SECURITIES AND EXCHANGE COMMISSION
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________________
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended Commission File No. 1-
August 2, 1997 10892
HAROLD'S STORES, INC.
(Exact name of registrant as specified in its charter)
Oklahoma 73-1308796
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification
No.)
765 Asp Norman, Oklahoma 73069 (405) 329-4045
(Address of principal executive (Registrant's
offices) telephone number,
(Zip Code) including area
code)
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 the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
As of September 12, 1997, the registrant had 5,742,894
shares of Common Stock outstanding.
Harold's Stores, Inc.
Index to
Quarterly Report on Form 10-Q
For the Period Ended August 2, 1997
Part I. - FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets - August 2, 1997
(unaudited) and February 1, 1997 3
Consolidated Statements of Earnings -
Thirteen Weeks and Twenty-Six Weeks ended August
2, 1997 (unaudited) and August 3, 1996(unaudited) 5
Consolidated Statements of Stockholders' Equity -
Twenty-Six Weeks ended August 2, 1997 (unaudited)
and August 3, 1996 (unaudited) 6
Consolidated Statements of Cash Flows -
Twenty-Six Weeks ended August 2, 1997 (unaudited)
and August 3, 1996 (unaudited) 7
Notes to Interim Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
Part II - OTHER INFORMATION
Item 1. Legal Proceedings 12
Item 4. Submission of Matters to a Vote of Security
Holders 12
Item 6. Exhibits and Reports on Form 8-K 13
Signature 14
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(In Thousands)
August 2, February
1997 1,1997
(unaudited)
Current assets:
Cash $ 244 433
Trade accounts receivable, less
allowance 5,746 5,476
for doubtful accounts of $222 in
1998 and $215 in 1997
Other accounts receivable 735 673
Merchandise inventories 34,113 28,544
Prepaid expenses 2,254 2,174
Prepaid income tax 887 -
Deferred income taxes 1,615 1,615
Total current assets 45,594 38,915
Property and equipment, at cost 28,484 25,001
Less accumulated depreciation and (9,208) (7,897)
amortization
Net property and equipment 19,276 17,104
Other receivables, non-current 2,345 2,603
Other assets 766 986
Total assets $67,981 59,608
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(In Thousands Except Share Data)
August 2, February 1,
1997 1997
(unaudited)
Current liabilities:
Current maturities of long-term debt $ 255 110
Accounts payable 8,044 6,668
Redeemable gift certificates 678 923
Accrued bonuses and payroll expenses 1,276 1,958
Accrued rent expense 105 298
Income taxes payable 942
-
Total current liabilities 10,358 10,899
Long-term debt, net of current maturities 21,666 12,528
Deferred income taxes 146 146
Stockholders' equity:
Preferred stock of $.01 par value
Authorized 1,000,000 shares; none - -
issued
Common stock of $.01 par value
Authorized 25,000,000 shares; issued
and 57 57
outstanding 5,735,140 in August,
5,713,526 in February
Additional paid-in capital 31,774 31,548
Retained earnings 3,980 4,430
Total stockholders' equity 35,811 36,035
Total liabilities and stockholders' $67,981 59,608
equity
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(In Thousands Except Share Data)
13 Weeks Ended 26 Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
(Unaudited)
Sales $26,826 22,391 55,234 46,913
Costs and expenses:
Cost of goods sold
(including occupancy and
central buying 18,510 14,343 37,256 30,373
expenses, exclusive of
items
shown separately
below)
Selling, general and 5,779 4,936 11,413 9,651
administrative expenses
Advertising 2,384 1,448 5,202 3,424
Depreciation and 881 646 1,719 1,311
Amortization
Interest expense 233 54 394 180
27,787 21,427 55,984 44,939
Earnings (loss) before (961) 964 (750) 1,974
income taxes
Provision for income taxes (384) 386 (300) 790
Net earnings (loss) $ (577) 578 (450) 1,184
Net earnings (loss) per $ .10 (.08) .21
common share (.10)
Weighted average number of
common shares 5,764,864 5,612,246 5,797,656 5,450,427
outstanding
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in Thousands)
26 Weeks 26 Weeks
Ended Ended
August 2, August 3,
1997 1996
(Unaudited)
Common stock:
Balance, beginning of period $
57 50
Issuance of 460,000 shares in 1996
- 4
Balance, end of period $ 57
54
Additional paid-in capital:
Balance, beginning of period $31,548 20,572
Issuance of 460,000 shares in 1996, - 6,863
net of issuance costs of $143
Employee Stock Purchase Plan 191
226
Balance, end of period $ 31,774 27,626
Retained earnings:
Balance, beginning of period $ 4,430 4,677
Net earnings (loss) 1,184
(450)
Balance, end of period $ 3,980 5,861
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
26 Weeks 26 Weeks
Ended Ended
August 2, August 3,
1997 1996
(Unaudited)
Cash flows from operating activities:
Net earnings (loss) $ 1,184
(450)
Adjustments to reconcile net earnings
(loss) to net cash
provided by operating activities:
Depreciation and amortization 1,719 1,311
Loss (gain) on sale of assets (2) (2)
Shares issued under employee 226 191
incentive plan
Changes in assets and liabilities:
Decrease (increase) in trade and (332) 33
other accounts receivable
Increase in merchandise inventories (5,569) (1,846)
Decrease in other assets 220 57
Decrease (increase) in prepaid (80) 294
expenses
Increase in prepaid income tax (887) -
Increase in accounts payable 1,376 193
Decrease in income taxes payable (942) (471)
Decrease in accrued expenses
(1,120) (396)
Net cash (used in) provided by 548
operating activities (5,841)
Cash flows from investing activities:
Acquisition of property and (3,898) (3,929)
equipment
Proceeds from disposal of property
and equipment 9 85
Payment of principal from term loan
to others 258 -
Net cash used in investing activities (3,844)
(3,631)
Cash flows from financing activities:
Advances on debt 25,755 19,137
Payments of debt (16,472) (22,314)
Issuance of common stock
- 6,867
Net cash provided by financing
activities 9,283 3,690
Net (decrease) increase in cash and (189) 394
cash equivalents
Cash and cash equivalents at beginning
of period 433 2
Cash and cash equivalents at end of $
period 244 396
See accompanying notes to interim consolidated financial
statements.
