing stores. We also plan to continue our
strategy of expanding the size of certain highly productive stores.
The Company's sales and operating results are seasonal. Sales and operating
results have been the highest in the first quarter (February - April) and second
quarter (May - July) and lowest in the third quarter (August - October) and
fourth quarter (November - January). We continue to develop strategies to
increase sales volume in the third and fourth quarters of the fiscal year.
Average store rent and related expenses are expected to continue to increase in
fiscal 1999 and beyond due to the location and the increase in average store
square footage of stores that opened in fiscal 1999 and planned future openings,
as well as the closing of older, lower-volume stores. We will seek to leverage
these increases through improved average store sales volume.
Liquidity and Capital Resources
Increased sales, gross margin and favorable tax adjustments mentioned above
resulted in a 65% increase in net income in the first nine months of fiscal 1999
compared to the same time period in fiscal 1998. In the first nine months of
fiscal 1999, net cash provided by operating activities was primarily used to
reduce the balance of the revolving credit facility and to open new stores,
expand and remodel certain other top-performing stores and purchase software. In
the first nine months of fiscal 1998, net cash provided by operating activities
combined with net borrowings from the Company's revolving credit facility were
used to purchase property, equipment and software.
Merchandise inventories at the end of the third quarter of fiscal 1999 increased
5.7% in total and 4.6% on an average store basis compared to the end of the
third quarter of fiscal 1998. In preparation for the holiday season, total
merchandise inventories at the end of the third quarter of fiscal 1999 were also
19.2% higher on an average store basis than at January 30, 1999 when inventory
levels are typically lower. The level and source of inventories are subject to
fluctuations because of our seasonal operations, opportunistic buying strategy
and prevailing business conditions.
As a result of our continued emphasis on purchasing from domestic sources, the
level of outstanding documentary letters of credit decreased to $4.1 million on
October 30, 1999 compared to $4.7 million on October 31, 1998. We currently
expect to continue to pursue opportunistic purchases of merchandise from
primarily domestic sources, but will purchase merchandise from foreign sources
when it is deemed to be in the best interests of the Company.
Total accounts payable and amounts outstanding under the credit facilities,
including long-term portions thereof, increased 4% at the end of the third
quarter of fiscal 1999 compared to the third quarter of fiscal 1998. This
year-over-year increase was primarily the result of the year-over-year increase
in merchandise inventories. The level of accounts payable and amounts
outstanding under the credit facilities are subject to fluctuations because of
our seasonal operations, opportunistic buying strategy, rate of capital
expenditures and prevailing business conditions.
Our credit facilities consist of a revolving credit facility to meet short-term
liquidity needs, a mortgage loan collateralized by the Company's corporate
offices and distribution center and letter of credit facilities to accommodate
the Company's needs to purchase merchandise inventories from foreign sources.
Collectively, the credit facilities contain certain financial and non-financial
covenants with which the Company was in compliance at October 30, 1999. A
summary of our credit facilities follows. Please refer to Note C of the
unaudited financial statements contained within this Form 10-Q for a more
complete description of the credit facilities.
We have a $37,500,000 revolving credit facility (including a $25,000,000 letter
of credit sub-facility) with our primary lender through March 2001. Borrowings
under the agreement are collateralized by all assets owned by the Company during
the term of the agreement (other than land, buildings, fixtures and improvements
collateralizing the mortgage loan discussed below). Maximum borrowings under the
revolving credit facility and utilization of the letter of credit facility are
based upon a borrowing base formula determined with respect to eligible
inventory as defined in the agreement. At October 30, 1999, we had approximately
$16.7 million in excess availability under the borrowing base formula.
We have a twenty-year mortgage loan agreement with a commercial bank payable in
consecutive equal monthly installments through July 2017. At October 30, 1999,
the mortgage loan had an unpaid balance of $7,795,000. The agreement is secured
by the Company's real property located at its corporate offices including land,
buildings, fixtures and improvements.
