-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LjOGWekm+Ni+RTLKy5azJpXibo49ClczEYrtlNM8i015UE12Gg7BmUUeMTaBJlTi ZBpAeNY5AiphpXycAB0QJQ== 0000812446-99-000030.txt : 19991214 0000812446-99-000030.hdr.sgml : 19991214 ACCESSION NUMBER: 0000812446-99-000030 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19991030 FILED AS OF DATE: 19991213 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ONE PRICE CLOTHING STORES INC CENTRAL INDEX KEY: 0000812446 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-WOMEN'S CLOTHING STORES [5621] IRS NUMBER: 570779028 STATE OF INCORPORATION: DE FISCAL YEAR END: 0130 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15385 FILM NUMBER: 99773433 BUSINESS ADDRESS: STREET 1: HWY 290 COMMERCE PK STREET 2: 1875 E MAIN ST CITY: DUNCAN STATE: SC ZIP: 29334 BUSINESS PHONE: 8644338888 MAIL ADDRESS: STREET 1: P O BOX 2487 CITY: SPARTANBURG STATE: SC ZIP: 29304 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended October 30, 1999 OR | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ______________ to _______________ Commission file number 0-15385 ONE PRICE CLOTHING STORES, INC. (Exact name of registrant as specified in its charter) Delaware 57-0779028 (State or other jurisdiction of (I.R.S. Employer identification No.) incorporation or organization) Highway 290, Commerce Park 1875 East Main Street Duncan, South Carolina 29334 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (864) 433-8888
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No The number of shares of the registrant's common stock outstanding as of December 1, 1999 was 10,489,091. INDEX ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES PART I. FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) Condensed consolidated balance sheets - October 30, 1999, January 30, 1999 and October 31, 1998 Condensed consolidated statements of operations - Three-month and nine-month periods ended October 30, 1999 and October 31, 1998 Condensed consolidated statements of cash flows - Nine-month periods ended October 30, 1999 and October 31, 1998 Notes to unaudited condensed consolidated financial statements - October 30, 1999 Independent accountants' report on review of interim financial information Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Item 3. Quantitative and Qualitative Disclosures About Market Risk PART II. OTHER INFORMATION Item 1. Legal Proceedings Item 2. Changes in Securities and Use of Proceeds Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters to a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K SIGNATURES
PART I. FINANCIAL INFORMATION Item I. Financial Statements (Unaudited) CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) One Price Clothing Stores, Inc. and Subsidiaries October 30, January 30, October 31, 1999 1999 1998 ------------------ ------------------ ---------------- (1) Assets CURRENT ASSETS Cash and cash equivalents $ 4,321,000 $ 2,418,000 $ 2,500,000 Merchandise inventories 55,197,000 45,639,000 52,197,000 Deferred income taxes 1,745,000 768,000 -- Other current assets 7,484,000 6,562,000 6,751,000 ------------------ ------------------ ---------------- TOTAL CURRENT ASSETS 68,747,000 55,387,000 61,448,000 ------------------ ------------------ ---------------- PROPERTY AND EQUIPMENT, at cost 64,903,000 62,084,000 60,700,000 Less accumulated depreciation 31,794,000 28,638,000 27,553,000 ------------------ ------------------ ---------------- 33,109,000 33,446,000 33,147,000 ------------------ ------------------ ---------------- OTHER ASSETS 4,698,000 3,994,000 3,889,000 ------------------ ------------------ ---------------- $ 106,554,000 $ 92,827,000 $ 98,484,000 ================== ================== ================ Liabilities and Shareholders' Equity CURRENT LIABILITIES Accounts payable $ 33,109,000 $ 24,750,000 $ 28,975,000 Current portion of long-term debt and revolving credit facility 11,191,000 11,998,000 13,141,000 Sundry liabilities 7,880,000 7,993,000 8,798,000 ------------------ ------------------ ---------------- TOTAL CURRENT LIABILITIES 52,180,000 44,741,000 50,914,000 ------------------ ------------------ ---------------- LONG-TERM DEBT 7,626,000 7,755,000 7,795,000 ------------------ ------------------ ---------------- OTHER NONCURRENT LIABILITIES 2,907,000 2,914,000 2,895,000 ------------------ ------------------ ---------------- SHAREHOLDERS' EQUITY Preferred Stock, par value $0.01 -- authorized and unissued 500,000 shares Common Stock, par value $0.01 -- authorized 35,000,000 shares, issued and outstanding 10,474,091, 10,439,531, and 10,439,531, respectively 105,000 104,000 104,000 Additional paid-in capital 11,560,000 11,465,000 11,465,000 Retained earnings 32,176,000 25,848,000 25,311,000 ------------------ ------------------ ---------------- 43,841,000 37,417,000 36,880,000 ------------------ ------------------ ---------------- $ 106,554,000 $ 92,827,000 $ 98,484,000 ================== ================== ================
(1) Derived from audited financial statements. See notes to unaudited condensed consolidated financial statements CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) One Price Clothing Stores, Inc. and Subsidiaries Three-Month Period Ended Nine-Month Period Ended ------------------------------- ------------------------------- October 30, October 31, October 30, October 31, 1999 1998 1999 1998 -------------- ------------- -------------- -------------- NET SALES $ 70,428,000 $ 69,732,000 $ 255,446,000 $ 248,031,000 Cost of goods sold 45,301,000 45,496,000 162,425,000 158,664,000 -------------- ------------- -------------- -------------- GROSS MARGIN 25,127,000 24,236,000 93,021,000 89,367,000 -------------- ------------- -------------- -------------- Selling, general and administrative expenses 19,766,000 18,953,000 58,798,000 56,619,000 Store rent and related expenses 6,811,000 6,504,000 20,388,000 20,122,000 Depreciation and amortization expense 1,289,000 1,149,000 3,972,000 3,809,000 Interest expense 412,000 436,000 1,374,000 1,594,000 -------------- ------------- -------------- -------------- 28,278,000 27,042,000 84,532,000 82,144,000 -------------- ------------- -------------- -------------- (LOSS) INCOME BEFORE INCOME TAXES (3,151,000) (2,806,000) 8,489,000 7,223,000 (Benefit from) provision for income taxes (1,983,000) (1,090,000) 2,161,000 3,377,000 --------------- -------------- ------------- -------------- NET (LOSS) INCOME $ (1,168,000) $ (1,716,000) $ 6,328,000 $ 3,846,000 ============== ============== ============= ============== Net (loss) income per common share -- basic $ (0.11) $ (0.16) $ 0.61 $ 0.37 =============== ============== ============= ============== Net (loss) income per common share -- diluted $ (0.11) $ (0.16) $ 0.60 $ 0.37 =============== ============== ============= ============== Weighted average number of common shares outstanding -- basic 10,469,272 10,437,817 10,454,518 10,436,293 ============== ============= ============== ============== Weighted average number of common shares outstanding -- diluted 10,469,272 10,437,817 10,626,242 10,466,709 ============== ============= ============== ==============
