UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
|x| Annual Report Pursuant To Section 13 or 15(d) Of The Securities Exchange Act
of 1934 (No Fee Required)
For the fiscal year ended January 30, 1999
OR
| | Transition Report Pursuant To Section 13 or 15(d) Of The Securities Exchange
Act of 1934 (No Fee Required)
For the transition period from
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 organization) (I.R.S. Employer Identification No.)
1875 East Main Street
Highway 290, Commerce Park
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
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 Par Value
(Title of Class)
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 ___
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
The aggregate market value of the voting stock held by non-affiliates of the
registrant as of March 29, 1999: Common Stock, $0.01 Par Value - $39,338,973.
The number of shares outstanding of the issuer's classes of common stock as of
March 29, 1999: Common Stock, $0.01 Par Value - 10,440,331 shares
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the proxy statement to be filed with respect to the annual
shareholders meeting to be held June 9, 1999 are incorporated by reference into
Part III.
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PART I
ITEM 1. BUSINESS
General
One Price Clothing Stores, Inc. (the "Registrant" or the "Company") operates a
chain of off-price retail women's and children's specialty stores offering a
wide variety of first quality, contemporary, in-season apparel and accessories.
During fiscal 1997, the Company expanded its merchandise offerings to include
additional categories and styles of merchandise to be sold at price points other
than its previous uniform $7 price point. This merchandise mix expansion was
designed to meet customer demand for items that the Company could not profitably
offer for sale at a retail price of $7. The Company purchases merchandise at
heavily discounted prices in large quantities from a broad mix of manufacturers,
jobbers, importers and other suppliers. The Company is able to acquire such
merchandise at heavily discounted prices because of imbalances between supply
and demand, order cancellations and vendor needs for liquidity. The Company is
able to take advantage of these circumstances because of its willingness to
purchase large quantities and to buy goods later in the season than many other
retailers. This purchasing strategy allows the Company to obtain favorable
prices and to react quickly to seasonal fashion preferences and weather
conditions affecting consumer spending. It is the Company's policy to offer only
first quality apparel; the Company does not purchase "seconds" or irregular
merchandise from its suppliers.
Company History and Organization
The Company opened its first store in August 1984. On February 9, 1994, a
wholly-owned subsidiary of the Company, One Price Clothing of Puerto Rico, Inc.,
was incorporated in Puerto Rico. It commenced operations on May 28, 1994. On
January 31, 1997, a wholly-owned subsidiary of the Company, One Price Clothing
- -- U.S. Virgin Islands, Inc. was incorporated in the U. S. Virgin Islands. It
commenced operations on March 20, 1997. On June 11, 1997, a wholly-owned
subsidiary, One Price Realty, Inc., was incorporated in South Carolina, to own
the Company's corporate offices and distribution center facilities in Duncan,
South Carolina. As used herein, unless the context otherwise indicates, the
"Company" refers to (i) One Price Clothing Stores, Inc., a Delaware corporation,
(ii) the immediate predecessor of One Price Clothing Stores, Inc., a South
Carolina corporation of the same name, (iii) the South Carolina corporation's
predecessor, a North Carolina corporation organized in 1984 under the name J. K.
Apparel, Inc., (iv) One Price Clothing of Puerto Rico, Inc., (v) One Price
Clothing - U.S. Virgin Islands, Inc., and (vi) One Price Realty, Inc.
Industry Segments
The Company operates in only one industry segment. All of the Company's assets
and significant revenues and pre-tax earnings relate to retail sales of apparel
and accessories to the general public through Company-operated stores. Other
than operations in Puerto Rico and the U.S. Virgin Islands, the Company had no
operations outside the continental United States at the end of fiscal 1998 and
no export sales. Reference is hereby made to the consolidated financial
statements included in Part II for information about the Company's assets, net
sales and profitability.
Operations
The Company operates a chain of off-price retail women's and children's
specialty stores offering a wide variety of first quality, contemporary,
in-season apparel and accessories. Prior to fiscal 1997, this merchandise was
offered at the uniform retail price of $7. The Company currently offers most of
its merchandise at or below a base price of $7 and offers certain additional
categories and styles priced higher than $7 when the Company believes that such
merchandise is clearly desired by the Company's customers. Such higher priced
merchandise -- including denim, dresses, coordinated sets, sweaters and heavier
jackets -- is offered primarily within the $8 to $15 price range. In fiscal
1997, the Company adjusted its base prices in Puerto Rico and the U.S. Virgin
Islands to $8. Also during fiscal 1997, the base price for plus-sized apparel in
the United States was adjusted upward to $8. During the fourth quarter of fiscal
1998, the Company began testing men's apparel in select stores.
The Company registered the trademark "One Price" with the United States Patent
and Trademark Office in June 1990 for a ten-year period with the option to renew
prior to expiration. The Company intends to apply for renewal for this
trademark. This trademark was accorded incontestable status by the United States
Patent and Trademark Office. The Company registered the trademark "OPC Fashions"
with the United States Patent and Trademark Office in January 1999 for a
ten-year period with the option to renew prior to expiration. The Company
considers the "One Price" and "OPC Fashions" trademarks to be valuable and
significant to the conduct of its business. The Company has registered "Ropa de
Ninos a un Precio" in the United States.
The One Price Store. The Company's typical store has approximately 3,300 square
feet, of which approximately 2,500 square feet is devoted to selling space. The
Company's current strategy is to open stores with a somewhat larger selling area
than this average and the Company expects to continue this approach. All of the
Company's stores are located in leased facilities with convenient access to
adequate parking or public transportation. At January 30, 1999, approximately
79% of the Company's stores were located in strip shopping centers and the
remaining stores were located in central business districts or malls. The
Company does not franchise its stores.
The Company's stores are typically located in communities with populations of at
least 40,000 people, as well as in large metropolitan areas. Most of the
Company's stores are open seven days a week and typical hours of operation are
from 10:00 a.m. until 7:00 p.m. or 9:00 p.m., Monday through Saturday, with
shorter hours on Sunday. A typical store employs a full-time manager, one or two
full-time assistant managers and up to ten additional part-time sales
associates.
The Company's stores are designed for customer convenience and for attractive
presentation of merchandise. All apparel is displayed on hangers and is
organized by classification, style and color, with in-store signage and graphics
that promote a pleasant shopping environment and customer convenience.
The Company's store operations department is headed by a Senior Vice President
of Stores who is assisted by regional and district sales managers. Each of the
six regional sales managers is responsible for approximately nine districts.
Each district sales manager is responsible for approximately 11 stores and
visits each store in his or her district on a regular basis to provide
assistance in promoting sales, training, store layout and merchandise
presentation, and to monitor adherence to the Company's operational and
management policies.
Store Locations and Expansion. At January 30, 1999, the Company operated 618
stores in 27 states, the District of Columbia, Puerto Rico and the U.S. Virgin
Islands. The Company opened 7 stores, relocated 5 stores and closed 49
underperforming stores in fiscal 1998. The Company anticipates that it will open
approximately 30 new stores in fiscal 1999. The Company will continue to monitor
the individual performance of all stores. Currently, the Company foresees that
it will close approximately 15 underperforming stores in fiscal 1999.
Purchasing. The Company's practice is to offer value to its customers by selling
desirable, first quality women's and children's apparel and accessories at
considerably lower prices than generally would be available from department
stores and other specialty retailers. The Company purchases its merchandise at
heavily discounted prices and on favorable terms from manufacturers, jobbers,
importers and other vendors.
The Company typically is able to purchase merchandise from vendors at
substantially discounted prices as a result of the following circumstances: the
inability of a manufacturer or importer to dispose of merchandise through
regular channels, the discontinuance of merchandise because of changes in color
or style, over-production by manufacturers, cancellation of orders by
conventional retail stores, the need of catalog retailers to dispose of
inventories of unordered catalog merchandise, and manufacturers' need to utilize
excess capacity or import quota or need for liquidity. The Company's ability and
willingness to purchase in large quantities and its reputation for reliability
in the industry provide the Company with purchasing advantages. The Company buys
its merchandise opportunistically which includes the purchase of merchandise
close to and during each selling season, later than department stores and other
specialty retailers. This purchasing strategy permits the Company to react to
fashion trends and opportunistic developments during a selling season. The
Company also purchases selected merchandise in advance of a selling season.
During fiscal 1998, the Company purchased merchandise from approximately 800
vendors, including manufacturers, jobbers, importers and other vendors. No
vendor accounted for more than 10% of the Company's total purchases for the
fiscal year. The number of vendors in any particular fiscal year fluctuates due
to the Company's opportunistic buying strategy.
Although there can be no assurance that the Company will be able to continue to
acquire sufficient quantities of first quality merchandise at such low prices
and on favorable terms, the Company continues to add new vendors and believes
that adequate sources of first quality merchandise are available at appropriate
price levels. The Company does not maintain long-term or exclusive purchase
commitments or arrangements with any vendor.
Corporate Offices and Distribution Center. The Company's corporate offices and
distribution center are located in Duncan, South Carolina. With the exception of
functions performed by certain merchandise buyers (including those based in the
Company's New York City office), regional directors of real estate, district and
regional sales managers, loss prevention investigators and field audit personnel
and certain administrative functions performed in Puerto Rico, substantially all
purchasing, accounting and other administrative functions are centralized at the
corporate offices.
Merchandising. The Company's merchandising strategy emphasizes contemporary,
in-season apparel for juniors, misses, plus-sized women and children. In the
fourth quarter of fiscal 1998, the Company began testing men's merchandise in a
select group of stores and the Company plans to continue to do so in fiscal
1999. The Company's target customers are value- and fashion-conscious women,
primarily in lower- and middle-income brackets. The Company offers only first
quality merchandise and emphasizes the value of its merchandise compared to
similar merchandise sold elsewhere at higher prices. Women's apparel sold by the
Company includes contemporary sportswear such as knit tops, blouses, shirts,
pants, shorts, skirts, dresses, sweaters and blazers. In fiscal 1997, the
Company began offering additional categories of merchandise such as outerwear,
denim and better dresses. Over the last three fiscal years, the proportions of
categories of merchandise the Company has sold have remained consistent and are
as follows: As a percentage of net sales, women's (juniors and misses) apparel
sales were 59%; plus-sized apparel sales were 21%; accessory sales (such as
scarves, watches, hair accessories, handbags, jewelry, fragrances and specialty
gifts) were 12%; and children's apparel sales were 8%.
Inventory Monitoring. The Company's management information systems, featuring
point-of-sale cash registers and a computerized inventory management system,
permit management to review each store's sales and inventory on a daily and
weekly basis, thereby enabling the Company to tailor its purchasing strategies
and merchandise shipments to stores based on customer demand.
Distribution Systems. Substantially all merchandise is shipped directly from
vendors to the Company's distribution center where the goods are inspected,
processed and sent to the Company's stores. The majority of shipments to stores
are made by common carriers.
Change in Fiscal Year
In March 1996, the Company elected to change its fiscal year from the Saturday
nearest December 31 to the Saturday nearest January 31, beginning in fiscal
1996. 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 those of other retail companies. The
Company's tax year, however, ends on the Saturday nearest December 31.
Seasonality
Prior to the Company's change in fiscal year, 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 the 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 net sales, were typically
higher.
As discussed above, the Company changed its fiscal year end to conform the
fiscal calendar to the seasonal patterns it experiences. As a result, the
Company's historical quarterly patterns have changed. The 1998, 1997 and 1996
fiscal years 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). Management is unable
to predict if this trend will continue in the future. However, management is
developing merchandise strategies designed to increase sales volume in the third
and fourth quarters.
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Working Capital Requirements
The Company's revolving credit facility, which provides up to $37,500,000 of
borrowing capacity (including a letter of credit sub-facility of up to
$25,000,000), expires in March 2001. Borrowings under the facility 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). The Company's twenty-year
mortgage agreement with a commercial bank of $8,125,000 is secured by the land,
buildings, fixtures and improvements located at the Company's Duncan, South
Carolina corporate offices and distribution center. The Company`s additional
letter of credit facility with a commercial bank was amended in March 1999 to
increase it to $5,000,000 and to extend its term to the earlier of June 2000 or
termination of the Company's revolving credit facility with its primary lender.
These lending agreements contain certain covenants and terms described in Items
7 and 8 of this report.
Merchandise inventories are typically purchased on credit or, for certain
merchandise inventories from foreign suppliers, by the use of letters of credit.
All such purchases are paid in United States dollars; thus, the Company is not
subject to foreign currency risks. As a result of the Company's opportunistic
buying strategy and to ensure that an adequate supply of merchandise is
available for shipment to its stores, the Company may, at times, invest a
significant amount of its working capital in merchandise inventories.
Revenues from retail sales are recognized at the time of the sale. The Company
accepts cash, checks, and certain major credit cards. All stores offer a liberal
exchange and return policy. A reserve for estimated merchandise returns is
recorded in the period that the merchandise is sold.
Customers
No material part of the business of the Company is dependent upon a single
customer or a few customers.
Competition
The women's retail apparel industry is highly competitive. In order to compete
effectively, the Company is dependent upon its ability to purchase merchandise
at substantial discounts. The Company competes with department stores, specialty
stores, discount stores, other off-price retailers and manufacturer-owned outlet
stores, many of which are owned by large national or regional chains with
substantially greater resources than the Company. There can be no assurance that
other retailers with substantially greater financial resources than the Company
will not adopt a purchasing and marketing concept similar to that of the
Company. Management believes that the primary competitive factors in the retail
apparel industry are price, quality, fashion content, variety of merchandise,
site selection and cost of operation. The Company believes that it is well
positioned in all of these areas to compete in its markets.
Environmental Factors
The Company is not aware of any federal, state or local environmental
regulations that will materially affect its operations or competitive position
or require material capital expenditures. The Company cannot predict, however,
the impact of possible future legislation or regulation on its operations.
Employees
At January 30, 1999, the Company had approximately 3,900 employees, of which
approximately 49% were full-time employees. The Company, like other retailers,
experiences a high turnover rate of full-time and part-time store employees but
has not experienced difficulties in hiring qualified personnel. None of the
Company's employees are covered by a collective bargaining agreement and
management believes that the Company's relationship with its employees is good.
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Private Securities Litigation Reform Act of 1995
All statements contained in this Annual Report on Form 10-K 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 Annual Report on Form 10-K 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
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.
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ITEM 2. PROPERTIES
The Company leases all of its store locations. At January 30, 1999, the Company
had 618 stores operating in 27 states, the District of Columbia, Puerto Rico and
the U. S. Virgin Islands. The Company leases its stores under operating leases
generally with initial terms of five years and with one to two renewal option
periods of five years each. Leases typically contain kickout provisions based on
an individual store's annual sales volume and/or the shopping center's
occupancy. The leases generally provide for increased rents resulting from
increases in operating costs and property taxes. Certain of the leases provide
contingent or percentage rentals based upon sales volume, and other stores are
leased on a month-to-month basis. To date, the Company has not experienced
difficulty in obtaining leases for suitable locations for its stores on
satisfactory terms. Approximately 80 existing store leases expire or have
initial lease terms containing lessee renewal options, which may be exercised
during fiscal 1999. Management believes that the Company will not experience a
significant increase in lease expense as a result of exercising renewal options
or negotiating additional lease terms for such locations. The following is a
list of store locations as of January 30, 1999:
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NUMBER OF
STATE STORES
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Alabama................................................................................................... 13
Arizona................................................................................................... 11
Arkansas.................................................................................................. 5
California................................................................................................ 60
Florida................................................................................................... 63
Georgia................................................................................................... 36
Illinois.................................................................................................. 30
Indiana................................................................................................... 10
Kansas.................................................................................................... 2
Kentucky.................................................................................................. 4
Louisiana................................................................................................. 18
Maryland.................................................................................................. 16
Michigan.................................................................................................. 15
Mississippi............................................................................................... 12
Missouri.................................................................................................. 17
North Carolina............................................................................................ 32
New Jersey................................................................................................ 8
New Mexico................................................................................................ 5
New York.................................................................................................. 12
Ohio...................................................................................................... 17
Oklahoma.................................................................................................. 7
Pennsylvania.............................................................................................. 20
Puerto Rico............................................................................................... 29
South Carolina............................................................................................ 35
Tennessee................................................................................................. 20
Texas..................................................................................................... 92
U.S. Virgin Islands....................................................................................... 2
Virginia.................................................................................................. 20
Washington, DC............................................................................................ 2
Wisconsin................................................................................................. 5
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TOTAL STORES.............................................................................................. 618
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The Company's corporate offices and distribution center, occupying approximately
500,000 square feet, are located in Duncan, South Carolina on approximately 82
acres which are owned by the Company. The Company's facilities are expected to
be able to support the Company's planned growth over the next several years. The
Company's borrowings under its mortgage loan facility are secured by the
Company's real property located at its corporate offices including land,
buildings, fixtures and improvements. 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.
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ITEM 3. LEGAL PROCEEDINGS
From time to time, the Company is a defendant in legal actions involving claims
arising in the normal course of its business. The Company believes that, as a
result of its legal defenses and insurance arrangements, none of these actions
presently pending, if decided adversely, would have a material adverse effect on
its financial position, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the Company's fiscal year.
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER
MATTERS
The Company's Common Stock is traded under the symbol ONPR in the National
Market System of NASDAQ. As of March 29, 1999, there were approximately 400
shareholders of record.
Since its inception, the Company has never paid cash dividends. The Company's
credit agreement contains covenants which, among other things, prohibit the
Company from paying dividends. Currently, the Board of Directors intends to
continue its policy of retaining earnings for operations, debt repayment and
expansion of the business.
The quarterly high and low sales prices of the Company's Common Stock as quoted
by NASDAQ are shown below.
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Fiscal Year Ended Fiscal Year Ended
January 30, 1999 January 31, 1998
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High Low High Low
First 3 3/16 1 1/8 4 1/2 3 1/8
Second 4 1/2 2 7/16 4 7/8 3 5/16
Third 4 7/16 2 3/8 3 5/8 3
Fourth 5 3/4 3 7/8 3 1/8 1 1/8
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ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The following table presents selected consolidated financial data for the
Company for each of the five fiscal years ended December 31, 1994 through
January 30, 1999, including the 5-week period ended February 3, 1996 ("the
Transition Period"), resulting from the Company's change in fiscal year end. The
selected consolidated financial data as of January 30, 1999 and January 31, 1998
and for the fiscal years ended January 30, 1999, January 31, 1998 and February
1, 1997, are extracted from the Company's audited consolidated financial
statements and should be read in conjunction with the consolidated financial
statements and the notes thereto included under Item 8 of this Form 10-K and
Management's Discussion and Analysis of Financial Condition and Results of
Operations included under Item 7 of this Form 10-K. Selected consolidated
financial data as of and for all other periods were derived from audited
consolidated financial statements not contained within this Form 10-K.
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Transition
Fiscal Year Ended Period Fiscal Year Ended
------------------------------------- Ended ---------------------------
January 30, January 31, February 1, February 3, December 30, December 31,
1999 1998 1997 1996 1995 1994
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Dollars in thousands except per share amounts
1 Net sales $ 328,059 302,285 298,986 15,022 294,692 283,326
2 Restructuring (credit) charge $ (385) 2,265 -- -- -- --
3 Income (loss) before income taxes and
cumulative effect of changes in
accounting principles $ 5,497 (13,493) (1,994) (9,091) (2,595) 7,138
4 Income (loss) before cumulative effect
of changes in accounting principles $ 4,383 (11,320) (1,267) (5,634) (1,304) 4,389
5 Cumulative effect on prior years of
changes in accounting principles $ -- -- -- (1,090) -- --
6 Net income (loss) $ 4,383 (11,320) (1,267) (6,724) (1,304) 4,389
7 Current assets $ 55,387 48,331 61,891 52,517 35,990 31,252
8 Long-term assets $ 37,440 39,781 39,076 41,663 43,374 36,678
9 Total assets $ 92,827 88,112 100,967 94,180 79,364 67,930
10 Current liabilities $ 44,741 44,080 48,722 40,669 18,594 13,035
11 Long-term debt $ 7,755 7,915 4,868 6,447 6,579 --
12 Deferred income tax liability $ -- -- 718 818 1,482 1,449
13 Other noncurrent liabilities $ 2,914 3,095 2,317 1,089 828 372
14 Shareholders' equity $ 37,417 33,022 44,342 45,157 51,881 53,074
15 Stores opened (closed) during the
period, net # (42) 15 (43) (13) 60 101
16 Stores operating at period-end # 618 660 645 688 701 641
17 Number of employees # 3,900 4,269 4,105 4,574 4,841 4,907
18 Weighted average number of common
shares (000) - diluted # 10,494 10,436 10,401 10,335 10,314 10,527
19 Number of common shares outstanding at
period-end (000) # 10,440 10,436 10,436 10,335 10,335 10,305
20 Diluted income (loss) per common share
before cumulative effect of changes
in accounting principles $ 0.42 (1.08) (0.12) (0.55) (0.13) 0.42
21 Cumulative effect on prior years per
common share of changes in accounting $ -- -- -- (0.10) -- --
principles
22 Diluted net income (loss) per common $ 0.42 (1.08) (0.12) (0.65) (0.13) 0.42
share
23 Cash dividends declared per common $ -- -- -- -- -- --
share
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Notes to Selected Consolidated Financial Data
Line Definitions
17 Number of employees-- Number of full and part-time employees at
period-end.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL SUMMARY
The following table sets forth, for the three most recent fiscal years, certain
financial statement elements expressed as a percentage of net sales:
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Fiscal Year Ended
January 30, 1999 January 31, 1998 February 1, 1997
PERCENTAGE OF NET SALES
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 64.6% 66.8% 64.7%
------ ------- ------
Gross margin 35.4% 33.2% 35.3%
------ ------ -----
Selling, general and administrative expenses 23.5% 25.8% 25.3%
Restructuring (credit) charge (0.1)% 0.7% --
Store rent and related expenses 8.1% 8.7% 8.6%
Depreciation and amortization expense 1.6% 1.7% 1.6%
Interest expense 0.6% 0.7% 0.6%
----- ------ -----
33.7% 37.6% 36.0%
------ ------ -----
Income (loss) before income taxes 1.7% (4.4)% (0.7)%
Provision for (benefit from) income taxes 0.4% (0.7)% (0.3)%
------ ------- ------
Net income (loss) 1.3% (3.7)% (0.4)%
====== ======= ======
Stores in operation at period-end 618 660 645
====== ======= ======
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FISCAL YEAR ENDED JANUARY 30, 1999 (FISCAL 1998) COMPARED TO FISCAL YEAR ENDED
JANUARY 31, 1998 (FISCAL 1997)
Net sales in fiscal 1998 increased 8.5% to $328.1 million compared to $302.3
million in fiscal 1997. In fiscal 1998, the Company achieved an increase in net
sales while operating an average of 27 fewer stores than in fiscal 1997. The
increase in net sales is primarily due to merchandising and presentation
strategies implemented during the fourth quarter of fiscal 1997. These
strategies included (i) clarifying price points, (ii) increasing emphasis on
offering highly desirable, in-season fashionable merchandise and (iii) improving
merchandise displays, window graphics and in-store signage. In fiscal 1998,
comparable store sales increased 9.1% for the year compared to fiscal 1997.