We have a $5,000,000 letter of credit facility with a commercial bank through
the earlier of June 2000 or termination of the revolving credit facility with
the Company's primary lender. Letters of credit issued under the agreement are
collateralized by inventories purchased using such letters of credit.
During fiscal 1999, we expect to spend approximately $6.0 million on capital
expenditures, most of which will be used to open new stores, remodel,
re-fixture, expand and relocate existing stores and invest in information
technology. During fiscal 2000, we currently expect to spend approximately $9.5
million on capital expenditures, most of which will be used to open new stores,
expand and relocate existing stores and invest in information technology. Our
liquidity requirements in the foreseeable future are expected to be met
principally through cash provided by operations and the use of our credit
facilities. If we believe it to be in the best interests of the Company,
additional long-term debt, equity, capital leases or other permanent financing
may be considered.
Market Risk and Risk Management Policies
We are exposed to market risk from changes in interest rates affecting our
credit arrangements, including a variable-rate revolving credit facility and a
fixed-rate mortgage loan agreement, which may adversely affect our results of
operations and cash flows. We seek to minimize our interest rate risk through
our day-to-day operating and financing activities. We do not engage in
speculative or derivative financial or trading activities.
A hypothetical 100 basis point adverse change (increase) in interest rates
relating to our revolving credit facility would have decreased pre-tax income
for the nine months ended October 30, 1999 and October 31, 1998 by approximately
$67,000 and $102,000, respectively.
Year 2000 Issues
State of Readiness
The Company began identifying its major systems and software vendors susceptible
to Year 2000 issues during its preparedness evaluation in fiscal 1996. During
fiscal 1997, a formal steering committee was assembled from throughout the
Company to ensure a smooth transition into the Year 2000. The Company separated
its Year 2000 efforts into five phases ("the Year 2000 Plan"): (i) awareness and
identification of issues relating to the Year 2000; (ii) analysis of the impact
on and risk to the Company's software, hardware and the services provided by the
Company's vendors; (iii) performance of the work necessary to change or upgrade
programs and files including installation of software and/or hardware; (iv)
testing and certification of systems to assure compliance, including disaster
recovery testing; and (v) implementation of systems. Because the Company uses a
variety of internally-developed and third party software, certain tasks of
various phases of the Year 2000 Plan have been and continue to be performed
simultaneously. The Company successfully completed the upgrade of its major
systems in the first quarter of fiscal 1999 and successfully tested such
systems, including disaster recovery testing during the third quarter of fiscal
1999. Accordingly, the Company believes that it has substantially completed all
five phases of the Year 2000 Plan and its Year 2000 simulation, but will
continue to monitor its compliance during the remaining weeks of 1999 and into
2000.
Like other companies, the Company relies upon third parties for its operations
including, but not limited to, suppliers of merchandise, software, telephone
service, electric power, water and financial services. As part of the Year 2000
Plan, the Company has a formal Year 2000 vendor compliance program in place. The
Company has identified and assigned various levels of risk to third party
vendors associated with the Company. Each vendor identified as critical to the
operations of the Company has indicated that it already is, or expects to be,
Year 2000 compliant in a timely manner.
Cost
The Company is primarily using internal resources to identify, test, upgrade and
replace its Year 2000-sensitive systems. The Company's major systems, including
its merchandise management system, its point-of-sale system, its inventory and
general ledger system and its payroll system, were due for upgrades during 1999
in order to maintain vendor support. Therefore, the Company would have devoted
much of the efforts of its internal resources to some or all of these projects
through the normal course of business even if the Year 2000 issues had not
existed. The Company continues to replace any non-compliant software and
hardware as necessary. During fiscal 1999, the cost of these incidental software
and hardware replacements is expected to be less than $75,000.