See notes to unaudited condensed consolidated financial statements CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) One Price Clothing Stores, Inc. and Subsidiaries Nine-Month Period Ended --------------------------------------- October 30, October 31, 1999 1998 -------------------- ----------------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,328,000 $ 3,846,000 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 3,972,000 3,809,000 Provision for supplemental post-retirement benefits 70,000 98,000 Decrease in other noncurrent assets 54,000 42,000 Decrease in other noncurrent liabilities (47,000) (46,000) Deferred income taxes (977,000) -- Loss on disposal of property and equipment 353,000 396,000 Changes in operating assets and liabilities (2,284,000) (7,009,000) -------------------- ----------------- NET CASH PROVIDED BY OPERATING ACTIVITIES 7,469,000 1,136,000 -------------------- ----------------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchases of property and equipment (3,599,000) (1,084,000) Purchases of other noncurrent assets (653,000) (520,000) Repayment of related party loan -- 30,000 -------------------- ----------------- NET CASH USED IN INVESTING ACTIVITIES (4,252,000) (1,574,000) -------------------- ----------------- CASH FLOWS FROM FINANCING ACTIVITIES: (Repayment of) net borrowings from revolving credit facility (816,000) 1,468,000 Repayment of long-term debt (120,000) (111,000) Debt financing costs incurred (69,000) (42,000) Payment of capital lease obligations (289,000) (168,000) Decrease in amount due to related parties (101,000) (47,000) Proceeds from exercise of common stock options 81,000 11,000 -------------------- ----------------- NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES (1,314,000) 1,111,000 -------------------- ----------------- INCREASE IN CASH AND CASH EQUIVALENTS 1,903,000 673,000 Cash and cash equivalents at beginning of period 2,418,000 1,827,000 -------------------- ----------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 4,321,000 $ 2,500,000 ==================== ================= SUPPLEMENTAL CASH FLOW INFORMATION: Interest paid $ 1,193,000 $ 1,560,000 Income taxes paid 2,370,000 361,000 Noncash financing activity - capital leases 505,000 --
See notes to unaudited condensed consolidated financial statements NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS One Price Clothing Stores, Inc. and Subsidiaries October 30, 1999 NOTE A - BASIS OF PRESENTATION AND CERTAIN ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and include the accounts of One Price Clothing Stores, Inc. and its subsidiaries, all of which are wholly-owned (the "Company"). All significant intercompany accounts and transactions have been eliminated in consolidation. These financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and the instructions of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For interim reporting, the Company's gross profit is calculated on a current quarterly basis by its inventory management system. Inventories are stated at the lower of cost (using the first-in, first-out (FIFO) retail method) or market. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Due to the seasonality of the Company's sales, operating results for the three-month and nine-month periods ended October 30, 1999 are not necessarily indicative of the results that may be expected for the year ending January 29, 2000. For further information, refer to the financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended January 30, 1999. The Company's sales and operating results are seasonal. Sales and operating results have been the highest in the first quarter (February - April) and second quarter (May - July) and lowest in the third quarter (August - October) and fourth quarter (November - January). Segments and Related Information The Company operates in only one industry segment: Retail sales of apparel and accessories to the general public. NOTE B - EARNINGS PER SHARE Basic earnings per share are computed based upon the weighted average number of common shares outstanding. Diluted earnings per share are computed based upon the weighted average number of common and common equivalent shares outstanding. Common equivalent shares consist solely of shares under option. A reconciliation of basic and diluted weighted average shares outstanding is presented below: Three-Month Period Ended Nine-Month Period Ended ---------------------------------- ---------------------------------- October 30, October 31, October 30, October 31, 1999 1998 1999 1998 ---------------- --------------- ---------------- --------------- Weighted average number of common shares outstanding - basic 10,469,272 10,437,817 10,454,518 10,436,293 Net effect of dilutive stock options - based on the treasury stock method using the average market price - - 171,724 30,416 ---------------- ---------------- ---------------- ---------------- Weighted average number of common shares outstanding - diluted 10,469,272 10,437,817 10,626,242 10,466,709
NOTE C - CREDIT FACILITIES The Company has a revolving credit facility of up to $37,500,000 (including a letter of credit sub-facility of up to $25,000,000) with its primary lender through March 2001. Borrowings under the credit agreement with the primary lender are collateralized by all assets owned by the Company during the term of the agreement (other than the land, buildings, fixtures and improvements collateralizing the mortgage loan discussed below). Under the agreement, the borrowings bear interest, at the Company's option (subject to certain limitations in the agreement), at the Prime Rate plus 0.25% or the Adjusted Eurodollar Rate, as defined, plus 2.0%. Maximum borrowings under the revolving credit facility and utilization of the letter of credit facility are based on a borrowing base formula determined with respect to eligible inventory as defined in the agreement. Availability under the revolving credit facility fluctuates in accordance with the Company's seasonal variations in inventory levels. At October 30, 1999, the Company had approximately $16.7 million of excess availability under the borrowing base formula. The lending formula may be revised from time to time in response to changes in the composition of the Company's inventory or other business conditions. The Company's revolving credit agreement contains certain covenants which, among other things, restrict the ability of the Company to incur other indebtedness, or encumber or dispose of assets and prohibit the Company from repurchasing its Common Stock or paying dividends. The Company is required to