Comparable stores are those stores in operation at least 18 months and there
were 571 such stores at January 30, 1999.
In accordance with a decision to limit new store openings under the
restructuring plan announced in the fourth quarter of fiscal 1997, the Company
opened 7 stores during fiscal 1998, relocated 5 stores and closed 49
underperforming stores. The Company opened 64 stores during fiscal 1997,
relocated 13 stores and closed 49 underperforming stores.
During fiscal 1998, the Company continued to improve upon the merchandising and
presentation strategies established in the fourth quarter of fiscal 1997. Under
these strategies, the Company priced most of its merchandise at $7 or less; $8
for plus sizes. The Company also offered select merchandise, such as denim,
better dresses and outerwear, at discernable price points up to $15. The Company
continued to focus on the attractive presentation of merchandise as well as
clear signage in the stores.
Gross margin as a percentage of net sales was 35.4% in fiscal 1998 compared to
33.2% in fiscal 1997. This increase in gross margin as a percentage of net sales
was primarily due to a significant decrease in the amount of markdowns taken in
fiscal 1998 versus fiscal 1997. The decrease in markdowns was the result of
improved sales at competitive original price points and better transition of
merchandise between selling seasons. The Company also lowered its distribution
and merchandising costs as a percentage of net sales when compared to fiscal
1997 through higher levels of sales and efficiencies achieved in its
distribution center.
Selling, general and administrative ("SG&A") expenses decreased in dollars and
as a percentage of net sales in fiscal 1998 versus fiscal 1997. SG&A expenses
were 23.5% of net sales in fiscal 1998 compared to 25.8% of net sales in fiscal
1997. The significant decrease in SG&A expenses is primarily due to achieving
cost-containment goals, including reducing total payroll expense, established in
the Company's restructuring plan announced in the fourth quarter of fiscal 1997.
Although total payroll decreased, average salaries and wages in the Company's
stores increased slightly in fiscal 1998 compared to fiscal 1997. This increase,
affecting primarily part-time associates, was due to an increase in the average
hourly wage rate, which was partially offset by a decrease in average store
hours.
During the fourth quarter of fiscal 1997, the Company announced a restructuring
plan which identified 75 low-volume, underperforming stores for closing. A
substantial number of these stores were closed by January 30, 1999. Certain of
these stores are no longer under consideration for closing due to a significant
improvement in performance since the announcement of the plan. As a result,
during the fourth quarter of fiscal 1998, the Company recorded a favorable
adjustment to pre-tax income of $385,000 to reverse the estimated cost, recorded
in fiscal 1997, of closing these stores.
Store rent and related expenses were 8.1% of net sales in fiscal 1998 compared
to 8.7% in fiscal 1997. Store rent and related expenses for fiscal 1998
decreased as a percentage of net sales due to the leverage provided by higher
year-over-year sales as well as aggressively closing underperforming stores
during fiscal 1998. Average store rent and related expenses increased by 5% in
fiscal 1998 compared to fiscal 1997. 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 leasing more costly sites with
higher rents while closing older, underperforming stores which generally have
lower average rent costs.
Depreciation and amortization expense as a percentage of net sales was 1.6% in
fiscal 1998 compared to 1.7% in fiscal 1997. The decrease in depreciation and
amortization expense is primarily due to the leverage provided by higher
year-over-year sales as well as a decrease in the number of stores open during
fiscal 1998 versus fiscal 1997.
Interest expense was 0.6% of net sales in fiscal 1998 compared to 0.7% of net
sales in fiscal 1997 due to the increase in net sales year over year. Interest
expense in dollars increased in fiscal 1998 when compared to fiscal 1997. This
increase was primarily due to higher average borrowings in fiscal 1998 versus
fiscal 1997 in order to maintain levels of inventory necessary to support the
increased sales.
The effective income tax provision rate for fiscal 1998 was 20.3% compared to
the effective income tax benefit rate of 16.1% in fiscal 1997. The change in the
Company's effective income tax rate is primarily attributable to a favorable
valuation allowance adjustment for fiscal 1998 compared to fiscal 1997. Because
management cannot be assured that certain net operating loss carryforwards,
credit carryforwards and net cumulative temporary differences for U.S. federal
and state income tax purposes will be fully utilized or realized, valuation
allowances have been provided for a portion of the net deferred income tax
asset. Management estimates that the Company's effective income tax rate will be
approximately 40% in fiscal 1999; however, if sufficient levels of profitability
are achieved, the effective income tax rate may decrease because of a possible
favorable adjustment of some or all of the valuation allowance.
OUTLOOK
Sales through the first ten weeks of fiscal 1999 are ahead of planned levels
(through the corresponding time period) due, in part, to favorable trends in the
women's apparel industry as a whole, as well as the Company's merchandise
strategy of offering goods that emphasize quality, value and fashion. Sales
during the corresponding time period in fiscal 1998 were hindered by slow
receipts of key merchandise. During fiscal 1999, the Company intends to focus
its efforts on improving sales in existing stores while maintaining its margin
and cost-containment targets. As part of this strategy, the Company plans to
continue to monitor the merchandise mix and demographic profiles of its stores.
The Company also plans to increase the size of certain highly productive stores
and expand the test of men's apparel sales to approximately 200 stores. The
Company plans to open approximately 30 new stores in existing markets and close
approximately 15 underperforming stores in fiscal 1999.
Average store rent and related expenses are expected to increase in fiscal 1999
due to the location and the increase in the average square footage of stores
planned to open in fiscal 1999 and the closing of older, lower-volume stores.
Management will seek to leverage these increases through improved average store
sales volume. Also, the Company has approximately 80 existing leases that expire
or have initial lease terms containing lessee renewal options which may be
exercised in fiscal 1999. Management believes that the Company will not
experience a material increase in aggregate store rents as a result of renewal
options or negotiating new lease terms for such locations.
FISCAL YEAR ENDED JANUARY 31, 1998 (FISCAL 1997) COMPARED TO FISCAL YEAR ENDED
FEBRUARY 1, 1997 (FISCAL 1996)
Net sales in fiscal 1997 increased 1% to $302.3 million compared to $299.0
million in fiscal 1996. This increase in net sales was primarily due to more
stores being in operation, on average, during fiscal 1997 as compared to fiscal
1996. In fiscal 1997, comparable store sales decreased 1% for the year compared
to fiscal 1996. Comparable stores are those stores in operation at least 18
months.
The Company opened 64 stores during fiscal 1997, relocated 13 stores and closed
49 underperforming stores. The Company opened 23 stores during fiscal 1996,
relocated 11 stores and closed 66 underperforming stores.
During fiscal 1997, the Company implemented its previously announced strategy to
offer additional categories of merchandise at price points other than its
traditional $7 retail price. However, during the implementation of this
strategy, management believes that the Company confused its customers by
introducing too many items at price points higher than its previous $7 price
point. In addition, these higher priced items were offered at too many price
points. This combination of too many higher priced items at too many price
points had a negative effect on markdowns and SG&A expenses as discussed below.
During the fourth quarter of fiscal 1997, the Company adjusted its pricing and
merchandising strategy to increase the portion of its merchandise priced at $7
or less. Also, the Company established clear policies to limit its higher price
point items to only that merchandise which had been determined to be clearly
desired by its customers and could not be offered for $7, thus focusing its
merchandising strategy on quality, value and selection. Such higher priced items
are offered at discernable price points up to $15.
Gross margin as a percentage of net sales was 33.2% in fiscal 1997 compared to
35.3% in fiscal 1996. This decrease in gross margin as a percentage of net sales
primarily resulted from a significantly higher level of markdowns taken during
fiscal 1997. Higher levels of markdowns were taken during the third quarter of
fiscal 1997 in an effort to clear transitional merchandise which was not
"fashion right." Higher levels of markdowns were taken during the fourth quarter
of fiscal 1997 in order to clear inventory as part of the Company's initiative
to aggressively close underperforming stores and to adjust price points in
certain merchandise categories downward as part of the Company's strategy to
offer more of its merchandise at $7 or below.
SG&A expenses as a percentage of net sales were 25.8% in fiscal 1997 compared to
25.3% in fiscal 1996. When expressed as a percentage of net sales, corporate
office and store operating costs increased. These increases resulted primarily
from increased marketing costs as a result of producing in-store signs and
posters to promote the new merchandising strategy and to display the many new
price points and increased equipment lease costs in the Company's corporate
offices. Average salaries and wages in the Company's stores increased 6% in
fiscal 1997 compared to fiscal 1996. This increase, affecting primarily
part-time associates, was due to an increase in average store hours and to
increases in the Federal Minimum Wage which were effective in October 1996 and
September 1997. Management allocated a higher number of average payroll hours
per store in fiscal 1997 compared to fiscal 1996 because management believed
introduction of the higher price points would necessitate additional training
and a higher level of customer service.
In response to lower than expected operating results, the Company announced a
restructuring plan during the fourth quarter of fiscal 1997. The plan included
initiatives which were designed to return the Company to profitability by
lowering operating costs, redeploying assets and curtailing the number of new
store openings until the Company's existing stores were operating profitably.
Under the restructuring plan the Company planned to close approximately 75
low-volume, underperforming stores and eliminate approximately 300 positions.
The Company recorded a one-time charge of $2,265,000 during the fourth quarter
of fiscal 1997 to cover costs associated with the plan. The total charge
included costs to close stores, such as the noncash write-off of fixed assets
and store supplies of $1,378,000, lease buyouts of approximately $398,000, and
employee severance, outplacement costs and other miscellaneous expenses of
approximately $489,000.
Store rent and related expenses as a percentage of net sales were 8.7% in fiscal
1997 compared to 8.6% in fiscal 1996. Average store rent and related expenses
increased 5% in fiscal 1997 compared to fiscal 1996 primarily due to the
continuation of the Company's store expansion strategy of increasing the
proportion of larger, higher-volume stores and thus entering more costly sites
with higher rents, and the closing of older, underperforming stores which had
lower average rent costs.
Depreciation and amortization expense was 1.7% of net sales in fiscal 1997
compared to 1.6% of net sales in fiscal 1996. This increase in depreciation and
amortization expense resulted primarily from fixed asset additions associated
with new store openings in fiscal 1997 and to software upgrades in the Company's
corporate offices.
Interest expense was 0.7% of net sales in fiscal 1997 compared to 0.6% of net
sales in fiscal 1996. This increase in interest expense resulted from a
combination of slightly higher average borrowings and a 0.5% higher average
borrowing rate in fiscal 1997 compared to fiscal 1996.
The effective income tax benefit rate for fiscal 1997 was 16.1% compared to
36.5% in fiscal 1996. This decrease was primarily attributable to the recording
of valuation allowances related to the Company's tax loss and credit
carryforwards in fiscal 1997.
INFLATION
During its three most recent fiscal years, the Company believes that the impact
of inflation has not been material to its financial condition or results of
operations. Occasionally, the Company may experience slight increases in the
average purchase price per unit of merchandise; however, such increases also
reflect the impact of an increase in the quality of goods purchased in addition
to minimal inflationary factors.
LIQUIDITY AND CAPITAL RESOURCES
Historically, the Company's primary needs for liquidity and capital have been to
fund its new store expansion and the related growth in merchandise inventories.
The Company has obtained credit facilities which, together with cash provided by
operations, are expected to meet the liquidity and capital needs during the
period of the agreements.
The Company's credit facilities consist of a revolving credit facility to meet
the Company's 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 Company's credit facilities
contain certain financial and non-financial covenants with which the Company was
in compliance at January 30, 1999. A summary of the Company's credit facilities
follows. Please refer to Note B to the Consolidated Financial Statements
contained within this Annual Report on Form 10-K for a more complete description
of the Company's credit facilities.
The Company has a $37,500,000 revolving credit facility (including a $25,000,000
letter of credit sub-facility) with its 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 on a borrowing base formula determined with respect to
eligible inventory as defined in the agreement. At January 30, 1999, the Company
had approximately $9.4 million of excess availability under the borrowing base
formula.
The maximum and average amounts outstanding during fiscal 1998 and fiscal 1997
and amounts outstanding at the end of such periods for the revolving credit
facility are disclosed in Note B to the Consolidated Financial Statements in
Item 8 of this document.
The Company has a twenty-year, $8,125,000 mortgage loan agreement with a
commercial bank payable in 240 consecutive equal monthly installments through
July 2017. The agreement is secured by the Company's real property located at
its corporate offices including land, buildings, fixtures and improvements.
The Company has 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.
The Company's weighted average interest rate for all borrowings was 8.6% and
8.4% in fiscal 1998 and fiscal 1997, respectively. The Company had outstanding
letters of credit for the purchase of merchandise inventories totaling
approximately $6,613,000 and $6,075,000 at January 30, 1999 and January 31,
1998, respectively.
Net cash provided by operating activities for fiscal 1998, 1997 and 1996 was
$3,923,000, $8,660,000 and $2,352,000, respectively. The decrease in net cash
provided by operating activities in fiscal 1998 compared to fiscal 1997 is
primarily the result of an increase in merchandise inventories, and a decrease
in noncash charges including deferred income taxes and costs associated with
disposal of property and equipment, and partially offset by an improvement in
the Company's year-over-year results of operations, including a favorable
adjustment in fiscal 1998 to the estimated costs of fiscal 1997's
restructuring plan. The increase in net cash provided by operating activities in
fiscal 1997 compared to fiscal 1996 is primarily the result of a decrease in
merchandise inventories and increases in noncash charges for depreciation and
costs associated with the disposal of property and equipment (due to closing
stores as part of the restructuring plan) which more than offset the Company's
net loss.
Total merchandise inventories were $45,639,000, $35,508,000 and $48,371,000 at
January 30, 1999, January 31, 1998 and February 1, 1997, respectively. Total
merchandise inventories increased 29% at January 30, 1999 compared to January
31, 1998. The increase in total merchandise inventories is attributable to all
portions of merchandise inventories -- including merchandise in-transit to the
Company's distribution center from its vendors, merchandise inventories held in
the distribution center and in-store inventories. Most of this year-over-year
inventory increase was the result of purchasing and distributing spring and
summer merchandise in order to increase inventory to an appropriate level - the
January 31, 1998 inventory level was abnormally low. It is management's intent
to purchase goods in an opportunistic manner, as well as in a timely manner, in
order to make smooth transitions between each season.
Total merchandise inventories decreased 27% at January 31, 1998 compared to
February 1, 1997. The decrease is primarily due to a decrease in merchandise
in-transit to the Company's distribution center from its vendors. Most of this
year-over-year in-transit decrease related to lower levels of imported goods.
Since late fiscal 1997, the Company has relied heavily on sourcing inventory
through opportunistic purchases from domestic vendors. In fiscal 1998, import
purchases (including freight and duty) were 13% of total purchases compared to
24% in fiscal 1997 and 31% in fiscal 1996. The level and source of inventories
are subject to fluctuations because of the Company's opportunistic buying
strategy and prevailing business conditions.
Net cash used in investing activities for fiscal 1998, 1997 and 1996 was
$3,151,000, $7,134,000 and $3,033,000, respectively, and was primarily used for
leasehold improvements and equipment for new stores opened each year, as well as
information technology expenditures including software and hardware upgrades.
Net cash of $181,000 was used in financing activities in fiscal 1998 primarily
as a result of the repayment of the Company's mortgage loan facility and the
payment of capital lease obligations which exceeded the net borrowings from the
Company's revolving credit facilities. Net cash of $2,256,000 was used in
financing activities in fiscal 1997 primarily as a result of a net repayment on
the Company's revolving credit facility which exceeded the net borrowings on the
Company's mortgage loan and term loan facilities. Net cash of $2,834,000 was
provided by financing activities in fiscal 1996 primarily as a result of net
borrowings on the Company's revolving credit facility and net borrowings on the
Company's term loan facilities.
In fiscal 1999, the Company plans to spend approximately $5.0 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. The Company's liquidity requirements in the foreseeable future are
expected to be met principally through cash provided by operations and the use
of its credit facilities. If deemed by management to be in the best interest of
the Company, additional long-term debt, equity, capital leases, or other
permanent financing may be considered.
MARKET RISK AND RISK MANAGEMENT POLICIES
The Company is exposed to market risk from changes in interest rates affecting
its credit arrangements, including a variable-rate revolving credit facility and
a fixed-rate mortgage loan agreement, which may adversely affect its results of
operations and cash flows. The Company seeks to minimize its interest rate risk
through its day-to-day operating and financing activities. The Company does not
engage in speculative or derivative financial or trading activities.
A hypothetical 100 basis point adverse change (increase) in interest rates
relating to the Company's revolving credit facility for fiscal 1998 would have
decreased pre-tax income by approximately $132,000 for the same time period. Due
to the fixed-rate nature of the mortgage loan agreement, a hypothetical 100
basis point adverse change (decrease) in interest rates would have increased the
estimated fair value of the Company's mortgage loan agreement by approximately
$627,000 at January 30, 1999, but would have had no effect on the Company's
results of operations or cash flows for fiscal 1998.
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 has
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 are being performed
simultaneously. The Company anticipates that all five phases will be complete
and its major systems will be Year 2000 compliant by the summer of 1999.
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 this program,
the Company has a formal vendor Year 2000 compliance program in place. The
Company has identified and assigned various levels of risk to third party
vendors associated with the Company. The Company has received responses from all
the vendors identified as critical to its operations. Each has indicated that it
expects to be Year 2000 compliant in a timely manner. During the course of
fiscal 1999, the Company will continue its vendor compliance efforts focusing on
the remaining, less critical vendors in order of their assigned levels of risk.
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, have been due for upgrades in
order to maintain vendor support. Therefore, the Company would be devoting 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 also continues to replace any non-compliant software and hardware as
necessary. During fiscal 1998, the cost of these incidental software and
hardware replacements was considerably less than the expected amount of $25,000.
The cost of these incidental software and hardware replacements is expected to
be less than $50,000 in fiscal 1999.
Risks and Contingency Planning
Management expects that the Company will substantially complete implementation
of the Year 2000 Plan by the summer of 1999 and will continue to monitor its
systems through the remainder of the year, but gives no assurance that
unforeseen difficulties which could alter the date of completion of the Year
2000 Plan will not occur while performing upgrades, installations, testing and
implementation. In addition, as part of a 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 intends to mitigate its Year 2000 risk by completing implementation
of the Year 2000 Plan by the summer of 1999, permitting time to monitor
compliance as well as to conduct disaster recovery tests. The Company intends to
mitigate its risk of temporarily closed stores due to possible interruptions in
service such as electric power and telephone through the use of business
interruption insurance, which it currently carries, and uses from time to time
to protect itself from temporary closings due to weather related interruptions.
The Company plans to continue to develop its contingency plans during the
completion of the remaining phases of its Year 2000 Plan.
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," effective for periods beginning after June 15, 1999. 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 Annual Report on Form 10-K 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 Annual Report on Form 10-K 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
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 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
See "Market Risk and Risk Management Policy" in Item 7.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of
One Price Clothing Stores, Inc.