Risk and Contingency Planning
Although the Company has substantially completed all five phases of the Year
2000 Plan and will continue to monitor and test its systems through the
remainder of the year, it gives no assurance that unforeseen difficulties which
could alter the completion of the Year 2000 Plan will not occur from having
performed incidental hardware and software replacements and while performing
additional Year 2000 simulation tests. In addition, as part of the worst case
scenario, if the Year 2000 Plan is not successful in a timely manner, the
Company's third party vendors are not Year 2000 compliant in a timely manner
and/or if the Company's supply of merchandise or ability to distribute its
merchandise to its stores is adversely affected, the Year 2000 issues may have a
material adverse impact on the results of operations, financial condition and
cash flows of the Company. Also, possible interruptions in services such as
electric power and telephone could occur in certain geographic areas, thereby
temporarily closing some of the Company's stores. In addition, any general
economic disruption caused by Year 2000 issues could adversely affect customer
demand.
The Company believes it has substantially mitigated its Year 2000 risk by having
substantially completed its Year 2000 Plan and disaster recovery tests. The
Company will continue to monitor its compliance during the remaining weeks of
1999 and into 2000. In addition, the Company has developed contingency plans for
all areas considered to be critical to the operations of the Company. The
Company intends to mitigate its risk of possible interruptions in service, such
as electric power and telephone, by carrying business interruption insurance in
its corporate offices, distribution center, and in its stores located in Puerto
Rico and the U.S. Virgin Islands. In addition, the Company believes that such
risk in the Company's stores located in the continental United States is
mitigated by the diversity of its store locations.
Effect of New Accounting Pronouncements
The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and
Hedging Activities," which, as amended, is effective for the fiscal year ending
February 2, 2002. This new standard requires recognition of all derivatives,
including certain derivative instruments embedded in other contracts, as either
assets or liabilities in the statement of financial position and measurement of
those instruments at fair value. The Company is in the process of reviewing the
effect, if any, that SFAS 133 will have on the Company's consolidated financial
statements and disclosures.
Private Securities Litigation Reform Act of 1995
All statements contained in this document as to future expectations and
financial results including, but not limited to, statements containing the words
"believes," "anticipates," "expects," and similar expressions, should be
considered 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 fiscal 1999 and beyond to differ
materially from those expressed in such forward-looking statements. These
factors include, but are not limited to, general economic conditions and
consumer demand; consumer preferences; weather patterns; competitive factors;
pricing and promotional activities of competitors; the impact of excess retail
capacity and the availability of desirable store locations on suitable terms;
whether or not the Company's merchandising strategy to offer alternative
categories of merchandise at alternative price points will continue to increase
sales and operating results or increase and attract new customers; whether or
not offering for sale new categories of merchandise including, but not limited
to, menswear, will increase sales and operating results; the availability,
selection and purchasing of attractive merchandise on favorable terms; credit
availability, including adequate levels of credit support provided to certain of
the Company's vendors by factors and insurance companies; import risks,
including potential disruptions and duties, tariffs and quotas on imported
merchandise; regulatory matters, including legislation affecting wage rates;
whether or not the Company and its major suppliers will ready their computer
systems to be "Year 2000 Compliant" in a timely manner; and other factors
described in the Company's filings with the Securities and Exchange Commission
from time to time. The Company does not undertake to publicly update or revise
its forward-looking statements even if experience or future changes make it
clear that any projected results expressed or implied therein will not be
realized.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
See required information contained within Item 2 of this Form
10-Q.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
10* Letter of Understanding regarding Non-Executive Chairman of the
Board position and Consulting Agreement dated April 16, 1998 and
Amendments to Letter of Understanding and Consulting Agreement dated
December 22, 1998 and October 8, 1999 between the Registrant and
Leonard Snyder.
15 Acknowledgement of Deloitte & Touche LLP, independent accountants
27 Financial Data Schedule (electronic filing only)
(b) Reports on Form 8-K
The Company was not required to file any report on Form 8-K
for the three-month period ended October 30, 1999.
--------------------------------
*Denotes a management contract or compensatory plan or agreement.