maintain a $5,000,000 minimum level of working capital and to maintain a minimum adjusted net worth of $25,000,000 (both as defined in the revolving credit agreement). The Company was in compliance with these financial covenants at October 30, 1999. The Company also has an agreement (as amended) with a commercial bank to provide a separate letter of credit facility of up to $5,000,000. Letters of credit issued under the agreement are collateralized by inventories purchased using such letters of credit. The agreement contains working capital and minimum net worth requirements of the same level as that required by the Company's primary lender under the revolving credit agreement. In March 1999, the letter of credit agreement was amended to extend the expiration date of the facility by one year to the earlier of June 2000 or termination of the Company's revolving credit facility with its primary lender. The letter of credit agreement, as amended, contains certain restrictive covenants which are substantially the same as those within the Company's revolving credit facility discussed above. The Company also has a twenty-year mortgage agreement with a commercial bank. The agreement, entered into in June 1997 with an original balance of $8,125,000, is secured by the Company's real property located at its corporate offices including land, buildings, fixtures and improvements. The mortgage loan, which had a balance of $7,795,000 at October 30, 1999, is payable in consecutive equal monthly installments (including interest at the rate of 9.125% per annum) through July 2017. Certain fees may be payable by the Company if the mortgage loan is repaid prior to June 2014. The mortgage agreement contains certain nonfinancial covenants with which the Company was in compliance at October 30, 1999. NOTE D - EFFECT OF NEW ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," which, as amended, is effective for the fiscal year ending February 2, 2002. This new standard requires recognition of all derivatives, including certain derivative instruments embedded in other contracts, as either assets or liabilities in the statement of financial position and measurement of those instruments at fair value. The Company is in the process of reviewing the effect, if any, that SFAS 133 will have on the Company's consolidated financial statements and disclosures. INDEPENDENT ACCOUNTANTS' REVIEW REPORT To the Board of Directors and Shareholders of One Price Clothing Stores, Inc. Duncan, South Carolina We have reviewed the accompanying condensed consolidated balance sheets of One Price Clothing Stores, Inc. and subsidiaries (the "Company") as of October 30, 1999 and October 31, 1998, and the related condensed consolidated statements of operations for the three-month and nine-month periods then ended and the condensed consolidated statements of cash flows for the nine-month periods then ended. These financial statements are the responsibility of the Company's management. We conducted our reviews in accordance with standards established by the American Institute of Certified Public Accountants. A review of interim financial information consists principally of applying analytical procedures to financial data and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with generally accepted auditing standards, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion. Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated financial statements for them to be in conformity with generally accepted accounting principles. We have previously audited, in accordance with generally accepted auditing standards, the consolidated balance sheet of the Company as of January 30, 1999, and the related consolidated statements of operations, shareholders' equity, and cash flows for the year then ended (not presented herein); and in our report dated March 17, 1999 (March 31, 1999 as to Note B), we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of January 30, 1999 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived. DELOITTE & TOUCHE LLP Greenville, South Carolina November 18, 1999 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Net sales for the nine-month period ended October 30, 1999 increased 3.0% to $255,446,000 compared to $248,031,000 for the same time period in 1998. Comparable store sales for the nine-month period ended October 30, 1999 increased 3.8% compared to a 7.1% increase for the same time period in 1998. We consider stores that have been open 18 months or more to be comparable, and there were 602 such stores at October 30, 1999. We believe that these year-to-date sales results were generated by having more fashion at our core price points and better execution of our micro-merchandising strategy, based upon improved demographic profiling of our stores. Net sales for the quarter ended October 30, 1999 increased 1.0% to $70,428,000 compared to $69,732,000 for the quarter ended October 31, 1998. Despite the increase in total sales, comparable store sales for the third quarter of fiscal 1999 decreased 0.3% compared to a 12.1% increase for the same quarter last year. The quarterly sales results were adversely affected by inadequate amounts of inventory in several key categories and, to a lesser degree, to temporary closings of some of our stores as a result of several hurricanes. During the third quarter of fiscal 1999, we opened 14 stores and expanded three of our top-performing stores. In addition, we relocated two stores and closed six under-performing stores. At October 30, 1999, we operated 628 stores, seven greater than at quarter-end last year. The stores are located in 27 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Gross margin was 35.7% of net sales in the third quarter of fiscal 1999 compared to 34.8% of net sales in the third quarter of fiscal 1998. For the first nine months of fiscal 1999, gross margin was 36.4% of net sales versus 36.0% of net sales for the same time period in fiscal 1998. Increases in gross margin as a percentage of net sales were realized by improvements in maintained mark-up which were offset, in part, by slight increases in buying and other costs. Selling, general and administrative ("SG&A") expenses were 28.1% of net sales for the third quarter of fiscal 1999 compared to 27.2% of net sales in the third quarter of fiscal 1998. SG&A expenses were 23.0% of net sales in the first nine months of fiscal 1999 compared to 22.8% of net sales during the same time period in fiscal 1998. In both periods presented for fiscal 1999, SG&A expenses increased in dollars compared to the same time periods in fiscal 1998 due primarily to increased payroll expense in the stores. Payroll expense in the stores increased due to year-over-year increases in both the average hourly wage rate and average store hours. Store rent and related expenses per average store increased 4.4% in the third quarter