Duncan, South Carolina
We have audited the accompanying consolidated balance sheets of One Price
Clothing Stores, Inc. and subsidiaries (the "Company") as of January 30, 1999
and January 31, 1998, and the related consolidated statements of operations,
shareholders' equity, and cash flows for each of the three fiscal years in the
period ended January 30, 1999. Our audits also included the financial statement
schedule listed in the Index at Item 14 (d). These consolidated financial
statements and financial statement schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
consolidated financial statements and financial statement schedule based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of January 30, 1999
and January 31, 1998, and the results of its operations and its cash flows for
each of the three fiscal years in the period ended January 30, 1999, in
conformity with generally accepted accounting principles. Also, in our opinion,
such financial statement schedule listed in the index at Item 14(d), when
considered in relation to the basic consolidated financial statements taken as a
whole, presents fairly in all material respects the information set forth
therein.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
March 17, 1999(March 31, 1999 as to Note B)
<PAGE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
January 30, January 31,
1999 1998
----------------- -----------------
Assets
CURRENT ASSETS
Cash and cash equivalents $ 2,418,000 $ 1,827,000
Miscellaneous receivables, net of allowance for doubtful accounts
of $80,000 (1998) and $196,000 (1997) 1,526,000 2,066,000
Merchandise inventories 45,639,000 35,508,000
Federal and state income taxes receivable 1,303,000 4,637,000
Prepaid expenses 3,733,000 4,293,000
Deferred income taxes 768,000 --
----------------- --------------
TOTAL CURRENT ASSETS 55,387,000 48,331,000
PROPERTY AND EQUIPMENT, net 33,446,000 36,004,000
OTHER ASSETS 3,994,000 3,777,000
--------------- --------------
$ 92,827,000 $ 88,112,000
=============== ==============
Liabilities and Shareholders' Equity
CURRENT LIABILITIES
Accounts payable $ 24,750,000 $ 25,391,000
Current portion of long-term debt and revolving credit facility 11,998,000 11,664,000
Accrued salaries and wages 3,118,000 1,789,000
Accrued employee benefits 2,338,000 2,271,000
Other accrued and sundry liabilities 2,537,000 2,965,000
---------------- ----------------
TOTAL CURRENT LIABILITIES 44,741,000 44,080,000
LONG-TERM DEBT 7,755,000 7,915,000
OTHER NONCURRENT LIABILITIES 2,914,000 3,095,000
COMMITMENTS AND CONTINGENCIES
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 10,439,531 (1998) and 10,435,531 (1997) 104,000 104,000
Additional paid-in capital 11,465,000 11,453,000
Retained earnings 25,848,000 21,465,000
--------------- ----------------
37,417,000 33,022,000
---------------- -----------------
$ 92,827,000 $ 88,112,000
================ =================
</TABLE>
See notes to consolidated financial statements
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
January 30, January 31, February 1,
1999 1998 1997
----------------- ------------------ -----------------
NET SALES $ 328,059,000 $ 302,285,000 $ 298,986,000
Cost of goods sold 211,893,000 201,901,000 193,318,000
----------------- ------------------ -----------------
GROSS MARGIN 116,166,000 100,384,000 105,668,000
Selling, general and administrative expenses 77,158,000 78,077,000 75,564,000
Restructuring (credit) charge (385,000) 2,265,000 --
Store rent and related expenses 26,653,000 26,415,000 25,566,000
Depreciation and amortization expense 5,115,000 5,131,000 4,778,000
Interest expense 2,128,000 1,989,000 1,754,000
----------------- ------------------ -----------------
110,669,000 113,877,000 107,662,000
----------------- ------------------ -----------------
INCOME (LOSS) BEFORE INCOME TAXES 5,497,000 (13,493,000) (1,994,000)
Provision for (benefit from) income taxes 1,114,000 (2,173,000) (727,000)
----------------- ------------------ -----------------
NET INCOME (LOSS) $ 4,383,000 $ (11,320,000) $ (1,267,000)
================= ================== =================
PER COMMON SHARE AMOUNTS:
NET INCOME (LOSS) PER COMMON SHARE -
BASIC AND DILUTED $ 0.42 $ (1.08) $ (0.12)
================= ================== =================
Weighted average number of common shares
outstanding - basic 10,437,102 10,435,531 10,400,789
================= ================== =================
Weighted average number of common shares
outstanding - diluted 10,493,816 10,435,531 10,400,789
================= ================== =================
</TABLE>
See notes to consolidated financial statements
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Additional
Common Stock Paid-in Retained
Shares Amount Capital Earnings Total
Balance at February 3, 1996 10,335,031 $103,000 $11,002,000 $34,052,000 $45,157,000
Stock options exercised 100,500 1,000 451,000 -- 452,000
Net loss -- -- -- (1,267,000) (1,267,000)
---------- -------- ----------- ------------- ------------
Balance at February 1, 1997 10,435,531 104,000 11,453,000 32,785,000 44,342,000
Net loss -- -- -- (11,320,000) (11,320,000)
---------- -------- ----------- ----------- ------------
Balance at January 31, 1998 10,435,531 104,000 11,453,000 21,465,000 33,022,000
Stock options exercised 4,000 -- 12,000 -- 12,000
Net income -- -- -- 4,383,000 4,383,000
---------- -------- ----------- ------------ -----------
Balance at January 30, 1999 10,439,531 $104,000 $11,465,000 $25,848,000 $37,417,000
========== ======== =========== ============ ===========
</TABLE>
See notes to consolidated financial statements
<PAGE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
---------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $ 4,383,000 $ (11,320,000) $ (1,267,000)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization 5,115,000 5,131,000 4,778,000
Provision for supplemental post-retirement benefits 113,000 128,000 970,000
Deferred income taxes (768,000) 1,217,000 246,000
Loss on disposal of property and equipment 52,000 2,325,000 1,261,000
Decrease in other noncurrent assets 276,000 382,000 579,000
Increase in other noncurrent liabilities 18,000 435,000 151,000
Changes in operating assets and liabilities:
Decrease (increase) in miscellaneous receivables and
prepaid expenses 1,039,000 (1,460,000) 594,000
(Increase) decrease in merchandise inventories (10,131,000) 12,863,000 (8,598,000)
Decrease (increase) in federal and state income taxes receivable 3,335,000 (400,000) 437,000
Increase (decrease) in accounts payable and other
liabilities 491,000 (641,000) 3,201,000
---------------- -------------- --------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 3,923,000 8,660,000 2,352,000
---------------- -------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (2,438,000) (6,346,000) (2,674,000)
Purchases of other noncurrent assets (782,000) (564,000) (359,000)
Repayment of (issuance of ) related party loan 69,000 (224,000) --
---------------- -------------- --------------
NET CASH USED IN INVESTING ACTIVITIES (3,151,000) (7,134,000) (3,033,000)
---------------- -------------- --------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings from (repayment of) revolving credit facility 321,000 (3,469,000) 2,171,000
Proceeds from long term debt borrowings -- 9,572,000 7,500,000
Repayment of long term debt (147,000) (7,957,000) (6,553,000)
Debt financing costs incurred (42,000) (259,000) (698,000)
Decrease in amount due to related parties (98,000) (47,000) (38,000)
Payment of capital lease obligations (226,000) (96,000) --
Proceeds from exercise of stock options 11,000 -- 452,000
---------------- -------------- --------------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (181,000) (2,256,000) 2,834,000
---------------- -------------- --------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 591,000 (730,000) 2,153,000
CASH AND CASH EQUIVALENTS AT BEGINNING OF FISCAL YEAR 1,827,000 2,557,000 404,000
---------------- -------------- --------------
CASH AND CASH EQUIVALENTS AT END OF FISCAL YEAR $ 2,418,000 1,827,000 2,557,000
================ ============== ==============
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 2,121,000 $ 1,766,000 $ 1,777,000
Income taxes paid 677,000 86,000 68,000
Noncash financing activities - capital leases 106,000 537,000 237,000
</TABLE>
See notes to consolidated financial statements
<PAGE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
January 30, 1999
NOTE A - Operations and Summary of Significant Accounting Policies
Business: One Price Clothing Stores, Inc. and subsidiaries (the "Company")
operates a chain of off-price retail women's and children's specialty stores
offering a wide variety of first quality, contemporary, in-season apparel and
accessories. Accordingly, the Company operates in one business segment. Prior to
fiscal 1997, this merchandise was offered at the uniform retail price of $7. The
Company currently offers most of its merchandise at or below a base price of $7
and offers certain additional categories and styles at prices higher than $7
when such merchandise is clearly desired by the Company's customers. Such higher
priced merchandise is offered at prices up to $15. At January 30, 1999, the
Company operated 618 stores in 27 states, the District of Columbia, Puerto Rico
and the U.S. Virgin Islands.
Fiscal Year: The Company's fiscal year ends on the Saturday nearest January 31.
All periods presented herein consist of 52 weeks.
Principles of Consolidation: The consolidated financial statements include the
accounts of the Company and its wholly-owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in consolidation.
Accounting Estimates: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
Comprehensive Income: The Company is required to disclose within the basic
financial statements items of comprehensive income, such as foreign currency
transactions and unrealized gains and losses on available-for-sale securities,
under the provisions of Statement of Financial Accounting Standards ("SFAS")
130, "Reporting Comprehensive Income." Because the Company has no items which
qualify as comprehensive income, the adoption of SFAS 130 resulted in no
difference between comprehensive income (loss) and net income (loss) for fiscal
1998, 1997 and 1996, respectively.
Segments and Related Information: The Company operates in one industry segment:
retail sales of apparel and accessories to the general public.
Fair Value of Financial Instruments: The estimated fair values of the Company's
financial instruments, including primarily cash and cash equivalents, accounts
receivable, accounts payable and the Company's revolving credit facility,
approximate their carrying values at January 30, 1999 and January 31, 1998, due
to their nature. The fair value of the Company's mortgage loan at January 30,
1999 and January 31, 1998 is calculated based on discounted cash flows using the
estimated currently available borrowing rate.
Cash and Cash Equivalents: The Company considers all highly liquid investments
with an original maturity of three months or less when purchased to be cash
equivalents.
Merchandise Inventories: Merchandise inventories are stated at the lower of cost
(computed using the first-in, first-out (FIFO)retail method) or market.
Depreciation: Depreciation is computed by the straight-line method, based on
estimated useful lives of 10 years for land improvements, 33 to 40 years for
buildings, 5 to 10 years for leasehold improvements and 3 to 15 years for
fixtures and equipment.
Income Taxes: Deferred income tax assets and liabilities represent the future
income tax effect of temporary differences between the book and tax bases of the
Company's assets and liabilities, assuming they will be realized and settled at
the amount reported in the Company's financial statements.
Purchased and Internally Developed Software: Purchased software is included in
other assets and is amortized over its estimated useful life of 5 years using
the straight-line method. Direct costs of developing software internally are
capitalized using the principles of Statement of Position ("SOP") 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use." The result of adopting SOP 98-1 was an increase in pre-tax income
of $285,000 in fiscal 1998. Upon placement into service, internally developed
software will be amortized over its estimated useful life of 5 years using the
straight-line method.
Store Closing and Impairment Costs: At the time management commits to close a
store and for other stores which may be impaired, the fixed assets are written
down to estimated fair market value. For stores to be closed, a provision is
made for any remaining store lease obligation after closing or penalty, if any,
to cancel the lease obligation.
Revenue Recognition: Revenues from retail sales are recognized at the time of
the sale. An estimate for merchandise returns is recorded in the period that
the merchandise is sold.
Store Preopening Costs: Costs associated with the opening of new stores are
expensed as incurred.
Advertising and Promotional Costs: Advertising and promotional costs are
expensed when incurred. Such expenses were $623,000, $592,000 and $987,000 in
fiscal 1998, 1997 and 1996, respectively.
Earnings Per Common Share: Basic earnings per common share are computed by
dividing earnings by the weighted average number of shares of Common Stock.
Diluted earnings per common share are computed by dividing earnings by the
weighted average number of shares of Common Stock and dilutive Common Stock
equivalent shares for stock options outstanding, unless antidilutive, during the
period. See Notes F and H.
Reclassifications: Certain amounts included in prior periods' financial state-
ments have been reclassified to conform to the fiscal 1998 presentation.
Effect of New Accounting Pronouncements: The Financial Accounting Standards
Board ("FASB") issued SFAS 133, "Accounting for Derivative Instruments and
Hedging Activities," effective for periods beginning after June 15, 1999. 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.
NOTE B - 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). In January 1999, the Company
amended its credit agreement to lower the borrowing rates and other fees
associated with its revolving credit facility. Under the amendment, 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
January 30, 1999, the Company had approximately $9.4 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 amended 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 (both as defined in the amended revolving credit agreement).
Effective January 30, 1998, such minimum net worth requirement was reduced from
$34,000,000 to $25,000,000. The Company was in compliance with these financial
covenants at January 30, 1999.
<PAGE>
The maximum and average amounts outstanding during fiscal 1998 and 1997 and
amounts outstanding at the end of such periods for the revolving credit facility
are presented as follows:
<TABLE>
<S> <C> <C>
Fiscal Year Ended
---------------------------------
January 30, January 31,
1999 1998
----------- ----------
Revolving Credit Facility:
Maximum amounts outstanding $20,832,000 $19,525,000
Average amounts outstanding 13,152,000 10,784,000
Outstanding at period end 11,838,000 11,517,000
</TABLE>
The Company also has an agreement with a commercial bank to provide a separate
letter of credit facility of up to $3,000,000. In November 1998, the agreement
was amended to increase the letter of credit facility to provide up to
$3,500,000. On March 31,1999, the agreement was amended to increase the letter
of credit facility to provide up to $5,000,000. Letters of credit issued under
the agreement are collateralized by inventories purchased using such letters of
credit. In March 1998, the agreement was amended to adjust the Company's minimum
net worth requirement to the same level as that required by the Company's
primary lender under the revolving credit agreement. On March 31, 1999, the
agreement was further 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 agreement, as amended, contains
certain restrictive covenants, which are substantially the same as those within
the Company's amended revolving credit facility discussed above.
During fiscal 1997, the Company repaid the term loan portion of its primary
credit facility and entered into a twenty-year mortgage agreement with a
commercial bank. The agreement provides for a mortgage loan of $8,125,000
secured by the Company's real property located at its corporate offices
including land, buildings, fixtures and improvements. Such secured real property
had a net book value of $14.2 million at January 30, 1999. The mortgage loan is
payable in 240 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 January 30, 1999.
Annual maturities of the mortgage loan are as follows:
Fiscal Year Amount
----------- ------
1999 $ 160,000
2000 173,000
2001 192,000
2002 210,000
2003 231,000
Thereafter 6,949,000
-------------
Total $ 7,915,000
============
The fair value of the Company's outstanding mortgage obligation at January 30,
1999 and January 31, 1998 was $8,458,000 and $8,062,000, respectively. Fair
value is determined based on discounted cash flows using the Company's estimated
currently available borrowing rate.
The Company's weighted average interest rate for all borrowings was 8.6% and
8.4% in fiscal 1998 and fiscal 1997, respectively. The Company had outstanding
letters of credit for the purchase of merchandise inventories totaling
approximately $6,613,000 and $6,075,000 at January 30, 1999 and January 31,
1998, respectively.
NOTE C - Property and Equipment
<TABLE>
<S> <C> <C>
January 30, January 31,
1999 1998
--------------- ----------------
Land $ 914,000 $ 914,000
Land improvements 494,000 494,000
Buildings 16,061,000 16,055,000
Leasehold improvements 14,682,000 14,194,000
Fixtures and equipment 29,933,000 29,095,000
------------- --------------
62,084,000 60,752,000
Less accumulated depreciation (28,638,000) (24,748,000)
------------ ------------
$ 33,446,000 $ 36,004,000
============ ==============
</TABLE>
The Company evaluates whether assets, largely store leasehold improvements and
fixtures and equipment, may be impaired based on store lease termination and
renewal decisions and estimated undiscounted future cash flows of the individual
stores. For stores which are determined to be impaired, leasehold improvements
are written off and fixtures and equipment are written down based upon
management's estimate of recoverability. Such impairment loss was approximately
$111,000 and $425,000 for fiscal 1998 and 1997, respectively, and is included in
selling, general and administrative expenses in the accompanying Consolidated
Statements of Operations.
NOTE D - Income Taxes
The provision for (benefit from) income taxes consists of the following:
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
--------------- --------------- -----------------
Current:
Federal $ 1,416,000 $(3,670,000) $(982,000)
State and local 371,000 280,000 1,000
Puerto Rico -- -- 8,000
Virgin Islands 95,000 -- --
Deferred:
Federal (684,000) 616,000 265,000
State and local (84,000) 447,000 (149,000)
Puerto Rico -- 154,000 130,000
------------ ----------- ----------
Total provision for (benefit from) income taxes $ 1,114,000 $(2,173,000) $ (727,000)
============= ============ ==========
</TABLE>
A reconciliation of the statutory federal income tax rate to the annual
effective income tax rate follows:
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
----------------- ---------------- -----------------
Federal income tax (benefit) at statutory rate 35.0% (35.0)% (35.0)%
State and local income tax (benefit), net of federal tax 4.4 (2.7) (4.6)
Puerto Rico net operating loss (2.3) -- --
Tax benefit from federal jobs credits (3.9) (0.4) --
Valuation allowance (11.1) 20.8 --
Other, net (1.8) 1.2 3.1
-------- --------- -----
Effective income tax (benefit) rate 20.3% (16.1) % (36.5)%
======= ========= ======
</TABLE>
Presented below are the elements which comprise deferred income tax assets and
liabilities:
<TABLE>
<S> <C> <C>
January 30, January 31,
1999 1998
------------ -----------
Gross deferred income tax assets:
Accrued employee benefits deductible for tax
purposes when paid $ 857,000 $786,000
Excess of tax over financial statement basis of
inventory 346,000 375,000
Accrued retirement benefits deductible for tax
purposes when paid 536,000 530,000
Accrued store closing and restructuring costs
deductible for tax purposes when paid 299,000 885,000
State and local net operating loss and credit
carryforwards 779,000 999,000
Puerto Rico/Virgin Islands net operating loss
carryforwards 1,175,000 1,314,000
Other 540,000 295,000
--------- ---------
Gross deferred income tax assets 4,532,000 5,184,000
Valuation allowance (2,188,000) (3,156,000)
----------- -----------
2,344,000 2,028,000
------------ ----------
Gross deferred income tax liabilities:
Excess of financial statement over tax basis of
property and equipment (1,576,000) (1,999,000)
Excess of financial statement over tax basis of
supplies -- (29,000)
------------ -----------
Gross deferred income tax liabilities (1,576,000) (2,028,000)
---------- ----------
Net deferred income tax asset $ 768,000 $ --
============= ============
</TABLE>
At January 30, 1999 the Company had net operating loss and credit carryforwards
for state income tax purposes aggregating approximately $779,000 of income tax
and Puerto Rico net operating loss carryforwards aggregating $1,175,000 of
income tax. These carryforwards expire at various times between 2002 and 2012.
Management cannot be assured that certain deferred income tax assets related to
these carryforwards will be fully utilized or realized. Accordingly, a valuation
allowance has been provided for a portion of the net deferred income tax asset.
The net deferred income tax asset at January 30, 1999 is included in current
assets in the accompanying Consolidated Balance Sheet.
NOTE E - Commitments and Contingencies
From time to time, the Company is a defendant in legal actions involving claims
arising in the normal course of its business. The Company believes that, as a
result of its legal defenses and insurance arrangements, none of these actions
presently pending, if decided adversely, would have a material adverse effect on
its financial position, results of operations or cash flows.
Leases
The Company leases its stores under operating leases with initial terms of
typically five years with one to two renewal option periods of five years each.
The leases generally provide for increased payments resulting from increases in
operating costs, common area maintenance costs and property taxes. Substantially
all store leases also provide the Company with an option to terminate the
agreement without penalty if certain conditions are present. Certain of the
leases provide for contingent or percentage rentals based upon sales volume and
others are leased on a month-to-month basis.
In addition, the Company has operating leases for automobiles, trucks, trailers
and certain computer and other equipment with one to ten year terms.
Future minimum rental commitments as of January 30, 1999 for noncancellable
leases (including those which may qualify for early termination) are
approximately as follows:
<TABLE>
<S> <C> <C> <C> <C>
Fiscal Year Stores Other Total
----------- ----------- ---------- -----------
1999 $20,669,000 $1,419,000 $22,088,000
2000 16,865,000 538,000 17,403,000
2001 13,076,000 199,000 13,275,000
2002 10,358,000 98,000 10,456,000
2003 5,675,000 43,000 5,718,000
Thereafter 7,073,000 -- 7,073,000
----------- ---------- ------------
Total $73,716,000 $2,297,000 $76,013,000
=========== ========== ============
</TABLE>
Total rental expense for operating leases was as follows:
<TABLE>
<S> <C> <C> <C> <C>
Fiscal Year Ended
January 30, January 31, February 1,
1999 1998 1997
------------- --------------- ----------------
Minimum rentals $23,060,000 $23,244,000 $22,061,000
Contingent rentals 5,262,000 4,932,000 5,103,000
------------ ------------ -------------
$28,322,000 $28,176,000 $27,164,000
=========== =========== ===========
</TABLE>
The Company's capital leases for certain office equipment and computer software
were calculated using interest rates appropriate at the inception of each lease.
Gross amounts of such capital lease assets were $880,000 and $774,000 at January
30, 1999 and January 31, 1998, respectively. Accumulated amortization amounts of
such capital lease assets were $285,000 and $102,000 at January 30, 1999 and
January 31, 1998, respectively. Future minimum lease payments for capitalized
lease obligations as of January 30, 1999 were as follows:
Fiscal Year:
1999 $281,000
2000 226,000
2001 75,000
2002 27,000
------
Total minimum obligations 609,000
Less interest (59,000)
--------
Present value of net minimum obligations 550,000
Less current portion (248,000)
---------
Long-term obligation at January 30, 1999 $302,000
========
NOTE F - Employee Benefits
Stock Option Plans: The Company currently has stock option plans (the 1991 and
1988 Plans) which provide for grants to certain officers and key employees of
options to purchase shares of Common Stock of the Company. Options granted under
the plans expire ten years from the date of grant and have been granted at
prices not less than the fair market value at the date of grant. Options
canceled under the 1991 Plan are available for reissuance. At January 30, 1999,
a total of 99,000 shares of Common Stock were reserved for issuance under the
1991 Plan.
Effective April 1995, the Company adopted the 1995 Director Stock Option Plan
which provides for annual grants to non-employee members of the Board of
Directors. Such grants are immediately exercisable on the date of grant and
expire ten years from the date of grant. At January 30, 1999, 15,000 shares of
Common Stock were reserved for issuance under the 1995 Director Stock Option
Plan.
Effective April 1997, the Company's Board of Directors approved a special stock
option grant for 300,000 shares at the exercise price of $4.13 per share (fair
market value at the time of grant) to its Chief Executive Officer. Twenty-five
percent of such grant was immediately exercisable on the date of the grant with
the remaining shares vesting ratably over four years. The options expire ten
years from the date of the grant.
Effective April 1998, the Company's Board of Directors approved a special stock
option grant for 80,000 shares at the exercise price of $1.77 per share (fair
market value at the time of grant) to its present Chairman of the Board of
Directors. One third of such grant was immediately exercisable on the date of
the grant with the remaining shares vesting ratably over two years. The options
expire ten years from the date of the grant.
A summary of the activity in the Company's stock options is presented below:
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Fiscal 1998 Fiscal 1997 Fiscal 1996
---------------------------------------------------------------------------
Weighted Weighted Weighted
Number Average Number Average Number Average
Of Exercise of Exercise Of Exercise
Shares Price Shares Price Shares Price
-------- ------- -------- ------- -------- -------
Outstanding at beginning of period 909,796 $5.47 555,845 $6.79 588,245 $7.84
Options granted 408,025 $2.88 510,250 $3.93 234,250 $3.80
Options exercised (4,000) $2.75 -- -- (100,500) $3.92
Options cancelled (198,648) $6.47 (156,119) $5.13 (166,150) $8.04
--------- --------- ---------
Outstanding at end of period 1,115,173 $4.35 909,796 $5.47 555,845 $6.79
========= ======= =======
Exercisable at end of period 458,465 370,706 237,015
======= ======= =======
Weighted average fair value of
options granted during the period
(see below) $1.20 $1.94 $1.86
</TABLE>
The following table summarizes information about stock options
outstanding at January 30, 1999:
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Options Outstanding Options Exercisable
--------------------------------------- --------------------------
Weighted
Number Average Weighted Weighted
Range of of Remaining Average Number Average
Exercise Shares Contractual Exercise of Exercise
Prices Outstanding Life (Years) Price Shares Price
-------------------- ------------ ------------ ------------ ------- ----------
$ 1.56 to $ 2.75 208,500 9.0 $ 2.20 41,867 $ 2.09
$ 2.78 to $ 3.56 222,700 9.3 $ 3.33 44,500 $ 2.90
$ 3.69 to $ 4.00 84,025 8.8 $ 3.80 44,750 $ 3.73
$ 4.13 410,550 8.1 $ 4.13 164,750 $ 4.13
$ 4.50 to $ 14.92 171,398 5.0 $ 7.73 148,198 $ 7.95
$ 17.25 18,000 5.1 $ 17.25 14,400 $ 17.25
----------- -------
1,115,173 8.0 $ 4.35 458,465 $ 5.43
========= =======
</TABLE>
The Company applies the principles of Accounting Principles Board ("APB")
Opinion 25 in accounting for employee stock option plans. Accordingly, no
compensation cost has been recognized in the Company's financial statements. Had
compensation cost been determined on the basis of SFAS 123, "Accounting for
Stock-Based Compensation," compensation expense would have been recorded based
on the estimated fair value of stock options granted during the fiscal years
presented. The total fair value of stock options granted was estimated at
$490,000, $990,000 and $435,000 for the fiscal years ended January 30, 1999,
January 31, 1998 and February 1, 1997, respectively, based upon the
Black-Scholes option pricing model. The following assumptions were used in the
Black-Scholes option pricing model for stock options granted: risk-free interest
rates of approximately 5.4%, 6.0% and 6.0% for fiscal 1998, 1997 and 1996,
respectively; an expected life of approximately one year from the vest date for
fiscal 1998, 1997 and 1996; and 60%, 65% and 65% expected volatility for fiscal
1998, 1997 and 1996, respectively. The expected life of the stock options
granted and the stock price volatility during the expected life of the options
were estimated based upon historical experience and management's expectations.