HAROLD'S STORES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
August 2, 1997 and August 3, 1996
(Unaudited)
1. Unaudited Interim Periods
In the opinion of the Company's management, all
adjustments (all of which are normal and recurring) have been
made which are necessary to fairly state the financial position
of the Company as of August 2, 1997 and the results of its
operations and cash flows for the thirteen week period and
twenty-six week periods ended August 2, 1997 and August 3,
1996. The results of operations for the thirteen week period
and twenty-six week periods ended August 2, 1997 and August 3,
1996 are not necessarily indicative of the results of
operations that may be achieved for the entire fiscal year.
2. Definition of Fiscal Year
The Company has a 52-53 week fiscal year which ends on the
Saturday closest to January 31. The period from February 2,
1997 through January 31, 1998 has been designated as fiscal
1998.
3. Reclassifications
Certain comparative prior year amounts in the consolidated
financial statements have been reclassified to conform with the
current year presentation.
4. Net Earnings Per Common Share
Net earnings per common share are based upon the weighted
average number of common shares outstanding during the period
restated for the five percent stock dividend in fiscal 1997 and
includes common stock equivalents of 36,299 shares and 150,780
shares for the thirteen week period and 75,007 shares and
145,070 shares for the twenty-six week periods ended August 2,
1997 and August 3, 1996 respectively.
5. Long-term Debt
On July 31, 1997, the Company increased its line of
credit with its bank from $20 million to $21.5 million, through
and including September 30, 1997 at which time the maximum
amount of the revolving loan will reduce to $20 million.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The following table sets forth for the periods indicated,
the percentage of sales represented by items in the Company's
statement of earnings:
13 Weeks Ended 26 Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
Sales 100.0% 100.0% 100.0% 100.0%
Cost of goods sold (69.0) (64.1) (67.4) (64.7)
Selling, general and (21.5) (22.0) (20.7) (20.6)
administrative expenses
Advertising expense (8.9) (6.5) (9.4) (7.3)
Depreciation and amortization (3.3) (2.9) (3.1) (2.8)
Interest expense
(0.9) (0.2) (0.7) (0.4)
Earnings (loss) before income (3.6) 4.3 (1.3) 4.2
taxes
Provision for income taxes (1.7)
1.4 (1.7) .5
Net earnings (loss) (0.8)% 2.5%
(2.2)% 2.6%
The following table reflects the sources of the increases
in Company sales for the periods indicated:
13 Weeks Ended 26 Weeks Ended
August 2, August 3, August 2, August 3,
1997 1996 1997 1996
Store sales (000's) $ 21,192 50,624 43,183
24,995
Catalog sales (000's) 3,730
1,831 1,199 4,610
Sales (000's) $ 22,391 55,234 46,913
26,826
Total sales growth 19.8% 17.4% 17.7% 16.2%
Growth in comparable store (3.7)% 3.2% (3.7)% 3.5%
sales (52 week basis)
Growth in catalog sales 52.7% (19.6)% 23.6% (7.3)%
Store locations:
Existing stores 37 31 36 29
New stores opened
2 1 3 3
Total stores at end of
period 39 32 39 32
The opening of new stores, the expansion of existing
stores, as well as an increase in catalog sales contributed to
total sales growth for the first quarter and second quarter of
fiscal 1998 and 1997. Significant increases in catalog sales
are the direct result of the Company's controlled expansion of
this segment of the business. Comparable store sales declined
during the thirteen week period and twenty-six week periods of
fiscal 1998 as compared to the same periods of fiscal 1997.
The opening of second stores in each of the market areas of
Norman, OK; Memphis, TN; Houston, TX and Washington, D.C., in
the opinion of management, resulted in a decline in comparable
store sales due to a shift of sales from the existing store to
the new store. In other locations, management attributes
variance in comparable store sales to market conditions, the
merchandise offered and personnel changes.
New stores opened during the prior twelve months, include
a 5,083 square foot full-line men's and ladies' store opened in
McLean, Virginia (Washington, D.C. metro) in August, 1996
(third quarter); a 5,496 square foot full-line men's and
ladies' store opened in Littleton, Colorado (Denver metro) in
October, 1996 (third quarter); a 5,857 square foot full-line
men's and ladies' store, known as Harold Powell opened in
Houston, Texas in November 1996 (third quarter); a 15,521
square foot outlet store opened in Norman, Oklahoma in January,
1997 (fourth quarter); a 6,300 square foot full-line men's and
ladies' store opened in Cordova, Tennessee (Memphis metro) in
March 1997 (first quarter); a 5,500 square foot full-line men's
and ladies' store opened in Wichita, Kansas in May 1997 (second
quarter); and a 6,000 square foot full-line men's and ladies'
store opened in Columbus, Ohio in July, 1997 (second quarter).