of fiscal 1999 and increased 4.2% in the first nine months of fiscal 1999 compared to the same periods last year. The increase in average store rent and related expenses is primarily due to the Company's store expansion strategy of opening larger, higher volume stores and thus entering more costly sites with higher rents while closing older stores with lower average rent costs. Due to the increase in average store rent, store rent and related expenses were 9.7% of net sales in the third quarter of fiscal 1999 compared to 9.3% of net sales in the third quarter of fiscal 1998. However, store rent and related expenses for the first nine months of fiscal 1999 decreased as a percentage of net sales to 8.0% from 8.1% in fiscal 1998 primarily due to the leverage provided by higher year-over-year sales. Depreciation and amortization expense was 1.8% of net sales in the third quarter of fiscal 1999 compared to 1.6% of net sales in the third quarter of fiscal 1998. Depreciation and amortization expense was 1.6% of net sales in the first nine months of fiscal 1999 compared to 1.5% of net sales during the same time period in fiscal 1998. In both periods presented for fiscal 1999, depreciation and amortization expense increased in dollars compared to the same time periods in fiscal 1998 primarily due to investments in new stores and software. Interest expense was 0.6% of net sales in the third quarters of both fiscal 1999 and fiscal 1998 and decreased to 0.5% of net sales in the first nine months of fiscal 1999 compared to 0.6% of net sales for the same time period in fiscal 1998. In both periods presented for fiscal 1999, interest expense decreased in dollars compared to the same time periods in fiscal 1998 due to the combination of lower average interest rates realized by obtaining more favorable pricing on the Company's working capital facility and lower average levels of borrowings. The Company's effective income tax rate was approximately 25.5% in the first nine months of fiscal 1999. This rate is significantly less than the statutory rate because the Company has achieved profitability in Puerto Rico sufficient to reverse the remaining valuation allowance attributable to deferred tax assets in its Puerto Rico subsidiary. The effective income tax rate for fiscal 1998 was 20.3%, also primarily attributable to a favorable valuation allowance adjustment. Outlook Sales thus far in the fourth quarter of fiscal 1999 are slightly behind sales for the same time period in fiscal 1998. Although the quarter began slowly, we are encouraged by recent customer response to our current merchandise offerings and will continue our efforts on maintaining our cost-containment targets. During the fourth quarter of fiscal 1999, we have opened nine new stores in existing markets and expanded or relocated three existing stores. We currently expect to open approximately 50 stores and close approximately 15 stores during fiscal 2000 as part of our plan to build new business while maintaining our focus on improving sales in existing stores. We also plan to continue our strategy of expanding the size of certain highly productive stores. The Company's sales and operating results are seasonal. Sales and operating results have been the highest in the first quarter (February - April) and second quarter (May - July) and lowest in the third quarter (August - October) and fourth quarter (November - January). We continue to develop strategies to increase sales volume in the third and fourth quarters of the fiscal year. Average store rent and related expenses are expected to continue to increase in fiscal 1999 and beyond due to the location and the increase in average store square footage of stores that opened in fiscal 1999 and planned future openings, as well as the closing of older, lower-volume stores. We will seek to leverage these increases through improved average store sales volume. Liquidity and Capital Resources Increased sales, gross margin and favorable tax adjustments mentioned above resulted in a 65% increase in net income in the first nine months of fiscal 1999 compared to the same time period in fiscal 1998. In the first nine months of fiscal 1999, net cash provided by operating activities was primarily used to reduce the balance of the revolving credit facility and to open new stores, expand and remodel certain other top-performing stores and purchase software. In the first nine months of fiscal 1998, net cash provided by operating activities combined with net borrowings from the Company's revolving credit facility were used to purchase property, equipment and software. Merchandise inventories at the end of the third quarter of fiscal 1999 increased 5.7% in total and 4.6% on an average store basis compared to the end of the third quarter of fiscal 1998. In preparation for the holiday season, total merchandise inventories at the end of the third quarter of fiscal 1999 were also 19.2% higher on an average store basis than at January 30, 1999 when inventory levels are typically lower. The level and source of inventories are subject to fluctuations because of our seasonal operations, opportunistic buying strategy and prevailing business conditions. As a result of our continued emphasis on purchasing from domestic sources, the level of outstanding documentary letters of credit decreased to $4.1 million on October 30, 1999 compared to $4.7 million on October 31, 1998. We currently expect to continue to pursue opportunistic purchases of merchandise from primarily domestic sources, but will purchase merchandise from foreign sources when it is deemed to be in the best interests of the Company. Total accounts payable and amounts outstanding under the credit facilities, including long-term portions thereof, increased 4% at the end of the third quarter of fiscal 1999 compared to the third quarter of fiscal 1998. This year-over-year increase was primarily the result of the year-over-year increase in merchandise inventories. The level of accounts payable and amounts outstanding under the credit facilities are subject to fluctuations because of our seasonal operations, opportunistic buying strategy, rate of capital expenditures and prevailing business conditions. Our credit facilities consist of a revolving credit facility to meet short-term liquidity needs, a mortgage loan collateralized by the Company's corporate offices and distribution center and letter of credit facilities to accommodate the Company's needs to purchase merchandise inventories from foreign sources. Collectively, the credit facilities contain certain financial and non-financial covenants with which the Company was in compliance at October 30, 1999. A summary of our credit facilities follows. Please refer to Note C of the unaudited financial statements contained within this Form 10-Q for a more complete description of the credit facilities. We have a $37,500,000 revolving credit facility (including a $25,000,000 letter of credit sub-facility) with our primary lender through March 2001. Borrowings under the agreement are collateralized by all assets owned by the Company during the term of the agreement (other than land, buildings, fixtures and improvements collateralizing the mortgage loan discussed below). Maximum borrowings under the revolving credit facility and utilization of the letter of credit facility are based upon a borrowing base formula determined with respect to eligible inventory as defined in the agreement. At October 30, 1999, we had approximately $16.7 million in excess availability under the borrowing base formula. We have a twenty-year mortgage loan agreement with a commercial bank payable in consecutive equal monthly installments through July 2017. At October 30, 1999, the mortgage loan had an unpaid balance of $7,795,000. The agreement is secured by the Company's real property located at its corporate offices including land, buildings, fixtures and improvements. We have a $5,000,000 letter of credit facility with a commercial bank through the earlier of June 2000 or termination of the revolving credit facility with the Company's primary lender. Letters of credit issued under the agreement are collateralized by inventories purchased using such letters of credit. During fiscal 1999, we expect to spend approximately $6.0 million on capital expenditures, most of which will be used to open new stores, remodel, re-fixture, expand and relocate existing stores and invest in information technology. During fiscal 2000, we currently expect to spend approximately $9.5 million on capital expenditures, most of which will be used to open new stores, expand and relocate existing stores and invest in information technology. Our liquidity requirements in the foreseeable future are expected to be met principally through cash provided by operations and the use of our credit facilities. If we believe it to be in the best interests of the Company, additional long-term debt, equity, capital leases or other permanent financing may be considered. Market Risk and Risk Management Policies We are exposed to market risk from changes in interest rates affecting our credit arrangements, including a variable-rate revolving credit facility and a fixed-rate mortgage loan agreement, which may adversely affect our results of operations and cash flows. We seek to minimize our interest rate risk through our day-to-day operating and financing activities. We do not engage in speculative or derivative financial or trading activities. A hypothetical 100 basis point adverse change (increase) in interest rates relating to our revolving credit facility would have decreased pre-tax income for the nine months ended October 30, 1999 and October 31, 1998 by approximately $67,000 and $102,000, respectively. Year 2000 Issues State of Readiness The Company began identifying its major systems and software vendors susceptible to Year 2000 issues during its preparedness evaluation in fiscal 1996. During fiscal 1997, a formal steering committee was assembled from throughout the Company to ensure a smooth transition into the Year 2000. The Company separated its Year 2000 efforts into five phases ("the Year 2000 Plan"): (i) awareness and identification of issues relating to the Year 2000; (ii) analysis of the impact on and risk to the Company's software, hardware and the services provided by the Company's vendors; (iii) performance of the work necessary to change or upgrade programs and files including installation of software and/or hardware; (iv) testing and certification of systems to assure compliance, including disaster recovery testing; and (v) implementation of systems. Because the Company uses a variety of internally-developed and third party software, certain tasks of various phases of the Year 2000 Plan have been and continue to be performed simultaneously. The Company successfully completed the upgrade of its major systems in the first quarter of fiscal 1999 and successfully tested such systems, including disaster recovery testing during the third quarter of fiscal 1999. Accordingly, the Company believes that it has substantially completed all five phases of the Year 2000 Plan and its Year 2000 simulation, but will continue to monitor its compliance during the remaining weeks of 1999 and into 2000. Like other companies, the Company relies upon third parties for its operations including, but not limited to, suppliers of merchandise, software, telephone service, electric power, water and financial services. As part of the Year 2000 Plan, the Company has a formal Year 2000 vendor compliance program in place. The Company has identified and assigned various levels of risk to third party vendors associated with the Company. Each vendor identified as critical to the operations of the Company has indicated that it already is, or expects to be, Year 2000 compliant in a timely manner. Cost The Company is primarily using internal resources to identify, test, upgrade and replace its Year 2000-sensitive systems. The Company's major systems, including its merchandise management system, its point-of-sale system, its inventory and general ledger system and its payroll system, were due for upgrades during 1999 in order to maintain vendor support. Therefore, the Company would have devoted much of the efforts of its internal resources to some or all of these projects through the normal course of business even if the Year 2000 issues had not existed. The Company continues to replace any non-compliant software and hardware as necessary. During fiscal 1999, the cost of these incidental software and hardware replacements is expected to be less than $75,000. Risk and Contingency Planning Although the Company has substantially completed all five phases of the Year 2000 Plan and will continue to monitor and test its systems through the remainder of the year, it gives no assurance that unforeseen difficulties which could alter the completion of the Year 2000 Plan will not occur from having performed incidental hardware and software replacements and while performing additional Year 2000 simulation tests. In addition, as part of the worst case scenario, if the Year 2000 Plan is not successful in a timely manner, the Company's third party vendors are not Year 2000 compliant in a timely manner and/or if the Company's supply of merchandise or ability to distribute its merchandise to its stores is adversely affected, the Year 2000 issues may have a material adverse impact on the results of operations, financial condition and cash flows of the Company. Also, possible interruptions in services such as electric power and telephone could occur in certain geographic areas, thereby temporarily closing some of the Company's stores. In addition, any general economic disruption caused by Year 2000 