ITEM 1. BUSINESS
General
One Price Clothing Stores, Inc. (the "Registrant" or the "Company") operates a growing chain of off-price retail women's and children's specialty stores offering a wide variety of first quality, contemporary, in-season apparel and accessories for the uniform retail price of $7. The Company purchases merchandise at heavily discounted prices in large quantities from a broad mix of manufacturers, jobbers, importers and other suppliers. Items offered in the Company's stores typically sell in department and specialty stores for $15 and up. The Company is able to acquire such merchandise at heavily discounted prices because of its willingness to purchase large quantities and odd lots and to buy goods later in the season than most other retailers. The Company's buyers are able to take advantage of situations such as over-production, order cancellations and manufacturers' needs to liquidate stock. This purchasing strategy allows the Company to obtain a price advantage and to react quickly to seasonal fashion preferences and weather conditions affecting consumer spending. It is the Company's policy to offer only first quality apparel; the Company does not purchase "seconds" or irregular merchandise from its suppliers. The Company increased its retail price from $6 to $7 on August 5, 1990, the only price increase since the Company began operations in 1984. At this time, management does not anticipate increasing the retail price in the near future.
Company History and Organization
The Company opened its first store in August 1984. The Company changed its corporate domicile from South Carolina to Delaware on April 9, 1987 and completed the initial public offering of its Common Stock on May 27, 1987. All information contained herein has been adjusted to reflect the issuance of 10.120811 shares of the Company's Common Stock, $.01 par value, (the "Common Stock") in exchange for each share of Common Stock then outstanding in connection with the Company's re- incorporation in Delaware, a 3-for-2 stock split effected in the form of a stock dividend paid on October 15, 1987, and a 3-for-2 stock split effected in the form of a stock dividend paid on April 29, 1994. On February 9, 1994, a wholly-owned subsidiary of the Company, One Price Clothing of Puerto Rico, Inc., was incorporated in Puerto Rico. It commenced operations on May 28, 1994. As used herein, unless the context otherwise indicates, the "Company" refers to One Price Clothing Stores, Inc., a Delaware corporation, to its immediate predecessor, a South Carolina corporation of the same name, to the South Carolina corporation's predecessor, a North Carolina corporation organized in 1984 under the name J. K. Apparel, Inc. and to One Price Clothing of Puerto Rico, Inc.
Industry Segments
The Company operates in only one industry segment. All of the Company's assets and significant revenues and pre-tax earnings relate to retail sales of women's and children's apparel and accessories to the general public through Company-operated stores. At the end of fiscal 1994, 1993 and 1992, the Company's total assets were $67,930,000, $64,201,000 and $50,718,000, respectively. Net sales were $283,326,000 in fiscal 1994, $234,698,000 in fiscal 1993 and $184,149,000 in fiscal 1992. The Company had net income of $4,389,000 in fiscal 1994, $8,724,000 in fiscal 1993 and $6,846,000 in fiscal 1992. Other than operations in Puerto Rico, the Company had no operations outside the continental United States at the end of fiscal 1994 and no export sales. Reference is hereby made to the financial statements included in Part II for more detailed information about the Company's assets.
Operations
The Company operates a chain of off-price retail women's and children's specialty stores offering a wide variety of first quality, contemporary, in-season apparel and accessories for the uniform retail price of $7. The Company registered the trademark "One Price" with the United States Patent and Trademark Office on June 5, 1990 for a five year period with the option to renew upon expiration. The Company intends to apply for renewal for this trademark. The Company applied for renewal and permanent registration of the trademark "Every Day Every Item" in June, 1994 with the United States Patent and Trademark Office. Approval of the application has not yet been obtained. The Company registered "Every Day Every Item", "Todos Los Dias Todos Los Articulos", "One Price" and "Un Solo Precio" in Mexico on June 12, 1993. All Mexican trademarks expire May 14, 2003, with the option to renew them. Management believes that the loss of such trademarks would not have a material adverse effect on the Company's financial position or results of operations.
The One Price Store. The Company's typical store has approximately 3,300 square feet, of which approximately 2,400 square feet is devoted to selling space. All of the Company's stores are located in leased facilities with convenient access to adequate parking or public transportation. At December 31, 1994, approximately 93% of the Company's stores were located in strip shopping centers and the remaining stores were located in malls. The Company does not franchise its stores.
The Company's stores are primarily located in or near communities with a population of at least 40,000 - 50,000 and above, as well as in large metropolitan areas. Most of the Company's stores are open seven days a week and typical hours of operation are from 10:00 a.m. until 7:00 or 9:00 p.m., Monday through Saturday, with shorter hours on Sunday. A typical store employs a full-time manager and two full-time assistant managers, and most stores employ up to ten additional part-time sales associates.
The Company's stores are designed for customer convenience and for attractive presentation of merchandise. All apparel is displayed on hangers and is organized by classification, style and color, promoting a pleasant shopping environment and customer convenience.
The Company's store operations department is headed by a Vice President of Stores who is assisted by two Directors of Store Operations and Regional and District Sales Managers. Each Regional Sales Manager is responsible for approximately 9 districts. Each District Sales Manager is responsible for approximately 10 to 12 stores and visits each store in his or her district on a regular or as-needed basis to provide assistance in promoting sales, training, store layout and merchandise presentation, and to monitor adherence to the Company's operational and management policies.
Store Locations and Expansion. At December 31, 1994, the Company operated 641 stores in 28 states, including states in the southwest, southeast, northeast, midwest and west coast regions of the United States, and in Puerto Rico.
The Company opened a net of 101 stores in fiscal 1994. The Company's expansion plans in 1995 include opening a net of approximately 80 stores in new and existing markets. The Company closed 27 underperforming stores in fiscal 1994, and closed 12 such stores in January and February of 1995. The Company anticipates closing additional stores during fiscal 1995 if warranted by the operating performance of such stores.
Purchasing. The Company's practice is to offer value to its customers by selling desirable women's and children's apparel and accessories at considerably lower prices than generally would be available from department stores and other specialty retailers. The Company purchases its merchandise at heavily discounted prices and on favorable terms from manufacturers, jobbers, importers and other vendors.
The Company typically is able to purchase merchandise from vendors at substantially discounted prices as a result of the following circumstances: the inability of a manufacturer or importer to dispose of merchandise through regular channels; the discontinuance of merchandise because of changes in color or style; over-production by manufacturers; cancellation of orders by conventional retail stores; the need of catalog retailers to dispose of inventories of unordered catalog merchandise; and manufacturers' need for liquidity. The Company's ability and willingness to purchase in large quantities and in odd-lot or broken-size assortments and its reputation for reliability in the industry provide the Company with purchasing advantages. Typically, the Company buys the majority of its merchandise close to and during each selling season, later than department stores and other specialty retailers. This purchasing strategy permits the Company to react to fashion trends and opportunistic developments during a selling season. The Company may also purchase selected merchandise in advance of a selling season.
During fiscal 1994, the Company purchased merchandise from approximately 870 vendors, including manufacturers, jobbers, importers and other vendors. No vendor accounted for more than 10% of the Company's total purchases for the year.
Although there can be no assurance that the Company will be able to continue to acquire sufficient quantities of first quality merchandise at such low prices on favorable terms, the Company continues to add new vendors and believes that adequate sources of first quality merchandise exist at appropriate price levels to permit the Company to continue its expansion program. The Company does not maintain long-term or exclusive purchase commitments or arrangements with any vendor.
Corporate Offices and Distribution Center. The Company's Corporate Offices and Distribution Center are located in Duncan, South Carolina. With the exception of functions performed by certain merchandise buyers, regional directors of real estate, district and regional sales managers, and certain administrative functions performed in Puerto Rico, substantially all purchasing, accounting and other administrative functions are centralized at the Corporate Offices.
Substantially all merchandise is shipped directly from vendors to the Company's Distribution Center where the goods are processed and sent to the Company's stores. The majority of shipments to stores are made by common carriers; however, shipments local to the Company's Distribution Center are made in tractor-trailers leased and operated by the Company.
Merchandising. The Company's merchandising strategy emphasizes contemporary and in-season apparel for juniors, misses, large-sized women and children. The Company's target customers are value- and fashion-conscious women, primarily in lower and middle income brackets. The Company offers only first quality merchandise at the retail price of $7 per item and emphasizes the value of its merchandise compared to similar merchandise sold elsewhere at higher prices. Women's apparel sold by the Company includes contemporary sportswear such as knit tops, pants, blouses, shirts, skirts, sweaters, jackets and shorts. In addition, the Company occasionally sells other types of merchandise such as dresses, swimsuits, jumpsuits, raincoats, lingerie and other related items. The Company also offers selected accessories such as scarves, socks, belts, handbags, jewelry and fragrances, in addition to apparel. Accessory sales as a percentage of net sales were 10.7% in fiscal 1994, 11.6% in fiscal 1993 and 11.7% in fiscal 1992. Sales of children's clothing comprised less than 10% of net sales in each of the last three fiscal years.
Management Information System. The Company's management information system, featuring point-of-sale cash registers and a computerized inventory management system, permits management to review each store's inventory on a daily and a weekly basis thereby enabling the Company to tailor its purchasing strategies and merchandise shipments to stores based on customer demand.
The Company is currently implementing a new warehouse management system to improve the management of the location and flow of merchandise within the Distribution Center. Implementation of the new system is expected to be completed during the summer of 1995.
Seasonality
The Company's sales and operating results are seasonal, as is typical in the women's retail apparel industry. The Company's sales historically have been lowest during the first quarter (January-March) and the third quarter (July-September) and highest during the second quarter (April-June) and the fourth quarter (October-December). Reduced sales volumes in first and third quarters coincide with the transition of seasonal merchandise. Therefore, increased levels of markdowns generally occur during these transitional periods and operating expenses, when expressed as a percentage of net sales, are typically higher. Management expects this seasonality to continue.
Working Capital Requirements
Historically, the Company's primary needs for liquidity and capital have been to fund the cost of its new store expansion, the related growth in merchandise inventories, and the expansion of the Corporate Offices and Distribution Center. These needs have been met through cash provided by operations and the Company's available line of credit. The Company had an amended agreement with a bank for a $20,000,000 unsecured line of credit and a $10,000,000 letter of credit facility, expiring April 30, 1995. This agreement was superseded on March 16, 1995 when the Company and the bank executed a credit agreement for a $25,000,000 unsecured line of credit and a $15,000,000 letter of credit facility which will expire May 31, 1996. The agreement contains certain covenants described in Item 7 of this report. The Company has never used long-term debt or capital leases as a source of capital; however, the Company may use such permanent financing, if deemed by management to be in the best interest of the Company.
Merchandise inventories are typically purchased on credit, including the use of letters of credit. Letters of credit are primarily used to purchase merchandise inventories from foreign suppliers. All such purchases are paid in United States dollars; thus, the Company is not subject to foreign currency risks. As a result of the Company's opportunistic buying strategy and to ensure that an adequate supply of merchandise is available for shipment to its stores, the Company may, at times, invest a significant amount of its working capital in merchandise inventories.
Revenues from retail sales are recognized at the time of the sale. The Company accepts cash, checks, and, in selected stores, certain major credit cards. All stores offer a liberal exchange and return policy. Merchandise returns are recorded in the period the merchandise is returned by the customer. The amount of unrecorded merchandise returns is not significant to the Company's financial position or results of operations.
Customers
No material part of the business of the Company is dependent upon a single customer or a few customers.
Competition
The women's retail apparel industry is highly competitive. In order to compete effectively, the Company is dependent upon its ability to purchase merchandise at substantial discounts. The Company does not know of any direct competition from other specialty apparel retailers having a $7 one-price concept. However, the Company does compete with department stores, specialty stores, discount stores, other off-price retailers and manufacturer-owned outlet stores, many of which are owned by large national or regional chains with substantially greater resources than the Company. There can be no assurance that other retailers with substantially greater financial resources than the Company will not adopt a purchasing and marketing concept similar to that of the Company. Management believes that the primary competitive factors in the retail apparel industry are price, quality, variety of merchandise, good site selection and low cost of operation. The Company believes that it is well positioned in all of these areas to compete in its markets.
Environmental Factors
The Company is not aware of any federal, state or local environmental regulations which will materially affect its operations or competitive position or require material capital expenditures. The Company cannot predict, however, the impact of possible future legislation or regulation on its operations.
Employees
At December 31, 1994, the Company had approximately 4,900 employees, of which approximately 48 percent were full-time employees. The Company, like other retailers, experiences a high turnover rate of part-time store employees but has generally not experienced difficulties in hiring qualified personnel. None of the Company's employees are covered by a collective bargaining agreement, and management believes that the Company's relationship with its employees is good.
ITEM 2.