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: December 13, 1999 /s/ Larry I. Kelley
Larry I. Kelley
President and Chief Executive Officer
(principal executive officer)
Date: December 13, 1999 /s/ H. Dane Reynolds
H. Dane Reynolds
Senior Vice President and Chief Financial Officer
(principal financial officer and principal
accounting officer)
</TABLE>
Exhibit 10 - Letter of Understanding regarding Non-Executive Chairman of the
Board position and Consulting Agreement dated April 16, 1998 and Amendments to
Letter of Understanding and Consulting Agreement dated December 22, 1998 and
October 8, 1999 between the Registrant and Leonard Snyder
April 16, 1998
Mr. Leonard Snyder
6260 N. Desert Moon Loop
Tucson, Arizona 85750
Subject: Letter of Understanding Regarding Non-Executive Chairman Position
Dear: Lenny:
We are very pleased that you have agreed to serve as a consultant to, and member
of, the Board of Directors of One Price Clothing Stores, Inc. ("Company"). In
addition to welcoming you onto the Board, we would like to confirm our mutual
understanding with respect to your serving in such positions, and, subsequently,
as Non-Executive Chairman of the Board.
I. Duties & Responsibilities - Upon execution of this agreement, your
appointment as a member of the Board of Directors ("Board") of the Company, and
Consultant to the Board, will become effective. Your name will be included in
the Proxy as a nominee to serve as a member of the Board for 1998, with a
statement of our intention to appoint you as Non-Executive Chairman. At the
meeting of the Board, which will immediately follow the June 10 Annual Meeting,
you will be appointed Non-Executive Chairman of the Board, at which time your
Position, as a consultant to the Board will end. In your capacity as
Non-Executive Chairman, you will have all the usual and customary duties and
responsibilities of such position, including, among other things, (i)
development (in conjunction with the CEO) of the agenda for meetings of the
Board of Directors and the Annual Meeting of Stockholders; (ii) designation and
appointment of members of the Committees of the Board and their Chairmen; and,
(iii) establishment, with the Chairman of each Committee, of the Agenda for
meetings of such Committee. As a consultant to the Board, and, subsequently as
Non-Executive Chairman, you agree to use your best efforts, in support of the
CEO, to ensure that the Company has in place a firm vision, solid management and
sound merchandising and operating strategies, all designed to maximize sales,
profits and growth opportunities. As appropriate, and again together with the
CEO, you will address issues involving such areas as stockholder relations,
Public audit, financing and financial relationships, and SEC matters. As
Non-Executive Chairman, you will be charged in monitoring and, in conjunction
with the Board, approving, both the short and long term goals of the Company.
You agree to devote the time necessary to faithfully perform your duties as a
member of, and Consultant to, the Board and as Non-Executive Chairman, in
accordance with the functions outlined above, and further agree to avoid taking
on other commitments which would jeopardize your ability to fully perform such
duties or such other duties as may reasonably be assigned to you from time to
time in agreement with the Board of Directors. For example, we understand that
you currently serve as a member of the Board of Directors of other,
non-competing, companies and agree that you are free to continue in such
capacity, provided the time requirements do not interfere with your duties as
described above. We have discussed and agree that you will not accept an
operating position with another company during the term of this agreement, nor
serve in the capacity of Chairman of the Board of another company during such
period.
II. Duration - So long as you reasonably fulfill your duties as described to the
reasonable satisfaction of the Board, and subject to re-election as a Director
by the stockholders of the Company, and to the By-Laws of the Company, you shall
serve as Non-Executive Chairman of the Board for a period of three years from
the date of your appointment, currently scheduled for June 10, 1998. The Company
agrees to use its best efforts to assure your election and re-election to the
Board. You may, of course, resign your appointment as Non-Executive Chairman, in
which case your compensation for such position would end. You have agreed to
give the Company at least 120 days advance written notice of such resignation.
III. Compensation & Termination - Commencing upon your execution of this letter,
for your services as a Consultant to the Board and member of the Board, you will
receive total compensation per annum of $150,000, of which $20,000 represents
Director's fees. Such sums shall be payable to you monthly, pro-rata, with the
Consultant's fees to be paid promptly upon receipt by the Company of your
monthly invoice for services rendered. Thereafter, upon your appointment as
Non-Executive Chairman, and as a member of the Board, your duties as a
Consultant will cease and, as both a Director and Non-Executive Chairman you
shall receive total combined annual compensation of $150,000 per year, payable
monthly, at $12,500 per month.