Had compensation cost for the Company's stock option plans been determined based
on the estimated fair value at the grant dates for awards under those plans
consistent with the method of SFAS 123, the Company's net income (loss) and net
income (loss) per common share would have been impacted as indicated in the
proforma amounts below:
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
--------- ------------- ------------
Net income (loss) Actual $4,383,000 $(11,320,000) $(1,267,000)
=========== ============= ============
Proforma $3,973,000 $(11,805,000) $(1,373,000)
========== ============= ============
Net income (loss) per common share - diluted Actual $ 0.42 $ (1.08) $ (0.12)
========== =========== ===========
Proforma $ 0.38 $ (1.13) $ (0.13)
========== ============ ===========
</TABLE>
Retirement Plan: The Company has a 401(k) and profit-sharing plan, the One Price
Clothing Stores, Inc. Retirement Plan (the "Plan"). All employees in the United
States who are 21 years of age or older with at least one year of service are
eligible to participate in the Plan. The Company is obligated to contribute 50%
of each participant's contribution with a maximum contribution of 2.5% of the
participant's base compensation. In addition, the Company may make an annual
discretionary contribution on behalf of the participants; no such discretionary
contributions have been made by the Company. Employer contributions
(approximately $307,000, $306,000 and $296,000 in fiscal 1998, 1997 and 1996,
respectively) vest ratably over five years.
Stock Purchase Plan: The Company has a Stock Purchase Plan that allows
participating employees to purchase, through payroll deductions, shares of the
Company's Common Stock at prevailing market prices. All full-time associates who
are 18 years of age or older with at least six months of service are eligible to
participate in the Stock Purchase Plan. The Stock Purchase Plan provides that
participants may authorize the Company to withhold from net earnings and deposit
such amounts with an independent custodian. The custodian purchases Common Stock
of the Company at prevailing market prices and distributes the shares purchased
to the participants upon request. The Company pays expenses associated with the
purchases of the Common Stock and administration of the Stock Purchase Plan.
Shareholders' Rights Plan: The Company adopted a Shareholders' Rights Plan in
November 1994. Each shareholder is entitled to one Right for each share of
Common Stock held on such date. Each Right entitles the registered holder to
purchase from the Company one half share of Common Stock at a specified price.
The Rights become exercisable only upon the occurrence of certain conditions set
forth in the Shareholders' Rights Plan relating to, among other things, the
acquisition of 20% or more of the outstanding shares of Common Stock.
NOTE G - Related Party Transactions
The Company has a deferred compensation agreement with its President and Chief
Executive Officer. The agreement provides for 120 consecutive monthly payments
of $5,000 (including interest) beginning upon the date of retirement, contingent
upon completion of at least six years of employment. Approximately $57,000 and
$40,000 of the total present value of the obligation was charged to selling,
general and administrative expense in fiscal 1998 and fiscal 1997, respectively.
Approximately $97,000 and $40,000 is included in other noncurrent liabilities at
January 30, 1999 and January 31, 1998, respectively. The remaining portion of
the total present value of the obligation, approximately $309,000 at January 30,
1999, will be fully accrued by May 2003, six years after commencement of
employment.
During fiscal 1997, the Company entered into a loan agreement of $225,000 with
its President and Chief Executive Officer. The terms of the loan required that
certain principal and interest payments be made to the Company during the term
of the loan, with the full amount of the loan plus accrued interest due by
December 2000. Approximately $107,000 and $117,000 were included in accounts
receivable and noncurrent assets, respectively, at January 31, 1998 under this
agreement. During fiscal 1998, the remaining repayment requirements of the loan
were waived by the Company's Board of Directors and the remaining balance of
$173,000 was written off.
The Company also has a deferred compensation agreement with its former Chairman
of the Board of Directors. The agreement provides for 120 consecutive monthly
payments of $13,750 (including interest) beginning upon the earlier of the date
of retirement or death. When the Company entered into the agreement in fiscal
1996, the estimated present value of the obligation, $970,000, was charged to
selling, general and administrative expenses. During fiscal 1998, the former
Chairman of the Board of Directors retired earlier than anticipated.
Accordingly, an additional $55,000 was added to the estimated present value of
the obligation and was charged to selling, general and administrative expenses.
Approximately $74,000 and $965,000 is included in current liabilities and other
noncurrent liabilities, respectively, at January 30, 1999. Approximately $28,000
and $1,002,000 was included in current liabilities and other noncurrent
liabilities, respectively, at January 31, 1998.
In addition, the Company has a deferred compensation agreement with a former
executive officer who is currently a member of the Company's Board of Directors.
The agreement provides for monthly payments of $6,250 (including interest)
through July 2002. Approximately $57,000 and $167,000 is included in current
liabilities and other noncurrent liabilities, respectively, at January 30, 1999.
Approximately $52,000 and $224,000 was included in current liabilities and other
noncurrent liabilities, respectively, at January 31, 1998.
The Company paid approximately $42,000, $76,000 and $64,000 in fiscal 1998, 1997
and 1996, respectively, for legal services provided by the law firm of which a
Company Director is a member.
NOTE H - Earnings per Share
In accordance with the principles of SFAS 128, "Earnings Per Share," the Company
presents "basic" and "diluted" earnings per share on the face of the income
statement. 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 outstanding consist solely of shares under
option. A reconciliation of basic and diluted weighted average number of common
shares outstanding is presented below:
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
---------------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
--------------- --------------- --------------
Weighted average number of common shares
outstanding - basic 10,437,102 10,435,531 10,400,789
Net effect of dilutive stock options based on
the treasury stock method using
the average market price (anti-dilutive
in fiscal 1997 and 1996)
56,714 -- --
--------------- --------------- --------------
Weighted average number of common shares
outstanding - diluted 10,493,816 10,435,531 10,400,789
=============== =============== ==============
</TABLE>
NOTE I - Quarterly Results (Unaudited)
The following is a summary of quarterly (13 weeks) operations for the fiscal
years ended January 30, 1999 and January 31, 1998 (in thousands except per
share data).
<TABLE>
<S> <C> <C> <C> <C>
Fiscal 1998 Quarters Ended
-------------------------------------------------------------
May 2, August 1, October 31, January 30,
1998 1998 1998 1999
------- -------- ---------- -----------
Net sales $82,513 $95,786 $69,732 $80,028
Gross margin 30,621 34,510 24,236 26,799
Net income (loss) 2,045 3,517 (1,716) 537
Net income (loss) per common share - diluted 0.20 0.33 (0.16) 0.05
Fiscal 1997 Quarters Ended
--------------------------------------------------------------
May 3, August 2, November 1, January 31,
1997 1997 1997 1998
------- --------- ---------- -----------
Net sales $78,899 $86,134 $63,845 $73,407
Gross margin 29,529 31,107 19,565 20,183
Net income (loss) 1,444 2,391 (5,161) (9,994)
Net income (loss) per common share - diluted 0.14 0.23 (0.49) (0.96)
</TABLE>
Net income in the fourth quarter of fiscal 1998 was increased by $968,000, or
$0.09 per common share, as a result of adjustments to the estimated effective
income tax rate used in previous quarters within fiscal 1998. The net loss in
the fourth quarter of fiscal 1997 was increased by $2,802,000, or $0.27 per
common share, as a result of adjustments to the estimated effective income tax
rate used in previous quarters within fiscal 1997.
NOTE J - Effect of Restructuring
In response to lower than expected operating results, the Company announced a
restructuring plan during the fourth quarter of fiscal 1997. The plan
included initiatives which were designed to return the Company to
profitability by lowering operating costs, redeploying assets and curtailing
the number of new store openings until the Company's existing stores were
operating profitably. Under the plan, the Company estimated that it would
close approximately 75 low-volume, underperforming stores and eliminate
approximately 300 positions. The Company recorded a one-time charge of
$2,265,000 during the fourth quarter of fiscal 1997 to cover costs associated
with the plan. The total charge included costs to close stores, such as the
noncash write-off of fixed assets and store supplies of $1,378,000, lease
buyouts of approximately $398,000, and employee severance costs, outplacement
costs and other miscellaneous expenses of approximately $489,000.
A substantial number of the stores identified for closing under the
restructuring plan were closed by January 30, 1999. Certain of these stores
are no longer under consideration for closing due to a significant
improvement in performance since the announcement of the plan. As a result,
during the fourth quarter of fiscal 1998, the Company recorded a favorable
adjustment to pre-tax income of $385,000 to reverse the estimated cost,
recorded in fiscal 1997, of closing these stores.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Effective February 5, 1999, Cynthia R. Cohen resigned her position as a member
of the Board of Directors of the Company for personal reasons and without
disagreement with the Company regarding the Company's operations, policies or
procedures.
The remaining information required under this item is incorporated herein by
reference to the sections entitled "Election of Directors" and "Executive
Officers of the Company" and "Section 16(a) Beneficial Ownership Reporting
Compliance" of the Company's definitive Proxy Statement (the "Proxy
Statement") filed with the Securities and Exchange Commission in connection
with the Annual Meeting of Shareholders scheduled to be held June 9, 1999.
ITEM 11. EXECUTIVE COMPENSATION
The information required under this item is incorporated herein by reference
to the sections entitled "Compensation Committee Interlocks and Insider
Participation," "Compensation of Executive Officers," "Employment Contracts
and Deferred Compensation Arrangements," "Compensation Committee Report on
Executive Compensation," "Performance Graph" and "Election of Directors -
Directors' Fees" of the Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information required under this item is incorporated herein by reference
to the sections entitled "Security Ownership of Certain Beneficial Owners,"
"Election of Directors" and "Security Ownership of Management" of the Proxy
Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required in this item is incorporated herein by reference to
the sections entitled "Compensation Committee Interlocks and Insider
Participation" and "Employment Contracts and Deferred Compensation
Arrangements" of the Proxy Statement.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a) 1. Financial Statements
The following financial statements of One Price Clothing Stores, Inc.
are included in Part II, Item 8:
Independent Auditors' Report
Consolidated Balance Sheets as of January 30, 1999 and
January 31, 1998
Consolidated Statements of Operations for the fiscal years
ended January 30, 1999, January 31, 1998 and February 1,
1997
Consolidated Statements of Shareholders' Equity for the
fiscal years ended January 30, 1999, January 31, 1998 and
February 1, 1997
Consolidated Statements of Cash Flows for the fiscal years
ended January 30, 1999, January 31, 1998 and February 1,
1997
Notes to Consolidated Financial Statements
(a) 2. Financial Statement Schedule
The following financial statement schedule of One Price Clothing
Stores, Inc. is included in Item 14(d):
Schedule II -- Valuation and Qualifying Accounts.
Schedules not listed above have been omitted because they
are not applicable or the information is included in the
financial statements or notes thereto.
(a) 3. Exhibits including those incorporated by reference:
Exhibit
Number Description
- ---------- ------------
3(a) Certificate of Incorporation of the Registrant, as amended
through April 1987: Incorporated by reference to exhibit of
the same number to Registrant's Registration Statement on Form
S-1, filed April 10, 1987 (File No. 33-13321) ("the S-1").
3(a)(1) Certificate of Amendment of Certificate of Incorporation of
the Registrant: Incorporated by reference to exhibit of the
same number to the Registrant's Annual Report on Form 10-K for
the year ended January 1, 1994 (File No. 0-15385).
3(b) Restated By-Laws of the Registrant, as of July 22, 1992 and
amended as of July 20, 1994, March 14, 1996 and April 29,
1998: Incorporated by reference to Exhibit 10(h) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 2, 1998 (File No. 0-15385)("the April 1998 Form
10-Q").
4(a) See Exhibits 3(a), 3(a)(1), and 3(b).
4(b) Specimen of Certificate of the Registrant's Common Stock:
Incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A filed with the Securities
and Exchange Commission on June 23, 1987 (File No.0-15385).
4(c) Shareholder Rights Agreement by and between the Registrant and
Wachovia Bank of North Carolina, N. A. as Rights Agent dated
November 3, 1994: Incorporated by reference to Exhibit 2 to
the Registrant's Form 8-K filed November 10, 1994 (File No.
0-15385).
4(d) Loan and Security Agreement by and between Congress Financial
Corporation (Southern) as Lender and the Registrant and One
Price Clothing of Puerto Rico, Inc. as Borrowers dated March
25, 1996: Incorporated by reference to exhibit of same number
to the Registrant's Annual Report on Form 10-K for the year
ended December 30, 1995 (File No.0-15385).
4(d)(1) Amendment Number One to the Loan and Security Agreement
by and between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing of Puerto
Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated May 16, 1997: Incorporated by
reference to Exhibit 10(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended May 3, 1997 (File
No. 0-15385) ("the April 1997 Form 10-Q").
4(d)(2) Amendment Number Two to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as Lender
and the Registrant, One Price Clothing of Puerto Rico, Inc.
and One Price Clothing - U.S. Virgin Islands, Inc. as
Borrowers dated June 17, 1997: Incorporated by reference to
Exhibit 10(c) to the Registrant's Quarterly report on Form
10-Q for the quarter ended August 2, 1997 (File No. 0-15385)
("the July 1997 Form 10-Q").
4(d)(3) Amendment Number Three to the Loan and Security Agreement by
and between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing of Puerto Rico,
Inc. and One Price Clothing - U.S. Virgin Islands, Inc. as
Borrowers dated February 19, 1998: Incorporated by reference
to exhibit of the same number to the Registrant's Annual
Report on Form 10-K for the year ended January 31, 1998 (File
No. 0-15385)("the 1997 Form 10-K").
4(d)(4)+ Amendment Number Four to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing Stores, Inc. of
Puerto Rico and One Price Clothing Stores - U.S. Virgin
Islands, Inc. as Borrowers dated January 31, 1999.
4(e) Mortgage and Security Agreement by and between First Union
National Bank, as Mortgagee and One Price Realty, Inc. as
Mortgagor dated June 17, 1997: Incorporated by reference to
Exhibit 10(d) to the July 1997 Form 10-Q.
4(f) Promissory Note by and between First Union National Bank and
One Price Realty, Inc. dated June 17, 1997: Incorporated by
reference to Exhibit 10(e) to the July 1997 Form 10-Q.
4(g) Continuing Commercial Credit Agreement by and between Carolina
First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated May 16, 1997:
Incorporated by reference to Exhibit 10(b) to the April 1997
Form 10-Q.
4(g)(1) Amendment Number One to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing of Puerto Rico, Inc. and One
Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated
March 20, 1998: Incorporated by reference to exhibit of the
same number to the 1997 Form 10-K.
4(g)(2) Amendment Number Two to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing of Puerto Rico, Inc. and One
Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated
April 21, 1998: Incorporated by reference to exhibit of the
same number to the 1997 Form 10-K.
4(g)(3) Amendment Number Three to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing Stores, Inc., One Price
Clothing of Puerto Rico, Inc.and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated November 5, 1998:
Incorporated by reference to Exhibit 10(c) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended October
31, 1998 (File No.0-15385).
4(g)(4)+ Amendment Number Four to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and
the Registrant, One Price Clothing Stores, Inc., One Price
Clothing of Puerto Rico, Inc. and One Price Clothing -
U.S. Virgin Islands, Inc. as Borrowers dated March 31, 1999.
4(h) The Company hereby agrees to furnish to the Commission upon
request of the Commission a copy of any instrument with respect
to long-term debt not being registered in a principal amount
less than 10% of the total assets of the Company and its
subsidiaries on a consolidated basis.
Material Contracts -- Executive Compensation Plans and Arrangements:
10(a)* Stock Option Plan of the Registrant dated February 20, 1987
and related forms of Incentive and Non-qualified Stock Option
Agreements: Incorporated by reference to Exhibit 10(d) to
the S-1.
10(b)* Stock Option Plan of the Registrant dated
December 12, 1988 and related forms of Incentive and
Non-qualified Stock Option Agreements: Incorporated by
reference to Exhibit 10(a) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1988 (File No.
0-15385) ("the 1988 Form 10-K").
10(c)* One Price Clothing Stores, Inc. 1991 Stock Option Plan:
Incorporated by reference to Exhibit 10(b) to the
Registrant's Annual Report on Form 10-K for the year ended
December 28, 1991 (File No. 0-15385).
10(d)*+ Summary of Incentive Compensation Plan.
10(e)* Form of Employment Agreement between Registrant and Henry D.
Jacobs, Jr.: Incorporated by reference to Exhibit 10(j)
to the 1988 Form 10-K.
10(f)* Agreement dated June 24, 1992 between the Registrant and
Raymond S. Waters: Incorporated by reference to Exhibit 10(l)
to the Registrant's Annual Report on Form 10-K for the year
ended January 2, 1993 (File No. 0-15385).
10(g)* Directors' Stock Option Plan effective April 19, 1995:
Incorporated by reference to Exhibit 10(m) in to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(File No. 0-15385).
10(h)* Amendment Number One to One Price Clothing Stores, Inc.
Director Stock Option Plan dated March 14, 1996: Incorporated
by Reference to Exhibit 10(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended May 4, 1996
(File No. 0-15385).
10(i)* Agreement dated March 25, 1997 between the Registrant and Henry
D. Jacobs, Jr.: Incorporated by reference to Exhibit
10(n) to the Registrant's Annual Report on Form 10-K for the
year ended February 1, 1997 (File No. 0-15385)("the 1996
Form 10-K").
10(j)* Addendum to Employment Agreement dated March 6, 1997 between
the Registrant and Henry D. Jacobs, Jr.: Incorporated by
reference to Exhibit 10(p) to the 1996 Form 10-K.
10(k)* Stock Option Agreement dated March 26, 1997 between Registrant
and Larry I. Kelley: Incorporated by reference to
Exhibit 10(c) to the April 1997 Form 10-Q.
10(l)*+ Letter of Understanding regarding Non-Executive Chairman of the
Board position and Consulting Agreement dated April 16, 1998
and Amendment to Letter of Understanding and Consulting
Agreement dated December 22, 1998 between the Registrant and
Leonard Snyder.
10(m)* Stock Option Agreement dated April 16, 1998 between the
Registrant and Leonard Snyder: Incorporated by reference to
the April 1998 Form 10-Q.
10(n)*+ Employment Agreement dated March 26, 1997 and Amendment to
Employment Agreement dated December 22, 1998 between the
Registrant and Larry I. Kelley.
10(o)*+ Employment Agreement dated March 30, 1992 and Amendment to
Employment Agreement dated February 4, 1997 and amended
December 28, 1998 between the Registrant and Ronald Swedin.
10(p)*+ Employment Agreement dated October 21, 1991 and Amendments to
Employment Agreement dated April 16, 1998 and December
28, 1998 between the Registrant and George V. Zalitis.
10(q)*+ Employment Agreement dated November 10, 1997 and Amendments to
Employment Agreement dated April 16, 1998 and January
14, 1999 between the Registrant and A. J. Nepa.
10(r)*+ Employment Agreement dated April 12, 1999 between the
Registrant and H. Dane Reynolds.
Material Contracts -- Other:
10(s)* Lease Agreement by and between One Price Clothing Stores, Inc.
as Tenant and One Price Realty, Inc. as Landlord
dated June 17, 1997: Incorporated by reference to Exhibit 10
(f) to the July 1997 Form 10-Q.
11 Statement regarding computation of per share earnings
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule (electronic filing only)
---------------------------------------
* Denotes a management contract or compensatory plan or agreement.
+ Filed herewith.
(b) Reports on Form 8-K.
On January 12, 1999, the Company filed a report on Form 8-K dated
January 11, 1999 to report strong initial reaction to test sales of
menswear and its comp sales for fiscal November and December 1998.
No other reports on Form 8-K were required to be filed during the
last quarter of the period covered by this report.
On April 13, 1999, the Company filed a report on Form 8-K dated
April 12, 1999 to announce the appointment of H. Dane Reynolds as
Senior Vice President and Chief Financial Officer.
(c) Exhibits.
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate
section of this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
<TABLE>
<S> <C>>
ONE PRICE CLOTHING STORES, INC.
Date: April 28, 1999 /s/ Larry I. Kelley
----------------------------------
Larry I. Kelley
President and Chief Executive
Officer (principal executive
officer, principal financial
officer and principal accounting
officer)
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Date: April 28, 1999 /s/ Leonard Snyder
---------------------------------
Leonard Snyder
Chairman of the Board of Directors
Date: April 28, 1999 /s/ Larry I. Kelley
---------------------------------
Larry I. Kelley
President and Chief Executive Officer
(principal executive officer)
Date: April 28, 1999 /s/ Warren Flick
---------------------------------
Warren Flick
Director
Date: April 28, 1999 /s/ Laurie M. Shahon
---------------------------------
Laurie M. Shahon
Director
Date: April 28, 1999 /s/ Malcolm L. Sherman
---------------------------------
Malcolm L. Sherman
Director
Date: April 28, 1999 /s/ James M. Shoemaker, Jr.
---------------------------------
James M. Shoemaker, Jr.
Director
Date: April 28, 1999 /s/ Allan Tofias
---------------------------------
Allan Tofias
Director
Date: April 28, 1999 /s/ Raymond S. Waters
---------------------------------
Raymond S. Waters
Director
</TABLE>
ONE PRICE CLOTHING STORES, INC.
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<S> <C> <C> <C> <C> <C>
COL. A COL. B COL. C COL. D COL. E
--------------- --------------- -------------------------------------- -------------- -----------------
DESCRIPTION ADDITIONS
Balance at Charged to Charged Deduction - Balance
Beginning of Cost & to Other- Describe (1) at End of
Period Expenses Describe Period
--------------- --------------- -------------------------------------- -------------- -----------------
FISCAL YEAR ENDED
JANUARY 30, 1999
Allowance for
doubtful accounts $ 196,000 $ 130,000 $246,000 $ 80,000
=========== ========== ======== ============
FISCAL YEAR ENDED
JANUARY 31, 1998
Allowance for
doubtful accounts $ 144,000 $ 432,000 $380,000 $ 196,000
=========== =========== ======== ===========
FISCAL YEAR ENDED
FEBRUARY 1, 1997
Allowance for
doubtful accounts $ 233,000 $ 685,000 $774,000 $ 144,000
=========== =========== ======== ===========
</TABLE>
(1) Deductions pertain to write-offs charged against the allowance for returned
customer checks.
<PAGE>
ONE PRICE CLOTHING STORES, INC.
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
3(a) Certificate of Incorporation of the Registrant, as amended
through April 1987: Incorporated by reference to exhibit of
the same number to Registrant's Registration Statement on Form
S-1, filed April 10, 1987 (File No. 33-13321) ("the S-1").
3(a)(1) Certificate of Amendment of Certificate of Incorporation of
the Registrant: Incorporated by reference to exhibit of the
same number to the Registrant's Annual Report on Form 10-K for
the year ended January 1, 1994 (File No. 0-15385).
3(b) Restated By-Laws of the Registrant, as of July 22, 1992 and
amended as of July 20, 1994, March 14, 1996 and April 29,
1998: Incorporated by reference to Exhibit 10(h) to the
Registrant's Quarterly Report on Form 10-Q for the quarter
ended May 2, 1998 (File No. 0-15385)("the April 1998 Form
10-Q").