ITEM 2. PROPERTIES
The Company leases all of its store locations. At December 31, 1994, the Company had 641 stores operating in 28 states and Puerto Rico. The Company leases its stores under operating leases generally with initial terms of five to ten years and with one to two renewal option periods of five years each. The leases typically contain kickout provisions based on that store's annual sales volume or the shopping center's occupancy. The leases generally provide for increased rents resulting from increases in operating costs and property taxes. Certain of the leases provide contingent or percentage rentals based upon sales volume, and other stores are leased on a month-to-month basis. To date, the Company has not experienced difficulty in obtaining leases for suitable locations for its stores on satisfactory terms. Approximately 64 existing store leases expire or have initial lease terms containing lessee renewal options which may be exercised during fiscal 1995. Management believes that the Company will not experience a significant increase in lease expense as a result of exercising renewal options or negotiating additional lease terms for such locations. The following is a list of store locations by state:
The Company's Corporate Offices and Distribution Center are located in Duncan, South Carolina on approximately 82 acres which are owned by the Company. In fiscal 1993, the Company completed a 28,000 square foot expansion of its Corporate Offices. The expansion increased the total size of the Corporate Offices and Distribution Center to approximately 390,000 square feet at January 1, 1994. Additionally, the Company is currently expanding the Distribution Center by approximately 90,000 square feet. With the addition of certain equipment and systems in fiscal 1995, the expanded Distribution Center should be able to support the Company's growth over the next several years.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS
On September 22, 1994, two separate lawsuits making certain securities and common law allegations and seeking unspecified damages were filed in the United States District Court for the District of South Carolina, Columbia Division against the Company and its Chairman and Chief Executive Officer Henry D. Jacobs, Jr. A motion to consolidate these cases is pending. The lawsuits, which seek certification as class actions, allege that the Chairman and Chief Executive Officer and the Company made materially false, misleading and untimely projections and statements on earnings. The plaintiffs in these cases, sought to be consolidated, are Leonard Pitten, Katherine Hogan and Anthony J. Mallozzi. The Company has moved to dismiss the lawsuits, and a ruling on that motion is currently pending. Although the Company cannot predict the outcome of these lawsuits at this time, management intends to vigorously defend these actions and believes that as a result of its legal defenses and insurance arrangements, the final outcome should not have a material adverse effect on the Company's consolidated financial condition or results of operations.
Occasionally the Company is a defendant in legal actions involving claims arising in the normal course of its business. The Company believes that, as a result of its legal defenses and insurance arrangements, none of these other actions presently pending, if decided adversely, would have a material adverse effect on its financial position and results of operations.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth quarter of the Company's fiscal year.
PART II
ITEM 5.

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND 	 RELATED SHAREHOLDER MATTERS
The Company's common stock is traded under the symbol ONPR in the National Market System of NASDAQ. As of March 23, 1995, there were approximately 430 shareholders of record.
The Company has never paid cash dividends since its inception. The Company's credit agreement contains covenants which, among other things, restricts the Company from paying dividends without prior approval. Currently, the Board of Directors intends to continue its policy of retaining earnings for operations and expansion of the business.
The quarterly high and low sales prices as quoted by NASDAQ are shown below. Prices have been adjusted to reflect a 3-for-2 stock split effected in the form of a dividend to shareholders of record on April 15, 1994.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA
The following table presents selected financial data for the Company for each of the five fiscal years ended December 29, 1990 through December 31, 1994. All of the selected financial data are extracted from the Company's audited financial statements and should be read in conjunction with the financial statements and the notes thereto included under Item 8

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Shareholders of One Price Clothing Stores, Inc. Duncan, South Carolina
We have audited the accompanying consolidated balance sheets of One Price Clothing Stores, Inc. and subsidiary as of December 31, 1994 and January 1, 1994, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three fiscal years in the period ended December 31, 1994. Our audits also included the financial statement schedule listed in the Index at Item 14 (d). These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 1994 and January 1, 1994, and the results of its operations and its cash flows for each of the three fiscal years in the period ended December 31, 1994 in conformity with generally accepted accounting principles. Also, in our opinion, such financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly in all material respects the information set forth therein.
DELOITTE & TOUCHE LLP Greenville, South Carolina
February 10, 1995 (February 28, 1995 as to Note B)