The Company's gross margin decreased during the thirteen
week and twenty-six week periods ending August 2, 1997 compared
to the comparable periods in the prior fiscal year. Among the
principal factors contributing to the decrease was an increase
in aggregate merchandise markdowns due to excessive inventory
levels in the Company's stores. The Company has recently
employed a new Vice President of Planning to improve inventory
planning and control, which may be beneficial to the operating
results of the fourth quarter of the current fiscal year.
Selling, general and administrative expenses decreased as
a percentage of sales during the thirteen week period and
increased as a percentage of sales during the twenty-six week
period ended August 2, 1997 compared to the comparable periods
in the prior fiscal year. The increase is primarily the result
of an increase in store selling expenses. The Company has
recently restructured store level management and has added to
its district management team to improve the control of these
expenses. Management anticipates incremental monetary increases
in selling, general and administrative expenses as a result of
the Company's continuing expansion plans.
Advertising expense including catalog production costs,
increased as a percentage of sales during the thirteen week
period and twenty-six week periods compared to the comparable
periods in the prior fiscal year. This increase was due in part
to the promotional efforts to liquidate the excess inventory in
the Company's retail stores.
The average balance on total outstanding debt was
$17,516,000 for the second quarter ended August 2, 1997
compared to $7,102,000 for the second quarter of fiscal 1997.
This increase in outstanding debt was due primarily to
borrowings under the Company's line of credit to finance
inventory purchases, store expansion, remodeling and equipment
purchases and to provide financial assistance to a major
contractor who is instrumental in the Company's design process.
Average interest rates on the Company's line of credit were
approximately the same for the quarter ended August 2, 1997 and
the comparable quarter in the prior fiscal year. As the
Company's growth continues, cash flow may require additional
borrowed funds which may cause an increase in interest expense.
Capital Expenditures, Capital Resources and Liquidity
Cash Flows From Operating Activities. For the twenty-six
weeks ended August 2, 1997, net cash used in operating
activities was $5,841,000 as compared to net cash provided by
operating activities of $548,000 for the same period in fiscal
1997. The significant decrease in cash flows from operating
activities is partially attributable to an increase of
$5,569,000 in the Company's merchandise inventories for the
twenty-six weeks ended August 2, 1997, as compared to the same
period of fiscal 1997, during which inventories increased by
$1,846,000. Management expects the dollar amount of the
Company's merchandise inventories to continue to increase with
the expansion of its product development programs, private
label merchandise and chain of retail stores, with related
increases in trade accounts receivable and accounts payable.
In addition, the difference in cash flows from operating
activities is partially due to the timing of cash disbursements
as reflected in an increase in accounts payable of $1,376,000
for the twenty-six weeks ended August 2, 1997 versus an
increase in accounts payable of $193,000 for the prior fiscal
year.
In order to conform with the current year presentation of
certain costs associated with new store openings, comparative
fiscal 1997 amounts were re-classified from prepaid expenses to
capital assets-construction in progress. This change resulted
in a decrease in net cash used in operating activities and an
increase in net cash used in investing activities in the
aggregate amount of $907,000.
Cash Flows From Investing Activities. For the twenty-six
weeks ended August 2, 1997, net cash used in investing
activities totaled $3,631,000 compared to $3,844,000 for the
same period in fiscal 1997. Capital expenditures were invested
in new stores, and remodeling and equipment expenditures in
existing operations.
Cash Flows From Financing Activities. During the twenty-
six weeks ended August 2, 1997, the Company made periodic
borrowings under its revolving credit facility (described
below) to finance its inventory purchases, product development
and private label programs, store expansion, remodeling and
equipment purchases.
The Company has available a long term line of credit with
its bank, which was increased effective July 10, 1997 to $20
million. On July 31, 1997, the Company increased this line of
credit from $20 million to $21.5 million, through and including
September 30, 1997 at which time the maximum amount of the
revolving loan will reduce to $20 million. This line had an
average balance outstanding of $15,283,000 and $7,511,000 for
the twenty-six weeks ended August 2, 1997 and August 3, 1996,
respectively. During the twenty-six weeks ended August 2,
1997, this line of credit had a high balance of $20,000,000 and
a 19,555,000 balance as of August 2, 1997. The balance as of
September 12, 1997 was $21,442,000.
Liquidity. The Company considers the following as
measures of liquidity and capital resources as of the dates
indicated:
February August 2, August 3,
1, 1997 1997 1996
Working capital (000's) $28,016 $35,236 $25,292
Current ratio 3.57:1 4.40:1 4.66:1
Ratio of working capital .47:1 .52:1 .54:1
to total assets
Ratio of total debt to .35:1 .61:1 .19:1
stockholders' equity
The Company's primary needs for liquidity are to finance
its inventories and revolving charge accounts and to invest in
new stores, remodeling, fixtures and equipment. Cash flow from
operations and proceeds from credit facilities represent the
Company's principal sources of liquidity. Management
anticipates these sources of liquidity to be sufficient to meet
its operating needs and capital requirements in the foreseeable
future.