4(a) See Exhibits 3(a), 3(a)(1), and 3(b).
4(b) Specimen of Certificate of the Registrant's Common Stock:
Incorporated by reference to Exhibit 1 to the Registrant's
Registration Statement on Form 8-A filed with the Securities
and Exchange Commission on June 23, 1987 (File No. 0-15385).
4(c) Shareholder Rights Agreement by and between the Registrant and
Wachovia Bank of North Carolina, N. A. as Rights Agent dated
November 3, 1994: Incorporated by reference to Exhibit 2 to
the Registrant's Form 8-K filed November 10, 1994 (File No.
0-15385).
4(d) Loan and Security Agreement by and between Congress Financial
Corporation (Southern) as Lender and the Registrant and One
Price Clothing of Puerto Rico, Inc. as Borrowers dated March
25, 1996: Incorporated by reference to exhibit of same number
to the Registrant's Annual Report on Form 10-K for the year
ended December 30, 1995 (File No.0-15385).
4(d)(1) Amendment Number One to the Loan and Security Agreement
by and between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing of Puerto
Rico, Inc. and One Price Clothing - U.S. Virgin Islands,
Inc. as Borrowers dated May 16, 1997: Incorporated by
reference to Exhibit 10(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended May 3, 1997 (File
No. 0-15385) ("the April 1997 Form 10-Q").
4(d)(2) Amendment Number Two to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as Lender
and the Registrant, One Price Clothing of Puerto Rico, Inc.
and One Price Clothing - U.S. Virgin Islands, Inc. as
Borrowers dated June 17, 1997: Incorporated by reference to
Exhibit 10(c) to the Registrant's Quarterly report on Form
10-Q for the quarter ended August 2, 1997 (File No. 0-15385)
("the July 1997 Form 10-Q").
4(d)(3) Amendment Number Three to the Loan and Security Agreement by
and between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing of Puerto Rico,
Inc. and One Price Clothing - U.S. Virgin Islands, Inc. as
Borrowers dated February 19, 1998: Incorporated by reference
to exhibit of the same number to the Registrant's Annual
Report on Form 10-K for the year ended January 31, 1998 (File
No. 0-15385)("the 1997 Form 10-K").
4(d)(4)+ Amendment Number Four to the Loan and Security Agreement by and
between Congress Financial Corporation (Southern) as
Lender and the Registrant, One Price Clothing Stores, Inc. of
Puerto Rico and One Price Clothing Stores - U.S. Virgin
Islands, Inc. as Borrowers dated January 31, 1999.
4(e) Mortgage and Security Agreement by and between First Union
National Bank, as Mortgagee and One Price Realty, Inc. as
Mortgagor dated June 17, 1997: Incorporated by reference to
Exhibit 10(d) to the July 1997 Form 10-Q.
4(f) Promissory Note by and between First Union National Bank and
One Price Realty, Inc. dated June 17, 1997: Incorporated by
reference to Exhibit 10(e) to the July 1997 Form 10-Q.
4(g) Continuing Commercial Credit Agreement by and between Carolina
First Bank as Lender and the Registrant, One Price
Clothing of Puerto Rico, Inc. and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated May 16, 1997:
Incorporated by reference to Exhibit 10(b) to the April 1997
Form 10-Q.
4(g)(1) Amendment Number One to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing of Puerto Rico, Inc. and One
Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated
March 20, 1998: Incorporated by reference to exhibit of the
same number to the 1997 Form 10-K.
4(g)(2) Amendment Number Two to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing of Puerto Rico, Inc. and One
Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated
April 21, 1998: Incorporated by reference to exhibit of the
same number to the 1997 Form 10-K.
4(g)(3) Amendment Number Three to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and the
Registrant, One Price Clothing Stores, Inc., One Price
Clothing of Puerto Rico, Inc.and One Price Clothing - U.S.
Virgin Islands, Inc. as Borrowers dated November 5, 1998:
Incorporated by reference to Exhibit 10(c) to the Registrant's
Quarterly Report on Form 10-Q for the quarter ended October
31, 1998 (File No.0-15385).
4(g)(4)+ Amendment Number Four to the Continuing Commercial Credit
Agreement by and between Carolina First Bank as Lender and
the Registrant, One Price Clothing Stores, Inc., One Price
Clothing of Puerto Rico, Inc. and One Price Clothing -
U.S. Virgin Islands, Inc. as Borrowers dated March 31, 1999.
4(h) The Company hereby agrees to furnish to the Commission upon
request of the Commission a copy of any instrument with respect
to long-term debt not being registered in a principal amount
less than 10% of the total assets of the Company and its
subsidiaries on a consolidated basis.
Material Contracts -- Executive Compensation Plans and Arrangements:
10(a)* Stock Option Plan of the Registrant dated February 20, 1987
and related forms of Incentive and Non-qualified Stock Option
Agreements: Incorporated by reference to Exhibit 10(d) to
the S-1.
10(b)* Stock Option Plan of the Registrant dated
December 12, 1988 and related forms of Incentive and
Non-qualified Stock Option Agreements: Incorporated by
reference to Exhibit 10(a) to the Registrant's Annual Report
on Form 10-K for the year ended December 31, 1988 (File No.
0-15385) ("the 1988 Form 10-K").
10(c)* One Price Clothing Stores, Inc. 1991 Stock Option Plan:
Incorporated by reference to Exhibit 10(b) to the
Registrant's Annual Report on Form 10-K for the year ended
December 28, 1991 (File No. 0-15385).
10(d)*+ Summary of Incentive Compensation Plan.
10(e)* Form of Employment Agreement between Registrant and Henry D.
Jacobs, Jr.: Incorporated by reference to Exhibit 10(j)
to the 1988 Form 10-K.
10(f)* Agreement dated June 24, 1992 between the Registrant and
Raymond S. Waters: Incorporated by reference to Exhibit 10(l)
to the Registrant's Annual Report on Form 10-K for the year
ended January 2, 1993 (File No. 0-15385).
10(g)* Directors' Stock Option Plan effective April 19, 1995:
Incorporated by reference to Exhibit 10(m) in to Registrant's
Annual Report on Form 10-K for the year ended December 31, 1994
(File No. 0-15385).
10(h)* Amendment Number One to One Price Clothing Stores, Inc.
Director Stock Option Plan dated March 14, 1996: Incorporated
by Reference to Exhibit 10(a) to the Registrant's Quarterly
Report on Form 10-Q for the quarter ended May 4, 1996
(File No. 0-15385).
10(i)* Agreement dated March 25, 1997 between the Registrant and Henry
D. Jacobs, Jr.: Incorporated by reference to Exhibit
10(n) to the Registrant's Annual Report on Form 10-K for the
year ended February 1, 1997 (File No. 0-15385)("the 1996
Form 10-K").
10(j)* Addendum to Employment Agreement dated March 6, 1997 between
the Registrant and Henry D. Jacobs, Jr.: Incorporated by
reference to Exhibit 10(p) to the 1996 Form 10-K.
10(k)* Stock Option Agreement dated March 26, 1997 between Registrant
and Larry I. Kelley: Incorporated by reference to
Exhibit 10(c) to the April 1997 Form 10-Q.
10(l)*+ Letter of Understanding regarding Non-Executive Chairman of the
Board position and Consulting Agreement dated April
16, 1998 and Amendment to Letter of Understanding and
Consulting Agreement dated December 22, 1998 between the
Registrant and Leonard Snyder.
10(m)* Stock Option Agreement dated April 16, 1998 between the
Registrant and Leonard Snyder: Incorporated by reference to
the April 1998 Form 10-Q.
10(n)*+ Employment Agreement dated March 26, 1997 and Amendment to
Employment Agreement dated December 22, 1998 between the
Registrant and Larry I. Kelley.
10(o)*+ Employment Agreement dated March 30, 1992 and Amendment to
Employment Agreement dated February 4, 1997 and amended
December 28, 1998 between the Registrant and Ronald Swedin.
10(p)*+ Employment Agreement dated October 21, 1991 and Amendments to
Employment Agreement dated April 16, 1998 and December
28, 1998 between the Registrant and George V. Zalitis.
10(q)*+ Employment Agreement dated November 10, 1997 and Amendments to
Employment Agreement dated April 16, 1998 and January
14, 1999 between the Registrant and A. J. Nepa.
10(r)*+ Employment Agreement dated April 12, 1999 between the
Registrant and H. Dane Reynolds.
Material Contracts -- Other:
10(s)* Lease Agreement by and between One Price Clothing Stores, Inc.
as Tenant and One Price Realty, Inc. as Landlord
dated June 17, 1997: Incorporated by reference to Exhibit 10
(f) to the July 1997 Form 10-Q.
11 Statement regarding computation of per share earnings
21 Subsidiaries of the Registrant
23 Consent of Deloitte & Touche LLP
27 Financial Data Schedule (electronic filing only)
---------------------------------------
* Denotes a management contract or compensatory plan or agreement.
+ Filed herewith.
<PAGE>
(b) Reports on Form 8-K.
On January 12, 1999, the Company filed a report on Form 8-K dated
January 11, 1999 to report strong initial reaction to test sales of
menswear and its comp sales for fiscal November and December 1998.
No other reports on Form 8-K were required to be filed during the
last quarter of the period covered by this report.
On April 13, 1999, the Company filed a report on Form 8-K dated
April 12, 1999 to announce the appointment of H. Dane Reynolds as
Senior Vice President and Chief Financial Officer.
(c) Exhibits.
The response to this portion of Item 14 is submitted as a separate
section of this report.
(d) Financial Statement Schedules.
The response to this portion of Item 14 is submitted as a separate
section of this report.
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
<TABLE>
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EXHIBIT 4(d)(4) Amendment Number Four to the Loan and Security Agreement by and between Congress
Financial Corporation (Southern) as Lender and the Registrant, One Price Clothing Stores, Inc. of
Puerto Rico and One Price Clothing Stores - U.S. Virgin Islands, Inc. as Borrowers dated
January 31, 1999
</TABLE>
AMENDMENT NO. 4 TO FINANCING AGREEMENTS
January 31, 1999
One Price Clothing Stores, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing of Puerto Rico, Inc.
1875 East Main Street
Duncan, South Carolina 29334
Gentlemen:
Congress Financial Corporation (Southern) ("Lender"), One Price
Clothing Stores, Inc. ("One Price") and One Price Clothing of Puerto Rico, Inc.
("One Price PR"; and together with One Price, individually referred to as a
"Borrower" and collectively as the "Borrowers") have entered into certain
financing arrangements pursuant to the Loan and Security Agreement, dated March
25, 1996, between the Lender and Borrowers (the "Loan Agreement"), as amended by
Amendment No. 1 to Financing Agreements, dated May 16, 1997, Amendment No. 2 to
Financing Agreements, dated June 17, 1997 and Amendment No. 3 to Financing
Agreements, dated February 19, 1998, together with various other agreements,
documents and instruments at any time executed and/or delivered in connection
therewith or related thereto (as the same now exist or may hereafter be amended,
modified, supplemented, extended, renewed, restated or replaced, collectively,
the "Financing Agreements"). All capitalized terms used herein and not herein
defined shall have the meanings given to them in the Financing Agreements.
Borrowers have requested that Lender agree (a) to a reduction of the
applicable interest rates, (b) to reduce the unused line and letter of credit
fees and (c) amend the early termination fee provisions contained in the Loan
Agreement. Lender is willing to do so on the terms and conditions and to the
extent set forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Definitions. The definition of "Interest Rate" set forth at
Section 1.33 of the Loan Agreement is amended in its entirety to read as
follows:
1.33 "Interest Rate" shall mean, as to Prime Rate Loans, a
rate of one-quarter of one (1/4%) percent per annum in excess
of the Prime Rate and, as to Eurodollar Rate Loans, a rate of
two (2%) percent per annum in excess of the Adjusted
Eurodollar Rate (based on the Eurodollar Rate applicable for
the Interest Period selected by the applicable Borrower for
such Eurodollar Rate Loans in accordance with the terms
hereof, whether such rate is higher or lower than any rate
previously quoted to such Borrower); provided, that: the
Interest Rate shall be increased to the rate of two and
one-quarter (2 1/4%) percent per annum in excess of the Prime
Rate as to Prime Rate Loans and the rate of four (4%) percent
per annum in excess of the Adjusted Eurodollar Rate as to
Eurodollar Rate Loans, at Lender's option, without notice, (a)
for the period on and after (i) the date of termination or
non-renewal hereof and until such time as all Obligations are
indefeasibly paid in full (notwithstanding entry of any
judgment against either Borrower), or (ii) the date of the
occurrence of any Event of Default or act, condition or event
which with notice or passage of time or both would constitute
an Event of Default, and for so long as such Event of Default
or other event is continuing as determined by Lender and (b)
on the Loans at any time outstanding in excess of the amounts
available to the respective Borrowers under Section 2 (whether
or not such excess(es), arise or are made with or without
Lender's knowledge or consent and whether made before or after
an Event of Default).
2. Letter of Credit Fee. The first sentence of Section 2.2(b) is
amended in its entirety to read as follows:
(b) In addition to any charges, fees or expenses charged by
any bank or issuer in connection with the Letter of Credit
Accommodations, each Borrower shall pay to Lender a letter of
credit fee at a rate equal to one and one-half (1 1/2%)
percent per annum on the daily outstanding balance of the
Letter of Credit Accommodations issued for its account for the
immediately preceding month (or part thereof), payable in
arrears as of the first day of each succeeding month, except
that such Borrower shall pay to Lender such letter of credit
fee, at Lender's option, without notice, at a rate equal to
three and one-half (3-1/2%) percent per annum for (i) the
period from and after the date of termination or non-renewal
hereof until Lender has received full and final payment of all
Obligations (notwithstanding entry of a judgment against such
Borrower) and (ii) the period from and after the date of the
occurrence of an Event of Default and for so long as such
Event of Default is continuing.
3. Unused Line Fee. Section 3.4 of the Loan Agreement is hereby
amended in its entirety to read as follows:
3.4 Unused Line Fee. Borrowers shall pay to Lender monthly an
unused line fee at a rate equal to three-eighths of one
(.375%) percent per annum calculated upon the amount by which
the Inventory Loan Limit exceeds the average daily principal
balance of the outstanding Revolving Loans and Letter of
Credit Accommodations during the immediately preceding month
(or part thereof) while this Agreement is in effect and for so
long thereafter as any of the Obligations are outstanding,
which fee shall be payable on the first day of each month in
arrears.
4. Term. The first sentence of Section 12.1(c) of the Loan
Agreement (as previously amended) is hereby amended, by adding Section 12.1(c)
(iii) thereto:
(iii) .125% of the April 1, 2000 to but not
Inventory Loan including March 31, 2001.
5. Carolina First Bank.
(a) Lender hereby (i) consents to an extension of the term of the
Carolina Bank Documents for a period not to exceed an additional one year and an
increase in the line of credit available for letters of credit issued for One
Price's account thereunder from $4,000,000 to $5,000,000 and (ii) amends clause
(i) of Section 9.9(g) of the Loan Agreement by deleting the term "$3,000,000"
and substituting the term "$5,000,000" therefor.
(b) Lender's consent pursuant to Section 5(a), shall, however, be
conditioned upon Lender's receipt, in form and substance satisfactory to Lender,
of the written agreements between One Price and Carolina Bank setting forth the
foregoing modifications, together with, if required by Lender, a written
confirmation by Carolina Bank of the continued effectiveness of the
Intercreditor Agreement, dated May 16, 1997, between Lender and Carolina Bank,
in form and substance satisfactory to Lender and accompanied by the written
agreement and acknowledgment of One Price.
6. Conditions Precedent. The effectiveness of the amendments set forth
herein are further conditioned upon the satisfaction of each of the following
conditions precedent in a manner satisfactory to Lender:
(a) No Event of Default, or act, condition or event which with
notice or passage of time or both would constitute an Event of Default shall
exist or have occurred; and
(b) Lender shall have received an original of this
Amendment, duly authorized, executed and delivered by
Borrowers and One Price VI.
7. Miscellaneous.
(a) Entire Agreement; Ratification and Confirmation of the
Financing Agreements. This Amendment contains the entire agreement of the
parties with respect to the subject matter hereof and supersedes all prior or
contemporaneous term sheets, proposals, discussions, negotiations,
correspondence, commitments and communications between or among the parties
concerning the subject matter hereof. This Amendment may not be modified or any
provision waived, except in writing signed by the party against whom such
modification or waiver is sought to be enforced. Except for those provisions
specifically modified or waived pursuant hereto, subject, nevertheless to the
periods of effectiveness of the temporary waiver and temporary amendment set
forth, respectively, in Sections 1 and 2 hereof, the Financing Agreements are
hereby ratified, restated and confirmed by the parties hereto as of the
effective date hereof. To the extent of conflict between the terms of this
Amendment and the Financing Agreements, the terms of this Amendment shall
control.
(b) Governing Law. This Amendment and the rights and
obligations hereunder of each of the parties hereto shall be governed by and
interpreted and determined in accordance with the internal laws of the State of
Georgia, without regard to principles of conflicts of law.
(c) Binding Effect. This Amendment shall be binding upon and
inure to the benefit of each of the parties hereto and their respective
successors and assigns.
(d) Counterparts. This Amendment may be executed in any number
of counterparts, but all of such counterparts shall together constitute but one
and the same agreement. In making proof of this Amendment it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.
By the signature hereto of each of their duly authorized officers, all
of the parties hereto mutually covenant and agree as set forth herein.
Very truly yours,
CONGRESS FINANCIAL CORPORATION
(SOUTHERN)
By: /s/ Drew Stawin
Title: Vice President
AGREED AND ACCEPTED:
ONE PRICE CLOTHING STORES, INC.
By: /s/ C. Burt Duren
Title: Treasurer
ONE PRICE CLOTHING OF PUERTO RICO, INC.
By: /s/ C. Burt Duren
Title: Treasurer
CONSENTED TO AND AGREED:
ONE PRICE CLOTHING - U.S. VIRGIN ISLANDS, INC.
By: /s/ c. Burt Duren
Title: Treasurer
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
<TABLE>
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EXHIBIT 4(g)(4) Amendment Number Four to the Continuing Commercial Credit Agreement by and between
Carolina First Bank as Lender and the Registrant, One Price Clothing Stores, Inc. of Puerto Rico
and One Price Clothing - U.S. Virgin Islands, Inc. as Borrowers dated March 31, 1999
</TABLE>
<PAGE>
AMENDMENT NUMBER 4
TO
CONTINUING COMMERCIAL CREDIT AGREEMENT
March 31, 1999
One Price Clothing Stores, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing of Puerto Rico, Inc.
1875 East Main Street
Duncan, South Carolina 29334
One Price Clothing - U.S. Virgin Islands, Inc.
1875 East Main Street
Duncan, South Carolina 29334
Gentlemen:
Carolina First Bank ("Bank"), One Price Clothing Stores, Inc. ("One
Price"), One Price Clothing of Puerto Rico, Inc. ("One Price, P.R."), and One
Price Clothing - U.S. Virgin Islands, Inc. ("One Price V.I.", and together with
One Price and One Price, P.R., individually referred to as a "Borrower" and
collectively as "Borrowers") have entered into certain financing arrangements
pursuant to the Continuing Commercial Credit Agreement, dated May 16, 1997,
between Bank and Borrowers, as amended by Amendment Number 1, dated March 20,
1998, Amendment Number 2, dated April 21, 1998, and Amendment Number 3, dated
November 5, 1998 (the "Credit Agreement"). All capitalized terms used herein and
not herein defined shall have the meanings given to them in the Credit
Agreement.
Borrowers have requested that Bank increase the Maximum Credit of the
Credit Agreement, extend the Term of the Credit Agreement, and extend the term
of any individual Letters of Credit. Bank is willing to agree to this Amendment,
subject to the terms and conditions set forth herein.
In consideration of the foregoing, the mutual agreements and covenants
contained herein and other good and valuable consideration, the parties hereto
agree as follows:
1. Section 1.6 of the Credit Agreement is hereby amended by
deleting the figure "$3,000,000.00" appearing therein, and
substituting therefor, the figure "$5,000,000.00".
2. Section 2.1 (d) of the Credit Agreement is hereby amended by:
(a) deleting the phrase "120 days" appearing therein, and
substituting therefor, the phrase "180 days"; and (b) deleting
the date of "June 30, 1998" appearing therein, and
substituting therefor, the date appearing in Section 11.1
(a), as amended from time to time.
3. Section 11.1 (a) of the Credit Agreement is hereby amended by
deleting the ending date of the Term of the Credit Agreement
of "June 30, 1998" appearing therein, and substituting
therefor, the date "June 30, 2000".
4. This Amendment Number 4 replaces paragraph 3 of Amendment
Number 2, dated April 21, 1998.
5. This Amendment Number 4 replaces Amendment Number 3, dated
November 5, 1998.
6. Miscellaneous.
a. Entire Agreement; Ratification and Confirmation of
the Credit Agreement.
This Amendment contains the entire agreement of the
parties with respect to the specific subject matter
hereof and supersedes all prior or contemporaneous
term sheets, proposals, discussions, negotiations,
correspondence, commitments, and communications
between or among the parties concerning the subject
matter hereof. This Amendment may not be modified or
any provision waived, except in writing, signed by
the party against whom such modification or waiver is
sought to be enforced. Except as specifically
modified herein, and as specifically modified in
Amendment Number 1 and Amendment Number 2, the Credit
Agreement is hereby ratified, restated, and confirmed
by the parties hereto as of the effective date
hereof. To the extent of a conflict between the terms
of this Amendment and the Credit Agreement, the terms
of this Amendment shall control.
b. Governing Law.
This Amendment and the rights and the obligations
hereunder of each of the parties hereto shall be
governed by and interpreted and determined in
accordance with the internal laws of the state of
South Carolina, with regard to principals of
conflicts of law.
c. Binding Effect.
This Amendment shall be binding and enure to the
benefit to each of the parties hereto and their
respective successors and assigns.
d. Counterparts.
This Amendment may be executed in any number of
counterparts, but all of such counterparts shall
together constitute but one in the same agreement. In
making proof of this Amendment, it shall not be
necessary to produce or account for more than one
counterpart thereof signed by each of the parties
hereto.
By the signature hereto of each of their duly authorized officers, all of the
parties hereto mutually covenant and agree as set forth herein.
Yours very truly,
Carolina First Bank
By: /s/ Charles D. Chamberlain
Charles D. Chamberlain,
Title: Executive Vice President
AGREED AND ACCEPTED:
One Price Clothing Stores, Inc.
By: /s/ C. Burt Duren
Title: Treasurer
One Price Clothing of Puerto Rico, Inc.
By: /s/ C. Burt Duren
Title: Treasurer
One Price Clothing - U.S. Virgin Islands, Inc.