		 ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY 		 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 1994
NOTE A - Summary of Significant Accounting Policies
Business: One Price Clothing Stores, Inc. and subsidiary (the "Company") operates a chain of off-price retail women's and children's apparel stores in the United States and Puerto Rico. The Company operated 641, 540, and 446 stores at the end of fiscal 1994, 1993 and 1992, respectively.
Principles of Consolidation: The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.
Cash and Cash Equivalents: The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.
Merchandise Inventories: Merchandise inventories are stated at the lower of average unit cost or market. Average unit cost is determined by the first-in, first-out (FIFO) method.
Depreciation: Depreciation is computed by the straight-line method, based on estimated useful lives of 10 years for land improvements, 33 to 40 years for buildings, 5 to 10 years for leasehold improvements and 3 to 15 years for fixtures and equipment.
Income Taxes: The Company had accounted for income taxes since its inception using the principles of Accounting Principle Board Opinion No. 11. Effective January 3, 1993, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for Income Taxes". The cumulative effect of adopting SFAS No. 109 had no material effect on the consolidated financial statements.
Under SFAS No. 109, deferred income taxes represent the future income tax effect of temporary differences between the book and tax bases of the Company's assets and liabilities, assuming they will be realized and settled at the amount reported in the Company's financial statements.
Trademarks: The cost of trademarks is being amortized over their expected useful lives of 10 years using the straight-line method.
Revenue Recognition: Revenues from retail sales are recognized at the time of the sale. Merchandise returns are recorded in the period the merchandise is returned by the customer. The amount of unrecorded merchandise returns is not significant to the Company's consolidated financial position or results of operations.
Store Preopening Costs: Costs associated with the opening of new stores are expensed as incurred.
Store Closing Costs: At the time management commits to close a store, a provision is made and operations are charged for any remaining store lease obligation, any estimated write-down of property and equipment, and any estimated future operating loss.
Income Per Common Share: Net income per common share is computed by dividing net income by the weighted average number of shares of Common Stock and dilutive common stock equivalent shares for stock options (Note E) outstanding during the period.
Fiscal Year: The Company's fiscal year ends on the Saturday nearest December 31. Fiscal years 1994 and 1993 each consisted of 52 weeks, while fiscal year 1992 consisted of 53 weeks.
Reclassifications: Certain amounts included in prior years' financial statements have been reclassified to conform to the fiscal 1994 presentation.
NOTE B - Credit Facilities
The Company has an amended agreement with a bank which provides for a $20,000,000 line of credit and a $10,000,000 letter of credit facility, expiring April 30, 1995. The agreement provides for a 0.20% commitment fee per annum on the line of credit. Borrowings against the line of credit are unsecured and bear interest at the Company's option of the bank's prime interest rate, the adjusted LIBOR rate plus 1.25% or the bank's discount rate for Bankers Acceptances plus 1.00%. The credit facilities contain certain financial covenants which, among other things, have the effect of limiting amounts available for dividends to approximately $9,217,000 at December 31, 1994, and prohibit the Company from encumbering or disposing of a material amount of assets. The Company must also maintain certain ratios regarding net worth, leverage and fixed charges. The maximum amounts outstanding under the line of credit during fiscal 1994 and 1993 were approximately $16,421,000 and $8,616,000, respectively. The average amounts outstanding under the line of credit were $3,165,000 during fiscal 1994 and $2,057,000 during fiscal 1993. The weighted average interest rate was 7.6% in fiscal 1994 and 5.6% in fiscal 1993. There were no amounts outstanding against the Company's line of credit at December 31, 1994 or January 1, 1994. The Company had outstanding letters of credit totaling approximately $7,656,000 at December 31, 1994.
On February 28, 1995, the Company and the bank executed a commitment letter which amends and restates their agreement to provide for a $25,000,000 line of credit and a $15,000,000 letter of credit facility. The revised agreement, when executed, will provide for a 0.25% commitment fee per annum on the line of credit and will expire May 31, 1996. Borrowings against the line of credit will be unsecured and will bear interest at the Company's option of a Base Rate (defined as the higher of the bank's prime interest rate or the Federal Funds rate plus 0.50%) or the adjusted LIBOR rate plus 1.50%. The amended credit facilities will contain certain covenants which, among other things, restrict or limit the ability of the Company to incur indebtedness, or encumber or dispose of assets. In addition, the Company will not be able to repurchase its Common Stock or pay dividends without prior approval. The Company must also maintain certain ratios regarding net worth, leverage and fixed charges.
Presented below are the elements which comprise deferred income tax assets and liabilities:
	 The net deferred income tax asset is recognized in the accompanying balance sheets as follows:
	 The Company's subsidiary has a net operating loss carryforward of 	 approximately $696,000 which is available to offset future taxable 	 income in Puerto Rico through fiscal 2001. Due to the subsidiary's 	 short operating history, management cannot be assured that the 	 deferred income tax asset related to the operating loss 	 carryforward will be realized. Accordingly, a valuation allowance 	 for 100% of the deferred income tax asset has been established. 	 Otherwise, scheduled reversals of temporary differences and 	 anticipated future taxable income should be sufficient to offset 	 scheduled losses arising from the net deferred income tax assets.
NOTE D - Operating Leases The Company generally leases its stores under operating leases with initial terms of five to ten years with one to two renewal option periods of five years each. The leases generally provide for increased rents resulting from increases in operating costs and property taxes. Certain of the leases provide for contingent or percentage rentals based upon sales volume and others are leased on a month-to-month basis.
In addition, the Company has operating leases for automobiles, trucks, trailers and certain other equipment with one to ten year terms. The leases for trucks and trailers also provide for contingent rentals based upon miles driven.
Future minimum rental commitments as of December 31, 1994 for noncancelable leases, are approximately as follows:
	 Total rental expense for operating leases was as follows:
	 NOTE E - Employee Benefits
	 Stock Option Plans: The Company has three stock option plans (the 	 1991, 1988, and 1987 Plans) which provide for grants to certain 	 officers, directors, and key employees of stock options to purchase 	 shares of Common Stock of the Company. Options granted under the 	 plans expire ten years from the date of grant and, to date, have 	 been granted at prices not less than the fair market value at the 	 date of grant. Effective October 27, 1988, the Board of Directors 	 retired all unissued options under the Company's 1987 Plan. 	 Options cancelled subsequent to October 27, 1988 under the 1987 	 Plan are retired. Options cancelled under the 1991 and 1988 Plans 	 are available for reissuance.
	 Information with respect to the stock option plans is as follows:
	 At December 31, 1994, a total of 892,000 shares of Common Stock 	 were reserved for issuance under the Company's option plans.
	 Retirement Plan: Effective July 1, 1992, the Company established a 	 401(k) and profit-sharing plan, the One Price Clothing Stores, Inc. 	 Retirement Plan (the "Plan"). All employees in the United States 	 who are 21 years of age or older with at least one year of service 	 are eligible to participate in the Plan. In fiscal 1994, the 	 Company was obligated under the Plan to make a matching 	 contribution of 25% of each participant's contribution with a 	 maximum matching contribution of 1.25% of the participant's base 	 compensation. Effective January 1995, the Company's contribution 	 obligation increased to 50% of each participant's contribution with 	 a maximum contribution of 2.5% of the participant's base 	 compensation. In addition, the Company may make an annual 	 discretionary contribution on behalf of the participants. Employer 	 contributions (approximately $132,000, $101,000, and $44,000 in 	 fiscal 1994, 1993, and 1992, respectively) vest ratably over five 	 years.
	 Stock Purchase Plan: The Company adopted a Stock Purchase Plan, 	 effective March 1995, that allows participating employees to 	 purchase, through payroll deductions, shares of the Company's 	 Common Stock at prevailing market prices. All full-time associates 	 who are 18 years of age or older with at least six months of 	 service are eligible to participate in the Stock Purchase Plan. 	 The Stock Purchase Plan provides that participants may authorize 	 the Company to withhold from net earnings and deposit such amounts 	 with an independent custodian. The custodian will purchase Common 	 Stock of the Company at prevailing market prices and distribute the 	 shares purchased to the participants upon request. The Company 	 will pay expenses associated with the purchase of the Common Stock 	 and administration of the Stock Purchase Plan.
	 NOTE F - Related Party Transactions
	 In fiscal 1992, the Company entered into a deferred compensation 	 agreement with a former executive officer who is currently a member 	 of the Company's Board of Directors. The agreement provides for 	 monthly payments aggregating $75,000 annually (including interest) 	 through July 2002. In fiscal 1992, the present value of the 	 obligation, approximately $493,000, was charged to selling, general 	 and administrative expenses. 	 	 NOTE G - Shareholders' Equity
	 In March 1994, the Company declared a 3-for-2 stock split effected 	 in the form of a stock dividend payable April 29, 1994 to 	 shareholders of record as of the close of business on April 15, 	 1994. Accordingly, Common Stock outstanding, the weighted average 	 number of common and common equivalent shares and per share amounts 	 have been retroactively adjusted to give effect to the stock split.
	 The Company adopted a Shareholder Rights Plan in November 1994. 	 Each shareholder of record on November 15, 1994 is entitled to one 	 Right for each share of Common Stock held on such date. Each Right 	 entitles the registered holder to purchase from the Company one 	 half share of Common Stock at a specified price. The Rights become 	 exercisable only upon the occurrence of certain conditions set 	 forth in the Shareholder Rights Plan relating to the acquisition of 	 20% or more of the outstanding shares of Common Stock.
	 NOTE H - Commitments and Contingencies 	 	 On September 22, 1994, two shareholders filed separate lawsuits 	 making certain securities and common law allegations and seeking 	 unspecified damages against the Company and its Chairman and Chief 	 Executive Officer. The lawsuits, which seek certification as class 	 actions, allege that the Chairman and Chief Executive Officer and 	 the Company made materially false, misleading and untimely 	 projections and statements on earnings. Although the Company 	 cannot predict the likely outcome of these lawsuits at this time, 	 management intends to vigorously defend these actions and believes 	 that as a result of its legal defenses and insurance arrangements, 	 the final outcome should not have a material adverse effect on the 	 Company's consolidated financial condition or results of 	 operations.
	 At December 31, 1994, the Company had commitments of approximately 	 $1,300,000 related to the addition of a new warehouse management 	 system and the expansion of the Distribution Center.
ITEM 9:

ITEM 9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING 	 AND FINANCIAL DISCLOSURE
There are no matters which are required to be reported under Item 9.
	 PART III
	 ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
	 The information required under this item is incorporated herein 	 by reference to the sections entitled "Election of Directors" 	 and "Executive Officers of the Company" of the Company's 	 definitive Proxy Statement (the "Proxy Statement") filed with 	 the Securities and Exchange Commission in connection with the 	 Annual Meeting of Shareholders to be held April 19, 1995.
	 ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION
	 The information required under this item is incorporated herein 	 by reference to the sections entitled "Compensation Committee 	 Interlocks and Insider Participation", "Compensation of 	 Executive Officers", "Stock Options", "Employment Contracts and 	 Deferred Compensation Arrangements", "Compensation Committee 	 Report on Executive Compensation", "Performance Graph" and 	 "Election of Directors - Directors' Fees" of the Proxy 	 Statement.
	 ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 	 MANAGEMENT
	 The information required under this item is incorporated herein 	 by reference to the sections entitled "Security Ownership of Certain 	 Beneficial Owners and Management", "Election of Directors" and 	 "Executive Officers of the Company" of the Proxy Statement.
	 ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
	 The information required in this item is incorporated herein by 	 reference to the section entitled "Compensation Committee Interlocks 	 and Insider Participation" and "Employment Contracts and Deferred 	 Compensation Arrangements" of the Proxy Statement.
	 PART IV
	 ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND 			 REPORTS ON FORM 8-K
		 (a) 1. Financial Statements
			 The following financial statements of One 			 Price Clothing Stores, Inc are included in 			 Part II, Item 8: 			 				 Independent Auditors' Report
				 Consolidated Balance Sheets as of 				 December 31, 1994 and January 1, 1994
				 Consolidated Statements of Income for 				 the years ended December 31, 1994, 				 January 1, 1994 and January 2, 1993
				 Consolidated Statements of 				 Shareholders' Equity for the years 				 ended December 31, 1994, January 1, 				 1994 and January 2, 1993
				 Consolidated Statements of Cash Flows 				 for the years ended December 31, 1994, 				 January 1, 1994 and January 2, 1993
				 Notes to Consolidated Financial 				 Statements
		 (a) 2. Financial Statement Schedule
			 The following financial statement schedule of 			 One Price Clothing Stores, Inc. is included in 			 Item 14 (d):
				 Schedule II -- Valuation and 				 Qualifying Accounts.