In addition, as an inducement to your accepting to so serve, you will receive a
grant of 80,000 stock options of One Price Common Stock, with an exercise price
equal to the average of high and low sales price per share of such Common Stock
as of the date of your execution of this agreement. The vesting schedule
regarding such options shall be: one-third (1/3) vested and exercisable
immediately upon registration of the underlying shares with the SEC on Form S-8
and transmittal to you of the required prospectus regarding your individual
stock option plan (the "Initial Vesting Date"). Thereafter, the remaining
two-thirds will vest in equal amounts (1/3 & 1/3, respectively) on the first and
second anniversary of the Initial Vesting Date, all as more fully described in
the prospectus to follow.
You will also be entitled to a cash bonus of 25% of your total annual
compensation of $150,000 for each year that the Company achieves its "stretch
plan" in fiscal years 1998, 1999 and 2000. For example, the Company's "stretch
plan" for fiscal 1998 is a pre-tax earnings number of $4,375,000, the equivalent
of 25 cents per share. If the Company meets or exceeds this pre-tax earnings
figure for fiscal 1998, you would be entitled to a cash bonus of $37,500,
payable upon completion by the Company's public accountants, currently Deloitte
& Touche, of their audit of the Company's books for such year and issuance of
their auditor's letter.
In the event that the Board terminates your appointment as Consultant or,
subsequently, as Non-Executive Chairman, without "cause" (as defined below), and
despite your having reasonably fulfilled your duties as described, then your
monthly payments of $12,500 shall continue for the lesser of (a) one year from
the date of such termination without "cause", or (b) the period remaining under
your original three year appointment from the date of the next annual meeting of
stockholders, scheduled for June 10, 1998 (the "Termination Payout Period"). For
purposes of this agreement "Cause" shall mean fraud, theft, dishonesty, criminal
activity, breach of the "Representation and Warranty" provision in section VII
of this agreement, or failure, following 30 days written notice, to comply with
the other provisions of this agreement, including the Confidentiality and
Non-Compete provisions. In the event of termination without Cause, and in
consideration for such termination payments, you agree to execute a general
release at the time of any such termination in favor of the Board and the
Company, in form and substance reasonably satisfactory to the Board.
The compensation and benefits described above, are inclusive of all your duties
and responsibilities as a Consultant to, and member of, the Board, and any
services you may perform on any Committees of the Board, whether as a member or
Chairman, as well as for your services as Non-Executive Chairman, following your
appointment to such position.
IV. Expenses - The Company agrees to reimburse you for your reasonable
out-of-pocket expenses incurred in the performance of fulfilling your
responsibilities as set forth above, upon submission of an expense report with
supporting information, wherever possible. You agree to comply with the
Company's policies regarding travel.
V. Confidentiality - As a publicly traded company, One Price Clothing is subject
to the rules and regulations of the SEC, and as a company listed on the NASDAQ,
to the rules of the NASD. You understand that you will be deemed to be an
"insider" for purposes of such rules and regulations. We are enclosing a copy of
our "Insider Trading Policy" for your review and execution in this regard. In
addition, you will be receiving highly confidential, non-public information
regarding the Company and agree to keep all such non-public information strictly
confidential. Documents provided, obtained or produced by you, as part of your
initial due diligence regarding serving as a consultant, Board member or as
Non-Executive Chairman, will remain the property of the Company and you agree to
return such property upon the request of the Company, along with any copies.
VI. Non-Compete - You have advised us that you are not currently, and will not,
during the period of your services with the Company, and for a period of two
years thereafter (one year thereafter in the case of termination without Cause),
provide services, as an employee, consultant, advisor, or otherwise, to any
other discount or off price retailer of women's apparel that is in significant
competition with the Company either currently or at the time of the termination
of your services for the Company. Similarly, you agree not to serve as a member
of, or advisor or consultant to, the Board of Directors of any such company for
a comparable period. You have agreed not to interfere, or attempt to interfere
with, or disrupt, the relationship between the Company and any of its employees,
customers, or suppliers. You agree not to employ, solicit the employment of, or
cause to be employed, any of the Company's associates for a period of two years
from the termination of your services with the Company, whether or not for
Cause.