By: /s/ C. Burt Duren
Title: Treasurer
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 10(d ) - SUMMARY OF INCENTIVE COMPENSATION PLAN
Pursuant to the Company's incentive compensation plan (the "Plan"),
participants will be eligible for incentive compensation payments based upon
individual objectives and earnings of One Price Clothing Stores, Inc. (the
"Company"). The weight of each of these factors will be determined each year
by the Company. The maximum potential amount of the incentive compensation
payments of each participant will be based upon a percentage of the
participant's annual base salary (the "Percentage"). The Percentages for
each participant will be determined each year by the Company. The Plan is
subject to approval by the Compensation Committee of the Board of Directors.
Under the provisions of his agreement with the Company, the Chairman of the
Board is also eligible for incentive compensation payments in accordance
with the provisions of the Plan. Except for the Chairman of the Board,
directors who are not also officers are not eligible to participate in the
Plan.
10(l) Letter of Understanding regarding Non-Executive Chairman of the Board and
Consulting Agreement dated April 16, 1998 and Amendment to Agreement dated
December 22, 1998 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.
Sincerely Yours, REVIEWED & AGREED:
/s/ Laurie M. Shahon /s/ Leonard Snyder
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.
One Price Clothing Stores, Inc. Leonard M. Snyder
/s/ Larry I. Kelley /s/ Leonard M. Snyder
By: Larry I. Kelley Chairman
Title: President & CEO
EXHIBIT 10(n) Employment Agreement dated March 26, 1997 and Amendment to
Employment Agreement dated December 22, 1998 between the
Registrant and Larry I. Kelley
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 26th day of March, 1997, by
and between One Price Clothing Stores, Inc., a Delaware corporation with its
principal place of business in Spartanburg County, South Carolina, hereinafter
referred to as "Employer", and Larry Kelley, a resident of Duxbury, State of
Massachusetts, hereinafter referred to as "Employee".
W I T N E S S E T H:
For and in consideration of the mutual covenants and promises of the
parties hereto and the benefits inuring to the parties hereto, Employer and
Employee agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
Employer employs Employee as its President and Chief Executive Officer, and
Employee accepts such employment with Employer. The employment hereunder shall
commence on the day Employee reports for work at Employer's offices in Duncan,
South Carolina and shall continue for six (6) years from such date unless
terminated as hereinafter provided.
2. DUTIES OF EMPLOYEE. Employee shall serve Employer as its President
and Chief Executive Officer faithfully and to the best of his ability
under the direction of the Board of Directors of Employer. Employee shall
be elected as a Director of the Company immediately following execution of
this agreement and thereafter nominated annually as a Director, commencing
with the annual shareholders meeting in June 1997, so long as this
Agreement is in effect. Employee shall devote his full time and efforts to
his duties as an employee of Employer. As Chief Executive Officer of the
Company, Employee shall have the authority to hire and fire any and all
other officers and employees of the Company, excluding the Chairman of the
Board of Directors.
3. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this
Agreement, Employer shall pay Employee an annual base salary of $400,000,
which shall automatically increase to $450,000 twelve (12) months after
commencement of employment by Employee and shall thereafter be subject to
annual review, payable in bi-weekly installments in accordance with the usual
payroll practice of Employer, less all legally required deductions.
In the event Employee shall die during the term of this Agreement, his salary
shall be continued only through the end of the bi-weekly pay period
following his death.
(b) Bonus. Employee shall be entitled to a first
year bonus of $150,000, payable $100,000 upon commencing employment
and $50,000 at fiscal 1997 year end; provided, however, if Employee is
not employed by Employer on the first day of fiscal 1998, Employee
shall reimburse Employer the $100,000 paid upon commencement of
employment and shall forfeit the $50,000 due at fiscal 1997 year end.
Starting in fiscal 1998, Employee shall be entitled to receive a bonus
of up to 50% of his base salary if the Employee's personal and the
Company's goals are met in accordance with the Company's bonus program
then in effect.
(c) Special Stock Option. The Board of Directors has
approved the granting to Employee of an option for 300,000 shares of
Employer's common stock at the market price on the date of grant,
which date shall be the earlier of the execution of this Agreement or
the commencement date of employment. Such option shall be exercisable
twenty five (25%) percent on the date of employment and thereafter
exercisable equally over a period of four (4) years at 18.75% annually
commencing twelve (12) months from the date of Employee's employment.
Should Employee die or become permanently disabled prior to the
expiration of a twelve (12) month vesting period, he shall be
considered as employed at the end of such twelve (12) month period
during which he dies or becomes permanently disabled for purposes of
exercise of the option granted hereunder. The options shall not be
transferrable except to members of Employee's immediate family or a
trust for the benefit of members of his family, shall have a ten (10)
year term, contain typical anti-dilution and change in capitalization
provisions, a commitment to register the shares underlying the option
on Form S-8 and appropriate provisions for exercise in the event of
death or disability.
(d) Retirement. So long as Employee is employed
by Employer for a minimum of six (6) years, he shall be entitled at
the end of six (6) years to a $600,000 retirement sum payable over ten
(10) years in equal monthly installments following his retirement from
the Company. For each year that Employee remains employed by Employer
beyond the initial six (6) year period, his retirement sum shall be
increased $100,000 and the aggregate retirement sum due Employee
should he remain employed beyond six (6) years shall be payable over
ten (10) years in equal monthly installments following his retirement
from the Company. If Employee does not remain employed for at least
six (6) years, he shall not be entitled to any retirement sum.
(e)Other Benefits.(i) During the term of his employment, Employee
shall be entitled to participate in all employee benefits as are
customarily provided to its officers by Employer, and to participate
in such other employee benefits as may from time to time be approved
by Employer's Board of Directors.
(ii) Employee shall be entitled to four (4) weeks of
vacation annually.
(iii) Employee may serve as a director of a non-
competing company or otherwise participate in educational, social,
religious or civic organizations so long as such activity does not
interfere with Employee's duties hereunder.
(iv) Employee shall also
be entitled to reimbursement of all reasonable hotel, travel,
entertainment and other business expenses actually incurred by
Employee in the course of Employee's employment hereunder and in
accordance with such policy as may be established for Employer's
Executives, upon submission to Employer of satisfactory documentation
thereof.
(v)Employee shall be indemnified by Employer as an
officer and director to the fullest extent permitted under Delaware
law.
(f) Moving Expenses. Employer shall reimburse Employee for:
(i) Air travel to the Spartanburg/Greenville
area for himself and his wife, which
travel shall be limited to reimbursement for up to a total of fifteen
(15) round trip coach plane tickets for Employee and his wife from
Boston to Greenville/Spartanburg.
(ii) Employer shall obtain a
competitive bid from an independent moving company setting forth the
cost of transportation of Employee's family's household goods, effects
and two (2) automobiles and Employee shall be entitled to receive such
amount in cash grossed up to cover any applicable federal or state
income taxation.
(iii) Upon Employee's reporting for work, Employer
agrees to reimburse Employee for up to three (3) months for the cost
of temporary lodging at a hotel or motel such as Residence Inn, such
reimbursement to cover room only, and not food or other expenses.
(iv) Reasonable closing costs associated with buying a
home, including such expenses as real estate commissions, loan
origination fee, attorney's fees, etc., but excluding discount
points, prorated taxes or insurance. Payment will be made on a
receipt reimbursement or written estimate basis.
(g) Payments Upon Termination. In the event Employee
is terminated by Employer without cause, Employer shall continue
Employee's annual base salary following Employee's termination for
twelve (12) additional months at the rate of base salary in effect at
the date of Employee's termination, payable in accordance with
Employer's usual payroll practices. In addition, Employee shall be
entitled to payments of such base salary for an additional six (6)
months if unemployed at the end of twelve (12) months, provided that
such additional salary payments shall be immediately terminated upon
his employment during such additional six (6) month period. In the
event Employee voluntarily terminates his employment with Employer or
is terminated for cause, he shall be entitled to no additional payment
upon such termination other than any then accrued but unpaid salary,
vacation pay, or other normal reimbursement items. Cause shall be
defined to mean (a) the commission by Employee of any felony, (b) the
commission by Employee of any crime or other activity involving
dishonesty or moral turpitude, (c) the engagement by Employee in any
act of fraud, misappropriation or similar misfeasance, (d) the
engagement by Employee in any activity in contravention of paragraph 4
of this Agreement or otherwise resulting in a material adverse effect
to Employer or (e) repeated non-attentiveness by Employee to his
duties under this Agreement; provided, however, that prior to any
termination based on cause as herein defined, Employee shall have
received written notice from the Board of Directors of Employer
stating in reasonable detail the basis therefor and shall be given an
opportunity to meet with and address the Board regarding the grounds
for such termination.
4. CONFIDENTIAL INFORMATION. Employee
acknowledges that during his employment he will have access to
confidential information belonging to the Employer. Such confidential
information shall consist of all information disclosed to Employee as
a result of employment by Employer not generally known in the retail
business in which Employer is engaged including information concerning
Employer's suppliers, including the costs, quantities and types of
goods supplied, and the identity of such suppliers; information
concerning the Employer's marketing and/or sales strategy or plans;
real estate strategy and expansion plans; all pricing information
relating to merchandise offered for sale by Employer; customers' list
and all information dealing with customers' needs or preferences; all
data processing information; all financial information including
financial statements, financing plans and forecasts, and any and all
information designated or marked as confidential. Employee will not
use or disclose, or otherwise make available, such confidential
information to any other person or entity without prior express
written consent of Employer, either during or following the
termination of Employee's employment. Upon termination of employment,
Employee shall turn over to Employer all property then in his
possession or custody belonging to Employer and shall not retain any
copies or reproductions of correspondence, memoranda, reports,
notebooks, drawings, photographs, or other documents relating in any
way to the affairs of Employer.
5. NON-COMPETITION. (a) Upon
termination of Employee's employment with Employer, whether voluntary
or involuntary and whether with or without cause, Employee will not
for a period of two (2) years from date of such termination conduct or
engage in, directly or indirectly, alone or jointly, with any other
person or corporation as agent, consultant, employee, manager,
purchaser, proprietor, stockholder, co-partner, or otherwise, any type
of womens retail apparel business involving the general retail price
range(s) engaged in by Employer at the time of termination of his
employment. This restriction applies to the continental United States
and any other country or possession of the United States in which
Employer does business. (b) Employee agrees not to employ or cause to
be employed any other employee of Employer for a period of two (2)
years after Employee's termination of employment. This restriction
applies to any type of business which Employee may be engaged in or is
associated with.
6. NOTICES. All notices, consents, changes of address
and other communications (hereinafter referred to as "Notice(s)")
required or permitted to be made under the terms of this Agreement
shall be in writing and shall be (I) personally delivered by an agent
of the relevant Party, or (ii) transmitted by postage prepaid,
certified or registered mail: To Employer: One Price Clothing Stores,
Inc. Post Office Box 2487 Spartanburg, South Carolina 29304
To Employee: Larry Kelley at such address as he
may provide to Employer in writing
cc: Theodore Wm. Tashlik
Tashlik Kreutzer & Goldwyn P.C.
833 Northern Boulevard
Great Neck, N.J. 11021-5308
7. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by Employee. No waiver shall be valid unless in writing
and signed by any authorized officer of Employer.
8. ASSIGNMENT. Employee acknowledges that the services to be rendered
by Employee are unique and personal. Accordingly, Employee may not assign any of
Employee's rights or delegate any of Employee's duties or obligations under this
Agreement. The rights and obligations of Employer under this Agreement shall
inure to the benefit of and all be binding upon the Employer, and its successors
and assigns.
9. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
Employer that he is under no obligation to or bound by any contract with any
person, corporation or other entity which would prohibit or in any way interfere
with the performance of his duties and obligations to Employer under this
Agreement.
10. SEVERABILITY. If any provision of this Agreement as applied to
either party or to any circumstance shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
11. ENTIRE AGREEMENT, MODIFICATION OR AMENDMENT. This Agreement
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written agreements. This Agreement may
be modified or amended from time to time by the mutual agreement of the parties
hereto. No modification or amendment of this Agreement shall be binding upon
either party unless it is in writing and executed by the party sought to be
charged.
12. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
13. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
14. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to South Carolina's rules of conflicts of law, and regardless of the place or
places of its physical execution and performance.
15. ENFORCEMENT. This Agreement may only be enforced in a court of
competent jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in Spartanburg
County, South Carolina, whether or not then residing in South Carolina. The
prevailing party shall be entitled to recover from the other party the cost of
any court action, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
<TABLE>
<S> <C>
Witnesses: One Price Clothing Stores, Inc.
/s/ Stephen A. Feldman By: /s/ Henry D. Jacobs, Jr.(SEAL)
Henry D. Jacobs, Jr.
/s/ Diane G. O'Bryant Chairman of Board of Directors
As to Employer
"EMPLOYER"
__________________________ /s/ Larry Kelley_____________(SEAL)
Larry Kelley
As to Employee
"EMPLOYEE"
</TABLE>
Amendment to Employment
Agreement Dated as of March 26, 1997
Reference is made to the Employment Agreement dated as of March 26, 1997,
("Agreement") by and between One Price Clothing Stores, Inc. ("Employer") and
Larry I. Kelley ("Employee"). The Agreement is hereby amended to add the
following new provisions relating to termination of employment by Employee
following a "Change of Control" (as hereinafter defined).
1. The following new Section 3 (g) is added to the Agreement:
3. (g). Change of Control - In the event the Employee's employment with the
Company is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after a "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum, an
amount equal to thirty-six (36) months severance pay, rather than the maximum of
eighteen (18) months severance pay currently provided for in the Agreement.
Termination for "Good Reason" shall be deemed to have occurred, and the Employee
shall be entitled to the benefits of this provision, provided that: x) the
Employee voluntarily terminates his employment after 30 days written notice to
Employer; y) a "Change of Control" has occurred; and, z) any one or more of the
following events has occurred: (i) the assignment to the Employee of any duties
inconsistent with the highest position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities attained by the
Employee during the period of his employment with the Employer or any action by
the Employer which results in a material diminishment in such position,
authority, duties or responsibilities as were in effect immediately prior to the
Change of Control; (ii) a decrease in the Employee's compensation (including
base salary, bonus or fringe benefits); (iii) relocation by Employer of the
Employee more than 50 miles outside of the Greenville /Spartanburg area of South
Carolina; or, (iv) failure of any successor of the Employer to comply with this
Agreement. In consideration for the benefits conferred to Employee under this
provision, in the absence of an Employment Event the Employee agrees to continue
his employment, following a Change of Control, for the term remaining under the
Agreement.
Should a Change of Control occur, all stock options granted by Employer to
Employee, 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 Employee shall have 90 days to
exercise such option following an Employment Event.
In addition, upon the occurrence of an Employment Event, Employee's Loan
Agreement and the underlying Note, by and between Employee and Employer and
dated as of December 31, 1997, as amended effective July 6, 1998, shall be
immediately extinguished, along with any and all accrued interest and any
remaining principal.
Finally, should an Employment Event occur, the entire sum of Employee's
retirement benefits, which would have been otherwise payable at the end of his
six year term (the "Entitlement Date") in 120 consecutive monthly payments of
Five Thousand ($5,000.00) Dollars, shall be deemed immediately due and payable,
without deduction or off-set, provided, however, that in the event an Employment
Event shall occur prior to the Entitlement Date, Employee shall be entitled to
the present value of such deferred payments calculated as follows. The present
value shall be calculated using a discount rate of 8% p.a. and based upon the
period of time between the date of the Employment Event and the Entitlement
Date.
It is the intention of the parties that payments to Employee arising from an
Employment Event pursuant to the Agreement, as amended herein, shall constitute
reasonable compensation for Employee's services to Employer and shall not
constitute "excess parachute payments" within the meaning of Section 280 G of
the Internal Revenue Code of 1986, as amended, and any regulations thereunder.
In the event that the Employer's independent accountants, acting as auditors, on
the date of an Employment Event determine that payments provided for herein
constitute "excess parachute payments," then the compensation payable hereunder
shall be reduced to the point that such compensation shall no longer qualify as
"excess parachute payments." In the event that such "excess parachute payments"
are determined to exist by such auditors and the amount of any extinguishment of
Employee's loan is included in determining the amount of benefits received, then
the auditors shall, to the extent necessary, first reduce benefits attributable
to the extinguishment of Employee's loan with Employer, in order to maximize the
amount of cash to be received by Employee upon the occurrence of an Employment
Event.
For purposes hereof, a "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) The occurrence of 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 in
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 to the Company.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
22 day of December, 1998.
One Price Clothing Stores, Inc. Larry I. Kelley
/s/ Leonard M. Snyder /s/ Larry I. Kelley
By: Leonard M. Snyder "EMPLOYEE"
Its: Chairman of the Board
"EMPLOYER"
EXHIBIT 10(o) Employment Agreement dated March 30, 1992 and Amendments to
Employment Agreement dated February 4, 1997 and December 28, 1998 between the
Registrant and Ronald Swedin
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 30th day of March, 1992, by
and between One Price Clothing Stores, Inc., a Delaware corporation with its
principal place of business in Spartanburg County, South Carolina, hereinafter
referred to as "Employer," and Ron Swedin, a resident of Bloomingdale, State of
New Jersey, hereinafter referred to as "Employee."
W I T N E S S E T H :
For and in consideration of the mutual covenants and promises of the
parties hereto and the benefits inuring to the parties hereto, Employer and
Employee agrees as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
employer employs Employee as its Vice President of Stores and Employee accepts
such employment with Employer. The employment hereunder shall commence on the
date Employee reports for full time work, and shall continue until terminated as
hereinafter provided.
2. TERMINATION. The employment hereunder shall terminate at the will of
either party at any time, with or without cause, or upon the mutual agreement of
the parties hereto.
3. DUTIES OF EMPLOYEE. Employee shall serve Employer faithfully and to
the best of his ability. Employee shall devote his full time and efforts to his
duties as an employee of Employer.
4. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this
Agreement, Employer shall pay Employee an annual base salary of not less than
$160,000, subject to annual review, payable in bi-weekly installments in
accordance with the usual payroll practice of Employer, less all legally
required deductions.
(b) Bonus. In addition to the above salary, the Board of
Directors of Employer, in its sole discretion, may award to Employee an annual
bonus in accordance with a bonus plan that has been adopted by the Board of
Directors. Employee shall be entitled to a first year minimum bonus of $16,000,
provided Employee is actively employed by Employer at January 31, 1993.
(c) Special Stock Option. Employee shall be granted an option
for 15,000 shares of Employer's common stock at the market price on the day of
grant, exercisable twenty (20%) percent annually commencing twelve (12) months
from the day of grant.
This option shall be granted on the day Employee reports for fulltime work.
(d) Automobile. Employer shall provide Employee with the use
of an automobile, with a value not to exceed $25,000.00. In addition, Employer
agrees to take care of maintenance, insurance, gas and oil, etc. Adjustment for
personal use shall be accounted for under appropriate Internal Revenue Service
Regulations.
(e) Other Benefits.
(i) During the term of his employment, Employee
shall be entitled to participate in all employee benefits as are customarily
provided to its officers by Employer, and to
participate in such other employee benefits as may from time to time be
instituted by Employer's Board of Directors.
(ii) Employee shall also be entitled to
reimbursement of all reasonable hotel, travel, entertainment
and other business expenses actually incurred by Employee in the course of
Employee's employment upon submission to Employer of satisfactory documentation
thereof.
(f) Moving Expenses. Employer shall reimburse Employee for:
(i) Employer agrees to reimburse Employee for
air travel up to six (6) round trip airline tickets, other than first-class, to
and from Greenville/Spartanburg, SC/New York, NY or Newark, NJ.
(ii) Transportation of household goods and effects,
and not more than two (2) automobiles.
(iii) Upon reporting for work Employer agrees to
reimburse Employee for up to three (3) months for the cost of interim living
expenses, such reimbursement to cover lodging only. Total
cost of interim living expenses not to exceed $2,500.
(iv) Employer agrees to reimburse Employee for
lodging, meals, etc., for a maximum of three (3) trips, which includes the
actual moving event.
(g) Employer shall pay Employee up to $30,000 of documented
expenses for brokerage fees, closing costs, double mortgage payments and any and
all other related relocation expenses. This payment will be made upon
presentation of documentation on or after the first day of employment.
(h) Payments Upon Termination. In the event Employee is
terminated by Employer, with our without cause, except for fraud, theft,
dishonesty or criminal intent, Employer shall continue Employee's salary
following Employee's termination for six (6) additional months at the annual
base salary in effect at the date of Employee's termination, payable in
accordance with Employer's usual payroll practices. In the event Employee
voluntarily terminates his employment with Employer, he shall be entitled to no
additional payment upon such termination other than any then accrued but unpaid
salary, vacation pay, or other normal reimbursement items. In the event Employee
shall voluntarily terminate his employment with Employer prior to his first
anniversary of employment, Employee shall reimburse Employer fifty (50%) percent
of payments received for moving expenses and relocation expense reimbursement
set forth in paragraph (f) and paragraph (g) above.
5. CONFIDENTIAL INFORMATION. Employee acknowledges that during his
employment he will have access to confidential information belonging to the
Employer. Such confidential information shall consist of all information
disclosed to Employee as a result of employment by Employer not generally known
in the retail business in which Employer is engaged including information
concerning Employer's suppliers, including the costs, quantities and types of
goods supplied, and the identity of such suppliers; information concerning the
Employer's marketing and/or sales strategy or plans; real estate strategy and
expansion plans; all pricing information relating to merchandise offered for
sale by Employer; customers' list and all information dealing with customers'
needs or preferences; all data processing information; all financial information
including financial statements, financing plans and forecasts, and any and all
information designated or marked as confidential. Employee will not use or
disclose, or otherwise make available, such confidential information to any
other person or entity without prior express written consent of Employer, either
during or following the termination of Employee's employment. Upon termination
of employment, Employee shall turn over to Employer all property then in his
possession or custody belonging to Employer and shall not retain any copies or
reproductions of correspondence, memoranda, reports, notebooks, drawings,
photographs, or other documents relating in any way to the affairs of Employer.
6. NON-COMPETITION.
(a) Upon termination of Employee's employment with Employer,
whether voluntary or involuntary and whether with our without cause, Employee
will not for a period of three (3) years from date of such termination conduct
or engage in, directly or indirectly, alone or jointly, with any other person or
corporation as agent, consultant, employee, manager, purchaser, proprietor,
stockholder, co-partner, or otherwise, any type of retail apparel business which
uses the one price concept or a substantially similar concept, such as a ceiling
price point. This restriction applies to the continental United States.
(b) Employee agrees not to employ or cause to be employed any
other employee of Employer for a period of three (3) years after Employee's
termination of employment. This restriction applies to any type of business
which Employee may enter.
7. NOTICES. All notices, consents, changes of address and other
communications (hereinafter referred to as "Notice(s)") required or permitted to
be made under the terms of this Agreement shall be in writing and shall be (i)
personally delivered by an agent of the relevant Party, or (ii) transmitted by
postage prepaid, certified or registered mail:
To Employer: One Price Clothing Stores, Inc.