Seasonality
The Company's business is subject to seasonal influences,
with the major portion of sales realized during the fall season
(third and fourth quarters) of each fiscal year, which includes
the back-to-school and Christmas selling season. In light of
this pattern, selling, general and administrative expenses are
typically higher as a percentage of sales during the spring
season (first and second quarters) of each fiscal year.
Inflation
Inflation affects the costs incurred by the Company in its
purchase of merchandise and in certain components of its
selling, general and administrative expenses. The Company
attempts to offset the effects of inflation through price
increases and control of expenses, although the Company's
ability to increase prices is limited by competitive factors in
its markets. Inflation has had no meaningful effect on the
other assets of the Company.
PART II
ITEM 1. LEGAL PROCEEDINGS
NONE
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The 1997 Annual Meeting of Shareholders of the Company was
held on June 20, 1997. The following matters were submitted to
a vote of the Company's shareholders:
1. The election of eleven directors (constituting the entire
board of directors) for the ensuing year and until their
successors are duly elected and qualified. The results of the
election for each director were as follows:
Director Votes For Votes Withheld
Harold G. Powell 4,530,111 15
Rebecca Powell Casey 4,530,096 30
H. Rainey Powell 4,530,111 15
Kenneth C. Row 4,527,690 2,436
James R. Agar 4,527,675 2,451
Michael T. Casey 4,530,096 30
Robert B. Cullum, Jr. 4,527,630 2,496
Lisa Powell Hunt 4,530,096 30
W. Howard Lester 4,527,690 2,436
Gary C. Rawlinson 4,527,690 2,436
William F. Weitzel 4,527,630 2,496
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits: The following exhibits are filed as part
of this Form 10-Q:
No. Description Pag
e
10. Third Amended and Restated Credit Agreement
1 dated April 24, 1997 between Registrant and N/A
Boatment's National Bank of Oklahoma.
10. Fourth Amended and Restated Credit Agreement
2 dated June 25, 1997 between Registrant and N/A
Boatment's Naitonal Bank of Oklahoma.
10. Fifth Amended and Restated Credit Agreement
3 dated July 10, 1997 between Registrant and N/A
Boatment's Naitonal Bank of Oklahoma.
10. Sixth Amended and Restated Credit Agreement
4 dated July 31, 1997 between Registrant and N/A
NationsBank of Oklahoma.
27. Financial Data Schedule N/A
1
(b) Reports on Form 8-K; There were no reports on Form 8-
K filed by the Company during the fiscal quarter ended August
2, 1997.
SIGNATURE
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, hereunto duly
authorized.
HAROLD'S STORES, INC.
By:\s\H. Rainey Powell
H. Rainey Powell
Chief Financial Officer
Date: September 17, 1997
THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made and entered into effective
the 24th day of April, 1997, by and between HAROLD'S STORES,
INC., an Oklahoma corporation (the "Borrower"), and BOATMEN'S
NATIONAL BANK OF OKLAHOMA, formerly Boatmen's First National Bank
of Oklahoma ("Lender").
W I T N E S S E T H:
WHEREAS, the Borrower and Lender have entered into that
certain Second Amended and Restated Credit Agreement dated
February 28, 1996, as amended by a First Amendment dated June 28,
1996 and a Second Amendment dated November 6, 1996 (as amended,
the "Agreement");
WHEREAS, the Borrower has requested that the Agreement be
amended to permit Borrower to increase the Revolving Loan from a
maximum amount of Fifteen Million Dollars ($15,000,000.00) to
Seventeen Million Dollars ($17,000,000.00) up until June 30,
1997, at which time the maximum amount of the Revolving Loan
would reduce to $15,000,000.00; and
WHEREAS, Lender is willing to amend the Agreement to provide
for such increase and reduction in the maximum amount of the
Revolving Loan upon the terms and conditions set forth in this
Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
I. Definitions. The definition of "Corporate Base
Rate" in the Agreement is hereby deleted and the definitions of
"Agreement," "Borrowing Base," "LIBOR Rate," "Maximum Revolving
Facility" and "Revolving Loan Note" in the Agreement are hereby
amended in their entirety as follows:
"Agreement" shall mean that certain Second Amended and
Restated Credit Agreement dated February 28, 1996 between
Borrower and Lender as amended by the First Amendment dated
June 28, 1996, the Second Amendment dated November 6, 1996
and the Third Amendment dated April 24, 1997.
"Borrowing Base" shall mean an amount equal to the sum
of (i) eighty percent (80%) of Eligible Accounts, and (ii)
fifty percent (50%) of Eligible Inventory not to exceed
$17,000,000.00 up until June 30, 1997, and not to exceed
$15,000,000.00 thereafter, as reflected in the most current
Monthly Report less all Letters of Credit.
"LIBOR Rate" shall mean the London Interbank Offered
Rates for either (i) one (1) month or (ii) three (3) months,
as published in The Wall Street Journal indicating the
average of interbank offered rates for dollar deposits in
the London market based on the quotation at five major
banks. If the date of the rate change falls on a date when
The Wall Street Journal is not published, then the one (1)
month or three (3) month LIBOR Rate published in the
following issue of The Wall Street Journal shall be the
applicable LIBOR Rate used.