VII. Representation & Warranty - You warrant and represent that you are not
bound by any commitment, including any contract of employment or consultancy,
which restricts or would preclude you from accepting to serve as a consultant
to, or member of, the Board or as Non-Executive Chairman of the Board, or from
fulfilling your obligations, as outlined in this letter. You agree to defend and
indemnify the Company against any claims by third parties arising from your
acceptance of such position(s) or the performance of your functions outlined
above.
VIII. Disputes - In the event of any dispute, we agree to first try to resolve
such differences together, failing which we agree that such differences shall be
settled by arbitration in accordance with the Commercial Arbitration Rules of
the American Arbitration Association ("AAA"), and judgment, upon the award of
the arbitrator, may be rendered in any court having jurisdiction. Written notice
of a demand for arbitration must be mailed by either party to the other and sent
to AAA by certified mail within ninety (90) days of the occurrence of the
dispute. Failure to mail written notice of a demand for arbitration within such
ninety (90) day period and comply with all procedural requirements set forth in
the AAA's Commercial Arbitration Rules shall be an absolute bar to the
institution of any proceedings and a waiver of the claimed disagreement.
IX. Complete Agreement - You agree that this letter sets out our basic
understanding with respect to your serving as Director and Consultant and,
subsequently, as Non-Executive Chairman, and that no material change in such
understanding will be effective unless agreed to in a written amendment signed
by both parties.
X. Successors & Assigns - This agreement is personal to you and you may not
assign it. It shall, however, enure to the benefit of, and be binding upon, the
Company's successors and assigns.
If the foregoing meets with your approval, please sign the enclosed copy of this
letter of understanding and return it in the enclosed, self-addressed and
stamped envelope.
Once again we are delighted to welcome you to One Price Clothing and look
forward to working together with you.
<TABLE>
<S> <C>
Sincerely Yours, REVIEWED & AGREED:
/s/ Laurie M. Shahon /s/ Leonard Snyder
</TABLE>
DATED: 4/16/98
Amendment to Agreement Dated April 16, 1998
Reference is made to the letter agreement dated April 16, 1998 ("Agreement") by
and between One Price Clothing Stores, Inc. ("Company") and Leonard M. Snyder
("Chairman"). The Agreement is hereby amended to add the following new
provisions relating to termination of the Agreement following a "Change of
Control" (as hereinafter defined).
1. The following language is hereby added by mutual agreement to Section III
("Compensation & Termination") to the Agreement:
Change of Control - In the event the Chairman's Agreement with the Company is
terminated by the Company (or the Board of Directors) without Cause, or for
"Good Reason" by the Chairman, within 24 months after a "Change of Control" of
the Company (a "Trigger Event"), then the Company shall pay to Chairman, in one
lump sum, an amount equal to twenty-four (24) months compensation, rather than
the maximum twelve (12) months provided for in the Agreement. Termination for
"Good Reason" shall be deemed to have occurred, and the Chairman shall be
entitled to the benefits of this provision, if the Chairman voluntarily
terminates the Agreement after 30 days written notice to Company and following
the occurrence of any of the following events, provided a "Change of Control"
has occurred: (i) the assignment to the Chairman of any duties inconsistent with
the highest position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by the Chairman
during the term of his Agreement with the Company or any action by the Company
or its Board of Directors which results in a material diminishment in such
position, authority, duties or responsibilities as were in effect immediately
prior to the Change in Control; (ii) a decrease in the Chairman's compensation
(including base salary, bonus or fringe benefits); (iii) a substantial increase
in the number of days required for the Chairman to fulfill his duties to the
Board or Company or a substantial increase in travel by the Chairman, in each
case as compared to the amount of days or travel required prior to such Change
in Control; or, (iv) failure of any successor of the Company to comply with this
Agreement. In consideration for the benefits conferred to the Chairman under
this provision, in the absence of a Trigger Event, the Chairman agrees to
continue his duties, following a Change of Control, for the term remaining under
the Agreement.