Post Office Box 2487
Spartanburg, SC 29304
To Employee: Ron Swedin
Bloomingdale, NJ
8. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by Employee. No waiver shall be valid unless in writing
and signed by any authorized officer of Employer.
9. ASSIGNMENT. Employee acknowledges that the services to be rendered
by Employee are unique and personal. Accordingly, Employee may not assign any of
Employee's rights or delegate any of Employee's duties or obligations under this
Agreement. The rights and obligations of Employer under this Agreement shall
inure to the benefit of and all be binding upon the Employer, and its successors
and assigns.
10. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
Employer that he is under no obligation to or bound by any contract with any
person, corporation or other entity which would prohibit or in any way interfere
with the performance of his duties and obligations to Employer under this
Agreement.
11. SEVERABILITY. If any provision of this Agreement as applied to
either party or to any circumstance shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
12. ENTIRE AGREEMENT, MODIFICATION OR AMENDMENTS. This Agreement
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written agreements. This Agreement may
be modified or amended from time to time by the mutual agreement of the parties
hereto. No modification or amendment of this Agreement shall be binding upon
either party unless it is in writing and executed by the party sought to be
charged.
13. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which taken together shall constitute one instrument.
14. CAPTIONS. The captions contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to South Carolina's rules of conflicts of law, and regardless of the place or
places of its physical execution and performance.
16. ENFORCEMENT. This Agreement may only be enforced in a court of
competent jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in Spartanburg
County, South Carolina, whether or not then residing in South Carolina. The
prevailing party shall be entitled to recover from the other party the cost of
any court action, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Witnesses: One Price Clothing Stores, Inc.
/s/ Diane O'Bryant By: /s/ Henry D. Jacobs, Jr.
Henry D. Jacobs, Jr.
Chairman of Board of Directors
(seal)
As to Employer
"EMPLOYER"
/s/ J. Coursen /s/ Ron Swedin
As to Employee Ron Swedin (seal)
"EMPLOYEE"
First Amendment to Employment Agreement Dated March 30, 1992 by
And between One Price Clothing Stores, Inc. and Ron Swedin
On March 30, 1992 Ron Swedin ("Mr. Swedin" or "Employee") entered into an
employment contract (the "Agreement") with One Price Clothing Stores, Inc. ("One
Price" or "Employer"). The Agreement provides for payments upon termination
under the first sentence in section 4.(h) as follows:
"In the event Employee is terminated by Employer, with or without
cause, except for fraud, theft, dishonesty or criminal intent, Employer shall
continue Employee's salary following Employee's termination for six (6)
additional months at the annual base salary in effect at the date of Employee's
termination, payable in accordance with Employer's usual payroll practices."
Employer and Employee wish to amend this forgoing provision by adding the
following sentence immediately after such first sentence in Section 4(h) of the
Agreement:
In addition, in the event Employee has not taken a position with
another Company by the end of six months from the date of Employee's involuntary
termination, Employer shall pay to Employee up to an additional six (6) months
salary continuation on a bi-weekly basis so long as other employment has not
begun."
Except 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
4th day of February, 1997.
Witness: One Price Clothing Stores, Inc.
/s/ Dianne O'Bryant By: /s/ Henry D. Jacobs, Jr.
Henry D. Jacobs, Jr.
Chairman, President and C.E.O.
`EMPLOYER"
/S/ Patti S. Taylor /s/ Ron Swedin
Ron Swedin
"EMPLOYEE"
Amendment to Employment Agreement Dated March 30, 1992, as Previously
Amended as of February 4, 1997.
Reference is made to the Employment Agreement dated as of March 30, 1992,
as amended on February 4, 1997 ("Agreement") by and between One Price Clothing
Stores, Inc. ("Employer") and Ron Swedin ("Employee"). The Agreement is hereby
amended to add the following new provisions relating to termination of
employment by Employee for "good reason" following a "Change of Control" (as
hereinafter defined).
1. The following new Section 4 (i) is added to the Agreement:
4. (i). Change of Control - In the event the Employee's employment with the
Company is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after a "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum, an
amount equal to fifteen (15) months severance pay rather than the maximum of
twelve (12) months severance pay currently provided for in the Agreement.
Termination for "Good Reason" shall be deemed to have occurred, and the Employee
shall be entitled to the benefits of this provision, if the Employee voluntarily
terminates his employment after 30 days written notice to Employer and following
the occurrence of any of the following events, provided a "Change of Control"
has occurred: (i) the assignment to the Employee of any duties inconsistent with
the highest position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by the Employee
during the period of his employment with the Employer or any action by the
Employer which results in a material diminishment in such position, authority,
duties or responsibilities as were in effect immediately prior to the "Change of
Control"; (ii) a decrease in the Employee's compensation (including base salary,
bonus or fringe benefits); (iii) relocation by Employer of the Employee more
than 50 miles outside of the Greenville/Spartanburg area of South Carolina; or,
(iv) failure of any successor of the Employer to comply with this Agreement. In
consideration for the benefits conferred to Employee under this provision, in
the absence of an Employment Event Employee agrees to continue his employment,
following a "Change of Control," for a minimum period of six months.
In addition, should a "Change of Control" occur, all stock options granted by
Employer to Employee, 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 Employee
shall have 90 days to exercise such options in the event of termination
following an Employment 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) The occurrence of 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 Amendment shall be binding upon any successor to the Company.
Except as provided for herein by the foregoing amendment, the Agreement shall
continue unchanged in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of this
28 day of December, 1998.
One Price Clothing Stores, Inc. Ron Swedin
/s/ Larry I. Kelley /s/ Ron Swedin
By: Larry I. Kelley "EMPLOYEE"
Its: President & CEO
"EMPLOYER
EXHIBIT 10(p) Employment Agreement dated October 21, 1991 and Amendments to
Employment Agreement dated April 16, 1998 and December 28, 1998 between the
Registrant and George V. Zalitis
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 21st day of October, 1991,
by and between One Price Clothing Stores, Inc., a Delaware corporation with its
principal place of business in Spartanburg County, South Carolina, hereinafter
referred to as "Employer," and George V. Zalitis, a resident of Huntington,
State of New York, hereinafter referred to as "Employee."
WITNESSETH:
For and in consideration of the mutual covenants and promises of the parties
hereto and the benefits inuring to the parties hereto, Employer and Employee
agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement, employer
employs Employee as its Vice President of Finance and Employee accepts such
employment with Employer. The employment hereunder shall commence on the
date Employee reports for full time work, and shall continue until
terminated as hereinafter provided.
2. TERMINATION. The employment hereunder shall terminate at the will of either
party at any time, with or without cause or upon the mutual agreement of
the parties hereto.
3. DUTIES OF EMPLOYEE. Employee shall serve Employer faithfully and to the
best of his ability. Employee shall devote his full time and efforts to his
duties as an employee of Employer.
4. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this Agreement,
Employer shall pay Employee an annual base salary of not less than $95,000,
subject to annual review, payable in bi-weekly installments in accordance
with the usual payroll practice of Employer, less all legally required
deductions.
(b) Bonus. In addition to the above salary, the Board of Directors of Employer,
in its sole discretion, may award to Employee such annual or other bonus as
it may determine or as may be applicable in accordance with a bonus or
comparable plan which may be adopted by the Board of Directors. Employee
shall be entitled to a first year minimum bonus of $5,000, provided
Employee is actively employed by Employer at December 27, 1991.
(c) Special Stock Option. Employee shall be granted an option for 12,000 shares
of Employer's common stock at the market price on the day of the grant,
exercisable twenty (20%) percent annually commencing twelve (12) months
from the day of grant.
(d) Other Benefits.
(i) During the term of his employment, Employee shall be entitled to
participate in all employee benefits as are customarily provided to its
officers by Employer, and to participate in such other employee benefits as
may from time to time be instituted by Employer's Board of Directors.
(ii) Employee shall also be entitled to reimbursement of all
reasonable hotel, travel, entertainment and other business expenses
actually incurred by Employee in the course of Employee's employment upon
submission to Employer of satisfactory documentation thereof.
(e) Moving Expenses. Employer shall reimburse Employee for:
(i) Employer agrees to reimburse Employee for air travel up to six (6)
round trip airline tickets, other than first-class, to and from
Greenville/Spartanburg, SC/New York, NY.
(ii) Transportation of household goods and effects, and not more than
two (2) automobiles. This includes transportation of one (1) boat.
(iii) Upon reporting for work Employer agrees to reimburse Employee
for up to six (6) months for the cost of interim living expenses, such
reimbursement to cover lodging only and not food or other expenses. Total
cost of interim living expenses not to exceed $4,000.
(iv) Employer agrees to reimburse Employee for lodging, meals, etc.,
for a maximum of three (3) trips, which includes the actual moving event
and two (2) other trips.
(f) Employer shall pay Employee up to $15,000 of documented expenses for
brokerage fees, closing costs, double mortgage payments and any and all
other related relocation expenses. This payment will be made within fifteen
(15) days after submission of a documented statement.
(g) Payments Upon Termination. In the event Employee is terminated by Employer,
with or without cause, except for fraud, theft or dishonesty, Employer
shall continue Employee's salary following Employee's termination for six
(6) additional months at the annual base salary in effect at the date of
Employee's termination, payable in accordance with Employer's usual payroll
practices. In the event Employee voluntarily terminates his employment with
Employer, he shall be entitled to no additional payment upon such
termination other than any then accrued but unpaid salary, vacation pay, or
other normal reimbursement items. In the event Employee shall voluntarily
terminate his employment with Employer prior to his first anniversary of
employment, Employee shall reimburse Employer fifty (50%) percent of
payments received for moving expenses and relocation expense reimbursement
set forth in paragraph (e) and paragraph (f) above.
5. CONFIDENTIAL INFORMATION. Employee acknowledges that during his
employment he will have access to confidential information belonging
to the Employer. Such confidential information shall consist of all
information disclosed to Employee as a result of employment by
Employer not generally known in the retail business in which Employer
is engaged including information concerning Employer's suppliers,
including the costs, quantities and types of goods supplied, and the
identity of such suppliers; information concerning the Employer's
marketing and/or sales strategy or plans; real estate strategy and
expansion plans, all pricing information relating to merchandise
offered for sale by Employer; customers' list and all information
dealing with customers' needs or preferences; all data processing
information; all financial information including financial statements,
financing plans and forecasts, and any and all information designated
or marked as confidential. Employee will not use or disclose, or
otherwise make available, such confidential information to any other
person or entity without prior express written consent of Employer,
either during or following the termination of Employee's employment.
Upon termination of employment, Employee shall turn over to Employer
all property then in his possession or custody belonging to Employer
and shall not retain any copies or reproductions of correspondence,
memoranda, reports, notebooks, drawings, photographs, or other
documents relating in any way to the affairs of Employer.
6. NON-COMPETITION.
(a) Upon termination of Employee's employment with Employer, whether voluntary
or involuntary and whether with or without cause, Employee will not for a
period of three (3) years from date of such termination conduct or engage
in, directly or indirectly, alone or jointly, with any other person or
corporation as agent, consultant, employee, manager, purchaser, proprietor,
stockholder, co-partner, or otherwise, any type of retail apparel business
which uses the one price concept or a substantially similar concept, such
as a ceiling price point. This restriction applies to the continental
United States.
(b) Employee agrees not to employ or cause to be employed any other employee of
Employer for a period of three (3) years after Employee's termination of
employment. This restriction applies to any type of business which Employee
may enter.
7. NOTICES. All notices, consents, changes of address and other communications
(hereinafter referred to as "Notice(s)") required or permitted to be made
under the terms of this Agreement shall be in writing and shall be (i)
personally delivered by an agent of the relevant Party, or (ii) transmitted
by postage prepaid, certified or registered mail:
To Employer: One Price Clothing Stores, Inc.
Post Office Box 2487
Spartanburg, SC 29304
To Employee: George Zalitis
Greer, SC
8. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by Employee. No waiver shall be valid unless in
writing and signed by any authorized officer of Employer.
9. ASSIGNMENT. Employee acknowledges that the services to be rendered by
Employee are unique and personal. Accordingly, Employee may not assign any
of Employee's rights or delegate any of Employee's duties or obligations
under this Agreement. The rights and obligations of Employer under this
Agreement shall inure to the benefit of and all be binding upon the
Employer, and its successors and assigns.
10. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
Employer that he is under no obligation to or bound by any contract with
any person, corporation or other entity which would prohibit or in any way
interfere with the performance of his duties and obligations to Employer
under this Agreement.
11. SEVERABILITY. If any provision of this Agreement as applied to either party
or to any circumstance shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
12. ENTIRE AGREEMENT, MODIFICATION OR AMENDEMENT. This Agreement constitutes
the entire agreement of the parties with respect to its subject matter and
supersedes all prior oral or written agreements. This Agreement may be
modified or amended from time to time by the mutual agreement of the
parties hereto. No modifications or amendment of this Agreement shall be
binding upon either party unless it is in writing and executed by the party
sought to be charged.
13. COUNTERPARTS. This Agreement may be executed in one or more counterparts,
all of which taken together shall constitute one instrument.
14. CAPTIONS. The captions contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
15. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving
effect to South Carolina's rules of conflicts of law, and regardless of the
place or places of its physical execution and performance.
16. ENFORCEMENT. This Agreement may only be enforced in a court of competent
jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in
Spartanburg County, South Carolina, whether or not then residing in South
Carolina. The prevailing party shall be entitled to recover from the other
party the cost of any court action, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
<TABLE>
<S> <C>
Witnesses: One Price Clothing Stores, Inc.
/s/ R. S. Waters By: /s/ Henry D. Jacobs, Jr. (Seal)
Henry D. Jacobs, Jr.
/s/ Diane O'Bryant Chairman of Board of Directors
As to Employer "EMPLOYER"
/s/ Ethan S. Shapiro /s/ George V. Zalitis (Seal)
George V. Zalitis
/s/ Diane O'Bryant
As to Employee "EMPLOYEE"
</TABLE>
First Amendment to Employment Agreement Dated October 21, 1991
by and between One Price Clothing Stores, Inc. and George Zalitis
----------------------------------------------------------------
On October 21, 1991, George Zalitis ( "Mr. Zalitis" or "Employee") entered into
an employment contract (the "Agreement") with One Price Clothing Stores, Inc.
("One Price" or "Employer"). Consistent with Employee's recent promotion to the
position of Senior Vice-President, Planning, Allocation and Distribution,
Employer and Employee wish to amend such Agreement as follows:
Section 4(a) of the Agreement, providing for "Compensation and Benefits" is
hereby amended to provide for a base salary of $200,000.
The Agreement currently provides for payments upon termination under the first
sentence in section 4. (g) as follows:
"In the event Employee is terminated by Employer, with or without cause,
except for fraud, theft, dishonesty, Employer shall continue Employee's salary
following Employee's termination for six (6) additional months at the annual
base salary in effect at the date of Employee's termination, payable in
accordance with Employer's usual payroll practices."
The foregoing section 4. (g) is hereby amended by adding the following sentence
immediately after such first sentence in Section 4.
(g) of the Agreement:
"In addition, provided Employee has diligently pursued another position
following his involuntary termination, in the event Employee has not taken a
position with another entity (including a position with a company, or
partnership, or substantially full-time self employment) by the end of such six
months from the date of Employee's involuntary termination, Employer shall pay
to Employee up to an additional six ( 6 ) months salary continuation on a
bi-weekly basis so long as other employment has not begun, and Employee is
continuing to diligently pursue another position. Employer shall be entitled to
receive from Employee, upon request, reasonable proof of such diligent effort(s)
to pursue another position, failing which, such additional six months of salary
shall cease."
In addition to the forgoing amendments, the three year restriction of Section 6.
of the Agreement, "NON-COMPETITION" is hereby amended by adding the following
language to clarify that:
"Upon termination, whether voluntary or involuntary, Employee shall not
engage in any type of "off-price" retail apparel business whose price points
and/or customer base could reasonably be considered in competition with the
business of Employer, either now or at the time of termination. Ceiling price
points and single price concepts shall be included."
The Agreement is further amended by adding the following new Section 17, which
shall provide:
"In the event of involuntary termination, and in consideration for
Employer's agreements hereunder, Employee agrees to execute a release in favor
of Employer in form and substance reasonably satisfactory to Employer."
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
16th day of April, 1998.
One Price Clothing Stores George Zalitis
By:_/s/ Larry I. Kelley /s/ George Zalitis
Larry I. Kelley "EMPLOYEE"
President and C.E.O.
"EMPLOYER"
Amendment to Employment Agreement Dated October 21, 1991,
as Previously Amended April 16, 1998
Reference is made to the Employment Agreement dated as of, October 21,1991, as
amended on February 4, 1997 ("Agreement") by and between One Price Clothing
Stores, Inc. ("Employer") and George V. Zalitis ("Employee"). The Agreement is
hereby amended to add the following new provisions relating to termination of
employment by Employee for "good reason" following a "Change of Control" (as
hereinafter defined).
1. The following new Section 4 (h) is add to the Agreement:
4 (h). Change of Control - In the event the Employee's employment with the
Company is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after a "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum, an
amount equal to eighteen (18) months severance pay rather than the maximum of
twelve (12) months severance pay currently provided for in the Agreement.
Termination for "Good Reason" shall be deemed to have occurred, and the Employee
shall be entitled to the benefits of this provision, if the Employee voluntarily
terminates his employment after 30 days written notice to Employer and following
the occurrence of any of the following events, provided a "Change of Control"
has occurred: (i) the assignment to the Employee of any duties inconsistent with
the highest position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by the Employee
during the period of his employment with the Employer or any action by the
Employer 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 Employee's compensation (including base salary,
bonus or fringe benefits); (iii) relocation by Employer of the Employee more
than 50 miles outside of the Greenville /Spartanburg area of South Carolina; or,
(iv) failure of any successor of the Employer to comply with this Agreement. In
consideration for the benefits conferred to Employee under this provision, in
the absence of an Employment Event Employee agrees to continue his employment,
following a Change of Control, for a minimum period of six months.
In addition, should a "Change of Control" occur, all stock options granted by
Employer to Employee, 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 Employee
shall have 90 days to exercise such options in the event of termination
following an Employment 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 Director"), 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 Director shall be
considered an Incumbent Director for purposes hereof, or,
(ii) The occurrence of Section II (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 20% as
provided for in the Rights Agreement.
This Amendment shall be binding upon any successor to the Company.
Except as provided for herein by the foregoing amendment, the Agreement shall
continue unchanged in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of this
28 day of December, 1998.
One Price Clothing Stores, Inc. George V. Zalitis
By: /s/ Larry I. Kelley /s/ George V. Zalitis
Title: President & CEO "EMPLOYEE"
"EMPLOYER"
EXHIBIT 10(q) Employment Agreement dated November 10, 1997 and amendments to
Employment Agreement dated April 16, 1998 and January 14, 1999 between the
Registrant and A. J. Nepa
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 10th day of November, 1997,
by and between One Price Clothing Stores, Inc., a Delaware corporation with its
principal place of business in Spartanburg County, South Carolina, hereinafter
referred to as "Employer," and Alphonse J. Nepa, currently a resident of
Charlotte,State of North Carolina, hereinafter referred to as "Employee."
W I T N E S S E T H :
For and in consideration of the mutual covenants and promises of the
parties hereto and the benefits inuring to the parties hereto, Employer and
Employee agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
employer employs Employee as its Senior Vice President, Merchandising, and
Employee accepts such employment with Employer. The employment hereunder shall
commence on the date Employee reports for full time work, and shall continue
until terminated, as hereinafter provided.
2. TERMINATION. The employment hereunder shall terminate at the will of
either party at any time, with or without cause, or upon the mutual agreement of
the parties hereto.
3. DUTIES OF EMPLOYEE. Employee shall serve Employer faithfully and to
the best of his ability. Employee shall devote his full time and efforts to his
duties as an employee of Employer.
4. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this
Agreement, Employer shall pay Employee an annual base salary of not less than
$215,000, subject to annual review, payable in bi-weekly installments in
accordance with the usual payroll practice of Employer, less all legally
required deductions.
(b) Bonus. In addition to the above salary, the Board of
Directors of Employer, in its sole discretion, may award to Employee an annual
bonus in accordance with a bonus plan that has been adopted by the Board of
Directors.
(c) Special Stock Option. Employee shall be granted an option
for 20,000 shares of Employer's common stock at the market price on the day of
grant, exercisable twenty (20%) percent annually commencing twelve (12) months
from the day of grant. This option shall be granted on the day Employee reports
for full-time work.
(d) Other Benefits.
<PAGE>
(i) During the term of his employment, Employee
shall be entitled to participate in all employee benefits as are customarily
provided to its officers by Employer, and to participate in such other employee
benefits as may from time to time be instituted by Employer's Board of Directors
(ii) Employee shall also be entitled to reimbursement of
all reasonable hotel, travel, entertainment and other business expenses actually
incurred by Employee in the course of Employee's employment upon submission to
Employer of satisfactory documentation thereof.
(e) Moving Expenses. Employer shall reimburse Employee for moving
expenses and interim living and travel expenses as set forth in the attachment
hereto, entitled "OFFER OF EMPLOYMENT";
(f) Employer shall pay Employee up to a total of $(20,000)
for: (i) documented expenses for brokerage fees (up to 6%),and any similar
expenses related to the sale of Employee's current home and (ii) loan
origination fees (up to 1%) for the purchase of a new one. This payment will be
made upon presentation of documentation on or after the first day of employment.
(g) Payments Upon Termination.
(i)In the event Employee is terminated by Employer,
with or without cause, except for fraud, theft, dishonesty or
criminal intent, Employer shall continue Employee's salary
following Employee's termination for six (6) months at the
annual base salary in effect at the date of Employee's
termination, payable in accordance with Employer's usual
payroll practices.
(ii)In the event Employee voluntarily terminates his
employment with Employer, he shall be entitled to no
additional payment upon such termination other than any then
accrued but unpaid salary, vacation pay, or other normal
reimbursement items.
5. CONFIDENTIAL INFORMATION. Employee acknowledges that during his
employment he will have access to confidential information belonging to the
Employer. Such confidential information shall consist of all information
disclosed to Employee as a result of employment by Employer not generally known
in the retail business in which Employer is engaged including information
concerning Employer's suppliers, including the costs, quantities and types of
goods supplied, and the identity of such suppliers; information concerning the
Employer's marketing and/or sales strategy or plans; real estate strategy and
expansion plans; all pricing information relating to merchandise offered for
sale by Employer; customers' list and all information dealing with customers'
needs or preferences; all data processing information; all financial information
including financial statements, financing plans and forecasts, and any and all
information designated or marked as confidential. Employee will not use or
disclose, or otherwise make available, such confidential information to any
other person or entity without prior express written consent of Employer, either
during or following the termination of Employee's employment. Upon termination
of employment, Employee shall turn over to Employer all property then in his
possession or custody belonging to Employer and shall not retain any copies or
reproductions of correspondence, memoranda, reports, notebooks, drawings,
photographs, or other documents relating in any way to the affairs of Employer.