"Maximum Revolving Facility" shall mean the maximum
aggregate amount which Lender has agreed to consider as a
ceiling on the outstanding principal balance of loans to be
made to the Borrower and Letters of Credit issued pursuant
to Section 2. The Maximum Revolving Facility shall be
Seventeen Million Dollars ($17,000,000.00) up until June 30,
1997 and Fifteen Million Dollars ($15,000,000.00)
thereafter.
"Revolving Loan Note" shall mean that certain Ninth
Amended and Restated Reducing Revolving Note executed by the
Borrower substantially in the form of Exhibit "A" attached
to the Third Amendment to this Agreement, dated the
effective date of such Third Amendment, as same may be
extended, renewed, amended or modified from time to time
pursuant to the terms of this Agreement.
I. Interest. Section 2.4 of the Agreement is hereby
amended in its entirety as follows:
2.4 Interest. The Borrower shall pay to Lender
interest on the average daily outstanding balance of the
Liabilities at a rate per annum equal to, at the option of
the Borrower, one and five-eighths of one percent (1.625%)
plus either the one (1) or three (3) month LIBOR Rate as
designated in writing by the Borrower. The Borrower may
make this selection at any time during the term of this
Agreement, provided, however, if a LIBOR Rate is selected no
changes may be made until the applicable LIBOR Rate time
period has expired.
I. Notices. Section 9.12 of the Agreement is hereby
amended in its entirety as follows:
A. Notices. Except as otherwise expressly provided
herein, any notice required or desired to be served, given or
delivered hereunder shall be in writing, shall be addressed to
the Person to be notified as follows (or to such other address or
addresses as may hereafter be furnished in writing by the Person
to be notified):
(a) If to the Lender at:
Boatmen's National Bank of Oklahoma
211 North Robinson Avenue
P. O. Box 25189
Oklahoma City, Oklahoma 73102-0189
Attention: Beverly B. Perri, Vice President
with a copy to
Phillips McFall McCaffrey McVay & Murrah
12th Floor, One Leadership Square
211 North Robinson
Oklahoma City, Oklahoma 73102
Attention: J. Mark Lovelace
(a) If to the Borrower at:
Harold's Stores, Inc.
765 Asp
P. O. Box 2970
Norman, Oklahoma 73070
Attention: H. Rainey Powell, President
and Chief Operating Officer
I. Definitions. Except as specifically defined in
this Amendment, capitalized terms used in this Amendment shall
have the same meanings ascribed to them in the Agreement.
I. No Default, Event of Default or Claims. No event
has occurred which constitutes a Default or Event of Default and
the Borrower has no and waives any claims, rights, setoff or
defense against the Lender under the Agreement, as amended by
this Amendment, or the other Financing Agreements.
I. Miscellaneous.
A. Effect of Amendment. The Agreement, as amended,
modified and supplemented by this Amendment, shall continue in
full force and effect in accordance with its covenants and terms
and is hereby ratified, restated and reaffirmed in every respect
by the Borrower and the Lender, including any security interests
granted pursuant thereto, as of the date hereof. Each of the
Borrower's representations and warranties contained in the
Agreement and other Financing Agreements are true and correct as
of the date hereof and with the same force and effect. To the
extent the terms of this Amendment are inconsistent with the
terms of the Agreement, this Amendment shall control and the
Agreement shall be amended, modified or supplemented so as to
give full effect to the transaction contemplated by this
Amendment.
A. Descriptive Headings. The descriptive headings of
the sections of this Amendment are inserted for convenience only
and shall not be used in the construction or the content of this
Amendment.
A. Multiple Counterparts. This Amendment may be
executed in one or more counterparts, each of which shall, for
all purposes of this Amendment, be deemed an original, but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, Borrower and the Lender have caused this
Amendment to be duly executed effective the date and year first
above written.
"BORROWER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President and
Chief Operating Officer
"LENDER": BOATMEN'S
NATIONAL BANK OF OKLAHOMA, formerly
Boatmen's First National Bank of
Oklahoma
By:
Beverly B. Perri, Vice President
FOURTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made effective June 25, 1997, by
and between HAROLD'S STORES, INC., an Oklahoma corporation
("Borrower"), and BOATMEN'S NATIONAL BANK OF OKLAHOMA, formerly
Boatmen's First National Bank of Oklahoma ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into a Second
Amended and Restated Credit Agreement dated February 28, 1996, as
amended by a First Amendment dated June 28, 1996, a Second
Amendment dated November 6, 1996 and a Third Amendment dated
April 24, 1997 (as amended, the "Agreement");
WHEREAS, Borrower has requested that the Agreement be
amended to permit Borrower to increase the Revolving Loan from a
maximum amount of Seventeen Million Dollars ($17,000,000.00) to
Eighteen Million Dollars ($18,000,000.00) and to extend the
maturity date thereof until June 30, 1999; and
WHEREAS, Lender is willing to amend the Agreement to provide
for such increase in the maximum amount of the Revolving Loan and
extension of the maturity date upon the terms and conditions set
forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
I. Definitions. The definitions of "Agreement,"
"Borrowing Base," "Maximum Revolving Facility" and "Revolving
Loan Note" in the Agreement are hereby amended in their entirety
as follows:
"Agreement" shall mean that certain Second Amended and
Restated Credit Agreement dated February 28, 1996 between
Borrower and Lender as amended by a First Amendment dated
June 28, 1996, a Second Amendment dated November 6, 1996, a
Third Amendment dated April 24, 1997 and a Fourth Amendment
dated June 25, 1997.