			 Schedules not listed above have been omitted 			 because they are not applicable or the information 			 is included in the financial statements or notes 			 thereto.
		 (a) 3. Exhibits including those incorporated by 	 reference:
		 Exhibit 		 Number Description
		 3(a) Certificate of Incorporation of the 				 Registrant, as amended through April 				 1987: Incorporated by reference to 				 exhibit of the same number in 				 Registrant's Registration Statement on 				 Form S-1, filed April 10, 1987, (File No. 				 33-13321) ("the S-1").
		 3(a)(1) Certificate of Amendment of Certificate 				 of Incorporation of the Registrant: 				 Incorporated by reference to exhibit of 				 same number in Registrant's Annual Report 				 on Form 10-K for the year ended January 				 1, 1994, (File No. 0-15385) ("the 1993 				 Form 10-K").
		 3(b) Restated By-Laws of the Registrant, as of 				 July 22, 1992 and amended as of July 20, 				 1994.
		 4(a) See Exhibits 3(a), 3(a)(1), and 3(b).
		 4(b) Specimen of Certificate of the 				 Registrant's Common Stock: Incorporated 				 by reference to Exhibit 1 of the 				 Registrant's Registration Statement on 				 Form 8-A filed with the Securities and 				 Exchange Commission on June 23, 1987, 				 (File No. 0-15385).
		 4(c) One Price Clothing Stores, Inc. and Wachovia Bank of North Carolina, N. A. as 				 Rights Agent Shareholder Rights Agreement 				 dated November 3, 1994: Incorporated by 				 reference to Exhibit 2 to the 				 Registrant's Form 8-K filed November 10, 				 1994 (File No. 0-15385).
		 Material Contracts -- Executive Compensation Plans and Arrangements: 		 10(a)* Stock Option Plan of the Registrant dated 			 February 20, 1987 and related forms of 				 Incentive and Non-qualified Stock Option 				 Agreements: Previously filed as exhibit 				 10(d) of the S-1.
		 10(b)* Stock Option Plan of the Registrant dated 				 December 12, 1988 and related forms of 				 Incentive and Non-qualified Stock Option 				 Agreements: Incorporated by reference to 				 exhibit 10(a) in the Registrant's Annual 				 Report on Form 10-K for the year ended 				 December 31, 1988, (File No. 0-15385) 				 ("the 1988 Form 10-K").
		 10(c)* One Price Clothing Stores, Inc. 1991 		 Stock Option Plan: Incorporated by 				 reference to exhibit 10(b) in the 				 Registrant's Annual Report on Form 10-K 				 for the year ended December 28, 1991, 				 (File No. 0-15385) ("the 1991 Form 10- 				 K").
		 10(d)* Summary of Officer Bonus Plan: Previously 			 filed as exhibit of the same number in 				 Registrant's Annual Report on Form 10-K 				 for the year ended January 2, 1993, (File 				 No. 0-15385) ("the 1992 Form 10-K").
		 10(e)* Form of Employment Agreement between 				 Registrant and Henry D. Jacobs, Jr.: 				 Previously filed as exhibit 10(j) in the 				 1988 Form 10-K.
		 10(f)* Employment Agreement dated February 1, 				 1991 between the Registrant and Ethan S. 				 Shapiro: Incorporated by reference to 				 exhibit 10(m) in the Registrant's Annual 				 Report on Form 10-K for the year ended 				 December 29, 1990, (File No. 0-15385) 				 ("the 1990 Form 10-K").
	 10(g)* Key man term insurance policy, issued 	 			 February 20, 1993, on the life of Henry 				 D. Jacobs, Jr.: Previously filed as 				 exhibit of the same number in the 1992 				 Form 10-K.
		 10(h)* Employment Agreement dated January 16, 				 1995 between the Registrant and Stephen 			 A. Feldman.
		 10(i)* Disability Income Policy for the benefit 			 of Henry D. Jacobs, Jr.: Previously filed 				 as exhibit of the same number in the 1992 				 Form 10-K.
		 10(j)* Disability Income Policy for the benefit 				 of Ethan S. Shapiro: Previously filed as 				 exhibit of the same number in the 1992 				 Form 10-K.
		 10(k)* Agreement between the Registrant and Jane 				 R. Shapiro, Trustee of the Ethan S. 				 Shapiro Life Insurance Trust: Previously 				 filed as exhibit of the same number in 				 the 1992 Form 10-K.
		 10(l)* Agreement dated June 24, 1992 between the 				 Registrant and Raymond S. Waters: 				 Previously filed as exhibit of the same 				 number in the 1992 Form 10-K.
		 10(m)* Proposed Directors' Stock Option Plan to 				 be effective April 19, 1995 and submitted 				 for shareholders' approval at the Annual 				 Shareholders' Meeting to be held April 			 19, 1995.
		 Material Contracts -- Other:
		 10(n) The Corporate Plan for Retirement Profit 				 Sharing / 401 (k) Plan - A Fidelity 				 Prototype Plan Non-Standardized Adoption 				 Agreement 002, Basic Plan No. 07, as 				 amended September 1, 1994
		 10(o) Letter of agreement for an unsecured 			 $15,000,000 line of credit and 				 $15,000,000 letter of credit facility by 				 and between the Registrant and 				 NationsBank dated April 14, 1994 and 				 unsecured Promissory Note of the 				 Registrant to NationsBank dated April 14, 				 1994: Incorporated herein by reference to 				 exhibit 10 in the Registrant's quarterly 				 report on Form 10-Q for the quarter ended 				 April 2, 1994, (File No. 0-15385).
		 10(p) First Amendment to Letter of agreement, 				 dated December 31, 1994, by and between 				 the Registrant and NationsBank and 				 unsecured Promissory Note of the 				 Registrant to NationsBank dated February 				 27, 1995.
		 10(q) Credit Agreement dated March 16, 1995 by 				 and between the Registrant and 				 NationsBank (as agent) for an unsecured 				 $25,000,000 line of credit facility and a 				 $15,000,000 letter of credit facility.
		 11 Statement regarding computation of per 				 share earnings.
		 21 Subsidiary of the Registrant. 		 		 23 Consent of Deloitte & Touche LLP.
		 27 Financial Data Schedule (electronic 				 filing only).
		 ---------------------------------------
		 * Denotes a management contract or compensatory plan or 		 agreement.
(b) Reports on Form 8-K.
	 On October 21, 1994, the Company filed a report on Form 8-K 	 dated September 29, 1994 to report the legal proceedings 	 discussed in Item 3.
	 On November 10, 1994, the Company filed a report on Form 8-K 	 dated November 3, 1994 to report the adoption of Shareholder 	 Rights Plan by the Board of Directors.
	 No other reports on Form 8-K were filed during the last 	 quarter of the period covered by this report.
(c) Exhibits.
	 The response to this portion of Item 14 is submitted as a 	 separate section of this report.
(d) Financial Statement Schedules.
	 The response to this portion of Item 14 is submitted as a 	 separate section of this report.
			 ONE PRICE CLOTHING STORES, INC. AND SUBSIDIARY 				 EXHIBIT INDEX

Exhibit 	 Number Description
	 3(a) Certificate of Incorporation of the 				 Registrant, as amended through April 				 1987: Incorporated by reference to 				 exhibit of the same number in 				 Registrant's Registration Statement on 				 Form S-1, filed April 10, 1987, (File No. 				 33-13321) ("the S-1").
	 3(a)(1) Certificate of Amendment of Certificate 				 of Incorporation of the Registrant: 				 Incorporated by reference to exhibit of 				 same number in Registrant's Annual Report 				 on Form 10-K for the year ended January 				 1, 1994, (File No. 0-15385) ("the 1993 				 Form 10-K").
	 3(b) Restated By-Laws of the Registrant, as of 				 July 22, 1992 and amended as of July 20, 				 1994.
	 4(a) See Exhibits 3(a), 3(a)(1), and 3(b).
	 	 4(b) Specimen of Certificate of the 				 Registrant's Common Stock: Incorporated 				 by reference to Exhibit 1 of the 				 Registrant's Registration Statement on 				 Form 8-A filed with the Securities and 				 Exchange Commission on June 23, 1987, 				 (File No. 0-15385).
	 4(c) One Price Clothing Stores, Inc. and 				 Wachovia Bank of North Carolina, N. A. as 				 Rights Agent Shareholder Rights Agreement 				 dated November 3, 1994: Incorporated by 				 reference to Exhibit 2 to the 				 Registrant's Form 8-K filed November 10, 				 1994 (File No. 0-15385).
	 Material Contracts -- Executive Compensation Plans and 	 Arrangements:
	 10(a)* Stock Option Plan of the Registrant dated 				 February 20, 1987 and related forms of 				 Incentive and Non-qualified Stock Option 				 Agreements: Previously filed as exhibit 				 10(d) of the S-1.
	 10(b)* Stock Option Plan of the Registrant dated 				 December 12, 1988 and related forms of 				 Incentive and Non-qualified Stock Option 				 Agreements: Incorporated by reference to 				 exhibit 10(a) in the Registrant's Annual 				 Report on Form 10-K for the year ended 				 December 31, 1988, (File No. 0-15385) 				 ("the 1988 Form 10-K").
	 10(c)* One Price Clothing Stores, Inc. 1991 				 Stock Option Plan: Incorporated by 				 reference to exhibit 10(b) in the 				 Registrant's Annual Report on Form 10-K 				 for the year ended December 28, 1991, 				 (File No. 0-15385) ("the 1991 Form 10- 				 K").
	 10(d)* Summary of Officer Bonus Plan: Previously 				 filed as exhibit of the same number in 				 Registrant's Annual Report on Form 10-K 				 for the year ended January 2, 1993, (File 				 No. 0-15385) ("the 1992 Form 10-K").
	 10(e)* Form of Employment Agreement between 				 Registrant and Henry D. Jacobs, Jr.: 				 Previously filed as exhibit 10(j) in the 				 1988 Form 10-K.
	 10(f)* Employment Agreement dated February 1, 	 			 1991 between the Registrant and Ethan S. 				 Shapiro: Incorporated by reference to 				 exhibit 10(m) in the Registrant's Annual 				 Report on Form 10-K for the year ended 				 December 29, 1990, (File No. 0-15385) 				 ("the 1990 Form 10-K").
	 10(g)* Key man term insurance policy, issued 				 February 20, 1993, on the life of Henry 				 D. Jacobs, Jr.: Previously filed as 				 exhibit of the same number in the 1992 				 Form 10-K.
	 10(h)* Employment Agreement dated January 16, 				 1995 between the Registrant and Stephen 				 A. Feldman.
	 10(i)* Disability Income Policy for the benefit 				 of Henry D. Jacobs, Jr.: Previously filed 				 as exhibit of the same number in the 1992 				 Form 10-K.
	 10(j)* Disability Income Policy for the benefit 				 of Ethan S. Shapiro: Previously filed as 				 exhibit of the same number in the 1992 				 Form 10-K.
	 10(k)* Agreement between the Registrant and Jane 				 R. Shapiro, Trustee of the Ethan S. 				 Shapiro Life Insurance Trust: Previously 				 filed as exhibit of the same number in 				 the 1992 Form 10-K.
	 10(l)* Agreement dated June 24, 1992 between the 				 Registrant and Raymond S. Waters: 				 Previously filed as exhibit of the same 				 number in the 1992 Form 10-K.
	 10(m)* Proposed Directors' Stock Option Plan to 				 be effective April 19, 1995 and submitted 				 for shareholders' approval at the Annual 				 Shareholders' Meeting to be held April 				 19, 1995.
	 Material Contracts -- Other:
	 10(n) The Corporate Plan for Retirement Profit 				 Sharing / 401(k) Plan - A Fidelity 		 Prototype Plan Non-Standardized Adoption 				 Agreement 002, Basic Plan No. 07, as 				 amended September 1, 1994
	 10(o) Letter of agreement for an unsecured 				 $15,000,000 line of credit and 				 $15,000,000 letter of credit facility by 				 and between the Registrant and 				 NationsBank dated April 14, 1994 and 				 unsecured Promissory Note of the 				 Registrant to NationsBank dated April 14, 				 1994: Incorporated herein by reference to 				 exhibit 10 in the Registrant's quarterly 				 report on Form 10-Q for the quarter ended 				 April 2, 1994, (File No. 0-15385).
	 10(p) First Amendment to Letter of agreement, 			 dated December 31, 1994, by and between 				 the Registrant and NationsBank and 				 unsecured Promissory Note of the 				 Registrant to NationsBank dated February 				 27, 1995.
	 10(q) Credit Agreement dated March 16, 1995 by 				 and between the Registrant and 				 NationsBank (as agent) for an unsecured 				 $25,000,000 line of credit facility and a 				 $15,000,000 letter of credit facility.
	 11 Statement regarding computation of per 				 share earnings.
	 21 Subsidiary of the Registrant.
	 23 Consent of Deloitte & Touche LLP.
	 27 Financial Data Schedule (electronic 				 filing only).
				 	 --------------------------------------
* Denotes a management contract or compensatory plan or agreement.
(b) Reports on Form 8-K.
	 On October 21, 1994, the Company filed a report on Form 8-K dated 	 September 29, 1994 to report the legal proceedings discussed in 	 Item 3.
	 On November 10, 1994, the Company filed a report on Form 8-K 	 dated November 3, 1994 to report the adoption of Shareholder 	 Rights Plan by the Board of Directors. No other reports on 	 Form 8-K were filed during the last quarter of the period 	 covered by this report.
(c) Exhibits.
	 The response to this portion of Item 14 is submitted as a 	 separate section of this report.
(d) Financial Statement Schedules.
	 The response to this portion of Item 14 is submitted as a 	 separate section of this report.