issues could adversely affect customer demand. The Company believes it has substantially mitigated its Year 2000 risk by having substantially completed its Year 2000 Plan and disaster recovery tests. The Company will continue to monitor its compliance during the remaining weeks of 1999 and into 2000. In addition, the Company has developed contingency plans for all areas considered to be critical to the operations of the Company. The Company intends to mitigate its risk of possible interruptions in service, such as electric power and telephone, by carrying business interruption insurance in its corporate offices, distribution center, and in its stores located in Puerto Rico and the U.S. Virgin Islands. In addition, the Company believes that such risk in the Company's stores located in the continental United States is mitigated by the diversity of its store locations. Effect of New Accounting Pronouncements The Financial Accounting Standards Board issued Statement of Financial Accounting Standards ("SFAS") 133, "Accounting for Derivative Instruments and Hedging Activities," which, as amended, is effective for the fiscal year ending February 2, 2002. This new standard requires recognition of all derivatives, including certain derivative instruments embedded in other contracts, as either assets or liabilities in the statement of financial position and measurement of those instruments at fair value. The Company is in the process of reviewing the effect, if any, that SFAS 133 will have on the Company's consolidated financial statements and disclosures. Private Securities Litigation Reform Act of 1995 All statements contained in this document as to future expectations and financial results including, but not limited to, statements containing the words "believes," "anticipates," "expects," and similar expressions, should be considered forward-looking statements subject to the safe harbor created by the Private Securities Litigation Reform Act of 1995. The Company cautions readers of this Quarterly Report on Form 10-Q that a number of important factors could cause the Company's actual results in fiscal 1999 and beyond to differ materially from those expressed in such forward-looking statements. These factors include, but are not limited to, general economic conditions and consumer demand; consumer preferences; weather patterns; competitive factors; pricing and promotional activities of competitors; the impact of excess retail capacity and the availability of desirable store locations on suitable terms; whether or not the Company's merchandising strategy to offer alternative categories of merchandise at alternative price points will continue to increase sales and operating results or increase and attract new customers; whether or not offering for sale new categories of merchandise including, but not limited to, menswear, will increase sales and operating results; the availability, selection and purchasing of attractive merchandise on favorable terms; credit availability, including adequate levels of credit support provided to certain of the Company's vendors by factors and insurance companies; import risks, including potential disruptions and duties, tariffs and quotas on imported merchandise; regulatory matters, including legislation affecting wage rates; whether or not the Company and its major suppliers will ready their computer systems to be "Year 2000 Compliant" in a timely manner; and other factors described in the Company's filings with the Securities and Exchange Commission from time to time. The Company does not undertake to publicly update or revise its forward-looking statements even if experience or future changes make it clear that any projected results expressed or implied therein will not be realized. Item 3. Quantitative and Qualitative Disclosures About Market Risk See required information contained within Item 2 of this Form 10-Q. PART II. OTHER INFORMATION Item 1. Legal Proceedings None Item 2. Changes in Securities and Use of Proceeds None Item 3. Defaults Upon Senior Securities None Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K: (a) Exhibits 10* Letter of Understanding regarding Non-Executive Chairman of the Board position and Consulting Agreement dated April 16, 1998 and Amendments to Letter of Understanding and Consulting Agreement dated December 22, 1998 and October 8, 1999 between the Registrant and Leonard Snyder. 15 Acknowledgement of Deloitte & Touche LLP, independent accountants 27 Financial Data Schedule (electronic filing only) (b) Reports on Form 8-K The Company was not required to file any report on Form 8-K for the three-month period ended October 30, 1999. -------------------------------- *Denotes a management contract or compensatory plan or agreement. SIGNATURES: Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ONE PRICE CLOTHING STORES, INC. (Registrant) Date: December 13, 1999 /s/ Larry I. Kelley Larry I. Kelley President and Chief Executive Officer (principal executive officer) Date: December 13, 1999 /s/ H. Dane Reynolds H. Dane Reynolds Senior Vice President and Chief Financial Officer (principal financial officer and principal accounting officer)
EX-10 2 LETTER OF UNDERSTANDING Exhibit 10 - Letter of Understanding regarding Non-Executive Chairman of the Board position and Consulting Agreement dated April 16, 1998 and Amendments to Letter of Understanding and Consulting Agreement dated December 22, 1998 and October 8, 1999 between the Registrant and Leonard Snyder April 16, 1998 Mr. Leonard Snyder 6260 N. Desert Moon Loop Tucson, Arizona 85750 Subject: Letter of Understanding Regarding Non-Executive Chairman Position Dear: Lenny: We are very pleased that you have agreed to serve as a consultant to, and member of, the Board of Directors of One Price Clothing Stores, Inc. ("Company"). In addition to welcoming you onto the Board, we would like to confirm our mutual understanding with respect to your serving in such positions, and, subsequently, as Non-Executive Chairman of the Board. I. Duties & Responsibilities - Upon execution of this agreement, your appointment as a member of the Board of Directors ("Board") of the Company, and Consultant to the Board, will become effective. Your name will be included in the Proxy as a nominee to serve as a member of the Board for 1998, with a statement of our intention to appoint you as Non-Executive Chairman. At the meeting of the Board, which will immediately follow the June 10 Annual Meeting, you will be appointed Non-Executive Chairman of the Board, at which time your Position, as a consultant to the Board will end. In your capacity as Non-Executive Chairman, you will have all the usual and customary duties and responsibilities of such position, including, among other things, (i) development (in conjunction with the CEO) of the agenda for meetings of the Board of Directors and the Annual Meeting of