"Borrowing Base" shall mean an amount equal to the sum
of (i) eighty percent (80%) of Eligible Accounts, and (ii)
fifty percent (50%) of Eligible Inventory not to exceed
$18,000,000.00, as reflected in the most current Monthly
Report less all Letters of Credit.
"Maximum Revolving Facility" shall mean the maximum
aggregate amount which Lender has agreed to consider as a
ceiling on the outstanding principal balance of loans to be
made to the Borrower and Letters of Credit issued pursuant
to Section 2. The Maximum Revolving Facility shall be
Eighteen Million Dollars ($18,000,000.00).
"Revolving Loan Note" shall mean that certain Tenth
Amended and Restated Revolving Note executed by the Borrower
substantially in the form of Exhibit "A" attached to the
Fourth Amendment to this Agreement, dated the effective date
of such Fourth Amendment, as same may be extended, renewed,
amended or modified from time to time pursuant to the terms
of this Agreement.
I. Extension of Maturity Date. Sections 2.7 and 2.8
of the Agreement are hereby amended in their entirety as follows:
2.7 Term of this Agreement. This Agreement shall
terminate on June 30, 1999, at which time all principal and
accrued interest shall be immediately due and payable. All
of Lender's rights and remedies under this Agreement shall
survive such termination until all of the Liabilities under
this Agreement and the other Financing Agreements have been
paid in full. In addition, this Agreement may be terminated
as set forth in Section 7. Upon the effective date of termi
nation of the Revolving Loan, all of the Liabilities shall
become immediately due and payable without notice or demand;
provided, however, that if such termination is by reason of
an event specified in Section 8, all of the Liabilities
shall become immediately due and payable at such time
without notice or demand.
2.8 Letters of Credit. (i) Lender agrees to extend
credit to Borrower at any time and from time to time by
issuing, extending, re-issuing or amending Letters of Credit
pursuant to the executed Letter of Credit Agreements. (ii)
Each of the Letters of Credit shall (a) be issued by Lender,
(b) contain such terms and provisions as required by Lender,
including payment of customary fees, (c) be for the account
of Borrower in favor of a beneficiary reasonably acceptable
to Lender, (d) expire not later than the expiration date set
forth respectively in each Letter of Credit, which in the
case of commercial Letters of Credit shall not be more than
one hundred eighty (180) days from the date of issuance,
unless prior approval of Lender is obtained for a longer
period, but in no event shall any commercial Letter of
Credit have an expiration date beyond September 30, 1999.
I. Definitions. Except as specifically defined in
this Amendment, capitalized terms used in this Amendment shall
have the same meanings ascribed to them in the Agreement.
I. No Default, Event of Default or Claims. No event
has occurred which constitutes a Default or Event of Default and
the Borrower has no and waives any claims, rights, setoff or
defense against the Lender under the Agreement, as amended by
this Amendment, or the other Financing Agreements.
I. Miscellaneous.
A. Effect of Amendment. The Agreement, as amended,
modified and supplemented by this Amendment, shall continue in
full force and effect in accordance with its covenants and terms
and is hereby ratified, restated and reaffirmed in every respect
by the Borrower and the Lender, including any security interests
granted pursuant thereto, as of the date hereof. Each of the
Borrower's representations and warranties contained in the
Agreement and other Financing Agreements are true and correct as
of the date hereof and with the same force and effect. To the
extent the terms of this Amendment are inconsistent with the
terms of the Agreement, this Amendment shall control and the
Agreement shall be amended, modified or supplemented so as to
give full effect to the transaction contemplated by this
Amendment.
A. Descriptive Headings. The descriptive headings of
the sections of this Amendment are inserted for convenience only
and shall not be used in the construction or the content of this
Amendment.
A. Multiple Counterparts. This Amendment may be
executed in one or more counterparts, each of which shall, for
all purposes of this Amendment, be deemed an original, but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective the date shown above.
"BORROWER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President and
Chief Operating Officer
"LENDER": BOATMEN'S
NATIONAL BANK OF OKLAHOMA, formerly
Boatmen's First National Bank of
Oklahoma
By:
Beverly B. Perri, Vice President
FIFTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made effective July 10, 1997, by
and between HAROLD'S STORES, INC., an Oklahoma corporation
("Borrower"), and BOATMEN'S NATIONAL BANK OF OKLAHOMA, formerly
Boatmen's First National Bank of Oklahoma ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into a Second
Amended and Restated Credit Agreement dated February 28, 1996, as
amended by a First Amendment dated June 28, 1996, a Second
Amendment dated November 6, 1996, a Third Amendment dated April
24, 1997 and a Fourth Amendment dated June 25, 1997 (as amended,
the "Agreement");
WHEREAS, Borrower has requested that the Agreement be
amended to permit Borrower to increase the Revolving Loan from a
maximum amount of Eighteen Million Dollars ($18,000,000.00) to
Twenty Million Dollars ($20,000,000.00); and
WHEREAS, Lender is willing to amend the Agreement to provide
for such increase in the maximum amount of the Revolving Loan
upon the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
I. Definitions. The definitions of "Agreement,"
"Maximum Revolving Facility" and "Revolving Loan Note" in the
Agreement are hereby amended in their entirety as follows:
"Agreement" shall mean that certain Second Amended and
Restated Credit Agreement dated February 28, 1996 between
Borrower and Lender as amended by a First Amendment dated
June 28, 1996, a Second Amendment dated November 6, 1996, a
Third Amendment dated April 24, 1997, a Fourth Amendment
dated June 25, 1997 and a Fifth Amendment dated July 10,
1997.