6. NON-COMPETITION.
(a) Upon termination of Employee's employment with Employer,
whether voluntary or involuntary, and whether with or without cause, Employee
will not, for a period of one (1) year from date of such termination, conduct or
engage in, directly or indirectly, alone or jointly, with any other person or
corporation as agent, consultant, employee, manager, purchaser, proprietor,
stockholder, co-partner, or otherwise, any type of "Off-price" retail apparel
business whose price points and/or customer base could reasonably be considered
in competition with the business of Employer, either now or at the time of such
termination. Ceiling price points and single price point concepts shall be
included. This restriction applies to the continental United States.
(b) Employee agrees not to employ or cause to be employed any
other employee of Employer for a period of three (3) years after Employee's
termination of employment. This restriction applies to any type of business
which Employee may enter.
7. NOTICES. All notices, consents, changes of address and other
communications (hereinafter referred to as "Notice(s)") required or permitted to
be made under the terms of this Agreement shall be in writing and shall be (I)
personally delivered by an agent of the relevant Party, or (ii) transmitted by
postage prepaid, certified or registered mail:
To Employer: One Price Clothing Stores, Inc.
Post Office Box 2487
Spartanburg, SC 29304
To Employee: Alphonse John Nepa
4630 Montibello Drive
Charlotte, NC 28226
8. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of
any provision of this Agreement shall not operate or be construed as a waiver of
any subsequent breach by Employee. No waiver shall be valid unless in writing
and signed by any authorized officer of Employer.
9. ASSIGNMENT. Employee acknowledges that the services to be rendered
by Employee are unique and personal. Accordingly, Employee may not assign any of
Employee's rights or delegate any of Employee's duties or obligations under this
Agreement. The rights and obligations of Employer under this Agreement shall
inure to the benefit of and all be binding upon the Employer, and its successors
and assigns.
10. REPRESENTATIONS AND WARRANTIES. Employee expressly confirms,
represents and warrants to Employer that he is under no obligation to, or bound
by any contract with, any person, corporation or other entity which would
prohibit or in any way interfere with the performance of his duties and
obligations to Employer under this Agreement. Employee further represents and
warrants that, to his knowledge, no litigation is pending or has been threatened
against Employee or Employer as a result of Employee accepting a position with
Employer. Employee agrees to defend and indemnify Employer against any and all
claims by third parties against Employer arising out of Employee's prior
employment.
11. Release. In the event of termination, and in consideration for
Employer's agreements hereunder, Employee agrees to execute a release in favor
of Employer in form and substance reasonably satisfactory to Employer.
12. SEVERABILITY. If any provision of this Agreement as applied to
either party or to any circumstance shall be adjudged by a court to be invalid
or unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
13. ENTIRE AGREEMENT, MODIFICATION OR AMENDMENT. This Agreement
constitutes the entire agreement of the parties with respect to its subject
matter and supersedes all prior oral or written agreements. This Agreement may
be modified or amended from time to time by the mutual agreement of the parties
hereto. No modification or amendment of this Agreement shall be binding upon
either party unless it is in writing and executed by the party sought to be
charged.
14. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which taken together shall constitute one instrument.
15. CAPTIONS. The captions contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving effect
to South Carolina's rules of conflicts of law, and regardless of the place or
places of its physical execution and performance.
17. ENFORCEMENT. This Agreement may only be enforced in a court of
competent jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in Spartanburg
County, South Carolina, whether or not then residing in South Carolina. The
prevailing party shall be entitled to recover from the other party the cost of
any court action, including reasonable attorneys fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
Witnesses: One Price Clothing Stores, Inc.
/s/ Diane O'Bryant /s/ By: Larry I. Kelley (SEAL)
Larry I. Kelley
President & CEO
As to Employer
"EMPLOYER"
/s/ Jill DuVze Nepa /s/ Alphonse John Nepa (SEAL)
Alphonse John Nepa
Senior Vice President,
Merchandising
As to Employee "EMPLOYEE"
First Amendment to Employment Agreement Dated November 10, 1997
by and between One Price Clothing Stores, Inc. and A. J. Nepa
On November 10, 1997 Alophonse J. Nepa ( "Mr.Nepa" or "Employee") entered into
an employment contract (the "Agreement") with One Price Clothing Stores, Inc.
("One Price" or "Employer"). Employer and Employee wish to amend such Agreement
as follows:
The Agreement currently provides for payments upon termination under the first
sentence in section 4. (g) (i) as follows:
"In the event Employee is terminated by Employer, with or without cause,
except for fraud, theft, dishonesty or criminal intent, Employer shall continue
Employee's salary following Employee's termination for six (6) additional months
at the annual base salary in effect at the date of Employee's termination,
payable in accordance with Employer's usual payroll practices".
The foregoing provision is hereby amended by adding the following sentence
immediately after such first sentence in Section 4 (g) (i) of the Agreement:
"In addition, provided Employee has diligently pursued another position
following his involuntary termination, in the event Employee has not taken a
position with another Company by the end of such six months from the date of
Employee's involuntary termination, Employer shall pay to Employee up to an
additional six (6) months salary continuation on a bi-weekly basis so long as
other employment has not begun and Employee is continuing to pursue diligently
another position. Employer shall be entitled to receive from Employee, upon
request, reasonable proof of such diligent effort(s) to pursue another position,
failing which, such additional six months of salary shall cease."
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
16th day of April, 1998.
One Price Clothing Stores Alphonse J. Nepa
By: /s/ Larry I. Kelley /s/ Alphonse J. Nepa
Larry I. Kelley "EMPLOYEE"
President and C.E.O.
"EMPLOYER"
Amendment to Employment Agreement Dated November 10, 1997, as Previously
Amended as of April 16, 1998
Reference is made to the Employment Agreement dated as of November 10,
1997, as previously amended as of April 16, 1998 ("Agreement") by and between
One Price Clothing Stores, Inc. ("Employer") and Alphonse J. Nepa ("Employee").
The Agreement is hereby amended to add the following provisions relating to (i)
termination of employment by Employee for "good reason" following a "Change of
Control" (as hereinafter defined); (ii) amendment of the Agreement to provide
for a term agreement through January 31, 2002 in lieu of the existing Section 2
employment at will provision; and, (iii) addition of a provision calling for a
change in compensation to be effective February 1, 1999.
First Amendment - The following new Section 4 (h) is added to the Agreement:
4 (h). Change of Control - In the event the Employee's employment with the
Company is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after a "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum, an
amount equal to eighteen (18) months severance pay rather than the maximum of
twelve (12) months severance pay currently provided for in the Agreement.
Termination for "Good Reason" shall be deemed to have occurred, and the Employee
shall be entitled to the benefits of this provision, if the Employee voluntarily
terminates his employment after 30 days written notice to Employer and following
the occurrence of any of the following events, provided a "Change of Control"
has occurred: (i) the assignment to the Employee of any duties inconsistent with
the highest position (including status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by the Employee
during the period of his employment with the Employer or any action by the
Employer which results in a material diminishment in such position, authority,
duties or responsibilities as were in effect immediately prior to the "Change of
Control"; (ii) a decrease in the Employee's compensation (including base salary,
bonus or fringe benefits); (iii) relocation by Employer of the Employee more
than 50 miles outside of the Greenville/Spartanburg area of South Carolina; or,
(iv) failure of any successor of the Employer to comply with this Agreement. In
consideration for the benefits conferred to Employee under this provision, in
the absence of an Employment Event Employee agrees to continue his employment,
following a "Change of Control," for a minimum period of six months.
In addition, should a "Change of Control" occur, all stock options granted by
Employer to Employee, 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 Employee
shall have 90 days to exercise such options in the event of termination
following an Employment Event.
For purposes hereof, "Change of Control" shall be deemed to have occurred
following either of the following two events:
(iii) 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,
(iv) The occurrence of 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.
Second Amendment- Section 2 of the Agreement is hereby deleted in its
entirety and the following provision inserted in its place:
2. Term Agreement. Effective as of the date hereof, Employee's employment with
Employer shall continue through January 31, 2002, unless terminated as provided
for in the Agreement. In the event Employee elects to leave voluntarily during
the period of such term employment (or any extension thereof), Employee agrees
to give Employer a minimum of 90 days notice prior to leaving and agrees to work
closely with Employer in such event to assist, as requested, in the recruitment
and transition of a new General Merchandise Manager.
Third Amendment - The following Section 18 is added to the Agreement.
18. It is understood and agreed that Employee shall receive a salary
adjustment which shall be effective February 1, 1999.
Except as provided for herein by the foregoing amendments, the Agreement shall
continue unchanged and in full force and effect.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the 14
day of January, 1999.
One Price Clothing Stores, Inc. Alphonse J. Nepa
/s/ Larry I. Kelley /s/ Alphonse J. Nepa
By: Larry I. Kelley "EMPLOYEE"
Title: President & CEO
"EMPLOYER"
EXHIBIT 10(r) Employment Agreement dated April 12, 1999 between the Registrant
and H. Dane Reynolds
EMPLOYMENT AGREEMENT
THIS AGREEMENT, made and entered into as of the 12th day of April,
1999, by and between One Price Clothing Stores, Inc., a Delaware corporation
with its principal place of business in Spartanburg County, South Carolina,
hereinafter referred to as "Employer," and H. Dane Reynolds, a resident of North
Carolina, hereinafter referred to as "Employee."
W I T N E S S E T H :
For and in consideration of the mutual covenants and promises of the
parties hereto and the benefits inuring to the parties hereto, Employer and
Employee agree as follows:
1. EMPLOYMENT. Subject to the terms and conditions of this Agreement,
Employer employees Employee as its Senior Vice President and Chief Financial
Officer and Employee accept such employment with Employer. The employment
hereunder shall commence on the date the Employee reports for full-time work,
currently scheduled for April 12, 1999.
2. TERM. The employment hereunder shall continue for a term of two years,
unless terminated earlier, as hereinafter provided.
3. DUTIES OF EMPLOYEE. Employee shall serve Employer faithfully and to
the best of his ability. Employee shall devote his full time and efforts to his
duties as an employee of the Employer.
4. COMPENSATION AND BENEFITS.
(a) Salary. For all services rendered to Employer under this
Agreement, Employer shall pay Employee an annual base salary
of not less than $240,000, subject to annual review, payable
in bi-weekly installments in accordance with the usual payroll
practice of Employer, less all legally required deductions.
(b) Bonus. Employee shall be subject to the normal management
bonus structure, as approved annually by the Board of
Directors, provided, however, that solely for fiscal 1999
Employee shall be entitled to a guaranteed bonus of $30,000,
payable upon payment of 1999 bonuses to other management
personnel, anticipated to be in March of 2000.
(c) Special Stock Option. As an inducement to Employee joining the
Company, Employee shall receive a grant of 40,000 stock
options for the purchase of shares of Employer's common stock,
with an exercise price equal to the average of the high and
low sales price per share of such common stock on the
effective date of this agreement, exercisable twenty (25)
percent annually commencing twelve (12) months from the day of
grant. The "grant date" of such options shall be the day the
Employee reports for full-time work. Employee understands and
agrees to file a Form S-8 with respect to such options with
the Security and Exchange Commission.
(d) Loan. A loan of $70,000, bearing interest at a rate of __ %
per annum will be made to Employee upon commencement of his
employment. Such loan shall be repaid, along with all interest
accrued and unpaid, within 30 days of the sale of Employee's
home in North Carolina; provided, however, that such loan and
interest shall, in any event, be due and payable no later than
twelve months from the effective date of this agreement.
Employee agrees to sign a loan agreement and promissory note
with the Company evidencing said loan and repayment terms.
(e) Other Benefits.
(i) During the term of his employment, Employee shall be
entitled to participate in all employee benefits as
are customarily provided to its officers by Employer,
and to participate in such other employee benefits as
may from time to time be instituted by Employer's
Board of Directors.
(ii) Employee shall also be entitled to reimbursement of
all reasonable hotel, travel, entertainment and other
business expenses actually incurred by Employee in
the course of Employee's employment upon submission
to Employer of satisfactory documentation thereof.
(f) Moving Expenses. Employer shall reimburse Employee for:
(i) House Hunting trip to include two nights, three days to include meals and
lodging.
(ii) Transportation of household goods and effects, and
not more than (1) automobile, plus mileage incurred
driving car(s) from North Carolina to South Carolina.
(iii) Upon reporting for work Employer agrees to reimburse
Employee for up to six (6) months for the cost of
interim living expenses, such reimbursement to cover
lodging only. Total cost of interim living expense
not to exceed $5,000.
(iv) Employer shall pay brokerage fees up to 6% and
similar expenses related to the sale of Employee's
home and for loan origination fees up to 1% for
purchase of a new home. This payment will be made
upon presentation of documentation on or after the
first day of employment.
(g) Payments Upon Termination.
(i) In the event Employee is terminated by Employer, without
cause, Employer shall continue Employee's salary following
Employee's termination for six (6) additional months at
Employee's annual base salary in effect at the date of
Employee's termination, payable in accordance with
Employer's usual payroll practices.
(ii) In addition, provided Employee has diligently pursued
another position following his involuntary termination, in
the event Employee has not taken a position with another
entity (including a position with a company, or
partnership, or substantially full-time self employment)
by the end of six months from the date of Employee's
involuntary termination, Employer shall pay to Employee up
to an additional six (6) months salary continuation on a
bi-weekly basis so long as other employment has not begun,
and Employee is continuing to diligently pursue another
position. Employer shall be entitled to receive from
Employee, upon request, reasonable proof of such diligent
efforts(s) to pursue another position, failing which, such
additional six months of salary shall cease.
(iii) In the event Employee voluntarily terminates his
employment with Employer, or is terminated for "cause", he
shall be entitled to no additional payment upon such
termination other than any then accrued but unpaid salary,
vacation pay, or other normal reimbursement items. "Cause"
shall mean (a) commission by Employee of any felony, (b)
the commission by Employee of any crime or other activity
involving dishonesty or moral turpitude, (c) the
engagement by Employee in any act of fraud,
misappropriation or similar misfeasance, (d) the
engagement by Employee in any activity in contravention of
paragraph 5 hereof ("Confidential Information") or
otherwise resulting in a material adverse effect to
Employer or (e) repeated non-attentiveness by Employee to
his duties under this Agreement, provided, however, that
prior to any termination based on cause hereunder,
Employee shall have received written notice from the
President & CEO and the Chairman of the Board of Directors
stating in reasonable detail the basis therefor and shall
be given an opportunity to meet with such individuals
regarding the grounds for such termination.
(h) Change of Control. In the event the Employee's employment with the Company
is terminated by the Employer without Cause, or for "Good Reason" by the
Employee, within 24 months after "Change of Control" of Employer (an
"Employment Event"), then Employer shall pay to Employee, in one lump sum,
an amount equal to eighteen (18) months severance pay rather than the
maximum of twelve (12) months severance pay currently provided for in the
Agreement. Termination for "Good Reason" shall be deemed to have occurred,
and the Employee shall be entitled to the benefits of this provision, if
the Employee voluntarily terminates his employment after 30 days written
notice to Employer and following the occurrence of any of the following
events, provided a "Change of Control" has occurred:
(i) the assignment to the Employee of any duties
inconsistent with the highest position (including
status, offices, titles and reporting
requirements), authority, duties or responsibilities attained by the
Employee during the period of his employment with the Employer or any
action by the Employer which results in a material diminishment in such
position, authority, duties or responsibilities as were in effect
immediately prior to the Change of Control;
(ii) a decrease in the Employee's compensation (including base salary, bonus
or fringe benefits)
(iii) relocation by Employer of the Employee more than 50 miles outside of
the Greenville/Spartanburg area of South Carolina; or
(iv) failure of any successor of the Employer to comply with this Agreement.
In consideration for the benefits conferred to Employee under this
provision, in the absence of an Employment Event Employee agrees to
continue his employment, following a "Change of Control," for a minimum
period of six (6) months.
In addition, should a "Change of Control" occur, all stock options
granted by Employer to Employee, 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 Employee shall have 90 days to exercise such
options in the event of termination following an Employment 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 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) The occurrence of a Section 11 (a) (ii) Event, as defined in
the Shareholders Rights Agreement, dated November 3, 1994,
between Wachovia Bank of North Carolina, N.A., as Rights
Agent, and Employer ("Right Agreement"), as amended, provided,
however, that for those 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.
5. CONFIDENTIAL INFORMATION. Employee acknowledges that during his employment
he will have access to confidential information belonging to the Employer.
Such confidential information shall consist of all information disclosed to
Employee as a result of employment by Employer not generally known in the
retail business in which Employer is engaged including information
concerning Employer's suppliers, including the costs, quantities and types
of goods supplied, and the identity of such suppliers; information
concerning the Employer's marketing and/or sales strategy or plans; real
estate strategy and expansion plans; all pricing information relating to
merchandise offered for sale by Employer, customers' list and all
information dealing with customers' needs or preferences; all data
processing information; all financial information including financial
statements, financing plans and forecasts, and any and all information
designated or marked as confidential. Employee will not use or disclose, or
otherwise made available, such confidential information to any other person
or entity without prior express written consent of Employer, either during
or following the termination of Employee's employment. Upon termination of
employment, Employee shall turn over to Employer all property then in his
possession or custody belonging to Employer and shall not retain any copies
or reproductions of correspondence, memoranda, reports, notebooks,
drawings, photographs, or other documents relating in any way to the
affairs of Employer.
6. NON-COMPETITION.
(a) Upon termination of Employee's employment with employer,
whether voluntary or involuntary, and whether with or without
cause, Employee will not, for a period of one (1) year from
date of such termination, conduct or engage in, directly or
indirectly, alone or jointly, with any other person or
corporation as agent, consultant, employee, manager,
purchaser, proprietor, stockholder, co-partner, or otherwise,
and type of "Off-price" retail apparel business whose price
points and/or customer base could reasonably be considered in
competition with the business of Employer, either now or at
the time of such termination. Ceiling price points and single
price point concepts shall be included. This restriction
applies to the continental United States.
(b) Employee agrees not to employ or cause to be employed any
other employee of Employer for a period of three (3) years
after Employee's termination of employment. This restriction
applies to
any type of business which Employee may enter.
7. RELEASE. In the event of involuntary termination, and in consideration
for Employer's agreements hereunder, Employee agrees to execute a release
in favor of Employer in form and substance reasonably satisfactory to
Employer.
8. NOTICES. All notices, consents, changes of address and other communications
(hereinafter referred to as "Notice(s)" required or permitted to be made
under the terms of this Agreement shall be in writing and shall be (i)
personally delivered by an agent of the relevant Party, or (ii) transmitted
by postage prepaid, certified or registered mail:
To Employer: One Price Clothing Stores, Inc.
Post Office 2487
Spartanburg, SC 29304-2487
To Employee: H. Dane Reynolds
9. WAIVER OF BREACH. The waiver of Employer of a breach by Employee of any
provision of this Agreement shall not operate or be construed as a waiver
of any subsequent breach by Employee. No waiver shall be valid unless in
writing and signed by an authorized officer of Employer.
10. ASSIGNMENT. Employee acknowledges that the services to be rendered by
Employee are unique and personal. Accordingly, Employee may not assign any
Employee's rights or delegate any of Employee's duties or obligations under
the Agreement. The rights and obligations of Employer under this Agreement
shall inure to the benefit of an all be binding upon the Employer, and its
successors and assigns.
11. REPRESENTATIONS AND WARRANTIES. Employee represents and warrants to
Employer that he is under not obligation to or bound by any contract with
any person, corporation or other entity which would prohibit or in any way
interfere with the performance of his duties and obligations to Employer
under this Agreement.
12. SEVERABILITY. If any provision of this Agreement as applied to either party
or to any circumstances shall be adjudged by a court to be invalid or
unenforceable, the same shall in no way affect any other provision of this
Agreement, or the application of each provision to any other fact or
circumstances.
13. ENTIRE AGREEMENT, MODIFCATION OR AMENDMENT. This Agreement constitutes the
entire agreement of the parties with respect to its subject matter and
supersedes all prior oral or written agreements. This Agreement may be
modified or amended from time to time by the mutual agreement of the
parties hereto. No modification or amendment of this Agreement shall be
binding upon either party unless it is in writing and executed by the party
sought to be charged.
14. COUNTERPARTS. This Agreement may be executed in one or more counter- parts,
all of which taken together shall constitute one instrument.
15. CAPTIONS.The captions contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation
of this Agreement.
16. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of South Carolina, without giving
effect to South Carolina's rules of conflicts of law, and regardless of the
place or places of its physical execution and performance.
17. ENFORCEMENT. This Agreement may only be enforced in a court of competent
jurisdiction in Spartanburg County, South Carolina. Employee agrees to
submit to the jurisdiction of a court of competent jurisdiction in
Spartanburg County, South Carolina, whether or not then residing in South
Carolina. The prevailing party shall be entitled to recover from the other
party the cost of any court action, including reasonable attorney's fees.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
Witnesses: One Price Clothing Stores, Inc.
/s/ Diane O'Bryant By: /s Larry I. Kelley
Larry I. Kelley
President &
Chief Executive Officer
As to Employer
"EMPLOYER"
(SEAL)
/s/ Diane O'Bryant
/s/ Howard D. Reynolds
As to Employee
"EMPLOYEE"
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 11 - STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<S> <C> <C> <C>
Fiscal Year Ended
-------------------------------------------------------------
January 30, January 31, February 1,
1999 1998 1997
------------------- ------------------ ------------------
BASIC INCOME (LOSS) PER SHARE
Weighted average number of common shares outstanding 10,437,102 10,435,531 10,400,789
================== =============== ==========
Net income (loss) $ 4,383,000 $ (11,320,000) $ (1,267,000)
================= =============== ============
Basic net income (loss) per common share $ 0.42 $ (1.08) $ (0.12)
=============== ============== =============
DILUTED INCOME (LOSS) PER SHARE
Weighted average number of common shares outstanding 10,437,102 10,435,531 10,400,789
Net effect of dilutive stock options based on the treasury
stock method using the average market price 56,714 -- --
------------------- ------------------ ----------------
Total 10,493,816 10,435,531 10,400,789
================== ================= ===============
Net income (loss) $ 4,383,000 $ (11,320,000) $ (1,267,000)
================= ================= =================
Diluted net income (loss) per common share $ 0.42 (1.08) (0.12)
================= ================= =================
</TABLE>
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 21 - SUBSIDIARIES OF THE REGISTRANT
On February 9, 1994, a subsidiary of the Company, One Price Clothing of Puerto
Rico, Inc., was incorporated in Puerto Rico.
On January 31, 1997, a subsidiary of the Company, One Price Clothing - U.S.
Virgin Islands, Inc., was incorporated in the U.S. Virgin
Islands.
ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES
EXHIBIT 23 - CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the 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. of our report dated March 17, 1999 appearing in Form 10-K of
One Price Clothing Stores, Inc. for the year ended January 30, 1999.
DELOITTE & TOUCHE LLP
Greenville, South Carolina
April 28, 1999
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