ITEM 1. BUSINESS
Hechinger Company (the "Company") is the successor to a business started in 1911 by Sidney L. Hechinger. The Company is a leading specialty retailer providing products and services for the care, repair, remodelling and maintenance of the home and garden. The Company currently serves the home improvement industry through two operating subsidiaries: Hechinger Stores Company, operating 72 home center stores located primarily in the mid-Atlantic region and Home Quarters Warehouse, Inc., operating 56 stores located primarily in the eastern and central parts of the United States.
Hechinger stores are customer-service driven, offering expert advice and a full range of building material and home improvement merchandise in facilities containing on average approximately 70,000 square feet of space under roof. Home Quarters Warehouse stores, with their large-scale merchandise presentation, produce high sales volume by emphasizing low pricing and quality service. Home Quarters Warehouse stores bring a wide assortment of building materials and home improvement merchandise to do-it-yourselfers, and professional contractors in brightly-lit, uncluttered facilities containing on average approximately 90,000 square feet under roof.
PRODUCTS
All of the Company's stores offer for sale a large selection of lumber, building materials, hardware and tools, paint, garden supplies, electrical and plumbing supplies and other items related to the home improvement market.
The following table sets forth the percentage of sales accounted for by the merchandise categories:
Many of the items sold in the Company's stores are nationally advertised, brand name products. The Company also offers some private label items such as garden equipment and supplies, and paint. The Company may add private label items to its merchandise in those areas where there are no major national brands or where management deems it an effective way to meet price competition in a particular product line.
The Company's merchandise is purchased from approximately 1000 suppliers. The Company believes it has good relationships with its suppliers and does not consider itself dependent upon any single source for its merchandise.
MARKETING
The Company is continuing its expansion of Home Quarters Warehouse subsidiary. In July 1993, the Company opened a new 115,000 square foot store in Chesapeake, Virginia. This store incorporates many new features, including: a 5,000 square foot greenhouse and garden center, three design centers, installation services for major items and a tool rental program. In addition, the new Home Quarters store has a dedicated Contractor's desk to handle the special needs of professional contractors and commercial property owners, including its own entrance and loading area. The new store also offers
"Kids Quarters", a supervised on-site child care facility for children ages three to eight and a dedicated classroom called "HQ University" for how-to clinics. Of the nine new Home Quarters stores opened since July 1993, eight have these new features. The Company is planning to implement these new features in all of its new stores to be opened in 1994 and in its existing Home Quarters stores where possible.
The majority of the Company's sales are to individuals. Employees are trained to help the do-it-yourself customer make his or her purchases and solve technical problems related to home repair, maintenance and improvement work.
The Company employs an advertising program through the regular use of newspaper and direct mail pieces. A "catabook", which is compact enough to carry along as a shopping reference and serves as an "idea" book with an index and large type prices, is heavily utilized. Advertisements feature the stores' wide selection and values. The Company also employs television and radio advertising where deemed effective. The Company emphasizes competitive pricing with its policy being to meet or beat the regular or sale prices of all major competitors. In addition, the Company offers its customers a liberal return policy.
The Company hosts how-to clinics throughout the year at various stores. At these clinics, trained employees, manufacturers' representatives and, at times, nationally recognized experts, demonstrate products and conduct classes on major home improvement projects.
The Company offers a private label credit card program pursuant to which credit is extended to its customers by third party financial institutions. The Company also accepts Visa, MasterCard and Discover in all stores and American Express in its Home Quarters stores. For the fiscal year ended January 29, 1994 credit card sales account for 50% of the Company's total sales.
EXPANSION PROGRAM
The following tables set forth the number of stores operated by the Company and the aggregate amount of square feet of store space in such stores for the specified periods:
In 1994, the Company intends to open approximately 11 new Home Quarters Warehouse stores, including two relocations, and approximately two new Hechinger stores, although the precise number will depend upon, among other things, the availability of suitable locations and prevailing economic conditions. In addition, approximately 19 Home Quarters stores and approximately six Hechinger stores are intended to be remodelled.
COMPETITION
The business of the Company is highly competitive. The Company competes in each of its market areas with other home center chains, national chains of general merchandise stores and local hardware stores, some of which have greater financing resources than the Company.
The extent of the Company's competition varies by geographic area. New competitors have entered several of the Company's existing markets and those targeted for future development, and established competitors are expanding in certain of those markets, reflecting the high level of growth anticipated for the industry. The Company's pricing strategy against the introductory pricing of new competition in certain markets may lower gross margins.
The Company believes that it is in a strong competitive position. The Company believes that it occupies a leading position in most of its established market areas, reflecting the quality of its trained personnel, breadth and depth of merchandising, pricing, advertising policies and store size, location and condition. The Company believes that its ability to devote substantial capital resources to the operation and expansion of its business will enable it to remain competitive in the industry.
EMPLOYEES
The Company has approximately 18,000 employees, approximately half of whom are employed on a part-time basis. The Company conducts comprehensive employee training programs. These training programs have enabled the Company to promote from within many current area supervisors, store managers and merchandisers. The Company believes its employee relations are satisfactory.
ITEM 2.

ITEM 2. PROPERTIES
Hechinger stores currently average approximately 70,000 square feet under roof and an additional 22,000 square
feet of outdoor selling and storage space. The Home Quarters Warehouse stores currently average approximately 90,000 square feet under roof and an additional 28,000 square feet of outdoor selling and storage space.
As of January 29, 1994, the Company owned 23 stores and leased the remaining stores. The Company believes that all its facilities, both owned and leased, are in good condition and well maintained. Expiration dates of the leases range from 1994 to 2023. Almost all leases contain renewal clauses or continue on a year-to-year basis after their respective expiration dates. Twelve of the store sites are leased from an affiliate.
Hechinger stores are serviced, in part, from the Company's modern warehouse and distribution facility in Landover, Maryland, which has approximately 640,000 square feet under roof. The Landover distribution facility and the Hechinger headquarters office facility in Landover, Maryland together have approximately 177,000 square feet of executive and administrative office space. Home Quarters is serviced directly by their suppliers and as such, requires only limited distribution facilities. Home Quarters has approximately 71,000 square feet of office space in Virginia Beach, Virginia.
ITEM 3.

ITEM 3. LEGAL PROCEEDINGS.
None.
ITEM 4.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
Pursuant to General Instruction G(3) of Form 10-K, the following list is included as an unnumbered Item in Part I of this Report in lieu of being included in its entirety in the Proxy Statement.
The following table sets forth certain information regarding the Company's executive officers:
John W. Hechinger Jr. and S. Ross Hechinger are sons of John W. Hechinger.
Executive officers are elected by the board of directors of the Company at its first meeting held after each Annual Meeting of Stockholders to serve until their successors are chosen and qualified, or as otherwise provided in the Company's By-laws.
PART II
ITEM 5.

ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS.
Pursuant to General Instruction G(2) of Form 10-K, the information called for by this item is hereby incorporated by reference from page 23 of the Company's Annual Report to Stockholders for the fiscal year ended January 29, 1994.
ITEM 6.

ITEM 6. SELECTED FINANCIAL DATA.
Pursuant to General Instruction G(2) of Form 10-K, the information called for by this item is hereby incorporated by reference from page 1 of the Company's Annual Report to Stockholders for the fiscal year ended January 29, 1994.
ITEM 7.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
Pursuant to General Instruction G(2) of Form 10-K, the information called for by this item is hereby incorporated by reference from pages 9 through 11 of the Company's Annual Report to Stockholders for the fiscal year ended January 29, 1994.
ITEM 8.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Pursuant to General Instruction G(2) of Form 10-K, the information called for by this item is hereby incorporated by reference from pages 12 through 23 of the Company's Annual Report to Stockholders for the fiscal year ended January 29, 1994.
ITEM 9.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
Not Applicable
PART III
ITEM 10.