In addition, should a "Change of Control" occur, all stock options granted by
the Company to the Chairman, and not yet expired as of the date of such "Change
of Control," shall become immediately exercisable. In such event, the normal
expiration date shall apply to such options, provided, however, that the
Chairman shall have 90 days to exercise such options following a Trigger Event.
For purposes hereof, "Change of Control" shall be deemed to have occurred
following either of the following two events:
(i) A change in the Board of Directors of the Company, with the result that the
members of the Board, as elected by the stockholders of the Company on June 10,
1998 ("Incumbent Directors"), no longer constitute a majority of such Board,
provided that any person who becomes a director and whose appointment or
election was supported by a majority of the Incumbent Directors shall be
considered an Incumbent Director for purposes hereof; or,
(ii) a Section 11 (a) (ii) Event, as defined in the Shareholder Rights
Agreement, dated November 3, 1994, between Wachovia Bank of North Carolina,
N.A., as Rights Agent, and Employer ("Rights Agreement"), provided, however,
that for these purposes the applicable percentage for a Change of Control to
arise from a change in stock ownership shall be 40% and not 20% as provided for
in the Rights Agreement.
This Agreement shall be binding upon any successor of the Company.
Except as provided for herein by the foregoing amendment, the Agreement shall
continue unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
22, day of December, 1998.
<TABLE>
<S> <C>
One Price Clothing Stores, Inc. Leonard M. Snyder
/s/ Larry I. Kelley /s/ Leonard M. Snyder
By: Larry I. Kelley Chairman
Title: President & CEO
</TABLE>
October 8, 1999
Mr. Leonard M. Snyder
6260 N. Desert Moon Loop
Tucson, Arizona 85750
Subject: Amendment to Letter of Understanding Regarding Non-Executive Chairman
Position, dated April 16, 1998
Dear Lenny:
On behalf of the Compensation Committee of the Board of Directors of One Price
Clothing Stores, Inc. ("Company"), I am pleased to advise you that such
Committee has approved an amendment to Section III of your original letter of
understanding, dated April 16, 1998, as follows. Notwithstanding the final
paragraph of Section III in such letter agreement which currently provides that
the compensation and benefits described are all inclusive, the Committee has
authorized you to participate in the Director Stock Option Plan, as amended
("Plan"), for the current Board year 1999-2000 and the Board year thereafter,
2000-2001. In all other respects your letter agreement remains in effect.
For the current Board year 1999-2000 you have been awarded 5,000 shares of
Restricted Stock at a price equal to the closing price of the Company's stock on
the NASDAQ on October 7, 1999. We anticipate granting you an additional 5,000
shares of Restricted Stock next year for the Board year 2000-2001.
This grant is subject to the terms and conditions of the Plan.
Please acknowledge your receipt and agreement to such amendment, along with your
acceptance of such grant, by signing below and returning such signed copy in the
enclosed envelope to the Company's Corporate Secretary.
Sincerely Yours,
Laurie M. Shahon
Chair - Compensation Committee
Acknowledged, Agreed & Accepted: /s/ Leonard M. Snyder Dated: October 8, 1999
Leonard M. Snyder
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 15 - ACKNOWLEDGEMENT OF DELOITTE & TOUCHE LLP, INDEPENDENT ACCOUNTANTS
One Price Clothing Stores, Inc. and Subsidiaries
Duncan, South Carolina
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
subsidiaries for the three-month and nine-month periods ended October 30, 1999
and October 31, 1998, as indicated in our report dated November 18, 1999;
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 October 30, 1999, 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 and 1991 Stock Option Plan, and the Director Stock Option
Plan, respectively, of One Price Clothing Stores, Inc.
We also are 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
December 13, 1999
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</TABLE>