"Maximum Revolving Facility" shall mean the maximum
aggregate amount which Lender has agreed to consider as a
ceiling on the outstanding principal balance of loans to be
made to the Borrower and Letters of Credit issued pursuant
to Section 2. The Maximum Revolving Facility shall be
Twenty Million Dollars ($20,000,000.00).
"Revolving Loan Note" shall mean that certain Eleventh
Amended and Restated Revolving Note executed by the Borrower
substantially in the form of Exhibit "A" attached to the
Fifth Amendment to this Agreement, dated the effective date
of such Fifth
Amendment, as same may be extended, renewed, amended or
modified from time to time pursuant to the terms of this
Agreement.
I. Definitions. Except as specifically defined in
this Amendment, capitalized terms used in this Amendment shall
have the same meanings ascribed to them in the Agreement.
I. No Default, Event of Default or Claims. No event
has occurred which constitutes a Default or Event of Default and
the Borrower has no and waives any claims, rights, setoff or
defense against the Lender under the Agreement, as amended by
this Amendment, or the other Financing Agreements.
I. Miscellaneous.
A. Effect of Amendment. The Agreement, as amended,
modified and supplemented by this Amendment, shall continue in
full force and effect in accordance with its covenants and terms
and is hereby ratified, restated and reaffirmed in every respect
by the Borrower and the Lender, including any security interests
granted pursuant thereto, as of the date hereof. Each of the
Borrower's representations and warranties contained in the
Agreement and other Financing Agreements are true and correct as
of the date hereof and with the same force and effect. To the
extent the terms of this Amendment are inconsistent with the
terms of the Agreement, this Amendment shall control and the
Agreement shall be amended, modified or supplemented so as to
give full effect to the transaction contemplated by this
Amendment.
A. Descriptive Headings. The descriptive headings of
the sections of this Amendment are inserted for convenience only
and shall not be used in the construction or the content of this
Amendment.
A. Multiple Counterparts. This Amendment may be
executed in one or more counterparts, each of which shall, for
all purposes of this Amendment, be deemed an original, but all of
which shall constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective the date shown above.
"BORROWER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President and
Chief Operating Officer
"LENDER": BOATMEN'S
NATIONAL BANK OF OKLAHOMA, formerly
Boatmen's First National Bank of
Oklahoma
By:
Beverly B. Perri, Vice President
SIXTH AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT
AGREEMENT (this "Amendment") is made effective July 31, 1997, by
and between HAROLD'S STORES, INC., an Oklahoma corporation
("Borrower"), and NATIONSBANK, N.A., successor by merger to
Boatmen's National Bank of Oklahoma ("Lender").
W I T N E S S E T H:
WHEREAS, Borrower and Lender have entered into a Second
Amended and Restated Credit Agreement dated February 28, 1996, as
amended by a First Amendment dated June 28, 1996, a Second
Amendment dated November 6, 1996, a Third Amendment dated April
24, 1997, a Fourth Amendment dated June 25, 1997 and a Fifth
Amendment dated July 10, 1997 (as amended, the "Agreement");
WHEREAS, Borrower has requested that the Agreement be
amended to permit Borrower to increase the Revolving Loan from a
maximum amount of Twenty Million Dollars ($20,000,000.00) to
Twenty-One Million Five Hundred Thousand Dollars ($21,500,000.00)
through and including September 30, 1997, after which time the
maximum amount of the Revolving Loan would reduce to
$20,000,000.00; and
WHEREAS, Lender is willing to amend the Agreement to provide
for such increase in the maximum amount of the Revolving Loan
upon the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements set forth herein, the parties agree as follows:
I. Loan Agreement Definitions. The definitions of
"Agreement," "Borrowing Base," "Maximum Revolving Facility" and
"Revolving Loan Note" in the Agreement are hereby amended in
their entirety as follows:
"Agreement" shall mean that certain Second Amended and
Restated Credit Agreement dated February 28, 1996 between
Borrower and Lender as amended by a First Amendment dated
June 28, 1996, a Second Amendment dated November 6, 1996, a
Third Amendment dated April 24, 1997, a Fourth Amendment
dated June 25, 1997, a Fifth Amendment dated July 10, 1997
and a Sixth Amendment dated July , 1997.
"Borrowing Base" shall mean an amount equal to the sum
of (i) eighty percent (80%) of Eligible Accounts, and (ii)
sixty percent (60%) of Eligible Inventory not to exceed
$21,500,000.00 through and including September 30, 1997, and
fifty percent (50%) of Eligible Inventory not to exceed
$20,000,000.00 beginning October 1, 1997, as reflected in
the most current Monthly Report less all Letters of Credit.