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item regarding directors is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report. Information regarding the Company's executive officers is set forth above in the unnumbered Item following Item 4 of Part I of this Report.
ITEM 11.

ITEM 11. EXECUTIVE COMPENSATION.
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
ITEM 12.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
ITEM 13.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
Pursuant to General Instruction G(3) of Form 10-K, the information called for by this item is hereby incorporated by reference from the Company's definitive proxy statement to be filed pursuant to Regulation 14A not later than 120 days after the end of the fiscal year covered by this report.
PART IV
ITEM 14.

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
(a) The following documents are filed as a part of this Report:
1. Financial Statements. The following Consolidated Financial Statements of Hechinger Company and subsidiaries are incorporated by reference to the pages indicated in Annual Report to Stockholders for the fiscal year ended January 29, 1994:
2. Financial Statement Schedules. The following consolidated financial statement schedules of Hechinger Company and subsidiaries for the year ended January 29, 1994, January 30, 1993 and February 1, 1992 are filed as part of this Report and should be read in conjunction with the Consolidated Financial Statements of Hechinger Company:
Schedules not listed above have been omitted because they are not applicable or are not required or the information required to be set forth therein is included in the Consolidated Financial Statements or Notes thereto.
3. Exhibits.
EXHIBIT NUMBER DOCUMENT - - -------------- --------
(b) Reports on Form 8-K.
The Current Report on Form 8-K dated October 15, 1993 was to file Ernst & Young's consent to the reference to that firm under the caption "Experts" in the Prospectus Supplement dated October 21, 1993 for the issuance of Senior Notes.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Pursuant to the requirements of the Securities and Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
HECHINGER COMPANY AND SUBSIDIARIES ANNUAL REPORT ON FORM 10-K YEAR ENDED JANUARY 29, 1994
INDEX TO SCHEDULES AND EXHIBITS
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE I - MARKETABLE SECURITIES YEAR ENDED JANUARY 29, 1994 (in thousands)
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE I - MARKETABLE SECURITIES YEAR ENDED JANUARY 29, 1994 (in thousands)
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE V - PROPERTY, PLANT AND EQUIPMENT (in thousands)
(a) During the year ended February 1, 1992, the Hechinger Stores Company changed its method of transporting merchandise from its Landover, Maryland distribution facility to its stores, from using its own fleet to utilizing commerial carriers. Dispositions during the year were primarily the result of the Company disposing of this fleet of delivery vehicles. (b) Substantially all additions represent ordinary expenditures for new stores and store remodeling. (c) Sale and leaseback transactions. (d) Substantially all other retirements were primarily the result of store closings. (e) Transfer of construction in progress for assets placed in service.
Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the various assets, which in general are:
Classification Estimated Useful Life
Buildings Generally 30 to 45 years. Leasehold improvements The term of the lease. In some longer term leases, up to 21 years. Furniture, fixtures and equipment 5 to 10 years. Capital leases The term of the lease.
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE VI - ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY, PLANT AND EQUIPMENT (in thousands)
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE VIII - VALUATION AND QUALIFYING ACCOUNTS (in thousands)
(a) In 1992, the Company sold the entire Hechinger Stores' accounts receivable.
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE IX - SHORT-TERM BORROWINGS (in thousands)
Notes:
(a) At February 1, 1992, January 30, 1993 and January 29, 1994 there were no short-term borrowings. (b) The weighted average interest rate during the period was computed by dividing the actual interest expense by average short-term debt outstanding. (c) Note payable to bank represents borrowings under a line of credit borrowing arrangement. (d) There were no short-term borrowings during the year ended January 30, 1993 and January 29, 1994.
HECHINGER COMPANY AND SUBSIDIARIES SCHEDULE X - SUPPLEMENTARY EARNINGS STATEMENT INFORMATION (in thousands)
Amounts for depreciation and amortization of intangible assets, taxes other than payroll and income taxes, and royalties are not presented as such amounts are less than 1% of total sales and revenues.


ITEM 1. Business.
(a) TRINOVA Corporation ("TRINOVA") is a world leader in the manufacture and distribution of engineered components and systems for industry, sold through its operating companies, Aeroquip Corporation ("Aeroquip") and Vickers, Incorporated ("Vickers"), to the industrial, automotive, and aerospace and defense markets.
On September 22, 1994, Joseph C. Farrell, Chairman of the Board, President and Chief Executive Officer of The Pittston Company, was elected to the Board of Directors of TRINOVA.
No business acquisitions were completed in 1994.
On February 26, 1994, TRINOVA sold the assets, net of certain liabilities, of its electric motor business located in Wichita, Kansas; Blue Ash, Ohio; and Maysville, Kentucky. The business was sold as part of TRINOVA's ongoing program to eliminate businesses and product lines which do not fit its strategies.
(b) "Note 13 - Business Segments" on pages 80-81 of Exhibit (13) filed hereunder is incorporated herein by reference.
(c) A description of the business done and intended to be done by TRINOVA and its subsidiaries in each industry segment follows.
(1) INDUSTRIAL: Aeroquip manufactures and sells all pressure ranges of hose and fittings; adapters; self-sealing couplings; and molded, extruded and co-extruded plastic products.
Vickers manufactures and sells hydraulic, electrohydraulic, pneumatic and electronic control devices; piston and vane pumps and motors; servovalves and controls; hydraulic and pneumatic cylinders; hydraulic power packages; electric motors and drives; hydraulic and lubrication filtration; and fluid- evaluation services.
Principal markets for these products include construction, mining, logging and farm equipment; machine tool; process industries; electrical machinery, air conditioning/refrigeration; appliances and communications equipment; electronics; lift truck; material handling; plant maintenance; and housing and commercial construction. Sales are dispersed geographically across a broad customer base. Products are sold directly to original equipment manufacturers ("OEMs") and through a worldwide network of distributors serving aftermarket and small- and medium-sized OEM customers.
The industrial business is highly competitive in terms of price, quality and service. TRINOVA believes that Aeroquip has significant market position worldwide for industrial hose, fittings, couplings and adapters. TRINOVA also believes that Vickers has significant market position worldwide for mobile and industrial vane pumps, solenoid-operated directional valves, mobile hydraulic control valves for forklift trucks, cartridge valve systems, piston pumps for high-horsepower agricultural tractors, hydraulic tilt-train
technology, and utility vehicle hydraulic equipment. TRINOVA serves many customers in the highly diverse and fragmented industrial markets. Due to the diversity of TRINOVA's products, there are a large number of competitors scattered across a wide variety of market segments, with no single competitor competing in each of TRINOVA's product lines.
The order backlog for the industrial business was $185 million as of December 31, 1994, compared to $148.4 million as of December 31, 1993. Substantially all of the December 31, 1994, backlog is expected to be filled in 1995.
(2) AUTOMOTIVE: Aeroquip manufactures and sells air conditioning, power steering, oil and transmission cooler, and fuel line components and assemblies; body side moldings; decorative bumper strips; roof moldings; spoilers; rocker panel claddings; engine components; louvers and trim plates; interior trim; garnish moldings; structural products such as bumper beams; interior engine covers; instrument clusters; radio bezels; and display products.
The automotive operations of Aeroquip serve worldwide automobile, light truck and van manufacturers. Products are primarily sold directly to manufacturers. Approximately 52 percent of worldwide sales of TRINOVA's automotive business are made to three major U.S. automobile manufacturers.
The automotive industry is highly competitive in terms of price, quality and service. Aeroquip is a preferred supplier to the major U.S. and European automobile manufacturers. Competition for products in the automotive industry is very fragmented.
(3) AEROSPACE & DEFENSE: Aeroquip manufactures and sells hose, fittings, couplings, swivels, V-band couplings, fuel-handling products and high-pressure tube fittings.
Vickers manufactures and sells fixed- and variable-displacement pumps; fuel pumps; hydraulic motors and motor packages; motor pumps and generator packages; valves and valve packages; electrohydraulic and electromechanical actuators; electric motor packages; and sensors and monitoring devices.
The aerospace & defense operations of Aeroquip and Vickers serve worldwide commercial aerospace and military markets including commercial aircraft, air defense, cargo handling, combat and support vehicles, commuter aircraft, engines, marine, military aircraft, military weaponry, missiles and naval machinery. Products are sold directly to OEM businesses and the Government and through a distributor network. Approximately 19 percent of TRINOVA's aerospace & defense business sales are made to two major U.S. airframe manufacturers.
The aerospace & defense business is highly competitive in terms of price, quality and service. TRINOVA believes that Aeroquip has significant market position worldwide for aerospace hose, fittings and quick-disconnect couplings. TRINOVA also believes Vickers has significant market position worldwide for aerospace piston pumps and motors, and lube system diagnostics.
TRINOVA serves a large number of customers in the diverse and fragmented aerospace and defense markets. Due to the diversity of TRINOVA's products, there are a large number of competitors scattered across a wide variety of market segments, with no single competitor competing in each of TRINOVA's product lines.
The order backlog for the aerospace & defense business was $267 million as of December 31, 1994, compared to $278.4 million as of December 31, 1993. Approximately 22 percent of the December 31, 1994, backlog is not expected to be filled in 1995 because certain contracts require deliveries after 1995. Approximately 34 percent of the December 31, 1994, backlog represents direct Government contracts or subcontracts on Government programs, which are subject to termination for convenience by the Government.
(4) OTHER INFORMATION: TRINOVA and its subsidiaries are generally not dependent upon any one source for raw materials or purchased components essential to their businesses, and it is believed that such raw materials and components will be available in adequate quantities to meet anticipated production schedules.
Patents owned by TRINOVA are considered important to the conduct of its present businesses. TRINOVA is licensed under a number of patents, none of which are considered material to its businesses. TRINOVA is the owner of a number of U.S. and non-U.S. trademark registrations.
TRINOVA devotes engineering, research and development efforts to new products and improvement of existing products and production processes. During 1994, 1993 and 1992, TRINOVA spent a total of $55.5 million, $55.3 million and $65.3 million, respectively, on these efforts.
TRINOVA employed 15,024 persons at December 31, 1994.
(d) "Note 14 - Non-U.S. Operations" on page 82 of Exhibit (13) filed hereunder is incorporated herein by reference. TRINOVA believes the risk attendant to non-U.S. operations, which are primarily in developed countries, is not significantly greater than that attendant to its U.S. operations.
ITEM 2.