Stockholders; (ii) designation and appointment of members of the Committees of the Board and their Chairmen; and, (iii) establishment, with the Chairman of each Committee, of the Agenda for meetings of such Committee. As a consultant to the Board, and, subsequently as Non-Executive Chairman, you agree to use your best efforts, in support of the CEO, to ensure that the Company has in place a firm vision, solid management and sound merchandising and operating strategies, all designed to maximize sales, profits and growth opportunities. As appropriate, and again together with the CEO, you will address issues involving such areas as stockholder relations, Public audit, financing and financial relationships, and SEC matters. As Non-Executive Chairman, you will be charged in monitoring and, in conjunction with the Board, approving, both the short and long term goals of the Company. You agree to devote the time necessary to faithfully perform your duties as a member of, and Consultant to, the Board and as Non-Executive Chairman, in accordance with the functions outlined above, and further agree to avoid taking on other commitments which would jeopardize your ability to fully perform such duties or such other duties as may reasonably be assigned to you from time to time in agreement with the Board of Directors. For example, we understand that you currently serve as a member of the Board of Directors of other, non-competing, companies and agree that you are free to continue in such capacity, provided the time requirements do not interfere with your duties as described above. We have discussed and agree that you will not accept an operating position with another company during the term of this agreement, nor serve in the capacity of Chairman of the Board of another company during such period. II. Duration - So long as you reasonably fulfill your duties as described to the reasonable satisfaction of the Board, and subject to re-election as a Director by the stockholders of the Company, and to the By-Laws of the Company, you shall serve as Non-Executive Chairman of the Board for a period of three years from the date of your appointment, currently scheduled for June 10, 1998. The Company agrees to use its best efforts to assure your election and re-election to the Board. You may, of course, resign your appointment as Non-Executive Chairman, in which case your compensation for such position would end. You have agreed to give the Company at least 120 days advance written notice of such resignation. III. Compensation & Termination - Commencing upon your execution of this letter, for your services as a Consultant to the Board and member of the Board, you will receive total compensation per annum of $150,000, of which $20,000 represents Director's fees. Such sums shall be payable to you monthly, pro-rata, with the Consultant's fees to be paid promptly upon receipt by the Company of your monthly invoice for services rendered. Thereafter, upon your appointment as Non-Executive Chairman, and as a member of the Board, your duties as a Consultant will cease and, as both a Director and Non-Executive Chairman you shall receive total combined annual compensation of $150,000 per year, payable monthly, at $12,500 per month. In addition, as an inducement to your accepting to so serve, you will receive a grant of 80,000 stock options of One Price Common Stock, with an exercise price equal to the average of high and low sales price per share of such Common Stock as of the date of your execution of this agreement. The vesting schedule regarding such options shall be: one-third (1/3) vested and exercisable immediately upon registration of the underlying shares with the SEC on Form S-8 and transmittal to you of the required prospectus regarding your individual stock option plan (the "Initial Vesting Date"). Thereafter, the remaining two-thirds will vest in equal amounts (1/3 & 1/3, respectively) on the first and second anniversary of the Initial Vesting Date, all as more fully described in the prospectus to follow. You will also be entitled to a cash bonus of 25% of your total annual compensation of $150,000 for each year that the Company achieves its "stretch plan" in fiscal years 1998, 1999 and 2000. For example, the Company's "stretch plan" for fiscal 1998 is a pre-tax earnings number of $4,375,000, the equivalent of 25 cents per share. If the Company meets or exceeds this pre-tax earnings figure for fiscal 1998, you would be entitled to a cash bonus of $37,500, payable upon completion by the Company's public accountants, currently Deloitte & Touche, of their audit of the Company's books for such year and issuance of their auditor's letter. In the event that the Board terminates your appointment as Consultant or, subsequently, as Non-Executive Chairman, without "cause" (as defined below), and despite your having reasonably fulfilled your duties as described, then your monthly payments of $12,500 shall continue for the lesser of (a) one year from the date of such termination without "cause", or (b) the period remaining under your original three year appointment from the date of the next annual meeting of stockholders, scheduled for June 10, 1998 (the "Termination Payout Period"). For purposes of this agreement "Cause" shall mean fraud, theft, dishonesty, criminal activity, breach of the "Representation and Warranty" provision in section VII of this agreement, or failure, following 30 days written notice, to comply with the other provisions of this agreement, including the Confidentiality and Non-Compete provisions. In the event of termination without Cause, and in consideration for such termination payments, you agree to execute a general release at the time of any such termination in favor of the Board and the Company, in form and substance reasonably satisfactory to the Board. The compensation and benefits described above, are inclusive of all your duties and responsibilities as a Consultant to, and member of, the Board, and any services you may perform on any Committees of the Board, whether as a member or Chairman, as well as for your services as Non-Executive Chairman, following your appointment to such position. IV. Expenses - The Company agrees to reimburse you for your reasonable out-of-pocket expenses incurred in the performance of fulfilling your responsibilities as set forth above, upon submission of an expense report with supporting information, wherever possible. You agree to comply with the Company's policies regarding travel. V. Confidentiality - As a publicly traded company, One Price Clothing is subject to the rules and regulations of the SEC, and as a company listed on the NASDAQ, to the rules of the NASD. You understand that you will be deemed to be an "insider" for purposes of such rules and regulations. We are enclosing a copy of our "Insider Trading Policy" for your review and execution in this