"Maximum Revolving Facility" shall mean the maximum
aggregate amount which Lender has agreed to consider as a
ceiling on the outstanding principal balance of loans to be
made to the Borrower and Letters of Credit issued pursuant
to Section 2. The Maximum Revolving Facility shall be
Twenty-One Million Five Hundred Thousand Dollars
($21,500,000.00) through and including September 30, 1997
and Twenty Million Dollars ($20,000,000.00) beginning
October 1, 1997.
"Revolving Loan Note" shall mean that certain Twelfth
Amended and Restated Reducing Revolving Note executed by the
Borrower substantially in the form of Exhibit "A" attached
to the Sixth Amendment to this Agreement, dated the
effective date of such Sixth Amendment, as same may be
extended, renewed, amended or modified from time to time
pursuant to the terms of this Agreement.
I. Reporting and Eligibility Requirements. Sections
3.1 and 3.2 of the Agreement are hereby deleted in their
entirety and replaced by the following:
3.1 Monthly Reports. The Borrower shall submit to the
Lender, not later than the twenty-fifth (25th) day following
the end of each month, a monthly report ("Monthly Report"),
accompanied by a Borrowing Base certificate in the form
attached to the Sixth Amendment to this Agreement as Exhibit
"B", which shall be signed by the President, chief financial
officer or other authorized officer of the Borrower. Each
Monthly Report shall include, as of the closing day for the
preceding month: (i) a summary aged trial balance of
Accounts for the Borrower ("Accounts Trial Balance"); (ii)
calculations of the current Borrowing Base; (iii) the amount
of the outstanding principal balance of the Liabilities; and
(iv) a representation by the Borrower that no Default or
Event of Default occurred during such month or, if a Default
or Event of Default has occurred during such month, a
description of such Default or Event of Default and of the
actions the Borrower has taken or intends to take to cure
the same. Upon Lender's request therefor, the Borrower
shall furnish with such specificity as is satisfactory to
Lender, concerning matters included, described or referred
to in the Monthly Reports and any other documents in
connection therewith requested by Lender including, without
limitation, but only if specifically requested by Lender,
copies of all invoices prepared in connection with the
Accounts. The Monthly Reports shall contain such additional
information as Lender may reasonably require.
3.2 Quarterly Reports. The Borrower shall submit to
the Lender not later than the forty-fifth (45th) day
following the end of each fiscal quarter and shall be
accompanied by the Quarterly Borrowing Base and Compliance
Certificate (the "Quarterly Report") in the form attached to
the Sixth Amendment to this Agreement as Exhibit "C". Each
Quarterly Report shall include, as of the closing day of the
preceding fiscal quarter: (i) calculations of the current
Borrowing Base; (ii) the quarterly itemization of Inventory
described in Section 3.7; and (iii) evidence satisfactory to
Lender that each of the covenants set forth in Section 6.9
has been complied with during such quarter.
3. Definitions. Except as specifically defined in this
Amendment, capitalized terms used in this Amendment shall have
the same meanings ascribed to them in the Agreement.
4. No Default, Event of Default or Claims. No event has
occurred which constitutes a Default or Event of Default and the
Borrower has no and waives any claims, rights, setoff or defense
against the Lender under the Agreement, as amended by this
Amendment, or the other Financing Agreements.
5. Miscellaneous.
5.1. Effect of Amendment. The Agreement, as
amended, modified and supplemented by this Amendment, shall
continue in full force and effect in accordance with its
covenants and terms and is hereby ratified, restated and
reaffirmed in every respect by the Borrower and the Lender,
including any security interests granted pursuant thereto,
as of the date hereof. Each of the Borrower's
representations and warranties contained in the Agreement
and other Financing Agreements are true and correct as of
the date hereof and with the same force and effect. To the
extent the terms of this Amendment are inconsistent with the
terms of the Agreement, this Amendment shall control and the
Agreement shall be amended, modified or supplemented so as
to give full effect to the transaction contemplated by this
Amendment.
5.2 Descriptive Headings. The descriptive headings of
the sections of this Amendment are inserted for convenience
only and shall not be used in the construction or the
content of this Amendment.
5.3 Multiple Counterparts. This Amendment may be
executed in one or more counterparts, each of which shall,
for all purposes of this Amendment, be deemed an original,
but all of which shall constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have executed this Amendment
effective the date shown above.
"BORROWER": HAROLD'S
STORES, INC., an Oklahoma
corporation
By:
H. Rainey Powell, President and
Chief Operating Officer
"LENDER":
NATIONSBANK, N.A.
By:
Kelly H. Sachs, Vice President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-28-1998
<PERIOD-END> AUG-02-1997
<CASH> 244
<SECURITIES> 0
<RECEIVABLES> 5,968
<ALLOWANCES> 222
<INVENTORY> 34,113
<CURRENT-ASSETS> 45,594
<PP&E> 28,484
<DEPRECIATION> 9,208
<TOTAL-ASSETS> 67,981
<CURRENT-LIABILITIES> 10,358
<BONDS> 21,666
0
0
<COMMON> 5,735
<OTHER-SE> 35,754
<TOTAL-LIABILITY-AND-EQUITY> 67,981
<SALES> 55,234
<TOTAL-REVENUES> 55,234
<CGS> 37,256
<TOTAL-COSTS> 37,256
<OTHER-EXPENSES> 18,334
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 394
<INCOME-PRETAX> (750)
<INCOME-TAX> (300)
<INCOME-CONTINUING> (450)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (450)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> .0
</TABLE>