ITEM 2. Properties.
A description of TRINOVA's principal properties follows. Except as otherwise indicated, all properties are owned by TRINOVA or its subsidiaries.
TRINOVA's executive offices (leased) are located in Maumee, Ohio.
INDUSTRIAL: Aeroquip Corporation has executive and administrative offices in Maumee, Ohio (leased); technical centers in Ann Arbor, Michigan (leased) and Maumee, Ohio (leased); and manufacturing facilities throughout the United States and abroad, including plants in Mountain Home, Arkansas; Fitzgerald, Georgia; New Haven, Indiana; Williamsport, Maryland; Forest City and Norwood, North Carolina; Van Wert, Ohio; Gainesboro, Tennessee; Bassett, Virginia; Wausau, Wisconsin; Rio de Janeiro, Brazil; Chambray-Les-Tours, France; Baden- Baden and Hann-Muenden, Germany; Livorno, Italy; and Cardiff, United Kingdom. Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad.
Vickers, Incorporated has executive and administrative offices in Maumee, Ohio (leased); a technical center in Rochester Hills (leased), Michigan; and manufacturing facilities throughout the United States and abroad, including plants in Decatur, Alabama; Searcy, Arkansas; Carol Stream and Petersburg (leased), Illinois; Grand Blanc and Jackson, Michigan; Omaha, Nebraska; White City, Oregon; Sao Paulo, Brazil; Bad Homburg, Germany; Casella and Vignate (leased), Italy; and Havant and Telford (leased), United Kingdom. Vickers also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad.
AUTOMOTIVE: Aeroquip has executive and administrative offices in Maumee, Ohio (leased); technical and administrative offices in Mt. Clemens, Michigan (leased); and manufacturing facilities throughout the United States and abroad, including plants in Atlanta, Georgia; Kendallville, Indiana; Henderson, Kentucky; Clinton Township (leased), Mt. Clemens, Port Huron, Spring Arbor and Sterling Heights, Michigan; Mooresville, North Carolina; Fremont, Ohio; Livingston, Tennessee; Baden-Baden, Beienheim (leased) and Frankfurt (leased), Germany; Chihuahua, Mexico; Alcala de Henares, Spain; and Brierley Hill, United Kingdom. Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad.
AEROSPACE & DEFENSE: Aeroquip Corporation has executive and administrative offices in Maumee, Ohio (leased); administrative offices in Jackson, Michigan; and manufacturing facilities throughout the United States and abroad, including plants in Toccoa, Georgia; Jackson, Michigan; Middlesex, North Carolina; Pau, France (leased); and Lakeside, United Kingdom (leased). Aeroquip also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad.
Vickers, Incorporated has executive and administrative offices in Maumee, Ohio (leased); and manufacturing facilities throughout the United States and abroad, including plants in Los Angeles, California; Grand Rapids, Michigan; Jackson, Mississippi; Hi-Nella, New Jersey; Glenolden, Pennsylvania; Bad Homburg, Germany; and Bedhampton, United Kingdom. Vickers also owns or leases warehouse, assembly and distribution facilities and sales offices in the United States and abroad.
ITEM 3.

ITEM 3. Legal Proceedings.
As previously reported, on March 26, 1992, the United States Environmental Protection Agency ("USEPA") issued an Administrative Order ("106 Order") under Section 106 of the Comprehensive Environmental Response, Compensation, and Liability Act ("CERCLA") to TRINOVA's subsidiary, Aeroquip Corporation ("Aeroquip"), and five other Potentially Responsible Parties ("PRPs") relative to the San Fernando Valley Burbank Operable Unit ("BOU"), involving groundwater contamination. (Reference is made to Part II, Item 1, of TRINOVA's Quarterly Report on Form 10-Q for the quarter ended June 30, 1994.) The 106 Order requires the six PRPs to design and construct a water blending facility at a cost now estimated to be approximately $4.8 million. TRINOVA's portion of any such cost is estimated to be 18.33 percent based on a cost-sharing agreement among the six PRPs which was executed by TRINOVA on July 6, 1992. Construction of the blending facility is expected to be complete in March 1995.
Also related to the BOU, on May 15, 1994, USEPA issued to Lockheed Corporation ("Lockheed"), Aeroquip and other PRPs a Special Notice of Liability under CERCLA for the remaining 18 years of operation and maintenance (O&M) costs associated with the blending facility, as well as a water treatment facility constructed by Lockheed under its BOU Consent Decree with USEPA. The Special Notice of Liability also covers USEPA's past response costs. The cost of the O&M phase is not known at this time; USEPA past costs claimed against the PRPs are estimated at $12 million for the entire San Fernando Site, which includes other operable units in addition to the BOU. On April 26, 1994, Lockheed filed a complaint against Aeroquip and 105 other PRPs seeking contribution toward costs Lockheed incurred to construct the water treatment facility. Negotiations are under way among the PRPs and Lockheed to arrive at an equitable and reasonable allocation with respect to the BOU costs. Recovery by Lockheed, if any, against Aeroquip is not expected to be significant.
As previously reported, on November 13, 1992, the USEPA, Region IX, issued a General Notice of Liability letter to TRINOVA's subsidiary, Sterer Engineering and Manufacturing Company, now known as the Fluid Control and Actuation Division of Vickers, Incorporated ("Vickers"). (Reference is made to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1993.) The letter notified Vickers of potential liability, as defined by Section 107(a) of CERCLA, that it may incur with respect to the San Fernando Valley Glendale South Operable Unit, involving groundwater contamination. The USEPA issued its Record of Decision ("ROD") on June 18, 1993. The interim remedy proposed in the ROD for both the North and South Operable Units is projected by the USEPA to cost approximately $45 million. Twenty-seven PRPs, including Vickers, entered into an Administrative Order on Consent with the USEPA on March 21, 1994, to conduct the Remedial Design ("RD") phase of the interim remedy. The estimated cost of the RD phase is $4.7 million. Vickers' portion of the RD costs is estimated to be 2.79 percent based on an interim allocation agreement among the PRPs.
As previously reported, on July 31, 1992, the Maine Department of Environmental Protection issued an Administrative Enforcement Order to TRINOVA and its wholly owned subsidiaries, Aeroquip Corporation and Sterling Engineered Products Inc. ("Sterling"), as well as one other party, Pioneer Plastics Corporation ("Pioneer Plastics"), (collectively the "respondents"), pursuant to Title 38, section 1304(12) of the Maine Revised Statutes. (Reference is made to Part I, Item 3, of TRINOVA's Annual Report on Form 10-K for the year ended December 31, 1993.) The Order, which was issued without a prior hearing, required the respondents to conduct a complete Phase II environmental assessment of alleged soil and groundwater contamination at a manufacturing site in Auburn, Maine, which was formerly owned by Sterling and is now owned by Pioneer Plastics. The Order further required the respondents to remediate any environmental contamination identified in the Phase II assessment. On May 5, 1993, a Compliance Order on Consent ("COC") was entered into by the State of Maine, Sterling and Pioneer Plastics. The COC replaces and revokes the Order issued July 31, 1992. The COC requires Sterling to conduct a site investigation and to develop and implement a remedial work plan. The cost to Sterling to conduct the COC site investigation and develop the remedial work plan is estimated to be approximately $850,000. Sterling's remediation costs are undetermined at this time because the remedial work plan has not been completed.
TRINOVA and certain subsidiaries are defendants in various lawsuits. While the ultimate outcome of these lawsuits and the above environmental matters cannot now be predicted, management is of the opinion, based on the facts now known to it, that the liability, if any, in these lawsuits (to the extent not provided for by insurance or otherwise) and the above environmental matters will not have a material adverse effect upon TRINOVA's consolidated financial position.
ITEM 4.

ITEM 4. Submission of Matters to a Vote of Security Holders.
None.
EXECUTIVE OFFICERS OF THE REGISTRANT
The names, ages, positions and recent business experience of the executive officers of TRINOVA as of February 21, 1995, are listed below. Officers of TRINOVA are elected annually in April by the Board of Directors at the organization meeting immediately following the annual meeting of shareholders.
NAME AND POSITION AGE BUSINESS EXPERIENCE
Darryl F. Allen, 51 Chairman of the Board, President Chairman of the Board, and Chief Executive Officer of President and Chief TRINOVA since 1991. President and Executive Officer Chief Executive Officer of TRINOVA from 1986 to 1991.
William R. Ammann, 53 Vice President-Administration Vice President-Administration and Treasurer of TRINOVA since and Treasurer April 1992. Vice President - Administration of TRINOVA from 1983 to April 1992.
Warren N. Bimblick 40 Vice President-Corporate Vice President-Corporate Communications of TRINOVA since Communications 1990. Director-Investor Relations and Corporate Communications of TRINOVA from 1985 to 1990.
James E. Kline, 53 Vice President & General Counsel Vice President and of TRINOVA since 1989. General Counsel
James McKee, 63 Executive Vice President of Executive Vice President of TRINOVA since 1989 and President TRINOVA and President of of Vickers, Incorporated since Vickers, Incorporated 1987.
James M. Oathout, 50 Secretary and Associate General Secretary and Counsel of TRINOVA since 1988. Associate General Counsel
NAME AND POSITION AGE BUSINESS EXPERIENCE
Gregory R. Papp, 48 Corporate Controller of TRINOVA Corporate Controller since February 1993. Vice President and Controller of Aeroquip Corporation from July 1991 to February 1993. Vice President Planning and Control - Automotive Products Group of Aeroquip Corporation from January 1991 to July 1991. Group Controller - Garrett Automotive Group of Allied- Signal Corporation from 1987 to 1991.
David M. Risley, 50 Vice President - Finance and Chief Vice President - Finance Financial Officer of TRINOVA since and Chief Financial Officer October 1992. Group Vice President - Administration and Control of Aeroquip Corporation from 1991 to October 1992. Vice President and Controller of Aeroquip Corporation from 1990 to 1991.
Howard M. Selland, 51 Executive Vice President of Executive Vice President of TRINOVA and President of Aeroquip TRINOVA and President of Corporation since 1989. Aeroquip Corporation
Philip G. Simonds, 54 Vice President-Taxation of TRINOVA Vice President-Taxation since 1983.
There are no family relationships among the persons named above.
PART II
ITEM 5.

ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters.
"Stock Exchanges," "Stock Ownership," "Dividend Information," "Quarterly Common Stock Information" and "Dividend Payments per Share of Common Stock" on page 84 of Exhibit (13) filed hereunder are incorporated herein by reference.
ITEM 6.

ITEM 6. Selected Financial Data.
"11-Year Summary of Selected Financial Data" on pages 49-51 of Exhibit (13) filed hereunder is incorporated herein by reference.
ITEM 7.

ITEM 7. Management's Discussion and Analysis of Financial Condition and Results of Operation.
"Analysis of Operations" and "Liquidity, Working Capital and Capital Investment" on pages 52-58 of Exhibit (13) filed hereunder are incorporated herein by reference.
ITEM 8.

ITEM 8. Financial Statements and Supplementary Data.
"Quarterly Results of Operations (Unaudited)" and the consolidated financial statements of the registrant and its subsidiaries on pages 59-83 of Exhibit (13) filed hereunder are incorporated herein by reference.
ITEM 9.

ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.
PART III
ITEM 10.

ITEM 10. Directors and Officers of the Registrant.
"Election of Directors" and "Section 16(a) Reporting Delinquencies" on pages 1-2 and 9, respectively, of the proxy statement for the annual meeting to be held on April 20, 1995, are incorporated herein by reference. Information regarding executive officers is set forth in Part I of this report under the caption "Executive Officers of the Registrant."
ITEM 11.

ITEM 11. Executive Compensation.
"Compensation of Directors" and "Executive Compensation" (excluding material under the captions "TRINOVA Stock Performance Graph" and "Board Compensation Committee Report on Executive Compensation") on pages 3 and 5-9, respectively, of the proxy statement for the annual meeting to be held on April 20, 1995, are incorporated herein by reference.
ITEM 12.

ITEM 12. Security Ownership of Certain Beneficial Owners and Management.
"Security Ownership" on page 4 of the proxy statement for the annual meeting to be held on April 20, 1995, is incorporated herein by reference.
ITEM 13.

ITEM 13. Certain Relationships and Related Transactions.
None.
PART IV
ITEM 14.

ITEM 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K.
(a) The following documents are filed as a part of this report.
(1) The following consolidated financial statements of TRINOVA and its subsidiaries, included on pages 61-83 of Exhibit (13) filed hereunder are incorporated by reference in Item 8.
Report of Ernst & Young LLP, Independent Auditors
Statement of Income - Years ended December 31, 1994, 1993 and 1992
Statement of Financial Position - December 31, 1994 and 1993
Statement of Cash Flows - Years ended December 31, 1994, 1993 and 1992
Statement of Shareholders' Equity - Years ended December 31, 1994, 1993 and 1992
Notes to Financial Statements - December 31, 1994
(2) The following consolidated financial statement schedule of TRINOVA and its subsidiaries is filed under Item 14(d):
SCHEDULE PAGE(S)
Schedule II - Valuation and qualifying accounts 17-19
All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are either not required under the related instructions or are inapplicable, and therefore have been omitted.
(3) The following exhibits are incorporated by reference hereunder, and those exhibits marked with an asterisk (*) (together with those exhibits so marked on page 13) are management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of this report:
EXHIBIT NUMBER
(3)-1 Amended Code of Regulations (amended April 21, 1988), filed as Exhibit (3) to Form SE filed on March 18, 1993
(3)-2 Amended Articles of Incorporation (amended January 26, 1989), filed as Exhibit (3) to Form 10-K filed on March 18, 1994
(4)-1 First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, with respect to the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-1 to Form SE filed on May 6, 1992
(4)-2 7.95% Notes Due 1997, issued pursuant to the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank
(formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-2 to Form SE filed on May 6, 1992
(4)-3 Officers' Certificate of TRINOVA Corporation, dated May 4, 1992, pursuant to Section 2.01 of the Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), as supplemented by the First Supplemental Indenture, dated as of May 4, 1992, between TRINOVA Corporation and NBD Bank, filed as Exhibit (4)-3 to Form SE filed on May 6, 1992
(4)-4 Rights Agreement, dated January 26, 1989, between TRINOVA Corporation and First Chicago Trust Company of New York filed as Exhibit (2) to Form 8-A filed on January 27, 1989, as amended by the First Amendment to Rights Agreement filed as Exhibit (5) to Form 8 filed on July 1, 1992
(4)-5 Form of Share Certificate for Common Shares, $5 par value, of TRINOVA Corporation, filed as Exhibit (4)-2 to Form SE filed on July 1, 1992
(4)-6 Fiscal Agency Agreement, dated as of October 26, 1987, between TRINOVA Corporation, as Issuer, and Bankers Trust Company, as Fiscal Agent, with respect to $100,000,000 aggregate principal amount of TRINOVA Corporation 6% Convertible Subordinated Debentures Due 2002, filed as Exhibit (4)-1 to Form SE filed on March 18, 1993
(4)-7 Indenture, dated as of January 28, 1988, between TRINOVA Corporation and NBD Bank (formerly National Bank of Detroit), with respect to the issuance of $50,000,000 aggregate principal amount of TRINOVA Corporation 9.55% Senior Sinking Fund Debentures Due 2018, and the issuance of $75,000,000 aggregate principal amount of TRINOVA Corporation 7.95% Notes Due 1997, filed as Exhibit (4)-2 to Form SE filed on March 18, 1993
*(10)-1 TRINOVA Corporation 1982 Stock Option Plan, filed as Exhibit (10)-1 to Form SE filed on March 18, 1993
*(10)-2 TRINOVA Corporation 1984 Incentive Compensation Plan, filed as Exhibit (10)-2 to Form SE filed on March 18, 1993
*(10)-3 TRINOVA Corporation 1987 Stock Option Plan, filed as Exhibit (10)-3 to Form SE filed on March 18, 1993
*(10)-4 Change in Control Agreement for Officers, filed as Exhibit (10)- 4 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various executive officers of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the officers and the dates of execution, and as to other variations directly necessitated by said differences)
*(10)-5 Change in Control Agreement for Non-officers, filed as Exhibit (10)-5 to Form SE filed on March 18, 1993 (the Agreements executed by the Company and various non-officer employees of the Company are identical in all respects to the form of Agreement filed as an Exhibit to Form SE except as to differences in the identity of the employees and the dates of execution, and as to other variations directly necessitated by said differences)
*(10)-6 TRINOVA Corporation 1994 Stock Incentive Plan, filed as Appendix A to the proxy statement for the annual meeting held on April 21, 1994
*(10)-7 TRINOVA Corporation 1989 Non-Employee Directors' Equity Plan, filed as Exhibit (10) to Form 10-K filed on March 18, 1994
(99(i))-1 TRINOVA Corporation Directors' Charitable Award Program, filed as Exhibit (99(i)) to Form 10-K filed on March 18, 1994
(99(i))-2 Credit Agreement, dated as of August 31, 1994, among TRINOVA Corporation (borrower) and The Bank of Tokyo Trust Company; Chemical Bank; Citibank, N.A.; Dresdner Bank AG, New York and Grand Cayman branches; The First National Bank of Chicago; Morgan Guaranty Trust Company of New York; NBD Bank; and Union Bank of Switzerland, Chicago branches (banks) and Citibank N.A. (administrative agent)
The following exhibits are filed hereunder, and those exhibits marked with an asterisk (*) (together with those so marked on pages 12-13) are management contracts or compensatory plans or arrangements required to be filed as exhibits pursuant to Item 14(c) of this report:
*(10)-8 TRINOVA Corporation Plan for Optional Deferment of Directors' Fees (amended and restated effective April 1, 1995)
*(10)-9 TRINOVA Corporation Directors' Retirement Plan (amended and restated effective January 1, 1990)
*(10)-10 TRINOVA Corporation Supplemental Benefit Plan (amended and restated effective January 1, 1995)
*(10)-11 TRINOVA Corporation Voluntary Deferred Compensation Plan (effective April 1, 1995)
(11) Statement re: Computation of Per Share Earnings
(13) Portions of the 1994 Annual Report to Security Holders (to the extent incorporated by reference hereunder)
(21) Subsidiaries of the Registrant
(23)-1 Consent of Independent Auditors
(23)-2 Consent of Independent Auditors
(24) Powers of Attorney
(27) Financial Data Schedule
(b) TRINOVA did not file any reports on Form 8-K during the fourth quarter of 1994.
(c) The exhibits which are listed under Item 14(a)(3) are filed or incorporated by reference hereunder.
(d) The financial statement schedule which is listed under Item 14(a)(2) is filed hereunder.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TRINOVA CORPORATION (Registrant)
By: /S/ DARRYL F. ALLEN Darryl F. Allen Director, Chairman of the Board, President and Chief Executive Officer
Date: March 20, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
/S/ DARRYL F. ALLEN Darryl F. Allen 3/20/95 Director, Chairman of the (Date) Board, President and Chief Executive Officer (Principal Executive Officer)
/S/ DAVID M. RISLEY David M. Risley 3/20/95 Vice President - Finance (Date) and Chief Financial Officer (Principal Financial Officer)
/S/ GREGORY R. PAPP Gregory R. Papp 3/20/95 Corporate Controller (Principal Accounting Officer)
PURDY CRAWFORD* Purdy Crawford* 3/20/95 Director (Date)
DELMONT A. DAVIS* Delmont A. Davis* 3/20/95 Director (Date)
JOSEPH C. FARRELL* Joseph C. Farrell* 3/20/95 Director (Date)
DAVID R. GOODE* David R. Goode* 3/20/95 Director (Date)
PAUL A. ORMOND* Paul A. Ormond* 3/20/95 Director (Date)
JOHN P. REILLY* John P. Reilly* 3/20/95 Director (Date)
ROBERT H. SPILMAN* Robert H. Spilman* 3/20/95 Director (Date)
WILLIAM R. TIMKEN, JR.* William R. Timken, Jr.* 3/20/95 Director (Date)
*By James E. Kline, Attorney-in-fact
/S/ JAMES E. KLINE James E. Kline 3/20/95 Vice President and General Counsel (Date)