regard. In addition, you will be receiving highly confidential, non-public information regarding the Company and agree to keep all such non-public information strictly confidential. Documents provided, obtained or produced by you, as part of your initial due diligence regarding serving as a consultant, Board member or as Non-Executive Chairman, will remain the property of the Company and you agree to return such property upon the request of the Company, along with any copies. VI. Non-Compete - You have advised us that you are not currently, and will not, during the period of your services with the Company, and for a period of two years thereafter (one year thereafter in the case of termination without Cause), provide services, as an employee, consultant, advisor, or otherwise, to any other discount or off price retailer of women's apparel that is in significant competition with the Company either currently or at the time of the termination of your services for the Company. Similarly, you agree not to serve as a member of, or advisor or consultant to, the Board of Directors of any such company for a comparable period. You have agreed not to interfere, or attempt to interfere with, or disrupt, the relationship between the Company and any of its employees, customers, or suppliers. You agree not to employ, solicit the employment of, or cause to be employed, any of the Company's associates for a period of two years from the termination of your services with the Company, whether or not for Cause. VII. Representation & Warranty - You warrant and represent that you are not bound by any commitment, including any contract of employment or consultancy, which restricts or would preclude you from accepting to serve as a consultant to, or member of, the Board or as Non-Executive Chairman of the Board, or from fulfilling your obligations, as outlined in this letter. You agree to defend and indemnify the Company against any claims by third parties arising from your acceptance of such position(s) or the performance of your functions outlined above. VIII. Disputes - In the event of any dispute, we agree to first try to resolve such differences together, failing which we agree that such differences shall be settled by arbitration in accordance with the Commercial Arbitration Rules of the American Arbitration Association ("AAA"), and judgment, upon the award of the arbitrator, may be rendered in any court having jurisdiction. Written notice of a demand for arbitration must be mailed by either party to the other and sent to AAA by certified mail within ninety (90) days of the occurrence of the dispute. Failure to mail written notice of a demand for arbitration within such ninety (90) day period and comply with all procedural requirements set forth in the AAA's Commercial Arbitration Rules shall be an absolute bar to the institution of any proceedings and a waiver of the claimed disagreement. IX. Complete Agreement - You agree that this letter sets out our basic understanding with respect to your serving as Director and Consultant and, subsequently, as Non-Executive Chairman, and that no material change in such understanding will be effective unless agreed to in a written amendment signed by both parties. X. Successors & Assigns - This agreement is personal to you and you may not assign it. It shall, however, enure to the benefit of, and be binding upon, the Company's successors and assigns. If the foregoing meets with your approval, please sign the enclosed copy of this letter of understanding and return it in the enclosed, self-addressed and stamped envelope. Once again we are delighted to welcome you to One Price Clothing and look forward to working together with you. 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
October 8, 1999 Mr. Leonard M. Snyder 6260 N. Desert Moon Loop Tucson, Arizona 85750 Subject: Amendment to Letter of Understanding Regarding Non-Executive Chairman Position, dated April 16, 1998 Dear Lenny: On behalf of the Compensation Committee of the Board of Directors of One Price Clothing Stores, Inc. ("Company"), I am pleased to advise you that such Committee has approved an amendment to Section III of your original letter of understanding, dated April 16, 1998, as follows. Notwithstanding the final paragraph of Section III in such letter agreement which currently provides that the compensation and benefits described are all inclusive, the Committee has authorized you to participate in the Director Stock Option Plan, as amended ("Plan"), for the current Board year 1999-2000 and the Board year thereafter, 2000-2001. In all other respects your letter agreement remains in effect. For the current Board year 1999-2000 you have been awarded 5,000 shares of Restricted Stock at a price equal to the closing price of the Company's stock on the NASDAQ on October 7, 1999. We anticipate granting you an additional 5,000 shares of Restricted Stock next year for the Board year 2000-2001. This grant is subject to the terms and conditions of the Plan. Please acknowledge your receipt and agreement to such amendment, along with your acceptance of such grant, by signing below and returning such signed copy in the enclosed envelope to the Company's Corporate Secretary. Sincerely Yours, Laurie M. Shahon Chair - Compensation Committee Acknowledged, Agreed & Accepted: /s/ Leonard M. Snyder Dated: October 8, 1999 Leonard M. Snyder EX-15 3 ACKNOWLEDGEMENT OF DELOITTE & TOUCHE ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARIES EXHIBIT 15 - ACKNOWLEDGEMENT OF DELOITTE & TOUCHE LLP, INDEPENDENT ACCOUNTANTS One Price Clothing Stores, Inc. and Subsidiaries Duncan, South Carolina We have made a review, in accordance with standards established by the American Institute of Certified Public Accountants, of the unaudited interim condensed consolidated financial information of One Price Clothing Stores, Inc. and subsidiaries for the three-month and nine-month periods ended October 30, 1999 and October 31, 1998, as indicated in our report dated November 18, 1999; because we did not perform an audit, we expressed no opinion on that information. We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended October 30, 1999, is incorporated by reference in Registration Statements No. 33-20529, 33-31623, 33-48091, and 33-61803 on Form S-8 pertaining to the 1987 Stock Option Plan, the 1988 Stock Option Plan and 1991 Stock Option Plan, and the Director Stock Option Plan, respectively, of One Price Clothing Stores, Inc. We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act. DELOITTE & TOUCHE LLP Greenville, South Carolina December 13, 1999 EX-27 4 FINANCIAL DATA SCHEDULE
5 1,000 9-MOS JAN-29-2000 OCT-30-1999 4321 0 1883 0 55197 68747 64903 31794 106554 52180 0 0 0 105 43736 106554 255446 255446 162425 162425 24360 0 1374 8489 2161 6328 0 0 0 6328 0.61 0.60
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